Welcome to Retirement Unpacked with Al Smith, owner of Golden Eagle Financial. You want a retirement plan that alleviates your fears about the future, so you know your money will last. As a chartered financial consultant, Al Smith will help you find a balance between the risk and reward of the market and the safety of your retirement income. And now, here’s your host, Al Smith. Welcome to another program of Retirement Unpacked. I want to thank you for tuning in. I have some good information that I dug up that you’ll like to hear today. And before I dive into that, I want to thank all the people who have met with me recently. I’ve stayed extremely busy, even though it’s the summer months. I know a lot of people who do what I do get a little slower in the summer. I’ve been extremely busy. If you would like to have a conversation to see if you’re on track for what you’re trying to do for retirement or if you’re getting close to that transition where you’re thinking about it’s time to consider rolling over my 401k or it’s time to evaluate if you’re on track. Give my office a call, 303-744-1128. And before I dive into my topic today, I’m going to bring us up to date a little bit. Jerome Powell, who is the head of the Fed. That’s the Federal Reserve. They’re the ones who raise interest rates or lower interest rates or declare that they’re going to remain the same. He has met with Congress recently and they are toying with the idea of possibly lowering interest rates a little bit. And I’m not a prognosticator. I can’t say that’s going to happen. But it would ease things for folks who are thinking about purchasing a home. Possibly an automobile because those interest rates are also a little bit higher than they normally are. So that’s what’s going on as far as the Fed is concerned. The big banks, JP Morgan, Chase, City Group, Wells Fargo, they’re all going to be declaring earnings very soon. And that may have some effect on the markets we will have to see. And also both the S&P and the NASDAQ are at record high levels right now. So that means if you have an IRA or 401K that’s linked to the market, your money is growing and that is a good thing. Clearly. Today’s topic. I’m going to talk, take a deep dive. And first of all, I want to precede this with a disclaimer. I am not a psychiatrist or a psychologist or anything along those lines. But there are certain psychological considerations or roadblocks or whatever we want to, however we want to describe those, to successfully saving for retirement. And some of those roadblocks might be psychological. Some of them might just be steps that need to be taken, that haven’t yet been taken. But it all boils down to you really only do the things that you plan to do. And before you sit down and make the plan, these are things that you have to think about. And so I did a little bit of research and one of the things that I learned, there’s an entity in Wales that did some research. The entity is called Mind, M-I-N-D. That’s their website. And one of the things that they discovered is that mental health can affect the way people deal with money. Money problems themselves, they can affect your mental health. What they also learned is that feelings are very heavily associated with money. The patterns of money affect your moods. And another one is overspending. And that is almost can be described as a mental health circumstance itself. There is one entity that did some research that I thought was really interesting. They called it a sentimental savings study that was done in 2019. And in this study, they associated very positive feelings and they created positive rewards and feelings for folks who saved money. And after I don’t have all the details of this study, but after as little as three weeks, the group with whom they were working increased their savings by 73%. Which I thought was rather enormous. But obviously you can’t listen to television for any length of time at all without hearing about mental health. And I know John Rush talks about that from time to time. It’s part of his Wednesday health and wellness and so forth. Mental health is certainly no less important than physical health. But being mentally healthy with respect to the propensity to save money is incredibly important. And one of the things that I have found especially with younger people and by younger, I don’t necessarily mean people in their 20s. All of those various ranges, you know, millennials, Gen X, Gen Z and so forth, people who are, excuse me, somewhat younger. They have not learned to delay gratification. For example, how often do you hear ads for a new cell phone and learn that that cell phone is $2,200? You never hear that. What you do here is that you get one of those free if you change your carrier. Well, we all know that nothing is really free. And so when you change carrier, you’re probably in a new contract and that $2,200 cell phone is wrapped into your new contract which may last three years or whatever. So I think delaying gratification is something that a lot of younger people haven’t learned. And the few who have, you’ll find might be driving an older automobile because they’re saving so that when it’s time to buy a new one, they’ll either have enough to pay for that new one or the later model vehicle or when they put the money down and finance it, they’ll have a very modest payment. So I think delaying gratification is incredibly important because I often talk about the time value of money. And when people begin saving, and if you’re saving when you’re at a young age, 20s or 30s, it doesn’t grow in a linear fashion. In other words, if we were to look at a graph, it doesn’t look like a straight line going up and to the right at an angle. It is a very sharp curve. When you begin saving money, the first few years, you pretty much only have the principle that you set aside plus a little bit of interest. But if we’re talking about someone saving for 30 or 40 years, it’s a very sharp curve. And near the end of that curve, the interest on that money is vastly more than the amount that’s being set aside every month. So the discipline to delay gratification is an important component that needs to be there in order to successfully save. And not just for retirement, if you’re saving for your children’s college education, if you’re saving for an automobile, you’re saving for some big vacation or event or something that’s going to cost a significant amount of money. Obviously, you have to choose not to purchase some things so that you have the money to set aside. And that way you can get that thing that in your mind has greater value. So it sounds like an oversimplification, but it’s really not. And the people that I have known who have accumulated healthy nest eggs didn’t necessarily earn an enormous amount during their lifetimes, but they consciously made the choice of not having the latest model automobile, not living in the biggest house, not simply for the family. Not sending their children to the most expensive colleges and so forth, or possibly even a trade school as an alternative. And as a result, living well within their means, they have nest eggs to the point where their concerns and retirement did not revolve around finances. But some companies that we are familiar with, they’ve really dug deeply into some of these things. For example, we’ve all heard of SoFi. SoFi is the big financial firm that has alternative loans for young people who have student loans and so forth. And they know a lot about finance and they know a lot about lending money, they know about saving money and they have an article where they talk about 14 reasons why it’s so hard to save money. But they have also linked their today, saving money today, why things are more difficult today to save money. And what’s surprising, they learned that 35% of adults would have difficulty covering a $400 emergency expense entirely with cash. They would have to use credit or something else, which is kind of surprising. So why is it harder now for people to save money? Well, I think that bad choice of not delaying gratification is certainly one of those reasons. But there’s some key points that SoFi describes and why it’s difficult for people to save right now. One of the things they’re talking about is high inflation and rising cost for essentials like gas and groceries and things of that nature. A lot of the adults they’ve learned have difficulty covering unexpected expenses without resorting to credit. That is something that certainly holds back young people from because of high interest credit cards making it difficult to save. One of the more obvious reasons is lack of budgeting and using a budget is extremely important because I’m a Christian and I believe everything we have belongs to the Lord. The first place some of our resources should go is to the church we attend, but after that there’s an expression pay yourself first. In other words, if you are not going to set aside money for your own future and for those financial things that you may want in the future, then the alternative is to resort to credit and things of that nature. So that’s a basic part of budgeting and in order to budget you need to find out how much you’re already spending. What are your fixed costs, your utilities, your rents, automobile payments, automobile insurance, maintenance, health insurance, all of those things. Put those into the budget and then include in that budget your discretionary things because it’s not going to be possible to save money if you don’t currently take a clear look at where you’re now spending your money. And we’re going to dive much further into those reasons why it’s difficult to save for retirement now even some of those that are psychologically based. Talk to you right after the break. About half of all retired people will need long term or in-home personal care at some point and now Smith with golden eagle financial will help you be ready for it. No one wants to think about possible health issues, but they can put a big roadblock in your dream retirement plan if you are not prepared. Al knows how important it is to include a plan for long term care in your overall retirement strategy whether you need it in home provider, medical equipment or any other care. Al gets to know you and your goals deeply. He gains a comprehensive understanding of your preferences so he can best advise you and make sure you’re prepared for any care that may be needed. Stay in charge of your retirement by contacting Al Smith today at klzradio.com/money and get your free no obligation consultation so you’re ready for whatever retirement brings. Investment advisory services offered through Brookstone Capital Management LLC, a registered investment advisor, B.C.M. and golden eagle financial limited are independent of each other. Insurance products and services are not offered through B.C.M but are offered and sold through individually licensed and appointed agents. Welcome back to retirement unpack. We’re looking at some of the roadblocks, some of those being psychological, making it difficult to save for retirement. One of the first ones that research done by SOFI brought out is not focusing on paying down debt. I don’t know that it’s necessary to pay off the mortgage on your home but if you have high interest credit card debt or an automobile payment with a high interest rate, I think it’s very much in your best interest to pay down that debt. So we talked about budgeting and so forth and a lot of the people I sit down and work with when we go through their budget they will tell me they’re doubling up on certain payments because they don’t want to be paying that high interest and they want to have that vehicle or home paid off. So extremely important in saving for retirement or saving in general for that matter is paying down debt because interest rates on credit cards are astronomically high and automobile loans those are still pretty high also. So it’s in your best interest to pay down debt as quickly as you possibly can. The other thing SOFI talked about which I’ve already talked about is the importance of budgeting and if people don’t have a high priority for budgeting, it’s difficult to save money if you don’t know where your money is going. How are you going to know how much money you are able to save if you haven’t created a budget and it may be that as you get through a budget or something like that it may be necessary to go out and look at the potential for some supplemental additional income. That’s another topic on its own and I could probably cover that in a whole separate show but sometimes that can become necessary especially if people get in a difficult circumstance regarding their finances. One of the problems and I would describe this almost as a mental health problem that SOFI discovered is trying to impress friends with money. Maybe friends invite you to a pricier than expected restaurant and you go along only to split the painfully expensive check or you maybe get a bonus and blow it on something that’s of a status nature which maybe you don’t really need. But then instead of saving that bonus, now you have a watch with 42 different features but your bonus is all gone. So I think impressing friends with money is foolish and that doesn’t mean that you need to be a tight-wad but I think over the long term people would have greater respect for you. If they learned that you were a good saver and one at time came time for you to pick up the check or something like that you may do that occasionally but your friends knew you primarily as being a good saver and also someone who does not get into financial difficulty because you have in addition to your long term savings you have an emergency fund. So if there’s something difficult financially that raises its ugly head you’re able to deal with that. Whereas many people I know who end up in financial difficulties have to rely on friends or family to get them out of a jam and this is certainly no way to handle your finances. So I’m earning enough money. I recently worked with a younger person. He had a good job, he is single. And in addition to the spirulid good job he has which was about $70,000 a year he had a part-time occupation and he made about another $30,000 a year from that. And this not only enabled him to save for retirement but it enabled him to do a few things that some people would might think are maybe a little bit extravagant and so forth but by working this extra job instead of just making $70,000 a year he was making over $100 with this additional job. And he’s saving through his 401k at work through his separate Roth IRA and he is on the way toward a good retirement no question. So if there’s not enough money coming in there are all kinds of sources of providing additional income. I was researching this recently and I found there’s all kinds of different marketing companies that would love to have people work online and do their job. And work online and do research about various products that are sold and so forth. Some of the other things that so if I talk about is not having an emergency fund. I already talked a little bit about that but that’s incredibly important because you don’t know if your car is going to break down, if you’re going to need a new furnace, a new air conditioner and so forth. And we can see that this is a problem and whenever there’s a problem there are companies that just pop out of the woodwork you can’t watch TV for more or listen to the radio for very long without hearing ads for not only extended warranties on automobiles but also warranties for all your appliances at home. Now I think if 98% of the people had adequate emergency funds companies that are providing warranties for home appliances and automobiles wouldn’t exist. And if it would be much much cheaper to have one of these warranties then it would be to save the money then these companies would not exist because it’s going to be very clear that over the long haul they’re not going to be paying more for automobile repairs than they’re bringing in in those premiums for extended warranties. And the same holds true of health holds appliances and so forth. So I think it’s important to have an emergency fund and it’s not only for appliances and things of that nature and emergency that’s kind of a big topic. You can have a loved one who lives far away and his or her health deteriorates you need to go visit maybe take time off of work that’s what emergency funds are for. Big one shopping too much I mean to some degree this can also become a mental health thing also I have known people who are for lack of a better word shopaholics. I knew I met a woman one time whose husband and he had since passed away that he would go to estate sales and buy an enormous amount of things that he did not need. And to give you an example he had sets of golf clubs multiple sets of golf clubs he didn’t play golf he had a beautiful leather saddle he did not own a horse he had some artwork that was more than they are work they needed to decorate their home. And so he had this compulsion that there were an estate sale there’s something that he had to take advantage of and when we think of compulsive spending you may think of women but it’s not subject to one sex only men women young people anyone can be subject to this they may be in a circumstance where they feel they have to have the newest whatever it is. And that compulsive spending represents money that could be going into savings or into that emergency fund which is far more important than the very newest shiny object. Inflation we already talked about that a little bit but it’s severe in certain areas especially housing education and some other things certainly fuel and groceries are included in that and that’s where not necessarily earning enough money is a problem but with inflation it becomes much more difficult to have some of the basic needs which were maybe relatively inexpensive five years ago now all of a sudden have become expensive. And although your income may have gone up in the last five years sit down sometime and get the pencil out and figure out if your income has kept up with inflation some other areas there’s all kinds of memberships to various services that you may not be using. I know at one time I checked my bank statements and I had a membership to a car wash service that I hadn’t used for an incredibly long period of time some people have the prepaid use of the toll roads and I don’t know for a fact but I know sometimes you get statements for those even though you haven’t used the toll road. I know that I have a membership the list can go on and on and on so spending money that slips through the cracks because of things that may only cost though twenty thirty dollars a month well when you have multiple of those that can really add up to some money no question. I remember one time quite a number of years ago I had to renew my driver’s license and I did it completely online through a website that popped up which I thought was part of the website to renew it but no it was a membership service that continued charging my account. And online it takes discipline to save for retirement and you get good feelings when you know you have enough in your emergency fund and you’re on track for retirement if you want to learn if you are on track call my office we’ll have a conversation three zero three seven four four one one two eight thank you for listening God bless you and let’s keep the folks in Israel and our prayers. Thank you for listening to retirement unpacked with your host Al Smith of Golden Eagle Financial set up a free consultation with Al today at klsiradio.com/money find your purpose in retirement with Golden Eagle Financial. Investment Advisory Services offered through Brookstone Capital Management LLC a registered investment advisor V.C.M and Golden Eagle Financial Limited are independent of each other insurance products and services are not offered through B.C.M but are offered and sold through individually licensed and appointed agents. [BLANK_AUDIO]