RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:00:01]
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.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:00:38]
MIKE: Welcome to Safer Retirement Radio, where you get the transparency you deserve. I’m Mike Decker.
CLAYTON: I’m Clayton Bradshaw.
MIKE: Today’s theme is about how a strategy is not a plan and there are so many people confusing the two. We’re going to break that down, what that means. But we’re also, today, in the show, we’re going to be talking about the secret that caused a few retirees, I mean our clients and some others, to get through 2008 financial crisis and win. As in not lose any money, make money, and also over the last ten years they’ve had a significant increase in their portfolio, over the last ten years, the huge bull market cycle.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:01:14]
MIKE: That secret we’re divulging in today’s shows, as well as two other fundamental truths. How to diversify your assets in retirement. We’re talking about the second principle of retirement planning, diversify by purpose, not just by risk. You can have your cake and eat it, too. But last, but not least in today’s show, we’re going to be talking about something that has helped hundreds of retirees that have come through our office, Clayton.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:01:44]
MIKE: A lot of retirees come through and they think I have questions that I don’t think can be answered. It’s because the wrong tools are being used for a retirement plan. And when you have the right tools, the right blueprint, the right plan, and the right, when you have it laid out, spelled out for you, those questions can be answered, and we’ll be explaining that today, all today on Safer Retirement Radio. Clayton, I’m just going to get it off my chest. A strategy is not a plan, okay. We just need to break this fundamentally down, okay.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:02:16]
MIKE: For all of you who don’t understand the financial side of what a strategy is versus a plan, that’s okay. You don’t need a financial degree to understand what we’re talking about here. I think these are just truths that are inherently understood by people. Football just happened. Congratulations to Kansas City and the Super Bowl. So it’s on my mind. I’m going to use this as an analogy. If you got one guy, he’s supposed to block that guy, right. This guy blocks that guy. That’s his strategy. That strategy has one outcome, to block that guy.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:02:47]
MIKE: A couple of strategies create a play. The play is a plan. When a plan is executed correctly, even if one or two strategies fail, there are other systems in place that allow that plan to succeed and accomplish the goal. And if you’re on offense, it’s to get yards and eventually a touchdown. If you’re on defense, it’s to shut them down and spend the least amount of time on the field. Okay, if you’re not a football fan let me give you a different analogy.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:03:13]
MIKE: What if you’re on fire? [LAUGH] What’s the strategy? Clayton, we’re taught this in elementary school. What’s the strategy?
CLAYTON: Stop, drop, and roll.
MIKE: Okay. Is that the plan? No. That is a strategy to accomplish a very important need right away. Stop, drop, and roll. Now that you’re not on fire anymore, okay, now what do you do? And I’ll even speak from personal experience. When I was a child, I actually, I fell into a campfire and I watched, it was a very traumatic experience, I watched my hands, so to speak, melt.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:03:48]
MIKE: There were third degree burns. It was a very traumatic experience. And at that time, my strategy was stop the pain. So I immediately went down to the river and I started putting my hands in the water to just stop the pain and cool them down, but we didn’t have a plan. We were very, very reactive every step of the way because we were not prepared, or my family was not prepared for me to be an idiot and trip and fall into a campfire. Okay? The same parallel happens with retirees.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:04:18]
CLAYTON: Well, and Mike, we’re bringing this up, for our listeners, we’re bringing this up because some folks are going to go into their advisor and they’re going to get told, “Yeah, here’s your strategy, this is going to work out for you great in retirement.”
MIKE: Yeah.
CLAYTON: But it doesn’t. It doesn’t work out because it’s a strategy. And I was looking at kind of the definitions of both of these words to make sure our listeners understood kind of what we were talking about here.
MIKE: Let’s break it down.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:04:45]
CLAYTON: A strategy is a high level plan to achieve one or more goals under conditions of uncertainty.
MIKE: Okay, so it accomplishes one thing.
CLAYTON: Yeah.
MIKE: And maybe two things at most, but a strategy is to accomplish one thing and it’s not fully comprehensive. It is objective.
CLAYTON: Right. And so when you compare that with the definition of a plan, which is an orderly or step by step conception or proposal for accomplishing an objective. An orderly or step by step proposal, right.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:05:14]
MIKE: Yeah. Complete view. Full view. All encompassing. Let me say it this way, Clayton. In 2008, a lot of people lost a lot of money. That’s a very sad and very stressful situation. I think a lot of people right now are also feeling like the market’s got to give at some point. Okay? Whether it does or doesn’t, the feeling just makes people sick. In 2008, the strategy was to diversify your assets for risk. Okay? Let’s build a nice pie chart, it’s diversified. Good. If things go up then we’ll make some money, if they don’t, well it’s diversified so hopefully, you know, it doesn’t.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:05:52]
MIKE: In the end of 2008 and early 2009, there were a lot of hard conversations with financial professionals that said, “Well, you know, just ride it out, markets will recover, that’s fine.” No, that’s a reaction to a failed strategy. Okay, not all strategies are perfect. I’m not going to hold every financial professional to a perfect bar. Sometimes investments don’t go up. That’s just the name of the game. But if a failed strategy derails your entire retirement you probably had a strategy and not a plan. That’s all I’m suggesting.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:06:31]
CLAYTON: Well, and if you look, for our listeners, if you’re looking at your investments and wondering what yours looks, if you have a strategy or if you have a plan and what your advisor has done for you, chances are if you look at it you see a pie chart, it’s a strategy.
MIKE: It’s a strategy, not a plan.
CLAYTON: And when you go in and you say, “All right, I’m ready to retire, what do I do,” they’re going to say, “Oh, well, let’s just have you pull a percentage out of your pie chart every year.”
