Speaker 1 0:02
On today’s show, we’re going trick-or-treating. We’re going house to house for the Halloween suites that symbolize the richest retirement planning strategies. Stay tuned today to Retire Smart Maryland Radio.
Announcer 0:17
Welcome in to Retire Smart Maryland Radio with Prashant Sabapathi.
Speaker 2 0:24
Welcome into Retire Smart Maryland Radio. Your host, Prashant Sabapathi. You can find him at Elite Income Advisors, independent fiduciary. He’s also a published author, couple of books already to his credit: Physical Health, Retirement, Wealth, and Retire Abundantly. The offices, well, they’ve got two of them headquartered in Ellicott City, but also in Annapolis, for your convenience. Again, it’s always about the importance of having that plan, being ready for your retirement. I’m Morgan Patrick. The privilege every week to talk with Prashant about the importance of that retirement plan, but we also give you an opportunity to get on the calendar with elite income advisors and just kind of see where you are now. These are no cost, no obligation, no pressure appointments, and if you grab one, you’re not agreeing to become a client. It’s a get to know you situation where you’re going to get to know Prashant and his team, and they’re going to get to know you, and if there’s any way that they can help, obviously you’re going to have that kind of conversation. Well, you heard the tease. We are coming out of Halloween. We are coming out of one of my favorite events as a young man, a kid going around and trick-or-treating, and you’re probably asking, How has this got anything to do with retirement planning? Well, we’re gonna have some fun with the candies, some of your favorites, and before we kind of dive into the trick or treating aspect of retirement planning. Prashant, how was your week? And end it with, did you have a favorite when you were out trick or treating? When you, when you got to the house and you realize, wow, they’ve got this. What was your, what was your go-to? But tell us, how your week was. The week’s been
Speaker 1 2:00
good. It’s, it’s been really nice that the weather’s kind of held up here. Right, seems like we’ve been able to extend the fall a little bit longer before we hit cold season. So that’s been good. We’ve been busy around the office as always. I think I mentioned on last week’s show that the fourth quarter, when fourth quarter gets ramped up, we’re doing a lot of our year-end planning, doing a lot more seminars and educational events, so it’s been busy around the office, and busy is how I like it around here. So, that is fantastic. To answer your question, I was always a Twix guy, you know, I’m a chocolate guy, and so I love Twix, and we’re gonna make the, I guess, the relation here between candy and financial planning. This will be a fun
Speaker 2 2:48
one. Again, we’re coming out of the holidays, so there’s probably some loose candy around most of your houses out there, so try not to partake too many, you know, snacks when it comes to Halloween candy, but enjoy it, and I certainly hope you enjoyed the holiday when it happened. So, let’s talk about specific retirement strategies, and we’re going to go house to house now. When I was a kid, we actually mapped out the neighborhood, we knew kind of what the houses were going to have as far as what the treats were, and we had a map of what houses to hit. Now, the full candy bar was usually that was the wow factor, candy corn not so much, but the full candy bar, you were a preferred house, and the line would be long to get up to the door and, and get that treat, but when you think about retirement strategies, how does it relate? How does it parallel with just say a popular piece of candy? So, the first one is very popular. You’re a golfer, I’m a golfer. When you get out there on a hot summer day, cart girl comes around with refreshments, there’s usually a refrigerated compartment, and they normally have frozen Snicker bars. Snicker Bar is the first one we’re going to talk about. Love them on the golf course. Loved them when I was a trick-or-treater, but what is the.. what’s the parallel between the Snickers bar and, I guess, how it’s all put together in retirement plan
Speaker 1 4:21
Snickers bars are the perfect example of diversification when it comes to candy, and when it comes to chocolate, right. And that’s because it has layers. When you bite into the Snickers, you get the nougat, you get the caramel, you get some of those nuts, and then, of course, the best part, the chocolate, right. And just like a diversified investment portfolio incorporates different types of investments from different asset classes, things like stocks and bonds and real estate investments and annuities and gold and CDs. There’s so many different ways to construct a portfolio, especially when you’re. Closer to retirement, and Morgan, what we’ve found is some of our most successful retirees, the ones that are the most comfortable through the retirement phase of their lifetime, have multiple asset classes, multiple investments that are all designed to do different things for them at different stages of their life, and that is what true diversification is all about, so Snickers represents diversification,
Speaker 2 5:27
multiple streams of income, we’ve talked about it quite often. All right, so here, here, your, your favorite one, it pops up number two, and that is the Twix bar, left side, right side, cookie, chocolate, caramel goodness, but how does that relate to retirement planning?
