Retirement Frequently Asked Questions

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Episode Transcript

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The advice given on the following programdoes not necessarily represent the views of iHeartMedia,
its management and staff. Since individualsituations canon will be different. Please
consider this when exercising any options givenby our guests. It's time to get
your retirement plan in order. Welcometo the Empowered Retirement Show with Nicktoma and

(00:22):
Caleb Simbolac. Reach out to theEmpowered Financial Team now at six eight two
one two seventy three hundred or visittheir website empowered FM dot com. Now
here's your host, Nick Tooman andCaleb Simbolac. Happy Saturday morning to everybody
out there. This is Nicktoman andCaleb Simbolac, the Empowered Retirement radio Show

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here on a wonderful summer Saturday morning, hoping to make your retirement better folks
during the show. If you wantto connect with us, there's two ways
you can do that. Call usat six to eight two one two seven
three zero zero, or you canvisit are updated and revised website which I'd
love to talk about. Yes,retire Madison dot com. Retire Madison dot

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com. A ton of good resourceson that website. If you want to
connect with us, kill how areyou doing on this summer Saturday morning,
Nick, I'm great. I'm great, and you know, I will say,
you know, we've been talking aboutbeing excited for these upcoming summer months
and the sunshine and all of that, and I can't believe that we're kind
of in this phase where it's likewe need some clouds and some rain.
Well we got some last week.We're just talking about that. It wasn't

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very fun on Sunday, but itis a nice summer weekend. A Father's
Day edition. A few weeks agowe had the Mother's Day edition, so
this week it's the Father's Day editionof our retirement show. So Happy Father's
Day to all the dads out there. What they want to do is get
prepared for retirement between nine and teno'clock on Saturday and then maybe go do

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something fun like play golf, forgo fishing or whatever the case is.
So Happy Father's Day to all thedads out there. And you know,
I want to tie that in withour show today. And as we got
ready for the show this week,I thought it would be a good idea
if we put together Caleb, acompilation of frequently asked questions that we've gotten
from folks over the last few months, actually over the last year or so,

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people that we get to meet atretirement events, or clients that have
begun working with us through the retirementplanning process, or just people we work
with over the years or in passing. And I was thinking about this the
other day because I was looking atsome websites for different travel destinations and we're
talking about Father's Days and some ofthe activities that dads like to do,

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whether it's golf, travel, andwhen you do these things, when you're
researching and doing your homework, you'relooking up there frequently ask questions. You
utilize that as a tool, rightright, absolutely, And so our goal
to day is will primarily be wantto educate individuals. And when it comes
to these our selection of these frequentlyasked questions, they are quite literally frequently
asked questions, and there are questionsthat we see being asked most of the

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time, whether it's one of ourretirement courses, whether it's the first time
you meet with somebody, Typically thesequestions are the one that's asked, and
so we hope to be able toeducate you on you know, some of
the questions that are asked, andalso kind of to introduce you guys into
the complexity of these issues. Oftentimes, you know, we kind of say
they're they're what cooler conversations? Youknow, you have it with some friends
and family over maybe a beer orsomething like, right, But they're really

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much more complex than just you know, a cooler. The water cooler discussion
is funny you say that, Iwas just thinking about let of dad's getting
together with their kids, families doingfamily things, sitting around and these topics
do come up. I know youand I get this with our family when
we're at family gatherings, and theyknow what we do. We help people
prepare for that next phase in theirlife, which is retirement. So we

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get these questions from our friends.But over the last few months, back
in the spring, we did acouple retirement courses over at Madison College.
By the way, we're going tobe doing those again in the fall,
and one of the questions we've beenasked is when are you guys going to
offer some retirement courses again. Thosewill be coming in the fall, so
look for those dates and times hereover the next several months. But during

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those events, after the events duringthe break These are some of the things
that are on the minds of folkswho attend. And you know, there's
a lot of questions given what's happenedin twenty twenty two with the markets and
the economy surrounding investments, and we'lltalk a little bit about that as well,
but we're also going to focus onother aspects of retirement preparation. And

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some of the questions were asked absolutely, so it should be a pretty good
show. We'll list tough all thequestions we're going to go through so you'll
be able to be aware of them, but who no guarantees on getting through
all of them, right, sothe ones that we miss we will most
likely continue at a later yep.Or as I've told people, if you're
listening to the show and have aquestion or a topic you'd like us to
address, drop us a line,go to attire Madison dot com and let
us know. So folks, itshould be a fantastic Father's Day edition show

