Risk Management in Retirement: Strategies for Consistent Returns

8.25.23: Audio automatically transcribed by Sonix

8.25.23: 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. I've got Sam Davis, our executive producer, with us here on this week's Active Wealth Show. Sam, say hello to everybody. Welcome to the weekend activators. Hope all of our listeners are staying cool because it is a scorcher. A hot summer weekend, but there's a lot to be excited about. Kids are back in school. The tour championship is in town and before you know it, I expect cooler temps will be around the corner. So enjoy your weekend and thanks for making us part of yours. Absolutely. What was interesting, I watched the broadcast, the Braves broadcast, and they were playing the Mets on Wednesday night. And they had, you know, Chipper and John Smoltz and Tom Glavine and Jeff Francoeur doing the play by play and announcing the game. And they let this loud speaker come over in the press box. And it was 721 at night was the game start and it was 91 degrees. Hope everybody stays cool. Staying cool out there. Um, want to just talk a little bit about what we're going to talk about today. So the title of this show is The Retirement Risk Equation. We're going to be safeguarding your future through smart risk and smart, safe approaches. We're going to do our level best to educate you on ways to invest in a smart, risk and smart, safe approach. What we what we would call a smart financial plan.

Ford Stokes:
Again, this is here for educational purposes. We're here to try to help you protect and grow your Wealth. Also, you probably heard me talk about the activators at the front of the show, welcoming the activators through the show. So just so you know who an activator is, it's somebody who listens to the Active Wealth Show on a weekly basis. It's somebody who is looking to protect and grow the hard earned and hard saved Wealth. I mean, a lot of times it's even harder to save it than it is to earn it. A lot of us will. You got to take our lifestyle up to the amount of income that we're generating. And then also these folks are looking to build a tax efficient, fee efficient and market efficient portfolio. And we're happy to help you do that because we're trying to help you plan for successful retirement. So that's really what an activator is. And we really appreciate the activators making us the number one listen to national radio show or any any radio show on AM 920 The Answer. On the weekends here at Am 920. So and again, big shout out to our Am 920 folks. We really appreciate y'all and thanks for letting us be part of the Am 920 family. So quick question. Did you know that in 2022 Bonds had their worst year in more than four decades? In fact, according to the Barclays U.S.

Ford Stokes:
Aggregate Bond index, 2022 was the worst year for bonds since they started measuring in 1976 also. Harry Markowitz was given credit for being the founder of Modern Portfolio Theory that basically stated, hey, if you take 60% stocks and 40% bonds and put them together in a portfolio, that will help you get an efficient frontier moving forward. And the 60 over 40 portfolio that is over 70 years old now, it's 71 years old. That portfolio actually did worse than it's done in 41 years. We meet with so many people who discover how much they were paying in fees on bonds they didn't even know they were holding within their portfolios. And we help them get more efficient as well, but also help take some risk off the table because with bonds, you've got interest rate risk and reinvestment risk as well. And basically with fixed indexed annuities, you do not have interest rate risk. You might have some reinvestment risk, but you don't really have the same interest rate risk that comes with bonds. So if you're interested in learning about bond replacement and how it could help you delete fees and establish guaranteed lifetime income, I would encourage you to reach out to us. You can go to ActiveWealth.com. That's ActiveWealth.com and click that schedule a consultation button in the upper right corner. You can also visit Active Wealth Show.com and listen to any of our shows and in the upper right corner on that home page is also a schedule of consultation.

Ford Stokes:
You get booked directly into my calendar. You can also call us at (770) 685-1777. Again (770) 685-1777. And Diana and Deborah and our team are standing by to take your calls here on this weekend. And want to give you a quick overview of today's show. So we're going to talk about our quote of the week. Sam is going to share that. We're also going to have a little bit about this week in history, but we're going to talk through some financial terms of the week. Specifically, we're going to talk about beta and standard deviation on today's show. Both of them are really important terms for you to know as an investor, as a pre-retiree and a retiree. And we're also going to talk about how you can balance risk in your savings. And also we'll give you the last of our cost. Cutter We did a whole series on 23 cost cutters for 2023, and we finally made it through 23 weeks. So we're going to share the very last of the 23 cost cutters for 2023 here on today's show. And we're going to talk through the three legged stool and how you can take action and stabilize your retirement plan. Sam, why don't you go ahead and share a little bit about the financial wisdom quote of the week.