MIKE: Yep. And it’s interesting, Clayton, you bring up the percentage. The industry only, to my knowledge, the industry is really only offering two options for retirees, and they’re both strategies. They accomplish one object.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:07:06]
MIKE: The first one is the pie chart. Let’s diversify your assets by risk only, not by purpose, just by risk. Okay. So we’ve got a nice beautiful portfolio of large caps, small cap, you know. The jargon that most people frankly don’t actually understand. But they go, “Oh, it’s diversified, we’re fine.” Okay. And then you draw four percent from it. The crazy part about the four percent rule, and this is the rule where you draw four percent from your assets comes from the idea that stocks on average dropped eight and a half percent over the last hundred years and bonds have averaged around four and a half percent over the last 30 years. Okay.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:07:43]
MIKE: That’s fine, but if you include the last 30 years, do you remember in the ’80s what it was like to have a mortgage? Okay, those insane rates are included in this average. Look at rates today. Do you think those are apple to apple comparisons? Now on the stocks. Who in the world’s going to retire for a hundred years? We haven’t figured out immortality yet. So first off, to take an average of insanely high interest rates and historic low interest rates and to call that a fair playing field, and then to assume that a retiree’s going to take an average over a hundred years, which means you have to retire for a hundred years, is ludicrous.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:08:25]
MIKE: This is why when I go to conferences the big debate is well is it the three percent rule now? Is it the five percent rule now? All of it flies in the face of principle base or timeless truth planning. You can’t do it. It’s guessing. The four percent rule is founded on guessing. And Clayton, I know you want to interrupt me here real quick, but I just got to say this, the guy that invented it had good intentions, but the guy who invented it in 2009 had the integrity to go on national television and discredit it. What a good man.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:09:01]
MIKE: The problem though is that the bankers and brokers and most financial professionals are using this strategy. Clayton, you want to interrupt me before I go to what the industry’s offering on the other spectrum?
CLAYTON: Well, let’s look at life expectancy, right.
MIKE: Yeah.
CLAYTON: Life expectancies typically going to run about your early 80’s, right. That’s just kind of where it is. And some people have better health than others, right.
MIKE: Yeah.
CLAYTON: It varies.
MIKE: Eat your veggies.
CLAYTON: Right. So that being said, a lot of people that I saw were retiring in their 60’s. Mid 60’s typically. Social security, we know that, comes around, your full retirement age is 66 to 67 anymore.
MIKE: Okay. Thirty years of retirement maybe.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:09:38]
CLAYTON: But not even that. I mean you’re looking at 20, 30 if you’re healthy, of retirement.
MIKE: Mm-hmm.
CLAYTON: Plus, if you look at historically, it’s been almost every seven to eight years that we’ve had market drops.
MIKE: Yep.
CLAYTON: And so you’d be looking at going through three of those in retirement. And if you’re following that accumulation strategy, that’s strategy. If you’re following through with what the pie chart is going to tell you and what the bankers and brokers are going to tell you, you’re not going to be able to last in retirement.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:10:08]
MIKE: Now the pendulum effect states that when you’re incredibly nervous or when you’re on one side of the equation you swing on the exact extreme opposite side. So what’s interesting is the industry created products, and I’m using the word product because you are locking in assets in the exact opposite. So the four percent rule, it’s pie chart, it’s diversified, all at risk, but you can sell out whenever you want. Okay. That’s one extreme, but all of your assets are at risk. Who in the world wants to live a hundred percent in risk? Not many. Not many retirees want to live there.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:10:45]
MIKE: The other side, the pendulum swings over, the people that are so nervous about market risk that they lock up their assets into an income annuity. An income annuity is the attempt to make a self-made pension that pays you for the rest of your life. The problem with an income annuity is even though they promise, and I had this last night, a guy says, “Hey, yeah, I got an income annuity, I want you to check it out. It’s guaranteed eight percent.” Great. Guaranteed eight percent growth every year, but divided by a number that that insurance company decides.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:11:17]
MIKE: So they still have the complete authority to give you the return on investment that they want. Regardless of eight percent, ten percent, I don’t care the percent that they’re promising, they still have full control over it. And when we break these down they’re really averaging around two percent annual return year over year. Is that worth it? Oh, and by the way, it’s completely locked up, you can’t change anything about it. It is an income stream for life that does not account for a cost of living adjustment. And we were talking about 20 year retirements, Clayton. What did eggs cost 20 years ago? What did milk cost 20 years ago? What did gas cost 20 years ago? What’s it cost today?
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:11:54]
CLAYTON: Costs are just skyrocketing.
MIKE: So when you account for a two percent return, and keep in mind some money markets right now pay about two percent that are fully liquid, is that going to offset future costs for you? The answer’s probably not.
CLAYTON: Well, and there’s a lot of different, I love looking at these, there’s a lot of different CPI graphs, inflation graphs out there that get put out there and different organizations are going to follow different things and try to tailor it.
MIKE: Mm-hmm. Mm-hmm.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:12:22]
CLAYTON: But one the things is you’ve got to be mindful that that’s assuming you’re buying the same products all the time when you’re going to substitute, you’re going to go with things that are better, things that are newer, and that can increase the inflation on things even more than what it says.
MIKE: So what it comes down to, what the purpose is of retirements. Okay, I don’t want to put words in your mouth. These are the common things that we see of purpose for a retirement plan. Income. I want income stability. Okay. That’s fine and can be accomplished without the income annuity extreme and without the four percent rule extreme as well.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:12:57]
MIKE: We can still accomplish income needs in retirement that have stability and you can sail through market crashes like 2008. We can accomplish that. That’s fine. I want growth. Okay, you want some growth. You want to keep accumulating your assets. Is that for future income? Is that for legacy? What’s the purpose of that? That purpose may be different than the income end growth conversation. Maybe you need emergency cash. Maybe health is not the best of situations for you and you need a little extra for if a hospital trip is just going to come out of the blue. These things happen.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:13:34]
MIKE: On a more subjective level, we want to travel. Okay, you want to travel. What does that look like? We want to pursue certain hobbies. What does that look like? Your investments needs to be able to articulate the purpose of what you want out of your retirement. A strategy cannot accomplish that by itself. There have to be tens, if not hundreds of different strategies working together to create a plan. A complete view plan that accomplishes all these little tasks. We do that in three simple principles. This is the guideline for all retirement planning and that is to one, only draw income from principle guaranteed sources.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:14:14]
MIKE: That doesn’t suggest that all of your assets are in principle guaranteed sources or sources that cannot lose money, it’s that you only draw income from those sources and you can map that out accordingly. The second one’s to diversify by purpose, not just by risk. Just by risk is the extreme of the pie chart or the income annuity. That’s short sided and there’s a better way than when you diversity by purpose, not just by risk. You can have your cake and eat it, too. And the third one is to use a distribution plan, not a pie chart guesser. These are written plans. Written plans for success that encompass a number of different variables.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:14:52]
MIKE: And frankly, all those who are listening right now, if you would like to further your conversation and you want to talk about what a written plan looks like, what these principles can do for you, and what a plan looks like, a written plan, not a strategy looks like, I’d invite you in. 833-707-3030. Give us a call right now. It won’t cost you a dime. When you call you’ll get a friendly voice on the phone, they’ll reach out to you and then we’ll follow up with you on Monday to schedule that visit. But when it comes down to it, this is your retirement. Do you want a single minded strategy or do you want a holistic full view plan?
