Tariff Tantrum: How to Stay Calm and Protect Your Nest Egg

4.18.25: Audio automatically transcribed by Sonix

4.18.25: 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. And whether you're nearing retirement or already enjoying it, we are here to guide you along every step of 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 retirees can navigate tariffs, inflation and market volatility. And as always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matthew, how are you today, sir?

Speaker4:
I'm doing great, Mike. I've been I've been, you know, super busy here lately with everything that's been going on. And I often have the thought I said, you know, if I am busy, I think Mike Zeno is probably about 5 to 10 times as busy as I am.

Speaker3:
Yeah it is. It has been a busy season. Uh, you know, tax season has, uh, somewhat concluded for all the filers that, uh, had to have their returns done and, and postmarked by April 15th. So we've been doing a lot of annual reviews for folks who needed just to make sure all their financial ducks were in a row. So, yes, ten hour days are not a stranger to me over the past several months.

Speaker4:
Yeah, I bet so. Well, you know, I hope that our listeners this weekend are taking it easy, wherever you might be, listening to us on the radio in the Carolinas, or if you are listening to us via the podcast, wherever you might be, uh, if you're in Timbuktu or Texas, you can be listening to us on the podcast wherever you get your podcasts. We really appreciate you because as Mike often says, you know, without you we do not have a show at all. So thank you, thank you, thank you. Um, from the bottom of our little hearts here. Um, also don't forget, go to the website. You can engage with Mike Zeno there. Go to Money Matters with Mike comm. It's money matters with Mike comm. A lot of stuff there. Uh, where you can find out, you know, all the information about Mike and the different services that he provides for folks and can provide for you as well. And also past episodes of the show. We've got, you know, links to the YouTube and all of that there where you can find highlights from the show and some special content. Uh, also go to the Facebook page. You can, um, you know, go there and interact with Mike. And, um, you know, he loves to talk to listeners, engage with listeners there on social media as well. And I mean, really, Mike, that is what it's about. You know, the show is about helping folks and and really all kind of different arms of the show, whether it's on social media or on YouTube or anything. It's all about just helping people and really helping them just navigate their finances.

Speaker3:
It absolutely is, Matt. And folks out there listening. If you learn anything from any of my shows, please do me a favor and do your fellow people a favor by sharing the content across all social media platforms. And that way, you might even want to tag some of your best friends so that they can, uh, be guaranteed to see it. But go ahead and like our channel or our pages on across social media, subscribe to the information. That way you don't miss a thing because rising tides lift all boats.

Speaker4:
Absolutely right. And of course, once again the website is Money Matters with.com. You can also give Mike a call if you have any questions or if you'd like to schedule a free consultation. We'll talk more about that whole process as we go along in the show today. But you can give them a call at (704) 560-1573. (704) 560-1573. All right. Well, as Mike said, we got a lot coming up here on the show. And we're going to talk about the tariff tantrum that's been happening on Wall Street here in the last couple of weeks. And we'll look at some data and kind of give you a little bit of, of grounding, a little bit of context as far as what is going on here in the markets. And then we'll talk about how retirees have been reacting and to kind of talk about maybe what moves to make or maybe not to make during a time of uncertainty like this. First, though, let's get started 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 the one and only Oracle of Omaha himself, Mr. Warren Buffett. And he said this. Never test the depth of the river with both your feet. If you don't know how deep it is, don't just just dive right in.

Speaker3:
Yeah, I've, I've seen actually, unfortunately, I've seen people get hurt by diving into water without knowing the depth of it and end up, you know, being paralyzed for the rest of their lives. That happened to a classmate of mine in high school. So, yeah, it's very, very important to understand how deep the water you're jumping into is. And I think it is especially important in terms of financial planning and retirement planning, because his quote speaks directly to protecting your life savings as well as your future lifestyle.

