Anthony Saccaro: Well, hello and welcome to another edition of the Providence Financial Retirement Show. We are your retirement income source, and this is the place where retirees come for income. Really glad that you’re joining us today because we’re gonna talk a little bit about your beliefs, and I want to ask you a question.

Why do you believe what you believe?

Because here is the truth: You don’t believe what’s true. You believe what gets repeated. When it comes to retirement, some of the most commonly repeated ideas don’t always hold up in real life. You’re gonna learn today why the 4% rule, why taxes in retirement, the idea that you can adjust later, and the belief that the markets always come back deserve a closer look. And I’m pretty sure that you’re gonna be surprised with some of the things you learn.

Of course, we’re gonna take your listener questions along the way, as we always do.

Anthony Saccaro: So shall we jump right in? Let’s do that. Let’s start with belief number one, and that is this: The 4% rule is something you can count on.

One of the most commonly repeated ideas in retirement is this 4% rule. If you’ve spent any time reading articles or listening to podcasts or talking with friends who are retired or maybe close to it, you’ve probably heard about it. The idea sounds simple and comforting. If you take about 4% per year from your portfolio and you adjust for inflation, your money should last, and that’s essentially what the 4% rule tells us.

And yet that simplicity is exactly why people believe it. The 4% rule gives retirees something to crave: a single number. One clean answer to a very complicated question. How much can I spend? 4%. How long will your money last? Supposedly? Forever.

But here’s the problem: Retirement doesn’t work neatly and life doesn’t follow formulas. The 4% rule didn’t become popular because it was perfect. It became popular because it was repeatable. It sounded responsible, it sounded academic, and once it started getting repeated often enough, it became something people stopped questioning.

I’ve met many retirees who have felt confident simply because they did the math. They didn’t feel reckless, they didn’t feel like they were gamblers. They felt prepared. After all, they weren’t spending 6% or 7%. They were doing the conservative thing. They were only spending 4%.

But retirement does not care how you feel. Spending in retirement isn’t smooth. Markets aren’t always cooperative, and life doesn’t arrive in tidy inflation-adjusted increments. Some years you’re gonna spend far more than expected. Other years, unexpected expenses are gonna show up all at once. Healthcare costs don’t follow spreadsheets and neither do family needs or tax changes or market downturns.

The real danger of the 4% rule isn’t that it’s always wrong. The danger is that people treat it like a guarantee instead of what it actually is: a general guideline based on past assumptions, not future realities. Think about it this way: using the 4% rule without context is like setting your car on cruise control and assuming that the road ahead will stay flat and dry and empty. It might for a while, but retirement roads have traffic, potholes, weather detours, and sometimes they all happen at the same time.

Another issue that people don’t think about when retirement withdrawals happen is that the math behind the 4% rule doesn’t feel so comforting if the market drops early in retirement. Losses combined with withdrawals can permanently change outcomes even if the markets eventually recover. And yet, that 4% rule, it keeps getting repeated.

Why? Because it’s easier than saying, “it depends.” It’s easier than admitting that income planning requires flexibility and strategy and ongoing attention, and it’s much easier than facing the uncomfortable truth that retirement income isn’t something you solve once and then move forward blindly from there.

And I wanna be clear, the goal here isn’t to scare you or tell you that every rule of thumb is useless. The goal is to get you thinking, to question whether a number you’ve heard repeated over and over and over again is enough to build a retirement around. Because retirement isn’t just about percentages, it’s about paychecks, it’s about timing, it’s about stress or lack of stress. It’s about knowing that no matter what the market does next month or next year, your lifestyle isn’t hanging on a formula that you barely understand, and that might not even be true to begin with.

Anthony Saccaro: We talked about why the 4% rule became so popular—it’s not because it was so perfect, but because it was simple, repeatable, and comforting. Naturally, that leads to a question I hear all the time. This particular question came in from a listener, Brian from Laguna Niguel. He wrote: “If the 4% rule worked for people in the past, why wouldn’t it still work for someone retiring today?”

