New Year Planning, Global Investing, and Retiree Psychology

Zach and Ryan, good morning.

Morning, George.

Morning, Zach. Happy New Year to you both, and Happy New Year to all of our clients. Yeah, 2024 just wrapped up. We're filming this in January, but I'm guessing by the time that it comes out, it'll probably be around February or so. And so I know we're going to cover a lot of different topics today, but I thought I would just kick it off to start.

I think one thing that comes up with investors is, when they hit the New Year, some people, New Year's resolutions, they're supercharged to, all right, I'm going to really sit down and tackle some of my financial decisions this year. But then they sit down with a pad of paper and they say, okay, where do I start? And there's a variety of different things you could be covering. It's hard to know sometimes what you should be prioritizing right out of the gate when you hit January and what things can wait till later in the year.

So from a financial planning aspect, I thought what I would start covering is what I think are maybe five important general topics, with some more specifics inside of them, on things people may want to just consider tackling this year. And these are items that you don't necessarily have to do every single year, but maybe you tackle some of them annually, some of them you take a look at every couple of years. But yeah, I think out of the 12 wealth pillars on the Wealth Bridge that we talk about, there's five main ones that you want to keep top of mind each and every year when you hit January.

And so I think from an investment perspective, and we'll look at this from two different angles, you know, one for retirees and then one for people that are building wealth. But I think for retirees, when it comes to their investments, one thing that's good to think about when you hit January is, you know, particularly after a year like 2023 and 2024, is from an investment standpoint, should I be rebalancing? Should I be taking some gains off of the table? And I think what goes along with that is, what are my cash needs going to be for the coming year? And that may come in the form of, you know, a required minimum distribution that you have to take out, you know, even if you don't need the money, or it may just be money from your taxable accounts that you need to sustain your living expenses over the course of the year.

The reason why I think it's important to take a look at that in January is, 2022 was a really good example. You know, a lot of people, particularly on their RMDs, will think, well, you know, I could do it in January, but maybe I want to stay invested for most of the year and then take out the RMD. 2022 was a difficult year to do that, because the market dropped significantly in the first month and basically stayed there for most of the year. And so in that case, for people that were a little low on cash, they found themselves having to sell investments when the valuations were lower than they would have liked. Had they taken care of that in January, you know, they could have maybe taken the cash out of their IRA, funded it for living expenses, and sold at higher prices.

Now, that's, you know, one specific year. There's no guarantee that that's ever going to happen, but I think particularly when you have a couple of good years in the markets, you may want to think about that. One thing that makes people hesitate, particularly if they have big taxable accounts, is, hey, I don't want to be rebalancing and triggering gains. Again, it may be good to look at your retirement accounts, IRA, 401(k), and say, hey, I can rebalance here, maybe get more conservative inside of those accounts, where I'm not going to be triggering taxes, even if I've got bigger stock exposure in some of my non-qualified accounts, you know, my taxable accounts. I can take care of the rebalancing in some of my qualified accounts, get myself better balanced at the start of the year. So I think that's a good thing to think about for retirees.

For people that are younger, maybe building wealth, people that are contributing to different investment accounts or savings accounts as the year goes on, I think it's important to think about taking care of that early on in the year, and there's a couple of different buckets you might want to think about funding early on in the year. I think most notably, you know, something I do for myself every single year, I've got a rainy day fund where I try to keep six months' worth of expenses. It's just set off to the side, hopefully never going to have to use it. But, you know, something you read about in the news over the last couple years is inflation is higher than people liked. And so even though I hit my six-month goal a couple years ago, it probably costs more to buy things than it did a couple of years ago. And so each year it's good to take a look in January and say, hey, maybe I want to throw an extra, you know, X amount of dollars, couple hundred dollars, couple thousand dollars, into my emergency fund, just to add to that, to account for the higher cost of things that are out there now.