Speaker 1 5:46
You just said it, it’s multiple streams of income, and the way that I think about it is every package of Twix has two bars in one pack, which is part of the allure of the thing to begin with, and so why have one when you can have two, and when it comes to planning for your income in retirement, the more streams of income the better, right? Remember, retirement is all about paycheck creation. When you lose your paycheck from working, you need to have another way to recreate that paycheck in retirement, and that starts with multiple streams of income, things like a pension, if you’re fortunate enough to have earned one. Social Security is another example of a guaranteed source of income, maybe of an annuity that gives you an income for the rest of your life. Maybe your portfolio, which is well diversified, hopefully kicks off things like dividends and interest on an ongoing basis. All these different types of things are multiple streams of income, which are directly correlated, I think, as an example to the Twix bar.
Speaker 2 6:48
Well, I’m curious about retirement planning, but I’m even getting hungry talking about Snickers, Twix bar. Now I’m going to take you back in time. If you remember sitting around, maybe back when you were a lot younger, Prashant, maybe watching some cartoons on Saturday, and a cartoon would come on, it would be a commercial, and it would be an owl, all right, if you remember, and let’s see if we can get to the center of this Tootsie Roll Pop Sucker and a one, and they’re licking right, a two, and then crunch, they couldn’t do it right, but it tells you that if you can, you know, take your time and enjoy the Tootsie Roll Pop, you know, it’s just so much better than just crunching into it, so there it is, Tootsie Roll Pop, big popular item, you know, recently for Halloween, but how does that symbolize retirement planning?
Speaker 1 7:48
Yeah, to me it’s long-term planning, right, and part of the reason I never really liked the Tootsie Roll Pops is because there was no instant gratification, you had to actually work to get the most out of the candy, right, all those licks, and just like you said, it’s that commercial, how many licks to get to the center, and so when you think about the Tootsie Roll Pop, it’s all about how long it took to get to that middle, and that’s just like the long-term nature of retirement investing. There is no instant gratification, in my opinion, when you’re getting prepped for retirement, it’s a long-term process, so having a little bit of fun with these things. Look, folks, if you’ve been thinking about your retirement, but you’re not sure exactly where you stand, you’re not sure if you have multiple streams of income, you don’t know whether or not your portfolio is properly diversified, like we talked about. Pick up the phone and give us a call. The phone lines are open now. It’s 800-653-8404 It’s a complimentary visit with our team to just sit down and review your situation. You’re not agreeing to do business with us. You’re not agreeing to become a client. What you are doing is getting exactly what you need to make the best decisions possible. Pick up the phone, give us a call, schedule that complimentary appointment today. When we return on Retire Smart Maryland Radio, is the American dream of retirement slipping away? We will discuss that when we get back,
Speaker 2 9:22
you We are back on Retire Smart Maryland Radio, hosted by Prashant Sabapathi, Elite Income Advisors. Where you can find him, they’re headquartered, Ellicott City Satellite Office for Your Convenience in Annapolis, independent fiduciary. Yes, he is published author, you bet. Fiscal health, retirement wealth, and retire abundantly. And check out a great resource website, Elite Income advisors.com It’s easy to remember. There’s tons of stuff to do there, including links to our radio show and podcast form. TV show is there, you. Get a good sense of what Elite Income Advisors is all about, and it’s all about helping you get ready for your retirement. Here on the program, we do open up appointments that are complimentary, and Prashant likes to say that, you know, if you grab one of these appointments, you’re not agreeing to become a client, right? It’s a discussion, it’s a conversation, it’s a get to know you. You may work together, you may not, but it’s an opportunity for you to certainly get to know elite income advisors before you make your big retirement decisions. All right, so as more Americans get ready for retirement, they’re approaching retirement financial landscape per shot that they are going to face basically increasingly uncertain, and according to a recent Yahoo Finance report by contributor Carrie Hannon, nearly get this, 50% nearly 50% of US adults say they lack sufficient retirement savings, and more than a third of workers have less than, wait for it, 10,000 saved.
Speaker 3 10:58
Americans love to spend, they are really terrible at saving for retirement. We are under saved. Vanguard came out with a report this morning that showing that over a career someone might change employers eight times, and each time they get behind on their retirement savings, and so they calculated it was something like $300,000 in lost retirement savings by switching jobs.
