Well hello there, to watch and you’ll learn what you need to know about how to get income from your portfolio that you can rely on regardless of what the market conditions are. We’ll email it to you for free. You just have to give us your information, and you can do that by going to providencefinancialradio.com/video. Once again, it’s providencefinancialradio.com/video, and in a very short time, you’ll have a video show up in your inbox. All you gotta do is press play, and you’re gonna really enjoy watching this video to learn how you can get income from your portfolio that you can count on and pay the bills monthly. It takes all the averages outta the equation. To claim your free video and have it emailed to you, just go to providence financial radio.com/video and we will get it right out.

Well, thank you for staying with us here on the Providence Financial Retirement Show. I’m your host, Anthony Saccaro. We are your retirement income source, and this is the place where retirees come for income. We’re talking about the fact that you can’t retire on assets, but you do retire on income. And it takes us to our first listener question of the day, which comes from Mark in Laguna Woods, and he asked this: “I’m 63 and still mostly invested for growth because that’s what my advisors always recommended. How do I know when it’s time to shift from growth to income, and what does that actually look like?”

Well, Mark, that’s a very astute question, and it’s not a surprise that your advisor keeps recommending that because most advisors do. Most advisors specialize in growth, and so they keep recommending to stay invested for growth, even though you now understand why you shouldn’t, based on what we’ve talked about in the previous part of this show.

To answer your question though, there’s really no magic age about when you need to start shifting from growth to income. There’s a lot of things to consider though. First of all, how close are you to retirement? That’s a consideration because generally speaking, the closer you get to retirement, the more you should probably start thinking about switching to income. The reason is simple: the more growth-focused your portfolio is, the bigger it’s going to drop when we have another major market crash. And if that drop happens within a few years of retirement, it may affect your ability to actually retire.

So on the Providence Financial Retirement Show, I don’t recommend waiting till the last minute and then flipping a switch from growth to income. What I often recommend is just easing into it, and that process usually starts about a decade out at least. That’s what I found works best.

There’s other things to consider though. It’s not just about your portfolio being invested for growth. If you’re gonna retire and instantly need to start taking money outta your portfolio, yeah, you probably wanna start focusing on income and shifting from growth to income sooner than later.

But what if you’re gonna retire and you’ve got pension and rental, and maybe it’s gonna be 10 years after retirement until you actually need to start getting income from your portfolio? Well then you can wait longer because you’re not gonna need the income right away. I think a good answer, Mark, is that you wanna start shifting about 10 years out from growth to income, from the time period that you know you’re gonna start needing income from your portfolio. I really hope that that gives you something to think about, Mark, and thank you for taking the time to write in the question.

And this is probably a good time to remind the rest of you that if you have a question for the Providence Financial Retirement Show, don’t hesitate to ask it. You just need to go to providencefinancialradio.com, ask the question there, and maybe we’ll get a chance to discuss it just like we did for Mark in a future episode.

When it comes to actually retiring, I find that most people just retire and then just start making withdrawals from their portfolio kind of on an as-needed basis without really a withdrawal strategy. Essentially, they stay invested the way that they’ve always been invested, but now they start making withdrawals. Think about your situation: if you are retired or if you’re on the brink of retirement, what are you gonna do? Do you have a plan to switch from the accumulation phase to the deaccumulation phase of life? Do you have a strategy that will allow you to get income from your portfolio that you know you can count on whether the market crashes or not? Or are you among those who really just is gonna start making withdrawals from the portfolio as you need it and crossing your fingers and hoping that everything works out?

If you’re honest with yourselves, I know that most of you, that’s exactly what you’re gonna do, but hope is not a retirement strategy. Hope causes you to have uncertainty, and uncertainty is why you might be feeling a little anxious about retirement. When you invest for income, though, you’re gonna find out that your peace of mind is just gonna go through the roof. Your anxiousness level is gonna go through the floor. You’re gonna be much less anxious just because you know you have income that you can count on.

And that’s really my definition of a successful retirement: making sure you have the peace of mind because your retirement is covered by the income, income that you can count on month by month, and year by year, regardless of what the market does.

And that’s one of the main reasons why I wrote chapter five of my book, More Life Than Money, where I talk about the difference between investing for accumulation or investing for deaccumulation, investing for income. If you’d like to read it, I’ll send it to you absolutely free of charge. All you have to do is ask for it, and you can do that by going to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. In my book, I talk about the 10 most common retirement mistakes that I’ve seen retirees make, and certainly one of those is being invested wrong for the phase of life that they’re in. I know you’re gonna enjoy reading it and learn something from it as well too—primarily how you can have more peace of mind in retirement.

And if you want to get a copy of More Life Than Money, one more time, just go to providencefinancialradio.com/book and we will get it right out. I’m Anthony Saccaro. Thank you for joining us today. We’re spending our show today talking about that you can’t retire on assets, but you can retire on income.

Have you ever noticed though that retirement seems to be really hard, probably much harder than most of you expected? Why is that and how can you make retirement seem to be much easier? We’re gonna pick up with that right here on the Providence Financial Retirement Show.

I’m Anthony Saccaro Thank you for hanging out with us today, wherever you might be. You’re listening to the Providence Financial Retirement Show. We are your retirement income source and this is the place where retirees come for income. We’re talking today about you can’t retire on assets, you can retire on income, but retirement, I’m told a lot, is very hard. It’s not as easy as a lot of people think. And a lot of that energy is mental energy. And if you’re wondering why that is, you really have to look at the difference between the accumulation years when you were working and the deaccumulation years now that you’re retired. When you’re working, you have predictable paychecks, and that really is a significant foundation to the peace of mind that you have when you’re working.

If the market goes down, you know that you’re benefiting from it because you’re buying more shares. If the market goes up, you feel good because you see the balance on your statement go up. Market volatility doesn’t affect you at all when you’re working. Why? Because you have that paycheck coming in. It’s all about the paycheck and your spending. It all feels automatic, but when you move into retirement, that changes. Every dollar now has to start working for you. You’re not putting money in. What are you doing? You’re taking money out. And whenever you take money out and make a purchase with that money, whether it’s something fun or just to support your retirement lifestyle by paying the bills, it’s going to be permanent. It’s a permanent withdrawal.

That’s money that you no longer have to work for you, and you didn’t have to worry about that while you were still working and contributing to your account. What this does is it causes many of you to second guess yourselves. If you want to take another trip, you have to really ask, is it worth selling more principal and cannibalizing your portfolio even more to take that trip? And the same thing is true if you want to give more to charity, give to your grandkids, or whatever it is you want to spend your money on. It very much causes you to second guess because you know that every time you take money outta your portfolio, that’s a permanent withdrawal. It can’t grow back.

Denise from Rancho Mission Viejo wrote in and asked a question. That’s very much on point with what we’ve discussed, and here’s our question: “My husband and I both have IRAs, but no pensions. We worry about relying on investments for income. Is that risky?”

Well, the short answer is yes, because of all the reasons that we talked about. When you’re relying a hundred percent on markets and withdrawals from your market-oriented portfolios, then it’s gonna create a lot of uncertainty. You don’t know what the market’s gonna do. A lot of you intuitively believe that there’s gonna be some problems ahead, and a lot of professionals believe that as well.

Now, there’s nothing immediately on the horizon that says that next month or next year the market’s gonna crash. But we know that the market’s not gonna go up forever. We know that in 2001, the tech crash took off almost 50% of the market, and in 2008, the financial crisis took off almost 60% of the market.

What’s the odds of something like that happening again? I would say they’re probably pretty good. At some point in time, there’s probably gonna be something, whether it’s geopolitical, political, or market related, that’s probably gonna cause the market to go down in a much bigger and much longer way than we’ve seen for many, many years. And when that happens, if you are invested wrong, you might unfortunately find out the hard way.

And that’s why this is something we often talk about here on the Providence Financial Retirement Show. Many of you don’t realize how stressful retirement can become when everything depends on market performance. If you’re invested in the market, then you have to hope that the market does really good in order for your retirement to stay intact. And Denise, if you are gonna be relying on those withdrawals from a market-oriented portfolio, then you’re really in that same boat.

Now, I don’t know when you’re gonna retire, and that certainly has a lot to do with it, but I would certainly start thinking about shifting from growth to income sooner than later so that your retirement doesn’t depend on what the stock market does. I don’t want you to only be able to retire if the market does well. I want you to be able to retire no matter what the market does, and I’m pretty sure you probably feel the same way. But I really appreciate you writing in the question, Denise. Thank you for taking time.

