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Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine
ABOUT Alan

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

If you are like the majority of Americans, your financial health barely has a pulse, and the condition is worsening rather than getting better. With the money you have saved right now, at what age would you be able to retire? 65? 70? NEVER?! The doctors are in the house: Joe Anderson and Alan Clopine and are here to revive your retirement plan and to take you from surviving to thriving!

Download this week’s special offer – for a limited time only!

Retirement Rescue Guide - free download

Retirement Rescue Plan:

  • Diagnose the Problem: Symptoms
  • Stop the Bleeding: Treatments
  • Preventative Medicine

Important Points:

  • 0:00 – Intro
  • 01:26 – Retirement Rescue Plan
  • 02:00 – Overspending
  • 02:59 – Plan vs. No Plan
  • 04:53 – Account for Inflation
  • 06:20 – Proper Allocation
  • 06:52 – Download the free Retirement Rescue Guide
  • 07:40 – True/False: Most people have a budget and know how much money they spend.
  • 08:44 – Set a Budget
  • 09:53 – Shock your Savings
  • 10:30 – Max-Out Employer Match
  • 12:09 – Risk Allocation
  • 13:25 – Outpace Inflation
  • 13:56 – Download the free Retirement Rescue Guide
  • 14:36 – True/False: Starting in 2024, if you earn more than $145,000 in the prior calendar year, all catch-up contributions at age 50 or older will need to be made to a Roth account in after-tax dollars (NOTE: This has changed since this episode was recorded! A two-year administrative transition period will begin in 2024. This new rule will not be enforced for catch-up contributions made before April 15, 2026 for the 2025 tax year, so the rule will be fully in effect beginning in 2027.)
  • 17:23 – Tax Smart
  • 19:03 – Ask Joe & Al: If I have a target date mutual fund do I still need to rebalance my portfolio? Kaleo, Guam
  • 20:08 – Ask Joe & Al: With the current market conditions, I’ve gone to a higher percentage of cash in my portfolio. Is it better to invest in I bonds or Treasury bills? Dani, Tennessee
  • 20:34 – Pure Takeaway
  • 21:06 – Download the free Retirement Rescue Guide
  • 22:29 – Pure Takeaway
  • 22:44 – Download the free Retirement Rescue Guide

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Transcript: 

Joe: Is your financial health on life support? Well, you came to the right place because we have the doctor in-house. Welcome to the show, everyone. The show is called Your Money, Your Wealth®. Joe Anderson here. I’m a CERTIFIED FINANCIAL PLANNER™. President of Pure Financial Advisors, and I’m with the big man, of course, Big Al Clopine. He’s sitting right over there.

Al: How you doing?

Joe: Good. We’re talking about financial health and if you’re like most Americans, we’re on life support and it’s not getting any better. If you take a look, 2020, 46% of Americans could not cover their basic necessities in retirement. That number is trending in the wrong direction. Now it’s 52%. Let’s flip the script here, folks. Let’s get us in better financial health. That’s today’s financial focus.

Joe: Here’s a startling statistic. 37% of people haven’t even started saving, haven’t even started looking at their financial health. Not to worry folks, we’re going to get you started. We got the doctor in the house, Dr. Big Al Clopine.

Al: Today, we’re going to talk about your retirement rescue plan. And just to be clear, I’m not a doctor. But even still, I will help you diagnose your problem, stop the bleeding, and then prescribe medicine or whatever you need to do to get this back on track.

Diagnose the Problem: Symptoms

Al: And Joe, I think this is a show that a lot of people need to hear, because so many people are behind on saving for retirement.

Joe: Yeah, I mean, there’s a lot of other things going on in people’s lives, right?

Al: There are.

Joe: And procrastination kind of plays a big role in this. So let’s start diagnosing some problems. One of the biggest things is that we’re overspending. You have to start paying yourself first, but I know it’s challenging. Because you have a mortgage, or you have rent, you gotta put food on the table, you got daycare, you got this, you got that. And next thing you know, you run into debt with your credit card and you didn’t even save a penny for yourself. So on average, consumers spend about $7,400. So you earn, you spend, and then now you owe.

