Prices Go Up, Markets Go Down: Is Your Retirement Paycheck Ready?

[00:00:00] Speaker A: Prices go up, your investments go down. What happens to your retirement paycheck? [00:00:05] Speaker B: Great question. Let's talk this time around about building a plan that has room for both. [00:00:17] Speaker C: Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of. A retirement you can take pride in, no matter who you are, where you're [00:00:45] Speaker A: from, or who you love. [00:00:47] Speaker C: So now let's start the show. Here's Matt McClure. [00:00:52] Speaker B: Hello there, and welcome to another edition of Take Pride in retirement. Matt McClure here with you, your host, your advisor, your friend, your pal, and your confidant. [00:00:59] Speaker C: And I am Josh Red Noble, the [00:01:01] Speaker A: attache to the advisor, AKA co host, AKA Matt Husby. [00:01:06] Speaker B: Love it when you stick the husband in there. This is the show where we talk about the fact that no matter who you are, where you come from, who you love, how you identify, or how much money you have, you deserve a retirement that you can take pride in. It is as easy as that when we talk about the things that we talk about around here. And in our last episode, we talked a lot about building a social life in retirement. So what are we talking about this time, Josh? [00:01:36] Speaker A: Yeah, well, I mean, how do we keep those plans affordable when prices and markets change? [00:01:42] Speaker B: Isn't that the probably literal $64,000 question? Or more than that, if you're in today's. In this economy. But so, yeah, so your retirement budget needs to support those everyday bills, obviously. But it's got to account rising costs. It's got to account for market losses. And you're like, no, I don't have a crystal ball. How can I possibly do that? Well, that's what we're going to talk about because we're going to talk about things like growth and dependable income and access to money. They all deserve a place in the conversation. If you are sitting there or standing there or running or walking there, whatever you're doing, and you are, you know, wondering, how in the world do I do any of this? And is my retirement plan actually ready to account for these things? Go to take pride in retirement.com. take pride in Retirement. Com, that is the website. You can schedule a free consultation there. Listen to previous episodes of the show. Do so much stuff. Also, follow us wherever you can on all the socials. We are also, you know, anywhere you get your podcasts as you might have discovered if you discovered the show. And we're on the old YouTube machine. So if you're watching on YouTube, hey there YouTube and please do us a favor like and subscribe. [00:02:55] Speaker A: Subscribe. [00:02:57] Speaker B: The low and sultry tones of Mr. Joshua Noble telling you to subscribe. Once again, the website is Take Pride in Retirement dot com. [00:03:06] Speaker A: Yeah. So Matt, if someone, let's say they [00:03:08] Speaker C: have enough money to retire today, why [00:03:10] Speaker A: might that same budget fall short later on? [00:03:14] Speaker B: Well, there is this old thing that you may have heard of here lately called inflation that you know, it's one of those things that happens in retirement. It can last decade. And if you think back, let's say you think back 30 years ago, what were costs then and what are they now? Compare those two things and you might be pretty darn shocked at what you find because that means that today's spending, if you are retiring today, that's your starting point. So you look 30 years ahead from now. Do you have that crystal ball? No. You don't know what prices are going to be, but you have to account for them going up. And we can look at the past to see how much they might go up each and every year. Right. So we can use that as kind of a guide. But purchasing power means what those dollars can buy. You may have the same amount of dollars, but if inflation goes up, those individual dollars have less purchasing power on their own. So a steady account balance means that you buy less. So if you, if you have something that's not making money, that's not a good thing to be doing because your money needs to be making money both in retirement and before. Before, definitely. But still even in retirement. And some longer term money may opportunities for growth because you've got to account for those rising costs, actual spending changes as well. You know, you've got the, the whole concept of the go go years, the slow go years and the no go years. And I've brought that up before on the show where those early retirement years are the go go years, right. You're going, you're doing your all the things, the retirement that you've dreamed of, that's what you're doing those early years. Then the body starts getting a little, a little older. You start breaking down a little bit as we tend to do. And you're slower, you're still going, but you' about it. That's why those are the slow go years. Then there are the no go years and Those mean higher bills, because higher medical bills, even though you're not going like you were early in those early go go years. Right. So go go years, expensive, Slow go years, not so much. No go years. Really expensive because of the healthcare expenses that are in there too. Let's say 5,000 bucks a month today, if that's what you have to spend. Like those are your expenses. Rather 5000 bucks a in 10 years. If you looked at that and said, okay, maybe I'm going to account for about 3% annually growth of prices, the expenses today of $5,000 a month would be over $6,700 a month in 10 years. And that's hypothetical, obviously. I'm not saying that's definitely going to happen, but it's not an inflation forecast in any way. But different expenses are going to change at different rates as well. I