Speaker 1 0:01
The markets can move fast and often for reasons that have nothing to do with your portfolio. World events, headlines, and shifting sentiment can change the retirement picture overnight. Today, we’re breaking down what really matters and how to stay in control.
Announcer 0:18
Welcome in to Retire Smart Maryland Radio with Prashant Sabapathi,
Speaker 2 0:26
welcome in to Retire Smart Maryland Radio, your host, John DeFeo. You can find him at Elite Income Advisors, he’s an independent fiduciary. They’re headquartered Ellicott City and a satellite office located in Annapolis for your convenience. I’m Morgan Patrick. A pleasure to be on, and just talk about the proactive part of playing, just getting ahead of this, making sure you’re prepared, John. Before we dive in on topic number one, How was the week?
Speaker 1 0:52
It’s been great, busy as usual, you know, beginning of the year, everybody is looking to get a jump start on their finances, start to plan out, you know, what to expect throughout the year. You know, there’s a lot of folks that have just entered retirement for the first time, so checking in with these folks, you know, ensuring that the plan that we put together is working well, making tweaks as it comes up. So it’s been a busy couple of weeks, a lot of workshops in the community, so I think we say this every week, it’s a busy week, but a good week at that.
Speaker 2 1:28
Yeah, I tell you, and a lot of people are concerned, and we’ve said this often on the program: retirement does not happen in a vacuum, things are going to impact you, consumer sentiment, you’ve also got world events, fast-moving markets, and why we’re going to talk about today as we open up the show. Why this matters to retirees. John,
Speaker 1 1:50
yeah, absolutely. You know, one of the things that we have seen coming into the year are some pretty volatile markets. We talk about this on the show a lot, that you know, with you know a world of instant information and quick trading, there’s a lot of movement that’s unexpected. So, for folks that are either just about to retire or who are already in retirement, this volatility and the shift in investor sentiment can really be concerning and challenging. So, today we’re going to talk a little bit about what we’re seeing now, some of the expectations that we have coming up throughout the year, as well as some potential strategies to shift from what we call the accumulation mindset to the distribution mindset. You know, and how that can impact retirees as you’re approaching retirement, as, as in addition to when you’re actually in retirement and starting to take money out of your portfolio.
Speaker 2 2:50
It’s so important to be prepared, and we, we tend to procrastinate, and we are in our working lives, we’re putting our monies away for retirement. The portfolio is growing, and, but there really isn’t a plan in place, and there are a lot of you that are in this category. We talk about it each and every week, but we also give you an opportunity to take action on your own behalf, and what I mean by that is a complimentary appointment with elite income advisors, come in and meet, sit down, talk about your own scenario, and if you want to roll forward, you can, but if you don’t want to, you don’t have to, you’re not obligated to become a client, but these again are complimentary, and you can call it anytime during the show, 800-653-8404 that’s 800-653-8404 so this, this bigger picture, this ever-changing world that we’re in, John, it causes a lot of stress. So, let’s talk about some recent, but ongoing triggers that are out there.
Speaker 1 3:52
Yeah, I think right now one of the biggest triggers that we’re seeing are the, you know, the uncertainty in global politics. You know, we’ve got a lot going on in the Middle East. We’ve got the, you know, issue of Greenland and the US is desire to take control of that property, and you know the sentiment behind that. We have, you know, the central bank decisions. We have interest rate cuts potentially coming this year, you know, inflation in the headlines, so there’s a lot of things that drives this emotion when it comes to the markets, and because there are so many retail investors that are driving the markets these days, it has a lot of effect on that, you know, by the time this show comes out, we’ll be a little bit further past it, but we just had an announcement from the Trump administration that they were going to potentially put some tariffs on Europe due to the, I guess, the conflict with Greenland. The markets didn’t like that, right? We saw a pretty significant drop in the markets just in one day from that sentiment, and this happened time and time again by. When there’s an announcement of some geopolitical rhetoric, you know, whatever the case is, whatever the announcement is, you know, those things shift the markets, and what do you do if you’re in the midst of retirement, you’re taking money out of your portfolio, you see a drop of two to 3% and you’re forced to take a distribution, you still have to pay the bills and keep the lights on, so we want to have plans around that. We want to be able to provide some peace of mind to our clients that these market dips are more on the short term, but also to have a plan in place when they come through, because again, the last thing you want to do is be in a position where we have a market dip, and you’re forced to take a distribution to provide income, whatever the case is. So, we, you know, we try to plan for this. We, you know, talk about this on the show a lot. We’ll talk a little bit deeper throughout this show about switching from accumulation to distribution mindset, how to protect your money, and also how to just emotionally get through the news, you know, seeing the markets go down, seeing your portfolio lose value, you know. Unfortunately, retirees don’t have the luxury of waiting out these longer term dips, so you know what can you do in the short term to try and get in front of that and protect yourself against the volatility when it comes to,
Speaker 2 6:22
