Retire With Style Wade Pfau & Alex Murguia

In this conversation, Bob French and Rob Cordeau discuss ESG (Environmental, Social, and Governance) investing and its growing popularity. They explore the different ways investors can align their portfolios with their personal values and beliefs. They also address common misconceptions about ESG investing, such as it being solely for liberal investors. The conversation highlights the importance of understanding the impact and potential trade-offs of ESG investing, including the potential for lower expected returns. They discuss different approaches to implementing ESG investing, including using funds and ETFs, separately managed accounts, or donating the difference in returns to charities. The conversation concludes with advice on how to approach the decision of whether ESG investing is right for an individual.




Takeaways

ESG investing allows investors to align their portfolios with their personal values and beliefs.
ESG investing can involve adding or subtracting certain stocks, industries, or sectors based on values and beliefs.
ESG investing may result in a slightly lower expected return compared to a globally diversified market portfolio.
Investors should carefully consider the impact and potential trade-offs of ESG investing before making a decision.
Different implementation options for ESG investing include using funds and ETFs, separately managed accounts, or donating the difference in returns to charities.

Chapters

00:00 Introduction and Setting the Stage
07:37 Implementing ESG Investing: Adding or Subtracting
09:41 The Impact and Trade-Offs of ESG Investing
14:04 ESG Investing: Not a Boycott or Punishment
20:01 ESG Investing and Portfolio Performance
26:58 Implementation Options: Funds, SMAs, and Donations
39:37 Making the Decision: Is ESG Investing Right for You?
41:50 Conclusion and Final Thoughts





Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Wade Pfau, Alex Murguia, and James Matthews discuss retirement income and the Retirement Income Style Awareness (RISA) framework. James shares his background in the retirement income space and his realization that traditional retirement planning advice was lacking. The conversation touches on the limited investment options in 401(k) plans and the need for a holistic view of retirement income. They also discuss the importance of risk management and the gaps in the current financial planning curriculum. Overall, the conversation highlights the need for a more comprehensive approach to retirement income planning. The conversation explores the need for a strategic approach to retirement income planning and the limitations of traditional retirement income paradigms. It emphasizes the importance of maximizing living standards in retirement and the need for open-mindedness in exploring different methodologies. The conversation also discusses the role of the Retirement Income Certified Professional (RICP) designation in addressing the gap in retirement income planning education. It highlights the shift towards a more client-focused and personalized approach to retirement planning and the potential applications of the RISA framework in other retirement decisions. The conversation concludes with a discussion on the importance of finding an advisor who embraces an open-minded and client-centric approach.




Takeaways

Traditional retirement planning advice often lacks a comprehensive approach to retirement income planning.
401(k) plans typically offer limited investment options and lack clear mechanisms for converting assets into retirement income.
The Retirement Income Style Awareness (RISA) framework provides a more holistic view of retirement income planning.
Risk management is an important aspect of retirement income planning that is often overlooked.
There is a need for improvements in the financial planning curriculum to better address retirement income planning. Retirement income planning requires a strategic approach beyond traditional paradigms.
Maximizing living standards in retirement should be the primary goal.
The RICP designation addresses the gap in retirement income planning education.
A client-focused and personalized approach is crucial in retirement planning.
The RISA framework can be applied to other retirement decisions.
Finding an advisor who embraces an open-minded and client-centric approach is essential.

Chapters

00:00 Introduction and Background
09:59 The Retirement Income Style Awareness (RISA) Framework
23:21 The Importance of Retirement Income in ERISA
30:40 Applying the RISA Framework to Other Retirement Decisions
37:05 The Importance of Finding an Advisor with an Open-Minded Approach





Links

Join the Retirement Researcher team for ”Travel in Retirement: New Options and Opportunities,” with Dan Veto, CSA, to learn how travelling in retirement is different from the vacations you took while you were working - and how you can make the most of these differences. Register to attend LIVE on 7/23/24 at 1:00 PM ET by visiting risaprofile.com/podcast.

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

In this episode, Wade and Alex answer listener questions about portfolio allocation in retirement. They discuss the impact of low yields on TIPS and how it affects a retiree’s portfolio. They also explore the optimal allocation of assets in taxable, tax-deferred, and tax-avoided accounts. Additionally, they address the role of annuities in retirement income and how they can replace the bond portion of a portfolio. They emphasize the importance of tax diversification and asset location. Finally, they provide insights on investing in stocks and the different factors to consider, such as value, small-cap, and REITs.




Takeaways

Low yields on TIPS impact a retiree’s portfolio and may require a reassessment of risk and allocation.
Tax diversification is important, but the exact percentages in each type of account are not as crucial as asset allocation and asset location.
Annuities can play a significant role in retirement income by providing protected lifetime income and reducing reliance on other investments.
When investing in stocks, it is important to capture market risk and consider factors such as value, small-cap, and REITs.
Growth indices may not necessarily provide a premium over value stocks in the long term.

