What\’s Going On In The Investment World?



Much that happens in the investment world affects our retirement plans. It helps to know whatever is going on in it. David, Karen, Bret, and Joe have us covered as they discuss about the worries people often have with retirement, how to deal with investment risks, and when the worst time to retire is. As they share their daily encounters, they provide some insights and advises on how to navigate your way into the stock market. They provide some reassuring words that will comfort you in times of confusion and will inspire you to get yourself educated as much as you can.

Listen to the podcast here:

What\’s Going On In The Investment World?

David, as we come and start with something that is very important, very educational and all part of what makes up the world of our audience, there are so many questions that start to fall into place. There are so many answers that are needed around retirement, around social security, around taxes, and around this big Rubik\’s cube that is very difficult to put together.

It continues. There are tons of emails, tons of phone calls, a lot of inquiries about past episodes. It\’s exciting and we\’re always so passionate about trying to share this information act as advocates for the people that we serve. Things had been absolutely spectacular.

Bret Elam is with us as well. Bret, how are you?

I\’m doing excellent.

How were the workshops that you had out of Chester County? What was the response?

We haven’t been there in a while and we came back, I guess it had been almost six months. It was overwhelming. The message is starting to catch on. We\’re getting people that have been to our workshop who are telling others about the workshops. It\’s a different means and different ways of people getting the information and people are starting to see the importance of putting all the puzzle pieces together.

I\’ll tell you about the upcoming workshops that are going to take place in the coming days. David, you will be the captain of the program.

The three of us are going to talk a little bit about different topics. It\’s all going to boil down to sentiment about what\’s going out on the investment world. One of the biggest two questions that occur and that we hear most frequently from folks who are getting ready to retire or who have just entered retirement is, “Do I have enough money?” Do I have enough money to retire the way that I want to retire? There is a different answer for every single person. That takes a little bit of analysis and going through that to get that answer. The second, which is equally as important is, “If I have enough, is it going to last?” Is it going to last my lifetime? Is my money going to expire first or am I going to expire first? I can\’t imagine quite frankly anything worse than spending your aging years worrying if you\’re going to ultimately end up running out of money. It\’s not a picture that anybody wants to imagine, but if you don\’t do proper planning, it\’s a distinct possibility.

We heard some of the statistics and we talked about the high percentage of people that are concerned about running out of money before their retirement.

I\’m going to read a little bit of an article. I know Bret got some survey information. People tune into a radio show and a lot of times these radio shows, especially the ones that are financially-oriented, are nothing other than infomercials. What we\’ve committed to and what we\’ve prided ourselves is that we\’re trying to become that trusted resource out there. People can get transparent information without any pressure and without any commitment. They can get what\’s truly happening out there without any agenda.

[bctt tweet=\”Everybody’s at a different stage and each stage has its difficulties that need to be navigated.\” username=\”\”]

We\’re getting a lot of feedback about that. We have people showing up and saying, “I\’ve been tuning into your show and it finally dawned on me that the best thing for me is to get out to one of these educational workshops and then take us up on that complimentary Thrive Retirement Roadmap Review,” which is the analysis that gives you all the answers. It does give you that peace of mind that things are going to work out perfectly the way that you want. Even after we\’ve stressed it and we\’ve done all kinds of disruptions, you still pass the test. It\’s early enough in the equation that we can find out maybe there are some bumps ahead and what can we do to fix those now so that we can avoid them?

Let me ask you this on behalf of the audience that feels as though they\’re past the point of no return, how would you answer that?

It\’s simple. Everybody\’s at a different stage and each stage has its difficulties with it that need to be navigated. We’ve sat down with people that were in their mid to late 50s and then we\’ve sat down with people that were in their late 70s or early 80s. There are differences between what the challenges and differences between the questions that they had but it\’s not too late. It\’s only too late when you\’re in the ground. We\’ve got to try to figure out solutions prior. I\’d encourage anybody that if they\’ve got any question, if there\’s any doubt, if there\’s anything going on, contact us at (800) 516 5861 or better go to our website at ThriveFinancialServices.com. Look at the resources that are on the website. They may help you get your answer, if they don\’t, you\’ll see a little contact information. You put it in to contact us, we\’ll give you a call or you can call us, whatever you feel most comfortable with. There is no stupid question. Just ask it and get your comfort out of it.



