[00:00:00] Speaker A: 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.
[00:00:18] Speaker B: You're tuned in to the Retirement Planning Pipeline, the show that helps you take control of your financial future. Whether you're five years from retirement or just getting started, we've got the strategies, tools and experience to help make the most of your nest egg. Retirement planning specialists David Pipes and Steve Zarek are two trusted voices in retirement planning with over 30 years of combined experience helping hard working Americans navigate 401k rollovers, income planning, tax strategies and everything in between.
[00:00:49] Speaker C: Thanks for joining us. I am David Pipes and if you're wondering how to get yourself on the right track for retirement or how to turn your savings into steady income, you're in the right place. And I'm Steve Zarek. Each week we break down the complex world of retirement in plain English, no jargon, just smart strategies to help you retire with confidence.
[00:01:07] Speaker B: Now let's dive into today's show and start paving the way to your smooth retirement. Here are your hosts, David Pipes and Steve Zarek.
[00:01:17] Speaker A: Welcome inside another edition of the Retirement Planning Pipeline, the show that delivers expert insights, actionable advice and real world strategies to help you retire confidently and comfortably. This is the radio show and podcast that breaks down key topics like investment planning, tax strategies, Social Security optimization, estate planning and more. All the clear focus on helping you build a secure retirement and we want to tell you right off the bat to go ahead and schedule your 100% complimentary consultation with us today. Our listeners can meet with us regarding their own financial situation with their family or their business and there's no obligation. So give us a call at 251-236-4371 or visit retirement planningpipeline.com I'm Jim Tarabokia alongside retirement planning specialists friend of mine, David Pipes. David, how are you today?
[00:02:08] Speaker C: I'm doing great Jim, how are you?
[00:02:10] Speaker A: I'm doing great. I'm glad that we are here once again for another episode this weekend, the Retirement Planning Pipeline. Thanks of course to all of you who are listening on the radio side, also on the podcasting side as well. We do really appreciate that and we've got a jam packed show on tap. But first, another news bullet. And speaking of podcast, the Retirement Planning Pipeline. Our show now available on our website retirement planningpipeline.com or your favorite podcasting app, Apple, Spotify, Iheart, Pandora, or any podcast vendor of your choosing. Give us five stars. Leave a review. We would certainly love to hear your feedback. Also, our YouTube channel, Retirement Planning Pipeline on YouTube. Go there to see videos and subscribe to the channel. For weekly highlights and more special content, hit that subscribe button again. Hit the subscribe button so you get notified when more content is available. Just search Retirement planning pipeline on YouTube. And finally, please, please, please do not hesitate to contact us with your questions.
David and Steve, they want to help you. It's not just that the market gets shaky and David has talked about this in previous episodes, your confidence can get kind of shaky, too. Today's show, it's all about how to stay grounded, avoid panic moves and protect your retirement when volatility strikes. Remember, you can always give those guys a call, David and Steve, 251-236-4371 or visit the website Retirement Planning Pipeline.com for more information.
All right, Volatility Proof retirement How to minimize risk, maximize confidence and make your money last no matter what the market does. Coming up on today's show, why market volatility hits harder near retirement. What is sequence of return risks and why does it matter? Emotional investing, my gut reactions, they hurt your returns and the four most common mistakes retirees make in unstable markets. But David, let's kick off things this week with our quotes of the week.
[00:04:13] Speaker B: And now for some financial wisdom. It's time for the quote of the week.
[00:04:21] Speaker A: And a good quote here, of course, from the great Warren Buffett, the true investor. Warren Buffett says quote, the true investor welcomes volatility. A wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses. Again, a really good quote there, David, from Warren Buffett considering and here's a guy who has suffered through market crashes in the last 60 years. He's beaten the market in the process.
[00:04:48] Speaker C: I talk about Warren a lot, actually with a lot of clients because, you know, he's, he's a big proponent on, you know, the no bond as well. So, you know, he, he really doesn't like bonds. And, and to be honest, Warren's one of those that if you look at his history and what he's done, I mean, I think there's a statistic that he outperformed like every single year the market for like a straight 40 year period, which is absolutely absurd. You know, but Warren's biggest thing is is that, you know, he's always stuck himself grounded. Right. And I think when in the retirement phase, it's hard to stay that way, especially because Warren's a big hold guy. Right. Warren buys these companies, and that's what this quote's about. You know, hey, look, we have a solid company, but when the actual volatility increases, right. You're going to be able to buy a good company at a good price. And that's Warren's biggest proponent about what he really tells a lot of people out there and a lot of investors out there. But when you hit the retirement phase, Jim, you don't really have a lot of that timeline to be able to buy those companies and hold when you're wanting to be able to use that money. Right?
[00:05:56] Speaker A: So, yeah, and another fun fact that I love about Warren Buffett, if I'm not mistaken, he still lives in the same house that he lived in, what was it, 40 to 50 years?
[00:06:07] Speaker C: Yes, sir. Yep. Super. Hey, man, super, super humble guy. I mean, you know, you listen to him talk to it. He's super humble. So.
[00:06:16] Speaker A: Yeah. All right, well, let's get today's show started with discussing why market volatility hits harder than near retirement. You're close to the finish line, so why does everybody.
[00:06:27] Speaker C: Why does every.
[00:06:28] Speaker A: Every dip. It feels, David, like a disaster. I mean, market swings are always stressful, but they feel more personal the closer you are to retirement. You spend decades saving, and suddenly your balance, it bounces up and down like, yo, yo. It's not just paper losses anymore, Dave. It's your future.
[00:06:45] Speaker C: It is, man. You know, it's funny because you.
I have a client that actually, I actually met him a couple weeks ago, and, you know, when he walked in my office, that's, that's the, this is. I'm glad we're talking about this because this is really the first topic that he brought up, and he said, look, David, I don't have 20, 30 years anymore. Right? I don't want 20, 30 years anymore to hold. I want to be able to spend this money now. And I think, you know, a lot of the times people are so.
You heard me say this in shows in the past, they want to hold on to their funds as long as possible instead of spend it because of this fear of a big volume of a drop.
When mathematically you look at it, the mental math is so much different because as you're using that money, like we talked about on one of our other podcasts, you really get a different structure, right? So when you're, when you're turning that money into, we, we call it the decumulation phase, or, you know, Turning into the income phase, right?
