NEW EPISODES! This past Saturday we premiered one of our new episodes of the Money Puzzle TV Show. This week Brian Ramsey and Chris Vaughn are talking about the importance of retirees having a plan in place that says, yes, my portfolio can withstand the volatility and income sources. They share some examples of what we are hearing and seeing in our client meetings!

Watch the full episode or to catch up on all our podcasts just click the link below! 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 [00:00:19] Hi. Welcome to the Money Puzzle. I am Brian Ramsey and that right there is Chris Vaughan. Question for you. Right off the bat, we recently had an inflation number that came out 0.1%. Do you believe that? The question is, should you believe it? That’s what we’re going to talk about today on the money puzzle. But first, Chris, to tell folks where we’re located and we’re off. Is it all right?

Speaker 2 [00:00:40] Well, Family Wealth Planning Partners is a full service financial planning firm, were located at the corner of Shelbyville Road and Hersman Lane right over in East End, Louisville. Really easy to find. And we’d love to have all kinds of guests come in because we do lots of events there, too.

Speaker 1 [00:00:54] Yeah, we do. All right. So real quick, we got this puzzle back here behind us. I hate to say it, but I will give you credit. So you kind of came up with a name. So walk. Walk everybody through. Why we choose the money puzzle. What it actually means.

Speaker 2 [00:01:08] Well, I mean, this is an analogy that financial planners have been using for years, and we’re certainly no exception to it. The reason that we kind of use that analogy is everybody is familiar with the jigsaw puzzle and they know that it’s important that you get all the pieces turn in the right direction. You got to put them together in a certain order in order to form the picture. Well, that’s what financial planning really is, and we do it very much the same way. You find the edges first, in particular the corners. You’ve got to get those corner pieces set up and then you put all the pieces together to form what that puzzle looks like. And that’s exactly how financial planning works. Figuring out how to make all the little pieces go together.

Speaker 1 [00:01:45] Yeah, yeah, that’s that’s perfectly explained. All right, so let’s go back to the very beginning. I posed this question recently. We had a number, an inflation number that came out that was reported 9.1%. The question is, well, we asked, should you believe that? I will tell you, I don’t believe it. And here’s why. So we did a podcast not too long ago where where we talked about inflation and what it was right after that 9.1% came out.  So what we did, we said, okay, what are the most common things that we all use, consume whatever the case is, and let’s just Google it for like for a better how much are they able to see how much things have increase year over year?  All right. I’m going to give you some stats. All right. First of all, food up 40% year on year. Okay. That’s probably about right. 40, 44. Because I know I go to Kroger and I know that’s about right. Okay. So about what I can say. All right. Energy 50%. Now I know what people are going to say. Well, wait a minute, Bryan. Gas was two bucks. Now that’s $4. That’s way more in what could be a five bucks at one point. We get that this was all energy included. So this was gas utilities, gas, utility, electric, all that stuff. So it was up 50%. Still a big number, right? Yeah. Housing alone where you’re from, 15% was the number. But I’m telling you, is way more than that level because we have clients that are buying houses left and right. And it’s unbelievable how much housing has gone up. Right. Cars. Well, first of all, good luck finding one. Yeah, good luck getting a new one or even a used car at this point. But up 40% clothing. This is that’s actually was a little surprising to me. So 5% fairly reasonable, right? You would think so. Utilities this is other utilities that came out. We just Google the other utilities. I think gas and electric. I forgot it was like cell phones, Internet, things like that. All kind of I was accumulating other 20% when cell phone. Utilities, things like that.

Speaker 2 [00:03:41] My wife was getting on the boys when we got our cue bill just the other day. We don’t have LG and we live in Shelby County because we’re special. But yeah, the bill was really high. I’ve got two teenage boys, you know that? And Kathy was really getting on him about, you know, turn it lights off. And all of a sudden it’s like, honey, that’s that’s where everybody is right now. It’s going up that much.

