Why Retiring is Harder Than Ever

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Transcript

00:00:00:01 – 00:00:25:09
Mike
If there is a market drop of 20% or more at any point during the first ten years of your retirement, if your plan, if you just have like a diversified portfolio, you are up the creek with no pattern, you are in trouble.

00:00:25:12 – 00:00:43:26
Zach
Welcome to retirement today. I’m your co-host, Zach Holcomb. And alongside me, we have Michael Reese. He’s a certified financial planning professional and he spent the last 25 plus years helping develop plans to get families into and through retirement. This is retirement today. But before we get started on today’s program, Mike, tell me how you are this.

00:00:43:26 – 00:00:50:14
Mike
Evening as always, doing fantastic. I mean, I live in Austin, Texas. How’s that? Not a how’s that? Not a good.

00:00:50:14 – 00:00:52:26
Zach
Thing. I know there’s no reason to not be happy living here.

00:00:52:28 – 00:00:54:10
Mike
Suffer traffic sometimes.

00:00:54:10 – 00:00:55:13
Zach
And the real estate prices.

00:00:56:04 – 00:00:57:21
Mike
That’s. They’ve been good to me.

00:00:57:21 – 00:01:10:17
Zach
Yeah, yeah, definitely. Well, I’m excited for the show today. I think we have a great topic that we’re going to discuss that our listeners are really going to take a lot out of. We’re going to be talking about retirement income planning and some of the risk associated with it.

00:01:10:29 – 00:01:21:20
Mike
Yeah, that’s right. And you know, we’ve got this great article that came out and, you know, titled Planning for Retirement Income Within an Increasing, Volatile and Uncertain World.

00:01:21:20 – 00:01:22:11
Zach
That’s scary.

00:01:22:11 – 00:01:36:06
Mike
Who? Yeah, yeah. It’s the problem is, you know, this is written by, of course, some kind of a, I don’t know, academic person. So there’s about, I don’t know, 100% or 150% more words than needed. Yes. In this whole.

00:01:36:06 – 00:01:39:03
Zach
Article, wordy, but you know what? We’ve taken away some good points from it.

00:01:39:14 – 00:02:00:29
Mike
Yeah. You know what’s kind of interesting? I do want to read this and this is, by the way, this for all of you listening out there in radio land, this is the kind of stuff we have to read through just so that we can share with you what’s really happening. So here’s what this says. Retirement income planning is one of the most highly personal, complex and least understood financial journeys individuals face today.

00:02:01:11 – 00:02:23:25
Mike
And there goes more Americans into retirement. Without the protection of a defined benefit pension plan, the potential ramifications of inadequate income planning become even more immediate. And they talk about, Hey, you’ve got these questions, how long you going to live? How healthy are you going to be? And what about inflation? What about taxes? There’s a lot of moving parts.

00:02:23:25 – 00:02:51:24
Mike
And essentially what they’re talking about in this article is they’re saying this. They’re saying, hey, everybody, it used to be when you retired, you had Social Security and a pension and your personal savings, the three legged stool. So again, leg number one, Social Security, leg number two, pension, leg number three, personal savings. Two of those like Zach, are lifetime income streams.

00:02:51:24 – 00:03:12:05
Mike
Yep. Right. Guaranteed streams of lifetime income. You cannot live them. It’s always going to be there. One of those streams, personal savings, you know, it’s kind of for extra stuff. Sure. But what they’re saying is today there’s a ton of people. I think the article references something like 80% of people do not have pensions.

00:03:12:05 – 00:03:13:27
Zach
Yeah, it seems pretty accurate. Maybe even more.

00:03:13:28 – 00:03:43:25
Mike
Yeah. So all they have is Social Security and retirement savings. Right. And they got to make it work. Yep. And what’s really important in this article is, I mean, this article destroys what the financial industry as a whole tells you you should do. It destroys it. Because think about this. If you go to an investment advisor today or you go to like one of the big firms, you know, Vanguard, Fidelity, Schwab, you know, those kinds of places.

00:03:43:25 – 00:03:52:07
Mike
Sure. If you go there and you ask them, how do I structure my portfolio for retirement?