Brian, that’s a fair question, and it’s exactly the kind of question that I think people should be asking. The short answer, Brian, is this: retirement hasn’t stayed the same, even though the advice has. Most people assume that if something worked for retirees 20 or 30 years ago, it should continue working that way just as well. But that assumption ignores one critical thing: conditions have changed.

Think about retirement like flying an airplane. A flight plan that worked yesterday doesn’t automatically work today if the weather and fuel and altitude and all the runway conditions are different. The destination might be the same, but the environment isn’t.

And the same is true when it comes to retirement income. People are living longer today, and just that alone changes everything. A plan designed around a 20-year retirement looks very different from one that has to last 30 or 35 years. The longer income needs to last, the less margin there is for error early on.

Markets are different today too. Volatility isn’t new, but the speed and severity of the market moves are very different from decades ago. When large market declines happen early in retirement and when withdrawals are just starting, the impact can be permanent. Even if markets recover later, the money that was taken out during the downturn doesn’t get a chance to recover.

And then there’s also retirement spending behavior. The 4% rule assumes smooth and consistent spending adjusted neatly for inflation, but that’s not how real people live. Retirement spending is lumpy. It comes in waves—travel early on, helping adult children later in life, healthcare, sometimes big expenses that you’re not even aware of, and unfortunately sometimes they happen all at once.

Taxes play a bigger role than most people expect. Withdrawals aren’t just about percentages. They’re about what you keep after taxes. Required distributions, Social Security taxation, Medicare premiums—all of those can stack on top of each other. And the 4% rule, it doesn’t adjust for any of that in real time.

But here’s the most important part of your question, Brian. The 4% rule assumes discipline, consistency, and emotional control. Things that are easy to assume on paper, but much harder to maintain in real life. It assumes that you’re gonna calmly withdraw the same percentage whether markets are up or down. It assumes that fear is not gonna change your behavior. It also assumes that confidence won’t turn into panic at exactly the wrong time. That’s not criticism. It’s just human nature, and that’s why retirement income planning shouldn’t start with a rule. It should start with questions.

How do you wanna live? What needs to be reliable? What risks matter the most to you? Where do you need certainty and where can you be flexible? When people rely too heavily on a rule like 4%, they often miss the bigger picture. Retirement isn’t about getting the math right once. It’s about creating a system that can adapt without forcing painful decisions when conditions change.

The reason the 4% rule doesn’t always work today isn’t because it was foolish or irresponsible. It’s because it was never designed to be a promise. It was always a starting point. And somewhere along the way, repetition turned it into something more than it was ever meant to be.

Anthony Saccaro: We discussed how this applies to the rule of 4% that many of you believe, and now we’re gonna change gears and we’re gonna talk about how this is relevant to taxes.

One of the most commonly repeated beliefs in retirement is this idea that once you stop working, your taxes are automatically gonna go down. On the surface, that sounds perfectly logical. No paycheck, no W2, so people tend to naturally just assume a lower tax bill. And for many years that was actually true for a lot of retirees, but that’s exactly why this belief has stuck around—because it was repeated so often. But retirement taxes don’t work the way that most people expect, and the surprise usually doesn’t come until after someone has already retired.

I’ve had many conversations with retirees who say something like this: “I thought taxes were supposed to be lower in retirement, but that’s not what’s happening.”

Well, what’s happening isn’t that they made a mistake. It’s the way that income shows up in retirement is different, and the tax rules change with it. During your working years, taxes tend to feel more straightforward. Money comes outta your paycheck automatically, and what hits your bank account is what you get used to spending. In retirement, though, income comes from multiple sources and all at different times, and each of those sources can be taxed differently.

Social Security is a great example. Many people just assume it’s tax-free, but depending on how your other income lines up, a portion of it—most of the time—is gonna be taxable. Required Minimum Distributions from retirement accounts also add to your income. They can force income onto your tax return whether you actually need the money or not. And Medicare premiums, these can increase based on your income and it often feels like an extra tax, even though it really doesn’t show up in that way.

The real issue is that most people never plan for this because the belief that taxes go down in retirement gets repeated so often that it turns into a “true” belief—but it’s not. It’s an assumption, and assumptions are often very expensive. Once you’re already retired, your options are more limited. Income sources are in place, distribution schedules are set. Social Security decisions have probably already been locked in, and at that point, planning becomes reactive instead of proactive.

Retirement doesn’t eliminate taxes, it rearranges them. And when those taxes show up differently than expected, they can quietly change your spending and your lifestyle, and more importantly, your peace of mind.

Anthony Saccaro: What I wanna focus on now is why retirement taxes are so difficult to correct once you realize that they’re actually higher than you expected. One of the biggest reasons is that retirement income doesn’t arrive in isolation. It tends to stack on top of each other. Multiple income sources that feel manageable on their own can create a very different tax picture once they actually show up together.

You might have Social Security coming in. You have distributions from your retirement accounts. Maybe you’ve got some investment income layered on top of that, and none of those feel overwhelming by themselves. But together they can push income higher than expected and trigger tax consequences that you never planned for.

And this is where retirees often say, “I didn’t realize one thing would affect the other.” And that’s understandable because during your working years, those interactions rarely matter. In retirement, they matter a lot.

Another reason taxes might feel more painful in retirement is because of visibility. While you’re working, taxes are largely hidden. They come outta your paycheck before you ever see the money. In retirement though, you are going to feel them. You see the withdrawals, you see the tax bill, you feel the Medicare premium increases—the same dollars simply feel heavier.

But the most important issue isn’t just how taxes show up. It’s when they show up. Many of the most effective tax decisions in retirement need to be made before or early in retirement. Once Social Security has started, once Required Minimum Distributions are in motion, and once your income streams are established, your flexibility really narrows.

That doesn’t mean that there’s nothing you can do later, but it does mean that planning becomes more about managing consequences than shaping outcomes. And this is why the belief that taxes automatically go down in retirement can quietly do damage. It encourages people to delay thinking about taxes until retirement begins. By then, some of the most powerful planning windows have already closed.

And this comes back to repetition. When people hear the same idea over and over again—that taxes are gonna be lower, that things are gonna be simpler—they just stop challenging it. They just assume that retirement is naturally gonna reduce complexity. In reality, though, retirement often introduces complexity that you didn’t expect.

Anthony Saccaro: We’re gonna move into a third belief that many of you believe. But is it really true? Do you believe it because it’s true or do you believe it just because it’s been repeated a lot? And that is this: the belief that you can always adjust later in life if something goes wrong.

This is a belief that gets repeated all the time in retirement planning. It’s the idea that if something doesn’t go according to plan, you can just always adjust later. And I certainly understand why that sounds reasonable. Most people don’t want to overreact. They don’t wanna lock themselves into decisions too early. They want flexibility. They wanna feel like they’re keeping their options open. So they tell themselves, “let’s just see how it goes, and if something changes, we will deal with it later.”

The problem is though, in retirement, flexibility doesn’t stay constant. It usually shrinks. What people underestimate is how quickly circumstances can change. Once paychecks stop, markets don’t move in straight lines. Health isn’t always gonna cooperate. Tax rules are gonna change, life’s gonna happen, and these things usually don’t show up one at a time. Oftentimes, they show up altogether. And waiting feels harmless when everything is calm. But calm periods are exactly when options are created. When stress arrives, those options are often already gone.

Think of it like maintaining a house. If you notice a small issue with the roof, you can put it off for a while and nothing terrible is gonna happen. But once a major storm hits, that small issue might become a big problem, and now you’re fixing it under pressure and usually at a much higher cost.

Retirement works the same way. The idea that you can always adjust later assumes that adjustments are gonna be easy and available and affordable, but many retirement decisions aren’t that flexible once they’re set in motion. Social Security timing is difficult to undo. Required Minimum Distributions aren’t gonna wait for you. Your tax brackets and Medicare premiums are also not gonna pause while you’re trying to figure things out. And that’s why this belief is so dangerous. It sounds calm, it sounds rational, but quietly under the surface, it delays the very planning that creates flexibility.

Anthony Saccaro: We had a listener question that came in that’s right on target to the heart of this belief, and it comes from Susan in Encinitas. She wrote: “Is it really that risky to wait a few years before doing some serious retirement planning?”

Susan, that’s a great question. The risk, Susan, isn’t that something bad is definitely gonna happen if you wait. The risk is that if something does happen, your ability to respond might be limited. Planning early isn’t about predicting every outcome. It’s about creating choices before you need them.

The retirees who have the most flexibility later in life, I’ve found, are usually the ones who made intentional decisions earlier. They didn’t rush, but they didn’t procrastinate either. They thought through their income sources, their tax exposure, and their risk while they still had time on their side. On the other hand, retirees who rely on the idea that they’ll “figure it out later” often end up reacting instead of choosing.

Adjustments still happen, but they happen because they’re forced to happen, not because they’re optimal, and forced adjustments are rarely comfortable and rarely work out to your best interest. Retirement planning isn’t about locking yourself into a rigid plan. It’s about building a framework that can absorb change without turning every surprise into a crisis. And that kind of flexibility doesn’t come from waiting. It comes from preparation.

So thank you, Susan, for taking the time to ask the question. If things are going great for you right now and you’re on the verge of retirement, as you indicated, it’s probably a better time to plan than you will ever have in the future.

Anthony Saccaro: What I wanna focus on now though is why those adjustments are often harder in real life than they look on paper. On paper, adjustments sound simple. You just spend a little less. Or you shift money from one place to another, or you delay a decision. None of that feels overwhelming when you’re thinking about it ahead of time.

But retirement doesn’t happen on paper. It happens in real time, and it happens with real markets and real emotions and real constraints. Many adjustments assume ideal conditions. They assume that markets are gonna cooperate and that your health is gonna allow flexibility, and they assume that the tax rules are not gonna change. They assume that you’re gonna feel comfortable making decisions during periods of uncertainty—but that is a lot of assumptions to rely on at one time.

Timing is another critical factor. Adjustments are much easier when they’re optional. They’re far more difficult to make when they’re forced. The same change that can feel manageable when it’s planned for can often feel very stressful when it’s reactive. Reducing spending is a good example of that. Cutting back gradually as part of a plan feels very different than cutting back suddenly because something unexpected happened. Even if the dollar amount is the same, the emotional impact isn’t.

There’s also the behavioral side of retirement that often gets overlooked. When markets are down or headlines are unsettling, people don’t always act the same way that they would when everything is calm. Decisions that felt reasonable in calm conditions can feel risky when uncertainty is high, and that’s when hesitation or delay or emotional decisions can creep in.

The retirees who handle these moments best aren’t necessarily the ones chasing the highest returns. They’re the ones who have planned for that uncertainty early on before it actually happened. They built margin into their plans.

They understood which income needed to be dependable and which parts could be flexible, and that kind of flexibility doesn’t happen by accident, and it certainly doesn’t happen by waiting. It comes from preparation. Assume flexibility often disappears at the worst possible time. Planned flexibility becomes a tool.

So when you hear someone say, “Well just adjust later,” it’s worth pausing and asking what that really means. Adjust from what position? With what options? And under what conditions? Those questions matter more than most people realize. But I find that it’s been repeated so often that you can just make changes later that most people believe it, even though it’s not true.

And yet, I’ve been a retirement advisor for 27 years, and what I believe and what I know to be true is that many of you are making mistakes because you believe them to be true—not because they are, but because they’ve often been repeated.

