Episode 17: Mom Autism Retirement 101, Part 2 with Brenton Harrison & Joe Saul-Sehy

Welcome to part two of our retirement planning discussion with Brenton Harrison and Joe Saul-Sehy!

Listen to part one of this discussion.

This week we’ll cover:

  • Annuities.
  • Sheltering your investments from asset tests.
  • How ABLE accounts & supplemental needs trusts fit into the equation.
  • Life insurance for parents of disabled children.
  • Finding the right financial advice for your unique situation.


Show Notes

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Listen to Mom Autism Retirement Planning 101, Part One

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Listen to the ABLE Account episode of Mom Autism Money with Paul Curley, CFA

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Full Episode Transcript

Brynne: Hi, everyone. Welcome to Mom Autism Money. Today, we’ll be continuing our conversation from last week with Joe Saul-Sehy and Brenton Harrison. We were talking about retirement planning when you have an autistic child, and if you missed that last episode, I’d highly, highly, highly recommend going back to listen to it first.

We covered things like retirement accounts 101, target date funds versus ETFs versus index funds, socially responsible investing and just a whole lot of other stuff too. Today, we’re going to be expanding that conversation to talk about annuities, sheltering your investments from asset tests, life insurance, and more.

Just a reminder that what you’re about to hear is not personalized financial advice. In fact, we talk in this episode about just how important it is to find a certified financial professional who can sit down and look over your unique situation and goals. And this is going to be especially true when you’re raising a disabled child. Any information conveyed is for entertainment purposes only, though we do hope it inspires you to research further and find a professional who can offer you that individualized advice.

With that in mind, let’s talk to Joe and Brenton.

(whooshing sound)

Brynne: All right, everyone. Welcome to Mom Autism Money. We are going to be talking about retirement planning when you have an autistic kid today. And Joe and Brenton, I’m just wondering if you can tell us a little bit about your experience in this space.

Brenton: Well, you know, mine kind of came, I would say by accident.

Uh, I’m a financial advisor in the Nashville area, work virtually. But when I started in the industry, I was not at a large shop and I wasn’t really in a position where I was working with a consistent clientele of people who had had financial advisors or had a team of people around them who were helping with legal problems there or anything like that.

Most of my clientele were people who had never been in a position where they’d had professional advice. So as a result of that, when you are the advisor and they’ve never had an attorney, they’ve never had a trust company help them. You end up having to be the one to kind of figure out all that stuff on the fly.

So early in my career, in many situations, I found myself trying to figure out, okay, what exactly does this person need? Let me try to be the resource or the conduit, because trust, especially in this community, is hard to come by. So when you have someone who’s looking to you, they’re not necessarily going to easily trust four or five other people.

They’re looking for that one person to try to coordinate things. So I became that person and through the course of being in those situations over and over again, over a number of years, you start to develop some capacity. So that’s how I got into the space.

Joe: Yeah. And I’ll second what Brenton’s saying about just the mess of different advice that’s out there.

There’s so much, uh, frustrating advice because especially when it comes to how to make sure that your, your investments are protected. There’s lots of people selling products that really just want you to buy whatever their product du jour is. So I was a financial planner for 16 years before moving over to the financial media space.

Initially that wasn’t my goal. My goal was to sell my company when I was 40, because I had a friend who said that he liked being a financial planner, but he didn’t love it. And he had other mountains to climb. And that really resonated not just with me, but with a lot of other people, especially when, after he left our company.

It turned out. He was — that wasn’t a euphemism, like he, wasn’t doing some analogy. He went and climbed Mount Everest twice and climbed most of the tall peaks around the world. And he’s just been such an inspiration. So at 40 I decided that I would sell my financial planning business and I would become a high school teacher and a track coach could do what I love to do because those were my mountains.

Well, during that time, as I was taking classes, I was in shorts and a t-shirt teaching people about money online. That blog grew into a podcast, which became the stacking Benjamin show. We’ve been doing that now for a decade. So I get to teach money stuff, but especially in this area, I think it’s incredibly important to have good advice.

There’s so much to know most of the advice that I see out there is kind of, uh half-truths so putting together a cohesive plan, I agree with Brenton, is pretty hard.

Brynne: A thousand percent. This is something that we see way more often, I feel like, in education. A lot of times, like when you work in education, which again is a more female-dominated field or fields where there’s a pension involved. A lot of times, even when you’re offered a 403b what you find pushed at you is annuitites.

So I’m wondering if you guys can tell us a little bit about how annuities work and how they might operate differently within a pension versus like a 403b versus like looking at them offered within an insurance policy, which a lot of people also end up having that pushed onto them.

Joe: Well, let’s back up, back up even further to why is it that you go work for any company, most companies, well, not even most, but a lot of companies and they’ll have a retirement plan or they won’t? And that’s it. Yet when it comes to teachers, incredibly valuable people for our society, you’re offered 18 different retirement plans. You get to choose the one and they’re always annuities. Now, the reason by the way that they are annuities in general, is that annuities are high-fee instruments.

