Disclaimer: This transcript has not been edited for grammar, spelling, or punctuation.
Nicole Wipp: Welcome to the smart planning 101 podcast episode 22. I'm Nicole Wipp and I'm your host.
Hello, smart planners. Welcome back to the smart planning 101 podcast. Today I bring Kim Butler and I brought Kim along to talk about retirement planning and saving your money for the future. I brought her because she really is not your typical financial planner.
She has some notions that may be considered to be controversial by some people. But to be honest with you, and I talk about this a little bit in the podcast interview. I've seen the truth of these in practice with clients. And so that was actually what made me ask her to come on. She is the founder of partners for prosperity, which is a federally registered investment advisory firm.
And she works with clients in all 50 states. She has a leader in the prosperity economics movement and also the best-selling author of live your life insurance and busting the financial planning lies. And she has a new book out, which we will be talking about today. One of the core principles that Kim discusses is just basically that financial planning does not work and that conventional wisdom related to financial planning.
Something we've been sold sort of a bill of goods about it that we are making assumptions that are going to lead to bad decision making into the future. And if you know anything about smart planning, 1 0 1, that's really something. I have been, trying to discuss is how some of the ideas that we are being told or, that you just sort of grew up believing or, people repeat over and over again, just how these are things that are just not good advice and they're not good ways to plan your life.
And so really that's what this whole interview is about. And I'm really. Happy to bring to you today. Kim Butler, the founder of partners for prosperity. Thank you for listening.
Hello, Kim Butler. Welcome to the smart planning 101 podcast. Thank you so much for joining me today.
Kim Butler: Oh, you're welcome. Nicole. It's always a joy to just be able to chat with somebody who is of a similar thought.
Nicole Wipp: Yes. And I think that this is a very exciting conversation for me because I told you this before we got started today, but I'm also going to tell the listeners that I experience a lot of the things that you discuss in your books and in your other published materials, I experienced them as an elder law attorney a lot because I'm dealing with clients financials and I'm dealing with the repercussions of decisions that they made based on conventional wisdom. And unfortunately, as you and I both know those decisions can become very poor decisions, unfortunately later on in life depending on what our goals are. And it really was exciting to me to come across the person that's in the financial planning industry that really gets it and actually speaks to that because people think you're crazy when you talk about these things sometimes because they hear so much about the quote-unquote conventional wisdom, wouldn't you agree?
Kim Butler: Absolutely. It is amazing how much the media, in particular, I find impacts our lives. And we may think, oh, I don't pay attention to the news or, oh, I don't really listen to them, but the media presents conventional thought and then everybody just parrots it and repeats it and sometimes people don't take the time to think wait a minute here, this idea, let's take a typical one, retirement.
This idea of I'm going to work for 30 years and save a bunch of money and then I'm going to live for 40 or 50 more years and spend what I saved. If you just present it that way, people will go. I don't think that's going to work. And the same I'm sure is true of your work with the elder law, because again, the media and the people that make the laws are, I think sometimes along the same thought and those of us that actually have to live with the common plot go no, this cannot work. So it's a joy to be able to try to get people to think a little bit differently because there are solutions.
Nicole Wipp: Absolutely. And that's why it's really great to have you on because I just wanted the audience to know. So I came across Kim Butler because I'm a member of a group called strategic coach I am a participant in strategic coach, which is a coaching group for entrepreneurs. And Kim happens to be one of the coaches at strategic coach. And when I was in Toronto for one of my training sessions, I came [00:05:00] across this book that she had written called busting the financial planning lies, and the title alone made me stop because I had come across so many financial planning lies already in my practice.
And I said, oh, I have to buy this book. And so I bought it and. It was just this amazing revelation to me, reading it because I was like yes. All I see this, I know this is true. She's this woman is speaking my language and then there's one, just a little paragraph that I want to read and she can write in here.
Who comes up with conventional wisdom, you know, the stuff that begins with they say, or everybody knows followed by some general statement, is it one person or is there a committee? And does anyone ever check what they say to see if it's accurate? And I just was like, oh my gosh, that's so true because.
It's we hear these things and it's parroted so much that everybody just accepts it as truth. And yet it really isn't the truth. And so I found out that you came up with this new book busting the retirement lies, and I said, okay, I got to reach out to Kim, ask her to be on the smart planning 101 podcast.
And you've already gone there a little bit. Why don't you just, before we get really into it, tell us a little bit about you and where, you know, whatever you want the listeners to know about?
Kim Butler: Sure. I started my profession right out of college, in banking, and what's known as the financial services industry. And I got a certified financial planner designation, the CFP, and I practiced what I would call typical financial planning for about eight years. And it was okay. I loved it. I actually had a great practice. And yet I knew that everything that I was doing was wrong and every time I handed a financial plan to somebody, I would get concerned because I knew the information that I was giving them was all predicated on a whole bunch of assumptions, printed out on a piece of paper.
You know, this was before the web existed and the document wasn't worth the paper, it was printed on let's list, all the beautiful color ink. And so over time I just shifted. The way that I was communicating with clients and my work since then the last 20 years has been helping people understand that typical financial planning is flawed and affected and ineffective because it is based on a whole bunch of assumptions, tax rates, interest rates, how long we're going to live, what age we think we're going to retire.
That's the dumbest question in the whole wide world. What age do you want to retire? Nobody has a clue. And so you fast forward to today when we have the web and you can get on any website that deals with finances and pop in information, and it'll spit back out all kinds of things to you, but they are false pieces of mind and that's worse than wrong information.
If the information is mathematically correct, but it is wrong information. So I love strategic coach. I've been attending myself almost 20 years and it enables me to have the guts to put myself out there. As what I now call a prosperity economics advisor. I dropped my certified financial planner designation because I absolutely disagree with what they're promoting.
And instead with my own clients who happen to be in all 50 states, I work strictly over the phone and the web. Which is pretty funny considering the challenges we just had with Skype we're able to help people stop financial planning and instead, really make their money work for them in the way that it's supposed to.
Nicole Wipp: And that is just amazing. I wanted to, I sort of picked out three topics from your new book that I wanted to go over with the audience. And I was thinking, first of all, to talk about this idea of why the idea of retirement is fundamentally flawed and then move into the whole truth about 401ks and while you, why you keep less than you think.
And then the third one is how financial planners skew. Projections creating false expectations. And this is probably a lot for the short amount of time that we have. But Kim, I'm going to ask you to give it your best shot.
Kim Butler: Happy to, and the three things are all interrelated, so it makes so much sense to talk about them.
So let's just jump in and I'll try to pause every now and then Nicole if you have something that you want to add or make sure that. Making clear what I'm saying, but when we start with the title of the book, busting the retirement lies, there's two retirement lies. There's numerous, but two that I'm going to talk about it around the flaw of retirement.
One is the whole idea of retirement, which I've already brought up. You can't save money for 30 years and then live off of it for 40 years. This is not going to work for most people. Arguably there's [00:10:00] the upper 1% of our society, but I doubt that's who we're talking to today. But the second one is that the typical retirement plan.
So I'm really addressing one end too, for you here is the 401k arena. And as most people know, those have not existed forever. It's been something in the last 20, 30 years, and the 401k was designed to shift the responsibility from the employer. To the employee and yet the employee, most typical employees are completely unprepared to deal with it.
That responsibility being. To save and invest the money. Now save is get the money in there when we save money. That's what we do. We put money in a place that we expect it to be there down the road. And then when we invest that money, that's when we try to take the money and grow it. And a typical person may have the saving ability.
If they're well-disciplined or if they just opt into their 401k, but they're typically not prepared to invest it. They do try to do some studies on their own. They try to get skilled at the investment arena, but frankly, most of us don't. And so how many of us and I'm in my late forties had our 401k accounts cut in half in the 2008 stock market. And that was a disastrous for many people. Are we on the right track so far?
Nicole Wipp: Absolutely. And I just want to clarify one thing when we're talking about 401ks, we are basically though talking about all tax-deferred assets, such as IRAs as well. Correct?
Kim Butler: Yes, thank you for indicating that 4 0 3 B even a pension or a profit-sharing plan and money purchase plan. We could even throw the Roth IRA into the discussion. Now, Roth IRA clearly is different tax law than regular IRA and 401k, but the fact is it is still a governmental program that shifts the retired. Responsibility, if you will, from the employer to the employee and walks our money up until we're 59 and a half.
And this is not a good thing. When you're 30 years old for you to lock money. So that you cannot use it for the next 30 years is old-style thinking it may have worked when tax rates were high and we expected to retire in a lower tax bracket. So again, 401ks and IRAs now not Roth IRAs. That the 401k and IRA environment could have worked then, but now it's the other way around.