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this week. Come back on theother side, and we're gonna hit and
target those frequently asked question chance tohelp make your retirement fantastic. Welcome back
everybody to the Empowered Retirement Radio show. This is Caleb Simbolak here with Nick

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Tomans CFP. As always to makeyour retirement retirement better. You can reach
us at six O eight two onetwo seventy three hundred, that is six
eight two on two seventy three hundred, or you can find us online at
retire Madison dot com. So,Nick, we introduced it in the In
the first segment, we're gonna betalking about frequently asked questions. So I'm
going to set the stage and kindof um talk about, you know,

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give a brief listing of the questionswe are going to hopefully cover today.
The first one that will cover issocial Security. Should I take my Social
Security benefits early or delay until theage of seventy? Pension election is a
really big one, especially in thisarea. Should we do lifetime payments?
Should we do a lump sum?What does that look like? The third
one will be should we just writeout excessive market volatility? And this is

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especially you know in a time likewe have right now, where the market
is you know, going really up, like it's significantly like we're almost at
I think we're right an all timehigh year over year, but obviously there's
a lot of volatility. It goesup and down a lot. Do I
need a living trust or is justhaving the will that you know I developed
thirty years ago? Is that okay? And then what is the best way
to contribute to or convert to aRoth four oh one k or roth ira

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ray. So we got a fullyloaded show, So let's get started here,
Nick, social security. Oh mygosh. So that's a great list.
And the one right at the topof the list you just mentioned was
social security. And I'm going togo one step further beyond just taking it
early or delying toil age seventy,but when between those ages, what how

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do I use this best? Howdo I maximize our so security benefits.
I'm going to start out by saying, just like most of the answers that
we're going to get to these questions, I'm going to blanket all of these
by saying it is very customized toeveryone, and this one in particular,
because this is probably the most askedwater cooler type discussion out there, or

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the most asked question of us duringour retirement courses. Because social security and
when you take it, how youtake it, especially if you're married,
is probably one of the most importantfinancial decisions you'll make about your retirement.
So let's lay that out there thatit is very specific and very customized to
everyone. And knowing that and knowingthat there's so many different when I call

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iterations of when to take it,especially if you're married, you know,
one takes it early, one delays. So let's just put that on the
table that it's very customized to everyone, and one you should put the most
thought and work into. I believe, almost as much as any other decision
you're going to make. Yeah,absolutely, And you know you kind of
mentioned it. This is one ofthe more popular water cooler discussions that people

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have, and I would say itmost often right when we meet with individuals,
they think typically to take social securityright away as soon as you can.
Why is that, Well, there'sa couple of reasons. One because
people think, you know, justget it going. There's you know,
what is it in ten years?Right, that's when they're planning out potentially
cutting social security because there's our budget. Well, the years they have changed.

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It started out a few years ago, was twenty thirty four. Now
they're telling us maybe by twenty thirtytwo, twenty thirty one, that the
trust fund will be depleted and sobenefits potentially would be cut. Right.
So most recently, what I've seenfrom a lot of people is their reasoning
is I'm going to take it now, and I'm going to get my benefits
as early as i can so thatI can accumulate that maybe throw out into

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investments. How that income now andjust in a case in the off chance
later on that gets reduced. Ididn't delay my Social Security and I've just
kind of gotten jipped from a lotof years of payments. Yeah, And
when it comes to Social Security andthe reform, and I'm sure our listeners
have heard for years politicians talk aboutwe're going to reform social Security and this

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is my opinion, in our opinion, and there's no crystal ball that we
have versus somebody else. But ifyou think about Social Security, it feels
like it's one of those things thatpoliticians will continue to both sides of the
kick that can down the road,because if you mess with seniors payments and
so let's say in six years thoseget cut by twenty percent, that's going
to be the quickest way to runyourself out of a job. Is when

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you mess with seniors payments. Soeven though the math says we're going to
have to cut benefits, I thinkthere's probably going to be other solutions that
are going to become that people aregoing to come up with politicians, such
as raising the Social Security age,full retirement age, cost of living increases
might be adjusted, whatever the caseis, raising the amount that we tax

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so Security, whatever it is.So there is no crystal ball that says
they won't cut But if people aretaking it early because of that reason,
we understand why. But when youtake it early, that could leave you
short later on in life, especiallyif you're married. So let's talk about
that. When you take Social Securityearly, which you can start taking at

