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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Hi. Mike Decker, author of the book How to Retire on Time. Here's a question I was recently asked on my Retire on Time q and a. Check it out.
David:Let's go to question this last one here. I've got a lot of CDs that are maturing soon. I'm concerned about inflation. Where should those funds go next?
Mike:Not financial advice. But if you're concerned about inflation, and you've got CDs, this is a tricky one because you were in CDs probably because you're concerned about market risk.
David:Mhmm.
Mike:So any fixed growth account has inflation risk. And then if you're avoiding variable returns, I'm not talking variable annuities, the stock market is a variable return.
David:It can
Mike:go up or down. That's the variation, just so we're clear on definitions. Then you're probably gonna need to explore the indexed category.
David:Okay.
Mike:The index category is the category that has growth potential. No downside risk. But if the markets go down, you got a zero. Right. And let's be very clear about this.
Mike:Okay? If you have a shorter timeline, index accounts may not make a lot of sense.
David:Yeah. Because? Tell us why.
Mike:So we've got inflation risk right now. It's sticky. We also may be near a market top. That's concerning. So if you need the money in two, three years, it might be better to have fixed growth because you're gonna spend it in the near term.
David:Oh, okay.
Mike:If you wanna leave it there for a couple of years, five, seven, ten, or so on. Then an indexed account because you have enough time that if you got a zero, there's still enough time to still average and grow over the long term anyway.
David:Okay.
Mike:So there's a time component to this, but it's a blend of fixed if it's short term needs or index upside potential, no downside risk, long term. What are indexed accounts? You've got buffered ETFs. You've got structured notes. You've got indexed annuities, and you've got indexed universal life insurance.
Mike:And even with all of that, there's a a massive amount of conversation and variations of all of those products. They all might be a fit. None of them may be a fit. I don't know.
David:Yeah. Because the danger here is if I if I do another five year CD and and I lock in, I don't know, three and a half percent, but then inflation's over four or more, then you just lost money, haven't you?
Mike:Yeah. I mean, if you're old enough, you might do a MIGA. I'm not quoting rates here, but typically what I'm seeing is MIGA's multi year guaranteed annuity. It's basically a CD for an insurance company with a longer maturity time. They typically pay more than CDs do.
David:Okay.
Mike:So it might help hedge that inflation risk if you just wanted something a little bit better than potentially potentially a CD. Yeah. Yeah. Up to the person. Options are good.
Mike:So that's all the time we've got for the show. If you if you enjoy the show, make sure you tell a friend, you know, invite them to the the q and a, or invite them to a workshop every Tuesday at 06:30 central time. We do do our workshops. If you're ready to start planning with us, retireontime.com/call. You can schedule a thirty minute call where you just ask a bunch of questions before you start the planning process, or you can schedule your first planning session and just dive right in.
Mike:That... The purpose of that first planning session, at least in the first ten minutes, is just to run a... The basic first version of your plan and say, can you retire on time or not? And then we pull back and say, alright. What do you want your money to do for you?
Mike:What should it look like? All all of those questions are planning process nice and simple. The first planning session doesn't cost you anything. Just go to retireontime.com/ call to get started. Thank you all for being here.
Mike:We'll be here next week, same time, same place for the Retire On Time q and a. Have a good day.