MMWM 7.25 Show.mp3: Audio automatically transcribed by Sonix

MMWM 7.25 Show.mp3: 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 live from Fort Mill, South Carolina. Happy Saturday, people. What a great day to be alive in these United States of America. Today, we are absolutely going to bring the heat and give you plenty of useful information that you can take with you and apply to your personal situation. And once again, I have the distinct honor and privilege of being joined by the one, the only, Mr. Matt McClure. Matt, how are you doing today?

Producer:
I'm great, Mike. How are you? It's it's a great weekend, huh?

Mike Zaino:
It is an absolutely phenomenal weekend, my man. And it's been a hot week this week.

Producer:
Oh, Lord, you got to stay cool out there and do everything you can. I'm telling you this, this summer has been, I think, one of the hottest that I can remember and most humid. I'm not that far from you. I'm you know, I'm in Georgia and it's like just the humidity just hits you like a ton of bricks when you're out there.

Mike Zaino:
It's a slap in the face for sure.

Producer:
Yeah, totally. Totally. Well, we're going to hopefully.

Mike Zaino:
You know, just not to interrupt you, but at least we have air conditioning. I don't know if you saw in the news this this past week where the heat wave out in Europe, over 1000 people dying because they just don't have air conditioning. They're not built for it.

Producer:
Yeah, exactly. And I remember, you know, I used to live up in the northeast and a lot of places did not have, you know, basically everybody when I lived in New York City, basically everybody, unless you were in a brand new building, had window unit air conditioners, because they just weren't built with air conditioners in them because they weren't ever really needed that much in the past. And now it's just like kind of crazy. And yeah, you're in the same way.

Mike Zaino:
I can't imagine living without air conditioning in today's day and age in the heat and humidity that we have here in the southeastern United States of America.

Producer:
Sure. Oh, no. It makes me want to get out, you know, sit out on the front. And now you know why people did this. They set out on the front porch and sipped a mint julep or whatever they did, you know. And it was like that was the only way to stay cool back in the day.

Mike Zaino:
It was I was amazed. We went to we had the privilege of going doing a little traveling. Earlier this spring, my wife and I, we went to Portugal and to Spain, and it was 70 degrees, 74 degrees and outside. And I'm sweating like I'm because we're doing a lot of walking. We're sightseeing and we're walking probably five or six miles a day on average. And I was sweating and hot and wishing I had shorts on. I had very thin pants with a t shirt and everybody there in 74 degrees was in like a shirt, a vest, a scarf and a coat. And they were probably looking at us like silly Americans.

Producer:
Yeah, exactly. Exactly. Well, it was so funny because I actually and this is the last bit of weather talk I'm sure we'll do, but I used to live in South Florida at one point. People are like, where has this guy not lived? But talk about heat. But then during the oh, totally, 100% and the humidity there is even worse than it is here. It's just like it's a whole thing. Hmm. But in the wintertime, I would look at people who are South Florida natives or have lived there a long time. Like they were crazy because it would be like 60 and they'd be wrapped up in there in like five layers of coats and with a sock cap on and stuff. And I'm and I'm like, I've got my shorts on, you know, just like, this is not cold, people. They're like, it's going to snow, don't you know?

Mike Zaino:
No. But the funny thing is, is that you get used to it. And I don't know if they, you know, the old wives tale where your blood acclimates. But I lived in Florida way back in the day. Right. And when my kids were little and I can remember the first year going to the bus stop in January with 70 degrees. And I had shorts, flip flops on the t shirt on and everybody else is in fur lined parkas. And the second year, you know, I had tennis shoes and shorts and like a sweatshirt on. And then by the third year, I'm in jeans in a full hooded sweatshirt and, you know, and it's just like you get used to the heat and humidity. But it's definitely been hot here in the Carolinas, for sure.

Producer:
Yeah, I guess your body definitely does get get used to it. But yeah, that's it has been really, really hot. That's something I don't think I will ever get used to is this kind of heat. But we've got we got been feeling heat in the markets. People have been feeling heat at the gas pump as well. And. It's not just the temperatures outside that are kind of driving people crazy. And that's what we're here to help people out with, right? I mean, that's what money matters with Mike is all about giving you knowledge that you can take into your everyday life and hopefully make your financial situation just a bit better. The website, folks, by the way, is Money Matters with Mike Wwe.com and the phone number 7045601573. We'd also like for you to subscribe wherever you listen to podcasts. Yeah, you can get us as a podcast as well. And really I say wherever you listen to podcasts and that's true. You know, Spotify, Apple Podcasts, all the big ones leave us a rating there as well. We would love that, love that feedback, and we hope that you're enjoying listening to the show. Well, as we start things off here, Mike, we always like to share financial wisdom, quote of the week to kind of help us set the stage for our program. And this time around, it comes from Benjamin Franklin. And Benjamin Franklin is at least credited with saying an investment in knowledge pays the best interest. And I know there's kind of a variation on that. An investment in knowledge pays the best dividend. We've heard kind of both of those, but I think so. You know, knowledge. Knowledge is power, right?

Mike Zaino:
Only if you apply it.

Producer:
Yeah. Yep.

Mike Zaino:
Take what you learn and put it into application. And that can make you light years ahead of the competition. And sometimes that competition is the man in the mirror, right?