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

Producer:
This week's Quote of the week comes to us from Earl Nightingale, who was an American radio speaker and author dealing mostly with the subjects of human character, development, motivation and success. He wrote a book called The Strangest Secret, which is considered by many to be one of the greatest motivational books ever written. And Earl Nightingale once said, Never give up on a dream just because of the time it will take to accomplish it. The time will pass anyway.

Ford Stokes:
Yeah, I would try to fit that a little bit. Into what? What's going on with retirement planning? I would say I would take action. And if you've got a dream of a of an absolute worryfree retirement in or mostly worryfree where you're not necessarily watching the stock ticker and you've got the consistent income from Social Security, fixed indexed annuities, building your own personal pension or even tax free income from life insurance or Roth IRAs, as well as implementing a managed portfolio with tactical asset allocation and strategic asset allocation. If you want to put together those types of plans that are multifaceted, that are comprehensive, then I would encourage you to go ahead and reach out to us at (770) 685-1777. I think Earl Nightingale's quote is very on point these days. You know, again, you you haven't made a decision unless you've taken some action. So if you listen to this show for years, we're starting to talk to more and more people that have listened to our show for over two years. I would encourage you to go ahead and make the decision to call us today at (770) 685-1777, or go ahead and reach out to us at ActiveWealth.com and click that schedule a consultation button. We are going to give you a free copy of my book, Annuity 360 and you can also get that free ebook just by visiting annuity 360 dot net. Put your name, email and phone and mailing address in there. Again, annuity 360 dot net. We'll get that to you. And if you come in and speak with us, we've got a special gift for you with our special blend of. Steak seasoning that a chef, a New Orleans chef puts together for me for steak and fish and chicken. And it's fantastic. I love this stuff, Sam. I'll put it on my corn flakes almost if I could. So but now, Sam, let's go ahead and share the financial terms of the week as well.

Producer:
For that steak Seasoning is fantastic, and I would encourage all the listeners to come into the office, give us a visit and get a copy of that book, Annuity 360 and and try that steak seasoning out while it's still warm outside and you've still got the grill going out there on the back patio. So yeah.

Ford Stokes:
It's a lot of fun.

Producer:
Couple big terms that we're going to start defining as we wrap up segment one and get into segment two. The first one is going to be beta, which is a term meaning the measurement of investment volatility. This can help you choose investment options based on your desired level of risk. And there's a few things to know about beta, and we'll talk about that in segment two. The other term we're going to really get into is standard deviation, which you may be familiar with. This is a measurement that helps gauge how unpredictable an investment or a portfolio's returns might be. And that's really just about seeking to protect your money first and reducing that standard deviation. So we'll talk about that. We're also going to give you a cost cutter tip regarding ETFs and ETFs stands for exchange traded funds. We know all the activators out there are looking to save money. So we're going to get into ETFs as well and how those can cut costs in your portfolio.

Ford Stokes:
Yeah, look forward to catching up on that. Mean beta and standard deviation are really important, honestly, or investing in portfolios. The measurement of standard deviation and being able to reduce your standard deviation during your retirement years may be more important than average rate of return, believe it or not. So we'll talk through that here on the Active Wealth Show right when we come back. You're listening to Active Wealth Show right here on Am 920. The Answer and come right back so we can talk more about our two financial terms of the week, beta and standard deviation.

Producer:
With the traditional 60 over 40 portfolio having its worst year in more than four decades now may be a great time to consider more than just stocks and bonds. Ford Stokes, author of Annuity 360 and host of The Active Wealth Show, wants to help you retire with peace of mind. Schedule your free consultation today at ActiveWealth.com. That's ActiveWealth.com.

Producer:
Investment Advisory services are offered through Brookstone Capital Management LLC a registered investment advisor. 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.

Charlie Kirk:
Charlie Kirk here. If you're concerned about your investments, rising taxes from the Biden administration, then I encourage you to listen to the Active Wealth Show hosted by my good friend Ford Stokes right here on Am 920. The Answer. Listen to the Active Wealth Show Saturdays at noon and Sundays at 11 a.m. The Active Wealth Show right here on Am 980. The Answer.

Producer:
Investment. Advisory Services offered through Brookstone Capital Management, LLC, BCM, a registered investment advisor, not an actual client of active Wealth management. Thanks so much for listening to the Active Wealth Show. Make sure to rate us everywhere you listen to podcasts, including Spotify.

