Dwight and Mitchell go through a list of reasons why now is an important time to consider getting more defensive with your investing strategy. Plus, tax tips to help you win with your money!
In 2023, we want you to be prepared, not scared!
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4.14.23: Audio automatically transcribed by Sonix
4.14.23: 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 Retire 360 with your host, Dwight Mejan. Dwight is a licensed fiduciary and financial advisor who always places your needs first. Dwight works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Dwight Mejan.
Dwight Mejan:
Good afternoon. Welcome, everybody back. My name is Dwight Mejan. I am your host of Retire 360 show. And alongside me is Mitchell Keiser and our executive producer back this week, Sam Davis. How are you guys doing today? How's the week going? Mitchell, how about you?
Mitchell Keiser:
Hey, Dwight. I'm doing well. Glad to be here. Yeah, Got lots of cool topics going on this week. Sam.
Dwight Mejan:
How was your Easter?
Mitchell Keiser:
It was fantastic. I enjoyed watching the golf on television and relaxing at home with the family and looking forward to another great episode of Retire 360. Well, glad to have.
Dwight Mejan:
You guys alongside me as always, and glad to have you, the listeners of this show participating. And hey, I just want to tell you, as the host of the show, I am really grateful for the feedback that we get on a weekly basis. People who want certain topics, some of which we're going to touch on in today's show. But just the feedback and hearing from people in general, the ultimate compliment we get is the interaction that we have with our listeners. Mitchell is going to be giving you some dates for an upcoming event, which we'll get to in today's show and just some other things to be aware of, some upcoming other topics we're going to be speaking live on in the month of May. So stay tuned for that in this show. But we've got a great show planned for you today. We want to talk about today how to establish tax efficient retirement income streams if our topics aren't being defined by you, the listener, which we love, then what we do is we want to make this real. We want to make it relevant. So what the three of us get together and we talk about in preparing for these shows is what are we seeing with our clients on a week to week basis? What are we seeing with some of you, the listeners who come in to visit with us and get that second analysis, get that second opinion? And that's what we're really put the notes together of the show is what's relevant, what's timely.
Dwight Mejan:
That's what we always want this to be about. This isn't our show trying to sell our listeners something we want it to be about what's near and dear to your heart as it relates to your portfolio. Many of you are kind of in that critical stretch. You know, the red zone, you're either just retired, concerned about your portfolio or you're getting ready to retire within the next few years. And there's some important decisions that you're facing and we want to help guide you and walk you through those decisions. As we always say, we won't make decisions for people because that crosses the line of what we value. What we want to do is lay out your options. And we may not always know all the right answers. Some people think we do, but we don't. But we do know the questions to ask people so that they can make their own decisions.
Mitchell Keiser:
Yeah, no, just right on the money. It's not always about knowing all the knowing all the knowledge, but just knowing what questions to ask. So even if we don't know the answer, like you said, we can help you just direct who to ask what questions to or what questions you should be asking.
Dwight Mejan:
Right on. Well, you know, we were talking before the show began here, guys, and one of the things I always like to put things in the analogy format to kind of frame things for people, our listeners, specifically, the analogy that came to my mind today is football. You know, we're not in football season. Football is behind us. But I like the analogy of a football team as it relates to retirement. We've got offense, we've got defense and we've got special teams. But what is it that they say in most sports? What is it that wins championships? It's defense, right? The best offense is a strong defense and we're certainly in an environment right now where people are thinking about defense. I said we're going to put notes together for shows and a lot of our callers who do call in a lot of the questions, a lot of the discussion right now seems to be about, hey, I want to stay invested. Perhaps somebody who's comfortable in the market. Where could I position money right now in preparation for what could be a downturn in a recession? That's coming. We're going to talk about that in today's show. So I want you to really be thinking today as you think about your portfolio, think about it in terms of those three areas, offense, defense and special teams.
Dwight Mejan:
And we're going to focus a lot of today's show on the defensive side because that's what we believe people need to be focusing on and really zoning in on is the defense side of their portfolio. So I want to just have a special shout out and thank you to all of our longtime listeners of the show, those of you that tune in every week. We are so glad that you're here. We love hearing from you. And again, we love meeting you and if you're a first time. Listener of today's show, just want to welcome you specifically. Hope you'll stay tuned with us here for this next hour. We call it the hour of power for you, the Listener, because we want to pass on information that you can act on. We want this to be relevant. We want you to be able to take what you hear from with today's show. Reach out to us and then have some great information that you can begin to digest and process and incorporate into your financial plan and your financial pathway. If you are new to the show or you want to catch up on some of the previous shows, you can download our podcast anywhere where you download podcasts.
Dwight Mejan:
All you got to do is search for Retire 360 and that's where you can get more information of past shows from us. Listen to those. We also have a YouTube channel, so you can check that out as well. You can see some video highlights, some special content. Just search, Retire 360 there as well and don't hesitate to reach out to us. We love hearing from you, the listener, and we'd be happy, more than happy to answer your questions during a complimentary consultation with you in your home, in our office, or we can do a zoom call, whichever you prefer, but also want to just let our listeners know to get in touch with us. You can receive a free report on the banking crisis, what you need to know and how you can protect your hard earned money from the volatility that's infecting the banking sector. And this free report is yours today. When you reach out to us and schedule a consultation, we'd love to meet with you there, but we're going to get started here. And Mitchell, why don't you kick off with our listeners? You got some information you want to share with the listeners here.
Mitchell Keiser:
Yeah. So I guess just important reminders for those just with some dates coming up. So Tax Day is Tuesday, April 18th, just so everybody is aware of that. If a taxpayer cannot submit their own returns in time, you can request an extension from the IRS, which I'm sure if you if you've ever had to do that before, you know what that is. And that just grants you extra time to complete the process until that runs you up until October 16th. However, any outstanding taxes due must also be paid must be paid by Tuesday, April 18th. Other important dates. So this upcoming week on Thursday, we are actually hosting an event. If you guys have been listening to us for any amount of time, you know that the core of what we do is educating people. We are members of coffee, which you might be thinking of the liquid gold substance that I and many people run on for a living. But that's not what that is. True. That is true. Coffee, Actually, coffee. It is Council of Financial Educators. So we are a part of that nonprofit. It's a 400 and 13B, but we do provide educational events here within our community. We have our most popular event is coming up this Thursday, April 20th in Pinehurst at the Cannon Park Community Center. And we are going to be talking about taxes and retirement. So how can you maximize your taxes? How can you pay less taxes next year? What's what are tax laws going to be looking like in the future and how can you best prepare for them? Because you know, taxes during your working years, taxes and retirement years and you know, all along they're changing. So you need to be on top of the laws and regulations and we want to help you do that. So April 20th, which is a Thursday at 11 a.m. at the community at the Cannon Community Park Center, come meet us. We'd be happy to talk to you guys, educate you a little bit on what's going on in the crazy world of taxes.
Producer:
And now wholesome financial wisdom. It's time for the Quote of the week.
Mitchell Keiser:
Isn't it appropriate that tax month begins with April Fool's Day and ends with cries of May Day? I thought that was pretty funny. Yeah. Anything you wanted to add to that, Dwight, or anything else coming up that I missed?
Dwight Mejan:
No, I think it's. I think it's good. I know you got some other dates to give them later in the show or we'll give them that in our next face to face that we're going to have. Beyond that, I know our listeners like to know those in advance so they can be prepping for those dates as well. But yeah, and.
Mitchell Keiser:
You know, if you if you heard that and you're like, Oh, well, I definitely want to check that out. We've got a whole bunch of events coming up with pension planning, taxes, planning, Social Security planning. Those are kind of our three big ones that we do. If you want to know when those are, give us a call or you can check it out on our website. But probably best is just to call us and we can help fit you into a time slot because we kind of do it all over the county. So our office number, if you don't already know or have it, is (910) 235-0812. Give us a call. I'd be happy to help connect you with an event.
Dwight Mejan:
And you can go to also to the website Retire360Show.com and you can reach out to us there or ask questions as well. So. Well great. Well we've got we've got some. Good stuff planned for today's show. We're going to take that defensive posture and we're going to talk about why focusing today on the defensive side of your portfolio. Why that's important and why we think it's critical right now that that's the side that you're focusing on being a little more defensive. We're going to talk a little bit about the Bonds specifically piece to that component. And that's the other thing. As you were mentioning, too, I wanted to let the listeners know is that's one of the things I think we appreciate meeting the listeners, but I think one of the things they appreciate about coming to our live events is it gives us a chance to dive a little deeper because the topics like when we got I know we got a Social Security plan planned event. And what's great about that is a lot of our listeners, you know, when they're they're in that situation right now, they're wondering, hey, should I delay Social Security? Should I take it now? Could I afford to delay it? What is that going to look like? You know, it gives us a chance to go deeper on those topics. And I think the feedback that we always get on the evaluations that come back after people attend, that is, for many of those listeners, it answered a lot of their questions and they've got a better direction of where to go.
Dwight Mejan:
So I'm just I'm excited for our listeners to get that because sometimes on the radio we can't dive as deep as we can in person. That's certainly one of the benefits of attending one of our live events. So we're going to talk about, you know, retirement tax strategies. We're also going to discuss, hey, what is it like to work with us? Some of you wonder, hey, if I come in, am I am I obligated? Am I committed to that? I'm going to talk about that a little bit later in the show, what it is like to work with us. And then we got a cool little segment coming up on how to retire today on 750,000 or less. And these are some strategies for you, the listener, that you can take and implement if you're in that category, in that situation. So let's just hop right in here, Mitchell And we're just going to jump right in here, talk about why it's the best time, we believe, to be focusing on the defensive side of a client's portfolio. You know, I mentioned at the beginning of the show about some of the recession fears. You know, no one knows exactly where this economy is headed, something we can recover or we're in a recovery.
Dwight Mejan:
Others, you know, are still pessimistic. We don't know. We're not 100% either. But caution still is. We believe, you know, the environment that we're in and we're getting calls from a lot of our clients and we're getting calls from prospective people, many listeners or listeners of this show, and they're concerned about the impact another recession could have on their retirement. You know, we always feel for people who are in that situation that they come into our office like happened last year, even halfway into last year, and they started watching a lot of their their nest egg, you know, go down. And many of them were not comfortable with that because they hadn't seen it go down that much. You know, the last time they saw that was probably when Covid hit. But it was such a quick recovery. We tend to forget about those and what we want to avoid, of course, and help our listeners avoid is the impact of being heavy in the market, retiring or being retired, and then having an oh eight period come about. So we just want to avoid those big drawdowns on the portfolio. So a lot of Americans lost 20% or more in their retirement accounts in 2022, but people who had more of a defensive position with their portfolio, they lost little or no money. And we're going to talk about bonds here in another segment because that was certainly a terrible part of portfolio.
Dwight Mejan:
And many people, a lot of our listeners are heavy in the bonds because, you know, the old position of equities go down, the bond portfolio typically would go up. That was not true of last year. We kind of saw an anomaly of a situation where not only did the equity markets retrench, but because of rising interest rate environment, the bond portion of the portfolio went down as well. So that was kind of a double whammy for a lot of people and not a situation that brought a lot of comfort to most listeners who were invested in the market. So with all the concerns in the global economy and there's talks of another recession, you know, our question is, are you prepared to enter retirement without a solid income plan? And we say this a lot on this show, your income is what enables you to enjoy that retirement. And if you're depending on that, on income from the portfolio that you have saved last year, didn't do you really well, particularly if you were heavy in the market. So remember, retirement is is about income. It's not about the size of your nest egg. It's not just about how much you've saved. You know, there's a whole tax component to this as well, which we won't get into a ton on today's show, but that's a whole nother factor that you have to think about. But when you find some defensive products and there's defensive products on the security side, you know, imagine this.
Dwight Mejan:
Imagine having being getting exposure of what we call a 1 to 1 ratio in the market where if the if the S&P, let's say, the market does recover and the people who think we're heading into a recession are wrong, a lot of people get concerned of, hey, I'm too defensive. I don't want to miss that uptick to make up for some of those losses that I had in 2022. I want to be tracking. That S&P is close as I can 1 to 1 meaning if the S&P climbs 3% this month, I want to make sure I'm capturing that full 3%. Well, there are instruments in the securities world that provide you that opportunity to capture that 1 to 1 ratio and provide you with a buffer that if we're wrong on the upside and the people who are predicting a recession, if they're right and we have a recession, let's say, of 20%, there's instruments out there that could protect you from a pretty good percentage of that loss where you may you may, for example, be able to retain 50 to 75% of that loss in your portfolio. And that's called buffering. And there are instruments in the securities world that give you that opportunity. So it's not just insurance. We use insurance products. You hear us talk a lot on the program about annuities. Annuities can be used for income.
Dwight Mejan:
They could also be used as a defensive posture. So just know that they exist both on the insurance side and on the security side. There are some defensive positions that you can take. And we believe if you if you don't have those in your portfolio or you're not even sure if you have them, that's why it's good to reach out to us and let us look at that with you. And I'm just going to tell our listeners, if you're listening to us and you have a 401. Or a 403. B, even if you retired from that company, certainly if you retired and it's still sitting there, there's pretty good chances you don't own those instruments in your 401. K and 403 B because they're typically not offered in those type of retirement plans. But if you're, you know, if you even have a private plan and you're not sure if the person who manages or maybe you self-direct you don't even know if those are in your portfolio, then reach out to us, you know, schedule that complimentary call or call us and say, Hey, I'd like to have a Zoom meeting and talk to you about my portfolio. We'll let you know what those instruments are, how they could work, how they could benefit you, but just know they are out there. So, Mitchell, you have another dimension here that you want to talk about.
Mitchell Keiser:
Yeah, another concern that we've been seeing about a lot in the news or that you guys have been reading about, maybe hearing on the radio is banking concerns. We get asked a ton of questions on this. I know we've talked about how there's like 186 banks right now being held up, which is kind of unsettling. You know, we saw what happened with the Silicon Valley Bank, which, you know, not that we should think that every bank is going to be like that, but it's definitely possible. And I'm just going to go over a few things with you on this topic. So most of you know, banks are required to have a fractional reserve requirement. What does that mean? That means that banks only need to have 10% of the deposits in cash reserves. Okay. So that's how that's how some of these banks begin to collapse is when they're giving out more money than they actually have. People pull their money and they don't have the money to give back. So that's when the banks basically go under. Well, banks are only required to have 10% of what they give out. You need to keep that number in your head, 10%. And it's important because you also need to think, and I think this is the biggest misconception we have with clients is, you know, you hear the term bank and you've grown up with the bank and you always think that banks are safe.
Mitchell Keiser:
It's your brick and mortar. It's what you're used to. But that doesn't necessarily always mean that you need to go put all your money there because there are instruments out there. There are solutions out there, places to put your money that have a 100% reserve requirement. And it is not a bank. There are places to house your money that can hide higher interest yields than that. That's not a bank that have 100% reserve requirement. Think about it. Where would you rather have a bulk of your money? If you have a lot of money sitting at the bank, would you rather it be sitting at a housing instrument where you're they're only required to have 10% on cash reserves or where they're required to have 100% on cash reserves? Maybe you're not like me, but I know that I work hard for my money. I want to know that it's safe. So I try to be as mindful of that as possible. I would think many people are like that as well. If you have more questions on that, we can't really get much deeper on that right now.
Mitchell Keiser:
We don't really have the time, but give us a call. We'd be happy just to go over that with you or just talk to you a little bit more about your situation. If you've questions or how you can protect the assets that you have. And I'm just going to leave you guys with one more tip about banks. Now, this is going to be pointed to people that are not a part of the big banks. So we recommend that you do not keep money in a bank that has less than 100 million in total deposits as they're not even required to have 10%. So if you belong to a bank, which is probably a smaller bank realistically, but if they have less than 100 million in total deposits, they don't even need to have 10% of that. So what does that mean? It means that their chances are of going under are higher. Then it's not to say that they will, but it's higher than like a larger bank. So that's something to be mindful of. If you do have money at a at a smaller local bank or a business bank or something like that. So I just wanted to leave you with that tip.
Dwight Mejan:
Yeah, that's great. Great advice. Mitchell, while you were talking, I was thinking about I got a call from a family member, actually had about 3 or 3 or 4 or 5 people ask me in the last week knowing what I do for a living. They said, You know, Dwight, one of these was my brother. He said, You know, I'm just looking for some places where where do I put some more cash? You know? And his concern is and this is a valid concern as well, that we hear, you know, the next crisis that we see could be a currency crisis. You know, we're already seeing trade happening in the US dollar is not the, you know, the currency that's being negotiated anymore. There's a lot of deals being brokered with other countries where the dollar is, you know, is in question. And that's that's a legitimate concern. But what I want you to be cautious to as a listener is there's a lot of advertising and preying on people's fears right now that's trying to get everybody to invest in gold. And we are not opposed to gold. We're not against gold at all. In fact, if you don't own any gold, there may be something to look at there with gold. There's there's, you know, the paper gold that you could own that's backed by currency itself, by gold. And then there's other gold, physical gold that you can own. What we want to caution you against in this show is don't panic and go all to one side. Okay? I like what Dave Ramsey said. I heard him say this.
Dwight Mejan:
Mitchell We I think we were both watched a video that he had that, hey, if the currency collapses, you know, everybody says, well, you got to have something to barter with. But what Dave Ramsey says is what you're going to need if that happens is you're going to need bullets. And, you know, he's right to a pretty good extent. But that doesn't mean that gold is a bad thing. Just don't go make rash decisions and load up your whole portfolio. You know, on a commodity like gold and silver. Again, we're not opposed to people having that. We think you should own some of that, but just don't go crazy. Keep that portfolio balanced. And you know, we have a very resilient economy. We always have. I realize there's a lot of things around the globe that are changing that make us wonder, will we remain the dominant power that we have been? We don't know that. Nobody knows that for sure. Time will. Time will tell. So just be cautious there. So I want to talk about another point here on the defensive. Why it's good to be defensive is interest rates right now. You know, we're we're still uncertain what the feds are going to do if they're going to pivot right away and lower. It looks like they could raise interest rates 1 to 2 more times. Very low. They're talking quarter points maybe two more times. And then in June, July, make a pivot and start to reduce rates at that point. But, you know, rising interest rates as that does impact your bond portfolio, there is something significant there.
Dwight Mejan:
You know, to to kind of look at with the bond side of the portfolio, with bonds taking up a pretty good percentage of a lot of people's portfolios that we review anywhere from 30 to 60%. You know, you should consider some other bond replacement alternatives. So if you want to stay exposed in the security side and you don't want interest rate risk, which is what you deal with, one of the primary risks with bonds you hear us talk about before structured notes, structured notes might be a great fit because they're not dependent upon or affected by what the feds do with interest rates. And one of the things a lot of our clients, like who own structured notes, is this is an instrument that we can ladder into the portfolio, meaning, you know, take a set of money that someone's looking to invest of their total portfolio. It could be anywhere from 2,025%, for example. And every month purchase some of these structured notes. These yields range anywhere right now from, you know, 10 to 13% annually. They only have one year terms on them. And for your principal to be protected, as long as we don't see movement of the market fall more than 30%, that money could remain intact and be protected, just like it would be if it were in a bond. But it doesn't have the interest rate sensitivity attached to it. So that's one area that we look at. And I mentioned about the buffer products as well. So if you want to stay exposed to the market and try to get upside, that's where those buffer products come into play.
Dwight Mejan:
If you want to get completely out of the market, then we believe there's some great deferred contracts in the fixed index space, fixed fixed indexed annuities. So that may be another area that you take a look at and reach out to us. We'll ask some questions. We'll find out a little bit about your tolerance for risk and then we'll make some recommendations for. For you to consider. And the other thing we can do is we can take your current portfolio and we'll run it back one years, three years, five years, ten years, even go back 15 years back to the last Great Recession in oh eight. And we can measure it against a portfolio that we put together that have some of these instruments that that are buffered and give you some of these other alternative bond replacement strategies. And you can look at them side by side and see how they would have done under those same timeframes. And we can also stress test it and you can see how it would perform under certain big disasters like zero eight. And you can measure both of those portfolios and see what they would have done. So a lot of people find that helpful. I think you see that Mitchell, when they come in as well, people like that visual representation so they can see some some charts and some graphs and that's helpful just for gauging how something would have performed under a prior period of time.
Mitchell Keiser:
Yeah, absolutely. We I'm just going to add a little bit to what you said there as far as like the tax benefit side of a tax deferred IRA. So this this kind of applies to people that are still working so you can take a deduction from your income. I know sometimes we talk about, you know, maxing out your 401. K, but making sure that you only do that up to the contributed amount because if you go outside of your IRA to create your own account with your own broker dealer, whoever that would be, you're just going to have way more options as far as who you can invest with. And I mean, statistically, you're going to outperform what that is as far as options and interest rates and all that. So with the tax deferred IRAs, we also just like for people to know, because it's not always common knowledge that you can have a tax deferred IRA in many different instruments. So you can have that in a brokerage account with mutual funds, stocks, bonds, you know, the whole gamut there. You can have it, as Dwight just said, with structured notes, you can have a tax deferred IRA in there.
Mitchell Keiser:
You can have a tax deferred IRA in CD like instruments where you're earning a fixed amount or you could have it, like you just said, with an annuity. I mean, you can have a tax deferred IRA within any of those strategies. There's not just one that you need to be able to do that with and to transfer it from one to the other to bounce it around, move it around. There's no transfer fees involved in that. Most people think, well, that'd cost me too much to move it or I don't want to pay for the trade fee. There's no trade fees unless you're getting hosed by some crook. But most people, there's no trade fee to get that done. And if you have questions on that, again, we'd be happy to answer that in greater detail. But just another tip for people to remember when looking at their IRAs or thinking that they're stuck or that it would cost them too much to move where it's probably not the case.
Dwight Mejan:
That would get a lot of people's attention to start asking questions. And you've seen that. Mitchell from listeners who've come in and had questions after we take the time to do the analysis and and lay it out there for them. And I think a lot of people have said and you've heard this as well, Mitchell, they come in and they don't really know what to ask. They're like, I don't really know. I feel dumb coming in here because I'm just giving stuff and I don't really understand what I have. Well, that's a lot of people, isn't it, that come in here. They don't know because that's not their forte. That's not what they do. You know, they're busy either running their own business or they're working still and they work for somebody. They don't have time to get into this sort of stuff. But when we explain it to them, they certainly have a lot of questions at that point, don't they?
Mitchell Keiser:
Mitchell Sure. Yeah. It's important to be working with people that you trust, people that align with your core values, whoever that would be. I'm not saying that's us, but that all is something to take into consideration. I think one of the biggest faults that happens with people is that they just go work with, you know, a friend of a friend or somebody that they heard is good or they just jump to the big broker house thinking that they're just going to do them right. And that's just not always the case.
Dwight Mejan:
Yeah, good point. Good point. So the other thing we talk about here, we talk about an income stream is the protection from longevity risk. You know, it's no secret today that people are living longer. Interesting stat from the CDC, life expectancy in 1900 was under 50 years old. By 1950, it had risen to 68 years old. Today, life expectancy, 77 years old. This is the stat that I didn't know about. More than 6300 US citizens turn 90 every day, and there are more than 100,000 US citizens aged 100 or older. You know, that's crazy. Mitchell I remember 30 years ago when I got in the business when we were doing an income plan for somebody, people said, you know, you got to you got to pretty much get them out to 85 to 90. And that was, you know, that was realistic. And today, you know, we don't assume too many things, but the one assumption that we have to make every time we sit down with someone to explain their portfolio, look at their income plan and make sure they have one, is we we tell them we make an assumption in everything we we do and we do this analysis. And that assumption is this You're going to make it to 100. And we have to make that assumption because it's becoming a reality for too many people. And that's a good thing. Know as long as it's quality health and enjoying a quality retirement. But it's critical if you are going to have decent health and live that long and want to have AmeriLifestyle. So we have to look at protecting people's portfolio from longevity risk, just the chances that you live too long. You know, it's not a bad well, not a good thing, you know.
Mitchell Keiser:
And the other thing with that, Dwight, so I know I've talked to people and this kind of leads me into my next point here. The amount of retirees, that fear of running out of money, they say most people say they fear that more than death itself, which is understandable. It's easier to die than it is to struggle and die. According to a survey by AIG Life and Retirement Company, when asked about retirement planning, 59% of responders said that they fear of running out of money more than they fear death itself, which I mean, you just hit the nail on the head. I mean, it is scary to think, you know, you worked all your life and now you're you hit the golden years and you're, you know, you put your feet up and you're going golfing and you're just, you know, basically thinking that, you know, you're set. But, you know, now people are starting to get a little bit rattled. I know my grandma just got something in the mail that's talking about how, you know, they could means test for Social Security. And she's like, well, what does this mean? Like, so now inflation is like going through the roof. So you have that working against one hand, and now they're going to means test. If they mean test means test Social Security. And so then you would receive less money. These retirees, I mean, they're thinking, how am I going to buy food? How am I going to live? You know, this is I mean, it's a real concern that people need to be made aware of.
Mitchell Keiser:
And now that's more of a concern even still to those that aren't working or they're not receiving a pension. This is people with their IRAs because, you know, your IRA is also subject to market volatility. So if that's you and your your IRA is subject to that, I'm sure you've also experienced a good bit of losses. So the idea of potentially losing that and having to do this huge lifestyle adjustment, hey, that's a real fear and we understand that and we want to help talk you through that. I'm not going to steal your thunder because I know this next topic is your specialty. Dwight As far as what you help people with. But I do just encourage people if you've been listening to us or if you do have a question, you're not going to bother us and we wouldn't take up too much of your time and just give us a call. (910) 235-0812. Or you can come and see us. Your best bet is to probably try to schedule an appointment because we do get pretty busy throughout the week. But our office is in downtown Southern Pines. We've got a big sign 360 Capital Management.
Dwight Mejan:
Yeah, right on, Dwight.
Mitchell Keiser:
And I think you were going to say something. So those those people that are fearing of running out of money with their nest egg, what can they do to make sure that that doesn't happen, to make sure that they're always going to have money? What should they be thinking?
Dwight Mejan:
Yeah. Mitchell you don't you didn't know Going into my next point here, it's about income. You know, always going to ask this question. But I want you to tell our listeners because I know you've seen enough of these with folks that have come in, those that come in. You know, we build our practice on five pillars that we bring every prospective client that comes to our office or anybody that just wants to review a second opinion. We take them through five areas of the planning that we do. There's the construction of that portfolio, there's the investment plan, there's the income plan, which I'm going to talk about. There's the tax plan, building a tax efficient portfolio. That's going to be important, as most people believe, taxes are going up. Number four is the health care plan, long term care, Medicare, all of that. And then there's the estate and legacy plan. But focusing on that income plan, Mitchell When we sit down with people and we ask them if they're particularly those people that are early in retirement or getting ready to retire, they're in the home stretch. A question we always ask them is walk us through. We find out what the target income is for retirement. We know what their Social Security is going to be because we've already found that out. We found out any pensions. And then we look at that income gap. What are they short from what they want to have? And then we ask them, walk us through, just tell us what your income plan is, what percentage? Let's put it in a percentage format, what percentage of people know and can articulate and explain to us what the income plan is and how it's going to generate. Just curious, what do you see?
Mitchell Keiser:
I would say people that understand it effectively and this isn't an insult to our clients, not at all. So so if you if you're listening to me hear out my whole sentence, I'd say probably 15% of people have a good idea of what they want. I will tell you, we do. The people that we tend to work with tend to be more savers, so they tend to be great savers. They tend to budget well and do all of those things, and they're usually experts at what they do. I mean, they're good. And that's, you know, I'll say we work with some awesome people, huge blessings that we have each and every person that we have. But but I'll tell you, I'll just even talk about my parents teach. My dad was a teacher. My mother was a nurse by trade. She works in a similar field. Now, when it comes to retirement planning, that is not their area. I mean, they do not fully understand what to do, how to do it. And it's just a totally different language. I mean, you wouldn't just expect to go to your doctor's office and just you don't just know everything your doctor knows. You know, you don't just go to these places and just think that like, you know, these people that are experts in this field. And I do think it's important or no, I know it's important that if you're not a financial expert and you don't do it for a living, you need to consult with somebody.
Mitchell Keiser:
You need to get their opinion, even if you don't decide to like, sign up with somebody, you need to get multiple opinions as far as what you should be doing. Have somebody look at your portfolio. Don't just take one bit of advice for it and I get it. You might be thinking, Well, you know, I have a guy I've been working with this guy for years and, you know, he's got my back. If it's not your area, you need to make it your area because if that's your livelihood and if your livelihood, if something happens to that or if it kind of sways or, you know, you're talking about AmeriLifestyle adjustment later in life. And I'll tell you, you don't want to be somebody that's 80 years old who's just tanked and now they're means testing your Social Security. You need to plan for all of that stuff in advance. You need to be cautious and mindful and making sure that you're on top of your stuff. Because if it's not your area or it's confusing, that's no excuse to be uneducated. Like I said, the head of what we do above everything else is that we're educators and you need to be educated in what you have. Even if you don't work with us, we'd be happy to at least educate you. So hope you guys know that by. Now, but just wanted to throw throw those $0.02 in there.
Dwight Mejan:
Well, Mitchell, you were being I thought you were pretty close to where I was thinking the number was. I was going to say right at about 10%. So you were right there. You said 15% of people who come in can articulate and understand what their income plan is going to be. And we have people that come in that don't need income from the portfolio. They've got a pension which are dying. We know that. But not many companies offer pensions and they don't need much more income besides their pension and their Social Security. But I'm talking about the people who come in need income. And we had we had somebody, a current client, he was going to come in. He did explain what he thought he was going to do, But he even admitted and I could tell when he was saying it, he was just making it up when he was with us, what he was going to do. It was just it just in his mind, it was logic and that's what he was going to do. And I said, well, why wouldn't you delay your Social Security? And that's not right for everybody listening to this. We don't make a one size fits all diagnosis for everybody. But for him, I saw this as a great opportunity. Delay Social Security. We could get him plenty of income. It was only going to take less than 2% of his total portfolio and he's going to get an 8% raise with Social Security. So all I did was ask him questions, and then he began asking me questions and one thing led to another and another meeting.
Dwight Mejan:
We might have had two more meetings after that with them. And he was so excited. He said, This is what I want to do. And the funny thing was he picked it. We just asked him questions and challenged some of his thinking of what he was doing and explained educated, which again is what a good fiduciary is going to do. And like Mitchell said, we hope to be that for all of our listeners. But if it's not us, make sure you are going to somebody who at the heart of what they do, they're a teacher. That's very important. And so an income plan, we're going to help put together that income plan and, you know, assets in the stock market, they can lose value, They can go up, they can go down. Diversification is key. If you want to be exposed in the market and you're comfortable in securities, we can show you diversified portfolio that is kicking out decent income and we can show you other defensive products that can give you guaranteed lifetime income if you want guarantees behind it. And we can do a blend of both if that's what you're interested in. So, Mitchell, you've got one more point there about the importance that we've been talking about here in this segment. I know it's a long segment on defensive building that portfolio, but share with the listeners that last opportunity.
Mitchell Keiser:
Sure. So we get questions about this, too, because there are certain products out there that you can receive bonuses upon entering into a contract and people say, Well, that sounds too good to be true. What's the catch? There are there's there's there's no catch. It does exist. So you can receive a bonus on the principal of your money most of the time. I will say that's in the form of an annuity. And those do have a lot of different variations as far as what that looks like, what your growth can be tied to. If you need income, if you don't need income, there's not a one size fits all. We do believe in annuities. They are good for some people. They're not good for other people. It's just kind of all depends. There's not a one shoe fits all when it comes to that. But if you were somebody that experienced, if you have a nest egg, you're trying to leave two beneficiaries and you're just watching that thing take a hit and you just want to protect that principle. I mean, there are products out there that we could give you a 10% plus bonus on that money to help you recoup some of that loss. And then, you know, you could just let that sit tax deferred for a beneficiary. And again, that holds the same asset class as any other deferred IRA. So as far as, you know, RMDs or Roth conversions, all that stuff, I mean, we can help you take care of all that. But as far as bonuses, they do exist, there is no catch, you know, when it comes to that stuff. But again, it's not for everybody. But they aren't necessarily all bad either.
Dwight Mejan:
That's great. I think it's a great point. Mitchell They're not for everybody, but the ones that they are good for. We will walk you through the benefits of that and compare it to your current situation. So, hey, we're going to take a short break. And when we come back, we're going to talk a little bit about the bond side of your portfolio. And we'll be back right after this message.
Producer:
Thanks for listening. To Retire 360 with Dwight Mejan
Producer:
You may think you're stuck with your utility providers, but you could be wrong. I'm Matt McClure with the Retirement.Radio Network. Powered by a real life utility, Bills for things like electricity and natural gas have been climbing fast over the last year or so due largely to Russia's war in Ukraine. If that gives you sticker shock once a month, there could be hope for you and your wallet. Depending on your state regulations, you may be able to shop around between different third party energy providers instead of using the default utility provider in your area. When it comes to electricity, the federal government says 15 states and the District of Columbia allow you to shop around. More than half of all states allow you to choose between natural gas providers. That's according to the American Coalition of Competitive Energy Suppliers.
Mitchell Keiser:
One can move to any of these other companies. And actually, right now, it's a good deal.
Producer:
Kenneth Gillingham is an energy expert and professor at Yale University. He recently told Wfsb-tv that changing providers could save you a pretty penny. But there's a catch for.
Mitchell Keiser:
Most people right now, it's a good move. But if you're the type of person who makes a decision and then doesn't ever check your bill anymore, it might not be the best move.
Producer:
So you've got to pay attention to your bill. Each month, suppliers can raise rates after any initial contract period runs out. A good resource to find third party providers for your address is the website Choose Energy Comm. So could you save by shopping around for a new utility provider? That's a key question to consider and it's one of the 23 retirement cost cutters for 2023 with the Retirement.Radio Network Powered by AmeriLife. I'm Matt McClure to get.
Producer:
Your free copy of 23 cost cutters for 2023 call Dwight today at (910) 235-0812 Or visit Retire 360. Show.com you're.
Producer:
Listening to Retire 360 with Dwight Mejan now back to the show.
Dwight Mejan:
All right well I'm your host Dwight Mejan we're back alongside me Mitchell Keiser, our executive producer Sam Davis. So we're going to jump right in here to the bond x ray component here that we're talking about on the show. You know, a lot of our listeners, I find them in two areas. If they're really safety conscious, they're really heavy in bonds or they're really heavy in cash. And the folks in cash know they're missing some opportunities. You know, with the rising interest rates, you know, that that person, a lot of them that I talked to, they're like, well, I think rates could go up further. So they keep delaying and they're missed. They continue to miss opportunities, you know, to be in some safe products. But one of the things we just want to provide an opportunity for either one of those individuals. If you're heavy in cash or you're heavy in the bond side, there are bond alternatives and replacements out there, some of which may be even safer than your bonds because bonds do have interest rate risk. And of course, your cash is very safe. However, if you are in cash with the inflation environment, you are in the safest place to be, where you're still losing money because inflation is eating away at those dollars. So one of the things that, you know, one of the reasons we say you should be looking at replacements for your bonds is if they're held in a portfolio that's being managed, you're being charged fees for having those bonds there.
Dwight Mejan:
And that's one area that we can help you eliminate the fees that you're paying on that bond portfolio and give you some alternative places to park those funds where you can eliminate the fees. The other thing is the poor performance of those bonds. You know, last year was a terrible year for bonds. And there may have been other places you could have been. There certainly were other places with hindsight that you could have been and not dealt with the blow that you had to that bond portfolio dropping in value. And we call it there's a what we call a safe leg of your stool. We like to say it's more like a melting ice cube if you're invested in bonds. And we will do an analysis of those bonds for you. The other thing that's important for you to look at with the bonds and we will run this analysis is, you know, bonds are rated and given a grade and they're graded from triple A, then they go down to double a single A and then triple B, and that triple B is the last place on the way down because it drops from there to double B, single B, and then bonds that are not rated or junk bonds, but anything below a triple B, and we're finding more of these in portfolios.
Dwight Mejan:
A lot of people's advisors, in order to get more yield, lower the quality of the bonds. And again, this is another area that we find that people don't really know what the overall grade and we can give a single grade for the entire bond portfolio that you have. And if you're going to stay in those bonds, how many of you would stay in those bonds if the average grade for all of those bonds was a. Or a single be. Well, if you answered yes to that and you believe that the economy is headed in the wrong direction, then you really want to get a good look at those bonds because some of those bonds could be with, for example, corporate issuers who in order to entice you as an investor and other investors like you, they have to offer higher yields on their bonds than, you know, stronger companies. That's that's how they raise money. They've got a they're higher risk. They've got to put a higher enticement on there, which is why they pay a higher yield. But those could be companies or corporations that have have to weather some bad times and they may not be as quick to default as some of these stronger bonds out there.
Dwight Mejan:
So if you're going to stay in bonds, at least know what the grade of those bonds are. And that is something for you as a listener that we would be happy to run for you. You can call us at (910) 235-0812. We can meet with you on a zoom call or in the office and we can make some alternative recommendations for a bond replacement strategy that could actually shore up that money, give you a little more safety and give you a little more yield as well for that. And some of you are wondering, hey, what do we do when we take a look at your portfolio and your assets? And one of the things that we do is we discuss with you your financial goals and your vision for your retirement. That's where it all begins. We're also going to take a look at your current plan, and we're going to look at what your holdings are. We're going to do a breakdown of that and get a good understanding of what your tolerance for risk is. That's very important. From the position that we sit in. We can't make recommendations unless we know a lot about you. And one of those things is we've got to understand your tolerance and the degree of risk that you're willing to take.
Dwight Mejan:
And that's another area we find a lot of disconnect as many people are taking more risk than they're comfortable with. And unfortunately, the only time they find that out is time Periods like we had last year, 2022, they realized, wow, I didn't expect to lose that much money. So better to find that out before it happens. We'll walk you through some recommended plans, some different ideas that we would have. That's one of the things that we'll look at and we'll answer as many questions about your retirement that you have. And you may not have that many, but I can promise you that if you met with us, we would present information in such a way that it would trigger questions from you and it would put you kind of on that journey to better, you know, owning the decisions that you're making. Because believe it or not, at the end of the day, it is your money. It is the decisions that you make that are going to ultimately make or break you. Yes, you need to have good people in your court, but at the end of the day, you have to own those decisions and you need to understand your portfolio and what you have. You know, we say in our and we say this know, I don't say this in an ugly way to our listeners, but we don't work with victims.
Dwight Mejan:
We don't work well with that. In fact, we've parted meetings with people because we don't feel like we're a good fit because we want people who own the responsibility of their own decisions. Our job is to educate and point things out and answer questions, but we we don't like working with people who don't own those choices that they make. So, you know, some people are nervous. They're intimidated by meeting with a financial advisor or a professional. We want to help ease these concerns in our initial consultations. So we'll simplify and answer some of these questions. You know, what is a successful retirement look like to you? What are you doing and who are you with? We'll ask you. What are you looking to accomplish? Do you have some specific goals? We'll ask you how you grade the current plan that you're in. How would you put a grade on that yourself to this point? You know, you had a bad year last year in the market. How did you do? How do you plan to fund your retirement? And then how do you plan to create an income each month? Those are some of the things that we'll ask you. But hey, there's no obligation. We never put pressure on people. We're here to inform and we're here to educate. So.
Mitchell Keiser:
Yep. You know, Dwight, my biggest takeaway from what you said there was you are responsible for the decisions that you make. And I mean, that just kind of goes with everything. I think a lot of times people will, you know, push or they'll make an exception for their finances thinking, Oh, well, my finance guy is taking care of that. We hear that a lot. Oh, so-and-so is taking care of that for me. So I think that's good, just that people realize, you know, you are ultimately responsible for that. Not not your finance guy, not Dwight, not Mitchell. I mean, it's you. Ultimately, it all comes down to you, so that's good. Yeah. One more quick thing. I just wanted to kind of go over with the listeners. You know, we talked briefly on taxes. Don't forget, Tax Day is Tuesday, April 18th. But just another tax tip for you that there are only two tax free investments available to Americans where you can both get tax free growth. And withdrawals. And that is a Roth IRA or that is life insurance. They're the only two tax, pure tax free instruments for you to park your money. If you guys have questions on that. That's kind of my sweet spot. I'd like to get into greater detail with you. Just the tip, because we always hear people say, Oh, what about municipal bonds? They are not necessarily tax free. They are sometimes subject to federal, state and local taxes. They can also impact your Medicare for a higher income earner.
Mitchell Keiser:
So muni bonds, they're not always in the same category. So just keep that in mind. But I'm going to give you a couple reasons that if you guys have qualified money, tax deferred money, why you should maybe consider doing a Roth conversion. Roth conversions are tax free accumulations of wealth. They're tax free income in retirement, so you don't have to pay taxes on that later or the growth. There's no required minimum required minimum distributions. Your RMDs, you can take what you want when you want, how you want it. You're not going to be subject to that rule. You get protection from future tax increases. So if the tax rates go through the roof and they quadruple, it won't matter to you because that money will be tax free. And lastly, you can leave that money as a tax free benefit to your beneficiaries. So as current law has it, they have ten years to pay the taxes on the money that they would inherit from you. So if it was converted to a Roth IRA, they it would be tax free for you and tax free for them so you'd lessen a burden there. But they are pretty cool. And there are a lot of just avenues and ways to go on that. So if you guys have questions on that or, you know, the life insurance component, give us a call. Look us up online, be happy to talk to you more in depth.
Dwight Mejan:
Yeah, awesome. Michelle, I can't believe we're already at about the end of today's show here, so we're going to have to catch up on a couple of things that we we're going to try to get to today on how to retire on under 750,000 if that describes a portfolio of some of our listeners. So we'll pick that up next week. And maybe just in closing, Mitchell, I mentioned some do we have a date yet that we can share with the listeners for? We have a Social Security workshop that's coming up, and we like people to actually call us to see if they're a good candidate to come to that. Is there a date that we have there that we can share with them, that they can reach out?
Mitchell Keiser:
And so we don't have a finalized date yet, but it's looking like it's going to be one of the first weeks in May. So if you guys are interested in learning more about Social Security. Stay tuned or give us a call and let us know. We're actually we should know that within the next couple of days. But we're going to do an event in Sanford and we're going to do an event here in Pinehurst. We really only teach at colleges. So it's going to be at some local community college. So that's something that's of interest to you. Reach out, let us know. We'll be happy to hook you up.
Dwight Mejan:
Yeah. And you know, I know there's some people listening right now that got their tax returns back from their tax preparer. And I know there's somebody listening here right now that got a surprise that they didn't expect. And they've got a larger than they thought tax bill. And there are reasons why that happened. And I just want to invite you as a listener to this show to go to Retire360Show.com or call us at 910235081 to bring that tax return in and we'll let you know if that could have been avoided and let you know what we do to help our clients look forward on that tax return to things that that happen within their investment portfolio to as best as we can help them avoid those surprises, because there's nothing worse than getting a financial bill that you owe, especially when you maybe thought you were getting a refund and then you got to pay taxes. So that is another area that we'd love to help the listeners of this show better understand. So reach out to us. (910) 235-0812. We'll be back next week and we'll pick up where we left off. And until then, have a great week, everybody, and thanks for taking time out of your day to listen to us here and hope you have a great rest of your afternoon.
Producer:
Thanks for listening. To Retire 360. You deserve to work with an experienced and licensed expert who will strategically work to protect and grow your hard earned assets. To schedule your free no obligation consultation with Dwight, visit Retire360Show.com or pick up the phone and call (910) 235-0812. That's (910) 235-0812. Investment Advisory Services offered through Brookstone Capital Management, LLC, BCM A registered investment Advisor. Bcm and 360 Capital 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.
Producer:
If inflation and living expenses are putting more of a financial strain on your bottom line, it may be time to explore canceling those unnecessary subscriptions. I'm Jim. With the Retirement.Radio Network Powered by Emperor Life. In recent years, streaming and subscription services have dominated the digital space. According to a survey done by Chase Bank in February of last year, the study found that a whopping 71% of Americans waste over $50 a month on unwanted subscription fees, and it's becoming increasingly harder to cancel these subscriptions. Meanwhile, the Federal Trade Commission proposed a provision back in March targeting the struggles of customers to cancel their unwanted subscription payment plans. Under this new proposal, titled Click to Cancel, the sellers would face a requirement to make subscription cancellations as simple and as straightforward as possible. Axios technology reporter Ashley Gold was a guest recently on CBS News MoneyWatch to break down this new proposal.
Ashley Gold:
Those little prompts you see that are like, Are you sure you want to cancel? We can offer you this deal. We can offer you that deal or to cancel, you actually have to call us between these business hours or to cancel. You have to show up in person and tell us why none of that's going to be allowed anymore. If what the FTC wants to do passes in its final form.
Producer:
So in the meantime, how can you keep your subscription prices from slashing further into your own personal bottom line? Review all of your monthly subscriptions from every sector on every device and cancel the ones you don't need. Useful tools like rocket money and pocket guard can help you track down these unwanted subscriptions and clear them from your monthly expenses. Cutting back on your monthly subscriptions. It's an important factor to consider, and it's part of our 23 retirement cost cutters of 2023 for the Retirement.Radio Network Powered by AmeriLife.
Producer:
At 360 Capital Management. We know you've worked hard to earn your money and you've worked even harder to save it. When it comes to wealth management and planning for retirement, Dwight Mejan is passionate about helping people protect and grow their wealth. Visit Retire360Show.com to schedule your free consultation today. It's a 1000 hundred dollars value provided at no cost to you. Book yours now at Retire360Show.com.
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