Navigating the Retirement Risk Zone

Eric Amzalag

The Retirement Risk Zone is the period of time that begins roughly 10 years before retirement and ends 10 years into retirement. During that time, you will make many of the most consequential financial decisions of your life, including your exact retirement date and age, when to claim social security, how to claim Medicare, how to reposition your retirement assets, as well as how to create an income from retirement savings. So much focus is put on the accumulation (Savings phase) of retirement, or the distribution (spending phase) of retirement that the risk zone often gets overlooked despite its importance. This podcast is designed to not only help you navigate the retirement risk zone but thrive in retirement. My name is Eric Amzalag, I am a Certified Financial Planner TM, Retirement Income Certified Professional, and owner of the independent Financial Planning and Wealth Management Firm Peak Financial Planning. Let's explore retirement income planning, social security, retirement investing, and retirement satisfaction together. Happy Retirement Planning! read less
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Episodes

How Much Should I Pay My Advisor? 1% vs Fee Only
Sep 11 2024
How Much Should I Pay My Advisor? 1% vs Fee Only
In today’s video I’m going to do my best to address what might be the most frequently asked question when hiring a financial advisor - how much should I pay?I am a Certified Financial Planner and Owner of an Independent Financial Planning Firm, and every year, we help retirees build robust retirement plans that match their life goals.Despite the fact that I myself AM a financial advisor, and therefore am undoubtedly biased in this evaluation, I believe there are many routes to financial and retirement success - and many of those routes DO NOT require hiring a paid, professional financial advisor.But if you are in the position where you may want the help of a paid professional, it can be a truly daunting task to understand if you’re getting the value that you are paying for.In this video not only are we going to walk through how to identify whether or not you should hire a professional paid financial advisor, we are also going to compare and explain the different fee structures within which financial advice can be obtained. If you found this episode helpful, subscribe so you don't miss any future episodes.Also, I'd greatly appreciate it if you gave a rating and review. It helps other people just like you find the podcast and benefit from discussions on these topics as well.Eric Amzalag, CFP®, RICP®_ _Want help with your Retirement Plan?Schedule a free consultationEmail me: Eric@thepeakfp.comVisit my Youtube Channel#retirement #howmuchtoretire #retirementplanning #rothira #rothconversion #investing #401k #socialsecurity
How to Plan for Sequence of Returns Risk
Jun 26 2024
How to Plan for Sequence of Returns Risk
In this episode I cover sequence of returns risk as thoroughly as one can cover it. The episode show notes include:What is sequence of returns risk?Sequence of returns risk is the risk of negative market returns near or during the time when you will take withdrawals from retirement assets.It’s particularly pernicious for people within 5-10 years of retirement or in the first 5 years of their retirement because it has an exponential effect on portfolio depletionWelcome back to Navigating the Retirement Risk Zone.I’m Eric Amzalag, Certified Financial Planner and Retirement Income Certified Professional. I am the owner of Fee Only Financial Planning firm Peak Financial Planning.For the next 15-20 minutes we are going to go deep down the rabbit hole of sequence of returns risk - not academically, but very practically.I’ll explain what it is, how to understand it, and how to plan for it in your retirement planning efforts. You’ll want to stick around to the last third of this podcast where I’ll address the investment specific strategy.Two layered principals that make up SORRThe unequal relationship between market declines and positive returnsGive example from spreadsheetwhat happens when we add in distributions on top of market declinesExample relationship from spreadsheetWhy SORR is particularly pernicious in retirement planning toolsMost retirement planning tools will default to straight line illustrations (straight line rate of return)If you don’t look under the hood, you will get blindsidedHow do we plan for/ protect against sequence of returns?Comprehension1 - Understand the two components mentioned before - the unequal relationship between market growth and market decline and the time it takes to recover2 -  understanding portfolio withdrawals additional impact on that recovery timelineProper PlanningDon’t rely on Monte Carlo or retirement planning tools probability of success - it will mislead youStress test your financial plan with multiple “investment return scenarios” as well as multiple withdrawal / spending strategy scenariosBottom up withdrawal to investment strategyUsually we begin with asset allocation in mind - and it is important and should be addressed but planning for sequence of returns Withdrawal rules - something like: withdraw from portfolio returns when portfolio values are up (to preserve cash and cash like investments), withdraw from cash and cash like investments when portfolio is down (to allow time for investments that have lost value to recover)Depending on ability and level of wealth, build an asset allocation that will support that withdrawal strategyEach person will need to determine the amount of cash/cash like investments they can support in their portfolio and still meet their desired spending in retirement.Fill in the asset allocation with specific and appropriate investments that actively support the hedging goal - don’t blindly purchase funds that fit the asset allocation at a categorical level - an easy example of where people go wrong is thinking that intermediate and long term bonds are actually LOW VOLATILITY and are “cash like” because the asset allocation says that the bond part of the portfolio is the defensive part. Share anecdote about result of 2022 market correction and int+long bonds getting clapped.Diversify out of concentrated positionsHaving more individual investments reduces “concentration risk” and allows for investment specific pruning when markets decline.A 3 fund portfolio only has so many areas where you can prune while waiting out a recoveryThinking about planning for sequence of returnsIt’s like purchasing insuranceWhen things are going well, we think we don’t need itBut in many areas of our lives, we buy insurance.Even though we hope we never need to rely on it - and will be thrilled if we get through life without having to call upon it, we still purchase it because it is prudentPortfolio strategies to protect against SORR serve the same functionWhen markets are going up - it will feel unpleasant to watch the “hedge” in your portfolio underperforming the rest of the portfolio.It is not an investment strategy if you do not have a hedge - that is called gambling.If you found this episode helpful, subscribe so you don't miss any future episodes.Also, I'd greatly appreciate it if you gave a rating and review. It helps other people just like you find the podcast and benefit from discussions on these topics as well.Eric Amzalag, CFP®, RICP®_ _Want help with your Retirement Plan?Schedule a free consultationEmail me: Eric@thepeakfp.comVisit my Youtube Channel#retirement #howmuchtoretire #retirementplanning #rothira #rothconversion #investing #401k #socialsecurity
How to Know When You Can Spend More In Retirement
Jun 12 2024
How to Know When You Can Spend More In Retirement
This episode will detail how we help clients understand when they can SPEND MORE in retirement.Retirement is all about matching how much you would like to spend, with how many years you expect to live, with how large a portfolio you will need to support that spending.The permission to spend problem arises bc of the amount of uncertainty around this spiraling formula. And what ends up happening is without a good grasp of how to measure risk and likelihoods of success, we tend to default to being OVERLY CONSERVATIVE, thus the permission to spend problem.Why You Should Care About the problemThe goal of saving all those years is to maximize your satisfaction later in life - to rely less on work and more on savings to support the activities you want in life.Shift retirement from fear to funWhat contributes to the problemPsychologyThe fear of running out of moneyThe “paralysis” that comes from having too many things to consider but no great way to prioritize themTerrible “one size fits all” informationThe 4% ruleROTH conversions for everyone!Social Security at age 70 is ALWAYS the best!ACA subsidies because it’s free money!Taxes are ALWAYS badHow to solve the permission to spend problemProper financial planning and educationThe educational process of building a plan (with the right guidance) hypertrophy your “distribution” or “pay yourself” muscleThe educational process of building the plan and reviewing scenarios will help you appropriately determine if and which of the “one size fits all” information ACTUALLY applies to you.The if-than, or contingency plans will help remove the decision making frictionThe plan itself will help you prioritize the never ending set of action items or optimizations that can be done.Documenting and reviewing the plan regularly with a set cadence that you commit to (not too frequently, not too infrequently) will help prevent you from making impulsive (fear based) decisions and help you make decisive (confidence based) decisions.If you found this episode helpful, subscribe so you don't miss any future episodes.Also, I'd greatly appreciate it if you gave a rating and review. It helps other people just like you find the podcast and benefit from discussions on these topics as well.Eric Amzalag, CFP®, RICP®_ _Want help with your Retirement Plan?Schedule a free consultationEmail me: Eric@thepeakfp.comVisit my Youtube Channel#retirement #howmuchtoretire #retirementplanning #rothira #rothconversion #investing #401k #socialsecurity
Social Security for Dummies
May 30 2024
Social Security for Dummies
This podcast will cover all things social security.How social security worksExplain 35 years of earningFull retirement age (what age it is)Early claiming (decreased benefit)Delayed claiming (increased benefit)How social security is taxedExplain the “Claiming decision” - factors to evaluateOther sources guaranteed incomePortfolio sizeEarly or later -  push back risk by claiming earlier or bring forward risk by claiming later?Spouses guaranteed incomeSocial Security as an investmentExplain COLA (the power of it!)It’s an annuity - delegating investment responsibilityThe long term viability of social security and whether to plan for itAccording to a recent update from the Center for Retirement Research:Likely changes to social security : Cost of living adjustment, reducing level of benefits, or increasing retirement age.Reducing the COLA by 1% per year would solve half of the social security shortfallIncrease retirement age from 67 to 70 over a period of 12 years. This would solve half the social security shortfallListen to the episode to learn more.If you found this episode helpful, subscribe so you don't miss any future episodes.Also, I'd greatly appreciate it if you gave a rating and review. It helps other people just like you find the podcast and benefit from discussions on these topics as well.Eric Amzalag, CFP®, RICP®_ _Want help with your Retirement Plan?Schedule a free consultationEmail me: Eric@thepeakfp.comVisit my Youtube Channel#retirement #howmuchtoretire #retirementplanning #rothira #rothconversion #investing #401k #socialsecurity