Content transcribed from podcast “Wealthworx Radio with Eric Kearney“, Episode 99 – The Impact of Inflation and the Stock Market On Your Retirement (Listen to this and other episodes on Google Podcast)
Coming up on WealthWorks Radio. From inflation to rising interest rates, it’s getting harder and harder to save for retirement. On today’s show, we’ll outline six major obstacles that could be preventing you from a comfortable retirement and offer some tips to help you get there. Stay tuned.
And now WealthWorks Radio with Eric Kearney, from Retirement Wealth Advisors LLC in Cape Coral, FL.
Hey, welcome out everybody. This is WealthWorks Radio. I’m consumer advocate, Steve, so all joining me today. As always, Eric Kearney, Eric at Fiduciary Independent. President of Retirement Wealth Advisors. Also, alongside Eric is Joseph Lanza. Joseph, of course fiduciary with the With the Retirement Wealth and works alongside Eric, you’ve got a lot of side by side stuff going on here.
So now we’re officially in, uh, you know, holiday shopping season, and I, and I’ll tell you what, um, you mentioned this. Too, and, and that, you know, harder and harder to save for retirement. That’s what we’re talking about here. And again, especially we come into the holidays, people wanna spend more money.
Um, but we’re reacting to the inflation. I mean, how, how, you know, we’re talking about a survey here of the Schwab Retirement Plan Services that four and 10, uh, people say they’ve altered their 401k investing because of inflation. What do you. I agree. I mean, I, I think that, you know, uh, the more affluent client, it’s not really going to affect them.
Um, and I also think that people that have done strategic financial planning, I’ve said this all year long, uh, inflation should not be an issue for you. And, uh, but there’s a lot of people who do not have a financial plan to do, not have an income plan. Um, and, and, and let me just say this. There’s a lot of frustrated people out there.
There’s a lot of frustrated investors out there, and they’re, they’re finally getting to the breaking point with their current advisor. And we’re seeing that. And, you know, we, we talk about the gentleman who literally, um, after the hurricane was canoeing from his house to go get fuel for his generator, and he actually said, I had to take the time out of all this to come and see you because I’m so frustrated now.
Bad are things when your street is completely flooded and your only means of transportation is a canoe, and yet you still have to go see this advisor because you’re looking for a second opinion. Wow. Like that. That’s how bad things are. Right, right. And so we’re just seeing a lot of people that are just frustrated with the financial industry.
They’re frustrated by their, their current advisor. They realize that their advisor has done nothing for them this year, and their year is actually getting worse and worse. And it’s just amazing to me how slammed and busy we have been over the past few weeks. Wow. And it’s continuing all the way to the end of the year.
I mean, we’re, we’re coming up on the holiday season, but there’s, there’s no slowing down. So, you know, while people are concerned, um, you know about the holidays and everything, they’re also still concerned very much about their finances because the inflation this year has gotten absolutely out of touch.
Right? And, and, and it’s something that so many of us have never experienced. I mean, a lot of the younger folks, they’ve never seen anything like, This. That’s right. And I can understand why in that, in that set, you could, why they would say, okay, I gotta stop saving, saving for retirement, if that’s exactly the wrong thing to do right now.
Well, it always goes on the back burner, right? I mean, our, our savings always goes on the back burner and, you know, when, when. When people say, Eric, what do the wealthy do differently? This is what happens. I mean, they invest first and then they spend what’s left over. But a lot of other people, you know, spend everything first and then invest if anything’s left over.
Exactly. So that really is the difference. I mean, there, there’s a lot of people who, you know, again, we talk about money and lifestyle. Are you concentrating on your lifestyle or are you concentrating on your money first? And if you’re concentrating on your money first, that’s going to give you the lifestyle that you actually want.
So really, uh, you know, there’s some really cool indicators here of, of someone’s financial capabilities or someone’s financial realities of how they actually respond to money in times. This. And there’s a lot of people who wanna get strategic and they wanna plan. And they say, okay, how do I get out of this hole?
And then there’s some people that are just status quo, and this is where you really have to begin to challenge your financial status quo and figure out how you get into a better position. And again, how do we do that, Eric? I mean it’s, I think that there’s a, there’s a turning point for a lot of us when we get to be, you know, in our fifties and realize I really gotta get serious about this retirement thing.
Yeah. And it’s interesting cuz we, we met a new couple, um, last week and they came in and they said, well, geez, Eric, you know, we, we have. You know, only like nine to 10 years till retirement. And I’m like, Hey guys, that’s a great timeframe. You have a whole decade to prepare. Like we can do a lot of really cool strategic planning by then.
So, you know, the person that says, Hey, I’m gonna retire next year, and has never done any financial planning, that’s a little bit more of a challenge. I mean, you’re, you know, you’re up against the clock a little bit and sometimes you have to hyper focus and, and put, um, strategies into play pretty quickly.
But you know, time is always on your side, so the less that you procrastinate, The better off you’re gonna be. I mean, like I said, I mean inflation, if you’re factoring in inflation every single year, it should not be an issue. So, like I said, I mean for all of our clients that we’ve done long-term planning for, we’ve factored in two and a half to 3% inflation every year.
33% of the people say that they are, running into obstacles because of the stock stock market. But what, and again, you know, watching the retirement, you know, watching our 401k go down. So let me ask you this. How often should I look at my. Well, it’s not really how often you should look at it. It’s just making sure if it’s on track for your specific retirement and your goals.