I tell you, we are so close to it, and when I say to it, I’m talking about any event that could impact your money. Sometimes that bigger picture, we just can’t quite focus on it, but if you take the opportunity to sit down and have conversations with professionals that do this on a daily basis, it’s going to become more clear a pathway strategy to get you to and through your retirement, and kind of cut through all the noise, and right now we’re getting a lot of noise, and it’s making a lot of people nervous. Now, if you have a plan, there’s more structure to your overall, there’s there’s a steadiness to that, so the opportunity to get on the calendar again with Elite Income Advisors. These appointments are cost-free. These appointments are no obligation, meaning you’re not obligated to become a client, and Elite Income Advisors is not obligated to take you as a client. This is a good way to see if it’s a good fit, see if there’s a comfort level there. If you want to roll forward, you certainly can. So, John, with everything that’s going on, world events, fast-moving markets, people are nervous, they get an opportunity right now to get on your calendar. Walk us through the appointment.
Speaker 1 7:36
Yeah, number one, we want to identify what your retirement vision is. We’re going to gage what you’ve done up to this point to save for retirement, what your foundational income sources are, figure out if there’s a gap in that income relative to what you want to spend, and how we’re going to efficiently distribute those assets that you’ve saved over time. Once we can identify that we’re going to look at your tax situation, we’re going to help you bet out an efficient estate plan, navigate the cost of health care, long term care, bring all of that together in a centralized plan that we can monitor and revise over time. These plans are not static, they’re very dynamic, so we have to check in, keep up to date on these things, so again, that first visit is a conversation to identify if we’re even the right fit to help you with those goals, and if so, that plan I just described is exactly what we’re going to put together for you.
Speaker 2 8:32
Okay, we’ve got the opportunity in front of you right now. Call our number, 800-653-8404 secure one of those appointments, no cost, no obligation. See if you’re on track for your retirement. See if it’s a good fit. 800-653-8404 Once again, 800-653-8404 When we return on Retire Smart Maryland Radio, it’s time for strategy of the week. Stay tuned, you We are back on Retire Smart Maryland radio. Your host is John DeFeo. This week you can find him at Elite Income Advisors. He’s there every single week, and he’s helping his clients get ready for retirement. Check out the website Elite Income advisors.com and treat that as a resource. Links to the TV show, our radio shows in podcast form. Again, good information on retirement planning, background information on John Prashant, Ozzie, the entire team at Elite Income Advisors. They’re headquartered, Ellicott City. They have a satellite office in Annapolis, and John is an independent fiduciary. I’m Morgan Patrick. A pleasure to be on. We started off the show just talking about, you know, where the consumer is right now in their mindset. The world events are going to, you know, impact that mindset, all the things that can happen, the fast-moving money. Markets and why it matters to those that are about to retire, and especially those that are already in retirement. So, that’s how we started, and now we move to our strategy of the week. This is a segment we do on the show, and it gives you some insight into possibilities. All right, strategy of the week: realigning portfolio risk with retirement reality. It is a key shift, but John, first and foremost, why this strategy? Why now,
Speaker 1 10:26
right? So we talked just briefly earlier on the show about the transition from the accumulation mindset to the distribution mindset, where, while you’re working, your primary objective with your investments is to grow your money, save and build as much of a nest egg as you can, and then at some point prior to retirement and in retirement, you want to change that objective from just growth to a combination of growth and income. You know, how do we start to distribute the money that we’ve saved over our careers in a way that we’re not negatively affected by the market, by the sequence of returns of the investments over time, in the timing of our distributions. I think these are three key factors that we have to keep in consideration when we’re switching that strategy, and you know, we get the question all the time about when is the right time to do this, you know. Should I do it the day I retire? Should I be looking at it 510, years ahead? And I think it’s really subjective to the individual. I think that the closer you get to retirement, the more that you want to look at shifting from the accumulation to the distribution mindset. And when we talk about this, you know, we’re not suggesting that you want to take all of your money out of the market and stash it under your mattress, and you know, start to live off of your money in that fashion. You still want to have some of this money working for you in the market, you still want to have growth in your investments, but you only want this with the portion of your money that’s not going to be drawn for income, so we start to look at, we start to look at ways to separate your money into different buckets. We talk a lot about the bucketing approach, where some of your money is directed just towards growth, the other money is directed towards income, and how do we figure out the right amount to put into both of these, you know, it really depends on your goals, what your income needs are, your appetite for risk, and what your plan could withstand in terms of risk. So, we have to be able to identify all of these things when we start to put that plan together. So, it’s one of the number one questions we get in when clients come in, and even new people come to visit with us, is am I taking too much risk? Should I start to transition into more of a distribution mindset? When’s the right time to do that? So, you know, it’s something we help our clients gage through all the time.
