How to Live Worry-Free During Retirement

TPOR 0305 How to Live Worry-Free During Retirement : Audio automatically transcribed by Sonix

TPOR 0305 How to Live Worry-Free During Retirement : this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
At Take Point Wealth Management, we know you've worked hard to earn your money and you've worked even harder to save it when it comes to wealth management and planning for retirement trust. Eric Arnett and his team of experts who have been helping individuals, families and business owners find financial freedom for more than 20 years. Let us help you protect and grow what you've worked so hard for. Schedule your free no obligation consultation now at TakePointWealth.com.

Producer Sam Davis:
Registered investment advisors and investment adviser representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosure of any conflicts of interest, if any exist.

Producer Sam Davis:
Please refer to our firm brochure. The ADV to a Page four for additional information.

Producer:
Welcome to take point on retirement with your host Eric Arnett Eric is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Tech 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 Eric Arnett.

Producer Sam Davis:
Yes, welcome back to take point on retirement. I'm Sam Davis, joined as always by the founder of Take Point Wealth Management. It is Eric Arnett. Eric, how are you doing?

Erick Arnett:
Hey, how are you doing today, man?

Producer Sam Davis:
Doing good. Glad that you're here! You know, we have some interesting and ongoing global events. You know, we were talking about what was going on in Eastern Europe and Russia with Ukraine and Russia a couple of weeks ago. At the time, we weren't sure if it was something that was going to be a story or an event that kind of had staying power. But it's stuck around and we do have pre-retirees, retirees and people in general who are just investors in the market concerned about the about the effects of this. We spoke a couple of weeks ago about the cycles with these events, but I just wanted to revisit that so you could talk to investors out there and and kind of give them your perspective on what's going on as a financial expert, as a veteran and what they can expect moving forward into Q2 and Q3 of this year.

Erick Arnett:
Yeah. So, so much, you know, going on, obviously this year and a lot of different things rattling around in my head right now that I need, I feel like I'm compelled to get out to our listeners and and hopefully can just, you know, calm their fears a bit, unfortunately. Fear is a very strong emotion. And, you know, once fear grabs hold of us, we tend to make poor decisions. So, you know, and unfortunately, our media Sam and you know, the pundits and the talking heads, you know, they will hone in on events like this with the war on Ukraine to basically grab headlines. And and it really bothers me because the media just creates so much fear and more and more fear mongering, and we're missing so much of the real headlines that matter. And what's important to our investors here in our country and our retirees and pre-retirees. And so one thing that we do and I've been doing for over 24 years, and I think it's important to say that because I have been through so many of these, you know, geopolitical events, big market downturns, recessions, you know, market collapses, you name it. Over my twenty four year career, I've been through it all, OK? And so you know what, we what we do and what we do well is that we we don't look at investing in retirement planning from an emotional standpoint. We're not doomsday or is we're not fear fear mongers. You know, we're we're about putting a plan in place and sticking to that plan. And you know, there's so much to talk about there.

Erick Arnett:
And we've talked about this on our show for a long time, Sam, that, you know, we were talking about this early last year, you know, we could see this coming. We knew that twenty twenty two was going to be a volatile year. We prepared our clients. We prepared our retirement warriors for that. And so if there's listeners, new listeners out there, you may be hearing this for the first time. But if you've been listening to our show for a while, no matter what market you're in, you know, we have been talking about preparing for this volatility for a long time. So what's so important is to stay focused on what truly matters and what drives the economy, what drives the markets. And so, you know, tons of stuff to talk about today. But you know, let's just look at kind of what's currently happening. You know, just looking at market news this morning. You know, obviously oil is rising because of the conflict and the the, you know, the potential. Strangulation of oil supply. But, you know, there's there's a lot of oil out there and a lot of reserves and a lot of things and a lot of tools that are world leaders can use to kind of help that help that. But you know, that's that's the one issue we have right now. But rising oil costs don't mean does it mean the end of, you know, of your retirement plan or the doomsday scenario? So as an example, we added more jobs this week.

Erick Arnett:
Hiring picked up in February. Over four hundred seventy five thousand jobs were added, so the economy is very strong. People are going back to work. Wages are higher. You know, we have a lot of good, positive things. Earnings from our corporations, our top corporations in America have been extremely strong. Retail spending has been has been strong. So, you know, there's a lot of positive things. Yes. Inflation is a concern. But if you had the proper plan in place and you know, you wouldn't be as concerned about that because that's something that we plan for ahead of time. So when we build our smart plans, our smart retirement plans for our clients, you know, we factor in inflation. Ok, so we plan for the worst. And so and and it's so important to just have a plan. So if you're out there listening, if you have a plan, great, let's test it. Let's look at it because times like these Sam are great times to kind of sit back and reevaluate your goals, reevaluate your plan, reevaluate your risk, reevaluate, reevaluate what kind of taxes you're paying in retirement, reevaluate the fees and expenses and how that's affecting your portfolios. And and truly say to yourself, Do I feel comfortable with my plan right now? You know, we have a lot of clients that take point wealth management. And I have to be frank, the phone is not ringing even during this period because take point. Wealth Management was out in front of this months ago, September, October of last year, meeting with our clients, preparing them for this volatility that was coming and then readjusting portfolios and plans if we needed to.

