Episode Transcript
[00:00:00] Speaker A: 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.
[00:00:27] Speaker B: Welcome to Retirement your Way with Amerilife of Central Florida, the show that puts you in control of your financial future. Your hosts, Bradley and Madison Hardin, are a trusted husband and wife team dedicated to helping you design a retirement that fits your lifestyle, your goals, and your vision for the years ahead. From smart income strategies and Social Security planning to protecting your wealth and living life on your own terms, this is the place where financial clarity meets coastal confidence.
Whether you're just entering the retirement red zone or already enjoying your golden years, Bradley and Madison are here to guide you every step of the way. This is retirement your way. Let's build the future you deserve.
[00:01:11] Speaker A: Hello there and welcome to another edition of Retirement your Way with the Marilife of Central Florida. Matt McClure here with you, just really the guy who kind of is pushing buttons and making sounds happen and all that stuff. Because the real stars of the show, the ones who bring the heat every time, and by heat, I mean knowledge, money knowledge. They are Bradley and Madison Hardin with Amerilife of Central Florida. Hello you two once again.
[00:01:36] Speaker C: Hey Matt.
[00:01:38] Speaker D: Hey Matt. How are you doing today?
[00:01:39] Speaker A: I am doing very, very well, thank you. I appreciate it. And I'm looking forward to spending this next half hour with you talking about volatility proof retirement. And boy, that's something that we have seen a lot of this year and really over the past several years, you know, we'll have of quiet in the markets and then all of a sudden things go crazy and then it will calm down and then we'll have volatility again.
And so that's just kind of how the markets have been going as opposed to say, I don't know, the previous 10 years where things were nice and calm and steady for, for several years there.
So yeah, I mean a lot of people are, you know, thinking about this and so we're going to spend this next half hour really talking about it. One of the things too that I wanted to say for the listeners, thank you so much for joining the show whether you are listening on the radio in Florida or whether you are listening to the podcast. And yeah, you can actually find the show as a podcast wherever you subscribe to podcasts. Thank you so much for spending your time with us. You can also give a call to Bradley and Madison. If anything we talk about on the show today really piques your interest, give him a call, 386-977-9684. Or you can go to the website. It is plan retirement your way dot com. That's Plan retirement your way dot com.
All right. And so now let's get a little preview of what is coming up here on the show. And you know, we're going to talk about market volatility. As I said, it hits harder near your retirement years and we're going to talk about how to prepare for it. We'll get to some sequence of returns, risk. What is it? Why does it matter?
Emotional investing, boy, you got to avoid that. And that's going to be a big part of the discussion today. And then we'll get to maybe some of the common mistakes that retirees make in, in unstable markets. First, though, let's get some inspiration for our conversation, shall we? We'll do that with our quote of the week.
[00:03:36] Speaker B: And now for some financial wisdom. It's time for the quote of the week.
[00:03:43] Speaker A: And this week's quote comes from the oracle of Omaha himself, Mr. Warren Buffett.
And Warren Buffett said this, the true investor welcomes volatility. A wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses. I think that's, you know, Warren Buffett, when you think about somebody who knows what in the world they're talking about as far as investments go, there's your guy.
[00:04:11] Speaker D: Right. No, I agree. And, and one of the things with the volatility with the clients that we sit down with and help is they don't know how to manage it and they get emotional. So as a true investor, you know, he, he knows what to do, when to buy it. If we all had that magic sauce, we, you know, Warren Buffett wouldn't be so special. We could all be little mini Warren Buffett. But again, one of the things that our clients like that we help them with is navigating that volatility, how to feel safe and secure through those market ups and downs.
[00:04:43] Speaker A: Yeah. And it's, you know, that peace of mind, especially during volatile times in the market. Boy, that's so and I mean, let's, let's get into it here because, you know, market volatility really does, as I was saying a minute ago, hit harder near retirement.
And it's, you know, this is something that happens. Right. But it's once you do get closer to your retirement date, it feels like every dip could be, you know, you're sort of watching it, you're getting more ulcers and more gray hairs because you're just like, oh my gosh, what's going to happen? Right.
[00:05:16] Speaker C: Definitely in, in your 30s and 40s, you have that time to recover, so to speak, to ride the wave.
Whereas when you're nearing the, you know, five o' clock somewhere in retirement, in your 60s and 70s, you don't necessarily have five or 10 years to recover from a huge loss in the, in your portfolio.
[00:05:38] Speaker D: Yeah, right. A lot of times, you know, you've been saving your whole life, you know, whole working life to get to this point and then you take a 10 or 20% loss.
Sometimes I could mean working for another two or three or four more years, not only to make it back, but then to add contributions back to that plan. And I've even seen one scenario where for example, a client over that year put in $10,000 of her own money from payroll to Dutchess, and then in a matter of two or three days, her portfolio went down $10,000.
So then it's like, you think about that. In a matter of two or three days it wiped out 300, you know, 360 tire days of contribution. So we try to help manage going from saving to spending and how to navigate, you know, retirement during that volatility.
[00:06:30] Speaker A: Yeah, and, and that's, boy, that's gotta be so stressful.
Just, you know, looking at your close to retirement and then that entire year is just wiped out. It's, it's crazy. The kind of, the truth of the matter is volatility though is, is not necessarily something to, as Warren Buffett alluded to, it's not necessarily something to be afraid of. Right. I mean, it's kind of one of the normal parts of the cycle when we're talking about the markets.
But really I think that the important thing is how you respond to it.
[00:07:03] Speaker C: Right, Definitely. And I, I think too it's just about the way that you're set up in your own specific scenario. And again, your age, you know, we try to use our clients age as a good parameter of exactly how much of their portfolio should be subject to risk entirely. So therefore how much you really feel that impact is going to, you know, change depending on your age.
[00:07:33] Speaker D: And one of the phrases we like to say is you want to protect what you cannot afford to lose.
So you know, if, if you get to that point and I can't afford to lose this 70 or 80% of the portfolio, then maybe it's time to look at some safe, some Safe options.
[00:07:50] Speaker A: Yeah. And that's so important. People will say, you know, yeah, I'm, I need that safety. I need some guarantees in my life. But I think people are especially, you know, there are a lot of, you know, financial folks who are just scared to death of using that word guarantee.
But and for good reason, because if you're talking about in the market like there are, there are no guarantees there because you're, that, that's all at risk. You're taking that risk. Right. But there are ways to get safety inside your portfolio so that you can weather whatever storm comes. And I feel like that's an important thing to let people know is, you know, you don't have to be all at risk.
[00:08:30] Speaker D: Right, No, I agree. And, and having that balance between safety and risk and knowing that, okay, well, I know tomorrow I'm not going to lose that amount. You can afford to maybe be a little bit more risky on the rest of the portfolio. Whereas, you know, we've met with people who go, yeah, no, I'm conservative. And then we do a review of their portfolio and they're wide open. Dale Earnhardt in the red, you know, run into the checkered flag. So, you know, maybe not, maybe we need to be the pace car. We don't necessarily need to be wide open. I know, you know, the listeners here in Volusia county will understand what I mean because we have the speed rain nearby. So again, there's my NASCAR reference for those local folks.
[00:09:16] Speaker C: It can be hard to know, you know, what's a good balance between that risk and that safety. And so something that we mention a lot in our day to day appointments is that rule of 100 which simply just states we take your age, subtract that from 100 and whatever number is left would be the recommended amount of your portfolio that should be subject to that risk. Whereas the, you know, your age should directly correlate to how much is safe. And then that way as you get older, you kind of lower that amount of risk that you're taking to kind of like Bradley said, you know, keep it, keep it in the garage, keep it, keep it safe and guaranteed.
[00:09:58] Speaker A: Yeah, and that's a good way, I feel like, to, to just sort of proactively protect yourself from being emotional and doing, you know, the emotionally invest thing. Because when your emotions get involved, you make bad, rash decisions and all of that. And if you're properly allocated as far as your, your risk tolerance goes and, and your age and all of that stuff, then it makes it less likely that that volatility is going to have less of, of an impact.
And so, you know, I mean, I guess the, what was it? The World War II poster from the, from the UK? Keep calm and carry on. I feel like that is a good thing in volatile times for, for everybody to know. And also, you know, I mean, really and truly, there are three sort of market volatility facts that we've got here to share that really I think are a bit eye opening. One is The S&P 500 actually averages three to five corrections every year. And so that's, you know, when the market corrects, it's about 5 to 10% of a dip and then the recovery will come after that. And so volatility isn't rare.
It's actually fairly rout.
More than 70% of years since 1980 have had a market drop of 10% or more, but still ended in the positive. So you see that growth over time. Yeah, we may have a big dip. We may take a big hit one day or one week or one month, but then things are going to recover eventually. That's what history has shown us anyway. And then volatility often spikes right before or after big news headlines.
But when the, the headlines, you know, change and people move on from that, especially these days, that tends to happen more, more often than not because the headlines are always changing very, very fast. With our, you know, always online lives, you know, things will settle pretty fast. So don't have those knee jerk reactions. I think that's really just the lesson there, right. Is it's just to make sure that you do just kind of keep calm and carry on.
[00:12:02] Speaker D: Right. I agree. And like Madison said, it's about setting up the portfolio in a way where you know that, that volatility, like you said, is routine and it will happen and you're able to weather that storm with confidence. You know, being able to go to sleep at night and waking up the next morning, even if the markets are down, knowing that. Well, I got, with my advisor, we set up things. Okay, I understand maybe a portion of the assets are on the market. So I may have a little volatility there, but then the rest of those assets are safe. Doesn't matter what the market does today or tomorrow because we try to set stuff up for the long term. So we're looking at it every year. You know, it's tracking every year, every two years and you're, and you're gaining that, those returns. But in that short term, as long as you know that you and your advisor came up with a good plan it should be easy to sleep at night.
[00:12:53] Speaker A: Yeah. Came up with that plan with the long term in your sights and not, not just, you know, on the short term, as you were saying there. And look, folks, if the market has had you kind of nervous about retirement, and you get more nervous the closer you get to it, now is the time to act. And I want you to go to the website. It's plan retirement your way dot com. That's plan retirement your way dot com.
You can also give Bradley and Madison a call at Amerilife of Central Florida. It's 3869-7796-8438-6977-9684 is the number you can get a personalized plan just for you.
And don't wait, you know, don't wait until the next downturn. If you, if you wait to fix the roof until you know it's raining, then you're going to have a mess on your hands. Right. So the time to fix the roof as well. The sun is shining, to paraphrase an old quote.
All right, so this is, of course, retirement your way with the mirror life of central Florida. Thanks so much for being a part of the show. As we talk about volatility here and the next point that we want to kind of make, and this is one of the things that I always say sounds, kind of sounds kind of wonky, a little bit like one of those things that, oh, well, you know, you have to have a degree in finance to be able to understand this or whatever is sequence of returns, risk. And you know, it does kind of sound, I mean, maybe we should just come up with a new name for it or something. But it, it just sounds kind of wonky. Right. But it's important to understand and talk about why it matters because, you know, the market might kind of average out over time, but timing is really important, especially in those early days and years of retirement. Right.
[00:14:36] Speaker D: Yeah. Because the sequence of return says that, you know, timing your withdrawals is important because if you're withdrawing funds and the market goes down, you then have less capital to make up the downturn. So then trying to time out and, you know, it's, there's no magic recipe, but having an income plan and knowing that, okay, well, maybe I'm going to pull income from some of these safe investments I have or these safe alternatives and letting those more risky investments kind of go up and down and not withdrawing from those. And that's just an example. Right. So the idea is with the proper planning and getting with you, with us, as the advisor, we can help plan out those periodic distributions to help overcome that sequence of returned risk.
[00:15:29] Speaker A: Yeah, the sequence of your returns really does matter there. And that's why it's called, you know, sequence of returns, because, you know, if you got those early losses and you add in early withdrawals, you are just dipping yourself a hole instead of being where you want to be, you know, getting growth in the money that's still left in the market while, you know, making withdrawals from that.
And then, you know, we've got, and, and here, Madison, I know we have a couple of examples, actually an example of two different retirees here, I think, Linda and Steve.
Once again, the names have been changed to protect the innocent. But let's look at Linda and Steve here and kind of compare their two retirement experiences. And they both are retiring sort of around a very volatile time in, in US history here.
[00:16:22] Speaker C: Yeah. So Linda retires in 2008 and she begins withdrawing 40,000 annually.
Her portfolio drops 20% in year one, shrinking her base for her future growth.
Steve retires in 2010 after markets have recovered. He earns stronger early returns and sees his portfolio last six to eight years longer than Linda's, even though they had identical investments.
So, I mean, that right there is a perfect example of what we just talked about in that timing is really everything.
[00:17:00] Speaker A: It really is. And you don't want to try and take it upon yourself to time the market. Right. You don't want to try and guess, obviously, buy low, sell high, that it sounds easy, but it's, it's. Markets are unpredictable and so it can be very difficult. A lot of times maybe you can get one of those right, like, you know, the buy low part or the sell high part, but not both. That's, that just makes it really, really difficult to do so. That's not what we're talking about. What we're talking about is, you know, just making sure that you have a, a plan in place that is going to account for no matter what is going to happen in the market.
So that when you do want to retire, your portfolio is protected as much as possible and that, you know, you're, you're not going to be in a situation like Linda, who, you know, just retires right at the beginning of the financial crisis and is dire straits because she was invested completely in the market. You want to have some, some, you know, diversity in, in your investment portfolio.
[00:18:04] Speaker D: Right. And you want to make sure that when, when we meet, that our goal is to try to build a plan to protect those early years.
So that could mean cash reserves, guaranteed income withdrawal strategy designed to weather those short term hits.
And again, with the right structure, you don't have to guess, you can feel prepared.
[00:18:24] Speaker A: So folks, you know, if you are curious about, you know, how your retirement plan would hold up in a rough first five years, let's, you know, get, get with the folks at Amerilife of Central Florida, get with the Bradley and Madison here. They can run the numbers for you all you can, all you have to do, rather visit the website, it's Plan retirement your way dot com.
Plan retirement your way dot com. Or you can give them a call at 386-977-9684. That number once again, 386-977-9684. So we mentioned briefly there, you know, emotional investing and kind of gut reactions hurting your returns. And you know, it's easy to kind of say, don't let emotions guide your financial decisions. Right. But you know, I mean, when the market is making these wild swings, that can kind of be easier said than done.
[00:19:19] Speaker D: Right, right. No, I agree. And you know, a lot of people act on emotion rather than logic no matter how long you've been investing. And one of the big things is panic selling, you're actually locking in your loss.
So if, if you panic sell and you get out when the markets, you know, take a slight turn, then you've now given up the opportunity for that to come back. So you've kind of locked in your loss.
[00:19:47] Speaker A: On the other side of that, I feel like overconfidence can be risky as well if you're in a, if you're in a bull market.
[00:19:54] Speaker D: Right, right. No, I agree. And thinking, oh, it's going to do what it's always done. It's, you know, it's gonna run. We've been on this big run and sometimes when things are on a big run, you know, it's only a matter of time. You know, gravity, what goes up must come down. So nothing. And that's the biggest thing when we sit down with our clients or potential clients is guarantee.
Right. So there's no guarantee that it's going to continue to go up.
But you know, we can guarantee against it going down in certain circumstances.
[00:20:28] Speaker A: There's that word again, that word that is forbidden in many financial circles, but not around here because, you know, this is retirement your way after all. So we want to, you know, you can have it your way like a, like a popular fast food chain that shall remain nameless because, you know, things. Anyway, the other thing too, and this is One of those things too, that, that I, I've sort of wanted to explore more like it, like study it more is like behavioral investing. Right. So your brain, it isn't quite wired for investing and like how the markets work.
[00:21:03] Speaker C: Yeah. And behavioral finance research actually shows that we feel losses twice as strongly as gains, which I can say from experience, I believe that to be true. You know, you take the losses a lot, a lot harder sometimes than the, the wins. So, you know, when you think about it like that, that fear bias can, can push you to act rationally even when the right move is to wait it out. And like you said, it's easier said than done sometimes.
[00:21:33] Speaker A: Yeah, it really is easier said than done. It's easy to just sit here and say it, but when you're in the moment, it's easy to, because of that very thing, you know, make that rash decision. And there's actually data that we have, that we uncovered doing research for the show, that data from 2024 showed that the average equity fund investor, so it's the average investor out there investing in the markets in equity funds underperformed the s and P500 by nearly 5, by nearly 4 1/2% annually over the past 20 years. And that's largely due to emotional decision making, poor timing and all of the things. And I mean, I think a thing to really keep in mind here is that you are not irrational. You're, you're human. And so you gotta build in some guardrails to make sure that you can protect your portfolio from these big market swings. And that's kind of where we want to take this conversation next. How do you actually protect your portfolio from those big market swings?
Let's go through some strategies here, guys, that really, you know, can, can help people, you know, keep their retirement plan steady, even, even if the market is not steady, because those ups and downs, those are inevitable. But damage to your retirement, that, that doesn't have to be right.
[00:22:56] Speaker D: Right. No, I agree. And one of the main things, and we've all heard it over time with investing, is you want to be diversified.
So diversify across different asset classes, where it's a mix of stocks, bonds, alternative assets to help smooth those returns and cushion the losses. Because when one area drops, the others may hold steady or even rise. And so if you spread out that risk, it tends to create more stability in the overall plan in your retirement.
[00:23:29] Speaker A: Yeah. And then also I feel like a good point here to make, and the next one on our list is kind of don't set it and Forget it. Right. You gotta make changes when you need to and rebalance regularly.
[00:23:40] Speaker D: A big component of the plans that we design for our clients include plenty of guaranteed income.
Right. So we work with figuring out your Social Security, how much that's going to be, what pensions you may be entitled to, and making sure that we create enough income to support your regular bills, your lifestyle, your vacations. I'm a big cruise guy, so if I could grow, go on a cruise a quarter, I'd be happy. But I'll settle for one every two years. But again, we want to build that stuff into your plan, so that way. Well, I know that every month, this is how much I'm going to be receiving, no matter what the market does.
[00:24:22] Speaker C: Yeah. And for a lot of our clients, they might not necessarily need that guaranteed income stream or additional income now, but it's about anticipating those future expenses and how your income is going to change in retirement. For a lot of folks, they're going to take a hit on their income in retirement. As you know, the average Social Security payment isn't meant to replace all of your working wages. So for a lot of the clients we meet, it's about creating that, that plan where we're parking this, this money in the garage as we save for later. And then whenever that future need comes up, you have this bulk quantity that you can just start drawing from to kind of pay yourself in retirement. You know, what could be better than that? Because things certainly aren't getting less expensive.
Cost of goods and services, nothing is, is going down. So we can all but guarantee that we are going to need more money in the future, not less.
[00:25:23] Speaker A: Yeah, that, that is for sure. And, you know, I mean, and also one other piece I know that you all are very comfortable talking about, because if you're watching the video version of the show on the old YouTube machine, you will see after all, three of our names. Actually, RSSA, which is registered Social Security Analyst. And timing of Social Security benefits can be a really important thing as well.
And, and one of the things that I have learned over these, you know, last couple years is that you don't necessarily want to maximize your Social Security benefit, but you want to optimize it. Right. Because the maximum benefit, like waiting until age 70 or whatever to maximize that benefit might not be the best thing in your particular situation. So Social Security timing, that's one of those guaranteed income sources, right?
[00:26:15] Speaker D: No, I agree. And because Madison and I and umat, we have our RSSA designation, we have access to special tools, education that allows us to help our clients, you know, optimize the benefit where we take into account Social Security, the investment, the pensions, and we build a true income plan. Because a lot of times we have to factor in your life expectancy. Right. So we go through questionnaire about how long do you think you're going to live based on these certain factors?
And it's not always about waiting till 70 because, yes, that may produce the highest monthly benefit, but what if your health says you may pass away a year later? Well, you've now given up. And that's just a small example.
So the phrasing, it used to be maximize your Social Security, which common sense says that says wait till 70.
But a lot of the clients we've met with, where we've run these roadmaps for them, actually say, no, you shouldn't wait till 70. And this is why. And we can provide those results.
[00:27:18] Speaker A: Yeah.
[00:27:18] Speaker C: And interestingly enough, every situation truly is different. Every person is going to get that complimentary individualized roadmap that will kind of show the different, the different paths you can take when it comes to Social Security.
[00:27:33] Speaker A: Yeah. And that's just one piece of the puzzle. A very important piece, but one piece of the puzzle. When you work with Bradley and Madison with Amerilife of Central Florida, it's the consultation is absolutely free of any cost, any obligation. Start working with them today or at least start exploring that. Because if your plan feels like it's a little bit too fragile for today's markets, well, now's the time to strengthen it. Give him a call, 386-977-9684 or go to planretirementyourway.com well, that's going to do it for this edition of the show. It has flown by. But Bradley, Madison, thank you both so much. Really appreciate your time as always.
[00:28:11] Speaker C: Thank you, Matt.
[00:28:12] Speaker D: Thank you, Matt. Yeah, thank you.
[00:28:13] Speaker A: And thank you for listening to this edition of the show and we'll see you next time.
[00:28:17] Speaker B: Thanks for joining us for retirement your Way with with Amerilife of Central Florida. Our goal is to bring clarity and confidence to your retirement journey. Remember, Bradley and Madison Harden are here to help you create a personalized plan for the future you deserve. If you'd like to schedule a no cost, no obligation consultation, give the team a call at 386-977-9684 or visit planretirementyourway.com and don't forget to tune in next week, same time, same place, for more strategies, insights and support to help you live retirement your way. Investment Advisory services offered through Brookstone Capital Management, llc, a registered investment advisor. BCM and Amerilife are separate companies but are affiliated through common ownership insurance. Products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents not affiliated with the United States Government. Bradley and Madison Harden do not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended to predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. Amerilife assumes no responsibility or liability for the content of this message. The Inside the information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or the results obtained from the use of this information.