And the reason that’s important is because if the school district is not subsidizing the cost of the administration of the plan, somebody’s got to pick that up. Well, in a school district, they don’t. So annuities become a key piece of a teacher’s retirement plan because the teacher has to eat a lot of the administration fees, the fees that make it worth the time of the company to actually support it.

It’s it’s horrible. I absolutely hate it. It is frustrating. So that’s when it comes to 403(b)s. Now annuities themselves though are a little bit of a different beast and annuities are frustrating for me because if I said to anyone, ‘Hey, how about creating an income stream that you can’t outlive? You don’t have to worry about the market anymore.

You just get a check in the mail every month and it’s going to be the same every month, or maybe it goes up with the cost of living adjustment, whatever, but just generally you have this pension you create for yourself.’ Everybody goes cool, man. That sounds great. Might be for me, might not be for me, but that sounds awesome.

What is it? It’s an annuity. Oh, I heard annuities are horrible. I got to go away. So the frustrating thing is the annuity industry, I feel like, has done that to themselves in a lot of ways. They’ve tacked on so many bells and whistles and add a lot of unnecessary fees so that they’ve made us have this reaction to the word annuity.

And I think if we back off that word, and instead think about this as a self created pension, then we’ll begin eliminating a lot of the bad pieces of annuities. And if we need an annuity in our life, we may go buy one. I’m not pro annuity. I’m not negative annuity, but I do feel like there’s a lot of people who say no to annuities, because they’ve heard that they’re bad that if they actually did a little more research, they could get one that really fits.

And generally for me, the type of annuity that fits, if you’re somebody that there’s no way where somebody like a Brenton or I, or you ladies, can help them learn about how these investments work and they’re afraid of longevity risk, they’re afraid of outliving their money? Well, turning it into a pension they can’t outlive maybe a great low risk way to transfer that risk to an insurance company.

The one thing you have to realize is I just said the word insurance company and they don’t work for free. So when you transfer that risk, you could probably, if you were a savvy investor, you probably could have beaten the rate of return yourself, but you’re getting rid of that. You’re totally giving that risk over to the insurance company.

And now you have the freedom to just do whatever you want to do. As long as it’s inside of the confines of whatever that check was.

Brenton: I feel like that whole answer was a long hug to me to let me know you understand what I go through.

Joe: So frustrating, isn’t it?

Brenton: You know, the, and you said something, you said that that annuity companies have done this to themselves. I will add that, unfortunately, I’m a part of this industry, but financial advisors are complicit in that, as well. My feelings about annuities are similar to my feelings about permanent life insurance, which we might discuss.

It can be appropriate for certain people, but when you have advisors out there in the world who treat it as if it’s appropriate for everyone, it ruins it for everyone. Annuities are the exact same thing. I think that there are scenarios where it’s appropriate. If I have an investor who is not really as concerned about the return of their investments anymore, because they’re two years from needing this money, they’re more concerned with the income they’ll get from that investment?

Well, that might be a time where it’s worth paying the extremely high fees that come with an annuity. I mean, you could have an annuity that has three or 4% fee, and that’s not something that you want to tack on to the investment account of a 35-year-old who still has 25 years to invest. Unfortunately, there have been dozens and hundreds and thousands of financial advisors in this country who have done just that.

They’ve gone to that person who has no business taking on an account that has, that has that many fees associated with it and saying, no, trust me, this is the right thing to do for you. When you look at tools like a pension, where you work somewhere for a certain period of time – there’s also, what’s called cash balance pension.

A cash balance pension, you might work at a place for 30 years. And once you get to that 30th year, they’ll say, you know what? If you decide to take this monthly payment, it’ll be a thousand dollars a month. But once you take that thousand dollars a month, that’s what it is. Or you have a pool of money over here that’s sitting here that’s $300,000.

That’s probably too much. Let’s do a hundred thousand dollars. In this example, you can take that as cash, or you can take the payment from us. Essentially what that company has offered you is the option to either take your money or to let them use an annuity. They are essentially taking that hundred thousand dollars in exchange for giving you that thousand dollar a month check.

Now, if you die and you had only spent $30,000, $40,000, well, that a hundred thousand dollars that you had may be gone. You have given up the right to take that lump sum. And instead you’ve allowed the company to make an annuity out of your money for themselves. To me, when you have someone who says, Hey, I’m going to do that same thing for myself, but if I die and there’s $50,000, $60,000 left in this account, my family can get that money.

That’s another scenario where, Hey, this, this annuity thing may not be as bad as I was led to believe in my particular scenario. But if you took that same advice and give it to my 25-year-old son, now we have a problem.

Joe: You also bring up though, Brenton, what’s off the table. And a lot of people, you know, a lot of discussions we have are families trying, and maybe for the first time ever, to build intergenerational wealth. A frustrating thing with annuities is that you automatically are taking that up off the table because when you pass away, the annuity might go bye-bye. The lump sum of money might go bye-bye. So yeah, I’m totally with you.

It’s a, it is a case-by-case basis, but annuities aren’t the devil, maybe annuity salespeople are.

Brynne: You guys have me dying.