I raised the question because sometimes I feel as though people intimidate themselves into not asking questions. For our audience, it\’s definitely not too late to call, as David said, as Karen has professed, as Bret talks about it so many times at the workshops, come and get educated. Take them up on the complimentary workshop and then proceed from there. Bret, educate the consumers and educate them the right way, it’s what this is all about.

The segment that we are getting ready to chat about goes a little bit deep and talking about one of those seven senses called greed and trying to maybe eliminate it a little bit during retirement. Here\’s an interesting article that came out from the American Psychological Association. They surveyed over 1,000 adults talking about anxiety and 39% of people reported being more anxious than they were a year ago. The top three things that lead to that are their overall safety, which is their overall daily living, health, which is a big deal. We always talk about needing to be healthy to be wealthy and then number three is finances. We\’ve chatted about the volatility or the roller coaster of the market where we finally have gone back into the black and into the good side of the market. We\’re finally back above in the positive territory, with all the volatility that\’s been going on out there.

A lot of times when we sit down with people and we\’ve talked about Riskalyze, some of the tools that we utilize out there. There are so many times that David, Karen, and I sit down with people and make a comment that “Risk is for people who don\’t have what you have. Your job is to simply make sure you don\’t lose.” It doesn\’t mean put that money under the mattress, but it\’s understanding. That’s where Riskalyze comes in. It\’s the leading software in the industry that\’s almost measuring people\’s odds or their level is. What can they stomach that\’s out there in the market and then we go measure and look at what their portfolio looks like and looking for that divergence? We think we see that\’s where a lot of anxiety comes from.

Does the anxiety hasn\’t had a negative effect where it prevents you from making a decision that you should make that will help you because the anxiety is overwhelming?

That\’s where we talk about trying to be rational versus being emotional. It\’s having that game plan that\’s out there. It\’s out of fear or it\’s a sick stomach feeling where things are changing, whether something\’s going on in North Korea or there\’s something going out there into the market. It\’s sometimes things that we need to pay attention to and sometimes things that really don\’t matter. It\’s just having a plan and staying deliberate with that plan.

The comment that I\’d like to make because this is an observation, the thing that we are fortunate is that we get to sit down with 30 to 35 new families on a weekly basis. We get to see it all and it\’s 35 different scenarios. We see it all and it\’s interesting because as much as things are different, they\’re the same. I’ve always been an observer. I\’ve always liked to watch and see and try to understand what\’s going on out there. We sat down with a couple and they had about $1.2 million built out for retirement. They recently retired. They came in for the Thrive Retirement Roadmap Review and as we were going through their investment portfolio, one of their IRA accounts had over 150 individual holdings in it. I started to notice that most of the holdings were 1,000 or 1,500 or 1,900. It was 0.07% of the overall but just an amazing amount. I didn\’t do this with any disrespect, but I said to them, “Why do you have this holding?”

[bctt tweet=\”People intimidate themselves into not asking questions.\” username=\”\”]

I’ve got a shrug of the shoulders then I went to ask, “Why do you have this holding?” and a raise of the eyebrow. I asked them a question, “Do you listen to CNBC around 6:00 at night? There\’s this show called Mad Money on there with Jim Cramer. Philadelphia loves them the whole nine yards.” We\’ve mentioned where most people get their financial information, Money Magazine, radio shows and all this. I asked that question and they said, “How did you know?” I said, “This is a portfolio represented of that. There is no rhyme or reason to this portfolio and the fact that you can\’t answer me why you took these positions does put your retirement at risk.” Anxiety happens in a couple of different ways. Some people get fearful and do nothing about it. Some people get fearful and do too much about it. You’ve got to be careful where you get your information from.

I totally agree with David. People do that all the time.

When couples are involved and that was a couple that you guys met with in terms of that, is there cohesion between the husband and the wife?

That particular couple, we send out a Riskalyze questionnaire and they each filled out their own questionnaire.

