Retirement Answer Man

Passive investment management has taken over the world. Nine of the top ten mutual funds are based on passive investing. On this episode, I explain what passive investing is and how it works, the top two indices that most funds are based on, and the advantages and disadvantages of investing based on those indices. I also take some time today in the Practical Planning Segment to answer listener questions. Listen in to expand your understanding of passive investing and hear answers to questions that you might be asking. The two indices that most passive investment portfolios are trying to model Eight of the top ten passive investment funds are focused on the S&P500 and the Total Market Index. On this episode, I describe asset allocation within these funds and how the funds are weighted. Is this model an efficient way to for you to implement a passive investment strategy? I’ll fill you in on the advantages and some of the questions around these funds on today’s episode of The Retirement Answer Man. Are market indices focused on a smaller segment of the market than it first appears? The S&P 500 and the Total Market Index have, respectively, 500 and 3600 individual equities. So at first it appears that passive investments that mimic these indices would be spread out among those equities. On today’s episode, I explain how the equities are weighted and the percentage of the indices that are in large or giant companies. Listen in to get a clearer picture of these two popular indices and to think about whether or not that is an efficient way for you to implement a passive investing strategy. Index rebalancing on fixed dates is like the Nike store on Black Friday. Have you seen the videos, or experienced in person, what it is like to shop for great deals on Black Friday? When the indices rebalance on fixed dates three times each year, any funds invested to mimic the index will be moved as quickly as possible. Everybody is running in the exact same place at the same time. Kind of like the Nike store on Black Friday. On this episode, I talk about this downside of passive investing based on the two most popular indices. Listen in to learn why I’m a fan of passive investing but wonder if there could be a more thoughtful way of doing it. Answers to listeners’ questions I’m always glad when listeners send in their questions. On the Practical Planning segment of today’s episode, I respond to questions that have recently come in. “What about the ‘Equal Weight’ S&P 500?” “What happens with a 401K loan if your company switches you to independent contractor status?” “Should I adjust my asset allocations as I head into retirement?” and “Should I empty my retirement account to pay off my credit card debt?” Listen in for answers to these questions and an invitation to send in questions of your own. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:24] Black Friday madness [2:33] Disclaimer - Don’t take advice from me on this show. [2:50] Today’s topic: Mutual Funds that mimic indices HOT TOPIC SEGMENT [3:22] Passive investment management has taken over the world. [5:13] What hypothetical portfolio is a passive investment trying to model? [7:13] If we accept that passive investing makes sense, what passive investment strategies make the most sense for us? [8:00] Understanding the Total Market Index [9:45] Understanding the S&P 500 Index. [11:46] Index rebalancing on fixed dates is like the Nike store on Black Friday. [14:43] Does passive investing have to track one of the most popular indices? PRACTICAL PLANNING SEGMENT [16:24] The “Equal Weight” S&P 500 index gives you broader exposure, but here’s why I’m not a fan. [19:31] Be aware of 401K loan penalties if you leave employment or change to independent contractor status. [22:00] A balanced approach to taxable and non-taxable asset allocations for retirement. [27:53] Paying off credit card debt without dipping into your retirement account. TODAY’S SMART SPRINT SEGMENT [31:16] Go to RogerWhitney.com and ask a question. THE HAPPY LAB SEGMENT [32:09] Do what’s right for you, not what’s expected of you. RESOURCES MENTIONED IN THIS EPISODE Ask a question Work with Roger 3-Video Series: 5 Minute Retirement Makeover Roger’s retirement learning center The Retirement Answer Man Facebook page

Pre-tirement is that phase between full-time work and what we think of as traditional retirement, and it could be the key to you having a great retirement. Traditional retirement planning that focuses only on investing just doesn’t work. It doesn’t inspire much confidence or clarity about what your future could be. On this episode, I explain the advantages of pre-tirement and give you some ideas to get you started thinking about it. Listen in to learn why you should consider pre-tirement before retirement! Why is pre-tirement important? Saving and investing for retirement is extremely important. But it is not all of the story. Your nest egg cannot be all of it. It just doesn’t work. As you think about your retirement, consider pre-tirement as part of your plan. It takes some pressure off of the saving mentality and allows you to build a better life when you do reach full retirement. On this episode, I give you a number of reasons why pre-tirement is important, explain the advantages, and suggest ways you can go about it. Listen in and get started on planning your pre-tirement! Pre-tirement offers numerous financial benefits Pre-tirement (thinking of retirement like a dimmer switch) offers numerous financial advantages over full retirement (the on-off switch). On today’s episode, I will explain how pre-tirement benefits you in terms of preserving investments, delaying Social Security, reducing health-care costs, and moderating spikes in post-retirement spending. Listen in to learn what you need to know about pre-tirement and how it could save your retirement! Pre-tirement offers qualitative advantages that you could miss out on with full retirement As you are planning your retirement, qualitative considerations are as important as financial ones. When you treat retirement like an on-off switch, you miss out on a number of qualitative advantages that come with treating retirement like a dimmer switch, by embracing pre-tirement. Join me on this episode to learn about the difference that pre-tirement can make in your social network, your sense of purpose, and in your mental and physical health and motivation. What can I do to start exploring pre-tirement? You want to start planning your pre-tirement sooner than later. On this episode, I describe several steps you can take to get started and provide a few questions you can begin thinking about. Should you stay in your same industry or do something different that you love? How do you go about building a new network? What opportunities should you consider? Listen to this episode of The Retirement Answer Man Podcast for answers to these questions and more. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:24] What is pre-tirement? [0:33] Why do I need something different than traditional retirement planning? [2:23] Disclaimer HOT TOPIC SEGMENT [3:04] Why Americans are still not confident or ready for retirement. PRACTICAL PLANNING SEGMENT [5:38] What excites you most about retirement? [7:30] What does pre-tirement look like? [12:24] Why is the pre-tirement phase important? [14:57] Transitioning into retirement is a period of significant change. [15:35] Pre-tirement preserves your savings. [17:29] Pre-tirement allows you to delay Social Security and keep your full benefit. [19:49] Pre-tirement can reduce health-care costs. [21:34] Pre-tirement can help you moderate post-retirement spending. [23:45] Pre-tirement helps you maintain a robust social network. [26:42] Pre-tirement can help you maintain a sense of purpose. [28:25] Pre-tirement supports your mental and physical health. [29:10] Getting started tip #1 - Start planning earlier than later. Questions to ask. [31:09] Getting started tip #2 - Build your networks. [32:19] Getting started tip #3 - Be open to opportunities. [32:50] A few ideas for pre-tirement work TODAY’S SMART SPRINT SEGMENT [34:17] Think about what you might do in a pre-tirement phase. (Share it with me so I can share the ideas on another show). THE HAPPY LAB SEGMENT [35:12] Want to be happy? Focus on how you respond to things. RESOURCES MENTIONED IN THIS EPISODE Book: Built to Sell, by Book: The One-Hundred Year Life by Lynda Gratton and Andrew Scott Martin Miller, Career Pivot Episode 98 with Michael Kitces Ask Roger a question Abe & Louie’s Steakhouse, Boston 3-Video Series: 5 Minute Retirement Makeover Contact Roger Joe Saul-Sehy of Stacking Benjamin’s - hosting podcast meet-up at McFadden’s Anaheim on Tuesday, August 22 at 7:30 pm Six-shot Saturday (Scroll down to a box on the right to subscribe to this weekly e-mail). Roger’s retirement learning center The Retirement Answer Man Facebook page

If you want a great retirement, you don’t need better answers, you need better questions. Pretty much everyone in financial advice and the media want us to stay with tactical questions like “How should I allocate my investment account?” “Are interest rates going to go up soon?” and “Am I saving enough?” These tactical questions are like tools in a toolbox that can’t be used well until after you decide what you are building! On today’s episode, I’m going to suggest some better questions that will help you make better decisions. You’ll learn to start with the design and work your way down to the tactical decisions for a great retirement. Address the incongruence between your financial worries and what you are actually doing A recent Gallup poll pointed out the top three financial worries in America. On this episode, I’ll share those with you and point out the ways that our actions tend to be incongruent with what we are concerned about; how we often are not actually doing anything that addresses the concern about not having enough money for a great retirement. Listen in and get motivated to take specific steps that can actually help to mitigate the financial worries that you have. Power questions you can ask when you’re feeling stuck on a decision When you’re feeling stuck on a decision, it’s important to be able to step out of the immediate moment and ask questions that will help you move forward. On today’s episode, I’ll share a couple of power questions that can help you get unstuck and get a clear vision of what really matters to you. Don’t look for better answers, listen in and start asking better questions so that you can move forward towards a great retirement. Key questions to ask when you’re thinking about your future When you are thinking about your future and a great retirement, it is important to ask yourself some good questions that will help you envision what you really want. On this episode, I’ll give you some key questions to ask, not only as you are planning your retirement, but also along the way into and through retirement as your goals and priorities change. Listen to learn the questions that matter far more than just what you should do with your portfolio. Keep good questions in front of you to help you make better decisions Asking good questions is essential to a great retirement. On this episode, I’m sharing what I think are the important questions to have in front of you. This week’s Smart Sprint is to write those questions on a card and keep them top of mind for a week so that you can refer to them whenever you are in a quandary and use them to help you make better decisions. Listen to today’s podcast to start asking yourself good questions and taking steps to get out of the tactical world and start taking intentional action to build the life that your 90-year-old self is going to be proud of.   OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:27] Tactical, transactional questions are great, but should never be discussed first. [2:32] Disclaimer. Don’t take advice from me on this show. HOT TOPIC SEGMENT [3:02] The 5-minute Retirement makeover - not your parents’ retirement planning. [3:53] America’s top three financial worries. [5:09] The incongruence between financial worries and what people are actually doing. PRACTICAL PLANNING SEGMENT [8:36] Design first, and work your way down to tactical. [12:16] Question #1 - “If I knew the answer (hypothetically), what would it be?” [14:00] Question #2 - “What would my 90-year-old self want me to do?” [16:19] Question #3 - Do I still want to do this? [17:30] Question #4 - What does this make possible? [18:40] Question #5 - How does this help me towards my goal? [20:08] Question #6 - What can I do next? [21:24] Get out of the tactical world and start taking intentional action that to build the life that your 90-year-old self is going to be proud of. TODAY’S SMART SPRINT SEGMENT [22:08] 7-day goal: Keep the focusing questions top of mind and refer to them to make better decisions. THE HAPPY LAB SEGMENT [23:04] In a dinner group, try to get everyone focused on one conversation instead of all the side conversations. RESOURCES MENTIONED IN THIS EPISODE 3-Video Series: 5 Minute Retirement Makeover Contact Roger: http://www.rogerwhitney.com/retirementanswers/ Roger’s retirement learning center: www.RogerWhitney.com/learn The Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan

The top financial stress in America, according to a Gallup poll, is not having enough money for retirement. Some people choose to ignore it to avoid the stress, but for others, the worry is a motivator to be proactive and get moving in the right direction. In this podcast interview with Emily Guy Berkin, we will discuss why there is so much financial stress, how to get a better understanding of your relationship with money, and specific steps you can take to decrease your stress about money. Listen in and stop financial stress now! What does money mean to you? Money is just little green pieces of paper. It doesn’t have any meaning except for the meaning that we humans assign to it. In today’s podcast interview, Emily Guy Berkin gives us tools to help us start thinking about what money means to us, how our relationship with money changes over time, and the influence of our culture on how we think about money. Listen in and begin to identify the meaning of those little green pieces of paper in your life. How has your relationship with money changed over time? Your relationship with money changes throughout your life. One really big change in your relationship with money is when you retire and no longer have a job. We often don’t prepare for the emotional stress that comes with this change in relationship. Listen to this episode of The Retirement Answer Man podcast to learn to identify your relationship with money, manage the change in your relationship with money, and decrease the financial stress that often comes with retirement. Financial security is a myth Financial security is a myth, and pursuing it can be destructive. Find out why on this episode of the Retirement Answer Man podcast, where I talk with Emily Guy Berkin about how the idea of financial security can actually contribute to our financial stress and be counterproductive. Listen in to learn about what matters more than building a big nest egg and how you can take steps to reduce your financial stress regardless of how much money you have saved up. How to decrease your financial stress What would it mean to you and to your family if you could stop the financial stress that you are facing as you head into retirement? In today’s interview with Emily Guy Berkin, we will discuss how to identify what money means to you and to recognize when you are doing things that are counterproductive. Listen in to learn how to bring your mind back into the way you use money and to recognize when your emotions about money may be leading you down the wrong path. If you want to stop financial stress, then this episode is for you! OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:24] Financial stress comes when life seasons change. [2:37] Disclaimer - Don’t take advice from Roger Whitney on this show. [3:12] Getting confidence and clarity about managing your financial life in retirement. HOT TOPIC SEGMENT [4:05] The top financial worry in America is not having enough money for retirement. PRACTICAL PLANNING SEGMENT [6:54] Introducing Emily Guy Berkin. [7:26] Emily’s experience with financial stress. [10:00] The meanings we put on money cause our financial stress. [11:49] How has your relationship with money changed over time? [13:59] The messages of our culture influence the way we use money. [16:56] How to decrease financial stress. [19:32] Financial security is a myth. [22:33] How to manage the day-to-day spending. [24:43] Helpful tools can be found in Emily Guy Berkin’s book, End Financial Stress Now. TODAY’S SMART SPRINT SEGMENT [25:21] Identify one area of your life where you have financial stress, and take one proactive action to deal with it. THE HAPPY LAB SEGMENT [26:12] It’s a great feeling when you can help direct a young life. RESOURCES MENTIONED IN THIS EPISODE Book: End Financial Stress NOW by Emily Guy Berkin Emily Guy Berkin on Twitter Emily Guy Berkin’s website Mint financial management app 3-Video Series: 5 Minute Retirement Makeover Contact Roger: http://www.rogerwhitney.com/retirementanswers/ Roger’s retirement learning center: www.RogerWhitney.com/learn The Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan

Have you ever considered that it might be advantageous to retire overseas? Where your home will be when you retire can dramatically change what the landscape might look like financially. There is a growing trend of Americans retiring outside of the country. Should you be one of them? That’s the topic of today’s episode and interview with Keith & Tina Paul, who are retired and living in Cuenca, Ecuador. Listen in to get a glimpse of what it is like to retire overseas and find out how you can begin exploring the idea. The top ten countries for retirement living There can be some huge advantages from a financial perspective if you have the spirit to do something like retiring in another country. On this episode, we’ll talk about those advantages and I’ll tell you the current top ten countries for retirement and give examples of how much it costs per month to live there. If you think, even for a moment, that you might like to retire overseas, then this episode of the Retirement Answer Man podcast is for you! A window into overseas retirement living What would it be like to retire in another country? How would you go about finding a place? Keith and Tina Paul, of RetireEarlyandTravel.com, are retired and enjoying life in Cuenca, Ecuador. On today’s episode, they share their story of how they planned, researched, and found their new home and what it is like for them to live there. Listen in and enjoy this glimpse into what it is like to retire overseas, and then take my Smart Sprint challenge to dream a little! I’d like to retire overseas, but what about . . . ? If you are thinking about retiring outside of the US, you likely have a number of questions and concerns. What about health care? Would I feel isolated? Is it safe? These questions and more are addressed in today’s podcast interview with Keith and Tina Paul. Listen in to find out why they think the health care is even better, their experiences in connecting with people, and what the crime rate is like where they live. If you have questions about the wisdom of a decision to retire overseas, you will love this episode of the Retirement Answer Man! Home is where the heart is Do you feel that a different house in a different location will never feel like home? I know exactly what that is like. On today’s Happy Lab segment of The Retirement Answer Man podcast, I’ll tell you my story and how I found out that home really isn’t a house. It’s where your heart is. And your heart can change locations. If you’re feeling concern about moving to a different home or a different country, today’s episode just may give you the encouragement that you need. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:24] Choosing to live somewhere less expensive can buy you retiring 3-4 years earlier. [3:25] Have you watched the 5-minute makeover videos yet? HOT TOPIC SEGMENT [4:16] There is a growing trend of Americans retiring outside of the country. [5:08] The top ten places to retire overseas. [06:30] Use your vacation to explore places you might like to live. PRACTICAL PLANNING SEGMENT [08:15] Introduction to Keith and Tina, bloggers of RetireEarlyandTravel.com. [9:14] How did two American professionals end up moving internationally? [11:01] Keith and Tina’s criteria, research, and visit to find a place to retire overseas. [15:27] If you retire overseas, what about health care? [17:04] Does retiring in another country make you feel isolated? [20:27] Do you feel a lack of purpose because of the overseas retirement lifestyle? [22:23] The financial aspects of overseas retirement. [23:34] What to look for when considering retirement outside of the US. [25:11] Is it safe to retire overseas? [26:30] You need a bit of a sense of adventure. [27:45] Do I need to know the language? [29:29] What about 15-20 years later, when you are starting to slow down? [30:58] To do this, you don’t actually have to retire. THE HAPPY LAB SEGMENT [32:03] Home is where the heart is. THE SMART SPRINT SEGMENT [34:22] 7-Day Challenge: “What if?” questions to get you started talking. RESOURCES MENTIONED IN THIS EPISODE 3-Video Series: 5 Minute Retirement Makeover Keith & Tina’s Blog: Retire Early and Travel International Living - Short list of best countries to retire in. Contact Roger: http://www.rogerwhitney.com/retirementanswers/ Roger’s Retirement Learning Center The Retirement Answer Man Facebook page

Do you want to have a great retirement? Make sure you value the right things. It is possible to make a million dollars and feel poor, or to make $60K and live a rich and full life. On today’s episode, Jason Parker joins me to talk about how to calculate your retirement spending and make wise choices that will benefit you long-term in your retirement years. Listen in to learn about the new software tool that Jason has developed that helps with this process and to find out how you can get started on counting the cost of retirement. The empty-nester lifestyle can be wonderful . . . and dangerous As empty-nesters, there are many opportunities for us to spruce up our homes and enjoy some time freedom that we have not had in years. But there is a danger with the spending increase that can come along with this life phase as well. On today’s hot topic segment, I’ll explain what I mean by this danger, and how you can avoid falling into it. Listen in to learn to count the cost and prepare well for retirement spending. Understanding your spending is key to your retirement cash flow plan Did you know that the more income people have, the worse they are at understanding what they are spending? As Jason Parker says in this episode, one of the most important pieces of a good retirement cash flow plan is understanding your spending. Listen to today’s interview to find out why you need to count the cost on your lifestyle, how you can get a clearer picture of your spending, and where to find a great software tool that will help simplify the process. A simple tool to estimate retirement spending Jason Parker, host of the Sound Retirement Planning podcast, has developed a software tool that can help you understand your current spending and help you plan for retirement spending. On this episode, Jason talks with me about how this new tool came about, how it works, how it is different from other budgeting tools, and where you can get it. My listeners will get 50% off, so be sure to listen to the podcast and get the coupon code. It’s never too soon to start planning for retirement costs Whether you are retiring next month or in 20 years, getting a clear understanding of your spending is an important part of your overall financial well-being. On this episode, Jason Parker and I talk about the importance of calculating your spending and your retirement costs and explain how to do it. We cover how to account for costs that don’t fall into your monthly expenses and how to balance your money so that you don’t run out too soon. Listen in and then take my seven-day challenge to begin getting a clear picture of your spending. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:24] Make sure you value the right things. Don’t build a financial cage that gives you no options in life. You can make a million and feel poor and scared, and make 60,000 and live one of the richest lives. Conversation on spending and counting the cost for retirement. Jason Parker[3:13] Disclaimer[3:53] Traditional retirement planning doesn’t work. Doesn’t give you much confidence about the future. Just completed a 3 video series called the 5-minute retirement makeover. Go to fiveminuteretirementmakeover.com.HOT TOPIC SEGMENT [5:09] How empty nester lifestyle creep can mess up your retirement. Kids are leaving, you’re making more money than you ever have, starting to define your life without kids. Can also be dangerous. You have more time freedom. Can explore other activities. Can update the house, etc. Re-nesting as an empty nester. But, when you increase your lifestyle, it’s always hard to scale back again. You can expand your lifestyle in your 50’s and then it’s hard to maintain when you retire. PRACTICAL PLANNING SEGMENT [09:49] How do you count the cost on your lifestyle?[10:57] How accurate are you when it comes to what you think you spend?[14:49] How to account for costs that are not included in your monthly spending.[19:34] Can you afford “Go-Go” years?[20:21] The Retirement Budget Calculator is different from other budgeting tools.[23:53] How you can approach using the budget calculator without being overwhelmed.[25:05] When should someone start counting the cost for expenses in retirement?[27:39] How safe is the data on the Retirement Budget Calculator software? TODAY’S SMART SPRINT SEGMENT [30:23] 7-day goal: Get a clear picture of your monthly spending. THE HAPPY LAB SEGMENT [31:31] Get excited about your purpose instead of your things. RESOURCES MENTIONED IN THIS EPISODE Sound Retirement Planning podcastRetirementBudgetCalculator.com (50% discount with coupon code “Roger”)Roger’s Five Minute Retirement Makeover videosContact Roger: http://www.rogerwhitney.com/retirementanswers/Roger’s retirement learning center: www.RogerWhitney.com/learnThe Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan

There is a lot of weird science out there when it comes to investment management. But if we’re going to be successful in investing for retirement, we need sound science. Last time we talked about asset allocation for the flexible portion of your portfolio. Today we’re going to talk about the science behind the fixed portion. Index-based investing is currently the popular way to manage this side of your investments. But remember, you want to “know what you own and know why you own it” (Peter Lynch). Listen to this episode and follow through with the 7-day goal to gain a better understanding of what you own and why! What is an investment index? Index-based investing is taking over the world. But what, exactly, is an index? It is not something you can invest in directly. It is a mathematical model that represents a broad swath of the US equity markets. Index-based investment products try to mimic the model. On this episode, we’ll use the S&P 500 index as an example and explain how it works. Listen in to learn more about what the index is and how it affects asset allocation in your portfolio. Following an index when allocating assets might boost your retirement Index-based investing has a few distinct advantages, one of them being lower cost. As I explain the science behind an index, using the S&P 500 as an example, I will describe the factors that reduce costs for index-based investments and make them more efficient. Listen in to learn how index-based asset allocation can benefit your portfolio. Your retirement might suffer if you follow the S&P 500 When looking at index-based investments, there are nuances to consider that may be disadvantages. On today’s episode, I will explain how the S&P 500 index works, and why it can be great when huge companies are doing well, but concerning if they are not. I’ll also describe how the changes made annually to the index can result in inefficient trading and higher prices. Listen in to learn about index-based asset allocation so that you can know what you own and why you own it. Are there options other than an index-based product for the fixed portion of your portfolio? It is important to carefully consider your options when investing. While index-based products are the popular “go-to” for the fixed portion of your portfolio, there are other options out there. On this episode, I’ll talk about these options, which for some people may be a smarter way of investing. Listen in to learn about index-based asset allocation, other options, and what you can do in the next seven days to get a better understanding of what you own. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:25] There is a lot of weird science when it comes to investment management.[1:04] How do you go about thinking about the fixed allocation to index-based portfolios?HOT TOPIC SEGMENT [2:22] Index-based investing is taking over the world.PRACTICAL PLANNING SEGMENT [6:28] How do we choose managers to invest the passive/fixed part of a portfolio?[8:08] What is an index?[9:42] What are the advantages of following an index like the S&P 500?[11:09] What are the potential disadvantages of following an index like the S&P 500?[18:29] Are there other options out there?[20:09] Focus on the things you can control.[21:21] Please send me your questions about this topic or series.TODAY’S SMART SPRINT SEGMENT [21:58] Get a better understanding of what you own by looking at the fact sheets.THE HAPPY LAB SEGMENT [23:06] Take some time to appreciate someone else and to acknowledge appreciation you receive.RESOURCES MENTIONED IN THIS EPISODE The Five-Minute Retirement MakeoverContact Roger: http://www.rogerwhitney.com/retirementanswers/Roger’s retirement learning center: www.RogerWhitney.com/learnThe Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan

David Booth once said, ““The important thing about an investment philosophy is that you have one.” But how many people who are actively planning for their retirement actually DO have one? You’d probably be surprised to know that much of the planning side of “retirement planning” is pretty haphazard. Even among investment advisors. But I've learned that it’s vital to know what your goals are and WHY you invest in certain types of investments so that you can know if what you’re investing in will get you to your goals. Does that make sense? On this episode of The Retirement Answer Man, I’m going to walk you through “5 Ps” of a good investment philosophy that you need to consider in order to make the best choice for reaching your goals. When it comes to investment philosophy, all we care about is repeatability. When you assess the investment opportunities before you, there’s really only one thing you should care about in the long run. That’s what I call “repeatability.” Will the investment you’re considering continue to perform at the rate and along the line of what it’s done in the past? That’s a pretty difficult question to answer when you get right down to it. That’s why I have decided to publish this episode of the show, to walk you through the things I consider when doing my “due diligence” part of helping a client determine their investment philosophy. It takes some time, but it’s worth it to ensure that what you’re investing your money in is actually going to give you the outcome you want. To assess an investment philosophy, look at People, Parent, Process, Performance, and Product. When it comes to the analysis of a potential investment you need to look deeper than the returns it’s currently getting. There are a number of factors that impact that return and looking deeper will provide you the opportunity to see patterns in a number of areas that will indicate whether that return is normal, will continue or can be expected to taper off. So what should you look at to make your decision? I call them “5 Ps” - People, Parent, Process, Performance, and Product. You can hear what I mean by each of those and even how I go about assessing them, on this episode of The Retirement Answer Man. Why it’s important to know something about the people behind an investment fund. One of the things most investors don’t think about when it comes to assessing an investment fund is that they need to keep abreast of the goings on within the company that is managing their investment. That means knowing something about the individuals who manage the fund and make the decisions about how it will be run. If you’re able to see patterns in the behavior and decisions of those individuals, or if you see that personnel changes have taken place within the investment firm, you’re able to pay closer attention to see how or if that change is going to impact your investments. But if you aren’t paying attention in the first place, you could experience outcomes you weren’t expecting. Find out more about how to assess the people behind your investments, on this episode. I don’t consider any investment that has less than 10 years of track record. Your investment philosophy needs to be built on a solid set of data, clear numbers that indicate why the investment choices you make are good choices for your goals. One of the things I have made a rule of thumb for myself (and therefore my clients) is that I won’t even consider an investment possibility that has a track record of fewer than 10 years. Why? Because there’s simply no way I can tell how the investment will perform. Any recommendation I make to a client in that scenario is nothing more than a guess.... And my clients deserve better than that. On this episode, you can hear how I go about assessing an investment’s track record to help my clients attain their retirement goals. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:31] My decision to get on the “smart thermostat” bandwagon![4:30] Considering your investment philosophy decisions in the same way: not always the best approach.HOT TOPIC SEGMENT [7:53] The 2017 Mutual Fund Landscape Report - the highlights.[12:37] Taking a look at the winners in the report and how they did the next year.PRACTICAL PLANNING SEGMENT [16:15] How DO you actually choose the right strategy for your “flexible” investments?[19:30] Things to be aware of when it comes to making your decision.[22:00] Most advisors don’t have a detailed “due diligence” process they use to assess investment options.[23:56] Learn about the people behind the investment.[26:11] It’s vital to know something about the “parent” company behind the investment.[27:52] What type of process is used to manage the portfolio?[32:10] What role does performance play in assessing an investment philosophy?[35:04] What is the specific product you’re looking at?[36:16] An example from the 1990s to show you why these things are important.TODAY’S SMART SPRINT SEGMENT [38:35] Look at your holdings and write out why they make sense: Are they helping you achieve your goals?THE HAPPY LAB SEGMENT [39:08] Two friends who experienced abrubt changes in their lives and how they reacted postively.RESOURCES MENTIONED IN THIS EPISODE Nest ThermostatEcoBee ThermostatContact Roger: http://www.rogerwhitney.com/retirementanswers/Roger’s retirement learning center: www.RogerWhitney.com/learnThe Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan  

“Learn the rules like a pro so you can break them like an artist” (Pablo Picasso). When I was taking a math refresher course for my certification, I had to memorize and practice calculating investment specific formulas. I have never had to use that skill again. But it did serve a purpose in giving me a greater appreciation for the rules as well as an understanding of where those rules are useful and where they are not. It’s important to understand the rules. In this episode on the role of asset allocation in retirement, I’ll talk about how we also need to break some of the rules to serve us in creating a great life. Why is asset allocation what everyone uses if it doesn’t really work 100% for retirement? Asset allocation is focused on maximizing return for a given level of risk. It is not tied to your retirement goals or your life. So why does almost everyone use asset allocation in retirement planning? On this episode, I’ll explain how asset allocation works, its benefits, and its downsides. Now that we’re not dealing with accumulation of assets but are starting to deal with decumulation of assets (retirement), we are starting to see that asset allocation may not be the entire answer. That doesn’t mean we throw it out. Listen to today’s podcast to find out what I do to balance it with more flexibility. Tie your investment strategy to the goals that you want to achieve Asset allocation builds a solid foundation for making better investment decisions. But you also need to have an investment strategy that is tied to the goals you want to achieve during the retirement (decumulation) stage. On this episode, I help you understand the need for more than just asset allocation in retirement planning. Listen in to hear how I implement portfolios with clients as they are entering and in retirement. The “Fixed and Flexible” approach to retirement investing The way that I have come to manage assets with clients is what I call “Fixed and Flexible.” It starts with fixed allocation as a foundation and then adds actively managed investment vehicles for more flexibility. On this episode, I describe how to choose where you want to be in the “river” of capital markets, and I clarify the difference between actively managed vehicles that are flexible and those that are not. Listen in to learn how to develop an approach that has both stability and flexibility. Evaluate your investment types according to your retirement goals In the next seven days look at each of your managers, ETF’s, mutual funds, whatever it is you own and identify what type of investment mandate they have. Are they passive, active, or flexible managers? Why do you have these different types and these different portions and how does that relate to what you are trying to achieve for your family? Listen to today’s podcast to get the information you need to ask and answer these important questions about your investment portfolio. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:27] Why learn the formulas?[4:03] How do we break some of these rules to serve us in creating a great life?[4:20] Disclaimer. HOT TOPIC SEGMENT [5:05] Why is asset allocation what everyone uses if it doesn’t really work 100% for retirement?[8:56] What are the benefits of the asset allocation model?PRACTICAL PLANNING SEGMENT [14:03] Asset allocation is a sound framework for investment decisions, but not the entire solution.[15:52] The “Fixed and Flexible” approach - asset allocation.[21:56] The “Fixed and Flexible” approach - Actively managed investment vehicles.TODAY’S SMART SPRINT SEGMENT [32:46] Identify what types of investment mandates your funds have.THE HAPPY LAB SEGMENT [34:04] Scott & Jeannine Fitzgerald. Children’s Book - Buddy Pegs podcast. Kickstarter for new book Buddy Pegs Taking the Lead.RESOURCES MENTIONED IN THIS EPISODE Buddy Pegs Taking the Lead, Scott and Jannine Fitzgerald (Kickstarter)Contact RogerRoger’s retirement learning centerThe Retirement Answer Man Facebook page

What you base your assumptions on when it comes to market forecasting and retirement planning will determine the course of action you take. Forecasting typically comes from respected “experts” who we all look to for advice, but here’s the problem: None of them are 100% accurate. In fact, even with all their knowledge and experience, they are often way off in what they predict. How can you plan for retirement when you don’t know which market forecast to rely on? That’s the topic of this episode of The Retirement Answer Man. Imagine trying to track your weight when every scale gives you a different number? I experience this every time I go to my Doctor. The nurse takes me to the scale before I take a seat in the exam room and it almost always shows me to weigh 8 to 10 pounds heavier than my scale at home. Naturally, I wonder: “Which scale is right?” To me, that’s the same thing we all experience when it comes to looking at the market forecasts the experts make. They all tell us something different is going to happen. Sometimes the differences are negligible, but other times they are huge. Who should we trust? I don’t think we can fully trust any of them, and on this episode, I tell you why - and what I do instead. Assumptions about investment returns are one of the ways market forecasting goes awry. Every market forecaster has to make assumptions. It’s the only way they can have any sense of continuity to their predictions that are tied to reality. But notice, their predictions are only TIED to reality, they’re not reality itself. In order for a market forecast to be reality itself, we’d have to have a crystal ball that could tell us exactly how investments are going to perform in the future, and none of us has that kind of foresight. But there are ways you can use the historic data to inform predictions that don't require you to follow a given expert in lock-step. Find out how on this episode of The Retirement Answer Man. Are your investment decisions for retirement tied to your lifestyle goals? They should be. One of the things that happen when using return assumptions to plan for retirement is that our fear of pessimism prompts us to make decisions based on those assumptions (whether accurate or inaccurate) instead of on what really matters: the type of lifestyle you want to have during retirement - and what is needed to provide it. It’s a nuance you’ll have to have explained a bit more in order to understand, but you’re in luck! That’s what I address on this episode of the podcast, so I hope you take the time to listen. How much of your investment portfolio is based on market guesses? I know that's an odd question, but it’s one that reveals a lot about how you’ve approached investing up to this point. If you’re making investment decisions based on what you or some expert THINKS is going to happen, you’re simply guessing. Yes, it may be an educated guess, but it’s a guess nonetheless. What’s the alternative? This episode of the Retirement Answer Man is an introduction to a more agile way of retirement planning that I believe you’ll find helpful. Be sure to listen. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN [0:30] The thing I don’t like most about going to the Doctor: weighing myself.[3:41] The benefit of one consistent source of data when it comes to asset allocation.HOT TOPIC SEGMENT [5:30] How forecasters view the art of forecasting markets (not like you might think).PRACTICAL PLANNING SEGMENT [8:49] The wrinkles that come into play using investment return assumptions for retirement.[11:07] What return assumptions should you use in retirement planning?[14:48] A look at the results of some of the more respected market forecasters.[20:34] How I approach retirement planning in light of market forecasting.[22:16] Why my approach doesn’t solve the problem, but does help make better decisions.TODAY’S SMART SPRINT SEGMENT [23:00] Your 7 day goal: Identify the parts of your portfolio that are based on market guesses.THE HAPPY LAB SEGMENT [23:46] Games I learned to play at my friend Joe’s house. Maybe some of these can put a little enjoyment into your life.RESOURCES MENTIONED IN THIS EPISODE Stacking Benjamins PodcastGames I learned at Joe’s place:Code Names GameTicket To Ride GamePuerto Rico GameMemoir ‘44 GameViticulture GameContact Roger: http://www.rogerwhitney.com/retirementanswers/Roger’s retirement learning center: www.RogerWhitney.com/learnThe Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan TWEETS YOU CAN USE TO SPREAD THE WORD #MarketForecasting: Who Can You Trust To Tell You What to Expect During #Retirement?Imagine trying to track your #weight when every scale gives you a different number?Assumptions about #investmentreturns are one of the ways #MarketForecasting goes awryAre your #investment decisions for #retirement tied to your #lifestyle #goals? They should beHow much of your #investment #portfolio is based on #market guesses?