Are You Ready for Retirement?

4.12.24: Audio automatically transcribed by Sonix

4.12.24: 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 Retirement Results, the national radio show and podcast for listeners like you who want to protect and grow their hard earned money. In a world filled with so much uncertainty and financial risk, we seek to cut through the noise and build successful plans for hard working Americans on their road to financial freedom. Retirement Results is powered by Active Wealth Management, a team of fiduciary advisors who always place your needs first and now your host. He's a registered social security analyst, member of the Forbes Finance Council, an author of multiple books on retirement planning. Here's your chief financial advisor, Ford Stokes.

Ford Stokes:
And welcome to the Retirement Results. Result drivers. I'm Ford Stokes, your chief financial advisor. I've got Sam Davis here with me. He's our senior financial advisor and co-host on Retirement Results. Sam, say hello to the folks.

Sam Davis:
Welcome to the weekend result drivers and welcome back to Retirement Results. So happy to be with you Ford and all of our listeners. It is a beautiful spring weekend here in Atlanta. And we're here once again to bring you some important information to better your retirement. And for those of you who are yet retired, help you prepare and get that successful plan in place.

Ford Stokes:
Yeah, the weather's gotten a little bit nicer after all, the folks at the Masters had to deal with rain on Thursday. Always is great to be able to be out at the Masters at Augusta National on Thursday and Friday instead of working right. I've been able to do that for a lot of years, but not this year. And, um, just, uh, good luck to all the golfers. Hope everybody enjoys the golf action. And it's great that the entire golf world focuses on the state of Georgia, our state of Georgia. So it's pretty neat stuff. But today on today's show, we're going to be talking about building a roadmap for your retirement. We're going to help you navigate common obstacles as you approach your golden years. Um, we just want to welcome all of our result drivers, as Sam has. It's always great to have that weekend ambassador to the weekend here for with Sam Davis. Sam, thanks also for getting this going on this special. Masters weekend. And also the Braves are still doing quite well and, uh, got rained out earlier in the week. Um, with the Mets. But, uh, we're excited about them being in first place and all that great stuff. And listen, we'd love to meet with you and discuss how we can help you reach your financial goals.

Ford Stokes:
We can help you build that retirement plan and build that successful retirement with retirement planning, risk management, estate planning, and a whole lot more. We're building sound financial plans for our listeners that are calling in. We've got so many long time listeners, first time callers that have called our office at (770) 685-1777. Again, a lot of people are calling (770) 685-1777, and I would encourage you to do the same. Um, also, when you work with us at Active Wealth Management, when you call in to get your free portfolio analysis and free financial plan, what we call a results in advance retirement plan. Here's what you get. You get a portfolio analysis of what your current situation looks like, how your assets would do. We we also run a monte Carlo analysis. And that Monte Carlo simulation simulates a thousand different reactions of how the markets are going to react to the assets you currently hold. And we're also going to then give you a Social Security maximization report. If you're not taking Social Security already and or if you've only taken Social Security within the past year, we can help you maximize your Social Security, um, income benefit. And I'm a registered Social security analyst. I'm one of only 15 here in the state of Georgia, so we're happy to help you there.

Ford Stokes:
Then number three is we're going to give you a retirement income plan to your 95th birthday. And we're going to help you determine whether you have a negative retirement income gap. We hope not. Or a positive retirement income surplus. We hope you're starting that way. Also, reminder, if you're within five years of retiring or five years after retirement, you're in that red zone of retirement. So we want to do everything we can to make sure you're getting off to a strong financial start with your retirement. And then number four is we'll give you a retirement plan to your 95th birthday, just with your current plan, everything to do with your current assets. And then number five is we'll give you a full financial plan to your 95th birthday with our recommended portfolios and also a strategic Roth ladder conversion. If you're interested in deleting the IRS and being your partner of retirement. Sam, I think a lot of people are interested in limiting the IRS from being their partner in retirement. And your thoughts on all of that? And then also just give us an overview of kind of what we're talking about today on today's show.

