Welcome, Don Lukie. Thank you so much for joining us today. I'm so happy to be here.
We're so excited to talk about financial fitness and health. We talk about expanding people's health span and improving their quality of life, but going hand in hand, if you're going to have this health span — live longer, be more active and functional — you're going to have to fund that. That's one of those things people don't think about. Financial planning, lifespan, and health span all connect, and the sooner we get them connected, the more enjoyable the experience will be.
What a Holistic Financial Planner Does
Tell us about what you do. I'm a financial planner — I've been in the business almost 30 years, so we've seen everything from nuts to bolts. I'm a CFP, and I take pride in a more holistic planning process, which is why I like what you guys do. You hear the word "lifespan" and think about how long people live; you hear "health span" and think about how long people live *well* — and we have to be able to fund that.
Too often we think financial planning just means growing our nest egg — save as much and as fast as we can, then spend it down. What we enjoy is having conversations with clients to make sure they're really intentional. It's not just growing; it's being aware of the different risks out there — taxes, inflation, health care costs. The two biggest fears most clients have are (A) living too long and outliving their assets, or (B) health care challenges. So this conversation is appropriate because it addresses the two top fears investors have.
Have you noticed a difference as the health span idea has come about? A little bit, especially with younger clients, because it's become more mainstream. It used to be so traditional — "Doctor, I hurt here." "Okay, let's give a shot there and make it go away." Now there's more attention on diet, exercise, and being financially fit as well. Financial fitness goes hand in hand with being mentally stable, because you're not worried about those things — and that worry is probably one of the things that helps make us sick. So we want to connect all the pieces; they all need to align. I see that with younger clients — and by younger I'm including the 50s, 60s, even 40s, but also the 70s and 80s. It's incumbent on me to have those conversations to make them more aware, and you guys have great resources I share with them.
When to Start and Defining Your Ideal Retirement
Whatever age you are as you're listening, if you haven't started, now's the best time. If the goal is to have money as long as we live, now's the time to make plans. We do income plans — clients help choose an age, whether to age 90 or 100 — and then we take your nest egg and spend it down intentionally.
One thing I like to ask people is to define your ideal retirement. A lot of times that just means how much money you want coming in, but it's beyond that: What do you see yourself doing? How are you spending your time? Are you traveling, spending time with grandkids? From the financial perspective, you'll have an ideal number, then known repeatable sources of income — Social Security comes to mind — and then there's going to be a gap. We need to solve for that gap. Wherever you are, now's the time to see how you match up, find out what you can do today, and be proactive about being financially fit as you work on your health span.
Taxes and Roth Conversions
Are there products well suited for people anticipating aging? There are products and processes that go hand in hand. It's important to save money, but also to keep as much as you can. Tax is one of those hidden things we don't often think about, like inflation. Right now we're in the lowest tax bracket we've probably been in our lifetimes, and we're also $36 trillion in debt, running a roughly $2 trillion deficit every year. That doesn't bode well on the tax side. Can we economize our way out of $36 trillion in debt? We're going to find out — and if it doesn't work, the next best place to go is a tax increase. So we want to be proactive rather than wait for it.
One of the things we do quite a bit — this is process, not just product — is Roth conversions, when appropriate. If all your money is in an IRA, that won't be super efficient in the future as taxes rise. It's interesting that with an IRA, we're in a partnership with the IRS — one of the only partnerships where they can change the terms in the middle of the process, going from a 30% owner to 40% overnight. So we want to get ahead of that and, when appropriate, creep toward the 0% tax bracket. It's not for everybody, but it's worth considering, because we're talking about living a long time — retirements of 20 or 30 years — and we want access to money at that time.
Diversity, Risk, and Bucket Planning
What other forms of diversity should people look for? Diversity should be broad. At a younger age you can be a little more aggressive; as you get older, a little less. Accessibility matters too — you may have funds invested but can't reach them if a catastrophic event happens and you need hard cash.
When we hear "diversity," we really mean a mix — some stocks, some cash, maybe some bonds — determined by your risk tolerance. So we need to know our risk. What I like people to consider is bucket planning. Say you have $100 to invest — set up five buckets and put $20 in each. Bucket one is short-term money: I might need it tomorrow, next week, or next year; I want it liquid and I can't afford risk with it. Bucket five is long-term money, where I can do more because I can afford that risk.
