Harsh Realities for the Next Generation of Retirees

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Producer:
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.

Producer:
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.

Randy Sams:
Hey, good morning, central Arkansas. I'd like to welcome you to today's program. Thank you for joining me. My name is Randy Sams. You're listening to Your American Retirement on 101.1 FM. The Answer where Little Rock comes to talk, folks, We've got a great show for you today. And again, like I just said, I want to thank you for listening. This is a big hello and a big thank you to all our listeners, our faithful listeners, folks that have been with us for, you know, a little over a year now. We enjoy listening to you guys when you all leave us the voice recordings, giving us information about who you are, what your concerns are about retirement. But, you know, we are here. We've been doing this for a long time. I have been in the business since 1986, 37 years in the business, working with folks traveling the country. I've had a corporate level executive positions with a couple of very large companies, one being the last one being one of the largest companies in the world. I led their senior division for 18 years. I retired in 2014 and started SMG Financial folks. So I am focused on retirement, working with folks like yourselves, retirees, pre-retirees, educating them on the financial issues that you're going to face as retirees and those of you who are getting close to retirement. By helping you understand and prepare for a secure retirement, not a risky retirement. So, folks, that's what we do at SMG. We're all about safe money.

Randy Sams:
I'm not ever going to tell you take 100% of your funds out of if you have an equity based investments. I'm never going to tell you to take 100% of those funds out. But I do believe that you should consider safe money alternatives to where you work so long and so hard to get where you are today. Here's a little hint. All of the young folks out there today are trying to get where you are right now. So your objective from this point forward is not to lose. Okay. So if you're in that retirement red zone. That I like to refer to the retirement red zone. That's five years before you retire and five years into retirement. That's when you need to start focusing on risk. Let's eliminate as much risk as we possibly can. We can eliminate 100% of the risk, but we can sure take care of a lot of the financial risk that you and your family will, more than likely. Be involved with during your retirement Because folks in one of the things is longevity. That's the number one risk we have to we have to account for longevity risk. That is where you have the risk of outliving your money. We want to address that and we want to eliminate that. We want to take that fear. That concern away from you in your retirement? Excuse me. Got choked up there. That's how passionate we are about what we do. But folks, listen.

Randy Sams:
Thank you for joining. I want to give a shout out to all our local listeners that you guys that are in Little Rock, thank you so much. I've got several phone calls from folks that are listening to me in Little Rock and also Conway. Thank you so much. But thank you for listening. You know that we like to travel all over Arkansas. So I've had people that from other states that are driving through that pick up the show and they listen. And when they get to where they're at, they give me a call and we have conversations. So again. Thank you for listening. And hey, if you want to schedule your free consultation, all you have to do to work directly with me is give us a call. Hey, there's no obligation. Take advantage of my 37 years in the business working with thousands of clients across Arkansas, Tennessee, Mississippi, Louisiana, Texas, sometimes Oklahoma and Missouri, but love to sit down and talk to you. Let's take a look at what you have today and let's see if we can put together a retirement plan that again, takes you out of that risky retirement and puts you into a secure retirement. Hey, podcast. Those of you who listen to podcasts, all you have to do is go to our website, Your American Retirement.com or your favorite podcast app and look for Your American Retirement. And you can see any previous episodes on their YouTube channel. Your American Retirement.com. Check out our videos and subscribe so you'll see weekly highlights so we don't have the entire show on YouTube.

Randy Sams:
We'll have little snippets. What we feel like are the highlights from like today's show. Kind of pique your interest and then take you over to the website or to your favorite podcast where you can see the entire show or listen to it. So so all you have to do is search Your American Retirement on YouTube and you'll see my smile and face right here. See it? Okay, So. So please don't hesitate to give us a call. You know, this is what we do. We love to talk to folks about your financial questions. What concerns you when you lay your head down on the pillow at night? If you're getting close to retirement or you're in retirement, what is it that is your main concern? Is it long term care? Is it Medicare? Is it Social Security? Is it your retirement funds? You have a concern about running out of money. We address all of those when we sit down and put together a retirement plan. Okay. We'd love to do business with you. We'd love to meet you. Shake your hand, introduce myself to you. Let you know how much I appreciate you listening to the show, and let's see what we can put together for you and your spouse. So, hey, all of our listeners today, if you'll get in contact with me, you're going to receive a free report. 23 retirement cost cutters for 2023.

