At age 62, you receive 75% of what you’d receive at your full retirement age (assuming 66). If you delay until 70 years old, you accrue 8% more per year (32% over 4 years).
In general, I usually recommend waiting until 70 to start your social security, but this is also assuming a long life.
When you’re looking at social security planning for couples, I have a program on my computer that can track all the permutations (file and suspend, delay, spousal benefits), etc.
In my video today, I ask the question “is it time to run for the hills, or jump off the ledge?” because of the recent increased volatility and decline in the markets.
Let me give you the short answer: no.
The bond correction was an over reaction, and the most recent equity dip is not a precursor to some big decline. At least not in my opinion.
For a full discussion of this, listen to my short video where I expand on these ideas.
Hi there, it’s Mike! Friends, Mike Brady here with Generosity Wealth Management – a comprehensive full service wealth management firm right here in Boulder, Colorado and today’s conversation is about whether we ought to run for the hills, find that ledge, and jump off it, because if you’ve been watching or reading in the news recently the volatility has gone up in the unmanaged stock market indexes and some of the bond markets as well.
They’ve decreased and the answer is no, I don’t believe that we should jump off that ledge and I think this is a short term correction to what we’ve seen. Let’s talk about the unmanaged stock market indexes first and foremost; your S&Ps, your DOWs, your NASDAQ, etc. I’m going to put a chart up there on the screen and if you have been watching my videos for a long time, you’re very familiar with this chart.
It is normal for there to be intra-year decline throughout the year, going back years and years and years. Every year there is one and every time there is one, we always freak out and forget that that’s a normal thing. I think this is going to be one more of those normal things, not the beginning of some huge decline where we lose 20%, 30%, or 40%. I just don’t see that with all of my analysis.
I also think that it’s going to be relatively short lived as well. Let’s talk about the bond market. The yields have spiked up in relation to the bond prices going down. Back in June, Ben Bernanke was the chairman of the Federal Reserve. He made some comments about starting to taper off. Now of course, he’s taken all summer to kind of back off some of those comments, but essentially let’s think about money in the economy as money in a bowl.
Here, kind of look at my hands there. Money in a bowl. You could put money into it; you can take money out of it. For the last four or five years, we have definitely been putting money in there by decreasing the interest rates, but also doing a bond repurchase. What he said back in June was not that we were going to start taking money out of it, but if we’re stop one of these two levers of putting money in – the bond repurpose.
You just said we’re going to put in – we’re going to buy left backs or we’re going to put less money in. Also, there’s an accumulated amount of sums and money in there already. I think that the concern isn’t overreaction and it took us a long time to fill this bucket with a lot of money. It’s going to take a long time for that impact to really be felt. At this point, there’s money in there for banks to lend out and they are definitely doing that at this point.
I think that the reaction even on the bond market, is an overreaction and I’m not freaked out about that as well. It is important to have a portfolio that has both stock and bond components in general, being very general, each client is different of course. The percentage that you have in those two of course is specific to what you’re trying to do with your particular strategy, whether that’s your retirement strategy or growth strategy and income strategy, etc.
The mix between these two, some things zig when the others zag. At this point, the equity markets in general have that. All of the bond markets in general have been down so they’re going to compete in force this year. In previous years, it’s been reversed where the bonds have done well and maybe sometimes the stocks at various points have gone down, so having that mix makes a lot of sense.
I’m going to end this video with something that I really like from Warren Buffet. Back in 1975, he wrote a letter to Katharine Graham who owned the Washington Post and he basically told her to keep the long view, the long picture in mind. Think of it as he wrote in the letter of a thousand coin tosses and there are going to be times when five or 10 of those are going to be in a row all head or all tails.
You might see it all-sided one way or the other, but it really is just a short time frame that does go back down to normalization. It’s the same way when we’re looking at investments. We’re here for the long term. We shouldn’t get too excited if there’s a month or a quarter or even a year that’s off. They do have a tendency to go up and down in value.
The reason why we have investments, of course, is that we assume that the future value will be greater than today. Whether that future value is five years, 10 years, 20 years – whatever it might be. Otherwise, why would we have investments? Why would you put it in there? You’d put in your master of storing in the bank savings account.
It’s important to take that into consideration that there are times both five to 10 coin tosses as Warren Buffet says, but we’re really kind of looking at it as we’re building this portfolio up together that works for us with our particular risk tolerance level and what you’re really trying to achieve. You’ve heard me, ad nauseum, talk about how important the strategy and the retirement analysis and the plan is and that we then use managers and other investment vehicles in order to support that particular strategy.
Let’s keep our eye on that particular strategy.
Mike Brady, Generosity Wealth Management. There was an awful lot here in a short amount of time, but I like to make my videos short, and pithy, and to the point. Hopefully today I achieved that.
It’s been my experience that when people don’t reach their financial goals it’s not because they failed to buy stock A over stock B, or bought this mutual fund over another.
Most of the time, it’s the bigger questions they’ve failed to answer, like “am I spending more than I earn?” or “what happens if I lose my spouse?”.
What is the dynamic value Generosity Wealth Management brings to the table? A = helping clients answer and address these issues, and keep the big picture in mind.
For a full discussion of this, listen to my short video where I expand on these ideas.
Good morning. Mike Brady with Generosity Wealth Management, a comprehensive, full service, wealth management firm, headquartered in Boulder, Colorado.
Today I want to talk about the dynamic value that I bring as a professional to the relationship with my clients; or at least my philosophy of where I probably add the most value. Here it is:
Point A is today. Prospective clients come in and they usually have a point B; what their goals are in the future and most of the time that’s retirement. Of course there’s usually a point C as well which is not outliving your money. So there’s a point B, something that we’re striving for in the future and of course a point C which is a secondary goal which is not outlive their money. Where I add value is all the planning from point A to point B and of course to point C. All the decisions that are there.
Understanding and explaining with the client and working with them the interdependence of all the various variables of; the saving, the investing and when to retire. All the decisions around retirement, how much the particular portfolio supports with various assumptions, upon retirement or withdrawal. All those various decisions- because what my experience has led me to really understand is when someone has not reached their particular goal it’s usually not because they bought stock A instead stock B or they had mutual fund A instead of mutual fund B; it’s because they frankly, didn’t save enough money; they spent more. Here’s your income and here’s your expenses and the expenses were greater than the income. They just didn’t save enough. Or it’s because they had some kind of a catastrophic event along the way like the loss of a spouse, the loss of a job, the loss due to some kind of a disability; and so part of that planning process is to proactively identify and talk about what are the contingency plans that we should have that could derail the great plan that we’ve come up with together. Many times that’s trying to identify them and have a plan for them. So that’s where I think I add some of the best value in the relationship.
I do believe that just having the appropriate investment plan that’s consistent with the risk level and the tolerance and the goals of a client are absolutely essential. I don’t want to minimize that in any way; however, I do want to say that that’s kind of the sexy part that everybody likes to talk about but I think what people really should focus on is that planning and a contingency for all those things that could derail that particular plan. That’s where I add the dynamic value to the relationship.
Mike Brady, Generosity Wealth Management 303-747-6455. Hopefully you’re my client; if you’re not my client hopefully you’ll give me a call and we can talk about what that client/ advisor relationship would look like.
Mike Brady, 303-747-6455. Have a great day. Thanks, bye, bye.
It’s my belief that the longer your time horizon, the more it starts to be your friend.
What do I mean by that? Investments of all nature tend to be cyclical, meaning as a normal course of business they go up and down. The longer you’re invested, the more of these intermediary “cycles” you’ll experience, with the end goal eventually being up. If you don’t believe that long term the value will be greater, then why are you investing?
Anyway, many times people say “but I just retired and I’m no longer a long term investor”. My answer is that I hope you’re still a long term investor, as I hope you live a long life.
For a full discussion of this, I highly recommend you watch my video. Good stuff (if I do say so myself).
Good morning, Mike Brady here with Generosity Wealth Management, a comprehensive full-service wealth management firm headquartered right here in Boulder, Colorado and today I want to talk about how long-term investing is probably going to be better on your stomach and being able to sleep well at night. I want to really talk about that.
You might say to yourself, “Mike, I’ve heard that before but I’m not a long-term investor because I’m retiring next year or I just retired.” All I would respond is, “I sure hope that you’re long-term because hopefully you’re going to live a very long and fruitful life all through retirement and you don’t want to outlive your money so even though you might think that you can’t be a long-term investor, you probably are.”
I’m going to put two or three different charts up on the screen so pay attention.
The first one is the 100% unmanaged stockmarket index over the last 15 years. You’re going to see it up, down, up, down, all over the place and by looking at this chart you’re probably saying to yourself, oh the market’s gotta go down. Well, I’m just saying that’s not necessarily the case.
I’m going to put the second chart up if you could pay attention to it and this is the 100% stockmarket index over a 113-year timeframe and what you’ll see, there are some times where it plateaus, sometimes where the trend is down, and times when it’s a generally up-trending market.
The third chart that I’m going to put up on the video is the range of returns over a one, a five, a 10, and a 20 year time horizon. What you’ll see, is as the time horizon is shorter, whether it’s unmanaged stockmarket index, unmanaged bond index, or a 50/50 between the two, the shorter you go the more volatile the standard deviation as we call it, it gets greater and the range of return is very high or very low. As we go out from left to right on that chart, what you’ll see is the band starts to get narrow and narrower. I bring this up because many times we have a tendency to look at things on an hourly or a daily, particularly with the 24-hour news channels and cycle anymore, weekly, monthly, even quarterly or annually, when really we need to keep our eye on our plan and start to look at things from a long-term vision.
Of course you should work with your financial advisor, hopefully I’m that guy, in order to find a plan that works for you that you feel works with your particular goals and your risk tolerance, etcetera. We do have to keep a long-term vision and of course review it, how it’s fitting with our plan, but let’s start thinking long-term.
Mike Brady, Generosity Wealth Management, 303-747-6455. If you’re not my client, give me a call and we’ll talk about it. If you’re my client, I love you and I think that’s it for today. You have a wonderful week, wonderful day, wonderful week, wonderful quarter, and of course wonderful long-term horizon as well. Bye-bye now.
I was recently asked “what are some characteristics or traits you’ve noticed in people who seem to reach their goals?”.
Hmmmm…..good question.
I suppose I could be completely self-serving by saying “they click on my videos in my newsletter” but that’d be too obvious.
So, I’ll start off by saying “they treat their life and goals like a business”.
For the rest, you should watch the video.
Good morning. Mike Brady with Generosity Wealth Management, a comprehensive full-service wealth management firm headquartered right here in Boulder, Colorado, although I have clients in many different states.
Today, I wanted to ask a question that a client had of me. They asked after reading the book The Millionaire Next Door, it was like, “Mike, in your over 20 years of meeting with clients, hundreds if not thousands, what are some of the characteristics that you’ve seen that are similar to those that have achieved their goal? People who perhaps 20 years ago you met and they stated what their intention was and then they were successful in reaching their goals, and others that were not successful.” I want to answer that question here today. By the way, read that book The Millionaire Next Door, because you’re going to find some habits that this book talks about that people with very good balance sheets that have worked hard for their net worth, but they have many similarities together. That’s really kind of what I’m talking about here today but just more of from my anecdotal and observational experience.
The first thing is, they treat their finances, their goals, their retirement goals, etcetera, as a business. They have a good conversation with themselves and with me and with their spouse and perhaps their family about where they want to go, and they have a plan; they have a goal, they have a plan and they review it periodically and that could be within the year, maybe annually, maybe every other year just to track where it is that they’re going. They also understand the relationship between income and expenses, saving and investing. You’ve seen me do this before. This is your income and this is your expenses and the difference between the two, the income has to be greater than the expenses. It’s that simple. If you don’t know if your expenses are equal to your savings or if they’re even greater, than that’s the first warning light on the old dashboard that you might not be setting yourself up for success.
No matter how busy a client is, whether they’re a doctor, a lawyer, a business owner, or a family with a bunch of kids, the people that I have found have been very successful treat their life like a business. I have to say one indication of that is they a lot of times return paperwork very quickly. They have prioritized up all dealings with their finances and reaching their particular goals. That could be educational goals for their kids as well. That could be providing for older members of their family you know, etcetera. Whatever those goals are they have made a real priority, they’re organized, and they address it accordingly and in a timely fashion.
Another thing is they are engaged. They review paperwork, they ask good questions, and they’re more engaged and that’s one thing that I’ve found is common amongst those that reach their goals. Then the last thing is a little self-serving and I’m just going to preapologize on that one, but they have good advisors and they have an estate planning attorney, they have a CPA, and they usually have a good financial advisor, and hopefully that’s me of course, that’s my observation. They listen to them, they ask questions, there’s a true dialogue, a relationship, a collaborative relationship, and they have a tendency to follow that advice particularly when all of those members are working together, agree on how to go forward and they have good advisors and they recognize the value that they’re bringing. Those are some things that I have found in my over 20 years of working with people, and I can many times tell starting off when I meet someone who doesn’t become my client whether they have the right habits or not just by the fact of whether or not I ask them for the data to do a financial plan and they can’t even pull that together. I really question at that time how serious they are about their goals in order to get a plan and then of course to review it.
That’s it for this week. Mike Brady, Generosity Wealth Management, 303-747-6455. If you’re my client, I love you. If you’re not my client, I would love to talk with you and hopefully we can both love each other and help each other out.
