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ANNOUNCER: You found it. It’s your safer place for retirement planning. Prepare to be coddled in pure fiduciary goodness with your host and President of Decker Retirement Planning, Mike Decker. This is Safer Retirement Radio. If you’re in or near retirement, listen up and learn about a math-based, principle-based approach to retirement that is designed to help you enjoy a safer retirement. These strategies are to help protect and grow what you’ve saved and live the life you want today. So, grab a pen because your safer path to retirement planning starts now.
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MIKE: Welcome to Safer Retirement Radio where you get the transparency that you deserve. I am Mike Decker, the President of Decker Retirement Planning here, and I’ve brought my panel with me, Cameron Archibald, who handles all of our in-service, all of our clients’ needs throughout the retirement. And you’re kind of like the Sherpas, Cameron, of our retirees ‘cause you walk every step of the way. Thanks for joining us today.
CAMERON: Oh, so good to be back.
MIKE: And then I’ve got Josh Hunsaker here as well and Josh is the, on the architect side. He works with the planners and the clients to build the right plans to have a math-based, principle-based plan put together that also fits the customization and needs of the individual narrative of that client. Josh, thanks for being with us today.
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JOSH: Thanks Mike. Good to be here.
MIKE: Before we get started, I want to kind of have a little fun here of the idea close enough. And it’s been on my mind because, well my wife and I, we love to cook. And we don’t use recipes. And a lot of times, it gets close enough. Like this morning she [LAUGH], bless her soul, she’s a nutritionist, and she’s really good at it, but she wanted to kind of experiment a little bit. She wanted to have some turmeric in our morning drink, celery, ginger, very good things that are typically taken individually. And she thought, you know, let’s just put it all together. And [LAUGH] when we had it, I thought it was fine. It was good enough, and it satisfied a lot of nutritional value to my needs. She couldn’t drink it.
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MIKE: And it was an experiment. She wouldn’t do that to a client of hers. But, then it got me thinking, close enough might work in some situations but not in retirement. Like close enough, when you cook your brownies and they’re underdone, close enough. And I kind of like the gooey middle anyway, you know. Cameron, Josh have you guys seen this before?
JOSH: So, a few years ago, we lived in a condo here in Utah and we had this, our HOA was just horrible. I’m not gonna say the name of the community, but it was awful. Anyways, in doing the maintenance, the maintenance guy needed to redo some of the handicap parking signs.
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MIKE: Mm-hmm.
JOSH: Not the ones on the pole but the actual stencil on the ground. But, he didn’t want to spend the money on a stencil and so he just did it by hand. And so the end result was this blue blob with some kind of white deformed creature in the middle of the blue blob.
CAMERON: Oh no.
JOSH: And I mean everybody knew what it was because you know it’s a handicap spot and you know, the sign is still there so you know it’s a handicap spot but…
MIKE: It’s a blue square.
JOSH: Yeah.
MIKE: People know blue square on ground means handicap parking.
JOSH: Right. But if you were to just see that shape on a page or something there’s no way you’d be able to identify it.
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JOSH: So, in his case, yes. Close enough but in reality missed the mark a bit.
MIKE: Well it feels like the, on the 15 here in Utah, there’s a couple of spots where they’re trying to do all this construction. I feel for these construction workers. They’re keeping up with the infrastructure to be able to handle the growth that’s happening here in the Lehi area. But, sometimes when they’re drawing those lines it’s like, well close enough. And as drivers, we get it. Okay. I’m supposed to stay between these two rough lines and all is well, right? And we see this time and time again with different parts of our lives and sometimes it’s not close enough. Like when I was a kid I remember this vividly, I tried to cook my mom some pumpkin cookies.
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MIKE: But, I mixed up teaspoons and tablespoons, and I put a tablespoon of salt in the cookie…
CAMERON: Oh no.
MIKE: …batter as opposed to a teaspoon and she says, “Oh, Michael.”
JOSH: Did she eat ‘em anyways?
MIKE: No. [LAUGH] We threw them away. But close enough works and it’s fine for some of life’s situations but it should not be good enough for any retirees. And this is why we put out there so much a math-based, principle-based approach to retirement planning is critical. And if you don’t know the principles that govern proper retirement planning, go to deckerretirementplanning.com.
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MIKE: On there, you can go to our books page and resources and for free you can download our eBook, Principles That Govern Proper Retirement Planning and understand the scaffolding to which you can build your plan. Whether you work with us or not, these principles are timeless. It’s a big reason why in 2008 a small group of people had their retirements sail through the market crash, unaffected. Let me say that again. In the 2008 financial crisis, probably one of the worst years in financial history, there was a group of people that were unaffected, did not have to change their travel plans, because they followed the principles that govern proper retirement planning.
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MIKE: You can learn that. deckerretirementplanning.com. Go on there, and you can read for yourself what that means. It’s at no cost to you. It’s free. Just education online for your benefit. But, the reason why I want to bring this up, and Josh found this article this week and it just, I was livid but also hysterical as I wrote this because this is common accepted knowledge by the broker industry. People who are typically Series 7 licensed, Series 63 licensed.
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MIKE: They’re paid to put you in a pie chart and diversify your assets in hopes that you don’t, your portfolio doesn’t crash. And that may be fine for an accumulation strategy. You have a paycheck, and you can grow your assets and take a little bit more risk. But, retirees don’t have that kind of risk. If a retiree is gonna retire around 55, 65 years old, you’re gonna have probably 30 years of retirement ahead of you. If you have 30 years of retirement, statistically speaking, with the markets crashing every seven or eight years, you’re gonna have to face about four bear markets.
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MIKE: Not just like a little dip like Q4 of last year. We’re talking big bear markets like ’08, like 2000, 2001, 2002, a 50 percent crash over three years, a massive recession. Like in the early ‘90s when Iraq invades Kuwait and there was a four year or so dip in the market. Like in ’87 a black money situation, or whatever it may be. These are triggered by black swan events, but they seem to happen every seven or eight years. By general practice of the broker industry, which it’s only common practice because of sheer volume that they have over the fiduciaries in the RIA space that are independent and fighting this narrative, trying to correct people, kind of like rebels against established quo.