mean, we, we see that even, you know, today. [00:06:10] Speaker A: Yeah, I mean, it's hard just to say one thing that I have noticed that expenses have gone up, obviously. We can talk about gas, we could talk about diesel, we could talk about food. And I mean, I think that that's a conversation you're gonna have to have about how prices are ultimately changing so much in such a short period of time. And thinking back to our last episode, Matt, we talked about, you know, like those things that you want to make sure you have the money to enjoy those meals with friends, the activities that, visiting that chosen family. You know, all that still needs a budget. You know, it needs a place in your budget so you have those joys. [00:06:41] Speaker B: Yeah, I often talk about, you know, your, your money having different jobs to do in retirement. Give some of your money a good chunk of it. The job of growing in retirement still so you can account for those price increases in the future. Give some of your money the job of paying for those expenses, extra things that you want to do today and review not only what your income needs are now or what they might be a year from now, or whatever, but look longer term, you know, alongside that. So just make sure and include a plan for that and you'll be in a lot better spot. [00:07:14] Speaker A: Yeah, and my question too. What happens if your bills are getting bigger but at the exact same time your investments are losing value? [00:07:22] Speaker B: Yeah, it's a good question because we've been there in the past. I mean, you look back at say, 2008, like financial crisis time period, gas prices were insane. At the same time the bottom was falling out of the market. So it's like we had all this increase in prices and Then you had the stock market just going belly up, essentially. Not literally, but essentially. And so those market declines, they become really challenging when you are withdrawing your money. We call it sequence of returns risk in retirement. So it's a double whammy, Right. You're withdrawing and your dollars are losing value and losing the opportunity to grow in the future and to bounce back. Selling investments after prices fall locks in those losses, and then you've got to have more shares to cover the same bill. So you. There's a lot that goes into thinking about this and planning for it. You want something in retirement that's not going to lose value if at all possible. That's why we look at things like fixed indexed annuities and those sorts of things. Plan for retirement because you got principal protection there. And, you know, I mean, it's not necessarily the optimal thing for somebody in their 20s, but for, you know, if you're in your 60s, it could very well fit into your retirement plan overall. And so, you know, the sequence of returns risk thing is a real risk. That's why the word risk is in there. And it's not one of those risks that you want to face. Sometimes you can't help it initially, but you've got a shield against it ahead of time if you can. And so, you know, that recovery later on, especially for making withdrawals of the markets, the markets go back up, yay, great. But it takes a lot to recover just to get back to where you were before the losses and then to experience any growth beyond that, to maybe try and account for some of the inflation that happens. There's a lot. And so you want to have a plan that accounts for the possibility of this and shield you against sequence of returns risk. And one of those things could very well be something like a fixed indexed annuity or something similar that's not going to lose value as you are making withdrawals or taking an income from it. Yeah. [00:09:44] Speaker A: So should the question be that where is next month's spending money coming from? Is that what the question should be? [00:09:49] Speaker B: Well, I mean, what I think you should do is say not only where is next month spending money coming from, but where, you know, 10 years from now, where is the spending money going to be coming from 20 years from now, et cetera, et cetera. Right. What I would do is identify the essentials, those things that are covered by Social Security, dependable income, like maybe a pension if you're lucky enough to have one. If not, we can talk about generating one through one of the avenues. I guess I Should say that I just mentioned, determine which bills are going to require withdrawals from savings, if any. Now if you've got your expenses covered by that dependable income, you're in good shape. So you don't have to make any withdrawals or cash in any of your shares of anything or that kind of stuff. Consider accessible reserves. You got to have an emergency fund and this could be one of those things where you have to dip into that if there is sequence of returns risk that's come rearing its ugly head. You can identify the optional sort of spending that, you know, maybe something non essential that you can maybe adjust temporarily. You don't have to necessarily take that vacation to Bora Bora this year. You can go next year maybe when things are a little bit better financially. Right. And so view your investments, your withdrawals, all those things together. And also ask yourself too, is your plan, is it supporting you or is it supporting you and your spouse or your partner? How would your household income and expenses change maybe after a partner's death, God forbid, But you got to plan for that. It's another risk that you have to plan for. And which sort of community connections and activities would you want to preserve? Like what are the essential things that you would still want to do if things got really tight for you during a particular year? You know, we talk, we did talk a lot about last episode about the things that you really kind of want to do in retirement and which of those want to dos would you still want to do no matter what the situation is with your finances? So you know, know how you would cover expenses during a downturn before one happens. That's why it's essential to have a plan. I happen to know a guy who can help you with one. And you know, I think I am pretty good at getting people that sort of income that they're not going to outlive for those retirement years. [00:12:15] Speaker A: Right. I mean that's what I was going to ask. Like what if someone doesn't know how if their plan would handle, you know, the death of a spouse? Like what should they do? I mean, how could they start? Which obviously would be contact Matt. [00:12:26] Speaker B: I mean, I would say so too. But yeah, if you're in those, especially in those few years before retirement or right into your retirement years, just super, super useful conversation to have with me or with someone who is acting in a fiduciary capacity. Right. Someone who has your best interests at heart and in mind and top of mind when we meet in person. And the complimentary consultation is where it begins, and it is 100% free and complimentary. No cost, no obligation for it. We can review how your income and your savings and your investments and all those things fit your needs, fit what you want to do and what you have to do in retirement. Takeprideinretirement.com is the website. That's takeprideinretirement.com. you can also call 855-246-9211. [00:13:20] Speaker A: Mad McClure, the advisor that cares. All right, so how do you balance growth and protection without making the whole plan complicated? Because we want to have things easier right when we're planning. So how do we. How do you do that? [00:13:35] Speaker B: Yeah, it's like a particular office supply chain, which shall remain nameless. Used to have those ads that were like, with the easy button, you know, I'm like, where's the easy button for this? You know, take pride in retirement. Dot com, I would say, is your easy button. But when. When you're looking at these things, it can get complicated. Your eyes can start to glaze over. And so if you want that peace of mind and an extra set of eyes definitely do reach out. But you got to start with the purpose of the money. I talk about giving each kind of bucket of money a job. What is the purpose of this money? What's the purpose of that money? When do you expect to need that money? Just have that sort of frame of mind going in. Think about what money needs to be there to be protected and needs to grow over time, right? So that can help fund later years, can help fund future costs, give you that baseline, and accept still some investment risk, because that's your future money. So you've got some more time for that to grow, and you've got time to make up for any losses. Right? More so than the other buckets. The other one would be income. Those are those immediate needs, your regular spending alongside things like Social Security, pensions, whatever. And part of that income could be something like an annuity. That's what we can look at when we meet as well. Potentially, if it works for you, liquidity, you got to keep some money that you're able to get at, like, soon, if you need it, if the H Vac breaks, if you have a pipe burst in your house, if you, God forbid, have totaled car situation. And you got to do some, like, anything can happen. And sometimes it often does. And so those expenses, those surprises will come your way and then, you know, protection again. Like, limit risks with some of your investments. Like, you got to have a clear Understanding of any restrictions, the costs involved, the trade offs involved as well. And those jobs can overlap. Like they don't have to be literal individual buckets of money. Like there can be some overlap there. Like I often say, growth and protection kind of in the same thing because you want to protect that money that's growing as well. So there's some overlap there. But you know, it's something that depends on you and your individual situation, your wants, your needs, your health, all those things. So that's where my fiduciary capacity comes in. Because right now it's for educational purposes only. Since we're on the show, I don't know you and what your situation is, but when I find out, that's when I'll start doing what's in your best interests. And I feel like that's one of those things that I just really, really take seriously. And I love doing and helping people out with. [00:16:22] Speaker A: Yeah, and so does having a bunch of different accounts mean that you've already [00:16:26] Speaker B: covered all those jobs or no big misconception there, I feel like, because a lot of people think, oh, I have an account, that means I have a plan. No, it means you have an account. So if you have, you know, 15 different accounts actually ran some plans for, for a lovely gentleman not all that long ago who, I mean, literally had like 15 different accounts, like money just all over the place. And that doesn't automatically mean that you're well diversified if that's the case for you. Nothing necessarily wrong with it. But it all depends, right? So the funds in the different accounts could have a lot of the same investments. They just might not know it. You know, they're not talking to each other, they're maybe in different places and in different types of accounts, but they maybe have the same sort of underlying investment alone lot of the time. And so what you need to do is make sure that everything is working in concert. All of your dollars make are making sure that they are part of the overall plan. Review the household's holdings together, the expenses together, the assets together, all of those things. Diversification then can help manage risk. And not just having a bunch of accounts, but having true diversification. That means having a mixture of stocks, bonds, other types of protection through things like annuities, different types of accounts, things in checking, in savings and all that, maybe CDs, maybe other different types of investments that I could sit here all day and name. So diversification helps manage the risk, but it doesn't necessarily prevent every loss because who can but. But periodically review things Big things happen in the economy, things happen with your health or emergencies arise, your household spending changes. So review that mix and make sure that it's still appropriate now, even though you set that mix up five, 10 years ago, make sure that it's still good for you now. And if not, make some changes. Consider your taxes, your fees and any access restrictions to that money before making any of those adjustments. That's super important too. [00:18:34] Speaker A: Yeah, it's basically just having a plan. That's what I, it sounds simplistic, but that's it. I mean it's like, you know, working around the house. Like, you know, like Matt and I do specific things, you know, usually he does, you know, the letting the dogs out in the morning and blah, blah, blah. So it's just trying to figure out what's covered, what overlaps and what's missing during this process. [00:18:51] Speaker B: Yeah, and that's right. I mean, you know, it's, it's making sure that the right hand knows what the left hand is doing and that they're all working together for the, they don't have the same job necessarily. Like you know, I, as a right handed person, I can't give my left hand the job of writing a letter. If I do, you're probably not going to be able to read it. But I type so much and don't pick up a pen as much these days. You probably are going to be hard, like tough to make it out on a letter that I write with my right hand as well. But you know, make sure that those jobs that you give your money, they are doing those jobs. There could be, as we say, some overlap there, but make sure that the right hand knows what the left hand is doing and each part of your plan has got to have a purpose. [00:19:40] Speaker A: Yeah. I mean should money that's needed immediately, should that carry the same risk as money that's intended for much later or. [00:19:47] Speaker B: No, no, definitely not. I mean that money that's needed for much later that can have a bit more risk associated with it because you'll have a bit more time make up for any losses that might happen. But that near term money really does need a lot of protection that goes with it. [00:20:04] Speaker A: Yeah. So let's talk about our listeners. What should they ask at their next retirement planning meeting? Hopefully with you, but whomever you go with. [00:20:12] Speaker B: Yeah. What should they, you know, if you want to, if you want to go with me, take PrideInRetirement.com again is the website but a few things along these lines to ask at a meeting with a financial Professional, hopefully me. But whoever it might be, what if your budget grows over the next 10 to 20 years? Like, what's going to happen? What does that look like for me? And how much money will I need to cover those expenses if it grows by XYZ amount, how would I be protected if early on in my retirement the market starts to drop and I am making withdrawals? Have a plan for that. And then for each of those scenarios, discuss with that financial professional which income sources or accounts would pay your bills in those scenarios, what money would remain accessible for any surprises. Do you have that emergency fund that's been built up? Super important that you do that, especially in your retirement years when you don't necessarily have that paycheck coming in all the time. Everybody needs to have an emergency fund ideally, but especially when you're in those retirement years, what purchases are there that could wait in those scenarios, what would prompt a change in your rate of withdrawal? [00:21:38] Speaker A: Right. [00:21:38] Speaker B: I mean, if prices are going up, you know, you probably will have to change the rate of withdrawal to account for that. But at the same time, that's going to eat away at the money that's available for you in the future and the money that would otherwise have a chance to grow over time. And so also, you know, how would a surviving partner's plan be different than what the plan is now with both of you there? So there are a lot of different questions to ask when you sit down and you look at those different scenarios. [00:22:10] Speaker A: Yeah, I mean, and obviously I've seen you work with people. He's great at what he does, guys. But with that, obviously make sure that you bring your statements, you know, from all your accounts. So that way you're able to just discuss and reflect on what the full picture is. Right. And I would always say too, like, ask for explanations if you don't understand something. Because I've learned so much through this podcast and that's why, that's part of the reason I'm here is to ask Matt, like, no, hold on, hold on. What does that mean? No, put it in, like, tell me, like I'm like a five year old, you know, explain this to me. So just make sure that the, you know, the advisor's explaining to you exactly, you know, what, what you're, you know, getting into, you know, and I think that's what's great about Matt is he obviously is able to, to make sense of all this. And I mean, I would say too, like, for the listeners at home, just write down your essential money, expenses and how you Expect to cover them. I think that's one of the first things you could do. Just be like, this is, I know essentially this every month, this is what my expenses, how am I going to cover those? And that's a great thing to walk into an advisor with, right? [00:23:08] Speaker B: Yeah, well, absolutely. And, and as far as like the other points that you made there, like bringing