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Wall street's cruel retirement hoax

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  • 1. Wall Street’s Cruel Retirement Hoax!
    Will Deceptive Wall Street Math Turn Your Retirement Dream Into a Nightmare?
  • 2. What is deceptive Wall street math?
    • Stock and bond markets are variable, they have ups and downs. In down markets you can actually lose value.
    • 3. Yet, in planning assumptions, an average rate of return (e.g. 7%) is normally used. This doesn’t account for the up and down movements of the market and hides your true risk.
    Foundational Asset Management™
  • 4. Managing retirement income risk
    • Portfolio volatility and the sequence of returns plays a unique role in retirement income planning. Specifically, variable returns affect a portfolio with systematic withdrawals much more negatively than one that is in the accumulation phase.
    • 5. More importantly, negative returns early in retirement can create disastrous conditions from which recovery is nearly impossible if lifetime income is your goal.
    • 6. So, it may make sense to transfer your investment and longevity risk to a 3rd party.
    Foundational Asset Management™
  • 7. Recovery of Losses
    Edward Winslow,
    Author of, Blind Faith,
    “96% of professional money managers do worse than the S&P 500 index”.
    “It will take the average household over thirty years to recover the wealth lost in 2000 and 2001 from market declines”.
    Foundational Asset Management™
  • 8. Protected Investment
    Edward Winslow,
    Author of, Blind Faith,
    “If unprotected against loss, an investment in stock or an equity mutual fund is nothing more than a gamble”.
    “The primary objective of an intelligent investment strategy should be to preserve capital and build on it at a consistent, moderate rate in both bull and bear markets”.
    Foundational Asset Management™
  • 9. Variable Returns – Accumulation Phase
    • The following four slides show the impact of variable returns over a 20 year period on your money in a balanced 60% Equity – 40% fixed portfolio in the accumulation phase.
    • 10. The first two slides show a Bull Market followed by a Bear Market. The next two slides show a Down Market followed by a Bull Market.
    • 11. Will there be any difference in the ending values?
    Foundational Asset Management™
  • 12. Impact of Average -Vs- Variable Returns
    Accumulation Phase – 1st 10 Years
    This calculator, used throughout the presentation, will show the impact of variable returns. For our example here, we will start with a beginning investment of $300,000 and illustrate what happens in both the accumulation and income phases.
    Foundational Asset Management™
  • 13. Impact of Average -Vs- Variable Returns
    Accumulation Phase – 1st 10 Years
    Here is the first 10 years of your money in a bull market while it is in the accumulation phase. Notice the difference between the average return of 12.05% and the actual rate of 8.37%.
    Foundational Asset Management™
  • 14. Impact of Average -Vs- Variable Returns
    Accumulation Phase – 2nd 10 Years
    Now your money enters a 10 year period of volatility reaching some
    high- highs and low-lows ending with very little return to show for it. Very much like the 10 years from 1999 – 2009. Notice the ending value of $789,192.
    Foundational Asset Management™
  • 15. Impact of Average -Vs- Variable Returns
    Accumulation Phase – 1st 10 years
    Now we have reversed the order of the up & down markets. Do you think it has any impact on the 20 year outcome? Let’s see what the next 10 years brings.
    Foundational Asset Management™
  • 16. Impact of Average -Vs- Variable Returns
    Accumulation Phase – 2nd 10 Years
    Remember the ending value from the first 20 years? It was $789,192 , the same as it is for this 20 years.
    So you can see that the sequence or variability of returns had no impact on your money during the accumulation phase, assuming you remained fully invested.
    Foundational Asset Management™
  • 17. Variable Returns – Income Phase
    • Now we will look at the impact of variable returns over a 20 year period of your money in the same 60/40 portfolio with the goal of providing you and your spouse lifetime income.
    • 18. Again, the first slides show a Bull Market followed by a Bear Market. The next two slides show a Down Market followed by a Bull Market.
    • 19. We just saw that the variability of returns had no impact during the accumulation phase. BUT, will you be so lucky when it comes to your retirement income security?
    Foundational Asset Management™
  • 20. Impact of Average -Vs- Variable Returns
    Retirement Income Phase – 1st 10 Years
    Now, you have retired with $789,192 and you need it to provide you and your spouse an income for life. Let’s look at the impact of taking out an annual income of $35,514 growing with a 2.5% inflation rate.
    This slide and the next one show you retiring into an up market followed by a down market. At the end of the first 10 years, so far so good.
    Foundational Asset Management™
  • 21. Impact of Average -Vs- Variable Returns
    Retirement Income Phase – 2nd 10 Years
    Now the bear market hits and while you are down from the $1,276,994 you had at the end of year 10, you still have more than the $789,192 you started with 20 years earlier.
    Foundational Asset Management™
  • 22. Impact of Average -Vs- Variable Returns
    What if you are unlucky enough to retire into a disastrous down market first, like millions of Americans did back in 1999. Notice your ending value now is down to $458,991; HOW DOES THIS MAKE YOU FEEL!
    Retirement Income Phase – 1st 10 Years
    Foundational Asset Management™
  • 23. Impact of Average -Vs- Variable Returns
    Retirement Income Phase – 2nd 10 Years
    As you can see, your future would not be so bright even with the big returns of the bull market. Your early losses in the first 10 years combined with your income withdrawals are too much to overcome.
    Now left with $402,793 at the end of 20 years you will run out of money in another 6 to 9 years depending on future returns. A retirement disaster in the making! Could it have been avoided?
    Foundational Asset Management™
  • 24. swear off wall street
    Flee to safety then back to market
    After 10 years of volatility in the market and your retirement assets depleting, Human Nature and your emotional side may cause you to swear off Deceptive Wall Street Math™ forever.
    Now let’s look at 2 scenarios:
    • Under the first you rush to the safety of CD’s
    • 25. Under the second you rush to the safety of CD’s but then after 2 years of big market gains you jump back into the market.
    Foundational Asset Management™
  • 26. swear off wall street
    Flee to safety then back to market
    Under scenario one you have rushed to the safety of CD’s, but the early losses are to much to overcome and your retirement nightmare is a reality; you‘re broke in 3 to 4 years .
    Foundational Asset Management™
  • 27. swear off wall street
    Flee to safety then back to market
    Under scenario two you rush to the safety of CD’s. Then like so many investors, after missing 2 years of big returns in the market, you decide to expose yourself to market risk once again for the hope of continued higher returns.
    Congratulations, while not totally avoiding retirement disaster, this typical scenario now staved off the POOR HOUSE for 4 to 5 years.
    Foundational Asset Management™
  • 28. Now what…
    If this disastrous scenario were to happen to you what would you be forced to do?
    • Go back to work?
    • 29. Reduce the amount you take out of your accounts to try and make your money last longer?
    • 30. Sell your home?
    Do You Have A Backup Plan; A Plan B?
    Foundational Asset Management™
  • 31. Deceptive math… Wall Street’s cruel retirement hoax
    • Most retirement income calculators used by Wall Street trained brokers and financial planners assume an average rate of return. As you just learned this doesn’t paint a true picture of the risk you face in retirement. You never know when the next stock or bond market crash will wipe out your retirement income security.
    • 32. There is NO “do over” when it comes to your retirement income. YOU MUST Disaster-Proof Your Retirement™ so un-managed investment and longevity risk doesn’t result in you going BROKE.
    To paraphrase a famous Clint Eastwood movie line,
    “Ask yourself, do you feel lucky today, well do you?”
    Foundational Asset Management™
  • 33. What if…
    • There was a way for you to position your money to minimize the devastating impact of the variability of returns and Deceptive Wall Street Math: would you want to know about it?
    • 34. Has your current advisor Stress Tested your retirement income plan so you know how you would come through in another unforeseen market meltdown?
    • 35. Remember, Wall Street math works fine when you are in the accumulation phase, but can be disastrous in the income phase.
    When would you want to know if you were going to run out of money, NOW when you can Disaster-Proof Your Retirement™ or down the road when it may be to late?
    Foundational Asset Management™
  • 36. FREE Retirement Income Stress Test
    • We will do a retirement income check-up and stress test for you for FREE, no strings attached. You will be able to see if you are Disaster-Proof™ or at risk of running out of money in retirement.
    • 37. We will also show you how to Disaster-Proof Your Retirement™ using breakthrough Anti-Risk Foundational Asset income strategies that allow you and yours to Retire and stay Retired, without the fear and worry of running out of money NO MATTER what happens to Interest Rates or the Stock Market.
    Foundational Asset Management™
  • 38. Disaster-Proof retirement
    • Stock and Bond Market volatility is just one of the risks you must address if you want a Disaster-Proof Retirement. 
    • 39. There are many other risks you will encounter in your retirement years.  There are two more major areas that you must address:
    • 40. Increasing Income and Estate Taxes
    • 41.  Major health related events
    • 42.  Early death of a spouse
    • 43.  Long term disability and confinement
    Foundational Asset Management™
  • 44. Professional partners protecting you
    • Tax Strategies That Cut Uncle Sam OUT
    Sharp, Safe, Cutting Edge
    The drastic changes to the economy and financial systems in recent years has resulted in highly complicated tax and accounting processes that require expert knowledge to understand. Our professional partners can ensure that your portfolio will take into account tax implications for an advantageous after-tax return.
    • Long Term Asset Protection Strategies
    Protecting Your Sunday Paper is one Thing.
    Protecting Your Life Savings is Quite Another.
    Nobody expects to be sued. Just ask the 20 million people involved in lawsuits last year. With our professional partners we are able to design an asset protection plan that will make the difference between reaching your financial goals and "losing it all."
    Foundational Asset Management™
  • 45. Call today to get your FREE
    Retirement Stress Test and
    Disaster-Proof Analysis
    1-800-380-7889
    Stop worrying about your retirement. Put a Disaster-Proof Retirement Plan™ in place today. We’ll even help you relax with a FREE 1 hour massage just for taking the test.
    Call NOW!
    Foundational Asset Management™