Our Trip to a Retirement Workshop, Part 1

As you know, we’ve been to three direct mail retirement seminars so far.

Two have been pretty good (the first and third ones — we even met with two planners from the third seminar) and one not so good (the second seminar.)

What you don’t know is that we actually planned to attend a fourth one. But the day before it was scheduled the seminar was cancelled as the speaker came down sick and didn’t want to risk passing it along to attendees.

It’s supposed to be rescheduled, but I’m not sure I want to attend another one of these for a while. That’s because we recently had a similar but different kind of invitation come through the mail.

This one was a workshop, class, or seminar — whatever you want to call it.

We attended because we wanted to get more in-depth retirement thoughts and see if we’d learn anything.

The workshop covered a wide range of topics and some “interesting” points of view. In fact there’s so much to share with you that I’ll be reviewing the workshop in three separate posts!

But before I dive in completely, let’s back up a bit and start from the beginning…

Our Invitation to the Retirement Workshop

In early February we received a mailer that invited us to attend a workshop (my words — they called it a “course” here and there, but there’s no consistent labeling).

Here are the details:

• It was called “The Changing World of Retirement Planning”.
• It offered two sets of dates, each for two nights.
• The course was three hours each night.
• It was to be held at the University of Colorado – Colorado Springs which is about 20 minutes from our house.
• The workshop was offered by the Society for Financial Awareness (SOFA) which is “a 501(c)(3) non profit public benefit corporation providing financial education across America, one community at a time.”
• Our teacher was to be John Chapman from Chapman Private Client Services.
• The flyer was eight pages long and detailed the course.

Here are the sections the flyer listed:

• Section 1 — Retiring in the 21st Century
• Section 2 — Tax Rate Risk
• Section 3 — Retirement Distribution Planning
• Section 4 — Estate Planning
• Section 5 — Maximizing Social Security
• Section 6 — Protecting Against Market Loss
• Section 7 — Retirement Distribution Pitfalls
• Section 8 — Long-Term Care Planning

I must say, I was intrigued. Here was an organization/planner offering six free hours of retirement education. It made me wonder, “What’s up with that?”

Of course I assumed it was a way to gather clients, but since I’m always up for a financial adventure (as is my wife), we decided to sign up.

We picked the classes held on Tuesday, March 3 and Tuesday, March 10, each from 6:30 pm to 9:30 pm.

Arriving at the First Class

On Tuesday, March 3 we headed out around 5:30 pm since we weren’t exactly sure where we were going.

Plus traffic gets a bit crazy around UCCS at that time, so we wanted to leave plenty of room in case it took us some time to find it.

It did not take us much time at all. By 6 pm we were on campus and in our room.

Interestingly enough, we were not the first ones there (we were second).

Just before we walked into the classroom we checked in with two ladies at a table and received our workbook.

The workbook would closely mirror the presentation slides. This was nice, none of our dinner events had provided any notes, but I would have preferred the workbook to match the slides exactly as it would have been easier to make sure we had everything recorded.

Anyway we got our seats and as people filed in the hosts brought in cookies, coffee, hot chocolate, and hot apple cider. Free stuff! We were starting off on a good foot! 😉

The seminar began promptly at 6:30 pm.

Introduction

John kicked us off by introducing himself, the organization he was representing, and the workshop itself.

The highlights:

• John was a financial planner based in Colorado Springs.
• He has taught these courses for years in both in Colorado and California.
• The course would share general financial information. If we had specific, personal questions pertaining to our situations he offered a free “Strategy Session” which “most people take advantage of”. Of course.
• Each night would run 90 minutes of teaching, then a break, then 90 more minutes of teaching. I wanted to point out that unless the break was 0 seconds long, we’d be over the three-hour time frame, but it seemed pointless to bring up.
• This was “not a disguised sales presentation” like those “buy-you-a-steak-dinners.” Uh huh. It already seemed to me like the purpose was the same — to get new clients.
• He is not an attorney or CPA. He is a financial planner. Good to know.
• SOFA developed this material. They work with planners who are 1) independent (not tied to a company selling insurance, mutual funds, etc.) and 2) fiduciary to educate the public on financial matters. I have no proof but in retrospect it seems like a bunch of planners created this non-profit as a way to generate new clients. Yes, I’m a bit jaded. But I wouldn’t be surprised if that’s the real deal with SOFA.
• This is not a sales pitch. Whenever someone says something isn’t something twice in this short of a period, it is what they say it isn’t. Sure, he wasn’t pitching products, but he was selling his services, starting with the free consultation. I didn’t have a problem with this — he has to get something out of it — but it did annoy me when he kept telling us the class wasn’t something it clearly was.
• If we wanted more info, we could set up a private meeting with the ladies outside. And there it was, another mention of the free meeting.
  SOFA offers other classes and he encouraged us to check out their site.

I did some web searching on SOFA and found this in a forum:

I read another review by a SOFA “member” (presenter). He indicated that how it works is that SOFA itself is a non-profit, and the presenters “donate” their time giving the presentations – which is how they are free. However, you have to realize that these presenters pay SOFA for their membership and then sign up to do the SOFA presentations as a mechanism to generate leads for their real business, turning attendees into paying clients. The presenters primary occupation might be as a financial planner, a wealth manager, an insurance salesperson, etc.

Not sure this is accurate either but if I was a betting man I would say it is.

Anyway, after the preliminaries we were ready to get started…

Section 1 — Retiring in the 21st Century

He kicked off section 1 by showing us this video:

It was cute and meant to illustrate how absurd it was to lend someone money who couldn’t repay.

He then launched into a look at the federal deficit and drew the comparison between it and the video.

He also stated that because of the deficit tax rates would most likely be higher in future years. He noted that later he’d share how we could reduce our retirement tax burden.

John then talked a bit about retirement itself and asked us to think about what our retirement would be like, especially what we would do with our time. He told us it was our homework to think this over and have a chat with our spouse (if we had one) about what we wanted to do when we retired. I told my wife we’d simply look at our calendars and that’s what we’d do in retirement. Ha!

He said we needed a clear vision and plan for retirement or else it was likely our retirements wouldn’t be enjoyable. This matches what I’ve read in almost every retirement book.

As such, I was starting to track with him on this line of thinking. Then he pulled back a bit and started sharing some details from the workbook.

The first thing he listed was what they called the old retirement paradigm. It went like this:

• You work for one company your entire life.
• You retire at 65 and receive a pension.
• The pension covered most lifestyle expenses.
• Social Security was added on top for supplemental income.
• There was very little emphasis on one’s own investments.

Then he contrasted the way it was done in the past to how it is now. John said we currently we operate under a new retirement paradigm which goes like this:

• The average person now works for seven different companies during their career. Interestingly, I worked for exactly seven different companies if you only count parent organizations. If you list major divisions, which were large enough to be their own companies, I worked for 10.
• The 401k has replaced the pension for many.
• Retirement is mainly self-funded.
• Social Security may cover very little of the retiree’s lifestyle requirements.
• Some never retire but choose to stay engaged at some level.

Overall, I would say both of these are generally correct. There’s no doubt that the world of retirement saving has moved dramatically from pensions to self-saving plans.

Then he summarized section 1 with the following:

• It’s as important to know what you’re retiring to as it is what you’re retiring from.
• Your retirement will likely look a lot different than the previous generation’s retirement.
• You need to adopt updated paradigms as you plan your retirement.

Not much to criticize here. The information was good so far IMO. But it felt like we were being set up.

The message was starting to come through: “Things are changing and you need to be ready for them with new/different retirement plans.”

It felt to me like this was step one of a few which ultimately would end with, “I’m the one who can successfully help you get through retirement.”

From there we moved on…

Section 2 — Tax Rate Risk

In this section he followed the same pattern as in section 1, except this time the focus was on taxes.

According to the workbook, the old tax retirement paradigm was:

• You will be living on less in retirement.
• You will therefore be in a lower tax bracket.
• Given this, tax-deferred investing is the best option.

And supposedly the new tax retirement paradigm is:

• You may need just as much income in retirement as you did during your working years.
• Your marginal tax bracket may rise based on the country’s fiscal challenges (rising deficit).
• You may lose many of your greatest tax deductions in retirement.

We then launched into slide after slide and “expert” after “expert” showing us how current tax rates were historically low, the deficit was out of control, and as a result only a moron (my word, not his) would believe that future tax rates would be equal to lower than they are now.

Add to this that we’ll likely need to earn as much in retirement (so income won’t decrease) AND we’ll lose many of our tax deductions (like mortgage interest and charitable giving) in retirement. When all this hits to make the perfect tax storm, we are in for a world of pain in retirement.

I’ll get to my thoughts on this in a minute. For now, here’s how the summary for this section came down:

• Absent dramatic and permanent spending cuts, tax rates in the future are likely to be much higher than they are today.
• There is historical precedence for higher taxes.
• You will not likely have as many deductions in retirement as you did during your working years.
• Retirement accounts like 401ks and IRAs may be exposed to inordinate amounts of tax rate risk.

Here are my thoughts on this section:

• I don’t think it’s right to say people will need as much income in retirement as they needed during their working years. Our experience has been that most non- or semi-discretionary costs have gone down in retirement (car-related expenses, clothing, eating out, and the like). Our spending has gone up mostly because of our discretionary choices (like travel) which could easily be eliminated if we had to (as noted in my post How to Become Financially Independent in Five Years.)
• But forget us, even for the average person, I think it’s more likely retirement spending will go down. The wild card is health care, of course. But that’s offset by no mortgage payments (which should be the case in retirement) as well as big reductions in work-related costs (local travel, clothing, eating out, etc.). I know some may disagree, but after a quick Google search I found this Marketwatch article which says: “According to the latest Bureau of Labor Statistics data, which is based on 2016 figures, “older households” — defined as those run by someone 65 and older — spend an average of $45,756 a year, or roughly $3,800 a month. That’s about $1,000 less than the monthly average spent by all U.S. households combined.” The difference would be even greater if you looked at 65+ households versus “below 65” households (instead of all households).
• Notice that the workbook uses “may” a lot, since even SOFA acknowledges that no one knows what the future holds. But there wasn’t a lot of “may” in what was said (only what was printed). It was presented as almost a fact that tax rates would go up. I can see their reasoning and they may be right, but no one knows the future, so the hard sales job on future taxes being higher was a turn off.

FWIW this was the same line of thinking used by the third direct mail planner we went to. I’m wondering if this is the latest “thing” for planners to sell: taxes are going up, you don’t know how to minimize them, and I can help you. Seems like a good sales pitch — create a problem and then solve it.

That’s it for section 2 and the start of this workshop.

Any thoughts so far? Agree or disagree with what’s being said?

To read on, check out part 2 of this series.