If you’d like to learn what some of those mistakes are, so you can challenge your own assumptions and your own beliefs about what you believe to be true, well, that’s exactly why I wrote More Life Than Money. It’s an Amazon number one bestseller, and I talk about the 10 most common mistakes that I’ve seen retirees make and exactly how to avoid them.

I’ll send you a copy, 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. Leave us your information and a brand new hardcover copy of More Life Than Money will show up on your doorstep in just a few days.

To claim your free copy of More Life Than Money, just go to ProvidenceFinancialRadio.com/book and we will get it right out.

Thank you for staying with us or just joining us. If you just tuned in, you’re listening to the Providence Financial Retirement Show. We’re in the middle of a deep discussion about the fact that you don’t believe what is true; you do believe what gets repeated.

We’ve talked about that so far in the context of the rule of 4%. We’ve talked about that with regards to taxes, and we’ve even talked about that belief with regards to what many of you believe: that you can always make adjustments later in life if things don’t go the way you want.

But now we’re gonna move on to the fourth and final belief, which I believe is the most destructive belief of all if you actually believe it. And that is: The markets will always come back, so you’re going to be just fine.

One of the most repeated beliefs in retirement planning is this idea that the market always comes back, and because of that, everything’s gonna be just fine.

And to be fair, this belief doesn’t come out of nowhere. If you look at long-term market history, recoveries happen. Down markets are followed by up markets and over time, the trend has always been positive, and that message gets repeated so often that it starts to feel like a promise instead of an observation.

The problem is that retirement changes how that entire story plays out. During your working years, market downturns are inconvenient, but they’re usually temporary. You’re still contributing, you’re still earning a paycheck. You don’t need the money right away, and time is on your side.

But when you’re retired, time behaves differently. Once you’re living off your portfolio, the timing of returns matters just as much as the returns themselves. Losses early in retirement don’t just hurt emotionally; they change the math for the next 20 or 30 years. Money withdrawn during down markets doesn’t get a chance to participate in the recovery that happens later.

I often hear retirees say something like this: “I know the markets are gonna come back. I am not worried about it.” And that confidence makes sense… until income needs enter the picture. At that point, the question isn’t whether the market someday recovers. It’s whether it recovers before your withdrawals do lasting damage.

I received a question that’s right on point with this, and it came from David in Mission Viejo. David asked this:

David, that’s the right question. People don’t run outta money in retirement because markets don’t recover. They run outta money because income needs, market timing, and human behavior all collide at the wrong moment. When you’re making withdrawals during downturns, it has a huge emotional impact that is underestimated by most retirees.

Something I’ve said a lot here on the Providence Financial Retirement Show is: No good decisions are made when you are panicking.

Think of it like owning a house that eventually regains its value. Well, that’s great on paper, but if you need monthly rent to pay your bills, the long-term value doesn’t help you in the short term. Retirement income works the same way. Two retirees can experience the same average return over time, and yet end up in very different places based on when the gains and losses actually occurred.

Retirement doesn’t happen in averages. It happens in sequence. Markets still matter in retirement and growth still matters, but relying on recovery alone without a clear income strategy has left a lot of people exposed exactly at the wrong time.

A lot of professionals are worried that we might have another major market correction coming. And my concern is that if you’re not prepared for it, it might affect the rest of your retirement. And neither one of us wants that to happen to you. Unfortunately, though, when you look at market history, another major crash could be right around the corner.

If you’d like to learn more about what market history tells us and why it could be predicting some volatility ahead, well, we’ve put together an animated video just about the history of the market, and you’re gonna learn what you need to know to have a better feel for why history tells us what could happen next.

I will email this video to you absolutely free of charge. I just wanna make sure that you have the information, but you do have to ask for it, and you can do that by going to ProvidenceFinancialRadio.com/video. Again, it’s ProvidenceFinancialRadio.com/video. Leave us your email address and we’ll get it right out. All you’ll need to do is check your inbox and press play. You’ll be able to watch this short but fun animated video about market history.