If you’d like to get better educated about how you can have peace of mind in retirement and less anxiousness than maybe you have, then it probably makes sense for you to learn a little bit more about the idea of getting income from your portfolio and disengaging yourself from market performance. That’s why we created this short animated video that talks about investing for income. It’s animated, so it’s really fun to watch, and it’s short—only seven or eight minutes. I want to email it to you absolutely free of charge, and you’re gonna love watching it.

If you’d like to get it, all you need to do is go to providence inancialradio.com/video. Again, it’s providencefinancialradio.com/video. Just give us all the information we need to send it out, and you’ll have it show up in your inbox shortly. One more time to get that animated video about how you can get income that’s dependable from your portfolio: just visit us@providencefinancialradio.com/video and we’ll get it right out. I’m Anthony Saccaro. Thank you for spending part of your day with us here for the Providence Financial Retirement Show.

We’re spending our conversation today discussing the thought and considering the idea that you can’t retire on assets. You can retire on income. We’ve already discussed the fact that financial advisors tend to rely on market averages. It sounds good when you know that the averages of the market generally are between 8 and 10% a year, and it seems logical that if that’s the case, you could take out 4 or 5% a year from your portfolio and not have to worry about ever running outta money. That seems logical, but it’s just not true. Averages have a way of really smoothing out the volatility. But regardless of what the average is over the long run, if the market drops significantly over the next few years and you wanna retire, you might not be able to. And I know we talked about this earlier, but it’s just really worth repeating.

I wanna come at this though from a little different angle and I want to talk a little bit with you about the confidence gap. Because I’ve been a retirement advisor for over a quarter of a century, and my goal is to help you get the income you need from your portfolio so you can retire or stay retired regardless of what the market does. I want you to have the peace of mind that you deserve in retirement, and I don’t want your retirement to be tied to market performance. If your retirement depends on what the market does and the market goes south, well then your retirement’s gonna be affected, or you’re not gonna be able to retire. And to me, that’s not a successful retirement plan when your retirement plan is actually tied to the stock market.

And I have found that someone who is getting income from their portfolio that they know they can count on, regardless of what the market does, has much more clarity, much more confidence in retirement, and much less anxiousness because they know that they’ve turned their assets into income. They’re not making withdrawals and hoping that their portfolio cooperates. They’re actually living off the income that their portfolio is gonna give them, regardless of what the stock market does. On the other hand, the reason that many people decide to become clients of Providence Financial is because they don’t have the peace of mind. They know intuitively that their portfolio and their retirement is tied to the stock market, and they know if the market crashes, they’re gonna be in trouble. Just that knowledge is what causes them not to be able to sleep well at night.

There really is a huge confidence gap between someone who’s invested for income that knows that they can rely on their income no matter what, compared to someone who is hoping that the market acts in their favor all the time so they can stay retired. Think about another way with me for a minute. When you were working, was it the balances in your portfolio that gave you security, or was it the income that you know you were gonna get every week and every month from your paycheck? I’m gonna guess it’s the latter. Well, why would you change that when you retire? Why would you quit getting a paycheck and just settle for starting to withdraw your portfolio?

And yet I find that that’s what most people do. You know, it’s funny, I was recently talking with Tom, who’s been a client of ours now for eight or nine years probably, and he said something that I think really fits in well here. He said, “Anthony, you just showed me how to replace the paycheck I was getting from my job with a paycheck that I’m now getting from my portfolio.” I think that was the best definition I’ve ever heard of what retirement should be. You just replace your paycheck from your job with the paycheck you’re now getting from your portfolio. You’re not replacing it with withdrawals from your portfolio. You’re replacing it with the interest and dividends that your portfolio is giving you. Because withdrawals are not a paycheck. That’s cannibalization. Interest and dividends are a paycheck. That’s distribution.

If you’re always worried about what the market does and your portfolio balance, and whether you’ll run outta money before you run outta life because you know that you’re cannibalizing your principal, oh my gosh, that makes retirement really hard. But on the other hand, if you like Tom, are invested in such a way to where you can get distributions from interest and dividends and leave your principal alone, that’s going to make retirement a whole lot easier than it is.

If you’re on the edge of retirement, maybe you’ve got just a few years to go, or maybe you’re just newly retired, and then now you realize that you’ve just been making withdrawals and not living off income, and you wanna know more about how you can replace your job paycheck with a portfolio paycheck. Well, that’s exactly why I wrote Chapter five in my book, More Life Than Money. It’s an Amazon number one bestseller, so you can go buy it for $25, or if you want us to send you a free copy, I’ll do that. You have to ask for it though, and you can do that by going to providence financiaradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information and we’ll send a copy right out to you. Absolutely free of charge, no cost, no obligation, just information. You’ll get it in just a few days.

Just go to providencefinancialradio.com/book and we will get it right out. And soon you’ll also know how you can replace your job paycheck with the paycheck that comes in from your portfolio. Thank you for spending part of your day with us. I’m Anthony SAccaro. You’re listening to the Providence Financial Retirement Show, where it truly is all about the income. We’re spending our time together today talking about that you can’t retire on assets. You have to retire on income.

We have a question that came in from Brian and he’s from Agoura Hills, and he asked this: “Anthony, I’ve saved, I’ve invested, I’ve tried to be responsible for years, but now that retirement is getting close, I still don’t feel settled about it. Why does something feel like it’s missing?”

Well, I think Brian, that’s a great question. And during your working years, you probably save consistently. You probably dollar-cost average. You were probably disciplined and you build really solid balances, and yet you get close to retirement and you still feel like something is off. I know that you’re not alone ’cause many people feel like that. Well, Brian, thank you for taking the time to answer the question, and there are two big reasons that I can think of.

One is that your whole financial life is about to flip, and the second reason is because you are no longer going to have a paycheck from your job. A lot of times people think that this uneasy feeling Brian is describing comes from things like fear of the stock markets or maybe fear of spending money, but I actually think it’s deeper than that. Number one, your whole life is about to flip. For 30 or 40 years, what did you do? You didn’t take any money outta your portfolio. You worked, you earned, you saved hard. You invested. You made decisions that might have been painful. You might have wanted to buy that car, but you didn’t buy that car because you couldn’t afford that car from your income, and you didn’t want to take money outta your portfolio.

So you bought this other car. And the same thing is true. Every time you decided to travel or with the homes you bought, you were just responsible. But the key is that you were always moving money into your accounts and not taking money out. But now that flips. You’re on the brink of having to start pulling money outta your account. You’ve spent decades building and now you’re gonna start taking, and that’s a massive psychological shift. And I don’t think many of you understand from a psychological perspective what retirement might do to you. When you lose that security of the paycheck, it’s probably gonna have a major impact on you. Psychologically, it’s probably gonna create a lot more anxiousness. Your brain is wired for accumulation because that’s always been what you’ve done. You’ve never taken money outta your retirement accounts, and so just doing something different than you’ve always done it, that feels strange. It might cause you to feel like you’re missing something, and now you’re at a point where you have to start taking money out of your portfolio that you’ve spent a lifetime building. Oh yeah, that’s gonna affect you psychologically. And I think the psychological impact of retirement is very, very underestimated and underrated.

Retirement is not gonna be successful if you have a lot of money, but you don’t know how to spend it, or you’re afraid to spend it, or you’re afraid that the market’s gonna drop and you’re gonna lose it. That’s not a successful retirement. A successful retirement is having a plan and knowing that you can spend your money and knowing you can do the fun things you want without any impact on your portfolio.

But Brian, if you have a paycheck replacement plan like Tom does, who we talked a little bit earlier, you remember Tom when he said, “Anthony, what you helped me do is replace my paycheck from my job with a paycheck from my portfolio.” If you have a paycheck coming in from your portfolio with no impact on your principal, I’m pretty sure, Brian, that you’re gonna realize that you are no longer missing anything.

What you’re probably missing is the fact that you’re gonna have to make withdrawals and now you’re gonna be subject to the market, whereas in the past, the market volatility didn’t matter. In retirement, it does. I’m gonna take a strong guess that the reason you’re feeling uneasy is because you don’t have an income plan. That’s probably it. And many of you, that’s probably true as well.

If you’d like to learn more though, how to get an income plan, we’ve put together this short video that’s animated and very fun to watch and short, so it’s only seven or eight minutes long. In that video, you’re gonna learn what you need to know about how to replace your paycheck from your job with a paycheck from your portfolio—all while leaving your principal intact.

I’m gonna send this video to you free of charge by email. You just have to give us your email address, and to do that, just go to providence financialradio.com/video. Again, it’s providencefinancialradio.com/video. Give us your email address and your name and we’ll go ahead and get it right out. You’ll be able to watch it and learn what you need to know about how to get steady income from your portfolio. One more time, go to providencefinancialradio.com/video and we will get this video to you emailed very shortly.

