Latest / The Happiness in Retirement® Hour / Retirement at Risk: The Four Threats You Can't Ignore
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- # Swell AI Transcript: riverside_bill_— take 03 _ aug 20, 2025 001_bill_del-sette's st.wav SPEAKER_00: Welcome to the Happiness in Retirement podcast, where we help you turn your retirement dreams into reality. Each week, we'll dive into smart financial strategies, lifestyle tips, and expert insights to help you build a fulfilling and secure retirement. Whether you're planning ahead or already enjoying retirement, this is your go-to place for inspiration and practical advice. So sit back, relax, and let's make your golden years the best years. SPEAKER_01: Hello, and welcome to this episode of the Happiness in Retirement Program podcast. I'm Bill Del-Sette, founder of Del-Sette Capital Management, the Happiness in Retirement Program. And this podcast, we've been on a summer hiatus, but we're back. The Del-Sette team and I who help with this podcast are back. and recording again as we head into the final weeks of summer. Today is the last day where the sun sets after 6 p.m. here in upstate New York until April 26 of next year. So take it while you can get it, the short upstate New York summers. Well, today we're gonna talk about a subject that I think personally doesn't get enough attention, generally speaking, okay? And that is, What are the four core financial risks that you need to concern yourself with? It's a big question. Most people only think about growing their wealth, saving and investing and getting a good return. Now at Delcetti Capital Management, we generally don't even talk about the investments until the third planning meeting. Frequently, prospects will come in and they'll ask if we'll just manage their money and not put together a financial plan for them. We will do that now. For a while, we wouldn't. We want everyone to have a financial plan. We will manage money now, but without doing any kind of financial planning, but we could be the best money managers in the world. But if you lose everything because you're sued or a family member dies or becomes disabled, then my question is, have we really done our job as advisors? If we have not at least given the client the option. do financial planning. So that's why also in these podcasts, we don't talk a whole lot about investing. We like to focus on asset protection planning first. And with that comes these four core financial risks that here at Dell said, we want to protect you from having to deal with or How can you protect yourself from these risks in other words so in this episode we're gonna break down these four core financial risks here they are dying too soon living too long becoming disabled and wealth eroding factors i'm pretty sure there are songs about all of these different topics right dying too soon living too long. becoming disabled. I'm not so sure about the wealth eroding factors, but sure. Didn't Pink Floyd write money? Not really a wealth eroding factor, but inflation is anyway. Any one of these can derail your financial plan, but with the right strategies, you can protect yourself and your family. So let's dive in. Okay, risk number one is dying too soon. Live Like You Were Dying. Who wrote that song? Who sung that song? I don't know who wrote it. I knew who sung it. It was a country singer. That much I know for sure. The first risk is dying too soon. None of us want to think about it, but it's one of the most devastating financial risks for your families. Of course, for you. but also for your families. Not to mention the fact that goals left incomplete, right? Goals left incomplete, that's a risk to you. But imagine this, you're the primary income earner, your family depends on you for their home and education costs, day-to-day living expenses, et cetera. Something happens unexpectedly, your income stops, but the bills don't. Mortgages, car loans, student loans, credit cards, they all remain. Now, I'm going to tell you in all my years of being a financial planner, I've never met a widow that didn't like life insurance. Okay? Never met a widow who didn't like life insurance. I've also never met a widow who said, boy, that's just too much life insurance my spouse had. you really need to use life insurance to protect your income. The risk of dying too soon, life insurance is one of the best tools out there to protect your family because it creates instant liquidity, meaning cash available right when your family needs it most, but also it will fund future goals. Now, how you go about Figuring out the correct amount of life insurance? Well, here at Del-Sette, we believe in total asset protection planning, full replacement value protection on your income assets and your life. I'm sure if you own a home, you probably have your home insured for replacement value, don't you? Well, you should probably have that much life insurance. What is replacement value life insurance? It is the amount of insurance that will replace your income stream, the present value of your future earning stream. Now that's going to result in a lot of life insurance if you're 30 years old and you've got 30 or 40 more years to work, but that is the correct amount. In other words, you want life to go on for your family as if you were still around. That's kind of how we view things. We do life planning