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age sixty two, you start gettingthose payments. But let's talk about some
of the drawbacks to doing that.Yeah, absolutely for those who are married.
Right, So when a spouse dies, you're going to get the higher
of the two social securities. Sothere could be some really extreme benefit of
delaying one of the spouses. Youknow, most oftentimes it's going to be
the higher earning right of the twospouses to make sure that that Social Security

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payment is going to be optimized andit's going to be the highest so that
in the off chance a spouse dies, the higher paying of the social securities
is going to be left for thatspouse. But if you're both were to
take it early because you just maybewanted that income, maybe you didn't need
to, that could be problematic lateron because then when one of you die,
is not only gonna be bumped upinto a higher tax bracket, and
you're going to have less income potentiallyfrom maybe they're a part time job worker,

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or maybe they're benefits or whatever itmight be. You're gonna be left
with less money coming in residually monthlyfrom social Security. So it's important,
especially as a couple and as anindividual as well, to understand from year
to year the difference in what thatincome is going to look like. So
starting at age sixty two all theway through full retirement age right now for
all intents and purposes as age sixtyseven, or delaying it as far as

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age seventy doesn't make any sense todelay farther than that. Each year that
you wait to take your benefits,it's about approximately an eight percent difference in
your monthly or yearly something that youwould receive. So if you start taking
at at age sixty two, you'regoing to get about seventy five percent of

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what your full benefit would be atfull retirement age. And if you continue
to wait till age seventy, you'regoing to get an eight percent bump per
year approximately. Now there's the argument, so to speak, that there's a
break even point, right if youtake it early, there's an age.
The math says that you break eveneventually at sometimes depending on when you take

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it early, it might be ageseventy, eight, eighty, whatever the
case is, where if you wouldhave delayed, then you're going to be
better off. Yeah, but there'sno way of really knowing life expectancy.
We're projecting men and women to beliving into their eighties. That's what life
expectancy is. But unless you knowif you have a health situation going on
where you're going to die early,we suggest that you plan for living in

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te righties in your nineties, Sothat is a consideration absolutely, and when
it comes to social security, sowe just went through a series talking about
what we believe the core pillars ofretirement are where you need to plan right.
So we have income, investments,taxes, legacy, healthcare planning right
fidiciary all of that, and sowhen it comes to social Security planning,
you want to make sure that youare figuring it out along with all of

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the other potential income pieces you havein retirement. So that really helps you
strategize it. Right. Maybe youdon't need to elect social Security right away,
you have other sources of income.Maybe you're gonna be working part time,
You're able to delay it easier forthat benefit. Kind of like you
were saying, right, Okay,maybe we need the income sooner and we
need to do it right now.Maybe health events that we need to just
we're not expecting to live a longtime, so you want to get those

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payments in. And so regardless whenyou're planning for social Security, you're going
to be coinciding that planning with therest of your retirement incomplaining, right,
So that is going to be thecore piece to your income plan. There's
other pieces mentioned, pensions, CDs, cash notes, life interns, annuities,
But the first thing to build aroundwhen you're doing designing your income plan

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or your advisors deciding your incomplaints shouldbe the options you have and what those
amounts are going to look like.When you start your soul security benefits.
And the other thing I would addto this, Caleb, is there's some
folks that just want to continue working, maybe not doing what they've done all
along in their careers, but doingsomething different, doing something fun, turning
a hobby. Yeah, like maybethey love golf, so they're going to

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go work at a golf course ormowing along or something where they have income
coming in that could bridge the gapfrom when they left their career to maybe
age sixty seven or age seventy,and it would make sense. So again,
folks, this is very specific toeverybody, and again in our show
today, we don't have enough timeto dive too deep into this, but
just know it's a customized plan.It's a customized decision to everybody out there.

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So if this is something that hasbeen on your mind, if this
is something that you've thought about butyou haven't yet decided on how to take
Social Security, or you've yet tocreate an income plan for yourself in retirement
or a customized retirement plan looking atthings in your totality, give us a
call today at six O eight twoone two seventy three hundred or go to

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retire Madison dot com and request aone hour complementary visit with one of our
advisers to come in and talk tous about what is it that you have
done to this point to prepare forretime, including what you've done to prepare
on to take Social Security. Sowe're offering this complimentary one hour visit to
the first six people that contact usduring the show. And again you can

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do that by calling us or bygoing to our website. Now, folks,
if you're calling us to schedule thatvisit, we are off on weekends,
so Caleb, you'll contact the folksback on Monday. You just need
to leave your name, your number, and that you're interested in a complimentary
one hour visit with one of ouradvisors. And during that time together,
Caleb, we sit down over acup of coffee and we listen to you.

(15:30):
We listen to you, hear what'son your mind, what you think
you have done well to this point. Most of the people who come in
for these visits, I must say, have been really good savers. Yeah,
they're good stewards with their money,but they just don't have that next
phase of life figured out. Sowe're going to sit down listen to what
you've done share with you how wehelp people prepare and see if at that

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point, during that time together wewant to go farther, take another visit
together, take a deeper dive,yeah, folks, to see when it
comes to retirement planning, just havinga second opinion, it can't really hurt,
you know. Kind of We toucheda little bit on the nuance of
just social security and of itself,which is just one part of income planning.
And even when it comes to liketax implications of social Security, Right,
maybe you have a really big nestegg and you don't want to wait

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until your RMD years because obviously youknow you're going to get hit bigger on
your r and DS because it's goingto be more accumulation and growth. And
so even just strategizing, Okay,maybe I can hold off on social Security,
convert some of that into maybe aROW four O one K or maybe
just a row iro way right,so that my tax liability is lower and
utterly you doing that reducing your nestegg tax liability. But also when you

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do turn on social Security, youknow you're going to have more income,
which is going to bump up yourannual income, ie the taxes that you
O, and so there's just there'sa lot of things that kind of commingle
and go together, whether it betaxes and social security, investments and income.
Like just get a second, andI'm smiling here because there are so
many more decisions that need to bemade and these all weave together more than

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we think about. So when we'vedone a good job during our working years
to save money in our iras,our four oh one case, our retirement
plans, our brokerage accounts, theseprobably are not things that come top of
mind that we think about all thetime. We're just focused on saving,
which you should be. But ifyou're within three to five years of actually

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retiring, if you're going through alife transition, maybe you just change jobs,
maybe you've retired and tried to tackleall of this on your own.
That's why we make this offer everyweek, is to come in, sit
down and figure out if what wedo as planning specialists for this next part
of life is what you need andwhat you want. So it's a great
one hour, maybe one and ahalf hours together understanding you and if at

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that point we want to go deeperthan that, we can do that as
well. So we're off to agood start on this Father's Day edition of
the Empowered Retirement Radio Show. Joinus on the other side. We're going
to continue to go through our listsof frequently ask questions. This is the
Empowered Retirement Show, Nicktoban, Calebsimbolac Here hoping to make your retirement better.

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Welcome back everybody to the Empowered RetirementRadio Show, Nicktoban and Caleb simbolac
Here to help make your retirement better. Coming back to some fun music on
a summer Saturday morning, a Father'sDay edition. So again, Happy Father's
Day to all the dads out there, and hopefully we're helping all the dads
out there make their retirement better.And Caleb, throughout the show, we've

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been doing a frequently asked Question show, which I love to do because these
are questions that we get quite frequentlyat our retirement events or just in passing
or from clients or at family gatherings, whatever the case is. And if
you're listening to the show and youguys out there, think of a question
that you would like us to talkabout or address, give us a call
or better yucho to retire Madison dotcom, drop us a message say you

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heard the show and you'd be interestedin this topic. We're always looking for
feedback because when we get to Saturdayat the end of a week and we're
thinking of things that resonate with people, we want to make sure that these
are topics that are on the mindsof the folks out there. We want
to be as practical as we can, So drop us a line at retire
Madison dot com or call us sixO eight two one two seventy three hundred.

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So let's continue on with our nextquestion. And I think this ties
in with the last segment when wewere talking about social security and when to
take social security and some considerations.The next one, especially for people here
in the Madison area, is howto and when to take their pension payments.

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And I say that because being auniversity town or the hospitals, many
people out there, many of ourlisteners, will have a pension. Now,
many companies are not offering that anymore, but the people listening to our
show, they may have in afew years a decision to make about how
to best take their pension and someof the elections that they face. Yeah,

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and so when it comes to pensions, we know we kind of left
it off with social security and talkingabout uh, you know, social security
being a part of the income partof your retirement planning, and pension election
and just pension planning in general alsofalls into that category. And so,
just like we mentioned, you know, first off, when it came to
social security, there's no one sizefits all rule when it comes to pension

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election. Each person situation is different. They've done different things in the accumulation
stage of life that has brought themto retirement and it's going to look different
to distribute that money to them thatin a manner that is best for them.
And so that that change of mentality, especially when it comes to pensions,
is pretty important in making that decision. Do you need that money right
now? Okay? Do you needit? You know longevity wise, like

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is it going to benefit you andyour income planning? Maybe you want to
take it out in a lump sum. That might be what's what's best for
you. And then you could youtake that money allocate it maybe to a
tax free vehicle and you know,reduce your tax liability if you have other
sources of income. How wait,you know, what does the stability of
a pension fund look like there's alot of things that go into this,
and uh, you know, kindof like we said, especially when it

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comes to the stability of the pensionfund, it's very nuanced as to punch
individual and you know who is youknow, running that fund themselves as to
how you're going to plan this.Yeah, that the pension fund stability that's
come up a few times some statesover the years, Kentucky and know there's
some states that have had some troublewith their pension fund. But let's just
assume that the fund itself is prettystable. And the question is you mentioned

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just a moment ago, is alump sum a better option or taking those
payments now? I will say,and this is just a general comment,
this is not specific to anybody.Usually, or quite often, it works
out better if you take those paymentsover a lifetime because it might compliment very
nicely. You're so security. Solet's just say you're out there, you're

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married, husband, wife, andone of you has a pension. You
have a husband social security, awife social security, and one pension.
You have three sources of cash flowcoming in which may allow your other buckets,
your investments, your other accounts tokind of ride out the waves some
of the ebbs and flows. We'lltalk about that in the next segment.
Market volatility. So quite often usinga pension is another cornerstone of your income

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plan is a way to go.But you also mentioned if you need the
money, what do you need thatmoney for? What do you want it
to do. So let's say youdon't have an investment account, or you
have a good solid security payment,you have a modest budget, but you
don't have much liquidity. You needmoney at the ready. That's maybe when
you would consider taking a lump sum. Absolutely, and so kind of like

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you said, when it comes toproducing your own paycheck in retirement, you
know that is weak the foundation ofyour retirement when it comes to income making
sure that you have that predictable,guaranteed income coming in, and so pensions
another word. You know, wetalk about this in retirement courses. People
don't fully understand that pensions are effectivelyannuities, right, and so oftentimes people

(23:12):
who don't have pensions, they willutilize annuities to get that guaranteed form of
payment coming in. And so,like you were saying, when it comes
to income planning, oftentimes because youwant that predictable, guaranteed income coming in.
You know, letting that pension rideand just you know, not on
one lump sum is really beneficial.That's a great point, Gale, But

(23:32):
that's normally when I look at aclient situation, my starting point when they're
even considering taking that lump sum,but they also want a stream of income,
is to figure out what that lumpsum if taken that way, Yes,
what in the marketplace we could getin terms of a private annuity.
Yes, So when you compare whatthat private annuity would be from an insurance

(23:55):
carry and what that could do whensome of the riders and specifics to that
annuity, compare that to the pension, that's a starting point in many cases.
And as I said a moment ago, I find that taking that pension
from the pension fund many cases isa better way to go, but not
always, so that is a considerationas well. Also, one of the

(24:17):
things you're going to have to electif you take payments and you don't take
a lump sum is if you're married, what is that survivor benefit going to
be? So people out there canprobably relate to this. If you're a
few years from retirement and you've everlooked at one of those election forms,
it most likely says on there,you know, lumpsum life only annuity,
which means that you get a paymentfor life and when you pass away there's

(24:37):
nothing left. If you're married,you might elect one hundred percent survivor,
meaning you get less every month,but if you pass away, your spouse
continues to get that same payment throughthe remainder of their life. Yeah,
and so this is where it reallycomes into being nuanced, right, because
Okay, what is your health looklike like? Your longevity of life?
Because the survivor benefit, how youdistribute that pension that annuity is totally going

(25:03):
to depend on you know, howlong are you going to be alive for?
Right? What would it look liketo best take care of your spouse
Because maybe the lump sum is thebetter option. You're able to put it
into a private annuity or into alife insurance policy where you get cash value
that you can withdraw cash free.There's a lot of considerations there are,
and that's why we've been making theoffer throughout the show to come in and

(25:25):
meet with one of our advisors fora one hour complimentary visit just to help
walk through some of these decisions.If you want to take advantage of that
offer, call us at six Oeight two one two seventy three hundred,
leave your name and number and amessage that you like to take advantage of
that one hour complimentary visit at ouroffice out in Middleton, or go to
retire Madison dot com and request thatvisit. Because our staff is off on

(25:45):
the weekends, Caleb will reach backout to you guys on Monday to schedule
that time. But it could bea second opinion or maybe just a starting
point as you work through some ofthese things in preparation for your retirement.
So if you're within three years,five years of retirement, maybe you've retired
a few years ago, it's agood starting point. Come in talk to
us see if what we do canhelp you make your retirement better folks.

(26:08):
As always we're here to help.On a Saturday morning, this is the
Empowered Retirement Radio Show, Nick Toomanand Caleb Simbolac here to make your retirement
fantastic. Welcome back everybody to theEmpowered Retirement Radio Show. This is Caleb

(26:33):
Simbolac here with Nick Tooman CFP.As always, to make your retirement better.
If you would like to reach us, give us a call at six
O eight two one two seventy threehundred. That's six O eight two one
two seventy three hundred, or youcan go to our website at retire Madison
dot com. As always, wetypically make an offer for the first five
six numbers of six people today andtoday it's six people. So if you
would like a free consultation with us, give us a call or send us

(26:56):
an email online. So this isthe first segment that you have tuned into.
It's been a good show. We'regoing through frequently asked questions, the
questions that we get asked the mostabout, you know, people transitioning into
retirement. So we've covered should Itake my Social Security benefits early or should
to lay it until the age ofseventy. We kind of went through that
and talked about how nuance it is, how it has to be tailored to
your specific situation. But you know, we talked about some important things like,

(27:21):
you know, spouse will benefit,how to you know, maybe plan
if you're married, to make surethat you're leaving your spouse in the off
chance that you die more money canyou fill the gap? Do you need
it at that specific time. Wewent through all of that fun stuff.
We also went through another income portionwith pension planning, whether or not we
should let that pension write out andproduce income for us, whether or not
we should take it a lump,some of the factors and considerations and what

(27:45):
might make a better decision for you. And then you know, we joked
about it in the beginning, right, We're not probably not going to get
through all of our frequently asked questions, So now we're going to talk about
writing out whether or not you shouldwrite out excessive market volatility. And as
you're as we're going through it,you guys will will year that income planning,
And that's kind of why we startedwith social Security and pensions. That
income planning and how you have purposedyour money for income planning is really going

(28:08):
to have a lot of dictation asto how you write out market volatility in
your retirement and what I would encourageeverybody to do. Who's listening. You
mentioned if you missed those first twosegments, I would go back and listen
to those first two segments. Youcan go to our website and up at
the top there's a little icon ofradio and you can click on that and
listen to past episodes. I wouldgo back and catch up because the foundation

(28:30):
of most retirements is their income planand what you have coming in every month.
And we covered at a high level, at a ten thousand foot view,
social security and considerations, things tothink about, how to take pension,
So those are important thing. Goback and listen, or you can
go to iHeartRadio podcast, subscribe tothat, listen to those first two segments.
But let's talk about market volatility andthe question that we've gotten I'm just

(28:55):
paraphrasing over the last eighteen months orso quite often, is if I have
money invested in the market, shouldI just ride out this market, not
do much, kind of put yourhead down and just ride through it.
And the reason I thought this wasimportant it's not only do we get asked
about this, but we write articlesfor Kiplinger magazine, and Kiplinger asked us
last year to write an article asa contributing writer. I wrote about if

(29:21):
we're advising people to ride out thismarket right out twenty twenty two and not
necessarily do nothing, but you kindof put your head down, don't pay
attention, let things go, andhope that they come back. And I'm
going to say to start out withagain, it depends. Yeah, I
hate to start that way, butit really depends. So let's talk about

(29:44):
some of the considerations to think aboutwhen you're out there. If it's okay
to ride out a tough patch inthe market. And you mentioned just briefly
the purpose for your money, Solet's talk about the importance of separating your
well, my purpose and if youdo that, why it gives you more
flexibility to ride through these ebbs andflows. Absolutely, and so when it

(30:08):
comes to your investments, right,so, there's a very popular tread of
retirement planning and it primarily you know, accounts for just investments and withdrawing a
said percentage each year for people tolive off of. A lot of advisors
will say they do holistic planning andtip oftentimes a lot of times we're not
going to name names, but they'rejust throwing your money in like a sixty

(30:30):
forty portfolio. You know, they'vegot some income producing stocks in there,
which they say it's like the incomeplan. They got some bonds as you
know, potential market alternative. Andso it really depends as to how you
have purposed your money. And soif all of your money is in the
market and you're using it for income, you're susceptible to very different risks in
retirement as opposed to when you're justan accumulation stage of life. When you

(30:52):
were younger and you're accumulating paychecks andyou're throwing money into your nest egg and
accumulating stocks, right, it didn'tmatter the market was down for ten years,
okay, because you were just goingto keep buying buy stocks on a
discount and you knew you were goingto have that money later. But in
a retirement longevity of money is extremelyimportant. So if you haven't properly established
an income plan and you're just solelyliving off of your investments, you want

(31:17):
to make sure that you have yourinvestments I guess planned accordingly to make sure
that you're not going to just getabsolutely hammered with you know, sequence of
returns risks, you know inflation riskin the beginning of retirement, and money
in the market. You mentioned thatphrase money in the market, Well,
when you think about your wealth inits totality, and in past episodes,

(31:40):
we've talked about the three worlds ofmoney, World of Wall street. Those
are investments, the insurance world,of banking world, and using the best
of all of those specific to youis and again this is a ten thousand
foot discussion, a way to separateyour money by purpose. So you don't
want to commingle your wealth and saythis is all of my wealth and one

(32:00):
bucket. So let's just say youhave two million dollars, just for example,
and you have that invested in themarket, and you describe a sixty
forty or a target date fund typeof investment portfolio, and you're using that
wealth to not only accumulate more wealthand grow, but you're also using that
full regular income. It's designed alsofor maybe healthcare or long term care,

(32:24):
or whatever the purpose is in life, and you just commingle it together.
That's where we run into problems.And that's where we would tell people,
if you haven't begun to separate thatout and use different tools in and out
of the market, that when wehave some volatile months, we have some
volatile years, we have a twentytwenty two, I don't think in that

(32:45):
case it's just okay to write itout because if the market goes down another
fifteen twenty percent and you said thisbefore. If you're working and you're just
putting in every two weeks into yourfour one K, you can take advantage
of those out yeah, those dips. But if you now are not working
and you're not putting in but you'reinstead pulling out, it's a double whammy.

(33:07):
And the market goes down fifteen ortwenty percent, it's going to take
you a lot longer to get backto even because you're losing so much compound.
Again, we called the sequence ofmarket return risk. And you know,
one of the frustrating things, youknow, when I talk with people
of water cooler conversations, you know, I don't like bash them over the
head or anything like that, butthey always talk about, well, my

(33:30):
investments are going to go down fora year or two, but they're always
going to bounce back. What happenedover the course of thirteen years when we
had that thirteen year bull run afterthat, you know, the two thousand
and eight stock market collapse not normal. That was not normal by any means.
Okay, so the amount that weearned and gained people are very accustomed
to just okay, you know,I might have taken a hit here,
but it's going to come back,and it's going to come back exponentially,

(33:52):
and I'm going to even come backin the positive. And so one thing
that people I think they fail torealize. So let's say you lose twenty
percent in a year, how muchdo you have to earn just to get
back to even It's more than twentypercent, right, you have to do
right forty percent. And so whenit comes to retirement, especially if you're
living off of this, you knowyour your investments, Well, let's say
we have you know, we're ina little bit of a quote unquote bow

(34:14):
market right now, you know theSMPS rallying a little bit. But let's
say you lose fifteen percent this year. Let's say there's a little bit of
a downturn. A lot of peoplehave been using their procession word for a
while. Would you be okay,right, using your investments for income if
it didn't come back until that's theequilibrium point for another four five years,

(34:35):
right? And how would that affectthe money for in your investments or even
for your retirement in longevity? Right? So, and that's where the problem
lies. So just picture this.So let's say again you have two million
dollars and just for argument's sake.Let's say you allocated five hundred thousand of
that and you pulled that out ofthe market, and you used an income
producing type of tool, and there'svarious tools we're not going to get into

(34:57):
that today. That provides predictable andreliable income. So when the market has
a pullback, let's say in thefuture of thirteen fourteen percent, and your
investments are down, you don't necessarilyhave to change your lifestyle. Now,
I understand when the market's down andyou're trying to create long term well for
yourself, you might not take thoselarge distributions to give to your grandkids are

(35:20):
going the trip, but you havemoney coming in from other sources that's predictable
and reliable, so your monthly lifestyledoesn't necessarily have to change. The reason
I say that is that is theanswer to the question can I write it
out? People that have separated theirmoney by a particular purpose and used tools
inside and outside the market, thebest of the three worlds properly are in

(35:43):
a better position to be able tolet that money come back, to get
those gains back over time, wherethey honestly can say I can leave it
alone and not touch it. Butif you're taking three thousand a month every
month because you need to pay yourmortgage or you need to pay your bills
from an account that goes up anddown, and it just so happens we're
in a down period, that canbe dangerous. I'm saying this because it's

