How To Build An Investment Portfolio For Retirement

Planning for retirement? Learn how to build a smart retirement investment portfolio! In this episode of The Wealth Mindset Show, Austin, Josh, Chase, and Jess explore how to adjust your investment strategy as you approach retirement, generate reliable income, and avoid common missteps of retirees. Discover withdrawal strategies, portfolio allocation tips, and how to protect your nest egg in any market. 

For the full transcript, show notes, and resources, visit thewealthmindsetshow.com/s2e9

➡️Download Free Resource: 8 Timeless Principles to Investing!

🎧Connect & Listen Here: Website | Instagram | Facebook | Spotify | Apple Podcasts

Chapters

• 1:20 Investing in Retirement Vs. Your Working Years
• 3:12 Key Components of a Successful Investment Portfolio
• 5:53 Adjusting Your Portfolio As Your Approach Retirement
• 8:19 Ideal Asset Allocation for Your Investment Portfolio
• 11:12 The Bucket Approach: Short-Term, Mid-Term, and Long-Term Investing
• 12:55 Income Sources That Factor Into Liquidity Needs
• 17:13 Your Withdrawal Strategy & The 4% Rule
• 22:07 Should You Live on Dividends & Interest or Sell Investments?
• 24:57 Retirement Mistakes Your NEED To Avoid
• 27:31 Work With An Educated Financial Advisor

Transcript

You're listening to The Wealth Mindset Show, where Hixon Zuercher Capital Management's team of finance professionals, portfolio managers, and a life coach, come together to tackle complex topics in finance and retirement planning, so you don't have to. From investment strategies and wealth management, to tax planning, retirement income, and aligning your money with your values and purpose, The Wealth Mindset Show offers the tools to thrive.

Austin Wilson:

All right. Hey, hey, welcome to The Wealth Mindset Show, where our Hixon Zuercher team will have conversations on managing wealth, navigating retirement, and making smart decisions for a secure, meaningful future. I'm Austin Wilson, Director of Investments at Hixon Zuercher Capital Management.

Josh Robb:

And I'm Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Today we are joined by Jessica Hinks and Chase Rose, two other advisors at our firm, and we're going to be talking today about building an investment portfolio for retirement.

Austin Wilson:

And this is a loaded question. How do you do that? What are the process? What's the steps? I feel like we can go a lot of different ways here, but we're going to be answering questions like, "Hey, maybe should you adjust your investment strategy as you get closer to retirement?" Or, "How do you keep growing your money without losing sleep?"

So, let's start with just talking about the foundations of a retirement investment portfolio. So, any thoughts on why investing in retirement is different than when you're investing during your working years?

[1:20] - Investing in Retirement Vs. Your Working Years

Josh Robb:

Yeah, so we start with the biggest difference is during your working years, you're putting money into your portfolio and then in retirement you're drawing money out of, so it's a shift from contributions to distributions.

Austin Wilson:

Correct.

Josh Robb:

That's the biggest change between those two.

Chase Rose:

And the biggest concern for any investor has to be the bear market, right? The inevitable dip in market prices. And so the biggest difference, as I'm sure you all know, and our listeners most likely know as well, when you're saving for retirement, that's an opportunity. Whereas if you're in retirement, it's pretty significant risk for a retiree to go through a bear market. So, the psychological aspect is much different.

Austin Wilson:

So Jess, from a psychological perspective, how does that volatility feel different in retirement versus leading up to it?

Jessica Hinks:

Yeah, it's not a party anymore, like Chase was referencing, for people who are still saving. But for retirees, you probably spent 40 years growing and growing and growing a portfolio, and your sense of value can get kind of tied up in that, and your sense of peace, most importantly. And so when that volatility comes, your peace can just be shattered. But there is ways to restore that piece, protect it if you do build a portfolio that's meant to navigate that volatility.

Austin Wilson:

Yeah, that's a great point. So there's multiple aspects of these portfolios. They need to have some growth components of course, because we know cost of living increases over time. So our money needs to grow. We also need to look at generating income, but also preserving our capital, which is really the most important part when it comes to volatile markets. And we're experiencing a volatile market right now, as we're in a correction for the market, not a bear market, but a correction. So that's something at the top of mind for retirees in particular.

Let's talk about some key components of a strong portfolio. So Josh, talk a little bit about that diversification between and across different asset classes and why that's important.

