Podcast

YFP 295: 10 Common Social Security Mistakes to Avoid (Part 2)

Posted on February 16, 2023March 10, 2023 by Caitlin Boyle

YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP®, RICP®, to wrap up the two-part series on common social security mistakes to avoid.

Episode Summary

This week, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP®, RICP®, to wrap up the two-part series on ten common social security mistakes to avoid. Tim and Tim start the discussion with a quick review of the first five common social security mistakes to avoid: not checking your earnings record, only considering your own benefits and not knowing what benefits are available, not understanding how social security benefits are calculated, taking social security too early, and not coordinating benefits with your spouse. They move on to dig into the second half of the list, including mistakes like not considering the cost of living adjustment (COLA) and how it changes your benefits, not planning for taxes on social security benefits, assuming social security benefits will fully cover your living expenses in retirement, how getting divorced too soon or remarrying can change social security benefits, and the mistake of viewing your social security benefits through the wrong lens. They share about potential dangers of polar opposite views on social security and how viewing social security as an insurance framework tackles a variety of financial risks that can impact the financial plan.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, Tim Baker and I wrap up our two-part series on 10 Common Social Security Mistakes to Avoid. Now, whether you’re a new practitioner, where Social Security is far off in the distance, perhaps in the middle of your career listening or approaching that timeline towards retirement, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 280 households in 40-plus states. YFP Planning offers fee-only high-touch financial planning that is customized to pharmacy professionals at all stages of their career.

If you’re interested in learning more about how working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom. Okay, let’s jump into my interview with Tim Baker, where we complete our 10 Common Social Security Mistakes to Avoid.

[INTERVIEW]

[00:01:11] TU: Tim, welcome back.

[00:01:13] TB: Good to be here, Tim. How’s it going?

[00:01:14] TU: It is going well. I’m looking forward to part two of our series on 10 Common Social Security Mistakes to Avoid. If you missed last week’s episode 294, make sure to check it out, link in the show notes below, where recovered the first five Common Social Security Mistakes.

Tim, we talked through not checking your earnings record and making sure you’ve got a good view on what’s going on in the ssa.gov profile and some of the tools in there. We talked about not knowing some of the specifics of the benefits that are available, spousal benefits and disability benefits. We also talked about how benefits are calculated and then some of the strategies around potentially the timing of claiming Social Security. So a lot of information in that episode. Make sure to check it out.

Tim, let’s jump right into number 6 on our list of 10 common mistakes, which is the cost of living adjustment. We talked briefly about this last time, but it really needs the attention that it deserves. So tell us more about the Social Security COLA and how that works.

[00:02:11] TB: Yeah. So every year, the government looks at the consumer price index for urban wage earners and clerical workers, and they do this I think – I think this is in fourth quarter. Based on the CPI-W, they announce what like the change in payments would be for security or other government benefits. This year was – Most years, it’s very incremental, right? Because inflation hasn’t been what it was year over year from 2021, ’22, what we’ve seen. But last year, they announced and then put it into practice that the benefit would increase by 8.7%, which is huge, Tim, if you think about it.

Because if we take a step back and we talk about one of the major pieces of the retirement paycheck, obviously, Social Security, which is what we’re talking about, the other major piece is the investment portfolio. So one of the reasons why we put our money into the markets and we, hopefully, take aggressive but intelligent risk is because, unfortunately, we can’t stuff the mattress full of cash and then hope that in 30 years, when we go to retire, that that’s going to be enough to sustain us. So the reason that we invest and we earn dividends and we earn capital appreciation on investments is to outpace really two things. It’s the tax monster and the inflation monster. That’s why we do this.

One of the beautiful things about Social Security is that it is inflation-protected. So your payments going from December to January got almost a 9% bump to month over month, which is huge. What we have said is that they don’t even sell annuities on the market right now, as I’m aware, that has a cost of living adjustment rider, which means that when I’m talking about annuity, all an annuity is is your own Social Security benefit that you’re creating yourself. So it’s where you say, “Hey, I have $100,000. I’m going to give this to the insurance company, and then they’re going to pay me for life or for a term certain X amount of dollars per month for that lump sum of cash.”

I can even go on to the market and say, “Hey, you see what Social Security is doing, where they’re simply giving me that 9%.” Or hopefully, it’s not that big. We don’t have inflation starting to temper down, but it could be 5% next year. It could be 7% the following year. You can’t even get that on the marketplace. So Wade Pfau, who is a professor at the American College, he’s written a lot of books on retirement. He’s basically saying that Social Security is really the cheapest annuity money can buy, even the firm process. So you can’t even get that on the market.

Now, what you can yet, Tim, is you can get a rider that says, “Hey, it’ll go up 3% every year or 2% every year.” That’s typically the component that drives the price of the annuity because two or three percent could keep pace with inflation. But this year, you’re like, “Hey, you’re down 6% if you have a 3% rider based on the difference.” So really what we’re doing with Social Security and it being protected by inflation is we’re protecting your buying power. We know that the price of gas, the price of eggs, the price of other groceries, housing, utilities, everything has gone up. For a retiree on a fixed income, that can be super stressful. But at least if a good portion of your retirement paycheck is protected by this inflation protection, it’s a little bit of a feather in the cap.

Social Security payments, just to clarify, they’re adjusted every year based on inflation, based on that CPI index. This is another important thing. By law, an individual’s benefit can’t decline, even in deflationary times. So that’s one thing that your benefit could stay the same. Usually, it goes up every year. When we’ve had a year like this, where there’s been a lot of inflation, you see that matched in the benefit increasing by 8.7% this year. So I think that this is one of the things that is often overlooked. When we’re buying policies or doing things, like cost of living always comes up, and it’s one of the more expensive things because it’s just an unknown. We just don’t know where it’s going, so the fact that the government has our back in this regard.

Again, a lot of people, we pay for Social Security. Like that comes out of your check every time. So this is just allowing us or the government allowing us to kind of get those payments for life. So they’re doing what they need to do on the back end to make sure that that is sustained. But to me, this is important piece that it is inflation-protected. Again, being on a fixed income, there’s risk there that if you’re not, you’re just being priced out. Your standard of living is affected without it.

[00:07:04] TU: Yeah, Tim. New news to me. That’s really neat. I was unaware of, essentially, the floor, right? That they’re in a deflationary time period, that the benefit can’t go the other way, which makes sense, right? That while some people are using Social Security benefit, obviously, for goods and services that are going up with inflation or in a deflationary period, those costs would go down. There are other things that are fixed that aren’t going to go the other way. So that would make it difficult for planning.

Tim, I was feeling good about my high-yield savings account with Ally at what? 34 or 35 –

[00:07:34] TB: 3.4.

[00:07:34] TU: So I saw 87, and I was like, “Oh, man. Still losing, right?” That’s inflation, so.

[00:07:40] TB: Yeah. You know what? Every little bit helps. Again, most banks, they kind of just collect that money on the float. So I like seeing those payments roll in, even though I know that it’s a jungle out there with inflation.

[00:07:53] TU: I’m glad that you mentioned the tax monster and the inflation monster. Obviously, we just talked about the inflation monster and addressing that with COLA. But our number seven common Social Security mistake really gets to the tax piece. I think, as we’ve talked about many times on the show, tax, like inflation, is often an overlooked part of the financial plan.

Tim, when it comes to this number seven mistake, not planning for taxes on Social Security benefits, another example of the integration of tax planning with the financial plan. So how are Social Security benefits taxed, and how could this impact, potentially, someone’s decision to whether or not they’re going to earn additional income as well?

[00:08:32] TB: Yeah. So to your point, shout out to our tax team at YFP Tax, Sean Richards and Paul and Ariel, I think this is another indication or another example of having a professional look at this and help decide on this as important.

So one of the things that people don’t know is that up to 85% of your Social Security benefit could be taxed at the federal level, if you earn substantial outside income, such as wage or dividends. Really, the benefit, Tim, the percentage of your benefit that’s subject to income taxes really depends on what’s called your combined income. So your combined income is essentially 50% of your household’s Social Security benefit, plus any other taxable income, which could be wages that you receive from a W-2 or a 1099, plus any tax-exempt interest, which is typically things for like bonds, that type of thing.

So 50% of Social Security benefit, plus taxable income, plus tax-exempt interest income. That’s essentially your combined income, and that’s how it is determined, like what your tax will actually be. So one of the interesting things is that back in the ‘80s, I believe it was the ‘70s, ‘80s. A smaller percentage of people’s Social Security was being taxed, and a lot of it is because some of these thresholds that they’ve set were not indexed for inflation. But as time has gone on, and people have earned more money, we’ve seen it creep up to where now a recent study projected that going forward, about 56 of beneficiaries will pay taxes on at least some of their Social Security benefits.

It’s good to kind of sit down and see, okay, if I’m earning additional money or I have a portfolio that spits out of income, how does that affect what I’m going to pay taxes on? Then probably even more, a broader conversation is really, okay, if I do additional work, am I going to lose some of my benefit, which is also a misnomer and probably something that should have made this list as well. Like if you make a lot of money, you don’t necessarily lose the benefit. You just don’t – They just kind of pause it, and they give it back to you later.

Earning money in retirement, so to speak, is actually a great strategy. But understanding kind of the tax and how it affects the benefit itself is important to know. Again, it can be great because it, obviously, helps maintain the portfolio and all that stuff. But it’s really important to understand that the tax is. Again, if you work with an accountant, a CPA, an enrolled agent, they should be able to walk you through, okay, this is what the tax bill is going to look like on your Social Security benefit. I think that’s an important piece of the puzzle as well.

[00:11:21] TU: Yeah. Tim, it’s reminding me back too on 275. We talked through how to build a retirement paycheck, right? You talked about that a little bit on the last episode as well, but so important. I mean, at the end of the day, like for planning purposes, we want to know what is the takeout, right? What’s the net? So we can plan for our expenses and goals and other things that we’re working towards.

Another good example is you mentioned of not only thinking about the sources of income, one being Social Security, that are going to make up our retirement income. But what are the tax implications, and the tax optimization strategies to, obviously, pay our fair share, right? But no more, right? We want to be able to allocate those dollars.

[00:11:59] TB: Yeah. If you know that your tax bill is going to be higher for that year, maybe the paycheck, the source is really coming from things like a Roth account, which you’ve already paid the taxes on. Or an after tax account, which you might have to pay capital gains tax on. But that’s different than ordinary income tax, and you leave the traditional accounts alone a bit. That’s why at the end of the day, a lot of people ask me like what proportion should be in pretax versus Roth versus like a taxable account.

It’s tough to say, again, depending on like where you live and what you’re doing because state taxes are different. But I think it’s a good bet to have a little bit in column A, a little bit in column B, and a little bit in column C, and be able to kind of like pull from those different accounts, depending on what’s going on in that time in your life. So, yeah, just, again, having that optionality is another key theme in all of this.

[00:12:55] TU: Tim, as we move on to number eight on our list, which is assuming Social Security benefits can fully cover your living expenses, I think we’ve highlighted well the benefits of Social Security. We talked about the COLA. We talked about potentially the size of that benefit. You gave some examples in the last episode, as you were looking at your ssa.gov, online portal.

I think maybe some folks might be listening and be like, “Man, do I need to be saving as much as I am outside of Social Security? Can I potentially depend more upon that than I was planning?” So what is the potential mistake here in assuming that Social Security benefits can fully cover your living expenses?

[00:13:32] TB: Yeah. I think it’s – When we’re sitting here and like, “Wow, it’s COLA,” and if I can work till 70, well, I’m going to work till 70, anyway. So it’s funny because like a lot of clients that come to us, and maybe they have a couple $100,000 in debt, they’ll be like, “Man, I’m never going to retire. I’ll never be able to retire.” Then we kind of start to deconstruct that repayment, and then we start to get them in a portfolio that does its thing. Over a couple years, you can start to see the script flip, so to speak on, okay, like I think there’s a path forward.

In a lot of those scenarios, we’re not even really accounting for Social Security in a lot of ways. When we say we’re going to plan first, as if it’s not there. But the reality is it will be there. Again, it might be dependent on how far away you are from retirement. It might be a lesser benefit. But I think it is definitely a mistake to say, and some people do believe this that it’s like, “Hey, I’m going to do what I can do in my 401(k) and my IRA, and I’m not going to kill myself because I know that the Social Security benefit will be there for me.”

I would say that, that is – Again, if we’re talking about optionality, if we’re talking about we don’t really know how long we’re going to live, we don’t really even know how long we’re going to be able to work, all of those things, I think, tend to say, “Hey, let’s do what we can to kind of make sure we have a good healthy portfolio that we can draw from.” We don’t know where inflation is going to be. We don’t know really know where the US markets are going to be in the next 30 or 40 years. Again, I still feel super bullish about that. But the fact remains that it is unknown.

But I would say that, and these are really beginning of 2022 numbers, the average for all retired workers, the benefit is about $1,657 per month. That’s 20 grand a year, Tim.

[00:15:23] TU: Yeah. That’s lower than I would have thought.

[00:15:25] TB: Yeah. I think we’re actually going to – But I think that for so many people who are collecting this benefit, the mindset was like 62 and go. It’s like once I get to that, I’m going to get the money because I’m only going till 68 or 69 or 70. So I want to get the money while the getting is good. We’re starting to see that trend really shift, where I think people are starting to understand, okay, I can defer. Or they’re just naturally working longer because of some of the affirmation things like debt, student loan debt, etc.

The average for older couples in situations where both spouses receive benefits is $2,753 a month or about $33,000 a year. There’s a lot of different ways to kind of skin the cat, so to speak. But a lot of planners will say, okay, if you make $100,000 as a household, they’ll use anywhere from 60 to 80 percent of those dollars and to say, “Hey, you need 60,000 to 80,000 dollars to live because they discount it, and a lot of the discount is based on really the fact that like while you’re in retirement, you might be saving 10, 20, 30 percent or more.

Then also ideal, that’s not necessarily true in early retirement because you’re typically a kid in the candy store where you’re like, “Wow, I need to go do all the things I defer while I was working, so travel and that type of thing.” So there is a little bit of a smile, so to speak, of spending where it starts higher, and then it starts to come down as you age. Then as you age, medical expenses get larger, so it kind of increases.

[00:17:00] TU: Yeah, makes sense.

[00:17:01] TB: But when you compare that, again, 100,000, most of the clients that we’re working with are making a way above that as a household. So 100,000, 33% of that is covered. It’s not a huge portion of that paycheck, and it’s even going to be smaller the further you climb up kind of the pay ladder.

So this is to say, and we’re kind of talking at both sides of our mounts, how great of a benefit it is. But it’s also to say that it’s not going to be the end-all be-all for you in terms of retirement, unless your lifestyle just says, hey, I can live off of $33,000, which maybe some people can do that and go from there. So to me, that’s a big thing. If we’re looking at somebody, their stats, Social Security will be a major source of income for many retirees, especially like lower income levels. It represents about 30% of the income for older adults.

Specifically, when you kind of go down from a gender perspective, about 30% of men and 42% of women receive at least half of their income from Social Security. Then probably one of the more concerning things is that roughly 12% of men and 15% of women rely on Social Security for 90% of their income. Again, hopefully, the people that are on our listeners, because of some of the socioeconomic differences and resources available and, hopefully, the education that they’re receiving from a financial literacy, that will not be them in the future. But it is safe to say that it could be 20 to 30 percent of what you’re relying on, which is getting a good chunk of money. If that can grow because we are differing, and it is inflation-protected, that’s the power of the Social Security benefit.

[00:18:47] TU: Yeah. Tim, this reminds me. One of the takeaways I’ve had just from listening, and you teach and talk on this topic, is to really kind of avoid the polar extremes of use on Social Security, right? I think there’s some folks that, especially maybe earlier in the career, like Social Security is not going to be anything, and we can establish why that probably won’t be the case in the first episode.

Then here we’re talking about the other side of the spectrum, which is assuming it’s going to fully cover all my expenses, and I think for obvious reasons of what you just highlighted, probably not going to do that for the vast majority of folks. But it can be a really good in-between, just like we talked about building a foundation early in your career with the financial plan here. Like you’ve got this foundation or at least some of the makeup of the floor that’s going to give us some insurances. It’s not nothing but it’s also not going to be everything that we need, as it relates to retirement planning.

[00:19:35] TB: Yeah. Like we mentioned before, like if you’re pretty conservative in your approach, if you can get Social Security and maybe annuity that you purchased by peeling off a couple $100,000 of your investment portfolio, and you can say, “Okay, this check from Social Security, plus this check from the insurance company for my annuity is going to provide for all of the necessities that I need,” like there’s a feeling of freedom there.

Now, someone who has more appetite for risk, they’re like, “Well, I would almost rather just kind of spend down my portfolio and be able to enjoy the things that I want to enjoy without paying that huge bill up front.” But there’s also stress in saying, “Okay. Hey, the market is down 30% and I’m drawing on it,” versus if you were just getting that paycheck built in. So there is a different approach. It’s based on your appetite for risk, and what we’re just kind of describing here is the flooring strategy versus the systemic withdrawal strategy, who I think can be – You can have hybrids of that as well. But, yeah, important to kind of see what is the best way to tackle it for you and go from there.

[00:20:44] TU: Tim, number nine on our list of 10 Common Social Security Mistakes refers to those that may get divorced and then potentially remarry as well. Talk us through what are the implications of the Social Security benefit for these situations?

[00:20:58] TB: Yeah. So sometimes, people don’t know that if they’re divorced and the failed marriage kind of meet certain criteria, you’re actually eligible for a benefit based on your spousal Social Security record or your ex-spouse’s Social Security record. So essentially, the rules for this is that you have to be divorced. The marriage has had to last at least 10 years. You are age 62 or older. You’re still unmarried. Then your ex-spouse is eligible to receive a Social Security retirement benefit or disability benefits and your benefit. So if you’re a worker, your benefit from your own work is less than what you would receive under your ex’s earnings record.

The other interesting thing, which kind of makes sense because as a divorce say, you’re not like – You shouldn’t be all up in like your ex-spouses like business and when they’re going to retire and claim. But they don’t need to be claiming the benefit. Whereas if I’m married and my spouse can’t claim on my benefit, unless I’ve claimed the benefit. So those are really the rules. So like, again, it might be where if you’ve been married for nine years and you’re looking at divorce, it might be best to kind of get to that 10-year mark, so stay married longer, to activate that benefit.

Or even just as you move on and have other relationships, whether you want to actually marry or not because once you marry, then that comes off, and then you’re kind of tied to your new spouse’s benefit, that type of thing. So it is one of those things that, obviously, Tim divorce can be a very emotional thing, and we would never advocate for someone to be in a situation that is unsafe or doesn’t make sense for them. But if it’s kind of a more of an amicable thing, it is something that you should definitely use and understand in terms of strategy.

The interesting thing, Tim, and I listened to a lecture on this, if you’re married and divorced multiple times, I mean, you could have a stable of ex-spouses that can be claiming on your benefit, and that’s kind of where maybe some of the inefficiencies. If I have three or four ex-spouses, and they’re claiming off of like one worker’s benefit that’s been paid into, and then there could be children involved with that, the bill could pile up, so to speak, for Social Security. I wonder, I wonder. This is just be speculating out loud. I wonder if this is one of the things they potentially tighten up in terms of what this looks like in the future.

So we know that, obviously, divorce is a reality for a lot of Americans and, obviously, this is the benefit that should be there. But I wonder if this is one of the things that they look at in the future.

[00:23:41] TU: For the record, Shay, nothing to worry about. Tim mentioned three ex-spouses. Just an example, in case she’s listening.

[00:23:48] TB: Yeah, exactly right.

[00:23:49] TU: This is the test, right? Is Shay listening to the podcast or not? We’re going to find out.

[00:23:53] TB: She says she does. She says she does. But I probably need to like quiz her or drop some –

[00:23:59] TU: Well, this is deep and a part two of a series, so like –

[00:24:02] TB: I know. For her, she’s probably sleeping or fell asleep listening to me talk about this stuff.

[00:24:09] TU: All right. Number 10 on our list is looking through the wrong lens. Tim, this is a new concept for me, as it relates to Social Security and looking at it as an investment framework or an insurance framework. Describe the difference. Tell us more here

[00:24:24] TB: Yeah. So I think so many people, when they approach the decision on when to claim, they look at it from the vantage point of like, “Okay, if I’ve put money into the system over the last 30 or 40 years as I’ve worked, I want to get as much money back and more.” So a lot of advisors would use what’s called a breakeven analysis. Basically, they would say, “Okay. If you claim at 62, here’s your reduced benefit. But if you were to wait to claim at 70, there’s eight years where you’re not claiming it, and it’s at any increased benefit. So where did those kind of cross?”

For a lot of people, it’s usually between age 80 and 84. So if you’re like, “Well, my uncle Donald or my aunt Ginny,” or whatever died at 78, then I’m like, “I’m definitely taking it early.” Many retirees, they live a lot longer than they think they will. So the average person at 65, they’re going to live. Once they get to 65, there’s a really good chance you’re going to live to 85 and beyond.

[00:25:25] TU: Yeah. Life expectancy increases once you get to a certain age. Yep.

[00:25:28] TB: Yep. So I feel like too many people think of it as an investment that only pays off if they live a long time, and they worry too much about what happens if they don’t live as long as they expect. The thought is that this framework gets the focus – This framework focuses on the wrong issue, dying young instead of living a long kind of retirement with a good kind of standard of living.

The opposite one, where I think the decision really should reside, is in the insurance framework. So why do we buy insurance? We buy insurance because we want to mitigate risk. Again, this is not advice because everyone’s situation is different. But typically, the longer you to defer, the more you kind of scratch the itch of mitigating some of these risks related to retirement, so one being longevity risk. So longevity risk is that you live too long, where you’re going to basically outlast your money.

Deferring Social Security and looking through for that framework, you get a larger stream of lifetime income, long-term care risks. So one of the things that I talked about with a smile is that you could get to a point where you need to use nursing homes or that type of thing. Because you deferred Social Security, you have more resources, i.e. in your portfolio, later in life to kind of cover that inflation risk.

Again, we’ve talked about this. A larger percent of your income is protected against inflation. That’s a beautiful thing. Things like frailty risks, which is as you get older and cognitively you might not be as sharp as you were, this really simplifies the decision making because, again, a bigger portion of your income is covered, and it’s inflation-protected. Even things like elder financial risks streams of income is – They’re less at risk to kind of be stolen and take advantage of versus like a couple million dollars in an account.

Excess withdrawal risk, so this is where you’re locking in larger income stream in Social Security, so eliminating risk of generating income from the portfolio assets. Again, market risks, it eliminates volatility and returns. Then early loss of spouse risk, where you’re deferring, again, a larger benefit. Even if I’m in poor health and I defer my benefit, when I were to pass away, even if it’s sooner, it might be larger than what Shay would do.

At the end of the day, you kind of look at it from the standpoint of, okay, if I have a short – So if I look at this from the strategy of claiming early versus claiming later, and I look at my retirement time horizon, whether it’s a short time horizon or a long time horizon, the only way that it works out to claim early is that if I claim early, it’s worked out, I get a lesser benefit. But I die early, so it worked out. If I claim early and my time horizon is actually longer, I permanently reduced my lifestyle because the benefit just isn’t as good. If I claim late and I have a short retirement, it’s minimal harm done because at the end of the day, again, a spouse could still use that. At the end of the day, it’s not necessarily there. It’s there to kind of provide a baseline for your needs.

Then if you claim late and you have a longer time horizon, you’ve permanently increased the lifestyle. Again, that’s where I think that most people will fall is that they’re going to live longer than they think. At the end of the day, they’ve permanently increased their lifestyle because of the deferral credits that they’re going to get 8% a year. Think about it as that 8% a year raise that you get for every year that you defer.

To me, that’s the crux of the issue. It really should be less about kind of a breakeven analysis and more about what is the impact that a decision like this can have permanently on my lifestyle, and what is it that we’re really trying to tackle. I would argue that the Social Security should be more, again, looking through from an insurance mitigating risk, and then the portfolio is where you’re really trying to maximize, okay, vacation and grandkids and things like that. So everyone’s going to be different. But to me

I think people are starting to come around on this, as they really look at this and they see, hey, we’re just living longer, inflation-protected, all those things that we talked about in the segments. But it is a really important decision, if we haven’t got that point across, that you want to make sure that you’re looking at this from an analytical approach and then overlaying that, again, with what your goals are in retirement.

[00:30:02] TU: Yeah. I think what you’re highlighting here, which is really interesting, something I hadn’t considered before is this is a framework, a mindset in terms of are you thinking about this more from the investment strategy, more from the insurance, and kind of bringing us full circle. Like what I’m interpreting is if you’re able to plan earlier and throughout your career by building other investment streams that you can pull from, it allows you to have maybe some more freedom and peace of mind and viewing that Social Security as an insurance piece and less as a need on the investment side. I think that’s a really, really great example and something that seems obvious that we need to be thinking about in great detail.

Tim, this has been great, 10 Common Social Security Mistakes to Avoid. We’re going to continue to build out more information on this topic, I think, I hope, as we’ve highlighted so much to consider around Social Security as a part of the financial plan. We’ve just scratched the surface really here in these two episodes. We also did an introductory episode on Social Security back on 242. We’ll link to that in the show notes. But much more to come, and we’re going to tap into Tim’s expertise and the expertise of the planning team at YFP Planning to really bring us some more content in this area.

So, Tim, as always, appreciate your time and looking forward to more coming on this topic.

[00:31:15] TB: Yeah. It was fun, Tim. Thanks.

[END OF INTERVIEW]

[00:31:17] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist, unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward-looking statements that are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 294: 10 Common Social Security Mistakes to Avoid (Part 1)

Posted on February 9, 2023March 16, 2023 by Caitlin Boyle

Tim Ulbrich, PharmD, is joined by YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP®, to kick off a two-part series on ten common social security mistakes to avoid.

Episode Summary

This week, Tim Ulbrich, PharmD, is joined by YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP®, to kick off a two-part series on ten common social security mistakes to avoid. Highlights of the show include Tim Baker sharing about the Retirement Income Certified Professional designation and training and why it is a crucial aspect of the overall financial plan. Tim and Tim dig into tackling the complex and critical decision of when to start claiming social security benefits, why it is an integral part of the financial plan, and how the program is funded. They then get into the weeds on the first five of ten social security mistakes people make and how to avoid them. Major mistakes include not checking your social security earnings statement for accuracy, only considering your benefits or not knowing what benefits are available to you, and not understanding how social security benefits are calculated. Tim and Tim discuss the mistakes of taking social security too early, not working long enough, and not coordinating social security benefits with a spouse and how all impact the financial plan. Listeners will hear practical ways to get on the path to success and learn about resources available to prevent those common social security mistakes.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

This week, I had the pleasure of welcoming YFP Co-founder and Director of Financial Planning, Tim Baker, to kick off a two-part series on 10 Common Social Security Mistakes to Avoid. In addition to talking through just how big a part of the financial plan Social Security can be, we talk about the first 5 of 10 common mistakes, including some big ones like taking Social Security too early, not understanding how the benefits are calculated, and not coordinating benefits with a spouse.

Now, before we jump into the show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 250 households in 40-plus states. YFP Planning offers fee-only high-touch financial planning that is customized to the pharmacy professional. If you’re interested in learning more about how working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s jump into part one of 10 Common Social Security Mistakes to Avoid.

[INTERVIEW]

[00:01:21] TU: Tim Baker, welcome back to the show.

[00:01:23] TB: Thanks, Tim. Happy to be here. I lost my voice over the weekend. So hopefully, this will be okay. But, yeah, I’m doing well. How about you?

[00:01:32] TU: Go Eagles, right?

[00:01:33] TB: Go birds. Yeah. I was at the NFC Championship in Philadelphia. Shout out to my cousin, Pete, for scoring some tickets, and it was crazy. One of the best sporting events I’ve ever been to. It was great. Yeah.

[00:01:46] TU: Love it. Love it. So, Tim, you recently completed the RICP training, which connects well with the topic that we’re going to talk about today, considering Social Security is such a big part of the retirement planning process for many folks. Before we jump into the topic today, tell us more about the RICP training and why it’s such an important really aspect to the overall financial plan.

[00:02:10] TB: Yeah. So RICP stands for Retirement Income Certified Professional. I think what it does is it kind of expands further on the deculumation or the withdrawal part of the retirement phase. So I think so much of what the CFP really focuses on is just accumulating assets to get to that destination. I think what the RICP – First, it says it’s not really a destination. It’s more of like a journey. It’s a process. I think a lot of retirees, they think they’re like, “All right, I’m 65. I’ve made it,” and it’s so far from that.

But then the idea really is to say, okay, we have all of these assets that we built up over the last 30 or 40 years. How do we then translate that into a recurring paycheck that lasts us for the rest of our life, which is a timeline that’s undetermined? So it’s looking at sources of income like Social Security, like retirement plans, like individual retirement plans, like home equity, how does long-term care, insurance, health insurance, Medicare fit into this, any type of executive benefits? If you’re a single business owner, what are the risks in retirement? What are your overall goals? What are we trying to accomplish?

Kind of really put that together as people are transitioning from the workforce, sometimes very abruptly, whether it’s their choice or not. Sometimes, it’s a phased retirement. But to do that in a way that, again, is sustainable for the course of the plan. So that’s really what it is. Obviously, Social Security is a huge part of this and probably one of the biggest things that a retired professional or a retired person has to answer is how does one access. How does one determine Social Security benefits? When should I do this? How?

Yeah. I think it’s often an overlooked part of the of the plan. There’s so much focus on climb the mountain. But if you ever watched any type of documentaries about Everest, probably the hardest part is getting down and the most dangerous. So that’s kind of the best analogy I can give.

[00:04:23] TU: Yeah. That’s why I’m excited not only to dig deeper into Social Security, which we’ll do on this episode of the next, but to dig deeper into more of that climb down the mountain, right? We’ve spent a lot of time in the first five and a half years of this podcast, talking about issues related to the climbing up the mountain. I think that whether someone’s approaching retirement, whether they’re in the middle of their career, or whether they’re on the front end of their career, beginning to think about this, and even if it’s, “Hey, I’m on the front of my career, but I’m planting some seeds.”

Obviously, for those that are listening that are a little bit closer, there’s some tangible takeaway items that they can implement, hopefully, sooner rather than later. But so much attention given to the front end, the accumulation side. We want to spend some more time here in ’23 and into next year as well, talking about the decumulation.

So today, we’re kicking off a two-part series on 10 Common Social Security Mistakes to Avoid. We’re going to tackle five this week. We’ll tackle five next week. Just about a year ago, we talked Social Security 101, including the history, how it works, why it matters to the financial plan. We’ll link to that episode, which was episode 242, in the show notes. Tim, we’re not going to rehash everything we covered in 242. But let’s get some of the fundamentals related to Social Security on the table so that we have a framework to consider, as we talk about these 10 common mistakes.

So first and foremost, I think that decision about when to claim Social Security benefits, arguably one of the most important decisions that clients will make, that individuals will make, is in your retirement. Why is that the case?

[00:05:54] TB: I think it’s the case because for a lot of Americans, it’s going to be the biggest source of income that they have, even more so than money that’s coming from a 401(k) or equity built in the house. So many people – There is this impression that Social Security is going to be the paycheck that dominates. Unfortunately, for a lot of people, that’s the case. Hopefully, for a lot of our listeners, that is not the case because of either good planning outside of Social Security or even good claiming strategies.

The thing that makes Social security so powerful, one, is backed by the full faith and credit of the US taxpayers backed by the government, which is probably some of the surest assets that are out there, no matter what you think about. Where the economy is going or if Social Security’s going to be there, it is, I think, one of those things, unfortunately or fortunately, that it’s just too big to fail. So people hear horror stories about it’s going to go bankrupt. It’ll be there when – If you’re 25, 35, 45, if you’re listening, it’ll be there. It might not be what it looks like for retirees right now. But nonetheless, it will be there.

I think one of the big thing I think that is often overlooked, and we’ll talk about that, is it is inflation-protected. So when we saw inflation run rampant in 2022, Social Security and a lot of these other government payments that go out went up, I think, by about 8.7%. One of the things we’ll talk about this is like you can’t buy an annuity that has a COLA, that has a cost-of-living adjustment out there. So one of the big strategies is that you want that Social Security payment to you and your spouse to be the largest it can be.

I think so many people, so many retirees, similar to like a student loan strategy, kind of just goes with the flow or talks to a colleague, and that becomes the basis for how they approach their security. But it really needs to be a lot more in depth than that. It’s going to be a big part of your retirement paycheck. We want to make sure that we have all the data, and we understand the system to be able to make the best claiming decision that we can.

When we talk about our first point here, I’ll give an example of just looking at my own statement what that looks like. Obviously, I’m a few years off. But when we talk about the student loans, the delta between scenario A versus scenario Z can be hundreds of thousands of dollars. So that’s important to understand.

[00:08:28] TU: Tim, just a general scope, I think you make a good point that whether it’s a good thing or a bad thing, depending how you look at it, maybe too big to fail. I think there’s many folks that are maybe earlier in their career, they hear pay Social Security, and they think, “Hey, that’s not going to be a thing.” But I think if we take a step back and really look at just how big Social Security is in terms of like who receives the benefits, how many people receive the benefits.

[00:08:52] TB: Yes. Some of the numbers?

[00:08:52] TU: Yeah. And how big this is for many folks in terms of their income in retirement.

[00:08:58] TB: Yeah. So the number is the majority of American retirees receive more than half of their retirement income from Social Security. So that is the most important retirement asset on the balance sheet, so to speak, even though it doesn’t show up as something on their balance sheet. There’s just a lot of dollars involved. A client who currently claims benefits at the age of 70 and who is eligible for maximum Social Security benefit will receive a benefit that’s like 50k a year.

So over 20 years, that really kind of relates about a million dollars in inflation adjusted spending power. So if you think about that in that context, where it’s like, “Oh, it’s 1,500 bucks a month or it’s 3,000 bucks,” maybe it doesn’t hit. But there’s a lot of dollars involved. Really, for a lot of people, not everyone but working longer and deferring, which we talk about with an investment, typically how you feel is what you should do. You should do the exact opposite in investment.

It’s almost like the same with Social Security. It’s like if you’re like, “Man, I need to get out of my job. I’m ready to retire,” working longer and differing are strategies that can have the most impact to help you kind of mitigate the longevity risk, is the risk of running out of money because, one, it’s another year where you’re not spending in retirement. But it’s also another year where you’re deferring, and you’re potentially earning credits, deferral credits, that makes that dollar amount larger.

We’ll talk about the whole, well, if I put money into, I want to make sure I get every dollar out. People look at this from a breakeven perspective, which I think is a little bit flawed, and we’ll talk about that in one of our things. But if we actually break down the numbers, there’s about 47 million retired workers who are receiving benefits that are around $73 billion per month. So it’s huge.

The second biggest pie are disabled workers. That’s another thing that we’re going to outline. About eight million disabled workers receive about $10.3 billion. Then there’s survivors’ benefits. So this is, typically, you have a worker that dies, and they have children or a spouse that might be receiving benefits, about six million or survivors that are receiving benefits at about 7.3 billion. So it’s very much a piece of the puzzle.

We’ll talk about kind of the averages when we – I think in part two, where we’re talking about like how much this is actually percentage-wise covered from a paycheck perspective. So it’s a big thing. Again, like I think just like we talked about other parts of the plan, you got to take the emotional inventory. You got to take what the actual statements or the balance sheet looks like, and then make the best claim decision for you. That’s, hopefully, some of the things that we’ll uncover.

[00:11:43] TU: So with that, let’s jump into 10 Common Social Security Mistakes to Avoid. Again, we’ll tackle five this week. We’ll tackle five next week. So tip number one Common Social Security Mistake to Avoid is not checking your earnings record for accuracy. Tim, whether someone is nearing retirement, listening in the middle of their career or listening on the front end of their career, tell us more about where they can go to find this information and making sure that they don’t make this mistake.

[00:12:09] TB: Yeah. I think in an effort to go more paperless, I think back in the day, once you reach a certain age, you get like a statement every month. Now, I think they’re moving to every quarter. They’re trying to kind of modernize. For maybe retirees, that can be a little bit of a hard sell. The best place to go is to ssa.gov. You can – It’s the my Social Security website. I signed on right before we hopped on here. It’s really easy to get on, and the website is actually pretty easy to navigate. We’ve talked about some other things related to student loans. The websites that the government built actually is pretty good, same thing with like the IRS tools. S

When I log on, Tim, just to kind of give you a description of what this looks like, I can download my Social Security statement. I can go and replace my Social Security card. I can view my benefit verification letter. The big thing that catches my eyes when I first log in, it’s called the eligibility and earnings section. It basically says that you have 40 work credits you need to receive benefits, and there’s four blocks. There’s a big checkmark, which basically means that I have earned enough credits to earn Social Security.

So Social Security credits, you can earn for a year. You earn a credit by – I think in 2023, dollars is a little bit more than $1,600 in that year. So 1,600 times four, if I earn that amount of money, then I get four credits. Essentially, I need 40 credits to collect Social Security. So it’s essentially 10 years of earnings. But the cool thing is that under that section, it says review your full earnings record now. So when I click on that, it takes me to the eligibility earnings, and it goes back, essentially, from when I first started making money back whenever that was.

When we talk about accuracy, one of the big things that you want to do is you want to make sure that when I filed my taxes in 2022, it shows the tax Social Security earnings dollars, and this is basically how they calculate that. There is a cap, but that’s basically how they calculate what your benefit is. So I can go back and see, okay, this is the amount of money I made in ’21, ’20 for me, all the way back to 1998, Tim, where I earned $353.

[00:14:25] TU: Love it.

[00:14:26] TB: So this is really important because they’re looking at the way that the – And we’ll get into this a little bit more, but they look at, essentially, the 35 highest years of earnings. If there aren’t 35 years, then they essentially use zero dollar year, which moves your average down. So you want to make sure that when you’re reviewing this, that your earnings record is correct. It’s not infallible, like you find errors here. So you want to make sure that when you go back and you’re looking at the top 35 years, that it’s accurate. You’re getting the best benefit you can.

It basically lists for me from 2022, all the way back to 1998. I’m just eyeballing. I’m like, okay, that makes sense because I left the workforce here, or I work part time or that type of thing, just to make sure it looks good. The other thing worth mentioning when we talk about deferral, for a lot of people, the last years before they’re retired is typically their highest income years. So that’s another feather in the cap of like defer work longer. We’re closer to that full retirement age and beyond that. For a lot of us, it’s going to be 65. But then the longer you defer to age 70 is when the benefit gets the highest. The earnings record is going to be the biggest thing in terms of accuracy and making sure in that.

But the other cool thing about this, Tim, is there’s actually like a section on here that shows me if I were to retire at age 67, it says your monthly benefit at full retirement age is going to be $2,599. So it shows me like this pretty cool graph that says, okay, at age 67, this is your full retirement age. Your benefit’s 2600 bucks, if I retire early, say five years early at 62, which is the earliest I can collect it, that drops to $1,774.

[00:16:21] TU: It’s almost 900 bucks, right, yours Tim?

