Closing the Gap: How to Catch-Up on Your Retirement Savings

8.25.23: Audio automatically transcribed by Sonix

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

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

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike 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 Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino, coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on each and every week. And today we are absolutely bringing it again. On today's show, we're going to discuss the retirement risk equation and show you how to safeguard your future through a smart, risk and smart, safe approach. And on this week's show, I have a special guest co-hosting and filling in for Matt, who's out off on assignment today. We get the honor and privilege of being joined by the one and only Mr. Retirement Radio's very own, Jim Boca. Jim, how are you doing today? Mike Thank you very much. And by the way, I can't tell you how happy and thankful I am that you say my last name so perfectly. Just rolls right off the tongue. I've always enjoyed listening to you guys, you and Matt, on a weekly basis talking about numerous subjects that has gone on this year in the financial world, things like inflation, the stock market, talking about the banking crisis and cheap plug here. But all of those previous episodes, Mike, as you know, for our current listeners and listeners who are now just joining us, maybe some new listeners, those shows are available at MoneyMattersWithMike.com and of course wherever you get your podcast any platform Apple, Google Spotify again wherever you get your podcasts.

Mike Zaino:
So it's good to be here. Mike with you today. And as you mentioned, we've got a jam packed show. I'm ready to get going here. Yep. And it's, you know, a couple other things. You know, YouTube channel, if you haven't checked this out on YouTube, make sure you hit YouTube, the Socials, Facebook especially. I love interacting with our listeners. You want a question? Answer drop it in the in the Facebook chat and we'll get that answered on the air. You can also reach out to us through the contact form. You can contact me directly on my cell phone number at (704) 560-1573. That literally is the only telephone number I've had since 1997. And millions of people have that number. Okay. Don't hesitate to pick up the phone. Give us a call with your questions. We love helping our listeners. So, you know, did you know this is just one of those did you knows that in 2022 last year, Bonds had their worst year in more than 40 years? That's for decades, folks. In fact, according to a Barclays U.S. aggregate bond index, 2022 was the worst year for bonds since they started measuring them in 1976. Jim, what do you think about that? A long time before my time, quite frankly, yeah.

Mike Zaino:
I mean, I know so many people who who kind of had their grandpa's formula, right, where it was going to be 60 over 40 and that 40 was bonds in their portfolios. And those bonds were supposed to be providing income. I met with a gentleman literally this week who lost $200,000 because he was in an aggressive bond portfolio. That speaks volumes or should speak volumes, I guess, to the rest of our listeners out there. And we meet so many people who discover how much they were paying in fees, fees on their bonds, fees they had no idea that they were paying and no idea that the bonds that they were holding in their portfolio were charging. And so if anybody out there is interested in looking at the possibility of a bond replacement in your portfolio and how that could help you delete fees and establish a guaranteed lifetime income, please pick up the phone. Reach out to me. (704) 560-1573. I'll send you our free bond replacement report. Okay. And you can also get that by checking us out at MoneyMattersWithMike.com. Yeah And you know, Mike, it's funny you say all of that funny but but it's just the reality of the financial world a lot of times where it's that one shoe you're always waiting for that other shoe to drop and what the story you were you were talking about there, about the fees that you don't even know you're paying on.

Mike Zaino:
You know, I was thinking about this recently. I think about this all the time. When I go and pay my monthly credit card, I never like having a balance on my monthly credit card. And and people don't really mind at this point. They're so cavalier sometimes I've noticed when I talk with people about what's on their credit card, the balance they may have, the credit card debt that they're in, but they say, well, I pay this amount every month, but you're paying that interest. You're having to pay that interest, having to pay those fees. So that's just another example of what you explained there. That's always that other shoe waiting to drop when it comes sometimes to your finances if you really don't pay attention. Yes. And so different advisors will charge differently. They may charge quarterly and make it seem like a pretty insignificant fee. They're only going to charge you, you know, half a point. A. Order. Well, that doesn't sound like it's a whole lot, does it? Well, there are four quarters times a half a point. That's 2%. Well, if you have money with that advisor for 40 years or 20 years. All right, Half of that. 20 years times 2%, you're paying 40% of your portfolio to your advisor in fees. And I just think there's a better way.

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

Mike Zaino:
All right. Well, let's get things started with today's show, as Mike mentioned. We've got a lot to get to. Let's kick things off with our financial wisdom. Our Quote of the Week. And Mike, our quote comes from Earl Nightingale. He says, quote, Never give up on a dream just because of the time it will take to accomplish it. The time will pass anyway. And again, this week's quote comes to us from the mind of Earl Nightingale, who was an American radio speaker and author, dealing mostly with the subjects of human character, development, motivation and success. Let's talk about that for a second, Mike. You know, talking about dreams and everything else, sometimes I believe this, that, you know, dreams, they can be kind of they're not as tangible as, say, money. So let's speak in financial terms. Mean we we can talk all we want about having a dream. And that's great. I mean, jeez, I wish I could be Tom Brady. That's a dream of mine. It's not going to happen. I'll I'll I'll I'll stick with being a radio host and producer and everything else that that I've done here on retirement radio. But when you talk about financial terms and just finances in general, talking about a dream and you've talked about this before with financial longevity and the connectivity that may have to your retirement, making sure that you have enough in retirement, that quote, serves us well as as your financial dream, being able to kind of play the long game a little bit when you need to and make the right decisions financially, it does, because it's saying that you shouldn't give up on your dream just because it's going to take a while to achieve it.