[3:12] - Key Components of a Successful Investment Portfolio

Josh Robb:

Yeah. And that really doesn't change for working versus retirement, is we suggest you always have a diversified portfolio. Now, working versus retirement, your diversification may look a little different because you may be targeting different asset classes a little more in one or the other. For instance, you mentioned income. If someone's really trying to maximize income in retirement, they may focus on different areas of some of those like the stock market or bond market, they may focus in on different pieces of that. So overall, both should be diversified, but how and where the diversified may be a little bit different.

Austin Wilson:

Anything else about liquidity? So talk about a little bit about purposes for cash, and how that can be important, but also not having too much cash that it's a drag.

Chase Rose:

Yeah, absolutely. So, one of the biggest recommendations we make for clients as they approach that retirement date, those last few years obviously 401(k) savings is a great way for clients to save for retirement. But as we know historically speaking, when you're saving into especially a pre-tax 401(k), you're going to generate a lot of income tax when you inevitably take that in retirement. So, something we often advise as long as the situation allows for it, just start stacking cash those few years before retirement, because not only are you going to have the cash available where you don't have to worry about what is going on in the market, but you can keep your income tax pretty low, your tax return is going to be much easier to navigate.

Jessica Hinks:

Yeah, I say that all the time to people on the on-ramp to retirement, that I've never met a retiree who regretted having cash. It doesn't happen. It helps you have peace, it helps you navigate volatility. So if you're already meeting your 401(k), your Roth IRA savings goals, yeah, start hoarding it up those next few years of retirement. That's honestly my recommendation.

Chase Rose:

Yeah. And that's a really big point as well. Something that I feel like people, it's hammered into people when they're young just to save for retirement. And doing something is always better than nothing. But if we were to work with a young person, I think a common recommendation piece we would have, or a piece of advice would say, diversify not only in your investments but in the tax, the way in which you save. So you can use vehicles like 401(k)s, Roth IRAs, and brokerage accounts, and any other accounts that are out there, those are just the most common ones. Because when you have flexibility in how you take your money in retirement, that can optimize retirement. It can optimize things to such another level that you wouldn't have had before.

Josh Robb:

Yeah, there's three. There's after tax, which is that taxable cash investment; there's pre-tax which is usually your traditional 401(k); then after tax, which is the Roth piece. And so all three of those are taxed differently, which allows you flexibility.

[5:53] - Adjusting Your Portfolio as Your Approach Retirement

Austin Wilson:

All right. So next, let's talk about adjusting your portfolio as you approach retirement. So this is common knowledge that people tend to think is, "Hey, I'm getting close to retirement, I need to be less risky." Or, "Hey, I'm in retirement, maybe I should be really conservative." And that's not always the case, and I'm sure Josh is going to insert his most his favorite term, "it depends," sometime in this conversation. But let's talk a little bit about adjusting that investment philosophy as you approach retirement. So, is it a time to adjust your investment approach?

Josh Robb:

Well, it depends. Look at that. But the on-ramp, Jess mentioned kind of that on-ramp those years before, part of that piece is, and we've talked about this in some other episodes, is that early part of retirement you're most vulnerable to market movements and how that impacts your success. And so there is some to getting a portion in a nice conservative piece. We've talked about it as kind of a bare market fund to protect against market volatility for a couple years worth of your needs. And in doing so, heading into retirement, you remove a piece of that sequence risk, the risk of, "Oh no, those first couple of years aren't as good in the market as I needed." And so from that standpoint, yes, you do see some people heading into retirement take a portion of their portfolio and maybe reduce volatility. But the overall is, if you're retiring in your 60 or 70s, you have a long-term timeframe, and you still have the biggest challenge, which is inflation, to fight against. So you really can't go very conservative if you hope to have that long-term success trade-off.

Austin Wilson:

I think that's a common thought is, "I'm retired, or I'm nearing retirement, I need to really protect my nest egg." And I think that that often actually burns people more than they think, because you just mentioned it, that big ticket item that we're trying to outpace this inflation. Inflation is always there, and it erodes your purchasing power over long terms. And fixed income has its place, as we're going to talk about, but it does not do nearly as well as stocks.

Josh Robb:

In the long term, yeah. And that's the thing is, what am I protecting against the short-term volatility, the stock market going down this year? Or my purchasing power, can I buy the food and everything I need 30 years from now? That's the bigger risk. But not as many people think about that risk versus the, "Oh, market on the TV is down. I should be concerned about where my portfolio is at this point."

[8:19] - Ideal Asset Allocation for Your Investment Portfolio

Austin Wilson:

So Jess, talk a little bit about the role of bonds, the role of fixed income. That sleeve in an investor's portfolio as they get closer to retirement and into retirement, how important that is? And if they're even really relevant for most people.

Jessica Hinks:

Yeah. Like Josh mentioned, retirement is such an important part of an investor's life, and I just think it's a stage... A lot of us don't just step back and think about our asset location, our stock to bond ratio. We wait for certain life events to happen, whether it's a job change, or retirement being the biggest one. So it's just a good time to prompt the conversation, and also just prompt the debate of where bonds belong in your portfolio. They still absolutely deserve a place.

You really have to look at your financial projections you've created with your financial advisor, because if you don't need to have your pedal to the floor on risk, you shouldn't be targeting an 8% return. You shouldn't have to put yourself through those sleepless nights if you really don't have to take on that kind of risk. So, if your risk tolerance doesn't support that, or if your success in retirement isn't dependent on high returns, bonds absolutely deserve a place in your portfolio to bring stability and peace of mind, and to provide for those first few years of cash flow or during emergencies.

Austin Wilson:

I would also add that if you need those super high returns for your plan, first of all, you either have really high expectations-

Jessica Hinks:

Or you're not ready to retire.

Austin Wilson:

Or you're not ready to retire, and you need to postpone this, because typically it is probably a good idea to be taking some of those super high risk, super high beta allocations down as you get into retirement, because those are the things that can really just either tank, or really suffer overall for your portfolio. So that's an opportunity there.

But one thing that we really advocate for in retirees' investment planning and their portfolio management is dividend income in general as a, a diversifier within your stock portfolio, because I mean, a lot of the big stocks don't pay a very good dividend. So if you have a portfolio that pays a steady stream of income that's growing over time, those are often less associated with high volatility areas of the market. They're a little bit more stable, steady as she goes, kind of blue-chip companies. And those are something that clients can get equity exposure, which has a better return over the long haul, while taking less risk than buying something that's more like the S&P 500, which as we know right now is pretty growth-oriented, it's a little bit more risky. And that's something we've been advocating for. And we've had clients do really well with that over time.

Chase Rose:

Yeah, absolutely.

Josh Robb:

And it also gives you, so let's say, you got a 2% return on your investment. That's 2% of your need as well-being created from your investments. And so from a total return approach, you can sell some of those that appreciate, but you have to sell less because it's also generating income. So it just gives you another way of creating income within your portfolio.

[11:12] - The Bucket Approach: Short-Term, Mid-Term, and Long-Term Investing

Austin Wilson:

Let's talk about asset allocation in terms of not what you're buying... This is maybe location, let's talk asset location. So let's talk about different type account types and types of portfolios, and the buckets that you can put all those in to know where to pull from what over time. So how do you guys manage that with clients?

Chase Rose:

Yeah. Well, first and foremost, we mentioned it earlier when we are recommending that a client just stack some cash before they retire, you want to make sure that cash is liquid, right? There's no point in accumulating cash in a Roth IRA when you know that that might be one of the last buckets that you touch. And then that's another point that we can maybe get to in a little bit as far as what you should be accessing first. But you definitely want to keep your most liquid assets in the most liquid tax accounts. Just think about your IRAs. Your IRAs, you're generating income, so it's one step less liquid than just an after-tax brokerage account.

So, we want to accumulate a little more conservative assets because they're also, generally speaking, going to accumulate less income and less internal less tax over the long term. So you want to reduce your tax exposure. But also those IRAs and the Roth IRAs, they're going to grow tax-deferred. So if you have more aggressive strategies, especially long term, you're going to be a lot better from a tax perspective, having your more aggressive strategies there.

Jessica Hinks:

And to build on that, we're talking about asset location, you really need to think about what are my next one to four years of expenses? They need to be conservative, preferably in a brokerage account, if that's what you're living off of. But what if your RMD age already? So 73 plus, then perhaps your conservative assets need to be in your IRA. So, it not only does it matter that you're retiring, and matters at what stage in retirement are you. Are you at the age where we have to live from your IRAs, or aren't you? Or do you even have a brokerage account at all? Because some people don't.

[12:55] - Income Sources That Factor into Liquidity Needs

Austin Wilson:

And that brings up another discussion of other income sources that you can factor in on your liquidity needs at any given point in time. Maybe you've got a pension, maybe you have pension from a spouse who passed away that you're still able to receive. Maybe you're receiving social security, you have some rental income on the side. How do those factor into that whole picture?

Josh Robb:

Yeah. And that's a beast. When you look at your retirement plan or you're working through kind of when can I retire? One of those pieces is, how much do I need in retirement? And that's a spending number. And then, once you retire, you have income sources, and then the difference between what I spend and my income is what the portfolio needs to provide. So, how you factor in all your income is to say, okay, one, is it growing? So social security has a cost of living adjustment. Not all pensions do. And so the question is… rental income does probably periodically you raise your rental prices, so how does that affect my needs over time? And then you say, "Okay, my portfolio needs to cover the difference. And so, I need to invest a way to make sure I'm getting that return. The difference between my income and my expense."

Chase Rose:

And typically, when we're building the retirement plan, one of the first things we're doing is we're identifying what their goals are, what their needs are in retirement. So let's say, just for the sake of round numbers, let's say someone has $5,000 per month in needs from their portfolio. Well, let's analyze what their fixed income sources are. By the time they get to the retirement, their fixed income is what it is, there's not a whole lot you can do about it at that point. So, whatever that difference is, that's where we start the conversation about how aggressive or how conservative do you need to be.

And this right here is oftentimes why I like to say that financial planning is an art, not a science. It's not going to be the same for everyone. And oftentimes we have clients who come in and say, "Hey, I talked to XYZ advisor, and they said because of my age, I need to be 60-40 or 70-30." Well, I would say that that is a very blanket statement. We're in a highly regulated industry, so a lot of times people are saying that just to protect their butt. But to that, I would say let's focus more on what your needs are. So let's say if you need $3,000 a month from your portfolio, that's going to be a different withdrawal rate, and turn a different asset allocation for one person than it is another.

Josh Robb:

It's the balance you have, yeah.

Chase Rose:

Exactly. If I need 4% of my portfolio a year to cover my expenses, and that dollar amount is going to be 1% from someone else, well, you can be a totally different, and your investment philosophy can be totally different for both people. That's why it's definitely not, it's not a cookie cutter type of thing.

Austin Wilson:

I think that's why things like target date funds are risky, because every situation is so different, but those are not right. Those are based on a number and an allocation to get you to a date. But every person's need is different. Every person, how they want to look at things and understand and pull from different things is different. I mean, we've got clients in their 80s who just are not bothered by risk. They might be a hundred percent equities. But we've got clients in their 50s who are very risk averse. And they may be very conservative in their investments. But those would not be the standard, the industry standards that everyone talks about where they're like, "Oh, you need to get less risky as you get old." That's not necessarily the case for everyone, and that's definitely, we have some examples of that.

Josh Robb:

Have you ever felt overwhelmed by the complexities of managing your wealth? At Hixon Zuercher Capital Management we specialize in helping affluent families and individuals navigate the complex challenges of managing their finances. Wealth management is all about combining thoughtful financial planning with active investment management to help you reach your goals. Our process is designed to guide you toward what truly matters, because we believe wealth isn't the destination. Achieving your dreams requires careful planning, smart decision-making, and access to high quality investments. That's where we come in.

We understand that complex financial situations call for deep expertise in investing, tax strategies, and retirement planning. But our approach goes beyond that. We integrate your financial goals with your core values, helping you visualize the possibilities your wealth can create for a secure future. If you're ready to take the next step, visit hzcapital.com/start. Again, that's hzcapital.com/start.

Now, let's get back to today's episode.

[17:13] - Your Withdrawal Strategy & The 4% Rule

Austin Wilson:

So that brings us to a great discussion on that income, that difference that you're trying to generate from your portfolio. Having a withdrawal strategy, as you just mentioned, super important, you kind of in calculate where and when that should come from with your advisor, but let's talk about the 4% rule. Because that's what everyone talks about. You can withdraw sustainably 4% from your portfolio forever, and you'll never run out of money, and you should be fine. Is that true today? And does it still work? Is that what we recommend? I don't know. What do you guys think?

Jessica Hinks:

It depends.