Brenton: It’s definitely tough to – this goes back to the conversation about navigating these waters on your own. How is a person who has a life and a job and a child with autism is supposed to look through all of these things and establish a level of expertise, and not say, oh my goodness, this is so overwhelming? All of these things I have access to, I do it every day. And I still have to go brush up on topics that you talk about as things change. I cannot imagine trying to do all of it on my own with no background knowledge. And then have to make a decision that’s so consequential.

Joe: Can I also, because I like where Brenton’s going there and I’m going to present something from the other side that actually I wrote about in my book, because I totally believe that people should have financial advisors. I believe that the stuff Brenton’s forgotten is more than most people will be able to learn with all the things that they’re juggling.

But I want to be clear about this. When you hire an advisor, you don’t show up twice a year and go, ‘Hey, advisor person, you took this for the last six months. How are we doing?’ You can’t do that. And by the way, I don’t think you should hire advisors that just take it away from you. I think they need to make you smarter.

So if somebody hires Brenton and they get hit by a bus, or he gets hit by a bus they’re smarter for the time they spent with them versus some advisors I know where they just take it and they do it. The advisor gets hit by a bus you’re back at square one. You don’t want that. And an analogy that I really like is Mary Barra at General Motors, Mary Barra, the CEO of GM.

GM’s not the most phenomenal high flying stock. They’re a company that’s had some missteps, but man, the fact that she’s kept them relevant in this marketplace in a time when you know, Tesla is kind of already eaten their lunch, but she’s kept them in the game is incredible. Mary doesn’t show up at work twice a year and says, Hey VPs, how’s this car thing going?

How are you using all that knowledge? Mary still goes to the meetings. She listens to the podcasst. She reads everything. She can, she asks her “advisors,” which are these VPs around her that know more than she does about their individual departments. So she’s filling her tank with as much of that as she can. And to Brenton’s point, what I just said means it still isn’t going to be easy, but the advisor’s job I think, is to make you smarter, not to just take it and run with it, which is why I often like it when people fire their advisor.

 I read online way too often. I feel like whenever people go online, they’re like, should I fire my advisor? Facebook says, yes like every time. We just like the witch hunt, I think partly, but in some cases I do like that because why the hell you asking Facebook about your advisor?

If you really trusted your advisor, you wouldn’t be asking Facebook. But the second thing is, and the piece I don’t like about the Facebook group, is it Facebook groups then we’ll generally say, well, you’re smart enough to do this yourself. You don’t need an advisor. Sure I’m smart enough, but I think that’s a straw man argument.

That’s that’s the wrong argument completely. Of course. I’m smart enough. It’s that, what are my weak links? What are the things I’m not seeing? Who’s going to argue with me who’s not emotional about my money? If I really have a growth mentality and I want to be the dumbest person in the room, which I totally do, then I need to surround myself with some pretty smart people who know me, not just that you get these people that spend all day in the internet.

How do you spend all day? On Facebook groups telling everybody else what to do with their money and, and still hold down your own fort? I don’t get it. Anyway, that’s my ax. Sorry.

Brynne: No, it’s all good. Thank you. Thank you. I do want to get into some of this stuff about just like asset tests, right? Because that’s a major thing in our lives.

Um, a lot of these programs that we rely on for our kids’ health care, a lot of these programs that they’re going to rely on long-term for their health care. You know what? The asset tests are getting raised in some states or even eliminating them, which is exciting. But I very much doubt that’s a pattern that we’re going to see sustained across all 50 states anytime soon.

So there’s still a very big part of our reality. If your child needs SSI benefits, there’s that $2,000 asset test, as well. And so, as we’re saving, as we’re investing, that’s something we have to be hyper-conscious of. I’m wondering with some of the accounts we’ve been talking about so far anyways, like when we’re talking about a 401k or 403b or a Roth IRA is the money that you put in there, first as a parent, is that sheltered from asset tests, whether that be at the state level for Medicaid or the federal level for SSI? And then subsequently if your child puts money into any of these retirement accounts, is that money sheltered, as well?

Brenton: There are some things in, in terms of, if you’re leaving that money to say a special needs trust as a beneficiary, there are some tax concerns that are above my pay grade.

In terms of you needing to find a CPA that you have to consider. So for example, if you’re leaving, what’s called a traditional 401k IRA to a special needs trust, there are certain tax considerations you have to follow to do that without jamming up the child. So you don’t want to just say, Hey, I created this special needs trust in my name and it’s the beneficiary for my 401k, without talking to a tax specialist.

There are other types of investments that are not counted in terms of an asset to the child. And that are also a little easier if you name a beneficiary of the account. We talked about the last time I joined you guys, not necessarily putting all of your eggs in the basket of retirement accounts in the first place.

If you’re a mother of a child with autism, you want to make sure that you do have a pool of resources that you can access at any age with no restriction. In our industry, that will be called a non-qualified account. It is, uh, in my opinion, infinitely easier to name a beneficiary of a non-qualified account as a special needs trust without worrying about, okay.

