The Current Market Landscape and its Impact on Retirees | 7 Figure Annuity Sales Podcast | Ep. 217
This podcast episode (hosts Chad Owen and Caleb) reviews late-2022 market conditions — steep stock declines, rising interest rates, high inflation, and stressed real estate — and explains how those conditions threaten retirees' ability to maintain planned lifestyles. The hosts emphasize sequence-of-returns risk, the rising likelihood retirees must delay retirement or reduce income, and preview annuities as a source of guaranteed, lifetime income to protect "safe money." The episode is the first of a three-week series on positioning annuities during downturns.
Questions this video answers
512-798-3500, extension 5
23.31% down year-to-date
31.67% down year-to-date
20.04% down year-to-date
Over 3% (Fed rates were described as currently over 3%)
Chapters
On this week's episode, we're going to.
Talk about the current market landscape and its impact on retirees.
There you go.
Hello, everyone. Welcome back to this week's episode. As you know, I say this every single time. If you want a new imo, come to retirement realize financial. We are more than happy to help you. If you are happy with your imo, then why. No, I'm just seasonal. Go to retirement realize Agents Academy or RR Agents Academy. And we can help with the training. We don't require contracts. And it's important to know because there are some great organizations out there. That's true. And we partner with them and we love them. You know, it's. There's a lot of good fathers in this industry that have been around a long time and they just are really good at helping people. But there's also some very, very challenging ones as well. It's true. So you decide and if you are interested, call Caleb at can do this one again.
Yes, you were here last week. You heard the number again, but it's 512-798-3500. Extension number five.
There you go. We're gonna say it every single time because I don't love it, but we have new people that come and watch.
Well, sure, we. Yeah.
Yes.
Our marketing guy gets on to us all the time because Chad likes to start with all these shameless plugs and the marketing guys, like, guys, you got to get to the point, you got to get to the content, get in there and get started.
That's what I do.
So.
And sales is a good thing.
Sales and marketing go hand in hand.
They do. Absolutely. Without sales there is no marketing and without marketing there is no sales. It's a symbiotic relationship.
Symbiotic.
I mean, you can apply that to your annuity business. What good is marketing if you don't know how to present the product correctly?
True.
What good is presenting the product correctly if you don't have anybody to as an audience? Yeah, it's the same thing. So you just tell that marketing guide, just keep it zipped.
The marketing guy can hear us.
I know he can.
I'm excited because we're going to do a three week series about positioning annuities in a down market or during market downturns as we have been in steadily decrease over the course of all of this year. 2022.
Consistently. Yes.
And so I've got a few, I guess, points to make about the current market conditions and then want to talk about how those are impacting retirees. And then to wrap it up at the end, talk about how annuities kind of fit into that. And then next week we'll build on it. And then the third week we'll build on it even more. So should be a pretty cool little series here.
So you're saying you have a point to say something about something?
Yeah, yeah. So I, I made four, I made four notes about the current market conditions. I made a note about stock market, interest rates, inflation, and then real estate, stock market. Here's some stats for you. And this is as of the day that we're recording. So by the time this gets released, this is old data, but it's still.
It'Ll probably be relevant.
Yeah, probably. S P 500 is down 23.31 year to date. The NASDAQ is down 31.67 year to date. The Dow Jones Industrial average is down 20.04% year to date.
So everything's in a bear market.
Everything's bear market. Wow. At least the three brats.
Wait, wait, we got to specify why.
We call them brats.
I call them the brats because they're the ones that they feel happy one day, sad the next day. Happy one day, sad the name, throw a tantrum the next day. And then now they're on, you know, sugar rush. So they are brats.
They're brats, yeah. The interest rates, the Fed rates currently over 3%, which is really high.
What now? Over 6% loan, I think for a 30 year mortgage. I think that's. God, what are they thinking?
It's crazy.
It's going to destroy the housing market, the auto industry. Almost everybody buys electronics, big electronics on credit now. Furniture. I mean, there's so many things that are bought on credit now.
Yeah.
Unbelievable.
It's wild. You've got inflation at the end of August, the published official inflation rate was 8.3%, which I think is absurdly low compared to what prices are actually doing.
But it's so, it's so much more than that. And it's not just the inflation rate. It's that that 20 ounce bag of chips is now 16 ounces and you don't even bother to check the label and you're paying more for it. And you're thinking, oh, I got, oh my gosh, this bigger bag of three chips in here. Yeah, it's. Yeah, it's true.