To claim your free video and have it emailed to you, just go to ProvidenceFinancialRadio.com/video and we will get it right out.

I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement Show.

Thank you for joining us today. I’m just glad that you’re here and hope you feel the same way. We’re talking about the fact that you don’t believe what is true; you do believe what often gets repeated. And in the last segment, we talked about why the belief that markets always come back is so powerful, and yet why it can break down once you are actually living off your money.

What I wanna do now though is just take that one step further. The real issue isn’t whether the markets eventually recover. History tells us that it usually does. The real issue, though, is what happens in between.

Retirement exposes something that doesn’t matter much during your working years, and that is dependency.

Your portfolio isn’t just a long-term growth engine anymore. It becomes a source of income, and income changes your relationship with risk. During your accumulation years, volatility is mostly noise. In retirement, though, volatility can force your hand. It can force you to make decisions that you don’t want to make.

If markets drop and you don’t touch your money, patience is easy. But if markets drop and withdrawals still have to happen, patience becomes much more difficult. And at that point, you are no longer just waiting for a recovery. You are selling into a decline to get the income you need because, as far as I know, bill paying in retirement isn’t optional.

This belief also assumes that behavior won’t change under stress. On paper, it’s very easy to say, “Oh, I’ll just stay invested.” But in real life, headlines and account balances have a way of changing how you feel and how you actually think. And how you act. And I’ll say something that I mentioned earlier, and I’ve mentioned many times before: You never make good decisions when you are panicking.

This doesn’t mean that markets shouldn’t play a role in your retirement. Growth still matters. Inflation, that’s still a big factor. But relying on recovery alone to solve your income needs? That’s where you might get into trouble.

When retirees often need most is not maximum growth. It’s not maximum return. It’s reliability. Knowing that they can count on their income regardless of what’s going on with the market. Reliable income reduces pressure. It reduces the need to sell at the wrong time. It allows market assets to actually behave like long-term assets instead of emergency funding sources.

And this is why two retirees can experience the same market environment and yet have two very different outcomes: same market, different structure.

“The market always comes back.” That sounds reassuring, but it leaves out the most important question: Comes back in time for what? In retirement, timing isn’t a detail. It’s the difference between confidence and stress. It’s the difference between choice and reaction. No good decisions are made when you are panicking.

And before I offer you a copy again of my book, More Life Than Money, I want you to really consider the question:

Do you believe what you believe because it’s true? Or do you believe what you believe just because you’ve heard it so often and everyone else thinks it’s true?

That’s a very critical question when it comes to retirement, and I find that most of the mistakes that people make in retirement is because they believe something that’s not necessarily true. It’s kinda like blind faith.

In my book, More Life Than Money, I wrote about the 10 most common retirement mistakes that I’ve seen retirees make over my career and what you need to know to be able to avoid them. I wanna send you More Life Than Money, absolutely free of charge so that you can get the education you need. But you have to ask for it.

You can do that by going to ProvidenceFinancialRadio.com/book. Again, go to ProvidenceFinancialRadio.com/book. Leave us your information and we will get a copy of More Life Than Money right out to you. A FedEx truck is gonna show up in front of your doorstep and hand deliver it. You’re gonna enjoy reading it, and you’ll learn about the most common mistakes that most retirees are making and don’t even know it because they’ve just been repeated so often.

One more time to claim your free copy of More Life Than Money, just go to ProvidenceFinancialRadio.com/book and you will have it on your doorstep shortly.

I certainly hope you’ve enjoyed the Providence Financial Retirement Show. The reason I do these shows is to educate you and give you the peace of mind that you deserve in retirement.

My name is Anthony Saccaro. You’ve been listening to the Providence Financial Retirement Show. Have a great week everyone. God bless.