Strategies to Optimize Your Retirement Plan

Hello and welcome to the Her Retirement podcast. I am your host Lynn Toomey, and here in my podcast each week, I talk about how to live a better, more intentional, and financially secure life now and in retirement. Whether you’re single, suddenly single or partnered up woman, your only sure investment is an investment in yourself and finding financial wellness, also known as financial security. Isn’t just a dream. It’s a decision. And when you decide to make a commitment to yourself and change your financial destiny, our fresh modern platform will help you know, more and have more now and in retirement. Welcome to her retirement. Welcome to my no more, have more financial wellness platform and welcome to my podcast. Are you ready to get her done? Let’s do this

In this week’s episode of the, Her Retirement podcast I am speaking to Brian Saranovitz of Your Retirement Advisor. He also happens to be my significant other, and this was done during a zoom chat that we had with people that attended our Retirement Power Hours masterclass. And after attending the class both live and on demand, we offered a December, 2021 live Q and a session. Brian kicked off that session with a discussion of what he calls Multi-Discipline Retirement Strategies or MDRS. And these are little known retirement optimized strategies that many people can deploy in their plan to really improve their retirement outcome. I think it’s really, really important topic. And we’ll give you some ideas and strategies that you may not have heard before. So definitely throw on some headphones, go for a walk, ride your bike. Sit back, take a listen and learn about MDRS and if some of these strategies can help your retirement

Hey there officially, if you haven’t met me before, I’m Lynn Toomey, I’m your host and co-creator of both Her Retirement for those people who are coming to us from that program and the Retirement Power Hours masterclass. And joining me is Brian Saranovitz, and he’s the co-creator of Retirement Power Hours and the president of Your Retirement Advisor. So just really quick, Brian, in addition to teaching, Brian is a retirement advisor to many pre and post retirees. Your Retirement Advisor is what we call a one stop retirement advisor practice. And he really focuses on people, you know, 50 to 70. I think your sweet spot is people like five years from retirements is where I’d probably, I’d probably say 55 to 70 or so. Yeah, I mean, we have worked with, people in their mid-seventies and so depending on how long they’re planning to live, but in many respects people planning to live to 95. So even if you’re 75, you still have 20, 25 years to go, you might as well make them an efficient 25 years. And you got some 30-year-olds who are focused on, those retirement plans.

Yeah, I do. I do have younger clients as well. yep, we do. We don’t discriminate by age, but, uh, <laugh> the vast majority I would say are between like 55 and 70. Yep. Services are offered across the United States. Although there’s some physical offices here and Massachusetts, for those that are close enough, we could actually meet you face to face at some point. But, you know, Zoom is just as good for that. We call Brian the resident retirement geek. He’s an investment advisor representative and an RIA with over 35 years’ experience. And he also has a tax planning company, and he’s a former professional football player. I think in one of the emails we alluded to not asking him any questions about the NFL playoff prospects or this week’s Patriots game, but you can stick around and do that at the end if you’d like to ask those questions.

So, I wanna start off with a couple things. 70% of people give up many retirements income benefits because they don’t know all the facts. So, it’s great. You’re here to get some questions answered and don’t give up those income benefits because you don’t learn the facts. If nothing else you’ve attended our classes or if you haven’t or you going to down the road, either on demand or live, you make sure you learn as much as you can about all of this stuff so that nobody pulls the wool over your eyes. And you go into retirement with a full understanding of what it is you’re doing and why you’re doing it. 81% of people don’t know how much income they need to retire. And that’s an issue, you need to know that. And 85% don’t have a written retirement plan.

So, Your Retirement Advisor and Retirement Power Hours, and Her Retirement were created to help change this for people. So my question is, do you have the right plan? It’s December, right? New year’s resolution, it might be, I’m going to get a written plan. It’s a great resolution. But the question also is, is your plan efficient. Brian’s gonna talk about efficiency and his offer to all participants tonight is he wants to do a Retirement Efficiency Assessment, because you know, why not over the holidays, right? He may have a little extra time, although he always thinks that December’s gonna slow down and, and never seems to slow down at all.

<laugh> I really don’t have extra time. <laugh>, you know, I am very, very, very, very busy and, which is good. I love it because I’m helping a lot of people and, keeping things moving forward. But, no, that’s good. But, yep, the Retirement Efficiency Assessment is a very, very important piece. You know, one of the things I was thinking, as you said, most people don’t, or many people don’t have a plan, I guess you don’t need a retirement plan. If all you have is social security income and a little pension, but if you’ve got you 250, 400, 500,000, a million, $2 million, I mean, and, and we see all those types of people. If you’ve got some money that you’ve put away over the years, you’ve got some social security income, some pension income, so on and so forth, you know, and a nest egg that you built up in your 401k, you really need to have of some sort of plan, at least look at some sort of plan.

So, I think that’s very important. Like I said, if you don’t have, you know, you got, you know, $200,000 in an IRA or a 401k, and you’ve got, your social security income, you maybe don’t need a plan. But you know, I had one gentleman the other day, he said, gee, if I didn’t have all this stuff, I wouldn’t need to plan with you. And I said, absolutely. So, I think, you know, once again, there was, as we’ll talk about in a minute, there’s a lot of things that you can do to better your retirement outcome. That’s the bottom line. And once again, thank you everybody for being here. You know, I really enjoy teaching and, and going through these things. But as it says, as it says here, the right retirement plan is more than a 401k investment strategy.

And this is so true. I think, you know, a lot of people, will have you believe. And, you know, I work with Fidelity. I work with Vanguard. I work with T. Rowe Price. I work with all the investment companies, but if you go directly to them, they’re gonna tell you that, you know, all you need is a 401k stock and bond portfolio, and we’ll run a couple projections, tell you how much you can generate for income. Here’s your social security. And that’s just a projection. There’s no planning to that. And they’ll say, you know, you got your 401k, your social security, maybe a little pension, just call it a day. And this is what you can do. There is much more than just a 401k or an investment strategy. As it says here, the right strategy incorporates a portfolio that will reduce risk and volatility in increased growth.

You also need a proper investment strategy. You know, you also need a proper investment strategy that will, you know, take you through to the end. You also need to incorporate tax efficiency, tax efficient, distributions tax, efficient income, which is another component that is going to make you more successful, get a better retirement outcome when taking money from your portfolio and incorporating that tax efficiently. You also need to protect, and this is something that’s very important is we can create the best we can create the best income plan, the best income strategy ever known demand. And if you have a long-term care event or some unforeseen situation and you haven’t done the proper risk management strategies looked at your long-term care insurance, so on and so forth, that can decimate the best of plans. And also, you should have a properly drafted whether it’s just wills or revocable trusts or irrevocable trust, maybe to protect from long term care situations.

So, there’s a number of facets that are gonna make sure that you need to incorporate to be as efficient as possible and get the best outcome. But then also, so make sure that you know, when you have this plan put together that you’re also protecting the plan, you’re also protecting the plan through estate planning and risk management. Okay, this does this all the time. There we go. I know why it does that.

All right. So this is a very, very important quote. And I hope you take this to heart, cuz I think this is very, very, very important. One of my favorite retirement planning quotes, and this is from a gentleman, Wade Pfau, Ph.D., he is one of the foremost retirement researchers in the industry. I don’t know if anybody else has ever heard of Wade Pfau, Ph.D., but Wade, like I said is one of the foremost retirement researchers. He also is a, he writes the curriculum. He writes much of the curriculum for the CFP certified financial planning classes, at the American College, that’s where CFPs get designated as a certified financial planner. So he trains CFP certified financial planners. And ultimately this is his quote. Most advisors concentrate solely on managing investments. They don’t incorporate all the intricate retirement strategies. As I said, they don’t incorporate all the intricate retirement strategies that must be utilized to dramatically increase the probability of a retiree success. And that’s one of the reasons why we said earlier, I said earlier, you know, it’s much more than just an investment strategy. I don’t care. Anybody tells you there are many as Wade Pfau says, there are many intricate strategies that can be utilized to increase and better your outcome.

All right, I’ve boiled it down to, there are many strategies out there. But I’ve boiled it down to the five that are most important to try to. Now all of these strategies are not going to be incorporated in everybody’s plan, but you should at least look at each one. That’s what the Retirement Efficiency Assessment that I put together that I run for each individual. That’s what it does is it incorporates and shows us how each of these, what I call Multi-Disciplined Retirement Strategies, MDRS strategies. Each one of these will have a certain effect on your retirement outcome.

So, the first one is what I call Retirement Portfolio Optimization, RPO. This is by reducing the volatility in your portfolio. And there are strategies beyond just stocks and beyond just bonds, stocks and bonds reduce the volatility in your portfolio and is imperative to creating a sustainable retirement income for life. Okay. Very, very important to understand RPO optimizing, optimizing your portfolio, minimizing risk of loss and increasing growth for the risk that you are assuming that’s what retirement portfolio optimization is all about. And it can add years of life to your portfolio when taking income.

Number two, tax efficient income distribution, tax efficiency, take money from your portfolio. Tax efficiently in retirement will reduce taxes and ultimately increase the probability of portfolio survival. Once again, this will increase the amount of spendable income in your pocket that you can put away and make sure that you can actually increase your net spendable income by being more tax efficient and enjoy better retirement or take the same amount of income and leave more on to your loved ones, kids, grandkids, family. So whether you want it to take more income in your pocket and enjoy a better lifestyle and retirement, or leave more money onto your kids and take the same amount of money as you were gonna take before. That’s what tax efficiency is all about.

