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Transcript
Zach:
You’re listening to retirement today. I’m your cohost, Zach Holcomb. And alongside me, we have Michael Reese, founder and president and Centennial Advisors. Mike, how are you this evening?
Mike:
Doing fantastic. Another wonderful day in Austin, Texas. And I’m excited for today’s shows, Zach.
Zach:
Yeah, we’ve got a really interesting topic to discuss. This is really important to a lot of you listening. We’re going to be talking about some numbers that came across my desk this morning. That honestly really shocked me. So I’ve got an article from NPR here on my phone.
Mike:
Okay. Whoa, whoa, whoa. From where?
Zach:
From NPR.
Mike:
You know what I’m thinking about as soon as you say NPR,
Zach:
Mike’s thinking about the Saturday night live skits. I know
Mike:
I better not even say it on the air.
Zach:
He’s got a big old grin on his face, but let’s get right into this article. So the headline is talking about older workers. Hadn’t planned on retiring so soon, but the pandemic speed things up. Now they’ve referenced some numbers here. Now, before the pandemic, more than 47 million people, age 55 and older were projected to be retired. But as of this July, in 2021, more than 49 million are retired. So about 2 million more people have actually ended up retiring early.
Mike:
Because of the pandemic?
Zach:
Because of the pandemic, sooner than they expected.
Mike:
Or maybe, maybe what happened was like, I talked to a lot of people and I’m wonder, you know, the pandemic is going on. It’s interesting. I get both sides, right? It’s like one side. I get people saying, well, I was planning to retire, but shoot, now that I can stay at home and just, you know, talk to my computer, I don’t have to deal with traffic. I don’t mind working anymore. So they, they work longer. You’re saying that this study says though that a lot more people are retiring than expected.
Zach:
Right. And they referenced a number of reasons. I mean, obviously some people were laid off and you know, they couldn’t find, they couldn’t find work immediately. Some were just, you know, saying, Hey, this might be a good opportunity for me to just, me to just call it quits early. But some are wanting to go back to work and they can’t find jobs that give them the same wages. They’re like, well, why would I go back to work if I’m going to be paid significantly less?
Mike:
Yeah. Meanwhile, while that’s going on, I mean, everywhere we look, people are trying to hire, but I guess maybe they’re trying to hire the lower salary people. We have all these people retiring and what that brings up in my brain. You know, actually I like to joke and have fun with the Saturday night live skit on NPR with a certain flavor of, of meatball, I think, or something. Anyway, let’s continue on. I don’t know if I can even talk about that on the radio. This is, you know, like public, but when we think about retiring and, and all of these people who are retiring, you know, it brings to my mind, you know, all kidding aside, this, this concept we talk about here in the office, the life cycle of investing, right? The life cycle of investing. So what does that mean?
Mike:
Whenever you invest money, there are three competing priorities, you know, and, and those priorities, some are more important to you than others, depending on where you are in life. Right? So here we go, Zach are you ready for a Q and A?
Zach:
Oh yes. I’m ready.
Mike:
I’m gonna pop quiz you. Here we go.
Zach:
Let’s go.
Mike:
So whenever we invest money, I said, there are three priorities. Let’s talk about the first priority. And I’ll bet you even know what it is. So when you invest money, you say, I’m going to take this money. I’m going to invest it. Why do you invest money? What do you want to see happen with that money?
Zach:
Well, at this stage in life, I want it to grow and I want it to grow a lot.
Mike:
There you go. So you are in your late twenties, right? And, and all you ladies out there listening, he’s still single.
Mike:
So just heads up on that. So here he is, he’s in his late twenties, single, but you know, when you invest money, you want to grow. So obviously priority number one is growth, right? Whenever we invest money, you know, I mean, shoot, you could just leave it in the bank, but if you do that, what’s going to happen?
Zach:
It’s just going to sit there pretty much,
Mike:
Yeah, no growth. So we’re investing, we’re taking we’re, we’re, we’re putting money in here. We want it to grow, but that brings up priority number two. If you go, if you’re going to invest your money to grow, there’s something that comes along for the ride. It’s like at the bank, your money is your money is perfectly safe. It doesn’t make anything but it’s safe. But if you go out and you invest money, what do you know might happen at some point?
Zach:
I got to take on some risks. There could be some losses.
Mike:
All right. Risk, number two. So here’s how investing works. Whenever you invest money and you’re younger, you know, you’re what is it? 27,
Zach:
Right.
Mike:
I think.
Zach:
Yep.
Mike:
So you’re 27. You want to grow. And you know, you know, in advance that, you know, some years you’re going to make money. In fact, most years you make money, but some years you lose money, but some years you make money and some years you make a lot of money. But along for the ride, some years, you’re going to lose money some years, a lot of money. Right. But you’re young enough that you have a fancy four letter word that is on your side.
Zach:
It is time.
Mike:
T I M E time is on your side. So here we are. We’re 27 priority.
Mike:
Number one growth. Now. And you’re willing to take on priority number two risk, you’re willing to take it on because you’ve got so much time on your side. So let’s fast forward several years. Let’s say you’re not 27 anymore.
Zach:
Okay.
Mike:
Let’s say you are 57.
Zach:
Oh, that’s more than a few years, but, okay. Yeah.
Mike:
Dude. Say by the way, for what it’s worth, that’s I’m 57. Well, I’m 56, but I’m 57.
Zach:
Getting there.
Mike:
This year, later this year. Anyway I saw this cool thing on Facebook of all places because when you’re a 57 year old guy at night, that’s the place to go.
Zach:
Facebook’s the go to.
Mike:
Anyway, they had a great little thing that said, did you know that from 1980 to 2021, right to this year is the exact same timeframe is from 1980 to 1939.
Zach:
That’s crazy to think about,
Mike:
Oh my gosh, that makes me feel so old, anyway.
Mike:
So let’s say you’re 57. Okay. Now you’ve been saving money for tons of years. You’ve had some good years. You’ve had some bad years, but now, you know, you open up your investment account one morning and you’re like, holy cow, look at all the money I’ve got there. Maybe you’ve got, I don’t know, 500,000 or more, a million or more whatever the number is, but you’re like, wow, that’s a lot of money. And maybe when you’re 57, you start thinking, gee, I’d like to retire maybe in five or six years. And that’s when you start wondering, gee, should I be taking on- Now you still want growth. Right? But now that second priority, the priority of risk starts coming kind of becomes a little more important.
Zach:
That’s a little more top of mind, like, am I set up the right way for the age that I’m at?
Mike:
Right? Because what happens is at that point, you start thinking yourself. Well, if I retire in five or, let’s say you’ve got a million dollars. Right? And by the way, as you’re listening, you might have more, you might have less. I like to use that number. It’s a round number. Let’s say you got a million dollars. You’re thinking, man, I want to retire in five years. It’s natural that you start thinking yourself, holy cow, I’ve been doing this investing thing for years. I have seen some really good years, but I’ve also seen some really bad years. And it’s natural that you start thinking to yourself, man, what if the market crashes between now and when I want to retire, you know, I want to retire in five years. Could the market crash in the next five years? Yeah, probably could. And if that happens, you might be thinking, I don’t want to lose half of my life savings because the market crashed and I wasn’t paying attention,
Zach:
Especially not at the age of 57.
Mike:
Right? So what do you start doing naturally? You start saying maybe the second priority, the risk priority or said another way, safety of principle becomes more important. You start thinking, you know what? I need to maybe balance these off. I still want to grow my money, but I also want to be protected. I want to have my money safe at the same time. And that’s when people start thinking, you know, maybe it would be okay to accept a little bit less upside in the good years so that you can protect yourself in the bad years.
Zach:
Sounds pretty good.
Mike:
You with me so far?
Zach:
Yeah.
Mike:
Alright. Now I want to talk about priority number three, but I know some run out of time coming up on it, coming up on a break. So let’s do this before we talk about I’m going to hold priority.
Mike:
Number three, off to the break. Now, just so you know, priority number three really comes into play when you’re getting really close to retirement, right? And, and then you get into retirement. But Hey, before we talk about that, we’ll hold that off to the next segment. I do want to talk a little bit about this prosperity planning, blueprint that we have available. So if you’re out there, let’s say that you’re wondering, are you making the right financial choices? You know, when you think about it, financial planning can be really complicated. It can, there’s a lot of questions you have to answer, you know, are you invested the right way for the stage of life? You’re in, you know, do you, what about taxes? Oh my gosh, we talked about taxes on this show all the time. Those are complicated. What do you do about your tax planning?
Mike:
How do you protect yourself from the IRS? You know, what about estate planning? What about your health care planning? Lots of issues that you have to get the right answers to and it can be complicated. So what we’ve done is we kind of put our heads together and we said, how do we take this complicated topic of financial planning? And how do we make it simple? How do we drill it down to just one simple page? And that’s what we’ve done. We’ve created something. We call a prosperity planning, blueprint. It’s a one-page piece of paper. And on this, it’s personalized. It’s personalized for you. If your neighbor calls us, it’s personalized for them. So it’s personalized just for you. And in this blueprint, what we do is we help you take a look at the three core decisions that you need to make, that you need to make smart decisions on in order to live that financially prosperous life.
Mike:
And so these three decisions are number one, you gotta make sure your investments are structured the right way. Number two, you’ve got to make sure that you have some kind of a paycheck replacement plan so that your work can be optional. So will your money last and then number three, what are you doing about your tax planning? Those are the big three. We’ve drilled it down to one piece of paper so that you can say, all right, here’s where you are right now. And here’s what you need to do when it comes to your financial planning. Best part about it. Zach, how much does it cost to get one of these done?
Zach:
It’s free Mike,
Mike:
Absolutely free of charge, but you got to call so you can get it done. These are personalized. Zach, What’s the number?
Zach:
Give us a call at (512) 886-5850. Again, that number is (512) 886-5850. Now stick around. Don’t go anywhere. We’re going to be continuing our discussion on the life cycle of investing. We’ll be right back.
Zach:
Today’s show started off great. We’re talking all about the life cycle of investing, what it means, how to find out what stage you’re in and which area is most important to you. So let’s pick up that discussion again, Mike.
Mike:
All right. So here we go. Remember, and this all came because, you know, we saw this article when I say we, I mean you and you showed it to me, but we came across this article. You did from NPR. Every time I, I can’t even say NPR without laughing, cause that’s stupid Saturday Night Live skit. But anyway we’re thinking about NPR and we’re thinking about how more people are retiring because of pandemic, whether they choose to right. Or they are kind of forced to. And you know, like 2 million families have retired unexpectedly, right? And it made me think about the life cycle of investing. We talked about one more younger and, and especially when we’re focused on accumulation, that growth is our priority. We put the money in, we want to grow. We know we’ll have good years. We know have bad years, but we have time on our side.
Mike:
Then we said, the older we get though, like you’re 27, let’s say you’re 57. More like I am, getting there.
Zach:
On the way.
Mike:
Now we’ve saved a bunch of money and we’re thinking, Hey, might want to retire in five or 10 years. But we start thinking, man, we’ve got a lot of money now. And if the market crashes between now and retirement, we got a problem. Yep. So we also want now priority number two, which is safety or risk, right. Managing risk. And we start thinking to ourselves, it’s not just about growth anymore. Now it’s about growth and safety. We need to balance those off in a manner. That’s comfortable. Alright. Now more time goes by now we’re maybe a couple of years away from retirement or maybe we’re going to retire in the next year or maybe you’ve already retired. And now when it comes to investing, there is a third priority that comes into play.
Mike:
Now that third priority is the priority of income.
Zach:
Or replacing your paycheck.
Mike:
Yeah. At the end of the day, I could almost make this argument. And this is why this NPR article, right? Why the NPR article really comes to play because we’re thinking, Hey, all these people are retiring. Well, number one mistake I see is that when people transition to retirement, they don’t transition their investing, their portfolio to be income focused.
Zach:
They don’t really have a plan for it.
Mike:
Yeah. And if you think about it, what is the end all purpose? What’s the, what is the goal? When all of a sudden done, what’s our big goal? Why do we invest money anyway? It’s like, Zach, you want to, you’re investing money. You said for growth, but what’s the end game. What’s the goal at the end of the day, what do you want to do?
Mike:
Retire? Enjoy my money comfortably and not worry about it running out.
Zach:
There you go. Basically said, and I’m going to say this in a two word phrase, three words you want work? The three words are workout or two words work optional. I was going to say work to be optional forwards. And I was just completely messing up. So let’s just go with two words, work optional. Why do we invest money? So that someday work is optional. So that someday you’re working, not because you have to, you’re working because you want to. Right. I am personally fortunate. I’m personally fortunate enough to be in that situation for me right now. I work not because I need to, I don’t need the money anymore. I mean, Hey, I always like more money. I mean, we all do. I can give more to charities and all that good stuff.
Mike:
But the point is I work because I want to, because I enjoy what I do. In fact, I don’t just enjoy what I do. I love what I do. This is awesome. Like I have the most awesome life I work when I want to. I can take vacation when I want to. It’s great. But we all want to get to that point. That’s the goal. That’s why we save money. And so if you’re getting close to retirement, what does that mean? You’re getting close to work optional. That’s what you’re getting close to. And if you’re getting close to work optional, it is now about the end game. The end game with investing is not, I just want my mind to get bigger and bigger and bigger. Right? Right. Some of the most miserable people I know are retired. They’ve got more money than they know what to do with yet.
Mike:
They spend all day looking at the computer and if their accounts, if their pile of money, it’s like, they put their money in a pedestal and they look at it and they admire it. They genuflect to it. And they’re like, gosh, if their polling money isn’t getting bigger, it just just kills.
Zach:
The worst person to be around.
Mike:
They just they’re just miserable. No, that the end game is we want work to be optional. So what does that mean, from an investment perspective? While we start with stage one of the life cycle growth, we’re focusing on growing, growing, growing, we don’t really care about anything else. And once the account gets large enough where a bad market crash would cause some heartache. That’s when we hit the point of stage two, which is risk or safety. That’s where we say, Hey, we need to balance. We still want to grow, but we need to balance our growth and our safety.
Mike:
And then we reached the end game. It’s like, oh, now we’ve accumulated enough where work is optional. Now it’s all about replacing our paycheck or income. At the end of the day, you’re a portfolio’s ability. Your life savings, the ability to generate income is overwhelmingly. The reason you do all this to begin with, right? This is why we do it. Yet, I’m thinking of those 2 million people who are retiring, whether they want to, or not. I’m thinking to myself, how many of them recognize that and are starting to transition their portfolio to one that’s income focused versus growth focused.
Zach:
I think it’s safe to say not all 2 million of them realize or are actively doing that.
Mike:
Yeah. My experience is it’s probably a very small percentage.
Zach:
Props to those who are doing that though.
Mike:
Yeah. So I’ve, and by the way, and the next thing that I’m going to tell you the story of my grandfather, because he is an excellent example of going through this life cycle.
Mike:
He’s an excellent example of doing things the right way and then doing something wrong and it cost him everything. Right. So I’m going to talk about that in the next segment. Okay. But here’s the deal. Here’s what I want you to think about right now. Let’s imagine that you’re sitting there. Maybe you’re listening to us in the car. Maybe you’re at home. Maybe your work, wherever it is, you’re listening. You watch us on the podcast or listening. I’m sorry. Listening on a podcast, watching on the YouTube channel, however, you’re, you know, gathering this absorbing this wonderful information, right? And if you’re watching me on YouTube and say, I’ve got my fun little fidget spinner with me today the point is when you get close to retirement and when you’re in retirement, it’s the game is not about just growth anymore. The game is not about having a balanced portfolio
Mike:
That’s balancing growth and safety. In fact, those things while still important, are they, they’re just, they’re minuscule in comparison to what the real goal is, what the real game is now. And that game is how do you take this money that you saved and turn it into an income stream that is steady. So it comes, it’s stable and it’s steady. It’s coming to you every single month. It’s growing. Your income’s got to grow. If you want work to be optional income, your portfolio generates has to grow. Why is that Zach?
Zach:
I mean, you gotta keep up with inflation.
Mike:
Yeah. Inflation. Right. Which is becoming a real thing again. And then it also has to last a lifetime. It’s got to last, as long as you live, it’s got to last, as long as your spouse lives, if you’re married. Growing stable, predictable lifetime income, that’s the name of the game.
Mike:
This is why we invest money. It’s to get that outcome. At the end of the day, it takes many, many years of investing to be able to get to the point where you can do that. But if you’re retired or if you’re nearing retirement, if you’re one of these 2 million that had to retire by hook or by crook, right? But if you had to retire or you were, or you chose to retire either way, have you made that transition with your money super important, by the way, lots of decisions you got to make with your financial plan. If you want to live a retirement, a prosperous life, you’ve got to make a lot of choices. A lot of decisions, financial planning is hard. It’s complicated, but at the end of the day, but we asked ourselves as well, how do we take this topic
Mike:
That is hard. That is complicated. That is confusing. How do we make it simple and easy? And that’s what we’ve done. We’ve created a one page. I mean, you can’t get any simpler than that. Right? One page, a one page prosperity planning, blueprint. And the purpose of that blueprint is to help you look at the three core areas that you’ve got to get, right to enjoy a prosperous financial life. Those three areas are what we’re talking about tonight, investing, right? Are you investing in the right way for the stage of life you’re in. Number two, that making your money last, right? How do we make sure we were making work optional with a paycheck replacement plan? And then number three, your tax planning taxes are always, don’t get me started on that one Zach. You know, I get all red in the face,
Zach:
Not this week.
Mike:
Not the thank you. I need a week off of taxes. Anyway, this is personalized for you. It helps you in a simple way. Say, look, here’s where you are. And here’s what you need to do. We make it super easy, super simple and personalized for you all. You had to just give us a call. We’ll make it happen. So Zach, let’s get that number out there. So our listeners can call.
Zach:
Yeah, absolutely, Mike, you gotta give us a call at (512) 886-5850. Again, that number is (512) 886-5850 it’s after hours, you’re going to get our awesome answering service. They’re going to set you up with a quick 15 minute call with one of our team members. So we can walk you through creating your own personalized, prosperity planning, blueprint. Again, one more time before we go to break, that number is (512) 886-5850. Now stick around. We’re going to be continuing our discussion on the life cycle of investing. We’ll be right back.
Mike:
Yeah. So here we go. This is a real story. Always the best ones. Right?
Zach:
Awesome.
Mike:
Well, I don’t know if there always the best, but this isn’t a true story. So this is what happened to my grandparents on my father’s side. So I have two grandparents, Wes and Carol, their names are Wes and Carol they’re school teachers in Lansing, Michigan. Okay. And they have a dream. So they get married. They have a family, but they have a dream that they want to someday retire to a cottage up in Northern Michigan. So the, the idea is if you grow up or you live in Southern Michigan, you know, everybody has the same goal and that’s to someday, I want to have a cottage in Northern Michigan, on a lake. Why? Because Northern Michigan is very hilly and it’s lots of lakes and they’re crystal clear and it’s beautiful.
Mike:
And it’s wonderful. Right?
Zach:
Sounds like fun.
Mike:
So the idea is I want to have a cottage on a lake. And the idea is it would be like a family enclave right there. They have four, they’ve got grandchildren. They said, Hey, we want a place for our children, our grandchildren to all come and gather. And after we’re gone, that’ll be a legacy to the family. We’ll keep it in the family to be a family thing. That was their dream. So when they’re younger and during their working years, what did my grandfather do? We’re talking about the life cycle we’re talking about. He started off saying, I just want to grow my money. So what did he do? He went out and he would save money. And those days, I mean, this is like, I don’t know the forties, fifties. I mean, it’s back then. Right?
Mike:
In the day,
Zach:
Back in the day,
Mike:
Back in the day, anyway, he would save money. And when he had saved enough money, he would go to a stockbroker, which, you know, those days that’s all we really had or all he would have available. And he would say, Hey, here’s the lump sum money. I want to buy shares in some different companies. And he would identify the companies. And he’d say, I want to buy shares in these companies. And they were always like these big name companies. Everybody knew who they were,
Zach:
The blue chip stocks,
Mike:
Blue chip stocks that all pay dividends. So he would save a chunk of money, go buy some blue chip dividend paying stock, save some more money, go buy some more blue chip, dividend paying stock and so on. And so on. Right. All about growth. Now while he was doing this now, when he started like the fifties and the sixth, and I guess the forties 50 sixties anyway, while he’s doing, as he sees his accounts, get bigger and bigger and bigger.
Mike:
And you know, we talked about the life cycle of investing. He said it was growth. Number one and stage two, we wanted to add in a measure of safety, stage three was income. So stage one’s growth. He’s doing exactly the right things. Now, after a while the counts get pretty vague, but he doesn’t worry about it a lot Zach because he has in his mind, he’s also covered, say stage two safety, because these are all what, they’re not fly by night companies. They’re all blue chip company,
Zach:
Right? Everybody knows them. They’re big where they’re not going anywhere.
Mike:
And they’re all paying what?
Zach:
Dividends,
Mike:
Big blue chip dividend. We all know who they are. They’re not gone anywhere. Blah, blah, blah. Right? So growing, growing growing. So eventually, and this is now early seventies, like 1970, 1971. They finally accumulated enough money and they retire, right?
Mike:
Now, at this point, the grand-, their children are grown. They’ve got grandchildren. And guess what? They’re able to buy the cottage up in Northern Michigan. And they bought a cottage on a little check this out. This is the name of the lake. It was called lake 13. That’s really the name of the lake 13 in a little town called Farwell, Michigan. You can literally Google that on map. You’ll see right where it is.
Zach:
I’ll look it up after the show.
Mike:
Yes. So it’s in Farwell, not far from Claire anyway, they succeeded in their quest. And the grandchildren, the family starts coming up for the weekends in the summer they spend in, you know, his grandchildren might spend a week or two during summer break, up there. It was a family enclave. It was exactly what my grandparents envisioned. Right. And I should say my grandfather, because he’s the one that kind of led this.
Mike:
In those days, the, the husband tend to lead, you know, lead these things and the wife would kind of take care of the house and that type of thing. Sure. Anyway, at that time, my grandfather and his little idea of investing, like say some money, invest in stocks, saving buddy money, invest in stocks and accumulate about 300,000, which in those days, I mean, 300,000 is a lot of money today. It was a lot back then. I mean, that was the equivalent. If you apply some inflation, he retired with the equivalent of over a million dollars in today’s world. So, and they’re not big spenders, you know, they’re just kind of, it’s not like they’re pinching pennies either, but they’re living well within their means. So this is they’re doing great. Yeah. And this is the point where circumstances change in my grandparents hit the last stage of life cycle, which was what income.
Mike:
Right? But they started with growth and safety was number two. Now they’re at the stage of income and now they’ve bought the cottage. So their goal has changed. They no longer are saving money so that they can buy a cottage someday. They bought the darn thing. Now their goal is, Hey, we want to keep it and pass it down to our children, grandchildren, and my grandfather, he thinks he’s in great shape because his entire portfolio is invested. His entire 300,000 is invested in blue chip companies that everybody knows that all pay dividends. And the idea is that he would just live off the dividends. Right. Yeah. And you know, these dividends were growing over the years. I mean, he’s got the perfect solution.
Zach:
And I’m sure he was not the only person with this plan or with this idea around the same time. Oh exactly.
Mike:
Oh exactly. That’s exactly how people invested back. Yeah. So this, before the rise of the 401ks and all that stuff. Yep. And, oh, here’s the other thing. We certainly can’t change any of this because in those days everything was bought after, you know, this wasn’t in a 401k or IRA, this is regular account. So all these accounts had huge gains, which meant he can’t sell. Of course. Cause he would have to pay what a lot of taxes, capital gains tax. Oh my God, I can’t do that. Right. Nope. That’d be horrible. So that was the deal. But now here’s what changed. The goal changed. It’s not about growth anymore. It’s not about safety as much. It’s really more about income. Yep. But he’s feeling good. Cause they all pay dividends. But then something happened in the early seventies, it’s called the OPEC, the oil embargo. And you would on your TV and you would see in those days back then the remote was a little kid named Mike.
Mike:
I would go, my parents might go turn the TV. So I’d turn the TV. I’d play with the rabbit ears. You know, if it, if the TV was flickering, I’d whack it down. The side of the nature, CBS comes in clear. There you go. Anyway, whenever you turn on the news, you saw the same thing. Lines of cars, everywhere question. Did that affect the stock market? Absolutely it did. You bet. It did not in the right direction though. Yeah. And here’s what happened. Stocks went down, they crashed. And when they crashed all these blue chip companies went down, they crashed my FA my grandpa was like, who cares? As long as I’m getting the dividends, the dividends I’m good. But the problem is the stock price went down. Guess what else? What else went down? Dividends tanked. Yeah. And my grandfather found himself in a bad place because suddenly the dividends had got down so far that he wasn’t able to make the bills.
Mike:
And that meant he had to get more money. He had to sell stock positions and he had to sell when the stocks were down down. And so didn’t have a choice. So, so he did start selling stocks. And here’s what happened a few years later, my parents, you know, they brought us kids gonna say, come on, kids, get in the car. We’re going to the cottage for the last time. We’re like, what? What’s going on? Well, grandma and grandpa are running out of money. They got to sell the cottage. Now imagine that, by the way, this is the mistake, the mistake he did everything, right. He had the growth part, right? In this case he had safety, right? At least good enough for him. He did not transition to income because here’s what my grandfather didn’t understand. Stock dividends at no point in their entire history have been designed or is the purpose.
Mike:
The purpose of a stock dividend is not retirement income. The purpose of a stock dividend is a return of investment. Different thing altogether. And they’re never guaranteed. And my grandfather found that out to his dismay, they did everything right. And they were able to accomplish their dream. And then because he made, he failed to understand. That was time to transition on the life cycle of investing. He didn’t make that transition because he failed to do that. They accomplish the dream, but then they lost the dream. And I’m telling you that broke him. That was the day, my grandfather was the hap- every time you saw him, happy guy laughing all the time. Once they sold that cottage, I never saw him even smile again. He was dead within a year. It killed him. Literally killed him. Don’t be making that kind of mistake. Don’t be my grandfather.
Mike:
So in our office, financial planning, it can be complicated. We’ve made it easy. We’ve created a prosperity planning blueprint. So you can learn from the mistakes. And my grandfather don’t be like him. This is a free blueprint we put together for you. It’s simple. It’s easy. It’s a single piece of paper. Super easy. You call us, set up a 15 minute phone call. We start gathering information. We get this put together for you. It helps you make the right choices for your retirement so that you can achieve your dreams and then keep those dreams. Sack. What’s that number to call
Zach:
Mike it’s easy. It’s (512) 886-5850 again, (512) 886-5850 it’s after hours, you’re going to get our answering service. They’re going to set up a quick 15 minute phone call with our team so we can learn a little bit about your situation and put together this personalized, prosperity planning, blueprint for you. It’s absolutely free. Again. That number is (512) 886-5850. Now don’t go anywhere. You’re gonna want to see how we’re going to wrap up the show in our final segment. Get a really exciting story to share with you. We’ll be right back.
Mike:
So, and, and so many people, this is where they miss a step. They miss the transition from moving from, you know, growth and safety focus too, which is kind of stage one and two to stage three, which is how do we, we gotta make some changes to deliver income. Now, remember this, when you do choose to retire, that’s a fundamental shift in life, right? You you’ve moved from a stage where you’re adding money to your portfolio. Now you’re going to be taking it out. There’s a fundamental shift. If your portfolio, if your retirement savings, if you are not fundamentally shifting the tools within your portfolio, then that that should be a red flag. I mean, a fundamental shift means in life means you have a fundamental shift in the tools you use. It’s kind of a no brainer yet. So many people don’t do it, right?
Mike:
So many people think, oh, I just need to have a few more bond mutual funds and a few less stock mutual funds. Guess what? You still own mutual funds, you haven’t fundamentally shifted anything. You know, a fundamental shift. It’s kind of like, like the person who says, oh, I’m going to retire. Instead of having 60% stock and 40% bond, I’m going to flip that around. And we have 60% bonds and 40% stock. It’s kind of like, I’ve got this. I don’t know a Chevy pickup truck and it’s green. And you know what? I’m just going to paint that blue. When in reality, what you really need to do is sell the stupid pickup truck and get yourself a Tesla because you need a fundamental shift here or like a Ferrari. That’d be fun, right? That’d be cool. Now we can’t get me talking about cars. Cause I just I love cars
Zach:
That’ll derail this whole conversation.
Mike:
I want to go back to my grandparents though, because in the last segment I shared this story. My grandfather, he was, he did things both right and wrong and it broke him. What he did, right? He bought stocks early on for growth. What he did wrong was when he got to retirement, he kept those stocks. He wouldn’t sell those stocks because he didn’t want to pay capital gains. And he felt comfortable with them because he’s dealing with them his whole life. He, he kept them and he was depending on dividends for income when they were never designed for that purpose. And when the stock market crashed, the stock values went down, the dividends went down. Next thing you knew. He had to sell stocks at a discount just to make up his income needs. It all fell apart. And he had a dream. I want to get a cottage.
Mike:
She had to sell the dream because he made mistakes with his investing. We don’t want that to happen to, you know, right now a lot of people say, well, so my grandfather, by the way, he lived a year and he died. Well, what happened to my grandmother? You know, like where’s as Paul, Harvey would say, what, you know, here’s the rest of the story. Right? So when my grandfather died, he had some life insurance. So he dies. My grandmother gets some life insurance. Plus they still had some money left over, just not enough to be able to continue to afford the cottage. So she has a little bit of money left over. She’s got the life insurance and everything for her is now hunky Dory. Right? We’re all good. Until she started getting Alzheimer’s and next thing you know, she’s in a nursing home and before all of a sudden done, when she died five years later, guess how much money?
Mike:
So I remember my grandparents retired with $300,000 in the early seventies, the equivalent of over a million dollars today. And because the market went south, when they weren’t expecting it. And then my grandmother needed to some time in a nursing home because of Alzheimer’s at the end of her life, this in today’s terms, over a million dollars in today’s terms, guess how much money was left over when she died?
Zach:
I’m going to say close to nothing.
Mike:
Yeah. Not close to nothing.
Zach:
Literally nothing.
Mike:
Literally not one thin dime.
Zach:
Wow.
New Speaker:
Now one done now, by the way, I want to get this straight. My parents or my dad is on his, my dad’s side and his brothers and sisters. That that was okay with that. It’s not like, mom, dad, you owe us an inheritance. Right? In fact, my parents, my dad and my, my uncles and my aunt, they all said the same thing.
Mike:
It’s like, look, mom, you need this care. It’s okay that you spend your money to take care of you. Right. But here’s the worst part the last year or two of her life, she was on welfare. Right. Which is just, I mean, it’s a good thing. She was, it’s a good thing she had Alzheimer’s she didn’t know what was going on. Cause that, I mean, can just imagine how she would have felt about that. Right. I retired with the equivalent of over a million dollars and because I mess up my planning in simple ways, like these are, these are, it’s not like this is a glaring, you’re a moron stuff. That’s not what it is. It’s oh, I thought this would work. And I have a reasonable, it’s reasonable to think that this path might work. They just didn’t have the experience to know that there were risks there that they didn’t, that could get them jump up.
Mike:
And you know, there’s a crocodile in that river there that could jump up and snap them, right.
Zach:
Got to watch your ankles.
Mike:
Haha. An Alligator. Anyway, they didn’t know that they thought they were doing the right things. And when you talk about that NPR article where you’ve got all these people retiring, whether they chose to or were forced to, because of the pandemic, I think about my grandparents. And I think about, I think about you as you’re listening, are you retired? Are you forced to retire? Did you choose to retire? Are you nearing retirement? Are you within five years of retirement? Is it time for you to maybe make some intelligent transitions in your portfolio? You know, things so that you don’t end up like my grandfather or my grandmother. Right. And how do you even know? See one of the things I know, because I’ve been doing this for a long time, I know financial planning can be complicated.
Mike:
I know it can be complex. I know I talk to people every day. People just like you, you call us and you talk to us and I might talk to you. And, and I hear things like Mike, I swear, I’ve never spoken to a financial advisor, where I feel I’m smarter leaving the office than when I got there, it’s like, why? Because it can be complicated. Just like, you know what? It’s like talking to lawyers, you know, I, Hey, I need my wills and trusts done. And I go talk to a lawyer. If I talk to the right lawyer, I know what’s going on. But if I talked to one, that’s a lot of times these lawyers, like I feel dumber when I ended the conversation. Here’s the thing. We want your financial planning, we want your retirement plan, we want your financial prosperity to be easy and not hard.
Mike:
We want to give you the easiest path to enjoying a comfortable financially prosperous life. And so what we’ve done is we’ve created a one page, just a single piece of paper, a one page called the prosperity planning, blueprint. It’s a one page, piece of paper. What it does is it it’s it’s by the way, it’s customized or personalized just for you. What it does is it helps you look at the three big areas. There are three areas you absolutely have to get, right? You’ve got to have your money invested the right way. You’ve got to have a paycheck replacement plan, a way that your money will last. As long as you live, kinda like we’re talking about today, you’ve got to have taxes. You got to plan on, you know, utilizing the right tax strategies. So you can keep more money in your pocket, give less to the IRS.
Mike:
These are the three areas you’ve got to get. Right. And what we’ve done is we’ve just distilled them down on a single piece of paper. So you know, what you do is you give us a call and it’s after hours. So you talk to our team, you schedule a 15 minute call with one of our advisors. And in 15 minutes, they just learn a little bit about you. They start gathering information and absolutely for free. They’ll put one of these together just for you so that you can in a very easy way, identify here’s where you are. Here’s where you’re at. Here’s what you need to do. These are the decisions you need to make to get on the right path. If you want to do it yourself. That’s great. And if you want to talk to us about maybe hiring us to help you with that, that’s great too. Either way is fine. I just want to make sure you’re on the right path in an easy way. What’s that number? Sec, Mike
Zach:
(512) 886-5850. Again, give us a call. (512) 886-5850. All right, Mike, that’s our show for this week. We hope you enjoyed it. We’ll see you next time.