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:15:28]
CLAYTON: Yeah, and when you call in, if it’s on the weekend we’ve got a friendly voice that’s going to answer the phone, they’re going to take your information, and somebody from our office is going to get back to you on Monday to schedule an appointment.
MIKE: Mm-hmm.
CLAYTON: Now with those appointments, I want to talk a little bit about what they look like and what they are because I think people worry sometimes that well if I walk in there they’re going to force me to buy something, they’re going to make me uncomfortable, they’re going to pressure me into doing X, Y, Z, that I don’t want to do, I’m not ready to do. That’s not what our appointments are.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:16:02]
CLAYTON: Our appointments, you sit down with one of our fiduciaries.
MIKE: Mm-hmm.
CLAYTON: They’re there to find out what’s important to you, to find out what you’re currently doing.
MIKE: Mm-hmm.
CLAYTON: One of the things that we love providing for people is just a second opinion.
MIKE: Mm-hmm.
CLAYTON: So let’s say you come in and your plan’s set, you’ve got a second opinion. They’re going to tell you that.
MIKE: Got your second opinion.
CLAYTON: Yeah, and they’re not going to force you into anything. You don’t need to bring your checkbook, you don’t need to plan on making any decisions.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:16:30]
MIKE: Mm-hmm. Just imagine this for a moment. Imagine this. We don’t know when the markets are going to crash, but at some point the markets will give. It’s cyclical, it just happens. So let’s imagine this. A couple years from now you’re retired and you turn on the news, FOX, CNN, MSN, NBC, whatever your news source is, and you see the market’s down 40 percent for the year. And people are freaking out. It is absolute chaos. And you roll over to your spouse and you say, “Hey, honey, do we need to be worried about this?” And your spouse says, “No, we got a plan for it. We’re drawing income from principle guarantee sources, our other accounts, they’re using models that did what they’re supposed to do, and we’re not even losing money right now. We’re actually making money. So we’re fine.” And you roll back over and you just keep sleeping. Extended day. Every day feels like Saturday.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:17:23]
MIKE: While the world’s in chaos, you’re able to sleep in, breakfast in bed, have brunch with friends, whatever you want that day, because it did not affect you. That right there is the power of a safer retirement. That’s what we’re talking about today.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:17:39]
CLAYTON: So if you think you’ve got a strategy, but you want to learn what a plan looks like, give us a call. Our number is 833-707-3030. Again, that’s 833-707-3030.
MIKE: Now you can also go to deckerretirementplanning dot com. For those just tuning in right now, this is Safer Retirement Radio. I’m Mike Decker.
CLAYTON: And I’m Clayton Bradshaw.
MIKE: We were just talking about how a strategy is not a plan. And when you have a written plan, which by the way, did you know 88 percent of retirees don’t have a written plan?
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:18:09]
CLAYTON: That number still blows my mind.
MIKE: So statistically speaking, what you have right now may be convinced to you, as in sold to you as a plan, statistically speaking, it is a strategy, not a plan. They’re just putting lipstick on the pick. Here’s another fact. About 1.6 percent of all financial professionals are actually fiduciaries. Are pure fiduciaries. So statistically speaking, everyone listening right now, you don’t have a written plan, even though you may have a written strategy, you don’t have a written plan for retirement that can fully articulate what your needs are.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:18:46]
MIKE: And you’re working with someone that may be in a sales capacity that is not legally bound to have your best interest first.
CLAYTON: So I’ll say that again, we’ve got, for those retirees, for those that are heading into retirement, one out of every ten, only one out of ten has a written plan. And those people, for those ten people, there is only one advisor out of every 100 that is an actual fiduciary. So combine those together, that is a very low number for people that are actually getting the help that they should and deserve for retirement.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:19:19]
MIKE: Mm-hmm. It’s fun, when people come in it’s such a fun conversation, Clayton, because there’s a lot of firsts. I was joking last night, I was at Red Lobster for an event we did, first time I had Red Lobster, I’ve never been to a Red Lobster, and I said, “Everyone, it’s my first time at Red Lobster tonight. How many of you’ve been here before?” And everyone in the room raised their hand. The people just loved Red Lobster that came to that event. And good for them. And I said, “What should I get?” And they said, “Oh, the biscuits. The biscuits are the best. I mean the lobster’s good, too. And there’s this, that, and the other. But you got to get the biscuits.”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:19:51]
MIKE: And I said, “Great.” And I had the biscuits and they were incredible. They were up to all the hype that people were giving it. I said, “All right, tonight, we’re going to give you a few firsts. How many of you have seen a written plan before?” Not many people ever saw a written plan before. “How many people understand what two sided models look like? Models that are designed to make money up or down markets.” Not many people raised their hand. No one actually. No one raised their hand. They didn’t know it was there. I said, “What’s interesting is that statistically speaking, you have all been set up for failure because most of you, if not all of you in this room right now, are working with a salesperson that’s not legally bound to have your best interest. There’s going to be a lot of first experiences here. Our job is legally to do what’s in your best interest and we’re going to show you a principle based way to get you to retirement success.”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:20:37]
MIKE: “If you want to talk with us, no pressure. Let me know. I’m not going to chase anyone here.” Everyone signed up. Why? Because of what we’re doing. The first principle here we want to talk about is draw income from principle guaranteed sources. Okay. Now we need to understand risk with principle guaranteed sources. Let me use social security for an example. There’s a lot of skeptics out there that say social security is going to go away. Okay, maybe. But no politician in my opinion is ever going to get voted into office that’s campaigning about getting rid of social security.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:21:13]
MIKE: They have to figure out a way to keep it going. They just have to. So social security, with that one risk in mind, is considered okay relatively principle guaranteed source of income because it’s backed by the federal government. Okay. Pension. If you got a Boeing pension, Intermountain Healthcare Pension, whatever the pension may be, just look at the integrity of the company, if the company seems fine that, just that one risk, but okay, for the most part it seems principle guaranteed. It’s backed by an entity. Great. Okay.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:21:45]
MIKE: Where you draw your income from, most people that hear the first principle, draw income from a principle guaranteed source, immediately defer and think that we’re going to pitch them an income lifetime annuity. And if they’ve heard us for 30 seconds after we’ve discussed this they would know income annuities lock up your assets and don’t account for cost of living adjustment. In our opinion, no fiduciary would sell an income annuity, turn on that rider and put you into a vehicle that makes insurance companies very, very rich.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:22:15]
CLAYTON: You know, Mike, one of the things that I love about our planning process is that everybody that goes through it gets to see all of the options that are available.