[00:16:22] TB: Yeah. Yeah, exactly right. But then if I defer, so if I worked three years longer from age 67 to age 70, that goes up to the delayed retirement where I earn referral credits, 3,231. So that’s the thing is like when I’m when I’m talking about tens of thousands, if not hundreds of thousand, the earliest I want to get out, it’s 1,700, 1,800 bucks. The latest, age 70, eight years later, 3,231.

So that’s where – Again, and this is inflation-protected. So that’s a huge thing, where those dollars go up every year with what the index says. But then you can also look at disability benefits, I mean, if you have them. It talks about Medicare part A and B, and how you qualify for that. But it’s just a good – When we talk about when we work with clients, get organized, the big thing is looking at the balance sheet, looking at what’s coming in income-wise. Like this is going to be a huge part of that for the retiree or someone who’s transitioning into that. So checking it, making sure it’s accurate.

The earnings is going to be a huge thing that a lot of people don’t do. You want to make sure that you audit it as you go and make sure it’s accurate. So if it’s not, you can make the necessary adjustments.

[00:17:39] TU: Yeah. So takeaway number one, if you haven’t already done so or recently done so, ssa.gov. Log in to my Social Security. You can access your statements, look at the dashboard. Tim’s looking at and talking about, obviously, looking at whether or not you have the 40 work credits. Then looking at some of those simulations for when you may retire.

Tim, I also like – You can play with some of this, right? So you can change your future salary. You can include a spouse or not include a spouse. You can see how that changes the benefits amount as well. So similar to some of the credit I’ve been given to the Department of Ed lately on what they built, that is studentaid.gov, I think they’ve done a really good job with this, so credit where credit’s due.

[00:18:17] TB: I agree. Yep.

[00:18:19] TU: So that’s the number one mistake, not checking your earnings record, not being aware of your Social Security account. Number two, Tim, is only considering your own benefits and not knowing what other benefits are available. So I suspect that folks are most familiar with retirement benefits in Social Security but perhaps to a lesser degree or maybe not even all some of the survivor and disability benefits. Talk to us about really the breadth of benefits that fall under the Social Security benefit.

[00:18:48] TB: Yeah. So the retirement benefits are the big one, and one of the things that is often overlooked is kind of that, yeah, those spousal benefits that are available for non-working spouses as early as age 62. Typically, a lot of the benefits are like kind of hinged on the worker. So if the worker isn’t collecting, then the spouse can’t collect, unless there’s a divorce, and we’ll talk about divorce here later. If it’s a separate household, even though you’re divorced and maybe you had to be married at least 10 years, then you can collect, even if the working divorced spouse is not collecting.

To go back, a lot of the benefits hinges on the working spouse collecting the benefit, unless retired. But the worker must claim the worker benefit to trigger the spousal benefit at full retirement age, which is kind of that middle number, so 67 for me. If you’re a little bit older, it could be 65, 66 years old. But at full retirement age, the spousal benefit is 50% of the workers’ PIA, and we’ll talk about that a little bit. But basically, that’s the number that they use.

The spousal benefit is not affected by the age that the worker claims benefits. So it’s basically once the worker claims it, it’s 50% of that benefit, but it can be reduced if – The spousal benefit can be reduced if it’s claimed before that full retirement age, which again, for me, is 67. Then deferring that benefit does not increase. So there is no referral credits for a spousal benefit. So getting that beyond full retirement age doesn’t make any sense. The spousal and survivor benefits do not increase, like I said, past full retirement age.

The other interesting thing is that if a spouse is caring for a child that’s under 16, you can receive the full benefits, regardless of the caregiver’s spouse’s age. So there’s a lot of just little like nuance here that if you aren’t part of Social Security, you can, again, look these up and see if you would be eligible for a benefit. But this can also be paid for a dependent, an unmarried child under 18. So if I’m 65, and I’ve retired, and I’m collecting my benefit, and I have a 15-year-old daughter, they’re eligible for a benefit, as an example.

Then if there’s a disability, as long as the disability started before age 22, there’s another benefits there related to that. There can be, Tim, a fat family like maximum applied. So like if my family – If I have two dependents and a spouse and then myself and then we’re all drawing like four checks, essentially, there is a cap per family that has to be considered, and that changes over time.

It’s just interesting to know, again, a lot of people overlook this. Unless they’re looking at their mail, which there might be some notices here, or working with a planner sometimes, like this goes unpaid. So you want to make sure that, again, this is a system that you pay into as a worker. That you want to make sure that you and your dependents have the ability to collect the maximum amount.

[00:21:50] TU: Tim, one thing that stands out here real quick is it feels like this is a good example. I mean, there’s many that you just listed off there, where really getting in the weeds and planning could be helpful. But I’m thinking about – Selfishly, I think about my situation, Jess, and others that maybe have a nonworking spouse. Like when you talk about things about a spousal benefit and the percentages and that being hinged on the worker and that it doesn’t have the deferment credits, like there’s really some calculations to be done there of like does it make sense that there’s a strategy around spouse gaining employment, and what might that look like, and what’s the net benefit relative to the time.

Or if the plan is that there’s a nonworking spouse, and it’s going to remain that way for whatever reason, then kind of understanding some of those nuances, right? It’d be hinged on the individual that’s working. What are the risks and benefits of that? Then also, that there’s not things like that deferral credit, right? So there’s a lot to unpack there.

[00:22:49] TB: Yeah. Even taking a step further, if your full retirement age is 67, and you decide to take it at 67, the things that you would have going on there is, say, your benefit is $5,000 at 67. Jess, if she decided not to work, it would be 50% of that, so $2,500. Or do you wait to get that 8% every year, which is essentially going from 67 at age 70, it increases by 8% every year. So you say you claim at age 70, which she can’t claim until you’re claiming, and then she gets 50% of that, right?

If you were to pass away or she were to pass away, you basically get the larger of that benefit. So if you’re at 5,000 and she’s at 2,500, that’s 7500 hours for the household. But then if you were to pass away before her, she would get your benefit. So you would get 5,000, but the other 2500 we’re going to turn off. So the exercise then is what is the best strategy for you to claim to get the maximum out versus deferring. So there’s lots that goes into this.

Again, even me making blanket statements of like, “Hey, deferring usually makes the most sense,” for your case, maybe that’s not the case because you want to turn that benefit on as quickly as possible because deferring for her is not going to really matter.

[00:24:12] TU: Yeah. But that highlights the value of the planning here, right? Yeah. I mean, you talked about at the beginning building a retirement paycheck. Well, that paycheck is going to come from multiple sources. Here we’re only talking about one source and within that one source all the decisions and the nuances.

[00:24:28] TB: Exactly, right. Yep. The second population of people, Tim, so everybody we’ve talked about so far in terms of like benefits, that’s like the worker and like their dependents. So the next bucket is for when that worker dies, so you have like a survivor benefit. When a person who has worked and paid Social Security taxes dies, certain members of family may be eligible for survivor benefits. So a widow, widower would get full survivor benefits are available at full retirement age, but reduced benefits can begin as early as age 60.

This is a whole another ball of wax that we get tested on for the RICP. That can be very confusing to understand. If the widow or widower is disabled, the benefits can then begin as early as age 50, not 60. Then full retirement, full benefits are also available if the widow is caring for a deceased person’s child who is under age 16. You can also get survivor benefits if divorced spouses are under certain conditions. Or unmarried children younger than 18 can also get a benefit. Children under the age of 80 or 18 or older, if you’re disabled before 22, so this kind of falls very similar to the worker benefits. Then dependent parents aged 62 or older. So if I am –

[00:25:43] TU: Interesting.

[00:25:45] TB: Yeah. So say I’m taking care of my mom, and I’m receiving a work benefit, and then I die, my mom might not be receiving a check for Social Security. She might get her own. But if she’s not, then she has the ability to actually get a benefit based on my Social Security. Again, a lot of nuance when a worker passes away as well.

[00:26:07] TU: Tim, what about disability? I know this is an area when I’ve talked to folks before that are evaluating Social Security, asking questions, thinking about Social Security, it’s always focused on the retirement income side of it. But a big part of Social Security on the disability side as well, correct?

[00:26:23] TB: That is correct. I think what we had said in the beginning that it is the second most behind – Yeah, second most behind workers benefits is the disabled workers. About 8.1 disabled workers receiving about $10.3 billion per month. This one’s tough, though, because the Social Security definition for disability is pretty strict. So to receive disability benefits requires providing proof that the worker is incapable of engaging in any type of gainful employment, any type of a gainful employment.

You have to be in a pretty tough medical status to be able to get this, and they typically have an end date. So they’re paid until the earliest of death, the end of disability, or attainment of full retirement age. So then you would go – So if I were disabled at age 55, and I was still alive at age 67, then I would switch over to my worker benefits. It can be pretty strict to be able to get the disability benefit, but it is the second largest after workers benefits. It’s a pretty strict interpretation of work and gainful employment.

It is important to know, again, do I have a worker benefit? Do I have a survivor benefit available to me or my kids? Do I have a disability benefit? So kudos to the website. I would be on there. Obviously, there’s a lot of education, but then being able to log in and see, hey, I do have this benefit because I paid enough into it. There’s some assurance there, to know that.

[00:27:57] TU: Tim, when I see on the disability side that the worker is incapable of engaging in any type of gainful employment, my first thought is, well, this seems to be why, for so many pharmacists, we’re often looking at standalone long-term disability insurance policies that have some type of an own occupation component to it. Am I reading that correctly?

[00:28:16] TB: Correct. Yep. Yep.

[00:28:17] TU: Okay. Yeah.

[00:28:19] TB: Really, the reason for that is like what often happens, if it’s not an occupation, say I’m a pharmacist and say I’m in an awful car accident, and I cognitively can no longer do the work of a pharmacist, that doesn’t necessarily mean I can’t do the work of bagging groceries or doing something like that. So what the insurance company could say is like we’re going to deny the claim because you can still have gainful employment. It’s just not for the employment that you were trained for. So that’s just – Yeah, it’s important to know that.

[00:28:51] TU: Good stuff. Number three on our list of 10 Common Social Security Mistakes is not understanding how benefits are calculated. Tim, admittedly, this is something I know very little about. You’ve already thrown around a term. I’m sure you’ll define PIA. Tell us more about the formulas that are used to determine one’s benefit?

[00:29:09] TB: Yeah. So the two big terms here is the PIA, the primary insurance amount, and the AIM, the average indexed monthly earnings, which I alluded to a little bit. So the worker’s benefit is tied to the primary insurance amount, PIA, which is a benefit formula applied to the worker’s average indexed monthly earnings or AIMs. That’s a mouthful. So the way you get to aim is you add together all of the index wages for the highest 35 years, and you divide that by 420 months or 35 years, and that’s the AIM.

So if you look at this on a timeline, the timeline zero is kind of the PIA. Then anything before that, so if you retire early, say at 62, that’s kind of a reduction, and I’ll take you through the math on that, then anything to age 70, which is the opposite on the spectrum, is a credit. So the worker’s benefit is reduced by – Of course, we don’t want to make this simple, Tim, but it’s five-ninths of 1% of the PIA for each month before retirement age up to 36 months. So essentially, you’re getting a haircut five-ninths of 1% of PIA for every month before your full retirement age.

If it’s greater than 36 months, it’s further reduced by five-twelfths of 1% per month. So in my exam, I’m basically calculating this. I’m like, okay, the full retirement age is 65. They – Yeah, no doubt. So here’s an example. If we’re claiming 44 years early, that’s 48 months. So the first 36 months, it’s five-ninths of 1%. Then the last 12 months to get to the 48 is five-twelfths of 1%. So if I do the math there, that’s a 25% reduction. So five-ninths times 36, plus five-twelfths times 12, the 12 months is 25%.

[00:31:06] TU: Four years early.

[00:31:08] TB: Correct. So that tells me that my paycheck is reduced by 25%. So if my primary insurance amount was 1,500, then my benefit would be reduced by 25% or 1,125. The scary thing or not the scary thing, but the problem is, Tim, is like once you do that, there are some like you can unwind it. If you claim early, you have 12 months to kind of give the money back. Or you can give them money back and say, “I’m just kidding. I want to actually defer.”

But once you take that haircut, you take that haircut. Again, you still might get the cost of living so that 1,125, if you’ve got that in 2022, you still get the 8.7% increase. But I would rather have the 8.7% increase on that 1,500. So if you defer the worker’s benefit, it increases by two-thirds of 1% for each month, until age 70 or 8% per year. So if that 1,500, basically, I go all the way out to age 70, for every year, essentially, it’s about 8% per year, which is why when I was looking at my benefit, I’m like, all right, 2,600 bucks at age 67, if I wait to age 70, 3,231. That’s kind of the idea.

[00:32:27] TU: What was your spread, Tim, your low to your high, 62 to 70? What was your –

[00:32:31] TB: 62, I’m getting $1,774. To age 70, I’m thinking 3,231s. What is that? 70, 80% difference between the two or something like that?

[00:32:43] TU: Quick $1,500 about. Yep.

[00:32:45] TB: Yeah. It’s significant. We’re talking about this a little bit, Tim, but what people are saying is like, “Well, if I retire at age 62, I’m probably going to live to age 65.” Like people have kind of very little sense of their own mortality, and they typically live longer than what they think. Now, that’s not always the case. There are some people that it does make sense to claim, and we’ll talk about a little bit more of the mindset. But a lot of advisors and people, it’s like, well, it’s kind of a breakeven. It’s like, well, if you are collecting at 62, that’s eight years of collecting it at that versus waiting at 70. There’s a breakeven analysis that you can do. But I think that’s flawed in a sense, in terms of it looking at it from an investment decision versus like an insurance decision. We’ll talk about that in the next episode.

[00:33:34] TU: Tim, a question I have, when you talked about the benefit going up 8% per year by deferring, is that 8% plus the COLA then, just like it was on the downside? You know what I’m saying?

[00:33:48] TB: Correct.

[00:33:49] TU: Okay.

[00:33:49] TB: Yeah.

[00:33:50] TU: Yeah. I mean, that’s wild, right? I was just kind of taking those numbers like, so instead of 1,500 going to 1,125, getting reduced by 25%. Essentially taking that up 8% per year and, obviously, it’s 8% on the 8%. But then adding to that the COLA piece, like that’s where the numbers start to really deviate.

[00:34:08] TB: Yeah. Again, this was a crazy year, so –

[00:34:13] TU: Yeah, that’s right. That’s right.

[00:34:14] TB: I’d have to look at in terms of like what the – But I feel like it’s gone up, even in years of very little inflation. The CPIW, which is the Consumer Price Index for Urban Wage Earners and Clerical Workers, is essentially what they use to adjust it, even if it’s a 1%, 2%. Yeah. That’s completely separate from the deferral credit of 8% that you receive away from inflation. Again, that can be huge.

[00:34:41] TU: Yeah. Yeah, absolutely. Again, I think this is a good reminder, like we’re talking in generalities. I think you mentioned, Tim, the importance of, hey, we can run the math. You can run a breakeven. But it doesn’t stop there, right. As we highlighted earlier in our conversation, there are so many layers to this and considering spousal benefits and quality of life and overall health condition, what you’re doing.

I mean, there are so many things that consider that, yeah, I mean, there are cases where someone may claim early, as we look at generally. Certainly, the math here would advocate that deferring makes sense, but that may not always be the decision. I think that’s where the planning really comes into play.

All right, number 4 on our list of 10 Common Social Security Mistakes is taking Social Security too early, not working long enough. Tim, we talked about this a little bit already, and perhaps it’s due to the age of my parents and in-laws, where this topic is one that comes up a lot. But this feels like a topic that is often discussed, often debated. So talk us through some of the major implications here.

[00:35:42] TB: Yeah. Just like any other parts of the plan, Tim, like what we’re really trying to strive for here is optionality. I can speak to my own parent, at least my dad. When he retired, it was kind of out of his hands because his company was bought by another company, and he was kind of duplicitous. So his options there were, okay, find a new job at 65 or whatever it was or start retiring.

Again, like if I’m him, in that moment, I’m probably trying to use other sources of income. So I can then defer Social Security, get the biggest benefit. Sometimes, your plan is out of your hands because of external things like that. You want to prepare yourself as best you can to kind of cushion the blow, again, if you are, if you do kind of get phased out of the workforce. A lot of it, it’s related to scale backs and things like that. But sometimes, a lot of it is health.

Sometimes, you’re like, “Oh, I’m definitely going to work to age 65, or I’m definitely going to work to age 70.” I think it’s something like 40% of the time, that’s not the case. So 40%, that’s a coin flip, a coin flip, Tim. Sometimes – Now, just because you’re not working doesn’t necessarily mean you have to claim Social Security. But for a lot of us, especially for a huge portion of that, you have to, right? But the argument that I would make is that if you can build a plan to have enough retirement assets or being able to tap home equity or taxable brokerage assets to kind of bridge that gap, it allows for further sustainability later because just more of your dollars are coming from Social Security, versus taking a 30% haircut or whatever it is. Yeah. Not working long enough is huge.

The other factor is that, again, typically, towards the end of your careers, when most of us are working or earning the most money, which, basically, we’re looking at the highest 35 years, so it could be I’m making $200,000. If I decide to work another year, $200,000, maybe that’s taken zero or that $358 a year that I had in 1998 off the table. Then my benefit is going up even higher.

But then the other side of it is like it is another year, where you’re not essentially senior. You’re not in senior unemployment, i.e. retirement, where you’re not basically generating your retirement paycheck yourself, which, again, is the whole purpose of retirement. So there’s a lot of people that are now really trying to either phase into retirement, or they have lifestyle, jobs, or businesses, or things that they do that maybe bring some dollars in that they’re not full stop.

Because, again, from an emotional standpoint, we talk about this from an identity perspective, a lot of us like my identity is very much wrapped up in the job that I have, which can be unhealthy. But we’re seeing high levels of depression and drug use, alcoholism in retirees that we haven’t seen before. I think it’s because a lot more people are talking about it. But that’s another benefit of like easing in from a work perspective.

But as we talked about it, again, it’s a 30% reduction if you claim at age 62, versus full retirement age. If you work past it to get the full credits, 8% per year. The difference, it can be like 70 to 80 percent between age 62 to age 70 in terms of the benefit, if you defer. One of the things that is if you’re listening to this, and you’re like, “Ah, I just retired summer of last year, and I took the benefit right away,” there isn’t the ability. It’s called a withdrawal of application, which can be made by a worker within 12 months of claiming the benefits.

It’s basically like a take back seats, like do over. You’re like, “Oh, I just kind of did what everyone else is doing, and my situation maybe requires some more TLC and attention to see. Like maybe I can get by or not claim this. I can work part time. I can consult or do whatever to kind of grow that benefit to –” Where you’re getting that 8% raise to age 70. I think that’s important. Really important to look at.

[00:39:57] TU: Tim, one of the things that just hit me as we were talking, to reiterate something we lead with, is the need for time, attention, love, planning, whatever you want to call it for Social Security. We spend so much time – When I think about numbers like $5,000 a month, right, just throwing a round numbers here, as we’re looking at some of our examples, $5,000 a month, and the attention and time we give to building and putting together a nest egg that would generate $5,000 a month, while we, I think, largely often kind of wander, walk into perhaps on some level and inform the decisions around Social Security, the implication around Social Security, a very similar level here we’re talking about, and it’s substantial, significant level, several thousand dollars per month.

I think it just highlights, as we’re digging into some of these numbers and how to optimize it, how much time and attention Social Security does really need and deserve as a part of the financial plan and one that admittedly – We look back over the first five years and said, hey, we haven’t really talked about Social Security. It’s a huge part of the financial plan, and that’s in part why we’re talking more about it right now.

[00:41:02] TB: Yeah. Again, just like anything, the financial plan is not necessarily built in a day. I think a path towards financial freedom, how you just decide that, is months. It’s years. It’s decades of being very intentional, of working towards stated goals. Social Security is a part of that. Again, we often think of it as just I’m earning money, 35 years of earnings in the background. But a tweak here or a tweak there, someone listening, and they’re like, “Hey, I can definitely earn $1,600 times four a year to turn that benefit on for me.”

Even if it’s a small benefit, I mean, that might be a car payment. It might be a chunk of rent. It might be groceries. So I think every little bit counts. At the end of the day, what really – Again, it goes back to the being intentional but then optionality when you get to that moment. Again, like one of the things that we do – Again, if we use the term, if we use 5,000, 60 grand a year for that, we might need another 60 grand to live.

So let’s say it’s 120,000. Essentially, what we’re doing then is we’re looking at those alternate sources, which could be pretax dollars from a traditional 401(k), after tax dollars from, say, a Roth IRA, a taxable account. We’re kind of trying to bring all those in, and it could be money from home equity. It could be money from an annuity that we take a chunk of the portfolio, and we say, “Hey. For us to get to a minimum, maybe it’s not – Maybe we need 80,000.” So maybe we buy a $20,000 annuity for that year or for like a term or whatever to get to that level. Then you know that based on Social Security and based on what that annuity is going to pay you that I’ll food, I’ll have a roof over my head, all those basic necessities. So everything else that’s coming from the portfolio, which is kind of cream.

Essentially, what I’m describing is like the flooring strategy. But, yeah, it’s huge. It’s huge. Again, I think what we’re advocating for is just intentionality. So it leads to optionality in the future.

[00:43:23] TU: Yeah. It’s separate conversation for a separate day. But just things that are coming into my mind as we walk through some of this if you have a solid flooring strategy in place, if that’s the route and pathway you’d go, like does that change your risk tolerance or risk capacity around investing or other opportunities? Again, all this feeds into to one another.

All right, let’s wrap up this two-part series on 10 Common Social Security Mistakes. We’ll finish up with number five here, and we’ll pick up next week with 6 through 10. Number five is making sure that we’re not looking at this in a vacuum and specifically not coordinating benefits with a spouse. Tell us more about this one, Tim.

[00:44:01] TB: Yeah. Kind of I’m thinking about this. We do have a lot of people that come through the door that’s like, “I’m looking for a financial plan just for myself,” but they’re married. I’m like it is hard to do because up and down, whether it’s a shared benefit like a home or even something like Social Security, like you got to be on the same page.

As we said, the spousal benefit does not increase if the worker defers benefits. But a survivor benefit may. You can get credit based on that because it’s based on the PIA of the worker. One of the things that like we often hear is like, “Well, I’m in poor health, or like my dad and my uncle, they all died in their early or late 60s, early 70s.” But it might make sense. So even if the spouse, who is in poor health, it might make sense to defer the benefit because the longer you defer –

Again, if we give an example of spouse A has a benefit of 1,700, and spouse B has a benefit of 3,000, that’s a $4,700 per benefit. But if I can defer spouse B to get the 3,500 or to get the 3,800, I still can either pick mine, which is 1,700, or my spouse’s at 3,000, when they do pass away.

Again, it can’t be looked at a vacuum. You really have to look at everything. But a lot of people at default, they’re like, “Hey, I just got to get the money as quickly as possible.” Because I put all this money into, I want to get out. That kind of goes back to like the whole investment. So it really is important for you and your spouse to go back to the first one, where it’s like look at your earnings. Look at everything. Make sure it’s accurate. Then really coordinate the benefit that maximizes the dollar for the household, when both spouses are alive but then also when one spouse predeceases the other.

So not in a vacuum, just like so many other pieces of the financial plan, you need to really make sure that there’s a coordination strategy there to, again, maximize the benefit and not leave money on the table.

[00:46:00] TU: Tim, one of the themes I’m hearing from you, especially for folks that are listening that have still a decent runway to save, is what can we be doing to take off that pressure of early claiming, if that’s not the move that we would desire to make, for the reasons we’ve talked about looking at the dollars and cents here?

Can we build those other sources that we can pull from, when it comes to that retirement paycheck? You mentioned the traditional retirement accounts, Roth IRAs, brokerage accounts, etc. Can we build those up in a way that relieves that pressure? Then if the decision really should be different for some and, again, that may not be a blanket for all, but we take that out of the equation, pressure out of the equation.

[00:46:42] TB: Yeah. I think this all goes back to like goals, like what is your goals around retirement? It’s funny. Like it goes back to all the other pieces that we talked about what the financial plan. It’s like what’s the balance sheet say? What are the sources of income, and where are we trying to go? What are the goals? It’s the same, whether you’re starting out, or it’s the same, whether you’re starting to wind down your career, so to speak.

Having a good eye on like where you’re at and where you want to go is just as important at age 60, 65, 70, as it is at 25, 30. To me, it’s really, really important to have these conversations out loud. I always – I laugh at myself, where I’m like, “Man, I love what I do. I love the work that we’re doing at YFP. I can see myself working at least till age 70 to get ready for retirement age.” But I also know that like we can be fickle creatures, right? Something could happen outside of our control that just makes the work that we’re doing a lot harder. There can be a lot of things.

So I think even checking in with yourself, checking in with your spouse in terms of like what you want is important. But then if you do have to kind of pivot because of maybe some of the things that we did 20, 10 years ago, we have the option to say, okay, we can still not be hasty with our retirement claim or Social Security claiming strategy because we have the ability to pull through other sources to still max them out, max out like what we get from the system.

Again, like I would almost say that this decision is going to be one of the bedrock decisions, if not the bedrock decisions, because we’re looking for sure things. Although, again, like there might be differences in the benefit in the future, it’s still going to be there, and it’s still going to be inflation-protected and all those things that is really positive about the Social Security benefits. So, yeah, I think, hopefully, this is a good first five and looking forward to getting to the next five. But I can’t stress the importance of this decision on the retirement income plan.

[00:48:43] TU: Great stuff as always, Tim Baker. We’re going to pick up next week, as we continue with 10 Common Social Security Mistakes to Avoid. Again, I’d reference you back to episode 242, where we relate some of the foundation around Social Security. We look forward to talking more about this topic throughout the year.

For folks that are listening, especially, Tim, I’m talking about folks that are maybe in that later part of their career, nearing retirement, a lot of these questions are really coming to life around Social Security. It’s moving from the education to the decision making, if you will. We’d love to have a chance to talk with you to determine whether or not the financial planning services that we offer at YFP Planning are a good fit for you. So you can do that by booking a free discovery call at yfpplanning.com. Again, that’s yfpplanning.com.

Tim, thanks so much, and we’ll be back next week.

[END OF INTERVIEW]

[00:49:29] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 293: Employee to Entrepreneur with Dr. Victoria Reinhartz

Posted on February 2, 2023March 10, 2023 by Caitlin Boyle

Dr. Victoria Reinhartz, CEO of Mobile Health Consultants, a business founded to solve the access to care problem by empowering interprofessional Mobile Integrated Health and Community Paramedicine teams, discusses her motivation for building Mobile Health Consultants, the target audience and how this has evolved, how she overcame the initial hurdles of starting a business, and how she balances running a business while working in an academic position.

About Today’s Guest

Dr. Victoria Reinhartz is an industry leader in Emergency Medical Services, where she established the first-ever paramedic-pharmacist partnership to address chronic disease and medication challenges for underserved populations. She is the Chief Executive Officer of Mobile Health Consultants, a business founded to solve the access to care problem by empowering interprofessional Mobile Integrated Health and Community Paramedicine teams. Dr. Reinhartz is a national advocate for innovative models of care, and she serves on the Board of Directors for the National Association of Mobile Integrated Health Providers, an organization advocating for mobile interprofessional teams as the nation’s care solution. She also serves as the Mobile Integrated Health subject matter expert for the Commission on Accreditation of Medical Transport Systems.

For her leadership and exceptional care provision within Emergency Medical Services and Mobile Integrated Health, Dr. Reinhartz has been recognized with a Chief’s Commendation Award, a Congressional EMS Unit Citation Award, and national attention from the United States Public Health Service.

Her national advocacy for pharmacists as part of mobile health teams has resulted in Dr. Reinhartz being named a 2021 Top 50 Most Influential Leader in Pharmacy. She was also selected as the 2020 Next Generation Civic Leader, an honor awarded to one pharmacist nationwide whose vision for interprofessional care best spotlights the needs of underserved communities.

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, talks with Dr. Victoria Reinhartz, CEO of Mobile Health Consultants, about her journey from employer to entrepreneur. During their discussion, listeners will learn about the motivation and inspiration behind the genesis of Mobile Health Consultants, the target audience and offerings, how they’ve evolved, and how Victoria conquered the initial hurdles of starting her business. Highlights from the episode include a discussion of Victoria’s start in pharmacy and how a standout moment in her career highlighted the teaching abilities that she thought she might never use as a pharmacist, how Victoria discovered her passion for community paramedicine and mobile integrated healthcare, and how she moved her idea for Mobile Health Consultants from an idea to a business.

Tim and Victoria discuss the path from employee to entrepreneur, the value of professional coaching and small business development centers, and how as a CEO, time distribution can fluctuate when managing competing responsibilities and onboarding teammates. Victoria shares practical tips and tricks on managing and running a business while also working in academia, how her presence in the front office and the back office have evolved as needed, and strategies she has used to grow her team.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

This week, I had the pleasure of talking with Dr. Victoria Reinhartz, CEO of Mobile Health Consultants, a business founded to solve the access to care problem by empowering interprofessional mobile integrated health and community paramedicine teams. During the show, we discuss the why behind building Mobile Health Consultants, the target audience and offering and how this has evolved over time, how Victoria was able to get over the initial hurdles of starting the business, and how she balances her time running a growing business, while also working part time in an academic position.

Okay, let’s jump into my interview with Dr. Victoria Reinhartz.

[INTERVIEW]

[00:01:22] TU: Victoria, welcome to the show.

[00:01:24] VR: Oh, thanks for having me, Tim. This has been a long time coming, so I’m glad we’re able to put it together.

[00:01:29] TU: It has. We crossed paths this past year through the pharmacy entrepreneur circles. After I learned a little bit more about your career path and the work that you’re doing with Mobile Health Consultants, I knew we had to bring you on the show to share a little bit about your entrepreneurial journey, what was the genesis of the idea, what is the work that you’re doing. We know that we have many pharmacists in our community that are itching with an idea or a side hustle or a business that they’re working on and excited to feature other pharmacy entrepreneurs such as yourself.

So let’s start with your background in pharmacy. What drew you into the profession? Where did you go to school, and what was the first position that you had after graduation?

[00:02:07] VR: I decided to become a pharmacist because I am kind of a nerd at heart. I really enjoy a good puzzle, so to speak. I think that every patient and the best drug therapy for them is really a puzzle for us to figure out and navigate through the various challenges related to genomics and treatment course and side effects, etc.

So the nerd at heart in me, I love putting together puzzles, and I ended up going to pharmacy school at LECOM School of Pharmacy and graduated, I guess, now over 10 years ago, which feels crazy, right? We no longer qualify as new practitioners too.

[00:02:45] TU: We don’t.

[00:02:47] VR: But that’s alright. So graduated from LECOM School of Pharmacy down in Bradenton, Florida area and stayed in Florida to practice more in the community setting. But I was fortunate enough to continue to take on leadership roles and new opportunities to develop skills within myself, which really is what led to a lot of the opportunities and academia and public health and now mobile integrated health that I’m involved in.

[00:03:16] TU: So one thing, Victoria, I read that you shared on LinkedIn was a story from your last year of pharmacy school, when you did an educational training session, I would assume, during an experiential rotation for a nursing staff at a hospital. Through that experience, you realized the love that you have for teaching and problem solving. Tell us more about that experience, and how did it influence some of the career path and directions that you’ve taken today?

[00:03:44] VR: Yeah. So the story that I have on LinkedIn is a true one, and it is something that I feel still happens to this day. So I come from a super blue-collar family. We cuss a little bit in our family. I don’t know. Any of pharmacists listening, if you have families that that cuss a little bit, my family is super blue-collar, and I had been practicing like how to say glomerulus. I was so nervous about this presentation that I was going to do to an inpatient nursing staff.

After the presentation, a preceptor pulled me aside and wanted to have a serious talk with me, and she was kind of had that serious face on, and I said, “My goodness, I’ve cursed in the middle of the presentation, right? I let a four-letter word slip somewhere on accident.” But she wanted to have a serious talk with me about my future and about whether I had considered teaching.

Like many of the entrepreneurs that you bring on the podcast here, I thought that when I did decide not to do a residency that I had closed the door on any opportunity to teach. I was candid about that that, no, I decided not to do a residency. So I don’t think I would be allowed to teach anywhere. She really encouraged me to pursue opportunities where I got to develop that skill set of teaching.

So when I graduated and took a role in community pharmacy, I started figuring out how do I gain teaching skills. So I started to bring in new pharmacists, to train them. I started doing teaching events with our local pharmacy school and in local college of medicine. I started taking on more initiative on the district level to figure out how can I develop the skill set that I need to become a faculty or a professor.

Really, that professor had a huge impact on my life, that preceptor. It was secondary to her taking a minute and saying, “I think that you should develop this,” that prompted a lot of the steps that I took to continue to develop myself. So once I had kind of launched some of those things where I felt more comfortable in teaching, I had been engaging in teaching concepts for a while now, I took the opportunity to apply for a faculty position. I did accept that faculty role in 2015 with LECOM.

But I knew that I wanted to really stay involved in clinical practice as a younger practitioner. So I started working in the public health department and doing tuberculosis management and women’s health and immunizations and things like that. I was brought in to kind of help the Department of Health figure out a solution for our access to care problem. We started brainstorming. Really, this is where I found the passion for what we call community paramedicine and mobile integrated health care.

Like a lot of pharmacists, I think when we start to do a side hustle or when we step out to become an entrepreneur, it’s often born out of a problem that we’ve identified in practice that we feel passionate about or something that is just like lights our soul on fire, right? Like something that brings out that, “I want to do this. I’m excited to do this. This lights me up, and it keeps me up at night.”

So this was kind of a blend of those things, as there was a big problem. As we know, in all of our communities, we have a huge number of patients or underserved populations that are not able to navigate the healthcare system, right? So they don’t have primary care. They’re uninsured or underinsured. They don’t speak English and can’t navigate even getting established with a primary care. So what this leads to is we have these patients utilizing the 911 call system and emergency rooms as their primary care, right?

So definitely something that we all see in our communities, we know that health outcomes suffer. We know that cost, it gets expensive. So I said, “Well, why don’t we do a pilot? Why don’t we launch a pharmacist and a paramedic side by side into patient homes on a proactive basis, so not when the 911 call comes?” But paramedics know who in their community needs the support.

[00:08:30] TU: That’s right.

[00:08:30] VR: They know who’s calling 911 all the time. They know when Mr. Jones calls for the fourth time that they’re going to be back next week. So they know who to see. We launched a pilot with a pharmacist and a paramedic side by side together, going into the homes proactively for these patients that did not have the resources they needed, and we were able to see a huge impact in reducing the overall cost of care, but also improving the health outcomes.

That is now how my entire consulting business is founded in the mission of empowering these paramedicine teams with the training and resources they need to improve access to care.

[00:09:15] TU: I love that, and I want to come back and dig into more of what you’re working on with the consulting business and how it’s grown over time, the vision you have for it going forward. I want to make sure we don’t gloss over, though, some really important parts of the story you shared on that rotation and that experience, and one being great mentorship, right?

All of us have the opportunity to interact with other pharmacy professionals. Perhaps we precept students as well, and we never know the impact that some of those words of encouragement are just seeing a skill set or a passion in someone and either affirming them in that skill set, encouraging them in that as well, the impact that that may have long term. So it’s just such a great example of that.

Then another key piece that I really heard in that story was initiative, right? So one of the mindsets that can be out there is, “Hey, I can’t get X, Y, or Z job,” in the case here, you’re talking about a faculty position teaching, “Because I might not have,” insert whatever. Residency training, board certification, whatever credential. That’s one mindset.

The other mindset is like, “I’m going to figure it out. I’m going to figure it out because I have a passion for teaching. I have an interest in it. Somebody else has affirmed that skill. And I’m going to kind of blaze that pathway, and I’m going to take initiative in building relationships, collaborations, and getting opportunities that I can then go and make a case for why I can provide value in this teaching role.”

What’s really interesting, Victoria, is you are doing teaching in somewhat of a traditional format, obviously, in a faculty type of role or position. But you’re also teaching every day in the work that you’re doing through your business. I think one of things we got to be careful about is if we have a gift or a passion in a certain area, but we feel like we may not be able to do that because it’s defined a certain way by an employer or in a certain career path, it doesn’t mean we can’t do that, right?

You can teach. I can teach. I’m not in a formal academic role anymore. But I’m teaching every day on personal finance. It’s a different method of delivering that information, but it doesn’t necessarily have to be defined in the way that we may think that it has to be with a certain step or credential or degree or pathway to be able to do that. So I love that story and that journey. I think that’s so powerful.

So when it comes to Mobile Health Consultants, so you talked a little bit about the pilot project, the initiative, really the problem and the opportunity that you saw, that you’re able to solve. Tell us more about the step from idea to actually beginning to implement that business, right? It’s one thing to identify a problem that needs to be solved or an opportunity that can be addressed, and you could have continued to do that through collaborations and partnerships with existing entities, while you’re employed in other positions.

But it’s another thing to really take a problem and then develop a solution through creating a business. In here, we’re, obviously, talking about the consulting work that you’re doing. So tell us about the early stages and how you were able to initiate and get started with developing the business.

[00:12:11] VR: Well, I have to say that we do not do a good job in pharmacy of teaching or creating skill sets around entrepreneurship, in general, I would say.

[00:12:22] TU: Amen.

[00:12:25] VR: I know that you and I have gone back and forth about this issue over the last few years, and so many others that are out there creating side hustles for themselves, creating small businesses and solutions in the healthcare industry and outside of the healthcare industry also feel that way. But I was in that boat. I felt – I knew a little bit from managing a pharmacy or being involved in pharmacy management. But when you talk about entrepreneurship and establishing a small business, that’s not enough. It’s not even close to enough, right?

I did find it difficult in the beginning. I still find it difficult every day because so many pharmacists are kind of inherently intelligent, and they’re kind of good at things that they do and can figure things out really easily. Some of us, maybe you didn’t even have to study that hard for some of your undergrad courses and things. I think that that was a big challenge for me in the beginning was struggling, like struggling and navigating. How do I do this? What are the laws and regulations? How do I draft contracts? How do I set my hourly rates? All of those pieces have to be figured out?

I had a lot of success with, first of all, finding coaches. So for anybody on this podcast, and Alex and Jackie Boyle and the team from Happy PharmD have not asked me to discuss this or mention it or anything, but I did actually go through the Happy PharmD processes for prioritizing myself and my own goals and figuring out what do I need to do to make this happen. It’s living in my heart. But like so many of us that are parents and spouses and professionals, our own personal passions tend to take a backseat to all the other things that we have to do, right?

So I did pursue some coaching with Happy PharmD to create a series of deliverables for my own goals that I knew would set me on the path to getting established. I also found the Small Business Development Center or the SBDC to be really valuable. I will tell you, I still meet with them, with my SBDC rep like, I don’t know, every other month or every few weeks, if I need to, if an issue comes up and I’m like, “I have no idea how to handle this,” or, “Can you help me find someone in the area that is a trustworthy source and this expertise area?” So you have to ask for help. For a lot of these things, you have to be willing to kind of put up the money, if that’s what it takes.

