On this week’s show, Ford talks about some of the most common retirement misconceptions and dispels some major myths about planning for your financial future. He also details some financial risks you should consider heading into retirement.

Are your retirement savings safe and protected from loss? Are fees holding-back your portfolio?

Call Ford Stokes today at 770-685-1777

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cost cutter
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9.8.22: Audio automatically transcribed by Sonix

9.8.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Matt McClure:
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.

Producer:
Welcome to the Act of Wealth Show with your host, Ford Stokes. Ford is a fiduciary and licensed financial advisor who places your needs first. He'll help you protect and grow your wealth. The act of wealth show has grown because activators like you want to activate their retirement planning with sound tax efficient investing. And now your host Ford Stokes.

Ford Stokes:
And welcome to the active wealth show Activators. I'm Ford Stokes, your chief financial advisor, and we have a special executive producer today. We have got Matt McClure from the Retirement Radio Network, who's filling in for Sam Davis, who finally took vacation. I don't know who approved that, Matt, but we're really glad that you're here to replace and elevate the show. We all we love Sam. But getting you who does all these reports for us every week is a special treat. Welcome to the Active Wealth Show, Matt.

Matt McClure:
Appreciate you. Thank you for it. It's great to be here. I really am enjoying it. I'm looking forward to a great hour with you.

Ford Stokes:
Yeah, it's it's also neat because your local here in Atlanta a you and your partner live in midtown and but also can you tell a little bit just about your background how you used to be a reporter when New York One and what you did there? Because I think the listeners would just like to know.

Matt McClure:
Yeah, yeah. No, I used to live, as you said, in New York City. And before moving back home, I was born and raised here in Georgia and so moved back a few years ago. But before I moved back, I was a reporter for New York One and I worked on the floor of the New York Stock Exchange for a good long while. And I was the afternoon business anchor for a couple of years for New York one as well. And so that was just really cool. And that was actually one of the coolest experiences of my life, I think was being on the floor of the stock exchange and doing live reports from the floor. With all the trading going on around me and all that, it was just that was just really cool.

Ford Stokes:
Yeah, it's awesome. It's just great to get a talent like that. Also, your voice is way better than mine, so that's good. Also super ticked off at your when I got your headshot for the retirement radio network, everything. It's just perfect and you have hair and I don't it's not fair. But anyway, super excited to have you help us and I'll have you kind of chime in a little bit. Also, it's great because you're also life and health license and you help people with their retirement income and protect and grow their wealth as well. So just glad to have you with us and thanks for filling in. When Sam went to Syracuse, New York, to be with his mom. And so we're glad you're with us.

Matt McClure:
Yeah, no problem at all. Any time. Glad to join you.

Ford Stokes:
That's good stuff. All right. So again, welcome to the show, everybody. And we love our activators. And for Matt and others who don't know who to activator is an activator, somebody who listens to this show. It's somebody who wants to protect and grow their wealth that somebody who is looking to build a tax efficient, fee efficient and market efficient portfolio. And there's really only one way to do that, and that's to dig in and that's to really start trying to build a smart retirement plan that you can implement. And we've been talking about that the last four weeks. This is week five of our Smart Retirement Plan series. We thought it was going to be six. It's actually going to be seven now because we're going to push back the smart care and the smart health part of the smart retirement plan to next week, we're going to try to get Bonnie Dobbs from Medicare and other red tape on the show for next week. But I wanted to kind of dive in because today we're going to talk about really two big things. We're going to talk about the most common misconceptions about retirement. And then the other is and this one's even more important, I'm going to talk about that in the first segment. We're going to talk about the risk that every retiree and pre-retirees should consider and why it's important to have a smart retirement plan. But let's go straight into the financial wisdom quote of the week. And Matt, I know you're passionate about these. Can you go ahead and just read I'm going to let you read the quote this week and let's talk about it.

Producer:
And now for some financial wisdom, it's time for the Quote of the Week.

Matt McClure:
Yeah. I love these because I love sharing wisdom in the words of somebody else. You know, I feel like. Right. I say things that might sound wise, like I know what I'm talking about, but I like to hear from people who actually know what they're talking about. Like you and other smart people out there in the world. So this week's Financial Wisdom Quote of the Week comes from Daniel Kahneman, an economist, a psychologist, winner of the 2002 Nobel Prize in Economic Sciences as well. So obviously, somebody who knows what he's talking about. And the quote is, money doesn't buy you happiness, but a lack of money certainly buys you misery.

Ford Stokes:
Amen. And pass the turnips, I think Andrew Tate, who's been controversial out there on Tik Tok and in other platforms, he says, you know what, I understand that people get depressed, but I don't think there's any depression that $7 Million couldn't solve.

Matt McClure:
There you go.

