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Meir Statman

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Joseph Anderson

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Alan Clopine

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Published On

July 31, 2017

Finance For Normal People

Meir Statman, professor of finance at Santa Clara University and author of Finance For Normal People: How Investors and Markets Behave tells Joe and Big Al how smart people can avoid doing stupid things when it comes to investing. Also, are you house rich but cash poor as you approach retirement? The fellas have some strategies for making use of that home equity to create some additional retirement income.

Show Notes

(00:45) Using Home Equity in Retirement: Downsizing
(12:05) Meir Statman: Finance for Normal People
(20:56) Meir Statman: Interview Continued
(32:51) Using Home Equity in Retirement: Gain Exclusion
(39:30) Using Home Equity in Retirement: Refinancing
(47:26) Utilizing Home Equity When Approaching Retirement
(57:11) Email Question: Young Listener Question
(62:40) Email Question: Roth IRA for Grandchildren

Transcription

“Once you kind of figure out that if you are in fact walking into a jungle when you walk into the market, and you have a water pistol and other traders have bazookas, the best thing to do is not get into the jungle.” – Meir Statman

That’s Meir Statman, professor of finance at Santa Clara University and author of Finance For Normal People: How Investors and Markets Behave. Today on Your Money, Your Wealth, he tells Joe and Big Al how smart people can avoid doing stupid things when it comes to investing. Also, are you house rich but cash poor as you approach retirement? The fellas have some strategies for making use of that home equity to create some additional retirement income. Now, here’s a guy that’s always good to his mother, Joe Anderson CFP, and the perpetually positive Big Al Clopine, CPA.

(00:45) Using Home Equity in Retirement: Downsizing

JA: Welcome to the show. We have a few things lined up today.

AC: Yeah we do. I’m pretty excited.

JA: Are you? At least one of us is.

AC: Because you know why? It’s my favorite time of the week. I actually get to sit down, relax, have a nice chat with my best friend. So there ya go.

JA: Well alright. Look at you, buttering up. The show better be really good. (laughs) Let’s get into a couple of different topics right off the bat, Al. Home equity. We did this TV show this week on home equity – using your home equity, because if you take a look at some of the statistics, average net worth – you got that in front of you, bud? Because of course, I’m not prepared.

AC: I do. You’re hoping I’ve got these charts which I happen to have. I’ll try not to give out too many numbers, but let’s just focus on 65 to 69. That’s the common retirement age. So the average net worth, in round numbers, is about – and this is a median, which means half that people are above this and half the people are below it. So that’s what median means. Just so you know.

JA: It’s not an average.

AC: Correct. Because averages can skew when you have some billionaires in there. So median net worth is $200,000. 65 to 69. However, in rough numbers, the median liquid assets: investments, stocks, bonds and other types of investments, cash, whatever. $50,000. Which means if you got $200,000 and only $50,000 liquid, the other $150,000 is in your home. Home equity. So in other words, three-quarters of people’s net worth in the United States, 65 to 69, on a median basis, is the real estate equity.

JA: 75%. And how many of those individuals do you think have a strategy to potentially tap into their home equity to create some additional retirement income?

AC: Well not many Joe, because at least the folks that we talked to, they want to stay in their home, first of all, and they’ve heard reverse mortgages are shady, and they don’t want to do that, and they certainly don’t want to borrow more money on their home. They’re trying to pay off their debt. Which is a great thing to do, but then you still have all this home equity that’s – as we just went through, if it’s three-quarters of your net worth and you have only so much to work with on your retirement, you’re missing out, potentially, on some retirement lifestyle.

JA: Right. But the problem is, is that the emotions come into play, not necessarily the financial numbers. Because it’s like, “I want to get the debt paid off so I know for fact I got a place to sleep.” And I totally understand. I get that. There’s that sense of security. But if you do this appropriately or strategically, I think that more and more people might have a more comfortable lifestyle in retirement if they utilize their entire net worth.

AC: Yeah I think so too. And then when you look at another stat, Joe, when you’re 65 and older, almost 80% of those folks own homes. So we’re talking about the majority of people own a home and the majority of their net worth is locked up in their home equity.

JA: Correct. So let’s dive in. Let’s get into a few different things that people can do. First is what, maybe downsize.

AC: Yeah, you can downsize. And there are lots of reasons you might want to downsize like maybe you don’t need as large a home -maybe kids have moved out, you don’t really need all the bedrooms. You might want a single story, maybe you had a two story home. Maybe it’s time to get a single story. As we get older, unfortunately, knees and backs, arthritis, a few of those terrible things can set in. Maybe you want to move closer to the kids, that might be another reason you might want to downsize.

JA: I would say that’s most popular.

AC: Yeah that’s that’s a common thing that we hear. In fact, I would say most common when people say they want to downsize. That’s the primary reason.

JA: Right. Because the kids move out of state. And they want to be closer to the grandkids, and they don’t necessarily have maybe the additional capital to take all sorts of trips and so on and so forth.

AC: And then, of course, another one, why you might want to downsize, is obviously, to reduce expenses. Because maybe you can pay off your mortgage. Because maybe you’ve got a million dollar home and a $500,000 mortgage and you sell that, you buy a $500,000 condo with no mortgage. I mean, I’m not saying that’s the best use of funds, but I’m just giving you a real simple example.

JA: Jeez. $500,000 condo is nice. (laughs)

AC: Yeah. I’m thinkin’ Southern California! (laughs)

JA: I was home for a graduation for my little cousin. So I go back, and I haven’t been back to Minnesota in a few years. So, go to the house where I grew up. My parents had like a little apartment, and that was their first home. So they bought this thing 50 years ago. 45 at least. And at the time, it was it’s very nice home. It’s a small two bedroom. I don’t know what square footage is. But my father was a carpenter. And so he remodeled the attic to make it a bedroom for my brother and me, so it was the entire attic.

AC: Oh, you had a whole story.

JA: It wasn’t anything extravagant, believe me. (laughs)

AC: Did you have a ladder to get there? (laughs)

JA: It was like maybe 400 square feet. (laughs)

AC: Did you have a fire pole to get down in the morning? (laughs)

JA: Exactly. (laughs) But it was it was enough where my brother and I could have a little bit of space. And then he remodeled the basement. So it was a very small house, but with a handy man, you can redo things and make it look nice.