Randy Sams:
It's filled with ideas for hanging on to more of your hard earned money, which is what our objective is. And it's yours today when you schedule a consultation. All right. So just give us a call. (866) 990-7664. Or go to the website Your American Retirement.com. Hey, Randy, I'd love to have that report. I'd love to be able to sit down with you and let's see what we can put together for me and my spouse, me and my family. Whether you're getting close to retirement or you're in retirement, again, it's absolutely free, no obligation. So thank you for joining today's show. Are you prepared for retirement no matter what? Good question. So we're going to have one segment. We're going to talk about how to catch up. If you started late, you'd be surprised. Folks, I talk to folks all the time. That they have just now started. They may be in their mid 50s and they're just now really starting to focus, focus on retirement. I've even met with people that are in their early 60s that are just now starting to focus on their retirement planning. Okay, don't do that. It's not too late, but please get started early. The earlier you get started, the more time you have. To accumulate. And that's where you're at when you're younger. You are in the accumulation phase. And then when you retire, you're in the accumulation phase. So anyway, let's get started. Quote of the Week Words of wisdom from a best selling author.

Speaker4:
And now wholesome financial wisdom. It's time for the Quote of the Week.

Randy Sams:
The quote of the week. Financial Wisdom. The goal isn't more money. The goal is living life on your terms. I like that. Okay. The goal isn't more money. The goal is living life on your terms. And that was brought to us by Mr. Chris Brogan. Chris Brogan is an American author, journalist, marketing consultant and speaker about social media marketing. He's written books, Trust agents using the web to build influence, improve reputation and Earn trust. And that was written in 2009. Okay, so it became a New York Times best seller. He wrote that with Julian Smith. So again, the goal isn't more money. The goal is living your life on your terms. That kind of matches up what we like to say at Qmg Financial. You don't retire on assets. You retire on income. Okay. And so the goal is, is it more money? So I don't care what your assets are when you are in retirement, the goal is living life on your terms. What does that mean? That means you need to have guarantees. Make sure that you take the concern of running out of money. Take that stress away from your retirement planning, and you can do that by giving a giving us a call. (866) 990-7664. Or going to the website Your American Retirement and schedule a free consultation so folks generation X. Generation X. For those of you who may not be familiar with it, Generation X are from those who were born in 1965.

Randy Sams:
To 1980. So the oldest of you are 58, just turning 58 this year and the youngest of you are 43 this year. All right. So Generation X faces a harsh retirement reality. So millions of Americans born between 1965 and 1980, collectively known as Generation X, are headed. Board retirement woefully unprepared financially for retirement. So this is a recent analysis and this is what it shows. Typical Gen X household with a private retirement plan has 40,000in savings. The figures are even more alarming for low income Gen Xers, who have managed to stash away no more than about $4,300 and often even less. The group found. So across all members of generation, some 40% don't have a penny saved for retirement. So, folks. That's not good. All you Gen-Xers that are listening. Y'all need to stay tuned because we're going to come back and we're going to talk about. Watch some of the things that you guys can do to hopefully if you've started late. Hopefully you can get yourself prepared. Gen-xers, it's not too late for you. You've still got some time, but you need to listen to the show. Hey, we're going to be right back. You're listening to Your American Retirement 101.1 FM. The Answer.

Producer:
Are you interested in ways to protect and grow your hard earned money? Your American Retirement is here to help.

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Producer:
Visit Your American Retirement.com to schedule a free consultation with Randy today. And now back to the show.

Randy Sams:
Hey, welcome back. Let's jump right back into it. We're talking about Generation X, those of you who were born between 1965 and 1980, which would put you in the age of anywhere between 43 as the youngest and 58 as being the oldest. Okay. So a a study this is a report from the National Institute on Retirement Security in IRS. They looked at the Generation X, So the average private retirement plan for Generation X household has 40,000in savings. So but listen to this. Some 40% of Generation X don't have a penny saved for retirement. So Gen X's, Gen Xers, you're fast approaching retirement age, but the data indicates that the vast majority are not even close to having enough savings to retire. Mo Xers don't have a pension plan. They've lived through multiple economic crises. Wages aren't keeping up with inflation, and costs are rising. Folks, that sounds like the perfect storm to me. Done it to you. So the American dream of retirement is going to be a nightmare for too many Gen Xers. So why are Gen Xers so unprepared? So these are according to researchers. Several obstacles contribute to this financial unpreparedness. Only 55% of Gen X workers participate in an employer sponsored pension or 401 K plan. Only 55%. Now, why is that? Is that by choice or is that because their employers don't offer one? If I were to interpolate this to me, that is telling me that only 55% of Gen Xers, even though they have a 401.

Randy Sams:
Plan available to participate in. And build on that retirement plan. They do not participate. So that means they're giving up that employer money. So most of your 401. K plans out there, you put in a contribution and the employer has a matching contribution up to a certain percentage or a certain dollar amount. Okay. So if you're not taking advantage of that, that's why you're seeing 55% of Gen Xers. Do not participate, though only 55% of Gen Xers do participate in a. Employer sponsored pension plan or 401, which means 45% of Gen Xers are not. Wage growth has been relatively stagnant compared to previous generations, so wages aren't going up as as high or as quickly as it has in previous generations. Student loan debts are also higher for Gen Xers compared to baby boomers. All right. So let's look at some facts concerning Gen Xers. This is an article that a research that was put together by the Alliance for Lifetime Income and Connect KNX, designed to better understand and forecast retirement income trends. So they surveyed 1519 investors ages 45 to 75. With more than 100,000 in investable assets. And they also interviewed or surveyed 602 financial professionals. All right. So this is Gin. Turning to annuities at higher rates in search of protection as private sector pensions disappear. All right. So they're singing my language right there. Why? Most of the majority of the folks that are listening to the show today, you know that the majority of you are not going to have a pension plan.

Randy Sams:
So it's all on your shoulders. The years of being able to have that that retirement party where you get the gold watch after 45 years. And then you get the sail off into horizon for her retirement and you've got that guaranteed pension, which is a defined benefit plan. They don't exist anymore. Only about 13% of employers offer a pension plan to their employees. Most of those are like state job federal jobs, or they're connected to unions that have that in the contract. So. 71% of all younger investors have some interest in purchasing annuities as part of their overall retirement income plan. Now, listen to that. 71% of all younger investors have some interest in purchasing annuities as part of their overall retirement income plan. The smart, 58% of investors under age 55. So, folks, this hits you Gen X, This is hit. This is you. Right, Right. Right. Square in the middle. 58% of investors under age 55 embrace annuities as alternative to pensions. So that's what we do. That's what I tell people. We can set you up with a self pension. You've heard of self-funded plans. Well, this is what this is. That's what an annuity is. A guaranteed lifetime income annuity is a pension for you and your spouse. We can set it up based on your life or we can set it up based on joint life.

Randy Sams:
That would be you and your spouse guaranteed pension to pay you that paycheck for life. And when you pass away, your spouse is guaranteed to get that paycheck for his or her life. Also now 9 in 10. It's nearly unanimous. 9 in 10 investors say it's important that their retirement income plan is designed to provide a guaranteed income payment or principal protection. Folks, listen to that. Okay. 9 in 10 investors say it's important that their retirement income plan is designed to provide a guaranteed income payment. You know why? Because, folks, it takes away that stress. You don't have to worry about running out of money. We can sit down and put together a plan that we can look at your basic expenses and we can take into account inflation over the upcoming years, because you've got to ask yourself this question is the money that I have today going to have the same purchasing power? In five years or ten years or 20 years. So you can look at this. If you're retiring on $1,000 a month, just as an example, and inflation averages, I think it's 4%. In 20 years, it's going to be worth 30% less. In 30 years it's going to be worth 50% less. In other words, your buying power at $1,000 today, 30 years from now will be have the same value as 500. All right. So you have to look at inflation, but you have to have that guaranteed income.

Randy Sams:
Take care of those basic expenses. Let's take that concern off the table. Let's take that. Let's focus on longevity risk and let's make sure that we put together a plan that you and your spouse cannot outlive. In other words, we want to set up a plan where your blood pressure hits zero before your retirement account does. Get it? All right. The majority of investors who have an employer sponsored retirement plan are interested in investing in an annuity through it. That's 56%. So the majority of investors who have an employer sponsored retirement plan are interested in investing in an annuity through that plan. So. As the number of baby boomers reaching traditional retirement age continues to accelerate, planning for income in retirement versus just accumulating assets has become central to investors. Retirement security. Folks, that's that's my that's my whole spiel right there. You don't retire on assets. You retire on income planning for income for retirement. Versus just accumulating assets. Assets can be lost. Guarantees cannot. All right. 55% of investors say protecting income is very important, compared to just 39% of financial professionals. So, folks, that trend is switching you as a consumer. Hopefully it's from listening to shows like my like like like Your American Retirement or others. But hopefully you're starting to understand that income is what I need to look at to make sure that I have a safe and a secure retirement.

Randy Sams:
Like I said earlier, you retire on income, not assets. So you need to give us a call. (866) 990-7664. Or go to the website Your American Retirement and let us sit down with you. No obligation free consultation and let's look and see what you have. And let us put together a plan that you can't outlive or your spouse can't outlive. Okay, Just give us a call. You know the number 866990 or the website Your American Retirement schedule that consultation, complimentary consultation and analysis, five steps to catch up on your retirement plan. So all your Gen-Xers, if you all have not started that retirement plan. All your baby boomers out there. Anyone who's listening, if you haven't started that retirement plan, listen to what we're going to talk about. Five steps to catch up on your retirement plan. Starting retirement planning late can be challenging, but it's never too late that the old saying is never too late to start. So we want you to start taking action and improve your financial situation. And here are five steps to begin planning for retirement if you feel you've started the process too late. Number one, assess your current financial situation. Begin by taking a comprehensive look at your current financial status. Calculate your net worth, including assets like savings, investments and real estate, as well as liabilities. Such as debt and mortgages. Understand your income and expenses to identify areas where you can potentially save more money.

Randy Sams:
Folks, this is one of the first steps that we do when we meet is we give you a form to complete yourself and your spouse. And we want you to list all of your financial your what you have on your house. If you have rental property, what the values are, what your equity is on those. And folks, we're not trying to get too invasive, but we have to know what we're able to work with. And you need to know what you have to be able to work with. All right. And the only way we can do that is to go and get that information and put it down in black and white. So we have a form. It's an asset form that we put together, and then we put all that together in a program and it spits out a one page report for you and for me, and it lets us be able to look at one page exactly where you are as far as your savings. Your investments, real estate, plus any liabilities and debts. How much equity you have. And we also go as far as looking at what are your Social Security benefits. If you're not taking Social Security today, what will they be in five years or eight years or ten years? And you know that you can you get that report from Social Security or you can go and set yourself up an account and it'll show you what they estimate based on what your current income is.

Randy Sams:
They estimate what your Social Security payment will be at age 62, at age 67 or at age 70. All right. So that's something that we put together. It's a free report. A free asset report gives us what your net worth is, and we do that during a free consultation. So. Guys. We need to set specific retirement goals. This is number two. You define clear and achievable retirement goals. What is it that you want to do? Determine the age at which you want to retire and the lifestyle that you want to have during retirement? Being specific about your objectives will help you and me gauge how much you need to save and invest to meet those goals. So folks. We've got two objectives. We can set you up with a paycheck, a pay check, and we can also set you up with a paycheck. A play. Check. Play. Check. I help you enjoy that retirement. You want to travel, you want to take cruises, You want to see the states, You want to see the world. That's great. That's a paycheck. But we're going to focus on your basic expenses first. So we got to set specific retirement goals so folks come back. We're going to go over number three. Number four. Number five. You're listening to Your American Retirement on 101.1 FM. The Answer. We'll be right back.

Producer:
Miss, part of today's show, Your American Retirement is available wherever you listen to podcasts and online at Your American Retirement.com. Are you anxious about retirement? Concerned that you could outlive your money? Randy Sams is a Little Rock native who has nearly four decades of experience helping hundreds of Arkansans retire with confidence. If you want to get the most out of what you've worked so hard for, or if you're interested in learning how to maximize your Social Security, call Randy Today at (501) 249-2343. That's (501) 249-2343. Or visit Your American Retirement.com. 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 10 a.m. right here on 101.1 FM. The Answer. Protect your retirement and schedule a free no obligation consultation now at Your American Retirement.com. 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.

Randy Sams:
All right. All right. All right. Thank you for joining me again. You're listening to Your American Retirement. My name is Randy Sams. We are all 101.1 FM. The Answer, It is Saturday morning. I hope you're having a great morning. I hope you have a great rest of your Saturday. I know it's going to be a hot one. We're in Arkansas. Hey, it's hot. It's August. What do you expect in Arkansas? It's going to be hot. All right. But that's okay. Hopefully your air conditioner is cranked down and you're feeling you're feeling good and you're listening to Your American Retirement on 101.1 FM. The Answer, How could it get any better? So, folks, we're we're listing the five steps to catch up on your retirement. We've gone on, number one, assess your current financial situation. Number two, set specific retirement goals. What is it that you want to do in your retirement, your go go years, your slow go years and your no go years? And number three, we're going to go into maximize retirement savings contributions. So contribute as much as you can to retirement accounts such as 401. Ks, individual retirement accounts, IRAs or Roth IRAs. Take advantage of catch up contributions. That's not ketchup like we put on hot dogs or hamburgers. That's ketchup like catch CRTC ketchup contributions. If you are 50 or older, as these allow you to contribute additional funds to retirement accounts beyond the regular annual limits.

Randy Sams:
So folks, take advantage of if your employer has a 401. K. Take advantage of what I say free money. And that is the employer contribution, their matching contribution. Okay. Try to put as much away as you possibly can. If I'm doing seven and they're matching three, then that means I'm getting 10% of my income put back every year. If I'm doing 15 and they're doing five, that means I'm getting 20% of my income put back every year, folks. And you need to start as soon as you possibly can. But if you can start right now. Better. Better now, better, better. Late than never is what they say. All right. So maximize retirement savings contributions. Creating a budget and call it cut unnecessary expenses. That's a big one right there. Create a budget and cut unnecessary expenses. So develop a budget to track your income and expenses rigorously. Look for ways to cut back on non-essential expenses and redirect those savings towards your retirement accounts. Reducing discretionary spending can significantly boost your retirement savings. So, folks. Yeah. You're going to get to a point where you realize that you're closer to retirement. Then you were 15, 20 years ago. All right. You're maybe half way through that tunnel, but you can see that dim light at the end of that tunnel, and that's called retirement. And you look back and you say, man, if I'd have started this, thinking about this ten years ago, 15 years ago, 20 years ago, just think where I would be today, because you would have been taking advantage of compound interest over that same time frame.

Randy Sams:
But get started today. But you've got to sit down and figure out. What can I do without today? Do I have to have that new vehicle? Do I have to have those new shiny tennis shoes or whatever it might be? So start looking at it and create a budget and cut out any unnecessary expenses. So you reduce discretionary spending can significantly boost your retirement savings. Number five, consider delaying retirement or taking on a part time job. Now, folks, I deal with this one quite often. Yeah. If possible, consider delaying your retirement age to allow more time for savings to grow and to maximize Social Security benefits. Meaning. If your full retirement age is 67, but you wanted to retire at age 65, that means you're going to turn on Social Security early before your full retirement age and before your full retirement benefit, which means you're going to retire on a lesser amount, especially if you turn it over at age 62. If you're going to plan on continuing to work, I would be the first one to tell you, don't turn that Social Security on at age 62 if you're going to retire at age 67.

Randy Sams:
Try to keep it. From touring on that Social Security stream until you age 67, and if you can wait to age 70. Remember every year that you can delay between age 67 and 70, you're guaranteed 8% growth. So if you can wait from 67 to age 70, you've just given yourself, what, almost 30% more retirement funds coming in guaranteed every year. If you can wait that three year period. So. People that are working and have not taken advantage of the in-service distribution, which means that at age 59.5, you can transfer funds that you have in a IRA or a 401. K into an income annuity. But I've seen too many folks that were not aware, made aware of this feature, and they're getting close to retirement and what happens to their account? It goes down. What happened in 2021, 20, 22, 401 K balances went down. And the last thing we want to happen is if I'm within that five year retirement, remember that red zone the five years before my retirement, the last thing I want to see is my account value, my 401. K or IRA to decrease. Because that means I've got two options. Number one, I've got to delay my retirement age to build that account back up. Or number two, if I retire at that same age, I'm going to retire on less funds than I had originally planned on.

Randy Sams:
Okay. So if possible, consider delaying your retirement age to allow more time for savings to grow and to maximize Social Security benefits. Alternatively, consider working part time during retirement to supplement your income and reduce reliance on your savings. Now, folks, that is consider working. Unfortunately, I have people that are in retirement that I meet with that they have had to take a part time job or going back working full time because of the fact that they've lost money in their retirement funds. Their income has gone down because they can't take out as much money in their retirement funds as they had planned on because they've lost money. And now to supplement that, they have to get another job. And that's a have to not a want to. But if you are in a position to where you can work part time and use that money to put into a retirement account, that's great. But that's because you want to because you see the need is to help me out when I decide to turn on that retirement switch. All right. So let's make it a want to versus a have to. All right. So those are the five steps. It's not too late. You can get started today. If you follow those five steps. Again, those five steps are, number one, assess your current financial situation. Number two, set specific retirement goals. Number three, maximize retirement savings contributions.

Randy Sams:
Number four, create a budget and cut unnecessary expenses. And number five, consider delaying retirement or taking on a part time job. Those are your five steps. All right. A little bonus, you need to give me a call. (866) 990-7664. Or go to the website Your American Retirement and let us sit down with you and help you get something started. At least let us put together a roadmap to where you and your spouse know over the next few years what our target is and what our path to get to that target is. But you got to have a plan and that's what we do. So give me a call. (866) 990-7664. Or go to the website Your American Retirement.com. Leave me your contact information. I'd love to be able to meet with you. No obligation whatsoever. I love meeting with folks, especially those who say, Hey, Randy, I listen to you on 101.1 FM. The Answer, and I'll want to have a meeting with you. All right. That's great. Now, let me ask you this question, folks. Can you retire on $750,000 or let me phrase that. How long will $750,000? That's three quarters of $1 million. 750 comma 000 last you in retirement. So if you retire with 750,000in your portfolio, how long will it last? So this is one of the most important questions in retirement. And the Answer is it depends. That a good Answer.

Randy Sams:
So it depends on a wide range of individual factors from where you live. How much you spend. And how much you invest. Okay. No one can give a general Answer to this question, but we can give you a few ways to think about the issue as you plan your own retirement. And the good news is, depending on who you are, this might be enough. This might be more than enough money to live a comfortable retirement. If you want to better understand if it's enough money for your situation. All right. You can give us a call and we can talk talk to you about this. But I want to point this out to you. All right. So can I retire on 750,000? Randy, how long will 750,000 last me in my retirement. You got drawdown and spending. The first question is we're going to ask, how much do you plan on withdrawing per month? From there, you can do some back of the envelope math to figure out how long your retirement account will last at a minimum, for example. Take two common rules. Two common rules of thumb for retirement, the 4% method and the 80% replacement. So the money might last 25 years under the 4% method. Investment advisors suggest that you plan on drawing down 4% retirement account each year. So that's the zero 4% rule. So with a $750,000 portfolio, if you used a 4% rule, that would give you 30,000 per year in income.

Randy Sams:
Now, folks, remember, the target is for this to last past your life expectancy, supposed life expectancy. But there's no guarantees using that 4% rule that it's going to last as long as you live. Okay. There's not a 100% guarantee that it's going to last to age 100, but the 4% rule. On 750,000 will generate 30,000 a year per income. And at that rate of withdrawal, your portfolio would last 25 years before it hit zero. All right. Now, guys, that's assuming no losses. So if you're making withdrawals in the market account goes down, your market or your account goes down, it won't last 25 years. All right. So I'm not a big fan of the 4% rule. So a lot of people that I meet with, they go 750,000. I can only withdraw four. I can only draw 30,000. You have to remember, guys, what's your goal? You want your blood pressure to hit zero before your retirement account does. Now, this 4% rule, and that's just if it gains zero and you don't lose anything. So it's just going to be starting at 750,000 and you're just going to be withdrawing $30,000 a year for the next 25 years. Boom. Then your account value is zero. All right. So what happens if you start that at age 65 and it lasts for 25 years at 30,000? What does that put you at? That puts you at age 90.

Randy Sams:
But what happens if you live to age 94 or 90 8 or 102? Good question, huh? So by contrast, the 80% rule, we go backwards for planning income replacement. Basically means this. So what we do, you take a plan and we're going to replace about 80% of your income once you are in retirement. So at that time, if you look at it, let's say the median household income in the United States was about $70,800. So you would plan for a retirement income, 80% of that is $56,640. So at that rate of withdrawal. 80%, meaning you're taking out $56,640 every year. A $750,000 portfolio would last a minimum of 13 years. Again, that's assuming no losses, folks. All right. I don't like that. I like the 100% guarantees. And we're going to talk about some of the different examples and scenarios as we get farther into this. But. Can you retire on $750,000? Randy. How long will $750,000 last? Me in retirement. If you have 750,000, you want to talk about it, you can give me a call. (866) 990-7664 and set up a free consultation. So you come right back and we're going to talk about putting together a plan for your lifestyle investment growth. And we're going to talk about income annuities, how they can be used. You're listening to your America Retirement 101.1 FM. The Answer.

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Producer:
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Randy Sams:
Hey, welcome back, folks. Again, my name is Randy Sams. I want to thank everyone for joining me today. It's Saturday morning, August in Arkansas. It's going to be a hot one. So stay inside Your American Retirement 101.1 FM. The Answer. Let's jump right back into it, folks. We're talking about can I retire on $750,000? How long will $750,000 last? Me in retirement? And I've given a couple of examples. Now we're going to talk about plan for your lifestyle. This is where we put together a retirement plan. So before anyone freaks out, it's an important to note that these are minimum drawdown periods. All right? They don't take into effect portfolio growth or Social Security into account. So we'll get into that in just a minute. All right. But it also doesn't take into account portfolio. It says growth. It doesn't also doesn't take into account what happens if your portfolio goes down. If you lose money, then we have to start dealing with sequence of returns risk. But first, it's important to understand that both the 4% and the 80% numbers are generic. Your personal drawdown would depend entirely on your own lifestyle and needs. Folks, we talked about that earlier. You got to look and see what is it that we want to retire on? What is it that we want to do? Do you want to travel the world or do you just want to travel and go to Hot Springs? Do you want to travel the world or do you want to travel to California or Florida or Hawaii? Makes a difference.

Randy Sams:
We got to put that in your plan. So when planning for your retirement, the 80% plan is generally a good place to start. So how much do you earn? Or even better, how much do you actually spend and live on each year? So that's your benchmark. Then you got to consider how much you plan on changing your lifestyle. For example, do you live in an expensive city and plan on moving? And will you enjoy that new, more remote lifestyle? Some folks will. Some folks won't. So do you currently have children or other dependents? Do you have expensive hobbies that are unlikely to continue as you age? So you got to plan your own future spending and estimate high. Don't go low, estimate high on what you're going to need. So don't just assume that your slash and burn the budget because it's better to save a little now than to find yourself forced into unpleasant services or sacrifices later. So the good news is spending isn't the only plan that you need to account for. Every portfolio will continue to grow in retirement. Exactly how much will depend entirely on how you invest this money and how you manage these assets. For example, take an investor who puts all their money into bonds and lives entirely off the income that they generate. There's no guarantee, but they live off of that income that they generate. So their annual income will be relatively low.

Randy Sams:
But that portfolio will last indefinitely. So on the other hand, a stock investor will post stronger returns, but they'll also need to plan for those down years, even loss generating years. That's called sequence of returns, folks. That's the risk. Market risk is something that we focus on. We want to address market risk and we want to take the majority of your funds out of potential market risk and put you into a guaranteed situation so we can talk about bond returns. So a good way to anticipate returns is through the bond market. So a rule of thumb for retirement planning is to shift your portfolio from growth oriented assets like equities to security oriented assets like bonds. So more secure assets like bonds as you age by retirement. Under this plan, you will generally hold about 750,000 in bonds. Don't like that. But on average, a collection of corporate bonds will kick back 5% per year in interest. That's going to do a lot for your portfolio. Longevity. For example, let's say you follow the 4% rule. So you don't have to, but you can upgrade to that 5% rule and live indefinitely off the interest that this portfolio would provide. But you need to live on $37,500 plus Social Security, which may not be a bad final number depending on what your lifestyle is, remember? Or you could plan for the 80% method and the median income you would draw down would be 56,640, while your portfolio throws off a steady 5% interest.

