Having A Plan
Building wealth and having a financial plan is much more than just creating a budget. While that is a critical component other things to consider are life insurance, investments such as college, retirement, rainy day funds. Navy veteran Matthias Pope, a Northwestern Mutual Financial Advisor, is the guest this week and we discuss how an advisor can assist you in setting and planning your goals, difference in term vs whole life insurance, retirement planning and more.
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Transcript from Episode 69 with Matthias Pope:
Keith McKeever
Welcome to the battle buddy podcast with Keith McKeever. Welcome back to another episode of the battle buddy podcast. I've got a great guest with me today. If you're interested in your financial health, your financial wealth, you might wanna pay attention to this one. Before we get into it though, make sure you go like and subscribe. Follow the channel. Most importantly, share it if you find this information valuable. Or you think one of your battle buddies or find it valuable, make sure it's got share it. So without further ado, I have Mr. Matthias Pope here with Northwestern Mutual. Welcome to the show.
Matthias Pope
Thanks, Keith. I appreciate you having me.
Keith McKeever
Yeah, well, I'm glad to have you on here. I kind of nerd out. I think I've told you that. I kind of nerd out on personal finance stuff. So I know we're gonna geek out on
Matthias Pope
the club too, right? I mean, so we can, we can nerd out together.
Keith McKeever
I think everybody has a goal of being a millionaire. Cross our fingers. Hopefully we're all there someday. But no matter what, we all need to build wealth. We all need to take better care of our money. I don't care who you are. Even rich people you see on the internet, making stupid purchases, like $2 million sports cars. I can't even imagine the insurance costs alone on those. Hey, they got the money. If they got the money to do it, do it right. But to some of us, it looks like a really stupid financial decision. But without Anyway, go ahead and share us a little bit about your story. Who are you? What was your What was your military journey? What do you do now? Those kind of things?
Matthias Pope
Yeah. So I, I went to law. I grew up in Pittsburgh, and I went to college on a ROTC scholarship. So I was able to be fortunate enough to pay for school that way as a Navy ROTC. So those familiar with the that type of scholarship they pay for school, and then you serve after I was nine years active duty, I was a helicopter pilot, Sh 60 Bravo's Seahawks set. So H 60. Same airframe is Blackhawks. Last couple of years in taught over here at University of Illinois, about an hour down the road from me. ROTC instructor went back and got my, my masters and my MBA, and actually ended up working at State Farm corporate for about eight years here in Bloomington Normal, which is where I live now in central Illinois, and then left a few years ago to start my own financial planning practice and evaluate a couple of different models out there a couple different places and for me, landed at Northwestern Mutual. Just turned 44 Do a lot of retirement planning. But in general financial planning for for folks that at every stage of life and of course, love working with veterans, military, love working with families and business owners in general. But always I'm gonna have an affinity in my heart for the military community.
Keith McKeever
I totally get that I'm the same way. There's nothing better than helping our brothers and sisters kind of achieve whatever their goals are. You know, you do it on the financial side, I do it through the real estate side. But some people may not be super familiar with what a financial advisor does. So can you explain to us the basics of what you do? And the benefits to somebody using an advisor? Yeah,
Matthias Pope
yeah. And it can be confusing. I think for folks, you know, it's, it can mean a lot of different things to different folks. And maybe, you know, I think very often what I see is that when we hear financial advisor, we, we might have a tendency to think, you know, investments. And while that's certainly a vital part of have a long term plan, so that we can wake up in retirement and be in a good position, outpace inflation, etc. It's really, it's really just part of an overall comprehensive plan. And so, as much as I love talking investments and doing those things, you know, I really like to lean more towards that, that planner type of definition. And, and what does that mean, you know, I remember when I went to start my business, my sister was like, I don't know, what's a financial planner do? And and, you know, in simplest terms, what I would say is really, we want to figure out two things about you. So, so if we were talking, right, Keith, I'd say Listen, before I can help you really with anything. I'm not just gonna throw solutions out there. Right? Because I don't know you. And so really, I think that the goal of a financial planner is to understand two things. Right. Where are you at today? A what are the steps you've taken to get where you are today? What's the current state? And really understanding that and then understanding what are what are the goals? Where do you want to be tomorrow? You know, one year down the road five years down the road at retirement, right? What are the goals? What are the motivations? What's important to you? So that's really where I spend the first hour or so with everyone I come across, really trying to understand where are you today? Where do you want to be tomorrow, then we can create, you know, that's where I go and create what I call a draft plan, bring it together, and then we sit down, look at kind of the 30,000 foot view for Keith or whoever, to start figuring out. How do we get from where we are today to where we want to be tomorrow? Another way of saying that is, a lot of folks will ask, Hey, what's the next best use of my dollar? Right? I'm trying to pay down. Yeah, I'm trying to pay down the house. I'm trying to save for retirement, I want to save for kids college, I got some debt, I want to knock out I want to get that new truck. Right. We don't have enough dollars to fill every bucket. And so what's that next best use of my dollar? What should I be doing? And the answer is, it depends. That answer is different. For me, for you for for the next person who walks in the door in the we change those answers from it depends to more clarity, and hopefully some some some useful guidance by understanding where you are today, where you want to be tomorrow, looking at that intersection, starting to talk about priorities and say what makes the most sense for Keith, and then we take it from there and can get get tactical on on solutioning. For those those priorities.
