Gen X is Not Prepared for Retirement: How You Can Catch Up

Episode 3: Audio automatically transcribed by Sonix

Episode 3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Announcer:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ community. Protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of. A retirement you can take pride in, no matter who you are, where you're from or who you love. So now let's start the show. Here's Matt McClure.

Matt McClure:
Hello and welcome once again to Take Pride in Retirement. I'm Matt McClure. I'm your host. I am your advisor. And this is the show. Yeah, it's all about you and wherever you are right now and helping you go from wherever you might be right now to a better place, financially speaking, so that you can be more prepared for retirement. It's no matter who you are, it's no matter who you love. This is specifically geared toward the LGBTQ+ community. But hey, if you are someone who's an ally, if you are someone who just, you know, considers yourself a human being of the world, this is all for you, too. It's not just for LGBTQ plus folks, but this is it's focused on our community because there were really you know, when I had the idea for this show, there were really no resources out there to speak of other than like a couple articles online. And so that's, you know, that just didn't cut it for me. So that's why this show exists and that is why I got my husband to do the voiceover for the very beginning of the show. For the show opening you just heard a second ago. So it's it's great. It's, you know, going going so well so far and look forward to joining you each and every week that we are able to get together here for a new edition of the show. Great stuff to come up here over this next probably close to an hour that we'll spend together. On this edition of Take Pride in Retirement.

Matt McClure:
We're going to take just a bit of a break from what we've been doing the first couple episodes. And, you know, we've been doing the Smart retirement plan, which is great. This is a concept that is sort of written or come up with by my colleague, who is also an advisor out of Atlanta, as I am. And. That's wonderful. And it really does cover all of your bases that you need to think about and that you need to talk with your advisor about when it comes to retirement and and planning for it and being smart about that planning. Right. So we'll we'll continue that next time around. I also have I've got one guest scheduled to come on the show within the next couple of episodes. She'll be here. Her name is Gabrielle. She's amazing. I've gotten to know her through an organization that I'm a part of called the Georgia Business Alliance, which is basically the LGBTQ+ Chamber of Commerce in in the area where I live. And so she's going to come on. She'll talk about different things to do with the trans community, things that you might not think of when it comes to financial planning in general, but more specifically, trying to plan for your retirement as well. If you are one of our trans brothers, sisters or siblings out there. So I'm looking forward to that. Today, though, we're going to take a bit of a break, as I said, from the Smart retirement plan. We're going to talk about a new study that came out here not very long ago at all about Gen X, generation X.

Matt McClure:
I literally I just missed it by this much. I'm technically a millennial, but I am right on the cusp of both of those generations. I was born in 1981, so I'm like literally on that that like ledge between millennials and Gen X. So of course, you know, I just don't quite fit in anywhere. But we're going to talk about Gen X, It's a big generation. It's coming up for retirement right behind the baby boomers who are retiring now with the clip of like 10,000 a day, which is just an insane number. That's why it was a baby boom. Right. And not like just a baby fizzle out or something. I don't know that it wasn't a baby bust, I guess is a better way to put it. But it was a baby boom. And so the next generation is generation X, generation X, not very prepared for retirement. And a lot of things have led to that. We'll go into kind of the details, but then I'm not going to leave it as like a doom and gloom kind of a thing. Right? I am going to give you five steps to catch up on your retirement plan. If you're one of those Gen Xers who has fallen behind, if you are one of the baby boomers who may have fallen behind, if you're a millennial who has fallen behind, I'm going to give you five steps so that you can catch up.

Matt McClure:
Or even if you haven't started yet, you can catch up. You can get it going. All right. We also have a bit of an inflation demonstration. The Federal Reserve, a little bit more rosy outlook for the economy on the horizon, but we'll have some steps to prepare for no matter what happens. It's kind of why I'm I'm sort of tentatively titling the show today. Are you prepared for retirement no matter what? And that's the goal, right? To get you prepared for retirement. No matter what happens, no matter what comes your way, no matter what happens in the economy. Et cetera. It's you no matter what happens with your family situation. That's why want to for this show. And not only this episode, but this show in general. Focus on the LGBTQ+ community. Because no matter what happens, we've got different family situations that tend to happen. We may or may not have children. So as far as, you know, an inheritance estate planning, if that is your thing that you need to do, how do you go about that? What do you plan for when you have no kids? Do you have nieces and nephews, that kind of thing? Do you have other family? Do you have chosen family that you might want to include in that plan? That can all be a part of the discussions. When you reach out, when you give me a call, you reach out to the website. You can go to the website. By the way, it's easy to remember because it's the name of the show.

