Bad Financial Habits that Can Impact Your Retirement

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5.10.24: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to your American Retirement with your host, Randy Sams. Get set for a full hour of financial information and economic news affecting your bottom line. Randy works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for, and he can help you too. So now let's start the show. Here is your host, Randy Sams.

Speaker3:
Hello again. Central Arkansas, want to welcome you to your American retirement. I want to thank you for joining us on this Saturday or Saturday morning or Sunday afternoon. Uh, we got a show that's jam packed, lots of good information. Listen to today's show. Bad financial habits to break. Now, you're not going to want to miss this. Plus the importance of financial literacy. A lot of folks that we deal with, they don't know a whole lot what's going to happen in in their retirement, what could happen, what probably will happen. Uh, so that's what we do at Qmg Financial. But folks listen. I'm glad you join in on today's show, but don't forget to check us out on podcasts, the show, on podcast form, on Apple, Google, Spotify, or wherever you may get your podcasts. And also check out our YouTube channel. Our YouTube page at youtube.com and search for your American retirement folks. Our YouTube page is a little bit different than the podcast, as you've heard me say in the past. Youtube page is going to have little clips of the segment, maybe 3 to 8 minutes long, kind of give you what we feel like are some of the highlights of the show today and any previous shows, and that way, hopefully you'll see that you'll get interested and say, hey, I want to learn more about that. You can go to the podcast or you can go to the website, Your American retirement.com, and look and listen to any of our previous shows that we've had over the last couple of years.

Speaker3:
But listen. I want to start today's show off. You know, we're very excited. We love, uh, hearing from our listeners. Uh, we get phone calls from, uh, clients that basically are talking to us about things that are occurring, uh, now somebody that some people that we've worked with in previous, you know, years past, uh, and certain things have come up and they need to make some arrangements or some adjustments to their plan, or they want to, uh, increase the amount of income that they have coming in and create another lifetime income annuity. And that's what we do. But I got a little story I want to tell you. Uh, again, we love listening. We love that you're listening to the show and we love talking to those of you who listen. You know, you can get in contact with us (866) 990-7664 or leave us your information at the website, your American retirement.com, and we'll be glad to get in contact with you and have a conversation with you, like I did with Tom. So let me give you a little information about Tom. So, Tom. He is 64 years old. He's soon to turn 65. He is what we refer to as a peak Boomer, and I'll explain that to you in just a second. Tom worries about his savings and his Social Security that there's not going to be enough to retire.

Speaker3:
So when Tom and I were speaking, this was what Tom said. Randy, my biggest fear is finding myself at 75, standing at the door at Walmart. All right, being a Walmart greeter, I'm not slamming Walmart greeters. That's fine. But Tom thinking about retirement and he's wondering if he's going to be able to. So. You see, Tom is aged 64. He's a resident here in central Arkansas. Feels like his sailboat. His retirement dream is drifting further and further away. So, Tom, am I going to give you names that I've actually changed the name to protect the innocent? But Tom has an IT job. Good job. He earns almost $65,000 a year, just under 65,000. So he, uh, maintains an IRA account and puts money into his 401 K, but he still is not confident that he saved enough to retire. Just like a lot of folks that are listening today, you're in you're joining on the show. A lot of previous people that have gotten in contact with us and said, Randy, I love your show, and these are what my concerns are, and this is one of the main concerns. They just don't know if they've saved enough for retirement. Is it going to last through their retirement years? So so Tom is hoping to start collecting Social Security checks in a couple of years, just before he turns 67. Alright. That additional money would allow Tom to put more of his professional income into his retirement accounts during the last years of his career.

Speaker3:
Now see, first of all, if you got your ears on and you're listening, Tom is not planning on retiring at age 67. Okay. But he feels like when he's able to turn on Social Security at 67, which is his full retirement age, he's going to be able to put more of his salary, his job earnings into his 401 KS or IRAs. So, see. That tells me that Tom is not expecting to retire at age 67, but. He feels like he needs to continue to work. Probably like a lot of y'all listening to today's show. So Tom said again, my biggest fear is finding myself at age 75, standing at the door of Walmart greeting people as they come in. So you see, Tom's not alone. He's one of 30 million Americans known as Peak Boomers, a group of baby boomers born between 1959 and 1964 who will start turning 65 this year, 2024 and are heading towards retirement. However, guys, that's 12,000 per day right now. That's why they call it peak boomer. Up until this year, we had about 10,000 people per day turning 65 that were baby boomers. Now, between 1959 and 64, if you were born between those years, you were what's known as a peak boomer, because there's now 12,000 per day turning 65. And that's going to be that way for about the next four years. So folks are worried about having enough money to fully stop working, called full retirement and cover their living expenses.

Speaker3:
You see, the Census Bureau Current Population survey found that more than half of Americans over 65. Now listen to this. Have an annual income of 30,000 or less. And this is from an April report from retirement research firm Alliance Lifetime Income Retirement Income Institute. 52.5% of boomers have 250,000 or less in assets. So for many, Social Security won't be enough to fill the gaps. As of March 2024, the Social Security Administration said its average monthly check sent to recipients is $1,774.83. That's the average. And if lawmakers don't intervene, intervene. That's the folks up in Washington DC. You know, the folks that you vote for come in November. The US Social Security Fund is set to dry out by the late 2030s, 2033, 2034, somewhere in that range. So this group of boomers is feeling the consequences of the US switch. From employer funded pensions, known as defined benefit to employer funded to employee funded 401 system. So it went from employer funded defined benefit or pension to employee funded 401 systems in the 1980s. That's known as defined contribution. So even with aggressive savings, Tom is not sure about his future. You see, his anxiety about retirement has fluctuated throughout his career. Probably like a lot of you guys that are listening, he's experienced a few periods of unemployment that made saving money difficult and has his past employers didn't always awful offer retirement benefits? They didn't have 401 KS or any type of retirement, you know, employee savings accounts or anything like that.

Speaker3:
But as of now, he has, in his current job for the past 12 years, is now using highly aggressive retirement contributions to reach his goal. In other words, Tom is maxing out his 401 K's are trying to max out his 401 K benefits and IRA benefits. So right now Tom says his top expenses y'all listen to this are car payment, gas money, and the cost of housing and utilities. That sound familiar? Everything's going up. So Tom is in good health, but worries about affording medical care if that changes. As you know, we've spoken about this in the show many, many times in the past that medical care, your health care, long term care is something that we have to address going into retirement. So Tom also said he isn't sure he would be able to return to work after retirement because of hiring discrimination for older adults. So if he does retire and he needs to go back to work, is he going to be able to find a job other than remember? That Walmart job. So. If if Tom says if he's by himself out competed in need for money in my 70s and having health problems. Life's going to suck. That's my fear. That's what Tom told me. All right, so Tom says this to you guys and to me.

Speaker3:
He wishes more people understood that some older adults aren't able to adequately prepare for retirement because of life circumstances. He also wishes government safety net programs for affordable housing and health care, didn't wait for people to reach critical status and be destitute before they provide assistance. Although Tom hasn't forgiven or hasn't given up on his sailboat dream, he's anxious about having enough to live comfortably a decade from now, and he often tells his young adult son to think about retirement early, start saving, and do it aggressively as you can, as aggressively as you can, he told his son. And when you can't be aggressive, still save something. So my question to you, are you worried about being financially ready for retirement? How are you preparing? You need help, like Tom. You need to call us (866) 990-7664 or go to our website, your American retirement.com. Leave us your contact information. Leave us some of your concerns. Let me get in contact with you and have a conversation with you like I've had with Tom. And let me set up that consultation with you like I did with Tom. So, folks, listen, I appreciate you joining us this morning or this afternoon. Whenever you're listening, y'all need to stay tuned, because when we come back, we're going to start with financial wisdom quotes to quote of the week. And then we're going to talk about five bad habits that cost you thousands every month. We'll be right back.

Speaker2:
Thanks for listening to your American Retirement. If you like what you're hearing, subscribe to our YouTube channel to watch videos from this program and other recent episodes.

Rolling Stone you know, if a call is the right.

Speaker2:
Visit your American retirement.com to schedule a free consultation with Randy today. And now back to the show.

Speaker3:
Hey, welcome back to your American retirement on 101.1 FM. The answer where little Rock comes to talk. Hey, don't forget to check out our YouTube page, visit youtube.com, and search for your American retirement. You know you got the right place when you see my smiling face, folks. All right, you know we can't start the show. Completely, and we don't ever have a show without having what we got to present the financial wisdom quote of the week. So, Mr.. Jim, if you'll play that financial wisdom music, key it up and we'll get started.

Speaker4:
And now for some financial wisdom. It's time for the quote of the week.

Speaker3:
All right. Here we go. Y'all ready for this week's financial wisdom quote of the week that's given to us by Orrin Woodward. All right. You can have a master's degree in making money. But you will still wind up broke if you have a PhD in spending. That makes sense. You can make all the money you want. If you're not saving any of it and you're spending all of it. You got that doctor's degree? Doctor degree in spending. You're going to wake up in retirement. Kind of be like what? Tom, the guy we just spoke about in the first segment, you're going to look back and go, man, I wish I would have saved some of that money. So remember, when you're making it now, always put something back for retirement. What you save today you're going to be happy, happy, happy that you did in the future. When you look back and your retirement years, you're going to be glad that you didn't spend all that money that you made because some of you are in your peak earning years right now. Remember that. As you get older, you're going to hopefully be earning more money. Take advantage of that and max out your 401 K's, your IRAs. If you're over 50 years of age, take advantage of the catch up catch like Catch Me if you can catch up contributions which allow you to add an additional $7,500 per year to your 401 K or your IRAs.

Speaker3:
Okay, but that's great wisdom. You may have a master's degree in making money. But you're still going to wind up broke if you have a PhD in spending it. Learn how to save. All right. Five bad habits That Cost You thousands every month. So did you know that there are some common habits? I speak to people every day, every week, every month. Common habits that could be costing you thousands of dollars each month. Did you know that? It's true. So let's look at five of these habits and how you can avoid to save some money, how you can avoid these five bad habits and hopefully save some serious cash. All right. Number one not budgeting. Got to have a budget, folks. A recent survey A recent study found that 27% of people do not have a budget. Does that include you? Come on now. So or in other words, a spending plan. Guys, you got to run your household like you would run a business. Basically meaning what you got coming in versus what you got going out. And folks, let me give you a hint. Unlike the folks up in Washington, D.C.. They know what they have coming in, but they don't care what they have going out. Okay? Because it's not their money, it's ours.

Speaker3:
It's called tax money, okay? They don't generate anything anyway. But when you're running your household, you got to look at what you have coming in, what your revenue sources are, and then you got to look at what your expenses are, what you got going out. All right. That's called a spending plan. Budgeting is actually a powerful tool that can help you keep track of your spending and avoid overspending. You know, that's called deficit. What's the national deficit? If we have time, we'll talk about that in today's show. Also, it's well over, what, 35 trillion? I hope your household deficit. Isn't that so? In other words, if you have more money going out. Then you got money coming in. That means you got a gap. That's a deficit. Okay, so that's what we say. Without a budget, you might be spending way more than you realize. So take some time, create a budget and track your expenses. It'll make a big difference in your financial well-being. And it's a great place to start. That's number one. Number two, overusing credit cards. Credit cards are super convenient. You know that you got something that you want. You see something on the internet. I mean, that's that's what makes it so bad nowadays. Is that, my gosh, I don't even have to get in my car and go to anywhere, go to a store like we used to when we were younger.

Speaker3:
You know, if you wanted to buy something when we were younger, we had to get in the car and go somewhere. Now you don't even have to leave your couch. You go to Amazon or you go to whatever store that you like to purchase things at. Okay. Or from, including Walmart or Sam's Club or Costco or go down the list, Home Depot, whatever it might be, you see. They're super convenient, but they can also lead to overspending. Remember the first bad habit we talked about? So the average interest rate on credit cards is around what, 22%? Folks, listen to that. 22% is just the average. What does that mean? That means there are some that are much higher than that, and some that are lower than that 22%, which can really add up if you carry a balance. So if you charge something on your credit card for $1,000, and the next month you start making the minimum payments. And they've added 22 to 28% interest on that thousand dollars that you borrowed. Folks, that thousand dollars is going to turn into 13, 14, 1500 very quickly. If all you're paying is your minimum charges. All right. Your minimum balance. So. Try to limit your credit card use to necessary purchases and make sure this is the key. Make sure you pay off your balance in full each month.

Speaker3:
Remember, a credit card is not free money. Folks, you've heard me say this in the past. I have no issues with the credit card if you use it correctly. I have a credit card. My wife has a credit card. My credit card is used for business expenses and my credit card. Thank thank God it gives me reward points. So I have all different kinds of reward points that I can use for different things. Okay. Whether it be hotels or airfare or Home depots, whatever it happens to be. All right. Or I can get cash, cards or whatever, but I use that card for my for my expenses. But guess what I do at the end of the month I pay off the balance. We also have one for our household accounts. We can pay off. We can pay put our utility bills on a credit card. We can put whatever will allow us that doesn't charge us an extra percentage. You know, some places nowadays, if you use a credit card, they're charging you 3% upcharge. To use a credit card, you're going to need to stay away from those and just pay cash, I guess. But what we utilize is we all both the cards that we have. Have reward points. I don't have any issue with that. As long as remember what the key point was, you pay off your balance in full each month.

Speaker3:
So if you're using a credit card to pay your monthly expenses, to accumulate reward points or travel points or whatever it might be, that's fantastic. As long as you pay the balance off at the end of the month. Because remember what I said before, a credit card is not free money. You got to pay it back. All right. Number three dining out. So we all love a good meal. You know as well as I do we love a good meal at a restaurant, your favorite restaurant. But those costs can add up. They can be expensive. Did you know that Americans spend an average of $166 per person each month on dining out? Now, folks, I find that a little low. You know as well as I do that if you go out to eat once or twice a week. You got a husband and wife. If you go out and you know $166 a month. I know people that spend that much in a week per person, if not more per person. See, that's a lot of dough. Get it out to eat a lot of dough anyway. Bad joke. Cooking in a home is not only healthier, but it's also a more cost effective option. Go to the grocery store, buy those groceries, and fix yourself some dinner.

Speaker3:
All right. I don't care if it's beans and cornbread. Hey, even if you like steak, you can get a steak from the grocery store or the meat market. And along with all the trimmings that you want baked potato, asparagus, broccoli, whatever you like. Really making somebody all hungry, and it's going to be a whole lot cheaper doing that for a family of four than it would be taking that family of four down to the steak restaurant. All right. Not trying to say not to do that, but be wise about it, okay. Because. $166 per person per month. If you've got a family of four, you add that up, okay, that's between 600 and $800 a month you're spending for dining out. That could be used somewhere else. Remember, number one, have it budget. You don't have a budget. Add in your budget. If you want to go out to eat, add that into your budget. All right. Let's look at number four paying for unused services. Well I see this a lot when I talk to folks about their expenses. Think about all those subscription services. You know, the ones you get emails or text messages or whatever. It happens to be those subscription services you've signed up for. Are you actually using them regularly? Many people are surprised to find out that they're spending way more on subscriptions than they thought.

Speaker3:
Especially subscriptions that you may never use. And we all have magazines coming in that when the magazine comes in, you don't have time to read it. All right. Well, what's that magazine costing you? I know I've got business magazines that are costing me, like $25 a month. But now I read those. You better be glad I do, because this is what some of the things we talk about on this show keeps me informed for you. Helps me stay knowledgeable on the financial realm. But do you have subscriptions? Do you have applications on your cell phone or your iPad or whatever it might be that you're not using that you're paying for? Every month? You may have a a television subscription like Netflix or, I don't know, HBO or whatever it might be that's costing you additional charges per month. Do you actually utilize that? And I'm not trying to get personal to get into your personal business. I'm not trying to step on your toes. I'm just saying that that's the number four bad habit paying for unused services. If you're not using it, you don't need it. All right, number five again, if you're not using them, consider canceling and saving that money instead. Number five not investing. And I think this is one of the most important. All right. Saving money is great. But if you're keeping it in low interest accounts you're missing out on potential returns.

Speaker3:
So investing your money can help can help it grow significantly over time. Compound interest if you're using compound interest correctly. Surprisingly, a survey found that 28% of people have nothing saved for retirement. I'll hear that 28% of people have nothing saved for retirement. You know what that tells me about their retirement planning? Their retirement plan is to continue to work until you can't or you die. If you do not have a savings account. If you do not have anything saved for retirement, what else do you have? You know you can't retire solely on Social Security. The average check is just under $1,800 a month. That's average. Okay, so that's 29% of the people, 39% of the people contributors. They aren't contributing to a retirement fund. So don't miss out on the opportunity to build wealth for your future. Consider investing and take advantage of potential returns. Folks, that's what we do at Qmg Financial. You know, we want to get together with you free consultation and talk to you about do you have a budget? What's your retirement planning? Okay. So listen, y'all come right back. I appreciate y'all listening so far. But we're going to talk about when we come back inflation demonstration. We're going to give you a great demonstration about inflation and how inflation impacts your retirement. We'll be right back.

What's the matter with the clothes I'm wearing. Can't you tell that your.

Speaker5:
Ties to wide.

Speaker2:
Are you concerned about market volatility, rising taxes, economic uncertainty and how it all could affect your future in retirement? Then tune in to your American retirement to learn how you can protect and grow your hard earned money. Your American retirement. Every Saturday at 1 p.m. right here on 101.1 FM. The answer protect your hard earned money today and schedule a free, no obligation consultation now at your American Retirement Comm. Are you interested in ways to protect and grow your hard earned money? Your American retirement is here to help. Here's Randy Sams.

Speaker3:
Hey, thanks for joining me on this week's edition of Your American Retirement. Please be sure to check us out on podcast version of the show on Apple, Google, Spotify, or wherever you may get your podcast. All right. Inflation demonstration. All right. We're going to talk about inflation in this segment.

