Is It Time to Move? Financial Considerations for Retirees Video from Savant Wealth Management

Download our complimentary guide books, checklists, and other useful financial resources at savantwealth.com/guides. Good afternoon everyone. For those of you whose first Savant webinar this is, welcome and thanks for being here today. For those of you h who have joined us before, welcome back. We’ve got a great presentation for you guys today. We’re going to be discussing is it time to move financial considerations for retirees. My name is Evan Goldfuss. I’m a financial adviser in our Atlanta office. I’m excited to be here today and to have the one and only Miriam Flocky joining us as well. Welcome Miriam. Thanks Evan. Hi everyone. As Evan mentioned, my name is Miriam Falaki and I am an adviser out of the Atlanta, Georgia office as well. Excited to dive into this topic. As we get started, I’d be curious how many of you are already thinking about a move today. Maybe it’s a move to a warmer climate, closer to the kids, the grandkids, maybe, you know, for some people getting further away from the kids. No, I’m just kidding. But, maybe even a simpler place to enjoy retirement. Whatever’s on your mind, my guess is that today’s conversation is going to give you a completely different lens for thinking about it. Today, we’re walking through the financial side of what that decision, you know, looks like, and we’re going to walk through it in a way that’s practical and actionable. By the end of it, you’re going to have a much clearer picture of what to think about before you start packing the boxes. So, Miriam, what are we going to be focusing on today? All right. Well, here is our agenda for today. This is what we’ll cover. These five areas are intentionally ordered because they build on each other. So, we’re going to start with the housing decision itself, then move to income planning, taxes, estate planning, and close with the mistakes we see most often. Think of this as a checklist for your own situation. Take notes. The things that feel most relevant to you are probably the things that you should continue the conversation and talk about. So, let’s jump into section one, Evan. Absolutely. So, relocating is a financial event. A financial event. I love this framing because it captures something that most people don’t instinctively think about. When a retiree says, “We’re thinking about moving to Florida.” My first instinct isn’t to ask, well, what neighborhood are you going to? It’s to ask, what does your plan look like? Both before and after that move. A move in retirement isn’t just a lifestyle event. It triggers really a chain reaction across your entire financial picture. So, let’s jump into what the average retiree is not thinking about when it comes to that big move. So, the first thing is addressing how many layers of your financial life are actually impacted by a move. In a way, moving in retirement can feel like pulling on a loose thread in a sweater. Might feel like one small tug, right? Maybe a home sale, being in a new state. Might feel like a small impact, like changing your address, your license, canceling your internet provider. We’ve all been there. Shout out to anybody that’s had to deal with Xfinity in the past. But suddenly you realize everything was connected, right? The bigger challenges lie underneath the surface. Identifying what changes impact your financial life like your investments, your cash flow, your taxes, your estate documents, and potentially all of it all at the same time. Now, that’s not a reason not to pull the thread, but I do think it is a reason to know where that thread leads before you pull it and you start talking harder. So, these decisions are all connected. A home sale can create a tax event. A tax event can impact your Medicare premiums. Those costs can then in turn impact your cash flow, your portfolio composition. All this can affect, you know, enter your estate plan after that. It goes on and on. It’s all connected. So, the important thing is to see the full picture. These decisions can feel separate, but they’re absolutely not. That’s why we always say it’s important to discuss these things with your team, with your adviser, your CPA, your attorney to help you see that the impacts, you know, are there and help you see around those corners.

So, let’s focus on the biggest financial question here, which is how does this move actually impact my assets? How do I navigate the transition from my existing home equity and my portfolio? How does that look?, you know, after before and after, as an adviser, my favorite phrase is always it depends. I say it probably more than anything else in my vocabulary. Everyone’s situation is going to look a little bit different here. And depending on your goals, your needs, your strategy can warrant, you know, a different approach and a different take. If you’re downsizing, you might generate more liquidity than you actually expected, which sounds like a great problem, but it still needs a plan. Where does that excess capital even go? What does that do to your overall asset allocation, and how should that be invested? Okay, if you’re upsizing or moving to, you know, a more expensive market, you might actually be reducing your liquid reserves, which has consequences for how you fund retirement income after your move. So, housing decisions can expand or shrink what is available for generating retirement income, paying for healthcare, and dealing with unexpected expenses that we know are just going to happen. These impacts are rarely obvious until you actually sit down and model it all out. So, let’s jump to the next big decision and discuss what to think about when actually closing on a new home. So, you finally done it. You’ve been searching forever, searching for months, and all of a sudden it came up on your radar. You found the perfect home. How are you going to pay for it? Okay, so conventional wisdom and kind of the old adages of financial and retirement planning says pay cash if you can. Try to be debt free in retirement. These are really common phrases and common thoughts you know that we’ve all heard and experienced throughout our lives, but it’s not always necessarily the right answer, especially in retirement when your portfolio is funding your living expenses. Today, things like interest rates and costs of debt