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Joe Lucey

Freedom Isn’t Free

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The freedoms we enjoy in this great country are deeply important to me and to all of us at Secured Retirement. As a proud veteran of the US Marine Corps, I carry with me the honor and responsibility of those formative years. I am grateful to be among the generations who have served our nation.

It’s often said, but it bears repeating: Freedom isn’t free. It requires immense sacrifice from the courageous few.

The Fourth of July invites us to reflect on the life, liberty, and pursuit of happiness that our founding fathers bestowed upon us. This ideal is so precious to my family and me that we actively seek opportunities to celebrate our homeland and its values throughout the year. 

One organization particularly close to our hearts is Folds of Honor, a non-profit that provides life-changing scholarships to the spouses and children of America’s fallen or disabled military personnel. This spring, I attended a fundraiser they held at The Patriot Golf Club in Oklahoma.

The entire weekend, full of camaraderie, stories, presentations, and patriotism was incredibly moving. Hearing from the families of the fallen was a sobering reminder of the high cost of freedom, and proof that courage and determination have the power to unlock brighter futures. 

The experience left such an impact on me that on the final night, after dinner, I approached the organizers and asked if it were possible to purchase one of the flags they had displayed during the event as a memento. They graciously gifted it to me.

That same flag will hang proudly in front of my home this July 4th weekend, as it does every day. Out there, waving in the summer breeze, it is a reminder of how 13 colonies became our 50 states. It is a reminder of the hope, dreams, and perseverance of those who came before us, and the banding together of people that carried us here. 

This Fourth of July, I encourage you to take a moment to give thanks for this nation and its abundant resources, for the extraordinary sacrifices of everyday people, and for the full lives we’ve built in this land of the free.

 God bless America.

Travel in Retirement: Tips to Finance Your Adventures

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The opportunity to travel is something many people look forward to in retirement. All that time and freedom to explore the places you’ve always dreamed of visiting! We want to help you live your adventure. Here’s a few financial considerations to keep in mind before you plan your itinerary and pack your walking shoes.

Invest Appropriately

To best finance your retirement travels, you have to invest smart! Because of the market’s volatility and despite our best predictions, it’s important to protect the funds you’ve set aside for your jetsetting. Generally, one-time expenses, like a trip you plan to take within the next two years, should be held in cash alternatives, rather than portfolios.

To avoid the risk of market downturns affecting your travel budget, we would urge you to consider keeping these short-term funds in things like treasury bills, certificates of deposit (CDs), or money market funds. These options offer principal protection so you’ll have the funds for the travel you’re planning for the relatively near future.

For travel plans further into the future, you can afford to take on a bit more risk with your investments. For instance, expenses planned three or more years in the future might be better financed by a mix of fixed-income investments and stocks. This balanced approach can provide higher returns over time, helping your travel savings grow, grow, grow.

Building a Budget

Having some semblance of a plan for what kind of travel you’d like to do can help you best budget for it. If you imagine you’ll go on a few major trips a year, allocating a lump sum at the beginning of the year can be most helpful as you plan out your retirement withdrawal strategy. If you think you’ll be taking shorter, more frequent trips, maybe to visit loved ones, it might be better to incorporate those anticipated costs into your monthly budget. With an idea of your travel-style in mind, you can best tailor your budget to your lifestyle!

Quick Tips To Keep In Your Rucksack

And now it’s time for the portion of our show when we hand out some quick tips to maximize your travels. Whether you’re planning your Alaskan cruise adventure or a relaxing stay in the south of France, these smart strategies will serve you well:

  • Secure Travel Insurance: While it does add a little to your travel expenses, travel insurance is an investment that’s well worth it in the event of the unexpected – illness, injury, or otherwise. It can also cover lost luggage and trips to the emergency room, potentially saving you from substantial financial setbacks and protecting you abroad.
  • Maximize Credit Card Rewards: Many credit cards provide points, miles, or cashback on travel-related purchases, along with perks like rental car insurance discounts and airport lounge access. There are so many ways to get a greater bang for your buck with reward cards, especially while traveling. If one of your main goals for retirement is travel, we highly recommend learning the ins and outs of the world of travel credit cards. Of course, to avoid interest charges and get the most out of these rewards, it’s essential to pay off your balance each month.
  • Leverage Senior Discounts and Travel Groups: Take advantage of senior discounts available through various travel companies, airlines, and accommodation providers. They are designed to allow you to celebrate your golden years! Joining travel clubs for retirees can also offer unique group travel experiences at reduced rates. Who knows – you might even make some new friends along the way.
  • Stay Flexible: You know this already, but when planning a trip, shop around for the best prices on flights, hotels, and activities. Even better, staying flexible with your travel dates and destinations can lead to significant savings. If you’re able to travel mid-week when others aren’t, do it! Additionally, consider traveling during off-peak seasons to stretch your travel budget further.

