Announcer:
Welcome to Roadmap to Retirement, the Radio Show, with David Bezar, Karen Bezar, and Bret Elam from Thrive Financial Services who have been featured on Fox, ABC, NBC, the Wall Street Journal and more. Saving for retirement is a great start, but it’s what you do with this money that really matters. What’s your strategy to reduce taxes, generate income in retirement, reduce your risk, and get even more from Social Security? This is where you can count on straightforward and objective advice about how you can make your money go a lot further in retirement. Roadmap to Retirement, the Radio Show. Now here are your hosts, David, Karen, and Bret along with Joe Krause.

Joe Krause:
Recently TheStreet described this year as the equivalent of a root canal, and we’re only halfway through it. The challenges in the second half of this year could have even greater consequences for our economy, the stock market, your investments, and your plans to retire. Welcome in everyone to Roadmap to Retirement, the Radio Show here on talk radio 1210 WPHT. David and Karen Bezar will be with us for the full hour. Bret Elam is off today. David, I say good morning to you. Karen, good morning to you. Welcome [crosstalk 00:01:21].

David Bezar:
Good morning, Joe.

Karen Bezar:
Hello, hello.

David Bezar:
Welcome to our audience. This is going to be a great show today, Joe. We’re really lined up on deck for the second half of 2020. It could bring even more fireworks than we’ve seen. I mean it could be one of the most contentious and divisive presidential elections we’ve ever seen in history, more stimulus that could send taxes through the roof, continued record low interest rates could even go lower, and a whole bunch more. So how you play your cards right now could mean the difference between achieving your dreams in retirement or really unfortunately never being able to afford to retire. So coming up on our show today, four daunting challenges for the second half of 2020 that could have significant consequences for your nest egg including the following things: why you could pick up the tab for the economic stimulus, and I got to promise it ain’t going to be cheap; what the result of the presidential election could mean for the stock market; plus why the record low interest rates are really, really punishing good savers. Karen’s going to get started on why more stimulus could most likely lead to higher taxes in the future.

Karen Bezar:
Yes. Again, so when we’re working hard, saving our money, we are all believing that fairy tale, the conventional wisdom that claims you’re going to have lower taxes when you retire, but we’ve kind of figuring out that’s wishful thinking right now at best and taxes could actually be much higher. We have this new stimulus package that has helped millions of Americans get through this current economic crisis, which is great, but it could also have unintended consequences, and that’s something that a lot of people aren’t talking about. There could be collateral damage.

Karen Bezar:
Where is this money coming from? Somebody has to pay for it, and we’re assuming it’s going to come from higher taxes. Taxes aren’t going to go lower in the future. Just coincidentally, we got a lot of Baby Boomers coming up that are going to retire soon or in retirement. They’re going to have to start tapping those IRAs and those 401(k)s for the first time to pay for retirement, and these higher taxes could literally decimate their retirement savings. Remember, I’ve said before, if you think you need a million dollars to retirement comfortably, you’re going to need a million dollars of cash flow, you better have more than a million dollars saved. Right now it’s so much more important to understand that. So if we’re talking about another stimulus coming in, and there’s no end in sight what’s going on, I mean you really need to start preparing now.

Karen Bezar:
This is a recent article I’m going to read from CNBC, “The wealthier and people who are retiring are preparing for tax increases, working with their accountants to give away money or shift their income to avoid some of the impact of higher taxes. Accountants and tax lawyers say they’re seeing a surge in calls and emails from wealthy clients asking about actions they can take now to avoid tax hikes in 2020 and beyond.” We’re seeing that now. That’s something we’ve always planned on. We’re having a lot of people watch our webinars, and they’re asking the same questions, right David?