Social security timing, timing your social security, properly, understanding how social security works. As it says here, proper social security filing and maximizing this very important income source can dramatically increase the probability of a retiree success as well. So once again, social security filing. When should you take your social security? When should your wife take her social security or vice versa? My husband or wife. So ultimately that’s a very, very important question based upon longevity and based upon a number of other factors as to when you should take your social security benefit to get the most. It’s not just that you want to get the most, like most people tell you to take it at age 70 or you’re better off. Some people say you’re better off taking it at age 62. It depends. You must run it in your retirement projection, do some planning around social security timing to make sure you do the right thing. When you take your social security benefit and maximize this very important benefit.

Alpha Efficient Portfolio Management. I don’t have an acronym for this one. Lynn <laugh> I guess we could call this A E P M, that’s good. <laugh> I’m trying to make it AEPM, Alpha Efficient Portfolio Management, simply what this means is it means adding positive money management effect, adding positive management, what’s called Alpha Affect to a retirement portfolio. So for instance, if you have one control fund that basically is investing in large cap growth stocks, another manager that’s investing in large cap growth stocks. So you have a Fidelity fund and a zero price fund. One manager for the same risk gives you a 10% percent rate of return. The next 10 years, one gives you an eight and a half. Well, I’ll take that 10% all day over the eight and a half with that same level of risk. So that’s what Alpha Effect is getting you, above average returns above the index averages. And that’s very important in retirement because if you have 50%, 60%, 40% of your money in whether it’s mutual funds, ETFs, individual money managers, whatever it is, if we’re getting 1% or 2% more from those portfolio managers, because you know how to find them, ultimately that gives you more income again, that’s what this is all about with all of these strategies is creating more in your pocket, spendable income.

And then last, but definitely not least is the prudent use of home equity. Many people have five, especially today with the, with the values of homes. Many people have $500,000 homes, $600,000 homes, a million-dollar homes, and ultimately, they are not taking advantage of some opportunities, opportunities to add that value net equity as either a tax-free income source or are just as a reserve for opportunities or a reserve for emergencies. What am I trying to say? Thank you, Lynn. I was at a shortage for words there, or for opportunities or for emergencies, emergencies. Thank you. And so that’s what you can actually utilize your home equity in retirement. There are many, many ways to do this and leading academic research indicates that the use of home equity in retirement can increase the probability of portfolio survival and increase the legacy to your loved ones.

So, these are what I think are five major strategies that we will look at incorporating in your Retirement Efficiency Assessment report to see do all of these, give you value, can just one of these give you value or whatever.

So ultimately these are things that you should include in your overall retirement efficiency, whether you do it through the Retirement Efficiency Assessment, or you do it on your own very, very important to maximize these. All right.

So now once again, according to several research studies from Morningstar, Vanguard Investments, Morningstar and Envestnet, three major studies were done and it shows that all three studies showed that 3% or more or additional equivalent yield can be added to your safe withdrawal rate. So, let’s just say, for instance, your portfolio makeup, if you have just, ETFs exchange, traded funds or indexed in your portfolio, and that’s all you do, and your safe withdrawal rate is 3%. What this studies, what these studies say is by incorporating some of those strategies we talked about, you could increase your equivalent yield by another 3%. So if you’re earning 6%, you can increase that as much as 9% equivalent yield. So we’ll talk about that. Vanguard, this is Vanguard study, Vanguard did the Vanguard Advisor’s Alpha study. And basically it said by incorporating proper retirement strategies can add as much as 3% equivalent yield. As I just said to your retirement portfolio, Morningstar, Vanguard and Envestnet, as I said, also did some very extensive, studies in research papers and they have differing areas that you can identify to increase your overall, what they call retirement of alpha <inaudible> gamma.

And I think, Brian, you talked about the five, but there’s, there’s more right. Five are the key ones. Those are kind of your, but you know, there’s things like behavioral coaching, right? Studies show investor behavior, investor returns have failed in comparison to what managed money by advisors has done historically, you know, a 2% difference. So, it’s those five plus a few more things that an advisor value can offer as well.

There’s just a lot of other, as I said earlier, the five, I would say what I just went over the five, the majors, the five MDRs strategies, you know, use of home equity and alpha and, and all the rest. Those are five. What I think are major strategies, right? That incorporating can really give a tremendous advantage and a much better outcome if they’re incorporated properly, if they’re incorporated properly into a retirement plan. These are within the Morningstar study, the Vanguard study Envestnet Capital study, shows that there are other strategies that can be employed as well. Mm-hmm <affirmative> so ultimately, yes, that’s absolutely true.

