What if everything you’ve worked so hard for could start unraveling in the first year of your retirement and you wouldn’t even see it coming? How would you even know if the decisions that you’re making today could turn into mistakes that you can’t recover from later? Well, today you’re going to learn how to stress test your portfolio so you can see whether your plan is built to survive or whether it’s just built on hope.

I’m Anthony Saccaro. Thank you for joining us today here for the Providence Financial Retirement Show. We are your retirement income source, and this is the place where retirees come for income because in retirement, your success is all dependent on your income. Retirement is chock-full of mistakes.

There is a lot of opportunities to get things wrong, and unfortunately, a lot of these mistakes might be fatal. That just means that you can’t recover from them. And unfortunately, many of these mistakes are made early on in retirement and they make your retirement much more difficult in the later years when there’s not a lot of options for you to be able to fix them.

In today’s show, you’re going to learn some of the more common mistakes that I’ve seen retirees make, and we’re gonna show you how to stress test your portfolio so you can see if you’re making any of these mistakes so you can catch them earlier rather than later. And as we always do, we’re gonna answer a few of your listener questions along the way as well.

So you’re gonna wanna stay with us. Without question, the most common mistake that I’ve seen retirees make over my career of almost twenty-seven years is not having a plan. Most retirees don’t have a plan. They have a portfolio, they have a mix of accounts, and they have a general belief that things are just going to work out.

But there’s a big difference between having investments and having a retirement strategy. Many retirement plans that I’ve reviewed are taking on too much risk for the situation that that individual is in. The stock market’s been going up really strong for the last thirteen years, and that can create a false sense of security.

When you’re in the accumulation phase of life and you’re heading towards retirement, it really is all about the balance. Your money has one job and that is to accumulate, to grow. When you get into that retirement or that pre-retirement phase, though, it’s not all about growth. It becomes about principal protection and it becomes a lot about income.

And a question that many of you are asking whenever you get your statements is: What is your portfolio balance? Well, that’s the wrong question. The question should be: How much income can you get from your portfolio and not have to worry about whether you’ll ever run out of money before you’ll run out of life?

And yet I find that most retirees are still looking at their portfolio balance, not the amount of income they can get. And that can be a mistake that later on down the road you can’t recover from. I live in California, and fires in California are a real threat to homes that are in hillside area. Imagine buying a home in California that is in a hillside and could potentially be burned down by a fire in the future, and not even thinking about that possibility or doing anything at all to protect yourself from the potential fire that may happen in the future.

You’re probably thinking that that just would be irresponsible, and you’d be right. But many people when they go into retirement do the same thing. There are a lot of risks in retirement, and they’ve never been thought out. They’ve never been considered. And if you don’t know what these risks are, then you might be making them, and you might not even know it.

And as I mentioned before, they might not show up until it’s too late. Just yesterday, I was talking to a friend of mine who has recently retired, and I identified a couple of risks in his own retirement that he hadn’t even considered. And I know that he’s not the only one. Many of you have risks in your own retirement situation that you probably haven’t even thought of.

And the first step to correcting or fixing a risk is to identify that risk. And because you’re a listener of the Providence Financial Retirement show, I want to help you with that. And that’s why we’ve put together this animated video that talks about the seven most common retirement risks that retirees are making and don’t even know it, to help you learn what those risks are and what you need to do to mitigate them.

If you want to get this video, we’ll email it to you absolutely free of charge. All you have to do is go to our website and ask for it. Our website is providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your information, and in a short time, that video will show up in your inbox, and all you have to do is press play.

You’ll be able to watch it. And it’s fun because it’s animated, and it’s also short, seven or eight minutes, so it won’t take you too long. But you will learn what the seven most common risks are, and then you can find out if you’re making any of them. It helps you really stress test your own situation by knowing what these mistakes are.

To claim your free animated video, once again, go to providencefinancialradio.com/video and you’ll have it shortly. I’m Anthony Saccaro. Thank you for being with us today. We’re spending our show talking about the risks in your retirement plan that you might not even be aware of. And it’s really easy to ignore the risks or not even consider what the risks might be when everything is going well.

