Episode 170 – How to Overcome the Obstacles of Inflation in Retirement

On this week’s episode of On the Money with Secure Money, Neil Mager discusses the importance of having a long-term retirement plan to help you overcome inflation and the rising cost of living.

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Radio Show Transcript

Announcer 00:00

Investment advisory services are offered through foundation investment advisors, LLC. an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. As performance is not a guarantee of future results, investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products, they do not refer in any way to securities or investment advisory products, fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.

Steve 00:39

And welcome everybody this is On the Money with Secure Money. I’m consumer advocate Steve, Neil Mager is here Neil is an independent fiduciary representative to Secure Money Advisors and secure money advisors.com There’s a lot going on today, we’re gonna cover some ground, lots of economists saying oh, it’s the R word. Come on in the next 12 months, well, is it? Well, it might be time to take stock of your current plan. That’s what we’re going to be doing will offer some tips and suggestions on you being able to weather this current political storm going again, if you’d like to get a head start, it’s 800-656-8616, 800-656-8616. We’re gonna get things started right after this on the money with secure money and do major.

Announcer 01:25

And now On the Money.

Brian Quaranta 01:28

Any good retirement plans starts with the foundation,

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asset protection, tax reduction, holistic planning,

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these are the things that start to move you towards having a retirement plan.

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Announcer 01:46

And now On the Money with Secure Money.

Steve 01:53

Welcome, everybody. This is On the Money with Secure Money. I’m consumer advocate, Steve, Neil Mager is here. Neil is Senior Advisor at Secure Money Advisors. Neil, of course, is a fiduciary independent and does so much more than that. It was a pleasure, Neil, how are you?

Neil Mager 02:07

I am Well, Steve, how are you today?

Steve 02:08

Doing? Well. Thank you. We got a lot to cover today. And I mean, as we as we do every week, but are you believing that? I mean, some folks are saying recession over the next 12 months. Some say we’re already there. The big question, I think that we have to ask ourselves is are we okay, and can you reassure me that I’m okay, Neil?

Neil Mager 02:32

Well, it certainly feels like we’re there. I mean, doesn’t it? Yeah. And if we’re not there, then we’re definitely getting there. We’re on the way there. So, you know, obviously, you know, everything that we do at Secure Money Advisors really starts with building out a plan. And we really focus in and zoom on this plan, especially in the fact that, you know, Steve, the bulk of the folks that are coming in from the radio show from the television show are 55 and older. And, you know, they’re facing that financial redzone Oh, yeah, that’s what I call it. And so, it’s, it’s really, really important to have a plan built out, because you’re so close to retirement, and things like recessions, things like inflation, things like the market going down significantly, certainly impact your plans to retire, and your ability to generate and create cash flow in retirement. So first and foremost, you better have a well-designed plan, and it’s really never too early.

Steve 03:35

And again, so do I have a long-term financial plan? So, if you’ve got a plan, is it designed for long term, which is what Neil is just saying? That’s what they do?

Neil Mager 03:45

That’s exactly it, Steve. I mean, you know, everything that we do really focuses in on the five key areas of retirement planning. Okay, retirement planning is much different than what you’ve been doing as you accumulate money over the years. Right. Retirement Planning focuses on one, how am I going to generate cash flow for myself? And obviously, if you think about right now, what’s happening in the biggest concern facing our country, and really the world right now? Is inflation. Right? I mean, the cost of goods has gone up so significantly, Steve. I mean, you really feel it at the at the grocery store and the gas pump. Here’s a current stat from by lending tree. Yeah. And it says middle- and high-income people 63% of middle-income earners in 49% of high earners. Say they’re living paycheck to paycheck. Those numbers are up significantly over 10% from previous year. So, you know, think about that, when it starts to affect middle and high income. Gosh, can you imagine what it’s doing to people that are on more of a fixed budget?

Steve 04:56

Oh, well, yeah. Again, particularly those in retirement and you’ve got that fixed income. How are you dealing with that? How are you helping folks? I mean, if they met again, with your plans, the money that we need today to live on, if I’m retired, well, that money’s already here. And it’s safe.