We're looking at the next tax bracket environment, being a rising tax bracket, not a decreasing one. And I really think it was fundamentally flawed, to begin with. Who wants to be in a lower tax bracket, being in a lower tax bracket means less income. I know it sounds good, lower taxes, but when we really think about it, it's not never mind.
That's not going to be the case anymore. Right now, people that are contributing to 401k. Are taking a deduction today and potentially going to be taking that money out down the road at a higher tax bracket, unless we have a major governmental change around the debt in our country. So here we have this environment that we're setting ourselves up for. We're locking our money up and then we're going to pull it out down the road at a higher tax bracket that doesn't make any sense.
Nicole Wipp: No, it really doesn't. And this is actually this concept of planning to be poor, which is something that you address but then also taking it out at a higher tax bracket. I do see that every day.
I see that with clients that clearly are in the same, if not higher tax bracket at retirement than they were during their working years. And or if there is a healthcare crisis, which is something that I deal with on a regular basis, now we are pulling the money out at the highest tax bracket, no matter what, because we have to pull so much out to deal with the healthcare cost.
Kim Butler: And potentially we're paying a penalty because the individual that has the 401k, maybe under 59 and a half, maybe the healthcare crisis is with themselves. Maybe it's with a parent, but regardless, you've got a 10% penalty on top of the taxes because you locked the money up and we put forth seven principles of prosperity, which I won't try to get into today.
They're available on our website. And one of the principles of prosperity is to keep control of your money. When you put money in a 401k plan, you're giving up control. So not only are you giving up control, you're putting yourself potentially in a higher tax bracket, especially if you have to take big amounts out.
And then on top of that, when you look at the fees that are structured inside of 401k, not only [00:15:00] 401k fees and again, 403 B IRA, et cetera. Also the managed money environment. The whole mutual fund environment. Now I'm a financial planner, but I don't handle manage money. And there's a reason I don't.
And it's because the fees are ridiculous. They're insane. Way, way too high for the value that is put forth. I got out of the entire stock market environment in the year, 2000. For the same reasons that I got a financial planning, I just couldn't continue to stomach it. And I'm not saying that advisors and brokers that handle mutual funds are bad, but the fact is the fees are not commensurate with the value that's provided.
So you've got a person putting money in the 401k bad tax law with unbelievable fees, and they're supposed to create wealth in this box. There's no way that can happen.
Nicole Wipp: Right. And I know from experience that people really have no clue what they're paying and that they are being misled about the true costs of those investments.
Kim Butler: That's correct. So when you take into consideration the cost of the investment, the tax law, and inflation, because now we're talking a decent period of time, 20, 30 years, the 401k. Will barely return to the individual, the money that they put in. And I prove this out in my busting retirement life book, by painstakingly walking people through the book, pictures of a software called truth concepts that tells the whole truth of the 401k.
And the fees and the taxes and the inflation, and just points out in as black and white as I can make it how ineffective the 401k is as a savings vehicle and as an investment vehicle, it is ineffective in both parts.
Nicole Wipp: So for those engineers out there, you have it out in black and white for them. Correct.
Kim Butler: Yep. Usually the miracle behind the story.
Nicole Wipp: Which exactly, because you know, anybody can talk the talk, you can talk all day, but if you know, you're saying that in your book, you're showing exactly how the numbers show that what you're saying is correct.
Kim Butler: Right. And the software that I use is available to anybody. It's not some proprietary software. Anybody can go on truthconcepts.com, get the software for free for 10 days, and plug in their own numbers on their own 401k plan.
Nicole Wipp: Wow. That is great. So definitely visit truthconcepts.com and put your numbers in there and see what if, what Kim's saying to you and see how it's true because Like I said, you know, the thing is that the biggest fear that people have, I think is outliving their money.
Kim Butler: Definitely. And so we are trying to save we as a society, I think are finally getting the message that we've got to save, but now we're saving in a place where we're going to lose it and it's sad. It cannot keep happening.
Nicole Wipp: So you just talked about you know, you show this in black and white. I know that somebody would sit in front of me in my office and say but this is what my financial planner did for me.
They showed me this, and this is what they're showing me. And they're telling me, and I've seen in black and white that my numbers are this annuity that I purchased. I'm going to get, you know, I'm going to make a hundred thousand dollars on it, even though I only put 200 in or something crazy. How does that play into this conversation?