Al: Yeah. It’s an equation that just simply doesn’t work. In other words, it doesn’t really matter what you make, if you’re spending $7,400 more than that what happens? Well you go into debt and debt compounds. It’s a big problem, especially for retirement. So Joe, it’s just one of those things and it seems so obvious. But here’s what happens, is people have a thought of what they can spend and things come up. The car breaks down or someone gets sick, or you know what, it’s a once in a lifetime vacation that we don’t want to miss out on. All these things add up over time.

Joe: Let’s take a look at people that have a plan in place versus people that don’t. Right? A simple plan could be just writing something on paper, right? Emergency fund. 65% of people at least have emergency fund that have a plan. Non-planners, only 33%. Looking at aware of what they’re invested in. What are the fees? What are the costs? 71% there, less than a half. Rebalancing the portfolio, or managing the risk of their overall investments, 87% of planners, they get this. They understand it. 63% for non-planners. That’s pretty good. Only 47% of people have zero debt, but only 30% here with non-planners. So what’s the gist? Put a plan in place. Start writing things down. Start with your goals and work backwards.

Al: Yeah, and I think that’s pretty telling because many of us are going into debt, just like we talked about, because you really don’t know what you’re spending. Now when we’re talking about debt, we’re talking about consumer debt, car loans, things like that. Most of us have mortgage debt that are- that bought a home. So, that doesn’t really count in this category. But people have credit card debt, they got student loans, they got car loans, on and on and on.

Joe: Looking at this stat here, 78%. GoBankingRate surveyed a thousand Americans 18 years or older. And out of those thousand people, 78% of those people had less than $50,000 saved in retirement.

Al: Yeah, it’s not enough.

Joe: I think they found the worst, the most depressing stat ever.

Al: Well, maybe they just asked 18-year-olds. I can tell you my kids don’t have 50 grand.

Joe: Oh, for sure.

Al: But the point is, we’re behind in our savings. We know. And $50,000 for a lot of people, that’s a lot of money. It’s a lot of money for everybody. But $50,000 for retirement, if you think about how much income can you generate to live off of, well, maybe about $2,000 a year. It’s just not enough.

Joe: Yeah, you got to look at inflation. Most people don’t understand inflation, until like the last couple of years, where we’re seeing the price of goods and services that we use every day increase. Looking at 2023, $100, right? So you take your $100, you buy some goods and services. In 2043, so 20 years, given a 3% inflation rate, it almost doubles. So you need almost $200 to buy the same goods and services that you’re purchasing today. This is the whole reason why you need a strategy and a plan, especially around your investments. Because if you just hold your money sitting in cash, right, it’s pretty hard to outpace inflation. So basically, you’re kind of running in mud here, or you’re losing money safely.

Al: Yeah, no question. And finally, you gotta consider your investments. Age appropriate, right? If you’re younger, you want to tend to be a little bit more aggressive. If you’re older, maybe a little bit more conservative, or maybe even a better way to say this is have investments that meet your goals.
Whatever your goals may be, whether they’re aggressive or not, depending upon your age, make sure investments are working alongside with what you want to accomplish.

Joe: Yeah, because we see some people that should be very conservative, but they’re very aggressive. Right. And on the other side where, hey, you could probably take on a little bit of risk, right? You maybe have some excess capital, or you have a longer time frame where they might be very conservative, but they should be maybe a little bit more aggressive. So finding that portfolio based on your goals is the first step. And then I think the second step is just taking the sleep test, right? Can you sleep at night with the portfolio that you have? Because if you can’t, right, you’re going to have to make some changes. Because you’re going to make changes regardless. You’re going to have so much anxiety about the markets, you’re going to sell when you shouldn’t be selling and buy when you shouldn’t be buying. So making sure you have that strategy and have that combination of conservative and aggressive. Okay, we gotta take a short break. When we get back, what we’re gonna do is we’re gonna stop the bleeding. You’re watching Your Money, Your Wealth®.

Andi: For a limited time only, The Retirement Rescue Guide is the special offer at YourMoneyYourWealth.com. This free guide explains the symptoms of a financial plan on life support and the treatments and preventions that can help revive it – in more detail than Joe and Big Al can cover here on YMYW. Go to YourMoneyYourWealth.com and download this special offer, The Retirement Rescue Guide, by this Friday.

Stop the Bleeding: Treatments

Joe: Hey, welcome back to the show. Show’s called Your Money, Your Wealth®. Joe Anderson and Big Al hanging out here. Stopping the bleeding. It’s called a Retirement Rescue. Is your financial health on life support? Hopefully it’s not, or we’re gonna revive you right now, but let’s see how you did on that True/False question.

Al: ‘Most people have a budget and know how much money they spend.’ True or false? I wish that were true. I wish most people had a budget, but Joe, very few people that we talk to actually keep track of this stuff.

Joe: Very few.

Al: Yeah.

Joe; What percentage? I would say 5% of people actually know how much they’re spending.

Al: I mean, I think when you look at surveys, they say 50% do, but we know it’s way less than that.

Joe: That’s a- like you engineers out there, that have your spreadsheets, right? You’re the only ones. Everyone else, I mean, they’re winging it. Most people, 65%, I would say this is 95%-

Al: I would too.

Joe: – have no clue what they’re spending. They might know what they’re spending on the major things.

Al: Yeah, Yeah.

Joe: Right? But you know, every single month or every single day, something kind of pops up. 27% say, you know what, I don’t even need a budget.

Al: Yeah, which that’s probably about 1%. So the number is a little messed up. And by the way, is that a parking meter smoking a cigarette? I think so. Yeah, I think so. Yeah. They’re taking a break. I don’t need a budget. I’m going to smoke a cigarette right here. All right. Stop the bleeding, get a budget. Well, here’s something, you know, if you’re not going to, like, have a spreadsheet and look at every line item of every dollar that you spend or every penny that you spend, you know, look at your income, right? Your net paycheck. Because then that would be after taxes. Then you look at, okay, well, what are my needs? You know, so here’s your mortgage, right? My wants, and how much do I want to save? 50% is probably your needs, 30% your wants, 20% savings. I mean, this is at least a kind of a high level, good- good place to start. It’s not perfect by any stretch.

Al: No, it’s a guideline. Actually 20%, if you could save 20% of your income, you’re gonna be in great shape. I’ll just tell you right now. Hard to do, very hard to do.

Joe: I’d say what, most people save about 5%?

Al: About 5%. About 5%, something like that. But if you can work to 20%, that’s great. But realize the rest of your expenses are stuff you have to spend, whether it’s rent, your mortgage, whatever it may be. And then there’s other stuff, like trips and clothes and things like that. So just realize there’s a difference between the two. When things get tighter, you can cut down on your wants just to keep the budget in balance.

Joe: So let’s take a look. You have $75,000 of income. You’re at that average savings rate of 5%. So over 30 years at a 6% rate of return, hypothetically, right? You’re going to have $314,000. So let’s say if you can shock that savings a little bit, right? Just shock it up. Double that savings to 10%. So you’re $75,000 of income. You save 10%. All right. $629,000. That’s a big chunk of change. If you can get it up to 15%, that’s like before we said 20%, but at 15%, you’re almost at a million. Right? At 20% you’re probably at $1.2 [million].

Al: Yeah, no question. It’s it all comes down to savings. And like we talked about, what you make, what you’re spending, the leftover savings, that’s what you needed to save. Now realize this though, a lot of companies have 401(k)s and the matching, the matching on the 401(k)s, they keep going up and up and up. And Joe, right now, the average 401(k) match of all employers is 4.7%. That’s extra money. You know, if you save 5% and can have another 4%, almost 5% go in, that’s like 10% savings.

Joe: You know how many people blow this up? Is that you have to take a look at your overall 401(k) plan, right? Because sometimes the match, let’s say if you max out your 401(k) plan too early, all right, then you might lose some of that match, right? Some of you are not taking advantage of the full match because you might have to contribute maybe 10% to get the 5% or you have to contribute 6% to get the 3%. There’s all sorts of different formulas that you see out there in your overall 401(k) plan. There’s billions of dollars that are being missed of free money from employees because they don’t understand their employer match.

Al: Yeah. And also Joe, this happens too, which is the market has a problem. It goes down, people start saying, I’m not going to save anymore because the market doesn’t work. So now what have you’ve done? So you’ve stopped savings, you’ve stopped the employer match, and furthermore, if the market’s down, you actually would want to be buying more because stocks are cheaper. That’s the best time to make sure you’re going all in. So just get this on autopilot and keep doing it. Good markets, bad markets. Keep saving, keep getting the match.

Joe: Alright, let’s look at getting the risk right. So, 30s and 40s. I guess you can sprint. Not worry about a heart attack. Oh, but then when you get in your 50s and 60s, you gotta take it a little bit easier.

