Words of Caution About the Economy and How to Protect Your Retirement

7.21.23: Audio automatically transcribed by Sonix

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

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

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

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on each and every week. And today we are absolutely bringing it again. On today's show, we're going to talk about how to protect yourself from market volatility and economic uncertainty, as well as discussing why people with annuities actually say they want more annuities. As always, I have the distinct honor and privilege of being joined by the one, the only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today, brother?

Producer:
Hey there, Mike. I'm doing great, sir. I hope you are as well.

Mike Zaino:
I am enjoying these summer months, the warmer weather, although I wouldn't mind if it cools off just a little.

Producer:
Yeah, that's right. I just got through walking in the hot sun myself here in. In Atlanta, of course, where I join you from each week. And boy, that's it's not fun sometimes this time of the year. But hey, if I can get out maybe to the to the pool or something this weekend, I'll be a happy camper.

Mike Zaino:
Yeah. My wife describes it as walking around inside of somebody's mouth.

Producer:
That's actually. That's pretty. That's pretty good. You know, I always say it's like. It's kind of like you're walking through a swamp in in August or something. It's just it's the humidity in the south.

Mike Zaino:
It is. And people out west, they don't get it. I remember one time I was in just north of San Francisco in a town called Sausalito, and we were going, you know, doing some shopping. And I heard I just overheard a lady complain about how humid it was. And I said, Excuse me, ma'am. I said, Do you happen to know what the humidity percentage is? She goes, oh, my gosh, it's so humid. It's like 12%. And and I just kind of looked at her like with the with the, you know, the emoji face of the straight eyes and straight mouth. Like, are you serious right now? Because anybody listening to this who lives anywhere in the southeastern United States knows that the relative humidity averages probably 80 to 85% and climbs from there. And, you know, I know in the summertime when I used to get a newspaper, I could walk out to my mailbox. And by the time I bent over to pick up that said newspaper, I would have sweat beads rolling down. So, yeah, uh, you know, this is a whole nother level.

Producer:
Yeah. No, it really, really is. They don't know anything about it out out west. But we're not going to make you sweat today here on the show. We're going to try and and cool you off a little bit with some great information and education of a financial nature here over this next hour. We do have a lot to get to. But first, we you know, a little housekeeping out of the way here. And the first item on that list is just thanking you, our listeners, for joining us, whether you're joining us here on the air on or you're joining us on the podcast, wherever you listen to podcasts, we really, really do appreciate that as well. You can find us on all the big Boys wherever you subscribe to podcasts and, you know, just just like us, subscribe to us, leave us a comment. We would absolutely love that. And you'll get notified with all of our new episodes as well, so you'll never miss one. You can also sign up for us for our YouTube channel. Of course, that's absolutely free as well. Just subscribe to the channel there by Searching for Money Matters with Mike on YouTube, Facebook also. Mike, you of course love interacting with the listeners there. And I know you have some some really good conversations that have started through that. And that's kind of the goal here, is to to pique people's interest where they will reach out. You can have a dialogue and really, you know, they can they can be educated and have their questions answered. That's really what it boils down to.

Mike Zaino:
It Absolutely. Matt, I find that a lot of folks can learn from other people's situations. You know, you might not be in the exact identical situation, but it might be similar enough to where just looking at how other people have dealt with certain things and maybe bouncing ideas off of me and, you know, in a public forum that can help other. People who also read that comment and my solutions to your issues. I just again, a rising tide lifts all boats. And that's the whole goal of the show is just to educate people, just simply because of the catastrophic level of financial education that is being taught in our school systems and to our young adults, which obviously produces, you know, adults who are just not where they need to be from a financial acumen standpoint.

Producer:
Yeah, that's, you know, that that education that is being taught or isn't being taught in in our schools these days, that's that's kind of where it is, unfortunately, as far as financial education goes in in schools. And also, folks don't hesitate to reach out. Give us a call. Mike Zaino is always excited to take your calls as well. And I kind of like to rib him a little bit. But it's true. He is like one of the only people I know who actually will answer his phone when you call him. 704 56015737045601573. Or you can go online to the website it's MoneyMattersWithMike.com you can reach out there for a free consultation get our 23 cost cutters for 2023 as well as part of that reaching out to Mike Zaino also it's a great report. We're actually going to highlight one of our 23 cost cutters coming up in just a bit. And that's yours. If you give Mike a call or go to the website and schedule that consultation. A lot of great resources there, Mike. And we actually have a lot of different free reports that we can give people if they have any questions about a lot of different, you know, things that are either going on in the world, things that they might be coming up on, you know, if they're coming up on maybe Social Security, age, that kind of thing. We've got a lot of great resources for you.

Mike Zaino:
Yeah, and we've mentioned a lot of these on previous shows. You know, whether it's the widow's tax and how to prepare and plan in advance for the loss of a spouse, whether, you know, what the Secure Act 2.0 means for your retirement, whether it's, you know, how to invest in tax free investments to help you retire smarter and better, whether it's how to create a personal pension, whether it's how to replace bonds inside of your portfolio. So whatever those reports are, they can obviously help you make a dent in getting to where you need to be financially and climbing that ladder, so to speak.

Producer:
Yeah, and they'll cost you absolutely nothing when you go to MoneyMattersWithMike.com or call (704) 560-1573. So mentioned a lot of stuff to get to here in the show of course our quote of the week we'll kick things off in just a moment. Then we also have kind of the bulk of the show focused on the market and can it continue to outrun economic declines? We've got some expert analysis we're going to kind of sift through here on this on, you know, market conditions of late and how kind of learning from what has either A previously happened or B, is happening now and in in recent weeks and months in the market, how that can sort of help you formulate a financial plan for your retirement. People with annuities also want more annuities, and that has to do a lot with the volatility in the market and economic uncertainty. We'll tell you more about that. We'll have a little bit of a problem solver as well. Some advice on those tax free retirement income options that you teased just a second ago with that free report that's available on that very subject, Mike. And then we'll also do a cost cutter of the week, as I said, cutting back on entertainment costs this week. It doesn't mean you can't have fun, but we'll tell you about how to cut back on entertainment costs and still have fun coming up in just a bit. Plus, this week in history to round things out at the end of the show. But first, as teased just moments ago, let's get to our Quote of the week.

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

Producer:
Our words of wisdom this week might come from Orrin Woodward, who is an entrepreneur, a best selling author, leadership expert, a speaker extraordinaire as well. And he said this once, quote, A person either disciplines his finances or his finances discipline him. Yeah, that that can definitely happen.

Mike Zaino:
Yeah, those those are pretty wise words from Mr. Orrin. And first off, what a what a cool name. The guy's name is Orrin. And you don't you just don't see that too often these days. But his quote emphasizes the importance of managing one's finances effectively. It actually suggests that individuals have two choices when it comes to handling their money. They can either take control, right, or it can take control of them and basically dictate their lives.

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

Mike Zaino:
So when a person disciplines his finances, it means that they are exercising control over their spending, over their saving, over their investing habits. They create budgets, they track their expenses. They actually save money for the future and they make informed financial decisions, Right? And so by practicing discipline, they ensure that their financial situation will remain stable in order to enable them to achieve their financial goals. And on the flip side of that, if somebody neglects to discipline their finances, then their finances will eventually discipline them. It's kind of like, you know, we always talk about our future selves thanking us. This is an example where our future self will smack us around a little bit because their lack of control over their money can lead to financial difficulties, which which can involve things like accumulating debt, living well beyond their means, or struggling to meet those financial obligations. So in this type of scenario, their financial circumstances absolutely control their life and limit the amount of choices and opportunities that they're able to participate in. And so by exercising discipline, people can take charge of their financial situation and work toward financial stability and success. But failing to do so can just result in financial struggle and limitations.

Producer:
Yeah, that's not a place that you want to find yourself in your money controlling you. It's one of those things. Yeah, Either you control it or it controls you. And but it's not to say and we'll get a lot of that discussion I think today will revolve around this. It's not to say that you can control everything, right? Because there are certain things that you can't control. Right. There's there are these macroeconomic things like inflation and the markets and all of these other things you can't do a darn thing about. But what you can't is your response to it and your preparation for it.

Mike Zaino:
All right. And we always say control the controllables. You know, if you can't if you can't control something, then then don't worry about trying to control it because that's just going to, you know, freak you out and lead to a lot of stress and anxiety and and just, you know, overall ill feelings toward everything. Right. But the things that you can control, you can absolutely take proactive steps to make sure that you're set up for a better future by putting a plan in place and following that plan to a tee.

Producer:
Yeah. And you just mentioned a lot of it there, you know, putting a budget in place, tracking your spending, making sure you know where everything is coming from and going to. It's all part of that building, that foundation for a financial future that's going to be a successful one. And and, you know, really that is one of the things that you help people do each and every day. You know, if they go to money matters with com or they call the number 704 560 1573, then you can help them along that road if they don't have any type of plan or any type of budget or anything like that, you can sort of help clear away the cobwebs from all of those those those files that are stacked away in their brain and, you know, make sense of it all.

Mike Zaino:
Yeah. And because of the fact that so many pre-retirees and retirees are concerned about the potential rates of return that they're getting on their investments, it is very, very easy, especially in times of wild fluctuation, to become almost enthralled in what we call the Wall Street Casino. But what's more important is making sure that you absolutely have the right plan that balances both safety, especially in the retirement red zone as well as risk. Okay. So. Go into that website schedule on that free consultation, letting us help you become more tax efficient, more efficient, more market efficient with your hard earned dollars is imperative.

Producer:
That's absolutely 100% correct here. And we're going to go into more of exactly, you know, some of the reasons why people are giving you a call or going to the website because we've got this analysis. Paul Dietrich, B, Riley Wealth actually wrote this big, you know, article, this this big piece that went out several, several pages worth. And we're going to kind of distill it down to the high points here. But he was just looking at the, you know, kind of recent market activity from the past couple of months. And, you know, things had been really volatile previously, a little earlier in the year, of course, last year, certainly a lot of volatility in the markets and that sort of had reversed course a little bit several weeks back. Well, you know, he's been looking at that and saying, can the markets continue this even though we have these, you know, economic indicators that are showing, you know, like flashing red lights, that there's probably some some hurt coming?

