Silicon Valley Bank was just one of a few banks that collapsed over the past week. It can be a scary time for anyone trying to save or plan for retirement, so Mike shares the latest info and some tips to give you back some peace of mind. Plus, we talk about what is happening in the bond markets right now and explain how you can maximize your Social Security benefit in retirement.

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3.17.23: Audio automatically transcribed by Sonix

3.17.23: 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 day 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 single week. And today, Matt, we're absolutely bringing it again. Okay. On today's show, we're going to talk about how to protect your family and your retirement from financial volatility. Okay. And as always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today?

Producer:
I'm doing much better this week, Mike, because I can actually talk.

Mike Zaino:
Amen, brother. Last week you sounded like the Little Rascals character.

Producer:
Froggy Yeah, I really did. And I'm glad to not be that this week. Not like 100%, but getting there, I'm above 90% now. I'd say so It's it's pretty good. Life is good. I hope things are going well for you, man.

Mike Zaino:
I have had a wonderful week despite what has gone on in the markets and we're going to cover that in depth and in detail today. But, you know, my week has been very, very busy. I've been on the phone with a lot of clients, helping them protect their retirement nest egg. So, yeah, this week has been just just an ordinary week for me. And and we had a little bit of what I call the the spring of deception earlier in the week where we had the freeze warnings here in the Carolinas. I'm sure you may have had them down there in Georgia as well. But yeah, as the the week has ended out, you know, temperatures are back up in in the in the 60s and 70s and you know, flowers are blooming and the pollen is is everywhere. Everything is lime green right now.

Producer:
Remind me, by the way, never to buy a dark colored car ever again while living in the South. It's crazy. It really is. Because my my car is like a navy blue. I love the color. It's like when it's when it's nice and clean. Boy, it's a beautiful car. Yep. But this time of year, it's not navy blue. It's green. No, I.

Mike Zaino:
Drive a black pickup truck, and this is my seventh black vehicle. And after every vehicle that I get, that's black, I swear on my life that I'll never get another one. And like, literally, you run it, you wash the car, and within five minutes it's just lime again. And it's aggravating because you don't want to rinse it off because then that's going to leave the water spots and then you have to dry it off. And then five minutes later it's lime green again. So it's like people that that have the problem of driving in the snow all the time in the north and out west, you know, they literally don't wash their car for the entire winter. And, you know, it's one of those things I just cannot drive around in a dirty car. I don't know what it is for me. It just I just like the way a freshly cleaned car feels when I get in it. And when I look at it, Um, you know, my is, on the other hand, they don't care. You know, they got stuff thrown in the floorboard, thrown in the back. You know, those.

Producer:
Apples fell a little far from the tree.

Mike Zaino:
It is what it is. I think it's the military upbringing in me.

Producer:
That's. Yeah, well, you know, my dad was the same way. And as we've talked about before, he was in the Air Force. That was one of the things that he told me. By the way, before I got my car. He said, make sure that it's something that's easy to keep clean. Did I listen? No, I should have. So there we go. You know, I've.

Mike Zaino:
Had white vehicles and you'd think that white gets dirty real easy. White is actually one of the easiest colors to keep clean. White in, like a silver color. Black. No, forget about it. Black is ridiculous. Dark navy ridiculous. It's just, you know, turns green what it is and subjected to everything.

Producer:
Yeah, well, speaking of green, we got a lot of talk about some other green things that we like here, and that would be money and. And it's movement over this past week. Boy, we got a lot to talk about regarding Silicon Valley Bank, SVB, of course, one of two banks that actually failed this past week. And as you mentioned at the very top, we'll talk a lot about that in detail because I know that our listeners are really, really wondering about what exactly happened, why it happened, and do we have to worry about more banks failing in. The future. Those are big, big questions. We'll work to answer those as we go on here. We also want to make sure folks that you know, that you can go to the website MoneyMattersWithMike.com. That's where you can find the the show past episodes there you can also find the contact us page to reach out to Mike Zaino and get a free consultation as well. You can also give Mike a call at (704) 560-1573 and you can find us as well on YouTube and on the Facebook. Yeah, that's right. I said the Facebook. Don't know why, but that's what I said. But yeah, you can find us there as well. It's just go to either YouTube or Facebook. Search Money Matters with Mike and you'll find us there some great content from the show, but also some exclusive content that you won't see on the show or hear on the show as well. So that is something to keep in mind and reach out to us, whatever you do, because we absolutely love reading your messages, hearing your messages, just just hearing from our listeners. That's what makes it go around for us.

Mike Zaino:
Absolutely. Pick up a phone, give me a shout if you have questions that you want answered on a following week's show, then feel free to reach out again via phone, via social or MoneyMattersWithMike.com.

Producer:
And you can also do that very thing to get our 23 retirement cost cutters for 2023. A great free resource for you. All of the details about how you can save money and some of them you're like, Oh yeah, that's a little bit of common sense kind of a thing. But and then you turn the page and it's like, Oh wait, I never thought of that. So it's some great, great stuff in there for you. Helpful tips Go to MoneyMattersWithMike.com or call 704 5601573 to get your free copy. Well you know Mike we did mention coming up on the show is failure at the banks you know what happened at SVB and others. We're also going to talk about some safer solutions for your hard earned money as well as you plan for your retirement and your future, maximizing Social Security. We'll talk about that as well. What's happening to your bonds? A great discussion on that, especially, you know, sort of related to everything else that's going on, our bonds, this safer alternative as well. And safer for income also. And why your nest egg may be smaller than you think and what to do about it. All that coming up here on the show. A lot to cram in, but we'll get to it all. Well, okay, maybe I shouldn't over promise, but we'll get to as much of it as possible. Right now, though, let's start out, as we always do, with our Quote of the week.

