Nate Reineke (00:12)
Hello physician moms and dads. I'm Nate Renneke, Certified Financial Planner and Primary Advisor.
W. Ben Utley (00:18)
And I'm Ben Utley, certified financial planner and the service team leader here at Physician Family. Welcome to the show. Nate, what do we have on tap today? Some listener questions?
Nate Reineke (00:28)
Yes, then I realized we missed our opportunity for April Fools.
W. Ben Utley (00:34)
⁓ wow, that's a bummer. Hey, I know we didn't talk about this in the prep, but I have a little personal story I want to share. that okay? And I'm not intentionally hijacking. I just forgot to tell you about this in the prep. So I wanted to tell you, I went to Costco last weekend and I bought two Adirondack chair kits. And I managed to lose the instructions to the first kit. And there's like...
Nate Reineke (00:36)
I know, I was gonna-
Okay, yeah, go ahead.
Mm-hmm.
W. Ben Utley (01:01)
eight pieces to this thing that are like big chunks of Adirondack chair and they're like 24, 30 fasteners. And I know that's how many there are because I had to study them in order to put this thing together without the instructions. And so I was like, I'm curious how long this is going to take. It took me three hours to build the first Adirondack chair. You know how it took me to build the second chair?
Nate Reineke (01:13)
Mm-hmm.
How long
W. Ben Utley (01:25)
25 minutes. And the reason it took me 25 minutes instead of 20 minutes is when I cut open the packet of fasteners, they hit the ground and just went everywhere. it took me five minutes to get them up off the floor of the garage so that my wife didn't drive in and puncture a tire with it anyway. the point of the story is that it takes longer the first time to do something. And it made me think about backdoor Roth setup.
Nate Reineke (01:36)
You
W. Ben Utley (01:52)
So I'm hearing a lot of Backdoor Ross Setup these days, because it's tax time. are talking about that. They pay their taxes. like, I know this is something I need to do. And I haven't done it. OK. So for all you listeners out there, Backdoor Ross Setup is part of step two of our three-step process. And it's something that we do for our clients. But I remember the first time that I ever did one of these. was right when Kyle was coming on board. This is a decade ago. Kyle's been with us a decade this weekend, right?
So, ⁓ I think that backdoor Roth set up took me somewhere between six and nine months as a financial advisor, because A, I didn't want to screw it up and B, I had never done it before. The next one took me like a month and now it takes like an hour or two hours worth of our labor to be able to set one up. And then in terms of the actual doing of it, the Roth conversion, I believe it was last year in December.
Kyle did over 200 backdoor Roth conversions in an afternoon. So the point of the story is that when you do something for the first time, it's going to take forever and there's a good chance you're going to screw it up. Now with my Adirondack chairs, no big deal. I can just back out the screws and then just try again. if push comes to shove, I can go back to Costco and spend another 126 bucks. But your retirement is different. You screw up your retirement, you got one shot at it.
Nate Reineke (02:56)
Mm-hmm.
Mm-hmm.
W. Ben Utley (03:17)
So don't mess that up. Take your time as you're planning it and think about it very carefully. So that's my little personal banter for the day.
Nate Reineke (03:22)
Yes.
Nice, I like it. Do you want to my failed April Fool's joke? I was going to introduce us as the Attorneys Family Financial Advisors. We serve attorneys now! I missed it.
W. Ben Utley (03:30)
Yes.
That's a... That's a howler.
Well, when people
ask us, we do tax prep all the time, we don't. So maybe we should call ourselves like the, ⁓ the accounting physician, physician, accounting advisors or something. I don't want to do tax. That's, that's looking back.
Nate Reineke (03:49)
Yeah.
Yeah, there's always next year. Cause all the bloggers came out.
Yeah, all the bloggers came out and they had all these articles. I'm like, I missed it, but that would have been last week. All right. So not from attorneys. We got questions from doctors here. The first one is from a radiation oncologist in Georgia. Despite having a pretty simple situation, we're both W-2 employees. I don't like filing my own taxes.
Should I pay someone to do it for me?
Can I start Ben?
W. Ben Utley (04:23)
Yeah, far away.
Nate Reineke (04:25)
So here's the, so there's a problem. We've talked about this before, but the problem is these tax professionals, they don't really want your business as a W-2 employee, mainly because it's not all that profitable. So everyone seems frustrated in this relationship because you're sitting there thinking, this is really simple. You're sitting there thinking, I have to gather all these documents for you anyways. That's most of the work.
and they're sitting there thinking, I'm barely making any money. So that is the butting of heads of simple doctors' taxes with CPAs or tax people. And so the answer to this question is simply this. If you hate it so much that you're willing to pay someone basically $1,000 an hour to do it, because that's what it's going to cost. It's going to cost $1,000 and it's going to take them about an hour, then do it.
W. Ben Utley (05:21)
Mm-hmm.
Nate Reineke (05:23)
But if not, if you don't want to do that, you have to realize most of the work is gathering these documents. If you're willing to do it on TurboTax for another hour, so maybe one hour gathering documents, another hour on TurboTax, then you can save a thousand bucks. That is the gist of why this is so frustrating for people who are W2 employees.
W. Ben Utley (05:46)
So I got this question literally yesterday. I know this is, you just read about a radiation oncologist in Georgia. I got the same question from a radiologist in Georgia. I know they're not the same thing, but same state, same darn question. Like, you know, the guy was a hospitalist. No, not a hospital, was a radiologist, sorry. Employed by hospital though, W-2 employee, and was thinking about having somebody prepare their taxes. Like, you you should do this yourself.
Nate Reineke (05:49)
Mm-hmm.
Mm-hmm.
W. Ben Utley (06:15)
You can either use TurboTax or my kids actually use FreeFile, like the government sponsored one. And they like it better. It's actually easier than TurboTax for them and it's free. Right. So it is mostly they'll like it because it doesn't nag them for an upgrade. So my, my, my daughter, her roommate, who's an engineer does this. have another daughter who does it and they all like it. So you might give that a shot. But I told them the same thing. And it's here. It's really what it is. This is a labor problem.
Nate Reineke (06:26)
Mm-hmm.
Yeah.
W. Ben Utley (06:44)
Right? So there's not a huge availability of accountants coming out of accounting school. So that's the first thing. This is just not a lot of bodies that want to do this. Second thing is if you're doing tax preparation, you're working ungodly hours. You're literally working Saturdays and Sundays, you know, somewhere between 18 and 20 hours a day for three weeks in there. It's miserable. And then if all you're doing is tax prep, the rest of the year, it's crickets. So what you have is a staffing problem.
You have to staff up for an event that lasts about a month and a half, two months. And for the other 10 months of the year, they're twiddling their thumbs. So CPAs in particular, accountants, you people that are trained as CPAs rather than just tax preparers, like business clients, because business clients have needs that last all year long. They have true accounting issues, bookkeeping, they got, you know, estimated taxes, they've got continuous questions about taxes. That allows them to smooth their work.
Over a 12 month cycle such that by the time April comes around, they're basically just like putting a stamp on that. They've got all the data collected. And so for them, that's a real business, but as they have this glut of W-2s, that's just kind of a pain for them. Right? So not that our listeners that are hardworking doctors out there in the trenches doing this as hospitalists or clinicians, know, your work is valuable. Your work is valid. It's just your tax returns are so darn simple.
that they can't be bothered. So for you, know, really, like Nate said, the worst part is gathering all the documents. But after that, putting it together, really pretty straightforward.
Nate Reineke (08:19)
Yeah. Okay. Anesthesiologist in Illinois said, before I connected with physician family, I bought a couple hundred thousand dollars of single stocks. Several of them have gone down in value and I'm wondering, should I sell them now or wait for them to come back?
This is always a funny one because I don't think they realize they're asking this question, but it is like a moral victory is all they're asking. Should they wait for the moral victory? Because at the end of the day, if you sell stocks at a loss and you get into your agreed upon investment strategy according to your retirement plan, that is a win. And if you sell them at a loss, you just save some taxes.
W. Ben Utley (08:51)
Mm-hmm.
So what do you say? Yeah, sell them now. and by the way, I would bet that the stocks that they bought include like Netflix, Facebook, Amazon, Tesla, Apple. I bet there's nothing in there that's terribly creative. In fact, those are like the top stocks in the S &P 500. They're the top stocks in the, the like
Nate Reineke (09:05)
So I sell now. Sell now.
