Retirement Roadmap

Retiring in Turbulent Markets: Is 2025 Still Your Year?

• Mark Fricks • Season 3 • Episode 13

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Market volatility in 2025 doesn't have to derail retirement plans if you've properly structured your income sources and diversified your investments. Proper retirement planning involves creating stable income buckets that aren't totally dependent on market performance, allowing retirees to weather economic storms with confidence.

• Sequence of returns risk can pose a significant danger when withdrawing from declining investments
• Traditional retirement income approaches like dividend stocks or bonds may only yield 2-4% and can lack stability
• Professional retirement planning should involve creating guaranteed income streams of 5-6% regardless of market conditions
• Having income buckets prepared before retirement can eliminate the stress of watching markets daily
• Catch-up contributions allow those over 50 to save up to $31,000 in 401(k)s and $8,000 in IRAs annually
• Working slightly longer or part-time can significantly improve retirement security
• Review investment fees, insurance policies, and subscriptions to potentially uncover hidden savings opportunities
• Emotional preparation for retirement can be as important as financial readiness
• Diversification in retirement means more than just different market sectors—it includes stable income sources

Schedule a complimentary consultation to receive personalized retirement planning guidance at masterplanretire.com or call 770-980-9262.

Have a topic or question you'd like Mark and Evan to address in a future episode? Email us at info@masterplanretire.com or call 770-980-9262.

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Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants.  The aforementioned are affiliated companies.


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Evan:

Is 2025 still your year to retire? Hey folks, welcome back and thank you for joining us. Welcome to Retirement Roadmap with MasterPlan Retirement Consultants. My name is Evan and with me, as always, retirement planner Mark Fricks. So, during this episode we'll consider if those who wanted to retire in 2025 may need to reconsider, and we'll also touch on how those running behind on retirement savings can still catch up. Mark, we've had a pretty exciting year four months into 2025.

Mark:

Yeah not too many phone calls, but a few here and there, right, but mostly just watching the markets and how quickly they can turn on one or two words. Sure, absolutely, which has always been true, by the way, it's worse now because of social media and so many talking head shows out there. It is a little bit worse, but the more we look at the history- I found a great article the other day about the history and how every time we have a correction that's motivated by emotion, there's a recovery. You know pretty quickly. Don't leave the market. We're going to talk about all that today, of course, but just don't let emotions, you know, run your portfolio.

Evan:

Well, 2025 feels shaky for retirees. I mean, they can't help but feel it. With markets down, inflation still lurking, 401k is taking a hit. It's no surprise that many are second guessing their retirement plans.

Mark:

Well, it's not a great time to start taking money out of an account, a retirement account, when it's down 10, 15, 20%, for sure, and so many times when people retire, that's the first thing they start doing is supplementing their income retirement income with one of their stock market accounts, which is not how we do it. So we have different rules about that, but that's what a lot of people do. It's the old-fashioned way. I'll just turn on my IRA or whatever and yeah, that's dangerous and imagine retiring in 2007. In 2008, 2009, 56% drop. You'd go back to work. You'd almost have to. So I don't think that's where we're headed today, for sure, but certainly this is a year of unrest until they work out all the tariffs and things like that. So, the simple answer is, unless you've been preparing for retirement for a few years and have said it with a true retirement planner, you may want to reconsider pushing it down a little bit.

Evan:

Yeah, absolutely. Well, you know, just like you said, it all depends on your setup. Every person is different. Whether 2025 is a bad year to retire, it comes down to how much you've saved, how you plan on withdrawing your money, what lifestyle you plan to live. Every situation is different, just like all of retirement planning.

Mark:

Absolutely. And again, hopefully those that are listening are working with someone and not just an investment broker or something like that, or an insurance agent, somebody that really looks at all eight to 15 areas of retirement to make sure it all comes together. One of those most important areas is income planning, and we don't use a moderate or aggressive stock market account to produce income. We use tools that are stable, that have guaranteed principle, and you don't have to worry about the market. It's going to produce same income regardless of what the market does. People that get started with us one year, three years, five years away from retirement. We just progressively move them into that position and by the time they hit retirement, it's just a, it's a set it, it's turn it on, let's get going.

Evan:

Yeah, that's right and you know you got to be aware of the sequence of returns risk. I mean, the problem is when you don't have a plan, when you're not planning for your income buckets or accounts and you're just pulling from market accounts. You are at the mercy of the stock market and the economy. What's going on right there. You're not planning and taking control of your own retirement. Sequence of returns risk, pulling from your investments during a market dip, that can lock in your losses early on, which is bad news for a long-term income.