Okay? And a lot of times what happens is people see all this volatility and they start making all these irrational decisions, or their advisors telling them, just wait. Just wait. You know, hold, you know, stay. Stay the course, stay in your current investments. And it’s either they’re. You know, way too much active management or not enough at all, and there’s a time for both really.
There’s a time for holding positions long term, and there’s a time for active management. The real question you need to be asking yourself is, how relevant are your investments? Exactly. How relevant are they in order to actually come back and recover from this market. If you have toxic positions in your portfolio and your advisor’s telling you, well, don’t sell them now, they’re.
Then that’s completely false because those toxic positions that are low right now are gonna take such a long time to recover. That. If you actually sell those and get in relevant positions, you’re gonna put yourself in a much better position the next following years when you recovered a lot quicker than if you stayed in that same old portfolio.
So a lot of people are getting caught up on the, well, I don’t wanna sell low. Stop looking if it’s low or high. Look, if it’s, if the position it’s correct for you first Yeah. Is kind of bounce back too. Exactly. I mean, in this market right now, I mean, with all the market volatility, I mean, is your, is your, is your portfolio with to bounce back?
And a lot of people don’t understand, well, how do I know that? Right. And, and with interest rates right now bearing down, I mean it’s, it’s wreaking havoc and bond funds. I can’t. The amount of people that are still in bond funds, it’s, it’s horrible place to be. I mean, they’re down double digits and, uh, it’s just not a good place to be at all.
To me, the, it’s become very clear how important it is to work with a, a independent fiduciary advisor. That’s got a lot of experience. It is worth every penny. To work with an advisor because, I mean, statistically it bears out, doesn’t it? I mean, working with an advisor, you’re gonna make more money. Yeah. It should not be costing you money.
Like, everybody’s like, well, what are your fees? And I’m like, well, geez. You know, like, well, what value do we give you? And I think a lot of people will start to see the value because I mean, they’re, they’re being provided with so many things that they’ve never had before. Um, and you know, financial planning is a lot of work, but being successful is also.
Work. I mean, like I said, when you take a look at a financially successful person, they have put in effort, right? They’ve put in time. They’re investing their time to work with a plethora of professionals who they can surround themselves by, who are trying to constantly put them in a better position, but they’re also looking at all the different situations in the economy.
Look at all the different dynamics of this year. You’ve had midterms, you’ve had interest rates, you’ve had volatility. Um, there’s just been a lot of things that have been all over the place this year. This has not been an easy year, and so you have to, uh, uh, significantly shift gears all throughout the year and, and take.
Care of this. And you know, the thing is, is that you can’t overreact. You can’t underreact, but you have to react. And that that’s one thing that the client doesn’t understand. And I think that there’s a lot of advisors this year that are now backpedaling, trying to make up for an awful year, too late for that.
If you didn’t move your clients into cash earlier in the year like we did, you’re probably not in a great position because you can’t take advantage of this down market. But the thing is, is that if your advisor did do that for you, then. Your portfolio is able to fight another day, and that’s a huge difference.
Absolutely. And, and, uh, , you know, we talk about all of these things it seems all the time. And, and one of the things that, that always seems to come up is paying off debt. Uh, as we get close to retirement, how important is it to be as much debt free as we possibly can by the time we say, all right, I’m, I’m done working.
Well, we definitely wanna make sure those credit card debts are high interest rate. Is taken care of. So it’s, it’s important to get rid of those because especially with the current interest rate environment, I mean, some of these credit cards are getting up to like 30%, right? And it’s just ridiculous. I don’t know, you know, when, when we’re looking at a financial triage, as we like to call it, right, we’re gonna, we’re gonna attack and take care of what’s leading you the most right now.
A lot of times it’s that credit card debt. Um, if you refinanced your home in 2020 or 2020, And you have a 3% mortgage, a lot of times we can actually fit that into your financial plan to work out because, you know, your investments should be gaining on average more than 3% every single year. So why not use someone else’s money in order to pay off your house while your investments make you more money?
Sure. Now it’s different, and that’s different for everybody. Some people like to have the feeling of completely debt free, um, and if they’re able to financially, And that makes them feel better, then we’ll run in the plan, and most of the time, let’s do it then. If that’s gonna give you peace of mind, then you can do that.
But why don’t, why not run both scenarios and see which one could actually work out better for you? Well, again, folks, if you’d like to have a one on one with Eric and Joseph, give us a call right now. In fact, let’s, let’s open up the lines. Let’s do that. Sounds good. Steve, whether you currently have an advisor or you’ve never worked with a financial professional, We’re gonna be taking the next 10 callers who are in need of that missing financial plan.
We’re going to create and customize a full blown financial plan, review value to over a thousand dollars and give it away. Absolutely complimentary, no obligation. What this will consist of is simply taking the mystery outta financial planning by taking a look at what you’re currently doing and maybe just making some slight changes.
Let’s map it all out. Your goals, income needs, expenses, tax strategies, and even transfers generational wealth. We will get that plan built for you and see where it leads. Let’s get you reacquainted with your investments without any. In short, we’re gonna take the guesswork outta financial planning. So for the next 10 callers, a full blown comprehensive plan review that is valued at over a thousand dollars.
We are back on WealthWorks Radio with Eric Kearney and Joseph Lanza. I’m consumer advocate, Steve Saido, and of course, the Retirement Wealth Advisors is where you will find these guys. Eric Kearney advisor.com is the website. I encourage you to check that out. It’s a, it’s a very nice web website. It’s very calming when you arrive at your website.
