Kim vs AI: A 60 Year Old Couple with $2M – Episode 539 

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. Today it’s Kim is going to be chatting with our AI that went through the seven principles of prosperity. I have not shared the results yet. So we’re going to see what Kim AI and Kim personal come up with this today. How about that? That’s going to be fun. I’m in. Excellent. So I’m going to give context. What I did is I went into chat GPT and I said, do you understand the principles of prosperity? And it does. And so what I wanted to do is go from a base level of saying, okay, you understand the principles of prosperity. Here are two scenarios we want to work through. The first scenario is a couple, a 60 year old couple with a net worth of $2 million.

[01:00] Now the reason why I chose $2 million is because I Googled what is the average net worth of a couple 60 years old and resources said it was 1.7, 1.5, 2 million. So we’ll throw that number out there. And I wanted to frame it in a way of a 60 year old couple taking that wealth using the principles of prosperity and what they can do to preserve it to the next generation. So Kim, are you ready to see what chat says? Absolutely. I can’t wait. Okay, perfect. So it gave us five things that a couple with a net worth of $2 million needs to do. First one, estate planning. Do you agree with the first one of estate planning, meaning creating the will, the trust, and all of those other pieces? I will agree with it, but I reserve the right to change the order.

[02:01] Okay, perfect. So write that one down, then we’ll get the sequence correct. Second one, life insurance, considering purchasing life insurance policies to provide additional financial support to their heirs. This can be particularly beneficial if they have a taxable estate as a life insurance proceeds can be used to pay estate taxes and preserve more wealth for their heirs. I agree with the product. I disagree with their reasoning and I still reserve the right to change the order. Okay, perfect. This is good. Number three, invest in education. Invest in the education of their children and grandchildren. This could be involved in contributing to 529 college savings plans with other tax advantages.

[02:52] All right, so there’s number three. I agree with the words, invest in education. I categorically disagree with the products that they chose. Okay. Then number four, teach financial literacy, actively engage in teaching financial literacy to their children and grandchildren, share the principles of prosperity and provide guidance on managing money, investing and creating wealth. Hallelujah. Praise the Lord. That is awesome. All right, good. We got 100% success rate on that one. And then number five, charitable giving. Consider establishing a charitable foundation or donor advised fund. This allows them to contribute to causes they care about while also involving their family in philanthropy and potentially providing tax benefits.

[03:54] I will agree with that and reserve the right to change the order. Although in this case, the order is probably right of that one. Okay. Okay. You know the five, you get to change the order. Yep. Let’s hear it. Okay. So at the risk of sounding overly life insurance E or life insurance sales E, the first step absolutely positively must be the life insurance because we do not know if we can buy life insurance tomorrow. And a quick story to support that. I have some clients who were in their sixties and spent what ended up being about eight months getting an estate plan done during which one of them died and they were both healthy. So it breaks my heart to even repeat that story because that death caused a real mess

[04:51] in what was going to be the estate plan, which then ended up being a different estate plan, which caused their family a whole bunch of hassle. So number one’s gotta be life insurance. Sorry. That’s just the way it goes. And real quick on that, their reasoning, which is I agreed with the product and disagreed with the reasoning, a $2 million estate is state taxable E S T A T E. It requires 12 million in today’s world. Now in the year 2024, in case you happen to be listening to this later, maybe it will be a different number than 12 million, but I doubt it’s going to go as low as 2 million. So there is absolutely no reason for somebody in that space to buy life insurance for estate taxes. However, there’s tons of other reasons like some of the other things that got mentioned.

[05:42] So I’ll go on with that, but that’s number one. Okay. Number two, I’ll go with the estate plan. I absolutely do agree with that wills, trusts, and then all of the accompanying documents like living wills, durable powers of attorney, financial powers of attorney, healthcare proxies, all of those things. Super important. Then interestingly enough, I almost see number three and number four as the same. Now it’s not technically number three was investing in education, like putting dollars there. As I indicated, love the concept, can’t stand the 529 plans. That is like a deal with the devil. If I may say that you’re going into something that the government controls 100%. The investments in those 529 plans are usually quite questionable.

[06:33] I’m not saying there isn’t a good investment out there and that for some of 529 plan does make sense kind of depending on the state that you live in. But in general, why would you lose control of those dollars, especially in today’s world when we have no idea what college, in quotes, is even going to look like? So love the idea of investing in education, but let’s keep those dollars flexible and do things like just simple savings accounts. I mean, it’s such a short period of time. Relatively speaking, most people get thinking about this. You might think about it when your grandbaby is born, but most people get serious about it by the time the kids are five or six and you really only have about 10 years

[07:15] to go. So you got to be really, really careful with loss of principle there. And then so number three was invest in education, 529 plans. No, invest in education. Yes. Number four was teach financial literacy and share. I loved that I’m actually going to move that to number three because investing can may or may not happen all along the way, but sharing and teaching financial literacy needs to start when the child is about two. And the reason is because that child is going to go to the grocery store or the fill in the blank store and start to want things. And that’s when you start to teach financial literacy. And you and I’ve talked about the gravy stack app. Go on your cell phone, look at gravy stack.

[08:02] That is a fabulous way to get your children and grandchildren involved in teaching financial literacy and love the whole multi-generation thing. That’s why we wrote our book on perpetual wealth is to help people make that happen. And apps and games, because it is a game, are so valuable. So moving four to three, moving three down to four, yeah, then number five with the donor advised fund. That’s fine. And love getting the family involved again. Frankly, though, 60 year old, $2 million, that is not a lot of money. So be careful what you’re giving away because unless they had like some other, maybe a guaranteed pension or something like that, I mean, they’re going to have social security and money.

[08:47] But if there was some other income there that I didn’t know about, then that would change my guidance. But if that’s really their asset base, then they need to be very careful with the charitable giving and then I’ll shut up. And then I would like to do number six. Okay, perfect. So what I love about this is we’re getting to see the sequence of pieces, meaning we’re going to this knowledge base and all of us have heard of chat. Now we get to suck in all the information throughout the world. Many cases use the logic. We’re hearing that chat and I’ve tested it can actually build apps. It can develop stuff for you. It’s as robust as possible. However, a real life advisor that has worked the scenarios can coach unlike chat’s

[09:40] ability to do. So what is number six? Consider a guaranteed lifetime income with some of your assets in order to take all stress and fear off the table. And a guaranteed lifetime income is generally funded with a product that is known as a SPIA stands for Single Premium Immediate Annuity. This is the kind of thing that you would purchase from a life insurance company, but it is not life insurance and it will provide guaranteed lifetime income. And you could have it do that for a couple. In other words, both the man and the woman or the spouse or what have you. And that would be something that I would absolutely put as number six with some portion of their wealth. So good. So dive into SPIA and explain why if we had five, why six had to squeeze

[10:43] into the list and be there. Because income cash flow, this is the name of the game for our lives. And it doesn’t matter how old we are. But as we get older, income and cash flow become even more important. And net worth becomes literally irrelevant, which is a strong word, because it doesn’t matter what the net worth number is. That’s just something that’s fun for the golf course and the tennis club and wherever else you might share that kind of information. Cash flow income. This is the name of the game. And it becomes difficult to create. I have a 75 year old woman right now that has a very high net worth and very low income stressed beyond belief because she has been used to being very active in her investments.

[11:37] And she’s starting to feel not confident. She doesn’t want to make decisions. Consequently, she has stopped investing. She has a bunch of cash. It’s not creating income for her. She does not want to spend principal, though she needs to. And she said to me the other day, like, I just don’t want to pull the trigger anymore. I wish I had income that would show up every month guaranteed that I didn’t have to worry about out living her words. So good. So good. So I take this scenario. Two million dollars. You’re absolutely right. We wanted to use a number that was called Google a bull standard out there. What we’re going to do in the next episode is we’ve run the same scenario for a couple that is 25 years old.

[12:29] So the nice thing about that is this, depending on the timeline, meaning if someone gets a hold of you and they start to follow the correct principles and the sequence at time, that two million may be much greater. Or as your client has mentioned, maybe it’s just that it’s more predictable. Not everyone is trying to create a war chest, but you have to follow the sequence in order to get it correct. And I would love to end with the order of operations. And you brought this up yourself. The order of operations, what you do first, what you do second, what you do third is of utmost paramount importance, both for the 25 year olds that we’ll talk about next and the 60 year olds and everybody in between.

[13:18] Perfect, perfect. So, Kim, I have a follow up question, which is this. For any of the listeners that either know someone that’s in their 60s in this situation or they happen to be in this situation and the net worth could be, call it one million, it could be 10 million, regardless. What is the next step? Is there a book they should be diving deeper into? Is it just sending a simple email? What does that look like so that they can figure out the next step? And I’m going to put this as step zero above step one, right? So I believe that the first half of step zero is figuring out how you learn best. So think about it. Do you want to read? Do you want to watch? Do you want to listen? And then reaching out to the special email that we have for podcast listeners only,

[14:15] which is hello at Prosperity Thinkers and tell me which way you learn best and identify just your age and then maybe this podcast episode. So I have some context. I will send you matching information to the way that you learn best because I literally could spend the next 10 minutes covering the various resources that we have. But it’s I’m one of those people. If you send me a video, I am not going to watch it. But if you give me an article to read, it could even be 20 pages or a whole book. I will absolutely joyfully read it. So I don’t want to fill up your inbox with material that is not helpful. I only want to send you something that will be valuable to you for your situation as dialed in as I can get it at that initial stage

[15:07] because this is an area where truly the correct answer is it depends. What should you do next? Well, it depends on a whole host of scenarios, which is why the human advisor is always going to have a spot in this space no matter how much awesome AI we use to help us 100%. So send that email to hello at ProsperityThinkers.com and let Kim know how you want to learn next step happens. Thanks for listening to this episode with us. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.