Financial Freedom on Your Terms: Income Planning for LGBTQ+ Retirees

Episode 48: Audio automatically transcribed by Sonix

Episode 48: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
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.

Speaker2:
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.

Speaker1:
Hello and welcome to another edition rendition of Take Pride in Retirements. Matt McClure here with you, your hosts, your advisor, your pal, your friend, your confidant. Uh, really do appreciate you taking the time. Um, if this is your first time joining me here on the show, I am a licensed financial advisor and fiduciary here to really help educate LGBTQ. Plus, folks, just take control of your financial future allies as well, you know, don't feel excluded. We're inclusive of everyone here on take Pride in retirement. And you know, here's the deal. You know, retirement planning, no matter your situation can really feel overwhelming. But you don't have to figure it out alone. That's the whole point of this show. And we break it down here step by step so you can retire with confidence and security. And also and I think most importantly, pride as well. And you know, if you're planning solo, for example, if you're planning with a partner or if you're planning alongside your chosen family, like so many in the LGBTQ plus community, do one thing that you can do to at least get some peace of mind and and lose nothing because it's absolutely free of any cost or any obligation. Is schedule a 100% complimentary meeting today with me. Listeners to the show can meet with me and explore your financial future. You know, whether for, you know, planning personally, planning for your small business, if you're a small business owner and there's no obligation there, it's just guidance, right? And just just working together to see if I can be of help.

Speaker1:
Um, also wanted to say that of course, you're listening to the podcast here. Take pride in retirement wherever you listen to podcasts. We are available, so spread the word. If you're listening to us on Apple Podcasts and maybe your friend says, oh, I don't have Apple Podcasts. Say, oh well, do you have Spotify? Do you have Pandora? Do you have iHeart? Do you have any of the other apps that are out there? Then the answer is yes. You can find us. So spread the word. Tell. Tell your friends. Tell your family. If you don't like it, you know, tell your enemies, I guess. But just as long as you tell somebody. Um, that would be great. And also, uh, check us out. Leave us a good rating there. And, um, some nice comments on the podcast feed. I'd really appreciate that. Also, same thing on YouTube. Subscribe there. Leave a nice rating. Search for Take Pride in Retirement on YouTube. You can see highlights from the show and more special content as well, and just reach out anytime you can do that a couple of ways, you know, via the socials. I'm also on Facebook and Instagram as well.

Speaker1:
Um, but you can also reach out via the website and if you want to schedule that free consultation, you can do that on the website as well. Just go to take Pride in retirement. Com if you've got a question for me, you just you know maybe I talk about something and you're like, can you go into more detail on this or I have a question about this, that or the other concept. Sure I can I'll be glad to answer those questions for you. Uh, just use the contact form that's on the page. So just click contact. Easy enough right. If you want to schedule that 100% complimentary consultation. Then the other thing that you can do is click on schedule a consultation. Easy enough there, right? So I try to make it as easy as humanly possible for you to get in contact. Take pride in retirement. Com. That is the website. You can also give me a call 855246 9211. (855) 246-9211. That is the number in case you want to do it that way. And here's, you know, carrier pigeon. Any way you can get in touch with me I do not care as long as you reach out and get in touch. All right. Would love for you to do that and just, um, you know, improve your particular situation here. And, um, you know, see if I can help you do that.

Speaker1:
I would love to, if I absolutely can. Um, in any way. Well, um. All right, so coming up here on the show today, why you need a smart inspection of your financial plan and how I help make it effective for you and also help make it inclusive of you. Right. There's no one size fits all plan where I'm concerned. Everybody's situation is different. Everybody's life situation is different. And so, you know, if you hear people on the radio and maybe in another podcast or something like that, and they're giving just this advice by saying you need to go out and buy XYZ stock or you need to go out and do this right now, because if you don't, you're going to lose all your money or whatever they say. Um, that's not fiduciary advice. I am a fiduciary, and that means I act in a capacity where I have to act in your best interest. And so that is, you know, I do the show, of course, for educational purposes here. But when we meet and when I get to know you and your situation and we, you know, we talk one on one, that's when I act in a fiduciary capacity on on your behalf. You know, I have to I would anyway because it's the kind of person I am, but I have to I'm obligated, you know, legally bound to do that, to act in a fiduciary capacity for you, not for me.

Speaker1:
Do what's best for you and your situation. And so everybody's situation is different and there's no one size fits all. That's really what it comes down to. But it all begins with kind of a smart inspection of your financial plan. So talk about a little a little bit about what that is coming up here momentarily. Also, do you have a backup plan for Social Security? Social security is a big income source for so many people, and this is really a critical conversation to have for LGBTQ plus couples as well, because there are a lot of different things to take into consideration. Are you married? Will the spousal benefit come into play? Um, then you know, that's a different conversation than if you're not married. You just maybe have a partner. You got to take different things into consideration there as to, you know, when to begin claiming Social Security and all of the other decisions that go into it. Right. So and then, of course, right now there's just a lot of uncertainty about Social Security. There has been for a while about, you know, whether or not it's going to be there in ten, 15 years. Um, at least in its current form. There's a lot of anxiety out there and even more uncertainty now, given all that's happening in Washington these days with just the, you know, slash and burn kind of style that's happening now.

Speaker1:
Um, and you just you want it to be in a situation where Social Security is just the cherry on top, right? You're not relying on it as your sole form of income in retirement. And that is the that's the ideal. That's the plan. That's how I want your life to be. And that's how I work for each and every one of my clients. That's how that's how I approach it. Uh, you know, when talking about Social Security is I don't want you to rely on it, but I want you. I want it to be that, you know, that extra money that comes in each month. I want you to be safe and secure without it, so that when you get it, it's a it's a bonus, right? Um, and then also talk about what retirees fear the most and how a plan really does bring peace of mind. Um, yeah. Peace of mind. That's a good thing these days, especially given the fact that I've sprouted many a new gray hair recently. All right, so we'll get right into it. First, though, let's get some inspiration for this conversation we're going to have, shall we? Just just among ourselves here. And this is our quote of the week.

Speaker3:
And now for some financial wisdom. It's time for the quote of the week.

Speaker1:
This time around, the quote comes from Billy Porter, actor and LGBTQ+ advocate and, um, just overall fabulous human being. Billy Porter said this, quote, financial freedom is about so much more than money. It's about security, autonomy and the ability to live authentically on your own terms. Billy Porter said that and just wise, wise words because, yeah, it's we talk a lot on the show about the dollars and cents of it all. We talk a lot on this show about, you know, different types of ways that you can save different types of accounts. Iras, 401 annuities. We talk about all those different types of things, stocks and bonds and all of the all the things. Right. The thing that we talk about maybe a little bit less, but is just as important, if not more important, is sort of like the emotional side of it, the logical side of it, the feeling of security side of it as well, and just that ability that, you know, if you are financially free, if you have financial freedom, if you have financial security, you can determine what happens in your life much more easily, much more easily than if you don't. And so really, that's my goal. For each and every person who listens to this show is to be in a situation where you are financially secure, especially for your retirement years. But even before that, you know, I'm not one to say, oh, you've got to sacrifice all of these things and not have any fun and go, you know, sell all your belongings to, um, be able to save up for retirement.

Speaker1:
No, what I am saying and what I do say all the time is that you have to just you have to have your financial house in order. You've got to know what's coming in, what's going out, and then you don't save. As Warren Buffett would say, you don't save, uh, or you don't, um, save what's left after spending. You spend what's left after saving, right? In other words, save first, pay yourself first, and future you will. Thank you for that. And that's one of the ways that you can achieve financial freedom. And we'll talk more about it as we go throughout the show here today. Great quote there from Billy Porter. And okay, so I teed this up at the top of the show. Now, have you had a smart inspection of your retirement plan? What do I mean when I say a smart inspection of your retirement plan? Well, a smart inspection would be one that really dives in and takes a look at all aspects of your finances, not just the checking account and the savings account and the 401 K, and that's it. But anything else that you have or don't have? If there are missing pieces. A smart inspection can find missing pieces for you that will help you put the pieces together and fit those missing pieces in, so that you can put a pretty puzzle together for your retirement.

Speaker1:
Right. And make sure that you are set up for success in those retirement years of what should be your golden years, right? A big fan of the Golden Girls, it's the golden years of your life. And so, you know, if you hear me quote Dorothy, Blanche, Rose and Sophia today, don't be surprised. But so have you had a smart inspection. And this is what I do for each and every listener who reaches out. Right. I'll take and review all of your accounts. That's, you know, if you have an IRA, if you have a Roth IRA, if you do, that's, you know, great work on your behalf or on your part rather, um, already and we can, you know, improve on that and build up the balance in that Roth account. But if you've got a Roth, great. Um, if you have an IRA, traditional IRA, if you have a 401 K, a brokerage account, if you have savings, um, even if you even if you have, uh, you know, a tsp if you're a federal employee, I know that there are a lot of federal employees these days who are either a fearful about their jobs going away, and rightfully so, you know, because of everything that's happening. I'm here in Atlanta, and the CDC centers for Disease Control and Prevention are headquartered, of course, here in Atlanta.

Speaker1:
And there are a lot of people at the CDC who are being laid off this week. And it's a scary time for them. It's a scary time for a lot of folks. So if you have a TSP as a federal worker, I'd love to take a deep dive into that as well. See how it fits into your financial picture and hopefully set you up for success no matter what happens. We also assess your account balances and the fee structures. A lot of people are really surprised at what they're paying as far as fees go. Do you know you know how much you're paying in fees right now? I bet if I could see you if this was two way, you know, TV or whatever, if this was a video chat, I'll maybe I'll try and sound like I'm in the 21st century. If this were a video chat. Um, I bet I could. I would probably see, you know, a bunch of hands going up saying, no, I don't know what I'm paying as far as fees go. Like, if you don't know what fees you're paying, raise your hand and a bunch of hands would go up. Um, so yeah, we can take a look, see, see what you're paying as far as fees go and see if we can find something that is better for you in your situation. Review your returns over the past, you know, one year, three years, five years.

Speaker1:
See what your, uh, portfolio of assets. If you have a portfolio of assets, if you don't have a portfolio of assets, we can get you started toward, you know, more, uh, investments and, and all that kind of thing to get you in a better spot where you can have a successful retirement. Right. We can give you a more successful retirement, hopefully, if you do also already have a plan or already at least have some investments, but maybe not a written formal plan, it's just kind of out there doing its thing. Um, we can review those returns from the last few years and see what, you know, a portfolio that we would recommend. See what it would have returned over that same time period. Compare the two. And then, you know, let you choose between those different scenarios. We'll determine if you've got an income gap or an income surplus. Hint surplus is the one you want. Um, we'll analyze any, um, annuities, any pensions that you may have if you're lucky enough to have a pension through work or personal pension option, which would be, um, particular kinds of annuities can be characterized as a personal pension. Or sometimes people will call them like a self-funded pension. Um, and that is something that you can set up. And, uh, well, we can set up for you wouldn't want to go it alone on that, but, um, I would love to be able to set up one of those for you so that you can have peace of mind.

Speaker1:
Not only does it give you, you know, principal protection, but it also can turn into an income stream when you get to retirement. And that's income that you can never outlive. That's why we refer to it as a personal pension, right. Because if you turn on that income stream, that income is not going to go away until you do. And even sometimes, depending on how the contract is structured, those payments could continue on to a loved one after that. So it just kind of depends a lot of different options out there. So we'll also analyze, you know, all of those different things. We'll evaluate your tax exposure. We'll explore Roth conversions. You know Roths are a type of account. There are Roth IRAs, Roth 401 S and that kind of thing. And the money that you put into a Roth, you've already paid the taxes on. So when it goes into the Roth, the taxes have already been paid. So it grows tax free. And then the withdrawals in retirement are tax free as well from a Roth. So you've already paid taxes on that money. You don't have to pay taxes on it ever again, even on the growth that's in that account. So that's a great thing to explore for a lot of people, especially if you like.