Mike Zaino:
Yeah, there's no doubt about that. Investors clearly want the stock market to go back to the days when the interest rates were basically zero and the government was still mailing checks to everybody. And teenagers had so much money that they were using it to buy cryptocurrencies with no underlying value. And those meme stocks that were just fun to trade with no rhyme or reason. And it was a time when you could buy just about anything, any asset and watch it soar, right? But then steps in inflation.

Producer:
Yeah. That's the, you know, been the thorn in everyone's side here over the past several years. And there were, you know, there are a lot of factors that go into it. It's not a it's not a very simple issue to sort of discuss here. But he points out one thing that he says is a really big, big contributor to it, and that is a lot of a lot of spending in Washington.

Mike Zaino:
Yes. So after Covid, politicians printed almost $6 trillion out of thin air just to boost the economy, and that created such an increase in the money supply, but it also created a massive, massive unfunded deficit for the US government. And make no mistake about it, this unfunded spending has caused the inflation that we saw last year. It has caused the inflation that we are currently seeing. No matter if you pay attention to the wrapped up with a nice little bow that the CPI likes to frame inflation as it's currently, you know, in just under 5%. But when we look at the actual raw data, it's a heck of a lot higher than that.

Producer:
Yeah, it really, you know, has been not fun for those of us who, you know, do basically do anything, spend, spend money in any way. And, you know, he's comparing it here to the, you know, big spending of the government back in the late 60s, early 70s, funding the Vietnam War and other government programs. And so that is kind of what he's saying led to runaway inflation then in in that decade is particularly the 70s early 80s as well. We saw a lot of runaway inflation and now the biggest inflation number since then. You know, it's it's not often in you know, when you're talking about anything really oh, this is the only time that this has happened in five almost decades or, you know, like this is the only time that this has happened since whatever or this is the first time this has happened ever. Um, we don't get those things a lot. And this, these inflation numbers have been that's how big they've been. Yeah.

Mike Zaino:
So, so back then they actually used real data, not the CPI. Right. And I remember, you know, mortgage rates in the 80s being 15 to 18%. I mean, can you imagine if they get that bad today? Well, think about this. Just since 2020, we've added a total of $8 trillion to the US debt. And unfortunately, that has become the largest by far the largest three year debt increase in history. And so free money from stimulus payments is going to go down as one of the most costly handouts of all time. And it's also worth noting that the national debt increased from $9 trillion to $23 trillion. All right. From 2008, which was the financial crisis up until Covid happened in 2020, The national debt didn't even hit 1 trillion. Until 1981, but just since 2020, it went from 23 trillion to now pushing 37 almost $38 trillion.

Producer:
Yeah, it's just like into hyperdrive a little bit there. And you know, there are some ways not any fun ways, but there are some ways that the government can can pay off this debt. Yeah. Run through those that we that we have here on on our list of three, you know, and like I say, none of these are fun, but we're going to talk about them anyway.

Mike Zaino:
No, no. So, I mean, I always kind of jokingly say that there's really only two viable ones, right. That that we want. And the first one is that the government can cut spending. And I'm like, Yeah, right, because why? 80% of the budget is made up of Social Security, Medicare and defense spending. And so with the recent debt ceiling legislation, Speaker McCarthy tried to negotiate cuts in spending, and both he and President Biden claimed that the bill would cut spending over the next ten years, which is an absolute farce because, you know, according to the independent and non-partisan Congressional Budget Office, they concluded that the budget deficit would increase by the time the legislative excuse me, the legislation expired in January of 2025. And they also projected higher budget deficits over the next ten years, even though the Trump tax cuts are going to sunset in 2025. Congress never cut any spending, and that is, you know, eye opening for a lot of folks because the deficit reduction came from the increases in taxes after the Trump tax cuts expire. It was all a shell game by McCarthy and Biden.

Mike Zaino:
You know, they're kind of just flipping it, you know, flipping that shell and moving the moving the ball and you don't know where it's going. And that is the reason why most Republican Freedom Caucus members in the far left, progressives voted against the legislation. So, you know, is the government really going to spend less? Come on. Right. So then the second choice is, is that the government can raise taxes and no politician actually wants to do that. And the few liberals who do want to raise taxes don't have the votes to get the bill through Congress. So those are two of the ways that that they can do it. And then, of course, the most unpopular way would be for the you know, for the government globally to deflate and devalue the United States dollar. In other words, make its dollar our currency worth less. And so this is what Congress has decided to do. And they do that through this vehicle called inflation. Since the government increased the money supply by 26%, we have to devalue the dollar by 26% over time.

Producer:
Wow. And that's you know, that doesn't really seem like a great thing if you're going on a, you know, an international trip, for example, you don't you know, your dollar is not going to go as far if it's been devalued, you know, in relation to other international currencies.

Mike Zaino:
Right, Right. And so, you know, to make sure that inflation doesn't permanently raise the price of everything by 26% all at once, what the Federal Reserve does is they raise rates to slow that inflation over time. But I mean, it lands us in the situation that we currently find ourselves, you know, And so if we look at overall for 2022, that inflation rate was 6.5%. And analysts estimate that the real inflation number for 2023 is going to be closer to what we're seeing now according to the CPI at 5%, which still means that we have to devalue the dollar by another 15% in order to negate that original 26% increase in the money supply.

Producer:
Yeah, And he says that's going to take about 3 to 4 years at 4 to 5% inflation to do that. And that's not including about $1 trillion a year that the government is printing in really unfunded deficits. You know, he's saying for for each of the next few years, that has to eventually be included as well. So it's like you're trying it's like you're chasing after your own tail. You know, that.

Mike Zaino:
Is the very reason that investors, that economists, that politicians, they are dreaming. If they think inflation is going to come down to the Fed's target of 2% anytime within the next five years or so.

Producer:
Yeah. And he said that 4 to 5% inflation, unfortunately here to stay for the foreseeable future. And that is, you know not not great news to hear. There are, you know, some good things that could come out of that, you know, obviously in. The long run, it could bring almost almost feel like I'm in Star Wars. It could bring balance to the force. It could bring balance to the economy eventually, you know, kind of help even things out, be a little bit of a reset there. But it also means that that, you know, interest rates could remain high. Of course, on the buy side, that's not a good thing if you are in the market for a home, if you have credit card debt, if you're buying a car, all of those things will be more expensive. But on the other hand, if you have any sort of interest bearing investments that are tied to those interest rates that fluctuate, then those earnings on those accounts will remain higher for that time period as well. So at least on the flip side of that, there is a thin silver lining around that cloud.

Mike Zaino:
Yeah, yeah, no doubt. And it's like, you know, people are still asking the question, why is the stock market doing what it's doing when the economy is contracting? And, you know, if you just happen to take the few of the behemoths out of the equation, then it's really not okay. And I think that that's the thing that that people need to wake up and realize you have just a few companies, a handful of companies that are driving the growth, whether it's in the, you know, the Dow Jones or the S&P or the Nasdaq. You know, and if you're able to deduct and take out those big boys out of there, then what you're really seeing is that, you know, at least through the 1st of June, you're seeing that stuff is a lot more negligible than than where it was and where it wants you to think everything actually is.

Producer:
Yeah. The things in what is that thing on the rearview mirrors, the side mirrors on cars. Things in mirror are closer than they appear. It's like the growth in the stock market is less than it appears and as a matter of fact, might actually be negative. You know, we're seeing, at least as of last month, the Dow Jones Industrial average, just for example, is actually as of last month, was up more than 1%, almost 1.3% change since, but about 1.3% as of last month. But if you take away the performance of a couple of the big behemoths, Apple, one of them, that was the first company in the world to be valued at $1 trillion or $1 trillion valuation. And also Microsoft removed those from the Dow Jones Industrial Average. The Dow is actually negative year to date. So, yeah, I mean, we've got these spots of big growth for big companies. But as seems to happen a lot of times in our world and in our country, unfortunately, the little guy not doing so well.

Mike Zaino:
Yeah. And when you look at the yields and this thing called the yield curve, when you're long term yields are worth less than your short term yields, um, that's a problem in a very good indicator of an impending recession.

Producer:
Yeah, that's absolutely right. I mean, there, there is a lot of conversation to be had around whether or not, you know, we have been in a recession, whether or not we are still in a recession now or whether one is around the corner. I think pretty much everybody can come to an agreement on at least one of those things is true. But, you know, a lot of people and a lot of investors on Wall Street especially, really tend to be scared of recessions and and opposed to them as well. It's not a fun thing for for anybody to go through.

Mike Zaino:
Yeah, no, I mean, in business, cycles are as natural as the cycles of the seasons of the year or as natural as the Earth's rotation around the sun. Right? So as bull market business cycles start to slow, they roll over into contracting business cycles where the economy slows down and contracts. And that cycle is known as the bear market or the recession. And those usually last anywhere from 9 to 18 months. And then the recovery starts to happen and the economy starts to expand again.

Producer:
Yeah, I mean, and and that's that's really what the economy does. I mean, if you if you, you know, take an economics course, study these things and look at it historically, this is what happens. I mean, there are the ups and the downs. There are you know, there's the expansion, there's the peak, there's a contraction, there's a trough. And then the cycle repeats itself. The time between all of those particular events can vary, but that's really how it's gone, as far back as we can look and say that there has been a US economy, you know.

Mike Zaino:
Yeah, no. And so, you know, recessions do a great job of eliminating a lot of those excesses of the bull markets. Right. You know, and there are a lot of bubbles and excesses out there now, whether it's cryptocurrencies, whether it's meme stocks trading back in the day when there were 0% in interest rates, inflation and the bubble that's in housing because there's not enough supply for the demand. So yeah.

Producer:
Well, we know about housing bubbles being burst in this country. We experienced that back in 2008, 2009. And then, you know, I mean, you saw these heavily valued homes that that maybe had just sold for a couple hundred thousand dollars, then, you know, going to be on the on the market a couple of years down the road. If somebody tried to sell it for, you know, 40,000, maybe, you know, it's like there was an old it's just it was the dumbest thing. But it was kind of appropriate to to share for this discussion was this kind of parody song about Cleveland, Ohio, which I think is a great city. I'm just putting that out there. But these guys said and this was this song came out like when houses were dirt cheap, they they said, Come buy a home for the price of a VCR. Like that's essentially what happened to the entire housing market after 2008, 2009. And and I and I, you know, remember that I am old enough to remember those things. So, yeah, I mean, it's not a, you know, a fun time to be, you know, trying to take part in the in the economy when a recession happens. But as you said, it's it's part of the cycle. It is kind of a necessary thing.