Randy Sams:
Not bad. So you can't plan for a stable interest payment each year because you will need to draw down on the principal. But this will still significantly extend the life of your portfolio. At that rate, your portfolio will last for more than 21 years. Again, before adding Social Security. Now, see, folks, there's not a guarantee. It says it will last for more than 21 years. All right. This is why I love annuities. So let's look at annuities. Another option is an annuity. Lifetime annuities have become very popular option because of the security. They provide a secure retirement, not a risky retirement. The insurance company or any other company that takes it over in case of sale or bankruptcy, if there ever was one, if there ever happens. Promises that you will receive a set payment each month for the rest of your life. Okay. That's called guaranteed lifetime income. So you collect fewer returns than you would by investing something like stock market. But you can count on those payments. That's why I call it an annuity is not an investment, folks. I never refer to annuities as an investment. An annuity is a risk transfer vehicle. A risk transfer product. You're transferring the risk of running out of money. From that being on your shoulders to that Now, going to the annuity company, the insurance company where they're giving you and your spouse a guaranteed lifetime income. So annuities posts the best returns when purchased in advance. For example, putting something close to this retirement portfolio, the 750,000 into an annuity and let it grow for five years.

Randy Sams:
So we take that 750,000, we put it into an income annuity growing at 8% compound interest five years before your retirement. So your retirement. Target is aged 67 at age 62. We put that 750,000 into an income annuity and we let it grow for five years at age 67. Folks, listen to this. That retirement, that annuity will generate nearly 70,000 per year in guaranteed income for life. You got that? The 4% rule and the 80% rule does not come close to that. That's just what the annuity generates. Now you're going to add your Social Security payment on top of that. And so. Even if you don't let it grow. So let's say that you put the money in there. We want to do an immediate annuity. You can still lock in very meaningful income. As example, putting the 750,000 into an annuity at the time of retirement and turning on that retirement immediately, that income immediately can generate 57,000 per year for the rest of your life. Guaranteed. Folks. Which is more than enough to replace even a median income, although it's important to note. So this is just an estimate basically based on what your age would be and when you want to turn that on, it's what we got to look at. All right. So that's why I love the annuities because it gives me guarantees. And when we compare the 4% rule or the 80% rule to using an income annuity, the income annuity still generates the highest income even if you started immediately.

Randy Sams:
All right. So let's look at Social Security. So this is a plan. You got a plan for your Social Security income. So what are the challenges with Social Security is that it's not simple income guarantee in old age. It's not a simple income. Instead, it works more like an income replacement. So remember, folks, Social Security was not set was not created as a retirement plan. It was created to supplement your retirement, which back then in the 30s was a pension. Majority of y'all don't have pensions. That's why it's on your shoulders to build that retirement fund. Social Security is still going to be there to supplement. So if you lived your adult life in poverty, Social Security leads, you also leaves you in poverty. If you lived your adult life in relative wealth, that which you've had pretty high income over your adult life, Social Security can probably pay you a substantial benefit. All right. So. Well, we have to look at is. Putting your money into an annuity, paying $57,000 per year, taking Social Security, too, into account. This is about 78,000 income per year guaranteed for the rest of your life. This is greater than the median working income, meaning that a standard household might actually get wealthier wealthier in retirement. That's why I like it. If you turn it on immediately at 57,000, because the median income or the median Social Security for a retiree in 2023 is around $21,000 or $1750 per month.

Randy Sams:
So when you add that 21,000 to the 57,000 generated by the guaranteed annuity, you can generate almost 80,000 guaranteed income for the rest of your life. All right. So bottom line, how long was $750,000 last in retirement? The Answer is it depends entirely on how much money you need and how you choose to invest this money. But the good news is, is that for an average income household, a portfolio of $750,000 is more than enough to live a comfortable life. So, folks, that's what we are all about at SMG Financial. We want to put you in a situation. I know many of you may not have 750,000, but this is just an example. I get asked all the time, Randy, I have 500,000in my 401. K or I have 250,000 folks. We're going to do the same exercise with 200,000 as it would with 500,000 and we would with 750,000. We got to look at your specific objectives. Build a plan based on your wants, your needs, and your objectives, your lifestyle. Not a cookie cutter plan. That's what we do. Give us a call. (866) 990-7664. Go to the website Your American Retirement.com. Love to sit down and meet with you. Shake your hand. Put together a plan designed specifically for you. Hey, folks, I want to thank you again for joining me again, Randy Sams, Your American Retirement on 101.1 FM. The Answer. Thanks. And we'll see you next week.

Producer:
Thanks for listening to Your American Retirement. You deserve to work with licensed financial insurance experts 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 a specific result. All copyrights and trademarks are the property of their respective owners. America 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 of the results obtained from the use of this information.

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