When planning for retirement, a lot of people think they have more money than they actually do. That’s because the focus is on a big nest egg number, rather than income during their retirement years. We discuss that dynamic, plus Mike reveals the thing retirees fear more than death itself.

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6.2.23: Audio automatically transcribed by Sonix

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

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

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on each and every week. And today is no exception. We are absolutely bringing the heat again. On today's show, we're going to talk about maximizing your income sources during retirement and suggest strategies that you can implement this summer to help you make the most of your golden years. 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 well, Mike. I just have to say, though, that I have a little bit of an out of body experience every time I look at the calendar or hear that, you know, it's getting to be summertime, it's kind of crazy. I feel like we just started the new year of 2023 and it's flying by.

Mike Zaino:
Yeah, You know that old adage, the years fly by, especially as you get older. That holds true, my man. Because I remember that when I was a kid, we. It seemed like summers seemed to last forever, right? Oh, yeah. And, you know, by the time school was starting, you couldn't wait to get back to school because you were tired of, you know, either doing a summer job or just tired of being bored from there, being nothing to do because you'd already done it. That's not the case anymore, right? As adults, they just seem to fly and fly and fly. And, you know, children are growing up and they're getting graduated from, you know, higher education. Some of them are getting married. Some of them are popping out babies. I mean, it's just like it just seems like the days just fly by. Fly by fly by now.

Producer:
Yeah, it's very true. I mean, and they go faster and faster. My niece is going to graduate college before long, and I can't believe it. It's just a little insane. But we've got a show that is going to fly right on by before we know it here. We've got a lot to get to today. I wanted to mention, though, of course, everybody listening in, not only right around Fort Mill area, the greater Charlotte area as well. Thank you. Thank you. Thank you. This show would not be here without you. So thank you so much for listening not only on the radio, but also listening to the podcast. And yeah, you can subscribe, get us wherever you listen to podcast. We are also on YouTube. The the traction there keeps keeps getting more and more each and every week. So just a lot of great highlights from the show, special content there. And Mike, I know one thing that you are really passionate about is interacting with the listeners on Facebook. This is, you know, something that is also happening more and more and really kind of taking off for us.

Mike Zaino:
Yeah. So when we post our stuff and we try not to be the company that sends stuff every single day and just lights you up, right? We're only posting maybe one, two, maybe three things on the odd week, but it's amazing when I see interaction with our listeners, right? People are asking questions, they're commenting and they're making suggestions. They're reaching out through private message. All of these things are fun for me because I'm the one that's engaging with you guys, right? And so if there's anything that you have that you may want to see on an upcoming show or learn about on an upcoming show, just jump on the Facebook page and and let us know about it. And we'll be sure to incorporate that in a future show.

Producer:
Absolutely. You can also go to MoneyMattersWithMike.com that is the website Money matters with Mike all one word.com or you can give Mike a call at (704) 560-1573. And you can do that as well and get in touch with us to receive the free report we have for you on bond replacement. Some alternative investments for the bonds that you likely have inside your portfolio that have just not been doing well over the past year or so. And you can actually eliminate the fees that you're paying on maybe 40%, maybe even more of your retirement savings. So once again, MoneyMattersWithMike.com is the website. So what is the number one fear of retirees? Well, we're going to tell you coming up here in just a bit in the show. Also the biggest mistake that people make when planning for retirement. We will talk about managing your decumulation phase. Why that? Is so important for retirees and exactly what we mean when we say the decumulation phase. But first, let's get things started off here, Mike, with our Quote of the week.

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

Producer:
And those aforementioned words of wisdom this time around come from a motivational speaker, world renowned, motivational speaker, author and life coach, I should say. Tony Robbins, who has really been an inspiration to so many people worldwide. And he said this once, quote, Working because you want to, not because you have to is financial freedom. Boy, that hits the nail on the head.

Mike Zaino:
Yeah, it does hit the nail on the head, Matt And I remember listening to Tony Robbins when I was back in my 20s that when he was, you know, he was just coming up as well. And he inspired me back then. And when he says that working because you want to rather than because you have to, is financial freedom. That's due to the several reasons.

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

Mike Zaino:
Number one, you're able to pursue your passion and personal fulfillment because when you have achieved a level of financial stability that allows you to work on something that you genuinely enjoy and are passionate about, it brings a sense of fulfillment and satisfaction. Financial freedom enables you to choose a career or pursue other projects that align with your interests, with your values. And that in turn, gives you a much greater sense of purpose in your work. It also grants you the ability to have more control over your professional life. You are not solely dependent on a paycheck to meet your basic needs in order to sustain your lifestyle. And that independence allows you to make decisions based on your personal goals, your aspirations, rather than being driven solely by a financial necessity. In other words, you have the freedom to choose the type of work, the hours and the projects that you want to undertake. When you have financial freedom, you also have the option to design your work schedule in a way that promotes a healthier work life balance so you can prioritize personal and family commitments without feeling compelled to work long hours or take on jobs solely for monetary reasons. And that flexibility enhances your overall well-being and quality of life.

