Announcer: It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only, and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative, securities offered through Cambridge Investment Research Incorporated, a broker dealer member, FINRA SIPC. Investment advisor Representative, Cambridge Investment Research Advisors Inc, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s Today’s Financial Focus program.
Nate Kreinbrink: Good morning, and welcome to this week’s Financial Focus, brought to you each and every Wednesday morning right here on KROS. Well this is Nate, James joining me this morning. I know James and I talking a little bit on the way up, with the little sprinkles that we’re finally getting that, a little welcomed, I guess. After we’ve had it for so long we could probably use a little bit of rain, I guess. I was mowing the grass last night, and the ground felt pretty firm. It feels like we could use a little rain, as hard as that is to believe.
Nate Kreinbrink: A crazy time of the year with that, and then we were also talking as far as everything that’s going on at this time. It’s obviously, with our kids’ schedules, everything that they’re involved in. But even on a bigger stage as well, you have the NBA finals going on. You have the Cubs playing Cardinals playing now, everything going on. A Stanley Cup Finals. I know Andy from the tax division is a big St Louis Fan, and really stressing out to this game seven tonight that they have. And then James also mentioned the US Women’s World Cup and their dominating victory yesterday.
James Nelson: Yeah. How good was that? 13-nothing against Thailand. Alex Morgan had five goals. I was pretty excited.
Nate Kreinbrink: Crazy, crazy time and just everything that’s going on, and an exciting time. Markets also have been exciting as of late. You go back a few weeks ago, and with the news of the tariffs from China, things along those lines, markets were starting to drag a little bit. And then had some consecutive days of noticeable declines. You go back to last week, and then kind of to start this week, it kind of faded off a little bit, as far as having a nice little rebound attempt. I’m talking about the possibility of maybe cutting interest rates, and a bunch of other different things as far as with the tariffs. Maybe some ongoing deals being made along those lines.
Nate Kreinbrink: But again, looking at those up and down swings in the markets, I think it’s a great time to continue to talk about the overall planning process and having a plan in place. Because I think when we look at investing, when we look at retirement planning, when we sit down and meeting with people, a lot of it has to do with managing emotions. And when you see these big swings either up or down in the markets, it can get very emotional and a lot of times people act on emotion. When they act on emotion, it’s usually not a good action that’s going to end up happening.
Nate Kreinbrink: I know I had an individual that I met with yesterday. I’m talking about some of the upticks that were early on in the year, and then how that was going to be positioned, and they were going to be able to take on that risk as far as ongoing. But again, you look at the markets, they’re at all time highs. Where do you think the likelihood that they are going to go with all this uncertainty coming out there, the ongoing volatility, it’s not a place where we really want to take on a lot of risk and just jump in with both feet.
James Nelson: Yeah, exactly. And that’s what we always go back to, is sticking to the plan. Right? It’s easy to get caught up with a good week in the markets, or a good two weeks in the markets, but you know, and look at the big picture, that’s very minimal, right? That’s, that’s looking at a really short timeframe and like you said Nate, we’re at all time highs. We’re 10 years into this bull market, you know Bull markets don’t go forever. How long is this going to last? And having a plan in place and having a sell discipline to get out of the way when things aren’t working out is always the key.
James Nelson: Anybody can make money in up markets like we’ve had the last several years. It’s those downmarkets not giving those gains back is where a lot of the sell disciplines come into play. So yeah, having a plan, not setting a portfolio or a financial plan in general, kind of on autopilot, something that you need to monitor all the time.
James Nelson: Things are constantly changing. And like you mentioned with the uncertainty in the markets, who would’ve thought, you know, even earlier this year or mid last year, that the Federal Reserve would talk about cutting interest rates? I mean, their longterm plan was, we’re going to raise rates another two or three times this year, probably another couple times next year. And now all of a sudden we’re talking about maybe one rate cut, maybe two rate cuts this year. I mean, it’s just unbelievable to think of the quick turnaround there.
James Nelson: And clearly, from that perspective, they’re seeing signs of the markets and the economy slowing down a little bit. That’s why they’re pumping the brakes. And you know, a lot of investors see that as a good thing, but the feds cutting rates or talking about cutting rates for a reason. So that’s where we always go back to sticking to the plan, having a plan, and having those guard rails around the money.
Nate Kreinbrink: Right. And I think when you mentioned as far as the bull market being in a 10 year run, it’s almost to a point where people almost forget about ’08 ,’09 a little bit as far as what happened to their account during that time. I mean peak to trough during that time period, the markets were down close to 56%. I mean that’s over half of your account size cut in half if you were exposed to all that exposure.
Nate Kreinbrink: So again, understanding that that it’s not a question as far as if that will ever happen again, it’s just gonna be when that will happen. And again, is it going to happen tomorrow? We’re not saying that. But what we all need to do is again, the risk that’s out there right now, the volatility that’s out there with the markets, it’s a time where again going back to a baseball analogy, where we don’t need to be swinging for the fences at this point in time. And just kind of maintaining where we’re at is sometimes the best move as far as just waiting for for sunnier days, for better opportunities as far as getting back in and looking at where we want to be moving forward.
James Nelson: Then the other thing is, you know a lot of people and you know maybe we’re guilty of it to, focus on the account balances and looking at markets, but the financial planning discussion that is such a general term really, really goes beyond that. That’s that’s the social security planning. That’s the Medicare planning, that’s the tax planning. Those items oftentimes can provide more value, better decision making there than any of the money management. We never want to overlook that, and we cannot stress that enough. We always say it up here, but it’s true. We put together plan after plan, and a lot of the value is brought on the tax side of things, making good social security decisions. And then as far as helping with Medicare planning, are all very important things.
James Nelson: You could also throw estate planning in there, making sure that we’ve got beneficiaries taken care of, making sure wills, trust are up to date, current powers of attorney. All this stuff goes hand in hand and it’s part of the planning process. So it’s not just the money management, it’s not just the tax plan and it’s everything. And when you’ve got everything coordinated with each other, it just makes a much better product and, and a much smoother retirement is what we’re aiming for.
Nate Kreinbrink: Right. And I think understanding that in retirement, your two biggest expenses are probably going to be taxes and your healthcare expenses. And when you look at healthcare expenses, you can’t really control what those are. I mean a lot of times, whether it’s medicare premiums are based on the income that you have coming in to control it a little bit. But as far as your drug plans, and all those other Part Cs, Part, D’s, a Medicare advantage plan or whatever that you may get into, those premiums are set and you and you pay those. You don’t really have a chance to lower those or anything like that.
Nate Kreinbrink: Your taxes you do however. And the earlier that you start realizing exactly what you can do and how your taxes are going to impact you, not only today, but 10 years, 20 years, 30 years down the road in retirement, the better off you can you can be. And if we can lower the tax rate, that’s going to be again, more money that you get to keep in your pocket that goes to your retirement
Nate Kreinbrink: I was talking with a couple yesterday, that they’re looking at 55 as their magical retirement date and they’ve been saving hard for that up until this point. But on the discussion yesterday, we kind of talked a little bit as far as, okay, that’s fine. And saving wise, they’re going to be close. And then it’s obviously controlling the expenses that they would potentially have at that point in time. But a question that I asked them, okay, what are you going to do for health insurance from age 55 to 65? I mean, that’s 10 years where you’re going to have to go out into the marketplace and probably find yourself your own insurance, and that’s not going to be cheap.
Nate Kreinbrink: So that’s an expense that they maybe, I think underestimated a little bit as far as what that was going to look like for them to get to age 65. So again, it’s a lot of things that goes into it, and understanding which one. Social security is another big part of it that people, again, oftentimes underestimate the power of what they’re making decisions on in that asset.
Nate Kreinbrink: And I challenge people whenever I meet with them ,is to look at the cumulative benefits that they’re going to get over their lifetime. And then look at the third page of their social security statement right in the middle, and it’ll tell you exactly what you paid into social security, and what your employer paid into social security on your behalf. And when they look at and compare those two numbers, I think they’re kind of blown away a little bit, because they’re under the impression of this whole thing that, I need to take it early to get my money back and everything.
Nate Kreinbrink: But when you look at the money that was paid in, the money that you’re going to get back, and it’s three or four times higher as far as what you’re gonna get back versus what you paid in, I think it’s a pretty quick eyeopener to see why social security system is in the situation that it is. People are retiring earlier, they’re taking their benefits earlier, and they’re living longer. So again, it’s just a situation where understanding how that’s going to impact it, it may be one of the largest assets that you have that you’re making decisions on.
James Nelson: And we just want people to be aware of these options. You know, it’s eyeopening when we can get all the info from a client, load it into our software, put together a plan and show them on our screen in front of them. And show them all the options, show them the social security options, show them their tax liability over the next 20 or 30 years, and what we can do to minimize that. And it’s eye opening. Everybody loves that. Everybody, you know, nobody’s ever seen it before. Nobody’s sat down and had that conversation. And I think it’s really important. So if anybody out there, if this is appealing to anybody and they have questions, please give us a call. We’d be happy to sit down with you and do the same.
Nate Kreinbrink: Let us know. We’d be happy to help. But I did want to mention real quick that every Friday Nelson Cork Wealth Management is wearing jeans for charity. Money raised in the month of June will be donated to Mobile Meals. And James, thanks for joining me today.
James Nelson: Yeah, absolutely.
Nate Kreinbrink: Nate and James with Nelson Corp Wealth Management, bringing you this week’s Financial Focus. Thanks again for tuning in, and have a great rest of your week.
Announcer: Financial Focus is a production of NelsonCorp Wealth Management in Clinton in Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly Registered representatives, Securities offered through Cambridge Investment Research Inc, a broker dealer member, FINRA, SIPC. Investment advisor Representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncor.com.