What is Your Income Plan?

100 Dollar Bill

The following is a transcript of Episode #50 of the Retire Happy podcast with Roger Gainer.

All episodes of the podcast can be found at Apple PodcastsGoogle Podcast, and Spotify.

Roger: In retirement, you need that paycheck coming in every month because the bills are not gonna stop paying. So you can’t call up the power company and say, “You know, this was a slow month,” or, “The market’s down. I can’t cash any stocks to pay you.” It just doesn’t work that way.

Clark: You’re listening to “Retire Happy with Roger Gainer,” president of Gainer Financial and Insuracnce Services, Inc. Thanks for joining us. I’m your host, Clark Buckner. With so much uncertainty in the world today, it’s more difficult than ever to make decisions that can help you progress toward your financial goals. In this episode, Roger walks us through one of the most important questions to ask yourself as you approach retirement. What is your income plan? Also included here is how can your income last your entire lifetime? And how will your income keep up with inflation? These are some pretty big questions, and there’s a lot to cover. So, let’s dive right in. And don’t forget to head on over to gainerfinancial.com for more content like this. Enjoy the show.

Roger, it’s great to be connected with you again. How are you doing?

Roger: I’m doing great, absolutely fantastic.

Clark: We’ve got a topic ahead that…this particular topic, it is a little bit different because it’s different on how we approach this thought of retirement. You know, as I’ve always heard, it’s all about saving your money, investing your money, right?

Roger: Building a nest egg.

Clark: Building the nest egg. And that is what someone’s working towards their whole lives. That’s what they’re told. That’s what their work is telling them. So, how do you look at this? How is it different? Why does it matter? And we’ll just go through this from there.

Roger: Well, if you remember, this is the third step in how to retire in volatile times, right? So, the first step was why are you saving and investing, and having clarity on that. And then, when? What’s your time frame? And that was our last podcast. And today, we want to talk about what is your income plan? Because just like you said, people are taught to build that nest egg, save, invest, put money in your retirement plan, all those good things. And it’s not that any of them are bad. You know, it’s certainly better than nothing, you know.

People that don’t save and say, “What’s the point,” well, they will have their day of reckoning. But, you know, when you put all your money into a retirement plan…just before we came on the air you and I were talking, and I was mentioning a client. He’s kind of between cash flows in his working life, and he wanted to get his hands on some money from his investments. And I’ve been begging him and talking to him about, you know, saving outside of the retirement plan. And so he’s like, “Well, you know, I just need a little bridge money.” And the retirement money…he’s got a pension plan. And the guy said, “Well, the most you can get is $50,000.” He’s got a million dollars in there, but…

Clark: It’s trapped. That’s a lot of money stuck.

Roger: That money is stuck, and he doesn’t have money in another place. So, you know, life throws us curve balls all the time. And so, understand if I’m building a nest egg to provide me with security and I put all that money in a place I can’t get my hands on it, then did that help my security? No, that’s the whole thing about the why and the when, okay? But when you get to retirement, and we’ve touched on this before but I want our listeners to understand, retirement’s all about income. It’s not about wealth. Wealth is something you can pass on to other generations. And it certainly is better than not having wealth because you can convert wealth into income strategies.

But if you retire, you need to replace a paycheck. It’s that simple. You’ve been bringing money in from your business or you’ve been bringing money in from your employment. And you pay your bills out of that, and you let your money grow. And if we have, you know, a little pullback in a market, a correction or an illiquidity event, that’s okay because my paycheck is paying my bills.

But in retirement, you cannot afford to have that interruption. In retirement, you need that paycheck coming in every month because the bills are not gonna stop coming in every month. You can’t call up the power company and say, “You know, this was a slow month,” or, “The market’s down. I can’t cash any stocks to pay you, you know.” “Well, we’ll just cut off your power, right?” So, it just doesn’t work that way. So, when you want to build your retirement income plan, you need to first answer a couple of questions.

Clark: You know, while you were talking, Roger, there was some sirens. But I want to keep rolling with it because as you were sharing what I think is just a flat-out just loud, important message, you know, the sirens are coming on about retirement is all about income. And that is the message.

Roger: The alarms.

Clark: Yeah, listen up. That’s the message.