Mike Zaino:
Right? It also provides a safety net when you have financial freedom that allows you to take calculated risks, explore entrepreneurial ventures. You have the financial stability to invest in your own ideas, whether that's starting a business or pursuing opportunities that might have higher potential returns, but also carry higher risks. Okay? And that freedom to take those risks can lead to increased innovation, personal growth, the potential for greater financial rewards in the long run. And overall, it gives you peace of mind and it reduces stress, right? Financial freedom alleviates the stress and anxiety that often is accompanied with living paycheck to paycheck because you have the confidence and security of knowing that your basic needs are met and that you have a financial cushion for unexpected expenses or emergencies. And that peace of mind allows you to focus on your work, your relationships and your personal well-being without the constant worry about financial stability. So the bottom line is it just provides an opportunity to align work with personal values and interests, the ability to enjoy a more balanced and fulfilling lifestyle. So I love that quote by Tony, because working when you want to, not because you have to, is financial freedom.

Producer:
Yeah, going back to work in retirement because you have to just to make ends meet is not a place that that you want to find yourself. And yeah, I mean not, you know, not having to do that and making sure that you plan ahead, that you have your ducks in a row, as it were, before you are entering retirement does give you that peace of mind, like you said, and that, you know, peace of mind, less stress, less anxiety, all of that is going to mean a better quality of life for you in your later years. It just it just is it it is.

Mike Zaino:
And unfortunately, you know, I've witnessed all too often the people who retire on a motion or they retire just because they're eligible to retire and they're like, I'm out of here. I'm done. Right. And then they find out, unfortunately, a 6 to 8 months later that they shouldn't have retired. Why? Because they have more month than money and they didn't plan properly. They didn't have a plan in place prior to them pulling the trigger of retiring. And turns out they couldn't afford to retire. And so those folks are forced to go back to work. That is not a pretty picture.

Producer:
Yeah, it's really not. And that's why having a plan is so, so important. And it's got to be a plan that's tailored for you because, you know, everybody's situation is completely different in retirement. There's no one size fits all retirement plan. So if you go to MoneyMattersWithMike.com or if you call the number 704 5601573, you can get in touch with Mike Zaino. You can talk about your particular situation and Mike can do a deep dive for you, get things figured out and maybe there's a better plan out there for you than the one you have right now. If you have a plan at all. And if you don't get one because that's that's the thing to do. As we say, planning. I know a guy important. Yes, exactly. I know a guy. And he's he's right here with me. And his name is Mike Zaino go to MoneyMattersWithMike.com. Well Mike, I guess one of the reasons here that people might go back to work in in retirement is you know goes hand in hand with just not not being prepared, not having enough money in retirement. And they kind of find that out the hard way and sort of this fear, maybe maybe they're not there yet, but they have this fear of running out of money later on in retirement as they sort of draw down that that nest egg. Right. So this survey that was done by AIG recently actually really revealing. Tell us about what this survey found. Was the biggest fear for retirees.

Mike Zaino:
Yeah, it wasn't death. And that's kind of shocking. They feared, number one, running out of money, according to 59% of the people who responded to this survey said that they fear running out of money more than they fear death itself. And so, you know, that just goes to show again, you should not retire until you know your net numbers and, you know, unequivocably beyond a shadow of a doubt, you can afford to retire no matter what curveballs life throws at you.

Producer:
Yeah. And you will get some curves, you'll get some sliders, you'll get some knuckleballs, you'll get fastballs in the over the middle of the plate and you'll hit those, you know, way out center field. So, you know, it's all like a game of baseball sometimes. You never know what's coming next. And you don't have the the privilege of seeing the seeing the calls by the catcher there all the time. It's always going to be a surprise. So what are the solutions here, Mike? I mean, what can people do to allay those fears that they have about running out of money? And again, even fearing that fearing the the, you know, possibility of running out of money in retirement, even more than death itself.

Mike Zaino:
Yeah. So I think that the number one thing people can do is is try to go into retirement as debt free as possible. The happiest retirees that we see don't have a mortgage payment. And when you think about it, the mortgage payments alone, they can consume a lot of your monthly Social Security benefit. If Social Security is even around in the state that it currently is in the future. Right. A lot of people who don't have pensions through their employer, your place of employment and might have either a 401. K that they're going to have to depend on as one of their legs of their retirement stool. They might consider creating a personal pension through the use of a fixed indexed annuity. And what that does is it helps them beat inflation and is able to create lifetime income that pays them a personal check made payable to them or directly deposited nowadays into their bank account each and every single month that they know and can have faith in will never outlive. Okay. As long as they're alive, that check keeps coming. And guess what? If they pass away and they still have a balance left in the IRA, that we've set up that's fueled by that fixed indexed annuity, then the insurance company does not keep the rest.

Mike Zaino:
They actually pay it out to whoever you're named, beneficiaries are. And the bottom line, I think, too, for all retirees is that no retiree should spend more than roughly 4% of their assets on an annual basis. And there's a rule, it's a loose rule and a guideline called the 4% rule. Right? And so if you think about this, 4% of your money will last 25 years. And that's just simple math. Four times 25 is 104% times 25 years would be 100% of your money. But that takes into account two very bold assumptions. Number one, your money's not growing. And more importantly, number two, you're not losing anything due to market volatility. Well, with a fixed. The annuity as an example. We have solutions where you can not lose any money, right? You're only participating in the gains of the market. And so by virtue of removing that variable from the the equation, your money will last much longer than 25 years as long as we are adding to it and not detracting from it.