David Bezar:
Absolutely. It said in Forbes, taxes could actually double in the next 10 years to pay for the ballooning national debt, swollen Social Security, Medicare rolls, etc. A lot of people, they go, “David, what do you mean double?” Well, CNBC last week actually said that your marginal tax rate could jump as much as 46% when the Trump tax cuts expire in 2025. I mean that’s gargantuan. Most people don’t know that the current tax rules, the tax reform rules that the Trump administration put in, they sunset in 2025, and with the presidential election, who knows? Maybe an act of Congress even changes that and shortens that. So that’s a big deal.

David Bezar:
Here’s the issue, right? The idea for the people who are listening today is you got to use tax planning to lower your taxes. Most Americans are just simply preparing and filing their taxes every year with their accountant, but when you do that, what you’re really just doing is reporting history. If you want to save a lot of money in taxes during your retirement years, you need to look forward not backwards. This is called tax planning, and this is how we help our clients keep their hard-earned money in their pocket versus Uncle Sam. Tax planning is really critical if you want legally pay fewer taxes in retirement. That’s why Roth conversions, Karen, are really, really important.

Karen Bezar:
Depending on your situation, it might be beneficial right now to convert your 401(k) or traditional IRA to a Roth or simply save a portion of your retirement savings in a Roth. As a reminder, traditional IRAs allow tax-free contributions, but when you withdraw that money, you have to pay taxes. When you turn 72 now, you are forced, remember required minimum distributions except for this year, to withdraw this money. So a Roth doesn’t allow tax-free contributions, but you pay zero tax when you withdraw money in retirement. Then you don’t have to worry about required minimum distribution.

Karen Bezar:
So as a reminder, Roth IRAs, the money you put in a Roth IRA gets to grow, remember, listen to this, completely tax free and withdrawals aren’t taxed in retirement. Yes, you’ve already paid your income tax before the money goes in. Traditional IRA withdrawals do get taxed, which leaves you to deal with the burden during your golden years. Furthermore, Roth IRAs are the only or one of the most, best tax advantage retirement savings plans that you can have. Again, those required minimum distributions, when we sit down with people, they’re sometimes shocked what their amount’s going to be, and then they’re also enlightened to the fact that that number goes up on an annual basis. It doesn’t stay the same. Then if include your pensions and, yes, Social Security can even get federally taxed so that’s-

David Bezar:
That’s that ticking tax bomb that we always are talking about, and that’s why we want to accelerate. Karen, continue. But it’s ticking. Again, with the stimulus and everything else, it’s ticking faster.

Joe Krause:
Mm-hmm (affirmative).

Karen Bezar:
Right, exactly. I like this quote from the Motley Fool. It says, “Don’t let the tax tail wag the investing dog.” There are two types of 401(k) style plans. So even the government has given us an option now recently for… In the earlier days you weren’t allowed to invest in… a Roth IRA was not an option.

David Bezar:
It didn’t exist.

Karen Bezar:
It didn’t.

David Bezar:
That was the whole thing.

Karen Bezar:
Right, they didn’t exist. But now you do have the option. When you’re working and you’re putting money in a 401(k), you have the option to actually invest in a Roth IRA. Remember, it’s so important. So Roth conversion might be a great option for at least a portion of your money that you’ve saved in traditional IRA or 401(k). CNBC actually said, “Now is the time to shovel everything you can into a Roth IRA.” “It’s a slam dunk. You should almost always do a Roth conversion whenever you can afford to.” This is quoted by Ed Slott. He is a certified public accountant, for those of you listening, that we all like what he had to say as well. So you need to have a Roth IRA, as a reminder out there, for at least five years before you can take the money out of it tax free, and that’s any growth money that you might have.

David Bezar:
It’s interesting. So a lot of people may a little bit get confused between Roth contribution, Roth conversion.

Joe Krause:
I’d say very confused.

David Bezar:
What it is, Joe, is that a lot of times people don’t realize… The only way you can invest in a Roth is if you have earned income and you have a limit of $7,000. But when you convert, meaning you take the traditional IRA money and now pay the taxes and put it into the Roth, there’s no limitation. That’s a conversion not a contribution. I want to make sure everybody knows that because that gives you a great opportunity right now to do some special things.