Roger: All right. So, when you’re gonna build your retirement income plan, first and foremost, you have to answer two questions. Number one, will your income last a lifetime, your lifetime specifically? People are living longer. It’s that simple. The fastest-growing segment of our population are folks over 100 years of age. So, for somebody that’s retiring at 60 or 65, their money has to last more than 30 years.

Clark: And that’s them not working. That’s just…

Roger: That’s just living off your savings, living off your accumulated wealth and your assets. That’s a long time. A lot of things are gonna happen during 30 years. Think about the previous 30 years and how much has changed and what’s gone on and how many market corrections and wars and change of tax systems and all of that stuff that’s gone on in the last 30 years. Think about how much more expensive things cost over the last 30 years, which leads us to number two. Will your income keep up with inflation?

Over time, things cost more. It’s just that simple. That’s how our system works. It’s even something called Gresham’s law, that good money will be forced out by bad. And it’s just part of our economic system. And, in fact, it’s one of the primary reasons we have a Federal Reserve bank is to moderate it, not to eliminate it. So, they have a target of around 2% a year.

But if, you know, you’re on a fixed income…our listeners have probably heard that term before, and that income does not increase over time, then you’re gonna fall behind. You know, that’s being really brought home. Recently, we’ve seen a big uptick in inflation. But, you know, and so people that are maybe under 40, 50 years of age did not experience the ’70s and ’80s inflation, double-digit inflation.

Clark: Oh, boy. And it’s been so low for so long, right?

Roger: Right. Exactly. Exactly. And we can talk about all the reasons, but what’s important is you still…even when it was low, stuff still costs more over time. You pay more for a head of lettuce. You pay more for gas in the car. You pay more for insurance. If housing goes up in price, you know, hey, you bought a house not that long ago, you want it to go up in value, right?

Clark: Yeah, absolutely.

Roger: Okay. Well, that’s inflation. That means the next person who wants to buy a house has to have more because you’re gonna want to sell it for more. Okay? That’s what inflation is. So, if your plan doesn’t allow for inflation, your ability to support your lifestyle is going to decline. You will be losing money. You know, in 1973, it cost $0.08 cents to send a first-class letter. Right now, it costs $0.58 to send that same first-class letter. That’s over a 700% increase since 1973. So, if you had a…I have an article in my files from “Kiplinger.” “Kiplinger” has been around as a financial magazine, advisory service. They’re one of the first in that space and they’ve been around for decades and decades. In fact, I have an article from 1973 from “Kiplinger” that said if you want to retire on a moderate lifestyle, you would need $5,500 a year, plus your Social Security. And if you wanted to live on the high life, it would be $7,300 a year in income, plus your Social Security.

Now, if you’ve made that target your target and you were still alive today, let’s just say you’d be in public housing and you would not be eating steak at night. Okay? All right. So that’s how important that increasing income strategy has to be for you to be successful. There’s never been a generation that’s lived in retirement as long as the folks retiring today.

Clark: Got it. It makes sense. So, maybe next, we can talk about some of the tools available to anticipate inflation and how to make the income…

Roger: How to make the income work?

Clark: Yeah, how do you make the income work, especially if you might have to rely on 30-plus years.

Roger: Exactly. So, you know, I hear all the time from clients, “Gee, Roger, I’ve saved money, I’ve got all this money. How do I make it pay for my lifestyle? How do I turn this into income? I’ve got growth stocks, I’ve got real estate investments, I’ve got this, that, and the other thing. How do I make that…turn it into retirement income?” And the cornerstone of that is having a low-stress source of income.

Clark: Low-stress source of income. Is that, like, passive income? What does low stress mean?

Roger: Well, some people call it passive income. Some passive income can become very stressful. For example, over the last couple of years during COVID, a lot of sectors of our economy have shut down. So, people that, for example, were depending on rental income from a hotel. I happen to know somebody who owns a small hotel in San Francisco. You know, that’s the plan, right? It generates a nice income stream. Now, their hotel’s got a little bit of an advantage over other hotels, but a lot of hotels shut down. I have other clients invested in hotels and they stopped getting any income at all over a year ago because the hotels shut down. And why did they shut down? Because they were told they had to shut down. And even though people are traveling again, they’re not staying in hotels the way they used to. There’s a lot more Vrbos and Airbnb and all that kinda stuff.