Erick Arnett:
And so I'm guessing that if people are out there really panicking or concerned and they start selling their portfolios at what I must say, the worst time to sell is right now. Then more than likely they just didn't have a plan. And so how do I relate that to my military experience? And what's going on in in the war right now is that, you know, if you don't have a good plan going into battle and yes, you know what, even sometimes the best plans fail and we can see where you have to adjust fire and make some changes. And that's why we feel so strongly at take point wealth management that tactical asset management, I love the word tactical. It's actually an industry term. You know, you have to be tactical in these certain situations, and you have to be able to reposition to actively manage your portfolio to not only weather the storm and make it more defensive, but also to to capitalize on opportunities. So there's always a silver lining. You know, there's there are. Parts of the industry and asset classes and stocks that are doing well and despite the turmoil are moving forward. So, you know, I guess I just keep going back, Sam, to, you know, what is your plan and maybe times like these, you know, tells us that it's a good time to just really take another look at that and reevaluate that.

Producer Sam Davis:
Yeah. And I think that no matter where you're at and your process, whether you're five years from retirement and you just want to make sure you've got that plan ready to go for four when you step away from work, if you're currently in retirement and this volatility has started to really make you think that you need to rethink the way you're going to move forward or if you're a waste from retirement and you just want to make sure that you are going to be as tax advantaged as possible as we push through the uncertainty in this next decade, you know, we expect the taxes will go up in the future and that you want to be prepared to not pay those during retirement and not letting that be a drain. So really, I think no matter where you're at it is, it is such a good time to reevaluate. And Eric, something that we we always like to tell people is don't think of retirement as a finish line, think of it as the next starting line because people are living longer and people are having decades long retirements.

Erick Arnett:
Yeah, absolutely. And and so, you know, let's focus on what's really important. You know, the key component of a good strong retirement plan is your income. And let's talk about that, you know, regardless of what the stock market is doing. And you know, it's it's the stock market every three to five years has a major correction. And so it's doing what it should be doing. Quite honestly, it's reevaluating the values of the stock market and quite we are we are currently at. A p PE ratio, a price to earnings ratio on the on the market of pre-pandemic levels. So this is, if anything, is a buy opportunity. And so especially if you're truly in the markets to and it's a part of your retirement plan, I say the market should only be a a portion of your retirement plan. But if you're in the markets, you know, no matter what the stock market is doing, you know you have to you have to have the mentality that this will get better and we'll push through this. And you know, our our our chief investment officer at Brookstone Capital, I think brought out a great kind of historical time period that's very kind of close to what we're going through right now. And and trust me, I know history is no prediction of our future, but this is kind of similar. So back in 1990, it was a midterm election year, and that was the year that Iraq invaded and occupied Kuwait and oil prices went through the roof.

Erick Arnett:
They nearly doubled in a matter of weeks. And guess what? Oil prices are increasing every day and going through the roof. Currently, they haven't doubled, but they could, quite frankly, go to $200 a barrel. I don't know. But negative news dominated the headlines back in 1990. Just like it is now, inflation was near five percent, GDP growth was below two percent. We're nowhere near that. Our GDP is strong and we're growing. People are going back to work. We're coming out of the pandemic. A lot of positive things going on. A lot of positive way more positives than than negatives. Unfortunately, when you have these geopolitical events, they can shock the system. But what we see is if you hold on through it and you don't panic, you'll more than recover and get to the other side of this and and be just fine. And if what we see is, you know, the absolute wrong strategy is, Oh, I'm watching my economy dance going down in value, so I'm going to call my adviser and go to cash. If you do that, most of the time when the markets recover, they recover very quickly from the time that we hit the lowest point in the market. And we're already seeing the market kind of stabilize and bounce off its lows here and kind of forming a footing and pushing higher.

Erick Arnett:
And so, you know, the equity markets are wobbly and they were very wobbly back during Operation Desert Storm. I remember it well. You know, I was I was a soldier back then and I can remember those times. It was extremely uncertain and unnerving and things were were crazy. And, you know, but despite those headwinds, the market was able to begin a robust relief rally after the midterm election into year end that ultimately continued to take the market well above all time highs throughout nineteen ninety one. So while history does not repeat itself, repeat itself, it often often does rhyme. So I see this as a very similar situation in, you know, if your advisor isn't talking to you, calling you, you know, kind of walking you through this, reevaluating things and please call us and we would love to be able to help you. But we were talking to our clients a long time ago and making sure that their plan was in place and their plan was able to weather this volatility. And so it's so, so important that if you don't have a plan, then please get one and then stick to that plan, OK? Because I see 2020 as being very similar. We're going to have high oil prices.

