May 13, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage. Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for May 13, 2024

Aging Gracefully at Home in Retirement

Radon and Murs speak with Lynne Moore about the concept of aging in place, comparing it to continuous care retirement communities (CCRCs). Lynn has an extensive background in geriatrics and now works with ThriveMore, an organization specializing in helping people age in place.  

Aging Gracefully at Home in Retirement

On the Secure Your Retirement podcast, we have a great episode on Aging Gracefully at home with Lynne Moore. Lynne works at ThriveMore, where she uses her skills as a geriatric nurse and as a former director of a nursing home to help people in long-term care facilities…

Aging Gracefully at Home in Retirement

On the Secure Your Retirement podcast, we have a great episode on Aging Gracefully at home with Lynne Moore. Lynne works at ThriveMore, where she uses her skills as a geriatric nurse and as a former director of a nursing home to help people in long-term care facilities. 

She was also an administrator of a nursing home for 15 years before becoming a director of a continuous care retirement community (CCRC).  

During Covid, she learned a lot about bringing care into an independent living situation and how easy this was achieved, even with all of the regulations in place. Working with people in independent settings was much easier because there were fewer regulations to worry about. 

Her experience led her to become a geriatric care manager, working with people privately in their homes and bringing them the care necessary. Ultimately, this all led to a position at ThriveMore. 

Continuing Care at Home vs in a Community 

ThriveMore owns four CCRCs and is building two additional facilities, so the company is not against a CCRC. If you’re a person who wants to start aging gracefully in the comfort of your home, over 96% of people can achieve this goal. 

The difference? 

  • You retain your home 
  • You maintain your home 
  • Services are brought into the home 

Instead of selling your home to pay for entry into a CCRC, you’ll reside in your home that you know and love. 

What Services are Brought into the Home? 

From the very beginning, an aging-in-place assessment is performed to identify things such as, do you need a first-floor bedroom or do you need to widen the doorways? 

When people enter into the ThriveMore program, they must not need care at the moment. ThriveMore works as a sort of insurance and care is brought in over time as necessary. 

We bring in the support and care people need in their homes before they need them and add more as a person’s needs evolve. Short-term or long-term care is brought in, and the long-term care insurance is underwriting the care. 

Is medical underwriting required? 

Entering into a program like this will require: 

  • 5 years of medical to ensure that the applicant is “healthy.” What this means is that a person does not have a diagnosed progressive declining disorder, such as Parkinsons, ALS, Lupus and things of that nature. These disorders lead to extensive time in a long-term care community where this type of program would not be beneficial 
  • Entering into a membership 
  • Supplying financial information 

How the Program is Modeled 

You can think of the ThriveMore program as an insurance plan with multiple levels of coverage. Part of the cost is based on an entrance fee and then there’s a monthly fee attached to it. 

The buy-in fee is determined by the person’s age. Often, people buy in when they’re younger because it’s more affordable than if they’re closer to needing care. 

Members pay a pre-paid membership fee, and the monthly fee is less because you’re not paying for a fancy facility like in a CCRC. When compared to a CCRC, you’ll pay much lower fees. 

Through ThriveMore, a 75-year-old would: 

  • Have $385 per day in coverage max 
  • Have $192.50 per day and the person’s long-term care plan 

Entering into a program like this would cost around $50,000 for the entry fee and $500 per month in membership fees for a 75-year-old. 

Compare this figure to a CCRC, and you’ll notice that many CCRCs have a $300,000 – $500,000 buy-in plus $2,000 – $8,000+ per month. 

Homeowners are still maintaining the cost of their homes, so they can save a lot of money. 

A review is done when meeting with potential customers, where the team will review any insurance plans the person may have and determine the level of coverage. The highest level of coverage for someone who is 75 will be somewhere around $70,000 buy-in and $700 in monthly fees. 

These fees will provide $385 in coverage per day. 

Entering the program requires you to be at least 62, and at this time, the buy-in can be as low as $30,000. You can have a health crisis that happens early, and if you’re not a member, you cannot join in. 

Members who develop a diagnosis cannot be kicked out of the program, even if they’re not in their 70s. For this reason, it’s better to buy in when you’re younger, and it’s cheaper because you have the security of being a member. 