Clark: Right. Exactly.

Roger: Or staying with friends, you know. So, hotels have not come back, yet they were wonderful income generators for years and years and years.

Clark: And I’m sure they thought, “This this is guaranteed. We don’t need to worry about…everyone’s gonna…” I mean, who would have thought what happened in this world?

Roger: Right. Office space. Here in downtown San Francisco, we’ve got hundreds of thousands of square feet of office space coming online starting last year. Big tech companies are telling their employees to stay home. We’re seeing leases being bought out and canceled. So, if I’m a landlord and I own an office building and I’ve got a big old tenant… In fact, the building we were in for 13 years before we moved to where we currently are in San Rafael, they basically kicked us out because they had a dot-com move-in. I won’t say the name, but the dot-com showed up and it’s a rapidly growing company and they said, “We want every space in both buildings.”

And so, when my lease was up, they chose not to negotiate with me. So, they gave me a ridiculously high price because the dot-com was willing to pay that. And I said to my wife, Davey, I said, “You know, these people are very short-sighted,” because after the lease was signed, somebody sold the building to somebody else and the new people were the ones who didn’t want to negotiate with me. Anyways, a long story short, I said, “Either this company’s gonna fail and they’ve lost the one tenant they had that was paying them, or they’re gonna grow so rapidly that they’re gonna move on. They’re gonna leave.”

Clark: What did they end up doing?

Roger: They’ve left. The property’s empty now. Okay? The property is empty. They opened a gym in one end of the property. Who knows if that will even work out? Gyms come and go all the time. So, you know, there’s this tremendous focus on rate of return, especially for younger people. Well, they’ll go to a cocktail party or they’ll be talking to a friend or a family member. “Oh, how much money did you make last year? You know, the S&P 500 did over 25% in 2021. Did you do that?” And, in fact, I had a couple in here not that long ago, about a little over a month ago, and they’ve been clients for many, many years. And they wanted to sit down, and they are both extremely busy people. And we hadn’t sat down for a couple of years to do a comprehensive review.

So, I put together a summary of all of their investments, how they’ve performed since we started, and the wife, who happens to be a financial analyst, she looked at me, and she said, “Well, what’s the rate of return?” I said, “What difference does that make?” She said, “Well, I want to know what the rate of return is because the S&P had a great year last year.”

And I said, “When you came to me, you guys asked me because, A, you have more than a 10-year spread in your ages and you wanted the older spouse to be able to retire young enough so that you guys can enjoy life and do all the bucket-list stuff you wanted to do. You didn’t come to me and say, ‘I want the highest possible rate of return I could get.’ And so, what we’ve done is we’ve built your retirement income in a dependable way that you’re going to enjoy, whoever’s in the White House, whatever party’s in charge of Congress. If there is higher inflation, we’re gonna keep up with that. You can’t outlive your income streams that we have created. And so, now, we can go and be a little more aggressive with your investments, right? Because we could afford fluctuation because now we’ve already created your paycheck.”

Clark: You kind of have that landing. You already know where you’re gonna land. There’s some promise there.

Roger: See, when I started back in the ’80s, one of the first things I was taught was the pyramid of risk, the pyramid being the strongest, most stable architecture known to man, right? Pyramids are…you know, look at in Egypt. How many centuries have those, you know, lasted? So, with a pyramid, it’s wide at the base. You build the base first. Something that I’ve noticed evolving over the last few decades, really since the ’90s, is people turn their pyramid upside down and they start by laying in the risky stuff. So, I showed these folks how the base is cash, guaranteed income.

The next step up is your home, not investment real estate. The next step up is your investment real estate and blue-chip stocks. Then, you move up into tech stocks. Then, you move up into commodities and speculation and raw land and property development. And then, you move up to penny stocks and, you know, certain riskier, more volatile commodities like pork bellies and stuff like that. And so, you move up that ladder of risk. But if you skip a step, you destroy the health, the strength of that structure. Does that make sense to you?

Clark: Yeah, that makes sense.

