*Originally Aired on 3/2/2024

 

Welcome to roadmap to retirement, the radio show with David Bazar, Karen Bazar and Bret Elam from Thrive financial services. 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 money from Social Security. This is where you can count on straightforward and objective advice about how you can potentially make your money go further and retirement. This is roadmap to retirement the radio show. Now here are your hosts, David Caron and Bret along with Joe Kraus.

 

Joe Krause 

And welcome everyone to the month of March and welcome in to roadmap to retirement the radio show, we’re glad you’re joining us. And we’ve got an interesting and a great show planned and outlined for you today in a new voice Bret coming and joining us on the radio program today. Mike descends Oh, and I’ll let you do all of the honors and the introduction. But I just want to put his name out for the listening audience. And a quick reminder to our listening audience here on roadmap to retirement to radio show. As we go into the commercial breaks today, you’re going to hear about three upcoming workshops, new locations, I believe that we’re going to put out there and I want people to get registered pretty quickly. Yeah, absolutely.

 

Bret Elam 

There’s a lot going on out there in today’s economy in today’s world. Before we dive into that, just want to introduce our Thrive army who’ve been listening to us now for I guess it’s almost been six and a half years. So it’s crazy how long this show has been here. But David and Karen and I brought a recent addition Mr. Michael DiCenso. here who is our Chief Operating Officer and what he does for our company and for our clients is help us fight risk, which is going to be the theme of today’s show, as well. So I want to reduce the Thrive army to Mr. Mike DiCenso. And just Mike, I’m gonna volley to you and feel free to say a couple words. Maybe Mike’s gonna be coming to us from the deep south down in Texas. So we’re, we’re integrating them into Philadelphia culture. He is he is a fan of Cheesesteak. So we’ve already pulled that together. That’s good stuff. Yes,

 

 

these cheese steaks are amazing. Yeah, definitely coming to thrive here to help to grow the business to help our clients manage those clients better deliver everything from the standpoint of procedural and substantive prudence, helping to put into place all the process and structures that we can actually manage our clients better deliver a better result to them, and help them to have financial success.

 

Joe Krause 

Wow, great stuff. Amen. And welcome to what I think is one of the most incredible companies in the country, my own personal opinion in what they do for people, Mike is just unbelievable, as you are quickly finding out. And that’s the role of Thrive, financial services, 360 degrees. Bret,

 

Bret Elam 

that’s a you know, it’s funny, it’s only been a couple of weeks ago, just talking about the climate of what’s going on out there. And again, we talked about at the end of the year, the stock market for 2024 had priced in six rate reductions from the government. And we talked about last month, that when the inflation numbers came out for January, they’re expecting a point 1% increase. And we saw point five, that was a shock. And what just happened was we just hit a point four and back to back months. And now you’re starting to see some of the economist and people out there, the economy is not cooling off with what they’ve done. But again, it still leaves the effects out there have lead leading and lagging indicators of don’t have that false sense of security, because the bottom line of what you’re seeing with a lot of those numbers are rates probably need to sustain. And there’s actually talks now of a potentially going up from here, again, the unprecedented. The unprecedented, I guess, economy of increasing interest rates at the same time of printing money is is the new normal of what has become. And we’re seeing that things are not getting back on track. And now there’s even talks of the United States going from again last summer, we are a triple A rated country downgraded to a double A rated country and with the path that we’re heading on right now, there’s talks over the summer that we could be downgraded yet again, to a single A rated country, which is hard to imagine, but the reason for it is there’s no plan to get back on track. So for today’s show, we’re gonna be talking about de risking your retirement again, managing the risk of income, sustainability, market volatility and taxes for a more confident retirement, we’ll probably talk about a couple more risks as well. So it’s important to identify and take steps to mitigate the major risks that can impact a person financially in retirement. Again, while there’s numerous types of risks to be concerned about this program is really going to dive deep on really three and we’ll touch on some others as well. is helping ensure your funds can sustain your potential long horizon of 30 years, we’re not going to be talking about that risk. But that’s a risk in itself right there, just longevity. without running out of money is vital. The ups and downs of the stock market can influence your sustainability of your retirement funds, potentially affecting your ability to maintain your desired lifestyle during those golden years. And then taxes, you know that we’re gonna be talking about taxes on today’s show, we talked about it a lot can play a critical role in determining how much money you’ll have to live on once you retire. But managing tax implications, market fluctuations, and in common sustainability prudently, can better understand can give you a better understanding of your retirement, and most importantly, give you a confident, post career life.

 

 

A great job there, Bret, I mean, if you take a look out there, there are numerous types of risks that we have to manage as individuals, and that we manage for you as our clients. You have market risk, interest rate risk, tax risk, inflation risk, longevity risk goes on and on enough return risk. You get a diversification risk, geopolitical risks like we’re seeing around the world, and health risk, we have to live healthy lives in order to to live out our life successfully. And so in this, you know, there’s a number of questions to ask yourself, as you look at your retirement planning. And so, one question is, have you developed a comprehensive retirement income plan that considers all these potential risks? How do you plan to manage those risks? Especially the risk of running out of income during your retirement years? And that’s the longevity risk? What strategies do you have in place to help navigate market fluctuations, and help protect your retirement savings from loss? And there we go with with market risk. Have you assessed your true risk tolerance, and evaluated if your current investment approach aligns with retirement goals? And this is something we see in some of our clients that come in is from the standpoint of they don’t have those aligned and they’re misaligned. And so we help them to manage that better. How do you plan to optimize your retirement income, to help ensure that it can support your desired lifestyle? Whatever that lifestyle may be? Some people in retirement want to travel, want to spend more money? Others want to be more frugal, and live a lesser lifestyle that maybe they did during their working years? And when you take a look at retirement, it is your retirement years of living? And how do you want to live those? Do you understand the tax consequences of Social Security benefits and other income sources during retirement? How do you plan to balance the need for income with the desire to leave a legacy for your loved ones? And that’s if you want to leave a legacy. There are some people out there to have a thought process that they’re going to use their money, and their kids can take care of themselves and they’re not going to pass it along. So there are different mindsets out there. What steps are you taking to minimize potential tax increases that may arise due to changes in government policies and federal debt? If we take right now, the federal debt situation is running rampant. We’re at about 165% debt to GDP right now. We’re coming up on another budget crisis. And with this, there needs to be management of this debt. And it’s the same for individuals. You cannot go into retirement and try to manage your debt in retirement. You need to try to get to retirement debt free. As we look out there right now there’s about $17.1 trillion dollars of household debt. And it’s growing by about 300 to 500 billion per quarter. And this is what has been fueling this even firemen in this economy, the government debt and the household debt. This is a debt fueled economy.

 

Joe Krause 

roadmap to retirement to radio show we’ll get started after our first commercial break. And back here on roadmap to retirement to radio show with Bret Elam and the new CEO of Thrive financial services. Mike this Enzo Bret, over to you, sir. Yes.

 

Bret Elam 

On today’s show. We’re excited talking about de risking your retirement and Mike just did a phenomenal job of the questions that we’re going to cover in today’s show. And as we go through today’s show, my encouragement is if you hear something you’d like to learn a little bit more about how it may pertain to your personal situation. My encouragement is to text. You can text the word plan the 215-999-3272. Again, it’s 215-999-3272. If you text a word plan, we’re more than happy to set up a time to chat with you and talk about your personal situation as it pertains to all the information that we’re going through today. So again, welcome to today’s program. Hold, we divide, diving into the topic of de risking your retirement, an area far too many ppreciate. Too many people appreciate only when it’s too late and the problems become unavoidable. Again, our focus will be on the three areas of risk and retirement again, insufficient income, stock market volatility and talking about the impact of taxes. But don’t worry, we won’t dwell on the problems. Everyone always talks about problems. Michael and I were just talking about this this week. The problem is nobody ever comes up with solutions. And we’re going to be talking about that on today’s show. And as the strategies and those practical steps to effectively manage these risks. So again, we’re here to help empower you most importantly, with the knowledge to help protect that dream retirement. So again, sit back, grab some coffee, take some notes, so we some great information that we drive through these conversations. So again, at our practice, we assist a diverse range of clients, from business owners, to teachers, doctors, engineers, government workers, factory workers, etc, etc. No matter their profession, they often come to us with the same questions as I sound like you, will my savings be sufficient to support my desired lifestyle? Is there too much risk in my portfolio? will I face running out of money? It’s probably those three coupled with Hey, what are my taxes going to look like in retirement? We hear it day in, day out, day in, day out. And again, if you find yourself worried about these and other retirement related concerns, again, the encouragement is to text the word plan to 215-999-3272. Again, 215-999-3272. So we’re going to jump into talking about managing risk brings me back a little bit to my high school days. I think it’s the book that I’m pretty sure they still read it in high school. I know that the curriculum has changed quite a bit good old Ernest Hemingway and the old man in the sea. I mean, a classic. I think that’s a book that’s still out there today. But I bet you’re if I said the old man in the sea, for those of you familiar with that novel, you remember Santiago and his epic battle with that massive Marlin out at sea. It was such an incredible story. But one of the key takeaways from the tale is how we handle risk in life. Santiago’s journey shows us the importance of being wiser wisdom, with taking chances as we grow older. You know, it’s that wisdom that comes with age, and experience. Now, while most of us won’t face the kind of challenges that Santiago went through, we’ll certainly encounter our fair share of financial challenges, especially when it comes to retirement. But you know, what, we can learn from Santiago’s experience and be more cautious about the risks we take. Some can be avoided, and simply aren’t worth taking. But unfortunately, some risks will be present no matter what we do. But we can be as prepared as we can to take the steps to manage those. And here’s the thing when it comes to retirement, there are three specific risks that we’re going to jump into now that you should consider handling. But before you do that, let’s identify these three risks. And those are again, insufficient income, stock market volatility, and the impact of taxes. So let’s talk about the detail on each one of those.

 

 

Yes, so we take a look at at not having enough for retirement or running out of money during retirement. This is the longevity risk. And when you look at the longevity risk. This is where people come into our office. And one of the biggest questions they have is, will our money last us the rest of our lives? Will we be financially secure. And that’s the key for people is having that security, it’s a peace of mind, peace of mind. So with this, throughout our working years, we receive a paycheck. And that paycheck brings us and reassures us that we have an income to live off of. Well, in retirement, that paycheck goes away. So we have to create the paycheck that will sustain us through our retirement years. And that paycheck in the past the theory was that you’re going to have a pension, you’re gonna have Social Security. And you’re going to have your own personal savings. And this is where in the past was called the three legged stool. Well, what has occurred is the pension plans have pretty much gone away. If you take a look at it, only 30 of the Fortune 100 fortune 500 companies today have a pension plan in place. And so now Americans have to rely more on themselves. Yes, so security, it will be there it will be there in some way, shape, or form. But now personal savings becomes that much more important. And so we have to all work on our personal savings in our pre retirement years to make sure that we have enough that’s going to last us through our retirement years. And so this is a big part of What we’re all dealing with out there today in this environment, and the government is looking at some ways in which to try to help. But really, the onus is on us as individuals, we have to create that retirement savings. And in creating that retirement savings, we have to understand the tax implications of that savings, how it will be taxed, not only the social security, but also our personal savings, and how that is going to last us throughout our retirement years.

 

Bret Elam 

Yeah, it’s crazy with what Mike just showed just talked about there to three legged stool. It’s not there anymore. I mean, my parents have it. They’re fortunate enough. I mean, if you’re a school teacher, maybe a government worker, I mean, there’s very few companies that still offer pensions, Mike just said 30 of the Fortune 500 is crazy. But you go back 30 years ago, it was probably 80 plus percent of those companies offered a pension. And again, why did they stop pensions? My God, he said it longevity risk because companies don’t want to deal with that risk, because people are living longer and longer and longer. Exactly. So when you think of that three legged stool, the things toppling all over right now. Because the pension leg pretty much gone for a lot of people or it’s reduced a lot more than maybe what the generation before you had social security. Now reassuring is that every time you get a statement says we got enough money to give you 77 cents on the dollar in New Year 2033 Makes you feel a little bit uneasy. We’ll talk about some legislation change. It’s happening right now. And Mike said, You are reliant upon your savings. So you think about those right now. And again, there’s legislation changes are there’s talking about Social Security taxation, again, they’re talking about unlimited Unlimited, there’s no caps on Social Security, taxation. I mean, there’s a lot of crazy things that are out there. And that’s what our job is on the show is to bring awareness. And again, what’s awareness conversations that need to be had that you didn’t know that needed to be had? by asking a series of questions that you didn’t even know that needed to be asked? And it’s all about that information about how do I stay informed. And again, and understanding that that third leg is your savings and investments, you got a lot to rely on yourself? So when we first meet with new clients, we asked them, What have you done so far, in retirement? And I said, What do you want retirement to look like for you? And the number one answer that we hear from all our clients is What does retirement look like for you, they say, I’ve been dying to retire so I can become a part time financial planner. That was a joke. But yet, you think about everything that we’re talking about. The onus is on you to put all those puzzle pieces together. And so many times when we hear from people is what does that retirement plan look like? You get the description of their savings and their investments with total disregard with everything that we’re talking about, because what they just described was the portfolio. And that’s essential, but it’s not a plan. And at times, when we meet with people who have that written retirement income plan, it’s done by a financial professional. They’re too darn complex, and they add zero clarity and actually bring even more uncertainty, because even the person that’s even presented to them don’t even know what’s in there. And when you look at a lot of the fabrication and assumptions that are in there, we’ve talked about for years on this show, it’s not personalized to your situation. So you ask yourself, do you have an actual written retirement income plan in place, not just a collection of incomes are not just a collection of assets? But you got to have that plan? And it’s probably the number one report that we deliver to our clients is, have you stress test your situation for the what ifs in life? What are the what ifs if you’re enjoying life with a partner, what happens first one passes away, you’re no longer filing a joint tax return. Now it’s a single tax return game changer. What happens if inflation doesn’t revert back to two and a half percent like everybody thinks but it say sustained at four to 5% complete game changer, the silent killer? What happens when tax rates go back up and 2026 back to the 2017 code versus the favorable rates where they’re at today? That’s a big deal. These are all the things that we need to be thinking about. When do I start taking what bucket of money? How do I ensure that I’m not going to mess up my Medicare and throw myself into Medicare surcharges? There are so many pieces of the puzzle. And yet everybody wants to become a part time financial planner in retirement. That’s that joke. Again, nobody does. But the onus is on you. And you can’t just wing it on how do I grow, grow, grow your assets. So if you want help to ensure that your money last and better management of risks, is having a plan is key. And again my encouragement as we just went through that section right there. Love to have some dialogue with you. My encouragement is to text 215-999-3272 Again, 215-999-3272. Go jump in talking about proper risk alignment. And Michael talked about sequence returns a little bit ago and we’re going to talk about that conceptually how it works. But you talk about market volatility. You know, one word that I keep hearing a lot of days is volatile, is definitely a part of that word. And again talking about all the geopolitical risks and what’s going on overseas. And again, the world is going through some pretty turbulent times with lingering repercussions from the pandemic, inflation, politics, global unrest. And that can have an impact on the market with you get the big swings up and down, up and down. And in light of this turbulence, you may want to consider two essential things, your risk tolerance. And another rest, again, that we’ll jump into is talking about sequence of returns risk. And again, to explain, let’s go back to the pandemic March of 2020, it was the end of the 10 year bull, the bull market in the stock market. Again, long bull markets can make people forget about the potential pain of the crash, the market crash, I call it selective amnesia, people forget about the past or only thinking about the future. And while friends and family may be boosted up, they boasted about their stock gains, some even very conservative investors can get Leard because they’re least into the peanut gallery into riskier investments that they may need versus having a plan. That’s for them. And then in 20, in March of 2020, as the pandemic had came, and the market got rocked, many people panic pulled out, and they locked in those losses. And here’s the kicker, even after those historical drops, the market came back remarkably, it actually set a new high by the end of that year. And while this roller coaster ride may not be in your favor, and it definitely isn’t in your favor in retirement versus a younger person, we need to start thinking about that risk tolerance, we

 

Joe Krause 

go to our commercial break, I would say this after consuming and listening to Bret and Mike in that last segment. It’s okay to be smart enough to know what you don’t know. Back in a moment, back here on roadmap to retirement to radio show with Bret Elam and the new CEO of Thrive financial services, Mike descends, Oh, David is off this weekend, Mike coming back over to you. And as I said, going into the break, it’s okay to be smart enough to know what you didn’t want, you don’t know, I put myself in that category. Because as Bret started to outline all of that stuff, I think for a guy like me, it’s absolutely impossible for me to be able to be the expert in all of those areas. You

 

 

know, it’s one of those situations where you can either do it yourself, or you can have an expert do it for you. And that’s exactly what we bring to the table here to help people to nurture them, that help them to create that income throughout their retirement years. And do that successfully. And that’s the key. So Bret was talking about risk tolerance. And one of the risks we were talking about was sequencing of return risk. Now, this sounds like a complicated term. But it’s really not what it has to do with his market volatility. And the time in which you have to absorb market volatility on the downside. So the sequence of return risk is all about the money that you need, and how that plays out with the fluctuations in the market for when you need that money. It’s that simple. And so for example, with sequencing of returns, let’s say that you need $70,000 A year over a 30 year period of time. And let’s say you hold a stock that is worth $70,000. So one share will take care of your annual income for you. That’s today, if the market stays the same or goes up, you’re fine. But let’s say the market cuts that in half. Let’s say one share of stock of those 30 shares is now worth $35,000. So now you need to use two shares during that year, in order to have your $70,000 income. The problem here is how much time you have to make it back up in the market. Now if you’re young, this isn’t an issue. If you’re young, you’ve got the time to absorb the market ups and downs and stay where you are. But if you’re not young, and again, you have a shorter period during retirement, or a shorter period of life, and life expectancy, then you have got to manage these situations and these up and down markets and this volatility in a different way. You have to manage this so that your money will still last you throughout your retirement career.

 

Bret Elam 

You can think about what Mike just said and again, if you’re just joining us on today’s show, we’re talking about de risking your retirement and we’re really going through three big risks that we’re all going to face one is obvious is longevity risk. The longer you live the more risky take we didn’t even we’re not even diving deep on that one but because it pertains to every single one of these, but really diving into the three risks we’re talking about on today’s show is insufficient income and talked about that a little bit earlier. And Michael just concluded this part talking about stock market volatility And then will inevitably talking about the impact of taxes, be just start thinking about what what Michael just shared right there. And, again, we’ve talked about sequence of returns where it’s quite a bit on the show over the years, but the way that he just described it going from the one share to two shares, those are game changers. And again, when you’re a younger investor, you got time on your side, that’s, again, I don’t care how much money you have the one thing that none of us ever have the ability to buy, this time. It’s such the credit, it’s the probably the most precious commodity that all of us have right there. So again, as we enter retirement, it’s those first couple years of market returns, that’s going to set the pace of what our retirement is going to look like, you have a couple of good years right out of the gate, things are gonna be pretty well off. You have a couple bad years, like people that retired in 2001, like people that retired in 2007 2008, like people that were actually retired right in the middle of the pandemic, like that was they didn’t know what was coming. But yet, they just kept things exactly what they had. What did they not do? They didn’t reexamine the risk tolerance, they didn’t really understand it, they didn’t have a five to 10 year horizon, they needed to start using their money today. And again, when we start talking about that three legged stool of pension, social security, and savings, and so many people now no longer have that pension, we have to have at least some kind of reliance and faith related to the government as it pertains to Social Security. But again, that stool is unstable. The stool is unstable, because that pension like is, is gone. So I’ve never seen a two legged stool, like go to well, like we got to create where you almost have to replace that pension bucket with yet another savings bucket to provide that stability, otherwise, you’re going to be wobbly. You’re sitting on a stool, it’s wobbly, you’re not thinking right, you’re like What the heck’s wrong with my store? What’s wrong with the leg? My on uneven floor? It’s that’s the same thing that happens when you don’t have that same peace of mind, of stability of that financial plan? Is your thinking all replace what’s going on? What happens if this happens? Am I going to be sat there and it’s like, stop, pause, stop, listen to the peanut gallery. quit watching and listening to the articles and headlines on the news. And in the periodicals that are out there. Nobody can make a claim that one way to financial plan is the exact way to do it. For 300 million people in this country. That’s garbage. You need a unique plan that’s designed to your personal situation. And my encouragement is, is that if you’re doing it yourself, or you’re working with somebody, and the conversation continues, let’s talk about your returns. Let me tell you about this portfolio. Let me tell you about this new money manager. Let me tell you about this annuity. Let me tell you about products, the commodities. If that’s all you’re hearing, you gotta dismount, you got to think about Plan B, because it may not be what you’re doing is necessarily wrong. It’s just simply incomplete. You’re not looking in the periphery of what is coming. Because when it comes, we said it earlier, it’s too late. But if we take the time to do what plan, not talked about the portfolio, but we take the time the plan is what do people want in retirement? It’s not that part time financial planner. When you ask people what they want to do in retirement, you hear the same thing over and over again. I want to serve and give back in my community. I want to spend time with family. We get at least two grandkids, kids are questionable. You can laugh. grandkids are always good. But what does that take? Nobody wants to have. They want to have financial worry gone. You want to be healthy, you got to be healthy to be wealthy. You want to have peace of mind. But how do all those things happen? We said it over and over again. I’m gonna say it one more time. It’s having that plan. Because understanding everything that we’re talking about this show week in and week out. The onus is on you to put all those puzzle pieces together. I hope you’re listening intently when you’re talking to your advisor to be able to communicate whatever the heck was out what was just said to the accountant. And then between the two of them, I hope you understood exactly what was just said so that you can talk to the attorney to make sure that most of the money goes to where you want it to go. Not the government. Because when I ask people where do you want your money to go loved ones charity, your government, government always number three. But when you understand the way the rules and when they’re stacked against you, number three ends up winning. If you take the rules, those rules are set for all of us that are from the biggest nation in the world. What’s the biggest nation in the world? It’s called procrastination. Again, we understand how we need to be proactive and everything that we spoke about. That’s how you ensure number one and number two wins. Number one, number two is legacy and charities. Because when you’re proactive and you’re in control of the situation, your situation The situation is your situation doesn’t matter about anybody else’s situation, which is the importance of point A plan. It’s individualized for you, loved ones, charity government, if you play by those rules, number three, continually ends up winning my encouragement as I just went through that with Michael. And you’re like, you know what? I’m sick and tired of being sick and tired, I need to get some peace of mind and clarity. So I can go live. Text us at 215-999-3272 text a word plan 215993272. It’s the first step. Whether you want to register for one of our workshops here in the greater Delaware Valley, where you can skip that workshop altogether and just come in and sit down with one of our awesome teammates who can start giving you that peace of mind that you deserve.

 

Joe Krause 

And if you do want to go to one of those upcoming workshops here in the month of March, March 12 March 13 on March March 14, at three new locations in Horsham Exton and BLUEBELL, you’ll be able to hear that messaging as we go into the commercial break and then go to thrive financial services.com Back in a moment investment