Investing in experiences, like that dream trip to Italy or a cross-country road trip, is a significant part of enjoying your retirement. Planning ahead ensures that you won’t have to worry about financial setbacks, allowing you to enjoy your experiences to the fullest. If you want to learn more about planning out your finances for travel in retirement, give us a call: 952-460-3290. Bon voyage!

Rethinking The Classic “60/40” Portfolio

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The “60/40” portfolio, made up of 60% equities and 40% bonds, has been a staple of investment management for several decades. The strategy gained mainstream acceptance after William Sharpe and Harry Markowitz won the Nobel Prize in Economics in 1990 for this portfolio optimization model. Mutual funds further popularized the investment strategy in the late 1990s and early 2000s. And it worked well for the better part of the past three decades, but is it still relevant today?

So, Why 60/40, Anyway?

The 60/40 portfolio has become the generic term for a diversified portfolio, with the mix between stocks and bonds varying based on the investor’s risk tolerance and goals. Stocks are held in hopes of capital appreciation growing the portfolio and maintaining purchasing power against inflation, but they also carry varying amounts of risk. Bonds, used in conjunction with stocks, provide safety and reduce volatility. Bonds worked well in portfolios in the 45-year period leading up to 2020, at which time interest rates steadily decreased. This period saw bond prices rise (as bond prices move inversely to yields), providing investors with income and rising values. Government bonds, in particular, acted as a strong equity hedge during the Great Financial Crisis of 2008 as interests quickly dropped while investors sought safety in U.S. Treasuries.

Recent Underperformance and Challenges

However, things have changed. Over the past few years, portfolios with a mix of stocks and bonds have underperformed due to rising interest rates pushing down bond prices. In response to inflation spikes post-COVID, the Federal Reserve raised short-term interest rates, resulting in some of the most significant bond losses of the last hundred years. The so-called “safe money” in bonds has not fared well over much of the last three years. While stocks have generally performed well, bonds failed to provide the expected protection during the stock market downturn of 2022.

The Outlook for Interest Rates and Bonds

Current expectations suggest that interest rates will drop, pushing bond prices higher, and enabling the traditional stock/bond portfolio to regain its strength. However, we are not fully convinced that this will be the case. The yield curve has been inverted (short-term rates higher than long-term rates) for nearly two years. When (if) the Fed does lower rates, the yield curve will likely normalize, with short-term rates dropping and intermediate to long-term rates holding steady or even rising. Short-term bonds will likely provide a positive return but those gains may be somewhat limited since gains in bond prices may be offset by the reduction in interest received as a result of lower rates. Long-term bonds offer limited upside, outside of interest paid, if long-term rates hold steady and create potential for further losses if rates rise.

Despite these challenges, fixed income yields are at their highest levels in nearly 20 years, so investors get “paid to wait” and collect interest. However, after accounting for taxes and inflation, real returns on many fixed income instruments are minimal and barely maintain purchasing power.

Adapting With Changing Markets

A diversified asset portfolio still makes sense to lower volatility and preserve capital. However, asset allocation should be dynamic and adjusted according to current economic and market conditions. Modern Portfolio Theory, introduced by Markowitz in 1952, was based on three asset classes: stocks, bonds, and cash. Today’s investment landscape offers considerably more strategies and options for generating income and protecting against stock market losses than there were in the past.

Secured Retirement Will Explore Your Options

If you haven’t already, it may be time to look beyond the traditional 60/40 portfolio and consider alternative strategies. There isn’t a single right or best way to build an asset allocation, but mistakes can lead to poor outcomes. With the help of a knowledgeable professional, each investor needs to find the balance that best aligns with their unique goals and objectives. If you’re struggling to find your balance, give us a call: 952-460-3290.

Nathan Zeller Secured Retirement

Nate Zeller

Chief Investment Strategist
Secured Retirement

Top 5 Ways To Maximize Income In Retirement

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Your retirement should be a time of enjoyment and fulfillment, when you finally have the time to pursue the things you’ve never quite gotten around to. But it’s unlikely you’ll get around to them at all if you’re lying awake at night, worrying over running out of money. A financially secure and comfortable retirement is possible with the proper considerations, so that you really are free to live as you please. Prevent yourself from living off of savings alone by creating a robust income generation strategy. Even in your golden years, there are ways to continue to replenish your earnings. Based on our expertise, here are the top five ways to do so:

1. Reduce Your Tax Burden

Income taxes can be your largest expenditure in retirement. Withdrawals from tax-deferred accounts, such as traditional IRAs and 401(k)s, are subject to income tax in the year you withdraw those funds, potentially leaving you with a hefty tax bill. You may know how much you’ve saved in each of your accounts, but do you know how much you’ll pay in taxes on those savings? 

In order to maximize your income, consider relying more heavily on strategies like Roth conversions or tax-efficient retirement accounts for savings. Minimizing your tax burden is a core focus of our work at Secured Retirement, and we believe this is one of the most impactful ways to maximize your retirement earnings.

2. Make The Most of Social Security

Social Security stands out as a particularly valuable source of retirement income, offering financial security throughout a lifetime. In fact, the Stanford Center on Longevity reports that Social Security income meets more retirement planning goals than any other retirement income generator. A few reasons for this include that it’s:

  • Tax-privileged: A portion of each payment is provided tax-free. This is in contrast to other retirement options like annuities, where all payments are taxable as ordinary income. 
  • Inflation-adjusted: These benefits keep pace as the cost of living rises.
  • Cheaper than other forms of longevity insurance: Social security is cost-effective, offering financial security without the worry of funds running out.

Social Security benefits are essential, and the optimal strategy for it often depends on individual circumstances. Tailoring claiming strategies and their timing to ensure you can spend confidently in your retirement.

3. Rebalance Your Portfolio

Especially as you near retirement, achieving the right mix of assets becomes more and more important. The main reason for rebalancing is to control risk, not necessarily to improve returns, and in doing so, you’ll better preserve your nest egg. For example, right now, US stocks are having more success than US bonds and international stocks, and this continues to shift. Leading up to retirement, your margin of safety is actually smaller than when you’re actually in retirement. To ensure your portfolio keeps on track, it’s important to rebalance on a regular schedule.

4. Guard Your Nest Egg from Inflation

Inflation is as high as ever right now and, unfortunately, it can potentially erode your retirement income by diminishing your purchasing power over time. Everyone suffers because of inflation, but especially when considering the cost of healthcare, a particular spending cost for many older adults, it’s even more important to be able to defend against it in retirement.

While it can be difficult, it is possible to provide some insulation from inflation. Fixed-payout assets can often take the biggest inflation hit so diversification is key. Treasury Inflation-Protected Securities (TIPS) and real estate investment trusts (REITs) provide effective solutions, as they’re not highly correlated with stock or bond markets. 

Additionally, when planning your spending, being a little more conservative with your starting withdrawals in periods of high inflation can be beneficial. While higher prices might not make a huge dent in your retirement over one or two years, they can have a huge impact over 20 to 30 years, giving inflation its moniker as retirement’s “silent killer.”

5. Explore Additional Income Options

Diversify your retirement income sources by exploring alternative investment opportunities, such as real estate, annuities, or dividend stocks. The most successful retirements aren’t built on assets or savings alone, they’re built on your ability to continue generating income in retirement. By creating a diversified income plan, you can mitigate risk and ensure your long-term financial security in retirement. These assets provide additional streams of income to supplement your retirement savings and enhance financial resilience.

Income generation is a central component of a successful retirement plan, and it’s an area we specialize in. By implementing strategies in these five areas, you’ll be well-suited to enjoy a robust retirement plan that withstands market fluctuations and provides financial security. You deserve the retirement you’ve dreamed of. To review your plan for income in retirement, please give us a call at 952-460-3290.

Investment Strategy Insights

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When I was growing up in the 1980s, I remember the all-too-real threat of having my mouth washed out with soap for using a naughty word. Recently, a naughty word has been making the rounds among economists and market observers who claim we’ll all suffer from its bad taste. That word is “stagflation” – a cycle characterized by slow growth, high unemployment, and high inflation. So, is there real cause for concern? Or is this another instance of the media selling fear? Let’s see what the numbers have to say:

April Showers. . .

In April, the stock market saw a downturn, attributed in part to diminishing hopes of interest rate cuts by the Federal Reserve. While The Fed has acknowledged inflation remains stubbornly above their target rate of 2% and short-term interest rates will be maintained, there have also been murmurs of an interest rate hike. The Consumer Price Index (CPI), reported higher-than-expected inflation rates in April, while first-quarter GDP was lower than expected. Both reports seem to be trending in the wrong directions with higher inflation and lower growth fueling stagflation worries.

May Flowers?