Another thing that's important is, for people that have IRAs or Roth IRAs, taking care of those contributions early on in the year. And so one thing I think people talk about a lot is, hey, if you can start contributing to those accounts at 25 versus 35, you're going to be a lot better off, you know, when you end up retiring and start living on those funds. But I think something that people talk about less often is, well, what if I contribute earlier in the year versus later on in the year?

And so what I'm showing here is just from a blog I wrote a couple years back that just really goes along with the same principle of starting to contribute in your 20s versus your 30s. But, you know, markets are up more often than they're down, year by year, over the long term. And so these two charts basically just break out, okay, if I start contributing in January of every single year, and I do that for 30 years, versus waiting till December of every year to do that, you know, it builds up over time in terms of compounded return.

I don't know if you can see these numbers, but basically what you'd end up with, you know, putting, I think when I wrote this, the max IRA contribution was $5,500, for 30 years at a 7% rate of return. If you did that in December of every year, you'd have around $520,000, but if you did it in January, you'd have around $555,000. So over 30 years, you know, a $35,000 difference. It's not huge, but I think it just brings home the point that, similar to starting contributions early in terms of age, it still holds true for starting early in terms of the time of the year. And I think that holds true for your 401(k), 529 accounts, HSA accounts.

And so I think those, from an investment perspective, are two things that are important to think about in terms of, how much am I putting away into my investment accounts or my savings accounts? Should I be upping that for the year, and can I afford to do that early on in the year? And I think it's going to put you in a much better position when you go to retire than if you were to, you know, wait later on in the year, each and every year.

I think something else that's important, the second area, is taxes. People are getting ready to file their taxes in April. It's important to be looking at, you know, your tax return from last year and talking with your accountant about, what are some things that I can do this year that might allow me to lower my tax bill? You know, one example might be if you're somebody who used to be a W-2 income employee. Zach, I think you have a client that this just came up for, who now has 1099 income. She's got the ability to put money into a SEP IRA, which is potentially going to substantially lower her tax bill, while allowing her to put more money away for retirement. And so it's important to take a look at how your circumstances have changed from a tax perspective each year, and seeing how you can, you know, change things in order to lower your tax bill, not only in this year but in future tax years.

Whenever you can use tech to help inform those decisions, I think it's really important. We've started using new software called Holistiplan, and I think, Zach, you had a case with a client recently who was doing Roth conversions every year, and by reviewing his tax return, I think he was using TurboTax, had realized that he wasn't accounting for that income each and every year. Similarly, I had a client who was giving to charities. I wasn't aware of it, but, you know, going through that process of looking through their tax return, we were able to say, hey, you should take your IRA distributions and give to charity directly from your IRA. And so, you know, it wasn't something maybe we were able to do as much in the past, but now that tech has evolved and we're able to better inform our decisions through tech, I think engaging with, you know, advisers like us on your tax situation before April comes can be really important.

Third thing, we've talked about this before on previous podcasts, is just looking at your beneficiaries on your investment accounts, or looking at your current estate plan if you've got a trust in place. The tax laws might be changing at the end of 2025. It seems unlikely that that's going to occur now that the election results have come to fruition, but it's important to be talking with your attorney about, hey, what's the likelihood that those things are going to sunset, and do I need to be making any changes to my estate plan?

I think a fourth thing that's much more prevalent today than it's been the last five years, and it's a bigger deal now than it's ever been, is cybersecurity. It wasn't as much of an issue pre-2020, and now you're reading stories every day about people getting their information stolen, or used to set up new bank accounts or new credit limits. And it can be a very scary experience to go through. And so I think when you hit January, it's important to be asking yourself, hey, when's the last time I've updated my passwords? Do I have diversity amongst my usernames and passwords? You know, am I using the same password for everything? Do I have any sort of multifactor authentication in place, where I'm getting a text every time, you know, I have to log into one of my bank portals or my investment portal? Do I have any sort of identity theft protection? You know, do I use LifeLock or Privacy Guard, so if somebody does get my information, I can help protect against that?

