Wall Street’s Wild Week: Why You Shouldn’t Time the Market

8.9.24: Audio automatically transcribed by Sonix

8.9.24: 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. 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.

Speaker3:
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 as 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 we are absolutely bringing the heat again. On today's show, we're going to show how protecting your investments during volatile markets actually can be done and as a bonus, will also show you how to terminate your partnership with the IRS in retirement. After all, no one wants them as a partner. 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 doing today, brother?

Speaker1:
I'm doing great. Mike. Do you mean to tell me that people don't like the IRS?

Speaker3:
I don't know anybody that does unless they work for them.

Speaker1:
Right, exactly.

Speaker3:
And I'm going to question that because I work with a lot of federal agencies.

Speaker1:
There you go. Yeah. I was going to say probably not even them. But yeah. No, it's a great, great topic to talk about. And of course, the volatility that we have seen in the markets this past week has gotten people a bit on edge about that. Part of what we're going to talk about too. So a lot of great stuff to get to this week. And yeah, I you know, I bet your people have probably been, you know, beating down your door and ringing your phone this week as after this kind of market volatility thing has been rearing its ugly head here.

Speaker3:
I have had several phone calls, uh, all week this week, especially after, you know, last Friday and then Monday, and then Tuesday was like a little bit of a reprieve, but then it's just been more of the same throughout the rest of the week. And so, you know, the peace of mind that I give to my clients is that not a single one of my clients lost one penny this week due to market volatility. So, um, you cannot put a price on that peace of mind that I provide for them.

Speaker1:
That is 100% correct. And folks, if that sounds like something that you're interested in, first of all, thank you for listening to the show. Uh, as Mike always says, without you listening, we don't even have a show, so we appreciate that. And secondly, you can actually schedule a 100% complimentary consultation with Mike Zeno to get you that peace of mind that he was just talking about. All you have to do is go to the website. It is Money Matters with mike.com. You can also give him a call 7045601573704560 1573. We'll share that number. Many, many times as we go on through things here today. Once again, I want to remind you as well. You can also listen to the podcast version of the show. Previous episodes are available on the website or in your favorite podcast app. We're on YouTube with video highlights. Just search for Money Matters with Mike there. And also, uh, hit us up on Facebook as well because, uh, Mike's very active there interacting with listeners and fans of the show. So basically, as I like to say, if you can't find Mike Zeno, you're not looking hard enough.

Speaker3:
That is absolutely true. And, you know, Facebook has been getting a jolt as of late. We hired, uh, another person to come on and help with, uh, the graphics and the postings. And so I love, you know, just answering questions and communicating in private, uh, on messenger with folks. But bottom line is, I'd love to meet with you and discuss how we can help you reach those retirement goals. And so building, you know, reliable plans for our listeners is what I do best. And we help people relaunch in retirement, not just retire.

Speaker1:
That's absolutely right. And you can give Mike a call once again, that number (704) 560-1573. Or you can go online to Money Matters with Micom. Well we've got a lot to get to here. Of course we're going to talk about that market volatility in just a moment and how you can protect yourself from it to take some steps here. If those recent events that have been going on, have you concerned the IRS is your partner in retirement, whether you know it or not, how you can reduce your tax burden in your golden years. That's going to be a big topic of discussion here as well. Also talk about some timing, how timing really isn't everything when it comes to the market, and why trying to time the market is never a good idea. Um, also some financial landmines to avoid and much, much more. But what do you say? Let's get right into it here with our financial wisdom. Quote of the week.

Speaker4:
And now for some financial wisdom. It's time for the quote of the week.

Speaker1:
And this week's quote comes from Neil deGrasse Tyson, who is an astrophysicist, an author, a science communicator as well studied at Harvard, University of Texas at Austin and Columbia. I think he's a pretty darn smart guy. So let's see what Neil deGrasse Tyson says. Uh, to inspire us today. He said this knowing how to think empowers you far beyond those who only know what to think. Boy, I love that quote.

Speaker3:
I love that too. And you talk about astrophysicist. I mean, yeah, this guy's pretty smart. So his quote means that understanding how to think, which means being able to analyze situations, being able to solve problems, and actually make informed decisions gives you a much, much greater advantage than just knowing what to think or following maybe what others say without question.

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

Speaker3:
So when it comes to financially preparing for as well as living in retirement, this idea, his quote is absolutely crucial because if you only know what it is to think, you just might follow generic advice like maybe, hey, you need to be saving 10% of your income in retirement. And while that certainly is good advice, it is not tailored to your unique situation. Instead, it's more of a one size fits all, uh, type, you know, solution. But if you know how to think, what you're going to end up doing is analyzing your personal circumstances like your income, your expenses, what your retirement goals are, what your life expectancy is based on, your knowledge of your family history combined with medical data. And you might realize that you actually need to save more than 10%, or that you might invest in specific types of assets that fit your risk tolerance as well as retirement timeline. And you might also explore different investment options, considering risk tolerance and returns, rather than just putting all of your savings into a standard type retirement account. And then when we're in retirement, actually living in retirement, you might have heard that, hey, you should use that 4% rule, which means that you should withdraw 4% of your retirement savings each year. And if you only know that rule, you might stick to that rule even if it doesn't suit your situation.

