Guided Path 1-4 Retirement Income Risks

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Inflation can heavily impact your retirement plan, so how can you make your retirement funds grow alongside inflation? In this episode, Zacc, Laura, and Tyson Long discuss the impact of inflation on people reaching or in retirement. They also highlight how their team takes downturned markets into consideration when formulating personalized financial plans. Tyson discusses: - The concept of risk inflation and how you can prepare for it in retirement - The ‘retirement danger zone’ when investing your retirement funds - How Capita Financial Network integrates the possibility of low markets into the retirement plans they formulate - Identifies what a sequence of return risk is and the solutions for it - And more!

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[00:00:00] Welcome to The Financial Call. We are financial advisors on a mission to guide you through the financial planning everyone should have, whether you're doing it yourself or working with a financial advisor, these episodes will help you break down complicated financial topics into practical, actionable steps. [00:00:17] Our mission is to guide motivated people to become financially successful. Welcome to The Financial Call. This is Zacc Call. We have Laura Hadley. We're the co-hosts and Tyson Long is with us today. Tyson is one of the advisors at Capita and knows a lot about retirement income planning. This'll be fun. I want to give you a feel for where we are, what we've talked about already and why this conversation now fits into the guided path. [00:00:44] This is season one, Tyson, you don't know this, but Laura has named them seasons. Awesome. That way. You're a Netflix guy, right? And we'll be on Netflix soon guided path. It's going to be on there. It's going to draw a lot of views. [00:01:00] So season one, this is episode four, episode four. Okay. So we're right at the infancy of this. [00:01:09] And if you, if you're going through this journey with us, you're probably, you know, let's just go through what you've learned already, as well as if you're watching this, I'm going to make sure that you can see our screen. And then that way we can go through it all together. All right. So if you're looking at the guided path on The Financial Call, the website is The Financial Call.com and this is our beta version. [00:01:34] It's going to go live what we think two or three weeks from today. Yeah but today is March 23rd and this episode probably will come out sometime in late April. Anyway, so we're almost a month ahead. Say it should be there when this goes out. I think the middle of April is our launch date. That's the goal, right? [00:01:49] We're excited. So guided education is what we're doing here. So there are about 57 episodes out there on the podcast already, which feels like a [00:02:00] lot. But then you realize that it was over three years, that we did it in our spare time. And that's not that many episodes, but Hey, you know, I used to joke at the beginning that, you know, my mom really likes the podcast, but the reality is we actually have a decent following now. [00:02:14] But I realized that I wanted to bring this into more of a structured path for people who, because we've got a lot of questions, like, I don't know where to start and I don't know what comes next and I don't know how to finish. I don't know what the path is. So we've built out the path. So as a refresher, there are eight different seasons. [00:02:31] We are in income planning. So we have about four or five episodes, maybe six in a few that are within each season. So this is season one, which is income planning, episode four, which in this case is retirement income risks. And so on the website, if you click on income, well, first of all, you click on guided education. [00:02:51] You could find any podcast you want on the podcasts page of our website, or you could go to guided education, click on income planning, [00:03:00] and then that will take you down to the spot where you can see all of the income planning episodes and click on retirement income risks, and the reason this matters. [00:03:08] And the reason we're going through in this order is first you organize your retirement income. So this is probably a conversation a little bit more for those who are trying to let's say they're up in the air and they haven't quite landed into retirement right there in the plane, in the air. And they're circling around trying to figure out what the weather's like. [00:03:27] Right. And, they start to organize their approach into retirement. That's organizing retirement income, social security basics is you're starting to calculate the actual, like numerical numbers. I'm not a pilot. I wish Jason was here. One of our advisors actually has flown planes. We need to get him in here to give this example that apparently I am randomly going into. [00:03:48] So. You're trying to get down to the runway, right? And you, you basically are starting to calculate altitude speed. All of those things. That's social security that we went [00:04:00] through last time. That's pension decisions that we went through last time, and now we're calculating risks. So we're talking about the risks of weather and wind and all the things for this airplane ride. [00:04:10] As you're starting to approach the retirement landed. For us, we're going to talk about what those retirement income risks, not just retirement risks, but specifically the risks that affect your retirement income. And that's why it's part of this income planning section. And then we're also going to cover withdrawal strategies. [00:04:28] If you're watching this and can see it. We have retirement income risks and withdrawal strategies separated. And then we decided that we didn't want to leave people hanging on a negative note. We're going to give you the solutions today without just the problems. Right. So, we'll do both of those in one episode. [00:04:45] And then the last one in income planning, which will be our next one is income planning for investors under 55. Okay. That's the summary of where we're getting or where we've been and what we're doing. We'll dive into it a little bit more, many of you may know that, [00:05:00] I do these articles with Terry Flint, who is, a clinical mental health, uh, clinician or a professional. [00:05:09] I need to get her title better. Terry's awesome. She helps people. She helps people with wellness. She ran the wellness program at Intermountain. Do you know her title? No, I just loved that she's awesome. I don't know her title, but she's yes. So she's done counseling. She with the program at Intermountain, her job was to, in fact, if you should look up one, if you mind looking up one of the articles that she's written and see if her title's in there and if not, we need to get it in there. [00:05:37] But bottom line, she and I write these articles. I do more of the money side. She does the mind side. So the series is called money and mind, and there are seven different categories. And then we each write an article and this one is withdrawal strategy. So the withdrawal strategy is really going to talk about these risks [00:06:00] and then strategies for it. [00:06:01] So if you're watching, you'll be able to see that it has good charts. If you're not, we're going to explain everything, that's a whole lot of intro. Is there anything else that we need to go over proposed a great analogy with the airplane? I wish that I had asked that delivered it a little bit better though. [00:06:14] Right? If you prepare, I hear preparing is helpful for things like this. Here, we have an update on Terry, her official title. She's a licensed clinical social worker with a PhD in social work. So she knows what she's doing. And she listens to the podcast, then she'll be so disappointed that I was so far off because she and I have had so much interaction. [00:06:35] I just love Terry. I'm sorry. I didn't know your title, Terry. Okay. Withdrawal strategy. So you first need to understand the steps of this. So we talked about social security already. We talked about pensions already. So we want to supplement or add to your income with account withdrawals. And that's what our whole conversation is about today. [00:06:55] When you're young, your risk in retirement is really [00:07:00] inflation and sorry. Your risk is really inflation, not your retirement risk, but your risk is that the cost of living goes up