Keith McKeever
Awesome debt. That I think they should make it pretty clear for people. And I guess, full disclosure, I have I have talked to us. I've used somebody else at your company. That's how we connected. Northwestern Mutual, what I found interesting going through that process was they kind of looked at it like offensive and defensive. Right? Like you got your defensive stuff like, do you have life insurance? Yes or no? Okay, what what do you need? You know, if that one, something happens to one spouse? What kind of coverage? Do you need to pay those expenses and let that person get by to continue their life what? You know, and then you have more on the offensive side? Like investments, and you know, and those kinds of things like take care of those those horrible, whatever things? And then start looking at like retirement plans, investments and other different things to kind of that portfolio, if you will, I guess that's the best way I have of describing it. I thought that was really eye opening.
Matthias Pope
Going through that. Yeah, I love the offensive defensive mindset. I love I do like that language. And that way of talking about it, you know, on the defensive side, easily, what you're talking about is insurance most mostly, you know, other things like emergency fund, those are defensive in nature. But it's basically, you know, offense is fun, right? Everyone likes scoring the touchdowns, and we want to score them and score as many as possible. We also want to make sure we don't get injured, and we don't have to come out of the game. And then and then now we're not really worrying about touchdowns anymore. We're worrying about other things.
Keith McKeever
Yeah, I don't think anybody wants to have to call you up and say, Hey, I need to cash out all my stocks and 401k and all this because of this big emergency that happened, or, God forbid a death in the family. I think I had heard somewhere, you might know, exactly the amount but something like 20 to 25,000 just to bury somebody. Yeah, the cost of doing those things is pretty ridiculous.
Matthias Pope
Yeah, I think that's probably, you know, you've experienced a little bit with our company. And, and, you know, I might, I might be getting a little off topic here. But what, but I think there's probably also maybe a little people might be timid, or maybe even a little fearful, that might not be the perfect word. But diving in and finding someone that you're comfortable talking to, and then open up opening up about your finances and having to kind of lean into that that can take a lot of courage. And so I I really give kudos to those who kind of take that first step and, and can kind of lean into it and then you can start to see you know, that opens the dialog. You have to be probably a little vulnerable at first to allow that, but it opens the dialogue and hopefully you're working with someone you enjoy working with. And then it can be somewhat illuminating to your point about wow, I didn't really think about you know, this here's how much I need to you know, If my partner isn't here tomorrow, it's surprising. And there's There's any number of of of kind of realizations that maybe we come to. And just on the flip side of that, I'd say as much as that might be kind of intimidating. There's an equal number, if not more so than then maybe small things or things that we can do today, that are pretty minor that are going to have major impacts in the future.
Keith McKeever
Awesome. You kind of hit on something that's interesting, because I see it in my line of work too. Is that vulnerability to open up about your your financial situation, talking about money is hard for people really. But you can't really play and help somebody plan unless you know all the details. And it's hard for me is a realtor to help people buy and sell homes. If I don't know what their true financial picture is. I don't know exactly what that you know, what the net is on the house, what do you owe? Are there any other liens? Are there repairs that need to be done? As a buyer? Does that buyer have enough money to have all the inspections that they that they want? Yeah, well, it's important. And I had many instances over the years, almost 10 years doing this where I know I'm not getting all the information. Keep asking. So any advice for people about, you know, how they can kind of get over that mental block and actually open up to these people who are working on their behalf?
Matthias Pope
You know, that's a good question. I might frame it up from, you know, the, I might frame it up from, you know, I kind of see the onus in some points as at least the initial onus of that, that on me, in terms of how do I get folks to feel comfortable? How do I get folks to open up, you know, I can't get them to take that first step to have a virtual meeting with me, or step in the office. Right, that that kind of takes courage there. I think that's, you know, it's kind of like getting to the gym, that's like half the battle. Right. Once you're there, it's probably good things are gonna happen. But, but two things, I would say, one, in terms of, you know, this is actually a good analogy with the military. You know, I say financial advisors, financial planners, I'm very aware that, what I would say we start with a trust deficit in this role, meaning when I was in the military, and maybe we've all had a similar experience, and someone asked what you do, and you say, Hey, I flew helicopters, right? You know, I'm in the military, I'm in the army, I did whatever. Hey, thanks for your service. I appreciate you. Right. They know, they just as soon met me, as they're basically complimenting me, based on my career choice at that time. And it's funny, St. Mathias. But fast forward to now and you meet folks, what do you do? You know, I'm a financial advisor, and it's like, you know, like, hey, you know, the, what's your angle, man? And so either way, right, we're gonna get, you know, stereotyped to a certain extent, based on on our on our roles, right, I get it, like, you know, a lot of good famous military folks, but one adviser probably comes mind made off. Right, so, so that, so tying that back around, that's, that's where I think I start. And so what do we have to do, and I think this is another good military tie in is, it's kind of like leadership, in my mind, where really what we have to do is, you know, create the environment where folks are comfortable, being authentic, comfortable getting vulnerable, we have to do things like, right Leadership isn't one size fits all, you have to meet your folks where they're at, to understand where they're at, we have to, you know, shut our mouths to a certain extent, open our ears, ask questions, learn, and then, you know, really take that servant leadership mindset, and elevate them putting their goals as paramount. And so I think, you know, getting in the door, you're right, that that's kind of the hard part, I would say probably for a lot of us is finding people who are willing to take that first step. Once they do, I applaud them. It's not easy because you don't really know what you're getting into. You don't know me yet. And that relationship is important in financial planning, real estate, any number of types of services like that, and once they do step in, and maybe you feel the same Keith it's very much on me to do the listening to do the caring to show them things that are relevant to them, and to hopefully build that trust at that point through through my behaviors.