Roger: Okay. So, they came back a week later and I showed them their income plan. I said, “Here is what you’re doing and the minimum amount of income this is going to create on a basis that you’re going to never outlive. It will increase over time.” And my projections were very, very conservative, that they would only grow their assets at 3%, that they would only have 2% growth in the valuations. But because of the way we laddered their income, their income was gonna increase no matter what. We added guarantees to an awful lot of this step in their planning. And their number, let’s just say it was very impressive, in the hundreds of thousands of dollars of guaranteed lifetime income that they can’t outlive so that when the younger spouse retires and they’re only in their 50s because of the spread in age, that person is gonna have to make their money last 50 years.

Clark: Really?

Roger: Yeah. Now, I know this person, and they’ll probably work or do consulting or something like that. But they don’t have to because of what we’ve laid in. So, that’s the point. It’s not about rate of return. It’s about how much income that we’re going to create and how reliable is that income. So, like we were talking about with real estate, a lot of clients, they come and they say, “Oh, well, I just want rental property. Just give me a rental. I want to buy houses. They’re easy. I can buy them locally. I can rent them out.” Well, a house, you only have one source of that income, right? You have a tenant in a house. Now, there’s nothing wrong with houses as rental properties. But you have to keep in perspective what happens if that tenant loses their job or dies or for some reason decides to stop paying you, and instead of you getting income, you’re gonna create costs to evict that tenant, to fix up the property, and all of that stuff.

So, it creates a different need for a different type of strategy. There’s nothing wrong with the income generated by real estate, but you have to kinda rate it. So, when I have clients in that position, a lot of times we’re gonna exchange into real estate that has multi-payers, okay, like a larger apartment complex or something like that where there’s hundreds of people writing paychecks. So they’re not all gonna be, you know, out of work at the same time. Even at the height of COVID, there were still people earning a paycheck. With unemployment at its peak, you know, there were still the vast majority of folks who were employed. So, you know, if unemployment is at 10% but you’re unemployed, your unemployment level is 100%.

Clark: Right. That’s a new way to think about it, yeah.

Roger: Okay. So, you know, you need to create that strategy, that income strategy, and it’s gotta work and be all-weather. Okay? You know, there’s other things where we have to keep money for unexpected health emergencies, property emergencies, or opportunities. You know, if somebody says, “I’ll sell you this house. I just need to cash out and get out of here. And if you’ve got 50 cents on every dollar that this is worth, I will be happy to sell you the property.” So, how do we turn those assets that you have into reliable income? That’s really the question we’re gonna, hopefully, give you some ideas on. Now, I’m an RICP, a Retirement Income Certified Professional. And in the coursework, it’s very clear that there are only three main ways to generate income in retirement.

Clark: Yeah, let’s go through this. I want to…

Roger: Sure, but what’s interesting is most people don’t use any one of the three. They just take money and draw down their accounts and then stress out that they’ve spent too much, or that they’re gonna spend too much and they spend too little. You know, that’s the other side of it. If you knew exactly how long you were gonna live, then you’d know exactly how much you could spend every year, and then you’d spend your last dollar on your last day.

Now, there are strategies that let you do that. But in a recent article in “The Wall Street Journal,” they were talking about how most people avoid spending their nest egg in retirement, and some even continue to save in retirement because they’re worried about running out of money. And this could really short-change your lifestyle.

Clark: Oh, absolutely. I mean, that’s not what you want.

Roger: Right. So, the most popular strategy being deployed on Wall Street today is called the systematic withdrawal method. And the article in “The Wall Street Journal” referenced the straight withdrawal method and the 4% rule, which goes back years. We’ve talked about the 4% rule on other podcasts. But that’s the one that’s most often quoted. If you add up what’s my stuff worth and I can pull 4% a year off of that. And that works out great, except when your investments drop in value, and I’m still pulling the same dollar amount out. So, if we’re dialed back to 2008 and I’m taking 4%, and my investments are all in the S&P 500 and now, they’re worth half of what they were last year, and I’ve gotta make that withdrawal, and I need that amount of money, I have to withdraw 8%, not 4%, to get the same dollar amount, right? Because my investments dropped in half. That really happened in 2008.

So, now, I’ve cashed in a whole bunch more of what I have. And when the market recovers, I’m not participating. This I call reverse dollar-cost averaging, and it can dramatically increase the rate at which you consume your assets. So, you know, you can’t decide when the market corrections are gonna be. I actually have a program, a spreadsheet, that Matt helped to spruce up. And we’ve got the last 21 years of the S&P 500 put in the spreadsheet. And we can plug in your nest egg and a rate of return, and then, we start pulling income off of it. And we see…it’s kind of stress testing on a very basic level, see if your money’s gonna last, you know, for that 21 years.

Well, we have a randomizing button that then changes the order of the rate of return. That’s called sequence of return risk. And it’s like shuffling the deck. And suddenly, we find that people’s money is gone after 15 years, not even last 21 years, or people are having their money last 30 years. That’s pretty widespread based on a random set of circumstances that we have no idea, you know, the timing and how that’s gonna happen.

So, the newer thinking is don’t take 4%, take 6%. But you’re gonna take 6% of whatever it’s worth that year. So, if the value of your investments goes down, you’re taking 6% of a lower number, it means you take a pay cut. So, on that same scenario back in 2008, if you were taking $40,000 a year off of your portfolio, now, you’re gonna only take $20,000. And not everybody can…

Clark: You know, that’s stressful.

Roger: Very stressful. Now, that will make the money last your lifetime, but it means that there’ll be some bumps where, you know, you’re tightening your belt and you’re changing your lifestyle. That’s very hard for people emotionally, psychologically, and even on a health basis in retirement, especially as we get into our 80s and 90s. And you have to be monitoring your portfolio, making adjustments in your investments. You know, we’re seeing that now. Certain types of stocks are going down, other types of stocks are going up. And if you don’t monitor, that’s part of the…there’s a responsibility to monitor these things. And if you don’t, you’re gonna have some really nasty surprises 10, 15, 20 years down the road.

Clark: Absolutely.

Roger: But if you’re willing to do it in that manner, sometimes you can even start out and generate even more income than you think you can. Strategy two is called the bucket approach. The bucket approach says that you put money in cash to pay for all of your bills for the next three to five years. The thinking here is that if the market has a big correction, it will come back within three to five years. So, I’m drawing money out of my… This way I don’t have to sell when the market’s down. I’m drawing money from my cash. When the market comes back, then I harvest profits and add to the cash pile.

Clark: And this is just cash in a savings account, that kinda cash.

Roger: Cash in a savings account and other money is being invested. So, when my investments are up nicely, I harvest some of those gains, I plow it into my cash account, because I always want to have that three to five-year cushion. And there’s some rules that go into this, and we’ve created a statement that governs the discipline involved in harvesting and adding to buckets. And some people use three buckets, some people only use two buckets. The three-bucket approach says, “I carve some of that invested money out for much more aggressive investments that I’m not gonna even look at for 10 years.” I mean, I’ll monitor them but, you know, I’m expecting growth over a 10 year period, not over a 5-year period, and then others that are moderately risky that are in that 5-year period. So, I’m kinda harvesting gains when they’re there and moving them down the line to, ultimately, end up in the cash account.

Clark: Gotcha. And there’s a third strategy you said, right?

Roger: Yeah, the third strategy, we call that the flooring approach. There’s a great book called “Paychecks and Playchecks.” You can get that on Amazon.

Clark: “Paychecks and Playchecks.”

Roger: Right. A guy named Tom Hegna. He’s on NPR, you know, public television. And he talks about you want to have all your basics covered with guaranteed lifetime income that grows and keeps track of the cost of living. That way, no matter what’s going on around you, the lights stay on, the roof stays over your head, there’s gas in the car. And then, the other money is invested for your paycheck, for vacations and spoiling the grandkids and, you know, supporting charitable causes that are important to you and all of that kinda stuff. Okay? And that’s your playcheck.

So, you can invest that stuff, because, you know…I mean, how many people are taking…I had a client who was really looking forward to an around-the-world cruise this year. She paid a big-ticket on an around-the-world cruise. And she was gonna be on a ship, well on and off the ship, but going around the world for, like, seven months. Needless to say, she’s not going on that trip. Luckily, she had trip insurance and she’s getting that money back, but the point is, you know, a lot of retired folks aren’t spending on the playchecks very much these days.