Speaker 1 [00:04:00] Well, here’s the thing we just said now, I only named two things that were less than 9% clothing and utilities. The only two things that are less than 2%. So the question is, should you believe that 9% that was given to us? My question is no. Now, the question is, if you don’t believe that or even if you believe the 9%, the question is, how do you plan for it? Right. Right. What do you do to pay for it? And if you’re not paying for it, you’re making a huge mistake. And we’ll give you an example right off the bat before we get started. Phone number 8449005210. If you if you find anything that we’re saying interesting, please give us a call. Come and see us. We’ll do the exact same thing for you that we’re doing for all these other clients, which is helping you build a portfolio that can be best insulated by what we’re dealing with right now, which is inflation. All right. So almost start off by giving you an example. All right. So we had a caller that called in maybe three weeks ago. Our name was Rhonda. Rhonda had worked at GE for years and years and years. And Sweet Lady, right? I mean, she was 67. She had retired two years ago. She retired December 31 of 2019. Wow. Right. Anyway, so she retires. We’re two years in. She picked up the phone and called and said, Hey, I need to come and see you. I’m at a point where there’s more month at the end of the month than money. Right. Meaning there’s no money at the end of the month. Right. And so so what we did was she came in, we had a conversation. And to be honest, this was not unlike it was a little unusual, right, for folks to come see us, but it’s not uncommon. So after we met with her and we had done some preliminary planning. There was nothing we could do for her. Right. She just had not done a very good job of preparing for retirement. She hadn’t done a very good job of saving. She was squeaking by when inflation was hardly anything one or 2%. But when we’ve had this huge run in pricing, huge inflation at nine, well, we really can’t pay a 20% rate. But she was running out of money. She was now having more month at the end of the month than money. Right. Right. And so it’s a problem. We can’t help everybody. That’s the sad.

Speaker 2 [00:06:15] Part. No. And I think one of the one of the problems that happens is, you know, we’ve talked about how you’ve had this incredible bull market in the stock markets for the last, what, 14 years. But we’ve also had incredibly low inflation for a very long period of time. The current inflationary cycle that we’re going through, this is the first time we’ve experienced anything like this since the late seventies, early eighties. So you’ve got entire generations of people who have never seen this. And you get lulled into a false sense of security. That’s what happened to Rhonda. Right. It seems like you’re going to be fine, but you know that inflation will eventually go up. It’s a natural part of the cycle. So when it does, if you’re not properly prepared for it, that’s when you get burned. And you have that problem with having more money than you have money.

Speaker 1 [00:07:00] Right. Yeah. And that’s exactly what we’re going to be talking about over the course of the show is what strategies can you put in place to best mitigate the impact of inflation? Now, you can’t you can’t escape it, right? Offered, you know, inflation proof your portfolio while you’re still consuming things. So it’s still going up. But what we want to try to do is best mitigate the impact of inflation. And here’s the thing. If you are if you’re watching the show right now and you’re like, I don’t I don’t know that I’ve done a great job of preparing for it. Or maybe you’ve saved a life and you just want to make sure that your portfolio is best suited to, you know, take care of inflation or at least handle the impact of inflation. Make sure you give us a call. 8449005210. And it’s your opportunity to not be like, Rhonda, we don’t want you to be like Rhonda. We want you to be like Donna, who we’re going to talk about after the break, because Donna’s done a great job of working with us and putting together a portfolio and an income strategy that can mitigate the impact of inflation. So if you don’t want to be like Rhonda, which I would highly encourage you not to be, then pick up the phone and call us. Right now, it’s your opportunity to come see us and make sure that you mitigate the risk of inflation. So with that being said, we’ll be right back. Stay tuned. We’re going to talk about Donna. No side of this break.

Speaker 3 [00:08:23] 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 with? Is your current financial plan set up to get you there without mishap? Let’s design a roadmap 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 [00:09:58] All right. Welcome back to the Money Puzzle. I’m Brian Ramsay. That is Chris Vaughan. And we are partners at a firm called Family Wealth Planning Partners, and we are in Louisville, Kentucky. In fact, our office at the corner of Hirshman Lane and Shelby Road, right behind the old classic building. I don’t know, most people, older people know the term flashy building.

Speaker 2 [00:10:15] The younger ones don’t want a flashy. So they don’t.

Speaker 1 [00:10:17] They don’t know. All right. So before we get to dollar, because I teased that up before we went to break, it’s a great she’s a great example. But before we get to Donna, I don’t typically like statistics, but you’ve got a bunch of stats that we did, so let’s walk through them.