MIKE: Mm-hmm.
CLAYTON: And they’re the ones that decide what works best for them.
MIKE: Yep.
CLAYTON: Now our fiduciaries are there to say, “All right, here are the features of X, Y, Z item, here’s the benefits, here’s the detriments, this is how it would fit into your plan.”
MIKE: Mm-hmm.
CLAYTON: “It would help you accomplish these goals that you stated.”
MIKE: Here’s what they’re returning.
CLAYTON: Yeah.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:22:46]
MIKE: I mean what’s crazy is there are some principle guaranteed accounts, principle guaranteed, that have done this last year over 15 percent. Principle guaranteed. They cannot lose money. They’re averaging around seven percent or so. And most people have no idea they even exist.
CLAYTON: And for our listeners, when we’re talking principle guaranteed accounts, or principle guaranteed sources, we are referring to investments or accounts or sources that cannot lose value. If the market drops, these don’t drop with them.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:23:23]
MIKE: That simple. The easiest one that most people are familiar with is a CD. Are we suggesting that you load up your portfolio with CD’s? No. Right now, CD’s are not paying very well, but we still keep an eye on that. And some people like a CD or two in the first part of their plan, and that’s perfectly appropriate. Our job is to show you the options and what they’re returning and help build you that plan that’s principle based, that’s going to allow you to be able to help protect yourself during the bad years, but also incredible, enjoy incredible upside on the bull years, the bull markets. Like the bull market we just had.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:24:00]
CLAYTON: The up market.
MIKE: For the last ten years. What’s interesting, this principle is founded around the idea of not when markets are good, but when markets go flat or down. Let me explain. Income in retirement is incredibly expensive just because it’s your own assets. You’re taking away from your portfolio or your gains or something to create income for yourself. It’s not for your time, it’s now from your assets. Okay.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:24:30]
MIKE: Income becomes much more expensive on the flat years or the down years due to the whims of the markets and Wall Street. Let me explain. If you have a million dollars, okay, a million dollars, take four percent, 40,000 let’s say, from your assets and you just hit 2001 and ’02, the markets are down, now you’ve lost half your portfolio, about 50 percent correction there. Okay, so your million dollars is now worth 500,000 dollars, but it’s worse than that. Every year you were drawing income of 40,000 dollars a year, roughly speaking you’re down 64 percent from your portfolio. But it compounded down each year.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:25:12]
MIKE: Every year the markets were flat or down in the worst decade, 2000 to 2010, your income wasn’t just four percent. It started getting to be five or six or seven percent. It was extremely expensive to maintain that lifestyle because markets were down. This is what destroys people’s retirements.
CLAYTON: Well, and Mike, I know that we’re not in a math class, we’re not in a finance class, so I want to say what you just said again a little bit differently. What you’re saying is that if you’re following this strategy of distributing your income using a percentage.
MIKE: Mm-hmm.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:25:47]
CLAYTON: Out of a fluctuating account, out of a pie chart.
MIKE: Yeah. Not a plan, a strategy.
CLAYTON: A strategy.
MIKE: Mm-hmm. That if it goes wrong destroys your retirement.
CLAYTON: Right. You’re just digging yourself a deeper hole. And that’s where the issue lies because if the markets have a perfect track record and they never go down, it can work.
MIKE: A monkey can be your financial advisor at that point. We’re not here for you in the good years. Yes, we do very well in the good years with our two sided models and our investment strategies, but I love the study done in the late ’90s where it was so good, a monkey was throwing darts at a dart board picking investments and was outperforming many money managers. That’s how good it was.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:26:25]
MIKE: And that’s kind of what it felt like over the last ten years. The bull market has been incredible. Financial professionals are here for when markets go flat or down. Just like doctors are here not for when you’re healthy and perfect, but when you get sick, or when you break a leg, or when things go wrong, or when you’re noticing there’s some resistance with your health. You’re not doing so well anymore. That’s what we’re here for. Lawyers aren’t here because no one’s suing you. You bring a lawyer in, you have your situation for when you’re being sued. And we live in a very litigious society. You have estate documents, wills and all that, not for when you’re healthy, but when you’re sick or going to pass.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:27:07]
MIKE: You have financial professionals for not when markets are good, though the financial professionals can significantly help you not enjoy the good years like the rest of your friends, but enjoy them better than your friends, but when markets go flat or down that you’re not destroying your retirement. You don’t get many second chances in life. Retirement is not one of them.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:27:28]
CLAYTON: You know I love that you bring up doctors because one of the things that I thought was very interesting to hear from the folks that I meet with is how they would say, “Listen, we recognize that there is two people that you’ve got to build a relationship with in your life. Number one, that’s your doctor.” And this is coming from folks that are coming up on retirement or already retired.
MIKE: Yeah.
CLAYTON: So they recognize, they’re like, so we need to make sure that we’ve got someone that is going to be with us for the long haul.
MIKE: Mm-hmm.
CLAYTON: So they want to have that relationship. They said, “The other person we recognize is you, is the financial planner, the fiduciary, looking out for our financial interests.”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:28:02]
MIKE: Let me talk to that real quick and then we’ll have to transition to the next segment. But Clayton, do you want a doctor who has all the wisdom in the world, but may retire in five years and start building a relationship with that person? So when you’re in the most need they’re retired and you can’t call them anymore. You have to start over a new relationship?
CLAYTON: No.
MIKE: But do you want a young doctor that has no idea what they’re doing, that graduated from med school, everything’s theoretical at this point, and they don’t know how to diagnose issues very, very well? Absolutely not. So what do you do?
