Transcript Episode 131: Avoiding Traps

In This Podcast:

Six Roadblocks to Avoid

• No Retirement Plan? Have a written strategy in place.
• Procrastination: Don’t wait until after the “Holiday”. (which holiday?)
• Don’t use unrealistic investment returns as assumptions
• Don’t accept blanket statements from financial advisors, like “Ride it out”.
• Don’t optimize for Accumulation when in the Distribution phase.
• Don’t make knee-jerk reactions to markets

Narrator
This is Retire South Shore Radio, a weekly program designed to educate you on all your retirement options and introduce you to Mark Rowlette, founder of South Shore retirement services for the latest on free seminars. To obtain a report or to set up a consultation, please visit RetireSouthShore.com and real-world retirement solutions, looking at the whole picture to design a complete strategy, including retirement planning, Medicare decisions, and legal documents. Now, here’s Mark Rowlette. And your host, Jordan Rich.

Host Jordan Rich

Well, here we are in the midst of summer and the heat continues to though it’s lessening a bit, but we are definitely the topic of hot conversation here we talk about retirement and living a better one. I’m Jordan rich. And with me, of course, is Mark Rowlette, the founder and president of South Shore Retirement Services in Hingham, Massachusetts, and he’s doing a little time ion the boat, but much more time in the office these days. It seems it’s a very busy season for a lot of people concerned with retirement (and rightfully so) and planning and doing all that, Mark.

Today a very interesting topic, and one that I’ll be taking more notes on, as I do every week anyhow. And that is, six really important roadblocks or things to avoid or think about when you’re getting to the stage of retirement.

Mark Rowlette

Yeah, normally you would think that summertime is the time that people kind of take off and they don’t want to talk about money, retirement tax strategy, or anything like that. But it’s interesting how busy we are, even with just existing clients during the summer – to kind of reaffirm what they’ve already done to make sure that they’re still on track for everything.

And time and time again, when I talk to new people who are coming into the office through this show, webinars, seminars, different sources of how people come to our office – they’re all starting to wonder if they’re going to have enough money, right? I had a zoom last week where I talked to a client, and he literally said to me, I’ve been saving money for 30 years, and now I have no idea how to spend it.

So if that sounds familiar to you, if it sounds like you’re not sure if you have enough money, you’re not alone in this. I was reading a recent study that said 28% of people who responded to this study were confident that they had enough money to have a wonderful, consistent retirement. But 58% of the people who were questioned, or who participated in this study, were really stressed about whether they had enough or not.

We totally understand it. Planning for retirement can be a huge challenge for a lot of folks. It can be stressful. It can be something that maybe they procrastinate on. Lots of people procrastinate on everything in life, and this is no different.

But having a plan, having some sort of a strategy in place, obviously puts you in a better position. And people get stressed, even if they’ve had help along the way – even if they’ve prepared, even if they’ve had a really good job and they’ve made plenty of money.

It’s an obvious thing that you would stress about: “Am I going to have enough when I step out of the office or step away from my career, with everything that I’ve put together over the years?”

Host Jordan Rich

In one note before we launch into some really important reminders. And that is that this is a 24/7 world we were talking about. In the summer, as it used to be, most people could say, “Well wait till Labor Day”. No one waits until Labor Day anymore for anything. And I think that’s not a bad thing. It means information is available and resources like the ones through the All Hands Analysis Team. Resources are available anytime you need them – that’s the point.

Mark Rowlette
Don’t Wait until “After the Holiday“
Yeah, I used to hear this years ago, just to kind of echo what you just said, people would say, “Well, call me after the holiday.” And I would always answer, “which holiday?” because there’s always a holiday, there’s always something that’s going on in order to, I guess push, it off a little bit. But seeing all those statistics kind of brings us into what I was going to talk about today, and it reminds me of the things that I see that people are potentially doing wrong.

I hate to be negative on any of these shows, but there are things that people do wrong. And if you know what people have done, and made me maybe mistakes on in the past, you can kind of try to learn from that and avoid those going forward.

Host Jordan Rich
Before we begin the list, and it’s important, the 15 Minute no-obligation strategy call and sometimes that 15 minutes becomes 20 or 25. The 15 Minute no obligation strategy call is a chance to get questions answered anytime with no obligation on the phone at your convenience.

And to set it up go to RetireSouthShore.com and you can put it on the grid right there on the calendar, or you can call 781-836-4214 Anytime that number will be answered on the weekend by remote and someone will get back to you first thing during the week. Guaranteed. Okay, Mark, let’s take it away. What are the things to avoid?

Mark Rowlette

There are just things that you should be avoiding, and too many people fall into these traps. The obvious ones, most of them are obvious, quite honestly,

• Failing to have an income plan.
  By this, I mean failing to have an income plan that’s in writing, that you have something down that you can look at and say, “Alright, this was the strategy we built off five years ago, two years ago, eight weeks ago”, and make sure that you’re going to be okay. For retirees and people who are soon to be retired, that’s their number one worry.
  
  It doesn’t matter whether you have $100,000 or $100 million. Nobody wants to outlive their money. Yet, so many of the people that we meet with are just kind of winging it, right? They have no strategy in place. They’re just withdrawing money from their accounts and hoping that the accounts last as long as they do or last longer than they do some, there’s a cushion.
  
  That, to me is just a very risky strategy. You know, it’s winging something as important as your retirement and your family’s life, after you’ve stopped working, when you could be retired for as long as you worked in the first place, is just too risky. So to avoid something like that, have a written plan. It’s just a better option.
  
• Knowing where your money will come from each and every month, each and every year, gives you much more confidence. Knowing that, alright, if the market does this, this is what I pull the money from. And if it does the other thing, this is where I’ll pull the money from. Having a team I suppose in place, helping you and guiding you along, when to do that. And what’s the right timing to do that?

Host Jordan Rich
Now, a question. Are you talking about above and beyond the estate plan, which is so critical, you’re talking about a written plan for assets and things like that.

Mark Rowlette
A written income strategy, a growth strategy for your money, game plans for changes in the market, game plans for life-changing events. Because I talk to clients, (and that’s part of our process is continuously talking to clients), I would say, maybe a third of my week is doing reviews with existing clients, Damon and Erica are doing reviews with existing clients as well.

The ones that I sit in on are looking at what’s going on in their world. Such as clients that are moving to other states, selling a house, buying a second home, buying a car, or a water heater blows, things that come up, that will be life changing. Not that a water heater is a life changing event. But things that cost money, having a game plan in place for stuff like that, where are we going to where are we going to get that money from? How’s that going to impact me going forward? It just puts people’s minds at ease, I can see it on a daily basis.

Host Jordan Rich
And it’s almost anything you can point to because we’re all different. I said to Mark right before coming on the air, and you know a little bit about my family, my dad is in his 90s. And he’s finally agreed to and cannot wait, actually, to move to a safer environment, one-level assisted living and that means it’s great for him, it’s great for us, we have relief. But we also have an enormous amount of planning and work and, and finance to take care of. Luckily, we did that pre-planning in advance. But that’s, that’s what you’re talking about anything can happen. And you just want to be ready

Mark Rowlette
Having that written plan in place, and then sticking to the plan and staying the course on the plan. I think I’ve I say this every single week on my webinars every single week on my seminars, there was a like a light switch went off with me many years ago when I met a couple that I’ve worked with now for many years. And what they said to me, totally resonated. And I was like, “Oh my God, that’s what people are doing.” And it was, “if our accounts lose money, we just won’t take that money, we just won’t spend that money. We’d go without for that particular year and wait for it to come back.”

That’s no way to live in retirement. So if you have a strategy, that’s actually a proper game plan in place that if something goes in the wrong direction, meaning your accounts, then you have a safe haven to pull money from during that time, so you don’t have to go without – so you don’t have to not do the things that you’ve been looking forward to doing during your retired years.

Host Jordan Rich
Indeed, let’s continue we have a time to the break to do at least one more important reminder.

Mark Rowlette (Point #2)

I think using unrealistic investment returns as assumptions in your plan can be the death of the plan. Numbers in my world (and I say this to clients day in and day out) … It’s so easy to manipulate numbers and make you look like a complete Rockefeller, right? But it can be very misleading and very dangerous using some unrealistic assumptions. While you might get that return, you know, something like saying let’s use a 9% return and see how things go.

But what if you don’t make 9%? When we run plans for people, we use really, really conservative assumptions. It doesn’t mean that that’s what we want the client to make. Using really conservative assumptions and essentially stress testing your money, just makes it a much easier goal to achieve.

And if you can do it without taking an awful lot of risk with your money, why would you take all of the risk? It’s not to say that clients wouldn’t want to put money in the market and they should. But having this and I’m going to say the “B word” a lot today, having a bucketing system.

1. Having money that’s essentially like cash, and then
2. there’s money that’s fixed, or CDs, then
3. there’s money that’s fixed indexed, that can go up or can’t go down, but you won’t get all of the upside, and then
4. having money in the market, and having segmented money out, puts you in a much stronger position to be able to achieve the return that you want, and to be able to continue to derive the income you want. Because with the money that’s in the market directly, if it goes in the wrong direction, you just don’t take any money out of it. And that allows people to not make knee-jerk reactions, stress and sell off something at the wrong time.

Host Jordan Rich
And ultimately, any client of any organization such as yours wants the truth. They want to know honestly, what’s in store. We all lived through the news cycle of the Bernie Madoffs and all the crazy stuff that happened internationally. I mean, that’s on a much larger scale. But listen, everyone’s trying to impress you with numbers, and it’s important to get the real numbers, or the numbers that make sense that will not put you into the hole or at the same time will not overextend your expectation.

Mark Rowlette

Absolutely, absolutely. I say this to clients. I could obviously put the projections up and justify how that could possibly happen. But it’s just not realistic. It’s not safe. It’s not a good way to roll into retirement. I had somebody on Zoom a couple of weeks ago who asked me, “Well, can you tell me what your performance has been for your clients investments based on how the markets performed?” And like, that’s not what we do. What we try to do is make sure that the clients are going to be okay.

I’m not trying to beat out the S&P. I’m not trying to say that I’m better than everybody else. I’m trying to put clients in a position where they feel comfortable, based on their risk tolerance based on how much money they have. And they’re feeling confident enough to roll into retirement and have that income. And sometimes it can be very different between a couple, you know, a husband might have one type of aggression, and want to put his foot on the gas, and a spouse or wife might say, “I’m too nervous”, and you can see it in those conversations. So building the strategies, the way we do kind of gives everyone the best of both worlds.

Host Jordan Rich

And this whole issue is elevated greatly when we have the kind of economic issues we’re having now, not only the inflation, but the market is going up a bit now. But boy, it was kind of shaky there for a couple of months. And that’s the way it is. I mean, it is reality, and you have to just face that. So we’re going to take a short break. And as always, during the break, we’ll tell you about seminars, webinars, upcoming or in general will also tell you how you can contact the office and so forth, RetireSouthShore.com.

But Mark, I know you’re stocked with several more important reminders, and that’s why I got my pen out. Got a second one just in case I run out of ink. So standby, folks, we’ll be back with much more important and helpful information about your retirement when we come back.

[Begin pre-recorded message]

Narrators:

One of the biggest stressors when it comes to retirement is the obvious one will you ever have to worry about running out of money in retirement?

That is the key question and proper retirement planning. Working with the All Hands Analysis team can truly help. Here’s Mark Rowlette founder and president of South Shore Retirement Services.

Mark Rowlette
Most of our clients have a person when we meet with them somebody who has helped them accumulate their wealth during their working lives. But distribution going into retirement starting to take money out of these accounts is a totally different animal. It’s not just about returns. Returns are important, but strategizing on what’s the best way to take this money out, how you should take it out, when you should take it out, and where you should take it from is critically important when you’re transitioning into retirement.

Host Jordan Rich
Schedule your FREE 15-minute strategy call today just visit RetireSouthShore.com That’s RetireSouthShore.com investment advisory services made available through a EA Wealth Management LLC, AEWM. AEWM and Seltzer retirement services are not affiliated companies.

[End pre-recorded message]

Host Jordan Rich

This is Jordan rich reminding you that South Shore Retirement Services offers a number of ways to learn about a happy and safe retirement with frequent evening seminars at local fine dining establishments. You can find the complete schedule and register for the seminars at RetireSouthShore.com. There are also regularly scheduled webinars. There’s the retire South Shore podcast series and the South Shore Retirement Services newsletter. Information is power and the All Hands Analysis team at South Shore Retirement Services is ready to inform educate and reassure you in retirement. Again, visit RetireSouthShore.com.

Host Jordan Rich

We welcome you to RetireSouthShore.com and Retire South Shore Radio. I’m Jordan Rich and I’m here every week with Mark Rowlette. He’s the founder and president of South Shore Retirement Services. He’s also a dad he’s a son and he’s a husband as I am, so we all understand what you’re going through. And even though you’re a little bit younger than I am, you’re discovering the life milestones as you send your kids off to college.

Mark Rowlette

And right now I’ve been watching Amazon boxes, sheets and pillowcases and paper and paper clips that coming in. She’s heading off to Emmanuel after Labor Day, so that’ll be very exciting. Very nerve wracking. I know there’ll be certainly tears, maybe mine, but definitely Lauren …

Host Jordan Rich

Oh, wait a minute, definitely yours. I was crying like a baby. When my daughter went off to school, my son was easy. But my daughter, you lose your little girl to school, you know, lose her, but it’s an emotional moment. So we’ll report to the audience on that one at a time.
Let’s continue. The theme of today is the things you really want to be careful of, things that can “kill a retirement plan”.

Mark Rowlette

Before the break, we talked about making or projecting out unrealistic assumptions for rates of return. And that kind of echoes into taking too much risk, right? Taking too much risk with your money can be the detriment to your retirement. Too many people are focused on trying to look at their money as one sole lump sum. “I got half a million dollars saved and that half a million dollars needs to make me X amount of money every year in order for me to sustain my lifestyle.”

And the reality is that the lump sum is not irrelevant, but it’s not the important part. It’s “I need to take $4,200 a month for my accounts, and what’s the path of least resistance?” And again, the “B word”, bucketing, is what we think makes the most amount of sense.

So having money that is working really hard, meaning that it’s fully in the market, is a good thing, right for most people. But if the market goes in the wrong direction, if you have the bucketing system, you don’t have to take money from that. It’s not like, you know, “seven minute abs” or anything like that. It’s just logical to say,

• Don’t have all of your money doing the same thing,
• Don’t have all of your money super aggressive,
• Don’t have all of your money super conservative,
• Spread your money out and be realistic and realize that, we’ve grown this, or our built this nest egg up over 30 years, we need it to last us for another 30 years.

So it doesn’t mean that you need all of the money that day, it doesn’t mean that all of the money has to be so conservative that it doesn’t have a chance to make returns.

If you “bucket it out”, some of your money will be working directly in the market and have all of the great upside of the market also have all of the downside of the market. But if it goes in the wrong direction,
(A) you don’t need to touch it and
(B) if it’s pre-tax money, like IRAs and 401K’s there’s always a strategy around it right? Maybe pay the taxes at a discount.

I was with a client last week, who’s a retired CPA, super smart guy. And I started talking to him about that. And he said, “I’ve been doing that for the last three months.” He said, “Absolutely. I got a discount basically on good holdings that had dropped because they weren’t bad. It’s just the market’s down. So I’d rather pay the taxes when the market’s down.”

Having the ability to do that without impacting your day-to-day income stems from having your money bucketed out into different types of accounts.

Host Jordan Rich

If I’m sleeping better, because I’ve got buckets. I’m dreaming about my buckets, that’s all and I’m very happy to sleep more soundly.

But we’re talking about actually there’s a funny line from a Broadway show. Hello, Dolly. I’m sure you’re familiar with it, folks. Dolly Levi, the great matchmaker, says “Money is like manure. It ain’t no good unless you spread it around.” Another fun, flip way to look at it. So we’re talking about really important lifestyle issues.

But it’s where your mind is at when you’re planning, and that’s what we’re focusing on. And there are a few others that are important before we before we get to the next one. I keep mentioning it because it is important what you offer. The 15 Minute No Obligation Strategy Call at South Shore Retirement Services, something that began out of necessity during the pandemic.

It’s worked so well you’ve continued it, Mark. And let me just give the phone number 781-836-4214 to set up the phone call or you can set it up just by going online RetireSouthShore.com. And there’s a terrific, it’s so easy, I can do it, “Grid System”. Remind us again about why this is so helpful to people and how much it’s helped so many so long.

Mark Rowlette

Listen, most of the people that we start working with have some financial person prior to coming on board with us, and those financial people have done a fabulous job, but their focus has been on the accumulation side of things and it’s not that we don’t get involved in that our businesses (the money is money management and helping people grow their wealth and helping people make sure they maintain their income). But we take much further steps of having what we believe are all of the core things that people need when they’re either going to retire or they’re already in retirement –

• Income planning,
• Wealth Management,
• Tax strategy,
• Tax planning through our CPAs,
• Medicare planning,
• Medicaid planning and
• Estate planning.

Having all of those things accomplished in one building is much more simple and much more streamlined for the client. They don’t have to drive to five places. But they also feel confident because there’s a whole team working in unison for them and with them. Everyone’s on the same page, as opposed to people arguing over whether you shouldn’t do this because this person is telling you to do something else and, and it gets really stressful, complicated, confusing and unnecessary. When people are dealing with their life savings.

So the All Hands Analysis, we feel, covers everything that a person would need. Bringing all of these professionals together to meet and work with those clients, puts them in a stronger retirement driver’s seat.

Host Jordan Rich

So once again, the 15 Minute, No Obligation Strategy Call. It’s a phone call, it’s as easy as a cup of tea sitting on your couch or wherever you may be on your lounge chair, and making that call to sign up go to RetireSouthShore.com.  No obligation. Let’s, in the time we have left, run down some of the other things to be aware of – triggers to watch for in retirement

Mark Rowlette

The biggest thing you want to avoid is being so miserable that you can’t enjoy your retirement. Now, I can’t stop you from being miserable if you’re just a miserable person. Being miserable is generally echoed from being stressed because you’re worried about your money running out before you pass away, because you don’t have a game plan in place. And sometimes people’s portfolio risk doesn’t match their life risk, and doesn’t match where they should be.

So again, the bucketing system. Bucket, bucket, bucket your money. It will put you in a more confident place to be able to go and enjoy that two weeks in Italy that you always wanted to do, be able to go on a cruise, be able to do those things knowing that you’re spending money knowing that it’s not going to be “Oh my God, when I go home, I spent too much money and maybe I shouldn’t have done that.”

Host Jordan Rich

So let me let me jump in here for a second, because this is probably the most important thing we’ve said all day, and you say a lot of important things I don’t I just asked the questions.

I’m just goofing around here a little bit. But it’s true. Attitude is everything. When you’re in the work world, you want to have the sense that you can do this, that it’s going to work out, that things are going to get better and you’re going to make more money and so forth. But sometimes that attitude shifts because you’re not making the money the way you did. So when people walk through the door, I would imagine you can sense on their faces, either consternation or confidence, asking a lot of you but I’m sure you can.

Mark Rowlette

Absolutely. I can tell stories if the show was four hours long, story after story of people who come into the office, and they’re in such good financial shape. But you can see the stress and anxiety on one or both of their faces, because they don’t know if they’re going to have enough money to go into retirement. And you talk about being miserable in retirement, from the perspective that you think that you’re going to run out of money because for most of the people that we work with, they’ve gotten a paycheck for the last 30 years, a few weeks, every month, whatever it would be.

I talked to my sister who’s her husband is a doctor in Ireland, and it’s the same thing, though. They say, “Well, if we go on a vacation and we spend into our money, we know that we’re going to get another check in two weeks or another check in a month. If we’ve overspent a little bit, we can start pulling back and start paying down a credit card or something.”

But when you go into retirement, you’re basically creating your own paycheck, right? That’s really nerve wracking for a lot of people. So having a written plan in place that has guidelines as to “Alright, this is what we can afford to do, and this is what we can’t afford to do” just sets the expectation ahead of time.

Host Jordan Rich

Yeah, but for most people, and we say this all the time, they (that’s you guys out there listening) you’ve done the hard work to assemble this life that you’ve had and to make enough money that with the proper planning retirement work. It’s just a mindset. At some point you don’t even know that you’ve done all this. You forget that you’ve done all this, to set up your retirement.

Mark Rowlette

Absolutely. Yeah, it’s totally a mindset. But if you can see the relief on people’s faces, and also, it’s not that people walk into our office, and we’re just magicians. Sometimes people come into our office, and I see “red” at the end of their strategy. I say “listen, you either have to work longer, or save more money because you don’t have enough saved in your timeline that you want.”

But I’d rather have somebody tell me that ahead of time rather than down the road and say, “Oh, I’m sorry, you’re about to run out of money”. And now you’re 82 years old and you can’t go back.

Host Jordan Rich
Right? It’s like the mechanic who says “You might want to look at those brake pads and take care of them now before they go on you.” Any service providing that kind of insight and forethought is welcomed I guess. Anything else on the list (of things to avoid) that we should conclude?

Mark Rowlette

One quick one is just giving away the farm, right? Giving too much money to your kid(s) when it’s too soon. And I know children are expensive, because I have three of them. But when they’re adult children, as they grow, lots of parents are like, “I want to help them buy a house” or, their kids are going to college and “I want to give money away.”

And I suppose sometimes we (as advisors) act as like a firewall between the parents and the children. In that, the advisors are telling us that we shouldn’t do this this year. So it kind of alleviates the butting heads between parents and children. But we see that a lot. You want to make sure you have the ability to give money to your kids, if that’s what you want, but not to the detriment of your own retirement.

The final thing that I think is probably one of the most important things. This is going to sound familiar to a lot of people, including you. It’s just blindly believing your financial advisor, when they say, “you’re going to be okay, the market will come back, let’s just ride it out.” Those are things that people have told me time and time again. That’s what they’ve been told, and all of those things potentially would be true. But those are just blind blanket statements.

If you have a proper written strategy, and you say, “This is why you’re going to be okay, because if this happens, this is where I will take the money from, we have money that’s in fixed accounts and fixed interest, which is actually doing pretty well right now with the way that everything going on. That’s like the silver lining, that short-term fixed interest has actually gotten really good again.”

But just to be told by someone, “Ah, don’t worry about it, you’ll be fine. I got it all squared away.” – that, to me, would make me so anxious that I would run out of that office. So that’s not how we do things. Blindly believing a catchphrase, as it were, is not a solid foundation for retirement.

Host Jordan Rich
Well, I think we covered a lot of ground here. This is just the start for some people who are just getting to the point that they need to address retirement planning. There are lots of avenues, lots of education, but we urge you to check out the website that has a lot of free information. RetireSouthShore.com.

We’re getting back to seminars in person probably in September, which makes sense. But keep peeled your eyes for those because they’re very informative and very helpful. And quite frankly, very delicious because you (Mark) put them in some beautiful spots. And I just want to say as the weeks go by, and you’re packing your daughter up, buy extra Kleenex for yourself because you’re going to need it

Mark Rowlette

Well thankfully, she’s only 25 minutes away depending on the traffic in Boston, so I’m sure we’ll be seeing her a good bit. I just don’t want to see her at 11 o’clock at night at the front door saying “I want to come home”. That’s my stress right now.

Host Jordan Rich
You will see her with bags of laundry no doubt at some point.

Mark Rowlette Once I see them clean heading out the door. I’m okay with that.

Host Jordan Rich
Great to see you, my friend. Have a wonderful week.

Mark Rowlette

You too. Take care.