Wealth from Wisdom

How Inflation Could Impact Your Retirement

March 24, 2018
Wealth from Wisdom
How Inflation Could Impact Your Retirement
Chapters
Wealth from Wisdom
How Inflation Could Impact Your Retirement
Mar 24, 2018
Carson Wealth
Show Notes Transcript

Every dollar you’ve saved for retirement today could be worth less tomorrow … All because of inflation. In this episode, Paul & Jim cover the little-known strategies that could help you stay one step ahead of inflation in retirement!

Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced and wealth and 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. 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, an LLC, an sec registered investment advisor.
Speaker 2:
0:30
Doug market hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 the skyrocketing cost of healthcare and retirement could now run 350,000 blending for retirement today is a whole new ball game. 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. Every dollar you save for retirement today will be worth less tomorrow and it's going to be worth even less the day after that. And you're not surprised what did after that. It's all because of one thing. Inflation. And if you're retired and even thinking about retiring, you need to pay close attention to how inflation could threaten your retirement.
Speaker 2:
1:29
Hey, you're listening to wealth from wisdom. I'll Paul West and thank you so much for joining us today. I'm very happy and pleased at my cohost Jim Caldwell here. Welcome Jim. Thanks Paul. Yeah. Hey, you know what? Inflation is often described as a decrease in your purchasing power. What are most people sitting on the phone right now, blah, blah, blah, blah, blah. But basically what does that mean? Stuff just costs you more. Your everyday living expenses go up and before you know it, what was once affordable is now an unthinkable expense and you're just pinching pennies or nickels to get by. But really chances are inflation has had been on your radar because it's been, it's so low of level for some period of time here. But really we're dealing with a growing economy record, low interest rates and a nine year bull market that could have a significant side effect.
Speaker 2:
2:17
And that side effect is lingering and it's high dune, the background, but we don't want it to rear its ugly head. And yes, inflation can actually be coming roaring back right now. So if you're no longer earning a paycheck, this could actually spell real trouble for you. Hey, by the way, even if you are earning a paycheck, this could spell trouble for you and it really can have serious consequences. Jim, as we think about our lifestyle in retirement. So as we talk about today's show, you know, some things we really want to think about are what can we reveal to each one of you listening today about the impact it could have making meaningful for you so that you can learn, enjoy your show about it today, but also give you strategies that help keep you steps ahead of inflation years to come. So, you know, Jim has, I've looking back and I'm thinking about prices, right?
Speaker 2:
3:05
As we think about prices. So let's think about one of the most popular serials of all time. What do you eat every morning for breakfast? What type of cereal you don't need to get hold to you some days. OATMEAL, but cheerio's I would think cheerios is popular. Cornflakes, 35% of the most common brands. So in 1945 how much TV you could buy a box of corn flakes for 30 cents well, you're twice as much as what it was about 12 cents then. So think about that today. You're paying what? $384 for a thing in there. All right, let's go to something. You got a little more experience in Budweiser. So let's talk about Budweiser beer here, Jim. Okay, so 1954 how much did a case of Budweiser cost? 60 cents. 60 cents a little more in that a little closer to $3. Now what's it going to cost you? Oh, anywhere from 12 to 16 bucks for a case, depending on where you buy it.
Speaker 2:
4:02
I don't know where you're getting 24 cans of beer for that. When I go into a local grocery store, I see for 18 bucks, 20 bucks, but maybe you got to a frequent user discount there or something like that. Yeah. All right, so let's go somewhere. One of the things I love about you, Jim, is you're from Florida, so you've shared with us on this show before that Disney world is one of your favorite places ever to go. So I'm going to go to the other coast and Disneyland. So in 1956 how much do you think a children's ticket cost to get in Disneyland? 1956 I would say around $10 35 cents. So you're close within a rounding error there. I'm not. He liked this, don't you? Today? I'll, I'll stop torturing you here on the show. Yeah, but so what does a one day ticket now cost for a child?
Speaker 2:
4:50
It's $105. Yeah, a little less than that, but about basically call it $100. He imagined that 35 cents 62 years ago to almost a hundred dollars. Now you think about taking a family of five to Disney for one day. That is some powerful inflation yet, think about that. I remember as a kid we did well, you know we're from Omaha, Nebraska and we did the drive. Yeah, we drove from Omaha all the way out to Los Angeles, but I still remember going to Disneyland. You probably remember your first time going there, Jim. And now when you go and you're like, oh, I can't believe that Coca Cola or that day at coke used to cost a quarter 50 cents a dollar, $2 and now you want to go get something to drink there. Your cost of inflation is what significantly more so. I think Jim, for a lot of us today, and thanks for bearing with me and letting me harass you about current price, I was ready but still not getting the answers right. No, that's all right. It's all fun. So you know, let's talk about on today's show, what are some techniques people can use to overcome this? Because reality is, is it's something that people don't worry about it, but we all talk about it. So what are we as humans most likely to do? Do we like to, you know, really talk about the positive or do we choose to talk about the negative?
Speaker 3:
6:11
Well, most people want to talk about the negative. I mean we need to keep it positive and, and find, find a, a solution for what people are trying to accomplish.
Speaker 2:
6:19
Yeah. Well, and I love a phrase I hear people say is, I can't believe that costs x now. I can't believe that costs why now. Um, and that's why ignoring the inflation is one of the most important things that you consider. And I'm not sure, Jim, maybe you can share, you know, some of your thoughts on how you have these conversations with individuals across the country helping make sure, cause nobody wants to talk about it, but anybody who doesn't plan for it is making a bigger mistake.
Speaker 3:
6:47
I totally, they're like, when we have people come in, I mean, the biggest concerns is, you know, Paula's, do I have enough money to retire? And then if I do have enough money, can we make it last for retirement? And we've had to have some hard and fast conversations with people and we just had one a couple of weeks ago where we just know the folks wanted to retire, the husband wants to retire to end of the year and that was all great in theory. But when we did their personalized financial plan and went through all the numbers and did the five year income stream, we came up with the conclusion that sure you can hang it up at the end of the year, but you're going to be living tight. You're not going to have fun, you're not going to able to do the things you want to do. So those are tough conversations, but we have to have them.
Speaker 2:
7:29
Yeah, no all the time. So I think about other ways helping people think about inflation. I like to think about, um, things increase in value. So that hurts you. So like there are things that are go increase the value that are positive for us, right? If our stocks go up in value, what's that? That's a good thing. Or houses go up in value. That's a good thing. If the cost to hamburger goes up, is that a good or bad thing?
Speaker 3:
7:53
It could be good or bad. I mean you might have to eat something else if you don't want to pay the price, but I think, I think we know you love chicken and salmon, chicken and salmon. I'm all over that, but most people, I think what really hurts them is the cost of medical care. When you get closer to retirement or into retirement, those costs are going to increase because we're like an old car. Okay. The parts are going to break a little quicker and a little more often so we're going to have to go in and get it fixed. That to me is the biggest, biggest conversation we have with people. Paul?
Speaker 2:
8:22
Yeah. Well, I mean I think about sitting on my back patio. One of my favorite things to do and now that we're in spring is barbecue and I mean there's nothing more fun for me. And then going outside, having a beverage, cooking burgers or chicken or salmon or whatever on the grill. And I don't even really think about it, but I got amazed the other day when I walked in the store and I'm like, I'm paying what for a pound of hamburger now I couldn't believe it, but guess what? Did I buy it still? Absolutely sure. Am I going to buy it my retirement? Absolutely. Am I gonna have cut up back on something else cause I pay, I'm paying a dollar more for hamburger than I was five years ago. No, probably not. But on the aggregate, yeah, that could make a difference.
Speaker 3:
9:04
Well, and there's a number of issues that caused that to happen. I mean, here we live in Omaha, so there is, there are farms. So farms aren't turning the profits they used to have. That's totally changed out there. Then you've got fuel costs that go up to transport from a to B, that all factors into your cost to hamburger. Then you've got, you know, uh, uh, labor of people to unload the trucks at that, that goes up, wages go up. So there's a whole, it's a streamline effect.
Speaker 2:
9:30
Yeah. Well I mean, and I look at there's other silent killers inside of people's portfolios early. Financially. I don't know about you, but I just came through a renewal season. So, um, my wife and I, we have life insurance on each other and protecting for our kids. Guess what? Renewal season came out. Boom. Here came that annual premium. Um, I also do some insurances planning as part of our families need. Guess what that came up. Surprise. Surprise. I'm like waiting now for the next one, which is going to be this, is my furnace going to go out or is when I, the first time I turn on the air conditioner I get clunk in. That doesn't work well because those are, I think about, we're talking about inflation but equally challenging for us. It can be depreciation and that is, you know, think about things that lose their value and you're eventually going to have to replace. So I already mentioned your air conditioner, your furnace, your car. I mean that's one of those things, like many of us, you know, we'll, we'll drive it for as long as possible, but at the end of the day it's value keeps going to as close to zero as possible. And replacing that is one of those unexpected expenses that you're better planted budget for.
Speaker 3:
10:38
Exactly. Or or your, your roof has to be replaced. I mean nobody ever wants to replace their roof, right. But if you don't, you're going to have problems. You're going to have water damage and all kinds of things there. But I think the other thing to tie in there is the fact that not only with increased costs, you've got people living longer so you've got costs going up, but you've got costs going up over a longer period of time. People are living well into their late eighties early nineties and we have to, we call that longevity risk. We have to account for that when we're planning for people.
Speaker 2:
11:09
Yeah, all the time you do Jim. I mean because these things happen. They transpire, they go along. I mean, and people on the phone today are probably saying, gosh, this all sounds complicated. I'm going to ignore it. What should I really do with it? Um, and many of you I do believe are good savers, but being a good saver doesn't mean you're making every right decision and one bad step, you know, really can cause a problem. But also, Jim, I mean all day long, these questions we get from people are, am I going to be okay? Or what else would I like to ask is, Hey, what do you, what am I going to be able to retire? Or Paul, how much can I really afford to spend my retirement? Or what's another one I like, uh, Oh, who can I get to actually help trust me?
Speaker 2:
11:49
But the reality is most people don't even take that first step to figure out what questions will need to be asked. In reality is the truth of the whole situation. And we see this all day is the sooner you take control of your investments and make decisions, the better off you're going to be. It really, I just, I, Jim, I want to ask all our listeners, if you haven't taken that first app, do it now and maybe let us help be the ones to prove to you that you can really make the most out of every dollar in your retirement. And we can really make this simple and easy for you by focusing on the critical things that could have the biggest impact, your retirement by taxes, social security, asset allocation, et Cetera, et cetera. So you've, if you've really saved 100,000 or more for retirement, be one of our first callers to call us at (888) 419-8513 let us prove how we could make your money go even further in retirement. The number again is (888) 419-8513 (888) 419-8530
Speaker 4:
12:48
team trust, transparency, accountability. These are the values that drive Ron Carson and Carson. Well, you're listening to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. He's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more now back to, well from wisdom with Barron's hall of Fame Advisor Ron Carson. I recently met a client for the very first time and when I asked about it, about
Speaker 2:
13:14
their biggest concern, they told me it was maintaining their same lifestyle in retirement. What does this really mean? I mean this is one of the biggest concerns with so many people today and the reality is inflation is one of the things that can rob you of your lifestyle in retirement. Hey, welcome back. You're listening to wealth for wisdom and I'm your host, Paul West. Very glad to have Jim Caldwell here with me today. Um, you know, inflation may be something you've been shrugging off and we're having a lot of fun in the last segment. Jim, talking about prices, you know, from the past of coke and going to Disneyland at Budweiser and all those fun things. So let's go back to what's the current, the Oscar, an easy one here, Jim. I know, I may just struggle the first segment there. So how much is the current stamp cost?
Speaker 2:
14:00
I got this one. You got it. All right. I had to mail a letter yesterday about 49 cents. All right. Good job. Very good job. So let's, let's, let's back. Let's go back to, I don't know, a year. Bob Devani did pretty well here in Nebraska, you know, 1971 so, uh, how about 1971 what do you think the price of a stamp was? Is 1971 16 sets. You doubled it, doubled it. 8 cents. So think about this. 8 cents to there. It's amazing. So let's go back 10 years from that, 1962 her nine years. For those of you tested me on the math, how much do you take a gallon of milk was in 1962 see, I would have been five years old. I was drinking plenty of chocolate milk. I'd say 10 cents. You're your clothes. A little more than that. Yeah, but between 30 and 40 cents at that period of time. So now what's going to cost you two and 59 cents.
Speaker 3:
14:52
Three 59 to three 59 sounds a little bit better if you get it on sale. But yeah, closer to $4 depending on where you, Allman milk's a little cheaper.
Speaker 2:
15:00
Oh, it is. I sent, you said full gallon not asking for you there. So why are we sharing these stories with you? It probably just felt like a blink of your eye. How many of you listening to, they have kids it think about how quickly your kids grew up. They were just in your house. How many of your empty nesters and they're gone. I'm sitting there thinking, I've got a twins in high school. I got another in middle school and I can't believe it seems like yesterday they were born, they're changing their diapers and I just look at how fast life happens. But I'm also surprised when I go to things and I can't believe that I've got to pay $9 for a beverage at the century link center for March madness game. I mean, I just, I, I cannot believe, I know you can't serve alcohol at a march madness and how fun it is for Omaha to have that here.
Speaker 2:
15:48
But it's really, we got to talk about the impact of what these things mean for your retirement. So Jim, one of the things I want to talk about is many people don't know when they sit down with a financial advisor what a good inflation rate is. So one, a good barometer of that is what's called the CPI, the consumer price index there, you know, and that just came out here and it was at 2.2% but if a financial planner comes and presents your financial plan and it calculates it flirtation at less than 3% I wouldn't walk out of their office and high tail and run as fast as you can. Yeah. And why Jim? Why?
Speaker 3:
16:30
Well, because here's the thing, and we just did a plan yesterday. It was a, it was a very complicated plan. There was tax planning involved, there was insurance involved, there was, there were the normal questions of, you know, can the wife now retire? And if so, what's that gonna look like? Income Stream wise and all that good stuff. But we built in 4% as our inflation rate and we build in something reasonable, which was 5% for returns. The reason is if you're going to error as a, as a wealth advisor, you want to err on the safe side. You don't want to paint some picture. Like, I mean as, as a wealth advisor, you know, our planners here, we don't sell dreams, you know, we present nightmares. I mean that's Kinda how I look at it some days and when I go to bed I know which one I want. Yeah, exactly. It's not the nightmare. So I mean, we can illustrate anything. We can do Monte Carlo simulations, Paul, you know that we can make it look as pretty as as we want. But at the end of the day, is it going to be workable for the client?
Speaker 2:
17:23
Yeah, I mean I, I, I always share the story. Jim Is, you know, I love to tell analogies and paint pictures for people you know, are you saving for retirement when you go into your trip that will you have enough money a to go on a trip? But B, if you do, how do you want to get there? Do you want to be stuck on the airline where you got to pay for every single thing and you're deciding whether or not you should bring a bag or not, what you should check or not. Whether you could even get a beverage, not on the plane, whether you've got to buy toilet paper and out of the plane, but I can't even believe you have to do that now on airlines. They should maybe
Speaker 3:
17:56
some airlines even make you pay for the air. You got to breathe,
Speaker 2:
17:59
which love that you're not going to use their name. All right, smart. Thank you. The compliance department appreciates that too. Um, but do you want, I mean, do you want to be first class in your retirement or do you want to be making sure that you're not going anywhere, that you're stuck, you're grounded. And I'm not saying you have to fly first class you're talking about, but if you plan correctly, you won't have to cut back, especially in areas you want to cut, don't want to come back in. And what's the big area I'm thinking about here? What a lot of people think about after they have kids, they then began to think about grandkids and what do think about grandkids wanting to be close to them or wanting to visit them and one to spend money on them. Then the last thing you want to do is be stuck in that situation that you didn't plan for it.
Speaker 2:
18:45
So I'm going to say it again. If your advisor, and many do by the way, and we see this all day long, underestimate their impact of inflation. This is a huge red flag. So here's what to do for all of your listeners out there right now. Send an email, call your advisor and ask them what rate of inflation are they running for you? Ask Them. And again, if they're less than 3% I challenge you to give Carson a chance to help you understand what the difference would be. There's no charge of that. That's (888) 419-8513 if you want us to help you look at that. Because as we think about this inflation actually from 1979 to 1981 was 11.7% whew. You imagine that Jim, I mean if that, if that came back, and I'm not saying it's going to, but think about where we are today. Are you listening today and are you 65 years old? If you're 65 years old or older, 70% of you are going to require some form of longterm care and are you going to be able to afford that? I don't know Jim. I mean that's something,
Speaker 3:
19:53
well, we, we had a client in the other day and her mother is 97 still alive, healthy still drives, doesn't go out on the freeway too much, but still can get around town and we started using our decision center, which we can paint pictures and do what if scenarios and we were showing her, hey, let's just say you had a longterm care event at age 91 to 95 just for four years. The impact of that was one point $4 million that would come out of their portfolio if they did not have a longterm 1.4 1.4 now take it one step further, Paul, the average age that people need to either come out of their pocket or use their policy is 80 so we've multiplied those numbers out and we got almost most $7 million. I don't have that crystal ball as to when that event could happen, but we certainly have to plan and prepare for it.
Speaker 2:
20:43
Yeah. Well, I think you're just gave a great solution gem, which is having non-correlated way to just even the markets of insulating yourself from inflation. So insurance is definitely a way to do it, but make sure it's the right insurance for you, not something that you don't need. Make sure it's something that has value. And I will tell you Jim, longterm care for a lot of people scares them because of the use it or lose it. However, there are techniques out there that are now hybrid type policies that can provide you some death benefit if you don't use it. So again, make sure you're being educated in all those. So what are their Jim, let's talk about other ways to combat inflation here with what I would say opportunities for you and I would say not uncorrelated investments. And of course one of the most popular ways that's easy for people to understand real estate. So real estate is a way that you're not directly correlated to other pricing. So if you want to diversify, having real estate or a rental property is a great way for you to approach this.
Speaker 3:
21:43
I agree with that. And I think you have to still at this point with the new tax law also, even though I love real estate, is just make sure that some of those deductions, if you have to take a loan out to buy it, is that interest going to be deductible under the new tax laws? Because some of the new ideas that have come out on the, you know, with spending cuts and all that good stuff, they're good for corporations and are good for earnings and they might be good for the market. But for individuals it's going to affect everybody differently. So the ability to talk to your advisor and or his team with tax planning. Paul, very, very important here.
Speaker 2:
22:20
Yeah, no they are, I mean I think about others in terms of private investments, Jeb. So this is a way that you can again, try to combat this. So many people, um, you know, I've embarked on the philosophy of, you know, set it and forget it. Put your money in the s and p and not do anything else. Um, you know, of course there was the recent uh, challenge we've all seen with Facebook and what's happened there and you're putting a lot of risk again, candidly in a set series of companies, but you can also, you know, keep a majority invested that way. But there are also ways to invest in private vehicles and private investors if she's be companies that the average consumer can access, but they have to do it in a smart way because some of those can be huge and I'm talking to huge fees if you're not careful. So just because you can get into one doesn't mean you should. And that's why working with trusted professionals can really help you with that.
Speaker 3:
23:16
Sure. I, I think taking that one step further is, you know, we're in a situation here that we are fiduciaries and that's to me is huge today when you're evaluating who you're going to work with and how you're going to structure your retirement because we are going to sit on the same side of the table, the client, we're going to put their interests first ahead of ours.
Speaker 2:
23:34
Yeah. Well, another way to combat it is, is I think about it is hard assets, also precious metals, commodities, um, other things like that that could be extremely valuable for you. Um, and I'm to continue to think about those and ways, but I've got a lot to share with you. And one of the big things is, you know, for many of you really, if you got a career or you have a family or you're re recently tired and you just, you feel like there's no time for anything and your investments are really just a bunch of scattered statements. They're stuck in a, in a drawer in your house and that's all they are. There's really no rhyme or reason of how it all fits together. But deep down inside you really in your heart know that you could be doing a lot more with your money.
Speaker 2:
24:14
And Jim, I mean this, this hits people, this is the emotional button. Does this sound familiar to you? That you really know you could be doing a little bit better? And the truth is you can. So I'm just really telling you to take that first step. You know, let us have proved to you how you can make the most out of every dollar you've worked so hard over your life. If one of our first caller's to schedule an initial complimentary analysis at (888) 419-8513 this analysis is really about two things. One, can we bring value to the relationship and can we do better than you're doing right now? And ultimately, are we the right fit for you? So that number is (888) 419-8513 (888) 419-8513 and talking about doing what's best for you. In our next segment, we're going to share something really important for you. A very recently published article talking about how whistle blowers helped take part of Maine, or excuse me, Wall Street down and help them do what's best for our clients and how much money they actually got paid to tell on their own employer to make sure clients did not get
Speaker 4:
25:18
put in the wrong position. Keep listening. Well from the wisdom radio, he seemed good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with their, and the same advisor, Ron Carson. 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. You may not believe this, but even though we've had
Speaker 2:
25:44
very low inflation rates over the past decade, every dollar you've safe retirement still lost 21 yeah, 21% of its purchasing power. Wow, that's amazing. He Gym. You know what? Welcome back. You're listening to wealth from wisdom. I'm Paul West, so my cohost Jim Caldwell, and thank you for joining us. You know, he place play. She really does come roaring back. How's that going to impact your lifestyle now? If you're in retirement or in the next 10 years, 20 years, or 30 years, you're really coming up in the segment. We're going to talk about some techniques to really help you out in social security, um, and talk to you about some prevention techniques of ways you think you're protected but you're really not. But before we get to the gym, one of the powerful things we do here on wealth from wisdom is share stories with the audience and help educate them on what's going on in the world.
Speaker 2:
26:30
And so you feel better, and I mean today about investments and inflation, but one of the stories I want to share with you that came out earlier this week is what happened over at Merrill Lynch. So there were some insiders and is it called wood? And insider goes and tells on their employer they're called a whistle blower. All right, so they're called a whistle blower. So imagine this. So, so whistleblowers, back in 2008 16 came to the Securities and Exchange Commission, also known as the SCC and provided information that helped them bring a case against Merrill Lynch Boa. These people this week, two of them are now going to split $50 million, 50 million for bringing this, and a third person is going to get an award of more than 33 million fee for providing help in this same case, if that's how much they're getting. Imagine how much these three people helped individual clients across the country avoid and mistakes that were made based on this judgment.
Speaker 2:
27:34
I mean, think about that alone. I mean the SCC is actually given out since it first started pain whistleblowers, which am I think is a wonderful thing because people, if they see their employer doing something wrong, but they're concerned about telling on their employer because they didn't want to lose their job. They want to keep paying their own mortgage payments, putting food on their tables. The SCC is actually paid out $262 million since 2012 to employees of firms like this that are not doing what it is a client's best interest and paying them out. So what's been really nice to see is these people aren't keeping all the money. They've actually mentioned that they're going to be donating a lot of it. And I think that is super respectful and tells me a lot about how wonderful those individuals are and what they're doing for what's best interest.
Speaker 2:
28:23
But also it tells me that when one of those things happens, many other things are happening behind the scenes that people aren't probably blown the whistle on. And we've seen plenty of that. I don't need to Belabor what we've shared about wells Fargo recently on the show and what's going on there. But you as an investor need to understand where these things are happening. Stop turning a blind eye, stop ignoring that news, the story about what's happening there and stop ignoring when I keep telling everybody is about inflation. And Jim, you know, during the break you and I were sharing an interaction that happened. So why don't you share with me just the story you were just telling a few minutes ago.
Speaker 3:
29:01
Sure. We had a meeting with a gentleman that actually listens to the radio show and um, came in and we were going through his holdings and, and what is portfolio look like? And what his needs were. And when I was looking through the list, uh, I noticed a lot of insurance products and know we don't talk much about product on the f on the show here. It's not really our focus. But when I started looking through them, there were a number of, of different kinds of annuities and whole life contracts. And I mean they're there do not exist. Or I guess what I would ask people to look at is if you own an annuity or if you own an insurance product of some type, you know, do you really know what's inside of it? And the number one thing I would look at would be, do you have a cost of living adjustment in there? Because obviously you've lost some liquidity inside of those products. Some are good, some are not so good, but you've lost the liquidity so your money is stuck. You can't get it out without a huge penalty. What do you have in there to keep up with inflation and allow you to, to benefit from that?
Speaker 2:
30:01
Yeah. So the short term, we love acronyms in this world, Cola, Cola, Coca Cola, Cola, cost of living adjustment. So make it easy for you. If you owned, would you say what type of annuity?
Speaker 3:
30:13
Any kind of a variable annuity or could be a fixed indexed annuity? It could be a variable life annuity. I know some single premium immediate annuities do have a cost of living adjustment, but they all look the same to you folks.
Speaker 2:
30:26
Yeah. So again, something you should do, whether right now he got your phone next to you, you're on your laptop, your iPad, other device, email your advisor or I'm going to say the dreaded B word broker. Um, it probably was a broker who sold you an annuity. Ask Him if there is a cost of living job or asking if there's a cola. Find out if any answer you deserve to know and don't wait on this, you're going to feel way more comfortable. Bet Many of you listening are wondering if you have it or not. You may say, Hey, well I've got one of those products. We'll go find out. We want to help educate you. Your advisor, should we actually be better at educating you about your investments than they are even managing them? And this is a way to do it. Jim. I was actually on the phone earlier today with a really nice family and it was amazing to me.
Speaker 2:
31:16
Um, I was explaining to them, you know, they said, oh, they never use mutual funds or what do they do? They sent me a statement and there's all these mutual funds in there. So I had the headaches that just tells me they didn't know. And so then I said, oh, well did you know you're paying 39 basis points in additional fees on these mutual funds? They're like, what? My Ma? They said adviser and I correct it in a broker. Never told me that. I said, well, that's because you don't know. And their job is to explain to you what's inside of there. And it's big reason why we use a lot of individual securities and ETFs help keep a client's costs low. But let's get back to cola. I mean, again, so, um, while Cola is so important, what's one of the best techniques to help with cost of living adjustments? What's one of the most common things that everybody uses?
Speaker 3:
32:03
Well, so if you're asked, so security, yeah, I mean, so security, if you look at it in 2017, it was a 2% cola increase. They project out 2%, which is an inflation proof, Jim by any means. But it's something, it's better than nothing. Absolutely. I think we went like, I want to say almost six years. That's the highest increase that I can remember in at least the last six years they're projecting in 2019 something similar, but they're not really sure yet.
Speaker 2:
32:31
Yeah, no, I mean there's other things out there. So, so security and again, we've talked, we've belabored that all the time on the show and how important that is to you. Um, but I mean, there's some other things you can think about. Uh, one, have you ever heard of tips? Yes. So what are tips? Tip S, the treasury inflation protected securities, right? Right. So they automatically are as a placement. What are other things that can do, um, people like dividend paying stocks. That could be a technique that you can use. I mean there's a lot of vehicles out there, um, that really aren't directly correlated with stocks and bonds. That can be opposite of that farmland. Many farmers are listening to the show today. That's a great way to do it. Now you're of course worried about inflation. You're worried about what's the price of my land and what's going to happen with that too,
Speaker 3:
33:20
you know. And, and going back to the social security, even though we always talk about that, probably on every show would be if you are not taking so security yet or if you're getting closer to retirement and you're trying to decide what age do I take it, do I take it at 62, do I wait until full retirement around a 66 range or can I make my assets last to 70? The best way to do that would be to contact us for a complimentary. So security analysis, and we've done many of those in the last 30 to 45 days. So she with it being tax season and have really helped a lot of folks out and have really put a lot of people at ease as they get closer to having to make these tough decisions.
Speaker 2:
34:01
Yeah, and I agree with that, Jim. I mean, and I think I wish we could have, um, whistle blowers, um, that when there's a bad advice given, um, that on a client about social security, whether it's for your next door neighbor, your brother, or let's say someone else. I mean, we, we see it all day long and what happens, you know, but we're thinking about inflation. Um, and we're talking to a little bit, you just brought up taxes. I mean, what's coming up, uh, tax filing day, right? That's not that far away. It's on the horizon. Um, and really most people, Jim, don't even think about taxes and how it affects their investments. But you know, really think about this, remember, it's not what you make is actually more important what you keep and you're going to have more control over your taxes in retirement than any other time in your life.
Speaker 2:
34:50
But how you structure all of your investments has a huge impact on how much you're going to pay uncle say him versus how much you really keep in your own pocket and you can legally, I mean save thousands and thousand dollars more, but people don't do it because they let life happen. They get too busy. I can't stand to be where to visit. You know who that Jim, actually people have to stand up at our office here. If they say that word, I'm going to, I'm going to cut you some slack on the right. Thank you. I want people to be productive. It feels so good when you cross something off your to do list, so cross something off. Get that second opinion. You keep telling yourself you need to do at eight eight eight, four one nine 85 13 well, you can learn is going to do two things. Either one, it's going to save you thousands of dollars or two. It's going to make you feel better that you're on the right path. That's two darn good options in my book. (888) 419-8513 that's (888) 419-8513 coming up next, Jim Caldwell and I are going to share more ideas on how to help you combat combat inflation for the future.
Speaker 4:
35:52
How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson. Is it possible you could pick fewer taxes in retirement and keep this money for yourself? You could learn right here and right now, unwelcome wisdom with Barron's hall of Fame Advisor Ron Carson. Chances are inflation. Has it
Speaker 2:
36:14
been on your radar lately or for some of you? Maybe ever. And that's because it's been at historical lows for quite a period of time here, but with a growing economy record low interest rates in a nine year bull market, but investors are now letting that start creep back into their thought process and deflation could actually be coming back. Hey, welcome back. You're listening to well from wisdom radio. I'm Paul West and thank you for joining us. My Co host today is Jim Caldwell. You know, and if one of the biggest groups you have is to maintain your same lifestyle in retirement. You know, we've been going through this nine year bull market, Jim, and I mean a lot of people have a feeling that hey, this is never going to end, but we all know great things at some point have to come to an end. There's always down turns or things that the market.
Speaker 2:
37:02
So in this segment we're going to talk a little bit about how to combat that. And I wanted to share a story with you, um, on what's amazing to me about our business. And again, you know, we're in spirit of transparency here on welfare wisdom radio. So I was talking with a broker last week and again, I use the B word, a broker. Um, you know, somebody that's got their own interest in front of yours. Uh, they're more worried about what they're making yours. And you know, I keep thinking this goes away, but it doesn't. So I was having this conversation. I said, this individual, you know, well, how do you invest for client? Let's just say they brought you $100,000 will you do? And he said, well, um, I'd probably look at what's the right mutual fund or annuity to get me my 5% and I just, I about fell over and I said, Ha, how?
Speaker 2:
37:50
I mean I stopped the conversation and actually Jim because it made me sick to my stomach. But that's why you need to ask and I say it all the date wrong and that's why we're educating you here on the show though. The difference between a broker and advisor know the difference between an advisor and a fiduciary. No. Who's on your team and who's playing against you and help you figure that out. And when I think about that and now we think about this nine year bull run, Jim, many people are coming to us and saying, should we take a few chips off the table? I've been certainly publicly quoted in many media sources around the country about maybe you should, but portly downside protection, if you've made some money and earn some gains, it's okay. If you had to take a few chips off the table or are minimum, let's find a way to help protect you. How are you helping protect people, Jim?
Speaker 3:
38:38
Well, a couple things. Number one, uh, going back to the point you made earlier, most people out there are blindly trusting their financial advisor. And you can't blame the folks for doing that. I mean, they just figure, hey, you know, my guys doing what are my gals doing? What's best for me? But obviously that's not always the case. How we're protecting people as we're, we're being a little more on the defensive side where we may, you know, the old saying, pigs get fat, hogs get slaughtered, right? So we want to get some of the upside, maybe 60 to 70% but we certainly want to protect the downside. So when we did have a 10% drop here, what's it been six weeks, seven weeks ago, our defensive strategies are irreplaceable. Capital's were down maybe one and a half percent. Our clients are very, very pleased with that because we were able to protect the downside because as people get closer to retirement, and I think you brought this up, Paul a few weeks ago, was if you had a 30 or 35% drop in your portfolio, it could take up to six years for you to recover that. And a lot of people don't have that right now. So we're using downside protection. Um, with 401k plants, we see a lot of people that have a lot of their money in tax deferred products and that's where they've put the bulk of their retirement. So we're talking to them about an in service distribution opportunity and they've gone to their HR people or they've gone to their 401k provider where we can help them roll that out. It's not a taxable event and are able to give them the protection they need.
Speaker 2:
40:08
Yeah. Well, I mean in gym that's only dependent upon if they don't have the right individual investment selections and sign of their 401k plan. Um, but I mean I think about downside protection is how you're allocated. So a lot of people keep saying to us, hey, put my money in a s and p 500 fund or hopefully in ETF and not a fun for people and let it set and forget. But here's the reality. The day the market dropped 4% those are the people the first to sell or start calling or start panicking. That's not going to happen folks, you just, emotion tells us this. So let's look at many of you use vanguard. Vanguard produced one of the best studies ever called advisors Alpha and they show do we did it on your own versus investing with an advisor that you perform almost 3% better net of the advisor's fees because of multiple reasons and one is behavioral and that is in Pfizer's help you make rational decisions.
Speaker 2:
41:12
I wish we could all say we're rational. If I think about, I don't know about all of you listening, but I think all of us have irrational moments with our family, our friends or boyfriends or girlfriends or spouses. Those things happen at the same thing. Can happen with your investments, I guess. What money is personal, isn't it? I mean, and it can, it can fire you up in ways, uh, quicker than anything. Think about the time you thought you've been outed or, yeah. Jim Is your, uh, credit cards ever, you know, had a fraudulent transaction. I've had a couple of those happen. Yeah, I've had several recently. I don't know what's going on, but what does that do? It irks me. I mean, it just drives me crazy. It's an informed, I'm like, well, I'm just gonna cancel all my credit cards. Well, why would I do that? That's stupid. But people tend to make rational, makes decisions. And Jim, we see it, they do with their investments, right?
Speaker 3:
42:03
We see it all the time. I mean, we, the biggest frustration for me is, is the household that wants to chase returns. Maybe they've gotten to the party a little late, you know, they've got kind of a conflict going in their head. They want to protect our assets because they, they, they don't want to take a lot of risk. Maybe they need income. So they've got that bucket. They've got to fill and then maybe they do become concerned about inflation. So how do you combine all that? I mean that's, that's a tough row to hoe right now.
Speaker 2:
42:32
Absolutely is. It is. I mean, and I think about other people chase returns. What's a great example? Hmm? What's been going on earlier this year that people aren't talking as much about, oh, something called bitcoin. People were chasing that and I've shared on this show stories about, oh my buddy made all this money on bitcoin. Now I don't hear anybody talking about it. They're not bringing it up. And actually I'm going to do a plug here for a minute, Jim. I mean we huge believers that crypto currency will be very relevant. We think the technology is even more relevant behind it called blockchain. So we actually have Natana O'brian going to be here in Omaha doing a special bitcoin and crypto currency event on April 9th and 10th if you're interested in attending, send us an email with your information@infoatcarsonwealth.com and we can work on getting you a pass into that event. Eight it's, it's because it's fascinating to see the decline that's been going on there and happening in the crypto market
Speaker 3:
43:35
and that, that event I'm excited for. I'm looking forward to, to being there. Um, I wanted to touch on another area that I feel like we've taken for granted and that is the v word volatility. Last year in two south 2017, I believe we had roughly eight days of a 1% move the whole year. This year we are at double that already. So for what double? So in the first quarter. Yeah. I mean we haven't even got through March yet, so my handicap is still double digits. So you know, it's, it's, it's higher, but I have a feeling that the number of 1% days are going to exceed my handicap this year.
Speaker 2:
44:17
Yeah, well, and I think about, I mean that's still just a normal year, Jim. I mean that's just a normal year, but people's perceptions are off and many of your own perceptions are off. I would've had probably about how's your portfolio really behaving for you and are all of your things working well? The reality is is they probably not, but you're too afraid to call it and get a second opinion. Do you trust your advisor enough that you don't want someone else to give you a second opinion? Do you trust him that much that you don't want? Accomplish a second opinion. If you do want one, give us a call. (888) 419-8513 we can help show you how, if there's a pathway for you to be doing even better and better. (888) 419-8513 that's (888) 419-8513 Jim has been a real pleasure with you today. Sharing some stories with everyone. Make sure you take care of yourself, make sure you protect your family and make it a great day. Thank you for listening to welfare, wisdom, radio
Speaker 4:
45:15
risks, 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:
45:29
Okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Rod Carson over 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 mean 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 C an SCC registered investment advisor.