Matt McClure:
It's TakePrideInRetirement.com. TakePrideInRetirement.com. You can also send me an email. You can also give me a call and set up a free consultation. I do these absolutely free of charge. For anyone who's a listener of the show, you can get a comprehensive consultation. We'll take a look at your current situation where you are now. No matter what that situation is. You might say, Well, Matt, I don't have a whole bunch of money. You're talking about estate planning and all this stuff. I don't have a whole bunch of money. I'm just trying to kind of make it here and have the best retirement I can. Great. Because chances are you don't realize how great your retirement could be. Really. You just don't realize it because no one has taken the time to sit down with you and show you what your retirement could be. So we'll do that. We'll take a look at what kind of road you're on right now. We'll give you a plan, an analysis, and then we'll show you what that could look like. With your current situation. Now, compare that to what it could look like if you were to work with us. So give me a call at that phone number. It's (855) 246-9211. Give it to you one more time. Well, let's. I already give you the preview of what's coming up on the show today. So let's get things kicked off here, shall we, with our Quote of the week.

Producer:
And now for some financial wisdom, it's time for the quote of the week.

Matt McClure:
And our words of wisdom this week come from Chris Brogan, who is an American author, a journalist, a marketing consultant. He's a speaker about social media marketing as well. He's a bestselling author of the book Trust Agents Using the Web to Build Influence, Improve Your Reputation and Earn Trust. That was a New York Times bestseller. He's also an ally of the LGBTQ plus community. He has a trans child and has written about his sort of journey with with acceptance and love in his family. So Chris Brogan said this. It's a very, very wise quote here, and it means a lot. I know to me and I hope it does to you as well, especially if you're a member of the LGBTQ+ community. It is the goal isn't more money. The goal is living life on your terms. I mean, wow. The goal is not more money. The goal is living life on your terms. And how about something that that really hits home for us as queer people? You know, I mean, it really is, you know, something that that we've had to contend with. Pretty much all our lives is how do we live life on our terms? Not necessarily the terms that society thinks we should live them by or our our family, our parents or whomever, brothers, sisters, whomever thinks that we should live them by. How do we live life on our terms? Because I have always been a firm believer that, you know, if you're not hurting anybody else, what business is it of yours, What I do or what you know, anybody does, really.

Matt McClure:
So that is that is that. And. And. You know, we need to obviously, and I won't be preachy here, but we just need more love in this world and more acceptance. And I think Chris Brogan is a is a great example of that with how he has grown to be more of an ally of the LGBTQ+ community and all of that. And those words are very, very wise and saying that we need to be able to live life on our own, our own, on our own terms. Easy for me to say, no matter what our situation in life. So great words there from Chris Brogan as we start off our conversation. And you know, Gen X is is finding it hard to live life on their terms these days because they really do face a harsh retirement reality. Saw this article on CBS News and that Gen X generation is the the years the kind of the birth years there are between 1965 and 1980. Those are the Gen X years, that kind of 15 year span between 65 and 80 millions of Americans in that generation. Just are headed toward retirement, barreling towards it here. They're in their 40s and 50s now, but they're woefully unprepared financially for retirement. This according to a recent analysis by the National Institute on Retirement Security, the IRS.

Matt McClure:
The typical Gen X household with a private retirement plan has $40,000 in savings. That's according to a report that that's out. And the figures, you know, you might say, well, I don't I don't have that, you know, or I have way more than that. I must be doing great. Well, here's here's the thing. If you have less than that, don't. Don't be alarmed. You might be a little bit behind here, but we're going to tell you how you can catch up in just in just a few minutes. If you are ahead of that, if you have more than that in your retirement plan, great, great for you. But you've got to keep in mind that retirement is not about just one big nest egg number. It's about the income that you're going to have in retirement. That's really what it's all about. And we'll we'll tackle that as we go along here, too. But the typical Gen X household with a private retirement plan, as I said, $40,000 in savings. That's according to that report. And the figures are more alarming for low income Gen Xers. They've managed to stash away no more than about $4,300, $4,300 and often even less, according to this report. Now, across all members of the generation, about 40% don't even have one single penny saved, saved for retirement. And that really just that calls into focus here. The disparity.

Matt McClure:
You know, we talk about it a lot in our society between the haves and the have nots. Right. Because you look at it, if you if you look at like, say, the average the typical household, that private retirement plan has $40,000 in savings and yet 40% of Gen Xers have nothing put by, that's a big fat zero. Then you got a lot of people with a lot more than 40,000. You know, not as not nearly as many, though, as have nothing saved. Right. So you've got some people with a lot more than 40,000 and then you've got 40% of the generation with nothing, absolutely nothing set aside for retirement. The executive director, Dan Doonan. He's the executive director of the National Institute on Retirement Security. He said that Gen Xers fast approaching retirement age. The data indicate the vast majority are not even close to having enough savings to retire. He said that most Gen Xers don't have a pension plan. Those have kind of gone the way of the dinosaur. You know, it used to be you could work 30 or 40 years for one company and you had a pension when you would retire. You couple that with Social Security and maybe any kind of private account that you might have. That was the three legged stool, right, of your retirement. Well, now that pension stool has been taken away and your stool is really wobbly. That's moments because the pensions don't exist.