You never plan on having a stroke or developing Parkinson’s, so buying in early can save you a lot of money and lock in benefits that you may miss if you did have a diagnosis prior to applying. 

Plus, you benefit from: 

  • Recommendations for aging gracefully 
  • Help outfitting your home for older age 

ThriveMore engages with you from the moment you become a member, so you have professionals who will help you along the way. 

Monthly fee maximums are inflation-related, so they will rise every year. The fee is calculated by analyzing nursing facilities in the area and understanding the average number each year. 

So, yes, your monthly fee can rise annually, but it will not be more than the average you’ll pay at a skilled nursing facility. 

Staying Busy and Interactive  

Social engagement and keeping busy are crucial to staying healthy in the latter years of life. While an at-home program doesn’t provide many of the social aspects of a CCRC, it does allow friends and family to come to your home and spend time with you. 

Retirement planning in a CCRC is different from a solution like ThriveMore because people can remain in their neighborhoods and enjoy the social life that they already have. 

From Lynne’s experience, seniors are always very busy when they’re retired. 

However, there are opportunities to get together with members and get out in the community. 

ThriveMore is a program for people who want to stay in their homes, so they already have a social life and want to remain in place. Extroverts may prefer to be in a traditional CCRC, while introverts prefer something like ThriveMore. 

Quality Care Vetting 

ThriveMore’s care vetting strives to offer excellent quality. Partnerships with home care providers in the area allow members to have access to the exceptional care they need while remaining in the home they know and love. 

Lynne’s background allows her to assess healthcare partners to know if they offer excellent care or not. 

If you want to learn more about ThriveMore, you can visit the official website. 

Click here to schedule a call with us to learn more about how we can help you reach retirement. 

May 6, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage. Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for May 6, 2024

Downsizing In Retirement

In this Episode of the Secure Your Retirement Podcast, Radon, Murs, and Nick discuss downsizing in retirement. Scenarios such as lifestyle preferences and financial needs are what make downsizing a consideration for retirees. Listen in to learn how we use practical scenarios to help clients…  

Downsizing In Retirement

Nick Hymanson, CFP® from our office, joined us this week on our latest podcast, where we talked about something many people overlook in their retirement planning: downsizing.  Nick often meets with clients to review their retirement focused financial plan, making sure…

Downsizing In Retirement

Nick Hymanson, CFP® from our office, joined us this week on our latest podcast, where we talked about something many people overlook in their retirement planning: downsizing. 

Nick often meets with clients to review their retirement focused financial plan, making sure everything is up to date and the clients are happy. Sometimes, there are needed adjustments that are identified, and Nick works with clients to address these as well. 

And one of these adjustments relates to downsizing in retirement. 

We’ve noticed a common conversation recently where some folks are interested in discussing: 

  • Downsizing into a smaller home 
  • Downsizing into a home that’s easier for them to get around in 

Let’s dive deeper into this topic and look at a few scenarios. 

Scenario 1: You’ve Been in Your House for 30 or 40 Years 

Let’s say that you have been in your home for 30 or 40 years. Maybe you raised kids in your home, and it was set up for the lifestyle you had 20 – 30 years ago. Unfortunately, the house isn’t set up for where you may be now, or in 10 years. 

Often, retirees are in a much larger house than they need for the lifestyle they have now, and it would be nice for the main bedroom to be on the first floor. 

Pros and Cons 

In addition to wanting your bedroom on the first floor, you may want: 

  • Fewer stairs 
  • A smaller space that is easier to maintain 

Downsizing may mean worrying less (or not at all) about constant tasks like yard work, stairs, and cleaning additional bathrooms. 

In the Raleigh-Durham area, housing prices have been going up for quite some time.  People are concerned about going into a smaller home that may be even more expensive than the home they are in currently. From a financial perspective, moving to a new home may be an even exchange but the person may lose some square footage and land. 

Depending on the community, landscaping, and some outside work that you may not be able to do on your own may be included. 

Scenario 2: Cash Flow Scenario 

You’re in a beautiful home, but you want to reduce the mortgage and the strain it may have on your financial plan. From a cash flow perspective, downsizing may be a better option and provide peace of mind for the next 10 – 20 years. 

