Planning Your Income Stream For Retirement
The following is a transcript of Episode #58 of the Retire Happy podcast with Roger Gainer.
All episodes of the podcast can be found at Apple Podcasts, Google Podcasts, and Spotify.
Roger: My focus is to help people in this transition of retirement. And we are always talking about how risk is the risk of loss in an investment. But in retirement, the risks are really completely different. We’ve talked about this from time to time. And what I’ve learned is if you’re producing retirement income in a way that makes sense to you, that you buy into, that you’re comfortable with, you have much more chance of having that plan succeed. So that’s why once I was introduced to this tool and learned how powerful it is, I wanted to make sure I would have this tool available to our clients.
Clark: You’re listening to “Retire Happy” with Roger Gainer, President of Gainer Financial and Insurance 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 describes one of his latest tools designed to help bring awareness to different retirement income styles. He also shares, of course, a couple of great stories on why and how a tool like this works, including simplifying and focusing your retirement planning. Have you ever thought about what your style is? There’s a lot to cover. So, we’re gonna dive right in. And as always, don’t forget to head on over to gainerfinancial.com for more content like this. Enjoy the show. Roger Gainer, welcome back. How are you, my friend?
Roger: Doing well, doing well. Yeah. Days are getting longer. We always enjoy that part of the year.
Clark: I know. I’m so happy. It feels great. I’m loving that change. And it’s a great day to talk about retiring happy.
Clark: And you’ve got something new up your sleeve that you’re now able to offer your clients. We’re gonna learn more about it later, but we’ve talked about the thought organizer in the past, and that’s just like a very entry-level step somebody takes to better educate themselves of where they’re at, where their partner’s at. But this is something new.
Roger: Yes. Well, you know, again, all plans are personal, right? So instead of having, you know, a one-size-fits-all type solution, we need to have tools to help craft custom solutions that are tailored to our client’s comfort.
Clark: Wow. Like a well-fitted suit or a well-fitted…
Roger: There you go. What do they call those suits? You go to Savile Row and…
Clark: But it’s that feeling. That’s what matters. It’s that feeling.
Roger: It’s that feeling. It fits right. You feel good. You have great confidence. I remember years ago, a friend of mine turned me onto a tailor that would come here a couple times a year from Hong Kong, and I bought a bespoke suit that was measured, and I picked out the fabric, and, you know, and then they shipped it back. And I got to admit, it felt great. So, I know when something is right for you. You know, off the rack, it’s always just a little bit here, a little bit there, too snug in this place, or a little too loose there, you know. But when it’s tailored, you feel good, you feel better, you feel confident. You’re ready to take on everything. And we want you to have that experience when you retire. You know, I’m an RICP, a retirement income certified professional, and I am that. I have that designation because that really is the focus of what we do here at Gainer Financial, is this transition from our working years to our retirement years. And it is the most complicated, the most radically different timeframe economically of our life. It’s also emotionally the most radically different. I mean, think about it.
Clark: I mean, come on. You’re exactly right. I mean, it’s not only with money, but the world around us, just every day.
Roger: The world around you. It’s every day, right?
Clark: It’s emotional.
Roger: Exactly, you know. When you’re a little baby, there’s no routine, you know. You wake up, you cry, they feed you, you do your thing, you know, and everything sort of revolves around whatever your wants or needs are, and you don’t have a set time schedule. And then you go off to daycare, kindergarten, and that begins decades of organization, of schedules, and of things, you know, you need to do or have to do. So, you know, in school, you gotta get there at a certain time. And if you have a sport, you gotta get there at a certain time for practice and games. And then, you know, you go to college or you go to trade school and you get a job and you gotta show up there at a certain time. Or you start a business and you gotta show up there at a certain time. And you’re bringing home a paycheck and your life is very regimented. And then you go full circle and you hit this freedom button. You hit this moment where you can say, “You know, I can do whatever I want today.” So, to be truly happy in retirement and to retire happy, you’ve gotta know what you wanna do with your day. And you’ve gotta know what your income plan is so that you can finance that day.
Clark: I love that.
Roger: And live the way you want. And so, this notion of the retirement income style awareness profile is if you pick fabric, if you pick strategies, if you work with things that are tailored to what your comfort zone is, what your needs are, what you wanna be doing with the amount of time and energy you wanna be applying to, you know, your financial side of your life in retirement, then you’re much more likely to be successful.
