The theme this week on the Retirement Quick Tips Podcast is: The New 3.3% Rule For Retirement.

Today, I’m explaining the concept of the 4% rule to create a foundation for what we’ll be talking about for the rest of this week, which is new research out from Morningstar that recommends the 4% rule be lowered to 3.3% withdrawal amount for retirement. 

The 4% Rule is a short-hand rule of thumb that helps you calculate how much of your portfolio you can safely withdraw in retirement without running out of money.

If you apply the 4% rule to your retirement savings, you would take your portfolio value and multiply that amount by 4%...so if you get to retirement with $1 million saved, and multiply that $1million by 4%, you get $40,000. So according to the 4% rule, you can withdraw $40,000 from your portfolio in year 1 of retirement, then increase that withdrawal amount for inflation each year without worrying too much about running out of money.

4% is considered a safe withdrawal rate that has been around for over 25 years and is backed by some well-documented research. 

An important question to consider is: Can you rely on the 4% rule? Is this actually a reliable rule of thumb for planning for your retirement? 

The short answer is that it does work well...sometimes. The long answer is that retirement is too  complex to rely on a rule of thumb - taxes, inflation, your returns in retirement vary widely from year to year, and you may be unlucky enough to retire in the midst of a big stock market downturn - these are all circumstances that will make the 4% rule less useful or blow it out of the water all together. 

And that’s part of the reason for the downward revision to the rule, that I’ll talk more about tomorrow. 

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

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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: The New 3.3% Rule For Retirement

The 4% Rule is a short-hand rule of thumb that helps you calculate how much of your portfolio you can safely withdraw in retirement without running out of money.

It was a concept originally developed by financial advisor Bill Bergen over 25 years ago, and has been widely used since as a quick and easy way to ensure your portfolio withdrawals in retirement remain sustainable. The fact that the 4% rule has held up over a quarter century now as a way to determine a safe withdrawal rate, shows that even though this rule has some flaws it is still relevant and useful today.

However, new research from Morningstar suggests that the 4% rule for portfolio withdrawals in retirement should be adjusted down to 3.3%. 

So this week on the podcast, I’ll talk about why Morningstar is suggesting a lower withdrawal rate, the new assumptions that are built into this new recommendation, in what circumstances the 4% rule will still work, and why flexibility is key to ensuring you don’t outlive your retirement savings…no matter which withdrawal rate you go with.

I hope what I have to share with you this week will help you make smart and thoughtful decisions with your retirement. And while I am careful to not lead you astray, personal finance is not an exact science. There is no one-size-fits-all solution for everyone, so I encourage you to disregard anything I say that may not be helpful for you, and to consult your own financial, tax, and legal advisors regarding your own individual situation. 

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

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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

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

This week the theme was: 5 Behaviors of Emotional Investors That Lead To Ruin

In case you missed any episodes, here’s what we covered this week:

The most important takeaway from this week is…by knowing where biases in our thinking and how we’re wired can influence (often in some pretty damaging ways) how we make decisions, we’ll be better equipped to make more rational and less emotionally-driven decisions. 

Tomorrow, come on back, because we’re starting a brand new theme: The new 3.3% Rule for retirement. 4% of your portfolio has long been the rule-of-thumb standard withdrawal rate for retirees, but new research from Morningstar lowers that withdrawal rate to 3.3% and next week, I’ll explain why.

Thank you so much for listening this week! If this podcast is valuable for you (and hopefully it is otherwise you wouldn’t be listening), please share the show with a friend, a neighbor, your brother, or co-worker who is getting close to retirement. 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.

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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

The theme this week on the Retirement Quick Tips Podcast is: 5 Behaviors of Emotional Investors That Lead To Ruin

Today, I’m talking about Loss Aversion.

Essentially what this means is that the pain of loss is felt more strongly than gains. In fact, the 2 don’t even compare. For most of us, the pain of losing $1,000 far worse than the happiness we feel if we gain $1,000.

In more precise terms, research shows that the pain of loss is twice as bad as the happiness we feel when we gain something by the same amount.

The applications to money are far-reaching. Many of us are too scared of losing and want to avoid the pain of loss, so we might keep too much in cash, or not be invested in stocks as much as we should.

Where loss aversion is really problematic is when we are in the midst of a downturn in the stock market. When you looked at your January investment account statement and you saw that you were down 8% or that you lost $100,000 in just one month, you probably didn’t like it. Or how about some of these headlines from last month: 

• Barron’s - The Stock Market Just Suffered Its Worst Week Since 2020
• Market Watch - Is it time to bail out of the stock market? Wild price swings are shaking the resolve of some investors.
• NY Times - Stock Markets Off to Worst Start Since 2016 as Fed Fights Inflation
• At least 7 signs show how the stock market is breaking down - also from MarketWatch

If your left eye just started twitching, congratulations, you’re human, and you too can fall victim to loss aversion if you let these headlines spook you into abandoning your long-term investment strategy. 

Think about this too…there was probably a month within the last couple of years where you had a gain of the same amount - 8% or $100,000 in just one month. Your reaction, I’m guessing was much more muted…”hmmm, that’s nice”

And this strong aversion to loss and feeling the pain can cause us to sell our investments at the worst possible time and abandon our long-term financial plan.

So what can you do about it? Well, one common sense, easy way you can avoid falling victim to loss aversion is simply to look at your investments less often. The more often you look, the more likely you are to see a loss in a given day, week, or month. But if you only look at your investments every quarter or even once a year, those results smooth out and normalize. Some people can handle looking every day or week…others would be better off just looking every quarter or just twice a year, so if your temperament skews more toward loss aversion, then make sure you own quality investments and look as infrequently as you can stand it, while still keeping reasonable tabs on your investments. 

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

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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

The theme this week on the Retirement Quick Tips Podcast is: 5 Behaviors of Emotional Investors That Lead To Ruin

Today, I’m talking about decision fatigue. Decision fatigue refers to the deteriorating quality of decisions that you make when you’re in a situation where you must make a lot of different decisions. When you are burdened with too many decisions, it’s just so exhausting, that you can’t stay sharp. So you start making some pretty terrible decisions, just because you’re not as sharp.

The key to overcoming decision fatigue is to just decide on what you can, when you can and stop putting so much pressure on yourself to figure it all out. 

I see this happen a lot with social security. It can be a very overwhelming decision, especially when you’re married, and there’s too many options about when to start your benefits, spousal benefits, how social security will be taxed, and how that decision about social security will impact your finances for the rest of your life. It’s a complex decision that requires an understanding of how that decision will impact everything else in retirement. 

And then what do we do? Make a knee jerk decision because our head is about to explode, or we decide to defer the decision until later down the road, which may not be a good decision either. 

Sometimes the weight of making decisions on your will, your estate, your social security, medical insurance options, your retirement is overwhelming. And it's tiring. That’s when you know you’ve crossed the danger zone. 

The worst thing you can do when there’s too many decisions that are confusing and frustrating you is to press on, because your fatigue can lead you astray into some poor decisions. 

If you’re truly overwhelmed and don’t know where to begin with an important decision, seek some help. Often, the cure for decision fatigue is just to step away. For an hour, a day, a week, or a month. Sometimes you feel pressured to make a decision right then and there, but unless you have the presence of mind to realize that you’re not capable of making a smart decision in the moment, you may make a decision that’s fatigued. 

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

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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

The theme this week on the Retirement Quick Tips Podcast is: 5 Behaviors of Emotional Investors That Lead To Ruin

Today, I’m talking about Overconfidence Bias, which is mostly about thinking we’re better at something than we actually are. 

When I was 6 years old, I thought I was going to be in the NBA…

Overconfidence when it comes to investing shouldn’t always be conflated with arrogance. I find that in reality there are very few arrogant investors, at least when it comes to their arrogance in their investment acumen. That’s some of what overconfidence bias isn’t about, but not all of it.

Overconfidence has two components: overconfidence in the quality of your information, and your ability to act on that information at the right time for maximum gain. Studies show that overconfident traders trade more frequently and fail to appropriately diversify their portfolios. - https://www.investopedia.com/articles/investing/050813/4-behavioral-biases-and-how-avoid-them.asp 

Holding big stock positions and betting it all on just a single stock or a handful of stocks would be an example of overconfidence bias

How to overcome overconfidence bias: It goes back to the 2 components I just mentioned:

1. Overconfidence in the quality of your information. No matter the source, no matter their authority or intelligence, they’re often just as wrong and clueless as you, so always remember that. 
2. Second is your ability to act on that information at the right time for maximum gain. You may be right occasionally and time things perfectly in life, but if you really pay attention and if you’re honest with yourself, you get it wrong all the time. So do I. I think the cure for this one is one of the hardest things any of us can do, which is become more humble, and much of which comes with age. Gandhi once said: “It is unwise to be too sure of one’s own wisdom”

I love this quote: the opposite of wisdom is to be sure of your own wisdom. 

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

---------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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

The theme this week on the Retirement Quick Tips Podcast is: 5 Behaviors of Emotional Investors That Lead To Ruin

Today, I’m talking about confirmation bias.

Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that affirms one's prior beliefs or hypotheses. We are all guilty of this and this particular bias in how we filter information is also part of what’s ripping us apart as a country right now. If you are conservative and can’t bear to watch anything on CNN or if you’re liberal and hate Fox News, you’re guilty of confirmation bias.

Social media actually makes this much worse, making it harder for us to see alternative viewpoints, because the algorithms serve us up with news and information that it thinks we’ll like and click on.