Erick Arnett:
We're going to have higher gas prices at the pump. You know, we're going to have inflation. The Federal Reserve is going to raise rates to kind of try to slow down inflation and maybe slow down the economy a bit. And so, you know, the economy is actually really strong and on fire. So it's normal for the Fed to have to come in and say, Hey, we've got to tighten things a bit here. I mean, we are currently at zero interest rates. I mean, so we need to raise rates. That's a good thing. So but what we see is, you know, in the midterm elections, things will calm down. Things will settle down. The war in Ukraine will pass. Please don't panic. If you're out there, we're going to be OK. Everything's going to be fine and you're talking about a plan. When we do retirement planning, Sam, you know, 10 years, 15 years, 20 years, 30 years. So you have to really sit there and ask yourself if you're selling out right now, then that means you didn't have a plan and you weren't confident with it. You've got to have that plan. You've got to stick to that plan. And I know I'm beating a dead horse, but we have the solutions. So we've been doing. In all kinds of things, like last year to buffer the volatility in our in our portfolios, like adding for an example, an investment called structured notes.

Erick Arnett:
You know, these are these are great, you know, strong terms that are that we are short term borrowing coupons that we get from large, large banks, you know, real high coupons seven eight nine 10, 12, 13 percent. They're always issued but at different levels, but now is actually a good time to own these. And so just little things like that. And we started repositioning those into our clients portfolios six months ago. So if you have an advisor and they just kind of have this passive strategy just as kind of like, hey, buy and hold, and they're not making any changes, you know, and they're not talking to you about those changes, then it may make sense to to to reevaluate things. But because we believe you have to be active, you have to make changes, you have to shift the portfolio, but you certainly don't panic and sell and go to cash because what are you going to get back in? And when you do decide to get back and guess what the market's already have is going to already have gone up 20 percent by the time you do that and now you're getting back in after after a high or a push in the market. And that's bad timing. So just real, real important to stick with that plan.

Producer Sam Davis:
Yeah. And you can get your plan looked at by Eric and his team at take point wealth management. If you don't have a plan yet, that's OK, too. They can help you get one in place. And Eric, is it correct? The listeners get a free financial plan to their ninety fifth birthday just by booking an appointment at take point on retirement. Do I have that right?

Erick Arnett:
You got it, man. And so no matter what age you are, we are going to build out a plan to age ninety five. And so and then what we do, Sam, which is really cool, is we test the plan. So you may have a plan and you may have some ideas. Let's take a look at it. Let's test it. And so any plan that we put together and we recommend, we also test it right before your eyes and show you, how is this plan going to react in good markets, bad markets, high rates, low rates, high inflation, low inflation and combinations thereof, one thousand different scenarios or thrown at this plan. It's called the stress test. It's called a Monte Carlo simulation. It's going to give you some confidence and some clarity that you know you can you can get to your goals investing, retirement planning, sticking to a plan that takes discipline. That's what we do here. Take point on retirement and we take great pride in that. And any time you have a plan even going into war, if you don't have discipline, then it's going to fail, right? So you can't panic and you and you certainly can't fail. So, you know, we talk about this before to a lot of times is, you know, the income and the income gap. This is so important. So if you planned properly and you had your income, you know, guaranteed and you had your income shored up, no matter what, you're not worried about what's going on because your income is still coming in, so you have to have an income plan.

Erick Arnett:
And so that's the main thing we focus on is what are what are your goals? When are you going to retire? Are you already retired? You know, what are your expenses? How much income do you have coming in? If you have an income gap, then we need to put something in place to shore up that income gap and put a qualified income source in there to provide that for you long term. So at least you're not. Your income isn't impacted, right? And so, you know, most people, if we have a portion of their assets generating the income that they need, they're not as concerned about what's going on in the stock market, OK, because you know, their basic needs, their lifestyle isn't being impacted by the income that they're generating. So, so, so important to get that income plan. It's completely free. The way it starts out, Sam, is we just have a casual conversation over the phone. I'll zoom in if you don't want to come into the office and we can just meet in your home through the computer and we'll just chat and I want to find out what's going on with you currently. Is your plan working? Do you have confidence in your plan? What is your plan? And then we're going to talk about that.

Erick Arnett:
What are your goals and just kind of get a general idea? And then I'll start just kind of gathering some data and some information. And once we get that, I can go back with my team and really build out what we think is a solid plan and a recommendation for you. And then we're going to present it to you and we're going to go through it and truly educate you from A to B or A to C nuts and bolts and make it. Make sure that you truly understand what's going on, so like I said, you know, hundreds of clients that take point, wealth management and there are phone isn't ringing. And that gives me a good peace of mind that my clients, you know, are confident and feeling OK about what's going on and that they'll weather this storm. So, you know, just a real laid back conversation at first, and no one's going to hold a gun to your head and try to sell you something. Just educate yourself and and as a listener. And that's why we do this show, right? We're just trying to educate because that's what we're truly passionate about. Unfortunately, people aren't going to school and haven't been taught and don't, you know, don't know a lot about this stuff, right? So they just think, Oh, picking the best mutual fund is the way to success, right? So it's a little bit more than that.

Producer Sam Davis:
Yeah. So whether you're in Tampa or whether you're all up and down the nature coast of Florida or you're listening on the podcast, take point on retirement available wherever you listen to podcasts as well. And we're we're very grateful for our podcast listeners that are able to download the show each week or or whenever they happen to miss it on the radio. Just head over to take point on retirement. Book that free consultation. You'll get your plan checked. If you don't have a plan, Eric and his team can help you put one in place. And Eric, we hear from so many people all the time that they do have a plan, but their plan is only that they have their pension and they have their IRA, and they're just going to pull from it as they need it. But those people aren't realizing that that's not the most efficient way to do things tax wise. It's definitely not the most efficient way to do things market wise, because if you think about your your one big nest egg, you've got all your chips in the middle of the Wall Street casino. Who knows what could happen? You want to be sure that you're maximizing all of that all of that time you've put in working decades during your life. You want to be able to to shore up that money, make sure it lasts decades in retirement.

Erick Arnett:
Yeah, absolutely. And you know, we've been talking. I mean, this is what we do right for a living. I mean, we've been talking about this for years, and I was out two three years ago prior to COVID, you know, doing workshops and seminars and educational events for retirees and pre-retirees. And we were telling them, you know, that things like this were probably close to occurring because, you know, we could feel that this stuff was building up as far as, you know, interest rates being too low and and taxes possibly increasing. So we had to be out in front of our clients years ago trying to prepare them for this. And so if you if you don't have a plan, the problem is is and if you're just maybe way overweight it and taken too much risk in the markets like like you just said, you know, people just kind of have these IRAs and these forward caves and they don't truly know what the nuts and bolts are internally. You know, we'll dissect that and show you and educate you on how your portfolios are going to react in the different markets. But you know, if if you don't understand what's in your portfolio, then you're just not going to know how it's going to react and these type of market environments. And so it's so important, not in the first five years of your retirement, saying it's really important to not have big drawdowns on your portfolio or your retirement because that's really hard to recover from.

Erick Arnett:
And it can have a big impact on your retirement on the back end. So it's so important to get it right right away in the beginning. And that's why we talk about, you know, just a little simple things like the rule of one hundred, you know, you know, take your age, subtract it from one hundred, and that's really probably pretty close to what you should have and risk, you know, or or what we call naked investment investments that have risk. And guess what? The traditional market portfolio where we utilized bonds to hedge against the stock market isn't working right now. This year is one of the first years in a long time where stocks and bonds are down big at the same time. And so once again, we've been talking to people for years about using alternatives like the indexed annuity as an alternative to the bond market. And so the bond market is down four percent last year is already down four or five percent this year. And so you have negative drag on your portfolio, plus you're paying fees on that. And I really don't see that changing a whole lot over the next three to five years. So a lot of people sitting out there and have this basket of mutual funds in their 401k or their IRA, and they don't even know that a good portion of those are sitting in bonds. And so I can't tell you that a number of people that I talked to on a daily basis that truly just don't understand what they have inside their portfolio.

Erick Arnett:
So we need to do an. On that. I need to pull all that out for you. And we have the tools to do that and I'll do an x ray. And you can be right in the comfort of your own home and just pop it up on your screen and show you, you know, truly what your risks are and how your portfolio is allocated, because that traditional portfolio just is not going to work going forward. And it hasn't worked up to this point over the last year or so either. So we've got to have, you know, a a different mentality. We have got to work, you know, against conventional wisdom and reeducate ourselves and see what's truly working. So indexed annuities as an example, as a portion of your portfolio can act as a great anchor, a great hedge against the market. It has no interest rate risk. Ok, so what is interest rate risk? Yes, bonds have risk, and it's called interest rate risk. So if rates are going up, your bond values are going down. And that's what's happening. So if you had if you had an advisor or a broker, I've just been sleeping at the wheel for the last couple of years and you have a large portion of your portfolio in bonds. That, to me, is just crazy. I mean, that's just a big no-no.

Producer Sam Davis:
When we come back from the break, we're going to talk a little bit about how you can get some of that bonds and some of the bond risk out of your portfolio using annuities. We're going to tell you a bit about how you can educate yourself more about annuities. So we'll we'll talk specifically about fixed indexed annuities, and we'll also get into structure notes a little bit. Eric was talking about structured notes is a good investment vehicle earlier here in the first segment, we'll get into that a little bit in segment two as well. Don't forget to subscribe to take point on retirement so you never miss an episode or if you ever miss one, you can just go to take point on retirement wherever you listen to podcasts, subscribe. We'd love if you'd leave us a good rating. Let us know what you like about the show and where you're listening from. We'd love to hear from you. Also book your appointment at take point on retirement and we will be right back after the break.

Producer:
You're listening to take point on retirement to schedule your free no obligation consultation. Visit TakePointonRetirement.com. Welcome back to take point on retirement schedule, your free financial consultation now at take point on retirement.