first and that life plan that we do for each spouse, we want that life plan to continue on at the death of either spouse, right? Isn't that what most people want? So you want to have what is called economic life value or replacement value life insurance coverage. We won't get into the different kinds of insurance, but if you are young, probably you're going to need term insurance to cover a temporary insurance need. And that's to protect your income until you retire. Okay, so we use life insurance to protect against the risk of dying too soon. And the second tool is estate planning. You have to have a will, you have to have beneficiary designations. Bad things can happen if you have no beneficiary designations on life insurance or 401ks. Certainly you need to have a will to ensure your assets are passed smoothly and efficiently. And certainly in many cases, trust. Trust can be used at any age to avoid what is called probate. Talk to an attorney about that. So the bottom line is dying too soon means protecting your loved ones. It's about leaving them financially secure and not financially strained. Economic life value, life insurance, one of the best tools, get your estate planning documents done. Risk number two, living too long. Oh, and I should mention, act on your life plan. Complete those things in your bucket list, okay? Risk number two, living too long. Let's flip it around now. Instead of dying too soon, what if you live longer than expected? That's risk number two, living too long you might be thinking. How is living a long life a financial risk? Isn't that a good thing? Maybe yes, maybe no. If your health span equals your lifespan, meaning all of your years are healthy, absolutely it's a good thing, but that's just not the case for most people. So if you live too long, you could end up needing nursing home care, healthcare costs, they rise sharply with age, daily cost of long-term care, for instance, here in upstate New York, massive number, pushing $500 now, I believe, and you could outlive your money. Now, we have tools to safeguard against that, but it could happen. You could experience poor investment returns over the course of your life and overspend. Again, here at Dell City, for those of you that work with us, you know, or if you listen to this podcast, that an equally big risk is that you don't spend enough, oddly enough, as that may sound. Healthcare costs, cognitive decline, the risk of diminished decision-making ability as we age, leaving us vulnerable. to scams or poor choices or maybe having to have a family member quit their job to care for you. That's a big deal too. Maybe you will be a caregiver for a family member. Many caregivers become sicker than the person they're caring for from the stress. So it's important that you have enough money, enough savings, enough investments or long-term care insurance such that your loved ones are not your primary caregivers if you can help it. Okay. Another risk of living too long is market volatility, but not in the sense that you might think, yes, a prolonged stock market decline can impact your standard of living and retirement, no doubt about it. But what is worse we think is human nature and market volatility. If you manage your own money may cause you to make what we call the big mistake and sell your investments low, maybe really low. And if you do that and the market recovers, your portfolio will never recover and you will shoot yourself in the foot and in all likelihood outlive your money because when you get back in. Okay, so living too long, big risk, healthcare costs, long-term care costs, cognitive decline, and inflation. Let's not forget inflation. We're gonna come back to inflation though. So what are the solutions? Retirement income planning, of course, that means looking at how much you can safely withdraw each year without running out. Now here at Dell City Capital, we are big fans of dividend paying stocks for retirees for a bunch of reasons that will elaborate on in a future podcast. We're also big fans of what is called the guardrail approach to retirement income planning that just simply sets an upper guardrail and a lower guardrail around the value of your portfolio. And if you hit either of those, you're going to increase your withdrawals. If you hit that upper guardrail, Because you've done better than expected, enjoy more of your money. Isn't that what it's for? A big theme here at Del-Sette. If you hit the lower guardrail, it means that we've experienced some turbulence and you just want to slow down on your withdrawals for a a bit. So that's how we do it. Certainly long-term care insurance, you should consider long-term care planning. You should meet with an elder law attorney who can help protect your assets against those expenses. Finally, smart investing. We think smart investing means investing in a portfolio that includes mostly quality dividend paying stocks. Again, that is our opinion. And the primary reason for that is we want our clients to have an income that has a good chance of increasing faster than inflation so that you can maintain your purchasing power and standard of living in retirement. So here's the lesson. Living too long means protecting yourself. It's about ensuring independence and dignity. for the later years of life in addition to making sure that your standard of living does not decline. Okay, risk number three, becoming disabled. In all of my years of being a planner, I would have to say that talking about disability is the most difficult topic to talk about because, well, young people, let's face it, just don't think it's going to happen to them. I was going to say us. I'm not quite so young anymore, but nobody likes to think about becoming disabled. Then, you know, what are the chances? Well, think about this. If you're in your thirties, forties, fifties, what's more likely dying in the next decade or becoming disabled for an extended period? Statistically, disability is far more common for young people than dying. And yet I can tell you that in my practice, people are much more open to purchasing life insurance than disability insurance. And it's a big deal. The financial impact of disability can be huge because it means loss of income. And sometimes during peak earning years, rising medical bills and caregiving costs, retirement savings contributions stop completely. There goes your retirement for you and your family. And by the way, that can create family strain. If loved ones have to cut back their own work to provide care, or if they have to work more so the family can maintain their standard of living. What about if you're self-employed? Do you have a continuity plan? Do you have a succession plan? Can your risk continue without you? Again, see this all the time. I don't remember the exact number of small businesses that don't have continuity plan or a succession plan, but it's a lot. So what can you do about it? Well, disability insurance, both short and long-term, but if I had to choose between the two, certainly long-term disability insurance that will replace at least a portion of your income if you can't work. A couple of things to consider. You want own occupation disability insurance if you work with your hands, if you're a surgeon, if you're an artist, if you're a guitar player, et cetera, et cetera. Own occupation insurance, what that means is if you cannot perform the duties of your profession than you are disabled, the insurance company can't make you go flip burgers at McDonald's if you have own occupation disability insurance. If you can't perform the surgery, you're disabled. If you can't play the guitar, you're disabled. It doesn't matter if you can do anything else. The problem is most, if not all disability insurance that I've ever seen at work, because that's where most people get their disability insurances through group and coverage at work, it is not only occupation, it's any occupation insurance. Meaning if you can do anything, if you're a surgeon and you can go flip burgers, you're not disabled. Tip number Two, if the insurance is paid for by your company, then the benefit to you is taxable. So typically the employer provided disability insurance, this group insurance covers only 60% of your income and it's taxable. So you might lose another 20% to tax. So really you've only got 40% income replacement. Is that really going to be enough if you have any disability insurance at all? Okay, so definitely wanna talk to someone about the appropriate amount of disability insurance, especially if you work with your hands. You also wanna have an emergency savings plan, at least three to six months of your living expenses in a liquid, conservatively invested account, maybe money market. And by all means, if you own a business, have a continuity plan, have a succession plan. Here's the takeaway. Becoming disabled means protecting both yourself and your family. It's about making sure life can continue financially, even if your ability to work is interrupted. Okay, finally, risk number four, wealth eroding factors. Let's talk about the silent killers of wealth. They aren't single events like death or disability. They're slow drips that wear down your wealth over time. So here are some of the biggest ones. Number one taxes income taxes capital gains taxes estate taxes debt taxes without planning uncle sam can take more than his share now here at del seti capital we talk a lot about opportunity cost and when the context of income taxes if you. Pay a dollar more in income taxes than you technically had to you don't lose that dollar just for a year two years or three years technically you lose that dollar for perpetuity now we can't measure that that's opportunity costs it's not just that you lose the dollar that you pay that you didn't have to pay. you lost what that dollar could have done for you over the course of your lifetime and beyond. So when you measure that in the thousands of dollars that people potentially overpay in income and debt taxes, it's a big deal. Again, without planning, not only do you lose the tax that you pay, the extra tax that you didn't have to pay, but you lose what you could have done with that money. Maybe it's even enjoy it. Inflation, big, big deal. Again, it wasn't a big deal for many years, average 2% to 3%. And then a couple of years ago, we had a 9% pop and inflation is a big deal again. I don't need to go into detail about the cost of food these days. For instance, just go to your supermarket. That's why your money has to grow at least as fast as inflation. The only way for that to happen in our opinion is with quality stocks, meaning you have to put up with some volatility in order to have a chance for your money to grow at least as fast as inflation so you can maintain your purchasing power. Okay, what about healthcare and long-term care costs? Again, huge wealth eroding factors, unpredictable, often underestimated. consider long-term care insurance, consider long-term care planning with an elder law attorney. Again, market volatility, it's not necessarily the volatility itself that is a wealth eroding factor, it's how people respond to it, selling low, locking in a temporary decline and making it permanent, you never recover. If you are an optimist like we are at Del-Sette Capital Management, we view every market decline as an opportunity, plain and simple. Now, is that always going to be true? Who knows? Maybe yes, maybe no. We're not certainly making predictions, but that's just how we view the capital markets and quality common stocks in particular. It doesn't mean that you don't have some bonds and fixed income and conservative investments, but we feel that the vast majority of a client's portfolio should be. in quality stocks, and of course, some bonds and fixed income, assuming you can tolerate the ups and downs. Okay. Finally, what about unplanned expenses, wealth eroding factor? Wow. Divorce. Great divorce. A lot of it these days. A lot of people in their 50s, 60s, 70s, and even 80s getting divorced now, that's a huge expense, helping adult children or falling victim to financial scams. It's a big one. How do you fight back? Tax efficient planning, smart withdrawal strategies. We like dividends, stock dividends. We like the guardrail approach to retirement income planning, being diversified. You want to balance growth and yes, you want to have some protection certainly. Proper insurance coverage, big deal. What about estate planning? What about planning for potential death taxes? What about updating your legal documents to make sure that your wealth transfer wishes are honored? Most importantly, folks, ongoing financial guidance because the risks never go away. They just change over time. The planning for someone who is in retirement is very different than the asset protection planning for someone who's just starting out in life. And so early on, you want to focus on protecting income replacement. And later on, you want to focus on asset replacement protection coverage. The bottom line, wealth eroding factors means protecting your money. It's about guarding the financial foundation. You are either working to build or you've worked so hard to build if you're already there. And let's not forget to focus on your life plan and making sure that you're focused on doing the things that matter most to you in your lifetime. In that life plan, there's a question. If you knew you were gonna die tomorrow, what would you have regretted not having done, seen, et cetera, et cetera? You know, it's a really powerful question if you sit down and think about it. And so, you know, the point of that question is, well, if you're gonna regret that, if you found out you're gonna die tomorrow, then you should probably start acting on that life plan now. So there you have it. Four core financial risks. Dying too soon, protect your loved ones. Living too long, protect yourself. Becoming disabled, protect both yourself and your loved ones and the wealth eroding factors. Protect your money. It doesn't mean avoiding Volatility, necessarily, probably not. Financial planning isn't about just chasing returns. Believe me, it's about building a plan that can weather the storms of life, planned or unplanned, and make sure life goes on financially for your loved ones as if you were still around. Your financial plan at the end of the day and the final analysis should be designed not just to grow wealth, But to protect it, thanks for joining me in this episode of the Happiness and Retirement Program podcast. If you found this podcast valuable, share it with a friend, leave a review. It really helps to spread the word. Subscribe on Apple or Spotify. And until next time. I'm Bill Del Setti reminding you it's not just about having wealth, it's about protecting it so you can enjoy the life you are working so hard for or have worked so hard for. Because the road to retirement should be an adventure, not a survival strategy. See you next week. Bye-bye. SPEAKER_00: That's it for today's episode of the Happiness in Retirement Program podcast. We hope you found some valuable insights to help you create the retirement you deserve. If you enjoyed this episode, be sure to subscribe, leave a review, and share it with someone who's planning for their future. For more tips and resources, visit happinessinretirement.com or the Del-Sette Capital Management Facebook page. Until next time, here's to a happy, healthy, and financially secure retirement. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such. The views expressed in this podcast are that of Bill Del Setti and are subject to change based on market and other conditions. This podcast may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and opinions and should not be considered as indicative or actual events that will occur. The information provided is for educational and informational purposes only and does not constitute investment advice, and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status, or investment horizon. You should consult your financial professional, attorney, or tax advisor.