AC: Yeah. Turned out to be, what, a 10 bedroom home? (laughs)

JA: Yeah, 400 square feet, 10 bedrooms. One bath. (laughs) Have you ever seen Willy Wonka and the Chocolate Factory? Everyone’s sleeping in the same bed? My brother and I, we had to share a bed. And so I come home. anyway. And the neighborhood has changed. I lived right outside Minneapolis, North Minneapolis, and it’s the first suburb outside of North Minneapolis. And yeah, the neighborhood has changed just a smidge in the last 40 years. So all of the neighbors that my mom and dad were friends with, they all died off, or moved, or did whatever. My father passed away now, what, 8 years ago. So it’s just been my mom in the house. And then the neighbors, I don’t think they have a lawn mower. And there’s just grass and weeds and everything. And I was like, “Ruthie, this is time. It’s time.” And I said, “I will buy the house for you.” Because it’s Minnesota. It’s a couple hundred grand. So it’s going to cost me $500 a month. So that’s a lot of money, but still, I’m not buying a house in San Diego.

AC: You can pull it off.

JA: It’s going to be a stretch, but I think I can do it.

AC: Might have to sell your home. (laughs)

JA: I might. So, I go, Mom why don’t you start taking a look at 55 plus communities, because you need friends, you need activities. I mean she’s 68, but she doesn’t like to drive on freeways and things like that. And so if we go into this nice community, you can just walk to play cribbage or whatever you want to do. So they’ll probably have a pool, nice stuff that. She looks around, and then all of a sudden she’s like, “I found the place.” I said, “sounds good. Alright. Tell me more.” She’s like, “Oh, it has a pool. Two pools. It has a nice rec room, I can throw Christmas parties if I want to, and everything else.” But she’s like, “I found something out,” and I go, “what’s that mother?” And she’s like, “Well, I think I have champagne taste on a beer budget.”

AC: (laughs) I never heard your Mom say that.

JA: Well you don’t talk to my Mom as often as I do. (laughs) I’m like, “Alright, well tell me more.” So we’re going to build a home in Minnesota. So it’s a little bit more than $200,000. But not too much. Starting from scratch. What the hell. I go, “Ruthie. You made me the man I am today, so I can help you with this.” But there’s not a lot of retirement savings there. They put kids through school and they weren’t necessarily educated on financial planning and things like that. So that was my worry too, it’s like OK well if you sell the home, then that will free up a little bit of cash flow, where you don’t have to be living off of $800 a month. So now you have a nice home, and then you have a little bit more cash flow, and then hopefully you meet some friends. And she’s like, “I hope I find a man,” and it’s like, “OK that’s just a little too much.” (laughs) But, there are other motivations too I think, why, as you get into retirement, you might want to move. Because it’s like she was just living in this house, by herself. All the neighbors that she was friends with for the last 30 years they moved, died. Some other people kind of move in…

AC: Ones without lawnmowers.

JA: Yes and she’s like, “Yeah there was a mattress in the yard for like a month.” I was like, oh boy. So yeah. Because men tend to die before women. And then my dad died very young. So it’s like, there are other motivations too because you still got to find that purpose. You got to find friends, and that social circle, and everything else in life. So we’re excited. So I think she will move in I believe in December.

AC: Well good for her. But that’s not really downsizing. Is that upsizing?

JA: Well, I don’t know what the hell it is. As long as she’s happy, I’m happy.

AC: It’s because she’s got the champagne taste.

JA: She’s got a champagne taste on a beer budget.

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Now, Joe and Big Al covered downsizing – later in the show, they’ll return to the topic of how to use your home equity as you approach retirement and discuss gain exclusions, refinancing and reverse mortgages. But right now, Finance For Normal people with our guest, Meir Statman.

(12:05) – Meir Statman: Finance for Normal People

JA: We have Meir Statman back. It’s been a few years. Very smart individual. Meir Statman, thank you so much for joining us. How have you been?

MS: I’ve been fine, and I’m delighted to be with you again.

JA: Hey, you have a new book coming out, Finance For Normal People. Who are normal people?

MS: Normal people are people like me, and like you, and like your listeners. We are people who are generally normal smart, but sometimes normal stupid, and we are generally normal knowledgeable, but sometimes we are normally ignorant, but we are all intelligent people, and we are able to acquire knowledge, and we are able to increase the ratio of smart to stupid behavior.

JA: (laughs) So we’re smart in some areas and stupid in others. Where do you think we fall into this stupid category? Investing is probably one of them.

MS: Well, for example, just the other day, there was a piece that I wrote for MarketWatch about why it is really hard for individual investors to beat the market. And I got a bunch of responses on that site that kind of said, “Don’t tell me that it’s hard to beat the market, because if you just exclude the 300 bottom stocks from the S&P 500, then I can beat the market.” And I say, “Well, good luck with that.” It’s kind of this old adage, “buy stocks that go up, and if they don’t go up, don’t buy them.” So people just don’t seem to get the difference between foresight and hindsight. And people don’t seem to get the difference between luck and skill. And so some people will say things like, “well, I can beat the market if I’m lucky,” and I say, “Well, that’s very good, but you wouldn’t just go by luck, I hope. You’re not going to invest by luck, you have to have some reason to invest if you are actually not playing a game of luck, but you’re trying to save for retirement.” And so these are things where people just – normal people are ignorant, and normal people then do stupid things. And I hope that you and I can educate them to do better.

JA: Well let’s start there. What should people do when they when you look at their investments?

MS: Well, the first thing they should do is really figure out what it is that they want. They want to save. Or perhaps, they find it hard to save. But it is important to save, because there will be a time when you will not have income, and you’ll have to live on your savings. And so, figure out how you can save best for the future. Think about what you want. So you want to have a secure retirement. You want to be able to support your kids, rather than have them support you. For some people, they want to play the market. And I say, “Well if you want to play the market, you should know that this game is an expensive game. Perhaps more expensive than golf. Are you sure that you want to spend the money to play that game?” Some people lie to themselves and they say, “Well, I trade to make money,” and they do funny accounting by which it looks like they are making money, rather than losing money, relative to say an index fund. And so figure out what you want, figure out the tradeoff between wants – I want to play games, but it costs me money. Does it make sense for me to do that, and then proceed towards your wants. Proceed towards your goals, avoiding as many errors as you can.

JA: Do you think that, because of the lack of savings that individuals have as they approach retirement, they are trying to play the game within their head to find the golden goals here of investing, because they need that return, because they’ve lacked on the saving side of things, and then that’s where they make errors?