It starts to eat away at some of that accumulation, right? So what happens is, is that a normal portfolio, if you decide, right, to start using that money and with the actual distribution phase, you know, advisors and even people's thoughts are, hey, look, we gotta start to diversify so that I don't have a big loss, right?
And as much as some people think that it matters, it really doesn't, right? Because you could have one or two, you know, volatile periods where you're taking out money on a big drop, right? And all of a sudden now you have a gain on the money that you. That wasn't there, right? So, I mean, we've seen it happen in the past three years, in 2022, and now even, I mean, in April this year, imagine people that were taking money out in April were selling, you know, or saying, hey, look, I can't afford this loss, right? So I think a lot of the times too, you know, it be that word waited out is such a big.
That phrase is so is. So how do I say it is. It's so tender in retirement. Because people that's, that's their goal is, oh, I'll wait it out. Oh, well, the market will always come back up, right, in the future. And I talked about this actually in the last episode, which I'm sure you guys have, you know, kind of heard that one, but you don't. Why do you want to wait that 10, 20 years?
And I mean, I, when I ask a client that, they're like, okay, David, you're, you know, you're, you're, you're right. Why do I want to wait that long? And, you know, I think one of the most important things is also is understanding the planning of shifting to spending, right? Because if you don't do the math correctly and you don't plan correctly and you're fully in, you know, in the market and you're there, you can really see significant volatile markets hit your account fast. And especially when people aren't timing it right. I mean, not everyone's watching every single day of every stock that they're in of every ticker, right? So, you know, you get out tomorrow, and all of a sudden the market could be, let's say, three points down, right? So you've got to, you've got to really be able to. To maximize where, where you're taking out and what you're taking in and when what you're waiting on, Jim. And I think that's one of the most important things that we stress and that we meet clients about which, you know, again, 100% free consultation for anyone that wants to go on our website and set up a meeting. But really planning the atmosphere of what you want to grow you shouldn't be touching.
Right. And that's one of the biggest things that I, that I really go over.
[00:10:42] Speaker A: You're exactly right too. And a lot of people, most people don't have time in their day to watch that stock market ticker. A lot of people still in their 50s, even in their 60s, I have two parents in their 60s. They're still working, they don't have time to watch that stock market ticker. Now granted, when I was a kid, my father, who was working from home at the time before, it was the cool thing to do, he would watch that stock market channel in the early 2000s. So he was working while watching that stock market ticker. But most people do not have the time to do that. You're exactly right. Now, let me ask you this Volatility, it's normal. That's the truth. Right?
So how do people. And again, what matters most is how you respond to it, not just emotionally, but strategically. How would you recommend, because you mentioned 2022, that market drop as well. How would you as a retirement planning specialist tell your clients and help your clients get through that volatility and calm their nerves?
[00:11:44] Speaker C: And when it goes back to what I just said, Jim, and really tiles ties down to being planned properly, right? And you know, we can always help. So I, I don't want to say, hey, you know, if you screw yourself up, you're out. We can help in any way. But if you want to be able to maximize at first, you need to have a plan two or three years before you retire. And that plan comes from having a certain amount of money set away with no risk to be able to use that volatility to gain on the funds that you're not touching. And it's simple. But people don't get it and advisors don't get it sometimes, right? I mean, that's where the comprehensive planning comes from and why we're so busy right now, you know, because the comprehensive plan, it just simplifies things. It looks better on paper, it looks better everywhere. It sounds better if I have a certain amount of funds that I know that I can gain, you know, index link gains with, so I can still have growth to my accounts, but I have no risk and I'm taking income, it's a no brainer and it's a guaranteed income for life. So my Other funds can be able to sit and really, you know, grow and accumulate, and they can take that hit, Jim. They can. So in 2022, right, if I was retiring, you know, and I had that plan set up where I had my certain allocation of funds in a certain pot that I was taking income off of, but I was still invested in the market where that market dropped, it's okay, because I'm not taking income off those funds. So that drop didn't affect my income. Bucket. Right. And we always talk about buckets. And that's, that's another thing that I think we're going to go over later. But buckets are super important. And to be able to have those buckets and choose from which one you want and not be able to really stress about the timeline. Right. Have a plan, have a comprehensive plan. And that's what we do. You know, and that's what I really pride, the pride that I have in really us and Steve and I, is we sit down and we create that comprehensive plan for every client with a unique situation. Because every client's different, every couple's different. Right. So, Jim, I really, really think that, you know, down the road, that's what, that's what people need to be focused on, especially now in the market. I mean, you know, we're seeing some volatile times.
[00:14:02] Speaker A: Yeah, this is exactly right. And I've heard this before from other financial advisors. They will say you can't put everything or all of your hope about your retirement and your financial portfolio in the stock market because of all the fluctuations.
[00:14:16] Speaker C: That always happen now. Yep. And that's. But, Jim, it's funny because the statistics show that, you know, the majority of people in retirement have the majority of their funds in the stock market. So why. What. What's going on? Why aren't we fixing the problem, Jim? You know, and I think that's what, that's why our business is thriving right now and why the, the success is, is growing. Because people are finding out how to beat the system. Right. We talk about that all the time. And sadly, corporations take advantage of certain people, and that's going to happen. I mean, it's going to happen for forever since from, from, from day zero all the way to infinity, you're going to have corporations that, that get sued, that have lawsuits. Right. And we won't, we won't go over names, Jim, but we can already. We can already, you know, pretty much know a couple of them. Right. So the end of the day, you have to be able to beat that system and outsmart that system, but also be able to shop an advisor and have a comprehensive plan that's not based towards one side. And we're seeing, I mean, I'll tell you, Jim, I'm meeting a lot of people that do not have that plan set up that sadly have 80, 90% of their funds in the stock market and it's full volatile. And because, Jim, because of what the markets did in the past two to three years, okay. They feel like it's okay.
Right. When we had that 20, 22, that happens. And now they retire next year or the year after and all of a sudden they realize really fast that their funds aren't so, you know, liquid anymore. Right. So that's where I think people are getting so spoiled right now. Because, you know, I think one, one of our indicators hit the mag seven at an all time high, right. It's overbought by the all time high any, any time in history. Right. So that's where you have to be careful is when you have the probability of these big corporations being overbought because of growth.
You, you've got to be careful because it, it brainstorms Sometimes people think it's always going to go up, which we know, Jim. I mean we've, we've all lived through it. Right. I mean we've heard her stories. You've heard, I mean, even suicide stories in 2008. So you've, the one thing that I will say is retirement is, is not that cycle. Right. And you've built your entire life, you've worked your butts off. You know, it's time to be able to utilize those assets.
Yeah.
[00:16:41] Speaker A: And again, if you have any questions or concerns, we encourage you to reach out and give David and Steve a call at 251-2364-3712, 512-364371 or visit the website retirementplanningpipeline.com coming up later in the show, we pick apart the four most common mistakes retirees make in unstable markets. But up next, this often overlooked risk can erode your nest egg. If the market drops early in retirement, we'll take a deep dive into what that is on the other side. All right, let's break here. You're listening to the retirement planning Pipeline.
[00:17:18] Speaker B: Helping you take control of your financial future. This is the Retirement Planning Pipeline.
Visit Retirement Planning Pipeline to schedule your free, no obligation complimentary consultation today. And now back to the show.
[00:17:43] Speaker A: This is the Retirement Planning Pipeline. Thanks for making us a part of your busy weekend. We're glad to bring you Financial insights and information as we do every Sunday morning at 9am right here on Mobile's own news radio 710WNTM. And of course, we'd like to thank our podcast listeners from all over the country, all over the world, quite frankly, for listening and tuning into our show as well. A reminder, a free no obligation consultation is right there for the taking. Visit retirement planningpipeline.com for more retirementplanningpipeline.com to schedule your free no obligation consultation. Great first segment there, Dave. I want to ask you though, what are some key market trends in the past that people may not know about today?
[00:18:27] Speaker C: Yeah, it's a good question, Jim. One of them is mainly, you know, as far as the best 500 companies you know in the country, S P 500, you've got. You know, what people don't realize that in the volatility segment is that there are three to five corrections every single year in the market. And a correction is 5 to 10%, right? So that up to a 10% drop, right? Which is, I mean, you talk about a million bucks, it's $100,000 in, in a quick drop of a correction. Now, I mean, not all of those, you know, stick to it. You had the market end up positive at the end of the year, but on average there's three to five of those a year, right? So imagine, you know, that imagine you're taking income and you are actually taking money out on one of those three to five times or shoot in the middle, you know. So that's where being able to plan that as well is super, super important.
Not just to mention that, but more, more than 70% of years since actually 1980 have had a market drop of 10% or more but ended positive. So think about that. 70% of the years in the past 45 years, right, have had a drop of 10% or more.
So really a good market correction but then into positive.
So imagine, you know, you're in the stock market and you have a financial advisor or whatever, or you start to get worried or you start to take income or you need money for traveling. We need money for health care, right? Whatever it may be, whatever expenses you have in retirement and you're taking that money out, but you're taking it out like we talked about, when it's down or when it's going down, right?
This is where I think retirees miss the boat, right? Because if you had that money put away into a risk aversive, you know, investment, you wouldn't have that problem, right? You wouldn't See that loss, and like we talked about one of that, one of the, you know, earlier episodes, when you take that loss, it takes a lot more to get back, right? You, you're not in the accumulation phase anymore, so you're not plugging in. You're now taking out. So it's inversely correlated. That is the, one of the most important things that I think no one goes over is the fact that when you have those drops and you take out money and you think the market's going to come back, what happens in retirement when you're actually taking money out? Right. A 20% gain on 500,000, okay, is $100,000.
A 20% gain on a $600,000 portfolio is $120,000.
It's a $20,000 difference of gains just by taking out 100 grand for one year.
That's income for a lot of couples, for a lot of people. Right. For a lot of people that want to go travel, for a lot of things like that, Jim. So if there's anything I can say, it's, if you think that you know the market and you can control it, you're wrong. You know, and, and volatility comes and it's, it's not rare. It's always there, right. So it could come in spikes any time of the year. So you can't plan for something like that. Right. But what you can plan for and what we do, you know, and what I really specialize in, which again, 100 free consultation, please give us a call or go on our website.
You know, we, we really sit down with you and plan before that to where we don't have to worry about those things. And you can live that stress, simple retirement.
[00:21:58] Speaker A: You know, with all of the talk nowadays of inflation and there's always talk of, of people saying younger generation, maybe people from our generation as well, about how the American dream is disappearing. But you mentioned in their $20,000, and for some reason, people can't seem to really grasp that $20,000, no matter what context you put it in. Even with inflation, everything else, it's still a lot of money.
[00:22:26] Speaker C: Yeah.
[00:22:26] Speaker A: And that's a big difference, what you mentioned.
[00:22:29] Speaker C: Yeah. I mean, just imagine $20,000 compounded, you know, so that's, that's where it gets tricky, man, is you don't, we don't have that time anymore, Jim. And I think that's one of the biggest things in retirement is, you know, you don't have those 30, 40 years that you've been accumulating. You're not Plugging it in. So you have all these factors that change really fast when the, the cycle is not on your side anymore. Right. So you've got to be able to plan for that. And, and that's, that's really what's cool about this. You know, this career is, is being able to help people really plan for the. What's supposed to be, again, what's supposed to be the best part of your entire life? Don't make it the stressful part. Right, Right. I'm here today telling you, you know, if, if you need any help, if you have questions, you could reach out to us, we'll sit down and have a free consultation. But it should not be stressful. You should not be going to six different financial advisors asking for all their inputs or what's going on here. You should be understanding the plan of what your plan is and having someone that can actually plan your specific plan for you and what your goals are in retirement, not for everyone else's.
[00:23:36] Speaker A: All right, well, let's dive into sequence of returns risk and what. Why does it matter? The market might average out over time, but timing matters a lot more than you think. So let's explain what is sequence of returns risk and David, why does it matter so much?
[00:23:53] Speaker C: This goes into compounding, Jim. And, and I talk about this because the mathematical equations, again, you know, I know I have an analytical background, but you can't forget how compounding works. And if there's one thing that, that in, in math classes, really early seventh, eighth grade, that you really learned is, is the exponential formula, okay? And how things grow linear and how things grow exponential, okay? So if you change the sequence of numbers of a growth percentage, you end up compounding your percentages.
Right? So, and that goes the same way if you go inversely. So if you have two or three negative years. Right.
Well, what's different is this, is that if you have three or four good years at first and you actually compound on them, let's say that you went from $100,000 to 150 grand. So you made 50% in three years, which there's a lot of times in the market where that that definitely could happen.
And you have a 20% loss one year.
Okay? So let's take that average. So you have 50% in those three years, and on the fourth year you have a 20% drop.
That averages out 50 minus 30. 50 minus 20 is 30%. Okay, that 30%.
Now here's where it gets tricky. 30% of the. A hundred thousand dollars would be $30,000 so on an analytical or a spreadsheet that these 500 corporations or whoever it is, or your statement will say that your average rate of return made you out of $130,000.
If you take that 150 grand and you take 20% out of that $150,000, you're not at 130 grand, guys.
That's where it gets tricky. You're actually at $20,000.
So you really lost 30% of what you actually gained.
So see how the sequence when that loss comes in matters? It's not about, hey, I lost 20% up front. Because then it affects the total compounding different on the other side. And we actually sit down, we went over this with the client because he had things all spread out and he said, well, if I have it, if I can average this, and I've averaged this over the past 10 years, and if these mark at this, even if I have three downplays on these sides, well, he wasn't taking the actual compounding average off of it. He was taking just a percentage of what he originally put in. Right.
I think that that's one of the most important things. And you watch these stocks grow, right? I mean, you watch the, the, the Teslas, the Nvidias, the, the Palantirs. You know, over, over a year, they might have grown 100%, but then all of a sudden you get in at a higher average and guess what? You have a 30% drop in no time, right? And everyone always asks this question, Jim. Oh, well, what happens? I don't know why it seems like it drops faster than it goes up. Have you, have you ever heard that, Jim?
[00:26:49] Speaker A: I have.
[00:26:50] Speaker C: Yeah. And it, it, it seems like it. Because everyone wants, everyone wants the rainbows and sunshine everyone wants, oh, my account's been up crazy this past year. But then when you think about it, and let's say you just double your money, right? So, okay, I've doubled my money now, Jim. I had $100,000. Now I have 200k, Jim. If I lost 50% of that 200k, where am I at again, Jim?
[00:27:17] Speaker A: Well, not in a good place.
[00:27:19] Speaker C: Back to 100 grand, Jim. That's right. Going back to my normal amount of what I actually put in.
[00:27:25] Speaker A: I wanted you to be the bearer of bad news there. Not me. I'm just the host. I don't want to be the bearer of bad news.
[00:27:31] Speaker C: But I was up 100%, Jim. How can I lose 50 that next year? Yeah, right. So this, the math gets tricky where again, when you go back to the sequences and it goes into withdrawals. If you have early losses and early withdrawals, it's even worse, which we don't even want to. I don't want to go over that because that's why you need to come to us and we need to actually sit down and plan and be able to set you up for your future retirement or the retirement now. And yes, we can still save a lot of people. We do it every day. So if you feel like things are a little bit rocky right now or, you know, things haven't been going the best way, please reach out. We, we love what we do. We would love to help. It's 100% free consultation. We sit down with you, go over the numbers and the exposure expenses and, you know, anything you want to talk about, we go over. Okay, and, and that, that's one of the biggest things that we're seeing right now. And people aren't understanding the actual sequences. Right. Because. And it works the same way, right. If you have five or six years of those great percentages, they can compound, great. But if you're, if you're in the retirement cycle and you plan on using your money, I hope, I hope and pray that you are not fully risked and you are not, you do not fully have all of your money in aggressive situations. Because if you do, with risk comes reward. Obviously, with reward comes risk, right. So you have that risk of losing as well. You have one down year, you won't be able to use your money for another five years. So just keep that in mind. Keep that in mind.
[00:28:57] Speaker A: So let me, let me. Now that you're talking about risk, let me just throw this scenario out at you. Retirees from 2000 to 2010, I saw this not too long ago. They saw a slow growth and two major crashes. Again, retirees from 2000 to 2010, those retired just five years later, though, had a completely different ride. And so that just goes to tell you right there how planning for this risk is so essential in retirement.
[00:29:24] Speaker C: Yep. Yes. Yes, Jim. And people are getting super spoiled. And I say that all the time. But you, when you're in the bubble, calm the bubble wealth years, right? You've got these years that you get in 20, 30, 25, 22% compounded on top of each other. And it looks really, really good. I mean, until you have that one of that sequence that comes by and you lose more than half of what your gains were, which is super, super important. Enable. And we always say this, and this is one of my biggest proponents, lock in your gains People, why are you, what's the point of having all this growth and having the bubble wealth period and all of a sudden is letting it all tank and, or giving or having the risk to let it tank, right? Be able to plan those, that those gains and be able to use them and utilize them. That's what you've been doing for your entire life. So when you're plugging your money in and, and you're actually, you know, plugging in that 401k, your IRA and you want to know what to do with it down the road or you want to know what to do with it, hey look, David, how do I use this right? Understand that your gain should be utilized for your retirement, right? Not be risked towards the market to be able to lose those again. And we go across a lot of the times where the dead decade and gymnasts went over it from 2000, 2010, right? We saw those two slow growth periods, but two crashes.
I can't tell you enough how important those 10 years are to history, okay? Because people always look at the past 10 years. That's what they do. They say, oh my gosh, my account's been crazy. And we get all these financial advisors that go, we're going to grow your money so much because you have the hypothetical, oh well, the past 10 years has done this. So if the next 10 years do this, guys, when you take statistics and you do sample sizes, the market's been around for a lot longer than 10 years.
So you can't just take a 10 door, a 20th right. Of this sample size in a statistical format and use that as an inference. You can't be confident about that. Right? So that's where I think, you know, certain people will definitely have a struggle is if they don't utilize that and don't become more knowledgeable really, and, and, and learn and, and have the right plan. Jim?
[00:31:41] Speaker A: Yeah, and again, I just want to put this question out there. Are you curious about how your retirement plan would hold up in a rough first five years? Well, if you are curious, I think you should give David and Steve a call and let them run the numbers for you. Visit retirementplanningpipeline.com or again, you can give them a call at 251-236-4371 to schedule your sequence of returns analysis and protect your early retirement years. This is the retirement planning pipeline.
[00:32:11] Speaker B: 30 years of combined retirement planning experience.
Call David and Steve today at 251 4371. The retirement planning pipeline. We'll be right Back Planning for retirement doesn't have to be overwhelming. Get expert insights, tools and personalized strategies to secure your future. Visit retirement planning pipeline.com today. Your retirement, your plan, your peace of mind.
[00:32:50] Speaker A: You're listening to the Retirement Planning Pipeline. We're halfway through, but if you missed any part of today's show or previous episodes, subscribe and listen to the program in podcast form, Apple, Spotify or whichever platform you enjoy your podcasts from. Thank you very much. All right, before we get into emotional investing, let's just recap really quickly what we talked about in our last segment. David, about how important it is for you as the client. You, the listener as the client. First of all, to give David and Steve a call at 251-236-4371, schedule that free, no obligation consultation, but also how important it is to schedule your sequence of returns analysis.
[00:33:34] Speaker C: Jim, I know I get passionate about this, you know, but if there's one thing that I really have to push towards you listeners out there and anyone on the verge of two, three years or in retirement now, especially people in retirement, you need to protect the next two or three years. And as important as that is, people can say, oh, I can wait or I can hold it off or I have enough funds or I don't need to take a lot. Now imagine when you do, all right? Or imagine if something happens or imagine if you want to take out income in next year or if you want to go on a trip or if you want to buy a new car, if your car breaks down or you want to buy a new house or you know, something, who knows, right?
You need to be set up for the next few years. And Jim, I think that that's one of the most important things. I really want to stress that to you listeners out there. Be prepared, right? And, and, and don't, don't wait. I see now a lot of clients are coming in and they're saying, I wish I met you two three years ago, David. And I, and I had to tell them, Jim, I wish you did, too.
You know, so, but I just, I, if there's one thing I could stress, guys, please give us a call. Sit down with us. Don't wait, have a discussion about it. See what you can do with your income planning. See what you can do with the asset allocations. We'll definitely help you out.
[00:34:50] Speaker A: And again, let David and Steve run the numbers for you. Visit retirement planningpipeline.com or call 251-236-4371. All right, emotional investing. Why? Gut reactions Hurt returns. So there's things in life, David, we all get emotional about, right? I mean, for us guys, it's probably sports. You know, some people, it's. Some people, unfortunately, it's. It's social media, right? Or that great new show on Netflix that's an apparent. Can't miss that. Every time I check it out, it is, in my opinion, indeed a miss. But nonetheless, people get emotional about these things. And when it comes to investing, things like fear, greed, and gut reactions can cost you more than market ever will.
[00:35:35] Speaker C: Yeah, you know, I kind of get into this in a 50, 50 split, Jim, because I can see both sides and. And me, as a math guy, I can see both sides because the probability is 50, 50 though, right? So I can't really make an inference off of that, right? And it's hard because I go off numbers and, and, and when you guys meet me or any, Any client says about a meeting, we go over hardcore numbers. It's in the statistics and what we can. Inference, what we can be confident about and how we can plan accordingly, right? Problem and solution. I always tell that to a lot of agents under me. They ask me, David, you know, what should I go? How do I tell a client what to do or. Or, you know, how can I tell them how, like, you help so many people. How do. How do I tell them that you can help them? And I just say, look, you know, understand. You have to understand the problem of the client first. But a lot of times when you get into the emotional side, right?
Clients in. I'm sure a lot of you can definitely, you know, feel this one. You guys getting emotional on money, on funds. Funds are one of the most important things in the entire cycle, even at a young age, right? Being able to make a nice income, to be able to support your family and to be able to do those things, but also to being able to keep those funds, right. I can't tell you how many people have shoots hundreds of thousands of dollars in checking and savings accounts. I mean, to me, it's absolutely insane, right? But these people, all they can think about is, I don't want to risk my funds, right? Or that greed. And that comes in agreed, too, because greed's not only in the market. Greed definitely comes from being.
You know, I met a lady over in another area over in actually Florida, and she had about $1.1 million of her $2 million net worth in a savings account.
[00:37:30] Speaker A: Oh, my goodness.
[00:37:31] Speaker C: And it was, oh, my good thing, like 0.8%. And I'm like, what are you doing? Well, I just don't know what to do with it. I have a lot of cash and I'm not really sure, I don't know how to tell you but like there's anything you can do and let your money work for you. You can make a whole income off a million dollars, right? So. But it comes down, greed can come in different ways, right? And if you do, that's the other thing. Anybody out there listening, if you do have CDs, you need to call us. If you have CDs or money in the money market or things like that, that's a, that's a no brainer and I can't push that enough. Jim, there are things out there, there are vehicles out there that are 10 times better than that CD or that, or that, that money market that can really tax, defer your assets as well and be able to grow them and be able to use your money to work for you. But the other thing is, it's overcompens really quickly.
[00:38:26] Speaker A: Just piggyback on what you could piggyback on what you said there. I actually have a friend, good friend of mine whose father keeps all, and they have a lot of money, but he keeps all of his money under his mattress. So he doesn't even have a checking or savings account. I mean he is old, old, old school and I mean there's so much risk that comes along with that, obviously. But like you mentioned, you're leaving a lot of gains there on the table by just having said checking account or savings account with all of that money tied into those two accounts.
[00:38:58] Speaker C: Right? And sometimes you can't, you can't switch the mindset, right? So I met, I mean it's very, very few because I don't let a client walk out without knowing, you know, what's going on or, or the, the rate of returns or even the fixed, you know, the guarantees that they can get that are better than what they are guaranteeing themselves already.
And, but there are some that, and I'm sure you're out there that, that are just stuck to it, right? You've been doing it for 40 years. You don't want to ever do it. If there's one piece of advice I can give you and it's going to be really simple, right? Do you still drive a 1965 car? Do you still drive a 1970 car? No, no. It breaks down, you get a new one.
Okay. Do you still abide by the same housing principles that you did?
No.
You renovate, you do things, you buy a New house, you put a pool in the backyard, you make life better. It's the same difference. Don't get stuck in the olden ways. Learn how to innovate, right? If a financial advisor has been in the business for 40 years and he's doing the same thing for you that he's been, was doing 20 years ago, you're in the wrong system. And I'm here to tell you that now you have to innovate your finances, especially during retirement. Put your, shift your system, shift your allocations, shift your system to be able to work for you and how you want to live that retirement. Don't just go by what someone else says. Draw the numbers up, understand, draw a T chart for yourself and be able to compare those things, right?
[00:40:33] Speaker A: But you know, David, also really quickly, you know, you talked about their people, they upgrade their homes and they, they maybe put in a pool or they fix a certain room, they upgrade the house and they put money, invest money into doing that and they're not afraid to do that. But when it comes to your retirement, it seems like you find some people who, tying in with this segment, get emotional about their money and all of a sudden they become very, very timid because they don't know what to do with all that money that they have saved up.
[00:41:03] Speaker C: And, and it's, it, it comes from, from really the emotional setting like we talk about, like this section is talking about. But you know, you shouldn't be emotional about it. If there's anything emotional about it, it should be a good thing. I mean there's, there's fixed things, there's fixed vehicles out there that, I mean we had a client that had a million dollars. It was getting like 4 point something percentage off off a T bond. We ended up getting like 5.75% tax deferred until you want in, compounded until you want to take it out. So it gave him like $57,000 a year if he wanted it for the rest of, you know, for, for 10 years in a row.
It's just, it's something in retirement that you really have to think about, that you have to plan accordingly. And in that, that, that's a specific, you know, it depends on the person, it depends what you have, it depends on what you want really. But the other side of the things, Jim, is really that overconfidence in the bull markets. And I, we talked about this last segment, right?
You can't, you can't take 20 years. I don't even care if it's 20 years. You can't take 20 years in the market and then analyze it and then make, be confident about your inferences off those 20 years. Just statistics just don't work like that.
You're going to have different presidents, you're going to have different rates, you're going to have different decisions, you're going to have different lifestyle choices. You're going to have different, you know, demographics in society. Shoot. The wealth generation, the biggest wealth generation, the boomers are turning 65 years old and transitioning their assets. You're going to have these things that happen that cause cash flows and inflows and outflows in the market and in certain places or in certain other markets, right. That you have to adjust, you have to plan for.
And that's, that's a super important thing. If you're overconfident in the market, in this bull market that we're having, you're doing it wrong.
You really are. I mean I, I'm all about having the market gains, but have the market gains that you don't have to really worry about that you can wait 20 years to use. If you have a moment in your mind that you want to use those funds in the next 20 years.
I wouldn't even, I wouldn't even think about putting that in a fully risk investment. I mean, you got to think about it. You know, you get back in, in the actual 1900s, that we had a bunch of bad years too. I mean you're not, you're not adding those in, right? Or you know, what happens if we have crazy to say but World War III or whatever or you know, the stuff that happened with Ukraine. There's, there's so many things that, that, that happen that cause market volatility. There's so many factors. And then actually in school we call them a regressional analysis. Right? And when you have all these factors, it creates your, your confidence super, super low.
Well guys, there's unlimited factors that can happen in the market. So with anyone that can say, hey, the statistics show this, that this, unless you're literally leaving all your money in there and you don't have an IRA and it's all non qualified and you just never planning on touching it, which if you're retiring and you don't plan on touching your money, I'm sorry to tell you, you're doing the wrong thing. Retirement's meant for you to use it. Retirement's meant for you to be able to, to go travel, to be able to do the things that you want and not to say, well, I don't need to do that, right? I hear that a lot, Jim. I hear that a lot. I don't need to go on this trip. I don't need a nice, you know, car. I don't need. And it's like, why then what's the point? We just want to keep the money in there. And look at it. Is, is that the whole I don't.
[00:44:34] Speaker A: You want to enjoy your go go years?
[00:44:36] Speaker C: I'm right, right, right, right. I, I, I don't get it. But there's some clients that get it, Jim. There's some clients that say, hey, I want my income up front. I want a lot up front.
[00:44:45] Speaker A: Well, you know what, here's the thing, everybody. If the market drops and that keeps you up at night and you've ever felt tempted to quote, unquote, cash out, let David and Steve put a plan in place that you can stick to. So visit RetirementPlanningPipeline.com or call 251-236-4371 again, RetirementPlanningPipeline.Com or give them a call at 251-236-4371 for your personalized investment confidence checkup. All right, stay right there because coming up next, the four most common mistakes retirees make in unstable markets. You're listening to the Retirement Planning Pipeline. We'll be right back.
[00:45:23] Speaker B: Visit Retirement Planning Pipeline to schedule your free, no obligation, complimentary consultation today. The Retirement Planning Pipeline will return in just a moment.
Missed part of today's show. The Retirement Planning Pipeline is available wherever you get your podcasts and at retirement planning retirement planningpipeline.com welcome back.
[00:45:50] Speaker A: Inside the Retirement Planning Pipeline show that delivers expert insights, actionable advice and real world strategies to help you retire confidently and comfortably. Jim Taraboki alongside retirement planning specialist David Phibes. Thank you so much for making this show a part of your Sunday morning each and every week right here on Newsradio710NT. And hey, piggybacking on last segment that we did, did you know a little fact here for Everybody. Data from 2024 show the average equity fund investor underperformed the S P 500 by nearly 4.5% annually. Let me say that again. Data from 2024 show the average equity fund investor underperformed the S P 500 by nearly. David, here we go. 4.5% annually over the past 20 years largely due to emotional decision making and poor timing.
[00:46:46] Speaker C: Yeah. And then that's again, humans are humans, you know, and, and you can't, you can't forget about personal error right and one of the biggest things I think on that side, which I'm glad you went over that, Jim, because we try to go over some of those facts, but one of the most important things is this, okay, Financial advisors can do whatever they think they can do and they might be okay. I'm okay with 12% return, right? But at the end of the day, down the road, they're always going to be implementing something as bonds or they're always going to be implementing something as diversification, right? To try to justify themselves to where you're not going to be able to lose the 30 or 40% loss. You might just lose 20, 25. Right?
That's not, first of all, that's not helping your gain at all because that takes away your actual gain, obviously, right. For the past 20 years, Jim just said it, you're losing four and a half percent average annually just because of that. If you went with your best 500 stocks, you know that the corporations actually choose, you'd be fine. You'd be fine. But instead you have an advisor that you pay a fee for.
You could go and you could go buy the SB500, right, with full risk and not pay any fee. You pay an expense ratio and that's it. You wouldn't pay any advisory fee. And that outperforms your Advisor annually by 4.5% for the past 20 years.
So everyone out there that thinks that, okay, it's okay, it's, it's not. Especially in retirement advisors, you're in, you're seeing a lot of this, which is, I'm sure a lot of you are seeing a lot of commercials and all these millions of dollars of commercials with these financial institutions.
These people, these, these corporations are losing so much money because people are getting smarter. You don't need to pay someone to not make you money or to stunt your risk or to stunt your growth. You do not need anyone to do that. You can do that yourself, right? Or you can come to someone like us with a comprehensive plan and be able to actually plan both sides of that, which is super, super important because you now the advisors are turning into a paid system and being able to leave it hands off. That really is, is, is why the corporations are losing money. And now they're trying to train these, these advisors to do different things and different strategies to try to talk to you and keep your money there, send you a gift bag, send you this, send you that. And it's just not going to work. It's just not going to work because at the end of the day, in two or three years it's going to be too late for you and you're going to have to come to someone, maybe it's us. And like I tell you, I hope that you guys can come to us early and understand this early for a free 100% consultation and actually sit down and go over this stuff. And, and it's so cool to be able to help people with this because they realize early and they, they get confident about it and the word's traveling fast. So Jim, you know, that's, that, that, that's definitely one thing that I think that the retirement cycle is pushing. Yeah.
[00:49:40] Speaker A: And again, we talked earlier about avoiding making rash decisions and getting emotional when it comes to your retirement. So here's a quick checklist of how to emotionally prepare for market volatility in retirement. Know your withdrawal strategy before the next dip. Review your asset allocation with your financial professional. In this case would be David or Steve. Practice a 24 hour rule before making major financial moves. Keep a calm script on hand to ground you during volatility. Calm script. You know, one of those, I don't know, what do they call them now nowadays? What do the kids call them? David? Affirmations.
So keep an affirmation script on hand to ground you during volatility and finally remind yourself of your long term plan on a weekly basis. You can't control the market. We've touched on it throughout the show today. You can't control the market, but you can control how your report retirement portfolio is structured to handle it. A reminder to give David and Steve a call today at 251-236-4371 or visit the website retirement planningpipeline.com and schedule your free no obligation consultation with two guys that have a combined 30 years experience in retirement and financial planning. All right, let's dive into the four most common mistakes retirees make in unstable markets. From panic selling to trend chasing. Here's what not to do when the market gets rocky. These are some of the common and costly mistakes that David and Steve see very often. Number one, panic selling. Number two, sitting in cash too long. Number three, chasing those hot trends. Number four, making big changes without a plan. The good news, these mistakes are avoidable. With the right plan in place, volatility is normal. But what matters most, David, is how you respond to that volatility. So let's break those down, starting with the first one there.
And that is panic selling. Again, the four most common mistakes retirees make in unstable markets. Number one, panic selling.
[00:51:48] Speaker C: Yeah, yeah. And first of All Jen. Jim, you hit it on the head. I mean, these are all, these are all avoidable, you know, which, which makes it. And I don't want to sound, I don't want to sound like a broken record, but for the people out there listening, you don't have to make these mistakes. And if you have questions about them, you need to meet someone like us because you don't have to, right? Like you look at the first one. Panic selling, you should never. First of all, you shouldn't even be in the market if you're panic selling.
Why, why would you want to sell all your stocks or all your funds or mutual funds, whatever you're in, if you're not planning on selling anyways, right? So your entire life you stayed in and now you want to panic sell.
You shouldn't even be at that point.
That's why two to three years before retirement, you need to be sitting down with us. Because the panic selling comes when you retire. The panic selling doesn't come before it because you still have two to three years left, you're able to wait. So if you're already panic selling, you need to sit down or thinking about it or understanding when to sell or trying to find out that you need to sit down with us in general because the plan and this goes to number four, that's a big change.
So number one and number four kind of go together. You talk about panic selling, that's a big change without a plan.
Panic selling is a quick decision that you shouldn't be doing off the bat unless you plan for that panic sell and understand what you're doing or understanding why you're doing it, right?
Sitting in cash too long.
Jim, we just went over this on the last segment.
If you're sitting on cash and money market is cash, so. And so is CDs, so I consider all that cash, okay? I really do. Now, cash can be cash on hand, right? Paper bills or whatever. I consider money market and CDs cash as well, because it's very, very liquid, okay? And to me, cash is liquid. So if you're sitting on something like that, you have to understand other vehicles to be able to do the things that cash is doing for you.
And to make that simple, there are other things out there, other vehicles out there, other investments out there that are going to be 10 times better than what you're doing with your money in cash.
Sometimes it's hard to break the cycle of yourself and see that money in your account, right? I know myself. Sometimes it's hard for me to put the money away, right? But you have to understand that if you don't do that, you're going to be losing the opportunity. It's all about opportunity cost.
The normal economical principles, okay? If you're going to lose a year of that growth value, what is your opportunity cost, right? Normally it's pretty high, okay? Think about that compounded, okay? So if that cash sits in there and what's so frustrating is, you know, you don't really know until you miss the boat. Then you go, I wish I was there. I wish I did that. It's, it's almost like missing, missing out on something, right? Or missing out on a big party or missing out on a get together with the family that you wish you could have made. But then you find out that you could make it, right? So then you didn't take the flight home, right?
Don't miss that opportunity.
Find out fast. Find out first. Set the plan first, Then understand why you're doing something. Because if you have a fortune, pull a full plan, you won't need to log in your account every day and look at the million dollars in your checking account on the savings account, right? And I can't stress that enough. Now I know that not a lot of, a lot of individuals don't have that problem, right? Because we're dealing with a lot of smarter individuals. But if you have that problem, that's another situation that you need to come in and talk to us. That's one of the easiest, easiest fixes that we can do. And that comes across sometimes as well. But the last thing and not least, Jim, chasing hot trends.
[00:55:46] Speaker A: I'm glad you mentioned that because I was just going to ask a question about those hot trends nowadays, of course, AI tech stocks, but maybe most importantly, out of all of these new trends, cryptocurrency, which has really picked up steam in the last five to seven years, what's your take on chasing hot trends?
[00:56:07] Speaker C: You know, I have about two clients every day that ask me about cryptocurrency, Jim. So you hit it on the head. But, you know, here's where, here's where statistics come into this play, okay? Now crypto, Crypto's different.
I don't think it's a trend personally. I think it's an investment class.
It's a very volatile investment class. And if you're retiring and you plan on using money and you plan on using any of it, you should not be putting it into crypto. Now, if you have 5 or 10k that you can throw around 20k and you like a certain coin, go ahead, right? But small percentage chances that you're actually going to become a millionaire off of crypto, and as far as you can make it, as far as you can lose it too, right? So just be careful with that. But hot trends in general probabilities, statistics in the actual, in the actual world, in actuarial models class, we learned about one key thing, right? When a financial institution or anything, or any corporation or really any company has a high volatile period, okay? Which means high volume. So you have a lot of cash inflow or cash outflow, okay? Which is again, these trends, they call them trends because everyone's hopping on the trend, right?
Don't chase the trend, because if you chase the trend, right, you might get caught in what's. What was GameStop, right, when everyone lost their money or, you know, so well.
[00:57:43] Speaker A: You went there, don't you? The games, you had to take a shot at GameStop today.
[00:57:47] Speaker C: The probability, I mean, it, it crossed, Jim, it crosshairs, I mean it. And the people that made money, great. But was it a, Was it a logistic? Was it a real mathematical equation or was it a real spot that they could be confident on the money that they made, Jim? No, it wasn't. Because you can't just, you have to hop on something and hope that it goes up, which is super, super risky. Now, what we always went over in, you know, in all these courses was the biggest thing that you have to realize is that what, when a trend is already caught up to, right? And you have all this, these, this catflow going in, right, the probability that it stays a trend is low. You think about it, trends die out, right, Jim?
[00:58:33] Speaker A: They do.
[00:58:34] Speaker C: That's why I don't think cryptocurrencies is an actual trend, because I think crypto will always be there. I just don't know if it's going to be as popular as people say it will be, right? And I don't have a crystal ball on that, then that's one thing that I can be confident about. But what I can be confident about is this. Is that anything that you have a trend on or that you want to hop on or that you have to question that, you know, is it really worth it, right? Because if you're, if you can't be confident about it and you can't be confident about the returns and the actual growth, I personally, I can't invest in anything that I don't know that could be significant in the future, right? So, you know, when it, when you talk about These, you know, gold and AI and things like that in a lot of these companies that people are hopping on trends on, a lot of them don't even, aren't even in the positive of net income yet.
So you've got a lot of these companies that aren't even generating net income, but people want it. The prices, the, you know, the prices through the roof. And people all just want to, just want to hop on this trend. And, you know, the more cash flow that goes in, you've got to realize that people are going to take their gains, which means cash flow goes out, right? So that's where it gets tricky is when can you draw that line, right? And you always think about it in math, in mathematics, right? You have anything that happens on a straight line or a straight curve and you're at the top, right? Just kind of like gravity. You have things that are pushing down on it too, right? So the higher you get, right.
The more you, you have on it was. We call it a confidence interval. Okay.
The confidence interval stays the same, right. But your probability changes as that actual interval goes up. So it just, it's, it's definitely a different situation.
Now, could people make money off of it? Anything can happen, right? But in retirement, you shouldn't be worried about that. You should be worried about the safe stuff and understanding that, hey, look, if I'm in blue chip stocks, if I'm in something else or if I'm in, I can have index gains. And that's one of our biggest things, Jim. We're going to go over, you know, when I'm where we're coming to an end here, but I, I really want one of our next episodes. I'm going to talk about this.
You should be able to be aggressive with your portfolio in, in, into the SB 500 or into the NASDAQ and gain these gains. You want do market link gains, if you like the market, you can gain those gains without any risk. You don't have to risk your money, right. You could have those market link gains without those risks, which we're going to go over big time. And I know Steve's gonna be on me, Steve's gonna be on this one with me. But that's one thing that in, you know, I think everyone needs to really understand. And that's. You can literally meet us, you know, anytime, give us a call, you know, go to our website, set up a free consultation.
We would definitely help you out with that because that's a big thing we're seeing right now, Jim, is people loving that because they want those market league gains, they just don't want to lose when the market goes down.
[01:01:40] Speaker A: So yeah, and that Steve, by the way that David is referring to is Steve Zarek. And combined Steve and David have 30 years of retirement planning between them. Retire and and 30 again, 30 years of retirement planning between them. So give those guys a call. Steve will be back with both David and I next week on next week's show. But if your current plan feels a little too fragile for today's markets, now's the time to strengthen it. So visit retirementplanningpipeline.com or call 251-236-4371 for a volatility stress test and a personalized protection plan. You Again, if you missed any part of today's show, don't forget to subscribe to the program in podcast form on Apple, Spotify or wherever you get your podcasts. Subscribe to the show also on YouTube. Search Retirement Planning Pipeline on YouTube for clips and special content as well. And again, we thank you very much for joining us today. This is the Retirement Planning Pipeline. Have a great week everybody.
[01:02:40] Speaker B: Thanks for listening. Welcome to this week's episode of the Retirement Planning Pipeline, the show that helps you take control of your financial future. Whether you're five years from retirement or just getting started. Retirement planning specialists David Pipes and Steve Zarek have the strategies, tools and experience to help you make the most of your nest egg. Take control of your financial future and get started today by visiting retirementplanningpipeline.com and if you missed any part of the show today or want to catch up on past episodes, be sure to subscribe to the Retirement Planning Pipeline wherever you get your podcasts.
Not affiliated with the United States Government, Amerilife agents do not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are to subject 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 specific result. All copyrights and trademarks are the property of their respective owners. Amerilife 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. Charles David Pipes and Steven Zarek are individually licensed and appointed agents. Learn
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