Keith McKeever
Oh, I you took that a totally different direction. I love it. I love it. And I do feel that way. Um, we have this responsibility to educate and guide, you know, figure out what they know where they're at, and what they know what they don't know, or seemingly don't know, and educate them on it that way that it's their decision at the end of the day what they want to do. I've said many times, like, I don't sell, I mean, I sell houses, but I don't sell the actual house, right? You either walk in the front door and either like it or you don't, I just have to sell my ability to represent you and get you from signing that contract. To get the keys in your hands. It's closing. That's right. That's where I have to sell, you know, selling myself and my ability. So I love I love the way you went with that. The question I wanted to ask, in your experience with veterans, where would you say most veterans are the least prepared? Insurance retirement? Savings? A combination of those?
Matthias Pope
Yeah, good question. I, it might be tough to kind of do a one size fits all on that. But there's, there's probably a couple things that stand out. You know, not? We don't all retire, probably more of us don't don't retire than not. That's my guess. So when we get out, maybe we did you know, four years, maybe we did eight, something like that. So let's assume we went in at 18 or 22. You get out your late 20s, maybe mid 20s, late 20s 30. Even a couple of things. So in the military, right, we get fgli. Life insurance, and that should still be at 400,000. Last Last I checked was Yeah, yeah. So you know that? We get it, we haven't really probably had to think about it, because it's there. And, and depending on some of our career choices, you know, if we have families or not, that's the big thing. What do you want to see happen? If you're not here tomorrow, right? If you're single, and you're 22, that might be sufficient. If you're 40, and you've got, you know, three kids and a spouse in a house, it's probably not. I always say life insurances is a want, it's not a need, what do you want to see happen, but most families I talked to want to make sure that their families have a similar lifestyle to what they would have today. And so just the fgli, being there, I think just is out of sight out of mind, we know it's taken care of, we don't really do the death benefit analysis. And then we don't really know if it's necessarily the right number. And so then when we get out, now we have zero because we got out of the service. And maybe it's not kind of Top of Mind, we go on in life. And so sometimes that's could be a gap. Same with long term disability. That's not something that we you can really even get in the military. But it's something that when you get out, right, that's basically making sure you have a source of income. Regardless if you become sick or injured in a lot of times, that's a higher probability than a premature death. And the third thing that kind of stands out is TSP, you know, Thrift Savings Plan, I think they've done a lot of good things over the years in terms of improving that, specifically, even just adding in Roth options and matching. But, and this isn't limited to military by any means. But the understanding of the TSP, which is really very similar what you know, it's a 401k. Basically, it's a way that you can save for retirement, the government will match some of your contributions up to a certain level, but understanding you know, what, what fund or funds should I be invested in? How much should I put in there? What's the right number? You know, those types of things. And then taking that knowledge, if we haven't gained it while we were in the service with the TSP, then when we transition to civilian life to the private sector, trying to catch up, learn about the 401 K's, how they work, and maybe the different options out there can sometimes provide a little bit of a steeper learning curve.
Keith McKeever
Those are good answers. And I know when I got out, I think all of those all of those were a gap for me. It was it was like 2026 I think what I get 20 is, so I was like, oh, but no life. Well, I had a life insurance policy from from being a kid, but it was like, nothing on me my life for my kid. At the time it was health insurance, life insurance, no investment house, nothing. You get out in the real world. And it's kind of a slap in the face. It's like, I mean, I need health insurance. And I need life insurance, so they need this. And then, for me, I got it. I sold furniture for a year before I got into real estate. I've worked a commission job for 11 years now and budgeting It was one of the things you kind of got to figure out. I think a lot of military members get stuck in the trap of on paid on the first and the 15th. The paychecks come out every year, you know exactly what you're making. Yet. It's important to budget when you're in the military, but the government kind of does some of it for you. Whether or not they're paying you housing allowance, and you're just basically paying that forward on your rent, or they're taking it out or whatever. It's kind of managed somewhat for you. I don't know if I want to use word managed for you, but it kind of is just by the structure of it. And then you kind of get out and you're like, Oh, all right, it's, it's on me. I manage all this. I gotta set it up. I got to read about it and watch YouTube videos on and learn and figure it out. You know, it's just like going to the doctor and health insurance like, what do you do? Before? Yeah, call me call the medical?
Matthias Pope
Yeah, and no bill afterwards, right? You go there you get is like, Okay, what I'm getting a bill. Now, what's this about? What's an HSA? Right, what's a PPO? What are these types of health plans? How do they work? And how much is it going to cost me right, Dental? You're exactly right. health, dental, vision, those things. And that was a learning curve. For me, to be honest, getting out to understanding those fortunately, my wife is a nurse. So she gave me some education. But, you know, having someone who who can kind of provide context to those types of things for you can be helpful.
Keith McKeever
Yeah, and those can be difficult things to to navigate, if you don't have the assurance, to build and you're like, oh, like $4,000, for what? You know, just like, I just went to the emergency room for XYZ, I was in there for an hour and a half. And, you know, sure, they did some tests, but you know, 4000, you know, trying to prove which one I had even for the VA. I had been referred out to somewhere and I got the bill in the mail. And when I first first got the first one, I was reading it. And it turned out that, you know, he was only going to pay whatever, but I nothing out of pocket for me, right? But I started looking at and I see this big dollar sign dollar symbol, and I'm like, Whoa, that doesn't cost that much. Yeah, like, oh, man, like this would suck. If I had to pay that in a pocket. The first thought I did, and I was reading the fine print is like no member does not owe anything. Like I don't care how they're taking care of that on the back end. But I would not want to get stuck with that bill, because it was one of those appointments where I was like, I'm going to be seen at least four or five times, and devastating somebody's personal budget. If you're unprepared.
Matthias Pope
Yeah. And that's, that's one thing I didn't hit on before. And it's this is not specific to military or veterans by any means. But it's is is important for a lot of folks is, you know, avoiding bad debt. Right. So when I say bad debt, I'm talking high interest that, you know, mortgages are generally looked at as, as healthy, we're going to have car loans, for the most part, but we're looking for reasonable interest rates there. So kind of tying into that situation that we might find ourselves in, if we get if we get behind and we're reacting. Now. Maybe we use the credit card, right? To kind of play catch up. And now we're, we're sitting at 20% 20 to 24% interest rate, and it's really hard to get out in front of that. And and then you see it a lot to be honest. At least I do. And that's that's something that one we want to avoid. But if we haven't avoided it, you know, that's really a big thing that we want to tackle early on, to be honest. And another thing that right sometimes there's there's dealerships around bases and other folks who are willing to you know, is hey, here's a car and you sign this piece of paper and so that's something that can come up to and having someone just have eyes on it for you someone objectives, someone who wants to see the best for you. Also, also an important part of planning.
Keith McKeever
I was actually gonna bring up that 35% interest Mustang right off the base. It's so like, laughable but it happens frequently enough. I mean, I know when I was in ER B guys that 1819 years old, and here they are rolling to the gate and Camaro or dodge challenger or whatever. It's like, Dude, I know you make as an E three, like, how are you paying? It's like I don't get it. You know, they're probably not paying 35% interest, but it's probably pretty darn high. And it's just sad that I don't want to say that Now that it's predatory, I mean, if it was 35%, it probably would be pretty solidly in that category. But, you know, I guess if you're 18, or 19, and you don't really have credit, or you don't have a long history of credit, that does affect your, you know, your rates on borrowing just like it does on a home, but it's still pretty sad to see people making those kinds of decisions. Without credit works.
Matthias Pope
Yeah, I agree. I agree. It is, it is sad. And, and one other piece on that right if we, if we can, if we can, without getting too technical, but if we can get dollars inside of something, some of our dollars inside of something that's going to get compounding interest. And we can ride that compounding interest for a number of years. So that's a lot of our retirement accounts operating that way. The impact the the impact to those accounts, even just doing a little bit early on, can have a massive, massive impact relative to someone who maybe starts 510 years later. You know, playing catch up is very challenging to do, it's really hard to match the impact of that compounding interest happening in a in a retirement account, that's tax deferred. So you're getting that growth, that growth is getting reinvested in Uncle Sam is and taxing that every single year, over time, you can build a really large pile of money. So even if you can do a little bit, right, the best thing, one of the best things I say you have going for you at 1819 20 years old is you've got you know, 40 years plus of working, you got 40 years plus of having the opportunity to let some of your money work that long.
Keith McKeever
And it's amazing, if you look at some of the numbers, because I've seen charts, I know you have to, if you look at where, you know, investments have gone over a 2030 year period, it's it makes me wish I would have actually put some money away when I was 18. Or not spent money as a teenager on long alleys and snack foods and games, you know, money in money out when you're a teenager, you know, I've had this conversation with my kids, I'm like, if you just start, they'll spend the money on video game. You don't need the latest and greatest, you don't need all the bells and whistles with it. Just start saving some of that money, you know, is you're gonna wake up, you're gonna be like, Hey, how much money have I wasted in my entire life? I guess? I don't think you want to know. But I mean, have you thought about it for my kids? Like, gosh, you know, like, since they turned 18, like, I'm going to march them and you're going to set up a retirement account, like you're going to be prepared to launch at the earliest point versus to your mid to late 30s. setting something
Matthias Pope
up is hard, right? Yeah, very challenging.
Keith McKeever
So you gotta gotta get ahead of it. But, you know, eventually, we all want to retire. What can you you know, for those that would be listening that are close to retirement age. Any thoughts on pros and cons? What people need to look out for on retirement accounts as they're getting those age ranges?