MS: That is some of it, yes. That is people who will feel behind are going to take risks to catch up. Now, remember though, generally taking risks is what we do in life. as I like to say. if you want real risk, get married. And if you want more risk, have children. So we take the risk for a reason. We move from state to state, from career to career, to a get the benefits of those changes. But if you are in your 60s, and you have not accumulated the huge amount of money, and if you think that now you’re going to make a killing by buying into say a franchise, a new franchise that supposedly is going to be great, well yeah, it might be great, but it might leave you really penniless. And so I say to people who are getting to be old, such that they cannot make this money back anymore, buy an occasional lottery ticket so you have hope, but don’t risk your blood money. Don’t risk what you must have in retirement for a chance to make it rich, now that you are in your 60s or later.

JA: What’s different with this book than your first book, What Investors Really Want versus Finance For Normal People?

MS: What I try to do is really present what I think of as the second generation of behavioral finance, that really begins with what people want, and then goes into the cognitive errors. But then, I also say the knock against behavioral finance is that it is a bunch of really interesting story about stupid people. But it does not have a portfolio theory, and it does not have a life cycle theory, and it does not have its asset pricing theory and its notions of market efficiency. And so I tried to show how those wants and short cuts and errors underlie those components of finance, to present a unified framework of behavioral finance that I think at this stage is lacking.

JA: Well, give me a few examples.

MS: Well, think about notions of market efficiency, OK? So our discussions about market efficiency tend to be really confused, because people confuse notions where market efficiency means that the price is always right, the price equals value, as I call it. And the notion that market efficiency means that it’s hard to beat the market. The way I say it quickly is that, yes, the market is crazy, but that doesn’t make you a psychiatrist. And so, people tend to jump from the conclusion that, “I’ve seen the market behave in crazy ways,” to, “therefore I can figure out when to get into the market and when to get out.” Well, that really is wrong, and people who try to do that usually get burned, rather than get rich. And then I try to explain why it is that people who should not be playing games in the market, that they should understand that trading, for example, is like playing tennis against possibly Djokovic, are still doing that. One is because they don’t understand that it is tennis against possibly Djokovic, or Goldman Sachs, or high-frequency traders. They think that it is the simple game of tennis against a training wall. And then there are some people who understand that they might be playing against a player who is better than they are, but they’re just overconfident in their skills. They say, “I never played against Djokovic and so I guess the chances are 50/50 that he will win or I will win.” And so from that, you can kind of draw the lessons that say what do we know from evidence-based investing, and how is it that we can do better for ourselves and our families by doing smart things and avoiding stupid things.

More Finance for Normal People with Meir Statman in just a minute – but you’re listening to Your Money Your Wealth so we already know you’re not exactly normal, right? Actually, it means you’re probably ahead of the game! Now, make sure your portfolio is retirement-ready. Visit YourMoneyYourWealth.com and sign up for free financial assessment with a Certified Financial Planner. How much money will you need in retirement? What Social Security strategies are available to you? How much income can you get from your portfolio? Make sure your retirement strategy is aligned with your retirement goals. Sign up for a free two-meeting assessment with a Certified Financial Planner at YourMoneyYourWealth.com

(20:56) – Meir Statman: Interview Continued

JA: We’re back. The show’s called Your Money, Your Wealth. Joe Anderson here, Certified Financial Planner, Big Al Clopine, CPA, talking to Meir Statman. He’s professor of finance at Santa Clara University. He’s got his Ph.D. from Columbia University, and an MBA from the Hebrew University of Jerusalem. Meir, I think you bring up a really good point. I would say that the average investor still doesn’t understand that there’s someone on the other side of the trade. And I think that that’s what your analogy was referring to, is that I might get a good stock pick from the Uber driver, and then I do a little bit of research, and I’m like, “Oh, this is a really good stock pick.” Then I go to my discount brokerage on my computer and buy that stock. You’re not buying the stock, in most cases, from that particular company. It’s on someone else’s balance sheet, and the person that you’re purchasing it from is not Fred next door. It’s Goldman Sachs or JP Morgan that has thousands of analysts that look at that, and they’re selling it to you at that certain price. So was that kind of how your analogy worked out?

MS: Yeah, exactly. I say in every trade there is an idiot, and it is likely to be the one who has less information. And so, think about it – that as you heard that from a driver, or you saw it on CNBC, or you did your own analysis and take you seven hours. But remember, that you are not competing against somebody like you. You might well be competing against somebody who is at Morgan Stanley or Goldman Sachs, who knows this company inside out, and even he or she is not necessarily going to be right every time. But surely, they are right more often than you are. And so once you kind of figure out that if you are in fact walking into a jungle when you walk into the market, and you have a water pistol, and other traders have bazookas, that the best thing to do is not get into the jungle. By that, I did not mean don’t invest in stocks. By that, I mean, invest in index funds and trade only when you must – when you have money that you want to save, and put on the market. And when the time comes for you to take it out, whether it is to pay tuition for your children or retirement income for yourself.

JA: So let’s say if I want to start constructing my portfolio. Well, trading doesn’t necessarily work, or the probability of success long term is probably very low. You could get lucky on a few trades. Al and I, people come into our office that bought Apple at X and look at how big of a genius I am. But that’s the only stock they hold, that’s the only trade they’ve ever made that made any money. So how would I look at this? So I want to build my portfolio, I have my goals in line, I want to retire at some point, I’m saving some money, I want to use lower cost type funds – how do I construct a portfolio? how would I go about that?

MS: Well, I like to say that that we want two things in life. One is not to be poor, and the other is to be rich. And generally thinking, we think about bonds for not being poor, and think of stocks for being rich – moderately rich at least. And so the question really is always, “So what proportion should I have of stocks and bonds?” And I say when you are young, most of your portfolio, in fact, is in your head and your body – in your human capital, as economists call it. In the income that you’re going to be earning because you have skills and ability to work. And so, you can put most of the other money, that is money that you save in the 401(k) for example, you can put it all in stocks and you’ll be fine. As you grow older, there comes a point where your human capital is getting close to zero, because you are too old to work. And here, you have to have some downside protection. You can have it with bonds, you can have it with annuities, you need something such that you are not going to find yourself not able to pay your basic bills. Precisely what proportion would you have? Well, if you have accumulated really a good amount of money, such that even if worse comes to worse, you’re going to have enough to live on, then you can have as little as 20% in bonds. If their 20% in bonds makes for $2 million out of a $10 million portfolio and you’re in your 70s, that is fine. But if you have a more modest portfolio, then you might want to have bonds as much as half or perhaps even more. And remember, in addition, you are likely to have equity, I hope that you have equity in a house that you own, that is also providing for downside protection. So kind of be judicious in just asking yourself, “how important is it for me to be protected on the downside, and how important it is for me to be having an opportunity for the upside?” And if you have relatively little, and you still want upside, then go back to my example of buying a lottery ticket from time to time, that will give you hope of being rich.

