You’re watching Retirement Talk with Eric Kearney in Cape Coral, FL. Eric Kearney is an author, a radio host, a fiduciary and Southwest Florida’s premier investment advisor.
The number one fear that most people have is they’re approaching retirement is are they going to run out of money. Do they need to knock on their children’s door to come and live with them again? And actually, you know, we say that, but a lot of times it’s reversed as well. You have adult children moving. And so how do you balance that? How do you create stable income during retirement years? I think the biggest thing is again, it comes down to that lifestyle expense.
How much does your lifestyle cost and living down in Southwest Florida, we have it made down here. It’s paradise. It’s beautiful beaches, golfing, boating. You really have everything that a retiree wants here. The one question that I asked them is how would it feel if you lost your lifestyle?
And it’s kind of a serious question because the thing is they’ve gotten used to this lifestyle and they kind of sit back and they think about it and they don’t want to lose that lifestyle. Then let’s get serious about creating income.
Let’s get serious about making sure that we can afford this lifestyle and that we can keep it. Nobody wants to go backwards in their lifestyle. That’s for sure. It’s very difficult to do that. So the thing is that we’re putting them through is a process and what people want to see is progression.
Progression over perfection. They understand that everything’s not going to be always perfect. But as long as they have positive forward progression, that’s what they’re looking for. And when it comes to creating income, I want to show my clients accountability, that you understand exactly where your income’s coming from and why.
We’re factoring in inflation. Because inflation eats away at things. It’s unbelievable to me how many people come in without a financial plan? How many people have never been introduced to inflation? It’s mind blowing after you see if you’re living on $70,000 in income after 10 years, just with 3% inflation. That number is unimaginable. They know there’s $70,000 that they originally needed with 3% inflation. And it’s up over a hundred thousand dollars after 10 years. So it’s mind blowing to a lot of people to say, wow, I really do need to have a lot of different things with my portfolio.
But creating that paycheck is the one thing. More importantly than anything else, they just want stable income. And so that’s what we’re trying to provide them. And again, this is another strategy that we have that we have to start implementing for them. And stable income stable enough to withstand any life changes that someone goes through.
The fact is people can have a life change, like losing a spouse or just having a change. A divorce if you will. So creating stable income is so important, but I want to also ask you, do you have people that come in that think that social security will cover all of their retirement needs?
Is that a common thing that people say to you? It is. So when somebody calls me and they’re like, here’s my social security, this is what I have. The one guarantee that you almost have in your retirement is that you will have an income gap. Social security is inflated naturally at 2% over time. It doesn’t mean that you get a 2% inflation every single year.
It’s just 2% inflated over time. That’s typically not going to keep up with regular inflation. It’s certainly not going to keep up with healthcare and medical inflation, which is sometimes north of 6%. If social security is your biggest strategy in retirement, more than likely that’s going to affect you, especially in your late seventies.
When we get to our late seventies, it is at that point that we start to feel where we are financially vulnerable. We know that we have defined who we are financially. We also understand that we cannot go back to work. When you see people that are working that late in life, it’s usually out of.
We’re making sure that they always have increasing income throughout their lifestyle because we see a lot of people in their late seventies and eighties.
And their options go like this. So when they’re coming into us for a second opinion, we don’t have as many options for them and we’re, we have to work even harder to make that, that income last. Hmm. We have a client right now. They are 91 and 93 years old. And what they do is they go to rum runners every single Friday for lunch.
The point is, is that they are still driving. , they’re still going to lunch. They’re still getting their oil changed. They still have monetary needs. Mm. And so the thing is, is that I say to them, What are your needs this year? How can you be comfortable? You know, they’re not interested in going out to nightclubs and going dancing.
They just want to be comfortable. They want to enjoy their life, but it still costs them money. So they still have monetary concerns and being 91 and 93. I mean, they, at this point, One of them could still live another six or seven years. Sure, absolutely. So we’re, we’re constantly focusing just as much on them.
Yeah. As we’re focusing on someone that’s in their early sixties, because income is everything to us that I’m responsible for creating that paycheck and that’s the one thing, again, that’s disturbing about this industry is there’s a lot of advisors who are not running an income plan for their clients and the clients are like, I hope I don’t run outta money
Right. That’s just unacceptable. It is because that is just creating fear in retirement. Retirement should be when you begin your life again, right. You should have peace of mind and be able to do the things that you enjoy. Right. Instead of being like, oh my gosh, am I going to run out of money? That’s a fear that is actually unnecessary to have Eric.
Let me ask you, when you talk about creating a floor, what is that exactly? What is creating a floor? So I want to create a floor of income. I want my client to be prepared for both a secular bull market and a secular bear market. I want to be able to get through tough times. So I’m creating a floor of income that I know no matter if the market goes up or goes down, um, I’m not going to have any issues with getting income.
So I’m creating a stable floor of income for that client. And then anything on top of. It’s just like the cherry on top , but I know that I can get through any kind of market and that’s really what we’re looking to do. Mm. So the thing is, is that our clients want to know no matter what happens in the world.
No, no matter what happens with the us economy, I still have that floor of economy or floor of income that I can rely on all the time. Okay. And so that gives us a peace of mind too, because now we can actually work with the rest of their portfolio, knowing that they’re solid over here. it’s a, it’s an awesome responsibility that we have when you’re managing so many clients money.
But the day that I stop caring as much as I do, that’s the day I will retire because I love what I do. and I talk a little loud and, uh, there’s sometimes where my assistants will say, okay, you gotta calm down, but I get so excited about this, especially when I have a new client come in. Yeah. And I know that I can make a tremendous difference for them.
Yeah, absolutely. Earlier this year we had a client come in to me. They, they each had a very large variable annuity and they both had mutual. The interesting thing about this was they had one mutual fund in both of their variable annuities. It was the same mutual fund that was in their IRAs and the same mutual fund that was in their Roth IRAs.
It had performed horribly. The net expense ratio was 1.04% plus they were paying an advisory fee year to date as of September of 2020. That fund had done negative 1.0. So who made more money? The advisor with their advisory fee, the fund company made 1% and year to date up to September. All of their accounts with one mutual fund did minus 1%.
When we looked back and we took a look at their three and five year, time period. I was blown away because they had a lot of lost opportunity. what we did for that client was we said, look, you have fluctuating income. If the markets go down, that’s going to affect your income. We changed the whole entire portfolio.
I got them out of the variable annuities. I said enough of this because you’re going up and down. You’re paying all these fees. The variable annuity of Cynthia was 3.6% a year. Wow. So the thing is, is that we changed the entire dynamics of that portfolio that client right now is our biggest advocate.
I’m sure Eric, anybody that, you know, needs to talk to us, please have them call us. Yeah. And literally. We saw them where their probability of success was dropping off. About 78 years old, their, their way of their lifestyle was going to be gone around 78 or 79. Wow. When Donna did their financial plan, we now that have them going into their nineties.
Wow. That’s fantastic. Still increasing income. Yeah. Including healthcare and everything. It’s a completely different situ. he told me, Eric, we were so overwhelmed that we did nothing. Mm. We didn’t want to go in and see anybody else because we just thought that we were going to get the. Investments. Sure. Right?
Sure. And we change their situation considerably different. Absolutely. And that’s what we do. And that’s why I get outta bed every morning. Yeah. Because we are able to make a significant change in people’s lives. Absolutely. You are. And Eric, it’s about time for us to open up the phone lines for the very first time this week to the viewing audience.
Can you tell them what they can expect to receive by calling in today? Absolutely. Cynthia. So first of all, thank you so much out there for watching. If you’re in need of a second opinion, you have a portfolio and you really do have a lot of questions about that. Give us a call today. We’re going to take the next 10 callers who are in need of that financial plan that is missing.
What this will consist of is running all the reports for you. The fee reports, the Morningstar reports, tax analysis, maybe even a volatility analysis, let’s see where it takes. You let’s see where that plan leads. You let’s get you reacquainted without with your portfolio. And again, without any. If you are interested in your very own income plan, we’ll show you proven strategies and techniques to turbocharge your retirement income.
In short, we’re going to take all the guesswork outta financial planning. So give us a call today. +1 800-779-1942. Eric. Thank you so much to the viewing audience at home. The phone lines are now open that number to call. Once again is 807 7 9 1 9 4 2. We know you have a lot of questions about planning, your perfect stress-free retirement.
Eric is here to help guide you along the way. Again, the number to call is (800) 779-1942. We’ll be right back after this very short commercial break. What does your retirement look like? Is it filled with travel? Spending time with family uninterrupted rounds at the golf course, or are you too worried to even think about your hopes and dreams, questions about your retirement are normal.
So coming to our office, sit down with us and let us help you find those answers. Eric and his team can answer your questions with a complimentary review of your retirement and income plan. And it all starts with getting to know you. We specialize in helping people, just like you prepare for the retirement that they’ve always dreamed.
They’ll do exactly that by going over your current strategy to expose the weaknesses that may exist in your retirement portfolio. Plus they’ll explain potential risks and possible strategies to you and easy to understand terms and help get you reacquainted with your portfolio and income strategy.
What I enjoy most about retirement planning is sitting down with you and having real conversations about your retirement dreams and goals. Once they understand your retirement goals, objectives, and dreams. They’ll work to custom, build a retirement plan to help ensure that you cannot outlive your income in retirement
Retirement doesn’t have to be scary. Let us help you retire confidently because every dream needs a plan. Call Eric today and schedule your visit. You only retire. So let’s get it right the first time.
And welcome back to retirement talk TV. My name is Cynthia DeFazio. I’m joined today by Eric Kearney and Eric is the president and the CEO of Retirement Wealth Advisors, and Eric, we on our commercial break together. And we were talking a little bit about someone that had come to one of your classes recently.
Yeah. And it’s such a great story that I’d love for you to share it again with the viewing audience. Let’s talk a little bit about her. Sure. It’s kind of funny because this is certainly not what we were going to talk about today, but it’s a great story. what it does is it really talks about accountability with an advisor.
So before the whole COVID thing, we talk, we talk a wealth management class at local colleges, and we’ll get back to that in 2021. So while the girls are inside the classroom, getting set up, I’m kind of like going outside, thinking about what I’m going to talk about. Kind of pace the hallway after teaching these for 12 years, I still get super nervous so this woman comes up to me and she says, oh, you must be Eric.
And I said, yeah, I said, I’ll be teaching the class. And she goes, honestly, Eric, I don’t even know why I’m here. My advisor keeps telling me I’m doing great. So my question back to her was how do you know? And so it was interesting Cynthia, because the class got started and she went in and I just got started and yeah, I never heard from her.
And after about two weeks, she calls me on the phone and she says, Eric, this is so, and so I took your class and I said, oh yeah. I said, I remember you. And she said, you know, I can’t stop thinking about what you said. And I said, well, I said, we talked about a little bit about your advisor. And she said, yes, You said, how do I know that I’m doing well?
And she goes, I can’t stop thinking about that because they tell me I’m doing good, but how do I know that their way of thinking is going to be okay? Sure. And so there was no accountability with that advisor. So she ended up coming in and we ended up doing a. Full financial plan for her, a full lifestyle income plan.
And she really saw a lot of holes in that financial plan. She also saw where she’s paying a great deal of fees, but she really wasn’t getting a good rate of return. Wow. The portfolio had not changed in over 15 years. Oh my gosh. It was a significantly outdated portfolio, especially with all these changes in the economy and everything.
And she realized eyes wide open. This is. An appropriate portfolio for me. Yeah. So when it comes to creating stable income, you want accountability from your advisor. You want to know that you’re going to be okay. Yeah. And we get financially vulnerable again, later on in life, we feel like. We can’t spend money.
We actually have to encourage some of our clients to spend their money because they feel like that’s all they have and they can’t spend it. a lot of times I’ll say, if you don’t spend your money, someone else is going to have a really good time with your money. Sure. Right. Sure. And, and we’ve budgeted so that you can spend this money, but we get in that mindset, you know, that we’re worried, we’re, we’re worried and afraid to spend money.
Yeah. So it’s good to have too much money. But it also, again, it’s not good if you’re running on fumes. Oh, sure. And so the thing is, is that the financial plan is going to hold your advisor accountable and you’re going to know if they’re doing a good job for you or if they’ve dropped the ball. Okay. And if they’ve dropped the ball, you’ve gotta find somebody else.
Eric, let me ask you a question. How easy is it to make a transition from one advisor to the next? Is that something that the client has to orchestrate or do you help do that for the client? That’s actually a fantastic. So we have a concierge service with our office. You get four sides of financial planning.
You get a full financial plan, you get a lifestyle income plan, you have the wealth management side, and then you also have our concierge service and autumn foster, who a lot of people are, are well known of. Um, autumn is, uh, my right hand, man. And autumn actually is my boss. So, um, my name’s on the paychecks, but autumn is my boss and so when I walk into that office, I know who’s going to boss me around that day, but autumn is the concierge service to all of our clients.
The ACH. All the electronic forms, everything gets transferred over very smoothly. the client doesn’t have to do a thing. It’s actually a very easy process to do that. And that’s where a lot of people don’t want to move money over because they think this is a tumultuous process. it really isn’t.
You have to sign paperwork, open up accounts. That’s the hardest part. Autumn does the rest. And then we go to work for you. We actually show you the road that we’re going to put you on and you actually understand where you are. So that’s a great question. Okay. Thank you, Eric. We’re about ready to open up the phone lines again to the viewing audience.
Can you tell them what they can expect to receive by calling in today? Sure, Cynthia. So, if you’re interested in a second opinion, you have questions about your current portfolio and there’s a little bit of reasonable doubt. If you’re in a good situation, give us a call today. We’re going to provide you with that financial plan that is missing.
Just talking a lot about alleviating the fear of running out of money in retirement by creating a stable income stream, if you will.
Right. So I wanted to ask you a question. I know a lot of people at home might have questions about, um, dividend paying stocks. Yeah. How do those fall in line with creating a stable income plan? So dividend paying stocks. We have a lot of prospective clients giving us a call. I had this dividend paying portfolio, but it’s not quite doing what I thought it was going to do.
Here’s the issue with that? You take a stock like at and T as of lately, it’s been okay. But if you look back for the past two years, you actually have a declining stock price, but people get sucked into that dividend. And so the thing is, is that if you have a hundred thousand dollars of at and T, but it drops 6%, you’re at 94,000, but they gave you a 6% dividend.
Let’s just. You’re back to a hundred thousand. What money did you really make? There was no money to be made. There’s a lot of dividend paying stocks out there that actually have growth that actually have a better sharp ratio that are going to have growth and also pay you a dividend. The problem is today, is that too many people still have their parents’ portfolios?
Well, this worked out really well for my, for my parents, but interest rates were significantly different back then. Sure. So the dividend paying portfolios that a lot of people have, they think that they’re income producing, but sometimes they’re not the, what I loved doing about the classes was. We showed people how to create different streams of income, that when the markets get tumultuous, you can turn off some of those streams of income and go to other areas that didn’t get hit by the stock market.
Okay. That’s again, goes back to creating that floor. What we’re doing is, is we’re creating sustainability and that income and people want that. They, they want to know that, okay. I can allow these accounts that are down a little bit to come back because I’m pulling my income from over. The problem is, is that a lot of people are just pulling income from a couple of their portfolios, whether they’re up in the market or whether they’re down.
Mm. So there’s absolutely no strategic income plan whatsoever. And that’s critical because like I said, when you have this, these tumultuous markets, you need income, no matter what. Sure. And if you’re pulling from a portion that’s down, That’s never a good thing. No. So you’ve gotta be really careful about a dividend paying investment and you really want to see how much income they’re actually kicking out.
You also want to see what your rate of return has been over time. This is something that has to be changed on a regular basis. So again, a lot of these older dividend paying stocks have depleting, actual stock. That’s not good for you. Mm Eric, I want to actually talk to you as well about adding a tax advantage portfolio.
What is that? And how does that play into a stable income stream? So it’s not about how much you have it’s about how much you get to keep. So the people that are fortunate enough to have tax free income streams, that’s another source of income for them. The average millionaire in retirement has seven streams of income.
