2.10.23: Audio automatically transcribed by Sonix

2.10.23: 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

Dwight Mejan:
Well, good afternoon, ladies and gentlemen. Welcome back to the Retire 360 show. We are so glad that you are taking some time out of your Sunday afternoon to be with us. I am your host. My name is Dwight Mejan and I am with 360 Capital Management here in downtown Southern Pines and along side of me. Many of you know my son in law, Mitchell Keiser. How you doing today? Mitchell?

Mitchell Keiser:
Hey, Dwight. I'm good. And for those that don't know, my name is Mitchell, and I helped Dwight with the financial planning part of our practice. And I also handle all of our insurance. So if you guys have insurance questions or needs, that's me.

Dwight Mejan:
No, I couldn't do what I do myself without Mitchell in here. So I appreciate him. And I also appreciate Sam Davis. With us here at Sam is our executive producer. Many of you hear a little bit from Sam occasionally during the week. But Sam, how are you doing? Who are you liking for that Super Bowl, Kansas City Chiefs or are you Philadelphia Eagles?

Producer:
Hey, I got to say, I got to say I'm born and raised in Kansas. My wife's from Kansas City. So we will be hoping that the Chiefs can pick up their second Super Bowl in the last three years.

Dwight Mejan:
I hear you. That's that's who I'm picking. There any anything for you, Mitchell? You got any team there? You going against us? You're going to be the the odd man out there with Philadelphia.

Mitchell Keiser:
I'm probably going to have to go against you since I'm from Pennsylvania.

Dwight Mejan:
All right. Okay. We'll stay tuned. It's just a matter of time and we'll know the outcome of that one. So is there any wager going around going on this or no? Is this just pride? We'll have to come.

Mitchell Keiser:
Up with something maybe during the commercial break, you know, if Mitchell's going to be on the other side of us, I I'm all I'm all for voting on that veto. Extra veto.

Dwight Mejan:
Mitchell Always spend some time off. So that's that might be a little tougher to negotiate here. But hey, seriously, it's good to have these guys alongside me all the time. And it's really great to have you, our listeners, a part of the show. You are the reason we do what we do, which is helping you to to save your money. You hear us say this quite a bit. It's not just about saving a large nest egg. Many of you who listen to this have done a great job saving. We want to help you protect your wealth and more importantly, make sure that you have streams of income that are guaranteed and not out there that are speculative in your future. So we're glad you take time to listen to this. We're going to talk about some of those defensive techniques today in our show. I just want to take a moment just to welcome our first time listeners who might be tuning in. Maybe you're heading to a Super Bowl event here and driving in the car, but I'm glad you're dialed in here again. My name is Dwight, If you want to learn a little bit more about who we are, I would just direct you to our website. It is Retire360Show.com again that's Retire 360 show. If you ever want to reach out and contact us our office number is 9102350812. And we are located downtown Southern Pines on northwest Broad Street.

Dwight Mejan:
Our address is 400. And hey, we just really love to hear from our listeners. We've had many of you reaching out to us, particularly here these last couple of weeks beginning into this new year. Many of you just wanting that that checkup. We're going to talk a little bit about checkups today. We're going to talk about reviews, rule following certain what we call smart rules that you should follow in your retirement. And we are also going to talk about income planning and how to get that guaranteed income plan. But if you want to catch up maybe where you've never been before with us, you can download us on any place you get podcasts, Spotify, wherever, Apple, you can catch some of our previous episodes there. You can just go to Retire 360 show and you could pick us up there. But a lot of you reach out and tell us topics that you want to hear us talk about. Some of that is being broadcast today, some of those topics that you have called in. So we're listening to what you're asking for. And today we're going to talk about some of that. But I'm going to have Mitchell kick us off right now, and he's going to give us the quote of the week, how we always like to start out. So give it to us.

Producer:
Mitchell And now for some financial wisdom. Time for the quote of the week.

Mitchell Keiser:
Yep. So this week we've got author William Will Robinson, and that is financial. Fitness is not a pipe dream or a state of mind. It's a reality if you are willing to pursue it and embrace it. I mean, I thought this quote pretty much is speaking to the power of perseverance and consistency. Financial fitness, kind of like personal fitness. You can be fit if you stay consistent at it and you'll be financially free or financially comfortable if you develop that that healthy pattern, that healthy consistency, making sure that you're smart. Obviously, that plays a big plays a big role into it, too. And you know, also with personal fitness and financial fitness is, you know, what are you feeding yourself? You know, personal fitness, Like when you're working out, you know, your diet is a big part of that, how you look, what your body is going to look like, what the outcome is going to be, and then you've got financial fitness. So that's kind of going to be what are you feeding yourself with? You know, in this instance on the radio, what books are you reading? Who are you listening to? How many people are you listening to? I know when I go to the gym, I didn't just look at one fit person and say, Oh, I'm going to do everything just like that person is. I pick things here and there that I see people do, I see, trainers do, and I think that kind of transfers with financial fitness. Also, you should be looking at what your financial advisor says, what your friends say, and just always looking.

Dwight Mejan:
Yeah, that's a good point. Mitchell The what? The Super Bowl on us here this weekend. You know, it's the same rule that those teams follow. You know, they've been going through a lot of film the last couple of weeks in preparation for this big game, and it's no different in retirement. You've got to work your develop your plan and then you've got to work that plan. And that's a big thing a lot of our listeners do very well is they're very good at saving money, but they just need somebody to guide them in that retirement journey to make sure they have a tax efficient portfolio, to make sure they've got guaranteed lifetime income and to make sure that that risk that they're accustomed to taking or that they're comfortable taking, that that portfolio is in line, in alignment with that tolerance for risk. And there's a lot of other things that go into the picture there. You know, that being our health care guy here in the office helping people with asset based long term care, we've talked about that. And we're going to be talking more about that. Maybe not today, but but yeah, if you want to maybe take our listeners today. Mitchell there's been a little market update here recently in the last week or so. You want to talk about that.

Mitchell Keiser:
So so if you guys didn't know, which I presume a lot of people would know by now, there has been a slight hike with the Fed rates. They hiked at about 0.25%, the Federal Reserve said on Wednesday. So this would have been last Wednesday. It was raising its short term borrowing rate another 4%. The central bank's second consecutive decision to slow rate increases while extending an effort to cool the economy down to dial back inflation. So the feds had put forward a string of borrowing cost increases as it tries to slash the price hikes, slowing down the economy and choking off that demand. The approach, however, risks tipping the US economy into a recession, which will therefore put a lot of people out of work. So you kind of got pros and cons there.

Dwight Mejan:
Yeah. Good, good points, Mitchell. And one of the reasons we want to bring this to the attention of really our listeners today is that co-author point was expected that they were going to do that. But we don't claim to be or put ourselves out there to be economists or analysts for that matter. We leave that up to the professionals. But interesting article I came across this past week. I was just reading a little bit because I'm curious about, you know, there's different schools of thought right now about whether we're being pushed into a recession if we're already at the beginning of a recession. We're not the ones that make that call. But it's interesting when we look at layoffs and this is just a brief list of companies with layoffs in 2023. So just this year, Dell lays off 5% of their workforce. February 20, 23, HubSpot lays off 7% of their workforce. Paypal lays off 7% of their workforce. Ibm lays off one and one half percent of their workforce. Gemini lays off 10% of their workforce in January. Last month, Yankee Candle laid off 13%, 3m1 percent in January. Spotify 6% of the workforce in January, Google or Alphabet 6% laid off in January, Microsoft 4 to 5% was laid off in January. Amazon 1 to 2% in January. So why am I bringing this up to the listeners? Again, we're not saying there's we're in a recession or necessarily that we're leading to one, but layoffs are kind of on the front end of what happens in this cyclical environment that could end up leading to a recession.

Dwight Mejan:
And the reason that's relevant kind of where the rubber meets the road for you, the listener. Very, very important on the cuff of potentially going that route into a recession, I think it feels very reminiscent of the nineties during the dot com crisis when the tech sector kind of led the way into a recession. Again, I'm not saying that's where we're at. It feels that way to me right now because while the economy is still cranking, you know, I think I saw the unemployment report at 3.4%. There are some danger signs and some red lights that are flashing. And it's very critical that if you haven't made adjustments, folks, to your portfolio, perhaps you've been listening to this program for several months and you're thinking, man, I've been meaning to call these guys or just get that check up because I lost 20% or 30% of my portfolio. Literally just had a client come in here an hour ago and bring their statement in. And I watched a half a million dollar portfolio down today to 350,000. That's a big significant drop. And if we have further to fall in this coming year, you definitely want to make sure that your portfolio is adjusted in such a way where you can protect against that downside.

Dwight Mejan:
And I'm going to say this other thing. If you work with an advisor right now and that advisor has not spoken with you about buffered products, we don't have time today to get into the show. Specifically on Buffer products. I will be talking about them and some upcoming shows, but Buffer products are basically a defensive strategy that's built into a securities portfolio that protects you on the first X percentage of the downside of the market. I'll give you an example. You could have a buffered product, a buffer ETF that tracks the S&P 500 point to point, and you could buy a protection of 15%. So that first 15% that the market goes down, you don't suffer any losses over that next 12 months. If that market was to fall 12% in the next 12 months, you wouldn't have lost anything on that segment or that asset that you invested in if it had buffered 15% buffer on there. So if no one's talking to you about instruments that you could use to get more defensive, again, I love the fact we're on Super Bowl Sunday here and we're talking about defenses. You know, a good portfolio. You've got an advisor that is an offensive coordinator, helps you make money and show you how to position yourself according to your risk to make money when the market's doing well. But that advisor's also protecting you with the uncertainty of downward markets, which we likely could be.

Dwight Mejan:
Facing. Now, some signs are pointing to that. So my question to you, the listener, is this Do you have a defensive coordinator in your advisor? Are they talking to you about the defensive aspect of how your assets are positioned? If not or you've been wondering, hey, I am concerned just as well. Dwight Like the statistics you're reading about the layoffs, if we are heading towards a recession and you want to get that second opinion, or perhaps you're self directing your portfolio and you're wondering, Hey, I need to maybe get some professional guidance here. It costs you nothing to come in and get a complimentary consultation with us. We can do that via Zoom. You can come into our office and the way that you would schedule that is you can call us at 9102350812 or go to our website, Retire 360 show and there's a link down there where you can book a complimentary consultations. We get people every week that go through that link to get on our calendar and we can host a Zoom call or you can come in here and we'll be glad to tell you how that portfolio analysis works. I'll be getting a little bit more into that as the show goes on. But with that, I want to just do some review here for a moment on the Secure Act 2.0 quietly in December on the 29th, to be exact, part of an omnibus bill that had a lot of a bunch of little bills tabbed in.

Dwight Mejan:
It was this secure 2.0 act, which was a passage of literally dozens upon dozens. I think I read this about 80 different laws that impact retirement and retirement planning. Just to give you a perspective of that, secure the original Secure Act, which was signed in 2019, it took effect in 2020. That particular bill had literally a dozen retirement changes in it that affect with it. This one has about almost ten times the number of laws that have impacted retirement. So we're busy still going through these. And we're going to give you more updates on some of these. But let me give you just a few of the big ones right now. And stay tuned to these, because these are going to impact every single one of our listeners. Just some of the big ones here required minimum distributions. If you're not familiar with that term, that is the age in which you're required to start pulling money out of your pre-tax accounts. Your 401. Ks typically make that up if you're self employed and you have a SEP, any money that you've contributed to a retirement plan pre tax, that money has to start coming out. Currently it was at age 72, I should say, as of last year that got bumped now to age 73 and beginning in year 2033, it's going to shift to age 75.

Dwight Mejan:
Now, if you're listening to that and you're going, Oh, that's great, I can delay a little bit more and let that money grow and I don't have to worry about taking it out. Not so fast on that, because for some people listening, that might be the right course of action. But for other people, if you've done a really good job saving and you've got this affliction of affluence, as we say, and you've been able to save a decent lump sum of money, and I don't want to put necessarily numbers to this, but for every single person, it's going to depend in your retirement. Do you have a pension? What's your Social Security? When are you going to take Social Security? Because all of these are different separate decisions that need to be made. But if you keep kicking the can down the road and just start deferring and pushing back, when you take your RMDs and you and you're at an age now where you go, Oh good, I'm going to wait until I'm 75 in 2033. I'm here to tell you you are at the mercy literally, of the tax code in the IRS. Our role with our clients is to show them there's only three buckets of money that you can place your investments in and your savings.

Dwight Mejan:
One's a tax deferred bucket that your retirement accounts that most people contribute currently pretax dollars at your tax deferred, then your taxable money is next, which would be your cash and your after tax investments. And then you have your tax free accounts, which is your Roth account. And there's only two ways to pass money, by the way, tax free. It's a Roth. And the other one, if you're thinking there's only one other place and if you said life insurance, that is the only other outlet where you can pass money tax free. So these RMDs may not be the best to wait until 73 or even until 75. You may want to start pulling money out of these RMDs now to avoid a larger taxation of your income down the road. And not only does your income get taxed higher, you could be in trouble with capital gains. You could also have problems down the road with your Medicare premiums because those are affected by all the other income that's coming on the tax return. Now, again, I'm not a conspiracy theorist, folks, but I'm going to tell you this. I think the IRS is very intentional and they know exactly what they're doing right now. There's a crisis in this country because baby boomers are aging into retirement, over 10,000 people per day. And as that toll gets greater, not only are more people starting to draw their Social Security, but their Medicare is people are coming on Medicare.

Dwight Mejan:
And we have a smaller tax base today in this country. We have fewer workers supporting more retirees. So what is Congress looking for? They're looking for revenue. Every time we ask people at live events. We had one this past week. We ask them, do you think taxes are going up? Do you think they're going down or do you think they're staying the same? We have only one show of hands, and that is the fact that everyone believes taxes are going up. We believe that as well at 360 capital management. In light of that, the question becomes, what are you doing to have a tax efficient portfolio, a tax efficient stream of income so that as you age in retirement, more and more of your income is going to be off the tax return and become tax free. And that is the strategies that we talk about with our listeners, people who call us and want that complimentary consultation. But we're also working with our clients with that same information. We're looking at their tax return, we're looking at the upcoming RMD and what that might look like, and we can make assumptions about tax rates. But if tax rates are going up and we believe they are, one of the things that the federal government I think is doing is they keep kicking the can down the road because they know most people, when given the opportunity, will delay taking money out of their accounts and paying tax.

Dwight Mejan:
But all they're doing is building a sum of money that's going to be bigger and then have to take a larger amount out later when they retire. And if that's you and that happens to you, it's very hard to start fixing that when you're later in life in your mid seventies. At that point, you're at the mercy of the tax code and when they raise taxes and you got larger income, more and more of your estate is going to be given to the IRS and you're partnering with the IRS and retirement. If you want to avoid that, you need to have a tax efficient plan in place. And we will be glad to run that analysis for you. Show you if you are a candidate to do what are called Roth conversions and start converting some of that money each year. I'm of the belief that most people listening to this show should be looking at Roth conversions because you're in a tax bracket if you are and you're paying taxes and you're listening to this show, you ought to at least be converting money over to maximize the current tax bracket that you're in. And we can show you how to do that. We have software that helps us determine how much that is for our existing clients.

Dwight Mejan:
We'll be happy to show you how that would work for your situation and give you some projections on what that would look like in your retirement. So that's the first thing that changed. I know I spent a lot of time there, but I can tell you that is going to be a big growing problem for a lot of people. So don't look at that necessarily as a good thing. Look at it as you've got to kind of peel the onion back the layers and look at why is the IRS allowing me to take my RMDs and kick that down the road further? So think about that. The next thing, secure 2.0 I wanted to mention is catch up contributions. These will increase in 2025 four for one case for 403 B's for government plans and. All IRA account holders. And this basically gives pre-retirees more room to catch up and to save so we don't have time to go through all those limits. But if you want to know what those are. Give us a call. We'll be happy to go over that with you. And just know this. This is what I tell you about contributions if you're still working. Don't max out your retirement plan with the full percentage of what you can do within your current 401. K. Our recommendation is do as much as you can to get your employer's match.

Dwight Mejan:
For example, if they match dollar for dollar, up to 6% of your salary contribute the 6%. But if you're trying to fund another almost 20% in that 401 K fund, that plan outside the 401 K, because you will have more investment choices if you just go to the entire investment world. You want to you want to match, get that match from your employer, but that most employer sponsored plans have limited offerings for you. You're not going to be able to get some of those buffer defensive products like I talked about earlier. Those aren't included in 401 K retirement plans. You can only get those out in the individual investment marketplace and you could do that through a Roth account outside your retirement account. So if this is kind of new to you and you're hearing, hey, I've never heard this, my advisors never heard this, stay tuned. I'm going to give you a way that you can talk to us about that. And you could say, hey, I want to learn a little bit more about funding outside my retirement plan. I've never heard about the ability to do that beyond the employer match. Be happy to go over that with you. And then the last area I want to just touch on three areas here for secure 2.0 is 529 savings plans. This is really interesting. That came out after 15 years. If you've got assets that have been in a 529 plan, that plan can be rolled over into a Roth IRA for that beneficiary.

Dwight Mejan:
Let's say that again, if you're a grandparent and you've got some 529 accounts, let's just say that particular grandchild didn't go to college or they went a couple of years and they dropped out, you've still got money in that 529 plan. What you're able to do is you can roll that as long as it's been in existence and it's been funded for 15 years. You could take that money, put it into a Roth IRA for that particular beneficiary, so that money then can grow tax free. And there's no subject subjectivity to RMDs like I was talking about earlier. And that grandchild is going to have a great memory that you give to them, that you pass along money from their grandpa and grandma. That's tax free. What a great jumpstart for their retirement. So really cool stuff coming out of 2.0 right now in 529 college plans and you are subject to an annual Roth IRA contribution limit and there's a lifetime limit of 35,000. So, hey, we want to help you at 360 Capital Management navigate these changes. We always strive to help our prospects and our clients to adapt to this ever changing landscape and taxes and public policy. So if you want to get a hold of us, anything I just talked about in this first segment today, reach out to us.

Dwight Mejan:
Call us at our office. 9102350812. We don't bite, we don't push. We educate our goal as advisors. I always like to simplify things. I'll tell you this our goal for clients is to do two things is to manage the risk, their tolerance for risk, and to set expectations. What do we set expectations for? We set expectations for portfolios if the market goes down this amount, this is a range of what you could expect this portfolio to do over that same period of time. If the market goes up this amount, this is what you can expect that portfolio to do in an upward market. We have tools to show you that, but also to explain it to you. We're not going to push you into anything. Our role is to educate. So if you want to learn more, go to our website, Retire 360, show dotcom. There's a little link down there. You can click on that for the complimentary consultation. We'll get an instant email that you signed up for a meeting and we will confirm that date and time with you and find out if we're going to do that on a Zoom call or meet in our office. But with that, we're going to take a quick break. And when we come back, Mitchell is going to walk us through a Super Bowl inflation demonstration. So we'll be right back.

Thought I was in love before and then you moved.

Dwight Mejan:
In next door. Pretty blue eyes. Pretty blue eyes.

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 Major is passionate about helping people protect and grow their wealth. Visit Retire 360 Show to schedule your free consultation. Today it's a $1,500 value provided at no cost to you. Book yours now at Retire360Show.com.

Mitchell Keiser:
All righty, guys. And we're back. This is Mitchell. And you guys are listening to the Retire 360 show. Next, we're going to look at just a small inflation demonstration. And this is going to be on the price of Super Bowl tickets by year.

Producer:
Want to know where your hard earned money is going. It's time for an inflation demonstration.

Mitchell Keiser:
So I'm going to go back to the 1960s and I'm going to give you like a ten year increase. So per decade, how much they've gone up. So back in the 1960s, the average Super Bowl ticket was about $10. The seventies, it doubled to about $20. Now, when it got to the eighties, it went from $20 to about $75. And in the mid nineties it was about $350. Now, in the 2000s, it was as high as $700. And then in the 20 tens it was $2,500. And this year, if anybody had looked or had not looked, the average price of a ticket is starting anywhere from $5,400 for a ticket to the Super Bowl. That's great. So if you could, that would probably buy a pretty nice TV, pretty nice couch, your spectrum subscription.

Dwight Mejan:
So, Mitchell, I know it's not Father's Day. That's a little ways off a few months away, but is this like a Father's Day gift? Two tickets for us. Is that what you were talking to me about doing on StubHub?

Mitchell Keiser:
Yeah, Maybe if we were back in the sixties.

Dwight Mejan:
I get you a couple. Maybe we get to spring on that for us. What do you think? I mean, he's the executive producer. Those guys do pretty good, from what I'm understanding.

Mitchell Keiser:
Yeah. Come on, Sam. Yeah, well, at this point, guys, we'd have to pick up a few tickets and a pretty, pretty fast private jet to Phoenix.

Dwight Mejan:
Well, hey, there you go. I know a guy that's got a plane. If we can get one more ticket, he might be able to spring us down there pretty quick. But you be determined. Well, good. Well, Ronald Reagan had a quote on something there. Mitchell, you are a quote guy here. So why don't you give us what Ronald Reagan said.

Mitchell Keiser:
Trust but verify, which I like that we talk a lot about that. You know, you taking a basically a smart risk. You don't just take any risk. You take a smart risk and you trust, but you you verify.

Dwight Mejan:
Absolutely good words. You know, we talk about that a lot. You know, when when the economy prior to 2022, for the most part, we had the longest bull run in the market's history since the Great Depression that prior decade plus. And a lot of people, you know, didn't really need to do a lot of check in or they didn't do check in. You always should do check in with advisor or looking at your investments and your goals and just making sure you're on track. But, you know, we always encourage listeners as well as clients to do those smart reviews and just to review the performance of your investments on a quarterly basis, a semi-annual basis, just to make sure you're on the right track and that you're meeting your goals. You know, we all need and envision retiring someday, and that's why we want to help people retire better. So make sure you're getting that checkup and that tune up. And we're here to be that that springboard and that second sounding board, so to speak, and make sure you're on the right track. So we do provide comprehensive consultations at no cost to our listeners. There's no obligation. You only work with us if it's a good fit for you. You know, I always say there's got to be three C's.

Dwight Mejan:
And I look at this. If I'm going into particularly a service relationship, be it, for example, a CPA, whether it be a lawyer, I'm looking for what I call three C's character, chemistry and competency. And we wouldn't expect anything less if you were evaluating our services that way. And you should you should feel like we have the competency to help you get to where you want to go, that you could work well with us. The chemistry. You probably don't get a good feel for that unless you come in and take us up on that one on one offer. And then you've got to gauge our character. You know, I say that to my kids all the time. You know, trust is something you don't earn that in a day, but you can lose it in a moment. Trust is something that takes a lifetime to build in many cases, or at least it takes a long period of time. But one wrong decision or one wrong move and you could violate the trust of somebody. And you know, we are a values based firm. I always encourage our listeners, if you want to know more about what we believe, specifically myself, and I know Mitchell subscribes to those same core values because I showed them to him when he joined the company.

Dwight Mejan:
Go to 360-cm.org. That's our website for the company and go there and look up our core beliefs and you'll see that I always say my my faith, my family and my friends and my dog. None of those are for sale. Everything else I have is negotiable. It's just we got to name that price. But character is really important to us and you can learn more about those non negotiable values. They are listed right there on that website. So if you want to know Dwight, go read those. But more importantly, I'd love to. Meet you over a cup of coffee. So check us out. You can go to 360 cm dot org dash cm or just go to that Retire 360 show and you can click that complimentary appointment link and we'll sit down and have that cup of coffee and get to know each other a little bit better. But let's jump in here to Mitchell, some smart rule following. We talk about financial rules or some financial principles that we think are good basic rules for people to follow. And yet. Mitchell we find a lot of people, don't we, that are way off kilter when it comes to some of these principles, don't we?

Mitchell Keiser:
Absolutely. Well, I know the probably the most popular rule that we use is the rule of 100. So what that is, is you take 100, you subtract your age, and that is the amount of amount of your portfolio that you should have in principle protected products. So if you were 70 years old and you take that number, so 100 -70 and that's 70% of your assets should be in principle protected account. So if you wanted 30% of your portfolio or 30% of your liquid assets could be invested into something a little bit more risky. But again, we want to do a smart risk at that point of your life. You don't want to be taking too much risk where if you're 25 years old, you would take 100 -25. So that would be about 25% of your assets would be in principle protected products. And you have 75% of your liquid investable assets in the market. Somebody like myself, I've got a lot of working years ahead of me. So investing into those stocks, investing into those mutual funds, even if they do tank, which a lot of things have tanked, I've got 40 years to make that back up. And so do a lot of my peers. However, if you're 70 years old and you're still investing into stocks and you're still investing into mutual funds and more of a risky portfolio, if your portfolio goes down 35% like the client that we had come in here earlier, I mean, that's it's a lifestyle adjustment and there's a chance it may not come back up in your lifetime because sometimes those do take 20 plus years. So the rule of 100, that's that's one of our that's one of our core rules. But it's important to continue just to re evaluate that because the rule is going to change because nobody's getting any younger.

Dwight Mejan:
So. Right on. Mitchell That's great information and good points you bring up there. We do see a lot of folks who do come in and we like to have them imagine their assets through the lens of seeing three different buckets. We call them Bucket A, B, and C. Each bucket has some distinguishing characteristics attached to them, both over a range of return as well as principal safety. And we show them that bucket C is the one that doesn't guard their principle. It's totally at risk to the market. And when we ask them to pick after we show them these characteristics, we won't go through all that here over the radio. It's a little hard to it's kind of something visually you've got to see. But we ask them to kind of allocate percentages after we explain the characteristics of these three buckets, how they would like to have their assets allocated once they understand what each buckets kind of role is and what the characteristics are of each bucket. They pick the percentages and they pick them very readily, don't they? Mitchell They don't have any problem of picking what percentage they want to put in each one. What's interesting is when we have a typical retiree come in, I'll just use the example of an age 70. When they come in, they typically only want bucket C, which is the only bucket that doesn't have principal safety. Most of them don't want any more than that 30%. Maybe some of them go down to 20 in that bucket, which is the one that's where they could lose money. But yet where do we see most of their portfolio? Where is it?

Mitchell Keiser:
Mitchell It's usually where they don't want to be.

Dwight Mejan:
Exactly. They have to be there in that box. See.

Mitchell Keiser:
Most most people and it's not picking on people. It's just lack of lack of knowledge, which I would be, too, if I didn't do it for a living. Most people think I want to be either this risky or this safe, but they don't. They have no idea where they actually are or they just they think they know, but they really don't know.

Dwight Mejan:
Well, and that speaks to the other part of what we're talking about here. Mitchell, You touched on it with just with the risk and the whole rule of 100 is we have a simple six, seven minute questionnaire that somebody could fill out. And if you've never understood or had a gauge of what your risk tolerance is, we have something that could give you like a speed limit sign on a scale of 0 to 100 of what your risk tolerance is. And then we can dump your portfolio into that and see how closely they're allowed. And many people have an eye opening experience when they see that how the the disconnect between their risk and how they're actually invested. And that's what causes stress, particularly in down markets when people are too heavy in that risk bucket or bucket. See, as I've just been talking about. So rule of 100 good rule to follow. Take you through another rule here, a smart rule that we like to follow is the 4% rule. Now, this has had some just some disagreement a little bit in recent years. But let me tell you what the rule is. First, the 4% rule was basically put out based on a bunch of what we call Monte Carlo simulations, which is just a fancy way of sort of answering a question of how much money can the average person with their portfolio take out per year percentage wise and not run out of money in retirement as long as their portfolio was invested reasonably? What could they take out? Percentage of that total amount of money and not run out? And when they ran all these little tests, which were these simulations, it's been around for decades.

Dwight Mejan:
The rule has always been 4%. Now, where some of the disagreement is coming in today is with the bond portion of portfolios being beaten very hard, particularly last year in 2022, with interest rates just hitting all time lows. Many analysts and economists and people that look at these portfolio now analysis, they're saying that number is more like 2.8 to maybe 3%. But what we feel here and I'll give you my position on it, this is just Dwight's opinion. I'm still a 4% rule guy. And here's why. I believe that when we hit periods of volatility like we're seeing in this last year, that we've had volatility in the markets, the fixed income side of the portfolio, we can go to alternative asset classes and get higher yields. There's a lot of strategies that we use with our clients. I won't get into those here on the show, but one area that we can do that you've heard me talk about, these are structured notes.

Dwight Mejan:
Structured notes are look like a bond. They talk like a bond, but they derive their underlying value from a from an external asset, something like an index. And those structured notes right now yield anywhere between 11 and close to 14%. So we believe those are great alternatives for a portion of the bond portfolio. I'm not completely against bonds, but I'm more of a 6020 20 portfolio guy. And what I mean by that is if somebody is balanced in equities and that's the appropriate portfolio for them, then 20% may be in bonds, but short term bonds still and then 20% in alternative asset classes. And those are some of the asset classes that really in the last 12 months have helped to hedge and hold up a lot of portfolio returns because these alternative asset classes are like the structured notes. They're offering some very competitive yields right now. So we want to talk to you about those. You've heard us talk about them. Maybe. Maybe you don't still understand those. I'd be more than happy to dive in a little deeper with you individually and see if that might be a fit for you. We'll be happy to look at that. But, Mitchell, why don't you take them through the last rule here we're going to talk about We'll take another break. But the rule is 72.

Mitchell Keiser:
Yeah, the rule of 72 is that's a rule that we probably don't use quite as often in our practice. We'll go over it here just a little bit. So the rule of 72 is a straightforward calculation. It's used to estimate the amount of time it will take for an investment to double in value. So to calculate that, you just simply take 72 divided by the expected rate of return to get the number of years that you would need to double the investment. So I'll give you an example. If you if you're expected rate of return was 8%, then it would take nine years. So 72 divided by a 8% is nine. Another example if you wanted your investment to double in three years, then you would need a rate of return of 24. So that was 72 divided by three. Not to guarantee that type of rate of return is it's a little tricky, I'll say when you are looking at 8%, I mean, that's semi reasonable, 24% obviously to get a rate of return of 24%, you're taking a pretty big amount of risk. So for a lot of our clients, we tend to care to more of the conservative investor people that are nearing the end of their career. They're trying to take less risk, receive income. We kind of tailored to that end of the crowd. So to our clients and to the. People that usually come to our practice, they're probably wavering on that first example, trying to get 8%, probably not 20 for somebody that's younger or that's like a venture capitalist. They're looking to make those big returns. But like I said, you've got to dump out a pretty, pretty large amount of risk in order to get that.

Dwight Mejan:
Now. That's a good point, Mitchell. The one thing I want to say about the Rule 72 that a lot of listeners need to understand, and by the way, I'm going to send you to a helpful website. I'll give you this. If you're driving, don't write this down. You go back to a podcast and find this spot and relisten to it. But there's a great little website tool. I've used it for years. It's called helpful calculators, dot com helpful calculators, dot com. It's got a compound interest calculator so you could take your current nest egg, all your retirement savings. You can make an assumed rate of return 6%, 7%, whatever your target is. And if you're adding money into your retirement accounts every year, it has a little column or a box that you can input how much you're saving, and it will show you a defined amount of money at the end of a specified period of time, and you could pick that time period. So it's really, really helpful. Again, it's helpful calculators dot com and you just plug in the principal amount, plug in your deposit monthly fee. So if you're putting a certain amount annual into that, just divide it by 12 and you could put an assumed interest rate in there and you just tell it how many years you want to see how much your balance is going to be worth. And bingo, it'll put that on there. And I'll use this in client meetings to show people, Hey, why are you taking, as an example, somebody that might be taking too much risk in their portfolio? I just met with a client that has several million dollars and they live on literally 52,000 a year. They're in their late fifties and, you know, pretty aggressive portfolio. And my point to them was I said, look, why aren't you spending more money, first of all, or when do you plan to do that? And they've done a great job saving.

Dwight Mejan:
They've got some Roth accounts, they're doing a great job. But I said, why aren't you spending more money? And they said, Well, we're just really modest people and don't have an extravagant lifestyle. Nothing wrong with that. Nothing wrong with it whatsoever. But I was trying to encourage them to de-risk that portfolio because I said, you realize how this several million dollar account and you're 58 if we double this every seven years and I plugged it into that helpful calculators, these people were going to be passed $10 million on a relatively small assumed rate of interest, like five. We did five. I showed them 6%. They're going to blow past this in their seventies. They were well past $10. And I said, So wouldn't you want to de-risk this a little bit, you know, shore up more of this principle to protect it? And they just never had had looked at it that way before. No one had ever really showed them the concept of the rule of 72 and what they needed to earn. And they didn't really have a target in mind. They just were great savers and they didn't spend a lot of money. So but some of you need to make sure, you know, you need a certain sum of money to live on in this rule of 72 is going to help you. So look at that website, play around with that calculator. Great little tool. You can have some fun with that in between the Super Bowl. We'll be right back. We're going to take a break and we'll finish up with smart income.

Producer:
I'm gonna knock.

On your door. Bring on. You.

Producer:
Are you interested in protecting your assets from market volatility, rising taxes and economic uncertainty? Then tune in to Retire 360 with Dwight Meacham to learn how you can protect and grow your hard earned money. Retire 360 Sundays at 3 p.m. right here on Talk 97.3 FM 104.1 FM and 9:09 a.m. W.E.B. Protect your hard earned money today at Retire360Show.com OC.

Dwight Mejan:
Hey we're back. This is Dwight MI Jan I'm your host I'm here with alongside Mitchell Keiser my son in law. We're going to jump right in here Mitchell to smart income and the whole plan around having a smart income plan and retirement. We talk about it all the time. Income is your lifestyle. In retirement, you can have a large sum of money, but if you don't have a well defined and thoughtful approach to income and I wouldn't just say income. Mitchell I would say guaranteed income because there's two sources of income. There's non guaranteed and there's guaranteed and even guaranteed today. We've got to be cautious about like pensions. You know, pensions are only as good as the underlying assets are. Those are those pensions funded? Are they fully funded pensions? But for purposes of what we're talking about, we're talking about guaranteed income. But we're going to take a little history lesson here. But too many people think retirement is just about building one big nest egg. And a lot of our clients and a lot of people who come to us, they do a fantastic job. A lot of people listening to this show right now have done a fantastic job living within their means, saving for that rainy day and building a comfortable nest egg. But when it comes to figuring out, okay, how do I build this tax efficient income stream? How do I make sure I'm not paying more for Medicare? How do I make sure I'm not giving Uncle Sam more tax dollars down the road? It starts to get really complex in retirement. It shouldn't be that way, but it is. So you need to have a plan to replace your income and fund those monthly expenses. And keep in mind, some income sources are taxable and other sources are tax free. So, Mr. Mitchell, take our listeners through a history of Social Security here for a moment with you.

Mitchell Keiser:
Yeah. So Social Security, which, if you didn't know, was enacted by President Roosevelt's back in 1935, So the first payments were available in 1940. So Social Security is the largest government program in the world. There are currently 176 million people that pay into Social Security. So that stat was taken in 2021. And as of April of 2022, more than 65.5 million Americans are receiving Social Security benefits. So it's kind of we're going to do the math there, but we're also going to take a look back in history. So back in 1940, when Social Security first was given to. Given to the public. So there was about 159 people per check. 159 people working per check that was being sent out to the recipients. Now, in 1945, there was only about 42 people per check being received. So that's 160 workers to about 42 workers. So that's a pretty big jump. So a lot of people are not working and that are facing that retirement age. So we we go on into the closer to the present time after after that, in about 1950, there was about 16 people working per retiree. And then in the 55, we went down to about eight people in the sixties, five people per check. And then we get back to we're getting back more to present times and about 2000 and beyond.

Mitchell Keiser:
We're getting about three people or less per retired person. So that's three people working per Social Security paycheck. And if you're like me, like us, you're kind of doing the math here and you're thinking, how on earth are we going to be able to afford that? Well, interestingly enough, the Social Security Board of Trustees has estimated that the Social Security funds will be completely depleted by 2034 and will only be able to pay out about 77% of scheduled benefits, which they are authorized, which and I believe this is correct, that it does say that they do have the ability to means test and to reduce Social Security benefits. That's not something that's new. But we'll get into that in just a second. But I'll even go on to say so. That's in 2034, in about ten years, 11 years. So people like me that are in their twenties, you know, I'm thinking, is that is that going to be a program that we're going to have when we turn 70? Or is that just going to be totally done away with if they're already estimating within ten years that it's going to be completely flat? How could how could they continue to pay for it? But also, I'm paying into that every month. So. You know, I don't see how that's going to be sustainable.

Dwight Mejan:
Now, you're correct, Mitchell. It's that Social Security trust fund. We don't want to go political on this show, but it's been pillaged over decades. And those dollars that were in there to fund it fully have been borrowed out to support other programs. And it's unfortunate, but you're correct, if you have not and you're listening to this show right now, you have not gone on to get an estimate of Social Security. I would direct you to SSA that stands for Social Security, a dot gov. You can create a profile. If you haven't done that, you can log in and and play around with the website. And if you've never checked to see what your full retirement age projection is, we're going to talk about that here for just a moment when you can start to collect but go to a dot gov and you can work with that and see what you're eligible for. Folks, I want you to keep in mind on that ratio, when Mitchell was reading those numbers, when it was, you know, up in that hundreds to one to support one retiree and now we're down to under 3 to 1. That goes back to what I start at the beginning of the show talking about is it's not popular to raise taxes. Right. The people who are in office know that that's unpopular and they're always vying for their constituency and their position to stay in power. So if they raise taxes too much, they know that they stand to lose their position in Congress or in the Senate.

Dwight Mejan:
So one of the things that they're doing now is finding these little creative ways, I believe, to go in and pull these money grabs. And that's one of the reasons they're needing revenue to fund these benefits, like Medicare, like Social Security. And you'll see if you go on and you print your statement for your estimated payment, you'll see a line on there that says your are benefits. Your benefits are enough funded to pay $780 per 1000 in 2034 and beyond. It's almost as though they're preparing us to say we're not funded enough to give you 1 to 1. So it's in there, but you've got to dig to find it. I'm just telling you it's there. I printed my own statement several months ago and it was sitting right there. Someone told me about it and I wanted to see it for myself. It's there, so. Could they mean test? Absolutely. That's all the more reason, folks, to manage the tax return. So if you have this large lump sum of money, you've done a great job saving. How do we move that money over into strategic accounts that are tax free so that when you pull out of those accounts and they grow tax free, it's not going to be income on the tax return. Therefore, if they're means testing, which they typically do, the adjusted gross income, what might affect you today by not having a strategy might not be an issue down the road.

Dwight Mejan:
If you have a strategy and you start planning for how do I get that taxable income down? So Social Security, let's talk about that for a moment. You can become eligible for benefits when you reach age 62 and you've been contributing to the program at least ten years. You've got to have 40 quarters of payments. However, waiting until you're full retirement age, which I can tell you if you're you know, most people right now are 66 that are retiring in ten months, somewhere in that range. It's going to eventually be 67 for most. A lot of people who are listening to this, if you haven't started to take Social Security and you're still working, that's going to be a popular age. Right now, that's full retirement age. But age 67, if you wait till full retirement age, it gives you increased monthly benefits. Full retirement age, which is FRA, is determined by the year that you were born. If you were born 1955, your full retirement age is 66 and two months old. If you're full retirement age, though, as you graduate from that year of birth, 1960 birth and later you're full, retirement age is 67. So it kind of steps up by increments each month, all the way up to born of 1960. It'll be age 67 for everybody born after that. So spouses, you can collect benefits based on your own earnings or the earnings of your spouse.

Dwight Mejan:
And the amount of money you can receive from Social Security is determined from your averaged indexed monthly earnings. We call it AME averaged index monthly earnings during your 35 highest earning years. So as of April 22, the average monthly benefit for Social Security was $1,588 or 19, a little over 19,000 a year. And for every year you delay collecting your benefits, starting at age 62 and ending at 70, your benefit amount increases by 8%. So the maximum monthly benefit for 2022 for people 62 is $2,364. And the maximum benefit for 22, 2022 for people who are age 70 is $4,194. So there's an 8% increase from full retirement age. If you are a full retirement age 67 every year, you delay there's an 8% raise in there. So with that being said, you know, you're going to need help on this. If you want to know how that income with Social Security is going to work with other sources of income you want to have in retirement, maybe you're wondering, hey, could I retire right now? I'm not sure I could. Well, that's why we're here. We're going to talk about basically the retirement income gap. We'll start there on our next week's show. But we got just a couple of minutes left. And I just want to encourage those of you, if you heard anything in this show today that sparked some interest and you said, I've been meaning to call Dwight and Mitchell or get on that calendar, I'm just going to encourage you to pick up that phone and give us a call.

Dwight Mejan:
9102350812. We purposefully leave room in our week in the work that we do with other clients to meet face to face or on a Zoom call with our radio show listeners. We've met many of you at some of our live events, and I'm just going to encourage you to go to Retire 360 show and you can just select a date and a time to have that complimentary strategy session with us. If you can't figure the website out, it's pretty user friendly, I will tell you that. But you can pick a time that works. We'll get that email pushed right over to us and we'll call you to confirm that appointment time. And hey, we just look forward to talking with you. We love hearing from our listeners and we look forward to doing some complimentary analysis for you or discussing anything that we've talked about on today's show or anything else for that matter that you want to talk about. But on behalf of Mitchell, myself and Sam Davis, our executive producer, I want to thank you for joining us on this Super Bowl Sunday. And I hope your team comes out on top. But anyway, have a. Great rest of your week and thanks for tuning in and we'll see you next week.

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 9102350812. That's 9102350812.

Producer:
Investment Advisory Services offer 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:
Structured notes involve risks not associated with an investment in ordinary debt securities. The securities are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. Nor are the obligations of or guaranteed by a bank. The securities will not be listed on any securities exchange, and the secondary trading may be limited. Therefore, there may be little or no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity. The securities are subject to the credit risk of the issuing bank, and any actual or anticipated changes to its credit rating or credit spreads may adversely affect the market value of the securities. Information provided is not intended as tax or legal advice and should not be relied on As such. You're encouraged to seek tax or legal advice from an independent professional. Dwight Marjan and or 360 Capital Management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

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