But when things turn south, that’s when the risks get identified. I heard Warren Buffett say one time that you never actually know who’s swimming naked until the tide goes out. I actually think that’s funny, one of my favorite sayings by Warren Buffett. But the point is, is that until the risk actually happens, you might not even be aware that you’re taking it.

How do you become aware then? Well, first of all, you have to know what the risks are, and second of all, you have to then prepare for them, and I often refer to that as stress testing your retirement plan. This will help you identify the risk before it’s too late. You’ve no doubt heard that banks and financial institutions often are stress tested by the government.

Why? Because they wanna make sure that if things go bad, that these banks aren’t going to fail, that they have enough cash reserves, and that they’re gonna be able to meet their obligations, so it’s required by law. Well, in a retirement scenario, you’re not required to do anything. But if it’s required by law that a bank or other type of financial institution be prudent with their money and meet certain requirements to make sure that they’re gonna be prepared in a worst case scenario, it’s probably a good idea for you to do the same thing.

But I find that most people don’t. Stress testing your portfolio is something that I know that most of you have never done, but I also know that you should. I also know that most of you in real life don’t even know what that means or how to even start. It really boils down to two simple steps. Number one, as we’ve talked about, is you have to identify the risk.

Number two, you have to look at your retirement situation as a whole and ask yourself, are you exposed to that risk? Not just your portfolio, but your entire plan, your income plan, your withdrawal strategy, your tax structure, and the overall flexibility. You have to identify the risk, and then you have to take a hard look at your portfolio to see if you’re going to be okay if any of these risks occur or if any of these risks might affect your entire retirement.

I wanna spend a minute and talk about one of the most dangerous risks that a lot of you are making and not even aware of, and it’s not just that the market might drop, but it’s that it drops at the worst possible time for you. And this actually takes us to our first listener question of the day, which is right on point, and it comes from Linda in Thousand Oaks, and she wrote in this: “My husband and I are both planning to retire within the next year.

We’ve done well in the market over the last several years, but I keep hearing people talk about timing risk and retiring into a market downturn. If the market were to drop right after we retire, how much of a problem is that really? And is there anything that we should be doing now to protect ourselves?”

And Linda, that’s exactly the type of question I think that you should be asking yourself right now, because this is a textbook example of a risk that can quietly derail your retirement, and you wouldn’t know it until it’s too late. What you’re describing, Linda, is called sequence risk. It’s not just that the market drops, but it’s when it drops.

If you’re gonna be taking income out of your portfolio when you and your husband retire in a year, then sequence returns becomes very important. If you’re not gonna need any income from your portfolio at all, then it really doesn’t matter. It’s not that big of a deal. But if you’re gonna start taking income from your portfolio when you retire, sequence returns has a big impact on the future of your retirement.

Why? Because the numbers show that when the market drops in the first few years of retirement, you will have a whole lot less money at the end of retirement than if the market were to drop towards the end of your retirement. It’s all about timing. It’s all about the sequence of return as to when the market drops, not just the fact that it drops.

The market now is just about at record highs, and yet there are a lot of economists and professionals, including me, that are worried about the market over the next couple of years. And if it does crash right before you retire, it may cause you to have to delay your retirement or may cause you to have to change your lifestyle or a number of other things that would be negatively impacted because you were invested too much in the market.

So it’s a huge risk, Linda, and I think you’re asking the right question. And without knowing much more about you, I do think that it’s probably a good time to start shoring up your portfolio so you can retire on your schedule and your retirement is not dependent on what the market does. I really appreciate you taking the time and writing in that question, and I certainly hope that helps.

Sequence of returns risk is certainly one of the most dangerous and yet one of the least considered risks when it comes to your retirement. But there are certainly other risks as well, and if you’d like to learn what some of these other risks are so that you can be prepared and stress test your portfolio against them, well, that’s exactly why I wrote my book, More Life Than Money.

I talk about the ten most common mistakes that I’ve seen retirees make, so you can identify them, and of course, I discuss how you can avoid them. I’ll send you More Life Than Money free of charge. All you have to do is go to our website and request it, and you can do that by going to providencefinancialradio.com/book.

Again, it’s providencefinancialradio.com/book. Leave us your information, and in a few days, a hardcover copy of More Life Than Money will show up on your doorstep. But you’ll learn about the most common mistakes that retirees make and what you need to know to avoid them. Just go to providencefinancialradio.com/book and we’ll get it right out.

