Excel in Retirement

Wall Street has done a great job of marketing us. So much so that they have convinced us that we should sell our Amazon stock to pay our cable bill. Warren Buffett once said, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.” We take his advice to heart. We can’t be invested in the market for ten years if we are using that same bucket of money to create income. So, what do we do?

This brings us to our last point which is our “income bucket.” The worst year for the stock market in the last hundred years was a loss of over 43%. That’s an impactful loss for the portfolio. We can’t control what the markets are doing so we separate out our income bucket from our growth bucket.

The liquid bucket and income bucket are designed to meet our lifestyle needs in retirement. We use the income bucket to cover all of our income needs for ten years. We want this money to be some place that’s protected. No, we don’t want it buried in the backyard losing purchasing power.

We want it to have some growth. Historically, we could use several asset classes to find something that provides interest or dividends. We’re looking for something that will earn four to six percent on average. This enables us to leave our growth bucket alone for ten years like Buffett suggests and capture the returns of the market. 

 Does this philosophy resonate with you? 

Our approach enables us to tell our clients, like I tell Amelia about school, that we don’t have to be nervous about market volatility. When the difficult times come in the market hopefully you’ll remember the team at Clients Excel set your portfolio up with ten years of income. This gives the market time to recover from any potential losses it may face. We do this because our goal is for it to enable you to be worry free in retirement. 

Don’t fall into the trap of being completely in equities or pulled out of the market completely. If we’re all in equities, we are suffering this year. And if we are trying to time the market by selling and buying back in at the right time we’ll likely be disappointed.  

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

We sometimes  become quite loyal to the companies we are invested in. It may be a company we worked for or it may be an investment we inherited from our parents. Oftentimes, people in this scenario have a high concentration of their portfolio in one stock or one industry sector.

The problem with this type of investing is that sometimes companies or sectors falter and this could leave us overexposed and feeling distraught.  Just as if Thriller or Boogie Woogy were to break, Amelia would be disappointed. We don’t want to be overly allocated in one sector in the event that the investment underperforms.

If we’re invested in stocks, it makes sense to have numerous companies, but often a lower cost way that requires less rebalancing is to use index funds.

An example of an index is the S&P 500. The index was created in 1957 and it was designed to represent 500 large US companies. Today there are many different types of indexes to allocate to. 

We can use index funds to allocate to bonds, commodities, real estate, technology, emerging markets, international markets and the list goes on. With index funds we are diversified amongst the companies inside of the index and this prevents us from being over exposed to one company. Also what this does is it allows us to be diversified, thereby not being disappointed if a company underperforms.  

 When the market turns down as it has this year, it's a great time to evaluate how your portfolio has performed under stress and assess whether you need to rebalance to get your holdings in line with your priorities. Perhaps an index fund may be appropriate for you. If you need assistance with rebalancing and accessing whether your allocations are in line with your goals and objectives please call our office at 864.641.7955.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

In my twenties I loved riding and racing bicycles! Most of my races were on a closed circuit that was less than a mile long. The race would go around the closed loop for anywhere from 45 minutes or an hour.

This kind of racing gets fast! My strategy was to stay in the front third of the group of racers and then in the last lap sprint to the finish. 

During that hour leading up to the finish it’s a fight to survive and not crash. Every race was an adrenaline rush, but a few of them stand out as extra memorable. The races I won are enjoyable to reminisce about, but that’s only half of the picture. Unfortunately, the ones I crashed in tend to be stamped in my mind due to the physical pain they induced.

Many of these races were in downtown settings as they naturally had turns and were easy to create a circuit. My friend Phillip and I had driven to downtown Roanoke, Virginia, for a race one summer. I was hanging in the top third of the racers. Everything seemed to be going my way until I made a turn to the right and my pedal scraped the ground. This sent me to the ground with a big thud. 

Normally, if you can get to the wheel change area, you can get back in the race when something like this happens. Fortunately, I wasn’t injured and was able to get back in the race. I ended up  placing eighth in the sprint finish. 

Some people in the market have had it going their way until this year, but the market has made a turn. Some savers have been beaten up a little, but they may be okay if they have enough time to recover their losses. At this point they may feel like they can stay in it and live to see another day. But if they’re taking income off their positions they may be really hurting in this down market.

Later in the year Phillip and I traveled to downtown Salisbury, North Carolina, for a race. It was close to where I grew up so my parents came out to watch. They were standing just beyond the finish line. This race course was like a figure eight where on both ends of the course we navigated a small city block and then there was a wide-open stretch in between each square to race back and forth to. This allowed the race to generate a swift pace because it was essentially a sprint to each corner.

I had just upgraded to a more advanced level of competition and this race was fast! I found myself not meeting my goal of staying in the top third of the riders.  A few laps into the race I was on the outside of the road to the right. We were turning left. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

It was recently revealed that the stock market had its worst first half of the year since 1970 and several analysts are indicating the market still has further to drop. The article linked here states equities “Face a triple whammy of sticky inflation, recession risks, and the threat to corporate profits sinking consumer confidence.”   