00:03:52:07 – 00:03:53:23
Zach
Oh, I think I know the answer to this one.

00:03:53:23 – 00:03:54:25
Mike
What do you think they’re going to say?

00:03:54:25 – 00:04:04:09
Zach
They’re going to give you a nice, colorful pie chart. They’re going to diversify between stocks and bonds, throwing some international in there. You know, it’s going to look so pretty and great in perfect.

00:04:04:10 – 00:04:36:20
Mike
That’s right. They’re going to give you the balanced portfolio, right? They’re going to tell you you just need to invest in a balanced, diversified portfolio and it’s all going to be fine. Yeah, right. Yet here’s what this article tells. And this articles, it’s done by people. They don’t have a dog in the fight. Right. This is actually done by let’s see, it was by Colin Devine, who’s an education fellow at the Alliance for Lifetime Income, and Ken McGinn, chairman of Milliman.

00:04:36:27 – 00:04:44:08
Mike
Milliman it’s nothing more than a think tank. I mean, they’re just crunching numbers. They’re a bunch of actuaries. You know, they are, by the way, you know, an actuary is.

00:04:44:11 – 00:04:45:12
Zach
I need the definition.

00:04:45:12 – 00:05:17:18
Mike
It’s an accountant without a sense of humor. Da da da da. Yeah, me and my me and my jokes. But here’s what they tell you. They say, if you do this balanced portfolio and you want to say take 4% income, right. That’s classic. You got $1,000,000. You want to take out 40,000 a year, you got 500,000, take out 20,000, whatever it is they say, as long as everything goes really, really well, you still got a 20% chance that you’re going to run out of money.

00:05:17:18 – 00:05:20:05
Zach
And that’s if everything goes really well.

00:05:20:05 – 00:05:47:06
Mike
Yeah. Here, check this out. They say if you get one just one market correction and 20% just one in the next ten years or the first ten years of your retirement, one 20% drop in the first ten years of retirement, which, by the way, probability and that is extraordinarily high. Check this out. Now you’ve got a 43% chance you’re going to run out of money.

00:05:47:06 – 00:05:48:12
Zach
I don’t like that number.

00:05:48:12 – 00:06:23:25
Mike
That’s not good. No. And what if you want 5% income, same 6040, portfolio five. If you want 5% income and everything goes well, 44.6% chance you run out of money. And if you have one 20% drop, you have a 70% chance you’re going to run out of money. So essentially, what are they saying? They saying this idea of the classic diversified, balanced portfolio, the idea that that’s going to serve you well in retirement.

00:06:24:23 – 00:06:46:26
Mike
Essentially what they’re saying is not only is that wrong, that’s just really, really, really, really wrong. And I could have told them that because I experience that with my own parents right over 20 years ago, right over 20 years ago, when my parents retired, they retired in the late nineties. And at the time, what did the industry teach us?

00:06:47:11 – 00:07:09:28
Mike
Use a balanced, diversified portfolio. That’s what they taught us. And what happened was I so I did that for my parents and I did it perfectly well. And by the end of 2002, which was, you know, 2000, 2000 and 2002 is a three year period where the stock market lost about half by the end of 2000, to half of their money was gone and they were diversified.

00:07:09:28 – 00:07:36:27
Mike
But you combine a diversified portfolio with distributions and you have in a market that’s going down, you know, you have chaos. Yeah, it just doesn’t work. That’s what this article says. It’s like these balanced portfolios are great if you’re trying to grow money. But to be a solution for retirement planning once you’re retired, it’s like, that’s a loser.

00:07:37:19 – 00:08:02:04
Mike
And what, what makes me so angry this is why is you’re listening to us. You wonder, like, why do you do what you do? It’s right here. It’s this article is why we do what we do. Because the financial industry, they know here’s a part. They know it doesn’t work. That’s what drives me crazy. They know that a balanced portfolio is very likely to fail you during your retirement and they don’t care.

00:08:02:04 – 00:08:06:29
Zach
Right. Because you mentioned it failed when your parents retired 25 years ago. They’re doing the same thing now.