Ford Stokes:
And welcome back. Activators, the Active Wealth Show on Ford Stokes, Chief Financial Advisor. And I've got Sam Davis here with me on the Active Wealth Show as our executive producer. And Sam and everybody listen out there. We're talking about the retirement risk equation today. And we've got two important financial terms of the week that really fit into that retirement risk equation for your retirement. And the first one was beta. I mean, same you talked about it. Beta is a measurement of investment volatility that can help you choose investment options based on your desired level of risk. Our portfolios are managed, portfolios are managed by a team of. Of CFAs and certified financial analysts. It's a three year test that they have to take more. Diorio is our chief investment officer. And what we try to do is we try to implement a strategy of diversity. We want to diversify your portfolio. We want to implement a strategy of diversification. We want to diversify your portfolio. We also will try to implement, you know, exchange traded funds within your portfolio that are lower cost in fees than mutual funds are because they don't carry 12 be one fees or a share fees or C share fees. And beta is a great way to measure of how a particular investment such as a stock or mutual fund moves in relation to the overall market.

Ford Stokes:
In other words, beta is a way to see how much the value of an investment might change compared to the market as a whole. Beta is measured on a scale. If an investment has a beta of one, it moves in line with the market. If it's below one, it tends to be less volatile. If it is above one, it is more volatile. As a retiree, you want to really try to avoid too many investments that are above one on a beta perspective. Lower beta investments might provide more stability, while higher beta investments can offer more for potential gains, but also more risk. When you're investing in planning for retirement. Understanding beta helps in choosing investments that match your desired comFord level with risk. So one of the things to consider when you're talking about beta is a sequence of return risk. If you have a major loss in what you're dealing with and then all of a sudden you've got to come back, you're going to be coming back on a lower principal. So. You know, from March 8th to March zero nine, the S&P 500 lost 50.1% of its value. If you lose 50% of your portfolio. And you're going to have to have 100% to come back just to get back to zero. So protecting your assets are really important. I mean, let's don't forget the two first two rules of investing from Warren Buffett.

Ford Stokes:
Rule number one is just don't lose the money. Number two is don't forget rule number one. Last week, we discussed the differences between strategic and tactical asset allocation. We also discussed what an expense ratio was and why it mattered. Beta matters as well. And one of the ways to also try to get that beta lower is diversify your investments. And also. Invest in things or they're going to be less volatile than the market as a whole. And then you'll see that you'll you'll do much better. Our two main. Objectives here at Active Wealth Management will work with our clients is to first protect. Your investment in the second is to grow your investment. But we don't forget that the number one priority is to protect your money. When you're investing money in the stock market and securities and in bonds, there's always market risk. With bonds, there's reinvestment risk and and interest rate risk. And we try to minimize the bonds in our client portfolios and try to replace bonds with fixed indexed annuities or life insurance or even a structured note ladder, things like that. We do a lot of different strategies, so I'd encourage you to go ahead and reach out to us at ActiveWealth.com that's ActiveWealth.com and click that schedule a consultation button.

Ford Stokes:
Now let's talk about standard deviation, which is our second important term. On this week's show. Standard deviation is a measurement that helps gauge how unpredictable an investment or a portfolio's return might be. And as you would imagine, as a pre-retiree retiree, you might want to make sure that you can. It Hope, gauged how unpredictable an investment would be. It's a statistic that measures the dispersion of a data set relative to its mean and is calculated as the square root of the variance. Now, I know that's a lot we understand, but if you want to know more about standard deviation, I want to share a couple of things with you. Standard deviation is a way to see how spread out the returns of an investment are. A higher standard deviation means the returns can vary a lot, while a low one means they tend to stay closer to the average. Lower standard deviation investments may provide more consistent returns, while higher standard deviation investments are more likely to have bigger ups and downs. Standard deviation is just as important as the rate of return, if not more important in this adviser's opinion. You should seek to protect your money first, which means reducing standard deviation. Then you can focus on growth opportunities. The other thing we look for is kind of that risk reward.