Do we have to have this money taxed first before we can put it there? Is it going to pass the asset test? So to me, I typically would say, if you’re in the scenario, you need to have a couple of things in your corner. You need to have an attorney who specializes in it. Need to have a financial advisor who’s able to know what they know and don’t know, you might need to have a trust company so that if you have this conversation before something happens to you, you are fully aware of what can go into this account and what cannot, what needs to be spent down before it goes into this account, because you don’t want to run into that and you’re not even aware of it. You’re not here, but you don’t want your child to be in a position where they’re running into that, as well.

Joe: And I made a distinction earlier between a defined contribution and defined benefit plans. Defined contribution just from a very straightforward point of view.

I agree that there’s some trust work that you can do. There is – this can get incredibly complicated, but just very basically, defined contributions may be subject to asset tests. Defined benefit, if you’re receiving a defined benefit plan that can’t be shut off, that may not be, or if there is some money that’s going into a defined benefit on behalf of your company.

That may not be. So generally speaking though, defined contribution will be subject to the, to the asset test computations and defined benefit, uh, probably not.

Brynne: Awesome. Thank you guys so much. Another thing that comes into the equation here is ABLE accounts. I don’t know how effective able accounts are as tools to save for retirement.

First of all, because they’re capped. The protection is capped at $100k. So if you have a hundred thousand dollars, anything after that is going to start counting towards your asset tests again, especially when it comes to SSI and other federal programs. Most people, I think right now, the people that have them, the vast majority of people are using them as a way to just save for everyday items.

I think when we had Paul on, he said the average balance in there is like eight grand. And so this is money that people are using kind of like a checking account. Like I’m saving up for this need that I’m going to have in three months. And so I’m saving it in the checking account and I’ll just take the money out that way, I don’t have to worry about that $2,000 asset test because it’s in my ABLE Account.

But when we’re talking about retirement account options, these accounts operate a lot like a 529, where a lot of states only have a smattering of offerings, like maybe two or three, and you get to pick one of those few investment options within the ABLE account.

So I’m wondering if they’re even a practical way to save for retirement or how they kind of fit into that picture?

Joe: I don’t think they’re your number one place to save for retirement mostly because of that hundred-thousand-dollar cap. When you go over the hundred-thousand-dollar cap, then you start running into problems.

And also the frustrating thing about ABLE accounts for me is that because there’s the latest stuff that I read about them said that nearly every state had one, it’s difficult to compare which accounts are good and which accounts are bad. And frankly, in this case, because many of them, because they’re designed to do very much the same thing, looking at things like the fees that are inside of these accounts, you’re going to have a very wide range from state to state when it comes to the accounts.

The cool thing about an ABLE account, you’re not limited to your own state, just like with the 529, you’re not limited your own state. But I don’t think this is the number one place to save for retirement. Brenton?

Brenton: I agree. I’m glad that you brought up the average account size because I don’t think the average consumer is, you know, sitting there with the a hundred thousand. But if they do, it immediately becomes something where it’s like, okay, well now we’re, we have some limitations that we didn’t have before. If you’re sitting there at the $8,000, you’re really at the point in that conversation we had where it’s like, okay, would I be better suited putting some money aside for myself? And if something happens to me, making sure that it passes in a way that’s structured well for my child? And that may not even be the retirement account itself. It might be how you structure your life insurance.

When we meet with parents in this space, one of the first things we have to make them understand is the better you are financially, the better your child will be financially. And that’s a very hard balance to try to strike, because you’re not always in control, as you all are aware of what happens on a day-to-day basis in terms of what you spend money on for your child.

But if you go to the extreme of almost every dollar that I’m putting aside in the here and now is for my child, and none of it is for me, whenever I have a financial emergency for me, where do I have to turn to that’s not restricted in terms of how you access those dollars? So I’m not trying to turn away from those accounts, but I would encourage people to consider adding to the mix, what am I doing for my own benefit? And if something happens to me, I can always make sure that it passes to my child at that point in time.

Joe: Yeah, I think, I think Brenton makes a good point and the bad news is, it feels to me like the government really gives us a moat there, right? Like at some point we have to decide, okay, am I ready to begin swimming this moat?

Cause if I start swimming, there’s some benefits that are going to go bye-bye and some precious benefits that we may need, but if I can swim it and I can reach the other side, well then life is going to be to your point, better for everyone.

Brenton: Even with traditional 529 accounts, it’s one of those things where the intentions are always pure.

And we will have a parent who will put, you know, $50 to $100 a month into a 529. And that may be inadequate in terms of what their expectations are and when they, when they will get to access that money. And you’ll have someone who’s doing this. I am putting $50 to $100 a month aside into this 529.

And there’ll be riddled with credit card debt, you know, no savings at all. And there are times when the best thing for that child is to pay off the credit card debt or establish an emergency fund, and then go back to those tools. Because as you said, when you start to actually tackle them, that’s a journey of its own.

So you do have to make sure you have those foundations set aside first.

Brynne: No, definitely. And one, one major advantage of the ABLE accounts, I mean, there are tax advantages with the investing side of things. Sure. But I think that the biggest, like immediate problem that they solve is just being a 529 that you can use to shelter from those asset tests.

So if you need to build emergency savings,

Joe: Absolutely.

Brynne: You can finally do that for the first time ever.