JA: Meir, I have the best portfolio in the world. You have a portfolio that was recommended to you by Alan Clopine. So that means it’s not that great. But still, I bet you would perform a lot better than me, an average individual investor because you might have higher priced mutual funds. Maybe it’s diversified, it’s nothing crazy, but it’s not structured to the T. But maybe I have the perfect portfolio. I found the magic sauce. I have the perfect portfolio, but I cannot control my behavior. I freak out, I get greedy, and I get scared. So even though your portfolio sub par and mine is the perfect portfolio, I think the most important component of this is how are you going to react when markets react? Would you agree with that?

MS: Oh absolutely. And one of the nice things about getting the philosophy of just investing in index funds is there are things that go with it. The things that go with it, for example, don’t try to time the market. And so I liken myself to a cork on the surface of an ocean. I kind of go up with the market, and I don’t to congratulate myself for being smart, and I don’t double my investment, and I don’t panic on the downside. What the market gives me is not because I’m smart, and what it takes away from me is not because I’m stupid. And so, if you get to understand sort of evidence-based investing of how you can injure yourself, you can kind of catch yourself and say, “aha, it feels like this is a good time to double my investing.” And then there will be the other voice says kind of like your parent’s voices that say, “don’t do it.” Or it says, “boy I don’t like whatever- who was elected last time, I think this country is going in the wrong direction, I’m going to sell all my investments and be in cash, or in gold,” And you’re going to make another move that is likely to be a stupid move. And so, if you know your proclivity to your emotions, then you are able to use your intelligence to step away from your emotions, to count to ten, before you speak when you are angry. And if you know that all people are subject to hindsight, for example, thinking that they knew in 2007 that it’s time to get out of the market, and they knew in 2009 that it’s time to get back in, then it will give you the illusion that you will know next time to get in and when to get out. But I am not smarter than anyone. And whenever I have a feeling like that, this is a good time to get in or get out, I take a cold shower until that feeling goes away. And I do nothing about it. And so I just I just put in money that I want to save, and when the time comes, I will take money to spend. But I don’t play games because I have learned that these games are costly and that those games are going to be things that I’m more likely to regret than take pride in.

JA: Yeah but that emotion is tough. It’s like, “I’m in my 60s, I can’t afford to lose 20% of my overall portfolio.” But you’re 60! You got 30 years of life. You need to have some risk in the overall portfolio, I guess, depending on how much money that you have – but I would say most Americans need some sort of risk to outpace inflation and taxes. So they need to stand tall, and take those cold showers, and start talking to ten backward.

MS: Exactly. There is no there is no a life that is free of risk. So you have to really pick up the risk that you want. And remember people who get out say in 2008 or early 2009 – they are afraid, of course. But what else they’re doing is, they extrapolate and they say if the market has gone down, surely it will continue to go down. But no, the market has a mind of its own. And sometimes, when it is down, that continues to go down, and sometimes it turns to go up. And if you get out and then the market turns up, and are out, you’re going to find it really, really difficult to swallow your pride and get back in and buy at a price that is higher than the price at which you sold. And so just think of people who got out in early 2009 and they’re still waiting for the market to crash to its level, and get back in. And so that’s what I’m saying – we are intelligent people, we have emotions, but we have learned to control our emotions.When somebody tells me that he can get to be 15% risk-free, I am afraid. And that fear prevents me from going for another Bernie Madoff. But this fear that the world is coming to an end and you should just get it all in gold, well that is really an exaggerated fear. And in all likelihood, you’re going to hurt yourself rather than help yourself.

JA: That’s great advice. Meir Statman, he’s a professor of finance at Santa Clara University. Check out his new book Finance for Normal People. It’s a great book. It will help you get on track. Hey Meir, thank you so much for your time. This was a lot of fun. Thanks so much.

MS: And thank you it was delightful.

JA: Alrighty we got to take a break. The show’s called Your Money Your Wealth.

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(32:51) Using Home Equity in Retirement: Gain Exclusion

JA: We’re talking about utilizing, potentially, your home equity, as you approach retirement. A lot of you might be house rich, cash poor. So what do you do when you want to have a little bit more cash flow from your overall nest egg, and there’s not a lot there, but you have a lot of equity in the home? So downsizing is one thing that you can potentially do, what’s another?

AC: Yeah that is. Well to continue on that, Joe, some people don’t want to downsize, because they think it’ll be too expensive from a tax standpoint. And the truth is, over 20 years ago, the laws changed with regards to selling your residence. Much more favorable than they used to be. It used to be a once in a lifetime, Joe, gain exclusion.

JA: When did that change?

AC: I think it was 1986. I could be off a few years. But somewhere in there. It was a while ago and the thing is, a lot of people still think that rule is in existence. That was $125,000 once in a lifetime exclusion – that’s gone. That’s no longer available, but it’s much better now. What you get now is a $250,000 exclusion per person. So if you’re married it’s $500,000. And it’s no longer once in a lifetime. It’s virtually every time you sell your principal residence, as long as you’ve lived in that home two out of the last five years. You owned it and you lived in it. Those are the requirements. Now, if you have a rental and you converted it to a residence, you will still get some exclusion, gain exclusion, but it’s not quite as favorable. They kind of shored up that rule, I think 2009.

JA: A lot of questions come about this with the rentals. But also, let’s say that I have lived in my house for 30 years, and I’m single and I have let’s say a $600,000 gain. And then I have this girlfriend of mine that I’ve been with for years, and it’s like, well we want to sell the house. Maybe I get married, and then I sell the home. Now I’m married, I sell the home, and so do I get the $500,000?

AC: That’s an excellent question, and it does come up frequently. So, the way that the law is written is you have to own and occupy the home two out of five years.

JA: So I have to hold that joint with my spouse two of the last five years. So we would have to live there two more years before we sell it. After we get married.