Neil Mager 05:13

That’s correct, Steve, I mean, our philosophy and our model is pretty simple. And what we want to do is build out buckets of money, that are designed to do different things. For you in retirement, now each bucket of money is going to have a different goal, kind of like when you think of a football team, or any team out there, each player is going to have a certain goal and job to do in order for us to have success. Well, that’s the same thing, when we build out these buckets of money. Some of these buckets of money are designed to be safer, more conservative, where we don’t lose principal, but we can generate income, mathematically, in some of these buckets are going to be designed towards long-term growth. And what’s important about long-term growth is that we have enough time because we do know, the markets are gonna go up and down. But you know, what, Steve? I mean, I’m having different conversations right now, with my clients, you know, we’re talking about a lot of different things. Because, you know, a lot of folks are concerned about, you know, just how much goods have risen. And, you know, we’re talking about building up emergency savings, we’re talking about, you know, being cognizant of impulse buys, and maybe starting to eliminate some of those things we want to understand talk about, you know, what we’re spending and what are the things that we can do to make sure that, that our spending fits into our budget. And on top of that, Steve, you know, not adding any additional debt, and trying to actually chip away at that, I know, that sometimes can be a difficult thing. But you know, we have some strategies here that we can help chip away at that as well.

Steve 06:47

But that really is key isn’t getting rid of that debt as much as possible. Certainly, the consumer debt needs to be gone by the time we get to retirement, it’s just going to make things a lot easier.

Neil Mager 06:56

Yeah, absolutely. I mean, you think about as interest rates go up to what do you pay on that type of debt? Right? And yeah, 20% 25% 30%, you know, that’s going to be really, really tough to whittle down, especially as you go into retirement and face more of a fixed income. So, we want to make sure that we can utilize different strategies and approaches to try and eliminate as much consumer debt as possible.

Steve 07:23

So, I mean, again, with inflation, how does that how is that impacting my cash flow right now? Or is it?

Neil Mager 07:30

Well, I think it all depends on your circumstance. Oh, no, I mean, I mean, let’s, let’s be honest, Steve, I mean, you know, everyone’s going to have a little bit different family size is going to impact their food costs. Each and every family eats a little bit different. You know, some people are still working from home, so they’re not spending as much on gas. Whereas you know, me, I drive 50 miles each day to work. So, for me, you know, I’m putting a lot of gas in my vehicle every week. So, inflation is going to look, inflation can be good if you’re on a fixed rate mortgage locked in at a low rate, which essentially means your mortgage payments got a little bit cheaper in real terms. But you know, a lot of people aren’t in a scenario, some people are forced to move, some people are renting, and the landlord has raised your rent. So really, inflation is shrinking your purchasing power, you know,

Steve 08:21

And again, so that begs the question, so what do we do? And we’ll do let’s just go ahead and I’d like folks to call How about it?

Neil Mager 08:27

Yeah, folks, right track your retirement with our complimentary financial review, our Right Track Retirement Review, we’ll keep you focused on the five key areas of retirement planning, income, taxes, investments, health care and legacy that will show you exactly how to generate income from your investments, how and when to claim Social Security, how best to allocate your investments now that you’re nearing retirement to protect from these market conditions, how to get in the lowest tax bracket possible, and so much more. But you have to do your part. Pick up the phone, give us a call to schedule your complimentary right track Financial Review.

Steve 09:02

That’s right, folks, give us a call. We’d love to hear from you. 800-656-8616 you’re going to get that comprehensive financial review that Neil just described, you’re going to get all of the extras, there’s no cost. There’s no obligation simply make that call 800-656-8616 800-656-8616

Neil Mager 09:20

Everyone makes mistakes but making them in retirement can be costly and should be avoided. When we come back five of the most common blunders people can make and we’ll offer some suggestions on how to avoid

Announcer 09:39

Are you fighting for financial knowledge? Don’t let bad advice be a punch in the gut to your retirement. Take advantage of a complimentary no cost no obligation consultation with a local trusted financial coach. Call Brian Quaranta and his team as secure money advisors 806 566 16 800-656-8616

Steve 10:11

Hey, welcome back on the money with secure money, Neil Mager here, I’m consumer advocate, Steve, Neil is an independent fiduciary. He’s a senior advisor at secure money advisors, you can check out more at their website, secure money advisors.com, you can learn about, well, Brian Quaranta, Brian is generally here, Neil fills in when Brian is busy doing other things, being a dad with those two young ones.

Neil Mager 10:35

Being a dad growing a company, you know, all those things takes his time.

Steve 10:40

So, you’re saying he’s busy?

Neil Mager 10:42

He’s a busy man.

Steve 10:44

Exactly. So, Neil, it’s always a pleasure. But this is something I think we’re gonna get into. We talked about rules. And the thing is, like you’ve said many times, there are no real hard and fast rules. I mean, there’s suggestions. There’s rules of thumb, but I mean, as far as a hard and fast rule, not so much. It’s it depends on the individual. And some things make sense. Some things don’t.

Neil Mager 11:07

Yeah, for sure. I mean, I think, you know, one of the things is don’t sell because the markets down and, you know, mistake that you commonly see is thinking that you can beat the market. I mean, even professional traders who buy and sell individual stocks rarely outperform the market over the long term. That’s known as an active strategy moving in and out of individual stocks is a recipe for excessive volatility and can put your investments at risk. You know, I see sometimes people come into the office, and, you know, they want to do things themselves. And the problem is they’re buying and selling at all the wrong times often. Yeah. You know, I actually, I read something not too long ago that said, the average equity mutual fund averages over 10%. And they said, the average investor earns a little bit over three and a half percent. Wow, it’s a heck of a delta, isn’t it? Yeah. Oh, my God, why do you think that is, right? It’s, it’s buying and selling at the wrong times, right to thinking you can beat the market. And it’s just, it’s just not possible. I mean, now, I will tell you this. A lot of times, what we can do for you is reallocate your positions to be properly invested. So, what it means is that we’re staying in the market, we’re not selling out, but we can reallocate and reposition to be properly invested. And that can make a heck of a difference in the long run for folks. So that’s something I think you’d definitely want to take a look at.

Steve 12:38

Well, you know, you talked about being active and then actively going in and out of stocks. But you take an active management approach, which is more proactive than reactive.

Neil Mager 12:46

Oh, exactly. I mean, we really want to take a look at economic indicators use some of the latest technology that is available to firms like ours, that can really put people in position to succeed and take advantage of how we should be properly positioned. Because the most important thing, especially in retirement, is making sure that you have an efficient portfolio. And it’s one of the things that we offer in our right track review is simply the chance to have an analysis done of your portfolio, we have this really great software that we can plug in all the different positions that you have, and in the dollar amounts and, and do a review and a second opinion, to see exactly how efficient your model is.

Steve 13:33

Sure. One of the things that people have done, Neil, and I think you alluded to this is keeping your money in cash. And it’s okay. markets going crazy. I’m gonna pull it out, then it gets back to Okay, so when do I go back in? And how do I know? Exactly,

Neil Mager 13:46

exactly, yeah, that’s, that’s, that’s, that’s the tough thing. Right? You right? So, what happens is you sell at a low point in the market, right? The market starts to come back, you hear all your friends and family start to talk about, you know, how the markets coming back, and you’re starting to get your, your money back, and all of a sudden, you’re going on, I gotta jump in. It sounds like everyone’s starting to do well, again. So, then you buy at a high or a higher point, yep. And then what happens, market probably starts to come back down a little bit, and then you get nervous again, and then you sell. So that’s why you want to work with, you know, somebody that has, you know, a model built that you can utilize some real data with some real software and techniques behind it.

Steve 14:29

So, what about the when, I think diversification, I think I was talking to somebody over the weekend about her and say, they were saying, Well, I you know, I’m just gonna put a little bit of money in a lot of different places. So, I’m gonna go this ETF and that stock and that’s, you know, that’s, that’s like, you know, trying to beat the market.

Neil Mager 14:47

Right, right. Well, first of all, obviously, you want to diversify, right?

Steve 14:50

Right, that’s, that’s different than buying multiple things, right?

Neil Mager 14:54

That’s exactly. You know, what I’ve seen before is, is sometimes people will say, Well, I don’t want to put all my eggs in one basket. So, I want to use two or three different firms. And the problem with something like that is you don’t know what the left hand is doing. Right? So, you start to look at the different positions and the funds that they’re and what do you have you got Home Depot, Lowe’s, Pepsi, coke, apple on repeat, and just a bunch of different funds. Right? So, you’re not diversified at all. You just have a lot of different funds.

Steve 15:28

Just a lot of different funds. And they may or may not do well. And so one of the other things that we’re talking about too, is steering clear of your savings or to clear of your savings. We don’t want to, you know, we don’t want to use them all up, right.

Neil Mager 15:41

Yeah. I mean, you know, when we talk about this right track, financial review, I mean, the five areas are so important, and you don’t want to skip on any one. I mean, so really, if you plan on leaving money to children, charity, or other loved ones, it’s important to plan for that. And it’s important for us to know that, you know, there’s something called charitable qualified distributions, when you hit the age of 72, that enable you to instead of taking your RMD to send the money tax free directly to the charity of your choice, right. So, it’s important as planner, that I know that you give a lot of money to your church or to, you know, whatever charitable organization is important to you. But what’s important is, you know, you don’t get too concerned to dip into that savings store during retirement. Remember, that’s what it’s there for. What I see is a lot of retirees, they struggle to make the transition from saver to spender. And I guess that’s kind of how we’re taught, right, Steve? If you think about it, 10 years old, we’re taught when we get some birthday money from our grandparents to save it for a rainy day. Now all of a sudden retirement comes and we’re supposed to use that money. So, it’s quite a chump change in mindset. Yeah.

Steve 16:53

And again, 800-656-8616. That’s the number to call. In fact, let’s invite folks to call right now, Neil.

Neil Mager 16:59

Yeah, folks, let us help you right track your retirement with our complimentary financial review our right track, the five key areas of retirement planning, income, taxes, investments, health care, legacy, you probably need to know how to generate income from your investments, how and when to claim your Social Security, how to allocate your investments, now that you’re nearing retirement. So, you got to do your part, pick up the phone, give us a call and schedule your complimentary right track Financial Review.

Steve 17:26

Sounds fantastic, make that call 800-656-8616. It’s a comprehensive financial review, and there’s no cost there’s no obligation just take advantage of what Neil’s offering here today, that opportunity to get a financial roadmap put together 800-656-8616 That’ll give you the confidence you need to help get you to where you want to be in retirement. It starts with that call 800-656-8616.

Neil Mager 17:50

After nearly three years, there are still unanswered questions about the secure act and how it impacts our retirement plan. When we come back, we’ve got some estate planning strategies to rethink after the secure.

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Steve 18:40

And welcome back On the Money with Secure Money. Neil Mager’s here. I’m consumer advocate Steve, having a great show, as always, lots of good stuff. We’ve covered a lot of ground already, Neil. And that’s one of the things that I think separates a lot of financial advisors from you know, like you guys that Secure Money Advisors one year independent. It’s a fiduciary firm. But more importantly, I know those are all important things. But what I get from it is there is a truly a sense of, of camaraderie of teamwork within the organization. It’s a bunch of good folks. I’ve met several folks besides Brian and you. And I mean, I’ve met several others that are just fantastic! That says a lot about the company that Brian has created.

Neil Mager 19:22

Yeah, I mean, I mean, I couldn’t speak any more highly of Brian, as an individual as a person running this company. So, I think, you know, that’s a great place to start. And he’s, he’s really created a great culture here with, you know, people that work together really well as a team. I think it’s really important and what you just mentioned is that we are independent. So, each and every week we’re not being told what we need to sell or, or companies that we need to sell. We basically just find the best products that are available for our clients. We’re a fiduciary and a fiduciary really focuses on building out a plan because disease, as we’ve talked about in some of these other segments, there’s much more to this than picking the right investments for clients, right? There’s the tax planning. And we just talked about the secure act and how important it is to have a game plan now that the laws changed, you know, so there’s a lot of things that go into it. And we think that the diligence that we provide our clients the hard work that we put in that conference room, and the teamwork that we have here really just kind of shines through for the client experience.

Steve 20:34

800-656-8616 as we get into a couple of these questions here, while we’ve still got some time, Jenny is wondering, Neil, Jenny says my company matches my 401 K contributions, but they do it in the form of company stock. Now, I’m not that excited about owning a lot of company stock. But I also don’t want to miss out on any matching funds. Should I still try to put in as much as I can? Interesting question.

Neil Mager 20:59

That’s a very interesting question. Yeah, I could see Jenny’s concern, you want to avoid concentration risk, which is simply having too much invested in one position one stock. So, what Jenny might want to take a look at is how much exactly does her company match of her 401k? And maybe make sure that she gets the match. And then maybe she wants to invest in a traditional IRA or Roth IRA outside of her 401k. So that’s something that she might might consider, she might also be able to reallocate as time changes. So, to make sure that she has some diversification, but I can certainly understand, you definitely want to avoid, typically, say, about no more than 15%.

Steve 21:45

So, as she gets a little bit older, and you know, let’s say she’s over 59 and a half, then she actually can take money out of that 401k and sell that stock if necessary.

Neil Mager 21:55

Exactly. Yeah, that’s the number we love around here. 59 ½ is when you are still working, and you have a 401k with your company, what a lot of people don’t understand is that you’re actually able to work with a firm like ours at Secure Money Advisors, to help you position for retirement to help start to work on your plan. And what we can do is we can remove the money from your 401K, roll it over to an IRA, no taxes or penalties when we do something like that. And guess what, what happens is, next time you get paid, you’re still going to be investing in your 401K, you’re just going to be starting your balance over, so you still invest in your 401K, get your company match. But you’re better allocated in position for retirement.

Steve 22:41

That really makes the big difference doesn’t affect that allocation and being able to do that. Are you finding that people right now as things are a little sort of topsy turvy? are more people coming to you saying, I need to get this plan put together? Or I need you to look at my plan?

Neil Mager 22:56

Oh, for sure. People want help. I mean, obviously, there’s a lot of concern. People want help. They don’t know if this is the start or the end of all this volatility. Like I said, Remember, 2000, 2001, 2002 they want to make sure that their portfolio is efficient, that they’re properly positioned. You know, we’ve seen Steve, as a lot of people are utilizing different bond positions, you know, as they’re safe money, safer money, I should say safer, sure, safer. But what do we know about bonds as interest rates go up and continue to go up, bonds go down in value. And so, people are shocked when you pull up their bond positions in your show, you know, the year-to-date loss on those positions, they’re absolutely shocked because they didn’t think there was any way that those safer positions could lose.

Steve 23:43

Sure. 800-656-8616 how you get started. Jenny, let’s go to Lillian who says, I don’t have a retirement plan through an employer. What’s the best way I can save money and lower my taxes? I like how she thinks

Neil Mager 23:59

That’s right. Yeah, I like the way she’s thinking too. And this is this is a challenge that we see a lot too. You know, what we see is they took away our pensions, right? No, not many companies pay US per month every anymore upon retirement. And a lot of companies don’t even offer retirement plans. So, it’s kind of out of sight out of mind and glad Lillian’s thinking about it. So, one of the things that you can do, Lillian is you can set up a traditional IRA if you want to lower your taxes. based on your age, you have the ability to put in either $6,000 or $7,000. And what I would do, Lillian is I would set that up to have it automatically taken out of your bank account on a monthly basis. That way, you don’t have to think about it and worry about it. It’s also doing something called dollar cost averaging for you. So, it’s really important that you meet up with someone like secure money advisors to help you set up a traditional IRA, where you can put money in each and Every month automatically,

Steve 25:01

There you go. Lillian 800-656-8616 Make the call get things rolling. In fact, we have got a roll on out of here, Neil, let’s invite folks to call one last time.

Neil Mager 25:10

Yeah, folks, pick up the phone right now and schedule your right track your retirement complimentary financial review. The review is going to focus on the five key aspects of retirement planning, income, taxes, investments, health care and legacy. It’s going to show you exactly how to generate income, how to claim Social Security, how to allocate your investments, as you near retirement need to protect for more poor market conditions, how to get in the lowest possible tax bracket in so much more. But you have to do your part, pick up the phone, give us a call and schedule your complimentary right track Financial Review.

Steve 25:45

800-656-8616 again, 800-656-8616. Neil, as always, a pleasure to talk with you. And again, going through all of this information. It’s so important for folks to hear it.

Neil Mager 25:57

Yeah, absolutely. Steve, I appreciate the time today. Thank you. Thank you for having me.

Steve 26:01

And again, we want to thank everybody for listening. We really do appreciate it and we’re gonna come back next week, new topics and questions and a whole lot more right here on the money with secure money.

Announcer 26:17

Investment Advisory services are offered through foundation investment advisors, LLC, an SEC registered investment advisor. Brian Quaranta and his guests provide general information not individually targeted, personalized advice, and are not liable for the use of drip information. Discuss exposure to ideas and financial vehicles should not be considered investment advice or recommendations, buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results, investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products did not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.

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