Matt McClure:
But anyway, so Dan Doonan said, you know, Gen Xers, most of them don't have a pension plan. They've lived through multiple economic crises. You know, you're talking about, say, earlier on in life for a lot of the Gen Xers that the economic downturn of the 80s. Then you had ups and downs in the 90s, the.com bust back in the early 2000. You had in the late 2000 the housing bubble and the the subprime mortgage crisis as well. Causing the Great Recession and that being the worst that we've all lived through in our lifetimes, Probably unless you're listening to the sound of my voice and you are old enough to have been alive during the Great Depression, which is possible. But, you know, they've lived through multiple economic crises. Wages are not keeping up with inflation. Costs are rising as well, faster than than keeping up with wages, obviously. And the American dream of retirement, he says, is going to be a nightmare for too many Gen Xers. So here's the question then. Why is Gen X so unprepared? Well, he listed a couple of things there, but according to researchers, there are a few more things that have have contributed to it. Just a little over half, 55% of Gen X workers participate in an employer sponsored pension or 401. K. I was surprised at how low that number is. Just 55% participate in a 401. K or some other type of employer sponsored plan.

Matt McClure:
Wage growth has been stagnant compared to previous generations. Boy, don't you know that's true. Student loan debts are exponentially higher for Gen Xers compared to baby boomers. So whereas the baby boomers had money to be putting into these plans, they had they had pensions and all of that in large numbers, larger numbers than Gen X generation anyway. They had pension plans and other things that they could rely on, but then also did not have the burden of crippling student debt. The Gen-Xers have that student debt. Gen Xers have that burden each and every month that is weighing them down. So that money then goes toward paying for their education. All throughout their working years and they don't have that money then to set aside or invest for retirement. It is not a good situation. So the thing that I want you to to take away from this, I don't tell you all this to to scare you. You know, don't tell you all this to just kind of freak you out. But I do tell you all of this and give you all of these numbers to say, hey. You know, wake up a little bit, right. Don't be unprepared. Don't be uncertain about your retirement. Reach out to a financial advisor or a professional who can help you plan for whatever comes your way and achieve the retirement that you deserve. All right. We hope that it is us here at Take Pride in Retirement myself.

Matt McClure:
Of course. Again, I'm Matt McClure, the host of Take Pride in Retirement and also an advisor Life and Health licensed as well. I do annuities and and all different kinds of things. I'm a dual licensed advisor so I can help you in a number of ways. Go to TakePrideInRetirement.com. Fill out the contact page there once again that's TakePrideInRetirement.com is the website and then you can also give me a call (855) 246-9211. That's (855) 246-9211. And that is the way to get a hold of me there And you can just, you know, leave me a message. If I don't answer, chances are I will pick up. But if I don't pick up, it's because I'm busy. Maybe I'm recording the show. Hey, who knows? But you know, you can give me a call there and I will get back to you if I do not immediately pick up the phone. But definitely do leave me a message because I want to help you. I want to be of service to you. That is why I do this, especially if you are a member of the LGBTQ plus community, because we we need the help, I think a lot more than than most, because there are specific things in our financial situation. You know, everybody's financial situation is different, but there are things that are particular. To. The situation of LGBTQ+ people. That are, you know, maybe true kind of across the board.

Matt McClure:
There are little, you know, individual things that are different about everyone's situation. But especially if you're LGBTQ+, you want to have someone who you know that you can trust, who gets your situation, who might not be in the exact same situation as you, but is empathetic to you, who knows kind of what you're going through every day and can help you along. And I hope that that is me. So I told you I'm not going to leave you high and dry. I'm not going to leave you with all the doom and gloom there and just be like, okay, well, you know, Gen X hasn't planned for retirement. Oh, well, nothing can be done. No, there is plenty that can be done. And I've got five steps here to help you catch up on your retirement plan, you know? I mean, because if you've got a late start, no matter who you are. If you are starting that sort of planning journey late later than you should have, because really and truly, we should start this journey when we start working like in our 20s. But if we're in our 20s, we've got other priorities right. Hanging out with friends, going and having fun doing this, that or the other, paying the rent and all of the things. I get it. I get it because I was that way as well. It took me until I was, you know, right around the age of 40 before I really started focusing on this kind of stuff and started my journey toward getting out of debt and and really, you know, putting money aside for my retirement years.