Kim Butler: That's the third point that you want to cover today and we're doing great in terms of, I think getting the message out there, and that is that financial planning uses messed up projections and there's really no. Other word for it. And the reason that they're messed up is they're all based on assumptions.
So what you have happened, and it doesn't matter if you're on a website doing this, or with a person using a computer program, you ask all of these assumptive questions, like what is, you're going to retire? What age you're going to die, how much you think you can earn in terms of an interest rate, what you think inflation.
What do you think your tax rates are going to be? There's five specific assumptions that I just gave right there that are all available for incorrect thinking. So the math might be correct, but the thinking is incorrect. And because the thinking is incorrect, it means that this computer program is going to spit out an answer.
That again is mathematically correct, but because the assumptions are flawed, things like inflation, we have no idea what that's going to be. Interest rates. Age retirement. No idea. So we put these assumptions in there and we all know the little saying of what happens when you assume things and you spelled a little assume word out [00:20:00] and you understand that there is some major problems there.
Those assumptions are then leading to this document that says, if all these things happen, then this will happen. But the problem is we have too many ifs and those ifs can be wildly skewed. Take inflation as an example, anybody's going to say, oh, inflation right now, about 4%. Well, healthcare is not inflating at 4%.
It's going up in the double digits education. Isn't at 4% and people's lifestyles, somebody that lives in the woods of Alabama in a little cabin there, they have a completely different inflation than somebody that lives in New York City and is going out to dinner every other night. So all of these things predict really something that's nothing other than a false sense of peace of mind. We may have a piece of paper that says if this, then that, but if all the ifs are wrong, Then that is also wrong.
Nicole Wipp: And an example of what you just said that I'd like to give the listeners is the low cost of long-term care in my area is projected by the US government to increase by 88% over the next 13 years. We are not looking at a health care increase, the projected increase that will. Be in line with anything related to the inflationary rate. And if anybody is aware of what our inflation is in this country right now it's being kept artificially low.
Kim Butler: Yup. Yup. And that's the projections. Decimate people because then they think they're doing things right.
And then they realize that they're not too late. And that's what's sad. So we've got to get a place where we can save money and it will not be eroded by stock market fluctuations. And we've got to understand that a lot of these projections, even the Monty Carlo assimilation, which is the financial plannings industry to try to make financial planning, mathematics better.
And it basically just varies interest rates and it varies inflation rates. Even those are false senses of peace of mind. So I really encourage people to focus on what they can save and then focus on finding an investment that will not rollercoaster ride because it's the loss of principal that really hurts us long-term.
Nicole Wipp: So what would be examples? Can you give us some examples of things that would be okay?
Kim Butler: Yeah. One of my favorite investments is a life settlement and a life settlement is something that's going to earn the 10 to 12% rate of return that everybody's kind of looking for without fluctuating principles.
Now life settlements are available in all 50 states, but they're typically sold privately. So you're a financial advisor that's with the large brokerage firms. Those guys do not have life settlements available to them. Typically, I think this is going to change. It's a really fabulous asset class and it's literally the investor purchasing through a fund it's done in a mutual fund style.
A life insurance policy on an elderly person. So the elderly person gets the cash and then the investor gets the death benefit. And the average age is usually around 85 and they're not healthy. 85-year-olds. They're unhealthy, they've typically got a terminal illness. So that's a great example of an environment where you can get a good rate of return and not lose principal.
And there's a couple others bridge loans with a real estate backing. Those can work really well. And then. Sometimes people just use annuities as well. It kind of depends on the value and how important the rate of return is for them.
Nicole Wipp: Are these all things that if they visit partners for prosperity.com, that people are going to be able to get more information on?
Kim Butler: Our blog in particular. So thank you. The website is partners. Number four, prosperity.com. Our blog has information about life settlements and bridge loans. And we also do some recommendations about peer-to-peer lending. That's another place where people can get a decent return and they may lose a little bit of money, but.
Anything like the stock market can do to them. So yes, tons of information there. And then of course, if they have questions, they can reach out through the website to me, and I'm always happy to help. I love email and I'm on it heavily all day long.
Nicole Wipp: That's great. Let me just bring up a point that I really, you bring it up in your book and I really want to make clear here as well, which is that what you're talking about? Everything that we just discussed does require that you put some brainpower into it. Correct?