Ford Stokes:
Balance in that equation on on balancing risk with reward because with risk comes reward. But you you've got to be very careful, especially if you're not going to go back to work after you retire. Let's say you're in that red zone of retirement that five years before retirement and then five years after retirement. That's another time to really be cognizant of what your standard deviation is. Well, we look for is we look for portfolio that's got an average rate of return that is not. Lower than the standard deviation. We it's just not a good. You know, it's not a good trade off between risk and reward. If your standard deviation is higher than your average rate of return. So it's something we definitely look for. So let's talk about why these financial terms are important to understand. Versus safety and rescue. Understanding Beta and standard deviation helps retirees choose investment options that match their risk tolerance. Some retirees might want to play it safe with lower beta and lower standard deviation investments and portfolios, while others might be more comFordable taking one more risk or potential higher returns. The next reason why these financial terms are important are income and stability. Lower beta and lower standard deviation investments can provide a steadier and more predictable stream of income, which is vital for funding your living expenses during retirement.

Ford Stokes:
Number three is longevity. Retirees need their savings to last throughout their retirement years. By considering beta and standard deviation with your financial advisor. Hopefully that's us. Retirees can make informed decisions that focus on their long term financial security. Here's the number four reason why these financial terms are important to understand. Diversification is key. Understanding beta and standard deviation can guide retirees seeking to diversify and improve their investment portfolios. Diversification means spreading investments across different types stocks, annuities, structured notes, bonds, real estate, etcetera. In order to reduce the impact of poor performance in any one area. By having a mix of investments with varying levels of risk, you can manage the overall risk in your portfolio. If one investment isn't doing well, the others may help offset the loss. Savvy investors diversify their investments to create multiple income streams they can enjoy during their golden years. Withdrawals from investment accounts, annuities, rental income, etcetera. And we come back for the break for segment three. We're going to talk about our cost cutter tip and how to save money with the ETFs within your portfolio. Again, ETFs are exchange traded funds and they are superior products in lower fees than mutual funds. We'll talk more about that right when we come back from the break. You're listening to Active Wealth Show right here on Am 920. The Answer.

Producer:
With the traditional 60 over 40 portfolio having its worst year in more than four decades now may be a great time to consider more than just stocks and bonds. Ford Stokes, author of Annuity 360 and host of The Active Wealth Show, wants to help you retire with peace of mind. Schedule your free consultation today at ActiveWealth.com so we can help you delete fees and establish a personal pension that you can never outlive. Visit ActiveWealth.com. Now that's ActiveWealth.com.

Producer:
How much risk are you willing to take with your investments? I'm Matt McClure with the Retirement.Radio network powered by AmeriLife. Oh, if you're a thrill seeker, you probably enjoy the adrenaline rush of jumping out of a plane, bungee jumping off a high cliff or kayaking down a raging river. But when it comes to your finances, do you still find a lot of risk exciting, or does the danger of losing your hard earned money change your perspective? Think back for a moment to the 2008 financial crisis. Thanks to market risk and some shady Wall Street deals, the S&P 500 fell more than 46% between October 2007 and March 2009.

John Mack:
If you go back and look at the risk that we took 25, 30 years ago and it was kind of way out there, and a lot of these firms, including some of the things that happened at Morgan Stanley, we were so mesmerized by the great trader and the money they made that they got more and more autonomy until it was too late. We had huge losses.

Producer:
That's former Morgan Stanley CEO John Mack speaking with Yahoo! News. So how do you protect yourself if we have another year like that or even another 2022? When the markets had their worst performance since 2008? Financial advisors will tell you that to maximize your investment growth, you need to take some risk with your money. Just be smart about it.

Ford Stokes:
You want to have an actively managed portfolio strategy. You just do. It involves shifting investments in your portfolio to take advantage of pricing anomalies and strong market sectors. You want to reduce the risk, you want to have smart risk as part of your portfolio. You want to increase returns and you want to truly diversify your portfolio.

Producer:
Active Wealth Management founder and President Ford Stokes says smart risk investing is based on the concept that all investments carry some amount of risk and that the only way to reduce that risk is to diversify. This means investing in a variety of different asset classes such as stocks, bonds, real estate, commodities and other financial instruments. Everyone's situation is different, and that's why it's important to work with a fiduciary financial advisor to get the most out of your hard earned and hard saved money. So how much risk are you willing to take with your retirement? That's a key question to consider as you invest for the future. With the Retirement.Radio network powered by a mirror life. I'm Matt McClure. 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:
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.