Sam Davis:
Yeah, well, it's a fantastic offer. We've been on the air, you and I, Ford, for over four years now. And just bringing the people of Atlanta and people all across the United States who listen on our podcast. Just important information. If you want to improve your current retirement, if you want to make sure that you're planning for the best retirement possible, um, you really want to see those results in advance, and you really want to learn everything you possibly can. Ask as many questions as you can think of when when it comes to planning your retirement, because it's your money. You worked so hard the last three, four decades, and we want to help set you up for success. Definitely give us a call (770) 685-1777. A lot of people have been calling, trying to get more money into that tax free bucket. A lot of people want to take advantage of one of the only two types of tax free investments. We can absolutely help you there. And Ford, that brings us to this week's quote of the week.

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

Sam Davis:
And this week's quote of the week comes to us from author Jim George. He's a spiritual author, and Jim once said, it's not how you start that's important, but how well you finish. And fjord. I love that this really lines up with your philosophy when it comes to helping build a successful plan for people's retirement.

Ford Stokes:
Yeah, we want to try to make sure that as you're going to retire, make sure you're finishing strong, maybe work an extra 6 to 12 months, get a little bit of extra income, but also get a plan for when you retire. If you've got A41K or an orphan, 41K and or 403 B or 457, and you're trying to figure out what to do with that money, or you've got a thrift savings plan. If you're working for the government, I would encourage you to reach out to us at (770) 685-1777 and help us help you get started on planning for that tax efficient, fee efficient and market efficient portfolio so you can plan for that successful retirement. Our goal is to help you protect and grow your hard earned and hard saved wealth. Part of that is also filling those holes that are holes in your retirement bucket, that are leaking money out, just like water leaks out of a bucket. If you've got a hole in the bottom of it, we want to do everything we can to kind of shore up those expense holes and reduce your expenses. We can reduce your expense ratio. If you don't know what an expense ratio is, then I would encourage you to reach out to us. And if you don't know what your expense ratio is within your portfolio, definitely you should reach out to us. If your advisor hasn't shared what the expense ratio is within your portfolio, that's a miss on their part.

Ford Stokes:
I would encourage you to go ahead and reach out to us to get that second opinion, and you can just reach out to us at Retirement Results. Com and click that schedule a consultation button in the upper right corner. So on today's show we're going to talk about are you approaching retirement. We share a six step checklist to help you get prepared. Also we're going to talk about why it pays to have a plan and how we can help you establish a formal plan. And also we're going to ask the question, have you heard from your advisor lately? Chances are you probably haven't. Chances are you're they're just going along and making money off of you. And we want to make sure that you're getting communicated with consistently. We provide monthly performance reports, quarterly reviews. And we also, uh, and Sam and I both give out our cell phones to our clients so they can get in touch with us anytime they want. We're happy to help serve our clients in that way. We try to give that extra level of service. So if you haven't heard from your advisor lately and you'd like to communicate with your advisor a little bit more often to kind of understand what's going on with your investments and your hard earned and hard saved retirement nest egg. Encouraged to reach out to us at (770) 685-1777. And Sam, we're going to be talking about these six key tasks for advisors approaching retirement next.

Sam Davis:
Yeah, we're going to take a quick break. Don't forget to visit Retirement Results. Com you can check out all of our past episodes there. They're labeled and there's descriptions. So regardless of what topic you want to learn about there's something on Retirement Results.com for you. That's also where you can schedule your complimentary consultation. Retirement Results will be right back.

Producer:
Schedule your complimentary financial consultation now by dialing (770) 685-1777. That's (770) 685-1777 to connect with a qualified advisor.

Producer:
How much risk are you willing to take with your investments? I'm Matt McClure with the Retirement Radio Network powered by Amira Life. Who. 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 happen 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.

Producer:
You're listening to Retirement Results. And now back to the show.

Ford Stokes:
And welcome back result drivers. I'm George Stokes, your chief financial advisor. I've got Sam Davis here with us, our senior financial advisor and radio show co-host for Retirement Results here on the mic with us. Sam and I are talking about six key tasks for investors approaching retirement. He and I are going to take each one of these. And this comes from Morningstar. We work with Morningstar. They run institutional level portfolio analysis for our prospects and clients, and it's always good to get information from Morningstar. They're good folks. We really like working with those folks. And many individuals approaching retirement have come to us seeking guidance on their plans for retirement and how to make the most of their hard earned savings. This checklist is for those who are approaching retirement and want to give themselves the best chance of success. Remember, people are living longer than ever before, and so you may be retired almost as long as you spent working. And the first step here, and I'll take the first one, Sam, you can take the second one and so on, is we want to build your human capital, invest in your human capital by continuing to work. You may want to work another six, 12, 24 months longer while improving your skills and knowledge. It's never a bad idea to add a new skill. In fact, Warren Buffett was asked a couple of years ago as the inflation was rearing its ugly head. They asked, what should you do in inflationary economy? And the first thing he said is you really should build out your own skill set.

Ford Stokes:
And I've done that over the years. I started early in business as kind of in marketing and and business operations, and I became a vice president of marketing at the age of 27. And I came into this business as a chief marketing officer, and we helped grow two companies to be over 2 billion, um, from a standing start of zero. I mean, I remember working out of a condo in Kennesaw, Georgia, and we were successful. I sold out of those two businesses and started my own practice. Um, kind of like right around the 2010 area and. It's made all the difference. So I would encourage you to build up your own skill. If you're thinking about, well, you know, I'd love to learn coding or I'd love to learn how to build websites, or I'd love to learn how to do digital marketing, or I'd like to learn, you know, a new language, or I'd like to learn a new skill or get certified to be a project manager in it or whatever that looks like. I would encourage you to try to build out your those life skills and things that you can get certifications in and take tests on and, and be certified because people will trust that. So that's a good idea. And the final years of your career, you're more likely to be making more income than ever before. So be very careful about when you're going to hang it up. You don't want to hang it up too early. A lot of people did that post Covid, and then they reentered the workforce, um, because they felt like they didn't have enough retirement assets, especially after many of them lost a good amount of money in 2022.

Ford Stokes:
Dave Ramsey says that your income is your greatest wealth generator, so take advantage during your final decade before retirement or definitely the last five years. Also, do the catch up provisions in your 401 K, 403 B 457 your IRAs as well. And if you've got a chance to invest in a Roth 4k at work, I would encourage you to do that. That's a really good way to make sure that you've got Roth funds when you're going to retire. So therefore, you can make sure that the IRS is in your partner in retirement with those accounts. One quick hint there, though, is if you invest in a Roth 4k, the money you put into that is taxable. You pay the taxes within that tax year, but then you're paying money and taxes on the seed, not the harvest. And usually the harvest is a lot bigger than the seed, right? And a lot of people just don't want to retire. They want to relaunch and explore. Relaunching versus retirement. The word retire means to withdraw, so some people don't want to withdraw. A lot of people also really look forward to not having a boss, Sam, so we encourage them to pursue an encore career that is more fulfilling and less demanding, which can provide additional income and reduce the need for portfolio withdrawals in retirement. Now, Sam, you've got number two for us here on our list.

Sam Davis:
Yeah. The second step on our checklist. When you're preparing for retirement, it's a good follow up to building your human capital. It's have a game plan for your Social Security benefits. And we're so lucky for that. You are a registered social security analyst. There aren't that many of you here in the state of Georgia or in the southeast in general, and you are able to really help anybody who gives us a call, maximize their benefit, make the most of what they've been paying into for 20, 30 years. So one thing you can do is you can work longer, because don't forget, Social Security is based on your top earning years and how long you choose to delay. So if you work longer, delay the benefit a little bit. That's going to go a long way to maximizing your benefit. And you also want to consider your spouse's benefit. Um, you know, for one thing that you like to point out is that you don't get to keep both Social Security benefits when the first spouse passes away, you get to keep the larger of the two, but not both. So you want to have a plan for not just your Social Security benefit, but if you're married, one for them as well.

Ford Stokes:
Yeah, we plan for that eventuality, and a lot of males come to us and say, I need to take care of my wife. And, um, and that's very admirable. We're happy to do that. Uh, we just want to plan for losing at least 33% of the Social Security income that's coming into the household. Also, a little bit of bad news here. Uh, just we talked about on the show quite a bit, but I want to make sure that everybody that's listening to this show understands that the Congressional Budget Office and the Social Security Administration, they both came out and said earlier last year that the Oasi Trust Fund is set to be depleted 100% by 2033, which would mean a 23% across the board cut, which is a lot. Um, and so you need a plan for a potential loss of 23% of the Social Security income you're getting now. Now, hopefully there'll be some cost of living adjustments between now and then, but right now, Social Security is not in a great place, folks. In 1950, there were 16 workers for every Social Security income benefit recipient. Today, there are 2.6 workers for every Social Security income benefit recipient. So that's a that's a concern. And the government's not saving it. They're depleting it. And they should be doing more than they're doing now. Um, also one of the big strategies that you mentioned earlier, Sam, is that people just keep working another year or two to try to replace those lower income years because you want to maximize your top 35 earning years.

Ford Stokes:
So if you can really make it to your full retirement age, let's say it's 67 years old. If you're born after 1960 or if you're born before 1960 at 66, in a few months. I would encourage you to try to do that, because you want to replace those years where you, like, worked as an intern in college or when you were just getting your start. If you could do that and replace it with a really high income earning year, that could make all the difference in the world. The other thing that we urge people to do is really be careful when you're going to retire, because if you leave the workforce, you're going to find if you try to come back in in 3 to 4 years later, you're going to find it. It's going to be very difficult to make the same kind of level of income that you made before. Also, age discrimination in the United States is completely real, and we're seeing that all the time. I personally help a lot of folks when they're trying to figure out what they're going to do next. If they take a package, they get laid off. Um, if there's a restructure, there's been a lot of restructuring. In fact, in one week, Sam, I had four people call me because they've just been laid off, and it was only Tuesday of that week. So it was a real it's been a real concern for me.

Ford Stokes:
I just want to do everything we can to help maximize Social Security income, benefits, but also maximize your nest egg and also maximize that retirement income. Throughout all of your retirement. Cdc is saying that if. Each member of a married couple makes it to age 65. There is a oh, there's an over 50% chance that one of them's going to be over 90 years old. And so that's a long time. You've got to make sure you've got a plan for that because it's, you know, that's 30 years. You got to make sure this money lasts. And the number one concern, according to so many surveys out there, especially from AARP and others, the number one concern of retirees is actually not death. It's actually them outliving their money. So that is a real concern as well. So number three on our checklist here that we're trying to do for proper planning for retirement, especially if you're nearing retirement, is to maintain your safety net, continue to maintain and fortify an adequate emergency fund. We recommend saving at least six months of living expenses to provide a financial safety net, and avoid having to make premature withdrawals from your retirement savings. We see a lot of people also as they get older and they get further away from work, they want to build up that 50, 100,000, $200,000 in their checking account and would encourage you to really try to stick that six month fund and let the rest of the money go and grow.

Ford Stokes:
Um, but even if it's just in a bank CD that has got a one year, you know, liquidity on it, we we also have a brokerage CD that's offered by JP Morgan that offers a 5.6%, um, rate of return just for a one year brokerage CD. That's also SIPC insured up to $250,000. So if you are interested in that, you can go ahead and reach out to us at (770) 685-1777 or reach out to us at Retirement Results. Com and also part of that safety net, you can consider long terme insurance options and develop a potential long terme care needs as well. At least 70% of people that are 65 years and older will need long terme care services at some point in their lives. If you think long tum care insurance is expensive, then I would encourage you to research how expensive long terme care actually is as well. The average rate of long terme care services in the United States for nursing home care is $6,600 a month, for assisted living is $3,600 a month, and non-medical home care is $3,520 a month, and home health care being $3,520 a month, and adult day health care, where they're just helping you kind of deal with your lives, is $1,518 per month. And Sam, when we come back, you've got number four on our checklist, and that is going to be an interesting one. You're listening to Retirement Results on Am 9 to 1. The answer come right back.

Producer:
Retirement Results. We'll be right back to learn more and schedule your complimentary retirement consultation, visit Retirement Results.com or call us at (770) 685-1777. That's (770) 685-1777.

Producer:
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Producer:
Money questions? Money answers. You're listening. To Retirement Results.

Sam Davis:
And welcome back to Retirement Results. I'm Sam Davis, your senior financial advisor, alongside our chief financial advisor, registered social security analyst and host, Ford Stokes. We're going through our checklist of six steps some key tasks for investors as you approach retirement. And so far we've discussed step one, which is building your human capital, continuing to work, improving your skills, adding skills and really just maximizing that income. Step two was have a game plan for your Social Security benefits. Get in touch with us. Ford is a registered Social Security Analyst and can give you your RSA roadmap to help you maximize your Social Security benefit. And step three, which we just discussed before the break, was maintain your safety net, have an adequate emergency fund. You want to have enough for about six months of expenses, but not too much. You don't want to have too much in cash where you're not earning a good rate of return on your money. And also a part of that safety net is having a plan for potential long tum care needs. I think the biggest statistic coming out of that is at least 70% of people 65 years and older will need long terme care services at some point in their lives. You may know somebody in your personal life right now who's receiving long terme care. Me personally, I know the nice woman who lives across the street from being my wife in in here in Atlanta, Georgia. She gets home health care every single day. She's in her early 90s. She was a federal employee. Um, we bring her trash cans down for her on Mondays. On trash day. Nice.

Ford Stokes:
You're a great neighbor.

Sam Davis:
And, uh, try to try to say, hey, see how she's doing whenever, uh, she's she's out there checking the mail. But, um, you know, long terme care is expensive. A lot of people out there are dealing with it. I wouldn't be surprised if if you knew somebody who was in Long Terme care.

Ford Stokes:
Currently, once you go into Long tum care and assisted living, the males live to about on average around 18 months and then the females can live 36 months and longer. So it could be a significant expense. I know that's a little bit draconian, a little bit of, um, tough news there, but I just want to make sure people kind of have an idea of how long they would actually be in Long Terme care, that they would need it.

Sam Davis:
And step four, this is our next step on our checklist for it. I think this is a great one for you, because this is really what we do here at retirement. Results in step four is schedule a checkup for your portfolio. You know, you may be getting annual or bi annual physicals with your doctor, but how often are you really checking in on your money, your money that you're going to need to live on for the next 20, 30 years, maybe longer? So, um, Ford, what is that like when people get in touch with you and they reach out and they're like, hey, Ford, I just need a checkup for for my portfolio.

Ford Stokes:
Yeah. So what we do is we can either do a zoom where people can come into our one of our offices here in Atlanta. We've got an our headquarters is based in Alpharetta, Georgia. We're on off exit 12 in Farland, um, near Halcyon. And we're on the other side of the highway from Halcyon. We've also got, um, an office in Midtown at Colony Square, kind of near Colony Square, that whole, um, complex down there. And we also have offices in Kennesaw and in Cartersville, and we now have an office in Huntsville, Alabama, as well. So pretty excited about that. We were also launching a television show in Huntsville and Columbus, uh, starting on the 21st of April. Super excited about that and seeing how Retirement Results continues to grow. And you'll be able to see those episodes on Retirement Results.com anytime. Um, it will upload those at right after they air, so we'll let you know there. But the we're going to try to help you understand. The fees you're paying, the risks you're taking, and what is your retirement income look like? We're also going to help you, as I said in segment one, maximize your Social Security income. And then we're also going to give you a financial plan to your 95th birthday with our recommended portfolios and a strategic Roth ladder conversion. So you can delete the IRS out of being your partner in retirement. It's really a cornerstone of our practice. So you've got to do is reach out to us at (770) 685-1777, or you can visit Retirement Results. Com and click that schedule a consultation button. You'll get booked directly into my calendar.

Sam Davis:
All right. That brings us to step five. We've only got two more steps on our checklist for any of you investors. Your pre-retirees out there or even, you know, your early retirees, people who have just retired in the last couple of years, it's never a bad idea to check up on all these things. And step five is sprint to the finish and maximize your savings. So take advantage of maybe an empty nest transition, redirect some savings efforts towards retirement. As a lot of people near retirement, we're finding that they're earning more income than ever before. So that will allow you to take advantage of those catch up contributions. So people over the age of 50 can actually contribute even more each year to an IRA and even a Roth IRA, and that will help you really just sprint to the finish, build up that nest egg. You know, you still have time, you know, so anything that you're saving and your 50s, even in your 60s, that is going to benefit you so much in your 80s and your 90s as that continues to grow.