Matt McClure:
So it can seem overwhelming if you're starting late, but it's really and truly not too late to take action. Help improve that financial situation and get you caught up with others who may have started earlier. They had their priorities more in line with planning forward for their retirement right? So five steps to begin planning for retirement. If you feel like you have started that process too late. Well, number one is to assess your current financial situation, right? So so you got to know where you're going. It's almost like a financial GPS in a way. You've got to know where you are. It's got to know your current location. All right. So assess your current financial situation. So you got to take a look and it's got to be a comprehensive look at your current financial status. Calculate your net worth. Including assets that you might have, like your savings accounts, investments if you've got real estate. Also liabilities like debts, credit cards, especially personal loans, the car loan, all of the anything that you pay on your mortgage, any debt like that that you pay on every month or however, you know, whatever period you pay, understand your income and your expenses.

Matt McClure:
And then you can really once you do that, you can identify areas where you can potentially cut back and then save more for retirement. Right? So look at what is coming in and what is going out right now. Assess that current financial situation. So, so important. That is why we do the free consultation. That is essentially what that is. We show you what your situation is right now and we'll plot it out for you and it will have this nice visual representation of everything that you can look at and it'll make sense where you are now and where you could go and where you could go. Is number two on this list of of steps to take to catch up on your retirement plan, because you've got to have goals of where you want to go. So that's it. Set specific retirement goals, clear and achievable retirement goals. You want to determine the age that you want to retire, the lifestyle that you want to have during retirement, who you want to be spending your time with during retirement, what you want to be doing right. We all have different dreams and goals for those years. What are yours? I want to help you achieve those. That again, is what this show is about. That's what I do on a daily basis for people. And gosh, I love it. Absolutely love the look on someone's face when they're able to take a step back and say, oh, wait.

Matt McClure:
I'm brushing away the cobwebs here. I thought that my situation was kind of hopeless and that I was way too far behind to have a successful retirement, the retirement that I want. But now I've got this plan. I've got it in place. I'm going to act on it, and that is going to give me the retirement of my dreams. And that's really what it is. You want a retirement that you can take pride in. And so that is what Take Pride in Retirement really is all about. Step three to catch up, maximize retirement savings contributions. So if you if you have a job that is a is a full time job, even a part time job, a lot of times employers will will allow you to make contributions to a 401. K contribute as much as you can to that 401. K and as much as you can to get the employer match right. At least get the employer match. That's free money. That is my favorite kind of money. If it's free and if you if your employer offers matching funds going into your 401. Oh, my gosh. Why aren't you putting in enough money to get that match? Maximize those contributions. If you are maybe an independent contractor, maybe you own a business, something like that. If you've got maybe an IRA or a Roth IRA, those individual retirement accounts or other types of accounts, Right.

Matt McClure:
An SCP, for example, maybe a TSP if you're a government employee, that those kinds of things maximize those contributions. You know that certain accounts as well you can take take advantage of catch up contributions if you're over 50. And those will allow you to contribute some additional funds to retirement accounts beyond the regular annual limits. That's why they're called catch up contributions. Right? If you're so if you're over 50, let's say you don't have as much set aside as you would like, you can put then a certain other dollar amount. It basically increases the dollar amount that you can contribute to those accounts per year because of your age. And where you are in life, right? You've reached a certain age, and age comes with its privileges and that's one of them. Number four, step to help you catch up on your retirement plan. Create a budget and cut unnecessary expenses. So I know budget is not a four letter word, but a lot of times people treat it like it is. I know I have never budget has never been a word that I have enjoyed hearing. Because a budget is kind of like a diet, right? It tells you what you can't have a little bit. But it's an important thing. A spending plan, A spending and income plan, if you want to call it that, because you've got to keep track of what's coming in and what's going out.

Matt McClure:
And then if you create that plan and you cut unnecessary expenses. Or you'll be in a much better place than you are right now, no matter your your current situation. Right. You may be doing pretty well. You might see. Matt Well, I'm actually doing okay right now with everything. Well, because you're doing okay, that doesn't mean you can't be doing fantastic. You could be doing much better and just not even know it. There could be places where you can cut those unnecessary expenses and then have more money to set aside for your retirement. That's what we'll do. That's what will help you look at. It's a it's an essential thing to do, I think, to just get that second opinion. Even if you already have an advisor or a representative of whomever company that you work with, perhaps right now on your financial planning and on your retirement planning, even if that's your your situation, you already have somebody you've got a plan in place. That doesn't necessarily mean it's the best plan for you get a second opinion because you could be doing even better and chances are we can show you how you can do any better than than how you're doing right now. And here's the thing. If you are doing great and things are going well and we put together a plan for you and take a look at your current situation and where you're headed and say, look where you've actually got a good plan here.