They had totally different positions related to risk, but they didn\’t counsel with each other on the picking of the investments. It wasn\’t my money and his money type situation, it’s just wasn\’t a well thought out process. Even though I have a lot of money and they have manageable expenses, we see that their diversification isn\’t an appropriate model of diversification. That\’s the simple part and we brought that to light. They started to sense that they need a more sound approach to try to navigate the stock market, their investment portfolio and their overall retirement

When you look at that, especially somebody that has a portfolio full of equities and we believe in equities too, but the appropriate amount, talking about stocks. A lot of times when we sit down with clients, I\’ll make the statement, “You\’ve already won the game and you can continue to play the game and you can still win. If you continue to play the game, you also can now lose.” Taking that word greed and how much of that risk do I still need to take. One of the technologies that we use, a software called Money Tree Silver, a lot of times it only takes people a 4% to 5% rate of return to relieve that agita. Let some ride off into the sunset.



If I can stay away from these massive corrections that happen every eight to ten years or my portfolio is going down 30%, 40% or 50%. Remember in retirement, there is no more backfilling. I\’m not contributing money and I\’m pulling money out of that portfolio. If I can miss those corrections and be satisfied in that 4% to 6% range from a gross standpoint, not only are you taking care of your need, you\’re keeping up with inflation and you\’re relieving anxiety. David, Karen, and I sit down with so many people that are stressed out. They\’re riding that emotional roller coaster with the market as well. Then there are other people that we put that clear and deliberate plan together for them like, “Have you been watching the market?” They\’re like, “No.” We’re like, “That\’s exactly what you want to do.”

Remember we have the appropriate amount of money that\’s at risk where if it goes down, that\’s okay because we\’re not going to touch this bucket of money. The money or the foundation that we\’re going to be living on is that conservative bucket that’s gets taken care of us in our short-term needs. When we do see a market correction, we know it\’s going to come back. We just don\’t know how long going to take to come back. It\’s having the appropriate amount of risk that are sitting inside of those portfolios and that\’s part of that Riskalyze process. It\’s part of that Money Tree Silver and overall, that’s part of that Thrive Retirement Roadmap Review. It\’s why we love putting all those puzzle pieces together. It\’s not looking at the investments. It\’s that tax efficiency, which bucket should I pull money out of at what period of time, given whatever those different circumstances are.

Let me get Karen to weigh in. Some reassurance perhaps for our audience that when they open the door to retirement and they walked through that door into the unknown, that there\’s help when needed.

When we asked those couple that came in, “Why do you have so many holdings?” and they weren\’t sure of their answer, I don\’t understand why they weren\’t even sure of their answer. We make sure that we meet with our clients as many times a year, once a year, twice a year, four times a year, so that they would know the answer to why they have what they have. People that are out there saying, “My advisor is great,” that\’s fine. They may well be. We\’ve done great in the past few years, hopefully you have.

We certainly encourage you to go to ThriveFinancialServices.com and get one of the slots for those workshops. The real success, David, is that they\’re leaving the workshops with great information and then transitioning to a consultation with you with Thrive Financial Services and then that\’s where they can really get educated.

It\’s fun for us because when people first walk into the workshop, they think they are attending one of these financial company workshops where there\’s going to be an agenda. There\’s an underlying tone that you\’re going to try and sell us something and so on and so forth. The first couple of minutes, we addressed some certain things and it’s about eight to ten minutes into the presentation that you could start to see people unfold their arms, sit up in their chair and start paying attention. They start to get the sense that this is different and that this is educational. “These guys don\’t seem like they\’re trying to sell anything.” I can\’t say they put their guard down because they don\’t need to have a guard, which I think is critical. Anybody that\’s thinking about whether should they attend one of these or should they not attend one of these, we would encourage you to come out and experience it for yourself.

[bctt tweet=\”People stick to loyalty, and it is what could potentially cost them.\” username=\”\”]

Go through that workshop. It\’s got a lot of information. Sometimes it\’s almost like drinking out of a fire hydrant and it\’s a lot. We also want to impress upon people that there\’s a lot that you have to think about, that you probably haven\’t thought about at this particular point. One of the most common things that we get is, “I haven\’t had this conversation before. I\’ve met with my financial advisor for twenty plus years. I never had a social security discussion. I just thought at age 62, 66 or 70, I take social security.” The fact that there is analysis behind it, the fact that there are 567 different ways that you could take social security, the fact that taking the right social security election at the right time can improve your predictability of whether you survive retirement or not, we make all of that clear.