Speaker2:
Want to know where your hard earned money is going. It's time for an inflation demonstration.

Speaker3:
Americans are spending less on fast food due to rising prices. Now, folks, I don't do a lot of fast food. I can't tell you that I that I don't do fast food. I have, uh, but it's surprising to me. And I'm not going to use, uh, any names in particular, but, you know, whatever your favorite fast food restaurant might be, uh, whether it be a Mexican food. Drive through fast food, or whether it may be a burger joint, you know, with the golden arches or whatever it might be. If you have, if you compare what a. Whatever meal it is that you want to get, whether it be a Quarter Pounder or a Big Mac or a what a whopper. Or if you like tacos or burritos or whatever it might be. My gosh, if you get those meals. You should be aware of how well you know if you do it on a regular basis. You remember going back to that bad habits. They cost you a lot of money going through these drive thrus like this. It's costing a lot of money because I know it cost more today to get that Happy Meal or to get that number one or number two, Quarter Pounder meal, or that whopper meal. It costs more today than it did last year or two years ago or three years ago. Prices are going up, folks. But this is just an example. Americans are spending less on fast food due to rising prices.

Speaker3:
Who would have thought you would have to go through a drive thru and a burgers and fries and a drink for 2 or 3 people is going to cost you 30 or 40 bucks. That's called inflation. So listen to this. Fast food chains like Starbucks, McDonald's and Pizza Hut and this is just a short list. You could go down the list on anyone you want to. They are feeling the impact of a consumer pullback. Not as many people are going through those drive thrus or fast food restaurants. Starbucks saw a surprise drop in the same store, same store sales, leading to a 17% decline in its shares. Okay, and the value of its shares less. People are going through Starbucks to get that six, seven, $8 cup of coffee. Pizza Hut and Kentucky Fried Chicken KFC also reported shrinking sales. So you see, the competition for customers has intensified as consumers become more selective with their spending. Now, folks, one of the reasons why your Happy Meal or your Quarter Pounder meal, or your Whopper meal, or whatever it might be, is costing more money today. Yes, inflation. But you remember there was a group of people and I please don't take this wrong. You know, everybody wanted to have minimum wage of being 15 to $20. Well, folks, listen, if you own a business, I don't care if it's a McDonald's or Burger King or Starbucks or Taco Bell or whatever it might be.

Speaker3:
And you're now expected minimum wage to be 15 to $20 for employees. Where's that cost going to be passed on to. Think about that. All right. Inflation. Yes. But also it costs more now for those people to hire and pay employees to put your Quarter Pounder with cheese and your large fry and your big drink in that bag and hand it to you and take your order. All right. So here's what you have to look at. Why is this happening? Prices for eating out at fast food restaurants have risen faster than eating at home. Remember what we talked about making value a crucial factor for customers? In other words, am I getting my if my value meal or whatever it might be? I'm paying $10 for it now. Is that worth it, or can I spend that $10 somewhere else? So to combat the decline in sales. Fast food chains are adopting different strategies. Mcdonald's plans to create a nationwide value menu to appeal to thrifty consumers or customers. Although franchisees may push back due to the impact on profits. If you own a McDonald's franchise, it's going to happen across the board. But now the corporate says, we have to do this, but you're making less money. I don't think that's why you invested in becoming a McDonald's franchise owner, is it? Okay. So it may have an impact on their profits.

Speaker3:
Starbucks is focusing on deals and plans to release an upgraded app that allows all customers to order, pay and get discounts. You know what that means. Hey, I saw something the other day. Where they were talking about and and and again this is McDonald's. And please, I'm not picking on McDonald's. All right. I'm not this is just what I saw. This could be any fast food restaurant. You know, used to you would go into the, uh, into a McDonald's or Burger King or Taco Bell, and there was actually people that were there that would take your order and give you a big smile on your face. Okay, but guess what happened? Now we have you go in and there's nobody behind the counter. There's people putting your food order together, but you have nobody behind the counter, and you are actually placing your order on a kiosk. All right. There's a lot of folks that don't understand how to use those kiosks, but that's how. They got to pay 15 to $20 minimum wage. They're going to have less employees, they're going to have fewer employees, and they're going to let you start doing more of the service yourself. Hey, how many of y'all have to go to the grocery store or go to Walmart, or go to Costco or go to Sam's Club, and you have those self checkout lines. Okay. That's what it's coming to, folks. Listen. All right.

Speaker3:
So. You got to come up. The industry is hopeful that sales will will bounce back, but it remains uncertain how long it will take. Why? Because we're dealing with inflation and we're dealing with the cost of of employment nowadays. All right. So it's not enough to have a good income earner or a good saver anymore. You see here's what you got to do. It's you I want you to be a good income earner. And I want you to be a good server or a server a good saver. You need to have a plan that will stand the test of time, no matter how much prices rise in the future. We got to include inflation. So getting in contact with me today for your complimentary no obligation consultation. You know you can go to the website. Your American retirement. Com or give me a call (866) 990-7664. And let's get started with your no obligation consultation. All right. Let's talk about how inflation impacts your retirement. So it says here that inflation has been on our minds for a couple of years now. Yeah, really. Uh, I call it Bidenomics. It's really started since, what, 2021. But you got to realize the prices of food, gas, housing and just about everything else has risen. Since Mr. Biden took over, all right. Since the current administration is putting in their plans. So inflation is actually a long standing economic factor. We know we've had inflation not just picking on the current administration.

Speaker3:
But you've got to compare what was the inflation five, six, seven years ago versus what the inflation is now. That has to come down to the person and the people that are in charge. I don't care if you like hearing that or not, but that's what it comes down to. If I see that inflation under the previous administration was 1.5% or 2%, but inflation now is eight 9%. That tells me something ain't right. All right. So. You see, it's a long standing economic factor that we can't avoid. So the difference is that it's usually more subtle. Hadn't been settled over the last few years, but that means it's slowly driving up living costs over time. Those of you who are in retirement, you know it's costing you more to live today to pay your basic expenses today than it did a year ago, two years ago, ten years ago. Okay, this is the problem. Inflation can really mess with your retirement. You know that. And that's something that we have to address when we sit down. And we put together a retirement plan for you and your family. So Social Security is something we got to talk about. Social security benefits are supposed to be adjusted annually to keep up with inflation. But historically, those adjustments haven't been enough. They're not using the right factors to calculate what the actual cost of living adjustment, the Cola adjustment should be, folks.

Speaker3:
So last year it was like eight point something. This year was like two point something they're anticipating. In 2025. It's going to be a little where somewhere between 3 and 4% closer to 3%. But if you actually look at the the cost of living, if they actually utilize the things that affected your life or my life, those people who are in retirement right now, that would be much, much higher. But they're not using those factors. We've talked about that in the past. You see, those adjustments just have not been enough, which means that seniors end up losing buying power year after year. So if you're living on Social Security only, and if you turned on that Social Security benefit at age 62, which is the lowest amount you will ever be able to have in Social Security, you understand? Now, if you're 65 or 67 or if you're 72 and you've had that Social Security check coming in for ten years, you understand that that benefit that you took at age 62 does not have near the buying power today that it did ten years ago. And that's going to continue to be the same about retirement savings. Even if you manage to save up a good amount of money in your 401 K. Or your IRA if your investments don't keep pace with inflation. Your savings might not stretch as far as you have hoped.

Speaker3:
When it's time to use them. Okay. So listen. When you're working and you're contributing to a 401 K, which I hope you all have the ability to do, and if you have a 401 K or whatever type of mechanism or retirement account you have through your employer, especially if they're matching, please take advantage of that. All right. But here's what happens. I deal with people who are getting close to retirement, and they have a retirement age that may be two to 3 to 4 years away. And they have a dollar amount that they want to be able to retire on, and they feel like their 401 K or their IRA is doing well enough right now for that to be true. But here's what happens. The question has to be, if you leave the funds you have today in a 401 K or an IRA, as you get closer to retirement age, if those if the stock market, your IRA, your 401 K balance, if it drops by 25 or 30%. What does that leave you as an option? Either you're going to retire on less money, or you're going to have to continue to work longer than you planned. Those are your only two options. So that's why we have to look at your retirement savings. And let's take advantage of some of that money, some of those funds, and take those out of a risky investment. Stock market IRAs 401.

Speaker3:
S and let's put them into a guaranteed lifetime income annuity guaranteed to grow. So how can we avoid these issues. Number one, invest your savings aggressively when retirement is still far off. Time is still on your side, so it can be scary to put a lot of money in stocks because the market can be volatile. But if you take that risk, you might also get a higher return on your investment, which means you'll have more money when you retire. And remember. You have plenty of time to ride out any market downturns that might happen along the way. When you're young, utilize that stock market. Utilize that up and down the volatility as it goes up. But be smart. All right. So let's give you an example. Let's say you contribute $400 a month to a retirement plan for 40 years and get an average annual return of 8%. So that's a bit below the stock market average, but it would give you over 1.2 million by the time you retire. So if you go more aggressive or more conservative at 6% return, you're going to end up with around $743,000, which is still a nice sum, but not as much. So folks, we're going to give you the number two issue that you can do. Number two thing that you can do to avoid inflation and how it impacts your retirement. You're listening to your American retirement will be right back.

Speaker2:
Missed part of today's show. Your American Retirement is available wherever you listen to podcasts and online at your American retirement.com.

Sometimes wonder why all the flowers had to die.

Speaker2:
Like what you're hearing. You can watch the show to visit youtube.com and search your American Retirement to watch clips from this program.

Speaker3:
You're listening to your American Retirement. Please join us every Saturday at 10 a.m. and every Sunday afternoon at 2 p.m., right here on 101.1 FM. The answer where little Rock comes to talk. So folks, let's jump right back into it. We were just left the last segment talking about how inflation impacts your retirement. We all know that as we retire, the cost of living is not going to stay the same today as it was five years ago. And five years from now, it's going to cost more to live to retire on than it does today. So we have to take into account inflation. If you haven't considered that in your retirement plan, you need to give us a call at (866) 990-7664 or go to the website. Your American retirement.com. Leave us your contact information and let us get together and show you how we can include inflation. Inflation attacks. That's what I say going to attack your retirement. But if we're prepared we can take care of that two years from now, five years from now, ten years from now. And I could go on down that road. But that'll be another story, another show later on. So number one, we talked about invest your savings aggressively when retirement is still far off. Guys, as long as you have time on your side, take advantage of those 401 S max out those 401 k's. If you can max out those IRAs, put money back in a savings account or a CDs, okay, whatever it might be, take advantage of that, because I'm telling you, I can give you the example of 2008 and many of you know this.

Speaker3:
In 2008, the stock market fell by 401 K value fell. If you had a 401 K in 2008, your 401 K balance fell. Your IRAs, your stock market accounts. They fell by anywhere from 35 to 40 5 to 50%. But folks, I was younger and so were you. Hopefully you weren't in retirement in 2008 taking money out and had that drop. That's a bad situation. But see, I was young enough to ride that storm out. Now, I wasn't happy because it took six years for my 401 K balance to recover from the 2008 crash. I would have loved my 2008 balance to continue to grow for six years. Just think what that balance could have been. But at least I had time on my side where I could ride that out. Folks, as you get older, as you get closer to retirement or in retirement, remember we've spoken about the retirement red zone. That's 5 to 10 years before you retire, 5 to 10 years after you retire, you have to be able to look at your situation, your financial situation, your retirement accounts and make some decisions today about what's going to happen five years or ten years from now.

Speaker3:
We have to get together. So that's number one. Be aggressive in your retirement while you're still as far as your retirement funds, while you still can, while it's still far off and time is on your side now. Number two, when closer to retirement, move more of your money into safer investments that still offer market like gains. Folks. Rule of 100. It works both when you're younger and when you get older. Rule of 100 is this you take 100, subtract your age from it, and whatever is left over, whatever that amount might be, that's the amount that you should only have in risky investments, stock markets, whatever it might be. All right. So you can see as you're younger, if I'm 35 years old and I take that away from 100, then that tells me that I'm safe. Having at least 65% of my retirement funds in the stock market, 65% in the stock market, 35% in what I call safe money. As you get older, let's flip that around. Let's say you're 65 years of age. Take that from 100. That leaves 35. You should only have 35% of your retirement funds in risky or more risky investments, and the other 65% should be in what I call safe money products, annuities, guaranteed income, annuities, migas, fixed interest rate, whatever it might be. Annuities. That's what I utilize. Okay, the rule of 100 is what we always look at to kind of give us a roadmap.

Speaker3:
So consider investing in a fixed indexed annuity to eliminate that market risk or volatility on that portion of your portfolio. 65, 35, 65% in safe money, 35% in more risky. So you still are going to experience gains that are linked to the market index. So when you have a fixed indexed annuity or an FIA, what I like to use as an example, you see when the index goes up in value, so does the value of your annuity. When the index goes down you are protected. That your account value is locked in. Zero is your hero. So consider an elevator. If you've got one elevator, that's a stock market elevator, and one elevator that's an FIA fixed indexed annuity elevator. And we all love it when the stock market goes up. So that elevator goes up, it goes up. But the problem with the stock market elevator is when it starts coming down, you can't hit the stop button. It's going to continue to plummet until what it hits the bottom until it bottoms out. Everybody loves that elevator as it goes up, but they hate it because they can't stop it when it comes down. And we look at the indexed annuity elevator, what happens? It doesn't go up as quickly as the stock market elevator. But guess what? It goes up to a certain level. And if that index stops at that level and maybe next year it goes down well, you've your elevator has stopped at that level from last year.

Speaker3:
It's locked in. So if it went from 100,000 to 110,000, you're now locked in at 110,000. And when that index value continue goes back up, your 110,000 will go up as that index goes up and whatever it goes up, it's locked in to that next level. So that's why I use that elevator example, because it's something that people can actually visualize. I'd rather have that elevator go up, and when it decides to go down, I can lock it in at that level. And then as it comes back up, I get to ride it back up and then lock it in at that level again. So remember, zero is your hero when we're utilizing the indexed annuity. So when we're getting closer to retirement, remember that 5 to 10 years before retirement, when you're in retirement that 5 to 10 years into retirement, that's your retirement red zone. That's when we need to start focusing on making sure we do not lose. There are too many young people across this nation that are trying to get to the point where you are right now, they're trying to accumulate, but you're getting to the point in your retirement, whether it be a few years off or you're in retirement, you need to get the mindset that I've worked hard to get where I'm at today.

Speaker3:
Right now, my number one objective is to not lose. That's what we want to help you do. So folks, listen, we can we know that inflation is not going away anytime soon. So it's crucial to make sure your retirement plan and your portfolio are protected against inflation. So by taking the steps that we just went over, you can help ensure that inflation doesn't derail your retirement dreams that words like Tom said he's afraid of his retirement sailboat is drifting away. So at SMC financial, we can provide you with a complimentary consultation and retirement plan. All you got to do is give me a call (866) 990-7664 or visit the website Your American retirement.com to book your free consultation. So we look forward to helping you reach your retirement goals. All right, folks, let's talk about something that that I've known for many, many years. As you've probably tell, that's the reason that we got this radio show started. This program started because I've seen too many people again. I've been in this business for 38 years. I'd like to tell you, I started when I was really, really young, but I've grown and I've learned. And one of the things that is on my heart and one of the objectives, as you know, at SMC financial is our objective is to help you, whether you're in retirement or if you're getting close to retirement. A pre-retiree we want to educate you, and we want to help you with the products that are available, because we want you to have a what a safe and a secure retirement, not a risky retirement.

Speaker3:
So we believe that education is the number one thing that we have to do as our responsibility to you as a client or a listener is to educate you. And what we see. There are studies right now that show financial literacy is lacking in the US, and that's what we want to do to combat that. At your American retirement, SMC financial. So listen, according to a recent survey by World Economic Forum, not real happy with those people, but financial literacy is lacking among adults in both the United States and the European Union. The EU. In the US, only about 50% of adults. Have a good understanding of personal finance, with a 2% drop in the past two years. You see, this lack of financial literacy is concerning because it can lead to poor financial decision making and a false sense of confidence. So to address this issue, we recommend implementing financial education in schools and in creating learning platforms to improve financial literacy. And also listening to this show, Your American Retirement. Every Saturday and Sunday afternoon. That's what we do. Our business is education. So the survey revealed that comprehension of financial risk is particularly low among adults and is problematic as the world of finance is consistently as constantly changing.

Speaker3:
So you've got to be able to navigate this risk. You've got to be able to navigate risk. What are the risks that we're going to incur. You see the global economy is struggling and people living longer than ever. That's called longevity risk. Retirement planning and understanding how to make money stretch further is becoming increasingly important. So this survey suggests that financial education should be continuous, should be a continuous journey as the world changes and financial knowledge needs to keep up. So if you've got financial questions, folks, please contact me today. We can analyze your current situation and come up with a plan tailored specifically to your needs and your wants for yourself and your family. The consultation is complimentary and there is no obligation. You only work with us if it's best for you. We want to earn your business. Please give us a call (866) 990-7664 or go to the website Your American retirement.com. Leave us your contact information and we'll get right to you. So listen, folks, thanks for listening to today's show Your American Retirement. If you missed any part of the show, go back in the podcast archives Apple, Google, Spotify, or whichever platform you get your podcast. I want you to go out and make it a great rest of the day, whether it be Saturday or Sunday. God bless. Go Haugs. We'll talk to you next weekend.

Speaker1:
Thanks for listening to your American retirement. You deserve to work with experienced, licensed financial insurance professionals who can offer sound strategies for protecting and growing your hard earned money. To schedule your free, no obligation consultation, visit your American retirement.com today. That's your American retirement.com, not affiliated with the United States government. Randy Sams does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. A mirror life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or the results obtained from the use of this information.

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