Speaker1:
A lot of economists believe that eventually taxes are going to have to go up because of the national debt. Um, also, we'll provide a customized Social Security maximization report, including those considerations that we always take into account for LGBTQ plus couples or individuals. And, you know, if you're a couple, if you're whether you're married or not, we'll take that into account. And really, you know, see what might be best for you and most advantageous for you. So this is the reason that I do the show, folks. I'm just so passionate about helping the LGBTQ plus community, my community, retire with confidence. I want you to be able to retire with confidence and with pride. So what I want you to do is reach out. You can email me Matt at Take Pride in Retirement. Com you can just go to the website as well. Take pride in retirement. Com schedule that free consultation. You can give me a call as well 85524692 11 (855) 246-9211. Is that number. All right I'll be glad to help you out with any financial issues or questions that you may have, especially when it comes to, you know, where you, um, are in your life as far as planning for retirement goes. I'd love to help you make a better situation. Maybe make some better choices there. So another thing too, that I want to consider about retirement. And there are a couple of different considerations that you need to take into, well, consideration, um, when it comes to where you live, right? Where you live matters.

Speaker1:
Where you retire matters, right? This is that other thing that I was talking about is where you live. Um, but LGBTQ plus retirees often face different considerations when it comes to location. Things like inclusiveness, healthcare costs, state level protections, more considerations as well. Cost is one thing. All of that's another, right? So let's talk about the cost. I guess kind of unfortunately for us in the LGBTQ plus community, in a way, um, the most expensive states tend to be the most inclusive, tend to be anyway. So after Social Security. So this is how all this is calculated here after Social Security. A study found that if you live in Hawaii, it's the most expensive state to live in in retirement. According to this study, $87,770 a year cost of living after Social Security. So that's you take your Social Security. So beyond that, on average, more than $87,000 a year to live in Hawaii in retirement. Numbers also show that after Social Security Massachusetts over $65,000 a year. California 63,000. New York almost 51,000. Alaska. Same thing, 51,000. They're just shy of it, actually. And, um. So, yeah, not really all that surprising because there are a lot of wonderful things in all of those states. I actually just went this past fall to Massachusetts for the very first time, for example.

Speaker1:
So beautiful. Um, Boston. Such a cool city. And I had never been there before, believe it or not, even though I lived in the northeast. I'm in Atlanta now, but I lived in the northeast for like ten years and just never went to buy. I lived in New York, so I never went to Boston, um, before now, but or before, you know, like six months ago. But, um, it was it was very cool. It was a very cool trip. So anyway, the most expensive states tend to be the more Accepting of LGBTQ plus folks. Now the least expensive states to live in retirement. The least expensive is West Virginia 27,000 and change per year after Social Security. So much more affordable than, say, Hawaii at 87,000, right? But then you got to look at state level protections. You've got to look at levels of acceptance in the society there and all of that as LGBTQ plus folks. Um, so those are considerations that we've got to take into effect into account. Rather, all under 30,000 annually are the rest of the states on this least expensive list Kansas, Mississippi, Oklahoma, Alabama and Missouri, all under $30,000 a year. And that is it's a difference of over $59,000 a year between the most and least expensive states. So a big difference there. The question is, would you feel comfortable living in one of those places, and that's another consideration that you have to take into account.

Speaker1:
Do you have state protections or local protections? You know, in the law, in the state law so that you feel like you would be accepted, you feel like you would be safe. You feel like all of those things not seen as some second class citizen, for example, uh, in those states, answer may be yes, it may be no. It just depends on your considerations and how you approach the whole situation. And I will work with you regardless to determine whether maybe relocating, downsizing, whatever you want to do in retirement, whether that is a possibility from a money standpoint. But also you've got to consider all of those other factors. So a lot to really take into to consideration there when it comes to where you live. And, you know, I can help build a plan that fits your lifestyle. Also your values, also your budget. No matter where you choose to live in retirement, once again, take pride in retirement. Com is the website. Okay so you know mention Social Security there when talking about kind of where you might want to live in retirement. And I talk about it in the context of okay social security will cover X amount of dollars on average. But beyond Social Security, beyond that paycheck, those different states we just talked about, here's how much it costs to live after Social Security has kicked in and covers a portion.

