The theme this week on the Retirement Quick Tips Podcast is: Nowhere to Hide. It’s been a rough year, with threats of a deepening recession and continued, sticky inflation dominating the minds of most investors. So this week, I’m talking about how you can navigate an economic and investing climate where it seems like there’s nowhere to hide. 

In the intro episode of this week I talked about James Carville’s catchphrase -  “it’s the economy, stupid!” Carville’s catchphrase helped highlight the recession in the election year of 1992, and helped Bill Clinton get elected as president.  Exactly 30 years later, we find ourselves in another recession - this time driven by massive government spending related to Covid ($4.5 trillion worth so far), which has stocked eye-popping inflation, and the need for the Fed to step in to aggressively raise interest rates. 

So today, I want to highlight something that I think will be very important going forward, and that is: It’s all about quality, stupid! 

• Quality will be important for some time to come. I think that gone are the days when speculative traders could make money on meme stocks, cryptocurrency, and unprofitable tech stocks. 
• I also think that in a difficult market, it’s going to be less profitable to be a passive investor and just invest in the overall stock market. I think being more discerning and picky as an investor will become more important. 
• I believe that there’s too many things broken right now with our economy and that the pain could be with us for some time... Interest rates have remained low for too long, and all of this cheap and easy money has created a big inflation problem and bubble in a lot of areas - real estate & stocks - to name a couple. 
• But that doesn't mean that investing in these areas is going to be a waste of time and money. You just have to be more discerning.
• At the core of investing in quality in anything is to pay attention to the underlying fundamentals. When it comes to a stock, you’re buying a piece of that business. So we need to look for some key ingredients that make for good businesses: 
• Consistently profitable
• Strong cash flow
• Durable and predictable
• Healthy and growing dividend 
• Low debt
• Disciplined management 

These are some of the most important things to look for when buying a stock or selecting a mutual fund or ETF - it’s all about quality. Quality should be the bedrock of an investment portfolio at all times, but it’s easy to get greedy and leave the quality investments behind in favor of higher returns. 

But the high flyers of the last decade have begun to come back down to earth, and I think that it’s the quality that will shine through in this difficult market environment, and also when we emerge on the other side. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Nowhere to Hide. It’s been a rough year, with threats of a deepening recession and continued, sticky inflation dominating the minds of most investors. So this week, I’m talking about how you can navigate an economic and investing climate where it seems like there’s nowhere to hide. 

Today, I’m talking about keeping your bond portfolio short-term. This is definitely an area I would pay attention to. If you still have long-term bonds, bond funds, or bond index funds in your portfolio, those have been absolutely hammered this year - many down 10-15% or more. 

As rates continue moving higher, bond prices for longer-dated bonds will continue their downward spiral, so it’s important to shorten maturities on your bond portfolio. Most of my clients have no more than 3-4 years average maturity in their bond portfolios right now. 

The upshot of rising rates is that short term interest rates are the best I’ve seen in my 15 year career as a financial advisor…as I record this podcast, here are some of the short-term rates that are currently out there:

SWVXX – 2.65%

9-month CD – 4%

2-year CD – 4.25%

So if you’re going to make a move, I would move down into shorter rates, where your bond portfolio will be more stable in a rising rate environment, and you’ll be rewarded with higher rates on the short end. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Nowhere to Hide. It’s been a rough year, with threats of a deepening recession and continued, sticky inflation dominating the minds of most investors. So this week, I’m talking about how you can navigate an economic and investing climate where it seems like there’s nowhere to hide. 

Today, I’m talking about how now is an ideal time to be using a dollar cost averaging strategy. 

If you’re investing in your retirement plan at work every paycheck, then you’re already using a dollar cost averaging strategy. 

Dollar cost averaging is simply adding cash to your investment portfolio over a period of time, rather than all at once. 

I’ve been doing this for clients over the last several years, mostly because of all the uncertainty regarding Covid and the choppiness in the markets since then. 

I had a client who recently sold a rental property. She decided that she didn’t want to reinvest it back into real estate so she added it to her investment portfolio. It was about $500,000 that we added to the portfolio earlier this year, and I was certainly not going to throw it all in the deep end of the pool. 

So we implemented a dollar cost averaging strategy. The timing and the amount can vary based on your comfort level. You can also use the current market and economic climate as a guide, but I wouldn’t get too caught up in trying to predict where we’re at there. 

But it’s helpful to know that a bear market (or a downturn of 20% or more in the stock market) when accompanied by a recession, typically lasts 20 months from the market peak to the market bottom. It can last longer or shorter than that, but let’s just use that as our guide. So we’re 9 months into this current bear market that started in January. 

If I were investing that money today, I would recommend that we dollar cost average over a period of 6-12 months. This likely gets us through the worst of the current downturn, and if historical averages hold true, we’ll be fully invested around the time this bear market ends. 

I could be off by a few months, but if the economic climate deteriorates from here and the stock market falls further, the dollar cost averaging strategy will pay off quite well. The worst case scenario is that we’ve already hit bottom but we don’t know it yet, in which case it would have been better to invest everything today to take advantage of the market bottom. 

But since I don’t have a crystal ball, I like the dollar cost averaging strategy a lot better. 

I think generally investing the same amount monthly like clockwork for 6-12 months is a good dollar cost averaging strategy when adding cash to your portfolio. I also like getting a healthy amount working now that things have already deteriorated so much in the stock market. Often, I’ll invest ¼ or ⅓ now and then we’ll dollar cost average the rest over that 6-12 months. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Nowhere to Hide. It’s been a rough year, with threats of a deepening recession and continued, sticky inflation dominating the minds of most investors. It really feels like there’s nowhere to hide and nothing you can do to stop the train wreck. But alas, there is always something you can do. 

And today, I’m actually talking about something you shouldn’t do - abandon your plan. 

Hopefully if you’re getting close to retirement or if you’ve retired in the last few years, you have some type of written plan. Now this doesn’t have to be a massive 80 page financial plan, but it’s important to have some type of plan in place that provides the foundation for making decisions when it comes to your money. 

You should have a target asset allocation or a mix of stocks and bonds, and you don’t want to deviate from that - especially now when fear could be driving you down the wrong path.

You should have a plan for how much cash you’ll keep and how much of your income you’ll save for retirement this year. Dwindling your cash or stopping your savings because of inflation is not part of the solution…it will only make the problem worse in the long term. Aim to reduce your discretionary spending to keep cash savings healthy, and keep those retirement plan contributions in place. If you’re still working, those contributions are buying more shares of the funds you’re invested in, because their values are lower. 

Your plan may call for some adjustments. Maybe you delay retirement this year because of the economy or the fact that your portfolio is now 15 or 20% lower than it was last year. It’s ok to tweak the plan and you should as circumstances change. 

But never let fear or a negative outlook about the future cause you to abandon your investment strategy or the plan you hopefully have in place that governs your big picture decisions about retirement. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Nowhere to Hide. It’s been a rough year, with threats of a deepening recession and continued, sticky inflation dominating the minds of most investors. So this week, I’m talking about how you can navigate an economic and investing climate where it seems like there’s nowhere to hide. 

Today’s topic is sell this, not that. 

Now is the ideal time to review your investment holdings and rid yourself of the investments that are of poor quality. 

I have a client who owns a mutual fund in a taxable account. He’s owned this mutual fund for over a decade, and it has a sizable taxable gain. If he sells it, he’s going to pay the taxes on that gain, which he’s not too excited about. 

Even though the fund has made him money, it’s a terrible investment with lackluster future prospects. The fees are high, the management style of the fund is questionable and inconsistent with this client’s goals, and it consistently underperforms its peers. The only saving grace here is that at least I didn’t pick this fund for him, and it was something he bought along time ago. 

So we’ve been gradually selling some of this fund over the last couple years to spread out the taxes. 2022 is a great opportunity for us to sell the rest and move on. The fund is beat up this year, so his gains and tax consequences have been significantly reduced. 

Once we sell it, we can reinvest it in a better quality investment with better future growth prospects, lower fees, etc. 

The point here is that while it’s very unwise to sell your stock portfolio in a down market and hide everything under the mattress, you don’t want to confuse the “don’t sell” advice and apply that to everything you own in your portfolio. Markets like this expose the garbage that was previously hiding in your portfolio, so it’s a good time to sell and move to quality investments when you can start smelling the trash. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

Welcome to a new week here on the Retirement Quick Tips podcast! 

I’m your host Ashley Micciche, co-owner of True North Retirement Advisors, an independent financial advisory practice managing $340 million in client assets. I’m a Chartered Retirement Planning Counselor, and I started this podcast because I love helping people just like you gain clarity and make a plan for the retirement you envision. 

The theme this week on the podcast is: Nowhere To Hide

In the presidential election season of 1992, campaign advisor to Bill Clinton, James Carville, famously advised the future president and his campaign staff to focus on the economy every chance they got. At that time, the US was in a recession, and highlighting that fact and connecting the dots back to then-president George HW Bush, became a winning strategy. 

Carville’s catchphrase -  it’s the economy, stupid! - became famous and exactly 30 years later, we find ourselves in another recession - this time driven by massive government spending related to Covid ($4.5 trillion worth so far), which has stocked eye-popping inflation, and the need for the Fed to step in to aggressively raise interest rates. 

Inflation is bad for your wallet, but higher interest rates to tame inflation make the problem worse, at least in the short-term. Higher interest rates are already making anything requiring borrowing more expensive, so if you’re in the market for a car or a house, it just got a lot more expensive - car loans are now over 5%, and mortgage rates are over 6%. If you have credit card debt, rates are sky high - above 20% for many borrowers. 