AC: Yeah. Now to me, Joe, it gets a little bit fuzzy in California, because it’s a community property state. And I may have attorneys disagree with me but because it’s a community property state, I think there’s an argument. If you’ve been married for a number of years but the home is in one spouse’s name, not the other, and you’re paying the mortgage with income, salary, which is community income. Could that be considered a community property asset, even though the spouse is not on title? Maybe, but anyway, much safer to put the spouse on the title and then wait two years. But that’s the thing, you have to live in at two years, you can’t just be on title, you also have to live in it. So own and live in it for two years.

JA: So you have to be married, how about if I had a live-in girlfriend for 20 years.

AC: That’s fine if you’re both on the title and you both lived there, you each get 250 on each individual return. You could do that. There was even a case, I’d say maybe five years ago. where mom and dad, son and wife lived in the same house, and they each got it and all were on the title and they each got a $250,000 exclusion. A $1 million gain exclusion.

JA: That must’ve been a pretty large house. Wow. So let’s go to rentals. So now, I have two different rentals. I sell my primary residence. Get that, sell it, I get the 121 exclusion. $250,000 because I’m single. When I move into my rental property, and I live there for two years out of the last five. So do I get the full $250,000 exclusion?

AC: Not necessarily. So what happens there is, like let’s say you bought the home as a rental in 2010 and you sold it in 2017. In the current year, but you’ve lived in it two out of five years. So let’s just say, for simple math that it was a rental for five years and a residence for two years. Then in that example, you take the time you lived in it, two years, divided by the total homeownership, which is seven. And so two-sevenths of the gain can be excluded, up to the $250,000. It’s somewhat complicated to explain on the air, but I guess the biggest thing realize that when it was a rental first, and then it became your residence, you’re not going to necessarily get the full exclusion.

JA: You will get some but not the full.

AC: Right. Now on the other hand, if you bought the property in 1985, there are all kinds of weird rules. Because even though it was a rental that whole time, they consider from 1985 to 2009 just like it was your residence, because they didn’t have this rule. So you get all those years as a residence, so you get a much higher exclusion. Now the other thing is when it’s a principal residence, and then you move out and it’s a rental. Well, that’s completely different. When it starts as a residence, you can still get that full gain exclusion, as long as you’ve lived in it to out the last five years when you sell it. Which mathematically means you can’t rent it for more than three years because then you won’t have lived in it two out of five years. So that’s possible, although you will have to do depreciation recapture. So you depreciate your rental to get a tax deduction, whatever you depreciated, that tax deduction comes back as an income item.

JA: But the gain, I could potentially exclude some or part. But the depreciation recapture I’m still going to have to pay 25% tax on the recapture of depreciation.

AC: Yeah. Correct. 25% or it could be lower if you’re a lower tax bracket, but yeah that’s exactly right.

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(39:30) Using Home Equity in Retirement: Refinancing

JA: Talking about getting the most out of your net worth in regards to a retirement income strategy. A lot of you have potential to create a little bit more income in retirement by utilizing your entire net worth. And we’re talking about home equity. So downsizing is one, another could be…

AC: Yeah you could borrow against it. That’s tough when you’re retiring, right? But lets at least go over the options. Whether you like it or not, you need to know what the options are. And for some people, this is a fine option, to refinance their property to try to get a lower interest rate, number one, or number two, maybe they lengthen the term – which seems contrary. I want to pay this off, not extend it, but sometimes in retirement, you’ve only got so much income to work with, and it’s all about managing your cash flow. And if you’ve got 18 years to go on your mortgage, if you refinance it to a 30 year, all of a sudden your payment may go down by a third. And I’m not saying that’s the right answer for everybody, I’m just saying that’s an option. And we’ve seen it work in many cases where people only have so much income to live off of, and it allows them to retire.

JA: Because here are some of the issues that we see. Because they’re not managing their cash flow appropriately, and they’re managing their debt maybe too aggressively, which is I think, to steal your word, is counterintuitive. It’s like, “Well, of course, I want to aggressively pay off my debt.” But here’s what happens is that you’re putting every last ounce of discretionary cash flow to the mortgage, and you’re not saving any other monies. You’re not saving into the 401(k) plan. There’s very little cash reserves. There’s nothing in a brokerage account or a Roth account, and you’re aggressively trying to pay this big mortgage off. And then you pay the big mortgage off, but then you don’t have any cash to live off of. Now you’re just basically living off of Social Security. So there’s a balancing act here.

And then so it depends on a lot of different factors. It depends on what you’re trying to spend long term in your retirement, it depends on your fixed income, such as: What is your Social Security benefits? What is your pension benefits if you have them? What are your other liquid assets? But what we have found that works well is, to have a little bit more balance. To say, do I want to put an extra $5,000 a month to the mortgage to try to pay this thing off in 15 years, versus – especially if I’m in my 50s and 60s – I’m 65 and I’m still jamming all this money, and I want to retire at age 70, and you’re still going to have a $400,000 mortgage. Because I get it, it makes you a little nervous to have that big number in front of you. But if you refinance, push that thing out as far as you can, to get the lowest payment possible, and take the additional cash flow and put it into your 401(k) plan, put it in your Roth plan, or put it into cash or whatever, your $2,000 payment goes to $700. Even though, yeah, you’re paying it a lot longer. There’s going to be more interest in everything else, but then you can handle your cash flow a little bit. You’re going to have more cash reserves, you’re going to have larger investment assets.

And then if you look at it this way too: I just ran into an individual that refinanced, it was like a million dollar note and he’s like, “I want to pay this thing off in 10 years.” And he had very little retirement assets and very little cash, and he’s paying like a hundred some odd thousand dollars to pay off this $1 million plus note in 10 years. I’m like, “OK well fast forward 10 years. The note’s paid off. Now what?” You have a finite period of time to have this much income that is coming into the household. In 10 years you want to retire. That big income that you have is no longer. Do you need to look at strategically figuring out what is the best strategy to pay off the debt? Also, to create additional assets. How about if you push it out 30 years. You get a 4% rate. You have a lower payment, but then you take that over a 10 year period, let’s say, that’s enough time. Instead of putting everything on the mortgage, you put it into a brokerage account. Maybe the brokerage account over 10 years grows at 5, 6%. So you get the compounding of those dollars at 6%, and then, at the end of 10 years, you could take that money and pay off the note, and you would still have additional cash. So it’s just understanding arbitrage, I guess. If you’re paying 4% but if you’re in a high tax bracket, your cost of capital might be 3%, because of the tax deduction that you receive. So it’s like, over the next 10 years, do you think you can beat 3%? Because by paying that known as aggressively, you’re guaranteed yourself a 3% rate of return. But if you have a diversified portfolio over 10 years, do you think you can get a little bit better than 3%? If you don’t think you can, then of course, then just pay off the note. But we believe that, yeah, maybe over a 10 year, 15 year period, you could probably do a little bit better than very low. I mean, people could lock into the lowest interest rate probably we’ll see in history.