(36:06):
been the hard thing for people toget the arms around or resonate with folks
in the last thirteen years leading upto twenty twenty two, because for most
of those years, with the exceptionof twenty eighteen and twenty fifteen, the
market was earning double digits thirteen,fourteen, fifteen percent. So I don't
think this conversation resonated as much untillast year when we had twenty twenty two

(36:27):
and the SNP was down just undertwenty, the nasdack down almost thirty,
the DOW down about ten. Nowpeople are taking a step back and say,
ooh, what do I have todo so I can ride it out
next time that happens. Yeah.I like to think of it as like
an ice cream Sunday. Okay,your investment should not be the ice cream
itself. It should be the cherryon top. If you lose the cherry
on top, you still have awonderful Sunday, and it's not ruining your
sunday. If it's your base,it's the ice cream and you don't have

(36:50):
any ice cream in there, Well, that's not a Sunday that sucks,
right, And so ultimately hopefully yourinvestments of that cherry on top and that
your quality of life is not goingto be relying on them. Boy,
we were going along and you maybe hungry thinking of ice cream. All
right, Okay, Father's Day,maybe take your dad out for ice cream.
But we're having fun here, andwe try to use these stories in
these analogies so it helps you thinkbetter about retirement should be fun, it

(37:14):
shouldn't be complicated, and there's alot of complications to retirement planning. But
what we try to do every weekis educate people about the things they should
be thinking about from our experience workingwith people preparing for that next phase of
life. And if you're listening andyou haven't started preparing specifically for retirement,
or maybe you need a second opinionon your own retirement plan. What does

(37:36):
your income situation look like? Haveyou made that decision I want to take
social Security? Can you ride outmarket volatility if we have another drop down
a fifteen percent at some point inthe next ten years, do you feel
like you're going to be okay?If you'd like those questions answered, We've
been making an offer throughout the showto come in talk with one of our
advisors for one maybe one hour,fifteen minute complimentary visit at our office out

(38:00):
in Middleton, and you can takeadvantage of that offer during the show by
calling six O eight two one twoseven three zero zero or go to retire
Madison dot com. But if youdo call us to schedule that visit with
one of our advisors, we areoff on Saturdays, so you're gonna have
to leave your name and number anda message that you like to schedule that
time and calibile reach back out toyou on Monday to get that on the

(38:25):
calendar. But let me just sayone more thing about that visit. It's
a very casual time together. Wedon't have a real formal agenda. It's
just an opportunity for you to sharewith us what keeps you up at night
about this. Maybe you've had someof these questions, maybe of other questions
we can add to the lineup offrequently ask questions, but you just want

(38:45):
to feel better about that next partof life, which should be fantastic.
We listen to you, we sharewhat we do, and we figure out
at the end if what we dois what you needn't want. And after
that meeting, we want to takea deeper dive. Can schedule some time
after that to do so. Sothat is what that looks like. But
folks, boy, this is anothershow that flies by. We did these

(39:07):
frequently ask questions and the time goesquick. But we're excited and we're happy
to do this every Saturday. Yeah, and folks, if you have questions
for us, like we said,give us a call. There's a lot
going on right now. Right wehave commercial real estate that is devaluing like
crazy. We have a lot ofbanks that were up ended this year.
We're still seeing a crazy rally eventhough inflation is kind of coming down,
but the removing core aspects of it, so that's kind of an you know,

(39:30):
So there's a lot going on.Give us a call, just get
second pair of eyes and what youhave planned and just see if we can
provide somebody. We're here to help. And again, folks, have a
great Father's Day. Weeken. Allthe dads out there will be back next
Saturday, probably continuing with our FrequentlyAsked Questions show. This is Nick,
Tom and Caleb Simblack, the EmpoweredRetirement radio Show, Here to make your

(39:50):
retirement fantastic. Investment advisory services offeredthrough Track Capital Management LLLC and SEC Registered
Investment Advisor. Information presented is foreducational purposes only and it should not be
considered specific. Investment advice. Doesnot take into consideration your specific situation,
and does not intend to make anoffer or solicitation for the sale or purchase

(40:13):
of any securities or investment strategies.Investments involve risk and are not guaranteed,
and past performance is no guarantee offuture results. For specific tax advice on
any strategy, consults with a qualifiedtax professional before implementing any strategy discussed here in