Wealth from Wisdom

How to Retire in a Bear Market

December 15, 2018
Wealth from Wisdom
How to Retire in a Bear Market
Chapters
Wealth from Wisdom
How to Retire in a Bear Market
Dec 15, 2018
Carson Wealth
Show Notes Transcript

According to a recent study by CNBC, if you retire during a bear market, you could end up with 66% less money for the rest of your life. How can you avoid this? Tune in to this episode to find out!

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo, the opinions voiced and welfare wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged and may not be invested into directly investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through CWM LLC and SCC registered investment advisor.
Speaker 2:
0:30
This dud market hit another old time. Records as much as $10 billion in social security benefits go unclaimed every single year. Reserve announced that they will raise interest rates by 203 the skyrocketing cost of healthcare and retirement could now run 350,000 blending for retirement today is a whole new ballgame. It's loaded with challenges, obstacles, the trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of fame advisor, Ron Carson, straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson. Retiring successfully today is more challenging than ever before and unfortunately it just got even more difficult
Speaker 3:
1:15
and a recent research study from CNBC. If you retire during a bear market, it could mean you wind up with two thirds. Yeah, that's 66% less money for the rest of your life. Wow. Imagine you have a dollar in your pocket and you think it's worth that and then all of a sudden it's only worth 33 sets. Hey, you're listening to wealth from wisdom. I'm Paul West and today we're going to reveal the specific steps that could protect you if you retire during a bear market. I have a cohost today, Jim Caldwell. Jim, welcome to the show. Thanks Paul. Yeah, I think it's going to be fun to talk about this because most of us live in this world where we have a recency effect by us. That is what just happened is what we think always happens and so we'd been living in this world since 2008 when the market goes up.
Speaker 3:
2:02
The world hasn't been that volatile and now we've certainly been seen here in October and November and December. The market can move, the market can move quite quickly and we don't know ultimately where it's going to end up. But if you're going to retire in the next two to three years, you better be really paying attention to the show. And really for all of you, it's going to hit you at some point. And let me explain this to you. If the stock market falls during these first few years of retirement and the combination of the stock market losses that you experience plus your need to withdraw money from your retirement plus taxes here, the plus plus, right Jim, I mean this could literally decimate your retirement savings and this threat is bigger now. I mean, I look at last week in the market alone, you know, the first week of December the market was down 4.6% you have $1 million that wipes out $46,000 of paper value.
Speaker 3:
2:59
Therefore you, and at some point we are overdue for the next major market correction we might be experiencing. Now, I don't know, I mean we'll talk a little bit about some of those variables today, but coming up on today's show, Jim, let's share with people really what those most significant aspects are of retirement. And this what we like to call is the sequence of returns risk. But Jim, before we get into that, I know we've been watching the market closely. Um, and for those of you that are doing things on your own, just thought we'd share with you some of our key investor insights this week. And so before we get to sequence of returns, so first let's talk about some negative factors. So Jim, I would say bonds in oil probably provide the greatest concern about economic growth and market direction right now.
Speaker 4:
3:43
I would totally agree with that. I mean, when you look at cruise down to what, 50 some dollars a barrel, that's not real good. Um, you've got some OPEC, I think they came out with an agreement or at least some kind of a talking point last week you thought to China with the trade issue there and, and some other, um, off to the side. Like one of their key people getting arrested. I mean there's all kinds of stuff going on out there that we need to be concerned about.
Speaker 3:
4:08
Yeah, I mean, so those are the things that are very negative I think stacks and what the Fed is doing or both in what I would call a neutral category, but there's actually positive indicators out there right now. So let's think about the US labor markets and consumer spending. Both of those are strong and there's actually low wage workers who are providing great support for the future growth. However, it's the combination of all of these things that are happening. And I think what's really happening is people are starting to readjust how much risk they can take, how comfortable they are, and maybe they're slowing down for a moment. The, the throttle they're pressing for how much, uh, growth and ultimately return, they're willing to trade off. So something happened and it really, I think spooked the market over these last two weeks. Jim Is, we really got, um, at one inflection point there an inverted yield curve and we're not going to get in the technical requirements of it.
Speaker 3:
5:06
Uh, but the interesting part about the yield curve is, is if you're getting more value in the short run than you in the long run is that's what's inverted. So shouldn't you in fact, if you're going to hold your money for five years versus two years, I want to get paid more if I have to have it held for five years. And now, I mean, as we look at it, if the one year and two year are more valuable than the five year, oh, that's an issue. I mean, and so that's starting to say people are getting fearful and it's something that we are certainly wanting to watch overall. So Jim, I think let's move into now with those things that are happening. So that's just a warning sign. It doesn't mean it immediately signals a recession. It's just one of those indicators that we watch.
Speaker 3:
5:55
So short term volatility, you know, will average out into strong long term returns if you make the right decisions. So let's talk about, there's this great article from CNBC, Jim called retiring in a down market can mean two thirds less money for the rest of your life. So really if you think about withdrawing money from your savings for retirement can be a game changer. And what they cited was that people retiring just two years apart, the first one in the market downturn and the first one on the upturn, that 15 later years later, if you look back, somebody had two thirds less than the other. I don't know about you Jim, but I don't want to be that person. No, no, I'm not saying it's a, it's a winner versus loser, but a lot of it is just purely timing. And I also thought was interesting about a study connected by AIG is that 79% of investors are concerned about a stock market decline. And I think ultimately this is with good reason. So Jim, I was out traveling and his last couple of weeks, it wasn't on the show last week. And so I think this resonates across the country. I was in Las Vegas, Nevada. I was in Albuquerque and Santa Fe, New Mexico. I was in Miami, Florida. The theme was the same. I heard it across the country. And that is what's going on right now. What's happening and should I retire? And I think Jim, you encounter that every single day from clients and families you talked to across the country.
Speaker 4:
7:18
Sure. We, I mean the big thing here is people go from taking a paycheck from an employer to now they need to take a paycheck from themselves. And obviously if that pot that they had counted on to take that paycheck from has dwindled due to market fluctuation there, they're concerned. I mean, people don't like uncertainty. They don't like change. And then you add a little, uh, unsettling news that we seem to be getting here lately. It's, it's not good for their psyche at all.
Speaker 3:
7:46
No. I mean, no, nobody, nobody wants that negative thing that goes with it. And I think Jim was house sitting there in Las Vegas, Nevada, and I was amazed to look around there. So first of all, by the way, I don't know. Have you been to Las Vegas recently? No. It's been a couple of years. Okay. A couple like two a couple, like 25 or six. All right. People say the word a couple. I'd never know what they really mean. Not a big gambler, but we don't have to be up by the way. They isn't about, well, it is about, there's a lot of gambling that goes on there. I cannot believe food and how much of a foodie scene that whole city is now, and I just remember going back there when I was younger, it was great. Hey, I'm going to go and I'm going to get the five 99 steak buffet or whatever those things were.
Speaker 3:
8:34
It's not that way anymore. I mean, some of these properties you wanted to go to their buffet, it's $70 because they got steak and shrimp and crab legs and all of those things, but it's also all about these five star restaurants and celebrity chefs. We went to dinner, there's five of us that went out to dinner. Jim and I mean, my mouth dropped. I'm like, I can't believe this is how much you have to pay to go out to dinner and some of these restaurants and the casino. And I was like, I imagine if I was on retirement and I was living on a fixed income, I couldn't afford to obviously eat at places like that very often. But second, in terms of how it works for them overall, I mean, so as I look at the ups and downs of the market they have from the housing perspective there, Las Vegas is one of the most challenge markets that we absolutely ever see.
Speaker 3:
9:23
And so imagine you go buy a new property and what then happens, you have to go through an economic downturn like they saw in the late two thousands 2007 2008 through all that time period. So Jim, let's talk about when we look at growing and retiring in this economic downturn, one of the challenges we face is people are living longer than ever before. So let's talk about this. They're expecting right now there's about a half a million centenarians. So Jim, how long do you think you're going to live? I'm thinking I'll make it to 90 that's my magic number. 90 and I think you're going to make it more than that. You're just an, I think fit this morning. I mean, you're going to be feeling great. Let's say 95 right? I got you to do a hundred and we're going to get you to 180 boy. We'll be having some fun.
Speaker 3:
10:10
We'll be in Vegas. So I think I told the story the other day. I had lunch with a lady and she was 55 years old and I said, how old do you think in your live? She said, Paul, the good news is is I'm halfway there. I'm going to live to 110 that's just how I feel and that's how long I'm going to get there. So we're now predicting by the year 2050 that there's going to be 3.7 million centenarians. If I said that properly run people over a hundred I think that number's low. And I think at the number's low because based on all of the research in that healthcare is progressing faster than we ever imagined that people are going to live longer than ever expected. So now it's 2018 it's 2019 and we continue to experience this market volatility and you'd decide to retire and your portfolio's not positioned correctly.
Speaker 3:
11:01
Like we were saying earlier, you imagine that you have two thirds less money than you imagined because you didn't plan properly. Huge mistake we see all the time for people. Paul, you mentioned the word plan. We had some people at a few weeks ago and you know, normally when we, when we map out our plans we, we usually let the husband or or the guy go to 85 the female to 90 that's what the table show. But this particular lady, there's about a 10 year difference between she and her husband and she says, listen, my mother is 105 and I said, what? She says, can you map this out to 105? And we were able to, within five minutes on the screen, map out their assets and their portfolio to 105 and she was, you could see that Aha moment. Yeah. Well I think it's interesting you say that because in the consumer world we live in now, I don't want to wait for my CPA or my financial planner or my financial adviser.
Speaker 3:
11:52
Oh sure. I can map it out. Why don't you come back in three weeks and we'll go through that. It sounds like what you just did, Jim, was in five minutes, five minutes, you are able to give them the answer they wanted and they probably left the conversation more financially confident than they ever have in their life. So as you look at your own personal situation and you think about if you were forced to sell all of your investments in your retirement because of a stock market downturn and worse yet you had one of those required minimum distributions. So you double hurt yourself. You're now in this terrible tax situation. But the reality is if you plan for this, there's a little known strategy that we could help you out with this. If you'd like more information about that, give us a call. (888) 419-8513 it's really your choice. Do you want to pay more to the IRS or do you want to keep more for yourself? (888) 419-8513 (888) 419-8513 you're listening to wealth from wisdom,
Speaker 2:
12:49
trust, transparency, accountability. These are the values that drive Ron Carson and Carson wealth. You're listening to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. He's a published author and he's been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now, back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. According to a recent research study from CNBC, if you retire during the [inaudible] in a
Speaker 3:
14:27
bear market, you could wind up with two thirds less money for the rest of your life. Ouch. He say about that. What we call this is sequence of returns risk. And if you don't have a plan for this, it really devastates your chances of retirement successfully be like, you know, planning for a garden. You got to do it in the right order and you got to have the right weather and you got to make sure it all happens and you don't want it wiped out. Why? To farmers buy crop insurance, right? They want to avoid catastrophic risk and you really need to look at the same type of methodology for your 401k. You're a four o three B, your retirement plan because you don't want a catastrophic event. And by the way, those all happened in 2001 in 2008 one will happen again. Don't get caught by being lazy by thinking you are better than the market.
Speaker 3:
15:20
The reality is is the market does a wonderful job of making a fool out of the majority of people. It absolutely does, doesn't it, Jim? Hey, that's Jim Caldwell. I'm Paul last year, listen to, well from wisdom and today we've been talking about the consequences of this, what we call sequence of returns risk, which really if you think about it like the weather and how it affects crops and how it affects everything that goes on there. But also what we're looking at is how do you figure out ways to combat this in your retirement and what do you really need to do? And Jim, we've been talking, you know, about the market and what's going on and you know, certainly China and tariffs are a hot topic in the news. Uh, the Brexit vote or lack of vote becomes news. Um, I also wonder though, now that we have higher interest rates happening, what's that going to do?
Speaker 3:
16:16
The market, I think it's actually turning it into a little bit of a negative. And here's why. So earlier this week we learned that the higher rates are actually seeming to slow down housing. And you know, those of you, I know we're based in Omaha, Nebraska. You may not feel that way. But I've had the privilege of the last couple of weeks being across the country. I've been in Las Vegas, Nevada, I've been in New Mexico, Santa Fe and Albuquerque. I've been in Miami, Florida. I've been in all of these places. And I think what we're starting to see happen is people have a mental barrier. They don't want to pay a 30 year mortgage above 5% cause it's been so darn long since they've seen that. But also what's happening is, is now if these higher rates people are selling now, because they figured they better get out when they get a chance.
Speaker 3:
17:04
And so now you're gonna start seeing this glut of people, of people who don't want to pay any higher interest rate versus people who went out and I say you're increasing your supply and you're lowering your demand. That's a problem for what's going on there. And I think Jim, that's something we're going to watch because when we work with families, real estate is often a large percentage of their portfolio and I think it's important for them. So you don't want to be put into a situation where you're forced to sell maybe your largest asset, your real estate in your portfolio at a time that could hurt you the most.
Speaker 4:
17:34
And we ran into the situation just what you just said, Paul, where we were, we did a plan for a family and we put it all together and they're getting closer to retirement and you've got the market's doing what they're doing. The, the four o one k for the husband has taken a hit lightly and we can talk about that in a minute and possibly how we can help with that. But they're real heavy and real estate and they're going to have to make some tough, hard decisions. One of the properties we feel like we can help them get a decent price, but the one they they want to part with could, could, could be a real headache like you just said.
Speaker 3:
18:08
Yeah. Now at and absolutely can. I mean, and by the way, you know, when I think about real estate, I mean commercial still growing like crazy. I'm going to tell you, Jim, when I was down in Miami, I was down there visiting a few people. There's this event going on called Art Basel. It's with the larger one of the largest international art shows. I mean it was chaotic because the best word I could say in terms of how many events were going on, what was happening, traffic, uh, Jim, I mean, I don't mean to be a play that traffic, but this is just, it took an hour to get somewhere that should take you 15 minutes because there's so many people there. Everybody by the way, isn't shared transit in that, I mean is not buses. I mean Lyft and Uber is you just, it's just like continuous rose and rose for people.
Speaker 3:
18:55
But I had an opportunity to go to an event and I just want to share with our listeners. This is, uh, you know, just how the world and real estate and how people are trying to differentiate. So this event, this is pretty darn creative. So this high rise building I went to in the Miami area. So what happens is, is when you get there and you pull in, and so I took a shared service also, so I get dropped off of the front door. But actually if you live in this high story building, I think it's 50 stories that you actually pull your car in. Your car goes into an elevator, the elevator then takes you up to your floor and your condo unit, and then it takes your car into the Condo unit and you have your garage in there. So if you live on the 35th floor, you went in there and your car, it automatically goes up.
Speaker 3:
19:47
But you should have seen the technology in this place. It was just out of this world, all of these, by the way, where glass elevators. So you could see someone's car if you were in the middle central area and the place going all the way up to this building. And I was like, wow, that is super creative. But also I was thinking, I was like, I wonder how much money that has to build and construct. Um, but I'm sure the people that live there, it's part of their just life value is they love it. They think it's fun. And so they get along with it. But I mean, I imagine if that property, and I guess there's only I can run, they said there's like 135 units. There's only 10 units left. So obviously it's it. People are desiring it and they're willing to spend their money to go there. But if you have an economic downturn and you bought that unit right now, so essentially it's probably at its peak, but you're going to retire and you had to sell it because you needed the money four years later and it's worth 50% how's that going to make you feel?
Speaker 4:
20:46
Not Fun. Not good at all.
Speaker 3:
20:48
No. So let's talk about an idea here for everyone is, is diversification and really diversifying your risks are real estate is one area, but also how do you diversify your portfolio? And so, so many people hear about the word, oh, stocks or bonds or how it, what percentage should I have in that? And let me build the right percentage allocation. Well, guess what? That answer's wrong. Here's why. Because the reality is of it, most people don't stick to that allocation. They make changes, they make adjustments, and therefore they're now playing, I call it the guessing game. I start chasing returns. Yeah, they chase returns or they're guessing like many people are as did we hit the bottom, even though we had a major resistance level, did we hit the bottom? Did we not? And then what happens is people get paralyzed with this, and I know we have listeners today, by the way, Jim, I just talked to one the other day that got out of the market in 2008 and here in 2018 they still haven't got back in why?
Speaker 3:
21:55
And they're not the only ones, by the way, because people become what I call behaviourally paralyzed because they don't know when to get in, when to get out after they make a decision. And when. The reality is is you have to guess right twice when you got out and when you get in. But if you're properly allocated and you stick to it and you make sure you're making the right decisions. So let's talk about a defense, Jim. And this is something that we believe in, we share this story is, is really what is your area place spoke capital. Do you have a downside protection technique as a buyer right now? Right? Most people think bonds are downside protection technique. Bonds are helpful. However, in a rising interest rate environment, really tough question coming at you Jim. So hope you're ready here. Alright. If rising literary send environment to bonds go up or down, they go down, they go down.
Speaker 3:
22:48
So interest rates are going up right now bond prices are going down, people are not happy. And there's people out there that think I got to sell. Yeah. So they're saying, okay, I'm going to 60% stock and now it's down a little bit for the year and I'm in 40% bonds. So that should be up for the year. No, no it's not. So I think there's a lot of consumer confusion because we haven't been in a rising interest rate environment in a long period of time. So you have to figure out, and I think one of the big things is I love downside protection for people. And if you don't understand what that is, give me a call. (888) 419-8513 we'll cover. There's ways to do that. By the way, it does not mean put it in an annuity and get charged your eyeballs out with fees. Don't do that.
Speaker 3:
23:35
That is a bad decision. It rarely works in the way you want it to, or at least for the dollars that you've worked so hard in your life. But also I would say rebalance Jim, and I think this is one the under utilized things is people set it and forget it a little bit like your will and trust people just go, Oh man, I'm so glad I got it done and I love this gym. So here, here, here's a question for you. So when you ask somebody if they have a will or trust done, I would say a lot, certainly not all say, oh yeah, I got it done and there are that actually say I just got it done and then he'll ask, oh, you know, a couple of weeks ago, a couple of months ago, and what do you think the normal answer is? Yes, usually got it done five or 10 years ago.
Speaker 3:
24:18
Yeah, it feels like they just got it done. But one of those things about a will and a trust, I'm, I'm super happy you got it set up. And by the way, if you don't have one set up, I can't say this strongly enough, your doing one of the most selfish things you can do because you're so worried about you don't have time or you don't want to spend the money. You're hurting your family. You really are. I mean it just, if you can't hear it in my voice, it drives me absolutely batty. Be Selfless. Take the time, protect your family, make sure the resources you've earned over your lifetime, not only go to the people you want, but don't make them go into probate. Don't make them spend all this time and energy and money if you're not on this great earth. So get that done.
Speaker 3:
25:10
I mean it's just, it's just one of the simplest things Jim. And I think we were sad to see that a lot of people don't have that in place. Yeah. And how many, how many times do you see after the fact the problems that causes it ties up assets. They need baby deed liquidity for, for some medical bills at the end. And then people start arguing and it's not a pretty picture. Something simple is their kids are stressed out because they've got to pay for funeral expenses, but they can't get money from the parents, the state because that's not there. And I I, you know, I have three children. I know you have children. Jim Is, I don't want, I would hate to be looking down from above, at least I hope I'm looking from above and not looking. Well. We can discuss that at another show up when you can.
Speaker 3:
25:49
That's going to be a long show and I might need to be going to church for that one, but I don't want to see my children fighting are disagreeing or arguing over our state because of I didn't plan properly or I thought I updated stuff, but I didn't. It's a huge mistake people make. If you want help with that or want advice on the right ways to approach it or the frequency of it, give us a call. (888) 419-8513 what you could learn in just one meeting, which is obviously complimentary, could literally save you thousands and thousands and both of your retirement and in dollars. (888) 419-8513 (888) 419-8513
Speaker 2:
26:31
you're listening to wealth from wisdom. He seemed good times and bad times and he's got the gray hair to prove it. You're listening to me.
Speaker 3:
26:38
Well from wisdom with Barron's hall of Fame Advisor, Ron Carson, now he's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. If you're recently retired or you're even thinking about retiring in the next several years, do you face one serious risk that gets little and really any attention by you? And that's your growing chance of retiring and a bear market. Jim, we get so fixated on the number, I'm gonna retire at 60, 65, 67. Uh, but when you retire and what that looks like, and I'm not saying you shouldn't because of it, but if you have the right plan in place and you avoid what we call this sequence of returns risk, that would drain your really, your retirement savings faster. You know, it's one of the most underutilized techniques that people think don't think about and they retire on their own and maybe they want to manage their money on their own.
Speaker 3:
28:43
And one of those self managed places. And this turns out to be financial disaster because they think what happened in the past, growing their money and then 401k can grow like that and their retirement. But they retire in a time which could be shortly in a bear market and all of a sudden they put more at risk than ever before. They don't sleep well because they're losing money and now they're getting money out of their own account. And it makes a big difference to them. Hey, you're listening to well for wisdom. I'll Paul West joined my cohost wealth advisor, Jim Caldwell, and today we're talking about this risk that really has this devastating impact. So in this segment we're going to talk about how do you have this diversified income plan in retirement and how do you make sure you don't leave thousands of dollars on the table with all of your social security benefits?
Speaker 3:
29:29
So Jim, let's think about this. I mean markets really, and then they, they go up and down. But any income you can generate outside of the market. Maybe study, maybe this is rent, maybe this is rental income, maybe it's through an investment you made, but it also is true for social security benefits. So they either stay the same or they go up and that's called Cola or your cost of living adjustment. And this continues to change. But if you think you're smart enough to outsmart social security, let me give you a fact. There are 2,728 rules in the social security how book and you read all those? No. Okay. Nope, and I'm not going to, I don't think anybody has. There's obviously smart people that have, there's technology that's created that can help all of you figure out what's best for you. But if you think you're going to outsmart it, why do you think there were 2,728 rules written to stop people from outsmarting it and to protect and every single situation it's so claiming your benefits is complicated and confusing.
Speaker 3:
30:33
And you may not know this, but your decision for when and how you can claim these can actually trigger this, what we like to call this avalanche of additional taxes. It could double your medicare premiums and it could also cause you to really forfeit additional benefits that are rightfully yours. So Jim, I know we talk about this all the time on the show, but if you're going to retire and the stock market's going down and you don't file correctly for social security or at your optimal time and you double your medicare premiums, I just feel like somebody just piled on me, just beat the living, whatever word you want to add there that we don't get fine. Yeah. So what do people need to do? I mean, what's the right strategy here for them? Because there's, there's, I feel like they're walking through a field, uh, you know, a soccer field, but it's got all of these holes in it and you can twist your ankle over the place. And some, you may be able to make it all the way across, but others you're going to keep twisting it. You're not gonna make it all the way across the field and your journey of life.
Speaker 4:
31:33
So, so these are tough conversations because you get a situation where you got a husband and wife, they're sitting in a room, you can tell they want to retire, they want to, they want to clock out, they want to move on to other things. So what are their hurdles or hurdles are real simple. They're living longer so they possibly need to work longer. We've talked to in this show about timing and you know, do you retire in a down market and how does that look? So the best thing you need to look at is something we've talked about on previous shows, Paul. And that's the tax planning piece, not just tax returns, but tax planning. And we have to be able to take into account, do we hold off on, so security, do we take some of the qualified money, meaning your Iras or your 401ks, do we take those out in your sixties and put that into a taxable play to generate income, which is going to help you in your seventies there are strategies, but everybody's is different. And that's the key here.
Speaker 3:
32:27
Hands down, everybody's different. And I think one of the things that people forget about is how do they protect themselves from a tax perspective. I've yet Jim, to find someone that wants to pay more in taxes than they need ever. Marijuana. It's not going to happen. So as we think about this, um, many people are going into municipal bonds and I really liked municipal bonds. I do not like, and I can't stress this enough on the show. I do not like municipal bond. Mutual funds do not cause you're, you're forced to buy or sell based on what other people are making decisions. It's something that does individually impact you, especially in a rising interest rate environment. Hands Down with that. Your head handed to you at some point. Yeah. And imagine now in this year, mutual funds also, um, you know, only get priced once a day.
Speaker 3:
33:16
So if you need liquidity, you can't have it. Um, but also is I look at it, there's expenses in there that are hidden from you. So if you don't know your cost, so now you're in a short term municipal bond and you're maybe yielding two and a half, 3% today, but your, your mutual fund is charging you 30, 40, 50, 60 70 basis points, which is 0.3 0.4 0.5%. That's just coming out of your total return that impacts you and your family. And you probably have no idea that's actually happening. Well here, and here's one more. You know, this is December, right? So we're getting close to the end of the year. People are going to get there. There are 10 90 nines and their statements next year for taxes and some of them are going to have capital gains on there and they're going to sit there and look at that and say, wait a minute, I didn't make any money in my mutual fund last year.
Speaker 3:
34:08
How can I get taxed on a capital gain? And they're going to blow a gasket. It's just, it happens every year. Yeah. Well I, especially this year Jim, cause people are going to see their accounts potentially down. And so I call that the double whammy. There was this show on TV, what's that called? Pressure lock where? Wham. No. Whammies no whammies no. Whammies you remember that one? You didn't see it. I know our producer and all that. All enough. All right, well I know some of our listeners might Jim. So, but you're going to hit with, I want to call it the double whammy there. Account value down, but you've got to pay taxes on it. You're going to sit there and say this is insanity. I can't believe this is happening. And you're really gonna feel like you're getting pooped on them. And there's just this big problem out there.
Speaker 3:
34:51
Hey, by the way, hey, a complete sidebar here. I just thought it was, I'm going to call it the fascinating stat of the week. So are you ready for this Jim? I'm ready. That's it. This is, you know, for our, our friend down in Beatrice, Nebraska, he loves the stat of the week. So I'm going to share this with you here and I ain't going to see what you get to guess. So in the year 2015 only 43% of people in India, India is one, of course the largest country in the world. Only 43% of the people had an indoor toilet. Can you believe that? The 2015 I mean, think about, that's just three years ago. And think about, I mean, I imagine the United States or you imagine people who lived and had homes or places they are without an indoor toilet. You can, I mean it's just like, it just seems unfathomable to people. But for 40 less than one out of two. However, talk about the pace of change and how quickly the world is evolving it for the better. So now let's fast forward to the end of 2018 here. So what percentage of people do you think now have an indoor toilet?
Speaker 4:
36:02
I would say because India is growing so, so rapidly. I'm a, I'm going to take a stab that you're trying to bait me on this one song ever. I would never do that. I'm going to say I'm going to go 90% Oh, take a big jump. Wow
Speaker 3:
36:15
Jim, you did good man. Good job. 89% so you're almost dead on. So I mean, think about that. They went from essentially, you know, 43% to 90% I'll just round up to, I'll give you your number. I'll give you a correct.
Speaker 4:
36:30
The first one, the year there will be this year, Caldwell House.
Speaker 3:
36:35
That's amazing to me and that's why it's my stat or the week look at. And if you're a portfolio, by the way, doesn't have some form of exposure to the global world and you gotta be careful, by the way, I'm not saying like, oh I should have been smart invested in toilet. It's a 2015 in India. But you have to look at that with your overall portfolio. And I would say while global stocks or maybe more challenged here in 2018 2017 they were pretty darn good. And as we look at the economic outlook for 2019 and beyond, there are many markets outside of the u s that could be very positive. And I'm not saying, oh go move all your markets out of us. Large cap into international. I'm just saying it's gotta be some element. You need somebody who's looking at it. You can't just guess or you can't just say, Hey, I'm going to go into Alibaba, Baidu or some of the most famous ones that are out there.
Speaker 3:
37:33
You'd have to figure out the right game plan. No different gyms than what we were talking about. Having that right game plan for your social security. Figuring out when to claim how not to trigger all those extra taxes and how not to double your medicare premiums. If you want a free analysis, you need to be one of our first callers right now. (888) 419-8513 (888) 419-8513 this free social security analysis could really take the guesswork out of claiming your benefits. It's simple. We'll provide you an answer that helps you make your right decision. (888) 419-8513 you're listening to well from wisdom.
Speaker 4:
38:11
How could you make your money go further in retirement? Learn how unwell from wisdom with they're intolerant. Fame advisor, Ron Carson,
Speaker 2:
41:21
is it possible you could pay fewer taxes in retirement? Keep this money for yourself. You could learn right here and right now on wealth and wisdom with their install. The Foam advisor, Ron Carson at the stock market is falling
Speaker 3:
41:34
during the first few years of your retirement. This combination of this stock market losses and your need to take money out of your account to pay yourself in your retirement could literally decimate your retirement savings and investments. And Jim, we call this the sequence of returns risk. We've been talking about it on today's show. Hey, you're less than a welfare wisdom. I'm Paul West. My cohost today is Jim Caldwell. And let's get back into this job. We're not going to talk about toilets anymore, so we'll stay away from that for awhile, but come on this final segment. Let's talk about ways on how to protect your portfolio. Certainly people are paying way more attention to the stock market than ever before. I can't believe gym every day. I feel like I walk past the TV in our break room and and other places throughout the building. And the stupid word plummet is on the TV. I mean, it doesn't matter. I, I should write down, I actually, she's, I'm gonna start taking a picture with my phone. The market plummets and the market's down. 0.5% market plummets is down 2% okay? The market's down 2% and the market's down a half percent. It's not plummeting plummeting to me needs severe two percent's not severe.
Speaker 4:
42:43
What it should say is the market is, is creating incredible buying opportunities for that. I like grade something positive for a change three. Yeah. Well you really think the news is going to promote positive. No, that's enough. Watch the local news. I don't watch any news. Okay. I work incredibly hard like you do all day and I'm not going home and run it up by watching the nightly news. Well, you might watch for the weather. That's why most people watch it or sports of what's going on.
Speaker 3:
43:09
But I mean, I'm looking actually at my news notification today. Somebody died, somebody got hurt and somebody did something stupid. I mean that those are my three lead stories on my news notification app here on my iPad. Why? Because TV and radio and social media are smart. They know itself. You know what sells drama, drama or I like the f word fear or you wonder where I was going with that day.
Speaker 4:
43:37
It was one or one of one of two fun. Could have been another one.
Speaker 3:
43:42
Yeah, so, but I mean fear people selfie or, so I'm going to ask all of our listeners do one thing. Do you look on your phone and there's a button. I have an iPhone, it's called stocks and people set up their stocks in the phone and you can press the little box and change it from points down to percentage. Do me a favor, pull out your iPhone or your galaxy note or your Samsung or whatever device you have. Go to your stocks App and change the settings from points down to percentage. If you do that, you're looking at it correctly. If you're looking at points, I'm going to say compared to what one of my favorite things Jim is, is when people tell me something's expensive. So my answer back to you is compared to what? How do you know? I mean you can't make absolute statements about that. And I would say the same thing about the stock market. Oh my God. You've seen the market was down 500 points. Yeah, I did. What percent was that? 90% of people don't know.
Speaker 4:
44:44
No. Nor do they know how much is that in dollars? Yeah, that's what really, yeah,
Speaker 3:
44:48
so people are logging into their account and looking at it and so what are the things I would say is one of the strategies you can really do to protect yourself is figure out what's your really what I call your spending plan, Jim. One of the things we've learned and run and being financial planners is we help make sure people don't run out of money in their lifetime. If you want help with that, if you really do, it's not a simple thing. You can't Google, don't run out of money in my lifetime calculator, go online, put in five pieces of information and then be done. If you want a glimpse of it, he'll kind of what that looks like. Actually go to Carson wealth.com and under tools. Just on the front part of the page, there's a retirement readiness survey, so if you're getting closer to retirement, you want to look at it, go to our site or if you want, send us a note info@carsonwealth.com and we'll help give you some of that information to make sure you're on the right pathway and you have your right retirement action plan in place.
Speaker 3:
45:48
But in order to put together a full game plan, you need to be thinking about what your income stream, what are your expenses, what are your taxes right now? Is your advisor doing tax loss harvesting for you? Is there this opportunity out there to do that? And Tim, I hope do it yourselfers aren't doing this, but now not thinking about this a membrane. I'm worried. I wonder how many of them are like, oh my gosh, I am down for the year and a couple of stocks so I'm going to sell them today and next week. If you go back and buy the same stock, what happens? Got a problem. Yeah, what's the problem? Tax Problem. Yeah. You're, you're in this wash sale rule. You just completely nullify the tax benefit you wanted to create. And since investors haven't been in this for a while, I'm very concerned that they're going to make that type of mistake.
Speaker 4:
46:37
You know, what would I, if I had to give someone some holiday advice here, I would say a couple of things. Number one, uh, put together an expense worksheet. Do it for, for right now, planning for 2019 just to see where your money's going. Okay? Number two, go out and get a second opinion on your current portfolio. I know you can come to us. It's free, it's complimentary. What? We'll go through that and if we can add value to your situation, that's great. Then that's another conversation. But the third thing is try to figure out if you can do it or get some help on a five year cash flow. Just look and see where my expenses worse by cash flow and where am I going over a five year period to me, Ho, Ho, Ho with that.
Speaker 3:
47:20
Yeah. Well I for the holiday seasons we personally Jim. So here's what I would say is people also dislike the B word of budget. No one likes to feel constrained. And if I asked people, I do this all the time, hey, let's go over your budget. What are they? Do they back up? I almost feel like there, I'm trying to sell them a car. They dislike it so much. But if I ask him, Hey, just conceptually, what's your spending plan? Are you positive or negative for the month? Do you have more money coming in and more money coming out?
Speaker 3:
47:58
Most people, Jim can give me that general idea based on their paycheck and how much they spent. I certainly hope it's positive for everyone. If not, there's a whole new problem. So why everyone can understand conceptually that, but most people don't want to get down to the level of detail. They're not interested. It doesn't value their time. They haven't hired a professional to help them out. And I'm not saying you have to get down to the budget. I mean we do financial planning all day long gym and I get it. I mean conceptually I can give you percentages on how much your categorically spending between entertainment going out to dinner. I'm going to say your cable bill goes down, but your Netflix and your Amazon goes, go up. Those are all new expenses were seeing it. Today's world. Uh, it'll be fascinating to see how well Amazon does here during the holidays and just people's desired.
Speaker 3:
48:53
If my household is any indicator of the number of boxes that have arrived the last couple of weeks is it's something that I look at all day long and that is making sure when people have those rights spending plans in place, but also do they really budget for a downturn of the market? Do they budget for that major tax situation that they can encounter in gym? I was saying, I was in Miami, I was in New Mexico. Uh, and I would tell you everybody across the country is struggling with where's this market going to go and what's going to happen and there's more volatility than we've seen in a long, long period of time. Uh, productivity in the world is right about 3%. We'd really like it higher. We now have the lowest spread between the two year and 10 year that we've had in a long, long time. If I'm out doing this on my own right now, Jim, I'm scared.
Speaker 3:
49:55
I don't know what's happening. Um, I just can't imagine how selfish I'm being to my family. If I'm not working with a trusted professional, somebody who is a fiduciary, somebody that is making sure that I'm making the right decisions for my family. If you want someone like that, give us a call. (888) 419-8513 we have what's called our five step retirement action plan where we focused on those five big issues that can make sure you make the most out of every dollar you save for retirement. If you're person who wants this type of information, give us a call. We'll give it to you at (888) 419-8513 hang on, Paul West. Jim Caldwell. Thanks for much for joining me. You've been listening to well from wisdom,
Speaker 2:
50:38
risk, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
50:51
Okay. And here's the legal Mumbo jumbo. The opinions voiced and well from wisdom with Rod Carson or for general information only, and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m l l an SEC registered investment advisor.