Avoid These Mistakes with Your 401(k) - Take Point on Retirement

On this week’s show, Erick explains how a bond replacement can delete fees and eliminate risk for a sizable portion of your portfolio. Plus, millions of Americans are making mistakes with their 401(k) accounts. We point out those landmines so you don’t make any missteps when it comes to planning for retirement.

Call Erick today at 352-616-0511

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

Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Take Point on Retirement with your host, Erick Arnett. Erick is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Take Point Wealth Management takes pride in knowing they've helped so many pursue the financial future of their dreams, and they can help you, too. And now let's start the show. Here's Erick Arnett.

Erick Arnett:
So hey everybody, welcome back to Take Point on Retirement Radio. So great to be here. I'm so glad you're listening. Welcome to the show. This is Take Point on Retirement Radio. This show is for you, purely educational. If you hear something today that makes sense to you, please give us a call. Reach out to us. We're happy to take your phone call at any time and answer your questions or concerns. I'm going to put that phone number out right right away. Here it's (352) 616-0511. So get out your pen. It's (352) 616-0511. Take Point on Retirement radio. Welcome, Sam. How you doing today?

Producer:
I'm doing really well, Erick. I am enjoying this fantastic weather. I was down in Tampa over the weekend for Gasparilla and man, it's this time of year that I miss living in the Sunshine State. You know, up in Atlanta where my wife and I live, it's still pretty chilly, but man, Florida in December, January, even February, it's just fantastic.

Erick Arnett:
Yeah, I think you might have got the one nice day Saturday. So that was we got some decent weather. It was, uh, it was beautiful. It was the typical more of that Florida winter that you look for. But it's been kind of screwy down here for sure. With that, I guess that El Nino, I mean, it's hot, cold, hot cold. I mean, you know, we get a nice day and then it drops down to, you know, 55 degrees or whatever. So trying to get used to those big swings. Um, but, um, looking forward to some warmer weather for sure, so we can warm up. Uh, we haven't seen a whole lot of sun down here, a lot of clouds, and but it looks like, uh, today it's breaking out a little bit, so that's good news. Um, but, yeah, we're looking forward to getting that temperature back up and to warm the bones and maybe get a little sun on our skin again. But, uh, anyways, uh, a little shout out to our listeners up and down the Nature Coast. Thank you so much for listening and making this the number one finance show out there. Nature coast, Sarasota, Port Charlotte, Tampa, Venice. Thank you so much for listening to the show and making it such a great show. If you hear something today that makes sense to you or you got a question or a concern, please go ahead and reach out to us. There's a couple of ways to get a hold of us. Of course, you can always give us a call directly.

Erick Arnett:
We're standing by to take your call at (352) 616-0511. That's (352) 616-0511. You also could just go right on your little smartphone there. And you can Google take point wealth or Take Point on Retirement. We'll pop right up on your phone and you can go right to our website. In that upper right hand corner. You can just click right on there and schedule an appointment with us at your convenience, and we'll jump right on with you for a 15, 20 minute chat, just to see kind of what your concerns are and and what you need some help on. And of course, if you miss this show or you want to catch different tidbits or you gotta, you gotta jump and do something else, you can always circle back on our podcast station. You can get our podcast on any one of your podcast on your smartphone, iTunes, Apple tunes, you know, you name it. Uh, also, you can go right to our podcast site, Take Point on Retirement Radio, and you can get all of our past shows and catch up on our shows there. And we also have a YouTube channel. If you Google YouTube Take Point on Retirement, we'll come up on there as well. So lots of different ways to get some information. Please don't hesitate to call us with your questions. We love, love, love hearing from you, our listeners. That's why we do this show. So write down our number. Give us a call. We'd love to help you out.

Erick Arnett:
You know, we're here to discuss how we can help you reach your retirement goals. This is what Take Point on Retirement is all about. We're here to make a smooth transition, hopefully a stress free transition for you into retirement. If you're already in retirement, great. Let's take a look at what you're currently doing. Maybe there's something we can do better. Maybe we can optimize things. Maybe we can complement what you're doing. You know, I am the type of person that feels like if we're not moving forward, we're not growing, you know, we're dying or we're static. And so I think that the dynamics of the world, the dynamics of the markets, the dynamics of investment products and strategies out there, you know what you may have been doing two, three, four, five years ago might have been working, maybe it wasn't working. Uh, but, you know, it's always makes sense to get a third set of eyes or a second set of eyes on there. And and that's what we're happy to do. It's completely complementary, folks. You listening to the show today? All you got to do is pick up that phone and dial (352) 616-0511. We're standing by to build you a completely comprehensive. And so. Full blown retirement plan. Stress free retirement plan here for you $1,500 value calling us today. So with that being said, we got a great show. Sam has put together an awesome show for us today. A lot to get to. Hopefully we can get the most of it, but we're going to do our best.

Erick Arnett:
And you know, we usually kick off the show. Sam, with the quote of the week. Uh, we're going to also talk about some bond replacement. If you've listened to this show before, you've probably heard this. But it it it's important to emphasize because I still think there's a lot of folks out there with bond exposure. And we want to give you kind of our theory and our philosophy on that. We're going to talk about how to avoid some of those 401 K mistakes, how to avoid the missteps that millions of AmErickans are making with your 401 K. So if you have a 401 K, you have a 403. Be any type of corporate retirement account. Please stay tuned. And listen. We're going to talk about some of those mistakes that we're seeing being made out there. Hopefully help you out and then discover how much you're paying in fees, how to cut costs inside your account. You know, we always talk about it on the show, Sam, the three major disciplines that we really focus on, that take point wealth is we we look really hard at your fees and expenses because those are silent killer to your long term success in retirement. Of course we also look at taxes and tax sensitivity, tax planning, taxes. You know, it could be one small change or one small shift in what you're doing. It can make a big difference because taxes also are a silent killer. And then, of course, the number one killer of most retirements is risk.

Erick Arnett:
You need to find out if you're listening to the show right now, wherever your retirement plan is, wherever your retirement assets are, you need to know the risks involved with that. And so we have a way to pull that out for you. Show exactly. And measure the risk of your portfolio. Measure the risk of your retirement plan to see if you're on the right path, because volatility can be the silent killer you know for sure. Like in 2022, we saw, uh, that big decline in correction in the market. We didn't only have a correction in the stock market, but we had an insane, drastic correction in the bond market as well. So I'm sure that folks, uh, in 2022 experienced that downturn in that correction. There's ways to mitigate that, folks. We can have you prepared. We can have things in place so you don't have to experience that again. And so we've got to got to look at that. Uh, the strength of your portfolio, you know, what are the goals. What are the intentions. Also you know, what are the what is the risk? You know, what type of risk you're taking, what are the fees and what are the taxes. If we can optimize those key things, then we can really see much, much stronger success in your future. So with that being said, let's kick it off, Sam. You're pretty good at kind of leading into this, and you put together some financial wisdom for us today. What is that quote of the week?

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

Producer:
This week's quote of the week comes to us from Will Rogers, and Will Rogers quote goes like this A man only learns by two things one is reading and the other is association with smarter people. And Erick, I think this is a fantastic quote, because if we don't know something and you need that knowledge in order to get to where you want to go, you know, you've got to find out how to get there. And Will Rogers recommends one of two things reading or association with smarter people. You can learn a lot by reading, whether it be in traditional books. More and more people are reading on the internet these days. There's a plethora of information out there and association with smarter people. I think that's fantastic. I'm someone who learns a bit better by seeing in person, you know, I learn by doing. So whatever it is out there that you're trying to improve, maybe it's your finances. Maybe you're trying to improve your golf game. This year. Maybe you should do some reading. Maybe you should go get some lessons. If you're trying to improve your retirement, do the research, put in the work for yourself, and get in touch with a professional.

Erick Arnett:
No, I love that. I mean, you know that what comes to mind when I hear that and relating it to what we do in this industry and in working with clients, you know, and building out retirement plans and then monitoring those and then evaluating them and managing those for them on ongoing basis, is that. You know, it makes sense to to look into bringing somebody on your team. We've talked about this before. I've always looked at it like, you got to run your retirement plan and your household, your household finances, just like a corporation or a business. So you're you're out there listening to the show right now. You are the CEO, you're the chief investment officer. I mean, it's your money. It's your plan. You have to be in control of it. But you also have to understand, right? You've got to have the knowledge. You've got to have the time, the inclination. So the reason that investment advisers like ourself at Take Point wealth Management have a job or even have a business is that we're looking to work with people that don't have the time, the inclination or the desire to manage their own retirements. You know, I, I say this often, it's, you know, bringing us to the table. We've you know, I've been doing this for 25 years. I've managed billions and billions of dollars. I've been helping people for 25 years. You know, we're in this game every single day.

Erick Arnett:
Research, you know, we travel and get the best ideas that we can from other advisors across the nation. So we're always in the game. We're constantly researching. We're constantly bringing those ideas to our plans and our portfolios. And so it's a very intense, active process. And, you know, we feel very strongly that it's not about just putting your investments on a shelf and hoping for the best. You know, you've got to be constantly actively managing this process. And you can do you can add a money manager, you can add a third party consultant, you can bring us on board. And what we typically show you is that it's going to cost you maybe less. It won't even cost you more than what you're currently doing to try and do it yourself. So, you know, I've said this before on the show is even even when I retire. Someday, hopefully someday I get to retire is I don't plan on managing my own money. I don't want to. I don't want to have that stress. I don't want to be sitting behind the computer screens. I don't have to do that research. I don't want to have to handle all that. I want to hand that over to somebody else that's going to do it for me and and have that, you know, take pride in what they're doing. But also, you know, being on that day to day intense monitoring in that active management, you know, I don't want to be sitting there doing it.

Erick Arnett:
I want to be out there enjoying retirement. You know, if you're out there listening today, you know, yes, you're more you're probably more than capable of of managing your own retirement with research, with constant monitoring, with education. And also, you know, being careful about who you trust and where you place your money, however, you know, it's it's do you want to be doing that, you know, or do you want to be out golfing? Do you want to be traveling? Do you want to be enjoying the day? Do you want to be enjoying the Florida sunshine on the beach? You know, uh, doing other things. You've worked your hard your whole life. Why are you going to sit there and try to manage your own retirement? You know? So, uh, anyways, I just put that out there. That's kind of how I feel. I know that certain people, you know, are more than capable and and, you know, there's people out there that like to control that. And I totally understand that. And that's okay. But there's also people out there that just want to hand it over to somebody else and not have to worry about it and just go out there, enjoy their life. I mean, the first thing, Sam, that we, uh, say to somebody when they sit down with us is, hey, what are you doing in retirement? What's retirement look like to you? You know, tell us what you're doing, because that plan really needs to be designed around that dream and those goals first and foremost.

Erick Arnett:
And and so people kind of look at me, you know, funny. And they're like, hey, are we going to jump right in and talk about returns and investments and this and this and that? And I'm like, no, no, that's not really what it's all about because there's thousands and thousands and thousands of different types of investments out there that you can place your money. You know, we've got to build a tailored, customized plan for you that's going to meet your needs and your goals and get you to to where you need to go. And we do that completely free and comprehensive for you. In fact, we even test that plan. We don't we don't just, you know, come up with plans and ideas and and throw them to the wind. We test them. We constantly monitor them. How are they holding up in good markets, bad markets, combinations thereof, high interest rates, low interest rates, you know, black swan events, things that we don't see coming, geopolitical events. We throw all those scenarios at your portfolio and we stress test it. And we'll show you what you could expect confidently to see over time. Are you going to run out of money? Are you going to have enough money to live to age 95? You know, what kind of expenses do you have coming? Rising health care costs, long term care, medical, all that kind of stuff.

Erick Arnett:
You know, even inflation. I know gallon of milk and a dozen eggs. I mean, we've seen, you know, that inflation over the last couple of years rear its ugly head. So you got to be prepared long term. And it's not about what you did yesterday. It's not about even what you're doing for tomorrow. We've got to look at how things are going to look ten years from now, 20 years from now. So that's what we're looking at. We're looking out way ahead trying to. Fine. You know, the best mix of investments and assets. They're going to meet your needs. And so that's how it's done, you know. And it and quite frankly, um, you know, placing some smart people around you is not a bad idea. You know, it's the best. I've read some books in the past, like Lee Iacocca and even some Trump. You know, you learn a little bit about Trump. I mean, Trump always even says even though he probably has the biggest ego out there is, you know, walk into a room and make sure you're surrounded by smarter people than you. And so, you know, you got to learn to trust somebody and interview advisors.

Erick Arnett:
If you're listening right now and you think maybe, maybe, um, you know, it might be nice or be cool to have an advisor or an advisory team work with me on my retirement plan. Well, good. Go out there and interview several of them. Make sure they have the experience that you're looking for. Make sure their goals and and and their values align with you. And and make sure they have the knowledge and you feel comfortable. And are they educating educating you? Are they communicate with you, you know, all these things. But if you're listening today, get out there, interview some advisors and bring somebody on your team. Don't go it alone. You know, I've been an advisor for 25 years. I don't plan on doing it myself when I retire, I really don't I don't want to be bothered. So, you know, find somebody, put them on your team and and go from there and, you know, constantly evaluate, evaluate what you're doing. But I know that was kind of a long winded answer to Mr. Rogers quote. And I probably took up half the show just talking about it, but I, I feel pretty strongly about that. You know, sometimes, uh, bothers me, quite frankly. You know, when you talk to folks and they're like, well, you know, what are your fees and this and that and, and I tell you, no, and I'm not paying any fees or I'm out of my 401 K doesn't charge me fees.

Erick Arnett:
Trust me, folks, inside those 401 K's and your mutual funds, you have fees. But what you have, more importantly that you may not realize is you have opportunity costs. Opportunity costs are a huge what could you be doing that potentially could be better and add and grow your nest egg. You know so there's there's opportunity cost out there. And that's something that you got away. You got to look at what are your benchmarks. You know benchmarks. How am I doing versus my peers. You know, if I have an all stock portfolio, how did it do versus the S&P and the Nasdaq and the Dow. If I have a bond portfolio, how to do against the bond aggregate index, if I have a blended portfolio, how to do against the blended index, are you keeping pace? Are you you know, with with what you should be doing to, to achieve your goals. And when you're out there and interviewing advisors, you know, talk to them. Are they are they passive? Are they passive? Are they actively managing your portfolio. You know, are they watching it on a day to day basis? You know, we we feel very strongly at this point in the game. If you're close to retirement or heading into retirement, it can't be just a set it and forget it kind of mentality anymore.

Erick Arnett:
It's got to be constantly monitored. It's got to be constantly evaluated. We're always bringing new solutions, making changes to the portfolio, tweaking it when we need to. And so, you know, tactical asset management, while you're in retirement or going into retirement is very, very important. You've got to be tactical because you've got to protect that portfolio from another 2022. If we have another 2022 and your portfolio goes down 20%, and now you're looking at going into those years where you have to start maybe potentially pulling money from your portfolio as opposed to just accumulating it. That can be a double whammy. Imagine pulling money from your portfolio to live on to complement your income, but at the same time losing principal. It's it's very damaging. So we've got to look at it very, very differently. And I think that we're going to get into some of that here. Talking a little bit about the difference between indexed in bonds, fixed annuities. We feel very strongly about replacing bonds with annuities. And you owe it to yourself to learn about this. We have a book called annuity 360. We'd love to get it out to you. Don't take my word for it. Read up, educate, read a book. It's called annuity 360. Really simple read. Give us a call today. We'll get that book out to you. But I think it's important to educate yourself so you truly understand.

Erick Arnett:
Stop listening to your neighbors or you know what you see on the internet. Or, you know, annuities are bad or or you know, you don't want to do this, you don't want to do that. You know, those are just blanket statements across the board. And, you know, you really got to tailor something and put something together that works for you. So it's super, super important. We believe in safe money. You know, typically in historically when you're building a portfolio in order to dial down the risk in the portfolio, typically you people added or investment portfolios or managed add bonds into the portfolio to try to hedge against the stock market. Well, guess what? You could be potentially hedging against the stock market, but also losing money in bonds. And we saw that in 2022. We also see that they're just kind of inefficient. You know, even if you, you know, interest rates have peaked right now. Right? So you could go out and get a bond maybe five, 6% a good quality bond right now. But guess what? When inflation at almost 4 or 5% plus after you pay the taxes on the bonds or your distribution from your IRA, you got you almost getting a negative return, right. You know, so we've got to continue to protect the purchasing power of your money as well as we go through retirement. And how do you do that in retirement is you avoid the downturns.

Erick Arnett:
You avoid the big down years because bonds aren't going to do it. Stocks and equities aren't going to do it. So you've got to have a healthy mix of safe money. So safe what is safe money? Money that I can put into an investment where my principal is 100% protected. I had the potential for growth, but I'm never going to lose principle or with annuities. We can also wrap onto an annuity what's called a living benefit or an income rider. And that income rider is going to provide you guaranteed income for the rest of your life. So don't rely on bonds that are changing value every day, okay. Or even potentially could lose principal. Or, you know, you got people out there saying, well, now it's okay, you can buy bonds now because more than likely in keyword is more than likely the fed is going to lower rates. So bonds are okay now. Well, I don't buy into that because nobody knows what the future holds. Nobody knows what the Fed's going to do you know. So and even if something else happens that shocks the system and the fed has to react, they may even raise rates. Again we don't know. But you know, why have that uncertainty in the fluctuation in the value of your portfolio when you can put in place something that's going to pay you a guaranteed pension, put money into your pocket every month or quarter or, you know, year or whatever you select, it's going to pay you for your lifetime.

Erick Arnett:
And even if you end up, uh, you know, going on the account joint with your wife or your spouse or, you know, you can get joint income for life, you can create your own pension. And so you're not guessing anymore with with an annuity, you're going to get a guarantee. They're going to tell you exactly what you can expect in income. So when your income planning there's no there's no questions. There's no guessing. You know, what's my bond portfolio going to be worth ten years from now. We have no idea. So your income could go up or go down. Right. But with an annuity we can lock that in. And we know for sure what your income is going to. You know what the money that we place in the annuity is going to create for income. And then we use other sources to invest your money into a tactical portfolio to still create growth, liquidity. And but you don't you know, the number one thing that people are concerned about in their lifetime is running out of money. So let's let's take care of that first and foremost. So with your Social Security, maybe a pension, maybe you don't have a pension, maybe you just have Social Security. Let's put let's put an annuity in place as well to give you that guaranteed income, that peace of mind that, you know, no matter what happens in the markets, you know, because markets go up, markets go down, they go all around.

Erick Arnett:
But it's about the timing. You know, where you're at in life and how it's going to affect you. So if we get your safe money aside it's producing income for you. Then we can work with other investment instruments over here, you know, uh, and try to get you some higher returns and some liquidity. We we like that rule of 100, right? We talk about it all the time. The rule of 100. You take your age, subtract it from 100. That's really the I mean, that's really the most you should have at risk. The other if you're let's say you're 70, you know, so you'd have 30% at risk in the markets and then you'd have 70% of your assets safe. You know, where you're getting safe growth. Safe accumulation. Or if you need income, you may you may be listening to the show and say, I don't need income. I don't know what this guy is talking about. I don't need income. And that's okay. Maybe you don't need income, but if you do need income, then we can set that up for you where you get that guaranteed paycheck. And if you don't need income, that's okay, because we can customize the annuity to also gain value and appreciate in those up years in the market.

Erick Arnett:
So if the markets go up, your portfolio value goes up. If the markets go down, your principal's protected. So why take that additional risk if you don't have to. You know, we we pay close attention to when we're building out retirement plans and we stress test them. But we look at that standard deviation. That is the measure of risk in that portfolio. So we customize we dial down that risk, but at the same time maximize the return potential that we can get out of it in order to meet your goals and needs. So nine times out of ten, what we see, Sam, when people come in, you know, they'll show me a portfolio or run our matrix on it. We'll look at it and we'll pull all the data out of it. And it's like, okay, you know, you've got this portfolio as a 12, 13% standard deviation, which is, you know, a decent measure of risk, but you've only averaged 3 or 4% returns, you know, and that's because of the dead weight of bonds in there or the or the market timing of, you know, making those allocation changes. The people that try to manage their own money and control their own money, they underperform the indexes by 50%. So let's say you're trying to manage your own money in the S&P did 22% last year on average.

Erick Arnett:
The retail investor, the average person is just trying to go at their own and do it themselves. Um, and don't see value in getting help or money management. Those folks are underperforming the the S&P or the markets by 50%. So I can show you. Let me show it. To you. There's no obligation. Just give us a call. I want to show this report to you. I want to work through it with you. And we'll show it to you how we can show you how a tactical portfolio with indexed annuities can dial down your risk, but still achieve the returns that you're getting. You know, it's the same type of returns that you're struggling to try to get now. So I think we got to wrap up Sam's. Give me the signal, folks. We got about a minute in this first half hour. I can't believe it's gone by already. I'm so sorry I had to listen to me ramble and ramble. I'm going on a tangent here, but super excited about this year and getting folks, you know, in the door and turned around and getting get getting them back on pace. You know, it's been a rough, rough time in the markets. It's been a rough time with inflation. It's been a rough time with Covid. I'm excited. Let's get back on track folks. So with that being said, we'll be right back with Take Care on Retirement Radio.

Producer:
You're listening to Take Point on Retirement. To schedule your free no obligation consultation visit. Take Point on Retirement dot com.

Producer:
Do you want a steady stream of income for retirement? Then it's time to consider annuities. I'm Matt McClure with the Retirement Radio Network powered by Amara Life. Gone are the days when most employers offered pensions with guaranteed lifetime payouts to their workers. But what if I told you that you can build your own personal pension? It's possible with an annuity. An annuity is a financial product that provides a series of regular payments to an individual over a specified period of time, often for the rest of their life. There are several.

Producer:
Options for you.

Ford Stokes:
To consider when choosing an annuity. Be confident in knowing that there is an annuity out there that can meet all of your needs.

Producer:
Fort Stokes is founder and president of Active Wealth Management and author of the book annuity 360. There are several different types of annuities, including fixed, variable, and fixed indexed.

Ford Stokes:
A fixed annuity offers a specific guaranteed interest rate on their contributions to the account. A fixed indexed annuity is an accumulation based product offered by an insurance company. The growth of your fixed indexed annuity is dependent on the performance of a chosen stock market index, but your money is not actually invested in this index. This offers you great growth potential and exceptional protection for your investment.

Producer:
While each can provide tax deferred growth and a lifetime income stream, variable annuities put your principal at risk in the market.

Ford Stokes:
If you are currently investing in a variable annuity, your funds could be in serious trouble if the market experienced any downturns.