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MIKE: Let’s just walk through this article a little bit here. I’m not gonna read the article necessarily. I just want to go through a couple of points here and illustrate them and hopefully you can understand it’s not sarcastic here. We’re not making fun of this. It’s just really hard to take it seriously when it’s put into correct context. And it’s all about context. Now the article, it does start beautifully by saying, “It’s one thing to project an average annual return over your portfolio.” And it’s talking about, you know, the S&P over the last 30 years, 50 years, 100 years. And that makes sense. But the markets don’t move in averages.
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MIKE: That’s critical to understand. There’s an 18 year market cycle where it goes from flat to up, flat to up, which is critical to understand. But on top of that, not every year is a big year. And when you start a retirement in a bear market, it can be even more devastating. And it says in here, and this is a bit of an understatement, “The early years of retirement…” I’m gonna skip that thought and just say that the early years of retirement generally require a bit more money. We’ve got a story about that we’re gonna talk about in a little bit and how a client’s retirement was saved by simply structuring it correctly because they were unaware that it does require more money.
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MIKE: Keep in mind, when you retire, and Josh I’ll include you in a moment. I just want to set the premise here. Sorry to be so long-winded.
JOSH: No, go ahead.
MIKE: But, when you retire, you have more time on your hands. Chances are, you’re not gonna sit in front of your TV with that extra time but you’re gonna want to do something with the energy that you have. Doing things typically costs money. It’s just kind of the way of life. So keep that in mind here. And what’s crazy is the first line of defense is this person saying, “Well if a bear market’s coming up here, boost your cash.”
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MIKE: I’ll give him props. A broker saying, “boost your cash” and cash is king in a down market. And if you have a one-sided strategy for a two-sided model, okay. It gives some validity here because a one-sided model can’t make money or protect your assets in a downside market when markets are going down. That was a little redundant. But is cash the only option? No. This is why we talk about the second principle that governs proper retirement planning. You draw income from principal guaranteed accounts that can grow. The markets go down, you’re still, you’re set because it’s principal guaranteed. But when the markets are up, you’re going up with it.
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MIKE: Who in their, and if we’re honest with ourselves, who in 2000, ’01 and ’02 could have predicted that that market crash would have lasted that long? I was at lunch with Roger Ibbotson a few months back, and he was talking about his colleague who in ’97 was saying the market was gonna crash, in ’98, the market’s gonna crash, in ’99, the market’s gonna crash. Why? He saw the signs but didn’t know when it was happening and he was in cash. He lost a lot of returns because of fear and doing what this article is saying of, “Oh, a bear market may happen. Let’s boost our cash volume.” Okay.
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MIKE: If you have a one-sided strategy, that makes sense. But there are other options out there. Cash and stock are not the only options or investment strategies.
CAMERON: So what are our clients missing out on if they do have a big pile of cash? What are the downfalls of that?
MIKE: That’s a fair question. I mean we’ve got inflation to keep up with. Cash won’t keep up with inflation. Now if the markets go down and you’re in cash, okay. You’re doing well. But the markets keep going up. And we’ve got a couple of managers who say that based on their technical analysis that markets are gonna keep going up for a little bit longer. Why would we want to stay in cash if that’s gonna happen?
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MIKE: I’m not saying we’re timing the market. We’re not timing the market. That’s not a thing. But why sit out of the market with cash based on fear when it’s hurting your buying power in the future? Let’s not make decisions on fear that something could happen. Let’s make decisions that are math-based and principle-based that give you the guidelines to be successful so as markets go up, let’s enjoy it. When the markets go down your income’s taken from principal guaranteed accounts. Great. You can sail through it. Markets go back up, you’re capturing the growth again.
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MIKE: And if you want risk in your policy, and yes, we’re talking about ETFs or mutual funds or other assets with a two-sided strategy that tells you what to buy, when to buy, and when to sell it, who cares. It doesn’t matter either way. You don’t have to be bearish or bullish. Does that help?
CAMERON: Yeah. And how would our clients know how much money to put into principal guaranteed accounts versus risk? I mean, how do we determine what the spread is there?
MIKE: That’s a fair question. Josh, I can answer this.
JOSH: Yeah, yeah.
MIKE: So, Josh is on the architect side that builds the plans. Do you want to answer that one?
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JOSH: Well just goes back into math-based approach. All, everything we do is a math-based approach. It’s, and that’s how we figure out how much to put in each account, how much to hold in cash, how much they need liquid. And it’s mapped out across, like you said, 30 years in retirement. We map it out, especially at the beginning, for the first 15 to 20 years at least, to know exactly where each dollar’s gonna be coming from. And yes, it adjusts year by year, which is more your wheelhouse, Cameron.
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JOSH: But that’s really the answer is we use our proprietary algorithms and we basically put all of their information into these algorithms and find out exactly where each dollar needs to be to handle each dollar of need down the road.
MIKE: I’m gonna use a very simple principle as an example here. Is anyone gonna contest Newton’s Law of Gravity? No. No one’s gonna just start floating into the air. It’s a principle. It’s a law. It’s just as it is.
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MIKE: When it comes to retirement planning where you are right now, your age, how many assets you have, and let’s say to age 100 is how long you expect to live. These are restrictions that you’re gonna have to work with that build the plan that tells you down to the month net of tax how much you can take. It’s just math. You jump up, you’re gonna go down. If you’re this age, you have this many, this amount of assets, and you expect to live to 100 or less, up to you, this is what you’re looking at. Math-based, principle-based as opposed to the pie chart guesser. But it gets worse on this article.
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MIKE: And this is one of many articles that you’re probably seeing on your newsfeed. I mean, Josh, you noticed this when you just logged into, what was it? Just, not Google but…
JOSH: I just opened up a tab on my browser and this is one of the, that just popped up as like, hey, please read this article. We think you might like it. Something like that.
MIKE: Yeah. Well did we like it ever. The next part says, “Shift your asset allocation.” And it’s talking about increasing your bond exposure to stocks will reduce a risk of dramatic portfolio decline the moment you step away from your job. Bond funds?
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MIKE: Folks, let’s just establish right now, interest rates are historic lows. When interest rates go up bond funds lose money. It’s a mathematical fact. If they’re around one percent or so, one to two percent and Jamie Dimon, CEO of Chase, very well-respected individual, is saying they’re gonna be around five percent pretty soon. That’s a 20 to 30 percent hit to your portfolio. And this article is saying “with historic low interest rates” which means interest rate risk is at historic highs, that you should allocate more of your assets to bond funds? It doesn’t make sense to me.