We don’t have to believe the adage that nobody could have seen this problem coming. 

Congressman Thomas Massise astutely warned in March of 2020 that “The popular bill to spend $2 trillion dollars and shut down our economy was ‘the biggest mistake in history.’ That bill and subsequent bills that spent another $4 trillion are the reasons we now have shortages and inflation.”

This should be common sense for the Federal Reserve, but Janet Yellen, a former Fed chair, stated she was wrong and didn’t see this coming.

 When the government pulls back its money printing and raises rates it becomes easy to anticipate what will happen. The most recent example to point to is in 2018 the government raised rates, and the market went down over six percent.

In our July 2021 podcast, I warned of the coming inflationary problem we are experiencing and fortunately were able to help many prepare for what is transpiring this year. 

The worst thing we can do when faced with uncertainty is to do nothing. We don’t want to be the deer caught in the oncoming car’s headlights. Like the deer, we need to move and we need to do it quickly. 

When we hear people stating they did not see what is happening coming, I recommend being done with their advice like Amelia was done with Burglar Bill!

Are you positioned the best you can be if things get more dicey in the economy? Let’s find out. Call our office at 864.641.7955 to schedule an appointment. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

Our idea of successful retirement planning is creating a proverbial space suit for our clients that insulates them from twitches in the financial markets that we can’t control.

We create a buffer that allows our clients to know that they have a stable bucket of money available to them for income and expenses. This bucket of money is productively growing and can be drawn down over ten years.

After we have our income and expenses bucket of money taken care of, we use another bucket of money to participate in the stock market. 

If the market has a correction like this year, our client’s have the benefit of having ten years to recover. The market has always come back, but that does not prevent short-term pain. With our first bucket we lessen the pain of market losses. 

When the hard times in the market happen we begin hearing pundits preach about how it’s a unique period or this has never happened before. I normally don’t give that train of thought consideration but I recently read a compelling rationale for this actually being a unique correction. 

Peter Mallouk is an author and CEO for a financial services firm that manages north of $210 billion. He said in a recent interview, “I think it’s a more complicated time than normal,” noting key differences between this year’s market downturn and the past four bear markets.

 “‘These were four very scary bear markets but they all had one thing in common: They all had a single cause,’ Mallouk said, citing the tech bubble, 9/11, the 2008-09 financial crisis and the 2020 coronavirus pandemic.”

“In the past four bear markets, the Federal Reserve ‘was on the investor’s side’ and pumping money into the system, Mallouk said. Now, given high inflation and low unemployment, ‘this is the first bear market in a long time when the Fed is on the opposite side and wants the market to cool down,’ he added.”

Our goal as a company is to insulate our client as much as possible so that they can be less affected when things are haywire. 

If we are only using one or two financial tools for retirement planning we may be disappointed when the hard times in the market come. We strive to be holistic and comprehensive in our approach to allow our clients to have the greatest opportunity at success.  

 Whenever you’re ready to learn more about our process, please give us a call at 864.641.7955. We’d be happy to share with you our unique Excel in Retirement process. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

When I was in college I loved riding road bicycles. One of the first full years riding, I rode about 3,500 miles. The next year I started racing. Some people didn’t have a base of previous mileage on their legs before they raced. 

From the muscle memory perspective,  I felt advantaged that I had done the training the prior year. I raced for two years and was able to win two races. It’s addictive. When we start physical activities, oftentimes we feel sluggish and it’s hard. But once we achieve a level of fitness our physical exertion takes less effort and becomes more enjoyable. 

After I quit racing and started spending more time on career aspirations, I quickly fell out of racing shape. When I got on the bike I felt sluggish and riding took more effort. I was still in relatively good physical fitness shape, but I was riding less. Naturally, it felt more burdensome.

Without having the time to ride 6 or even 7 days a week I wasn’t able to be in “race shape” fitness. I found it hard to ride my bike when I wasn’t in race shape. I robbed myself of the ability to enjoy something I previously had enjoyed because I did not make a mental transition to the next stage in my life.

When helping people plan for retirement, I’ve observed that some folks have issues transitioning to a retirement planning mindset. Some of our readers have been great savers and have accumulated enough money to fund their retirement but you may still be playing the game. You have not transitioned to the next life stage. 

Think about this: The Carolina Panthers are on the 5-yard line and up by 6 points with 30 seconds left in the game. Does Cam Newton throw a 5-yard touchdown? NO! He would kneel. The Panthers have won the game. Why would they keep playing?

When we continue playing the retirement accumulation game it may cause us to take unnecessary risks. The gains of the market over the last 12 years have become addictive like my aspirations for race shape fitness was.

The goal with planning for retirement is to figure out how to take income and distribution off of our accounts and how to make it sustainable. Figuring this out may allow you to have more peace of mind when deciding if now is an appropriate time to retire. 

 If something here has resonated with you, please forward this to a friend who may benefit. As always we would be happy to discuss your particular goals and objectives with you in a private comfortable settings. Call our office at 864.641.7955. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

If you’re watching the news this week you may have seen the wild swings in the market. If one thing is certain it’s that we need to know that when we’re in the market, we may lose money. The market has been generous for over a decade due to easy money policies like ultralow interest rates and government bond buying.