But the kinds of things that we want to use we can create income ladders, which means we have income streams that we turn on periodically every 5 to 10 years. There’s different ways to keep pace with the increasing cost of living. But they still have to be an income stream that lasts your lifetime. And an example of one of those is Social Security. You know, people are, “That’s going away,” and all this other stuff. Frankly, it’s not gonna go away. I can tell you 99% there will be Social Security in some form for the rest of everybody that’s listening to this’ lifetime. And Social Security has a cost-of-living adjustment this year. It went up 5.9% because of that spike in inflation that we experienced starting last year. But Social Security, your claiming strategy is so critically important because it’s a great resource of guaranteed lifetime income.

Another one is pension, and we do a thing with clients that are eligible for a pension called pension maximization, because I see people leaving tens and sometimes hundreds of thousands of dollars, and in a rare occasion millions of dollars, on the table because of the claiming strategy they took on their pension that they’d earned. You know. I’m working on…a client of mine is just getting ready to retire. He’s been a client for over 20 years. And we’ve known each other for a very, very long time. And he asked me to update his income plan for retirement because we set that up four years ago and he kept working. But now, he thinks it’s time to pull the plug for a variety of reasons. And as I started working on the income plan, because he did pension maximization and he’s eligible for a pension, and because he’s maximizing his Social Security benefit, between him and his wife, they’re gonna have almost $115,000 in guaranteed lifetime income just from those two resources.

Clark: Whoa.

Roger: So now, we’re asking the money that he’s accumulated and we’ve set up income strategies. In fact, I’m not even gonna have to turn on all the income strategies that we set up to complement those other core income strategies. So, what are the other types of guaranteed income that we can use? Bonds. Now, I’m talking about investment-grade bonds, not junk bonds or high-yield bonds, or low-rated bonds that are kinda risky. Because, yeah, they pay you a higher coupon, a higher percentage, but they’re paying you that for a reason because there’s a good chance that the guarantor, you know, will default on their bonds.

So, you know, when it comes to using bonds for part of this, these days, they’re not paying you very much, right? And if you don’t buy bonds that you’re gonna hold until they mature, you lose that guarantee of your income. So, using bond mutual funds will not work efficiently for this purpose. And we can talk about that another time.

But bonds can be a great source of income. You know, if we were having this conversation in 1980, back in 1980 I had double-tax-free, AAA-rated school bonds from a school district here in California that were paying me 14.5%. Retirement was a lot easier when you had tools like that to work with.

Clark: Definitely. And we have new tools. We’ve got better tools now, in some ways.

Roger: Yeah, well, in some ways.

Clark: In some ways.

Roger: And more flexible. Well, we’ve had to become creative in this low-interest-rate environment. I don’t want to get into the politics of low-interest rates and what they’re doing to our economy. But we’ve had to create other alternative strategies for accomplishing this type of financial objective.

One of the other tools that are available are annuities, a very misunderstood tool. But if you’re gonna use annuities, you need to really understand the differences and pick the right ones based on your specific situation, because annuities are designed to create a steady source of income and even income that will increase over time. And some will do this better than others. Some are not designed to create guaranteed lifetime income, but there are many that are. And insurance companies are uniquely qualified to hedge what’s called longevity risk. There’s no other type of financial institutions, banks, brokerage firms at the market that can guarantee you won’t outlive your income, even if you live well past the 100. So, annuities are certainly something worth taking a look at. We can get income streams as high as 5% or 6%, and in some cases even higher.

Clark: When you think income streams 5% or 6%…

Roger: Yeah. So, if I’ve got $100,000 and I’m getting a 6% income stream, that’s $6,000 a year. Now, what that $6,000 a year, what’s different with it in an annuity is it’s never gonna stop. So, if the account gets drained and there’s no money left in there, the income checks continue.

Clark: Gotcha.

Roger: Because the insurance company has guaranteed that that income is going to continue as long as you live.

Clark: Right. And this is an insurance company. And they’re still coming out on top, and that’s how they’re able to do this, right? Because they understand… It’s an insurance.

Roger: It’s the law of large numbers.

Clark: Right. That’s right.

Roger: And you can’t do this on your own, but when they’ve got a half a million people that own annuities, they know some people are gonna live longer and some are gonna live shorter. That’s just the way of the world.

Clark: Right. They have that insight.