And then here's a fun one. Real estate. The cost of property as an average across the country is at its highest rate of inflation over the course of this year as it of any year since 1982.
But here's the sketchy part of that. Real estate applications are the lowest level since 1996 in Austin, which is a hot market, have had three months, three months in a row of double digit declines. They just raised the interest rates again. What's that going to do the housing market? We are going to see massive drops. Yeah, yeah, it's due.
It's due for it.
And so stocks, bonds, commodities, mutual funds and real estate right now are all being beat by cash. Isn't that crazy?
When was the last time that happened?
2018. And I don't know if that ever happened before that. I think, don't quote me exact on this, But I think 2018, I didn't.
Realize it was that recent.
The first year that stocks, bonds, mutual funds and, and commodities were all beat by cash. I don't think there's any time before, and I could be wrong, but I remember doing some sort of study on that. I just don't remember the exact details on that. Yeah, but you have stocks, bonds, mutual funds, commodities and real estate now. Right, because real estate was not being beat by cash in 2018. Okay, so now we have five. Yeah, it's. Yeah, it's. Yeah.
That is absurd. That is absurd.
Which is a prime time for us.
Right?
It really is. Because I love going to a client's house and they thought they're in deep trouble because they keep calling the broker and they're saying, oh, let it ride, let it ride, let it ride, let it ride. It's like that's the same squawking thing they said when. 2000 to 2003, 2007 to 2009. And they are now older now than they've ever been. And can you really afford another downturn now? I always balance this out. I don't have a problem with brokers. I don't have a problem with brokers putting people in stocks, bonds and mutual funds. But for the sake of love and all decency, don't put safe money in something that can lose.
Right. And what you mean by safe money is the things that are needed to be guaranteed for somebody to retire without concern, without nervousness or stress or all the things that, you know, all those.
Negativities, what's the things we talk about is the two questions nobody can answer. How long are you gonna live for? Nobody knows that.
Right?
Where's the stock market gonna be tomorrow, let alone 5, 10, 15 years from now? We can't answer those questions.
It's true.
As a matter of Fact, I had a client one time and this was probably a year ago, maybe even a little longer, we got in speakerphone, he wanted to liquidate his account. Now I did not advise on that. Sure.
That was his decision.
Your decision. If you want to do this, you need to call your broker that and you would need to tell them put it in money market. But as yours, I even have this sign a document saying it is your decision. I'm not telling you not to or to do this. I won't because I'm not series licensed. So they called the broker and she goes, yeah, but you know what? He's not a long term planner. And I about lost, I'm going, wait a second. Ma', am, can I ask you a question? She's like, yeah. I said where's the stock market going to be tomorrow? She says I don't know. I said, oh, I'm sorry, you said your long term planner. What about 10 years from now? I don't know. Oh wait, you said long term Planner. What about 20 years or 30 years? Can you tell me where it's going to be? No. Then don't tell me you're a long term planner. You are not. I am a long term planner because I can tell you exactly how much income they're going to have in a year, five years, 10 years, 15 years. I can give you the worst case scenario. Can you do that?
They can't give a worse.
Then you're not a long term planner. I am. And so yeah, anyway, there you go. Something that rubbed me the wrong way.
Yeah, I get it.
And needless age. And then she goes, and this was this guy's broker for like 15 years. She goes okay, and I'm just gonna use the name fine, Bob, do what you want with your money. I'm like, shouldn't have that been the response anytime he would have called her right? Is do what you want with your money.
Right.
But she takes it all personal, puts on this guilt trip like you know, I said, do you realize how much money she's made off of gambling your money?
Right.
Lots. Anyway, well, so that slow pill we were talking about last, isn't there something I could take to calm me down a little bit?
I'm trying to figure it out.
Oh if anybody, you need it more than me.
You talk about how this impacts retirees, right? And when I think of it, you look at these conditions with interest, with particularly market being down and inflation being up. Those two things together.
But, but let's balance that statement out a little bit though. The market is not down, technically. And why do I say that? Because if you take what the market's done the past 12 years, because brokers will say, oh, you don't want to sell when the market's down. No, you have way more money that usually than what you had right. 12 years ago.
Well, they'll say, you don't want to sell when the market's down. And when the market's going up, you don't want to sell. Well, the market's going up.
Okay.
So when you ever want to go.
Down, you never want to. You don't want to take the paper loss, you don't want to take paper gain. I mean, come on.
Yeah.
It's like they're telling you right there, they don't want you ever moving your money.
Right.
And when you're starting to draw on that and live off of that.
You start drawing money. It's that sequence of returns. And once again, if you call Caleb on that, you know, we can. Obviously, we got to make sure you're part of the program. Yeah. But we have a whole thing on the sequence of returns.
It's. It's an important concept because you basically, if. Well, I'll just summarize it for you, if you don't already kind of know what it is. Basically, if you're drawing your retirement income out of an account that's at risk to loss, and it incurs loss Right. In the value because of the risk investments that have taken place while you're drawing out of it, you're compounding the decline in the account value. If that happens particularly on the front end, it matters all the way through. But particularly on the front end of retirement, the way that that compounds the drop in the account over those first however many years greatly impacts the ability to have any kind of sustained retirement.
It's interesting. They used to do the same likelihood of retirement in the big brokerage accounts. I haven't seen one in a while, but they do. Oh, your likelihood of retirement, 60% or 65.
And I'm going, that's not something to bank on.
Yeah. So I got a 35% chance of failure.
Right.
And then on top of that, if you looked at their illustrations, the first, first three years in the illustrations always showed up years.
Right.
Now they're getting stricter that to where you can't cherry pick what dates you want to start. And it has to be true 10 years back.
Yeah.
But there's a long time where that was not the case. And you look at these illustrations and you're going. Why is it on their illustrations there's always the first three years and up?
It's true.
Yeah.
Well, I think about people trying to retire with these conditions and I'm thinking about people who are not going to be able to enjoy the lifestyle they originally anticipated or they're going to have to work for longer. I personally know somebody that I actually used to work with who because of this year's drop is actually going to impact their ability to retire by three years. They project.
How old are they?
65.
You haven't thought of talking about what we do?
I have.
You haven't referred them to me?
I think I have. Think. I'm pretty sure I gave him a card.
They haven't called me.
I guess not. Yeah. But yeah, seriously, it's gonna so impacting if they choose to retire. Right? It's impacting a lot of people's ability to retire, the type of lifestyle that they want to retire with or impacting how when they can. Right.
Well, that's what happened in 2007-2009. There were a lot of people that wanted to retire that are still working to this day now. And you know, maybe if they were 70 at that time and they had to do other RMDs even though they were still working. Oh my God.
It's crazy.
It is. It's not.
Another one that's wild to me is that there are surveys from several years ago that indicate that retirees are more concerned about outliving their money than they are about dying.
When you go back to 2020 that right now.
Oh yeah, we're north cumulatively north of 14% inflation from 2020 to 2022. Like if you take the cumulative inflation rate over this 2020 to 2022 and they're saying that back then from 2020.
Oh, 20. 2020. Okay.
Right. So you take the cumulative inflation rate is north of 14% in that short period of time. And people back then when we were seeing anywhere from 1 to 2% inflation year over year, that was kind of the norm there.
They're saying they're still more concerned about running out of money. Now we've incurred 14% published inflation rate in a 2 1/2, 3 year time period. I'm thinking that concern should be even more heightened.
Oh, 100%. And the thing is, and I did it really rough, just grabbed the calculator and figured out if we have a 20% drop in the market and don't quote me on exact numbers, but I just did this really quick a 20% drop in the market. And let's say you had 100,020 in the year 2000 and we have a 20% drop in the market and you stayed. I think I did the S and P. I'm pretty sure that's the one I used. But if you stayed in the market the entire time and you add the inflation value of the money since 2000 to 2022, we would. You'd have the same dollar amount you had 22 years ago.
Oh, my gosh.
I mean, that's just crazy to me.
Yeah.
That is because things cost more now. And even with inflation, it's just like, why would you want to be at the same buying power that you had 22 years ago? That means you're never upgrading lifestyle now. You know me, I'm not about fancy this, fancy that. I want a Ferrari. I just. That's not me.
Sure.
I don't care what brand name is. Whatever's durable and whatever's the. That's what I do. So, you know, I'm not about that. But getting older, I would hope you'd like to have a home that's getting paid for.
Right.
Cars that are paid for. You know, you have money to be able to go enjoy and spend some time enjoying life not working to exist, but working to enjoy.
Right.
And yeah, it's so good.
Well, and I think all of that, all of what we just described creates a perfect scenario, or at least perfect conditions where people need as much now than ever. Safety and security and guaranteed income they can never outlive with no risk to the market.
Yeah, that Very well.
Well, thank you. And that's what we're going to talk about next week.
You must have a good mentor.
I've got a great mentor.
Wow.
Yeah. Josh is in the other room, but.
And on next week episode, you will not see Caleb here. You have a great day. Happy selling.