I’m Anthony Saccaro. Thank you so much for making us part of your day. You’re listening to the Providence Financial Retirement Show, and we’re talking about that you can’t retire on assets, you have to retire on income. And we just got a question from Brian that basically suggested that even though he has done everything right in the accumulation phase of life, he’s starting to feel a little bit uneasy as he approaches retirement, and he wanted to know why.

We just talked about the first of two reasons, and that reason is that his whole financial life is about to flip. But the second reason is that he’s no longer gonna have a retirement paycheck. You think about it: when you’re working, you know exactly how much is gonna hit your bank account every single month, and that creates confidence. It creates clarity. And it also removes any anxiousness because you’ve got that steady paycheck coming in.

Well, why does retirement have to be any different? The short answer is that it doesn’t have to be any different, but most of you aren’t aware of that because your financial advisor is just telling you to do the same thing that you’ve always done. And yet intuitively you know that the strategy for putting money in is probably gonna be much different than the strategy for taking money out. But you just keep doing what your advisor tells you. And instead of getting true income from your portfolio, what you’re actually doing is just making withdrawals.

And every time you take money out, you see your balance start to go down a little bit. One of the reasons that you start to feel uneasy as you approach retirement is because you know your paycheck’s going to disappear and it’s not gonna get replaced unless you invest.

When you think about your assets, do you know exactly what you own and where? And I don’t mean specific mutual funds and stock, but when you think about your accounts, do you know how much is in each of your accounts approximately? I’m gonna guess the answer is yes. You know what your account balances are, but do you know how much income your accounts are giving? Well, the answer is probably not, because that’s never been your focus.

Your focus has been singular. You’ve had one purpose for your money until you get to retirement, and that purpose is for your money to grow. So all you care about is your account balances, but when you get to retirement, it’s not the account balance that’s gonna pay your monthly bills; it’s going to be the income that your accounts can give you. That’s what’s gonna pay the monthly bills. And if it’s not reliable, it’s gonna cause a lot of anxiety and a lot of stress.

And this stress kind of is a double whammy because two uncomfortable things happen at the same time. Number one, you went from saving to spending, and at the same time, number two, you lost your paycheck. Don’t tell me that that’s not gonna create anxiety. It is. And that’s why here on the Providence Financial Retirement Show, we often talk about replacing your paycheck, not losing your paycheck.

If your plan is that you’re going to lose your paycheck and you’re just gonna start withdrawing from your portfolio, that’s gonna create a combination of things that are not gonna make you feel so good. You’re always gonna be second-guessing purchase decisions. You’re always gonna be hesitant about taking money outta your accounts. You’re gonna be watching the market day by day, just hoping that it continues to stay positive. Some people have even told me that there’s a little bit of guilt around spending in that kind of environment as well. And that’s a lot of times why people feel anxious, why they feel off. It’s not because they failed, it’s just because nobody ever helped them make the transition.

The transition of getting a paycheck from their job to getting a paycheck from their portfolio. Consider this with me for a minute. When you think about growth, growth builds assets. That’s what it’s supposed to do. Income, though, that’s not supposed to build assets. It’s supposed to support your life. Assets show what you’ve built; income shows what you can live on. And that’s why I’ve said, and why the theme of our show has been, you don’t retire on assets. You do retire on income.

If you are looking for a way to feel more confident about retirement and build a paycheck from your portfolio that doesn’t depend on daily market swings, well, that’s exactly why I wrote my book More Life Than Money. It’s an Amazon number one bestseller in multiple categories, and it can be yours absolutely free of charge as long as you request it. And to do that, it’s really easy. All you need to do is go to our website, which is providencefinancialradio.com/book.

Again, it’s providencefinancialradiocom/book. Leave us your information and we will get a brand new hardcover copy of More Life Than Money right out to you. You’ll have it in just a few days. One more time to claim your free copy of More Life Than Money, just go to providencefinancialradio.com/book and leave us your information. You will have it shortly, and you’re gonna really enjoy reading it.

I’m Anthony Saccaro. Thank you for spending some of your time with us and I certainly hope that you’ve learned a little more about why it is that you don’t retire on assets, but you do retire on income. You’ve been listening to the Providence Financial Retirement Show. Have a great week everyone. God bless.

Disclaimer: This transcript is provided for educational and informational purposes only and reflects a general discussion from a live radio broadcast. It is not intended as personalized financial, tax, or legal advice. Individual circumstances vary, and listeners should consult a qualified professional before making decisions.