If your house has appreciated in value and you don’t have much to pay off on the mortgage, you might find yourself in a scenario where you can sell your home and buy another one in cash. 

A $1,000 – $3,000 mortgage can have a drastic impact on your financials. 

When we look at a retirement plan, we look at a person’s income and expenses to see where they may be having stress in their finances. For some people, downsizing can either: 

  • Reduce the mortgage 
  • Eliminate it 

If you eliminate the mortgage, you may have the additional cash to travel or have less of a strain on your finances in retirement. 

We talk to clients from the beginning about their homes and if it makes sense to downsize. 

Planning from the start to downsize can offer a realistic view of what freedom selling the house may offer. Of course, not everyone will need to sell their home or have a desire to do so. 

If selling does make more sense from a cash flow or mobility standpoint, then it is something that is worth discussing with a financial advisor. 

Moving to a CCRC is a conversation that we have, too. The CCRC allows you to receive community and care throughout the various stages of retirement, which is also a nice perk. 

What Happens in Our Strategy Meeting 

We have software that allows us to plug in the numbers and look at what your financial decisions today will mean in the future. Let’s assume that your target date for retirement is five years from now. 

In five years, we can simulate: 

  • What the sale price of your home is likely to be in five years 
  • Tax consequences of selling the home 
  • What it looks like if you use the funds to buy into a CCRC or another home that’s better for your scenario 

Our goal is to show you how downsizing in retirement may benefit you. We’re able to see how a lower mortgage (or no mortgage) can benefit your overall cash flow and retirement plan. If you don’t have a $1,000 – $3,000 house payment, it can make a world of difference in your expenses. 

Visualizing all the cash flows through the software helps you feel more confident in your decision, which may or may not be to sell your home. 

We can look at this scenario for you if you have two homes and want to sell one in the future or even if you want to make a large purchase in the future. Seeing the figures of your retirement and how the decisions you make today can shape your retirement is empowering. 

If you need help to secure your retirement, are considering downsizing and want to see how it may benefit you or want to know if you can really afford that once-in-a-lifetime trip, we’re here to have that conversation with you. 

Click here to schedule a call with us to learn more. 

April 29, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 29, 2024

Why Savvy Savers Should Spend More in Retirement – Part 2

In this Episode of the Secure Your Retirement Podcast, Radon, Murs, and Taylor discuss in detail the importance of spending more in retirement as a savvy saver. Taylor provides a numerical analysis and insights into how spending habits in retirement can impact your financial plan in a scenario of a sample retired couple in their late 60s.

 

Why Savvy Savers Should Spend More in Retirement – Part 2

Learn the importance of aligning expenses with income sources and assets in retirement planning, considering inflation and the potential for increased expenses. You will also learn the importance of enjoying retirement and fulfilling bucket list items even when they require larger withdrawals.

Why Savvy Savers Should Spend More in Retirement – Part 2

If you missed Part 1 of this series, we recommend that you either read through our blog post here or listen to the podcast here. Continuing on with Part 2 of why savvy spenders should spend more in retirement, we decided to bring in our own Taylor Wolverton, CFP ®, Enrolled Agent, on the discussion. 

Foundation of Why Savvy Savers Should Spend More in Retirement 

Oftentimes, we have conversations with clients who have more money than they’ll need in retirement. However, at times the fear of running out of money is so great that even when it’s a necessity, they hesitate to spend. Because of this, many will pass on a multimillion-dollar legacy to their beneficiaries at death, whether that is their true intention or not. 

Let’s look at some examples of this concept. 

Husband and Wife, Both 69 Years Old 

Our first example to illustrate the idea is a husband and wife, both currently age 69, with the following details: 

  • Both fully retired- not currently receiving wages or employment income 
  • Husband receives $4,000 a month from Social Security 
  • Wife receives $2,700 a month from Social Security 
  • Wife receives a pension of $1,900 
  • Cash savings of $200,000 
  • Husband’s IRA balance is $1,360,000 
  • Husband’s Roth IRA balance is $50,000 
  • Wife’s IRA balance is $830,000 
  • Wife’s Roth IRA balance is $44,000 
  • Joint brokerage account containing stock worth $80,000 

In total, the couple has $2,564,000 between cash savings, IRAs, Roth IRAs, and stock along with steady sources of income from their pension and social security benefits. 

