Ten Tips to Recession-Proof Your Retirement

8.4.23: Audio automatically transcribed by Sonix

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

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

Producer:
Welcome to Safe Money Masters with Greg Castle. Get ready for a full hour of financial information and economic news you can't afford to miss. Greg works hard each and every day to help hard working Americans like you navigate challenges and reach the financial freedom they desire and deserve. So now let's start the show. Here's Greg Castle.

Greg Castle:
Welcome, everyone, to Safe Money Masters, where our goal is to help you become masters of your money. And and we'll teach you how to keep it safe. Hope you're having a terrific Tuesday. My name is Greg Castle. I'll be your host today, along with my host and a co-host and producer, Matt McClure. You know, Matt, you know, here we are on another terrific Tuesday with another terrific lineup. So why don't you tell us a little bit about what to expect today?

Producer:
Yeah, absolutely. I would say terrific would be a great adjective to describe all of the things that are coming up here on the show over this next hour. Greg, we have a lot to get to. We'll start, of course, with our quote of the week as we do each and every time around that that is coming up in a little a little bit here, just moments away from a very famous late, great comedian, the Generation X, very unprepared for retirement. It turns out Americans in their 40s and 50s just generally do not have nearly enough set aside for their golden years. We'll talk about that and then we'll have we won't just be all doom and gloom on that. We'll actually talk about five steps that you can use to catch up on your retirement plan if you started late. We got some great tips there to make up for that lost time. We'll do an inflation demonstration. You know, we talked about this briefly last time around. We'll delve into a little bit more of the issues surrounding the Federal Reserve and their latest report. Of course, they raised interest. Their outlook right now for the economy is slightly brighter.

Producer:
But what to do if a recession happens anyway? That'll be a big topic for us. Tom Hedges Don't worry, retire happy. We started that discussion last week with some of considerations for your successful retirement plan if you follow those. Well, we've got some more from, don't worry, retire happy. And then, of course, we'll close out with This Week in History at the end of the show. And wanted to mention here as well, Greg, if you have been listening to this show out there, whether you're listening on the radio or you're listening to the podcast version of the show because you are interested in improving your financial situation and ability to retire someday, whether or not it's, you know, a few years down the road. Let Castle Financial Solutions help you with some one on one attention. Just give them a call. It's 813 430 7100. You can visit the website for the show that is SafeMoneyMasters.com. Greg and the folks there will be happy to meet with you personally. Provide customized guidance and solutions based on your specific financial needs.

Greg Castle:
We certainly will.

Producer:
And now wholesome financial wisdom. It's time for the Quote of the Week.

Greg Castle:
So this week's quote comes from the late actor and comedian George Burns, who once said, quote, People are always asking me when I'm going to retire. Why should I? I've got it two ways. I'm still making movies and I'm a senior citizen so I can see myself at half price. Now.

Producer:
That's a deal right there.

Greg Castle:
That sounds like George Burns.

Producer:
Really? It really does. Boy, he was just one of a kind, too. And and lived a long, long life. You know, one of the the few entertainers whose career spanned all of these different mediums throughout the 20th century. Right. Vaudeville, radio, film, TV and and that that cigar with him at all times and you know his had this familiar trademark phrases that he would that he would use and that familiar look to us all and of course very, very famous that he and his wife, Gracie Allen, appeared on radio, TV and film as the comedy duo Burns and Allen. And I'll always remember, you know, say goodnight, Gracie.

Greg Castle:
And goodnight, Gracie. Anyway, the ironically, I travel sometimes if I'm in the car. Um, especially if I'm taking a long trip somewhere that, you know, it's too. Too cumbersome to fly. There's actually a radio station. They'll actually rotate all the different shows, Some of the comedy shows, you know, like Burns and Allen, the The Jack Benny Show. You'll hear some Bob Hope, some other stuff. But anyway, it's a great it's really helps the time go by if you don't have an audio book to listen to. Other than that, anyway. So it's a good thing. Always joke around now and say that I'm going to be like now that I'm also a senior citizen, we'll joke around. So I'm going to be like George Burns, you know, Betty White and Queen Elizabeth. And as long as I'm physically, mentally and emotionally able to work, you know, I have no plans of stopping because I really enjoy what I do. But, you know, they were definitely a role models for the for the senior citizen crowd. So. Matt, before we get into today's topics, you know, I'd like to take just a minute to to once again remind our listeners what this show is all about. You know, as I've said before, the whole premise of this show is to bring you topics and tools and information that will help you protect and grow your wealth and retirement income. So, you know, we hope that you will keep tuning in. You can catch us every Tuesday evening at 6 p.m. on Moneytalk 1010, and on your local FM stations, 92.1 down south and 103.1 up toward Newport Richey. And if you happen to miss an episode, you can always catch the replay at SafeMoneyMasters.com or wherever you listen to your favorite podcast. You can also check out our YouTube channel and subscribe to see weekly video highlights and special content if you like, and if you have any questions or comments, we'd love to hear from you. You know, feel free to email me personally at Greg@SafeMoneyMasters.com. Or you can give us a call at the office at 813 430 7100.

Producer:
Very good. And we hope that our listeners, of course, will do that. Reach out, folks. If you have been listening for a while, as I said a little bit earlier and you would like some more information about any of the things that we talk about and, you know, getting into kind of the meat of the show here. Speaking of things that we talk about, you know, Generation X is really, according to a new study, facing a harsh reality when it comes to their retirement plan. I mean, really, Greg, the numbers kind of show here that millions have little to nothing saved for their retirement. It's it's kind of a dire situation, it looks like.

Greg Castle:
That's correct. As a matter of fact, you know, on this show, we like to rely on research and we always have surveys or or some research to share with you. So according to a recent analysis, millions of Americans born between 1965 and 1980, better known as Generation Xers, collectively known as Gen X, are headed toward retirement, woefully unprepared financially. You know, the typical Gen X household with a private retirement plan has an average of $40,000 in savings, according to a report this week from a National Institute on Retirement Security or IRS. The figures are even more alarming for lower income Gen Xers who've managed to stash away no more than about $4,300 or even less. You know, across the members of the generation, some 40% of Gen Xers don't have a penny saved for retirement. So Gen Xers are, you know, they're fast approaching retirement age, you know, but the data indicates that the vast majority are not even close to having enough savings to retire on. Most Gen-Xers don't have a pension plan. They've lived through multiple economic crises. Wages aren't keeping up with inflation and costs are rising. The American dream of retirement is going to be a nightmare for too many of the Gen-Xers.

Producer:
Yeah, those numbers really do paint. Not a great picture. And it really acknowledges and highlights the big disparity there, a big gap between those who do have a lot saved and those who don't. I mean, because if you're talking about 40% don't have one penny saved, but then the average is 40,000. Well, you got a lot of people there who are doing very, very well. But then you've got this huge chunk of people who don't have a penny saved at all. So big disparity there. And why is it, you know, when we look at this this study, this analysis, why is it that we're seeing such a large number of Gen-Xers so unprepared?

Greg Castle:
Well, you know, according to researchers and different different researchers have different articles on this. You know, several several obstacles basically contribute to the financial unpreparedness. You know, one is that only about 55% of Gen X workers participate in an employer sponsored pension or 401. K plan. You know, wage growth has been relatively stagnant compared to previous generations. And of course, we hear a lot about the next one, and that is student loan debts. Student loan debts are so much higher for Gen Xers compared to baby boomers. And it's.

Producer:
Very true.

Greg Castle:
Yeah, it's it's there's just so many, so many things that have sort of the the Unperfect storm, if you want to call it that ball, you know, met at one time on this particular generation caused a lot of issues.

Producer:
Yeah. From a financial standpoint, absolutely. Have as you as you just run down and those are, you know, just kind of the top line, the main reasons as well. But here's the thing, folks. If you are a Gen Xer or any other generation, but especially Gen Xers, since we're talking about you right now, um, and if you are in that generation and you are looking to boost your prospects for retirement, just give Greg and his team of professionals at Castle Financial Solutions Group a call today. You can do that. It's very easy. Just pick up the phone. I know Gen X, you still like to talk on the phone. I feel like for the most part, Gen X, you're not quite in the millennial generation where nobody likes to talk on the phone, but you can pick it up. Call 813430 7100 and then they'll develop your free inflation adjusted safe money retirement roadmap. So remember, if it's your money. So if it's important to you and I know it is, it's important to us as well. Well, okay.

Greg Castle:
You know, you know, just for those people that maybe are averse to phone calls, we also allow text.

Producer:
There you go. Okay. Very good. So that's really of any generation feel like pretty much, you know, people when my when my mom started texting several years ago now, I thought, oh gosh, what have we gotten ourselves into this? And my mom is embracing technology. Is it a sign of the apocalypse? What's happening? But anyway, so all generations can do that as well. Well, of course, you know, said earlier, we're not going to leave it all doom and gloom there. There are some things in that that research that just don't look great for Gen X, but. You know, if you are a Gen Xer and you you haven't started your retirement planning or of any generation really, and you need to get started or you need to boost things, right? It can be challenging, but it's not too late. It really is never too late to take action. Improve your financial situation. So Greg, share with our listeners here the five steps that we have to begin planning for retirement. If you feel that that you've started that process too late.

Greg Castle:
You know, it's there's an old saying that it's never too late and and that's not always true. There are some situations that prevent that from happening. But in most cases, it's all going to start with a plan. I mean, you've got to have a plan no matter how much you've got or how little you got. You need a plan that's going to carry you into the next phase of your life called retirement. Um, one of the first steps is to assess your current financial situation. Got to begin by taking a comprehensive look at your current financial status. Calculate your net worth even if it's a negative net worth, including assets like savings, investments and real estate, as well as liabilities such as debts and mortgages. Understand your income and expenses to identify areas where you can potentially save for more retirement. But but you got to have that plan. You got to you got to know the numbers. You got to know the numbers. And step two, basically. Or another thing you can do is set specific retirement goals to find clear and achievable retirement goals, determine the age at which you want to retire and the lifestyle you aspire to having during retirement. You know, being specific about your objectives are going to help you and your advisor. Hopefully it's us gauge just how much you're going to need to save and invest in order to meet those goals. Uh.

Producer:
First two things, Greg. I always just to pop in here, I think about those first two steps, like you're using a, you know, and the first step is you've got to know your current location, right? Otherwise you can't map anything out. So that's, that's, you know, where are you right now? And then step two, where do you want to go? And that's you're putting in your destination into the right. And so then your financial, which again hopefully is the great folks at Castle Financial Solutions Group just to plug in there, Um, they'll map that out for you to get from point A to point B, Let's just sort of how I wrap my mind around that.

Greg Castle:
Yeah, that's pretty much why we call our approach, you know, safe money, the safe money retirement roadmap, because it really is a roadmap and you need to get there and the roadmap is going to help you. But, um, so we covered two steps. There's a third step would be to maximize retirement savings contributions, as you mentioned before, that, you know, only a small percentage. I think it's I think the number was 40% actually have a 401. K or a company sponsored retirement plan if you have one. Or even if you don't, you've got to find some way to contribute as much as you can to retirement accounts, whether it be IRAs or company sponsored, four one K's or even a Roth IRA, take advantage of ketchup contributions if you're 50 or older. And the the ketchup contributions allow you to contribute additional funds to retirement accounts beyond the regular annual limits. Always, always, always. Unless unless, you know, just really won't be enough money to cover the bills if you do this. But get yourself in a position where you can always contribute enough to your company sponsored plan to get their match, which is usually going to be somewhere between 3 and 6%. In most cases, an average would be probably probably around 5% for most anyway. Get that company match. That's free money. You don't want to lose out on that. Uh, another step would be to create a budget and learn how to cut unnecessary expenses.

Greg Castle:
Those kind of tie together. When you actually take time to write out a budget, you'll see that there are some things that you're spending money on that maybe you don't need to spend as much money on. Or you could just cut out completely. Develop a budget to track your income and expenses rigorously. Look for ways to cut back on non-essential expenses and redirect those savings toward your retirement accounts. Reducing discretionary spending can significantly boost your retirement savings. Discretionary spending basically is money that you don't have to spend. You don't necessarily need to spend that money. It's money that you spend on things that you want, not necessarily need. And then finally, you know, consider delaying retirement or taking on part time work, sort of the hybrid retirement, which we talked about last week. But in that particular, if that's going to be an option for you, then consider delaying your retirement age to allow more time for savings to grow and to maximize Social Security benefits. Alternatively, consider working part time during retirement to supplement your income and reduce reliance on your savings. So when when I talk about allowing more time for to maximize Social Security benefits doesn't necessarily mean taking it a lot later. What it means is that. But your Social Security benefit is made up of the highest 35 years of income. So if you think back 35 years ago, 40 years ago, depending on your age to what you were making back then, I know one of the first real careers I had was actually in the Air Force, and I guarantee you we didn't make a lot of money back in those days in the Air Force.

Greg Castle:
And so those that that those lower earning years get knocked off by the higher earning years that you have currently, which will actually increase your Social Security benefits. So just one of the many strategies that in the Social Security planning a bonus step, basically, you know, seek professional advice. You know, again, we hope that we're the your advisor of choice. If you've got someone that you know and you're not quite ready to take the plunge to Castle Financial Solutions Group yet, just work with a financial advisor or a professional, it can be immensely valuable, especially when you're just starting retirement planning late. The advisor can help create a personalized retirement plan or retirement blueprint or roadmap, provide guidance on investment strategies and recommend appropriate financial products that align with your goals and risk tolerance and the amount of money that you're going to need in retirement. The Just remember that while you're starting late. While doing that may require more significant efforts, every step you take toward retirement planning can have a positive impact. The key is to be disciplined, proactive and focused on your retirement goals. Taking action now will significantly improve your financial outlook for the future.

Producer:
Now 100%. You know what they say about proper prior planning and what that prevents. I won't say the whole thing because we're on the radio. But if you are one of those people who needs to do some proper prior planning to prevent.

Greg Castle:
Prior planning, what's a mouthful? Yeah, it is. Say that five times fast. I know.

Producer:
Right? I was going to say the same thing. Planning if I. If I can even talk now, you know, after that. Tongue.

Greg Castle:
Tongue.

Producer:
But no, if you're one of those people, folks who are late getting a start, maybe you need to play catch up like we've been talking about. Or if you just, you know, need to see if you're even going to be able to retire when you want. Give Greg and his team at Castle Financial Solutions Group a call. You can do that. The phone number is 813430 7100 and let them help you develop a free, inflation adjusted safe money retirement roadmap. Remember, folks, as I've said before, it is your money. So if it's important to you, it is important to us. And by us, of course, I mean Greg and everybody, Castle Financial Solutions and us here at Safe Money Masters as well.

Greg Castle:
Want to know where your hard.

Producer:
Earned money is going. It's time for an inflation demonstration.

Greg Castle:
As many of you know and we talked about last week, the Federal Reserve once again raised interest rates by 25 basis points two weeks ago. That represented the highest Fed funds rate in over 22 years. It's all part of the central bank's efforts to combat inflation. Interest rates have soared from near zero at the start of 2022 to over 5% today. Actually, I think it's like five and a quarter to 5.5% now. In his latest statement, Jerome Powell and the Fed said it's no longer predicting a recession for the US economy in the near future. But many economists are beginning to disagree. Several leading economic indicators are pointing towards a downturn.

Producer:
Yeah, that's right. I mean, you know, the leading economic indicators have been pointing that way for quite a while. And, you know, at least towards a downturn, if not a full fledged recession, at least a downturn. So, you know, protecting your retirement plan from economic downturns like what could very well be coming, if those economists are correct, can really help ensure financial security. So let's share. Greg, we've got this list here of ten things, ten strategies to really recession proof or downturn proof, even your retirement plan. So the first strategy we're going to get, number one here, diversify your investment portfolio.

Greg Castle:
Yeah. You know, you shouldn't have. As they always say, you should have all your eggs in one basket. The. You want to make sure that you have a number of things that help you achieve what you're trying to achieve. Spread your investments across various asset classes, such as some stocks, annuities, which were a big, you know, a big proponent of bonds, real estate and cash. Diversification can help reduce the impact of market volatility on your retirement savings. And you know, remember last week we talked about the rule of 100. As you get older, basically subtract your age from the from the number 100 and your age should be, for example, if you're 65 years old, in roughly 65% of your assets should be in very, very safe, protected investments such as annuities. And the other 35% can be spread out among all these different asset classes we just talked about. As you get older, you know, for example, you get 70. That divide ought to be 70 to 30. And because you want to make sure that you've always got safe money. That you can rely on and we'll talk about it later. Guaranteed lifetime income that can't be lost in market volatility.

Producer:
Boy, that really not only gives you peace of mind, it keeps your keeps your hair from turning gray and all that stuff. You know, it's really keep the stress levels down when you know you're going to have an income that you cannot outlive in retirement. That means a lot to a lot of people. Well, number two, then, speaking of stressful situations, number two is to establish an emergency fund. This is super important because the unexpected is is bound to happen because, you know, life happens.

Greg Castle:
Yeah. Life happened to me a lot in the last year. I'll give you a couple of examples. Emergency funds do come in handy over the last year, actually year and a half now. We've had to replace two AC units in the house, which I assure you they were not cheap. And we also had to replace a roof. Insurance covered a portion of that, but they didn't cover all of it. And it's always something that's going to come up and bite you in the proverbial, Heidi. And so in an emergency fund to cover unexpected costs and expenditures are very, very important. How many of you ever had a an automotive repair that you get the price tag on and you're going for an estimate just drives you bonkers. New transmission, new clutch, new starter, new whatever. There was a time cars were easy to work on with all the electronic stuff that we all crave now and really want, not so much. So again, I've digressed, but emergency fund covers those things if you have it set up properly. So maintain a separate savings account with enough funds to cover anywhere between 3 and 6 months worth of living expenses because this will actually act as a buffer during tough economic times. And also when it comes time to those repairs we just talked about, it'll save you the trouble of having to dip into your retirement savings prematurely. Yeah, that.

Producer:
Is definitely not what you want to be doing. What you do want to do, though, is number three on this list and that is minimize debt, eliminate it if possible. Right. But just having as little debt as possible is great, and especially that high interest debt. Getting rid of that.

Greg Castle:
Yeah, credit card debt, especially in this high inflation rate we've gone through in the last year or so, is really, really, really, really tough. And those that have actually minimized debt and have little to no debt have actually had a chance to actually prosper over the last year and a half because they can take advantage of the high interest rates that are being paid sometimes by banks, but even other, you know, other products as well. But, you know, as you just said, you got to minimize debt. You got to work on reducing high interest debts like credit card balances and personal loans. Being debt free or having manageable debts will provide more financial flexibility during recessions. And again, we're talking about a situation where, you know, the Fed is saying we think we're out of the woods, but economists are saying not so fast. We're not quite so sure yet. So if we go into a recession like we had back in the super recession back in 2007, 2008, during the housing bubble, you want to be prepared. And if you've got a lot of debt, trust me, you will not be prepared. Yeah, that's absolutely right.

Producer:
You'll be behind instead of ahead where you need to be during difficult times like that. And also, you know, increase your contributions. This is number four on our list here. Increase contributions during good times. You know when things are going well, take advantage of that and and really use that time and that prosperity that you're enjoying to help you when times might not be so good in the future at some point.

Greg Castle:
No, you're exactly right. You know, just whenever possible, you want to boost your retirement contributions. We've already talked about that. Make sure you get your employer match to 401, four three, B, TSB plans, those type of things. And, you know, there's not a better time to do that than during periods of economic growth. I'll take advantage of higher income employer matches that we talked about already. You know, like I say, the average is going to be somewhere around 5%, but sometimes you get them as high as six. But it's hard to give up free money, increase your contributions if you're not giving the full match rate or not getting the full match right now. Increase your contributions when things are good and when you can afford it, you'll be glad that you did. Yeah, that's absolutely right.

Producer:
I mean, free money, that is that's the best kind that you can possibly get out there is definitely. And it fits right in my budget too. Free is always, always a good, free.

Greg Castle:
Free, free, free. Is that good? Four letter word. That's right.

Producer:
That's absolutely the best.

Greg Castle:
Unlike golf, which is another four letter word that can really drive you crazy sometimes. That's. That is.

Producer:
Very true. You don't know anything about golf. Living living down in Florida, do you? No. No.

Greg Castle:
Goodness, no. Oh, man, you're right. I don't know anything about golf. Well, I'd have to go and play. I don't know anything about it. But I go out there, I need my scores. My scores will show you that I don't know much about it lately. Lately, anyway. Remember that bat I told you about? Just, you know, just really throws your putting off when you got a retina issue.

Producer:
People are like, Greg, you know, the goal is not to have the highest score. It's to have the lowest.

Greg Castle:
Oh, now you tell me. I've been playing it wrong for the last 30 years. All these years. All these years. Well, moving.

Producer:
On now to number five on this list, Greg, regularly review and adjust your plan. It's not, as I've said before, it's not like the old infomercial where you set it and forget it. Right. This is something that needs to be reviewed, maybe adjusted as time goes on.

Greg Castle:
Yeah, you got to keep a close eye on your retirement investments and objectives, you know, especially when it comes to fees. I mean, most people don't realize how much they're paying in fees and. If you don't keep an eye on your retirement investments and you start making drawdowns from those investments, you'll find out really quick that how past is going to deplete because those fees don't go away. So you just learn to reevaluate your asset allocation and risk tolerance as you age. And also take a look at the economic landscape at the time and make sure that you adjust appropriately.

Producer:
Yeah, adjust to any of those changes and inevitably will. Number six is one that we that we like. If you want a recession, proof your retirement, and that is to consider annuities and especially a particular kind of annuity that we talk about quite a bit is one I know Greg that you'll that you'll mention here to really protect yourself from any big market downturns. There are certain types of annuities I know that that we've said before I wouldn't recommend that to my worst enemy but there are other types that that you recommend I know all the time for people because, you know, based on your situation, it can really, really provide you with that protection and with growth.

Greg Castle:
The new give you a number of things. Number one, you've got, you know, annuities for accumulation. You've got annuities for income, you've got annuities that can help with transfer of wealth. You've got there's so many different things that you can use annuities for. And again, most most I won't say most, but the majority I guess that's most of financial advisors have a number of different options in their toolkit. Based on your particular situation. There's no one size fits all. And even when it comes to annuities. But, you know, annuities have been around forever. I mean, it goes back to the Roman Empire, at least when the Roman soldiers were actually paid an annuity at the time of their service. That annuity is similar to a pension. Now a pension is basically an annuity. And it's a guaranteed income for life. The you know, some most annuities today offer protection against market downturns. They provide stable income regardless of economic conditions. And when we talk about changing economic conditions, especially as you get older, you won't find a better parking spot for a portion not all, but a portion of your big nest that you've grown to be able to. We find a better parking spot for it than a good annuity. And if you ask yourself the question is how much income do you need in retirement? It's one of the first questions we ask our clients How much income do you need in retirement? For two purposes. One is to and we'll talk about it later. Part of it is to cover your your basic expenses. In. The second part is to be able to fund the discretionary spending that you want. In other words, let's say, for example, your. Well, I'll tell you, we'll do an example later on. We'll get to Tom Higgins segment. I was. We'll save it for that. Anyway, moving right along. All right. All right.

Producer:
There you go. Tea and tea and that one up for a little bit later here. All right. So number seven on the list of things to do to recession proof your retirement plan. Explore defensive stocks. And when we say defensive here, Greg, it's definition time on the show because we're not talking about like, oh, you know, defense contractors or anything like that. We're not talking about, you know, the the NFL team. We're not talking about the Bucs defensive line or anything like that. You know, we're we're talking about defensive stocks. So so let us know exactly what that means here.

Greg Castle:
Yeah, simple definition. Defensive stocks belong to industries that are relatively resistant to economic fluctuations, things like health care, utilities or consumer staples. Such as oil, gas, those type things, you know, commodity or correction. Basically defensive stocks are really important to include in your portfolio and they can help protect your investments during recessions as well.

Producer:
Things that people are going to buy anyway those consumer staples.

Greg Castle:
Have.

Producer:
To have. You got to have them. And yeah, if you have to have them, then that's a good place to to be invested during bad times because, you know, they'll be resisting those big fluctuations. Okay. So number eight, delay Social Security benefits if possible. We mentioned this one just a little bit ago. It kind of bears repeating here, though, because, I mean, if you can can give yourself by delaying Social Security an 8% raise each year. Boy, that's a that's a big number by the time you delay all the way out to 70.

Greg Castle:
Exactly right. Typically, for every year you delay Social Security beyond age 62, you can expect somewhere between a seven and 8% increase per year. And it's hard to get that in any other investment that's out there. By delaying Social Security benefits until retirement age or beyond. You know, you can receive higher monthly payments, in other words. So this can be a valuable income source during retirement, especially again, during economic downturns. Yeah.

Producer:
And I think number number nine is super important and people are doing that right now by listening to this show. And that is continuously educate yourself. You don't know what you don't know, right?

Greg Castle:
You don't know what you don't know. You know, you've got to stay informed of economic trends. You've got to you got to do some retirement planning. And retirement planning is a learning process. You'll learn some things about your own budgets or some things about how well you've done or in some cases how well that you have not done. Uh, and you also need to know a little bit about our investment strategies. Doesn't mean you've got to go on to, you know, the Internet and try to do all this stuff by yourself. You need to find a good advisor. That can guide you, help educate you, point you in the right direction, give you options that you get a chance to make the decisions on yourself with their help. But you know, let them point you in the right direction and they'll help you make informed decisions and help you adapt your retirement plan as needed.

Producer:
And that leads us right into number ten, the steps to really recession proof your retirement plan, and that is to consult a financial professional or an advisor. You know, and really, I mean, that's where it all kind of comes together because, as I say, you don't know what you don't know. Like as a as sort of a layperson, you know, whenever kind of an everyday average Joe kind of guy, you don't know what you don't know, but you know who does. That's that's Greg Castle and the folks there at Castle Financial Solutions Group. It's you know, there there's a lot that goes into this, in other words, and chances are you'll need help along the way.

Greg Castle:
Right? We've been able to develop a team that that has got some great expertise. We have a local team. We also have a network of professionals that can help you out, whether it be, you know, CPAs, tax attorneys, those type of things. We're going to have actually a tax attorney, correct. An estate attorney on in a future episode that will be talking about, you know, how to develop a trust and how complicated it is or is not. And you'd be surprised in some cases how simple it actually happens to be and how uncomplicated it can be with the right help anyway. So, you know, seeking financial advice is not only important to talk about to to seek out a financial advisor, you know, such as my team or your own professional if you happen to have one. But you want to make sure that in all aspects of your life that you want to make sure that you get professional advice. The, you know, business one on one in any business person. Basically the success of their company or organization is going to be based on the advice they get from various professionals, whether it be technical professionals, whether it be.

Greg Castle:
Financial professionals, whether it be business professionals or coaching professionals or leadership professionals. It's all part of the education process we talked about in step nine. But the key is, you know, you need professional advice. And when it comes to your retirement, part of that advice needs to be to seek out a financial professional. So, you know, as we said time and time again, if you have concerns about the market or the economy and future tax increases or the economy in general, then I encourage you to schedule a complimentary meeting with us so we can get started on a plan to align your finances with your current risk tolerance. Simply give us a call at 813430 7100 or you can email me personally at Greg@SafeMoneyMasters.com and we can get an appointment set up for you. So, Matt. Uh, when you talked about the overview for this week, one thing we talked about was that the things we share with our listeners last week, which were some key points from Tom Higdon's best selling book and his PBS special, Don't Worry, Retire Happy.

Producer:
Yeah, Always some great advice and tips there from from Tom Hegna. He's kind of the guy who is one of the more famous kind of retirement gurus out there and has written some great things. He's a big fan of annuities as well, like like we are around these around these parts here on Safe Money Masters and he's great. I got the chance to meet him actually a couple of weeks ago as we were talking about last time around. Great guy. Yeah. Yeah. And and just, you know, very charismatic and all of that and just really, really great to be able to sort of, you know, hear from him in person when I was able to meet him. So, yeah, it's wonderful. And so this book, Don't Worry Retire Happy is really just chock full of a lot of those things. And and I love that. You know, don't worry retire happy It makes me want to listen to don't worry be happy and sit on the beach with, you know, a rum based drink.

Greg Castle:
Yeah, like I'm the same way every time I hear it, it. I think of the same thing. So anyway, in his book, you know, Tom explains why it's important to secure both guaranteed paychecks to cover basic expenses and play checks in retirement to cover both your basic expenses and also the fun activities you hope to enjoy. In other words, having the necessary income to cover the things that you need, basically your monthly expenses and your wants. Things like hobbies, travel, gifts, the things that make retirement enjoyable, sharing a glass of wine with friends and family. You know, these are all essential to a happy and secure retirement.

Producer:
100%. And in the book, Tom outlines seven steps to retirement security. We we started going through these last week. I'll run through all of these now and then we'll kind of pick up where we left off from last week's discussion. But number one, have a plan for retirement, then maximize Social Security benefits. Consider a hybrid retirement like we were mentioning earlier, protect savings from inflation. That's huge. Secure, guaranteed retirement income plan for long term medical costs and use home equity wisely. I think that's one that probably gets overlooked there at the end of the list. So last week we covered the first four steps. So today we're going to kind of pick up where we left off. We'll discuss the last three. So secure guaranteed retirement income plan for a long term medical costs and use home equity wisely. So here we go with step number five. That is secure, more guaranteed income. It is so, so important to know that you are not going to outlive your money.

Greg Castle:
Exactly. The Time magazine says that least base level of lifetime income should be every retirees priority, at least if they want to live happily ever after. You know, I'll tell you that that lines up with what the top PhDs who have studied retirement say. There are basically three sources of guaranteed lifetime income during retirement. Some of us have got some of these. Some of us have one of these. Hopefully you got all three, but only a small percentage actually do. Those three basic sources of guaranteed lifetime income are pensions, which are slowly fading away unless you happen to be a federal employee, a state or government employee of some sort, whether it be civil government, state government or a teacher, or in some cases a union employee anyway. So you got pensions. Second source is Social Security. In most cases, we will all qualify for Social Security. It'll still be there, may not be in the same form it is right now. And then finally as annuities. So pensions, Social Security and annuities. The success of your retirement is really not about your assets. We talk time and time again about accumulating a big pile of assets. Assets can be lost, stolen, swindled, sued, divorced or decimated in a market crash. The ultimate success of your retirement is determined by income. And as Tom says in ads, that income should be guaranteed lifetime income. See the success of your retirement really depends on the answers to these two questions. Number one is. How much guaranteed lifetime income do you have? And number two, have you taken the key retirement risk off the table? And when we talk about retirement risk, there are a number of retirement risks.

Greg Castle:
You've got things like longevity risk, which is basically living too long. Deflation risk, which is the opposite of what we have right now. Deflation risk means basically you're depending upon interest, for example, bank CDs, other other interest bearing things, and all of a sudden interest rate sinks below zero. Or the inflation is six below zero. Thus deflation risk, market risk, volatility. In other words, where the market goes up, the market goes down. You got the roller coaster going on. And and once you once the roller coaster bottoms out, it takes a lot of momentum to get it back up to the top of the the next hill on the roller coaster. A withdrawal rate risk if you withdraw your assets in the wrong order the wrong way. It can also devastate your retirement assets. Sequence of return risk is something that's really kind of hard to explain on the radio. However, it's a very, very real risk, which basically states that if you were happy to retire and the retirement red zone five years before five years after and you have a serious market downturn like we had back in 2007, 2008. Uh. Your retirement nest egg is going to be a lot smaller than it started out being, and it could devastate your retirement. By the same token, if the market does very, very well during the beginning of that retirement red zone, there's a good possibility it may be in a probability, depending on how much you're.

Greg Castle:
How much money you're actually going to need from your assets and how much money you actually have in assets. There's a good possibility or probability that you might do okay. Is it based on the order of the returns in the market that you have your money in a long term care risk? We're going to talk about a little bit later on. Long term care risk. Basically, I think the statistic is 72% of people age 65 or older will need long term care at some point in their life. Mortality risks, which are basically death. You know, that's that's the one guarantee taxes and debt. And so we all have an expiration date. Hopefully we can, you know, hopefully we can make it to that expiration date. Inflation risk. We went through a period of really high inflation last year. We're sort of slowly coming out of that. And but it's still a risk could happen again. It happens in cycles. Regulatory risk. We don't know what's going to happen with different government regulations. And also you've got taxation risk. We don't know what taxes are going to be in the future, but considering the spending we've done in the last couple of years, I don't think you can find anybody that say they expect taxes are going to be lower in the future than they've been already.

Producer:
A lot of risks that that you just listed off there, Greg, which retirement risk would you say is is number one, that should be the top concern?

Greg Castle:
Well, there's no doubt about it. I mean, hands down, it's the longevity risk. And why? It's because longevity is not just a risk. It's a risk multiplier of all the other risks. You see, the longer that you live, the more likely that we're going to see and the more likely you are to going to be going to see inflation. The more likely the market's going to crash, the more likely you're going to take out too much money, the more likely you're going to need long term care. So the retirement research that I've studied comes to one main conclusion. To retire successfully, you must absolutely must mitigate longevity risk. So how does a customer do that? Uh, it's not an easy answer, but traditionally. Investments like stocks, bonds, real estate, CDs. They just can't do it. They can't guarantee that you're going to have an income for the rest of your life. However, an annuity can do it because life insurance companies sell both life insurance and annuities. Life insurance companies are uniquely situated to offer products that can take longevity risk off the table. So when you receive guaranteed lifetime income from an insurance company, you're going to receive a quote unquote, personal pension like stream of income for the rest of your life. In other words, it's a guaranteed paycheck. We talk a lot about paychecks and paychecks, but a guaranteed income for life is a guaranteed paycheck. It's deposited into your account at your convenience, whether it be monthly, quarterly, annually. Semiannually. So we've talked about math, science and economics. So let me talk for a minute about economics. Some people talk about human behavior, but bear in mind, I actually am a psychologist. So people talk about human behavior having an impact on their financial life. Tom calls it psychonomics. I'm not sure if he came up with this term or not. I've never heard it before, but it certainly is appropriate. So let me ask you a question. You've got something from your company every two weeks for your entire career. What was that call? Matt. What's it called?

Producer:
I would call that a paycheck myself.

Greg Castle:
I would call it a paycheck as well. So if you're like most people, what you did with most, if not all of that paycheck is you spent it. You see, you got you got and you spent a paycheck every two weeks for your entire working career and you never had a problem doing that. But when was the last time you raided your 401. K or took $200,000 out of your bank account or brokerage account? Oh, we can't do that. You know, we have to save it. We have to grow it. We got to protect it. We can't touch it. So you do that for 45 years. Do you honestly think that you're going to wake up on your 65th birthday and say, by golly, I'm going to blow my 401. K today? You can't do it. Now, my wife probably could, but still no one can do it. I'm in trouble already. You know, your parents couldn't do it. You see, you have been psychologically programmed to not touch your assets. Many of your friends will go to their graves, never touching their assets. Which is why the Ph.D.s who've studied retirement can say that, you know, you should put a portion of your assets into these guaranteed paychecks and paychecks because you've been psychologically programmed to spend those. And you do realize it's the spending of money that allows you to enjoy your retirement, the travel, the cruises, the dinners out, the bottles of wine with friends. That is how you enjoy your retirement. I don't care how many millions of dollars you got in some accounts. If you're scared to do anything with that money, you're never going to be happy. Another question I get all the time is how much of my money should go into a lifetime income annuity.

Greg Castle:
Well, you know how much money a client puts into a lifetime annuity? Depends. If you ask 50 different advisers, I can promise you, as Tom Hegna will, that you're going to get 50 different opinions, quote unquote opinions. However, if you study the math and science of retirement, you will find out there's only one optimal answer. And that's not just an opinion. You know, luckily, the answer to the questions I posed earlier, you know what? What do you need for retirement? What do you need your retirement income to do and what do you want your retirement income to do should all be the same for all retirees. Those two questions you need your money to cover your basic living expenses. And I realize those costs are not what most people think about when contemplating retirement, but they are an essential part of a successful retirement plan. You know, cover your basic expenses and retirement's a must. A few examples of basic expenses are things like rent, mortgage, car payment, food, groceries, cell phone bill, utilities and so forth. You know, during pre retirement, most people focus on accumulating assets for retirement once they reach retirement. The next step, the distribution of assets, is equally important to help retirees maintain their financial independence. So an example we could give real quickly. I'll tell you what I'll say with an example for another time. Know that we're we're running a little bit short today. I could talk about this topic all day long. And I think what we're probably ought to do at this point is skip step six and seven till next week. It's this week in history.

Producer:
August 8th of 1796, we got we're going way on back now. Congress unanimously chose the dollar as the monetary unit for the United States of America. We've been talking dollars and cents ever since.

Greg Castle:
We have. We have. But then, you know, being a musician, as am I, I really enjoy music. I still play periodically out and about in the public in 1960, that very, very catchy, enjoyable visual tune, Itsy Bitsy Teenie Weenie Yellow Polka Dot Bikini by Brian Holland is number one. It's a bitsy teenie weenie yellow polka dot bikini. It just sticks to your brain. You can't get it out. Also, history. In 1992, the original US Dream team wins the basketball gold at Barcelona Olympics. The score was 117 to 85 over Croatia. And that particular team, the Dream Team, featured superstars like Michael Jordan, Magic Johnson, Larry Bird, Scottie Pippen, Charles Barkley and Patrick Ewing. And today is International Cat Day. National Frozen Custard Day. National Pickle Ball Day. National Tarantula Appreciation Day. National Time to Know Day and National Happiness Day. So I think what I'll do when this is all over today, I know you're dying to know this, Matt, is that I'm going to go to my granddaughter's house and help her play with the cats. We're going to go out and get some frozen custard. Go, pickle. Go. Go play some pickle ball. I'll go back, get some more frozen custard. I'm going to try and avoid tarantulas along the way. I'll get back home tonight and I'll say, Boy, this was a happy day. There you.

Producer:
Go. Sounds like a perfect day to me on all those all those things. You know, I'm just what I'm dying to know is why people appreciate tarantulas. That's. That's me. But.

Greg Castle:
Yeah, just. It should be a national tarantula avoidance day. I don't know. That's right. But anyway.

Producer:
That'll be my day. We'll celebrate that. Yeah, we do.

Greg Castle:
Our best anyway. Matt, I think we've had another good show for today, and obviously there's never enough time to get all the stuff that we want to fit into it. Hopefully our listeners have have picked up some tidbits of knowledge today. But with that said, I think we should probably wrap the show up and and look forward to next week, start getting ready for that. And so I will say I will see you next week at the same bat time.

Producer:
Same bat channel.

Greg Castle:
Have a great week, everybody.

Producer:
Thanks for listening to Safe Money Masters with Greg Castle. You deserve to work with a financial expert who has a track record of helping clients exceed their financial goals by implementing safe and proven strategies to schedule your free No obligation consultation with Greg. Visit SafeMoneyMasters.com.

Producer:
Not affiliated with the United States government. Greg Castle does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they 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 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.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

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 generate automated summaries powered by AI, powerful integrations and APIs, automated translation, enterprise-grade admin tools, and easily transcribe your Zoom meetings. Try Sonix for free today.