20 PMR Tom Hegna Interview

Peter Rochon, president and founder of Rochon insurance and investments. This is August 2, 2016, and today we are going to be joined by a very special guest to use a multiply published financial author and host of a PBS special. Don't worry retire happy. Tom Egner now joins us. Tom, thanks for taking the time out to speak with us today. Your Peter the Great rework your was great to have you and you have written extensively about retirement.

Can you share with the listeners. What are some of the unprecedented challenges that are facing today's retiring generation that maybe we have not seen before Arab Toyota Starbucks a number reluctant offer I never want to write a book agreement degree in Reading a book you will develop bucket list. So why to write a book will. Here's why.

Because right now your listeners talk to 50 different financial advisors and at this very simple question.

How should I retire there, probably to get 50 different opinions what the other. Do you see retirements been studied in depth by PhD's all over the world.

People like Dr. David Babel Gordon Dr. Moshe Lipsky of Toronto.

Dr. Menachem Yuri of Israel. Most recently, Dr. Robert C. Martin, the Nobel prize winner who just published in the Harvard business review of I read the research and or the research says there are not 50 optimal ways to retire is really 1 Optimal Way to retire and that's not my opinion is based on mathematical, scientific and economic facts. WHAT I write about is the mass in spite of her retire the optimal way in or nobody knows what will be the best way but I talked about the optimal way in an optimal simply means you will be the best. More often than anything else would be the best in November. Be the worst you know to get your question of what these people are facing or facing a life where most people don't have a pension anymore, and edit time on any guaranteed lifetime income more than ever are living longer than ever. The market is very volatile. Reprinted $4 trillion the government's 19 trillion in debt without monitoring of unfunded obligation.

There's a lot to be worried about, you've written extensively about these mathematical and scientific formulas. How do we arrive at our own mathematical or scientific equation in our own individual retirement preparedness yet so paycheck simply checks or four simple steps.

And don't worry retire at the second swimming over the four simple steps to paycheck and blazer step number one, you gotta cover your basic living expenses were guaranteed lifetime income so figure out how much you need to live in almost a month later date and that should be covered with guaranteed lifetime income. So that's our start strip at the Lebron said that our real estate. That's were guaranteed lifetime income for then step number two you need to optimize the rest your portfolio to protect yourself against inflation because you can't just have a steady income thereof so I felt that increasing income dresser lights. That's where stocks and real estate and other things can fit step number three got up a plan for long-term care. See, that's the one thing most people forget about the can wipe out the entire life's work. I say no retirement plan is complete without a plan for long-term care and then step number four. The most efficient way to pressure Welch your children and grandchildren is with life insurance.

I tell people time.

Don't leave your kids any money, spend your money leaving life insurance because he can leave so much more for so much less so those were the four simple steps based on math and science and how to take key risks off the table and I'll make sure you're going to be happy in them expanded on that in the TV special on the other book.

Don't worry retire happy and you going to depth on what some of those key risks are.

Can you explain a few of those key risks to retirement serving the same others. Quite a few risk market risk with United markets can drop Mark's good out of a crasher before you retire young big trouble. There's withdrawal rate risk, you might take up too much money. You know what's the safe withdrawal rate of taking money out. There's this thing called sequence of returns risk of people don't understand we could do a follow-up on that.

If you want to might of inflation by the deflation you might need long-term care, you might die. You might live a long time. There's a lot of risks in retirement. But when you study it.

There's only one number one risk and the number one risk, by far, nothing is even close is longevity risk because longevity is not just a risk. It's a risk multiply volume risk seats. If you think about it, the longer you live more like the market crashed, the longer you live more like you're going to take up too much money.

The longer you live, the more likely inflation decimate your purchasing power alone you live, the more likely you're going need long-term care UCB retiring your 65 and you drop dead on your 68. It doesn't matter if the market crashes 10,000 point it doesn't matter if inflation is 15%.

It doesn't matter if you were drunk 12% here.

It doesn't matter if you forgot to buy long-term care insurance because you didn't live long enough to be 75, 80, 8590 it's all those other risk that can wipe you out. So Tom, why has the general public been reluctant to adopt some of these scientific and mathematical formulas that you say can help overcome some of these key risks well because look in the 80s and 90s. The market was going so well everybody with disfavor and investor, and they were investing in there in the market. It was all about diversification and asset allocation, and they were just making money and make more money in the 401(k) was going up will then 2000 fit. We had two major market crashes in 2000 and 2008 and the 401(k) is returning the 201 days and that it happened again. And some people are out there better there. There never go back in and when you're an investor in your favor. You have one mindset and that's diversification allocation in that type of thing when you're growing retirement funds. Once you're in retirement are nearing retirement. Once in your 50s and 60s. You can't do that anymore okay because if you lose money right before or right after retirement. It can devastate your whole retirement.

So once you get into the retirement phase is way different than the accumulation phase. If you think you're going to retire with a portfolio just would draw money off and I'm telling you that other than Apotex. That's the way you run out of money and so in the distribution phase what you got a habit you got guaranteed lifetime income. You gotta take longevity risk off the table. You gotta take long-term care risk off the table. You gotta take withdrawal rate risk off the table sequence returns risk of the two gotta take these various risks off the table to retire successfully. And that's with the math and science shows. These are in my opinion these are what all the beasties of study retirement say you gotta do and it is really a simple formula once you figured out and we spoken about the importance of having an income plan for retirement were an income allocation as we have called it that income allocation is vastly different dynamically than the old asset allocation that you are discussing can you discuss some of the key differences they are and why that income plan is so vital for retirement. Success yellow back to the sequence returns receipt of the stock market's average 12% a year since 1924, so people say what you understood my money in the market and I'll just withdraw money out of that will give you your money in a diversified portfolio take income off. You can't withdraw 12%. Here you can withdraw 10% a year, or 8% or 6%.

Not even 4% morning starts as a safe withdrawal rate is 2.8% proceed to some people it doesn't make sense if the markets average 12% here. Certainly I can take out more than 2.8.

They don't understand that no you can't because of you have a diversified portfolio. I don't care who's running that it could be Warren Buffett.

If the first three years you retirement the market goes down, down, down, there is much else I can do for you. You're either going up to put in more take up less or you likely will run out of money.

That's called the sequence of returns, risks, and because of the sequence of returns risk you cannot going to retirement the same way that you saved accumulated money and so you've got to have a base level of guaranteed lifetime income.

Now there are three sources of guaranteed lifetime income. The first source of Social Security. A lot of people know about Social Security but they don't know what it is Social Security's a lifetime income annuity is a guaranteed paycheck for life. The second source of the pension. Now people know about pensions, but do they know that a pension of a lifetime income annuity guaranteed paycheck for life and as I said math and science is your basic living expenses need to be covered with guaranteed lifetime income so Social Security counts and pension count. Whatever your short you're supposed to go find an insurance company and by some form of lifetime income annuity now you and I been around the block enough that we know. I spoken all over the world, people, communities like Tom, we don't like annuities around here. Susie don't like abilities they've done.

Like notice Ken Fisher takes all probate jabbed. I hate annuities and so should you.

We don't like abilities around here. I got surprised that seriously. Could you tell me you don't like annuities to let me understand what you just said you paid into Social Security for 35 years but you're going to call up the so security ministries they stop those checks. We know one another.

Social Security check in this house we don't like annuities are you seriously going to do that you work for the company for 42 years, but you're going to call up HR safe stop those pension checks. We are not one another pension check in this house we don't like annuities well and they say well I guess we like those kind of annuities is just so's insurance company annuities we don't like I say, really. Why is that because they're all loaded up with fees really what the total ongoing fees in a lifetime income annuity are there zero. It's not even a fee product of your guaranteed a thousand bucks a month throughout your life. Get some if you get a thousand bucks a month for the rest your life. Note there are annuities that have fees, variable annuities of fees amid actually writers have fees. It doesn't mean or bad what you do. She got away what is to guarantee versus what is the feet, but basic lifetime income annuities are not even see products and people just don't understand. And a lot of times in annuities of the past and in your examples of Social Security and pensions Tom the lump sum is not transferable. If you die early with Social Security or pension. Often times that lump sum, the money that you paid in goes back into the pool to pay other people who are living longer, whereas the private annuities. A lot of times you can keep those within your estate and within your family. Correct yet and you have a check continue to espouse your get up the check.

Continue to a child he could have the jet continual grandchild. I don't really think and pay for 100 years that the key is to have guaranteed lifetime income to at least cover those basic living expenses. If if your listeners only got that out of this interview happy happy because they would be much more likely to be happy and successful in retirement than the people say well I got a broker. My broker handles all that oh yeah they don't have some guaranteed lifetime income your portfolio, you're likely to have problems down the road with Tom, you mentioned the difficulty especially with the sequence of returns risk if we have some downmarket years in the early years of retirement. I think that's an easy one will all just retire in years that we know that the markets going to be up for the first several years will not be nice you know a lot of people retired a lot of different times and that we need you and I both know examples.

I am in my book were somebody retired in a one year and five years later another person retired one person, the multimillionaire, the other person's broken link, they did the same things, but they did at different times with different markets and people just don't understand how that sequence of returns risk and decimate portfolios but that's why when into the research. You know nobody's reading the speech. These white papers, but I did and I put it into a book of people can simply understand Tom why do you see that Wall Street is failing. Today's generation of retirees in creating the security so that they can not worry and retire happy well because the Wall Street Way is just put it in the market and the market goes good over time and by dividend and by utilities and by real estate. That's the Wall Street Way. While I don't see any matter I any PhD's writing white papers on that's going to be optimal in retirement. Certainly those things can play a role in your retirement. That's where you optimized to protect against inflation. But I don't see anybody out there saying, all by real estate and by dividend to cover your basic living expenses in retirement that be ridiculous, and so I just don't think a lot of the Wall Street people understand the math and science behind the successful retirement and I was always a doubter out there Peter so I would give people a chance to prove me wrong. It appears all you gotta do you think that I'm that I'm filling a full boiler you don't believe me as I got it put together portfolios both stocks and bonds with STOCKS and bonds take some of the bonds out put a lifetime income annuity and do not ever do that every single on your portfolios. It will lower the risk and increase returns and I tell people if you don't believe me. Prove me wrong.

But here's what you can't inside of the portfolio. The way the lifetime income annuity works. It works like a AAA rated bonds with a triple. She rated you with zero standard deviation AAA rated ball of the trip. She rated you with zero standard deviation forwarded everyone.

Your portfolios will lower the risk and increase returns, is not making this stuff up. These are mathematical, scientific and economic facts will the economy that we are facing is more difficult than ever. And folks you want to add some security some stability to your portfolio and that's what Tom Hagler has written about in his books paychecks and play checks and don't worry retire happy, Tom. We appreciate you sharing your time, your knowledge and your insights on successful retirement planning with us today. Thank you for being here. Thank you Peter I am Peter Rochon, Pres. and founder of Rochon insurance and investments is planning matters radio. If you have questions about how to design or implement strategies for your financial future. Welcome to give us a call 803 859-4800 338-5944 or visit us on the web Insurance.com Content Provided Is Only and Is Not a Solicitation or Recommendation of Any Investment Strategy You Were Encouraged to Seek Investment Tax or Legal Advice from an Independent Professional Advisor. Any Investment And/or Investment Strategies Mentioned Involve Risk, Including the Possible Loss of Principal Binary Services Offered through Brookstone Capital Management, a Registered Investment Advisor. Annuities Guarantee Surveys Only on the Financial Strength and Claims Paying Ability of the Issuing Company. Withdrawals of Growth from Annuities Maybe Taxable As Ordinary, You're an Individual Should Review Contracts for Specific Details of Product Features and Calls for Early Withdrawals May Subject to Chari Duty Extends Only to Investment Advisory Does Not Exist. Other Activities Such As Insurance or Broker-Dealer Services Advisory Clients Are Charged a Quarterly Fee for Asset Management.

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