Speaker 2 12:55
Well, and we talk about it all the time, John, and you and Prashant do an excellent job of kind of painting the picture that I mean, think about it. We work our entire lives, we accumulate our entire working lives, and now all of a sudden we have to change. We have to go from accumulation to distribution, and there’s so many of you out there that are trying to do this by yourself, or you haven’t thought about the planning aspect of it, and it can be daunting when you all you know is save, and now all of a sudden you’ve got to start playing on how you’re going to distribute this kind of money as you move to retirement, and what is the, the, the most streamlined way to do it, the most beneficial way to you to do it, and there’s so many things that go into that, but we have this mindset of I, this is what I’m doing, I save it, I save it, I save it, and now all of a sudden I’ve got to shift gears, and we’ve had the conversation before. I just want you to reiterate, when you sit down with people and you have this conversation, John, I mean, it’s, it’s kind of a, it’s a new world for them, they’re not used to it, and they have to kind of have to buy in,
Speaker 1 14:02
certainly, you know, it’s difficult to change somebody’s perspective and their philosophy when it’s been one one way their entire lives, right, and it’s funny that we typically get two different types of people that come into our office, it’s one that will come in and you know, does not want to shift any of their assets out of the market, they’re still in it to win it, as we would say, you know, they want to continue to grow their assets as much as possible, you know, not really thinking about the risk that they’re taking, if we do see a market correction, I think Recency Bias is a part of that, we’ve seen such a positive market performance over the past few decades with only really one significantly poor year in 2022 that it’s easy to just see all of the growth and want to continue to ride that out, and then the other type of person comes in and they want none of their money in the market, right, they’ve been through an oh 809 they still remember the. The pain that that came from that, and they don’t want to put any of their money at risk at all. So, you know, working with people, and you know, trying to talk through that a different perspective can be challenging at times.
Speaker 2 15:15
Tell you, it’s so important to have those conversations, have that plan in place, we’re going to talk about that. We want to make sure you understand we’re here not only to throw around these topics about retirement, the importance of planning and being proactive, but we also want to give you access to a complimentary appointment if you’ve got any questions, and maybe you’re in this accumulation mindset and you can’t get out of it right, you haven’t started the planning process, but you’ve been saving well, you’ve done the heavy lifting, you’ve put the monies away. Well, now you have to start strategizing on how that’s going to work for you in retirement. The opportunity to get on the calendar with the Elite Income Advisors is right now, no cost, no obligation. Simply call the number 800-653-8404 cost free, a point. appointment, no obligation appointment. 800-653-8404 If you’re stuck with that accumulation mindset, but you need to transition into the distribution part of this, you need to have a plan. Excellent opportunity for you, if you’re in the middle of something, but you’re frustrated, need a second opinion again. Grab one of these appointments: 800-653-8404 So it comes down to the plan, but what about the framework of the plan?
