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Understanding investment risks and how to mitigate them · The Retirement Blueprint

• When it comes to investing, retirement taxes, healthcare and estate planning, the decisions you make today can greatly affect the quality of life for you and your loved ones tomorrow. What you need is straight and unbiased information on the most important issues you'll face when planning for your retirement and financial future. Good news, you found the retirement blueprint with Grant Door House. Grant is the founder of Door House retirement services, and he's been guiding people financially and into retirement for nearly 20 years. So get ready for an hour of the most comprehensive financial information on the radio. It's time for the retirement blueprint. And now here are your hosts grant Door House and Jeff Shea Good morning and welcome to the retirement blueprint, the show that gives you the straight talk and honest answers you need to help you reach your wealth management and retirement goals through Smart Investing and careful planning. On today's show. We're going to be talking about understanding investment risks and how to mitigate them. Also a refresher on your IRAs. We'll also be talking about taking control of your investments with target date funds and finally the bucket strategy. Is it a good strategy for you? My name is Jeff shade and as always, I'm just here to ask the question but of course the words of wisdom and solid dice government grant Dorough at founder and wealth advisor of Jorhat retirement services right here in Omaha, Nebraska grant How you doing this fine Saturday morning. Not gonna lie. I'm doing quite well. I'm really excited for the cool down that we've had in the fall this I love this time of year. It's one of the best times of the year with football getting going hopefully Huskers can straighten some things out. But but just excited to be here with you, Jeff. Yeah, likewise, too, I love this time of the year. And as you said, you know, baseball seasons overlapping with football season, there's always something going on the leafs are beginning to turn, it's a pumpkin spice time of the year here. I don't think I found anything new, they can add pumpkin spice to these days. So I don't know pretty soon there will be pumpkin spice, as I've said before gasoline, but anyway, it is what it is. But most importantly, we're glad to be here with the fine people of Omaha, to educate, inform, and certainly just give you the advice that you need to help you make the best decisions that you can make regarding your retirement grant, I want to start off with something that I did not promote at the beginning of the show. And that is something that I saw on the back of your business card, which related to peace in retirement, would you explain to the folks listening today why you have that on the back of your business card? And what that actually means? Yeah, that's actually an interesting topic that I came up with that because I started thinking about a story about when I was younger, I was six years old. And just the peace of mind that my parents gave me while growing up. And I started thinking, You know what, what I really want people to have is, is that peace of mind that I had when I was six years old? That's a beautiful thing that we can go through retirement, but then I did some further thinking about how we can create these different plans. And so if you actually look at it, it's the P is for protected income, developing a good income plan and income strategies. So you can get through retirement with the income that you need to do the things that you want. That's the first part but then looking at efficient tax strategies, how are we going to utilize that accumulation? How are we going to utilize the market and the growth that we could experience in the market but also take into consideration the risks that are associated there see would be for complete control of healthcare looking at how are we going to plan for these expenses that inevitably are going to come in retirement and then E is a state putting together all of these plans gets people that complete plan that we're really looking for that hopefully that can generate that peace in retirement that most people I've found are looking for. So that is going to be the theme of our show today. It's going to be the theme of every show really is achieving peace in retirement. If you want peace in retirement, I'm gonna give you the phone number right now. It is 402-281-0750 402-281-0750 to get your peace in retirement blueprint. And we'll tell you more about that later on in the show. But grant I did talk about market volatility here. So let's talk about how market volatility can affect people's retirements before getting into the options that you have to protect against the effects of market volatility. First of all, Greg, how does market volatility in reality affect a retirement plan the market volatility that we're having right now? Well, it's interesting because if you actually look at someone my age, if you look at someone that's 42 years old market volatility isn't that big of a deal because I'm not withdrawing any money from my account. So it further compounds the issue when we start pulling money out. That's where you start having that compounding effect of okay, well, if I have to pull money out of my retirement account, but I maybe experienced some short term volatility on the negative side, well, that doesn't make my trip that I already planned go away. It doesn't make my gas bill or my electric bill go away. So we still pull money out but then that volatility if it goes down and then we're pulling money out of the market, well, that could negatively impact the longevity of our money potentially on something that really isn't our fault. I mean, the market is volatile. It goes up and down all the time, but it can really have a detrimental fact if we don't have a properly structured income plan, and grant, you mentioned something that was interesting there, you gave away your age at only being 42. You are a young man, certainly by any definition, I would think. But a lot of folks listening to us today are baby boomers, let's say that someone is age 62, you talked about the accumulation phases versus the distribution phase, I would think that market volatility is much more concerning to somebody who is 62 versus 40 2am. I right or wrong about that. Typically, you're accurate. That's not always the case, though I have a lot of people that I've met that are in their 60s, they really have no problem with risk and volatility in the market. My wife, she's 40 years old, she's really risk averse. So everyone's going to be really different, I would say, as a whole, in that demographic. Yes, people in their 40s versus people in their 60s, they're gonna have different concerns about the market, typically, you're gonna see someone that's in their 40s be more concerned with just the growth that they're going to experience versus the risks that are associated with the volatility in the market. More often than not, you're gonna see someone in their 60s Pull back maybe a little bit on their risk, their risk profile, and how much risk they're willing to take in the market, just because they know that they're nearing a time if they haven't already, but they're nearing a time when you know what, I'm no longer gonna get that paycheck. So if I'm a rely on this nest egg that I've built, that volatility may affect them in a different way than it does someone in their 40s grant talking about volatility in the market, if someone is younger versus older? I mean, would you say that they should take less risk and really keep more of an amount of money on the sidelines? versus somebody who says, you know, hey, I've got another 20 years, I've got time to make this up. Can you always make up for a volatile market? If you have enough time? Typically, you can. I mean, if you look over time, the market? Yeah, I mean, it typically will recover. Who knows how long it's going to be? I mean, some people are still asking, Well, hey, are we really recovered to our 2021 levels? Are we going to get there? How long is that going to be all of those things? Well, that's really hard to say, if we're going to in a specific amount of time, typically, though, we have someone that's in their 40s, or even in their 50s, they have a little bit longer time span, until they're going to need that money to create income in retirement. So they typically can say, You know what, I'm not going to be as concerned with the ups and downs in the market versus again, that person that's in their 60s that, hey, I need this money to do the things that I want to do throughout retirement and live the life that I really, really envisioned, and I want the golden years to actually be golden. Well, they have to have different concerns versus someone that that is in their 40s that has the time to make it up. And when we talk about market volatility, typically I think people when we talk about the market, think about the stock market and the volatility that we've experienced in that, but is it just the stock market grant? Are there other aspects of the market that we should be concerned with? As far as volatility goes? Yeah, actually, there's a lot of different aspects of the market. If you look at the bond market, if you look at real estate, you look at commodities, how all of these different markets that people can invest in, that they can put some money in for building retirement assets, or utilizing retirement assets for retirement income, you're going to see a lot of volatility in all of them at certain times, it's not always going to be volatile, sometimes it's going to look like it's just an elevator going straight up. And that's great. And then other times, it's gonna look like an elevator going straight down. But that's not a hard and fast rule. It's just going to, you have to play those volatile moments and make sure that you have a plan to deal with them. Because it is inevitable that we are going to experience ups we are going to experience downs. We don't know really when they are going to be but we have to know that whether it's real estate or bonds, stocks, ETFs, mutual funds, commodities, whether it be gold, silver, all of these types of things, they will experience ups and downs, and you have to plan for them for your retirement goals, our shows called the retirement blueprint with Grant door hunt, we're talking about market volatility. So that's the problem market volatility. Let's talk about some of the possible solutions. What are some of the strategies that you may use that might help people protect against volatility? Well, you have to have a strategy that identifies how much of your money you are comfortable with being in a volatile environment and that be against stocks, bonds, mutual funds, ETFs, all of these, how much are we actually comfortable with going up and down with market conditions? And everyone's going to be different? Everyone's going to be different. I've heard a ton of different answers on how much they're actually willing to put at risk. But then you also have to think about what types of returns are you okay with? Well, that will actually help you get into a spot saying, Okay, I should have this much money, perhaps in a bank, perhaps in a money market, perhaps in a CD or something like that, where it has a different level of certainty, potentially that we won't have to worry about stock market up and down so that you can rely on those funds to be able to access maybe if the market does go down at an inopportune time for you and I'm sure Your grant, a lot of people listening to the program are saying to themselves, okay, what is Grant think what's going to happen with the market. I want to preface this next part of our conversation with saying that no one knows what is going to happen with the market. No one has a crystal ball, no one can foresee the future. But if you were to guess, and again, this is just your opinion, it is just a guess. How do you feel about where we're heading right now in terms of market volatility ending in terms of the recession coming on? And again, I want to reiterate, no one knows the definitive answer to this. This is just an opinion. Yeah. Well, if I look right now, if I look at between now and the end of the year, I had someone that I work with at Carson, I was just talking with them about what are we looking at for a generalized outlook just in the next few months, because we knew at the beginning of the year, what we were looking at for 2023. And it was, in general looking like a fairly positive year with everything looking at the bond market of what happened last year with the interest rate hikes and the different inflation and the fact that you're looking at the third year of a presidential term versus a second year of a presidential term right now, I don't see any real massive red flags in the next few months. Now, if I look at next year, well, I mean, that's kind of up in the air, we're gonna we're gonna do a bunch of research here toward the end of the year looking at what we can expect in 2024. But what I see as a little bit of a concern is looking at the presidential election that's coming up, there's a lot of stuff that happens with our stock market at times that may not have anything to do with the fundamentals of the stock market. So weighing that out, that gives me a little bit of pause. It doesn't make me say, Hey, get out of the stock market. I'm not saying that at all. I would never say that. But at the same point, it gives me a little bit of pause until you know, once we start getting into 2024, we should start seeing how this is going to play out in the next year. And I don't have any intense concerns right now. I'm not calling any my clients saying hey, we need to readjust things at this point. But you know, next year, it could change and of course, the door hot retirement services grant will do his best to help you get through these turbulent times grant. Before we continue, I want to take a moment to remind our listeners how they can have a conversation with you to ask their questions about market volatility. If you want answers about market volatility, then request your no cost no obligation, no judgement door out Retirement Services peace in retirement blueprint. You can do that by calling 402-281-0750 That's 402-281-0750 When you call you'll get a friendly voice on the other end of the line who will gather some basic information from you then set you up with a conversation with grant to create a path towards a successful retirement. Now remember, it's not going to cost you a dime, but it could uncover some blind spots that when a dress may help improve your quality of life and retirement that could last as long as 30 years again, call 402-281-0750 That's 402-281-0750 For your peace in retirement blueprint. You can also request your complimentary consultation online at Door House retirement services.com. That's Dr. H. o u t retirement services.com. One more strategies to support the quality of life you want for 30 plus years stick around. There's more retirement blueprint with grantor out in just a moment. Along with death and taxes, there's one other near certainty you need to plan for in retirement. inflation. Inflation can erode your buying power slowly but surely, and if not planned for may cause you to run out of money in retirement do or have retirement services in Omaha recognizes that and uses strategies that can help prevent inflation from eroding your savings in their almost 20 years of helping people just like you. They've seen how improper planning for rising inflation can damage your retirement plan. If you'd like to talk about a retirement that could last 30 plus years and includes a plan to fight inflation call for your no cost no obligation financial review, call 402-281-0750 That's 402-281-0750 Or request your plan online at Door House retirement services.com. That's D O R H O ut retirement services.com. Financial Planning offered through CWM LLC and SEC registered investment advisor. You can't start a trip you've never taken without a plan. And you can't start your retirement journey without a comprehensive plan to get there safely to request your no cost no obligation door Howard retirement roadmap call 402-281-0750 or requested online at door Howard retirement services.com Now back to more of retirement blueprint with Grant door out and Jeff shade. We are so happy that you could join us here on Saturday morning here on Newstalk 1290 coil. We're here for you every week for your fiscal fitness and your financial education. We've been talking about market volatility and grant I want to continue to talk about that in this segment. There's something called sequence of return risk that I think people should know about. So fill us in on what that is. Yeah, I brought this up to several people that they've never even heard of sequence of returns risk. And it's not as complicated as what sometimes it sounds. I give an example about my brother, and I'm 11 years younger than him. And if you look at how we retire, and when we retire and how we are positioned, it could make us susceptible to this sequence of returns risk. For example, if someone retired in, let's just say, 1990. And they retired with X amount of dollars, and they employ the 4% rule, which the 4% rule is basically you take 4% of the amount that you have, and you should be able to pull that out index it for inflation, you should be okay. Because you typically going to make more than 4% in a normal long term market. Well, if someone did that, if they pulled that out 10 years into retirement from 1990 to 2000, the market was a good market, at that point, the market, it was pretty consistently up all of those years, at the end of that 10 year period, they would have been sitting in a spot where they really felt really, really good about their retirement. Well, if they have a brother, like my brother and I, I'm 11 years younger than my brother will if I retired, and I experienced something, let's say I retired in the year 2000, even though I was only 20 years old, but just for hypothetical examples in the year 2000. If I decided to retire, I look at my brother's retirement plan. And his was keep everything the same. Just take the 4% rule and then you're you're going to be okay, well, if I did the same thing with the same amount of money at the end of 2010, if we went from 2000 to 2010, my experience with the 4% rule would have been way, way different. And I think about this, and I talk about this all the time that we don't know what our sequence of returns is going to be over the next 10 years. So how are we going to deal with it? If it's 1990 to 2000? That's pretty easy. But if it's 2000 to 2010, if that's the type of sequence of returns that we experience in the next 10 years, how are we going to get past that in a way that we can still live our life in retirement do the things that we want to do you have to be very, very mindful of what your sequence of returns risk is great is that one of the strategies that you could use in combating market volatility is adjusting that withdrawal rate of 4%? Yeah, you can adjust the withdrawal rate of 4%, you might go down to three or 2%, or even 1%. And then your risk of running out of money would in theory go down. We don't know what the markets going to do, obviously. But if we take less and less out of our retirement portfolio, yeah, we, in theory, we would have a longer time span that that money would last. Now, I'm not a big fan of doing that I would rather have a income plan that's structured in a little bit different way that it would deal with these sequence of returns in a different way than just saying, Hey, 4%, or 3%, or 2%. And just keep everything as it was, as you were getting to retirement, I think that we get through retirement with again, looking at a different structure for our income plan. And grant if people are listening to the program today, and they're saying, Well, I'm two years away from retirement or I want to retire this year, should market volatility Do you think be a non starter in getting into retirement? Or is there usually a way to help people get into retirement during volatile times like this? Oh, of course, yeah, there's always ways that you can get through retirement, you just have to seek out all of your options and make sure that you pick ones that you are comfortable with make sure that you have enough money that's in an emergency fund. If I have money that I absolutely need for a car for a vacation or for our grandkids, college education or something like that, in the short term, make sure that that's not tied to an asset that's more of a long term investment. If I need it in the next two years, I shouldn't put it in an investment that ideally you have to wait longer in order for it to be more of a reliable return. You have to separate these things out. And we'll talk a little bit more about that type of a bucketing strategy here in a little while as well. We're talking with Grant Dora how to door out retirement services, our show, it's called the retirement blueprint, we've been talking about market volatility. Once again, if you want to get in talk to grant about your individual situation, he is offering this piece in retirement blueprint that you can take advantage of no cost and no obligation for that the number to call right now. 402-281-0750 to get on the calendar, it is 402-281-0750. All right, Grant, Let us shift gears here. I talked in the beginning of the program about the fact that we will be talking about IRAs and how they play a role in your retirement, what strategies are out there for Ira holders in the market. And you know, we've seen some retirees utilize an IRA strategy to protect themselves during market downturns. So let's get into this a little bit. First of all, for people who do not know what an IRA is, what does Ira really stand for? So yeah, it's an individual retirement account. Let's say if you have an account that said Charles Schwab, that's who we would utilize for our particular