Mark:

Well, and the old way of doing it was either, again, taking it out of the stock market and maybe more conservative. So I've gone heavy bonds. Well, bonds, historically over the last 30 years, are barely producing two to 4%. That's inflation, barely you know. Or maybe you know the old fashioned way of hey, I'm going to buy a bunch of dividend stocks, and if you don't know what a dividend is, it's a profit shared by the company that you own stock in. So for every stock you own, maybe you get $10 or whatever it is, and that's great in good years.

Mark:

But as the economy and the markets, when they hit those downtimes, dividends drop too, and so again, that's not a guaranteed income stream. And again, our best dividend portfolio is producing about 3.5%. Again, that to me is not enough income. We like these tools that produce 5% to 6% income and it's guaranteed regardless of the market. So again, it's the sequence of returns. I'm glad you mentioned that.

Mark:

That's a real risk because we know over time the market goes up, but it goes up in this fashion, and so if you're taking money out every month or every quarter, are you hitting a dip or a height or what? And we don't know. And that's the unknown, which is why we want that stable bucket. And again, you need to be prepared now and not wait till, hey, I'm retiring next week. It's never too late, so don't not call us but a true retirement planner that can have you know when do you turn on Social Security. Again, how do you develop that income plan? And then all the other pieces that fit together with that tax strategy, long-term care strategies, healthcare strategies, medicare consulting I mean, I can go on again for another eight or 10 items, but they all matter. But really, as I think we've said before, I think the most important thing is a solid income plan, right?

Evan:

Right. And another note don't panic and go all cash. Jumping ship when the market is down means missing the recovery. Now that doesn't mean you can't hedge with some cash. Some of our more aggressive portfolios actually have a portion in cash right now. However, if you're all in cash and you lock in those losses, not only are you locking in your loss, but you're missing out on the recovery. History shows those who stay the course often come out ahead. In fact, one of my clients, he, in 2008, that market drop scared him and he moved all to cash in his 401k and you know, with money market funds. So he was. He was earning less than inflation. He was earning something. He wasn't keeping up with inflation. I didn't meet him till 13, 14 years years later. Actually longer, 15 years later and he still had a healthy 401k. He had over half a million in there. But just thinking about how much he missed out on all those years of market returns.

Mark:

I'm thinking over 500% Probably. I think it's the number that's popping in my head that if he had just stayed, even though there was a drop, he didn't need the money, he wasn't retired. Leave it alone. Again, it depends on your age depends on a lot of factors.

Mark:

These are not blanket recommendations.

Mark:

Here's the other thing. You can't blame someone for that either, because we were all given 401k s back in the late 70s, early 80s. That's when they rolled them out. All of a sudden, we moved from pensions to 401k s. Did they give us courses?

Mark:

No, training no.

Evan:

How to handle that, did they tell us? Okay, there are two big emotions that are going to control how you respond to your 401k. That's fear and greed. You got to tamper both of those. They both work against you. Yeah, you really should be managing your co-workers 401k and he can manage yours, so you can take a step back or just do the opposite. Don't actually do that, folks.

Mark:

The comedy episode. Just do the opposite, because everything I've ever done is wrong. Let me do the opposite. Everything I do will be right now. But really, I mean that's what Warren Buffett says.

Mark:

The world's greatest investor is when do you buy? When there's blood in the water, the worse things get, the more you should buy. And now, um, you know he went to cash recently. I bet you right now he's getting back into the market and buying some stuff. Um, gosh, I mean, so many stories I could tell we won't, we don't have time.

Mark:

But again, that's why, uh, we use professional money managers that do it for our clients, do it for us, because we don't want to be involved in the emotional aspect. We want those computer algorithms that are reading what's happening, trying to look ahead into the markets and making the right moves as quickly as possible. The portfolio you mentioned, that's pretty aggressive. They're 25% in cash now, but they didn't move 25% in cash three weeks after the drops. They moved very quickly, almost immediately, and they did not catch a lot of those drops that occurred. So it's not about and that's the problem with the 401k you can only make a couple of moves a month, and so you may have to wait another two weeks before you make a move. That might be good. It keeps you from making a move because all of a sudden, the next day it's up again.

Evan:

Well, we already saw some recovery recently after the extension of the 90 day extension for the tariffs.

Mark:

I think the last stat I saw and I may be off on this a little bit, but I think 90% of our gains in a year come in a 10-day period. I think that's correct and I'm not saying 10 days in a row, Maybe one day in February, one day in April, whatever. So if you're out of the market one of those 10 days, you've missed a big percentage of the gain for that market. So again, I'm not talking to somebody that's 62 retiring next year. That's a different setup, but I am talking to folks that are forties and fifties. And then as we, like I said earlier, as we start getting five years away, we start changing some three years away, start changing some more one year away. Big changes, retired boom, we're set up.

Evan:

It's all it's ready to go. Yeah, so not really speaking to our clients right now. If you've not spoken to a retirement planner, you've got to plan for flexibility, and I'm going to be careful about making blanket statements, excuse me, because, again, we say this over and over. These are not one-size-fit-all answers, but you know, if you have not really planned for retirement, if you can cover two to three years of expenses without touching your investments, hey, you're on a solid spot. You don't have anything to worry about. Otherwise, it might be wise to wait a little longer and ride out the storm. If you were thinking of 2025 as a retirement year, some real key factors to consider. One where is your income coming from? Do you have an income plan?

Mark:

As we've already mentioned, and that's how important it is. We will talk about that in every other show, every other episode. We'll talk about that because, again, knowing where your income is coming from for the next 30 years by the way, it's not set in stone, it's very changeable, very flexible, but being able to look ahead and say no. I talked to a guy one time and he did not become a client, he was very much a do-it-yourselfer and he basically had already retired. He'd been retired about a year and he admitted to me that he pretty much wakes up almost every business morning in retirement looking at what the market's doing, because he's relying on the market for his income.

Evan:

What kind of retirement is that 25, 30 years of doing that in retirement is not comfortable.

Mark:

I don't know. They go back to work.

Evan:

Yeah, it's stressful, wow. So 2025 could be a good year to retire if you've been saving consistently, managing debt, keeping your investments diversified, having those income buckets prepared. Inflation right now is relatively tame. It doesn't always feel like it when you're buying eggs, but inflation is relatively tame and market dips don't have to derail your plans if you're prepared. In fact, most of our clients have their income buckets prepared way before their retirement. In fact, yesterday we met with a couple who we've been with us for a long time. They retired earlier this year.

Mark:

Happy loving life. They could not quit hugging us. They could not quit thanking us. Uh, if it had been for guys, we would not be able to retire at this point. No stress, I mean, just it was beautiful. I've known them for probably 40 years through church and everything else, and we've been working with them I think we figured up 17 years but just it was so good, it was such a great ending to yesterday to to meet with them and they were making some final changes on their trust as they, as they enter retirement. But just it was so good. It's so rewarding, yeah, yeah well and.

Evan:

But they didn't retire in 2025 on a whim. You know they had a plan in place for it. Like Mark said, we've known them for 17 years, so we started working with them on their plan a long time ago. That's so much time to prepare and uh for accounts and build towards your goal in retirement because they know where their money's coming. They know where their income's coming from this year and it's not their market, and the money they do have in the market.

Mark:

They don't need it, right. So. But one of their accounts was up yeah, a good, a good bit and they needed to buy a car within the next two months. So we left alone most of the market accounts, but we went to their precious metals account, right, which was up significantly and and was able to buy almost a brand new car, uh, with what they had grown by. So that was really cool too.

Mark:

We always want a place we can go to that's going to be up. I've never seen a market and historically I think this is true is there's never been a market where there's not something that's up. So we want a little bit of everything so that if we need money, we can go to that particular bucket that is up and grab it. Otherwise, the income is coming from the stable bucket and it's never going to be down. So again, diversification when you're 25 or 30 is hey, have some large growth, small growth, small cap, these types of things. But diversification in retirement is much more involved, and then you even get into tax diversification. So, by the way, I want to make a quick, I guess, announcement here, or commercial break, whatever.

Mark:

Make sure you visit our website. It is a treasure trove of resources for retirement. Bookmark it. It's masterplanretirecom. Lots of checklists on retirement.

Mark:

Every episode we've done over the last couple of years is on there via podcast, via YouTube. Of course, our radio show as well. It's every subject in the world as it pertains to retirement. But also there's a little button on there. It says schedule a meeting.

Mark:

This is a complimentary meeting to figure out where you're at, talk about your dreams, your goals, your fears. What does your retirement life look like? We talk about that for several minutes and really want to explore what your ideas are. Maybe you've talked about it before and you and your spouse are looking at each other like you know, I don't know. Do we want a second home? Do we want to move? Well, whatever it might be.

Mark:

But, most importantly, we will then run you a series of reports that will tell you again who you truly are when it comes to numbers, and I think it's a big relief. It's like going to a doctor and you know, yeah, they may find something wrong, but you can't fix it till you find out what's wrong. So that's what these complimentary meetings will do. I hope you'll sign up for it, evan, and I will meet with you one or the other or both, depending on the schedule. And again, it's just a good chat and then some reports that will help you out. By the way, the phone number is also 770-980-9262. So if you like to talk to a live person, give that a try. 770-980-9262.

Evan:

Yeah. So if you're thinking of retiring in 2025 or even subsequent years, do a pulse check on your retirement before calling it quits. Ask yourself some key questions Are you maxing out your retirement accounts? Is your living situation affordable? Can you emotionally handle market swings without a paycheck? Are you completely reliant on market swings on whether or not you're able to retire? If you're behind on saving folks, it's not too late. You can use catch-up contributions up to $31,000 or $34,750 for ages 60 to 63. But if you're over 50, up to $31,000 in a 401k in 2025. Even small increases in contributions, especially with employer matches, can lead to big gains over time.

Mark:

And even if you're maxing out your 401k or 403b or thrift savings plan, you can still do a personal IRA or Roth individual like through a company, like us, or something up to $8,000 if you're 50 and older. So if you really are making good money maybe the kids are through college you've got that extra money that's come in. That's $38,000 to $42,000 more you could be saving right now, plus whatever the match is.

Evan:

So that's some heavy-duty saving right there and maybe you do need to work a little bit longer. That's the case for some people. Sometimes we talk to someone who just cannot bear to think about going into work one more day and we have to work with them and figure that out. But maybe working a little bit longer and automating your savings is the way you need to go. A couple extra years on the job can really make a difference, building your nest egg and lowering debt, or maybe cutting back.

Mark:

Or maybe even cutting back for a while. A lot of companies will let somebody work less hours and keep most of your benefits or just walk away because you can't stand the company and go find a part-time job.

Evan:

We just had a big episode on that the power of part-time work, not only financially, because it helps supplement retirement income, but emotionally, and it's hard to make that huge shift in your lifestyle, sometimes to just completely cut off what is, for many of us, our largest social circle through employment.

Mark:

Well, Evan and I, we love what we do and I know I mean I've been doing this a long time. If I just woke up one morning said I'm done, I really don't know what I'd do in my life. I mean, I love teaching, I love doing the episodes, I love sitting in front of a client and designing a retirement roadmap that fits their needs exactly. It's just so many things I love doing. Not crazy about the paperwork, but everything else so. But we got great people here that do a lot of the paperwork. That's the good news. But yeah, so I don't see myself now. Will I slow down eventually? Probably because I'll have to right's. It's hard to imagine now.

Mark:

Other people out there like they're like, hey, when I hit 60, I'm done, I am done with this, and that's fine too. Everybody's different. But we have other clients and we've talked about this or they're afraid to retire, they're afraid their health's going to deteriorate. Yeah, which is why we talk about what are you gonna be doing? Let's talk about us. Come, come up something to do. And again, we had a whole episode a couple weeks ago about that. So you going to be doing? Let's talk about it, let's come up with something to do Again. We had a whole episode a couple of weeks ago about that, so you might want to go back and listen to that one if you missed it.

Evan:

Yeah. So retirement is not a one size fits all. So whether you're ready now or thinking of punting to next year, it's more of the numbers. Yeah, the finances are incredibly important for longevity, but it's about confidence as well. Emotional confidence, flexibility, creating a next chapter you're genuinely excited to live, because if you're afraid to retire, that's not the retirement that I want to enter into. I want to make sure I'm confident and I have a plan.

Mark:

Yeah, that's stress free. That's one of the reasons why a lot of folks want to retire is stress. Stress at work, and so you know it helps us live longer without the stress. So having a stress-free retirement will extend your life span, I believe for sure. So that is important.

Evan:

A couple other things that you could do leading up to retirement. You know you did mention the B word earlier budget to help boost savings. Hopefully we'll blip that out.

Evan:

Yeah, we'll blip that out Again everyone's situation is different what they're able to do. But 50-30-20 rule is a common rule to use, Basically 50% for needs, 30% for wants, 20% for savings and debt. If you're able to start there, that's a great place to start and then you can adjust as you move along, help you catch up a little bit.

Evan:

Watch out for sneaky investments fees. This is one we don't talk about too often, but management fees might sound small but they could delay your retirement, especially if all of your money is in a 401k or something else like that. I bet you most of that investment is in mutual funds. You say, well, my 401k has got a pretty low fee. Yeah, the 401k itself might have a low fee, but those mutual funds within your 401k each have their own fee associated with them as well, and you probably don't know what they are unless you read the prospectus for each individual mutual fund, and I don't know too many people who have ever done that. Now not many, and those fees run from a half percent up to over 2% per fund.

Mark:

And so there was a study done by the government a few years ago and they said 401K, 403Bs were the most expensive investment vehicles. So that's why we're very quick to take a look at that under a fiduciary responsibility and see about rolling that out. A lot of people may or may not know this, but when you turn 59 1⁄2, even if you still work for that company, you can roll out a portion or all of that 401k into an individual investment account. Make sure you use one under fiduciary where there's no commissions built in, no hidden fees, just that one management fee. That's right on the top. You see it when you open your statement, so be careful that it eat it away, like you said.

Evan:

And if this is a season that you feel like you need to tighten your belt a little bit, you could hunt for hidden savings. Review insurance policies, phone and cable plans, unused subscriptions. I know most of us are guilty of that. You might find money hiding in plain sight and maybe even cancel that fifth streaming service you forgot about.

Mark:

I've talked to people that have been with the same insurance company like for car and auto for like 20 years. You should shop that every three years. There's no loyalty left with insurance companies. You could be with them 20 years, have two accidents and you're gone. It doesn't matter, you've been there 20 years. And so I love using independent agents because they represent multiple companies, kind of like we do, and so you get the very best rate to develop a relationship with that agent. They're always shopping for you. They have your back because they don't work for the insurance companies, they work for you. But shop it. Don't be afraid to shop it and get the very best rate. Combine them Like auto with home. You get a discount as well. But that's just one example. You touched on several things that are important.

Evan:

Well, it's tax season. Right now. Put your windfalls to work. Instead of spending your tax refund or bonus, send it to your IRA. Pad your emergency fund.

Mark:

Uh future, you will thank you and be very careful about and you mentioned this earlier, alluded to it, Evan, be careful about putting all of your money in your 401k, especially if you're under 59 and a half. You still need that savings on the side and that you've got to get to that. You can't get to your 401k without a penalty under 59 and a half, so be careful.

Evan:

Uh, that's to spread out your savings. Yeah, and we mentioned this throughout this entire episode, folks, but if you have not started considering your own retirement plan, start the conversation. We are retirement planners, but there are other retirement planners out there. Get help somewhere, even if it's just a consultation. We offer complimentary consultations A lot of places do but you need to get at least start that conversation. Get an idea of where your foothold is.

Evan:

Like Mark mentioned earlier, with our consultations, we give basically a 10,000 foot view of your retirement. We organize your accounts. We run a series of reports where. Where are your strengths, your weaknesses, what do you need to look out for? Whether it's tax strategy, bear markets, like we've discussed a lot today. When are you able to retire, social security reports. All of this has to work together. Mark mentioned a little bit about our clients who came in earlier to tighten up their trust documents. Is your estate plan in place? Folks, all of this has to work together. It's something we do. We're happy to work with you. Come on in- office, we'll buy a cup of coffee or we could do something via zoom as well, but if we can help you, folks, just come have a conversation with us we h ave people that listen to these episodes from across the country.

Mark:

We teach classes across the country, so this is not just about Metro Atlanta. We work with folks in multiple, multiple states. I think we're up to about 25 states now that we work with folks in, so don't worry about where you're at, you know. Give us a call Again. We could do a Zoom. I can do a phone call with you. Whatever works for you to take advantage of that complimentary consultation. So visit masterplanretirecom, get that scheduled, and I think that pretty much wraps us up for today. Hope everybody has a great week and until we see each other again, plan well and prosper.

Mark:

This was Retirement Roadmap Radio with Mark Fricks of Master Plan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretirecom or call 770-980-9262. Thanks for listening and remember plan well and prosper.

Speaker 3:

All matters discussed during this show are for informational purposes only. Each individual situation may vary and the opinions expressed here may not apply to everyone. Materials presented are believed to be from reliable sources and no representations can. We'll see you next time.