Thank you for continuing to stay with us. You’re listening to the Providence Financial Retirement Show. My name is Anthony Saccaro. Super glad that you’re here. We’re talking about stress testing your portfolio so you can identify the risk that you might not even be aware of, and then take a hard look at your entire retirement situation to see what would happen if one of these risks actually comes to reality sometime later down the road.

Would you be okay, or would it create problems and put you in a position to have to worry about running out of money before you run out of life? We’ve already discussed sequence of returns risk, but I want to turn our attention now to another risk, which is tax risk. This is one of those risks that could actually have a significant impact on your retirement lifestyle later down the road.

What happens if taxes are significantly higher in the future? We’re not here talking about a market crash, and it’s not a sudden event like a market crash would be, but more of a slow, steady cancer that it just increases quietly that erodes your income. Right now, many of you are feeling like your taxes are manageable.

You’re used to paying them. You know what you’re gonna pay, and most of your planning is done year by year, and you’re trying to save a little bit of tax dollars every year. But retirement planning isn’t about this year, and that’s one of the biggest mistakes that I see retirees make. They do tax planning year by year by year without taking a look at the longevity of their retirement plan and how is the tax strategies that you’re using this year going to affect you in twenty or thirty years from now.

Tax planning should not be year by year in isolation. Tax planning should be over the long haul. How are the decisions you’re making today going to affect you in twenty or thirty years throughout the rest of your retirement? Because of the Tax Cuts and Jobs Act that President Trump put into place during his first term, taxes are relatively low.

I know it doesn’t feel like that when you go to pay them, but when you look historically at our tax rates, we’re in a pretty low, I almost want to say historically low tax rate environment. And that begs the question, where are taxes likely to go from here? What do you think? You think taxes are gonna go down or you think taxes are gonna go up?

Well, they’re gonna go up because we have so much debt right now in our country, and there’s gotta be a way to pay for all this debt. And the way the government pays for the debt is through their taxes. So whether it happens during Trump’s term or sometime after Trump’s term end, we don’t know, but we know that overall, they’re not gonna go down.

Taxes are going to go up. And if you’re not prepared for it, it may be one of those risks that you want to stress test your portfolio against to see how it’s going to affect you, not this year, not next year, but ten years or twenty years down the road. One of the more common mistakes that I’ve seen a lot of retirees make has to do with overloading their pre-tax retirement accounts.

This means that over time, you’ve put a ton of money into your 401Ks or your 403Bs or your other pre-tax accounts. When you put the money in, you save tax that year, but what you’re doing is you’re delaying the taxes until some point down the road when you wanna start making withdrawals from your accounts to live your retirement, or when the government forces you to start taking withdrawals from their accounts through required minimum distributions.

I think this is a perfect example of how we tend to look year by year and not over the long run. Year by year, it feels good. You save taxes this year because you made a contribution to your 401K. But 20 years from now, when you turn 73 or 75 years old, and the government forces you to take required minimum distributions, it’s not gonna feel so good because now you have to take that income, and you have to claim it as income, and you have to pay taxes on it.

It’s called a retirement account for a reason, and that is because the government actually wants you to use it in retirement, and they will force you to use it in retirement whether you need the money or not. And as you continue to build up these accounts, what you’re building up is a ticking tax time bomb that eventually is gonna explode unless you have done some strategic planning to make sure that that doesn’t happen.

When you have to start taking required minimum distributions, there could be a lot of negative ramifications you’re not even aware of. It may cause your Medicare Part B premiums to increase. It may cause you to have to pay more tax on Social Security. It may cause you to be in a higher tax bracket. A lot of negative ramifications come from required minimum distributions.

This may be the first time that you’ve ever thought about that. Might be the first time that you’ve ever realized you’re actually building a ticking tax time bomb, and the best way to defuse that bomb is to never build it in the first place. And if you’re familiar with the idea of RMDs, but maybe you’re not as familiar with that ticking tax bomb concept that we just talked about, and you wanna make sure that your bomb is not ticking and ready to explode, well, I’ve created a video, an animated video, all about that, that will talk about RMDs and what you need to do to avoid that tax time bomb.

We’ll send it to you absolutely free of charge. You just have to leave us your information, which you can do by going to providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your information and shortly you’ll have an email in your inbox. All you gotta do is press play, and you’ll be able to watch this video about required minimum distributions and learn what you need to know so that you don’t become a victim of that bomb exploding on you later in life.

And it’s fun to watch because it is animated, and it’s only seven or eight minutes long as well too, so you’re really gonna enjoy it. But more importantly, you’re gonna learn what you need to know to make sure that you’ll be protected down the road because you were smart enough to make some decisions before that bomb went off.

Just go to providencefinancialradio.com/video and we’ll get that video right out to you. You’ll learn what you need to know so you can stress test your portfolio, not for market risk, but for tax risk. Thank you for hanging with us. My name is Anthony Saccaro, and you’re listening to the Providence Financial Retirement Show.

We’re talking about stress testing your portfolio, taking a look at the potential risks that you might be incurring and not even knowing it, and then being in a position to take a hard look at your portfolio to see if you’re making any of these risks, and if so, being able to solve them before they become a problem.

We’ve already talked about market risk and sequence of returns risk, and we’ve talked about tax risk. But I wanna talk about a risk now that affects you every single day, and yet most people underestimate how damaging this risk can be over time, and that risk is inflation. What happens if inflation stays higher for longer than expected?

I remember a conversation that I had with an engineer, oh, I don’t know, probably six months ago or so, and he had listened to the radio show and wanted to have a quick conversation with me, and part of what he wanted to do is just make sure that his spreadsheet and all of his projections were good and that he just wasn’t missing anything.

And when he was in my office, he laid out this beautiful spreadsheet. I’m not sure that I’ve seen a spreadsheet more beautiful than the one that he laid out. It was meticulous. He had his investments there. He had his average rates of returns. He had how much income. He knew where the income was gonna come from, and he just wanted me to bless it and sign off on it to make sure that he was gonna be okay.

But there was one glaring thing that was missing, and that is he did not adjust for inflation. And after reviewing it, when I asked him, “Where is the inflation adjustment in all of this?” I kid you not, he turned white as a ghost, and it was at that point that he realized he made a mistake and never even factored in inflation.

Fortunately, because he was smart enough to come to us before it became a problem, we were able to fix it, and it really wasn’t that big of a deal. We made a few adjustments here and a few adjustments there, and overall, his plan worked out really well, but we had to factor that in. Imagine for a minute, though, that he hadn’t have done that.

What would have happened if he didn’t realize that he had not factored in inflation 10 years from now when everything was a lot more expensive? It would have had a much greater impact on the rest of his retirement. But because he caught it early, that impact was really minimal. And again, we’re talking about stress testing your retirement plan.

The first thing is you have to identify the risk. In this situation, we’re talking about the risk of inflation. And then you have to ask, if inflation stays higher for longer, how’s that going to impact you? If 10 years from now prices are much higher than you’re anticipating, what is the result going to be on the rest of your retirement?

You might still have 20 years after that point, and if you haven’t planned on inflation and you haven’t adjusted your portfolio to compensate for that, you’re gonna be in real trouble. And inflation is not just about a number that you hear when you’re watching CNBC or Fox Business News or wherever else you get your news from.

Inflation means that groceries are gonna cost more, eating out’s gonna cost more. When you wanna travel and do some of the fun stuff, that’s gonna cost more. Healthcare, oh my gosh, that inflation goes up faster than anything else, and if you’re not prepared for it and you haven’t planned for it, it could wipe you out down the road.

And the time to plan for it’s not when it’s happening, but before it ever happens. You have to identify it, and then you have to have a plan for how you’re gonna deal with it if it happens. And inflation is just one of the risks that I identify in my book, More Life Than Money. There are a lot of risks to retirement.

Retirement is the most expensive purchase that you’re ever gonna make, and you only get one shot. And in More Life Than Money, which is an Amazon number one bestseller in multiple categories, I’ve identified the 10 most common mistakes that I’ve seen retirees make, so you can learn what they are and also how to avoid them.

If you want a copy of More Life Than Money, we’ll send it to you free of charge. To get it, all you need to do is give us your information at 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 within just a few days.

To claim your free copy of More Life Than Money, go to providencefinancialradio.com/book and we’ll get it right out. But you’ll learn the common risks that I’ve identified over my quarter of a century career of being a retirement advisor so that you can stress test your own portfolio against those risks.

We’re talking about stress testing your portfolio by identifying the risks that you might not be aware of and preparing yourself for these risks in case they happen sometime down the road. The next risk that we have to talk about is what happens when one spouse passes away. That’s a risk that I know from experience many of you haven’t really considered.

We’re gonna pick up our conversation and talk about that right here on the Providence Financial Retirement Show.

Welcome back. Thank you for being with us today. If you just hopped on, you’re listening to the Providence Financial Retirement Show, and 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 today about stress testing your portfolio so you can identify the risks that are in your portfolio and prepare yourself or take a hard look at your own retirement situation to see how these risks would affect you if they show up sometime down the road.

We’ve already talked about sequence of returns risk. We’ve already talked about tax risk. But we have to talk about a risk now that many of you are uncomfortable talking about and therefore haven’t really planned for it, and that is the risk of one spouse passing away before the other. That’s usually what’s gonna happen.

It’s not very common that both spouse passes away at the same time. But if your spouse does pass away before you, are you going to be okay? Well, there’s risks in one spouse passing away before the other, and we need to talk about those. You need to know what they are. And that’s gonna take us to our next listener question of the day, which ties in nicely, and here it is: “Anthony, this is Robert from Westlake Village.

My wife and I are both retired, and thankfully we’re both healthy. But it got me thinking, if something were to happen to one of us, what actually changes financially for the surviving spouse? Does the income stay the same, or are there things that we should be planning for now?” Robert, I’m really glad that you took the time to ask this question because this is one of the most overlooked areas in retirement planning.

Unfortunately, it’s often not addressed until it’s too late, until one spouse has passed away. When that does happen, though, there’s a compounding effect. The first thing is that in many cases, income is going to drop. I was just talking with someone recently who said that when one spouse passes away, the income for the surviving spouse is gonna stay exactly the same.

But then I found out that they were both getting Social Security, and I had to inform the individual that you’re going to lose a Social Security when one spouse passes away. I don’t know why it’s so misunderstood, but oftentimes people think that the surviving spouse is gonna get the larger Social Security, which is true, but they forget that the smaller Social Security benefit is gonna be gone.

There’s going to be a loss of income, and depending on your Social Security situation, it could be a dramatic drop. Another area that often impacts surviving spouses is taxes. This surprises a lot of people. The reality, though, is that if you’re married now, you’re filing a joint tax return, which means that you’re paying less tax because you’re married.

The IRS tax code favors married individuals. And when one spouse passes away, the surviving spouse becomes a single filer, and that means that their taxes are gonna go up. That simply means that the taxes are gonna go up at the same time that income goes down. Now, this is almost never considered. Another area that I often see retirees make a mistake in is assuming that when one spouse passes away, the expenses are gonna drop proportionally.

But that almost never happens. Your expenses when one spouse passes away usually don’t go down by a whole lot. Maybe it’s gonna drop a little bit by the food that they’re eating that they’re no longer gonna eat, maybe a little bit less in clothing costs. But outside of that, your expenses are really gonna remain about the same, whether both of you are alive or whether one spouse passes away.

And if you’ve been planning on expenses dropping dramatically when one spouse passes away, it could catch you off guard down the road when you find out that that’s not true. And Robert, these are three instant areas that came to mind as soon as I read your question. Number one, your income’s gonna be reduced.

Number two, your taxes are probably gonna be increased. And number three, your expenses are not gonna drop proportionally. And I do wanna thank you, Robert, for taking the time to write in that question. When one spouse passes away, as you’re starting to realize, there really is a compounding effect. It’s not just that you lose income, or it’s not just that your taxes go up.

It’s not just that your expenses don’t drop as much as you think. All of these things happen simultaneously at the same time, and it creates a compounding effect that if you haven’t planned for or stress tested your retirement plan against that ahead of time, any of these, much less all of them, could cause major retirement problems for the surviving spouse.

Losing a spouse is never fun, but it does create risks that you have to be aware of, risks that you don’t even wanna think about because you don’t want to have the thought of losing a spouse. But this is just one of the risks that we’ve identified in an animated video that we’ve created just for you, because there are a lot of risks in retirement, and we’ve identified seven risks in this video that’s only seven or eight minutes, and it’s animated, so it’s fun to watch.

But when you do watch it, you’ll learn what the most common risks are in retirement so that you can be aware of them, and you can then stress test your retirement situation to see if you’re making any of these risks and whether it would affect you down the road if any of these risks come true. I’m gonna email you this video absolutely free of charge.

All you have to do to claim it is go to providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your email address and other information, and we’ll get it right out. But you’ll be able to watch it, and I know that you’re gonna enjoy it. To claim your free video about the seven most common retirement risks that I’ve seen retirees make and what you need to learn to avoid them, go to providencefinancialradio.com/video.

You’re listening to the Providence Financial Retirement Show. I’m Anthony Saccaro. I wanna thank you for those of you that have listened to us for years or even decades, and I certainly hope that you’ve gotten the information you need over that time to help you enjoy retirement, to have the peace of mind and confidence in retirement, and the clarity that you deserve so that you’re not in retirement wondering if everything’s gonna be okay, but knowing that everything’s gonna be okay.

And I do thank you for continuing to join us. Today we’re talking about stress testing your portfolio by identifying the risks and then taking a hard look at your retirement plan to see if any of these risks would affect your retirement if they happen down the road. We’ve already talked about sequence of returns risk, we’ve talked about tax risk, we’ve talked about inflation risk, and now we’ve talked about the risk of losing a spouse.

I wanna shift our focus now to another risk, though, that’s a different type of risk. It’s a risk that has nothing to do with the market itself, but it can be just as damaging to your retirement. What happens if you make the wrong financial decision at the wrong time? This could be what I might call behavioral risk, and this is a risk that involves your decision.

What if you decide to sell at the wrong time? What about getting too conservative after a market drop because you got fearful? What about the other side of the coin, where you actually decide to take on too much risk because you’re comfortable with the fact that the market’s gone up for the last dozen years or so?

These are all behavioral decisions that could have a huge impact on your retirement if things don’t go in the direction that you’re counting on them going. In your working years, you can recover from mistakes because you’re adding to your portfolio. But in retirement, when you’re withdrawing income from your portfolio, you don’t have the same margin for error.

A bad decision at the wrong time can have consequences that affect your entire retirement. Selling your investments after a market drop and missing the recovery, I see that all the time. I talked to a lady who had her million dollars drop to four hundred thousand dollars back in two thousand and eight.

She sold everything at the worst possible time, and even now, because she never reinvested in the market and missed the entire recovery, her portfolio is still only worth about seven hundred thousand dollars. And that’s because she sold at the wrong time and invested too conservatively because she got scared.

I’ve also seen the other side of the equation. A lot of you today are feeling very comfortable with the market because it’s been a really long time since we’ve had a major market crash that’s lasted an extended period of time, and we know that it could happen again. As a matter of fact, a lot of professionals are worried that it’s gonna happen again.

And if you decide that you wanna take on more risk than maybe you should because it’s all gonna work out and the market always goes up, well, that could be devastating if you happen to be wrong. Because when you look at market history, there are really long periods of time where the market hasn’t grown at all, and I’m talking about time periods that last as long as two decades.

Here’s the stress test question that you need to ask yourself: If the market drops significantly, do you know exactly what you would do? Would it affect your retirement, or would you be able to maintain your same retirement lifestyle? That’s the retirement stress test question that you have to ask when it comes to market risk that you’re taking.

In my book, More Life Than Money, I spent a lot of time in chapter five talking about the difference between investing in the working years of your life versus being invested in the distribution years, your retirement years. And when I get feedback on that chapter, most people tell me that it opened their eyes, and they saw things in a completely different light, and I’m confident that you’ll probably have that same realization.

And that’s why I wanna offer you More Life Than Money absolutely free of charge just for being a listener of the Providence Financial Retirement show. If you want More Life Than Money, we’ll get it out to you very quickly. All you have to do to claim it is go to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book.

