We all want some level of safety and security, firefighters, construction workers, EMT. They’re all there when you need them to help manage life’s chaos in retirement. You want that same level of safety. But who was there for you to make sure your money will last? Brian is it just there in case of emergency he’s there so you don’t have an emergency with your money? A safer retirement doesn’t mean a boring retirement, but it prepared what for the things that inspire you. This is safer retirement radio with Brian J. Decker.
Welcome to safer retirement radio with Brian J. Decker of Decker retirement planning. I’m Mark Elliott, I would encourage all of you to check out Brian’s website Decker retirement planning.com. There’s a lot of great information about the company what they do. And of course, the great team that Brian has assembled to help his clients retire to the best situation that they can, if that is at all possible if you have questions like hey, can I retire? Well, when can I retire? Do I have had? Do I have enough? Well, my money lasts as long as I do really? At the end of the day, you want to know if I or if we retire, will I or will we be okay? That’s really the big question. Well, Brian and the team at Decker retirement are here to help you with that answer. And it’s it’s probably the answer is a little bit more complicated than the question. There’s a lot of moving parts here when it comes to your retirement income, investment taxes, health care, Legacy planning, Social Security, Medicare, what in the world do we do? A 33707 3030 is the number that a child with a team there’s no cost for you, a 33707 3030. And then on the website, Decker retirement planning.com. Under the heading of safer retirement education, there are 12 different things you can download no cost to you whatsoever, including Brian’s book on retirement, the Decker approach, check that out as well. Under the heading on the website, Decker retirement planning.com safer retirement education. 12 different things you could download, just really for your information. Then you have questions, call the team a 33707 3030. Aaron Ray joining us today as well and advisor with the team at Decker retirement. So Brian and Aaron will have a conversation about principal guaranteed accounts, risk bucket options, Brian, you guys got a lot to get to better get going. All right.
Thanks, Mark. Let’s let’s jump right in order
to talk about the soccer team, the women’s soccer team or did you want to talk about Bud Light or the Shabbos 50? I don’t know where you want it is that we wanted to start retirement topics.
Well, today is glad you’re not Megan Rapinoe day. I know that. Okay. And I wish that I was Bryson to Shambo day. How’s that?
I think you should be pretty happy that you had hip replacement. And three days later, we’re in the Bahamas feeling fine.
That’s a true story. I had my hip replaced my left hip replaced on Thursday and I hopped a plane for the Bahamas. So at the two week post op I come in, the nurse says where’s your where’s your crutches? I go, I don’t have any crutches. Well, doctors gonna be mad at you, Brian. And then the doc comes in. He goes, where’s your crutches I go, Doc, I don’t have any crutches. Check this out. And I lifted my left leg. Now remember, I had a left hip replacement. I lifted up my left leg after two weeks I lifted it. So my femur was horizontal with the ground. He said you shouldn’t be able to do that. I go, Oh, yeah, we’ll check this out. And I pull, I grabbed my left ankle and I pulled my my heel up to my bum. And he whipped out his phone and he said, I’ve got to get this on video. No one’s ever done that before. The other doctors won’t believe me. And so it was a interesting postop your medical marvel I consider. I honestly believe that being active after my operation really gave me a great outcome. But as we have cash getting old, we replace body parts. You want to get as much flexibility and mobility as you can. And so I think I had my knee my right knee done last year and whoever doesn’t move. They just freeze up. They limit their mobility. So I just learned from that and I got as much mobility as I could this morning. I played three hours of pickleball
There you go. If you have questions about how to recover from a knee replacement or hip replacements caughlin Brian Hey, Deckard. 833-707-3030 That’s awesome. All right, principle guaranteed accounts. What are you going to get to you and Aaron?
Okay, So Aaron, let’s jump in on this note. A lot of the bankers brokers use the pie chart, the pie chart has your quote unquote safe money in bonds funds, mostly bond funds. I mean, sometimes there’s laddered bonds, but gosh, in 38 years of doing this, Aaron most of the time I see bond funds, don’t you?
Yeah, say most people haven’t gone to the effort of putting together like a laddered bond portfolio. It takes a little bit more skill and time to do that. Okay, so
what’s wrong with bond funds? So one of the things is volatility, factually, mathematically and I really pride ourselves err in the deck retirement planning. We are a math base. firm we take our fiduciary responsibility seriously, this is common sense this point one, the reason why we don’t use bond funds, one of the several that we’re going to talk about here, and then I’ll toss it back to you, Erin. One of them is mathematically, factually, when you draw income from a fluctuating account, you compromise gains when markets go up, you accentuate losses when markets go down. And we have a saying that it works until it doesn’t. And you don’t want to have that uncertainty in retirement, you want to have you want to have confidence in your retirement, what are the reasons why you tell your clients that you don’t recommend bond funds in your retirement portfolio? Aaron,
you hit on a couple of them there. The big one is interest rate risk, where if you have specific bond funds, and all of a sudden we have dramatic interest rate raises, just like we have the last year and a half, two years, you see some pretty nasty effects. I have conversations with people all the time where they say, Hey, why did my conservative or safe portion of my portfolio do so badly last year and 2022. And then we pull out the chart and show them what interest rates have been like historically, and illustrate that as interest rates go up, bond funds lose money, they have an inverse relationship. So a lot of the bond funds that we see last year actually lost more money than the s&p did. So depending upon how it was structured, or what type of funds they were in, a lot of them lost 20 25%. So kind of a wake up call for those that thought it was the safe money. So we have a a better way to do that. But I would say interest rate risk is the big one. And then inflation is second, you want to make sure to hopefully have your investments outpace inflation. And luckily, that started to come down over the last few months. But as as those get paired together interest rate risk and inflation risk. There’s there’s some drawbacks to doing those bond funds.
I want to add to what you’re saying about the interest rate risk and interest rate history. A couple of things from if you were to look at interest rate history on the 10 year Treasury yield going back to Abraham Lincoln’s time in the 1850s 60s 70s, you see that the 10 year Treasury hit an all time low for that period in 1940. And then 40 years, from 1940 to 1980, interest rates trended higher to almost 15%. On the 10 year Treasury if you had a mortgage in from 1980 to 82. You remember very high double digit mortgage rates, then, was it coincidentally, from 1980 to 2020, exactly 40 years, interest rates are declining to an all time low of 0.47%. On the 10, year Treasury August of 2020. At that point, now, Aaron, I feel my blood pressure going up, who in the world who is a trained person to give financial advice would be recommending bond funds when your interest rate risk is enormous. Imagine investing in the stock market where the Dow Jones peaked out at 30,000. And they’re recommending that you should invest at 29 950. I mean, that is insane. You have all the downside, and you have very little upside. That’s the that’s the comparison of investing in bond funds when interest rates are at 0.47%. On the 10. Year Treasury, there was no that was financial malpractice, I just sorry for the rant, but no banker or broker should have ever been recommending bond funds as quote unquote safe when interest rate risk was at an all time record high. So what happened since then? Well, in the last three years, you lost the third on your safe money. Since August, in the last three years, the average bond fund is down a third 33%. And yet, have the bankers and brokers change their approach? No, they still use the pie chart, which is an accumulation strategy to build your wealth to a point where in retirement, if you keep actually let’s take a quick aside here, Aaron and toss it back and then get back to bond funds. I just feel like we’ve got so much more to say on this why we why we draw income from laddered principal guaranteed accounts we’ve got so much to say there but bankers and brokers use the same pie chart for accumulation strategies to build your wealth from you’re in your 20s 30s 40s and 50s. And then they use the same strategy in your retirement and if you use the same strategies in retirement that you use to build your retirement, it won’t work for several reasons. So Aaron, just take a minute and go through how it’s different. How will Even climbing Mount Everest, I mean, you have one strategy for ascent, and you have another strategy for descent, they’re totally different. And you have in football, you have an offense, you have a defense. Anyhow, Aaron, spend a couple minutes on this. I don’t want to leave interest rate risk and principal guaranteed accounts. But I want to have you hammer on why it’s essential to use distribution strategies in retirement, and not continue to use the pie chart. Yeah, it’s
a great setup, Brian, and I like your illustration of the of the mountain there. One of our one of our co workers, his father in law used to be a mountain guide. And he said that a lot of people misunderstood his role as being the mountain guide. When he would ask clients or those that were hiring him, it would say, well, your job is to get me to the top of the mountain, right? And you said, No, my job is to get you safely back down to your car. So I mean, let’s think about that for a second. People think about their whole lives accumulation, building up getting that nest egg as big as possible, but they don’t really think about what to do when that stage of their financial life has ended or is about to be over. And that’s really where we come in. And that’s really where that investment strategy needs to change. The same types of investment strategies and philosophies that got you to where you are, are not the same things that you need, as you shift into retirement or what we refer to as distribution, where the goal has shifted, you’re no longer just taking your paycheck every couple of weeks using that as spending income, dumping some of that money into your 401 K, you now need that money as you’re spending income to pay for expenses. And you don’t have the same time horizon that you did when you were 2030 years old. So the strategy and the philosophy and the way that you go about using those funds needs to change as well. And so for us, it’s so important to shift that because the traditional method of the pie chart of just having it in a 6040 or 7030 portfolio, and then taking some percentage out of that can have some pretty big drawbacks, especially if you get hit with a poor market cycle, where if we go back to the early 2000s, and you retire in a time period like that, where the s&p loses 40 50% over a couple of years, and you are following something like the 4% rule, just pulling out a set percentage every year, you have your money invested in a 7030 portfolio, you’re probably down 50 to 60% in just the first three to four years of retirement. So it’s essential that you shift into more of our distribution based strategy so that you don’t have some of those errors come and destroy your retirement caused you to go back to work.