[00:15:09] TU: Yeah. I’m glad you mentioned the SBDC. I’ve talked to several pharmacy entrepreneurs or those that are building something, just in the last couple of weeks, and that was one of the resources I pointed them. Hey, have you talked to the SBDC in your area? Because it’s – Even the technical stuff, some of that might be helpful. Some of it maybe you’ve already kind of gone down that path, putting together business plans, LLC formations, things like that.

But it’s about beginning to be a part of that network and community, where someone might say, “Hey, have you talked to so-and-so? Or what about this? What about that?” I think it’s just helpful to know you’ve got someone else in your corner to bounce ideas and questions off of as you’re developing. It’s such a great free resource that’s offered all across the country. We’ll link to that in the show notes, so folks can find SBDC office in their area as well. Then you mentioned the impact of coaching that can be there as well.

Let me ask a follow up, though, Victoria. Even with coaching, right? Even with coaching, even with putting up the dollars, there’s still a step of getting over the fear, right? The fear of, “Man, is this going to be successful? What if I mess up a contract? Who am I to kind of put myself out there of this expert in this area across the country?” There’s all what I like to call the head trash that might get in the way of us being able to actually move something forward. Coaching can help that. Don’t get me wrong. But at the end of the day, like we’ve got to be able to be comfortable taking some risks to move something forward.

So for your journey, was that a thing? Was that a part of the journey? Then how were you able to get past that to be able to take those first early steps of the business?

[00:16:38] VR: I think regarding the headspace, I think it’s not really a thing where you can say, “Oh, I don’t think I’m in the right mindset, or I’m being too hard on myself. So I’m going to do this tomorrow, and then that fixes the problem.” It’s an ongoing, continuous daily effort because every step of the process is going to be a learning lesson for you. So whether you’re earning your first dollar or your 100,000th dollar or your millionth dollar, each of those phases of growth creates a new element of imposter syndrome, right? Or a new element where you’re not sure am I ready for this level of the game, right?

So it’s an ongoing thing, and I just want everyone to know that and give themselves some grace. I think that giving myself grace was a huge part of how I continued to be in the right mindset and how I approached it early on as well. You’re going to make mistakes. You’re going to have to reach out for partners or resources because you don’t know how to do something, and you have to figure it out. You just have to be comfortable saying, “I don’t know. I need support,” and give yourself the grace to be able to do that. I think that was a big one for me, right? We’re a lot of times our own harshest critic, and so getting comfortable in that.

Then I think the other thing that I would say is, financially, it does take some preparation, potentially, depending on how comfortable you are with risk, with financial risk. I know that we, my spouse and I, had to put together a plan of what’s the dollar amount that we’re going to invest in here, and what’s the timeframe before we are going to count on a salary coming in for you that we feel comfortable with. So essentially, what’s the span of months, or even years maybe it might be for some people, until we say, “Okay, enough is enough. We did it, and we were not successful, and we need to kind of go back to a real world job, so to speak.”

So anything that you can do by saving ahead of time, making changes in the budget, putting money aside to reduce the amount of risks that you have or increasing your comfort level with the risk that you’re taking is valuable.

[00:19:12] TU: I’m so glad you mentioned that, Victoria, because I think there’s a lot of – I use the word over glorification of this idea of like just jump and figure it out. There can be value in like making some mistakes and learning along the way. But there’s also some wisdom in having a game plan and having some backup and options, especially when we’re talking about the financial aspects of the personal side. Of course, there’s a connection to that of the business side.

What we want to prevent is that we’re not able to pursue our business with the full attention that it needs and deserves because we’re worried about the risks on the personal financial side of things. Everyone has a different capacity and tolerance for risk, right? Everyone’s personal situation, of course, is very, very different. But doing that work, as you mentioned, to determine what is the runway that it’s going to take reminds me of –

We had Jodi Nishida on episode 266, I’ll link to that in the show notes, who has started a keto-based practice out in Hawaii, doing some really cool things. She talked about this for her journey of having a substantial amount of savings that she ended up having to lean on early in her journey because of some challenges that happened that maybe she could have predicted, maybe she could not have. But if it weren’t for having some of those reserves, it might have crippled her moving forward with the business. Potentially, without that, she might have felt the need to jump back into the work that she was doing previously.

So a ton of wisdom there, I think, that you’re sharing in terms of making sure that we have the financial plan and preparation, so we can approach the business with the confidence that it does deserve. So Mobile Health Consultants, I’m going to read your mission statement. Empowering mobile integrated health and community paramedicine teams in all 50 states with exceptional training and disease management expertise. So you painted the picture of kind of how it came to be and the problem you’re trying to solve. Tell us more about the target clients, the services that you offer today. Then we can also talk about kind of what you’re planning into the future.

[00:21:12] VR: Yeah. So I think one of the exciting things about being an entrepreneur is that you get to kind of follow your heart, and you get to really live the concept of success occurs when preparation meets opportunity, right? I started out just offering consulting services and some speaking services. That would be anything from coming in and doing a program evaluation, so for these programs that are already in existence, so coming in and doing a multifaceted evaluation to look for operational efficiencies, clinical appropriateness of their programs.

That ended up expanding to helping teams launch programs. So if they are recognizing there’s a high number of 911 calls secondary to injury in their area or frequent falls, then they might want to put together a false program. But maybe they don’t want to navigate all the challenges of which home safety assessment is best, which falls assessment tool is best, how do we deal with the meds that are going to contribute to falls. So I began going in and helping teams navigate that. How do you figure that out? What’s the best practice in the industry? What should you track for monitoring your effectiveness? So that kind of expanded to helping launch new programs and establish both clinical and operational efficiencies.

It has kind of expanded from there. So now, I work with teams that are getting set up with payers for establishing what metrics to track and how to quantify their effectiveness from a value-based care standpoint and reduce the overall cost of care for patients. That might be Medicare or Medicaid patients. We also do consulting for technology companies and healthcare service provider companies.

So as they are expanding markets that intersect with mobilized healthcare professionals, which we saw a huge boom of that via telehealth and community-based care programs as part of the pandemic, as technologies grow to recognize the value of mobilizing teams into the communities, there is a huge need to modify their technology systems. So we also have an end user design type consulting service that we provide, where we give insight to these teams and the companies that are developing the necessary technology.

[00:23:49] TU: I love it. We’ll link to the website in the show notes, so folks can get a feel for services and offering and educational programs. I think you’ve done a great job of laying that out on the website. One of my questions for you, Victoria, as I hear you talking about the evolution of the services is that – I think any early entrepreneur kind of goes through this phase of coming up with the content and the product, doing a little bit of business development and marketing.

I’m also, obviously, kind of a key relationship developer with partners. I’m trying to manage the finances a bit, wearing all these hats at once. So as I hear what you’re doing, and we’ll talk about how you balance this with other responsibilities that you have as well, like how would you estimate or breakdown your time in terms of where you’re spending and actually delivering the products and services, and where you’re in more of the backstage of the business, whether that’s in developing new relationships, partnerships, business development, marketing, brand awareness promotion? Like how do you distribute your time and how has that evolved over time?

[00:24:50] VR: It has evolved. It also waxes and wanes, to be honest with you. So as I pick up new projects with clients, then for a period bit of time, we’ll kind of go intensely more towards one area of the business or another. Some examples of that include the fact that if I have a really intense four-month project that involves consulting and user design and technology development and things, then we will shift, and we might do 60 to 80 percent on the consulting side, as far as hours commitment for that period.

On the flip side, on the education platform that we do, which is providing mobile integrated health care and community paramedicine providers, so this is paramedics, but this can be social workers. This can be nurses, any healthcare profession really. As they are looking to grow their skill sets, get into this industry, look for future employment opportunities in this industry, we have a rolling educational side.

For example, we have a community paramedicine accelerators course that launches our next cohort in January. So when January comes, for a couple months there, January through March, we’ll kind of pick up on the education piece because multiple times per week, I’ll be logging on live and doing case working and practice questions and live teachings and active discussions with paramedics across the country. So it does wax and wane, depending on the season, which is also fun because it keeps it not boring, right?

But in general, I would say about 60% or so of the business is consulting-related right now or over the last year or so. Then probably the speaking and education side is about 30% or so. The remaining 10% is really related to advocacy involvement at a high level nationally within the industry and internationally. Then also, we do have things that come up that are a little bit unexpected sometimes. So one of our core values is we get it done, plus some. We really believe in going kind of above and beyond and over delivering whenever that’s possible. So we’ve had multiple clients over the last two years that have asked for social media, graphic design, newsletter and content development. That has been an aspect of the business that I did not originally anticipate, and that I have actually contracted out and brought in new resources and things to help develop that.

So now, that is a growing area that we’re going to see over the next few years if we keep it or not, but it’s bringing in revenue. So it’s another way that we can over deliver to clients. That’s probably, I guess – Things like that are the other 10%.

[00:27:55] TU: Yeah. You’ve said we several times now throughout the show. So one of the questions I really like to dig deep on and better understand because I think it’s such an important evolution of the business when you go from solopreneur to having other people that are contributing, and that could be W team to employees. It could be contractors. It could be fractional services in terms of kind of piecing the team together. It can look very different. But how have you constructed the team, as you talk about we, and what are those different roles where you have some help in the business?

[00:28:29] VR: We are in a period of growth, so things are about to change. Tim, I didn’t get the date that this will be released, so it might already be announced. But I’ll hold off for now. So we are in the process. When I say we, I do have a few team members that work with me consistently and have now for several months or even years. I also have interns, so I accept interns each year.

[00:28:52] TU: Oh, cool.

[00:28:54] VR: Yeah. They stay with me for a period of time. So at a minimum, three months, but sometimes that relationship gets continued as they find value in the work and want to take on additional projects and things. So we have interns that cycle every few months or stay with us for half a year or even longer.

I think that we from a core team standpoint is pretty heavily administrative. It’s pretty heavily education-focused and content development-focused. The consulting side and also some of the education, I do a fair amount of contracting out. So I bring in people on a 1099 independent contractor basis, who I know will meet the criteria within the industry for projects that I am reaching for.

If I pitch for a project on social determinants or if I pitch for a project on high-risk medications or pediatric-focused meds or whatever that looks like, then I reach out to the network of experts in that area. That’s another one of our core values is cultivating a network of experts. So now, we kind of have this diverse team of experts. I think that we’re now over 50 different consultants that we’ve brought in in the last few years in different focus areas, based on what we’re working on at the time. Their projects range anywhere from three to six weeks to a year or more.

[00:30:33] TU: Yeah. The reason I asked that question, Victoria, and I love kind of the angle you took, is I read an article recently, and I’ll link to in the show notes from Y Combinator on the different and evolving roles of a CEO as you’re growing your business. They make a case that a CEO’s first job is to build a product that users love. Their second job is to build a company to maximize the opportunity that the product has surfaced.

I think that that requires a very different skill set over time, and one of things that we’re going through in the evolution of just YFP is early on, my role, typically, as the case for many early entrepreneurs, was all about product creation, content creation. You’re wearing all these different hats. Now that we’ve grown a team over time, it’s really about leadership and vision and that evolving role in terms of leading the company.

As time goes on, if I’m building the thing the right way, if you’re building the thing the right way, as I know you are, like your role as a content creator ideally becomes less important as you build the team, and you’re able to kind of step into other needs and roles and responsibilities that the business has. So it’s fun to see the evolution of some of these pharmacy entrepreneurs over time, really cool stuff.

Natural question, as a follow up to all of this is, Victoria, how in the world do you balance all this, right? So you still are working in the academic setting and a part-time role. You’ve described a very, I think, impressive and nuanced consulting business that you’ve built that has multiple different arms and is clearly on a growth path and trajectory? How do you balance the time, the schedule, the responsibilities, personal and professional? What are some of the strategies that have worked for you?

[00:32:16] VR: I’m smiling and I’m laughing because I think most of us feel like am I balancing it right really? I don’t know. I think that I am, and I would say that this ties into what the next 5 to 10 years looks like pretty heavily. I would say that right now, I am very dependent on my calendar, and I’m very dependent on all the intersections of my world being on the same calendar, right?

My spouse can see when I’m blocked off as busy and out of town or traveling from the work side. My academic teaching schedule has to be integrated on the business aspects so that we know not to schedule there. So I mean, there’s the technology piece that I think helps immensely and just you’re free when you’re free. When you’re not, it doesn’t work, right? So staying up to date and utilizing tools to make sure that you’re not getting double-booked, that you are making time for everything appropriately is important.

I would also say that if you’re in an early phase of content creation of project-based work, whatever that looks like for the type of business that you’re starting, you have to be intentional with scheduling or your calendar will get filled for you. So there’s times where you have to dedicate a full day a week to start maybe, maybe more, maybe less to something like content creation or writing or social media blocking and those sorts of things. There’s also time required for the follow up of that, right? So like if I record my YouTube channel, my education –

[00:34:06] TU: Which are great, by the way. Which are awesome. I love them.

[00:34:09] VR: Thank you. The Reinhartz Rundown is the title of that. We’ll put it in the notes or I can send you a link. So if we record that, it’s so multi-phase, right? You need to decide what you’re writing on. You need to narrow it down to the big points people need to know. You actually need to write it out. You need to do the digital transformation to teleprompter. You need to schedule like a day on your calendar to do the videography. You need to figure out what needs to be done from the editing and block that time.

Then you need to figure out all of the social media aspects that go along with that, like do I hashtags? How do I caption this? Do I upload to YouTube? Like what is the drip process? All of those things, right? So it’s not enough to say, “Well, I’m going to do content creation on this day.” It’s like I need to map out a process start to finish, and I need to make sure that we have proactively allocated the time accordingly on a schedule so that that gets done without being a point of stress for me. I think that it comes with some intentionality, and it comes from recognizing that everything takes longer and is a bigger deal than it seems like it’s going to be, and making sure that you’re as proactive as possible.

The next thing I would say is I have gotten better about delegating and automating things where I can. So now, for example, if I bring in someone, an expert to teach in the MIH Academy, before I would be like, “Here’s the thing you need to sign, and here’s your contract, and I’m going to get you set up for getting your check, and where does that need to go, and give me your headshot, and what are your objectives, and I’m going to add you into the platform,” and all of these aspects, right?

[00:36:05] TU: 20 emails later.

[00:36:06] VR: Yes. 20 emails. So now, I outline the process start to finish. I train my assistant on how to do that. Now, I just get to do the fun part, where I say, “Tim, I’d love to have you do a lecture on this topic or financial literacy for paramedics,” which, by the way, that sounds like a great idea. I’d love to do that.

[00:36:25] TU: That’s awesome. That’s awesome.

[00:36:28] VR: So I’m going to connect you to Rain, and then I CC my assistant, and I say introducing so-and-so here. Please get him set up for teaching in the academy. Then that process gets executed, even though I’m not the one physically doing it.

[00:36:46] TU: Process is the key word there, right? You gave a great example with that most recent one. You also give a good example with the Reinhartz Rundown YouTube and all the steps. Often it’s normal. You’re going to be doing all those steps to begin with, right? Until you kind of get to a point where it makes sense that you can justify having somebody help out. But if you can document the systems and the steps in the process over time, that’s the point where you can begin to systematize parts of your business and have other people step in and do it as good, if not better, than you’re doing it and more consistently over time so that you can focus on other parts of the business.

That’s something that Tim Baker and my partner are always talking about is how do we build this in a way that doesn’t depend on he or I sitting in any single seat of this business. The reason that’s so important, and it’s the same for your business, is that the work you’re doing in Mobile Health Consultants and the vision of the problem you’re trying to solve is bigger than Victoria, right? You started this, but there’s a day where like we want the impact and the vision of this to live on, whether you’re doing this or you’re not doing this. So if we have systems and processes that are in place that we can bring on team members and others to help execute that vision, all of a sudden, we’re building something that can transcend our time and the work that we have in that specific role.

So I love what you had to share there related to some of the systems in the process. This has been a ton of fun. I have really enjoyed following your journey from afar, at least on LinkedIn and, obviously, have the opportunity to talk here. I know this is going to be an inspiration to many other pharmacists that are perhaps at the beginning stages of an idea or looking to get something started on their own. If folks already are not aware of you and the work that you’re doing, where’s the best place that they can go to learn more about you and to follow your work?

[00:38:32] VR: So a couple different places. Obviously, on social media, find me on LinkedIn. Connect with me. Send me a hello message. I’d love to watch your success and your growth and serve as a source of contact, if you’re looking to either get into this industry or figure out your own journey. So please connect with me on LinkedIn, Victoria Reinhartz.

Also, if you want the link to the Reinhartz Rundown, I’m sure we’ll put that in the show notes for you on YouTube. Mobile Health Consultants is our website, and there’ll be information there on education and the MIH Academy under the education tab. So don’t hesitate to reach out, if that’s something that you’re looking for.

[00:39:17] TU: Awesome. We’ll link to those in the show notes. Again, Victoria, thank you so much for taking time to come on the show. I appreciate it.

[00:39:22] VR: Oh, thanks so much for having me. I loved it.

[END OF INTERVIEW]

[00:39:24] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 292: How & Why One Pharmacist Started a Functional Medicine Organization for Pharmacists

Posted on January 26, 2023March 10, 2023 by Caitlin Boyle

This week, Dr. Lauren Castle, founder of Functional Medicine Pharmacists Alliance, discusses how her experiences working with Walmart in influencer marketing and personal branding helped prepare her for growing her business, why she started FMPhA to integrate pharmacists into functional medicine, and her transition from employee to entrepreneur.

About Today’s Guest

Dr. Lauren Castle is the founder and CEO of the Functional Medicine Pharmacists Alliance (FMPhA.org), the first association representing pharmacists in functional medicine. FMPhA supports members practicing functional medicine across all pharmacy settings by uniting leaders in the field to provide continuing education, training, networking, and advocacy.

Lauren also serves as a functional medicine consultant pharmacist with the PharmToTable Team and maintains a part time practice as a retail pharmacist. She received her Doctor of Pharmacy from Ohio Northern University in 2013 and her Master of Science in human nutrition and functional medicine from the University of Western States in 2018. Lauren has also studied with the Institute for Functional Medicine and Functional Medicine University and became an Applied Functional Medicine Certified (AFMC) practitioner through the School of Applied Functional Medicine in 2022.

To download a free Functional Medicine Pharmacist Checklist, visit FMPhA.org/newsletter.

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, welcomes Dr. Lauren Castle, founder of the Functional Medicine Pharmacists Alliance, to the show. Tim and Lauren discuss how her experiences working with Walmart helped to prepare her to create her business, why she started the Functional Medicine Pharmacists Alliance (FMPhA), and her transition from employee to entrepreneur. Lauren shares what led her to pharmacy and how an internship with Walmart unexpectedly changed her life plans in the best way. After graduating from pharmacy school, Lauren had always planned to become a pharmacy owner. She planned to use her internship with Walmart to see something the opposite of her chosen path. While working with Walmart, Lauren quickly learned that even in a huge company, she could stand out and make a difference. After working on special projects for the home office, Lauren realized she didn’t want to put her dream in the hands of something else. Recognizing the value of her ideas, she started the Functional Medicine Pharmacists Alliance.

She explains how social media and networking benefitted her career and how consistently sharing her story and message of food as medicine helped to catapult her to a market director position. Listeners will hear about Lauren’s personal experience and how it led her to pursue her passion for functional medicine, ultimately forming FMPhA. She shares what FMPhA looks like today, the importance of advocacy for the profession of pharmacy in the space, and how pharmacists can differentiate themselves in functional medicine.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

This week, I welcome the Founder of the Functional Medicine Pharmacists Alliance, Dr. Lauren Castle. During the show, we discuss how her experiences working with Walmart in influencer marketing personal branding helped prepare her for growing her business, why she started the FMPhA to integrate pharmacists into functional medicine and functional medicine in the pharmacy, and how she planned for the transition over five years from employee to entrepreneur.

Now, before we jump into the show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 280 households in 40-plus states. YFP Planning offers fee-only high-touch financial planning that is customized for the pharmacy professional. If you’re interested in learning more about how working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call by visiting yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s jump into my interview with Dr. Lauren Castle.

[INTERVIEW]

[00:01:17] TU: Lauren, welcome to the show.

[00:01:18] LC: Thank you so much for having me, Tim.

[00:01:20] TU: So this episode has been a long time in the making. We’ve crossed paths for many years now through Ohio Pharmacy Association and other circles. We share our alma mater, Ohio Northern, so go Polar Bears.

[00:01:34] LC: Yep.

[00:01:34] TU: So let’s start there with your career path into pharmacy, what led you into the profession, and how you ultimately landed the work that you’ve been doing with Walmart really for over the last 10 years now.

[00:01:46] LC: Sure. So like many people, I decided I wanted to go to pharmacy school. When I was in high school, I actually had started working in an independent pharmacy in Monroe, Michigan, and absolutely loved it. So I thought for sure I was going to go to pharmacy school and become a pharmacy owner whenever I graduated.

I ultimately ended up meeting my husband while I was in school, and that is what led me to pursue a different internship. I thought to myself what better time to just get some totally different experience. I’ve already got my path laid out. I know what I want to do. But just in case, I’ll check out the exact opposite of an independent pharmacy, right? Like the largest company in the world.

So I joined Walmart. That summer, I just completely fell in love with it. It still felt like I owned my own pharmacy in a sense. But yet I had all of these resources and all of this capacity to literally influence millions of people. I kind of figured that out because I shared a little story on their sort of social media Internet company website about Walmart’s 50th anniversary and my experience as an intern. I didn’t really think anyone would read it or care. But that story actually got picked up, and it was published in our home office newsletters.

So like our president of health and wellness at the time had read it and sent it down to my supervisors, and that was sort of the aha moment for me that I realized I’m just one person in a company of over two million employees worldwide, and I actually can make a difference. So that was sort of the theme of these last 12 years that I’ve really been able to continue on with.

[00:03:25] TU: I love that, starting with the concept of let me use the internship. For some, it might be experiential rotations as an opportunity to see something different. I often share with students, if I had to go back and do anything different pharmacy school, it would be to really reevaluate those precious summer internships and then those 9 or 10 months of experiential rotations because the safe plays are always going to be there, right? What a unique opportunity, where you have a month or a summer that you can see something that’s completely different and, obviously, building relationships and having different experiences. Those more traditional opportunities will be there but such unique time to see those things, and so cool to hear you take advantage of those.

Let’s talk about some of those experiences with Walmart a little bit more because – No disrespect in any way to pharmacists that are out there working the bench day in and day out. But that was not your gig with Walmart. Certainly, you’ve done that. But as you look at your experiences with Walmart, it’s very, I would say, nontraditional in those experiences with Walmart, in terms of – You alluded to some of that with some of the posts that you were sharing early on that got picked up. Nationally, you’ve had some experiences working with them, more in that influencer marketing, personal branding, wellness side of things.

Tell us about those experiences because I suspect, as we’ll talk about more of the work that you’re doing with the Functional Medicine Pharmacists Alliance here in a little bit, those experiences were really critical to the work that you’re doing now as well.

[00:04:59] LC: They certainly are. I mentioned, even from the very beginning, I started sharing my story in the company. I think no matter what company you’re working for, there’s actually a book I’ve recently read that talks about how purpose is more than a side hustle, and it’s actually the way you show up for other people every day. So it doesn’t matter what type of role you’re in. If you’re in a nine-to-five job, if you’re working as an entrepreneur, you’re living your purpose every day, and you can tell your story in whatever role that you’re in.

For me, that really looked like sharing what I was doing on social media and sharing little bits of how I work as a pharmacist for the company. Ultimately, that is what led to some additional opportunities that I had to get promoted. So networking, of course, is huge. A lot of times, people will say it’s not what you do, but it’s more around like who you know. So for me, I was always trying to reach out and connect with people on LinkedIn. So every market director, when I was an intern, I was connected with them. They knew who I was. They knew my name. They knew my face. I would show up, like you mentioned, Ohio Pharmacists Association meetings. Make sure that I was involved in professional activities as a pharmacist.

That networking is really what led me to get promoted to a pharmacy manager to a clinical pharmacist manager whenever we actually moved to Michigan and ultimately to a market director. So five years after graduation, I became a market health and wellness director, which was sort of my big goal as an intern once I joined Walmart. That role was incredible, and I learned so much, just from managing teams, managing people, really managing a business, right? Yet again, continuing to share my story on social media.

At the time, I had also started getting into functional medicine. So now, this was a new aspect of the story I was telling and also was picked up and seen by people at our home office. That was the moment that really kind of catapulted things to what my real dream was, right? I’d already met this milestone from just a, “Oh, I got promoted. I’m a market director. This is awesome,” to, “Well. Now, I want to go work at our home office. I want to go to Arkansas. I want to go and really make a difference for the company.”

I didn’t know what that was going to look like. But as I was talking about functional medicine and how I really felt like it aligned with some of the things Walmart does around helping people save money and live better, and you really do have everything that you need to live a healthy life at an affordable price in the stores. So that was the theme. That was the message I was sharing. I, ultimately, ended up getting to meet our president of health and wellness, and this was back in 2019. He was a fellow Ohioan, so he came out and visited. We sat down and, as we were eating lunch, started talking about this concept of food as medicine.

They were like, “This is awesome. We think this is a great idea. We would love for you to come out and share more and see how this would integrate with Walmart Health,” which at the time, they were just starting to build those as primary care centers. So I didn’t really think anything of it. I was like, “Okay, yeah. Cool. That’d be awesome. Would love to come out.” A couple weeks later, I got a phone call, and they’re like, “Hey, we need you to come out like this week to meet Steuart Walton of the Walton family.”

[00:08:46] TU: The Waltons. Yep. Yeah.

[00:08:47] LC: Like that’s one of those calls that you never expect to get in your life. But it was my dream, right? Like as I was sitting here, trying to figure out like how am I going to get to home office, what am I going to do, you just keep taking the next step, right? You just keep living your purpose. Ultimately, that’s going to all come together.

So I spent three months out there on a special project, basically looking at how we would integrate nutrition in with the services that we have in health and wellness. As we were getting ready to pick out our first store, it was kind of the end of the year. There was some leadership changes. They sort of paused all the projects and said, “We’re going to hold off for a little bit.”

2020 hits and, of course, the whole world shuts down, and it’s COVID. So silver lining, of course, is that we would have never been able to do a lot of the things we wanted to do anyways. That also was the moment for me that I realized this has been an amazing journey with Walmart. But I also realized that I can’t put my dreams in someone else’s hand. So that was the moment that I came home, and I actually started my LLC for the Functional Medicine Pharmacists Alliance too.

[00:10:07] TU: I love that. So much to unpack there. But I think one of the things you just shared, which we’ll come back and talk about your journey, really growing the Functional Medicine Alliance, spending more and more time on that, is not necessary putting your own dream in someone else’s hands. But also recognizing that the experiences that you do have working for someone else can be so valuable and catapulting what you’re working on. Also, just the experiences, the network, all of what you shared.

But when I hear your success in, ultimately, getting to that point where you’re going to meet someone from the Walton’s family, what comes to mind is that the reason that moment happened is because you, for years, were consistently showing up and providing value. Then the compound effect of that just worked its magic, as it always does, if you’re consistently showing up providing value. That’s value in person and in the work that you’re doing every day. That’s value in developing your personal brand and helping other people, staying connected and in-person meetings, virtual meetings on LinkedIn and other things.

I think we sometimes lose sight of that when we see someone who has gotten to the point of launching a business, or they’ve grown a following of whatever number of followers on LinkedIn, and they’ve got a great personal brand. It’s been a decade in the making, right? It started with that leap of faith, if you will, that you took as an intern to say, “Hey, I’m going to post this out there. Maybe somebody thinks this is interesting. Maybe it’s not.” But I know the value in showing, sharing my story. I know the value of showing up every day and providing value. It might be that in any one day, maybe there’s not an obvious like ROI on that. But over time, consistently, that really can take off.

So let’s talk 2017, if I’m correct. 2017, you actually started the Functional Medicine Pharmacists Alliance, and we’ll link to that in the show notes, FMPhA.org. I’m curious, before we get into kind of why you decided to go that pathway with starting the alliance to really have the impact in functional medicine, where does your personal interest in functional medicine and this concept of food is medicine, where does that come from?

[00:12:13] LC: Absolutely. So as I mentioned, I had become a clinical pharmacy manager when we lived in Michigan, and Michigan is where we discovered functional medicine. So my husband and I, he also was working in a pretty high-level job for a big company and was having a ton of health issues, super stressed, had struggled with losing weight, couldn’t sleep, had got issues, just felt terrible all the time.

As a pharmacist, I thought I was doing everything right to help him try to feel better. But at the end of the day, I kind of said, “I think if you go to the doctor, they’re just going to hand you a bunch of pills, and it’s not going to help you all that much. It’s just going to cover up these side effects.” I don’t know what is wrong. It seems like we’re doing everything right, and nothing seems to be working.

We got a flyer on our doorstep for a integrative wellness center. It basically listed all these side effects and symptoms. I just handed it to Seth, and I said, “Babe, this is you on paper. You have all of these problems. So whatever these people do, I think should go check out this seminar that they’re doing this weekend and see what this functional medicine stuff is all about.” So he went to the seminar, ended up signing up for this program. We paid $5,000 out of pocket to work with these people for, basically, 12 weeks. It sort of included everything. So it had all of these different labs that we didn’t learn about in pharmacy school, supplements that I had never heard of, and this elimination diet, where we, basically, were going to cut out most of the foods that we were still eating that we thought were healthy like whole wheat bread and skim milk and, basically, eat this sort of paleo style of a diet.

Within just a few weeks, he was feeling so much better. Pretty much all the symptoms dropped off, and he lost 20 pounds. It was just like incredible. So as I continued reading more about functional medicine, the Cleveland Clinic in Ohio was actually starting a center for functional medicine that same year. So to me, that was sort of the moment that I was like, “All right, I think there’s something to this functional medicine stuff, and Cleveland clinic’s doing it. So it’s got to be pretty reputable.”

I decided at that point, I really think this is the future for healthcare and for pharmacy. But I knew also at the time, I was looking into other degree programs, so I did not do a residency after pharmacy school. At that point, I was a clinical pharmacist, but I was looking to get promoted to market director. So I was looking at MBA programs, things like that. I decided, well, maybe I’ll look into programs for this functional medicine stuff.

There was one master’s program in the US that was in conjunction with the Institute for Functional Medicine, and that, of course, is also who Cleveland Clinic was working with. So I figured, all right, this sounds like it’s pretty reputable, right? So I ended up enrolling in that master’s program and was still working as a clinical pharmacist. We had just gotten engaged. We were planning a wedding, really burning the candle at both ends. But I was loving it. I just – Everything made so much sense.

As I was starting to learn all of this new functional medicine knowledge, I started talking to other pharmacists about it. So Melody Hartzler, who you’ve interviewed on the show before, her and I reconnected. She had gotten into this through her own health journeys. Other people that I had gone to school with or had met through pharmacy conferences were getting into this space. I started to realize that we all need to come together. Like we need to form a little community and stay in touch and figure out what this is going to look like for the profession.

That was sort of where the Facebook came from, was just this idea of like, “Let’s get together. Let’s kind of bring everyone in this space and start collaborating.” I was also starting to teach other pharmacists. So Ohio Pharmacists Association had me do a CE presentation in 2017, and that was sort of the start of it. So we introduced the Facebook group. We did the CE, recorded it. That same year, I also got invited to speak at the Michigan Pharmacists Association. In those, basically, four months, I decided to actually create a website and post my story on there and not have it just be a Facebook group. But actually set up FMPhA.org, which I always give credit to Alex Barker, another friend of the YFP team because he’s the one who told me like, “Why don’t you just make an organization?” I’m like, “I can’t make a pharmacy organization.”

[00:17:18] TU: I remember I was talking about that back in 2017. I just loved that concept. It was such a nontraditional way to think about how to influence this space and really how to try to meet many people, instead of – I mean, sure, you can meet with people one on one and have a great impact. But how can you be an aggregate of the pharmacists that are practicing functional medicine and bring them together? So, yeah, I love that idea. That’s a great one.

Just so I’m understanding, the actual formation of FMPhA as a business, you mentioned just a few moments ago forming the LLC. When you started the Facebook group, when you’re providing CE, when you actually built the website, at that point, you hadn’t yet formed the business. Is that correct?

[00:18:00] LC: Nope, no business whatsoever, and I never set out to make any money off of this. It was truly just a – I believe in this so much, and I want to bring other pharmacists into it, that I’m just going to start sharing these resources that I’m learning and trying to connect with more people and bring us all together.

So, yeah, it wasn’t until the Facebook group continued to grow, and we went from 30 people at the very beginning to 500 people. So then 2018, the next year, I was at Institute for Functional Medicine conference and was talking to their leadership. I’m like, “Oh, we have 500 pharmacists and a Facebook group. They want to do functional medicine. How do we actually get them more involved in the care team?”

Because at the time, IFM really didn’t have any resources that were geared towards pharmacist. It was mostly towards physicians, and so they didn’t even know what to do with us, right? Just like a lot of the medical profession, it’s sort of like the pharmacist’s role is very misunderstood and kind of left behind or left out of the picture. So that was sort of the next step that I was like, “Okay. Well, how can we start to work with other organizations?”

Then in 2019 is when I ended up going out to do the special project. Kind of coming back from there, I had also spoken with another pharmacist, Jerrica Dodd, and she was the one who then gave me the push of like, “Lauren, you got to monetize this thing. You have got to start actually setting up a business and really taking this seriously because you’re sitting on a goldmine in a sense because people are hungry for this. They want this.” Yeah, that was – We were at a functional medicine symposium, and I had someone that asked me, “How do I become a member? How do I join? How do I sign up today?” I was like –

[00:19:56] TU: Let me figure that out.

[00:19:57] LC: I will get back to you.

[00:19:59] TU: But, Lauren, what I really liked about this, I don’t want to lose that there was at least two years until that point of, okay, how can I monetize this? We’re providing value. It’s growing, which there should be. Jerrica is correct. As you’re building something that’s providing value to others, like there’s a fair price that can and should – We charge for that. But you focus on providing value first.

Pat Flynn talks about that, one of my favorite podcasts and a blog that really influenced my journey early on in the Smart Passive Income Podcast. He talks about the value of really focusing on providing resources, providing value, building your community, really making the deposits in the bank, and doing that authentically. The business will grow from there over time. I think your story is such a cool example of that.

Before we talk more about the actual transition and how and when you made that transition to spend more of your time working on the business and less of the time on the W-2 side of things, tell us more about what does FMPhA look like today, in terms of you went through this journey of, okay, we need to monetize this. Is it a membership model? Is it they’re paying for certain resources and being a part of the community? What does it look like in terms of the business today?

[00:21:17] LC: Absolutely. So today, it is a membership, much like many pharmacy organizations that you can join. We’re bringing together pharmacist and community through the Facebook still, of course, which is a free resource. But really, the advocacy piece is sort of what’s most important to me. We partner with a few different organizations in functional medicine, one being the Institute for Functional Medicine. So when you join, you have the option to also add on IFM membership at basically a discounted rate. We also were able to work with them to get a 20% discount on their trainings, which one of the top questions that we get asked is, “Okay, I’m interested in functional medicine. Where do I get training? Do I need to get certified?” So the answer is you don’t have to get certified. But certainly, just like with any type of training, having that additional credential is going to speak for itself, in terms of working with other providers.

We really were wanting to get more pharmacists into that organization. So part of that was how can we make it more affordable because, again, it’s not cheap. A lot of these certifications are upwards of 10 or even $20,000. So that was kind of our first big step. We also worked with them to actually get the word pharmacist listed as a provider type, right? So it’s the little things to some of these organizations that mean a lot to us as pharmacists and to the profession.

So those are some of the things we do. We also work with A4M, which is the American Academy of Anti-Aging Medicine. We also have discounted rates on their training programs as well. So those are sort of the big two training programs that we’ve partnered with. Then we’re actually working on launching our very first course for members, so Functional Medicine Pharmacists boot camp will be launching in January, as of the time of this recording. That’s really the culmination of all of these seven-plus years of working in functional medicine, trying to figure out how do we actually do this as pharmacists, and answering a lot of those frequently asked questions around training and how to implement it and what types of jobs you might be able to find or create for yourself, and really just putting all of those pieces together.

The last couple of services that we also offer, of course, is with CE. We have a few different partners there. At the time, again, when I got into this, there was no CE for pharmacists in functional medicine. Now, we’ve got a couple of different partners that we work with that are offering functional medicine CE. So that’s another area. Then, of course, we have our annual meet up in conjunction with functionalmedicinece.com. We have our meet up there every year, usually in the fall. So in-person events, it’s been really great to get back together with people and actually, again, bring that networking together because you never know who you’re going to meet and where they’re at in their journey and how they might be able to help you as well.

[00:24:23] TU: Yeah. One of the things I’m curious to get your opinion on is from an outsider’s perspective, kind of following the functional medicine movement, seeing more pharmacists, clinicians start to dabble in this space, I think, for really good reasons, I’m not seeing a lot of differentiation. As I’ve talked to a couple of people that are starting up a business of which I know very little about functional medicine, but I’m looking at it from a business perspective, what really is glaring to me at first is like why you, why your services. There’s not like a compelling differentiation that I’m seeing there.

So as someone who, I think, spent a lot of time building a strong personal brand, doing influencer marketing, really building a niche of what you’re doing out there, and understands the importance of that differentiation, what advice would you have someone for – That’s listening and say, “Hey, I’m really interested in functional medicine, about how they might differentiate themselves in this space and what they’re offering.”

[00:25:19] LC: Yeah. So I think you bring up a good point, and that was sort of another reason that I finally kind of pulled everything together into this boot camp course is that I had a lot of pharmacists that were coming and saying, “I’m studying functional medicine, and I want to figure out how to use it.” I think everyone, somehow or another, because, of course, a lot of this really picked up steam during COVID in 2020, and virtual or telehealth became kind of the norm for a little while, and so a lot of people assumed that like, “Oh, if I’m a pharmacist, I can quit my pharmacist job and launch a virtual functional medicine practice and become a millionaire.”

[00:25:59] TU: Patients will be flooding and scheduling left and right.

[00:26:01] LC: Yes. They – Yeah, exactly. For some people, they can do that. For a lot of people, it’s not that simple. So what I really try to work with pharmacists to understand is that there’s no one way to practice functional medicine. It’s just a lens through which you are going to use your pharmacist license. So more often than not, if you want to do a virtual practice, yes, we can help connect you with the resources that you need to set that up. But is that really the way that you want to serve your patients?

If you’re someone who isn’t necessarily a big fan of social media and putting your face out there and having to tell your story over and over and over every single day to try and attract patients in a virtual practice, what about considering working with a physician in your local practice, right? What about a chiropractor? What about an independent pharmacy? Do you have a compounding pharmacy somewhere? There’s all of these other pharmacy settings where functional medicine can be an additional service that you bring to the table to provide to reach those patients that really need it the most, right? So it’s really about figuring out your skill sets and what areas of pharmacy you are most passionate about and then thinking about how you can apply a functional medicine approach to whatever that is.