00:08:06:29 – 00:08:30:10
Mike
Yeah. And it failed in 2008 as well. Yeah. So they know what’s going to fail when the market goes south. They don’t care. They don’t care. Just keep your money invested so they can make their fees and they’re happy. And that just offends me. I’m a big believer that you deserve to enjoy the retirement of your dreams. You work your whole frickin life to save money.

00:08:31:00 – 00:08:58:04
Mike
You deserve to enjoy the fruits of your labor. But a balanced portfolio isn’t going to cut it. You need to have a more sophisticated strategy to help you manage your money wisely to get you through retirement. Right. You need a plan to get you to retirement, but you need also a plan to get you through retirement. What gets you to retirement is not the same thing that gets you through retirement.

00:08:58:04 – 00:09:04:26
Mike
There’s four things that this article points out, I think. Yeah, four things I think they missed. One, I think they missed.

00:09:04:26 – 00:09:05:24
Zach
One, there might be five.

00:09:05:27 – 00:09:19:06
Mike
There might be five. But the article talks about that we’ve been referencing here today, talks about four different risks. And when you think about them, they all make such perfect sense. And the first one, Zach, is longevity.

00:09:19:06 – 00:09:25:00
Zach
Yeah. And this one kind of hits home with me. I mean, my great grandma lived to one oh 202.

00:09:25:08 – 00:09:30:19
Mike
Yeah, but I’ve seen how you take care of yourself. I don’t know that you’re going to make it all right.

00:09:30:19 – 00:09:33:10
Zach
Maybe I’ll make it to 95.

00:09:33:10 – 00:09:53:06
Mike
But here’s the question. You know, one of the things they talk about in this article, and it’s very, very true when it comes to retirement planning, here’s there’s good news and bad news. The good news is we’re all living longer. Right. Longevity. We don’t know how long we’re going to live, but we do know that we’re living longer.

00:09:54:00 – 00:10:02:03
Mike
What’s the bad news? We’re living longer, which means our money has to last longer. It’s a bigger job now.

00:10:02:03 – 00:10:05:14
Zach
This is going to blow you away. They’ve got some stats in here that are going to blow your mind.

00:10:05:14 – 00:10:06:25
Mike
Okay, I got to here. Let’s go.

00:10:07:26 – 00:10:12:11
Zach
A married couple, one out of every three, one of them is going to live past age 90.

00:10:13:29 – 00:10:18:17
Mike
What? 90? I’m okay. I see. Married couple. That’s a 50% chance.

00:10:18:17 – 00:10:22:06
Zach
So about a third of all 65 year olds today will live past age 90.

00:10:22:07 – 00:10:24:04
Mike
Is that what they say? Oh, there it is.

00:10:24:04 – 00:10:26:10
Zach
One in seven making it to 95.

00:10:26:25 – 00:10:37:20
Mike
Well, okay. So you saw. Yeah, by the way, for all of you out there in radio land, Zach and I look at the same article. He’s reading the text, and I’m looking at the picture because I like pictures. I’m visual.

00:10:37:20 – 00:10:38:26
Zach
It’s very colorful, too.

00:10:38:26 – 00:10:48:05
Mike
It is. So they do they break that down, I think is what they do in the picture because they say one out of three will make it to age 90.

00:10:48:05 – 00:10:48:20
Zach
Yes.

00:10:48:21 – 00:11:10:06
Mike
Or about a third. Yeah. But then they say, what if you’re married? Yeah, right. If you’re married. If you’re married, there’s a 50% chance that at least one of you will make it to 91. There’s a 25% chance that at least one of you might be both make it to 96.

00:11:10:06 – 00:11:16:04
Zach
So if you retire and you’re 60, you might have to structure income to last 30 to 35 years.

00:11:16:05 – 00:11:38:26
Mike
Exactly. I can’t tell you how many families we talked to today. We’ve we saw a study, Zach, in a previous show where they said that the average age that people are wanting to retire is 62. Remember that? Yep. So imagine that you retire at 62 and you live to 92. That’s 30 years. That’s a long time. Your money’s got to last.

