There are a number of hard truths when it comes to retirement planning and investing. Ryan and Bob will talk through some of the stats that reveal these hard truths so you can be sure to address them appropriately as you prepare for your financial future.

[1:01] 75% of Americans manage their own finances without help from a professional

  • Research shows that financial planners help individuals generate 30% higher retirement income.
  • If you’re not a professional in a particular realm, you’ll want to delegate those tasks to someone who is.
  • It’s not about someone taking control of your finances. Instead, you gain a sounding board in the form of someone who works in the industry every day.
  • Bob shares a client example of someone who doesn’t want to sink his retirement.

[5:00] Why take the risk?

  • The S&P over the past 20 years averages 7.2% a year. But if you take the ten best days out, the return goes way down.
  • Ryan gives an example of how this works as well as a client story of someone moving money into bonds. Remember, you can’t time the market, it doesn’t work.

[6:14] The market is not just about buying low and selling high

  • The market is about buying low and holding because half of the return comes from the dividends that accrue. You need someone to build a portfolio for you that focuses on building an income to live on in retirement.
  • The biggest mistake you might make is to keep adding money to what is currently up the most in the market. You tend to expose yourself more severely to downturns because you’re not properly balanced.

[9:44] 76% of Baby Boomers aren’t confident that they’ve saved enough for retirement

  • Most people are taking more risk than necessary.
  • You have to factor in inflation, taxation, and a sign of rate of return.
  • Unless you have a cohesive view, you don’t know if it’s working.

[12:30] 55% of retirees retired earlier than expected

  • This is often due to health issues or job loss. You shouldn’t just plan to retire; you should plan for financial independence.
  • Also, remember that it’s not so much about you. It’s about your spouse and your family.

[13:53] A couple will spend an estimated $245,000 in healthcare costs

  • There’s a gigantic risk in your portfolio if this cost hasn’t been planned for.

[14:39] Nearly 60% of retirees don’t budget for entertainment or activities

  • Have that in your plan because you work all your life and will want to enjoy social activities later on.

[15:45] 56% of Americans lose sleep when they think about retirement

  • It’s important to know you are in good shape, so you get rest at night. You need to know what you own, why, and where you’re going.

MAILBAG QUESTIONS:

[19:14] Rex: Market crash

  • Rex in White Plains wants to know when the market is going to crash.
  • Bob says we had a crash in 2008 and the previous crash was 70 years before.
  • Ryan says conventional wisdom is every ten years there has to be some sort of crash or recession but in Australia there hasn’t been a recession since 1991.
  • You just don’t know what will happen. Markets are volatile, however, and annual corrections need to be made. Your portfolio should always be prepared for whatever happens in the market. You want a proactive strategy, not a reactive one.

[22:33] Woody: Selling a home in retirement

  • Woody in Livingston is planning to retire in two years and plans to sell his home and move to the beach. But home values are sky high right now. Is it worth selling now and renting for a few years? Is this a bad idea?
  • Real estate can be a tremendous cost to upkeep.
  • Baby Boomers will be retiring in droves and downsizing at the same time, which could lower real estate prices.
  • Financial planning is not just about building a great portfolio but also managing expenses.

“You shouldn’t just plan to retire; you should plan for financial independence.”

– No Payne No Gain Podcast

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