Producer:
Yeah, that's very true. And then that 4% rule, obviously it doesn't doesn't take into account inflation and all the other things. And as we've seen over this past year or so, you know, inflation has really caused a lot of headaches and even worse for people all across the country. So, yeah, definitely an important thing to to consider. And, you know, that's why you should, you know, reach out to Mike Zaino for that that free consultation, get an inflation proof retirement there.

Mike Zaino:
Yeah. And people like safety, right? I know there's a lot of safe options that are out there. The problem with safety, safety is easy. It just doesn't come with any decent type of return. You're typically trading a reasonable rate of return for the safe environment that your money is is placed into. Well, again, with that fixed indexed annuity because you're not participating in the market and you're in your linked to a market index, I should say, you have zero risk. So you actually can get reasonable rates of return, 4%, 6%, 8% in the occasional years, double digit returns while still having the security blanket that the worst you can do is zero. And so that's why so many people, as they near retirement, are looking at these types of of options for them and their financial security through retirement. Yeah.

Producer:
Growth and security in the same package there. That's definitely something to consider for you and your retirement and this actually goes right into something that we also wanted to bring up here, Mike, is that there's a big mistake that people make when they're planning. And that is I sort of alluded to this a minute ago. They get in in their heads about building up this big nest egg like they have maybe this magic number, whatever it is, you know, some big number that they've always had this, this, this target on. And they want to reach that goal. And that's all they're focused on. Um, that's, that's not really where your focus should be when it comes to planning. Yeah.

Mike Zaino:
All too often people are so focused on the accumulation phase that they have zero plan or have overlooked to plan in detail the drawdown, the decumulation, the preservation and the distribution of their life savings. So I remember, you know, when I think it was fidelity that used to have the commercials, this has probably been ten years ago or so where people would follow a green arrow walking down the road and above everybody was this these, you know, just rolling numbers of what their big, you know, retirement nest egg number would be. And at the time, I thought it was genius. You know, how cool is that, right? Everybody has, you know, a goal that they aim for, a goal that they try to push toward. And once they reach it, it's great. Okay. But if you haven't put together a plan for how you're going to spend that money, okay, People actually make the mistake of thinking that they have more saved for retirement than they actually do. Because don't forget, especially if you're saving in tax deferred accounts like 401. Ks, 403 B's, Thrift Savings Plan, IRAs. These are all tax deferred, meaning you haven't paid the piper. Uncle Sam wants their cut. Right, Or his cut, I should say. And so whatever your number is, it's not all yours. Somewhere between ten. And as it stands now, 37% of that belongs to your greedy uncle. So you owe the government taxes every time you take a distribution and they can tell you when to take them too. If you never need that money, you're going to have a thing called required minimum distributions. Now, thanks to the Secure Act 2.0 that went into effect this year. Okay, the age is 73 for those who are not already taking their mandatory distributions and eventually by the year 2033, that will be phased out another two years to age 75. So again, it's a huge mistake thinking that just having a number without having an income plan is going to get you through retirement.

Producer:
Yeah, the month to month is really what matters. You don't want to have more money or more month than money. Rather, you want to have more money than month. And especially true, you know, we talk on occasion here on the show about, you know, sequence of return risk. You know, when you get into your retirement red zone kind of time, which we talk about five years before retirement. Or so. And then the first five or so years into retirement. Mike, talk to us about how that can affect you and your your retirement picture. Because a lot of people are saying, oh, well, you know, when I when I retire, then I'm just, you know, I've got my I've got my my nest egg or my whatever. I've got my plan and I'm just going to be drawing that down. And whatever's going on in the market, that's I don't know, that's maybe not going to affect me. But it does.

Mike Zaino:
It does affect you. We talked about this on on on shows before. I refer people to what is known as the lost decade. And that was the first decade of the 2000. Right. And so the first three years, the market saw significant declines in in returns of the S&P 500. And then we saw a few years of growth before 2008 hit and everybody was walloped. And it was followed by another year of growth. And so when you look at those years, the the ten year, you know, point in a period of time had a -9.1% return. So if you retire and you all of a sudden experience consecutive negative downturns in the market and your money is exposed to that risk. I hate to break it to you. It'll never last you as long as you're going to need it to. So if you are in the retirement red zone, which again is either those five years immediately preceding or the five years immediately in retirement, you know, please give us a call so that we can test the strength of your plan if you have one. And if you don't have one, what are you waiting for? Let's put something together. It won't cost you a penny.

Producer:
And you can start that process by going to Money matters with mic.com. That's MoneyMattersWithMike.com. Or give Mike Zaino a call. 704560. 3704560 1573. Three factors here, Mike, as we talk about, you know, planning for retirement, the plan that you want to put together for folks, the plan that you know will work with our listeners on when they do give you a call or go to the website. Three things that are a focus here are to be fee efficient, market efficient and tax efficient. So we use that word efficient a lot there. Talk about those three aspects and you know why it's so important to be efficient when it comes to fees, when it comes to the market and when it comes to tax efficiency.