Let’s look at their spending. 

Spending 

This couple spends about $12,000 per month to cover their expenses. This does include $6,000 to $7,000 per year that they use for travel. In our long-term projections of this scenario, we assume inflation on their expenses at a rate of 3% per year for the duration of their retirement. 

Note: When we meet with the client, we try to gather as much information as possible to have an awareness of relevant figures, but there are times when someone forgets about an account or a small pension, so it’s something that we continuously review and tweak as necessary over time. 

Assumptions 

As previously mentioned, we assume inflation will rise 3% per year. To stress test a retirement scenario, we also assume that the invested assets will have a 4% to 5% return each year which we believe is conservative. We assume the social security and pension amounts stay the exact same with no cost-of-living adjustments over time. 

What the Couple’s Retirement Page Looks Like 

Clients of ours receive a one-page retirement summary that outlines income and expenses for the duration of their retirement. For this couple, the page will show the following: 

  • $1,900 per month from the pension 
  • $6,700 per month in combined Social Security benefits 
  • After subtracting an estimated for tax withholdings, net income is $8,400 per month 

Based on the couple’s current spending habits, they need $3,600 – $4,000 distributed from their accounts per month to make up for this difference. The couple has over $2.5 million in savings, IRAs, stock, etc., so they have a decent amount of money available to take distributions from. 

Both spouses are age 69 today. At this rate of distribution, what will happen by the time they’re 80? 

Inflation Calculation 

The couple spends $12,000 a month at age 69, and by 80, with a 3% inflation rate, this figure will be $16,900. In just 11 years, additional pressure is put on the savings and investment accounts because the couple needs about $8,500 a month to cover expenses after pension and Social Security. 

You can quickly see how inflation will impact your assets. 

At age 69, the couple had over $2.5 million in retirement accounts, and by age 80, we project they will have around $3.2 million. If you were feeling stressed up until this point, you’re not alone. But with a conservative 5% annual rate of return, the couple in this example has more in savings and investments at age 80 than when they started at age 69, even when taking regular monthly distributions to cover their expenses. 

What about at age 90? In this scenario, the couple is projected to have $2.9 million in savings and investments. Withdrawals started to impact the accounts somewhat, but at age 90, the total value is nowhere near an amount that would cause concern around the ability to maintain the current level of spending. 

You can do a lot with $2.9 million and enjoy the money that you worked so hard to accumulate. We know that this couple puts aside $6,000 to $7,000 to travel, but they do have a few bucket list trips that they would love to take. 

$30,000 Trip Added In 

The couple is nervous about taking these bucket list trips because they will have to take a larger withdrawal. For a few years, the couple has wanted to take a $30,000 trip that they couldn’t because of work and other obligations. 

We always sit down to crunch the numbers with our clients because retirement spending is a major source of anxiety for a lot of retirees. 

What we show the client is something like this: 

  • Remember, at age 90, without taking this trip, you’ll have $2.9 million. 
  • Let’s add in the $30,000 expense at age 69. What’s the long-term impact at age 90? The couple has $2,780,000 instead of $2.9 million. 
  • Over 20 years, they may lose about $120,000, but they were able to tick something off their bucket list. 

Will the trip and memories be worth the money? For most people, the answer is a resounding “yes.”  

$35,000 Trip Added in for 2026 

Perhaps the couple was so excited about their first trip and didn’t mind the retirement spending, so they added in an additional trip of $35,000. By age 90, with the $30,000 and $35,000 trip taken, the couple will still have $2.6 million in savings and investments. 

Passing $2.6 million to your beneficiaries is always going to be a nice gift. 

Withdrawing money and adding in these larger expenses into your retirement planning really comes down to “what are you working for in retirement?” The sooner we can add these figures into your plan, the faster we can secure your retirement. 

We encourage you to start looking at the things that you really want to do in retirement and begin planning them now. 

It doesn’t matter if you would never spend $30,000 on a trip or don’t have $2.5 million in retirement accounts. 

Spending and retirement accounts vary drastically between couples. If you’re not spending more than you have, there’s always a good chance that you can start checking off some of the items on your bucket list and still have more than enough money for yourself well into retirement. 

We can run these numbers for you so that you can feel confident about spending more money and making memories for yourself while in retirement. 

If you have any questions or would like us to run the numbers for you, please feel free to reach out to us. 

Click here to schedule a call with us. 

Why Savvy Savers Should Spend More in Retirement

You’ve saved well enough to secure and enjoy your retirement. Today, you’re going to hear two financial advisors (us) say something that you never thought you would hear: spend more in retirement.

We see it all the time – people are so used to saving that spending money is difficult.

People have developed a mindset where spending money in retirement becomes a moment of anxiety. Many of our clients leave behind significant inheritances. We encourage them, with good and thoughtful planning, to spend some of that money to:

  • Make memories
  • Experience new things

You can spend a little more and still leave money behind for the next generation.

Why Savvy Savers Should Spend More in Retirement

A long time ago, we had a client call us. She had about $2.5 million in retirement and at the time, she had some water damage in the kitchen. She was living on only her Social Security amount and was in her 70s.

She said that insurance would cover the replacement of her linoleum floors, and she asked if she had enough money to upgrade to hardwood floors for about $15,000. We knew that with 100% certainty that she could upgrade, but she was so scared and reluctant to use any of her $2.5 million, she never did.

She left behind a few million dollars to her children and grandchildren, but she never spent her money on herself. Perhaps she would have enjoyed life a little more while she was here by doing something like buying those hardwood floors for $15,000.

The Psychology of Savings

You want to save for retirement and get to a place where you don’t need to worry about having enough money. From a young age, you decide to save for the future, and you put away as much money as you can to enjoy it later.

Everything you do in life is for your family and future, whether it’s saving for a house, putting food on the table, or putting money away for retirement.

You build a habit of saving over the course of decades, and then what happens? It becomes an ingrained habit that can be hard to break. People become extremely frugal, and it’s difficult to spend your money when you reach retirement age.

There’s also a factor of going from accumulation mode to retirement, so you’re taking money out of your retirement and no longer earning a paycheck, which is scary change for a lot of people.

Shaping Your Mind for Retirement

Five or ten years from retirement, when you know you’re on the right track to secure your retirement, it’s time to start switching your mindset. You want to think about:

  • What you’ll do in retirement
  • What big travel or experience goals you have
  • How you’ll spend time with family
  • Whether you want to own a second home

When we’re working, we tend to neglect some things in life, but when you finally hit the retirement milestone, you deserve to make the most out of your time.

We always ask our clients what they’re going to do when they’re on pace to reach their goal, and they’ll often say:

  • We’re too busy to think about that
  • We’ll figure it out when we get there

If you start making goals for what you’ll do in retirement, you can start allotting money to it. Good saving habits help to reach big goals in retirement, but you need to break that “saving only” habit to some extent.

Things to Think About When You Hit Retirement

What are the things you would like to do in retirement? A few questions we like to ask are:

  • Where would you like to travel to in retirement? How would you like to travel?
  • Do you want to do any major house renovations?
  • Do you want to focus on your health and wellness? Ex: hire a personal trainer?

Paying for health and mobility improvements are always going to be worthwhile.

You can also create experiences with your family. For example, we have one client who took their entire family on a cruise for a week. While the person spent a little money on the experience, they created a memory that will last a lifetime.

We’re not saying go out and spend 75% of your retirement, but you can enjoy the money you worked to save and still be confident that you have planned well to secure your retirement.

What You Need to Think About to Spend Your Money Smartly

We don’t want you to go out and spend all your money. What we would like to do is have our clients get these goals in place so that we can use financial planning to help them reach their goals.

If you think about your goals ahead of time, we can:

  • Plan for these costs
  • Allot enough money for these expenses

Imagine a $35,000 trip that you want to go on. We can add the expense to your retirement plan and see its true impact.

When we understand the numbers, it makes it much more comfortable for clients to spend some money in retirement because they see the true impact of their spending.

One story that we love to share is of a client who wanted to sell their house, buy an RV, and travel the US for 10 years.

We told them to provide the details and let us run the numbers. The clients came back with data on the cost of the RV, the sale price of the house, expenses, and everything else you could imagine.

They have been happily traveling in their RV for over 10 years now.

We sat down with them last week, and they plan to keep traveling for the next 5 or so years. Next week, we’ll run through case studies to show you the numbers, examples, and “what-ifs” for this type of retirement goal.

A financial plan is like a GPS to help you reach your retirement destination. If your destination changes, the GPS can reroute you to get you where you want to be. Proper financial planning can help you safely reach your retirement destination while still making pit stops along the way.

If you want to learn more about planning for retirement and spending more money, please feel free to reach out to us.

Schedule a call with us to talk more about spending money in retirement.

April 22, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 22, 2024

Why Savvy Savers Should Spend More in Retirement

In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss the importance of spending more in retirement. The savings habits we build in our working years can unintentionally lead to a fear of spending money to enjoy life in retirement.

 

Why Savvy Savers Should Spend More in Retirement

Learn how to shift your mindset from fear of spending and start building good habits that will lead to a successful retirement. You will also learn about the experiences and things you can spend money on, plus the importance of planning ahead of your retirement.

April 15, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 15, 2024

Do You Have All Your Eggs In One Basket in Retirement?

In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss the meaning of portfolio diversification and why you shouldn’t put all your eggs in one basket. True portfolio diversification means spreading your money across multiple layers of different options. Listen in to learn about the four major strategies we use to significantly diversify investment portfolios for our clients.

 

Do You Have All Your Eggs In One Basket in Retirement?

Diversification is a conversation that you should have to avoid risks in retirement. You’ll hear the term of having, or not having, “all your eggs in one basket.” Clients even come to us with the idea of three financial advisors. They do not want to have all their money in one place. But what is diversification, really?…

Do You Have All Your Eggs in One Basket in Retirement?

Diversification is a conversation that you should have to avoid risks in retirement. You’ll hear the term of having, or not having, “all your eggs in one basket.” Clients even come to us with the idea of three financial advisors. They do not want to have all their money in one place.

But what is diversification, really?

Let’s imagine that you have three advisors with three different custodians:

  1. Schwab
  2. Fidelity
  3. Vanguard

You have three custodians and three advisors. Does this mean that you’re diversified? If all three advisors have a similar philosophy, your investments in these custodians are likely going to be similar.

For example, all three may choose large-cap growth.

If you have money with each advisor across large-cap stocks, you’re truly not diversified.

Could You Be Widely Diversified with One Advisor?

Retirement planning needs to feel secure. You have risks in retirement naturally, but you can diversify by putting money into multiple financial vehicles. Most people have their money in “buy and hold” investments, and it does work, but are you willing to sit during the bad times?

If you go back to 2021 and 2022, you know what it’s like to sit through a buy-and-hold scenario when stocks are down.

For our clients, we follow four major themes or strategies in portfolios:

  1. Core strategy, which is a theme that fundamentally focuses on good data that is in front of us. Recession talk led us to be a little defensive. The core strategy looks at what we think will happen in the short- and intermediate-term in the markets. We have 5 – 7 Exchange Traded Funds (ETFs) within this strategy alone. What this represents is, many times, thousands of stocks within the ETFs.
  2. Tactical strategy, which is the theme that looks at what’s working right now. In this strategy, you’re looking at AI, technology, and large-cap stocks (like Amazon) that are running away with the market right now. This portion of the portfolio goes into these types of ETFs. If nothing is working, like a 2022 down market, we may decide to shift to lower risk assets, such as treasuries, to reduce risk and preserve capital.
  3. Structured notes, which is something our clients love and is still rather unique. We work with banks to receive a “yield,” which is sort of like interest on a CD. The risk is low, and rates (at the time of this writing) are 8% – 10%. However, as interest rates come down, the yield will also come down. Structured notes are somewhat of a bond alternative. You need to have ultra-high net wealth to get these notes as an individual, but since we manage many clients, we can go to the bank with larger purchasing power.
  4. Fixed income, which is bond ETFs and is actively managed. Since short-term bonds are going well, we’re investing in them a lot right now. Over time, we’ll move to medium- and long-term bond options as short-term starts to be impacted by interest rates.