Speaker 1 16:32
Yeah, I mean, I think to start the process and create the framework, we have to analyze where you currently are, right? So one of the things that we do with our clients, and even folks that visit with us that aren’t quite clients yet, is we do an X-ray of your portfolio, and we stress test it. Right, we figure out what the best case scenario would be based on historic market conditions, we look at what the worst case scenario would be based on historic market conditions, and then we help the clients evaluate their comfort with that, and whether their plan can withstand, you know, a potential 50% downturn if we saw another event, like a financial crisis or.com bubble, so you know, we have to analyze where you currently are, we have to look into the stress test to figure out what the best and worst case scenarios are. We’re not so interested about average returns, of course, that’s important. Your returns over time are going to matter for you, but what we really care about is in any given year, if you are taking money out of your portfolio, what’s the most money that you could lose, and then have to take a distribution on top of that. We talk about this all the time, that the losses that you incur in retirement are going to hurt you a lot more than the gains are going to help you. You know, if we find ourselves in a bear market two, three years in a row, that maybe we’re down 15, 20% and you’re taking out 50 $60,000 a year. It makes it incredibly difficult to get back up to that point that you were, that you were at previously, right? Make yourself whole. So, you know, we find that the sequence of returns that you inherently have in retirement are going to make or break your success. If you don’t have a plan in place to get in front of that, you know, we want to potentially segment the assets that you have by the income that you need in the short term, in the intermediate, and then some of the long term money as well, and again, that’s where the bucketing approach comes in, but to create the framework around how much to put in each bucket, you know, we want to identify what your current risks are now, and we do that through an X-ray and a stress test to evaluate where you are and how comfortable you are with that.
Speaker 2 18:51
Well, and John, you say it all the time, Prashant reiterates it too. Everybody’s different, you need an individualized, customized plan that takes into account, you know, the puzzle pieces that you have on the table when it comes to your retirement. So, okay, big picture, we have the framework. What’s the outcome once we have it?
Speaker 1 19:11
Well, the outcome is you have a plan in place that doesn’t force you to sell at losses in your account, you know, you have a portion of this that is meant for growth that’s not touched during those poor periods of the market. You have flexibility to be able to feel comfortable in where you’re taking your distributions from, right? You have more of a predictable cash flow, more certainty in your income, and at the end of the day, that’s what we want to be able to create for our clients is peace of mind, it’s certainty. Where, if you see the markets on fire, the news is, you know, projecting mass hysteria, whatever it is that they’re talking about that week, you’re still comfortable on the fact that you have a consistent income stream, your cash flow is steady, and what’s happened. In the market is not affecting your short-term financial plan, so I think the outcomes are pretty substantial. Again, we want our clients to sleep well at night, we want peace of mind. The less time that you’re spending stressing about your financial plan, the more time you can enjoy retirement, enjoy your family, enjoy your vacation, and that’s what it’s all about. I mean, I preach this all the time. If I can save you time in retirement and give that back to you, then I’ve done my job in some way.
Speaker 2 20:31
You need a plan, a plan of attack, a plan to protect. I mean, this is an opportunity for you to get on the counter with the elite income advisors and have this kind of meaningful conversation, as it pertains to you and your money. This is your retirement. You can take charge right now. We’ve got appointments. These are complimentary. They’re no obligation. Test drive elite income advisors come in, meet with John Prashant, the team, and see if this is a good fit. See if you’re on track for your retirement. So, John, kind of walk us through. We call the number. What happens?
Speaker 1 21:07
Yeah, it’s a conversation, like I said. Figure out what your goals are in retirement, map out your income, your expenses, do that x-ray of your portfolio. See what type of risk you’re taking right now, what it’s going to take to restructure your plan to eliminate uncertainty from your income stream and your cash flow, you know, build in a tax efficiency plan, an estate plan, navigate the long-term care and health costs, all of those things bundled together, you know, are really what we’re going to look into and give you our perspective on. At the end of the day, it’s your money, we’re just the advisors, but we want to offer that perspective and see if we could potentially offer you the peace of mind that all of our clients have due to the plans we put together.
Speaker 2 21:52
It is no cost, it is no obligation. Call the number, grab one of these appointments: 800-653-8404 again, see if you’re on track for your retirement. 800-653-8404 Again, bring your scenario and talk about it. 800-653-8404 We’ve got more Retire Smart Maryland radio coming up. I’ve got a scenario. We’ll see what John’s going to do next. I’m John, welcome back in. It’s Retire Smart Maryland Radio, your host, John DeFeo, independent fiduciary at Elite Income Advisors. Check out the website, treat it as a resource, Elite Income advisors.com information on retirement planning, background information on John Prashant, Ozzie, the team, and also links to the TV show, links to the radio show, and podcast form. I’m Morgan Patrick. Absolute pleasure to be on with John, independent fiduciary, as we have stated. They’re headquartered Ellicott City, and they’ve got a satellite office in Annapolis for your convenience. We’ve had a lot of fun discussions on just the importance of being proactive, having a plan, and what it means for pre-retirees and those that are in retirement. Got to be prepared for it, because retirement doesn’t happen in a vacuum. And now we’re at scenarios, and I’ve got a situation. I’m going to present it to John, see what he would do with this. All right, so here’s the situation: couple in their late 50s retirement, they can see it, it’s within five years, they’re confident after a strong market run, and we’ve kind of been on that for a number of years, talk about the wake-up moment, John, and what happens.