Uh, Eric. Thank you Steve . It resembles our office. Yeah. Very calm, right? It’s calm, yes. Um, place of peace. Well, exactly. Well, I mean, you know, we, you’re talking about, uh, the re the roadmap we talk about all the time. This, you know, the road to retirement, get you on the right road to retirement. Well, you know, it only stands to reason that there’s gonna be a little construction.
Maybe you detour, maybe, uh, right. You know, some kind of a roadblock. What do we do about that? And, you know, it’s gonna go back to what we talked about at the, in the last segment. I mean this, this whole. Inflation and volatility. And I mean, it, it’s very, you know, it’s, it’s overwhelming for some folks. It is.
And you know, I mean, just, uh, a few weeks ago I was up in Blue Ridge, Georgia. Uh, we were talking about that before the show. And you know, the, the thing is that those mountains and those back roads get pretty overwhelming and you can get lost pretty damn quickly. Mm-hmm. and you. When you’re trying to get from A to B, no matter where it is, whether it’s your retirement, you know, you’re really trying to get through retirement or you’re going on a trip or you’re trying to figure out where you are, you don’t wanna be lost.
You know, getting lost is frustrating, um, can be scary. Um, and you wanna understand the direction that you’re. It still blows me away today. How many people don’t have any kind of financial roadmap, financial plan, financial direction. You know, how did you get over these difficult times? How do you get through a difficult market?
Like how, how am I getting through this? And so, again, you know, being a. Financial planning firm. Um, that’s what we do all the time. I mean, and I think that that’s why our office is so calm, because we are providing financial planning, we are providing more of a solution for our clients. And, um, it’s not always perfect.
You know, like I, I’m not gonna sit here and say it’s always perfect. I mean, there’s sometimes road bumps for us. You know, you get market volatility, the market shifts. Um, things don’t pan out the way that they’re supposed to. Time and time again. If we keep at it and we stay on top of this, more than likely the client is gonna be just fine.
You know, and we’re, we’re, we’re constantly striving to put them in a better financial position. And, um, and I think that that’s where a lot of advisors have just dropped the ball. They don’t want to have anything to do with financial planning. They’re more focused on just bringing in assets under management or selling silly products or doing something like that.
But, and that’s, and it’s not fine with me. I don’t wanna say that’s great, but the bottom line is, is that that just keeps us busy because two years after this, Client has gone with this advisor, they’re frustrated, and then they come to us and they say, you know, come on, you know, Joseph, you know, here’s what I have.
Can you please help me with this? Or they’ll come to me and they’ll be like, Eric, can you help me? I’m like, I can certainly help you with this, you know? Sure. But the, but what we really want to do is we, we really want to provide them with a personal financial blueprint.
I wanna show them, What their portfolio looks like. Why are we fixing this? You know, like, look at your fees, look at all the risk that you’re taking. Look at your low rate of return compared to the actual indexes. And people are like, oh, I never knew this. You know, and so it, this is a huge education, uh, program for a lot of people that, you know, they’ve never been shown this, but what it also does is it provides them with accountability to us.
Now they understand that they can hold us accountable with their financial needs. And there’s a lot of people that don’t have that. They are literally at the mercy of their own financial advisor. And if their, if their finances, if their finances or their net worth has outgrown that advisor’s capabilities, that’s not good for the client.
And people don’t understand that either. Sure. So there’s just a lot of stuff that’s happening in the financial industry that, that needs to change. I mean, there, there’s, there’s gotta be a huge disruption. And, and this year again is highlighting that, well, I I think you, that’s the word of the day disruption.
That’s, that’s a great description of what’s going on. Yeah, I think so. I mean, you know, like I said, I mean the, the, I don’t wanna say the panic, but I would say the disappointment that, that are coming in with a lot of new potential clients into our office, that’s what we’re seeing. They’re just absolutely disappointed and they’re frustrated.
How important is it to have that retirement mindset? In other words, you know, thinking like a retired person before you. Well, not only you thinking like a retired person, but making sure that your advisor is as well, because, okay, an advisor isn’t just managing somebody’s finances or managing the wealth, right?
That’s such, everybody always thinks that it’s, oh, you manage, you know, the, the investments that are in the account, that’s one piece of a very large pie, right? Because retirement is so much more than that. Are you talking to your advisor about minimizing taxes? Are you talking about how much healthcare is gonna cost you?
What about legacy planning? These are all key factors. That go into your retirement and they need to be answered by your advisor, or at least addressed because we’ve seen it time and time again where if you don’t do it now, it becomes too late. It’s just like taxes. We know that the taxes are gonna be increasing in 2025, yet people come in still with these massive IRAs or massive 401ks and like, oh, I’ve been working with my advisor for 10 years, and we’re like, have they ever mentioned opening up a Roth.
At least, you know, not even a Roth conversion. So they even mentioned opening up a Roth and they’re like, oh no, they told me I should just be maxing out my 401k and. As a lazy advisor, if you just put it in layman’s terms, they’re lazy. Right? They’re not gonna do, they don’t wanna sit through and do the Roth conversion and, and do all the, the calculations for that.