Karen Bezar:
Right, I agree. Have you been a good saver? Unfortunately, our system punishes people like you, and you could get clobbered by taxes when you retire; taxes when you withdraw money from your IRA, 401(k), or other tax deferred accounts; taxes on your investment income; and taxes on your Social Security benefit. To add insult to injury, the current stimulus package that’s being used to save our economy could trigger even higher taxes on these things. So your retirement savings could end up being a fraction of what they are today unless you take steps to defend yourself before you retire.

Karen Bezar:
We want to show you how you could dramatically reduce your taxes with a free retirement tax analysis. In this free analysis you’ll learn the defensive tax planning strategies that could help you save tens of thousands if not hundreds of thousands of dollars with your IRA, 401(k), Social Security benefits, investment income and more. Now, you might expect to pay thousands of dollars for a customized analysis like this, but we’re going to cover 100% of the cost just for the listeners who call us today. If you saved at least $250,000, call to schedule this free analysis now, 215-987-2430. Remember, call to get the analysis now. Our number again, 215-987-2430.

Joe Krause:
All right, good stuff, Karen and a great opening segment here on Talk Radio 1210, WPHT. David, I really want to appeal to the listening audience and to those individuals that are in my bucket being smart enough to know what we don’t know. You have to take advantage and call 215-987-2430 and get that complementary review. It’s so important, and the time to do it is right now. We’ll get to our first commercial break. When we come back on Roadmap to Retirement, the Radio Show, we’ll share what a second wave of the pandemic could mean for the economy and your nest egg.

Joe Krause:
No doubt about it this has been a very difficult, difficult year for everyone, and we’re only halfway through 2020. Unfortunately, we could face even greater challenges on the backside of 2020 with an even greater stock market volatility, higher taxes, and continued low interest rates. David, this is going to be a challenge to say it mildly for 2020.

David Bezar:
Yeah. Look, I apologize that we’re talking about this and bringing up things, but it’s current. It’s not like the past. I know people are tired of it and don’t want to hear any more about it, but that potential complacency is what could set people up for failure in retirement. Again, today we’re talking about the four daunting challenges of the second half of 2020 that could really have those consequences. What I want to talk about, and gosh, I, too, Karen, I mean the whole team, we’re just so tired of hearing about COVID-19, but cases are surging again, and they’re threatening more lockdowns. This past week, GDP reports came down into a historic decline over 32%, never seen before, never heard about before, but those lockdowns really caused that to happen.

David Bezar:
Where are we headed next? Will we get a vaccine? How will this change the economy moving forward? Just in July 13 of ’20, Barron’s said, “With market volatility picking up lately, it might seem like a good idea to hedge your portfolio against another downturn.” Stock valuations are really high according to pretty much everybody’s measures, and the market may be very overly optimistic about an economic recovery and rebound in corporate profits next year especially based on the recent wave of coronavirus cases that are continuing to rise. I mean it’s moved all over the country.

David Bezar:
So you have to ask yourself, has the stock market lost its mind? I mean the contentious presidential election is right around the bend; a major health pandemic continuing the roil the globe and keep economic growth under severe pressure; major companies telling investors this earning season that thing are far from great and they may be even getting worse. Yet, in face of all this negativity, brutal reality, the good old stock market has galloped like a one-year-old stud back into pre-COVID-19 pandemic highs this week. Again, we’ve had some pretty earnings from a few of the leaders out there: the Amazons, the Facebooks, Google didn’t do awesome. Again, just because of that, we’re seeing it drive the market up further, further, further. Again, I don’t want to be the bearer of bad news, don’t want to hang the Sword of Damocles over people’s heads, but could there be a revisitation of the March 20 market lows, and holy smokes, are you prepared for it?