So Brian and Aaron just getting started on today’s safer retirement radio, talking about principle guaranteed accounts are also going to get into risk bucket options. There’s a lot of moving parts in retirement. And that’s what Brian and the team at Decker retirement are certainly here to help you with. Right. The safer retirement process focuses on income planning and distribution planning. It’s different in retirement, because you’re in the D accumulation phase. You’re working years you were in the accumulation phase, a lot of moving parts Brian Aaron and the team at Decker retirement are here to help. Again that number, a 33707 3030 833-707-3030. There is no cost for this. There’s no pressure, there’s no obligation. There’s no judgment either the team is here to help you looking forward. Not going to go I can’t believe you still have not held on to that blockbuster stock. They’re not going to judge they’re here to help a 33707 3030 talking about principle guaranteed accounts. Ryan and Aaron back with more right here on safer retirement radio.
If you only think about taxes once a year, you’re doing it wrong. To get the most out of your retirement nest egg. You shouldn’t just file your taxes. You need to plan for them. Call Brian now to see what tax opportunities you could take advantage of 833-707-3030 That’s a 33707 3030 Decker retirement planning has a question for you is your retirement inflation proofed? Here’s what we mean in retirement chances are you’re on a fixed income with variable expenses. So how do you not run out of money when the cost of just about everything continues to go up? You inflation proof that Brian Decker and the team at Decker retirement planning can show you strategies to help combat inflation. So what does it outpace your retirement income? Call Brian Decker today at 833-707-3030. To learn more inflation could take a huge chunk out of your retirement savings, but it doesn’t have to with some simple planning inflation can go from being a major disruption to a minor annoyance. Call Brian and the team at Decker retirement planning now to start inflation proofing your way. Retirement today, adding 33707 3033 3707 3030 investing involves risk security and insurance services offered by Decker retirement planning a registered investment advisor with the SEC. You’re listening to save for retirement radio. If you like what you hear on today’s show, or have questions dropped by Decker retirement planning.com or call 833-707-3030 to talk to Brian.
Welcome back to save for retirement radio with Brian J. Decker and Aaron ray of Decker retirement planning. You can always learn more on the website Decker retirement planning.com You can always go to the heading on that website save for retirement education. 12 different things you could download. There’s the three principles of retirement book. There’s a checklist challenger’s Brian’s book on retirement, the Decker brochures and sample income plan. Those are just four of the 12 things you can download Decker retirement planning.com To find out more about Brian Aaron and the team, you can certainly do all of that. But under the heading of safer retirement education, there’s a lot of information just for you to try to learn more about some of the maybe the questions, concerns you have about retirement. You have questions you want to call, chat with them. No cost for that either a 33707 3030 833-707-3030 mark Elliott. All right, Brian, you and Aaron are deep into conversation, we had to take a break. I’ll let you continue.
All right, Aaron, keep going on some of the reasons why we should shift from the accumulation strategy, which was point out what those are buy and hold. If you take a 30 40% drop in the market while you’re at work in your 30s 40s 50s No big deal because your income is still coming from your work. And every two weeks you’re throwing money, your dollar cost averaging into a stock market that’s down, when it recovers, you actually benefit from a market that was down and took, I don’t know, three, five years to recover, you actually benefit from that now let’s switch and now you are 65 years old. market goes down 40 50% now and you’re drawing income from that account. Now that’s quite the difference, right? When you’re drawing income from a fluctuating account, you compromise gains when markets go up, you accentuate losses when markets go down. Whenever bankers and brokers are recommending a buy and hold strategy in retirement, I scratched my head there’s no downside protection and the visual I want radio listeners to think about as a trapeze artists with no, no net now it’s real. Oh, when the markets are down 30 40% Your income that you’re drawing from that portfolio will change your life. Many people, millions of people went back to work in 2009, because they had to their money had just taken a 50% shot for two times in the in the same decade. That was the last decade. Why don’t bankers and brokers recommend that you draw income from laddered principle guaranteed accounts? Why don’t they recommend like we’re going to cover today, we’re going to cover both sides. We’re gonna cover ladder principle guaranteed accounts. And we’re going to cover strategies that give you protection in a down market. This this is not new stuff that’s been around for 20 over 25 years. So Aaron, let’s get back to it. I just want to cover before you jump in want to cover that in the last three years the quote unquote safe money for bond funds has lost on average 33%. So would you recommend bond funds now that the bond funds a 10? Year Treasury is little over 4%? i I’m interested in your answer and then I’ll follow up.
No, I wouldn’t right now. They can be useful for certain things. But the way that we put those distribution plans together, there are much better options that don’t have the same risks in different categories that these types of bonds and bond funds do. And the way that we structured them, the type of investments that we use, the duration that we put them in for seems to work better in pretty much every category relative to just putting some stock bond mixture together and hoping it works out in their favor.
Okay, I 100% agree. A little more. Let’s let’s the current yields right now the 10 year treasuries at 4% current yields on bond funds. Oh, by the way, if you can get safer bond funds at 4%. Why do you do I see a lot of people and you tell me if this is true also, they’re told by their banker and broker that they can get a better yield. Well better yield like six or 7% when the 10 year treasuries at four. What does that mean high yield What is another name for high yield bond funds? High risk You’re high risk and a word that rhymes with junk. You talk to listeners about what those are?
Yeah, so it’s the trap of yield, right? Like where you look at, okay, X investment, say the 10 year Treasury is paying 4%? Well, okay, I have this other investment, be it a dividend stock or some other some junk bond, whatever you want to call it. It’s paying 678 9%, I had a guy that I spoke to a week and a half ago that told me he was averaging 11% on his dividend portfolio, and I just kind of looked at him in awe, because that is not sustainable. So the problem when you get into the yield chasing discussion is, yeah, it looks better. But where’s the risk, that type of yield, that type of return doesn’t come risk free. And if you don’t see the risk on the front face, it’s hidden somewhere else. And so I talked through kind of some of the things that he was missing and the dangers of that, but really, at the end of the day, what you’re looking at is either default risk or risk, they’re gonna slash the dividend, and all of a sudden, the stock price takes a huge tank, and then you’re down 30%, and you don’t have the dividend that you used to have. It’ll be interesting to see how that goes over the next little while, because as yields have risen, a lot of people go down that road of yield chasing, and they may not have had the experience of a yield cut or a duration cut, like, like before, and it’s going to come home, eventually, there’s going to be some not so nice consequences from that.
Right junk bonds means high risk. So high risk, high return, they’re synonymous. So I’m glad that you went over that why would anyone put their quote safe money into high risk bonds? That just doesn’t make any sense? So what do we do? You’re one of the key people at our company that would go to a database. If we’re talking about hope, doing homework, doing our due diligence, talk about don’t name the database, because I don’t want to give, give up what we do. But it’s the major database lets us know what principle guaranteed offerings are from banks and insurance companies for cash one to three, year three to five, year five to seven, seven to 10 year principle, guaranteed accounts. get granular on this. Aaron, tell what you did for our clients, what our company does for our clients in looking for the principal guaranteed accounts and trying to find the best yields.
Yeah, this is actually one of my favorite discussion topics when we meet with our clients, because there’s a lot of lot of detail that goes into this. And like you said, Brian, we have a couple of databases that we take a look at, and find the best performing principal guaranteed accounts. Now there’s a lot of different factors. And a lot of different things that are considered when selecting the best performing investments, we first start off with is it a reputable company is whoever is issuing the investment. Somebody that you can trust, do they have a good financial standing? Do they have a good credit rating, because as I’m sure you could agree with if you have a company that offers a phenomenal investment, but they are not financially sound, or you cannot trust them, from a credit standpoint, it doesn’t really matter how good the investment is that they’re pitching. So that’s number one, we want to make sure that we trust and verify the company in their financial standing that they’re going to be around and those funds will be safe. After that, we get into some of the details about those specific investments. You talked about different time ranges, the plans that we put together have laddered principal guaranteed accounts because we want to balance the liquidity that’s needed for funds that you need to spend at the beginning of the plan. Versus those are they’re not going to be used for 510 20 plus years. So duration is a big part of it, figuring out when they want to use the funds, and then what types of investment options fit well within the rest of that framework. Now in the world of principle guaranteed accounts. These can be issued from one of four different places, either a bank, an insurance company, the federal government, or a municipality. And there are pros and cons to each of those certain things to consider. But at the end of the day, there are a there are a ton of different offering options that come from all of these sources. And it’s our job to be able to weed out those that are either just straight garbage or that don’t work well or don’t fit certain criteria, and find the best performing investments that have low or no fees, the ability to earn a high rate of return the ability to provide income for you. And it really helps narrow down what’s actually going to be advantageous for each client. So this is one of the things I spent a lot of time on. A lot of research on. And I can tell you without a doubt that we have the best performing principle guaranteed accounts. And it brings me a lot of peace of mind to be able to share those with our clients and know that they’re going to be protected, taking care of the when we do have another downturn, I know we just had one last year. But there’s going to be a couple more in the near future, I’m sure that when those happen, we have all of these accounts in a place where they are not going to have to take drastic income cuts, they’re not going to have to go back to work, they’re not going to have to make major financial decisions based off of poor performing investments. And that brings a lot of peace of mind to all of us.
So let’s tie this off. Because we’re going to spend the rest of the show talking about the risk side, let’s give some actual numbers. So with our due diligence, right now, today, the highest yielding principle guaranteed money market, if you’re putting your emergency cash, or discretionary cash in a bank or a credit union, compare this we’re getting 4.85%. Right now, on our liquid money market accounts for our clients, that’s very good. Second, on three year and five year, we’re getting the best rates from fixed rate investments that are yielding just just a little bit higher than CDs, five and a half, five and three quarters for three and five years. And then when we go out seven to 10, it’s the variable rate investments that are giving us the highest rate seven and 10 year principal guaranteed accounts averaging over eight and a half percent. Those are all taxable rates. And then for tax free principle guaranteed. Right now we’re seeing returns in the high sevens. For principal guaranteed accounts. Those are hard to find. We have done the due diligence, we ladder, those in place, so that our clients are getting the best returns and they’re drawing from those accounts. Ladder principle guaranteed accounts so that when the markets go down, our clients don’t have to go back to work. It doesn’t affect them. In fact, last year, with the s&p dow 19, NASDAQ down 33 bonds, average bond fund down 20% Our clients Aaron, last how much in those laddered principal guaranteed accounts? Nothing. In fact, they made money in buckets. One, two and three, correct?
