The theme this week on the One Minute Retirement Tip is “I Sold All My Stocks In 2020...Now What?!”. 

Today, I’m talking about what your panic in 2020 may be indicating about your temperament as an investor and why you should pay attention to that. 

Sometimes investors panic and sell because they get too caught up in the emotions of the situation, resort to fight or flight thinking, and sell. In that moment, their emotions clouded their good judgement, and it resulted in panic selling. 

But if this has been a pattern for you and you get very anxious and worried each time the stock market drops, with your hand hovering over the panic button, that’s a sign that you may not have the temperament for your current stock portfolio. 

If you were 75% or 80% in stocks at the beginning of 2020, and your had $1 million retirement portfolio, it wouldn't have been unusual to see your portfolio drop to $750,000 or even lower. 

What happens to you when you look up your account value online after a really ugly day in late March 2020, and you see $250,000 of your retirement savings evaporate? 

Do you close your browser and tell yourself it will be ok? Do you lose sleep that night and obsessively check your account multiple times a day, or worse, did you move your entire 401k balance with a few clicks to the cash or stable value fund to stop the bleeding. 

If you get very anxious about seeing your portfolio drop in value, that’s not something to ignore. If you sold in 2020 and also in 2011, 2008, and 2001 when the stock market faltered, then that panic selling is doing some major damage to your long-term results and it should be an indication that you had too much in stocks to begin with. 

The place to start is understanding your tolerance for the ups and downs of the stock market. If you have a lower tolerance for those downs, then you should have less in stocks than someone else in a similar set of circumstances. It doesn’t mean that you should have nothing in stocks, but aligning your portfolio more closely with your tolerance for risk will help you stick with your long-term strategy during troubled times. 

It’s important to remember that by reducing your % in stocks, you’ll also be reducing your long-term growth potential. This is not something to take lightly, as the difference in just a 1 or 2% in annual returns because of a more conservative portfolio equates in a lower portfolio value - often a difference of hundreds of thousands of dollars.

That means if you want to be more conservatively invested with less in stocks, you may need to save a lot more, retire later, or spend less in retirement, just to ensure that your more conservative investment strategy doesn’t derail your retirement. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

The theme this week on the One Minute Retirement Tip is “I Sold All My Stocks In 2020...Now What?!”. I’m helping you make a plan for getting back in the stock market if you cashed out last year or even if you’re underweight in stocks. 

Today, I’m talking about not losing sight of your long-term strategy. Many people who are close to retirement get spooked when big drops in the stock market happen. In my experience, I find that those within 5-10 years of retirement are most susceptible to selling their stock portfolio and moving to cash when the market takes a big drop.

People in their 40s still recognize that they’ve got a ways to go to make up for any losses, and people who are retired are surprisingly more likely to brush it off, which I credit to their experience, especially going through 3 major stock market meltdowns over the last 25 years. 

But what about those of you who are just a few years away from retirement. It’s a critical time and you hope and pray for good portfolio returns during your final working years and in the early years of your retirement. It’s the most dangerous time for a big stock market drop, and it’s the most dangerous time to abandon your long-term investment strategy. 

The key is remembering that even if you retire today, you still need to make your money last for 20-30 more years, and that means sticking to the plan you’ve laid out for yourself. If you’re 60 or 65 years old, you shouldn’t have more than about 60% of your portfolio in stocks in most cases anyways. That will help insulate you from the roller coaster ride of the stock market. 

You should also think through your plan B. If there is a prolonged downturn in the stock market just before or just after retirement, would you be willing to keep working, go back to work, work part time, cut your expenses, build up your cash savings - anything you can do to stop portfolio withdrawals for 12-18 months during a stock market downturn is going to help protect you in retirement. 

One last thing before you go...If you’ve been listening a while and you haven’t yet left a review in Amazon or in Apple Podcasts, could you take just a minute and leave me a quick, honest review? It’s been a while since I plugged reviews on the podcast, and it’s starting to show with some of the more recent reviews tending more toward hate and not love. So if you’re getting value from these tips on retirement, or even if you call me nefarious, like a recent reviewer, I would be very grateful for your honest review.

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

The theme this week on the One Minute Retirement Tip is “I Sold All My Stocks In 2020...Now What?!”. 

Today, I’m talking about the worst part of selling all your stocks. This is something that few people realize, but if you can sear this investing truth into your brain, it will help to convince you never to sell, even when it seems the world is coming to an end. 

Using data compiled from JP Morgan Asset Management, during the 20-year time period from 2000 through 2019, the S&P 500 averaged a 6% annual return. If you missed just the 10 best days, your returns over those 20 years dropped to 2.44% annually. Astonishing! 10 amazing days in the stock market over a 20-year time period were responsible for more than half of the cumulative returns over those 20 years. 