Karen Bezar:
It’s so important to understand your risk tolerance. I think people having short-term memory loss. A couple months ago it was the end of the world as far as finances were concerned. So it’s critical. You need to know your risk tolerance. When it comes to retirement, some people say “risk” is a four-letter word. Taking on too much risk can decimate your retirement savings. Remember that feeling back in February, March went crazy, when everything was going crazy. So when you’re formulating your retirement game plan, it’s critical that you look at your risk tolerance, and you need to know exactly where you stand. How much can you afford to lose? What’s the worst-case scenario? You have to plan. According to U.S. News, they say, “Make sure your risk level is appropriate. If you can’t sleep at night when your portfolio loses value, you’re probably taking on too much risk with your retirement investments.” We say we invest for our clients, we use the SWAN method, right, David? The sleep-well-at-night method. So now’s a great time to assess your risk. When the stock market is doing well, people forget about that, they forget about their pain that they had a few months ago, but when there’s a shake up and a downturn, people will look at their overall investments.

David Bezar:
I mean measuring and determining your risk tolerance is really the first step that you got to take before choosing what investments make sense for your financial goals. Once you know how much risk and market risk you can actually tolerate, you can now start to choose those suitable investments that match up with your risk profile. Financial planners often categorize risk profiles as conservative, moderate, or aggressive, but truthfully, you got to even get much more granular than that. Risk tolerance involves a feature known as risk capacity which identifies the amount of risk that you can afford to take. Don’t take chances. Don’t do it haphazardly. Really go through an analysis whether it’s on your own, whether it’s with your existing financial advisor, or if you need a lift from us to help you with that. It’s something obviously we’re happy to do. Risk profiling has evolved from advisors applying intuition, and that’s how I think a lot of people have operated. It’s kind of gut: “How does it feel?” You have to go and develop a much, much stronger strategy.

Karen Bezar:
Here’s a few steps that you might want to think about. Number one, risk need. It’s perhaps the easiest to mention to consider since it is at the heart of any financial game plan given the client’s current assets, future cash flows expected due to earnings, savings or other sources. So you want to look at your risk need, your future goals. Risk taking ability, this is so important. This is the second dimension to think about is, what is your ability to take risk? Simply put, if you cannot weather market turns without suffering serious disruptions to your goals, then you have little capacity for taking risk.

Karen Bezar:
But this is something again, David said, we were happy to analyze and discuss with you. Behavioral lost tolerance is the third dimension of risk profiling and is probably… what research says is part of the six elements, lost tolerance should be assessed independently. Risk tolerance, risk preference, financial knowledge, investing experience, your perception of risk. It’s all important to understand this. Again, if you’re concerned about this and you want to speak to somebody, we’re here to help you. The Motley Fool has three things that you should have prepared for retirement is you want to stockpile emergency cash, which we agree, you want your portfolio to be diversified, and you have to have cash ready to invest, which we discussed before on this show.

David Bezar:
Again, some times these market corrections are actually wonderful opportunities. We’ll talk a little bit more about that as the show goes on. I would say as these things start to happen, and again, it’s a distinct possibility, can’t say it’s a probability, but with everything that we’ve shared thus far in the show, there’s a good chance presidential election, COVID, economy not matching up with stock market returns, earnings coming down, there’s a distinct possibility that we see some type of a correction. If we do, relax. Corrections and crashes are inevitable. Understand that the corrections do create a sense of opportunity. Maybe a Roth conversion might be the thing that makes sense during a market correction. If we look back to late February, March, a little bit of April, we did a lot of Roth conversions for our clients.

David Bezar:
As a matter of fact, Joe, we’re going to be doing a webinar in a couple of weeks about that specific topic. So if you’re the type of person who takes action in time of crisis or uncertainty, or are you more likely freeze in a panic, which a lot of people do? Today we’re talking about four daunting challenges for the second half of 2020 that could really have significant consequences for your nest egg. It’s critical you get in front of these challenges before they actually happen.

David Bezar:
So if you have questions about how you could shield your retirement savings from higher taxes, how you could protect your nest egg from a potential impact of the presidential election, or your options to generate income with record low interest rates, again, if you’re that type of person who thinks you should take action, then here’s what I would really suggest that you do. Let’s have a conversation. It’s something we always talk about on the show. Let’s have a conversation. We’re happy to share strategies we’ve used with other people who are basically in the same boat and often ask those questions, keeping you up at night that can be resolved with just a simple phone call. So give us a call at 215-987-2430. Remember, we’re always here to help. If you end up getting our voice mail… Now, we’ve got a team that staffs the phones right after this show. You can give us a call, 215-987-2430. If you get the message, just leave it and we’ll get back to you within 48 hours, and we’d be happy to have that conversation.

Joe Krause:
Real quick, that upcoming Roth conversion webinar is a must-see. That’s a must.

David Bezar:
It was actually requested. We did a big one. A lot of people emailed us, called us and said, “Hey, we want to get a little more granular.”

Joe Krause:
Good stuff. As we go into the commercial break, this presidential election could have significant consequences for anyone who is retired or on the doorstep of retiring. We’ll tell you why after the break.

Joe Krause:
Fasten your seat belts and place your tray tables in the upright position. We could be in for a lot more turbulence in the second half of this year including one of the most contentious and divisive presidential elections in history; more economic stimulus that could send your taxes through the roof; plus continued record low interest rates and more. So the financial decisions you make now could have devastating financial consequences for decades to come. Welcome back, everyone, to Roadmap to Retirement, the Radio Show. Along with David Bezar and Karen Bezar, I’m Joe Krause. Bret Elam off this weekend. He’ll be back with us one week from today.

David Bezar:
We’ve been talking about the four daunting challenges for the second half of 2020 that could really have some consequences to your retirement nest egg. So what we’re going to talk about… Again, no one’s got a crystal ball, but we got to bring it into the equation. We’re going to talk about in this segment is why this presidential election could really trigger even greater stock market volatility and what you could do today to protect yourself. So this upcoming election could really send your retirement portfolio tumbling. Karen’s going to cover a little bit about the details related to that.

Karen Bezar:
It’s crazy times out there, right? So we already have the global market outlook. It’s kind of hazy. In light of the COVID-19 pandemic, we don’t know what’s going on worldwide. Now we have the upcoming presidential election which adds another layer of uncertainty for sure. We believe that for the balance of the year politics will have growing impact on investment decisions. I know for a fact that we have people that are concerned about what’s going on globally. Also who’s going to become president of the United States, and how’s that going to affect my retirement? There’s so much news out there on so many topics it actually might be possible to forget that there’s an election coming in just a few months. There’s been a surprising number of studies out there on what elections mean for the market.

Karen Bezar:
So here’s what you can expect this November. We’ve got Biden and we’ve got Trump saying this and that. It’s definitely one of the key drivers in people’s thoughts is, where are taxes going to go when I’m retired? So it can definitely have implications that we’re concerned about. The uncertainty of an election can also imply a higher risk in certain stock prices especially those with greater impact for electoral outcomes, and this can cause greater volatility in the weeks prior to election day. As we see now, we’ve had enough volatility. Do we need more craziness going on in the market? But you need to prepare for this, right, David?

David Bezar:
Again, one of the things we do have is we’ve got some history behind things. A lot of research has been done on the 2016 election that showed the markets focused primarily on tax policies. Now, we got a lot of different things this time around, but what we’re talking about here on today’s show is the markets and the uncertainty of taxes. There’s different news medias out there depending on who… Again, you don’t know who to trust. You don’t know who to listen to. People tend to listen to who they favor, but that may not be the best path. I mean one of the news media outlooks say Biden’s blue wave tax hikes could batter the stock market. The S&P could take a 10.5% hit from the current levels. Another news media says it’s the uncertainty surrounding the elections that may present the greater risk regardless of the outcome, and uncertainty was a more pronounced feature in financial markets around this time four years ago. Trump versus Biden, stock market will pick the winner. This is an interesting statistic. The stock market has nearly perfect track record of the prediction of who the winner will be in the presidential election. That’s crazy. Now, it’s not what I’m going to necessarily use, but the S&P 500 has indicated the winner 87% of the time and every time since 1984. Holy smokes, right?