Ford Stokes:
So I think that's I think that's pretty pretty apropos. We work with, you know, all kinds of folks. I mean, our our typical clients got 1000000 to $2 million. We do work with higher net worth folks all the way up to $100 Million Plus net worth folks. But we really can help people that have got like 250,000 and above our general. Our average is between one and 2 million. But we've got to make that check last. And we we work with pre-retirees, Matt, and we work with retirees and business owners. And they all have one thing in common. And you help people deal with this, too, which is they all have one check to last in the rest of their lives. They've got one amount of money, whether it's multiple accounts or whatever. They've got one sum of money, that one big nest egg, and they've got to be able to generate income from it. And retirement is more about, in my opinion, and I think yours as well. It's more about an income level than it is about building just one big nest egg and you need to build it tax efficiently. And listen, if you don't have an income plan, you can be miserable to that to the point of the quote.

Ford Stokes:
And and so I agree. I think a lot of folks feel better about about having money because it also allows them to help for grandkids and and kids and and also deal with emergencies in their life and but also fund their lifestyle so they don't become burdens on their kids during retirement. I know that's really important. My even my assistant, Deborah, she she put a kid through her son through college and he's an aerospace engineer at Georgia Tech. It's remarkable. But the only thing she's worried about is making sure that he doesn't ever have to support her, even though she spent her whole adult life transitioning from a paralegal to a I.T. project manager so she could afford to pay him. I paid it for him to go to Tech, plus his scholarships and things like that. And she's still worried about becoming that financial burden. So just kind of your thoughts on what you see out there in the marketplace and what people are dealing with. And also just the income, how how important income is is part of retirement?

Matt McClure:
Oh, yeah, definitely. Well, and that's I think we say it a lot with retirement radio network across the board is that it's not about a couple of things. Retirement is not one size fits all. First of all, everybody's situation is different. You know, you might have similarities to somebody else. And of course, there are different products and services available that you I know Ford can help guide folks through to decide what's best for them. But not everybody. No two retirements are the same period. And number two is that, as you said, it's not about that one big nest egg number. It's about reaching that goal of 1 million, 2 million, 3 million, whatever, although that's great, but you got to have that stream of income in retirement to cover those expenses, to live the lifestyle that you want to live, and to have that steady, I guess, steadiness as you go throughout your retirement years. So, yeah, I mean, it's very important to have that income stream and one that's going to last you the rest of your life, because it's not a situation where you want to, you know, run out of money. It's it's you know, we talk about budgeting and whether you have more month than money or more money than month, you know, you don't want to have more life than money. You know, you want to have more money than you do life, basically.

Ford Stokes:
Amen. Amen. Absolutely. So let me just recap what we're going to talk about on today's show. Number one is we're going to talk about the risk every retiree and retiree should consider and why it's important to have a smart plan. And then we're also going to talk about the most common misconceptions about retirement. This all fits within that smart retirement plan. And we're going to kind of skip the market update. I at the beginning of the segment, too, I'm going to play a really great little some audio from Mark Diorio, our chief investment officer, where he's talking about September and how it's typically a tougher month. And a lower average volume month of growth and even negative growth for for investors. And I want you to get his take on it and how you don't really need to build an entire retirement plan and investment plan around it, but you do need to be aware of it. But let's go straight into the risk that every retiree and pre-retirees should consider. And this will this will bleed into next segment as well. We've only got a couple of minutes left, but. Here's why it's so important for you to have a smart financial plan. We want to make sure we have. An understanding of what we're dealing with. Right? So the first thing that every pre-retirees and retirees should consider is the market risk, which is systematic and unsystematic market risk. Systematic market risk is the overall market. Unsystematic market risk is in individual stocks, things that could be facing an individual stock within their company or or legal troubles that our company may have or any of that stuff would be unsystematic risk. Systematic risk would be the market as a whole.

Ford Stokes:
It can be things like when Jerome Powell keeps going up on 75 basis points at a time on interest rates trying to handle that. We think that's a pretty important thing to consider as well. But number one is market risk, which is systematic and unsystematic. Market risk number two is interest risk. Interest rates are subject to change and adjustments have shown to have significant effects on American families and the economy as a whole. But specifically, if you own bonds and the interest rates go up, guess what? Your bonds that you currently hold are worth less because the new bonds that have the new interest rates that are higher are more attractive. So therefore you have to discount your bond and therefore you lose market value if you want to sell out and then go invest. You also have reinvestment risk and and also systematic and unsystematic risk regarding bonds as well. So we come back from the break. We're going to hear from Mark Diorio talking about the month of September and what you need to be aware of with your investments in the month of September and how it's traditionally been one of the lower performing months, but how you really don't need to consider, you know, totally changing your investment plan just because of a single month each year and what can happen and what what there can be positives in it as well. We're going to play that for you when we come back from the break. And then we're going to go more into the risks every retiree and pre-retirees should consider. Come right back. You will stay active. Well, show right here on AM 9:20 p.m..

Erin Kennedy:
Give me peace on earth. Give me light.