I think when you hit the New Year, it's a good time to reset and say, hey, you know, this isn't something I had to deal with 10 years ago, but, you know, we always got to evolve our planning as the years go on, and this is a new and important thing we need to be considering. And so I think those are all really important things to keep in mind when it comes to cybersecurity.

And the last thing I'll say is surrounding insurance. You know, if you have insurance, people tend to set it and forget it, but insurance can be used in a variety of different ways as the years go on. You know, if you're somebody who was newly married or newly had a child, maybe you never had insurance before, maybe you need to add it. Maybe you're somebody who had some sort of insurance in place to protect against loss of life, but now you're retired, you don't need it as much. You might have an opportunity to change the type of insurance you have, you know, drop a certain amount of coverage to save you cost, convert insurance into an annuity-type product, investment-type product.

So those are all those five areas, you know, investment planning, taxes, insurance, cybersecurity, and estate planning. I think when you hit the New Year, it's important to be looking at those, you know, even if it's just briefly. And I think something like contributing to your investment accounts every year, your retirement accounts, that should be an annual process, and some of the other things, maybe you do it every other year, or every three years or four years. But just having that checklist in place and to be able to glance at it every year, I think, is a really good starting point.

And that way you can move forward, you know, as you go on throughout 2025, and say, hey, there's nothing glaring that I need to get to right away. I can kind of hit the pause button and then, you know, address some of the smaller items as we hit the summer and the fall and the winter. So that's it in a nutshell. So I don't know if there's any questions on any of that, but if not, Zach, I can just turn it over to you. But those are my five.

Yeah, thanks. I think that was really good. And one thing, on the timing of the IRA contributions, in your example I thought that was really interesting, of just, you know, do it in January versus December. And I think one thing people try to do is kind of time the market with your contributions, of saying, oh, you know, using the S&P 500, which is the US, like, large-cap index, you know, that's at an all-time high, should I, you know, wait a little bit, and, you know, maybe it'll dip and I'll be able to buy in at a little lower price?

And, you know, people who, maybe last January the S&P 500 was at an all-time high, you know, they said, oh, I'm going to, you know, wait for it to take a dip. And, you know, 2024, the S&P 500 hit 57 new all-time highs, and you were kind of just always waiting for that dip. So over a longer, you know, time period, your example was 30 years, you know, odds are it's going to go up in the year, so it makes more sense just to do it in January and kind of be done with it for the year. And there's going to be years where, you know, it probably takes a dip, you know, after the point, and, you know, it'll be, you know, tough pill to swallow, but more often than not, that's the right time to do it.

Yeah, I think if you're truly not going to need the money for living expenses, or a big trip, or you're buying a new home or new car or whatever, for the next, you know, three to five years, I can hear the argument for, hey, let's keep it invested as long as possible, you know, each and every year, because, you know, like I said, markets more often are up than they're down over the long term. So I think it can be, you know, beneficial to wait. But I think for anyone that says, well, I may not need it this year, but I'll need it, you know, next year, should we wait till December? There's too much of a question mark there of what's going to happen with the market.

And I think what people can do now is, you know, take care of it, you know, have that peace of mind. Listen, I've got my cash, I've taken care of my RMD for the year in January, and you can park it in a high-yield savings account, which is a lot more attractive than it was five years ago. So even if you can only get, you know, 4% and the market's up six or seven, the certainty of knowing, I've got my spending for 2026, I was able to get that loose up and ready, and take gains off the table and rebalance in early 2025, and I was able to get a decent chunk of interest in a conservative account, I think that's a really good tradeoff. You can give yourself peace of mind that that's not a bad decision in most circumstances.

Yeah, for sure. No, I think those are great points. And the topic I wanted to talk about was, like, global investing. So we always, you know, I just referenced the S&P 500 as being the large-cap US index, and, you know, that really is just a small piece of global investing. I'll share my screen here and show one of my, like, favorite charts when it comes to thinking about investing.

So here we have the world market capitalization, and this is as of December 31st, 2023, and it shows the weights of each country's market cap as you think about the whole world. So you can see on the left here, in the blue, is the US, which makes up 61% of the world market cap, which is a huge portion of it. And you could see on here, I think it's really cool how it shows, there's, you know, about 3,400 companies in the US, and in total that market cap is $50 trillion.