Speaker 2 [00:10:29] I’m the same way, but I think some statistics are important because they put things into into context. You know, we’ve been talking about how over the last ten or 15 years we’ve had very, very low inflation and then all of a sudden it’s skyrocketing. Well, I pulled these up because I wanted people to see we’ve been through this before. So if you think about you go back to the seventies, that’s the one that we have all been hearing about on the news in the 1970s. The average annual inflation during that decade was 7.9%. That’s the reason it felt so bad. But the big part of it happened towards the end 78, it was 8.3. So similar to the numbers we’re dealing with now, 1979, 12.2%. So that’s a full third worse than what we’re dealing with now. 1980, 12.6, 81, 11%. It was years and years and years of that that stagflation problem that we’re having. And what happened that changed it? Well, we had economic policy changed, and that’s the reason those things started going away. But if you look back into the 2000 and the 2000 teens, you’ve got historically low numbers. So part of what we’re going through now is just the markets catching up with with with the natural balances. We’ve made it through worse. We’ll make it through this one. So don’t panic. You just have to have a plan to deal with the inflation instead of winging it.

Speaker 1 [00:11:50] Well, and that’s a great segway into this over before the last break. Before the break, we talked about Ron and Rhonda was unfortunately just a situation where we’re going to be able to help her. Right. It’s kind of a sad situation, but it’s just due to a lack of planning and a lack of structure on when to save, how to save, how to say, you know, where to save, too. But we also have a situation where Donna and Donna is recently widowed, actually a couple of years ago. But then she thing was they came to us years and years ago and she was very skittish on the market. Right. She was didn’t much care for the volatility of the market that we’re experiencing right now. And so what we did and they see her husband worked at G.E. so he had a great pension and she was a nurse. Okay. So what what when he passed away, she continued with his pension, which is great. Her current income up until 2020 was totally fine. It all her income needs, she had no problem whatsoever. The smart thing we did years ago was we took because she was a little nervous. Nellie, when it comes to the market, we took part of her income and allocated it towards an annuity. Okay, now again, we’re not going to get into the good and bad about annuity right now. It was a it was an investment tool in the toolbox that we could use to mitigate the risk looking forward. Right. But we added to that an income plan to say, well, if in some point down the future, five, ten, 15 years, we’re going to flip a switch and we’re going to turn that income stream on. And this is one of those years. So in the middle of 2021, okay, she said she came to me and said, Hey, Brian, my income is a little tight, right? It’s getting a little bit tighter, a little outside my comfort zone. And we said, Donna, this is exactly why we did what we did seven, eight years ago. Whatever the number was, it’s exactly what we did. So now we’ve got a tool in our toolbox that we can now flip on which we did. And it was in the middle of 2021, and it’s giving her a certain amount of income every month. It now is more than what she needs, but it’s going to give her the income she needs even if inflation continues to rise a little bit over the next few years. The good thing about that is we actually have another one that we did at the exact same time. You know, it was structured a little bit differently, but we knew that was there in case she needed it long term. And that was more of a long term care play, but we still set it in place. But the good thing is, here’s the difference. And this is where if you’re watching the show today, we’re giving you some contrasting people that have come to the door. Right. We had Rhonda, who didn’t do any planning and is now 69 years old and having to go back to work to supplement her retirement. I’m sure that’s not how she started out. I’m not sure that when she retired, she didn’t say, well, I’m going to retire for a couple of years and I’m going to go back to work. It’s not what she wanted to do, but she’s just an unfortunate circle. Where she didn’t plan well enough and now she’s having to go back to work. And then here you have Donna, who had met with us years and years ago. We had put structures in place to account for this. That’s what we’re talking about when we’re talking about it. Not inflation proof, but helping are setting up your portfolio to mitigate the impact of inflation. This is what we’re talking about. That’s a great example of how we took a tool in our toolbox to mitigate inflation.

Speaker 2 [00:15:26] Yep, absolutely.

Speaker 1 [00:15:28] All right. Do you have an example you want to walk through?

Speaker 2 [00:15:30] Well, I’ve got one that we’re working on right now with Sheri. This is also another widow. She’s, you know, very concerned about market volatility. But the problem that she’s got is she’s sitting on about $400,000 in cash. She doesn’t want to invest the money because she’s afraid that she’s going to lose. And I get that. The problem is, in an inflationary market, you look at it this way, let’s assume that that 9.1% is accurate. We’ve already shown that it’s a little bit of an allusion to what’s really going on based on the way they calculate that number. But if you go with that 9.1%, that means that that $400,000 that she’s got is losing 9.1% of its value of its buying power every single year. You could make the argument that cash is the most high risk investment there is because of inflation. And, you know, for the last ten, 12 years, it’s been difficult to explain to people where the potential problem there is. Right now, people are starting to recognize, hey, sitting on this much cash is a problem. So we’ve been working with Sherri to find some ways. And there are a lot of different tools in that toolbox that you can use on ways that we can make that money grow faster than what inflation is doing, at least over time. Maybe not this year, but over time. But at the same time, still provide some security to her where she feels comfortable that she’s not going to lose. So there are a lot of tools in the toolbox to kind of help mitigate that situation.