Al: You better get on a bike.

Joe: You gotta get on-

Al: You gotta go a little easier on the knees.

Joe: This guy’s 50. He looks like he’s 80.

Al: But he can ride a bike well.

Joe: But he can ride a bike. Look at that. He’s Lance Armstrong. Look at that- look at that form, Al.

Al: Yeah.

Joe: And then when you’re 70s, you’re chilling.

Al: You’re not doing it.

Joe: You’re not doing anything. You’re just laying in the hammock. So here, in your 30s and 40s in your overall investment strategy, you might want to take on a little bit more risk, right? You could take on higher risk. Some more stocks. 50s and 60s as you’re transitioning closer to retirement. Now you want to start to have a blending of stocks and bonds. And then in your 70s, you know, you might want to be a little bit more conservative. This is very high level. Of course, you want to pinpoint that portfolio for your own target return and your goals. But this is just kind of a fun way to illustrate it.

Al: Yeah. And when we talk about stocks and bonds, so let’s take a look, what does this mean? So if inflation- last 20 years through 2021, it’s been a little over 2%, right? So if you put your money into a checking account, you’ve earned 0%, right? So you actually went backwards. So you look at the different investments, and you look at the ones that are more risky, like real estate investment trusts or stocks, like S&P. They do a lot better. They’re volatile. Yes, I understand. They go up and down. But if you average those years together, they do better over the long term. That’s why when you’re younger, you can handle that risk a little bit better. When you’re older, you might want to pull back on the risk, because now you’re going to want to start pulling money out, like the bonds, you know, maybe 4% versus- versus almost 10%. It’s actually important to have all components in your investment, but you just may want to change things around as you get closer to retirement.

Joe: Okay, we gotta take a break. When we get back, we’re gonna talk about preventative medicine. How about that for a concept? Let’s cure the ailments before they happen. Alright, we’ll be back in just a second. You are watching Your Money, Your Wealth®.

Andi: Download the Retirement Rescue Guide for free. It’s the special offer right now at YourMoneyYourWealth.com but only for a limited time. Learn how to recognize the symptoms of a financial plan in need of a transfusion and the treatments and preventions that can help you go from just barely surviving to thriving. Go to YourMoneyYourWealth.com and download this special offer, The Retirement Rescue Guide, by this Friday.

Preventative Medicine

Joe: Hey, welcome back to the show. We’re here to rescue your retirement. Joe Anderson and Big Al hanging out here. Let’s see how you did on that true/false question.

Al: ‘Starting in 2025, you may qualify for $10,000 in catch-up contributions to a 401(k).’ True or false. Boy, I sure hope that’s true. What do you think, Joe?

Joe: I believe it is true, Al. We just talked about that, you know, with the SECURE Act 2.0, they started to kind of infuse a little bit more favor into the retirees’ retirement plan. Especially starting in 2025 with that catch-up contribution. It’s going to be $10,000. So once you reach age 60 to 63, another $10,000 can go into the overall 401(k) plan. 2023, 50 up, $7,500. So pretty good matches that, especially if you’re a little bit behind in your 60s, you can really crank it up.

Al: Yeah. And I think when you think about preventative medicine, what can you do right now to get caught up? This is a huge benefit. $7,500 right now will go up to $10,000 in 2025 if you’re 60 to 63. Take advantage of it. But Joe, actually, if you could have saved earlier, you can do even better.

Joe: Yeah, this is great. When I got into the business 25 years ago, I talked to my younger sister and I showed her something like this and I said, you know what, if you could start saving as early as possible, you know, it’s gonna reap huge rewards. Let’s say that they’re saving $7,500 a year. So you got Jack and Jill, right? So Jill saves from 25 to 35. She stopped saving. So she put in $75,000 total over that 10-year period, $7,500 per year. Stopped saving from 35 to 65. The balance in her retirement account is $600,000. Pretty good. Let’s say Jack, right? He’s partying. He doesn’t want to save. He wants to take that $7,500 and do other things with it. But then at age 35, he’s like, you know, I’m getting a little bit older. I should start thinking about my retirement. Start saving that 35, saves that same $7,500 a year, but he saves until 65. So he put $225,000 away. The ending balance here is $628,000. It’s almost identical, but Jill put $75,000 in. Jack had to put $225,000 in to get to almost the same number.

Al: Triple the amount to get to the same number. But it’s really important. We want to emphasize this. If you start earlier, it’s better, but for a lot of people, they didn’t start early enough because life got in the way. I don’t really care what age you are. You’re 62 years old and you haven’t saved very much, start today, because what you do today will give your retirement something, more breathing room. You’ll be able to do more. You’ll be able to improve your situation.

Joe: Where we find most people’s liquid assets or dollars are in their tax-deferred accounts. And we’ve been talking about 401(k)s and matches and compounding and all of that all morning long here. So yes, you want to take advantage of the tax-deferred accounts, 401(k)s, IRAs and so on. But also for a lot of you, you might wanna consider a Roth IRA. Or a Roth 401(k). Because they’re after-tax, but all of that growth grows tax-free. So let’s say Jill, for instance. She put her $7,500 a year into a Roth IRA. So for 10 years, that’s sitting in a Roth IRA. Her $600,000 is gonna come out 100% tax-free. Pretty good. Let’s say Jack went to the standard 401(k). Okay? So he put his $225,000 in the 401(k), but that $225,000 comes out 100% ordinary income. He did get a tax deduction though, as he put in his $225,000 over the years. But in most cases they don’t necessarily save the additional tax savings, they spend it. So understanding does a tax-free account work better for me?
Does a tax-deferred or pre-tax account work better for me? Or maybe just a straight taxable account where I might be subject to capital gains? But I think the best strategy is just to have a balance in all of these.

Al: I think it is too. And then also realize you can switch it around. You can swap. In other words, you can take money out of your tax-deferred, you can put it into a Roth IRA. That’s a Roth conversion. Yes, you pay tax on what you convert, but all future income and growth in principal is tax-free. On the other hand, if it’s in your taxable account, you already paid tax on it. You can get into a Roth also, right, by doing a Roth contribution. So just be aware of what’s available.

Joe: Hey, it’s that time of the show again. We’re going to flip the script and turn it over to you, our viewers, and answer some of your email questions.

Al: All right, our first question is Kaleo from Guam. “If I have a target date mutual fund, do I still need to rebalance my portfolio?” What do you think, Joe?

Joe: We have viewers from Guam?

Al: Apparently. Actually, I think we’re rated in Sweden. That’s the last I saw, so maybe we’re worldwide. Who knows?

Joe: Yeah. Target date fund, right? So you take a look at, alright, well, when do I wanna retire? Is it 2040? 2045? 2050? 2035? And basically there’s a glide path within the overall target date fund that is going to shift and change the overall allocation as you get closer to that target date. I think target date funds are really good and useful for some cases and not a huge fan in others. If you just want to put this thing on autopilot as you’re saving money into your 401(k) plan, I think it’s an okay option. But once you retire and you start taking distributions from the account, I don’t know if it’s a great solution depending on how much money that you have. But yes, you don’t, it’s a, just a set it and forget it and let it go.

Al: I totally agree. Let’s see. Number two, Dani from Tennessee. “With the current market conditions, I’ve gone to a higher percentage of cash in my portfolio. Is it better to put it in I bonds or Treasury bonds?” Dani, both are good choices. I bonds, you can only do $10,000 a year. The rates are a little bit higher than treasury bonds, but they’re variable. Treasury bonds, they’re fixed for whatever term you pick. So you may potentially wanna look at both depending upon your situation.

Joe: Retirement rescue plan, what’s number one? You gotta diagnose the problem. Take a look. What are your goals? Are you on track? Not on track? What are the steps that you need to do? Stop the bleeding. If you you’re not on track, what do you need to do to get yourself on track? Get yourself healthy. And then from there, making sure that you stay healthy. Preventative medicine. That’s it for us today. Hopefully you enjoyed this wonderful show. And hopefully your financial health will be better for it. For Big Al Clopine, I’m Joe Anderson, we’ll see you next time.

Andi: The Retirement Rescue Guide is the special offer right now at YourMoneyYourWealth.com, but only for a limited time. Learn how to take your financial plan from just barely surviving to thriving with the treatments and preventions in the Companion Guide to today’s episode. Go to YourMoneyYourWealth.com by this Friday and download The Retirement Rescue Guide for free.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience, and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.

AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.

CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.