And then the yellow is what we consider developed ex-US, so Canada, United Kingdom, Germany, France, you know, Japan is in there, Australia. Each one of these are substantially smaller than the US's 61%. In fact, in the US, Apple makes up a little bit more than 4% of the world's market cap, so bigger than France or Switzerland or Germany or Canada. Japan is really the only country that's bigger than Apple, market cap-wise. And, you know, all these different sizes change from year to year.

You know, as I mentioned, this is as of December 31st of 2023, and I'll flip here, could talk about, you know, what happened in 2024. This is a chart that I know Will in the past showed on this podcast, but this is the updated version as of, you know, December 31st, 2024. So all the way to the right here, we can see the different asset class returns for the year. So, you know, 2024, US large cap, so that S&P 500, led the way at 25%, so fantastic year on the back of a really good one in 2023. US small caps did really, really well. As we're kind of focusing on equity investing here, I'll go emerging markets. So those are your China, more, Brazil, Argentina, countries like that, average about 8.1%. And then down here at the bottom are the developed ex-US at 4.3.

So I want to kind of show, you know, this is one extra year, where the percent of the world market cap is at now, after another additional year. I'm going to switch slides here, and this chart has a lot going on, but what I want to focus on right now is this top right-hand corner, which shows percent of, you know, US, or percent of country market cap in the world. So this gray bar represents US. So, you know, as of 2023 it was 61%; now it's grown to be 67% of the world. And, you know, it's funny how much these have changed over the time.

And I've got some stats here showing, you know, what the US has done compared to Japan, really since 1990. So in 1990, the US made up 32% of the world and Japan made up 41%. And you fast forward to 2000, you know, as we were building up to what ended up being the tech bubble, we didn't know it at the time, the US grew to be 52% in 2000, so right here, and Japan fell to 12%. So that was a huge turning point. But then you'll notice here, during this, you know, period from 2000 to 2010, the US lost, it fell from 52 to 44. So that's during the Great Financial Crisis. This is a period that, in terms of US investing, is known as the lost decade, where the S&P 500 lost money. And then really since then, the US has just continued to grow and grow and grow.

And I'm not trying to suggest that, you know, the US is going to, you know, fall to 10%. US has some of the, you know, largest, most, best companies in the world, and it's going to continue to do great. But I think we want to just be diversified. You know, if the 67% fell to 60%, that would, you know, really hurt if you were, you know, heavily overweight US, if you were 100% in US equities. So I think we want to be diversified, you know, in markets where the US maybe doesn't do as well as Japan, or, you know, Europe or emerging markets. We want to, you know, own the whole world.

And another interesting point here that I thought was, or another point that I thought was interesting, was 2024. You could see here what the different countries did. So I mentioned, you know, US was up 25%, but really, as we think about international investing, there's what's considered local currency and then US currency. So in terms of local currency, Japan returned 21%, but, you know, me, I live in, you know, Chicago, Illinois. I don't exactly care what Japan's stock market did in Japan's dollar. I want to convert it to USD. And because the dollar has done really, really well, and did in 2024, for me owning a Japanese equity, I would have only returned, you know, 8.7%. So that is another headwind towards international investing, is the dollar strength. And, you know, if the dollar were to fall and Japan equities do well, I kind of get a double whammy. So, you know, I think that there's a lot of things that go into it, but we want to just make sure we're owning the whole world, because, you know, there's great companies in the US, as well as, you know, international.

And another, one last chart here. This just shows, out of the top 50 stocks in the world, you know, US or international, doesn't matter, you know, which piece, or how many of them are in the US versus how many are not in the US. So this green bar shows, you know, how many are in the US, and I was kind of surprised with how many were not in the US. So over the last 13 years, about 37 of the top 50 companies, on average, are based not in the US. And I think that that's really kind of a compelling story. I want to make sure I own those in, you know, a diversified portfolio, so I can get some, you know, good, or get a piece of those returns, even if it's just a small percentage of it. But yeah, so that's the case for being internationally diversified.

And I was thinking also, you know, people say, you know, I don't want to own anything outside of the US, there's no good companies there. And one that really comes to mind is, you know, automotive manufacturing companies. And I know Ryan and George and myself all own non-US cars that we drive to work every day. I thought that was kind of a funny story, a funny component of it, because there's great companies all around the world. We want to make sure we own all of them.

Yeah, no, these charts are great, Zach. And I feel like we have been talking about this a fair amount on the podcast, and I feel like it's important, because diversification, I think, has come under fire a little bit. You know, I don't know how you feel, Ryan, you've been doing this longer than us, almost maybe more so now than ever, because the US stock market, which is what people see in the news, has done better than pretty much everything, it seems like, year over year, the last six or seven years, even better than US fixed income, you know, US small caps. You know, this, basically the S&P 500, which is a fair representation of the total market but has a lot of large-cap companies in it, that specific sector continues to outperform.

But one thing that came to mind when you were talking about Japan, Japan's a really good example, and again, Ryan, I may need to rely on you for this in terms of the numbers. But when I think of the US and Japan, you know, it's almost like when you think about a mutual fund that has a lot of different companies inside of it, and concentration risk. Companies or countries are no different. The US is just one country out of many. Now, the US, for all of our clients and most clients in the US, makes up a significant portion of their portfolio, because there's always usually some sort of domestic bias that kind of goes along with where you live and how you invest.

But I think Japan's a great example of the dangers of putting all of your money into a single country, because I think that's the question that comes up when people are arguing against diversification, is, why don't I have all of my money in US large-cap stocks? Is because I think Japan, when that stock market cratered, it took, was it 30, 29 or 30 years to get back to the levels they were at? Ryan, does that sound right to you? I think it was sometime around COVID it finally had got back to the break-even point. And so we talk about the lost decade with the US, but that was basically a third of the period that the Japan stock market went through.

So for, you know, if I just par what we're talking about here to, if our clients lived in Japan, we managed money in Japan, and we took the same approach we did with clients, that would be an extremely tough period to live through. And, you know, it's easy to brush it off and say that won't happen again, but it did happen. And so I just think it's important to keep that in mind. And when you think about why do you continue to diversify, it's just because those types of situations do come up. It's not to say that it will happen to the US, but it happened to Japan, so there's no reason why it couldn't happen to the US. So sorry, Ryan, I cut you off.

Oh, you're good. So, Zach, I mean, you brought up a good point using the car industry, right? So if we have domestic vehicles, you know, that's kind of a microcosm of, you know, the market conversation, right? The components of that vehicle, how many of those are truly made in the US? You pick up the hood of an engine and look at the components of the car, I would best guess that most of those components are built in other countries, even though they may be assembled here. That just goes to show you the multinational aspect of how much things have grown throughout, globally, throughout the last 20 and 30 years.

If I may introduce myself to the new podcast recording, I have been in as a financial adviser for over 20 years. This is my 14th year at McCabe & Associates. This is my very first podcast. So, George, you talked about tech and how far that has come, and look what we can do in our offices just by click of a button. So, you know, tech has definitely come a long way. We brought up some very valid points as far as, you know, financial planning aspects, the way to look at markets, the way that we as a firm and our philosophies look to invest our clients' money.

The one topic that I kind of want to touch on today, and what I have been seeing recently, not recently, but I would say over the last couple years, is the distribution planning. I believe that is the art of what our firm specializes in when it comes time for the topic of retirement. And it's a difficult way to think about, hey, you know, I've been geared to work 30 and 40 years as an employee. I've been saving and putting my money away in various vehicles, an IRA or Roths or my 401(k)s. You know, what is the psychological effect from saving now versus spending?