really, really do matter. If your portfolio in some instances can earn more than what you’re paying in mortgage interest, you know, on an after-tax basis, the math might favor you financing. Paying all cash can also concentrate your wealth in a liquid asset right when liquidity matters most. So, paying all cash for a home in retirement, it’s kind of like sitting at the poker table and going all in. Feels kind of cool when you do it, right? You might win, but if you get dealt a bad hand or, you know, in this case, you get dealt a bad series of market returns and what your remaining portfolio looks like, you’ve got no chips left to play with. And if your circumstances change, that can leave you in a tight spot. Keeping a mortgage might in your case feel like keeping chips in your hand and keeping chips on the table. Which is going to help you stay more flexible. It’s going to keep your plan flexible and ultimately more adaptable for whatever comes in the road ahead. The right answer to this equation for you is going to depend on what your income looks like, your income needs, your risk tolerance, and your portfolio, which is exactly what you should be helping or you should be mapping out ahead of time with your team. So, now the big transaction always gets the most attention and focus. What about the hidden costs that are not often addressed and can really sneak up on retirees? These hidden costs are often where we see people have the biggest surprise factors, right? People budget for the big purchase, but they don’t necessarily budget for the cost to own what comes next. HOA fees, property taxes, insurance, especially in, you know, the well-coveted coastal markets. You know, where insurance costs can be really volatile and especially maintenance costs can add up very quickly. Those are all things that directly impact you know, after that move. A $50,000 renovation doesn’t necessarily show up in your retirement income plan unless someone actually runs the numbers and models it out. The most important one in my opinion here on this slide is stress testing. Stress testing what those costs could actually in reality look like, right? So, stress testing, what does that mean? Stress testing means what if what happens you know to your plan if those costs actually run about 20% higher than you originally expected or anticipated, right? It happens all the time. How many times have you heard the story? I’m going to go and pick on my parents here. If they’re listening, I apologize. I’m sure I’ll hear it later. But, you know, how many times have we heard this story when you’re, you know, doing the kitchen renovation here, say your budget is $40,000, but along the way, ah, those cabinets are nicer. That top looks a lot better over here. We’ve got to have the fridge that orders the food all by itself. Of course you don’t. Suddenly that budget of 40,000 is completely blown and now you’re at 70,000 all in. Okay, that happens all the time and we have to face, you know, reality and be practical with our planning and our approaches. Expenses come in higher than expected all the time. It’s important to not only factor in all of these hidden costs and see what happens to your plan if they come in even higher than expected to be sure that your plan can handle kind of whatever comes your way and not be blindsided by anything. So, as we’re talking about the all-in costs and potentially higher long-term spending, let’s take a look at the important impact of how these moves can affect our asset allocation in our investment decisions. So, your investment portfolio, which is a big piece here, should never be an afterthought when you make a major property transaction. A large distribution to fund a down payment or after a home sale can fundamentally shift your asset allocation without you even realizing it. If you pull from bonds to fund a purchase, your portfolio is suddenly more equity heavy or stock heavy than it should be. That math matters because the remaining portfolio needs to be invested properly to support your retirement and your other spending and your goals. So, like step one is understanding your portfolio composition today to help you identify how you should ideally be funding your move. Step two is ensuring your portfolio post transaction is set up in a way to support you as efficiently as possible and throughout any market that we can experience. We never know what market returns we’re going to get year to year and how volatile that experience is going to be. So, we always model the portfolio both before and after a transaction. The move should serve your plan, not disrupt it. Okay. So, that’s the 30,000 foot view on the housing picture. Once you’ve made the move, the next big question is where does your income come from? Miriam, why don’t you take it away? Thanks, Evan. Yeah. So, really once the housing decision is clear, the next question becomes, how will retirement spending be funded over time? And I just want to share a quick example before we dive in. So, I have a couple we’ll call John and Lisa. They retired in their early 60s with about 2.5 million saved and their home paid off. Like many retirees, they decided to move warmer weather, lower taxes, and a simpler life. But within the first year, they started to feel uneasy. Not because they were running out of money, but because their cash flow felt tighter than expected. The issue wasn’t the move itself. It was that they had used a large portion of their liquid assets to buy the new home. You know, like Evans poker chip table example, and they hadn’t fully mapped out how their income was going to work after the move. So, once they restructured their plan, coordinating social security, withdrawals, and taxes, they went from asking, “Did we make a mistake?” to now we understand how this fits into our plan. And that’s really the key here. Moving in retirement isn’t just a housing decision. It’s a cash flow decision. So, in this next section, it’s about sequencing. It’s not just about how much you have. It’s about which buckets you draw from and in what order. So, you know the first principle is we start with what’s predictable and not market dependent. Your guaranteed income floor. For most retirees that means social security. For some that retired early, that could be a pension, rental income, some other sources, but these are your baseline. You