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

Speaker3:
Retirement, folks, is not the time to gamble at all. And so, you know, there are several things I want to point out. And the first of which is simply diversifying. In other words, do not put all of your eggs in one basket. And I know that cliche has been heard and kind of run through a zillion times, but let's talk about the wrong approach. First off. Right. That might be somebody who's just retired and they take their entire 401 K and they move it into a hot tech stock that they heard about from one of their neighbors. Okay. That would be the wrong approach, folks. While a better approach would be to diversify across stocks, annuities, cash, and then maybe only allocate a smaller percentage to those riskier assets if they still want to have some growth potential. That way, they are not standing in the deep end with both of their feet. Matt, what do you think about that?

Speaker4:
Yeah, you know, that's very true. I mean, especially I love how you bring up like, you know, maybe just a hot stock tip or like one popular tech stock or something that maybe everybody's getting into and all that at the, at the moment. But then you look at over these past couple of weeks, what has happened to, um, tech stocks really have been hit hard by the whole uncertainty surrounding the tariffs. And so, you know, if you are all in on one big tech stock, well, maybe that tech stock is going to be the one that does a lot of business in China or something. And then they're going to really be hit. And then that whole nest egg, or at least a huge chunk of it is going to be gone. And so you don't want to do that. You want to be, as you say, diversified across different asset classes so that you can, you know, weather whatever storm comes your way 100% right.

Speaker3:
The second thing I want to talk about is when it comes to income planning in retirement, the need to kind of test first and then commit where, you know, talking about a wrong approach, you know, somebody hears that bonds are the way to provide retirement income. Uh, and they've heard this because maybe their dad did it or parents did it, or maybe their grandparents or great grandparents did it. And so they dump their entire portfolio into bonds for income in retirement without understanding any of the terms or any of the payout structures. While a much better approach would be to use a part of their savings and allocated maybe to a fixed indexed annuity as part of their overall income plan. And then maybe, maybe, just maybe, they ladder multiple annuities over time so that they're providing themselves with multiple income streams across multiple years, or maybe even they combine those with other income streams, like a pension if you're fortunate enough to have one, or Social Security if it's still there by the time you get there. So, Matt, what do you think about that?

Speaker4:
Yeah. No, it's so true. I mean, we we have said this before on the show and I'm sure we will say it again many times. Is that the, you know, when it comes to retirement, having that, you know, one big nest egg is, is great and is a wonderful goal to, to have. But then how do you take that and turn it into income. Well you got to have a plan for that. You've got to make sure that you know how you're going to take whatever money you've you've saved up or invested or whatever over the years and turn that into income, because income is how you are going to, you know, pay those bills. Income is how you're going to be able to go on those big vacations and do all of the things that you want to do and, you know, really make sure that that money lasts for the rest of your life, no matter how long that life may be.

Speaker3:
Yes. Yes, absolutely. Planning is imperative. Okay. The number three thing a lot of people just have this idea that they want to retire. Uh, and some of them retire too early without first testing their budget. Okay. So in other words, a wrong approach. Maybe you quit your job when you're 60 years old, but you have no clear retirement spending plan or no idea of healthcare costs. And thinking, you know what? I'll just wing it. I'll figure it out as I go. Uh, because I've always been able to do that in the past, where a better approach might be to run retirement simulations, maybe work part time first to kind of test that water, or even do a practice retirement by living on your expected post retirement income for somewhere between six months to a year. That way you can identify any potential shortfalls while you still have an income source, and that gives you a way to test the water without committing and just jumping right in.

Speaker4:
Yeah, that's the thing. Yeah. You've got to be able to have a good way, um, to to sort of test things, dip your toes in, you know, before you, um, as you were saying earlier, you know, jump in and then maybe end up in a world of hurt, um, because it's, you know, if you have a way to, you know, test things, then you know, you're not you know what's coming, you know, what to more of what to expect. And, uh, you know, you know how deep the water is. And and there you go. You can, you know, again, it's all about what we talk about a lot on this show is proper prior planning. And part of that plan is testing things out and making sure that, yeah, the waters as deep as you, as you think it is.

Speaker3:
It is. And one another thing that I think a lot of folks, it's difficult for a lot of people to kind of wrap their brain around is switching from the accumulation phase into the, you know, income distribution and preservation phase. And so chasing yield, right. Those high returns that come with high risk and a wrong approach would be investing in just really high dividend stocks or maybe junk bonds because they have these really attractive yields without understanding the risk of loss of principal. And a much better approach would be sticking with a well-balanced income strategy, knowing and understanding that it is much better to earn a reliable 4% with safety than it is to chase those shaky double digit returns and risk everything. Matt.

Speaker4:
Yeah. You know, I, um, I enjoy going to a casino every once in a while, you know, but I don't I don't chase jackpots. You know, I try to get a little slow and steady wins along the way and just have fun, you know? I know that I'm paying for my entertainment by, you know, playing money down on a table or putting money in a slot machine or something like that, or at a video poker machine or something. But yeah, it's a little bit like what you're talking about here is you're sort of chasing those big jackpots, and along the way you're just kind of, you know, losing quite a bit of you're laying down a lot more money on the table than what you maybe had budgeted for. And it's not good. Preserve what you have, especially when your time horizon is a lot shorter. And that means, you know, the closer you get to retirement or in retirement, you've got a lot shorter timeline to deal with. So any losses, you've got a lot less time to make those up.

Speaker3:
Yeah, they're absolutely compounded. So I guess, you know, to wrap things up on my, you know, just cut wrap things up on my summation I guess. Yeah. Okay. All right. Ready? Yep. Yeah. Exactly. Matt. And just to kind of wrap things up on my summation of the Oracle's quote, you know, I've got a little bit of wisdom for retirees. Preservation is greater than speculation. Okay. In retirement, you're not in the accumulation phase anymore. You are definitely in that distribution and protection phase. And his quote just serves as a reminder to number one, be cautious. Number two, move much more deliberately. And number three, always leave yourself a way out.

Speaker4:
Yeah. It's so very true. Um, you know, you've got to be prepared for whatever might come. And that's just, um, you know, we're seeing it here lately in the markets. You know, you can't really necessarily predict what's going to happen in the future. Sometimes, you know, we have a good idea because there are cycles to the market and things like that. But you don't know exactly when the next phase of a cycle might come. Um, and you don't know when new tariffs may be enacted, for example, as we found out here recently. Or you don't know how. World leaders or or corporations or whoever are going to react. You don't know how investors on Wall Street are going to react. All of those different things. So you've got to be prepared for no matter what happens. And if you want a plan for no matter what happens, folks get in touch with Mike Zeno, go to Money Matters with Mike comm. That's money matters with Mike comm. That's the website. You can also go on the phone and actually, you know, instead of typing in the web address, if you would like, actually open up the phone app on your phone, it still works.

Speaker4:
And you can give Mike a call (700) 456-0157 three. That's directly to Mike Zeno. No, uh, you know, press one or press two, or, you know, our our options have recently changed or any of that stuff. Mike. Zeno's personal phone is 704 5601573. There's no obligation to continue on. The consultation is absolutely free of any cost or any obligation. As I said there. And speaking of those tariffs, Mike, you know the markets have reacted in a big way to them. It's been all over, you know, all over the headlines all over social media. People cannot avoid hearing about this lately. And um, it's been it's been a difficult period for folks who have been investing in stocks. And anybody with a 401 K or an IRA or a TSP or anything like that. You know, they're watching those portfolios. And I know that I have heard from several people who have been sort of anxiously checking those every day. And I just have to kind of tell them not to because it just you just can't do that. Um, because it's just you're in for a world of worry.

Speaker3:
Yeah. No, people are terrified, right? Just using a play on words there they are. Absolutely terrified of tariffs. Okay. And so, you know, I mean, heck, a couple of weeks ago, the markets saw over $6 trillion wiped out, which left investors in a state of shock. I think, myself included, I was like, what the heck is actually going on right now? You know, stocks lost 6.6 trillion in value on April 3rd and April 4th. And according to Dow Jones Market Data, the total stock market has lost around 11.1 trillion just since the middle of January. So yeah, people have a right to kind of at least be a little shook, but they should not react based on, you know, downturns, especially if they have a while to go before they are going to actually need that money. And so, you know, for those of you who are at least ten years away from retirement, this market downturn is actually a really nice opportunity for you to add more money to your portfolio. And think of it this way all of those shares are on sale right now. If, uh. Think of it in military terms. You're able to add soldiers to your army for pennies on the dollar. And therefore, when the market does turn back up, you're able to charge up the hill. Uh, so much, so much faster than than you would have had you not added to. Right. And then for other people, the the de-risking process should begin. Once you are within, say, five years away from retirement, that's when you really want to look at, um, taking some of your chips off the table, so to speak, and moving into a more predictable but secure financial, uh, uh, state of being.

Speaker4:
Yeah. No, that's absolutely right. Because, you know, the closer you get, as I as I mentioned a minute ago, the less time you have to make up for any losses that you might, um, have have experienced. And again, you know, and you've said this before on the show, Mike, is that, you know, if you let emotions get the better of you in a time like this and you end up selling when the markets are down, you've locked in those losses. And so it's it's not a good place to then be essentially kind of starting over from, you know.

Speaker3:
Right. No, I've had to walk uh, dozens of people, uh, back away from the ledge over this past few weeks just simply because they have a long time to go before they're going to need the money. And we don't want to react to bad news. We want to have their portfolios respond instead of reacting. And so, yes, you are absolutely correct. Nobody should ever make emotional decisions when it comes to their money, because even most professional money managers don't get it right both times. And so what most people do is they freak out when there's a loss. And so they sell low, and then they wait until the market comes back and they miss those, you know, those greatest days. And so they buy high and and and that is the opposite of what you're actually supposed to do. Right. We always hear buy low and sell high. And so when you allow your emotions to control your decision making process when it comes to finances, almost inevitably you are going to do just the opposite. And that's not good. Matt.

Speaker4:
Yeah. No, it's the as you said, the exact opposite of what you want to do. And you know, what you want to, to be doing as well when you get closer to retirement, as you said, is reducing that risk right from your portfolio. And then, you know, you can also there are different strategies that Mike Zeno can help you with. And that is, you know, to establish a personal pension. Um, I mentioned that earlier with a fixed indexed annuity. Is is a way to do that. And that creates a lifetime income stream. And it really is a kind of a simple strategy. But you got to know what you're doing, and you got to know that that option is there. And so, you know, if you would like to explore those options, those personal pension options for retirement, maximize that retirement income potential. Just give Mike Daniel a call (704) 560-1573 or go to Money Matters with Mike. Com so that Mike can help you out. He'd be glad to do that. Well, um, we got some a little bit of insight from the markets and their reaction to all the things that have been going on with the tariffs. I mean, essentially one of the big things is from my, um, experience, as you know, Mike, I used to be a reporter on the floor of the New York Stock Exchange when I lived in New York.

Speaker4:
And from my experience, the markets, they love certainty, you know, um, and there's so little of that in life, but they love it. And, and right now there's just a lot of uncertainty, you know, and sort of piggybacking on that, um, the, uh, chief investment officer of, uh, Brookstone Capital Management put out a note not all that long ago about kind of the things, a little bit of context around this whole, um, experience that we're all going through collectively right now. And it's kind of like what the basis of it is. Have we been here before? And all of that. So let's kind of run through a few of the highlights of what he said. Um, Mike and of course, we start off with the fact that this recent market sell off, of course, has been driven by the uncertainty of policy and the tariffs that have been, um, enacted and then taken away and then put back some of them and then taken away again. It's just a lot of, you know, kind of shock to the system.

Speaker3:
It is. And I think it's it's important to understand that it is not driven by financial system imbalances. And unlike 2008, the United States private sector is not facing major structural imbalances. Okay. The market is responding to the potential for downward pressure on corporate earnings. And possibly. A mild contraction. And history offers some useful parallels. Think about the euro crisis contagion of 2011, the oil crash back in 2015. How about the fed rate hikes as recently as 2022, during which time the equity market fell around 15 to 20%? And so we got to kind of just keep these recent things in the backs of our mind and understand that this too shall pass.

Speaker4:
That's absolutely right. I mean, you were talking earlier about kind of the quick market drop in the initial sort of aftermath of the big tariff announcement a couple of weeks ago. And, you know, some indexes dropped about, you know, 10% even in just a couple of days. And there have only been three other times that the market has dropped that quickly back in October of 1987. B7. Um, Black Monday was in 87, uh, November of 2008. We know what happened then. Um, and then March of 2020. We know what happened then. And so, you know, the they had quick sell offs there and it wasn't necessarily the absolute bottom of the market at that point. They came very close, but they were ultimately followed again, as you were saying, by higher prices, by gains. And that's why you don't want to, you know, sell when the markets are either at or close to their bottoms.

Speaker3:
Yeah. No matter how bad the news is, there is always a price at which you want to be a buyer. Okay. And this time is absolutely no different whatsoever. The situation remains fluid. And we're definitely going to continue to monitor market conditions.

Speaker4:
And so yeah, Mike, that is you know sort of a look at how the markets are reacting. But how are retirees and pre-retirees Retirees reacting to what's going on right now. Um, there was a fortune magazine had this article kind of looking at that very thing. And it's a it's a tough time for people who are, uh, you know, in retirement or near it because they've been hit by this sort of financial double whammy. Right.

Speaker3:
Yeah. Not only are their portfolios losing value at a time when they can least afford it, but they are also often people who are the least able to absorb much higher costs because they're living on fixed incomes. Right. Some pre-retirees and retirees are postponing large or nonessential discretionary purchases just in order to keep some of that liquid breathing room in their budget or spending plan. But with these new tariffs on the horizon, it is worth being intentional about spending. If you were already planning on buying goods, uh, from soon to be tariffed countries. For an example, any internationally manufactured car or truck, it might make sense to accelerate those purchases. And that's not market timing, that's just intelligent consumption. Matt.

Speaker4:
That's right. And I mean, you know, other retirees interested in sort of shifting strategies from concentrated stock positions to more diversified holdings. And of course, that, you know, makes sense. We've been talking about diversifying, right. And a mix of maybe US and international stocks, as well as some other asset classes like fixed indexed annuities, for example, to protect what you have already. And so now, right, could be this sort of ideal time to sort of just take a step back, take a look at what you have as far as market exposure inside your investments, and consider reducing that exposure. Consider reducing that risk if it, you know, exceeds the level that maybe might be recommended for you if you're working with a trusted financial professional right now, maybe they have recommended a certain amount of risk and maybe you're taking too much. Or if you're not working with someone, you should be working with somebody. And I happen to know a guy.

Speaker3:
Yeah. Instead of adhering to that rigid withdrawal rate. Right. Like the common 4% rule, retirees can consider adjusting withdrawals to take less during downturns. And Pre-retirees may also consider delaying retirement a few more months, or maybe even a year or two, because continuing to work, whether full time or part time, can also provide some of that much desired financial security until those markets stabilize. And I think it's really important to note, Matt, that, you know, we have fixed indexed annuity products that guarantee lifetime income streams that start in the six percentile, uh, go up as high as seven or even 8% payouts, and they will guarantee that you do not run out of money during your entire lifetime. So that 4% rule. Uh, that was designed to make sure that you don't run out of money, folks, if if you like the idea of maybe drawing down 6 or 7 or 8% and still not running out of money. We may have a solution for you. And so it's really important for you to take charge of your retirement and your financial future today. And as loyal listeners, we're offering you an opportunity to schedule a complimentary retirement and financial consultation with our expert team. Okay. (704) 560-1573 or reach out at Money Matters with Mike.

Speaker4:
Com is as easy as that. And that is going to do it for our time together this week. Mike has come and gone very quickly here. But uh, as always, sir, I thank you for each and everything that you bring to the table, all of your expertise each and every time we get together, but we'll do it again next week.

Speaker3:
Matt, thank you for what you bring to the table. But most importantly, thank you to all of our listeners. Whether you're listening to us on the radio in the Carolinas or anywhere across the globe on a podcast, if you learn something today, again, please share the content across all your socials and whatever you're doing this weekend. I hope you enjoy it to its maximum. And as always, have 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 704560 1573. That's (704) 560-1573. Not affiliated with the United States government. Mike 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.

Speaker4:
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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