Chapters

00:00 Introduction and Small Talk
02:45 Navigating Low Yields and Portfolio Allocation in Retirement
09:15 Optimal Allocation of Assets in Taxable, Tax-Deferred, and Tax-Avoided Accounts
25:58 The Importance of Tax Diversification and Asset Location
26:41 Investing in Stocks: Capturing Market Risk and Considering Factors





Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 

This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode, Alex, Wade and Rob answer listener questions about retirement planning. They discuss topics such as asset allocation, selling RSUs, managing sequencing risk, and when to claim Social Security. They provide insights on diversification, tax implications, and the importance of considering both sequence risk and concentration risk. They also suggest strategies like creating a bond ladder and using IRA distributions to bridge the income gap. The episode ends with a plan to continue answering more listener questions in the next episode. Listen now to learn more!




Takeaways

Consider the risks and benefits of holding concentrated positions, such as RSUs, in your portfolio
Evaluate the tax implications of selling RSUs and consider the potential benefits of diversification
Use Social Security claiming software to determine the optimal claiming strategy for both spouses
Explore strategies like bond ladders and IRA distributions to bridge income gaps in retirement
Balance the preservation of principal with the need for growth and income in your retirement portfolio

Chapters

00:00 Introduction and Q&A Format
05:42 Managing Concentrated Positions and Sequencing Risk
27:43 Creating a Bond Ladder to Bridge Income Gaps
29:54 Using IRA Distributions to Manage Tax Liability
35:23 Balancing Preservation of Principal with Growth and Income





Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Alex Murguia and Wade Pfau discuss various topics related to retirement planning, including glide paths, asset allocation, index funds, and tax planning. They address questions about implementing a rising equity glide path, asset allocation across different types of accounts, the performance of index funds, and the availability of withdrawal strategy software for retirees. They also touch on the topic of Medicare and HSA contributions. Overall, the conversation provides valuable insights into retirement planning strategies and considerations.

Takeaways

Implementing a glide path for retirement asset allocation depends on individual circumstances and goals, and there is no one-size-fits-all approach.

When considering asset allocation across different types of accounts, it is generally recommended to place tax-efficient assets in taxable accounts and tax-inefficient assets in tax-deferred accounts.

Index funds generally reflect the performance of the stocks in the index they follow, and their daily performance is based on the weighted average of the proportion of each stock in the index.

Withdrawal strategy software packages for retirees are primarily available to investment advisors and may not be easily accessible to individual consumers.

Individuals who work for employers with more than 20 employees can delay applying for Medicare after age 65 to continue contributing to their HSA accounts, but it is important to consult with HR and understand the implications of signing up for Medicare.

Chapters

00:00 Episode 131 Starts
01:29 Asset Allocation and Glide Paths in Retirement
04:07 Understanding Index Fund Performance
07:10 The Drawbacks of Equal-Weighted Indices
10:47 Tax-Efficient Asset Location
21:46 Limitations of Withdrawal Strategy Software
28:00 Managing Medicare and HSA Contributions
32:33 The Value of Professional Advice in Retirement Planning

Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Alex and Bob discuss the impact of the election on the stock market and retirement planning. They emphasize the importance of looking at historical data and not getting caught up in the rhetoric and uncertainty of the election cycle. They also highlight the recency effect and how campaigns are information machines that can influence market movements. They discuss the complexity of interpreting campaign statements and the countervailing effects they can have. They also mention the upcoming webinar where they will dive deeper into the numbers and provide more insights. The conversation explores the relationship between presidential elections and the stock market. The hosts discuss whether there is a correlation between the political party in power and stock market performance. They also touch on other factors such as the height and handedness of presidents and their impact on the stock market. The hosts emphasize the importance of taking a long-term view when it comes to investing and retirement planning, rather than trying to time the market based on election cycles.


Takeaways

Look at historical data and avoid getting caught up in the rhetoric and uncertainty of the election cycle.
Campaigns are information machines that can influence market movements.
Interpreting campaign statements and their impact on the market is complex and uncertain.
Consider the countervailing effects of policy proposals and how they may impact the economy and stock market.
Join the upcoming webinar for a deeper dive into the numbers and insights. There is no clear correlation between the political party in power and stock market performance.
Other factors such as height and handedness of presidents also do not have a significant impact on the stock market.
Taking a long-term view and focusing on retirement planning is more important than trying to time the market based on election cycles.
Understanding historical context and having a framework for interpreting market events can help investors make informed decisions.


Chapters

00:00 Introduction and Setting the Stage
00:29 Discussion on the Election and Stock Market
05:08 The Recency Effect and Campaign Season
07:20 Interpreting Market Movements After an Election
08:46 The Challenge of Timing the Market Based on Current Expectations
09:15 The Difficulty of Predicting Market Reactions to Campaign Statements
13:14 The Volatility of Campaign Season and Uncertainty
15:12 Considering the Impact of Policy Proposals
22:38 Upcoming Webinar and Deeper Dive into the Numbers
25:30 The Impact of Presidential Elections on the Stock Market
33:51 The Relationship Between Election Years and Market Volatility
37:25 Long-Term Investing and Retirement Planning
41:16 Understanding Historical Context and Interpreting Market Events

Links

Register now to attend the next webinar with Retirement Researcher, “The Election and The Stock Market: Understanding the Effects on Your Investments” on 6/25/24 at 1PM ET hosted by Bob French. Visit risaprofile.com/podcast to reserve your spot!

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 


This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips