Do you ever dream about those golden years, about that time when you won’t have to work for the man, exchanging your labour for pay? But how can you make sure that you have enough money to realize that dream?
“I think a lot of people forget there's other assets that they, that they have as well. And those assets could be their, their networks, their, their communities, their wisdom, because those assets might come into play later if it's potentially maybe a second career. Something that feeds their soul more than their first career or doing something like mentoring others once, once they're retired. So there's a lot of things we look at when it comes to assets, that wisdom and those learnings though, and, and, and the, the networks and the friendships really come into play when I'm looking at someone's ability to retire. And then what, not, not, not only will the numbers work, will the numbers work, but what will their life look like out in that next half?”
“We like to get to know someone first. So our, our first questions that we ask are more about your family tree. Help me understand how you got to where you are today. And if it's a couple sitting in front of us, both, both parties, how, how did each of you get to where we are today? Did you grow up with money without money? Were you an only child? Were you the first child, the last child? Was there stress around resources? And it's, it's, it can be a very organic conversation. A lot of times clients will come in and, and they'll, they'll have talked for 40 or 50 minutes and say, well, we haven't gotten to the meeting yet. And we say, no, no, that was very deliberate. We want to get to know you.”
In the early days of COVID-19, we experienced one of the sharpest market-correction downturns in years, throwing us into a recession—and throwing many retirees into a panic that lasted even after the market had recovered. If the pandemic exposed anything about retirement, it’s that money decisions related to it can be very emotional. But do they have to be?
Bill Keen is back with a second edition of his bestselling Keen on Retirement, updated with a wealth of new information learned from the COVID correction, to help anyone planning for retirement engineer their best “second half” of their life—calmly and confidently.
What’s a crossover point, and how will it help someone choose their ideal retirement age?
- How can we prepare for the ups and downs of market corrections?
- How can we avoid panicking and making costly emotional mistakes when planning for or living in retirement?
BILL KEEN is the founder and CEO of Keen Wealth Advisors. A childhood marked by financial hardship drove Bill at a very young age to learn about saving and investing so he could one day support his family. That desire has fueled Bill throughout a career that includes providing commentary for national media outlets and co-hosting the long-running Keen on Retirement podcast. Bill is a proud board member for Angel Flight Central, a volunteer non-profit organization that provides charitable flights for healthcare and other humanitarian purposes. Bill and his wife, Carissa, reside in the Kansas City area.
Have a listen to Bill's podcast right here
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Stocks for Beginners.
I'm gonna get one more year of salary. I'm gonna save one more year of savings, and then we'll look at it again. Well, what I've seen over the years is many people just continue to do that, and their spouses are telling them, Hey, we wanna enjoy some of this next time. We want to enjoy the time. And, and so I've seen people hundreds of times, if not thousands, get to a point where they say, wait a second, that one more year of salary and savings is not worth one more year of life.
Hi, and welcome back to Stocks for Beginners. I'm Phil Muscatello. Do you have a dream about those golden years, about that time when you won't have to work for the man exchanging your labor for pay, but how can you make sure that you have enough money to realize that dream. To discuss, I'm joined by Bill Keen from the Keen On Retirement Podcast. Hi, Bill.
Hi. Good to see you. Very grateful to be on your program today, Joe,
I'm very grateful to have you here as well. Thanks for coming on Bill. Bill's, the founder and CEO of Keen Wealth Advisors, the host of the long-running Keen on Retirement podcast, and the author of the best-selling book, Keen on Retirement, and a keen listener of podcasts on the treadmill, as am I.
Bill (1m 17s):
Yeah, they come in real handy. We get a lot of wisdom while we're, I call it chunking Phil. It's taking care of two things at once. Yeah. And those natural endorphins are some of the most powerful, if not the most powerful, and things we can experience.
Phil (1m 29s):
In your bio, it's mentioned that your childhood was marked by financial hardship. What were the challenges faced by you and your family?
Bill (1m 36s):
I, I remember sitting on my father's couch. My parents were divorced and I, I was probably 10 or 11 years old in a, in a very small one bedroom apartment waiting for his unemployment check to hit the mailbox. And that was back when they actually hit the mailbox. Hmm. They weren't direct deposited back then. And for whatever reason, Phil, I experienced and in, and internalized the anxiety that I saw in him around financial insecurity. And it was a tough job market at the time. He, he seemed to have a hard time with, with finding work. And as a young boy, I was more aware of it than, than probably my kids. Well, my kids didn't have to go through that, which is a whole nother podcast.
Bill (2m 18s):
We could probably talk about how not to spoil kids this day
Phil (2m 21s):
And age. That's the opposite problem really, these days, isn't it?
Bill (2m 24s):
Yes, it is. Yes, it is. But I took that, that, that desire into knowing what I wanted to do from a very young age and pursued it into college and got, went right through college and got a finance degree and came out and was hired, worked on the 83rd floor of the World Trade Center South Tower in the early nineties for a company called Dean Whitter, and was basically just said, here's a phone book, kid. You're not going to make it, but we have to hire a certain amount of you every year. And it's, it was really just a sales job at the time. I mean, you did have financial training of course, but it was a different world 30 years ago back then. But yeah, I was very fortunate. I knew I was going to have to support my parents as well, Phil, financially, and I knew that going through high school and college.
Bill (3m 9s):
So it created a tremendous amount of stress. I wouldn't trade it today, but it was pretty difficult knowing that that was coming and then having to, to, to make it. But you know, when, when, when failure is not an option, they, as they say, you burn, burn the bridges for however that looks. It, it can get your attention. And, and so here I am, 30 years into the industry now, and it's the, the, it's played out, played out pretty well.
Phil (3m 36s):
So what age was that? I mean, that's pretty mature as what you were a young teenager when you had that realization that you'd have to look after the family.
Bill (3m 44s):
Yeah. In, in my book, I talk about starting to realize the insecurities around 10 to 12 years old. And then once I was in, in high school and college, it was just very clear I was going to have to financially support my parents. In, in, in, in the book. I sure will talk about it here in a bit. I talk about my father used to work for me, so I was just right outta college and I didn't have the money to employ him, but I really know, knew he needed to get on our insurance. Hmm. So I had him employed at the firm so that he could have insurance, and I would introduce him as Mr. Keen of Keen Wealth. And folks thought I worked for him, and it was, it really meant a lot to me to not correct them
Phil (4m 23s):
On that. Yeah. And to imbue him with that respect, which maybe he didn't have through his life.
Bill (4m 29s):
That's right. You know, some, some, some dignity there in those, in those later years. So I was, yeah. Grateful for that and wouldn't trade it, like I said.
Phil (4m 37s):
No, that's a lovely story. So many people, I mean, we're just moving ahead and men, sometimes people go through life and they haven't even started thinking about retirement until it's too late. What's the best time to start planning? Yeah.
Bill (4m 50s):
So our whole business is focused on helping people, you know, navigate up to that point of having enough money to retire and then making that transition over into retirement. And I always tell folks, if you can start as early as possible, you know, I've trained my kids to, to put money into what we call Roth IRA accounts even, and just get started just as early as possible. The reality of it though, Phil, is my experience in working in this industry now, we have somewhere between 800 and 900 families that we help here at our firm. And, and over, in my case, 30 years, I see folks really start to get focused on it at about 50 years old.
Bill (5m 33s):
Now, I, again, I wish it was earlier, and some, in some cases it is, but at 50, the reality sets in that, oh my goodness, you know, this might actually be possible. One, that's a first thought. And then secondly, it's, I know that I haven't done the work I need to do to get this plan in place, and I need to, I need to get, get it in gear.
Phil (5m 53s):
So what someone who's 50 years old that you're seeing that comes to you for the first time, what are the kind of things that you're pulling together as part of the plan?
Bill (6m 1s):
Well, we always say, you know, there's, we first we have to assess our assets. And, you know, the, a lot of people think of assets as their balance sheet. A and it is, that's, that's part of our assets. What do we own? Do we own our home? Do we own collectibles? Do we own investments? Of course, we own those things most, more than likely. And what are our debts and how, how do those play out? And to give us some sort of a net worth. Other things that we might own would be, and I, I don't maybe say own, but if we have a, a pension coming or we have social security coming at a later date, those are all would go, I would call those over into the asset column or the things that we have to work with, resources to work with.
Bill (6m 42s):
But I, I think a lot of people forget there's other assets that they, that they have as well. And those assets could be their, their networks, their, their communities, their wisdom, because those assets might come into play later if it's potentially maybe a second career. Something that feeds their soul more than their first career or doing something like mentoring others once, once they're retired. So there's a lot of things we look at when it comes to assets, that wisdom and those learnings though, and, and, and the, the networks and the friendships really come into play when I'm looking at someone's ability to retire. And then what, not, not, not only will the numbers work, will the numbers work, but what will their life look like out in that next half?
Bill (7m 29s):
I call it the best half. And I do call it half in on, in my book my, it's called Keen on Retirement Engineering, the second half of life. And a lot of folks say, well, we're already past the halfway mark, but I like to just be, think positively and just call it the second half.
Phil (7m 46s):
Bill (7m 47s):
But those are the kind of things we look at up front. Yeah, Phil, because a lot of people don't realize the people that I work with are much like me. And I think as advisors, I know you talk to a lot of advisors in your work, we tend to attract people that are, have similar values. So client bases for advisors, and I have 12 additional advisors here at the firm as well now, which is really a blessing. Folks that have, have had to start from scratch and build their wealth on their own over a, a lifetime. And so they have a little different mindset than somebody that might have come into wealth quickly through an inheritance or a lottery winning, or even a professional athlete or a someone in, in the in mo a movie star if you will, where they get, they get a big contract, they've never had to dealt with wealth in their life, and then all of a sudden it's plopped in their lap.
Bill (8m 31s):
Those can be two different mindsets. So we really enjoy working with folks that have built their wealth on their own and have a real wisdom and respect for the journey as well.
Phil (8m 40s):
So are financial advisors always acting in the best interest of their clients. I believe there's, there's a couple of different kind of advice models and they're not always working for the best interests of clients. Is that the case?
Bill (8m 55s):
Yeah, it, it, it sure can be. And, and you know, I, I talk to a lot about this difference between these, this suitability standard and then something called the fiduciary standard. And if, if an advisor is making recommendations for a product for a commission, so a transactional type recommendation, that recommendation simply, if you're operating under the suitability standard, which, which that would be the case. It only has to be suitable. It has to, I call it meet the low bar of suitability. Whereas in the fiduciary world, which, which we are here at Keen Wealth Advisors, we are required to eliminate as many conflicts of interest, if not all as possible.
Bill (9m 40s):
And if there is a conflict to disclose the conflict, but to always put the client's best interests ahead of our interests or their interests ahead of our interests. And I think that in the financial advisory world, if when folks do decide that they might want to get help in, in this area, working with the fiduciary, I think probably makes the most sense. There are good advisors that operate on the suitability standard that maybe don't abuse that standard. So not to say they're all bad, but I think from a, if you had to line 'em up side by side and choose one, you would choose the fiduciary model pretty much every time, I believe, in my opinion.
Phil (10m 19s):
So how can clients assess the suitability of their advisor and what kind of advisor that they actually are? Are there any questions you would suggest that they ask?
Bill (10m 29s):
Yeah, one of the things that I, I think is super important is for a client to, to do their research, I always, I always recommend a client meet with multiple advisors and get a sense for the questions that the advisor is asking them. Are they asking you about your numbers first or are they trying to get to know you? And, and there is a, an aspect to an advisor needing to know about you and some of your numbers to understand maybe which advisor at their firm to us to, to have you work with. There are reasons that we ask about numbers, but in, in my experience and, and the way that we like to do it is we like to get to know someone first. So our, our first questions that we ask are more about your family tree.
Bill (11m 13s):
Help me understand how you got to where you are today. And if it's a couple sitting in front of us, both, both parties, how, how did each of you get to where we are today? Did you grow up with money without money? Were you an only child? Were you the first child, the last child? Was there stress around resources? And it's, it's, it can be a very organic conversation. A lot of times clients will come in and, and they'll, they'll have talked for 40 or 50 minutes and say, well, we haven't gotten to the meeting yet. And we say, no, no, that was very deliberate. We want to get to know you. That's really important. And there's times where there's clients that come in that maybe, maybe they're not a fit for our firm or they're looking for something different, and we find that out before we even have to, you know, make them disclose all their information, if you will, because it's hard to lay bare.
Bill (11m 59s):
It's a big deal to lay bare all your resources to a stranger. The other thing i, i, I would say is to work with an advisor that's focused on educating their clients. And because I think education is super important. So, and, and we, for instance, I've got a long-running podcast that's been out for seven years called Keen on Retirement. And we, we really give away a lot of basically free information. So if someone wanted to try to execute on all the tax and estate planning and social security decisions and, and IRA rules and regulations and, and how, how, how much to be able to spend and invest and how it all comes together, we talk about it a lot.
Bill (12m 42s):
I mean, we give away that information on the podcast. We do a bunch of webinars that are educational in nature as well. Then I have a book and a second edition out as well. So advisors that are thought leaders, that's another way that I would say that a client could evaluate, does this, does this advisor or this advisory firm put enough of information out there that I can get to know them from afar? It's let much less threatening understand how they think, how they reason by plugging into some of these resources, if not all of them to some extent, before they actually go see the advisor. I think that's a really important piece of it too. And I'm a pilot too, Phil, so I, I operate with checklists.
Bill (13m 22s):
So the firm operates with checklists. So I would ask an advisor, do you have a checklist driven process? Because we, no one can remember all these things and how often are you servicing your clients? And how important is that service in that relationship? Finally, the last thing would be that relationship. I wanna work with professionals that look at me as a person in a relationship, not as a number. And I think that's really important too, when you're dealing with your life savings.
Phil (13m 51s):
It's interesting, the checklist analogy as well, isn't it One of my favorite investors, he realized reading a book about the checklist, that there was a, a conversation between a doctor and a pilot, and the doctor suddenly realizing, why don't we have a checklist like a pilot has before you go into surgery? And he took, took that one step further in terms of investing that you have a checklist for all of the reasons that you're making an investment decision on.
Bill (14m 18s):
That's right. Now that was the Checklist Manifesto by Atul Gawande. I That's right. Believe that you're speaking of, I quote that as well. We work with, in our firm a lot of engineers in the, where I'm headquartered in the greater Kansas City area, we have a lot of engineering firms. And so about half of our clients are either engineers or from engineering firms. And so imagine the mindset when you're working with some of the smartest people on the planet who've been doing big things to drive the growth and, and drive our world, really. And then they want to delegate their financial planning. They want to delegate their investments and that they want to have someone they can trust.
Bill (14m 58s):
Imagine the the standard that you would have to operate to and the level of detail, at least initially with these folks so that they understand that they're plugging in and working and partnering with somebody that has a real process. And that process is so important. And I, and I've heard that throughout the other podcast that I've listened to of yours. All of your, most of your, at least guests all talk about whatever their focus has been is them having a process that they follow. You can't wing this stuff. Yep. For lack of a better term,
Phil (15m 28s):
To make an analogy to wing it. Yeah.
Bill (15m 31s):
Yes. I didn't even mean to do that. That's right. Yeah. Perfect.
Phil (15m 34s):
So it sounds like that clients come to you off, and it's almost like a psychologist's couch. You're trying to create that atmosphere where you're trying to draw out the, the real inner people, inner person and what they're trying to achieve. Are there common questions and concerns that you can put into a couple of buckets for listeners?
Bill (15m 53s):
There are, and when, when I think about, you know, why are we all, why are we all doing this? Why are we participating in the capital markets? Why are we putting ourselves through the volatility and some of the uncertainty that we see all the time in the news? And, and we do know that the news is going to, they're, they're looking to sell advertisements, so they're going to accentuate the negative. Hmm. So it makes it harder on a long-term investor if they're, if they're trying to get their information from the news to make solid, prudent long-term decisions and their investments, it's probably not a super good idea to watch the news and, and react to be reactive.
Bill (16m 33s):
But I believe we all share one similar goal. And I, I really do. I haven't had anybody push back on this. If, if you think it's not right, tell me. Hmm. But I think we all want to get to a point in our lives that work becomes optional. And I used to say that we all want to retire, and I really don't even like the word retire anymore because retire almost feels like we are going dormant or we're not worth anything anymore, or we're stopping living. And what I'm seeing is people are just having amazing second halfs of their lives once they've retired or left their primary, primary career. But the idea that we all could get to a point someday, that work becomes optional, and that means that we're independently wealthy.
Bill (17m 15s):
And that's hard for a lot of my people that I work with to even grasp because they started from nothing like, like I have. And, but the reality is you build up your resources to a point where they will sustain your lifestyle for the remainder of your life, adjusted for inflation. And that's a reality. It's almost feels like it's too good to be true. But the, I would say the question that we get most is from some very smart people that come sit with us. They say, look, we have all these things. We have assets spread here and there, and we've got social security and we've got real estate, we've got some property, a lake house, you know, whatever their situation is. They're like, we just don't know if we have enough. I mean, do we have enough to actually be able to have that paycheck stop coming in and make this money last the rest of our lives?
Bill (18m 1s):
And then secondarily to that, it's, we have never been retired before. So a lot of the folks I work with have worked, have built their wealth long-term, and they've experienced market downturns. So they're not necessarily completely afraid of the volatility in the markets. They've seen how it's worked, and that's how they built their wealth, was being long-term participants in the capital markets. But they've never been retired and had to deal with a market correction. They've always had that paycheck coming in where they're saving money and they realize they're buying more shares cheaper during market corrections, but they're, they're smart enough to know what they don't know and know what they haven't been through before. And they say, we don't know how we're going to emotionally respond to the next downturn that we experience or the next series of downturns.
Bill (18m 42s):
And then finally, when it comes to couples, there's usually one lead in the, in the relationship. And we really try to encourage folks to, if there's, if there's a couple involved to be both couples, to be fully engaged in this process, but they want to know what's going to happen to the, to, to the coup, the the person that's remaining if one should pre-deceased the other. And that's, that's because a lot of times we'll see folks that know they want to try to navigate all this on their own. I would contend they're probably missing some tax planning and some other planning issues. It's so hard to stay on top of all this. But let's say that there, there's one of the parties that wants to do it on their own to manage their assets on their own. And they hadn't really thought through what happens to my spouse when I die?
Bill (19m 24s):
Cause we don't wanna think about our mortality, of course, but what happens to them if I die? And we see people come to us that are highly capable and very smart, that wanna partner with us because they realize they want their spouses to be taken care of.
Phil (19m 37s):
It, it sounds like you're providing that reassurance and it's the reassurance of reaching that point when they realize that you can be independently wealthy. And I guess that's partly the crossover point that you refer to in your work.
Bill (19m 49s):
It is. And that, that independently wealthy, it, it's a different, it's defined differently for each family based on how much money they would like to live on. So if somebody needs 20,000 a month to live on because they have some hobbies and different things that they want to do, that that's, that cost more than somebody that might just need four or 5,000 a month to live on. And about a half of America just lives on, on social security and they're able to figure out how to do that. I talk about a crossover point in my work and I, I've gotten to see it mi over many, many years. And what, when I talk about that, it's, I say, when is the best time to retire from a financial standpoint?
Bill (20m 30s):
And this is your show, Phil, so I would not wanna put you on this spot, but if I were to say, when is the best time to retire from a financial standpoint, what would you say? Do you think you would say, from a financial standpoint, when's the best time to retire? And I, and I, you, you hear me keen on that financial standpoint. I'm trying to give you a hint.
Phil (20m 48s):
Yeah, yeah, yeah. Well, I guess it's that, that point in time when you realize that you can live off your investments to a certain point. I mean, I, I really have no plans to retire because I'm just enjoying so much what I'm doing. I know a lot of friends around me are retiring, but I dunno, maybe I'm not into fishing as much as they are.
Bill (21m 9s):
Exactly. And, and that's, that's a reasonable answer. And, and I get other answers, like, the best time to retire from a financial standpoint, no other consideration in a vacuum. Some people say, well, it could be 59 and a half because that's when we can access our retirement money. Or 70, you know, 70 maximize social security or 65 because of Medicare. You start thinking of those answers and it's kind of a trick question, but where I'm going with that is, f the best time to retire from a financial standpoint only would be never, because you could always work, oh, I'm just gonna work one more, one more year. I'm gonna get one more year of salary. I'm gonna save one more year of savings, and then we'll look at it again.
Bill (21m 54s):
Well, what I've seen over the years is many people just continue to do that and their spouses are telling them, Hey, we wanna enjoy some of this next time. We wanna enjoy the time. And, and so I've seen people hundreds of times, if not thousands get to a point where they say, wait a second, that one more year of salary and savings is not worth one more year of life. It's not postponing one more year of working on my health of one more year of taking that trip of being with the grandkids, of, of, of pursuing that hobby or that second career that feeds
Phil (22m 27s):
Myself. Yeah. One more, one more year of working for the man.
Bill (22m 30s):
It is. And I've heard you say that before. I love it. And, and it, yes. And so that crossover point is where, is what I speak about, where it just becomes clear that there's a decision point now, and of course the, the resources have got to be there. So I mean, it's not like you can just decide that if you don't have the resources to do it, and it, and it's a, you know, it's a problem waiting to happen or a failure. So those, the resources have got to be there, but once the resources are there and someone's really spent the time, taken the time to figure out what they need to live on, I have a whole chapter in my book on the spending plan because the spending plan is such a key lever. If you think about the levers in retirement planning, you know, you have, how much money do you have upfront?
Bill (23m 11s):
How long are you going to live? What's your rate of return going to be? But how much do you need to spend is a huge lever that can make a, make a very big difference on someone being able to retire comfortably and not have to worry.
Phil (23m 27s):
So now we're getting back to the point about capital markets and you mentioned capital markets and people have to be exposed to capital markets and debt markets, fixed interest, a lot of things that people don't really have a lot of knowledge from. You know, I'm sure an engineer wouldn't have knowledge about these, these kind of markets and what the exposure is. And I'm presuming that you've gotta deal with people and the panic that they might feel when you go through something like we went through in March, 2020 with the Covid crash. How are you dealing and how are you teaching people how to deal with those situations?
Bill (24m 1s):
Yeah, so having done this for 30 years, I I, I had clients that were invested and retired when we had been going through you, you might recall the, the world was supposed to come to an end in the year 2000 when none of the computers were supposed to be able to figure out how to do the next century. Yep. That didn't happen. But we did go into the tech bubble and we had a, a very large sell off in the NASDAQ. We, we entered a, a deep recession and we thought we were coming out of it and we were fighting to come out of it. And planes flew into the buildings in New York City. The market closes for an entire week or so, and here I've got clients that are retired and the markets are closed.
Bill (24m 46s):
You can't even access your resources that week. Hmm. And have, having, having navigated that path. And then just a few short years later, the oh 08, 09 financial crisis that really hit the world where we saw the broad markets off 50 plus percent in US markets closer to 60. And so many of our clients, or all all the clients that we work with have been through these things and they've been through corrections. Most of 'em been through the 87 correction. I was in a college in the 87 correction, but I actually was trading stocks through a Schwab account in 1987 from college and went through the 87 Black Monday. But I think one of the things that we, that we, we we rely on is folks wisdom from their experiences.
Bill (25m 32s):
Because when we get through it, we go through difficult things and we come out the other side. Okay. We, that gives us confidence to, to approach the next thing that's coming. And there's always going to be something coming. There'll always be a correction coming. A a market, a bear market. The other thing though, and that's a kind of a psychological aspect to it, one of them is just, we can get through this, we've gotten through it before, but, but you can't get through it, in my opinion, if you're not set up appropriately going into it. So if someone's not diversified properly and they don't have a specific number, amount of their assets outside of the equity markets over in fixed investments that can buy them time to get through the downturns now.
Bill (26m 15s):
And you're forced to sell securities at a bad time. There's two ways I call 'em the big mistakes. One is you have, you had money in the market that you needed back within three to five years or so. And then the other one is that emotional mistake that says it's that parasympathetic nervous system or it's, sorry, it's a sympathetic nervous system that says fight or flight. Get me outta here. I I,
Phil (26m 35s):
I can't cope with this anymore. I can't relax when I'm playing golf.
Bill (26m 39s):
Yes, that's right. I just sell everything and protect what I've got. And, and
Phil (26m 42s):
We, it happens so many, many, so many times, doesn't it? It's been proven by history.
Bill (26m 46s):
Yeah. And I, I believe that a, a good financial advisor, of course you have to be technical experts and have a team, you know, we have CPAs, c CPAs, all these things. You have to be a technical expert and get the details right. But as much you have to be a behavior modifier. You have to help people have that confidence to get through those things. And it's not unfounded confidence. It's confidence knowing that we're set up appropriately. So to give you an example, to get through those periods of time, and I write about it in my book cause I give examples of it where folks of the markets were down 50%, 60% in oh 8, 0 9, and this most recent covid when we're off close to 35 ish percent in just just a, a few weeks. We, we train our clients to understand you have a certain amount of your money that you need to live on.
Bill (27m 29s):
And now remember we're in a, we're not talking about people that are adding money to portfolios cuz young people, if we can get 'em trained right, to think right, this wisdom is so valuable. You're adding, you're buying more shares when it's down. If you're not done buying yet, you just hope the market stays down. It's a, I know it's the opposite thought process, but someone now that's taking money out, so they're looking at their nest egg is this is all we've got. We're not adding to it. We need to preserve this and make it last the rest of our lives. Well the key is to have at least five years of your income needs at a minimum in fixed investments. And then a good portfolio will also have dividends and interest coming in as well off the equity side. And the bond side now bonds a little more than they had been the last 10 years, but you're gonna have dividends and interest coming in plus at least five years of your income needs in fixed investments.
Bill (28m 14s):
Even when they were paying nothing, we still had those, there was a purpose for those and those were to get people through those downturns and also provide a little dry powder to be buying things to be averaging into some of the areas of the market that are down the most, that make sense, that are, that are studied and prudent so that we come out of the correction or the, or the bear market actually better than had it not happened at all. Because we were able to reposition some things prudently, not panic and sell everything at the bottom, but actually reposition some things. And there's some other things we can do as well. Not just investment related, but tax loss harvesting and do Roth conversions and other things that we do when the markets are down. That gives us some real opportunity to do some proactive work when the market's going through corrections.
Bill (28m 58s):
So we're, we're, we're very busy doing proactive work for folks during tough times. And when and when things come back, whether it's six months, a year or two years, no one had to sell anything when the market was down and they made some really proactive moves while it was down. So what a thought. Now that's a theory. If somebody hadn't been doing it, they hear it and they say, well it sounds good, but what I see that as clients sign off with us once they've experienced it and actually gone through it five years, 10 years, 15 years, whatever, even, even if it's just a few years, they start to, their blood pressure starts to drop during the next one and they almost say, wow, hey, we're going through another one of those corrections. That it's opportunistic. Hmm. Isn't that interesting? I mean, to, it's a whole different way to, to view this thing and but they're not
Phil (29m 40s):
The mind switch, isn't it? Yeah,
Bill (29m 42s):
It is. And and it can be, I've had some very high level advisors and, and and, and consultants over the years say it's impossible to train people. They're either going to be able to have a long-term kind of competence in the future mindset or they're going to be obsessively obsessive and they're gonna fail at investing. But I've, I have found, and I work with a lot of engineers, like I said, that are really very specific and very focused on, on details that over time with some experience on the journey, they actually shift. They actually do change. They were one way and over time they change into being someone that can let focus a little bit more on the long term. Knowing though that the plan is in place and there's a, there's a, there's a process and those things are going on on their behalf.
Bill (30m 25s):
You can't just be in denial about this stuff. So not worrying about it and letting it play out is different. And having a plan is very different than just not having a plan and just being in denial. Those are two very different things. So there's some fi some people should worry because they haven't set up their affairs appropriately. Does does that make sense?
Phil (30m 47s):
It is, yeah. No, no, definitely. And I actually, I've heard from other guests or one or two other guests about engineers that they find that the engineers are the hardest people to talk to about equity markets because equity markets are based so much on emotion, whereas engineers are working with physical concrete mindsets and sometimes it can be very difficult to, for them to switch that mindset into understanding what equity markets are like and that they, they're just not going to be, you know, you, you put in a rivet there and it's going to provide strength to that beam Yes. In the way that an engineer would think. Yes.
Bill (31m 20s):
Yes. Because those are so, matter of fact black and white, some of those things. And the reality is, if we can spend the time training and educating our engineering clients and reminding them how they built their wealth in the first place, because most folks are, are on professional autopilot when it comes to their retirement planning. They might have, we specialize in what something called ESOP plans, employee stock ownership plans, of course 401ks and different other retirement vehicles. And these folks have just been putting money away, stock purchase plans just kind of every month or every paycheck. And they look up and they've accumulated a modicum of wealth that is going to make retirement possible.
Bill (32m 3s):
And most, almost every single time it's because of the equity markets. That's how the wealth has been created. Hmm. And so they've, they've, they've got this very valuable experience that they might not have even been thinking about that we're able to remind them of and just bring that into their presence. So one of the things I tell our clients when they're dealing with stress and anxiety is to, is to journal their feelings. I said it a lot during covid, don't miss this opportunity to journal how you're feeling and what you're seeing in the news. Cuz not only were we threatened financially, we were threatened with our health. Mm. No one knew if we were gonna, it was gonna kill us plus, plus take our money from us. So it was a, you wouldn't be human if you weren't worried back then, but I'd encourage folks to journal your feelings and write down what's happening and what you're seeing in the news.
Bill (32m 48s):
Either do it on your phone, your voicemail, write it down, whatever. But don't, don't miss the opportunity to journal what it was like so that we can gain confidence when the next thing happens.
Phil (32m 57s):
Most people are aware of equity markets in the stock market that you hear about it, you can't escape it, but they don't really know about the fixed income side of things. Do you find that that's part of your education process to reveal to clients that there's this whole other area where their investments can be and how to allocate to it?
Bill (33m 17s):
Yeah, for sure. And as I mentioned earlier, we talk about that fixed income being a necessity, especially when someone is taking money out or they're going to need them, their
Phil (33m 27s):
Money out. But what, what is fixed income?
Bill (33m 30s):
Yeah. So, so for us, it's interesting because I, I talk about there's, there's two ways you could be an investor. One is you can own things and the others you can loan things, loan make loans as an investment.
Phil (33m 40s):
That's a beautiful way of expressing it.
Bill (33m 42s):
Yep. Yep. So you can own your house, your car, your stocks, maybe some art, some gold. You can own, own things and you hope they go up in value at some point. And some of those things actually pay dividends while you wait. But if you want to loan your money as an investment, you're going to be a fixed income investor. And you, you could loan money to governments, you could buy government bonds, you can loan money to a bank. Those are called CDs or demand deposits. You can loan money to municipal governments or corporations even. And the municipal governments and corporations have different rankings. They can be AAA all the way down to junk bonds. Of course the junk bonds pay more interest, but you might not actually get your money back, which is a something you need to have somebody helping you and analyze what makes the most sense. So those, those are investments that you pla you place 10,000 in and you know that in a certain timeframe that you'll get your 10,000 back with whatever interest rate you agreed upon upfront.
Bill (34m 32s):
So we call it fixed income invest investing because it's actually, it actually is fixed. Unless of course you try to sell one of those securities before it matures and there will be a, a price that's not the par value. It'll be a price that's in most cases based on where interest rates have moved since you bought that initial investment and possibly a credit quality if you bought something that was a corporate or a municipal bond. So that, that whole segment, you know, we look at that and we see over time that those, those investments, they don't, they certainly don't return as much as the equities. Most of them don't return as much as an equity portfolio will over, over the longer period. But they provide a real stability for, for money that in my opinion, we're going to need shorter term.
Bill (35m 15s):
And, and in some cases people just don't like to see their investment as a portfolio as a whole fluctuate as up and down as much. Well of course we want it to fluctuate up. We don't mind volatility on the upside. It's the volatility on the downside that people don't like. But by having a portion of your money, some portion of your assets in, in the fixed income market, you're helping with the risk or that volatility factor. But I think it's necessary when you're pulling money out for a young person, I'd be a hundred percent equities. But so, so, but understanding the difference between those two things and really understanding the reason that you, that your advisors are advising you, like really understanding the reason that you're being advised and why you're doing what you're doing helps folks get through some of the times that are, are uneasy as well.
Phil (35m 55s):
And I hope you don't mind that I'm gonna steal that line. You can either own or loan, that's a great way of expressing it.
Bill (36m 1s):
Yes. Yeah. You can be an owner or a loaner and I actually have that in, in my, in my book.
Phil (36m 5s):
It's Well, tell us about the, tell us about the book, Bill. Oh, we're not, we're not recording the video by the way. It's only, it's all only Okay. Yeah. But
Bill (36m 12s):
Phil (36m 13s):
But it was a lovely, lovely shot of Bill holding up the cover of the book, but we'll put that in the blog post. You'll see the cover of the book in the blog post.
Bill (36m 19s):
Yeah. Oh, excellent. Excellent. Yeah, we'll get that to you. So yeah, it's called Keen on Retirement. It's a little play on words, like I say, and the, and the subtitle is Engineering the Second Half of Life. And I, in the first portion, I go through the, the plan, like we believe that the, the plan is, is some of the most important work that we do. It's figuring out where you stand, assessing your assets, and really having at least a general understanding of how social security works and how IRAs rules and regulations work, estate planning at Wills trust, how things are, are titled what might, what would happen if you were to pass before you, you would like to, so to speak. And also your spending plan. I mean, the spending plan is so important and, and I share stories in each one of those chapters on people.
Bill (37m 4s):
Of course I've changed the names, but real life stories of successes and some of the things that haven't worked as well for folks that have been referred to us. So people can relate to these things. Like, well, I, I can kind of see myself in those, in those stories. The, the second portion of the book is called The Engine to the Plan because if you think about it, your goals, your aspirations, where you're heading in life, the inspiring future that you're trying to, to plan for the investments, all they're, they're just a, they're just an engine to that plan. The investments are just an engine to the plan. The thing where people get in trouble and their investments is when they're investing in a vacuum with no real objective. And now if you win, you wanna try to double up or it almost feels like a gamble if you don't have your investments, in my opinion now allocated into a funding mechanism or the engine for the plan, which is your ideal life, your inspiring future.
Bill (37m 54s):
And so we look at that in that context. And I share things like that five years of income and fixed income and why we don't use mutual funds in our, in our firm. Why we use individual securities and indexes and some of those things that we do. I, I share how to navigate unprecedented times. That's a new chapter. Some of the things we've, we've hit on today and some of the things I've seen. And then the final section of the book talks about living your best life. And I even say for married couples, I even say 10 to your marriage, I have a whole chapter on that because we see people get out to the end where they are able to retire. And then we see this thing called gray divorce where we've been so focused on kids and raising kids and work and these things. Next thing you know, you're together 24 7 and you don't have a plan you hadn't talked about about it beforehand.
Bill (38m 36s):
And, and so we want people to really think about how to maximize their time post-retirement, post financial independence because it's, it's heck to think your whole life. You get to become financially independent, you get there and you're not prepared emotionally and mentally with what you're going to do and how you're gonna do it, who you're going to do it with. And to see relationships break apart at that point, you know, it's not good. So I I, I put all that together in one book and I ended in the book with the tragic last flight of JFK Jr. Because again, I'm a pilot and I share some of the shortcuts he tried to take when he cut across the ocean to get to Martha's Vineyard and ended up turning it upside down in the ocean and made some real comparisons to his tragic last flight.
Bill (39m 16s):
And folks that don't, that don't financial plan appropriately and the serious nature of both. So I hope it's very relatable. Hit bestseller on Amazon first edition in 2019 and second edition last month. So congratulations. I think I was going to say. Yeah. Yeah. Thanks Phil. I was gonna tell your listeners I didn't write it for the, to make money on it, I wrote it to be a resource into the community. So if, if somebody would like a copy of this, of this book and they were to send, send an email to me, firstname.lastname@example.org. I had just referenced that they heard me on your podcast. I literally will give them a copy.
Phil (39m 49s):
Oh, fantastic. Thank, thank you very much for that. Yeah,
Bill (39m 51s):
Yeah, a hundred percent. When you asked me to be on your show and I saw the quality of your show, I thought that's really cool and I wanted to do something nice for you and and your listeners. So yes sir.
Phil (40m 0s):
Bill Keen. That's fantastic. Thank you very much for joining me today.
Bill (40m 4s):
You're welcome. You're welcome. Thank you very much, Bill.
Phil (40m 7s):
If you found this podcast helpful, please tell a friend, especially if it's someone who needs to start thinking about investing for their future, you'll be helping them and helping me to keep this show on the road
Chloe (40m 18s):
Stocks for Beginners is for information and educational purposes only. It isn't financial advice and you shouldn't buy or sell any investments based on what you've heard here, any opinion or commentary, the view of the Speaker Only Not Stocks for beginners. This podcast doesn't replace professional advice regarding your personal financial needs, circumstances, or current situation.
Phil (40m 36s):
And thank you for listening to my podcast.
Stocks for Beginners is for information and educational purposes only. It isn’t financial advice, and you shouldn’t buy or sell any investments based on what you’ve heard here. Any opinion or commentary is the view of the speaker only not Stocks for Beginners. This podcast doesn’t replace professional advice regarding your personal financial needs, circumstances or current situation.