Mike Zaino:
Yeah. And you know, Riley's his his article, you know, kind of chimed in as far as about the people who think that this time will be different. And he said that he's amazed at the number of investors and analysts who actually think that this time is going to be different and that the natural business cycle laws will somehow be magically suspended and we won't have a recession or we'll have this thing that that boy, they have really pumped into the media these days, this soft landing that is usually defined as a slowdown that doesn't result in a negative economic contraction or, you know, for example, a recession. Right. But most economists don't believe that there has ever been a soft landing and very few say one might have happened in the late 1990s. But people have to realize that they've had a historic run, really. I mean, from from 2010 to 2020 was the absolute longest bull run in the history of the market. Nobody alive or dead, for that matter, had ever seen anything like it in the history. And then even with Covid thrown in there, if you look at the 13 year run, that's still a historic bull market. You know, whether you have the Covid pandemic, the geopolitical energy and economic disruptions, declining earnings, historic inflation, central banks, interest hikes, banking failures, commercial real estate defaults and slowing and contracting. Leading. Okay, leading economic indicators. What kind of evidence does one actually need to clearly see that we are moving into a business cycle recession?

Mike Zaino:
Yeah.

Producer:
And you know, I mean, that's as we say, it's part of the cycle here. And there are some signals pointing that way. A lot of them actually. And he says, you know, the bottom line here is that the the evidence is there. And he thinks that that wise investors should be very skeptical of those who tell you that we are starting a new bull market and that we will not have a recession. You've got to be careful. It's not different this time, he says. He says that investors are facing a recession starting sometime in the next two quarters. His prediction? Not not ours. We just want to make that clear. But, you know, I mean, it's a thing where, you know, Mike, you people are looking for in this type of environment and this type of market, even though things have kind of turned positive, at least in the short term, and markets went on a nice, pretty nice run last month, they, you know, are still looking for safety because of these very things, because anything can happen after that 13 year bull run in the markets that you just talked about. You know, nobody saw Covid happening. Nobody saw the resulting supply chain issues. Nobody saw the then resulting inflation, resulting rising interest rates like like, you know, I mean, come look back at early 2020, January, February, early March. And we were all just kind of in our little, you know, naive bubbles of of living and not really realizing that this stuff could happen because it hadn't happened in so long. And now look where we are.

Mike Zaino:
Yeah, no, it's it's kind of revelatory if you think about it. And people, you know, always are asking the question, when will the recession end? Right. That that's the biggest question. Even though we technically or at least they don't want you to think that we have technically started a recession. And so. These are questions that have to be answered, bottom line.

Producer:
Yeah, absolutely. And you know, he said a little bit ago earlier in the show that recessions generally last like 9 to 18 months. So we're looking at, you know, two thirds of a year to about a year and a half kind of kind of deal. And so if a recession were to start when he thinks it will during the third quarter of this year, then a nine month recession could see a stock market bottom at the end of this year If it turns out to be kind of that 18 month recession, then we're looking at the bottom of the market being probably spring early summer of next year and then things start climbing. But but there is some good news here, Mike, and that what he's saying is that, yeah, these kind of things do happen and it's not the end of the world, you know, because of the strong jobs market out there. This is not this is not 2008. So he's saying that we're not going to have a similar situation where multiple things fell apart and the jobs market fell apart, you know, being one of them, and we were lurched into the Great Recession. Yeah.

Mike Zaino:
And I think the crux of everything is that younger investors probably need to be patient and realistic. And then older investors need to really weigh whether or not they're going to stay exposed. Okay. And so, you know, the facts and the data, it's it's all there for folks to to analyze nine ways until Sunday. But, you know, fact of the matter is, is that your personal circumstances should dictate, you know, how much risk you are willing to accept, how much risk you are not willing to accept. And if there is a portion of your portfolio that you have earmarked for the income side of your retirement and you have a number come hell or high water, you don't want to go below, then we have a solution for that that we're about to talk about.

Producer:
Yeah, that's absolutely right. I mean, that is the the bottom line of all of this discussion. We don't tell you all of these things to scare you via the words of Mr. Paul Dietrich at B Riley. They're you know, we're using his analysis not to not to scare you, not to do any of that. We're using it to put frame things in this way. Yeah, these things do happen and you shouldn't be scared of them. That's not what we're we're trying to say. You should be prepared for them. That's the big thing. And I can't think of a better way to prepare for whatever might come than to reach out to Mr. Mike Zaino at MoneyMattersWithMike.com. You can also call him 704 5601573. And then, Mike, what you're going to do then is is really delve into somebody's personal situation and customize a plan for them to move forward.

Mike Zaino:
That is exactly what we do. We provide these comprehensive consultations at absolutely no cost to our listeners, nor is there an obligation. The biggest deep dive that we take a look at is where you currently are so that we can determine where your current circumstance, if you continue on the same path, will lead you. And then we look at where you want to be and then we determine what needs to happen to get you where you want to be. So if that includes, you know, taking an x ray of trying to discover how much you're paying in fees because fees can absolutely eat up your returns, we can help you cut out unnecessary costs in your IRAs, your 401. K's or any other types of retirement savings accounts, whether it's a brokerage account, whether it's, you know, God forbid, a CD at the bank. We call them certificates of depreciation, although right now they're okay. But you know what I'm saying, They're only going to be okay for a little bit of time. So we can also help folks with Social Security maximization planning. We can help folks with Medicare planning. And you know what? We're going to compare your situation to what's possible if you work with us. And we don't take it lightly because you know what? It's your money. And if it matters to you, it matters to us.

Producer:
That's right. Absolutely. Work with someone who who actually has that that opinion and who cares about your money and your financial situation. And you can get in touch with Mike Zaino going to MoneyMattersWithMike.com or call (704) 560-1573. Now Mike we've been talking about this analysis from B Riley about the economy where things are headed. And we're going to get into more of why people are kind of flocking toward safety a little bit more while still getting growth out of their their hard earned money. But we'll get there in a second. But we want to go a little bit deeper here into the why, because we've talked about this, the B Riley piece and saying that, okay, the signals are pointing toward. A recession coming or at least a big economic downturn coming. Right. So what are those indicators? What are those signals? What are those symptoms? So let's take a look at it As of June. Us leading economic indicators will run these down. I will. I'll name the indicator and then you can tell me what it is showing where it's headed over the next 12 months, the directional trend. All right. That's correct. The leading economic indicators. All right. So conference board, composite of leading economic indicators.

Mike Zaino:
That is signaling a recession. It's trending downward.

Producer:
A.i. Composite of weekly leading index.

Mike Zaino:
Also signaling a recession and trending downward.

Producer:
Okay, so here we go. The ten year, three month Treasury yield spread.

Mike Zaino:
Guess what? Their directional trend is down.

Producer:
The Institute for Supply Management Manufacturing New Orleans index.

Mike Zaino:
Trending down.

Producer:
The new orders index and the Services ISM index there.

Mike Zaino:
That one is trending down.

Producer:
S&p 500 Real.

Mike Zaino:
Price. The real.

Mike Zaino:
Price. The directional trend down.

Producer:
The US index of consumer expectations.

Mike Zaino:
Again trending down.

Producer:
Us four week moving average of initial claims for unemployment.

Mike Zaino:
You guessed it trending down.

Producer:
Us Consumer Goods. New orders.

Mike Zaino:
Trending down.

Producer:
Us Construction materials and supplies. New orders.

Mike Zaino:
This one's.

Mike Zaino:
Not up. It's not down. It is.

Mike Zaino:
Sideways. That's the lone.

Producer:
Bright spot here. Us manufacturing average weekly hours.

Mike Zaino:
Their directional trend is down.

Producer:
Us manufacturing new orders.

Mike Zaino:
Actually down again.

Producer:
Us non defense capital goods excluding aircraft. New orders month over month trending down. Us building.

Mike Zaino:
Permits.

Mike Zaino:
Trending down.

Mike Zaino:
At US.

Producer:
Weekly Economic.

Mike Zaino:
Index. Matt.

Mike Zaino:
All of these, with the exception of the US construction materials and supplies, new orders are trending down. And then if you look at the forecast, whether it is declining, plateauing or recovering, every single one of the United States leading economic indicators, they are all in decline. So the folks that are saying that we're not going into a recession, wake up. Okay. I mean, how can you look at the data and say that we're not heading toward a recession, but there is light at the end of the tunnel for those folks who are in that retirement red zone and need to guarantee they need to get to those guarantees that they're not going to lose any of their principal, nor will they lose any of their gains that that principal generates and need to guarantee lifetime income no matter how long they live.

Producer:
Right. And that's why, you know, Americans who already have something like an annuity, which is the thing we talk about a lot here on the show and if you are, you know, are not familiar if your first time joining us here on Money Matters with Mike we'll explain it to you. But people who own annuities already or other products that give a guaranteed source of lifetime income, they want more. They love the idea of investing in more annuities, buying more annuities, right, Mike?

Mike Zaino:
They absolutely do. In fact, the American Council of Life insurers came up with data on how familiarity with annuities breeds love for annuities. All right. When it sponsored a recent survey of over a thousand retirement savers between the ages of 45 and 65, and about 26% of the survey participants said that they already owned annuities and 86% of those surveyed who actually owned annuities in the first place said that they were either somewhat or very interested in buying more.

Producer:
Yeah, absolutely right. And so 76% of the participants with pension plans, 67% of the participants without annuities, said that they also wanted to invest in annuities. So big, big numbers there. And so, Mike, talk about just for a moment here, the one particular type of annuity that that we, you know, sort of think is kind of the Goldilocks for most people and that's the fixed indexed annuity, right? So talk about kind of how those kind of could be an advantage for some people to have as part of their retirement plan.

Mike Zaino:
Right. And so if you are listening to us and you hear the word annuity and that kind of just, you know, gives you an uneasy feeling, you have to understand that there are many, in fact, over 100 different types of annuities. And there are some that I wouldn't stick my worst enemies in. And there are others that I have my personal family members in. So you know that Goldilocks and the Three Bears kind of just right annuity, especially for those who are approaching retirement or who are already retired, that is called a fixed indexed annuity. And the reason is because let's break it down by the words fixed. Your principal is fixed. You can never go below and that is a contractual guarantee. The amount of money that you use to purchase an annuity, well then you have the index and that gives you the ability to choose from a wide variety of different indices, whether that's, you know, you want to. Tie your money to the S&P 500 or to the Nasdaq or to a proprietary index, whether it's through Goldman Sachs or through Barclays. Some of the largest wealth managers in the world all have their own indices. You get to participate only in the gains of the market. And when the market goes down, you just level off and get nothing. So they typically will look at these either on a month to month point to point or on an annual point to point.

Mike Zaino:
And at the end of your crediting term, whether it's monthly or whether it's annually, they're going to look at it. And if the index had a gain, then you get a credit, you get money added to your account. And if the index had a loss, then guess what, folks? You don't lose a penny, okay? Not one single red cent and then say you gain money this year and then next year the market or the index loses value. The interest that you gained this year becomes locked in as principal through a provision called an annual reset. So not only is your principal fixed, but any of your interest credits, your gains, they're fixed and locked in as well. And oh, by the way, these can be set up for growth. They can be, you know, if you're not going to need the money for another ten years, then we'd put you into a growth annuity. They can be set up for income. So if you have a need for immediate income, then we can turn on a guaranteed lifetime income stream that you can never outlive. Or they can even be set up for a combination of growth for a few years and each year you delay taking income. Obviously your income number is going to increase.

Mike Zaino:
It's kind of like Social Security where the more you push it off, the guarantees become a little bit more. And then once you turn on income, that is income again, you can never outlive, no matter how long you live in any of those, you know, issues or excuse me, circumstances, whichever one you choose, whether it is, you know, growth, income or a combination, you still maintain liquidity. So if you have a need to grab ten grand, 20 grand, it's all dependent upon how much you use to purchase the annuity. Typically, it's about a 10% liquidity feature on an annual basis. They'll allow you to do that and you don't have to pay any additional fees in order to get some immediate cash injection if that need arises. And then here's the thing that I love the best. You get to control the money from the grave when you pass away. If there's anything left in the in the account value, then you're going to tell, you know, who gets to get that money by virtue of having named beneficiaries. So that, in a nutshell, is why the fixed indexed annuity is really a phenomenal, you know, platform for those who either need growth, either need income or need a combination of growth than income and are in the right age frame to place into an annuity.

Producer:
Yeah, that's right. It's a great, great thing to explore and to get more information about. And if you have had your interest piqued by Mike's description there of a fixed indexed annuity or anything else that we've talked about so far on the show, just go to MoneyMattersWithMike.com that's MoneyMattersWithMike.com or call (704) 560-1573.

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

Producer:
So this time around, in our very famous and much awaited Problem Solver segment, Mike, the problem is people wanting tax free money for retirement. I mean, you know, we talk about this a lot, that the best kind of money is free money. The second best kind is tax free. So everybody wants it in retirement. How do you get it? That's the question.

Mike Zaino:
Well, number one, you see, you stop contributing to tax deferred accounts where you're just pushing off, paying the piper until a point in the future when you have absolutely no idea what the rules are going to be. And we all know that the government likes to change the rules on us. So the solution would be to take advantage of the only two types of tax free investments. And the first one is going to be a Roth account, whether that's a Roth IRA or participating in a Roth employer sponsored plan like a Roth 401 K, or if you're a federal employee, a Roth TSP, why you pay the taxes up front on your contributions? And what that does is allows your money to grow tax free for the remainder of its life. So not only what you put in, but everything it generates in interest becomes tax free for the remainder of its life. You get to take tax free distributions because you've already paid the tax on the seed. You don't have to pay the tax on the harvest. Another great benefit of this type of an account is that there are no required minimum distributions, those pesky things called RMDs. So if you have your money being saved in a tax deferred IRA, a tax deferred 401. K, a tax deferred, any other employer sponsored plan. Guess what? Even if you don't need the money, the year as it stands now that you turn 73, that will eventually be phased out to age 75.

Mike Zaino:
If you don't need the money, Uncle Sam will come knocking on your door, requiring you to take money out so that he can collect the taxes. And this also includes, if you contribute to Roth accounts, tax free benefit, death benefit to your beneficiaries. So big, big, big fans of Roth accounts, whether it's IRAs or whether it is employer sponsored plans. And then the second way that you can actually generate tax free income in retirement, believe it or not, folks, is through life insurance. Yes, I said life insurance. There is a specific kind called an indexed universal life insurance that operates very similarly to a fixed indexed annuity from the indexing standpoint, where your money is only going to participate in the growth of an index and it's protected and tied to that index for beneficial growth. And what it does is it allows you to take tax free loans from the cash value or tax free loans against the death benefit, depending on how you structure it. By the way, loans you never plan on repaying. Okay. And those income payments can also be structured to guarantee you income for the rest of your life. But with the life insurance, obviously you want to get those at a younger age because you're going to need time to fund those and to allow that cash value to build up. And always remember this you're most likely the youngest and the healthiest you're ever going to be today.

Producer:
Yes, definitely the youngest and quite possibly, definitely the healthiest as well that you will be. And I just love Mike. Whenever we get to bring up, you know, life insurance and retirement together, I think that, you know, minds are blown every time we talk about that. And I can I can hear the little explosions happening all across the listening area and people on the podcast right now because they don't think of that, you know, think of the old style life insurance where it's just the death benefit. No death.

Mike Zaino:
Insurance.

Producer:
Benefits now.

Mike Zaino:
Yeah, yeah.

Mike Zaino:
I mean, death insurance wasn't too marketable, so they had to rebrand it and call it life insurance. But in actuality, death insurance, you know, you only get paid on that when you die. So if you actually have a life insurance plan that is just death insurance and you cannot take tax free income in retirement, then perhaps it's time to give me a call. Let me analyze what it is that you have and see if we can offer you a better solution.

Producer:
That's right. Go to the website as well. MoneyMattersWithMike.com or call that number 704 560 1573.

Producer:
Here's the cost cutter of the week.

Producer:
You know we've been doing this series for the last several weeks now most of the year, actually with 23 retirement cost cutters for 2023. See what we did there. 20, 23, we got 23 of them. You know, we, we like numbers that that are similar that way. But what we do is each and every week, as long as we can fit it in the show, we're putting in these cost cutters and we're highlighting one each week. This time around, we're going to talk about one that is cutting back on entertainment cost. Doesn't mean you can't have fun. It just means you got to be more mindful about it. Let's take a listen. My colleague Jim Tiribocchi put this together. Let's listen to his piece on it and we'll talk about it on the other side.

Producer:
Two years of high inflation could warrant cutting back on entertainment costs. I'm Jim with the Retirement.Radio Network. Powered by AmeriLife inflation in times like these have triggered Americans to be more cognizant about their spending habits. A recent survey done by CNBC found Americans from all income brackets have begun to cut back on spending. Washington bureau chief Bankrate Mark Hamrick explains.

Mark Hamrick:
People need to have a sense of hope when the economy is working for them. They're is a greater likelihood that people will have hope that they can accomplish their basic personal financial objectives.

Producer:
And despite past recessions and examples of inflation, Americans have never been timid about spending money within the entertainment sphere. Sporting events and concert tickets have always been a hot item, but lingering inflation and impacts from the Covid 19 pandemic have shifted consumer priorities. According to Morning Consult Economic intelligence data. Entertainment was among the categories that posted the sharpest year over year spending decline as of March 2023. The purchases of books and movie theater tickets underwent the steepest spending drops at a combined 58%, and about 1 in 4 US adults said they're either spending less on or have stopped paying for media and entertainment expenses altogether. So what are some ways you can cut back on entertainment costs, start sharing or cancel unused streaming subscriptions? Or you can research cheaper alternatives to sporting events and concerts in your area. Cutting back on entertainment costs. Part of our 23 cost cutters for 2023 for the Retirement.Radio Network Powered by a Mirror Life. I'm Jim Tiribocchi.

Producer:
If money is on your mind, you're in the right place. This is Money Matters with Mike.

Producer:
Dollars and you can get your free copy of the 23 retirement cost cutters for 2023 by going to MoneyMattersWithMike.com. Or you can give Mike Zaino a call he'd love that as well. 704 560 1573. And Mike I think great tips there you know if you if you don't watch that streaming account or if you haven't you know if you used to there was a show that you wanted to binge, you binge that show and now you haven't watched it in six months. You don't need to be spending that money every month. Basically.

Mike Zaino:
You really don't. And I always ask myself when it comes to stuff like that, is this going to matter to me in a year from now? Is this going to matter to me in five years from now? And if the answer is no, then guess what? I typically don't pull the trigger on that stuff. So if you don't need it, don't spend the money on it.

Producer:
That's right. Great, great advice that we should use that as a as a quote of the week sometime like that. A lot short, sweet and to the point. Well, speaking of short, sweet and to the point, our show has just about come and gone here, Mike. But go once again, folks, MoneyMattersWithMike.com is the website (704) 560-1573 is the number. I've enjoyed it sir. We've gotten a lot of great info out there for the listeners once again this week and look forward to doing it again next time around.

Mike Zaino:
Matt, thank you so much for everything you bring to the table and for setting me up to knock it out of the park. To our listeners, I thank you guys out there, each and every single one of you. Without you, we don't have a show. So go to our website, give us a call if you want to learn anything about annuities. Heck, if you currently hold a variable annuity or any other type of annuity, give us a call for a free annuity x ray where we can help you understand what you have and then possibly present alternatives that could improve your future income potential. Because many retirees, most retirees, in fact, enjoy the peace of mind that comes with being able to plan their golden years with predictable sources of income that they cannot outlive. Whatever you are doing this weekend, I hope you do it to the fullest extent and as always, make it a great day.

Producer:
Thanks for listening to Money Matters with Mike. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money to schedule your free no obligation consultation. Visit MoneyMattersWithMike.com or pick up the phone and call 704 560 1573.

Producer:
Not affiliated with the United States government. Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. Amara Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis, with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information. Are you concerned about market volatility, rising taxes, economic uncertainty and how it could all affect your future in retirement? Then tune in to Money Matters with Mike to learn how you can protect and grow your hard earned money. Money Matters with Mike every Saturday at 9 a.m. right here on FM 100.1 and Am 1340. Schedule a free no obligation consultation now at MoneyMattersWithMike.com.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity. Contract guarantees are backed by the financial strength and claims paying ability of the issuer.

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