Joe Krause:
Wow.

David Bezar:
According to senior market strategist at one of the Boston-based broker dealers, they said that when the S&P 500 Index has been higher the three months before the election, the incumbent party usually wins. While when stocks were lower, the incumbent party usually lost. So you got to think about it. I mean no one expect Hillary Clinton to lose back in 2016. No one except the stock market, that is. The Dow had a nine-day losing streak directly ahead of the election while Trump’s infrastructure play, what he was talking about, had the markets up 14 days in a row since the party change happened at the White House. So it’s just a crazy element. Again, what we try to do is we try to look at everything to help our clients understand what direction to take.

Karen Bezar:
So I guess we need to start watching the S&P 500 more closely than we have. Here’s a quote by Forbes is so they looked at how the stock market performed under every US president since Truman, and the results will surprise you. Biden versus Trump, “Some speculate that the future of the republic hinges on the outcome of the next election. But for smart investors, it really doesn’t matter who wins.” With the 2020 election less than four months away, some investors, they’re scared about the pros and cons of Trump versus Biden presidency. So they’re thinking, could a Democratic sweep almost certainly mean a rollback of Trump’s massive corporate tax cuts? It’s negative for stocks but additional economic stimulus which the market apparently loves despite deficit implications because it’s going up and down, and stability on China trades would be a big positive. Again, you can’t understand what’s going on every day, but we can definitely help you out with that and give you a little guidance if you’re not following what’s going on, and you’re not following the S&P 500 as deeply as these companies are.

David Bezar:
Bull markets and bear markets, they come and go. It’s more to do with business cycle than actually whether the president or the presidential election is ultimately going to impact what happens to the stock market. Here’s really just the bottom line. You got to understand how to diversify and rebalance your portfolio now before it’s too late.

David Bezar:
We get the opportunity to visit with tons and tons and tons of people on an annual basis. People who are a couple years out from retirement or have entered retirement, one of the surprising things that we hear and we see is that most of them have not touched their portfolios for five to 10 years. That philosophy is an awesome one if you’ve picked really good stocks, bonds, mutual funds, ETFs and held them for a long time. But when it comes time to retirement, this is the time where you may be forced through required minimum distributions to start selling those. So if you’re not properly diversified and you’re selling during a declining market, those are shares you’re never going to recover because you’ve had to sell them to get your required minimum distribution out. So diversification is just not a kind of a one-time task. I mean once you have your target mix, you need to keep it on track by periodically doing checkups and rebalancing. If you don’t rebalance, a good run in a stock could actually leave your portfolio with a risk level that is inconsistent with what your goal and strategy actually is.

Karen Bezar:
Again, things are changing quickly in today’s world, so you have to be quick to adapt. If you aren’t updating your plan, you’re definitely setting yourself up for a major fail. It’s something that we structure portfolios around clients. You have to look at your long-term goals, your short-term goals, but that doesn’t mean that you should hold on and ride things out. Like David said, when we have met with some people they haven’t changed anything. Because you know what? When you’re working and money’s going into your account, it’s not that big a deal. But when you are in retirement and that income is no longer there, this is something that you really, really, really need to pay attention to. If that’s something that you would like to a complementary consultation on, we will be glad to sit with you, help you with that, give you some information. Remember, like David said earlier, we’re going to have market downturns, so is this now a good time to do those Roth conversions that we talked about?

David Bezar:
It is. Again, this is something that may be contradictory or controversial for your advisor or even your own mindset as a do-it-yourselfer. In February or March of this year when the markets took those declines, we went into action. This is where we stepped up, talked to our clients, got them educated, and told them, “This is a time to do the Roth. Let’s sell those stocks at that lower price point.” That means less taxes in today’s current tax climate. If you’re a believer that taxes are going up in the future when the market comes down, it’s absolutely the right time to sell because you’re going to pay lower taxes. You can take those stocks that are left over, put them right back in a Roth IRA account. They’re going to go back up like we always know that they do. This time it’s going to be tax free for you.

Karen Bezar:
Today we’re talking about the four daunting challenges for the second half of 2020 that could have significant consequences for your nest egg. Most people don’t understand this, but taxes are lower now they’ve ever been in 40 years, and many tax experts and economists agree that taxes are going to go up. This could happen just as you retire which could dramatically reduce the amount of money in your IRA, 401(k), all that money that you saved in retirement.

Karen Bezar:
But here’s some good news for you. If you take advantage of simple tax planning strategies now, you could dramatically reduce or potentially eliminate your taxes in retirement. I want to show you how you could save this with a retirement tax analysis. In this free analysis, you’ll learn the defensive tax planning strategies that could help you save tens of thousands if not hundreds of thousands of dollars with your IRA, 401(k), investment income and more. If you’ve saved at least $250,000, call to schedule this free analysis now at 215-987-2430. You know what saving money on taxes could mean for you? It could help you do more for your kids and grandkids. It could help you buy that vacation home you’ve always dreamed about or enjoy more traveling. Learn how much money in taxes you could save. Call us and leave a message right now at 215-987-2430. That’s 215-987-2430.

Joe Krause:
All right, good stuff, Karen. Next is zero percent interest rates are punishing good savers. It forces you to take more risk than you want to take at this stage of the game. When we come back after the commercial break, we’ll share some attractive options to generate income you may have overlooked. Back in a moment.

Joe Krause:
Recently TheStreet described this year as the equivalent of a root canal, and we’re only halfway through it. The challenges in the second half of this year could have even greater consequences for our economy and the stock market as well as your investments and plans to retirement. Welcome back, everyone, to Roadmap to Retirement, the Radio Show here on Talk Radio 1210 WPHT.

David Bezar:
Again, today we’re talking about those four daunting challenges for the second half of ’20. Again, I think we’ve shared enough that people are starting to see that it could be a significant consequence for your nest egg. So in our final segment what I’m going to be talking a little bit, and Karen will share as well, is how to beat record low interest rates on CDs and savings accounts.

David Bezar:
I mean that’s one of the things we hear from a lot of people walking through the door here at Thrive. They said, “I’ve got these CDs that are maturing. They were paying somewhere between 1% and 2.5% when I got them, but the renewal rates are less than 1%.” What can we do? How can turn your savings and investments into an income workhorse? The thing about it is interest rates have been at a record low for a long time now, but things just kind of got worse. According to Barron’s, “Fed sees rates near zero all the way through 2022, and vows to do nothing needed to support the economy.” So they’re keeping these rates at record lows to try to instigate things. Again, 32% decline in the GDP that was reported this week, historic decline. Never would have ever… But this pandemic has had smashing effect on what’s been going on.

Karen Bezar:
This is from CNBC: “With interest rates near zero, preserving retirement income gets risky. In the wake of an emergency rate cut by the Federal Reserve to combat the economic effects of the COVID-19 outbreak, saving rates, certificates of deposits, and Treasury yields are all down significantly. For savers in need of reliable retirement income through their golden years, it’s probably going to get worse before it gets better. Interest rates were already low in the aftermath of the Great Recession, and they will likely head lower in the months ago.” That’s scary.

David Bezar:
I mean the real focus for a future retiree or a current retiree is that you need to create as many different sources of income as possible. These sources include Social Security; if you’re lucky to have one, a pension; making sure that the stocks that you own are paying good quality dividends; that bonds are producing good yield. If you happen to have real estate investments, great to have it in a positive cash flow type scenario. There’s things like certain types of annuities out there that can help people grow. So retirees are often having several sources of income, and you should have them in a way where you have a written retirement income plan that takes a look at all of those streams of money including the Social Security and that these streams of income are adjusted for inflation. That’s one of the reports that we do. It’s called the MoneyTree Report. What we do with the MoneyTree Report is we take all of those buckets of income and see if they are going to meet your monthly expenses adjusted for taxes and inflation. If not, what we want to try to find is ways that we can enhance the income stream to meet the monthly expenses.

Karen Bezar:
Again, that’s something we do take a look at. This is from Barron’s. It says, “Annuities have long gotten a bad rap. Retirement experts now say savers should consider basic options for guaranteed income. Financial planners have long counseled…” The old school way was stocks and bonds, stocks and bonds. “That advice now looks like it’s in need of a refresh because bond yields, they’ve been bumping around historical lows for around a decade, and stocks provide strong growth during the longest bull markets in US history, which ended earlier this year. Now, the stocks have rebounded nicely, but due for a period of below average returns, the bonds have not and this is causing a shortfall. So annuities could be a savior. Many researchers say they provide stable income for retirees even if the markets plummet and as life spans lengthen. The Secure Act passed late last year means that annuities should be available in more 401(k) accounts.” We have seen that starting this year. That’s an option.

David Bezar:
I’m here’s the thing, folks. I could tell you here at Thrive, we’re not in love with annuities by any stretch, but we’ve done our research. We’ve done our homework. One of the conclusions that we’ve come to is very specific type of annuities, whether you’re an average saver or whether you’ve been an extreme saver and have accumulated significant assets, we have found a way to use certain annuities, and I really want to emphasize the word “certain annuities,” ones that have either no or very, very, very low fees, ones that have liquidity built into them so that if there’s an opportunity that the stock market comes down and you want to get out of the annuity and go back into the stock market, you can do that. They have actually had very significant returns. They’re more like bonds than they are stocks. But historically some of these annuities we’re talking about have averaged 5.5% return over the past 10 years with absolutely no risk to the principal balance of the portfolio based on interest rates or the stock market.

David Bezar:
So it’s really kind of interesting. Again, the perception that most people have about annuities, I get it and I completely understand why you would avoid them. But when you look at these certain types of annuities and the features that they bring, most people say to me, “If you told me those features but didn’t use the word “annuity,” I would have jumped in a heartbeat.” So we want to help people get educated that could a certain type of annuity be a fit in your overall portfolio either to enhance your income or bring some protection to that overall portfolio. These interest rates are low. I mean according to Barron’s the Fed anticipates interest rates are going to be at the zero percent number, almost zero percent number through 2022. So this makes generating income in retirement virtually impossible from traditional sources like CDs and savings accounts. This is forcing many families to take much more risk by investing in the stock market at levels that maybe they shouldn’t be investing at. It could be a very dangerous game if you’re nearing or in that retirement space.

David Bezar:
Here’s the good news. There are some surprisingly attractive options for generating additional income that you may not even know exist. I want to show you exactly what these options are with our retirement income analysis. It doesn’t cost you a dime. There’s no obligation to do business with us. So if you’re the kind of person who needs to make your money work for you but you can’t afford to lose a dime, this might be right up your alley. If you’ve saved at $250,000 for retirement, call us at 215-987-2430. We’ve got a handful of slots on a weekly basis for these appointments. Obviously, you can guess that they fill up very quickly so don’t wait. Give us a call at 215-987-2430.

Joe Krause:
That’s going to do it for this week’s edition of Roadmap to Retirement, the Radio Show. We thank you so much for listening. On behalf of David Bezar, Karen Bezar and Bret Elam, I’m Joe Krause. See you next week, everybody.

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