Retirement Answer Man

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191 - What Your Financial Advisor Should Be Doing Oct 11, 2017

Show notes

I’ve been married to my wife for 27 years. That’s a long time! I have noticed that there has been a rhythm within our relationship over the years where, as we have become more comfortable with each other, we begin to become disengaged. Not disengaged in a spiteful way but simply not as focused as a team. This happens in any relationship whether it be a parent and a child, the relationship between spouses, or even between you and your advisor. Listen to this episode of Retirement Answer Man to hear my tips for staying on track in your relationships and keeping your advisor on the same page.

An advisor in Colorado Springs has allegedly stolen millions from clients.

This financial advisor seemed like a great person. There was no past history of dishonesty or crime and no red flags seemed to pop up. It seems very easy to be fooled into a bad relationship like this one. Are there ways you can stay on top on the relationship and catch the red flags if they arise? There certainly are and I will outline 4 steps you can take in your relationship with your financial advisor to keep the relationship healthy.

Pursuing purpose in retirement

On this episode of Retirement Answer Man, I’ll interview a friend of mine, Jeff McManus, who is turning his passion into an income stream he can benefit from during retirement. Jeff is the director of Landscape services to the University of Mississippi. He has a wealth of horticultural knowledge and has found joy in applying it to his career. Now, as he is nearing retirement and thinking of the future he is applying that knowledge in unique ways to grow opportunities for himself in retirement. Listen to this episode to hear his story.

Don’t wait for Retirement to pursue your joy, start now!

My books are finally here!! I’ve been working on my book for about 4 years and I just got the call that it is ready. Since I contractually have to buy 2500 copies I decided to have them all sent to my house so I could see what that many books looked like. I didn’t rationalize it, I just dove in and ordered them. They arrived on 2 pallets and have taken over a room of my house. It's been so fun looking over them and signing them for friends and family and even for the delivery lady. Is there something you think will bring you joy? Are you waiting for the perfect moment? Are you waiting for retirement? Don’t! Jump in now and experience the joy, don’t wait until it is too late. Tune in to this episode to hear all about the book delivery.

This time of year is a great time to get on the same page with your financial advisor.

As we near the end of the 4th quarter a great opportunity to refocus is presented. Take the chance to have a quarterly meeting with your advisor and refocus on your goals and make sure you both are on the same page. Trust me, you don’t want to begin the new year without being unified on your savings and the direction of your retirement.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0:33] It’s easy to become disengaged after many years of marriage.
[1:00] Constant vigilance is needed to keep a good relationship of any kind.
[1:40] The same goes for your relationship with your advisor.

HOT TOPIC SEGMENT

[3:25] An advisor in Colorado Springs has allegedly stolen missions from clients.
[4:00] The longer a relationship continues the more likely you are to become disengaged and draw apart.
[6:00] If you have quality meetings with your advisor you will have a better idea of what is happening with your money.
[6:30] Keep it formal.
[7:00] Have an agenda.
[7:50] Have an agreed upon plan.
[9:30] Make sure your goals are mutually agreed upon and addressed in order of importance.

PRACTICAL PLANNING SEGMENT

[12:05] One baby boomer is making a change and living his dream!
[14:50] We all want some measure of control and freedom in our life.
[17:00] Cultivate a culture of teamwork and collaboration and grow a mutual passion.
[19:27] Setting up a passion and source of income you can devote yourself to during retirement.
[23:19] A vision for retirement.
[25:19] Get your foot in the door of your passion.

THE HAPPY LAB SEGMENT

[28:15] My book is finally here!!
[29:11] Hear about the delivery ladies response in Six Shot Saturday
[29:30] What can you do that may not be practical but will bring you joy.

TODAY’S SMART SPRINT SEGMENT

[29:54] It’s nearing the end of the 4th Quarter. Make sure you have a 4th Quarter meeting to stay on track.

RESOURCES MENTIONED IN THIS EPISODE

3-Video Series: 5 Minute Retirement Makeover

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Get Jeff’s book here on Amazon

#190 - How much you should have saved for retirement by now Oct 04, 2017

Show notes

Several years ago I participated in an Ironman Triathlon. I didn’t win, not even close. I finished in the 77th percentile. Turns out, the winner could have started 6 ¼ hours after me and still beat me. So was this experience a failure? It depends on how you look at it. I enjoyed the experience, I loved the cycling and felt refreshed by the countryside surroundings. So for me, this was definitely not a failure. Comparison is important to keep us on track with our goals but when we put all of our focus on our performance v.s. someone else's performance...we often become unhappy. Regardless of where you are in life or how much you have saved for retirement, comparison could be the death of joy. Listen to this week’s episode to hear my thoughts on how to stay on track without letting go of your joy.

A Fidelity study shows exactly how much you should have saved for Retirement

A recent Fidelity study lays out exactly how much you should currently have in savings for retirement based on your age. They say that by age 30 you should have 1x your annual income in savings, 3x at age 40 and 7x at age 55. For some of us on the journey to retirement that may feel like a daunting task. Many of us don’t start saving as early as we should, I know I didn’t. But are these numbers really where we need to be? Can we make it work with less? Join me this week on the retirement Answer Man show to hear my thoughts.

Are my assets safe in the hands of my advisor?

Recently a financial advisor absconded with over 1 million dollars of their client's money. The advisor had no history of fraud and seemed to be a good person. If anyone can snap and steal from us, how can we trust our advisor? In this episode, I’ll dive into a few things to look for in your advisor to help you decide whether or not they are trustworthy. I’ll also outline some red flags that signal something fraudulent might be happening with your money. If you want to make sure your advisor can be trusted with your money, listen to this episode of Retirement Answer Man.

How should I allocate my 401K contributions to provide future security?

A listener called in with a question. He is making contributions to his 401K and wants to know how he should allocate his assets. Of course, I can’t give him specific advice but I can give guidelines of how you should think of your contributions based on your retirement goals. Make sure you catch this episode to hear my advice.

Life is full of changes. Go along for the ride and have fun.

Fall has come to Texas. It’s not as unbearably hot and pumpkins are selling in all the stores. I love the change of seasons, the change of pace and the excitement. Life, like the earth, often has many seasonal changes as we get older and they can be exciting as or sometimes challenging. Whether or not you are ready for the next season of life remember that there is nothing you can do to stop it so you might as well go along for the ride and focus on being happy.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0.28] Several years ago I participated in an Ironman Triathlon
[3:29] I finished behind many. But was it a failure?

HOT TOPIC SEGMENT

[6:38] Fidelity study shows what you should have saved for retirement.
[7:50] Regardless of where you are, you compare yourself to others.
[9:01] By age 50 you should have 6x your annual salary saved for retirement.
[11:57] Many of us start saving late.
[12:00] Many of us make bad savings and investing decisions.
[13:50] Comparison can be the death of joy.

PRACTICAL PLANNING SEGMENT

[14:33] Listener questions with Nichole.
[16:04] How safe is my money with a financial advisor?
[20:00] How can I verify an advisor’s trustworthiness?
[27:00] Be wary of private investment opportunities.
[28:01] How should I allocate my 401k contributions?
[32:08] I have 80% of my 401K in stock. How can I balance my investments?

THE HAPPY LAB SEGMENT

[37:57] Fall has come to Texas
[38:39] The seasons are changing. Whether you like it or not, try to enjoy the ride.

TODAY’S SMART SPRINT SEGMENT

[39:22] Look at all of your investment assets and see, based on Fidelity’s study, where you are based on your age.

RESOURCES MENTIONED IN THIS EPISODE

3-Video Series: 5 Minute Retirement Makeover

The Retirement Answer Man Facebook page

#189 - How Indexes and Bear Markets Can Make a Bad Mix Sep 27, 2017

Show notes

Indexes are comprised of many companies. Yet only the top few companies drive the index. What happens if we hit a rocky patch in the markets and those companies falter? On this episode of the Retirement Answer Man, I dive into the pros and Cons of investing passively v.s actively and what might happen if a Bear Market does indeed come.

Bear Markets might be bad news for your Retirement.

A Bear Market is a self-sustained drop of the market and if one of these shifts does happen, it might impact your ability to retire. Passive based investing becoming very popular nowadays, but if the majority of your strategy is comprised of these kinds of investments you might be in for trouble if a Bear Market shift happens before or during your retirement. A shift like this would affect the big companies in the major indexes, causing the index to drop. A drop like this could negatively affect your investments. You could always wait for things to stabilize but you may not have the luxury of waiting. In this episode of Retirement Answer Man, I’ll give you a rundown on what you can expect in a Bear Market and how you can act wisely to mitigate your risk.

Passive based investing is sweeping the nation.

What is passive based investing? Well, whatever it is it makes us more than %40 of the nation's investments. In this episode of Retirement Answer Man, I’ll dissect the differences between active and passive based investing and which one might be the best for you and your retirement. I also talk about how a market downturn affects them and what steps you can take to be safe.

Should I use my raise to pay off debt or add to my investments?

A raise can make your year! Not only does it say “good job” it gives you options to change aspects of your lifestyle, investment strategy or even the lives of someone you know. There are many things we could do with a raise. You could spend it, invest it, pay down debt to free up future cash, or even give a gift to someone in need. In this episode of Retirement Answer Man, I’ll expound on the options a raise make possible and give you a framework for deciding what is the financial priority in your life.

I’m looking to work with a retirement advisor, what red flags should I look for?

On this week’s episode of Retirement Answer Man a listener writes in with a question about an advisor he is looking to work with. The advisor has worked for many firms and not stayed long at any one. Is this a red flag? Should he be worried? Tune in to this episode to hear my thoughts and get tips for asking your advisor the right questions.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0:26] Would you like to place a wager against Warren Buffett?

[2:00] Should we all switch to passive investments?

HOT TOPIC SEGMENT

[2:59] Passive based investing is taking over the investing world.

[4:47] Does passive make the market more or less efficient?

[5:33] Passive investing is driven by the “hot” sectors of the market.

[6:50] Jim Rogers says Bear Market is coming!

[8:50] We are down to the wire in Retirement, there is no more time to wait.

PRACTICAL PLANNING SEGMENT

[12:27] Should I allocate my raise into my investments?

[14:50] What should I do with a raise?

[17:50] How does unstable politics affect my investment strategy?

[19:58] Ed’s question about advisor research.

[24:40] Think of an advisor as an investment. How can you have the best returns?

[28:50] Should I pay off debt or fund a 401K?

RESOURCES MENTIONED IN THIS EPISODE

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#188 - Worried about the Equifax Data Breach? Here’s Your Protect Your Credit Action Plan Sep 20, 2017

Show notes

Have you ever had your identity stolen? I have. It’s not fun. It can leave you feeling helpless and frustrated as you try to prove who you are and undo the false financial claims against you. In this modern era data is everything. Your life is wrapped up in one 9 digit code, your Social Security Number. If someone were to get that number they could open credit cards in your name, access your life savings, and even take out a mortgage. While the dangers are high, there are effective ways to protect yourself and your assets. I will outline some of the most effective ones in this episode of the Retirement Answer Man.

Equifax has been breached by hackers

Equifax has been breached by hackers. Almost 60% of the American population’s cyber data is in the wind. For many of us, this is a fearful thing. We have spent our whole lives planning for our future. As we draw near to retirement we can see the light at the end of the tunnel as all our hard work starts to pay off. Identity theft could put a serious damper on those retirement plans and could take years to recover from. Luckily, you are not at the mercy of these hackers. There are steps you can take to ensure that your data stays safe. Listen to this episode of Retirement Answer Man to hear my simple steps to guard your identity.

5 simple steps to guard your identity

With the daily increase of cyber threats facing our modern world, it is essential that you know what to do if your information is compromised. Over 100 Million Americans were affected by the Equifax breach. Odds are you are probably one of them. It’s never too early to take offensive steps to make sure your credit is monitored and you will be alerted to any suspicious activity.

Is new technology all it’s cracked up to be?

Apple has just announced the release of a few new devices, an Apple watch that can be used as a cell phone and the new I Phone X. The ads for these devices portray them as just what you need to fill the technology gap in your life. Having the new I Phone will make your life easier, safer, and on the cutting edge. Are these claims true? Think back to the last time you got a new device. It feels great and it’s exciting, but after a few days or a week, the excitement fades away. It becomes normal. Did it really bring you joy? We might be better off searching for joy in an area that doesn’t put a dent in our bank account.

Don’t let your identity fend for itself.

I’ve created a Free Credit Breach Protection Plan that you can find on my website. It gives simple instructions to help you take steps to protect yourself, your assets and your loved ones. Don’t wait until it’s too late, be proactive and protect what you have worked so hard for. Don’t miss this episode of the Retirement Answer Man.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0:25] Have you ever had your identity stolen?
[1:50] It can be difficult to regain your footing after an id breach.

HOT TOPIC SEGMENT

[3:47] Hackers infiltrated the Equifax database.
[4:20] The information of 60% of the American population has been compromised
[5:49] There's a way you can know if you have been affected by this breach.
[6:00] What does this mean for me?

PRACTICAL PLANNING SEGMENT

[8:24] Protecting yourself without becoming a cybersecurity expert.
[9:18] Credit Protection Action Plan
[9:50] 5 Basic ways to protect your cyber data.
[14:24] The best ways to respond to this data threat.

THE HAPPY LAB SEGMENT

[21:39] The new Iphone X
[22:08] The “new” is overrated

TODAY’S SMART SPRINT SEGMENT

[23:45] Download the Free Credit Breach Action Plan

#185 - Should My Advisor Have Access to My 401(k)? And Other Listener Questions Sep 13, 2017

Show notes

My listeners have been asking great retirement questions, and this podcast episode is focused on giving answers to some of those. I’m excited today to bring on my awesome sidekick, Nichole, to play the part of the listener and ask the questions. One really important question is whether your financial advisor should have access to your 401(k), including your username and password. While this can be convenient for you and for your advisor, it’s not a good idea and is typically not allowed. Listen to today’s episode to find out why.

Important differences in spending cycles for single and two-person households

Spending habits change for people, depending on age and household size. The changes in spending habits are important for each household to understand, because they affect planning for retirement. In the Hot Topic section of this episode, I explain why the changes are quite different for single and two-person households, and how each needs to consider how this affects their retirement planning. Listen to find out how spending cycles might affect your household and hear answers to other retirement questions, and then follow up with today’s Smart Sprint and get clear about your financial needs in retirement.

Should I lower 401(k) contributions to build up my emergency fund and college savings?

Bill is 59 ½ and has all his savings in his 401(k). He puts in 9% with an employer match of 3% and has a son going to college. His retirement question is whether he should lower his contribution to 6% to start building his emergency fund. On this episode, I explain several reasons why it would be a good idea to lower his contributions even further to give him more flexibility in how he makes financial decisions, and Nichole and I have a conversation about whether or not parents should cover college expenses from their retirement account and what other options might be available.

When thinking about jobs for pre-tirement, be sure to consider the work environment

Mark Miller at careerpivot.com sent in a helpful comment about pre-tirement jobs. He suggests that people carefully consider the physical aspects of the job, such as whether their body can handle walking on cement floors all day. There is also a concern for retirees working in retail environments where the schedules are not given with advanced notice, which creates problems for the time-freedom someone might be expecting in pre-tirement. On this episode, you can hear the details about these considerations, and also get answers to other retirement questions.

Listener ideas for pre-tirement

Quite a few listeners have chimed in with comments or questions about the pre-tirement episode a few weeks ago. On this episode, we’ll take another look at the math from that show, and demonstrate how numbers significantly lower than the ones we used can still work for you. We’ll also hear the ideas that various listeners have for jobs they would like to do in pre-tirement. Listen in to hear their thoughts and also get answers to other listeners’ retirement questions.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0:00] Equifax data breach. Action plan - six steps you can take to minimize credit fraud and stay vigilant.
[1:02] To get to great, you have to blow up what’s good!
[1:44] Intro this episode - listener questions with Nichole Mills.
[2:49] Disclaimer - Don’t take financial advice from me on this show. This is tips and education.

HOT TOPIC SEGMENT

[3:12] Important differences in spending cycles for single and two-person households.

PRACTICAL PLANNING SEGMENT

[7:17] Bill’s question: Should I lower my 401(k) contribution to start building my emergency fund?
[9:47] Should parents consider covering college expenses with their retirement account?
[11:47] Should my advisor have access to my 401(k)?
[14:08] Mark Miller: When thinking about jobs for pre-tirement, be sure to consider the work environment.
[16:16] John: Is the math in the pre-tirement episode a little high to be realistic?
[18:36] When is your book coming?
[19:26] Ideas for pre-tirement jobs from Michael, John, and others.

THE HAPPY LAB SEGMENT

[21:51] You can even make a commute happy as long as you are intentional about it.

TODAY’S SMART SPRINT SEGMENT

[23:33] 7-day goal: Dial in what your financial needs are for retirement

RESOURCES MENTIONED IN THIS EPISODE

Free Credit Action Plan for those affected by the Equifax breach

Episode #183 - How PRE-tirement could save your retirement

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Retirement Travel - One Way to Fund Your Dreams Sep 06, 2017

Show notes

#186 - Retirement Travel - One Way to Fund Your Dreams

Do you have dreams for traveling in retirement? Everyone’s dreams are different, but every dream is going to cost some money. On today’s episode of The Retirement Answer Man, my friend Jamie joins me to talk about one creative way to fund your travel dreams. Discover how you can use your home to produce income when you’re not there, so that you can enjoy your travels. Learn what a sharing economy is and how it can benefit you and fund your dreams for retirement travel.

What is a sharing economy, and how can it help fund my retirement dreams?

A sharing economy is an economic system in which assets or services are shared between private individuals for a fee. Uber is one example. AirBnb and VRBO are systems that can work for you to fund your retirement travel by renting out your house, earning money when you are not there. It allows you to monetize your home as an asset to fund your retirement travel dreams. My friend Jamie has had great experience with AirBnb, and joins me on today’s podcast to discuss how it works.

The benefits of renting out your home while you travel

Renting out your home to fund retirement travel takes a bit of preparation and work. But the benefits are worth it. Not only do you create income while you are away, but you also have someone staying in your home without paying a house-sitter. And, in my friend Jamie’s experience, you have the opportunity to build clients and become friends with repeat guests. Listen to today’s podcast episode to hear Jamie’s story of how renting out their home has benefitted his family.

How to prepare your home for rental when you are away

Sharing your space with other people may seem overwhelming at first. But you can start small and acclimate to the process as you go. To get started, check your local listings on AirBnb and VRBO to see what is available in your area and what the prices are. On this episode, my friend Jamie describes some of the things he has done to prepare his family’s home to be shared. From buying fresh linens to learning how to effectively advertise his home, Jamie’s insights will help you get started on this new adventure.

How do you vet who will stay in your house when you rent it out?

Many people have concerns about renting their home to strangers. But my friend Jamie’s experience is that people will actually take very good care of your home. On this episode, Jamie shares how he has found that the way you advertise your property and the price you set has a lot to do with who will rent it. Listen in to hear Jamie’s perspective on getting the right clients to rent your home and getting the best price for your rental as well.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0:27] Regardless of what your dream is, you will need a way to fund it.

HOT TOPIC SEGMENT

[5:06] What is a sharing economy?
[6:23] In terms of funding retirement travel, how might the sharing economy help you?

PRACTICAL PLANNING SEGMENT

[10:46] My friend Jamie’s vacation experience in Mexico, and how he funded it.
[17:24] How to prepare your home for rental when you are away.
[19:30] How do you vet who is going to stay in your house?
[20:29] If you’re going to rent out your house, how can you get top price?
[23:55] How renting out your house opens up possibilities of owning a second home.
[24:58] You can rent our your home even just once or twice a year.
[26:58] Building clients and return guests.
[27:58] What are the downsides of renting out your home?
[29:21] What are the next steps to get ready to rent out your home?

THE HAPPY LAB SEGMENT

[30:52] Blow up what is to start working towards what could be.

TODAY’S SMART SPRINT SEGMENT

[31:46] Plan a weekend trip and rent something on AirBnb or VRBO.

RESOURCES MENTIONED IN THIS EPISODE

Work with Roger (Currently accepting clients)

3-Video Series: 5 Minute Retirement Makeover

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#185 - Don’t Be Like Wimpy! How Spending Can Ruin Your Retirement Aug 30, 2017

Show notes

In the news today, credit card debt has reached over 1 Trillion dollars. In addition, we have 1.2 Trillion dollars in auto debt, 13% above the previous record. Impulse shopping is easier than ever, and this can be bad news for your retirement! On this episode of The Retirement Answer Man Podcast, I talk about spending and some safeguards you can put in place so that you don’t overspend on things you don’t need and may not even really want. Listen in and learn to differentiate between needs and wants, and get some great tips to help you avoid unnecessary impulse spending.

You don’t want to be one of those people who are over-leveraged on their debt

As you are heading into your retirement, you don’t want to get over your head into debt because of personal spending. Lifestyle choices are crucial. In retirement, how much money is needed for your needs, wants, and wishes? On this episode, I describe how you can avoid unnecessary debt and save that money for the things that really matter to you. The happiest clients I have seen are those who value experiences over things. Listen to today’s podcast and start thinking clearly about what you value most and how your spending reflects it.

To prevent overspending, differentiate between needs and wants

We have grown into a society where things that technically are wants are considered needs. On this episode, I talk about defining for yourself what is a need and what is a want. Keeping this distinction clear can help a great deal with reducing unnecessary spending and credit card debt. Listen in to start thinking about needs and wants and how they affect your spending and your retirement lifestyle.

To prevent overspending, build friction into your ability to do transactions

Shopping used to be more difficult. You had to plan out how to get what you wanted, get in the car, drive to a store, find what you wanted, and write a check for it. Now, all you have to do is click and you can have it in an hour. Marketers are experts at taking away the friction and making impulse purchases seem normal. On this episode, I suggest several ways that you can build friction back into your shopping so that you have more opportunities to make wise spending decisions as you approach your retirement. Listen in and take back control of your spending.

The Retirement Answer Man Responds to Listener Questions

Today in the Practical Planning Segment, I respond to questions sent in by listeners like you: Should I pay off my mortgage first, or max out my 401K first? What are the pros and cons of rolling over a 401K to an IRA upon retirement? Should I include my home equity in the asset pool for tapping living expenses in retirement? On this episode, I clarify the considerations that need to be taken into account when making these decisions for your retirement. Listen to today’s questions and answers and then feel free to send in a question of your own.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0:40] Shopping used to be more difficult.
[3:22] Don’t take financial advice from me on this show. Consider it as helpful tips and education.
[3:50] The 5-minute retirement makeover

HOT TOPIC SEGMENT

[4:48] In the news today, credit card debt has reached over 1 Trillion dollars.
[6:43] You don’t want to be one of those people who are over-leveraged on their debt.
[7:44] To prevent overspending, differentiate between needs and wants.
[9:06] Build friction in your ability to do transactions. Here’s how.
[12:22] Value experiences, not things.

PRACTICAL PLANNING SEGMENT

[13:35] Answering listener’s questions today.
[14:20] Current plan is to hit the mortgage hard and pay it off in two years, then transfer that effort into maxing out that 401K. Is that the right thing? [19:46] What are the pros and cons of rolling over a 401K to an IRA upon retirement, vs keeping it in the 401K?
[29:46] Should I include home equity in the asset pool for tapping living expenses in retirement?

TODAY’S SMART SPRINT SEGMENT

[37:05] 7-day challenge: Come up with one way you can increase some friction in your life of commerce.

THE HAPPY LAB SEGMENT

[37:55] Listening to the audio book Steve Jobs, by Walter Isaacson. Commencement story. “Remembering that I’ll be dead soon.” We’re all going to leave this world. Be as intentional as possible on how we live our life, invest our assets, and make little decisions. We don’t want to wake up and say we didn’t follow our heart because we were living for other people’s expectations.

RESOURCES MENTIONED IN THIS EPISODE

TheStreet.com

Book: Steve Jobs, Walter Isaacson

3-Video Series: 5 Minute Retirement Makeover

The Retirement Answer Man Facebook page

#184 - Passive Investing: What You Should Understand Aug 23, 2017

Show notes

Passive investment management has taken over the world. Nine of the top ten mutual funds are based on passive investing. On this episode, I explain what passive investing is and how it works, the top two indices that most funds are based on, and the advantages and disadvantages of investing based on those indices. I also take some time today in the Practical Planning Segment to answer listener questions. Listen in to expand your understanding of passive investing and hear answers to questions that you might be asking.

The two indices that most passive investment portfolios are trying to model

Eight of the top ten passive investment funds are focused on the S&P500 and the Total Market Index. On this episode, I describe asset allocation within these funds and how the funds are weighted. Is this model an efficient way to for you to implement a passive investment strategy? I’ll fill you in on the advantages and some of the questions around these funds on today’s episode of The Retirement Answer Man.

Are market indices focused on a smaller segment of the market than it first appears?

The S&P 500 and the Total Market Index have, respectively, 500 and 3600 individual equities. So at first it appears that passive investments that mimic these indices would be spread out among those equities. On today’s episode, I explain how the equities are weighted and the percentage of the indices that are in large or giant companies. Listen in to get a clearer picture of these two popular indices and to think about whether or not that is an efficient way for you to implement a passive investing strategy.

Index rebalancing on fixed dates is like the Nike store on Black Friday.

Have you seen the videos, or experienced in person, what it is like to shop for great deals on Black Friday? When the indices rebalance on fixed dates three times each year, any funds invested to mimic the index will be moved as quickly as possible. Everybody is running in the exact same place at the same time. Kind of like the Nike store on Black Friday. On this episode, I talk about this downside of passive investing based on the two most popular indices. Listen in to learn why I’m a fan of passive investing but wonder if there could be a more thoughtful way of doing it.

Answers to listeners’ questions

I’m always glad when listeners send in their questions. On the Practical Planning segment of today’s episode, I respond to questions that have recently come in. “What about the ‘Equal Weight’ S&P 500?” “What happens with a 401K loan if your company switches you to independent contractor status?” “Should I adjust my asset allocations as I head into retirement?” and “Should I empty my retirement account to pay off my credit card debt?” Listen in for answers to these questions and an invitation to send in questions of your own.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

[0:24] Black Friday madness
[2:33] Disclaimer - Don’t take advice from me on this show.
[2:50] Today’s topic: Mutual Funds that mimic indices

HOT TOPIC SEGMENT

[3:22] Passive investment management has taken over the world.
[5:13] What hypothetical portfolio is a passive investment trying to model?
[7:13] If we accept that passive investing makes sense, what passive investment strategies make the most sense for us?
[8:00] Understanding the Total Market Index
[9:45] Understanding the S&P 500 Index.
[11:46] Index rebalancing on fixed dates is like the Nike store on Black Friday.
[14:43] Does passive investing have to track one of the most popular indices?

PRACTICAL PLANNING SEGMENT

[16:24] The “Equal Weight” S&P 500 index gives you broader exposure, but here’s why I’m not a fan.
[19:31] Be aware of 401K loan penalties if you leave employment or change to independent contractor status.
[22:00] A balanced approach to taxable and non-taxable asset allocations for retirement.
[27:53] Paying off credit card debt without dipping into your retirement account.

TODAY’S SMART SPRINT SEGMENT

[31:16] Go to RogerWhitney.com and ask a question.

THE HAPPY LAB SEGMENT

[32:09] Do what’s right for you, not what’s expected of you.

RESOURCES MENTIONED IN THIS EPISODE

3-Video Series: 5 Minute Retirement Makeover