Speaker 1 23:45
Yeah, I mean, you know, typically it’s like you said, the market’s going strong, and all of a sudden we have maybe a six month period to a year period where we’re not experiencing those returns, and it can be a bit of a shock to the system, especially if you’re five years out, right? You see, a million dollar portfolio drop down to $700,000 and what just happened? You know, is this mean that I have to delay my retirement? Do I have to save more? Do I have to change my lifestyle? So we, we actually, you know, hear about this a lot, and the folks that come in that are in that train of thought, where they’re saying, “Look, I want to, I want out of the market entirely. You know, I want to put it under my mattress. I don’t want any of this at risk. I think, have you know, that been affected by that more than others in the past. You know, very specific scenario comes to mind with a couple that was visiting with us, and their father had been employed with a company for about 25 years, coming into the financial crisis. He had a lot of his money in equities. His financial advisor had suggested putting a significant amount of his wealth into just a few companies. It was not diversified as much as I personally would have, I. You know, done it myself, and when the financial crisis came to fruition, and the markets were down 50% he lost even more than 50% of his portfolio. The gentleman was just a few months from retirement. Again, he’d been with that company for 25 years, and that forced him to work for another decade before he was able to feel confident and retiring, and that meant that the guy was almost 80 years old when he got to retire, and this couple said, I do not want to be in that situation, you know, it really messed with his mental health, he didn’t get to accomplish the things he wanted to accomplish, and they lived through that with their, their own, their own family, so you know, when I heard that, I understood completely why they didn’t want to take any risk in the market. We developed a plan that allowed them to separate a piece of their portfolio, it was roughly a third of their investment portfolio, into a more secure bucket of money that provided them the income that they needed to supplement all of their employment income, alongside social security and a small pension, and that meant with the other two thirds of the money we were able to invest that in the market, you know, provide a level of growth to them, to provide a long term care bucket down the road, a potential legacy bucket, you know, protection against inflation, because growth is key to protect against that, but it provided them with that peace of mind that they knew, because all of the income that they needed in retirement was guaranteed and solidified with the instrument that we put together, that they could invest the other two thirds of their money, still take advantage of growth and participate in the market, and not have the same fear that their dad had when he lost more than half of his retirement savings and had to work for another decade. So, those are the types of plans that we’re putting together for our clients to ensure that you’re not going through the emotional regression that comes with a market downturn.
Speaker 2 27:04
I tell you, having a plan, having that peace of mind. I think there are many people out there that are invested, they’re in the market, and the person they’re working with is probably a broker, not a planner. So, when you think about it from that aspect, I mean, your money’s going to be in the market, your money’s gonna be at risk, and this particular couple that John’s talking about, they wanted to make sure that history didn’t repeat itself, they wanted to have protection, but at the same time, and you mentioned it, you got to have some skin in the game, you got to have something in the market that’s going to help you with a number of things, and you mentioned inflation, so the, I mean, listen, prices aren’t coming down. Our inflation number might come back a little bit, but the prices are high, and you’re going to need more money in retirement just to pay for the just your regular things that you’ve been paying for for years. So, make sure in your planning process you’re having these types of discussion, but have skin in the game.
Speaker 1 28:00
Agreed, and I also just want to revisit something that you had mentioned, because I think this is really important, and that’s the difference between a broker and a financial planner. There’s nothing wrong with, with brokers, right? You know, they’re needed, they’re, they’re there to place transactions, it’s a business, right, it’s a business, exactly, but they’re not, you know, and not all of them, but not all of them are fiduciaries or financial planners, so their, you know, responsibility to the client is to play suitable trades that could be, you know, a suitable trade for the client, and not necessarily to do what is absolutely in the best interest of the client at all times, and that’s what comes with working with a fiduciary advisor, and that’s what we are in our office, as a fiduciary advisor that’s always looking out for the best interest of the client, and in addition to that, as a certified financial planner with that CFP designation that I have, there’s even a higher standard of care that we take with our clients, you know, that is subject to the review of the CFP boards of standard and conduct, so you know the things that we do for our clients, at least that I do for my clients, that Prashant does for our clients, are always looking at the best interest of what’s going on. It’s not just, you know, whether that stock is suitable in this situation, it’s how does this play into their income plan, how does this play into the estate plan? Is it tax efficient? All of these things we have to take into consideration, and I think that’s the big difference between the experience that this couple’s dad had versus what they’re having, is they didn’t have discussions, or her father didn’t have discussions with this broker about how these stocks could play into his retirement plan, if we saw, you know, a correction like we did in 0809 Nobody was anticipating that, whereas we had those exact discussions out the gate before we invested any of their money, before we took them on as clients. We gaged their risk tolerance, we gage their income needs, we ensured that those aspects were taken care of. So before we talked about, you know, investing the money aggressively into the market, so I just wanted to kind of identify the difference there. Again, there’s nothing wrong with the broker model, you know, but I think that as time progresses, as the market becomes more complex, the fiduciary model, you know, and even further along, the certified financial planner is the, you know, the kind of the highlight of the industry at this point, and one of the reasons that I got the designation that I did is that I wanted to be able to serve clients to the best possible ability that I could, and there’s not many designations in the financial planning field that are higher than that CFP designation, so you know that if you, you know, you do come and work with a certified financial planner, you’re getting the highest standards possible.
Speaker 2 30:44
Well, and you’re looking at all the different puzzle pieces that are required to put together a complete retirement plan. You’re going to need the broker side, but you’re also going to need, you know, everything else that goes into it, and you don’t want to miss any of this, so have a plan, be prepared, have these types of conversations, and if you’re just sitting on your portfolio, you’ve accumulated well, you’ve done, as I say, the heavy lifting. Now start the planning process, and again, work with a fiduciary firm. Opportunity to get on the calendar with such elite income advisors is right now. John, walk us through the appointment.
Speaker 1 31:22
Yeah, it’s a conversation to determine whether we’re the right fit to help you with the goals that you have. We’re going to ask what those goals are, what your primary concerns are, where you stand currently with your financial situation. We’re going to review your income, we’re going to review your expenses. We’re going to navigate taxes for you now and in the future, help you build out an efficient estate plan. You know, cover your long-term care and your health care costs, all of the things that you’re probably thinking about as you approach retirement, or if you’re already there, you know, we’re going to help you with along the way. And we’re going to review this on an ongoing basis, you know. We meet with our clients three, four times a year. We want updates, we want to provide our perspective on changes in the economy and regulations and laws. So, all of this, you know, is dynamic. We want to update that regularly. So, again, first appointment is just to gage if what we do here is a right fit for you and if you’re the right fit for us, and then if we find enough common ground to work together, we’re going to be along with you on that ride through retirement to help create that peace of mind.
Speaker 2 32:29
All right, we’ve got the complimentary appointment waiting for you right now. Call this number: 800-653-8404 That’s 800-653-8404 You’re leaving the checkbook at home, and you’re not obligated to become a client, and they’re not obligated to take you as a client. This is a get to know you meeting. See if it’s a good fit. 800-653-8404 We’ve got our final segment coming up. Some closing thoughts. You’re listening to Retire Smart Maryland Radio, you Retire Smart Maryland radio hosted by John DeFeo. You can find John at Elite Income Advisors. They’re headquartered Ellicott City satellite office in Annapolis, for your convenience. A kicking website, go check it out, treat it as a resource. Elite Income advisors.com that’s Elite Income advisors.com Links to the TV show, you can see their pretty faces, and also links to our radio show in podcast form. And again, John is an independent fiduciary. I’m Morgan Patrick. Absolute pleasure to be on. Talk about the importance of just being proactive, having a plan, and so many of you have done this. Just an amazing job. You’ve worked your entire career, you’ve put your monies away, and now here comes retirement. What are you going to do? You’re just going to show up and have a portfolio and start withdrawing, man, that can get kind of scary. You don’t know how much gas you’ve got in your retirement tank. So, we want to talk about just some closing thoughts with you, John, on where we are now, and there’s a lot of uncertainty out there, and, and just, you know, also kind of plant some seeds of, you know, retirement hope. There’s, there’s, there’s a plan out there for you. You need to make sure it’s customized.