Matthias Pope
Yeah. You know, when. So there's all all different types of retirement accounts. And some of them, they don't always have the easiest names, right? 401 k 403? B. 457. Right. Sounds like the names of the buildings that were on base, right? So much. And so you really have two big different types of plans. One One is the pension a lot of folks probably are familiar with that in the military, because we know if we do 20 years active duty, for example, then we're gonna get, you know, a paycheck for life. And so that's that's common, right? That's a pension. Another way of a defined benefit plan. So the benefit is defined by you know, a formula of number of years plus your paid pensions are fewer and far between than they were 10 2040 years ago, especially in the private sector at companies, those are generally going away. And so really, what you have in replacement of that is what will be called defined contribution plans. Or 401. KS is most common employer sponsored plan it's the same as tsp. Thrift Savings Plan in the military and so really what you're doing there is it's on the individual and and it's on the individual to make contributions to understand how the plan works. To make selections of fonder fun things that that align to your your long term goals. And so that can be a little, again, a little bit more challenging. And and. And if you're not taking those steps if you're not disciplined, right, I know some mornings it's hard, hard to get out of bed and go for a run and go PT and do these types of things. So so it's it's nice to be able to spend money right today and enjoy today, not knowing what tomorrow holds. But being able to carve some that out, understand how that works and build that nest egg is is important. There's other aspects of planning in their retirement accounts of pre tax dollars, post tax or Roth dollars. Some of us may have heard that, what are the pros and cons there? I won't go into that right now. But and then you have IRAs individual retirement accounts, which are things that you can set up on your own. I'm a, I'm a very big fan of Roth IRAs, I think they have a lot of benefits for folks. And, and sometimes just the names alone can be scary, right? And I think it's, you know, I see it as a charge of mine, and probably a lot of folks do is to take these things that seem complicated, I'm sure you do it in your craft, things that seem overwhelming are complicated and make them simple, right, make them easy to understand not not dumb it down, per se or oversimplify. But it's not, it's not rocket science. These things, you know, break them down into key elements that we can understand and then then help folks make the best decision possible. As you as you get older, I would say right.
Matthias Pope
In my opinion, planning gets more complex what what my planning looked like at 22, when I was single and in the military looked different than when I was 32, and had my first kid and was married. And it's different than 42. Now where I have three kids in a house. And as I head into retirement, right, so folks, maybe 10 years, about that timeframe, and retirement things or the decisions you make at that point are going to be really impactful to the second half of life, things can get a little bit more complex. Now we're talking about not just we spent our whole careers climbing the mountain, so to speak, putting money hopefully in these different buckets, putting it in the TSP, building up that pension, building our savings, etc. And then their strategies on distribution to how do we come down the mountain? You know, and a good example there is is to the max extent practical trying to avoid taking money out and the down market when the markets down which it is at the time that we're recording this relative to six, eight months ago. We want to avoid locking in those losses. That's an example of a distribution strategy. And do we have a buffer set up over here that allows us to do it. So it's not just building that pile of money and understanding the different buckets as I refer to them that we can put it in? And knowing how much do we do we need for that comfortable lifestyle for that second half of life, but also can get a bit more complex. If we're thinking about things now, like long term care, maybe legacy for our children. You know, we're trying to get our kids to college in a lot of instances, and making sure we have enough to live on for 30 or 40 years, potentially. And so I would say it's that time a life can be the decisions we make then can be very impactful. And in a lot of cases, we can't really reverse them. You know, once we kind of hit a certain age and get a certain distance from retirement.
Keith McKeever
Yeah, there's a few things I want to kind of hit on there that you get more years if you retire at 65. I think that life expectancy for men in this country is like 78, we'll just go with that number. could have just pulled an hour, I believe it's about 78. That's 13 years after retirement. That's life expectancy. Now, you know, some people fortunately passed away before that, but some people, I've got a friend who's who's almost 98 You know, he retired a long time ago. So you have to think about that. Now he lives on his own. But you know, nursing homes are going to could vary around the country, but I'm not here in the Midwest. It's gonna cost you probably at least $3,000 a month, at least to get in there. And if you need more advanced care, memory care, things like that, your your debt numbers, double and tripling depending on what those digital needs are. And you got yourself, your spouse, how the VA benefits play into that. How much you save when you need it for. Are you retiring at 65 or want to travel for five or 10 years before that inevitable age starts creeping up on you A lot of things we got to think of. And another thing that jumped in my mind is, is risk. You know, I've heard those conversations too, around those investments and more offensive side of things like how much risk do you want to take? Yeah, hold up a lot of money, you might not want to take a huge risk at 60. With your money. With 20, you have more time to recover, you have a lot more years to, if you put 10,000 in and it drops to 5000. Tomorrow, because of the market, you still have, you know, 2530 years to let that recover and grow even more. So everybody's gonna have a different strategy based on what your gut will let you. We've gotten your mind together, well, let's just, you know, handle.