Matt McClure:
Give me light. Remember, all of Ford's listeners receive a free financial consultation just for listening to the show. Visit Active Wealth to learn more and schedule an appointment. Thanks for listening to the Active Wealth Show and subscribing wherever you listen to podcasts. And welcome back to the Active Wealth Show, everybody. I'm Matt McClure here alongside Ford Stokes, your chief financial officer. And we are talking about, of course, retirement today, as we do each and every week here on the show and how you can plan for it, educating you about your financial future and how to make it more sound. And we've got something special that we wanted to share with you at the moment with Erin Kennedy. She's with Brookstone Capital Management, and she's joined by Mark Diorio, the chief investment officer at Brookstone, which is the registered investment advisor of which Ford is a representative. And we're going to hear from them about a September effect and if there is going to be one this year.

Erin Kennedy:
Hey, Mark, good to see you. It's that time of year, so I have to ask, will there be a September effect? September, of course, as you know, has a reputation for being the worst month of the year for the stock market. Mark, stock market. Historically, it's been the weakest month for the S&P, with an average decline of 0.5% since 1950. So we look at history again for perspective, not predictions, but is the September effect real?

Mark Diorio:
It definitely has been, even in my career over the last 20 plus years, where you see some weakness in September and it has been historically the weakest month of the year. And so I would watch out for those times where you see kind of exaggerated selling in the marketplace. And so I am a little cautious when you come into September, October, naturally.

Erin Kennedy:
So a little bit more it's not just an anecdote here.

Mark Diorio:
Correct? Although I wouldn't make build a whole philosophy or an investment plan around it in the sense that it's 50, 50, half the time Septembers are positive, half the time September's R negative, at least in recent history. But we have seen kind of those exaggerated, as I would call them, sell offs that ultimately lead to some bounce back. But we've had seen those bad times and in 2008 was the big one where you got Lehman Brothers and the Lehman Brothers event in mid September. Of course, that's the extreme event and we're not looking for something like that. But it does seem to be the time period where maybe companies get out some of the bad news if they have it, and regroup and get ready for 2023, if they're having a bad or the following year, if they're having a bad current year. So that's where kind of the news flow or where it kind of, I think emanates from.

Erin Kennedy:
Right. Okay. So I want to take a look at September's performance. This was a chart supplied by you to the Brookstone Capital Management Advisors. So September's performance against other months and I don't need to remind you, it is a midterm election year. You say that this graph illustrates that the market may be anticipating a weaker market ahead. Why is that?

Mark Diorio:
So we saw a pretty good rally from really mid-June up until mid August. And and it brought it all the way back to what it's called its 200 day moving average, which we talked about, which is kind of a general trend line for the marketplace. And the market was very oversold in June. So July and August saw a pretty good rally at least to mid-August. And at that point, I think the market turned its attention to realizing that, oh, maybe it's run a little too far too fast with a bounce back. We have September coming up next. And so we saw the market really start to peel down and really drop pretty quick in terms of adjusting to that reality that we're heading into September.

Erin Kennedy:
Okay. So now I'd like to pivot to the cycle composite, which the market has tracked pretty closely this year. Let's take a look at that. What does this suggest?

Mark Diorio:
Sure. In the blue line, there is kind of the ten year, the four year and the one year cycle combined. And in a chart like this, you're just looking for tendencies, how markets respond to the historical seasonal tendencies and really looking at longer term. But what it does show is September, October weakness. And as you mentioned, there's a midterm election coming up in midterm election cycles. You have historically seen weakness up until about the midterm election. And that's what this chart really reflects, that this might be a soft period here.

Erin Kennedy:
And so will you be surprised then if you see more selling in the market?

Mark Diorio:
Well, we've seen it already from the mid August and the market almost anticipated this to the first part of September. And then looking over some of the data from Morningstar, for example, their research, they came out with a piece that showed that they think stocks are 15% undervalued as of today. So we see we have a little bit of pause in that. We have the Federal Reserve planning to raise rates. The expectation is for 75 basis points or three quarters of a percent higher. So I think the market is just pausing to digest that at this point. So I don't know if I'd be surprised, but at the same time, I think the market's anticipated a lot of that and has pulled back already and where you could see some sideways action or some choppy seesaw action going forward as we try to work our way through up until the midterm election.

Erin Kennedy:
Okay. We'll see what happens next then. Mark, thank you very much.

Mark Diorio:
Thanks, Aaron.

Ford Stokes:
So I think what Mark is sharing there is very telling. Matt I think it's, you know, you can't really build it's not like you're going to pull all of your money out of the market and stay invested and and then go back in and incur more fees and trading fees and everything else when you go to reinvest. So you don't really want to pull all of your money out just for September and and because you never know at the end of the month, especially when people are covering their shorts, their short sales or anything like that, you're going to see a pretty good bump more than likely at the end of the month as what we've seen over the last several months in 2022. So you want to really kind of stay invested because you never know. You may have a half percent growth or or even more this month and you don't want to miss a big rally. Let's say if Jerome Powell comes out and says he's not going to go up 75 basis points the next time, then that would be a pretty good rally situation as well. And so I would say stay invested is really the in my opinion, the moral of that story. And also really what we can gather from what Marc shared, will there be a September effect or not in that piece? We just felt like it was important.

Ford Stokes:
We always feel like it's important for our listeners to hear from our chief investment officer. I'm just your chief investment advisor. I'm here to help you protect and grow your wealth. And if you want to get a free financial consultation, all you've got to do is visit Active Wealth show. That's Active Wealth show dot com. And we're happy to help you with a free financial plan. There's a schedule a consultation button in the upper right corner. Just click that. You'll get booked directly into my calendar. You won't talk to another advisor, you'll talk to me directly. You get to talk to the host of the show, The Active Wealth Show, and we're happy to help you also, if you want. Deborah and her team are standing by this weekend. All you've got to do is pick up the phone and give her a call at 7706851777. Again, that's 7706851777. Also, it's really neat because Deborah is a client as well. So Deborah and her team are standing by to take your calls and get you scheduled into my calendar. Also, what you get when you work with us is you get a free portfolio analysis where you can understand the risks you're taking and the fees you're paying and the allocation and correlation of your risks and and all of your investments out there.

Ford Stokes:
We'll have all of that together in a nice, neat package with an institutional level Morningstar report that you'll get. Number two is you'll get a financial plan to your 95th birthday. And with your current plan that you get, you also get a financial plan, your 95th birthday with our recommended portfolios. And then number four is you'll get a Social Security maximization report. And number five is you will get a retirement income gap analysis as well. And within that number three, which is when we're giving you that financial plan, your 95th birthday, that all recommended portfolios, we will also give you a Roth ladder conversion plan. And if you've never consider a Roth ladder conversion plan and you want to learn about what that means and what that's all about, we're happy to help you. And all you got to do is visit Active Wealth and click that schedule console button in the upper right corner. And so we were talking about the risks that people face and number one was interest and number two was inflation that they're facing in retirement. That's for pre-retirees and retirees and business owners. And also we're saying, hey, they all have one check, the last one the rest of their lives. So we think we take that very seriously.

Ford Stokes:
We think that is extremely important. And we're doing whatever we can to help protect and grow that hard earned wealth and protect that one check. The next is public policy. I mean, we've all seen the public policy situation with taxes and most notably how that can affect family budgets. We've seen $4 trillion going into the market and we've seen the market go up last year in 2021. But we've also seen extreme runaway inflation as well. So that's another factor. We've also seen timing. They call it sequence of risk, sequence of investment and sequence of risk. Out there and you know, you can't control the markets are going to go up or go down. So you must consider that sequence of return. Risk is a real, real issue. It's a real problem. And what would you do should you choose to retire in a bear market like the folks, the poor folks that retired in March of zero eight, they lost 50.1% of their assets or if they were invested in an index funds on like SPIDER funds on the S&P 500, because the S&P 500 lost 50.1% between March oh one. I mean, between March 2008 and March 2009. Liquidity risk is another thing. You need to have sufficient access to your savings and assets in order to fund your expenses and to meet your goals.

Ford Stokes:
We want to make sure that we don't put 100% of your money and fixed indexed annuities. We also want to make sure we don't put 0% of your money into safer products that can get you income for the rest of your life. We need to do a balance there and not a balance of both between tactical asset allocation and actively managed portfolios and also safer and sound products that are fixed indexed annuities or life insurance or a combination of the two. And we also need to consider the tax buckets in our monies in we want to really consider how can we generate tax free income. That's a big important deal. So also again, we're talking the other sequence of return risk, like we said before, on the timing. But if the market experiences a downturn in the early part of your retirement, your savings and future savings could take a dip as well. And then longevity. We're going to go we're going to hear more about longevity here in the next two segments, but we're going to also have Matt talk about our cost cutter from The Motley Fool. That was in July of 2022. The talked about early bird specials and what people are doing with seniors are doing to try to reduce their costs during retirement.

Matt McClure:
Yeah, no, let me tell you, Ford, I love a good early bird special. The unfortunate thing is they're getting more expensive. So, yeah, we've got some some suggestions on how to fight that.

Ford Stokes:
That's great. I can't wait to hear that. Come right back to hear about that early bird special as our cost cutter for the week. And then also we're going to be talking more about the risks that people are facing during retirement and also the common misconceptions about retirement that pre-retirees and retirees are facing out there. Was the active wealth show right here on AM 920 answer once there was a boy and girl all say.

Matt McClure:
I love you so. Thanks so much for listening to the active wealth show. Make sure to rate us everywhere you listen to podcasts, including Spotify. Hello once again and welcome back to the Active Wealth Show here on AM 920. The Answer, I'm Matt McClure here alongside Ford Stokes, your chief financial advisor. And of course the active wealth show brings you so much great information about how you can invest and save for your future. And speaking of saving, it is time for the cost cutter of the week.

Producer:
Here's the Costcutter of the week.

Matt McClure:
And the Costcutter. This week has to do with those early bird specials that we all like so much. At least I do. I've always kind of been kind of a little bit of an older person at heart, you know.

Ford Stokes:
And kind of an old soul for.

Matt McClure:
Sure. I am, really. But, you know, I mean, The Motley Fool had this report come out not all that long ago. Talking about the early bird specials are really going up in price because of inflation. And, you know, restaurants obviously are not in the business of giving food away. So, you know, if there's an early bird special out there, they've got to make a profit on it. Right. So if it's you're paying 12 bucks, Motley Fool says chances are it probably cost the kitchen about $4 to make it. So that's why it pays to actually cut back on eating out at restaurants. And the cost cutter part of this, as you cut back on that eating out is to cook at home to save on your food costs much cheaper than than going out to eat obviously like any any time not just during a time of inflation, but, you know, you could spend more time doing that, bringing out some old family recipes, cooking healthier things, because you can actually control the things that go into the meals that you make at home. So not only can it help you lighten your load as far as the money that's going out of your wallet, it keeps your wallet fat and it keeps you skinny.

Ford Stokes:
How's that? I love that. I'll tell you my own personal experience. You know, you kind of marry who, you know, your mom is kind of a deal. And my mom was a dietitian. Guess what? My wife is the dietitian. It's really strange. And by the way, my mom, we lost her 17 years ago. But and and, you know, we think about her all the time, and she was awesome. But she loved my wife probably more than she loved me. So we're really, really fortunate. But my mom was a pretty good my mom was a fantastic baker, actually. And my wife is the best cook I've ever known. And and the best meals we have, we have at home. I'm a pretty good griller, but mainly because the big green egg made me a much better griller. So. So that helps. And so shout out to the big green egg and no, I'm not being paid for that endorsement of the big green egg, but I'm a huge fan and I am an egghead. Not just because I don't have hair on the top of my head. I'm a huge, big green egg fan for sure, but those are the best meals we have where I'm like cooking the protein and she cooks all the vegetables and all the sides and the breads and the desserts and everything else. And those are always less expensive than if we go out to a steak restaurant and steak dinner. And I can tell you, I can't find a steak better than when I'm cooking a steak on the big green egg. And quite honestly, what I think the big green egg cooks the very best is poultry. I think chicken is amazing.

Matt McClure:
The one time I've had food cooked on a big green egg was they were like, jerk chicken legs. Oh, my gosh. My our friend Dan had a big green egg and oh, my goodness, that was just like the best.

Ford Stokes:
Chicken.

Matt McClure:
That I think you and.

Ford Stokes:
Josh have, like a grilling area where you guys.

Matt McClure:
Have. And we don't you know, we don't. This is it's funny because we used to we used to live out in West Georgia on this huge, like, you know, 30 acre farm and recently sold that and moved into the city into into midtown. And so, you know, we went from 30 acres to a one bedroom apartment in midtown. So, you know, not much room for grilling at the new place, but hopefully we're looking to hopefully buy here in the next year or so as the housing market cools off. So we'll hopefully have plenty of room again.

Ford Stokes:
That's good. That's great. Yeah, at least at least I know what to do as a housewarming gift for sure.

Matt McClure:
There you go. Big green egg.

Ford Stokes:
There it is. That's good stuff. That's awesome. All right. So let's let's keep going on these risks. And thanks so much for reading the cost cutter, Matt. I appreciate it.

Matt McClure:
No problem.

Ford Stokes:
So we were talking about all these risks right now so far, the risk that pre-retirees and retirees face or interest rate risk, obviously market risk, a lot of people are concerned about what's going on with will there be a September effect? We heard from our duo talking about that. We also talked about inflation risk, public policy timing, liquidity risk, because you do need money to be able to take care of your immediate needs, sequence of return risk. And we talked about how that's such a factor for some of the poor people that retired in March zero eight. That was an issue because from March oh eight to March oh nine, the S&P 500, as an example, lost 50.1%. That's probably one of the more extreme cases of sequence of return risk for pre-retirees and retirees longevity risk. The CDC says that, you know, if if at least if both of the spouses lived to be over 65 years old, guess what? There's over a 60% chance that one of them is going to live to be over 90. Also, excess withdrawal. We like the 4% rule. We like folks spending no more than 4% of their assets and withdrawing 4% of their assets from their nest egg each year. But we also encourage people to invest in like a fixed indexed annuity so you can get higher than a 4% risk and have your money continue to last, because some of those products, when they don't include market risk, because your money is not invested in the market, it's invested in a ten year US Treasuries and then they take the growth on or the interest from that ten year US Treasury.

Ford Stokes:
At the end of year one, they'll take that money and invest it into options in the S&P 500 and they'll continue to invest those dollars or into different options like the Credit Suisse Rayburn PAC or, you know, the Nasdaq 100 or the Russell 2000 or Wilshire 5000. There's all kinds of different things like the JP Cycle morgan, Jp morgan Cycle Index. There's all kind of different indices out there that these annuity companies use to tie their assets to the growth to help a client grow. Also, I want to remind everybody right now that it's really a good time to consider a fixed index annuity because we've got fixed indexed annuities are illustrating over 10%. And that's a big deal. And mainly because the ten year US Treasury is has gone up and up and up this year it's had a little bit of fluctuation kind of between 2.6 and and 3% or 3.3%. But here's an interesting fact. I mean, the average ten year US Treasury over the last ten years has been hovering right around at or below 2%. And so those companies now have more interest to in which to buy options. And so therefore they can get you more growth on your money and they can also share in making money off of your money, which we think is a great deal for them.

Ford Stokes:
But also, it's nice to get market like gains without market risk for you. And it's willing, you know, if you want a reasonable rate of return without the market risk and also to generate more than a 4% withdrawal rate. That's a really good idea, is to invest a portion of your assets, specifically the retirement income portion of your assets. Let's say you you would have had invested into bonds. It's a really good idea to replace those bonds with fixed indexed annuities to protect and grow your wealth. So take ten, 20, up to 40% of your assets and invest in fixed indexed annuities. And you won't have to worry about the markets nearly as much because you're your money is growing without having any risk in the marketplace and you're also able to generate income from it and turn on income from your annuity and you're going to sleep better at night. So it's something to consider there. All you've got to do is visit active wealth show dot com that's active while show dot com and you can schedule a consultation by clicking that button the upper right corner of the site or you can just give us a call at 7706851777. Again, Deborah and her team are standing by that 7706851777 and ready to take your call and get you scheduled directly into my calendar.

Ford Stokes:
You're going to talk to me, the host of the Active Well Show. And, you know, we love hearing from our activators. And if you're somebody that's been listening to this show for a very, very long time and you've never called in, you know, Tony Robbins says if you don't take action, you've actually never you haven't made a decision. And so I would encourage you to take action, make a decision, and go ahead and pick the phone up and give our office a call at 7706851777. Again, 7706851777. And we're so happy you listen to us on the active well show because you're seeking to understand and trying to be a bear. If you're going to be a bear, be a grizzly, you're trying to be more aggressive about getting better at improving your retirement situation. And we applaud you for that. And then the last three different factors and risk factors that that pre-retirees and retirees face is health expense. Fidelity came out with their retirement survey a few months ago and they said that. A married couple is going to spend $325,000 on health care during a 30 plus year retirement. And guess what? That's up 25 grand from the year before. So it's already gone up almost 10%. That's crazy. So be careful, because medical costs are typically one of the largest expenses for Americans in retirement.

Ford Stokes:
You want to be sure that you have a medicare plan in place that covers you and your spouse throughout your lives, that covers your co-pay and also your deductibles. Then also the loss of spouse. That's another risk that people face. When you lose a spouse, you'll lose one of your Social Security benefits after your spouse passed away, literally on the day they pass away. And then last is re-employment. You don't want to have to go back to work during your golden years. We want to keep people from having to say welcome to Wal Mart. We really do. We want to help them spend more time with their family. And we we spell love in our family time. And we want to help you spend more time with your family. We care about y'all as activators. We really do. We're fiduciaries and we're going to put your needs ahead of our own. And we're doing everything we can to protect and grow your hard earned and hard saved wealth. And we come back from the break. We're going to talk about the misconceptions. About retirement that many retirees have as part of our Smart Retirement Plan series. I think it's a really important thing for you to understand, and we'll come right back here on the on and we'll be right back here on the Active Wealth Show. You're listening to AM 920 answer. This Scott.

Matt McClure:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. And welcome back to the Active Wealth Show Activators. I'm Matt McClure here alongside Ford Stokes, your chief financial advisor for the Active Wealth Show. We are talking, of course, about a lot of different aspects of retirement today, as usually happens here on the show. But right now we wanted to cover some of the most common misconceptions about retirement and Ford. I actually was, I guess, victim of one of these misconceptions in that I really didn't realize that Medicare doesn't cover long term care costs. That's one of the misconceptions here, is that people people think Medicare covers long term care costs, but.

Ford Stokes:
Know that doesn't you really do need to have a plan. A lot of people self-insure unknowingly for long term care and it depletes their assets. And we don't sell a lot of long term care insurance, but we do for folks that really care about it and also want to make sure that they're not depleting their assets. They want to have a legacy plan for sure, but a lot of people don't know. That's what is one of the misconceptions that number one is Medicare doesn't cover long term care costs. People have this idea that government is going to take care of them. And you really just can't depend on that because it's simply just not the case. Number two is Medicare doesn't cover almost any money with long term care whatsoever. Medicare is really there for health care. It's there for Medicare Part A, which is your hospital costs and Medicare Part B, which is your physician costs. And Medicare Part D, which is the only one in the alphabet that actually makes sense because that covers drug costs.