build everything else on top of that foundation. Once you know what guaranteed income covers, you identify the gap. And that gap is what you fund from your portfolio. Required minimum distributions at a wrinkle after age 73. They can actually force more taxable income than you wanted, which is its own planning challenge. So, again, we want to start by building the foundation. I think of retirement income like building a house. You start with the foundation, social security, pension before you ever think about the walls. If the foundation is wrong, nothing built on top of it is stable and the foundation needs to be in place before you ever touch the portfolio. So, again, retirement income should be layered and coordinated rather than withdrawn from a single bucket. This sequencing helps preserve portfolio longevity. So, on this next slide here, there’s a lot going on, but this is one of my favorite slides when it comes to financial planning that we do for our clients. That’s because it encapsulate encapsulates all of the pieces of planning that we do in a visual manner that you can easily follow along with. So, this slide is looking at how much do we have in the way of total income and it’s looking at it from today moving forward throughout retirement until what we call end of the plan or end of life. We have an orange line that represents the amount that is being spent each year. So, in this graph we’re just showing a simple $100,000 a year need that’s growing with inflation. But as you follow the line you’re going about in retirement and it pops up a little bit. Then it stabilizes, pops back up again and again. Those big bumps symbolize different goals. It may be a car purchase, a home renovation, an international trip, or maybe every 5 years you take the family on a big trip to come see you since you moved away. So, how do we budget for these items? These are not linear since the orange line is on an upwards trajectory with inflation and various miscellaneous expenses over time. The first handful of years here, that is that short-term income that’s illustrated in the orange bars. That could be a number of different resources. Like I mentioned before, you could also have some stock options that are paying out. You decide to work part-time. Maybe you moved, kept your primary residence for a little bit and are renting it before you decide to sell, getting some rental income. And then we move on to the light blue bars which represents the withdrawals from your portfolio because there’s a gap from when we are going to start claiming social security in this example. The dark blue color illustrates when the social security income kicks in. The green color is referring to your required minimum distributions when you will be forced to take money out of your pre-tax accounts like IRA and 401ks which eventually that becomes higher in this example than what this fictitious couple needs to live off of. But when we work with our clients, we’ll use this chart to illustrate where their resources will come from to meet their spending goals in any given year in the future. This example, the household elects to delay claiming social security, which is why they need to fund that gap in the beginning. They start by living from part-time income, the yellow bars, and distributions from their investment portfolio, which are the light blue bars. Once they start taking social security, it nearly allows them to stop their distributions from their investment portfolio. So, designing an integrated retirement income strategy is really a necessary step in the financial planning process especially when considering a move.

And then of course the other question where can I draw from? You know not all retirement accounts are created equal when it comes to access. So, depending on your age some have penalties for early withdrawals. You know, like under age 55, we try to go after the taxable brokerage accounts, maybe some cash reserves. Roth contributions are the most flexible, but maybe we don’t want to access those that early. However, those are the accounts we would usually target before moving once you’re over age 55 to 59 and a half. That’s when you can use traditional IAS and 401k earnings. They typically can carry penalties until 59 and a half with one exception for 401ks if you separate from your employer at 55 or older. And then the next one, once you’re over 59 1/2, obviously the traditional IAS, earnings and Roth IAS and 401ks, you’re able to take those out without that penalty. So, if you’re considering an early retirement date, this sequencing question becomes critical because penalties on top of taxes is a combination we want to avoid at all costs. So, this is a planning conversation we have with every client considering early retirement and of course funding moving. Yeah. And Miriam, it sounds like each one of those different, you know, want to call them buckets feels like the right approach to it. Sounds like as we’re thinking about through the sequencing of when we’re supposed to take from what bucket that should probably impact how we should invest in each one of those buckets, right? That’s right. Absolutely. But then, you know, part of the retirement income and cash flow planning is also about having a sustainable withdrawal rate. A lot of us have heard that the classic 4% rule, but that has evolved. So, today’s research really points to a 3 to 5% range depending on your specific situation. But we do factor in investment myth investment mix risk tolerance and legacy goals. There’s no one-size-fits-all answer here. But the key phrase on this slide is without substantially depleting. Your plan shouldn’t just survive. It should give you genuine confidence. The goal isn’t to die with nothing. The goal is to live without running out. And another analogy I’ll throw out here is you can think of your portfolio like a well. You can draw from it indefinitely if you’re thoughtful about how much you take each year. You draw too fast and you drain it. You draw too slowly and you’re not living the retirement you worked for. So, the sustainable withdrawal rate is finding that sweet spot. And it’s different for every family. So, taxes add a whole another dimension to all this, right Evan? They absolutely do unfortunately. So, with a move, obviously you might be able to get away from annoying neighbors, you know, different