Retire With Style

In this episode, Wade and Alex discuss the evolution of messaging in the financial advisory industry and the importance of retirement income planning. They highlight the transition from brokers to investment managers to wealth managers and the shift from accumulation to decumulation. They emphasize the need for comprehensive financial planning that considers both the asset and liability sides of the balance sheet. They also discuss the challenges of retirement income planning, including longevity and liquidity risks, and the importance of addressing these risks in a client's financial plan. In this conversation, Wade Pfau and Alex Murguia discuss the signs of a retirement income advisor who is knowledgeable and focused on the specific needs of retirees. They highlight the importance of advisors addressing concerns and risks faced in retirement, such as sequence risk and longevity risk. They emphasize the need for advisors to have a well-thought-out approach to retirement income planning beyond just investment diversification. They also discuss the significance of advisors having specialized retirement income certifications, such as the RICP or RMA designations. Additionally, they stress the importance of advisors having a clear and specific messaging that resonates with retirees and solves their unique retirement income needs.   Takeaways The financial advisory industry has evolved from brokers to investment managers to wealth managers, reflecting a shift from transaction facilitation to comprehensive financial planning. Retirement income planning is a distinct field within financial services that focuses on managing assets to meet liabilities in retirement. Comprehensive financial planning considers both the asset and liability sides of the balance sheet, taking into account the goals and risks of retirement. Retirement income planning addresses challenges such as longevity risk and liquidity risk, ensuring that clients have sufficient resources to meet their expenses and unexpected spending shocks in retirement. A knowledgeable retirement income advisor will address concerns and risks faced in retirement, such as sequence risk and longevity risk. Advisors should have a well-thought-out approach to retirement income planning beyond just investment diversification. Specialized retirement income certifications, such as the RICP or RMA designations, can be a good indicator of an advisor's expertise in retirement income planning. Advisors should have clear and specific messaging that resonates with retirees and solves their unique retirement income needs. Chapters 00:00 Introduction and Acknowledgments 02:51 The Shift from Accumulation to Decumulation 06:12 Comprehensive Financial Planning: Managing Assets and Liabilities 10:13 Addressing Longevity and Liquidity Risks in Retirement 22:08 Signs of a Knowledgeable Retirement Income Advisor 24:12 Beyond Investment Diversification: A Comprehensive Approach to Retirement Income Planning 27:19 The Importance of Retirement Income Certifications 31:23 Clear and Specific Messaging: Key to Effective Retirement Income Planning   Links Join Alex and Wade for our workshop "Elevate Your Practice: Workshop on Marketing Mastery for Retirement Income Advisors" to discover how to better market yourself as a retirement income advisor so you can stand out, attract prospects, and turn them into loyal clients. Register to attend LIVE on August 6th or 7th at www.risaprofile.com/marketingworkshop The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this conversation, Bob French and Rob Cordeau discuss ESG (Environmental, Social, and Governance) investing and its growing popularity. They explore the different ways investors can align their portfolios with their personal values and beliefs. They also address common misconceptions about ESG investing, such as it being solely for liberal investors. The conversation highlights the importance of understanding the impact and potential trade-offs of ESG investing, including the potential for lower expected returns. They discuss different approaches to implementing ESG investing, including using funds and ETFs, separately managed accounts, or donating the difference in returns to charities. The conversation concludes with advice on how to approach the decision of whether ESG investing is right for an individual.   Takeaways ESG investing allows investors to align their portfolios with their personal values and beliefs. ESG investing can involve adding or subtracting certain stocks, industries, or sectors based on values and beliefs. ESG investing may result in a slightly lower expected return compared to a globally diversified market portfolio. Investors should carefully consider the impact and potential trade-offs of ESG investing before making a decision. Different implementation options for ESG investing include using funds and ETFs, separately managed accounts, or donating the difference in returns to charities. Chapters 00:00 Introduction and Setting the Stage 07:37 Implementing ESG Investing: Adding or Subtracting 09:41 The Impact and Trade-Offs of ESG Investing 14:04 ESG Investing: Not a Boycott or Punishment 20:01 ESG Investing and Portfolio Performance 26:58 Implementation Options: Funds, SMAs, and Donations 39:37 Making the Decision: Is ESG Investing Right for You? 41:50 Conclusion and Final Thoughts   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Wade Pfau, Alex Murguia, and James Matthews discuss retirement income and the Retirement Income Style Awareness (RISA) framework. James shares his background in the retirement income space and his realization that traditional retirement planning advice was lacking. The conversation touches on the limited investment options in 401(k) plans and the need for a holistic view of retirement income. They also discuss the importance of risk management and the gaps in the current financial planning curriculum. Overall, the conversation highlights the need for a more comprehensive approach to retirement income planning. The conversation explores the need for a strategic approach to retirement income planning and the limitations of traditional retirement income paradigms. It emphasizes the importance of maximizing living standards in retirement and the need for open-mindedness in exploring different methodologies. The conversation also discusses the role of the Retirement Income Certified Professional (RICP) designation in addressing the gap in retirement income planning education. It highlights the shift towards a more client-focused and personalized approach to retirement planning and the potential applications of the RISA framework in other retirement decisions. The conversation concludes with a discussion on the importance of finding an advisor who embraces an open-minded and client-centric approach.   Takeaways Traditional retirement planning advice often lacks a comprehensive approach to retirement income planning. 401(k) plans typically offer limited investment options and lack clear mechanisms for converting assets into retirement income. The Retirement Income Style Awareness (RISA) framework provides a more holistic view of retirement income planning. Risk management is an important aspect of retirement income planning that is often overlooked. There is a need for improvements in the financial planning curriculum to better address retirement income planning. Retirement income planning requires a strategic approach beyond traditional paradigms. Maximizing living standards in retirement should be the primary goal. The RICP designation addresses the gap in retirement income planning education. A client-focused and personalized approach is crucial in retirement planning. The RISA framework can be applied to other retirement decisions. Finding an advisor who embraces an open-minded and client-centric approach is essential. Chapters 00:00 Introduction and Background 09:59 The Retirement Income Style Awareness (RISA) Framework 23:21 The Importance of Retirement Income in ERISA 30:40 Applying the RISA Framework to Other Retirement Decisions 37:05 The Importance of Finding an Advisor with an Open-Minded Approach   Links Join the Retirement Researcher team for "Travel in Retirement: New Options and Opportunities," with Dan Veto, CSA, to learn how travelling in retirement is different from the vacations you took while you were working - and how you can make the most of these differences. Register to attend LIVE on 7/23/24 at 1:00 PM ET by visiting risaprofile.com/podcast. The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 

In this episode, Wade and Alex answer listener questions about portfolio allocation in retirement. They discuss the impact of low yields on TIPS and how it affects a retiree's portfolio. They also explore the optimal allocation of assets in taxable, tax-deferred, and tax-avoided accounts. Additionally, they address the role of annuities in retirement income and how they can replace the bond portion of a portfolio. They emphasize the importance of tax diversification and asset location. Finally, they provide insights on investing in stocks and the different factors to consider, such as value, small-cap, and REITs.   Takeaways Low yields on TIPS impact a retiree's portfolio and may require a reassessment of risk and allocation. Tax diversification is important, but the exact percentages in each type of account are not as crucial as asset allocation and asset location. Annuities can play a significant role in retirement income by providing protected lifetime income and reducing reliance on other investments. When investing in stocks, it is important to capture market risk and consider factors such as value, small-cap, and REITs. Growth indices may not necessarily provide a premium over value stocks in the long term. Chapters 00:00 Introduction and Small Talk 02:45 Navigating Low Yields and Portfolio Allocation in Retirement 09:15 Optimal Allocation of Assets in Taxable, Tax-Deferred, and Tax-Avoided Accounts 25:58 The Importance of Tax Diversification and Asset Location 26:41 Investing in Stocks: Capturing Market Risk and Considering Factors   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode, Alex, Wade and Rob answer listener questions about retirement planning. They discuss topics such as asset allocation, selling RSUs, managing sequencing risk, and when to claim Social Security. They provide insights on diversification, tax implications, and the importance of considering both sequence risk and concentration risk. They also suggest strategies like creating a bond ladder and using IRA distributions to bridge the income gap. The episode ends with a plan to continue answering more listener questions in the next episode. Listen now to learn more!   Takeaways Consider the risks and benefits of holding concentrated positions, such as RSUs, in your portfolio Evaluate the tax implications of selling RSUs and consider the potential benefits of diversification Use Social Security claiming software to determine the optimal claiming strategy for both spouses Explore strategies like bond ladders and IRA distributions to bridge income gaps in retirement Balance the preservation of principal with the need for growth and income in your retirement portfolio Chapters 00:00 Introduction and Q&A Format 05:42 Managing Concentrated Positions and Sequencing Risk 27:43 Creating a Bond Ladder to Bridge Income Gaps 29:54 Using IRA Distributions to Manage Tax Liability 35:23 Balancing Preservation of Principal with Growth and Income   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Alex Murguia and Wade Pfau discuss various topics related to retirement planning, including glide paths, asset allocation, index funds, and tax planning. They address questions about implementing a rising equity glide path, asset allocation across different types of accounts, the performance of index funds, and the availability of withdrawal strategy software for retirees. They also touch on the topic of Medicare and HSA contributions. Overall, the conversation provides valuable insights into retirement planning strategies and considerations.   Takeaways Implementing a glide path for retirement asset allocation depends on individual circumstances and goals, and there is no one-size-fits-all approach. When considering asset allocation across different types of accounts, it is generally recommended to place tax-efficient assets in taxable accounts and tax-inefficient assets in tax-deferred accounts. Index funds generally reflect the performance of the stocks in the index they follow, and their daily performance is based on the weighted average of the proportion of each stock in the index. Withdrawal strategy software packages for retirees are primarily available to investment advisors and may not be easily accessible to individual consumers. Individuals who work for employers with more than 20 employees can delay applying for Medicare after age 65 to continue contributing to their HSA accounts, but it is important to consult with HR and understand the implications of signing up for Medicare. Chapters 00:00 Episode 131 Starts 01:29 Asset Allocation and Glide Paths in Retirement 04:07 Understanding Index Fund Performance 07:10 The Drawbacks of Equal-Weighted Indices 10:47 Tax-Efficient Asset Location 21:46 Limitations of Withdrawal Strategy Software 28:00 Managing Medicare and HSA Contributions 32:33 The Value of Professional Advice in Retirement Planning   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Alex and Bob discuss the impact of the election on the stock market and retirement planning. They emphasize the importance of looking at historical data and not getting caught up in the rhetoric and uncertainty of the election cycle. They also highlight the recency effect and how campaigns are information machines that can influence market movements. They discuss the complexity of interpreting campaign statements and the countervailing effects they can have. They also mention the upcoming webinar where they will dive deeper into the numbers and provide more insights. The conversation explores the relationship between presidential elections and the stock market. The hosts discuss whether there is a correlation between the political party in power and stock market performance. They also touch on other factors such as the height and handedness of presidents and their impact on the stock market. The hosts emphasize the importance of taking a long-term view when it comes to investing and retirement planning, rather than trying to time the market based on election cycles.   Takeaways Look at historical data and avoid getting caught up in the rhetoric and uncertainty of the election cycle. Campaigns are information machines that can influence market movements. Interpreting campaign statements and their impact on the market is complex and uncertain. Consider the countervailing effects of policy proposals and how they may impact the economy and stock market. Join the upcoming webinar for a deeper dive into the numbers and insights. There is no clear correlation between the political party in power and stock market performance. Other factors such as height and handedness of presidents also do not have a significant impact on the stock market. Taking a long-term view and focusing on retirement planning is more important than trying to time the market based on election cycles. Understanding historical context and having a framework for interpreting market events can help investors make informed decisions.   Chapters 00:00 Introduction and Setting the Stage 00:29 Discussion on the Election and Stock Market 05:08 The Recency Effect and Campaign Season 07:20 Interpreting Market Movements After an Election 08:46 The Challenge of Timing the Market Based on Current Expectations 09:15 The Difficulty of Predicting Market Reactions to Campaign Statements 13:14 The Volatility of Campaign Season and Uncertainty 15:12 Considering the Impact of Policy Proposals 22:38 Upcoming Webinar and Deeper Dive into the Numbers 25:30 The Impact of Presidential Elections on the Stock Market 33:51 The Relationship Between Election Years and Market Volatility 37:25 Long-Term Investing and Retirement Planning 41:16 Understanding Historical Context and Interpreting Market Events Links Register now to attend the next webinar with Retirement Researcher, “The Election and The Stock Market: Understanding the Effects on Your Investments” on 6/25/24 at 1PM ET hosted by Bob French. Visit risaprofile.com/podcast to reserve your spot! The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/    This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode, the conversation covers various aspects of long-term care, including qualifying for long-term care insurance, alternative options for funding long-term care, and the role of Medicaid. Alex and Wade also discuss the importance of planning for long-term care and the potential challenges faced by individuals who cannot afford to pay for care. The conversation concludes with a discussion on how to invest funds set aside for long-term care. The conversation covers various topics related to financial planning and investment management. They discuss fee-only planners, annuities, engaging a fee-only planner, strategies to lower risk during retirement, buying whole life insurance for teenage children, and investing to keep up with inflation. They also touch on the reinvestment of dividends and capital gains for a 74-year-old to offset RMDs. The conversation ends with a lighthearted discussion about push-ups. Listen now to learn more!   Takeaways Traditional long-term care insurance is difficult to qualify for if you have chronic conditions. Alternative options for funding long-term care include hybrid life insurance with long-term care, annuity with long-term care, and deferred income annuities. Medicaid can be an option for long-term care if you have depleted your other resources. Investing funds set aside for long-term care depends on your liquidity mindset and the timeline for needing the funds. Transparency and client preferences should guide the choice of compensation models for financial planners. Fee-only planners charge a fee for investment management and financial planning, while commission-based planners earn a commission on annuity sales. Engaging a fee-only planner may be worth it if you have enough assets, typically around $500,000 or more. Whole life insurance for teenage children can be used to protect their insurability in case of future health issues. Lowering risk during retirement can be achieved through strategies like adjusting asset allocation, creating bond ladders, and building an income floor. Investing in TIPS (Treasury Inflation Protected Securities) can help preserve the inflation-adjusted value of your principal. Dividends can be taken out to offset RMDs (Required Minimum Distributions) for IRA accounts. Both Wade and Alex need to get back on track with their push-up routines. Chapters 00:00 Episode 130 starts 00:17 Exploring Alternative Options for Long-Term Care Funding 07:23 Considering Medicaid as a Long-Term Care Option 14:35 Investing Long-Term Care Reserve Assets 19:59 Transparency and Client's Best Interests 23:34 Lowering Risk During Retirement Transition 31:13 Reinvesting Dividends and Capital Gains for RMDs 39:32 The Importance of Regular Exercise   Links Register now to attend the next webinar with Retirement Researcher, "The Election and The Stock Market: Understanding the Effects on Your Investments" on 6/25/24 at 1PM ET hosted by Bob French. Visit risaprofile.com/podcast to reserve your spot! The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Wade Pfau and Alex Murguia discuss retirement planning and how to determine how much can be spent from a portfolio without running out of money. They touch on the use of Monte Carlo simulations and the funded ratio approach. They also highlight the limitations of Monte Carlo simulations and the importance of considering the magnitude of failure and the potential for underspending in retirement. The conversation emphasizes the need for individualized planning and the importance of working with a financial advisor. The conversation in this part focuses on the funded ratio and its implications for retirement planning. The funded ratio is a tool that measures the ratio of assets to liabilities in retirement. It is used to determine if a retiree has enough assets to cover their retirement expenses. The conversation also touches on the relationship between withdrawal rates and failure rates, the role of long-term care costs in the funded ratio, and the impact of political and environmental uncertainties on retirement planning. Takeaways Monte Carlo simulations are a common method used in retirement planning to determine the probability of success, but they have limitations and can be sensitive to assumptions. The funded ratio approach, which focuses on a fixed rate of return, can provide a different perspective on retirement planning and allows for more control over assumptions. It is important to consider the magnitude of failure and the potential for underspending in retirement when using Monte Carlo simulations or the funded ratio approach. Individualized planning and working with a financial advisor are crucial for determining how much can be spent from a portfolio without running out of money. The funded ratio is a useful tool for assessing retirement readiness and determining if a retiree has enough assets to cover their retirement expenses. Higher withdrawal rates are associated with higher failure rates, so it's important to find a balance between spending and ensuring a successful retirement. Long-term care costs should be factored into the funded ratio as a contingency expense, as they are a high probability, high-cost event. Political and environmental uncertainties can be addressed through scenario analysis and contingency planning, but it's important not to let short-term events dictate long-term investment strategies. The Retirement Income Challenge offered by Retirement Researcher provides an opportunity to learn more about retirement planning and create a comprehensive retirement plan. Chapters 00:00 Introduction 01:59 Retirement Planning and the Use of Monte Carlo Simulations 08:24 The Pros and Cons of Monte Carlo Simulations 25:19 Addressing Questions about the Funded Ratio 33:08 Incorporating Long-Term Care Costs in the Funded Ratio   Links Join the waitlist for the next Retirement Income Challenge by visiting www.retirementresearcher.com/challenge  The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode, Wade and Alex discuss the different features of long-term care insurance. They cover topics such as waiting periods, benefit periods, benefit amounts, inflation adjustments, and methods of payment. They also touch on the administrative aspects of managing long-term care insurance and qualifying expenses. In this conversation, Alex and Wade discuss various aspects of long-term care insurance. They cover topics such as the definition of activities of daily living, the differences between policies, the option for couples to pool their benefits, the concept of hybrid policies, underwriting requirements, coverage for living abroad, liquidity and death benefit options, ways to lower premiums, and the importance of sharing your long-term care plan with family members. The conversation concludes with a discussion on implementation and monitoring of the plan, including the importance of staying healthy and reviewing the plan regularly.   Takeaways Long-term care insurance policies have different features that need to be considered, such as waiting periods, benefit periods, and benefit amounts. Waiting periods determine how long you have to wait before the benefits kick in. Benefit periods determine how long the benefits will last. Benefit amounts can be paid per day or per month, and the total benefit pool depends on the policy. Inflation adjustments are important to consider to protect the value of the benefits over time. Methods of payment include reimbursement, indemnity, and cash methods. Managing long-term care insurance can be administratively burdensome, and it may be helpful to have a trusted person or professional assist with the process. Qualifying expenses for long-term care insurance coverage depend on the policy and may include in-home care, assisted living, nursing home care, and more. Understand the definition of activities of daily living and how they are defined in different policies. Consider the option for couples to pool their benefits in a joint policy. Explore hybrid policies that combine long-term care insurance with other benefits. Be aware of the underwriting requirements and shop around for the best health classification. Check if the policy covers living abroad if that is a consideration. Consider the liquidity and death benefit options in hybrid policies. Explore ways to lower premiums, such as choosing a lower level of inflation protection or a shorter benefit period. Share your long-term care plan with relevant family members and make sure they are aware of the policy and any care coordinators. Implement and monitor your plan regularly, reviewing it annually and making adjustments as needed. Stay healthy and take care of your health to reduce the need for long-term care.   Chapters 00:00 Understanding the Different Features of Long-Term Care Insurance 06:10 Navigating Waiting Periods and Benefit Periods 08:13 Determining Benefit Amounts and Inflation Adjustments 15:21 Exploring Methods of Payment for Long-Term Care Insurance 24:28 Qualifying Expenses for Long-Term Care Insurance Coverage 24:56 Understanding Activities of Daily Living and Policy Differences 27:17 Pooling Benefits for Couples in Joint Policies 28:37 Exploring Hybrid Policies 29:00 Navigating Underwriting and Health Classification 30:36 Considering Coverage for Living Abroad 31:38 Understanding Liquidity and Death Benefit Options 33:05 Lowering Premiums through Various Strategies 35:23 Sharing Your Long-Term Care Plan with Family Members 37:57 Implementing and Monitoring Your Plan 39:16 Staying Healthy to Reduce the Need for Long-Term Care   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/roth/ to download McLean’s free eBook, “Is a Roth Conversion Right For You?”