Josh Robb:

Yeah, thank you.

Austin Wilson:

There you go.

Chase Rose:

Did you just think of that?

Josh Robb:

In the end, this was based off a lot of research, and it was a initial withdrawal rate of 4% would cover a 30-year retirement. That was what they based all the research on, and they looked at different market cycles, and it gave them a high probability success. Is that still true? It depends on your asset allocation. And they were using 60% or higher of equities. Higher equities you had the more success you had on these researches. But that's the big thing going forward is, is 30 years the right number? And I think that's of all the things they used in their calculation, that's the thing that's changed the most since they've done this research, is people are retiring in their 60s, but they're not living until their 70s, 80s, now they're living into their 90s or over 100. And so you're extending this timeframe.

So this 4% rule becomes interesting. It's still a good rule of thumb. It's still one if you just wanted to do some math on a piece of paper to say, "Where am I?" It's useful. In the end, is it right? It really just depends on where they're at, what age they are, and what their withdrawal is to see how much pressure is that. Do they have flexibility? It's just like, "Well, if I take 4%, I got plenty of money and I can do a lot of fun stuff, but if things get rough, I can cut back." Or it's like, "4% I need this to live on and I can't go any lower." Because those are two different lifestyles of a 4% withdrawal.

Austin Wilson:

Well, and that brings us to a discussion of the way we often implement this with clients. We don't typically just say, "4% is your number," we bring in what's called a guardrail's approach. So can you explain that a little bit too?

Josh Robb:

Yeah. The idea there is you have a withdrawal rate, and usually it's higher than 4% because we have some rules based around it. But the idea is you have a starting withdrawal rate, and you increase it with inflation, you would need to over retirement. But in years where the market doesn't do well and your portfolio drops, if your withdrawal rate hits a certain threshold, then you are asked or required to reduce your spending by a certain percent.

And then on the other side, if it does well, you get to give yourself a raise, or a bonus, to increase your spending. And so guardrails, think of it just driving on the highway, there's the barriers on each side that keep you from going too far. And that's all they are. They're trigger points on either end, good or bad, that says, "Hey, let's make an adjustment. Some things have happened that have changed since we initiated this. Let's make an adjustment."

Jessica Hinks:

And one reason I actually think the 4% rule is actually too conservative, is I've seen dozens and dozens of people retire and lift when their portfolios, and they don't ask for raises very often. We always say like, "Oh, guardrails, you can get a raise every year with inflation if that happened and the portfolios performed well." But more often than not, retirees seem to slowly spend less, not counting inflation over time. And they seem to just absorb that cost into their inflation, because they're slowing down year after year. And for that reason, I think that your initial withdrawal rate can definitely start above 4% if you choose a careful number, with your advisor, you monitor your withdrawals every single year, and then you maintain a place of flexibility to where if they tell you you need to cut back or something, you have the ability to do so.

Josh Robb:

Right. It's usually, in real life, three to five years, a retirees every three to five years, "Let's make an adjustment." Everybody likes round numbers. 2% inflation adjustment just gives you weird withdrawals. And so a lot of times they'll say, "Hey, I've taken 5,000." Three years later, "Let's go 5,500."

Chase Rose:

Exactly.

Josh Robb:

And so it kind of averages out, but in the end, you're right, it's not a year to year thing.

Chase Rose:

And so your point, Jessica, the real reason why we're trying our best to get our clients to identify what their real spending is, because that's primarily what we're planning around, we know that if we have income sources that might start later, you can have a withdrawal rate initially that's much higher than that 4% rate. Now, obviously you're not going to be taking 20% of your portfolio per year, but if we know that your spending is $5,000 a month, but you have this $2,000 pension that won't start for another five years, as long as our research and our analysis shows that you'll have a successful retirement, we can be comfortable with those higher withdrawal rates early on, knowing that that fixed income will replace it later on.

Jessica Hinks:

So that again, Austin, is why it just depends.

[22:07] - Should You Live on Dividends & Interest or Sell Investments?

Austin Wilson:

Just depends. All right, ready for the hot topic of the episode?

Josh Robb:

Yes.

Austin Wilson:

Dividends and income only distributions versus selling investments. So capital gains, right?

Josh Robb:

Yes.

Austin Wilson:

Some retirees are very adamant that they only want to take the income off their portfolios. And there are lots of ways we can do that. We can do that with dividend paying stocks and ETFs, or bond ladders, or all kinds of things. Or we can use a total return approach, where we are essentially harvesting gains as we go, and just taking it off out of the portfolio as a total, rather than just the income. Talk about the pros and cons to both of those, and how we've implemented it with clients.

Jessica Hinks:

I'll kind of start with saying, I think the dividend and interest only approach creates a scarcity mindset. I think you only get $2,000 a month of dividends, that's all I can live off of. And you're just really partialing off your entire portfolio, which is your wealth, you should be enjoying and living off of.

Chase Rose:

You save the principle up your entire life.

Jessica Hinks:

Yeah, and that's growing.

Chase Rose:

Exactly. These are for my kids.

Josh Robb:

Yeah. They have a legacy goal, and something like that may make sense. But you're right, is you're going to leave potentially that same amount of money at the end, or bigger.

Jessica Hinks:

Hopefully appreciate it, yeah.

Josh Robb:

Yeah, if it's growing. So, is that your goal? Is that what you're trying to achieve? Are you leaving stuff on the table that you could use for your own benefit?

Chase Rose:

Yeah. I feel like the dividend income always ties back to, at least me personally, a tax planning conversation. The dividend reinvestment strategy might make sense for one account as opposed to another. So just think about if someone's consistently withdrawing from an IRA, and let's say you're using that dividend reinvestment strategy, you're not incurring capital gains when you're buying the dividend back that got paid out, or buying the stock back that paid out a dividend, and selling that for a short-term gain later. Whereas in a brokerage account, you might be. So, if you're consistently withdrawing from a portfolio, it's really important to know which account you're taking from before you make that decision.

But the stats would say, and I'll let you allude to this, Mr. Wilson, as the portfolio manager, dividend reinvestments definitely perform better over the long term.

Austin Wilson:

It does. So if you look over the long, long term, if you reinvest dividends versus taking it out of the portfolio, your portfolio essentially over a 30-year period is actually have about double the performance.

Chase Rose:

Exactly. Yeah.

Austin Wilson:

That's a lot.

Josh Robb:

Three out of every four years is positive. So even along the way, if you're taking withdrawals, if you're putting and reinvesting the money, a lot of times just that, fresh between timing gives you a little bit of growth on that on top.

Jessica Hinks:

And the total return approach allows for natural rebalancing.

Josh Robb:

Exactly.

Jessica Hinks:

If you're only living off dividends, it's going to be really easy for your portfolio get out of whack. But if you're selling things, you can choose what needs sold purposefully.

Chase Rose:

And when those dividends are paid out, they're sitting there in cash waiting to be reinvested. You'll have some underweight positions that you can kind of buffer back up, so that the opportunity is better in the future too.

[24:57] - Retirement Mistakes Your NEED To Avoid

Austin Wilson:

All right, last topic. Mistakes to avoid in retirement. So, any examples of some of the biggest missteps that retirees have made as they're planning for or getting into retirement with their withdrawals and stuff like that?

Josh Robb:

Yeah. The biggest one we hit out in the very beginning is too conservative versus too aggressive. And actually, you're not going to know the answer to that until the end of your life, when you know all the returns, and you know that sequence, then you could have known exactly your withdrawal rate to go to zero at the end. We don't know that. But the question on the front end is always, how aggressive do I need to be to meet those goals, like we talked about earlier? Then how much aggression can I tolerate? And we got to get as close for those two together to meet the needs without going too much past your tolerance. So, too aggressive, too conservative, is a mistake we see on either end, because you don't want to run out of money. You also don't want to leave a bunch of money if that's not your end goal. You want to use it.

Jessica Hinks:

One of the biggest mistakes I've seen is just people not planning ahead for major expenses early in retirement. People retire and the next thing you know they're buying a lake house, or they're buying an RV, big cars. And they knew in their heads that you're probably going to do it, they just didn't prepare for it. So next thing you know, you're taking hundreds of thousands of dollars out of an IRA in one tax year, right? But if you just planned ahead a little bit more, put some cash aside, it would've been so much less painful.

Austin Wilson:

Yeah, absolutely. I think taxes are something that is overlooked a lot. That looks very different when you're withdrawing money than when you're making money. And planning for that appropriately is obviously key. But obviously, that also goes into, the other side is also true, being over-focused on taxes, where it's good to focus on taxes of course, and you need a plan for that, but letting that drive your investment decisions can be very, very tricky as you're trying to navigate those, they're murky waters, right?

Chase Rose:

Yeah.

Austin Wilson:

There's no right or wrong answer that's the same for everyone. You have to work what's best for you with your advisor, but I feel like both sides of that are also true. Too focused, not focused enough, and both can be critical choices.

Josh Robb:

Yep.

Chase Rose:

Yeah. We work oftentimes with a CPA who our clients utilize. And his perspective, honestly, I had come to appreciate quite a bit, as a tax advisor his perspective is, "Don't let taxes prevent you from making a smart investment decision." And that's how we invest money here. We are aware of taxes when we're making a trading decision, but we do not let taxes dictate a move, because if we think that a stock's going to outperform in the future, that's obviously the change that we're going to make despite what the tax implication is.

Austin Wilson:

Don't let the tax dog wag the investment tail.

Chase Rose:

Exactly. There you go. Yeah.

[27:31] - Work with An Educated Financial Advisor

Austin Wilson:

All right. Well, as we would always recommend, this is a great opportunity to talk to your advisor. Check in with them about your preparation leading up to retirement, or withdrawal strategy, everything we talked about today. But this is just a great opportunity. Whether it's us or someone else, talk to your advisor. And as we mentioned earlier, we're in a little bit of a volatile market. So, this is a great opportunity to look forward, look past the current tariff drama that we're having right now, and the current sell-off that we've gotten in the correction territory for the S&P 500. It's just an opportunity to keep a long-term perspective with your investments here. But yeah, I guess, any other key takeaways?

Chase Rose:

I think working with an advisor, because the advisors who, and I say this, almost, just a little bit biased, as I feel like we do a good job here at Hixon Zuercher, but the advisors, the way we build our portfolios, we're aware of what investments we're putting our clients into, whereas General Joe Schmoe's walking down the street might be invested in the S&P 500, but he's not fully aware of what he's investing in. There's lot of companies in that index. Just to use that as an example.

But also having someone who can plan for all the other areas of your life around those investments. How do you use the investments as a tool to unlock the other areas of your life, right? So, there's a lot of other conversations to be had. Investment planning is just one piece of the puzzle. You have tax planning, you have healthcare planning, which is big for retirees, and that's just one piece of the puzzle. So, working with an advisor who understands all aspects of your plan can unlock a lot of potential in your financial life.

Josh Robb:

And have a good plan. A good plan you can make tweaks to, but it shouldn't have really large dramatic changes. And then be flexible, because again, there may be some opportunities for you. There may be something that you had on your bucket list that comes up. Flexibility is really important in retirement, because you want to enjoy that. But understanding the trade-offs, that's really all it comes down to in all investment planning. But especially for retirees, once you stop your income and contributions, you're just weighing opportunities versus others. What am I trading off for this or that?

Jessica Hinks:

I think investing for retiree comes down to just asking your advisor two questions, which is, how much can I take a year from my portfolio? Simple as that. And two, how can I be invested in a way to best support those withdrawals? And that's really all it comes down to.

Josh Robb:

Yep.

Austin Wilson:

Absolutely. Well, thank you guys for listening. Thanks for the team for being on this episode today. If you found value in our conversation, don't forget to subscribe to The Wealth Mindset Show on whatever podcast platform you're listening to so you'd never miss an episode. Also, visit us at thewealthmindsetshow.com for more resources. And if you're ready to invest with us, if you're looking for advisor or just a second opinion, head over to hzcapital.com and check out the Invest With Us tab there. And we invite you to follow us on all of our social medias. We are pretty active on there, so that we can stay connected. Otherwise, thanks for listening, and we'll see you next episode.

Josh Robb:

Talk to you later.

Chase Rose:

See you later.

Josh Robb:

Thanks. Bye.

Announcer:

Thank you for joining us at The Wealth Mindset Show, where we tackle the complexities of finance and life planning to help you align your wealth with your values. We hope today's conversation provided value and clarity, as you navigate your financial journey.

Your hosts work for Hixon Zuercher Capital Management, and all opinions expressed by them or any podcast guest are solely their own, and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only, and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. And any investor attempting to mimic index performance would incur fees and expenses that could reduce returns. Securities investing involves risks, including the potential loss of principle. And there is no assurance that any investment plan or strategy will be successful.