If you miss the Money Puzzle TV Show this past Saturday, we talked about Inflation. In retirement, you want to be able to enjoy yourself. You want to focus on the things you want to have and do. That’s why working with a professional coming in and going through the comprehensive financial planning process can give you that security.
If you’d like to speak with one of our advisors or need more information regarding any of the topics discussed on our show, please give us a call!
Speaker 1 [00:00:20] Hello and welcome to the Money Puzzle. I am your host, Randi Meijer, and I’m talking today with Chris Vaughan and Eric Douglas from Family Wealth Planning Partners. Nice to see you again.
Speaker 2 [00:00:30] Good morning to you as well.
Speaker 1 [00:00:32] How are you today?
Speaker 2 [00:00:32] Very well, thank you.
Speaker 1 [00:00:33] And you.
Speaker 3 [00:00:34] Doing great.
Speaker 1 [00:00:35] Great. Well, glad to be here. We have a great show in store for the viewer today and a very special offer coming up, which we’ll tell you about in a minute. But first, I want to just jump right in and talk a little about your team and your approach to retirement planning.
Speaker 3 [00:00:49] Sure. Our approach I mean, we put this firm together with a group of like minded advisors that our focus is not on all the other little things that you typically see. It’s on developing a good plan for the clients, which gives them peace of mind. They actually know how things are going to work and and how all the little pieces of the puzzle are actually put together. That that’s the important thing. That’s the way that we go about our our philosophy on things.
Speaker 1 [00:01:15] I love the name of the show. It really just makes sense. It’s about simplifying.
Speaker 2 [00:01:20] Very much relates to our goal, which is to really focus on planning first. Yeah, we’re not focused on investments first, we’re not focused on insurance first, we’re focused on planning because when you go through the planning process, that will dictate the recommendations. We’re not coming in with a one size fits all approach for all of our clients. Right. We want to talk about what’s most appropriate for you, because what you need versus what you need are going to be two completely different.
Speaker 3 [00:01:42] Absolutely.
Speaker 1 [00:01:43] Absolutely. And everybody’s retirement goals are different as well.
Speaker 3 [00:01:46] Absolutely they are.
Speaker 1 [00:01:47] So we’re all seeing it. We’re all feeling it everywhere. We spend our money right now, we’re feeling inflation. Is this one of the main concerns of your clients today?
Speaker 2 [00:01:58] It’s the hottest topic right now. It’s all over financial, news, media, it’s all over really all all news right now. Really. We’re not having a day go by where we’re not having clients and prospects come into the office asking us what is going on with inflation? What are we supposed to do with it? Right. It’s it’s obviously a huge, huge concern, especially for clients that are already retired, for the most part, living on some type of a fixed income. And there’s a number of different things that we do to address it. But first, let’s talk about really what the impact of inflation can have on your portfolio and what it means for you in everyday, real life. And and Chris and I were talking about this before the show. Just the easiest thing to point to is gas prices. Right. And I’ll even relate when I started driving however many years ago, that was right. I remember I was I had a minimum wage job. I was making $55.50 an hour. And when I got my license, I was paying $0.96 for for gas.
Speaker 1 [00:02:54] Oh, yeah, I remember that.
Speaker 2 [00:02:56] Yeah. It’s a little bit different now, right? Yeah. Even when we go back about a year ago, the price of gas, at least in Louisville, Kentucky, was about $2, 15, $2.20. Today, it’s about $3.35. Right. The actual consumer price index is going to show you about a year over year inflation rate of about 8.5%, a little bit less than 8.5%. So where it was today versus where it was a year ago, that’s not the real inflation rate. But let’s just stick with the 8.5% year over year inflation rate, for starters. What does that mean? At the end of the day, it means your cash that you’re sitting on is worth 8.5% less than it was a year ago. If you have 8.5% less in cash than you did a year ago, and that’s huge, especially when you look at those more conservative or more elderly clients that still have that old school mentality where they think cash is king, you know, the amount of cash that you have and, you know, that’s the conservative place and that’s where you go to avoid risk in the market. What we’re seeing right now is an entirely different type of risk, which is inflationary risk, and that can pose an altogether different threat to your overall investment portfolio in addition to what you’re going to see with market risk.