Ford Stokes:
And welcome back. Activators, the Active Wealth Show on Ford Stokes, Chief Financial Advisor. And I've got Sam Davis, our esteemed executive producer, with us here. And we're talking about ETFs. So we're going to give you our last cost. Cutter And this is the way this is a big one. You really can save money in your portfolio. You can reduce the risk in your portfolio by investing in exchange traded funds and just having lower fees because with mutual funds, there are things called 12 be one fees or marketing fees that, according to the Investment Act of 1940, mutual fund companies are allowed to charge for marketing fees. But when was the last time you really saw a mutual fund actually advertised on television or in a billboard on radio? You really don't see that very often. And I would encourage you to really look at moving money from mutual funds into ETFs within your retirement portfolio because it's just money that's leaking out of your bucket that you don't need to leak out of your bucket. You need to have that into your nest egg. You need to have that money staying within the portfolio so it can work for you. And also exchange traded funds are something that you can actually trade within the day, the trading day. Whereas mutual funds you have to wait to get the net asset value at the end of the trading day and then you can begin to market that share or those shares in mutual funds to for sale if you want to sell out of those mutual funds on a daily basis.

Ford Stokes:
So ETFs in exchange traded fund is a type of pooled investment security that holds multiple underlying assets rather than only one. And here's how ETFs can cut costs in your portfolio. Etfs generally lower expense ratios compared to many mutual funds. Expense ratios are like fees that cover the cost of managing investment with lower expense ratios, more of your investment returns, stay in your pocket, and they also help you grow the portfolio as a whole. It's also greater transparency. Etfs often provide transparency about their holdings on a daily basis. This lets you see exactly what you're investing in. Mutual funds might only disclose their holdings quarterly or even less frequently. So also no load fees. Many ETFs don't charge load fees, which are sales commissions When you buy or sell, mutual funds might have front end or back end load. Fees cutting into your investment right from the start. Many of the holdings you may currently hold in your work based retirement plan, your 401. Your 403. B, your IRA, your IRA. Et cetera could be weighed down with fees, which in turn moves your expense ratio in the wrong direction. If you have a work based 401 k 403 B, Sep, IRA or even just IRA or Simple IRA or other retirement plan, we encourage you to reach out to us and schedule a complimentary no obligation consultation.

Ford Stokes:
We'd be happy to meet with you in person. We've got our brand new office building in Alpharetta. We're on Exit 12 at Grassland Parkway. We're right off McFarland. We're on the other side of the highway from Halcyon, and we'd be happy to meet with you in person, on the phone or in a private virtual video call. We can do Zoom teams, whatever you'd like. We understand that your money is important to you, which means it is important to us. And here's what you're going to get when you meet with us. We provide. All of our comprehensive consultations at no cost to our listeners so you can make an informed financial decision about who you're going to work with on the front end. We start acting like fiduciaries, right when we meet you, not whether you say, yes, you're going to work with us or not. We help you analyze your financial situation. We'll also closely examine any annuities you may currently have. We'd love to give you an annuity x ray if you've got that or if you've got a pension. We work with a lot of folks that were are with AT&T or with Goodyear or Georgia Pacific and others that have pensions, and we help them figure out whether they're going to take a lump sum pension or whether they're going to do with it.

Ford Stokes:
We'll also help you discover exactly how much you're paying in fees and help you cut unnecessary costs within your 401. K. Your 403. B, IRA or other retirement savings accounts. Also, if you are younger than 59.5 and and you're not going to move the money out of your 4k, we will still help you optimize the investments that are available to you within the 401. Or 403 B at no cost to you and help you optimize. And what we're going to do is we're going to do everything we can to reduce the fees and reduce your expense ratio within the portfolio and look at a ways to reduce the standard deviation within your portfolio as well. We'll also help you with Social Security planning and help you figure out what you're going to do with Medicare. We we work with Bonnie Dobbs, with Medicare and other red tape and her team on the Medicare side. And we also help you maximize your Social Security income when to take Social Security, how your Social Security income benefit is calculated and think you're really going to like getting our Social Security maximization report. The people who get our Social Security maximization report or people who come in to meet with us. You can also just go ahead and visit us at ActiveWealth.com and we've got a.

Ford Stokes:
Workbook, a financial workbook. If you want to get started. There's a financial workbook link at the bottom of the page, but you can visit ActiveWealth.com/workbook to get started and it's a 256 bit encrypted interface where we're able to grab your statements. And also it's a little bit of a fact finder so we can understand your age and and your income and what you think your Social Security income is going to be, what your monthly expenses are. And we'll get started on running a free financial plan for you. It's about a $1,500 value. We'll also compare your current situation to what's possible if you work with us. Remember, it's your money. If it matters to you, it matters to us. All you gotta do is visit ActiveWealth.com, click that, schedule a consultation button in the upper right corner and we're happy to help you. And the next thing we want to talk about on this week's show, we've only got a couple of minutes left in segment three. Here is the three legged stool of retirement planning. So here's the three legs of a really sound retirement plan. Number one is Social Security. Number two is personal savings, and number three is pension. The problem is, is that the 401. Replaced the pension. There's literally less than 14% of all. S&p 500 companies still offer a pension, but you can generate your own personal pension. We can help you do that.

