Build a More Efficient Retirement by Replacing Your Bonds and Target Date Funds

11.3.23: Audio automatically transcribed by Sonix

11.3.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to The Active Wealth Show with your host, Ford Stokes. Ford is a fiduciary and licensed financial advisor who places your needs first. He'll help you protect and grow your wealth. The Active Wealth Show has grown because activators like you want to activate their retirement planning with sound, tax-efficient investing. And now your host Ford Stokes.

Ford Stokes:
And welcome The Active Wealth Show activators. I'm Ford Stokes, your chief financial advisor. And I've got Sam Davis, our executive producer here with us. Say hello to the folks.

Producer:
To the Weekend Activators and welcome to The Active Wealth Show. We're so glad that you're here listening to us today because once again, we've got some very important information for all of those who are in retirement, preparing for retirement, or even those of you who are still working. And just to get a little bit more efficient with your hard earned retirement savings. And I got to tell you for this week, my wife Bailey, set me up into the attic to get the coats and the winter boxes down because it started to get a little bit chilly, didn't it? Yeah, it was.

Ford Stokes:
38 degrees early this week when I got in my truck to go down to our Alpharetta headquarters from Cumming, Georgia, where we live, and it was chilly. It was winter has arrived. I tell you, October was really mild. It was great. Played, played a good amount of golf and some great weather with the leaves turning and now it's getting a little bit cold. It's going to warm back up. As we're talking to you here on the weekend. It's it's warming back up. But it was pretty chilly earlier this week and um, super excited to get to the next season, but also super excited to hear and see that Jerome Powell didn't raise rates this past week. And so was the market. It was nice to see the markets warm back up as well. We want to talk about what we've got on tap for the rest of the show. First of all, if we're going to start by talking about why we host this show, then, Sam, you're going to give them the financial wisdom quote of the week. And we're going to share some smart, safe alternatives to bank CDs. A lot of people are thinking about trying to get to bank CDs with the markets right now. Also, we're going to talk about protecting and growing your hard earned and hard saved assets, and then the value of building your own personal pension. In the value of building your own personal pension. And we're also going to give you important reminders keeping our listeners up to date with the latest retirement news. One of those being just make sure everybody knows that there's a 3.2% cost of living adjustment that is going to go in place in January and February of next year from the Social Security Administration.

Ford Stokes:
Want to make sure that everybody had that news. Think you have. We've shared it on this show a few times, so just wanted to make sure everybody knows it's a 3.2% cost of living adjustment. Also, we believe that that's well below what the real rate of inflation is. Milton Friedman once said that inflation only comes from one place, and that's Washington, D.C.. We had John Williams from Shadowstats.com, who's an economist with over 50 years of experience as an economist. He stated that he felt like the real rate of inflation was more like 14.1% a year. And then we asked him what the rate of inflation was since basically February of 2020. And he shared with us he felt like it was closer to 60%. His site actually quotes 52.6, and then the cost of living adjustments that have been given to Social Security recipients since 2020 have been 20.5% in total, or aggregate, if you will. And that means that Social Security recipients are losing 30 plus percent in purchasing power on their Social Security income and more than likely, some of their assets as well. And so you've got to keep pace with inflation. And we're going to talk about why we host this show as well. But you know what Sam? I'm going to go ahead and let you give us the financial wisdom quote of the week we had. We lost a very successful man, a controversial guy, but somebody that I've really followed and believed in in what he was doing because he he believed in work and hard work, much like a lot of much like my dad and others. So let's hear that financial wisdom quote of the week from Bobby Knight this week.

Producer:
And now wholesome financial wisdom. It's time for the quote of the week.

Producer:
Yeah, we had to change our quote of the week this week when we heard that Bobby Knight had passed away at the age of 83 years young. That was on Wednesday that we heard the unFordunate news. And so I wanted to pick a quote from Bobby Knight, big college basketball fan. Definitely appreciate how he values hard work. And here's your quote of the week. Bobby Knight once said, do what needs to be done when it needs to be done the best way it can be done, and do it that way every time. And I just really appreciate this sentiment for it. I think this is the way that we help our clients and prospects prepare for their retirement, and that's the kind of people that we like to work with, people that want to make sure that things are done the right way and done that way every time, so that they can live their best life in retirement.