Speaker 1 [00:04:09] So now do you have to go ahead and adjust the portfolios of your clients that are already retired because of this inflation?
Speaker 3 [00:04:16] Well, you you would ingest some of the portfolios for the near-term income. So and we’ll talk about bucket strategies. We’ve talked about that on other episodes, the moneys that you’re going to be using ten, 15, 20 years from now, that bucket of money, that portfolio not necessarily adjusting for that one because it’s too far out in the near term. As Eric was just saying, if if you’ve got an inflation risk that is going up, the only way to balance that out is to take your portfolios and make them a little bit more aggressive because you need to get a little bit higher rate of return on your money. That’s why cash is not king in a high inflation environment. So, yeah, you do have to make some little tweaks and adjustments.
Speaker 1 [00:05:01] Wow. So do you suggest that folks come in and really get a second opinion on their portfolios they have now?
Speaker 3 [00:05:09] Absolutely they should.
Speaker 2 [00:05:10] Yeah, they absolutely should. And if you don’t have some strategies in place to account for inflation in your portfolio, then that’s a huge red flag you need to. And that’s once again going back to the idea of what we focus on first, which is the idea of financial planning. We need to run through a full scale financial plan to really understand, are you prepared for inflation? Do we have inflation accounted for in your plan? Or We are counting on inflation in the next ten, 20, even 30 years in your portfolio. If you’re retiring at, let’s say, 63, 65 years old, we have to account for the possibility that you’re going to live another 25, 30 years. The value of your portfolio today is not going to be what it’s worth in 30 years. It just won’t be. And we’re going back to that example of when I started driving and how much money I was making in my first job working on a grounds crew at a country club. Right. Inflation is a real thing and it’s a huge threat to your portfolio and we just have to account for that in every planning that we do.
Speaker 1 [00:06:07] Especially when you’re on a fixed income, I mean, this can cause a lot of folks a lot of anxiety.
Speaker 3 [00:06:12] Yeah, absolutely. There’s a lot of a lot of sleepless nights when you’re not when you’re not sure how this is going to how this is going to affect you. And to Erick’s point, that’s why we like to do things in a financial plan first, because then when they come back in and they say, okay, how is this going to impact me? What is this inflation environment going to do to my portfolios? Well, the most important question is, what’s it going to do to your goals? How is it going to affect the overall plan? So we can run those scenarios and say, okay, here’s the impact of the kind of inflation that we’ve got now. And what if this continues on for two, three, five, ten years? How does that impact it, even though it might have a negative impact? If we can see in the plan, everything’s still going to work out. It gives that peace of mind because they know, okay, yeah, this is not fun, but everything’s still going to work out, right? So yeah.
Speaker 1 [00:07:02] You took the words right out of my mouth. That’s what I was going to say. I mean, the fact that your clients can come in and meet with you, you can go over different scenarios and give them exactly show them exactly what’s going to happen either way. Piece of mind. And that’s what we all want in our retirement years. We work so hard our entire lives. The point is to enjoy it, right?
Speaker 3 [00:07:24] Yeah, that’s.
Speaker 1 [00:07:24] Right.
Speaker 2 [00:07:25] That’s what you want to be able to give yourself the ability to enjoy your retirement and to not feel so much pressure to account for every single dollar that’s going out of your bank account. Right. You want to be able to go buy the boat you want to go to and would be able to, you know, take your grandkids out for for lunch whenever you want. Right. You want to be able to spend the money, have the freedom, have the financial independence, to be able to live the retirement of your dreams.
Speaker 1 [00:07:50] Now, do you find now more than ever, you know, folks that are about to retire or think that they have to spend a lot less because of this inflation?
Speaker 3 [00:07:58] I think some people have that myth, but once again, that kind of comes back to the plan in reality, if you’re going to maintain the lifestyle that you have, but yet inflation is going up, you’re going to have to spend more money to maintain basic math there. But yeah, they do have that misconception. Maybe I need to cut down. And can they? Sure. If there are things that are not that important to you, you can cut back. So those are some of the changes you can make. But if you’ve got a good plan, you shouldn’t have.
Speaker 1 [00:08:27] To have to. Right. Well, gentlemen, we have to take a very quick commercial break, but I know you have a very special offer for the viewers today. So, Eric, do you want to tell them what you have for them?
Speaker 2 [00:08:36] Yeah, absolutely. So to our first ten callers, please give us a call. 844 900 5210. Please give us a call first. In class, we will go through and offer you a complimentary, holistic, comprehensive financial plan. We will go through your entire puzzle. So bring all your puzzle pieces into us. We’re going to talk about your life insurance. We’re going to talk about your portfolio, your risk tolerance, your investments, your estate planning needs. We’re going to go through all of those different things. We’re going to put all those puzzle pieces together for you.
Speaker 1 [00:09:06] Thank you so much. We’re going to go ahead and open up the phone lines. That phone number is on your screen. 844 952 ten. What Chris and Eric are offering you today is the opportunity to retire with peace of mind. Totally worth a phone call, an absolutely worth your time. So we’re going to take a quick break and we’re going to be back with so much more. Please stay tuned.
Speaker 4 [00:09:30] How confident are you in your current financial plan? Do you know with certainty how the recent market volatility will affect your future hopes and dreams? How much are you paying in taxes and how much are you losing to unnecessary high fees? You didn’t work to save this money so that you could spend your time worried in retirement. Now is the time to take charge of your finances so you can feel confident about your future. Call in during the next 30 minutes of today’s show, only to set up an absolutely complimentary, no obligation, full blown financial review that will result in your own customized written plan. This is a $999 value that we’re giving away, complimentary to the first ten people who respond. We’ll start with a full blown analysis of what you already have by running a report to untangle how much you are currently paying in fees, how you’re allocated for risk, and what it’s costing to work with your current advisor. Next will identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you hope to go there? When? Is your current financial plan set up to get you there without mishap? Let’s design a road map to create a financial plan you can follow with confidence. Get the peace that so many people are missing from their retirement. Find out how having a written plan can make a difference to your retirement dreams. Call now to schedule your complimentary, no obligation, full blown Financial Review today.
Speaker 1 [00:11:04] Welcome back to The Money Puzzle. I’m your host, Randy Meijer. And talking with me talking with me today are Chris Vaughan and Eric Douglas from a family wealth planning partners. Really diving into what we’re all seeing and feeling out there today. Inflation, gosh, everywhere we spend our money, it’s apparent. So why is planning so important in an inflation environment today?
Speaker 3 [00:11:28] Well, you do the plan for the peace of mind. First of all, that that emotional component that you need to have a sense of knowing. It doesn’t really matter what happens. I’m going to be okay. What you don’t want to do is spend your whole life saving up, not buying those things that you want so that you’ll have that money later and then not have enough. So. Great story that I heard several years ago is imagine that you and your spouse and maybe another couple have planned a vacation for years and you’re going to go out west and you’re going to drive across the desert and you’re really looking for this, all the beauty of the desert, everything. You get out there, you rent the big car so that it’s comfortable and you head out across the desert and then you realize you don’t have enough gas to get to the next gas station. It’s, you know, a couple hundred miles away. And it’s it’s going to be close. So you start thinking about, okay, what can we do? Well, we can roll the windows down and turn the air conditioning off. Right. Not a lot of fun if you’ve ever done that driving across the desert. But then you start going, okay, well, maybe if we coast down the hills and then accelerate real hard to go up the next hill, or should we maintain that nice, steady speed? But what ends up happening is you spend the entire trip with everybody staring at a gas gauge instead of looking at all the beauty around you, which is why you saved up. That ruins what you’ve what you’ve worked so hard to get to. And then, of course, you know, you finally get there. You do make it to the next gas station and you get out and you’re so relieved and you realize you just missed everything. And that guy pulls in behind you and he’s gone. Did you see that? You know, and that’s why planning is so important, because, you know, the car is going to get across the desert so you can actually enjoy the scenery.
Speaker 1 [00:13:24] Yeah. You’re spending your time stressed about every purchase rather than knowing you can actually enjoy.
Speaker 3 [00:13:30] That’s a miserable wallow.
Speaker 1 [00:13:31] In your life after retirement.
Speaker 2 [00:13:33] It’s just. It’s just no fun. That’s not the way to enjoy retirement. You want to be focused on the things that actually matter. And counting every penny is not the way to enjoy yourself in retirement.
Speaker 1 [00:13:44] Absolutely.