Producer:
Yeah. Oh, totally. That's as Michael Jackson once say.

Mike Zaino:
Absolutely. Well, you know, Matt, you hit the nail on the head a second ago when you said the whole goal of the show is to educate and empower people out there who are listening just to be more equipped to make better decisions that will enable them to, in turn, maximize their retirement dollars and therefore have a much more successful and enjoyable retirement. And so I want to give people every week something that they can chew on. We like to call it Meat on the Bone, the Meat on the Bone segment of this week. We're going to talk about something that a lot of people may not be aware of. And that's a concept called the sequence of returns. You guys out there, you face plenty of risks when you're investing your hard earned dollars for retirement. All right. Markets crash, inflations can eat into your return. You might even worry about outliving your savings, like we discussed last week. But there's one really, really big retirement risk that gets very little attention, and that's called sequence of returns risk. And so a lot of you may be saying, well, what the heck is that? What is sequence of returns risk? Right. It's also called sequence risk. And it's the risk that comes from the order in which your investment returns occur. To put it another way, it's the risk that markets decline in your early years of retirement and the impact that that could have to significantly reduce the longevity of your portfolio. So when you experience a market drop in the early years of retirement, that can create problems that go well beyond the immediate hit to your portfolio, potentially to the point where you're going to permanently lose multiple years worth of income.

Mike Zaino:
And that can be absolutely catastrophic if you're just starting out on what could turn out to be a 25 to 30 plus year retirement. So timing is everything. And in retirement, early market declines, particularly if they're paired with rising inflation, can have a huge effect on how long your nest egg could last as a retiree. So let's just say for an example, Matt, you and I are two investors in the market and we have the exact same dollar amount, whatever that dollar amount is, whether it's 100,000, 500,000, $1,000,000, let's just say that we have the exact same dollar amount and then we both get the exact same return percentages over, say, a five year period. So we get 25%, 15%, 5%, -5%, and then -20%. The only difference, Matt, is that let's say you get gains during those first three years, the 25 to 15 and the 5%, and I get losses of 20% and 5% before I gain and you get the gains before you lose. That's the only difference. If that happens, not only will that drain my savings a lot faster. But it also leaves me with fewer dollars that can generate growth and return during future recoveries. So if you out there listening to the show today face such declines early in retirement, i.e. if you have retired in the last year or two and you've seen the market do nothing but lose money, you have the potential to run out of money far sooner than any investor who starts off their invest their retirement with gains. So, you know, that's a huge problem. Sequence of returns risk.

Producer:
Yeah, it sounds like it and it sounds like timing really is everything. And the difficulty, at least to me on the outside and I'm sure that that there are solutions in ways to deal with this. But at least the difficulty to me is, you know, predicting what's going to happen because a couple a couple of years back, I mean, no one no one really could have predicted that COVID would be a thing. And then supply chain issues followed by inflation, followed by market turmoil, followed by all of these different things. Right? So it's like, how do you even prep for that?

Mike Zaino:
It's a it's a ripple effect. And the fact of the matter is, is that nobody and I mean, nobody has a crystal ball. I mean, if we could predict the markets, we would all be retired and living on some beach in Tahiti, sipping umbrella, fruity drinks. Or if that's not your thing, you might be up in the mountains, you know, just relaxing and looking at wilderness, but I mean.

Producer:
And sipping a bourbon, that would be my thing.

Mike Zaino:
And sip of the bourbon, the or lemonade if lemonade is your thing. But the fact of the matter is, is that nobody can predict the future. So we have some solutions to kind of mitigate that sequence of returns risk. All right. The first one would be to keep a reserve above and beyond your investments, having somewhere between 1 to 3 years worth of cash type investments that should give you enough to cover any expenses during a downturn in the market and allow you to avoid having to tap into your investments while they're down because nobody wants to have to sell off stuff while it's just lost 20%. I don't know how realistic for most people that is to have 1 to 3 years of cash reserves. But you know what that that is? That is one potential solution. Another solution would be to scale back your spending in retirement. In other words, withdraw less than you would normally take or even skip taking a withdrawal altogether. Because if your assets are losing money and you take money away from it, all you're doing is compounding that loss, leaving you again with less money to rebound and grow. And so those those first two are definitely potential solutions, but I don't know how viable they are for for most of today's American public. Yeah.

Producer:
And especially that the first one that you mentioned there is have having those reserves there because I'm like okay will I'm will I make it through next month? You know, and that's what I think a lot of.

Mike Zaino:
People a lot of people out feel feeling more, more months than money and they're thinking three years. What is he as he is? He bumped his head. You know, I'm just saying, hey, that's a solution. So I think a more viable solution in anybody out there that has amassed any amount of savings can can participate in this solution. And that's the purchase of fixed indexed annuity that allows for both growth without loss and a guaranteed income stream that you can never outlive. So when you take some of your money and you and you buy one of these fixed indexed annuities, you're entrusting it to only make you money throughout market downturns. You're not going to make anything, but you're not going to lose anything. Zero becomes your hero. And then when the market rebounds because you didn't lose anything, you don't have to make up that loss. So here's another example. If you have $100 and you lose 50%, you got 50 bucks, right? But then if you get 50% back, a lot of you are thinking, hey, I got 100 bucks. No, you don't. You get 50% of the $50, which means you only have $75. So if you out there lose 50%, you've got to make 100% just to get back to even. And we talked about nobody can predict the future. Well, we don't know how long this market volatility is going to last in in COVID, we had the fastest decline in the history of the stock market. I mean, we lost 30% in like five days. I think it was March 6th through March 11th where the stock markets lost. $6 trillion of earth. And five months later, in September, we were at all time highs. It was like, what happened? You know, contrast that with 2008 when the market lost 53% and it took ten years to get back to even. So, if you're out there and you've just retired or you're about to retire, the one thing that you don't have is that luxury of time. So that's why the fixed index annuity is just an absolutely perfect solution for sequence of returns risk.

Producer:
Yeah. And as you say for everybody, no matter what your investment sort of situation might be at the current time, that is something that is attainable for folks. It's not like you have to have some big lump sum necessarily sitting around, you know, under your mattress or something right now.

Mike Zaino:
No, I've done them with as little as $50,000 on up to, you know, several million dollars. I mean, it really just depends on on you and what your situation is and how much other liquid assets you have. Because we don't want to tie up all of your money. Obviously, we want to be able to have you have some liquidity. And the best thing about the fixed indexed annuity is that if life happens, as it often does, you actually have liquidity. A lot of people have the misunderstanding that you're locking your money up for a period of time. That is absolutely not the case. Most of our carriers still give you access to your money of up to 10% a year. So, I mean, I don't know about you, but if you if you have a half a million dollars, I mean, when's the last time you wrote a check for 50,000? It just doesn't happen that often. So. And the likelihood of you writing a check for 50,000 every year for ten years, that's not that likely. So don't believe the the falsities, the myths out there that it's locking up your money, because that's absolutely not the case. You definitely still have access and you have that liquidity in case your air conditioner. All right. We've been talking about the the AC here and the heat in the southeastern United States. If your air conditioner blows and you need to go spend 5 to 15000, depending on how many units you have, well, you have that flexibility. So again, that fixed index annuity is just a great tool in the arsenal for retirement.

Producer:
Yeah. So you are not hung out to dry if you need some need some cash, need some liquidity there. Well, let's move along here, Mike, as we try to test our listeners knowledge and I guess is probably more testing my knowledge right now, but I do invite our listeners to play along with us as we play a little game we like to do called right or wrong. It's basically true or false. And so what I'll do is make a statement and then Mike will give us the answer as to whether or not that statement is right or if it is wrong. And like I say, play along with us at at home or in the car or wherever you happen to be right now. So here we go. Statement number one, Mike, in right or wrong, there is no product safer than a bank CD when it comes to protecting your money. Is that right or wrong?

Mike Zaino:
Matt, you couldn't be more wrong with that statement. First off, when you put your money in the bank CD, you are absolutely tying up your money for anywhere from six months to five years where you don't have access to those funds without penalty. On the other hand, a fixed indexed annuity can protect your wealth, while also providing that upside on the principle that you've invested. Because it's tied to an index, whatever index that might be, whether it's the S&P 500, whether it's a Barclays index, Barclays is a bank that's older than the United States, whether it's a Goldman Sachs investment. Goldman Sachs, one of the largest money managers in the world. It's tied to an index. So when that index goes up, you're going to participate in the gains. But when the index drops, zero becomes your hero. Now, a lot of people think, well, is it FDIC insured? Because that's what banks like to tout. They're FDIC insured. Well, the Federal Deposit Insurance Commission, which is what FDIC stands for, they only protect your dollars up to $250,000 in deposit, and they only require the banks to have a 10% financial reserve, whereas fixed indexed annuities are governed governed by the insurance State Department of Insurance. They are 100% financial reserve requirements. And in fact, depending on the state, most states will require those companies to have a five or 10% surplus. So on top of all of the money you've invested, they have 5 to 10% more. So think about that for a second. Right. So there is a product that is absolutely better at protecting your money than a CD is.

Producer:
Yeah, not yet.

Mike Zaino:
You still have access to money. All right. Without penalty, unlike you do in a CD.

Producer:
Exactly. There you go. That's all I'm going to say. You know, you tie up that money for, you know, period of several years versus actually having access to at least a portion of those funds that that you can use in an emergency situation, like you said, with the air conditioning thing or whatever, you know, God forbid something else were to happen. All right. So I got that one wrong and definitely not the first time I've gotten something wrong here. But we'll move along to number two and maybe, just maybe, I'll be right about this one. Here we go. Here is statement number two in right or wrong? It is if you choose to take a lump sum on your pension when you retire, you can receive up to a 10% bonus on your money. Is that right or is that wrong, Mike?

Mike Zaino:
Matt. That is absolutely correct. You got that one right, brother. Congratulations. Right. So if you make a lump sum on your pension, if that's an option for you, you can turn around and put that into a fixed indexed annuity that can provide you up to a 10% bonus on your money. And it can also help generate a higher income payout during your 25 to 30 plus year retirement, for sure. So you got that one right, sir. Congratulations.