AC: Yeah. And just have that going forward. And I think, just so we’re clear, we’re not saying don’t pay off your mortgage. But the point is, don’t pay off your mortgage to the exclusion of you saving for your retirement. And that’s what we see. We see a lot of people, they approach retirement, they’re way behind on their retirement savings, and they’re putting all their excess cash they have from their job in their mortgage. Which is not necessarily a bad thing but then what? Fast forward to retirement. They’ve got a home. Maybe the mortgage is paid off, or maybe it’s a lot lower, but they have almost nothing to live off of. And then they got to sell their home, or they gotta refinance it to pull cash out or whatever. Or they just have to have a much lower lifestyle than what they wanted. They’re home rich and cash poor, have you heard that before? That’s exactly what happens in this kind of situation.

JA: So it’s determining where you are, how old you are, when is your retirement date, how big of a note do you have, is going to determine – do you pay that thing off, or do you just now punt, and just refinance, and get the lowest payment possible. Each of those strategies are perfectly fine, but one strategy is going to work better for one person, while the other strategy is going to work better for the other. That’s why it’s so difficult to give any type of real advice over the airwaves, in a sense.

AC: Yeah you can just sort of give concepts and then you’re right it’s different for everybody. And I would say this Joe, even a national radio host Dave Ramsey and he is big on debt repayment, debt reduction.

JA: Oh boy. Do you want to bring up Dave Ramsey?

AC: I do, follow me here a second. So his whole thing is, after you get your emergency fund and your credit cards paid off, is his methodology which maybe is slightly different, but I like the concept, which is then, after that, the next step is to completely max out your retirement accounts. Then when you’ve done that, you start paying extra on your mortgage, if you want to. And not vice versa. And that’s what we’re saying. We see people do vice versa, especially as they get to age 55-60, thinking, “I’ve got to get this thing paid off.” And so they exclude their retirement savings, and when they retire, they realize that wasn’t such a good idea.

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(47:26) Utilizing Home Equity When Approaching Retirement

JA: What about a reverse mortgage there, bud?

AC: Well that’s that’s an interesting question, Joe, because I think a lot of us, particularly the baby boomer generation, we’ve heard all these horror stories about reverse mortgages, and so a lot of us have kind of just presumed that this is not something we ever want to look into. And the truth is, about three or four years ago, there was some pretty new legislation by The HUD, Housing and Urban Development.

JA: You call it “The HUD?” (laughs)

AC: The HUD. I was thinking The HUD because I wasn’t sure exactly what it was. (laughs)

JA: I don’t think you have to put “the” in front of it. (laughs) Sounds like a bar.

AC: The HUD? Just HUD? (laughs) Anyway, so they came up with a few things. First of all, which I think is really good, as they consider the younger spouse in the whole calculation. Here’s what happened in the past. You had a 75-year-old male, I suppose it could’ve been female, and you had a 40-year-old female.

JA Oh, come on. That’s pretty aggressive. (laughs) Are you talking about me?

AC: It could happen. I’m just doing the math. (laughs) Anyway. So the old guy, or the old gal, let’s put it that way, I don’t want to be sexist, passed away. And the reverse mortgage was calculated on that older spouse’s life. Not the younger spouse’s life. And so, therefore, when the older spouse died, the younger spouse had to get out of the home.

JA: Well here let’s explain what a reverse mortgage is first. So you got to be 62 years of age to do this. Just the name reverse mortgage, no one really wants to get into that, because you’re going in reverse. You want to go forward. But a forward mortgage we’re all familiar with. You have a note on your house. You have a $200,000 mortgage, and there’s a certain interest rate on that mortgage, and you’re paying interest in principal to pay off the $200,000 back to the bank, within a 10 year, 15, 20-year, 30-year mortgage.

A reverse mortgage works in the opposite, reverse. So you have to have equity in the home first of all to do this, and there are limits and caps on what they calculate as what the market value of the home is. It’s about 650 grand. So if you have a million dollar home, they’re going to assess it at $650,000, because that’s how the calculation runs to see how much equity that you can potentially use. Because they’re protecting themselves, just in case the market goes down, like it did in ’08. So you could then take cash flow or lump some loan out of the home, but you don’t have to pay it back with cash flow. So right now, you’re paying your mortgage with cash flow. With a reverse mortgage, the equity in your home pays the mortgage payment. So it’s in reverse. So there’s no outlay of cash flow from you, but your equity then potentially could shrink, if there’s no growth in the overall house. So the equity is paying that mortgage payment each month. So there’s some flexibility there, so it’s like, well right now I’m paying $1,200 a month to the mortgage. If you do a reverse mortgage, then that could potentially free up $1,200. So that’s the concept of it. So there’s a lot of pros, where it’s like, “I can free up $1,200, I can use that on my spending, and do anything that I want.” But there are also cons like Al said, in the past, it was like, well if you have an older spouse 62, and maybe you have a younger spouse at 60. And let’s say the older spouse passes away at 63, and that other spouse is not 62 yet, it’s calculated on the older spouse, you’ve got to be 62 to do it. Then it’s all of a sudden, hey, get out of the house, we’ve got to sell this thing. There are assessments, and there are all sorts of negatives, but there’s also I think a lot of positives.

AC: And so I think you’re right Joe. So in other words, the amount that you can borrow, now the younger spouse is considered. So if the older spouse does pass, then the younger spouse doesn’t have to move out of the home. And to just be really clear on this, right now that the cap that you mentioned is actually $636,150. That’s the highest value that they’ll give you on your home for this calculation, even if your home is worth $2 million.

JA: So the most that you could potentially get out on a reverse mortgage is about 300 grand.