Producer:
With so many possible choices to consider, it's essential you speak to a financial advisor or professional to help you make the best decision for your future. So are you ready to consider an annuity as part of your retirement plan? It's a key question to consider as you approach what should be your golden years with the Retirement Radio Network powered by Amira Life? I'm Matt McClure. Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
Welcome back to Take Point on Retirement. Schedule your free financial consultation now at Take Point on Retirement.com.

Erick Arnett:
So hey everybody, welcome back to Take Point. On Retirement Radio. Thank you so much for listening today. This is our second segment. So glad you're listening. And uh, we're talking about bond replacement. We're talking about annuities and fixed indexed annuities and fixed annuities. And you know there's there's all kinds of annuities out there, folks. And yes, some annuities have gotten a bad rap, but you owe it to yourself to call us today. (352) 616-0511. That's (352) 616-0511. Get the book annuity 360. You know, take that book, read it yourself and make your own decisions. You know, there's there's there's some annuities out there that we do really like and you don't. And the word annuities almost even not the right word to use when you're talking about because a lot of times you don't have to annuitize the annuity. You can just use annuity for safe money and safe accumulation. You know, we talk about the old 60 over 40 portfolio. You know, majority of our listeners out there who are getting into retirement or close to retirement already in retirement. You're probably in that 6040 portfolio. You're in that range anyways. Or you should be. When we talk about the rule of 100 so that traditional 60 over 40 portfolio is, you know, 60% in stocks, 40% in bonds. However, how did that do for you in 2022? You know, how did that do for you? In 2008, we found we find that real quickly that bonds do not protect your portfolio.

Erick Arnett:
Bonds are not safe bonds. There's a lot of efficiency to bonds. And our bonds even going to pay you. Are they giving you any reward at all for taking on. You know that that that risk. So it's important we we feel very strongly and have for years that the new 6040 portfolio is a portfolio, 60% stocks and 40% in fixed indexed annuities or indexed annuities feel very strongly about that, because the bond replacement allows you to take a large percentage of risk off the table. It takes fees off the table all in one move. So if that 6040 portfolio, let's just say you get $1 million in a 6040 portfolio, you know, more than likely you're paying close to 1% when you factor in management fees and internal expense ratios and side your funds or ETFs or whatever is that you're using, trading costs, more than likely you're paying around 1%. So that's $10,000 a year in annual fees, right? But if you put half of that or 40% in an indexed annuity, as opposed to bonds, who which isn't really doing anything for you other than just kind of being a dead cat with dead weight, if you take that 40% and put it into an annuity, an indexed annuity, or a fixed annuity with insurance company, and they're actually going to pay you money. And it's a really nice rate at the same time. So, you know, you're taking that risk off the table and you're no longer paying fees.

Erick Arnett:
So now if you only have if you have 60% in the market and 40% in bonds, not only paying $6,000 a year in fees. So we immediately eliminated fees or not eliminated, but really drastically cut fees in half. We cut your risk in half because the standard deviation of a 60 over 40 portfolio, you know it's going to be in that range of like 8 to 9% standard deviation. And we see when we introduced the FIA or the fixed indexed annuity into this portfolio, it sometimes drops the all the way down to 3 or 4% standard deviation. So with with the with the same average return if not higher than the 6040 portfolio. So why continue to do this old conventional style of investing? The industry just hasn't caught up. That old 60 portfolio isn't working for folks. And we saw that in 2022. So you got to think outside the box. You've got to you got to look at things differently. We really feel strongly about educating yourself and asking those questions. What does it really mean to have a 6040 portfolio with fixed indexed annuities and stocks, as opposed to bonds using that bond replacement? There's a much more market efficient and fee efficient strategy than what most money managers are implementing for their clients today. And you owe it to yourself to give us a call (352) 616-0511. That's (352) 616-0511. Or just go to my website.

Erick Arnett:
Take point wealth com in that upper right hand corner you can just click on my little appointment schedule there. You can get right on my calendar. And I'm happy to talk to you about it. And I'm happy to work through it with you. No one's going to hold a gun to your head. There's no obligation to do anything with us. This is completely for you. If you're a listener to this show, this is your show. This is your time. Just put put a little effort in, give us a call, and we're happy to work through that for you. That's 60 over 40 portfolio. The new 60 over 40 market efficient fee efficient. And what what did we talk about. Risk. Risk efficient as well. So if you'd like to see how a personal pension can fit into your retirement plan, pick up the phone and give us a call today. That's (352) 616-0511 will help any of our listeners who get in touch with us this week and help them compare their personal pension options so they don't have to spend their retirement worrying about what's happening with the volatile stock market. Our number one goal is to help our clients make informed financial decisions that leave them feeling confident about making and taking those next steps into retirement. We got to build that confidence. We got to build that clarity, and that's what we do here at Take Point on Retirement.

Erick Arnett:
So give us a call today. Uh, I think the next thing we're going to kind of pivot to Sam is we're, you know, one of the things that we we see quite a bit, let's, let's talk about 401 K's, uh, for a moment, you know, we see a lot of mistakes. We see a lot of problems with 401 K's. And this segment, you know, this discussion isn't about beating up our listeners. I actually have a great deal of compassion for our listeners, because I know that most of us are out there. And, you know, we've been taught to, in a sense, going back to the 1980s when they kind of brought 401 KS to the forefront, you know, these corporations and businesses that we work for. They said, hey, we're no longer going to have a pension for you, but we expect you to contribute your pay into this retirement plan called the 401 K. We'll match it. We'll we'll give you some match. But here's the ludicrous of it and think about it. You know how many different companies and corporations and different disciplines do we have? I mean, our listeners out there, you guys come from all different walks of life. I mean, we have all different professions out there right across the board. But how many how many of you, uh, you know, in your 20s, 30s, 40s, even 50s jumped out of bed one day and were a market expert? You're a Warren Buffett, you know, or, you know, you're you are expected to be, um, you know, Goldman Sachs, you know, overnight.

Erick Arnett:
You know, you're you're expected to pick the right funds and to manage your own portfolio with no experience. This is insane. This is and this is what our country or what the 401 K plan is, you know, and what did they do and what did the industry do in order to react to that, or to even capture more of your dollars and to make it seem less stressful and simple? They created these horrible, horrible funds called Target Retirement Date funds. And we're going to dig into those a little bit, because unfortunately, I think 95% of our listeners out there that are still in A41K plan are stuck in one of these horrible investments. And so and, and there's trillions and trillions of dollars in these things. And all it's doing is making the mutual fund companies rich. Okay. So we're going to talk about the target date funds a little bit more in a, in a in a little bit. But, you know, most baby boomers are either retired or on the cusp of retiring. So members of this generation now ages, you know, 59 to 77, you need to be very careful about the decisions you're making inside your 401 K. We want you to be aware of, of some common mistakes that we think you can avoid and improve your retirement outlook.

Erick Arnett:
So, you know, and of course, the number one mistake, the number one mistake is not saving enough for retirement in your future. Right? So, uh, we need to talk about that. Are you on pace? You know, are you on pace? What are your needs going to be in retirement? We need to look at that. We need to kind of do some, do some foreshadowing and do some predictions there. And let's let's start getting on track so we can meet those needs. But you know, are you even saving enough? You know, are you contributing to a Roth 401 K, or are you just contributing to a regular 401 K? You know, there's there's a lot of different options out there. Hopefully, you know, our listeners have that option of Roth. And if you don't give us a call because we can set one up for you, that's super important. I want to talk about that with you, because you need to know about the pitfalls of just accumulating a bunch of money in your, in your, in a taxable 401 K account. That's going to be it's tax deferred, but it's all going to be taxable when you go to retire. Once you turn 59.5, you you can pull money out penalty free. But guess what. It's all going to be taxed. And so the government knows. I mean the IRS knows that when you go to start pulling that money out, they can tax it.

Erick Arnett:
They can tax it at whatever rate they want. I mean, they can change the laws. They can move tax rates up. So it's super important to talk about those. Roth, you know, all the different options that you have available for saving for retirement, you know, but one whenever possible, you know, boomers should max their 401 K contributions and take advantage of catch up contributions. So as an example for 2024, that 401 K annual contribution limit is 23,000. But if you're over the age of 50, you can take advantage of an additional catch up up to $7,500 a year. So you you might have a couple bucks laying around and you didn't even think about this, like, hey, we can get that. Let's get that working. You know, let's get that moving. Let's get that growing for your retirement. And. The number one mistake. That drives me crazy. And I want to help folks. In fact, it's pretty. It's pretty frustrating. Uh, we get we get people that call in all the time on the show, some of our listeners, and they're they're working, you know, they're still working. They may even be, you know, young, you know, 30s and 40s, and they realize they're in these 401 K plans and they're not helping them any. And they realize that they're stuck in them. And sometimes they call us and they're like, hey, can you, you know, manage my 401 K? Or can I get it out of there and put it into something else? And and nine times out of ten, no.

Erick Arnett:
They're handcuffed. They can't move that 401 K prior to 59.5 unless they're terminated or they or they leave the company. Right. But the options that they're given inside the 41K, they're either very limited. You know, they're not that great. They're really just benefiting the mutual fund company that the 401 K plan or the or the third party administrators in bed with. But whoever got your 401 K plan you know it's just benefiting them. I mean they're getting fees on your money internally. And what they they so they thought they would make it easy and just say, oh, you know, we know that you don't know anything about investing. We know that you're expected to invest your own money and make those decisions on your own. So we just we'll just make it easy for you. We'll create these target date return funds. And so, you know, okay, if I'm 40 years old and I plan on retiring at 65, that's 25 years from now. So I'll just pick the target, return retirement 2020, you know, 2025 fund or whatever, or 2050 fund what I'm going to retire. And so what we find is that those funds are just funds of funds. So it's a fund that has hundreds of mutual funds in it, highly inefficient. We call it diversification. There's fees involved. You know, uh, they may have bonds in there that shouldn't be in there.

Erick Arnett:
You know, I honestly don't even care how old you are. We don't like bonds, period. And, you know, so if you're a bond investor, I'm I apologize. But, you know, we we're just not thrilled about them. And if you got all those bonds in the target date return fund, what's happening is they're moving you into an underperforming asset class or an asset class that's costing you purchasing power. You're not beating inflation. It's potentially going down in value dragging on your equities. Let's say the equity portion of your portfolio does 20%, but the bond portfolio was down 16%. So you had all that money in there working. And by the time it took fees out you made 2% for the year. So let's look at some of these, you know, target return funds, the Vanguard Retirement 2025 fund. Uh, six point is that a -6.1 Sam -6.1% in the last five years? I mean, this is crazy, folks. And why did it do that? Because as you were getting older, this fund is automatically putting more money into bonds. So they were they were adding bonds to a declining asset class or a class that a freight train was coming for when the fed was raising rates 12, 15 times last year and a half, bonds were getting decimated. But this target date return fund was just adding more to that declining pitfall. So you know, these autopilot target date return funds, they're just really not doing anybody any any good.

Erick Arnett:
And and so like the okay the 2030 fund the vanguard and not to beat up on Vanguard I mean there's all kinds of mutual fund companies out there that have these. But -2.5% in the last five years, the 2035 fund, -1.8%. The 2040 did 0.26% in the last five years. So you're working hard, you're pumping money into this thing and you're getting zero return. Okay. How about the 25, 20, 45 fund? Okay. It did 7.5% over the last five years. It's the 2045 fund because it's further out in time is going to have more stocks, more risk, more equity. Right. So that's why it's doing a little bit better. But it still got a lot of bonds in there dragging down the performance. So you can have a great stock portfolio that's crushing it. But your bonds are like an anchor pulling it underwater. You know you just can't get anywhere. And even the most aggressive target date return fund, the 2050 fund only did 10.9% in the last five years. That's a cumulative total return. That's not an average return. That's what the thing did over five years. So divide that by five and you're looking at a 2% return. And you took all that risk. I mean, come on, these things are these things are horrible. And so we've got to we've got to look at alternatives. And so one thing that we did, you know, a lot of times if you're if you're 59.5, you turn 60.

Erick Arnett:
Even if you're still working a lot of plans, and a lot of 401 K's do not require you to retire or leave the company in order to pull money out and roll it to your own individual IRA. There's a lot of options out there. Give us a call so we can at least look into where your 401 K is at and see if there's mobility there. So we can typically jump on there and help you manage that portfolio. Uh, just recently I had a young man and he was smart enough to see this. And he was like, hey, you know, these things, these things just aren't good. And if anything, they're hurting me. I need some better options. I need more options. Unfortunately, he was at the age and this corporation, he wasn't allowed to roll out funds. So what we said to him was like, look, come in and see us. We'll charge you a flat fee. You know, just a consulting fee. We'll sit down with you. We'll look at all of the funds that are offered in there. Let's at least get away from those target return funds, because we know those are horrible. And let's see what other funds or ETFs they have inside your plan and what will help you build a good solid portfolio, diversified portfolio. And we'll even help you monitor that on an ongoing basis.

Erick Arnett:
But we're going to have to charge you a flat fee or a financial planning fee outside of that and very reasonable fee. And we can you can still have somebody by your side helping you manage this because, you know, you could be a person that works, uh, you know, for, um, it could be a mechanic or a plumber, you know, and you could be a, um, you know, uh, whatever. You can work for the local, uh, electric company, and you're really good at what you do, but you can't be expected to manage your own money, you know? I mean, you really can't unless you're able to just 100% jump in it, be a student of the game, and have at least the control and the flexibility to move funds around. But what we find is that you just don't have those choices. It's called a lack of customization. You know, what we do here at Take Point on Retirement is we customize, customize, customize, customize. I love that word because no one person or one family or couple that comes through our doors gets the same plan. They're all different. And so unfortunately, in AmEricka, if you go, you're working with one of the big houses, like one of the big wire houses, or you're working with, you know, these 401 K plans, they just put you in a box. They pigeonholed you that they have. You ask a couple of questions, they answer them and they put you in a portfolio and they hope for the best.

Erick Arnett:
Okay. That's not what we do here. We customize, we actively and tactically manage, and we're always constantly looking for the best plan for you going forward. So we customize. And those target date funds are designed to be one size fits all, which means they likely will not align perfectly with an individual's specific financial goals, risk tolerance or needs. So that, you know, it's just I hate hate that people have been set up for failure like this. So hopefully folks out there listening know that they have a choice or they have a place to go that, you know, we can at least do our best to try to help them mitigate that. Um, fees, you know, target date funds often have high management fees. I hear this all the time, Erick. You know, I'm concerned about moving my money to an investment advisor because you charge fees. And what I say is, well, what's what are you currently doing? Let's look at that. And we have a portfolio program that extracts expenses out of, you know, the funds that you have. And typically what I show them is like, look, you've got these internal expense ratios. You know, you've got these turnover ratios. These are costing you a lot of money. You don't see it. Yeah. You're you're 401 K plan or your third party administrator.

Erick Arnett:
Whoever's administering your plan isn't charging you fees. But inside of those investments, trust me, there are fees. They did not build those big, beautiful buildings and towers, you know, that. You see as you're I was just in Atlanta actually last, last week, and I was like, driving through the city. And you see him, you see Invesco, you see, you know, uh, Guggenheim you see all these big, you know, Truist, you know, you see all these huge signs on these massive, you know, billion dollar buildings. Right? They didn't build those buildings by not charging you folks any fees. Right. And guess what? They don't know you from Adam. But Take Point on Retirement. Take point. Wealth management does know you. And we get to know you. And we customize and tailor things for you. And we learn and we build a relationship with you ongoing for your lifetime. So, uh, you know, the lack of customization, the fees, which can erode your returns over time, especially for long term investors. Some target date funds may invest in other funds, leading to layers of fees. So this can make it challenging to understand the total cost of investing in a target date fund. And then guess what? The risk tolerance may not even match your situation or needs. The level of risk taken by a target date fund will not align with every investor's actual actual risk tolerance. So for some, this could result in overly conservative or overly aggressive.

Erick Arnett:
I've seen both. This is a big mistake. There's people that come in and see me and you know, they they experienced one market downturn and they were trying to do things on. On their own, so they panicked. They didn't know what to do, so they went ahead and pushed the button and pushed everything into cash. And then they were so bitten by it, and they were so scared by it that they just left it there. They went ahead and worked. And, you know, for five years, ten years got away from it. And all of a sudden they look back and was like, I made no returns in my portfolio because it was just sitting on the sidelines, you know. So that's market timing. You know, typically people that try to manage their own money, they're also fall prey to market timing because the emotions of investing your emotions around money really get us at take point. When you bring on a third party, you bring on an advisory team, you bring on a partner. We we take all that emotion out of the game for you because we don't manage your retirement emotionally. Okay. Yeah. So it's important to help people and save people from making those mistakes. Market timing I see it all the time. All the time. It's one of my biggest, biggest concerns is that market timing. It can really devastate long term retirement plans. You know, taking a withdrawal from your 401 K when you shouldn't, you know, that's that's can sometimes be damaging.

Erick Arnett:
You know, a recent survey found that 1 in 4 1 in 4 baby boomers okay. Have already taken a withdrawal from their 401k, with the top reasons being to pay down debt or cover health care expenses. This can be particularly expensive and expensive. Mistake if you draw your. If you withdraw your money before you reach age 59.5 because you will face an early withdrawal penalty plus taxes. So you know what's the solution? You can not take money out of your retirement accounts too early, right? Albert Einstein once said that compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn't pays it right. We I think we actually have had that quote of the week before. So, uh, be careful not to live beyond your means and have an emergency fund in place, of course, and to assist with any unforeseen expenses. But please, please don't don't, don't jump into those 41K accounts for those for those miscellaneous needs or expenses that come up. So, you know, not seeking I think not I think, you know, not seeking professional advice with your hard earned money is probably one of the biggest mistakes you can make, you know. And I know that it could be out there listening and you say, hey, I'm pretty confident with what I'm doing, and I think that's great.

Erick Arnett:
Let's test it. Let's take a look at it. Let's test it out. Let's show you what you're currently doing. Is it going to work? Is it going to meet your needs. And is there potentially something that you could do to optimize that? You know, it could be there could be a way to optimize what you're doing without making any big changes. Okay. So it's super, super important, I think, to just at least to get that second opinion, that third set of eyes on it, uh, give us a call. We're happy to do that for you. Completely free. No obligation. No. No one's going to hold a gun to your head. You have to work with take point. You know, just take advantage of being being one of our warriors, our retirement warriors out there listening to our show. I know most of y'all that call me and I talk to you throughout the week. You've been listening to the show for a long, long time. So I know there's folks out there that have been listening to us for a while. Just take that action, pick up the phone and give us a call. (352) 616-0511. That's (352) 616-0511. Or just go to, you know, just real quick. Just Google us. Take point wealth in the upper right hand corner on my website. You can just click and pick your own time and get right on our calendar. And we're standing by. I mean, we can't wait to help you.

Erick Arnett:
We can't wait to help you avoid those mistakes, because at the end of the day, I tell people it's like, hey, listen, I've been doing this 25 years. And it's not that. It's not that I'm the smartest guy in the world. I'm the smartest investment advisor in the world. It's just that I've seen a ton of mistakes in 25 years, so I know what not to do, right? You know? So I know how to help you not make those same mistakes. And it's never too late. You know, you may be in those in your 60s or 70s. You're like, ah, man, you're beating yourself up. I already made those mistakes. It's too late for me. No, it's not too late, folks. There are some really great solutions out there, some really great ideas. Our whole team is standing by waiting to help you out. So give us a call. We can help set you on the path to retirement you've always envisioned for yourself and your family. Give us a call. Give us a call today and you can book yourself right into our calendar. We're standing by this week to take your calls so you you can schedule that free consultation and get started with us today. So thank you so much for listening. This has been Take Point on Retirement Radio. I really appreciate our listeners. Thank you. Sarasota. Thank you Nature Coast. Thank you Tampa Bay. We'll be back next week with Take Point on Retirement Radio.

Producer:
Thanks for listening. To Take Point on Retirement. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free, no obligation consultation, visit. Take Point on Retirement.com or pick up the phone and call (352) 616-0511. That's (352) 616-0511. Investment advisory services offered through Brookstone Capital Management LLC, BCM, a registered investment advisor. Bcm and Take Point Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer:
So you know where you are now and where you want to be in retirement. So how do you plan to get there? I'm Matt McClure with the Retirement Radio Network, powered by Amira Life.

Jack Nicholson:
Do you have any other questions for me? Counselor, there.

Producer:
Are a lot of questions to ask yourself when you start your retirement plan. Questions like when should I retire? How much money will I need? When should I claim Social Security? What about health care costs and taxes in retirement? This complicated puzzle means you're probably going to need some help coming up with a smart retirement plan.

Ford Stokes:
If you want to retire successfully, you really need to plan early. You know inspectorj you expect and get prepared. Putting a plan in place now while you're still working is a great idea.

Producer:
Ford Stokes is founder and president of Active Wealth Management. Once you find a financial professional you want to work with, they can help you answer all the questions you may have. Back to what.

Ford Stokes:
Warren Buffett said. If you don't find a way to make money while you sleep, you're going to work until you die. So we need to do everything we can to figure out a way to make money. While while we're sleeping, we talk about this human capital versus actual capital. When you're young, you have a lot of human capital. You've got a lot of left, a lot of room left, a lot of capital left in your career. Right? But at the same time, a lot of people that are older, let's say you're 65, 70 years old, you don't have a lot of human capital left, but you should have a lot of capital that is making money while you sleep. And if you don't, then you didn't make the right decisions.

Producer:
There are also some retirement costs you may not have considered yet. Long term care. For example, did you know it's not covered by Medicare? What about home renovations? If you decide to stay in your home instead of moving into a facility, your home might need some updates to ensure you're safe and comfortable. And those are just the tip of the iceberg. So do you have a fiduciary, financial advisor, or professional to help you wade through the complicated retirement planning process? That is a key question to consider if you want to make the most of your hard earned money with a retirement radio network powered by Amira life. I'm Matt McClure.

Interviewer:
I'm here with Erick Arnett of Take Point Wealth Management. Erick, these last few years have been a time of change for a lot of people. Some have left their old jobs and started new ones. What if they still have a 401 K or other retirement plan from their old employer?

Erick Arnett:
That's a great question. If that's you, you've got options. A lot of work based retirement plans come with high fees. We can show you options that are a lot more affordable and don't eat away at your retirement savings and investments.

Interviewer:
What about if I'm getting close to retirement? Do I still have options?

Erick Arnett:
Yes, and this goes for anybody with an employer based retirement plan. You have more options than you think. Did you know you can roll over some of those funds into an IRA with more favorable investment options and lower fees?

Interviewer:
I did not know that.

Erick Arnett:
Now you do. We can help you navigate it all. Just go to take Point wealth.com and schedule a free, no obligation consultation with me today.

Interviewer:
That's right. You heard him. Folks head on over to take point wealth.com today.