Ford Stokes:
Yeah. You want to kind of finish strong. That's my. My dad's key to success is show up and finish. And also, he says finish strong when you do finish. He's an attorney. He's been an attorney for over 50 years. And, um. I've always tried to really show up and finish for my clients and also finish strong when we're doing, planning and doing the investing. We also provide monthly performance reports on purpose so that therefore everybody can see where they're at. And also they can see how their holdings are performing the individual allocations and holdings. And then we also try to replace the bonds within their portfolio, because bonds have really performed very poorly over the last three years. In fact, the 60 over 40 portfolio, 60% stocks, 40% bonds, that portfolio has been around since 1952. Um, it's it's a 72 year old strategy now. And the in 2022, that portfolio had its worst year in 41 years. So I would encourage you to consider something different. We like to replace the bonds with fixed indexed annuities and get a retirement income that our clients can never outlive. And then it also allows the rest of the portfolio to grow unencumbered by withdrawals. And there's less pressure on the rest of the portfolio. And then the last thing that we do is we delete the advisory and portfolio fees on the income portion of the portfolio. Because, Sam, you and I ask our our prospects and clients when they come in to talk to us like, why are you paying? An advisory and portfolio fee on the income portion of your portfolio. It doesn't make sense because you're not really in the game for your bonds to grow in value. You're in the game with bonds to just get income, so why not get a higher rate of income? Get market like gains. There's zero advisory and portfolio fees. That's a big deal. Uh, you could save 40% of what you're paying each year in advisory portfolio fees and over a 30 plus year retirement that starts adding up to real money.

Sam Davis:
Yeah, absolutely. That's such an easy fix. And it's really easy to spot. You know, you can take less risk and pay no fees and likely generate a better rate of income for yourself in retirement. And it's also a stream of income that lasts as long as you live. You know, a lot of people out there have friends, family, maybe their parents had pensions, but most people in the workplace today don't have access to that pension income. But it's still something that they want for retirement because they want that guaranteed income. They want to go to sleep at night knowing that the paychecks come in the next month. They're not worried about it. They're going to have that personal pension, they're going to have that Social Security income. And that's really what it comes down to when we talk about results and advance planning. When you hear Ford and I talk about that, that's really what we're discussing. And Ford's step six, our last step on the checklist. How about how about you give that one for us.

Ford Stokes:
And step six is really protect your savings from sequence of return risk. So from March zero eight to March zero nine, the S&P 500 lost 50.1% of its value and a lot of people that were retired. Then you had to go back to work. They had to do a lot of different things because they didn't have a plan to lose 50% of their IRA, and they also had the IRS. There was a partner in that account as well. What else happened since then was really interesting. The US government came out with Chirac 1.0 and 2.0 and made annuities more available with employer plans. Because they didn't want to all of a sudden be saddled with the burden of taking care of the retirement for all Americans. And also, there's over 75 million people are going to retire between now and 2030 because the baby boomers are now in full fledged retirement mode, and even some Gen Xers are heading that way. I would just say this. You ought to take a hint from what the US government's doing, and always take a hint from what a lot of other people have done. They want to make sure they're avoiding that sequence of return risk. So the people that lost 50.1% of their assets, let's say they were in the spy. It was 100% growth to come back. It took them 6.2 years on average to come back to where they were before. So the way to really avoid the sequence of return risk is take that retirement income portion of your portfolio and invest into a fixed indexed annuity, where zero is your hero and your principal is 100% protected, and let the rest of the assets grow. Also, we implement tactical asset allocation and strategic asset allocation to further protect the growth portion of your portfolio as well. So you want to make sure that you're holding assets in safer securities and also can help protect your portfolio potential market downturns with interest rates still high. Safer investments still offer significant return potential as well. And Sam, can you just recap the six steps that folks should take as they approach retirement?

Sam Davis:
Yeah, absolutely. So taking it from the top step one is build your human capital. Continue to work. Your income is your greatest wealth generator. Step two is have a game plan for your Social Security benefits. Remember your final benefit is based on your top earning years so it can benefit you to keep working. Step three was to maintain that safety net. Make sure you have an adequate emergency fund. Enough, but not too much because you don't want to just have all that money sitting in cash, right? And step four, schedule that checkup for your portfolio. We're here to help you with that. Just visit Retirement Results.com or give us a call. Step five was sprint to the finish. Maximize your savings. And finally, step six you just heard Ford discuss. Protect your hard earned savings from sequence of returns risk as you near retirement. A 50% loss would be absolutely devastating. A lot of you probably remember 2008 2009. That's what a lot of pre-retirees and retirees experienced. And that was not that long ago. And that is our six step checklist forward. And that brings us to the end of segment three. You're listening to Retirement Results.

Mom and. Dad away.