And of course, there’s the impact on the stock market from all this as well. As I record this podcast, the stock market is down 22% this year. If you’re concentrated in tech stocks like too many investors are, you’re doing even worse than that, with the tech-heavy NASDAQ down over 30% now for the year. 

And the problem is likely to worsen. In August, Federal Reserve Chairman Jerome Powelll, acknowledged the unavoidable reality of raising interest rates to combat inflation, saying: “While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

What he means is that the consequences of a recession are coming. Raising interest rates is done to slow the economy and tame inflation. There’s a price tag for doing that, and a further slowing economy means that job losses are on the horizon. The job market is still strong and unemployment is near historically low levels, but jobs are a lagging indicator, meaning that the jobs situation gets worse after the economy sours. 

A few weeks ago, I talked about some important ways you can protect your finances in this gloomy economic climate. Things like aggressively reducing your debt, avoiding any unnecessary purchases to preserve cash, and delaying retirement are all important ways you can protect yourself in 2022.  

So this week, I’ll focus specifically on what you can do as an investor when it seems like there’s nowhere to hide in this deteriorating economic and investment climate. 

That’s it for today. Thanks for listening! Come on back tomorrow when I’ll talk about how now is the ideal time to trim some fat in your investment portfolio. 

My name is Ashley Micciche...and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal financ

It’s Sunday, which means...it’s recap time here on the Retirement Quick Tips Podcast

This week the theme was: How Much Is Enough? It’s based on a parable I read on the wall at a Jimmy John’s, of all places. 

In case you missed any episodes, here’s what I covered this week…

• The Minimum Income You Need To Be Happy
• Finding The Sweet Spot With Timing Your Retirement
• More For The Sake Of More
• How Much For A Comfortable Retirement
• Back Of The Envelope Calculation For How Much Is Enough

The most important takeaway from this week is: We want to be careful about falling into the trap of pursuing more for the sake of more without giving much thought to what we might be sacrificing by working longer than we need to. A well-executed plan for retirement provides you with enough assets and income to live a comfortable and financially secure retirement with some guardrails built in to account for the unexpected future that is inevitable. 

Tomorrow I’m starting a brand new weekly theme: Nowhere to hide. 2022 has been a dismal year for investors. As I record this podcast, the S&P 500 is down 18% for the year, the bond market is down about 13% this year, and even traditional safe havens like gold and cash savings are losing value due to the rising dollar and inflation, respectively. 

So what’s an investor to do. Now that the 3rd quarter just wrapped up and we have about 3 more months left in the year, I’ll talk about where we go from here, and what’s an investor to do, especially if you’re just a few years away from retirement. 

Thank you so much for listening this week! If you’re enjoying the podcast, chances are someone else you know who is getting close to retirement could also benefit from checking it out, so please share the show with a friend, a neighbor, your sister, or your boss. Just go to your favorite podcasting app, hit the share icon, then text or email the show link to someone you know who is eyeing retirement. 

Thanks for sharing the love and spreading the word. I hope you have a blessed Sunday. My name is Ashley Micciche, this is the Retirement Quick Tips Podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: How Much Is Enough?

Yesterday I talked about a Fidelity study that gives you some benchmarks on figuring out for yourself how much is enough for retirement. 

Today, I’m talking about a back of the envelope calculation that you can run to help you determine how much is enough. I wouldn’t rely on this to make important irreversible decisions about retirement. More careful planning is required, but this will at least get you started. 

I’m just going to run through this pretty quickly in today’s episode, but if you want to go more in depth in running this calculation, I’ve linked to an article in Kiplinger than will help you do that in today’s show notes, which is episode 1448.

Link to article: https://www.kiplinger.com/retirement/605117/find-out-in-5-minutes-if-you-have-enough-to-retire 

The first step is you’ll need to figure out your monthly expenses. If you don’t know or don’t track what you spend on a monthly basis on the basics like gas, groceries, utilities, your Netflix subscription, eating out, clothes, etc. You’ll want to track that for at least 3 months to start to get an average. 

There are expenses that will go away or change in retirement, and some that will go up. If you’re like me, you probably would stop getting your nails done every 3 weeks at $40 a pop, but I’m definitely still getting my hair done and I’d probably spend more on travel once I’m retired. 

So track those expenses and come up with a figure. You’ll need to add taxes too, so in most cases you’ll want to tack on another 20-25% a month for taxes.  

A trick offered in the Kiplinger article is to “Look at two years of annual statements from your bank accounts. Divide the total debits by 24. That’s it. This is an accurate portrayal of your monthly expenses. This should encompass everything except what you pay for before it hits your bank account (taxes, health insurance premiums, group life insurance, etc.).”