If you missed the best 30 days, your returns were actually -1.95% over that same 20-year time period. 

What’s the takeaway? You must be invested at all times to benefit from the stock market’s growth. If you bail out of the market when times are tough, you’re likely to miss at least some of those best days. They usually occur in the midst of a downturn in stocks, not when times are calm. If you watched the stock market closely in 2008-2009 or in 2020, you know exactly what I mean. 

A 500, 800, or 1200 point drop in the Dow was often followed by a massive gain shortly thereafter. On March 24, 2020, the Dow has it’s best 1-day gain since 1933, surging more than 11% in just one trading day. 

Little did anyone know, but the stock market hit its Covid bottom just a few days prior to that. If you panicked and sold when the stock market was in freefall just days prior, you missed the best day in the stock market in a lifetime. 

And that’s the worst part of selling all of your stocks. It most often means you’ve both locked in your losses, but you miss out on those good days in the stock market when it matters most. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

In 2020, I had a handful of clients who sold some or all of their stocks and moved to bonds or cash after the stock market plunged historically in the spring of 2020. 

A couple of these clients eventually got back on the saddle again, but often what I see is that when you sell, and lock in those losses it can take years to get back in. Just a casual look at the headlines would cause anyone in cash to be skittish about getting back into the stock market - last year’s election, new covid strains popping up, uncertainty about vaccine rollouts, and waiting for the next shoe to drop. 

The hard part about getting back into the stock market after you sell is that it never feels like the right time. Nearly every time, you’re going to have to get back in the stock market before you really start to feel better. If you wait until the negative and scary headlines have stopped convincing you to stay in cash, you could be waiting for years to reinvest. All the while, you’ve abandoned your long-term investment strategy and guaranteeing yourself very low rates of return. 

There’s a lot to deal with psychologically when you’ve sold your stock portfolio. Most people feel stupid about selling, and they’re convinced that as soon as they reinvest back into the stock market, it will crash. There’s a lot of guilt and shame and regret wrapped up in the decision to sell your stocks, and it can be paralyzing to reinvest.

The key is realizing that it doesn’t matter what decisions or mistakes you’ve made in the past.  All that matters is how you move forward from here. In a lot of ways we can’t live our lives looking in the rearview mirror and wishing it were different. All you can do is look ahead through the windshield and make a wiser decision about where you go from here. So don’t let the remorse prolong the problem. You can’t think like that if you’re going to be a successful investor.

So this week on the One Minute Retirement Tip podcast I’m talking about what to do now if you sold your stocks in 2020. You’re sitting on the sidelines kicking yourself because you were convinced that the pandemic was going to wipe out millions of lives along with your portfolio. 

Yet, here we are, a year later and the stock market is at it’s all time highs. So where do you go from here if you got spooked last year and sold all your stocks? Or even if you didn’t sell everything, but you’re underweight stocks and you know you need to increase what you have in stocks, I’ll lay out a strategy to help you get fully invested in this week’s podcast episodes.  

That’s it for today. But before you go, I just want to say thank you so much for listening to the One Minute Retirement Tip Podcast! This podcast is aimed at helping you enjoy a meaningful and financially secure retirement. If you’re getting close to retirement or you recently retired, this podcast is for you. 

I’m your host, Ashley Micciche, and each week, I take a retirement planning topic and I break that down into digestible daily doses of retirement wisdom, so in just a few minutes a day, you’ll be better equipped to live the retirement you envision.

I hope you’ll join me this week, and I look forward to spending a few minutes with you tomorrow! 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

It’s Sunday, which means...It’s recap time! The theme this week on the One Minute Retirement Tip was the biggest money worries for retirees

Here are the top money worries that I covered in each episode this week:

• Outliving your money - by far the biggest money worry - it’s almost universal among all but the wealthiest Americans
• Another top money worry - inflation!
• I also talked about the risks of a big stock market crash, health care costs, and cuts to social security. 

Hopefully after listening to the One Minute Retirement Tip podcast this week, I talked about some worries that you have thought about and addressed these worries in a way that helps you take practical steps now to minimize the risk of these worries coming to fruition in your own situation. 

Tomorrow, we are starting a brand new theme: I Sold All My Stocks In 2020...Now What?!

2020 was an unexpected year for growth for the stock market. Most people stayed invested and rode out the covid stock market crash and subsequent recovery without selling. 

But what if you did sell in 2020? Surely you had a good reason to...a global pandemic that brought the entire global economy to a screeching halt. Then we had civil unrest through the summer and then a contentious election in the fall. 

Just keep your money invested, everything will be fine! 

Not everyone bought into that one, and I occasionally talk with people who are waiting for the next shoe to drop - if it’s not new strains of covid or worries of higher inflation that will bring the stock market back down, it’s bound to be something else. 

Many people who went to cash last year are frozen because the stock market is at it’s all time highs as I record this episode, and its no fun jumping back in at this point. So next week, I’ll talk about practical ways to get back into the stock market for those of you listening who may have gone to cash last year or are at least under invested in stocks at this point. 

And before you go, be sure to check out my YouTube channel - True North Retirement, where I post a new video every Sunday on helping you live a fulfilled and financially secure retirement. 

That’s it for this week! Thanks for listening and I hope you have a blessed Sunday! 

My name is Ashley Micciche and this is the “One Minute Retirement Tip”.

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The theme this week on the One Minute Retirement Tip is the biggest money worries for retirees. 

Today, I’m talking about cuts to social security. If there ever was a classic example of kicking the can down the road for the federal government, I think social security takes the #1 spot. It’s not politically popular to mess with the income of a large voting block of retirees, so our politicians will likely keep kicking that can until we’re in a real crisis situation. 

According to a 2020 article in AARP, the social security trust fund is expected to run out by 2031. That 10 years will be here pretty quickly, and it’s anyone’s guess what will happen. Keep in mind that the current revenue coming into social security from working americans will continue to fund social security payments to retirees, but 100% of those payments won’t be covered. The amount of current benefits that would still be paid out without any reforms to social security is somewhere in the 75% range. 

So if you hear people talking about benefits stopping when the trust fund runs out, just ignore them. It’s not correct. Even with no money in the trust fund, the payroll tax revenues are still pouring in to pay current benefits for retirees. 

Because too many low-income and retired Americans rely on every penny of their social security checks in retirement, I don’t think they’ll mess with current benefits to current retirees, and I wouldn’t be concerned about it, especially in your 50s and 60s. 

I think they’re much more likely to raise taxes or raise the age you can start social security, but worrying about getting the rug pulled out from under you when you’re relying on social security in retirement is not a rational concern in my opinion. The reforms will impact working Americans the most and may result in reforms like someone my age not even having the option to start social security until later, or incorporating means testing which would result in lower social security checks for higher-income retirees. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

The theme this week on the One Minute Retirement Tip is the biggest money worries for retirees. 

Today, I’m talking about another common money worry for retirees and my clients - health care costs. 

Healthcare is one of the biggest expenses for most retirees - ranking right up there with housing and transportation costs, and it comes with an equally big lifetime price tag. 

Fidelity estimates that about 15% of the average retiree's annual expenses will be used for health care-related expenses, including Medicare premiums and out-of-pocket expenses. 

In that same study, Fidelity found that the average retired couple age 65 in 2019 will spend $285,000 on health care expenses in retirement. For single retirees, the estimate is $150,000 for women and $135,000 for men.

How much you spend is obviously going to vary widely depending on where you live, how you’re paying for out-of-pocket expenses and how healthy you are, but in my experience, most of my clients end up spending $5,000-$15,000 per year on healthcare costs. 

Healthcare will likely be a big ticket item in retirement. There isn’t a whole lot of control you have over that. However,  you can still tackle this problem in a practical way: 

1. Don’t bury your head in the sand. Plan for health care costs, calculate your estimated expenses, and make it a part of your retirement spending budget. Knowledge is power. 
2. Secondly, I recommend that you attach a 5-7% inflation rate on health care costs. Despite political rhetoric, I don’t think we’ll be solving the health care cost problem in America anytime soon. Costs only seem to be heading higher, and I think it’s reasonable to expect that in retirement. 

If you’re still a few years away from retirement and you’re eligible for a health savings account or HSA, you can start saving and investing for health care costs now. I’m a big fan of the HSA as it offers tax benefits that no other retirement savings account can match - tax deductible contributions, tax free growth, and tax free withdrawals as long as the money is used to pay for qualified medical expenses.

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

The theme this week on the One Minute Retirement Tip is the biggest money worries for retirees. 

Today, I’m talking about another top money worry for retirees - a big stock market crash. 

A big stock market crash is a major concern for retirees. Especially if that stock market crash happens in the early years of retirement, it can be a big big problem, and some portfolios never recover, and the risk that you’ll run out of money is a lot higher...all because of bad luck and bad timing. 

The answer to why a big stock market crash can be problematic lies in a concept known as sequence of returns risk, or sequence risk. According to an article in Forbes published in 2019, 

“One of the biggest risks for retirees who want to generate their retirement income from a volatile investment portfolio is large negative returns early in retirement. We often call this sequence of returns risk. When you withdraw money from an investment portfolio, negative returns early in retirement can cause the portfolio to fail faster than if those same negative returns instead occurred later in retirement.” 

In other words, your portfolio withdrawals in those early years combined with a large drop in the value of the portfolio, permanently reduce the size of your nest egg and it’s really difficult to recover. 