Speaker 1 [00:16:59] Yeah. So again, there’s another good example of someone that picked up the phone and called us and said, I need some help. Yeah, I just have some questions. Right. I just got questions about my current situation. I’m scared to death inflation. I’m paying 40% more and I go to the grocery store. I get it. So are we. But you got to have a plan in place. And that’s really what we’re here to do. We’re here to tell anybody that calls in. You can hear. We’ll walk you through the exact same thing we done with Donna and Sherry and put together a strategy that will help, again, insulate your you know, insulate you from the impact of inflation. So, Chris, why don’t you. Let’s go to another commercial break. We’ll get it on coming up. So why don’t you tell the folks what we do, what we offer folks that call in from the show.

Speaker 2 [00:17:47] So if you call in, what we’re going to do is we’re going to look at the situation that you’re currently in. Where’s your money coming from? Where’s your income coming from? Maybe you’re still working. Maybe you’re already retired. What types of savings do you have and how can that be positioned better so that it can help mitigate that inflation risk? What is your what are your goals? What do you want your lifestyle to look like? Look like? We’ll walk through that with you and kind of help figure out here’s the best way to position everything so that inflation and any number of other risks are not going to be as big of a risk to you. Give us a call at 8449005210. And we would be more than happy to go through and help you figure out that part of your plan.

Speaker 1 [00:18:29] All right. Great. Last question before we get off the break. Do you have a disaster plan? You better. We’ll talk about that after the break.

Speaker 3 [00:18:37] 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 K’s 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 [00:20:04] All right. Welcome back to the Money Puzzle. I’m Brian Ramsey. That is Chris calling our phone number 8449005210. Make sure you pick up the phone and call us. Do you have a disaster plan? If you don’t, you better. That’s what we’re talking about right now. So what we’ve been talking about is the impact of inflation. Sure. Right. But that involves having a disaster plan. So you were telling me as you were prepping for the show, even your family has a disaster, of course.

Speaker 2 [00:20:30] And, you know, a disaster plan is kind of like insurance. You really hope you never use it. Right. But we did this when my kids were much younger. What if we had a fire in the house? You know, they had been through one of those little things at school where the fireman comes into the firefighter comes in and and says, here’s what you’re supposed to do. So we actually worked up a plan. Here’s how you have to get out of the house. If you can’t get out your door, all that stuff. And then once you get outside the house and one of them, he’s on the he’s on the second floor. So we had to figure out a strategy there. And then once you get outside, everybody goes to the mailbox, everybody meet at the mailbox. That way we know that everybody’s here, everybody’s safe. Or if somebody’s missing, we know we got to. That’s a disaster plan inside your house. And, you know, you and I were talking about this. You have a disaster plan at school, right? I mean, we have tornadoes where we live. So every year, a couple times a year, you go out and you practice sitting in the hallway and how to protect how to protect yourself. You know, we’ve had multiple disasters in Kentucky recently. You have to have a disaster plan because you don’t have time to put it together after the disasters happening. You got to think about this stuff in advance.

Speaker 1 [00:21:41] Exactly right. So somebody comes in to see us. We ask we always ask that question. Yeah. Not as direct as what we’re asking right here, but we say, do you have a disaster plan? There’s ways that we find out if they do right. What percent of people that walk in our door have disaster plan?

Speaker 2 [00:21:56] It’s oh, gosh, less than 10%. Very few. It’s very few. I don’t know the percentage, but very, very few of them do. In fact, they frequently they don’t know what what we mean when we say a disaster plan. What if something goes wrong? Life does throw curveballs at you. What if something goes really wrong? What’s your plan? They don’t know.