Speaker 2 11:22
Okay, just your initial thoughts on hearing those numbers. Pretty staggering stuff. I
Speaker 1 11:30
totally understand the psychology of why switching jobs could actually set you back. It’s because you have to actually go out and make elections when you start with a new employer, right, and one thing I’ve learned, being in the business as long as I have been, is that when you automate things, things tend to get done at a more efficient rate. When you have to actually go and, you know, force yourself to do something or make an elective decision, it’s easy to fall behind on that. So, I get that. If you’re a job switcher, you got to be really diligent about making sure that you’re saving money. The statistic about a third of workers have less than $10,000 saved, that’s that’s alarming to me. You know, and there’s several reasons for that. I think inflation is a reason for that. People just feel like they maybe don’t have the disposable income to save, but honestly, I think that it has a lot to do with discipline too. I think that there’s a lot of people that want that instant gratification and will delay saving for retirement in pursuit of being able to travel or being able to have the nice car, whatever it is now, that doesn’t tend to be our client. Our client is are typically going to be folks that have done a really good job saving. Most of the people that come in to visit with us have saved a million dollars or more. It doesn’t mean that we have a million dollar minimum to work with you, that’s absolutely not how we do things, but most of the people we work with tend to be really good savers, Morgan. And when you have a million dollars saved or more, the strategies that we offer to our clients become that much more effective. I feel like, so lot going on here, and we can talk about it, but you know those things like inflation and social security planning, those types of things, those affect everybody. It doesn’t matter if you have 50,000 saved or 5 million saved, those are still things that you have to be cognizant of.
Speaker 2 13:32
Well, we’ve had this discussion on this particular topic before. You’ve brought it up many, many times. You, I mean, when you’re talking about being diligent, being disciplined, I mean, you really need to focus on paying yourself first, and when we talk about paying yourself first, that’s putting your money where it is going to work for you over the long term, and that does take discipline.
Speaker 1 13:54
Yes, exactly right. I think it goes back to automation, right? Automation makes it easier to get it taken care of. I don’t know about you, but like, I try to automate everything in my life where I can, because it then it takes all the emotion out of it for me. I don’t know anybody who, in this day and age, still writes a check and sends it to their mortgage company to pay the mortgage, right? Most of this stuff is just done through auto pay, and it’s done online. If we’re doing that for paying bills, why are we not doing that for saving money? Right, so whether it’s contributing 10% or 15% to a 401 k, or setting up a systematic contribution to your brokerage account or your Roth IRA every month, those are the types of things that I think successful people really take seriously. They don’t leave things to chance. They make sure that they’re saving their money first and paying themselves, paying themselves first, before going out and spending money on things that, let’s face it, we might not actually need. Need on a month to month basis. Yeah, you got to ask yourself, do you need it or do you want it? Exactly right. So it’s all about making those decisions, and one of the big decisions you’re going to make in your life is sitting down and starting the planning process, or sitting down and saying, you know what, maybe I need a second opinion. I’m not getting my phone calls returned. I’m a little bit frustrated. I’m concerned about my portfolio, and I can’t get him to return a call. Well, you can get a second opinion, and here on the program, that’s what
Speaker 2 15:30
we do. We offer up complimentary appointments. Again, you’re not agreeing to become a client. This is just a get to know you. If you’re, if you’re in need of a second opinion, that’s exactly what this is for you. All you’ve got to do is call the number 800-653-8404 that’ll grab you one of the appointments, that’s 800-653-8404 Get some peace of mind, get some confidence, knowing number one, that you made the call, and number two, you set the appointment, and then you’re going to come in, and you’re just going to be able to exhale and talk about where you currently are, and guess what, as a fiduciary, Prashant and his team will say if you’re okay, they’ll tell you you’re okay, but if you’re not, that’s when you really start having those conversations, but wouldn’t you want to know again, appointments complimentary 800-653-8404 so I’ve got some follow-up questions for you. You mentioned inflation, that’s going to impact retirees, it’s going to impact your strategy. You also mentioned
Speaker 1 16:30
social security, I want to dwell on that for a little bit too, but having inflation as part of our picture, we need to build that in, and we need to have more money. Inflation erodes your purchasing power. Okay, so think about it this way. You need $7,000 a month, hypothetically, to retire, and that’s going to give you a great quality of lifestyle. Okay, let’s say 7000 is your number. For some people, it’ll be less; some people will be more. 10 years from now, is $7,000 going to be enough to fund your lifestyle, probably not, and that’s because inflation would have increased the cost of goods and services. So, when we talk about inflation planning, it all comes back to income. The reason we named the firm Elite Income Advisors is our belief is that retirement is all about the income, so often you can solve retirees’ planning issues by just simply increasing the amount of guaranteed income that they have to live on. Okay, I’ve never had a client come to me, Morgan, and say, Prashant, you guys built way too much income into my plan, and now I’m struggling. I
Speaker 2 17:43
don’t know what to do. I can’t
Speaker 1 17:44
spend it all now. I have heard the one where, hey, Prashant, you guys built a lot of income into our plan, and now I’m paying more in taxes, and that’s a legitimate concern. But I’ve never had someone come to me and say, I have way too much income, and now I’m struggling, and I’m not sure what I’m going to do to make sure that I don’t run out, right? So, with inflation eroding, eroding purchasing power, you have to think about ways to increase your income to offset higher prices. Prices will go up, we’ve seen that over the last several years. Here, I think some of that will continue, might not continue at the 9% rate it was growing at some time ago, but inflation rate will still be present. Prices are going to go up. You have to be prepared. You get prepared by building in as much income as possible,
Speaker 2 18:27
and that takes planning. That takes a conversation. We’re going to open up those appointments here in just a little bit. You can meet with elite income advisors and talk about your situation, and your situation is different. We’ve had the conversation before in the program where you’re getting advice from everybody, right? Family members, maybe somebody at work, they’re doing this, you should do this. I mean, you don’t know what you don’t know. I mean, what your situation is, and what is going to be a good fit for you. Have a customized plan put together. So, again, some follow-up questions. Social Security is going to be a part of everybody’s retirement, Prashant, in some form or fashion, there really needs to be a strategy with Social Security. Those of you out there that feel like you don’t have enough, and you’re going to go, you know what, I got to take it right away. You really need to have a conversation before you kind of pull that trigger.