Ford Stokes:
We've got access to a nationwide product that's fantastic, that offers a 20% immediate bonus on your money. It also offers a 325% participation rate and the BNP Paribas Global H Factor Index. And it also offers an 8% simple interest growth on your money called an 8% roll up each year that you defer your income. But remember, a stool with one leg will fail. A stool with two legs requires a delicate balancing act. And a stool with three legs provides the greatest stability. And we want to help you do that. And we come back from the break. We're going to talk to you about how you can build a stable retirement plan for you. That's going to make a lot of sense. And we'll make it where you don't have to watch the stock ticker as much. And we really appreciate you listening to Active Wealth Show. We're here to help you. We also would like for you to give us a call so we can get started helping you right away. All you got to do is call us at (770) 685-1777. Again. (770) 685-1777. Or visit ActiveWealth.com and click that schedule console button in the upper right corner. We come back from break we're going to talk more about how to build that three legged stool for a sound retirement plan right here on the Active Wealth Show on Am 980. The Answer.

Producer:
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 or call us today at (770) 685-1777.

Producer:
Is your house too big for your current needs? What about your current budget? I'm Matt McClure with the Retirement.Radio network Powered by AmeriLife. As our circumstances change, so do our needs. In retirement, it's likely you'll no longer need the five story, two bedroom home you've lived in since your kids were all in school. But it's not just the size of the home that can be a consideration in deciding whether to downsize.

Sandra Rinomato:
Some people are living in a situation where the house needs a lot of work. It's time to renovate the kitchen. It's time to put on a new roof. And they they think, do I spend that money? Do I have the energy to do that? Maybe I should just move instead.

Producer:
Real estate expert Sandra Rinomato told CBC News that selling your home and moving into something smaller can be a good way to free up cash in retirement.

Sandra Rinomato:
By selling the house that liquidates gives you the money to live a lifestyle that you've dreamt of your whole life.

Producer:
A smaller place is also cheaper to heat, cool and maintain. Moving into an apartment or living with family members is another way to potentially save money on housing expenses such as lawn care and maintenance, experts say. To maximize your profits on the sale of your old home, keep your real estate agent's commission as low as possible. And there are companies out there that can help if you decide downsizing is right for you. So could cutting the size of your home help keep your retirement budget in check? That's a key question to consider. And it's one of 23 retirement cost cutters for 2023 with the Retirement.Radio network powered by AmeriLife. I'm Matt McClure.

Ford Stokes:
Chapter six The Rule of 100 Big Idea. You want to risk less as you get older because you have less time to make up any big losses as you get closer to your golden years, many financial professionals advise gradually reducing your risk. Retirees and pre-retirees don't have the luxury of waiting for the market to bounce back after a dip. The dilemma is figuring out how safe you should be in certain stages of your life. For years, a commonly cited rule of thumb has helped simplify asset allocation. This rule states that individuals should hold a percentage of their stocks that is equal to 100 minus your age. For example, a 60 year old would have 40% of their holdings in stocks and 60% in fixed income products like bonds or fixed indexed annuities. Why you Should Follow the rule of 100. Take our current example of a 60 year old at age 40, your risk capacity is higher. You have more time to rebuild your Wealth. Should you experience a dip in the market. However, at age 60, you can't afford to risk as much of your portfolio in the market because the time horizon to rebuild your Wealth is much shorter. Rule of 120 Many financial advisors now advocate the rule of 120 so they can get a significant rate of return for their clients and maintain management of the portfolio. I disagree with today's market volatility. A retiree does not want to go back to work in a job making less than what they made before. They must consider following the rule of 100 or at least a 5050 smart financial plan that is built equally with smart risk and smart, safe investments like.

Producer:
What you're hearing. You can watch the show to visit YouTube.com and search the Active Wealth Show to watch clips from this program.