Leave us your information. We’ll get it right out, and you’ll be able to read chapter five and find out if you’re taking too much market risk. But you’ll certainly learn what you need to know to be able to stress test your own portfolio and make any corrections before it’s too late. To claim your free copy of More Life Than Money, just go to providencefinancialradio.com/book, and you’ll have it shortly.

Thank you for continuing to join us here for the Providence Financial Retirement Show. I’m Anthony Saccaro. We are your retirement income source, and this is the place where retirees come for income. We’re spending our time together talking about knowing the risks that are involved in your retirement plan and being able to stress test your portfolio so that if one of these risks happens, you know that you’re gonna be okay.

We’ve already talked about market risk. We’ve talked about tax risk, inflation risk, the risk of losing a loved one, and now we’re gonna change gears and talk about a risk that can show up suddenly, and this is a risk that can create significant financial impact almost overnight, and that risk is a major health event or the need for long-term care.

If you’ve been with us, you’ve already learned that some risks tend to grow quietly, like inflation risk or tax risk. They don’t generally show up overnight. But other risks do, like market risk. You could have a major drop very quickly in your portfolio, and that’s a sudden risk. With the market though, you know it’s always gonna come back, so you might just be in a position to have to wait it out.

The problem though with a healthcare event, especially when we’re talking about long-term care, is that it could happen suddenly with a major medical event like a stroke or something else, and it could last for a long, long time. And unfortunately, over my career of more than a quarter century of being a retirement advisor, I’ve seen a significant long-term care event wipe out a multi-million dollar estate in just a matter of years.

And the amount of stress and tension it creates, oh my gosh, it’s not something that you ever want to go through. But you have to be prepared in case something like this happens to you, because none of you are immune to that risk. What’s unfortunate about a long-term care event, too, is that most of the times it comes when you’re already under some type of financial stress.

Usually, it happens when you’re in your 80s, although of course it could happen earlier or later. But in your 80s, you’re already locked into your income. You already have income coming in from your multiple sources. When you’re in your 80s, you’re often taking as much income as you can from your portfolio.

And now, if you have an extra $150,000 or $200,000 a year that you have to pay for because that’s what long-term care could cost you these days, there aren’t many of you that are gonna be able to survive that for a terribly long period of time. Some years ago, I’m recalling that one of my really dear friends who was responsible for his aunt and uncle watched them go through a couple million dollars in just a period of a few years because they both needed long-term care at the same time.

And they were responsible, they were well off when they retired, but they hadn’t prepared properly for long-term care, and their entire estate almost went to long-term care expenses instead of to the people that they wanted it to go to, just because they hadn’t really considered the risk and what they would do if they needed long-term care.

And I don’t want that to happen to you. Generally speaking, there are four ways that you can actually protect yourself against long-term care, and one of the ways is to use what’s called an asset-backed long-term care insurance policy. It’s fairly new in the world of insurance, but if you’ve turned down long-term care insurance in the past because you think you know how it works or it was too expensive, you’ve gotta check out these new programs because they will actually guarantee you a specific amount of monthly benefit.

And if you never need long-term care, then whatever you paid into the insurance policy generally goes back to your beneficiaries. So you don’t really lose anything if you don’t need it. And yet, if that doesn’t make sense, there are other ways to protect against long-term care as well. Usually not as good.

If you wanna learn more about asset-backed insurance, though, maybe this is something that’s intriguing you, well, in my book, More Life Than Money, I wrote an entire chapter about it. You’ll learn exactly what you need to know about how it works, whether it makes sense for you, and I even give you some practical illustrations as to how it could work under different scenarios.

If you wanna receive a copy of More Life Than Money, I’ll send it to you because you’re a listener of the Providence Financial Retirement Show, but you do have to ask for it. You can do that by going to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information, and we’ll go ahead and get it right out.

You’ll have it in a few days. To get your free copy of More Life Than Money, just go to providencefinancialradio.com/book. You will have it shortly. And not only will you learn about asset-backed long-term care, but you’ll also learn about ten other common mistakes that I’ve seen retirees make so that you can be aware of what they are and then stress test your portfolio against them as well.

providencefinancialradio.com/book. That’s where you need to go to get your free copy. I’m Anthony Saccaro. I’m really glad that you’re here with us today for the Providence Financial Retirement Show. We’ve spent our entire show talking about identifying the risk and stress testing your portfolio just to make sure that if one of these retirement risks pops up later in life, you’re gonna be okay and it won’t cause you to have to worry about running out of money before you run out of life.

We’ve already looked at stress testing your portfolio from several different angles: market risk, taxes, inflation, loss of a spouse. We talked about bad decision-making, and now we just talked about the risk of a long-term care event. The real question, though, is how do you actually do this in a very practical way?

Because it’s one thing to hear about all these risks, it’s another thing to actually evaluate your own situation, and that’s what I wanna help you do now. And the first thing you have to do is you have to start with clarity. What do you actually have? What accounts do you have? What are your income sources?

What are your expenses? I’ve found that most people don’t have a clear, organized picture as to what their retirement currently is. They just kinda take money as they need it and hope everything’s gonna be okay. And you can’t stress test what you don’t have clarity about. The first step then is to know where you stand.

Get clarity on your current situation. The next thing you have to do is you have to identify your income plan. If you’re not retired, where is your income going to come from in retirement? And of course, if you are retired already, where is your income coming from? You don’t wanna just say, “I’ll take it from my portfolio,” but you have to be very specific.

What accounts are you gonna take it from? In what order? Under what conditions? Income planning is the foundation of everything, and you have to know what your income plan is. The next practical step is to run a what if scenario, and this is probably the most practical of all. How would your retirement be affected if the market drops early?

How would it be affected if taxes increase in the future? What about inflation? If it stays high, how would your retirement and your spending be affected? When one spouse passes away, you’re gonna lose some income. How’s that going to affect your retirement plan? And if you run what if scenarios, it’s really gonna shed some light on what you need to do now to protect yourself if those events happens.

What if? Another thing you wanna do is you wanna look for pressure points. Where does your plan break? Is your plan too dependent on market performance, meaning that as long as the market goes up, you’re gonna be just fine, but if the market crashes, you won’t be? Is it too exposed to future taxes, meaning that you’ve put everything in tax-deferred retirement accounts, and you have that ticking tax time bomb that we talked about earlier?

Is it too rigid with income? Every plan has weak spots, and the key is to identify those weak spots early. And once you’ve done this, once you know where you stand, once you’ve identified your income plan, once you’ve run your what if scenarios and you’ve looked for your pressure points, your weak spots where your plan could break if something happens, the next step then is to take action to fix the problems that you just identified.

And even once you’ve done that, you need to have a plan B. I ask people all the time, “What is your plan B?” And I don’t remember the last time that someone actually had a plan B. But things don’t always go the way you want. As a matter of fact, if we’re honest, oftentimes things don’t go the way you want, and plan B comes into place.

But you have to have a plan A, and then you have to have a plan B. And if you feel like this might be overwhelming and you wanna get some help doing this, well, I’m gonna invite you to contact us here at the Providence Financial Retirement Show, and I’m gonna make a stress test available to you absolutely free of charge.

And yet we’ve found that the stress test is really beneficial for people that have more than $500,000. So if that sounds like you and you want us to stress test your portfolio absolutely free of charge to help you identify the risks and even talk about what some potential solutions are, because you’re a listener of the Providence Financial Retirement Show, I’ll make that available to you absolutely free of charge.

All you have to do to sign up is go to providencefinancialradio.com/report. Again, it’s providencefinancialradio.com/report. And in the comments area, just let us know that you wanna get that stress test, and we’ll certainly get you on the calendar with one of our advisors, and we’ll be more than happy to stress test your portfolio to help you identify any mistakes that you might be making, along with some potential solutions.

To claim your free stress test, just go to providencefinancialradio.com/report. One more time, it’s providencefinancialradio.com/report. Give us your information and someone will be in touch with you shortly. And after we run the stress test, if you’re like most retirees that we run the stress test for, you’re probably gonna be shocked as to some of the risks that you’re taking that you’re not even aware of.

Just go to providencefinancialradio.com/report. Leave us your information. Someone will be in touch with you shortly. I’m Anthony Saccaro. Thank you for joining us for today’s Providence Financial Retirement show, where we’ve spent our entire time talking about stress testing your portfolio to find out if you’re making any mistakes that might cost you down the road in your retirement.

I certainly hope you’ve enjoyed the 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.