Complex Financial Planning: Bad Economy - Should you delay retiring?

In this episode, we discuss the complexity of retiring in a bad economy. We explore the fear and uncertainty that often accompanies the decision to retire during challenging economic times. Our conversation highlights the importance of understanding the difference between a bad economy and bad markets, as well as the psychological impact of fear and guilt. 

Retirement shouldn't be burdened with anxiety over layoffs and job security. Instead, it should be a phase of life to look forward to. We provide you with a fresh outlook, emphasizing the essence of personalized planning over the noise of economic forecasts. We stress on crafting a retirement plan that fits your unique needs and circumstances, eliminating the uncertainties of leaving the workforce. And yes, we discuss the emotional side of this decision, taking into account how past experiences with financial instability can stir up retirement anxiety.

We emphasize the role of a good financial planner in helping individuals navigate these complexities and make informed decisions. The episode concludes with a reminder to focus on the value of money in retirement and to be cautious of fear-based sales pitches.

Enjoy this episode, as we help you navigate through these financial crossroads, equipping you with knowledge to make your retirement journey more confident. Don't forget to share this episode with others who could benefit from this conversation.

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Transcript

Speaker 1: 0:08

Welcome to Ditch the Suites, a movement, awakening and opportunity for you to start getting more from your money in life. I'm Steve Campbell. With my amazing co-host, Travis Moss. We're going to share industry insights nobody wants you to know about, so buckle up and enjoy the episode. Well, welcome back to Ditch the Suites, steve Campbell, here with Travis Moss.

Speaker 1: 0:30

Hopefully you guys are appreciating this series as much as we are, where we've talked about complex, simple questions. Looking at really the biggest questions that we hear all the time in the financial planning world that clients will ask that actually have a lot more moving parts than how the question comes out, being very simple. First one we talked about social security when you should take it. Last one we talked about should I do a Roth conversion? And this is a big one.

Speaker 1: 0:54

Let's say you are on the precipice of trying to retire, but you've been looking around lately and seeing what's going on with the economy or world news and you've begun to ask yourself, or even a professional should I, could I retire in a bad economy? Sounds like maybe a simple question, but there's actually a lot of moving parts and it's fairly complex, so we're going to park here for a little bit of time. Also, there are millions upon millions of Google results when you pose this question and we go out and do our due diligence to see what people are asking the internet. So, travis, when people are thinking about, should I retire in a bad economy to unwind some of this, what's actually a good starting point?

Speaker 2: 1:34

I think it's a word game. Steve, if I were to ask you what a bad economy is, what would you say it is.

Speaker 1: 1:41

Just everything's bad. Gas prices are high. It costs more to buy things. My money doesn't go as far as it once did.

Speaker 2: 1:51

So if gas prices are high, it's a bad economy, unless you own a lot of energy stocks, in which case you made a ton of money last year.

Speaker 1: 2:00

That's very true, travis.

Speaker 2: 2:02

So the point is is that somehow we get in our mind that there's a bad economy, right, and it could be politics, it could just be the media and the media trying to find something to put on the news. It could be. I see online all the time there's people that are making these prognostications. I guess that's the right word prognostic, big word, right, that's a lot of syllables. I'll pat myself on the back for that one. I'm not going to try to say it again, but anyway, people are projecting these things that are going to happen because of what's going on, and they're like I'm an economics person and I know these things. And then you find out that nothing that they were talking about is actually real or has come to fruition. And the problem is, is that a bad economy is kind of undefinable, because it implies that there's a good economy. And well, what's a good economy then? And if I were to say we're in a good economy but you got laid off tomorrow, would you think it's a good economy? Or if I were in a good economy but you're in a state that is really struggling fiscally, in your state it could be a horrible economy. In the rest of the country it could be a wonderful economy. The world economy could be struggling, but a local economy could be doing great, right?

Speaker 2: 3:34

So the first issue that people have, I think, is we're living in fear, and I think it's irrational fear and I think it's driven by every storm is going to be the worst storm of mankind, right, every hurricane is, you know, the worst hurricane.

Speaker 2: 3:56

Every winter storm is the bomb, cyclone or whatever they call it right, everything is terrifyingly bad, instead of just being like, yeah, some things are happening and they may impact you, if you're in this industry or this profession, or if you're looking for an apartment or something like that, and you know, they talk about housing prices.