Mike Zaino:
Well, mean first and foremost, maximizing efficiency is just good business sense, right? It's also good money sense. And the reason being and you want to be fee efficient is a lot of folks don't understand how much they're actually paying in fees. Okay. And fees can erode the overall value of your portfolio and especially if you add them up over time. So you may have an advisor that's charging you X, whatever X is and you think, Oh, that's not that bad on a, you know, yearly basis. But when you've been with that advisor for 20 to 30 years and you start adding up that percentage as a total of your portfolio, you'll find that you've paid that advisor, you've put their kids through college basically. Okay. Another thing is bonds, right? Everybody understands stocks that's buying shares in in companies. And that's kind of sexy Bonds. That's boring. That's not sexy. All right. That's that's just the income portion. And you're not going to see that until way at a future date in time. You should never pay fees on the bonds you hold. All right. You are able to generate more income with a fixed indexed annuity. And for that portion of your portfolio, you will pay.

Mike Zaino:
Get this zero fees. You should never overpay for an underperforming asset. So that's being fee efficient. You want to be market efficient as well. And there are ways that you can eliminate risk by moving some of your money out of the market and into that fixed indexed annuity. Again, that offers you market linked gains without the market linked risk. Okay, so market efficiency, we have solutions for that. And then taxes. Okay. Nobody wants to pay Uncle Sam more than their fair share. So you're able to divest. That means kick the IRS out of your retirement plan by having a tax plan and consider implementing either a Roth IRA or doing what's known as a Roth conversion to systematically move money from tax deferred accounts over into Roth accounts, paying the taxes at a known rate so you don't run the risk of the government changing the rules on you. And then once that happens, the money that's in those accounts, guess what, folks? It grows tax free for the rest of its life. So fee efficient, market efficient and tax efficient. Those are three of the you know, the efficiencies that we will talk about in our plan that we design for you.

Producer:
Yeah, and that's one of the reasons really, that people do need a comprehensive retirement plan. There are a lot of reasons, though, even going beyond that, that people need a plan that's built for them. Talk about, you know, if somebody's listening today, Mike, maybe they tuned in for the first time and they're hearing all of this, you know, talk about retirement planning and making sure that you have everything lined up in a way that's right for you. What should they know about why they need a plan that is comprehensive for.

Mike Zaino:
Yeah, yeah. So, so a lot of people, when they think about finances, they just, they just think about the money that they've got coming in and the money that they've got going out. They don't think about all the things that that, you know, financial professionals are going to, you know, have encompassing everything in a 360 degree view. We find that a lot of people, like I just mentioned a minute ago, they think retirement planning is about just rate of return. Building that one big nest egg, they forget about having an income plan. And so as a result, we find that so many people we talk to that have up to 40% of their portfolio in bonds. They have no clue about those bonds, which again, are making up in many cases 40% of their portfolio to help provide income in retirement. And another thing we find that way too many people have no plan whatsoever for health care expenses and how they're going to address those as they age. And folks, this is a problem. As we age, our bodies tend to break down. Right. And the closer we get to mortality, the more stuff tends to degenerate. So in our experience, many people haven't even thought about what they want to do when every single day is a Saturday, right? And well as how they are going to finance and pay for what they're going to do when every day is a Saturday. So all of these things are discussed within our consultations and we make sure that you leave feeling confident in the plan that we've generated for you.

Producer:
And that is a great way to get started, is with that full retirement plan consultation and it is free. When we say free, we mean free. I mean it's free of any cost. It's also free of any obligation. It's not like, you know, you're signing your life away to Mike Zaino and he's going to you have to work with me now for the rest of your. There's like, you know, one basically in your initial interaction with somebody, it's kind of like getting to know you sort of a situation and then you'll take a deeper dive, right? And that's how in that process you decide if you both want to work together, it's got to be a mutual thing.

Mike Zaino:
Yeah, there's got to be it's got to be obviously, you know, some form of of, you know, symbiosis. Right? We've got to gel. I mean, I'm pretty blunt in what I say. I don't mince words. And my goal sometimes is just to shake people a little bit, right. To shake the rattle their cage and get them to wake up. Because unless they start looking out for themselves, nobody else is going to do it for them. So, you know, inside of the comprehensive plan, we're going to try to see what you're paying unnecessarily in those fees that I just discussed. Right. See if we can save some of that money for you. You know, if you're close to either Social Security or Medicare, we'll do deep dives into the many ways and the many strategies of of employing, drawing Social Security and the different combinations of Medicare. That makes the most sense for you. And we're going to compare your current situation to what's possible when you work with us, because, you know, you got to remember it's your money. And if it's important to you, it's important to me.

Producer:
And if you want to get started down that road and at least explore what it would be like to work with Mike Zaino, get that plan started and underway. Go to MoneyMattersWithMike.com. That's all one word MoneyMattersWithMike.com or call (704) 560-1573.

Producer:
It's time for this week's problem solver.

Producer:
And we have reached that portion of the show where I present a problem to Mike Zaino, as I so often do, and he solves that problem for me. This time around, Mike, we're talking about in our Problem Solver segment, you know, a lot of people who own variable annuities don't really understand them. I mean, they might think that they do, but they don't necessarily understand that their principal is at risk in the stock market. They don't understand they're paying 3 to 6% in fees. They don't understand they're paying an income rider fee just to have their their own money paid back to them. So what's the solution for for that lack of understanding?

Mike Zaino:
Yeah. So education, right? I mean, that's people should understand what they're buying. The people selling them should, you know, should explain them in a way that their people understand what they're buying. And I think that annuities get a bad rap because of the fact that either the person selling them did not do a good job explaining them or the person purchasing them did not understand what it was they were purchasing. Right. So I think the solution from a variable annuity, the word variable just means change, right? That means it can go up, it can go down. And, you know, I like to call them variable annuities because people should be afraid, be very afraid of variable annuities. They're good for younger folks for a period of time, but not necessarily as good for those pre-retirees and retirees because the last thing those folks can afford to do is lose money right before they retire. So I think the solution would be to consider a different type of an annuity to better protect and grow your wealth. So we believe that your money should be working as hard for you as you did for it. Right? And so a fixed indexed annuity can both protect and grow your wealth. So think of it like Goldilocks and the Three Bears. All right. That's a great comparison that we've used before in the show. The variable annuities, they are way too hot because they're in the market. They are at risk. There are huge fees involved with, you know, the variable annuity. The fixed annuity is the opposite end of the spectrum. So it's way too cold.

Mike Zaino:
It almost is like a bank CD. It's going to pay a fixed interest rate. Traditionally, it is a low interest rate. You know, now that the Fed has raised their interest rates, they've come up a little. But, you know, that's short term, right? So they're going to come back down. It's not beating inflation regardless of what the Fed does. And you're getting extremely low interest fixed for life. But a fixed indexed annuity is just right, because when you have your money in an FIA, again, you only participate in the gains of the market. You have none of the downside of being exposed to the dips in the market. So when the market gains, you get a credit, When the market goes down, you don't lose a penny. So imagine going to Las Vegas and sitting down at a table where the, you know, the dealer says, Hey, at my table, you can only win if you win. I'm going to pay you out. If I win, we'll just push. Okay. That is very similar in theory to the way a fixed income or excuse me, a fixed indexed annuity is is operated and you have the ability to design it for or ask for it to be designed, whether it is for growth, whether it is for income, immediate income that lasts you the rest of your life, or if you don't need the income now, but you may need it in five, six, seven years, ten years, then we can do a combination of growth and then income. And the best part about them, folks, we have very low to zero fees.

Producer:
Yeah. And that is, you know, as we talked about a minute ago, a very different scenario than those variable and annuities where the fees can just be really high. Once again, go to MoneyMattersWithMike.com if you want to explore that opportunity MoneyMattersWithMike.com or call 704 5601573. Now you know Mike a lot of people might be in this sort of planning phase for their retirement and not necessarily realize as they get out their crystal ball that they are not going to have enough income in retirement. We talked earlier earlier about the importance of focusing on income and even just in our Problem Solver segment just then, you know, talking about fixed indexed annuities. Adding that that income that you cannot outlive the income for the rest of your life, no matter how long your life might be. But the way that people go about, you know, sort of if they try to go it alone, maybe willy nilly kind of planning. Okay, yeah. I've got money in my 401. K, whatever. I'll be fine in retirement or I'm going to have Social Security and that'll get me by. Well, that's not that's not really a plan. And if you plan that way in air quotes, then you're going to have holes in that plan that need to be filled. You're going to have an income gap, probably.

Mike Zaino:
Yeah. An income gap means that you have more money than money. You have a lot of expenses and you don't have enough money coming in each and every single month to fund those expenses. And so you're having to spin plates, right? You're having to juggle bills to decide which ones need to get paid this month, which ones can afford to be pushed till next month. And that's just, you know, stress inducing anxiety inducing. It's not the way to enjoy, fully enjoy your retirement golden years. And so, according to an HP Foundation study, 62% of baby boomers believe that Social Security would have provided at least half of their income during retirement. And the sad truth is, is that when you're working, you're making a lot of money or you should be making a heck of a lot more money than when you retire and you're only counting on Social Security. And so your Social Security benefits alone are not going to be enough to maintain your standard of living, most likely because the average monthly benefit is only $1,542 a month, a little over $18,000 a year. The maximum monthly benefit if you're 62, which remember, is giving the government a discount because you don't even get 100% of your of your you know, what you're owed is 23, 64. Or think of it on an annual basis as 28,000 in change. And if you wait all the way until age 70, the maximum benefit that you can draw is just under $4,200 at 41, 94 or $50,328. So the sad reality is, is that while you're working, it's here. When you're in retirement, it's here. That's why we want to develop a plan to maybe have you sacrifice a little bit more here, save a little bit more on this side so that the the drop off is not nearly as significant in retirement. Yeah.

Producer:
And and the two shall meet, you know, and hopefully that is the case and that is the goal. I mean just waiting you know between the ages of 62 and 70, you're nearly double your monthly income and your and your annual income from Social Security with that max benefit. You know, in our example there, that is a real eye opener, I feel like for a lot of people.

Mike Zaino:
Yeah. And so, you know, one of the biggest pieces of advice that I can give folks is before they decide when to turn on Social Security, they should absolutely go to the doctor and ask for a very comprehensive physical. I'm talking about, you know, have them draw enough blood to run every blood panel known to man. Have them scan your brain, your heart, your lungs, your liver, your kidneys to make sure that you don't have anything going on. Have them do a plaque test and see how much plaque you got built up in your arteries. Have them stress test you. Why am I telling you to do that on a financial education, radio show and podcast? Well, I'll tell you why. You're going to make decisions, financial decisions that will impact the rest of your life. And how many people can you even think of or maybe you've heard of who have retired and then within a year or two, they drop dead. Most of them didn't know they had anything going on. And had they known right, they might have made different choices, different decisions, number one, on how they spent their time and number two, how they spent their money.

Mike Zaino:
So if you do that and you find out that you have, you know, something going on that is treatable, awesome, you can treat it, take care of it, and then, you know, to expect you can combine the data you get from the medical community with your own knowledge of your family history. So if all of your people, you know, drop dead in their 70s, then you might want to consider taking your Social Security at the earlier ages. But if all of your people are like the women on the wife's my wife's side of the family who just refused to die, they're all well into their 90s, you know, with all of their faculties for the most part. You know, you might consider delaying as long as possible. So lots of different ways to to to when you should draw Social Security. But I think a very, very, you know, important thing to do and just paramount that's why we harp on it so much is to go get that comprehensive physical and ask them to do everything that I just asked you to ask them to do.

Producer:
Right. And that is super important because that same foundation study that we were mentioning earlier found 76% of retirees say that income stability is a top concern for them in retirement. I mean, that is that's huge. And so when we say retirement income gap, what exactly do we mean kind I kind of break that down. I mean, obviously, more more money than month is where you want to be. If you've got a retirement income gap, you've got more month than money, unfortunately. But what does it say when we break it down further than that? Mike Yeah.

Mike Zaino:
So so really what we're talking about are your core expenses. So the money you spend on food, the money that you spend on clothing, the money you spend on your rent or your mortgage, the money you spend on taxes, what you spend on health care needs, Right. We're going to add those core expenses to your discretionary expenses, which means, you know, going to eat out every once in a while, going to the movies, going to catch a ball game, going to play a round of golf, whatever you do for entertainment, as well as maybe purchasing some of the things that you may want you don't necessarily need, but you say, hey, you know what? I don't need a new set of golf clubs, but I sure would like a new set of golf clubs because hopefully that will improve my golf game, right? I don't need my 48th pair of shoes, but maybe just having that 48th pair will make me walk a little bit differently. So those are the wants. So when you add your core expenses to your discretionary expenses and then you subtract your guaranteed income sources, not the ones that fluctuate, but you're guaranteed income sources. So pensions from work, Social security and or income streams, whether they're rental income or anything else that's going to equal either a retirement income gap or hopefully it's the other way around and you have more money than month and that gives you a surplus. But if you do have a gap, you know, we've got some solutions for that as well. Yeah, there.

Producer:
Are a few things here to suggest that you might want to consider to fill that retirement income gap. And number one, Mike, is to make sure that you are saving money during your high earning years. If you've gotten a big if you've if you've been in your job for a while, if this is your career, if you've been with the same employer for a long time, chances are you've gotten raises over the years. So now you are in a higher earning year. So then that translates to hopefully putting more money aside for your retirement. Yeah.

Mike Zaino:
So all too often people have lifestyle creep. That's what it's called, right? So they make more money, so they elevate their lifestyle and they end up spending more money and they find that they're still, you know, living close to, if not paycheck to paycheck. Instead, you know, maybe you take home every third raise that that you do and you make sure that you're investing in saving, you know, the two raises beforehand because you just want to make sure that you have enough. And especially if you're in like corporate America or in any normal job where you have an entry level, a mid-career and then, you know, management level, if you're in those upper levels, you're commanding higher salaries. That gives you the opportunity to put more money away so that your future self can. Thank you.

Producer:
Yeah, absolutely. So and you know, future you being very grateful to present day you is a very good thing and so yeah make that make that your goal for that to happen. Also you know review your monthly expenses for any extraneous payments those things that you that you don't necessarily need and maybe some of those things as you were talking about a minute ago, Mike, that you want but that you might could either hold off on or go some other route.

Mike Zaino:
So so one of the the biggest eye openers for a lot of folks in our consultations is when I ask them to bring in their last three months of their credit card statement and their bank statements. Right. Because what they're what we're going to find is we're going to identify their spending habits. And when we see how much people are actually spending in in just fat, you know, just the stuff that doesn't really make sense. They're going out to eat six times a week. You know what I mean? When they could buy groceries and cook at home and save themselves, in some cases 40 to 70%, or they like spending a lot of money on entertainment and they do it a little bit too often. It's hindering their ability to. A save for the future. So reviewing your monthly expenses for all those just extra stuff that you're doing and we can eliminate that stuff. We've just found money that we can divert towards your future. You and we can save and we can invest that money. Yeah.

