Excel in Retirement
Excel in Retirement
How to Deal with Financial Pressure Ep 127
Experts from the show:
A couple weeks Jerome Powell, the head of the Federal Reserve, stated the time has come to lower interest rates. The goal has been to lower the cost of everyday items we use while not plunging the economy into a recession. Talk about trying to walk on a tightrope over the Grand Canyon.
Believe it or not there’s even a fear and greed index that gauges which sentiment is most applicable at the time.
From the Wall Street Journal, “September is a popular time for companies to go public. This month’s stock-market volatility is putting some plans on ice. It isn’t just the market’s recent choppiness, they say, but that turbulence could flare up again, given the uncertainty around November’s presidential election and how much the Federal Reserve will cut interest rates this year.”
From Fox Business, “About 61% of workers said they fear retirement more than they do death, while 64% said the thought of retiring is scarier than the thought of getting divorced. One reason for the fear is that Americans are worried they will run out of money in retirement.”
Last week I was talking to my friend Jason Benham and we were talking about how fear often leads to anxiety.
The World Health Organization states, “In 2019, 301 million people in the world had an anxiety disorder, making anxiety disorders the most common of all mental disorders.”
If you’ve been reading our newsletter for a while you may recall our mice problem we had a while back in our garage.
Investment advisory services offered through CreativeOne Wealth, LLC. Clients Excel, LLC and CreativeOne Wealth are not affiliated companies. Licensed Insurance Professionals. Investing involves risk, including potential loss of principal. Any references to protection or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% IRS penalty before age 59-1/2. Roth distributions are tax free after age 59-1/2 and the account has been open for at least 5 years. This video is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.
Welcome back to the Excel in Retirement podcast, where we help good people make wise financial decisions so that they may excel in retirement with confidence. Learn more at clientsexcel.com. Now to your host, David Treese.
UNKNOWN:David Treese.
SPEAKER_01:All right, welcome back to episode 127. We're going to talk interest rates, what's going on. We're going to talk about how to deal with pressure, and then we're going to talk about debt and some views on debt and how we should handle that. It seems like just a minute ago, we were back in early 2022, and everyone was wondering why the Federal Reserve hasn't already raised interest rates to combat the rapidly rising cost of goods. I think it's safe to say that nobody anticipated rates would stay as I'll see you next time. A couple weeks ago, Jerome Powell, the head of the Federal Reserve, stated that the time has come to lower interest rates. The goal has been to lower the cost of everyday items we use while not plunging the economy into a recession. Really talk about trying to walk on a tightrope over the Grand Canyon. That's a perilous situation, isn't it? And it is to be determined how it's going to play out, really. But seemingly, what has pushed the decision to eventually lower rates later this month has been unemployment rising. And from an article I linked here, and I'll put it in the show notes, meanwhile, he said, a slowdown in the labor market is unmistakable and a downside risk to employment has increased. And so that was what Jerome Powell said. In finance, commentators sometimes say people may their decisions about their portfolio based on fear or greed. Believe it or not, there's even a fear and greed index and it gauges the sentiment that's most applicable at the time. And it doesn't take long to discover things to be fearful about, does it? This time of year also is generally a hot time for companies to begin offering shares of ownership to the public for investment. So IPOs will come onto the scene and whatnot. The Wall Street Journal recently This month's stock market volatility is putting some plans on ice. Companies weighing whether to make their stock market debuts face critical decision in the coming weeks. Pull the trigger soon so they can launch their deals before year-end or hold off until 2025. And the article continues, the outlook isn't rosy. The growing consensus among companies considering initial public offerings is to wait until the end of the year. wait until next year. Many bankers, lawyers, and corporate executives say it isn't just the market's recent choppiness, they say. But the turbulence could flare up again, given the uncertainty around November's presidential election and how the Federal Reserve will cut interest rates this year. And so Fox Business had another article that said about 61% of workers fear retirement more than they fear death. And while 64% said they thought of retiring as scarier than the thought of getting divorced, one reason for the fear the article is that Americans are worried they will run out of money. That's certainly a consideration and something to think through. And it's a big fear every time polling happens around these questions. But I've got a confession for you. If I had to pick fear or greed as one of the most dominant feelings I have, I'd have to say it would be fear. And some of us probably learned at a young age that you tend to attract to your life the people you're like. So I'm commonly having conversations Let me preface that a healthy view of both is probably most helpful, right? We want to be cautious, but we also want to be positioned to capture opportunities when they arise. Last week, I was talking to my friend Jason Benham. And I'll put a show note link to his information if you want to check that out. But we were talking about how fear often leads to anxiety. The World Health Organization states that in 2019, 301 million people in the world had an anxiety disorder, making anxiety disorders the most common of all mental disorders. My takeaway from that is if you're not dealing with anxiety about something, your probably interact today with someone who is. So how can we deal with this challenge? Jason has a framework he works off of to deal with anxiety. He starts by defining the types of pressure we often experience. And so he says, number one is everyday pressure. And so we're supposed to have this type of pressure, pressure to get out the door so we're not late to work or pressure to make sure a bill is paid on time or the kids are at school on time or we get to a doctor's appointment on time, things like that. Number two would be events. We have a big project at work due and we have to get it done or we have to give a presentation at a club we're part of or at work or something like that. So everyday pressure, events, and then number three is emergency. So let's say we're in an accident and something bad has happened outside of our control. And so those are the three types of pressure, everyday, events, and emergency. And fear may cause level one and two things to accelerate to level three if we leave ourselves unchecked. Jason defines anxiety as projecting fear into the future, which may turn pressure into panic. And then what happens when pressure becomes panic and we're projecting that fear into the future is we get stuck. So now. We know what pressure is. Let's figure out a solution and three keys to deal with this. Number one, what we want to do is recognize what's truly going on. And so as a Christian, we realize that the enemy doesn't want peace. But we have hope as a Christian that all things will eventually be made whole. Even if you're not a Christian, I think most people out there would agree that there are forces in our world that are obstinately pursuing chaos. My faith, though, helps me understand why. Understand it for what it is. There's forces out there that are not for peaceful solutions to our issues. So we've recognized number one. Number two, we want to renounce the lie that we're tempted to believe. Have you ever thought something in your head? I do this all the time. And then you say it out loud to a friend or maybe your spouse, and you realize that wasn't right at all. Sometimes our internal dialogue leads us to believe things that just aren't true or they're not fully true. We should be aware of the temptation to despair. We can find tons of reasons to worry, but that's a temptation to despair and we need to renounce that in an ideal situation. Number three is to replace it with truth. And so we've got number one, recognize. Number two, renounce. Number three is to replace it with truth. What do you know to be true about the situation? Figure out what's important about the situation. So let's tell a story. When Jesus was on the boat with his disciples, a storm arose on the lake. But Jesus was below peacefully sleeping, the Bible says. The disciples believed Jesus to be the literal Messiah of the world, and yet they panicked, thinking they were going to drown that day. They believed Jesus was a divine being, so they should have really known that the boat was not going down with Jesus on board, the literal Messiah of the world. As a Christian, we know Jesus is in our proverbial boat, and the book says the boat isn't going down. Jesus ultimately rebuked the disciples for their lack of faith. And so from a practical standpoint, sometimes we lack faith in our own work or accomplishments, right? We strive and work to save for retirement, and some of us are prone to fear that doom is impending. But hopefully with this template that I've outlined that Jason has created, you can have a tool to combat some of those feelings. I feel like it's been helpful to me and I feel like it's a good exercise. I believe with all the innovation with technology, And with things getting so much more robust with us being able to get information quickly, it generates issues with us having more to be anxious about. Okay, let's transition to another story. I don't know about you, but I really like having comfortable furniture. I love sitting down in an oversized recliner and kicking up my legs after a long day, right? Mallory, my wife, though, she's the type that prefers aesthetic furniture over comfortable furniture. Comfort is secondary to her. She might disagree with me there. Remember, she's the art teacher and the interior decorator. When we started dating, she had this small couch in her living room that fit the bill perfectly for her. If you were looking at her living room and not actually living in it, it was a great couch. And so it looked like something out of a magazine. Another challenge we have is Mallory's about seven inches shorter than I am. So in a big chair, her feet sometimes don't reach the ground, right? When I sat on her couch, though, my knees were in my chest. And so the couch became a point of contention. I've always figured, though, that if our biggest disagreement was over furniture, we were doing pretty well. The other issue with the tiny couch is, we were sitting on it when I proposed to her. So now the uncomfortable tiny couch has sentimental value too. At this point, when I figured this out, I started really despairing, thinking I would be dealing with this couch until I go to my grave. After a lot of griping though, we finally got a bigger couch and somehow the tiny couch ended up transitioning to our garage for storage. And if you've read our newsletter, you may recall back in May, I wrote about... our mice problem. And I'll put a show note link here to that. And we had mice in our garage from when we were storing chicken feed in there for five years or so. That was a bad, bad idea. And after the extent of the rodent problem was revealed back earlier in the spring, Mallory was finally okay with getting rid of this couch, but not before she had imagined those beady-eyed devils lounging on it at night. So we left the couch on the trailer. We loaded it up a few weeks And so we waited for an opportune time to drop it off at the dump on the other side of the county. And the time finally came this past weekend. And as soon as that went over the ledge into the great trash abyss, I sighed a sigh of relief and Mallory immediately started reminiscing about all the memories the couch invoked for her. Sometimes people come into our office and they have old debt hanging out there. Maybe it's an old student loan or an old credit card from when they hit a rough patch, and the topic will come up about what to do about it. Sometimes people have the funds to retire the debt, but they keep it around like our old tiny couch. They reminisce about the fun they had financing that boat or that car or whatever it was. Maybe they initially didn't have the money to pay it off, but now they do, and they're still operating under the terms of not having the funds to be done with the problem. The other challenge is sometimes we don't want to give up our cash to pay debts down. That can be a challenge. And you'll be able to find tons of people on the internet advocating for things like never paying your home off because of the tax deduction and making the argument you can earn more on your money if you have a low interest rate on your mortgage. And those ideas are fine for some people and they certainly have merit, but we What we need to think about is that peace of mind is freeing, and we cannot put a price tag on peace of mind. Not to speak of the interest we're paying on that debt that we're servicing. At times, if our debts are causing our clients distress, I'll consider with them whether it makes sense to take funds from their retirement accounts to pay off the debts and be done with it. What it comes down for me is I spent a lot of time with my grandparents as a kid, and I'm both sides of my family, I had some great-grandparents and then my mom's parents, they lived through the Great Depression. And one of their number one objectives early in their careers was paying their house off as quickly as possible. And what it came down to is they were looking to generate as much financial security as possible, given that their childhood was the Great Depression and their young years. And so they wanted to pay that off. And call me simple-minded, but when it And when we have less debt, I think it frees us up for the potential of other opportunities, opportunities to grow our savings without interest payments, or maybe it frees us up to support nonprofit causes that are important to us. And I really think it relieves our mind of stress. So my rule of thumb is when in doubt, pay it off. And so we want to get rid of that stuff as quickly as we can in an ideal situation. If you have any questions or comments, feel free to email. You can reach us at 864-641-7955, or you can email us at hello at clientsexcel.com. Hope you have a great day.
SPEAKER_00:Take care. Investment advisory services offered through Creative One Wealth, LLC. Clients Excel, LLC and Creative One Wealth are not affiliated companies. Licensed insurance professionals. Investing involves risk, including potential loss of principal. Any references to protection or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims-paying abilities of the insuring carrier. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% IRS penalty before age 59 and a half. Roth distributions are tax-free after age 59 and a half, and the account has been open for at least five years. This podcast Transcription by CastingWords The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by clients Excel. The use of logos and or trademarks of hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.