custodian. You'd have an individual retirement account. A lot of times I've actually had people ask, Well, hey, can I combine that with my spouse's? That's not possible. because we don't have a joint retirement account, it's an individual retirement account. It's important to note that depending on what type of a investment you put your money in, or what type of asset class you put your money into in an IRA, it can change that word. If you put your money into an annuity, it'd be an individual retirement annuity. So that doesn't really matter that much. It's just you want to know that there's a little bit of a difference, if you change what asset class you go into, for those IRAs. Now, a traditional IRA is one where you put the money in and and you don't pay any tax, when the money goes in, you defer that tax until you would be starting to pull that money out in retirement, you have to know that you can't take that money out at younger ages. Like I said, my age earlier, 42 years old, I can pull money out of my IRA, that's true. But I have to wait until after 59 and a half. If I want it to be penalty free, when you pull this money out, it's always going to be taxable. However, you have to wait until 59 and a half to make sure that there's no penalties 59 and a half or later. And grant, I think it's important for people to understand important rules and restrictions before utilizing an IRA, what are some of those important rules and restrictions that you think people should know about before getting into an IRA? So yeah, first off is that 59 and a half rule, you have to wait until you're 59 and a half to pull the money out. Otherwise, there's a penalty. But there's that timeframe between 59 and a half and currently 73, when you have to start taking required minimum distributions out of a traditional IRA. So you just have to be mindful of those. And we didn't actually talk about the Roth IRA. Yes, something else that we have to have to discuss as well, a lot of people like to do what's called a Roth conversion strategy. And they open up these Roth IRAs, because they built up all this money in traditional IRAs over the years, and for whatever reason, they don't want to have it into that deferred account anymore, they want to pay the tax, they want to put it into a Roth IRA. And you have to be mindful of the fact that if you open up a Roth IRA, you're still bound by that 59 and a half rule. However, there's also a five year rule where you have to wait until after the five years, if you're going to pull the gains out of the Roth IRA, you can always pull your contributions out of the Roth IRA. And that's no big deal. However, if you put money into a Roth IRA, and then it grows, the gains, you have to wait until that's after 59 and a half, or after five years, either one or both, depending on what your age is. And based on our conversation grant, I can see that there are a lot of benefits to doing an IRA or a Roth IRA. But we always talk about the pros and the cons. Can you think of any cons, any reasons why you may not want to do an individual retirement account? If I look at it in a traditional IRA, that kind of depends on what your real feeling is on what the future is. I personally, I look at the fact that okay, we were in this environment in our nation where we have a lot of national debt, some people say that we're going to have to raise taxes, some people say, we'll just print more money. And either one of those may be true. It's just what are you comfortable with? How much is a client of mine? Or how much is any individual that's listening to this radio show? How much are you comfortable having an a nest egg that is not taxed yet? Is it 200,000? Is it 2 million? It doesn't really matter the dollar amount, but you have to figure out okay, well, how much am I pulling out of this in retirement? How much is that going to impact my Social Security? How much is that going to impact what I have to do for required minimum distributions once you hit the required age, which who knows what that's going to be for the majority of this audience in the future? Again, right now, it's 73. But that's not always a guarantee on a Roth IRA. If you put a bunch of money in there, and you grow it, whether it be through Roth conversion, or if you meet the income limitation, and you can do a contribution into a Roth IRA. If you build up a bunch of money in that Roth IRA, well, then I don't have to pay any taxes anymore. I've already paid the tax, which one is going to be best? There's a lot of debate for me to say, I can't say that to all of Omaha that might be listening to this everyone's situation, their income level, their age, what their income in retirement, what their Social Security, what their pension, what all of these different things. And there's a whole host of other factors that we would have to figure in all of those different factors have to play a part in deciding how much do we really want to have in a Roth IRA? How much do we really want to have in a traditional IRA and then other assets that you may want to hold outside of IRAs as well. And grin I'm glad that you mentioned that everyone is an individual, your results may vary. So certainly you need to get in and sit down with Grant and talk about whether an IRA would be right for you. If you haven't discussed IRAs in your retirement plan. Then listen up because this is for you this message that is Grant and I invite you to call us so you can schedule a 30 minute consultation and get your piece in retirement blueprint. All you've got to do is call right now at 402-281-0750. That's 402-281-0750. Now this consultation is totally Complex. generate no cost, no obligation, no judgment. We want to help you succeed and your retirement will not only help you compare your different options and strategy so you can pick one that is right for you. But your hot Retirement Services will also take a look at your overall lifestyle plan to ensure that it's set up to support the quality of life that you want for the next 30 plus years. All you got to do is call right now at 402-281-0750. That's 402-281-0750 make that call today. Leave your information someone will get back to you within a business day. If you are calling here on the weekend to schedule your consultation for that piece in retirement blueprint. You can also request your retirement blueprint online at Door House retirement services.com that is d o r h o u t retirement services.com. If you're just joining us, this is retirement blueprint with Grant door out my name is Jeff shade. And if you want to hear the show again, don't worry. We're also a podcast. Just go to wherever you get your podcast and search for the retirement blueprint with Grant door out you'll get this show along with past shows so that you can stay on top of your wealth in retirement planning. One more talk about sustaining your wealth and thriving and a retirement that could last 30 plus years. Stay tuned for more retirement blueprint with grab door out after this. If you're planning for retirement, you may have some questions like when should I take Social Security? How do I pay for long term care? Or how can I reduce my tax bill to or how to Retirement Services can help answer those questions. They recognize your unique and so should your plan be designed just for you. If you'd like to begin a conversation about retirement planning and get your questions answered, request your complimentary review by calling 402-281-0750 or visit to our house retirement services.com Financial Planning offered through CWM LLC, an SEC registered investment advisor ready to climb a mountain of financial know how good he goes. It's time for more retirement blueprint with your financial Sherpas grant Dora and Jeff che. We certainly do enjoy your company here on a Saturday morning here on Newstalk 1290 coil. We're here for you every week, of course for your fiscal fitness and your financial education. Once again, if you'd like to talk back to us, if you'd like to talk to us about the peace in retirement blueprint, the number to call 402-281-0750 402-281-0750. Or you can request it online at Door House retirement services.com. And we would love to hear from you. What do you like about our show what you don't like about our show? Are there topics that we have not discussed yet that you would like us to discuss? Once again, give us your feedback at 402-281-0750. You know, grant these days, your retirement futures in your hands or more specifically in your investment portfolio. But investment management is certainly no laughing matter and asking you to be on top of your portfolio maximizing upside and minimizing downside. Well, that is a tall tall task. But that's where target date funds can ease the burden on you to manage your whole investment strategy, but not without caveats. So let's talk about what a target date fund really is, what it's good at and what we want to watch out for it. First of all, Grant, what are target date funds, and what are they best used for? Well, typically, they're best used in my experience, they're best used and maybe a 401 K or 403 B where they might have a whole host of investment options. But it makes it a little bit easier for a particular individual that says you know what, I want to retire in the year 2055, okay, or around 2055 or 2053? Well, then you look at maybe 2050, or 2055. And there's a mixture of stocks and bonds that are inside of that fund. And it adjusts as you get closer and closer to that retirement date. And that way, it makes it easier for someone that says, You know what, I don't know the whole world of investing. I don't know what all of these things mean. So they can say, okay, my target retirement date is here. Now I leave it up to that fund manager to actually make those adjustments. And as we get closer to retirement maneuver, the amount of stocks and the amount of bonds and the amount of equity positions that are in there to suit what that retirement goal is. So basically, we can put a date on our retirement, I want to retire in 2026. So I'm going to have a 2026 target dated retirement fund. So generally grant, are these funds designed to build gains more in the early years, you know, by focusing on riskier investments and growth, stocks, that sort of thing. And then they go to more safe investments as the years go by. Sure. Yeah, they typically are designed that way. That obviously doesn't mean that it's going to happen that way. But in the early years, let's say if there's someone that's I don't know, 20 years old right now, and they say, You know what, I want to retire in 40 years. So I'm going to look at a retirement date 2065 fund, well, that's going to be more heavily weighted towards stocks, which could be more volatile than bonds, so they're not going to have much in bonds in there. But as someone gets closer and closer to that 2026 date we've all heard The old adage that whether you agree with it or not, we shift from stocks to bonds, the older that we get, and then there's a difference in the way that it is managed. And that target retirement date will do that automatically for that person, whether it's for yourself at 2026, that would, in theory have weighed more in bonds than in stocks than in someone that is looking at a 2065 fund that is going to be more heavily weighted towards stocks versus bonds. And that was my next question. You know, we talked about 2026. But there may be younger listeners, certainly, we have intelligent listeners who listen to this program. And maybe we do have some people that are your age who say, you know, I want to retire in 2035? I mean, how far out into the future can these target date funds go? I mean, they're really 4050 years out that you can plan for these things. And you can just let it sit in there and do its thing, and I think really target retirement date funds, I think they are a really, really good thing for these 401, K's or employer based plans to have for people, the general public, if you put in front of them 200 or 500 different investment options that they have to research on their own, and then figure out how much of it they want to be stock, how much they want to be bond. That's a really tedious task. And what I found is that typically, people will ask their HR director or the person in HR that had them sign up for that employer based plan, and they'll say, What should I do? And they say, well, that's up to you, the HR director, they're not a financial adviser, so they're not going to give the advice on which one to go with. So a target retirement date makes it really, really easy for someone to go into that type of a fund. And it may not be customized the way that they need or maybe that they even want, but it makes it a lot simpler for them to pick an investment option know that okay, this money manager is angling for a retirement date of this and how it's done behind the scenes they may or may not really know or care about. They just want to know that someone else is taking care of it for a retirement goal of that specific date. And grant when I set up this topic, I talked about the pros, but I also talked about the caveats of target date funds or target dated funds. So what are some of the reasons why someone may not use a target date or target date fund? That's a great question. And I only come down to customization. So if you have someone that is younger and more risk averse, that they have a target retirement date of 2065. Well, a target retirement date of 2065 may have more in stocks than what that younger, risk averse person, whether we agree with the fact that they need to be risk averse or not doesn't matter if they need to have more in a bond than in stocks at a younger age to help them sleep at night. Well, that's the type of customized plan that they're going to prefer. On the flip side, there might be someone that is retiring five years or 10 years from right now. So uh, you know, the conventional way would be well, you're going to retire around 2035. So take the 2035 fund. Well, what if it's someone that has a much higher risk tolerance, and they're nearing retirement, whether that's wise or not, that's, that's debatable, we don't know. Because we won't know what's going to happen in the next 10 years until it happens. But that person, if they just have a higher risk tolerance, maybe they don't need a 2035 fund, maybe that's going to have more bonds in it, then they want, they might want to have something that has more stock based investments, because they enjoy that ride, they enjoy that return. And that's really what they're angling for. So it could be not a great thing for people just depending on what their risk tolerance is. And, and that's something that they can find out with their financial advisor, and they should be able to help them select a target date fund or select different investments inside of that 401. K, if they have something that needs to be more customized grant, are there potentially higher expenses with a target date fund? That's possible? It really depends. Because if there's a ETF fund, or if there's a stock fund, or if there's a mutual fund, all of them are going to have different expense ratios that are associated with them. And it depends on what type of money management that is going to be associated with it. So it could be true, but it could not. And you know, there's ways that you can find out what all of those fees are, you should get that from your HR director, and you should be able to find, okay, this is what the expense ratio is whether it's, it could be a wide range, it might be point 1%, it might be 1%. That's the expense ratio for that money management. So that's kind of a loaded question. It could be higher, but it actually could be really in line depending on if they use mutual funds or if they use ETF funds. And I like to call inflation, the silent killer, sort of like blood pressure. I mean, it's there many times you don't notice it most of the time that you do. So how does inflation play into this picture with target date funds and its ability to keep up with inflation? Well, inflation is a very real thing. It's not going away. We've witnessed that in the last couple years. And you know, if you just look at what we have in our grocery stores, you know, a couple years ago, you know you could go into a grocery store and you could Pay $100. And you could fill up a cart right now you can get one of those little handheld ones and barely fill that. And you're going to be at $100, depending on what type of things you're buying. So inflation has to be planned for in when you look at a target retirement date fund, it could give you a hedge against inflation, if the growth is in line with what inflation is going to be if it's going to outperform that inflationary amount. Now, you're going to have to figure if you're in retirement, then okay, how am I going to fend that off in retirement, that's a little bit different discussion. But with the discussion of the target retirement date funds, you're probably going to have more of a chance at outperforming inflation by having a longer timeframe on that retirement date fund just because you're going to have more stock based investments versus bonds. And grant I want to add to that to that there's no guarantee that the funds earnings are going to keep up with inflation. In fact, there are no guarantees that the fund will generate a certain amount of income or gains at all target date fund is an investment, it is not an annuity. So you should keep that in mind. So those are some of the reasons why you may not want to do a target date fund. But let's wrap up this segment with again, talking about some of the benefits of a target dated fund and who it may be best suited for. Yeah, I again, I really like the target date funds, because of the simplicity that it creates. For most people that are going into a 401 K or an employer based plan, it really does give the simplicity so that you can say, you know, when I'm 20 years old, I want to retire around 2065. So I'm going to go ahead and I'm going to take that 2065 fund, it does simplify things, but you have to be on top of it if your situation changes or if your risk tolerance changes or if your spouse's job changes that could change what you are really going to want from that target date funds. So if you're someone that's looking for advice on that, just make sure you have a financial advisor that can really help you work through those things in an objective way that they can say, Okay, you might be 20 years old, retiring and 2065. But it may be better suited for you to have a 2055 target date fund just because of maybe the uncertainty with your spouse's job or the uncertainty with your job or whatever it may be. You have to weigh those things out to make sure that you're in the right fund for what your objectives are, and maybe more importantly for what your sleep pattern needs to be over the next few years. If volatility in the market is something that you just are not a fan of or just don't want to stomach and grin before we continue, I want to take a moment to remind our listeners how they can have a conversation with you to ask their questions about whether or not a target date fund is right for you. If you've got questions, we invite you to call us and request your complimentary piece in retirement blueprint with Grant it's just a friendly conversation that will cover a wide range of topics based on your individual situation so that you can proactively adjust your financial plan to address your retirement journey and of course, any blind spots that may hinder you from reaching your goal. Once again. There's no cost there's no obligation there is no judgment whatsoever. Grant will meet you where you are that number again. 402810 750 it's 402-281-0750 this one call could make all the difference. You can also request your complimentary plan online at Door House retirement services.com It is D O R H O ut retirement services.com. One more straight talk and honest answers about your wealth management and retirement journey. Stay with us there's more retirement blueprint with grantor out here. Retirement can be a long journey that could last as long as 30 years or more. Are you prepared for the challenges it may bring do or how to Retirement Services has the knowledge and tools you need to have the best retirement possible considering your circumstances and having a plan that considers tax minimization strategies and healthcare costs means you may be able to avoid some unpleasant surprises down the road. Start your complimentary retirement conversation by calling 402-281-0750 or visit door hot retirement services.com Financial Planning offered through CWM LLC, an SEC registered investment advisor. We're back with more strategies for a successful retirement. This is the retirement blueprint. Once again, here's grant door out and Jeff shade. We're so glad you could join us this week here on Newstalk 1290 coil, Jeff shade along with Grant doghouse, or show, of course, is called the retirement blueprint. And we're offering something called the peace in retirement blueprint. We'll be telling you more about that in just a moment. But in this segment grant, I want to talk about the bucket strategy. Now when I think of the bucket strategy, I visualize three or four buckets here that we put things in for different goals. But how do you define the bucket strategy? And is it something that you use in your practice? Oh, yeah, the bucket strategy is really simple, really straightforward. Most people can get on board with it because they can visualize this. So if you actually visualize it doesn't matter if you want to do three or four buckets, but the first bucket is going to be more of a short term. So if I have an asset or some money that I need for purchase of a car or purchase of x or or whatever it is, or retirement income that I need in the next two years, that's going to be in that bucket. And that's going to be invested differently than if I have money that is more geared for long term growth and different timeframes need different buckets? Okay, so in essence here, we have roughly three buckets. The first one you talked about was the immediate or the spend bucket. So if you need the money out of that bucket in the relatively near future, are you saying that the first bucket should consist of basically just cash or cash equivalents? Or are there other investments that you can put in that first bucket? Yeah, I would say that's a good place to be as cash or cash equivalents, you're going to be looking at things that that are liquid, your money market accounts, your savings accounts, your checking accounts, but you don't want to have all of it just sitting in your checking what you need for the next two years, that wouldn't be my recommendation, you could do that. And you'd be okay. But you just wouldn't earn any interest. So I would, I would suggest, even in that two year time span, even having money in a savings account, or a money market account, that is going to generate some interest before you put it in your checking account to spend for those things, whether it be your income that you need, or whether it be for a car purchase, or whatever things you're going to spend money on in the next two years, and then you just readjust. So basically, what you're saying, if I'm hearing you correctly, is that first bucket should be maybe a two year bucket, should it be longer than that? Or do you recommend about two years for the first bucket, that's what I would do is I would do two years, you could do it any way you want. Some people will say, You know what I want three years in my first bucket or four years, I think that's a little bit too far. But that's just my opinion. I mean, that's kind of a personal preference that you can set up with your financial advisor that Hey, okay, my first bucket is going to cover zero to two years, I wouldn't like to go less than two years. But that's just a personal preference. I just like to have that two year span in that first bucket. And then and then we move forward from there, looking at three to seven, and so on and so forth. Okay, so let's continue to talk about the buckets here. I want to finish up with the first bucket here, you talked about an emergency fund, or at least you applied it emergency fund here, what do you recommend is the proper amount of money or the number of months income that you should have in an emergency fund, I always look at three to six months for your emergency fund that has to be inside of that zero to two year bucket, obviously, three to six months is going to be sufficient in most cases, not all. So if you have extenuating circumstances, things that are outside of the norm, then you're going to have to take into consideration what you need your emergency fund to be. Because if you have a business or if you have rental property, or if you have, there's a lot of things that you could have that would cause you to want more than three to six months, just if there's additional risk that is brought in by having only three to six months. But if I look at my parents, for instance, in their particular situation, someone that might be 82 years old, 80 years old, not a lot going on in their life, that would be additional complication, their particular situation, someone that's that age, they might only need three to six months, and then then I would feel comfortable with that number. And if you don't have three to six months, just start small, put $1,000 in there and build up. But that is the goal is to have three to six months of income in your first bucket, which is your immediate needs buckets. And in our example here, we've talked about having that bucket for anything that you may need within two years. So let's move on to the next bucket, our middle bucket, can you give me an example of a timeframe for that middle bucket? Yeah, you can look typically between three and 10 years for that middle bucket that you're going to have assets that are probably going to be generating some income, that would be what that would be my preference that that's going to be generating some income or some yield that it's going to be paying out and it might be paying from your three to 10 year bucket, it might be paying in two years zero to two year bucket, and then we just every month, it just kind of moves down the ladder moving forward. So it's typically going to be something that I would prefer would be an income generator, that's going to just keep that zero to two year bucket every single month, zero to two years, you just pay it from the three to 10 year bucket into that zero to two year bucket at your bank, whether it be inside of a money market account or again inside of your checking account for you to spend on a monthly basis. So that middle bucket that's still going to be somewhat of a safe buckets, you want to earn a little money on that. But would you say that you should be completely risk averse in the second bucket? Or are you free to take a little risk that's going to be up to every person that's going to be different and I wouldn't even say that it's a safe bucket, I would say that it's maybe a little less volatile than a lot of investments that you could put in there. So some people are gonna say You know what, I'm going to swing for the fences with a lot of my money. I would not suggest that in this intermediate bucket. If it's three to 10 year money, I would say you know, if I'm looking at risk profile between conservative and aggressive, I put it somewhere in the middle more of a moderate type of a tolerance for those monies. You don't want huge ups and huge downs in these monies because I know I'm going to need some of that money to filter into my zero to two year bucket and I'm glad that you put a cap On my statement about a safe bucket because all investments do have risks, but typically, we want this middle bucket to be a little safer than the first bucket. That would be our goal. So let's jump now to the third bucket. Now, that's our long term or riskier buckets. Can you tell us a little bit more about some of the investments that you might want to put in there and what those are intended for? Yeah, absolutely. I like the way that you put that when you say riskier, I want to also put in there, I'm not saying risky, okay, because if I look over 10 years or longer, yes, I can maybe put that in more of a growth mindset, or maybe even aggressive depending on what someone's risk tolerance is. But you have to have that 10 year time frame, I believe everyone has the opportunity to always have 10 year plus money, even if they're 80 years old, like my dad, there's some money that you're going to have that is for a longer timeframe. And I'm going to say, You know what, I'm not going to access this money in the next 10 years. So what the market does in the next 10 years, it shouldn't bother me. Because if I have that zero to two year bucket, if I have the three to 10 year bucket, and I have my income taken care of by those will then I don't have to worry about if the market goes down and has a downturn are what the fluctuations are on a monthly basis, because that money's purpose is more for a growth mindset, it's not guaranteed that it's going to do that over a 10 year period. But that's what that buckets goal is, is for long term growth. And again, to reiterate, here, the immediate bucket of the spin bucket zero to two years, the intermediate bucket would be three to 10. And then the long term risk bucket would be 10 plus grand to the size of these buckets change based on where you are in your retirement journey. And thus your risk tolerance, would you say ideally, I would say no, but everyone's spending habits are going to dictate what that looks like. And that's going to change based on the person, you're going to see probably a spin down on that three to 10 year bucket in a lot of cases. But you know, then that 10 year bucket goal is that that would have a growth. So then if I have money in there for 10 years, well in the 11th year, if it's grown, then I can actually filter that into that three to 10 year bucket and just again, just kind of take those monies and shift them down the line, so to speak, from bucket to bucket to bucket and eventually into your checking account so that you have that spending money on a monthly basis for your retirement goals and your needs. So if I'm hearing you correctly, as you get older, you still have your spend bucket or your immediate bucket, your intermediate bucket, and then you have your long term bucket. So let's say that I'm employing the bucket strategy. I'm not, you know, 43 years old anymore, but I'm 68 years old, I mean, how would that affect the investments or the money that you put into each of those buckets? Or does it it really doesn't, in my opinion, because if I have the income taken care of by that intermediate bucket if I have something that's paying out, and this could be a variety of things, it could be an annuity, it could be a bond, it could be some other type of structure that you have that's paying in a monthly basis that is filtering into that zero to two year bucket, you're really relying on that for a different purpose. So I actually look at this and I see two different sides. On the intermediate side, I see that paying into my income. And then on the long term growth side, I see that bucket and I see that one that its purpose is to grow. And when it does grow, it's obviously it's going to make up for anything that could potentially be a spin down in that intermediate bucket that's paying the income into my zero to two year bucket. So hopefully that makes sense. I think that the that you're going to have a separation of duties, so to speak, in money, we have all these different monies when we get to retirement and and I think it's important to assign a task for every single one of them in those dollars have to stand up and say this is what I'm doing for you in retirement, what we're doing in zero to two years and what we're doing in three to 10 years and what we're doing in 10 year plus they all have very specific things that they have to do for us. And if they're not doing it, you may need a different evaluation on if we have these funds actually in the appropriate position. And if we're allowing assets to do what they were intended to do, we're talking with Grant Doral here of door out retirement services in Omaha, we're talking about using the bucket strategy and whether or not it is right for you in your retirement plan. Now, grant I know that people don't listen to the entire program. In the beginning of the show, we talked about the peace in retirement blueprint. So I want to end the show today by once again talking about that for those people who have not had the benefit of hearing the entire show. So when we ask people to call 402-281-0758 That gives them an opportunity to talk to your beginning conversation about the peace in retirement blueprint. Can you reiterate again what that means? Yeah, the piece in retirement blueprint. I said that at the beginning of the show about you know the piece that I want people to experience in retirement and it's an acronym that we use here for the different plans that We put together looking at a protected income plan looking at having a defined income plan. And part of that is that with that bucketing strategy that we just discussed, looking at efficient tax strategies, like what is your particular scenario? And is there a different way from a tax perspective that you can approach it to make it more geared toward what your retirement goals are accumulation? How are we going to be in the market in a responsible way that's going to allow us to experience some growth, but also to allow you to sleep at night, complete control of health care, looking at how much that cost is going to be? We have to cover that how are you going to do it? Are you going to do it through insurance are you going to do it through a totally different bucket, maybe that fourth bucket that I alluded to earlier, and then also an estate plan, making sure that money gets where you want it to go in the most efficient way possible. If you'd like to talk to grant about getting your piece in retirement blueprint, it is very simple. Call 402-281-0750. Once again, that number 402-281-0750. You can do it this weekend. If you'd like simply leave your information and someone will get back to you within a business day to schedule a conversation between you and grant just a friendly conversation that will cover a wide range of topics based on your individual situation so that you can proactively adjust your financial plan to address your retirement journey and any blind spots that may hinder you from reaching your goals. Once again, I think your goal should be having some peace in retirement and we're offering that to you today at no cost, no obligation, no judgment whatsoever. Again, the number to call 402-281-0750 Do it today. This one call just may make the difference in your retirement journey. It is possible for you to find peace in retirement by calling 402-281-0750 You can also request your piece of retirement blueprint by going out to the website it is door out retirement services.com That's D O R h o u t retirement services.com. You know, grant we've had a wonderful show today and again, if our listeners are joining us late we're also a podcast go to wherever you get your podcasts and search for the retirement blueprint with Grant door help. You'll hear this show and all of our other shows so you can stay on top of your retirement journey. Well, again, grant as I said, the clock is ticking. We're out of time for this week. I want to thank you for your time grant. But most of all, I want to thank to find people here of the Greater Omaha area for joining us for grant Ohad I'm Jeff shade. Have a great weekend. We'll talk to you again next week on Saturday morning with another edition of the retirement blueprint right here on Newstalk 1290 coil. The opinions voiced in the retirement blueprint with grantor Howe and Jeff shade are for general information only and are not intended to provide specific advice or recommendations for any individual past performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly investing involves risk including possible loss of principal no strategy assures success or protects against loss to determine what may be appropriate for you consult with your attorney, accountant, financial or tax advisor prior to investing Jeff shade and show guests are not affiliated with CWM LLC investment advisory services offered through CWM LLC an SEC registered investment advisor s&p 500 is a capitalization weighted index 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market of 500 stocks representing all major industries. The Dow Jones Industrial Average is a price weighted average of 30. 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