Speaker 2 [00:13:44] You want to be able to enjoy yourself. You want to focus on the things you want to do. That’s why working with a professional coming in and going through the comprehensive financial planning process can give you that security. It’s actually it’s interesting because so many times when we’re working with clients that are in retirement, we spend more time telling them to go spend more money. inf
Speaker 3 [00:14:02] Oh, yeah.
Speaker 2 [00:14:03] Go enjoy yourselves a little bit more because they have these habits they’ve spent a lifetime developing. Your spending habits don’t traditionally change too terribly much. Once you go into retirement, maybe for the first five or ten years, you get the travel out of the way and some of the you know, you buy a few things maybe. But traditionally you’re you’re spending habits are set in stone for the most part. You’re going to you are who you are at that point. And so so many times are actually telling them, what are you going to do with all this money? You said you didn’t want to leave all of this to your kids. Go, go spend it. Go, go, enjoy yourself. And that’s how we illustrate we very specifically illustrate you have this bucket of money that’s going to cover your expenses for the next couple of years. This is kind of the next bucket for the next 5 to 10 years. You know, here’s your long term needs. Those are all accounted for. Here’s this other pot of money over here that we don’t have anything to do with. Well, go enjoy yourself a little bit. Go, go with.
Speaker 1 [00:14:56] Would you say that your clients are coming in more often with the market being so volatile, kind of asking for reassurance?
Speaker 3 [00:15:04] I’ll be real honest with you. Most of the clients that we have that, you know, we’ve developed that good financial plan are not coming in with those questions because they already had that that that piece, that knowledge of, okay, I know how this works. And that’s where the education piece that we do is so important, teaching the clients not only this is what we’re going to do, but this is why we’re going to do it. This is how it. Here’s the fail safes that we’re putting in in case something does go wrong. Here’s how we’re going to deal with it. So when you have these things, you know, inflation, whatever the case might be, come along. Most of these clients, they understand this is how it’s going to work and this is why it’s going to be okay.
Speaker 1 [00:15:43] You’ve already completed their puzzle.
Speaker 3 [00:15:45] Exactly. The puzzles put together.
Speaker 1 [00:15:46] So someone might be watching at home saying, gosh, I don’t have that piece of mind right now with my current advisor. What would you say to them? You know, if they’re hesitating, picking up that phone, what would you tell them?
Speaker 3 [00:15:59] A second opinion is always a good idea. You know, if you if you go to the doctor and you get that big diagnosis, do you just go? Sounds good. I’m going to go with that. I know you always he’ll get a second opinion and it might be a little bit scary, but there is a peace in knowing that you have the right solution laid out for whatever the puzzle is that you have.
Speaker 1 [00:16:22] Do you get a lot of clients that come in for second opinions?
Speaker 2 [00:16:25] And we do. We get quite a few. It’s so interesting because he was talking about the clients that we already have built those relationships with and how low their anxiety levels are, especially in times of volatility and inflation like we’re living in today. There really is a huge difference level between the new prospects they come in or maybe they have been working with an advisor that doesn’t really do planning in their practice. And it’s amazing to me how many of those are still out there. Really the way the world is going and really this is once again where we set ourselves apart, I believe is going through that planning process. So many times I’ve had well, I’ve got an investment advisor who manages my investments or I have an insurance agent. Okay, that’s great. And not to downplay any one of those individuals, and I’m sure a lot of them can be really great at their jobs, and that’s great. But that’s different from a plan that’s different from the planning process. And you really need to sit down and comprehensively put all of those different puzzle pieces together to really understand and appreciate, you know, whether or not you’re fully prepared to live the life you want to live in retirement.
Speaker 1 [00:17:32] Monthly statements coming in the mail are not a solid retirement, correct? It’s about a relationship. It’s about knowledge. Educating your clients. Well.
Speaker 2 [00:17:40] Well, it’s interesting, too. Another thing I tell clients that, you know, so many times we talk about going through the planning process and I say planning for a very specific reason because it’s ongoing. It never ends. I can easily have someone, you know, I can put some numbers down on paper and I can I can print them out and hand them to you, say, here’s your financial plan. That’s not what this is. It’s totally different than that. It’s an ongoing relationship. It’s regular meetings throughout the year. It’s knowing you. It’s knowing your kids. It’s knowing what you want to achieve not only in your retirement, but how you want to invest that money, how you want to leave a legacy behind for your beneficiaries.
Speaker 1 [00:18:16] Well, gentlemen, we have to take one more commercial break. But before we do that, let’s remind the viewers at home about the special offer you have for them today.
Speaker 2 [00:18:23] Absolutely. Give us a call. 844 900 5210. We talk about the money puzzle, right. Bring us all of your different puzzle pieces and we’re going to go through your life insurance, your investments, your risk tolerance, your portfolio, all of those different things. We’re going to go through the planning process complimentary. Of course, we’re going to put all those puzzle pieces together for you folks.
Speaker 1 [00:18:44] If your retirement plan right now is statements in the mail every month and you don’t have that relationship or peace of mind, I encourage you to pick up the phone today and call the number on your screen. It’s no obligation and you have nothing to lose. 844 952 ten is the number. We’re going to take a quick break and we’ll be right back.
Speaker 5 [00:19:05] As a good saver, you’ve been putting away money during your working years. Studies find that the biggest fear of retirees is running out of money. Market volatility isn’t just the downward movement of stock prices. It’s the size and frequency of change. The more dramatic the ups and downs, the higher the volatility. This can put savers who are newly retired or a few years away from being retired at greater risk. Today’s generation of retirees is not receiving traditional pensions, as our parents or grandparents did. Instead, we have retirement accounts such as 401 KS or four or three B’s. These accounts typically expose your money to market risk. The last thing you want right before retirement is to lose a portion of the money you need for income. But how do you turn these accounts into a retirement income? Is it safe to keep all your retirement money sitting in the stock market? The last thing you want is to lose a portion of the money you need for income due to market loss. By working with a financial professional. You can learn how to turn a portion of your savings into an income stream for life and income for the life of your spouse. If you’re married, we all have moments in our lives when we wish we had taken action sooner. Don’t let procrastination rain on your retirement parade. Act now before it’s too late. Please call our office to set up your no cost, no obligation retirement income review today.
Speaker 1 [00:20:31] Welcome back to the Money Puzzle. I’m your host, Randy Major and Chris and Eric and I were just talking over the break and I know you really wanted to follow up on what we were just chatting about, you know, statements being not a solid plan for.
Speaker 3 [00:20:45] But yeah, exactly. It comes back to the concept of working with an investment adviser, which is that’s not a good or a bad thing. That’s a thing. But if if your investment advisor does not have a plan that they’re working towards, you have a problem. So, for example, you get those statements in and we talk to people all the time. They come in. I want to get a second opinion. Okay. Look at the rate of return that you’re getting on your investments. Oh, I’m doing great. I’m getting 10%, 15%, 20%. Yeah. But is is that what you’re supposed to be getting? Because if you look back at the plan is working towards goals. The investments are a tool as part of the overall plan. If you’re getting 15, 20%, you say, hey, I’m doing great. Yeah, but you only need to get, say, eight, for example. Why are you taking on that much risk? Because if the market’s take a turn at the wrong time, you’re going to take a major hit because you’ve got too much investment risk in the portfolio that needs to be tweaked. Kind of a philosophy that we have would be you would never take on more risk than is necessary to achieve the plan. That’s why the plan needs to come first and then you figure out all the other components that go into it.
Speaker 1 [00:21:58] Do you want to expand on this, Eric?
Speaker 2 [00:21:59] Well, it’s just the traditional way of thinking for so many people when they think about people in our business. And first and part of it’s the fault of our industry because for so long and so much of what you see in the news is about returns, how do we maximize returns? And there’s certainly value in that, don’t misunderstand. But that’s not planning. The investment returns are not planning. And to piggyback off Chris, Chris, this point, if you’re getting a 20% return on your portfolio, good for you. That’s fantastic. That comes with a high level of risk. No, no doubt about it. And I think a lot of people have been fooled by the last ten years. We’ve been in a really good bull market. I think last year woke a lot of people up in 2020 when we had, you know, obviously a pretty steep nosedive right in the market. Now, we came out of it pretty quickly, amazingly enough, and that’s fantastic. But that is not the norm for what happens in a market correction or a market downturn. When you go back to the early 2000, so you look at 28, 29, it can take years to climb out of those things. So if you if you have too much leverage or you have too much risk in your portfolio at the same time that you’re looking to retire, that can put you that can set you back just literally years and completely derail your retirement plan. That’s why it’s important to go through the planning process and look to segment your portfolio into different pieces, because we want to make sure that you’re not taking too much risk with the assets that you need to access in the next couple of years. Right. You don’t need a 20% return, probably in most cases for the entirety of your portfolio go super the 20% and kind of that long term bucket. That’s fantastic. That’s what that is designed to do because you don’t need to touch those assets for ten years. And if we do get another correction or for heaven’s sake, another recession, well, we have time to pull out of it. And for those assets to recover before you actually need to draw income from those. But the assets that you need really in the next 2 to 10 years, they need to be more protected. You can’t be taking that much risk.
Speaker 1 [00:24:00] Now, would you say who’s someone who is about to? They want to they want to retire soon. Would you suggest they they wait or how do you figure out when the right time to retire is in a market like this?
Speaker 3 [00:24:12] I would say the first thing you need to do is develop a plan not to be a broken record, but that is what will give you the ability to make those decisions. So once you develop that, that initial plan out, you can go back and say, okay, if I retire at age X, here’s what’s going to happen. Well, what happens if I retire a year earlier than that? Okay, what happens if I retire a year later than that? A lot of times you’ll find that it affects all of the other parts of the plan so much that it’s a really good decision to modify. That’s that’s the whole point is we can pull all those different levers and see how that’s going to affect all of the other things that you do. And then you make good, educated decisions instead of, you know, just I don’t know, let’s see what’s going to happen if I do this and then you’re committed to it.
Speaker 1 [00:25:00] Yeah. So we had a lot of calls from last week’s show, and I was wondering if you’d like to take a viewer question.
Speaker 3 [00:25:07] Sure. Sure.
Speaker 1 [00:25:08] All right, let’s do it. So Patty in Louisville wrote in and she wants to know, the more I watch the show and learn about many different financial tools that exists, the more I dislike my 401k and the limited investment choices I have. Is there anything I can do to broaden my options, or am I just stuck with what’s on their menu? Thank you for calling in. Patty by the. Hey, guys, how about this?
Speaker 2 [00:25:32] Yeah, that’s fantastic question, Patty. So a few different things. First of all, if you’re still employed and you’re working and contributing to that plan, you’re going to be stuck in that plan to some degree. Now, if you’re over 59 and a half, most employers so offer the ability to do what’s called an in-service withdrawal or an in-service distribution, depending upon how it’s phrased in their plan. But basically what that allows them to do is take a percentage. Sometimes it’s up to 75, in some cases maybe even 100% of your 401. K, you can do an in-service withdrawal and roll that into an IRA that allows you some flexibility before you go to retire to do some other things. So if you need to look at doing like some long term care planning, if you want to look at, you know, adding some downside protection to your portfolio, if you just want to look to improve the performance or broaden the diversification of your portfolio, you can do that much more easily within an IRA than you can in a41k or four or three B, because you are going to be limited by the investment options within those plans.
Speaker 1 [00:26:32] Okay. And Chris, just a few seconds left. I’ll let you expand on. Sure.
Speaker 3 [00:26:35] Just another option that you have. I’m a big fan because of the limited options you having for one case for three days. Go ahead and take the match. Put it up to your match. Make sure you know what it really is, because the companies, given your money, you need to take advantage of that. But then put the next dollar or however much you have that you can save. Go ahead and put that into an IRA in the first place where you have a much, much broader range of investments. That almost always works out. Plus, you have the option of maybe using a Roth so that we’ve got some different tax situations to deal with down the road. So there’s lots of things that you can do.
Speaker 1 [00:27:13] Thank you both so much, Eric. Or at the very end of the show, let’s remind the viewers really quick of your special offer.
Speaker 2 [00:27:17] It’s an absolutely give us a call. 84495210. Come on in. We’re going to go through a comprehensive financial planning process for you and your family. Bring us all your puzzle pieces. We’re going to put them all together for you in a nice, clear picture so you can understand the trajectory or the path that you’re on to achieve the retirement that you want to live.
Speaker 1 [00:27:39] Thank you both so much for spending time with us today for such great information to the viewers at home. Thanks for spending your time with us. We encourage you to pick up the phone today and call the numbers on your screen. Have a beautiful rest of your day.