AC: Yes. So the way this works, they have a principal limit factor, because the bank doesn’t want to loan you the whole thing because you’re not paying the interest. So the interest is going to be adding to the principal balance. So I can give you an example. This is based upon a 5% interest rate and a 62-year-old homeowner. You could get about 52% of that 636, as long as your home is worth at least that much. Which should be $333,000. Then you take that money, if you already have a mortgage of a couple of hundred thousand, well that has to be paid off with the 333. But using your example where you had a $1,200 mortgage payment, now that goes away, because that mortgage is paid off, and you still have about $130,000 that you can receive either in a lump sum or in a cash flow, month by month, depending upon your choice.

JA: So, one of the better advantages is to do the line of credit. An HECM, a home equity line of credit. How that works is that you open up, let’s say, a reverse mortgage at age 62, and you have the $300,000. That’s your principal limit. But you’re not going to use that. You’re not going to take it out. You’re not going to spend it. And what happens with that $300,000, or 333, whatever the number is. That’s your line of credit, that’s going to increase each year by the interest rate that the bank is charging. So if you think of it like this, is that, if you have a loan, and if I’m paying off the mortgage, there’s an interest rate on that that I’m paying off. So there’s a principal payment of X, and then there’s an interest payment of Y. On a forward mortgage, you’re paying both of those off. In a reverse mortgage, it’s just building up inside the equity. Does that make sense? I feel like Wade Pfau right now. It is pretty difficult to explain on the air.

AC: He tried, on the TV show. (laughs)

JA: What happens though is then that $300,000, that’s your line of credit. But your line of credit is going to increase each year by the interest rate that they’re charging. Because if I took that $300,000 out as cash, I took a lump sum, they’re going to charge me on that $300,000. Let’s say it’s 5% or whatever that number is. So my line of credit is going to increase by that 5% per year. So if I don’t take it out, it’s still going to grow.

So one of the strategies is that you take the line of credit, or at least open it up as soon as you can, because maybe now at 65 or 70 or 70, you might want to use some of that, and it’s going to be a lot larger balance, because it has increased over the last five, 10, 15 years, or whatever it is. It’s a good safety valve, and some of the strategies that some advisors – and Wade Pfau, he’s a Chartered Financial Analyst, Ph.D. at the American College, he was actually on our TV show. And it’s like here’s a strategy, it’s like a sequence of return risk. When the markets go down, you don’t want to be selling stocks. So you could potentially tap into that line of credit. That line of credit comes to you and it’s going to be tax-free. You don’t have to pay it back until you sell the home. So, Al and I are not licensed mortgage experts by any stretch of the imagination, but we want to help you just at least cover some topics here that you might not be aware of, to say hey, that might make sense in my particular situation.

AC: Well and as Wade Pfau has talked about, a lot of people are also looking at reverse mortgages in their 60s so that they can delay Social Security longer, because not only will they get a higher monthly benefit by delaying, but some of that Social Security is actually tax-free. At least 15% of the federal Social Security income, if not more, will be tax-free to you, and 100% of that Social Security income is tax-free in California, which is a great benefit. And to me, it’s just another tool, particularly since a lot of people have a lot of their net worth kind of stuck in their home if you will.

TheYour Money, Your Wealth TV show features an interview with retirement researcher Wade Pfau, which you can watch on demand on our YouTube channel beginning August 14th! Just search YouTube for Pure Financial Advisors and Your Money, Your Wealth. And right now, you can watch clips from our estate planning show with attorney Nicole Newman, Trump’s Proposed Tax Plan, Social Security Savvy, all about the 401(k), and much more. IF you’re dying to see Joe and Big Al on your computer screen, don’t miss the Your Money, Your Wealth TV Show – just search YouTube for Pure Financial Advisors and Your Money, Your Wealth.

It’s time to dip into the email bag, with financial questions courtesy of Advisor Insights from Investopedia, and you, the Your Money, Your Wealth listeners. Joe and Big Al are always willing to answer your money questions! Email info@purefinancial.com – or you can send your questions directly to joe.anderson@purefinancial.com, or alan.clopine@purefinancial.com

(57:11) Email Question: Young Listener Question

JA: Alan has a personal e-mail that he would like to read.

AC: It’s actually to you and I. This is from Zach. It says “Hi Joe and Al”. I like the way he starts it: “I love the Your Money, Your Wealth podcast. I’ve listened every weekend for years,” and the heading of this is, “young listener question.” “Here’s my question. I am 27, I’ve been maxing out my Roth IRA, my 401(k) match, and my health savings account – I pay myself first. I invest in Vanguard index funds. My next goal is to pay for a downpayment on a first home in around 8 years.” I guess when he’s about 35. “Is there a smart way to tackle that goal? Is adding stocks too risky? Thank you Zach” and then of course he goes. “P.S. You guys were joking about Al’s “celebrity status” last week, but I assure you some of us would definitely ask for an autograph.”

JA: First of all, I think he’s got the wrong show. (laughs)

AC: No one has asked you or me for an autograph. (laughs)

JA: Definitely can’t be asking Alan for an autograph. (laughs)

AC: Well, it says Al. (laughs)

JA: Well there’s gotta be another show with Al. (laughs)

AC: But anyway, getting to his question, so he’s doing all the right things, right?

JA: Yeah, he listens. You gotta pay yourself first, you gotta start with the match, and then you go to the Roth. Got a little HSA goin’.

AC: And he’s got Vanguard index funds – like it, like it all. And then he wants to save for a down payment his first home in around 8 years. What’s the best way to tackle that goal and should he be investing in stocks?

JA: That’s a great question because 8 years… That’s… huh. It depends on the down payment, it depends on how much money that he’s saving, it depends on a lot of things. But I think 8 years Al, I would if I were Zach. I would definitely go into Total US Stock Market Index Fund, dollar cost the average, that in. So I’m saving, whatever, $500 a month, or whatever he is saving. And as I get closer, maybe when I get maybe three years out, four years out, then I would definitely want to reallocate that overall portfolio. But 8 years I think is enough time for stock investment.

AC: I would tend to agree with that, Joe, and I think a lot of financial planners, advisors, a lot of very smart people, kind of use 5 years as a marker. In other words, if you need money in five years or less, maybe you should not be in the stock market. But if it’s more than five years maybe you can be.

JA: But it’s not going to hurt him. He’s 27 years old. So let’s just say he’s saving a couple hundred bucks a month. And guess what, in year 7 the market implodes. And he’s still saving. Who cares? You push out your house another year or two. That’s how I would because you have all those shares of that stock, you know what I mean?