00:11:38:27 – 00:11:51:03
Mike
Yeah, 30 years. Where? I mean, we don’t know how long we’re going to live, but what else can happen during those 30 years? That brings up some other of the four risks that this article talks about. What’s the next.

00:11:51:03 – 00:11:52:02
Zach
One? It’s health.

00:11:52:09 – 00:11:59:02
Mike
Yeah. If you live it to your 92 is your health, what’s going to happen? Is it going to get better or worse over that time?

00:11:59:02 – 00:12:02:08
Zach
Well, I will not ideally, but it’s going to probably get worse.

00:12:02:12 – 00:12:18:26
Mike
Well, the good news is, at first, early retirement, maybe you got a chance to work out. And yeah, we had a event the other night and this gal showed up. I think she was like 63 years old or something, but she was wearing this CrossFit jacket. Yeah. Oh, my gosh. She was in such great shape.

00:12:18:26 – 00:12:19:18
Zach
She would beat us up.

00:12:19:18 – 00:12:41:04
Mike
She would she could just. She could beat me up with two hands tied behind her back. She was in great shape. I was so proud of her. Anyway, the point is, you know, during the early years of retirement, certainly you can spend some time with your health and your physical fitness. But, you know, you get in your late eighties nineties, your health goes downhill.

00:12:41:18 – 00:13:00:28
Mike
And the question is, what’s it going to cost you? That’s a big unknown, isn’t it? Yeah. So it’s okay. So we great. We’re living a long time, but towards the end stages of our lives, maybe our life, you know, quality of life isn’t what it used to be. And this is where we have to bring in some people to help out.

00:13:01:17 – 00:13:22:00
Mike
So, you know, I think about my my own my wife’s parents, right. His her dad, Harry, who is like a saint of a man. He’s still alive. Her mom passed away a couple of years ago. Her mom had Alzheimer’s for the last five years of her life. And, you know, Harry did everything he could to take care of her.

00:13:22:22 – 00:13:27:19
Mike
But at some point, you know, you got to bring people in to help out. Sure. And that costs money.

00:13:27:19 – 00:13:28:11
Zach
It’s not cheap.

00:13:28:11 – 00:13:46:01
Mike
They were very fortunate because they were able to stay at home the whole time and they were able to pay for people to come in and help. But not everybody can do that, right? Some people have to go to an assisted living facility, to a nursing home. What’s it going to cost? So we don’t know how long we’re going to live.

00:13:46:12 – 00:14:10:06
Mike
We don’t know what we’re going to pay for health care. By the way, I think I saw somewhere that the average price, if you are 65 years old, that, you know, Fidelity does a study every year. They said that you’re likely going to spend a right around 390,000 on health care total. Wow. Over your expected lifetime? Most of that towards the end, by the way, that assumes no long term care, right?

00:14:11:04 – 00:14:19:13
Mike
Adding long term care. On top of that, you got what they call real money, right? So we’ve got longevity. We don’t know is a risk health. We don’t know what’s the next one.

00:14:19:20 – 00:14:22:11
Zach
The market volatility. And you touched on that a little bit in the last segment.

00:14:22:16 – 00:15:08:11
Mike
Here’s what nobody talks about in this article. Does such a great job. This article really focuses in on how sensitive your planning is in the first ten years of your retirement. So the first ten years are hugely important. And what this article says it talks about, and they do all the math right and they say if there is a market drop of 20% or more at any point during the first ten years of your retirement, if your plan, if you just have like a diversified portfolio, you are up the creek with no paddle, you are in trouble.

00:15:09:07 – 00:15:35:14
Mike
And by the way, think about that. Do you know how often 20% drops have happened in the markets historically? Usually they come about once every five or six years. It’s been a while since we’ve had a 20% drop, right? It’s been I mean, really, it’s been 28 since we’ve had a major and you could say, oh, no, wait, Mike, what about, you know, the coronavirus March of 2020?

00:15:35:14 – 00:16:00:16
Mike
The market was down 30% in a month. Yeah. And it snapped right back. That’s what they’re talking about. They’re talking about a bear market and they’re talking about recessions that happen in the economy that knock you backwards 20, 30, 40%. And all has to be is one time, one year markets down for one year, 20% or more in the next.

00:16:00:16 – 00:16:04:02
Mike
In the first ten years of retirement. And you are just hugely in trouble.

00:16:04:05 – 00:16:04:24
Zach
It’s not good.

00:16:04:24 – 00:16:13:04
Mike
Well, the odds of that happening. Hi there. That’s a that’s an enormous risk. And then we’ve got our fourth risk that they bring up.

00:16:13:04 – 00:16:15:22
Zach
What’s that? Inflation. And that’s a hot topic right now.

00:16:15:22 – 00:16:45:04
Mike
It sure is. What happens? What’s inflation going to be? We don’t know. But good news sack Social Security I hear increases their payout with inflation really it’s amazing that they do that. They never increase it as much as inflation. Yeah. Here’s the fun part, though. Magically, your Medicare premium increases as well, and usually the amount pretty close to the increase that you got your Social Security check.

00:16:45:04 – 00:17:05:25
Mike
So it’s kind of a break even. Right. So but here’s the thing. When it comes to your retirement income planning, you got to think about what are those risks? Number one, how long you going to live? What’s your health going to be? What about market volatility and what about inflation? There’s a fifth risk, though. Okay. Right. They don’t talk about in this article.

00:17:05:25 – 00:17:15:24
Mike
I wish they would have. Zach, where do most people have the majority of their money when it comes to their retirement savings?

00:17:15:24 – 00:17:23:29
Zach
Well, you know, people just do what they’re told. They stuff their four one K’s, their IRA. And, you know, that’s what we’re told to do. And that’s where a lot of people have those savings.

00:17:24:00 – 00:17:51:02
Mike
That’s right. You probably as you’re listening, if you think about where you have most your money, it’s probably in your 401k or four three or 457, you know, depending on if you work for a public or a private company. And guess what? That’s usually a big pot of money that has never been taxed. So I think I’ve shared this story on the on the show before, but I think this is a good time to share it again.

00:17:51:02 – 00:17:52:28
Zach
I think I know where you’re going. I like this story.

00:17:52:28 – 00:17:59:21
Mike
I’ve never I’ll never forget. Yes. A gentleman who came to my office many years ago and we’ll call him Steve.

00:18:00:10 – 00:18:02:08
Zach
Right, Steve. With the fidelity statement.

00:18:02:08 – 00:18:29:05
Mike
Yes, Steve of the fidelity. Yeah. This is a story. So this guy, Steve, you know, he’s he can’t I don’t know if he came to one of our dinner events or he heard us on the radio or TV. I don’t remember where he came from, but he came to the office clearly. You know, how some people, when they walk in the room, it’s obvious that as far as that person is concerned, they’re the smartest person in the room.

00:18:29:05 – 00:18:30:08
Zach
Steve had it all figured out.

00:18:30:08 – 00:18:38:26
Mike
Oh, yeah, he’s brilliant. Yeah. According to him. Right. And so and he comes, he’s like been almost a jerk from the very beginning.

00:18:38:26 – 00:18:39:26
Zach
A little bit of arrogance.

00:18:39:26 – 00:18:58:06
Mike
I have a simple rule, by the way. You know, if you want to come visit with us and get a little bit of help or a second opinion, we would love to have you come visit. Just be nice. We’re nice. You’ll be nice and it’ll be a great experience. Well, apparently, Steve decided he didn’t want to be nice that day.

00:18:58:18 – 00:19:22:16
Mike
Anyway, he comes in the office and literally as we sit down, the very first thing he does is he has his fidelity statement in his hands and he slams it on the table in front of me and he says, What do you think I should do about this? And so I kind of did. After kind of taking a step back here, I kind of pick up the paper and look at it.

00:19:22:16 – 00:19:43:28
Mike
And it’s a fidelity statement. And he has an imbalance in account balance of about 500,000. He’s got basically a diversified portfolio like we’re talking about tonight. Yeah. And Mike, but I, I wasn’t sure what exactly he was asking, so I said, well and he says, look, I have 500,000 my IRA, what, how should I invest and what should I do about it?