Right. And it really makes Eric and I angry because it’s really, it’s a, it’s a simple fix and it can save people thousands, if not hundreds of thousands of dollars in, in tax money in retirement. And it’s huge lost opportunity for the client too. I mean, just, you know, by not doing that, it’s, it’s just, it’s a huge loss of opportunity that, that you can never recapture.
And that’s disappointing. Right. And I, and I think you say retirement mindset, and I know for a fact, Eric and I have this, when somebody comes in, It’s almost like a worksheet in our head is going off of like, okay, do they have this? Do they have this? Do they have this? What different strategies can we put forward to, you know, together for them?
And it’s like light bulbs going off. And that’s how we work in the office as well. It’s like putting, you know, it’s like putting together a puzzle. Eric, Donna, and and myself all get together and we can say, okay, what strategies can we do for them? Let’s run the plan looking like this, like this. And I think.
That’s what people want is a team approach. They want to know that they’re, that they have a team of advisors and certified financial planners that are coming together and really looking at their situation as a whole and knowing that they’re in the best case scenario. Well, it’s, it’s important to have that, that sort of big view of things and, and as you said, it’s a team of people working together to create the retirement that you want.
I mean, wow. How valuable is. Yeah, it’s not just an asset gatherer, like Eric was saying, one guy who is, who’s taking your assets and putting it in a third party portfolio and then, you know, maybe gives you a call once every year and ask it, how’s it going? You know, it’s, it’s, it’s so much deeper than that.
And that’s what a lot of people in our area and, and the clients that we’re getting this year are really seeing. Um, I met with somebody about two weeks ago and it was our second meeting and I had done our personal financial blueprint, which like we talked about before on the show. It gives you an in-depth look at your portfolio, how much you’ve actually returned.
One of the key things is how much you’ve actually been earning a rate of return over the past three, five, and 10 years. Mm-hmm. , and when I showed this couple what their number was, they were so taken back because. It was almost half of what their advisor said that they need to be earning in their financial plan.
And he kept saying that they were on track for their financial. Wow. So how do you think that client felt now seeing that and when their advisor just kept saying, ah, just stay in the market. Just, just, you know, stay with this strategy, stay with this strategy. Don’t sell anything. Don’t make any changes.
Time and time again when they were complaining to their advisor, well, yeah. They feel like crap is how they feel. Right. And so it’s, it’s, it’s like the last straw that broke the camel’s back Right. Was right enough. And that’s what we’re seeing. Like Eric said, so many people are so frustrated, just like enough now with these game, you know, we, we need true management here.
Well, and, and again, to that end, it’s important to work with, with an advisor and a firm that will fully explain what’s going on, why you’re doing what you’re doing. And I think sometimes, you know, I don’t wanna. Point fingers, but sometimes there are, there are advisors, brokers, whatever, that just try to talk in a whole different language just to confuse you.
Well, hey wanna sound smart, right? Yeah, sure. And, and, and alls it does is just confuse the client. It’s like, okay, you know, they’re, they’re, they’re speaking over me, um, instead of, instead of speaking to me. And the other thing is, is that, you know, people want open communication, but they also want transparency.
And a lot of these people do not. Transparency and Joseph just talked about, you know, one couple that had come in, you know, that we’re disappointed with their rates of return. We had another person come in and I showed her what her sense inception number was, and it was clearly on the statement, but since uh, she was with this advisor, her, her rate of return was 2.33%, and yet her fees were extremely.
And so she’s like, she’s like, I knew I wasn’t making any money. She goes, but I was just really disappointed. And this is somebody who’s truly trying to prepare for retirement. So, you know, now all of a sudden inflation, you know, at 8% and she’s only making 2.33 is ridiculous, you know? And so the whole thing is, is that she’s like, you know, I just trusted this person.
And that’s, that’s the problem. We trust these advisors. But, and, and look, the one thing I will. is, there’s a lot of good advisors out there, right? Mm-hmm. , I mean, I don’t wanna sit here and say all advisors are bad, and we’re the only ones that, no, that’s not true. I mean, there’s a lot of very good advisors out there.
Of course, of course. Um, but there’s also an awful lot of advisors who really don’t know what they’re doing. They got in the business for the wrong reason, quite frankly. And so, you know, again, this is where we’ve spent a lot of time, um, preparing for a financial planning arm, an income planning arm. We’re giving them.
Things that they need. And, um, I mean, again, it’s very comforting for us because we know the direction that that client is going. And, um, it’s always going to change. I mean, like I said, there’s always gonna be market corrections, bear markets, bull markets and everything. But you gotta be prepared for those.
You gotta be prepared. I mean, that really is the key here is to, is to be prepared and to work with, uh, an independent fiduciary advisor like you guys are. And, and, uh, in fact, let’s go ahead and invite folks to call. Come on in. There’s just a few spots left on the calendar. A. Whether you currently have an advisor or you’ve never worked with a financial professional before, we’re gonna be taking the next 10 callers who are in need of that missing financial plan.
We’re going to create and customize a full blown financial plan, review value to over a thousand dollars and give it away, absolutely complimentary, no obligation. What this will consist of is simply taking the mystery outta financial planning by taking a look at what you’re currently doing and maybe just making some slight change.
Let’s map it all out. Your goals, income needs, expenses, tax strategies, and even transfers or generational wealth. We will get this plan built for you and see where it leads you. Let’s get you reacquainted with your investments without any obligation. In short, we’re gonna take the guesswork outta financial planning.