Matthias Pope
Yeah, and, and one thing I would add to that is, you know, personally, I would consider myself pretty prudent and fiscally conservative when it comes to how I manage, manage, you know, my own dollars. And one of the things that I like to communicate, especially to young folks is, one of the benefits you have in these retirement accounts is time. So in the short term, the market is very unpredictable. It's hard, almost, you know, I'd say impossible to guess what's going to happen tomorrow. But in the long run, 510 years, we've got 100 years of data, it's very predictable in the long run, and what we can anticipate. And so the benefit that we have going for us, and that we can leverage in our youth is our youth in that in that timeline. And so all that to say, folks who maybe would consider themselves, you know, pretty prudent, maybe conservative, and don't want to take a big risk. And a lot of ways that, you know, the most prudent decision for say, you know, a 25 year old who's going to retire and 40 years at 65, is to keep those dollars in the retirement buckets, very diversified and very aggressive. Knowing that in the long run, the markets pretty predictable. And so that can be a risk actually is going to conservative, especially in some of these retirement accounts. And so that's something to look at, because folks who might not label themselves aggressive or very aggressive. You know, taking some factors into account, like timeline, might see, hey, you know what, I want 65 year old Mathias to wake up with a bigger pile of money. And there's maybe some ways to do that, that wouldn't seem natural or maybe self evident, just just upon first swag.
Keith McKeever
Absolutely. You might want to think if you're if you're young and conservative, you might want to think about those that I'm not trying to think of any specific stock or fund but you think about where we've been over the last 2030 years and technology, you know, technology is going to continue to, you know, what's that next wave, right? Is there a next social platform that comes out? Or a tech company, where it's like, geez, if the thought in the back your head, well, maybe this company or this industry is going to take off and go on to lead the future? Maybe it's a good place to be, in my opinion, maybe the place to be more or less consumer dog. When you look at everything in green and environmentally safe, and companies operating in that space? Well, you hear it all the time, everything's about going green electric cars, and hybrid cars, and solar is such a huge thing, right? So things like in that in that realm, you might want to think about, like, where's this going to be in 30 years? How many of these companies are going to come and grow and lead you know, in the beginning, nobody expected Microsoft and Apple to be as big as they are? Started in their garage. So yeah, you think about those things and you're young it take take take some Gamble's you might lose on some, they might hit on some who knows somebody hit on Facebook, somebody hit on Microsoft, you know, yeah.
Matthias Pope
Yeah, and I'm a big fan of diversifying to, you know, we don't know. So being able to leverage different asset classes, being able to deliver it leverage, you know, really, you know, different companies within these different asset classes and, and, and then leveraging the using the, the tax advantage of these retirement accounts, IRAs, 401, K's etc. In terms of you know, in a Roth IRA example or a Roth 401 K, you pay the tax today it grows tax deferred, and all that growth that you're gonna get over that time you don't have to pay tax on on that grows and it's really hard to find that and again, you know, it's probably sound like a broken record, but that's, that's that in the compounding interest inside of there is really how you're able to build these these nest eggs that can kind of take you from you know, 65 to 78 or 92 or 98. And outpace inflation. Right? So inflation has gotten a lot of discussion over the last year or so and, and, you know, a decent rule of thumb, they're not perfect, but is, you know, the cost of the cost of things doubles about every 20 years, give or take, right. So it depends on what the rate of inflation is. But things are more expensive tomorrow than they were yesterday. That's the general gist. And so So, so we've got to find a way to outpace it, in the long run with some of our dollars,
Keith McKeever
that's a good point. To speak to those that are young, living in the dormitories or the barracks. Take it from somebody who has two kids, and buys all the groceries. The price I pay for certain things in the grocery store, sometimes I sit there scratch my head, and like, how was this $4? And how was five years ago? Much less less, you know, loaf of bread, a gallon of milk, just as examples, you know, it's sometimes you just look at it like, wow, you know, I used to be able to feed, you know, go to the grocery store for 100 bucks. Now, it's 150, or 200, you know, for five, six days when it's it gets gets expensive. So that's the for the folks out there who aren't really buying too much of their groceries and they're eating at the chow hall or out in the field or whatever. So another reality, it's going to slap you right in the face. I hate to be that blow out it but it's it's going to slap and it's going to stay. If there is Yeah. But it does get worse over time. Yeah, not I wish I could put a positive spin on that. But that is what it is. So anyway, back to the insurance stuff you kind of hit on. Some people may be looking at so can you tell us what the difference between the basic differences are between a whole whole life policy and a term life? Policy?
Matthias Pope
Yeah, it's, it's a great question, I get it a lot at the basic differences, you know, so on the on the term life side, and the way I try to tee things up is there's there's really not a lot of right or wrongs, you know, its pros and cons. So lighting your money on fire, that that would be wrong, I would say that's not something we should do. But when it comes to a lot of the choices we can make, you know, there's, there's, there's pros and cons. And so I think it's important to illuminate those. So when we talk about term and whole life, there's pros and cons there. Term Life is you know, it's very, the pro very cheap, and so you can get a lot of it, especially if you're young and healthy. A lot of it for for very cheap. What do I mean by that? So let's say we do a death benefit analysis on on you, Keith. And we see you need, you know, $500,000 of life insurance, I'm just making it up, and you're, you're, you're young and you're healthy, you might be able to get something like that for $25 a month. So sometimes right off the bat, that's kind of surprising for younger folks. But it's also actually the cons, it's actually designed to not be there for most people when when you need it later in life, most of us aren't going to, to die before 30 That's, that's the truth. And so, depending right term, it's it's the name, it's, it's for a certain period. And so it's important because we want to protect our loved ones, God forbid if something should happen. If there is a premature death, and so we're able to get that in place. On the flip side, whole life or permanent life, the it's, it's, it requires greater cash flow, basically, because we know at some point, you're gonna die, the company knows you're gonna die. And although it requires greater cash flow, it's the most efficient way to get death benefit coverage. It builds a cash accumulation, safe dollars that can't go backwards in a whole life policy. And as folks get older, there's generally what I've seen a greater appreciation for safe dollars. These are also tax advantaged accounts. And so the money goes in after tax and they're tax advantaged. They're safe dollars generally off the market of the roller coaster, or excuse me off the roller coaster of the market. And they are more strategic in nature. You can you know, wake up later in life have a have a big pile of safe dollars, that you were able to grow much quicker than you would have They using a money market or other other instruments. Also, a lot of times you'll have a growing death benefit that goes along with that. And then you can leverage the cash value, you can leverage the growing death benefit. And you can actually even use the death benefit. And this might not be that important to younger folks. But as you get older, Advanced Care Benefit, meaning you can use that for long term care as well, which most people that I come across, you know, 50s 60s are thinking about and trying to find a way, an affordable way to be able to tackle that as well. So, you know, short version, there is term is cheap, right, for lack of a better word, you can get a lot of it. The drawback is, it's the least efficient way to cover to cover the death benefit need. Whole Life on the flip side is higher cash flow need, but but much more strategic in nature is there for until you die.
Keith McKeever
However, looking at it as one of my costs, you know, whole life might cost you 150 $200, something like that. And in term 1520 25, depending on what you need, all those factors. But would it be a Geralyn? A decent idea to layer those maybe to have one of one or both? That way? I think you can correct me if I'm wrong, I think you can have a term and like 10, year, fifth 1020 30 year, you know, so you could do something like that,
Matthias Pope
that that's actually something that's very common, it's a good question. And it's something that normally, where we might end up on the on the insurance side for folks. So generally, the cash flow for so generally, if you calculate the death benefit for, say, a parent, you know, let's say, I'm just making this up, again, a million, well, a million in whole life is it's going to be really challenging from a cash flow standpoint to make that work. But it doesn't change the fact that if something happens to you, your family is going to be in a bad spot. So what we generally try to do is say, alright, what is the whole life make sense to you? Do you like the attributes of it for a portion of these dollars? Right? Now? Let's do right, what maybe make sense is like 850 term, 150 hole. And a lot of the term policies to it, you know, at Northwestern Mutual, and other places, are convertible in nature, meaning that you're able to convert the term policy that you have at the rating that you received at that time. You can, you can convert portions of it to whole life without additional underwriting. So if you're healthy when you get it, right, that's, that's what I do. I've got a large policy. And as cash flow allows, I can convert some of my term to to Northwestern Mutual permanent, again, as cash flow allows. So it's a great option. It's something that is done a lot and something that I think makes a lot of sense.
Keith McKeever
Yeah, and it's life changes, right? You're in a different position in your life when you're 40 than when you're 30. You know, I haven't hit 40 yet, but I'm close enough to see the difference between 30 where I'm at now. So I can only about you know, the step between 40 5050 and 60. You need to for those who haven't been out very long back. You need to reevaluate your life situation every so many years. And it's not just financial, it's just everything. Where are you in life? Where do you want to go? What are your goals, financial and not? Because there's big differences over just a 10 year period of where you want to where you're at and where you want to go. So that's that's a really neat feature to be able to convert that if your life situation has changed in some way. And nothing you mentioned was people in their late 40s. And in their 50s looking at at that is probably I'm assuming a lot of them have already had their parents go into assisted living in nursing homes or pass away. They've been through that process, assisting their family. And that's when it's kind of Top of Mind of like, hey, I need to take care of myself for my kids and get that all set up. But it'd be pretty quick, correct assumption.
Matthias Pope
Yeah, yes. And it's, you know, sometimes challenging and part of the charge that I have is I'm blessed to get to see a lot of folks and a lot of different situations and try to take some of the learnings that I see with maybe some of my older clients and try to impart some of that wisdom that that that that that they've experienced, right with some younger folks now sometimes I'm successful at doing that, and sometimes I'm not so but but one thing I'd say too, and again, I'm biased because I build plans. But I would say that's the value of having a plan in place. And having it all located in one area is as life changes, your plan is going to change with it. And so that's why we get together, you know, yearly, or as life changes, and we do annual reviews, and we update it, you know, things that we thought might occur or hoped for maybe a couple years ago, life took us in a different direction, I'm sure all of us can think to 10 years ago version of ourselves, maybe I wouldn't have seen myself here. And and, and so making sure that, that that plan adapts with you. And normally what I say to folks is we're not only trying to build overall net worth, in irrelevant buckets, but we're also trying to increase optionality and decrease risk along the way. And so we want to basically knowing that, that things might change, knowing that there's a lot of things out there, we can't control, being able to build optionality into our plans, especially if it comes at little or no cost is definitely something that I think is an important part of that. And then leveraging that optionality later when things go a different route than we thought they may.
Keith McKeever
Awesome. Now you've, you've got plenty of nuggets, and great information, this, this, this is good for everybody here, not just veterans, but a lot of good nuggets of information there. For those who are watching it. I've got your website link, scrolling at the bottom, it'd be in the show notes, too, for those that are listening, so they don't have to freak out. It's all it's there. Like I always put it there. But any anything else to say about your individual practice? Or how you can help people or anything like that?
Matthias Pope
No, I appreciate that. I think it's I would say, I think just the value of a financial planner, and in total is, is is a value add. And so I, I think it's important to find someone that that you can build a good relationship with. I'd like the idea. Again, I'm biased, I like the way Northwestern Mutual does it, they give the planning away for free, that gives folks a chance to assess the individual that they're talking to and assess the value of the information and the value of the plan. With no risk, right? It's free, there's no risk. You can see hey, do I like this guy? Is Matthias annoying? Is he you know, got too many dad jokes in there? Is he great? Does he follow up? Is he trustworthy? Is he patient, the things that you're looking for? For someone, ideally, you're probably going to want them to be around a long time for you, you really want it to be a trusted adviser, I think someone that you can brainstorm with. And so being able to assess the relationship side and then assess the value of the information is something that at least in my opinion, the northwestern model, and maybe there's some other ones out there, lends itself to so you know, maybe less about me and my practice, but But you know, there's a lot of a lot of folks out there maybe maybe some of the reputation of advisors isn't isn't as bad. And I think there's a lot of good people out there trying to do a lot of good work. And if you can find the right person for you. I think you're going to probably be happy. One thing I'll throw out there, as we know from data that you know, 80 90% of people say nothing makes them happier, nothing makes them happier than knowing that their finances are in order, but only a small percentage around 15% actually have a plan in place that they're following. And so, you know, really, I'd see the planners job, I see my role is as trying to make a dent in that trying to give people that confidence that they're doing the right things, and realizing that, hey, I can spend today and enjoy today. Because I know I'm putting the dollars where they need to be for the future. So I know 65 year old Matthias is going to be happy. And I know that that I'm happy today and living the life I want in that type of confidence, that type of belief, knowing that you've kind of got that taken care of. You know, I would just encourage people to maybe rethink or reach out to someone who they think you know, might be a good partner.
Keith McKeever
Absolutely. It's always important to vet people and make sure that you kind of you connect you know, we've probably all done business with somebody or like why am I you know, why am I have a relationship with this person? You As you just don't get along, and this just happens sometimes, right? But you should, you should, you know, do all that and vet the person and make sure that you're comfortable with them for sure. But you said 15% of people actually have some sort of plan that doesn't surprise me. But it also blows my
Matthias Pope
mind. It's around there, you know. So the so yeah, the way it's still take a little bit of margin, but it's, it's, it's a, it's around that area. And it's, it's a minority of folks.
Keith McKeever
You got to play it because I can, I can say, from my perspective, as a realtor, I run into a lot of people with credit issues. Credit cards, bad purchases, high interest, just people I've talked to that have no budget, they have no idea where they're at financially, they have no goal no end in sight. That's, that's half the battle is no, where do you want to be, you know, if you're of a certain age or less social security may not be around, you know, we don't know what kind of what what the future is going to be be like, and know that 2025 years when retirement comes around for some of us, or even longer, so, plan what you can try and plan. You know, there's there's unknown, so don't don't don't try. And, you know, like you mentioned earlier, we know the investments have gone up, you can you get 100 years of data on that. We know what insurance can do and peace of mind that some of those other things, so do what you can, right? Yeah, I think it's a very important takeaway.
Matthias Pope
Yes, a personal note there, I I've managed my stuff my whole life, and I was confident with it in a way. There's a time in my life where I wouldn't necessarily think I would have needed or wanted help. And, and to be honest, and I understand it's my career choice. So maybe, maybe that plays into it. But I can honestly say there's, there's things I did along the way that, you know, I could have done better at. And if there's some things that I know today that I wish I'd known then and you know, if I could go back and tell 25 year old Matthias, maybe to tweak a couple things along the way. I think finding someone that I could trust and work with now might have put me in a little bit better spot than I than I am now. And so
Keith McKeever
I think we're all like that, I think, almost feels like we're a couple of really old guys sitting in a rocking chair saying can we tell you the old ways? Let me let me show you the way to success here. Are uphill both ways. And snowdrift snowstorm Exactly.
Matthias Pope
Hey, you know, the way school used to be I know,
Keith McKeever
right? It's supposedly, I don't know ever got there if they went uphill both ways. But anyway. So anyway, metallus, I appreciate you stopping by dropping tons of information. This is gonna be helpful for so many people in so many different ways. Once again, everybody if you want to reach out, kind of scroll in there in the show notes, but I do appreciate you hopping on the podcast and sharing with us.
Matthias Pope
Yeah, I appreciate the invite anytime and enjoy the combo. Thanks, Keith.
Keith McKeever
Yep, thank you. All right. There you go. Hope you enjoyed that conversation. Once again, all of his links be in the show notes. You can check out my website battle buddy podcast.net for all kinds of resources of information. As always, I always challenge people. If you find something on there, and it's not on there, you think it'd be great resource, please reach out to me and let me know what you think should be on there and we'll work towards making it happen. It's all about providing value, and the National Suicide Hotline number is now 988 press one or you can text 838255
