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Transcript

Mike:

Here’s a guy that was planning on retiring January 1st, 2008. And because the markets crashed on him, he couldn’t retire anymore. He ended up not being able to retire until January of 2013. Wow. It was like a five-year stretch for him. Don’t be that guy. Don’t be George. Right? So here’s the question. You’ve worked your whole life, your 401k values probably at the highest level they’ve ever been. What is your plan? Do you have a plan to protect them?

Zach:

George didn’t have a plan.

Mike:

Yeah. He thought he did. He didn’t.

Zach:

Welcome back to your retirement today. I’m your cohost, Zach Holcomb, and next to me we have Michael Reese. He’s a certified financial planner, retirement planning expert, and president and founder of Centennial Advisors headquarters right here in Austin, Texas. Mike today’s show has been great so far. We’re talking all about the retirement questions that you absolutely have to say yes to.

Mike:

That’s exactly right. So we’ve talked about income. How are you going to replace, you know, do you have a plan to replace your paycheck in retirement? And remember what we say hope is not a plan, right? The second one is, do you know why your taxes might be higher in retirement than when you’re working? And, you know, we talked about that. You know, that one gets me all going. So I’m still a little, I had to go take a quick drink of water there between, you know, while we are on break. Because of course I was all hot and bothered from taxes. I hate taxes. All right. So let’s move on to question number three. So here’s the question. Go ahead, Zach. What’s our question.

Zach:

Talking about investments. Do you have a plan to protect yourself from downside risk when you retire?

Mike:

This is a great one. So think about this, the market’s at all time highs, right? So here’s my question. You’re probably looking at your, your retirement savings. You’re like, holy smokes. Look at that. I’ve been, wow. Look at man. I’ve I’ve got more money now than I’ve ever had at any other point in my life. It’s probably what you’re saying. Like, you’d look at your retirement accounts. There’s probably more money there now than you’ve ever had.

Zach:

You’re kicking back. You’re like, I’ve done a great job.

Mike:

Look at me. I’m the bomb, right? I’m the investment guru like move over Peter Lynch. I’m the man or I’m the woman, you know, depending on your gender, here’s the thing you are likely to stage of life where your retirement savings are the largest number they’ve ever been. Right. But I’ve got news for you. It turns out that the markets do not always just go up. Sometimes they go down. Right? So here’s my question. What is your plan? Or do you have a plan to protect the values that you’ve worked so hard to build? Right. So I’ve got a great story about this has to happen years ago. Okay. So I don’t know if I’ve told this story on the radio before or not real life story. This was back in 2007. Okay. So you guys know what’s going to happen in the story already. Cause I said 2007 and we know what happens after what happens after 2007 Zach?

Zach:

Market crashes.

Mike:

2008. So anyway, back in 2007. So as you can tell, I’ve been doing this for a little while. I’ve been doing this 26 years.

Zach:

And I was in eighth grade in 2007.

Mike:

So thank you for the reminder. I was already working hard. Yes. 2007 gentleman comes to me wonderful guy. Right. And let’s call him George. Okay. Not his real name. We’ll call him George, George, working away. And he had come to one of our events on retirement planning because George, this was like, oh, I want to say August of 2007, he was planning on retiring at the end of the year. All right. That was his goal. In fact, he had already let everybody in his office know he’s retiring at the end of the year. He told his boss, I mean, he’s already starting to work with the administrative department at his work, you know, the HR department. And he’s like to set up retiring as of December 31st, 2007. And when he came to see me, you know, he in his 401k, I mean the markets were going up and he had more money there and he’s ever had, right.

Mike:

In fact, he had gotten to about, it was like $950,000. Right. And from his projections, he was just doing the math. He said, you know, based on I’m going to be adding some money between now and the end of the year, a little bit more growth. I should be retired with about a million bucks in my 401k. I’m like, awesome. And, and I said, and when I started doing the math, I put together some planning for him, you know? Cause he paid me. He’s like here, how much does it cost to put together a retirement plan? I told him, I don’t remember how much it was at the time. But I said, I charged him. He said, here’s what it is. Cost as much. So like, okay, great. Let’s I’ll hire you. I need a plan. I need help. Let’s do this. So he paid me a fee and we learned Zach, that his 950,000 they had.

Mike:

Right. Actually I’m sorry, it was 960. Cause I remember it was 960. I said, look, you’re good. Like you could literally make no money. Like you could take your 401k, put it in stable value, put it in the money market. Just stop taking risk. You’ve made it, you’ve won the game. You’ve got enough money to retire January 1st. Yep. And he’s like, yeah, but here’s the problem, Mike? I just would feel better if it were a million. I’m like, why is that so important to you? My gosh. And his answer. It just feels good. Right? Right. I’m like I said, that’s great. But I’m telling you as a certified financial planner, as a fiduciary, that you are taking risk, that you do not need to take, you have enough money to retire. So stop taking risk. Right? You it’s like my grandfather told me my grandfather, I’ll never forget my grandfather.

Mike:

When he was, when I was like eight or nine years old, I’m sitting there, he’s retired and I’m at their house. You know, visiting the grandparents. He’s you know, my grandparents chain smokers. Right? He’s got this, he’s got this four foot tall wooden bear in, that’s been carved, you know, in his house. And the bear standing up and its arms are out in this huge ash tray in his arms, you know? So he’s sitting in his recliner with the Ash tray and I’m in the other recliner. He looked at me one time out of the blue and he says, son, remember this, you take risks with your money when you’re younger. So that when you’re my age, you don’t have to write. Well, that was George. I’m like George, you took risks when you were younger. You’re not like my grandfather. You’re at the point where you don’t have to take risk anymore.

Mike:

Stop it. Just stop. You’ve got enough money. You’re good. You’ve won the game. Just don’t don’t mess this up. Right. Well, Mike, a million just feels better. So anyway, he doesn’t listen to me. Right. Anyway. So I, we call them, we follow up with him. He’s supposed to retire January one, we followed up with him January about mid January. Cause we hadn’t heard from him like, Hey George you know, Hey, it’s January. You know, you’re probably retired now and you ready to, you know, we need to get this money restructured out of your 401k. Like we talked about in your plan. Yup. He’s like, well, you know, I, I, I actually, you know what, I didn’t call you because I postponed my retirement date. Cause he said, you know I don’t know if you remember this. Well, you don’t remember this probably, but starting in October, October, November, December.

Mike:

That’s when the 2008 market crash started. And the accounts, his count was down now to a little below 900,000.

Zach:

And he likes that million.

Mike:

And he wants a million and he’s like, yeah, I’m a little below 900. And I just look, I just feel like I want to get back in a million. So I just postponed it to like, I postponed it to the end of January. I’m going to retire February 1st and I’m doing the math. I’m like, George, you’re still good here. You still have enough. Stop risking your money. I mean, what if the market doesn’t go back up? Oh, this is temporary. Yeah. By the way, it was temporary. Just didn’t know how long it would be before it started going the other way. And as the year went on every month, oh, it’ll be next month. It’ll be next month. There’ll be next month.

Mike:

By the time we got to the end of 2008, his retirement accounts, which were 960, we’re down to like 600,000. In fact, the market kept going down January, February, March of 2009. He was all the way down Zach to $500,000. Before markets started turning around, wow, here’s a guy that was planning on retiring January 1st, 2008. And because the markets crashed on him, he couldn’t retire anymore. He ended up not being able to retire until January of 2013. Wow. It was like a five-year stretch for him.

Zach:

It’s rough.

Mike:

And I’ll never forget him saying to me the first time. Right. As soon just darn it. As soon as he got back, as soon as he hit a million dollars, he called us, said, all right, I hit a million. Now I already put it in the stable value fund. You know, I learned my lesson now I’m ready to go.

Mike:

When can we get together? Let’s get this done. But I remember him telling us, you know, five years, it wasn’t just the money. That was five years of fishing trips with his grandson that he didn’t get to take. Cause he was working five years. Didn’t get to spend with his granddaughter. He wanted to take her to Disney. Cause he was working. Right. I mean, it’s just like worst mistake he ever made. Don’t be that guy. Don’t be George. Right? So here’s the question. You’ve worked your whole life, your 401k values probably at the highest level they’ve ever been. What is your plan? Do you have a plan to protect those values? George didn’t have a plan. Yeah. He thought he did. He didn’t. And that brings up retiring while university. So Zach, just a couple minutes here in this segment. Why don’t you talk about that a little bit.

Zach:

This is an online class that we’re going to be hosting on July 20th and 27th. It’s a two part online class to help you answer yes. To these questions that we’ve talked about on today’s show, we’re going to be diving in deep about investments, taxes, income. We’re going to help get your questions answered. This is an online interactive class. We’re hosting it in the zoom platform next Tuesday, the first session, July 20th, 6:30 PM. Going to run till about eight 30, maybe a little bit longer than the second session resumed the next week on the 27th. Also at six 30. All you have to do to sign up is you go to retiring well university.com again, it’s retiring. Well university.com.

Mike:

Yeah, I remember this. I mean the goal of this class. Look, we want to give you the easiest path to complete financial security. And that means that you’ve got to answer. Yes. You have to have a plan to replace your income, a plan to protect your assets from market losses, a plan to protect your assets from the IRS, right? Yeah. And one more topic that we’re going to hit hit here in the next segment, right? So it’s free. You get to hang out with me for a couple hours each night. You get to ask me all the questions you want. Retiring. Well, university.com again, retiring well, university.com go there right now. Sign up. Don’t go anywhere. We’re going to be right back with question number four that you have to answer.

Zach:

Hi and thanks for checking out retirement today. If you like the content we share on our channel, make sure to like comment and subscribe. So can say notified about all of our latest content and videos. Be sure to share all of our information with your friends and family as well. Thanks for joining us. We’ll see you next time.