Producer:
And also another way to fill your retirement income gap. We just did a deep keep using this term today, but we did a deep dive into this one so we'll go into depth on it again. But consider delaying Social Security for those reasons we mentioned. Also, review your investment and withdrawal strategy. We've been talking about this, but it's it's good to to reiterate, you know, don't just set it and forget it necessarily. Like the old infomercial said, maybe, you know, set it, maybe don't think about it for a little while and then don't forget it, review it.

Mike Zaino:
So so, you know, in my speaking engagements, people that are working and they're participating in, you know, their company is 401 K or TSP or 403 B, I'm like, Yeah, you just go in there and you set it and forget it, right? And everybody's like, Yeah. And I'm like, No, don't do that, right? You don't set it and forget it because you know, things change. Your plans should be ever evolving as your circumstances change, Meaning when you get paid more, save more. You know, when you have a baby, you're going to have some other things in life. When you're preparing for that baby to go to college, you're going to have some other things in life when you're, you know, going out of your starter home into your middle aged home or your forever home, you're going to have some different circumstances. And all of that should be taken into account inside of of your plan. So you need to make sure that you're reviewing that investment strategy. And then when you're retired, reviewing how you're going to draw down to make sure that it will stand the test of time.

Producer:
Yeah. And that is the you know, one of the most important things is making sure that you have that income that is going to stand the test of time that's going to last you for the rest of your life. And that's where you can establish that income stream that you can never outlive. And when you get there, when you get to retirement, when you start drawing down on those investments, when you start taking an income from those those sources, that is what we refer to, Mike as the decumulation phase, right? I mean, you've been accumulating all the these years and now you're in that decumulation phase. Talk to us about that phase of your life and your your retirement and why it's so important.

Mike Zaino:
Well, I mean, think about it. So so when I'm in my 20s and I'm straight out of school, right? I have a long time to go before I'm retiring. In fact, I'm not even thinking about retirement, Right? I don't think about retirement in my 20s Most people don't think about it in their 30s. In my experience, what I have found is most people start thinking about it and then get serious about it in their mid to late 40s. And man, if they had only started a little bit earlier, your time horizon is so much longer. If you start in your 20s and go to your 60s, right? That's 40 plus years of having that money work for you and then you have the ability to have the power of compound interest work in your favor so that you have a much larger nest egg. Now, on the flip side, when you retire in your 60s, or maybe you're fortunate enough to retire in your 50s, but typically you have a much shorter investment horizon, right? Because you are drawing down. And unless you're going to live another 60 something years after you're already in your 60s, which not that many people do, okay, then you need to have a plan to make sure that you're not running out of money. And I'll give you an example. The soaring number of baby boomers that are entering and approaching retirement. That's leading to a major shift in focus right from the building phase, the accumulation phase and retirement savings to decumulation the drawdown and a focus on retirement income. And so the problem is, is that most people approaching retirement today are uncertain how they'll manage their retirement assets and generate consistent income without outliving their money, like we've already discussed, is the number one fear for almost 60% of retirees.

Producer:
Yeah, and that is obviously obviously a big fear. And, you know, I mean, people need some some assurance and some reassurance that they can overcome that fear. You know, we've we talk about safety a lot. We talk about those reassurances, those guarantees for retirement a lot. So in the last we're kind of getting close ish to the end of the show here. So don't want to get. Early too into the weeds. But talk about the sort of solution for that decumulation phase because people are, you know, maybe a little bit confused about it, looking at it years on ahead. Let's say you're not in that retirement red zone just yet and you're just sort of, you know, planning for your future a little bit more in the abstract. Like we tend to when we're farther away from a goal. So talk about the Decumulation solution here.

Mike Zaino:
Yeah. So so we actually found some research from the Stanford Center on Longevity that looked at lots of different ways that investors could potentially assess and combine a mixture of investments as well as insurance products against different retirement income goals. And they evaluated systemic excuse me, systematic withdrawal plans for investment portfolios and annuities, and they compared it against the following criteria. Number one, the amount of income. Number two, the access to their savings. Number three, the pre and post retirement protections that their choices afforded them, whether or not they were protected against inflation, whether or not they had lifetime guarantees. And one of the key findings from their research was that from a purely financial perspective, believe it or not, annuities often provided a higher yearly income as compared to systematically withdrawing down on their investment assets. And I think people should pay attention because, you know, Stanford, that's a pretty good school.

Producer:
I think they probably know what they're talking about. As human beings, we like to sort of be in control at all times. I know that that's sort of my like, you know, human nature. And I think some people might have kind of a bit of a misconception, Mike, in their in their mind of, well, okay, if I have this maybe this big nest egg of money like we've been talking about in my retirement, then I can choose I can be in control every month, how much I draw down and all of that. But it's sort of backwards thinking because you you set yourself up for potential failure when you do that. Because if you are trying to be in control in retirement, you're focusing more on, okay, what are my my needs or my wants necessarily this month or right now? And you could very well overspend and find yourself with a decumulation phase instead of lasting years. Maybe it lasts months. Who knows? It's just kind of like a, you know, throwing it against a wall and see what sticks kind of retirement.

Mike Zaino:
Right. And hoping we've we've discussed this before. Hoping is not a strategy. Flying by the seat of your pants is not a strategy. You need to have a plan. You need to have confidence in the plan. The plan needs to evolve as your as your circumstances change throughout your career. So whether you're mid-career or late career pre-retiree or already retired, that plan needs to suit each and every single one of those situations, along with the circumstances that are accompanied with that progression through life. So that is why it is so important and why we harp on it so much to where if you don't have a plan, if you need a second set of eyes, a second opinion, think of it this way. If you go to the doctor and you get diagnosed with the C-word, most people are not going to say, okay, they're probably going to go get a second opinion, if not a third opinion, a fourth opinion, a fifth. I had a guy that went to nine different eight different doctors and the eighth doctor said, did they know what kind of cancer you had? And it was amazing to me because he he went through and got all this research and said, no, if you would have done what they'd had done, that you'd been dead okay, within a matter of time. And now, believe this or not, stage four cancer. A year later, he is cancer free because he got those extra opinions.

Mike Zaino:
So if you have a plan, look, let me put my eyes on it. If you're in good shape, I'll tell you, keep doing what you're doing. You're doing great. Your advisor is doing great for you. Okay. But if I see any areas that we can improve upon that puts you in a better situation. I'll make a suggestion. I'm not a strong arm guy. I'm not going to twist your arm off and beat you over the head with it and be like, Buy now, do this now. These are suggestions. I don't care who gets your money, whether it's your church, your children or your Chihuahua, because I won't take possession of your funds. I'll just facilitate movement between companies and companies so that you don't have to pay those exorbitant fees that you're paying right now. So, I mean, if that is something you're interested in, please reach out. I don't care if you reach out on money matters with Mic.com. I don't care if you reach out on Facebook, you know, just by searching money matters with Mike. I don't care if you email me at Mike at MoneyMattersWithMike.com. I don't care if you call or text me at (704) 560-1573. I am in this to help put people in better situations and if that's you and you're ready to make a change, reach out.

Producer:
And those Chihuahuas, boy, you got to watch out for them. Once again, folks, the website is MoneyMattersWithMike.com.

Producer:
It's this week in history.

Producer:
Some big events this week in our history Mike and a historic moment this date in 1953. And by this date we mean June 2nd 1953. As we look at dates from throughout the weekend here, 27 year old Elizabeth. The daughter of King George, the sixth was crowned queen of the United Kingdom by 1953. She lived, of course, until just last year. She was on the throne, ruling over 32 different sovereign states during her time, 15 at the time of her death. And boy, she was just something else. It's almost surreal that she has has passed on because obviously the only the only person we've ever known to be queen of England.

Mike Zaino:
Of England. Right. What what an iconic person when it comes to, you know, the the the you know, I don't even know what you call it, the matriarchy, I guess you would say the the aristocracy in Britain, another icon on this date in 1935. We're going to switch genres and go into sports. American professional baseball player Babe Ruth retired after playing 22 seasons of major League Baseball for the Boston Red Sox. He wasn't remembered for them. He was remembered for the New York Yankees. He was nicknamed the Bambino, the Sultan of Swat, regarded as one of the best athletes across American culture. He had 714 home runs. He had almost 3000 hits. He had just over 2200 RBIs. And he was inducted into the Hall of Fame, the Baseball Hall of Fame, in 1936.

Producer:
Yeah, well, mean and yeah, known definitely for his time as a Yankee. Of course, the old Yankee Stadium, the house that Ruth built. So there we go. Also another baseball reference here, because in 1941, on June 2nd, American professional baseball player Lou Gehrig died only 37 years old. Of course, he was famously diagnosed with what's now known as Lou Gehrig's disease. It was ALS, which it's also still known, but Lou Gehrig's disease, because he was sort of the earliest, most famous person to be diagnosed with it. And he really set a bunch of records in the MLB as well, All playing for who?

Mike Zaino:
Playing for who?

Producer:
Oh, Oh. I think maybe that team up north again. Maybe the Yankees.

Mike Zaino:
Perhaps the New York Yankees. Yes, sir. 17 seasons, two.

Producer:
Greats there for the Yankees in our This Week in History segment. Well, that was just going to just about do it here, Mike, for this week's show. It has come and gone quickly, as predicted at the top of our proceedings here today. I thank you, though, sir, for all that you do. And we'll talk to you again next time.

Mike Zaino:
Matt, thank you so much for everything that you bring to the production of this show and setting me up to, you know, to kind of just hand out all the information. I want to put a special thank you to our listeners without you out there. We don't have a show, right? So if you know anybody that could benefit from what it is that we talk about each and every single week, share our show, please share it with them. But whatever you're doing this weekend, I hope you do it to the fullest extent. 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:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

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