Ford Stokes:
Yeah, it's remarkable to me. Um, I've learned a lot and gleaned a lot from him, but also from this quote. Listen, if you're sitting there fumbling around and trying to figure out what you're doing about your retirement and you're like, I don't know what I need to do, you really do know what needs to be done. You need to pick up the phone and give us a call at (770) 685-1777. Again, our number is (770) 685-1777. We have a lot of long time listeners. We are the number one listened to radio show here on AM 920 The Answer thanks to our activators. Thanks to the people that are looking to protect and grow their wealth. We want to build that tax efficient, fee efficient and market efficient portfolio. But the one thing you need to do is you need to seek advice. The advice of us here on The Active Wealth Show and all of our fiduciaries and series 65 licensed financial advisors, who are also life and health licensed in multiple states. I'm also very privileged that I'm now a contributor to the Forbes Finance Council, and I contribute monthly articles to Forbes magazine and Forbes.com. Privileged to have that opportunity? I would just strongly encourage you to do the right thing and actually start planning. We have so many long time listeners, like we said to this show. But you still haven't called for the first time. Again, I would just encourage you to go ahead and visit ActiveWealth.com. Click that, schedule a consultation, but in the upper right corner you'll get booked directly into my calendar. I'll work with you directly. You can also just call us again at (770) 685-1777. And Sam, I kind of want to go through. What it's like to work with us, but also why we host the show every week.

Producer:
Ford. You've been doing the show since 2019, and I started working with you as your producer in early 2020. And really the main reason why we come on the radio each week and on our podcast feed is to educate you retirees and pre-retirees out there by providing valuable information and insights, really encouraging you to make informed decisions about your financial future. Now, Ford, you're always saying that knowledge is power, and we don't want our listeners and clients to ever feel powerless in retirement. So it's really about education. Staying up to date with the latest developments, trends. We come on the air every time there's a big update with regards to Social Security or interest rates or talking about volatility in the banking industry. And that's just what we want to do. We want to educate you.

Producer:
Yeah. And I would say number two there is we want to address retirement challenges that retirees and pre-retirees are often facing these days. I mean, we want to offer some smart, safe and smart risk strategies, but mainly just those smart retirement planning solutions to help you navigate these tough obstacles we're dealing with, whether it's political unrest or rising interest rates or, you know, market volatility that we're seeing, you know, or labor shortages, supply shortages, pandemics, things like that, just all those things that we've been here through the whole time. We haven't stopped doing our radio show, even when there weren't a lot of people in their cars. And we were getting a lot of calls from the show. And again, if you want to get started and get on the right path for retirement and get a diversified portfolio that also focuses laser focuses on retirement income to make sure that you've got the retirement income you can never outlive. At least knocking that down, and then also doing a great job at protecting and growing the rest of your portfolio. I would encourage you to pick up the phone and give us a call at (770) 685-1777. Sam, go ahead and share the number three reason why we host this show. Yeah.

Producer:
We also want to empower smart financial decision making. There's some really important decisions that all pre-retirees and retirees have to make, whether it's choosing when to take Social Security or how exactly to allocate your portfolio, or making decisions related to future tax liabilities and retirement. We want you to feel empowered to make smart financial decisions.

Producer:
Yeah, I would say, you know, next is we want to promote financial literacy because so many people feel like financial freedom is simply out of reach. It's not. We're here to answer your questions and help you understand what you need to do in order to reach your own retirement goals. And then finally, I just want to share. Number five is we want to really serve you as your trusted guide, as your trusted advisor. We want to be your fiduciary. We want to be your financial advisor to help you to and through retirement, want to help you not just survive during retirement, but thrive during retirement. Want to help you spend more time with your family? We spell love and our family time. We want to help you spend more time with your family. And that all starts by visiting Active Welcome and clicking that schedule a consultation button.

Producer:
And when we come back, we're going to talk about why you should look beyond bank CDs when it comes to protecting your retirement savings. Visit ActiveWealth.com for more information and The Active Wealth Show will be right back.

Producer:
At The Active Wealth Show.

Producer:
We know you've worked hard for your money, and you've worked even harder to save it. When it comes to wealth management and planning for retirement. Ford Stokes of The Active Wealth Show, is passionate about helping people protect and grow their wealth while educating them on all their options so they can choose what's right for them. Visit ActiveWealth.com to schedule your free retirement consultation. Learn more now and listen to The Active Wealth Show today.

Producer:
Fixed annuities, including multiyear. Guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. Thanks so much for listening to The Active Wealth Show. Make sure to rate us everywhere you listen to podcasts, including Spotify.

Producer:
And welcome back to The Active Wealth Show on Ford Stokes. Chief Financial Advisor. Got Sam Davis here with us on the board as our executive producer. And Sam, we're going to talk about reaching beyond bank CDs and really in our beating Bank CD segment. But right now we're going to talk about why you cannot prepare for retirement the same way your parents and grandparents did. The retirement age has kind of changed, too. In the past, many retirees expect to stop working in a fixed age, often right around 65 years old. Nowadays, people are relaunching. They're not even retiring, and retirement age is definitely more flexible, with some people working longer while others are retiring. Much earlier due to Covid and other things. You also got longer life expectancy. The CDC says that if a married couple, both members of a married couple. Both spouses lived to be aged 65. There's over 50% chance at least one of them is going to live to be age 90. That's likely the female. We'll take care of your spouses in. The best way to do that is to make sure you've got your retirement income in place, and we can help you do that. All you've got to do is reach out to us at ActiveWealth.com and click that schedule a consultation button in the upper right corner. Also, we're seeing a significant decline in pensions. In the past, defined benefit pension plans are more common, providing retirees with a guaranteed income. In retirement. These plans have become less prevalent.

Producer:
I think less than 14% of all S&P 500 companies actually offer a pension these days. There's also Social Security challenges. Concerns about the program's long term sustainability have increased, especially when ssa.gov and.gov. The Congressional Budget Office and the Social Security Administration, they both have come out and said, you know what the OAS was? The Old Age Survivors Insurance Fund is scheduled and set to be 100% depleted by 2033. Last year, they said it was 2034. They shortened it up by a year. That is less than ten years from now. You've got to have a plan for your own retirement income as an example. That's why your retirement is going to be different to what your parents dealt with. Also, health care costs, health care costs have risen beyond what normal inflation is, has been. And with the increased life expectancy. Health care expenses in retirement have become a significant financial concern because you're not just passing away and therefore it doesn't cost money. It becomes one of the top expenses and expenditures during your retirement years, which is health care inflation. We've all dealt with inflation since Covid. Outgoing inflation has eroded the purchasing power of money over time, making it necessary to save more and invest wisely to combat its effects on retirement savings. What all that means is you've got to stay invested. We're here to help you stay invested and get going and build that tax efficient, efficient, and market efficient portfolio. There's also globalization and economic uncertainty in a more globalized economy.

Producer:
Economic and market conditions are influenced by the events around the world. It does affect the economies around the world and affects markets. Next is the last one is there's a changing employment landscape. You've got people working from home. We've got an entire buildings that are remaining empty because people aren't going back to work. They're working from home. The gig economy increased. Job mobility has changed the nature of work. Less pensions means people aren't sticking with companies longer. Those golden handcuffs aren't there anymore. Job stability and employer provided benefits may not be as reliable, requiring individuals to be more proactive in their retirement planning. And we are here to help you be more proactive in retirement planning. So let's go ahead and start addressing. What's going on? A lot of people are looking and say, hey, can I put some of my qualified money into my money, my 401 K money? Can I put some of that into bank CDs? We've had bank failures in 2023. Also, I'm not going to sit here and quote what's going on with the FDIC since Covid 19. Generally, the financial reserve requirement is between 3 and 10% of banks. Covid 19 suspended that. They came out with regulations to suspend that. So I'd encourage you to go ahead and Google what is the financial reserve right now for banks and what's happened since March of 2020? It's scary. It's really scary, folks. Silicon Valley Silicon Valley Bank failed on March 10th, and that was the 16th largest bank in the United States at the time of its failure.

Producer:
It was also the largest bank by deposits in Silicon Valley. Signature Bank failed on March 10th. Signature Bank was a New York based full service commercial bank, which failed when customers, spooked by the sudden collapse of Silicon Valley Bank withdrew more than $10 billion in deposits. And the bailout efFords. On March 16th, 11 of the biggest banks in the country announced a $30 billion bailout package for First Republic Bank in an efFord to prevent the California based bank from becoming the third bank to fail in less than a week. The collapse of the Silicon Valley Bank and signature Bank were the second and third largest bank failures in US history. Historically, if you look at the 20 largest bank failures in US history, ten of them happened between 2008 and 2010. Here's a warning. Please do me a favor. Do not hold more than $250,000 in your household with any bank at any time. I'm going to repeat that again. Do not hold more than $250,000 in any bank at any time. That's for your household, not just for you and your spouse individually. Please be sure to verify that any bank that you use is FDIC insured. The Federal Deposit Insurance Corporation insures deposits up to $250,000 per depositor per insured bank. Do not hold more than $250,000 in deposits at one bank at any time. As a family, police.

Producer:
Need a higher rate of return from your safe money. Listen up. It's time to beat the bank CD rates.

Producer:
While bank CDs do offer some predictable returns, many retirees are looking for protection and growth. This is because inflation has been eating away at American's buying power for most of the last four decades, and has picked up in a bad way since 2020. Fixed indexed annuities allow investors to track the performance of a stock market index. Without subjecting their hard earned money to stock market risk. Some rabbis even have attractive features like bonuses and guaranteed simple interest roll ups. Here are some smart, safe alternatives to bank CDs and how to protect and grow your hard earned wealth. A lot of people are concerned about the market downturn. Over the last three months. The S&P 500 has fallen about 7.5% since its most recent peak in July. You likely received your Q3 account statements recently, and like so many others, we know you're concerned about losing your hard earned money to have heavy stock market exposure. It's important to protect a portion of your retirement savings as you get older, simply because as you age, you have less time to make up any significant losses. And once you leave the workplace and retire, you begin your decumulation phase. As you start drawing down your assets to receive the income you need to live on in retirement. Because of rising interest rates, banks are able to offer more attractive rates for CDs certificates of deposit. But you should know that the current interest rate environment is also made. Other safe money alternatives more attractive as well. And we're going to talk more about those other safe alternatives and how attractive they've become when we come back to the break. You're listening to Active Wealth Show right here on 9 to 1 the answer. And we really appreciate you guys and gals as listeners to The Active Wealth Show. Come right back.

Producer:
All you can do. You want more monthly income during retirement? Are you growing concern that you can't count on Social Security? Ford Stokes, author of Annuity 360 and host of The Active Wealth Show, wants to take this stress out of retirement planning by providing a complete portfolio analysis and retirement income plan free of charge to listeners of this station. Schedule your one on one consultation at ActiveWealth.com. That's ActiveWealth.com investment.

Producer:
Advisory services are offered through Brookstone Capital Management LLC, a registered investment advisor. Do you want a steady stream of income for retirement? Then it's time to consider annuities. I'm Matt McClure with the Retirement Radio Network. Powered by AmeriLife. Gone are the days when most employers offered pensions with guaranteed lifetime payouts to their workers. But what if I told you that you can build your own personal pension? It's possible with an annuity. An annuity is a financial product that provides a series of regular payments to an individual over a specified period of time, often for the rest of their life.

Ford Stokes:
There are several options for you to consider when choosing an annuity. Be confident in knowing that there is an annuity out there that can meet all of your needs.

Producer:
Ford Stokes is founder and president of Active Wealth Management and author of the book annuity 360. There are several different types of annuities, including fixed, variable, and fixed indexed.

Ford Stokes:
A fixed annuity offers a specific guaranteed interest rate on their contributions to the account. A fixed indexed annuity is an accumulation based product offered by an insurance company. The growth of your fixed indexed annuity is dependent on the performance of a chosen stock market index, but your money is not actually invested in this index. This offers you great growth potential and exceptional protection for your investment.

Producer:
While each can provide tax deferred growth and a lifetime income stream, variable annuities put your principal at risk in the market.

Producer:
If you are currently investing in a variable annuity, your funds could be in serious trouble if the market experienced any downturns.

Producer:
With so many possible choices to consider, it's essential you speak to a financial advisor or professional to help you make the best decision for your future. So are you ready to consider an annuity as part of your retirement plan? It's a key question to consider as you approach what should be your golden years with the Retirement Radio Network powered by AmeriLife I'm Matt McClure.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
Are you concerned about US tax rates being raised by the Biden administration and how that will affect your retirement? Tune in to The Active Wealth Show with Ford Stokes, your chief financial advisor, to learn how you can reduce the taxes you pay before and during retirement. The Active Wealth Show Saturdays at noon and Sundays at 11 a.m..

Producer:
Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interests of our clients and to make full disclosures of any conflicts of interest, if any, exist. Refer to our firm brochure, the ADV to a page four for additional information. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by BWR.

Producer:
Thanks for listening to The Active Wealth Show. If you like what you're hearing, subscribe to our YouTube channel to watch videos from this program and other recent episodes.

Producer:
And now we're talking about smart, safe alternatives to bank CDs with other products. And we want to help our listeners understand what happens to their money when they place their savings in bank CDs. When you deposit money with a bank leaving bank CDs, the bank is only required to keep about 10% of the money in reserve. This is the Federal Reserve requirement, while the remaining 90% is used for other bank operations, including loans made to other customers. What's interesting is that financial reserve was reduced due to the Covid 19 pandemic as well. So it encouraged you to go ahead and Google and check that out. In comparison, the highly rated insurance companies that issue fixed indexed annuities, which is another retirement tool for safe money protection, are required to keep 100% of the dollars you give them in financial reserves. Let me ask you, where would you rather place your hard earned retirement savings with a bank that has a 10% financial reserve requirement, or with a highly rated insurance company with a 100% financial reserve requirement? Personally, I would rather have the 100% financial reserve requirement. I can count on that. Also, bank CDs and annuities have different tax implications. When your money is in a bank, you're required to pay taxes each year. Any interest is earned, even if you don't take that as income and put it into your checking account. In comparison with a fixed indexed annuity, your investment is tax deferred, similar to a 401 K. And you only pay taxes once you start withdrawals.

Producer:
Certificates of deposits or short to medium term investments with lower penalties. Annuities are long term investments for retirement, and they also pay a higher interest rate in general. And now I want to talk about a specific product that's offered by nationwide. Only 1% of all financial advisers have access to this product. And we're very proud to be one of those 1% of financial advisors. And this is an example of a fixed indexed annuity currently offered by nationwide. They're A+ rated by three major credit agencies, including Moody's, S&P, BVB. And they're also highly rated by Aon Best as well. The nationwide Peak ten is offering a 20% immediate bonus on the amount you invest into the income account. On the day that your policy issues example, if you invest $300,000, your account value would start at $360,000. The nationwide peak, ten is also offering an 8% simple interest roll up every year. You defer turning on income, so what that means is you get 8% on your principal and gains and your bonus. Each year that you do not turn on income and you defer any withdrawals from the policy. They want you to keep your money in there so that. They can use your money to make money for you and for them. The nationwide peak, ten is also offering a 335% participation rate than BNP Paribas Global H Factor Index, a stock market index that tracks global health care markets. If the index goes up 10% as an example, you would receive 32.5% growth on your principal bonus and gains less a 1% spread.

Producer:
That spread is a spread rate that they reduce from your growth. A spread rate only happens when you have growth on the account. If the index does not go up, the worst you can do is 8% simple interest for every year. You defer turning on income as an example. They're giving you a 20% immediate bonus. There is a 1% fee each year with the product. But because they're giving you a 20% immediate bonus, that really helps mitigate. The 1% fee. Also want to remind everybody there are no advisory fees or portfolio fees. When you invest in fixed indexed annuities because we as fiduciaries can't double dip, we can't charge for management fee and then having the insurance company manage the funds. It wouldn't be right. And if you have anybody trying to double charge you on annuities as an advisor or management fees, I would encourage you to go ahead and pick the phone up and give us a call at (770) 685-1777, and we can help you. If you have questions or if you're looking to reduce your investment risk during times like these, please visit our website at active Health.com or give us a call at (770) 685-1777. We help our clients and listeners make informed financial decisions. And help them make choices that leave them and their money safe. And sound and secure for at least a portion of their gains and a portion of their overall portfolio.

Producer:
We're not saying you. You need to put 100% of your money in a fixed indexed annuity. It's not suitable for you to do that. But we are saying anywhere between 10 and 70% somewhere in that range. Usually it's about 20 to 40%. A lot of folks like to do 50 over 50 plans. They'll do 50% with tactical asset allocation, with smart risk and 50% with smart, safe investments in things like the fixed indexed annuity or life insurance or both. So we're happy to help you navigate this, these difficult financial times. And all you have to do is visit ActiveWealth.com and click that schedule consultation button in the upper right corner. And you'll get booked directly into my calendar. And now we're going to talk about what it's like to work with us. Some people are nervous and intimidated by meeting with a financial advisor or professional. We want to help you ease these concerns. In our initial consultations, we'll simply help you answer these questions. What does successful retirement look like for you? Also. What are you doing and who are you with? It's kind of a vision for your retirement. What are you looking to accomplish? Do you have specific goals? How do you plan to create income each month? And we're also going to help you get a portfolio analysis of your current portfolio, the risk you're taking, the fees you're paying, and the correlation of your assets.

Producer:
How much does one asset move when others move within your portfolio will help you answer those questions? If you don't know what your expense ratio is within your portfolio currently, or you don't know what an expense ratio is, then I encourage you to visit ActiveWealth.com and click that schedule a consultation button, or just call us at (770) 685-1777. Again (770) 685-1777. And we're happy to help you. Many of you have invested in target date funds in your 401 K's. Did you know that these are underperforming investments right now, especially with what's going on with bonds? The Vanguard Target Retirement 2025 fund lost 6.1% over the last five years. The Vanguard Retirement Fund 2030 fund lost 2.5% in the 2035 fund. Lost 1.8%. It's interesting that those closest to retirement have lost more, whereas the ones that are further out have gained more. You've got a real opportunity to avoid bond interest rate risk and reinvestment risk by replacing the bonds with a fixed indexed annuity as well. And we can help you do that. We can help you with your bond replacement strategy. Again, all you've got to do is visit ActiveWealth.com. We're happy to help you. And we want to educate all of our listeners about the target date funds. Number one is a lack of customization. Target date funds are designed to be one size fits all, which means they likely will not align perfectly with an individual's specific financial goals, risk tolerances, and needs. So be careful with those.

Producer:
Yeah, another thing to be concerned about Ford with these target date funds is fees. They do often have high management fees, which can erode returns over time, especially for long term investors. So be aware of that.

Producer:
Yeah. Also there's other hidden costs to some target date funds may invest in other funds leading to layers of fees that don't show up in your statement. But they do show up. When the overall value of your portfolio.

Producer:
One more thing before the break forward is that the risk tolerance may not match. These target date funds are designed to be one size fits all, but that is not the reality for all of those who are preparing for retirement. Everybody's retirement is different. Everybody requires different needs, and so the level of risk taken by a target date fund will not align with every investors true personal risk tolerance. For some, this could result in an overly aggressive or overly conservative portfolio. Yeah.

Ford Stokes:
You've also got some limited investment control. Investors have limited control over the fund's asset allocation, as it typically is set by the fund manager. This lack of control can be frustrating for those who desire more hands on approach in managing their money. Let's go ahead and go to the break. We'll go over a couple other things about target date funds. We come back. We'll also talk about some new 60 over 40 investment strategies that could help you get a greater rate of return and better protect your assets. We've got more smart investment and smart retirement planning strategies to share with you in segment four. Come right back.

Producer:
World, so you know where you are now and where you want to be in retirement. So how do you plan to get there? I'm Matt McClure with the Retirement Radio Network, powered by AmeriLife.

Jack Nicholson:
Do you have any other questions for me, counselor?

Producer:
There are a lot of questions to ask yourself when you start your retirement plan. Questions like when should I retire? How much money will I need? When should I claim Social Security? What about health care costs and taxes in retirement? This complicated puzzle means you're probably going to need some help coming up with a smart retirement plan.

Ford Stokes:
If you want to retire successfully, you really need to plan early. You know, Inspector G, expect and get prepared. Putting a plan in place now while you're still working is a great idea.

Producer:
Ford Stokes is founder and president of Active Wealth Management. Once you find a financial professional you want to work with, they can help you answer all the questions you may have.

Ford Stokes:
Back to what Warren Buffett said, if you don't find a way to make money while you sleep, you're going to work until you die. So we need to do everything we can to figure out a way to make money while we're sleeping. We talk about this human capital versus actual capital. When you're young, you have a lot of human capital. You've got a lot of left, a lot of room left, a lot of capital left in your career. Right? But at the same time, a lot of people that are older, let's say you're 65, 70 years old, you don't have a lot of human capital left, but you should have a lot of capital that is making money while you sleep. And if you don't, then you didn't make the right decisions.

Producer:
There are also some retirement costs you may not have considered yet. Long term care. For example. Did you know it's not covered by Medicare? What about home renovations? If you decide to stay in your home instead of moving into a facility? Your home might need some updates to ensure you're safe and comFordable. And those are just the tip of the iceberg. So do you have a fiduciary, financial advisor, or professional to help you wade through the complicated retirement planning process? That is a key question to consider if you want to make the most of your hard earned money with a retirement radio network powered by a mirror. I'm Matt McClure.

Producer:
And welcome back activators, The Active Wealth Show on Ford Stockton. Chief financial advisor. And I've got Sam Davis here with us. We're talking about target date funds. But I've got a personal thing I want to share first. Sam. So our twin girls, Grace and Madison Stokes, they are 17 years old. They're juniors in high school at North Forsyth High School in Cumming, Georgia, in Forsyth County, Georgia. Their cheer team is competing in the regionals down in Houston County for the. 2023 State High School cheer comp. And I'm super excited to see how they do this year. We're currently like second or third in the state based on scoring, and we are cheering for those girls really hard. And for all of you North Forsyth folks and all those folks that are part of Raider Nation, be sure to go down and and see them and pay your $10. And down there in Houston County to Harrison County High School, that's where they're going to be competing. It's like three hours away. And I'm wearing my North Forsyth Peter Miller golf shirt. It's got the North Forsyth Raider logo on it cheering for him and Sam. I'm one proud dad obviously, but it also is great because they are the highest ranked athletic, competitive team in all of Forsyth and North Forsyth County. For the high school. So they are they're the highest ranked athletic team at their high school. And we got a chance to win it all. The Houston County is very good, but just I'm so proud of the girls because they have really turned that program around since they joined as varsity cheer competition cheerleaders. As freshmen. They've they've lettered all three years and hopefully they'll do well this year. Yeah.

Producer:
My my wife was a cheerleader growing up. She was on the spirit squad in college. And we're pulling for you and the girls. We know it's not easy being a cheer dad, and it's a lot of pressure once it gets to regionals and state. So we're pulling for them all the way. Yeah.

Producer:
It's amazing. Appreciate it Sam, so much. And it's it's crazy. It all ends in 2.5 minutes. It's just so fast. So anyway, good luck to the North Forsyth cheer team for this year and hope you make it to state and know if you do, you'll do great at state. But let's let's win regionals and send a message out there to our competition. But good luck to all the North Forsyth Cheer team this weekend at regionals. So let's talk more about these target date funds. And Sam, you've got kind of the last three elements of concern with target date funds as well.

Producer:
Yeah we talked about how the risk tolerance is made to be one size fits all. And that's just simply not the case when it comes to retirement. So you could be potentially over conservative or over aggressive when it comes to investing in these target date funds. You're also subjecting yourself to some market timing risk. So it's important to know that target date funds may rebalance and adjust their asset allocation at certain intervals, which can expose investors to market timing risks if these adjustments don't happen at the proper times. Also unpredictable returns. You know, we went through some of the recent five year returns from the Vanguard funds. The performance can vary widely depending on that fund manager's decisions as well as the underlying assets. We talked about the fees and more importantly, these funds are likely underperforming benchmarks, and they're doing a poor job at protecting your hard earned and hard safe money as you near retirement, because when you're in that retirement red zone, we talk about, you know, the 5 or 10 years before retirement and the 5 or 10 years after, that's such a critical time for you as you're transitioning from your accumulation phase to your accumulation phase and starting to draw down your assets, you don't want to take on any big losses. Protection is key during those times.

Producer:
Yeah, a couple of concerns I've got just kind of happening out there in the marketplace. First of all, there's over like $2 trillion in target date funds. And these things were set up by 401 K plan managers that made life easier for them to manage the assets and also to make it easier to educate and just say, hey, just pick this fund, you'll be fine. That's also a labor reduction for the 41K plans. And they also can limit the number of options to keep it really, really tight. And the other thing is it's also allows them to kind of insert some expense ratios so they can make more money on it. You got to be careful with all those things. Also, so many of us. The second big concern I've got is so many of us join a job, join a workplace, and we select a target date fund when we think we're going to retire and we set it and forget it. The buy and hold strategy is not the way to go. Tactical asset allocation, where you're rebalancing on a monthly basis, coupled with at least strategic allocation with a rebalancing of at least once a year on the asset allocation within your portfolio is really the best way to go. And it's also a way for you to reduce your standard deviation and reduce your risk and diversify your risk.

Producer:
I am super concerned about people just setting it and forgetting it within target date funds. Also, if you've got old for chunks that are still sitting in these target date funds, you owe it to yourself to get that out of an old 401 K and put it into an IRA. Don't roll it over into new 4k, and if you've done that in the past, go ahead and roll it out into your IRA. And that's a rollover. So there's no tax event when you're rolling over and doing a traditional rollover into your IRA from your 4k. I would encourage you to do that immediately. Go ahead and reach out to us at ActiveWealth.com. Schedule your consultation or you can call us at (770) 685-1777. We're happy to help you figure out what to do with those old four one. And also, if you've got money in target date funds, let's help you rebalance into a higher performing asset allocations that also are not exposed to the bond risk that's out there with interest rate risk and reinvestment risk that we're seeing in the marketplace. It is very telling that we talked about it in segment three, that the target date funds are the closest to retirement age or the closest to the date that we have right now in 2023.

Producer:
I can't believe that the 2025 Target Date Fund is is underperforming the 2050 fund. It's remarkable. It's mainly because of the bond exposure risk and what's happened in bonds over the last three years. Also, the 60 over 40 portfolio ended up. Harry Markowitz is given credit for being the founder of 71 years ago, in 1952. That investing strategy just had its worst year in generations. Looking beyond bonds to protect your retirement. The tried and true 6040 portfolio lost 17% last year, its worst performance since 1937, according to the lethal group analysis. Even with a 14% gain in the S&P 500 helping the strategy recover in 2023. Stocks and bonds have moved in tandem more over the past three years than any time since 1997. A bond replacement will help you accomplish the following. Delete the fees and the bond portion of your portfolio, often 40 to 70% of a Pre-retiree Retiree's portfolio. Eliminate the market risk and interest rate risk associated with bonds, and diversify your portfolio while generating the guaranteed lifetime income that you need to live on during retirement. Get in touch with us today at (770) 685-1777 or visit ActiveWealth.com. And now for the final countdown. It's the.

Producer:
So let's recap what you may have missed. It's the final countdown. The final.

Ford Stokes:
So on today's show, we kind of talk about why we host this show. We're really here for you. We're here to help educate you. We gave you some great information about what's going on with bank cities and also what's going on with target date funds. Bank cities may be paying higher, but also the financial reserve requirement is much lower than fixed indexed annuities. We gave you the value of a personal pension. We talked about how to protect and grow your wealth through fixed indexed annuities for a portion of your assets. We also said, hey, wait a second. You need to consider tactical asset allocation and strategic asset allocation and not just set it and forget it on your investments. We also wished the. Purple Raiders of North Forsyth. All the best and good luck at regionals for your cheer comp team. During this year's 2023 Georgia High School Cheer competition, and we are cheering for you guys and gals like crazy. And good luck to all the teams out there. Also hope everybody stays safe through the playoffs in Georgia high school football. Hopefully the best teams win and hopefully everybody stays injury free and we just hope everybody has a great week.

Ford Stokes:
But please pay attention to what we're talking about on these shows. Please consider not investing in target date funds. Please consider a bond replacement strategy. And next week we're going to talk about. Our November structured note. I think you're really going to like what we've got offered from JP Morgan. And if you're curious about what that rate of return is from this JP Morgan structured note, that's north of 10%. I would encourage you to go ahead and reach out to us at (770) 685-1777. If you're curious about the structure, know that we're offering from JPMorgan and that rate of return, I would encourage you to go ahead and reach out to us at (770) 685-1777. Again, we invest in structured note ladders to diversify the risk. We don't just invest in one structured note. We recommend investing in a series of notes, and all you have to do is pick up the phone and give us a call at (770) 685-1777. And good luck this week to all the cheerleaders for the Georgia State High School competition. And I would encourage you to go ahead and reach out to us at (770) 685-1777. Have a great week, everybody.

Producer:
Thanks for listening to The Active Wealth Show. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free consultation, call your Chief Financial Advisor, Ford Stokes at (770) 685-1777 or visit ActiveWealth.com. Investment advisory services offered through Brookstone Capital Management LLC. Bcm, a registered investment advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer:
Structured notes involve risks not associated with an investment in ordinary debt securities. The securities are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of or guaranteed by a bank. The securities will not be listed on any securities exchange and the secondary trading may be limited. Therefore, there may be little or no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity. The securities are subject to the credit risk of the issuing bank, and any actual or anticipated changes to its credit rating or credit spreads may adversely affect the market value of the securities.

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