Tom Hegna is an incredibly popular industry speaker and considered to be THE Retirement Income Expert. His book, "Don't Worry, Retire Happy! Seven Steps to Retirement Security" has received many accolades and has now become a featured presentation on PBS. It's with this seven-step approach that has led Tom to help hundreds of individuals and families create trouble-free retirement plans with a solid foundation to build on for future generations. In this episode of Money Script Monday, Sal guides you through the seven steps to retirement security and provides a preview of Tom Hegna's keynote presentation at the 2018 LifePro Summit.

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Video transcription

Hello. My name is Sal Mendoza, and welcome back to Money Script Monday. Today, I'm going to be talking about the seven steps to retirement to security. Before we start, let's start with a quick story.

There were two people from the East Coast who always wanted to come to California. It wasn't the beach that they wanted to go to. It wasn't the mountains. It was actually the high deserts. They always wanted to jump in a van and go in the dunes and that's what they did.

The next thing you know, they came out to California, they rent this very large, oversized van with these large, knobby tires. They get plenty of sandwiches, plenty of water, and they crank up the AC.

They take off and they are having a blast.

About 100 miles away from base camp, the passenger looks over and he realizes that they're almost out of gas.

And all of a sudden, there's fear.

We've all had that fear before when we've looked down at our own gas tank and it's almost out. And whether it's these vacationers who are in the high desert or someone who has not properly planned for retirement and you're almost out of money, that's the feeling you experience.

So today, we're going to be talking about a road map. A seven-step roadmap that I learned from Tom Hegna in his book, "Don't Worry, Retire Happy! Seven Steps to Retirement Security."

Step #1: Roadmap

Let’s talk about the first part, which is the roadmap. So, the roadmap is something that everyone should have in some kind of writing.

There was an industry article that was handed out by Hartford many years ago, and in this article, the conclusion was that less than 25% of Americans who retire have no roadmap. That's like if you're going to go from here to, let's say, New York or to Boston or to Philadelphia, and you didn't have a roadmap. You just got in your car and you started driving.

We know that's probably not very good for all kinds of reasons. So it's important to have something down in writing.

And whether you're 25 years away or 45 years away from retirement, a roadmap is essential if you're going to have a happily retirement at age 65.

Step #2: Maximize Social Security Benefits

Number two is maximizing Social Security benefits. A lot of people are aware and some people are not aware that if you get to your retirement age, and whether that's 65 or 67, depending on when you were born, every year that you don't take that retirement from Social Security, they actually bump up your paycheck by 8%.

These are the kinds of things that we can discuss with our clients - how to maximize our benefits.

Step #3: Inflation Protection

We move into step number three, and that's called inflation protection.

I was at Target one day and I buy a lot of my soap, detergents, cups, and things like that. And it seems like every year that I go, it gets a little bit more expensive for me.

Not a lot, but you can kind of feel that pinch a little bit and that's what inflation does. It's kind of like that silent, mysterious killer that no one knows, but it's there and it's growing every year.

And one of the things is when we're planning, we need to actually consider inflation. And we can do that in several different ways on our retirement plan. And one of those ways is possibly getting some kind of an annuity that has a special rider that has what's called an increasing paycheck.

That's how we can address inflation.

Step #4: Explore a Hybrid Retirement

As we move into step number four, we want to explore a hybrid retirement.

We could look at investments as one source of your income. And also, we could put money, into a fixed index annuity (FIA).

This way, we have money from two sides, and that's really what it means when we say, "A hybrid retirement,” or, “A hybrid annuity”.

Step #5: Guaranteed Lifetime Income

Guaranteed lifetime income. In the world that we're in, there's nothing more powerful that you can say to a customer besides guaranteed, the other powerful word is free.

Guaranteed, in my opinion in the financial industry, is the most powerful word that we can use, and I'm going to challenge you to use it as often as you can because there's only one product in the world that can actually offer a guaranteed lifetime income, and that's typically an annuity.

And let’s say that annuity is a SPIA. If someone is older and need to trigger money here within the next 30 days or 60 days, there's nothing that can beat a SPIA. It's as simple as that.

Or if we have a little bit of time, maybe a year, two, three, four, or five, then we can definitely put that into a deferred annuity - whether that be a 5-year, a 7-year, a 10-year annuity.

Step #6: Long Term Care

As we move into step six on the road to retirement, we need to talk about long-term care.

Whether that's the old traditional kind of stand-alone or the living benefits that come into an index universal life (IUL).

Let's visit that for a quick second.

The long-term care inside an IUL is probably one of the most powerful features of today's permanent insurance.

Not only do you have a death benefit, not only do you have income, but also, if something happens between both of those, then you actually can accelerate some of that death benefit to provide for long-term care.

The other thing that I find very fascinating is, in the state of California, you're mandated to have car insurance. Me, personally, I've been driving now for over 35 years, I've never had a car accident. I've had maybe a bump or two in a parking lot at Target, but I've never been in a car accident.

But, it's mandated that I have to continue to pay these premiums to have insurance - just in case.

I have a little condo here in California, and as part of that, the mortgage company requires me to have homeowner’s insurance because - just in case - maybe the house was to go on fire, that's also mandated.

What's not mandated is something that's going to happen to over 80% of us or right around there.

We are going to come down with chronic, critical or terminal illness and we don't have it and it's not mandated!

This is something that we definitely want to talk to our clients about, whether it's a stand-alone or maybe wrapped into an indexed universal life.

Step #7: Home Equity

And finally, home equity. Many of us will start thinking about buying a home probably in our mid-20s, and by the time we save for that 20% down, we're looking maybe around 30, 35, 40, you know, depending on the circumstance when we buy our home.

And usually, it's a 30-year fixed. It's usually the most affordable route that, traditionally, most people will go to.

And so, by the time you're 60, 65, or 70 and you retire, you have a paid-off home.

What's nice about using home equity is that you don't have to use it but it's a very powerful tool because if you do need to take what's called a reverse mortgage, well, we can teach our clients how to take a reverse mortgage from their paid-off home that could supplement just in case some of the other features maybe didn't work out as good as we had planned.

So, this map here, the seven-step process, was one of the things that I learned many years ago from a MDRT member. He was actually a Top of the Table MDRT qualifier.

We were having dinner and he was talking about this concept. He pulled out a napkin off the dinner table and a pen out of his jacket and he started writing this roadmap down.

And at the end, he wrote down his name, he wrote down his phone number, and he handed it to me. I still have that today.

This napkin was the very seven-step roadmap that I discussed today and the man who I’m referring to was in fact Mr. Tom Hegna.

Attend the 2018 LifePro Summit

Tom will be one of the main speakers at the LifePro Summit on February 15th in San Diego, CA.

For more information about the lineup and topics being discussed, please visit www.LifeProSummit.com.

My name is Sal and thank you so much for showing up today.