Producer Sam Davis:
This is take point on retirement. I'm Sam Davis, joined by Eric Arnett. We're back before the break, we were talking about bond risk and how you how you can get some of that risk out of your portfolio. And we actually have an offer for listeners some information that they can get their hands on a new book that's out Annuity 360 learning everything you need to know about annuities, which ones to avoid, which ones to buy for a successful retirement. Eric, tell the listeners how they can get this book. What sort of information they can expect to learn. And then we'll actually play them a section of the audio book after we hear from you.

Erick Arnett:
Yeah, no. It's a great book written by one of my friends, Ford Stokes and I love the book, and we've been giving this out for a long time because it's just a really good version and explanation of of of annuities. And he does a great job at kind of, you know, putting it in relative terms, so people from all walks of life can truly understand it. It's an easy read. I actually had this is a great story. We have listeners call in and request the book and what you can do. You can. You can call me (352) 616-0511. You could also go right to our website, take point wealth management or take point on retirement. Just google it on your phone. In the upper right hand corner, there's a little button that says Schedule an appointment or a chat, just click that. And then the notes just put that you would like to have the book. I'll reach out to you and get it to you. But so real simple. Just just just request the book. And it was kind of cool past shows that had a guy call in and wanted the book, and we sent the book out to him, and he read the book six times and highlighted Hunt. And I loved that because this was, you know, not an industry expert.

Erick Arnett:
I mean, he I don't know what he did in real life, but he was, you know, you know, a farmer or something like that. And he just but he studied and studied and study. And I love that. Like, don't take my word for things on the radio. Don't take, you know, stuff you see on the internet verbatim and and always challenge your advisors and your broker. And if you don't understand something, it's guess what? It's your money. You know you're responsible for your money and you have to be a good steward of it. So I love this when people educate themselves and take the time to truly understand it, because that makes the best client for all of us. And so this guy read the book like six times. And then he said, You know what? I don't understand, like why more people aren't utilizing this as a tool, the the index annuity and explain to them, Well, a lot of people are I mean, billions and billions of this stuff is being sold every day to folks, but it still has to be in the right context of your plan and be appropriate and you can't overweight and things like that. So, you know, I'm not saying that everybody needs to buy an index annuity.

Erick Arnett:
I'm not saying that at all, but it makes sense to research it, educate yourself. It's a great book, and I think everybody should know and understand what the difference is between all the different annuities that are out there because it's very confusing. You know, the investment industry as a whole is very confusing. I mean, you have people out there, financial advisors, insurance salesman, brokers, they don't even understand how their annuity works. So, you know, but I think it's a great book, easy to get. Please reach out to us because I'd love for you to get this book and then let's chat and talk about it. So going back to, you know, we've been talking about this for a long time, probably over a year and a half now, utilizing the index annuity as a bond alternative to save your money, to make it safe and to hedge against the stock market and the bond market. So just a great book, great tool, and I think people are really enjoy it. So yeah, let's play an audio of that of that book where he talks about, you know, how you can utilize the index annuity as a great bond alternative. And I think it's still truly, really, really important at this time.

Producer Sam Davis:
Yeah, we'll play that here. In a moment, you can get your copy of Annuity 360 by reaching out to Eric. Give them a call at (352) 616-0511. That's (352) 616-0511. Or just go online to take point on retirement, take point on retirement and you can book your consultation while you're there as well. They offer a free financial plan to your ninety fifth birthday, a 401K report, a Social Security review, and more. And let's go ahead and play that chapter audiobook of Annuity 360. It is about bond replacement using fixed indexed annuities.

Ford Stokes:
Chapter 15 Bond. Placement with fixed indexed annuities. Big idea Historically, bonds have seen volatility when the market is volatile. Fixed indexed annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial adviser talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. Am I firm Active Wealth management? We believe this is a smart way to protect your future. Many people have learned that bonds are a safe way to invest your money, but there are some downsides to bonds that should make you think twice. We'll talk about some reasons why you should consider replacing your bonds with annuities. First, here's some information on the history of bonds in the United States historical bond volatility. The nineteen hundred saw two secular bear and bull markets in U.S. fixed income. Inflation peaked at the end of World War one and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The U.S. government kept bond yields artificially low until nineteen fifty one. The long term bond yields were at one point nine percent in nineteen fifty one. They climbed to nearly 15 percent in nineteen eighty one. In the nineteen seventies, globalization had a huge impact on bond markets. New asset classes such as inflation protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created.

Ford Stokes:
Early investors in these new asset classes were compensated for taking on the challenge. The bond market was coming off its greatest bull market, coming into the twenty first century. Long term bond yields declined from a high of 15 percent to seven percent by the end of the century. The bull market in bonds showed continued strength in the early twenty first century, but there is no guarantee with our current market volatility that this will hold. See Chart fifteen point one to see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this Why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history of loan, you can see how uncertain the future of bonds is. Inflation and fluctuating interest rates play a big role in bond yields. Interest rate risk of bonds, bonds and interest rates have an inverse relationship when interest rates fall. Bond prices rise due to the COVID 19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option. However, this has caused bond yields to fall to all time lows as of May twenty four point twenty twenty. The 10 year Treasury note was yielding zero point six four percent, and the 30 year Treasury bond was at one point twenty seven percent.

Ford Stokes:
Reinvestment risk of bonds This is the likelihood that an investment's cash flows will earn less in a new security. For example, an investor buys a ten year, one hundred thousand Treasury note with an interest rate of six percent. They expect it to earn $6000 a year at the end of the term. Interest rates are four percent. If the investor buys another 10 year note, they will earn four thousand instead of six thousand annually. Consider the possibility that interest rates change over time when deciding to invest in bonds. Systematic market risk This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpredictable and it is impossible to avoid. Diversification cannot fix this issue, but the correct asset allocation strategy can make a big difference. Unsystematic market risk This type of risk is unique to a specific company or industry, similar to systematic market risk. It is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes coming to the industry. However, there is no way they can know how those changes will affect the market. There are two factors that contribute to company specific risk business risk.

Ford Stokes:
There are two types of risk internal and external internal refers to operational efficiency and external would be similar to the FDA banning a specific drug that the company sells. Financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading reduced advisory fees. Investors who trade individual stocks may know how much commission they are paying their broker, but individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds they sell called markups, but they bundle them into the price that is quoted to the investors. This means you are unaware of how much commission you were actually paying. Standard & Poor's estimates of bond markups is zero point eight, five percent of the value for corporate bonds and one point twenty one percent for municipal bonds. However, markups can be as high as five percent, up to 50 dollars per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time. Unlike an annuity, which provides income for life, you must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss. As we discussed above, annuities will provide you with an income you can never outlive.

Producer Sam Davis:
So that was a chapter from Annuity three 60. The audio book and the audio book is available where audio books are sold, but you can get your free copy of Annuity 360 just by reaching out to Eric and the team at Tech Point Wealth Management. Just go to take point on retirement. Eric, I wanted to wrap up things with annuities and getting bonds out of people's portfolio as it becomes a less and less positive investment option for folks. You know your final thoughts on on fixed indexed annuities and annuities in general?

Erick Arnett:
Yeah. So you know, like like the book will reveal, is there's so many different types of annuities out there. That's why it's really important, I think, to work with an independent fiduciary as an independent fiduciary. We don't work for a specific company. We don't push a certain company or a product. We go out there and truly scan the entire marketplace for the very best product and solution for our clients, depending on what it is that they truly need. And so there's so many of them out there. That's why you need an independent, objective professional that's been doing this for 20 for some odd years to make sure we carve out the right one for you because there's so many different ones out there and you've got to be very careful. A lot of some of them are more set up to increase the profits of the insurance company than they are for the client, but also a great tool. There are some that are stronger than others to create income now or even in the future to create that. I think you mentioned it earlier that guaranteed pension. So I was working with a couple the other day listeners on the show and and they really liked the fact that they were still 15 years away from retirement, but that they could utilize this as a tool to create another guaranteed pension for them in the future.

Erick Arnett:
And we can literally just about show them exactly what they can expect 10 years from now, 15 15 years now and a guaranteed paycheck. So they like the fact that that guaranteed paycheck was going to supplement their Social Security, their pensions and create the guaranteed income that they need for their lifestyle in retirement. And so they they weren't concerned about tying their money up for a long period of time because they weren't going to be retiring for a while anyways so they can create income. And it's really hard to find income today in the markets, you know. And when I say markets, I mean, the stock markets, the bond markets, you know, it's difficult to find yield in these low interest rates environments. And so these insurance companies are very competitive in a great way to potentially get some good rates and lock in some income for now or the future. So there's a couple of different strategies there. If you're if we're if we're having to fill that income gap and we're looking for income, that's one strategy and there might be one indexed annuity out there that's better than another. If we're just looking for safe growth, safe accumulation, which is a great alternative to bonds and cash, you know, then we then you're going to be looking for something that has a high participation rate, low fees, for instance.

Erick Arnett:
Right now there's I kind of like the idea like the Nasdaq is in correction, know the S&P is in correction where they're down more than 10 percent. So even if you go into one of these index annuities, you're buying that index, you know where it's kind of at a low right now, it's getting beaten up and you want to be able to buy things low, right? This offers great opportunity. You know, for folks that maybe even been sit on the sidelines and worried about the market was going too high, too fast. Well, this correction has offered a great opportunity to get in and to capitalize on some potential future appreciation long term for your for your portfolio, for your retirement. So those are the kind of, I think the major kind of differences in dynamics are those. But please be very, very careful. And what we do is we sit down with you and we'll look at all the different ones that are out there and which one applies best to you. And then we'll run scenarios and illustrations and we'll show you several of them. So a lot of guys or people will just come in and try to sell you an annuity or a stock or a mutual fund or whatever, they're just going to show you.

Erick Arnett:
One thing we're going to show. Tell you how we're going to give you multiple choices and show you how they all kind of react differently and create different tools or bells and whistles that could provide for your situation and everybody's different. So it's really important to evaluate those, and we'll put three or four of them in front of you. Walk you through and educate you on the differences of them. And then ultimately you can decide what's the best one for you. So. But you know, it's going to be difficult to get that income in that yield from that traditional portfolio. So if you just like we talked about it, if you just had that traditional portfolio, sam of stocks and bonds and you're having to draw income off of that this year. Think about it. Your stocks are down. Your bonds are down. You have fees on top of all that and now you have to pull income out of the account. You know, you could be looking at some considerable downside and a difficult hole to dig out of. So those are the things that we want to really eliminate. Ok. And so it's really, really important to take a look at that stuff.

Producer Sam Davis:
Yeah. And if if your strategy is the the one big nest egg strategy that we absolutely do not recommend, it's one of the most common mistakes we see people make and you find yourself in this situation right now. I mean that one big nest egg is not as big as you think, but when you have a have a plan in place, you can really preserve your assets because no matter how much money you have, the money that you do have is important for you and you want to work hard to make sure that you can protect and grow it. So we've got about five minutes left in the show, Eric. So I want to make sure people know what to expect when they book an appointment by going to take point on retirement. Let's take point on retirement, and it all starts with that initial 15 minute chat and you say you like to determine people's financial speed.

Erick Arnett:
I wrote a book about that, and if anybody wants to get a copy of it, it's real simple, easy read just reach out to me. But everybody has a different financial speed, and that's what's important for us to really hone in and find and and really what that means is, you know, what type of risk are you taking in? What type of return is that yielding for the return that you're getting over time? And then how much income am I going to need in the future or even now to supplement my income to and through an important word is through retirement? Unfortunately, I guess it's just a condition, a human condition or the American condition where it is very short sighted. And we think about today and maybe tomorrow a little bit. And unfortunately, we dwell away too much on the past, but we really need to be looking forward five, 10, 15, 20, 30 years and have a plan for that long period of time. And we'll show you how you can with some confidence and some clarity. Most importantly, not run out of money and have enough income to retire on and live comfortably and factor in inflation and everything else. And Social Security and when to take, you know, when do we take Social Security? That's a huge question. Like, do I take it now later? Do I take the spousal benefit? You know, what are my sources of income? Which buckets do I take from? So, so many things go into that retirement plan as opposed to just this. Hey, I got this mutual funds and I got a basket of him, and I'm just going to draw for that in the future. And hopefully everything's OK. That's just that's just not not not a good plan.

Producer Sam Davis:
Yeah, and kind of getting into a little bit more of what you're provided with, you know, it's a 401K review, a Social Security maximization report, that income gap analysis because remember, retirement is much more about income than it is about having that big nest egg. And the smart financial plan to your ninety fifth birthday. So Eric, can you touch on each one of those just a little bit to let people know the importance of getting all of those things checked on?

Erick Arnett:
Yeah. So everybody's kind of got a different situation. I mean, some people are currently in a 401k. Some have IRAs. Some already have annuities, you know, so it's just a good time, particularly this year in twenty twenty two with what's going on to kind of reevaluate and review everything. But, you know, we can provide that for one K review, which is going to kind of pull out, like I said before, it's an x ray into it. So how are you allocated? Where are your risks? What kind of expenses are you paying? And if what you're currently doing, is it going to hold up and is it going to provide for what you need in retirement? So let's test that. Maybe it will. Maybe it won't. We put together what we call the Social Security maximization report for you, whether you're single or a couple. There's a lot of different strategies and and you don't want it. We see a lot of mistakes made with people taking Social Security at the wrong time, as opposed to maybe drawing off their portfolios first and continuing to defer their Social Security, you know, so there's a lot of things and things to look at there and what's the most important strategy in Social Security and then the most important. What we've been talking about and hammering on is the retirement income gap analysis. Do you have a gap in income needs? And so we've got to put a plan together first and foremost to fill that, forget about growth in the markets and everything else.

Erick Arnett:
Let's let's make sure you got the income that you're going to need in retirement first and foremost, and that is guaranteed and that you don't have to worry about the bumps and and and the economy and the bumps in the market and geopolitical events that you know, your income is going to be solid. And that's smart. Financial planning is going to go all the way up to ninety fifth birthday. So it's really important to have that longevity and that long term outlook. And you know, I I tell people when you call in or we get together and we talk. My first question is what does retirement look like to you? And people just kind of sit there and look at each other and like, not really sure. I mean, that's important to know. You know, what are you doing in retirement? Because that's going to give us kind of a cost evaluation, right, to see what it's going to cost. And so that's the most important part. And so all of those things working together. How is my portfolio need to be positioned to get me to my goals? That's your financial speed. And some people, some people need only three percent on their portfolio. Some people need more, like six to eight percent on their portfolios. Some people need guaranteed income.

Erick Arnett:
Some people don't. Some people already have pensions and they're covered. I have people all the time. They have Social Security, pensions, VA pension, and they're covering their incomes. Fine. That's OK. Then we've got to do something different with your other assets and make them strategically tax sensitive, fee sensitive and optimize them for risk. So that's your financial speed. So I have to find everybody's speed, and that's how I get you to and through retirement. So the smart plan, the take point on retirement, smart plan for all our retirement warriors out there is really about having multiple components. One is the smart, safe component where a portion of your plan and your assets is protected and guaranteed. Then we have the smart risk portion, which is the growth portion of your portfolio. And yes, you still going to have a portion in there at risk and growing for future inflation and liquidity, and we can go into all that. But it's also smart health. Are we planning for health care expenses, Medicare, et cetera? You know, how is your income impacting Medicare and Social Security and your health insurance so we can work on all that and then smart tax. We are also a tax office, so kicking the over know the overspending, the government and the IRS out of your retirement. We want to kick them out completely. So don't have to worry about that. So the strategies we can put in place to save taxes now and in the future with all kinds of different strategies and tools.

Erick Arnett:
So Roth conversions utilizing whole life insurance, just a couple of things that come to mind. But how do we how do we get you into a tax free situation in the future? You know, that might be a potential possibility, but most important is that smart income portion have a plan for your monthly and annual expenses in retirement and make sure that's first and foremost shored up and solid so you don't have to worry about income and paying the bill. So the Smart Plan is a smart, safe, smart risk, smart health, smart tax and smart income, and we bring all those components together. And trust me, when all those are together and they're working properly, no matter what happens. You know what? What kind of geopolitical event goes on? You have a solid plan that will weather all storms and you stick to it and you're going to be able to sleep at night and you're not going to worry so much. And that's what I want my listeners to focus on is getting out of that fear mode and that worry mode and truly looking and being excited and happy about retirement and being able to enjoy that retirement and doing the things that you want to do and having fun and let us worry about all the other stuff.

Producer Sam Davis:
If you do one thing today, take that first step towards financial freedom and book an appointment at take point on retirement. That brings us to the end of the show. Eric, we'll be back same time. Same place next week.

Erick Arnett:
It's been great being with you and look forward to all those retirement warriors out there giving us a chat.

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 or pick up the phone and call (352) 616-0511. That's (352) 616-0511. Investment Advisory Services offered the Brookstone Capital Management LLC. Bcm, a registered investment advisor, BCM and Take Joint Wealth Management are independent of each other. Insurance products and services are not offered through VCM, 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 Sam Davis:
A purchaser should evaluate and understand all of the risks and costs of an investment in structured notes Essenes prior to making any investment decision a purchase of an Assen entails other risks not associated with an investment in conventional bank deposits. A purchaser may not have a right to withdraw his or her investment prior to maturity or could incur substantial penalties for an early withdrawal if permitted. A purchaser should carefully read the disclosure statement and any other disclosure statements for a S.N. before investing. An investment, in essence, is not FDIC insured and is subject to credit risk. The actual or perceived credit worthiness of the no issuer may affect the market value of. Essence will not be listed on any securities exchange. Even if there is a secondary market, it may not provide enough liquidity to allow purchasers to trade or sell Essenes. As a holder of SNS, purchasers will not have voting rights or rights to receive cash, dividends or other distributions or other rights in the underlying assets or components of the underlying assets. Certain built-in costs are likely to adversely affect the value of Essenes prior to maturity. The price, if any, at which the notes can be purchased in secondary market transactions, if at all, will likely be lower than the original issue price and any sale prior to the maturity date could result in a substantial loss. Essenes are not designed to be short term trading instruments. Purchasers should be willing to hold any notes to maturity. The tax consequences of SNS may be uncertain. Purchasers should consult their tax advisor regarding the U.S. federal income tax consequences of an investment. In essence, if a S.N. is callable at the option of the issuer, in the essence is called, the holder will receive only the applicable redemption amount and will not receive any coupon payments that would have been payable for the remainder of the term of the S.N..

Producer Sam Davis:
As sins are not, FDIC insured may lose principal value and are not bank guaranteed. This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. All data believed to be reliable but not guaranteed or responsible for reliance on this data. Past performance is not indicative of future results, which may vary the value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed and a loss of principal may occur. Brookstone does not provide accounting, tax or legal advice. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively. And investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client's investment portfolio. Historical performance results for market indices generally do not reflect the deduction of transaction and or custodial charges or the deduction of an investment management fee. The occurrence of which would have the effect of decreasing historical performance results, economic factors, market conditions and investment strategies will affect the performance of any portfolio, and there are no assurances that it will match or outperform any particular benchmark. The investment strategy and types of securities held by the comparison indices may be substantially different from the investment strategy and the types of securities held by the strategy, not FDIC insured may lose principal value. No bank guarantee

Producer:
At take point wealth management. We know you've worked hard to earn your money and you've worked even harder to save it when it comes to wealth management and planning for retirement trust. Eric Arnett and his team of experts who have been helping individuals, families and business owners find financial freedom for more than 20 years. Let us help you protect and grow what you've worked so hard for. Schedule your free no obligation consultation now at Take Point Wealth.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including advanced search, world-class support, transcribe multiple languages, automated transcription, and easily transcribe your Zoom meetings. Try Sonix for free today.