If you’re lucky enough to have this. That’s a great portion to go to, to reduce your taxable income. The other thing is you can set that up, so there’s no market exposure to that. So you’re building a stream of income. That’s sometimes non-correlated to the stock market. So when the markets drop this portion of your portfolio, isn’t going to be affected by much. the thing about a tax free portfolio is you need two things. You need time and you need. And so a lot of times an older client will come into us and say, Eric, I’m in a horrible tax situation, but unfortunately they just don’t have the time to make that back up. So if you’re a younger retiree and you really are concerned about taxes, give us a call because there’s a lot of people that get referred to us just from the tax planning standpoint.
Sure, absolutely. I also want to ask you about withdrawing income from appreciated assets only. what does that mean? And how does that involve into the true income stream? So earlier in the show, we talked about the woman who was depleting accounts from one account. What she was doing was she was pulling income from depreciated assets.
She was paying a lot of fees. She’s getting horrible performance and pulling out her income and just watching that account dwindle. When we shut that off, what I’m basically telling her. We no longer pull from depreciated assets. I then went to her other account, cleaned that up, took out all the toxic holdings and made sure that that was significantly more relevant to today’s stock market.
And now all of a sudden that portfolio started to. Thrive. So now what I’m doing is I’m taking out from appreciated assets and allowing this other account to come back. So now what happens is I’ve got two solid accounts, two healthy accounts, instead of having one that was going down. And now I pull a little bit from here and I pull a little bit from here.
Again, sequence of returns. We’re being very careful about where we pull from and we’re making sure that both of those accounts are, are stable. So the bottom line is, again, we’re trying to create different, uh, silos of money. Sure. That we can go in and choose from. Imagine if you had seven different checking accounts with a hundred thousand dollars in ’em , you’ve got seven different accounts now all of a sudden, you know, if one goes down in value, for some reason you still have six others that are affected differently. That’s what we’re trying to create. So again, it’s all about alleviating the fear of running out of money in retirement by creating a stable income stream. Basically, we talked about this before, you’re basically in charge of paying yourself, right?
And I love how you talk about the fact that retirement is the same as unemployment, because basically that paycheck goes away. Right? And you’re responsible for making sure that you have the income coming in to maintain the lifestyle that you choose to have. There’s a lot of emotions that go into retirement.
Sure. The first. It can be really exciting or it can be absolutely daunting. Yeah. And so there’s a lot of times where people say, geeze, Eric, you know, the first year was fun. Now I’m freaking out. I’m not working. And how am I going to make sure that I have enough so that’s the thing. We’re building this lifestyle income plan.
It’s really helping them and making sure that you’re ready to retire on all levels. Yeah. I mean, most definitely there’s so many moving parts to it and we have to build in all those plans for all those contingencies that could possibly happen. Sure. Eric. We only have about a minute and 20 seconds left of the show today.
I know. So I just wanted to ask you, do you want to tell the viewing audience one more time, what they can expect to receive by being one of your callers? Sure. Cynthia, this is your last. Today, give us a call. The girls are waiting to answer your calls. If you don’t get through, leave a message. We’ll call you right back.
This is the busiest portion of the show. We’re going to run all the reports for you. The fee reports, the Morningstar reports, tax analysis, maybe even a volatility analysis. Let’s get you reacquainted with that portfolio. Let’s see where that plan leads. You let’s see where it takes you again. If you’re interested in your own retirement income plan, we’ll show you proven strategies and T.
To turbocharge retirement income. Give us a call today +1 800-779-1942. And I want to thank the TV crew that you have done an awesome job, Eric. Thank you so much. What an amazing show that you delivered to the viewing audience today to our viewers at home, the number to call once again is eight hundred seven seven nine one.
Four two. We know you have a lot of questions about retirement. Well, you only retire once, so let’s make sure you get it right the first time Eric can help guide you on that path to tranquility and serenity peace of mind in your retirement years. Again, thank you so much for spending time with us again this week we look forward to seeing you here next week. Be safe. Be happy. Be blessed. Thanks.
This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Eric Kearney Advisor, LLC, Retirement Wealth Advisors, LLC and their affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.