Matt McClure:
You've actually got this is probably a great plan for you, actually. So keep on doing what you're doing. That's great. Keep on working with the advisor you're working with. That's fine. It's not a situation where you come in for a free consultation and we've roped you in to, you know, you're paying every month for this, you know, plan that that we've put together. No, it's when we say free, we actually mean it. We mean free. And it's free of any cost. It's free of any obligation. So that should be good news to you. Really got nothing to lose there and everything to gain potentially a better retirement, to gain a greater sense of financial security, to gain for your future, for your your family's future. No matter what your family looks like. Just go once again TakePrideInRetirement.com. That is the website. And then number five here to catch up is maybe extend your career a little bit right Consider delaying your retirement maybe taking on some part time work. You know, one of the things to do is potentially if you could wait to start claiming your Social Security until the age of 70, like let's say, if you have just as an example, it's not right for everybody to do this. But for example, if you have people who, you know in your family who historically lived to be 100 years old.

Matt McClure:
Great. Maybe you should delay your retirement, taking your retirement income from Social Security anyway until the age of 70. Because if you do that, if you delay from whatever the the age is, you know that you're going to think about retiring and maybe, you know, drawing from Social Security like, say, the age of 62, for example, if you delay into until you're the age of 70, you're basically giving yourself about a 7%, 8% raise each and every year, about an 8% raise, actually, each and every year that you delay. So that income is going to be even more. And boy, that can mean the world of difference to you each and every month and potentially the world of difference to your spouse as well because of the spousal benefit. Because let's say if you are the higher income earner in the couple. And you pass away and your spouse is left behind. They can then claim your Social Security benefit if it was the higher of the two, If theirs is the higher of the two. They'll just keep getting what they're getting. But if you have the higher of the two, then they get your benefit after you pass away. So then you can leave them in a better place after you're gone as well. So it not only makes a difference for you, but it makes a difference for your spouse who might be left behind here after you are gone, after you graduate the planet, as it were.

Matt McClure:
So, you know, maybe consider delaying retirement or even if you do retire, take on a part time job in retirement. My dad did that. He was one of the kind of guys he could not sit still, You know, he had a good a good time sitting at home. He did he did actually babysit my niece after he retired some. But then after she was going to school, going to preschool and all that, he was like, okay, what do I do now? And he got the little part time jobs here or there to keep him busy. So he went to work because he wanted to. If you want to go to work, great. If you feel like you have to go to work. To get a little bit more income, right? To get some more more dollars coming in every month so that you can maximize that retirement planning for yourself, that retirement income that you're going to draw from a little bit later on. Do that, do that, get that part time job to put that money aside so that you can reap the benefits later on when you actually do call it quits from retirement or from your job and go into retirement? Well, a bonus step here is to seek professional advice. I would hope that you would do that by giving me a call. Again, that number is 85524692118552469211. You can go to the website it is TakePrideInRetirement.com.

Matt McClure:
Take Pride in Retirement easy to remember because it's the name of the show.com. TakePrideInRetirement.com. There we go. That's the last time I'll say it at least for this moment. Seek professional advice mean working with someone who is a financial advisor like myself. It can be so so valuable. Especially when you're you're starting your retirement planning journey late because an advisor can help create this personalized plan, provide guidance on investment strategies, recommend appropriate financial products that align with your goals that we talked about earlier. Where are you now? Where do you want to be? And also align with your risk tolerance, which is something we haven't mentioned here. You know, generally speaking, as as people get older, their risk tolerance gets less and less. And it kind of should because your time horizon gets less and less, you have a shorter time period to be saving and investing in planning for retirement as you get older. So your sort of appetite for risk. It shouldn't kind of naturally go down, generally speaking, as early as you as you or as as you get older, rather, I should say. So that is something to keep in mind also, so that you have, as you get older, a greater percentage of your assets in safe investments. Things like maybe the bond market, which is traditionally seen as as a very safe investment and can provide income, maybe an annuity as well, which of course subject to the claims, paying ability of the of the issuer.

Matt McClure:
We always have to say, but these are these are insurance companies that have been around for a century in a lot of cases that that will issue these products that that they will guarantee will be paid out to you whenever you want to turn on income. And there are products like a fixed indexed annuity where you can turn on income and you can get a guaranteed income for as long as you live each and every month. And that is I know music to a lot of people's ears because, you know, having a guaranteed income for life. We don't have those pensions anymore like we talked about earlier. But, you know, we might have the ability we do have the ability through products like I just talked about, to build our own personal pension. So there's that. So we can go through all of that when you give us a call. So no obligation at all. When you do a free consultation with us, you only will work with me if it is the best scenario for you. If everybody agrees, right. If we both agree it's a two way street, that the best situation is for us to work together, we can do that. We can come up with a plan for you and your life will help analyze your financial situation closely, Examine any annuities that you might currently have.