Kim Butler: Yes, you own your own responsibility for, if you want to call it retirement fine, but for [00:25:00] your own financial success, and yes, that means some brainpower and some time.
Nicole Wipp: And so the big problem here is that I think I just read some article recently where they said something along the line of that people put more thought into where they're going to have dinner than they do into their financial plan. And I have to say that's probably true.
Kim Butler: I agree. I think everybody needs to have two businesses, one where they earn their cash and then the other, where they save and invest their cash. And we need to spend a sufficient amount of time in that second business, which is our own family's finances.
Nicole Wipp: And so really in order to get involved and get informed. You have these resources available for people to understand this is another tool in the toolbox of those of you that really want to be smart planners and plan really plan for your future. Because some of these things that we didn't really get into it today, When it comes to some of the legal issues that happen down the road, I can tell you that the conventional wisdom and some of the things that Kim's already discussed can have devastating, legal consequences and financial consequences simultaneously.
And so we really want to be aware of that, right? And it's just getting yourself informed. And this is just the beginning step of this here today.
Kim Butler: I'm really glad we got to talk. I think the more talking and writing and work that we do and getting the message out there that then people can take action on. Then the better we'll put ourselves as individuals plus our families. And then in time, we will get the country back on solid financial footing as well.
Nicole Wipp: Right, because all of this does tie into not just our own what's happening in our own backyard, but as a goal, as sort of a global, nationwide, and global phenomenon of just taking responsibility for thinking things through.
Yeah, Kim Butler, I really appreciate your taking the time to talk to me today and to share your knowledge with the listeners. And I just want everybody to know that I will put the contact links for Kim on our blog posts. Thank you, Kim Butler. And Kim is there anything else, any parting thoughts that you want to give to the listeners or something that you want to make sure that they know.
Kim Butler: This will resonate entirely with you. And I think the most important thing that we do every day is find things to be grateful for. So you've thanked me. I'm super grateful for you and the work that you're doing and everybody that takes the time to listen. And I want everybody. Find something that they're grateful for sometimes, literally every minute of the day, because that's, what's going to keep us going forward in our own lives and keep us in good relationships with our family members.
And the people that are important to us is just finding places to be gratitude, to be in gratitude. And when we appreciate things, those things appreciate, and it doesn't matter whether it's a relationship or our money, it works the same.
Nicole Wipp: Brilliant. I love it. You're right. That did resonate with me. Thank you so much.
Kim Butler: All right, Nicole, you enjoy.
Nicole Wipp: You as well, Kim, Thank you!
This concludes my interview with Kim Butler. I hope that even if you don't agree with everything, she says that at least it provides some really good food for thought because I would tell you that it's hard to really disagree with the things that she says. There's nothing about the fact that, that.
Inflation is not a static number and making assumptions related to numbers can greatly change the outcome and results of any decision that we make. These are the basic principles of what she just discussed with us. I want to reiterate, I can't, I guess I can't say this really clearly enough, which is that I'm telling you that I see the results of this.
I see the truth of what she says from the fact that even though I am not a financial planner, let's make that clear. And I have no formal training in the area of financial planning. But I deal very heavily with people's money. I see. And what we're planning for and my practice every single day is exactly related to my client's money.
And so there's no question that I see the results of decisions that people make based on some of these assumptions that she's talking about and the very different results that different people have as a result. Of making certain types of assumptions. And I can just tell you, it is amazing, the difference of the level of prosperity and wealth that people have based on early and later, decision-making related to their money and these exact topics that Kim is talking about.
You know, I hope that this is useful to you. I hope you found it interesting. And I hope you actually just give it some thought if nothing else. To read the show notes for this episode and to contact Kim or learn more about Kim, [00:30:00] please visit smart planning. One oh one.com forward slash 22. That's smart planning one oh one.com forward slash 22.
And leave me messages, leave a thought, leave a comment. I love to hear back from you. Thanks for listening.
Now that you're starting to get the knowledge you need to make better planning decisions. Don't let your journey stop there. Nicole's incredible guide five tools you need to be truly in control of your future includes smart planning options and worksheets you can gain access to right now. And the best part is you can download it for free by going to smartplanning101.com/tools right now, time is flying by. So don't wait another day to download. This must-have guide and we'll see you next time on the smart planning 101 podcast.
Information contained within this podcast does not constitute legal or financial advice. It's for general informational purposes or for advice specific to your situation, consult with your legal or financial professional.