Yep. Yeah, it was a beautiful thing to see.
So if you’d like to learn more about this a 33707 3030. How is your portfolio set up? Is it set up for to handle the we’d love the bull markets? But can you handle the bear markets? Where are you How’s how’s everything set up the team at Decker retirement here to help 833-707-3030 833-707-3030 Brian and Aaron back with more of safer retirement radio right after this.
As the weather warms the open roads begin to beckon if you’ve been getting the itch to travel called boy 833-707-2020 to make sure you have enough saved to keep the winds of adventure blowing in retirement.
Glad you’re with us today
for a safer retirement radio with Brian J. Decker and Aaron ray of Decker retirement planning. The team is here to help you figure out where are you on that road to retirement. Can I retire? When can I retire? Do I have enough? Will my money last? A lot of questions we’ve never retired before we want to get it right, we got one chance? Well, the idea is if you don’t have an actual written retirement plan, where’s your income coming from? How much is going out? What about your investment strategies? Are you all in risk? Are you not any at risk? everybody’s situation is unique. The market world the insurance world? How do we blend all that together? Then it comes to taxes. We know taxes are changing, it looks like in 2026. And you might be in the 12% bracket right now. But that could be in 2026. You might be in the 25% bracket. It’s crazy. There’s a lot of moving parts here. And then don’t even mention health care, long term care legacy planning. So security decisions, Medicare decisions, Ryan and the team and Aaron at Decker retirement are here to help 833-707-3030 If you have questions 833-707-3030 All right. Ryan, you said you and Aaron, we’re now going to get into after talking about principal guaranteed accounts, you’re gonna get into the risk strategies. Yes. So
how much money should you have at risk? Is it in your advantage to have be in retirement have 60 or 70% of your portfolio in risk? Erin, how much quantitatively let’s start with that quantitatively how much what percentage of the portfolio typically is our retired client have at risk?
It’s usually in between 15 and 25% depending upon the specific client.
Let that sink in Say that again? Because that is quite different from 60 or 70%.
Yeah, yeah, we pretty much flip the like 7030 portfolio on its head where a lot of people have 60 to 90% of their total portfolio invested in equities or some type of stock investment. We usually put more of that in those protected vehicles and then anywhere from 15 to 25, maybe 30%, depending upon a specific client into equities or stock type vehicles.
Okay, now I’m going to go on to rant here, back to back rant. Number one, the biggest fear that clients have 65 years, and older people in the United States is running out of money before they die. Why is that? Because in retirement, you look at a pie chart, no matter how smart you are, you cannot know how much money you can draw from that pie chart. Aaron, what is a distribution plan? How does that help someone if they’re worried about how much they can spend?
That’s because we have a math based approach, that distribution plan is very mathematically optimized. And it helps clients understand exactly how much money they can pull from, or they pull every year where the money is coming from. And it helps them make a lot of decisions around. Are they ready to retire how much we can spend in any given year do we need to save more, spend less. And so the way that we structure those helps you see exactly year by year, month by month, how much money you can have. And so it’s not just we’ll hope for the market to perform well. And we’ll pull X percent every year where your income is going to change on a yearly basis or a monthly basis. Depending upon how much you update it, we want to give a little bit more consistency, a little bit more stability to the income that they’re receiving. And that’s what we do. Most of our clients aren’t interested in having their income fluctuate up and down depending upon whether the s&p performed well, or whether it performed poorly. And so for us, we put all of those principal guaranteed accounts in place, the cash accounts, the risk accounts, all of those are very intentional, and the dollar amounts that are received in each of those categories. And when they’re used to optimize that income and make sure that they don’t run out before they pass away.
So there’s two genius parts of distribution planning. One part is we always draw now we’re math based, we always draw from the lowest earning account allowing the highest earning accounts to grow and compound more than offsetting typically, more than offsetting the money that they draw in the first few years in their retirement first five or 10 years. The second genius part of distribution planning that we do, let’s say the start. So you’re 65 years old, married, you have 1.2 million in assets, and you start drawing on your portfolio in retirement, well, you want two things in retirement, you want income and you want your portfolio to grow. So on the income side, we carve out about 75% of your portfolio, like like you said, Aaron, and that is where the laddered principal guaranteed accounts are for the first 20 years. And you draw that income. And the beautiful thing is when you’re drawing income from those for those first 20 years, you’re able to have to have that income. Let me stop there for a second, by the way, what percentage I’ve been doing this 38 years 100% of the time when I showed them version one, it’s higher Aaron than what they thought that they could draw every single time. What’s your percentage?
Yeah, I’d say it’s pretty high. I’d say there’s a few that have some unrealistic expectations. But for the most part, I would say mine is probably 90 to 95%. People are usually pretty surprised by how much income those types of plans are able to provide, which is great for us, right? When somebody thinks I’m going to be able to spend five or $6,000 a month and you show them it’s eight to 10. It’s a good conversation to have.
Okay, now the second genius part of distribution planning is you start with 1.2 million in this example, 65 years old, early retiree, and 20 years from now, in distribution planning, they still have at least their 1.2 million because that 25% that we carved out to grow over those 20 years is set up in the plan. It’s designed to restart the second part of your plan in your mid 80s and giving you the growth that you want. While in the first 20 years we gave you the income that you want. So the distribution plan is genius in with it. We use compounding interest in our favor. And in distribution planning. We’re using ladder principle guaranteed account so you get your cake and you get to eat it too. You’re able to have the income that you need and want and you’re able to have the growth that you want to replace what you’ve spent in the first 20 years it really is genius. So what do you say to the people Aaron that they say well, my banker and broker showed me that I’ve got a 90% success rate with Monte Carlo and Testing. Here it is, what would you say to that?
I’d say so you’re okay with having a 10% chance of failure? And they would say, yeah. They don’t really think about it in those terms. Most of the time, usually, they’re just focused on the 90% success rate. I go, I mean, yeah, sometimes that’s a good probability. But when you’re talking about whether you’re going to have enough money to live or not, in my opinion, I don’t really want to take a 10% chance that that may or may not work out
10 10% risk Aaron is called tail risk and statistics. Let’s look at some of them. Recently, when we started COVID, we had in five weeks, the s&p is dropped 32% in five weeks, that’s never happened before that falls into that 10% tail risk. Oh, and by the way, last year, was also a tail risk event because stocks, bonds and stocks, bonds, commodities, all went down in the same year. That’s pretty rare. And so we just have had two events in the last three years that we would have that the advisor would have said to that retiree. Oops, sorry. Yeah, that falls in with the 10%. I reminds me of Dirty Harry, do you remember Clint Eastwood, he’d get in that big shootout, and he had his big revolver? I can’t remember what it was. But I can’t remember. Does it hold seven shots? Well, I think March 6, were there six shots in there? Mark? Do you know what kind of gun that was? I don’t. Okay, when you how big monster cannon he had. And he was a big shoot out. And then he the pins the guy down, puts the gun right against the guy’s head and said, I can’t remember how many shots I’ve taken. I can’t remember if it’s five or six. But do you feel lucky, punk? Do you do remember? It’s just classic. So I just think of that when I think of Monte Carlo investing? And do you feel lucky that that 10% won’t apply to you when twice in the last three years? We’ve had tail risk events already. Aaron, anything more to add to that before we continue on the risk side?
Yeah, for me, I just like to frame it in the sense of look, you could go this route. And you could be okay. Right? But do you really want to leave that up to chance, and most of the time, they say no. And we talk a little bit more in detail after about how you don’t have to there is a better option, there is a better way to still provide income, protect those funds not have to deal with the same types of tail risk. And you can have the surety and the peace of mind that your investments and your plan and your money is going to last you for the remainder of your life, there’s not going to be that 10% chance that it may or may not work out. So we want to help you show or help show our clients that there’s a better way to do that. And you don’t have time to settle for having an eight to 10% chance that it may or may not work out for you.
Okay, now, when I was trained as a stockbroker, I started in 1986. I had my my manager come by my office every morning at seven o’clock, and he would say CDs don’t pay anything. And you know what that meant? He was teaching me to keep our clients at risk, because risk money pays commissions. 60 and 70% of the portfolio for a retiree to be at risk in their portfolio is not in their best interest. It’s in the banker and brokers best interest when it comes to fees. Let’s take a quick second on the risk side. When it comes to fees. Most people in the United States are paying 1% in fees. Now apples to apples for our portfolio. Aaron, what is the typical portfolio fees breakout to
ours is about point 3%. So about 70% Less than a typical 1% average. Right?
So let that sink in. And now so we talked about quantitatively Aaron, we’ve reduced client risk. You also in the previous segments have talked about how we don’t recommend bond funds. So we’ve reduced not reduce, we eliminate interest rate risk because we don’t use bond funds. So now let’s spend some time on how strategically we reduce risk. So Aaron, I want to tee this up for you. In the last well, in the history of the s&p 500 There have been four times that the s&p 500 has traded above 30 times trailing earnings. I want to say that again, this is very important. It gives context to our discussion. So radio listeners, I’m gonna say this again, there have been four times that the s&p 500 has ever keyword ever traded above a market valuation of 30 times trailing earnings listen to These dates 1929, and it took 17 years to get your money back 1964, it took 18 years to get your money back 1999 November of 99. And it took 14 years to get your money back the fourth and final time, November of 2021. We traded at 32 times trailing earnings if history repeats, and we believe that it will, we’re talking about 15 years or so, where your risk portfolio yield nothing with passive investment strategies, buying and holding mutual funds, buying and holding stocks or ETFs. If history repeats, you will yield nothing. Now think of how devastating that would be for a retiree to be drawing income from a portfolio that has a zero return over 15 years. That’s what we’re talking about. However, in buckets, 1234 and five, Aaron, those are set up to make money in Upper down markets. Correct, I want you to spend at least 30 seconds talking about how the ladder principle guaranteed accounts can do well in a flat market.
Yeah, I love this point about them. Because it’s one of the huge advantages to retirees that when you’re younger, you don’t have to worry about necessarily when those big returns come right, like if it comes now it becomes five years, 10 years, it doesn’t really matter. As long as you get those longer term averages over time in retirement, it very much matters when you get those returns. So if you have five, six years of zero or nothing, and then a bunch of big returns down the road, that’s really painful to deal with as you’re drawing income from that portfolio. So with these principle guaranteed accounts, they have the ability to make money in both up and down markets with the s&p 500. The NASDAQ now in down markets, the worst return you can get in some of these is a zero, so you cannot lose money in these investments. So it protects you from those big market swings. But they do have the ability still to make money, even if the market has a big downturn. Brian, you mentioned earlier that some of our principal guaranteed accounts made money last year in 2022. And that’s not an unusual thing. A lot of these made money in 2018 2008, the early 2000s. They’re not directly tied to the performance of the major indices, the s&p 500, the NASDAQ, the Dow, whatever you want to relate them to. And so they have the ability to make money in some of those difficult market cycles, which then means that you have much more consistent income as you are drawing that to spend over your retirement years.
So you think about your situation is your portfolio setup to make money in up markets or in down markets? That’s a huge question. And it’s a huge part of the the answer to Will my money lasts as long as I needed to. If you have questions you want to learn more about your situation because that’s what Brian and Aaron and the team at Decker retirement will do. When they sit down with you is find out about your hopes and dreams for retirement. What do you need? How can we help? There’s a lot of moving parts here, Brian and team are here to help again, it’s 833-707-3030. no cost to you for this, a 33707 3030 Brian and Aaron back with our final segment of today’s save for retirement radio, right after this.
We all want the freedom to do the things that make us happy, especially in retirement to get help lay the foundation for that freedom. Call 833-707-2020 to have a chat with Brian. What if you ordered a pizza, but when you open the box, a couple of pieces were missing. That would be upsetting. Right? Now think about how much you believe you have saved for retirement. Do you still owe taxes on that money? Brian Decker and his team at Decker retirement planning understand the importance of tax planning and can help you reduce the impact that Uncle Sam has on your retirement. Give them a call today to start working on your retirement tax plan at 833-707-3030 Bow may be a great time to lower your future tax liability. Create a retirement plan today so that you can get as many slices of your retirement pie as possible. Give Brian Decker a call at 833-707-3030 and schedule a visit that’s 833-707-3035 offers insurance services and may not give tax advice, security and insurance services offered by Decker retirement planning and a registered investment advisor with the SEC. You’re listening to safer retirement radio. If you like what you hear on today’s show or have questions drop by Decker retirement planning.com or call 833-707-3030 to talk to Brian.
Welcome back to safer retirement radio with Brian J Decker and Aaron ray of Decker retirement planning again the website Decker retire We’re planning.com and find out more about Brian Aaron and the team a lot of great information on the website. But you can also go there if you’d like Brian’s book on retirement, the Decker approach, there’s a three principles book, there’s a checklist challenge, a sample income plan, those are just four of the 12 things that you can download for free, no cost to you. It’s really just there for your information. So Decker retirement planning.com, then go to under the heading of safer retirement education, all those things are ready for you to download. They’re yours, no cost. They’re really for your information, your education as it comes to retirement. You can always call 833-707-3030. No cost to chat with the team. We got some questions, we got some concerns. Can I retire? Well, where my money last? I don’t know. I think I’ve done enough, but I just don’t know, why not find out? Hey, 33707 3030. All right, now you’re going to talk a little strategies in this risk world. Right?
Right. So if we know from the previous segment, we just set the template or the context here, where there’s been four times where the s&p 500 has traded above 30 times trailing earnings, one was 1929. And we went flat for 17 years, 17 years to get your money back. The second was 1964 18 years before you got your money back in the stock market, the third November of 1999, it took 14 years to get your money back in the stock market. The fourth and final time was November of 2021. And if history repeats, and we are hoping for the best, but we are planning for the worst, we’re talking about about 15 years of flat markets, meaning what has worked in the past is not going to work going forward any passive investment strategy of buying and holding mutual funds, stocks, or ETFs will yield a zero return. And so Aaron right before the close of the last segment, you mentioned that buckets, one, two, and three that we have laddered in four principal guaranteed accounts, those are fixed rates, those will give us our clients yield no matter what the markets do. And buckets. Four and five, and possibly six are variable rate investments. And those can do well in probably 11 of the 15 years. Now let’s dial specifically into the risk bucket. So on the risk bucket, we do our due diligence, we go to the databases, and we really spend a lot of money on our research on our due diligence. So Aaron, could you do this? I couldn’t could you say to your clients, hey, here’s five mutual funds. These are okay. I know there’s better out there, but let’s just use these. Could you do that?
No, I wouldn’t be able to take myself seriously.
Yeah. Okay. And we don’t do that. So here’s the the extent that we do our due diligence on we go to the databases, the Wilshire database, largest database of money managers in the world Morningstar database, largest database of mutual funds in the world, and three others. And we have four requirements requirement number one manager has to have gone through a down market. Well, that’s easy after last year, second requirement manager has to show actual numbers, no hypothetical, no backtested numbers. Third manager has to show their numbers, net of all fees. And fourth is most important, they have to show third party verification on all of it. We gather the data, we have four filters, we get rid of managers, number one that are not not accepting new clients, boom, they’re gone. Number two, we get rid of hedge funds because of their volatility. Number three, we get rid managers with five plus million per account minimums. And number four, we get rid of high beta managers like to x, NASDAQ or s&p that go way up in the good years and way down in the bad years. Well guess what’s left in the last 25 years, the best performing managers. I always ask my clients if they’re surprised. Would you be surprised if we told you that the best performing managers are all computer models? So we just simply take the top five right off the top check for correlation and plug them in. But we’ve learned something very valuable in the last several years. Right, Aaron, we’ve learned that these non correlated investments underperform when the markets go up in several years now in 2020. The s&p is up 17. We were up 32. That’s how it’s supposed to always be but no, in 2021, we underperform. So in football, there’s an offensive team that goes on the field. And there’s a defensive team that goes on the field. So when the s&p 500 is trading above its 200 day moving average we have the offensive team on the field and we can index keyword can we can index Aaron you’re going to jump in and talk about other strategies but we can index when the offensive team is on the field and the market is trading in an uptrend with by using 1/3 1/3 1/3 1/3 The s&p 1/3 Nasdaq 1/3 Small cap index. But guess what happens when the s&p trades below the 200 day moving average, we move the defensive team on the field, the computer trend following models are very good at protecting capital. They’re able to make money in 2000, o One and o two, s&p is down 50% NASDAQ’s down 70, these were able to do well, in 2008, they were able to make money. Last year s&p is down 19, NASDAQ is down 33, we were down last year, we were down six, these are very good at defending capital, protecting capital. So you don’t take these monster hits. So in the context of markets going forward, that are trending higher, and then giving it all back, we have an offensive strategy and a defensive strategy, not a buy and hold strategy. I want to emphasize passive investment strategies do not work in a flat investment cycle. So Aaron, add to this, I’ve just mentioned a couple strategies here, strategically, we greatly reduce our client’s risk by using strategies able to participate when the markets go up, and then protect capital when markets go down and even possibly make money when markets go down. What would you add to that, Aaron?
Yeah, I really like the way that we do the two sided models, because it’s something where over the long run, the s&p, the NASDAQ equity markets have done a really good job from a wealth generating standpoint. So we don’t want to just completely forego that. But when you shift into retirement, you need to take a different approach where you want to have exposure, but in a way that allows you to be able to better mitigate some of those losses or have more consistent returns with those investments that you’re putting into place. And so that’s really where the active participation from our side comes in, both in the indexing strategy, and in the utilization of those two sided managers is being able to take advantage of the situations when the market is doing well, but not have to take those massive 3040 50% drops when the market isn’t performing. Well. One of the things a lot of our clients don’t realize is that in retirement, sometimes not losing is much more important than having those homerun gains because if you have a 30 or 40% loss, it isn’t a 30 40% gain to get back to breakeven, it’s 5060 70% gain to get back to break even depending upon how far of a hole you need to dig out of. So with those two sided models, like you said last year, Brian s&p was down 19, NASDAQ down 33, we were down six. That means this year, we don’t have to make up a 20 30% loss. We’re already way further ahead by having some of those protection vehicles in place. And so really, I love it because we can still have exposure to the markets have great returns over the long run, but provide them at a much more consistent rate where we don’t take those huge nosedives like the rest of the regular indices do.
Alright, so we talked in this whole 60 minutes, we talked about the importance of lowering client risk. In fact, I want to cover just in this last little bit, the six key parts of a retirement plan we covered two, one is risk reduction. Two is portfolio optimization, we spent the whole hour on that where make sure that every part of your portfolio is optimized and getting the highest return for that slot or that segment of your portfolio. Three is fee minimization we talked about that too. Number four, is have a plan. A pie chart is not a plan. We touched on that a distribution plan is part of the strategies that are used once you’ve accumulated your assets. Number five is maximizing your net of tax income and number six is huge. minimize taxes, we have several strategies to minimize your taxes. The most common one, Aaron that I know you love is Roth conversions. So again,
if you’d like to chat with the team at Decker retirement planning, you certainly can 833-707-3030 a lot of moving parts everybody’s hopes and dreams are different income needs are different. There’s everybody’s situation is unique. And that’s how Brian Aaron and the team at Decker retirement look at it. If you’d like to learn more about your situation. I think I’ve got enough I hope I’ve got enough you don’t know why not find out. There’s no cost 833-707-3030 833-707-3030 Thanks for being with us this week for safer retirement radio with Brian J Decker and Aaron ray of Decker retirement back with more next week enjoy the rest of the weekend.
Security and insurance services offered by Decker retirement planning and a registered investment advisor with the SEC investing involves risk including the potential loss of principal any references to protection, safety or lifetime income generally referred to fixed insurance products never securities or investments insurance guarantees are backed by the financial strength and claims paying ability of the issuing Carrier. This radio show is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual situation. Decker retirement planning is not permitted to offer and no statement made during this show shall constitute tax or legal advice our firm is not affiliated with or endorsed by the US government or any governmental agency. The Information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable that accuracy and completeness cannot be guaranteed by Decker retirement planning. This radio show is a paid placement
Welcome to safer retirement radio with Brian J. Decker of Decker retirement planning. I’m Mark Elliott, I would encourage all of you to check out Brian’s website Decker retirement planning.com. There’s a lot of great information about the company what they do. And of course, the great team that Brian has assembled to help his clients retire to the best situation that they can, if that is at all possible if you have questions like hey, can I retire? Well, when can I retire? Do I have had? Do I have enough? Well, my money lasts as long as I do really? At the end of the day, you want to know if I or if we retire, will I or will we be okay? That’s really the big question. Well, Brian and the team at Decker retirement are here to help you with that answer. And it’s it’s probably the answer is a little bit more complicated than the question. There’s a lot of moving parts here when it comes to your retirement income, investment taxes, health care, Legacy planning, Social Security, Medicare, what in the world do we do? A 33707 3030 is the number that a child with a team there’s no cost for you, a 33707 3030. And then on the website, Decker retirement planning.com. Under the heading of safer retirement education, there are 12 different things you can download no cost to you whatsoever, including Brian’s book on retirement, the Decker approach, check that out as well. Under the heading on the website, Decker retirement planning.com safer retirement education. 12 different things you could download, just really for your information. Then you have questions, call the team a 33707 3030. Aaron Ray joining us today as well and advisor with the team at Decker retirement. So Brian and Aaron will have a conversation about principal guaranteed accounts, risk bucket options, Brian, you guys got a lot to get to better get going. All right.
Thanks, Mark. Let’s let’s jump right in order
to talk about the soccer team, the women’s soccer team or did you want to talk about Bud Light or the Shabbos 50? I don’t know where you want it is that we wanted to start retirement topics.
Well, today is glad you’re not Megan Rapinoe day. I know that. Okay. And I wish that I was Bryson to Shambo day. How’s that?
I think you should be pretty happy that you had hip replacement. And three days later, we’re in the Bahamas feeling fine.
That’s a true story. I had my hip replaced my left hip replaced on Thursday and I hopped a plane for the Bahamas. So at the two week post op I come in, the nurse says where’s your where’s your crutches? I go, I don’t have any crutches. Well, doctors gonna be mad at you, Brian. And then the doc comes in. He goes, where’s your crutches I go, Doc, I don’t have any crutches. Check this out. And I lifted my left leg. Now remember, I had a left hip replacement. I lifted up my left leg after two weeks I lifted it. So my femur was horizontal with the ground. He said you shouldn’t be able to do that. I go, Oh, yeah, we’ll check this out. And I pull, I grabbed my left ankle and I pulled my my heel up to my bum. And he whipped out his phone and he said, I’ve got to get this on video. No one’s ever done that before. The other doctors won’t believe me. And so it was a interesting postop your medical marvel I consider. I honestly believe that being active after my operation really gave me a great outcome. But as we have cash getting old, we replace body parts. You want to get as much flexibility and mobility as you can. And so I think I had my knee my right knee done last year and whoever doesn’t move. They just freeze up. They limit their mobility. So I just learned from that and I got as much mobility as I could this morning. I played three hours of pickleball
There you go. If you have questions about how to recover from a knee replacement or hip replacements caughlin Brian Hey, Deckard. 833-707-3030 That’s awesome. All right, principle guaranteed accounts. What are you going to get to you and Aaron?
Okay, So Aaron, let’s jump in on this note. A lot of the bankers brokers use the pie chart, the pie chart has your quote unquote safe money in bonds funds, mostly bond funds. I mean, sometimes there’s laddered bonds, but gosh, in 38 years of doing this, Aaron most of the time I see bond funds, don’t you?
Yeah, say most people haven’t gone to the effort of putting together like a laddered bond portfolio. It takes a little bit more skill and time to do that. Okay, so
what’s wrong with bond funds? So one of the things is volatility, factually, mathematically and I really pride ourselves err in the deck retirement planning. We are a math base. firm we take our fiduciary responsibility seriously, this is common sense this point one, the reason why we don’t use bond funds, one of the several that we’re going to talk about here, and then I’ll toss it back to you, Erin. One of them is mathematically, factually, when you draw income from a fluctuating account, you compromise gains when markets go up, you accentuate losses when markets go down. And we have a saying that it works until it doesn’t. And you don’t want to have that uncertainty in retirement, you want to have you want to have confidence in your retirement, what are the reasons why you tell your clients that you don’t recommend bond funds in your retirement portfolio? Aaron,
you hit on a couple of them there. The big one is interest rate risk, where if you have specific bond funds, and all of a sudden we have dramatic interest rate raises, just like we have the last year and a half, two years, you see some pretty nasty effects. I have conversations with people all the time where they say, Hey, why did my conservative or safe portion of my portfolio do so badly last year and 2022. And then we pull out the chart and show them what interest rates have been like historically, and illustrate that as interest rates go up, bond funds lose money, they have an inverse relationship. So a lot of the bond funds that we see last year actually lost more money than the s&p did. So depending upon how it was structured, or what type of funds they were in, a lot of them lost 20 25%. So kind of a wake up call for those that thought it was the safe money. So we have a a better way to do that. But I would say interest rate risk is the big one. And then inflation is second, you want to make sure to hopefully have your investments outpace inflation. And luckily, that started to come down over the last few months. But as as those get paired together interest rate risk and inflation risk. There’s there’s some drawbacks to doing those bond funds.
I want to add to what you’re saying about the interest rate risk and interest rate history. A couple of things from if you were to look at interest rate history on the 10 year Treasury yield going back to Abraham Lincoln’s time in the 1850s 60s 70s, you see that the 10 year Treasury hit an all time low for that period in 1940. And then 40 years, from 1940 to 1980, interest rates trended higher to almost 15%. On the 10 year Treasury if you had a mortgage in from 1980 to 82. You remember very high double digit mortgage rates, then, was it coincidentally, from 1980 to 2020, exactly 40 years, interest rates are declining to an all time low of 0.47%. On the 10, year Treasury August of 2020. At that point, now, Aaron, I feel my blood pressure going up, who in the world who is a trained person to give financial advice would be recommending bond funds when your interest rate risk is enormous. Imagine investing in the stock market where the Dow Jones peaked out at 30,000. And they’re recommending that you should invest at 29 950. I mean, that is insane. You have all the downside, and you have very little upside. That’s the that’s the comparison of investing in bond funds when interest rates are at 0.47%. On the 10. Year Treasury, there was no that was financial malpractice, I just sorry for the rant, but no banker or broker should have ever been recommending bond funds as quote unquote safe when interest rate risk was at an all time record high. So what happened since then? Well, in the last three years, you lost the third on your safe money. Since August, in the last three years, the average bond fund is down a third 33%. And yet, have the bankers and brokers change their approach? No, they still use the pie chart, which is an accumulation strategy to build your wealth to a point where in retirement, if you keep actually let’s take a quick aside here, Aaron and toss it back and then get back to bond funds. I just feel like we’ve got so much more to say on this why we why we draw income from laddered principal guaranteed accounts we’ve got so much to say there but bankers and brokers use the same pie chart for accumulation strategies to build your wealth from you’re in your 20s 30s 40s and 50s. And then they use the same strategy in your retirement and if you use the same strategies in retirement that you use to build your retirement, it won’t work for several reasons. So Aaron, just take a minute and go through how it’s different. How will Even climbing Mount Everest, I mean, you have one strategy for ascent, and you have another strategy for descent, they’re totally different. And you have in football, you have an offense, you have a defense. Anyhow, Aaron, spend a couple minutes on this. I don’t want to leave interest rate risk and principal guaranteed accounts. But I want to have you hammer on why it’s essential to use distribution strategies in retirement, and not continue to use the pie chart. Yeah, it’s
a great setup, Brian, and I like your illustration of the of the mountain there. One of our one of our co workers, his father in law used to be a mountain guide. And he said that a lot of people misunderstood his role as being the mountain guide. When he would ask clients or those that were hiring him, it would say, well, your job is to get me to the top of the mountain, right? And you said, No, my job is to get you safely back down to your car. So I mean, let’s think about that for a second. People think about their whole lives accumulation, building up getting that nest egg as big as possible, but they don’t really think about what to do when that stage of their financial life has ended or is about to be over. And that’s really where we come in. And that’s really where that investment strategy needs to change. The same types of investment strategies and philosophies that got you to where you are, are not the same things that you need, as you shift into retirement or what we refer to as distribution, where the goal has shifted, you’re no longer just taking your paycheck every couple of weeks using that as spending income, dumping some of that money into your 401 K, you now need that money as you’re spending income to pay for expenses. And you don’t have the same time horizon that you did when you were 2030 years old. So the strategy and the philosophy and the way that you go about using those funds needs to change as well. And so for us, it’s so important to shift that because the traditional method of the pie chart of just having it in a 6040 or 7030 portfolio, and then taking some percentage out of that can have some pretty big drawbacks, especially if you get hit with a poor market cycle, where if we go back to the early 2000s, and you retire in a time period like that, where the s&p loses 40 50% over a couple of years, and you are following something like the 4% rule, just pulling out a set percentage every year, you have your money invested in a 7030 portfolio, you’re probably down 50 to 60% in just the first three to four years of retirement. So it’s essential that you shift into more of our distribution based strategy so that you don’t have some of those errors come and destroy your retirement caused you to go back to work.