Roger: So, they know statistically how to price this thing and how to hedge. So, they have the ability to have surplus and reserves that will guarantee they won’t run out of money. And so, those checks will continue. I have a couple of clients in their late 90s who have been collecting for decades on their annuities. Those accounts ran out of money years ago.

Clark: Yeah, I’m sure.

Roger: And they giggle every time. In fact, there was this study done about five or six years ago that people that have guaranteed lifetime annuity payments live longer because they want to stick it to that insurance company.

Clark: That’s the ultimate win. That is your life win right there.

Roger: There you go, right?

Clark: That’s good. Okay. So, you know, those are the five basic ones, Social Security, pensions, bonds, annuities. And the fifth one we’ve talked about, and there’s pros and cons. I wouldn’t necessarily recommend just using it, but income-generating real estate.

Roger: Right. Because it depends. Sometimes that can go well but sometimes you might…

Clark: Exactly.

Roger: …get a bad tenant. But if you use those types of tools, you can create a very low-stress retirement. You know, one of the things that I always learned from my clients, those folks that I talked about earlier that I showed that we built the base and that they were worried about their rate of return not keeping up with the S&P 500, I said, you know, “And this is a low-stress strategy. So when you guys are traveling the world and checking things off your bucket list, you don’t have to read the newspaper every day and wonder if you should be selling off investments or if, you know, there’s gonna be a market correction.”

And they looked at each other and they said, “You know, we know people who are retired who have lots of money and they worry about running out of money every day. When we get together with them for dinner or just to hang out, they’re always talking about running out of money. They’re always worried about the next market correction.” So, now, that was that little aha moment for them. They said, “Oh,” and I could tell in their eyes they could actually see these people and them talking to them and realizing that, you know, these folks are not relaxing and enjoying this last, you know, 25, 35 years of their lives because they’re worried about something that may or may not even happen.

Clark: Well, these are all great tools to consider. And, ultimately, what somebody needs to do is fill out the thought organizer.

Roger: Right.

Clark: And that is a free resource there at gainerfinancial.com. And what that does is help them think about their unique situation, and it helps them think about the right ways to approach this.

Roger: Well, create the context so that you can make decisions about how much… In fact, anybody that’s listening to this podcast, we have another tool that I will offer you at no charge. You can send an inquiry through our website at www.gainerfinancial.com, or you can call the office at (415) 331-9030. We call it a spending plan analyzer, and it’s just simply…everybody spends their money based on the things they want in their life. And, you know, stuff that I think’s important may not be important to you, and stuff you think’s important you want to, you know, have being part of your life may not be important to me.

So the spending plan analyzer tells you what you’re spending on your lifestyle right now today. And that’s a great starting point for making your income plan because now you have a target. Then, we adjust that plan based on the things that will go away when you retire. You won’t have to buy work clothes anymore, for example, if you work at a job that you have to dress a certain way. And we want to spend more money on some other things. You may want to travel more because you’ve got more time to travel, or you have these bucket list things that you just never had the time that you could take off to take a month and go, you know, hang out in the Galapagos or someplace like that, right?

And then, we can make these adjustments thinking forward to what you want based on your thought organizer. And then now, we’ve got a target income, and we can then look at the income…you can look at your wealth and see what strategies are most efficient for turning this into the income to meet the lifestyle that I aspire to. You can’t always get there, but we’ll get closer, and you’ll make better decisions.

Clark: Good deal. Well, Roger, thank you, as always, for taking the time. I’m really looking forward to our future conversations.

Roger: Well, it’s always a pleasure, and I get a kick out of talking with you. And I hope our listeners, you know, enjoy and get some insights that help them have a happy retirement as well.

Clark: Roger L. Gainer, RICP, CHFC, California Insurance License Number 0754849 is licensed to sell insurance and annuity products in California, Illinois, Arizona, and Nevada. Roger L. Gainer is an investment advisor representative providing advisory services through HFIS, Inc., a registered investment advisor. Gainer Financial and Insurance Services, Inc. is not owned or affiliated with HFIS, Inc. and operates independently. The content herein are the opinion of the speaker, and should not be considered as tax or legal advice. This podcast should not be considered a solicitation for investing or advisory services. Strategies mentioned are not a recommendation to implement or purchase those products or strategies. You should contact your own advisors as to the appropriateness for your specific situation