Speaker 1 34:24
You’re absolutely right, you know. And markets don’t warn you before they change directions, right? Even the Oracle of Omaha, Warren Buffett, doesn’t know what’s going to happen tomorrow in the market, so that’s why having a plan that’s proactive, that is, you know, assuming the worst in the plan that you have is the best way to get in front of it and create the peace of mind that you need in retirement. You know, when you think about what drives success with investing, it really is time, right? It’s the time that you are able to remain invested, you know, time to recover. Or and what is the one thing that retirees are lacking, it’s time, right? It’s the time to recover, it’s the time to wait before taking a distribution, so to alleviate that emotion, the concern behind it, you know, making a decision to sell out at a low point and not participate back in the recovery, all of those things that come with, you know, reactionary investing, you know, having a plan in place where the income that you need is set aside, the growth aspect is in a different location helps to get in front of that. So, as you’d mentioned, there is a plan out there for everyone, whether you know you are in need of income from your portfolio or not, being able to address the risks that you’re taking, the diversity that you have in the portfolio, looking at things like the correlation between your investments, the internal expenses, you know, the drag and taxes, all of these have to be identified when putting these plans together, and it’s unique to each and every person, right. The factory workers’ financial plan might be a lot different than the federal workers’ financial plan, who has a guaranteed pension and health care taken care of. The doctor is probably going to have a different financial plan than the waitress or the server at the restaurant, right, but everybody has the ability to plan properly if you put the time in, so that’s something we preach time and time again. If you haven’t had an opportunity to get a diagnosis on your financial plan, if you don’t have a financial plan in place, and retirement is in the near future. I think it’s a really important time to take a look, see where you’re at, see where the risks lie, and put something together to get in front of that. You know, I don’t want to sound all doom and gloom, because I’m, you know, I am optimistic that the market will prevail, prevail over the long term, right? I think over the next five to 10 years the market will still be positive. What’s going to happen between now and year end? That’s anybody’s guess. You know, it’s a midterm election year. Historically, those aren’t the greatest years in the market. We’ve got a lot of geopolitical noise, as I would say, that can affect the, you know, the outcome of what we’re looking at, and again, if you’re someone that’s taking distributions from your account now, or that’s in the near future, I think it makes a lot of sense to evaluate the plan that you have, ensure that the money that you need for income is secure, it is not aligned directly to the market, and give yourself some peace of mind at the end of the day, that you’re not going to be a position where the negative sequence of returns that you receive are going to put you in a bad position 10 years down the road.
Speaker 2 37:51
Tell you, it’s important again, have a plan, and it needs to be customized, needs to be tailored to you and your circumstances, and there’s so many of you that have saved well, and you put the monies away. Now the planning needs to start. Prashant says this all the time. John, you’ve reiterated a number of times too. It all comes down to your income, your income that you can produce in your retirement, and the more income you have, obviously, you’re going to be able to take care of some of, you know, the chaos that we are currently seeing. Things are going to cost more. If you have more income, you can pay for them. There’s health care, there’s taxes, there’s long-term care, there’s estate planning. You know, the more income you can create, and we’re talking guaranteed income, where you can, you can sleep well at night, that’s what planning is all about.
