Matt Balderston

Matt is a graduate of the University of California, San Diego with a BS in Mechanical Engineering. After 10 years as an engineer, Matt decided to pursue a long-held passion and shifted his career to finance. He attained his CERTIFIED FINANCIAL PLANNER™ designation and the Accredited Investment Fiduciary designation. Prior to becoming a fee-only advisor [...]


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

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 [...]

You’ve saved for retirement for years with tools like 401(k)s, IRAs, other investments, and rental properties. Now you need an income stream for life. How do you go about it? You may need to create income to support your lifestyle for 25 years or more.

Financial professionals Joe Anderson and Alan Clopine give you strategies to create a steady stream of income during retirement.

Plus, Pure Financial’s Matt Balderston, CFP® tells us about the Total Return approach and the benefits of using this strategy for retirement planning.


Retirement Income Strategies Guide


Important Points:

(00:48) – Retiree Sources of Income

(2:27) – Creating a Steady Stream of Income in Retirement

(3:25) – Calculating How Much Money You Should Have Saved for Retirement

(4:47) – Analyzing Strategies to Help Save More Money

(5:08) – The 4% Distribution Rule

(8:39) – Retirement Income White Paper – Download Here

(9:43) – Life Expectancy

(10:22) – Ways to Create a Fixed Income: High Dividend Stocks, High-Yield Bonds, Laddered Bonds

(11:28) – Types of Annuities

(14:12) – Total Return Approach

(18:23) – Is Social Security Going to Run Out of Money?

(19:54) – Delaying Social Security Benefits

(20:35) – Reverse Mortgage

(21:30) – Part-Time Jobs

(22:08) – Renting a Room in Your Home

(22:59) – Saving Money on Taxes After Selling Your Business

(24:16) – Pure Takeaway


Joe: You’ve worked for 10, 20, 30 years saving as much money as you possibly can in IRAs, 401ks, 403bs, maybe even a TSP. Now it’s time to retire. Do you know how to create the retirement income to last you your lifetime? Welcome everyone shows called your money, your wealth. My name’s Joe Anderson, CERTIFIED FINANCIAL PLANNER™, president of Pure Financial Advisors. And this show just is not a show without the big man. That’s Big Al Clopine and he’s sitting right over there. We’re going to get to him momentarily, but here is the problem folks. When it comes to retirement, this is not your parents retirement anymore, where they might’ve had a large pension, had some Social Security and shorter life expectancies. Today’s retirees face a tougher challenge than ever before. Because if you look at the statistics, this is an average 65 year old when they’re looking at their form of income or their sources of income, almost 35 percent is coming from Social Security.

Looking here, this is their investments. Personal retirement accounts, 20%. Investments, 10%. Guess what? There’s another piece of the pie here. It’s called current employment earnings. People need to continue to work just to supplement their income. This is a problem that we need to fix so you’re at the right place. That’s today’s financial focus.

18%. What do you think that 18 percent stands for? That’s the individuals out there that have a pension plan. So what does that mean? 82 percent of us do not have a pension plan. We need to figure out how do you create the retirement income from all of our sources. How do you encompass Social Security with your savings?

What type of investments should you choose to create that steady stream of income? It can get confusing. So. Without further ado, let’s bring in the big man right now, Big Al Clopine.

Al: So today we’re talking about creating a steady stream of income because you’re able to save through your working years. How do you turn that into an income stream? So you first need to know what your goals are, how much that you want to spend. So we’ll show you how to calculate your number, what that means.

Then we’ll get into how you create that income, maybe fixed income opportunities. Maybe you want to go total return, maybe a combination of both. And we’ll get even a little bit more creative and show you a few more things towards the end of the show. So Joe, I mean, you think about saving some money and you Receiving Social Security and then it’s like well, how do you take these dollars and create income for 30 years, right?

Joe: It’s it’s a totally different set of planning, right? I think as we accumulate wealth We’re throwing money at our 401k plans Maybe Roth or brokerage accounts, right and it’s fairly easy in a sense of let’s just save as much as we can But then when it comes time to retire then it’s like oh boy right now I have this nest egg that I’m taking distributions from what assets do I sell what tax bracket?