The key thing to keep in mind here is that the biggest risk to you and your portfolio from a big stock market crash is in the earliest years of retirement. 

It’s important in the early years to have a plan B in case your portfolio drops. I’m a big advocate of 18 months worth of portfolio withdrawals in cash at all times, so you could stop withdrawals altogether in a big market downturn, which tend to last about a year to a year and ½ - hence the 18 months worth of withdrawals recommendation. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

The theme this week on the One Minute Retirement Tip is the biggest money worries for retirees. 

Today, I’m talking about another big money worry for retirees - inflation. Should you worry about inflation? 

I actually dedicated an entire week’s worth of tips to this topic in August 2020, so if you’re really spooked about inflation, go back and listen to episodes 659-665. MY answer about whether or not you should worry about inflation hasn’t changed since last August: 

I don’t think inflation is a concern right now. Although more news articles and headlines have come out recently on higher inflation as it has picked up in recent weeks, along with higher interest rates. 

But while we’re still in recovery mode from Covid, I don’t think inflation is a concern in the near-term. But should you be concerned about it over the span of your retirement? You betcha. The problem of inflation for retirees is that the cost of everything continues to go up, but your income generally cannot keep pace. Increases in social security to account for inflation are pretty dismal, so you’re going to need your investment portfolio to continue to grow to keep up with the rising cost of everything in retirement. 

Inflation is a concern even if we have low or moderate inflation during your retirement years, but it can be devastating if inflation is even in the mid to high single digits. Either your portfolio withdrawals will need to go up, or you’ll have to cut back on your lifestyle and expenses in retirement. Either way, it’s not a good situation. 

Rather than sit there biting your nails, there are a few practical steps you can take to protect yourself and your retirement portfolio against higher inflation: 

The key principle to remember here is that what you invest in must have growth potential, so that your dollars will grow over time to keep up with inflation. Holding cash, savings, money market accounts, CDs, and low-yielding bonds aren’t good protectors against higher inflation, because the growth rate just can’t keep pace with inflation.

That doesn’t mean you shouldn’t own any bonds, CDs, or cash, but owning too much of these assets is problematic. 

In addition to not owning too much in bonds, there are a few types of investments that actually do well when inflation is higher. Having some of your retirement portfolio invested in these areas can help insulate you from the ravages of higher inflation.

The most obvious and well-known protection against inflation is gold and other precious metals. But gold’s ability to protect you against higher inflation is limited, because owning too much gold comes with it’s own set of problems. 

An often overlooked, but in my opinion a better protector against inflation is your stock portfolio. Yes, just by maintaining a meaningful % of stocks in your portfolio, you can protect yourself against inflation, since stock market returns tend to outpace inflation by a wide margin over time. 

TIPS or Treasury Inflation-Protected Securities are US Govt bonds that have an inflation protection component to them are also a great hedge against inflation, and lastly there’s real estate. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

The theme this week on the One Minute Retirement Tip is the biggest money worries for retirees. 

Today, I’m talking about the biggest money worry by far. This one is so common, dare I say it’s universal. I don’t know many people, even most millionaires that I know, who aren’t at least a little concerned about this one.

It’s outliving your money. Running out of money before you run out of years is a major worry. Even for some of my clients whose net worth is well over $1 million, this is a major worry. I find that the worry begins to fade once net worth exceeds about $5 million or $6 million. But that’s just not the case for most of us. 

Worrying about outliving your money is a well-founded worry. When you transition into retirement, there’s an uncertain road ahead. You have your retirement savings, but you don’t actually know if that will be enough. I think most of us don’t want to be a financial burden to our kids when we’re 80 years old, or sit in front of a TV all day for 20+ years in retirement because you can’t afford to do anything else. That’s probably not the retirement you envision. 

You likely want to maintain a similar lifestyle you had while working, without needing to cut back. You probably want to travel more and be able to enjoy time with your family, kids, and grandkids. Go out to restaurants. Enjoy your hobbies. And just maintain your home and keep up with the cost of living. These desires all require money, and you want to be sure you’ll have enough to help you live the lifestyle you envision in retirement. 

The key to reducing this worry is based on 4 factors. If you can get these 4 things right, you’ll be able to mitigate much of the risk of outliving your money. 

These 4 factors are: 

1. pre-retirement savings (i.e. how much you save and accumulate pre-retirement)
2. The age you retire, as retiring too early can have a ripple effect and drain your portfolio value 
3. How your portfolio is invested and your mix of stocks and bonds
4. Your spending in retirement

These 4 factors are all interconnected and have the most influence on whether or not you’re likely to outlive your money. The good news is that unlike many of the other common money worries - a big stock market crash, inflation, rising health care costs - these factors are all very much within your control. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast