Welcome back to A-List Talks with Adam Armbruster.
I have an amazing guest today.
If you ever thought about retiring, he's your man.
His name is Tom Jacobs.
He is owner and founder and president
of Jacobs Financial Services in Michigan,
but he's a national name.
And you'll hear more about that later.
But if anybody listening to this
that's maybe thinking about retiring one day
or maybe one day very soon,
I've never met anyone that has a better take
on that incredible chapter in life than Tom Jacobs.
Welcome, Tom.
Hey, good morning, Adam.
Thanks for having me.
Tom, you often say that you've retired hundreds of times.
I have retired thousands of times.
And where that comes from is,
as folks are approaching retirement,
they've got all of these big heavy duty major decisions.
And it can be quite overwhelming and intimidating
one of the ways we try and comfort folks
is just let them know, hey, I have retired personally
with my clients thousands of times.
And because of that, the advice that we can offer you
surely is gonna pay great dividends.
Tom, when I read somewhere that people spend more time
planning a vacation than retirement,
is that cliche or is that true?
You know, I think that's true.
We get so busy and so distracted.
Retirement doesn't become important
until it's time to retire.
And people don't think about it oftentimes until that time.
And yeah, they're spending time doing other things
like planning vacations.
That's absolutely right.
So does it happen like this?
It gets to here we are end of the year.
And is it like a panic session?
Like, oh my gosh, I never thought of this, this, this,
and this, or is it methodical like they come in
and their people are organized?
How does that go?
Well, you know, it's across the board.
You've got all spectrums.
You know, I think probably 50% of Americans
are keeping up with their record keeping
and their deductions and doing things come tax time.
And I think maybe 50%, it's crash course.
Let's do it all at the end when we have to.
But preparing for retirement
isn't like preparing your annual tax return.
Preparing for retirement is a process.
And there's lots of moving parts.
And it's not a one and done situation.
And I would just encourage people to find an advisor
that you can have a really great relationship with
because it's an ongoing fluid relationship
that you need to have if you want to win
just because life changes so much.
What's, if someone finds an advisor in their city
or the country, I mean, this is going worldwide here.
What's the first question they should be asking the advisor?
Well, you know, different things are important
to different people.
I think reputation is important.
I think experience is important.
I think credibility is important.
So depending on what's important to that client
is gonna direct their questions.
But let's just talk about something
that's even more important.
And that's the mindset.
You know, my clients are not folks in their 20s,
in their 30s, in their 40s.
My folks are people that are close to approaching retirement
or perhaps are already retired.
And our business is built on folks
that are 55 to 70 years old.
They are not in the accumulation phase of life anymore.
In other words, in your 20s, 30s and 40s,
the most important thing is rate of return, best investment,
you know, growing your portfolio.
But there comes a time,
and that time is different for everybody
when that is no longer the priority.
And now the priority is, hey, I've worked hard,
I've accumulated some wealth,
I need to preserve this wealth and protect it.
And more importantly, how am I gonna use these dollars
to create unlimited or income
that will last for the rest of my life?
Cause you know this, Adam,
I know that the number one concern of folks 65 and older
is have I saved enough money?
And am I gonna have enough money to get to the finish line?
So we try and solve that number one problem first and foremost.
My family and I had to finally find senior housing
for my mom because of some health issues.
And it's 7,000 a month, Tom.
It's crazy.
Not a year.
Do most people understand what senior care
is gonna cost themselves in retirement or cost their family?
Not until they need it.
It's one of those things
that people just don't like to think about.
They procrastinate just like with tax preparation
and tax strategy.
I mean, people oftentimes don't know they have a problem
until the problem is already there.
And you know, perfect examples.
So many people in this country are saving their retirement money
in their company retirement plan, the 401k, tax deferred.
And you can build marvelous accounts
and you know, there's great opportunities
to get employer matches and all kinds of things
to help accumulate and grow that bucket.
But the number one problem is people don't understand
when we start taking money out of that bucket,
we gotta pay tax on that.
And people have done a great job building and accumulating,
building that nest egg, but what they have also built
and might not realize it
is they have built a massive, massive tax bomb.
So we try and get ahead of that and let people know,
hey, there's other places to be saving
that might make a heck of a lot more sense
like Roth IRAs and life insurance contracts.
There's places we can put our money
and then go grab it later
and not have to pay any federal tax.
And I encourage people to think about
how much more money would you have in your pocket to spend
if you didn't have to pay any federal taxes?
Would that be significant?
And for most people, it would be very significant.
So what are you doing about it?
Nothing.
Well, let's fix that problem.
So yeah, that would definitely surpass an 8% gain
in the stock market every year
when you're lopping off fed taxes,
which are usually above 8% if I'm not mistaken.
It can be way above 8%.
So yeah, just depends on how much money you make.
Interesting point.
So suddenly conserving the wealth,
Trump's any gain by kind of riding the horse
a little longer on a boom stock market run,
which could change in a minute, right?
Well, the biggest challenge is,
we as a country have been on the most unbelievable bull run
ever in the history of mankind.
As we're talking today, the market is at all time.
I mean, never been this high in the history of mankind.
And people are chasing the market.
They don't wanna miss it.
They're greedy.
They don't wanna miss it
cause their buddy's making all kinds of money
on Enron and Tesla and Apple.
The people that win in this business are proactive
and you have to do things proactively.
I believe in gravity.
What goes up must come down.
We know the market's gonna come down.
We don't know when, we don't know how significant,
but it is going to happen.
So I would say, look, if you're 64
and the plan is to retire at 66,
what if between 64 and 66,
something bad happens in the market
and it goes down 10, 20, 30, 40, 50%.
First of all, is that possible?
Absolutely it's possible.
I'm 64, I get to 66, my target retirement date,
I'm down 35%.
Now I've gotta decide,
am I gonna hang it up now with 35% less dough
or do I have to keep grinding a little bit longer
to make up for what I lost?
And I would argue that both of those options are horrible.
Let me take that decision off the table for you.
Let's take the money that you've accumulated right now
and let's put it in a safe spot
where it's totally protected from any market up and downs.
If the market's going well,
you're gonna enjoy some gains,
but if the market doesn't,
you just simply never lose your principle.
And we can use that type of an account
to create a guaranteed income
that'll last the rest of your life.
That's what we do,
we sell insurance-based products.
I don't believe in securities for my clients,
I don't believe in stocks, bonds, mutual funds.
If my clients were 20, 30, 40 all day, all the time.
But there comes a day when you have to switch
and that is so hard for people
because their whole life has been about growth,
accumulation rate of return,
the best place to invest my money.
And people have a hard time flipping that switch.
And that's why we're gonna see complete carnage
when this market crashes.
I mean, it's gonna make 2008 look like a picnic
compared to what I believe is about to happen.
You know, you just explained in like three minutes,
probably one of the most confusing topics to Americans.
I mean, not everybody's a millionaire, Tom.
Some people have worked their butts off for 40, 50, 60 years
and they have 300 grand, 500 grand, a million maybe.
And you can't really afford a haircut
if senior housing's 10, 7, 10 grand a month.
So the first smart move you're saying is
to kind of organize for retirement
and lop off the issue of taxes on your distributions, correct?
Number one thing is where is your money?
Let's put that money in a safe spot.
Number two, what's your tax strategy?
So when we start using the money,
we do it in the most tax efficient way possible.
And you just need to have a,
you need to have guaranteed sources of income.
So everyone's got one guaranteed source of income
and that's called social security.
Some people have a second guaranteed source
and that might be a pension.
Some people own fixed indexed annuities
or annuity products that provide guaranteed income.
All of the research shows that people
that have multiple sources of guaranteed income
live longer, have less stress, have better relationships
and are more freely able to spend their money.
So my whole philosophy is,
hey, I want my clients spending their money right now today
while they're healthy, while they're mobile,
while they can enjoy it,
while they can watch their family enjoy it,
while they can enjoy it with their family.
I did something recently on a television segment.
I took out 10 raffle tickets, you know?
So 10 raffle tickets, they're all hooked together.
So each one of those 10 raffle tickets,
let's say represents a decade, 10 years of your life.
So I'm 56 years old.
So I've got my 10 raffle tickets.
Well, I've got to take the first five and a half raffle,
I had to cut those off the thing and put those aside.
My life expectancy is 78 years old.
I'm probably not the most healthy guy in the world.
So let's say it's 75.
So I got to take two and a half raffle tickets off the back.
I'm left with this little teeny short string
of raffle tickets.
Well, that's what's left for me.
And whatever your numbers are, that's what's left for you.
And my job is to help you maximize your enjoyment,
maximize your income, minimize your risk
during what you have left so that you can freely enjoy it.
Yeah, I'm trying to speak for all Americans
or maybe even all people.
We're not trained in that Tom,
we're trained in more is better, earn, earn, earn,
save, save, save, invest, invest,
build the nut, build the nut, build the nut.
But nobody tells us what to do
when it's time to stop working.
Here we are, this is being recorded late in the year.
You got a lot of people, Tom,
that retire year-end calendar, is that true?
Absolutely, absolutely.
Let me put it in perspective to you.
Have you been to Las Vegas?
Yes, sir.
Here's what I observe personally.
If I'm gonna go walk into a casino in Las Vegas,
here's what I know before I walk in.
The longer I stay there, the less likely it is
I'm gonna walk out of there with my money.
And I go there and I watch guys
and they're on this great run
and they got this huge pile of chips in front of them.
And I just think to myself, man,
take the chips off the table,
because that's not real money right now,
that's just chips on a table.
Until you take that money off the table,
over to the cage and turn it into money,
it's just hocus pocus.
Your 401K, the balance that you see on your statement,
that's not real money.
That's a number on a statement that is 100% meaningless.
That is not real until you take it out of your 401K,
put it in a spot where you cannot lose it.
That's the concept that people need to understand.
The longer you stay, the higher the probability
we're gonna see a correction
and you're gonna lose some money
and at your stage of the game,
you might not have time to get it back.
Tom, you're kind of a name in the business.
You've been ranked number one in the country
on serving clients with insurance product,
protecting money, et cetera.
You have quite a reputation.
You're a humble guy, you know, you're not gonna bring it up,
but I've seen the trophy and the award.
Why do you think you're so kind of sought out
in your, frankly, your state, across your state?
Why are you so sought out?
There's probably a thousand guys
that could do what you do.
Why you?
Well, number one, we're very bold.
We're very aggressive marketers
and we tell people the truth,
whether they wanna hear it or not.
So many people, you know, have heard the same story
over and over and over and over
and the story they're hearing is not the truth.
So once we can break them down and explain the truth
and how money works and the risk that they're taking
that they shouldn't be,
I think people resonate towards the truth.
I think the truth always wins.
And sometimes it's hard to combat
all of the misinformation that's out there
because I mean, I'm fighting the greatest money machine
on planet earth, which is Wall Street.
You know, you talk about David and Goliath.
This is David and Goliath times 10.
So we're just very bold.
We're very aggressive.
We tell people the truth
and a lot of people resonate with that message
and they're attracted to us and they wanna learn more.
I know you're good to your clients.
I see in social media, you know,
you just had Thanksgiving pie week.
It's not pie day.
It's like pie week.
You have so many clients
and you do like barbecues and picnics.
I just see a lot of smile in faces.
What, what do these people say about retirement, Tom?
I mean, obviously you're working with them
and you're helping them, but more on a personal note,
like what do they say?
What, I mean, this is a big chapter of your life.
This should be your great reward, right?
You bust your butt for your whole life.
You finally can take it easy and have some fun.
But what do they say to you about,
what's it like to be retired?
You know, we try and encourage clients, you know,
we tell them that first 12 months
is gonna be a really big adjustment for you.
And it goes fast for some and slow for others,
but retirement looks vastly different for every family.
And a lot of our families, retirement is,
hey, Tom, we just wanna be comfortable.
We wanna stay here local with our family, our grandchildren.
And then we have the complete other spectrum,
you know, the second they retire, they're out of here.
I've got five families right now
that are on one year long cruises.
We've got people traveling the world, buying second homes.
But it's so vast.
And our planning process starts with,
what does retirement look like for you?
And let's build a plan to help you, you know,
enjoy every second of your retirement.
Tom, it's year end and you're right in the throes
of something that people may have heard of by now
called Retire-Thon.
And it sounds to me like you're reaching out
to the public saying, now's the time.
And that's what I take from that theme.
Is that what that means?
It's exactly what it means.
You know, we're just trying to do something
to put retirement planning in the top of people's mind.
So we are promoting Retire-Thon 2024.
You wanna help as many families as possible
be positioned to retire,
whether that's you're physically retiring
at the end of this year or you're thinking about it.
We wanna get that planning done.
And I know if I can take that off the table,
I can get that out of your brain.
And it's one less thing that you have to think about.
You're gonna enjoy these holidays a heck of a lot more.
You're gonna go into 2025 with a plan.
People that plan win.
People that don't, if you,
let's talk about an income plan.
If I could put together a plan for you and show you
where your paycheck's gonna come from once you retire.
And it's the most tax-advantaged plan that you've ever seen.
And you know for sure that once you retire,
you're gonna have four paychecks every month
for the rest of your life, guaranteed, can never go down.
You're gonna have a hell of a good 2025.
Cause you don't have to worry.
You're sleeping.
You know where your income's coming from in retirement.
I think it's really, really important.
I don't think people realize what happens
once they've done that.
It's like the weight of the world.
But people don't realize it until they've done it.
I think you touched on that national statistic earlier
about 50, I think it was 59% of Americans.
It's our biggest worry is running out of money.
And it's legitimate.
I mean, my brothers and I got hit with that senior housing
quote of $84,000 a year.
And then looked at my mom's estate saying,
okay, first thing we did, Thomas,
think how many years we got out of this.
And that's just senior housing, man.
I just went through this with my dad who had Alzheimer's,
an eight year battle.
So you start adding memory care and skilled nursing
and all of the medical component on top of food and lodging.
You're easy 15, 20, $25,000 a month
depending on what's going on.
And most people don't have that type of insurance
or the assets to carry that long-term.
So you've got one topic that,
it's not a fun thing to think about, but it's reality.
I mean, if you're lucky enough to be alive
in 70 and 80s or 90s, with that gift comes a price tag.
And I don't think people like to think about it.
I don't, but it's real.
And to get caught, you're right.
Get caught with your pants down
and the market drops 30% and now you're like, okay, now what?
Now I need to draw money out and the money's down 30%.
That's like drawing out three times.
Same concept with required minimum distributions.
You know, when you have these tax deferred
retirement accounts, your IRAs and 401Ks,
whether you want it, whether you need it,
at some point, age 73,
you are required to take money out of your account.
Well, what if that account is just doing miserably,
but you're required to take money out of a position
that's down 40%, making it go down even further,
making your recovery that much harder.
I tell people, well, what if we took that required distribution
out of an account that will never go down?
In years when the market's doing well,
you take your distributions from the gains,
but in years the market's doing crummy,
you just take it out of your account
and it will never go down.
Does that make sense?
Well, hell yeah, it makes a lot of sense,
but people don't think about this stuff.
There's ways that you can use your RMDs
to pay to charitable organizations and do things
where you pay zero tax on that money.
So again, people that proactively plan,
they seek out professionals,
they're the ones that win in retirement.
I remember you mentioning either a book you wrote
or an interview about your parents
and you saw firsthand people getting caught at the wrong time.
Can you just talk about that,
about your parents and what happened there?
So my mom and dad retired late 2007.
When my mom and dad retired,
they were the most excited couple I have ever seen.
They had the retirement mapped out,
they knew exactly what they wanted to do,
the trips and the travel and the grandkids,
and the day the retirement was real for them,
they are out the door, they are having a blast.
I mean, just having more fun than you can imagine.
Market takes a big hit early 2008,
my parents, they pull back their horns, oh my gosh,
what happened?
Market comes back a little bit,
and then they're back out having their fun doing their thing,
then the market takes another big hit.
Now I'm involved,
because I noticed my parents are turning into different people,
they're nervous, they're scared, they're anxious,
they're not my mom and dad.
So I step in, I'm not in the business that I'm in today.
Hey mom, what's going on?
How can I help?
And come to find out,
my dad's money's with a major brokerage firm,
my mom's is with a different brokerage firm,
a guy from church,
I go and meet with these guys
and they're trying to comfort me, telling me,
look, don't worry about your folks,
everybody loses money sometimes.
It's just a paper loss, market's gonna come back,
fees that we're charging, that's just normal,
that's customary.
Well, here's the story, that is 100% bullshit.
It is 100% bullshit.
Everyone doesn't lose money sometimes.
I've got 2,164 clients and not one of them
has ever lost $1 when the market goes down.
Paying fees is optional,
you never have to pay fees the rest of your life,
you just need to know, where can I put my money
that is not subject to a fee structure?
The market will come back, it will,
did for my parents, but it took eight years
and during the eight years, my dad got sick
and my mom's my dad's caregiver,
their quality of life is worse
than anything I could possibly describe to you.
They got all the money back, who cares?
Had my mom and dad been to one of my events 15 years ago
and heard the message that we share with people,
they would have jumped all over this in a heartbeat.
And that's why I feel like we're kind of the pied piper
of what we do and we're very bold in our messaging,
very aggressive, because we tell a different story
and it's called the truth and people need to hear it.
Don't chase the market, don't pay more fees to your broker,
your broker's never gonna tell you to get out,
he's just gonna shuffle the deck,
because they get paid whether your account's going up
or your account's going down, but they don't get paid
if they don't have your money.
So they're never gonna say take your money out,
they're gonna say let's just shuffle it up
into different spots where you can lose money.
And I'd say let's get at the heck out of there
and put it in a spot where it's safe.
Tom, you mentioned honesty and I find knowing you,
you're very generous, you give away free books,
you do free seminars, free dinners,
free television interviews, you can watch on your website.
You push all this for free, you put so much passion
and frankly, I'm sure it costs you a lot of money to do this.
Why so generous?
Why are you willing to just have these conversations
for free with people?
They're not even hiring you yet,
I mean, they can choose to not do that,
but why so much of that Tom?
That's a lot.
Well, when I got in this business,
this was a job and a career.
That's not the case today.
Today, this is a passion, this is a mission.
We're on a mission right now
because it's just so darn important
and so few people are banging the gong like we are.
You know, one of the biggest regrets in my life
when I was growing up or when my children were growing up,
I wasn't there.
I was out doing seminars and working it
and I justified that in my own mind by saying,
hey, the time I do spend with my kids, it's quality time.
And that was the lie I was feeding to myself that,
hey, it's okay that you're not there to tuck your kids in
and you're not there to make breakfast
and you're not there to take them to school
because you get to take them to Hawaii for 12 days a year.
And looking back, my kids would have so much rather
had their dad there daily engaged,
loving on them as opposed to that one 12 day trip.
I can never get that time back with my kids.
Don't get me wrong.
I have a great relationship with my children.
That's the biggest regret in my life.
So my second chance is with my grandkids,
with my team and with my clients.
And that's why we're so damn passionate
because we want people to enjoy today
because tomorrow is not given.
The market returns are not given.
I like certainties, I like guarantees and I like to win.
Wow, I think we just all learned a lot about retirement
and we're all gonna do it.
Hopefully we're all fortunate to retire at some point.
I think about that time when I go to a Walmart
or supermarket and I'll see a greeter
and they're clearly in their 70s, early 80s,
standing up there all day.
I can't imagine that's for fun.
I think they need the money.
And I always think to myself,
I wonder what they did right
or maybe what they didn't do right
that they've got to work at these years
when they shouldn't be hanging out with the grandkids
and having a good time, right?
So I think there's a reward and a penalty
for decisions people are making
as they approach retirement.
But I really appreciate chance to speak with you today.
Folks, you just heard a crash course retirement
from the man who's retired thousands and times,
Tom Jacobs, Jacobs Financial, he's in Michigan.
Jacobs Financial Services,
you can find him real easy online.
He's a great communicator, one of a kind.
You'll never meet somebody like Tom, everybody.
Tom, thanks for joining me on A-List Talks.
Really a privilege to have you today.
Thank you so much, Adam.
And for anybody retiring, it's Retirethon.
Take a look at, get his free book, watch his videos.
He's the Wikipedia of retirement, in my opinion.
Thanks again, makes you be with you.
Thank you, have a great day.