Producer:
Okay. I'm 5050 at this point. We'll do one more and see how I do here. Here's statement number three In right or wrong for this week, it is the happiest retirees have paid off their home. The happiest retirees have paid off their home. Is that one right or is that wrong, Mike?

Mike Zaino:
Matt, you got that one right again, brother. Okay. When you pay off your home, you don't have that weight on your shoulders going into retirement. A mortgage payment can consume so much of your monthly income. And while some people recommend not paying off your home early and keeping more money in the market, we recommend that you absolutely delete, eradicate your mortgage and take a huge leap towards financial freedom. I mean, not only does it give you peace of mind, but the fact that if your mortgage is, I don't know, 500 to $3000 a month, depending on the size of the house that you live in, we'll think about that for a second. That's 500 to 3000 more cash flow every single month that you have at your disposal. So the happiest retirees have paid off their home, for sure.

Producer:
Yeah. Imagine just just having that monthly burden off of your back and as you say, frees up a lot more of that money that you could be doing other things with, including enjoying your retirement. Right. Well, good. So I got two out of three. I think this is the second week in a row. I've gotten two out of three. I am doing.

Mike Zaino:
Numbers right there, batting 667. Got a lot, right.

Producer:
Instant Hall of Fame and just just no debate at all. Unanimous vote here I am in the in the right or wrong Hall of Fame ballot. That's right. Exactly. First year of eligibility. I am right in there. Oh, here we go. All right. Well, it's actually now time, Mike, for my very favorite part of the show. And it is the intro to our next segment. It's not even necessarily the next segment itself, which I love, but it may be my second favorite part of the show next to what we are about to hear right this very second.

Producer:
It's time for this week's Problem Solver.

Producer:
So there we go. Mike, the drama, the the absolute passion of the introduction to our next segment. It's the Problem Solver segments. And I just love that introduction and I love the segment, too. Don't, don't let me sell it short here, because basically what happens is I try to present you, Mike, with a common problem that a lot of folks might be having each and every week. And then I know you come up with a solution to that problem because you like to be a problem solver instead of like me. I create the problems. You've got to solve them. You've got to come behind me and sweep up. All right. So here we go. Here's our statement this week in our problem solver, our problem to be solved. And it is. Are you concerned about market volatility and bonds, underperforming expectations? Well, market losses and poor payouts from bonds can be a drain to your portfolio. Rising interest rates make your bonds worth even less. So how do you address that problem if that's a concern that people have?

Mike Zaino:
Mike Well, I mean, we've kind of talked about it a lot on this show and we do every week because I'm such a firm believer in the power of the fixed indexed annuity. Bottom line is the fire that can help you sleep much, much better at night and not having to worry about market volatility. And you don't have to worry about what's on the news, whether that news is local, regional, national or international. Nobody could have predicted that the war in Ukraine would affect the United States markets like it did. Right. And I always ask people how much of that the stuff that goes on, on the news do you have control over and what do people say? Not a thing. Not a thing. I can't control any of that. Well, guess what? How much of that has a potential to negatively impact your portfolio now?

Producer:
A lot of it and a lot more than you would think.

Mike Zaino:
All of it has the potential to do that. And so you take advantage of market like gains without the market risk. And a lot of folks out there have bonds and those bonds have been underperforming, especially this year as the Fed has raised interest rates, because when interest rates go up, the value of the bonds go down. There's an inverse correlation there. And so I don't think that anybody should have to pay for an underperforming asset. And so replacing bonds with a fixed indexed annuity can help you become much more fee efficient inside of your portfolio. And you also might want to consider an accumulation based annuity without an income rider if you don't have the need for income. So there's no sense putting an income rider if you don't ever plan on taking an income. So, you know, the solution to to to bonds that are underperforming your expectations now. Absolutely. Could be purchasing a fixed indexed annuity with those funds.

Producer:
Yeah. And people, I think maybe may have gotten used to, you know, Bonds performing well for the previous ten years or, you know, plus because interest rates stayed so low. I mean, it was the Fed, you know, benchmark interest rate stayed at or near zero for years and years and years. And now we're seeing those rates go up not just by, let's say, a quarter percentage point or something like that. It is going up by like three fourths of a percent. And so that is really having an impact on a lot of folks.

Mike Zaino:
Yes, it is.

Producer:
Well, we're going to actually find out a little bit more about bond replacement with fiAs fixed indexed annuities. Our good friend Forde Stokes, who has written a book called Annuity 360. And we're going to share a chapter with you right now, folks, about bond replacement with fixed indexed annuities. We'll come back we'll chat about it just a little bit after we hear from Ford Stokes from Annuity 360.

Ford Stokes:
Chapter 15 Bond Replacement With Fixed Indexed Annuities. Big idea. Historically, bonds have seen volatility when the market is volatile, fixed indexed annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial advisor talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. And my firm Active Wealth Management, we believe this is a smart way to protect your future. Many people have learned that bonds are a safe way to invest your money, but there are some downsides to bonds that should make you think twice. We'll talk about some reasons why you should consider replacing your bonds with annuities. First, here's some information on the history of bonds in the United States. Historical bond volatility. The 1900s saw two secular bear and bull markets in US. Fixed income inflation peaked at the end of World War One and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The US government kept bond yields artificially low until 1951. The long term bond yields were at 1.9% in 1951. They climbed to nearly 15% in 1981. In the 1970s, globalization had a huge impact on bond markets. New asset classes such as inflation protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created.

Ford Stokes:
Early investors in these new asset classes were compensated for taking on the challenge. The bond market was coming off its greatest bull market coming into the 21st century. Long term bond yields declined from a high of 15% to 7% by the end of the century. The bull market in bonds showed continued strength in the early 21st century, but there is no guarantee with our current market volatility that this will hold. See Chart 15.1 to see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this Why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history alone, you can see how uncertain the future of bonds is. Inflation and fluctuating interest rates play a big role in bond yields. Interest rate risk of bonds. Bonds and interest rates have an inverse relationship. When interest rates fall, bond prices rise. Due to the COVID 19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option. However, this has caused bond yields to fall to all time lows. As of May 24, 2020, the ten year Treasury note was yielding 0.64%, and the 30 year Treasury bond was at 1.27%.

Ford Stokes:
Reinvestment Risk of bonds. This is the likelihood that an investment's cash flows will earn less in a new security. For example, an investor buys a ten year $100,000 Treasury note with an interest rate of 6%. They expect it to earn $6,000 a year. At the end of the term, interest rates are 4%. If the investor buys another ten year note, they will earn 4000 instead of 6000 annually. Consider the possibility that interest rates change over time when deciding to invest in bonds. Systematic Market Risk. This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpredictable and it is impossible to avoid. Diversification can not fix this issue, but the correct asset allocation strategy can make a big difference. Unsystematic market risk. This type of risk is unique to a specific company or industry. Similar to systematic market risk. It is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes coming to the industry. However, there is no way they can know how those changes will affect the market. There are two factors that contribute to company specific risk.

Ford Stokes:
Business risk. There are two types of risk internal and external. Internal refers to operational efficiency. An external would be similar to the FDA banning a specific drug that the company sells. Financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading. Reduced advisory fees. Investors who trade individual stocks may know how much commission they are paying their broker, but individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds. They sell called markups, but they bundle them into the price that is quoted to the investors. This means you are unaware of how much commission you were actually paying. Standard and Poor's estimates of bond markups is 0.85% of the value for corporate bonds and 1.21% for municipal bonds. However, markups can be as high as 5%, up to $50 per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time, unlike an annuity which provides income for life. You must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss. As we discussed above, annuities will provide you with an income you can never outlive.

Producer:
Not affiliated with the United States government. The agent 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. Educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. A married 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 of the results obtained from the use of this information.

Producer:
You're listening to. Money Matters with Mike. Visit Money Matters with Mike.

Producer:
That was bond replacement with fixed indexed annuities, a chapter from the book Annuity 360 by our good friend Ford Stokes. And you know, a lot of great info there with fiAs and replacing your bonds with those. Of course, Mike, there's a lot more to talk about with folks with when their retirement because maybe they don't have any investments in bonds, maybe they have mutual funds, maybe they have or invested in stocks, maybe they are invested in a particular kind of annuity right now. But that might not necessarily be the right kind of investment for them. That is all why all of those reasons and many, many more I know are the reason why you offer this full retirement plan. Consultation is absolutely free of charge and no obligation at all to folks.

Mike Zaino:
It is because different people have different situations and no two people are the same. Some folks have might have, like you said, might have purchased an annuity and that might have been bought, I don't know, ten years ago, 15 years ago. I can promise you that the products they have out there today are much different and much better and offer many more solutions for things that life throws at you than the ones that were bought even 10 to 20 years ago. So there's a reason that we want to actually take a 360 degree view of your total financial situation. We're going to closely examine everything that you currently have and see if there is room for improvement. And if there is, we'll make suggestions. We're not going to tell you what to do. There's no commanding in my business. We don't allow that. So if there's any time in your life where you have felt pressured into purchasing something by any sales person, whether it was at a car lot or a department store, I mean, think about that. When you walk into a department store and in that little buzzer goes off and you have somebody on you immediately white on rice and they're saying, hey, how can I help you? What are they really saying? Hey, what can I sell you? Right, right. Don't. And you will never get that feeling working with me. We're just going to have conversations and I'm going to talk to you just like I'm talking to Matt, just like I'm talking to you guys.

Mike Zaino:
Now, I'm going to be blunt. I won't mince words. If if you've done a great job and you're on the right course, then I'm going to tell you, hey, congratulations, man. Pats you on the back. You're doing awesome. But if there is any area of improvement, I'm going to suggest it. And whether or not you take me up on that, that is entirely up to you. And so other things that we can help with Medicare planning, Social Security planning. And so there are a lot of different ways to take Social Security and there is a lot of thought that should go into when you take Social Security, Medicare can be an extremely confusing topic, especially for those over 65, which you have to be 65 to qualify unless you're disabled. But we have a thorough understanding of all parts of Medicare. So if you're a little bit confused on that, you should give us a call. Bottom line is, is we'll compare your current situation to what's possible if you work with us and if you haven't heard from your advisor lately, if they're kind of hiding under a rock because of the market volatility and all the money that that you've lost so far this year, you definitely might want to get a second set of eyes and a different opinion to what you're normally used to.

Producer:
Yeah, well, then, and that's the thing. You know, if you have a health issue, right, a lot of people will go and get a second opinion, especially if you've got some sort of surgery or something like that. You're going to get a second opinion on that, get a second opinion on your finances as well. And folks, if that sounds like it's something that is good for you, if you would like to reach out, please do it. Money matters with Mike Dotcom is the website. It's Money Matters with Mike all spelled out one word dot com and the telephone number directly to Mike Zaino himself is 7045601573. So we got a lot more to come here on the show. Mike, I know that we wanted to talk a little bit about summer travel and maybe some experiences there that folks can kind of use to save a little bit of money. And, you know, I love a good cost cutter and that's kind of what this is going to be about here. And what is it? What is a good solution, do you think? I mean, I know that you talked about traveling and you're lucky enough to go to Europe earlier this year. I've done just a little bit of traveling more than I have, of course, obviously over the past couple of years. But 2022 has been a year where I've gotten back out there just a bit. But what are what is a solution maybe that folks might not think of? That is something that they can do to save some money when they travel.

Mike Zaino:
Great question, Matt. And I think that a lot of people here in the United States have the ability to travel to national parks, and we have some absolute treasures in the United States of America. The beauty of America is absolutely astounding. And on a handful of days every year, national parks that typically charge an entrance fee allow free admissions to all visitors. So upcoming days include the anniversary of the Great American Outdoors Act, which is August 4th. You can get into any national park for free. You can go on National Public Lands Day, which is September 24th, and Veteran's Day, which is November 11th. And so there are a lot of national parks out there that have no fees or they may have discounts for seniors or for military or veterans. And, you know, I love the national parks personally. One of my favorite national parks to go to is Yellowstone. Been there once and absolutely was blown away by it. And Matt, you have any any favorite parks or outdoor activities? What do you like to do?

Producer:
Well, my favorite national park that I've been to, and there are a lot that I haven't, but my favorite one that I've been to and I've been to it several times is not too far from you. The Great Smoky Mountains National Park. I just absolutely it's just beautiful, beautiful part of the country. And I think there is no more beautiful view in the eastern United States, at least that than that. You know, road for 41 that goes between Cherokee, North Carolina, over to Gatlinburg, Tennessee. You get up to the top of the mountain and there's that viewing area that you can take advantage of. Oh, my gosh. It's just like I.

Mike Zaino:
Think you can see, what five states from up that that.

Producer:
Park. Yeah it's crazy. And just an absolutely beautiful view. I love the Great Smokies and actually plan to go back up there one time a little bit later on this year might might actually visit the casino in Cherokee. So that'll be a little fun. Hopefully I'll do okay this time around. But I'll you know, I'm going to carefully budget my money that I put in a slot machine or on a table. So don't worry about that.

Mike Zaino:
I have a tip for you when you're up. Leave. Yes, exactly. What does everybody say when they leave the casino? Dang it. I should have left a little bit earlier when I was up. Right. So when you find yourself up, walk away.

Producer:
That's right. I have I have done that before and kicked myself afterwards. So, yeah, that's a great, great tip for anybody. It's almost like, you know what the stock market people say buy low, sell high. Well, that's if you're up in the casino, walk away from the machine or the table. Well, I know that, of course, continuing with our theme of educating folks, which we like to do here every week, Mike, we want to talk about something called the 4% rule. And this is something that we touched on last week, but I don't want to come back to it because I think it's a concept that people might get a little bit confused about. They might hear it, they might sort of know what the concept is, but maybe not know necessarily how to apply it. So talk about the 4% rule and how it can be a useful thing for people to think about and implement when they're thinking about retirement.

Mike Zaino:
Sure. I mean, in the 4% rule is just that. It's it's a guideline. It's a rule of thumb, if you will, that states you shouldn't spend more than 4% of your retirement assets in any given year. So think about this. If four times 25 equals 104% of your money, Time's 25 years would equal 100% of your money. And that takes into consideration two very, very bold assertions. Number one, you don't lose any money. And then, number two, you're not making any money. So it's almost like your money is in a vacuum. Certain retirement accounts, whether it's an IRA or a 401. K, they have mandatory minimum distributions that you must take after you reach age 72. However, if you've recently retired or nearing retirement and are not yet that age, nothing is forcing you to take a withdrawal. But when it comes back to the 4% rule, you just want to make sure that you're staying within that 4%. So what does that look like? Well, if you have a half a million dollars and you take 500,000 and you multiply that times 4%, you're going to get 20,000 on an annual basis that you could comfortably withdraw, divide that out by 12 months, and that's 1600. $67. Keep in mind, though, you have not paid the tax on any of that money. If it were part of or if it was part of, I should say, a tax deferred strategy. So that 4% rule in general should be just a rule and a guideline. And some years you may be able to take more. Some years you might have to take less.

Producer:
You know those RMDs that required minimum distributions that you're talking about there? It really is something I think that people might not even have in their mind when they're planning for retirement, especially if they're in a situation where they have a 401. K or something like that. Those investments just sort of happen. They get taken out of their paycheck, maybe their employer matches that. And then there's like, okay, so I'm going to have this money in retirement and I don't necessarily know the rules. Right?

Mike Zaino:
Well, and that's just it. So unless you have dealt with your aging parents and they have spoken ily toward the government for forcing them to take money out of their retirement accounts that they didn't need, then you wouldn't really have any knowledge of the required minimum distribution. But the fact of the matter is, I've said it before. I'll say it again. The government is greedy. They want your money. And how do they do that? Through taxes and through these required minimum distributions that force you to take money once you turn age 72 so that they can collect their tax base. The government is in the tax business.

Producer:
Yeah. And that is why, you know, you recommend a lot of the time something like a Roth IRA, which is, you know, the distributions on a Roth IRA completely tax free because you've already paid you pay into it with post-tax dollars. Right. So then in retirement, that money is stuff that you get tax free.

Mike Zaino:
Yeah, it's tax free. It grows tax free. You never have to take required minimum distributions. I mean, there are a lot of reasons to open up a Roth account. I'm actually scared that the government's going to take it away because once people fully understand the power of the Roth, I think a lot of folks are going to do it because I mean, again, do you think taxes, Matt, or do you think personally are they going up or down in the future?

Producer:
They generally go up. So right now they're on sale.

Mike Zaino:
So so why in the world would people defer to a time in the future that's unknown? Heck, the government could choose to be where everybody pays 50% in taxes. I mean, it's been done before in history, has a tendency to repeat itself. So, you know, Roth IRA is great. Another another vehicle to get tax free retirement in in or tax free income, I should say, in retirement would be from life insurance. Do some advanced life insurance planning. Don't just buy life insurance to pay a death benefit. That's death insurance. We don't want that. We don't like death insurance. We like life insurance that can actually work for you and provide another bucket that you can fill up with tax free retirement dollars when you take loans against the death benefit, loans that you never plan on repaying. So when you pass away, the death benefit will pay off the loans and then the rest will be distributed to your beneficiaries.

Producer:
Yeah, it's definitely not just your grandfather's life insurance policy that is out there anymore. Well, you know, we talk a lot on the show here, Mike, about inflation, of course, because it's such a huge topic. It's affecting us all. There are a couple of things, though, that you might be surprised to learn that inflation is not having a really big impact on. And one of those is something that's very popular. I am going to explain what I mean, and I put this piece together here just in the last week or so, and I want you to listen now and we'll talk about it on the other side. This is a little look at some things that inflation is not really impacting all that much right now. It seems like prices are going up everywhere, but that's not 100% true. I'm Matt McClure with a retirement radio network powered by a micro life. We've all been feeling the pain of inflation, which is causing consumer prices to soar at levels not seen in more than 40 years. From the gas station to the grocery store, we're paying more for just about everything we buy. But not every product is causing our dollars to fly out of our pockets. Take Costco, for example. The big box membership chain's CEO had a one word answer recently during an interview with CNBC. When asked if the company would raise the price of a signature food court staple. No, the hot dog and soda combo is staying where it's been for years. A dollar 50. You know.

Speaker5:
We're a volume business, we're not a margin.

Mike Zaino:
Business, and we drive a lot of sales. That's all we know. That's what we do.

Producer:
Ceo Craig Jelinek also said something else is staying unchanged. Costco's membership fee. An increase from the current $60 one year membership or $120 for a premium membership is not on the table. So what about his overall feelings on the economy? You know.

Mike Zaino:
Overall, I think the consumer is not doing bad. As you can.

Speaker5:
Say, unemployment is down significantly. If people want to work, they can work. So, you know, my view at the moment.

Mike Zaino:
Things aren't so bad.

Producer:
Costco is not the only place you can find some steady prices. According to the World Economic Forum, there are at least three things not affected or barely affected by inflation. They are public transit, which saw prices increase by just 1.9% year over year, at least as of May. Some vegetables like tomatoes and potatoes as well. They rose much less than meat, fish and poultry prices and surprisingly, electronics. The price of a TV actually fell one and a half percent. Audio and video equipment fell by at least 3%, and the average price of a smartphone nosedived more than 13%. So will you spend your money on any of the categories where inflation is having the least impact? That's a key question to consider as overall prices continue to climb with the retirement radio network powered by a Amira life. I'm Matt.

Producer:
Mcclure. You're listening to Money Matters With Mike. Mike the Money Man. The more you listen, the more you make. Here's Mike.

Producer:
You're listening to Money Matters with Mike Guy, Matt McClure here alongside Mike Zaino. And we were just listening to a piece that I did there about inflation and some things that inflation is not really having a huge impact on, at least at the moment. I was kind of surprised that some of the electronics in there have actually gone down in price. But I, I love that Costco CEO, he said, you know, I promised the former CEO and one of the founders of the company, I believe, that I would not raise the price of the hot dog and drink combo like ever because he goes that's that's what attracts so many people to come in. And it's it's a big attraction there at Costco. It's legendary.

Mike Zaino:
It is. It's their loss leader. It gets you in the door. Hey, let's go grab a hot dog combo for $2.50. And then when you're in there, you just felt you feel compelled to start walking the aisles. And then the next thing you're walking out and you just spent three or four or $500. Right. And you have and you have six months supply of toilet paper.

Producer:
Which over these past couple of years that would have really come in handy, actually, if if you were, you know, had just been to the Costco and gotten yourself some some toilet paper. I actually it's funny because I used to live above a Costco when I lived in New York for a while. And we I was a Costco member then and we would go down and stock up on stuff, you know, maybe once a month we would go downstairs because it literally the apartment complex was built on top of a mall pretty much. And we would just take the elevator down to the Costco, bring this, you know, our our big barrels of stuff back upstairs. And we were set for for a good long while. So, you know, one of the.

Mike Zaino:
Things that that story also mentioned was the fact that tomatoes haven't been affected. And and thank God for that, because I tell you what, in the summer, there's nothing better than a good tomato sandwich, isn't it? I love a good tomato sandwich.

Producer:
That's true. You know, I was not a fan, especially as a kid of raw tomatoes, but when I had a good tomato sandwich with a good ripe tomato, a little salt, little pepper on it, some mayo, nice, you know, fresh bread. That was.

Mike Zaino:
Summertime. And you're making me hungry.

Producer:
All right.

Mike Zaino:
What about hot dog combos? And it's time for lunch.

Producer:
Welcome to Mike's Food Show, everybody. Now here. We'll move on. We'll move on before we start chowing down. But yeah, I mean, there's a lot to talk about when it comes to inflation as we kind of near the end of the show here in about 5 minutes or so left. But, you know, there was this recent Fox News poll that revealed 93% of registered voters extremely concerned about inflation and higher prices, 52%, that is over half said that they have changed their summer travel plans because of gas prices specifically. Right. So, I mean, it's a big concern for a lot of people, especially those who are, you know, at or near retirement.

Mike Zaino:
It does. I mean, inflation affects everyone, but you can especially be vulnerable if you're already retired. And the reason that is, is because it harms retirees, as generally retirees are on a fixed income comprised of Social Security if they're lucky enough to have a pension and then withdrawals from their retirement portfolios. So sustained inflation over a number of years can drastically reduce their purchasing power. Heck, anybody's purchasing power, especially without cost of living adjustments. And we all know that most cost of living adjustments, they don't even keep up with the inflationary periods in time. And then strong investment markets that can help grow your retirement accounts would just also help that. But we're not really seeing that right now, are we? In fact, I had one client that she was 65 years old. She was a widow. And she had, I don't know, roughly $700,000 ish in her various accounts that were saved. And when we looked at her portfolio, she was pretty much 100% at risk. And luckily, we got to her before this year in the market decline. She actually decided to take a little over half of that and put it into a fixed indexed annuity so that she would make sure she was not exposed to loss.

Mike Zaino:
And so while everybody else has been losing, she hasn't lost a single penny. So she's absolutely love with that. And she was mainly concerned at that time with becoming a burden on her children, and she wanted to get started on an income plan. So we have it set up to where once she turns 70 that she'll have an income plan that she can't outlive. It is adjusted for inflation. So you don't she doesn't have to worry about the rising inflation impacting her negatively. And then we left enough liquidity for her to still invest and to still take advantage of the market when it does rebound. So, I mean, these are things that we do for folks and are able to help people just plan better and have contingent plans because like you said earlier, nobody could have predicted that this little this little planet looking bug with spikes all over it called COVID, would impact the world in the way that it did. Yeah.

Producer:
And, you know, I mean, we sort of heard the rumblings of it in late 2019, early 2020, but it was very isolated just over in China. And you sort of think to yourself, oh, well, this is something that's over there. It's not over here. And it's it's probably fine because we've had things that pop up. You know, a few years ago we had a couple of different viruses in Africa that popped up and a few cases were here, but it never really became a thing. But then, you know, in our minds we were thinking like, Oh, we'll probably be okay. And then we weren't okay and the economy wasn't okay. And then it was, as you say, that snowball effect that really led to a lot of turmoil.

Mike Zaino:
And I think the big difference with this particular client is that the writing was on the walls, as it often is, but she read it and then she didn't just read it and not act. She read it and acted. She took action. We put a plan in place and it actually protected her. Whereas I have a lot of people that have been calling me up this year and said, Man, I wish I would have listened to you six months ago, man, I would have. I wish I would have listened to you a year ago. And so I'm not the one to ever say I told you so, because I just don't think that accomplishes anything. But the bottom line is, is you have to determine once you get into or close to retirement, how much of your nest egg you want to protect and how much you want to leave exposed. And so if exposed is not your thing, then then call me. All right? And we've got a plan. We've got a solution. One that will work for you, not against you.

Producer:
Yeah. And that conversation, folks, the initial conversation and consultation is absolutely free. Money matters with Mike. That's all spelled out. Money matters with Mike Dotcom. That's the website contact information there. And the phone number 7045601573. Well, Mike, the time has come and gone very quickly once again this week. We have a lot of fun and hopefully spread some financial education to folks as well. I look forward to doing it again next week and I hope you do, too.

Mike Zaino:
I absolutely do. And thank you, Matt, and thank you everybody out there for listening to this show. I mean, without you guys, we don't exist. So my number is not a secret, folks. Share it with people. If you know anybody that can take advantage and use this knowledge to better their financial situation, send them to our website. Money Matters with Mike. Again, I thank you so much from the bottom of my heart 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 money matters with mike dot com or pick up the phone and call 704560 1573 That's 7045601573 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. It 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. It 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.

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