pests around your house. But you certainly can’t get away from taxes. That’s something, you know, we try to run away from, but seems to always find us. Taxes definitely don’t go away in retirement. For a lot of our clients, they actually get a lot more complicated. Especially when a move is involved. This section we’re going to talk about is all about understanding how a change of address can drastically impact your tax. You know want to get ahead of all those decisions and really understand what that impact looks like from the tax perspective. So, let’s first address that different states depending on where you’re thinking about going different states can treat retirement income very differently. As a lot of you may know Florida, Texas, Tennessee have no state income tax whereas other states may have drastically different rules on taxing distributions investment income and even your social security. So, where you end up has a drastic impact. And you have to be ahead of those changes. Additionally, property tax can vary drastically by state and even by county as you’ve probably seen. Sometimes it’s one of the biggest ongoing costs in somebody’s move. For clients moving internationally, not even on this page, you know, those going to Portugal, Mexico, Costa Rica, all those are seem to be very popular these days. I can see why. It gets even more complex. Treaty implications, foreign tax credits, reporting requirements, that all has to be factored in and addressed upfront before making that switch. Tax planning should play an equally big part in your relocation decision. Shouldn’t be an afterthought. We’ve seen people choose a state for the lifestyle and then suddenly get completely surprised by the hidden taxes that ends up honestly reducing their lifestyle sometimes with these unexpected costs. So, it’s all stuff that we want people to get, you know, out in front of and understand what’s coming down the pipeline. So, one of the most important taxes to understand, when evaluating MOVE and funding a home purchase is capital gains taxes. This is one that kind of catches a lot of people off guard. Frankly, when you’re funding a home purchase, especially if you’re pulling money from your investment portfolio, you might be triggering a taxable event without even realizing it. Okay. So, for capital gains, for stocks, mutual funds, ETFs, everything held outside of your retirement accounts, right? So, your IAS, your Roth IAS, everything outside of that in brokerage accounts, any gain you’ve built up in those investments can become taxable the moment you sell it. Okay, here’s what’s interesting. Your primary home actually has a huge advantage here. If you’re married filing jointly, you can actually exclude up to $500,000 of capital gain on the sale of your primary home. That is a massive tax benefit that actually not a lot of people understand or fully appreciate. It’s definitely a big one you want to factor into your decision on where you’re sourcing a down payment from. So, when thinking about this sequence of where do I source this down payment, the answer isn’t always flat out obvious. And it isn’t always just, oh, with whatever cash on end I have. Sometimes selling the house that you’re in first and using that equity can be dramatically more tax efficient than liquidating say an appreciated stock position. So, that’s the conversation we want to have before anybody pulls the trigger. And again kind of relates back to what I was saying. We want to be very aware and understand our portfolio composition where it sits today before those transactions take place. So, for capital gains, I want to take a closer look at this. Again, a lot going on here on this slide. But yeah, some of you may be sitting on as I had said a large concentrated stock position maybe from a long career at one company or a business that you’ve built. This illustration below is going to show us what a capital gains event really costs at scale. Okay, so at 23.8% which is the capital gains tax rate, the max rate at 20%, it’s scaled 0 15 and 20 depending on your taxable income. At 23.8% 8% which is that max 20% rate plus net invest net investment income sir tax you’re giving up nearly a quarter of that position immediately when you sell it and the cost doesn’t necessarily just go into what you pay today. It’s compounding you know what you lose on that capital going forward that’s no longer invested and working for you. So, as we’re talking about sourcing and potentially selling appreciated stock versus taking equity and all those decisions sometimes the best approach can actually be a hybrid approach. Okay, for example, if you need liquidity for a down payment and you don’t want to sell that position and take a full tax hit, there’s options on the table. Pledged asset lines, margin loans, bridge financing are all things that you should be evaluating in your position and have in your back pocket. You may be able to you may be able to borrow against your portfolio, close on a house that comes up. As we know, speed and everything you know, and timing is everything in this market. So, you may be able to borrow against your portfolio, close on the house, and then pay off, you know, that margin or bridge loan when your primary home sells. That can help you avoid a major taxable gain and keep your investment position intact and growing. So, the point here is before you sell any anything, you want to understand what it’s going to cost you, not just today in this tax year, but in the long term. That’s the kind of planning that actually moves the needle for us. We could talk for hours about other taxes involved here, but I want to jump into the next leg you know really of your financial life that can be drastically impacted by a move and one that I think not a lot of people pay a ton of attention to. So, Miriam’s going to walk us through your estate plan and legacy and why a move is a great time to revisit this area. All right. So, moving in retirement can also require updates to legal documents. You know, most people think I already got them done. I’m good. And move even if it’s just been a few years. But that does require a review of how your assets will pass if something happens if you move states. So, I’m going to go back to my fictitious couple, John and Lisa. After they moved from Georgia to Florida, they assumed their estate plan was still good to go. They had a will, powers, powers of attorney, everything in place. But when they reviewed things after the move, there were a few gaps, right? Some of their documents were still based on Georgia law. And while many documents are genuinely recognized across states, the details can differ. Things like how powers of attorneys are interpreted, how probate works, and even homestead rules in Florida can change how assets are protected and transferred. They also had to look at how their home was titled under Florida law. Beneficiary designations that no longer aligned with their overall plan, and whether a revocable trust made more sense in their new state. Once they updated everything, their plan wasn’t just valid, it was aligned with their new location and goals. And again, another key takeaway, when you move in retirement, your estate plan doesn’t automatically move with you. It needs a review to make sure it still works the way you intend. So, in this map above, you’ll see which states impose their own estate and inheritance tax. The difference between an estate tax and an inherit inheritance tax is that the estate tax is paid by the estate of the person that died. Assets are only distributed out of the estate after the tax is paid. With an inheritance tax, the beneficiary who receives the inheritance pays the tax personally. And you’ll see that little itty bitty Maryland right there does have both. So, if you’re a Marylander, please discuss this with your advisers ASAP. However, just like the federal estate tax, these states do have varying exemption amounts. But unlike the estate tax, which is the federal estate tax, which is a flat 40%, many of these states have progressive rates. One thing I want to emphasize here is that the state estate tax is imposed on top of federal estate tax. You can get a deduction on your federal estate tax for certain state estate taxes, but so what does that mean? When your estate owes federal and state estate taxes, it just becomes a little more complicated and why you want to make sure to do the right planning before you move or after you move states. So, over here, I’m going to cover kind of the main pertinent documents. There are three to six main documents that every client will have. Here I’m just going to cover these four basic ones, but the basic concepts are the document that names a financial power of attorney. If you are having severe mental decline, who is going to manage your accounts? Who is going to pay bills and taxes and take care of everything? The other document, similar idea. If you’re in the hospital, who is making health care decisions? Who is deciding what course of medical treatment you will receive? That’s your power of attorney for healthcare, which you may also hear sometimes referred to as the advanced directive for healthcare. And lastly, you’ve got your last will and testament, possibly a revocable trust. These documents answer two practical questions. Who can act for me? And how should my assets be handled? Now, I’ll briefly touch on these core documents. First, I’m going to cover these next two, the financial power of attorney and a power of attorney for healthcare directive. Everyone should have these in some form or another. Some states like Georgia have statutory forms, so you’ll see the same piece of paper over and over. Other states have codified forms, so you’ll need to make sure you know how to read them. For the financial power of attorney, another thing to note is that it is sometimes springing. What that means is that it only comes into effect once you’re incapacitated. Hopefully, the document defines a incapacity and who is making that determination. If not, it can be really hard to get any sort of paperwork from a doctor or overseeing physician saying that you are incapacitated. If it’s not springing, it’s effective immediately. Whoever is named as the agent has the authority granted to them under the document and can use it today. One other thing to note, so long as you’re in good mental health, you can always revoke these documents if need be. And update them because you know like when you move, especially if you’re older and have health concerns, you want to make sure to share these documents with your doctor so that they know that those will work. Sometime some medical facilities will not use a certain form if it’s not the statutory form. Again, just something that you would need to review if you move states to make sure you have the right documents in place. On this next slide, this is other big part of any estate plan. The last will and testament. So, what is a will? A will is a legal document that expresses a person’s wishes as to how their property is to be distributed after their death and names a person to manage the property until the final distribution. The most basic will says I leave everything outright to my spouse and if my spouse doesn’t survive me, I leave everything outright to my kids. More complicated wills can create irrevocable trust for spouses or other descendants. But the will is probably one of the most misunderstood estate documents because many people think a will avoids probate. It doesn’t. Assets passing through a will are subject to probate which is public and can be time-consuming and costly. A will only controls assets in your name alone with no joint owner and no beneficiary designation. Everything else passes outside of it. This is why beneficiary designations are part of estate planning. They need to be reviewed and updated regularly and they override your will entirely. So, a will matters a great deal but it does not control every asset. And then the last one I’ll cover is the revocable living trust. This is the document that does avoid probate. For clients with property in multiple states, it’s often essential without it. You’d need separate probate proceedings in each state. If you keep a property in Georgia and one in Florida, for example. But the three key roles are the guarantor, that’s you, the trustee, also typically you, while you’re living, and beneficiary, again, also typically you while you are living. After you pass, a successor trustee steps in seamlessly. It’s flexible. You can change it anytime while you’re alive and competent. It also provides smooth management of your assets if you become incapacitated without court involvement. That peace of mind alone is worth having in place. So, bottom line, a revocable trust is a legal entity that can hold assets for beneficiaries. The key advantages are continuity of financial management during incapacity and probate avoidance at death. Particularly helpful in more complex situations like multi-state property ownership. A trust can be a very useful tool, but only if it is both drafted correctly and funded correctly. Now, let’s talk about the mistakes because knowing what to avoid is just as valuable as knowing what to do. Eban, no. Absolutely. And I would say we’re pretty far down the prover proverbial sweater analogy here on the thread. Honestly, Miriam, it kind of reminds me of for those of you who don’t know Miriam, she is a whiz at solving Rubik’s cubes. And as we’re talking through each one of these scenarios, it frankly kind of reminds me of a Rubik’s cube, right? It’s like you can solve and maybe get all one side all blue, but that doesn’t mean you got all the other sides correct. Sometimes even if you got the all blue side, everything else still looks like you know a messed up quilt of sorts. And so it’s almost you know there’s a solution out there but it’s tough to get all of those you know pieces looking the right color and moving the same way. [snorts] Miriam, we’ll have to we’ll have to make you do a Rubik’s cube solve on you know live webinar here one day. Anyway, jumping into to common mistakes that we can avoid. This is really my favorite section here because these are patterns that we actually see. These are not hypothetical. This is stuff that we’ve seen and encountered all the time. The good news is every single one of these things is avoidable with the right planning and the right foresight in place. So, let’s take a look. The top four honestly that we would address. Number one, moving solely for tax savings. Letting, you know, if you’ve ever heard the phrase letting the, tax tail wag the dog is another way to put this. Tax savings moving especially into you know those no state income tax states those tax savings can be real and be very meaningful right but what we’ve seen is they’re rarely enough on their own to justify a full move factoring in the full cost of living the social connections you know stuff outside of the financial plan healthcare access and quality of life we’ve seen people move to no income tax states and end up spending a lot more you know in other ways that they ever thought they’d imagined that far outweighs what they saved in taxes. It just happens. And so I think zooming out and taking a look at it through the lens of am I just doing this to save a lot of money or is this best for me and my plan together. Okay, can absolutely avoid doing that. Number two, underestimating long-term housing costs. We kind of touched on this one a little bit earlier. So, as we’d said, the purchase price is really just the beginning. It seems like the biggest thing. And oftentimes it kind of takes away all of our attention. But the back end, everything behind that, the insurance, maintenance, property taxes, all those are ongoing costs that are quietly eating into, you know, the rest of your assets that are designed to generate your retirement income over decades. Again, one of the key things that we talked about there is making sure that we’re being realistic, stress testing those scenarios and what those excess housing costs could actually be. And certainly understanding how those you know extra costs factor into our portfolio. As Miriam had mentioned, we want to be focusing on the remainder of our portfolio being able to generate a sustainable withdrawal rate to help us cover our spending you know again for sometimes the next 10, 15, 20, maybe even 30 years in retirement after that move happens. So, want to be realistic with actually estimating what those new you know living costs could look like. Number three, over allocating to liquid real estate. Okay, so this is what we talked about in terms of paying all cash versus doing some sort of hybrid or potentially financing a little bit. So, real estate is a wonderful asset. It can be you know a great piece of your asset or your balance sheet, a great diversifier for you. Where it can be problematic is when you need liquidity and can’t necessarily access it really quickly. Retirees who put too much into their property can find themselves being asset rich and cash poor. That’s kind of a stressful place to be in retirement. Again, like we had said, the best and most successful plans are those that are designed to be flexible and adaptable. We want to make sure that we’re not overleveraging ourselves. Again, that chip scenario, going all in, want to make sure that we’re still staying diversified even after you know, our down payment to a new property. Okay. For making a permanent decision, a permanent decision too early in retirement. I think we don’t give ourselves enough credit here. Over here at Savant, we map all of our plans out until, you know, about age 92 and 94. Retirement is a really long game. People are living longer than ever. And what that means is that if you are, you know, a retiree or even an earlier retiree between 50, 65, the lifestyle you want today, you know, at 65 might look drastically different than the lifestyle you may want or need at age 80. So, we want people to think carefully before making a move that’s hard to reverse in some cases. Give an example here. My wife’s grandpa was an absolute huge skier. He and his wife moved out to a mountain town resort back in their early 60s. Absolutely loved skiing, loved being outdoors. It was their whole lifestyle. He could, you know, wax anybody on the mountain that I ever saw. But, you know, they got out there and it was awesome for a period of time. But as time went on, 15 years later, they were ready for something a little more walkable, slowing down a little bit. Something more walkable, more suited to their lifestyle. Weren’t spending as much time on the mountain, obviously. Wanted to be closer to things like you know their doctors, being able to provide medical care for what they needed. But when that period had happened, the real estate market in their town had shifted. It was taking a lot longer to sell. The you know cost and what they were able to get for their property wasn’t exactly what they planned for. Ultimately, they worked through it. They got there, they got out and got to the place that was better for them, but it was a lot harder than expected. And so the lesson here isn’t necessarily don’t move there or there’s a bad place to move or don’t make that decision, but it’s think about your exit before you make the entrance, right? It’s thinking about the long game. And again, never putting yourself in a position where, you know, you’re not adaptable and flexible with your plan. Okay, so those are the most common mistakes, you know, that we see all of the time and definitely are things that can be very much avoidable with proper planning in place. The final one, and honestly the easiest mistake I think to avoid, is underutilizing coordination. So, as we’ve talked today, if there’s one theme running through everything we’ve talked about, it’s that none of these decisions live in a silo. Your housing decision affects your portfolio. Your portfolio affects your taxes. Your taxes affect your estate plan, and your estate plan can affect how everything gets passed on. These are all connected and that means the best outcomes come from treating them that way that they are all interconnected. The families that we have seen navigate this most successfully didn’t make these decisions one at a time or as they came up. They modeled out the outcomes before they ever even committed or signed on the dotted line. They updated their plan after the move or you know both before and after the move and they had their financial adviser, their CPA, their estate planning attorney all looking at the same picture at the same time. That coordination is the difference between a move that works beautifully and one that creates problems that you didn’t see coming. And that’s what comprehensive planning is designed to do. Okay, so we have covered a lot of ground today. And if you’re walking away with even just one question about your own situation, that is exactly the conversation we want to have with you. So, I encourage everyone to take advantage of a free 15-minute phone call with us where we can dive into your specific plan, get to know your world, and see if we can help guide you and your family through that next chapter. That link is in the chat right now. Grab a time that works for you, and our team is going to be there ready to help. Us at ad advisers at Savant love this conversation specifically on this topic because there’s so much complexity to it and so many layers behind the scenes and making complexity easy is exactly what we do. So, now that we’ve got a few minutes here let’s jump into a few of the great questions that we’ve gotten throughout the presentation today Miriam what are we going to start with? All right I got a great one here that I think you can address and here we go. We’re thinking about moving from Georgia to Florida. What should we do first? Georgia to Florida. Okay, that’s a really good one. Honestly, I think the biggest thing that you can do is map out that checklist. I think getting in a plan in place today and understanding, okay, one, how are we going to fund that move? What does the portfolio look like today? And two, what are the biggest tax chain tax changes we can expect?, and you know, where do we expect to be in this tax year? What does that timeline look like with our move? How is that going to impact our plan?, you know, when are we going to change residency?, I think that all very much matters. And besides that, I think it’s, you know, am I ready for the Florida Heat versus Georgia, which is frankly not that much better, but I think a lot of things to weigh and get out in front of, but the best advice I could ever give before any move in general especially when changing states, is to get out, make that checklist, and reach out to your team members today. I think getting everybody you know, in the room on that phone call and saying, “Hey, here’s what I’m thinking. What am I missing?” is a great place to start. So, let’s see. What are some other questions? Miriam, we got one right here. What does a revocable trust or I’m sorry, when is when does a revocable trust make more sense than just a will? Oh, that’s a great question. We get that all the time. And I will say I mean the biggest thing is if you have multiple properties across multiple states, you definitely want to consider getting a revocable trust because you don’t want to deal with probate in more than one state, right? And then you know privacy and capacity planning that just makes it easier. A lot of people want to set up revocable living trusts even if they don’t have a complicated situation just to make it easier on their heirs on their children. You know if something I’ll just give an example of a spouse they own home jointly. If something happens to both of them the home usually will be passed via the will and go through the probate process. If it’s in the name of a revocable trust, that is automatically assigned to whoever the beneficiary is. In this example, I’ll just say they have one child and that would automatically go into their name, giving them the opportunity to avoid probate and going ahead and selling as or keeping it or whatever they need to do. So, probate can be lengthy in some states, you know, some states it’s easier. But again, what we do here at Savant with our clients is we’ll review. The biggest thing is to make sure that you have a proper net worth statement and have everything how it should be titled. We’ll run into couples sometimes that have, you know, an account under their name, two properties, a rental just under the wife’s name for example, joint here. So, when we review the net worth and if the goal is to avoid probate, we want to make sure that titling is done right or also update the estate documents and maybe implement a revocable trust plan. So, again, that’s becoming more and more popular for people that definitely want to avoid probate. And if you have a lot of assets, it does it can make sense. All right, let’s see. We got time for probably two more questions, I would say. Evan, let’s see. Should we sell or buy first? You touched on this a little bit. So, man, that is a classic. I’m just going to have to pull the old phrase out of my pocket. It depends. [laughter], selling or buying first absolutely does depend on a number of different things. You know, obviously, as we had said before, timing is such a big