Speaker 1 [00:22:16] Well, we ask the questions. What happens if you pass away? What is your family? What happens if you become disabled? What are your income sources when you become disabled? You know, so there’s a series of questions we go through which is really getting down to the point of do you have a disaster plan? Right. And for the most part, they don’t. Right. I mean, that’s the thing. So we’ve got to make sure you have a disaster plan in place. What’s been interesting is over the last two years, typically what we find is that you take any cycle, market cycle, life cycle, whatever the case is, and you will get a flurry of phone calls after a disaster. Yeah, right. We’ve had two in the past two years. So number one, we had COVID, right? So when COVID hit, we we got flooded with phone calls from folks that said, hey, I work with the current advisor and my current advisors never talk to me about the disaster plan. You don’t really say that, right? But what they want to know is what happens if I, if I, if I pass away, I get cobra and all of a sudden I’m gone, what happens to my family? And so all of a sudden, there’s this rush to get estate documents complete, right? So that’s one disaster plan. The other disaster plan is look at the impact that inflation has had on portfolios, on income streams, in retirement, on folks that are already retired, folks that are getting ready to retire. It’s had a big punch in the face. Right. So that we’ve had a major punch in the face. And that’s what everybody’s experiencing. However, if you have a disaster plan in place, like most of our clients, because we have a very specific meeting every single year where we specifically to talk about your estate documents, that is on the calendar, first meeting of every year. We talk about estate documents, talk about your beneficiaries. So we make sure that their is their disaster plan from that perspective is in place. Right. We also do financial planning. That’s the foundation of what it is that we do because we believe in education. Information is key to every major financial decisions. So we want to make sure that we put a financial plan together. We test that plan against inflation. Now, sometimes we we don’t always test against 10% inflation or 20% like we like we think it probably is, but we still want to test it to make sure that if there’s an event like a crazy market, like we experience, right? We’ve had two of those. We’ve where the market’s been down close to 30% in the last couple of years. We just want to make sure that the portfolio is going to withstand that. We want to make sure that when inflation is bad, that the portfolio and your income streams can withstand that. Right? So we put together disaster plans.

Speaker 2 [00:24:57] I think the best part of a plan and as the market has been down in the first half of 2022, a lot of people have said. Oh, my goodness. You know, Chicken Little, the sky is falling. And I’ve had people that I know come up to me and say, oh, man, I’ll bet you your phone is blowing up with people who are totally panicked. No, because I’m a financial planner first. That’s the priority. And people who have a financial plan, we’ve already figured we know inflation is coming. We don’t know when it’s going to come, how bad it’s going to be and how long it’s going to last. But we know it’s coming. We know the market cycles are going to happen. So when you put together that plan, that accounts for all those things over time and you look at the disasters that can happen and you’ve got ways to deal with them already in place, it provides a peace of mind. So our clients haven’t been calling us like crazy in a panic. We’ve been talking to them and reassuring them and going through their plan like we normally would. And people can see everything is going to be okay. It’s all going to work out because I’ve got a good plan in place.

Speaker 1 [00:25:55] Yeah. And it’s exactly why we named our show The Money Plan, right? Because all those pieces of your puzzle affect each other. And when you take an outside force and you force that onto your puzzle, to all your puzzle pieces, it can have a dramatic effect. Someone passes away, someone becomes disabled or loses a job, or there’s rapid inflation like we saw over the last year and a half. What happens when the market falls 30%? All those are forces that can change your puzzle. So if you’re not looking at on a regular basis and you’re not planning for this, it can it can cause some severe anxiety and you don’t need that. And actually, we could help you not have that anxiety. Yes, there’s going to be anxiety, anxiety when the market goes crazy. But it sure does feel better knowing that I have a plan in place that says, yes, my portfolio can withstand the volatility, my income sources. Now, I’m not retired yet, but my income sources I know when I get to retirement, I have put in place the things that I need to put in place to to withstand all this market volatility and all the inflation. Right. Yep. And so certainly that’s what our offer is today. But Chris, once you go into little bit more detail because you get to wrap up the show, but give us folks a little bit more detail around what it is that we’re offering.

Speaker 2 [00:27:12] Well, if you give us a call at 8449005210, what we’ll do is we’ll look at your plan. Where is it right now? What could go wrong? What disasters could happen that would have an impact on you? And if they do, how are you currently planning on mitigating it and what would be a better way to deal with that? How do we deal with what things could go wrong in life? Because life does have some problems. So come and give us a give us a call. We’ll put that together for you, have a look at all the things that can go wrong and how to mitigate those and give you that piece of mind.

Speaker 1 [00:27:45] Exactly, Chris. So you don’t have a if you don’t have a disaster plan, make sure you call us and come get one because we’ll help you out. Have a good week, everybody. And.