00:19:44:22 – 00:20:08:23
Mike
And let’s be honest, Steve was just being such a jerk. Another word I might use, right? He’s being such a jerk. I’m like, and I know I’m not like, there’s not a chance in the world I would ever accept him as a client. Sure. Because, you know, I have a simple rule, like if I’m going to accept someone as a clam, a simple rule, this, I won’t be able to get along.

00:20:09:01 – 00:20:27:09
Mike
Yeah. You know, when I see your name on the calendar, I want it to put a smile on my face. Right, because, hey, we’re. You’re you’re a good person. We’re good people, and, you know, we’re just good people hanging out. Yeah. Steve Not so much so. And maybe he just had a bad day. I mean, sometimes it happens, right?

00:20:27:21 – 00:20:47:04
Mike
But anyway, I, for whatever reason, I said, you know, here’s a great opportunity for me to have some fun. So I pick up his statement again and I look at I said, I don’t know, Steve, I don’t see it. He’s like, What do you mean? I said, I don’t see that you have 500,000 here and Oh boy, he picks that paper up again.

00:20:47:05 – 00:20:54:25
Mike
He’s like, he starts pointing at it, like starting to get red in the face. It’s like, What are you talking about? It’s right here in black and white. 500. But can you not read?

00:20:54:25 – 00:20:56:19
Zach
Are you blind by 500,000?

00:20:57:00 – 00:21:20:08
Mike
It’s like you can’t read. And so I take a look at it and I say, Yes, Steve, I. I’m sorry. I just don’t see it. And, you know, now he’s getting really red in the face. He’s like, rah, rah, rah, rah, rah, rah, rah, rah. You know, he starts. He’s kind of going off barking. It’s yeah. It sounded like, you know how and the peanuts the old Peanuts episodes where, you know, the teacher talks, you know, can’t understand or that’s kind of what it is at this point.

00:21:20:21 – 00:21:40:06
Mike
But he getting so red in the face, I seriously thought it’s about to have a heart attack. So I finally I said, See, Steve, relax. Okay, calm down, Steve. So here’s the thing. Yeah, I see that your account balance says 500,000. Mm. And I see that’s your name on this account. But what makes you think that that’s your money?

00:21:40:29 – 00:22:02:17
Mike
What makes you think that all that money is yours? I mean, how tell me. Maybe you know something I don’t you know, I know that something is worth what you can sell it for and then put the cash in your pocket. Right. If you have a home that’s worth 500,000 and it’s paid for yourself for 500,000, you put 500,000 cash in your pocket.

00:22:02:25 – 00:22:21:19
Mike
But if you have a home that is has a mortgage on it, something less goes in your pocket. Steve, this is an IRA. How are you going to pull 500 grand out of here and put it in your pocket? Oh, well, of course I got to pay taxes. That’s like. Right. So I guess you don’t have 500,000, do you?

00:22:21:19 – 00:22:45:12
Mike
Yeah. So here’s the deal. You live a long time in retirement and you have a lot of your money in for one case and IRAs. Guess what? The IRS has a share of that. And I saw recently that our national debt just exceeded $30 trillion. That’s the equivalent of $90,000 per citizen. Do you think taxes are going to go up down the road?

00:22:45:13 – 00:23:08:08
Mike
MM Do you think there’s a risk of that? Do you think that maybe if taxes go up down the road that that will reduce the value of your retirement accounts? Definitely. When you’re living longer and you have health care issues and there’s inflation and all that other stuff, yeah, it’s a very real threat. Here’s the deal. The old diversified portfolio is not a retirement plan.

00:23:09:15 – 00:23:38:02
Mike
And if you’re retired, if you’re nearing retirement, it is so important that you make that you take the right steps with your planning. My dad worked for the same company for 32 years. For 32 years, he saved for retirement. Just a middle class guy. He’s you know, my parents, they’re not millionaires. They never were middle class, good, solid middle class people, just like probably, you know, you are as you’re listening in right now.

00:23:38:19 – 00:24:04:15
Mike
And they just did everything they were told to do, try to do everything right. And when they retired back in the late nineties, they came to me and I put them in the diversified, balanced portfolio because that’s what I was taught and I did it perfectly well. And then along comes 2000, 2002 thousand to a three year period where over that period of time, the markets lost almost half of their value.

