In this latest episode of The Peak Financial Freedom Show, Jim and Dan use a hypothetical client to showcase the benefits of sitting down with an advisor to minimize the risk in your portfolio and create a financial plan that works for your unique needs. Specifically, they touch on how one might go about organizing their assets and savings in order to use their assets as income during retirement so that they are able to both live the life they desire and deserve in retirement and leave an inheritance to their children or grandchildren.
There is a strong correlation between the risk in your portfolio and achieving financial freedom; the less risk you have, the more freedom you gain. In this episode of The Peak Financial Freedom Show, Jim and Dan discuss the difference between having a portfolio that looks pretty on paper and having one that is actually working for you, it all comes down to the amount of risk that you’re taking on and how much income flow you have. By taking the time to sit down with an advisor to write out your assets, your income revenues, and your investments in a simple format, you’ll be able to see and better understand exactly what your money is going to do for you for the rest of your life.
In this latest episode of The Peak Financial Freedom Show, Jim and Dan look into a case study of a widowed woman on the precipice of retirement and discuss the unique challenges that come with entering retirement single. Among those challenges, they explain why investing in stocks is actually much safer than investing in bonds. In order to reduce the amount of risk in your portfolio, you want to be sure that more of your money is in assets and stocks than it is in bonds. Another way to minimize your risk, is to be sure that you have a well-thought-out plan which details the ways in which you will make and manage your income once in retirement.
Portfolio stress tests! Consolidating assets! Analyzing risk! Shifting money to bonds! In this episode of Peak Financial Freedom Show, Dan and Jim discuss different ways that you can bring planning into your portfolio to minimize risk, especially when you’re in retirement. To do so, they look back at all of the bear markets that have happened since 1929 – how often they’ve happened, how big the losses were, the best ways one could have protected themselves from the market drop, and how another bear market may affect your portfolio.
When President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act on March 27, he enacted the largest aid package in American history.[i] One important impact is that Required Minimum Distributions (RMDs) for 2020 are, in essence, suspended. In this way, the federal government chose to sacrifice short-term tax revenue in order to provide immediate financial relief to retirees.
This change bears discussion, however, as there are many questions about what the CARES Act means for those who have already taken their 2020 RMDs, as well as any impact on taxes and inherited accounts.
Let’s begin with a review of the basic tenets of the RMD portion of this new law.
Understanding the CARES Act
This relief package allows defined contribution plans, including 401(k)s, 403(b)s, 457(b)s and IRAs to suspend 2020 RMD requirements. Now, RMD rates were already a bit lower since 2020 is the first year, per the SECURE Act[ii], in which the age change from 70.5 to 72 began, but skipping RMDs in 2020 altogether is a meaningful change. With so many Americans facing financial struggles due to the COVID-19 pandemic, the flexibility to opt-out of distribution means that retirement portfolios have more time to recover from the current market volatility.
You spend your entire life working hard, saving up, investing your money, and dreaming of the day when you can finally retire and enjoy the fruits of your labor. However, one can never expect stability in the stock markets, and that’s why it’s so important to have a portfolio that is uniquely built to protect you from any fluctuations the markets may face – no matter how drastic.
Join Jim Files and Dan Ahmad as they answer listener questions touching on topics that range from pension management to retirement planning to why it’s so important to have a written plan for your personal wealth management goals. Having a comprehensive financial plan for your future is critical to staying on top of your finances and setting you and your family up for the retirement you deserve.
Join Jim Files and Dan Ahmad as they provide valuable information about risk level in your portfolio as you age. Mathematically, there’s a high probability that you will experience many peaks and valleys of the stock market. That’s why as you age, your risk of running out of money in retirement goes up.
Stage 1 of Retirement Planning is known as Asset Accumulation. You’re young, still working and investing monthly, had time to make up losses, and focused on maximizing growth, because you don’t need income from your assets.
The stock market has always been volatile, going and going down repeatedly. But what are the actual FACTS about stock market crashes?
Since 1929, the stock market has had 13 bear market crashes that have averaged -39.5 [pronounced “negative 39 point 5”] percent in losses.
While 13 crashes since 1929 doesn’t sound like that many, it means historically, the stock market crashes and loses an average of -39.5 percent every 7 years. Why is all this important? 2 reasons:
