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50 Shades of Green

50 Shades of Green

Originally aired 3/7/2021

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Straight talk is like a four-leaf clover – hard to find and lucky to have! Luckily, you don’t have to look any further than the Get Ready For The Future Show! 

You’ll learn:
– 4 retirement tips that will leave you in the green
– How to make your own luck while planning for retirement

Downloadable Content: 

What’s the Plan? – A Manifesto for Your Life, Your Worth, and What Happens Next

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SHOW NOTES

Don’t Chase the End of the Rainbow

  • Straight talk is like a four-leaf clover – hard to find and lucky to have! Luckily, you don’t have to look any further. We’ve got straight talk for the next hour on the Get Ready For The Future Show!
  • It’s St. Patrick’s Day, and on this episode of the Get Ready For The Future Show: retirement planning tips that will leave you in the green!
  • #1: Don’t chase the end of the rainbow
    • When people go on a hunt for the end of the rainbow, more often than not they can’t even find it. And if they do, there’s no pot of gold waiting for them.
    • Chasing high rates of return and hot stocks is pretty similar.
      • If you enjoy the thrill, make sure your necessities and some cushion are covered first, then use some of the extra to have some fun.
    • There were a lot of people that got roped into the hype and bought Game Stop at the beginning of the year.
      • We’re not at all passing judgement or making any kind of recommendation.
      • But, most of the people who bought the stock after it gained publicity made little to no money off of it.
        • By the time the average joe hears about something, they’ve likely already missed the big growth they think they’ll get.
      • The fact of the matter is – you don’t buy financial independence, you invest in it.
        • Purchasing a bible doesn’t make you faithful; it’s the commitment to and practice of that faith that counts. 
        • In the same way, you don’t create security by buying a financial product or hoping you time the market just right, but by putting a plan in place that’s aligned with your vision, value, and goals—and adhering faithfully to it.
      • So, what’s the plan?
        • Feeling secure about your future starts with how you see your future. Reshape your idea of planning with What’s the Plan: a manifesto for your life, your worth, and what happens next. Click here to get your free copy.

Leave the Legends Behind

  • #2: Leave the legends behind
    • The St. Patrick’s Day we celebrate today is largely based on legends.
      • Some myths that have been debunked
        • Patrick was Irish
        • He banished snakes from the Emerald Isle
        • Green has historically been associated with St Patrick’s Day
  • Just like some legends have been proven wrong for St. Patrick’s Day, it’s time to leave these “legends” behind.
    • Sell in May and go away
    • The concept for this old investor adage is that returns in the stock market will likely be worse from May through October than they are from November through April. So, it would make sense to reduce or even eliminate your exposure to equities during the summer months.
  • Historical data is… historical
    • From 1950 to around 2013, the Dow Jones Industrial Average has had an average return of only 0.3% during the May to October period, compared with an average gain of 7.5% during the November to April period.
    • More recent data shows that may not be the case anymore.
    • You don’t drive your car just looking in the rear-view mirror (or if you do, you shouldn’t). You have to look ahead to know where you’re going.
  • Missing any time in the market could reduce your returns.
    • There is significant data that shows trying to time the market isn’t a good idea.
    • For a $10,000 investment in the S&P 500 Index from December 31, 1979 through March 31, 2020:
      • If you were invested every day of that period, your investment would have grown to $697,421
      • But, miss just the 5 best days of the market over that same period and your investment would’ve reached $432,411
      • Miss the 10 best days and the investment shrinks to $313,377.
      • Miss the best 30 days, it’s $115,481.
      • And miss the best 50 days over nearly 40 years and you’d wind up with $48,434.
      • It’s important to note that the S&P 500 is an index that cannot be directly invested in, and this is for illustrative purposes only.
    • So, if you’re thinking of “Selling in May” and getting back in by November, ask yourself how sure are you that you won’t miss even the best 5 days of the 2021 market? And how much would that cost you over time?

Protect Your Pot of Gold

  • #3: Protect your pot of gold
    • There are multiple ways you should consider protecting your “pot of gold” as you work toward or step into retirement.
  • Life Insurance
    • This conversation may not be fun, but it’s one of the most important ones you can have: What happens to your family if you don’t come home?
    • Can they function without your income? For a lot of families, the answer to this is no. That’s why life insurance is so important.
    • Secure Act in 2019 changed the way your ‘pot of gold’ gets transferred to your kids.
      • You have to take the full amount out of the inherited IRA and be taxed on it within 10 years.
        • Puts recipients in another tax bracket
      • If you’re concerned about leaving a legacy, spend your IRA and get life insurance to make sense for your kids’ taxes.
  • Long Term Care
    • Healthcare costs could tank your retirement plan if you aren’t prepared.
    • A healthy 65-year-old couple retiring last year (in 2020) are projected to be $387,644 in today’s dollars ($572,960 in future dollars) in healthcare costs.
      • This includes premiums for Medicare Parts B and D, supplemental insurance (Medigap), and dental insurance, as well as out-of-pocket costs related to hospitalization, doctor visits, tests, prescription drugs, hearing services, hearing aids, vision, and dental.
        • SOURCE: HealthView Services
    • Long Term Care Insurance
      • The point of LTC is to cover your chronic healthcare expenses without having to spend the money your family is living on.
      • In thinking about how much money you need when you retire, you should go ahead and include the premiums for a long-term care policy.
      • According to DHHS, half of Americans turning 65 today will develop a condition severe enough to require LTC – that means it’s highly likely that at least one person of a couple will need this coverage.
  • Address Risk
    • Dollar-cost averaging as you accumulate
      • Cow Story
        • More aggressive as you start
        • For dollar cost averaging to work, you need risk
        • Less aggressive and more diversified the closer you get to retirement
    • Bucketing strategy as you decumulate

Make Your Own Luck

  • #4: Make your own luck
    • In the 1997 best picture film, Titanic, Rose’s fiancé Caledon Hockley said, “a real man makes his own luck.”
  • For your retirement, we believe the best way to make your own luck is to strategically prepare for the long road ahead.
    • No one else is going to make your financial independence a priority. You have to do it for yourself.
  • The GenWealth Ready to Retire Process
    • The outcome is income
      • What are your needs and desires during retirement?
      • That’s the first thing we’ll discuss through the Ready to Retire Process. Yours will be different than the next person to walk through our door, so your plan should be different.
        • Gap Analysis
    • Accumulation and decumulation – more than just investments
      • Traditionally, financial advisors have been focused only on investment management.
        • When a client reaches retirement, they can be largely on their own figuring out how to take their managed investments and turn it into an income stream.
        • How do you decide what investments to sell, how much, and when?
      • There are no perfect investment products. Planning doesn’t assure success, but it provides a framework for investments, strategy, and protection.
        • The whole point of a plan is to give you options. Flexibility. We’d say hope, but fact is, you don’t need hope when you have a plan.
      • As we talked about a little earlier in the show, we’ve got a process to address risk as you accumulate and decumulate.
    • On paper on purpose
      • We often really can’t make guarantees in our industry. But there is one we can make: through the Ready to Retire Process you get a personalized financial plan on paper, on purpose.

FINAL THOUGHTS

    • Just because it’s St. Patrick’s Day doesn’t mean you should rely on luck to get you through retirement.
      • Don’t chase the end of the rainbow
      • Leave legends behind
      • Protect your pot of gold
      • Make your own luck
  •  
    • Feeling secure about your future starts with how you see your future.
      • We’ve got 10 ways to shift your perspective about planning in our free download What’s the Plan: a manifesto for your life, your worth, and what happens next.
      • Get your free copy here.