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:28:35]
MIKE: What’s interesting is we’ve got Brian Decker, founder of the company, okay, 30 plus years. I think he’s coming up on 34 years in the industry. And this is an industry that has a survival rate of seven years. As in every six or seven years there’s turnover because people can’t crack it. Brian’s been doing it for over 30 some years. It is incredibly rare to find any financial professional with 30 plus years in the industry. So the wisdom’s there. But at Decker Retirement Planning we also have the legacy plan that his wisdom is being implemented by people that also won’t be retiring before you pass.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:29:13]
MIKE: That’s the beauty of it. If you’ve got a financial professional who has the wisdom and foresight and lessons of 30 plus years, that’s being guided by a principle based plan, so you’re set up for success, and that person can be with you ever step of the way, it’s a win/win situation for you. That’s the brilliance of how we set up the legacy for Decker Retirement Planning.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:29:34]
CLAYTON: So for those of our listeners that want to learn more about what options are out there for principle guaranteed sources, to learn more about how a plan actually should look, give us a call, our number’s 833-707-3030. When you call, if you call on the weekend we’ve got a friendly voice that will answer the phone, take your information. We’ll get back to you on Monday and we’ll schedule an appointment so you can sit down with one of our fiduciaries.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:30:01]
MIKE: Yeah, it’s January right now. Okay. It’s cold. I want you to just imagine this real quick. Imagine that it’s January, you’re retired and thought, you know, I’m sick of the cold. I’m sick of the rain, I’m sick of the snow, I’m sick of the cold. Honey, let’s go to Hawaii for a week.
CLAYTON: Great.
MIKE: You can. It doesn’t matter what the markets are going to do, it doesn’t matter where on your plan, that’s built in to have that kind of luxury, to sustain the lifestyle and to do what you want to do. And it’s great. Imagine right now you’re going on a trip to Hawaii and you’re going to get that sunshine, the sandy beaches, you hear the ocean, the waves crashing on the beach. Maybe you’re sipping on some coconut water or a Mai Tai or whatever it is. That is retirement.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:30:48]
MIKE: Doing what you want to do, when you want to do it, and how you want to do it, and having a plan that sustains you so regardless of what the markets do you do what you want to do.
CLAYTON: Well, and Mike, these visits, for those that are kind of wondering what to expect, when you come in you’ll sit down face to face with one of our fiduciaries and they’re there just to talk to you, find out what’s important to you.
MIKE: Mm-hmm.
CLAYTON: And at the very least, give you a second opinion. But maybe you need more direction, maybe you don’t know, maybe you’re uncomfortable with your current situation, they’re there to help understand what’s going on.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:31:21]
MIKE: Here’s what it’s not though, and this is very important, the visit is not a time to make investment decisions. There’s not enough context. We just met you for goodness sake. We can review and say what’s not working, but it takes some time, takes a visit or two extra to understand what could be working for your specific situation. It’s also not a time to pay us anything. It’s complementary. Leave your checkbook at home because it doesn’t cost you a dime. There’s no lock situation where you’re locked in there for an aggressive sales pitch meeting. This is a relaxing visit to help understand what your wants, needs, hopes, and dreams are in retirement so we can help you articulate what you want to get out of retirement.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:32:04]
MIKE: Understand your purpose in retirement, what you want to get out of it, and then build around those needs.
CLAYTON: So if you want to learn more, give us a call. Our number is 833-707-3030. Again, that’s 833-707-3030.
MIKE: You’re listening to Safer Retirement Radio where you get the transparency that you deserve. I’m Mike Decker.
CLAYTON: And I’m Clayton Bradshaw.
MIKE: And today, we’ve been talking about how a strategy is not a plan. So let’s not confuse the two. Strategy is a single purpose objective. Like all of your assets are meant to grow. Great.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:32:37]
MIKE: What about income? What about your beneficiaries? What about your trips and hobbies? What about your legacy? What about? There’s so many other aspects a strategy can’t fully, it can’t strategize itself into a plan. It just, it can’t happen. A plan is just different. It’s a written plan for all sorts of different contingencies and outcomes. And statistically speaking, 88 percent of people don’t have a written plan. And only 1.6 percent of people are working with fiduciaries, people that are legally bound to do what’s in your best interest.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:33:10]
MIKE: It’s worth that second opinion. We’ve also talked about the first principle of retirement planning, which is to only draw income from principle guaranteed sources. We’re not suggesting income, lifetime income annuities. We’re suggesting the principle here and then we want to help guide you to what is best for you with that principle in mind. This next segment here is all about the second principle, and that’s to diversify by purpose, not just by risk. Diversifying by risk solely is a strategy. Diversifying by purpose, its’ much more I don’t want to say complicated and I don’t want to say comprehensive. It’s much more all-encompassing to what your needs are in accomplishing multiple goals at the same time.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:33:56]
CLAYTON: Well, and I’ll speak to that a little bit, Mike. Going through the planning process with someone, because inevitably there isn’t a single person or a single entity on earth that can guess and know every different eventuality that’s going to happen in your life.
MIKE: Yeah.
CLAYTON: Right?
MIKE: The Monte Carlo, which is a popular pie chart guesser simulation, it says, “All right, so statistically speaking, you should be good, assuming that there’s no market crash or black swan event that happens in the near future.” Assuming things only go well.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:34:28]
CLAYTON: And that’s why when you say that the strategies don’t work, for anybody that feels like their strategy is working I would suggest that it is luck that is the reason for that.
MIKE: Warren Buffet’s quote, “You know who’s swimming naked when the tide goes out.”
CLAYTON: The best quotes always come from Warren Buffet. I love his take on, especially on investing.
MIKE: Can I do a football analogy?
CLAYTON: Yeah.
MIKE: Do you think any football team on their offense could win a single game if all of their guys were receivers and you had one quarterback? There’s no line to protect the quarterback. Or what if everyone was there to just protect the quarterback and no one ran the ball or no one went for a pass.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:35:12]
MIKE: That is what the pie chart guesser does in retirement. It is a single purpose that does not articulate or incorporate your needs and lifestyle throughout retirement. It is guessing at best. I mean I’ll never forget, we had a visit with, he was the president of the fourth largest bank in the world, I can’t say that bank, can’t say his name, obviously there’s some sensitivity here with confidentiality, but we sat down, he says, “Hey, I want to go one of your events and I’m too interactive here, I want to sit down with you guys.”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:35:46]
MIKE: And so Brian sat down with him and what’s funny is he says, “All right, you got 15 minutes. My buddy says I need to talk to you. Just so you know, I’ve got buddy’s at Goldman Sachs, I’ve got access to all the private wealth investors, I’ve got millions of dollars here, I’ve got access to offshore like Swiss banks, you know, things of that matter.” He had everything you could need or want. He was best friends with some of the top hedge fund managers in the world. I mean the guy was connected. He says, “What in the world could you tell me?”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:36:16]
MIKE: Ninety minutes later, he stood up because he couldn’t contain himself, and said, “This is what I’ve been looking for. This is what people need.”