I\’m part of the population that assumes something could be because that\’s what we always thought it was and it\’s not the case.

Not even close. We\’ll illustrate that in our next segment. A particular client, to successfully navigate retirement, has to take social security precisely at the right date and at the right time. They have to, or they\’re not going to be able to do it successfully. That\’s how important it could potentially be. Add taxes on top of it, add your allocation in your investment portfolios, and add longevity into the equation. There are a lot of variables that can make or break a retirement situation.

I want to read an article that our audience can get ahold of. It was on InvestmentNews. If they read the whole article, it will give them the absolute essence of what Thrive Financial Services and what Thrive Capital Management do for the people that they serve. The headline says, The Worst Possible Time to Retire. It\’s a pretty grabbing headline. It says, “Market performance in the first few years of retirement determines financial security throughout one\’s golden years. Here\’s why the outlook for people retiring today is concerning. The outlook isn\’t good for clients on the verge of retirement today. The probability of being financially secure throughout one\’s golden years without severely compromising one\’s lifestyle or running out of money altogether depends largely on what happens in the markets in the first few years of retirement.”



Here\’s the bad news, “Current market conditions bode horribly for near-term retirees. In fact, the US is an uncharted water, researchers are saying because of the concurrent forces of stock valuations in near record highs and bond yields at historical lows. We viewed this as an elevated risk time for retiring. One of the partners at the Director of Research at Pinnacle Advisory Group said, ‘This is as close as you will get to all-time market highs and dangerously high valuations that make it a very risky time to retire.’ The worst time to retire is when stocks have run for a while without an intervening bear market, which is a downturn of 20% or more from recent highs. This is when unexpected returns are low or negative. In practice, this translates to a difference in the yearly spending levels that maintain a healthy portfolio balance. A client retiring immediately before a bear market will have a lower sustainable amount of spending throughout retirement than the same client retiring at the end of a bear market.”

That\’s where the big risk is. It goes on to say a bunch of other things. Some of their proof behind this, and this is what we see when we take a look at these portfolios and we do our stress test on it and everything else, it says, “Fortunately, some market valuation measures offer very reliable hints as to when advisors should start considering taking action for their clients. One of the things that get used predominantly is what\’s called the Shiller price-to-earnings ratio, better known as CAPE, the Cyclically Adjusted PE ratio. It is a good predictor of real returns over a decade or more, and when the sequence of return risk matters most, meaning where you’re starting out in the sequence? Are you at the beginning of a bear market or at the end of a bear market? The ratio is the current stock price divided by the average of the past ten years of inflation adjusted. There hasn\’t been a point in the last 140 years or so where the CAPE ratio has been this high and bond yields this low. This signals a pretty good chance returns will be much lower for retirees in the near future.”

For advisors, and this is a point that we make so clear in our workshop, using the 4%, which has been the historically safe percentage a retiree can pull from his or her portfolio in the years of retirement so the money will last at least 30 years, doesn\’t work. The ratio should be much closer to 2.8%.” If you were banking and you\’re working with an advisor or you’re self-directed and you\’re using a formula where you can withdraw 4% out of your investment accounts, it\’s outdated. If you\’re using 4% for that calculation, to give yourself a buffer between what your retirement expenses are and what your Social Security and maybe pension are paying you, the amount that you need to pull out, that doesn\’t work. It\’s a plane flying over the Atlantic Ocean with only enough fuel to get two-thirds of the way there.

That is a strong statement of reality.

It\’s scary because when I do the workshop and I ask that question of how many people heard and use the predominant amount, the majority of the room puts their hand up. When I illustrate the difference that now Morningstar, which is the company that came up with that formula, revised it back in 2013, down from 4% to 2.8%. People don\’t realize that they can\’t spend interest rates, but they can spend dollars. The difference is at 4%, if you wanted to pull $30,000 a year out for 30 years, you need about three-quarters of $1 million to do that. At the 2.8% rule, you need $1,071,000. That\’s a big difference and it\’s the difference between navigating it successfully and not so successfully.

In that headline, The Worst Possible Time to Retire, we talk some actuarial stats out there too. You have a couple at aged 65 and that there\’s now a 50% chance that one of them is going to make it to the age of 95. The unprecedented rates in bonds, we go back to where the environment that we\’re in right now where we have an increasing interest rate environment. Conventional wisdom, whether you\’re working with an advisor or you’re self-managed, having the appropriate amount of stocks, bonds, mutual funds or reading so much out there on these target-date funds and so forth and so on. It’s needing to understand and identify the risks that are out there. A lot of people think they may be in a conservative portfolio. When you dig into it and you pulled up the onion back and you dig into the actual meat and potatoes of inevitably what they have, you show them, “Here\’s what your portfolio’s done in a conservative portfolio for the past six to eight months. We\’re down 4% to 5% not being in stocks. How does that make you feel?”

I almost feel if you\’re not working with someone that is going to live with you through retirement and had the ability to constantly meet and have a conversation about these ever-changing topics on these areas, you\’re potentially in trouble.

[bctt tweet=\”There are things that we need to be conscious of.\” username=\”\”]

That\’s a big difference, 4% to 2.8%. Even if you\’re out there saying it can\’t be true, wouldn\’t you rather be prepared for something like that?

If you had a house that you had to sell and let\’s say that house is $1 million plus house. You interview two realtors. One realtor who\’s never sold a house for $1 million or never sold a house over $200,000 or $300,000 and a realtor who frequently sells houses at $1 million. It was important for you to sell your house. Which realtor would you pick?

You\’re going to sign on with the realtor with more experience.

What if the other one is the one you bought your three houses from?

I\’m a loyal guy, so I\’m going to live with the individual that has presumably done well for me over the past three times.

That\’s exactly what we see a lot of times. People stick to loyalty and it potentially can cost them their livelihood.

We\’ve talked about things conceptually so far. What we could do, which would be a good illustration, is review one of the folks that came in and saw us. They came in and they attended one of our workshops. They decided to take us up on the Thrive Retirement Roadmap Review and the first step of that is we spend an hour together. It\’s completely complimentary. We get to hear what questions they have. We answered any questions that they have. We collected some information that they\’re willing to share with us so we can provide them a social security maximization report and our tax clarity efficiency report. We can provide them the Money Tree Silver report, which gives you the overall picture of what\’s happening with retirement and then our Riskalyze report.

I\’m going to give you what that looks like. What this particular family and how much they have. I’m not going to mention any names and keep privacy and all that. It\’s something that our audience could potentially relate to. Then Bret, myself and Karen can talk about what those solutions are going to potentially be. The husband was born in 1950. He wants to retire at age 70. He has a gross income of about $127,000 a year. His wife was born in 1953. She wants to retire at 68. She has a gross income of 88,000. Their current expenses are not including health care costs in retirement, because most people don\’t know what it\’s going to be. We help them get educated about what health care costs.

People are shocked sometimes when we go through it. “I didn\’t know it was going to be that much. I didn\’t know that was going to be that little.” It\’s a little bit of an enlightening situation. They own two properties; a primary residence and a vacation home. They\’re both free and clear. The biggest concern that they have is having enough money in retirement. Social security, our report is ultimately going to tell them to take it to the limit because they can. When they scored on their Riskalyze, their risk tolerance level on a scale of one to 99 was a 42, which we feel is appropriate for them. The risk profile of their existing portfolio was 41, which is what we want to say in perfect alignment. When we ran their Money Tree Silver report, they had an 84% probability of having enough money throughout retirement on a scale of zero to 100%.

They are at 84% and that was with no blips on the radar. There are no market corrections, no medical crisis, anything that could possibly pop up and disrupt. That\’s a typical situation. Their income from social security total was going to be about $6,500. When we add health care on top of that and they have a $9,000 expense in retirement, not today, but what they want in retirement. They\’ve got about a $4,000 gap in their income. That\’s what we uncovered for them. Not that they weren\’t aware, it wasn\’t paramount yet. That retirement\’s not that far away and you\’re going to have a need to fill in $4,000 a month. How do we do that? This is the process that we typically take people through.

They had about $1.2 million in assets. They\’re going to be retiring in a couple of years down the road where they\’re maxing out their 401K.

With their need, it’s easy to sit there and say, “I\’m going to be okay and you discovered we’re $4,000 short a month.”

That\’s exactly right and they\’re making healthy salaries, $200,000 is not a big deal. They\’re doing things the way they have been throughout the years. Then all of a sudden, you’ve got to hit the brakes three years from now and say, “We need to start putting a plan together to ensure that we\’re going to maintain that standard of living.” When we found out that their portfolio measured up exactly to where their odds of their level is. You find that balance between stocks and bonds that were out there. Conventional wisdom takes a little bit from here and a little bit from there. Just based on their numbers of 41, they are looking for a little bit more of a guaranteed income. In this case, we\’re taking approximately about 25% to 30% of their assets. We were building a pension where it\’s going to grow and it\’s going to differ so that we can turn that on at that three-year mark. In this example, it was going to make up half of what that $4,000 gap was. It’s going to make up $2,000.



There are things that we need to be conscious of. What happens when the first one of them passes away? The reasons that you’ve got to be very deliberate in putting the different buckets together because we’re not only worrying about them when they\’re both alive. We need to worry about them when the first one of them inevitably passes away as well. Being able to know that a correction happens every eight to ten years of the market, where at least we know we can take a third of that money, or 30%, off the table and create a guarantee. All of a sudden, we still have two-thirds of the money that is out there. That have no handcuffs where you can do whatever you want to do with. It needs to only make up now $24,000 or $2,000 a month. It just makes it that much more predictable. It gives us that much more confidence so that when we do see a correction that indeed is going to come, we\’re going to be able to face that storm inevitably when it happens.

For people who come to workshops and come here for the first time, we’ll tell you up front when we meet with you, everything\’s great and you don\’t have to worry about anything. We\’ll tell you, “You have a little problem here.” We\’re going to tell you the truth. We\’re not going to sugarcoat it. People appreciate that and they are happy that we\’re honest with them. They might not always like what we have to say, but we don\’t just say, “This is your problem” and leave it at that. We will help you come up with a solution.

This is a scenario where I can see a couple feels pretty good about going to retirement.

Our job is not to hang the sword of Damocles over people\’s heads. We have a fiduciary responsibility whether you\’re our client or not. You came to us for insight and we have to provide accurate, transparent insight. People are walking through the door little puffed up. They’ve got $200,000 of income and $1 million or $2 million of retirement assets. Doing this 30 to 35 times a week, we get an intuition where we know where the tipping point is. $9,000 of monthly income needed to live the lifestyle that they want in retirement against a $1.2 million asset where we need to get $4,000 to supplement social security. Now they had no idea about social security, they were going to take it at 66 for retirement age.

When we maximize it, we filled more of the gap on a guaranteed basis. It required less than what we need to pull out a retirement asset. We want you to utilize a strategy where you can make at least $2,000 of that, using a very small portion of the overall assets to create a guaranteed income for the rest of both of their lives. The remaining $2,000 has to come out of their investments with market stress and everything else. It\’s a lot easier to get $2,000 out than it is $4,000. We have a lot less of a chance that we\’re going to deplete the assets over that lifetime now. When they walked out, there was a lot of clarity. There was a lot of understanding and a lot better peace of mind of what retirement was going to look like.

What we found out, 84% chance of making it to retirement with no corrections. One 40% correction that happens every eight to ten years, that’s 0% chance of making it. What happens when the first one passes away? The importance of maximizing social security so they keep every dollar they can in their pocket because it provides tax efficiency for them long-term as well. In addition to that, what happens when the first one of them passes away? All these things that we\’re talking about here with this particular client, that\’s all part of that Thrive Retirement Roadmap Review. We\’d do it 35 times a week. Every scenario looks different. Whether you\’re self-managed or working with another advisor. Whether it\’s social security, taxes, investment, income distribution or whatever it is, those are all the tools that we have. We just love to share that story with people.

It shows me and it teaches me that even when you think you\’re on solid ground, you\’re potentially not.

All I can say to everybody out there is to please look at our website, ThriveFinancialServices.com. We have listings of all of our workshops on there. If you\’re not sure that you want to come in or not, come to our workshop. Start there and listen to what we have to say. It\’s a lot of information that you can get out from there. I\’ve talked to people and they say, “We didn\’t realize retirement was so much work.”

We thank all of our audience for being part of Thrive Financial Services and the Roadmap to Retirement. On behalf of David Bezar, Karen Bezar and Bret Elam, I\’m Joe Krause. See you next time.

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