The market tends to be forward looking and price events before they have happened, but the government has done a lousy job forecasting the impact of inflation. Government officials thought inflation would be “transitory” last year, but late in the game they realized it was a problem. Even knowing this, the government was still buying bonds in March which increased the money supply, increasing inflation along with it. 

Stanley Druckenmiller, a seasoned money manager and billionaire, states that the economy has never had a soft landing when inflation has gotten above 4.5%. “It’s a historical fact,” according to him. What Druckenmiller is saying is we are heading for a recession.

But, what’s stopping this recession from happening now? Well, Americans are sitting on their savings which has allowed spending to continue. Once savings are depleted however, the recession will begin in haste. This may take 3 months, 6 months, or it may begin next year.

On Monday, we saw the market take a big hit, because of the higher than expected inflation numbers from the previous Friday. Advisor David Nicholas states, “The market thought inflation peaked. The Fed thought inflation peaked.” They were wrong and the market sold off. It’s further evidence that the government is gasping for answers for how to fix the inflation problem.

For these reasons, when we as advisors comprehensively help folks with planning, we suggest not having 10 years-worth of income in the market. Because remember we build all-weather proof financial plans. We help our clients figure out how to generate their retirement income from a stable bucket that cannot lose value. One that can only go up in value. This allows us to stay in the market and ride out storms like we are having this year. In the long-term, this allows our clients market positions to appreciate over time because the allocations have not affected my emotional sentiment.

If you are concerned about how your account is allocated and how the market may impact you, please call our office at 864.641.7955 or reply here to schedule a complimentary 15-minute call.

 Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

On The Podcast This Week

Doug, our new support staff member, joins David on the podcast this week. Doug and David talk about the ideal time to retire. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

Our business is growing! We’ve grown each year of our existence and we are on track to continue that pattern this year. We are growth minded, client focused, and desire to continue to serve new clients. Like most businesses, we were required to innovate during the COVID pandemic and fortunately, we came out of that situation stronger than we were.

 We are growth minded, client focused, and desire to continue to serve new clients. Like most businesses, we were required to innovate during the COVID pandemic and fortunately, we came out of that situation stronger than we were.

Taxes are on sale right now. We may have talked with you previously about how it may be a good idea to convert your tax-deferred accounts to tax-free Roth accounts. If you believe taxes will be higher in the future than they are today, then this may be a good idea. We are thirty trillion dollars in debt as a country and our unfunded obligations are fatiguing to consider. The writing seems to be on the wall that taxes will have to be much higher than they are today to continue funding our government. 

We’ve been able to skirt this issue in the last decade because America has been able to print more money to buy bonds and equities. But we can’t even do that now, or at least not right now. We printed too much money during the pandemic and it’s what’s causing our inflation issue. In order to tame inflation, the government is now increasing interest rates. Meaning, the government won’t be able to print more money to keep the wheels of industry turning or to make up its gap in funding. This means taxes are at an even higher likelihood of increasing than they otherwise were.

Now you may be scratching your head thinking “but why are taxes on sale?” As of last Friday, the S&P 500 was down 18.14% for the year. If you have $500,000 in your 401k and it’s down 18.14% you now have $409,300. When the market is down there is less to pay taxes on to convert to tax-free. At times, we may be able to create a situation for select clients where they will receive a bonus to enable them to make up some of their losses.

If you’d like to discover more about this, click here to schedule a 15-minute call with me.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

While it looks all but certain that we are heading into an economic recession, it’s important to consider what positive outcomes may be possible during this time. It’s also important to understand that if we do experience a setback due to market losses, we may be able to recover more quickly if we have good investing habits in place. Part of this habit is developed at the outset with clearly defined expectations on how to or how not to react when the market declines.

I recently watched a video from Craft Ventures about its raising of assets for private investors to place their money in. It mentioned that a couple iconic companies such as Google, Amazon, Airbnb, and Paypal were founded during the early 2000s Dot Com market correction. Many of us are very familiar with the success of these companies, regardless of what major obstacles have come their way. These companies are prime examples of how having the right financial habits set in place can set you up for long term success.

Ultimately, what the government is intending to do with increasing interest rates is to bring down the cost for our everyday goods. This hopefully means we’ll soon be paying less for basic necessities like food and gas. The economy tends to slow down during these times which often allows us to gain new perspectives about what’s most important to us in our lives.

For some, this could be physical assets. Others, like myself, hold family as the most important thing in our lives. Regardless of what this is for you, one thing is clear, we need to make sure that what we do have is cared for, protected, and secure.

With a well thought out, all weather proof financial plan in place, the necessity to fret about a downturn in the economy is lessened. Planning allows us to not have to dream about what we want. It allows us to work toward our aspirations, and that’s exactly what we help our clients do each and every day. Whenever you’re ready to talk more about this, please call us at 864.641.7955.

 Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.