In this episode, Joe and Al cover four crucial retirement risks to prepare for:
- Running out of money
- Investment risk
- Sequence of returns
- High taxes
Find out how to mitigate these risks properly so you can be fully prepared for retirement.
Important Points:
1:19 “Here’s a risk that you are probably not identifying in your overall retirement…”
2:40 “Here’s the other thing is longevity; we’re living a lot longer so your money’s got to last longer.”
3:13 “Make sure you have the right investments and investment risk – if you’re too aggressive, you risk losing your portfolio. If you’re too conservative, you’re going to lose your money safely so there’s go to be some sort of balance there.”
5:26 “What percentage should you be pulling from your overall portfolio? This is called a sustainable distribution rate. This helps you identify out how much you should be pulling from your portfolio.”
8:17 “Investing 101 – let’s take a look at what we need to do here. Let’s start with calculating your family index which means figure out what rate of return you need to make this portfolio work.”
11:00 [True or false?] “Savings accounts are good investments because they are risk-free.”
11:17 “They’re not risk-free; you know why? They generally don’t keep up with inflation, and that’s a huge risk. In fact, when you have all your money in savings accounts it’s almost guaranteed you’re going to lose money over the long-term because it’s eroding your purchasing power.”
14:19 “Roth conversions make a lot of sense for a lot of people but we would suggest you do a little more detailed planning for that.”
14:25 “Let’s get into one of the biggest risks out there that a lot of people don’t really understand – it’s called sequence of returns risk.”
16:41 “Let’s talk about how to mitigate the sequence of returns risk. First of all, invest in the safest portfolio possible. Do a little analysis to figure out the rate of return you need.”
17:51 “There are three different pools of money that you can invest in: tax-deferred, tax-free and taxable…if you can be diversified in your strategy (and have a money in each pool), you can significantly reduce the amount of taxes you pay when you start taking those distributions.”
20:12 “This really is what everyone’s goal should be when it comes to retirement planning, because then their money is going to stretch out that much more.”
21:43 [True or false?] “Small company funds always receive higher returns than large cap funds.”
23:20 [Email question] “We liquidated all of our stock investments and now only have cash. My husband and I are worried about losing our retirement funds. Should we get back in the market or stay in cash? We’ll probably need to save about $150,000 more to retire comfortably in five years.”
24:09 “Your time frame is not your retirement date; your time frame is end of life so you want to make sure you have enough risk in your portfolio to make sure you can maintain that lifestyle for the next 30 years (or so).”