Welcome back everybody. This is WealthWorks Radio. I’m consumer advocate. Steve Sodol. Eric Kearney is here. Joseph Lanza is here. Retirement Wealth is where they are. You will find them @ericKearneyadvisor.com. Uh uh and again, that’s a website I would encourage you to check out. Um, so we were talking in the last time, in the last segment, guys, about, uh, roadblocks.
And there was a, a particular study that I. Fascinating that, that kind of just laid out why it’s important to work with an advisor and, and really the value in that. Joseph, what do you think? Yeah, I mean, this recent Vanguard study revealed a self-managed account of half a million dollars grows to an average of 1.7 million in 25 years.
Sounds good, but Right, it does. It sounds like a decent return, but under the care of a advisor, the average is 3.4 million that that account grows to, well, that’s, That’s double, that’s an extra, that’s an extra 1.7 million. Yeah. At the end of it, which I don’t think many people would complain about. I don’t think so either.
And that’s, I mean, that’s, yeah. What a great way to think about that. So again, folks, it’s, it’s an opportunity for you to sit down with, with the team, like, uh, like Eric and, and Joseph, uh, call us now. Eight hundred seven seven nine one nine. For too. There’s a lot of different elements inside, you know, a plan and, and I think that a lot of times people don’t fully understand all of the various pieces of that puzzle that we talk about.
No, that’s true. I mean, like I said, I mean it’s, you know, people think, okay, I just wanna make more money. But there’s a lot of ways that you have to, it’s like ingredients, you know, when, when you think about anything that you’re building for, uh, dinner or creating, there’s a lot of ingredients that go into making something and.
There’s no difference with your money. I mean, it’s, it’s not just investing the money. It’s how to control the taxes, how to manage your tax bracket, how to control your budget. You know, what times of the year are you gonna need more money? What about volatility? Uh, what about interest rate changes? You know, what does the mix of your portfolio, what does that asset allocation look like?
And there’s just a lot of moving parts and, you know, whether we like it or not, our lives are going to change. And what a lot of people don’t realize is, Not all platforms or advisors are created equal. And so, you know, we’re, we’re looking for different services, we’re looking for different advisors. We’re wondering what kind of advice to get.
Um, and, you know, people don’t understand the difference. And there’s a huge difference. You know, there’s, there’s a difference between a money manager and a financial sales person. There’s a huge difference between the two. And, um, you know, it’s unfortunate, but. A lot of advisors, you know, started off in the insurance industry and they only wanna sell insurance.
And that’s okay, um, to that right person if it’s a correct fit. But a lot of times it’s not a right fit. And so I was very fortunate that early on I was actually. Shown how to actually manage money. I mean, I understand asset allocation, I understand the modern efficient portfolio. There’s a lot of different cool things that you can do about this.
But then I’ve passed them on to Joseph. He understands money management, but Joseph has also been able to work with Scott Martin, um, and some of the, the biggest money managers in the. States already. I mean, they’ve, you know, I’ve mentored him, but they’re also mentoring him as well. And he’s gonna take this even to a, a whole new level at some point.
So again, it’s just people have to understand the different, um, variations and the different options that you have. And it really is, it’s a struggle to find the right advisory firm that you’re gonna work with. It’s not. No. Well, and again, that’s why you encourage us to, to interview a couple, two or three different advisors and figure out what, what’s comfortable, what, what’s the best.
Yeah, always. I mean, there’s gonna be personality differences, there’s gonna be, um, value differences. Um, some people aren’t gonna like fees that one is charging. Um, some people aren’t gonna offer the services that you all need. Um, and then the other thing too is, is that you want to find an advisor who, who you know is capable of handling your.
You know, like we have a lot of people that come in here who have real estate portfolios. So I mean, I, I do as well. I love real estate. I always have. And so I have, uh, a pretty good, um, real estate portfolio. It’s got commercial property, it’s got, uh, residential property. And so I understand 10 31 exchanges.
I understand real estate values. Um, we have to, because like I said, a lot of people are, are going back and forth between the stock market and the real estate. And so, um, we have to be there to provide income. I mean that in, in the end, that’s what we want. We want money to be able to live on and support our lifestyle.
So we have to be able to understand how we’re going to define their assets and how we’re going to, uh, complete income from those as well. So again, you wanna make sure that you’re, you’re coming in, you’re speaking to an advisor who understands your lifestyle and your needs, and is, is capable of, of, of handling.
So let me ask you this right now. I mean, everything seems to be in turmoil. There’s the market and that’s, we talk about it, we drone on about it all the time. Do you think that sometimes, and I think right now people are thinking, oh my gosh, I’m doomed. This is not good. But I mean, there is a backside to all of this isn’t there?
And, and I think we just have to be patient. Am I right in saying that? Yeah, of course. I mean, definitely have to be patient. I mean, I think there’s a lot of great opportunities. I mean, I love. Some of the things that I can buy so inexpensively now. Mm-hmm. , but I also created that opportunity. So if your advisor didn’t create an opportunity to take advantage of this down market, that’s the problem.
That is the problem. That’s the problem’s. The problem right there, right? I mean, when, when you can buy Google at $84 a share, but if you’re a hundred percent invested in the market and you have no cash to buy that, well then it’s not gonna do you any good. And so people don’t understand that you’re gonna know.
Type of year, whether your advisor is proactive or not proactive. And if they’re proactive, your portfolio lives to fight another day. And it’s actually exciting. And this is the other side of that, yeah, the markets have plummeted, but it’s also exciting that you can buy so dirt cheap right now. And so when you’re able to buy at a lower price, you’re like, Hey, look at that.
I was able to take advantage of this down market. But if you’re not able to, That’s not a good position to be in. Right. Well, and again, to working with an advisor, you’re gonna be able to create those opportunities for us, and we are the beneficiaries. That’s just fantastic. Right. There’s a lot of responsibility that goes in with this industry.
I mean, there’s a, there’s a great deal of responsibility. Sure. It’s an awesome responsibility. But the thing is, is that when you have. Processes in place, you understand what has to happen with a client. Um, and so again, that’s why you’re meeting with a client on a regular basis. You’re, you’re communicating with them on a regular basis and you know that, you know, you’re, you’re surrounding them with what they need and they feel financially comfortable.
Um, and, and again, um, you’re, you’re consistently challenging that client status quo. You’re constantly taking a look at their asset allocation. Managing monitoring and maintaining it. That’s what people are looking for. And you know, there’s a lot of times where we can take a look at a portfolio and I can tell them right off the bat, look, nobody’s looked at this in years.
You know, I mean, this thing is completely outdated. And they agree with that. Hmm. Well, time gets on our side in terms of, we’re getting to an age where, oh, I gotta, I gotta address this. So let’s, let’s talk about 401ks for a second. Um, that’s what you were, you’ve mentioned going in. And I think there’s a lot of confusion about 401ks.
I think, you know me, I think I must know. I mean, I figure everybody knows what I know when they don’t. Right, right. And I mean, yeah, the 401k is gonna be by far. The largest piece of retirement tool that a person has by far. And yet I think it’s probably one of the most mismanaged pieces of money as well.
So, yeah. I mean, there’s a lot of knowledge that people don’t understand about it or they don’t even understand that they’re. 401K can be invested or how it is. I’ve even seen that before where they’re like, oh, well I’m putting, you know, I’m, I’m putting 10% in my 401k. And I’m like, okay, well how’s it, how is it invested?
It’s put in the 401k. Exactly. That’s all you need. Yeah. Well there’s subaccounts in that for same thing with a Roth. You see, you see it all the time. Um, so they end up putting it in like a money market or a stable value, which ends up just being cash. Mm-hmm. . Right. And it’s not actually being invested.
And another a big misconception. A lot of people are like, oh yeah, well I’m doing my company match. Right. And it’s, and that’s all I have to do, right? I just company match them and then I can retire. Right? And that’s the misconception, because why not do more? In my opinion, I think Eric will agree with me.
Putting away in a 401K is one of the most convenient ways to save money. Oh God. There’s no physical, there’s no physical attachment to that money. It’s not going in your account. And then you’re like, well, this looks nice, right? Yeah. And then, Putting in your IRA or Roth for that month, let the company do it for you.
Right. Right. Let them take it out for you. And so why not increase that even though it’s over your match and now you’re getting it? Cuz you know you’re getting more than that 6% that’s going in plus the money. That’s pretty much free money that they’re giving you. Right? And you’re not missing out it.
Cuz we see a lot of people that come in and. They’ll say, well, I’m doing my company match. And then I see, well, you have an extra $15,000. It looks like a disposable income every year. And when they really boil down their budget, oh yeah, we do have an extra 15,000. But it ends up getting spent because it’s going into their account.
Right. It’s not going into the 401k. Start having it go directly in there for you and you don’t have to think about it. I like that idea. Um, so let’s talk about a loan from a 401k and, and the, the adage is, well if it, if, if it’s not, if it’s not, if it’s bad, it, they wouldn’t let me do it. Yeah, so I, I, I’ve told this story before, but up in Michigan, um, we were managing a 401k and I would fly up there once a quarter and manage this 401k and it was for a, a parts supplier to one of the auto manufacturers and, um, super hard working people.
The problem was, is that I was sitting in the office one day and somebody comes in and they’re like, Um, can I get a loan? You know, I need, I need a new transmission. I’m like, yeah, you know, here’s the paperwork for it. And you know, they took out like three grand and all of a sudden, five minutes later, There’s other people in there.
Oh, I didn’t know I could take a loan out . Okay, yeah. I want some money too. Yeah, right. And, and and, and people ha you know, and that’s the problem, you know, that that person goes back out on the floor and they’re like, yeah, I just took a loan out. You know, I got three grand. Now everybody’s jealous cuz he has this free money.
It’s not free money, it’s your retirement money. Yes, exactly. So yeah, taking a loan is really not a good idea. I mean, like I said, it’s, I mean, I understand that people do it. I mean, the, the problem with is, is that a lot of people have good intentions of paying it back. Well, that doesn’t always happen, so, right.
Well, and again, if you take out a substantial amount and you get fired or laid off or whatever, well then you’re obligated to put all that money back. Yeah, exactly. I mean, there’s, there’s, there’s just an ugly side of. These participation loans. And I’m not saying that they should make ’em illegal cause I understand it is their money and they socked it away.
But at the same time, you know, you gotta realize it’s for retirement. It’s the last resort at best. Yeah, exactly. Yeah. We need to take a break. So let’s, uh, let’s invite folks to call. We’ll be right back. Whether you currently have an advisor or you’ve never worked with a financial professional before, we’re gonna be taking the next 10 callers who are in need of that missing financial plan.