Ford Stokes:
Welcome back. Activators, the Active Wealth Show on Ford Stokes, your chief financial advisor at Sam Davis, our executive producer here. And Sam and I are talking about the three legged stool that includes Social Security, personal savings and pension. And it really kind of speaks to retirement readiness with this three legged stool. We want you to think of your retirement as a three legged stool. Each leg serves as a purpose and provides stability. The first leg is a pension, and most of you probably don't have a pension. If you do have a pension, we'd love to be able to do a pension x ray for you. All you've got to do is visit us at ActiveWealth.com and click that schedule a consultation button and we're happy to help you do the analysis. Whether you should take a lump sum on your pension or you should consider turning on your pension. Most pensions, by the way, are implemented with a product called a sPIa, a single premium immediate annuity. And those products are really good at paying you your money back. They're not great at growing your money, so you may want to pivot that money into a fixed indexed annuity so that it could be linked to a market index and get you market like gains without market risk.

Ford Stokes:
But again that first leg of of this. Solid, stable retirement stool is a pension, sometimes called a death benefit plan. UnFordunately, most employers no longer offer this benefit to their employees. As of 2019, just 14% of Fordune 500 companies offered pension plans as a benefit to new hires. If you don't have a pension, no need to worry. We can help you establish your own personal pension based on the best options available today from highly rated insurance companies and annuity companies in the marketplace. We even have access to a proprietary product that only like 3000 plus advisors have access to in the country. This offer from nationwide and that product offers a 20% immediate bonus that goes into the income account. It also offers a 325%. Participation rate in the Global H Factor index. It also offers an 8% interest growth, simple interest growth on your principal that you invest each year. So you get a roll up of 8% each year that you wait to turn on income. And so we can really help you get there. Sam, what's your thoughts on this solid leg of the stool?

Producer:
Yeah, it's an important one to start with. Ford because when you get down to brass tacks and what retirement is to a lot of people, retirement is they're stepping away from the desk. They're leaving the office. They're just not working anymore. And and so you're not getting income in the same way that you did when you were working. And so the first thing we want to do at active Wealth is make sure that you're going to continue to get those paychecks, continue to get that income, because just because you decide to step away from the office doesn't mean that the bills start stop coming every month. Right. So you want to make sure that you're going to get those paychecks to fund the things that you need to pay for those non-discretionary expenses, those bills. Maybe you're still knocking off those last few mortgage payments, but also the paychecks as well. You know, it's retirement. You want to have fun, You want to go on trips every day, Saturday and all that good stuff. So you want to have that steady stream of income. And so I think that's a great place to start with the first leg of the stool. And you're right, you know, pensions aren't often offered as much these days. And so it's important to explore the other solutions that are out there. And we're using very similar solutions to what they're using in the corporate world to fund employee pensions.

Ford Stokes:
Yeah, but the good news is that our options and our solutions will grow your money as well as give you your money back and pay your money back. So that's the part that I think is really helpful. Most folks that we find they they take the lump sum pension, they invest in products with us. So I would encourage you to go ahead and visit us at active Wealth. Com If you want to get that pension x ray or you want to get your own personal pension, at least as a plan for you to consider, all you got to do is reach out to us at ActiveWealth.com and click that schedule a consultation button in the upper right corner or just give us a call at (770) 685-1777. Now the second leg of the stool is Social Security. But as we discussed on last week's show, Social Security is on track to cut benefits to retirees in 2033, when its trust fund reserves are forecasted to be depleted by the Congressional Budget Office and the Social Security Administration. In fact, the Social Security Administration has estimated that benefits will be cut by 23% in 2033 unless the program is strengthened. The uncertainty and instability regarding Social Security increases the need for people to strengthen their income plan prior to retirement. Just kind of your thoughts, Sam. You know, you're younger, but seeing that, you know, your parents and grandparents that you you and your wife's parents and grandparents see that their Social Security income could be cut by 23% or possibly even more as early as 2033, which is ten years from now.

Producer:
Yeah, it's incredibly concerning, mostly because think for a lot of people out there listening for Social Security is the first thing they think of when they start thinking about their retirement and their retirement plan. But we want to have a strong, stable, three legged stool, if not a four legged stool, and start looking into some alternative asset classes. But there's just so many people out there, Ford, that are really just depending on Social Security. And there may be a little too hopeful that the government's going to take care of them. And if you're the one that's only counting on Social Security for your retirement, that is not a retirement plan stool, that is a retirement pogo stick. And that is going to be very difficult to balance as you get older and into retirement.

