MIKE: Welcome to Retirement Radio where you get the transparency that you deserve. I’m your host, Mike Decker, from Decker Retirement Planning, home of a safer retirement. For all my longtime listeners, I’ve got a fun announcement. This week and next week we are going to try a completely different format. It’s going to be exciting. I’m so excited for this because, frankly, there’s so many talk shows, financial shows, radio shows that just tell you what you’re supposed to do and no one cares. If we’re honest with ourselves, sure, it’s interesting information, but we’re going to shift the show a little bit.
MIKE: We’re going to give you more transparency, not only the transparency that you deserve. We want to give you more transparency about what a safer retirement really means. We’re going to try and hit even harder by the stories, by the experiences we have in our offices every day at Decker Retirement Planning, about how we’ve been applying the three principles that govern proper retirement planning and how they have helped hundreds of people in just the last year. Very excited about this.
MIKE: And if this is your first time tuning in, stay tuned because what we’re going to talk about today pulls back the curtain and exposes the financial industry from pushing products, from doing what’s not in your best interest, from understanding who’s a salesman and who is a purebred fiduciary. And that’s a term I want to just highlight here real quick before we get started. Fiduciary is a term in Latin, meaning trust, that says if you’re working with someone with a fiduciary responsibility, it means they are legally bound to do what’s in your best interest.
MIKE: What’s interesting, though, behind closed doors, as I talk with a lot of other financial professionals, many of them say, “Sure, we have a fiduciary responsibility… kind of. We want to do what’s in our client’s best interest, but…” and then fill in the blank. “We’re limited by certain products we can do,” or, “We’re supposed to push these products and we try and make it work,” or… and fill in the blank. These are really good people, but the business structure or their employment limits them to have full access. And that is why, when we established Decker Retirement Planning, we established as an IRA that was independent.
MIKE: That means we’re fee based so you know what we’re getting paid, and no one’s telling us what we can and can’t sell, what we can and can’t recommend, what we can and can’t have access to. These are things that even… I’ll use this as an analogy. All of our retirement plans have emergency cash, something you should have in there. We don’t make any money off of this, but we tell you where the best money markets and the savings account are so if you want the best rate that’s where it is. That’s what a fiduciary does. And to put it in perspective, Tony Robins did a massive research on this for his book, and I thought it was fascinating.
MIKE: 30 or so percent claim, of the financial professionals, claim to be fiduciaries, but only 1.6 percent of all financial professionals are purebred fiduciaries. That is to say they actually have your best interest at heart, and they’ve actually put themselves in an employment and business structure to be able to do so. Most will use dual hat disclosures, smoke and mirrors to try and get around that. Everything we talk about here comes from a purebred fiduciary standpoint, one of the few, the 1.6 percent, that actually have your best interest at heart.
MIKE: And, sure, you may like your financial advisor, but what we’re talking about today any good financial advisor should be doing this for you. And if it’s not, that’s okay. We can still talk, and if you want to continue to use them, and you’ll hear this in our first story today, you’ll continue to see how you can still utilize and maintain that relationship if you want but still get the facts, figures, and numbers to have and enjoy a safer retirement. Now, as always, I’m going to extend a few offers here through the show.
MIKE: Because we’re optimizing retirement, we can’t make money grow on trees here. Anyone that calls, and we ask that you have at least 300 thousand of assets saved up for retirement, that isn’t some pretentious thing to say. We can’t add value to anyone that has less than that, that we’ve found, on average, and that’s to say that we are here to optimize the assets that you have. We are not accumulation advisors growing your assets to retirement. We are the guys that can quantify what you have saved up and how you want to distribute that. We are distributors. I said that word kind of weird.
MIKE: We are distribution financial professionals, not accumulation financial professionals, and there is a very big difference in that and we’ll talk about that in our discussion today. So, wait for those numbers to call in. They’re at no cost to you, whether you want a 30-minute phone call or a 90-minute, in-depth visit. It’s no cost to you. But also, you can visit us on our website at deckerretirementplanning.com. Lots of great information in there, articles, studies. You can also catch this show or previous shows at your own convenience on the website or iTunes, Google Play, wherever you get your podcasts.
MIKE: But folks, let’s dive in right here. The first short story I want to share with you, and these are all true stories here, was an individual that came to us, 77 years old with a spouse of 72 years old, and came to us with 3.5 million dollars and said, “Gosh, look, I know I have enough for retirement, but I am just, the market doesn’t make sense. We’re at a market top, it makes me incredibly nervous, and especially Q4 of last year I just couldn’t handle it. I don’t believe I can fully enjoy…” and I’m summarizing his words, for the record.
MIKE: “I don’t believe I can fully enjoy my retirement when I’m so nervous about the market and how it’s going to affect my retirement. I know I’m taking too much risk. I liked your presentation,” he and she had come to one of our events, “and I want to learn more about how it applies to me. And here’s what their current plan was. And Retirement Radio listeners, let me know if this sounds similar to you. They went the old, traditional route because that’s just kind of what you do. You’re accumulating your assets and you diversify to minimize risk as best you can, but that’s really what’s out there. Stocks, bonds, ETFs, mutual funds, take your pick, right?
MIKE: And we’re all taking from the same market with different theories to get in there, and he didn’t like how one theory with one manager was all his eggs in one basket, so to speak. And so, what he did is he had all his money at risk, and he was well aware of that, but he used three different managers to try and hedge his risk. Keep in mind they’re all invested in different ways but in the same markets. They all have different theories, but all of his assets were at risk and it drove him crazy, losing sleep over the night. Does this sound familiar?
MIKE: Just because you can have three different ways to invest in the market, you’re still in the market and you still gotta be able to account for that. Is that appropriate? Is that the right way you want to go about this? For him and her, both of them, the couple, they wanted to see what else was out there. They know ignorance wasn’t bliss, and they were being proactive about this. So, when they came in, they said here’s what we’re doing, here’s what we want to accomplish, and what was important to them was they wanted to make sure they could leave a legacy to their kids, had two kids.
MIKE: Wanted to leave a legacy to their kids to make sure that they could help them through the big moments, buying your first house, making sure they could retire, or not retire, to graduate college without student debt, very thoughtful gifts that they financially should be able to do. And so, it was a wonderful discussion to talk about, okay, let’s see what we can do from there. Here’s how it rolled out. First meeting… and I’ll admit, when they first came in, arms folded, very skeptical, “What can you do for us that these other three professionals just don’t even know about?” and that’s a very honest question.
MIKE: What can we do? We developed our safer distribution plan. A safer distribution plan is built because so many people asked and they did not want to live in a pie chart, which makes sense. And we took the 3.5, roughly, million dollars and we quantified it. Now, this couple they had their social securities. Again, they were already taking it past 70 years old, so we didn’t have anything to optimize there. What they had filed for was what they were going to get. They both, or one of them, I should say, had a pension, which was great, when they first came to us, and they had some real estate which created an Airbnb income stream, which was delightful, okay?
MIKE: So, we took those income streams, these are fixed incomes, and we lined ’em all up on a distribution plan, and then we took their assets and we quantified them. When I say quantified, I mean we broke down the income needs for the next 20 years. And remember, Retirement Radio listeners, principle number one, never, ever, ever draw income from a fluctuating account. This is called sequence of return risk. If you do this, you are compromising your gains on the up years and accentuating your losses on the down years.
MIKE: That was the first big principle that they were breaking and we wanted to adjust for that. Now, we hadn’t talked about what principal-guaranteed accounts they want at this point. We just said, okay, let’s assume that you’d be open to a principal-guaranteed account that you were okay with. For conceptual purposes, this is your first plan, we broke down a bucket one, a bucket two, and a bucket three, staggered so they could draw income from principal-guaranteed accounts, so should the market crash they sail through it unaffected and on the up years they’re capturing the gains and it’s delightful.
MIKE: Keep in mind his biggest risk. “I knew I was all at risk. If the markets were to tank, it could destroy my retirement.” We just solved that. The first iteration of the plan reduced his risk 85 percent, 85 percent. Now, he still had risk, and that’s the second principle, is you need to have one of all three of the different investment classes that we talk about. You need to have assets that are at risk. It makes sense for most people. You don’t have to, but it makes sense for most people for long-term investment horizons.
MIKE: You need to have income planned out for at least 20 years from principal-guaranteed sources and you need to have emergency cash. Like I said, we don’t make any money off the emergency cash especially, but it’s what is appropriate for your retirement plan. So, we quantified all that, summed it all up, and broke it down every year down to the month, net of tax, how much they can spend until age 100. And the husband was a little bit older than the wife, so we also incorporated what would happen when he would pass. Let’s say he passes five years before she does. We’re assuming a few things here, and I get that. There’s flexibility with the plan.
MIKE: But we’re assuming that, and how do you give her a smooth transition from when one of the most devastating things happened? When you lose your spouse, it is devastating. The last thing you want is spousal risk and your income is also cut in half or just diminished. We smooth it out so that would not happen. Down to the month, net of tax, they looked at that and said, “Gosh, that’s way more than we need. Let’s talk about our legacy plan,” and it opened up, too, in some of the conversations. Now, I want to point out their traditional [wall?] they had was the pie chart with three different managers and they were drawing about four percent from their portfolio each year.
MIKE: This is the four percent rule. The four percent rule says if stocks have averaged eight percent over the last 100 years and bonds have averaged around four percent or so over the last 30 years, you should be able to take four percent from your portfolio and be fine. The issue is this does not work. It breaks the first principle of proper retirement planning by drawing income from a fluctuating account. And unless the markets only go up, you are at risk, a risk that can keep you up at night. We wanted to get rid of that.
MIKE: But also when you take into account income from the four percent rule, four percent of their 3.5 million would show that they would be taking around 140k plus social security and pension, and so on and so forth. 140k is not bad, and they were okay with that. We showed them, though, that we could reduce their risk by 85 percent and give them 188 thousand dollars from their assets each year with a cost of living adjustment. They were blown away, absolutely blown away. We sat down, and this conversation, at the end of it, the conversation led to, “Okay, let’s start talking about legacy.”
MIKE: “Let’s start talking about what we really need,” and they said, “You know, let’s say that we get about 160 thousand of assets each year total, including pensions and social security, and so on and so forth, and the rest will go to legacy. What would that look like?” We’re a math-based firm, folks, so we quantified it and we fixed the starting amount that they wanted. We had their social security, we had their pensions, we had their Airbnb income, and then like putting the rocks in first and then the sand after, we were able to fill mathematically down to the dollar amount how much and how it would look like for their plan and the rest went to legacy.
MIKE: And it was a large sum of legacy, by the way, the kids would be able to have. Isn’t that incredible? Think about this. Retirement Radio listeners, if you want to leave a legacy but you need a certain amount of income, did you ever think it was possible until now that you could quantify that and plan it out? For a lot of people, legacy is also kind of a gray-area excuse of, well, if things go bad we’ll dip into legacy and the kids, you know, we didn’t have anything. The kids don’t have anything. If there’s leftover, then, you know, the kids will be grateful, but it’s our backup plan.
MIKE: What if you could already have your backup plan and the legacy was set, and you could plan out what your kids would be able to have and how they would be able to receive it? That is a remarkable ability, an incredible amount of transparency that you can have with a safer distribution plan, and this is what we’re doing each day, and it’s just incredible. What a fun conversation. So, we mathematically quantify that, and they said, “Okay, well, we don’t have just one kid. We have a couple of kids, so we want to talk about, okay, let’s dive into each kid and their own portfolios on their own legacies,” and so we broke it out.
MIKE: And they said, “You know what, and also 160k, let’s increase it a little bit,” because they realized they didn’t need their legacy plan as a backup plan. They could set their legacy aside and have a plan that was built to sail through these market crashes unaffected. They saw the fact that if we follow the three principles, never draw income from a fluctuating account, use all three investment types or incorporate or to build a proper retirement plan, and use a distribution plan format to map out down to the month, net of tax, how much you could draw each year for the rest of your life with a cost-of-living adjustment to get the transparency that you need, it blew them away.
MIKE: And they said, “You know, gosh, our stress levels are down. This makes sense. It’s math based. I’m a mathematical kind of guy. I’m a mathematical kind of girl. And I can rely on this. I want to have a little bit more fun.” And so, the conversations in our planning meetings they started changing to, “Well, what if we go on this trip? What if we start to travel a little bit more? What if…?” and these what ifs created a brainstorming kind of situation to where, and it was quite fun, to be able to incorporate their plans on how they want to leave a memory of legacy, or, a legacy of memories, excuse me, in their family.
MIKE: Not just a monetary legacy, a legacy of memories from this trip to this family reunion, to these gifts, to this support, to fill in the blank. It was a remarkable, life-changing moment for them to be able to map out, down to the month net of tax, their retirement, incorporate the three principles that govern proper retirement planning, and, most of all, be able to start living in their retirement.
MIKE: Getting rid of the stress is… gosh, you know, one of the most fun articles that I love to read, when I say fun I think it’s ironic, on how financial professional are now waiting for Trump’s tweets on how to invest, because it’s so volatile out there. I don’t know about you, but these kinds of financial storms, this uncertainty for most people is very unsettling. The other day I went golfing in 38 degree weather and it was raining. Everyone said, “Are you crazy?” I said, “Oh, I don’t really mind it. I know most people don’t.” I don’t know anyone that minds these financial storms.
MIKE: I know some people that don’t mind golfing in rain. I know some people that don’t mind hiking in storms. I don’t know anyone that actually enjoys the financial storms that we’re experiencing right now and the uncertainty at a market top. If you’re one like that, if you don’t enjoy the market uncertainty, if you want to know down to the month, net of tax, how much you can spend for the rest of your life and want to incorporate how these principles can elevate your lifestyle, potentially give you more assets in retirement or give you at least more control over what you’re doing, call me right now.
MIKE: Anyone that’s 55 years or older and has at least 300 thousand of assets saved up for retirement, this is for you at no cost to you. Phone lines will be open for the next 10 minutes. You’re going to call in. The folks at our call center are going to gather the information for you so on Monday we’ll reach out and be able to schedule your visit, ask you a few questions, and be able to quantify your custom retirement plan and then talk about it.
MIKE: You can either choose to have a 30-minute call over the phone and we’ll just briefly go over the three principles and how they incorporate your plan, or a deep dive for up to 90 minutes in person to where we’re going to go through the details line by line, set expectations on what the markets are doing right now, and go through your hopes and dreams, wants, and needs in retirement and establish that mathematically. Call me right now, 833-707-3030. That’s 833-707-3030 for the Decker 30 challenge.
MIKE: Folks, honestly, 30 minutes for a safer 30-plus years, I challenge you to find a better way to spend 30 minutes this week. 833-707-3030. Looking forward to talking to you all. We’ve got offices in San Francisco, California. We’ve got three in Washington, in Kirkland, Washington, Seattle, Washington, and Renton, Washington. We’ve got two in Utah, one in Salt Lake City, one in Lehi, and we also got an office for all of our Las Vegas listeners, a Las Vegas office right there in Summerlin.
MIKE: This is for you to get the transparency that you deserve so you can enjoy a safer retirement so you can start living. It’s a remarkable thing to be able to go through the planning process. And folks, we are purebred fiduciaries. We are here to do what’s in your best interest. If you can imagine a neutral environment where someone walks in and it’s an open conversation of what’s best for you, knowing that if you plan is all set to go and you should not be changing it, we are legally bound to tell you so. And we’re not going to charge you for confirmation or affirmation.
MIKE: We’re not going to charge you at all, even just to come in and visit with us and to give you your first draft of your custom retirement plan, your safer retirement. It’s for you. 833-707-3030. The phone lines are open for another seven minutes or so. Call us. We’re here for you as purebred fiduciaries to help you enjoy a safer retirement, because when it comes down to it this is your retirement, this is your life. Ignorance is not bliss, and when you pull back the curtain it is a transparent and wonderful conversation to be able to enjoy the rest of your life. You’ve worked so dang hard to be able to do that, so call us right now. 833-707-3030.
MIKE: Looking forward to talking to you soon. For all my Retirement Radio listeners who have been listening for months and are now just calling in, this is great. For those who just haven’t called in yet, I invite you to take me up on the challenge. For those of you who have been listening to the show for a while, client or not, we usually do our own commercials and things like that. We’re getting rid of that format. We’re new format for the radio show, having fun right here as we’re now done with the first story. I have another story. For anyone who feels like they have no idea if they can retire, for anyone out there who says, “Gosh, what do I even expect? Where do I even start?” the next story I’m about to tell you is that situation, so tune in for that.
MIKE: We’re going to take a quick not break, just change of thought here, on the top, or, the bottom of the hour. I’m going to take some time and talk about a tip for a safer retirement that’s not financially related. We talk about finance over and over again on the show, but there’s so much more when it comes to your retirement. I’m talking about nutrition, I’m talking about fitness, I’m talking about fraud protection, the legal side, and fill in the blank, the emotional wellbeing. So, I hope, you know, as we break up the stories here and talk on the [upon the?] hour, this new format, that we can, you know, have a good chat, some tips to incorporate the other aspects that are also critical for a safer retirement.
MIKE: And this week I want to talk about the importance to not ignore strength training. When I talk about strength training, I’m not talking about how you need to become the next bodybuilder. No, no, no, okay? What I’m talking about is strength training is, according to researchers and medical professionals, a must-do exercise to maintain your strength of muscles and also the bone mass itself. The older you get, it’s a use it or lose it kind of situation, and your health you either use it or you’re going to lose it.
MIKE: Focusing on your strength can help protect you should you fall or be in an accident. Accidents are just that. You don’t intend to hurt yourself, but they can happen. But doing strength training enforces and reinvigorates your body to be able to handle whatever could happen. And we don’t know what the future is. And if you can’t make some sort of daily routine for exercise or you didn’t get out and go for the long walk or things like that, just at least try to incorporate 15 to 20 minutes of body weight or weighted strength training exercises, you know, work on your core, your arms, your legs, and there’s so many ways to do it out there.
MIKE: Gosh, there’s TRX, which is kind of a fun home workout that I’ve done before. Just a couple of dumbbells could be good. And you can Google this or ask your kids or friends or family how to do this. There’s also a number of personal trainers who can come to your home and do specific exercises to you. If you don’t have your health, what do you have? Let’s be proactive, folks. Now, I’ll admit, I’m not a bodybuilder and I also avoid strength training, so my commitment to you, Retirement Radio listeners, is I’m going to start incorporating strength training into my daily workout, and I hope you can do the same with me.
MIKE: And I’ll follow up in a few weeks and ask you how you’re doing with that, just a little bit reminder, as we want to have effective, long-term change here. You know, I know it’s as one-way conversation. I’m here on a megaphone, on a soap box, talking to you about how important it is to stay healthy, but maybe the reminder could help you. I just want to help you stay healthy and enjoy your retirement. And if strength training, you know, the whole idea, you don’t want a personal trainer, you don’t want to spend the money, or you don’t want to do this now or the other, I personally, and this is a personal plug for me, I’ve loved my Peloton.
MIKE: It’s a bicycle that is great on the knees, you can get an incredible workout, and they also have yoga and weights as a part of the workout so you can incorporate at home. You don’t have to do anything and they’re available all the time. So easy to use. I’ve loved it. It’s the reason why I started working out again, because, you know, you gotta fit it into your busy schedule. But for better or for worse, folks, let’s stay healthy out there so we can enjoy our retirement longer and better. A lot of medical professionals are saying that we’re living longer sicker today.
MIKE: For all of the Retirement Radio listeners listening right now, I want you to be the exception. I invite you to be the exception so you can live longer and healthier, more aware, more alert, more cognitive, and everything in between. I care about you and I really hope that can help you. But let’s dive back into our content here. Client story number two, okay? This person, just, gosh, my heart goes out to these people. They were so wonderful because they knew where they stood and they did not put up a front.
MIKE: When I say put up a front or a facade or a wall, a lot of times we tell ourselves stories that just aren’t true or we push it off till tomorrow to figure out. As I say over and over on this show, folks, ignorance is not bliss. Retirement is not a guessing game. Sure, the casinos in Las Vegas are fun and that’s entertainment, but when it comes to your lifestyle, your livelihood, your finances, your general ability to continue to live and enjoy that life, it’s not a guessing game.
MIKE: These folks, they were working… and they had jobs, so it wasn’t a worry about can they keep their employment. It was a worry about how long do I have to keep this up. Have you been there, folks? Raise your hand in your car or at home or wherever you’re listening right now. You know, in your head you can raise your hand, too, if you don’t want to look weird driving in the car, raising your hand to some guy on the radio. But [LAUGH] if you’ve been there, this is for you. If you’re wondered can I retire or when I can retire, this is for you. If you’re wondering how much I can even pull from my assets without running out of money before I die, this story if for you because mathematically we can quantify that.
MIKE: They were 59 and 58 years old, had around 400 thousand of assets saved up for retirement, and they had no idea when they could retire and it was a huge burden on them. Many of you listening right now you probably feel that as well. They came in mostly wanting to see if they could retire and when that would be. They seemed hopeful for the best, given that they had social security and a small inheritance and their 401(k)s.
MIKE: But when it came down to it, and on our introductory questionnaire, which we ask everyone to fill out before they come in, we ask how much would you like to receive in retirement? What’s your ideal amount to receive in retirement for income? And they just said, “Honestly, we don’t know. We’re coming in because we didn’t know if we… it wasn’t about when we could retire. It was about if we could even retire.” What a remarkable conversation we were able to have, because we were able to show them that they could retire and we got them on track to be able to retire at full retirement age, and I’ll talk about that in just a moment.
MIKE: Here’s a question for you to think, for all of you listening right now. When it talks about your current retirement plan and your current action, do you feel comfortable with it? Or is it like “I have a plan” but is it really the kind of amount of plan that you want? They didn’t have a plan. They were a “I hope this works, but we’re going to keep working as long as we possibly can until our health says we can’t and then we’ll retire.”
MIKE: They were using assets like an inherited IRA as a current income stream that could have been optimized better, but they just weren’t aware of it, and a few other aspects we’re going to talk about in just a moment. Overall, the conversation really turned to let’s just make a plan, let’s make a plan on how to get to retirement, and it was just remarkable. And here’s kind of what it went down to. The big concern was, for them, that they just needed something that they could depend on. So, we quantified it. We took their total assets, we ran the numbers here, and said, okay, well, roughly, how much do you need?
MIKE: We kind of based off of what they were spending, and what they were able to do, and how their retirement would look like, and their lifestyle that they were looking forward to, and we got it down to they could retire at 65 years old. They’re at 58 years old, and they were going to go about seven more years of work and they were comfortable with that. They weren’t doing any massive savings right now. They just said, “What does it look like?” and we got them to be able to retire with 55 thousand gross every year with a cost of living adjustment, and for them they were stoked. Why were they stoked? Well, let’s talk about the four percent rule.
MIKE: The four percent rule says if you have 400 thousand of investable assets, you can take around 16 thousand a year gross. Do you think that’s a comfortable retirement to live off of 16 thousand? No. For most people, that’s a really tough situation, and I’m being a bit hyperbolic when I say that, but, okay, that’s tough. So, what do they do? Let’s talk about social security. They hadn’t filed yet, but they knew they had to figure out this conversation. Do they file at 62 or 63 or 64 and take a discount but file a little bit earlier? Or do they file at full retirement age? Do they file at 70?
MIKE: What do they do in their social security situation, knowing that they’re going to pull around 16 thousand, according to the four percent rule, each year? How do they live off of that and when can they retire? Their idea was we’re going to wait until 70 years old and then file for social security and retire about then. Makes sense. And for anyone that has 500 thousand or less, we have found most people will want to file their social security around 70 years old because it’s going to be a significant part of your income stream in retirement. But we did something clever, and what I’m about to tell you could give you five more years on your retirement life, so listen up.
MIKE: We said, yes, you need to retire, or, you need to file your social security at 70 years old, but you could retire at 65, and here’s how. Your assets we mapped out for 20 years of principal-guaranteed accounts, and we had them essentially mapped out to be able to grow in principal-guaranteed accounts that could participate in the up years, and we did it very strategically. On top of that, we put some assets in the risk bucket because they needed to have some exposure to risk, and they were okay from a suitability standpoint to grow and play a little bit of catch-up here. Okay?
MIKE: On top of all that, we then figured that they could take out around 55k each year for the first four years of their retirement and then drop it to around 11 thousand. We reduced their risk by over 80 percent, 80 percent, principal guaranteed. So, they knew that for the next, or, for the first 15 years of their retirement their income was set. It was good to go and their risk had 20 years to grow, which 20 years for a risk bucket that’s a great timeline to be able to grow, even with the market uncertainty.
MIKE: Then what we did is we dropped it at seven years old and allowed their social security take over a major part of their retirement income and lessen the burden on their assets. See, folks, for some people time is more important than the estate preservation, and for others it’s the exact opposite. If you file too early, your income is hurting. If you file too late, you’re hurting your estate. Let me say that again. If you file too early, your income is hurting.
MIKE: That’s to say that you’re taking too much of a discount on your social security to just get it earlier. If you don’t have faith that social security won’t work, we can incorporate that. If you think it’s going away, we can plan around that, too. My personal belief is doesn’t matter how dismal social security’s going to get, politicians are going to want to get elected, and so they have to figure out a way to make it work or they will lose their job. That’s a pretty good incentive. So, it may look different than it does today, but it is an income stream that should be around for some time.
MIKE: For them, time was important. Health was an issue for one of the spouses and they wanted to see as much time as they could spend while one of the spouses was still around. So, we filed at 70. It may hurt their estate a little bit, but they got five extra years of the retirement and got the income that they needed. Now, we presented them with the different options and they chose this one. If you don’t like that option, you can see the other options as well, and that’s your choice. The beauty here is we can give you the transparency that you deserve, and so it comes down to it you’re making the choices for yourself and what’s in your best interest, and we can support you in that, and it’s a wonderful thing, folks.
MIKE: It is a wonderful conversation, to be able to have these with those that are coming in our office. From there, we then accounted for their risk, and they wanted to use two-sided quantitative models. Let me tell you about these, folks. Two-sided models are built to make money in the up years while protecting your assets in the down years. It’s beautiful. As we’ve talked about before, fear keeps you… let me back up real quick. Markets go up and they go down. We’re all aware of that. What a lot of emotional investors will do is they end up buying high and selling low and destroying their investments.
MIKE: When markets go up and then they crash, greed keeps people in the market longer than they should. The markets are going down and we keep telling ourselves they’re going to recover, they’re going to recover, they’re going to recover, and they don’t until it’s too late. We sell at a loss and then markets start turning around. But we’re so scared that they’re going to crash again. Fear keeps us out of the market longer than we should, and this is a emotional, habitual trading pattern for a lot of Americans that can stop.
MIKE: When you find where the trend is and you have algorithms that tell you what to buy, when to buy it, and when to sell it, you now have a two-sided model for a two-sided market. And we diversify ours in different sectors, and then when you come in that’s something we can talk about, and we’ll open them up and show you third party verified what they’ve done. Their risk bucket assets that had 20 years to grow, we invited to enjoy two-sided, quantitative models that were able to participate in the up and help protect assets in the down years. Sure, they’re at risk, but they had 20 years to be able to do it and it was a phenomenal situation.
MIKE: And then what we did is we talked about their goal savings when it comes to each year while they’re still working. They’re still working for seven years. Some of you may be in the situation. But the beauty was they now had a plan and they knew how many years that they would work to get to the retirement that they wanted to. And we quantified how much they have to save each year and just add it to the portfolio so it can continue to grow. Dollar cost averaging here. A little bit of an accumulation phase. And sure, we’re trained in accumulation.
MIKE: We just don’t do large amounts of accumulation. We are specialists when it comes to distribution. But if it’s the last seven to five years to get you there, we’re going to use accumulation strategies to get you there and then help you retire, and then focus on the distribution from here. And it was a beautiful thing. We got their income up another five thousand dollars, which was perfect for them. They could enjoy the lifestyle that they wanted to and have five extra years on their retirement. We quantified, down to the dollar amount, how much they’re going to spend and mapped out their plan.
MIKE: And you know what was really cool, folks? The comfort it has when you know what to expect in the future. See, disappointment doesn’t necessarily come from bad news. And sure, it does, I get that, but hear me out. Disappointment comes when expectations are not met. For example, we have an expectation in this country to be safe. So, when something tragic happens, there is an incredible amount of sorrow because now our expectation’s not met.
MIKE: In our relationships, we’re often sad not when our significant other does something we don’t approve of, it’s because we had the expectation that they would not do that. Fill in the blank. There’s thousands of examples we could go in there, and it’s not right or wrong. It’s just what the expectations are need to be met or exceeded. They can’t fall through. They now had expectations and could get comfort from this. Now, let me say it this way.
MIKE: Now once they retire, and they know when they’re going to be able to retire, the conversations in our meeting started going to what do you want to do with your time. You have five extra years to spend with your friends and family. How do you want to incorporate that? Is there a bucket list trip that you want us to plan for? And we can incorporate that in this year. Is there a… do you want to move? Would you like to live in the current city you’re in or is there a retirement community that you like? And I don’t mean like some sort of retirement housing area.
MIKE: I’m talking there’s some great places here in Utah and also in Washington, just neighbors where there just happens to be a great community of retirees that are having a blast. The conversation’s changed to be so fun and fulfilling to where it’s not reactive “can we do this?” it’s proactive “we’re going to do this and here’s how it’s going to look.” Oh, it was so joyful. Folks, when it comes down to it, the principles that govern retirement planning are steady. They are principal.
MIKE: And when you work with a fiduciary, a purebred fiduciary who is mathematically based and principle based, the world really is your oyster and it’s an incredible thing. I want to talk about, in this situation, what this couple was lacking, and what caused their fear was the lack of principle three. They did not have a distribution plan. They had a guessing plan. They had a pie chart and they didn’t even know how to quantify the pie chart, which is not their fault at all. I blame the financial professional who was unable to walk them through this.
MIKE: Now, is it really his or her fault, whoever the financial professional was? No, they’re not trained in this. If you hurt your foot, you’re going to go to a foot specialist, not some general practitioner. If you have throat issues, you’re going to go to an eyes, ears, and nose and throat doctor, not a general practitioner. We want to make sure we’re talking to the right specialist. When it comes down to it, you gotta talk to a specialist with retirement planning and how to distribute assets. I just want to wrap up the show here and really hone in the three principles that govern proper retirement planning.
MIKE: Now, for all those that are going to call in here, and I’m going to give another segment as an option for you to call in, when you call in we can show these three principles and how they help your individual plan. I can only do generalizations on the radio, obviously, and I want to make sure that we still can at least hit them over and over again so you understand how they can help you. The first one, principle one, never draw income from a fluctuating account. If you want to Google why, Google “sequence-of-return risk.” That’s the jargon from the industry, the technical term, but here’s what it does.
MIKE: When you are drawing income from a fluctuating account, you are compromising your gains in the up years and accentuating your losses in the down years. If you have a pie chart, that’s essentially what you’re doing. If you can cut that out and draw income from a principal-guaranteed account, sure, I get it, you may be accentuating your gains in the years because you’re drawing income from the account that’s growing, but keep in mind we’re going to draw income from the lowest-earning accounts while the other principal-guaranteed accounts can compound, what I believe Einstein called “the eighth wonder of the world,” compounding interest.
MIKE: Now, there’s a multiple different ways that we could do that, and that’s up to you on how you want to do that. We’ll just show you the different options and you choose what’s best for you and we’ll quantify it. But in point in fact, never draw income from a fluctuating account. Principle number two, use all three investment classes or investment types in your plan, and here’s what I mean. Imagine an investment triangle and you’ve got on one side liquidity, on another side, and on another side you’ve got principal protection. Pick two. You don’t want to, right? You want to pick all three. The problem is an investment that has all three just doesn’t exist.
MIKE: So, when it comes down to it, pick two? Well, let’s not just pick two and stick to that and go all out. Let’s pick a little bit of all of those options. There’s three options out there. There’s liquidity and principal protection, which is essentially your emergency cash or discretionary cash for near-term purchases. And I got a quick aside with a story, actually. We had someone that walked into our door and said, you know, “Hey, I’m going to buy a roof here and I don’t think I can pull out my assets.” He locked ’em all up in income annuities and different life insurance products that were illiquid, almost all of his assets.
MIKE: He couldn’t pay because some financial professional pushed one product. And I’m not bashing on income annuities, though for my long-time listeners you know I don’t really like them at all. I don’t think they’re in the client’s best interest at all. It’s an expensive way to have an insurance, or, pay an insurance company to get your own money back. But he went to someone who claimed to be a fiduciary that put his assets in one of the three classes. If you’re talking to someone that puts your investments into one of the three classes, chances are you’re talking to a salesman, not a fiduciary.
MIKE: So, we have, okay, your emergency cash should go in there. Now, growth and principal protection, those are principal-guaranteed accounts. That’s where you draw your income. And your long-term play for retirement growth is going to be some risk or growth accounts with liquidity. Those are stocks and bond, or, excuse me, stocks, I guess you could do bond funds, ETS mutual funds, whatever you prefer. But I’m going to get on a little tangent with bond funds, if you don’t mind. Just bear with me. Bond funds are trotted out to be safe money, and the rule of 100 says that your age is essentially the percent of your assets that should be safe.
MIKE: But if interest rates go up, bond funds lose money, so how is that safe? And if we’re at all-time-low interest rates and we have relatively high… or, if we’re at all-time-high risk of interest rate risk, which means we’re at low interest rates. And on top of that we have relatively low taxes and all-time-high debt. How is this all going to happen? Interest rates have to go up eventually to pay off the debt. If interest rates go up, the quote-unquote “safe” money that’s in bond funds, it’s going to lose money. It’s mathematical.
MIKE: It’s not my opinion. It’s just math. It’s what happens. Is that really where you want to invest your assets? And especially with the rates we’re getting right now on bond funds and bonds even alone, it’s really hard to make the returns that you need to stay in the life that you want. There are other options out there. We’ll talk about bonds and the going rate and the best assets, or, the best bond funds that are out there, and we’ll show you that. We’ll show you the best funds and mutual funds and ETFs that are out there. We’ll show you the options.
MIKE: What’s surprising, though, is so many people don’t know all the options that are readily available to them, because they’ve worked with someone that pushes a product and then doesn’t actually look out for their financial health. I started with talking about purebred fiduciaries. I want to throw this analogy out there. We’ve said it in the past before, but it’s been a while, so I want to throw it out there again. When you’re working with your health, for example, and you want to talk about nutrition, it doesn’t make sense to talk to a butcher about your nutrition or a dietician.
MIKE: Butchers are not bad people. They’re just going to sell you meat, and that’s okay. That’s their job. But if you want to talk about your health, you should talk to a nutritionist, a dietician, someone trained in that space, and even then there’s room for error. Some nutritionists are just ignorant, some dieticians are just ignorant, and that’s okay. Some people are just ignorant and that’s just, it’s the human condition. But when it comes down to it, you want to put yourself in the environment where you can be successful, and part of that is going to be, pure and simple, working with a purebred fiduciary who can give you the answers that you need.
MIKE: For us, we try to take the emotion out of it and give you mathematically-based and principle-based information so you can know what’s going on. The third principle here that I haven’t talked about that’s critical to your retirement needs is plan with a distribution plan. Now, we didn’t invent distribution planning. It’s been around for a while. But when it comes down to it, we’ve got to understand how to distribute assets. You’ve gotta understand it. You can’t do that with a pie chart. A pie chart is a guessing game.
MIKE: And sure, guessing can be fun in some situations. Your financial health and stability is just not there. When it comes down to a distribution plan, there’s a lot of planners, a few amount of planners, I should say, that actually do this because it does take a lot more work. We figured out a way to quantify it much quicker and make it more customizable to you, and we’re bringing that to you, making it available to you for those that are going to be calling in, and I’ll extend the offer in just a moment.
MIKE: But when it comes down to it, and this is one of my favorite stories, our servicing manager who was talking to a dear friend who planned with one of the large banks, he was working with a banker, high net worth, and so he got the bells and whistles and all the fancy treatment, and our servicing manager said, “Yeah, well, we plan with distribution planning software we developed that tells you down to the month, net of tax, how much you can spend for the rest of your life.” And this gentleman said, “No, doesn’t exist. If it exists, we’d already be using it.” The logical fallacy and the prediction error that individual had, that man had, was that his banker was looking out for his best interest, and here’s the difference.
MIKE: The banker was doing his best to look out for the interest with a very limited spoke, or, scope of what that banker could offer. Do you think Vanguard is going to recommend American Funds to you? Do you think American Funds is going to recommend a money market to you? Well, okay, there’s money market mutual funds. But Oppenheimer’s going to sell you Oppenheimer. E-Trade’s going to sell you E-Trade. They sell their own products. When you have the full gambit of information to you, and that’s readily available to you, folks, that’s what the difference is, and when you have a distribution plan, you also get the transparency there.
MIKE: We developed it for you, for that very purpose. So, for everyone here that’s listening right now that has at least 300 thousand of assets saved up for retirement and is 55 years or older, I’m going to invite you in right now for the Decker 30 challenge, 30 minutes on a phone call for a safer 30-plus years of your life. It’s remarkable. I challenge you to find a better way to spend 30 minutes. If you’re more detailed and you want to dive into the details in person, we’ll give you 90 minutes as well in our office in San Francisco, in Kirkland, Seattle, Renton, or Lehi or Salt Lake City, and Las Vegas.
MIKE: We’re here for you as purebred fiduciaries, to give you the transparency that you deserve. Phone lines will be open for the next 10 minutes as we conclude the show. Call us now. 833-707-3030. That’s 833-707-3030. When you call in, they’ll gather your information and ask you a few questions. If you don’t feel comfortable answering the questions, that’s okay. Just say, “I don’t feel comfortable answering the question.” We’ll move on and we’ll have to just ask you in person, but that’s okay.
MIKE: We want to be able to run the numbers and prepare the plan for our visit, but if you’d rather us use generic content and still go over the three principles and move at your comfort level, like I said, we’re just here for you, legally bound to do what’s in your best interest, and want to give you some transparency, the transparency that you deserve. Call us at 833-707-303. That’s 833-707-3030. ‘Cause when it comes down to it, this is your retirement. This is your lifestyle. This is your livelihood. And it’s been a while since 2008.
MIKE: For all of you that have retired in the last 10 years, you’ve only experienced really a bull market. Sure, there’s the flash crash of 2015, I get that. But are you ready to wage the financial storms that could be ahead? Markets crash every seven or eight years. I personally believe, though quantitative easing, that we’ve delayed that since 2008, but it seems like the inevitable is coming sooner than we would want. Are you ready for that? 833-707-3030.
MIKE: Let’s do what we like to do each day, for those that come in. That’s reduce your risk, reduce your fees, reduce and minimize your tax exposure. We haven’t even talked today about the tax burden minimization strategies that we have that are absolutely proprietary in our systems and they are life changing. Six to seven figures we’ve had people save just by tax burden minimization, increasing transparency, and for a lot of people we’re increasing the amount of income they’re receiving in retirement and/or the amount of time, helping people retire five-plus years in retirement. Folks, it’s a phenomenal thing.
MIKE: Call us at 833-707-3030. And as a quick wrap up, too, as I’ve told you at the beginning of the show, we started the show admitting we’re doing a new format. We’re telling you the stories of how we’ve planned with other people and hope you can incorporate with that. If there’s something out there that you like that you heard on the show today and you’ve been a long-time listener and want to just touch base with us, call us, call me. You can email me at email@example.com. Happy to receive your emails. Love talking to you. That’s deckerrp, rp as in retirement planning, dot com, and let me know what you think.
MIKE: This show is for you. It’s a public service for you to help educate those, whether you work with us or not, to understand the principles that govern proper retirement planning as well as help guide you to enjoy a safer retirement, whether you work with us or not. All I care about is that, whenever the market does crash and you’re seeing more and more of that in the news, the trade war, whatever it may be, a black swan event, who knows, whenever the market does crash, that you don’t have to change your lifestyle. There’s a forty percent correction, according to Morningstar, the average mutual fund will take six years for you to get to break even without drawing income.
MIKE: That’s the kind of risk I would never live with. Would you? Phone lines are still open, if you want to take me up on that offer. 833-707-3030. But let me know what you think, folks. Again, my email, firstname.lastname@example.org. Happy to chat with you. You can also just want to chat about the radio show or your retirement, connect you to some purebred fiduciaries. On our website as well, just a quick reminder, you can catch this show or any previous show at deckerretirementplanning.com. You can catch the podcast on iTunes or Google Play, wherever you get your podcasts.
MIKE: The show is released every Friday at 10 A.M. Mountain Standard Time. And so, if you want this show first thing and listen to it at your own convenience, you can always subscribe there. If you don’t know how to subscribe to two different shows, you can always ask a friend, neighbor, son, daughter, grandson, granddaughter to help you with that. It’s pretty cool. We’ve got a lot of subscribers that listen to us now. They hear us once and then want to continue to subscribe as well. And then last but not least, folks, I want to do a big heartfelt thank you to all the listeners that have been continuing to listen and telling their friends. We’ve been growing, for our listenership, over and over and over again, and I think it’s just a testament we’re just talking differently.
MIKE: We’re speaking to you differently. You’re not stupid, and anyone that says otherwise is selling you something and it’s a bit condescending. You are intelligent people trying to better your life. We want to give you that transparency. We want to help educate you and guide you in that quest. Like I said, whether you work with us or not, let’s get you the information so you can be prepared. Whether you do it yourself, work with a financial professional, or a combination of the two, you deserve the life that you’ve worked so dang hard your entire life to enjoy. Let’s enjoy the retirement you want.
MIKE: Let’s allow you and enable you to live the retirement that you’ve always dreamt. We like to call that a safer retirement. Thanks so much for listening, folks. Have a wonderful rest of your week. We’ll talk to you in one week. Take care.
Decker Retirement Planning Inc. is a registered investment advisor in the state of Washington. Our investment advisors may not transact business in states unless appropriately registered or excluded or exempted from such registration. We are registered as an investment advisor in WA, ID, UT, CA, NV and TX. We can provide investment advisory services in these states and other states where we are exempted from registration.