thing with real estate. You know, if we’re in certain markets and we want to be able to move quickly and you know, maybe that means not being able to depend on selling your current home as quickly as you want to be able to get that down payment down. Those are some sometimes very tight timelines. So, I think that question begs you know, one a very good look and honest u analysis on what your current portfolio looks like today. I think answering that question on okay, once we do find a place, how are we going to fund that down payment most efficiently?, two, within my taxable portfolio or wherever I’m going to source, you know, between cash or investment positions that I’m going to sell, what does that tax consequence look like?, what does that overall balance look like with my ability to maybe take out a short-term, you know, margin loan or pledged asset line against that to kind of allow me to do some bridge funding until my other home sells? And then obviously, what does my current home equity look like in my house?, am I going to, you know, qualify and fully utilize that full capital gains exemption of 500,000?, so what does that ultimate tax consequence look like?, you know, looking at kind of both ways of doing this. I think ultimately the way that I would approach it is again, leaving yourself in a position where you can be flexible to move with speed and do as fast as possible. And I think that comes down to understanding what’s in your portfolio today. Do you have the ability to pull some of those, you know, extra options like margin loans out of your back pocket?, or do you need to work with a real estate attorney and be very diligent about your timeline? I think it all matters. Hopefully that was a big roundabout way of saying, again, it depends. But, you know, I think it’s about taking a good clean look at everything and weighing all the options before doing anything. So, I think let me see Mary we got time for one more here. Yeah. Yeah. So, let’s see here. So, we got another one on the 4% rule. So, you know some this question specifically said I heard the 4% rule is a little bit outdated. Can you attest to a little bit about that and kind of how we approach sustainable withdrawal rates? Yeah I mean I agree it is outdated and it’s not the only way that you should think about your withdrawals right when you’re in the portfolio. I mean a better range is 3 to 5%. But I think it really depends on risk tolerance, legacy goals, investment allocation. All of that really factors in to making sure that you have a planning conversation. Because if sometimes you might have to withdraw a lot more if you’re in that gap from that graph I was showing earlier before social security kicks in after some other short-term income. You might have to six or 7% withdrawal rate and then go down to two to three or in the example I showed they didn’t even need portfolio withdrawals. So, it really again will be based on different income sources, goals, risk tolerance, etc. So, I think that’s all we have time. We have some other really great questions in the chat and if we didn’t get to yours today, please go ahead and put that in there. I did want to say that Evan, I think my favorite line of our presentation today was what you said about think about your exit before you make your entrance. And I do like that one as well. I really [laughter] liked it. I thought it was a good one to take away from here, guys. No, I appreciate it. And yeah, I think if as we had said before, I think the biggest takeaway here is have a plan in place. And honestly, I’ll say my other old adage, Miriam, I know you’ve heard me say this one a thousand times, but as we’re talking about big financial decisions and changes and looking at the long-term effects, I think it’s important to just remember the one rule which we absolutely live by in retirement planning, financial planning, and investing. And it’s that little changes can add up to drastic differences over time. Even these small decisions that we’re looking at making today, you know, being a little more tax efficient here, sourcing from this part of our portfolio over here, making, you know, this foresight or change or getting a trust in place for our estate plan. All these little decisions can compound over time. I always use a really great example for anybody that out there is a pilot or is familiar with the aviation industry. I use this example a lot. It’s called the 1 and 60 rule. And what it reminds us is or really what it states is that for every when dealing with planes for every one degree off a plane’s initial heading is when it travels 60 miles over 60 mi travel that one degree off it’s now one mile away from where its intended destination was. Okay. So, even just a one degree turn as we you know travel on this flight plane of life right 60 mi is not that long you know if we’re flying around the world we can end up in a drastically different spot because of one small decision today so it’s important to kind of remember that I you know use it every day we keep it close to home here at Savant but just remember the small changes can really add up over time and it’s really important to get out in front of this you know and take a good hard look at your plan today so all right we’ve covered a lot of great info. I’m going to go ahead and have to cap it there for today, but thank you to everyone for coming out today. You know, again, spending some time with us. I hope everybody thought that the session, you know, was helpful. If at any time you’re looking for more information, you know, about Savant, about what we do, feel free to check out our website at savantwealth.com to learn more about us or definitely get one of those 15-minute phone calls scheduled. We’d love to meet you guys and have our team help and dive, you know, into your situation. So, thanks again everybody. I hope you all have a great rest of the day. I hope wherever you end up, wherever you, you know, might move to, is a great decision for you. If anybody on the call ends up, you know, moving down to the Atlanta area, definitely, stop by, come see us. We’d love to meet you. So, thanks again, everybody. Hope you have a good rest of the day. Bye, everyone. If you enjoyed this webinar, visit savantwealth.com/guides and download our complimentary guide books, checklists, and other useful financial resources.