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MIKE: Cameron, you’re leaning towards the mic here.
CAMERON: Yeah. Unfortunately, this is something that’s been taught for decades, the rule of 100. That the older you get the more funds you need to have in bonds so that by the time you retire a large portion of your assets are in bonds as opposed to stocks.
MIKE: Mm-hmm.
CAMERON: Now, based on the information you just said, you know, this assumption is that, been that bonds are safe, that bonds won’t lose value.
MIKE: Well let’s talk about bonds themselves. With interest rates this low, how in the world can a retiree live off of their yield? Their return on these bonds, not bond funds now. Let’s just talk about bonds.
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MIKE: How in the world can a retiree get the rate they need to outpace inflation, three percent, when a bond is barely paying that and they have to draw income from that? I mean you’ve got the feds bonds that are treasuries and our American fixed rate municipalities and stuff and then you’ve got Argentinean bonds, which are very popular right now because they have a higher yield. But Argentine, Argentina. [LAUGH] I don’t know why that was so tough. Argentina defaults every few years or so.
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MIKE: So, why in the world would someone buy a 100 year bond from a country that continues to default over and over again because of a rate when they could just lose all their money? I mean it. I feel for the retiree because it’s an impossible situation based on the information that they have in front of them. But that doesn’t mean you need to settle.
CAMERON: Yeah. I think it’s historically, you know, the way things have been done but times are changing. Retirees are living longer. And there are better options to principal guaranteed accounts that you can pull funds from in retirement than bonds.
JOSH: I just think it’s crazy in this article that we’re reading here. I actually really liked, like you said, the first couple of paragraphs were great.
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MIKE: Yeah.
JOSH: When they started out. And I actually thought it was gonna go a very different direction in reading it. But it’s just crazy to me in articles like this you never see the phrase, “Principal guaranteed.”
MIKE: No.
JOSH: There’s, it’s not hidden. It’s been around for 100, 200 years.
MIKE: Well it doesn’t mention CDs as an option. It’s keeping you in bond funds.
JOSH: Right. It’s, I just don’t understand that it’s not…
MIKE: And we’re not even suggesting CDs here.
JOSH: Right.
MIKE: There’s about 10 different types of principal guaranteed accounts that you can invest in and it only mentions two, bonds and bond funds.
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JOSH: Yeah. It’s not a secret. It’s, the information is out there. People have it. But for some reason the tried and, supposedly tried and true method is something like this article is saying is diversifying into bonds and cash versus something that can actually grow and is still principal guaranteed.
MIKE: Oh my gosh. Yeah. Well I love this. Sometimes to 60 percent or more, let’s see. It’s talking about that allocation of bond funds in their portfolio isn’t a, and this is a 60, 40 bit here, isn’t large enough to withstand a market decline.
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MIKE: As if like, oh, well you have X amount of assets here so we have to make some adjustments so if the market does decline you won’t get hit as much. You’ll still get hit but not as much. Who in their right mind is okay with a hit? What portfolio size is gonna say, “You know, hmm, I have this much money. I’m okay with a bit of a market decline because well, I have just so much money I don’t care.” People who are a high net worth are just as protective of their assets as those who are of lower net worth.
JOSH: I would almost say more so.
MIKE: Probably more so. It’s ludicrous to assume that you, the listener right now, are okay with a market decline.
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MIKE: And they’re writing these articles and they’re coming out more and more, they’re setting the stage trying to make you okay with the idea that they’re gonna lose you money. This is ludicrous. And the best part about it all, and it’s because they’re doing the asset allocation pie chart that a pie chart guesser, playing Russian roulette, retirement roulette I should say, and when it comes down to it they’re ignoring the principles that govern proper retirement planning. Because operationally it’s easier, it’s how they were trained. These are good people that may have all the information but have not connected the dots yet.
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MIKE: And it just, it’s why these articles are fun to pick apart here. Boost your cash, yeah. Argentinean bonds, out of your mind.
CAMERON: I mean it even goes on to say in the next paragraph how, you know, we talk about a safer retirement, how does this sound, these two researchers found your equity to bond ratio should look more like a rollercoaster over the course of your life.
MIKE: [LAUGH] Yeah.
CAMERON: Now how does that sound entering into retirement? That’s exactly the type of stability you want, right?
MIKE: Yeah.
CAMERON: Now that’s tongue in cheek.
MIKE: Raise your hand if you want your portfolio to be like a rollercoaster. Now in all fairness they’re saying equity to bond ratio.
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MIKE: They’re just saying, okay we’re gonna do 60 percent bonds now then 40 percent bonds later, then 60 percent bonds now. Sounds like market timing a little bit here. Sounds like we’re just kind of guessing our way through retirement. Kind of using intuition without data to back up, well I’d say data. These are smart people. I don’t want to give them the benefit of the doubt here. But what kind of structure is that? Where you kind of assess it each year and you should have flexibility but not like this. This is just risking it here. And the best part about it all ends is it says, “If market turmoil increases and you’re nearing retirement, consider working a little bit longer.”
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MIKE: That’s what sent me over the edge here. People come into our office all the time saying, “I probably can’t retire for another five years.” Because that’s the general consensus. And we’re finding out, not only can they retire now, if they want to, if they like their job and they want to keep working that’s fine. But they could retire now and earn as in receive income from their assets, more than they thought they could in five years’ time. That’s powerful. How can we do that? It’s a math-based, principle-based firm. We developed these algorithms. For a lot of people that listen to our show, it is a little difficult at first to understand what we’re talking about because what we’re doing just isn’t out there.
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MIKE: It’s not the popular way to go because it’s a, not a newer way to go even. Distribution planning’s been around for so long. We put the dots together, invested in technology that can help you retire sooner or now. And if you’re currently retired, potentially earn more money through retirement and lower your risk and lower your fees and lower your taxes. I mean folks, we only do retirement planning. If you’re in the accumulation phase, if you’re in your 20s, 30s, or 40s, we’re not for you. If you’re 55 years or older and have at least 300,000 of assets saved up for retirement, I mean that, 300,000, three million or 30 million, we are the specialists.
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MIKE: We want to invite you in to talk with us. If this, all this sounds like something of interest to you and you want to continue your research or have a conversation with us at no cost to you, we would love to have you in our office. And here’s what it would look like. You’d come in our office, no pressure here. It’s a 2,000 dollar offer. We’re gonna give you a Safer Distribution Plan. First version you can see your numbers. We can show you a Safer Tax Plan. We can show you a Social Security optimization report done correctly. When I say correctly, the biggest factor to retirement with Social Security is being missed.
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MIKE: And this is my opinion, but mathematically speaking, if you retire too early your income is hurting and if you retire too late you’re hurting your estate. Plain and simple, when you want to file your Social Security affects your income and your legacy. And you should be able to have those numbers in front of you to make a decision. We’re gonna talk about the market conditions and how they are and we’ll do a portfolio review with your investments, especially if you’ve got bond funds. We’d want to peek into that and talk about it at no cost to you. We’ll do all this in one visit. Call 833-707-3030 now.
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MIKE: That’s 833-707-3030 or you can just go to deckerretirementplanning.com and click the button, “Get started” on there. And you can fill out your information and we’ll call you. You’re in charge here. You have all the power. What do you have to lose to have a conversation like this that’s so transparent that you’re able to walk in, extend your knowledge, and then if it makes sense you’ve got a better retirement. If it doesn’t, 90 minutes of your time at most.
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MIKE: I have yet to meet someone that comes in and says, “I did not learn something.” Yet, to have that experience. Call us now, 833-707-3030. Must be 55 years or older and have at least 300,000 of assets saved up for retirement. We’d love to visit with you. We’ve got offices in San Francisco, California, Washington. We’ve got Renton, Seattle, and Kirkland. In Utah, we’ve got Lehi and Salt Lake City and in Las Vegas we’ve got, well Las Vegas, Nevada, a bit redundant there. But we would love to have you here. We’re gonna have a great conversation should you want to come. And that’s your choice here. You’ve got all the power.
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MIKE: At the end of the visit, you’ll determine if you want to continue talking with us or not. We’re not gonna pressure you into doing anything here. We’re legally bound to do what’s in your best interests. We’re purebred fiduciaries. We’re here for you. Let’s, I promised a few stories here. Gentlemen are you ready to start talking about some of these stories here and breaking down some real interactions on different parts of the spectrum? We good here?
JOSH: Yeah.
MIKE: You ready?
CAMERON: Yeah, you know I think our listeners appreciate the stories. They can relate to some of the clients in one way or another and know that there are real people behind each one of these stories.
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MIKE: So, the first one I want to talk about here was, we talked a little bit earlier about how when you first enter retirement the cost of your lifestyle goes up. Cameron, we were talking earlier today about a client who retired, started his pension, filed for Social Security, bought a house, and within a few months was just like, oh my goodness. Lot of changes happening. That’s a lot. I mean, just moving alone is a huge change. Adding retirement to that, which is a difficult thing for a lot of people, it’s an identity crisis for a lot of people, you’re having to reinvent yourself, and then managing the assets and the income.
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MIKE: Can you talk a little bit about what happened, what the struggle was, and the outcome for this client?
CAMERON: You know, this client, he’s such a cool guy. His first few months, like you said, Mike, it was kind of rocky. It was kind of rough. He had all these major life changes. He had his distribution plan, yet he had a hard time conceptualizing well how is this gonna work with my new house, with my new bills? He may have been a bit disorganized. He kind of self-admitted that in the past he hadn’t been the best with a monthly budget.
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CAMERON: And so part of it was for him a transformation journey of, you know, this is, you know, thanks to my Safer Distribution Plan, this is the new reality of what, you know, my monthly income can be. This is what I need to stick to. You know, before coming over with us he had no idea how much he would get as net monthly income with the combination of the pension, Social Security, and his income from his investments. And he didn’t know how much he could take to make it stretch the remainder of his life. You know, it did take him a few months, but he got into a routine.
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CAMERON: And by his first annual review I had the conversation with him, it was so great, he said, “You know, this has been the best thing for me. I’ve learned how to live within a budget. I’m living just fine. I love my new house. I love being retired. And,” he said, “I probably wouldn’t have retired as soon and definitely wouldn’t have taken some of these other steps, and I may even have been burning through my retirement assets too fast had I not had the distribution plan numbers to fall back on.”
MIKE: Mm-hmm.
CAMERON: And now, you know, heading into year two in his income plan everything, you know, went like clockwork.
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MIKE: Now, this is the third principle that governs proper retirement planning. And that is use a distribution plan, not the pie chart guesser. We’re not playing retirement roulette here. And close enough just doesn’t cut it with retirement. And it’s a beautiful thing, calculating down to the month, net of tax how much you can spend and showing on a spreadsheet where all the income sources are and how it goes. It’s football season. Do you think, I’m a Seahawks fan. I’ll admit it to the day cows come home. On my fantasy league Russell Wilson, he’s my quarterback. Through and through pure blue.
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MIKE: Do you think Russell Wilson, as good as he is, could honestly win or get a yard without his team? Like, it’s just not gonna happen. That’s a dumb question. It’s a leading question, I’ll admit to it. But you have to have the full team working together. With a retirement plan, it’s extremely common. You’ve got Social Security, if you’re married you’ve got two incomes from Social Security that need to be optimized and coordinate together. Then, if you’ve got a pension, and for all you Boeing folks listening right here, Delta, we have a lot of different clients that have pensions, which is great. It’s a rare bird these days. Got to make sure you’re coordinating with your pension. Do you want to use the pension? Do you want the lump sum?
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MIKE: What does that look like? Let’s compare the numbers. Then, let’s take your assets themselves. What do you have? Do you have CDs from some situation that you decided to invest in those? And that’s great. Let’s incorporate them. Do you have bonds? What do they look like? What’s the return on them? Should we keep them? Should we change them? Should we find a better rate? What about your stocks, your ETFs, your mutual funds? How are they doing? How are they gonna incorporate? Coordinating all of this, which is, I know, the second principle that governs proper retirement planning, but the third principle, to be able to see it and coordinate them as an efficient team to maximize your income is all it takes. And I say that jokingly.
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MIKE: It’s a lot of work on our part but it’s easy for all you folks that come in and visit with us because we do the heavy lifting for you. So you can see it and say, “Yep. I can live off that number.”
CAMERON: And, you know, and a lot of clients don’t realize either, especially having a lot of pre-tax funds, just how much paying income tax out of your investments is going to, you know, affect your income in retirement. And so being able to see and set up, you know, your safer distribution plan, taxes are incorporated, you know. A general tax rate is provided, you know, each situation is unique.
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CAMERON: But a lot of people forget that, you know, Social Security is taxed. Some of these, a lot, most pensions are pre-tax. A lot of retirement vehicles are pre-tax. And so that needs to be part of the equation as, you know, how much am I actually bringing home? Okay. That is what I can live on. And having the safer distribution plan has helped so many clients kind of wrap their brains around that better.
MIKE: Too many people are surprised about their net take home in retirement. Let’s not be caught off guard. If you want to have a safer distribution plan made for you at no cost to you we’ll do that.
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MIKE: Right now, you can call 833-707-3030. That’s 833-707-3030. Or you can go to deckerretirementplanning.com and on the bottom just click “Get started” and you can say a full Decker review or you can say a safer distribution plan. Up to you. But it’s remarkable how much more clarity and transparency you can get from a safer distribution plan as opposed to the pie chart guesser. Just saying. Biggest questions. I’ll throw ‘em out there. Can I retire and if so how much can I draw without running out of money before I die? Is that you?
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MIKE: We’d love to talk with you, 833-707-3030. Or you can go to deckerretirementplanning.com. Let’s talk about flexibility. With the pie chart you’ve got incredible flexibility because it’s just guessing the whole way through. You can make any adjustment you want. But what if you run out of your money too fast? What if you, the what if’s can be played out forever because it’s just you’re winging it through retirement.
CAMERON: And what if you don’t spend enough because you’re terrified of the future and you horde it away and live on way less than you could have.
MIKE: Mm-hmm. We could spend a whole show on what ifs.
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JOSH: Right. I mean there’s a lot of different scenarios there. But one that comes to mind for me, [CLEARS THROAT] excuse me. One that comes to mind for me is we had a client that came in and he started planning with us.
MIKE: Mm-hmm.
JOSH: And we explained the whole math-based approach. We put his plan in place and while we were working on getting everything in place he came to us and said, “You know what, I really want to buy a cabin. I think that a cabin is what I need right now.” And if that’s what he wants in retirement we say, “Okay.” That’s gonna be one of the things we work towards. Let’s…
MIKE: Which, for the record I love that idea. I keep telling my wife, “We need a cabin.”
JOSH: Yeah.
MIKE: A cabin just past Park City. That just sounds amazing.
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JOSH: Yeah. And then so he told us, “I want a cabin.” We had set aside some liquidity in his plan for income in the first couple of years.
MIKE: Mm-hmm.
JOSH: But he said, “I need you guys to figure this out.” Being math-based and being that the distribution plan is math-based, we’re able to pull things together again and, okay, you say you want to put some money down on a cabin. That’s okay. Here’s what that means for your plan. We can work that into the plan. Yes, there’s a little bit of give and take just like your pumpkin cookies. You got the tablespoon and the teaspoon mixed up. You could have saved the cookies if you just added a lot more ingredients to get the salt flavor down.
MIKE: They were already baked. You can’t add ingredients once they were baked. [LAUGH]
JOSH: Yeah it’s a little too late at that point. But in this case…
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MIKE: Which happens to a lot of retirees. They bake their plan, and they’re too far in and now they’re, can I, I was gonna say SOL. Can I say that on the air?
JOSH: I thought you were gonna say they were baked and I was gonna actually… [LAUGH]
MIKE: No. I know we broadcast in Washington but…
CAMERON: I think you’re okay with SOL. [LAUGH]
MIKE: But they’re too far down the plan because they, you know, they didn’t do the numbers.
JOSH: Right. Right. And for this particular client, everything worked out great. He was able to get his cabin. We said, “Okay. You having the cabin, here’s what it means for your distribution plan. It might change things a little bit.” But, all in all, he was able to keep his lifestyle and improve his lifestyle by having that cabin that he could go to on the weekends.
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MIKE: This feels like a Henry David Thoreau moment, Walden’s Pond or something.
JOSH: [LAUGH] Right. [LAUGH]
MIKE: But it’s simply the numbers. We’re not making, we’re not growing money on trees and putting it in your plan. We use what you have in a math-based, principle-based approach. You want to buy a cabin, here’s how it affects your plan. Are you okay with that? You can say yes or you can say no.
JOSH: Yeah. And I think that just goes back to the approach. We’re here to present options. We’re here to present details. Not to say, no, no, no. Don’t do that. That’s a bad idea. It’s, here’s your options. If you do that, here’s what it means. If you do this, here’s what that means.
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CAMERON: And sometimes it’s not planned. You know, we’ve had clients who call us and say, “Hey, you know, I know I’ve already got my distribution plan up and going but I, you know, I just had an emergency and took my wife to the hospital and we have a 30,000 dollar hospital bill. You know, where can I get that from the plan and what does that look like?” And it goes from sheer panic to, okay, you know, like you said, there’s some give and take but, you know, we’re able to, you know, update their and adjust their income plan to show that they can still have close to the retirement that they initially had planned because it’s all math-based and objective.
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JOSH: Right.
MIKE: Remember the client that we had? They were from Washington, but their second house is in Texas, and they travel back and forth to be around family. The client, he was just always involved with his retirement, was doing the investing, all of that. Found us, finally had the confidence in a financial professional to let go. He let go, had a heart attack, or no, it was a stroke, later that year, became incapacitated, could not manage. And we not only helped organize all of their bills, so all their bills were covered, their plan stayed intact, but we did it for them and the wife was in tears.
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MIKE: I mean, I almost tear up just thinking about it because she was not prepared to have these kinds of conversations. She was not prepared to manage the finances. She was not prepared for him to have a stroke. Just not prepared. Put everything together, she understood how it worked and was able to direct it while her husband was recovering. And thank goodness he’s alive and healthy still today. But these are traumatic experiences and as we get older our bodies do get weaker and our minds, you know, God forbidding, go. And we want to make sure that regardless of what happens, that you still can provide for your family and your lifestyle.
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MIKE: Even if one of your spouse, one of you or your spouse becomes incapacitated in one of these situations.
CAMERON: And to her credit, she has learned a ton about managing it in the last few years and, you know, we have phone calls with her fairly regularly and I think she appreciates the ongoing support that the Decker Retirement team, you know, both her advisor and our servicing group can provide her on an ongoing basis. It really is a relationship and not, you know, you’re just another household. You’re just another account number.
MIKE: Yeah. Well I mean I love REI. Great company, right? Outdoor gear. Bear with me on this analogy.
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MIKE: You go to the store and you talk to someone and say, “I’m gonna climb Mount Rainier.” “Great. Here’s all the gear you need. Good luck.” That doesn’t help you very much. You want a guide, right? You want some sort of Sherpa who can be with you every step of the way. Our firm is built to be with you every step of the way, plain and simple. And that’s what we want to do. Whenever life happens, for better or for worse, we can walk you through that moment and be able to assist you to make sure that your lifestyle’s protected, your income is happening, and if we need to make adjustments that we’re there. I’ll never forget, had a client call years ago.
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MIKE: The son had been in a motorcycle accident and became paraplegic. Thank goodness the client was a high net worth client. We restructured their plan, and they were willing to take a pay cut to set up a legacy for their son to take him through the rest of his life. When we talk about these income plans, when we talk about the principles that govern proper retirement planning, we’re not stringent on it. But at the same time we are. And here’s what I mean. We never draw income from a fluctuating account. That’s the first principle that governs proper retirement planning. Just never do it. It does not make sense.
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MIKE: You’re compromising your gains in the up years and you accentuate losses in the down years. Number two, diversify by purpose not just by risk. We’re not locking your assets into some income annuity that’s gonna pay a fixed amount for the rest of your life that gives you zero flexibility. That sounds like hell. To just hope for the best and that’s what you have to work with. That doesn’t make any sense. There’s always flexibility in any given proper plan. The third one’s to use a distribution plan, not the pie chart guesser. And that’s the other side of an income annuity that gives you no flexibility. The pie chart guesser gives you too much flexibility and zero guidance.
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MIKE: Can you imagine a kid growing up in this world, no parents, no guidance, no mentors, what they would end up like? It’s kind of like your money. Your money’s a kid. Got to give it some guidance. Got to give it some rules. Got to give it some principles. Got to make sure it does the right thing. Sure, markets will crash but your principal guaranteed accounts won’t. And yeah, your risk asset, should you choose to have that, it’s two-sided. It’s just like when you teach your kid hey, when you go to a party and they’re doing bad things, don’t participate, you leave. When your money’s in the market and the markets are looking bad, it should leave. Two-sided models for a two-sided market.
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MIKE: It just makes sense. Most people are unaware that this is available to you. If you want to talk with us, we’re gonna extend at no cost to you, you can call us right now. If you’re 55 years or older and have at least 300,000 of assets saved up for retirement we’d love to chat with you, present our research, show you your version of a safer distribution plan, show you a proper Social Security optimization report. Show you how to coordinate all of your different assets together and make a holistic effort to maximize your income while lowering your risk, lowering your fees, and most of all helping protect your lifestyle, your livelihood, all of your hopes and dreams, wants and needs, throughout retirement.
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MIKE: That’s 833-707-3030. Or you can go to deckerretirementplanning.com and on the bottom just click, “Get started.” Love to visit with you in one of our offices. And if you’re listening to us via podcast, we hear you. Call us anyway. Still submit that form. We plan with people all over the nation, Indiana, Minnesota, Florida, Jersey. We’ve got clients all over. We just have a physical limitation with the offices in only four of the States right now. We’ll get there. But let’s not wait for us to get there before we can help you get a safer retirement. Because time is now, and the bears are looming. The bear markets are looming around us.
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MIKE: Let’s talk about, we talked about flexibility with the plan, which is great. We’ve also talked about someone who maybe would have had a rocky start without the guidelines. Let’s talk about the exact opposite. We have some clients that come through and they’re panicked when they come in because they don’t think they still have enough money to retire. They’ve been told the four percent rule, just take four percent from your assets each year. You should be fine. And they’re just, the fear is stricken. They come into our office and they not only realize they could have retired a couple of years ago, but they could take more money than they were anticipating.
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MIKE: And this is because of a math-based, principle-based approach. So what happens? Well, a couple of things can happen. Cameron, can you walk through different situations? ‘Cause you see this often. This is probably more common than not for us with the people that we see.
CAMERON: Yeah, you know, it’s hard to know when you’re at that age and you see, you know, different piles of you’ve got pensions. You’ve got Social Security. You’ve got, you know, your 401Ks, 403Bs and, you know, how much really is this? How much is this on a monthly or yearly basis, you know? And how many years can this stretch?
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CAMERON: So a scenario we often have, I mean there’s one client that comes to mind but this rings true for so many clients. He was a single guy. He’d worked for decades at a large company that had, you know, in addition to a 401K, actually had a very nice pension. And, you know, this is starting to phase out in many companies as they realize the large costs of maintaining these pensions with retirees living longer. But for those who have one, consider it a great blessing. But for him, for his case, you know, he said, “Okay. I’m ready to retire. I’ve got…” you know, we built the safer distribution plan for him.
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CAMERON: And he said, “Okay. I’m taking my pension. And then we’ll take, you know, the plan dictated that we’ll take this much from income from assets this year.” And I remember the call. He was only three months into receiving income from assets from his plan and he said, “Cameron, I’ve got way too much money. It’s just sitting in the bank. I’m not spending it all.”
MIKE: First world problems.
CAMERON: Yeah, yeah. “Are you sure the plan was done right? You know, that this is, man, this is a lot of money.” And I said, “You know, well the great thing is, you know, you don’t have to spend it all. You know, you don’t have to take it all in as income right now.”
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CAMERON: And, you know, he was able to have the discussion with his advisor on, you know, being able to give to charitable donations, being able to set up legacy funds. He realized he was comfortable living on about 75 percent of what the plan had dictated. And he said, “I would have had no idea just looking at these beforehand.” And he, you know, saved his whole life kind of in fear like oh I need to just have as much as possible. And don’t get me wrong, there’s nothing, you know, wrong with that, and many of our clients do live, you know, right up to what the plan allows and that’s, you know, math-based and perfectly fine.
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CAMERON: But, in his case, he loved living on a little less and being able to be more generous in his community. And that really made the difference for him. And so as far as, you know, the income plan, any funds not taken remain invested. And it only, you know, made the future look more and more rosy.
MIKE: So, when he first reached out to you was he worried that he was getting too much money? Was he worried that it was gonna spend down too quickly? Or was he just… Go ahead.
CAMERON: No, yeah. Combination of both. I mean he said, “You know, did you run the numbers right? You know, am I, this just seems like way too much money for me. And, you know, I, are you sure?”
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CAMERON: And, “Yeah, yeah, you know. This is, you know, this is how your income plan was set up.” “Oh well. Okay.” Well, you know, and I get a call a few weeks later, “Well, you know, it’s still just piling up. How about we dial those back? I just can’t…” You know, he had been a frugal guy his whole life and sometimes we think, you know, some costs do go up, like Mike said, in retirement. But that doesn’t always mean that your spending habits will.
MIKE: He didn’t buy a new house, right? He just, same house, same lifestyle?
CAMERON: Right. Right. Yeah. Different scenario from the other client who had a bunch of life changes, including buying a house, you know, going into retirement.
MIKE: Mm-hmm.
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CAMERON: In this guy’s case it was, you know, I assumed same house for many years and didn’t have that, you know, those big, unexpected costs. But at the same time he had expected to live up to, you know, that bill. But he was happily surprised.
JOSH: I just want to point out here, a lot of our clients that come through the door, the first thing they ask is, “How much can I get out of my retirement?” So from our math-based plans, we usually run ‘em as maximum income, see how much they can pull as income. But in a lot of cases they say, “Well, I want to see what happens if I only need this much. What does it do to my plan if I only need this much?
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JOSH: How much can I leave? How much can I count? How much can I give to charities and leave for my kids if I’m only living off X amount?” So we can do it. Like I was saying before, it’s flexible. The math-based we can do it either way. And in his case, he probably thought he wanted to get as much as he could at the beginning but found out that he really just wants to hold it to a specific amount and then use the rest for something else.
CAMERON: Yeah. And sometimes clients will get into retirement and will change one way or the other. They say, “Oh we thought we wanted to live on X but I’m not working. I’ve got all this time on my hands. I’m spending more money.” And, you know, “Okay.”
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CAMERON: You know, so we, you know, gonna reduce that legacy portion and kind of get ‘em back more toward the maximum income plan. But, you know, it’s so cool that these income plans, regardless of, you know, regardless of your asset base, you know, this income plan really can give you the transparency you deserve to be able to know, this is how my retirement can line up. And life will change but math is just math and there’s something really reassuring about that.
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MIKE: Well and if you’re wondering what these plans look like, I’m gonna do my best to articulate it over the radio, over podcasts, what they look like. Imagine like you opened up a magazine. So 11 by 17 tabloid, big paper, okay. Your name’s at the top and on the top left you’ve got your emergency cash, which is funds set aside. We’re not gonna touch it unless there’s an emergency. Go to the hospital, need to buy a new car, just life happens. Set aside, not gonna touch it, not even a part of your investments it’s just there ready to go.
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MIKE: On the very left we’ve got your age, your current age to age 100 unless you want that to be longer. I feel like Chris Traeger from Parks and Rec when I say that when he says, do you remember this, “I believe that the first man to live to be 150 years old is alive. I believe that man is me.”
CAMERON: [LAUGH] Yeah. I love that show.
MIKE: I probably butchered the quote. But anyway, you decide that age. And then from left to right we have, it’s like you’re reading a book, right? Left to right, the first column we want to show you is your net monthly income. How much you’re gonna draw for that year, 5,000, 10,000, whatever it is, after tax.
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MIKE: Then next to it we’re showing you the net annual. Just to put it in perspective. Then we show you your taxes. And this is your effective tax rate, not your tax bracket. We want to know actually what it is and try and simplify the tax code for the purpose of the income plan and simplicity. And then we show you the gross as well and how we all calculate that. And then we want to line up your income streams. Social Security, we’re gonna optimize it right there and we’re gonna show you the gross amount going down as Social Security and then we’re gonna your pension, or rental income, or whatever it may be, in this section.
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MIKE: And then we have an income from assets column. Right there we have all the streams. Kind of like a coordinated football team working together. They’re all showing with a cost of living adjustment exactly how they’re gonna coordinate with each other and maximize your income and retirement. I have yet to meet someone who doesn’t understand this. I have yet to meet someone who has replicated it. We’ve had Boeing engineers. And we do a lot of business with the Boeing engineers. They love us because it’s math-based, principle-based. I mean that’s their bread and butter. That’s their language.
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MIKE: And it’s so fun to work with them. But we have yet to find someone that has replicated our plan because they are complicated algorithms that put out a simple to understand solution. Then we take all the assets and we want to organize them based on what you have and how they should be. That’s all customized. We don’t know what you have until you walk in the door and disclose that. And you only disclose that when you’re comfortable to disclose that. You have all the power here. But organizing all of that in a spreadsheet and then you see down to the month, net of tax. It’s remarkable. And on the very, very right you’re gonna see your total account balance.
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MIKE: This is your total net worth. And the cool part, and this is by design for distribution planning, is when you’re drawing income from your lowest earning buckets it allows the other buckets who are earning a higher rate to offset what you’re distributing from your first bucket. So even though you’re drawing income from principal of bucket one, bucket two, bucket three, the risk bucket are growing. Your assets, your net worth continues to grow. It’s just, it’s by design. It’s math. What, Albert Einstein said it was one of the eighth wonder of the world, compounding interest. It’s a cool thing to have.
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MIKE: Now we’ve talked about bucket strategies and there’s a lot of different interpretations of bucket strategies. Oh, here’s your bucket for the next three years and everything’s invested at risk, and there’s a lot of nonsense out there for the bucket strategy. So if you’ve heard that before, put that definition on hold. Chances are we have a different definition of how we’re doing it than a popular book you may have read or an article online about bucket strategies and distribution planning. I would say give us the benefit of the doubt and come in and see us. We’d love to have you. No cost to you, you can visit with us, do a safer distribution plan, we’ll do a proper Social Security optimization report. We’ll show you as things are. Not bearish, not bullish, just as things are in the market, and help you see what a safer retirement could look like.
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MIKE: And I think that’s incredibly powerful when it comes down to your livelihood, your ability to retire and not worry about on average the four massive bear markets that you may experience. When it talks about you want to take these vacations and regardless of the markets, if it’s down you’ll sail through it. You’ve got the two-side strategies. You’re taking income from principal guaranteed accounts and everything in between. Call us at 833-707-3030 if you are 55 years or older and have at least 300,000 of assets saved up for retirement.
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MIKE: We’d love to have that conversation with you, pull back the curtain, and give you the transparency that you deserve in retirement planning, 833-707-3030. You can also go to deckerretirementplanning.com. And on there there’s a number of eBooks and downloads you can explore. You can listen to this radio show, podcasts, we put the transcriptions on as well. And enjoy all that. And when you’re ready, and we hope it’s sooner than later because I do believe we’re bullish now unless a major black swan event happens. But I don’t know how long the bull can go.
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MIKE: It seems like this bull is losing energy. And when that bear attacks down it could be ugly. Especially from what we talked about in last week’s show with the bubble of mutual funds and ETFs and this, that, and the other. We don’t have time to dive into it but deckerretirementplanning.com. Go to the bottom of the page, click, “Get started.” Ninety minutes could increase your assets, your income from assets by thousands of dollars, by a significant, for a lot of people, for the high net worth people especially.
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MIKE: If you have over 10 million dollars, we’ve saved people tens of millions, your assets of tens of millions of dollars we’ve saved people six and seven figures just on taxes alone by using this different strategy that we’re implementing here at Decker Retirement Planning. Six or seven figures in taxes. I think that’s a pretty bold statement to say. As well as in 2008 the principles that we’re using, the approach we’re using, sailed people through that wreck unaffected, no problem. Our two-sided managers we talked about, collectively they made money. Who can say that? When you employ full-time people to do research on a staff it’s not just some small office.
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MIKE: This is a full-fledged planning service here that we’re doing for retirees to help with their livelihood. It’s quite fulfilling, 833-707-3030. Before we wrap up, any comments Cameron or Josh before we kind of close things up? We’ve only got like five minutes left.
JOSH: No. I think this has been great. I’ve really enjoyed some of the stories we’ve been able to share back and forth. I think that’s really one of the coolest parts for me is really getting to know the clients and their situation, their stories. We had a client today who sent us a bunch of pictures from his trip in Europe.
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JOSH: So it’s fun to be able to touch base with these clients and say, “Hey, how was that trip? Did you have fun? What did you guys end up doing?” Another client, one of my favorite clients I’ve met, went on a motorcycle trip.
MIKE: No way.
JOSH: In her 80s they [LAUGH] went on a motorcycle trip.
MIKE: Yes. [LAUGH]
JOSH: It was awesome. But yeah, it’s, I love the stories. I love the interaction with the clients. It’s been great today.
CAMERON: You know, and I think for my part, you know, being on the in force side, once clients have come over with us, seeing that over the years, the principles stay true.
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CAMERON: You know, despite the different situations, different levels of income, different levels of assets, the safer retirement that Decker Retirement, that we preach, it really does work over time and over a variety of scenarios. And that’s, I think, one of my favorite things about what we do is, you know, each one of you guys, each one of you prospective clients, I wish you could see what your safer distribution plan could look like because I’d be surprised if it didn’t bring you a lot of peace like it has for so many of our clients.
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MIKE: Yeah. And really it’s, what life do you want to live in retirement? We’ve got an RV group we support in Washington. They travel all over the nation all year round. Their income just comes in like clockwork, and they’re just focused on driving to their next national park, next major city they want to enjoy. That’s freedom. We had a client go to an African safari recently. That…
JOSH: [A?] client that took his entire family to an African safari. That was pretty…
MIKE: I didn’t hear about that. That’s… [LAUGH]
JOSH: …yeah. It was pretty awesome.
MIKE: When it comes down to it, these are major life experiences. I’ll never forget my grandfather when he retired. He wanted to bring the whole family together.
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MIKE: And that was a big family. And from California, Washington, Utah, Idaho, all of us came together to a dude ranch. Spent a whole week there, and it was just incredible. Rode horses, played basketball. There was a hot tub there. Just secluded, the whole ranch was to ourselves. I’ll never forget it. When you can retire and you understand how much you can draw and you have extra, or you want to leave a legacy and set some funds aside to draw periodically for the purpose of leaving a memory based legacy with your grandkids, that’s a powerful conversation. That’s fun to do.
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MIKE: And that’s a big reason why we’re here is to help support the families enjoy what matters most to them. Time is our most precious commodity. And these are the kinds of things. There’s clients that take their whole families on cruises. There’s clients that, I heard one that was funny. They said, “When I retire, sure I’ll have a house. But I’m gonna spend just a couple of months at each of my kid’s house and just keep doing the circuit. And never actually be home. I’m just gonna spend time with family and they’re all over the nation. And I’m just gonna do two months here, two months there, two months there, and so on and so forth.” And good for him. Good for them.
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MIKE: That’s the beauty of this. We’re gonna sign off here in just a second but when all is said and done, math-based, principle-based firm driven by purebred fiduciaries who want to give you the transparency that you deserve and present the information in a neutral standpoint because you’re the one in charge here and that’s how it should be. We’re just here to help educate you and get you on the path that you want to go on. Download all the information for free. Continue your research at deckerretirementplanning.com. Or you can sign up for a free review at deckerretirementplanning.com. Just go on the bottom and click, “Get started.” Thank you all for, thank you Cameron. Thank you, Josh, for joining us today. I’m Mike Decker, President of Decker Retirement Planning.
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MIKE: This show airs live every week, same time, same place, with a nationally syndicated show. So if you’re hearing it right now on the radio, this is the hour. Can’t say all the times, too many of ‘em. But this is the hour in your local market. Or you can catch the show first on podcast iTunes, Google Play, SoundCloud, wherever you get it, or on our website at Decker Retirement Planning dot com. Thanks so much. Have a wonderful week. Hopefully, [you?] can enjoy this new transition now into fall. And thanks for listening. Take care everyone.