For a lot of people, it might be figuring out how to set up a collaborative practice agreement, so you can practice at the top of your license. Or it might be walking into an independent pharmacy and seeing if you can get a job as a pharmacist there, leading their health and wellness programs. So lots of different options to think about before you just kind of go and quit the day job and start trying to launch a virtual practice.

[00:28:03] TU: Let’s shift gears here and talk about the transition that you’ve made from employee to entrepreneur, at least where you’re spending more the majority of your time now focused on Functional Medicine Pharmacists Alliance. You had this to, say, a few months ago on LinkedIn. You said, “It took five years to get here. But it feels amazing to finally have the time and space to pursue this fully.”

It hit me right after I got back from the DiversifyRx hat I had used up all my PTO in the nine-to-five job in order to attend pharmacy conferences this year. So I did the math. I realized I could work part time for the same salary and then turned in my resignation. Tell us more about what led you. I mean, I’m sure you’ve thought about this moment several times. But what was it specifically that you said, “Hey, this is the moment. I’m ready.”?

[00:28:48] LC: Yeah. So to provide a little more background, at the time, earlier this summer, I was working for a company called Brand Networks. So I mentioned before, I sort of had been burning the candle at both ends for a number of years, working as a market health and wellness director. Of course, COVID happened. I was also a caregiver for my mom who, ultimately, passed away last year.

After that moment, I actually had taken a 12-week leave from my market director job that my boss had suggested to me like, “Hey, Lauren. You have gone through a lot. And if you need to take some time away, you can do that.” So just one more thing to consider about before you leave your job, have you used all of the resources available for your own health and your mental health? So for me, I took those 12 weeks. I went through intensive outpatient therapy. I really got to kind of heal from a lot of that trauma and also found this new path in social media marketing with this company. So I was able to work remotely from home for a year. Still working as just a part-time peer and pharmacist, a couple shifts a month.

Then kind of the nine-to-five was in the social media marketing, which yet, again, was sort of another very intentional choice of I know that I want to grow FMPhA, which now is a business, and I still have a lot to learn about running a company online. So what a great opportunity to be able to actually work kind of on the inside of running marketing for the world’s largest company? I probably can learn a few things, so great experience, amazing team, super fun role.

But, yes, I was having to take time off in order to actually go to pharmacy conferences, which were finally kind of starting back up again in 2021. So I was doing a lot of traveling. Even though I was in a remote role, I still didn’t really have flexible hours. Like I still had to be available from nine to five. So as I was taking all of this time off, it hit me because we were planning for our pharmacy symposium in the fall, and I wasn’t going to have the PTO to take to go to my own conference.

[00:31:13] TU: Your own event.

[00:31:14] LC: I was like, “Oh, wow. Okay.” So that was the moment that, like I said, I really just sat down and did the math. It was like, “I think it’s time. I think it’s time.” So my market director had actually reached back out to me, the one who backfilled my position that I had trained and said, “Hey, I’ve got a store open. If you want to come back, whatever hours you want to work, we can make it work.” So I was like, “Yeah. I think I’m going to be a 48-hour pharmacist.” It was another one of those moments where it’s like, if you would have told intern Walmart pharmacy Lauren that she was going to only work 24 hours a week as a pharmacist one day, I would have thought that like something horrible happened, and I was like disabled. Like, “Oh, my gosh. Why can I only work 24 hours a week as a pharmacist? That’s terrible.”

But it took a lot of like unlearning to finally see that like, “Oh, yeah. There’s more to life than working 40 hours a week for your company. You can actually have your own life and work part time, still have a good salary and full-time benefits, and do all these other things that you’re passionate about.”

[00:32:29] TU: I love the story. As you’re still working part time, obviously able to focus more full time on the business, but you’re able to do that. Why? Well, because you left with really good relationships. Well, you haven’t left technically, but you had really good relationships. Somebody who’s coming forward, obviously, they saw your wellbeing as a priority. Let’s take some time off, refocus. We value you as an individual, also as an employee. Then, hey, what hours do you want? It’s like, “What? Come again.” Like, “So I can build this business and focus on that, but still be able to maintain some type of a financial base.”

I want to emphasize that because if we hit rewind here for a moment, 2017, FMPhA became a thing, right? Here we are in 2022, five years later, this is much more of an off-ramp than it is diving into the deep end. I want to say that emphatically because I have the opportunity to talk with a lot of pharmacists throughout the year that are thinking about different business ideas. I can tell they feel this internal restlessness and pressure, much of which, I think, is externally influenced. They see what other people are doing like Lauren, like other entrepreneurs we featured on the podcast. But they don’t know the whole backstory of this was years in the making, and it’s still in the making before there’s potentially a full-time transition to the business.

I share a similar story of working in an academic role for about six, seven years, while I was starting the business until I made that transition full time. I think that’s more of the norm than it is not, and I think there’s really good financial reasons to do that. I think there’s really good other reasons. You mentioned that as you’re working for that new firm here in the last year and a half, two years that, wow, I can get some really good experiences with one of the biggest companies in the world that, obviously, you’re able to now draw from the value of those experiences and what you’re building.

So I think there’s so much to take away there as, again, thinking about this more of a transition, more as an off-ramp, slow and steady, being patient, which is hard, and less about jumping into the deep end. So –

[00:34:38] LC: One thing to add there too from a financial standpoint is that was something that we really thought about throughout this journey, right? Because for me, I’m still planning ahead. One of the beautiful benefits of being a market health wellness director is, of course, the golden handcuffs, the stock options, those types of things. So for me, I knew it was like, “Okay, I need to stay with Walmart to really maximize the value of what they provided me as part of my compensation and really think outside the box of, oh, yeah, I don’t have to completely leave the company. I can still work part time and run everything through our ethics department and make sure that like, yes, you can be a pharmacist, and you can work as a contractor employee for Walmart, doing social media.” Like look for the and opportunities there because those are things that are going to, from a financial standpoint, really make more of the work I want to do a possibility.

So we’re kind of planning that out, as we think ahead of like, yeah, I still have another year that I definitely need to stay employed with Walmart. So what can I do to make the most of that time before I even consider leaving in the future? Do I even want to? Do I still want to drop back down from 48 hours to being truly part time hourly again? Then you start thinking about some of the bigger questions, right? Or like, “Oh, yeah. Well, what are we going to do for insurance and some of those things?”

[00:36:14] TU: Retirement. Yeah, exactly.

[00:36:15] LC: All the things you have to think about in terms of starting a business or leaving a job, especially when for us, my spouse actually had left his job as well, right? So we mentioned that that was a big root cause of his health issues. The case for leaving the job, sometimes that is the solution. But sometimes, it’s not. So really think about that, evaluate it, and think about all the options. So for us, it looked like one of us leaving the job, one of us transitioning the job.

[00:36:51] TU: This is so great. Look for the and opportunities. I think there’s – When people are building something, there’s a lot of internal pressure, where you kind of fall into this trap, I think. I know I felt this for a period of time of like there’s option A, or there’s option B. Either I’m not working on the business, or I’m going full time in the business. But there’s always more options. There’s always more options. I think it’s having the creativity to see what those may be as well.

I want to wrap up by asking you two questions that I’m adopting and stealing from Tim Ferriss who ask great questions on his podcast. The first question is if you could have a gigantic billboard anywhere with anything on it, metaphorically speaking, getting a message out to all 300,000-plus pharmacists in the US, what would that billboard say, and why would it say that?

[00:37:36] LC: So I think for me, what I always like to tell pharmacists that are kind of interested in this functional medicine or maybe they’re starting to hear about it is, yes, there is a better way than a pill for every ill. That is the sort of mindset that we’re all sort of stuck in whenever we’re still in a traditional pharmacist role of whether it’s dispensing in retail or being a clinical pharmacist and working on making sure everyone’s meeting the guidelines to the tee. It’s always about like adding another pill and making sure that they’re on all the right medications.

But I think through COVID, we’ve, obviously, seen that lifestyle plays such a big role in our patient’s health. So how can you start to think about ways to incorporate lifestyle, medicine, functional medicine into your patient’s health? Because, ultimately, I think that’s where the future of healthcare really lies, and a lot of times you kind of have to start with yourself too. Start to evaluate, where you can make some of these changes in your own health and your family’s health and talking to your friends about it. Then just continue growing from there and building out sort of that muscle of starting to have those conversations.

[00:38:54] TU: Yeah. I think what intrigues me so much about functional medicine is like it so much of the focus on let’s actually get to the root cause, and that takes time. I think if we take a step back and take off our bias of being trained in a doctorate program and being trained as a healthcare practitioner, we live in a system that is a for-profit healthcare system that incentivizes efficiency. It does not incentivize taking more time and not dispensing products that aren’t going to have revenue associated, right?

So I think we just have to ask ourselves always. We should be asking ourselves, kind of look at the status quo and what we’re doing. Why are we doing it, and is it the best option that’s out there and potentially available? It’s the same thing. You talked about a little bit your personal journey and some time off and some of what I heard there, like the inner work that was being done. That takes time, a lot of time. It’s easier to prescribe a medication and to see a physician for 30 minutes. But like that work is so important, obviously, for long-term benefits, for quality of life, for optimizing who you are individually as well. So it’s just such a good reminder, I think, of like what are the incentives that are out there, and are they appropriately aligned for what we’re looking at.

My second question here for you is what is one of the best or most worthwhile investments that you have ever made? It could be an investment of money. It could be investment of time, energy, in a training resource. What would you say that is?

[00:40:19] LC: Yeah. I think that overall, FMPhA has been one big investment. Rather than it just being like a business, it’s been this journey, this kind of life work of, yes, investing in the beginning money to go back to school and get a master’s degree and not take out more loans to do it, going and doing more training with different functional medicine schools for the sake of, hey, I want to be able to actually tell people my honest opinion of these programs. So I’m going to spend my own money to test them out, again, before I even have a full-on business or am being compensated to do these things. I think about the time.

My husband and I, we were just celebrating Thanksgiving together. Of course, I was also doing a Black Friday promotion. So he made a comment of, “Hey, all of your discretionary time seems to go into FMPhA, and you’re spending a lot of time on this.” I was like, “Well, yeah, I am. But at the end of that Black Friday promotion, it sort of all paid off, right?” Because then he was able to see, “Oh, yeah. This is what you’ve been building for five years, right?”

Now, kind of entering this next phase for the organization of actually having courses and potentially a podcast next year and, again, putting out more of this value for other people. It has been this labor of love. At the same time, it’s fulfilling, right? It’s what I love to do, and I feel like this is what I’m here to do. So I think FMPhA has sort of been like one big investment with money, but time, and of course energy. So now, it’s like, “All right, how do we find the balance of being a functional medicine pharmacist, CEO, and founder, but then also still having time for life?”

I think that’s probably what most people are starting to sort of see functional medicine or any type of consulting role as a pharmacist is sort of this opportunity to reevaluate what’s most important to you. Again, from like a purpose standpoint, this is the book that Ivan was reading. In it, it just sums it up so perfectly, that perfect purpose is more than a side hustle. It’s not something you turn on or off, depending on the situation or the conversation you find yourself in. Purpose is the unique way you show up every moment of every day to make life better for others. You have a purpose, and you can live it out on a full-time basis.

[00:43:04] TU: I love that.

[00:43:03] LC: So I just feel like when you think about investing, everyone’s going to be investing their time, their money, their energy into something. You get to choose what that’s going to look like.

[00:43:17] TU: I love that. We’ll link for those that aren’t watching the video. Lauren just shared Purpose Is More Than a Side Hustle. It was the book. We’ll link to that in the show notes, if folks want to check that out. Lauren, this has been fantastic. I knew it would be. So glad to have you on the show. As I mentioned at the beginning, it’s been a long time in the making. Where is the best place that individuals can go to learn more about FMPhA, as well as to follow your journey?

[00:43:39] LC: So FMPhA.org is our main website. You can also find me on drlaurencastle.com. I’m @drlaurencastle on every single social media platform, so happy to connect with everyone there.

[00:43:54] TU: Awesome. We’ll link to those in the show notes. Thanks so much for coming on the show.

[00:43:57] LC: Thanks for having me again, Tim.

[END OF INTERVIEW]

[00:43:59] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 291: Redefining Retirement with Professor Emeritus David Zgarrick, PhD

Posted on January 19, 2023March 10, 2023 by Caitlin Boyle

Dr. David Zgarrick, a Professor Emeritus of Northeastern University, discusses redefining retirement. He shares why he views the next phase of life as a preferment phase of his career, why he started planning financially early in his career, and advice for new grads facing the financial headwind of competing priorities including student loans, saving for the future, and buying a home.

About Today’s Guest

David P. Zgarrick, Ph.D., is a Professor Emeritus in the School of Pharmacy and Pharmaceutical Sciences at Northeastern University. His prior positions include Associate Dean of Faculty at Northeastern’s Bouvé College of Health Sciences, Acting Dean of Northeastern’s School of Pharmacy and Pharmaceutical Sciences, Chair of the Northeastern’s Department of Pharmacy and Health Systems Sciences; John R. Ellis Distinguished Chair of Pharmacy Practice at Drake University College of Pharmacy and Health Sciences; and Vice-chair of Pharmacy Practice at Midwestern University Chicago College of Pharmacy. He is a licensed pharmacist, receiving a BS in Pharmacy from the University of Wisconsin – Madison and a MS and Ph.D. in Pharmaceutical Administration from The Ohio State University. Dr. Zgarrick taught pharmacy practice management and entrepreneurship in the health sciences. His scholarly interests include pharmacy workforce research, pharmacy management and operations, pharmacy education, and development of post-graduate programs. He has published over 150 peer-reviewed manuscripts and abstracts, is co-editor of the textbook Pharmacy Management: Essentials for All Practice Settings (5th Ed), and authored the book Getting Started as a Pharmacy Faculty Member. He was editor-in-chief of the Journal of Pharmacy Teaching, Executive Associate Editor of Currents in Pharmacy Teaching and Learning, and an editorial board member of Research in Social and Administrative Pharmacy. Dr. Zgarrick is active in many professional organizations, including the American Pharmacists Association (APhA) and the American Association of Colleges of Pharmacy (AACP). He served on AACP’s Board of Directors for 12 years, including as Treasurer from 2016 – 2022. Dr. Zgarrick also serves on the Board of Visitors for the University of Wisconsin School of Pharmacy, the Board of Grants for the American Foundation for Pharmaceutical Education, and is a Fellow of the American Pharmacists Association.

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, welcomes Dr. David Zgarrick, a Professor Emeritus of Northeastern University, to the show to discuss redefining retirement. Some highlights from the episode include Dr. Zgarrick sharing his views on his next phase in life, after 30+ years in academia, as a preferment phase of his career. He shares how and why he started planning for his financial future early on in his life and career and hands down advice for new pharmacy graduates facing competing financial priorities. Throughout the discussion, listeners will hear Dr. Zgarrick speak on standout moments from his pharmacy career, the impact his financial choices have had on that journey, and ultimately his decision to enter this preferment stage of his career. He shares excitement for retirement and this next phase of his life, what he means by a preferment phase, and how retirement can be an opportunity to experience a rich, fulfilling life outside of pharmacy without the guilt of competing responsibilities. Listen for helpful advice Dr. Zgarrick took from his financial advisor regarding his first year of retirement and how factoring in a cross-country move played a role in his retirement and financial plan.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey everybody, Tim Ulbrich here, and thank you for listening to the YFP podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I had the pleasure of welcoming Dr. David Zgarrick, a professor emeritus of Northeastern University College of Pharmacy. Some of my favorite moments from the show including hearing Dave share why he views the next phase of life after 30-plus years in Academia not as retirement but rather as a preferment phase of his career. How and why he started planning financially early in his career to put himself in a position of having choice? And advice he has for new grads that are facing the financial headwind of many competing financial priorities, including student loan debt, buying a home and saving for the future.

Now, before we jump into the show, I recognize that many listeners may not be aware of what the team at YFP planning does and working one-on-one with more than 280 households in 40-plus states. YFP planning offers fee-only high-touch financial planning that is customized to the pharmacy professional. If you’re interested in learning more about how working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com.

Whether or not YFP planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s jump on my interview with professor emeritus Dr. Dave Zgarrick.

[INTERVIEW]

[00:01:29] TU: Dave, welcome to the show.

[00:01:30] Dr. DZ: Thank you. Thank you. It’s great to be here, Tim.

[00:01:33] TU: Well, I’m really excited uh to have you on to dig into your professional journey and the impact that finances has had throughout your journey so that you could retire or perhaps better said, as we’ll talk about, take a half-time break at the age of 57. And you and I have known each other for several years through the academic circles. And when I saw your post on LinkedIn about entering this next phase, I knew that your story would have such a great impact on our community. So, thanks so much for coming on the show.

[00:02:00] Dr. DZ: Thank you. Thank you so much for having me. I’m really great to be here. And it’s great to think about half time. It was interesting, I’m a Green Bay Packers Fan. You’re a Buffalo Bills fan. Just thinking about half time. We’re about halfway through the NFL season. It’s time to make some adjustments. And I think both the Packers and Bills will have some adjustments to make. And so, we can talk about how we make financial adjustments as well.

[00:02:22] TU: I love that. I love that. Let’s start with your pharmacy career. When did that Journey begin and what drew you into the profession to begin with?

[00:02:31] Dr. DZ: I’m from an interesting community. I’m from Marshfield, Wisconsin, which is a relatively small community in Central Wisconsin. But it’s a very unique community and that Marshfield has a very large medical center. It’s the Marshfield Clinic. It has now the Marshall Medical Center.

I grew up with health and healthcare even though no one in my family was a healthcare professional. My father was an administrator for a dairy corporation. My mother is an educator. She taught special education. I was not brought up in a healthcare background. But I had lots of friends and knew lots of people that were in the healthcare space.

And as I was going through high school, I was thinking about health and healthcare a lot and thinking about wanting to go down that pathway. I was reasonably good at all the things they tell you you’re supposed to be good at in high school, math and science, and communications and all those things.

I had honestly probably was thinking first about medicine at the time. I was going to go to medical school. I guess, in some ways I was very fortunate. I went to a career day seminar and one of the speakers that came to that career day seminar was someone from the University of Wisconsin School of Pharmacy. And talked a little bit about pharmacy and what pharmacists did and so forth. And pharmacy hit a good spot.

And again, I’ll give my parents credit. They were very pragmatic with me when it came to where are you going to go to college? And what are you going to major in college? That kind of stuff. And they were said, “You know, you can go to college anywhere you want. And you can major in anything you want so long as you can support yourself when you’re done.”

And to that end, pharmacy seemed it was a great at the time. Keep in mind. It was a five-year BS degree at the time, which was a great fit. Because in some ways I’m thinking, “Okay, I’m going to learn all these things that are going to help me if I go to medical school. Become a physician. I’m going to learn a lot about drugs, and a lot about health and health care and so forth.” Worst case scenario, if I don’t get medical school, I could be a pharmacist and I’ll be able to support myself.

I’ll say two things happened along the way. One, I recognized that being a physician wasn’t all it was cracked up to be. And especially the pathway towards becoming a physician. It’s not just medical school, of course. It’s residency and training and everything that that life brings. And then I also learned that there’s so much more to pharmacy than I had envisioned there was. Probably many people, when you start down this path. Growing up in Central Wisconsin, honestly, my only connection with pharmacy was with community pharmacy.

I saw people, primarily men, wearing white coats working behind counters and seeing them take big bottles of pills and put them into little bottles of pills. And didn’t think that much more of it. Obviously, as I learned so much more of about not only what the role of pharmacy was at that time but what we were seeing it begin to evolve to. Towards not just dispensing medications, of course, but really using our knowledge and expertise to help maximize the benefits from medication therapy.

I was fortunate. I had some really good experiences along the way. I hooked up with folks that were doing research in a variety of different ways. I spent one summer doing medical research working in a lab. And honestly said to myself, “That’s not what I wanted to do.”

But I spent more time doing research with social administrative scientists and learning about the kinds of questions that they asked. My parents will tell you I am one of those people that always ask questions. I was one of those always kids that always asked, “Why? Why? Why?”

And as you can imagine, parents, you being a parent yourself, you’re probably – at a certain point, you just want to tell your kids go figure it out yourself. Because, honestly, that’s what we do as researchers. We ask questions and we have the tools to be able to learn how to figure it out ourselves.

Now, my questions I was very interested in asking were honestly about pharmacists themselves. The work they do. How they’re rewarded for that? What their ambitions are? Where they see themselves going with their careers? As a pharmacy workforce researcher, my interest is very much in who pharmacists are and what they want to do with that pathway.

And so, I got my pharmacy degree from Wisconsin. I went and worked as a community pharmacist for several years. Worked for a company that’s called Shopko. Unfortunately, Shopko is no longer with us. But many of us probably remember what Shopko was. And for a number of years, they were a great place to work with because I really used my knowledge as a pharmacist and as a pharmacy manager working for Shopko.

But then went back to – went to Ohio State for graduate school. That was a good place to be able to go to be able to learn the research tools that I needed to have to be able to do the research that I do is. As well as to get more experience with teaching and educating.

I had gotten some experiences as a teaching assistant, as an undergraduate student at Wisconsin already. But then at Ohio State, I got even more experience and learned what it was like to be in part of a classroom of 100 students and have to be prepared and have to help students understand how does their knowledge of this particular topic fit into a bigger picture of all of the things that we expect them to know as a pharmacist?

As I finished up my graduate work, I had options. I could go work for the pharmaceutical industry. I could go work with a managed care organization. I could work with wholesalers like Cardinal, or McKesson, or Bergen or something like that. There were lots of options.

Ultimately, I chose the academic path because I really enjoyed that ability to not just continue to do research but to connect with students and to really – it felt that I could have the biggest impact in my profession. And ultimately, the biggest impact on patients by continuing to train and help educate the next future generations of people that are going to go into pharmacy.

[00:09:00] TU: I love that, Dave. And you would ultimately spend 30-plus years across three different institutions in that area of work and I know have had an impact on so many other colleagues that you’ve crossed path with, obviously, the thousands probably of students that you worked with over the years.

[00:09:17] Dr. DZ: It’s interesting. At this point of one’s career when – yeah, one naturally does kind of look back at those types of things. And I started adding up the numbers between the institutions I’ve taught. And I’ve been the professor of probably close to 5,000 students over the years. I’m editor of a textbook and I work with several others on that book as well that I know is used in most colleges of pharmacy in the United States. And including not many colleges of pharmacy across the world. And so, it’s kind of cool to think about how one has an impact not necessarily even just directly like we are used to with our patients. But that indirect impact that the work that we do can be used by so many people.

[00:10:01] TU: One of the reasons I was so excited for this interview, Dave, is that I think there’s often a perception around retirement that folks might be limping towards that line. Or begrudgingly working late in their career. Or there’s a lot of energy around early retirement. But often, I think that’s with the context of that someone may not necessarily be enjoying the work that they’re doing.

And what’s really interesting about your story is the great career you have had. The fulfillment and joy you had in your work. The impact you had on many others. But also, this excitement around the next phase of life. And to me, that is what – when we talk about preferred retirement, when we talk about what retirement may look like and the vision of like that, that to me is the success I know that I’m yearning for, is to have an option and choice, of course. But also, to look back and feel like, “Wow! I love the time that I had and the impact and the opportunities I had.”

And you shared something really interesting on LinkedIn. You said that, “While I may have concluded the pharmacy educator phase of my career, I certainly don’t think of myself as being done.” And to borrow a phrase from Lucinda Main, someone we both know. You said you’re entering the preferment phase of your career. Fortunate to have the luxury of choosing what you’d like to do. Who I’d like to do it with? And taking the time to figure it all out. I love that, the preferment phase. Talk to us more about what that means to you.

[00:11:31] Dr. DZ: Thank you so much, because I feel so fortunate to be able to be at this phase of my career. And I want to share my wife, Michelle, who’s also a pharmacist who I met in graduate school at Ohio State. She has also started at her preferment phase as well. She was a pharmacist. Worked in the hospitals and outpatient oncology settings for many years. And has decided to start her preferment stage at this point with us.

But, no. I think when one thinks about getting to this stage in a career, I mean, there’s been so much that’s been rewarding and interesting about the work that I do. But like anyone, none of our career paths or jobs are perfect. They all come with sometimes things that we would just assume not be doing. Or the longer we’ve been doing something, we get to know ourselves pretty well.

And I say to myself, “Well, these are things that I really like that I’m really interested in.” And then there’s other parts of my job that I’m doing that, “Well, I’m not so interested in those things.” And I’m just doing them because at a certain point you kind of feel you have to. And I guess this is, again, a good position to be able to be in.

When one thinks about preferment, I mean, yes, I stepped off in academia what we call the tenure track. I was a tenured full professor, which in many respects is the ideal position. It’s the golden ring that many people go towards. This idea that you have a lifetime contract. And I was very fortunate to have a lifetime contract at a leading university and was well-compensated for what I did. I’m very fortunate to have been in that position.

That said, if you’re staying in that position, you’re going to keep doing all of those things essentially for the rest of your career. And I just kind of said to myself, “Maybe not.” Maybe there are other things I’d like to do. Again, there’s things I like doing. There’s things that I don’t like doing. And then there’s this whole outside of my job life, the things that make me, so to speak, that I kind of wanted to think I’d like to be able to do them without feeling guilty that I should be doing something else. And so, no, I decided that this was a good point in my life to be able to make this type of change.

[00:14:01] TU: Mm-hmm. Yeah, and I think – No pressure, Dave. But I think you and maybe Lucinda should work on a book on the preferment phase. Because I think – and we try to find this balance. But we focus so heavily on the dollars and cents, right? Really important. We got to have enough to cover our needs and the goals we have. Whatever those may be. But we tend to overlook both in retirement as well as throughout our careers. What does it mean to live a rich life? Not just dollars and cents. But at the end of the day, money is a tool, right?

[00:14:34] Dr. DZ: Oh, exactly. Exactly. I couldn’t agree with you more. Money is a means to an end. It is not an end in and of itself. The same as our career. We have to think of our career path as a means to an end. Not the end in and itself.

Again, when I stepped back and thought about that, I think about my family. And it was difficult sometimes especially during the pandemic. I mean, my family was back in the midwest, in Wisconsin, in Chicago and so forth. And there was a long time where we literally couldn’t travel to go see them. My wife’s family was in Ohio. The same thing. My wife was working at a hospital and they’ve literally told her, “Well, if you leave the state of Massachusetts to go visit your family, you have to quarantine for two weeks before you come back to work. And that, just for a long time, wasn’t viable for either of us.

We started thinking about our families. We started thinking about the things we enjoy doing. I mean, I enjoy skiing. I enjoy getting out on my bike and going on rides and that kind of stuff. And some of the mental type things that we all like doing and so forth. The things that honestly make us us.

I look to this point of life that we’ve entered now where it’s giving us more space and time to be able to do that and not feel like, “Oh, I’ve got to do this job aspect of my job or that aspect of my job.” I mean, we’ve figured out ways to be able to manage that.

[00:16:09] TU: One thing I mentioned to you before we recorded is I’m reading right now a book called Retirement Stepping Stones by Tony Hixson. We’ll link to that in the show notes. And this was recommended to me by a shared colleague that really John [inaudible 00:16:23] said, “Hey, Tim you got to read this book,” to really have perspective on what he and I were talking about at the time, which is more this concept of life planning. Again, need the dollars and cents. But also, what are the goals? What’s the vision we have to live life well?

And Tony Hickson, in this book, talks about retirement not as a finish line but how we need to be thinking about as a half time. And I love that. Because what do we do at halftime, right? You already kind of mentioned it when our Bills and Packers played. You adjust. You adjust and you have a plan.

Yes, it’s been informed a little bit by what’s been happening. But it’s a time to reset, to look ahead and to make sure we have a plan. We don’t just go out into the third quarter and hope it’s going to work out, right?

My question for you is it’s clear to me, Dave, when I hear you talk talking about investment of more time with family, with the outdoors, and skiing and traveling. That there’s these other goals. But there’s been thought and intention behind this transition. And talk us through that a little bit more and how you and your wife got to this decision point and ultimately painted the picture of what this vision would look like.

[00:17:28] Dr. DZ: Yeah, I think for many of us – I mean, in some ways, it’s been a conversation we’ve thought about for a long time. I mean, we knew from this point that we started working that someday we were going to retire. We weren’t just going to stay chained to our desks, or to our hospitals, or universities forever and ever.

We knew that that day was going to come. We didn’t necessarily know when that was going to be. But we started saving and thinking accordingly for that knowing that it would come. And so, there was an aspect of having a financial plan that we started to put in place.

Moving forward, I’ll say, like many people, we did get to the pandemic and kind of said to ourselves, “As our jobs were changing and our careers were changing, are these changes we wanted to make –” I mean, in some ways we made them because we had to. We all adjusted and so forth. But did we want to continue down this pathway? And I think we put some thought and energy into this.

And then now, I’m going to say we also sat down with a financial advisor. And actually, I’m going to mention just a little bit thinking about finances. Because, of course, there is a financial aspect to be able to make these decisions. Like I said, my wife and I had started saving. And we are savers. That’s part of our culture.

I remember one time you posted on one of your blogs or something, what’s the most fun thing one can do when you’ve got some extra money? And I think I remember my comment to that post was save it. And to some people that might not seem the most exciting thing in the world. But when I can take that money and put it in the bank, that tells me that I’m going to have that for – I’m going to be able to make decisions in a future based on having made that decision now to save that money. And it’s going to give me options that I know other people might not have if they didn’t save that money.

Like I said, we were pretty good savers. That said, we didn’t have – let’s say, we didn’t have a sense of when halftime was or how we were actually going to go about making that decision. And so, in some ways I was really fortunate that a financial planner, so to speak, somewhat fell into my lab.

My parents had set up a life insurance policy for me when I was born. Like, many families do with their kids. And it was a whole life policy that had a relatively small cash value. But let’s just say a number of years later somebody from that company reached out to me and said, “Have you thought about your retirement and retirement planning?” And for years I just kind of put them off thinking, “Oh, you’re just somebody trying to sell me more insurance or something like that.” And didn’t pay much attention to them.

But then, ultimately, we just kind of – I’ll give him credit for his persistence. But every year, he came back and touched base. How’s things going and all that kind of stuff? And then ultimately kind of said – it kind of hit me that, “Yeah, I could really benefit the perspective from somebody like this.”

Because like I said, I’ve done – I’m a pretty informed investor so to speak. I’ve done a pretty good job of saving and thinking about where my money was going to go, and making our money work the best for us and all that kind of stuff. But that still doesn’t give us necessarily a sense of when can you say it’s half time? And when can you make that decision?

Tom, our financial advisor, really helped us with that thought process. And I’ll say I remember this very well because it was January 2021. We’d all been living through the pandemic for the better part of that year. And he just kind of sat down with us and said, “Well, okay, given what you’ve saved to this point, if you guys decided today if you wanted to not continue to do the jobs you’re doing right now and start living off of your savings based on the lifestyle that you have, of course. The spending patterns that you have and everything. He told us, essentially, you could live within – you could live to be 95 and you have a 95% chance of not running out of money. And we kind of thought to ourselves, “Wow! That’s a really good thing to hear.”

And just having that conversation really kind of opened up our eyes to, “Well, what could we do? What are the things?” Not so much the things that we felt like we had to do, but what do we want to do? Where could we go from here? And I think that’s where we really started saying, “Okay, this is – we’re going to start moving down this path.”

I mean, I didn’t – needless to say, didn’t immediately go to my boss and say I’m leaving. We had a very good conversation about how this was going to look. And honestly, it was more than a year and a half after I had that conversation. I didn’t officially retire from Northeastern until this past August. We had that conversation. My wife had that conversation with her folks at our hospital. And then we started planning for what our next phase of our life is going to be.

We started thinking where do we want to be? Do we want to stay in the Northeast? Or do we want to start thinking about other parts of the country that we might want to live in and so forth? We landed on Denver is where we decided we wanted to be. We started going through the work of preparing to sell our places in the Northeast and find a place to live in Colorado.

And I’m going to add real estate to that mix of your financial picture that you go through in making these decisions about what your total financial picture is. Because we’ve always thought of our homes not just as a place to live but as an investment that we are going to buy and hopefully sell for more than we paid for them at some point.

But we went ahead and started making those decisions and putting that into motion. And as of last March, or this past March, we made the move from Boston to Denver. nd I’ve been very happy that we made that move. It’s worked out very well for us.

[00:23:59] TU: Let me ask for, I suspect, some pre-retirees that are listening thinking, “Ugh! Dave, I love the story and the journey.” Maybe they even look at their numbers and say, “I think it’s there.” But then they are living the reality of 8%,9% inflation, market volatility. There’s so much discussion out there of when you retire and what the market’s doing can have a long-term impact on returns and how you mitigate that risk around retirement. Talk us through – for you, obviously, we can plan scenarios. I don’t know if any of us were planning for this type of inflation volatility.

[00:24:35] Dr. DZ: Well, that’s a really good point. And believe me, I’ve had some thoughts about what we’ve gone through and in terms of the timing. I mean, when I think about even what the environment was back in early 2021 where in some ways, yeah, the stock market was starting to come back pretty strong at that time. Inflation was still pretty low. Interest rates were really low.

One of the things – Needless to say, we go into an environment now. One of the things my financial advisor advised us of. And I can’t begin to tell you what a good piece of advice this was, was to be reasonably liquid going into what essentially will be your first year of – I’ll keep using the word preferment because I’m just not convinced that I’m retired.

But he said, “Basically, you want to have a year’s worth of spending money, liquids, such that you don’t have to sell stocks in order to be able to have money to live on essentially.”

And I’ll say this, it was actually relatively easy for us to be able to do that not just with some of our financial instruments that we had been using. We used them for a variety of instruments. I mean, from equity, to bonds and other types of things that everyone else uses. But again, this was the aspect of buying and selling real estate. We owned two properties outright in Massachusetts – one in Massachusetts. One in Maine. And when we sold those, we were able to purchase a home in Denver, as well as have a little bit of cash on hand.

And having that cash on hand has made things a lot easier. Now, no one likes 8%, 9% inflation of course. And it’s certainly taken a little bit of a bite out of that cash at hand. But it’s also saved us from having to go and sell stocks at a time where stocks have taken like in the past year – What? A 20% dive.

The one thing, thinking about stocks – I mean, I have confidence that the markets will come back. I’ve seen markets go down before and they’ve always come back. And looking at our economy and the things that underpin it, the market will come back. I don’t know exactly when and how it will. If I knew that, I probably wouldn’t be doing the preferment thing. I’d be making a lot more money as a financial advisor.

But anyway – but I had that confidence that it will. And with that confidence I know that essentially the way we have things structured, this combination of different assets that we’re utilizing to be able to make these decisions. It’s not just one type of asset class that you look at. It’s not just your 401k, for example. There’s a variety of different ways that we can get to what we’re doing.

And you know what? Another thing, just to get to think about this preferment thing, too. I mean, preferment does not mean not working or no income. It’s likely going to mean different types of things. I mean, I’ll say, as I’ve moved into this phase, I’m doing what most of us would call consulting work. I’m working with a couple of different universities right now. I want to add some teaching stuff. I want to add some more administrative stuff. Helping them deal with some issues that they’re dealing with and so forth.

And, again, just utilizing the expertise that I’ve developed over the years to be able to do some things. I mean, it’s bringing in a small amount of income. Definitely not as much as I was making when I was working full-time. But that’s okay. I don’t need as much as I was working full-time.

My wife’s in the same position. I mean, she is a pharmacist. She could go back and work as a pharmacist. I mean, especially right now, there’s lots of demand. She could. I don’t actually know if that’s really what she wants to do. She’s been telling me that her next job may be working at a Trader Joe’s. And for her, that, again, this could be the perfect thing for her.

[00:29:02] TU: Store discount. Bonus. Right?

[00:29:03] Dr. DZ: Exactly. Exactly. Believe me, that comes in handy. But again, that’s the sense of my wife and I were both very money pharmacists. We were well-compensated people. We were not hurting for income. But I just took a step back and said, “I don’t need or even want to live my life where I have to depend on having that level of income for the rest of my life. I just looked at it and said, “I can do the things I want to do and live a very good life on not having that level of income.”

[00:29:44] TU: Yeah. And that takes me – Dave, I’ve been thinking as you’re talking, you’ve said several things that have caught my attention. Your somewhat inherent behavior around saving. Really, this mindset around, “If I had an option to spend extra money, I’d save it because I could think about the growth and delay gratification into the future.” And those are a sneak peek into a mindset around how we think about and how we handle our money.

And it feels like, as you’re talking, that this is something that has been ingrained in you for a long time either through personal interest, research, family experience, whatever may be the case.

[00:30:20] Dr. DZ: We were talking a little bit about this before we came online. I mean, it’s almost fair to say I’ve been thinking about this essentially from the time I was born. Because I was born into a family of savers essentially. I like to use the example of my folks – again, like I said, my father was an accountant who went to work in the dairy industry in Wisconsin. And my mother was a teacher. Between the two of them, they had a decent middle-class income, of course, and everything. But again, always saved. Part of it was to be able to save to send myself and my two brothers to college, which again I cannot begin to tell you how fortunate I was to be able to have parents who had saved for our college education and then gave us that ability to be able to start our lives without the debt that I know that many of our students have today as they’re getting that education. That, again, I know that I was so fortunate. And I’m very thankful to my parents for that.

But even more than that, it created a mindset in me that I saw what they did to be able to not only to provide a college education for me and my brothers, but to create the life for themselves as well. And my dad also retired at the age of 57. And now, – And again, retirement for him wasn’t retirement. It was. And I’ll still say is. Because my dad’s 82-years-old and is still doing this. It’s very much preferment.

My dad was – Like I said, he’s an account who had always specialized in tax. And while he was working in the dairy industry, he started doing people’s taxes during tax season. And then when he decided he didn’t want to work in the dairy industry anymore, he just said, “Well, what am I going to do?” He just essentially start – his side gig has been doing taxes. And he still has about 200 clients to this day, including myself.

[00:32:32] TU: In his 80s, right?

[00:32:32] Dr. DZ: In his 80s. It is that – I’ll say for this. It’s that great mental thing for him. It keeps him very engaged. A matter of fact, every year, this time of year actually, he goes back to tax school. It’s like a one-week seminar that he goes and learns about like, “Okay, what are all the new tax codes?” and all the new things that he needs to be able to work with people as a tax advisor on and all that kind of stuff.

And so, every year he goes to just that. And every year he shares it with me and tells me what I should be doing and how I should be preparing myself financially and that kind of stuff. But again, I just give so much credit to my parents because they had instilled in me mindsets about the value of saving and about just think about your finances really is just another one of our tools in our toolbox so to speak. It’s not an end of in itself. It’s a means to an end.

We have money and we manage our money because we want to be able to live a life that’s meaningful to us. And however that is, I’m not here to judge how one spends their money or what one does with their money. So long as you’ve got the money to be able to do it, that’s our choices. It’s your choices to be able to do that how you wish. But it’s just having those tools and having that mindset to be able to make those decisions has been a really great thing.

I remember probably likely somebody we both know, Karen [inaudible 00:34:13]. I went to graduate school with Karen back at Ohio State. She introduced me back, and I want to say this was probably 1990, 1991, to this little financial tool called Quicken.

And I have to think back. Back in 1990, ’91, I don’t know if you remember the Macintosh computers that were literally like these cubes. And so, I got one of the first versions of Quicken for Mac that was – it started – And honestly, it was this way of tracking your finances. Tracking how you use your money. Doing the checkbook thing but doing it on the register on Quicken and everything. And then the fact that it keeps track of everything.

I mean, I’m pretty proud to say now, I – what is it now? 30 some years later, I have – I still use Quicken to this day. And I have a record of my financial transactions that goes back over 30 years. And that’s been valuable to me. I mean, I can’t say that I go back and look at every transaction from 1992. But it does tell me when – let’s say if my financial advisor wanted to know, “What kind of money do you need to live on?” so to speak. Well, I had that data. I could get those answers relatively easily. And that’s been – Again, one of my bits of advice is whether it be Quicken or any of the other tools out there that help us get in that picture of ourselves financially, utilize those tools. I say I probably put one to two hours every other week into managing my various aspects of my finances. And for me, that’s always been time very well spent.

[00:36:14] TU: Yes. Yeah. And the consistency and compound effect of that is huge over time. And it’s interesting, you’re talking about tools and Quicken. Here in 2022, obviously, there are more tools than ever, apps, that will help us, software tools. But I would argue, some of the mindset and behavior, it is getting harder and harder just because of all the things that are competing –

[00:36:39] Dr. DZ: Or time and attention.

[00:36:40] TU: Yeah, tracking, easier execution I think is even becoming a little bit harder. Let me ask you one final question. I know we have some new practitioners that are listening. You obviously work closely with students and new grads as well. But folks that are feeling the headwind financially despite obviously making a good income, having a good potential for their income into the future but they’re facing large student loan debts. They’re looking at potentially the housing market and wanting to buy a home in this market. Inflation. Tim and Dave, you’re telling me I need to start saving early and max out my retirement accounts. I need an emergency fund. I need to get rid of my credit card debt. Just overwhelming, right? What advice would you have for those folks about some of the early wins and behaviors and habits that they can employ?

[00:37:32] Dr. DZ: I think you nailed it right there. Early wins. One step at a time. Rather than getting overwhelmed by all of these things that are hitting you. Focus on one thing that you can do that you can impact.

Yeah, a good example would be like my wife. Or my wife and I, shortly after we got married, she did have a little bit of college loan debt. And she was somebody – she had gotten a bachelor’s degree. She went to graduate school. And then she decided to go to pharmacy school. And so, it took her a little longer to go down that path. And she had a little bit of financial debt. We decided to focus – to prioritize on paying down that debt. It was the highest interest debt that we had.

And we did the things that we had to, which in the short term, yeah, everyone probably meant making some sacrifices. There were some vacations we didn’t go on. Maybe we bought the used car rather than the new car or something like that. There are all the little things that one does to be able to then have a little bit more money to put in the areas that you want to prioritize.

So, whether it’d be paying down student loan debt, or sitting to make a down payment on a house, or all the other things. I mean, the great news is, as pharmacists, we are relatively high-income folks. We have access to funds. It’s just a matter of how we decide to utilize those funds.

But, yeah, should focus on that one thing. Don’t get overwhelmed by all of the different things and thinking to myself, “Oh, gosh. There’s so much going on here. How am I going to handle all of this?” You can handle things. Do one thing at a time. Then use that leverage, that success you have in doing one thing. So, then go do the next thing.

[00:39:22] TU: Yeah, I love that, Dave. I talk a lot with new practitioners about that early momentum. And while any one financial decision or win may not feel monumental in the moment, it’s the compound effect in the momentum that comes from that over time. And there’s a natural excitement of like, “Okay, small win. What’s next?” Another win, what’s next? What’s next? And you look back three, five, ten years later, and some of those behaviors start to really compound and add up over time.

[00:39:49] Dr. DZ: Oh, that’s the one thing. I remember back, I was thinking in high school, you learn about compound interest. And the idea that interest builds on interest builds on interest. And again, I think about 30, 40 years into my career span, so to speak. The decisions we made very early on are definitely paying dividends today and how they do things.

Now, that said, I also don’t want to turn off or upset your readers who maybe aren’t that young anymore or maybe thinking of themselves, “Gee! I didn’t do that when I was you know 25-years-old. What am I going to do?” It’s never too late to start. And there’s a lot that one can do to make good financial decisions even – again, another really good habit I picked up from my parents is while I have credit cards and use them liberally, it’s with the sense of never – my dad just instilled in me. You will pay off your credit card in full every month. You will never carry a balance on these cards.

And that’s, again, always just been part of my mindset, that I use a credit card. I get that bill out of it every – Actually, I don’t even get a bill obviously. Everything’s electronic these days. And honestly, it’s automatically withdrawn from my checking account. But I – essentially, I use the credit that’s available. Credit is not necessarily a bad thing. I’m not one of these people who will say never use credit cards. Or don’t take out interests. And don’t take out loans. I mean, heck, a lot of us, the reality is we wouldn’t go to college. We wouldn’t be able to buy a home if we didn’t take out debt. Debt can and is a good thing. It just has to be used in balance with everything else. Because if it’s not in balance, it will take over in a not so good way.

[00:41:55] TU: Well, this has been fantastic. I knew it would. And it’s delivered. And I’m excited to get this out to our community. And really excited, Dave, for you in this next phase of your preferment. I think I’m going to adopt that term.

[00:42:09] Dr. DZ: That’s a great thing. I do think Lucinda and I should get together and write a book on preferment. But as always, one of the great things about being an educator is – you know, Tim, is you – it’s not just the impact you make on students when they’re in your classroom. It’s the impact you see as their careers move forward.

And I’ve been so blessed and fortunate to be able to stay in touch with many of my former students and not only see the successes they’re having and the things that they’re achieving in their lives, but to be able to share what we’re all doing and so forth. And to that end, I hope some of my former students are out there and are seeing this. And I would love to be able to stay in touch if there are things that I can share more with your listeners about how one prepares to get to the point in this life. The thing, decisions that we make as we get to this point.

I will still say, keeping on our football analogy, it’s still half time. And my wife and I are sitting in the locker room still making those plans for what we’re going to go out and do in the third quarter. And just like I’m offering advice to some folks. I’m also appreciating advice from people who have been down this pathway ourselves. And whether it’d be books or whether it’d be other folks that have made similar decisions to what we have. There’s a lot to learn. And to me, that’s always been the best part about the academic path, is it’s not the teaching. It’s the learning.

[00:43:45] TU: Absolutely.

[00:43:46] Dr. DZ: And the more that we can learn, the better off we’ll all be.

[00:43:49] TU: Well, that’s great. We’ll link to, in the show notes, your LinkedIn if folks aren’t already connecting with you. I know that’s a way they can reach out. All right. Thanks again, Dave. I really appreciate it.

[00:43:58] Dr. DZ: Thank you. Appreciate it a lot. Thank you very much.

[OUTRO]

[00:44:01] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of your financial pharmacists unless otherwise noted, and constitute judgments as of the date publish. Such information may contain forward-looking statements are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacists.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacists podcast. Have a great rest of your week.

[END]

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YFP 290: Getting Ready for Tax Season

Posted on January 12, 2023March 10, 2023 by Caitlin Boyle

Sean Richards, CPA, EA returns to the podcast to discuss difference between tax planning and tax preparation, how effective tax planning can prevent costly mistakes, tax changes for 2023, and the basics of YFP’s Comprehensive Tax Planning.

About Today’s Guest

Sean Richards, CPA, EA, received his undergraduate degree in Corporate Finance and Accounting, as well as his Master of Accountancy, from Bentley University in Waltham, MA. Sean has been a Certified Public Accountant (CPA) since 2015 and received his Enrolled Agent certification earlier this year. Prior to joining the YFP team, Sean was the Senior Treasury Manager at PRA Group, a global debt buyer based in Norfolk, VA. He began his career at American Tower Corporation where, over 10 years, he held several positions in audit, treasury, and accounting. As the Director of YFP Tax, Sean focuses on broadening the company’s existing tax planning and preparation operations, as well as developing and launching new accounting offerings, including bookkeeping, payroll, and fractional CFO services.

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, welcomes Sean Richards, CPA, EA, back to the podcast to discuss getting ready for tax season. In their conversation, Tim and Sean discuss the difference between tax planning and tax preparation, how effective tax planning can prevent costly mistakes, tax changes for 2023, and the basics of YFP Comprehensive Tax Planning. Listeners will hear ways to prevent costly mistakes during tax filing season, including building a strategy around PSLF, nuances of real estate investing, and the impact of a side hustle or additional business income. Sean explains that the best way to avoid these mistakes would be through proactive tax planning throughout the year, but in particular, before tax season. Tim leads the conversation to the differences between tax planning and tax preparation, plus various tax changes for the 2023 tax filing season and into the future. Sean shares resources and information on changes to charitable contributions, energy credits, and clean energy credits. Sean closes out the conversation with an introduction to YFP Tax, the new YFP Tax website, and the various services available to clients including YFP’s Comprehensive Tax Planning (CTP), what it is, and the type of client the service would be a good fit for.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Tim Ulbrich here, and welcome to this week’s episode of the YFP Podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

Now, aside from being pharmacists with a passion for personal finance, there’s something else that you and I have in common, and that’s that we have to file our taxes each year. Now, I know what you might be thinking. Tim, it’s only January, and the tax filing deadline is still a few months away. 95 days to be exact, in case you’re counting. Do I need to start thinking about taxes right now?

I get it. But the truth is that now is an important time to shift gears and start thinking about the strategies that you can use to optimize your tax situation, and that’s why I’m excited to welcome back onto the show YFP Director of Tax, Sean Richards, to talk through getting ready for tax season. We discuss on this episode the difference between tax planning and tax preparation and how effective tax planning can prevent costly mistakes. To learn more about the services offered by YFP Tax, you can visit yfptax.com.

Now, whether you’re looking for help with your individual taxes, business taxes, or both, YFP’s comprehensive tax planning combines traditional filing with our proactive year-round planning process. All right, let’s jump into my interview with YFP Director of Tax, Sean Richards.

[INTERVIEW]

[00:01:22] TU: Sean, welcome back to the show.

[00:01:24] SR: Thanks for having me, and I’m excited to be here before we get into tax season, while I actually still have a chance to get on the pod and talk to you.

[00:01:31] TU: Absolutely.

[00:01:32] SR: Catch me in a couple of weeks, and I’m probably going to ignore all of your calls and everything. So get me while you have me.

[00:01:37] TU: Tis the season indeed. We had you on episode 283 not too long ago. We talked about how to optimize your tax situation as a pharmacy professional. We’ll link to that in the show notes for folks that want to go back to that. But as you mentioned, here we are in the midst of tax season, this episode going live right around the middle of January. Sean, this is about the time where we start to see those tax forms coming in the mail. I don’t know. Folks maybe are like me, where I start to pile those up on my desk. Maybe clutter the –

[00:02:06] SR: [inaudible 00:02:06] or whatever.

[00:02:09] TU: Clutter the countertop a little bit. It’s that visual reminder that we’re going to be filing our taxes. One of the things we’re going to talk about here today, not only what are some things that folks can do to, hopefully, have a smooth tax filing season, but also how can we be strategizing and planning, hopefully, year round and not necessarily just house on fire when we go to file our taxes each April.

So we’re going to talk in really a few different parts. Number one, what are some of the ways that folks can prevent some of the costly mistakes during filing this season? What are some most common mistakes that you see? We’ll then talk about some of the differences between tax preparation and tax planning. Then we’ll talk about some of the changes that folks need to be aware of for both this tax filing season, some of those coming from the Inflation Reduction Act, and then also some of the things that folks can be looking out for into the future. So I’m ready if you’re ready. Should we do this?

[00:03:07] SR: I’m always ready. Like I said, this is the most ready I’ll be for a while. So here we go.

[00:03:12] TU: So let’s jump into some of the costly mistakes that folks may find themselves making during the filing season. Obviously, we want to avoid this if we can. You recently wrote a blog post on this topic. We’ll link to that in the show notes. But give us some of the examples, as you’ve been talking with many pharmacists that are interacting with YFP Tax, many pharmacy clients. What are some of these examples of mistakes that are being made that if we had some more proactive planning, perhaps we could prevent it?

[00:03:43] SR: Yeah, and thanks for bringing up that blog post because that really gets into the nature of how a lot of these kind of arise and can be prevented. Not to give everything away about that, but the idea of the whole thing is really just sort of being able to go back in time, if you could, right? In a lot of circumstances in life, it would be nice to be able to get a redo and be able to go back and kind of get a mulligan, if you will. But with a lot of things in life, you can’t do that, and taxes are one of those things.

So I would say the biggest examples where I see pharmacists or anybody really making mistakes when it comes to taxes is not planning ahead and kind of looking back and saying, “Oh boy. I wish I had done that.” So that time that you had a great year, and you made a ton of money, and maybe you’ve had a side gig going, and you had so much cash that you didn’t know what to do with it. But then you come to the end of the year and you didn’t have that cash anymore when your actual tax bill comes due. So, “Oh, I wish I could have put some of that money aside, done a projection, see what I’m going to owe at the end of the year.” Maybe make estimated tax payments if you apply for something like that.

Or something like, “Hey, real estate’s hot right now.” You bought up a place. You fixed it up. You finally sold it. You hit that peak before interest rates went up, and now you’re sitting there going, “Oh, my goodness. I have to pay taxes on all those capital gains.” What are some things you could have done to maybe make different improvements to the house or take advantage of those improvements against your bases when you’re calculating the taxes? Or, “Hey, maybe I could have invested in some solar property or something.” Take advantage of some of those credits that we’ll talk about with the Inflation Reduction Act. So things of that nature.

A big one with pharmacists is loan forgiveness, right? PSLF. If you’re looking at this, and you’re saying you did your taxes, and you’re going to apply for forgiveness in the future and say, “Oh, maybe I could have filed separate for my spouse last year. If I had done this a little bit differently, then maybe I could have had some more of my loans forgiven.” So it tends to always be an – I’m not going to say always, but there tends to be a common recurring theme of if I just planned ahead, and I could go back in time and change these things, maybe that problem wouldn’t be there.

But actually, now that I think about it, I had a personal situation. I like to bring this one up because it’s near and dear to me and if I can ever prevent folks from having the same thing. I know, early in my career, I was lucky enough to have RSUs given, granted to me, and I was a young budding accountant and went to do my taxes and paid the capital gains and said, “Okay, that’s fine. I understand. I cashed them in. I have my capital gains.”

It wasn’t until I was looking at it a little bit down the line and talking to some of my colleagues that I realized I didn’t actually account for that properly. I had already paid taxes on some of that, and then I went and basically double-counted and paid again. So RSUs are one of those things. I know a lot of pharmacists get them. They get excited about them. If you don’t really pay attention or you don’t talk to somebody who knows what they’re doing with these things, you can end up double paying, and the IRS certainly won’t reach out and let you know that you did that. You have to find that on your own.

[00:06:44] TU: Yeah. Sean, to that point, we’ve worked with a lot of the pharmaceutical industry fellowship programs, and as a result, have a handful of those that are in pharmaceutical industry as clients, whether it’s on the planning side or on the tax side. So this is something that we see come up a lot about trying to understand what are RSUs, and what are some of those tax implications. Certainly, student loans, you mentioned PSLF strategy. It’s a big one in our community, real estate. We’ve got a whole separate podcast dedicated to that topic. So of course, that can be something that’s top of mind.

Then the first one you mentioned is something, Sean, I know I’m seeing and hearing more and more of. We featured many pharmacists on the show that are beginning to monetize their clinical expertise in a variety of different ways, whether that’s a business, whether that’s a side hustle, or perhaps a side hustle that turned into a business. As you mentioned, often there’s that new income that’s coming in. By the time we get around to filing, we’re maybe putting that income back into use in the business or other expenses that come up. Then there’s that surprise tax bill. So, yes, we’re doing good. We’re growing the business. We’re achieving that goal of monetizing whatever we’d been working on. But are we proactively planning for, obviously, the tax bill that’s going to be due? How can we plan for that throughout the year? So great examples I know that will touch many people that are listening.

The next question then is what is the antidote to these mistakes? You mentioned a couple times you were sharing that really that more proactive tax planning, not just necessarily looking at that point of filing, where we’re looking backwards, but really thinking strategically throughout the year can help us not only prevent these mistakes, but also optimize our overall tax strategy. So define for us the difference of tax planning versus tax preparation, and why it’s so important that we understand how these two are so different.

[00:08:36] SR: Sure. So tax preparation is the traditional what you think of with taxes. It’s, hey, you go to your account at the end of the year. You hand them a big box of receipts and say, “Here’s all the stuff.” All the things that you were just talking about you get in the mail, you put a little pile on the table, you bring it to your accountant and say, “These are what I have. This is what I did last year. Get my taxes done for me.”

That also is the traditional area where people kind of are fearful about taxes or have that stress like, “Oh, my goodness. Am I going to owe something?” Or even getting a big refund can be a good thing. But at the same time, you just gave the government an interest free loan for however long, right? I mean, getting a big refund, there’s probably a pretty good chance you could have done something better with that cash. So that’s typically the surprise or the idea I was talking about like, “Oh, goodness. I wish I had done that in the middle of the year in July,” something like that.

That’s tax preparation, and it’s not inherently a bad thing. It needs to get done. Again, it’s what most people are familiar with, whether it’s going to an accountant or going on to TurboTax yourself and getting it done. But that also, again, is where a lot of these stresses tend to come from. On the flip side of that is this idea of tax planning. So that is not just thinking about taxes at the end of the year, but making sure that you’re keeping them top of mind throughout the course of the year, and you’re synergizing your tax strategy with your overall financial strategy.

One thing I want to be clear about is I don’t want people sitting there all day long thinking about tax because, I mean, maybe I want to do that. But a lot of people don’t, and that’s not what we’re getting at with tax planning. It’s not where you’re sitting there all day long and how is this going to impact my taxes? It’s just making sure that when you’re making decisions, that it’s not something that you’re thinking about in April or next filing season. But it’s something that is in your mind. So, hey, I’m thinking about buying a property at the end of the year. What will those implications be from a tax standpoint? Or I’ve been working this side gig. Should I be putting cash aside and trying to plan ahead and everything?

One analogy, if you’ve ever heard me on the pod, I think I talked about this before. If you’ve ever talked to me in person, you’re probably sick of hearing this one. But I often compare it to tax preparation at the end of the year. It’s like a film editor versus tax planning. It’s like a film director who can kind of change things over the course of the year. A new analogy I’ll kind of introduce this time around, I’m really into cooking. So what I found it to be is tax planning is sort of like reading the recipe, prepping your ingredients, getting everything kind of ready to go. Like you watch these tasty videos. They all have everything measured out, and they’re just pouring it in at the time, and it’s all kind of ready.

Versus tax preparation is the last step of getting everything plated and putting it all together. Would you want to do all that piece, without having done any of the prep work to begin with? Are you going to try to throw everything together when you haven’t even cut the potatoes or anything yet? No. I mean, ideally, if you’re preparing a meal, you want to also plan, cut the things, read the recipe, and just have a good idea throughout the course of the thing. So that’ll be my new analogy going forward maybe until I get sick of cooking, and then I can come up with something else.

[00:11:35] TU: I’m smiling because I can totally see you this past weekend cooking and thinking, “Oh, I’ve got another analogy for how I’m going to explain tax planning versus tax preparation.”

[00:11:45] SR: Exactly. I was probably panicking and realize I didn’t cut something ahead of time that I needed to put in and was saying, “Oh, my goodness. If I had just done that ahead of time and made the connection there.” Most likely, this would happen.

[00:11:55] TU: Yeah. I think you’ve given some really good examples, Sean. I was thinking about this this morning. Even when I was working a W-2 job, a pretty simple tax return, pre-kids, there still was this kind of underlying feeling of like, “Am I really optimizing everything?” What I don’t know, I don’t know. Number one, yeah, I could do the TurboTax. I could do the H&R Block. I could figure that out. But how is this really interfacing with the rest of the financial plan? Then, obviously, over time, as things become more complicated, more than one income perhaps or rental properties or children enter the equation, changes of income throughout the year, all these different scenarios where there’s some real time adjustments that you want to make, as well as how can we look at all these things across the plan to make sure we’re optimizing this in the best way we can.

Sean, you know this because you’re my phone a friend on the tax side. But probably once a week, once every other week, it’s a, “Hey, I’ve got this notice. I’ve got this question. What about this? What’s it looking as we’re thinking about the estimated payment, whether it’s on the business income or question related to the real estate piece?” So there’s just so many things going on, and I feel like I have a high level understanding. But there’s a whole another layer of depth that, obviously, you and others with this expertise have and can really advise people to be thinking across the entirety of what’s going on with the taxes and the financial plan. But also looking at how can we be more proactive than just simply doing the filing each year.

[00:13:24] SR: Yep, I agree. The thing is, is that taxes often become a stressor for folks because they don’t plan ahead. That’s the biggest thing is that you go to your mailbox, and you see a letter, and it says the IRS on the top, and you immediately get this fear in your head. It’s because you think, “Oh, what did I do wrong? Or what should I have done otherwise,” or something like that.

I mean, it really just comes down to if you are thinking about these things proactively, if you have sort of that phone a friend that you can reach out to throughout the course of the year, you’re not going to be worried when the time comes because you’ll say, “I already talked to him about that. I already know what this is going to be. Oh, this letter from the IRS is just the refund check that I’m expecting to come back from them.” It’s not going to be that fear anymore.

[00:14:02] TU: So let’s shift gears and talk about some of the tax changes that individuals should be aware of. I think one of the main advantages in working with a professional is that you as the individual don’t have to sift through all the changes that are happening and understand the implications to your own plan. You can get the CliffsNotes version of that or someone that’s looking out for you and, obviously, has an understanding of your individual situation.

Sean, my understanding is there are some changes that folks should be aware of that impact this filing season. Then there’s also some other changes on the horizon that will impact things in the future. Tell us more.

[00:14:36] SR: Yeah. I mean, at this stage of the game, I don’t want to say it’s too late. It’s almost never too late to do really anything. But given that we’re getting into January of 2023 now, not a whole lot to talk about for 2022, but just a couple things to keep top of mind for folks, especially because it’s questions that people may have when they’re talking to their accountant about, “Hey, this looks a little different than last year.”

So one big thing that will probably be glaring to a lot of folks is there was a $300 above the line, we call it, credit for charitable deductions that has happened for the past couple of years. So that basically, even if you’re not itemizing your deductions, if you’ve made charitable contributions, you were able to take $300 of that as a credit, that is sort of a no more going forward. So in order to take those charitable contributions, you’re going to have to itemize your deductions.

Again, I just want to point that one out because I know a lot of people, it was right there on the front of the – On the form. So a lot of people will probably think, “Hey, what happened to that?” But that also brings up a good point that you always want to – Another reason why working with a tax professional stay on top of these things is really helpful because different states, different jurisdictions all have different rules when it comes to these things. I know I was just talking about charitable contributions, for example. In the state of Arizona, that’s actually something where you’re able to make donations up until the filing date. Sort of like you can traditionally with IRA accounts when you think of on the federal side of things.

That’s another reason why I say even though it might seem like it’s too late, it’s not always too late, and you really want to keep in mind that different states and different jurisdictions have different kind of rules with that.

[00:16:05] TU: Which is why, Sean, you love the Ohio jurisdiction and the [inaudible 00:16:09], right? Isn’t that your favorite?

[00:16:11] SR: Yeah. Love would be one word that I could use to describe it. I would definitely say that that’s one of them. It keeps me on top of my game. I could say that too. I’m running out of nice things to say. But, yep, sure, we’ll go with that.

Sticking on the subject of sort of top of mind 2022, things to keep in mind, one of them – This is not so much of a, hey, it’s something that you can still do now, just something that you’re going to want to really be careful of, especially when you’re talking to your accountant and probably trying to argue. Hey, how come I’m not getting the credit for this or something? You alluded to the Inflation Reduction Act. So that was the act that President Biden signed back in August. So a lot of changes to a lot of things, specifically, energy credits, things of that nature. A good number of changes to keep an eye on there.

A big one is the Residential Clean Energy Credit. So that is traditionally – Forgive me, I can’t think of the old name. They keep changing the names of these things. But keep in mind solar, geothermal, that type of thing, really the renewable energy sources. So that was supposed to drop down to a 26% credit in 2022. That bumped back up to 30% in 2022, and that’s going to go all the way out through 2032. So that’s a good one to keep in mind.

Electric cars, that’s another one, very important. So as of – The date on this one is August 16th. So if you bought a car before August 16th of last year, electric car, sort of the old rules, I won’t get into those. You’re probably familiar with them. If you bought a car beginning August 16th and through the end of last year, an electric car, there’s a final assembly requirement where your vehicle must have been assembled in North America. Those rules apply as of August 16th of last year, so something definitely to keep in mind there.

Then going forward into 2023, if you purchase a car in this year going forward, there’s not only final assembly rules, but there’s mineral sourcing rules. There’s sort of battery component rules. So a lot stricter requirements there. We can link to – The Department of Energy has a good list where you can kind of put in your VIN and see if your vehicle qualifies and what it is. But the long story short there is it’s $7,500 credit going forward. But again, you want to keep those dates in mind whenever you purchase the vehicle. So it’s kind of one of those things to keep in mind now.

That’s a good segue into 2023. So again, closing the door in 2022, a lot of good things heading into 2023, specifically around those energy credits. We talked about new – Or electric vehicles. We talked about new electric vehicles. But starting this year might bring a lot of people into the used market here, so used electric vehicles. That will be a new credit, 30% up to 4k of those. So that’s something definitely to look forward to.

Energy credits, again, not so much on the solar geothermal side, but more on the, hey, I got new doors, new windows, the typical sort of regular household improvements. You’re probably familiar with those being a $500 lifetime credit. That starting this year going forward is actually going to be a $1,200 annual credit, so that is quite the jump there. Definitely some new restrictions and everything to keep an eye on. Obviously, you want to talk to an accountant about all that kind of stuff. But that’s a very big jump from $500 a lifetime to $1,200 a year. So definitely want to take advantage of that going forward.

[00:19:34] TU: Is that one that if I invest, I don’t know, $10,000 in new windows, that you can disperse that credit over several years? Or is it within the year of purchase for 1,200, right? Because a lot of those examples you gave, windows, doors, roofs, etc. are, obviously, going to be fairly significant expenses.

[00:19:54] SR: Yeah. It’s in the year that you actually dole out the cash that you get the credit back. In a lot of cases, these credits are nonrefundable. So what that means is that if you, at the end of the day, don’t owe anything or don’t have any taxes to offset, you don’t get that credit back for you. So refundable credit basically means, hey, if I actually offset all of my taxes and still then get some, you’ll actually get that back as a refund.

A lot of these energy credits, you just want to take a look at all of them. I won’t get into which of which. But some of those are nonrefundable, meaning they’ll offset your taxes that year but not going forward.

[00:20:30] TU: Which is another great example of planning, right?

[00:20:31] SR: Of planning. Exactly, exactly right. You beat me to it, where if you’re making a big capital purchase, you say, “All right, I’m putting in these new windows or I’m getting this solar. I’m finally getting it done,” you want to make sure you have the taxes to offset. Maybe you sell some of those investments that you’ve had for a while. Take on some of those capital gains. Use the credits to offset it or – That’s where that tax planning definitely comes into play. Absolutely. You’re taking my job, man.

[00:20:56] TU: Sorry. It was a good example. I was just thinking about all – Obviously, a large percent of our community may be doing home improvement projects, other things. This is a common one, I think, will be coming up.

[00:21:05] SR: Absolutely. Yep. But, yeah, I mean, sticking to this year, I don’t want to say it was a boring year. Every year from a tax standpoint is exciting in my mind. But the biggest thing I would say outside of the energy stuff, the name of the game has been inflation. So obviously, inflation is top of mind for a lot of folks. So a lot of inflation-related changes going into next year, and what does that mean? Mostly means limits are going up for a lot of things.

So 401(k), deferral limits. That was up $2,000. That’ll be 2,500 this year. Catch up deposits also up 1,000, so that’ll be $7,500 this year. IRA contributions went up $500, so that’s $6,500 this year. The catch up stayed the same on that, but similarly, inflation. So starting next year, 2024, that will be indexed to inflation. That’s another one there. Tax brackets, so all the tax brackets were bumped up a bit due to inflation. I’m not going to get into the specifics of which one. Each of those, each of the limits are there. The overall story is that you basically can make more money before you bump into that next bracket.

But the one thing I really want to hone in on there is a lot of people don’t really – I don’t want to say don’t understand the concept of tax brackets. But a lot of people think, “Oh, I don’t want to make another $1,000 because that’s going to bump me into the next bracket. Or how’s that affect me? Is that going to put me the next tax bracket? Or how’s that look with everything?” I just want to make sure a lot of folks on here understand the idea of incremental dollars being taxed at that next bracket. So what does that mean?

If you’re right on the edge, and you make an extra $100 that bumps you into that next tax bracket, that $100 will be at the new tax rate. The rest of your cash is all getting taxed at the rates that you were before. So I don’t want anybody here who’s got two job offers on the table and saying, “I don’t want to take this higher one because it’s going to put me in the next tax bracket.” That’s not how it works. It’s only going to be a couple extra dollars. I know that’s a big scary one. So that’s where you hear about effective rates and everything. There’s a lot we can get into there, but I just don’t want to scare folks any more than they already are.

[00:23:07] TU: Sean, it reminded me as you’re talking. I’m sure many folks listening are familiar with the Schitt’s Creek episode, where David is talking about the tax-write offs and the things that he’s buying because they’re tax-write off, right? This –

[00:23:20] SR: Write-off, yeah.

[00:23:20] TU: It’s like we need an episode on the incremental approach. I mean, you hear that all the time of like, “Oh, I don’t want to go in the next tax bracket. Or if I earn additional money, I’m going to go into that.” I think a lot of that may come from the misunderstanding of how that works in terms of the incremental approach.

[00:23:37] SR: Exactly, right. You’d never want to turn down more cash. I think we had talked about before. But even though it might not seem like the best thing, a bigger tax bill at the end of the day generally means that you actually did better that year.

[00:23:49] TU: Yeah. Well, this is great stuff, Sean, and I want to transition. One of things we’re really excited about as we head into this tax filing season is that for new clients of YFP Tax, we’re really putting a stake in the ground that we’re not doing filing only. One of the reasons we got to that decision point was everything that we’re talking about right here, which is that we really feel like tax when done well is really proactive. It’s strategic, and we’re thinking about this year round so that we can optimize that situation. Yes, filing is a part of that, of course, but we really need to be thinking more strategically.

So that’s one of the reasons that we are really excited, Sean, to be introducing YFP’s what we’re calling CTP, comprehensive tax planning. Tell us more about what it is, who is it for, and potentially who is it not for as well.

[00:24:39] SR: Yeah. So comprehensive tax planning is – It’s a lot of what we had talked about before, right? So the idea of really synergizing your tax strategy with the rest of your financial strategy. It’s something where you’re touching base with us throughout the course of the year, and it really depends on what your individual needs are. It’s not something where we’re saying, “Hey. Every Friday at five o’clock, we’re all getting on the call. It’s the YFP Tax happy hour. We’re all going to talk about taxes and everything.” That’s not what this is all about. It’s really for everybody to look at their own situation and say, “Hey, I’m looking for more guidance on my withholdings.” Maybe it’s something where we’re meeting a couple times a year to talk about, “Hey, I have this new side job. I think I have to make estimated payments now. Can we talk about what that looks like?”

Or maybe it’s something where I have a real estate property that I’m thinking about purchasing at the end of the year, but I don’t even want to begin to go down that path until I can talk about what are the implications here. What if I rent it out a couple days a year? What if I rent it out 100 days a year? How’s that look? Can I live there? What are the tax implications? So it’s really for folks who want to not wait until the end of the year, like I said, and say, “Hey, here’s my box of receipts. I’ll see you next April. Get my stuff done,” and who really want to be able to sleep at night when it comes to taxes and don’t want to open up their mailbox and say, “Oh, no. It’s the IRS. What could this possibly be?”

[00:26:01] TU: Sean, if I’m interested in learning more about the comprehensive tax planning or perhaps even ready to get started, where’s the best place that I should go?

[00:26:09] SR: So the best place to go would be yfptax.com. So that’s our new and improved website we launched recently. It has a lot of different resources on there. It has the blog that you mentioned before, a lot of videos that we posted throughout the course of the year with some of these updates and some of these new tax laws that we’re talking about. It really has a breakdown of all the different services that we have.

So whether it’s the comprehensive tax planning, CTP, that we’re talking about here, or maybe you have a side gig and you’re interested in doing some bookkeeping for that. We offer bookkeeping services, all the way from, “Hey, I just have a couple of contractors I need to do payroll for,” all the way up through what we call our fractional CFO service, which is more of the, “Hey, let’s sit down. Let’s talk strategy about my business. Let’s put some forecasts and budgeting together and everything.” That website will have a great starting point to get you started.

But from there, you can get in touch with me. I’ll answer any questions you have. We can get on the phone. If you want to look at my face, we can get a Zoom call together. Or I’m happy to talk via email, answer any questions. So you can reach me personally at [email protected]. Again, you can also go to www.ypftax.com. You’ll get links to me. You’ll get links to all the things that we’re talking about here. That’s the best place to start.

What I would say is, definitely, if you’re interested, don’t wait. We’re getting into tax season. I know that I’m biased to say that, but I think you’re going to lose a lot of us in a couple of weeks. So might be not a bad time to hop on there and take a look.

[00:27:34] TU: Don’t wait indeed. This is really the – Now, I’m not going to say quiet. You guys got a lot of stuff going on, but really the lull before the storm that is the tax season and then, obviously, some hibernation of rest and recovery thereafter. So make sure to head on over to yfptax.com. Lots more information there. As Sean mentioned, you can reach out to him directly to set up a call, get some more information. If you’re ready to get going, you can also click on a complete a quick form. You can get started. But all the information is there on the website.

Sean, thanks so much, and we look forward to hearing from you after tax season.

[00:28:06] SR: Thank you. Yeah. It’s definitely the calm before the storm. But like I said, it’s sort of like if you watch the weather channel before a hurricane. Even though it’s the calm, everybody’s still prepping and getting ready and everything. Then once it’s all said and done, yeah, it’ll be nice to touch base in May once everything’s kind of a little bit calmer.

[00:28:23] TU: Great stuff. Thanks, Sean.

[00:28:24] SR: Thank you.

[END OF INTERVIEW]

[00:28:25] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 289: Building Pricklee with Pharmacy Entrepreneur Kun Yang

Posted on January 5, 2023March 10, 2023 by Caitlin Boyle

Kun Yang, a pharmacist and Co-Founder & CEO of Pricklee Cactus Water, shares how and when he knew the entrepreneurial path was right for him. In this episode, he discusses the experience of being on Shark Tank, where he effectively navigated a negotiation with two sharks that led to a deal, and the most important skills he has had to acquire as an entrepreneur leading a growing company.

About Today’s Guest

Kun Yang is a recent dad and pharmacist-turned-CPG entrepreneur. He grew up in Canada but has spent his professional life in the United States, where he is building his business, Pricklee Cactus Water, with some incredible humans who want to make the world a better place.

Pricklee is on a mission to inspire people to be resilient like the cactus through health, happiness, and sustainability. The refreshing cactus waters are made from the drought-tolerant prickly pear cactus and packed with antioxidants, electrolytes, and vitamin C, with 50% less sugar than coconut water. It’s 100% refreshing, with 0% pricks.

Kun is passionate about brand building, CPG, leadership, founder stories, futurism, mental health, and all things wellness. He looks forward to connecting and learning from others that build businesses through conscious capitalism!

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, welcomes fellow pharmacist and Co-Founder & CEO of Pricklee Cactus Water, Kun Yang, to the show. Highlights from this episode include hearing Kun talk about how and when he knew that an entrepreneurial path was right for him, the experience of being on Shark Tank, and the skills he has had to acquire on his entrepreneurial journey leading a growing beverage company. The discussion begins with Kun sharing his start in pharmacy, his pharmacy education, the moment he realized that a traditional pharmacy path might not be right for him, and the surprising story of how he got started as an entrepreneur. Kun speaks on how Pricklee came to be, his experience navigating negotiation with two sharks on Shark Tank, and ultimately getting a deal for Pricklee. With the added attention from the show, Kun shares how Shark Tank positively impacted the business in unexpected ways. He discusses the power of having a mentor, the skills needed to be a true leader, how he views leadership, and how he is cultivating a culture of growth in his company. Listeners will also hear an interesting parallel between parenting and entrepreneurial leadership.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

On this week’s episode, I welcome fellow pharmacist and the Co-Founder and CEO of Pricklee Cactus Water, Kun Yang. Highlights from the show include hearing from Kun about how and when he knew the entrepreneurial path was right for him, what the experience was like being on Shark Tank, where he effectively navigated a negotiation with two sharks that led to a deal, and the skills that he has had to acquire that have been most important to his entrepreneurial journey and leading a growing beverage company.

Now, before we jump into today’s show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 250 households in 40-plus states. YFP Planning offers fee-only high-touch financial planning that is customized to the pharmacy professional. If you’re interested in learning more about how working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s jump into my interview with Kun, the Co-Founder and CEO of Pricklee Cactus Water.

[INTERVIEW]

[00:01:20] TU: Kun, welcome to the show.

[00:01:21] KY: Glad to be here, Tim. Nice to see you again.

[00:01:23] TU: So we had an interesting crossing of paths through a mutual connection in the biopharmaceutical industry space, where we’ve done some personal finance education with some of the fellowship programs. You spent the early part of your career, before working on Pricklee, in an industry role. So let’s start there. Tell us about your career path into pharmacy, where you went to school, and what led you to going down that path of industry.

[00:01:50] KY: Yeah. So I graduated from the University of Maryland School of Pharmacy 2015. I have a lot of pride in my alma mater, and I think many people might relate to this. But it’s almost like the further removed you get, the more you realize how lucky really you were in that situation. But I had a chance to kind of go back this past year as the white coat speaker, and it just brought back a flood of just really incredible memories and just appreciation for just how difficult it is to be faculty and kind of lead the next generation of youth and just had a lot of proud moments to kind of know where we kind of came from in that space.

But I kind of grew up all over the place. I mostly grew up in Canada, and I always knew that I wanted to pursue health and wellness and many different components and also had a very, I guess, just entrepreneurial mindset to begin with. So I think pharmacy really kind of attracted me because fundamentally so much of pharmacy as an industry has been built upon independent business. Just the kind of skills that are required to be successful, to be able to socialize, to connect with your patients and provide value and help them lead healthier and better lives and be that trusted partner really kind of just gravitated to that profession.

As I entered pharmacy school, I think I realized that there was a lot of different ways that we could make an impact in society. Over time, as I learned more and more about all the incredible opportunities to affect population health and take all the skills that we were getting in pharmacy school and apply them in really creative ways, yeah, I just naturally gravitated towards more “nontraditional” roles. But I would just say that they were just roles that I think allowed us to flex additional skills that we didn’t know we had, and then eventually ended up pursuing a fellowship through MCPHS at Biogen in a sort of medical value-based outcomes type program, which is sort of a managed care-focused direction because I was very involved with AMCP and was very interested in the whole population, health management piece of that profession, going into graduation. Then through that, just really found myself appreciating and just developing a lot of incredible skills in the biotech pathway.

[00:03:57] TU: You and I talked maybe a week or two ago, and we’re talking about for those students that have that business or entrepreneur type of desire, I think the industry pathway is a natural one where there’s some exposure to that. But certainly, that’s still a step away from entrepreneurship and growing your own company, still a very different experience working within an organization, although, of course, less clinical and more business minded.

I’m curious, before we talk about Pricklee specifically, was there a moment during your fellowship or perhaps a moment in your first job where you looked around and you’re like, “Man, this just isn’t for me. I’ve got this entrepreneurial itch. I’ve got this pharmacy degree. Maybe I’ve been down this pathway, but like I don’t see myself doing this for 30 years.”

[00:04:43] KY: I think there were a lot of moments. When I look back, it wasn’t like I think one specific. I mean, I do have a specific moment that I’ll share, but I think there were a lot of feelings that I think that felt familiar to me, even in that moment, that I can kind of trace back and say, “Okay, this kind of makes a lot of sense.” So the moment really was walking into – I just finished our fellowship, and programming had started at a new company with a spinoff of our existing fellowship business. I kind of just walked in and had really, really fallen in deep appreciation for the opportunity and the people that I was working with.

But I think one of the days I kind of walked in, and I looked around, and this was still pretty early on in our journey, but something hit me that I had always thought that through all the different career changes and exploration of getting to that point that going this “non-traditional” path would have led me to move away from this feeling of “imposter syndrome” or feeling like everything that I was doing was actually getting more and more specific. It was because it was leading me to a point of clarity, right?

Really, over time, I realized that imposter syndrome and point of clarity had a lot to do with an understanding of who I wasn’t, as opposed to understanding of who I was. I think that’s something that probably a lot of us can relate to is growing up in your 20s and maybe sometimes early 30s, you have a lot of ideas of maybe what you don’t like to do, right? What are some of the things that don’t excite you? What are some of the general things that do excite you? But you may not really understand specifically why or what you’re really good at to allow you to succeed in those roles.

Again, all those feelings led to that one moment I walked in and looked around in this open office setting. I was kind of like, “Man, there’s a lot of incredibly talented and smart individuals around me. And if I work really, really hard here for another 15, 20 years, I can really be like one of them.” These were at the time, again, all my heroes I look up to that kind of forged the pathway for us before. I guess it hit me in that moment that there wasn’t a specific role that I could look at and say like that is exactly in specific what I wanted to do. I think that that was my – I call it a quarter life crisis moment of really all that imposter syndrome bubbling and kind of blowing up all at once, realizing that, wait a second, how could I have done all this and pursued all this specificity, only to feel this still in this moment? There’s not much more specificity I could pursue.

That was when it really kind of became an introspective question of like is there something outside of pharmacy that I could apply my skills to, still within the health and wellness space that we’re really passionate about, that I could find truth and clarity?

[00:07:17] TU: Where do you attribute – Obviously, you have an entrepreneurial spirit and desire. You’re pursuing that with the work that you’re doing at Pricklee, and I suspect this may not be the first venture and the last one that you’re going to do. Where do you attribute that entrepreneur spirit coming from?

[00:07:33] KY: It’s a really good question. I think it is family-driven in many, many ways, right? I’m a first generation American. My father actually immigrated over from China when I was one and then moved over to Canada when I was three and a half. To see kind of his journey and where he came from, where it was a small farm town that was – He was the first person in his entire family lineage to graduate high school and then did do college and all that stuff, and it wasn’t like there were resources around him.

So for him to kind of persevere and find a way through all that, pursue higher education, and then bring us over and provide, create a better life for his family, and then give us this opportunity then to live a really privileged life of education, of connectivity, of culture, of just growing up in North America, Canada, and the US, and really being shielded from a lot of that and realizing that, for me, a lot of the journey of getting to really, I guess, in many ways what I had initially idealize as the pinnacle of success, which was I think much more defined from a lower wealth generation value standpoint of like earning and salary and maybe comfort from a capitalistic standpoint. Getting to that point and realizing that it was much more than that, that was behind the growth that my father and sacrifices my father had made.

To look at that journey that he went on as a pretty entrepreneurial one himself, I think I got a lot of that same sort of mentality of like, okay, this still feels like the great opportunity has been presented. How can you take this opportunity and truly make a bigger impact? And take that opportunity and say if you have that privilege, and you have the connections and maybe the skill sets and the network to do more, to truly make an impact on society. Can you look introspectively and find authenticity in that journey to make that impact as positive and helpful as possible? So that’s really kind of where I think the initial energy came from.

[00:09:31] TU: I love that, Kun. One of the things I’ve been thinking about a lot lately, and I think your alma mater could give them some credit, is light years ahead in terms of a focus around entrepreneurship and nontraditional career paths. They put some specific efforts in that area to really be intentional and brand themselves as such. But I’ve often thought like we recruit for someone who wants to be a pharmacist and that clinical type of a mindset and then hope we can apply some entrepreneurial principles on top of that. I almost wonder if we need to flip the script in that like you recruit people that have an entrepreneurial mindset or interest, and then pharmacy gets overlaid on top of that. It’s just a totally different shift in how someone is thinking.

I think what’s interesting about your journey, and I think there’s a lot of people that may feel some of that imposter syndrome or feel that tug and pull of like, “Hey, I have an interest in this or that, but my identity is in I have a PharmD, or I’ve done a fellowship, or I’ve done two years of residency.” We know the reality of the sunk cost fallacy of, “Hey, I’m $200,000 in, right? And I’m not going to pivot or take that risk.” So I just think there’s a really neat opportunity for our academic institutions to be able to take this up and see what we can do in terms of some of the disruption that’s happening in our profession and how can we, especially as we train the next generation of pharmacists, be a part of that. I think to Maryland’s credit, they’re making some progress in this area, which is pretty cool.

[00:10:56] KY: I think that that’s a very, very, very astute point. I would just say like still early on in my journey, so I imagine that my view on this and perspective will change over time. But I would say that what I found in our in our journey, where we’ve kind of really broken into multiple industries now and almost from the bottom up and try to find value in that, it really comes down to aligning the journey to some core set of values that are intrinsic to an individual. I think that that’s something that a lot of institutions have maybe not done effectively. I think, obviously, professionalism, and I think core behaviors of what a profession should look and act like are definitely important.

But I do think that sometimes a lot of students come into these professions with personal values that are maybe extremely different, right? These personal values are often shaped by households and maybe by your initial friend network, right? I guess the challenge of this is then if most people are within this way of, this mindset of thinking you go through life, really kind of reflecting the same values that you’ve kind of been around since you were a kid, right? Your parents’ values and the friends that you’ve kind of grown up with.

It’s really hard to break free from that, right? Because as you get more and more within a bubble of people in terms of the work that you do, your interests become even more specific. The challenges that you own become more specific. It’s probably very hard for an average pharmacist to relate to like the challenges that a construction worker, for example, would relate to day-to-day. So naturally, these worlds don’t collide as often as you would see, right? So what does that really result in? That results in people finding answers to like these bigger questions of like how do we become more entrepreneurial? Or what can we do with our pharmacy professions?

They find answers amongst their direct community. Why is that challenging? Well, it’s challenging because a lot of people that go into higher education, they come from families where maybe their parents didn’t do this, right? Or maybe this is now a wealth generation they’ve entered making pretty healthy salaries, where their parents didn’t have that luxury, right? So what happens is you’re not asking maybe your reference point of like what success looks like is anchored to people that have never had the type of wealth opportunity that you do now. So to find answers to the questions that like, well, what’s next? If we’ve hit our milestones of getting your house or like having children and doing these things that seemed like, pretty far reaching milestones previously, and you’re starting to trend in that direction, where it’s pretty feasible, then you start thinking, “Well, what’s next right?” Then the answers often become, okay, invest your money, do these things, and grow your wealth.

Then simultaneously, alright, who else would you ask? You ask your friends and your colleagues, who, again, were raised by the same kind of parents that you’ve been around. So it’s really hard to get answers to these bigger questions of how do you make more out of the way that our institutions are set up when a lot of the influence of what the values are in society are really limited to the same influences and values that you were raised with, right? So what I found is when you want to answer a question as big as what’s next, ask people that have done those things. So a lot of the mentors that I’ve met in my life that have made these tremendous impacts, I mean, they’ve built and exited companies, global companies. They’ve done these things. Time and time and again, you start to realize that oftentimes the value system changes from one of just wealth creation to one where you start to realize that your wealth is really a set of tools that you can leverage to create value for others and to create not just a better life for yourself but for your profession, for people around you, for anyone, right?

I think as you meet more and more successful people that have gone through that journey, you really feel that, and it’s not only just really inspiring to see that that’s really what people stand for at the end of the day, but that that’s what the world and the universe tends to reward in the long term.

[00:15:04] TU: It’s such a great point, and I’m reading right now Hangry by the GrubHub founder. It’s a great book. It reminds me a lot of Shoe Dog. It’s another great read on kind of an entrepreneurial startup story, that one, obviously, of Nike and Phil Knight. But he talks about in the GrubHub journey like his initial goal was like do this thing to be able to pay off student loans. Then it gets to this point where he raises $31 million, and he gives up a stake of a company, and then it’s like, “Oh, wow. This got like really real. And, obviously, I’m now exceeding that goal, and there’s on to something else.”

Then, obviously, at some point, he exits what will be a multibillion-dollar company, and then he’s kind of asking this question of like, alright, that wealth and, obviously, paying off that debt was a very small goal that wealth was achieved. But like I’m trying to find my identity back of like who am I, what do I want to be, what do I want to be my legacy and my contribution.

So let’s shift gears and talk about Pricklee. For those that aren’t familiar with Pricklee yet, and I hope they will become soon, if they’re not already or they haven’t tried the product, what is it, and how did the idea come to be?

[00:16:07] KY: Yeah. No, it’s definitely an interesting story. So Pricklee is a cactus water. It’s a delicious, refreshing cactus water made from really the most sustainable and resilient plant on the planet, the prickly pear cactus. It’s packed with electrolytes, antioxidants, vitamin C, that just offers superior and natural hydration. It’s about half the sugar and calories of a coconut water, and it’s really just good in smoothies by itself, mixed drinks, and really any which way you want to have it. So that’s really what Pricklee is.

We actually created Pricklee right in the middle, again, of our fellowship. Our co-founder, Mo, grew up in Lebanon, and his grandma used to make prickly pear mixed drinks, prickly pear just smoothies, prickly pear just hydration beverages all summer long. It’s his favorite thing going up with him and his siblings. So one day, when he was shopping at our local grocery store, and he saw prickly pears in the market, he was blasted with nostalgia. He’s like, “I have to bring this back to my friends.” So he shared it with us. We were just blown away by the taste.

Then being in health care, we look at the benefits. That was really, really interesting as well. I think over time, we just realized like this is such an amazing opportunity to take a health and wellness platform, introduce an ingredient that meant something, significant to one of us, and then find ourselves in this, and that journey of really discovering authenticity through the creation of Pricklee, and figuring out that we could leverage the platform of the cactus to inspire people to be resilient. To really promote health, happiness, and sustainability became really what our core mission was. Then over time, really that mission manifested itself into a company that we now are privileged enough to be able to support and to grow every single day.

[00:17:47] TU: So I want to talk about your Shark Tank experience. You and your co-founder, Mo, also a pharmacist, appeared on Shark Tank, season 13, episode 22. We’ll link to it in the show notes, if folks want to go back and watch it. You were looking for $200,000 for 5% equity, which equates to a $4 million valuation. I want to talk about the numbers. But first, I want to hear about the experience. What was it like walking through those doors, and how did you prepare for that opportunity? Because as I’ll ask you in a moment, there were some instances in your responses with the sharks that it was clear you had done a lot of preparation. So I’m curious to hear how you went about that preparation.

[00:18:28] KY: Yeah. So we’d spent almost two years just sort of beta testing our product at farmer’s markets, figuring out how this whole industry worked. It was really, really something that just blew our minds because of how complex the industry was and the different aspects that went into it from D2C e-commerce, to retail, to supply chain, to operations, to production, to sales and marketing. I mean, there’s just so much to uncover, and it took us some time to really grapple around that. So we didn’t launch until February 2021.

Something to note of that is, I think, pharmacists and STEM individuals, specifically, are fantastic entrepreneurs because testing is so ingrained in our DNA. So we really went through it pretty – Really kind of taking our emotion out of it as much as we could. But in any case, we launched in February of ‘21. Within the first week, we’d run these Facebook ads and the production studio at Shark Tank, at SEMA, and these ads. So they reached out and were like, “Hey, you guys should apply.” We thought it was a complete scam. We had no idea this was real thing. But we pursued it. Next thing you knew, we had this gigantic application. It was like 40 pages. I mean, we were just spewing out all aspects of our life in this application.

This ended up being like a 16-month process from when we first [inaudible 00:19:44] to when we’d been filmed and then when we finally aired the following May. So it was probably the longest kept secret of our lives. When we started getting through the process, the team assigned us a production staff that really helped us kind of frame the pitch, prepare us for the kind of conversations that we’re going to have. A lot of that was just, again, an ongoing 16-month journey that eventually led to the air date on Mother’s Day weekend, actually May of 2022.

[00:20:15] TU: I’m curious. Yesterday, I was listening to a podcast of the founder of 1-800-GOT-JUNK?, and he had talked about a moment in their business, which it took them eight years to get to a million dollars in revenue, and now they’re north of $600 million a year. So a very patient slow growth and then, obviously, more of an explosion of that over time. But he talked about this instance where, after a lot of persistence, they got on to Oprah, a huge opportunity, couldn’t hire enough people to have the phones ready after that went live. But they didn’t have a same experience when they went on The Ellen Show. It was actually very quiet after that, and part of that had to do with, obviously, people can more easily get in touch now than they could when they went back on a previous show with Oprah.

But I’m curious how defining of a moment was that? Or was that not in terms of that goes live, and the business changes?

[00:21:07] KY: Yeah. I mean, I definitely think it was it was a defining moment. I think a lot of companies find a lot of luck in different components. You kind of have to. I mean, timing luck, it’s in every company’s journey. Shark Tank has manifested as one of those things for us, for sure. We had been on this like interesting media tour. Leading up to Shark Tank, we had actually filmed TODAY Show in August, right before we had filmed Shark Tank in September. That was a pretty big deal. I mean, Al Roker drinking your product on air. I mean, sharing your story. We got some texts about it. But it wasn’t comparable to the Shark Tank experience.

I mean, I think there’s something societally and culturally relevant about Shark Tank in the connection that every person has with that being like some pinnacle of entrepreneurship and a goal, and a milestone I think a lot of people will look for in starting businesses. So I think that there’s something innately exciting about it. Still to this day, anytime people see our booth, our materials, see us out in public with Pricklee, like we definitely get people being like, “Oh, we saw you guys on Shark Tank.” We always – The number of times we’ve had to tell the story of like, “What was that like?” It’s definitely something that we’re passionate about. But it was definitely one of those things where that was absolutely Shark Tank.

[00:22:23] TU: Not once. I don’t think not once did you or Mo mentioned that you were a pharmacist on that show. Was that an intentional move?

[00:22:30] KY: I think we actually did but –

[00:22:32] TU: Oh, did you?

[00:22:32] KY: Well, so the time that you’re in there is quite a bit longer than what actually gets aired. We think we’ve been there for almost 45 minutes. It was cut to eight. They did a really good job of actually representing the conversation and negotiate the intent of it. But, I mean, at the end of the day, I mean, they’re trying to put on a good show and trying to make it very, very snappy and quick.

It was funny. We had like a couple of our partners and friends actually fly in and put on cactus suits to like introduce the brand and the products, and that entire segment was cut out. So it was really funny. I mean, they were there. You saw them. But the whole dance sequence entrance, that was cut out. I guess they weren’t – I guess we just didn’t rehearse well enough, or like it wasn’t entertaining enough for dancers across the US. But, yeah, I know. We talked about it, I think, a couple of times. But definitely within the 45-minute segment, they cut that down to 8 minutes.

[00:23:22] TU: So one of the things Tim and I were talking about this, Tim, my partner at YFP last week, he does a lot of teaching on negotiation. One of the things that happened in the Shark Tank episode, at least, of the eight minutes that they filmed, is when Kevin – He went on this rant of, “I hate beverage deals. However, I like this product.” He ended up countering that. I think it was $200,000 for a 20% stake, instead of a 5% stake. Then you had a brilliant response, and you said something along the lines of how are we supposed to do that? Then you provide the rationale behind the how are we supposed to do that, in terms of needing the cash flow and so forth to grow and sustain the business, which is a textbook calibrated question or negotiation.

The book, How I Split the Difference, Chris Voss, he talks about this question precisely. So I assume you were prepared for that specific type of instance, where you had to negotiate. Was that fair?

[00:24:17] KY: Yeah. Yeah, absolutely. I mean, no Shark Tank deal goes on air and comes out the way that it was presented. It was kind of incredible how textbook the negotiation went to how we had prepared. We expected them to go to 20%. We expected Kevin in negotiation and then go to a royalty deal [inaudible 00:24:34]. Then our whole bottom line was going to be to offer the initial deal at a 5% line of credit. So the fact that it played out to a tee was just mind-blowing, I think, in terms of the preparation of that and to feel like we were actually in control of the entire conversation was pretty.

One of our first actual adviser, Patrick Muldoon, who’s the previous CEO of Zola Coconut Water and Detour Bar, an incredibly brilliant guy. He was the one that, to your point, brought up Chris Voss, How I Split the Difference. We read that. We kind of really prepared. What happens when this likely scenario occurs that somebody’s – Let’s say you left with one truck, and you have an offer, and it’s 20%. The fact that, again, happened at that exact moment was really funny. This is a guy who’s gone through so many tough negotiations in this life and I think can really speak to experience with it. Just he kind of coaches the same thing.

Like at the end of the day, when you’re in a tough situation, I think that the best thing to do is ask questions, right? There, you’re faced with an impossible situation or impossible task or ask, which oftentimes is the case with Shark Tank. These deals are impossible deals. Yeah. Yeah. Like you ask the question of like, well, lean into their expertise and experience and figure out what is it that they’re looking for? Oftentimes, that opens up the conversation from seeming like your back against the wall, no counter. This is the final offer on the last shark, to then turning that into an actual conversation where that results in negotiation. That’s absolutely part of the game.

[00:26:01] TU: It’s interesting seeing Barbara jump back in. I didn’t see that coming. Then I thought it was cool that you guys got caught a little bit in the middle for the benefit of at least the show, where there’s, obviously, an ego play going on between the two of them that she – So that was fun to watch.

[00:26:17] KY: Yeah. We were like, “Was this about us?”

[00:26:19] TU: Right. Kun, I’m curious that as your role expands, obviously, you’re leading a rapidly growing beverage company. I don’t think any schooling, including a PharmD program and even one that has more of an entrepreneurship focus, I don’t think any schooling can prepare someone for the work and the leading that you’re doing now. I’m curious, what what skills, if you had to pick one or two, we just mentioned negotiation potentially one, what skills have you really had to develop and hone that have proven to be most valuable to you in terms of leading this company?

[00:26:52] KY: Well, it’s hard to boil that down. So I would say if it really comes down to it, I think leadership is definitely the one that has been the most difficult for me because I think – I mean, I don’t know. I think leadership is often put together as this package of people in roles, in “leadership positions,” and that’s oftentimes rewarded. There’s often momentum built around that, right? If somebody tends to be active and speak up, this tends to happen. But you really realize over time that it’s really not about that. It’s really about how do you serve the people, your constituents, your workers, your partners, your friends, your customers, and your vendors, everyone that you work with.

Again, finding a voice of authenticity and a mission that’s so much greater than the product that you’re selling, ultimately, at the end of the day, and making sure that that’s an authentic mission and a set of value systems that really represents the people that are truly behind this company because the company really is just a journey. It’s really a journey of humans coming together, bringing their talents, introducing their networks of other talented individuals to come through. So at the end of the day, does the product really matter? Or is it really the people that come together and make it come to life? I really kind of believe that latter certainly to some extent.

But that was a really hard thing to understand. Because I think the skills that – Again, the leadership skills that are oftentimes rewarded in a corporate setting are oftentimes selfish and ones where it’s like what are you good at. You tend to see this too with a lot of individuals that when they find themselves in conversations with senior leadership, for example, which oftentimes isn’t the case in a corporate American setting, I mean, most of the time, it’s jockeying of position of like, “This is what I’ve done. This is how I’m effective. This is what I lead.” It’s like that doesn’t really provide a lot of value in your conversation, right?

I mean, the ultimate value, understandably, for any business is to move forward as a company because that improves everyone’s livelihood and, ultimately, your customers’ livelihood, right? So I think when you look at it in that macro, you realize it’s not about the individual. It’s about the bigger piece of like what are we all working for and realizing that the individual growth journey will actually lead to overall growth in the business. But, again, if you come from a place where you’re thinking about your specific role in that, as opposed to looking top down on how do you truly create and cultivate a culture of growth, it’s really hard to understand how to take yourself out of that and turn it the other way around and reflect all of that growth towards others, while still finding that your personal growth journey is actually felt that.

So that was a really, really extensive journey that I’m still on, and I think there’s a lot of the people in my team and partners have been extremely patient with me through that. That I would say has been the hardest, most emotionally intelligently challenging thing and process that I think I still undergo, and I still just – I’m so in awe of people that have mastered that, and I see how they bring them to home to their families too. That’s really, I think, what keeps me excited about the growth journey in that specific way.

[00:30:14] TU: I love what you just said there, and I think you can relate to this as a relatively newer dad. But I think parenting and entrepreneurship, at least in my own journey, have really forced some of the most significant inner reflection, which can be humbling and painful sometimes in the moment of like – My kids, I love them to death. But parenting exposes every limitation I’ve ever had that I was able to hide.

I think entrepreneurship can do the same. But I think if you lean into that, as I hear you are, it’s such a rich and rewarding journey of what are the opportunities to grow and to develop and flourish and to really think about some of these bigger questions of, sure, there’s going to be opportunity to build some wealth and create jobs and provide a really cool company and a product that’s awesome and tastes great. I can attest to that. My boys and wife can attest to that that have tried the product as well.

But it’s bigger than that, right? It’s bigger than that, and you’re already talking about that. I think that bigger than that also enhances the product, and it makes it attractive to people that are using it and the team that is behind that. It’s energizing when you have that type of a mindset.

[00:31:21] KY: Oh, my gosh. You hit the nail on the head. I mean, that same mentality when you apply it, to your point, I mean, having a kid, immediately put somebody significantly ahead of you in terms of priorities. That is what you have to do with entrepreneurship too, right? It’s really just not about you. It’s about the people that you serve. I think when it comes to product that you hit the nail on the head. I mean, as soon as we launched our product, we already knew that we were selling a product, and we had to find authenticity in our journey to express a brand, and that’s exactly what it was.

It just so happened that we had – I had my daughter in that really existential brand, soul searching phase. So it actually really helped us internalize like what it meant to feel empathy for consumers in that way and build a brand that really spoke to their needs, as opposed to a brand that we wanted to express ourselves. Then finding a common ground of authenticity so that when we build everything, it feels like a true genuine expression of self, as opposed to here’s a list of factors and characteristics of this product that you should buy into.

Sort of I think there’s a really interesting tidbit on that that I’d love to share, which is growing up in STEM, we were kind of taught to look at data and place data at a level of gospel sometimes, right? Where like the higher the end, for example, the more statistically significant, the more correct this data point ends up being. That is absolutely true, and there’s obvious logical science built into that way of discerning data. Then simultaneously, you do have occasional situations where a clinical trial may fail. Yet you have individual patients that may be cured of cancer. Does it necessarily mean that the product is not good? Or was it not tested in the right patients? I mean, you start to answer a lot of these interesting questions.

But the reason I bring that up is because this comes back to the value system of health care, which is it’s interesting. Because within healthcare, we’re tasked to be compassionate to care for our patients, and there’s sometimes like a disconnect with the way that we think about our jobs and the way that that happens. Because when you look at datasets, you look and you’re taught to think that the higher the data set, the more accurate, the more useful this information is, almost to the point where an N of 1 becomes tossed away as meaningless.

The irony is as we’ve built in our consumer journey, we’ve put all of our efforts into appreciating the N of 1 because the N of 1 is actually the lived journey that every single human being on this planet is born into, like every single person goes through an end of one journey. Your journey is your journey. That’s it, your perspectives, people that you’re with. I mean, that’s uniquely yours. That’s what you’re born into. That’s what you die with. The fact that that’s held out important sometimes or the importance of that, the significance of that is lost in our way of appreciating that people aren’t data points, people are people.

If we sometimes look at that N of 1 in the context of a broader dataset and find appreciation in the outliers, you actually will find a lot more answers to those questions that you may not even know you’re asking for. That’s actually where entrepreneurship really, really has taught us is we don’t find a lot of value in our aggregated success. Aggregated success is just the status quo of what’s working. We have so much failure that there’s no real N of 1 failure that you’re looking to innovate on.

But occasionally, we get an N of 1 that just blows our mind. How did that happen? Like where’s that coming from? Why is that happening? That insight that we get, picking up the phone, talking to that one person, can shift business strategy in ways that are so significant and unlock opportunities that we’d never considered, and it’s because we value that N of 1. I think if we look at that in health care and truly ask those questions, those deeper questions of making sure we don’t lose that context in the scheme of pursuing greater science, I think we can probably affect the holistic health of patients in a greater way as an industry. So that’s something that, again, going back full circle to your question of institutions is something that, as a value system, we should probably try to find a way to embed in our curriculum.

[00:35:30] TU: Great insights, Kun. Really have enjoyed the conversation. I’m excited to get this out to the YFP community. Where is the best place that folks can go to connect with you and to get involved perhaps in Pricklee as well?

[00:35:43] KY: Yeah, absolutely. So you can find us – For myself, personally, you can find me on LinkedIn in just Kun, K-U-N, last name Yang, Y-A-N-G. Yeah, feel free to connect and reach out if you ever want to have a conversation. We’d love to meet other pharmacists and hear about your journeys.

Then also, it just so happens that we actually are just opening our seed investment round for Pricklee as well. So if that’s something of interest, please feel free to reach out and let us know if you have any questions or want to learn a little bit more about that opportunity as well.

[00:36:11] TU: Awesome. We’ll link to both the Pricklee site, as well as Kun’s LinkedIn profile in our show notes. Kun, thanks so much for taking time to come on the show. I appreciate it.

[00:36:19] KY: Yeah. Thanks so much for the opportunity, Tim. I had a great time.

[END OF INTERVIEW]

[00:36:22] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 288: An Interview with Suze Orman (YFP Classic)

Posted on December 29, 2022March 10, 2023 by Caitlin Boyle

This week we replay a YFP Podcast Classic. Suze Orman, #1 New York Times bestselling author on personal finance with over 25 million books in circulation, joins Tim Ulbrich on today’s episode. They talk about her most recent book Women & Money: Be Strong, Be Smart, Be Secure and the advice Suze has for pharmacy professionals feeling overwhelmed with their student loan debt and managing their financial plan.

About Today’s Guest

Suze Orman has been called “a force in the world of personal finance” and a “one-woman financial advice power house” by USA today. A #1 New York Times bestselling author, magazine and online columnist, writer/producer, and one of the top motivational speakers in the world today, Orman is undeniably America’s most recognized expert on personal finance.

Orman was the contributing editor to “O” The Oprah Magazine for 16 years, the Costco Connection Magazine for over 18 years, and hosted the award winning Suze Orman Show, which aired every Saturday night on CNBC for 13 years. Over her television career Suze has accomplished that which no other television personality ever has before. Not only is she the single most successful fundraiser in the history of Public Television, but she has also garnered an unprecedented eight Gracie awards, more than anyone in the entire history of this prestigious award. The Gracies recognize the nation’s best radio, television, and cable programming for, by, and about women.

In March 2013, Forbes magazine awarded Suze a spot in the top 10 on a list of the most influential celebrities of 2013. In January 2013, The Television Academy Foundation’s Archive of American Television has honored Suze’s broadcast career accomplishments with her recent inclusion in its historic Emmy TV Legends interview collection.

In 2010, Orman was also honored with the Touchstone Award from Women in Cable Telecommunications, was named one of “The World’s 100 Most Powerful Women” by Forbes and was presented with an Honorary Doctor of Commercial Science degree from Bentley University. In that same month, Orman received the Gracie Allen Tribute Award from the American Women in Radio and Television (AWRT); the Gracie Allen Tribute Award is bestowed upon an individual who truly plays a key role in laying the foundation for future generations of women in the media.

In October 2009, Orman was the recipient of a Visionary Award from the Council for Economic Education for being a champion on economic empowerment. In July 2009, Forbes named Orman 18th on their list of The Most Influential Women In Media. In May 2009, Orman was presented with an honorary degree Doctor of Humane Letters from the University of Illinois. In May 2009 and May 2008, Time Magazine named Orman as one of the TIME 100, The World’s Most Influential People. In October 2008, Orman was the recipient of the National Equality Award from the Human Rights Campaign.

In April 2008, Orman was presented with the Amelia Earhart Award for her message of financial empowerment for women. Saturday Night Live has spoofed Suze six times during 2008-2011. In 2007, Business Week named Orman one of the top ten motivational speakers in the world-she was the ONLY woman on that list, thereby making her 2007’s top female motivational speaker in the world.

Orman who grew up on the South Side of Chicago earned a bachelor’s degree in social work at the University of Illinois and at the age of 30 was still a waitress making $400 a month.

Episode Summary

Happy Holidays! This week, we bring back a YFP Podcast classic! YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by the one and only, Suze Orman. Suze, #1 New York Times bestselling personal finance author with over 25 million books in circulation, talks about her book, Women & Money: Be Strong, Be Smart, Be Secure, and shares advice for pharmacy professionals feeling overwhelmed with their student loan debt and managing their financial plan.

Suze shares her journey of being a waitress until she was 30 years old and going through a loss of $50,000 from an investment through Merryl Lynch in a three month time period. This is where her passion for personal finance began. Suze landed a job at Merryl Lynch, quickly began rising in rankings and eventually started her own firm. Suze became an advocate to ensure other people’s investments make more money than she’s earning.

Suze says it’s important to have a healthy relationship with money and that there is no shame big enough to keep you from who you are meant to be. She shares that fear, shame and anger are the three internal obstacles to wealth.

In regards to student loans, particularly for those with the biggest debt loads, Suze says that first and foremost you have to understand the ramifications that unpaid student loan debt will have on your life. She suggests following the standard repayment plan to minimize the additional interest and amount added on the end of loan (if following an income driven plan), and the taxes to be paid if the loan is forgiven. After paying off your student loan debt, Suze says that you can start dreaming. If an employer offers a 401(k) or 403(b) with an employer match, Suze suggests to contribute to the retirement account only up until the amount of the match.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Happy holidays. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, our team at YFP is taking off an annual tradition for us, as we reflect on the year behind us, plan the year ahead, and most importantly, spend time with family and friends. Since our team is on a break this week, I’m bringing back one of our most listened to episodes of all time. That’s an episode from July 2019, where I had the pleasure of interviewing the one and only Suze Orman, a number one New York Times bestselling author on personal finance with over 25 million books in circulation.

On the show, we talked about one of her books, Women & Money: Be Strong, Be Smart, Be Secure, and the advice she has for pharmacists, as it relates to managing their finances. Now, Suze has been called a force in the world of personal finance and a one-woman financial advice powerhouse by USA Today. She’s a number one New York Times bestselling author, magazine and online columnist, writer, producer, and one of the top motivational speakers in the world. Orman was a contributing editor to the O, The Oprah Magazine, for 16 years, the Costco Connection magazine for over 18 years, and hosted the award-winning Suze Orman Show, which aired every Saturday night on CNBC for 13 years.

With that said, it’s without question and honor to welcome Suze Orman to the YPF Podcast.

[INTERVIEW]

[00:01:28] TU: Suze, before we jump in to discuss how pharmacists can be more intentional with their financial plan, I want to give a shout-out to one of our avid listeners, Amanda Copolinski, who is a super fan of yours that said, “Tim, you need to interview Suze on the podcast. Her message will resonate so well with your listeners in the financial issues that pharmacists are facing.” So while you have impacted millions of people, Amanda is one of those. Because of your work, your message will now impact thousands more in our community. So thank you so much for coming on the show.

[00:02:00] SO: You’re welcome. But, Tim, I just have to say one thing about Amanda, seriously. Amanda asked, and because she had a voice, because it is so important, particularly, that women have a voice, and they ask for what they want, and because she asked for what she wanted, even though it was for the good of all, it obviously was also good for Amanda. She got what she wanted. So if we can just learn to ask for what we want, I mean, what’s the worst thing that could happen? I say no. So then it wouldn’t have mattered if even – Do you see what I mean? So, Amanda, you go girl, you go girl, you go girl. All right, we can go now.

[00:02:41] TU: So before we jump in and talk more about your book, Women & Money: Be Strong, Be Smart, Be Secure, I’m curious and want our listeners to know as well a little bit more about your background into this world of personal finance that has led you to transform millions of people on their own financial journey. Were there a series of events or an aha moment for you that set you on this path, on this journey to teach and empower others about personal finance?

[00:03:07] SO: Yeah. It was a very simple story, actually, where I was a waitress till I was 30 years of age in Berkeley, California. Having been a waitress for seven years, making $400 a month, to make a very long story short, I had this idea that I could open up my own restaurant because I made these people a fortune with all my ideas. My parents had absolutely no money. My mother was a secretary. My father was sick most of his life, blah, blah, blah, blah. And the customers I had been waiting on lent me $50,000 to open up my own restaurant.

So I’m, again, making a long story short. They had me put that money in Merrill Lynch, which was a brokerage firm. I had a crooked broker. Within three months, all $50,000 was lost. Now, I didn’t know what to do, and I thought I know I can be a broker. They just make you broker. Because during those three months, I really loved starting to learn about a world that was so foreign to me. I didn’t even know what a money market was or Merrill Lynch was.

Anyway, I went and applied for a job at Merrill Lynch because I knew I wanted to pay these people back that lent me $50,000, and I wasn’t going to do that at $400 a month, which was my salary as a waitress. They hired me to fill their women’s quota. While I was working for them, I realized what my broker did was illegal, and I also had been told that women belonged barefoot and pregnant. They had to hire me, but they would fire me in six months. So while I was working for them, I sued them with the help of somebody who worked for Merrill Lynch who told me what had happened to me was illegal. Because I sued them, they couldn’t fire me.

During the two years until it came to court, and they then settled outside of court because I was their number six producing broker at the time, but what happened was during that time, those two years, I realized, oh, my God, how many people out there don’t have the money to lose? Like all right, I was young. I could have somehow come back. But what if it were my parents? What if it were your parents? What if it was somebody who that was every penny they had to their name?

Even though I was a financial advisor, in terms of serving people at that time, I became an advocate to make sure that every single person that invested money, that their money meant more than the money I was going to earn off of them. I put them before me. People first, then money, then things. It was those people that mattered because I was one of those people. Before you knew it, I just rose and rose in the ranks, started my own firm, and here we are today.

[00:06:20] TU: Indeed. I think that’s a good segue into talking about your million-copy,

number one New York Times bestselling book, Women & Money: Be Strong, Be Smart, Be Secure. As you may or may not already know, the profession of pharmacy is made up of a majority of women, approximately 60-40 split, two-thirds, one-third of graduates today, roughly speaking. So I think this message in your book is certainly going to resonate with our audience.

You start the book with a chapter titled Imagine What’s Possible, and there’s a passage in there that I want to briefly read that really stood out to me. You said, “Women can invest, save, and handle debt just as well and skillfully as any man. I still believe that. Why would anyone think differently? So imagine my surprise when I learned that some of the people closest to me in my life were in the dark about their own finances. Clueless or, in some cases, willfully resisting, doing what they knew needed to be done. I’m talking about smart, competent, accomplished women who present a face to the world that is pure confidence and capability.”

So why, Suze, is this topic of personal finance, even for well, smart, accomplished women, such as the pharmacists listening, and heck, regardless of gender, I would say this is true. Really smart people that often can’t effectively manage their money. What are the root causes for them?

[00:07:42] SO: Yeah. You just used the word can’t. Oh, they can. Women have more talent in their little fingers, I’m so sorry to say, more capability than most men have in both hands, really. I don’t say that as a put-down to men. It’s just that women hold up the entire sky here in the United States. They take care of their parents, their children, their spouse, their brothers, their sisters, their employees, their clients, their patients, everybody, their pets, their plants. When it’s all said and done, when they’re 50 or 60 years of age, that’s when, for the very first time, they start to think about themselves.

You have got to remember that women have the ability to give birth, in most cases. They have the ability to feed that which they have given birth to, in most cases. So a woman’s nature is to nurture, is to take care of everybody else before she takes care of herself. So it’s not that she can’t. It’s she doesn’t want to. She doesn’t want to. She wants to make sure that her kids, in particular – A woman will do anything to make sure that her children are fine. That is not true with men. That is not true with men.

I used to think that it was until 2008 came along and when people were laid off of their jobs. They lost their home. They lost their retirement. They lost everything. Women would go back to work, working three or four jobs, a waitress, a cocktail waitress, anything, just to put food on the table. A man, if they had a $200,000 job, would not go back to work if all they were offered was $60,000. They weren’t going to do it.

Again, it’s not putting men down. Please, men, don’t think that because I don’t put you down. It’s the socialization effect of the difference between a man and a woman. So a woman just will do it all, but she won’t take care of herself. She chooses not to. In any aspect, she’ll only take care of her household expenses. You know why? Because her house holds everybody that she loves. That’s the only difference. That’s the only difference, boyfriend. That’s the only difference.

[00:10:06] TU: Which is a good segue to talk about healthy relationships with money because in the book, you mention that in order to build a healthy relationship with money, there are attitudes that women need to get rid of, with the first of these being these weights or burdens that you referenced that are commonly carried around, one being the burden of shame and the second being the tendency of blame. Can you tell us more about this concept of blame?

[00:10:29] SO: Yep. You know, in the book, I talk about truthfully that there is no blame big enough or shame big enough to keep you who you are meant from being. There just isn’t. Sometimes, we’re ashamed that we don’t know about money. Sometimes, we’re ashamed that we don’t have the money that we need to be able to give our children what they want.

Now, what I just said was very heavy, believe it or not, because it’s really difficult. I mean, I just experienced it. I had my niece here. In fact, I had all my nieces here, but one in particular that has a five-year-old child who loves Pluto more than life itself. He literally thinks Pluto is alive. He said to me, “Aunt Suze, how do I get a real Pluto?” I mean, “You mean a dog?” He said, “No, really. I want this Pluto to be alive.” You could just see, you want to give this kid anything this kid wants because he’s so fabulous. Not that – All your kids are fabulous, to you, anyway.

So a mother feels, especially if she’s a single mother, that she has to make up for the loss of a father figure or another mother figure or parent figure, and she does it usually by purchasing things for her kids because when they go to school, oh, but this kid has this cute backpack, and this kid has this, and look at these watches, and look at this iPhone. So it becomes very interesting that a lot of times, you’re ashamed of what you yourself don’t have. You’re not proud that you have anything. You’re ashamed of what you don’t have, and you blame it, usually, on somebody else. Or you blame it on yourself.

It’s – Fear, shame, and anger are the three internal obstacles to wealth. They just are. I have people – I know you’re talking about the book right now, but my true love at this moment in time is the Women & Money podcast because it’s on the Women & Money podcast that you can hear. You can hear via the emails that are sent in the shame and the blame that women feel, the anger that they have at themselves for staying in a relationship that they don’t want to be in, but they don’t have the money to leave, the confusion that’s out there. A lot of these women are so powerless because they’re not powerful over their own money.

[00:13:10] TU: In the book, you go through a detailed financial empowerment plan, which I think is incredibly helpful for our listeners to hear more about since we know many pharmacists are struggling with spinning their wheels financially, graduating now with more than six figures of student loan debt, the average about $166,000, having many competing financial priorities with home buying, starting up a family, building up reserves, saving up for retirement. The list goes on and on. So the question is where does one start when they are looking at so many competing financial priorities, and it can feel so overwhelming?

[00:13:42] SO: You start by, number one, really understanding the ramifications that student loan debt that goes unpaid will have on your life forever. So your number one, bar none, is your student loan debt, and you have got to understand the difference between paying back student loan debt on the standard repayment method and the income-based repayment methods. You have to understand that in your head, if you think, “Oh, I have all this debt. I’m just going to pay back a little bit because I don’t have that much of an income, and they’re going to forgive it in 20 or 25 years. I’ll be OK,” no, you won’t.

You won’t because if under the standard repayment method, your monthly payment should be $1,500 a month, and under income-based repayment, you’re only $750 a month, that $750 difference gets added onto the back end of your loan, plus interest. When they forgive it, when a debt is forgiven, you need to pay taxes on that, as if it were ordinary income. It is possible that if you do that over 20 years, you’re going to end up owing more than you even started with that they’re going to forgive.

So you have to be realistic here. If you’re going to go in this industry, if you’re going to become a vet, if you’re going to become anything with massive student loan debt, then you have to put your priorities in place. Your first priority is your student loan. After your student loan, hopefully, on the standard repayment method, it is paid off, then start dreaming. Ten years isn’t that big of a deal. It will come, and it will go. But don’t try to do it all at once.

[00:15:45] TU: Yeah. That’s really timely. I know for many pharmacists that are listening to this, they’re looking at, as I mentioned, six figures of student loan debt, $160,000, $170,000, $200,000 of loan, unsubsidized many of those, interest rates that are at six to eight percent. So obviously, those interest rates and the growing interest and the baby interest can have an incredible negative impact on their financial plan.

That being a good segue, I think, into the conversation about loan forgiveness, which has gotten a lot of attention with the upcoming presidential elections, and we’ve had some discussion with Bernie Sanders, Elizabeth Warren, have forgiveness plans that are out there. Not even getting into specific candidates or politics or the individual policies, I think it brings up an interesting discussion around loan forgiveness and the positives and benefits of that, relative to what people learn through the process of paying off student loans.

I know, for me, individually, going through the process of paying off more than $200,000 of student loan debt, there was a lot I learned and that my wife and I learned through that lesson in terms of budgeting, working together, setting goals. But I also understand that for many, and certainly would have been the case for us as well, not having that debt would have been fantastic. So how do we reconcile forgiveness relative to being able to learn through that process?

[00:16:58] SO: First of all, let’s talk about student loan debt to begin with and the viability of it. Is everybody crazy that we should have to pay, our children should have to pay $200,000 for a college education?

[00:17:13] TU: Amen.

[00:17:14] SO: Like is that, just to begin with, the sickest thing you have ever heard in your life? So while everybody’s dealing with the debt that we have, what we also should be dealing with is why are we paying that kind of money? Listen, if that’s what these financial institutions need to keep the buildings and the teachers and everything going, maybe we need to go to online universities that are fully credited that everything is done online because the burden that these kids are leaving school with is so heavy. It is the number one question that I am asked. What is so sad, it is the number one question that I do not really have an answer for because they will not let you discharge it in bankruptcy. They do not –

I mean, it is crazy that you pay the same amount of money to get a master’s in social work as you do an MBA. Really? So tuitions, number one, should be based on the area that you are specializing in. Hey, if you’re going to graduate and you’re going to make $200,000, $400,000, $500,000 a year, fine. Then you start spending money that then subsidizes those that are going to make $30,000 a year because they want to be a teacher. Or whatever it may be. But I do think what’s going to start to happen is that people are going to have to start going to community colleges for the first two years or so, and then probably switch over. But then, you have to be crazy if you go to a school that’s $50,000 a year.

Now, with that said, I get when you want to be a vet, when you want to be a pharmacist, when you want to be a doctor. That’s what they charge. So if you know, if you know beforehand that that’s what it’s going to cost you, and you have an unsubsidized loan, which means that it is growing while you are in school, can you at least pay the interest on that loan while you’re in school?

I know everybody’s going to say, “But, Suze, I’m working full-time at school. I can’t.” Oh, yes, you can. I had to put myself through school. I worked until 2:00 AM every morning. I started at 7:00. I worked seven days a week for four years straight. Don’t you dare tell Suze Orman you can’t do it. You most certainly can. You just don’t want to. When you have debt that you can’t pay back, this is not a choice if you can or you can’t, if you want to or you don’t want to. You have to, and it’s – I don’t mean to sound harsh to you, but you’ll thank me years from now that at least you haven’t accumulated an interest rate on top of everything else.

[00:20:02] TU: Suze, one of the most common questions that I get and I’m sure you get all the time as well is how do I balance paying off my student loan debt relative to investing and saving for the future? As we think about pharmacy professionals specifically, many of them have gone through lots of education to get where they are. They may have four years of undergrad. They have four years – Likely, some people more in terms of getting their doctorate degree. They may go on and do residency training.

So here they are, and they look at the clock and say, “Yes, I’m young. But I also know I need to aggressively save, and I keep hearing the message of I need to be putting away money for the future. But I’ve got $160,000, $180,000, $200,000 of student loan debt, unsubsidized loans, six to eight percent. So how do I balance the two of these?” What advice do you give people to help them think through that?

[00:20:48] SO: I would not not pay a student loan under the standard repayment method in order to then save in a retirement account. Obviously, if you work for a corporation that gives you a 401(k) or a 403(b) or whatever it may be, and it matches your contribution, then you have absolutely no choice whatsoever but to absolutely at least invest up to the point of the match. After that, your very first bill that has to be paid before you can decide anything is your student loan repayment.

After you know what it’s going to cost you to pay on your student loan, then you have to make a decision. Oh, do I have to move in with six or seven kids and all live together in order just to do whatever? What do I have to do after that payment? Is there any money left over? If there is, what will it allow me to do? It may only allow you, I know you’re going to really think I’ve lost it, to move back in with your parents for a number of years.

[00:21:53] TU: You’ve got to do what you’ve got to do.

[00:21:54] SO: You’ve got to do what you’ve got to do. For all of us to make it in today’s society, we have to either really enhance the nuclear unit and nuclear family, and really help each other. Or if we can’t do what we’re born into, then create our own nuclear family, whereas five or six of you get together and you go, “Okay, we have this problem.” It’s not like communal living, but it’s how do we solve this problem? So rather than you each have your own individual apartment, you each have your own car, you each have all of this stuff, what can you do as a group of people? Uber and Lyft and Zipcars, all of that came, especially Zipcars, about people who couldn’t afford to have their own car.

Again, I don’t mean to be Suze Smackdown here. But I do want you just to be realistic about your life and the independence dream, living on your own, having all of these things. Nothing will give you more pleasure than having money versus things.

[00:23:08] TU: Yeah. My wife and I talk often, as we think about our own financial situations, that we felt some of that pressure in our mid-20s of wanting to live up to the lifestyle that our parents have gotten to after 30 or 40 years. So I think really reshifting expectations and thinking about specifically today’s pharmacy graduates just really has to be intentional with their financial plan and change some of those expectations to set them up to be successful in the long run.

Shifting gears a little bit, I want to talk about planning for the future, and we recently had on the show Cameron Huddleston, author of the book, Mom and Dad: How to Have Essential Conversations with Your Parents About Their Finances, an excellent book that has me thinking more and more about the significance and importance of healthy and open financial conversations with family about money and ensuring that the estate planning process is well thought out and is in place.

I noticed that you offer a protection portfolio that is meant to help people take the worry out of protecting themselves, their assets, and their family. So tell us a little bit more about why this process of having a protection portfolio in place is so important and what information is compiled in a portfolio like this.

[00:24:19] SO: What’s really important is for everybody to understand that we have no control over the things that happen to us. Are we going to be in an accident? I mean, really, just the other day, Tim, you know I live on a private island, and I’m driving down this road. I mean, there are no cars on this private island. There are only golf carts. There were only like – There’s 80 homes. There’s nobody here most of the time. I’m driving back to my house, and I come up on a golf cart that overturned on these four 20-year-olds, and they were seriously hurt, all right? I mean, five minutes before then, they were on this private island, having a fabulous time. Now, I’m like, “Oh, my God.”

So anything can happen at any time, and every one of you needs to be protected against the what ifs of life. May you always hope for the best, but may you plan for the worst, whether it’s an accident, an illness, an early death, whatever it may be. The number of emails I get from 40-year-old women, 50-year-old women, 30-year-old women saying, “Suze, my spouse died. I have three kids. I never expected to be in this situation.” They go on and on and on about it.

This is also, what I’m about to tell you, very important if you have parents. Because if you have parents, the question becomes like – My mom lived till she was 97. If something happens to your parents, they lose their mind, so to speak, they have dementia, they have Alzheimer’s, and they can’t write their checks anymore or pay their bills, who’s going to take care of them? You can’t do anything for them, unless you have what I call the must-have documents. Not only a will, a living revocable trust, an advanced directive, and a durable power of attorney for healthcare. You must have those.

But most of the time, lawyers tell you, “All you need is a will.” Oh, give me a break. The less money you have, the more you need a living revocable trust because wills make it so that in most cases, if you own a piece of real estate or whatever it may be, your estate has to go through probate. Guess who gets the probate fees? The lawyer that told you all you need is a will. So a living revocable trust not only passes your assets from one person to another within a two-week period of time, no fees, nothing. But in case of an incapacity, it will say you can sign for so-and-so. So-and-so can sign for you. It sets up your estate every way you want it, and it also helps you because minors cannot inherit money.

So if you have young children, and both you and your spouse are killed in a car crash, something happens, the money can’t go to your minors. If you left your money to them via your will, good luck. It’s going to end up in a blocked account until they’re 18. So with that said, most trusts, if you go to see a trust lawyer, first of all, you have to know there are good trust lawyers. Most of them are not, are at least $2,500. Every time you make a change, $500, $1,000, you’re just sitting here talking to me about you don’t have even have enough money to pay your student loan debt. Where are you going to get $2,500 to do a will, a trust, an advanced directive, a durable power of attorney for healthcare? Every time you need to make a change, where are you going to get the money to do that?

So years ago, with my own trust lawyer, I created what’s called the must-have documents. These documents are my documents. If you were to look at my trust, my will, everything, you would see these. But I wanted to do it at a price that every single person could afford. So we created over $2,500 worth of state-of-the-art documents for approximately $69. What’s great about these documents, not only are they fabulous. Every time the law changes, they automatically get updated, but you can change it as many times as you want.

So if you go from one kid to two kids, you go back to your computer, you change them. So you never have to pay for it again. If you’re interested, really, in that offer, you can just go to suzeorman.com/offer. Through there, it’s $69. Otherwise, you’ll see it sold for $100, $90. They’re sold for all over the place. But these documents have changed the lives of millions and millions and millions of people over the years.

[00:29:28] TU: Yeah. I think it’s also important for our listeners just to consider the peace of mind of having all of this together. When you think about all of the things that are found in estate planning documents, and my wife and I went through this process we’ve talked about on the podcast before, where you put together insurance policy information and where your accounts are at and birth certificates and all of the papers that would need to be readily accessible, in addition to all of your estate planning documents. To get there and the conversations you have and the peace of mind it provides is incredible. Again, suzeorman.com/offer will get you there.

Suze, I want to wrap up our time together by talking about legacy, and I’m fascinated with learning more about what drives very successful, highly influential individuals such as yourself to take on the life’s mission and work that they do. So for you, as you look back on a career that is undeniably wildly successful and that has positively transformed the lives of millions of people, what is the legacy that you’re leaving?

[00:30:31] SO: I hope the legacy that I leave is that women in particular, but men as well, but women in particular really know that they are more capable than they have any idea, that they will never be powerful in life until they’re powerful over their own money, how they think about it, how they feel about it, and how they invest it, and that every one of them, one of them, has what it takes to be more and to have more. They just have to want to.

I don’t really know. I don’t know how to answer that because I never think about what I’m going to leave. I only really think about what I’m doing. I can tell you right now, like one of my friends said to me, “You just can’t help yourself, can you, Suze Orman?” So with the Women & Money podcast, people write in their emails. I keep saying, “I’m not going to answer them. I can’t answer all these emails.” Now, I’ve answered almost every one, except four. I’ve got four left, and then they’ll mount up again, and blah, blah, blah, blah.

But I have such a desire for every single woman and the men smart enough to listen, but really for every single woman to get the right advice, the best advice, to start to educate them so that they become smart enough, strong enough, secure enough. So they can start educating their daughters and their sisters and their aunts and their moms and their grandmas and everybody. So that we start really teaching one another because I’m just so afraid of where this world – Truthfully, the hatred in this world that we are experiencing right now, I am very afraid of where it’s going to take us next year. So I hope I leave a legacy of love and power. That’s what I really hope I leave.

[00:32:45] TU: Yeah. What really stands out to me, Suze, the work that you’re doing, and you alluded to this, is the generational impact that it’s having, and that will forever go on. I mean, that’s an amazing thing, when you think about transforming somebody’s personal financial life. Let’s say they’re a mother, and they pass it on to their kids and their friends and their cousins and their network, and that gets passed on to another generation. That is incredible transformational work that will forever have impact. So I thank you for that work, and I know it’s had an impact here on me in even having the opportunity to talk with you today.

To our listeners, as Suze mentioned, she responds to her requests as it relates to the podcast that she has each and every week, the Suze Orman’s Women & Money podcast. So if you have a question for Suze that we did not touch on during today’s show, make sure to reach out at [email protected].

Again, as a reminder, make sure to head on over to suzeorman.com, S-U-Z-E-O-R-M-A-N.com, where you can learn more about Suze, including her blog, the podcast, comprehensive resources, live events that she hosts, and books and products that are designed to help empower you in your own financial plan.

Suze, again, thank you so much for coming on the show, and I’m grateful for what you were able to share and the impact that it will have on our community. Thank you very much.

[00:34:04] SO: Anytime, boyfriend. Anytime.

[END OF INTERVIEW]

[00:34:07] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 287: Monetizing Your Clinical Expertise with Dr. Timothy Gauthier

Posted on December 22, 2022March 10, 2023 by Caitlin Boyle

Timothy Gauthier, antimicrobial stewardship pharmacist and pharmacy entrepreneur, discusses the genesis of IDStewardship.com and LearnAntibiotics.com, how he has monetized his clinical expertise to create passive revenue streams, and how he balances the demands of entrepreneurship with his personal and professional commitments.

About Today’s Guest

Timothy P. Gauthier, Pharm.D., BCPS, BCIDP is a pharmacist trained in infectious diseases and antimicrobial stewardship. He is a clinician, researcher, educator, and author. He is an advocate for antimicrobial stewardship and pharmacy education.

Dr. Gauthier graduated from Northeastern University’s School of Pharmacy (Boston, MA) in 2008. He then completed a Post-Graduate Year-1 Pharmacy Practice Residency and a Post-Graduate Year-2 Infectious Diseases Pharmacy Residency at Jackson Memorial Hospital (Miami, FL). Since finishing terminal training he has worked in academia (Nova Southeastern University, 2010-2015), clinical practice (Miami Veterans Affairs Healthcare System, 2015-2019), and a leadership role (Baptist Health South Florida, 2019-current), all focusing on advancing the fields of infectious diseases pharmacy and antimicrobial stewardship.

He holds certifications from the Board of Pharmacy Specialties for Pharmacotherapy and Infectious diseases. He has completed the Making A Difference in Infectious Diseases Pharmacotherapy Antimicrobial Stewardship Training Program.

He is the creator and editor-in-chief of www.IDstewardship.com, www.LearnAntibiotics.com, and the many @IDstewardship social media profiles. He co-hosts the #ASPchat each month on Twitter. He reaches thousands of people each day on the internet and on social media, where he aims share reliable and relevant information from the world of pharmacy and healthcare in general. IDstewardship.com alone has registered over 5,00,000 page views as of November 2022. He is also the author of the recently released book “Learn Antibiotics” which is now available for sale on Amazon.

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, welcomes antimicrobial stewardship pharmacist and fellow pharmacy entrepreneur, Tim Gauthier. Tim is the creator of IDStewarship.com and LearnAntibiotics.com. During the show, Tim and Tim discuss the genesis for creating these two learning platforms, how Tim has monetized his clinical experience to create passive streams of income, and how he manages to stay consistent in entrepreneurship while balancing a full-time pharmacy career and fulfilling personal life. Listeners will hear about Tim’s pathway to pharmacy, what drew him into the profession, his passion for infectious disease pharmacy, and what he was hoping to accomplish with his learning platforms, IDStwardship.com and LearnAntibiotics.com. Tim walks us through the content and resources available on his websites and how he has monetized them while providing a wealth of free content to his community. Making things passive and generating passive revenue streams is crucial to Tim, and he shares the tools and systems he has put in place to make that goal possible while balancing other obligations. Tim also discusses the incredible value of community and how he has built an active, engaged pharmacists community that contributes to the platforms in multiple ways. Tim closes with advice for pharmacists looking to follow a similar path in monetizing their clinical expertise.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] T. ULBRICH: Hey, everybody. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I had a chance to welcome antimicrobial stewardship pharmacist and fellow pharmacy entrepreneur, Tim Gauthier. Tim is the creator of IDStewardship.com and LearnAntibiotics.com. During the show, Tim and I talk about the genesis for creating these two learning platforms, how Tim has monetized his clinical expertise, and how he manages and leverages his time to be able to consistently put out good content while working full-time and fulfilling his personal commitments and goals.

Before we jump into the show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 250 households in 40-plus states. YFP Planning offers fee-only high-touch financial planning that is customized for the pharmacy professional. If you’re interested in learning more about how working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

All right, let’s jump into my interview with pharmacist and entrepreneur, Tim Gauthier.

[INTERVIEW]

[00:01:21] T. ULBRICH: Tim, welcome to the show.

[00:01:23] T. GAUTHIER: Hey, thanks for having me. I’m really excited to be here. How are you, Tim?

[00:01:26] T. ULBRICH: I’m well. I’m excited to dig into the work that you’re doing and for you to share with the YFP community how you’ve been monetizing your clinical expertise. But before we jump into that, I’d love to learn about your journey into pharmacy school, into the profession, where you went to school, when you graduated, and what drew you into the profession of pharmacy.

[00:01:44] T. GAUTHIER: Oh, yeah, of course. So I went to Northeastern University in Boston, Massachusetts and graduated in 2008, which feels like yesterday, but it’s been four years now. I got into pharmacy because I really was interested in microbiology. It turns out it’s easier to transfer into microbiology from pharmacy than pharmacy to microbiology. So I started in pharmacy. I ended up sticking with it. I never thought I’d go into infectious diseases pharmacy, just because it didn’t really cross my mind, and I didn’t know much about that early in my years.

Then later on, after PGY1, I had the opportunity to do a PGY2 in ID. Lo and behold, today, I’m an infectious diseases-obsessed pharmacist, who’s out there to defend antibiotics and promote clinical pharmacy. So here we are today.

[00:02:27] T. ULBRICH: So the Northeast, Tim, to Florida. This is the time of year in the Northeast. I grew up in the Buffalo area, where it’s beautiful. I always say six months out of the year, I’d live anywhere else. But the Midwest I’m at now or the Northeast. But the other six months, included this time of year, is absolutely gorgeous. So do you miss the seasons at all?

[00:02:49] T. GAUTHIER: I do miss the seasons, but the winter in Miami, Florida, where I live now, is just absolutely wonderful. I love the culture, as well as all the different types of food here. We do visit. Periodically, I go to Boston, Rhode Island, Connecticut and stuff. So it’s nice to be able to have a little bit of the best of both worlds.

[00:03:06] T. ULBRICH: Yeah, yeah. So we connected several years back, and I’ve been following your work for some time. I wanted to bring you out in the show, as I think what you’ve built is a really cool example of how pharmacists can monetize their clinical expertise. Certainly, as we’ll talk about, it’s not just about the money, but it’s being able to leverage the skills, the passion, the interest that you have to fill a gap in the market and to help people looking to learn more about a topic.

Here, we’re going to be talking about infectious disease, of course, and we have featured a variety of individuals on the podcasts over the past year or so. So I’m excited to share your journey as well. So let’s start with IDStewardship.com. When and why did you start it? Who was it for? What were you hoping to accomplish?

[00:03:49] T. GAUTHIER: Yeah. So IDStewardship.com has been alive since about 2016, and I just had a friend who knew how to build websites, and I wanted to build something on my own, and he offered to help and put it together. Then I kind of took off from there, and I do pretty much everything on my own now. When I have a technical problem, he comes in? But why did I do it? There’s a couple of reasons.

One is I wanted to own my own space on the Internet, where I could have a voice, where I could publish things and not be restricted by a company or a manager or a group of people. Also, I just really enjoy your writing. So it gave me an opportunity to use a different part of my brain on the weekends and in the evening hours to share information that could be open access and someone else could benefit from. There’s a huge need in pharmacy. It has been for us to share our experiences and practical advice and insights so that others can learn and grow from it.

Also, just sharing information about antibiotics to make it easier for people to understand what drugs can I use for MRSA or Pseudomonas. But then some deeper things like what are five things to know about, I don’t know, Stenotrophomonas or Acinetobacter. So really, it’s just a myriad of content these days. If you’re a pharmacy professional, if you’re a healthcare professional, there’s some stuff on there that you’ll be interested in. If you’re just looking for fun stuff, there’s a drug name emoji that people really, really seem to enjoy.

[00:05:03] T. ULBRICH: So I’m trying to understand, Tim, the need you’re filling with this resource. So obviously, we all went through ID curriculums in our PharmD program. There are there are PGY2 residencies that focus on this fellowships who focus on this. Certainly, there are associations or interest groups within associations that focus on this. So what is different here that you’re trying to carve out to fill a need that you felt like either wasn’t being met for you or for other clinicians through those other learning pathways?

[00:05:32] T. GAUTHIER: Yeah. I didn’t do very well in ID in pharmacy school, ironically, and I didn’t feel comfortable with it until I was like halfway through my PGY2. Practical resources that are available that are insightful and that consider the things that are beyond just the obvious, those were lacking. That really motivated me to try to put out things that were interesting. But also, like when you go to practice, these are five things you need to know about [inaudible 00:05:55] come across [inaudible 00:05:57]. I think that the community has received it really well, but I use social media to amplify that voice in different social media platforms.

So it’s been a really rewarding experience, and collaborating with others from around the world has been something an area of success, I think, to be part of kind of the community that I’ve built. But I have a lot of flexibility, and that’s one thing that a lot of organizations don’t have.

[00:06:21] T. ULBRICH: Yes, yeah. The digestible nature of the content strikes me. You’ve alluded to it a couple of times with examples you’ve given thus far in the show. It reminds me of one of the pharmacist we’ve had on this show, Kelley Carlstrom, on episode 217. Her business called KelleyCPharmD. She does an awesome job of this in the pharmacy space, specifically in oncology practice, making it accessible, no matter where you are. She trained at the Cleveland Clinic, an internationally recognized institution. Not everyone can go do your residency there, right? Has the time to commit, potentially has to travel to do that.

Her vision really is what about all the other hospitals? What about all the rural healthcare settings that are trying to treat patients and get their clinical staff up to speed? Or perhaps different practice models that don’t have a lineup of board certified residency trained pharmacists with multiple credentials? How can we expand the accessibility of this content? That’s one of things I love about what you’re doing here, and it really does strike me as being much more accessible than what is out there and some more traditional training programs or those that are offered by other groups.

It’s also written and presented in a way that is easy to understand. It’s relevant. It’s things that, Tim, you’re experiencing daily as a clinician yourself or encounters when you’re precepting residents or students. So you know the pain points. You know the questions, the problems, the points of confusion because you’re living them each day. I love the platform of what you built to address that.

So take us, Tim, through IDStewardship.com, in terms of the content you have, the resources you offer, and how you’ve been able to monetize it, right? You give out a lot of great content for free. But you also been able to monetize the site and enable to reap some of the fruit for all the work that you’re putting in, and you’ve put in over the last seven years. So talk to us about what you offer and provide on the site and how you’ve been able to monetize that.

[00:08:14] T. GAUTHIER: Yeah. I offered way too much stuff for free, probably. But exactly like an altruistic passion project, it has to make some kind of money for my wife to allow me to continue it. So definitely, it’s a mixed bag. But the art of the IDStewardship.com offers articles, which are blog articles talking about the student experience, the pharmacist experience, clinical insights into common questions that we ask and that we see. Those are always written by content experts who have practical experience in the area, and I vet all that content to make sure it’s reliable, credible, and it goes beyond like the obvious content that you might find in a general article.

Also, there’s a study guide section, which is free and open access that has a picture of the drug, some of my key points, which I think you might find on your pharmacy school exams or maybe the BCPS or BCIDP exam and then links to some of the articles or some of the guidelines that are really relevant to that drug. I have a list of resources, which is pretty cool. If you’re looking for anything about antibiotics, that is a very robust list of resources. So like hepatitis C screening for Child-Pugh score. There’s a calculator in there. Just pick one random example. Or even if you’re looking for regulatory content from the Joint Commission, it’s linked there.

I also have the contributor section, where you can see who’s participated, and there’s really a lot of contributors to my website. So I do want to emphasize that that’s a really cool part of what I’ve been able to do, and it’s not just Tim doing it. It’s the community. But I kind of lead it because I’m kind of like the editor in chief of the content founder. The other part, though, which I really want to talk about for a second is LearnAntibiotics.com. So I’ve taken the opportunity to show people that, yes, these are articles that are available. But I’ve been able to produce content that you can use for learning. As a background in academia, I know that you have to go and be able to identify and define before you can analyze and assess and predict.

So I’ve built content specifically to help people through that learning process. If you’re looking to identify and define, I have cheat sheets on different disease states, on different drug classes. Those can help people to say, okay, like, “Pseudomonas drugs, these are my drugs.” But then I also make more fun content that has like a word search or a Jeopardy game. Those can be applied to the specific area. Then the practice tests I’ve built so that if you are able to pass that practice test, you can practice pretty competently as a pharmacist and know what questions to ask for infectious diseases and even some of them I’ll give you. Here’s the question, here’s the answer, and here’s the rationale for why each answer is right, and each answer is wrong. So it’s pretty robust.

[00:10:59] T. ULBRICH: I love that and I want to come back in a little bit to talk more about the LearnAntibiotics.com, in terms of what you’re trying to accomplish there. I think that’s going to give some folks some interesting ideas about as you’re considering monetizing your clinical expertise, there’s a lot of different ways to do that. I love what you’ve built there with that membership type of model.

Two words, Tim, that really stand out about what you’ve built and the vision that you have going forward are passion and community. You mentioned community just a moment ago, and I love that you’ve brought together a group of people that are, obviously, passionate about learning more about antimicrobial stewardship, learning more about infectious disease, bringing in contributors to the site, taking them from just a passive learner, to engaging them in the conversation, contributing to the community, and then passion. Your passion for this topic and furthering individuals’ knowledge and, obviously, the more our healthcare professionals know about this topic, the better they’re able to serve their patients.

I think this is so important for folks to hear, when you’re working on a side hustle or a business, especially when you’re working a full-time job, you have lots of other commitments, doing something that you’re passionate about, you mentioned that I probably got too much free content out there, right? It’s a passion project for you. Yes, you’re monetizing it. But that is going to really drive the energy and the enthusiasm to continue to build, especially in the early years, as someone who’s trying to get something off the ground.

Tim, as people go to IDStewardship.com and they see what you’ve built over several years, how much of this is what you have built and maintained? And how much of this is what you have other people that are helping you in building and maintaining the site?

[00:12:36] T. GAUTHIER: That’s a great question, and it’s definitely changed over time. When I started to look at developing a website, I talked to one of my friends who’s in website development, and he said, “Tim, we can do a website. But this is not a six-month thing, and this is not a one-year thing. This is like a 10-year journey, and you have to think of it very long-term.” So taking small bites has been one of the keys to success. As I’ve understood the workflows on developing different items, it’s gotten to be more efficient over time. I do produce actually the majority of the content on my own when it comes to the background work.

But the one thing that people send to the community of pharmacists, they’re willing to be a part of this journey. Them sending me articles and communicating with me and offering their assistance and trying to get their message out and share their passion, that really has enabled me to produce more content and put more information out there. But it is a tremendous amount of work. I do spend a lot of time between the hours of 8:00 PM and 11:00 PM working on this type of stuff. I think if you don’t have the passion for it, it’s probably going to be hard to do it long term.

But that’s what drives me because I just really am totally obsessed with infectious diseases and microbial stewardship, and I think people need help learning. I needed a lot of help learning. I see where there’s benefit. I see where there’s value. There’s some monetary benefit that comes with it. It’s not anything that’s extreme by any means. But by having that win-win, it’s really been something that I think has been worth pursuing.

One of the secrets that they say is not to do things alone, right? If you’re going to build a program like this, or you’re going to build a side business. I have mixed feelings about that. On one hand, I love the freedom that I have. I have total creative freedom to do whatever I want, whenever I want, with no one arguing with me. But at the same time, being in an echo chamber with yourself is not always a positive thing, and having a partner can push you in good directions. So I think partnerships are important, and you can choose to pursue things as a partnership or as an individual.

Something else I want to note that as I built out what I have online with IDStewardship is I’ve really purposely tried to make it about the brand and not about me. That kind of protects me in a way because the voice is the voice of the brand and not the voice of the individual. Also, people can engage within behind that brand and be a part of the community again, rather than it being part of what Tim is doing. So that was actually very strategic in the development.

[00:15:02] T. ULBRICH: Yeah, Tim. I think that’s a strategic move for the reason you mentioned also. I think about the passion and the mission of what you’re trying to do. Like there may be a day where maybe this isn’t only Tim who’s doing this. Or for whatever reason, you have others that are involved in the mission of advancing the education around IDStewardship and being able to have this information accessible, where folks can learn and perhaps be excited about learning it I think transcends just one person, right? So I think the contributors is another important aspect here of what you’ve highlighted.

[00:15:34] T. GAUTHIER: Like making things passive is also really important to me. I’ve learned that a lot during COVID because COVID has been absolutely horrible for all infectious diseases pharmacists and time management and when life was balanced. I mean, everybody in general. But I mean, trying to keep up with the literature and be engaged, on top of having this site and stuff going on, I need things to be able to put on pause, right? If I have no commitments that I’ve made, that’s not going to serve me well in the long term. So I really try to do things that are passive whenever possible and then only commit to like a couple of things at a time.

[00:16:05] T. ULBRICH: Yeah. One other thing I was thinking about, Tim, as I was looking at your site, that would be I think good advice for folks that are thinking about building their own, especially if they don’t have a huge budget upfront to be able to hire a web developer. If you’re building a content-based site, it could be blog articles that you’re adding, podcasts that you’re adding, e-resources that you’re adding checklists, guides, e-books, whatever, like you want to make sure you’re building it in a way that you understand and can add to it on a regular basis.

So even if you’re working with a developer or a contractor to help you, making sure you have enough understanding of the back end so that you’re not spending a whole lot of money long-term or frustrated that each time you’re trying to add a piece of content to the site, whether that’s a blog, podcast, an opt-in guide, whatever be the case, that you want to be able to have something that’s nimble, and you can add to over time.

[00:16:51] T. GAUTHIER: I’ve seen some people who built 20,000, 25,000-dollar websites, and they tend to be the people that follow a lot of podcasters in the space of like social media and engagement and business development. So I think if you’re committed to it, it can be worth the money. But you got to proceed with caution.

[00:17:10] T. ULBRICH: When I go to the site, Tim, and you mentioned already that LearnAantibiotics.com, www.learnantibiotics.com, we’ll link to that in the show notes, which takes you over to the IDStewardship site, that really is the membership portion of the site, where folks can be engaging with the community on an ongoing basis. Obviously, the goal there is that becomes some stability of recurring revenue that supports a lot of the time and effort and the free content that you’re putting out there.

Talk to us about – I think in content marketing, and I hesitate to use that word because I feel like you’re leading with such good passion and education that sometimes that word can sound dirty. But ultimately, the value that you’re providing and really good free rich education is naturally going to make people aware of what you’re doing on the membership side, which has a recurring revenue potential.

So what has your strategy or approach been to connect the free content with the membership model? Is it just that, hey, more eyeballs on the site and value that they’ll kind of find their way over there? Is it opt-ins that then point people to that resource? Tell us more about the strategy that you’ve employed to connect the free education people are viewing and receiving with some of the paid options you have.

[00:18:24] T. GAUTHIER: For sure. As you’re saying, this, I’m thinking about how I need to be more strategic. Sometimes, just go with the flow. That feels good. That feels good. Sometimes, I think of things, and I’m like, “Oh, I wish I had done that.” Even right now, there’s a list of things that if I had the time in my life to do, I would totally do.

But in general, what I try to do is capture a large audience and engage a large audience and do that through all these different ways that I think of, whether it’s something that’s like a clickable link on an Instagram story, or it’s a new blog post that I put out, or it’s putting a meme out there or just sharing like, “Hey, here’s like a part of my cheat sheet. If you’d like to see more of it like, shoot me your email address. I’ll shoot you a copy of this cheat sheet in full.” Then I have a way to communicate with those individuals. So if you’re just interested in the LearnAntibotics site or you’re interested in like all of IDStewardship, and you want to get our monthly newsletter, I’m able to reach you that way.

Another thing that’s important about having a mail listing is that if like tomorrow, Instagram decides to just delete my account, which they can’t, I have nothing. I’m left with nothing. Whereas since I have a Mailchimp account, they’re able to house my ability to communicate with my people. So in general, I provide something for free. I get the ability to contact these people. If you want to unsubscribe, I have no problem with that. Actually, when people unsubscribe, I don’t have to pay for you to be on my listserv anymore. I actually don’t mind at all. So if you don’t look at the newsletters we send out, feel free to unsubscribe. But if you want to subscribe, then we’d love to communicate with you.

I think that’s kind of the most important thing I’ve learned when it comes to telling people you have something to share with them, showing them that it’s meaningful, getting them excited about it, showing them that you’re a reliable person that has the know-how to get them the resource that they need to succeed. That is really critical. So that’s kind of some of the messaging there.

[00:20:18] T. ULBRICH: Yeah. I think one of the other things you’ve done really well, Tim, that I admire is you’re consistent in your content. We know and we’ll talk in a moment about how you balance time with other personal responsibilities. None of us are perfect and consistent in delivering the same amount of material, but you’ve been consistent over the years in terms of there’s not months and months of like quiet phases, and then you dump a bunch of content.

I think that’s so important for any – If we think about communities we like to be a part of or content we like to follow, it’s a consistent offering that we’re engaging with that content. So as you’re getting started, as someone’s getting started, I think thinking about what is – Once you decide on the medium, is it a blog, is it a podcast, whatever you’re looking at, is it something like a vlog, what is going to be your rhythm roughly that you’re going to be delivering content and making sure you’re showing up on a consistent basis with your audience and those that are finding value from what you’re doing?

[00:21:10] T. GAUTHIER: Along those lines, I think listening to your community is important. I had someone email me recently and say, “Hey, Tim. I wish you had a malaria cheat sheet because I’m studying for the BCIDP exam or the BCPS exam,” I forget which. I made one that weekend, and I really enjoyed it. I thought it was super interesting. I learned a bunch about malaria. So not only does it like help people advance their professional goals. It helps me remember things. I use my websites all the time to remember some of these nuances that are details that are just – You can’t remember everything.

[00:21:40] T. ULBRICH: That’s where I think the community piece comes in well too. You’ve got a good social media following. I’m sure people reach out to your questions all the time. You have students on rotation. You start to put some of those repeated questions into content buckets, right? I know you have a list of running content ideas. I’m sure you do. But once you hear a question more than one, two, or three times, it’s like, all right, maybe there’s something here in terms of a piece of content that we should be putting out.

Let’s talk about time and balancing doing this. You’ve certainly made a strong case that there’s a lot of passion behind it. But nonetheless, like you’ve got a family. You’re working a full-time job. You’re precepting residents, students. You have expectations at home and at work. Like what strategies have you employed time blocking, or how have you been able to really leverage time so that you can continue to put out content on a consistent basis while working full-time?

[00:22:31] T. GAUTHIER: Yeah. Well, in the early days, and I was working at the Veterans Affairs Hospital in Miami, and they’re very strict in terms of their hours. So when you’re off duty, you’re off time. So everything that I did in the beginning was during off hours. That’s still the same today, but it taught me that you should only work on these things when you’re not on company resources, etc.

But then I didn’t have small children in the early days, which meant I have had a lot more time, especially in the evening areas of the day. More recently, I have a three-year-old and a seven-year-old, and the evening hours are much more strenuous. So now, since we’ve developed more of an awareness in the community about IDStewardship, I reach out to people. When I see an article posted on like Twitter about something new that I’m interested in, I’ll reach out to the person who authored the article and say, “Hey, I’d love to have you write five things to know about whatever the topic is.”

People almost always say yes because they want to share their passion. But it’s not just about me getting content. They now have a way to share that information. Sometimes, it’s the resident or the student or the second or third author that I work with. So they get an opportunity to share their voice. Coming up with strategies where I don’t have to do all the work has been one thing. Then also, like when you look at the development of like research and scholarly work in an academic position, you kind of look at it like a conveyor belt, and you want projects in all areas of your conveyor belt.