CLAYTON: So this is coming from one of the most knowledgeable people in the industry.
MIKE: Mm-hmm.
CLAYTON: And he is saying even as he watched it and listened to it and talked to Brian that this is what people need.
MIKE: What the industry is offering right now and why it is broken is they’re offering accumulation or growth investment strategies and expect you, the person that is not a financial professional to figure out how to connect all the dots. It is ludicrous.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:36:53]
MIKE: And quite frankly, I think it’s quite offensive that we expect people to figure out the dots on their own, without the experience or professional background. That’s like saying, “Hey, so Clayton, I know you got a hernia right now, okay.” I’m making this up. Clayton doesn’t have a hernia, but let’s pretend. Okay. “Clayton, hey, you got a hernia. Here’s how you do the procedure. Here’s some tools. Good luck.” No one’s going to do that. But yet the industry is asking retirees to connect the dots and only use growth models that are highly risky by the way, buying and holding is highly risky when markets go flat or down, and then to draw income from it is just like pouring salt on the wound.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:37:36]
MIKE: The second principle, diversify by purpose, not just by risk, when you come in and work with us that we understand what your income needs are, what your growth needs are, what your legacy needs are, what you want to pass to your kids or beneficiaries. What does your emergency cash need to be? We will incorporate what your whole plan looks like and then we section out different amounts of your assets from whatever you have currently or whatever changes may be needed to accomplish the objectives, the many objectives you have in your retirement.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:38:08]
MIKE: And it is offensive to think that a person who doesn’t have financial background is going to do that on their own. That is ludicrous. And that is why the second principle is so critical. Diversity by purpose, not just by risk. And I don’t just mean by income. You diversify by purpose to minimize your taxes. You diversify by your purpose to have emergency funds set aside for when a hospital trip may happen, when you need to change the roof, or whatever may happen.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:38:35]
CLAYTON: Well, and also to plan for your estate, to pass money on to beneficiaries.
MIKE: You diversify by purpose to incorporate the beneficiaries that you want in your life. And maybe you don’t care about that. Maybe you say, “I didn’t receive an inheritance, my kids surely won’t.” Great. Diversifying by purpose in that situation means let’s focus on getting you the most income as possible out of your retirement. Unless you have this conversation you are working with a financial professional who is asking you to do their job.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:39:06]
CLAYTON: Well, and with these, that’s what I love about our plans is they are so individualized. It addresses as many needs as we can come up with in the conversation, the folks, that as I talk to them, as we discuss, what’s important to them, what’s not important to them, that is how we can individualize and personalize these plans. Now Mike, you mentioned that if you’re all in the pie chart and the stock market crashes that you’re going to be up a creek without a paddle.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:39:33]
MIKE: You want to hear an industry term that’s said behind the scenes that makes me sick?
CLAYTON: What is it?
MIKE: It’s not a problem until it’s a problem.
CLAYTON: Gosh, that drives me nuts, that kind of stuff.
MIKE: This is what’s said behind the curtains because it’s like oh well, you know, things are good, why change?
CLAYTON: Yeah.
MIKE: Oh, sorry, you lost 50 percent of your portfolio, but guess what? No, hold on, let me say it differently. Sorry, you’ve lost 35 percent of your entire life savings, but guess what? The market’s down 40 percent or 45 percent, you should be thanking me. No. No. Not at all.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:40:12]
MIKE: It went against principle, it was guessing, and now you’re having to deal with the consequences. That is not how retirement planning is to be done.
CLAYTON: Well, and maybe some of our listeners out there think well I don’t have any, I’m still in a pie chart, but none of mine’s in stock market, it’s all in the bond fund side of things. I’m going to be fine.
MIKE: Oh, great.
CLAYTON: Well, interest rate risk is what I want to talk about. Right now, we are in almost a historically low interest rate environment. We bottomed out on the ten year treasury yield about almost four years ago.
MIKE: Mm-hmm.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:40:46]
CLAYTON: And we haven’t gotten much higher since then.
MIKE: Mm-hmm.
CLAYTON: Now when interest rates rise the value of those bond funds is going to drop. So if you think you’re safe because you’ve got bond funds in your portfolio, right now they are not. They are near historically high interest rate risk.
MIKE: Can a story of a dear friend? This is before I could help this person, okay. I wasn’t in the industry, I wasn’t able to help this person, but I heard this story and it about broke my heart.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:41:16]
MIKE: So she single lady, okay, she’s divorced, she’s going to get 50 percent of the spousal benefit at 67 years old, is turning 60 actually this year. A few years back we’re talking and she says, “Yeah, I know I need to be investing in the market because sitting on cash, all my assets on cash is not good. I get that. But I just can’t handle the whims of the market.” And I said, “Well, what did you do?” She says, “Well, I went to a guy who was local that was recommended by a friend, I came to him and I said, ‘hey, I just really can’t handle risk very well’. And he says, ‘oh, okay, well we’ll put you in some bond funds because that’s very, very low risk’.”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:41:56]
MIKE: The friend who referred this person to, I should say the friend of a friend who referred this financial professional to my friend years ago had millions of dollars and was comfortable with the risk. My friend is now talking to someone who is only able to give risk products. Month after month this person was losing money because interest rates were slowly keeping up and she said, “I thought these were safe investments.” He says, “Well, they’re safer than a stock or an ETF or a mutual fund, but there’s always risk in the investment.” She said, “No, I didn’t want any risk.” But he was only able to provide investments that had inherent risk. He was a salesperson.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:42:40]
MIKE: That’s why I say work with a fiduciary, but only 1.6 percent are fiduciaries. At Decker Retirement Planning every financial professional here is a fiduciary and legally bound in your best interest. You say you don’t want risk, great, we will talk about only options that have zero risk. If you say I’m comfortable with some risk, great, we will talk about investments that have some risk to them, but we want to make sure it’s appropriate for your retirement. That’s why we do two sided models and not buy and hold passive investing. Or we suggest that. It’s okay if you want to buy and hold, as long as you’re okay taking big hits every seven to eight years.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:43:17]
CLAYTON: Well, and Mike, when you’re talking about zero risk, you’re talking about the risk that you can diversify away from, that you can’t avoid. Inherently, there is risk in every investment, right.