Ford Stokes:
Yeah, just please be careful and please give us a call so we can help you. One, maximize your Social Security income benefit so you can understand how it's calculated because we'll run a full Social Security maximization report for you. And then also, you really ought to think about trying to take the pension and the Social Security, those first two legs of the stool we're talking about here and figure out how you're going to generate an income where you don't have a retirement income gap and you start your retirement and you continue in your retirement with a positive income surplus. Also, here's another hint with inflation and what we've seen with inflation in the last three years running away rampant, that means you're going to have less buying power if you've got, you know, a pension or you've got a flat Social Security check, you know, granted, they're going to give you cost of living adjustments to Social Security. It's really something to be concerned with. Give us a call so we can help you inspect what you expect about your retirement income plan. Because it's not just trying to build one big number. We're really trying to help you build a tax efficient, be efficient, market efficient retirement plan portfolio and retirement income plan. And the third leg of the stool is just personal savings that many people have access to a 401. K or other work based retirement plans, but few understand the fees that they are paying within these accounts. People preparing for retirement also need to consider that money invested inside a 401. K IRA is tax deferred, meaning the IRS is your partner in these types of retirement accounts that are subject to required minimum distributions as well as future taxation, as well as potential future taxation rate hikes. And if you think taxes are going to go up in the future, I would strongly encourage you to give us a call at (770) 685-1777 or visit us at ActiveWealth.com that's ActiveWealth.com we're happy to help you and just last thoughts on that Sam with personal savings and what's going on with the retirement accounts out there.

Producer:
Yeah well it's really good to see when we meet with people that there's just so many out here in the Atlantic area that are great savers, but they maybe have a bit to go as far as becoming savvy investors. And for us, that starts with reducing that expense ratio. That's one of the terms we talked about on last week's show. And if you missed that, check out our podcast from last week. But simply eliminating the simple stuff, the fees that are unnecessary and maybe considering a bond replacement to delete fees and reduce your expense ratio at the same time. But personal savings and all the work you're doing every couple of weeks, you know, squirreling away that money out of your paycheck, Keep up the great work, everybody listening in Atlanta and get in touch with us. If you're interested in deleting fees and becoming a savvier investor.

Ford Stokes:
Yeah, and if you've been worrying about your retirement and you don't feel like you've got a comprehensive plan, we just encourage you visit us at Active Welcome, click that schedule a consultation button. You'll get put directly into my calendar and we look forward to helping you. It's the final.

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

Ford Stokes:
So we had our financial wisdom quote of the week. Never give up on a dream just because of the time it will take to accomplish it. And then also time will just pass away. That came from Earl Nightingale. We also gave you two important financial terms, which included beta and standard deviation. We also talked about balancing risk in your savings. We gave you the cost cutter tip, which was to implement and include exchange traded funds in your portfolio versus mutual funds to reduce the fees in your portfolio. And we talked about the three legged stool that included a personal pension or a pension. Social Security income and personal savings. And we want to help you maximize all three of those so you can enjoy a successful and happy retirement. We're so glad you've been with us here on the Active Wealth Show. We're trying to share more and more information that you can use for your own retirement plan. Also strongly encourage you to visit us at ActiveWealth.com. Click that schedule a consultation button in the upper right corner to start working with us right away. We're happy to help you and we're going to give you a full financial plan and portfolio analysis at no cost to you. It's $1,500 value. We look forward to working with you. And next week we're going to talk more about how to build your own smart financial plan for your own retirement. Go ahead and reach out to us at Active World.com. 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:
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. Any bonuses mentioned may be subject to additional restrictions and regulations based on the offering annuity company. You may not receive the bonuses if the contract is fully surrendered or if traditional annuitization payments are taken and if the policy is partially surrendered, it could result in a partial loss of bonuses. Because these are bonus annuities, they may include higher surrender charges, longer surrender charge periods, lower caps, higher spreads, or other restrictions that are not included in similar annuities that don't offer a bonus feature.

Charlie Kirk:
Charlie Kirk here to tell you about. Ford Stokes, founder and CEO of Active Wealth Management. Right now for a limited time, Active Wealth is offering a financial consultation to Am 980. The Answer listeners. Absolutely free. That's a $1,500 value at no cost to you. Active Wealth will show you the hidden fees you're paying and had a potentially save six figures by deleting taxes on your IRA during retirement visit ActiveWealth.com today.

Producer:
Investment Advisory services offered through Brookstone Capital Management LLC BCM a registered investment advisor, not an actual client of active Wealth management.

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