W. Ben Utley (09:31)
Vanguard Total Stock Market Index, you know, I bet that they have kind of replicated a little slice of the large cap market. Very seldom do I see people buying micro caps and doing that, right? And if that's you, just give up on the individual stock thing. Just, just buy the index really, you know, so sell those fruit as losers, turn around and buy some index funds by which I mean not just S &P, you know, the whole world is not focused on the United States anymore.
Nate Reineke (09:41)
Hmm.
W. Ben Utley (10:00)
foreign markets have begun to perform. There's some talk about the quote unquote Mar-a-Lago Accord where if they devalue the US dollar, those foreign markets are going to be worth something. So this is a time when we really need to be focused on actual diversification. Not diversification because you hold the 500 stocks in one country, but diversification because you hold a big basket of equities globally. I mean, this is a weird time. Strange things are going to happen. And when that's the case, you don't know what's going to happen next.
Nate Reineke (10:24)
Mm-hmm.
W. Ben Utley (10:29)
which we truly don't, diversification is your friend.
Nate Reineke (10:32)
Mm-hmm. Yeah, if you want to talk about stocks in the hot tub, just go inside the index fund and see what stocks you own in there. Because you already own a bunch of Tesla and Microsoft and all that. Yeah.
W. Ben Utley (10:42)
Yeah, that's right. Yeah,
that's right, that's right. And this is the other thing. Next year, two years from now, five years from now, regardless of whatever's hot, you're gonna have it, because it's gonna be in your index fund. Yeah.
Nate Reineke (10:55)
Yeah, that's right.
Okay, let's see. My oldest, this is an OB-GYN in Ohio. My oldest son has a mild form of autism. While I want to be prepared for the possibility of him attending college, I currently do not believe he will go. What should I do?
there's a great solution for this that I feel like doesn't get talked about very often, which is it's called. Yeah, that's right. It's called the ABLE account. So an ABLE account, we've heard, we've talked a ton about 529s. It sort of looks, smells and acts like 529, but it's actually even better. So it can pay for college. It can also pay for things like transportation.
W. Ben Utley (11:24)
Are you able to tell us about it, Nate?
Nate Reineke (11:47)
medical care, housing for a child who has a disability. So you, if they're diagnosed with a disability before the age of 26, I believe, you can invest the money. can, I, for this OB-GYN here, I wrote her a college plan, and we're just saving like we're saving for college, except there's a good chance it won't be spent on college.
and no penalties or anything. I did learn something that I thought I knew everything about these accounts. There is a smaller limit for how much can go into an ABLE account. Luckily, if you're planning for state school, usually the limit is high enough to pay for that. So save an ABLE account.
W. Ben Utley (12:14)
Yeah.
No,
correct me if I'm wrong, but I believe I saw something. It was new tax law last year or it's proposed tax law. don't recall, but it raised the age limit from whatever it was to something higher. And you know, what's funny is I actually saw a physician who was a client of ours. They came through just step one of the planning process and realized that they could open up an ABLE account for themselves because they were diagnosed before 26. This is an adult.
set up an ABLE account for themselves, and also had a bipolar child and set up an ABLE account for them. So there's a lot of power to this. you say child, you we always think of child, think of somebody who's shorter than we are, right? But child is like your offspring, even your adopted offspring. So there's a lot of power in these vehicles. If you use them, they can be used creatively, and I don't mean abusively. I mean like in circumstances you might not have seen coming for which they were actually originally intended.
Nate Reineke (13:03)
Mm-hmm.
Yeah.
Yes.
That's right. Yeah, well, it always feels creative when we talk about them because no one talks about them, but really they're pretty straightforward. mean, we went and opened one up in about five minutes. You know, you...
W. Ben Utley (13:42)
I
remember when 529 plans came out, Nate, it took me, I don't think they were widely adopted amongst the physician community for almost 20 years.
Nate Reineke (13:52)
which is incredible. Yeah.
W. Ben Utley (13:54)
Yeah,
and ABLE, you know, narrower niche, powerful tool.