statements from all of your. So glad that you brought that up because you know, even when I as an rssa, I'm a registered Social Security analyst and I will have people in just to, to run a Social Security roadmap for them. And we call it RSSA roadmap, which is showing them how much income they can count on from Social Security in the future based on what they've made, their earnings record and all that. And so we run that analysis for them. And I always say bring in the statements from everything and do this like quick budget worksheet so that we can see if all of this is going to be enough for you or if you are going to have an income gap that we then need to make up. And they're like, well, I'm just coming in for Social Security. I'm like, yeah, but it doesn't happen on an island. It doesn't happen in a silo. It happens in concert with everything else. And so that is. Yeah, that's a really important point there. To bring that to an advisory meeting to. [00:24:09] Speaker A: Yeah. And what's the main thing you want people to remember when they hear growth and protection? [00:24:14] Speaker B: Protect and grow, those two things need to be working in concert. And you can say, oh well, aren't those kind of, I don't know, sort of like opposites in a way? No, you can have both. They say you can't have it all. You can in a way because, you know, rising costs and market losses both deserve attention. They both deserve planning for longer term money that may need growth opportunities. So you can take a bit more risk there. But your ongoing bills, that's where your protection really comes in. You got to protect that money and you've got to make sure that you can cover those expenses each and every month. Now and then that money that is in the longer term bucket, that's your growth money for the future, that can also have a level of protection with it as well. It doesn't have to just be one or the other. You can have both. Even in one bucket of money, there can be that overlap. Like I said before, it all comes down to balance and what is the right balance for you. And it Depends on so many things like your income and expenses and your timeline, your ability to handle loss, otherwise known as risk tolerance and all those things. [00:25:29] Speaker A: Yeah. [00:25:29] Speaker C: And I mean, the ultimate goal is [00:25:31] Speaker A: just to keep living that retirement you plan for. [00:25:34] Speaker D: Right. [00:25:34] Speaker A: Like we discussed last episode, that's including the people and the activities that make it worthwhile. You want it to be what you want. [00:25:40] Speaker B: Yeah. The things that you have wanted to do, that smart vision that you've had for your retirement, the dreams that you've had for your retirement, make sure that you can actually achieve those dreams and those goals, not only now, but in the future. You know, if you are retiring today and you're like, great, I have the money today to do what I want to do. Awesome. What about ten years from now? Do you still have the money to do what you want to do? Then make sure you have. If you don't know what the answer is to that, make sure you have a plan. [00:26:07] Speaker C: Right. [00:26:08] Speaker B: Take pride in retirement.com. take prideinretirement.com is the website. [00:26:13] Speaker D: Go there. [00:26:14] Speaker B: The initial consultation you could sign up for it is free of any cost or any obligation. We can meet remotely. We can meet in Atlanta at one of our offices. I would love to meet with you and discuss what your needs are. And that's going to do it for this particular edition of the show. Thank you so much for being a part of things and of course, nice doing business with you, Mr. Mr. Attache, pleasure. Mr. McClure, thank you for listening to the show and. Or watching. Remember, like. And subscribe if you're watching on YouTube, follow us, do all the things, follow us on the socials and all of the above and all of the things that I didn't mention to spread the word about take Pride in Retirement so we can keep doing what we're doing. And by the way, if you're in Atlanta or if you're going to be in Atlanta this coming weekend, we'll see you at Atlanta Pride. Stop by and see us at the marketplace there. We've got a. We've got a booth, so we'll be out there. We'll be the pasty sunburn guys probably at that point, at least I hope so. I hope it's going to be sunny and not. And not rainy. But thank you so much for being a part of things as we continue on this Take Pride in Retirement journey. And remember, until next time, take pride in yourselves and take care of each other. We'll see you then. [00:27:26] Speaker C: Thanks for listening to Take Pride in Retirement. Members of the LGBTQ community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free no obligation consultation with Matt McClure and the team at Active Wealth Management, call 855-246-9211 or 2 or go online to take PrideInRetirement.com investment advisory services offered through Brookstone Capital Management, LLC, BCM a registered investment advisor, BCM and Active Wealth Management, Inc. Are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Matt McClure and active wealth Management are not affiliated with or endorsed by the Social Security Administration or any other government agency. [00:28:11] Speaker D: Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment clients. We have an obligation to act in the best interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure the ADV2A, item 4 for additional information. Any comments regarding safe and secure investments and guaranteed income streams? Refer only to fixed insurance products. They do not in any way refer to investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company, not guaranteed by any bank or the fdic. Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.