Ok, now that we know your spending in retirement, we need to look at sources of income from social security, pensions, rental income, and other income streams that will be flowing in during retirement. Don’t count your portfolio withdrawals here, that will come next.

Once you know your outflows (expenses) and your inflows (income), then you can calculate the gap that will need to be filled with your portfolio withdrawals. 

Let’s say your expected expenses in retirement including taxes are $6,000 a month. Your income from social security and other sources will be $3,700 a month, which leave $2,300 a month that needs to be covered by portfolio withdrawals.

Multiply this by 12 and you have $27,600 that you’ll need to take out of your investments in your first year of retirement.

From there you can use the 4% rule to calculate if this is sustainable. Again this is not perfect, but it provides a good starting place and a good estimate. 

$27,600 of annual income is 4% of a $690,000 portfolio. So in this case, if you have around $700,000 or more in assets, you probably have enough to retire. 

As a back of the envelope calculation, it gets the job done and helps you determine if you’re on track and have enough to make work optional or just simply retire. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: How Much Is Enough?

Today, I’m talking in more concrete terms about how much you need for a comfortable retirement. 

According to a Fidelity study, you should aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.

So if you get to retirement age with somewhere between 8-10x your household income saved for retirement, that is ideal according to Fidelity research. 

Of course other factors influence this and may require less or more than this amount. If you’ll have significant sources of income like a pension or rental income, then you may need much less than this amount. 

Fidelity study limitations - But it's important to remember that the total dollar amount isn't the end goal. It's all about the income that your assets can generate with some additional cushion for when you need to buy a new car, or a new roof, or if you need to pay for long-term care. 

If you read the footnotes of the Fidelity study, you see that they came up with the 10x figure by age 67, by analyzing the household consumption data for working individuals age 50 to 65 from Consumer Expenditure Survey, US Bureau of Labor Statistics. 

The average income replacement target of 45% is based on the objective of maintaining a similar lifestyle to before retirement. It assumes your other income comes from social security. 

Social security replaces anywhere from 25% to 40% of your income for most people. So this leaves you with a total income replacement of your income in retirement of abou70-85% whicic is ideal for maintaining lifestyle.

And I think that’s the key. Rather than getting too focused on that final number or dollar amount of assets you need to retire, it’s best to look at how much is enough from an income and lifestyle based benchmark to help you see if you are on track to retire. And that’s what we’ll look closer at tomorrow. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: How Much Is Enough?

Today, I’m talking about a common trap that many of us fall into that goes back to the parable I discussed on Monday, which gets to the heart of the fruitlessness of pursuing more and wasting time and energy in the pursuit of more, while at the same time sacrificing what might be more important - namely time freedom, relationships with your spouse, loved ones, and friends - all in pursuit of the almighty dollar. 

Many people fall into the trap of pursuing more for the sake of more. Not necessarily because they are greedy, but often I find because they don’t really put much thought into how pursuing less could bring more meaning and happiness than pursuing more. 

This is always a tricky subject for me - both personally and in conversations with clients. The ultimate goal, in my humble opinion is to live a meaningful and well-balanced life. But we often get out of balance, sometimes miserably out of balance and stay in that state for years. It ends up ruining our happiness, because life is too crazy and we’ve taken on too much.

This doesn’t just have to be about money. It can be about loading up our days with - yes, working more or unnecessarily, but also activities and saying yes to too many things that don’t actually make our lives any better. 

I’ve become better about this over the years, but before I was married, my maiden name was Wilson, and my initials were AW. My now husband used to joke that AW stood for always working. 

I took it as a compliment at the time, but always working as your nickname, is probably an indicator of a problem. In my case, I would work a lot, sometimes on the weekend, and would stress about working more, all in the effort to get ahead and meet arbitrary growth goals that I had for myself in growing my income and my financial advisory practice. 

I was less happy then, then I am now, and I think one of the main reasons why is because I have a more balanced life where I can spend time with my kids, I have time for friends and hobbies I enjoy like golf, and the laundry doesn’t pile up too bad. 

The problem is that having money in the world today (or at any time in history actually) also means you have power, more pleasure, and higher status, and we make the mistake of believing that these things will make us happier. As a result, many people pursue money and more without realizing that they’re running in the hamster wheel to pursue something that isn’t actually going to make them any happier. 

So the goal is to make thoughtful decisions about saving, working, and investing with a firm grasp of why you’re doing what you’re doing. And knowing that the pursuit of money, power, pleasure, status, etc. is futile. 

I have gradually learned and accepted this as truth in my own life, and I see it firsthand in the lives of the people I know and my own clients, that avoiding the common trap of accumulating more, working longer, or making other sacrifices in the name of accumulating above and beyond what is necessary for a comfortable retirement simply isn’t worth the trade off. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance