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Retire Eyes Wide Open: Season 3 Episdode 1

REWO S3E1: Strategies for Market Fog

Welcome to Season 3 of Retire Eyes Wide Open. Today we are talking about strategies for market fog.

How do you deal with market conditions that are not clear? 
Is the market going higher or lower? 
How do you build a plan when the world seems so uncertain?

To hear more episodes, CLICK HERE.

Strategies for Market Fog.

[Scot] Welcome to Season 3 Episode 1 of Retire Eyes Wide Open. I'm Scot Landborg, along here with Steven Murphy.

Today we're talking about strategies for market fog.

How do you deal with financial conditions that are not clear?

Is the market going higher or lower?

How do you build a plan when the world seems so uncertain?

In a world where higher interest rates are near 4%, where you can earn more money in CDs or savings accounts than you could have for decades, why invest in the market at all?

Where are the opportunities?

How do you deal with the risks?

You'll hear my Money Monologue, we'll talk about the most relevant news and our Money Rundown segment. And in our Money with Murph segment, you'll hear about glimmers of hope and why despite all the doom and gloom the pundits are preaching. There are reasons to be optimistic about the market and the economy will also take your questions.

This is Retire Eyes Wide Open.

Welcome to Retire Eyes Wide Open. Don't go into retirement with your eyes closed, go into it with your eyes wide open. If your financial advisor and tax advisor aren't talking, someone isn't doing their job. There are two systems in this country, one for the informed, and one for the uninformed. You can't turn back the clock and only get better for the future. You're gonna look back at this moment 20 years from now and you want to know you did everything you could to position your financial life. The world is changing, and so is retirement.

Hi, my name is Scot Landborg and I'm here to help you retire with your eyes wide open. That means having the information you need and the clarity you deserve. It means understanding and interpreting the world as it changes. It means knowing about investments, taxes, Social Security and estate planning, and how they're all connected. And probably most important, it's about living your best retirement life. The Good Life. You know, I meet with thousands of retirees. I see people doing it right, I see people doing it wrong. People that are happy, people that are depressed. I see people that are informed, and people that are uninformed, and I'm going to show you how to retire with your eyes wide open.

[The strategies and concepts discussed are for educational purposes only and do not represent specific investment tax or estate planning advice. Investing carries an inherent element of risk and it is in everyone's best interest to consult a tax legal or investment professional. Scot Landborg is an investment advisor representative of an advisory and services are offered through USA Financial Securities core member FINRA and SIPC, a registered investment advisor. Sterling Wealth Partners is not affiliated with USA Financial Securities.]

Money Monologue

And now for our Money Monologue.

Strategies for market fog.

Why do we say market conditions are foggy? Last year was brutal for the market S&P down over 20%, NASDAQ down over 30%, bonds worst year in 40 years down over 13%. It was a tough stormy year. This year a great start. S&P up over 7%, but be careful about being too optimistic.

Wells Fargo just published a note warning about a potential decline in the market of 10% over the next three to six months. They think the market will be up 7% by year end, about where it is now. But caution against a bumpy next few months.

Mike Wilson of Morgan Stanley. He was right about the markets last year. This year he thinks earnings will lead the market lower maybe 20% downside risk. Other analysts like Tom Lee of Fundstrat think the market hit a bottom in late last year, and that this is the beginning of a strong uptrend. There's always different opinions on Wall Street. That's not new. What's new, is that we haven't seen inflationary pressure like this in over 40 years and the Fed is hiking rates at a quick pace.

Bloomberg published a piece recently highlighting 17 different Wall Street firms and looking at their forecasts for the year, where the s&p is going to end up most forecasts the market to be up or down 10% or less. All of them forecasting the market will be up or down no more than 15%. Those different range of forecasts highlight the foggy conditions that we're in.

And while the technical indicators in this market, they're clearly improving, things like the market moving higher than the 200 day moving average, the fundamentals are still concerning.

So what can you do in a market fog? Here's some tips and strategies.

1. When your vision is cloudy, use caution.

It's okay to slow down a little bit when you can't see what's right in front of you.

It's okay to slow down a little bit when your vision is not really clear. And what that means is to take your time to be intentional about what your investment strategy is.

