Retirement Risks, Recovery, and Reality Checks

4.4.25: Audio automatically transcribed by Sonix

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

Speaker1:
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.

Speaker2:
Welcome to Money Matters with Mike, with your host, Mike Zeno. 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 Zeno.

Speaker3:
What's up people? Welcome to the show where we dive into the strategies, the insights, and the tools you need in order to secure a confident and stress free financial future. I'm Mike Zeno, and my mission is to help you protect your nest egg, outsmart retirement risks, and live the life that you've worked so hard to achieve. Whether you're nearing retirement or already enjoying it. We're here to guide you every step along the way. And boy, do we have a ton of great information for you today. On today's show, we're going to discuss how you can start building a much more secure retirement. And we'll talk about what working with a financial professional who actually has your best interest at heart, actually looks like. 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, sir?

Speaker4:
I'm doing great, Mike. Yeah, I was looking at, uh, you know, all of our our rundown for the show today, and I'm like, oh, we're going to have to, like, speak at double time just to get it all in.

Speaker3:
This, uh, this show is packed for with, uh, with so much great information. So, you know what? Let's let's not delay. Let's get in because I want to get all of it covered.

Speaker4:
That is right. Yeah. Absolutely right. I will, uh, do away with the fluff, but we do want to say thank you so much to our listeners. That's not fluff for listening to us. Anytime and anywhere you can listen, whether it's on the radio in the Carolinas or via the podcast. Yeah. Your favorite podcast app. That's where to find Money Matters with Mike. Just search for the show there, subscribe and like it, if you will. We'd appreciate that. Also check out Money Matters with Mike comm. That's the website for the show. Uh, go to YouTube and search for Money Matters with Mike. Same on Facebook. You can connect with the show there as well, and don't hesitate to reach out because, uh, Mike Zeno, he loves answering your questions. And you can reach out to him a couple of ways. You can go to the website. As I said, Money Matters with Mike comm, or you can call him at area code (700) 456-0157 37045601573. Mike, you just you just love helping folks. And that's the reason that you do what you do.

Speaker3:
It is the reason I do what I do. And you know, whether it's planning for retirement, uh, exceeding expectations in retirement. We can help you with the planning, the risk management, the estate planning and a whole lot more because building sound financial plans is what we do best.

Speaker4:
Absolutely correct. And of course, coming up on the show, as Mike mentioned, why you need a smart inspection of your retirement plan and your financial plan. We'll talk about exactly what that means, a smart inspection of what you've got going on now and then, hopefully how you can improve on that plan. Also talk about a backup plan for Social Security. Do you have one and why you need one if you don't, and also what retirees fear the most? Yeah, it's even more than death itself. And we'll get to that coming up here in just a bit. First, though, let's get into it with our quote of the week.

Speaker5:
And now for some financial wisdom. It's time for the quote of the week.

Speaker4:
And this week's quote comes from Mark Twain, an author you might have heard of once or twice in your life. But he said this the secret of getting ahead is getting started. The secret to getting started is breaking your complex, overwhelming task into small, manageable tasks and then starting on the first one. It's like it's almost like, you know, how do you eat an elephant, Mike? You know, one bite at a time, right?

Speaker3:
One, one bite at a time. And I was really struggling at first until I had an epiphany about how I was going to relate this quote to our show, and especially after everything that has happened in the market this year. Heck, this week, Matt, a lot of people are concerned and, you know, after a market crash, getting started can feel impossible. Fear, uncertainty and regret can actually paralyze us, making recovery itself seem impossible and very, very overwhelming. And that's where Mark Twain's wisdom comes in. Okay. Today I want to show you how his simple principle applies to rebuilding your financial future after a downturn.

Speaker2:
Hungry for something to chew on? Here's some meat on the bone.

Speaker3:
The truth is, financial recovery isn't about making one big move. It's about taking smart, steady steps forward. So let's dive in. The first part of his of his quote said, the secret of getting ahead is getting started. Well, after a market crash, many people feel frozen. And it's because of the fear, the uncertainty, the regret over lost investments that can lead to inaction. But the key to recovery is not dwelling on what happened, but instead taking decisive action. And as an example, instead of focusing on those past losses, you need to focus on what you can control, which is reassessing your financial plan, cutting any unnecessary expenses, or adjusting your investment strategy. Okay. The second part said the secret to getting started is breaking your complex, overwhelming tasks into small, manageable tasks and then starting on the very first one. Well, because a financial crisis can feel overwhelming, that makes it real tempting to either do nothing and hope that it just goes away, or take drastic, emotionally driven actions like pulling out of the market entirely. Instead, breaking recovery into smaller, digestible steps right? Make the process much less daunting and more effective. So let's talk about some of the steps that we can take. We said assess the situation.

Speaker3:
Well that means you need to review your portfolio. What assets do you still hold? How have they been impacted? You need to understand your cash flow. Do you need to adjust some of your spending? Do you need to increase some of your savings? Do you need to pay down debt a little bit more aggressively? And then it's a good time to, you know, give yourself a checkup from the neck up when it comes to your risk tolerance, has your comfort level with investing changed a little because of recent downturns? It might be time to rebalance some of those investments, right? If your portfolio is out of alignment with your long term strategy, rebalancing just makes sense, right? And that may mean reallocating assets to reflect your new risk tolerance, uh, especially given market conditions. So if you panicked and sold investments at a loss, then you need to consider a structured plan to be able to re-enter the market rather than just waiting indefinitely. And then obviously, at least it's obvious to me. You should probably adjust your your spending and your savings plans. So if necessary, cut those discretionary expenses to free up more money for savings or more money for investment opportunities. And then you should maintain or even increase your contributions to your retirement accounts while asset prices are low, they're on sale.

Speaker3:
Okay. And that allows you to take advantage of future market rebounds. So historically, market crashes have always been followed by recoveries. And if you're in a position to invest now, might actually be an opportunity to buy those undervalued stocks or assets at a much lower price than they were even three months ago. And then there's the tried and true dollar cost averaging, which is investing gradually over time, which will help you reduce risk and avoid trying to time the market, but above all, seeking professional guidance if you're unsure about your next moves. Consulting with a financial professional to create a strategic recovery plan just makes sense. And just like Twain's quote says, you know, the hardest part is getting started. But once you take that first step, no matter how small, you start to build momentum. And instead of seeing financial recovery as an insurmountable challenge, treat it as a step by step process, focusing on steady, disciplined actions that will get you back on track. The market crash may have been out of your control, but how you recover from it is entirely up to you. Matt.

Speaker4:
Yeah, that's absolutely right. I love that because, you know, it's it's the things and this is true in in life in general. But it's very true when we're talking about finances and money, especially the financial markets. You can't control what happens in the markets, but you can control how you respond to it. And you know whether the markets are up or down. Um, the way that you react to whatever is going on is going to be, uh, paramount. And one of the key things there that you've mentioned, Mike, in kind of using a little bit different words, was kind of not to react, but to sort of, you know, take that step back and say and assess the situation first and then go through those different steps to make sure that you don't take any sort of, you know, reactionary, uh, measures to, um, completely upend your financial life and then make the situation all that much worse.

Speaker3:
Yeah. We've talked in the past about the difference between reacting and responding. Right. Reacting to things has kind of a negative connotation. Think of a reaction to medication. Right? Normally not good. But if you respond to medication puts you in a much, much better situation. So that same analogy can be played out in the financial crisis that we're seeing ourselves go through at the moment.

Speaker4:
Nuclear reaction is another one that I can think of that's not not quite so good. Positive. Yeah. No, uh, don't want to be doing that. So. Yeah, absolutely. And folks, you know, they're uh, uh, sort of the end of that little section of the show Mike was talking about. You got to take that first step. Sometimes it's the most difficult to take. A lot of the time it's the most difficult to take. But the first step is actually really easy. And it can be anyway if you just, you know, make up your mind to do it. And all you got to do is just go to Money Matters with Mike comm. It's money Matters with Mike comm. That's the website. And there just click on the contact page and send Mike a message. You can ask him questions or you can say, hey, I want to sit down for that initial consultation. It's free of any cost and any obligation to continue on. You're only going to work together if you mutually decide that it's the best thing for you to be doing. All right. So money matters with Mike comm is the website. You can also give them a call (700) 456-0157 three 704 560 Zero. 1573 is that number? And of course, Mike, the kind of the first step that you go through with people after you kind of get to know them a little bit, a little about their situation is what we call a smart inspection of their plan. And that's really such an important thing because you, you know, to know where you're going, you've got to know where you're starting from, right?

Speaker3:
Yeah. No doubt for every listener that reaches out as well as all of our clients, right. We review each and every single one of your accounts. So if you have an IRA, if you have a 401 K, if you're a federal employee and have a thrift savings plan anywhere that you hold assets, including cash, we can review all of those things and assess your current account balances as well as your fee structures. And then we'll ask questions and answer questions. I should say, as far as how much you've been able to save for retirement, what you're currently paying in fees for, the management of those funds, and many people that we work with are absolutely surprised. Shocked, right. By the amount of fees that they're currently paying. They had no idea that they were actually paying what they were paying because they thought they were paying X. But with a lot of those hidden fees that are layered in, we can point those out. We'll review your rates of return over the past 12 months, the past three years, the past five years, and see if if you're happy with them. Or perhaps you're thinking you could have done a little bit better. And then we're going to determine the answer to the question whether or not you have an income gap which is not good, or an income surplus which is much more favorable.

Speaker3:
Will x ray any type of pension plans you have, including annuities, and determine the best personal pension options that are currently available for you to help you protect your hard earned savings. And then this is a big one. We'll determine if you have a tax problem. A lot of people are overly exposed in tax deferred accounts, which means that you have a ticking tax time bomb that could explode in you on you in retirement, which is never a good thing, because we want to kick Uncle Sam out of your retirement plan. Having him as a retirement partner is is not beneficial to you. And of course, we can provide you with a Social Security maximization report that will show you how to best maximize your Social Security earnings in retirement. Because we do have some tips and tricks that will help you take advantage of everything that you're entitled to so that you can enjoy some additional income in retirement. And like Matt said, all you have to do is call (700) 456-0157 three or go to Money Matters with Mike comm to take advantage of the complimentary offer today, because we love helping and working with our listeners. Matt.

Speaker4:
Absolutely do. And that's really what the show is all about, is, is being of of help and of service to the listeners. So hey folks, once again, that website Money Matters with Mike comm and the number (704) 560-1573. You can reach out today. And, um, you know, Mike, you were talking there about among all of the different, um, things that that you were discussing about an income gap versus an income surplus, for example, one of the things that you kind of determine when you start working with people is if that is the case and whether that's likely to be the case for them in retirement, which one of those scenarios they might fall in. And of course, you want to have that income surplus, not the income gap, because you want to have more money than month, right? You don't want to have more month than money. You also want to have more money than lifespan. You don't want to have more lifespan than money. And that really, you know, boils down to or comes down to the thing that we're going to talk about next, which is what retirees fear the most, and it's running out of money. I mean, even more than than death itself. We've seen that in survey after survey, right?

Speaker3:
It is. I mean, the last thing that that you want is a plan that you say, you know what? None of my people have ever lived past 85. And so your plan gets you to age 85, and then it's happy birthday. You're 86 and broke, right? That's not a good plan. So we want to make sure that no matter how long you live. Because people are living longer. All right. That your money is accounted for and you have plenty of surplus instead of, you know, gap. We don't want that at all. And so, I mean, I think it's a valid fear. It is a very valid fear because of all the stuff that can potentially impact that to the negative. Let's talk about Social Security cutbacks. Did you know that in 1940 there were 40 workers per retiree? That means 40 people paying into the system for every one person taking out, and today there are only three workers per retiree because the largest generation in our history, the baby boomers, are retiring at record paces and that ratio is expected to become 2 to 1 by the year 2050. All right. That's huge right there Matt. What do you think of that?

Speaker4:
Yeah. It's amazing how, you know, the system was set up to run a certain way and with a certain dynamic being true in society, which is, you know, there were a lot more workers than there were retirees. Well, as our lifespans have gotten longer, as life expectancy has gotten longer in the country, it's really kind of flipped on its head. It hasn't turned a complete, you know, 180 there, but it's almost. And so, you know, it just makes it a lot more difficult. And that's why because, you know, you look and and read the headlines, you know, is Social Security going to be on the chopping block. You know, are changes going to have to be made. And it's always kind of been the third rail of of politics to, to kind of, you know, do anything to Social Security. Uh, but, you know, unless something is done. Yeah, it could very well go away, at least in its current form. Um, so that's. Yeah, definitely, as you say, like one reason that this is a very valid concern, running out of money in retirement.

Speaker3:
And I think what really perplexes me is, you know, there's been arguments for and against the privatization of Social Security. And that freaks a lot of people out. But you know, the most you can pay into the Social Security if you're at the highest, you know, income is like 10,000 and change. It's not a whole lot of money. And then the most you can withdraw from it, if again, you paid into that for 35 years is like 4000 and change. So that's pretty significant. But if I would have taken that same $10,000 a year that I pay into the system and did that for 35 years in the S&P 500 index, for example, instead of, uh, $4,100 or whatever, the the maximum amount that you can draw is like, I could get a check for $30,000 a month if I had just put it into the market and let it ride, right? So, I mean, there are definitely arguments for some radical changes, and hopefully America will understand the why behind whatever they end up doing.

Speaker4:
Yeah, yeah. And of course, you know that on both sides, as you said, there is their concern, cause for concern no matter what the the changes are that people want to make. So anytime you talk about changing Social Security in any way, people hold on. Wait a minute. I've paid into this for so long, I've got to get my benefits, you know, and it's and completely understandable. Um, and then, you know, I mean, one of the things that we also talk about, um, when we talk about Social Security and, and it's, um, you know, health or lack thereof going forward is that taxes are probably at some point in the future, going to have to go up to be able to shore up the funds for Social Security. That's one of the things that, uh, you know, could have to change, um, on the, I guess the the incoming side of Social Security rather than the outgoing side of Social Security.

Speaker3:
Matt, are you saying the government can change the rules on us?

Speaker4:
I mean, you know, they've been known to do that.

Speaker3:
I mean, historically, though, people think we pay a lot in tax, and we do, but we really don't. If you consider the historical tax rates right, they're much lower than what they used to be. And so with the increasing national debt, with the increasing, uh, or, you know, the, the just the shortfall of Social security, many experts believe that taxes are going to have to go up in order to meet the nation's budget requirements. And then you staple the inflation on top of that, where cost of living adjustments have reflected a 14.6% inflation rate just over the last two years, with a lot of experts believing the true inflation rate, uh, has been much higher than that. That's just the one. They like to package and tie a bow on and present to the American public.

Speaker4:
Yeah. Look at what this has done for you. And yeah, you know, it has been erased and that a lot of people working in the private sector haven't seen a raise, I'm sure, in over that time period, unfortunately. But has it actually kept up with the real cost of living? Not so sure. Um, and then, you know, we're talking also about market crashes. That's another reason, Mike, that that people are concerned that they could run out of money in their, um, retirement years. And, you know, I mean, you talked about what's happened in the markets just this past week. Um, we saw that after the big tariff announcement boom, you saw the markets just really tank in one day. Um, you know, as we say, what goes down must come up really in the markets. But it could take some time. And if you're one of those people who, um, you know, is is about just right on the cusp of retiring, you're looking at that and you're sweating bullets, you know.

Speaker3:
No doubt. And so those folks may want to consider reducing the risk that they're taking with their current portfolio. Because did you know, right, that from the year 2000 to the year 2002, that three year period right there, the S&P actually saw three straight years of decline, right? In 2000, the market lost 9.1%. In 2001, the market lost 11.9%. And then in 2002, after what happened in nine over 11, the market lost 22.1%. Um, and that doesn't even account for what happened in 2008, when it lost 37%, in 2018 when it lost, uh, you know, 4.4% in 2022 when it lost 19.4%. And what has happened so far this year? Ouch. Yeah. There are many people who are overly exposed and need to get their boat a little closer to the pier. When it comes to a risk, um, standpoint.

Speaker4:
Yeah, and I was actually just checking, um, the S&P 500 as of the time that we are recording this show. Um, the S&P 500 down, uh, year to date, almost 7%, uh, since the beginning of January to till the time of this recording. So, yeah, it's, um, pretty scary. And so, you know, it's people do get, you know, very concerned. They get, you know, a few more gray hairs, an ulcer or two when they look at the S&P 500 sometimes. But as we say, if you do have time on your side, you've obviously got more time to make it up. But that's the reason why if you are closer to retirement, take some of that risk off the table. And that way you don't have to worry about it. A few, you know, less gray hairs, uh, maybe, but no doubt.

Speaker3:
Right. Portfolio balances going down quickly, um, can absolutely devastate those people who are in the retirement red zone, those 5 to 10 years immediately before and the 5 to 10 years immediately into retirement. So preservation of assets is key in order to fund a long and successful retirement plan.

Speaker4:
Yeah. Absolutely. Right. And folks, if you want to take some of that risk off the table, if you think that you are in a place where your portfolio needs rebalancing or your, um, you know, you're just too exposed to the risk in the market, go to Money Matters with Mike comm. Just go there. Uh, click on the contact page and you can send Mike a message, even if it's just to ask a question or if it's to schedule that free consultation. There's no cost. There's no obligation. Money matters with Mike comm is the website once again. Or you can give them a call directly at 7045601573704560 1573. And yeah, you'll you'll be speaking with Mike Zeno directly there. You're not going to get lost in some big phone tree where it's, you know, if you know your party's extension, please dial it now. And please pay attention, because our options have changed and all that stuff. No, that's going to connect you directly with Mike Zeno. 704 5601573. So, Mike, you know, we've been talking a lot here, of course, about Social Security amongst all of these different kind of sources of income and reasons that people are concerned about their, um, money in retirement and running out of it in retirement. So that really calls into focus here. You need a backup plan for Social Security. Uh, as you often say, you know, you want it to be the cherry on top. You don't want it to be the thing that you rely on. It doesn't need to be the ice cream sundae. It needs to be just that cherry on top, right?

Speaker3:
No doubt. I mean, it's a major source of income for 60% of current retirees. And that's according to a Gallup poll done just last year. So when you consider the dwindling trust funds, a loss of buying power due to inflation and the political tension threatening the program's future, how confident can you really be with Social Security to help support your retirement? Because inflation can take its toll on Social Security, the program's cash shortage could lead to benefit cuts, right? But there are things that you can do. You can receive a Social Security maximization report to determine the best time to file benefits for both you and your spouse. If you're married, you can supplement your retirement income and help make up for any of those retirement income gaps by establishing your own personal pension. So listeners who contact us receive a free portfolio analysis, as well as a retirement income plan so that you can make sure you are financially secure and not dependent on Social Security. Matt.

Speaker4:
Yeah, that's absolutely correct. And what you don't want to be is dependent on Social Security as your primary source of income. And again, money matters with My.com is the website there. And Mike, you know, just in the last couple of minutes that we have remaining here, talk a little bit about how folks can max out that Social Security benefit. You know, if it's going to be the cherry on top, it might as well be a big fat cherry on top of that ice cream sundae. So, uh, how can people maximize that benefit?

Speaker3:
Well, I mean, step one would be to make sure that you're working a minimum of 35 years because the Social Security Administration takes your highest 35 paid years in the labor force into account when calculating your monthly benefits. So if you don't have 35 years, you're going to substitute a lot of zeros for those years that you don't have. And you know, also years that you're making the most money you've ever made in your life before are going to supplant the years where you're making a couple grand, you know, as your first couple of jobs way back when, right? You can earn an income that's equivalent to or greater than the wage cap. Well, what does that mean? Well, there is a wage cap when it comes to Social Security taxes. That level varies from year to year. In 2023, that cap was $160,000. Uh, so income beyond that threshold wasn't taxed. That's not exactly attainable for a lot of American public. But what is attainable is delaying Social Security. Okay, as long as you possibly can to have those delayed retirement credits and then not forgetting that we can help you establish your own personal pension plan that you can never outlive. Right. That in and of itself is not going to change because you've created it for yourself. And if you need help, whether that's improving or starting on your own income plan, just pick up a phone and give me a call. (704) 560-1573 or visit Money matters with Mike. Com.

Speaker4:
It really is that easy, folks. (704) 560-1573 or go to the website Money Matters with mike.com. Well Mike that's going to do it for this edition of the show. But as always, thank you, sir for everything you bring to the table. And we'll do it again next time.

Speaker3:
Matt, thank you for everything you bring to the table, but most importantly, heartfelt thank you to all of our listeners. Because without you, whether you're listening to us on the radio or on podcast, no matter where you are in the globe. Without you, we don't have a show. So whatever you're doing this weekend, I hope you enjoy it to its fullest extent. And as always, make it a great day.

Speaker2:
Thanks for listening to Money Matters with Mike. You deserve to work with a licensed financial and insurance professional who can offer strategies for protecting and growing your hard earned money. To schedule your free, no obligation consultation, visit Money Matters with Mike. Com or pick up the phone and call 704 560 1573. That's 704 5601573. Not affiliated with the United States government. Mike Zeno 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.

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