When you fall victim to confirmation bias with your finances, you only see the intersection of the facts or data that already confirm your bias. It’s like making a decision with blinders on. You ignore what doesn’t already fit into your narrative, keeping you closed off to all the facts, and often we miss really important facts that should be weighed when making a decision. 

For example, let’s say you love tech stocks. You love technology companies so much that they make up your entire retirement portfolio. Instead of objectively looking at that situation and realizing what’s inherently wrong with owning companies from one sector, all you seek out online articles and research that confirm that technology will only go up from here. Or 3 additional tech stocks you need to add to your portfolio this year. 

By not expanding your research and searching for reasons to NOT own tech stocks, all you’re doing is digging yourself deeper and deeper into the hole. 

Succumbing to confirmation bias only serves to further entrench us in our skewed and bias beliefs. And when we don’t make a decision with all relevant information, we’re doing ourselves a major disservice. 

So here’s my challenge to you today. Research a topic from the opposite point of view from your own. Try to pick a topic where you’re already entrenched in your beliefs. Bonus points if the topic is about money. Research it from the opposite point of view, like why not to buy tech stocks. Spend 15-20 minutes researching the topic from the other viewpoint, looking for strong arguments in favor of that viewpoint. Pretend that you need to convince someone else to believe this point of view and research it like you were preparing for a debate. Practicing open-mindedness is uncomfortable, but building this skill is incredibly valuable in all aspects of life in helping you make well-informed and more well-rounded decisions, not just with your finances, but with everything else as well. 

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

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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

The theme this week on the Retirement Quick Tips Podcast is: 5 Behaviors of Emotional Investors That Lead To Ruin

Today, I’m talking about how to avoid the most destructive behavioral finance problem among investors: recency bias.

According to a white paper on this topic from Charles Schwab: “Recency bias is the tendency to place too much emphasis on experiences that are freshest in your memory—even if they are not the most relevant or reliable. Would you want to go for a long ocean swim after watching Jaws? Probably not, even though the actual risk of being attacked by a shark is infinitesimally small.”

I wonder if Hawaii tourism drops substantially after Shark Week on the Discovery channel? 

So why is recency bias so destructive? 

• It’s largely responsible for why investors buy high and sell low…when the stock market is at the top, you can’t find a worried investor anywhere. Everybody is buying. When the stock market has bottomed out, everyone feels hopeless and many have thrown in the towel.
• Recency bias leads us to just look at what’s happening today to make decisions that will impact you for the next several decades. If you think I’m exaggerating here, think again. 
• According to JP Morgan Asset Management, the average investor only made a 2.9% annual return over the last 20 years - only slightly better than inflation, compared to the S&P 500, which made 7.5% per year. Why? Recency bias. Investors let the current trends and what they’re seeing in the news drive them to buy at the top and sell at the bottom, and their dismal returns are proof of that.

So what can you do to prevent recency bias from influencing your decisions? Actually you can do a lot of things. The best advice I can give here is not to act when you’re feeling scared, fearful, or worried that this time is different. It’s probably not, so wait a week…

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

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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: 5 Behaviors of Emotional Investors That Lead To Ruin

Behavioral finance has been around for a while now and it combines the principles of psychology with investor behavior. Not only is it interesting to understand how our biases, past experiences, and just how we’re wired impacts our decision making as investors, but it’s practically important too, because it can help you better understand your natural inclinations can lead you to some destructive decisions with your money. 

As Dan Akroyd’s character Ray Zalinsky said to Chris Farley in Tommy Boy after he went a little heavy on the pine tree air freshener: 

“Good, you've pinpointed it, now the next step is washin' it out.”

And that’s exactly the point of this week’s tips…to help you pinpoint the flaws in the natural way we think and behave, so we can act in our own best interests even when it seems to go against our natural ways of thinking.

So this week on the podcast, I’ll talk about several behavioral biases that influence our behaviors…how you can recognize those biases and how to act in a way that doesn’t let those biases lead you to make bad decisions with your money.

I hope what I have to share with you this week will help you make smart and thoughtful decisions with your retirement. And while I am careful to not lead you astray, personal finance is not an exact science. There is no one-size-fits-all solution for everyone, so I encourage you to disregard anything I say that may not be helpful for you, and to consult your own financial, tax, and legal advisors regarding your own individual situation. 

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

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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

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

This week the theme was: Why You Shouldn’t Retire in 2022

In case you missed any episodes, here’s what we covered this week:

The most important takeaway from this week is…

Tomorrow, come on back, because we’re starting a brand new theme: 5 Behaviors of Emotional Investors That Will Lead To Ruin

Thank you so much for listening this week! If this podcast is valuable for you (and hopefully it is otherwise you wouldn’t be listening), please share the show with a friend, a neighbor, your brother, or co-worker who is getting close to retirement. 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.

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

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