Matt McClure:
If that's your situation right now, we'll discover exactly how much you're paying in fees. Help you cut unnecessary costs from the IRA, the 401. K, any other of those retirement savings accounts that you have? We'll also help you with Social Security planning. As we said, there are different scenarios where it might make sense to delay taking Social Security. There are also scenarios where as soon as you're able to, you might want to start drawing Social Security whenever you are first eligible for it. Or whenever you reach that full retirement age, maybe, which is kind of, you know, it varies person to person depending on your year of birth right now. And it's going to be, you know, later and later as people are living longer. But the bottom line here, we're going to compare your current situation to what is possible if you work with us because it's your money. And so if it matters to you, it matters to me. If it matters to you and your family, your loved ones, your whatever your current situation is, if you're single, if it matters to you, it matters to me. And I truly do mean that it really does. I am here to to be of service and to help you make your life, especially in those retirement years, the best that it can possibly be. Once again, the website TakePrideInRetirement.com that is TakePrideInRetirement.com.

Producer:
Want to know where your hard earned money is going. It's time for an inflation demonstration.

Matt McClure:
So the Federal Reserve raised interest rates by a quarter point. That's 25 basis points. A couple of weeks back. And that was something that really brought the Fed funds rate to its highest point in 22 years. Boy, it's fun, isn't it? If you've got a variable rate loans or credit cards and that kind of thing. But it's all part of the central bank's efforts to combat inflation. That is really what it boils down to. You know, an inflation has come down. It really has. The inflation rate peaked at around 9%. We're back down to right around 3% at last report here and perhaps even falling below that. The Fed has this 2% target each month. That's what they try to achieve and that's why they raised interest rates to to curb the you know, it's all it all has to do with supply and demand. Right. And so the Fed really can curb things on the demand side where if you have higher interest rates, then there's going to be less demand for a lot of things. So if demand is tamped down, then it can kind of balance things out. That's that's kind of the idea in layman's terms. But interest rates have really soared, though, as a result of this whole effort near zero at the start of 2022 to over 5% right now. And a lot of, you know, mortgage rates have been hovering kind of around 7%.

Matt McClure:
It may have changed since I looked yesterday, I think was the last time I looked at that. But yeah, I mean, it's. It's not it's not as fun as it was to buy stuff because you're paying more for it. But there is kind of a silver lining around this cloud where in its latest statement at its latest meeting, the Fed said it's no longer expecting a recession for the US economy. In the near future. Some economists, though, disagree. There's still a little bit more bearish on the economy. And I'm not talking about that kind of bear. Folks, I'm talking about the bears on Wall Street. They're a little bit more bearish. You know, we got bullish and bearish. Bullish is, yeah, things are positive. If the Bears are out, it's not the Folsom Street Festival or anything. It is it is the the naysayers coming out where they expect things to be, you know, taking kind of a downturn. Right. And so what if they're right? What if the Fed's wrong and what if they're right? What if those naysayers, the people who are bearish on the economy, what if they are right? Well. I'm going to run through here over these next few minutes. Some steps that you can take to sort of recession proof your retirement plan. No matter what happens, the Fed's not expecting a recession to happen.

Matt McClure:
But if it does anyway, what will you do to prepare? The Fed's not expecting a recession, but what if maybe not a full on recession happens? But what if a downturn happens? What do you do to prepare? There are a lot of things, actually, that you can do. Number one, and I've got ten of them here. Number one is to diversify your investment portfolio. You'll spread your investments across various asset classes stocks, annuities, bonds, real estate, cash. You diversify. You can reduce the impact of market volatility on your retirement savings. You want to have the proper balance in your investment accounts, right? You don't want to be all in on tech stocks. Ask anybody who was all in on the dot coms back in the late 90s, early 2000 seconds. And then we know what happened, right? That bubble burst in dramatic fashion and a lot of people were left with their investment accounts just being depleted big time. So diversify. Don't go all in on one asset class. Don't go all in on one type of investment. Certainly don't go all in on one company. Diversify, diversify, diversify. And then there are you know, because there are a lot of investments that have inverse relationships and then there are investments that are things that we'll talk about here in a moment where. They are called defensive investments that are things that don't take a big dip.

Matt McClure:
They they they generally speaking, sort of, you know, fight it out and stay steady even as the economy does its wobbly thing that we've seen it do, to put it lightly. Number two, establish an emergency fund. This is so important. You want to have enough funds. And this is something that, as full disclosure, I am still working on getting this done for myself. So I am on this road to I am on this journey as well. I speak from the experience of being in this place, but you want to have enough funds to cover 3 to 6 months worth of living expenses and that can be a good buffer during tough economic times. What if there is a recession and you lose your job? What if there is an economic downturn and you get your hours cut back? Or you are an independent contractor and the gigs are not coming like they were? You got to be prepared for that. So get that emergency fund in place. This is a biggie. Number three, I just talked about it. Minimize your debt. Because think about it this way. If you are trying to prepare for retirement or if you're just trying to get your financial house in order, period. Doing that is so much harder, especially if you have high interest debts at really any kind of debt, but especially high interest debts like credit cards, personal loans.

Matt McClure:
You know those I think the average. Credit card APR or interest rate, rather, is something like 20% or approaching 20%. Right now, maybe even higher. You know, don't necessarily quote me on that, but it's high. It's very high. And that can really it's compounding interest, too. So let's you know, if you carry a balance on that credit card month to month. Well, let's say if you, you know, have that balance that's carried over, then there's a certain interest that's then charged on that balance that then gets becomes part of your balance that next month. It's what we call compounding interest, right? It's like the interest that's that's then charged to the account becomes part of the principal, essentially. And then next month same thing. But that new interest that's credited onto the account is on top of not only that previous balance but that previous balance plus whatever interest was credited to the account last month. So then you see how it compounds, right? You're paying interest on interest and so on and so forth. This is why Albert Einstein called the concept of compounding interest the eighth wonder of the world, because it really is. It's almost like magic. And it can you can make it work for you or it can work against you. If you're carrying high interest debt, especially credit card debt, it is working against you.

Matt McClure:
So do your best to be as close to debt free as you can, or at least have manageable debts. And that'll provide more financial flexibility during hard times in the economy or during life in general. Increase your contributions during the good times. It can boost your retirement contributions during periods of economic growth. We saw that over that slow and steady economic growth over the previous ten years, like pre-pandemic right after we got out of the Great Recession. During the early 20 tens and on up through about 2020, there was that slow, steady economic growth. And we were all sort of lulled into this false sense of security, saying, Oh, things are steady, things are nice, they're good. We've got some some growth that's that's happening each and every year. And then Covid hit. And who in the world would have known going a couple of years prior to that that something like that was going to happen, especially when it happened and how it happened. And then all of a sudden the economy comes to a screeching halt. You know, stocks take a huge dip and you've got all of these economic factors that are completely out of your control, you know, all just kind of plummeting, in other words. So you want to during those good times like we had prior to 2020? And like we're hopefully working our way back toward right now, boost those retirement contributions as the economy grows because taking advantage of higher income employer matches, all of that can strengthen your retirement fund.

Matt McClure:
Number five, regularly review and adjust your plan. This is not, if you remember the old the old infomercials. They used to come on late at night for like, what was it, the convection oven thing or something? It was like or a pressure cooker or something. Set it and forget it. Whatever it was. This is not, you know, you can't just set it and forget it with your with your plan. Right. You've got to take a look at it at least once a year. I would say ideally kind of every six months, but at least once a year. Review your plan. Adjust your plan. If you work with me, I can help you do that. And I can help keep a close eye on your retirement investments, your retirement objectives as well. Reevaluate your asset allocation and your risk tolerance. As you get older and the economic landscape changes. Things are changing all the time. We're getting older each and every day, believe it or not. We don't want to believe it, but we are. And the economy is changing all the time. Maybe not every single day, but it does change quite often. Consider annuities. I mean an annuity in its purest definition here. It's a financial product that can provide you a stream of income during retirement, right? So some annuities, like a fixed indexed annuity, will offer protection against market downturns, meaning that you your principal is protected and then whatever growth is credited to your account over whatever period that growth is credited, whether it's a year or two years or whatever.

Matt McClure:
That growth is then credited to the account and then that is protected. That becomes your new floor. You cannot go below that. So that essentially means that that account value can only go up, it can't go down. And so that provides a stable income in your retirement years regardless of economic conditions. There are certain types of annuities I would not recommend to anybody. One type in particular, a variable annuity, that fees are just too high, and I just wouldn't necessarily recommend that to anyone pretty much under any circumstances at all. There are other types of annuities, like a fixed indexed annuity that I would recommend for most people. Probably it all though, depends on your your current situation. And if you go to TakePrideInRetirement.com, fill out the form there email me and I will reach out to you. We can set up a consultation. We can do it. You don't have to be in Atlanta, by the way, where I am. You can we can do it through Zoom. Absolutely. No matter where you are, I can help you.

Matt McClure:
I promise. All right. So give us a call. (855) 246-9211. Or go to the website. TakePrideInRetirement.com. Mention this a moment ago so I won't go into too much detail on it but number seven is explore defensive stocks. Right? So defensive stocks are those in industries that that are pretty resistant to economic fluctuations. We're talking health care. People get sick all the time. Right? Health care. We need all the time utilities. We need the lights to come on. We need the water running through the through the faucets and through other things in our house. Consumer staples as well. Everybody needs paper towels and toilet paper and and all of those types of things. Right. So that's the kind of thing that you want to be invested in. If you want some protection through defensive stocks. And we can we can look at that and see if including those types of stocks in your portfolio can help protect your investment during recessions. That is is a good thing to at least look at and at least explore and will help you do it if you reach out once again to TakePrideInRetirement.com Number eight DeLay Social Security benefits if possible. This is something I mentioned very briefly earlier. But by delaying Social Security benefits until your full retirement age, which is somewhere in your mid 60s or beyond to age 70, you're giving yourself a raise every year.