00:24:05:04 – 00:24:32:00
Mike
And you combine that with, you know, 4% withdrawals every year, there’s another 12% out of the portfolio. Yeah. By the end of 2000 to my parents because they followed my advice and I got from the financial industry they’d lost half their money and if they had kept on that pace, they’d be out of money today. Thank goodness that at the end, you know, by the way, at the end of 2002, you know, I’m looking for answers, right?

00:24:32:00 – 00:24:35:15
Mike
I’m you know, what could we do in the industry? You know what they said to me, Jack?

00:24:35:19 – 00:24:35:28
Zach
Well, they.

00:24:35:28 – 00:24:46:06
Mike
Say they all said the same thing. Everybody you know what markets go up over time. It’ll be fine. Tell you, tell all your clients, tell your parents. They just need to hold on.

00:24:46:06 – 00:24:46:25
Zach
Write it out.

00:24:47:11 – 00:25:10:18
Mike
The problem is that at that point, they don’t have time. They can’t hold on. If they kept doing what they were doing, they’d be out of money. And they had we had to do something different. And finally, after going to a number of conferences, you know, trying to get a better answer, I finally had lunch. One day I’m sitting at a conference, a lunch, and this older guy sits down.

00:25:11:02 – 00:25:31:10
Mike
He had been practicing since the, you know, sixties. He’d been around forever. And, you know, I asked him how he was doing and he told me, Man, if you think now is bad, you should have seen what we went through in the seventies. Right. And he showed me, here’s how you plan for retirement. Like, here’s how you do it so that even when markets are going south, it doesn’t matter.

00:25:31:10 – 00:25:48:22
Mike
Your clients are still in good shape. So I applied that to my parents. I mean, they’d already lost half their money, said, Hey, might as well try something else. So we did that and did it with other clients. It started working and then 2008 happens. But guess what? For my parents and the people I had in that plan, it worked.

00:25:49:09 – 00:26:18:17
Mike
That’s when, you know, it’s like here it looked like it should work. It made sense that you worked. It worked in 2008. So here’s the challenge. We’re looking at this article this week, talking about the risk when it comes to your retirement planning. And in this article, they basically say if you have a balanced portfolio, a diversify find balanced portfolio in retirement, be prepared to run out of money because that’s probably what’s going to happen if that’s your plan, because it’s not a plan and they actually get some statistics right in.

00:26:18:17 – 00:26:54:01
Mike
This is kind of interesting. They say balanced portfolio and you just take out 4% a year, 4% and the markets cooperate. They never really have a bad year at all. They say there’s still a 21% chance that you’re going to run out of money. Whoops. By the way, if you’re taking out 5%, they say that it’s about 45% chance you’re going to have money with how you feel about that going into retirement, saying, yeah, I want to take 5% income in and well, flip a coin 5050.

00:26:54:01 – 00:27:27:10
Mike
Yeah maybe I’ll maybe my money last maybe it won’t in my world that’s not good enough. It’s just not good enough. And oh, by the way, then the article goes on to say, what if what if you have just one year, just one year in the first ten years of your retirement, just one where the market’s down over 20% for the year, just one in the next ten in the first ten years of your retirement, how does that affect the odds that your money is going to last?

00:27:27:10 – 00:28:00:05
Mike
Well, 4% portfolio, we’re saying, oh, 20% that it would fail, 80% that would work. Right now it’s 43% failure rate, 57% win, basically, again, flip a coin, maybe your money lasts, maybe you run out of money and the industry doesn’t care, right? Yeah. By the way, if you want 5% income now you’ve got a 77 zero, 70% chance you’re going to run out of money that this doesn’t cut it.

00:28:00:05 – 00:28:23:05
Mike
Right. So but here’s why I can tell you, I do this every day. I can tell you that if you need 4 to 5% income for your retirement from your portfolio, I know how to design that so it lasts. I know how to build that. So it lasts your lifetime. Right. And it just involves a couple of simple strategies and they’re different for everybody, by the way.