So Brian and Aaron just getting started on today’s safer retirement radio, talking about principle guaranteed accounts are also going to get into risk bucket options. There’s a lot of moving parts in retirement. And that’s what Brian and the team at Decker retirement are certainly here to help you with. Right. The safer retirement process focuses on income planning and distribution planning. It’s different in retirement, because you’re in the D accumulation phase. You’re working years you were in the accumulation phase, a lot of moving parts Brian Aaron and the team at Decker retirement are here to help. Again that number, a 33707 3030 833-707-3030. There is no cost for this. There’s no pressure, there’s no obligation. There’s no judgment either the team is here to help you looking forward. Not going to go I can’t believe you still have not held on to that blockbuster stock. They’re not going to judge they’re here to help a 33707 3030 talking about principle guaranteed accounts. Ryan and Aaron back with more right here on safer retirement radio.
If you only think about taxes once a year, you’re doing it wrong. To get the most out of your retirement nest egg. You shouldn’t just file your taxes. You need to plan for them. Call Brian now to see what tax opportunities you could take advantage of 833-707-3030 That’s a 33707 3030 Decker retirement planning has a question for you is your retirement inflation proofed? Here’s what we mean in retirement chances are you’re on a fixed income with variable expenses. So how do you not run out of money when the cost of just about everything continues to go up? You inflation proof that Brian Decker and the team at Decker retirement planning can show you strategies to help combat inflation. So what does it outpace your retirement income? Call Brian Decker today at 833-707-3030. To learn more inflation could take a huge chunk out of your retirement savings, but it doesn’t have to with some simple planning inflation can go from being a major disruption to a minor annoyance. Call Brian and the team at Decker retirement planning now to start inflation proofing your way. Retirement today, adding 33707 3033 3707 3030 investing involves risk security and insurance services offered by Decker retirement planning a registered investment advisor with the SEC. You’re listening to save for retirement radio. If you like what you hear on today’s show, or have questions dropped by Decker retirement planning.com or call 833-707-3030 to talk to Brian.
Welcome back to save for retirement radio with Brian J. Decker and Aaron ray of Decker retirement planning. You can always learn more on the website Decker retirement planning.com You can always go to the heading on that website save for retirement education. 12 different things you could download. There’s the three principles of retirement book. There’s a checklist challenger’s Brian’s book on retirement, the Decker brochures and sample income plan. Those are just four of the 12 things you can download Decker retirement planning.com To find out more about Brian Aaron and the team, you can certainly do all of that. But under the heading of safer retirement education, there’s a lot of information just for you to try to learn more about some of the maybe the questions, concerns you have about retirement. You have questions you want to call, chat with them. No cost for that either a 33707 3030 833-707-3030 mark Elliott. All right, Brian, you and Aaron are deep into conversation, we had to take a break. I’ll let you continue.
All right, Aaron, keep going on some of the reasons why we should shift from the accumulation strategy, which was point out what those are buy and hold. If you take a 30 40% drop in the market while you’re at work in your 30s 40s 50s No big deal because your income is still coming from your work. And every two weeks you’re throwing money, your dollar cost averaging into a stock market that’s down, when it recovers, you actually benefit from a market that was down and took, I don’t know, three, five years to recover, you actually benefit from that now let’s switch and now you are 65 years old. market goes down 40 50% now and you’re drawing income from that account. Now that’s quite the difference, right? When you’re drawing income from a fluctuating account, you compromise gains when markets go up, you accentuate losses when markets go down. Whenever bankers and brokers are recommending a buy and hold strategy in retirement, I scratched my head there’s no downside protection and the visual I want radio listeners to think about as a trapeze artists with no, no net now it’s real. Oh, when the markets are down 30 40% Your income that you’re drawing from that portfolio will change your life. Many people, millions of people went back to work in 2009, because they had to their money had just taken a 50% shot for two times in the in the same decade. That was the last decade. Why don’t bankers and brokers recommend that you draw income from laddered principle guaranteed accounts? Why don’t they recommend like we’re going to cover today, we’re going to cover both sides. We’re gonna cover ladder principle guaranteed accounts. And we’re going to cover strategies that give you protection in a down market. This this is not new stuff that’s been around for 20 over 25 years. So Aaron, let’s get back to it. I just want to cover before you jump in want to cover that in the last three years the quote unquote safe money for bond funds has lost on average 33%. So would you recommend bond funds now that the bond funds a 10? Year Treasury is little over 4%? i I’m interested in your answer and then I’ll follow up.
No, I wouldn’t right now. They can be useful for certain things. But the way that we put those distribution plans together, there are much better options that don’t have the same risks in different categories that these types of bonds and bond funds do. And the way that we structured them, the type of investments that we use, the duration that we put them in for seems to work better in pretty much every category relative to just putting some stock bond mixture together and hoping it works out in their favor.
Okay, I 100% agree. A little more. Let’s let’s the current yields right now the 10 year treasuries at 4% current yields on bond funds. Oh, by the way, if you can get safer bond funds at 4%. Why do you do I see a lot of people and you tell me if this is true also, they’re told by their banker and broker that they can get a better yield. Well better yield like six or 7% when the 10 year treasuries at four. What does that mean high yield What is another name for high yield bond funds? High risk You’re high risk and a word that rhymes with junk. You talk to listeners about what those are?
Yeah, so it’s the trap of yield, right? Like where you look at, okay, X investment, say the 10 year Treasury is paying 4%? Well, okay, I have this other investment, be it a dividend stock or some other some junk bond, whatever you want to call it. It’s paying 678 9%, I had a guy that I spoke to a week and a half ago that told me he was averaging 11% on his dividend portfolio, and I just kind of looked at him in awe, because that is not sustainable. So the problem when you get into the yield chasing discussion is, yeah, it looks better. But where’s the risk, that type of yield, that type of return doesn’t come risk free. And if you don’t see the risk on the front face, it’s hidden somewhere else. And so I talked through kind of some of the things that he was missing and the dangers of that, but really, at the end of the day, what you’re looking at is either default risk or risk, they’re gonna slash the dividend, and all of a sudden, the stock price takes a huge tank, and then you’re down 30%, and you don’t have the dividend that you used to have. It’ll be interesting to see how that goes over the next little while, because as yields have risen, a lot of people go down that road of yield chasing, and they may not have had the experience of a yield cut or a duration cut, like, like before, and it’s going to come home, eventually, there’s going to be some not so nice consequences from that.
Right junk bonds means high risk. So high risk, high return, they’re synonymous. So I’m glad that you went over that why would anyone put their quote safe money into high risk bonds? That just doesn’t make any sense? So what do we do? You’re one of the key people at our company that would go to a database. If we’re talking about hope, doing homework, doing our due diligence, talk about don’t name the database, because I don’t want to give, give up what we do. But it’s the major database lets us know what principle guaranteed offerings are from banks and insurance companies for cash one to three, year three to five, year five to seven, seven to 10 year principle, guaranteed accounts. get granular on this. Aaron, tell what you did for our clients, what our company does for our clients in looking for the principal guaranteed accounts and trying to find the best yields.
Yeah, this is actually one of my favorite discussion topics when we meet with our clients, because there’s a lot of lot of detail that goes into this. And like you said, Brian, we have a couple of databases that we take a look at, and find the best performing principal guaranteed accounts. Now there’s a lot of different factors. And a lot of different things that are considered when selecting the best performing investments, we first start off with is it a reputable company is whoever is issuing the investment. Somebody that you can trust, do they have a good financial standing? Do they have a good credit rating, because as I’m sure you could agree with if you have a company that offers a phenomenal investment, but they are not financially sound, or you cannot trust them, from a credit standpoint, it doesn’t really matter how good the investment is that they’re pitching. So that’s number one, we want to make sure that we trust and verify the company in their financial standing that they’re going to be around and those funds will be safe. After that, we get into some of the details about those specific investments. You talked about different time ranges, the plans that we put together have laddered principal guaranteed accounts because we want to balance the liquidity that’s needed for funds that you need to spend at the beginning of the plan. Versus those are they’re not going to be used for 510 20 plus years. So duration is a big part of it, figuring out when they want to use the funds, and then what types of investment options fit well within the rest of that framework. Now in the world of principle guaranteed accounts. These can be issued from one of four different places, either a bank, an insurance company, the federal government, or a municipality. And there are pros and cons to each of those certain things to consider. But at the end of the day, there are a there are a ton of different offering options that come from all of these sources. And it’s our job to be able to weed out those that are either just straight garbage or that don’t work well or don’t fit certain criteria, and find the best performing investments that have low or no fees, the ability to earn a high rate of return the ability to provide income for you. And it really helps narrow down what’s actually going to be advantageous for each client. So this is one of the things I spent a lot of time on. A lot of research on. And I can tell you without a doubt that we have the best performing principle guaranteed accounts. And it brings me a lot of peace of mind to be able to share those with our clients and know that they’re going to be protected, taking care of the when we do have another downturn, I know we just had one last year. But there’s going to be a couple more in the near future, I’m sure that when those happen, we have all of these accounts in a place where they are not going to have to take drastic income cuts, they’re not going to have to go back to work, they’re not going to have to make major financial decisions based off of poor performing investments. And that brings a lot of peace of mind to all of us.
So let’s tie this off. Because we’re going to spend the rest of the show talking about the risk side, let’s give some actual numbers. So with our due diligence, right now, today, the highest yielding principle guaranteed money market, if you’re putting your emergency cash, or discretionary cash in a bank or a credit union, compare this we’re getting 4.85%. Right now, on our liquid money market accounts for our clients, that’s very good. Second, on three year and five year, we’re getting the best rates from fixed rate investments that are yielding just just a little bit higher than CDs, five and a half, five and three quarters for three and five years. And then when we go out seven to 10, it’s the variable rate investments that are giving us the highest rate seven and 10 year principal guaranteed accounts averaging over eight and a half percent. Those are all taxable rates. And then for tax free principle guaranteed. Right now we’re seeing returns in the high sevens. For principal guaranteed accounts. Those are hard to find. We have done the due diligence, we ladder, those in place, so that our clients are getting the best returns and they’re drawing from those accounts. Ladder principle guaranteed accounts so that when the markets go down, our clients don’t have to go back to work. It doesn’t affect them. In fact, last year, with the s&p dow 19, NASDAQ down 33 bonds, average bond fund down 20% Our clients Aaron, last how much in those laddered principal guaranteed accounts? Nothing. In fact, they made money in buckets. One, two and three, correct?
Yep. Yeah, it was a beautiful thing to see.
So if you’d like to learn more about this a 33707 3030. How is your portfolio set up? Is it set up for to handle the we’d love the bull markets? But can you handle the bear markets? Where are you How’s how’s everything set up the team at Decker retirement here to help 833-707-3030 833-707-3030 Brian and Aaron back with more of safer retirement radio right after this.
As the weather warms the open roads begin to beckon if you’ve been getting the itch to travel called boy 833-707-2020 to make sure you have enough saved to keep the winds of adventure blowing in retirement.
Glad you’re with us today
for a safer retirement radio with Brian J. Decker and Aaron ray of Decker retirement planning. The team is here to help you figure out where are you on that road to retirement. Can I retire? When can I retire? Do I have enough? Will my money last? A lot of questions we’ve never retired before we want to get it right, we got one chance? Well, the idea is if you don’t have an actual written retirement plan, where’s your income coming from? How much is going out? What about your investment strategies? Are you all in risk? Are you not any at risk? everybody’s situation is unique. The market world the insurance world? How do we blend all that together? Then it comes to taxes. We know taxes are changing, it looks like in 2026. And you might be in the 12% bracket right now. But that could be in 2026. You might be in the 25% bracket. It’s crazy. There’s a lot of moving parts here. And then don’t even mention health care, long term care legacy planning. So security decisions, Medicare decisions, Ryan and the team and Aaron at Decker retirement are here to help 833-707-3030 If you have questions 833-707-3030 All right. Ryan, you said you and Aaron, we’re now going to get into after talking about principal guaranteed accounts, you’re gonna get into the risk strategies. Yes. So
how much money should you have at risk? Is it in your advantage to have be in retirement have 60 or 70% of your portfolio in risk? Erin, how much quantitatively let’s start with that quantitatively how much what percentage of the portfolio typically is our retired client have at risk?
It’s usually in between 15 and 25% depending upon the specific client.
Let that sink in Say that again? Because that is quite different from 60 or 70%.
Yeah, yeah, we pretty much flip the like 7030 portfolio on its head where a lot of people have 60 to 90% of their total portfolio invested in equities or some type of stock investment. We usually put more of that in those protected vehicles and then anywhere from 15 to 25, maybe 30%, depending upon a specific client into equities or stock type vehicles.
Okay, now I’m going to go on to rant here, back to back rant. Number one, the biggest fear that clients have 65 years, and older people in the United States is running out of money before they die. Why is that? Because in retirement, you look at a pie chart, no matter how smart you are, you cannot know how much money you can draw from that pie chart. Aaron, what is a distribution plan? How does that help someone if they’re worried about how much they can spend?
That’s because we have a math based approach, that distribution plan is very mathematically optimized. And it helps clients understand exactly how much money they can pull from, or they pull every year where the money is coming from. And it helps them make a lot of decisions around. Are they ready to retire how much we can spend in any given year do we need to save more, spend less. And so the way that we structure those helps you see exactly year by year, month by month, how much money you can have. And so it’s not just we’ll hope for the market to perform well. And we’ll pull X percent every year where your income is going to change on a yearly basis or a monthly basis. Depending upon how much you update it, we want to give a little bit more consistency, a little bit more stability to the income that they’re receiving. And that’s what we do. Most of our clients aren’t interested in having their income fluctuate up and down depending upon whether the s&p performed well, or whether it performed poorly. And so for us, we put all of those principal guaranteed accounts in place, the cash accounts, the risk accounts, all of those are very intentional, and the dollar amounts that are received in each of those categories. And when they’re used to optimize that income and make sure that they don’t run out before they pass away.
So there’s two genius parts of distribution planning. One part is we always draw now we’re math based, we always draw from the lowest earning account allowing the highest earning accounts to grow and compound more than offsetting typically, more than offsetting the money that they draw in the first few years in their retirement first five or 10 years. The second genius part of distribution planning that we do, let’s say the start. So you’re 65 years old, married, you have 1.2 million in assets, and you start drawing on your portfolio in retirement, well, you want two things in retirement, you want income and you want your portfolio to grow. So on the income side, we carve out about 75% of your portfolio, like like you said, Aaron, and that is where the laddered principal guaranteed accounts are for the first 20 years. And you draw that income. And the beautiful thing is when you’re drawing income from those for those first 20 years, you’re able to have to have that income. Let me stop there for a second, by the way, what percentage I’ve been doing this 38 years 100% of the time when I showed them version one, it’s higher Aaron than what they thought that they could draw every single time. What’s your percentage?
Yeah, I’d say it’s pretty high. I’d say there’s a few that have some unrealistic expectations. But for the most part, I would say mine is probably 90 to 95%. People are usually pretty surprised by how much income those types of plans are able to provide, which is great for us, right? When somebody thinks I’m going to be able to spend five or $6,000 a month and you show them it’s eight to 10. It’s a good conversation to have.
Okay, now the second genius part of distribution planning is you start with 1.2 million in this example, 65 years old, early retiree, and 20 years from now, in distribution planning, they still have at least their 1.2 million because that 25% that we carved out to grow over those 20 years is set up in the plan. It’s designed to restart the second part of your plan in your mid 80s and giving you the growth that you want. While in the first 20 years we gave you the income that you want. So the distribution plan is genius in with it. We use compounding interest in our favor. And in distribution planning. We’re using ladder principle guaranteed account so you get your cake and you get to eat it too. You’re able to have the income that you need and want and you’re able to have the growth that you want to replace what you’ve spent in the first 20 years it really is genius. So what do you say to the people Aaron that they say well, my banker and broker showed me that I’ve got a 90% success rate with Monte Carlo and Testing. Here it is, what would you say to that?
I’d say so you’re okay with having a 10% chance of failure? And they would say, yeah. They don’t really think about it in those terms. Most of the time, usually, they’re just focused on the 90% success rate. I go, I mean, yeah, sometimes that’s a good probability. But when you’re talking about whether you’re going to have enough money to live or not, in my opinion, I don’t really want to take a 10% chance that that may or may not work out
10 10% risk Aaron is called tail risk and statistics. Let’s look at some of them. Recently, when we started COVID, we had in five weeks, the s&p is dropped 32% in five weeks, that’s never happened before that falls into that 10% tail risk. Oh, and by the way, last year, was also a tail risk event because stocks, bonds and stocks, bonds, commodities, all went down in the same year. That’s pretty rare. And so we just have had two events in the last three years that we would have that the advisor would have said to that retiree. Oops, sorry. Yeah, that falls in with the 10%. I reminds me of Dirty Harry, do you remember Clint Eastwood, he’d get in that big shootout, and he had his big revolver? I can’t remember what it was. But I can’t remember. Does it hold seven shots? Well, I think March 6, were there six shots in there? Mark? Do you know what kind of gun that was? I don’t. Okay, when you how big monster cannon he had. And he was a big shoot out. And then he the pins the guy down, puts the gun right against the guy’s head and said, I can’t remember how many shots I’ve taken. I can’t remember if it’s five or six. But do you feel lucky, punk? Do you do remember? It’s just classic. So I just think of that when I think of Monte Carlo investing? And do you feel lucky that that 10% won’t apply to you when twice in the last three years? We’ve had tail risk events already. Aaron, anything more to add to that before we continue on the risk side?
Yeah, for me, I just like to frame it in the sense of look, you could go this route. And you could be okay. Right? But do you really want to leave that up to chance, and most of the time, they say no. And we talk a little bit more in detail after about how you don’t have to there is a better option, there is a better way to still provide income, protect those funds not have to deal with the same types of tail risk. And you can have the surety and the peace of mind that your investments and your plan and your money is going to last you for the remainder of your life, there’s not going to be that 10% chance that it may or may not work out. So we want to help you show or help show our clients that there’s a better way to do that. And you don’t have time to settle for having an eight to 10% chance that it may or may not work out for you.
Okay, now, when I was trained as a stockbroker, I started in 1986. I had my my manager come by my office every morning at seven o’clock, and he would say CDs don’t pay anything. And you know what that meant? He was teaching me to keep our clients at risk, because risk money pays commissions. 60 and 70% of the portfolio for a retiree to be at risk in their portfolio is not in their best interest. It’s in the banker and brokers best interest when it comes to fees. Let’s take a quick second on the risk side. When it comes to fees. Most people in the United States are paying 1% in fees. Now apples to apples for our portfolio. Aaron, what is the typical portfolio fees breakout to
ours is about point 3%. So about 70% Less than a typical 1% average. Right?
So let that sink in. And now so we talked about quantitatively Aaron, we’ve reduced client risk. You also in the previous segments have talked about how we don’t recommend bond funds. So we’ve reduced not reduce, we eliminate interest rate risk because we don’t use bond funds. So now let’s spend some time on how strategically we reduce risk. So Aaron, I want to tee this up for you. In the last well, in the history of the s&p 500 There have been four times that the s&p 500 has traded above 30 times trailing earnings. I want to say that again, this is very important. It gives context to our discussion. So radio listeners, I’m gonna say this again, there have been four times that the s&p 500 has ever keyword ever traded above a market valuation of 30 times trailing earnings listen to These dates 1929, and it took 17 years to get your money back 1964, it took 18 years to get your money back 1999 November of 99. And it took 14 years to get your money back the fourth and final time, November of 2021. We traded at 32 times trailing earnings if history repeats, and we believe that it will, we’re talking about 15 years or so, where your risk portfolio yield nothing with passive investment strategies, buying and holding mutual funds, buying and holding stocks or ETFs. If history repeats, you will yield nothing. Now think of how devastating that would be for a retiree to be drawing income from a portfolio that has a zero return over 15 years. That’s what we’re talking about. However, in buckets, 1234 and five, Aaron, those are set up to make money in Upper down markets. Correct, I want you to spend at least 30 seconds talking about how the ladder principle guaranteed accounts can do well in a flat market.
Yeah, I love this point about them. Because it’s one of the huge advantages to retirees that when you’re younger, you don’t have to worry about necessarily when those big returns come right, like if it comes now it becomes five years, 10 years, it doesn’t really matter. As long as you get those longer term averages over time in retirement, it very much matters when you get those returns. So if you have five, six years of zero or nothing, and then a bunch of big returns down the road, that’s really painful to deal with as you’re drawing income from that portfolio. So with these principle guaranteed accounts, they have the ability to make money in both up and down markets with the s&p 500. The NASDAQ now in down markets, the worst return you can get in some of these is a zero, so you cannot lose money in these investments. So it protects you from those big market swings. But they do have the ability still to make money, even if the market has a big downturn. Brian, you mentioned earlier that some of our principal guaranteed accounts made money last year in 2022. And that’s not an unusual thing. A lot of these made money in 2018 2008, the early 2000s. They’re not directly tied to the performance of the major indices, the s&p 500, the NASDAQ, the Dow, whatever you want to relate them to. And so they have the ability to make money in some of those difficult market cycles, which then means that you have much more consistent income as you are drawing that to spend over your retirement years.
So you think about your situation is your portfolio setup to make money in up markets or in down markets? That’s a huge question. And it’s a huge part of the the answer to Will my money lasts as long as I needed to. If you have questions you want to learn more about your situation because that’s what Brian and Aaron and the team at Decker retirement will do. When they sit down with you is find out about your hopes and dreams for retirement. What do you need? How can we help? There’s a lot of moving parts here, Brian and team are here to help again, it’s 833-707-3030. no cost to you for this, a 33707 3030 Brian and Aaron back with our final segment of today’s save for retirement radio, right after this.
We all want the freedom to do the things that make us happy, especially in retirement to get help lay the foundation for that freedom. Call 833-707-2020 to have a chat with Brian. What if you ordered a pizza, but when you open the box, a couple of pieces were missing. That would be upsetting. Right? Now think about how much you believe you have saved for retirement. Do you still owe taxes on that money? Brian Decker and his team at Decker retirement planning understand the importance of tax planning and can help you reduce the impact that Uncle Sam has on your retirement. Give them a call today to start working on your retirement tax plan at 833-707-3030 Bow may be a great time to lower your future tax liability. Create a retirement plan today so that you can get as many slices of your retirement pie as possible. Give Brian Decker a call at 833-707-3030 and schedule a visit that’s 833-707-3035 offers insurance services and may not give tax advice, security and insurance services offered by Decker retirement planning and a registered investment advisor with the SEC. You’re listening to safer retirement radio. If you like what you hear on today’s show or have questions drop by Decker retirement planning.com or call 833-707-3030 to talk to Brian.
Welcome back to safer retirement radio with Brian J Decker and Aaron ray of Decker retirement planning again the website Decker retire We’re planning.com and find out more about Brian Aaron and the team a lot of great information on the website. But you can also go there if you’d like Brian’s book on retirement, the Decker approach, there’s a three principles book, there’s a checklist challenge, a sample income plan, those are just four of the 12 things that you can download for free, no cost to you. It’s really just there for your information. So Decker retirement planning.com, then go to under the heading of safer retirement education, all those things are ready for you to download. They’re yours, no cost. They’re really for your information, your education as it comes to retirement. You can always call 833-707-3030. No cost to chat with the team. We got some questions, we got some concerns. Can I retire? Well, where my money last? I don’t know. I think I’ve done enough, but I just don’t know, why not find out? Hey, 33707 3030. All right, now you’re going to talk a little strategies in this risk world. Right?
Right. So if we know from the previous segment, we just set the template or the context here, where there’s been four times where the s&p 500 has traded above 30 times trailing earnings, one was 1929. And we went flat for 17 years, 17 years to get your money back. The second was 1964 18 years before you got your money back in the stock market, the third November of 1999, it took 14 years to get your money back in the stock market. The fourth and final time was November of 2021. And if history repeats, and we are hoping for the best, but we are planning for the worst, we’re talking about about 15 years of flat markets, meaning what has worked in the past is not going to work going forward any passive investment strategy of buying and holding mutual funds, stocks, or ETFs will yield a zero return. And so Aaron right before the close of the last segment, you mentioned that buckets, one, two, and three that we have laddered in four principal guaranteed accounts, those are fixed rates, those will give us our clients yield no matter what the markets do. And buckets. Four and five, and possibly six are variable rate investments. And those can do well in probably 11 of the 15 years. Now let’s dial specifically into the risk bucket. So on the risk bucket, we do our due diligence, we go to the databases, and we really spend a lot of money on our research on our due diligence. So Aaron, could you do this? I couldn’t could you say to your clients, hey, here’s five mutual funds. These are okay. I know there’s better out there, but let’s just use these. Could you do that?
No, I wouldn’t be able to take myself seriously.
Yeah. Okay. And we don’t do that. So here’s the the extent that we do our due diligence on we go to the databases, the Wilshire database, largest database of money managers in the world Morningstar database, largest database of mutual funds in the world, and three others. And we have four requirements requirement number one manager has to have gone through a down market. Well, that’s easy after last year, second requirement manager has to show actual numbers, no hypothetical, no backtested numbers. Third manager has to show their numbers, net of all fees. And fourth is most important, they have to show third party verification on all of it. We gather the data, we have four filters, we get rid of managers, number one that are not not accepting new clients, boom, they’re gone. Number two, we get rid of hedge funds because of their volatility. Number three, we get rid managers with five plus million per account minimums. And number four, we get rid of high beta managers like to x, NASDAQ or s&p that go way up in the good years and way down in the bad years. Well guess what’s left in the last 25 years, the best performing managers. I always ask my clients if they’re surprised. Would you be surprised if we told you that the best performing managers are all computer models? So we just simply take the top five right off the top check for correlation and plug them in. But we’ve learned something very valuable in the last several years. Right, Aaron, we’ve learned that these non correlated investments underperform when the markets go up in several years now in 2020. The s&p is up 17. We were up 32. That’s how it’s supposed to always be but no, in 2021, we underperform. So in football, there’s an offensive team that goes on the field. And there’s a defensive team that goes on the field. So when the s&p 500 is trading above its 200 day moving average we have the offensive team on the field and we can index keyword can we can index Aaron you’re going to jump in and talk about other strategies but we can index when the offensive team is on the field and the market is trading in an uptrend with by using 1/3 1/3 1/3 1/3 The s&p 1/3 Nasdaq 1/3 Small cap index. But guess what happens when the s&p trades below the 200 day moving average, we move the defensive team on the field, the computer trend following models are very good at protecting capital. They’re able to make money in 2000, o One and o two, s&p is down 50% NASDAQ’s down 70, these were able to do well, in 2008, they were able to make money. Last year s&p is down 19, NASDAQ is down 33, we were down last year, we were down six, these are very good at defending capital, protecting capital. So you don’t take these monster hits. So in the context of markets going forward, that are trending higher, and then giving it all back, we have an offensive strategy and a defensive strategy, not a buy and hold strategy. I want to emphasize passive investment strategies do not work in a flat investment cycle. So Aaron, add to this, I’ve just mentioned a couple strategies here, strategically, we greatly reduce our client’s risk by using strategies able to participate when the markets go up, and then protect capital when markets go down and even possibly make money when markets go down. What would you add to that, Aaron?
Yeah, I really like the way that we do the two sided models, because it’s something where over the long run, the s&p, the NASDAQ equity markets have done a really good job from a wealth generating standpoint. So we don’t want to just completely forego that. But when you shift into retirement, you need to take a different approach where you want to have exposure, but in a way that allows you to be able to better mitigate some of those losses or have more consistent returns with those investments that you’re putting into place. And so that’s really where the active participation from our side comes in, both in the indexing strategy, and in the utilization of those two sided managers is being able to take advantage of the situations when the market is doing well, but not have to take those massive 3040 50% drops when the market isn’t performing. Well. One of the things a lot of our clients don’t realize is that in retirement, sometimes not losing is much more important than having those homerun gains because if you have a 30 or 40% loss, it isn’t a 30 40% gain to get back to breakeven, it’s 5060 70% gain to get back to break even depending upon how far of a hole you need to dig out of. So with those two sided models, like you said last year, Brian s&p was down 19, NASDAQ down 33, we were down six. That means this year, we don’t have to make up a 20 30% loss. We’re already way further ahead by having some of those protection vehicles in place. And so really, I love it because we can still have exposure to the markets have great returns over the long run, but provide them at a much more consistent rate where we don’t take those huge nosedives like the rest of the regular indices do.
Alright, so we talked in this whole 60 minutes, we talked about the importance of lowering client risk. In fact, I want to cover just in this last little bit, the six key parts of a retirement plan we covered two, one is risk reduction. Two is portfolio optimization, we spent the whole hour on that where make sure that every part of your portfolio is optimized and getting the highest return for that slot or that segment of your portfolio. Three is fee minimization we talked about that too. Number four, is have a plan. A pie chart is not a plan. We touched on that a distribution plan is part of the strategies that are used once you’ve accumulated your assets. Number five is maximizing your net of tax income and number six is huge. minimize taxes, we have several strategies to minimize your taxes. The most common one, Aaron that I know you love is Roth conversions. So again,
if you’d like to chat with the team at Decker retirement planning, you certainly can 833-707-3030 a lot of moving parts everybody’s hopes and dreams are different income needs are different. There’s everybody’s situation is unique. And that’s how Brian Aaron and the team at Decker retirement look at it. If you’d like to learn more about your situation. I think I’ve got enough I hope I’ve got enough you don’t know why not find out. There’s no cost 833-707-3030 833-707-3030 Thanks for being with us this week for safer retirement radio with Brian J Decker and Aaron ray of Decker retirement back with more next week enjoy the rest of the weekend.
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