Am I going to be in how big of a nest egg do I actually need? And you know what? What’s interesting now is Fidelity put out something pretty cool is that it gives you a very high level gauge of how much money that you should have at certain ages. so for instance, if I look at the graph here, if I’m 50 years old, you want to at least six times your gross income.

So if I make 100, 000 a year, 100, 000 times six would be 600, 000. So you can depend on, you know, where you’re at, how old you are. It’s going to see if you’re on track to, to, to reach that next day goal.

Al: Yeah. And I think, Joe, so by age 67, what this is Fidelity, they’re suggesting that it’s 10 times income.

So that would be a million dollars and I think I know what a lot of you are saying is I’m not there. I’m, I’m behind. Right. And we get a lot of people that come to us at age 50 or 60 and they haven’t really saved that much.

Joe: Right. And the problem is, is that, all right, well now I’m 55 or 60, I’m knocking on retirement store maybe the next 10 years and I don’t really have a lot saved.

I know I can count on Social Security and they go, you know what, I’m not going to do anything. I’m just gonna work until I die. Right, right. That’s not necessarily the right approach.

Al: But let’s go over an example. Let’s say you put 24, 000 into a 401k. You got a little bit of company match. You can earn 7 percent per year over a 10 year period.

Let’s just say that. Now you’re close to 400, 000 of savings. Savings where you had nothing. Now you’re way ahead of most people, Joe, at retirement. So it’s not too late at any age, right?

Joe: I mean, all it is is a few different lovers that you can pull. Can I push out my retirement a little bit more? Can I save a little bit more? By just doing a couple of things there. Save a couple of extra dollars. Push out your retirement a few more years. That’s going to increase your overall Social Security benefit. That’s also going to mean that you’re not taking dollars from that overall portfolio because you pushed out your retirement a few years.

So to dial this in even a little bit deeper, there’s something that’s called a 4 percent rule to figure out or calculate your magic number. And Al, let’s kind of walk through this example for individuals to see, all right, well, if these are my goals, anyone can do this arithmetic. So you can do this at home to say, all right, well, am I on track?

Al: Yeah, and I think this works really well if you’re near retirement, because it’s harder when you’re younger to know what these numbers are. But let’s say you want to spend 75, 000 in retirement per example. Let’s also say you have fixed income Social Security of about 30, 000 and maybe about 20, 000 of other income.

So that’d be 50, 000 of total. You want to spend 75, 000. So you still need 25, 000 from somewhere, right? And so now you take that 25, 000 need or shortfall, you multiply that by 25, 000. That gives you 625, 000. That’s approximately what you need to have saved to be able to generate that kind of cashflow.

Joe: Yeah. So it’s the 4 percent rule. So if you look at 625, 000, if you take 4 percent of 625, 000, guess what? That’s 25 grand. So what you want to do, just figure out exactly what you’re spending on a monthly basis, multiply that by 12, and then just take a look at what do you think you can expect from you and your spouse from Social Security?

What do you think that you will get from maybe a pension or if you have real estate income or any other ancillary incomes, maybe you’re working part time or something like that. So you just take these numbers, put it on a napkin for all I care. Take your goal minus your fixed income. That’s going to come up with your shortfall.

Then you multiply that by 25. And then that’s going to give you a gauge to see, you know, in the ballpark of how much money that you need.

Al: Yeah. And I think that’s the key. It’s a gauge. It’s not an exact science. So basically what we’re saying is this, that’s roughly what you need to save. There’s a lot of factors involved.

Like for example, your longevity. Right. In terms of perhaps maybe there’ll be an inheritance of all kinds of factors. You’re ready to return on your investments. So it’s just a starting point, right.

Joe: It helps people get to where they need to be. But then once you retire, you don’t say, well, I’m going to keep pulling this 4 percent out because some years you might have to pull out a lot less depending on what the market does.

Some years you might have to pull out a lot more depending on what life happens. So we believe that the 4 percent rule is a really good gauge to say, all right, Well, am I on track? Where? Where do I need to be? Here’s where I’m at. This is where I need to be. What does that number look like? You can do a quick back of the envelope type calculation at least get you there because we’ve seen people that have maybe 200, 000 saved and they’re spending, you know, 75, 000 a year from the portfolio.

And it’s like, okay, you’re gone. And you know, you’re done. And Three years. So you don’t necessarily want that to happen on the flip side there, too. We see people that have multi millions, but they’re afraid to spend a dime because they’re like, Oh, I don’t know. I don’t want to run out. So if you can do some of this back of the envelope type stuff, at least it can give you maybe a little bit more confidence when you when you approach retirement.

Al: Yeah, no question, Joe. And I think again, so this is just a gauge. So your own circumstance might be slightly different, but it tells you whether you’re in the ballpark or not. So do this, see where you’re at. If you’ve got a few more years to work and you’re behind, then start saving more. You may, maybe you might want to work an extra year or two, whatever, but you can get this done.

Joe: Hey, we got to take a short break. When we get back, we’re going to break things down. We’re going to bring Matty B, Matt Balderston. He’s a certified financial planner, senior, financial advisors at pure financial advisors. He’s going to talk about the total return approach in your overall portfolio.

Ever heard of that? You want to stick around. Also go to YourMoneyYourWealth.com click on our special offer today. We have a great white paper that talks all about this. How do you create income? How do you create a fixed income source to last your lifetime? When we get back to we’re going to talk about dividend paying stocks, high yield bonds, all sorts of stuff. So you don’t want to miss it. We’ll be back in just a second. You’re watching Your Money, Your Wealth.

Joe: Hey, welcome back to the show. Show’s called Your Money, Your Wealth. Joe Anderson, Big Al, talking about creating that retirement income, that steady stream of income that you need throughout your lifetime. Stick around this segment. We got a special guest, Mr. Matt Balderston. He’s a certified financial planner, senior advisor at Pure Financial Advisors. Alan and Matt are going to talk about a total return approach in your overall portfolio. But before we get to any of that, let’s see if you passed the true false question.

Al: A 65 year old man can expect to live on average until 84, while a 65 year old woman can expect to live on average until 80. Seven.

That’s actually an absolutely true statement. That’s the numbers, that’s the actuarial tables right now. Interestingly enough though, when you put a husband and wife together, the joint life expectancy is over 90 years of age. So the point here is that you gotta plan for many years for retirement or get married.

Joe: Yeah. Or get married, right? Yeah. I was, I was talking to Ruthie, my mother, my dad passed, and she was like, yeah, that’s all I read is these stupid stati statistics. So now I guess she’s gotta get married. Hey, so we’re talking about longevity here. So you gotta create income to last 40 years for some of you.

And there’s a lot of different ways that you can do this. Al, one of the popular ones that people hear is this one right there, right? High dividend paying stocks.

Al: Yeah, high dividend paying stocks. I’m Fred Grossman. We’ve seen a lot of big stocks and high yield bonds, and it’s tempting to use these vehicles, but when you do, you tend to have only one type of investment in your portfolio.

You’re not necessarily very well diversified. And you have to realize that when you receive a dividend, you’re also reducing the value of your stock, because that’s how these things are calculated.

Joe: Yeah, we’re huge fans of dividend paying stocks. Absolutely have that in your portfolio. High yield bonds, not a huge fan here because you’re taking on a lot of risk for that yield, right?

And then laddered bonds, of course, yes, but this is what people do. They just bunch it up and say, you know what, here’s my portfolio. All I’m looking for is really high dividend paying stocks. Well, that’s a very, I guess, structured portfolio that is leaving out thousands of different securities to give you the diversification that you need.

Another way that people are looking to create income are annuities. All right, annuities are issued by life insurance companies. It will give you a guaranteed income for the rest of your life. Now, these are shaped and created with all sorts of different bells and whistles. So you have to be careful what type of annuity that you’re purchasing.

Let me explain something real quick. There’s something that’s called an immediate annuity versus a deferred annuity. An immediate annuity. Right. This is exchanging a lump sum for an income stream that you cannot live. I’m going to give 100, 000 to MetLife. They’re going to ensure an income stream for my life.

So they will pay me 4, 000 every single year until I die. If I die tomorrow, guess what? MetLife wins. If I make it to 110, I win. This is pure insurance. This is the best way to insure against longevity. If you want to purchase an annuity, now there’s deferred annuities. So I’m going to give my money to this insurance company, but I want to defer that income to a later date.

There’s fixed annuities. So you’re going to receive a fixed rate and that’s based on the coffers of the insurance company. I’m going to give that 100, 000 to MetLife again. They will guarantee me, let’s say 3 percent on my money for the next five years. Now I have to hold it in that deferred annuity for the five years to get that 3 percent to avoid any type of penalties or taxes.

But then after that five years, Then I can receive that income if I choose to. Now there’s these indexed annuities and variable annuities. We could spend a whole show here. I would just be buyer beware. These are filled with all sorts of fees and bells and whistles that really don’t pay off in my opinion, indexed annuities.

I think these are probably one of the worst investments on the planet. It’s not an, even an investment. It’s an insurance contract. I think a lot of times people will sell it. Hey, would you like a, a stock market like return with zero risk? Well, sure. Who doesn’t want that? They pitch these almost like the Holy Grail of investments.

So just be buyer beware. I’m not a huge fan of annuities and I don’t know if you are, Al, but I think there’s a time and place for them, but you just got to be pretty careful depending on what you want to do.

Al: Well, I think you’re right, Joe, because I mean, annuities do have their place, but they tend to have some of them tend to have high costs.

So you just have to be careful. And they have surrender charges to where you’re very much locked in.

Joe: So let’s do this. We talked all sorts of different creative ways to create income, such as do you want a dividend pay in stock, high yield bonds? How about a bond ladder? Maybe you want an annuity. I think one of the better ways to look at creating income or building an overall portfolio is a total return approach.

Let’s turn it over to Matty B and Big Al to walk us through exactly what is that type of approach when it comes to investing for retirement. So

Al: today we’re talking with Matt Balderson. He’s a senior advisor at Pure Financial. Thanks for joining us today.

Matt: My pleasure.

Al: So let’s jump right in. What does total return mean?

Matt: Total return is getting income from your investments that isn’t necessarily created by those investments. You talked already about, dividends and interest income from bonds. Well, there’s also the principle of those assets, selling them to some extent, whether it’s through rebalancing or actual just sales for need, that can really help diversify how you create that income.

Al: Now that’s a little bit different than maybe so our parents grew up with was which was invest live off the interest and dividends and don’t touch the principle. So this is a little bit different way to go.

Matt: It definitely is. But the principle, if you want to look at it this way, is where you started when you retired, but it is going to appreciate. So taking some of that appreciation off the table is still leaving the principle intact.

Al: So then, would you say that a total return approach would be more risky or less risky than, say, just a fixed income approach?

Matt: I think it’s less risky. You made the comment earlier, as did Joe, that when you’re completely focused on dividend Producing stocks and interest producing bonds. You’re leaving out huge amounts of the actual investment marketplace. And a good statistic that kind of illustrates this is after the financial crisis in 2008, about a year later, 57 percent of dividend producing stocks either cut or eliminated their dividends. And if that’s not risk, I don’t know what is.

Al: Yeah, you’re not kidding. All right. So let’s talk about a total return. So how do you implement that? Let’s say maybe you’d want to do a total return and you use what we might call the four percent rule. How would that work?

Matt: Well, with the four percent rule, the idea is to try to keep your withdrawals within four percent of the total value of your portfolio.

If you can get a rate of return a little better than that, that can be very helpful because you do want to keep up with inflation. So if the account is a little higher the following year than it was the year before, then that four percent is a larger amount that you can draw. There will, however, be years where the portfolio is down in which case you can make adjustments through, you can spend less or spend more during the years when the market’s up higher.

So there’s a lot more flexibility in that, in my opinion.

Al: And what, and some people like to do it a little bit differently. They might say a flexible spending approach where if the market’s doing well, maybe they’ll spend a little bit more that year markets doing not as well. They might spend less. So.

Matt: Well, that actually is the closest that we can compare to when you’re working, whether you’re, when your income goes up or when, one of two spouses gets laid off or a cut in income, or there’s an emergency. Yeah, you, you adjust your spending. And so we’re already trained to do that. Why not do that to some degree when you’re in retirement based on the performance of your portfolio?

Al: So in your opinion, then, is the total return method a better way to go than maybe just a little bit? income? I believe so.

Matt: Yes a big fan of this too, is more tax efficient without detail. You know, if you interest, every penny of if you’re selling part of have a lot of basis return.

Al: Well, and I think that’s a good point because with dividends, they can be qualified. You can get capital gain treatment, but when you’re selling chunks of your portfolio, it can be long term capital gain, which is a lower tax rate than ordinary income. And some of it is basis, which is tax free. Right, right. And when you’re thinking about creating retirement income, you want to have some tax efficiency.

Matt: Absolutely. You keep more of it in your pocket.

Al: Yeah. So it’s, it really is a way to make it a little bit more tax efficient. Which stretches it longer. Yeah, exactly. Well, Matt, thank you so much for joining us. And, we’re going to take a break right now. You’re watching Your Money, Your Wealth.

Joe: Hey, welcome back to the show. Show’s called Your Money, Your Wealth, Joe Anderson and Big Al hanging out here talking about creating a steady stream of income in retirement. Want to thank Matty B, Matt Balderson from Pure Financial for joining us. Hey, before we dive into some rapid fire. In the questions that you have for us, let’s see how you did on the true false question.

Al: The Social Security system is projected to run out of money around 2033 and would stop making payments in 2034. Well, that’s false. what’s going to happen if there’s no changes in Social Security is the trust fund would actually run out of money, but they’re still collecting payments from those working.

So it’s projected right now that those would, that are collecting would receive 77 percent of their benefits. But Joe, that’s that’s if there’s no changes. We’ve had problems with Social Security before and they’ve made changes in the past.

Joe: Yeah, a couple of things they could do, right? They could probably extend their full retirement age.

So right now, the full retirement age is between 66 and 67. They could push that out to 68 or even 70. They could decrease the COLA. They could probably increase the overall payroll tax. So there’s multiple things that they can do, but it’s political suicide. So we’ll see, just stay tuned. Probably nothing’s going to happen until 2032.

Yeah, it’s gonna take a while until like we have to do something, but no, it’s not going to stop. It’s not going to dry up. There’s still millions of people that are putting in payroll tax. so there’s going to be some changes. Who knows what it’s going to be? But I would not necessarily worry about it’s going to be the zero.

Al: So let’s get into a new segment that we call rapid fire. We got a few creative ideas on how to how to increase your tax credit. Steady stream of income. And these creative ideas are, they’re right out of my head. They’re awful. You don’t want to end up in this area. Just FYI. Be that as it may, these are important.

So here’s the first one. Work longer. All right. That’s no one’s first choice. But you know what? Working longer, what that does a few things for you. Delay collecting Social Security so you get higher benefits. You save longer, right? And you’re also not spending your nest eggs. So three good things happen.

That can actually extend your retirement years financially quite a bit.

Joe: Yeah, by far. I think this is, this is the best one because it’s like the seventies, your 70th birthday should be your retirement date, not 60, right? We got to get that out of our head. We’re living so much longer. We’re so much more healthier as a society with advancements of healthcare and everything else.

70 should be the target date. A lot of really good things could happen if we did that.

Al: Consider a reverse mortgage. Now this isn’t necessarily going to work for everybody, because the maximum reverse mortgage is probably in the 300, 000 range. You have to be able to pay off your existing mortgage, but if you do qualify, you have to be over 62 years of age, and obviously be a homeowner.

But if you qualify for this, you may be able to get rid of your old mortgage payments and maybe even get a cash flow. And Joe, this can be something where all of a sudden you’re paying a mortgage. Now, all of a sudden you’re receiving payments instead of not paying a mortgage. It can make a pretty big difference.

Joe: Yeah. the HECM, the home Equity conversion mortgage. It’s a line of credit that you could do anyone that’s 62 years of age. Maybe you should take a look at it. A lot of some of the advanced academics in financial planning have looked at this that could really help a lot of individuals create additional cash flow in a very tax favored manner by using the reverse mortgage.

Al: All right. Next one is, you don’t really want to work longer, but at least full time, but how about considering getting a side job, part time work, side jobs? You know what, Joe, it’s the new gig economy. It’s easier now than ever to make some side income, right? Whether you’re dog sitting or whether you’re Ubering or consulting, or maybe you’re tutoring, there’s a lot of ways to gain a little bit of extra income.

It might be just enough to get you over the hump so you can continue your lifestyle.

Joe: Yeah, nothing better than 75 years old driving drunks around at two o’clock in the morning. That’s

Al: a good idea, bud. Is that your plan for your retirement? Exactly. Okay, now I know your plan. Your plan is to rent a room. In your home, because you’ve got a gigantic home and a lot of empty bedrooms.

I think your bedrooms are mostly filled up with people that are not paying you rent.

Joe: Yeah. It’s like the golden girls, right? But it’s the golden guys. Sit around, smoke cigars. I’ll play some poker, you know, and I’ll collect rent from my buddies. Right. Right. But I mean, I think every little dollar helps, right?

Every little dollar helps. So if there’s ways that you can a stretch your retirement out by pushing your retirement date, you know, maybe get a little side gig here and there. You know, rent a room out or rent a room and sell your house. I mean, there’s all sorts of different things that you can potentially do to, to hopefully secure that overall retirement.

Because if you’re happy, it doesn’t really matter if you have, you know, 15 people living with you. Is that is that your motto? Yes, it is. Let’s flip the switch here. Let’s go to our viewers questions and see what you got this week.

Mike: Hi, my name  is Mike McManus. I just sold my business recently. I’m looking for all the help I can get in tax strategies and how to save more money going forward in retirement.

Al: So I’m going to start with your first question, which is saving taxes. I’m going to presume maybe you’re talking about this year. So I’m going to assume that you sold your business. Maybe there’s a pretty big capital gain. So you’re trying to figure out how to save money in the current year. A couple thoughts for you.

One is, if you have stocks, bonds, mutual fund outside a retirement account, and they tend to go up and down at different points, if you have certain positions that have gone down in value, if you sell those, You’ll create a tax loss that will net against your business gain. So that’s one thing you can consider.

That’s called tax loss harvesting. You probably, when you sell, you want to buy into a similar investment, so you’re still invested in the market, but you will create a tax loss. another thing that people consider in your circumstance, depending upon what your charitable goals are, you might want to give kind of a lump sum.

But you might want to take future year contributions and make them all right now. Get the tax deduction today. You do that by opening a special kind of account called a donor advised fund. You can put money in, you get the tax deduction, in the year you put the money in, and then you can dole out that money slowly over time to the charities of your choice.

What did we learn today? What is the pure takeaway?

Well, we learned that you got to plan for a long retirement. you need to utilize your fixed income and consider total income, sources, total income being, it’s not just income. Dividends and interest, but it’s total portfolio growth. And then sometimes you got to get creative, Joe, you and I may have to go back to work. We might have to keep doing this forever so that we can fund our retirement.

Joe: Yeah. There’s a lot of different things that we went through today. Hopefully you enjoyed it. It’s creating a retirement income. It’s not easy. We didn’t, you know, get this taught to us in school. So that’s what we tried to do today. So go to YourMoneyYourWealth. com. Click on that special offer. You’ll Download our white paper on how to create that retirement income, YourMoneyYourWealth. com. Click on the special offer. Hopefully you enjoyed this show as much as we did. For Big Al Clopine, I’m Joe Anderson. You just watched another phenomenal episode of Your Money, Your Wealth. Have a wonderful weekend, everyone.

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