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Let’s map it. Your goals, income needs, expenses, tax strategies, and even transfers or generation of wealth. We’ll get that plan built for you and see where it leads you. Let’s get you reacquainted with your investments without any obligation. In short, we’re gonna take the guesswork outta financial planning.
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We are back on WealthWorks Radio with Eric Kearney. Joseph Lanza. I’m Steve Saidal, and we have, uh, again, one more segment here that means it’s questions. But before we get to the questions, um, you know, there’s just a general consensus that this is a weird time in our life, right? I mean that, that nobody’s gonna disagree with that.
Well, I mean, coming right after Covid, right? Yeah. You’re just having covid in 2020. Not, not only to mention Covid, but you had a short recession there. You had the pandemic, you had protests, you had an election year. I mean, 2020 was like one for the book, but then the market recovers so nicely, right? Mm-hmm. and 2020 and 2021 near the later half gets a little bumpy. Um, and now we still have a lot of political unrest. We still have, now we have interest rates, scoring, scoring through the sky. Russia and Ukraine going on. I mean, it’s just, it’s endless. It feels like endless, right? Sure. Um, and the thing that always puts me at ease is I feel like whenever we’re going through times like this, even from what I’ve seen the market so far, is that in a couple years from now, you look back and you’re like, man, remember when we were going through that?
Like, I, I can distinctively remember March of 2020, the moves that we were making in our portfolios and look and say, man, look at, remember that? All the moves that we were able to make and the things we were able to buy people for, for so cheap during that time. And it’s almost like you look back and you’re proud of, of yourself and the team that works here.
And what we were able to do for our clients during that time. And I think that we’re gonna look back on, on 2020. 2022, the same exact way that we did in 2020. Yeah. I mean it’s, you know, it feels like maybe things are gonna start to turn around and, and you know, when the market’s always recovered, and I know we can’t say that absolutely, but it, but it always has up till now.
I mean, why wouldn’t it? Why wouldn’t it this time? Yeah, I mean, we gotta be realistic with ourselves. And if every investor should be somewhat of a student of history, and I mean, looking back on the market, I mean, since the market has inception in, let’s say 1929 with the s and p 500, even when you include that big crash, right?
You’re getting an average rate turning the S and P of over 9%. You, you know, for the past hundred years, geez. Um, so you’re gonna have some, some horrible years, right? You’re gonna have, oh, eight years. You’re gonna have like a crash of 99 years and you can go on and on. But then you, you can’t f forget about the three to four years after those that are great years, right?
That are making up for that. Right? Um, so you have to keep that in mind and it’s hard to be rational and realistic when, when you’re actually. Through this, but that’s exactly why you should have a, a portfolio manager. It’s an advisor that is taking a third party point of view of this and able to put some realism and rationality in your eyes to help you get through it.
Patty is in Englewood. She’s wondering, uh, about 12 years ago I transferred all. That’s into an investment management firm.
I worked with a terrific advisor for a decade, but 18 months ago he retired. I was assigned a new advisor who dodges my calls. He also cost me a lot in the way of taxes last year, which never happened. While working with my previous advisor, I’m worried about things falling through the cracks and am close to.
What are your suggestions? Call Eric. Just that, that’s it. Just answer for call, Eric. Yeah, I mean, it’s, it’s, and this is what we see all the time. I mean, this is, I mean, Patty and Englewood is exactly who we meet with every single week. I mean, this is, this is the, the perfect thing. I mean, for first of all, You want to trust that person that’s managing your money.
You want communication from them. You want to hear from them. Um, you wanna know that they’re capable of handling your money, but you also want to know that they’re actually doing something with your money. Are they being proactive? Are they looking at it? And it just doesn’t sound like, you know, it sounds like this person inherited your accounts and they’re just taking you for granted.
And that that’s what happens. I mean, sure. You know, marriages happen like that. Relationships happen like that. Friendships happen like. Um, wealth advisory firms, I mean, you know, you can’t take that person for granted. And so, quite frankly, uh, that’s what’s happening here. But the other thing that we see is we see a lot of people that are very loyal to their advisor rather than their own money.
And, and, and how silly is that? I mean, you know, like I said, it’s like you, you can’t ever take your clients for granted. And I think that Autumn does a great job because, you know, we’re always reaching out to our clients that we’ve had since day one, just as much as everyone else. I mean, we want everyone to still feel, um, you know, like we’re paying attention to them, which we are.
I mean, and so that’s very important. So again, you know, You know, look for a second opinion. You need to have somebody that, uh, you can move to. And I’ll tell you this, I mean, a lot of people that when they move and they transfer over to us, they always say, Eric, there’s, there’s just a relief that we have now.
Like, we’re excited about working with you. Um, because they, they see the financial plan, the income plan, and so many things that they’ve never had before. And it’s actually. You know, a lot of them feel very relieved and, and, and we wanna keep that, that feeling going all the way forward. Sure. Uh, 807 7 9 1 9 4 2.
So does that happen occasionally when someone retires and they move to another advisor and that advisor’s already, his book is full and, okay, I’ll take it, right? Yeah. That kinda the attitude. Yeah, I think so. I mean, you know, like I said, I mean, I knew a financial planning firm, and these guys cared. You know, they sat around all day, um, making bets online, um, worrying about, you know, what they were gonna get for lunch every day rather than managing accounts.
And the reason that they didn’t have anything to do was they were only looking to take on assets. Owner management. Throw ’em into a portfolio and move on about their day. Now we’re busy because we’re, we’re actively managing their accounts. We’re actively updating income plans. We’re actively writing financial plans.