Mike Zaino:
I mean, I'm going to get to the financial part, but I mean, imagine if you wanted to learn how to play a musical instrument or if you wanted to get in shape. Obviously, everybody wants to save up enough money for a comfortable retirement. And the fact of the matter is, is that these things take time. I wish they didn't. Right. Heck, we'd all love to lose £20 by the end of next week, but that's not realistic. Okay. Time is going to pass no matter what you do and whether you work towards your dream or not. Days, months, years are going to still pass by. So instead of just giving up because it might take a long time, you should absolutely keep going. Press on toward the mark and work towards your dream, because eventually, like we said, time is going to pass, so you may as well take advantage of it.

Mike Zaino:
So now when we relate that to preparing for retirement, okay, for a lot of folks out there, retirement is like this, this huge goal where you want to have enough money and plans in place to be able to enjoy life after you stop working. Okay. Sometimes people delay or they avoid retirement planning because it seems like it's so far off. I mean, remember when I was in my 20s, Heck, I couldn't see my 30s, much less four decades away when, you know, when I was in my 60s, right? Sure. So so, you know, they think that they have plenty of time, but just like in the quote that time is going to pass whether or not they plan for retirement. So it's a really good idea to start preparing. Right. For it as early as you possibly can. I do ask this question a lot. When's the best time to plant a tree? Well, that would have been 20 years ago so that you could enjoy the shade of it right now, especially in the hot sun in the in the southern United States. But when is the next best time to plant that tree?

Producer:
Hungry for something to chew on. Here's some meat on the bone.

Mike Zaino:
Well, the answer is right now. So I wanted to give our listeners a few examples of how they can avoid procrastination and start preparing for retirement. Number one is just simply to start saving early because just like planting a small seed in the garden, start saving a little bit of money regularly will eventually yield a larger crop. So even small contributions can grow over time, especially with the help of compound interest. That's number one. Start saving early. Number two would be to set clear goals, which means you have to define what you want your retirement to look like. All right. Do you want to travel? Are you front porch sitting, sipping lemonade? Because that doesn't require a lot of capital, whereas travel does. Do you want to pursue hobbies? Do you like to play golf or tennis? Those are expensive sports, right? So having specific goals can motivate you and help you to plan and save. This next one, everybody listening right now is doing a phenomenal job and that's educate yourself. Okay. Learning about different retirement options, whether they're workplace options like 401. Ks or if you're a federal employee or any other type of IRA or other investment account. And understanding your options can help you make informed decisions. Then this may seem like a pretty obvious one for a lot of folks listening, but for some other people, they have no idea where to get started and that's to create a budget.

Mike Zaino:
So making a budget that helps you manage your expenses and helps you allocate some of the money for retirement savings will help you avoid overspending and ensure that you're putting your money away for your future. And trust me when I say that your future self will thank you for creating that budget and starting early. But perhaps one of the easiest ways to do it is to automate your savings. So set up automatic transfers from your paycheck to your retirement account. That way you don't have to think about it every single month because it happens automatically. And when you get a raise, don't forget to increase your retirement savings. Too often folks take that money home. And what do they end up doing, Jim? They spend it right. Just because you're used to living on whatever you're used to living on, does it mean that you should treat yourself and go out and expand your lifestyle when you could be preparing for a much healthier retirement down the road? And then staying consistent is one of the most difficult things, because life has this tendency of getting in the way, right? So just like tending to a garden regularly, consistently contributing to your retirement savings over time, like I said before, those are going to accumulate significantly due to the power of compound interest. And then. Go ahead. I'm sorry, Mike. I was going to say that it's funny how you brought up certain things that people spend their money on.

Mike Zaino:
It's expensive to travel. I just had a bachelor party in New Jersey, and those airlines, they they really can get you with those extra fees. It is very expensive to travel. I have a wedding coming up as well that I have to travel for and people my age in my age bracket from, say, 25 to 33, for whatever reason, we'd love to travel the world. Everybody loves to travel the world. And the one thing that I could say to your point, traveling, it costs it really does cost a lot of money and adds up over time. But mentioning about how it's never too early to start preparing for retirement and to have those funds ready to go and to keep growing with that compound interest and everything. The one thing I have to say that these things aren't really taught when you're younger to you about saving, about preparing early for retirement and think for the next generation. My generation included, and even below that, it's going to really cause a hindrance for them and for their retirement funds. I think there's going to be a big reckoning, right? A big, you know, just brick that hits people in the forehead. You know, proverbially, of course not. Not, not, not, not Home Alone two version. Right. When he throws the brick down the building and hits Marv in the head.

Mike Zaino:
Right. Not not like that. And it's because our financial education system is broken. So, you know, a little a little sneak peek into a book that I've just finished writing. It's it's it's being shopped around for publishers right now. It's actually called Uncommon Sense CMA and it goes into all of those different money topics that you wish you knew sooner. And so I'm really excited to get that out and to get it into readers hands because everybody that I've let read it so far has been like, Wow, where was this when, you know, I needed it back in the day? So, you know, I think that. To kind of wrap up my Meat on the Bone segment with all of those, you know, different topics and suggestions that I just gave. It's really, really, really important to review and adjust, right? You have to periodically review your plan. And if something is not in alignment, well, then you need to adjust it. So as your life changes, your retirement goals might change as well. And you need to make sure that those plans stay aligned with all of your goals and aspirations. So just remember, the key takeaway from the quote of the week is that time is going to pass. And remember, the key takeaway from the quote of the week is that time is going to pass whether or not you take action. So taking small steps now to help you prepare for retirement will make a huge difference in the end as far as your financial well-being.

Mike Zaino:
And I'll just leave you with this. How do you eat an elephant? And people are going, What? Well, exactly how do you eat an elephant? A huge elephant. It's big. Well, the answer is one bite at a time, Jim. Mike, that could be applied to when I went to a restaurant. A nice kind of fancy restaurant here in Tampa, um, a couple of weeks ago. And they had a huge steak, 44 ounce steak. I almost ordered it. I almost got that big steak. And, you know, I was going to eat it one bite at a time. One bite at a time. Was it burns by chance? No, it was, um. Um. It was, uh, Tim Panos here. That's a new one. I'm not eating that one. It's in Hyde Park, Tampa, Florida. For those who live in the area. Mikey, of course, you've mentioned this on the show before, but you used to live in the Tampa area as well. So 44 ounce steak or an elephant like you said. Mike Right. One bite at a time. One bite at a time. All right. Very good. Well, moving on with the show. Last week, we discussed the differences between strategic and tactical asset allocation. We also discussed what an expense ratio is and why that matters.

Mike Zaino:
So if you missed last week's episode, you can check it out now at Money Matters with Mic.com or wherever you get your podcasts. Apple, Google, Spotify again, whichever platform you listen to your podcast. So thank you very much for all of the support. Let's get into some financial terms here this week. Mike Talking about beta, which is a measurement of investment volatility that can help you choose investment options based on your desired level of risk. There are some things to know about beta and standard deviation as well, which is a measurement that helps gauge how unpredictable an investment or portfolio's return might be. So let's talk a little bit, Mike, about beta, what there is to know about beta and what there is to know the key points with both beta and standard deviation. Yeah. And for those of you out there listening who may be going, what the heck are they talking about? Right? These are some financial terms that to be honest, most people out in America have absolutely no idea what they mean. They have no idea how to interpret them, but they could actually give you some tools by which to determine where you should be placing your money. So beta is a way to measure how a particular investment, whether it's a stock or a mutual fund, for an example, moves in relation to the overall stock market. So in other words, beta is a way to see how much the value of an investment might change when you compare it to the market as a whole.

Mike Zaino:
So it is measured on a scale. And what that means is if an investment has a beta of one, it moves in line with the market. So if the market goes up by 1%, then this investment, whatever you chose that had the beta of one is likely to go up by around 1%. And if the market goes down, then your investment is likely to go down by that same 1%. Okay. If beta is below one, it tends to be less volatile and it might not experience the price swings as extreme as those of the market. But if it's above one, it's much more volatile and it might experience larger price swings than the overall market. So for an example, the market might go up by 1%. An investment with a beta of 1.5 would go up 1.5%. And if the market goes down by that same 1%, it could actually go down 1.5%. And then sometimes in some cases a, you know, an investment might have a negative beta, which means it tends to move in the opposite direction of the market. For instance, if the market goes up, an investment with a negative beta might go down and vice versa. So understanding the beta of your investments can help you diversify your portfolio because if you have investments that have different beta values, you can potentially reduce your overall portfolio volatility.

Mike Zaino:
So you need to. Consider your own risk tolerance when you choose your investments. And if you're comfortable with a higher volatility and potentially larger returns, investments with higher beta betas might be suitable. But if you prefer more stability like most of my clients do, then investments with lower betas could be better. So, you know, again, it's just going to provide that insight on how different investments could perform during different market conditions as well. So during strong bull markets, the higher beta investments do well, while during the market downturns, the lower beta investments might be more stable. So, you know, that's that's pretty much all I'm really going to get into with with beta because again, these are the boring financial terms that most people don't understand. But if they do just have a basic understanding of beta, I think that they're going to be much more better off when making their own investment decisions. Let me ask you this, Mike. How could people read the market better to take advantage and use beta and standard deviation correctly that can help them make more money? Well, I mean, just again, you got to make sure that you're aligning it with your your risk portfolio and your overall goals and objectives. And if you're in your, you know, younger years, you're in your 20s, your 30s and maybe even into your 40s, you can afford to take more risk.

Mike Zaino:
But once you get into your 50s, your 60s and your 70s and you're approaching the retirement red zone, those five years immediately preceding retirement, the five years immediately in retirement, you don't need or should you shouldn't want to accept that amount of risk. So your risk tolerance as you age and as your your retirement horizon becomes a little bit closer should diminish. And so they can use them by by just looking at them. Because, you know, we talked about beta. We didn't really talk about standard deviation. I am going to get into that. That's a measurement that helps you gauge how unpredictable an investment or a portfolio's returns might be. And so, you know, it's a way to see how to spread out or how spread out, I should say the returns of an investment are. It helps you assess the risk. So if you're comfortable with risk and you're looking for potentially higher returns, you might consider investments that have higher standard deviations. But again, if you're like most of my clients and are somewhat risk averse and prefer more stability, you might lean toward investments that have lower standard deviation because that lower standard deviation investment might provide more consistency in the money as far as the returns, while the higher standard deviation investments are much more likely to have big ups, big downs, kind of like a a roller coaster.

Mike Zaino:
So, you know, standard deviation is just as important as your rate of return, if not more important, because you should seek to protect your money first, which means reducing that standard deviation and then you can focus on the growth opportunities. Yeah. And again, understanding standard deviation helps you gauge the potential risk and volatility of your investments. I want to talk about some key financial terms that are really important to understand. Mike Safety and risk, income and stability, longevity and diversification, which is key. Yeah. Out of all of those, I'm going to ask you to kind of a two pronged question here. First, we're going to go through each one, but out of all four of those, which one would you put the most stock in, so to speak, and intended to best protect your portfolio and to be be in the positive when it comes to your finances? Yeah, so so again, my wheelhouse is, is retirement, right? So I'm of course, I'm going to say longevity. People that that I deal with need to have the peace of mind that comes along with knowing that their money will last them as long as they live, no matter how long they live. But, you know, so I would lean more toward the longevity of your funds because nobody wants to have a plan to to say, make it to 85 and then run out of money and see their 86th birthday.

Mike Zaino:
Right. And now they're broke at 86 because their plan was only to, you know, have enough money to 85. So, you know, you mentioned those things, the four topics. Okay. The first one, I believe you said was safety and risk and understanding. Beta and standard deviation helps retirees choose investment options that match their risk tolerance. So some retirees might want to play it safe with a lower beta, a lower standard deviation as far as the investments within their portfolio. And then others, if especially younger folks, might be a little bit more comfortable taking on more risk for potentially higher returns. So that's safety and risk. They kind of go hand in hand, right? Well, then the other one is income and stability. So those lower beta and lower standard deviation investments can provide a much steadier and more predictable stream of income, which is vital for funding your living expenses during retirement. Okay. If you're used to living at X level, you don't want to have to take a dip. When you cross over those that threshold and, you know, retire. I did mention longevity. Retirees need their savings to last all the way through out their retirement years and hopefully then some. And so by considering both beta and standard deviation with your financial, professional retirees can make informed decisions that focus on their long term financial security. And of course, you did mention diversification being key.

Mike Zaino:
So understanding beta and standard deviation can help retirees seeking to diversify and improve their investment portfolios. And so it just means when I say diversification, some most of you know what this is because we talk about it all the time, spreading your investments across multiple types of asset classes. So you're going to have stocks, you're going to have annuities, you may have some structured notes, you might have bonds we're seeing a lot of. Clients replace bonds. Now, especially with fixed indexed annuities, you might have real estate, you might have precious metals. And the whole idea is just to reduce the impact of any poor performance in one specific area. And by having a mix of investments that have varying degrees of risk, you can manage the overall risk inside the portfolio. So if one investment is not doing well, hopefully others will help offset that loss. And again, those financial terms are important to understand safety and risk, income and stability, longevity and diversification. And if you missed any part of today's show, go back in the archives and listen to the podcast Apple, Google, Spotify, and again, wherever you get your podcasts, give Mike a call to (704) 560-1573. Again, that number (704) 560-1573. Or visit the website MoneyMattersWithMike.com All right Mike our cost cutter this week our headline How ETFs can can cut costs in your portfolio that is this the headline of this week's cost cutter.

Producer:
Here's the cost cutter of the Week.

Producer:
ETF exchange traded funds, a type of pooled investment security that holds multiple underlying assets rather than only one.

Mike Zaino:
Right? So the first way it can help is lower expense ratios. So ETFs generally have lower expense ratios when compared to mutual funds. Okay. Expense ratios are like fees that cover the cost of managing the investment. And so a lower expense ratio means that more of your investment returns actually stay in your pocket. Okay, which is where we want it. We don't we don't want that money going out in fees. Okay. And another way that ETFs help is just transparency, okay? They often provide transparency as far as what their holdings are on a daily basis. And this lets you see exactly what you're invested in while mutual funds, you know, to to kind of compare and contrast, they might only disclose their holdings quarterly or even less frequency. So transparency, I think, is key. Okay. And then there are no load fees where, as you know, many ETFs don't charge load fees at all, which are sales commissions when you either buy or sell, whereas mutual funds typically have either front end or back end loaded fees, which cuts into your investment right from the start. So many of the holdings that you have even in your employer sponsored plan at your work, okay, whether it's in your 401. K, your 403, B, your thrift savings plan, your Sep, you know, et cetera. Et cetera. Et cetera. They could be weighed down with fees laden with fees, which in turn is going to move your overall expense ratio in the wrong direction. So if you do have a work based employer sponsored plan, whether it's a 401. K or any of those other ones that we mentioned. Okay. Or any other retirement plan, I encourage you to reach out to me, schedule a complimentary no obligation consultation. I'd love to meet with you in person on the phone in a private virtual zoom call. All right. Any way that you have of getting in contact with me is fine. I understand that your money is important to you, which means it's important to.

Producer:
Yet again to reach out to Mike. Visit Money Matters with Mic.com. On the website. Or you can again give Mike a call. (704) 560-1573. All right. On the outline this week, there's a neat little stool, a little bit of artwork this week added to the outline. Mike talking now about the three legged stool of retirement planning, Social Security, personal savings and then, of course, pension, the three pillars of retirement readiness and the three legged retirement stool.

Mike Zaino:
Yeah. So in Days of old okay, you know, this three legged retirement stool was was a great illustration because that first leg, if you thought of your retirement as a three legged stool with each leg serving a purpose to help provide stability, the first leg is a pension, okay, which is sometimes known as a defined benefit plan. Well, unfortunately, most employers no longer offer that type of benefit plan for their employees. And as of 2019, only 14% of Fortune 500 companies actually offered pension plans as a benefit to new hires. So if you don't have a pension, you need to worry because now your stool is only two legs. And if you've ever tried to to balance yourself on a on a unicycle, basically because that's what it might feel like, we can help you establish your own personal pension based on the best options available today from highly rated insurance companies in the marketplace. If you do have a pension, you might also consider taking a lump sum and investing that into your own personal pension that is completely separate from your employer. We meet with people who sometimes discover that their options that are on the open market can actually outperform whatever workplace benefits that their employer is going to use to fund their work based pension plan. So, you know, again, if you have a pension, count yourself lucky.

Mike Zaino:
You know, literally count your lucky stars. I know folks that work for the government a lot, a lot of people that work high up in in corporate America, they may still have a pension for the most part. Everybody else is on their own for that leg. So that's leg one that may or may not be there for you. The second leg is Social Security. But as we discussed on last week's show, okay, Social Security is on track to cut benefits to retirees in 20, 33, ten years, heck, less than ten years at this point when its trust fund reserves are forecast to be depleted. So, in fact, the Social Security Administration has estimated that benefits will be cut by 23% in in 2033. Okay. Unless things change. So that uncertainty and instability regarding Social Security increases the need for people to strengthen their own income plan prior to retirement, not rely on the United States government and rely on their own. I always say if it's to be, it's up to me and you guys, when it comes to retirement planning, need to, you know, adopt that as your as your mantra. Okay. The third leg is personal savings. Many people have access to 401 seconds or other work based retirement plans, but few very few actually understand and comprehend the fees that they are paying within those accounts.

Mike Zaino:
And so people preparing for retirement also need to consider that money invested inside that 401. K, inside that IRA or whatever employer sponsored plan or tax deferred plan is exactly that tax deferred. That means the IRS is going to end up being your partner in retirement. Okay? Which means you're going to have to pay the IRS every time you seek income from those types of plans. So and you also have to worry about the government changing the rules. What do I mean? Well, what happens if they raise taxes? Right. Do you think taxes are going up or going down in the future? Not once has anybody answered that question, Mike. I think they're going down, so you need to have that accounted for in your retirement income plan. So if you are tired of worrying about your future and you're ready to work with somebody who sits on the same side of the table as you, give me a call, visit my website. I genuinely love meeting with our listeners and helping with them, you know, just on their journey on the road to retirement, because my goal is to help stabilize and strengthen your retirement plan. So again, that number, 704 56015737045601573. Or you can reach out any of the socials or at MoneyMattersWithMike.com Mike so I wrote down.

Producer:
I want to make sure I have this quote right when it comes to be it needs to be me. Is that.

Mike Zaino:
Correct? If it's to be. If it's to be, it's up to me.

Producer:
Okay.

Mike Zaino:
Now it's up to me.

Producer:
I want to touch on that because it sounds like with that quote right there, I may actually have that printed out and hang it on my wall. So thank you very much, Mike Zaino. You are welcome. When when it comes to that type of quote, though, it seems like what you're saying is that your financial destiny, your retirement, the ways you save money, that is all with you can make your own destiny. That is all within reach and it's up to you. And there are some elements on that three legged stool with the Social Security and the personal savings and the pension. Again, you mentioned a lot of companies now don't give out those pensions, but there are still ways around that and there are still elements that you need to do financially and take care of taking care of your financial house, that it's up to you and you still, even with the changes that happen, you still have the opportunity. You have to change with the times, but still have the opportunity to be able to set up your financial house for retirement for the future.

Mike Zaino:
Yeah, 100%. I mean, if you don't take your own financial bull by the horns, so to speak, okay, once you retire and you stop trading time for money, what have you got to rely on? The government? I don't think so. Okay. Not at least in the in the state that it's been in the past hundred years. Okay. Things are going to change. They're talking about raising the age for Social Security from 62 all the way to 70 before you can even begin drawing benefits. And the main reason is when it was, you know, instituted way back in the 30s, it wasn't designed to last you for 20 to 30 years. You were already supposed to have been dead for four years because the average life expectancy was 58. You couldn't draw it until you were 62. Heck, now we got people drawing it at 62 and living well into their 90s or turning 100. It just wasn't built to do what it, you know, it's doing. And thus we find ourselves in, you know the conundrum that we're in right now. So you have to take your own financial future seriously. Number one, you have to stop putting off, you know, what you can do today. I understand that, you know, it's difficult. And you have this and you have that. If I'm just being blunt, those are excuses. If you want to change your overall financial outcome, you have to take control. Nobody can decide to do that except for you. So what are you waiting for?

Producer:
Right. And you have to take the way the one step you could take to doing all that is simply contacting Mike Zaino. MoneyMattersWithMike.com or give Mike a call (704) 560-1573. Again that phone number (704) 560-1573. Simple phone number. I have it in my phone book. There's no excuse. You should have it in your phone book as well. All right, Mike, Moving on with the show. Ways to catch up if you're nearing retirement. There was a story out from Yahoo! Finance this week talking about young baby boomers who have 4 to 9 years until they reach their full Social Security retirement age and still have a chance to boost their retirement savings. And there are some practices that could help those young baby boomers might reach those goals.

Mike Zaino:
Yeah, I mean, the number one thing to do would be to save more, right? That's the quickest and easiest way to add to your retirement nest egg is just to increase your savings and therefore your eventual compound gains. Okay. Save more money in your retirement account. Reviewing that household budget to cut expenses or find ways to increase your income. Maybe you turn a hobby into a side gig or you take on a a part time job. Maybe. I don't know. Maybe you enjoy the sport and the game of golf. So become a ranger for a couple days at a golf course. Then you'll get to play free golf. You'll be outside, out of the wife's hair or out of the husband's hair. Right. And it'll give you a little bit of extra jingle in your pocket. So saving more, right? That's number one. Number two would be adding to your IRA. You can add an IRA if you don't have one as long as you have earned income. So even in addition, even if you participate in a workplace 401. K, you can open up an IRA, specifically a Roth IRA, where you're going to contribute after tax dollars. Why is that important? Well, if you contribute after tax dollars, you've already paid the tax. Uncle Sam can't demand any more from that money. And here's the best part or the money that that money gains. So unlike a traditional 401. K or a traditional IRA, where you do have to pay tax on the gain and tax every time you withdraw in a Roth, you don't.

Mike Zaino:
Okay. And another thing is that even at now it's age 73 for required minimum distributions with a Roth because you've already paid the tax, you're not forced to take money out at age 73. So, you know, obviously adding an IRA or adding to your already existing IRA would definitely help those folks catch up, Right. Well, the very word catch up is a is a term used by the IRS when it comes to catch up contributions. So anybody who is age 50 or older, you can catch up, they can donate or not donate, but you may feel like it's a donation because you're not seeing it for a while, But they can contribute an extra this year $7,500 to a workplace employer sponsored plan for a maximum of $30,000 total or an extra $1,000 to an IRA to bring the annual IRA cap up to 7500. So catch up contributions are an extremely solid, just solid way of helping you catch up. Okay. Another way would be to delay taking Social Security just simply because those benefits are going to increase by 8% for every year that you don't take it. Now, you may be saying, Well, Mike, I just thought you said that it's not going to be there. Well, in the current state, if things don't change, my feeling is that things are going to change.

Mike Zaino:
So by you mean it's going to have to a meltdown in Social Security would cause a global economic meltdown that we've never seen before because there are people all over the United States, all over the world who are relying on those Social Security payments. Okay. So if you delay your your payments until you reach your full retirement age, which for most of our listeners listening now is either 66, 66 and some months or age 67, you can generate significant. And I mean, you were talking 800 plus dollars a month just by delaying to your full retirement age. Okay. Working longer and it goes hand in hand with delaying Social Security, because if you're working longer, you shouldn't need to collect your Social Security benefits. You also won't need to tap into your savings that much sooner in order to make ends meet. Maybe you work part time. Maybe you have a phased retirement if you can talk to your employer. Lawyer. And instead of working five days a week, you work four days a week for a certain period of time, then work three days a week for a certain period of time. And if they're not good with that, you can tell them, I'm out of here, See you later. And then go get a part time job that allows you to work on your own schedule. Right.

Producer:
What other options, by the way, are there? I mean, you can talking about using maybe an annuity to provide consistent income during retirement. Let's outline some other options as well.

Mike Zaino:
Yeah. So I mean, you just you just nailed probably the one that I use the most, especially for creating those personal pensions that we talked about before. There's an annuity product out there, folks. That's called a fixed indexed annuity that is not your grandpa's annuity. Okay? This and this type of annuity is is one that does not charge you for paying you back your own money. And then when you die, they get to keep the money. That's not how the annuities that we put into people's plans operate. In today's day and age. We actually have vehicles that allow you to participate in the upside of the market, be protected from the downside of the market. That means when the markets in the indexes go up, you make money. When they go down, you don't lose a penny. They also allow for liquidity options because, you know, before when you traded your money to an insurance company, that was it. You you basically settled for a payment of X, whatever that payment was. Well, that is not the case anymore. The newer annuities, the fixed indexed annuities will always allow for you to, you know, tap into on a free basis with no fee and no penalty, up to 10% of that income or of the total value amount, I should say, to supplement your income. They also may come with guaranteed lifetime income riders. Notice what I just said, guaranteed lifetime income rider. So the people that have those types of riders attached to their annuities never have to worry about running out of money because as long as they live, no matter how long they live, that money is guaranteed.

Mike Zaino:
And then whenever they pass away, whatever money is left in their account passes to named beneficiaries. So annuities are phenomenal vehicles where they fit for certain individuals, but not every individual is going to qualify. Believe it or not, there are certain things that need to be in place. I need to make sure that it makes sense for you. And there are, unfortunately, people who come to me all the time. They want them. It's not the right vehicle. I won't do anything that's going to put you in a worse situation or do anything that's going to be detrimental to your overall financial health. And so one of the other options that we talk about a lot on the show is the use of a life insurance retirement plan, which uses permanent life insurance to help generate tax free income that can either be derived from the cash value that you accumulate over time or offset against the death benefit as a loan. By the way, a loan you never plan on repaying, right? Because it'll be offset by that death benefit. And so there are multiple ways that that provide other options other than your traditional sense. And that's why, if anything, that I have stated so far on this week's show makes any sense to you. Or you could use help with a free no obligation retirement consultation. Don't hesitate to give me a call. I do this show every single week to bring important information to people just like you. And guess what? I love meeting people because my day is never the same.

Producer:
It's this week in history.

Producer:
Well, again, MoneyMattersWithMike.com or give Mike a call (704) 560-1573. I promise you will not regret it. Well this this hour we've got about ten minutes left. Mike. This hour is just flown by, but we've got one more thing to do, and that is this Week in History. So here we go. This week in history, August 26th, legislation was passed. On this date in 1920, the 19th Amendment became part of the Constitution of the United States that gave women the right to vote. The amendment allowed at the time 26 million American women, the right to vote in the 1920 election. The amendment was the peak point of a decades long movement for women's suffrage in the United States. On a little bit of a lighter note, if you will, on the sports side, on this date, 1939, the first baseball game was televised, the game as narrated by Red Barber, the legend himself, one of the first ever broadcasters. I think that I don't think I know one of the first ever broadcasters, Mike, that did a baseball game and in that game. Cincinnati Reds took on the Brooklyn Dodgers at Ebbets Field in New York. The game was televised on WQXR, later known as NBC, Nbc-tv, and paved the way for what we have grown accustomed to as a multi-billion dollar industry. Funny, Mike was watching a game yesterday on my phone. Mlb.tv. Amazing how far technology has come, isn't it?

Mike Zaino:
I mean, it's absolutely amazing that we can get anything at our fingertips now. I mean, I remember my first cell phone. I remember even before the cell phone pagers where you actually got to decide whether or not you were going to call somebody back. That's right. That's right.

Producer:
My dad I know my dad had one of them, too. Of course.

Mike Zaino:
Yeah. All right. Yeah. You know, we old folks, right? But listen, you know, anything out there, if anything out there that I said today piqued your interest. If you want to learn more, hit me up on the socials. Reach out to me on MoneyMattersWithMike.com. Heck, pick up a phone and give me a call. Don't put off tomorrow what you could take care of today. Okay. Thank you so much, Jim, for filling in for Matt. You know, I appreciate the way you guys just operate as a team and pick up and team me up to actually, you know, knock it out of the park and provide folks with all this information. But most importantly, I want to thank our listeners. Without each and every single one of you, we do not have a show. So whatever you're doing this weekend, I hope you do it to the fullest extent and make it a great day.

Producer:
Thanks for listening to Money Matters With Mike. You deserve to work with the financial and insurance expert who can offer strategies for protecting and growing your hard earned money. To schedule your free no obligation consultation visit MoneyMattersWithMike.com or pick up the phone and call 704 560 1573 That's 704 5601573. Not affiliated with the United States government. Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. Amara Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis, with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company, not guaranteed by any bank or the FDIC.

Ford Stokes:
Chapter five Types of Annuities. Big idea. There are several options for you to consider when choosing an annuity. Be confident in knowing that there is an annuity out there that can meet all of your needs. Fixed annuity. A fixed annuity offers a specific guaranteed interest rate on their contributions to the account. Fixed annuities are often used in retirement planning. Fixed indexed annuity. For a fixed indexed annuity is an accumulation based product offered by an insurance company. A fixed indexed annuity has features of both a fixed annuity and a variable annuity. The growth of your fixed indexed annuity is dependent on the performance of a chosen stock market index, but your money is not actually invested in this index. This offers you great growth potential and exceptional protection for your investment. We will talk in depth about fixed index annuities in a separate chapter. Immediate annuity. This is sometimes called a single premium immediate annuity or a sPIa sPIa. An immediate annuity is able to pay the policy owner a guaranteed income starting almost right away. Some spias allow you to defer payments for up to one year. You can purchase an immediate annuity with a lump sum and you are assured a consistent annual payment of an agreed upon amount. Variable annuity. Here's the definition, but please don't invest in a variable annuity. Disclaimer I strongly recommend that you do not invest in a variable annuity.

Ford Stokes:
I feel compelled to describe what a variable annuity is for you as the reader of this book. This type of annuity includes an investment feature managed by mutual fund managers. Because the funds are exposed to the stock market, they are exposed to higher risk, which means they carry the potential for substantial losses. How does it work? A variable annuity is a mutual fund wrapped inside an annuity product. There are two elements that contribute to the value of a variable annuity The principal, which is the amount of money you put into your annuity and the returns that your annuities underlying investments deliver over time. You can get variable annuities in two forms deferred or immediate. Deferred variable annuities are the most popular type of variable annuities and are most often used for retirement planning purposes because they are designed to start paying out an income at some point in the future. Immediate variable annuities begin paying you right away. Other things to know. Some advisors would say variable annuities are great products for young high income earners. These types of investors have a much longer time horizon when it comes to recovering losses from stock market volatility. Variable annuities are tied to specific investments, which is a double edged sword for most investors. There is the possibility of impressive growth, also a very real danger of major losses, including your principal.

Ford Stokes:
The bottom line here is if you are currently investing in a variable annuity, your funds could be in serious trouble if the market experienced any downturns. Two basic configurations. Immediate versus deferred. The option you select will depend on your financial goals. If you want to begin receiving annuity payments right away, you will choose an immediate annuity. Alternately, if you would like to set your payments to begin at some point in the future, you will purchase a deferred annuity and specify the start date in your contract. Income Now Immediate annuity features Number one funded with a single lump sum payment. Number two guaranteed monthly payouts. Number three, supplement your retirement savings income. Later deferred annuity features. Number one, tax deferred premium growth. Number two, guaranteed lifetime income. That begins on the date that you specify. Number three, more income later because your money accumulates longer phases of your annuity accumulation phase, the deferred growth phase, you defer withdrawals and the principal invested grows without asset subtraction. This refers to the period when an individual is working, planning and building up the value of their annuity through savings. It is a specific period when the annuity investor is in the early stages of building up the cash value of their annuity. The accumulation phase begins when a person starts saving money for their retirement and ends when they begin taking distributions.

Ford Stokes:
For many people, this period begins when they start working and it ends with their retirement. The sooner you can begin your accumulation phase, the better. The long term financial difference between starting to save in your 20s versus starting to save in your 30s is substantial. Not only will you have more of a financial cushion in your retirement, but you will also have access to advantages such as compounding interest and protection from business cycles. Remember, the more you invest during the accumulation phase, the more you'll receive in the distribution phase. Annuitization phase. The payout phase. As this happens, when you turn on income with your annuity and begin monthly income payouts or penalty free withdrawals. This refers to the period when the Annuitant starts to receive payments from their annuity after annuities move into the Annuitization phase. They will provide periodic payments to the annuitant. The more money you invested in your annuity during the accumulation phase, the more that is available to you in the annuitization phase. There are four options when it comes to receiving your payouts during the Annuitization life option period. Certain systematic withdrawal or lump sum payment life option. This option typically provides the highest payout because the monthly payment is calculated based on the life of the annuitant. This option will provide an income stream for life which helps retirees with their fear of outliving their wealth.

Ford Stokes:
There's also a joint life payment option that lets you continue the payments to your spouse upon your death. This means that your monthly payment will be lower because it is based on the life expectancy of both spouses. Period. Certain. This option means that the value of your annuity is paid out over a time period that you choose, such as ten, 15 or 20 years. If you choose a 15 year payout period but pass away within the first ten years, your contract is guaranteed to pay your beneficiary for the remaining years. Systematic withdrawal. This method involves withdrawing funds from an annuity account in specified amounts for a specified payment frequency. The Annuitant is not guaranteed lifelong payments with option. Instead, the Annuitant chooses to withdraw funds from the account until it is empty. The risk here is that funds could become depleted before the annuitant passes away. Lump sum. This option is a one time payment for the value of the asset. The value of your lump sum payment would most likely be less than the sum of payments you would receive if you choose another payout option. This is because the party in charge of the payout is being asked to provide more funds upfront than they would have otherwise been responsible for.

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 dot Radio network. Powered by AmeriLife. 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 just 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.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including powerful integrations and APIs, enterprise-grade admin tools, advanced search, secure transcription and file storage, and easily transcribe your Zoom meetings. Try Sonix for free today.