You can secure your retirement with great diversification using these strategies. We believe that there is no singular perfect strategy for your money. Utilizing tried-and-true strategies when investing in the market to safeguard our client portfolios as much as possible.

Diversifying Outside of the Market

We have many clients who want to grow money with no downside or market risks. Our choice for diversifying outside of the market is a diversified portfolio of fixed annuities. The annuities are part of an insurance, so they work very well in helping us create a highly diversified portfolio.

Using an extreme example, let’s look at Warren Buffett.

Buffett recommends investing in insurance companies because they’re:

  • Highly stable
  • Regulated

When you work with a group that helps you diversify this way, it is a great way to spread your money out and see it all in one report.

You can see your money all on a report where nothing overlaps, and everything is working together to secure your retirement.

We had a meeting with someone who is not working with us yet, and their money was spread out in multiple areas, such as multiple 401(k)s and investment accounts.

The person was frustrated because their money was spread out everywhere, which made management much more difficult.

Diversifying your investments among different strategies is a great start to helping you get peace of mind in retirement.

Schedule a call with us if you want to talk to us about diversifying your retirement.

April 8, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage. Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 8, 2024

2024 1st Quarter Economic Update for Retirement

In this Episode of the Secure Your Retirement Podcast, Radon and Murs speak with Andrew Opdyke about a 2024 1st quarter economic update and the expected economic changes in the second quarter. Andrew is a Certified Financial Advisor and Economist at First Trust Advisor. Listen in to learn how the current concentration performance and the 2024 elections will impact the market volatility and economy, respectively…  

2024 1st Quarter Economic Update for Retirement

Every three or four months, we have the privilege of having economist Andrew Opdyke on our show. He’s back to help us make sense of the economy ahead because, as we all know, 2023 ended better than many people expected. We had ups and downs throughout 2023, but the start of 2024 has proved to be rather positive. Will it stay that way?…

2024 1st Quarter Economic Update for Retirement

Every three or four months, we have the privilege of having economist Andrew Opdyke on our show. He’s back to help us make sense of the economy ahead because, as we all know, 2023 ended better than many people expected.

We had ups and downs throughout 2023, but the start of 2024 has proved to be rather positive.

Will it stay that way? We asked Andrew to start our conversation about the Q1 2024 economic update.

What Andrew Has Seen in 2024 So Far in Q1 2024

We’ve seen some strong and weak data in 2024. At the end of 2023, the expectation was that the Fed would cut interest rates six times in 2024. Instead, we’re likely to see two or three rate cuts instead.

The Fed really wants to get inflation down to 2%, which is positive.

Personal consumption expenditure prices ticked higher last week on a year-on-year basis compared to the prior month. Inflation on the month was 3%, and there’s a lot going on here:

  • Russia-Ukraine war
  • Israel–Hamas war
  • Earlier last week, a boat collided with the Francis Scott Key Bridge in Baltimore.

All of this is impacting economic recovery.

If inflation remains higher than the 2% the Fed wants to achieve, interest rate cuts may wait even longer. With all of this said, the economy is growing, consumers are continuing to spend, and only time will tell how things will play out.

In Q1 2024, markets are up, with strength in AI and Nvidia and the hype around these new technologies.

While the markets did react slightly to the lack of rate cuts for a day or two, there has been less pushback than expected.

Why Did Markets Not See a Pushback with the News on Rate Cuts?

If you look back to last year, we’re kind of in a continuation phase. At the beginning of 2023, if you had told people that the Fed was going to raise rates and that profits were going to be flat or slightly down, very few people would have predicted that the market would rise 24% in 2023.

Instead, what we saw was people willing to pay more for certain company stocks.

There’s almost a disconnect between the logic of the market’s performance because the top 10% of companies have about 75% of the market cap. Growth is sort of condensed in these companies, and this is the highest we’ve seen it going back about 100 years.

If you look at smaller cap companies, they’re still trading at relatively normal levels.

The question is, what happens if market conditions impact these major stocks that account for 75% of the market cap and everyone starts selling? We could see a lot of volatility.