We’re doing tax strategies. That’s why we’re so busy during the day. But I do know of other firms where these advisors really aren’t working very many hours a week, and that’s because they’re just taking over assets. Unfortunately, the public doesn’t know the difference. You know, they, they just think that, well, everyone’s doing, you know, financial planning and that’s just not the truth.
Hey, you know, Philip, you should really put in your Roth 401k instead of your regular one. Did you even know that was an option? That doesn’t happen. So a lot of times you have to take the initiative to call into your four, to your HR department, talk about your 401k with them, find out if you have that option.
So Phillip still has 10 more years until he retires. That’s a lot of money that could be going into his Roth 401k rather than the taxable 401k. And even if they don’t have that option available, they’re still outside investments. Like he could still do a regular. IRA while he does his 401k contributions as well, or even just a regular ira.
But I would say stick with the Roth. That way you’re starting to build that tax free retirement income for yourself. Okay. Makes sense. Let’s move on to Ingrid. She is in Marco Island. She says I’m a divorced mother of. Two who will be 59 next month. Now my 28 and 21 year old children live with me. One is a senior in college, the other is working a part-time job.
I intended to retire at the end of next year. I have $15,000 in credit card debt. And while I am due a pension as a state employee, I fear my mortgage payments, debt and household expenses will make retirement impossible. What do you think I should do first? I mean, here, here’s a typical. Um, problem is, is that, you know, like your adult children, um, especially the 28 year old, you know, is still more than likely relying on you financially, and this is where you’re sacrificing.
Your retirement for your children and, you know, this is where tough financial love has to really step in. Um, I would definitely get a financial plan. I mean, you’re, you’re at the point right now where you can’t mess around. And this is where I do get very blunt with people, you know? Um, I’m pretty laid back.
I think our, our entire financial planning firm is laid back, but we’re also firm. And this is where I had to say, look, I’ve gotta, I’ve gotta lay down the law and say, look, you need to make some. You know, you’re 59 years old, you got some, some credit card debt that you have to take care of. It’s a good thing that you have a pension as, as a state employee, but there’s gonna be a lot of things like you, you people think just because you have a pension, you have this constant cash flow coming in.
But if you’re not creating a budget and you’re not really, you know, uh, living within your means of that, of that pension, um, you know, may, may not be a comfortable place to be. A lot of people want to have. Buffer in their finances where they, you know, have some extra money, not where they’re just constantly paying down debt or whatever.
Let’s go to James in Cape Coral. James says, after seeing my folks struggle with retirement, my partner and I have cracked down significantly.
And despite being a. 22 years for retirement, we’re saving over 20% of our earnings and dedicating it to retirement savings. I’m 38, my partner’s 35. And are, are we being too rigid about this? This really comes down to, and first of all, great job on saving 20% of your earnings. Um, but this really comes down to, first of all, how much are you making, right?
How much is 20% of your earnings, and you have to compare that to what are you spending. Whatever your budget is, how, you know, whatever your lifestyle looks like is gonna be similar to how it’s gonna be in retirement. So instead of, you know, percentages of, oh, your savings rate should be this, your withdrawal rate should be that, that is was great 20 years ago.
And some of those are great rules of thumb to go by. But when it really comes down to cracking down the numbers, you have to do a full financial plan in order to figure out, you know, is this too rigged for you or rigid for you? Or is it actually gonna be in line with the goals and, and objectives that you have for your retirement?
You know, if he wants to live a, a very wealthy retirement, then maybe this is the route that he and his partner need to go. So it really comes down to how much you’re making now and what your lifestyle really looks like. Okay. So, I mean, again, they are pretty young, right? But I mean, good for them for being.
Yeah. I mean the more time you have with putting away this much money and having 22 years on top of that before you’re starting withdrawal, they can see some huge gains in there. Whew. But, so that’s gotta be a fun client to work with to build them up. I mean, if they got 22 years to work with them, I mean Joseph, that’s like gonna be most of your career.
Yeah. I mean, it could be. There’s a lot of different strategies. You can do it in there as well. Tax saving strategies, you know. You can spread out conversions over a very long time, or just contributing regularly as well and seeing the compound and growth in there is pretty fantastic. I like it. 807 7 9 1 9 4 2.
I tell you what, we’re gonna put a wrap on this show, so let’s go ahead and invite folks to call one last time. Hey, everybody out there. Thank you so much for listening. We appreciate all the positive feedback. If you feel like you’re out there in a financial no man’s land, you’re looking for a second opinion, give us a call today.
We’re gonna take the next 10 callers who have save. $500,000 for retirement. If you’re looking for a financial plan, let’s get that plan done for you. We’ll run all the reports for you, the fee report, the Morningstar reports, a tax analysis, maybe even a volatility analysis. Let’s see where it takes you.
Let’s see where that plan leads you. If you’re looking for an income plan, we’ll show you different ways to turbocharge your retirement income. In short, we’re gonna take all the guesswork outta financial planning, so give us a call today. We’re taking the next 10 call. We’re here answering the phones. We look forward to meeting you.
It goes by so quick and I, I just love the conversation. Gentlemen, thank you so much and everybody out there again, thank you so much for listening. We appreciate the listeners that we hear from every single week. Remember, you only retire once. Let’s get it right the first time. Don’t forget to thank a veteran and have a great week and an even better retirement.
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