So there’s this entire concept of like, okay, so we have this group of people who are generally underemployed. They’re thinking about saving for their own retirement and that’s stressful because they might not have enough money for today.

And then on top of that, they’re looking at their kid and they’re like, oh my goodness. I should probably be saving for your retirement too. I’m not sure really yet. Some parents might not know if that’s going to be a need, but you want to save and prepare for it, anyways. We had talked about life insurance previously as a way to kind of fill the gap and solve this problem.

So I’m wondering if we can talk just a little bit about the different types of life insurance. What parents should be considering, particularly in this situation where I feel like term life insurance is great, it’s cheap, but for a lot of our parents listening, the reason they want that life insurance is because they want to know when they die, that their kid will have something.

So I’m wondering if we can delve a little bit into whole and universal policies, as well.

Brenton: So there are a bunch of different types of life insurance. Term life insurance is definitely going to be the most cost effective, but term life insurance is almost like renting an apartment. You know, you’re going to sign a lease and that lease is going to be for a particular period of time.

Let’s say that I sign a two-year lease to live in an apartment. Well, for those two years, I get all of the benefits and amenities that come with living in that apartment complex. I get trash pickup. I can use the gym. I might have a dedicated parking space. At the end of those two years, they’re going to come to me and they can say, if you want to continue living here and benefiting from these amenities, you have to sign a new lease.

Right? So term life insurance is similar. You have life insurance, and if you die within the period of that term, your family will get a death benefit. It could be 10 years, 15 years, 20 years, 25 years, 30 years. As long as you die within the period of that term, your family will get those dath proceeds. When you get to the end of that term, they’re going to come and they’re going to say, Hey, your lease is up for lack of a better terminology.

And you have to either try to find a new term policy, or you have to convert it to permanent insurance. Now permanent insurance, most people associate with whole life insurance, but whole life insurance is just one form of permanent insurance. And permanent insurance to me is akin to owning a home. Now you are paying much more for your insurance, but it’s yours.

It will never expire. It is essentially your house and the more you pay into it, the more equity you get in that property. Now the different types of permanent life insurance, whole life, universal life,  variable universal life, index universal life. Those are essentially just a way to tell you how that equity is going to be invested.

And there’s a lot more details that go into it. But when you talk about whole life versus variable versus universal, it’s essentially a way to say, Hey, you’re getting this equity and we’re going to take this equity and do something with it. Whole life does something different with that equity then universal life does with it.

And they do something different than variable universal, but those are the main components. Term insurance is temporary. Permanent insurance is permanent. It comes at a much higher expense, but because you own that policy for life, there is some equity that you have when you have that type of policy.

Joe: You will hear often that permanent life insurance is a rip off.

And I don’t personally believe that any type of insurance is a ripoff, that these policies were each created for a specific reason. They’re meant to fulfill some certain job. And I think the reason people think there is a rip off once again is because sometimes when people sell them, they’re not selling them for that stated reason.

So I think the key is, is to know where they all fit in. But term insurance people think is not a rip off versus whole life because they look at that cost difference that Brenton talked about. And let’s be clear, the reason why there’s such a cost difference is because of the insurance company and how they make money.

If the insurance company is going to make any money on a term policy, they actually make money almost all the time, because I believe the number still is around three to 4% of all term policies are ever cashed in for a death benefit. I mean, it’s 96 to 97% of the time that the insurance company is going to get to keep every dime that you give them as payment.

Yet we look at a whole life policy. I mean the name! The name, whole life tells you how often they should pay. If you keep it forever, it’s a hundred percent of the time they’re going to have to pay. So with that type of a payout difference, that’s why whole life insurance costs more is because you’re prepaying a lot of that.

And you’re allowing them to make money. The key difference that when it comes to whole life and universal, variable universal, all the other types of permanent life insurance. What really helped me understand better the difference between whole life and the rest of those, the universal family was, this: Was that whole life is bundled.

Meaning in most cases, you can’t see the guts of the policy. They just tell you how much to put in. And it’s all bundled together. And you don’t know, they give you a cash value number, but it’s all just kind of mixed in and it’s, it’s heavily guaranteed. Meaning no matter what happens, you can guarantee that this money is going to be there as long as the life insurance company’s around, or they sell it to another firm. Uh, which by the way, historically, as far as I know, has always been the case.

So you start paying, you know that’s going to be there. Universal is different and universal variable, universal index variable, universal these policies, you see the guts, you know how much is going into the savings account portion versus the amount that’s paying the premium.

And this is where I don’t know about for you, Brenton, but this is where I always had my client have an ‘A-ha.’ If we had to use this type of policy, which I think for this group of people that we’re talking about today would use it more often, I believe, than a lot of groups of people would use a universal or variable universal type policy.

And the A-ha is this: The policy only works well if you stuff it full of money. And what’s funny is, is that once again, going back to my rant about the internet a few minutes ago, you’ll see people saying, ‘Hey, my advisor told me I had to put $500 a month in, in this policy.’ Now Brenton and I know that’s probably not what’s really happening.