Matt McClure:
You'd think that they would match the numbers with or the letters with the thing that it actually covers. But, you know, that would be that'd.

Ford Stokes:
Be too easy. Medicare Part H, you're right. Hospital. You also have co-pays and co-insurance and deductibles with those Medicare costs. So most people choose either a medigap supplement insurance plan or they get a medicare Advantage plan. Medicare Advantage kind of like an HMO. It's free, but they limit your usage and they do everything they can to kind of keep those costs down and utilization down. And then Medicare supplement are more like a PPO. You've got a lot more choices and a lot more opportunities. And also just for your drugs to be on formulary and all that kind of stuff. A lot of our folks that are risk averse, they go ahead and they pick a medicare supplement plan because it caps their costs. It's, say, 142 to like just under $200 a month, but it covers all their co-pays, that extra 20% that they have to pay. That's what it covers. So that's one of those common misconceptions about retirement, is that people think that Medicare covers long term care costs. It does not. And so we want to cover that one. Matt, why don't you go ahead and tee up this Social Security vignette you've done for us this week?

Matt McClure:
Yeah, you know, possibly a big change in Social Security coming and. Well, it is coming. It just depends on how big of a change it's going to be. And that is the cost of living adjustment for Social Security. You know, it changes every year. It's based on inflation. We know how inflation has been this year. Let's take a listen and we'll talk about it on the other side. Social Security will get a big cost of living adjustment next year, but there could be some consequences you might not have considered. I'm Matt McClure with the Retirement Radio Network. Powered by a Mirror Life, a new report by the Senior Citizens League says Social Security beneficiaries could see a cost of living adjustment or COLA as high as 10.1% next year. The reason? Inflation running at a 40 year high.

Erin Kennedy:
This is a very, very unusual and.

Ford Stokes:
Unprecedented.

Erin Kennedy:
Pattern of inflation that we're experiencing.

Matt McClure:
Mary Johnson with the nonprofit group, told WPTF TV that surveys show inflation has caused about half of Americans to spend their emergency savings and people are carrying more debt on their credit cards. So the highest jump in Social Security payments since 1981 would be a good thing, right? Well, Johnson says it's better than no increase, but there are some things to be aware of.

Erin Kennedy:
In fact, you can get penalized if you think your tax liability is going to be 10% more next year than you're paying now. You can be penalized if you don't send in estimated payments or have more money.

Matt McClure:
Withheld, she told the TV station the increase would not be enough to cover a jump in Medicare Part B premiums, which are taken directly out of Social Security checks. And she says higher incomes mean some seniors could no longer be eligible for some other government benefits.

Erin Kennedy:
And then a whole 15% were made in eligible because they were their incomes increased over the income limit for food stamps.

Ford Stokes:
Or rental subsidies.

Erin Kennedy:
Or programs in their area.

Matt McClure:
So what should you do? Johnson says. Prepare now. Talk to a financial advisor to help you get ready ahead of time and contact local nonprofits if you need help paying bills. So are you prepared for the unintended consequences of a larger Social Security check? That's a key question to consider as inflation impacts all our lives. With the Retirement Radio Network Powered by a merrill life, I'm Matt McClure.

Ford Stokes:
So Matt, I think all of us would agree that the government's not going to go far enough to what the real rate of inflation is. It's actually frightening what that real rate of inflation is. There's plenty of websites out there that talk. About, I think, the real rate of inflation before all this spike was like 7% when the government was estimating between two and three. Our whole system breaks down if everybody thinks that we're not keeping pace on things like Social Security. And right now, I mean, the rate of inflation year over year, April to April was eight and a half percent. So it's a real problem. I mean, and I don't I have a real concern about the cost of living adjustments going to come from Social Security. I don't think it's going to go far enough. But your thoughts when you were doing that research for that piece?

Matt McClure:
Yeah, well, the thing that I found fascinating about it was that, you know, you could get upwards of a 10% cost of living adjustment, which on the surface sounds like a huge thing. Right? I mean, it's like, oh, I'll be I'll be bringing in 10% more from Social Security than I did last year. But there are all of those caveats, a couple of which you just mentioned, where is it actually going to keep pace with the real rate of inflation? Or in the other aspect of this is the tax consequences potentially? Does it push you into higher income tax bracket? So are you then going to come out instead of coming out ahead or breaking even? Are you going to be behind where you were in the past year, previous years? So those are some some very strange dynamics at play.