So, Morningstar, now Morningstar research estimates, and this is David Blanchett and Dr. Wade Pfau, who I talked about, work together on the Morningstar report and Morningstar research estimates that a retiree can generate 22.6% more income by employing what they call Gamma Efficient Retirement strategies. Let me put that into perspective. What does it mean to get 22.6% more income? It simply means if you are taking an income of $60,000 and that’s what you’re getting from a traditional stock and bond portfolio <affirmative>, ultimately by employing, additional strategies, like we talked about, what Morningstar said is you can actually add 22.6% more income, or $73,560 inflation adjusted each and every year. So $13,560, more based upon a $60,000 income. Of course, if you’re getting a hundred thousand dollars income, now you’re at $122,600. So ultimately it just means once again, by incorporating strategies, proper strategies in retirement, you can get a heck of a lot more income. That’s the bottom line and retirement efficiency.

And once again, what I always say is yes. I sometimes have individuals come in when we look at their Retirement Efficiency Assessment and they’re gonna make it to age 95 with a traditional 60, 40 stock bond portfolio. And a lot of times, you know, they’ll have, you know, $600,000 initially, and at age 95, and even the worst case scenario, they’ll have a hundred thousand dollars. So they’ll make it with the type of income that they need. But there are many instances that we can increase that income instead of taking $30,000, $40,000 from the portfolio, we could take $50-$60,000 from that portfolio and get the same outcome at age 95.

That’s what the retirement efficiency means. It means squeezing out as much as you can out of your retirement so that you can enjoy a better lifestyle, a better retirement, or leave more money onto your loved ones. Once again, that’s what it’s all about. That’s what efficiency is, getting the most from what you’ve got. I don’t care if that’s $300,000 or 3 million, it’s getting the most from what you’ve got. All right. Retirement Income Readiness is being able to make this statement. And I think this is a great statement. And Lynn, the first time I’ve ever, ever seen this slide before? No, <laugh>, that’s why I was kinda like, oh, what is this? But as I read it, this is, this is exactly, this is perfect. Neither a stock market correction, or a bear market nor a rising interest rates will have a noticeable impact either of the amount of income produced by my portfolio or my ability to keep that income growing. That’s perfect. That’s exactly what setting yourself off properly does. It doesn’t matter whether we have, whether we encounter, the next 10 years are lost decade where the market loses 1% for 10 years, or if interest rates rise by two or 3% over the next five or 10 years, and we lose value in our bonds.

What we wanna do is we want to insulate our retirement from those inevitable events they’re gonna happen. It’s not like when it’s just when they’re gonna happen, not if they’re gonna happen. And that’s what you want to do is you want to insulate your retirement, mitigate these risks so that when you go through it doesn’t matter if the market goes up the next 10 years, like it has the last 10 years, we’re all happy. But if the market goes down, we still want to be happy. So very, very important.

And this is one of my favorite quotes. This is one of my favorite quotes, because this is one of my favorite guys. One of the greatest world’s greatest investors ever, Warren Buffet, he says, and he’s a very statistical probability type guy, kind of like Bill Belichick of the New England Patriots. Very statistical. Don’t go there. Probability football talk, right? You are neither. You are neither. And this is Warren Buffet. Not Bill. You are neither right, nor wrong. You are neither right, nor wrong because the crowd disagrees with you, you are right because your data and your reasoning, your math is right. That makes so much sense to me. Because once again you can hear all this conjecture out there and I’ll call it something else. But I won’t say it, but there’s so much conjecture. You know, there’s, there’s the investment. People say, annuity stink, never touch them. Don’t do that. And then and then the annuity guy will say, never put your money in the stock market. You can lose it all in one day. And that’s all just conjecture. That’s all ridiculousness. What you have to do is you run your numbers, your data, and your reasoning, and your math leads you in the right direction. And that’s exactly what you need to do.

I hope you enjoyed that discussion with Brian Saranovitz again, of Your Retirement Advisor and his discussion about Multi-Discipline Retirement Strategies. And as he mentioned, there is a very valuable retirement assessment that we do want to extend to all of the people that happen to listen to this podcast and would like to take Brian up on his offer of that Retirement Efficiency Assessment. If you are interested in that, certainly email me at And as I always say, email me with any questions, concerns, any directions you need in terms of getting your retirement right. And as I like to say, you need to go out and get her done. Knowing more is having more. And I hope you learned more today about Retirement Optimized Strategies. Thanks again. And we’ll talk to you next week.

Listen to the podcast episode here! 

Listen to more episodes here! 


Comments are closed.