What’s really, probably happening, and I don’t, maybe it is, but, but what’s probably happening is maybe $50, $75, whatever is going toward the premium, the amount to keep the life insurance enforced this month. And the rest of it’s being socked into the savings account on the side, which actually, if we stuff that savings account full of money, in most applications, that means we’re going to pay less for insurance because you’re self-insuring over time.

So let’s say you have a policy it’s a hundred thousand dollars. Over time, you’re trying to put as much money in there. So it’s your own money, the more of your own money you put in the less money you pay for insurance. So those policies work really well if you have high cashflow. If you don’t have high cashflow, then they don’t work as well, which is also by the way, the problem, you know. We talked about that, you know, these families being so stretched and maybe not having great cashflow, when it comes to planning for a child’s retirement, it might be an awesome way to try to do it.

But if you’re going to really maximize it, having good cashflow is going to be important and, you know, I don’t know where it comes from.

Brenton: And the marketing of it and the, the salesmanship of it. You have to make sure that expectations are set appropriately because that cashflow element is so crucial to understanding that if you want to just have a permanent death benefit, maybe the death benefit alone doesn’t require as much cashflow.

But if it’s being positioned as ‘Oh, you’re going to put money into this tool and you’re going to be able to use it for retirement. And you’re going to be able to pay for your child’s care with all these different types of things even before you die.’ Well, you need a tremendous amount of cashflow in order to be able to do that,

And unfortunately, that is the part that’s left out of the conversation too frequently. When it’s being put in front of families.

Joe: Which is by the way, the most important part of the conversation.

Brenton: Absolutely. Absolutely. So you know, we will have a family who says, I want just the death benefit, and I want to know that it’s going to be there.

I don’t want it to expire. And when I die, this money is going to fund a special needs trust. Well, that may not cost as much. And we can find a way to make that permanent. When someone comes and says, ‘I’m putting. $50 a month or $25 a month into this whole life insurance policy or this universal life policy. And at 18, I’m going to be able to buy my kid a house.’

No, you, you will not, not at $25 to $50 a month. And shame on the person who told you that you would be able to. So it’s just about making sure that you understand what are my expectations when I get it? And based on those expectations, does this fit the need?

Brynne: Gotcha. Gotcha. And that’s a huge question. Just like, as a layman that I always have is the policies that are marketed as cash benefit. Kind of like what you’re talking about, this insurance is an investment of itself and then you can withdraw against it later. That sounds like that’s something we should be avoiding?

Avoiding, whereas looking at the permanent death benefit is maybe more, more of a positive, helpful thing. Am I, am I understanding that correctly? Or am I missing some nuance?

Brenton: I wouldn’t say that you have to ignore the fact that you can borrow against those policies, because that’s absolutely something that you can do.

It’s something you should ignore if you’re putting $25 to $50 a month into it, because then that’s unlikely. But those policies do work in the way that they are described. It’s just about how much are you going to contribute in terms of being able to meet those expectations? I’ll give you an example. I started in this business when I was 25 years old and I started in an insurance shop.

So they told me at 25, well, you need to get permanent life insurance. So I did. And fortunately, because I got it at 25, it didn’t cost me a tremendous amount of money. And now years later, I won’t say how many years later, but years later that policy I have what’s called broken even, right? I have more in my policy than I’ve contributed to it over time.

So, you know, we for compliance reasons, can’t say it’s free insurance, but if you look at it, I’m going to have a death benefit. And I have money inside of my policy that’s worth more than I contributed to it. I can take loans against that cash value, but I also have been contributing a significant amount of money to it for a significant amount of time.

If you are in the same scenario where you have that cashflow and you can do the same, you will be able to have those same benefits. But what were your expectations going into it? Whether that you’d be able to access that money in five years? That typically is not the case. It might be 15 years or more before you can really start to see that level of growth in a policy.

So if you’re expecting to be able to go, ‘Oh, I put this money in it in 2022, and in 2025, I started taking loans against it.’ No, that’s not what you should be going to if that’s what you’re hoping to do. You would need to focus more on the death benefit. But if you said it’s 2022, I’m going to start putting a few hundred dollars a month into this thing.

And 20 years from now, I’m going to start taking loans from it. You might have that ability to do so. It’s all about what were your expectations when you started?

Joe: This is some of the frustration that I have with concepts out there, like infinite banking, which uses insurance. Infinite banking can be phenomenally – the math works on infinite banking as long as you have high cash flow.

These life insurance strategies that look really good? They work really well if you have high cashflow. The problem is that if you’re using a strategy that requires high cashflow, the second things derail, and a guy like Brenton sees this with his clients far more often than the average person does.

Certainly when I was a financial planner working with maybe 150 families, I’d see things, you know, many times a year where somebody’s cashflow all of a sudden changed. And while you may feel confident that yours won’t, you start looking at these law of larger numbers and there’s a better chance that it won’t.

So my problem with infinite banking is not that these concepts they’re showing you on Tik TOK videos don’t work it’s that when it unravels, when your cashflow unravels, it, it goes from great to suck in a hurry. And when you involve this life insurance product in these schemes, man, they become very, very expensive.

Brynne: Yeah, the way I understand it, a good number of policies actually end simply because people can’t afford to keep up with the premiums. And I think in America, that’s a huge thing, too. Like the average American income, we like to think it’s this perpetual line that’s going to go up forever. And I think a lot of our families listening know this part all too well.