Ford Stokes:
Let me just tell you, the number one group we work with the most is we work with a lot of widows because their husbands, before they passed away, husbands were the ones that were do it yourselfers and they were doing the investment. And then we end up taking over and protecting that widows money. I get really worried about those people where it's actually affecting and impacting the grocery bill. Chicken's gone up more than anything. It's crazy. And chicken used to be the real cheap alternative protein. And now and also a lot of women don't like eating steaks or eating ground beef, and so they don't eat red meat and that affects them as well. So it's just another thing to consider. I really appreciate you doing the vignettes. Let's go into all these misconceptions. People think. Their effective tax rate will dramatically decrease once they stop working. Well, when you replace your income with money that comes from your IRA or you've got a pension plus or Social Security and it equals what you made before. Guess what? You're in the same tax bracket. It's still or all of it's counted as ordinary income. Be careful. It's likely that your tax bracket is not going to dramatically decrease. Number three here, people think that the key to retirement is acquiring one big magic number. It actually isn't. It's actually about the main retirement income planning and the main part of retirement planning, in my opinion and opinion of a lot of other advisors about building tax efficient income into the plan and trying to get it into buckets like index, universal life insurance or or Roth IRAs.

Ford Stokes:
So that's a big thing. A lot of people think, you know, you just got it'd be great if I can just get $1,000,000 or 2 million or 3 million. But honestly, retirement is more about income than it is about getting that one big nest egg number. And you've got to get money into the right tax buckets. You can start planning in your forties and fifties and sixties. Also, if you've got kids and grandkids that are that are making money, they're in their working years and they have got a lot of human capital left, but not a lot of wealth capital. They need to start saving now and they need to start saving into IRAs and Roth IRAs and also saving into life insurance for sure. Next is some people think all seniors receive the same Social Security benefit. They don't. And it all depends on your top 35 earning years. Also, people think that taxes will remain flat during their retirement earning years. That's a big misconception as well. From 1960 to 1963, the current 24% bracket was actually 56%. That's 8% higher than two ex the same tax bracket. So be careful there.

Ford Stokes:
Also people assume they will die before they turn 90 years old. Careful. A lot of people think were the CDC and everything is proven that we're living longer even in a post COVID 19 pandemic world. And when it comes to my portfolio allocation, I can set it and forget it. Don't do that. Try to make sure you're not riding down to the lowest levels of the valley there and try to rebalance on a monthly basis and work with firms like ours that do tactical asset allocation that will rebalance and reallocate your a portion of your assets at least. And we a lot of our portfolios have smart retirement plans and strategic investment as well as tactical asset allocation. But most of them are 5050 plans or strategic asset allocation is set once a year. And then the tactical asset allocation is rebalancing at least on a monthly basis. And the last one is people assume that they can handle their own retirement planning by themselves. You wouldn't do surgery on yourself, right? And you wouldn't represent yourself in a criminal case. Please do us a favor and try not to plan your own retirement because you may wake up one day and be like, Oh, I really messed up and we're happy to help you because we're fiduciaries. We're going to put your needs ahead of our own. And now for the final countdown. It's the.

Producer:
So let's recap what you may have missed. It's the final countdown.

Ford Stokes:
All right, Matt, I'm going to let you be up here and help me this final countdown. So we had your vignette on Social Security. We thought that cost of living adjustment was really important to share. We talked about the risks that pre-retirees and retirees face during retirement. And we also talked about in a very hurried fashion here in segment four, where the common misconceptions that pre-retirees and retirees have. We talked about bond replacement. We ran out of time to talk about structure notes. But I would encourage you, if you've got questions about our September structure. Note It's a really good structure. Note It's got a great rate of return with a highly ranked bank, and you can reach out to us at Active Wealth Shoko or Active Wealth and click that schedule a consultation button. When you're dealing with retirement, try to seek some help. Reach out to us at Active Wealth dot com. Click that schedule consultation button. We're happy to help you. Also, you can call us at 7706851777. Again, 7706851777. Most people find it's hard to remember a phone number so I would encourage you just to visit active wealth dot com and you'll get booked directly in my calendar if you click that schedule a console button when you're trying to plan your retirement. If you're going to be a bear or be a grizzly, I want you to do everything you can to seek as much information as you can to protect and grow your wealth and to plan for a successful retirement. Just reach out to us at Active. Welcome. And next week, we're going to talk about smart care. And smart health is part of our Smart Retirement Plan series. That's now seven strong. We just finished number five and I hope everybody has a great week and come right back and listen to us next week. Thanks for making us the number one. Listen to radio show on the weekends on AM 910. The answer we appreciate you activators and have a great week everybody.

Producer:
Thanks for listening to the Act of Wealth Show. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free consultation, call your Chief Financial Advisor Forward Stokes at 7706851777 or visit Active Wealth Investment Advisory Services offered through Brookstone Capital Management LLC. Become a registered investment advisor BCM An active wealth management or independent of each other. Insurance products and services are not offered through BC but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

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