And that is a conversation that I've been having a lot with clients who have retired in the last couple years. And it is something, and that does take a lot of planning to go through, because what you're doing is you're gearing yourself up for, you know, working and putting kids through school and saving and paying down debt, and now all that stuff is done and it's time to enjoy retirement. So what I was going to talk about is, you know, the psychological saving versus spending aspect, how to spend in retirement, right, kind of phasing into retirement.

Where, you know, there's been conversations, hey, do we have a hard stop? Meaning, I am retiring on June 10th, 2045, which is my birthday, by the way, and June 10th of 2045 I'll be 67 years old, to think that that is coming, but it is. Do I have a hard stop? Do I phase into my retirement, meaning, do I work for a few days a week and finish out a year or two?

You know, the hurdles that we talk about, I talk about this with a lot of my clients when we meet, you know, the age hurdles, and I can run through them really quick. You know, 59 and a half is kind of the earliest when you can look to take money out of qualified accounts, IRA, 401(k)s. Certain 401(k)s will allow earlier without penalty, the 10% penalty, pre-59-and-a-half rules that apply to that, when you can take money out of qualified plans. Age 62 is the earliest that you can now collect Social Security, but that is an early collection, and there are some, what I like to call handcuffs on age 62 collection of Social Security. There is an income limit on what you can make if you decide to continue to work and collect Social Security at an early age.

Age 65 is Medicare, and I went through that exercise with my parents, you know, and most recently with my mom, on renewing her Medicare. You know, obviously Part A is covered, but the Part B supplemental aspect of it, and to go shopping for a solid supplemental Part B, what does that look like? You know, do you go from a private standpoint? Do you stay with Medicare and do you add the various plans that go along with that? And then obviously prescription drug programs, which there's a slew of those. That's your age 65.

Usually age 67, 67 and some months possibly, is when you can collect your full retirement Social Security number. We refer to that as FRA, your full retirement age. That allows you to collect your full benefit by taking the income handcuffs off for Social Security. 70 is the longest you can wait to collect Social Security. 73 is your required minimum distribution age, as it sets right now, where Uncle Sam will require you to take out a certain percentage of your IRA or your qualified funds, based on your age and life expectancy tables that the IRS publishes. So from 59 and a half till 73 currently, there's a lot of things to consider when it comes time for retirement, for distribution planning, for all that stuff.

So recently I've been working with clients on the age 60 to 70 category, right? Hey, you know what, we're retiring, we're going to travel a lot more, we're going to use a lot more money up front, you know, based on what we have saved throughout our years. And based on the balance sheet that we have, we were thankful to pay debt down and basically have very little to no debt. You know, what is a safe distribution rate that I can withdraw from my money that I have saved throughout these years, to make sure that, you know, that money lasts?

You know, the biggest question is, I always tell clients this, you tell me the age of which you're going to pass, and I'll come up with a perfect financial plan for you. But nobody knows that, right? Nobody knows that number. You know, so we have to prepare. And, as George mentioned, the technology, you know, we have technology out there that we can provide certain ratios on how long money will last. MoneyGuidePro is a program that we use that will show certain distributions throughout a certain time. We usually look at age 90, 95 for clients, both married, to make sure that, you know, we leave a buffer for distribution.

But more or less, you're going to spend more money from retirement up in, call it the front years, of the age 60 to 70, right? Age 80s to 90s, you know, there's kind of a lull. You're not going to be traveling that much. Maybe you take a backseat of traveling and do other things, or slow down a little bit. Maybe you don't need that much money that you had to distribute in your early 60s and 70s, that now you're in your 80s and 90s, that you're just, you know, instead of traveling twice a year, maybe it's once every couple years. You know, and then obviously in the age 90s is something that, you know, we got to prepare, you know, for possible medical-type expenses, where other things can come into play from that.

So there used to be an old rule out there called the 4% rule. I'm sure everybody that is listening to this is somewhat familiar with that, where, you know, if you were to withdraw 4% of your retirement savings, that was sort of a safe withdrawal rate. But again, that's a guideline. You know, it's all based on, you know, the market performances throughout the years.