Producer:
At Active Wealth Management 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 Retirement Results 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 Retirement Results.com to schedule your no obligation consultation today. It's a $1,500 value provided at no cost to you. Book yours now at Retirement Results.com.

Producer:
When it comes to retirement planning, focus more on income than building a big nest egg. I'm Matt McClure with the Retirement Radio Network powered by AmeriLife It may sound counterintuitive, but that big nest egg number you probably have in your head means a lot less than the income you'll have each month in retirement.

Christine Romans:
The math has all changed here, but the bottom line is time is your superpower. Save as much as you can.

Producer:
Nbc news senior business correspondent Christine Romans recently said on The Today Show that you should not just rely on Social Security in your retirement years.

Christine Romans:
Social security alone is not likely to support you in the manner to which you're accustomed, right? You want to wait as long as possible to get that maybe 70. If you wait till you're 70 to collect Social Security, you'll get the biggest check.

Producer:
And she says, contribute to your retirement accounts early and often.

Christine Romans:
So this is from fidelity. They say at age 30 you should have one time your salary in a retirement account when you're 30. So think about what your salary is at age 30, and that's how much you should have in your entire retirement account. By 50 it should be six. This is where I start to freak out, because I know a lot of people can't and don't do this. By age 67, it should be ten times.

Producer:
A personal pension. Using a fixed indexed annuity is also a great option for many pre-retirees and retirees to consider. It offers protection from market volatility and a guaranteed stream of income that will last the rest of your life, no matter how long you live. Having a big nest egg may sound nice, but focusing more on income will set you up for success in your golden years. So, do you know where your paychecks and play checks will come from each month when you leave the workforce? That's a key question to consider as you plan for what's ahead with the Retirement Radio Network. Powered by Amira Life. I'm Matt McClure.

Producer:
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Ford Stokes:
Those who are approaching retirement are afraid that they will run out of money, but an annuity can help make sure you have income you can never outlive. An annuity can be a great investment for your portfolio, but I encourage you to be careful that you don't overpay for your annuity. When you put your money into an annuity, the annuity company will pay you your money back at a date you specify. You don't want an annuity company to charge you too much to simply pay your money back to you. I'm confident that leaving a remarkable family. The legacy is important to you. You likely want to have money left over when you pass away to leave your beneficiaries. The goal of a personal pension is to generate lifetime income with no risk. That grows your money and allows penalty free withdrawals. An annuity can create a lifetime income with market like gains and no market risk, while also allowing you to build enough wealth to leave for your beneficiaries when you pass away. Don't give the annuity company fees for doing nothing. We prefer fixed indexed annuities for our clients that do not have an income rider fee, but you can still create a personal pension without an income rider on your annuity. If you get an annuity with an income rider but don't utilize the features of that income rider, then you are not getting what you paid for. You are literally just paying the annuity company 1 to 2% each year. You defer annuities using your annuity without receiving a single benefit for that annual fee.

Ford Stokes:
This income rider fee will also draw down your account value or principal, depending on how that index is performing. The growth on your entire account value could be significantly and negatively impacted. Some accumulation focused annuities are built to deliver increasing payments. Without an income rider, you should consider the features your income rider is providing you before deciding to purchase it as an add on, make sure you utilize the features you are paying for more ways to get the most out of your annuity. The longer you wait to turn on the annuity, the more you'll receive an annual payments. This is because your annuity will spend a longer time in the accumulation phase, meaning it will spend more time building up your account value. Your annual payments will grow as your account value grows. Believe it or not, you can generate your own personal pension by distributing no more than 5% a year with penalty free withdrawals from your accumulation based annuity policy. Many accumulation annuities are set up to be RMD friendly, so you won't suffer a penalty when you have to take your RMD. It would be silly for you to be penalized for something. You are required to do. Annuity companies take this into account by creating products that make taking your RMDs easier. Inspect what you expect with any annuity. Don't just go with what the annuity agent or advisor tells you. Read it for yourself.