Clark: That’s great. I mean, that’s what it’s all about. That’s the message you carry out into the world on a daily basis. You have some deep passion towards all of this, and it all makes a lot of sense. So, now you’ve, of course, always got a couple of great stories to share, and I understand you’ve got two quick stories you’re gonna share of some real people you’ve been working with recently. And one client, the word simplify and focus comes to mind, but I don’t know the story entirely. Who is this person and why is this an important story to share with our friends today?
Roger: Well, it’s just a story about style, and what are your priorities and kind of the process we go through here at Gainer Financial. You know, it’s interesting. I’ve just pulled up an article in today’s Bloomberg. Investors say they need at least $3 million to retire. Now, there’s nothing wrong with having $3 million to retire, but I have clients that have way more, and it’s not enough as far as they feel in terms of their confidence. And I have clients with way less. And we figured out ways to make it plenty to finance their desired lifestyles. So, a recent client referred to me, he’s in his mid-80s, she’s in her late 70s, and built and ran a business for 50 years.
Roger: And now that business is going off into, you know, other people’s responsibility. And they were referred to me because it’s like, “Wow, this transition, you know. I’ve been doing this for 50 years. I take a paycheck. I do, I am, you know, we’ve lived this way. Now I gotta figure out how to make this work.” And, you know, they’ve got a bunch of different stuff, a few properties, a little bit of money saved here, a bit in a retirement plan there. And so we started talking about what it cost them to live the way they wanna live, and then what do we need to add or subtract from that lifestyle? Because we have tools to help cost that out. So we have an income objective. We were able to come up with an income objective and then pad that for some additional lifestyle desires.
And in that conversation, they made it very clear, you know, he wants to play sports and he’s a very active guy, even though he’s in his mid-80s. He wants to garden. He wants to write. He used to write a lot and he stopped a few years ago through stress and such. So he wants to go back and start writing again. And he really, really made it very clear to me. He said, “I want my life to be simple. I don’t want a lot of moving parts. I want it to be simple.” She agreed wholeheartedly with that. And he goes, “I don’t wanna have any stress around money, whether or not I take money out of our investments. I wanna know that I’m just not gonna run out of money and I’m gonna be able to do the things that I wanna do for, you know, the next 10 to 15 years, he figures is what he’s got to be active.
Clark: That’s great. Finding that right style.
Roger: That’s the style, right? He wants simple, few moving parts, guarantees, not looking for volatility.
Clark: Well, he was an entrepreneur for 50 years. That’s full of risk and ups and downs.
Roger: Oh, sure.
Clark: Now they’re ready to coast and cruise.
Roger: Move to another chapter…
Clark: The next chapter.
Roger: …and really enjoy the wisdom, the grandkids…
Clark: Oh my goodness.
Roger: …the life they’ve built. They live in a beautiful, beautiful area. So, I’m looking at all the different potential headaches in their life, and we’re coming up with ways to simplify those things and optimize the amount of income while minimizing the amount of risk that comes off of these assets.
Clark: And so you have an actual tool now to help assist. I mean, you already were doing that, but now this is an actual system.
Roger: We were already doing it, but this is a systemized approach. And I said, “Boy, having this formalized will really be very helpful.” It’ll save our clients a lot of time and help improve that clarity, because this has been refined for a number of years. And the person that came up with this, the RISA Profile, is a gentleman by the name of Wade Pfau. And you can look him up, but he actually heads up the RICP program at the American College of Financial Services in Bryn Mawr, Pennsylvania, where I received my RICP. So, when Wade comes up, he’s one of the top researchers in the retirement income space in the country. Wonderful white papers and all kinds of things. And when he first made this available, you know, I have so much respect for him. So we’ll be incrementally rolling this out, but if any of our listeners would like to help us institute this process, the first 10 callers, we’re gonna do this absolutely pro bono.
Roger: Because you’re gonna be the guinea pigs for this, and we’re gonna probably talk to you a little bit more about things. And we won’t be, you know, using this in our normal fee-for-service model. So…
Clark: Very nice to know.
Roger: …those first 10 clients, please reach out to the office via email or the telephone, and we’ll get you set up with the RISA Profile and Wade Pfau’s real great insights.
Clark: Now, for this other example, this other story, let’s imagine someone’s listening to this like, “Oh, do I really need that? Do I really need that additional support?” Because you have a story of someone, I’m calling him the DIY guy, but this is a real person.
Roger: Well, he is a DIY guy. He’s one of my oldest friends anywhere. I’ve known him for many, many years. And in one of the iterations of his younger self, he was a stockbroker at a major wirehouse, and worked there for a number of years. Eventually moved on and started his own business, which he’s now retired from. And was definitely a do-it-yourselfer. And now that he’s retired and sold his business, he lives off his savings and he trades his own portfolio. He’s up at 6:30 in the morning with a cup of coffee, sitting in front of the TV and the computer screen, and checking out stocks at CNBC.
And he happens to be good at it, but, you know, the last few years have gotten more and more stressful when we have our conversations, you know. He’s more apt to be out than in, which has actually been a good thing for not losing money. And he agrees, like I do, that not losing money is really the critical mass of all, but he doesn’t want my help, but I do kind of hear in his voice and in some of the frustrations he expresses that, you know, just kind of doing this, investing the way he has for the last 40 years is not the smoothest thing for him. But, you know, you know how it is with friends. You can’t insinuate yourself in a friend or family member’s situation. If they ask for help, I’m happy to give it to ’em, but I can’t… I’m never gonna…
Clark: No, that makes sense.
Roger: …[inaudible 00:14:18] my way in.
Clark: That makes a lot of sense.
Roger: So I just get to see that even though he’s comfortable and he has this level of expertise that he’s really good at, it’s still stressful for him. So, you know, to me, when I see that, that’s not my path. That’s not the way I’m gonna engineer it for me, right?
Roger: But there are three main ways of creating retirement income and making sure that you have the income you need to live the way you wanna live. There are three basic styles, if you will. We’ve touched on these before in, you know, previous podcasts last year and the year before, actually. The flooring approach where we set up a basic income like a pension, including pensions if you have ’em, or social security. And, you know, these are income streams that you can’t outlive. And that’s the critical part of your base income is that you can’t ever run out of money. But that’s the flooring approach.
The next approach is the bucket approach. You have a bucket of cash for paying for several years’ worth of expenses, and then the rest is invested in two buckets, in an interim term and longer term that is a bit more aggressive. And as you have gains, you harvest them and move them to the buckets that are less risky. And the reason you start with at least a three-year cash profile in that style of income creation is most market cycles are…bear markets run less than three years. So, you only wanna be selling stuff when it’s an advantageous time to sell and replenish those cash positions.
Clark: I like it. Different styles for different approaches. And this tool helps you find the right way for you.
Roger: That’s right. And then there’s the systematic withdrawal approach, which is where you just plain old stay invested all the time, and you pull a preset percentage off of those investments. Now, you can either do that with you start out with a percentage and then you stick with a dollar amount and inflate it every year to keep up with the cost of living, or you just do a straight percentage every year if you’re willing to have your income go down when the value of those investments go down. Usually, clients don’t wanna do that, but it is a very viable and one of the generally accepted methods for creating a reliable income.
Clark: I love it.
Roger: So that’s where the 4% rule came from. Some of our listeners…
Clark: Well, it’s a math thing, and you’ve worked through that. And now also, you’ve also always shared this phrase, I think it’s, “You don’t plan to fail, you fail to plan.”
Roger: That’s correct.
Clark: This is just like putting a punctuation right at the end of that with this plan that you’re providing here. So how can somebody get connected? How can someone, you know, get to try this out and jump into it?
Roger: Well, reach out to the office. Go to our website at www.gainerfinancial.com and hit the Contact Us button, or just call the office. Somebody told me yesterday that we’re having a little bit of trouble with the button. So, if it’s not working, the website folks are working on it, then just pick up the phone and give us a call or shoot us an email, email@example.com. That’s Matt and he’ll be happy to set up a time so we can give you evaluation to do on your own, and then we go over the results to help you analyze ’em and understand, you know, kind of what your options are based on how you answered the questions.
Clark: Well, Roger, thank you for taking the time to talk with us a little bit about retirement income style awareness. I’m really excited to learn more about the tool. And again, always enjoy touching base with you and hearing not only the stories, but the advice that continues to stay steady despite uncertain times.
Roger: Well, I appreciate the opportunity to share knowledge.
Clark: Roger L. Gainer, RICP, ChFC, California Insurance license number 0754849 is licensed to sell insurance and annuity products in California, Arizona, Oregon, Washington State, Tennessee, and Georgia. 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 by or affiliated with HFIS, Inc. and operates independently. The contents 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.
Roger holds the coveted and well-earned designations of Chartered Financial Consultant (ChFC®) and Retirement Income Certified Professional (RIPC®) from the American College. He is also a licensed insurance agent for life and health insurance and a Certified Paralegal for Estate Planning.