AC: Well, I sort of agree with your first statement, which is as you get closer, maybe two, three years away, you start getting a little bit less aggressive, for that possibility. But I will say this. If we go to the Great Recession, which is the most recent recession that we had, housing went down at the same time as the stock market. So maybe your down payment is less, but the housing cost less too.

JA: Well are you predicting another Great Recession?

AC: Just saying that’s what happened last time.

JA: OK, name another correction in the markets where real estate blew up as much. I mean the real estate was the reason why everything cratered.

AC: Well it happened in the early 90s. We had a savings and loan crisis, real estate went way down and so did the market. Recession.

JA: I have no idea, I just threw myself out there. (laughs)

AC: I know. That’s why I’m older than you. I can remember some of these things. 1980. Real estate had done this huge increase.

JA: And so are you saying that real estate and the stock market have a positive correlation?

AC: Not as closely as, maybe two stocks, but sure. I would say there would be some level of positive correlation.

JA: Yeah I would agree with you. I was just being an idiot. (laughs) I’m tired too.

AC: Anyway, I think that’s great, and that’s a long time to say for a down payment, eight years.

JA: Yeah. He’s mapped it out, it sounds like.

AC: It’d be cool if he could do it sooner. But…

JA: Why? Why are you forcing Zach into home ownership when he’s not ready?

AC: Because I think… Depends on where he lives. But, let’s just say he lives in Southern California like we do. Home values tend to go up over time, and sooner is better than later.

JA: But let’s say he lives in Idaho. Or Minnesota.

AC: Sure. That could be different. Idaho probably goes up.

JA: I think my parents bought this house that we’re selling for a hundred grand. We’re going to sell for like $108,000. That was 45 years ago. (laughs)

AC: Right, there are markets that don’t see much appreciation, but I guess what I just said was based upon living in a high appreciation area like San Diego.

JA: Yeah come to San Diego and then you meet a $400,000 down payment. So your 8 years just turned to 80 years, Zach.

AC: Yeah but there are 10% down payment loans, there’s even a 3% down payment loan.

JA: Oh yeah then just leverage the hell out of it. Blow yourself up! (laughs)

AC: Well it worked for me, sort of. (laughs)

JA: Oh, my stomach hurts. All right we got one more question and then we’re done.

(62:40) Email Question: Roth IRA for Grandchildren

JA: Does parental income affect a dependent child’s Roth IRA contributions? And I’m not going to put all the fluffy stuff in and say Dear Joe and Al, Joe I really love how you run the show, that you are absolutely one of the best advisors in the world, and Al is just your sidekick.

AC: I would ask for your autograph.

JA: Yes, and definitely I would want a picture of you. (laughs)

AC: But a picture with you, that would be even better.

JA: I need to get some signed glossies.

AC: We need that.

JA: No we don’t need that.

AC: We get a note like that about once every three years, we need something. (laughs)

JA: Send them all a glossy of you and me? (laughs) We should get another photo shoot.

AC: True, there’s probably, what, 500 photos of you and me. We could pull one of those out. (laughs)

JA: Yeah, there’s a couple of them that looked like we were, like, “together.” Like you’re my old boyfriend. (laughs)

AC: Like a couple.

JA: Like I was your little token, little boy toy. (laughs)

AC: So what’s the question?

JA: This thing just went way off course. (laughs)

AC: I’m trying to change the subject. (laughs)

JA: My father in law wants to set up a Roth IRA for his grandchildren. My dependent children. He would match contributions to the Roth IRA. I understand the contributions are limited to the lesser of the qualifying income of $5,500. My question is, does my income, as the parent claiming the child as a dependent, affect the dependent child’s eligibility. I’m a high-income earner and not eligible to open up my own Roth. I am also subject to various rules like AMT, PEP phase-outs…. ooh, this guy must be a CPA. And other rules of the tax code. I am concerned that there may be some other rules in the tax code that applies to this situation. Please help.

AC: That’s a good question. First of all, the answer to the question is no – your income doesn’t affect your kid’s ability to do a Roth IRA. So we’ll get that out of the way right off the bat. I don’t care whether they’re dependents or not.

JA: The kids just need to have earned income up to $5,500.

AC: But I tell you what he’s probably thinking of, is the kiddie tax. The kiddie tax is this if your kids are under 19 years of age, and if they make investment income, interest, dividends, capital gains, they get taxed at the parent’s rate. I think that’s what he’s probably thinking about.

JA: Right, because let’s say if I gift several hundred thousand dollars to the kids, and then they sell the stock. And then they sell it at their rate, they don’t have income. And then, oh, guess what, they’re in the 15% tax bracket. I could get a lot of this capital gains tax-free.

AC: So you have to use the parent’s rate, that’s above what $1300. Anything above that, you got to use the parent’s rate, but that’s for investment income. When it’s earned income, the parents’ income has no bearing on it.

JA: Right. The child just needs to have earned income. It doesn’t have to be funded by the child. Let’s say the child makes $10,000 working part time, doing whatever. And so if you want to fund $5,500, Grandpa wants to fund $5,500, it has no bearing on your income or Grandpa’s income. It’s just the kid has to have earned income. If the child does not have earned income, so let’s say you’ve got a grandchild that’s five years old. That’s not going to work because they need to be working. W2 wages, self-employment income. So, there you go. That’s it for us today. Hopefully, you enjoyed the show. We’ll be back again next week. For Big Al Clopine, I’m Joe Anderson. The show’s called Your Money, Your Wealth.

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So, to recap today’s show: Downsizing, gain exclusions, refinancing and reverse mortgages are all potential ways to utilize your home equity if you’re “house rich and cash poor” as you approach retirement, but make sure you talk to a professional before making any decisions about which strategy works best for you. As long as a dependent is earning over $5500 a year, a parent or grandparent starting a Roth for the kid won’t affect either the parent or grandparent’s taxes. Investing in the stock market for 8 years before buying a house probably isn’t a bad idea, but good luck making that work if you’re in Southern California.

Special thanks to our guest, Meir Statman for explaining why some times smart people do stupid things when it comes to investing. Get a copy of his book, Finance For Normal People: How Investors and Markets Behave at Amazon.

Subscribe to the podcast at YourMoneyYourWealth.com, through your favorite podcatcher or on iTunes, where you can also check out our ratings and reviews. And remember, this show is about you! If there’s something you’d like to hear on Your Money, Your Wealth, just email info@purefinancial.com. Listen next week for more Your Money, Your Wealth, presented by Pure Financial Advisors. For your free financial assessment, visit PureFinancial.com

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