MIKE: Oh, yeah.
CLAYTON: I mean even for somebody that builds a house, you’ve got the risk that there could be a floor or an earthquake, right. Those are things that you can do the best you can, but there are some things that can’t be avoided entirely. Now what you’re talking about with this lady.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:43:40]
MIKE: In this situation, if this lady would have just said, “Hey, these are the options.” Let’s just say this guy said, “Hey, CD’s aren’t very good right now, but do you want a CD? I mean it will just go liquid in two years or five years or so. Or do you need access to all your assets now?” She’d say, “No, I don’t need access to most of my assets. I’m fine right now. I’m still working. I just need to have my money grow and not keep it on cash.” A CD would have been a comfortable situation for this person, but for whatever reason he didn’t offer it because maybe it didn’t pay that guy well. Maybe he wasn’t licensed appropriate. Whatever the reason was, he didn’t even offer that.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:44:15]
MIKE: And this situation is happening over and over and over again because financial professionals are not talking about diversifying your assets by purpose, they’re diversifying your assets just by risk, and it’s short sided.
CLAYTON: Well, and for our listeners as well, just know that what works for your neighbor doesn’t always and isn’t always going to work for you as far as the investments. And so if you’re talking to a neighbor that you feel that you look up to because they seem successful in their own right, they’re likely going to have a different risk tolerance and they’re likely going to be implementing a strategy that doesn’t work for you.
MIKE: Mm-hmm.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:44:51]
CLAYTON: And those are the considerations you need to have. Don’t feel like your neighbor, just because you like the guy or the gal and you feel like they’ve got more money than you, that they’re strategy is going to work for you. Don’t try to replicate it because number one, they’re not a financial advisor and they shouldn’t be giving you advice, but number two, it’s not going to work out for you the same way it worked out for them.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:45:11]
MIKE: That simple. If you saw the differences of the different plans that we produce, it is so customizable. It’s all centered around your unique wants and needs. If you want to see what one of these looks like, you want to see what a principle based plan looks like, a written plan made by someone who is legally bound to do what’s in your best interest, a real fiduciary, call right now, 833-707-3030. When you call in you’re going to get a friendly voice on the phone that’s going to gather some basic information so we’re able to reach out to you on Monday and schedule a time for you to visit with one of our fiduciaries.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:45:47]
CLAYTON: And we’re not, I want to make sure, this is important for people to know that we’re not trying to gather this information for any other purpose other than just being able to schedule an appointment. This is your information. We guard it meticulously.
MIKE: Mm-hmm.
CLAYTON: And we are very protective of it. So don’t think that if you reach out that you’re going to get bombarded with all sorts of contacts and things like that. That’s not what we do.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:46:13]
MIKE: Mm-hmm. Now I’m going to take a moment here, do some meditation. I want to just realize our current ceilings right now. May sound weird, but if you’re driving, keep your eyes open. Okay? Don’t close them. But if you’re sitting at home or at the office listening to the show, and it’s funny we’re coming in more and more contact with people that listen to us via podcast, and if you want to do that you can always get it at deckerretirementplanning dot com or wherever you get your podcasts. But regardless, safety first. But just take a moment to reflect right now.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:46:41]
MIKE: What are the biggest concerns you have in retirement? What goals do you have that you feel are not being accomplished? Let’s just use an example. Let’s say you want to travel right now, but because of the market uncertainty you’re uncomfortable with that. Now let’s say that we address that purpose, and regardless of what the markets do over the next 15 years, that every trip that you want to take over the next 15 years does not have to be compromised, that it is set, it is good to go.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:47:14]
MIKE: You might change the destination, but the funds are there so you can keep going on trips. Maybe it’s 20 years, maybe it’s 30 years, maybe it’s ten years or five years, that number’s up to you. Can you see the anxiety? Can you feel the anxiety going down when you know that the money is structured by purpose to accomplish your retirement goals? That is what we’re accomplishing here at Decker Retirement Planning.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:47:42]
CLAYTON: Now what you can expect from these visits, you’ll come in, sit down in a private space with one of our fiduciaries, and they’re going to find out what’s important to you. They want to just understand where you’re coming from, what your goals are to help start to formulate what your plan is going to look like. Now it’s not, what these visits aren’t, they’re not going to force you to make a decision. They’re just there to get information and understand you. They’re not going to lock the door and throw away the key until you get your checkbook out and pay something.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:48:12]
MIKE: No. It’s ridiculous. And if you’ve ever felt that way, on behalf of the industry I apologize.
CLAYTON: It’s a sad thing that that is how people have started to feel, but that’s not what we’re about. We want to make sure that these plans are right, and at the end of the day if you don’t feel like it’s right for you there’s no obligation after that appointment to follow up with anything.
MIKE: Mm-hmm.
CLAYTON: You can come in, you can see what it looks like, you can talk about our philosophy, we can understand where you’re coming from or what’s important to you, and then if you decide you want to look at it we can have that conversation.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:48:44]
MIKE: Low pressure. Call us right now, 833-707-3030. That number one more time, 833-707-3030. This is Safer Retirement Radio where you get the transparency that you deserve. If you’re just tuning in, I’m Mike Decker.
CLAYTON: And I’m Clayton Bradshaw.
MIKE: And we’ve been talking about how a strategy is not a plan. And we’ve addressed in the show the first two of three principles. The first one is to only draw income from principle guaranteed sources. And my big disclaimer is that please, please, please don’t consider that as an income, lifetime income annuity. It is not. Okay? Let’s not use extremes to plan our retirement, let’s use the silver lining, the beautiful part of balance in your retirement plan.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:49:25]
MIKE: The second part here is diversify by purpose, not just by risk. When you talk about your retirement plan, there’s a lot of purpose in there and a strategy can’t accomplish all the different aspects of your wants, needs, hopes, and needs. The third principle is to use a distribution plan, a written plan, not the pie chart guesser. A pie chart is guessing at best. It is a strategy, not a plan. Eighty eight percent of retirees, and I’ve said this over and over again, but I can’t stress it enough, 88 percent of retirees do not have a written plan.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:50:01]
MIKE: Most of the 88 percent have a strategy and think it’s good enough, but it’s because they’ve been bullied into the notion that their financial professional is meant to do one thing and they are meant to connect the rest of the dots. And frankly, I think that’s an abusive relationship. But I hope many of you get out of those abusive relationships and find someone that’s a fiduciary that can walk with you every step of the way. Clayton, can you walk us through what a written distribution plan actually is?
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:50:32]
CLAYTON: Yeah, so what our written distribution plans look like is you’ve got, it’s all laid out there in front of you. We take your age down to age 100 so you can see from your current age, you can see at the time you retire, what your income is going to look like. Now and this isn’t just a plan to show you what your investments are going to look like, what your income stream from your investments might look like, but it compiles everything. It looks at your social security. If you have a pension or if you have a rental property or some other investment business income, anything that you might have as income at retirement, it takes and puts that all in one simple snapshot so that you can see, all right, here’s my different income streams.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:51:17]
CLAYTON: And I’ve seen a lot of these where folks will have different business dealings that they got into and so they would have income that would start and stop. Sometimes it you’re still working, you’ve got a few years of income, all of these different income streams are put on one page so that you can see down to the month how much you can draw net of tax. And so you’re taking your investments, you’re taking, if you’re doing estate planning, all of that is visible on one page so that you can know here’s the number I’m going to get in retirement.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:51:52]
MIKE: And the big question is are you okay with that? And what’s fun is most people say that’s more than I was expecting and tears start to, their eyes start to water. Tears are shed, people thank God for this plan. I’m not being hyperbolic here. Because not only do they think they couldn’t retire, they didn’t see clearly even if they could retire how it would look, and now they’re seeing that they can get more money and they can retire sooner. It is incredibly powerful.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:52:20]
CLAYTON: There are a lot of people that came in that I could tell they were uncomfortable being there because they didn’t feel like they had done enough. They didn’t have that confidence because they had always just been shown all right, here’s how much you have, and they didn’t know what to do with it. But once they came in, once they got that written distribution plan put in front of them, that sigh of relief was there. I could visibly see them relax. And a lot of times, the husband or the wife would hit the other one on the shoulder or the arm and say, “Thanks for working so hard. You’ve done it. You’ve put us in a great spot.”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:52:53]
MIKE: We’re here. Now we can spend time with family and friends. Now we can travel. Now we can pursue those hobbies that we’ve been putting off for so many years. Now we can do fill in the blank.
CLAYTON: It’s that bucket list.
MIKE: That’s the beauty of not only a safer distribution plan, but following a principle based plan. It is so, I can’t even describe or use words to describe the feeling that happens here. The low pressure visits that create so much clarity to answer some of the biggest questions, one, can I retire, and two, if so, how much can I draw before I run out of money before I die?
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:53:36]
MIKE: We don’t want to, no person who’s worked, especially their whole life, deserves to be living every day in fear that they’re going to run out of money and be up a creek without a paddle. No one deserves that. And what’s so interesting is there are so many questions that revolve around retirement planning. Social security, required minimum distributions. When do I have to sign up for Medicare or Medicaid? All of that goes away in a written distribution plan. And when you follow the principles of a retirement, principles of retirement, and you enjoy a safer retirement, it all falls into place.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:54:15]
MIKE: And you can answer questions that you thought weren’t even possible. The biggest ones are typically with tax minimization and identifying huge pitfalls years before they’re a problem to help alleviate them. Clayton, let’s say that you were, I’m just going to use the coronavirus. It’s new. Let’s say Clayton, that I had, and I don’t, let’s say I had a vaccine and I said, “In five years you’re going to get the coronavirus, but I’ve got a vaccine right now, it can get rid of it.”
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:54:49]
MIKE: And I apologize if anyone is against vaccines, this is just an analogy. Okay, let’s say the vaccine does no harm to Clayton in any way, but I say, “Clayton, here’s the cure, would you like to take it right now before it’s even an issue? Or do you want to go through that trial and might die, might just get sick for a while and recover?” What would you do? That is what we’re offering at Decker Retirement Planning is to be able to alleviate pains before you even feel them.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:55:16]
CLAYTON: Well, and Mike, I mentioned that these plans go out to age 100. One of the things that is important to note is this isn’t just a set it and forget it type of plan. We are with you every step of the way. These plans are updated annually. We do annual reviews and we are the ones that proactively do this. We don’t put this on our clients to maintain and force them to make it their responsibility. If they want to, great. If they want to choose that as their plan, perfect. That’s fine. They can do that. But for those that want the help, we are there every step of the way.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:55:51]
MIKE: If you want to see what a safer distribution plan looks like, we’re going to extend it at no cost to you right now. We do ask that you’re 55 years or older, or within five years of your ideal retirement to call on this because it’s really not effective if you’re in your 20’s, 30’s, or 40’s. Just doesn’t make sense to do it because this is retirement planning and it’s an analysis of where you currently are. So if you are within five years of your retirement, 55 or older, or currently retired, call us at 833-707-3030. That number one more time, 833-707-3030. Won’t cost you a dime. The visit there is to open your eyes and give you the clarity that you’re looking to have in retirement so you can see what your retirement looks like and finally get the transparency that you deserve.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:56:39]
MIKE: Overall, the visit is all around you like a second opinion to open your eyes here, but the visit’s not a time to make financial decisions. It doesn’t cost you a dime. So leave your checkbook at home. It’s a time to just see what you may be missing in a full written retirement plan. Thank you all so much for listening to the show today. This is Safer Retirement Radio. Same time, same place next week. As always, if you’re listening to us via radio, if you like the show and want to catch it via podcast you can catch that on Sound Cloud, iTunes, Google Play, Spotify, iHeart Radio, wherever you get your podcasts, just search for Safer Retirement Radio.
RR S3 E33_THE DIFFERENCE BEWTEEN A RETIREMENT STRATEGY AND A RETIREMENT PLAN [00:57:16]
MIKE: I’m Mike Decker.
CLAYTON: And I’m Clayton Bradshaw.
MIKE: Next week we’re going to keep talking about similar topics here. More time sensitive though on retirement planning. But overall, the mission here is to get you the transparency that you deserve. Now if you want to catch this show as well, you can go and relisten to it, you can go to deckerretirementplanning dot com and get even the transcription. We’ve got some fun feedback that people that commute to work on public transit, they do it so they can even read the show. And that’s fun. Thank you for listening. Thank you for the fans that keep listening to the show and make it so great. And if nothing else, I hope you enjoy the resources that are available at deckerretirementplanning dot com. Thanks so much. Talk to you next week.