That’s not actually what reality is in a lot of American households. We see huge fluctuations in income over the course of a lifetime. So that’s, that’s a tough thing.

Brenton: People really never anticipate how things can change for the negative. And that sounds very pessimistic to stay, but I’ll give you an example.

You talk about income. It may not even be that your income decreases. It may be that your expenses increase. You know, maybe there’s a, a therapy that you have to pay for for your child that you just didn’t expect and is not covered by any insurance. And it’s a thousand dollars a month, but your child really needs it.

You know, that’s a life-altering, budget-altering event. And if you signed up to pay for a life insurance policy that only worked when your finances were in perfect condition, he’s right. Is it’s going to have some negative impacts into how you fund that policy. So when we set some, you know, some premiums for a person who is interested in permanent life insurance, there are many times where we go lower than what the client asked for.

You know, a client will say, ‘Oh, I think I can spend a thousand dollars a month on this thing.’ I’m like, okay, well, let’s do four hundred. And let’s do this for a few years and let’s see how things go. And it’s not because we don’t want to offer them that higher policy. It’s because again, it’s looking at all those scenarios, we might be able to say, yeah, that’s happened to us in the past.

And then the person that had a couple children and they decided that one of them was going to be in private school and then one of them needed a therapy and then another needed a tutor. And all of that cashflow that they had when it was just the two of them was sucked up. And now it’s harder to pay for that policy.

So you have to make sure that you understand that nothing that you do in your life happens in a vacuum. And that’s especially true in finances. You cannot sign up for something that has a required payment and you can only make that payment when things are perfect because things won’t always be perfect.  

Joe: I think that’s the issue with a lot of planning is that I’ve seen in my experience.

What we solve for is optimization. We want to optimize, I mean, a lot of what we talked about today is we optimize our insurances. We optimize our fees. We optimize our asset allocation. I think, instead of solving for optimization, we actually, we optimize for our tech strategy. Uh, we optimize for benefits.

I think we should be optimizing for flexibility, so that as life, hands us, these unknown things that always come out of the blue, that we have the resources to not have it derail our incredible plan. And in my experience, I don’t see enough people solve their financial plan for flexibility. Too many of us are just trying to optimize everything and then we get locked in.

Brenton: I agree, you know, there’s this concept of the ideal versus the reality, and there’s no better place to talk about that then on Mom Autism Money. And it’s why, when you talk about even how you structure your investments, the ideal scenario, when we talk about retirement planning would be for you to put money aside for 30, 40 working years.

And never touch it and live off of just the lowest expenses that you can possibly live off of and then retire and just ride off into the sunset at 60 years old and life would be perfect. Well, if you’re listening to this podcast, that’s not your situation. You’ve had life throw you some curve balls. And when you look at how you structure your investments, you having all of your money in a place that you can’t access until age 59 and a half with, you know, certain allowances that might be someone else’s ideal, but it’s not your reality.

So you do have to plan for that flexibility that says, yeah, I hear you talking pundit. I hear you financial advisor who doesn’t understand my situation. Yes. In a perfect world, I would have all of my money in tax deferred investments, but that’s not my reality. Give me something that suits my reality.

Joyce: I agree. I mean, for someone that started with one child in a spectrum, Second child in the spectrum, fourth child on the spectrum.

That’s what I deal with. I think that for me, as a person, as a family, writing about money and being debt free and getting there, I come to the point where I am just like, like you said, expenses are growing. Income is staying this. You know. Pandemic. Regression from the pandemic. Hospital visits. I needed to hear this because there are so many people out there talking about finances, talking about FIRE, but it’s just to me, it’s just marketing.

You know, if you retire this time, you can have this, or if you have this. So I am listening and I am agreeing I’m actually taking notes here so I can write about it in our blog. But I do agree. But one thing that I want to ask, what do you suggest we do as families with multiple children in the spectrum?

What, where do we start? Do we educate ourselves? What books should we get? Where can we find you? I mean, things like that because there’s so many, so many out there. So many influencers, so many ideas. And some of them are so like, what are you talking about? Like, so what as a family, where can we go to get started?

Joe: I can take that question from the media side. I think there’s two things. Number one is no matter what you’re going to need to hit a search button and you’re going to have to start sifting when it comes to people on the books media side. And I think number one is finding people that understand that these issues are more complex.

That there is complexity in life and people that don’t just have a one size fits all approach. But then second, I think often it’s also about fit in the way that you see the world. You know, I had a great mentor when I was a young advisor named Catana and she told me, she said, over time, you will attract people who are like you, and you will repel people who aren’t.

And you’ll find that often the person, the people that you work best with may not have the, all the knowledge today that they need to handle your situation, but if they have a good degree of it now, they’ll be very willing to do the extra legwork and they’ll know where to find it much quicker than you will because of the fact that you have a connection with them.

So, unfortunately, I don’t have a specific place, but I never, I don’t think it hurts to know the basics no matter what it is, you know? So getting a firm foundation in the basics of personal finance is a great place to begin and then realizing the complexity. I feel like often we start off with complexity and how we’re different.

And I think it’s much more like there’s a great book about building a business called the E-Myth. And he talks about how this woman has a bakery and what a master baker does is they learn how to build a cake, which there’s some definite rules on how to build it. And then when you become a master, that’s when you realize how to break it.

And where to break it and where this doesn’t make sense for me. So I think instead of starting with the differences, I would start with the similarity. How is financial planning done?  Which is frankly, pretty basic stuff. Then, okay, well, for me, I need these things that are different than for other people.

Brenton: That’s so insightful.

I was touched by that, you know, I, I think when you look at  two different levels, when you’re consuming information and that’s, if you’re consuming financial media, or even if you’re talking to individual adviser, XYZ. That first foundational layer is so similar, the principles, the concepts are so similar, regardless of persons. How to save, the different rules about financial behaviors and human behaviors.

So if you find a person or an outlet that speaks to you in a way that you will listen to cover those foundational elements, by all means, listen to it. To me, that second level is where it gets dangerous. And it’s when you start to form personal philosophies. And to me, that’s where you need to make sure that what you’re consuming or who you’re talking to, you are their average consumer.

So, you know, there’s no reason to name particular influencers or particular outlets, but there are outlets out there who position their advice as if it’s the only way to do things. And if you’re going to tell me that your way is the only way, I need to make sure that I am your typical consumer. Like, I don’t agree that there’s one way to do everything, but if I’m going to believe that, I better at least make sure that you’re typically talking to people like me. If I’m not your core consumer, and then I’m following your specific philosophy, that’s really dangerous.

So when you get past that foundational level, and you’re saying, my situation is unique, you need to be in a place where people are talking to people with your unique situation. You can’t then when you’re forming philosophies, go to the outlet that talks to people who are just nowhere near what your situation is.

You have to find more targeted advice when you’re starting to take action versus building the foundation.

Joe: Man, I absolutely love that. And when you get to that targeted place, I don’t know where it’s going to fit, but I do know when you should run. And I think the place to run is this. If the book, the program, the advisor, the whatever leads with product and not process, you should always run. Because when somebody tells you that they have this thing that they love, they have the strategy they love, and you should listen to them because this and that…

No, everybody, I mean, we talked about it so much today. There’s so much flexibility here, and everybody’s so much different that if somebody leads with product, you just need to get out.

Brynne: Such wise words. And I feel like that is something that Joyce and I are working on is like trying to put together some resources for parents in our situations, because for us, it is very hard to like, even when we Google these things, there’s not a lot of information or data out there for us. So hopefully start providing people with a place to start that research. Thank you guys so much for being here. We’re going to have to be more expansive on this topic in future episodes too, I think.

So, I’m just wondering where our listeners can find you and follow you and just learn about any projects right now that you’re really excited about.

Joe: I have a brand new book called Stack, co-written with a great friend, Emily Guy Birken who has four other books, one of which is The 5 Years Before You Retire. She’s a great writer.

And, uh, we had a lot of fun writing it and it is a book that’s meant to be a basic guide, begins with stacking your first Benjamin into building a stack of Benjamins into protecting your Benjamins and then building stacks upon stacks of your, of your Benjamins, which, uh, two things on that. Number one is we have a book tour coming.

Hopefully we’re coming to a city near you, stackingbenjamins.com/stacked. And we’re going to try to have financial influencers from each city. So you can get to know some of the other voices out there, but stackingbenjamins.com/stacked. And of course you can tell, we use the word stack a lot. We have our Stacking Benjamins podcast, which is every Monday, Wednesday, Friday, wherever finer podcasts are distributed.

Brynne: Only the finer ones.

Joe: Only.

Brynne: And guys, for those of you listening, I know a few of you have reached out to me like after you read The Feminist Financial Handbook. And first of all, thank you so much for that. It always means so much to hear back from you. But another thing I want to point out here real quick while we’ve got Joe with us.

You’ll probably recognize Emily’s name. She wrote the forward for that book. So if you enjoyed that forward in particular, you should definitely check out that book. Her and Joe did something just so fun and so amazing with it. So I highly, highly recommend.

Joe: Thank you so much.

Brenton: And you can find me at brentonharrison.com.

I’m also on YouTube. If you type Brenton Harrison Financial Advisor, you can find my channel on YouTube. Uh, we do a lot of general financial advice and wellness videos and educational videos. So hopefully that might be a fit when you’re trying to find those foundational elements. On social media. I will tell you, I, for years, I’ve been the old man in the cave who just avoided it, but I’m coming out of the cave.

Joe: Uh, I thought that was my territory.

Brenton: So on Instagram, you can follow me @wealthanchors. We actually just started the page. I was literally shoved into it. We’re going to make sure we have good content for you there as well.

(whooshing sound)

Brynne: Thank you so much to Brenton and Joe for joining us today.

Thank you all for listening. It truly means a lot that you keep joining us week after week. And if you enjoyed this episode, we’d appreciate it so much if you could leave a five star review  on your platform of choice to help us reach even more parents of autistic kids. All right, we’ll see you guys next week.

Joyce: Bye.

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