Speaker3:
But by knowing how to think, you could evaluate your spending needs, your investment returns, as well as potential risks, and then adjust your withdrawal rate accordingly. Okay, maybe you need to enjoy, uh, withdraw less to ensure that your money lasts longer, especially if you have, you know, extended longevity in your family history. Or maybe you have enough money that you can actually afford to withdraw more if your investments are doing well. So you're going to consider things like your health, your expected lifespan, the different market conditions, as well as other sources of income like social security pensions. If you're fortunate enough to have one, Uh, you know, 401 K or other employer sponsored plans to determine the best withdrawal strategy for you, and you could also think about ways to adjust your lifestyle or your spending plan if your investments are underperforming or if unexpected expenses, you know, pop up like they do. Life gets in the way sometimes, but in each one of those examples, being able to think critically and then being able to adapt to those specific needs, it empowers you to make better decisions and potentially achieve a much more secure and comfortable retirement. Matt.

Speaker1:
Yeah, no, you're absolutely right. It is all about putting a plan in place that's going to be tailored for you and of course, knowing how to think about all those different things that you just mentioned there, the different risks that go into financial planning, all of the different outside sort of factors that can affect your retirement plan. Um, you know, it really underscores the fact that that, you know, that you need to know rather how to think, not just follow some generic advice of, you know, you're my Uncle Jim, you know, did this and that was great. And yeah, well, it may have worked great for Uncle Jim, but you're not Uncle Jim. You know, your financial situation is going to be different, so know how to think about it. And what I'll say on top of that is work with a financial professional, like, say, Mike Zeno, for example, who can help guide you through all of these different things if you think, oh, well, that's just kind of overwhelming sounding to me. Well, it's not overwhelming to Mike Zunino because this is what he helps people with every day.

Speaker3:
Right. And one of the things I don't know if it's a gift that I have and it's just being able to take complex strategy, write complex terminology, and being able to break it down and explain it to where I don't care if you have a fifth grade education, you're going to be able to understand what it is that I'm talking about and more importantly, why it is that I'm recommending what I'm recommending.

Speaker1:
Yeah. And knowing the why is such a good thing for people because I think, you know, sometimes a lot of folks might have in their mind that if they go to meet with a financial professional, who's going to, you know, take a look at their particular situation and all this stuff, they're just going to get a lot of info and they'll kind of be overwhelmed and not really understand. But understanding is such a key because I love what you always say, Mike, is that, you know, yeah, knowledge is power. Applied knowledge really, truly is power, though, because unless you take that knowledge and then apply it, then you're not. It's not doing anything for anybody. But you know, you've got to have the knowledge. You got to understand it first.

Speaker3:
You definitely do. And you know, I don't I don't bash any other financial professionals, but there are those that will go out and try to make themselves seem, you know, like they know everything and and they talk and use of, of word choices. Um, that is a little bit over their clients head. And I think that there's, you know, a psychological reason that they do that. It just, you know, the people that don't understand, just trust that the person who's speaking does know what they're talking about. And so they just say, okay, do it. And I operate just a little bit differently. Again, I need buy in from my clients. And and really when we understand why it is, like I said, that we recommend what we recommend. Then people sleep very, very well at night. There are no restless nights.

Speaker1:
Yeah. And that's really what it is all about, giving people peace of mind that their future is going to be on solid financial ground. If you would like to get your feet on solid financial ground, go to Money Matters with Mike comm. That's a great place to start. Money matters with Mike comm set up that free consultation. And yeah, you know, people say nothing in life is free. Actually this is it's 100% free of any cost, any obligation whatsoever. You only work with Mike Zeno if you both agree that that is the good thing for you to do. All right. Money matters with Mike comm.

Speaker3:
Sorry about that, Matt. I meant to cut you off. Sorry. Um, I actually get, you know, the question all the time. What's the catch? And I'm like, there is no catch. This is a service that I provide. And the reason that I do it is because I've made every mistake that there is to make with money, um, to the point where in 2008, during that financial catastrophe. Right, I lost everything. And so I made it my mission to help as many people as I possibly could. Uh, after I got the education, after I got the licensing and the credentials to help people not make those same mistakes. So, um, you know, before I got into this industry, I was a well paid executive, made a lot of money, thought I knew a lot about money because I made a lot money, and I made some really stupid choices. And again, that is why I do what I do. So hopefully that resonates with folks. And you know, you take me up on, hey, just give me a call, reach out on the web. Uh, I'm human just like you are, but I'll make sure that you have peace of mind. And again, can't put a price tag on it.

Speaker1:
That's right. And that number to call, by the way, is (704) 560-1573 704 560 1573. Uh, once again, is that number and another reason I know, Mike, that you do what you do, and especially the way that you do it, because we've already mentioned this phrase a few times here on the show today is peace of mind, is to give people peace of mind and to give them that peace of mind in times like we've seen this past week is so crucial, because it's been kind of a roller coaster on Wall Street this past week. And, you know, I just want to kind of establish a little bit of the reason why. Um, if we can, as we start off our discussion on this, because, you know, I used to report from the floor of the New York Stock Exchange when I, when I lived up there and quickly found out that a lot of what happens in the markets just has to do with how people are feeling with investor sentiment. Exactly. It's it's such an emotionally driven thing. And really that is kind of what a lot of this week was, at least on Monday, you know, it's um, you know, after those July jobs numbers came out the previous Friday, it was, um, you know, something that that people were not too happy about.

Speaker3:
They weren't happy about it because, you know, they're talking about the potential of higher interest rates slowing down economic growth, which leads to the decrease in the confidence of the market. And that uncertainty is definitely causing fluctuations, uh, which makes investors nervous. Again, it's all about, uh, feel it's all about emotion. And so if we can learn to eliminate emotion and just look at data and facts, uh, you're definitely, definitely going to end up way ahead of the game. And, you know, as far as what you should do now, well, bottom line, it's natural for your risk tolerance to go down as you age. Or at least it should, unless you're just made of money and have very, very deep pockets. Um, especially if you are in the retirement red zone. Now, what do I mean by the retirement red zone, That is, you know, those five years immediately before you retire and the five years immediately in retirement? Okay. So if you've been in maybe a buy and hold type strategy, but you've been wanting to take some of the risk off of the table, well guess what? Now is actually a time to consider doing that, even with the fluctuations that we had, you know, July was still up, uh, you know, be at the end of the month. Um, so, you know, it wasn't a normal July, but it was still a positive return. So, you know, that's something that you should consider.

Speaker1:
Yeah, absolutely. I mean, you know, over time, uh, you know, the markets are going to go up. I mean, that's that's historically been the case. Obviously, you you can see that if you look at ever, you know, a historical chart of market performance over the decades that, you know, the US financial system has been kind of in its current form here. So, you know, if you're in it for the long haul and you are not investing with emotion, which, of course, as we say, you should not be investing with emotion at all, then, you know, that kind of gives you a good perspective on what the real scenario is and what it all has. You know, the, I guess, the what happens in the real world and what happens in the real world is, yeah, markets go up and markets go down. But over time, generally, they generally speaking they go up. So but then you might have people calling in and I'm pretty sure you do Mike calling and saying okay how do I then take part in the upside in the market? But how do I not take part in the downside? How do I protect myself from those days when you know the bottom drops out or God forbid, another 2008 happens or, you know, something like that? How do I then protect myself from all of that downside while still getting some growth? Because people need to grow the money that they've worked so hard for?

Speaker3:
Yeah. No doubt. So So, you know, we're really, really big fans of the use of a specific type of annuity. So don't freak out when I say the word annuity. Right. Um, not all annuities are bad. In fact, most annuities are actually pretty dadgum good. It's just those variable annuities that have, you know, crazy fees. And the word variable means they can change and go down. Um, I would stay away from those, especially as you're approaching retirement. But a fixed indexed annuity is actually a long term retirement investment vehicle whereby you can make a lump sum deposit, or maybe you can transfer funds out of your retirement plans or make multiple premium payments over time. And that money grows tax deferred, okay. Your investment performance is tied to the market, but it's not directly invested in the market. And so that is where you can have the ability to participate only in the upside, the growth of the market, but none of the downside. And your money will track the performance of an underlying index. So that might be the S&P 500. And within the S&P we can track it annually. We can track it monthly. We can do the sum of the months.

Speaker3:
We can choose a different index altogether like the Nasdaq or the Russell. And the Barclays has, you know, their own index and Goldman Sachs has their own index. I mean, there are plenty of indices that you can choose from, and I help explain and break down what the choices should be and is as performance has indicated. Right? And then again, you're protected from loss of principle, which means you don't lose a single penny of any of the money that you've put into the fixed index annuity. And so these can be set up for accumulation. But in a protected state they can also be set up for guaranteed lifetime income. If you're going to need to replace some of your working income in retirement, absolutely love them for that. And then maybe you're in your 50s and you're not going to need any income for maybe ten years or so. So then they can be set up for growth for a period of time and then allow a lifetime stream of guaranteed income. So I absolutely love these types of products for certain people and for a portion of their overall portfolio. Yeah.

Speaker1:
Absolutely. Right. I mean, that that protection and the growth and the lifetime income and all of it comes together to to create a nice package that works for a lot of people. And of course, you know, with anything there are, you know, positives, positives and negatives. We've we've gone through a lot of the positives here. There could be some potential negatives, some potential disadvantages for people as well. Although, you know, some of those really could be offset by other features within the product itself. Right? I mean it's a lot of the disadvantages, you know, could be something that you can account for elsewhere in the plan, for example.

Speaker3:
Yeah. So one of the biggest, uh, things that people say about, you know, how they're not good is they point out that these types of products have what are known as surrender charges. Okay. And I look at that like that's an absolute moot point, okay. Because if people understand why I'm recommending them, number one, remember what I said at the beginning of this segment? It is a long term retirement savings vehicle long term being the key. So the likelihood of you ever experiencing any surrender charges is extremely slim, okay. Because surrender charges typically decrease each year that you hold the annuity. And then they're gone after a period of normally 7 to 12 years. Okay. So again, if you're purchasing this in your 50s or early 60s and you're using it for guaranteed lifetime income, then you're never going to experience, uh, any of the surrender charges there. And then other people will say, well, they limit the amount of money that you can earn. Okay, great. Yeah, they do. But I mean, when we're talking about caps upwards of 10 to 12%, um, I would trade that any day of the week and twice on Sunday to never experience a daily loss of 3 to 4%. Okay. Or an annual loss of 20 to 30%. So it is a little bit of trade off. And as far as the uncertainty about what you're going to return, many of the products that we use actually have guaranteed returns. So 7%, 7.2% guaranteed, um, that we can point out there. So there's just a lot of misinformation about annuities in general. So if anybody has any questions, you can grill me with as many of them as you want, and I'll be able to answer them with 100% confidence.

Speaker1:
And if you want to, uh, throw, throw Mike Zeno on the grill, uh, just give him a call. 70456015737045601573. Go online to Money Matters with Mike. Com and another thing to Mike that this week really provides a real world illustration for and and really brings home is timing. Stop trying to time the market if that's something that you do or have tried to do. Um, you know, we're not psychics here. Our crystal crystal ball is broken. It is in the shop. It does not work. Um, and nobody's does. So stop trying to time the market because. Yeah. Buy low, sell high. It sounds great. And it sounds easy, but not quite so easy to do.

Speaker3:
It's not. And you know, obviously when we have dips people smart people will invest and actually buy the dip. We've heard that phrase before, hey, we need to be buying the dip. So it's real easy to get, you know, um, it. Right. Uh, once. Right. But the problem is with timing, the market is you have to get it right, not once, but twice, not only on the buy side. It's easy to buy when it's low, when it's low. Right. But we don't know necessarily when the peak is going to be. And if you go back in time and look at a two decade period, 20 years from 2001 to 2020, we actually pulled some data and looked at just an annual $2,000 investment under different scenarios. So when you invest $2,000 a year for your retirement, it isn't as important as trying to have perfect timing, which, let's face it, does not exist. Okay, money managers don't get it right. Um, more than a small percentage of the time. So the idea of perfect timing, you can toss that out with the trash because it doesn't exist. So watch. If you had perfect timing over those 20 years, your $2,000 a year, uh, investing would actually end up being just north of $151,000.

Speaker3:
That's perfect timing. But if you just start investing, invest immediately, okay, you're going to end up with $135,471. So there's not a huge difference over a 20 year time frame. I mean, we're talking about $16,000 over 20 years. Uh, that's pretty infinitesimal. And then dollar cost averaging. You may have heard that to where you're just continually buying. It doesn't matter what the market is doing. So when it's low, you buy when it's, you know, average, you buy when it's high you buy. It's called dollar cost averaging. That person is at $134,856. So just a little bit more than $16,000 over a 20 year period off of perfect timing, which does not exist. Now compare that to where if you just invest $2,000 a year and basically stay in cash with an extremely low, uh, percentage of return, well, somebody that's in cash over that same 20 year period would be in, uh, $44,000 territory. Okay. Now, I don't know about you. I'd much rather have 135,000, uh, over that 20 year period than 44. And of course, we're only talking about an investment of $2,000 a year, which is about 170 bucks a month.

Speaker1:
Yeah. And apparently they're, you know, putting it in some sort of savings account or something like that. And it's just getting that really, really low interest paid back. Um, definitely not keeping up with inflation. Definitely not making any money at all. And that's the thing like, you know, if you, um, you know, basically put the money under the mattress, it's not doing anybody any good there. You want you want growth and you want to get, you know, a decent rate of growth. You want to keep up with inflation, you want to do all of those things. But, you know, you also don't want to try and play psychic investor here because as you said at the beginning, nobody gets it right on both sides, both the buy side and the sell side. It's extremely rare that that ever happens. So just invest it immediately and do that. As you're talking about that dollar cost averaging is really the way to go here.

Speaker3:
Yeah, I mean and think of it like a casino. I use a lot of gambling references. I mean, you're gambling if you're trying to time the market. Right. But if you could sit down at a table and the dealer is going to say, hey, you know, if you are just going to continue to place bets and if you win, I'll pay you maybe half of your bet. But if I win, right, we'll just push. We'll call it a tie. Doesn't that sound like a better type scenario? And so if that does sound like a better type scenario, those types of options actually exist. And you know what they're called fixed indexed annuities. So, you know, if you're tired of playing the the timing game and maybe you've already worked an entire career and you've dollar cost averaged or you've invested throughout your entire career and now you're looking to escape the volatility. We have that solution available for you.

Speaker1:
Absolutely. And to get in on those solutions, learn more about them and have Mike Zeno take a look, a deep dive at your particular financial situation. And it's especially important, as we've been saying, in more volatile times, like we've been seeing at least this past week, go to Money Matters with Mike comm. That's money Matters with mike.com or call (704) 560-1573. Um, and of course, Mike, you know, one of the things that we often mention here is that the tax situation in the country, we take a look at the at the national debt quite often. And I think it's just what is it? Across the $35 trillion mark at $35.1 trillion, um, that the tax situation is going to have to change in this country if we are ever going to get any of that, even make a dent in, in that national debt. And so having a plan in place that is efficient from a tax standpoint is so, so important because especially during those retirement years, you could have well, we kind of refer to around here as a retirement tax bomb waiting for you in retirement.

Speaker3:
Yes. It is the ticking tax time bomb. All right. That blows up on you in retirement. Because let's face the facts, where most people save money is in tax deferred type accounts, IRAs, employer sponsored plans, you know, 401 S, 403 B's, TSP if you're a federal employee. And the downside with that is that the government knows that instead of paying tax on the seed, you have planted a garden and have grown that garden to produce as much harvest. And instead of taxing you on the original seed that you planted, they're going to tax you on the entire farm. So of course, they want to give you all of those years to defer your taxes, to grow that account balance as big as it possibly can be, so that in retirement, when you need the money the most, guess what? You have a partner in retirement. And his name is Uncle Sam.

Speaker1:
Yes. And that is, uh, you know, not he's not the friendliest partner in your retirement because, you know, instead of, uh, like the old war posters that said, you know, I want you with this finger pointed out. He said, I want your money. And he's got his hand held open, pointed out at you. So it's like, gimme, gimme.

Speaker5:
Gimme, gimme, gimme. Yeah.

Speaker1:
And one of the ways that he gets that money that he's got coming to him is through required minimum distributions, right? I mean, that is one of the ways that, you know, Uncle Sam says, okay, you've been putting this money away tax free, and it's been growing without you having paid taxes on it. So now, after all of these years, I want my share. Talk about a little bit about RMDs, as we call them, and and how those work.

Speaker3:
Yeah. So required minimum distributions. That's what RMD stands for. These are mandatory withdrawals that individuals must start taking from all of their tax deferred retirement accounts. Like I mentioned IRAs 401 S 403 BES simples. Like all of the ones that exist out there by April of the year after they turn 73. Okay, so it used to be back in the day, it was 70.5, and then the secure act 1.0 changed it to 72, giving you a little bit more time a year and a half to allow that money to grow. And now it's 73. So these withdrawals are mandated by the Internal Revenue Service, the IRS, to ensure that taxes are paid on those funds that have been accumulating, tax deferred and not meeting the requirements can lead to penalties. It's the largest penalty in the IRS's arsenal of up to 25% of the amount that should have been withdrawn. So you definitely want to pay attention to RMDs if you are approaching age 73.

Speaker1:
And then, of course, naturally for those who may be approaching 73 or are hopefully a few years before so they can get ready for that, how then they're probably asking, how do I avoid or at least reduce the burden that those RMDs will place on me once I reach the age of 73?

Speaker3:
Matt, that's an absolutely phenomenal question. So a lot of our listeners know, but a lot of our listeners don't know, that there are strategies that you can, um, put in place to help you avoid altogether or reduce those retired minimum distributions. And the first one that we've talked about a lot on the show is by simply doing what is known as a Roth conversion, you're actually allowed to convert funds from your traditional retirement accounts to Roth accounts so that you can reduce those future required minimum distributions. Okay, your Roth IRA conversions involve transferring assets from your traditional retirement accounts to a Roth version of that account. And when you convert, yes, you must pay the taxes on the amount that is transferred. But this strategy can be extremely beneficial as it will reduce future required minimum distributions, or RMDs, right, by lowering the balance in your traditional retirement accounts. And so, you know, we read an article that suggested that the early years of retirement are actually the ideal time for you to do those Roth conversions, particularly if you can delay Social Security benefits. And that timing helps you keep total income in the lowest tax brackets, which will again minimize the taxes you pay on those conversions.

Speaker1:
Yeah. And a great, you know, potential strategy there for a lot of folks. Then there are also some things, you know, I think a lot of people probably know, um, about Roth conversions or at least have heard about Roth accounts and the particular advantages there, as far as you know, from a tax standpoint, what about some other things that might be a little bit lesser known? I know that there are some things called qualified charitable distributions that people can can take part in.

Speaker3:
Yeah, this is a much lesser known. It's not a little bit it's a much lesser known strategy. So qualified charitable distributions or Qcds is their abbreviation. That is a distribution from an IRA not from a employer sponsored plan that is directly transferred to a nonprofit organization, bypassing the individual person's bank account. And this type of distribution counts towards the individual's required minimum distribution, right the RMDs, but does not count as taxable income, and so qcds are particularly advantageous for individuals over the age of 70.5. And yes, that age is still 70.5 as they allow for charitable donations with tax benefits without the need to actually itemize your deductions. And so for 2024, the limit for Qcds is set at $105,000 per person, which means that a married couple could potentially donate up to $210,000, which effectively reduces their required minimum distribution by the same amount. And I think it's important to note that Qcds are applicable only to IRAs, individual retirement accounts, and not to employer or workplace sponsored retirement accounts like 401 or 403 B's or TSP, or any of the other ones that are out there.

Speaker1:
Yeah, definitely important to remember that. Keep that in mind. But if you have an IRA, something that you could take advantage of there definitely. It's you know, and something as you say, that's a lot lesser known to people out there, I think. And then there's there's, of course, another, uh, one here that we have on our list, which is probably the least fun, um, strategy to avoid or reduce RMDs. But, hey, if you're if you're healthy and and able and want to do this, it could be something that's advantageous for you.

Speaker3:
Yeah. So, uh, of course, Matt is talking about, uh, continuing to work, folks, and believe it or not, more and more and more people are actually choosing to continue to work. And it's not out of necessity. It's just out of, hey, you know what? I'm bored sitting on my rump at home, uh, after a couple of months and I don't know whether to turn left or turn right when I back out of the driveway. So if you continue working, your current employers, uh, 401 K or other employer sponsored plan might actually be exempt from RMDs while you're working, and so transferring assets from old retirement plans into the current employer's plan can actually help also avoid those, uh, required minimum distributions. So, you know, these are some things to think about. And another thing to think about is the fact that if you have not heard from your advisor lately, or if you simply aren't receiving the attention that you deserve through your work based retirement plan, let us provide you with some great service and a complimentary consultation. All right. No cost, no obligation. You only work with us if it makes sense for you. And we will show you things like exactly how much you're paying in fees, where you might be able to cut costs through the use of strategies like bond replacement, personal pensions, smart tax strategies like a Roth conversion. And all you got to do is go to the website Money Matters with mike.com, or pick up a phone and give me a shout (704) 560-1573 and of course we'll get you scheduled for that complimentary consultation today.

Speaker1:
Easy peasy to do just that, folks. All right. So, um, as we as we continue on here, Mike, we've got some some landmines to talk about and obviously not not real landmines. But these are financial landmines to avoid both before and during retirement. Of course. You know we told you about kind of one landmine that's probably waiting there for you is that tax landmine or tax bomb in retirement. That's kind of just waiting for you to step on it and blow up your finances when you get to your retirement years. But let's go through five financial landmines that are things that you want to steer clear of. The first one here, I think, is probably the most important. And and I also think that for retirees, pre-retirees is something that a lot of people kind of fall victim to, unfortunately, quite often, and that is allowing your money to be mismanaged.

Speaker3:
Yeah, Matt, a lot of people think that because they have a 401 K, that they have a retirement plan and I'm like, no, okay. No, your retirement or, you know, plan A is is way more than just a 401 K. That's only one account in one part of your overall financial picture. So if you are somebody who is neglecting to review, uh, and update your retirement plan as the years go by, could be, uh, about to step on, on, on a very large landmine. And so if you don't know how much you're paying in fees, if you can't, like, tell me to the penny. Hey, I know that I am paying this amount. Um, then you might be about to step on a landmine. And if you're not trying to actively remove fees where possible inside of your portfolio, folks, those fees can add up to tens of thousands, if not hundreds of thousands of dollars over the entirety of one's working and retirement, uh, years. So those are huge, huge, huge landmines. And all of that is because you allow your money to be mismanaged.

Speaker1:
Yeah. So that's definitely something to avoid. And that's also, you know, one of those things that people don't necessarily focus so much on, the look at the balances in their accounts maybe, or that, you know, that kind of thing, but focusing on the fees that you're paying that is so, so huge because as you said, Mike, it can really eat away at your at your plan and at your ability to just live in your retirement years.

Speaker3:
Yeah. And people, you know, like you said, they just glance at the balance. They see maybe how much they've gained or God forbid, lost. And that's about all the attention that they pay to their statements. Okay. And if you don't understand, and I think that's probably the reason that most people don't, uh, really dive in a little bit deeper if they're not, you know, understanding what it is that are on those pieces of paper. Because let's face it, it looks like Greek to them. Um, then that would be another reason to set an appointment. Right? And I can actually break down your statements for you to give you a better grasp on what it is that you're investing in, how it is that you're invested, and then see if that actually aligns with your time horizon and with your risk tolerance, your appetite for risk.

Speaker1:
Yeah. Absolutely. Right. And I'll say this next financial landmine to avoid is something that we talked about a little earlier in the show, kind of in a bit of a different way, though, but it bears repeating because it is something that you really have to avoid doing, and that is thinking that you can beat the market.

Speaker3:
Yeah. If you think you're Nostradamus right, then by all means go for it. But I promise you that you'll probably regret, uh, having done that. You know, it's not about timing the market. It's more about time in the market. Because, as you said, there are going to be fluctuations. Markets go up, markets go down. But over time the markets have proven that they go up. I mean, just think about all the way back to 1929 and the Great Depression. Um, we're a lot higher than that now aren't we? Heck, even if we go back to Covid, guess what, folks? We're a lot higher than where we were once. Uh, you know, after the market dropped that, uh, fastest decline in the history of, of the market. So, you know, engaging in speculative or excessively risky type, um, investments, that is definitely something that can enable you to go boom in retirement and then overestimating your own ability. Many of our listeners are actually pretty financially savvy, but they're only pretty financially savvy to a point. Okay, so if you overestimate your ability to actually manage your retirement savings, then you could be setting yourself up for a potential step on a bomb landmine.

Speaker1:
Yeah. Absolutely. Absolutely. Right. And that's you know, the thing is, you know, you could be able and I actually just ran into this with with someone I was working with not long ago. Is that, you know, he had been great at investing and and all of that over a long period of time, and it's stayed in the market for a long period of time and all that at several different accounts and everything, but was getting closer and closer to when he wanted to retire. And so was then still taking too much risk. He's like, I came to you and said, I need, I know, I need to reduce my risk, but how in the world do I go about doing it? Luckily, was able to get him in a strategy where he reduced his risk significantly, but will still see a great rate of growth. So that's the same, you know, kind of thing that a financial professional like Mike Zeno can do for you folks is to get you on a path to where you are protected from that market risk, and you don't have to play the part of Nostradamus. You don't have to play the part of, you know, Miss Cleo, call me now with your little, uh, you know, crystal ball in front of you because you're not going to get it right and you're doom a lot more harm than good in those types of scenarios. Um, another thing to think about, Mike, is something that a lot of people think is that kind of a one size fits all sort of a deal, and that is Social Security. You know, if you don't have a plan for your Social Security benefits, that could very well be a financial landmine.

Speaker5:
Yeah.

Speaker3:
And not just a plan, but a Social Security maximization plan. How do we maximize the benefits that we're going to receive for something that we've paid into for our entire working career? So failing to understand the best time to start taking those benefits for your current situation could be a critical mistake. Okay, if you don't consider the impact of working in retirement, uh, on your Social Security, which means that you're drawing Social Security and you're working. If you don't understand that, you're then going to be subjected to what is known as as the earnings test. Then, you know, you could be negatively impacting the amount that you draw in subsequent years. So you need to be really, really careful about working in retirement and drawing Social Security. And then if you neglect to account for potential changes in Social Security in the coming decade. For an example, folks, the latest data that we see that we've seen is that the Social Security Trust Fund will basically be bankrupt in, what, nine years from now. So if you're not planning ahead and planning for alternative methods of supplementing your income, then you could be in for a very, very big surprise. So we want our clients not having to rely on Social Security benefits for their income and retirement. But, you know, whatever's there when they when they do retire, we'll still show you how to maximize. But that is going to be the cherry on top.

Speaker1:
Yes. Absolutely. Right. And and you know, I mean, one other, you know, part to talk about having a plan there for Social Security. You got to have a plan that accounts for how you are going to live month to month on an income in retirement as well. I mean, because otherwise you could very well step on this landmine that is next on the list, which is depleting your savings too quickly because you didn't have a plan.

Speaker5:
Right?

Speaker3:
When I speak in front of large audiences, you know, I'll poll the audience and I'll say, hey, how many of you have a 401 K? And a lot of people will raise their hand, right? How many people have an IRA? And a lot of other people, you know, raised their plan? I'm like, how many people have a 401 K or other type of employer sponsored plan and an IRA, and maybe not as many people raise their hand. But then I say, how many of you actually have an income and distribution plan in retirement? And Matt, when I look across the room, I might see 1 or 2 hands go up. So if you fail to establish a sustainable withdrawal strategy, sustainable being the key. Then you may deplete your savings way too fast, and underestimating the real cost of your monthly expenses in retirement is one of the biggest, um, reasons that I see people having to deplete their retirement savings faster than what they had thought they might do. And so, you know, the number one culprit there a lot of times is health care costs in retirement. Because as you age, your body tends to break down, which means you need more health care and then not having a sufficient enough emergency fund that is able to cover the unexpected things that pop up, like your HVAC or your transmission or whatever the case may be. Right? If you don't have an emergency fund and you're having to deplete your retirement savings, then guess what? You're going to deplete those savings way too fast, and you're going to end up having to depend on, um, you know, the government or friends or family or just accept a significantly reduced lifestyle. And that is not the vision that most people have for retirement. And the sad thing is, if those people had just planned accordingly, they wouldn't be where they are now, right?

Speaker1:
That that is very, very true. I mean, that's just highlights, once again, the importance of actually having a plan in place. And we're talking about, you know, a plan in writing something that is going to stand the test of time and account for all of these different things, including this list of landmines that we want you to avoid, the last of which is not aligning your investments with your risk tolerance, taking too much risk, or, you know, maybe not enough. Um, either way, could be a big, big issue.

Speaker3:
Yeah. So I sat down with somebody earlier this week who is 72 years old, and he was 97% in the market. And when I he didn't know what that meant. And and here's what I did. I took his dollar amount that he had saved for, you know, for basically 50 years of his life, he had saved very, very diligently at a sizable sum in there. And I just multiplied that times 0.97. And I said, this is how much you are actually risking. And if the market drops 10%, here's how much you lose. And he went, whoa. And I said, well, now let's see if it you know, what happens if it drops 20%? He's like, oh my gosh. And then, well, let's see if we have a repeat of what happened during Covid when the market lost 30%. He's like, oh my, I need to get that changed now. So if you're not adjusting your level of investment risk as you age and especially as you near retirement, you are making a critical mistake. And if you don't understand this risk, that is called sequence of returns risk. And a lot of people don't understand that. Maybe you've never even heard of it before. You could be about ready to step on a landmine. Sequence of returns is just taking returns, you know, and then flipping them upside down. So for an example, I think we talked about this last week, Matt, somebody who retired in 2007 and then saw three consecutive years in 2008, 2009 and 2010 of market declines before it started turning around in 2010.

Speaker3:
That person's money would never last as long as somebody who retired in the end of 2010 and then saw the longest bull run in the history of the market. So, you know, timing of when you retire and then timing of losses, especially more so than gains, is critical, uh, critically important to the overall success of your longevity as far as your money. Because if you don't have enough of your money generating income for you in retirement, then you've made that mistake. You've already stepped on that landmine. So many people are only concentrated on building, building, building accumulation, accumulation, accumulation with almost no plan for the preservation and the distribution. And so that just happens to be our wheelhouse here. We we teach people how to not run out of money in retirement. And folks, you know, we're three quarters of the way basically through 2024. This is an election year. And there's already so much uncertainty in the world that affects both pre-retirees as well as those who have already retired. Please do not wait until you are ready to retire to start your planning. The more time you give yourself to plan, to accumulate, to invest, and to put together an income and distribution plan, you are going to increase the likelihood that your retirement will be financially successful. So let us help you get started. Just give us a call (704) 560-1573 or book your free consultation online at Money Matters with Mike comm.

Speaker1:
And that is just a very, very easy way to reach out to Mike Zeno. Once again, money matters with Mike comm or as he said, call him (704) 560-1573. Well, just just about that. You folks obviously listening on the radio or the podcast can't, um, can't see, but it might just held up a green sign with a big thumbs up, uh, cartoon on it. And it just made me laugh. So there we go. Sharing with you the behind the scenes of Money Matters with Mike. Um, but with about five minutes left here in the show, Mike, let's talk about those folks who may be, you know, we actually have just mentioned a couple of people who were, um, you know, on on their game as far as saving for retirement, maybe investing for retirement had good sums, just didn't have a real plan for what to do with all of that. Didn't know how to to take their money, that they've saved up that one big number and protect it and then create an income from it during retirement. That was going to last. Right? So but they had done a good job on the saving side, the investing side. What about those who might feel like they've been left behind or need to do some catch up when it comes to their saving or investing for retirement?

Speaker3:
Yeah. I mean, if you feel this way, folks, okay, you are not alone. In fact, most Americans are behind and some of them significantly behind on retirement savings. Many people have actually done a great job saving, but haven't actually put a plan together to help ensure their financial success when they are in an actively withdrawing their money, uh, from their retirement savings account. So they are playing catch up and there are some moves that you can make that will help boost your nest egg as well as your retirement income. So I'm just going to go over a few of those right now here in our last five minutes. So, you know, if you have an employer, uh, plan. In other words, you have a 401 K being offered at your work or a 403 B, or if you're a federal employee, the Thrift Savings plan. Um, you need to take advantage of those, uh, plans, number one, and at least contribute up to what they will match if they offer a match. So maxing out those 401 K plans as well as your IRA contributions. And then if you're over the age of 15, catch up contributions if you're able to. Right. This is a great way to help you catch up. That's literally why they're called catch up contributions. Okay. And then also, you may consider working in until you're in your 60s or maybe even 70s. I mean, I talk to people all the time that are in their 70s and are still working because they like the extra change. It keeps them moving.

Speaker3:
It keeps them socially engaged, physically engaged, right? Mentally challenged. And the more you can extend your earning years and push off your drawdown years, the better off you are likely to be in retirement. So you could also consider things like maybe downsizing from the family home. You know, my wife and I are actually considering this right now. We have a, you know, relatively large home, and our youngest child has, uh, moved to DC, and it's just she and I. All right, her and I, I should say. And then, uh, we're thinking about. Wow, we got a pretty decent sized house, and it's just us. So consider downsizing or moving somewhere with a lower cost of living. Uh, maybe lower tax benefits for retirees. There are certain states that do not tax pensions, uh, and or have no income tax. I think those would be a little bit more advantageous. And then if you are self-employed, because a lot of our listeners are go getters and, you know, they have established businesses and they're, you know, trying to make a change for themselves and better the world, take advantage of tax deductions like writing off business expenses. Uh, and just make sure you're consulting a qualified, uh, certified public accountant, maybe who who has experience in dealing with, uh, self-employed folks and entrepreneurs. So I mean, all of these things I think can help folks play catch up. And if you just employ or deploy, I should say just a couple of those strategies that'll definitely boost your nest egg and retirement income.

Speaker1:
And if you feel like you are behind and want to get caught up, I know a guy who can give you those strategies and more, perhaps that can help you with your individual situation. Money matters with My.com is the website. And by the way, that guy's name is Mike Zeno. I should have should have mentioned that money matters with My.com. Once again, is the website the number (704) 560-1573? Well, Mike, that is going to do it for this edition of the show. It has come and gone quickly this time around, but I thank you for everything, as usual that you bring to the table. And we'll do it again next week. Sir.

Speaker3:
Matt, thank you for everything you bring to the table. But most of all, thank you to all of our listeners. Whether you're listening to us on the radio or wherever you are around this globe, uh, by virtue of podcast. Thank you so much. If there's anything here that you think one of your friends or family members can benefit from, please share the show. Okay, 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 704560 1573. That's (704) 560-1573. 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.

Speaker1:
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.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including enterprise-grade admin tools, world-class support, powerful integrations and APIs, automated subtitles, and easily transcribe your Zoom meetings. Try Sonix for free today.