Ford Stokes:
Specifically, you should read the annuity illustration guaranteed and non-guaranteed tables included within the annuity illustration. Also, please remember that an annuity policy is a contract between you and the annuity company, so caveat emptor or buyer beware applies here. Be aware of the annuity you are buying and choose an annuity that works best for you. They will help you build a successful retirement. And they'll offer you peace of mind. Whether you choose to generate income through penalty free withdrawals or invest annually in an income rider, know the consequences of both. This is a decision you will make at the beginning of the investment process. One poor decision here can cost you 1 to 1.5% of annual growth over a 30 year retirement. This could come out to be a significant loss. Educate yourself on your options and the specifics of each option you are considering. Making the right decision up front will save you a lot of frustration in the long run. Also, please remember that if you withdraw too much annually, say 10%, you will run out of money in 10 to 12 years. Make sure that you are working with an advisor who can help you choose the appropriate withdrawal amount so that your money lasts for your entire lifetime. As discussed above, we recommend no more than 5% be withdrawn each year from your account. Chapter 14. You may want to consider replacing your target date retirement funds. Big idea. We recommend that you choose to replace your bonds with fixed indexed annuities instead of investing in target retirement date funds.

Ford Stokes:
What are target funds? Target retirement date funds are usually found in defined contribution plans like your 401 K. They're designed to become more conservative as the target date approaches. All major companies have their own version of target date funds. Currently, these funds hold more than $2 trillion in retirement assets. Target date funds aim to simplify your choice as the investor simply select the fund with the year that is closest to your retirement year, and the fund will make the asset allocation adjustments. There are, however, two critical flaws in the underlying assumptions one might make about target date funds. Assumption one investors will be passive and ride the ups and downs of the market with their funds. See chart 14.1. If you look at the graph below, which shows fund flows from the beginning of 2020, you can see massive outflows during the March sell off due to the Covid 19 pandemic. Investors, who are as far as 15 years from retirement pulled money from their target date funds. Assumption two you will follow the glide path to reduce your equities and replace them with bonds. Target date funds use a glide path, which shows that as your fund gets closer to your chosen retirement date, the percentage of equities in your portfolio is reduced and replaced with bonds. This causes bonds to dominate the overall portfolio. The problem with the glide path is that it forces the investors to sell stocks and buy bonds at low interest rates.

Ford Stokes:
Here is an example of a glide path. See chart 14.2. Forward returns can be thought of as the return that investors buying stock today and expect from it in the future. Forward returns are linked directly to starting interest rates and currently they look like they will be below average for years. Your target date funds are making allocations based on formulas developed in the early 1990s, when interest rates were 6 to 8%. They are not allocated based on the value or outlook for the asset class. In today's world, a price to earnings ratio, or PE ratio, compares the share price of a company to the earnings it generates per share. A forward p e ratio typically uses projected earnings per share, meaning the earnings expected over the next 12 months. A forward p e ratio is based on speculation about a company's future, not historical data. Stocks trade at a forward p e ratio of around 22, and bonds trade at a forward PE ratio of 135. Forward bond returns. See chart 14.3. Should you reconsider target retirement date funds, we'll leave that up to you. However, it is my recommendation that you should replace your bonds with 100% reserve accumulation based fixed indexed annuities. As a reminder, at the writing of this book, bonds are trading at a forward price to earnings ratio of 135, while stocks are trading at a forward price to earnings ratio of 22. This is a significant concern.

Producer:
Thanks for listening to Retirement Results. You deserve to work with an independent team of fiduciary advisors that will strategically work to protect and grow your hard earned assets. To schedule your complimentary financial consultation, call us now at (770) 685-1777. That's (770) 685-1777. To connect with a qualified advisor. To learn more about our mission and our team, visit Retirement Results.com Investment Advisory Services offered through Brookstone Capital Management, LLC, BCM, a registered investment advisor. Bcm, an 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. 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 interest of our clients and to make full disclosure of any conflicts of interest, if any exist, please refer to our firm brochure, the ADV Two-a, page four, for additional information.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short terme 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 rising taxes and how they could affect you and your family during retirement? If you have an IRA balance over $400,000, you could save six figures in retirement taxes that you would be paying during a 35 year retirement. Five. Find out how much you could save today by scheduling your no obligation Roth conversion consultation with Ford Stokes of Retirement Results. Learn more and schedule an appointment at Retirement Results. Com investment advisory services offered through Brookstone Capital Management LLC, a registered investment advisor. Visit retirement.com for more information. The national debt is out of control, but your financial future doesn't have to be. Our listeners can schedule a complimentary consultation now by dialing (770) 685-1777. That's (770) 685-1777. To connect with a qualified advisor.

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