Speaker 1 19:13
Yeah, so many different viewpoints on this. Should I collect it early? Should I wait till full retirement age? Should I maybe even wait till 70 years old. I think everyone’s situation is a little bit different, and what works for your coworker or your golf buddy or your brother-in-law may not be the right thing for you. One of the tools that we use to help our clients in the social security optimization process is this idea of putting together what we call a social security timing report, and the timing report effectively allows you to look through all of the available options for how to collect your social security benefits, so if you’re thinking about coordinating that benefit with your spouse, if you’re not sure whether you should collect early or at full. Retirement or even delayed retirement, we can actually believe it or not run you a report that will show you the impact of the potential social security decision that you’re going to make. What I always like to say is, when you have this timing report, it should help you kind of untangle a lot of the mystery surrounding your social security collection strategy. By the way, the Social Security timing report – it’s something that we give away. I literally give it away for free to anybody who wants to come in and schedule that appointment with us. It doesn’t cost you anything, you have my word on that. Just pull up the recording of this of this podcast when you come in, and my team will give you that report for free. If that’s the only thing that you need with us from us, that’s going to help you with your retirement. Come on in, book that appointment, 800-653-8404 and get your Social Security timing report today. I
Speaker 2 20:54
tell you, it’s so important to be on task when it comes to your retirement. Want to hit one more, and then we will open up those appointments. Diversification, it obviously plays a big, big role in retirement, and I think about if you’re at a cookout and you’re cooking hot dogs, you’re not going to leave your hot dog in the fire the whole time. I mean, you have to be careful here, so being diversified or easing out to the edge of the flame, as opposed to the middle of the fire, so important when you talk about your monies in the market,
Speaker 1 21:25
especially given some of the recent market swings that we’ve had. Right, people are having that fear of running out of money and outliving their retirement savings. And so, quick comment on diversification, because I know we have to get to a break, here is it’s all about bucketing your money. Okay, instead of having all your eggs in just one basket, maybe that’s a market basket for which your savings go up and down. You might want to look at protecting some of that money, having two buckets of money, one bucket where your money’s totally protected, another bucket potentially for market-based money that does fluctuate up and down. If you’ve never had a bucketing plan put together, if you’re not sure how to collect Social Security, folks, pick up the phone, give us a call. It’s a free appointment to come in and visit with us. It’s 800-653-8404 That’s 800-653-8404 Let my team of specialists take the mystery out of the retirement planning process for you simply by having a conversation and creating a comprehensive and coordinated retirement plan. 800-653-8404
Speaker 2 22:34
We will have more Retire Smart Maryland radio coming up after the break. I Welcome back into Retire Smart Maryland Radio. Prashant Sabapathi is your host. Elite Income Advisors is where you can find him the power behind this program. I tell you, they’ve got a wonderful website. It’s a great resource for you, easy to remember: Elite Income advisors.com Prashants, and Independent Fiduciaries, a published author. A couple books already: Physical Health, Retirement Wealth, Retire Abundantly, the second book. And he’s all over your television set. You can go to the website, and you can see episodes from TV, you can see our actually listen to our radio show in podcast form, they’re there for you as well. But you guys have really put it out there that you want to help with the tax
Speaker 1 23:30
part of this. Prashant, let’s talk about the new website you’ve got, and also the amount of traffic you’re getting. People are going to the website testmytaxbill.com Why’d you say you know what we want to do this? So we wanted to do this because there is what I would consider to be a huge unknown tax burden or unplanned for tax burden embedded in your retirement accounts. If you have a 401 k or an IRA or TSP, and you did a great job saving money. Let’s say you have a million dollars in this account, that is pre-tax money. So every time that you go to access that money in retirement, you have to now pay income tax. So if you have a million dollars, but it’s all fully taxable, do you really have a million dollars?
