Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

Here's Why You Shouldn't Worry Regardless Of Who Is In Office

• Ari Taublieb, CFP®, MBA • Episode 215

Share episode

This episode should decrease your worries - using statistics (not opinions).

Join me as we tackle common worries related to politics and retirement planning through the lens of a relatable couple's concerns. While they grapple with fears of market fluctuations and tax changes, I'll show you how to remain resilient in your financial journey. As a financial advisor, part of my role is to guide you in distinguishing between genuine concerns and unnecessary noise. So, when the latest political upheaval comes up in conversation, you can rest assured with a robust and stress-free retirement plan. Listen in to find peace of mind and learn how to fortify your financial future, regardless of what lies ahead.

Text us your thoughts on the show!

Create Your Custom Early Retirement Strategy Here

Get access to the same software I use for my clients and join the Early Retirement Academy here

Join the new Root Collective HERE! (COMMUNITY)

Ari Taublieb, CFP ®, MBA is the Vice President of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.

Speaker 0:

Welcome back to the Early Retirement Podcast. I thought I would start it off light and, in light of the politics and things going on, here's who I voted for. No, I'm just kidding, I'm not going to go through that today. Today is me going through how you can plan knowing about whatever, whoever's in office, whatever changes occur, whatever tax brackets get adjusted, any what-if scenario. That's what today's all about. I want to give you some stats that are going to not just give you confidence but might make you think a little differently about your retirement, and my hope is that, truly, you don't worry about a bunch of stuff after this episode. So, yes, I am a financial advisor and my job is to advise. I view part of that role as telling you stuff not to worry about. So when your neighbor or coworker brings something up, you'll go. It sounds interesting, but I don't know if that applies to me. So, with that being said, let's hop right into the episode Now. I, of course, love this stuff. I don't care if you like Trump, if you like Harris, if you're upset about the results. I know this episode's coming a few weeks after, but the principle is the same. I want you to know the position that you're in, regardless of who's in office, and how that impacts your potential retirement investing horizon. You name it. So on YouTube, you can, of course, see what I'm going to bring up on my screen right now If you're listening on the podcast app. Totally cool, I'm going to explain it for you. So, so this is saying from 1948 to 2023, what is the growth of $10,000 in the S&P 500? Why am I bringing that up as my first example here? Well, the reason I'm bringing it up is I hope you can start to realize and sometimes it just takes some of these things to click to give you confidence that you're going to be okay, no matter what is if you invested only under a Republican president Once again, I'm not telling you who I voted for, didn't vote for, not what today's all about. I don't believe in going into that. You can see, if you only invested on a Republican president and this is a study done by Charles Schwab who said hey, we're going to detail a hypothetical investment of $10,000 in the S&P 500. How much would that have grown to? And so you can see here, if you put $10,000 in, what would have happened is you would have $312,000 if you only ever invested when a Republican was the president. Now you can take the same example and say what if we only invested when there was a Democrat in office? And it shows the sample would not be $10,000 to 312, but $10,000 to 1.2 million. That's significant, but that's nowhere close to what I'm about to tell you, which is if you stayed invested the entire time and there's lots of graphs I can pick from when it comes to politics, this is my favorite one, and there's lots of graphs I can pick from when it comes to politics, this is my favorite one your $10,000 today if you put it in in 1948, would be $37.8 million. So this is hopefully encouraging you to go. Wow, it's not like 10,000 became 300K or 500K or a million or 10 million, 37 million. The overall message stay invested, no matter who's in office.

Speaker 0:

Now what I imagine many of you are thinking is well, it's not just who's in office, it's what about tax brackets now? What about health care now? What about my withdrawal strategy? How does that change? So I have a couple that I work with. They are a lovely couple and they were really concerned about the politics that were going down, and we had a transparent conversation about it. It was about 20, 30 minutes. And then I said hey guys, what's the ultimate worry here? Like, are you moving out of the country? Is that how big your worry is? They go. No, I'm not moving out of the country, but I'm just worried that markets don't do well. That's going to change my retirement. I asked the spouse what about you? They go, I'm not worried if markets don't do well, I'm more worried about tax changes. And I said great. So it sounds like the ultimate worry is are we gonna be okay? Do I have that right? And they go. Yeah, it's these things that are getting me the anxiety, which is the short-term stuff. I said look, you're a human, you're not a robot. Let me show you something. So I'm gonna explain. You are watching, indeed, on YouTube.

Speaker 0:

So this is what's called stress testing, what if scenarios, and to me, this is what actually breeds confidence in retirement. Some people are really hoping I'm going to tell them one thing that's going to be like a light switch and all of a sudden they couldn't spend in retirement because they just didn't have it in them, because they're a saver and now they can spend, or that I'm going to say hey, you're wondering exactly when you can retire. It's this exact date. Retirement planning doesn't work like that. It's more of hey, are we confident that we have the ability to never run out of money based on these assumptions here? That's what makes it more difficult.

Speaker 0:

So what I like to do is I like to stress test things, and so you can see here, even the best retirement plans will be exposed to various risks. Those could be what if you retire and get unlucky and markets drop? What if Social Security is reduced? What if inflation is higher? What if your returns are lower? What if taxes go up? What if you live till you're 150? What if health care costs go up? So these are things that don't induce anxiety, but what I find is they actually alleviate it, because you know where you are in relation to your goal and I would want all of you to go wow. So if I'm like the most unlucky person ever, I'm not going to run out of money, like why am I still worrying?

Speaker 0:

Others of you are going to go look, I would love to retire tomorrow, but if you're telling me I could prevent against any kind of unluckiness by working two, three more years and really giving me a lot of confidence, well, now you're working for a very specific purpose, because the worst thing you can do, in my opinion, is work and work and work without a very clear reason for that Meaning. Are you working six more months so that you can save enough cash to be able to pay for health care? Are you working two more years so that you can get a little bit more into the 401k? Not withdraw from your portfolio so that your withdrawal rate is 3.8%? Do you have a very clear goal? What I find is a lot of people are just working, going. Yeah, politics, stuff is crazy. I'm not going to retire now. Oh my gosh, I'm not going to retire now because what if markets go down? I just don't think this is the right time and they're finding some excuse to push it back because it's easier to push it back.

Speaker 0:

I am the weird, transparent advisor that's coming to you guys and going guys, don't take the cheap way out. Run the what if scenario. See what you're on track for and maybe you are good to go, maybe you're not, but at least you have the answer. It's almost like imagine I hurt my knee and I'm a soccer player. It's almost like me trying to avoid the MRI. It's like I have a scan done. You guys a lot of you guys have a plan, but you don't have the right person interpreting it and going yeah, I know the MRI shows the scar tissue is not that bad, but actually I'm moving it right now and your knee is not in my knees, okay, okay, so don't freak out, um, but I want to make sure you go. Okay, I have an MRI. I also have a scan that tells me the true, like I can see the break or the tear, but I also have someone interpreting it saying yeah, turns out, it's not just your ACL but it's also your meniscus. So your whole physical therapy program is different.

Speaker 0:

So, to use an example for financial planning, if you look at my screen here, I'm also going to explain it. This is what I like to do to really breed confidence in retirement, and I'll do this with a client. I'll go look, your current probability of success is 85, 90%, whatever it is. But what if markets drop 20% as soon as you retire? How might that impact the plan? Well, that impacts the plan, but we're still on track. We still feel very confident. We won't run out of money.

Speaker 0:

What if social security gets reduced and it's gone by 30% by the time years starts. What if inflation goes up by 2.5%, meaning more than it's projected to be? I'm always conservative in my planning, but this is where we need to be careful, because some people want to put all these levers to the maximum. Yeah, what if my returns are 5% lower than I think? And what if I live till I'm 120? And what if I you know, tax brackets go up like crazy? And my healthcare? Well, we don't want to be so unrealistic, which I see as well, where people are really just trying to convince themselves yeah, I should just keep working, because this whole concept of retirement is still weird. This concept that we would not work ever again and have income for 30, 40 years like still a difficult concept, and have income for 30, 40 years like still a difficult concept.

Speaker 0:

So this what if scenario planning, when I have a client that comes to me and asks about politics and how that's going to impact their plan, I'll discuss it and then I'll bring it back to the what if scenarios. And what's the real worry? If your worry is that all of a sudden, you know you don't feel that the ethical issues are going to be, you know, in alignment with what you're looking for, I go that you have more than a right to, but that's not going to impact your retirement planning because you're not going to run out of money. The social side to the financial side that's different. I'm focusing on the financial side and I don't want any of you going, ah politics, maybe I should get my money out of the market and then try to go back in later and the timing works out and look at the craziness going on.

Speaker 0:

I have a lot of graphs and I have to pick and choose which ones I want to use. I'm very careful about that. But another one that I like I'm putting on my screen now once again on YouTube, if you're listening on the podcast app same principle that I'm going to explain, which is what does history tell us about elections and the market? It goes up. So the example I used before was 1948, but I could go all the way back to 1926. And I hope the message that you're seeing on my screen right here is just it goes up. That is the overall message. Regardless who's in office, markets go up because it's not presidents dictating what's going to happen, the complete earnings and the quality of valuations, and they're not dictating that.

Speaker 0:

Regardless of who's in office, like amazon is still delivering packages and I'm still here drinking water out of my hydro flask, and like I'm recording this right now with a canon camera and apple macbook pro. Um, I was thinking, is it a macbook air? I don't know, but it's a pro um. Just I know you guys needed to know that right now, or you couldn't't know, but it's a pro. Just I know you guys needed to know that right now, or you couldn't retire without knowing if it's a pro or an Air. I get it. So, with that being said, that's what I want to go through on this episode. Hopefully this was helpful, giving you some alleviation, if I can, of anxiety that, no matter who's in office, you're going to be okay, but also starting to get serious about when I can retire when I'm in a spot to do so. Once again, that's what we love to do here. So if you are looking for just the software and the access to the what-if scenarios I'm showing you can see in the description you can join the Academy to run these projections for you If you go.

Speaker 0:

I want the full service model. That's what I'm looking for. Ongoing planning service model that's what I'm looking for. Ongoing planning, proactive management, tax, estate withdrawal, healthcare Of course, that's our business and that's what we like doing. So if you're interested in that, I encourage you to reach out. I am very transparent. What we do is not for everyone, but for clients that go. Yeah, I really want to optimize. I don't want you to just tell me to rebalance. I want tax help and withdrawal and healthcare and insurance and the next level planning. So that's what the podcast and the YouTube videos are here to help you understand more about our business. I hope that this is helpful and if it is, I kindly ask that you share it with someone you want to retire early with. I'll see you guys next time.

Speaker 0:

Thank you for listening to another episode of the early retirement show. If you have a question that you want answered in a future episode, you can always go to my website, earlyretirementpodcastcom. That's earlyretirementpodcastcom, and you can go ahead and submit a question that I'll look to answer in a future episode. Thank you all for listening. Please do rate it, review it and share it with someone who you think would benefit from this information. If there's anyone out there that you know, I certainly appreciate it and I will see you all each week. Hey guys, it's me again. Please be smart about this. Nothing in this podcast should be construed as financial, tax or legal advice. Consult with your tax preparer or financial advisor before taking any action. This podcast is for informational purposes only.