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2022 EP0122 Planning Matters Radio Top Concerns

Planning Matters Radio / Peter Richon
The Truth Network Radio
January 23, 2022 9:00 am

2022 EP0122 Planning Matters Radio Top Concerns

Planning Matters Radio / Peter Richon

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January 23, 2022 9:00 am

What if I get sick, injured, or die? While we hate to think of these mortal questions as financial issues, they very much are. These are only a couple of questions watch and see what Peter Richon has to say about it.

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Welcome once again supplanting matters radio. I am Scott Wallace and we will be shedding some light on your financial situation. We have some fun along the way. I guess today is an author, a fiduciary, financial, investment, retirement planner offers dietary optimize retirement plan for all his clients throughout the great state of North Carolina, Peter Sean X for joining us. Always a pleasure Scott yet.

Great intro there. Try to help with their financial their investment their retirement planning. Make sure they have a grasp on their money confidence with their money so that they can go out and do the things that are more important in life than constantly worrying about their money. So that's that's the gist of it and the fiduciary responsibility that you mentioned, you know that's a big part of the relationship with an advisor. These days you want to have somebody who is looking out for your best interest and that's what that fiduciary responsibility entails and dictates.

It's more of in my mind a moral and ethical thing, but it is a legal standard of care. The fiduciary standard of care while at work, so have you happy with this. If you want to talk to this fiduciary Peter Sean yourself. You can call 919-300-5886 919-300-5886 or go to his website www.richenplanning.com Peter where the what's the feeling out there in the financial and personal investment world right now.

I think people have all kinds of concerns about their money. I mean, even those that are fairly comfortable with investing in with the market that have had some experiences over the past couple decades that have been up down sideways. Good Times bad Times and everything in between. I get a sense of angst right now and I'm actually seeing a lot of marketing that is probably building some of that angst and I hear a lot of people who come in and are worried about some of the marketing that I have seen and read and watched look folks that the sky is not falling here and there some marketing out there that seems to make people concerned that society around us is decaying, eroding, and on the verge of collapse and you know I think there's a time in every generation, maybe even every decade where people feel like oh this is that this is the end, the sky really is falling the dollars going to go to zero and then life goes on. Right. We have to plan as though life is going to go on in some capacity. Now can we be worried and concerned about some forces and factors and issues. Absolutely it's it's it's right it's appropriate to be aware of and be concerned about some issues and right now we have a lot of issues with everything involving COBIT and coronavirus and lockdowns and shutdowns and supply chain and then the government reaction to all of these issues and the creation and infusion of so much money the national debt deficit.

The inflation what all does this mean for American society, the value in the standard of our dollar right. There's a lot of worry but when marketing comes out and says the government is going to confiscate your IRA there that the dollar is going to crash and be worthless. You know you have to take that with a grain of salt because first and foremost were not going to see some type of Cypress style shut down. I don't know if you remember this but like several years ago, the country of Cyprus is a small island nation basically shuttered the doors of their banks and confiscated a portion of the wealth of the citizens. A portion of the savings and they reopened their banks a couple weeks later and people had 30 or 40% less money. The American government is not going to do that, they would have a real major issue on their hands if they did, and that number one job of politicians to get reelected. Well, they would all be fired, they would not succeed at that job.

If that were to occur, and those American citizens who are generally quiet about issues because they are at work and being productive would all of a sudden have a whole lot to say about so they are not going to just shudder the bank doors and compensate your wealth. But here's the other side of that they don't necessarily have to the greatest concentration of wealth in America is in yet to be taxed tax-deferred requirement accounts right we got over $30 trillion now saved stashed and put away with an arrangement with the IRS. The deal is that we are going to allow them to tax those dollars later.

So a lot of these initiatives and a lot of the things that have actually occurred that the mark that the marketing that I am seeing bends into scare tactics in my opinion are legitimate like the government is putting into place rules and laws that change how those dollars are going to be taxed into the future. So when they say the government is coming after your IRA well they're not gonna just compensate your IRA that's not what's going to happen, but if they incrementally raise taxes over time. They're going to get more of your IRA or if they change the laws which they have the secure act passed in 2019 went into effect in 2020, changed the laws on the way that those tax-deferred dollars can be transferred to the next generation so they have changed the rules there when they did that was a de facto tax increase on those retirement accounts as they pass generationally. Now why would they do it when it passes generationally wealth people who are dead can't complain and people who are receiving a large amount of money generally don't complain too much.

Even if they gotta pay some taxes so they figured that was the window of opportunity to attack some of these accounts they are making some additional changes to retirement account specifically that really tip the That the intention of these accounts is for retirement not for generational wealth transfer where an IRA used to be a decent generational wealth transfer tool.

These new rules. These new laws make it not so make it a a a very unfavorable generational wealth transfer tool well okay that's fine if retirement accounts are for retirement. There are other types of tools and accounts available that are for generational wealth transfer.

We just need to trade in that old jalopy for the new upgraded Lamborghini of vehicle to do the thing that we wanted to do is just a lot of people don't understand that specific types of accounts have specific reasons and purposes and results and so again going back to this marketing that I'm hearing date they make it out to be that the sky is falling, the dollars collapsing and the governments coming to pick your bones for what's left like you just have to back up and breathe. The dollar has not always been the world reserve currency in a brighter World War II. It was the British pound sterling. As far as I know Great Britain. England is still around there there there society did not collapse when it changed over to the dollar and even since then your your Europe has gone through a few different iterations they they unified with the euro and the European Union. And then there was Breck Sitton.

Great Britain left that you know there are changes that occur, but the dollars still a a strong currency and it is the world reserve currency for a number reasons. Could that change in the future, potentially, but it would take a process I don't see that happening tomorrow. I don't see the value of the dollar going to zero. Here's the thing is that most often when I see that marketing is from one of two sources is from an entity who is selling gold orders and entity selling life insurance. Now the entity selling gold. Once you to believe that the dollar is going to collapse and go to zero, and be worthless. Here's my question.

If there's so convinced that the dollar is going to collapse, then why are they willing to send me their gold and trade that for my dollars. It just doesn't make any sense. There's pretty Polish when you put it that way. Absolutely they they are not convinced that the dollars going to zero or they wouldn't take my dollars and trade me for their gold what they do know is that they make a commission on the sale of gold and the more people that they can convince to buy gold.

The more they make in that commission. There's nothing wrong with owning gold. I think there is some value and some purpose and some reason to own gold but don't be scared by this marketing into believing that you got a cash in your entire life savings and go to gold in order to store or retain any kind of reasonable value you know there there will be value in the dollar. There will always be some value in gold as well.

But these things fluctuate, they they they move and when those selling the gold can convince you with a scare tactic out of fear to purchase more of their gold for your dollars they make more money in commissions. On the other side the life insurance where they are telling people hey the governments coming after your retirement accounts.

You need to trade in that old IRA. Often times what I'm seeing is that that is coming from an entity selling some type of form or fashion of life insurance again. Life insurance is a fantastic tool that is available for very legitimate reasons but the scare tactic marketing has people doing things inappropriately with life insurance, cashing out IRAs that they should not be yet cashing out purchasing unappropriate amounts of life insurance and probably the wrong type of life insurance very often. So just breathe. Take a step back and think about the source of the marketing and if you want to talk to somebody about concerns that you are having legitimate concerns day-to-day about budgeting about market risk management about the rates of return.

The fund selection that you have about tax management all the way up to concerns that the dollars going to collapse, and how I met I going to survive the zombie apocalypse like we can talk to you about those things bring it down to a reasonable level. Talk about the issues, identify them specifically and then identify some tools or strategies to address those issues so that you feel more confident day-to-day about your money because no matter what the issue is whether it's all way on one end of the spectrum to very extreme or something minute that just lingers in the back of your mind, you don't want to spend so much of your time worrying about your money that it consumes you. You want to be able to use the tool that money is to enjoy your life and to support things are important to you, Scott words of reason from someone who knows what they're talking about. If you want to talk directly to Peter Shaughnessy mentioned you can call them at 919-300-5886. Peter, you mentioned gold isn't necessarily the best way to preserve wealth. The US dollar is still a you know, still in for the foreseeable future will be a great what it is to store wealth is the world's choice of how to store wealth at this point. How do I know that I'm saving enough of that US dollar. How do I know that I'm saving enough money to counteract all these things that your your your talk about yet. What first coming. Gold is a great way to store wealth but goals not real transactional that's storage of wealth versus the ability to transact wealth are two very different things. So that's why I do think there is some legitimate purpose and portion of your total net worth that you could consider gold with but yes she is quite Peter, when you talk about gold errors gold that I can hold in my hand. There's physical pieces of bully on that I can hold my hand there is gold that someone else is physically holding for me in a bank vault and then there's gold indexes and things like that. If someone is interested in gold.

How you make sense of all those different things and what's a good way to go. Not a wrong solution amongst those three options you laid them out very well. Those are three very legitimate and all available options to almost anyone.

And all three have their time and place an appropriate let's call it percentage of your total overall picture but you got understand that each one has benefits and disadvantages, as does any financial choice or option. There's always pros and cons and you've gotta weigh them out you holding the actual physical gold fantastic. There's some security there, but what risk does that represent I mean if if your purpose is to have some measurable store of value. If the dollar does collapse and then it actually happens. So you you own gold and then everybody else, every dollar in every person's pocket is worthless. The store shelves are empty and your holding this pile of gold like how much of a liability, does that represent versus the value that you intended it for when there was roving mobs working the streets right right so having somebody else store some physical gold or having some paper gold in a gold fund or ETF in your portfolio like you just have to weigh all of those and what their purpose is basically to me. Gold is a form of insurance right when when I buy a car.

I have auto insurance. I don't have a $30,000 car and take $30,000 and put it in the bank and say here's my store of value in case I get into an accident.

I tried to buy as little insurance as is going to be leveraged to protect the asset that I'm trying to protect. So, in the grand scheme of your portfolio. If you got $1 million portfolio, you don't buy $1 million in gold to protect and ensure the value of it. You dedicate a percentage, a small portion little as possible to protect some amount of the value of that portfolio. That's the way that I think about gold, whether physical, whether in hand or whether in the portfolio and that's actually the way that worse were beginning to see crypto currencies being utilized and that's a much more volatile whole different conversation but crypto currencies represent the same kind of store of value and insurance against the devaluation of the currency as gold. Once did it. It is a totally different thing. New technology and it's got its own risks associated with it, but more to the point of your original question, how do I know if I'm saving enough will the point of most people's savings is not the store of value actually it's the ability to transact and again you know gold is fantastic for the store of value not very great at the transactional necessities that people have and so we really want to have a diversification of different types of assets and the question of my saving enough. Usually that's delineated in dollars.

First of all, and the answer that question is it's going to be different for every person and it's going to boil down to your budget and your lifestyle right somebody can come in with $300,000 and then the next person can come in with $3 million. There is no saying, whom between those two is more prepared for retirement because if you got $3 million but your spending $500,000 a year on your lifestyle you're taken. While multiple vacations each year.

You and your wife had to separate destinations every time you you take trips your your spending $20,000 a month just on a regular lifestyle expenses that does not represent an amount that gives me or should give you confidence that you're prepared for retirement on it and I've had a day where I've met with both of these individuals. I'm going kind of talking about it in a hypothetical sense but had a day where I met with somebody with $3 million and I met with somebody with $300,000 at the end of the day, the guy with a $300,000 was much better prepared for retirement. He lived frugally.

He always lived with well within his means well below his income is Social Security was going to replace everything that he needed to meet his living expenses and basically the $300,000 that he had saved and accumulated was icing on the cake if it actually wasn't even needed to produce income for him in retirement and so how much do I need to be saving my saving enough that's up big question on the minds of a lot of people that I talk to but the answer is not in the lump sum that you have it's actually let's boil this down to budget and what your lifestyle cost you and so I have a lot of people look back at their lifestyle expenses. How much is going out of the bank account month in and month out, and month after month on a regular basis for the last six months, 12 months two years. Let's get an average of that running number.

Let's see how much it fluctuates month to month and that's the number that we probably need to be shooting to be able to replace given a stoppage in the paycheck transition to retirement and all of the available sources of income being turned on.

We want to be able to maintain that kind of income that generated the lifestyle that your accustomed to and comfortable with and more.

Christopher, Peter, Sean, you could talk to him directly about all these issues by calling 919-300-5886 Peter so the market goes up in the market goes down.

This kind of book. Fact of life in which you pounded into us, people like yourself To let us know that that's kind of the ebbs and flows. What about significant market corrections. The kind of thing that comes from once in a while. How do we do with this type of thing yet will buy once in a while. Over the last hundred years. It's actually been about every 6.25 years or so. We have seen 16 different bear markets in the last 100 years and by bear market. The definition of a bear market is when the market index drops 20% or more. So 16 different times over the last hundred years, the market has dropped 20% or more. Now a lot of people here that they are supposed to chase higher returns and they want an investment portfolio that is going to beat the market. We here's the thing about that.

If your investment performance is outperforming the market in good times.

That means you are taking a higher level of risk, then the market itself and during those bear market periods. You may stand to lose more than the market so again a bear market.

By definition, is a 20% loss or more. Now, on average, those 16 different downturns of 16 different bear markets have been closer to a 40% loss and in general it's taken about a year and 1/2 to get from the top to the bottom.

Sometimes it seems like all those bear markets they happened so quickly.

A lot of times it's a slow bleed that would takes about a year and 1/2 from the peak of the market down to the bottom of the bear market. Nobody knows where the bottom is down toward the bottom. Everybody's panicking how low will this go.

How long will this drop, and a lot of people make the mistake of selling out towards the bottom and then they don't participate in the recovery that recovery. By the way, on average takes about five more years, so about 6 1/2 years to go from the top down to the bottom and then back up to the top if you stay in if you just ride the market. If you kinda have the fortitude to go through that and here's think if you have security in your paycheck that you can pay your bills and maintain your lifestyle, then you should just ride that out and hopefully you continue saving so you actually take advantage of that downturn, and of those lower prices at the bottom of the bear market, but people right now there on the precipice of retirement. They are maybe 5 to 10 years before retirement right there at retirement or 5 to 10 years in retirement or worried.

I mean we've seen actually 10 fantastic years in the market here really since 2009, but we've seen you know a whole lot of of positive movement and a lot of people have prospered and done very well because of that, but what happens when the market turns around know.

Are you comfortable with the potential of losing 2030 4050% of of your portfolio value like what does that mean an actual real dollars that you would lose.

And you gotta. That's one of that the exercises that we go through with clients. We can look at how their funds have performed in the past during past downturns where the market has lost 18% or 30%.

How much did this fund actually lose that you own well if it lost that kind of amount when the market went down by this much, then it's probably positions to lose a similar amount proportionally to market downturns in the future and we can we can quantify the amount of risk that somebody has and then we can talk about how much that represents as a dollar value of a loss. So if you got $1 million portfolio losing 10% well yeah I can stomach a 10% loss so you're telling me that you you be okay with losing $100,000.

But what could you buy with $100,000. It kinda put in a new light and those are some of the conversations that were having. As were talking about and trying to figure out what the appropriate level of risk is with an individual investor. Everybody's got a little different level of appropriate risk because are willing to accept a little more or less risk but it's unique in and you know the concern of the market correction what's coming around the corner. I think that's pretty pervasive and and and I think that it's probably for a reason, because we've seen these fantastic years without a true major market correction. I mean there was covert, but that was a health related issue is not an economic issue. It turned into a little bit of an economic issue, but by the time it did. The market was back up and has been healthy despite the health related issue of coven. We haven't seen a true market correction since 2007, 2008 and in the very beginning of 2009, so we are little bit overdue. Some of the fundamentals P/E ratios valuations. They do point to the fact that you know we got a healthy market but we also have may have an overvalued market and so those are some of the things we pay attention to, as well as sort of indications of of what may be too common.

There is some reason to be worried about market correction doesn't mean you need to pull out right well that's that's the emphasis point that you made an end and to not participate in the kind of scare marketing that we were talking about before. We don't know when the next market correction is going to come. That being said, it's been 10 years and the average is 6 1/2 years yet. I'm actually more worried about some of the things that we do know were coming. Scott, the Fed has said that their weapon against inflation to create a soft landing is raising interest rates interest rates been very low for quite some time.

They have said they are going to raise interest rates throughout 2022 will interest rates start to rise. The housing market is going to start slowing down that the people who have been able to refinance to who are able to have done so already, and they won't do it again if rates increase those that could moved into larger homes that they could afford at the same price because interest rates have been so low. But if interest rates rise, which the Fed has said is going to happen housing market start slowing down and there's a lot of ancillary pieces of the economy and then the stock market and and bond market as well are all tied pretty directly to the housing market and so that could be something that that I'm I'm a little bit more worried about that's actually tangible, not this will what if the market goes down, it's more well what happens when the interest rates start to go up on values of all the stock market. Many things are links to the housing market. There's just a concern therefore for for my clients but know all these things are things that we talk about and work through and they are concerns that while they may be on your mind. If you've got a solid plan in place if you got that optimized retirement plan won't have to be consumed by them day after day after day you can know that you got a plan that you've addressed this in your planning and you can live life with confidence and that's really I think one of the most rewarding parts of my job is that I can help people turn those those worries and those concerns from an all-consuming thing into something that they are more confident they got a a plan and that they are prepared to face yet. What's that worth to know that the markets going up and I missing out on something or hey the markets going down to my going to suffer. Having the right plan in place means that you're in the position correctly. No matter which way the market goes and and that's no peace of mind in the end were talking about worry here.

The opposite of that would be peace of mind or confidence. And what's that worth both in a a monetary standpoint. In this case and in a mental health standpoint, Peter Sean, you're here you like this. Once again it's it's of great information that you're giving us if you do want to talk to Peter about the optimized retirement plan or any of the issues were talking about here, up to and including the zombie apocalypse as he mentioned earlier today, you can call him 919-300-5886 and you can talk directly to Peter. Just as as I am here today. You can also visit his website is www.richenplanning.com www.rochonplanning.com Peter what else you got for us as we wrap up the show Yuri any parting shot so I think a lot of people at that the root of it all. Their concerns are and my going to be okay.

It is my family going to be okay. And money represents a large part of our feeling of confidence in answering those questions. So let's get that part of it squared away there. There may be some additional factors there some legal planning that needs to be done. We can help you identify where that is needed or where it may need to be updated and end then we can live life with confidence that you mentioned a an important factor you will speak directly with me folks I I know that there are 20 other resources out there big names on the radio that give great information, but that you'd never talk to. Personally, that's not the case here were going to to talk face-to-face, shake hands, look, I die. We can do it in person.

We can do it virtually and I know coven researching here in and that being a factor again for a long time.

We did virtual meetings only. We are always able to conduct those meetings. Virtually we are on a limited and safe basis conducting in person meetings as well. So however you would prefer to do that but I will be the person that you're talking to about your money and about your planning will run through that optimized retirement plan you can get a copy of my book. Understanding your investment options. We can lay out a plan that you understand and that makes sense to you in the near we can't thank you enough for all this great information and in situ wisdom. 919300586 is Peter, thanks so much later for joining us and thank you for listening another episode planning matters. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy you are encouraged to think investment tax or legal advice from an independent professional advisor. Any investment and/or investment strategies mentioned involve risk and possible loss of principal binary services offered through virtual capital management, a registered investment advisor. Fiduciary duty extends only to investment advisory advice but does not extend to other activities such as insurance or broker-dealer services advisory clients are charged a quarterly fever as a belligerent product pay a commission which may result in a conflict of interest regarding compensation


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