Speaker 2: 4:16

Housing prices are horrible and they're going to collapse. That's as if you're saying every single housing market is exactly the same, and one of the things that we know from 2008 is that's not reality. You know, lots of these housing markets are very, very different. There's going to be markets that do collapse and there's going to be markets that continue to go up, and there's going to be markets that don't change at all. Through everything that's going on, it just happens to do with a lot of other factors, and so I think that the first thing. When a retiree or somebody looking at retiring because it's happening all the time say I don't know if I should retire it because the economy is bad, the first thing I try to find out from them is what do they consider bad?

Speaker 1: 5:03

And I know that we hear at least we do all the time from people that it's never been this bad before, which may have some merits to it. Right, it's, we're all recency bias, what's happened to us and what's been going on, and maybe some of it is rooted in people's fear of running out of money. A bad economy means that I may run out of money because, again, if the economy is bad, then my investments may not do as well, and maybe that's one of the things that we're kind of crossing that really don't cross, which is the idea of bad economies must mean bad markets, right? So if I just work longer, then I'll have money. So what do you say to somebody who is intermixing a bad economy with bad markets?

Speaker 2: 5:49

But before I do that, I want to say that you said that people will say that, and I've heard people say this that there's never been this bad before. I think that there's plenty of people who could argue it's never been this good either. There's plenty of people right now making more money than they've ever made in their lives. People today have bigger houses than anybody's ever had. There's more people with big houses than ever before. There's more people with multiple cars in their driveway big, fancy new cars. I mean, you can't even buy new cars right now. Right, it's still difficult to buy new cars. Everybody's got an iPhone, a refrigerator, a microwave, a dishwasher, a stove. You think about what we have today versus what we grew up with. Go to somebody's house, go to an apartment and look at the countertops. They probably got granite, quartz countertops. When we grew up, the style was tile, you know, or something like that. Little no longer for my car, whatever that plastic stuff was right like so far, yet it's the worst it's ever been.

Speaker 2: 6:56

Somehow it's like, wow, you know, you can, you can, you can do amazing things. Today you can see an experience, amazing things. So so really, what it is, I think, sometimes when we're saying it's the worst it's ever been, is back to fear. We're just afraid somebody's going to take one of those things from us. Maybe I can't have the grand account or top, because I don't have enough money to buy it, because it got too expensive, you know, and so not to be cynical on this, but you were talking about bad markets, and bad Economy is not necessarily lining up, and that is the truth.

Speaker 2: 7:31

Normally, by the time you know that the economy is bad the markets already figured it out you're the last to know. You really are last. No, I mean like we all think that we're really well informed by the time it gets to the news. The people out there making the money there, you figured it out. You know most recessions by the time the recession is called, by the time we go out, we're in a recession, the markets already going up, and then, and then people are gonna I can't retire because we're in a recession. It's like, yeah, but by the time you find out you're in a recession, the market recovered. You know it was already halfway there or something. It's already improving. So why can't you improve if everything's getting better? Why can't you retire? For everything's getting better, you know. And so it comes down to the fact that the stock markets which people, when people are saying I don't think I should retire, the same for one, two reasons. The stock markets down and their investments are done and they're thinking if I don't have as much investments, I can't retire because I don't have enough investments. Okay, that's one argument. The second argument that they're making is and I've heard this before, so I know this is true I feel guilty retiring Because it's really hard for other people right now. Okay, well, that's, that's a personal thing, right, you're feeling guilty for people. I mean, you were if you were thirty years. You work through a lot of recessions, a lot of bad economies. You worked and nobody ever said you know what, yeah, I'm gonna put off live in my life because times are bad, so that I can sit with you and suffer through bad times.

Speaker 2: 9:06

In reality, think about it most recessions, it's not like 50 or 60% of people are losing their jobs and going to the bread line. That's not actually happening. It's not like that. You know, most people do not lose their job in a recession. And you'll hear, well, there's all these layoffs. Amazon laid off 10,000 people last year, or something like that. It's like, yeah, 10,000 out of what. I don't even know how many employees I'm gonna get. I'm gonna guess they're in the millions. It's a. It would be like us laying off one person, but we don't have the perspective of that. And at the same time, 150,000 other jobs were created. You know, so it's like a net job, so it's like it's not even a real comparison, but it's headline worthy and so it drives that fear.

Speaker 2: 9:53

But for the most part, bad markets and bad economies. You know that. What's driving our fear with those and the reason why we think maybe we we shouldn't retire when there's a bad economy. We're getting all the vernacular mixed up. We don't. You know, we're mixing economy and markets and Long-term stability and all that kind of stuff together and and we really ought to be keeping it separate. You know, you think about from a standpoint too, and this is the. The question that I ask is what does the economy have to do with your retirement? Like Steve, if you were going to be retiring tomorrow and you open up the newspaper and they said massive layoffs, economy is horrible. Why would that change your perspective on retirement?

Speaker 1: 10:39

We're gonna stop right there to hear a word about our sponsor. You know we're here to help you get the most money in life as host of this show. But that doesn't just happen. You need good financial planners that have your best interests in mind, and that's why we want to take a moment to talk about Seed planning group. Seed planning group is a fee only financial planning firm that has a fiduciary obligation to put you, as your consumers, best interest first. If you're not sure if they're the right fit for you, we would encourage you to head over to seed PG comm. That seed PG comm, fill out the contact us form and schedule your free discovery meeting, because you could be one good decision away from getting the most from your money in life.

Speaker 1: 11:18

Well, let me help people understand when maybe they're coming from. I've worked with you for a long time. We've been doing this podcast. I know the quality of work that you, as a financial professional, have when you work with people, that when you get to this point of retirement, you have hashed out all the details, down to their life plan they're giving plan, their income plan. You've projected all of this out that we're not having these types of questions because people know.

Speaker 1: 11:45

I think what's happening is there's a lot of people that are trying to make information While drinking out of a fire hose. So if you were my planner and I was dealing with Travis Moss, I know that, no matter what's happening in the world, that you've built me a plan that's unique to my life, that allows my wife and I and my family to go do the things that we want to do, because we've factored in things from taxes to longevity, to health, to world events. We know all of that, we've discussed it, we've we've we've done risk assessments. We've had these kind of kind of fair conversations. There's a lot of people who have never had these kind of conversations before. They don't even know what's gonna happen tomorrow, let alone later today.

Speaker 1: 12:23

And so every bit of news, every headline, the 10,000 jobs loss it's so sensational and it sounds so impactful that you think it's going to affect your money today. And so I think, trying to kind of help people understand that when you think about a bad economy, you think it's going to affect your retirement because everything we so personalized, everything to our lives, when in reality there's just certain things that aren't going to affect you. But, depending on what you watch or what you listen to or what you engage with it. The news can make you feel awful for being successful and for doing the right things, but it can also terrify you, to the point that every piece of bad news Almost put you dead in your tracks, like I can't go do this because look at what's happening.

Speaker 1: 13:10

So, having somebody that I think is unique to what you do with people and what our team does, which is not bulletproof which we did in episodes before bulletproofing yourself from bad news, who cares what's going on in the world? Tomorrow, let's go take that trip because you've worked for it, we've planned for it, go enjoy your family. So I think maybe it's just doing justice to the fact that there are people that are literally living from moment to moment, from channel to channel, from audio clip to audio clip, from headline to headline, and it really is impact during and souring that life can be good. But there are a lot of moving steps involved.

Speaker 2: 13:45

Well, you set us up for the next point. But I set you up on that point because I actually had an answer in mind. Okay, that Well, it'll be a great transition to the next point.

Speaker 2: 13:54

But I have an answer that has come off the lips of more than one clients. So this this is. This has come to me from people who call up and say hey, I'm really concerned, this is happening. What should I do? And I'm not lying this, this is true verbatim. They will say but there's a lot of layoffs and unemployment is going up. I don't think I should retire.

Speaker 2: 14:21

Think about that for a second. You don't have to worry about losing your job when you're retired, you don't have to worry about whether or not the company you used to work for is having layoffs when you're retired, you're retired. You don't have to worry about whether or not there's a bunch of people working or not working when you're retired, you're retired, you're not working anymore. So what you've been worrying about for the last 30 years about being on the layoff line You're worried about being laid off or that there's layoffs At the point where you're like Pick me first, give me some severance, let me retire early. I'm fine with that, because that's really what you ought to be doing. If you're ready for retirement, if you've done some good planning and you're ready to go, it should be like please give my seat to somebody else, let somebody younger, with a family stay here because I'm ready to go. Man, give me the heck out of here. But what we get is this weird psychological like Explosion where we go oh man, I don't think I should leave right now Because of all the unemployment, because unemployment time you say, well, what's that got to do with anything?

Speaker 2: 15:31

And they said, well, just means the economy's bad. And then you say, well, what's that got to do with anything? You don't need a paycheck anymore. And then they go well, I don't know, that's a good point, and these are really really brilliantly intelligent people going through these kind of a mental and emotional challenges. I do think, steve, what you were saying it is tied with the emotional component of it. Right, because it's it's these things that make us feel horrible. Or we're supposed to feel horrible, or we're supposed to. If you've worked for a company that's cyclical and they do a lot of layoffs and and let's say IBM used to do this they always did the layoffs at the end of the year, so I was getting fired at Christmas time, right? So if you've been through three or four cuts of that, you're in net, natural inclination is to feel horrible, right, to feel loss Every time you see something like that happening and if you don't feel good, you're you're not going to be confident that you got this if you walk out the door. So it's, it's, it's a, it's a psychological landmine that you're stepping on and it's just because of how we're programming and wired and that actually, I'm telling you has come out of so many people's mouths. It's just a weird phenomenon. I think or maybe I just have like that, the one group of you know I have a cluster of people that that just happens to be what they're thinking of, but it's real.

Speaker 2: 16:56

So then, your next point that you went into is you know, really the point of a good planner is to insulate the client from the bad markets. Listen, you're not gonna stop bad markets when you. You've had bad markets your entire life. The whole time that you've been around this universe, this earth, the whole time you've been bored, there's been a stock market. There's not a personal life. There wasn't a stock market around. So the whole time you've been here, stock market's been going up and it's been going down and it's been going up and it's been going down. It's been going up and it's been going down. Why is it gonna stop just because you retired? And why should it and why do you need it to?

Speaker 2: 17:36

And if a planner's done a good job, you roll into that retirement year and you know good economy, bad economy, don't matter. What matters is what you wanna do next with your life, that next chapter of your life. That's the most important thing. If you've got to the point where you're financially free, you're there and it doesn't matter if the investments go down 15, 20, 30, 40%. You've already got that stress test. You've done everything you need to do.

Speaker 2: 18:01

Now it's different. If you're gonna retire and you got $100,000 to your name and you need every bit of that just to even get through the next five years, yeah, you probably should keep working, but you should probably should keep working a lot longer than the next year, like you shouldn't have even been talking about retirement. But if you've done a good job and you've had planning and you've got everything in place and you've got a portfolio that's market agnostic, it really just doesn't. It's gonna go up, it's gonna go down. Who cares? It's part of the expectation to it. You should be rolling into that bad market going. I can't wait to get the hell out of here. You should be thinking okay, unemployment goes up layoffs. Man, I'm gonna go down and talk to my boss and say I'm willing to tap out, give my seat to the junior guy behind me because I know it matters to him.

Speaker 1: 18:46

Well, and if you don't protect yourself from these types of conversations and a good planner that really is advocating for you to help you get the most from your money and life things we talk about you can be getting set up for a sales pitch that you never quite understood. Because if you're dealing with a financial advisor and you tell them that, based on the economy, you're terrified, you're gonna run out of money. That's when you're gonna have the conversation about financial products like annuities and hey, let's make sure we protect against that right. Because why I say that is when I was doing some of my Nancy Drew due diligence on, like, what are people asking the internet? And then, what is the internet saying?

Speaker 1: 19:22

You and I, with having this podcast over the last few years and being a little bit more in the spotlight in the financial services industry, we have recently been asked through different journalistic reviews and online articles for our two cents on certain topics. So in our world, we hear from journalists all the time that will email us like, hey, I'm looking for three professionals to give me a sound bite, a clip, a quote for this article that we're gonna release on USA Today. So I just want you to know that when you go to the internet and you Google these questions and you see blogs from major outlets, when you begin to read those articles on what should I do if I'm afraid of retiring in a bad economy, and it says, well, so-and-so from XYZ firm says that you should definitely consider an annuity. If you don't know what that means, then you might say, okay, I need an annuity. But what you don't understand is that whoever's writing that article is choosing what quotes, what sound bites go into that article, and they're not professionals. So if you're not careful, there are a lot of people being sold things because they're afraid and they don't understand.

Speaker 1: 20:28

And so when you talk about complex, simple questions, if you don't insulate yourself from the fear and the fear mongering and what's going on in the world today, then the right person with the right story can convince you that this is the thing. This one thing is going to take away your fear. No, it is not. If you went out and you converted all of your traditional IRA into an annuity to have quote, unquote guaranteed income, I guarantee you tomorrow morning you're not gonna wake up feeling any better when you watch the news Because you didn't get at the heart of the issue, which is understanding, like, what does this have to do with your life and well-being? And so I think, as you're starting to unwind why this is complex, people are trying to do the right thing, but the execution is really poor. So I think we had maybe kind of one more point or question that we wanted to throw out that I wanna leave you to run with.

Speaker 2: 21:24

Yeah. So just an important consideration is that we should not be gauging our financial independence or our personal security on the pile of money that's sitting in front of us, and I think that that's really where this comes into. I think a lot of people look at the pile of money and they say, well, if the economy is bad, I'm going to have a smaller pile of money or less buying power or something like that. And we need to stop looking at our pile of money as if it's some kind of finite thing. We need to start looking at it and say what can I do with this pile of money? Right, what does this pile of money actually mean to me? What's the value this pile of money can bring to me and how might I be able to use this and leverage it? Because, like you said, like with an annuity, if you're going into retirement and you've had somebody say, well, you need to put $500,000 in this to make sure that you have your income. Now you're fixated on a $500,000 number. There's no flexibility there. Another problem with that is probably the product has no ability to capture upside in the recovery. So, yeah, you are locking in losses if you do that kind of thing. So it's understanding who you're dealing with and how you're doing it. But a good planner, I mean you ought to be able to roll into an economy knowing I'm retiring this year and I'm going to be OK with the way that the market is, whether it's up, down or sideways. I mean it just. You know we just did the whole thing on index funds and passive or SAC and all that kind of stuff.

Speaker 2: 22:45

It's very easy to say to give you very generic information. It takes a lot of time to make it specific to an individual, to really help an individual understand. And there, if I was in your situation, I had the money that you have. This is what I would do to get the most out of it. Right, and I understand investments and I understand the markets and I understand you know all the different products, insurance and stuff. This is what I would do to get the most out of, out of that pile of money if I were in your shoes, which is very different than Somebody just peddling product or generic advice to you, right?

Speaker 2: 23:19

And I guess that opens up an error discussion. I mean you could have bad advice, you could have people that just this is what I would do if I were in your situation. And they're complete idiots. They don't actually know what they're talking about. They're so-called financial advisors, so that can happen too. But that's why we're we're so open and so frank on this show About how these you know what you should be hearing if you're hearing from somebody credible. Right, like a lot of people think they go to their financial advisor and I want to talk about golf and I want to talk about the kids and the grandkids on the social, and that is nice.

Speaker 2: 23:50

And we spend, let's say, 60 to 70 percent of our time talking about a client's life because we need to understand their life, but when it gets into the hard details and stuff, they've never had some of those discussions. They've never had some of those kind of somebody goes in says I'm concerned about my investment values going down because the economy and I'm supposed to retire. They say, well, do you want to reduce your risk? Or they just say stay the course. They don't actually help you understand. Does that put you at risk or doesn't it? Should this be something you're worrying or isn't it?

Speaker 2: 24:18

And then the other side, too is we need to not be so stubborn, as the clients, too, you know if, if you have a good reputable firm and a good reputable advisor who's helping you and they tell you this is how it works and you go. Meh, I don't believe you. It's like it would be like me walking into my dentist's office and saying you know, you know, go ahead, do your act. Raising is like, hey, you have a cavity. We have to remember. I go and I don't believe you. Like that's his job, I'm there so he can do his work. Right, let him do his job.

Speaker 2: 24:46

And so sometimes we see that too. Sometimes we see people who are just like no, no, it's, I looked online and this is what it's that online. So I'm going there and it's like okay, well, you know, if you don't trust the people that you're working with, get new people. You know that type of thing. So I guess the whole point of that is we need to get back to understanding what our money can actually do for us and stop being so afraid of it. Stop being so afraid of losing it or running out of it. Start learning about it. You can actually do with it and and what actually does influence it and make makes the long-term impacts? Well, because the counter question.

Speaker 1: 25:28

Whether you stuck with us this entire episode and understand what we're saying or not, is you pose the question should I retire in a bad economy? And I tell you, no, didn't like. How long do you keep working Like when? When do you know when the soak smokes again? When do you know when the soak smoke signal clears that it's time for Steve to retire? Right, if that's the question that you're answering, asking well then, what is the answer that's going to make you feel better? There is no answer other than good financial planning. That's led you to the point of understanding, regardless of what's happening, because if I look you dead in the eye and go, no, you should retire this year, well then, when are you going to be able to retire? What's the point? But I think too and this is something that I just want to throw out a caveat because I want to talk about you know kind of the industry.

Speaker 1: 26:14

I talk with people all the time that call in from the show and also just be weary of. We talked About the annuities. There's a lot of major custodians today that when you raise these objections on the phone about, I'm afraid of running out of money. Just be mindful of. You know professionals on the phone that are, you know, trying to talk to you about annuities all of a sudden and never have before. Just understand what is being, you know, talked about with you and if it's, if it's fear-based storytelling, then you might want to just ask a lot of questions, get a second opinion. But we have one more Conversation that I think will help in terms of this complex, simple questions as we dive into should I get rid of an investment that's losing money? So you're not going to want to miss this last episode, but, as always, we'd love you to subscribe to this podcast. Share this with a friend If you think this can help. But, as always, thanks for being our guest on digital suits.