so fast when you're in your twenties, thirties, and forties, that you're not making enough money to keep up with that or not saving enough money to be ready for that, that high expense. [00:07:15] I mean, think about cars nowadays. Right? We talked to our retirees and they're buying cars. $60,000. Some of them it's crazy, which when we're talking sedans and that's a nice car, that's a really nice car. Right. But, SUV's are between 75 and a hundred for a new one. Right? Anyway, that's what we're talking about with inflation. [00:07:35] And then there's this danger zone, retirement danger zone where market risk now becomes your greatest, your greatest issue. And that's usually about age 50 to 70. We're going to talk about why that is. Tyson will help us with some concepts around something called sequence of the returns that you experienced after that, you know, the market and inflation really doesn't affect you that much when [00:08:00] you're in your seventies and eighties, it's just how long, like, if you live beyond a hundred, good for you, but maybe good for you if you're happy then. [00:08:06] Right. But the idea is that you're healthy and happy for as long as possible. But if you live a really long time and need long-term care, that's expensive. That's your longevity risk. A lot of time talking to clients, we'll tell them we're planning for this life expectancy and we'll plan out later just to make sure, you know, they're covered if they live a long time. [00:08:22] And I don't know about you guys, the majority of our clients will respond. I'm not going to live that long. Like no way nobody I can say, well, I have a couple of clients that look at each other and then they say they have a mutual agreement to take each other out at a certain age. Hold on, hold on folks. [00:08:40] Let's not quite go there. I'll throw in there too. Even though the risk may change to market volatility, inflation risk is still a risk. It's just not the primary risk anymore. At that stage. A good point would say good point, because most, most risks are all prevalent at all times, right? Yeah. It's just that the [00:09:00] effect of them or the effects of them are greater or smaller at different times in your life. [00:09:05] That's a good one. Okay. So we talked a little bit about the retirement danger zone. I believe this to be usually about five years prior to retirement, and about five to 10 years after your actual retirement. And we're going to talk about why that is, but, uh, but think about this, you've grown your assets probably to, and maybe the peak, some people, their assets actually continue to climb throughout retirement, but for many people they will spend their portfolios. [00:09:31] And so that might be the peak of their wealth is at their retirement day. And that means that market volatility has the greatest impact, right? A 20% drop in that portfolio has the greatest dollar impact at that time. And then to compound upon that you have less time. In fact, you're actually probably selling some of those investments and maybe at a loss, if you don't do it. [00:09:53] Right. And, then you that's that retirement danger. And to, from an emotional standpoint, because you are at the [00:10:00] peak of. Net worth or wealth that 5% change in the market is a lot different at that point than it was when you were 30 or 40, because. Much more money, you know, 5% of a, million's a lot different than 5% of 500,000. [00:10:15] So you might feel it more too, which makes it even more of the retirement danger zone. That's a good point. And people start to worry because they are starting to draw from these accounts. It's their, you know, their 401ks, IRAs, Ross, they just haven't really paid attention to them, most people. And they don't worry about the risks because they're not gonna need that. [00:10:32] They haven't even thought about it. But now, as they start to get into that five to 10 years out from retirement, they start to realize they're going to need those funds. So those market fluctuations, I think that causes a lot of people to worry. They come in and they worry that they're not going to be able to retire at the same time that they wanted to because the market's down. [00:10:49] Now, they want to know what effect that has on their portfolios. Right. And the reality, you know, as we, as we move forward in understanding this risk, [00:11:00] we need to talk a lot about the sequence of returns here today. So this is going to be a new con. And folks, well, what I'm hoping is that we flush it out enough that you feel comfortable with it. [00:11:11] It is somewhat of a complex concept for people to understand, but we're going to take it really slow. That's what we're here for, right? I mean, this is this, I actually love doing this because these are the conversations that oftentimes we don't have time to spend an hour on this one particular thing. [00:11:27] We meet with every single one of our clients. But in this medium, we can do that. So Tyson you've dealt with this a lot. I think let's show an example of sequence of returns and then let's tweak some of the numbers and go through it. And again, everybody dive in as to what you said. [00:11:47] But a large market crash early in retirement can have a significant impact on your plan. And we're using a sample retiree named Kathleen, as just a, this is a made up number to help us understand, but [00:12:00] let's say that Kathleen has a million dollars and the employee, the portfolio is invested just like the S and P 500. [00:12:05] So she's owning the top 500 stocks in the US market. And investing is like season four. So we're going to go over all that later, but, uh, you don't really need to know that other than you need to understand that the S and P 500 has a very normal fluctuation of 10 to 15%, almost every single year up and down. [00:12:23] And then some years it can be as bad as maybe 30 or 40 or 50% swings. The worst years we see are usually like in 2008, it was negative 50 from top to bottom. And then early two thousands, there was about another negative 50, just shy of that. So, what we did is we said, okay, well, what if Kathleen decides to spend money out of her portfolio, she has a million dollars. [00:12:46] And she decides to spend 5% of that. That's $50,000 a year. It's 5% of the balance. And we tested Kathleen's retirement withdrawals through three different market scenarios. So we did the last [00:13:00] 30 years and just said, okay, if she started 30 years ago, what would her balance look like? And it's great, actually, because there were some pretty decent returns. [00:13:10] Like if we rewind 30 years, it's 1992, right? Yup. And right out of the gate, 1992 to about 1999 was the.com bubble that was being created, but had not burst yet. So basically anything, you throw a dart at a dartboard of stocks and you were making 10 plus percent rates of return every year. And so that portfolio by the end of about 19 years would have been worth about $6.1 million. [00:13:39] That's after withdrawals. Yeah. Crazy. So, then people might be saying, well, it doesn't sound like much of a risk to me. Yeah. I took out 50,000 and I have 6.1 leftover. I started with a million. Sounds great. Let's do it right. Easy game. Now let's say that we did the last [00:14:00] 30 years, but then flipped the returns. [00:14:02] So we started with the most recent returns and went backwards through the returns. Not that that's realistic necessarily, but it gives you an idea for just a different order of returns. And that ended out with 1.8 million still. Okay. Right. Um, because she's left with more money than she started with, but it's a very different number than 6.1 million, right? [00:14:23] 6.1 million is life-changing for your beneficiaries. And 1.8 million is just making sure that that is cool. Yeah. For these, for this couple, I mean, I think a lot of people who listened might say 1.8 million is a lot of money to me, which is a lot of money to most people, but this couple, they started with a million and anyway, the last one is, oh, we're going to say Lara. [00:14:41] I was just going to say, it might be helpful to talk about really what happened in those years. So we talked about the first 10 years of the first scenario being really good with the markets. If we flip it and we're putting the last 10 years first, maybe we can explain what happened in those 10 years that caused it to be a lot less. [00:14:59] So that's a really good [00:15:00] point. And I'll have to look back at exactly the date that I wrote this, but if you look backwards, it's actually been okay for the last couple of years, which is why. They still have 1.8 million, but there are some negative returns as they experienced 2008 and 2009 that are fairly close to the beginning of their retirement picture. [00:15:18] Right. Got it. And so then if you're watching this, there's a pretty steep decline in the orange line, at about eight, nine to 10 years. And that's the market dropping drastically. You're selling at a loss and you're not giving that money time to come back. And so that's a great point, Laura. Um, okay. [00:15:38] So we ran another scenario, which was, well, what if you went through the worst decade right out of the gate? Um, that would be early two thousands. Um, well, not the worst, worst, but like the worst we've had in our life or even most of our client's lives. And that was because the market got cut in half from early 2000 to 2002 came back up [00:16:00] and basically hit where it was. [00:16:02] In October of 2007, and then it got cut in half again. And I started this career in August of 2007 at fidelity. And I remember thinking how excited I was that the markets were doing so well. And we were hitting all time highs and I'm just barely, barely starting to understand what's going on fast forward. [00:16:22] Like two years later, I'm answering phone calls of people who have stock options that are completely underwater and we were so far underneath. So that was, and, you know, I remember going to lunch every day and going into the break room. And I remember looking at the board and, and thought, bear Stearns now, bear Stearns. [00:16:40] And then, you know, right at Lehman brothers and all these AIG, all these names that were staples in the industry. I remember thinking we got calloused to it. It was like, I'm pulling out my sandwich out of the fridge and almost like entertained with like, who's going under this day. You know, it was just a weird, weird time. [00:16:57] Yes. Um, okay. So then. [00:17:00] That's three very different scenarios. None of which are really that bad. Um, but there are market conditions that we can throw out, which do change it quite a bit. Um, so Tyson, can you help us, let's talk about, let's talk about if they're not withdrawing, like let's talk about sequence. [00:17:18] The sequence of returns is the order in which you experience the ups and the downs. Right, right. Yup. But if they're not withdrawing, like talk about the impact there. Yeah. If they're not withdrawing, it doesn't, it doesn't matter as much from a, from a risk standpoint, but it still does matter. Like for me, for example, I'm, you know, younger, so I've got time on my side. [00:17:39] So for me, it's almost, it might be crazy to think of it this way, but it's almost a good thing if we suffer a bigger market drop now, because I'm putting money in and I'm able to invest more at those lower prices. Um, so when you're not taking money out, like you're not quite as worried about when the bad years versus the good year's happen, although it is good to have maybe bad years at the [00:18:00] beginning, but in the grand scheme of things, it doesn't matter as much because you're still adding money at different times. [00:18:05] It's a lot different when you flip that around and have to now have this different mindset of taking money out. Now it matters quite a bit when those good years happen versus when the bad years happen. Right. And if so, in your case, you're putting money in, right? Yep. So you want those bad years at the beginning and in their case, they're taking money out. [00:18:24] They want the good years at the beginning. Okay. Only we could control that for everybody. I want all the retirees to have the good years right out of. But also for me to have those bad years at the same time, which is impossible. Totally impossible. We can't control. Yeah. But I guess if you're not putting money in and you're not taking money out, it really doesn't matter. [00:18:40] That's exactly. And this blew my mind to be honest with you, it took St and it was one of those, like, it was one of those where I had to rebuild an Excel file, like several times to convince my head. Yes. And I'm that way just, you know, I'm that way generally. Um, but anyway, so, all right. Let's, let's actually talk about that because if you can see, um, what we're showing, this is my [00:19:00] favorite thing, but one of my favorite things. [00:19:02] The financial world. So, oh, I thought you were just going to end it with one of my favorite things and we were all going to be a little bit of pity for you. I don't want to get too nerdy. There's other things I like to buy, right? This is up there for sure. Um, okay. So if you, if you experienced a set of returns and we just used 25 years worth here, if you experienced a set of returns and I think we use 24, so anyway, it doesn't really matter, but it's 1977 to 2001. [00:19:30] Okay. And if you experienced these exact returns in one order, and then you mix them up in whatever order you want, and then you experienced those same amounts of return, those same returns, but you make sure you go through every year. So you always have to experience all the returns, but you mix up the order, however you want. [00:19:49] No money's coming in and no money's leaving. This is where it's really bizarre. That same period is 5.3, 6% average annual rate of return. If you flip the [00:20:00] returns exactly on their head and go through them in reverse order, you end up with 5.3, 6% average annual return. And it even blows my mind a little bit here to do the numbers of like actual dollars. [00:20:12] So if we put in a hundred thousand dollars into each of these strategies and we, we let them simultaneously experience some returns, but they're in the exact opposite order and they work their way through all the returns. At the end, if you go forward through the returns, you end up with $318,000. If you go backwards through well, and at the very beginning, if you go forward through those returns, you actually lose money out of the gate. [00:20:36] Your money goes from a hundred thousand down to 88, down to 79, 73, and then it starts to climb back out and you make it to three 18. In the end, if you go backwards through those returns, you go from a hundred thousand up to one 15, and then you actually never, ever are underwater, but you end at exactly $318,173. [00:21:00] Exactly like the forward. And I know everybody. I don't th you're you're acting like this is a great magic trick and the reveal is underwhelming, but I've, if that's the case, like then I didn't do it justice because the reality here is people think that, oh, if I get 10, 20, 30% returns upfront, it's way better than if I get them at the end. [00:21:19] And the answer is it's not, if, as long as you go through them all, okay. Pounded that, that thing and did the horses dead. Um, so, so then we said, okay, that's for that period of time. Now, what if you took a 5% withdrawal from those accounts? So we've established that this, that no money and no money out ends with $318,000 either way. [00:21:42] Right? And the only variable we introduced into this equation is a 5% withdrawal. Well, here's the problem. When you go through the first scenario, the forward returns and those losses that happen at the beginning of the year, that 5,000 or beginning years, that 5,000 [00:22:00] leaves. And then it doesn't get to experience the growth. [00:22:04] You don't, you're not giving it time to wait and experience the positive years in the end. So you have some money that was lost and never had gains. And the portfolio actually runs out of money before the end of the 25 years. Um, you get actually all the way down to zero, but if you flip the returns and have positive years in the beginning, you, that $5,000 is like gravy, right? [00:22:24] It's just house money. You're taking growth out and you're not touching your principal and you end up with $154,000 at the end. So this is a huge difference between, you know, the idea of running out of money or being left with more than one and a half times what you started with. That's what I think retirees worry about the most, and it's almost all dependent upon the sequence of your returns. [00:22:48] Would you guys add anything to that? Like, is there any more. I think that help understand it too, in the first years, if your market, or if your portfolio goes down from a hundred thousand to 87,000 and you have to sell enough [00:23:00] stocks to get you $5,000, that's a lot more stocks than if your portfolio was valued, valued at 115,000. [00:23:08] So understanding that idea, you're selling more shares. Thank you. As high, since your shell, you're selling more shares, that's kind of a tongue twister. Yeah. Is brutal selling more shares of stock to get that $5,000 and then you no longer own those to recover with the market. I think that's why it has such a big impact. [00:23:27] Perfect. Yeah. So we, um, we basically, that was the returns of. Oh, actually, sorry. That was that we just do random numbers out to see what it would do. Yeah. That was the random that wasn't 1977. So I'm going to hurry and throw in 1977 to 2001, because I do think sequence is important and I do think people should understand it. [00:23:50] I also want to make sure that people don't get overly scared by it. It's not a scare tactic. Yes, because the reality is [00:24:00] 1977 to 2001 was a 10.8, eight average annual return. Not a five point something we threw in some numbers to purposefully show the effect of sequence. Um, but most retirees. Um, they could retire into most, any market scenario and have a positive outcome. [00:24:20] And in this case, we took the actual returns of 1977 to 2001 and flipped them. And in both scenarios, they have well over what they started with, you know, 400 to $500,000 leftover. Um, now that doesn't include any inflation on those withdrawals, which I should have done, but well, and I'll add in there too, this assumes that you were staying invested through those times, which, I mean, if you're invested in the S and P 500, like this example shows you're experiencing some decent volatility, if you're looking at those numbers. [00:24:50] And so you have to think, am I really going to be able to stick with that portfolio my first five years into retirement, if it's fluctuating that much, because you only get that result if you [00:25:00] did stick with it. So that's another, I mean, we're talking about sequence of returns, risks, and those bad years upfront, and assuming you make it through those, you could still be fine, but we're still assuming that you were disciplined enough to stick through. [00:25:14] So it adds again, that behavioral risk too, of not just the numbers, but like you're feeling more of that volatility, which could cause you to, you know, make an investment decision that may not be the best. That's a good point. We find that a lot of retirees feel a lot of that fear and we find that finance I'm going to maybe hit on our industry a little bit and I hope that's okay, but some financial professionals love doing this. [00:25:41] Let's do that. Right. Let's do it. Um, some, you know, financial advisor tells all, some financial professionals, I believe, pray on that fear a little bit too much. And, the reality is. The sequence of return risk is a real risk and it's probably the greatest risk to a [00:26:00] near the retirement danger zone of about five years prior and 10 years after the sequence of return risk is your biggest risk. [00:26:06] However, it's not as big as some people make it out to be for sure. And I think we have to make sure people understand that because what happens if you believe the sequence of return risk is too substantial or too great, you overcompensate for that. And you end up putting your portfolio way too conservative, or you end up buying way too much insurance product, like, um, you over-allocate to annuities or you over-allocate to life insurance that has no loss potential or things like that, that, that might have less flexibility and, and might not keep up with inflation over time. [00:26:40] Like to your point earlier, inflation still matters, still a risk not gone. Um, but just sequence of return risk is a slightly greater risk for them at that time. The total balancing act, you know, we have to balance the sequence of returns and market risk, but we also don't want to overdo it protecting from that risk because now we're more exposed to inflation risk, which can be [00:27:00] just as if not more disastrous. [00:27:01] So, you know, you gotta be careful not to go too far one way or another. It's definitely a fine balancing act. Okay. So I think if we can summarize at least the downside and the risks, because we know we want to spend the rest of the time on solutions, right? Yep. Um, the downsides and the risks of. [00:27:19] And this particular episode is really geared towards those who are approaching retirement decisions, right? So the downside and the risk is you have a sequence of return risk, which is probably one of your greatest risks, but don't be over scared by it. You have inflation risk because you have 20 to 30 years of potential life left, hopefully. [00:27:40] Right. Um, so both of those are still, still evident and still there. And then later you'll have maybe some longevity risks, but those are, is there anything else that you would add to that in terms of risks? No, I think that's great. Some people throw healthcare as a risk, which it is, but that's also just lumped in part of [00:28:00] your spending and inflation. [00:28:01] Right. And then some people will throw in flexibility as a feature that's needed. Um, but I don't know if that's necessarily a risk. It's just an aspect of investment. Some of them are more flexible than others. Um, so anyway, it's, it's those three risks and consideration, but I don't know that it caught a risk necessarily. [00:28:20] Okay. Which is kind of different than you and I were taught years ago. Right. Um, nice to be able to think for yourself a little bit. Right. Well, I'm not, I'm not trying to get to a product, so that helps I'm okay. Edit that out. No, we don't do a whole lot of editing to be honest. I told you we would, and then we probably won't edit much. [00:28:40] Oh, great. We have time for that. Um, okay. So. Now let's move on to solutions because, just like most risks for a retiree, can be funneled into one of those three. I think most income strategies can be consolidated into two. And we'll talk about what that means. There are a whole bunch of [00:29:00] different ideas and strategies that people will come up with, but most of them are either. [00:29:05] You're just saying, I'm going to use this money now and I'll use some different money later. That's just bucketing, right. And targeting certain money to certain timeframes. Or they will say I'm going to use a little bit of a bunch of accounts. And I hope that all of those things last for my entire life, that was what, that was what I would call a multistream. [00:29:25] And some people will use a combination of both, right. They might say, well, I'm going to withdraw from this account and this. You know, a reasonable withdrawal rate that will last for the rest of my life, but I'm going to actually take this chunk of money and spend it down in the first 10 years. And then I'll, I'll backfill that with another, so that'd be somebody who's doing both. [00:29:43] Right. Multistream and now in later money. And then I think what we do is we tackle what it, what it means to do now and later money a little bit more meaning like actually, how would you accomplish that? How, what kind of investments could you buy to do now and later money? Um, I'm going to dive into this, [00:30:00] if you guys have any other thoughts around that, can you think of any other strategy besides now in later money or multi stream okay. [00:30:05] Like you said, there's a lot of different ways to skin that cat, but they can all essentially be boiled down into those two. For sure. I know we had the discussion, then I was thrown out four or five different ones, but really, if you think about it, it can be boiled down to these two, for sure. Which I think is if I'm a retiree, I would want to know that I would want to. [00:30:23] Walk into a conversation with a planner and be able to conceptualize what they're telling me as either this or that. I think it simplifies the conversation quite a bit for sure, because some people might not realize that the advisor's doing now in later money. And they like, I've seen this before. [00:30:42] We're in where a plan is set up to spend a certain portfolio or certain accounts down over the first 10 to 15 years. And the client starts to get real anxious towards the end of that 10 to 15 year period, because they thought it was supposed to last forever, that account in itself. And so they start to stress towards the end of that period. [00:31:00] And then they're worried that they're safe, you know, money that they're using up is going away. But the reality is the plan was always to create a new now money from the later money. Anyway, you get the idea. So how would you do it? Um, there are multiple ways of doing this and we're going to be talking about specific account types and investments basically from here on out. [00:31:19] And we won't go into a ton of detail, but the idea is you should be able to, we'll give you enough of an understanding that you'll understand what you are hearing about. Right. You don't have to be an expert, but you need to be familiar and like a bond ladder. So Tyson, you, I feel like this is an area. What do you think? [00:31:37] Like how would you describe a bond? Yeah. I mean, I, you can even lump it in with CD ladder, cause it's going to be effectively the same. You're just choosing whether to do it through a bank or by a US government bond or a, or a corporate bond, but essentially you're trying to structure. So you've got some amount of income becoming available every year. [00:31:57] Let's say, so let's say I've got a 10 year bond [00:32:00] ladder. I've got one bond for each of those 10 years and one is maturing each year. So I've got that whenever that dollar amount is available to me for that year. And I continue to kind of roll and add another bond onto the end of that 10 years. [00:32:13] That way I've always got some money coming due each year. So, and, and give us, because I can hear a couple people, maybe I think most people understand what a bond is, but maybe just for those who might not like when you say coming due and like, what is a bond? I know we have, we haven't done investments yet. [00:32:28] So I use a CD as an example, because I think most are more familiar with CVS. Like through your bank or your credit union, you know, you give the credit union to the bank. X amount of dollars for three years, let's say, and for that three-year period, they promise to pay you a fixed amount of interest for those three years. [00:32:46] At the end of those three years, you get your principal amount back, whatever dollar amount you gave them. And that's directly with you in the credit union or the bank, a bond is the same exact thing, except for you're lending that money [00:33:00] to a government like the U S government or the state of Utah, or a company, a business like apple or general electric or whoever. [00:33:08] But the concept is still the same. You're getting whatever that stated rate of interest is for that amount of years and getting your money back at the end of those years. There's different risks. So let's talk about that for just a second. Why does someone buy a bond from GE instead of their bank? [00:33:27] Most banks and credit unions are FDAC insured or the NCUA, the credit union equivalent, where if something happens with that bank or credit union, you know, the federal government promising to step in and make you whole on that. Whereas general electric federal, government's not necessarily going to bail out general electric and give you your money back if they go bankrupt. [00:33:47] So there's a higher risk there that you may not get your money back. And typically in exchange for that higher risk, you should be getting a higher interest rate as well for taking on that additional risk. And generally bonds are lower risk than stocks. Like [00:34:00] if you, if you look at a bond portfolio, it seems most conservative bond portfolios will fluctuate two to 6%, maybe seven. [00:34:07] Um, you can definitely buy really volatile bonds. So I don't want people to think that some bonds are just like stocks, right? Don't lump it all into one category, but there are plenty of bonds out there that are pretty conservative, right. And stocks. We talked about 10 to 15% fluctuation, very, very regularly. [00:34:27] So somebody might buy a bond ladder or they just might buy bonds. But the latter is different because you talked about maturities. So as the bonds come due, And meaning they mature, the institution has done paying their debt to you. They're done paying the interest and they're going to deposit or send back your $20,000 to your bank or sorry to your brokerage account for the principal repayment. [00:34:52] Right. And some people will structure the now money as, um, bond maturities. I had a client that we did [00:35:00] this, where they had a social security strategy that would change over time. So like they had $20,000 of social security between, um, The wife and then her husband got a spousal benefit off of that. [00:35:12] And then when her husband got to 70, his social security was going to pop by quite a bit. So there was this four year period of lower social security income. And then from after that, they were going to have a lot higher. And we built a bond ladder where the maturities in the first four years were about 40 to $50,000 a year. [00:35:32] But then in year five, we only bought about 20, 20, $30,000 of maturities from there forward. And it made it so that they could structure the maturities of their bonds. And as long as they held those bonds to maturity and nobody defaults, then they got all their money at the right times. It was a really, it's a little less flexible than just withdrawing from an account. [00:35:51] You could always sell the bond early, but then you don't know if you're going to get exactly what it's matured for. Um, but that's bond ladders and CD ladders. Right? [00:36:00] Pretty similar concept there. Um, fixed, let's go fixed rate annuity next. So this is an account. Prob provided by an insurance company. And they're just, it's so much like a CD usually. [00:36:13] And that's how I would describe it. It's really the same exact concept as a CB or the bond, except for now I'm giving my money to an insurance company and I'm getting a promise from that insurance company that I'll be getting that principle back. And there are so many annuity types out there. And when we get into, I think there's an insurance section right season for insurance. [00:36:36] We'll go through each of those. Um, but the reality is like, just understand this type of annuity is a pretty straightforward one where they're just paying you a certain amount of interest. Usually they have maturity too, yeah. I mean, it's, it's a CD through an insurance company like New York life, three years, I give them a hundred thousand. [00:36:54] They pay me X percentage for those three years. And at the end of the three years, I get my money back [00:37:00] and then a fixed index to noon. This is where instead of a set interest rate and a set maturity where they're going to pay it back. The concept here is they say, okay, Oh, actually, sorry, let's go back. [00:37:12] Cause we're talking about now and later money. So if you use the fixed rate annuity, you might, you might be ready to retire in three or four or five years, and you want to take the risk of market volatility out on the money you're going to use in the first four or five years of retirement. So let's say you have, um, let's say somebody is gonna retire at 60 and they are 55 years old and they are just like, I do not want that income. [00:37:37] I'm going to use age 60 to 63 to be subject to markets in this next five-year window. So they would buy a fixed rate annuity or a CD or bond ladder or any of these options. Right. But they would buy an investment like this, let it grow at one or two or 3% because the rate is going to be really low. It matures when they hit 60. [00:37:57] And then they start spending that, um, for the first [00:38:00] three, three or four or five years. Um, that's another way that you would use a fixed rate as an analogy. No. I mean that that's probably the most common. I think you might see some that would maybe have it bought at or close to actual retirement and use the, you know, the 10% withdrawal from it. [00:38:17] That becomes a little more challenging though, because that amount could change year to year. And you're you have, let's say you need $20,000 of income. I got to put 200,000 into that. Well, I'm not going to be able to get the same 20,000 next year. And I'm having to commit 200,000 to add a little bit to what Tyson is saying. [00:38:36] If you don't, if you're not familiar, most annuities allow a 10% withdrawal without any surrender penalties or anything like that. So some people will do an annuity and then purposefully withdraw 10% per year. Um, there are very few insurance companies that allow you to take that exact same amount every year. [00:38:52] Most of them will adjust it down based on the balance. If the balance is going down or up, if the balance is going up, right, it's 10% of the beginning balance of that year, [00:39:00] but that's a good point. That's the other way you could use an annuity for safer now and later money, as you could say, I'm going to protect the first 10 years worth of income and I'll withdraw 10% a year. [00:39:10] You'll probably have that money last 12 to 15 years based on the interest earned. And then you just know that at some point you have to refill that bucket later. Yeah. You can see there there's trade-offs with all these, which I'm sure you guys will get to in your insurance section and whatnot. We haven't built that out yet, but that sounds like a good outline Tyson. [00:39:28] Right. Um, okay. So then fixed indexed annuity. Um, this one's a lot more popular. At least we see a lot more people doing them and it's a way to participate in the upside of the market partially. So be careful you're not getting the whole. Right now I expect these accounts to produce about a two to 4% average annual rate of return. [00:39:51] If you're expecting much more than that, I think you'll be disappointed. But the way these work is, they say it's the same concept as the fixed rate that Tyson went through just now. [00:40:00] But it is an account where they say, okay, if the market goes up 10%, we're going to give you everything after two or three or 4% that they call that a spread. [00:40:08] Or if the market goes up 10%, we'll give you up to two or three or 4%. And then that's a cap and they'll adjust the caps and spreads. Um, so that the insurance company doesn't have to pay out too much. Um, and then if the market goes down and is negative, you don't lose anything. So that's, that's the, that's the allure of it, right? [00:40:27] That's the excitement of it is that you don't have to worry about the downside and that provides safety now. And it gives you a little bit of upside. I have actually seen these come back in the teens, but that is by far the exception where maybe one year they had a, just a knockout year. It was 2000. What year was that? [00:40:44] 19 or 17? I can't remember which one it was, but there was not a downward trend in the S and P 500 for the entire 12 month period. I think it was, I don't know if it was exactly or close to, but after March of 2020. Yeah. A lot of people didn't do well. Any 21. Yeah. It was a good year for people, [00:41:00] especially if they had their contract date in March. [00:41:02] Right. And it sets at this low value. And then March of 21 to March of 20, sorry, March of 22, March 21, there was just this incredible increase. Good point, Laura. Okay. So that's fixed indexed annuity. Again, we'll go into more of that in detail, but the concept that you should walk away with here is that there are strategies that reduce the volatility on a portion of your portfolio. [00:41:24] And then you spend the money that's less volatile. So you never sell at a loss, or at least you sell at a very minimal loss. If it's like a bond that went down or something like that. And you allow the aggressive part of your, part of your portfolio to breathe and go up and down and give it five or 10 years. [00:41:39] And then you're able to recreate that short term bucket. I like this strategy. I've done a lot of modeling through markets on a strategy like this. Um, and I find. I like, I feel like you can withdraw more than what the studies show, because people have heard of the 4% withdrawal rule. [00:42:00] And I don't necessarily buy into that because what they're saying is let's go back over as many years as we have data and look at all the 30 year windows. [00:42:09] And what is the withdrawal rate that no matter what we're talking about, a multi stream where they just start and don't change their portfolio. Don't do it now. And later money doesn't optimize for that. They just withdraw. What is the withdrawal rate you can take? And no matter what, you're going to be safe in all of those many years of market data, the numbers 4%. [00:42:27] The problem with that is there's only one year like that. That's planning for the worst, worst, worst case scenario, right? And most people don't experience the worst case scenario. So if you can control a few of the risks, I think you can push that withdrawal rate up four and a half to 5%. And as you get older, you can increase it to five and a half, maybe six, depending on how old you are. [00:42:47] Um, anyway, I worry, I've seen too many clients die. In their seventies and eighties and financial planning was built for them to 95, to a hundred. And they ended up leaving [00:43:00] experiences on the table and joy and all their hard work and savings. Right. Right. All because some academics said you have to only withdraw 4%. [00:43:08] Right. Um, and I, I I'm, I, I, that was terrible. I'm like anybody, I like, I'm a nerd for this stuff, but I was not happy. I'm impressed. You know, his name. Um, I should, but anyway, I, I feel like there's a way to enhance the withdrawal rate a little bit, if you can structure it with now and later money, but multistream is different right before you go to multistream. [00:43:31] I just wanted to say on the, on the now and later, I think the other thing that's really appealing with. Approach as it speaks to us. Behaviorally I think as humans that's, like, we get really good at mental accounting. Like this is money for this. This is money I've earmarked for this. And this actually helps kind of, I don't want to say feed that behavior, but it takes that behavior and uses it to your advantage because now I can say, okay, this is the money that I'm going to use for the next two or three years. Here's [00:44:00] the next bucket of money I'm going to use for the next four to eight years? Let's say, and then this is all the money. That's eight years plus. So. With my eight years plus money, if it's invested more aggressively, like most likely is, and more stocks, it's going to fluctuate more when something happens in the market. [00:44:17] But I know that I'm not going to need that for eight years or more. That helps me stay a lot more disciplined than not do something I shouldn't do with that money, because I know I'm covered now and whatever the market's doing now, doesn't matter because I'm not having to sell or do something I don't shouldn't be doing because I need income, you know, just enables you to, like, it gives you permission to spend your money without worrying about what the market's doing. [00:44:40] So true. And we were finding that I'm loving that you're adding the human element to these decisions. Um, because we're finding that that matters so much more than people realize it's good. Okay. Multistream so this is where it can get a little bit more complicated. I feel like because [00:45:00] you have so many options for how you withdraw from accounts. [00:45:03] And the concept we're talking about here is, okay, you have, you have a million dollars and you can allocate 200,000 to this and half a million to that. And, you know, 300,000 to this other strategy. And you're withdrawing proportionately, or you're at least withdrawing some from each. And I don't mind these strategies. [00:45:21] I just think they can get complex. And I think that retirees often misunderstand the nuances of these, of these solutions. Right? And to your point, like mentally, it's a lot easier to say I'm spending this for the next five to 10 years and then I'll spend that. Yeah. Um, but, but these multistream strategies can work. [00:45:40] So I don't, I don't want to discount them. I think what you're saying is like, there's, there's definitely some value. Like if you crunch the numbers and do the math and look at it just from a pure logic standpoint, the multistream ones can make a lot of sense, but. We're humans and we may not execute everything perfectly. [00:45:57] You know, emotions get involved to where, [00:46:00] even though it may make the most logical sense, it's harder to execute on behaviourally. So that's what makes us maybe like the now and later money more for some. You know, that may be more sensitive to that. Something that made me move a little bit to favor the now and later money more versus the multistream is when I thought about retirement dollars, like a football team. [00:46:21] And I know this is weird, but hear me out for a second. This is new, we've never talked about this, but I played quarterback in high school because no one else would do the job. That's basically what happened. We were not great. We did not make the playoffs. I was really happy the season ended, so I could go play soccer. [00:46:37] Because that was my love. Um, but all my friends played football. So what are you going to do? Um, but anyway, I was a little shifty small person and the linemen are not right. I mean, they're powerhouses. They're twice my weight, you know, at least a foot taller than me, which makes throwing over them really hard by the way. [00:46:56] Um, anyway, the linemen are a very different [00:47:00] specialty than a quarterback and a tailback and think about how fast and usually tall and skinny wide receivers are. Right? So imagine going and playing a football team football game with 11 linemen against 11, um, wide receivers. Now you've got a really weird game happening there, right? [00:47:19] The linemen are going to just push right through the wide receivers at the line and going to run all day. And the wide receivers are just going to try to spread that game out as far as possible. Right. And throw it around. Now, the reason I make that comment is I feel like when you do a multi stream income, you force all your money to be one. [00:47:36] It's like building a team of lineman in particular, because you can't really afford to take on the volatility risk to get the growth. You need to keep up with inflation. If you're withdrawing from that particular account, the sequence of return risk will hit you. So. So it's almost like you can give your money different jobs and let something be fast and aggressive. [00:47:58] There's your wide receiver, right? [00:48:00] And that's your stocks and higher growth assets. And then you can let some of your money be really kind of slow and steady. There's your lineman just pushing through at one or two or three yards at a time. And so the idea of giving your money, different jobs allows you to take different risks and different speeds and allows you to be a more effective overall retiree. [00:48:20] Um, and I have a hard time consigning myself to a team full of lineman or a team full of wide receivers either way would be bad. Right. Yeah. Um, so anyway, that's kind of just the way they think about it now that we've, we've talked about some of the disadvantages, we talked about how we use them both. [00:48:35] Right? So multistream, let's go through some examples. Um, people who don't have a working pension, you know, a pension from their work, I should say. We'll sometimes work with an insurance company to recreate a pension, right? So they will say, I will give you two or three or $400,000. I am 65 years old. And my spouse is 62 years old. [00:48:56] Um, the insurance company will figure out how long they think you're going to live. [00:49:00] And they will give you a quote as to, they will like 300,000 in and they will maybe give you a thousand and change back as a, as a monthly payment, right. It's probably going to be 1500 or 16, $1,700. And you can choose different death benefits on those. [00:49:14] Some people think that no matter what, if the spouses died, the money's gone. That's not the case in this type of insurance product. Um, this is like the oldest kind of insurance annuity that exists. This is what they were all. This is the grandfather of the evolution of, of it, of annuities. Nowadays, you could do like a death benefit so that if you don't get your money back, your kids get the money back, call the periods well called the cash refund, or you can do like, I want it to pay for 20 years, no matter what, that's a period certain anyway, just know that there are options out there. [00:49:44] This is definitely a conversation for the insurance season, but that's one option. So that's, that's a strategy that we'll pay from today until death. And it could be one of the streams of income. Remember, it's a permanent investment. Like with most of those, once you [00:50:00] do it, you can't change your mind. [00:50:02] Right? And they, in this case, they don't even show you a balance anymore. They've taken your 300,000 and it's gone. The only thing you get on a statement is we're paying, we're still paying you $1,800 a month. That's it, that's all, you know, it's almost the pension decision of taking the lump sum or the monthly is exactly that. [00:50:18] It is exactly that. I'm going to skip annuities with writers, income writers, because I want to talk about where the most of the complexity comes with these types of solutions and we'll come back to it. But some people will say, well, just pay me the interest. Only on my investments, which worked a hundred years ago, a hundred, maybe 70. [00:50:39] I actually don't think it's quite that far. Cause I feel like it's our parents' parents. Um, were your grandparents, our grant, [00:50:50] uh, always over complicate it. Right. Um, I feel like our grandparents could do this, right. I mean, my grandpa was born in 1919, so he would've been suppose thinking. I mean, that's almost a hundred years ago though. [00:51:00] And it's true. 19, 19 when he was born, when he was retired. I remember as a kid thinking like 19, 19. [00:51:07] Yeah. That was 102 years ago, but he didn't retire in 1919 now. So he retired. Well, he never retired because he liked work and owned a business. But if he was what, 60 years old is that 1980 ish. Um, so, so then, yeah, so, I mean, that was a time period where bond interest rates were really high. You think about the seventies and eighties, people were buying. [00:51:29] CD's and bonds with teens, sometimes crazy things like 13 to 15%. So we did see a lot of people. In fact, the guy in my neighborhood who was really, really wealthy and had this huge house when I was growing up, um, I remember thinking like, what does he do? And somebody told me that he sold municipal bonds. [00:51:46] And I, my response was like, but what does he do? I don't understand what you just said. Um, but anyway, that was a great strategy back then. Um, and people used to do it, but now interest rates, I mean, you have to go out 30 years to [00:52:00] even get something above two and 3% on safe bonds. Right. So that's just not worth locking up your money for 30 years for two and three. [00:52:07] Dividend paying stocks are similar to the S and P usually is Hubbard. Dividend rate is around 2%. If you really want to go high dividend, you can get three and four and 5% cash flow on some stocks. The problem with that is you end up skewed into some really concentrated industries of, of what, like energy, their utilities, um, some healthcare and then financials, telecoms, like your Verizons and at and T yeah. [00:52:32] And you're, you're missing out on a lot of the best performing stocks stocks for the last five to 10 years. Right. Which is a big risk and of its own. Now you're concentrated in two sectors, which. It's a big risk and some stocks don't even pay a dividend because they're thinking we're growing, we're growing and that's maybe better. [00:52:47] Um, so there's real estate, investment trusts, master limited partnerships and other income focused equities. We're not going to go into a lot of detail here, but this is basically some type of investment that structures a higher interest payment, maybe that's, um, [00:53:00] leases from, uh, from a commercial building inside a real estate investment trust that then now those lease payments are passed out to the investors. [00:53:07] Um, and those can be higher. They oftentimes have lockup periods and more restrictions around your money, but those can be 6, 7, 8, 9, 10% cash flow. Um, depending on the investment and then portfolio funds, this would be like, this would be like, just put me in. This is what everybody knows of. This is just the mix, the asset chart, you know, the pie chart where you did buy a bunch of things and you just withdraw a little bit from everything, right? [00:53:30] And that works for a lot of people. And the math says that will work in many scenarios, but you're selling stocks at a loss every month. If you're doing a withdrawal from that, when the market is down, this is what a 401k will do. If you leave your money in a 401k company called to get a withdrawal, they'll just sell everything. [00:53:45] Pro-rata you don't have any buckets. They just take from your stocks. They take from your bonds, even if markets are down and they'll just send you a piece of each of it. Perfect. Yep, absolutely. Um, annuities with writers. Okay. So this is where it gets a little bit more confusing because you can buy [00:54:00] an annuity, either fixed or variable. [00:54:03] Market protected on the downside or up and down with the markets. And they oftentimes will add a benefit and they call it a rider. R I D E R. Um, that's an insurance term. So don't, I don't know how you'd remember the name, you know exactly what that means. A writer. I'm glad I have a writer along with me. [00:54:21] Who is it? Um, yeah, it's, it's weird, but a writer is, is an attachment. They're riding along with you, I guess have some type of benefit usually. Add some type of cost to the portfolio. So it's either cost in lower returns or cost in an actual fee. That's debited from the account. And these writers could be something like, okay, at 65 years old, we will pay you 5% of this. [00:54:47] We call it Disneyland dollar amount because it can only be used in the park. Um, it's not your actual balance. It's called an income balance or protected income or something like that. Um, I'm not downplaying. I have some clients that have these and they're [00:55:00] going to create an incredible pension stream for the client, but they have sacrificed growth to get these right. [00:55:06] They, if they had just put their money in stocks or higher growth assets, they'd probably have more income, but they would have had a lot more uncertainty of their income, right? So there's a trade-off, it's not one way better than the other, but this is where annuities get a bad name because they have a lot that you can layer cost upon cost. [00:55:24] I saw one, somebody sold once that they had a death. And an income rider. And if, if the account balance goes to zero and if by the way, it's not bad to have both of those, but in this particular structure, if the balance goes to zero, that's what the income rider is for. Right. It's supposed to keep paying the retiree, even if there's no money in the account. [00:55:45] That's the whole point of the income rider is to protect my income. But if the death benefit. Uh, I'm sorry. If the balance goes to zero, the death benefit evaporates. So they're paying a 1% fee for the death benefit, which was like [00:56:00] one and a half times their deposit or something like that. Right? So they have this 1% fee for, there was like a one or 2% fee for just administrative costs. [00:56:08] Add another 1% fee for the death benefit and a 1% fee for the income rider and the, the, the way it was structured. I had to explain to the client, like one of these is not going to pay out. You should pick one and drop the other, drop the death benefit, spend the money down and use the. Income that you're getting, that's the benefit of the income rider, or don't take any money from it. [00:56:31] Drop don't, pay for the income rider and pay for the death benefit so that your kids get one and a half times the balance anyway, but they'll never get both, but they were paying for both. And that was, that was really frustrating to see. Um, that's where the complexity kicks in and you can accidentally end up in a situation like that. [00:56:48] I bet the insurance person didn't strategize to say they probably didn't even think through that enough. You know, they just knew this thing was great and it made people feel good about all sides, right? Yeah. Um, [00:57:00] okay, so that's multi stream so how, how does this look in practice? Um, someone takes. A portfolio. [00:57:06] Well, let's say they have their social security income. Maybe they have a pension, maybe they don't. And they say, you know what? I have, I have three, $4,000. Let's call it $4,000 of fixed income sources from social security, from both spouses and whatever it may be, they want to spend $7,000 a month. They might say, you know what? [00:57:24] I have a $3,000 gap here. I have to come up with $3,000. So what if I solve half of that with, like a multistream strategy? Like I buy a pension like an annuity, or I buy an annuity with a writer, or I just buy some dividend paying stocks and pull that, pull those dividends off. Or, you know, you get the idea. [00:57:45] There are a lot of options here. They do a strategy that they think will last forever. And then for the other 1500, they could pick a different strategy. So they're diversifying the risks, right? Cause there's different risks buying a pension like annuity versus dividend paying [00:58:00] stocks. And they can diversify the income risk by buying both. [00:58:03] That would be one option or another option is I'm going to do a pension like an annuity for a thousand dollars. I'll do dividend paying stocks for a thousand dollars. And then for the other thousand dollars, I'm going to do now and later money, and I'm going to put $120,000 into something and I'll withdraw 12% of it every year. [00:58:21] And then when that's gone, I'll replenish. And then they've really diversified how they get their income. But structuring this, you just need to understand conceptually how these things work. And that's what we do. This is a lot of what we'd spend a lot of our time on with retirees. Don't you think? [00:58:36] Yeah, for sure. So, I mean, that's it right? I mean, that's, we've, we've gone through the main risks. Let's do a quick recap. And uh, the main risk for a young person is inflation. So that means you need to make money, both professionally, you need to make money and on your investments, you need to make money and you need to try to drive up both of those things. [00:58:52] If you're a young person, um, your main job is to race, right? Yeah. Your earnings, your. And will they call it [00:59:00] the human Capital? That's like your most important investment is to get a raise and get that income up for, right. So that you can save more so you can build more. And then you're not getting a whole lot of raises in your age, 60, your now your job is to protect what you've grown, that's the market risk. [00:59:15] And then as you get older, your job is to handle and prepare for longevity though. So inflation, risk market, risk longevity, risk retirement danger zone. This is arbitrary, but in my opinion, it's five years before, 10 years after, before, you know, if you're eight years before you've got a decent amount, the statistics say that markets are probably going to be positive for you until your retirement age. [00:59:34] But once you get into three to five years, it starts to get more like flipping a coin as to whether or not. But we've had a really long time before we've had a three to five-year period without positive rates of return, um, and a sequence matters. We talked about that, but don't be overly scared by that. [00:59:51] And then separate the concepts into now and later money or multi streams. And you could do one or the other, or you could do a little bit about. I think that's, uh, [01:00:00] we had, uh, we did it. Love it. Thanks for joining us Tyson. Yeah, thanks for having me. It was awesome. This podcast is intended for informational purposes only, and is not a substitute for personal advice from Capita. [01:00:17] This is not a recommendation offer or solicitation to buy or sell any security. Past performance is not indicated or for future results. There can be no assurance that investment objectives will be achieved. Types of investments involve varying degrees of risk, including the loss of money invested. [01:00:46] Therefore it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies [01:01:00] recommended or proposed by Capita will be profitable. Further Capita does not buy legal or tax advice. Please consult with your legal or tax professional for advice prior to implementing any strategies discussed during this podcast, certain of the information discussed during this podcast is based upon forward-looking statements, information and opinions, including descriptions of anti anticipated. [01:01:36] Mark. Get. Changes and expectations of future activity. Capita believes that such statements, information and opinions are based upon reasonable estimates, eight and assumptions. However, forward-looking statements, information and opinion are in [01:02:00] hair, only uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. [01:02:09] Therefore undue reliance should not be placed on such forward-looking statements, information and opinions, registration with the SEC does not imply a certain level of skill or training.

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