Retire Smarter with Kevin Kroskey, CFP® & Tyler Emrick, CFA® CFP®

Ep 57: A Tale of Two Decades

Proper investment diversification works ... even when you don't want it to. With the US stock market and particularly large technology stocks having the wind at their backs recently, many are eschewing diversification to chase these high flyers.
As the saying goes, if we forget history, we are doomed to repeat it. In that spirit, hear Kevin tell a tale of two decades.
First is the Lost Decade of the 2000s when, after the Tech Bubble burst, US investors lost money for an entire decade from 2000 to 2009. Second is the recent decade from 2010 to 2019 where US stocks screamed. The two are starkly different and instructive. Combining the entire 20 years allows you to clearly see the benefits of discipline and diversification.
What will the 2020s hold? Only time will tell, but today resembles the late 1990s in some ways. Importantly, in retirement, you can't afford to have a Lost Decade.
 
Timestamps:
6:15 - The Problem With Stock Splits
13:41 - Our Current Environment Is Similar To The Late 1990’s
18:50 - Areas That Are Not Doing Well
22:11 - The Way Diversification Works
25:12 - Avoiding Recency Bias
 
Contact:
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Ep 56: Should The Election Influence Your Investing Strategy?

Biden or Trump? Republicans or Democrats? Who will be better for the economy and your investments? These are questions many are asking with the election quickly approaching.
Many let their political beliefs influence their investment strategy, but should they? Hear Kevin discuss what the evidence shows and how our political beliefs may influence our perceptions of reality. Get ready to check your alternative facts at the door and get real.
 
Timestamps:
6:24 - Keep Politics Separate From Investing
10:47 - Pew Research Poll
14:33 - Perception Becomes Reality
19:49 - Peter Schiff Making The Right Economic Call, But Not The Right Investing Call
29:39 - We Have Beliefs, But 200 Years Of History Is More Insightful

Ep 55: Roth Conversion: Why 2020 Could Be The Best Year

Paying a lower tax rate today vs. what you would otherwise pay in the future on pre-tax IRA/401k dollars is a good move. They way you can do so is by converting money to a Roth IRA and paying tax in the year of the conversion.
The 2017 Tax Cuts and Jobs Act (TCJA) lowered tax rates and significantly widened tax brackets on individuals. Current law has the tax rates under the TCJA in effect through the 2025 tax year and increasing to pre-TCJA rates and brackets in 2026.
Yet, tax rates may go higher sooner. Many election models are currently forecasting Biden to win and for the Senate to flip blue. Assuming these come to fruition, the Biden Tax Plan calls for tax increases to occur before 2026. Then there are the trillions of dollars in unprecedented fiscal stimulus added to the government’s books to deal with the COVID crisis. At some point, the mounting debt has to be paid for, and various taxes are the way it must be paid.
Thus 2020 may be the last best year for conversions. Hear Kevin discuss these considerations in detail to empower you to take action to reduce your tax risk and improve your after-tax, spendable wealth.
 
Timestamps:
4:16 - Why Roth Conversions Should Be Considered Right Now
12:34 - Current Law 
16:09 - What Could Be Potentially Coming Down The Road
20:15 - Items To Consider When Tax Planning
25:55 - Sense Of Urgency

Ep 54: Should You Delay Retiring?

Some 24% of those 56 and older say the pandemic has caused them to push back their planned retirement date, according to a survey conducted by The Harris Poll on behalf of The Nationwide Retirement Institute. Hear Kevin discuss key variables you should consider as you plan through the COVID-induced uncertainty, including items that may nudge you to retire now and others that result in waiting.
 
Timestamps:
6:45 - Kevin's First Impressions On Postponing Retirement Due To Pandemic
10:35 - Case Study (Mark And Linda Consider Pros And Cons Of Retiring)
16:28 - It All Starts With A Plan
18:04 - Unemployment Considerations
20:47 - Healthcare Considerations
21:56 - Further Considerations In Delaying Retirement

Ep 53: Investing Vs. Speculating Part 2

65% of Institutional Investors surveyed in late June believe the market is factoring in the long-term impact of the coronavirus "too little" while only 5% said "too much," implying the market is overvalued. Yet, the market has continued to go up. Has it come too far too fast?
Hear Kevin discuss the topic in detail and explain why our brain function predisposes us to make investing mistakes, including blindly chasing investment returns and firmly entering the world of speculation (while abandoning principled and process-based investing). He even attempts to work in stories about Homer Simpson, Halloween, Thanksgiving, and pre-modern man to illustrate his points. Quite a feat to attempt. You won't be disappointed. 
 
Timestamps:
5:34 - Are Markets Factoring In The Impact Of The Coronavirus Appropriately?
9:54 - How Do We Define The Term “Market?”
15:34 - Too Big, Too Fast?
19:19 - An Important Lesson From The Simpsons
25:00 - Breaking The Herd Mentality

Ep 52: Investing Vs. Speculating Part 1

Investing should be scientific and process-based. Speculating is more akin to gambling and lacking fundamental support. At extremes, it is easier to discern the two but can be shades of grey in between.
Hear Kevin discuss the forward-looking nature of the stock market and times why it can make investing sense (not speculating) to look through bad economic news.
And be sure to listen to the end where Kevin discuss process-based portfolio changes made in March, as a result of changing inputs, and why Vanguard's DIY investors' portfolio inaction was the wrong thing to do.
 
Timestamps:
2:30 - Assumptions That Need To Be Made
9:20 - Looking Back On The Pandemic
13:29 - Looking Forward To The New Normal
22:30 - Rapid Changes

Ep 51: Case Study: Retiring Before Age 60 & Before You Ever Thought You Would

Like your work but hate your job? Bad boss. Terrible commute. Whatever the reason.
Hear Kevin share a story of a client who retired in her late 50s. She loved her work and taking care of her customers but hated other aspects of her job. She worked long hours and had a long commute. Taking care of her household on the weekend and trying to have a bit of fun left little space and time to seriously consider her retirement and life after work.
Perhaps this is why she was in a state of disbelief after her retirement plan showed she could retire in her 50s. The sheer thought of retiring was new and a bit scary.
And be sure to pay attention to the end to hear how things are going for her now four years retired and how she has defined phases and varied strategies to her retirement distribution planning.
 
Timestamps:
4:47 - About The Client
8:58 - The Realization Of Being Able To Retire
14:12 - Padding The Expenses 
19:44 - Healthcare When Retiring In Your 50’s
25:59 - Present-Day Planning

Ep 50: What To Do When Your Spending Goals Change After You Retire

You cut the paycheck cord and enter retirement. Then a spending goal unexpectedly increases...significantly. You can't simply continue to work longer, so what do you do?
Hear Kevin discuss real-life cases where clients had to provide financial support to their daughter going through a messy divorce and another situation where a client desired to buy a 2nd home. Though the situations were starkly different, the process to rework the retirement plan and evaluate tradeoffs was similar.
Life throws curveballs. Best to have a plan and process in place in advance on how to deal with them.
 
Timestamps:
4:18 - Client Story: Life Happens, Things Change
8:07 - Reworking The Plan For A Second Home
14:26 - Picking Up New Spending Goals
17:09 - Potentially Downsizing
18:12 - Taking A Second Look At Travel Expenses
20:14 - Providing Clarity
22:21 - Helping Clients Make Informed Decisions

Ep 49: Potential Inheritance: Include In Your Retirement Plan Or Not?

You live below your means and invest for your future ... similar to your parents. Now your parents are getting older, and it seems fairly clear they'll be leaving you an inheritance at some point. Meanwhile you're still working. Should you include the potential inheritance in your retirement plan?
Banking on an expected inheritance for your retirement plan involves risk. Hear Kevin discuss real-life cases where it was appropriate and another where it was too risky.
 
Timestamps:
6:25 - Market Update: We Are Not Out Of The Woods Yet
17:57 - Lean Towards The Conservative Side When Incorporating An Inheritance In Your Financial Plan
24:25 - 1st Client Case - Open Communication About Finances
30:03 - 2nd Client Case - Less Certainty About What The Future Holds
36:51 - 3rd Client Case - An Awkward Conversation Can Make A Great Impact On A Financial Plan

Ep 48: Why Big Tech Stocks Must Underperform

The five biggest tech stocks -- Amazon, Apple, Facebook, Google, and Microsoft -- are great businesses. They've been so successful over the last decade that they comprise about 20% of the total S&P 500 market capitalization -- a level of concentration not seen since the late 1990s. They also command higher prices (valuation) than the market as a whole.
While these companies have provided outsized growth rates and returns to investors over the last decade, there is no logical reason you should expect similar outsized growth rates and returns over the coming decade. Whether it is due to the magnitude of their success, capitalism or regulation, it will be nearly impossible to repeat their growth and success moving forward.
Listen to Kevin describe a simple thought experiment illustrating why it's mathematically impossible for past to be prologue for these tech darlings. Eventually, the music will run out. Investors will again learn the lesson that price matters ... just as they learned the same at the end of the Tech Bubble.
 
Timestamps:
6:24 - Why Do Tech Stocks Get So Much Attention?
9:46 - Looking Back At Tech Stock Growth From 2010-2019
14:57 - Why Growth Will Be Much More Difficult Going Forward
25:00 - Why Prices Matter