Some things are in – You’re designing. What do you think it might look like, and you have your concepts, your list of projects? Then other things are going into publication, going out on the newsletter. So you’re constantly just like feeding that conveyor belt and keeping it going in different areas, and that’s how you stay productive over a long period of time. It’s not about taking one thing and rushing it forward but just maintaining that conveyor belt. There might be different conveyor belts that go faster or slower, and some things might take two years to do.

But I always move forward with projects based upon what I think is like fun and interesting, and I don’t put pressure on people. I’m not out there saying, “Hey, if you don’t get back to me in two weeks, you’re not going to be allowed to do this.” If you don’t feel like doing this later because you have a problem, whatever. Don’t do it. If you want to circle back in two years, circle back into years, like no pressure.

[00:24:39] T. ULBRICH: Take us a little bit behind the scenes. I think one of the barriers that folks run into is they’re just trying to get started, and they go to someone’s site. They don’t necessarily have a picture of what are some of the tools and the systems and the processes that you have in place. You’ve mentioned a couple things already. Obviously, you’ve got the website infrastructure. You mentioned the email list. So like for us, we use WordPress for our website build. We use Bluehost for our domain hosting. We use ActiveCampaign for our email marketing. Then we have several other tools we use for project management and other things.

So what are some of the tools that you use or that you have found to be helpful as you’ve been working on IDStewardship?

[00:25:18] T. GAUTHIER: Yeah, for sure. I use WordPress, and then I use WPX Hosting. Then for like the memberships, it’s PMPro or Paid Memberships Pro. I’ve been pretty happy with those overall. The WordPress in particular, it’s just overall really easy to use. You add a plug in. It updates. It’s no big deal. WPX is really – Once a year, I pay a fee. Once in a while, I’ll have a bandwidth issue. So I’ve learned that I need to downsize the images that I use when I post, which I think a lot of people kind of learn that lesson.

I mean, that’s really the gist of it. Outside that, I use Mailchimp for my emails. I don’t really love how much they charge. I think they’re charging me like 250 a month for like 25,000 subscribers. So it’s great to have that many subscribers, but it doesn’t feel good paying $2,500 a year for that. But it also motivates me to put out content to use that tool that I’m paying for. So those are some of the key things that I’m using now.

Otherwise, I just maintained like Excel sheets for a while. In the beginning, when I didn’t have as much content, I would do a lineup, and I would remind myself of when I posted to Facebook about a specific blog post, and I would just keep cycling through them. So I was always posting like one thing a day on Facebook. But it’s gotten to the point that I can’t do that anymore. I’d need to hire like a social media manager or something like that. I think as you grow, you need to start considering how can you work with who can you bring in.

Another thing is as I’ve kind of met people in life through my way or through other venues, I work with them. So I just met a guy over the weekend that he prints things for a living, right? So there’s so much opportunity for us to collaborate with printing things. My audience is interested in topics of pharmacy and infectious diseases. So being entrepreneurial is one of the definitely keys to success here and also not being stuck in your ways, being able to evaluate things, and then accept feedback. If it’s not going well and someone tells you it’s not going well, take that advice and see how you can make it better and ask them, “Hey, how can I make this better?”

[00:27:13] T. ULBRICH: Yes, great advice, Tim. I think for people that are listening, and they hear 25,000 people on an email list and again not getting paralyzed from Jump Street. I think I love what you shared of it was a spreadsheet to begin with, right? I’ve shared before on this podcast that the first 100 subscribers on our email list were a combination of text messages and Facebook messages and LinkedIn posts that I had, and that eventually got added to an email software. Eventually, we added automations. Eventually, we added opt-in funnels and all those things, project management, social media management tools, things like that. But just getting started, you can do a lot of that manually. Get some of the things off the ground. Then as you get momentum, you can build out the systems and the processes that will help with efficiencies.

Tim, if someone is listening and they are on the very front end of this, so let’s just pick another specialty that’s out there, and they’re thinking, “I’d love to build something in this domain, similar to what I see Tim doing with IDStewardship, Kelley doing with oncology. I also think about what Jimmy Pruitt’s doing with acute care out there in pharmacy,” like what advice would you have with them at the very beginning of their journey? If you think back to where you were when you started in 2015, like now looking back seven years later, like what piece of advice would you have to share with them as they get started on this journey?

[00:28:33] T. GAUTHIER: Well, I mean, first of all, not just because I – If I say something, it doesn’t mean it’s necessarily true. So it’s just my opinion on some of this. So feel free to disagree. But one thing I feel is that, especially when it comes to social media, people go on Twitter, on TikTok, on Facebook because they’re looking for things for themselves. So if you’re not putting out things that are going to be interesting to your audience, then your audience is not going to grow like they should.

So everything that you do, no matter what you’re doing, should be aligned with why your audience is going to that area, and that’s going to help to get them to like it, get them to share it, which is very, very difficult in the pharmacy profession. We’re like 90% passive users. We love to learn.

[00:29:11] T. ULBRICH: That’s right.

[00:29:13] T. GAUTHIER: I’ll post something on Facebook, man, and it’s like five likes. But then I’ll see that I got 250 link clicks. So it’s very interesting. From an outside, you might look at my Facebook page or something and say, “Oh, I got a couple of likes or clicks,” and you can’t see the clicks, but you’ll only see a couple of likes, and they got lots of clicks. So it’s kind of one thing that’s important, I think, as you’re starting off.

Another thing about starting off would probably be considered like long-term how you’re going to grow, and you’re talking about the design of your product. I think that core message and that core what am I doing here is really important. Over time, is that going to change? Because if it’s focused on something that’s relevant now like COVID, for example, or monkeypox, maybe that’s not relevant in two years from now.

[00:29:59] T. ULBRICH: It’s pretty cool. Yep, absolutely. That’s great stuff, Tim. I’m excited for our listeners, if they’re not already aware to follow the journey, and I hope they’ll opt in your newsletter. Where is the best place that folks can go to follow you and the journey and the work that you’re doing?

[00:30:16] T. GAUTHIER: Yeah. I mean, definitely IDStewardship.com, and you can sign up for our newsletter there or just follow along on Instagram or our Facebook or goods areas. Twitter, you can find me there as well. It’s a little bit more focused on infectious diseases and as a whole and staying up with the literature on Twitter. So either of those but the newsletters are really a good place to start.

[00:30:37] T. ULBRICH: Awesome. Thanks, Tim. Appreciate you taking time to come on the show.

[00:30:39] T. GAUTHIER: Oh, it was my pleasure. We’ve worked together for so long over the years. It’s really a wonderful opportunity for me, and I appreciate your time.

[00:30:46] T. ULBRICH: Thank you.

[END OF INTERVIEW]

[00:30:47] T. ULBRICH: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 286: YFP Planning Case Study #5: Modeling Retirement Scenarios and How to Handle a Large Cash Position

Posted on December 15, 2022March 10, 2023 by Caitlin Boyle

YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP® is joined by Kelly Reddy-Heffner, CFP®, CSLP®, CDFA®, and Christina Slavonik, CFP® to discuss retirement scenarios and how to handle a large cash position in this YFP Planning Case Study.

About Today’s Guests

Kelly Reddy-Heffner, CFP®, CSLP®, CDFA®

Kelly Reddy-Heffner, CFP®, CSLP®, CDFA® is a Lead Planner at YFP Planning. She enjoys time with her husband and two sons, riding her bike, running, and keeping after her pup ‘Fred Rogers.’ Kelly loves to cheer on her favorite team, plan travel, and ironically loves great food but does not enjoy cooking at all. She volunteers in her community as part of the Chambersburg Rotary. Kelly believes that there are no quick fixes to financial confidence, and no guarantees on investment returns, but there is value in seeking trusted advice to get where you want to go. Kelly’s mission is to help clients go confidently toward their happy place.

Christina Slavonik, CFP®

Christina is a Certified Financial Planner™ located in Texas and has over 15 years of financial planning and industry experience. She received her Certificate in Financial Planning from Southern Methodist University.

Christina is passionate about helping clients live their best lives now while not losing sight of the future. She enjoys the collaborative approach of creating a custom financial plan with her team at YFP.

Episode Summary

YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP®, is joined by Kelly Reddy-Heffner, CFP®, CSLP®, CDFA®, and Christina Slavonik, CFP® to discuss various retirement scenarios and how to handle a large cash position in this YFP Planning Case Study. Tim Baker introduces the fifth case study, examining the fictitious couple, Jane Smith and Tyra Lee, from Westchester, Pennsylvania. Jane, age 59, is a Certified Registered Nurse Anesthetist, and Tyra, age 60, is a pharmacist working part-time. Jane and Tyra also have two teenage boys, Thomas and Robert. During the discussion on this case study, listeners will learn about the couple’s plans to retire in three to five years, earlier than previously expected. Tim, Kelly, and Christina discuss options for care and long-term care insurance concerning Jane’s elderly mother, college plans, and a recent car purchase for their children. The discussion leads to considerations for how the couple might handle their massive cash position and whether or not to pay off debts with their reserves. Tim, Kelly, and Christina talk through the couple’s housing situation as they transition to retirement, their plans for purchasing a cabin or potential forever home, and how that may impact the financial plan.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TB: You’re listening to the Your Financial Pharmacist Podcast, a show all about inspiring you, the pharmacy professional on your path towards achieving financial freedom.

Hi, I’m Tim Baker and today I chat with two important team members at YFP planning Kelly Reddy-Heffner and Christina Slavonik, both CFPs.

In this episode, we discuss our fifth case study of a fictitious couple Jane Smith and Tyra Lee, and their teenage kids Thomas and Robert. Jane is 59 and is a certified registered nurse anesthetist while Tyra, age 60, is a pharmacist working part time. We cover a bevy of topics that include in retirement in three to five years, where we model out different scenarios using our financial planning software. We chat about long-term care insurance, how to handle their massive cash position, and whether they should pay off some debt, their housing situation as they transition into retirement, college planning for the boys, and potentially how to handle care for Jane’s elder mother.

[INTERVIEW]

[00:00:58] TB: What’s up everybody? Welcome to YFP planning case study number five. So, I am joined today by Christina Slavonik and Kelly Reddy-Heffner, two of our CFPs on the YFP planning team. So, Kelly and Christina, welcome.

[00:01:14] CS: Thank you, Tim.

[00:01:15] KRH: Thanks, Tim.

[00:01:17] TB: So, we are recording this right before Thanksgiving. So, excited to get this recorded in the books and then enjoy some time off with family. I just would like to say that we are very thankful for all the listeners out there, thankful for the community that we’ve built, thankful for the two of you, Christina and Kelly being part of the team. And yeah, just really excited for the upcoming holiday season. Let’s jump into it.

So today, we are exploring a couple in Westchester, Pennsylvania, Jane Smith, and Tyra Lee. So, Christina, you’re going to take us through the first part of the fact pattern, Kelly is going to get into goals. And then, I’m going to talk about the wealth building, wealth protection tax and some of the miscellaneous stuff. And then we are going to dissect this client case study and see what are some planning opportunities? What are the things that should be discussed with the client, that we should really get in front of to make sure that they are on track with their financial plan? So, Christina, if you please kick us off on Jane Smith and Tyra Lee.

[00:02:18] CS: Sure. So, the clients we’re looking at today are Jane Smith, who is a CRNA, aged 59, makes about 194,000 a year and Tyra Lee, who’s a part time pharmacist, age 60, salary is 65,000. They are married filing jointly. They have two sons. I have Thomas, who is age 17, and is currently a student, and Robert, who was 14 and currently a student as well. They reside in Westchester, Pennsylvania, annual gross income is 259,000, which breaks down into monthly around 22,000, and then net after taxes and whatnot, 15,000.

Expenses for these people are fixed at about $5,977 a month. Variable expenses are the 4,500 a month, and the savings of about 4,400 or so. Their current living situation is they’re in a five-bedroom, single-family home outside of Philadelphia. They apparently have a great first floor master. And if Jane’s mom had to move in, they could accommodate her as she is ill and cash resources are currently limited.

[00:03:37] KRH: Complicated, right? This seems like a scenario that we’re seeing a little bit more of with some of our like pre-retiree clients, just that intersection between nearly adult children, but not quite adult and parents kind of having some needs as well. They both would like to retire over the next couple years. But they are thinking through making sure the children are taken care of, parent needs are also taken care of. They have a fairly large cash position and are not sure if they should leave it in cash or pay off some things. They have that home in Philadelphia that they like, it’s functional, but they’re not sure that this is the forever home where they want to stay indefinitely.

With the kid’s college tuitions, one tuition has is about to start, I think based on the age. One is a little bit further in the future, but they kind of want to see what the 529s are going to cover, and what they can maybe do out of pocket and what they simply can’t do. They’ve asked about long-term care insurance, kind of understanding the premiums and how those could change in the future. They might want to buy a lake cabin, maybe that could be the forever home or the primary residents. If they wanted to retire earlier, they had started at age 65. Could they do it like 62, 63? They’ve got a little bit of debt. They have a car note for their own vehicle, 1.9% interest rate. There’s three years left on that note. They also bought a car for the teenage children, so there is a payment of 545 per month, interest rates 2.25, three years also left on that. Obviously, they made those purchases prior to our current interest rates, or it would be much higher. They also have a reasonable interest rate on their mortgage at 2.75. But it is a pretty recent purchase. So, the amount left on the mortgage is pretty high and that monthly payment is 2,858. So, early in that, and that’s one of their questions.

[00:05:58] TB: So, picking up on the asset side of the of the ledger, Kelly had mentioned that they do have a good amount of savings tucked away. So, 143,000 in a joint savings account, 3,000 in check in, and then another 9,000 in an HAS that’s Jane’s. From a 401(k) perspective, looks like Jane is putting in 11%, which is the max for 2022, 20,500 into her fidelity 401(k) through her employer that’s invested in a target date fund for 2030. Tyra also has a 401(k). She’s putting in 31.5%, which is also max amount of 20,500.

Now, for the two of them, one of the things we’ll talk about that you have a catch up available if they want to do that, but she’s also her Vanguard, she’s in a Vanguard target date 2030. Jane has a Roth IRA. This is from a previous employer. It’s invested in a Vanguard 2030 fund. She’s not contributing anything to that presently. Tyra has a SEP IRA from her previous consulting work as a pharmacist. It’s 100% in the S&P 500. So obviously, there’s some little bit differences there in their allocation. And then they also have a taxable account that they’re putting in about two grand a year, $167 a month into a Vanguard target date 2060 fund.

So, it looks like this is going to be maybe a retirement fund, maybe for the boys. We have to kind of get some clarity on that. They do have a primary home that’s valued at 920,000 versus the 683,000 and change that’s left. And then, looking to potentially, maybe buyout another property that they could transition to. We’ll talk about that in a bit.

Overall, you’re looking at total assets, about 1.9 million, total liabilities of just over 725,000. So, net worth is about $1.25 million. We look at the wealth protection stuff. Jane has an individual policy, 1.5 million that expires at age 65. She also has a group policy through employer which is one-time income 194,000. Tyra has a $750,000 policy that also expires at age 65. And then she also has a onetime group policy through employer which is 65,000. They both have short term and long-term disability through their employer that pays out a 60% benefit for short term and long-term disability. They both have their own professional liability policies. And the estate planning documents are up to date.

But one of the things that they’re not sure of is if Jane’s mother has anything, which obviously can affect their financial plan. From a tax perspective, they use YFP Tax. So, thank you very much for that. They’re concerned about their pretax retirement investments and when Roth conversions might be helpful, so obviously there could be time where they’re maybe sunset into retirement, so they might be in a lower tax bracket. So, it might be beneficial to convert some funds over to the Roth. And then Tyra is willing to work more over the next several years if both can retire early. They’re wondering if they should pay off their debt based on the interest rates, and they also want to make sure that they are maximizing the FASFA for their sons.

So, a lot of stuff to talk about. What are the big things, I guess for you, Kelly, that jump out, that you would want to tackle first with regard to Jane and Tyra?

[00:09:07] KRH: Probably the first two is just like the taxable account, the cash position, like having a good understanding of what they have those in place for. Is it a future expense that’s very short term? Is it something more intermediate where we could do a little bit more with those resources? I do think for the wealth building, probably three of the investments are okay-ish, like the target date funds of 2030. I would want to just double check what’s in those funds, make sure they’re close to the right asset allocation, but the SEP IRA for retirement is a little bit more aggressive than it should be for their age, and I suspect the Vanguard target date 2060 potentially could be as well. That seems to make it seem like it’s for retirement, if it’s in the target date fund, but something that I would agree should be confirmed, for sure. But also, what Jane’s mother’s need is, I think, if some of the cash has been earmarked towards helping with some of her care, that would make a difference in kind of the recommendations for how to best put it to work, short term, midterm or long term.

[00:10:27] TB: My thoughts on the on the estate plan documents. I definitely would run out would want to run those to ground. We had some content about a book about how your parent’s estate planning or lack thereof can really affect your own financial plan. “Mom and Dad, we need to talk.” We can link that into the show notes. But I think that’s a vulnerability, and we want to make sure that that’s lined up. So, we’re not having to sue for conservative ship or do things that, if those documents are in place, are really going to put us in a bind later on.

From an asset allocation perspective, Christina, how would you broach this subject? Because obviously, there’s, Kelly’s point, digging in to fidelity 2030 target date fund, Vanguard target, not all target date funds are created equal. We have one that 2030 is probably a little bit – we’re going to be a little bit more conservative than the S&P 500, or the 2060. So, what would be your process to kind of get them in the right model right now, three to five years from retirement, they’re probably going to want to be the most conservative that they ever want to be. Because if the market dips now, it’s very hard to uncover, and that’s where we have to start having conversations of potentially pushing retirement age back, which is not a fun conversation to have. So, from an asset allocation perspective, how would you tackle that with Jane and Tyra?

[00:11:46] CS: Sure. So, first thing I’d want to look at is taking a deeper dive, like what exactly is built into these target date funds? How are they allocated? Mostly looking at the ratio of equities to bonds. So, someone who’s about three to five years out, they can be a little risky, but we want to see more of the bond exposure. Things starting to dial back, their savings years, so maybe looking more at a 60% equity, 60% to 70%, equity 30% to 40% bond allocation for them. And yeah, and then revisiting the S&P 500, for sure, since that is definitely a lot more aggressive than we would want them to be invested at the moment.

Also, another thing to consider too, Tim is we got to get people thinking too, what does my cash needs? What are those going to look like, as I’m getting closer to retirement? So, yeah, we might have some money earmarked that we could be investing, but we still need to have money set aside for emergency fund. Maybe, as you get closer to the retirement date, like have at least a year or so of cash saved up, that is one thing that we’re considering keeping it in a money market, or high yield savings type of environment as well.

[00:13:06] TB: Yeah, for sure. I mean, I think really looking at our processes to really look at the investments by approaching the client with a risk tolerance and seeing what comes out there. And then kind of comparing that to what we think their risk capacity is. So, risk capacity being like, what is the risk that they should be taking? The risk tolerances, what is the risk that they want to take? And they should be taken to your point, Christine, a lot less risk, because we want to really protect that principle. We don’t want to lose anything, and potentially have to push back the retirement or do something different because of where the markets are going.

So, I think foundationally, making sure that that’s there is going to be really important. And to Kelly, your point, 143,000 in cash money savings is a good chunk of change. Christina, you mentioned like, you didn’t say the bad word, but the bad word would be like, what is the budget had been through retirement, which is going to shape the emergency fund. It’s going to shape a lot of things, what’s the retirement paycheck going to look like? The clarifying questions I would want to have is like, what is that 143,000? Is that to pay Thomas’s tuition next year? Do we run that money through the 529? I don’t see a 529 on the balance sheet. But the benefit that PA residents get from a state tax deduction is pretty generous. I think it’s 16,000 per beneficiary, 30,000, 32,000 per filing jointly.

So, if you can shelter some of that, that would be great. But what is the savings account for? What’s the taxable account for? Is the taxable account, is that earmarked for retirement? They’re in a position right now where I’m assuming Jane, if she’s not beyond 59 and a half, she will be sued. So, all of these 401(k)s, Roth IRAs, SEPs, like they can be accessed and used for whatever purpose so we can use some of that money for things that are other than retirement, but I would just want to clarify, what’s the savings account for, what’s the taxable account for, et cetera, before we kind of get into how to deploy these accounts, and again, making sure that, we need an emergency fund, let’s not invest it in a risky way. But we want to get that yield. I think, high yield savings accounts are now at 3%. You can get CEs at 4%. Even the eye bond is still attractive. I think it’s 6.8% plus a fixed rate at point 4%. So, there’s some liquidity issues there. But that might be a good place to park some dollars. You can put up to $10,000 a year there.

So, Kelly, if they’re asking, are we on track for retirement? How do we best answer that question? I’m a visual learner. So, are there things that we can show the client to kind of model that out a bit? What’s that look like on your end?

[00:15:50] KRH: I think these are very, very good questions that we do get from clients. And we ask clients to work on uploading and linking documents to eMoney. So, it’s a software tool that we use, that can be very helpful and looking at where things are at. Even to answer the question about the 529, they’re not listed on their spreadsheet. But they do have –

[00:16:17] TB: Oh, they do have. Okay, good.

[00:16:19] KRH: – do have them. And actually, they don’t pull across on a balance sheet either. So even when we’re working with eMoney, because they’re technically assets for the beneficiary. So, there are the two 529s in place. And you’re right, that Pennsylvania is quite 529 friendly with the rules. But when we get that question, like, good, not good, like we do a nest egg calculation, but then we can also go in the eMoney and look at goals, just to see overall. I’m going to pick one of the scenarios that they were kind of asking about the retire early. The baseline facts is like, based on now how things look towards retirement, and they originally had an age 65.

So, we’ve got the 65 in here, this 95% would suggest like, looks pretty good for being able to retire at that age. We have a couple expenses embedded in. We’ve got college costs, but we can add in college, I mean, we could probably spend the whole rest of the day and Thanksgiving, turkey dinner, talking about things we can do in eMoney. But just to give a high-level overview, we can enter education as like only the 529s cover that expense or do they want to pay out a cash flow a certain amount to help with that goal. We can enter specific school, so they wanted to see public school, public state school, and they wanted to see a private school just to have a comparable.

So, we’ve added in both of those. From here, I like to look at some cash flow reports, so this gives you a like, this looks reasonable and doable. Even the retire early like looks pretty reasonable, but then it is good to see the layers just to make sure things are input pretty well to reflect what the client wants to accomplish. Do the expenses. Tim, you’re right, spot on, are the expenses accurate for what the client is looking to do? So, we entered in living expenses, their liabilities, going to be the mortgage. They have some other expenses added in so they have car purchases every couple years. This is the 529 expense coming across.

So yeah, we do like to take the information that the client provides. Our data is only as good as what accounts are linked. But then we can go back in and run some of those scenarios too. Can they buy the lake cabin? Now, it’s entered as an additional property, not instead of their primary residence. This is less successful. We do like to see above 80%. I guess, I probably on the conservative side like to see 85 to 90. I think when Christina and I look at scenarios, because there’s things that can happen in between that really do impact. Like this really does not include Jane’s mom. Does a certain amount need to be embedded to help Jane’s mom and what is that amount per year? But we can add that? Is it an extra $1,000 a month for her care? Is it 500? Is it something different? But those are important combo situations like what do Jane and Tyra collaboratively think they can do? The conversation is really important with both of them. They have to be on the same page about what they’re willing and able to do and maybe make tradeoffs about to help in that scenario.

[00:20:19] TB: Yeah. So, for those of you that are listening to this, maybe in the car, don’t necessarily see the visual, if you’re not watching us on YouTube, on our channel, what Kelly is really presenting here is an illustration of what ifs. If we buy a lake house to retire early, what is the probability of success, if we have to use these monies for different goals that we have? Are we still going to have money at the end of our plan?

So, what the tool does is that it uses simulation, it uses 1,000 randomly generated market returns and volatility, called trial rounds to say, okay, 95% or 950 times out of 1,000, there’s going to be money leftover of the plan, and anything above the threshold of 80% or 82%, is good. And typically, if it’s lower, we’re going to adjust the plan as we go to make sure that there is money left over. So, the idea is to keep, there is money, between now and then when you when you pass away.

So, the nice part about this is it allows us to kind of toggle on and off different scenarios, to see how it affects the overall nest egg, so to speak, and provide some math behind it. So, the nice part about this is that, you can kind of talk to the client, and you can talk to Jane, you can talk to Tyra and you say, of all these different things that we’ve extracted from your goals, whether it’s a cabin, or being able to take care of your mom, or retire at this age versus this age, what’s the most important? And then basically turn those on and off to see, okay, once we get to this threshold, then the plan might be in jeopardy and we can adjust from there.

But I think this is great, and a visual perspective, and this is the way I learned. I think, like from a client impact, I think, this is huge. Yeah, this is great modeling Kelly. Christina, when you look at this particular client, at least from some of the models that we’re seeing, are there things that you would want some additional information, whether it is Jane’s mom, or maybe more additional information on what is the goal for the education planning? Is it the put the boys through four years of school? Is there a certain percentage? Are we using some of that? Are we counting on scholarships? Are we counting on debt? What are some of the approaches that you would take with the client to kind of refine this out a bit?

[00:22:39] CS: Yeah. So again, just digging more into the weeds. And to your point with the education. Yes, are they going to be relying strictly on loans? Or are there scholarships involved? Or is it a combination of all three? Are they going to be funding, maybe a third of it, from their cash flow? Some from the 529, others from scholarships?

So, we’d like to see some diversity, so to speak, when it comes to funding college needs, especially if 529 is not going to carry the weight. And then looking at savings and withdrawals for the education expenses, as is it does look like there is going to be a shortfall. So, having more of those conversations, again, what is the 143,000 saved for? Is part of that going to help Thomas and Robert. But then again, looking back at what they had given us with the 529, how is it invested? Kelly, when you had shown us that it looked like it was probably just in the money market at the moment, and I would be more curious to see, well, A, is it linking properly. But B, is it indeed invested? You have to have a good solid allocation in there, if you want that money to work for you, over the period of time they have left.

[00:23:53] TB: And probably a good chunk of that money for Thomas, who’s the 17-year-old should be for a money market. It’s almost like you were saying like you want, maybe, like a year’s worth of cash for retirement. That might be true for the first year or so for tuition. But then the balance of that should be invested. I think Thomas had 45,000. So, a good chunk of that should be either in a balanced fund or something like that. For Robert, who is 14, and he saw us four years until the first year, we probably can be a little bit more aggressive. And then, as we get closer, same thing with retirement, we’re having more of a bond allocation, less of an equity allocation. The money mark is going to do well today just because of inflation, but you’re also being killed by that purchasing power that’s kind of being eroded every year.

So, what Kelly is showing right now on the screen is kind of the shortfall, the projected shortfall for the education expenses and it basically showing us what percent is underfunded, which is not necessarily a bad thing. We kind of talked about the rule of 33% and where we want, if we’re saving for a kid, a kid’s college, and we don’t really know what our goal is, it might be okay, we’re going to try to get x amount into a 529, pay x amount from , in that year, that’s the salary in that year for college. And then maybe the last third comes from scholarships, student loans, et cetera.

So, this is kind of showing us what has been underfunded so we can kind of plan for that and know what to do, so great stuff. Kelly, can you shift back to the case study real quick, I want to have a discussion that we really haven’t had much discussion on. We talked about Social Security in the past, I think, again, pulling their statements is going to be really important to see where they’re at. But I really want to talk a little bit more about the long-term care, and then Medicare decisions. So, walk me through, how would we approach those? Obviously, these are two things that, I think, there’s a lot of kind of negative press around long-term care insurance. It shouldn’t be something that we sell fund. What is long term care insurance? Why do I need it? So, I guess, let’s start there, how would we approach this particular risk that Jane and Tyra have to their financial plan?

[00:26:12] KRH: I will admit, it is a little bit newer territory for us, like typically, with our client base, we’re not having a ton of conversations about an immediate need. So, we have done some work recently, just to be better educated and to kind of get up to speed on some of the products. So recently, talking through kind of two products. One is a pretty traditional, like, pay a premium, get a policy, and it covers a certain amount of care per day, calculated out on an annual basis. And one of the biggest issues with those policies is like premium goes up. We had some education that I found to be very concerning, and enlightening, just so we know the premiums can go up. But with state regulations, there’s not a ton of regulation on how much the premiums can go up. So, that’s one of the challenges is like, if you buy a policy, you have it for like 10 years, your age 75, and the premium goes up and it becomes unaffordable. Pay 10 years into it, but you have to stop, that’s a concern.

So then, there’s a hybrid product that has some insight into that premium piece, but also provides a death benefit. Because the other concern is you never need the long-term care. You’ve paid for this premium, you have, unfortunately, a death event, without any care happening, and all that money has not been allocated anywhere else. So, there are some things out there. I think that’s kind of one of the things we’ve been working through, is understanding those policies, and then write the comparable, like many insurance products, is like if you paid for it out of pocket and funded it yourself. So, kind of running some scenarios like, that’s one of the things we started to build out, and that eMoney scenario was, if you take the premium and put it away, like how much could that grow? Because it seems like the premium, happy medium timeframe is like age 60 to 65 to start a premium then.

But again, a lot of things that we are learning about too, because there’s been a lot of movement. I think there used to be the person that was talking with us about it, like thousands of long-term care providers, like insurance providers, and it’s down to a very small quantity now, so a lot has changed.

[00:28:46] TB: Yeah, when I was first getting into the industry, it was that and it was tons of providers, premiums going up. I think the industry didn’t have enough information, because this is kind of a newer product, and some of these policies were priced, not correctly. They were – I think it was like low interest rate environment, which makes it makes it tough for them. People are living longer, or they’re alive longer with conditions that pay out a policy, because our medicine is better. I think though that, we’ve kind of gone through the burst of the bubble. I think a lot more of these policies have stabilized. I think you can still see increases I think the hybrid model is good in a sense that there are – it’s guaranteed, so your premium is fixed. Whereas, that’s not necessary for long term.

To back up, for those that are thinking like what are we talking about, long-term care, really what it is, it’s a broad range of skilled custodial and other types of care that’s provided over an extended period of time, due to things like chronic illness, physical disability or some cognitive of impairment. And the scary number of this is like roughly 60% of Americans are going to need some type of like long-term care in their life, and I think that number is continuing to go up. So, this is where, I think, a lot of people think of like nursing home, and that’s not we’re really talking about. I think the idea behind aging in place and keeping you in the home, as long as possible.

So, if you are getting older, and you’re starting to have problems bathing or dressing or with personal hygiene or eating, you would have someone come in and help and aide. For a lot of people, it’s a family member, or it’s a spouse, which can take a toll on their own mental, physical and financial health. I think, my perspective on this is evolving, but I think that studies have shown that couples, when they look at this type of care, are willing to spend, on average, in the range of $2,500 to $3,000 per year to get some type of policy, and you can get pretty decent coverage by doing that. I think it’s establishing a baseline at least to cover like home care. So, to have somebody come into the house and 80% of care that is provided through these policies, is homecare.

I think conversation, is what really what we need with Jane and Tyra. I think it’s to kind of demystify it a little bit, maybe not make it as scary as I’ve been led to believe or has seen. Because this is a major risk, like if you can – this can be a major drain on the financial plan if you don’t have that large reserve of cash or investments, or a policy in place. So, I think it’s important to kind of get in front of it, and just have a have a good conversation and at least have a baseline policy for homecare, I think would be a good starting point. And then see like, what are the social like, is Thomas, is Robert, are they going to be a safety net? Or my dad always says, “Just put me on the ice float and give me the Eskimo retirement.” That’s kind of what he’s looking for.

But I think, some of the social networks that you have, in terms of talking through this is going to be important as well.

Christina, how about Medicare? What’s your take on this? Obviously, they’re a couple years away from enrolling in Medicare. But how do you approach this with Jane and Tyra in terms of how that works?

[00:32:21] CS: Yeah, so I think it’s just giving them a high-level approach to what to expect like a year in advance. So, when you reach age 65, the window opens up three months before their 65th birthday, and they have until three months after their 65th birthday. So, in essence, is a seven-month period. You can go in, enroll your Part A, Part B, if necessary. Most of times, it will be, because if you’re retiring, you’re going to be off of your employer’s medical plan, and you may not have to worry about correlating benefits at that point. So, it’s really not that scary. And then, on an annual basis, once they are involved with Medicare, there’s ways you can change up your plan or your drug plan as you need to, and there are resources and people to help you with that.

[00:33:12] TB: Yeah, the enrollment period is going to be super important, right? It’s typically three months before you’re 65, and then three months after you turn 65, so it’s like a seven-month enrollment period for initial. You want to do that so you’re not penalized later, that can happen, so you don’t want to blow through that enrollment period. I think that you get a ton of mailers for that to remind you.

But I think the big decision from there is like do I do Original Medicare A and B? Or do I do a Medicare Advantage plan which is a kind of more like private insurance HMO that Medicare reimburses for on a per participant basis? There’s I think, hundreds of plan Ds, which is the prescription. Do you get a Medigap policy with Original Medicare? There are so many things that go into this. And that’s going to go into like, what’s your view on, do you want convenience? Most providers will accept Medicare insurance, but it’s not necessarily as simple as maybe like a Medicare Advantage. If you’re going to be a snowbird, like if they decide, “Hey, we’re going to buy this cabin, but we also want to buy a place in Florida.” Having care coordinated between those two, if you’re in a Medicare Advantage is more like an HMO. So, if you’re out of network, that can be problematic.

There’s lots of different things that go into this. At the end of the day, this is probably one of the bigger concerns, I think, that people have is like, what does this look like? If there is a gap, if they decide to retire before age 65, what do they do? Is that something like Cobra? Does the employer offer anything that’s becoming more and more of a dinosaur feature of late? The other thing that we didn’t mention that, Christina, we were talking about off mic was like, even long-term care insurance, I think we’re seeing that show up on an employer benefit. So, really taking a look at that and what’s provided there. The big things with long-term care, just to circle back to that is like, when we’re looking at this, what is the monthly benefit that we’re targeting? If we are trying to cover home care, you can – Christina was telling me about this awesome calculator that you can find at your state, this is what it costs. So, it’s 5,000, it’s 6,000, like, we’re going to target that. What’s your deductible period? So, that’s the elimination period or the time you have to wait before you have benefits. So, a lot. It’s just like disability insurance, a lot of them are built as 90 days. How long is the benefit going to pay out? And then like, do you want an inflation rider?

So, to circle back on those things, those are the conversations we’re going to having concert of like, what do we do with Medicare? If there is a gap in Medicare, what do we do, et cetera? But I think Kelly, the only other thing that we probably should discuss briefly, that the client brought up, I think this is the one thing that I have outstanding here is the debt. So, one, is should they be concerned about the amount of mortgage debt? Should they use some of that cash set savings for the car note and pay it off? Obviously, interest rates have moved a lot, over the last year or two. So, what would be your answer to that question? Obviously, we probably need some more context with what’s going on in different parts of the plan. But how would you approach that with them?

[00:36:07] CS: Right, so it is interesting, like, I think just baseline, high level, the mortgage, usually, it’s more desirable to not have a mortgage in retirement to have the cash flow be less. But I am intrigued by like, this is not the forever home. It’d be nice to know, well, like how long? When would the transition take place to either a smaller home or to that cabin? We see a lot of people talk about being expats too, which is kind of interesting, depending on what happens with Jane’s mom and the kids in college, is that on the radar as well?

So, like the mortgage, I feel like normally would be a priority to not have on the table. But in this case, I don’t have as much of a concern about it, if there is a potential for a transition that we can talk through, to see what is affordable. Is the 2858, is that affordable in retirement with the rest of the expenses? The cars, I would say that interest rates are lower, which is good. I wonder if maybe the kiddos would like to contribute and pay off if they’re going to eventually take ownership of the car. I feel like having the kids have some type of responsibility, some piece of the puzzle that they have to take care of, whether it’s paying part of their car insurance, definitely upkeep, maintenance gas. I personally think it’s an important piece for them to feel some type of responsibility. So, I guess I’d be curious as to their student jobs and the college, and can they help take care of the one vehicle. I guess, I’d be inclined to maybe pay off the other depending on what the other goals with the cash flow is.

[00:38:03] TB: Yeah, mathematically, I wouldn’t be in a rush to pay off the notes if you can get 3% in a high yield and both these notes are 1.92, 2.25, doesn’t necessarily make sense. But some of that is just kind of peace of mind to clear the balance sheet on the liability side. But the mortgage is I think the bigger one, the bigger shoe that we’d have to figure out, like how it’s going to drop because there’s some equity in the primary home, what it’s valued at, versus the mortgage. My big thing is if they buy the cabin, they would have essentially two mortgages, that if they sold the primary house, they could pay off the original mortgage and maybe apply some of that back to the cabin. It’s just a matter of like, what’s their comfort level in terms of carrying a mortgage debt into their 70s, 80s, et cetera.

So, there’s nothing concerning about, I think they’re on a fixed rate for the mortgage, so it’s not like it’s a variable rate or an arm or anything they have to worry about, but it’s just kind of the comfort level and then how is that, to your point, that 2858 go into play on a fixed income when we’re talking about generating a paycheck from Social Security, from the retirement assets and maybe any part time work or whatever they’re doing, so that would be the main concern.

What did I miss guys? I feel like we covered a lot of ground here. This was great. This is a great case study. Did we did we miss any question?

[00:39:30] CS: FAFSA, Tim, which is –

[00:39:31] TB: Oh, yeah.

[00:39:33] CS: I mean, it’s mostly income in the formula and probably like that cash might be a little bit of – if you’re planning to use it for college expenses, like running it through the 529. Yeah, I guess if they retired, there’s the two-year look back period. So, at least Thomas would be pretty well through school. I think by the time, if they retired, but they might have an impact on Robert’s last year or last two years. But we get questions about maximizing the FAFSA and again, with the income being the biggest component, we don’t know what the kids’ assets are, those aren’t entered in the eMoney, usually don’t ask about those. But I guess I’d inquire about those too, make sure if they have an UGMA and UTMA that they spend those down first before the 529s, since they count different in the formula.

[00:40:34] TB: I think one of the things that I would say is I think some sometimes people are, because of the formula, they detract it from putting money into the 529. But I think, having that pot of money there that’s grown tax free, if it’s used for education expenses, is more valuable than I think not doing it because you think that the FAFSA equation is going to change.

So, just like, what we talked about, sometimes people do weird things that are out of character because they’re trying to like save on taxes. If going to college is a big part of the plan for your kiddos, the 529 is going to be one of the best – it’s depending on your state, but it’s going to be one of the better vehicles to do that and I wouldn’t let the FAFSA formula detract anybody from doing that. But I think, yeah, probably looking at some of those assets. I know you can also put assets in. I think grandparents’ name, and I think that doesn’t necessarily capture in the equation. So, definitely something that we want to look at as we’re tackling the other parts of the financial plan, so good stuff guys. I appreciate the chat here. I think very, very productive. And yeah, just look forward to doing more of these in the future and thanks for lending your opinion and how this client is shaping out. So, enjoy the holiday.

[00:41:55] KRH: Thank you.

[00:41:56] CS: You too. Thanks.

[00:41:57] TB: All right, take care.

[OUTRO]

[00:41:58] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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