Speaker1:
Right. So that is and you see that even in the least expensive states, Social Security, not even close to enough to live on, right? It's just not especially this day and age where, yeah, of course you have a cost of living adjustment on an annual basis in retirement when you're on Social Security via the Social Security Administration. Um, you've got that annual cost of living adjustment. So it's supposed to keep up with inflation. You know, maybe it does. Maybe it doesn't keep up with the real, um, inflationary pressures that we see and feel. But at least there is that adjustment. You do get a raise when there is inflation in the economy and when costs do go up. So, you know, you've got that, but it's still not enough to cover all of your costs in retirement. It's just not unless you want to be, you know, because to quote an old SNL, um, character from the late, great Chris Farley, unless you want to be living in a van down by the river, then you are, um, not. And I don't think anyone will aspire to that. Really. Um, at least that's my assumption. If you do, that's that's you. Um, I know I wouldn't want to live in a van down by the river, so you would need more than Social Security to be able to be able to make it. And as I said in the beginning, you want Social Security to be a cherry on top or the gravy or the whatever.

Speaker1:
That extra money that you have, just something that makes life a little bit sweeter, a little bit tastier. Yeah. Not the thing that you rely on. So you got to have a backup plan for Social Security. That's what I'm getting at here. And LGBTQ plus retirees face unique challenges. A lot of the time when it comes to things like spousal or survivor benefits, especially if a marriage is not legally recognized or wasn't legally recognized until recently, or if you are not married to your partner, like if you are just, um, you know, partners, but you're not married partners, perhaps you've, uh, you know, had a commitment ceremony or something like that, or you just have any sort of ceremony, but you've been together for years and all those things, but it's still not a legally recognized marriage. Then you've got to, you know, have different, you know, things that you take, um, to mind when you consider all of the different options that you have for Social Security and Social Security, for all of its good and good and bad things. It's not a one size fits all thing either. I mean, there's some different ways that you can maximize your Social Security benefit, and I'll talk about those momentarily. But, you know, it's a it's a major source of income, social security for about 60% of current retirees, a major source of income.

Speaker1:
But according to the Social Security Administration, the trust funds are expected to run out by 2035. Folks, that's ten years, ten years from now, 2035. The trust funds of Social Security expected to run out. Inflation is eroding benefits faster than those cost of living adjustments I mentioned can keep up. And cuts of up to 17% could be coming without some type of reform in the way that Social Security is funded and the way that the benefits are paid out and all of that. So a couple of things that you can do. Um, number one is, is get an analysis of your Social Security situation. Get a Social Security maximization report. And that's tailored to your specific relationship status, your work history, all of those things, your earnings over the years. That is a great place to start. Just see where you are right now and see where things. See what things are looking like for your retirement. How much income you can count on as of now, projected out into the future. And then establish your own personal pension to close the income gaps. You know, like if and you can get your own personal pension that has preferred tax treatment, like, um, just like a 401 K or just like an IRA or even a Roth. Um, it can be treated as such. So it wouldn't create a taxable event to move money over from one type of account to fund another.

Speaker1:
And so there are three steps here that you really need to keep in mind to maximize your Social Security benefits. Number one is you work at least 35 years. You want to have income for at least 35 years. You don't want to have any zeros in there. And that's so important because what the Social Security Administration does is when it determines the income that you'll receive in retirement. To start out with, when you first start claiming Social Security benefits is they take your highest 35 earning years, the highest 35 earning years, and they take those into consideration when determining how much you'll get in Social Security. So you need to work at least 35 years and not have any zeros in there, because those zeros of course, not doing you any good when it comes to your calculation for your income in retirement. You need to earn income at or above the wage cap. And so, you know, if you earn up to a certain amount, you can, um, you know, get, see an increase in your Social Security benefit, right. And if you go above and beyond that, it doesn't go any higher. But you need to at least get to that wage cap so that you can, uh, max out your Social Security benefit in retirement, if possible. And this isn't possible for everybody. Again, I'm not giving advice here on a broad basis to each and every person saying this is what you need to do right now.

Speaker1:
No. If you can delay filing Social Security until age 70. Why is that? Well, for each year that you don't take Social Security beyond your full retirement age and the full retirement age right now is either 66, 66 in some months or 67. So somewhere between 66 and 67 people retiring these days. That's your full retirement age for Social Security benefits concerns. And so that's what you need to keep in mind. And then for every year beyond that, up until age 70, if you delay you get an 8% raise essentially each year. So if you're able to delay, you can max out that monthly check by waiting until age 70. No need to wait beyond age 70 because it doesn't go up any more beyond that. So wait until age 70 if you can, and if it makes sense for you. That's another reason, because you know that there's so many aspects of this that need to be taken into account. As I'm saying here, that's another reason why you need to have a smart inspection of your situation and that Social Security maximization report to show you when is the best time to take Social Security. And so a comprehensive plan matters, and it really does. You know, I talked about that wage cap a second ago. A lot of LGBTQ plus seniors will never hit those income thresholds because of past wage inequality in the community as well.

Speaker1:
So, you know, a lot of LGBTQ plus people are just kind of unfortunately behind, monetarily speaking, because of that wage inequality in the past. So it's like, you know, just trying to catch up to where everybody else is a lot of times. And I can help you create a personal pension that you cannot outlive no matter your Social Security income. Just go take pride in retirement. That's the website. You can reach out there for the initial consultation, which, by the way, again, is free of any cost or obligation. All right. So what retirees fear the most, not the boogeyman. Um, not, uh, you know, some strange thing under your bed? Not that ghost in the closet. No. What retirees fear the most is running out of money. And study after study has shown this, and study after study has shown that, you know, retirees fear running out of money more than anything, even more than death itself. And I mean, that's a valid concern, right? Given things like, um, Social Security uncertainty, given, you know, taxes that could be going up in the future because, you know, I mean, there's a national debt to to pay down and taxes are at historic lows. So eventually at some point in time, taxes are going to have to go up. Inflation. Inflation was, you know, just a couple of years ago in in two years we saw it go up 14.6% post Covid right.

Speaker1:
So 14.6%. And we're seeing inflation kick back up right now because of things that are happening in trade wars and all these things. Market crashes I mean you think back to 2000 even. Well the year 2000, you think back to 2008 or 2022, even where we had a down year in the market. What wasn't necessarily a crash in 2022, but we did have a down year in the markets. So that's another reason that people fear running out of money. And that's because of something called sequence of returns risk. That's really dangerous early in your retirement years. And it sounds kind of like a wonky term, but really what it boils down to sequence of returns risk is let's imagine that you retired in 2007, let's say 2008. The bottom falls out of the market, right? And so you are doing what? Well, a couple of things are happening. You are taking withdrawals from your retirement investment accounts to live on. You're drawing that income at the same time. The market is just nosediving. And so it compounds the problem. You have less money because you're making those withdrawals. You're making or you have less money, rather because the market is tanking and your stocks or your investments, whatever they may be, are losing value. All of that's happening at the same time. And it's just kind of a perfect storm.

Speaker1:
That sequence of returns risk. And it's a risk that we face because nobody's got a crystal ball and nobody knows when your markets, your markets, my markets, everybody's markets, when the markets are going to crash, nobody knows that. Nobody knows when there's going to be a down year or an up year, or heck, even a down day or an up day. A lot of the time. So sequence of returns risk a real thing and you need to protect yourself against that. Um, healthcare costs, they're going up. I mean, 350 000 plus per couple in retirement caregiving expenses for, you know, a partner, a parent, or maybe an adult child if you have children. Those caregiving expenses and other healthcare costs. Long term care, certainly, because that's not covered by Medicare, long term care. Um, those are all considerations and things that that really lead to the fear of running out of money in retirement. But there are solutions. Now, one of them is has to do with a couple of couple of different concepts here. And I'll talk about them separately and then bring them together I think. So one concept is, you know, reducing risk as you approach retirement is if you follow something called the rule of 100. It's a general rule. It doesn't, you know, it may not necessarily be the best situation for you. Um, but in general, it's kind of a rule or a guideline really, about how much risk you need to be taking inside your portfolio of investments at a given age.

Speaker1:
The idea being that the closer you get to retirement, the less risk you need to be taking because you have less time to make up for any big losses in those investments. So the rule of 100, you take the number 100, you subtract your age from it. The number left over is the percent of risk that you should be taking, the percent of your assets that should be at risk in the market. So, you know, at age 30, 70% of your investments can be at risk in the market because you've got a lot of time to make up any ground that you may lose. Right. You've got a long runway to to take off, but when you're, you know, 60, only 40% of your portfolio needs to be at risk in the market according to the rule of 100, because you have a lot less time, you need to have the other 60% in investments that are safe investments where there is safety, but still some return. Obviously a reasonable rate of return with safety, with some guarantees. And then the other 40% can then be at risk in the market according to the rule of 100. The other kind of concept that we're talking about here is called the retirement red zone. When you approach retirement about the first, I don't know, the five years or so.

Speaker1:
Some say ten, some say five years before retirement. And then, you know, going into retirement the first 5 to 10 years, that's what we kind of refer to as the retirement red zone. Those years are super important to pay attention to your amount of risk. Number one, because of sequence of returns risk, which we just talked about. Um, especially in those first few years of retirement, you know, you really want to make sure that you're not somebody who's got 100% of your investments in the market at risk, and then you're just caught, you know, what's what's an expression up the creek without a paddle, I guess that, um, you know, and you can't afford a paddle to to buy because you've lost all your money in the market when it bottomed out and you were making withdrawals at the same time to live on. So that's not something that you want to, to happen. And then, you know, before retirement as well, you just want to you don't have a long runway to bring back that analogy that, um, you did say in your 30s or 40s, you don't have as long of a period of time to make up for any losses before you retire. So reduce risk as you approach retirement and as you enter retirement especially, and replace volatile assets with something like, um, perhaps a fixed indexed annuity. I really, really like a lot of fixed indexed annuities.

Speaker1:
There are some out there that are not great. Um, but essentially kind of the bottom line of those and we can refer to them as well as FIA's. The bottom line of those is that they are tied to the market. The performance is tied to the market but not actually invested in the market. So you get market like growth without the market risk. And so like let's say for example, um, you know, you invest in an annuity that's tied to the S&P 500. May it may have a what's called a participation rate of say let's, let's say 90% for ease of math. So 90% of the S&P 500 performance you'll get credited. But at the same time no down, no downside risk. Zero is your hero when it comes to fixed indexed annuities. Because if there is a down year in the market, you don't lose it. You just sit at zero while everybody else is kind of losing their shirt. Right? You sit at zero. No loss. Of course, no gain that year, but no loss. Whereas the other years when say, the S&P 500in this example is up. You reap 90% of those gains. And so we can look at a solution like that for you as well. And FIAs also offer guaranteed lifetime income along with that protection against loss and market linked growth. So it's very essential to take into account all of the different ways that you are taking risks with your investments, especially as you age, especially as you get closer to retirement and cut down on those risks as you get closer.

Speaker1:
All right. Quickly here before it is time to wrap up, I wanted to talk about six expenses that drain your retirement savings, and also talk about what you can do about these expenses. So number one, market downturns in economic instability and and volatility in financial markets can really cause sharp, sharp declines in portfolio values, especially when withdrawals are occurring, as we've been talking about sequence of returns risk. So consider shifting to lower risk assets or using feas those fixed indexed annuities to protect your base income. And contact me. I can go through, do a complete analysis and see if feas or some other type of product or investment might be a good fit for you in your situation. Number two, expense that drains your retirement savings is healthcare. I mean, even with Medicare out of pocket costs for things like prescriptions, treatments, especially long term care, because Medicare doesn't cover long term care, they can reach hundreds of thousands of dollars over retirement. And so planning for things like supplemental insurance and health savings fund, perhaps that is key. There are also some annuities that have benefits that will say double your income should you need long term care. Uh, you know, while you're in long term care, your income, say, if you've been making, uh, from drawing from the annuity $1,000 a month, it'll double that to 2000 in this example.

Speaker1:
Um, as long as you're in long term care, as long as you need that. Number three expense, longevity. You're like, longevity is an expense. Yes. Because people are living longer these days thanks to healthcare advances. Hopefully it continues that way. Um, people are living longer than expected or longer than ever before. Rather. And maybe you will live longer than expected. Maybe your entire, you know, family has called it quits in life in their early 70s, and you live to be 104. And it's just like, wait a minute. I did not expect this living longer than expected. That means stretching your savings out further and without any sort of guaranteed lifetime income option. A lot of people will risk outliving assets. Really, everybody will risk outliving assets because you don't know how long you're going to live, right? I certainly don't. Again, my crystal ball is broken. Inflation is kind of a silent threat here. It erodes your purchasing power over time. And if your income doesn't grow along with expenses, then your standard of living may drop. And so that's an expense. Inflation is an expense on you. Taxes including on Social Security, you know, retirement account withdrawals, Social Security benefits. Those are often taxable unless it's a Roth. And that I explained earlier. So rewind if you missed it.

Speaker1:
Um without tax planning for the future you can lose out on, you know, a lot of, um, potential dollars in your pocket. You could lose more than necessary to the tax man, and that's no fun. Homeownership costs as well. You know, you you get older and so does the home. So there's a lot of maintenance, repairs, insurance, there's property taxes, all of those different things that are fluctuating and growing. Expenses can really strain a budget that's fixed. And so planning for major home related expenses is essential to avoid unpleasant surprises. So here's what I can do for you is help you protect your retirement income with some smart strategies that account for all of those things. And bottom line, folks, is it's time to get your financial house in order. It's time to get your money working as hard as you do. You've worked super hard for your money over the years. You've saved, you've invested, you've scrimped, you've done all of the things. It's time to get your money working just as hard for you as you have worked for it. Whether you're just starting out, whether you're approaching retirement, I am here to help you take pride in your financial future. The phone number once again. 85524692 11 85524692 11. And then you can also send me an email Matt at take pride in retirement. Com Matt at take pride in retirement. Com or you can just go to take pride in retirement.

Speaker1:
Com the website there click on the upper right hand portion of the the website the home page. And you'll see there it says schedule a consultation. Do just that. Schedule a consultation. I'd really appreciate it. That'll take you right to my calendar when you click the link. Well that is going to do it for this particular edition of Take Pride in Retirement. Thank you so much once again for joining me. I really do appreciate it. I know I say it a lot, but I say it so much, so much because it's true. Thank you so much for taking the time to listen to little old me. And hopefully you got something out of this episode. If you did again, please tell anybody and everybody about the show. I look forward to having a lot more guests on. I've had some great guests on recently. I had a wonderful analyst from Morningstar, Christine Benz. I just had Jonathan Lovitz, who is a former Commerce Department official and also worked for the National LGBTQ Chamber of Commerce. Um, just had him on last week. Go back and listen to that episode. It's a great interview with him. Um, I've had, you know, other guests on recently as well, and it's just been great. I look forward to having more, and I look forward to having you back with me next time around. And until then, take pride in yourselves and take care of each other. We'll see you then.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ plus 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 take pride in retirement investment advisory services offered through Brookstone Capital Management LLC. Bcm, a registered investment advisor. Bcm and Active Wealth Management Incorporated 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. Matt McClure, an active wealth management, are not affiliated with or endorsed by the Social Security Administration or any other government agency.

Speaker1:
Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional. 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 interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure, the ADV to item four for additional information. Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

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