00:28:23:05 – 00:28:39:13
Mike
Not everybody’s the same, of course, but there are some simple strategies that you can use. It depends on the person that that way you take these failure rates of 20 and, you know, 40 and 70%. Wouldn’t it be great if the failure rate would be zero?

00:28:40:03 – 00:28:40:20
Zach
Definitely.

00:28:40:20 – 00:29:06:10
Mike
Or gosh, less than ten? Right. I mean, that duh. Here’s the challenge, though. You have to understand, an investment plan is not a retirement plan. You have factors in your retirement you have to pay attention to. We’ve identified five things tonight that you got to watch out for. You got to watch Outlook. What if you live a long time?

00:29:06:24 – 00:29:26:11
Mike
Makes it harder for your money to last? What if you get sick along the way? What’s that going to cost? What if the market has a bad year or two? How do you protect against that? What about inflation? Well, who knows what’s going on there, right. And then what about my favorite topic?

00:29:26:12 – 00:29:27:00
Zach
Taxes.

00:29:27:00 – 00:29:48:02
Mike
Taxes? What if taxes increase down the road? Right now, our government’s over $30 trillion in debt. That’s $90,000 for every man, woman and child in this country. No way that’s going to get paid off. So they’re going to have to increase taxes. And if a bunch of your money’s in your 41k or IRA, what do you can do about that?

00:29:49:07 – 00:30:22:07
Mike
Well, here’s the thing. We have answers for you. We can help you with that. And you may have a current advisor if your advisors not talking to you about this stuff, guess what? You don’t have a retirement advisor, you have a growth in accumulation advisor. Or maybe it’s time for you to start getting more sophisticated help. By the way, if you’re retired right now, if you’re in the first few years of your retirement, if you are going to retire in the next, you know, five years or so, if you’re not calling right now, I don’t know what’s going on because this is a no brainer.

00:30:22:28 – 00:30:43:24
Mike
If you have saved at least 200,000 for your retirement, we are willing to put together for you absolutely free of charge, with no obligation. We will put together a personalized retirement income analysis, and this analysis will help you understand. Hey, will my money last as long as I do? What if taxes go up? How will that affect you?

00:30:44:12 – 00:31:07:06
Mike
What if your health care? What if you get sick long way? How will that impact your planning? Right? What about inflation? How does that impact things? This analysis will identify here’s where you are now and specifically, here’s what you need to do in order to make sure you have that bulletproof retirement plan. Right. Will it be awesome to have a bulletproof retirement plan?

00:31:07:07 – 00:31:07:24
Zach
Be amazing.

00:31:08:12 – 00:31:31:13
Mike
See, we’re huge believers. You know, you work your whole life just like my parents. You work your whole life. You save money. You deserve to enjoy the retirement of your dreams. You deserve that. The financial industry as a whole, they couldn’t give two hoots about it. But we do. I’ve seen this impact real people and I know how to help you.

00:31:31:13 – 00:31:35:20
Mike
Let us be helpful. So just give us a call in. Zach, what’s our number like?

00:31:35:20 – 00:31:51:01
Zach
It’s easy. It’s 512886 5850. Again, that number is 512886 5850. Now again, it’s after hours. You’re going to get our answering service and they’re just going to get your name, your number and a good time for us to give you a call back.

00:31:51:01 – 00:32:17:06
Mike
Mike, the key is this You’ve got to get a plan. You need to have a plan to get you through retirement. And it’s not the same thing that gets you to retirement. These are two very different activities. So it all starts. So by getting that free, personalized retirement income analysis, that’s where it all starts. You need to know where you are.

00:32:17:15 – 00:32:39:29
Mike
If you are sitting on the diversified balance portfolio, you’re trouble. It’s that simple. You’re in trouble. You just don’t know it yet. Let’s get this analysis done while you’re still in good shape so you can make some positive changes and protect yourself. Right? You deserve that great retirement. Let’s be smart. Let’s make sure you’re making the right financial choices.

00:32:39:29 – 00:33:05:01
Mike
All right, gang, we are up against the clock. We have to wrap up this week. It was great talking to all of you. I hope you have a great week. Beyond those first ten callers, 512886 5850. And we’ll see you again next week.


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