Producer:
And now for some financial wisdom, it's time for the.

Producer:
Quote of the Week.

Producer:
And those aforementioned words of wisdom come this week from Will Rogers, vaudeville performer, actor and social commentator. And just a really a legend. Will Rogers said this one time, quote, People should be more concerned with the return of their principal than the return on their principal. And boy, does that one really hit home this week.

Mike Zaino:
It rings true, Matt. Especially, you know. So we're going to concentrate today's Meat on the Bone segment, on the failure at the banks and how to protect your family, how to protect your hard earned money and your retirement dollars from a potential banking crisis.

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

Mike Zaino:
Everybody woke up to the news on Sunday, this past Sunday, that the Silicon Valley Bank or SVB went under. It was a commercial bank headquartered out in California. They were the 16th largest bank in the United States at the time of its failure on March 10th and was the largest bank by deposits in all of Silicon Valley. It operated from offices in 13 countries, and its failure quickly became the second largest failure in the history of the United States banking system. And then, along with SVB. On March 10th, Signature Bank, which is a New York based full service commercial bank, also experienced failure as customers got spooked by the sudden collapse of Silicon Valley Bank. And they went on a bank run and withdrew more than $10 billion. And there was actually a third bank signature bank that went out of business as well and collapsed because they were largely invested in some alternative assets. Crypto, for example. We're going to talk a little bit about that a little later in the show. So, you know that run on deposits and we're talking about the the signature banks run led to the third largest bank failure in the history of the US banking system. So literally within two days we had two of our country's largest bank collapses ever in history.

Mike Zaino:
Okay. The largest bank failure in history was when Washington Mutual or WAMU, some of you might know of heard of it that collapsed after the OR in 2008 during the financial crisis. In fact, if you go back and look at the 20 largest bank failures in history, ten of them happened during the financial crisis from 2008 to 2010. So we want our listeners and our clients to understand current events that are happening in the economy and the financial system. And don't be fooled by people who may be using these bank failures to help sell gold or silver or various cryptocurrencies or any other assets that offer little to zero consumer protections and carry a very high level of risk. It is also extremely important that if you're going to bank at a local bank or an online bank, you want to make sure that that bank is insured by the FDIC, the Federal Deposit Insurance Commission, and they will insure deposits up to $250,000 per depositor per insured bank. So we help our clients and our listeners make informed financial decisions and make choices that leave them and their money safe and secure. Matt.

Producer:
Yeah. Boy, talk about just some huge, huge developments over this past week. The SVB collapsed there, as you said, the second largest signature bank, the third largest in the history of the US banking industry. So we're not talking about, you know, a small deal here, but we also, you know, there's this fine line because it's yeah, it's a it's a big deal. But, you know, do we want people running out in the street and panicking and, you know, do like Kermit with the hands up and all that stuff? No, but but, you know, just take it, take a step back, take a deep breath and make sure that that your ducks are in a row 100%.

Mike Zaino:
And you know what is reacting? And that's that's our markets, right? I mean, we have been on an extremely wild ride that hasn't been too fun this past week. Okay. With with these banks going out and people are freaking out and they don't know what's going on. And do I can I trust the banking system? This this time is a little bit different than the financial crisis of 2008. And we're going to get into that a little bit more and explain that in detail during our show.

Producer:
Yeah. And really, you know, a lot more discussion on this to come. I was I was speaking with an professor from Emory University's Goizueta Business School not long ago. And this week, actually with, you know, talking about this very thing. And he said, you know, speaking of the markets part of that, like the market reaction to this obviously is the alarm bells and the and the red flashing lights about the banking industry and saying, okay, we're worried about this. This is this is craziness. It's happening. Also, though, more maybe a little bit on the some of the more positive the upswings that we've seen because it's, as you've alluded to, been wild kind of in both directions here that the. A reserve might look at this and say, okay, we're now not going to raise interest rates as much as we thought or maybe even at all for the near future. Right. To give the banks some stability because a lot of those banks and without getting too much into the weeds here, what the professor was saying was that the banks have a lot of fixed assets on their balance sheet. So like like corporate bonds and, you know, US bonds, things like that, things that are really subject to a lot of interest rate risk, right? And so when the interest rates climb, the value of those assets go down. So if the value of those assets go down, then the banks have even less assets on hand to be able to meet any run on on deposits. Right.

Mike Zaino:
Because when people are running to the bank to withdraw the money, if they don't have enough cash on hand, that's what they do, Matt. They sell those, you know, bonds. And the last thing they want to do is sell bonds at a loss to cover the deposits, right? So it's kind of a catch 22 situation. But with, you know, especially Silicon Valley's bank, you know, that was a lot of venture capitalists that had their money in that bank. And so 90%, literally 90% of the dollars held at that bank were unsecured. That meant not protected by the FDIC. So that's where you have to be very, very careful when you have a lot of money just sitting in a in a bank account for sure at any bank.

Producer:
Yeah, absolutely. And and one thing that the professor did say also is that if you are in that situation, one thing to possibly consider then would be to, you know, take that money that's sitting in a bank. If it's over to that 250 K and split it up into different accounts so that then those individual accounts are below that 250,000 threshold and they are FDIC insured. So that's that's at least one strategy to consider there. Yeah.

Mike Zaino:
And we're going to talk about a few others, too. So but I mean, what really concerns us about recent bank volatility, Matt, what would you say there?

Producer:
Yeah, well what what what shouldn't concern us about it. Well, you know, I mean, here's the thing is that there was an article in Fortune magazine, Fortune.com, the website version of the magazine. I still say Fortune magazine because, you know, I'm old school like that. But US banks have $620 billion in unrealized losses. I mean, it's kind of crazy. You know, the actually FDIC chairman is warning that those unrealized losses weaken a bank's ability to meet unexpected liquidity needs. He also cautioned mapping out a strategy to fund themselves profitably, profitably would prove a complex and challenging task. And I think that is possibly the understatement of the century.

Mike Zaino:
It is because, I mean, when you look at the tech sector, okay, a lot a lot of those banks or excuse me, companies that were out there banking with SVP, you know, a lot of them were in the tech sector. How do you think they're going to be affected with that bank being taken over by the Federal Deposit Insurance Commission? Right. And it's not just them. There's other companies like Roblox Blockfi, who I believe declared bankruptcy earlier this year and Rocket Lab. They're also reported holding a lot of excess cash reserves at Silicon Valley Bank. So, again, please, please, please do not keep more than $250,000 in deposits at a single bank and do not work with a bank that doesn't carry deposit insurance. Right. Let's talk about FDIC, because people love the idea of the Federal Deposit Insurance Commission, but they don't realize that the $250,000 threshold, that threshold was set way back in 2010 and has not changed since then. Okay. So I was playing around with an inflation calculator and today's value would actually be about $343,000. And that's just with an average inflation rate since 2010 to today of only 2.46%. All right. But that's a 37% increase in what they should be insuring, and yet they're only insuring up to that $250,000. So, again, don't have more than 250 K at any one bank.

Producer:
Yeah, that's definitely a key there. And the you know, funny thing is before that, I believe it was $100,000 was the FDIC limit. It was insured up to 100,000. Then they increased it to 250,000. That's where it stayed. And Lord knows how long it'll stay at that. I think it was at that 100,000 level forever, it seems like. So it could be a while before that goes up again. Yeah.

Mike Zaino:
And the fact of the matter is that most people don't just have a quarter of $1 million or more sitting in a bank. Now, I do know a few. Okay. Which makes me scratch my head because especially in. The past interest rate environments where they were paying 0.0023% for an entire year. You know, obviously when the Fed raises interest rates, the banks are able to give more money there. But I'm sure most of our listeners right here today are banking customers. They utilize the bank. So I'm going to ask our listeners a question. How do you guys feel now about fractional lending? And for those of you who don't know that what fractional lending is, that's how banks make money off of your money. They take your deposits. Okay. And they're only required to hold a certain percentage in liquid assets as a reserve. Think cash. Okay. That reserve requirement is only 10%. And then the banks are at liberty to lend the remainder, the other 90% of your assets out to borrowers. And so when they lend it out, they're making money because they're charging what, that interest. Interest. Exactly. So now do you feel more comfortable with your money being invested at a bank that has a 10% reserve requirement? Or would you feel more comfortable by investing your money in an institution that has a 100% cash reserve requirements like an annuity for an example? Okay. And the annuities that I refer to are not your grandfather's or even your father's annuities Today. They have all kinds of bells and whistles that can protect you, make sure that you still maintain liquidity and get passed on and keep the money in the family forever through named beneficiaries. So what's the difference between a 10% reserve requirement at banks and a 100% reserve requirement with annuities? Well, I'll tell you, Matt, that's simple math. It's a 90% difference and fewer sleepless nights.

Producer:
Yeah, and that means a lot like you can't you can't put a price on on fewer sleepless nights. Peace of mind. Exactly.

Mike Zaino:
Anything that costs you your peace of mind is way too expensive.

Producer:
Yeah, 100%. And and that's one of those things, you know, we talked about like a few weeks back when we were doing our Smart Retirement Plan series. You know, we talked about a lot about health and taking care of yourself. And that goes back to that as well, because really with this situation with SVB and the Signature Bank and others, you know, they talk about Credit Suisse now being potentially in trouble as well. So it's like there there's a lot of anxiety out there for for people. And so anything that can give you more of that peace of mind, I feel is a great investment because you're investing not only in your current peace of mind and your your mood and all of that, but that can have a big impact on your future because stress can lead to a lot of health issues. And if you're able to eliminate as much of it as possible, then chances are you're going to be healthier going forward and you are going to have the years that you have may be greater in number and maybe a lot happier to 100%.

Mike Zaino:
Stress will kill you. Okay. And if we can alleviate that stress, that's what we're going to do. We get up in the morning just to help people make better decisions with their money. I want you to be skeptical of what you might see in the media or hear on the news. Okay. Trust. But make sure you verify. Be skeptical. Be a little cynical. Stop listening to the Wall Streeters who criticize annuities so they can keep managing more assets and charging you high fees. I need folks to get educated and be able to make their own decisions. And by working with somebody who is required to put your needs first, Right. Instead of their own. The best way to enjoy retirement is to have multiple income streams that you can count on and never outlive.

Producer:
Yeah. And that is one thing that I think sounds great to a lot of people right now. You can get started with that journey, folks, and just even, you know, asking questions or finding out a little more by going to a MoneyMattersWithMike.com fill out the contact form there on the website. MoneyMattersWithMike.com or It's (704) 560-1573. So here's the question, Mike. I think that a lot of people are asking themselves, what should I do now with my safe money? You know, that money that you're going to need in the future, that money that you want to be there, that you want to be protected. Right.

Mike Zaino:
So, I mean, a lot of people don't understand what the concept of safe money is, okay? And that's the money that come hell or high water. You are not willing to go below a certain threshold. Whether that threshold for you is 100,000, a quarter of a million, A half million, a million. It depends on what your appetite for risk and volatility is. But whatever money that you absolutely want to protect, okay, with inflation continuing to rise and these bank failures that we're seeing now three this week, do you really want to count on banks for your safe money? Why would you take risks with what is going to be the income portion of your portfolio in retirement? Okay. Notice that there have been no negative headlines, none whatsoever surrounding life insurance companies or annuities right now. Why? Because insurance companies once again have a 100% reserve requirement and people are like, well, what does that mean? That means for every dollar that they have in as far as deposits, they also have the equal amount in cash. So if everybody wanted their money all at once, guess what? They have all of it to give and still have a surplus between 5 and 10% required by each state's Guaranty Association. So when it comes to investing, just don't forget the rule of 100, okay? And that's subtracting your age from the number 100 just to determine the approximate percentage of your assets that should be safe versus how much should be at risk in the market. The closer you are to retirement, the more concerned you should be with protecting what you already have.

Producer:
Yeah, 100%. And you know, I didn't even realize that I was using that term to talk about the rule of 100, but 100% correct there. And you know, this sort of reminds me of this quote that has been said by at least similar versions of it by a couple of different people. One is George Santayana. The other Winston Churchill, I believe, said something very close to this, that, you know, those who cannot remember the past are condemned to repeat it. And that's very true. I mean, you either you either learn from your past or you just keep doing the same thing over and over and over again. And and if you do that and you expect a different result, that is the definition of insanity. I've got a million quotes today.

Mike Zaino:
Guess the very definition of insanity and again, we are quick to forget a lot of us are 2008, what happened from March of 2008 to March of 2009 when the S&P 500 lost half of its value, it took more than six years between 6 and 9 years to recover its previous value. Meanwhile, inflation eroded that buying power away from so many hard working people. And the greatest way to illustrate this, and I've done this on multiple shows before, but if you lose 50%, you actually have to gain 100% of the 50% just to get back to even. So, think about it in dollar terms. If you have 100 bucks and you lose $50, which is 50%, then you have $50. But then if you get that 50% right back, it's only of the 50. So instead of having $100, you only have 75. And that's why it is so critically important, especially when you're in that retirement red zone. The five years immediately before and the five years immediately in retirement to not be exposing yourself to unnecessary risk. Okay. Again, think back to conversations with folks that you may have had 15 years ago who were maybe in your shoes now and were getting ready to retire. And they had just lost up to 50% of their retirement portfolio. That wasn't something they liked to brag about at dinner parties or Christmas get togethers. Right. Many who were nearing or already in retirement suffered a lot during that time. And most of them, at least the ones that I'm personally aware of, my mother was one of those included, had to work nine more years just to get back to even. So, you know, the bottom line is instead of placing your money in banks, we suggest you consider at least consider educate yourself on.

Mike Zaino:
And I'm happy to provide that education unbiased. I'll show you multiple different companies, pros and cons with each one. But alternative savings vehicles that are required to have a 100% cash reserve like a multi year guaranteed annuity. We call those migas like fixed indexed annuities and like indexed universal life insurance. Okay. My goal is to help educate you on all of your options that could help you reach your retirement goals, and I'll help you determine the appropriate amount of risk to take with your savings. Look, folks, there's no reason for you to ever be embarrassed or ashamed or afraid to demand that you understand what's going on with your money. And it's okay that you know very little, if anything, about how money and how the markets work. That's what I am here for. There are a lot of advisors out there that have fancy offices and they got on the nice suit and the nice tie and you might go in feeling all intimidated, almost ashamed that you don't know anything, but. But here's the thing. Once again, it is your money. And I'm here to help you understand and talk in terms that you're easily able to comprehend. I'm not going to make you feel stupid, okay? I'm going to explain things in plain English just so that you do understand the why behind what I am recommending. I'll educate you in a way that's so easy to understand. But ultimately, you're the person that is going to make the final decision. Why? Once again, it's your money. I just want to help protect it for you.

Producer:
And if that sounds good to you folks, MoneyMattersWithMike.com is the place to go. MoneyMattersWithMike.com or call 704 5601573. And boy this happenings this week really bring it home I think for a lot of people there Mike and a big part of it you know really has to do with crypto. We mentioned crypto earlier in the show about, you know, don't don't let people use the situation with the banks now to really, you know, kind of kind of swindle you really into buying something that you don't need in your portfolio. And among those examples was crypto. Um, we actually put together a piece not all that long ago about cryptocurrency and we call it take Caution with crypto here. Let's actually take a listen to this just a couple of minutes and it's got some very interesting sound from a lot of very interesting people in it and a lot of people who you might not think would agree on much of anything but do about crypto. So let's listen to this. We'll talk more about that part of this whole debacle on the other side. I'm Matt McClure with the Retirement.Radio Network Powered by a.

Producer:
If amusement parks are your kind of thing, roller coasters can be fun, but when it comes to investing for retirement, not so much. One of the most volatile investments around is cryptocurrency. That means sure, there's some potential upside, but is it worth taking a ride on the crypto coaster? First. What is crypto anyway? The website Investopedia defines it this way. A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities. Bitcoin was the first such currency out there, so it's been the most talked about and faced the most scrutiny. Like anything in life, crypto has its advantages and disadvantages, while it offers a faster and cheaper way to transfer money, its value is highly volatile. The technology has gotten some blowback from both sides of the political aisle. One of the most vocal critics has been Democratic Senator Elizabeth Warren of Massachusetts.

Elizabeth Warren:
Unlike, say, the stock market, the crypto world currently has no consumer protection. None.

Producer:
Republican Senator Pat Toomey, ranking member of the Banking Committee who generally supports the industry, also acknowledges there are issues with crypto. Now, it's.

Pat Toomey:
Important to note that many people have raised legitimate issues about cryptocurrencies. These include their use in illicit activity and the possible effects on monetary policy and our existing financial infrastructure.

Producer:
But what do big time investors have to say about cryptocurrency? Here's Warren Buffett speaking at a recent Berkshire Hathaway shareholder meeting. Now if you.

Warren Buffett:
Told me you owned all of the Bitcoin in the world. And you offered it to me for $25. I wouldn't take it because what would I do with it still?

Producer:
Cryptocurrency has legions of fans who swear by it and enjoy riding the daily roller coaster. So are you willing to risk your hard earned and hard saved money in a volatile cryptocurrency market? That's a key question to consider as you invest in your future with the Retirement.Radio Network Powered By AmeriLife, I'm Matt McClure.

Producer:
If money is on your mind, you're in the right place. This is Money Matters with Mike.

Producer:
And you know I'm Mike never thought that I would hear, you know the likes of some of those folks agreeing on on crypto but they do and a lot of the things that we're, you know, really concerned about right now go directly back to this because it's you know, we hear a lot of talk about there being little to no regulation in the crypto market. And that is something that should be concerning for folks because it's a bit like the Wild West.

Mike Zaino:
It is like the Wild West. And do I think crypto has its place in the financial markets currently? I don't know. Right. I'm not going to say that I'm going to bash it because I do think that and I know people that have made a lot of money in crypto and so it's one of those things that as time goes on, you have to remember cryptocurrencies are in its infancy right now. They've only been around for like 11 years since 2012. But in the case of Silvergate Bank, that was one of those three that went out of business. Their run was sparked by the erosion of trust across the crypto markets after FTX collapsed. Okay. And there's a lot of as well as a lot of people that were short, you know, shorting crypto. And so when it comes to cryptocurrencies, it's kind of like poker. Don't sit down at the table with more than you're prepared to set on fire. And if you're okay with that and you've got some money, some like super long term money that you can afford to risk and understand that it is high risk. I mean, even stable coin Stable coin is supposed to be stable. It's supposed to mirror the United States dollar. So Usdc dropped 13% on Sunday. And so you don't want your stable coin dropping, you know, double digit percentage points in a single day. That's not very stable to me. So that's why I'm saying just take caution. I think there's probably a place way down the line. But whether that's in my lifetime or not or my kid's lifetime, more likely than that is yet to be determined.

Producer:
Yeah. And you know, you say don't go onto crypto, don't go into crypto with more money than you can stand to lose, just as you say, like sitting down at the poker table, like going walking into the casino at all, putting it in a slot machine or something like that too. It's all kind of the same sort of deal. Could you and here's the thing, like could you sit down at a poker table and have a royal flush? Great hand. Yes. Yeah. Could you sit down at a slot machine, pull that lever or push that button and hit a big jackpot? Yes, you could. It could happen. Right. But chances are the you know, the odds are not in your favor. They're in the house's favor. So the odds are it's not going to happen. So if you lose that money, make sure that you're going to be okay.

Mike Zaino:
Yeah, I like in crypto to penny stocks. Okay. I mean, you you can buy penny stocks for fractions of a penny and if they even get to $0.10, Wow, you just made a whole bunch of money. Right. But the reality is, is with most of the cryptocurrency coins that are available out in the market right now, the whales, the people that have hundreds of millions of dollars, they're very, very easily, easily able to manipulate those markets by dumping a whole bunch of money in. And then everybody says, Wow, look at the look how fast these are rising. And then they jump in. And as soon as they jump in, the whales pull out. Right. And so everybody that has bought in a little bit too late ended up losing money. So, again, just don't play with more than you're prepared to lose.

Producer:
Yeah. Playing playing with fire there a little bit. And so just as we say, use caution whenever you are involving yourself in the crypto space. All right. So another part of this discussion, you know, we talked a little about Bonds earlier and how they relate because with the changes in interest rates, obviously any of the longer term bonds are going to be decreasing in value. Right. But those bonds that you already hold, the bonds that are in the market now, those will be more valuable. So with the higher interest rate, that higher coupon rate. So talk about that sort of relationship and what is happening overall with bonds right now.

Mike Zaino:
Yeah. So that's when we talk about prepayment risk. Okay. And the ability to have to sell your bonds at a loss because when interest rates go up, the relationship is inversely correlated, which means bonds go down. That means the bonds that you are holding at those lower rates are going to need to be sold at a discount. Right? We talked about that with the banks. The banks were needing to sell those long term assets to cover the run. On withdrawals as far as at the bank, and they couldn't make it up by virtue of those lower rates. So simply put, your old bonds are much less attractive to investors because new bonds are available at the latest rates. And. Bottom line is, is why are you taking risk with the income portion of your portfolio, especially when we are able to replace bonds altogether? Any bonds that you currently hold that have lost value, we can replace them in your portfolio with fixed indexed annuities. Why? Well, indexed. Fixed indexed annuities have a 100% cash reserve requirement. The Fia's provide you with a personal pension plan that you cannot ever outlive. So when we talk about multiple streams of income, there's different strategies to laddering or staggering money and income streams in retirement. So if you're in your 50s and you purchase one every single year for ten years or one every other year for five years, and then you can turn income on at your whim. Literally, when you turn 60, you turn one on. When you turn 62, you turn one on. Literally every other year you're in control. Those are the personal pensions that we talk about. And fixed indexed annuities allow you to kind of sidestep the market because you can still experience market linked gains. But while your principal is 100% protected from the market linked volatility. Okay. And so replacing your bonds allows you to not only delete the fees that you were paying on the bond portion of your portfolio, but also negate any potential loss. So that is huge when we're talking about going into retirement for the income portion of your portfolio.

Producer:
Yeah. And really to that laddering strategy. You know something, I think a lot of people don't really think about much at all, but it's a great way. You know, we've seen, of course, what's been the other big story that we've been talking about for months and months and months and months has been inflation. And so that's a good way potentially to to hedge yourself against any future inflation because you're literally you're giving yourself a raise each and every year with when that next income stream turns on. Yeah.

Mike Zaino:
So I've talked about this before. This is my personal plan. Many of you know that I'm 52 years old. Okay, well, when I'm 55, I'm going to start laddering annuities from the time I'm 52 until the time I am 62 or excuse me, 55 until I'm 62. So for seven years. And then I'll have the option of turning on income when I turn 62, I can start turning them on every single year all the way through my 60s. And if I don't need them, guess what? That money is earmarked then for legacy. And I'm sure my daughters will be very happy.

Producer:
Yes, definitely. So I think that's a pretty safe bet there. And if folks maybe that sounds like it's something that you might want to explore for yourself, you can just go to MoneyMattersWithMike.com. Absolutely. Free consultation there with no cost, no obligation. And we'll tell tell you more about that as the show goes on here. But MoneyMattersWithMike.com or you can call 704 5601573 the number one more time (704) 560-1573. Of course, Mike, I think when a lot of people talk about income in retirement, a lot of people's minds naturally will go toward Social Security before even they think of annuities or anything like that because it's something that we all pay into for our entire working career. And then we fingers crossed when when we when we get to that retirement age, whenever we want to, whether it's our our, you know, minimum qualifying age or whether it's, you know, that age of 70 or whenever we have to, whatever the law is going to be by the time we retire or whenever we have to start taking those benefits is, you know, that we're going to hopefully start getting that money every month. So people might be thinking, okay, how can I make the most out of that as possible and maximize that that benefit?

Mike Zaino:
Yeah. And so, so when we're talking about maximizing the benefit, I'm not sure that people even know what the maximum Social Security benefit is. Well, in dollars, it's $4,555 a month. And you're thinking, what, 45, 55? I'm nowhere near that. Well, if you want to increase how much you're going to eventually get to draw from Social Security, we have a few steps that you can take. The first step is to work a minimum of 35 years. Why? Well, the Social Security Administration takes your highest 35 years of pay into account when they calculate your monthly benefit. And so in order for. Are you to be eligible to receive the maximum amount? $4,555. You will need to have worked for 35 years so that you don't have any zeros in your benefit calculations for missing years. Okay. And part of that is hitting an income that's at least the same as or more than what they consider to be the wage cap. Okay. Did you know that there's a wage cap when it comes to Social Security taxes? Well, workers out there pay taxes on their earnings for Social Security purposes only up to a certain threshold for income. And that level varies from year to year. Well, in 2023, the wage cap is $160,000. Oh, and 200 bucks. So $160,200. So any income that you make beyond that amount is not taxed. But in order to claim the maximum monthly Social Security benefit, your earnings must have exceeded that for 35 years. So not that many people are making that kind of money for that long to where they can truly capitalize on the maximum Social Security amount. Well, another way that you can maximize how much you'll take home is to delay taking Social Security until the maximum age, which is currently 70.

Mike Zaino:
And I say currently because my firm belief and this is just my opinion is that they'll end up moving the needle just like they did from 65 -67. Right. Some people that that may already be taking it, theirs may have been 66 or 66 in some months. But it's based on those 35 years earnings history. Once you reach your full retirement age, which again, is either 66, 66 in some months or 67, that's the full retirement age as it currently stands for Social Security. Okay. Each year you delay filing past your full retirement age, your benefits actually grow by 8% per year. And so to snag the maximum monthly benefit amount, you must hold off until age 70. That's not exactly feasible for everybody, right? So some people don't have longevity. They may have health issues. And those people should do what we call the Steve Miller band and go on and take the money and run. But collecting $4,555 a month from Social Security during retirement, that might seem nice, but for most seniors, it's just unrealistic because, again, most do not have high enough income for that many years to qualify for the maximum benefit. So if the benefit you're eligible for isn't anywhere close to $4,555, but rather a little bit more in line with the current monthly average of only $1,827. It doesn't mean that you're doomed to a cash strapped retirement. So don't forget we can help establish your own personal pension that you cannot outlive. And if you need help improving or starting that income plan, please give us a call.

Producer:
And once again, that number is 7045601573704560 1573. Or go to. MoneyMattersWithMike.com. And you know Mike, every time I see this word now or these two words, it's two words I can count. It's that Georgia education. The every time I see these two words, it's now my mind immediately goes to talking about income versus saving one big money pot of money for your retirement. And those two words are nest egg, right? So, so many people have that idea in mind about, I've got to save this amount of money. I've got to here's my goal and I've got to have this in my 401. K or my my thrift savings plan or my, you know, 403 B or IRA, whatever your retirement plan is, they're looking for that one big dollar amount. Well, we actually ran across an article about this not too long ago. Why your retirement nest egg actually might be. Get this, folks, 15 to.

Producer:
37%.

Producer:
Smaller than you think. That's a huge chunk.

Mike Zaino:
That is a massive chunk. And so because so many people are too focused in on building and accumulating and growing their nest egg, very, very few people and very, very few financial professionals are actually concentrating on the Decumulation stage, the drawdown, the preservation and the distribution of those assets. And so most of your money that you've saved for retirement, I don't care if it's in a 401. K, a 403 B, a thrift savings plan, A 457. A simple a step, a Q or an IRA. Most of that money is tax deferred. Why you get to pay less taxes up front. And a lot of folks like that and they feel like they're getting a break. But what they're really doing is they're kicking the can down the road to a later point in time where you don't know what the tax environment is going to be like. The government gives you the option to pay on the seed or pay on the harvest. Okay. They would much rather you grow that nest egg as big as you possibly can so they won't tax the original seed. They'll tax the entire farm at harvest time. So the biggest thing that most people fail to account for is taxes. Okay, Your taxes are going to be somewhere in that 15 to 39%, you know, depending on how much money you are making in retirement and for all of you that are going. Yeah, but Mike, I'm going to be retired. I'm not going to have earned income. I'll be in a much, much lower tax bracket. Well, those of you who may need to look back in the history of tax rates in the United States of America, if you just go back to the 60 seconds, our current 24% tax bracket was at 56%.

Mike Zaino:
So while you in theory may hope and pray to be at a lower tax rate environment, if the government changes the rules on you, then you may not find yourself there. So the question is what can you do then? Well, we would like to encourage all of our listeners to schedule an appointment with us so we can provide you with a free Roth conversion plan on some of those tax deferred dollars. The plan is going to outline how you can convert your money that is currently tax deferred and place it into a tax free retirement bucket. There are only two ways that you can do that. And the Roth IRA is one of those two investment options for all of America. The other is life insurance. Okay. And so with your money in a Roth IRA, all of the funds will be allowed to grow completely tax free. And when you go to take money out, guess what? Since you already paid the tax on the seed, you don't have to pay the tax on the harvest. So those distributions are tax free as well. And additionally, Roth funds won't be subjected to RMDs, those pesky required minimum distributions when the government will force you to start taking withdrawals from your tax advantaged accounts so that they can start collecting the taxes that they feel they are owed. So a Roth IRA protects all of that and it protects your money from future tax increases and future changes to the US income tax bracket. So if you want to kick the IRS out of your retirement plan, I know a good guy to call.

Producer:
Hey, me too. His name is Mike Zaino and you can go to MoneyMattersWithMike.com or call him at 704 5601573. And yeah Mike you know you make a great point there about it was when we talked about before but you might make a great point this time around again of talking about how historically low the tax rates are right now. Because, you know, if you just look back, you know, it's historically not even have to go as far back as the 60 seconds, go back to the 80 seconds when tax rates were were much, much higher than they are right now. And, you know, periodically have come down over the years since. And so nobody likes paying taxes. We love to complain about taxes. You know, it's like I'm always of the opinion that like, hey, as long as my tax dollars are actually going to good use, then I don't mind paying them. But then it's like sometimes you see what some of your tax dollars go toward and you're like, What in the world is happening? So that's why we all like to complain. But we're really probably going to all be complaining in the future because the government's got to bring in more money somehow and chances are it's going to come from your pocket and my pocket.

Mike Zaino:
Yeah. I mean, the way I see it, they've really only got two realistic choices. We can throw in a third choice in there. If we're asking the US government to sell off assets, which they're never going to do, the other one would be to spend less, which they're never going to do, and then the other one would be to tax more. So I always tell people, prepare for the onslaught of future taxation in the country. They have to get a handle on the national debt in some way, shape, form or fashion.

Producer:
Yeah, absolutely do. And that is what we all need to be prepared for. And and speaking of being prepared, Mike, when people call the number 704 5601573 or they go to MoneyMattersWithMike.com what can they find there when they sign up or talk to you personally because hey, the guy answers his phone everybody he's not not like people who just let it ring and say, oh, I'll get them later. If it does ring, you get his voicemail, he's calling you back. Can. Promise you that. But when they do that, Mike, and schedule a free, full consultation. What can they expect?

Mike Zaino:
Well, so number one, the first conversation we're going to have is just going to be more of a discovery meeting. I'm going to tell you a little bit about me and my background. I'm going to want to learn a little bit about you and your background, but we're going to help analyze your current financial situation. Okay. You're only going to end up working with me if it's best and makes sense for you. Okay. I'll try to discover exactly how much you're paying in fees unnecessarily and help you cut those costs out of your IRAs, your 401. K's or any other retirement savings vehicles that you may have if you do possess an annuity of certain sorts. Okay. If you have an annuity and you see the word variable in front of it, I can promise you you've lost money over the past couple of years. And if you want to stop the bleeding, then I'm going to have options for you. If you are somebody who is trying to figure out when you should take Social Security or how to best plan filing for Medicare and which parts you need, and do you need a supplement or should you go with an advantage plan? I can help you navigate all of that. And the bottom line is that I'm going to compare your current situation to what's possible if you work with me and if I can do better for you and you want to work with me, I'd be happy to have you on board. Okay. That's what we do. I'm as real as real gets, and I'm not going to talk down to you. So we're just going to have conversation and you can ask me as many questions as you need to so that you understand the why behind my recommendation.

Producer:
Yeah, what you see is what you get. What you hear is what you.

Producer:
Get from from Mike Zaino as well. And you said it earlier, Mike, you know, with with not being someone who makes people feel stupid when you talk to them. And that's absolutely true. You know, we've we've worked together quite a while now. Many, many months have gone by since the show went on the air. And I can tell you folks, he has not made me feel stupid once. So there you go. Which is a difficult thing to do because I make myself feel stupid pretty often.

Mike Zaino:
I think we all have those tendencies at some point. You know, there's there's plenty of times where I've opened my mouth and inserted my foot, and most of the time it's with my wife.

Producer:
Yeah, well, yeah, that does that does tend to happen. I think every.

Mike Zaino:
Guy out there just related to that. Yeah.

Producer:
There you go. The married ones at least. All right. But yeah, so that's it. MoneyMattersWithMike.com once again is the website folks if you're interested in that free consultation and the way things have gone this past week you should be. MoneyMattersWithMike.com (704) 560-1573 is the number Well Mike just about time for us to start wrapping things up here but coming up next week you know we're going to, of course, update the situation with the bank failures, bank bailouts as well. Any new details that we have on that will, of course, give to our listeners? We'll have a new inflation demonstration and more information on how you can create your own personal pension. That's that income stream that you can never outlive in retirement. But that will just about wrap it up for us this time around. Mike I really have really enjoyed it this way. I always enjoy it every week. I enjoyed it this week, probably more than most for two reasons. One, I can talk and two, I really have enjoyed talking about this sort of crazy situation that's happening. Learning more about it as we as we have gone along here and helping, you know, really just educate folks about what is happening and what can happen if they just do a little planning and seek that expert help. So really, really do appreciate it. And you have yourself a great rest of the weekend, Matt.

Mike Zaino:
You do the same. And for folks out there listening, if you've heard anything this week, okay, that made sense to you, then please. I would love to have a conversation with you. Doing nothing is not a plan, okay? It's not an action plan. You need to do something. Just ignoring everything that's going on in the world can be extremely detrimental to your retirement income success. So please take action this week. Get on the phone. Give me a call. I hope you guys have a phenomenal weekend with whatever you're doing. And as always, make it a great day.

Producer:
Thanks for listening to Money Matters With Mike. You deserve to work with a 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.

Producer:
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:
Do you want to be a jet setter in retirement?

Producer:
Keep an eye on how much you're spending. I'm Matt McClure with the Retirement.Radio Network. Powered by Amara Life. Pretty much everyone loves saving money, but that doesn't mean you can't pack your bags and see the world. This year. There are some simple steps you can take to reduce.

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Costs while.

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Still checking.

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Off your travel wish.

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List. One thing to consider traveling during the off season.

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Peak season will always be more crowded and more expensive.

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So take that trip to the beach in the early fall when.

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The weather is still warm but the kids are back in.

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School.

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While the timing of your trip is important, so is.

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When you book Mark with the popular travel focused.

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Youtube channel. Walters World says you should book as far in advance as possible.

Walters World:
I know, for example, in Germany, if you pre-book your tickets on the train, it's a significant discount than if you buy the same day. So make sure you use that advantage of doing things beforehand, whether it's a hotel room or it's tickets to a show or it's tickets to transportation, it can make a big difference. So use those discounts you can get by booking early.

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Also look for deals on flights and hotels.

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Through discount sites. Consider booking a rental home or apartment.

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Instead of a.

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Hotel, and.

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Think about taking public transit instead of a cab or.

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Ride share. So have you considered all the.

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Ways to cut your travel costs this year? It's a key question to consider, and it's one of the 23 retirement cost cutters for.

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2023 with the Retirement.Radio Network.

Producer:
Powered by a.

Producer:
AmeriLife. I'm Matt McClure.

Producer:
Call Mike today at (704) 560-1573 or visit MoneyMattersWithMike.com to get your free copy of 23 retirement cost cutters for 2023.

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