Nate Reineke (14:00)
Yeah, so all the same, you know, tax free growth you get from a 529. Investments are pretty limited. Yes, I noticed something the last couple of times open up an ABLE account. The investments tend to be pretty limited, limited options, usually reasonable options, but they're not, you know, some target date options. So you have to be a little bit, you know, be careful with which ones you choose there and when you plan to spend the money.
W. Ben Utley (14:04)
But achieving a better life experience is what that is.
Mm-hmm.
Mm
Yeah.
Nate Reineke (14:30)
Good options, just not a lot of options for the investments. All right, last question is from a double doctor family in Pennsylvania. We are three to five years from retirement and have a bunch of cash. Before we invest all the cash, what should we consider spending on before we retire? So this was a double doctor family just came into our fold.
W. Ben Utley (14:33)
Mm-hmm.
Nate Reineke (14:59)
and I wrote a plan for him. And like, hey, in our plan, is he going to tell us where to put all this cash? Turns out they were terrific savers for about 25 years. And I said, well, you actually don't need to invest the cash, but you're such good spenders. I imagine you won't need it all. So is there anything that you want? And they started looking around the house. And like, well, they sort of kind of, and I could see in the video camera, I'm like,
W. Ben Utley (15:24)
Thanks.
Nate Reineke (15:28)
They don't have some mansion of a house or anything. Very reasonable, nice house. like, and then the next time I talked to them, said, we call it the contractor because we needed to replace our deck or something. And I was like, okay, that's a good start. Because one of the things I think you should do before you retire is do all the big ticket items in your house. You don't want to be doing a full remodel the day you retire. Like, you know, get all that stuff out of the way.
W. Ben Utley (15:32)
Yeah.
Mm-hmm.
Absolutely.
Nate Reineke (15:58)
Replace your appliances, do major home repairs, maybe you need a new roof that you've been putting off. Especially for people like this, they have a bunch of cash. It's because they're just naturally, they don't spend a lot of money. So yeah, the deck's a couple years overdue, but we can put it off. If you do that for long enough and you're on your way to retirement, you don't want those expenses landing in your lap in the first couple of years.
W. Ben Utley (16:19)
Yep.
Yep.
Yeah, new car would be in that same vein. And when I say new, I'm making air quotes here. I like used cars. know there a lot of people who are listening to show that would only buy new cars, but I got to tell you that, oh, this actually came from a physician that was on our show, like our fourth or fifth show. He said, and I quote, the most expensive trip you're ever going to take is the drive from the showroom floor to your driveway.
Nate Reineke (16:27)
Yes.
W. Ben Utley (16:51)
because your car depreciates by like 20 % in the space of about five miles, right? So everybody winds up with a used car an hour after they buy their new car. And so there's no problem with buying a used car. What you want is a great mechanic. People are like, what kind of car should I buy? I said, you should buy your mechanic first and then let them recommend what kind of car they want to work on. Build your relationship with your mechanic first, get yourself a used car. So I would say, you know, get yourself a late model used car two, three years out.
Nate Reineke (16:55)
Mm-hmm.
Mm-hmm.
W. Ben Utley (17:20)
and make sure you got a good car. Do things around your house that would make it usable. I'm a classic example of this. I got my new house about six months ago. I moved out of a 1900 square foot house with two stories, AKA stairs, and moved into a 1900 square foot house with no stairs. Right? And I probably put a roof on it, so I wouldn't have to worry about that later on in life. So, and don't worry folks, I have a retirement plan, but I don't plan to retire. I'm just having too much fun. Yeah.
Nate Reineke (17:37)
Mm-hmm.
Yeah.
Yeah, that's
right.
W. Ben Utley (17:50)
Yeah. What else? What else can you think that they, oh, here's some things, things that we don't think about when we're retiring. We don't think about kids going to grad school a lot of times. Sometimes we get surprises by that. We don't think about our kids having babies which sometimes is a surprise. Sometimes it's not a surprise, right? We don't think about some of the medical things that maybe we need to go through before we retire, right? What else? Tell me out here, Nate.
Nate Reineke (17:59)
Yes.
Yeah, it's funny that you said that because one of the another idea they had was like, well, you know, middle child's thinking about PA school. And I'm like, terrific. Like you got the money. And then, you know, a big one, too, that on day one, they showed up with a pile of cash and they kind of told me about their goals because the first call is always just about specifically goals. I didn't even need to look at their balance sheet. And they're like, once they told me their goal, I'm like, why do have this big pile of cash in a mortgage?
W. Ben Utley (18:28)
Yeah. Yeah.
Nate Reineke (18:48)
Well, we were waiting for you to tell me, tell us what to do about it. I go, I don't need to write a plan to tell you to pay that mortgage off if you're going to retire in three years. They paid their mortgage off right then and there. So clear their debt. You know, the, is all, this was teed up for me nicely, not big spenders, not they're going to, I had to encourage them to like consider if you need a car in a few years, you know, but everything you pointed out, I didn't even think about the medical expenses one.
W. Ben Utley (18:48)
Mm-hmm.
Yeah.
Nate Reineke (19:17)
Like what do you need done so that we don't maybe drain that HSA in the first year? Good one.
W. Ben Utley (19:23)
Yeah. And you know, it's, ⁓
it, there are categories of things, but it's a little bit different for each person who retires. I had somebody who wanted to build a stable for their horses before they retired. I had another person that was building a home on a vineyard. said, you're building this custom home from scratch. You're basically the general contractor. You should finish building this home before you retire because undoubtedly you'll have cost overruns. It always happens. And in fact, there were cost overruns, right? So you want to finish the, the home before you hit retirement.
Nate Reineke (19:33)
Mm-hmm.
Mm-hmm.
W. Ben Utley (19:53)
just in case it costs more than you thought, and you need to work a little longer. Because once you hang it up, hard to go back,
Nate Reineke (19:57)
Yeah. It's also just, yeah,
exactly. Um, you know, the average physician that we plan for families, they, maybe they spend 10 to $15,000 a month. So before you retire, having a 10, $20,000 idea wasn't really that big of a deal. But having a $25,000 idea after you retire, you probably have enough money to cover it.
but it's not going to be comfortable. Your mindset will shift completely and you will be focused on how much are we allowed to spend.
W. Ben Utley (20:36)
Did I say weddings?
Nate Reineke (20:37)
Oh, that's a good one too.
W. Ben Utley (20:39)
Did I say weddings? I'm working with a cardiologist who is probably a few years out from retirement and we're weddings. They're paying for a wedding right now. It's a big deal. you know, and whether you have a boy or a girl, there's a good chance that you might be paying for a wedding or something there. It's the kind of, you know, really what it is that trip us up. It's the kind of things that are big ticket items that you would have relatively easily said yes to before you retired that will trip you up after you retire.
Nate Reineke (21:05)
Yes.
That's right.
W. Ben Utley (21:08)
And it's,
typically not going to be you and your, your, you know, your expensive hunting trip. It's going to be somebody in your family who needs something that is very valuable to them. And you want to be the person who makes that happen for them. Can you still do that retirement? Yes. But there's a chance that you'll overdraw your accounts, right? There's a chance that you will, ⁓ you'll, you'll spend too much. And there's also a chance that the market could be in the tank when that happens. And that kind of draw at that time would be disastrous.
Nate Reineke (21:27)
Yeah.
W. Ben Utley (21:38)
aka sequence returns risk. So good to clear the decks beforehand, or at least set the money aside to spend it without investing it. So do we answer that question?
Nate Reineke (21:40)
Mm-hmm.
I think so. You gave me some ideas. I might call these people back about the weddings too.
W. Ben Utley (21:55)
Yeah, well, actually, you know, I mentioned this, but I have a little checklist called Look Before You Leap. And it is all the things I think people should think about before retirement. If anybody wants that, you can write podcasts at PhysicianFamily.com and I'll send you a summary of it. But yeah, that's what we got. So speaking of which, you know, if you're looking for a financial advisor, there's two guys here raising their hands. If you're interested and you'd like to find out if we're a match, just visit PhysicianFamily.com.
and get started. If you have your own question, like I said, you can send a question to us at podcast at physicianfamily.com. We typically respond to those questions immediately and then we cover them in the air as time allows. So until next time folks, remember you're not just making a living, you're making a life.
