Providence Financial Retirement Show

The Biggest Risk to Your Retirement

Than Money, about sequence of returns and the risk that it really is. I’ll send you More Life Than Money, absolutely free of charge. You’ve just gotta ask for it.

And you can do that by going to providencefinancialradio.com/book.

Again, it’s providencefinancialradio.com/book. Leave us your information and a brand new hardcover copy of More Life Than Money will show up on your doorstep shortly. To get your free copy, just go to providencefinancialradio.com/book and we will get it right out.

I’m Anthony Saccaro. Thank you for tuning into the Providence Financial Retirement Show. We’re spending our time together talking about uncertainty and the stress that it would cause you just by not knowing.

With everything going on in the world today, there’s no shortage of uncertainty. And we got a question from Linda in Temecula, and her question’s really good.

She said this:
Anthony, every time there’s tension somewhere in the world, especially in the Middle East, the news starts talking about oil prices. But how does that actually affect someone who is retired?

And Linda, that’s a really, really thoughtful question because the connection isn’t always obvious. When people hear about geopolitical tensions, whether it’s conflict or rising tensions between countries, it can feel very far removed from our daily lives here in Southern California.

It sounds like something happening thousands and thousands of miles away with many oceans in between and probably shouldn’t have much impact on your retirement, right?

That’s kind of what it sounds like, and I think that’s partly why the stock market has shrugged it off and just continued marching higher. It sounds really distant. It just doesn’t feel like it’s something that has hit home.

But the reality though is that global events can ripple through our economy in ways that eventually reach you right here. And one of the first places those ripple effects tend to show up is in the energy markets.

The Middle East plays a major role in global oil production. So when tensions rise, especially in Iran, stock markets often worry about the potential disruption to supply. And when that happens, oil prices generally move quickly and they generally move much higher.

And they affect a lot more than just what you pay for at the gas pump.

Energy costs influence transportation. Think about manufacturing. Companies and manufacturers need oil. Think about the freight liners and the shippers. They run on oil as well.

And when those costs rise, businesses have to pass those increases on through higher prices to you, the consumer. And that’s where inflation comes into the picture.

Higher energy costs are eventually going to affect the price of groceries and travel and utilities and many everyday expenses. And for retirees, inflation can be particularly challenging because many of you rely on a fixed income.

It doesn’t stop there though. When inflation rises, the Federal Reserve often keeps interest rates higher for a longer period of time in an effort to control price increases.

And when interest rates are higher, both stocks and bond markets are going to respond as well. And it might be good, but it might not be good.

So what began as geopolitical tension and a war somewhere overseas can work its way through energy prices and inflation and interest rates and ultimately into your retirement lifestyle.

And it doesn’t mean that every global event is going to cause long-term market problems. When you look at the past, markets have always navigated these things very well.

But it does remind you that you do need to be vigilant. You need to pay attention to your retirement. You need to have as much certainty in your retirement as you can and remove the uncertainty wherever you can.

The more certainty you have, the more stress-free your retirement is going to be. And that’s because the more certainty you have, the more you know you can count on your income.

And that’s what retirement’s about. It’s about your income. That’s what supports your retirement.

So Linda, great question. Thank you for taking time to write in that question and certainly I hope I’ve given you something to think about.

Interest rates now have been higher for longer, and the good news for those of you who want to get income from your portfolio is higher interest rates are actually helping you.

They’re going to allow you to get more income from your portfolio than you have been able to in the last 15 years.

So it’s really, really good time to lock in some of that income if that’s something you’ve been thinking about doing.

If you want to learn more about how to do that, we put together a short but really fun animated video to watch in which you’ll learn everything you need to know about how to get income from your portfolio and do it in such a manner where you can count on it and not have to wonder whether it’s going to come in.

Income month after month after month from your portfolio that you can rely on.

If you want to know how to do that and how to put yourself in that position, you’ve got to get this video and we’ll send it to you free of charge. We’ll just email it to you, but you have to ask for it.

You can do that by going to providencefinancialradio.com/video.

Again, it’s providencefinancialradio.com/video. Give us your information and we will send it right out. You’ll have it in your inbox shortly.

One more time, to get your free fun-to-watch animated video to learn more about the idea of investing for income, go to providencefinancialradio.com/video and you will have it shortly.

I’m Anthony Saccaro. Thank you for joining us today here on KNX AM 1070 where we’re talking about how to eliminate uncertainty from your retirement, especially because of all the uncertain things that are going on in the world right now.

One of the things you might not have thought of though is whether or not investing for the working years of life is different than investing for your retirement years, and we’re going to discuss why there is such a difference right here on the Providence Financial Retirement Show.

Welcome back. Thank you for joining us today. My name is Anthony Saccaro. You’re listening to the Providence Financial Retirement Show.

We’re talking about uncertainty and specifically how to remove it from your life, especially in light of all the uncertain things that are happening in the world today.

But as we continue here on the Providence Financial Retirement Show, I want to spend a few minutes and talk about something that often gets overlooked when people are thinking about investing.

And that is the difference between investing while you’re working and then investing once you’re retired.

The reality is that retirees are often more sensitive to economic shocks than younger investors.

When you’re in your forties or your fifties and you’re still working, market volatility would be uncomfortable, but it’s not catastrophic.

You’re still earning income. You’re still contributing to your retirement accounts, and you probably have many years or even decades for the markets to recover.

But in retirement, that changes. The whole dynamic around that is completely different.

Your portfolio is no longer just something you’re trying to build and add to that you can let sit there and be idle.

It’s something that you’re depending on to support your lifestyle. Your portfolio is what’s helping fund your everyday expenses and the traveling you want to do and all the other expenses that come with retirement that you worked so hard to enjoy.

And that means events that affect markets can feel very different once you’ve stopped working.

If geopolitical tension leads to higher energy prices, as we talked about in the previous segment, that’s probably going to contribute to inflation.

And if inflation rises, then interest rates are going to stay higher.

That trickle-down effect is going to cause retirement to be more expensive.

When you’re still working, you’re getting raises. You have the ability to go out and make up for inflation. You could do a part-time job, some outside consulting, or a lot of things to increase your income.

But when you get to retirement and you’re living off your portfolio, you don’t have all those options. Inflation is going to have a much bigger effect on you.

If not financially, certainly emotionally.

So again, while a global event might start thousands of miles away, the economic effects are going to be felt by you right here at home.

It doesn’t mean you should live in fear. Markets have always navigated wars and recessions and political shifts.

But it means retirement planning should focus more on what you can control, and that goes beyond just chasing returns.

For retirees, stability and income reliability become really important.

The goal isn’t simply to grow your portfolio as aggressively as possible anymore. The goal is to make sure that your income continues to come in and support your lifestyle even when markets become volatile.

And that’s where thoughtful retirement planning can make a difference.

Instead of relying entirely on market performance, many retirees benefit from having portions of their portfolio designed specifically to produce reliable income.

Income that doesn’t depend on whether the markets are having a good day or not. Income that doesn’t depend on what wars are going on or how uncertain the world is.

That kind of structure can provide the peace of mind that you deserve because it allows you to navigate market volatility without feeling like every headline or market swing is going to threaten your financial security.

That’s why getting income in your portfolio in retirement is such a big deal.

If this makes sense and you just want to learn more about how to get this kind of income, how to get income from your portfolio that you can count on and not have to worry about running out of money ever—income that’s not tied to all the uncertainty going on—well, I have something I want to give you.

It’s an animated video that’s short. I think it’s only seven or eight minutes. But it’s very well done and it talks about how to get income from your portfolio regardless of what’s going on in the world.

If getting income that you can count on sounds nice, maybe comforting, you’ve got to watch this video and we’ll send it to you free of charge.

To get your video, just go to providencefinancialradio.com/video.

Again, it’s providencefinancialradio.com/video. Leave us your email address and we’ll email the video to you shortly, but you are going to enjoy watching it.

One more time to claim your free video about how to get income from your portfolio that you can count on, go to providencefinancialradio.com/video and we will get it right out.

I’m Anthony Saccaro. Thank you for taking time out of your day to join us here for the Providence Financial Retirement Show.

We’re talking about uncertainty and how it affects your retirement both psychologically and monetarily, and there’s certainly no shortage of things to be uncertain about in the world today.

But how do you cope with it? How do you deal with it? And how do you eliminate it?

That’s a lot of what we’ve been talking about here on the Providence Financial Retirement Show.

As we continue, I want to take our next listener question. It comes from David in Pasadena.

He asks:
If something major happens overseas and the markets drop quickly, what should retirees actually do?

That’s a great question because it gets right to the heart of how retirees should think about market volatility.

The first thing I would say is that one of the worst reactions to sudden market volatility is panic.

The closer you are to retirement or the newly retired you are, the more panicked you’re probably going to be.

If you’re 30 or 40 years old and you have decades until retirement, you’re not going to panic. You’re going to keep investing and doing what you’re doing.

But if you’re within six months of retiring and there’s a huge market drop, you might suddenly realize you can’t retire yet. Panic can set in quickly.

Unfortunately, reacting emotionally to short-term volatility often makes things worse.

Historically, markets have recovered from wars, recessions, financial crises, political uncertainty, and global events.

Volatility is simply part of how markets function.

When you’re younger, volatility is uncomfortable but it doesn’t derail your retirement.

But if you’re older and about to retire, volatility can dramatically affect whether you can retire at all.

That’s why it’s so important to have a portfolio structured thoughtfully.

If you know where your income is coming from and you know you can count on it regardless of what the market does, then you know you’ll be able to stay retired.

If you’re relying entirely on selling investments each month to generate income, a market decline can create enormous pressure.

You may have to sell more investments just to pay the bills, which can have a dramatic long-term impact on your retirement.

But if your focus is on income, you don’t have to worry about that.

That’s the mental shift retirees often talk to us about. When they focus on income, they feel less stressed and less concerned about daily market movements.

Instead of focusing on account balances, they focus on whether their income needs are still being met.

That shift—from account balance to income stability—can make a huge psychological difference during volatile periods.

And here on the Providence Financial Retirement Show, if you listen to us for any length of time at all, you know we’re all about income.

Because the success or failure of your retirement is going to be about the income you’re getting and how reliable it is.

It’s amazing to think that if you have predictable income in retirement, what problem can you not solve?

That’s why I wrote my book More Life Than Money: How to Turn Your Portfolio into an Income Stream That Will Last as Long as You Do.

I’d love to get it to you. We’ll send it to you absolutely free of charge. You just have to ask for it.

To get your free copy, go to providencefinancialradio.com/book.

Leave us your information and a brand new hardcover copy of More Life Than Money will show up on your doorstep shortly.

Thank you for staying with us. I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement Show.

We’re talking about uncertainty and the impact it can have on your retirement.

In fact, I’m going to suggest that uncertainty—the not knowing—can affect retirees even more than market risk, interest rates, or inflation.

Uncertainty causes stress because you simply don’t know what will happen.

And with everything happening in the world today—wars, global tensions, energy prices—there is a lot of uncertainty.

That leads us to our next listener question from Maria in Carlsbad.

She asks:
How much of a retirement portfolio should actually be protected from market risk?

That’s a really good question.

But there isn’t a one-size-fits-all answer.

Some people have pensions. Some people don’t.

Some people have rental income. Some rely heavily on Social Security.

Others depend primarily on their investment portfolio for income.

All of those factors influence how much risk someone should reasonably take in retirement.

One of the first things we look at when helping someone build a retirement plan is how much income they need to support their lifestyle.

Then we look at how much of that income is already covered by reliable sources like Social Security, pensions, or rental income.

For many retirees, Social Security covers part of their income but not all of it.

The gap between what those sources provide and what you actually need—that’s where your investment portfolio comes into play.

For some retirees, it makes sense to structure a portion of their portfolio to generate income with less exposure to market volatility.

Other parts of the portfolio may still be invested for growth to help keep up with inflation.

So instead of thinking about retirement investing as simply risky or safe, it can be more helpful to think about it in terms of roles.

Some assets are designed to grow.

Some are positioned to generate income.

And some are meant to provide stability.

If you need a lot of income from your portfolio, then more of your portfolio may need to be invested for income.

But if you already have strong income sources and don’t need income from your portfolio, you might be able to invest more aggressively.

So again, there’s no standard answer. It depends entirely on your situation.

However, most retirees do need at least part of their portfolio to generate income because Social Security and pensions alone often aren’t enough.

And for those of you who aren’t taking anything from your portfolio at all, let me ask you something.

What are you giving up?

Are there things you would like to do in retirement that you’re not doing because you’re afraid to spend your money?

I find many retirees avoid spending from their portfolio because of fear—fear of running out of money.

That’s where focusing on interest and dividends can help.

When retirees learn how to generate income from their portfolio without spending principal, that fear often goes away.

If you’re in that situation, I’d love to send you another animated video we’ve created.

It explains how to generate interest and dividend income from your portfolio so you can spend the income while leaving the principal intact.

You can get it free by going to providencefinancialradio.com/video.

Leave your information and we’ll send it right out to you.

You’ll have it in your inbox shortly.

I’m Anthony Saccaro. Thank you for taking time out of your day to join us.

You’ve been listening to the Providence Financial Retirement Show.

We’ve been talking about uncertainty and how to remove it from your retirement.

There is so much in the world today that you can’t control—markets, politics, global events.

But you can control how your retirement plan is structured.

And if there’s one takeaway from today’s conversation, it’s this:

Uncertainty is normal.

Markets have always faced uncertainty. Economies have always faced uncertainty.

But the goal of retirement planning isn’t predicting the future perfectly.

It’s preparing for a future that will include both good times and challenging periods.

That’s why retirement planning should focus on income stability.

Some of your portfolio should be positioned for growth.

Some should provide stability.

But for most retirees, a significant portion of the portfolio should help generate income that you can rely on even when markets become volatile.

If your ability to retire depends entirely on what the stock market does, let me be blunt—I think you’re invested wrong.

You shouldn’t let something you can’t control determine whether you can retire.

Put yourself in a position to generate the income you need regardless of what the market does.

Make sure you can retire on your schedule, not the market’s schedule.

And if you’d like to learn more about how to do that, that’s exactly why I wrote my book More Life Than Money.

In it, I discuss the most common mistakes retirees make and how to turn a growth portfolio into one that generates reliable retirement income.

To claim your free copy, go to providencefinancialradio.com/book.

Leave us your information and a brand new hardcover copy will show up on your doorstep shortly.

I’m Anthony Saccaro. I’m really glad you tuned in today.

If you’ve been with us, we’ve been talking about uncertainty and how to take what’s uncertain and make it more certain—especially when it comes to retirement.

You’ve been listening to the Providence Financial Retirement Show, where it truly is all about the income.

Have a great week, everyone. God bless.