Speaker 2 24:22
You do not.
Speaker 1 24:23
You do not. Okay. And the issue with it is that future tax rates are unknown, right? We don’t know where tax rates are going to go. So, let’s think about this logically for a second. Let’s say that I have a million dollars and I wanted to follow the old 4% rule, and that means I’m going to withdraw $40,000 a year from my retirement portfolio. Okay, but let’s say that I had an assumed tax rate of 25% so a quarter of whatever I withdraw goes away in taxes. I was withdrawing 40,000 I’m netting 30,000 because. 10,000 goes away in taxes, but now what happens is taxes are not at 25% for my rate. Let’s say, hypothetically, taxes go up in the future, and now my rate is 35% as opposed to 25% right? And so what happens is, I still took the same $40,000 withdrawal out, but I didn’t net 30, I netted 26 So now just because tax rates went up, I now have less take home pay. And in order for me to make up the difference, what do I have to do, Morgan? I have to withdraw more. Instead of withdrawing 40,000 I might have to withdraw 47 or 48,000 to get to the same 30,000 net that I was at before. Is that going to increase the probability that I’m going to run out of money when I’m taking out a disproportionately high amount of income every year?
Speaker 2 25:55
Absolutely,
Speaker 1 25:56
absolutely. And so, what do I have to do to offset that? I need my money to grow at a faster rate, which means I have to do what I probably have to take more risk, and so this is why tax planning is so important. You have to understand what your future tax liability may actually look like, but more importantly than that, you have to understand how to protect yourself against taxes going up. If you visit Test My Tax bill.com you’ll be able to put in a couple pieces of information, either hypothetically or about your situation. You can put in assumed tax rates, assumed rate of growth on your investments, and you can see what kind of embedded tax liability you potentially have with your retirement accounts. It’ll also show you how potentially reallocating your money from a taxable status to a tax-free status could minimize the amount of total income tax that you pay over the course of your lifetime. Now, it’s not tax advice, it’s just a tool, but one thing that most people do is they go visit Test mytaxbill.com they enter in their information, they get their own free report, and then they’ll bring that report into us when they come to visit with us, and that way we can have a little bit more of an in-depth conversation on how to protect against your future tax rate going up. It’s a great tool. We’ve gotten so much traffic on the website, it’s been really cool to watch, and what’s been even better than just seeing how many responses we’re getting is how many people actually come in for appointments to talk specifically about it. It’s been a great resource. testmytaxbill.com You got to go check it out.
Speaker 2 27:31
Yeah, I mean, when you think about it, a majority of you out there are putting your money away and you’re doing a great job saving, but it’s in tax deferred accounts, tax deferred vehicles for said retirement, so the taxes are going to be coming out. This can be a light bulb moment for you, right? Figure out what those numbers could be, and then come in and talk about it. Check out Test My Tax bill.com Again, that’s easy to remember. Test My Tax bill.com So, Prashant, I want to get into this. A recent survey from EBRI, that’s Employee Benefit Research Institute, showed that nearly half, half of retirees are worried about what else. Number one, fear running out of money. So, life expectancies, they’re increasing, health care costs, they’re going up, and the unpredictability of the markets. Well, it’s the market, it’s always going to be unpredictable. How do you secure a financial future? Well, we need to answer that question. We need to move towards an answer, I should say. So, let’s discuss some strategies, critical strategies for building financial security in your retirement years. So, you want to be able to enjoy it. So, here’s a question. How can I ensure that my savings will last throughout retirement, especially with everything going up? It’s expensive.
Speaker 1 28:49
Let’s think about this from a logical perspective, right? I just try to make things as simple as possible, Morgan. While you’re working, what would you say the biggest sense of security is for you while you’re working, as a result of you working,
Speaker 2 29:03
I have a job, I know a paycheck is coming in, I’m covered, I like that.
Speaker 1 29:08
Exactly every two weeks, you know exactly what your paycheck is going to be. When you retire, what do you lose? You lose your paycheck, you lose your paycheck, and with it, you lose your peace of mind that you have no idea where your income is going to come from, so to ensure that your lifestyle will will be able to be what you want it to be, it all comes back to income security. While you’re working, your paycheck is your security. When you retire, you lose that paycheck, and so now it is on you. If you don’t have a pension, which is going to guarantee you a paycheck, it now is on you to recreate that paycheck to create that income security that will allow you the confidence to retire. So, you have to consider strategies that are maybe not high growth strategies, but more. Income generating strategies, whether it’s dividends or T bills or CDs or annuities, or whatever that looks like, you need to have multiple streams of income coming in. Delaying Social Security could be one way to do that, and then the second component to that is making sure that that income increases through your retirement, while you’re working, hopefully you have the opportunity to get a cost of living adjustment or a performance-based raise on an ongoing basis. Your retirement should not be any different. We have to shift our mindset to be from growth, growth, growth to income, income, income. Remember, it is all about the income.
Speaker 2 30:39
Well, you mentioned the A word, and you just kind of ran right through it, and look, it’s part of, you know, a big part of our discussion when you talk about planning, but the role of the annuity, that’s the a word when it comes to guaranteed income streams, and basically having that at least assist when it comes to creating that stable retirement,
Speaker 1 31:02
what is the use case for an annuity? Okay, an annuity provides a predictable guaranteed paycheck for the rest of your life. Okay, and that is the number one use case for an annuity. Okay, now you hear all these annuity horror stories, and you hear people that have terrible experiences with annuities. You have other professionals that go on TV saying things like, I hate annuities, and you should too, right? We’ve, we’ve heard all that kind of stuff. What is the primary reason for that? It’s because people expect their annuities to do something that they are not designed to do. Okay, if you get into an income annuity expecting it to be a high growth vehicle, you’re probably going to be disappointed by that. Now, if you get into an income annuity expecting to have a paycheck that will last you the rest of your lifetime, you’re probably going to be really, really happy with the decision you made. So, I think part of the use of an annuity is not just using it for what it’s intended to do, but you also have to manage your expectations for what it’s supposed to do for you. If you have a gap in your income, let’s say you add up your pension, your social security, and that totals 4000 a month, and now you need 6000 a month to retire. Does it make sense to put some of your retirement portfolio into a guaranteed instrument that’s going to fill that gap of 2000 a month, to me that makes all the sense in the world, provided that you’re not putting all your eggs in any one basket. Everyone’s situation is a little bit different, which is why you want to put together a customizable plan, but our clients, the ones who are a great fit for us and we’re a great fit for them, they all subscribe to this theory that your paycheck is the most important component that drives success in retirement.
Speaker 2 32:51
So important, and again, opportunity to get on the calendar with Prashant Sabapathi and his team at Elite Income Advisors. Easy to do, call this number 800-653-8404 That’s 800-653-8404 These are complimentary appointments. You come in and basically get to know the team, but they’re going to get to know you. And Prashant says it all the time on the program, just because you agree to come in on an appointment, you book an appointment, it does not mean you’re becoming a client, right. There’s no obligation here. These are cost-free, and you can find out more about your situation. 800-653-8404 That’s 800-653-8404 We’ve got retirement scenarios when we return, you retire Smart Maryland Radio, your host Prashant Sabapathi. You can find him at Elite Income Advisors. They’re headquartered at Ellicott City, and they have a satellite office in Annapolis for your convenience. Prashant is an independent fiduciary, he’s a published author, he’s a TV star. The books, how about this: Physical Health, Retirement Wealth, and Retire Abundantly, and Retire Smart Maryland TV can be seen right here in our market. And again, opportunity to check that out at any time, go to Elite Income advisors.com they’ve got links to TV links to our radio podcast, great information there. Get to know their team and certainly find out more about the complimentary appointments we do offer up here on the radio show, and you’ll get that Retire Smart roadmap put together for you. We’ll tell you about that as we move through our scenario portion of the show, and I’ll give you a scenario per shot, and you’ll tell us how you’re going to handle it. I want to remind our listeners, these are scenarios you may have something similar going on in your life, but it’s not what exactly what you’re going through. So that’s why it’s important to come in and talk about your situation, have a customized plan put together for you, or get that. Second opinion that you so desperately need. All right, the first scenario, I’ve been retired for five years, although I’ve been adhering to the 4% rule. There it is. Things are challenging, something which I did not anticipate. 30% of the 600k that I invested in stocks has been forever lost to the market. How can I diversify at this point in my portfolio for retirement with the remaining what is now 420k
Speaker 1 35:30
This is interesting, because to me this kind of speaks to this idea of what I call sequence of return risk. Okay, while While you’re accumulating money, it doesn’t really matter what goes on in the market. We know markets are going to go through their ups and their downs, and in fact, every time the market goes down, you can use that as an opportunity to buy into the market and hopefully get some more long-term growth out of it. The game changes when you enter retirement, and instead of putting money into the market, you’re actually taking it out. Remember that old saying on Wall Street, Morgan, it was buy low and sell high, sell high. But the issue is when you get to the retirement phase of your life, and you’re taking money out, and the market goes down, like in this, you know, example here. Market goes down, let’s say, say 30% and now you need to take money out to fund your lifestyle. Are you buying low and selling high?
Speaker 2 36:31
No, you’re selling on the way down on the roller coaster, that’s not fun.
Speaker 1 36:35
Absolutely, and you’re locking in the loss by taking the withdrawal as well, right, which makes it virtually impossible to recover. In fact, in order to recover, you now need a bigger rate of return, which means you might have to take even more risk, which could just compound the effect if the market doesn’t cooperate with you. So, when I hear this question, How can I diversify my portfolio to deal with the income phase of my lifetime, all while still being subject to a market that is incredibly volatile and unpredictable. I think this is where I go back to this idea of bucketing your money, instead of having all your money, in this case, having the remaining 420,000 in a risk bucket of money, which could go up or could go down. Does it make sense to protect some of that money? Maybe you take a quarter or a third of that money, put it in a totally safe account. That way, when the market goes down, you can allow your market-based account to recover by withdrawing from the safe money instead of the risk money, and I think this is how protection can actually be the key to unlocking retirement success. It’s not always about making money all the time. I know that’s what America wants us to think, especially in the social media kind of age that we live in. Everybody talks about how you get rich quick, folks, the ones who are enjoying a consistent, successful retirement, who never made more than 100 or 150,000 a year, they’re doing it by taking less risk, not taking more risk. Okay, it’s not about making money, it’s about making your money last, and lastly, on this topic, I think I said this on last week’s show. We think so much about ROI, right? When I put money away in an investment, my first thought is, how do I create the highest ROI, which to most people stands for return on my investment, return of invest on investment to me. When you get to retirement, ROI means something totally different. It means reliability of income. Okay, it’s not about making your money grow, it’s about making sure that your money lasts for the rest of your lifetime by having a dependable, reliable stream of income that you can count.
Speaker 2 39:02
Well, we’re both football fans, and you know, obviously the Ravens are, you know, they’re doing, they’re doing fine. But when you think about, when I think about retirement the way you’re talking about it, Prashant, I think about that famous football mantra: Defense wins championships.
Speaker 1 39:19
That’s right,
Speaker 2 39:20
defense wins championships. You can have that high flying offense, but if you have the high flying offense, guess what? You’re going to have some turnovers. You’re going to give the ball to the other team, but if you have that defense, if you have the Ravens D, if you have something that, where you know that running back’s not going to get over 100 yards a game against you. That quarterback’s not going to be throwing three and four touchdown passes against you because of your defense. You know, I think about that retirement planning aspect of it. If you can protect, you’re going to have a really good shot at winning at retirement. I think I remember what Ray Lewis always used.
Speaker 1 40:00
To say to Trent Dilfer, especially the year that we won the, that we, being the Ravens, won the Super Bowl.
Speaker 2 40:06
Can you say this on the air? Is this a direct quote,
Speaker 1 40:08
not quoting directly? I don’t think I can say that on the air, but what he used to say, and I’m paraphrasing, he used to say to Trent, just don’t screw it up for us, okay? Just don’t turn the ball over, just don’t throw an interception, even if you do nothing other than not turn the ball over. We’ll score on defense, because our defense was that good, right? And the interesting thing I was watching a couple weeks ago was watching the Ravens versus Tampa Bay Bucks game, right? And you see what happened at the end of that game. Tampa Bay was trying to make a comeback at the end, had all their starters still in the game, they were down by like 17 points with just a couple minutes left. Chance of you winning that game is pretty much zero, right? And then what happens, they leave their star players in, you got a guy getting injured, and that’s probably going to end his season. They’re so banged up now, and why, because they took the unnecessary risk of leaving their starters in the game. Right, what did the Ravens do? They took the quarterback out with 17, with a 17 point lead or 20 point lead. They took the quarterback out, so it wouldn’t get hurt, so that we could live to see another day. If you’ve already won the race, why take additional risk that you don’t need to? Protection
Speaker 2 41:25
is key. Yeah, I mean, like the Ravens did, take the future MVP
Speaker 1 41:29
absolutely
Speaker 2 41:30
out of the game. All right, so having some fun. I love the football parallels, by the way. Talking retirement, the importance of having, you know, a protected retirement plan, a defended retirement plan. We’re going over scenarios. I’ve got another one for you. We’ll hit it real quick. I have an investment portfolio, it’s worth right at a million. I don’t think that I’ll, that it’s going to be enough for retirement. I have a middle of the road risk tolerance, and was thinking about the right investing strategy for the future would be going all in on stocks, as they basically give the greatest yield. Is buying stocks right now a good idea?
Speaker 1 42:13
This all comes back to risk capacity. If you have a middle of the road risk tolerance, we need to truly define what that actually means. If you have a million dollars and it’s all in stocks, and now a year from now your million dollars has gone down to 700,000 because the market went down by 30% Hypothetically, is that a risk that you are comfortable taking? I think you have to evaluate your risk capacity first. There’s no doubt that stocks do offer you the highest potential upside, especially when you compare them to things like treasury notes and bonds, but with that being said, there’s a tremendous amount of risk involved there. So it’s not just about how do you earn the highest rate of return, it’s also about how much risk are you comfortable taking, and then how much income are you actually going to need when you retire, okay? If $1 million is not enough for you to retire, and maybe the target needs to be one and three quarters or 2 million, we have to have that conversation about how we’re going to get from 1 million to 2 million without taking on too much risk, whether that’s working longer, whether that is saving more than we’re currently saving, so that we can kind of increase our retirement savings rates, whether it’s reallocating some of the portfolio to things that are going to provide you a little bit more growth, or a little bit less risk, a little bit more income. All these things are on the table and need to be evaluated. It’s hard to say you should or you should not buy stocks at this point in time, without seeing your overall situation, understanding your risk capacity, but those are the factors that we absolutely have to think through before we make these potentially life-changing, important financial decisions.
Speaker 2 43:54
Again, so important to be ready for retirement, work with professionals that have been down this road many, many times, and can advise the appointments that we make available here on the program. Again, you’re not agreeing to become a client. This is an opportunity for you to really kind of test drive elite income advisors, Prashant Sabapathi and his team. And if you are sitting out there on a portfolio, folks, that is not a retirement plan, and if you’re in that other boat, you are working with somebody, but you’re frustrated, you’re not getting your calls returned, you want to talk about your situation, but you can’t. It’s okay to go and get a second opinion. Prashant, kind of walk us through how this is going to go. And again, these are complimentary.
Speaker 1 44:38
That’s right, they are complimentary. You dial that phone number, 800-653-8404 You’re going to have the ability to come into the office, meet with my team of specialists. Now, when you sit down with us, we’re going to talk through a couple very important aspects of your financial plan. Number one, we’re going to do an evaluation of your income. This is what we call the income. For life plan, it’s going to help you map out your income each and every year for the rest of your life. We’ll help you coordinate things like your social security benefit with your spouse, as well as your pension benefits, if you’re entitled to those. So, we’ll help map out your income. The second thing we’ll do is, we’ll do a risk assessment of your retirement portfolio. We’ll show you what kind of returns you can expect to get, how much risk you’re taking. We’ll even put your portfolio through a stress test to show you what your best and worst case scenario potentially looks like. We’ll also do a forensic fee analysis. This will highlight for you where you might have unnecessary or even hidden fees in your retirement portfolio. When we put all those things together, that’s what gives us the Retire Smart roadmap that gives us the opportunity to evaluate your situation and make sure that you’re on track for the retirement you deserve.
Speaker 2 45:54
Call that number one more time: 800-653-8404 That’s 800-653-8404 Another edition of Retires Mark Maryland Radio, in the books for Prashant. I’m Morgan. See on the radio next week.
Announcer 46:17
Annuity guarantees are subject to the claims paying ability of the issuing insurance company, if you withdraw money from or surrender your contract within a certain period of time after investing, the insurance company may assess the surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. Products are subject to fees and additional expenses. Any comments regarding safe and secure investments and guaranteed income stream deferral into fixed insurance products? They do not refer in any way to securities or investment advisory products. Information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy, and it should not be regarded as complete analysis of the subjects discussed. Discussion should not be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell the investments mentioned. A professional advisor should be consulted before implementing any of the strategies discussed. Investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. Elite Income Advisors Incorporated is registered as an investment advisor with the state of Maryland, and only transacts business in states where the firm is properly registered or is excluded or exempted from registration requirements. Registration as an investment advisor is not an endorsement of the firm by security regulators, and does not mean that the advisor has attained a particular level of skill or ability. You should always consult an attorney or tax professional regarding your specific legal or tax situation,
Unknown Speaker 47:27
you.