Matt McClure:
It's free money. And again, free money is the best kind of money, right? It's the best kind of money is free. The next best is tax free. And then a tax deferred would be after that. And then money got to pay taxes on each way to Sunday would be at the bottom of the list. But free money, always the best kind of money. So take advantage of it whenever you can. It can be a valuable income source during retirement, especially during economic downturns. You're going to want to have that sort of cushion there each and every month when you get that check. Continuously educate yourself. That's number nine. You're doing that by listening to Take Pride in Retirement. And so thank you for that. You know, continuously educate yourself about economic trends. You got to stay informed about retirement planning, about investment strategies. If you work with me as your as your investment advisor, as your as your, you know, helping you plan your retirement, that is knowledge that I can share with you and we can learn together and that can help you make informed decisions and adapt your retirement plan as needed. I will make suggestions and recommendations to you. In the end, though, it's all it's all your call. You know, we work together on this. This is not just me being a dictator over your retirement plan.

Matt McClure:
This is us working together. And that's the beauty of the thing. Consult a financial advisor. Hello? That's me. Number ten is the last one on this list of ways that you can recession proof your retirement. Consult a financial advisor or professional. Because let me tell you this. Seeking guidance from a professional financial advisor like me. Hope it's me. If it's somebody else, great. I just want you to get the help no matter where you get it from. But it can be invaluable in crafting a recession proof retirement plan. You know, I mentioned this at the beginning and I'll mention it here as we approach the end of the show. You have a unique situation in your life. My situation is different from your situation is different from, you know, Joe Smith's situation down the street is different from Jane Doe's situation on the next block. Everybody has a different situation. You've got potentially a different family situation, a different dynamic there. You know, you have a different situation with your savings, how much you have put aside, Do you have any put aside? Are you looking to invest periodically as we go along here, as you get closer and closer to retirement like we all do? Are you looking to invest in things that align with your with your values? I can help you in that way as well. It is.

Matt McClure:
The possibilities here really are endless. And that's the beauty of what we can do. By taking that free taking advantage, you can take advantage of that free consultation. You can take a we can take a look together at your financial situation, see where you are now, where you're headed and where you could be going if you work with us. If it's better for you than what your current situation is, that's awesome. We'll hopefully work together. If you feel good about the situation, we'll work together and we will get you a retirement that you can take pride in. So, look, if you have concerns about the market, about the economy, potentially about future tax increases, because pretty much nobody believes the taxes are going to come down anytime soon. And if nothing happens, you know, the end of 2025, we're going to get a tax increase because those tax cuts, love them or hate them that were passed a few years ago are going to sunset. And so tax rates will go up to to what they were prior to 2017. So if you're concerned about that and what that might mean for your retirement, if it might change your situation a little bit, please schedule that complimentary meeting so that I can get you started on a plan that will align your finances with your current risk tolerance. And with the future that you want to have, with the goals that you have for you and your family, no matter what that family looks like.

Matt McClure:
Because I have been so blessed by this community and I want to help you. That's really what I'm in this for. I mean, it is pure and simple. I want to help. And so let me do that once again. TakePrideInRetirement.com is the website. TakePrideInRetirement.com should be easy to remember because it's the name of the show. Take Pride in Retirement all one word.com. You can also call me (855) 246-9211. That's (855) 246-9211. Well folks, that is going to do it for this edition of Take Pride in Retirement. Thank you so much for taking time out to join me and taking time out of your busy day, your busy schedule to be a part of things. I so appreciate it each and every week. Once again, big guests coming up here on the show. We're gonna have a lot more voices joining us as the weeks go by. It's going to be great. Remember, no matter who you are, no matter where you come from, you are cared for, you are loved and you are supported. And you can take solace in that fact that that is very, very true here. And I know elsewhere in your life as well. Be strong and be proud. Until next time, I'm Matt McClure. We'll see you.

Announcer:
Thanks for listening. To Take Pride in Retirement. Members of the LGBTQ+ community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free no obligation consultation with Matt McClure and the team at Active Wealth Management. Call (855) 246-9211 or go online to TakePrideInRetirement.com.

Producer:
Investment Advisory services offered through Brookstone Capital Management LLC BCM A registered Investment Advisor. Bcm and Active Wealth Management, Inc. are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.

Producer:
Registered Investment Advisors and Investment Advisor Representatives Act as fiduciaries for all of our investment management clients, we have an obligation to act in the best interests of our clients and make full disclosure of any conflicts of interest. If any exist, please refer to our firm brochure the adv to a item for for additional information.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including generate automated summaries powered by AI, automatic transcription software, secure transcription and file storage, transcribe multiple languages, and easily transcribe your Zoom meetings. Try Sonix for free today.