Then we choose the investments: What stocks do I like? What ETFs and mutual funds are out there? A lot of people who want security choose annuities. Some annuities protect your principal while still giving upside growth — wonderful tools. Others, like Social Security, guarantee a lifetime of income, but that's one situation where you give up liquidity and access. So don't listen to this podcast and go put all your money in an annuity for guaranteed income, because you'd give up liquidity — and liquidity is how you fix your car or roof, take a trip, or treat the grandkids. That's bucket one. Having intentionality in dividing your buckets, then choosing investments for each, is key — there might be some crossover in buckets two, three, and four, but bucket five is its own where you can take more risk.
Knowing Your Risk Number
You had us take a risk assessment test, and it was neat because we took it separately, so Mark and I each had our own. I love that test — it's Nobel Prize-winning software, and it only takes about five minutes. A series of questions hones in on who you are as an investor — not the person you work with or play golf with, but who am I, and how do I invest for me? It identifies a number between 1 and 99: 1 being cash, 99 being an emerging-market fruit farm or island. The S&P 500 has been around a 72, and recently got up to 79 because of volatility. Those numbers change, which is why you have reviews — am I still on track? We take the number you identify with, then score your portfolio the same way, so we know whether the risk you *want* equals the risk you *have*. If there's a big disparity, we want to get them closer, because in times of extreme volatility there might be a big dip you're not prepared for.
Where can people find this? Our website is heritagefirst.net (h-e-r-i-t-a-g-e-f-i-r-s-t.net). In the upper left it says "free portfolio risk analysis" — a five-minute series of questions, almost like Let's Make a Deal, and it's been extraordinarily accurate. Take it again over time, too, because your comfort margin is always changing, just like market volatility. Right now there might be discomfort because of chatter about taxes, tariffs, and leadership changes. I'd encourage you: if we're focused on longevity, our plan is bigger than short-term risks. There's always been something that interrupted a financial plan — so make sure you have a plan on purpose that withstands volatility. Remember the buckets: bucket five might be getting beat up, so maybe now's a good time to put more money in bucket five, knowing long-term we're in a good spot.
Life Insurance
Life insurance has options too. What I like about it: number one, it's still life insurance — you pay to insure your life, and it lets us keep our promises. People ask what I do, and I help my clients keep their promises. Somewhere in life you made a promise — when you got your first job, certainly the day you got married. Even though we're focused on longevity, we won't be here forever, and those promises require plans, which life insurance can help fund.
If you use it properly with your excess money — not your IRA money — you can overfund life insurance, and it grows tax-deferred; later you can take the money out tax-free. It's also a good source for long-term care, because you can accelerate the death benefit for long-term care. It's still life insurance, and you have to apply for it, but it's a very good tool after you've filled the buckets.
Long-Term Care
There's also long-term care insurance. Is there a prime age to look at it? Probably somewhere between the 50s and 60s, because it's more affordable. There are many plans now. One we just discussed is life insurance with an accelerated rider. Insurance is all about transferring risk — from my portfolio to an insurance product to protect my portfolio if something happens. Another is an asset-based plan: you take a lump sum — say $50,000 or $100,000 — and set it aside, and it might buy $150,000 or $200,000 of long-term care benefit. Broken down, for every dollar of long-term care, maybe you only spent 30 cents. Some annuities now have multipliers too — you might put in $50,000, answer some questions, and it becomes $150,000 as a long-term care benefit.
It's important to have this conversation, because that's fear number two — health care. Medicare will not protect you for a long-term care challenge, and neither will Medicare supplements or Medicare Advantage plans. So the question is: how are you prepared to pay for a long-term health care challenge not covered by Medicare?
Are you familiar with the book *Die With Zero*? He talks about how we save for the what-ifs — "what if I need long-term care" — but you can get an insurance product to cover that so you don't have to keep a big lump sum liquid. These are all wonderful tools; the important thing is knowing they're available and figuring out what's best for you, because everyone is uniquely themselves. It particularly makes sense for a married couple: there's a mean, dirty side of life with morbidity, death, and long-term care, and if you start spending down assets, the surviving spouse may not be left with as much. Even if you're affluent, there's an argument for long-term care because of the leverage — you paid 30 cents for those dollars of care, so 70 cents can go to a surviving spouse, your children, or a nonprofit, rather than a facility.
I like the analogy to health care: what we do now to promote health is cheaper than correcting disease later. The earlier we start, the better.
Estate and Legacy Planning
What estate planning options are out there? I love estate planning, and I tandem it with legacy planning — I think they're different. We spend so much time building assets and sharing risk, but too often we forget to protect it with an estate plan: wills, a trust, durable power of attorney, and health care power of attorney (there's a difference — one makes financial decisions for you when you can't, the other makes health care decisions). Having an executor, a successor trustee if you have a trust, and advance directives like a DNR — all of that needs to be documented.
If it's not, either the courts decide, or your family — who all love you — each have different ideas of what's best, which creates disunity. Having a plan takes that off the table because you've made the decision and had the conversation. If you set up a trust, it's important — I'm not an attorney — to fund the trust, meaning put all your assets in the name of the trust, including your home (which gets overlooked), a second property, and cars. If you don't do it and leave it to someone else, a high percentage of the time there's a fight or dispute, and probate and disputes cost money. So get out ahead of it and spend it on a will or trust. Sometimes we just don't know the questions to ask. I'm lucky — my daughter is an estate planning attorney right down the hall, so our clients are well prepared, and we make sure all the documents communicate.
Actionable Steps
Do you have actionable steps listeners can take today? I'll repeat something important: identify what your ideal retirement looks like — quantify it and qualify it — and who you want to spend that time with. Don't just retire and do nothing. Having purpose is huge, and you'd attest to that with health span. I've helped clients retire at 55 and kind of wish I hadn't, because they lost their purpose. We wake up every day knowing what we're going to do — so when defining your ideal retirement, make room to define your purpose, because that's just as important as defining the income.
Then define your ideal income, take a good inventory of all your assets — how much is IRA, 401(k), and cash — because we have to fund the gap strategically. We diversify investments, but we can also diversify income sources: how much will be taxable versus tax-free? Then do your estate plan. And lastly, whether we live to 80, 90, or 120, we all share that we won't be here forever — so have an endgame. What do you want to look like when you're not here anymore? That's legacy planning. I ask clients, "Do you know your great-grandfather's name?" Most say no. "Do you want your great-grandchildren to know your name?" Almost all say yes. There are things we can do today to create that legacy and family unity across generations — passing values, not just valuables.
What Legacy Really Means
What's your definition of a legacy plan? There's the legacy of leaving money, but what's really important is that your children or benefactors understand they've already received their true inheritance — who they are. And they learn who they are through the sharing of stories. Do your children know the trials you went through to build your business, or the losses you've endured and survived? Those things build character and pass values, and there's usually a story attached to a value — maybe someone who nurtured you when you were young, or a parent who worked three jobs so you could go to school and play a sport.
The problem is, as parents we use didactic teaching — trying to teach with a moral like "do it this way" — and kids don't learn well that way. It needs to be adult to adult, and sometimes having a mediator in the room helps: you share your story with me, but the children listen and hear it differently. Many times they'll say, "Dad, I never knew that about you," when he probably told them a dozen times. So legacy planning is passing values — taking the money off the table and building a family unit that sustains generations. There's a terrible statistic that wealth has about a 90% fail rate over three generations, and I think it's because we don't pass the values. When we pass values and share stories, the wealth becomes a gift rather than an obligation, so it's treated differently. We use philanthropy as a teaching tool — a wonderful opportunity to be involved in something bigger than yourself. All those things together are how we communicate legacy with families and put forth a definition of an abundant life for our children.
How to Reach Don
If folks in the Kansas City area are interested, how can they reach you? Again, it's heritagefirst.net — that'll be in the show notes. My phone number is 816-931-0375, and my email is dluke@heritagefirst.net. I'm so appreciative of you guys and love sharing this time. We really appreciate your time. Have a healthy day.