One of the strategies we've been talking to clients about for market fog is something called buffered ETFs. Something you should take a look at when you're trying to use some caution, when you think the market could be potentially range bound in the year ahead, buffered ETFs are worth exploring. Now they're a newer concept to a lot of investors. But what they do is offer you as the name would suggest a buffer of protection if the market goes lower. Most of these buffered ETFs they have maturity, one year or less, they're liquid and get out of them anytime that you want. They will cap your upside, so you need to be aware of that if you thought the market was going to range higher, they might not be the right strategy. But for a market that's more range bound for foggy market conditions, they're worth exploring.

Now they can have buffers of protection 10%, 15%, even 20%. Upside, your cap will be anywhere from 15% to 25% on average.

There is no free lunch as an investor, but in foggy conditions, they're worth looking into.

2. Watch out for obstacles.

Make sure you're conscious of risk management. If your vision is cloudy, if you're dealing with market fog, risk management becomes more important than ever. You want to have a strategy to deal with that lack of visibility. And one of those things you got to be conscious of one of those obstacles is in volatility. Investment volatility.

If you're 65 years old, with $1,000,000.80 percent in stocks 20% in bonds, if you withdrew 5% A year indexed for inflation, if you retired in 1975, your money lasted 30 years. But if you retired in 1974, your money only lasted 13. Why is that? Because 1974 the S&P was down 26%. Just one year of volatility can kill a financial plan. Now that's from a study from Morningstar and Les Mason. And it's very relevant for today, especially coming out of what was a really tough year for the stock market. Watching out for obstacles, namely invest in volatility is really important.

3. Recalibrate your instruments.

In your own financial life, consider a recalibration strategy. The strategies and investment ideas that worked last year might not work this year, might not work under these investment conditions. Think about it. What we saw last year, some of the winners dividend stocks, energy, those were the winners of last year. This year, we've seen some new winners emerge, tech, some of the big tech names of the NASDAQ right different winners this year than last year. And you might need to recalibrate your instruments relook at your overall investment strategy and think what's the right strategy in the environment that we're in.

4. Make incremental progress.

You don't need to hit home runs, sometimes hitting singles and doubles is the way to go. Lower risk and higher yielding opportunities exist in an environment like this, especially in a higher interest rate environment. A couple of the ways we're helping people make incremental progress, take a look at barrier ETFs. These are a newer financial concept that give you a nice strong yield in exchange, if the index stays above a certain level, and typically those barriers are 30%, 40%, you can get a nice strong yield in the 6% to 7% range those have been worth looking into. Also take a look at dividend multiplier ETFs. Those could be attractive, be tied to an index like the S&P but have a multiplier of the dividend to the upside. And then you also might want to consider different bond strategies lately, short term bonds have been incredibly attractive, but intermediate and longer term bonds might be more attractive that the Fed is getting closer to being done raising rates.

5. Realize this market fog, it's not going to last forever.

Back to back bad markets are rare. Last time we saw it was 2001-2002. Does not happen very often. Usually a year later, the market's positive after you had a bad year like we did last year. In fact, there is a lot of data to back that up. One statistic we'd like to look at is consumer confidence. It's pretty negative right now. And over the past 40 years when it's this negative usually a year later, it's according to a JP Morgan Guide to the Market study. Usually a year later the market is positive. And so we've got to keep that in mind.

Later in our Money with Murph segment we're going to talk about some of the reasons behind being optimistic and if you've got a more intermediate to longer term view, it's important to keep that in mind.

6. Evaluate your ship and where you're going.

Everyone's on a different journey. You might be in a sailboat, your neighbor might be in a monster yacht. Everyone has a little bit different ship and different where they're going. What's your journey? What's your plan, if you don't need to touch your investments for the next 20 years, because you've got a strong pension and a strong social security, then maybe you can afford to take more risk in a foggy market. But if you need your investments to provide income for you, you can't afford something bad happening along the way, you need to be much more conscious of managing volatility in this stage of your financial life. So everyone's situation is a little bit different. The ride that you're in, the journey that you're in, the ship that you're on, but also where you're going and where you're looking for it to take you. So take some stock of where you are, and know that it's not a one size fits all in any investment strategy or any investment philosophy. You've really got to take stock of where you are, who you are and where you're going.

Now, different market conditions require different strategies to navigate. And it's important understand what type of market we're in. I think we're going to be range bound through the end of the year plus or minus 15%. I don't think you're gonna have a runaway market. If the market does start running away, I don't think the inflation issues are going to be solved, the Fed could keep raising rates.

I think buffer ETFs bearer ETFs, dividend multipliers, risk management, asset management all could be appropriate in this environment and worth exploring more.

And that's my Money Monologue.

Money Rundown

Now it's time for the Money Rundown.

Our money rundown segment is where we cover the week's news. There's a lot of media sources out there that are going to help you get updated information about the economy in the markets. Our job is to help summarize and synthesize, help pick out a few stories that are most important for you as a retiree or as an investor.

And joining us today is financial advisor Steven Murphy. Steven, welcome.

[Steven] Hey, Scot, thanks for having me.

[Scot] Absolutely. We're gonna run through these stories together, one at a time, and we're going to give some dialogue back and forth. Now, Steven has been working with us here at Sterling for the past few years. He's been a fantastic addition to the team, and he's often in my office going back and forth about the week's news. So this is nothing new for us.

Story number one,

Silicon Valley Bank was the second largest bank failure on record. The bank's struggle with rising interest rates to the impact of the value of their assets. A rush of depositors pulling their money caused the bank failure. The Fed took extraordinary measures to step in and protect depositors. What does it mean for your money and the economy as a whole?

Well, there's no question. This has been a big issue on the minds of many investors out there. Number one is my money secure where I have it? And I think one of the important takeaways from Silicon Valley Bank, the Fed came to the rescue, and the depositors were all in great shape. Even people that weren't at the FDIC insured limits, they were all protected. Now, the stock and bond fold holders, they could lose the majority of that investment. They're the ones that took on the lion's share of the risk. But as a deposit holder, you are in good shape. I think the biggest thing, the biggest takeaway from the story is what is the impact going to be for how banks are now lending? Banks are under pressure, they're under pressure, they're seeing their deposits, move into Treasury instruments, in move into bonds move into other things, it's easier to move money from one place to another, and I think it is a challenge for the banking sector. And it's one of the reasons why I think the banking sector is one of the least favorable sectors in the months ahead, Steven, any thoughts? 

[Steven] Yeah, I couldn't agree more, if you are an investor in some of the banks, it might be worth looking at some of your investments, making sure that their balance sheets are fine, and you're gonna be okay as an investor for the long run. I think the other thing to keep in mind as a depositor, you know, as you mentioned, the Treasury made whole most of these depositors at Silicon Valley Bank, but at the FDIC insurance limit of $250,000, you might need to reassess that you have a little bit over that. It might be worth taking some of those funds and putting them in a different bank. Some people might, some people are starting to feel that the depositors were made whole because there are companies with payrolls that need to be hit in the 50, you know, 50-100 million dollar range, whereas the Treasury might not be as gracious to you if you are at $300,000 and lose $50,000, compared to some of these companies are losing 15 million.

[Scot] Yeah, then you want to look at your FDIC insured limits. Know there's all kinds of different ways to protect yourself. If you've got TASH cash at a different bank. You've been with a bigger, more reputable bank, there hasn't been anything to be concerned about. And even a bank that went out of business under this last case you are fully covered, but it's worth looking at. And there are all kinds of different ways to insure a deposit with a different type of registration. There's banks that have programs where they can actually layer on the different levels of of insurance in at one bank. So there's all kinds of different ways to do it. You can also look at investing in other instruments outside of a checking and savings account as well. Treasury bills, different things like that. So all kinds of different ways that you can protect your asset. But I think the biggest thing that I'm focused on is what is the wider implication to the market at large? And how are banks potentially going to be pulling back from lending because of the pressure they've had on depositors? Something that definitely we're going to keep an eye on.

[Steven] All right, story number two.

Scot, Morgan Stanley is warning about a commercial real estate crisis. Analysts recently forecasted something worse than the great financial crisis for commercial real estate, predicting drops in values of up to 40%. The main reasons is the estimated $2.4 trillion of debt will train within the next five years, with rates significantly higher than when most of that debt was originally issued, many will be in a tough spot. So, what is the impact for the average investor?

[Scot] I think it's a huge news item, commercial real estate, and what's the impact going to be on the broader economy? We just saw a office building, Steven, near where you live right now in Costa Mesa, that was sold for over 30% less than what they bought it for nine years ago. That just seems crazy to me. But that's the truth.

[Steven] See, yeah it really is, and you know, interest rates alone are a big enough catalyst to cause some havoc in this industry. But the work from home trend, while many companies are starting to enforce a back to the office policy, many people are still still working permanently from home. And just the the amount of office space is still below pre pre pandemic 2019 levels. So will we ever see a full return office? We don't know.

[Scot] Yeah, that's true. And we've seen these seen the value of this property suffer as a result of that. And the question is, who owns these buildings? And how big of a hit are they going to receive? You've got to look at pension funds, you've got to look at the REIT sector, you have to look at different banks and what their exposure is to commercial real estate. And there's a ton of these properties that have to refinance and they have to do to it at higher interest rates, so it could have a much bigger impact on the market and the economy. I think it's worth keeping our eyes on.

[Steven] Yeah, I think if you're a REIT holder, you definitely need to take a look at what the REIT that you are invested in what they are owning. If they're owning mostly single family homes, duplexes, even apartment buildings, probably not going to have the same impact as office buildings and warehouse spaces, but definitely worth worth taking a look at what their owning.

[Scot] Story number three, the World Bank forecasting a "lost decade" and their recent report, the average potential global output is set to drop to a 30 year low of 2.2% annualized from now until 2030. Their forecasts cites higher interest rates and higher level of debt as enemies of economic growth.

[Steven] Yeah, it's definitely interesting. We don't know if if the past decade that we have will come into play. This next decade, I mean, interest rates across the globe are 12 years since the, 12-13 years since the great financial crisis. Rates have been dropping and stimulating economic growth. So but the rates going up and possibly plateauing. It might be a whole different decade.

[Scot] Yeah, it's interesting, you know, we built these financial models based on what the markets have done historically. And the markets can go through very different times from '01 to 2011, you had a lost decade where the market was really flat. Are we in store for that? Again, some people think we are, some think we're not. Another thing I think is interesting is that the difference between investing in US equities versus International. US equities have
been dramatically outperforming over the past 14 years. That's not always the case. From '01 to '08, excuse me, from '02 to '08, international really outperformed. So I think there's a couple stories here. One is International is becoming more attractive. In fact, some of our modeling is showing that definitely International is worth considering again, in an overall portfolio. When you think of balancing things out there could be some potential relative performance, outperformance potential in international, so that if you want to look at that, and know that you might need strategies for a lower growth world, and that could be more dividend strategies, looking at companies that are paying dividends, so that you're not as reliant on growth in the value of the index, but you could also get that growth delivered in the form of dividends. All things to be looking at, but it's a changing world for sure.

[Steven] Yeah Scot, I couldn't agree more, the winners of yesterday might not be the winners of tomorrow. It's just something to keep in mind.

Story number four, the Fed looks set to raise interest rates again, at their next meeting in May. Wall Street is putting the odds at greater than 80%, that rates will increase a quarter point. How much further will rates rise, and why does it matter for the average investor?

[Scot] We've been keeping our eyes on what the Fed has been doing for the past year, it's been on everybody's mind, we've seen just a real significant rise in interest rates from less than 1% to now almost 5%, and by the time this episode airs, we're gonna know if they raised rates again in May, I think very likely that they do, and they may raise rates one or two more times, or they might be done. I think the bigger impact is going to be higher rates for longer than people expect. I think the Fed is going to be very focused on inflation not coming back, and the biggest area where inflation is still an issue is in services. It's in the cost of labor, and so I think they're going to keep rates higher for longer, and it's going to have an impact on a lot of areas. Commercial real estate, selling used cars, getting a home, you know, so many areas where interest rates have an impact. And I think higher rates for longer, can really slow economic growth, and we've gotta keep an eye on it. And the last thing I'd say is on opportunities in the bond market, you know, when the Fed is close to being done, I think you want to start looking into more intermediate and longer term bonds, there could be some opportunity there not only for a good yield, but also for some appreciation potential. So I think the time is right for you to reevaluate your bond strategy, and talk to your advisor and ask difficult questions. What's the right bond strategy for the environment that we're in? Yeah, you can get a nice 4% yield on short term bonds and CDs. But what happens if the Fed in a year or two, if they cut rates again, and you can't get a renewal of those rates? You're going to be wishing you had more of an intermediate to longer term bond strategy. So, all things I think you need to look at.

[Steven] Scot, I couldn't agree more. It seems like everything you read and see online and on the news is, when will the Fed start cutting rates because the consensus is that we're near the end of this, this hiking cycle. This has been the most aggressive hiking cycle we've ever seen, and inflation has come down a little bit still is sort of hanging around well above their 2% goal. But it is a great point that I think there is a very strong chance that rates will stay flat before they start cutting probably for a little bit longer than people are realizing as they try and hit their you know, their soft landing. Will they hit it? We'll have to wait and see.

[Scot] You gotta keep your eye on inflation with your overall investment strategy. No question about it.

Well, that's our money rundown for the week.

Money with Murph

And now for Money with Murph.

[Steven] Alright, so this Money with Murph, the segment is titled glimmer of hope. So it's no question at all that last year was dismal for stocks, outside of a handful of sectors seemingly all equities had a tough year, and what made it even tougher for many investors systemic is that we're coming off of the heels of one of the best bull markets we've ever seen, which has created massive recency bias. From the depths of the Great financial crisis in '08 or '09, we've essentially had uninterrupted growth. Even when COVID hit the market drop and recovery was one of the quickest we've ever seen.

Let's put it this way. If you were in a coma, December 31 of 2019 and came to on December 31, of 2020, and the first thing you did was check on how the S&P 500 did over the past year, you would have seen it positive 18% and thought, "Wow, another great year and this never ending bull market."

[Scot] Wow, that's crazy. Yeah, despite all the craziness of COVID, the market had a great year, had a fantastic year that year. Great stat.

[Steven] So like I said, we are coming off of a very painful 2022, so is there any reason to have optimism that the worst is behind us, and that the lows of the stock market are in? I'm here to tell you that yes, there is reason to be optimistic. All you have to do is turn on the news to find reasons to scare you to death. And yet even with all the uncertainty in the world with inflation, bank failures, international war, political divide and rising interest rates, there are still reasons to be optimistic. No one knows what the market will do tomorrow, let alone a year from them. So then what becomes our next best options to make as educated of investment decisions as possible? They are market history, data, and statistics. So with that in mind, here are five reasons why looking out from a year from now, there's reason to have hope and optimism that the market will be higher than it is now.

[Scot] Looking forward to hearing it, Murph, there's a lot of scariness out there. So give us some good. Give us some glimmers of hope.

[Steven] Here we go. Number one, the S&P 500 has had two consecutive quarters of growth. Research from Fundstrat came out and stated that this is a pattern not seen in any bear market over the past 50 years.

[Scot] That's a great stat. I remember you sent this over to me. And yeah, what you're saying it is last quarter, first quarter was good and positive for the market, the fourth quarter was also positive. Putting those two quarters together is fantastic for stocks if you're thinking a year out, so a pretty compelling reason to be optimistic about where stocks could go.

[Steven] Number two, Ryan Detrick provided data showing that the previous 36 times going back to 1950, that if the S&P 500 does not close beneath its December lows during the first quarter of the following year, 94% of the time the S&P 500 full year return is positive with an average gain of 18%.

[Scot] That's an incredibly compelling statistic. So to repeat what you just said all the way back to 1950. If in the first quarter, the market doesn't close lower than it did in December, right?

[Steven] Yep.

[Scot] That 94% of the time, the end of the year, the S&P was positive. Pretty compelling reason that despite market fog, despite the choppiness of the next quarter or two, looking more towards the end of the year to be positive thing.

[Steven] Next one, Ryan also provided data showing that there's only been 13 times where the S&P 500 has gone six months without a new 52 week low during a bear market. Of those 13 times, only two went on to make new lows. So in 84% of the time, the S&P 500 was positive a year out.

And finally, as well, as we approach what we think is the end of the rising rate cycle from the Fed, let's look at some data from Chris Kimkowski. There have been seven distinct rate hikes since 1988, including the one we're currently experiencing, looking at the return to the S&P twelve months after the Fed concluded its last rate hike. we've averaged 23.7% gains. And furthermore, looking at the same criteria, but for fixed income, we see an average return of almost 12%. So with all that being said, go ahead.

[Scot] I think yeah, just want to jump in Steven, because I think that has a great, you know, really good statistics specifically on, specifically when the Fed's done raising rates, right when they're done increasing interest rates, what happens? What happens a year later. And historically, gains are pretty good. Now, that doesn't mean the next three to six months can't be tough, because usually there's a reason why the Fed is done raising rates, right? They're done raising rates because the economy is cooling or slowing or there's a pullback or some reason. So that doesn't mean it can't be super choppy the next couple quarters. But if you've got vision a year out, historically, it's been pretty positive for the stock market. And I think the stat on fixed income is interesting because you're dealing with higher interest rate environments in the past. But I do think that what is absolutely true, is that when the Fed starts cutting rates, it's good for bonds. It's absolutely good for bonds as well, so if you got a little bit longer of a view beyond just the next quarter or two, definitely some glimmers of hope and some reasons to be optimistic.

[Steven] Of course, yep. Doesn't know doesn't mean that there's not gonna be any more ups and downs in the short term. But yet history is one of our best guides in history seems to be on the side that the worst is behind us.

[Scot] Steven, great segment. That's Money with Murph. Steven Murphy, financial advisor. Thank you so much for putting it together. Thank you.

Listener Questions

And now for listener questions.

If you want your question answered during the show, go to our website,, that's and click on "Ask a Question".

Our first question, Steven, take it away.

[Steven] Yes. Our first question is Don from Newport Beach, and his question is: Why have any money in the market at all when I can get a treasury at 4%?

[Scot] That's a great question, Don. There's a couple of things first. Number one is if the Fed starts to cut interest rates in later next year or the year following, those 4%, short duration treasuries that are going to go away, and you need to start thinking about the interest rates you're gonna get over the intermediate to longer term. So as the Fed gets closer to being done raising rates, you may want to shift your strategy and look to intermediate or longer term bonds, because not only can you get a decent yield, but you can also get some appreciation potential. Also, some of the statistics that Murphy shared today are reasons why you don't want to just be in treasuries. And if you think about the market a year out, you could miss out on some big opportunities for some potential growth, so you need to be aware of that. Just because there's scary stuff happening in the world doesn't mean you go put your money underneath a mattress, or you would have missed some really good opportunities to make money in the market. It's one of the reasons why you want to partner with someone with an advisor with someone that you trust that's keeping an eye on things to help guide you through what's the best strategy for now, what's the best strategy for the environment that we're in. The average investor has a tough time navigating that the average investor is better off with a buy and hold strategy, because it really takes a professional if you're going to have a more dynamic approach to how you're managing risk and managing volatility. But I think the thing to remember is, sometimes, as Warren Buffett said, when the world gets greedy, he gets scared, and when the world gets scared, he gets greedy. Sometimes it pays to be a little contrarian. When it comes to investing in the market for the longer term.

[Steven] Of course, Scot, yep. The opportunity costs between some great companies and some longer term bonds. You might be missing out on some of those opportunities if you're fixated on a short term 4%.

Our next question is Joe from Tustin. Are buffers safe? What if the buffer company goes out of business?

[Scot] Thanks for the question, Joe. Joe's talking about buffered ETFs that we were talking about earlier on the show. And of course, with any investment strategy, talk to your own personal financial advisor, look at the perspectives, dig into the materials and find out more about it, you know, buffered strategies, buffered ETFs, they used to be underwritten by banks and, and the credit quality of that bank is to be very critical. Now, a lot of these buffered ETFs are backed by the US Options Exchange, which in the last financial crisis was deemed too big to fail. So I think there's a lot of strength in these buffers, it's backed by the US Options Market, and don't have much of a concern. Even if these buffer companies went out of business, you still have the underwriting options that are protecting you. So these buffered ETFs really package a bundle of options to protect you from downside volatility while giving you potential upside and pretty clear what the buffer protection is, what the cap is. These are complicated financial instruments, you just talked to financial advisor about it more. But it's definitely a question you should be asking if you have your own advisor, how do these fit into these fit in an environment of market fog for my portfolio?

Next question comes from Paul from Los Angeles, will I receive COLA on my social security benefits, even if I have not claimed yet? Steven, wanna take that one?

[Steven] Yes. Paul, great question. So the answer is, it depends, which is everybody's least favorite answer. So you will get a COLA, for those of you that might not be aware of COLA, cost of living adjustment, essentially an inflation adjustment to keep up with inflation on your benefits. So if you are of age 62, the answer is yes. Even if you have not turned on your Social Security benefits, your PIA which is your primary insurance amount. That is the number that when you get your Social Security statement in the mail, you'll see your full retirement age and it'll have a number next to that, for most people nowadays that full retirement age is between 66 and four months and 67. So typically, the number next to your full retirement age is your PIA. So that number will get adjusted for inflation. And then your actual monthly amount will be dependent upon if you claim early that your full retirement age or after your full retirement age. So in short, if you are age 62 or older, yes, you will get a cola even if your benefit is not turned on.

Jennifer from Minnesota asks, are gold and silver a good inflation hedge? Seems like they are doing really well this year.

[Scot] Oh man, we get this question a lot as gold's having a good year this year. And anytime there's financial challenges in the financial markets, in the economy as a whole is something that people look at. And I think I think what's important to know precious metals can be part of an overall allocation. Tony Robbins in his book thinks it needs to be part of a permanent allocation. There are some people that think it needs to be a big part of their allocation, some that think it shouldn't be people that think it needs to be a big part of their allocation, some that think it shouldn't be part of it at all. I think there is a role for it. But what I would say is it also has its own type of risks. If you bought gold in 2012, it took you 10 years to get back to even, you saw it go down in value, then come back up. In 2008, gold also suffered and went down significantly. So it's not a perfect hedge against inflation, it's not perfect protection against the market going down. It can be one tool you use. But you have to be careful, you know, Warren Buffett's not a big fan of gold, he'd much rather own companies that are growing and building businesses. But if you look historically, over the long term, over the past decade, gold's done pretty well, you just have to be aware, it does have risk, just like individual stocks do, just like the broader markets do, and needs to be part of an overall overarching strategy. It's not a silver bullet.

Next question comes from Chandler from Costa Mesa, how do I know if my RMD age is now 73 or 75? RMD, of course, being your required minimum distribution, age.

[Steven] Chandler great question. And the secure act 2.0, which came into effect earlier this year, it did change the RMD age. So now here, there are two RMD ages will that'll be dependent upon when you were born. So if you were born between January 1, 1951, all the way through December 31, of 1959. Your RMD age is 73. But if you were born January 1, of 1960 or later, your RMD age is now 75.

[Scot] The only thing I would add to that Steven, on RMDs is even though you've got more time to take it, that doesn't mean you shouldn't take withdrawals earlier that you shouldn't consider a Roth conversion strategy. Right? Maybe that gives you a couple more years to convert money from IRA to Roth. And just something you got to think about in your overall overall picture and overall plan.

[Steven] Great point, if you have significant pre tax assets, definitely a Roth conversion strategy might make sense for you.

All right, Angie from Sacramento. She asks, What about the collapse of the US dollar? Are we prepared for that? What is the risk to my money if the dollar collapses?

[Scot] Thank you, Angie, for the question. It's a question we get more frequent. I think there's news pundits out there that have dedicated whole shows to this question. And there's a lot of social media commentary going out there, we've seen quite a bit of discussion, you know, whether it's Russia or China or Saudi Arabia, different countries have an interest in moving away from the dollar. But it's not new. That's been happening for decades now. It's become a smaller and smaller percentage. But what I would say is getting off the dollar completely is very, very difficult, if not impossible, because we import so many goods and services as a country, that these countries need to trade in dollars. Now, does Russia and China do they need to trade in dollars? If they're exchanging oil or energy or natural gas? No. And you know, but there's a couple other questions. One is what is a viable currency, that would be a competitor to the dollar? And the Chinese currency, I think has some reliability issues of what numbers you can believe. So there's challenges other currencies and countries are trying to develop baskets of currencies. They don't like the fact that we've got our own printing press here in the US for dollars. But I think the most compelling thing of all of why you shouldn't be super concerned yet, something to monitor something to keep watch on is the value of the dollar is as strong as it has been in 20 years, it was slightly higher in '01, but the value of the dollar is held up really well. We've seen it pull back from its highs in the fall of this year. But despite having over a $30 trillion federal debt, the value of the dollar still really strong. Look at traveling abroad, you could still get a lot for your money if you want to go somewhere else. So I don't think the dollar is going away as a currency for a long time. But it is something to watch as an investor. And it's important to be open to different types of strategies. Maybe you want to make sure you have enough international exposure. International has been lagging for the past 14 years, but it's becoming more in favor now. Maybe having exposure to different international ETFs or different currencies are different ways you can hedge your bets if the dollar did go down. So it's something to continue to monitor and watch. We're not super concerned about it yet. But it's definitely something we're thinking about. Angie, thanks for the question.

That's our episode for this week. And if you want your questions answered during the show, go to our website and click on "Ask a Question", and if you want to sit down and talk more about your situation one on one with myself, or with Steven Murphy, go to our website, click on "Schedule A Consult". Happy to help. Go like us on Facebook to get our most up to date content, and subscribe to our podcast. We'll see you next time where I'll show you more how to retire with your eyes wide open. Don't go into retirement with your eyes closed. Go into it with your eyes wide open. I'm Scot Landborg here with Steven Murphy. We'll see you soon.

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