Zach, you know, you showed, you know, a chart of as far as what the US has done throughout the years. Every year since 2000, I have recorded all three indices, of the S&P 500, the Dow and the NASDAQ, of what their closing numbers were at December 31st. It's just kind of a hobby that I had. I always wanted to track and see what the markets, where they come from versus where they are today. And I was just recently showing my wife on a spreadsheet, and what I do is I color code them. I color code the indices. If they're green, that's a positive year. If they're red, it's a negative year. And I told my wife, I said, how, do you see more green or do you see more red, you know, from 2000 up until 2024? And by far it's mostly green, right?

We do have those, call them the hiccup years. They're not fun to live through. I've guided clients through those years, through the financial crisis of '07, '08, '09. We had some setback years in 2014 and 2015, you know, the COVID years. There's a lot of uncertainty when it comes time to discuss the retirement aspects. But, you know, I think one of the strong suits that we have at the firm is, number one, not putting all of our clients' eggs in one basket, right? You know, that's really the definition of diversification. You know, my grandfather kept it simple when I was growing up. You know, hey, kid, don't put all your eggs in one basket, spread your money around.

And that's what we stress to our clients today. That's how, you know, we invest our clients' money, from a fiduciary standpoint, and providing them as much guidance as we can to make sure that they are touching all those different asset classes, Zach, that you illustrated, right? So when it comes time for retirement, in that distribution phase, you know, that if the market does have a pullback, or if there is certain circumstances that, you know, just the market is not accounting for, you know, we stick to a disciplined distribution plan. And, you know, we make sure that that plan is in place regardless of what market conditions are. We adjust on the fly when we have to.

And that is an art. That is an art that I think a lot of, I would hope that most financial firms practice. I know that is our cornerstone here, you know, the art of making sure our clients have the necessary funds to get them through retirement. And, you know, through the 14 years here at McCabe & Associates that I've been here, and I'm sure, you know, the predecessors before me got to see on how that plan of fruition comes into play. You know, I have clients who have been retired now for 10 years, and they're still in very solid financial condition, even though they are, you know, withdrawing their funds. It's a discipline, but it is something that is also psychological, that, you know, we talk with our clients about when it comes time for retirement, and the importance of staying to a disciplined retirement distribution strategy.

So that's kind of what I wanted to talk about, you know, from relative terms of what I'm seeing today, you know, and the planning aspect of clients that are approaching the retirement years. I would say it's vitally important, you know, within a year or two out before you're thinking of retirement, to kind of go through, you know, hey, what are the phases? What are the ages that I need to be aware of? You know, what are the simulations showing from a distribution strategy? Here's what I've saved. What does my balance sheet look like? Have I paid debt down? You know, what are the goals that I want to achieve in my retirement years? You know, I want to take my family on multiple trips. You know, I want to take them to Europe, I want to take them to Disney, I want to take them to Hawaii. You know, those are things that, you know, we can take a look and account for. But it is vitally important to have those conversations once you start thinking about those retirement years.

Last I want to touch on is when you do retire, you know, the biggest thing that I've seen is, you know, what are your hobbies? What do you enjoy to do? You know, like I said, all of us today, you know, Zach and George and myself, and I know I'm filling in for Will today. For those that don't know, in our firm, Will and his wife Abby welcomed their first child, so I just want to congratulate, you know, the family on the birth of their new daughter.

But, you know, the thing that I wanted to focus with and talk about was, you know, what are the things that you want to do in retirement? Because those are the important things. When you retire, the first three weeks are cool. Hey, I don't have to get up, I don't have to get dressed, I don't have to fight traffic to go to work, I can enjoy my cup of coffee. But after, I think, three weeks, that might get old. You know, what are your hobbies, and what do you want to do? What are the things that you're passionate about? So those are the things that I know clients really reach out and talk about, and then we want to focus on that. So thanks for having me on my very first podcast, gentlemen. I appreciate it. And, you know, I think these are great public service messages that we can provide to our clients, and then those can raise conversations when we meet on our reviews.

No, we're happy to have you, Ryan. Thanks for covering that. I think that psychology piece of it is extremely interesting. And, you know, the purpose of the podcast, number one, is just to educate you investors, whether they're clients or not. But, you know, part of, there's a reason why we do this for a living, is because we do believe that having an advisor at your side, you know, throughout your entire financial journey is worthwhile. But I do think that retirement planning aspect of it, if I had to say, hey, this is probably where you need an advisor more so than any other time in your life, is that 60 to 70 time period you were talking about. And I remember shadowing my dad at meetings early on, when he talked to clients getting ready to retire, just preparing them for, it's going to feel weird the first three months when you stop having a paycheck come into your bank account.

For younger people, you know, as they're planning, if they're not as on top of it, it doesn't stress them out as much, I think, because they know, hey, I'm still continuing to build wealth, even if I'm not being as tax-efficient as I could be, or I'm not, you know, perfectly investing right now and the returns aren't where I want them, or I haven't gotten insurance. Because they continue to, you know, get a paycheck every two weeks, and they be able to meet their expenses, and they know that that income stream is going to continue to come in whether they perfectly plan or not. But it's different for retirees when they stop working, and then they say, this pot of money is all that I have.

And I think what goes along with that is, you mentioned a lot of those really important planning topics that we'll talk about in the firm: Medicare, Social Security, RMDs, you know, things like Roth conversions, you know, doing a lot of those in your 60s. That's all packed into that 10-year period, and stuff like Social Security, particularly Medicare, are really complex animals. So some of the most important and difficult topics are jammed into this 10-year period, which is probably the most important financial period of your life. And I think, for people, would ask me, like, hey, if I only need an advisor for, like, five or 10 years, when would you say? I would say it would be during that period.

Because when you stop having income come in, I think it's nice to have someone next to you, just, you can go to and say, you know, is my spending okay? This is what we were thinking about, but now this is what we're actually doing. You know, are you tracking the investments? You know, we had a tough year, are we still going to be okay? I think it'd be really comforting, you know, whether it's an advisor, your spouse or a trusted friend or whatever. But I think having someone, an advisor, someone who's been doing this for a long time, who's been through hundreds of different retirement scenarios with clients, to say, you know what, we've seen this over the course of several decades, and this is how it's generally played out, but if it doesn't, here's how you can tweak your plan in order to cover what you need.

And so that's, I think, it sounds really simple, but that's why that psychology piece is so important, and specific to that time period, is just because that income flow cuts off. And so that's when you really need to focus on your planning. So I think you covered it extremely well. Zach, I don't know if you have any closing comments. I'll pass it over to you before we wrap up.

Yeah, I just think, I know the different topics we talked about today, I feel like so many people will watch, you know, CNBC and want to talk about the newest semiconductor stock or AI or cryptocurrencies. And, like, that is such a, is an important part of, like, building a portfolio and, you know, understanding what's going on in the markets and, you know, different, you know, being allocated certain ways. But there's so many different parts that go into being, you know, having a sound financial, you know, footing, from, you know, George, we're talking about cybersecurity, to, you know, withdrawal planning, to Social Security and Medicare and all that. Like, there's just, it's a very complex, you know, system of things that you have to kind of keep track of. So I fully agree with the 60 to 70 is a time to have an adviser to, you know, help you through that whole process. But yeah, I think this is really helpful for a lot of different people, or will be.

Good, good. Well, Ryan, thanks for joining today, and, Zach, as always, thanks for hopping on. So I appreciate you both being here, and hopefully it was helpful to everybody else for episode three of Building Your Wealth Bridge. So we will wrap up for today. Happy New Year again to everybody. For any clients that may have questions about some of the things that we covered today, feel free to reach out, give us a call, and set a meeting. Happy to go over it with you. And for any prospective investors that want clarification on any of the topics that we covered, feel free to reach out to our firm. So thanks. Thanks, Ryan. Thanks, everybody.

Guys, take care.

This transcript was generated from the episode audio and may contain errors.