Right now, the market is moving on the idea of AI and its potential, but we haven’t really seen the profits from the technology to justify this. We’re in a phase where we’re seeing growth based on potential hopes and expectations rather than evidence that these technologies will be the game-changers companies predict.

Elections, Negative Conversations and the Year Ahead

Election season is always interesting because of negative conversations, uncertainty, and doubt. We just don’t know what policies will look like or how they’ll impact the market, so it leaves a big question mark for investors.

And while we have a presidential election every four years, the market does brace for the mid-term elections every two years, too.

Presidential elections do heighten concerns, but what we notice is that there is always emotion during one of these elections. You have people on all sides saying, “If this person wins, I’m moving to Canada,” and it showcases:

  • 50% of the country will be happy
  • 50% of the country will be unhappy
  • Everyone is going to go back to work

Regardless of who wins the election, you can be positive that Apple will be building another iPhone, and companies will continue producing products.

What the data tells us is that we’ll put a bunch of emotional energy into the election, and markets will have volatility before and during the election. But when the results come in, the market will tend to rise.

Once an election is over, companies tend to continue with their plans.

Short-term volatility is likely during an election, but after the “smoke clears,” markets tend to pick right back up, barring any major economic issues.

The Potential of a Recession and the Outcome

We may still see a soft landing and a potential recession, but it’s very unlikely to be a deep one. GDP numbers show that the U.S. economy grew 3% last year. Government purchases accounted for two-thirds of the growth, and we had a $1.8 trillion deficit.

Activity was led by healthcare and the government, which were responsible for roughly 50% of all job gains.

During normal times, these two account for 17% – 18% of all job gains.

When you dive into things, you’ll notice that there needs to be some healing to where the workers are. We haven’t seen a real transition back in certain sectors, such as tourism and restaurants.

Small- and medium-sized businesses are still facing an increase in rental costs, hiring, lending, and more.

Government support is really helping support the economy, but in other sectors, we are seeing companies adjust, such as in the tech sector, where layoffs are occurring. We’re at a point where there is a fine balance of government spending propping up the economy and the private sector readjusting.

We may see a weakening in employment, but if a recession does occur, it is likely to be a weak one.

Top Concerns for the Rest of 2024

If the Fed starts listening to the market and what the politicians want to happen, it poses a big risk. The Fed needs to stay the course and wait to cut rates until inflation is down enough because if they don’t, it can lead to inflation accelerating again.

Starting to cut rates too early will lead to short-term gains, but in the long term, we would need to raise rates again, restarting the whole cycle.

Spending remains too high.

The Fed lost $140 billion last year because they paid banks to hold onto the $200 billion the Fed gave to the banks a few years ago. We do need to get spending back in check, reevaluate and determine what is sustainable.

In an election year, parties want the economy to look its best. There is a concern that the wrong choices will be made to prop up the economy so that it looks good going into the election, even if that means long-term issues.

Excitement Outside of the Election

We’re seeing some broadening, which is always a positive thing. Earnings for the top 7 companies rose roughly 24% – 25%, but the rest of the 493 companies in the top 500 saw earnings decline 4%- 5%.

This year, we’re seeing earnings growth for the rest of the 493 companies.

You must remember that companies have had to do a lot and adapt to:

  • Supply chain issues
  • Worker shortages
  • Regulations
  • Interest rates

Many companies have found ways to be more productive and consistent with results. If the Fed continues to do its job and reduce inflation, we’re really putting these companies in an even better position in 2025.

Broadening out will ultimately be beneficial in the long term, even if the market isn’t reflecting it just yet.

Click here to listen to other episodes of our podcast.

 

April 1, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage. Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 1, 2024

Sequence of Returns – How It Could Affect Your Retirement Plan

In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss the impact of the sequence of returns on your retirement plan. The sequence of returns is the risk associated with how your money makes or loses money, and it can significantly impact your retirement plan.  

Sequence of Returns – How It Could Affect Your Retirement Plan

Sequence of returns is how long your money will last in retirement. If you’ve been reading our blog or a Secure Your Retirement podcast listener for any length of time, you know that we have a unique approach to how we set up assets to avoid the negative consequences of sequence of returns.