Rachel Lutzker: Welcome to today’s CT Buzz, I’m Rachel Lutzker. As you are planning for retirement, making informed decisions is so important, especially when it comes to your finances, Social Security, retirement age, income tax implications—that all kind of webs in there. Ben Fuchs, founder of Fuchs Financial, is here to explain what scenario-based planning is. You have mentioned scenario-based planning through our time talking together and why it’s an effective tool for looking at retirement. Ben Fuchs is the founder of Fuchs Financial, and he is a Certified Financial Planner and also a Certified Private Wealth Advisor professional. So let’s talk about this scenario-based planning and why it really helps to understand everything. Ben Fuchs: Alright, so we’ve got a graphic coming up there, and one of the most important things for me is that when I’m doing this kind of planning for myself, I need the visualization. I need to be able to see where I’m at. We talk about a lot of things here—Social Security, paychecks in retirement, taxes, estate planning—but what’s important is to see how all these things work together and how one thing impacts the other. So when we have informed decision-making, we can see the impact of taking Social Security earlier versus later, and what the tax impact of that is as well. It’s not just a goal of generating the most income—it’s how do we generate the most income and pay the least amount of taxes while doing it. Visualization is huge, right? I’ve got to be able to see everything. Rachel Lutzker: Okay, so again, when we’re playing with those metrics and looking at that piece, we want to be able to see the impact of that decision. Let’s talk about the empowerment of scenario-based planning. Ben Fuchs: So, if I—how do I say this nicely without angering a doctor—so like if a doctor is recommending a drug to me, I want to understand what the drawback is, what the impact is. I want to have some control over that decision. Is this actually right for me? Don’t get mad at me, doctors—but if I’m making a financial decision, I want to have some knowledge. I want to understand why you’re recommending that. I’m not just going to take your word for it—you have to make it make sense for me. I think it’s important for us and for all the advisors at Fuchs Financial to make it make sense to the clients who are entrusting us with their money. Lastly, in this case study, it’s about comparing and evaluating these decisions. Rachel Lutzker: Yeah. Ben Fuchs: I mean, that’s huge, right? There are reasons why we’ve done things in the past. There are reasons why we make these recommendations in the future. There are reasons why people who have all their money really aggressive in the market—we try to tone them back. And people who are really, really conservative—we try to show them where they can take risk and be comfortable. We do that by using case studies to show them the impact of that over time. Rachel Lutzker: Does anything in your time really stand out to you as to how this has really helped an individual client? Ben Fuchs: Yeah, I think there are a lot of ways where we’ve taken people who are very afraid to put anything in the stock market and shown them why they can put money in the market—what they can do without it actually affecting their lifestyle long term—and then making them comfortable doing it. Also, we’ve seen the reverse scenario where people are really, really aggressive, and then they’ve gone through COVID and the market dropped by 33% in a couple days, right? We went through 2022 where the S&P fell by 19% and the NASDAQ fell by over 30%. And while having that safety net maybe didn’t earn them as much over time, it still kept them comfortable so they weren’t having unnecessary heart palpitations while they were retired. And that really is also part of the goal. Rachel Lutzker: Yeah, do you feel like sometimes people come in with this uninformed view of things, and you really, with the scenario-based planning, sit down and explain the reasons and the certain age implications and the target dates that people have to hit? Ben Fuchs: Absolutely. I think a lot of people will say, “Look, my 401(k) went up by 23% last year—why are we talking about 8%?” Well, that’s great, but we also know from case studies that every other year we’ve seen a 10% or more decline in the S&P 500. So it’s great when it goes up, but when it goes down, we need to have a plan. Rachel Lutzker: So Social Security—delaying that until the age of 69—how does that play into scenario-based planning? Ben Fuchs: So taking it at 62 versus 65 versus 69—it depends on a lot of scenarios. For some people, you’re taxed less on Social Security than you are on other income. If there are no policy changes, of course, that will impact this even more. But we want to get more money from Social Security if possible and take less from other areas where it’s higher taxed. Rachel Lutzker: If this sounds confusing to you or if you need to fine-tune some things, folks can sit down and reach out to Ben Fuchs at Fuchs Financial. You can work with an experienced professional who can create and help you understand scenario-based plans to look at your financial future and see where you stand. They offer complimentary consultations and have offices in Middletown, West Hartford, Middlebury, and Mystic. You can visit their website, taxesandincome.com, or call (860) 461-1709 to set up an appointment. Ben, thank you so much—and thank you for joining us. We will see you next time on CT Buzz. I’m Rachel Lutzker.