Speaker 1 38:46
You’re absolutely right. Yeah, you know, and as you just said, when it comes to living a comfortable lifestyle in retirement, it’s all about your income, you know. We want to get your income as high as possible, as fast as possible, but most importantly, as safe as possible. You know, if you had all of the income that you could possibly need on a monthly basis to pay your bills, travel, do all the things you’d like to do in retirement, do you think that you would be able to sleep better at night if the market was creeping down, right? I mean, nobody wants to see the market declining, you know, just for ethical reasons. There’s a lot going on in the world that maybe keeps you up at night, but if we can alleviate a part of that by knowing that your financial plan is set in stone, that you’re not at risk of running out of money based on what the person in office says one day of the week, you know, I think that that has a lot of value to it, and that’s what our clients tell us, is that, you know, they almost look at us as counselors, you know, not just in their finances, but in their, their own personal and emotional. Thoughts, because you know, I’ll tell you, just about every review meeting we have, you know, we’re talking about the performance in the accounts, we’re talking about our forward-looking perspective on the economy, on the markets, and it always comes back to their personal sentiments, you know what’s going on in their lives, you know how this can impact them and what our thoughts are, how we would do things differently. So, a lot of times we’re, we’re listening to the pain that they’ve experienced in the past, through, you know, their own experiences, their family members, you know, we’re helping to counsel them on, you know, staying neutral in their thinking. I think that’s key is being able to maintain neutrality in our mindset when the market’s up and down, you know. We talk a lot on this show about reactions to when the market drops, and you know, maybe selling at a bad point in time, but I think you also have to be equally neutral when the market is positive and the market’s doing really well, like we said, we’ve been in a bull market for years now. You know, we’re hitting records all the time, and it’s important to remember that all good things do eventually come to an end. You know, I’m not saying that that’s going to be tomorrow, but it’s very feasible that we could see some sort of a correction in the next couple of years, based on where our economy is right now, and where we’re going geopolitically, so again, having something in place to protect your income against that is so important.
Speaker 2 41:31
Yeah, I think you hit on something there, John, and I think when we have so much success market wise, we tend to kind of fall asleep at the wheel, we’re just expecting it to show up every single day and be there, and for the last 1213 years, minus, you know, a couple of blips, it’s kind of done that, and people are very comfortable, at least they seem very comfortable with the way things are going, but then you got to throw in the what if scenario, and if you’re just sitting on a portfolio and you don’t have a plan, you don’t, you don’t have the what if plan, and you need that,
Speaker 1 42:07
yeah, yeah, yeah, and as you mentioned, there are people that are that are asleep at the wheel, you know, they’re kind of on autopilot, and when the market corrects, or we have a negative experience, it’s like you’re hitting those little little bumps on the side of the road when you start to go off, you know, and it’s, and you wake up, and if you don’t have a map to get back on track, you could really be in a bad spot. So, you know, one of the, we call our, you know, our retirement plan the Retire Smart Roadmap, right? Because it truly is a roadmap on how to navigate retirement, get through the valleys, get through the mountains, ensure that you’re not lost at any point in time. And again, if you’re kind of on autopilot, you’ve got the blinders up, you’re not paying attention and hoping that things will stay rosy. At some point, you’re going to hit that turbulence, you’re going to hit those bumps on the side of the road. When you wake up, you know, I hope that you do have some sort of roadmap to refer to. You know, it’s.. we hear it time and time again the emotional frustrations that come with retirement. You know, aside from the financial aspect, you know people want to live well. You’ve worked 20 3040 years to get to that point where you want to enjoy yourself. You don’t want the stress, you don’t want those outside factors to affect your happiness in retirement.
Speaker 2 43:34
You got to have a plan. You don’t want to be hitting those rumble strips on your way home. Yeah, you know, fall, falling asleep at the wheel. This is your money, this is your retirement. Have a plan and have confidence moving forward. The opportunity to get on the calendar with our friends at Elite Income Advisors, and this is no cost, no obligation. There’s no pressure. This is to see if it’s a good fit. If you want to roll forward, you certainly can, but there’s no obligation to become a client. John, walk us through the appointment.
Speaker 1 44:05
We’re going to sit down, we’re going to ask you about your goals, we’re going to identify what is important to you now and in the future, whether that’s family, whether it’s charitable giving, whether you want to start a business, you’ve got projects that you want to work on, everybody has a different retirement vision. We then want to calculate what that’s going to cost you. We’re going to look at what foundational income sources you have coming in through social security, maybe a pension, maybe a rental income, or an annuity, and we’re going to see if there’s any gap in that income and the expenses, and then we’re going to talk through a way to bucket your money, so you can safely withdraw the income that you need, while also having a component that provides growth to provide legacy. We’re going to talk to you about how that legacy can be distributed efficiently, in terms of taxes, build all that together. And revisit it on a regular basis, if we find that we’re a good fit to partner together.
Speaker 2 45:04
All right, we’ll jump on these appointments right now. They’re complimentary: 800-653-8404 That’s 800-653-8404 No cost, no obligation. Again, see if it’s a good fit. 800-653-8404 Another edition of Retire Smart Maryland Radio in the books for John DeFeo. I’m Morgan Patrick. We’ll see on the radio next week.
Speaker 3 45:34
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