May’s start eased inflation concerns with the help of positive earnings reports lifting spirits. Two defensive sectors – utilities and consumer staples– led the rebound after being some of the S&P 500’s worst performers over the past year. In the long term, the stock market is driven by earnings growth. Despite the economic slowdown’s potential impact, the market’s resilience and overall strength remain evident, with the S&P nearly 30% higher than October’s woes.

Valuation Adjustments Incoming

In terms of stocks, analysts are raising their eyebrows over the continued burgeoning valuations of certain growth stocks, particularly in tech. Recently, some hot stocks have cooled, providing opportunities in other, previously-overlooked sectors. It seems as if stock valuations do indeed matter again. While the S&P 500 trades slightly above historical averages in terms of valuation measures, the expectation is for valuations to adjust as earnings continue to grow.

These Things Alone Do Not A Recession Make

Many economists predict that the long-anticipated recession will arrive with a “soft landing”, rather than a deep recession. The recessions of the last 25 years were all caused by large-scale events – tech crash, financial crisis, and COVID. Higher inflation, ballooning deficits, and geopolitical events can make the economy more vulnerable in combination but are likely not enough to cause a recession. The normal state of the economy is growth and expansion; only when an event occurs does it contract. For this reason, we at Secured Retirement do not believe a recession is inevitable.

The Final Word On That “Naughty Word”

Inflation remains stubbornly higher than we’ve experienced over the past couple of decades, so it is important to account for this in your retirement planning. And there is a chance, albeit relatively small, that we will experience a period of that naughty word stagflation. However, the ongoing growth of our population and access to more disposable incomes, coupled with rapid technological advancements continue to contribute to the great American growth story. For now, we remain optimistic about the stock market’s prospects and foresee sustained growth in the long term. 

To learn more about stagflation-proofing your retirement planning, give us a call today at 952-460-3290.

Nathan Zeller Secured Retirement

Nate Zeller

Chief Investment Strategist
Secured Retirement

Are You Hoping For Long Shots? Or Betting On Boring?

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For many, myself included, the Kentucky Derby represents spring’s true entrance. This Saturday marks the 150th year of this iconic race – the longest-running sporting event in the US.

More than 150,000 spectators will gather at Churchill Downs to sip mint juleps and witness the thoroughbreds thunder down the track with incredible speed.

While I’ve always wanted to see the event with my own two eyes, it will remain on my bucket list another year. Someday, I’ll get to see the most exciting two minutes in sports in person!

The thrilling highs and lows of the Kentucky Derby are the exact opposite of what we’re trying to achieve every day in our approach to retirement planning. There are no risky bets, there is no spectacle, there are no split-second make-or-breaks.

We’d be the worst Kentucky Derby planners in its storied history because what we’re going for is boring, measured, by-the-book.

We’re not the place to go to get rich quick. We’re not the ones you come to for aggressive wealth accumulation strategies.

We focus on helping clients make the most of the money they do have – using tax and income planning to maximize take-home dollars. This has achieved results for decades. 

For many people, retirement is a gambling game. They might take on too much risk for payouts that never come, maybe they follow “experts” that over-promise and under-deliver, or, worst of all, they’re not making any preparations for retirement at all.

I’ve said it before and I’ll say it again: At Secured Retirement, we want to make a significant impact on the families we serve so that they can live comfortably, spend confidently, and pay taxes consciously.

So, as we welcome another Derby Day, I hope you feel the rush of the racetrack but ultimately know that your peace of mind can extend past one day’s winnings. 

When it comes to retirement, we believe that it’s best to bet on boring. How about you? Are you hoping for long shots to keep you on track? Or taking the slow and steady approach? I’d love to hear from you at 952-460-3290.

Happy spring!

Cup of Joe

CUP OF JOE

From Joe Lucey, Founder of Secured Retirement

There’s something about sitting down with a steaming cup of coffee that always kicks my day into high gear. And it’s not just because of the caffeine it sends coursing through my veins.

Throughout my career, some of my biggest revelations have come to me in conversation with my mentor over a cup of joe. Good conversation and personal connection can pick you up in a special way. It’s that feeling that I’m hoping to bring to you with my new series, your Cup of Joe.

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Download the Top 10 Mistakes That Increase Your Taxes

In this free report, you’ll learn…

  • Why being passive and having no plan of action for your taxes can kill your retirement.
  • The amount of money you can save with tax planning. (HINT: It’s often at least 5 figures.)
  • What the top 10 most common tax mistakes people make are and how you can avoid making them.

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Danielle Christensen

Paraplanner

Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!