Best Strategies to Avoid Running out of Money in Retirement

The #1 Fear Every Retiree Faces (And How to Conquer It)

What if your retirement savings could last forever?

That haunting question—"Will I run out of money?"—keeps more retirees awake at night than any other financial concern. But what if there was a surprisingly simple solution hiding in plain sight?

In this eye-opening episode of Yield to Reason, host Brandon Roberts reveals the counterintuitive secret that's helping his clients sleep soundly: Stop selling your assets.

Real People, Real Results: Three Retirement Success Stories

💰 Jane's $55,000 Annual Income Miracle

A widow with $800,000 in her 401(k) was terrified of outliving her money. Discover how Brandon transformed her nest egg into a $55,000+ annual income stream—without touching the principal. The twist? Her account balance is actually higher now than when she retired.

🛡️ The Couple Who Demanded Guarantees

Rich and Barbara had $1.2 million but refused to risk a penny in the stock market. Learn how they created a bulletproof $109,000 annual income plan that rivals their pre-retirement earnings—with built-in inflation protection.

🎯 The Super Savers' Mind-Blowing Wake-Up Call

Adam and Sarah were the poster children for extreme frugality. They hoarded every penny, lived in constant fear, and watched their relationship with money crumble. Then Brandon asked one simple question that changed everything: "What if you could make more money even after paying taxes?" The answer boosted their income from $8,000 to $34,000 annually.

The Income-First Revolution: Why This Changes Everything

Forget the 4% rule. Brandon's clients are generating income well above 4%—and they're not using 100% of their retirement assets to do it.

Here's what makes this approach revolutionary:

• No asset sales required (goodbye, market timing anxiety)
• Income-focused investments weather market storms better than growth stocks
• Multiple strategies available: from dividend-focused ETFs to guaranteed annuities
• Peace of mind that frees up mental energy for actually enjoying retirement

Who This Episode Is Perfect For

✅ Pre-retirees who want to build a bulletproof retirement income plan
✅ New retirees struggling with the transition from saving to spending
✅ Current retirees tired of worrying about market volatility
✅ Anyone who's ever wondered, "How much is enough?"

The Bottom Line Promise

By the end of this episode, you'll understand exactly how to position your retirement assets to generate reliable income without the constant fear of running out of money. No market timing required. No crystal ball needed. Just a proven strategy that's already working for retirees across America.

Ready to stop worrying and start living? Hit play and discover why the solution to your biggest retirement fear might be simpler than you ever imagined.

Disclaimer: Brandon Roberts is not an investment advisor. This podcast is for educational purposes only. Consult with a qualified financial professional before making investment decisions.

🎧 Listen now and take the first step toward a worry-free retirement.

Transcript

00;00;00;00 - 00;00;51;01
Brandon
You are listening to the Yield to Reason podcast, where we strive to help you build the most important part of your retirement strategy. Because a retirement plan built with robust income sources is a retirement plan built for success. I am Brandon Roberts. This is episode number nine. And today we're talking how exactly I go about showing people how they can avoid running out of money in retirement through income focused investing.

00;00;51;03 - 00;01;35;05
Brandon
It's time to get serious about the roadmap to success. As we set off on a journey to help you build the retirement you deserve and the one you actually want. The fear of running out of money is the number one most common concern. Retirees have consistently. It is identified time and again in a number of different retirement surveys conducted by a number of different organizations, both nonprofit sort of public interest organizations as well as private entities who are trying to sell various retirement assets and or services.

00;01;35;07 - 00;02;01;23
Brandon
Running out of money consistently comes up as the most common concern retirees have, and this is totally understandable. It's hard. As I've discussed in previous episodes, to necessarily wrap your head around the process of turning a pot of money into an income source and being able to distribute money from it in a fashion that ensures you won't one day run out of money.

00;02;01;26 - 00;02;27;06
Brandon
It's a huge concern and understandable concern. And there is one really simple solution to solve this problem. Don't sell assets. I know that that seems like a way over simplification of a really big problem, but trust me, it really works. Don't sell assets and it's really difficult to run out of money to drop your account balance to zero.

00;02;27;08 - 00;02;44;14
Brandon
But at the same time, I'm I'm aware of the fact that there are a number of people who will hear me say that, and they think I'm trying to be wildly more sarcastic than I really am. And they look at it and think, well, okay, fine, but what does that mean? How how do I actually do that? How?

00;02;44;15 - 00;03;17;20
Brandon
How on earth can I take my 401 K my 403 B, my IRA, whatever it is, and not sell assets and actually have money in retirement. Today I'm going to talk about exactly that. And I am going to go even further and deeper into this to discuss specifically three specific scenarios of real life people that I have helped use income focused style investing to solve the issue of worry regarding running out of money.

00;03;17;21 - 00;03;49;03
Brandon
These are people that I have helped set up their retirement plans in a fashion that allows them to significantly reduce the risk of ever running out of money. Now, before we get into those scenarios, there is a little disclosure that I felt would be necessary to give everyone. First off, I am not an investment advisor. I am not seeking to solicit you as a client of mine, as an investment advisor.

00;03;49;03 - 00;04;19;14
Brandon
If if you are an individual who is looking for an advisor, you can reach out to me and I may be able to give you a referral to an advisor who you might work with, but I do not myself engage in the practice of taking individuals on as clients. I can consult with those seeking somebody to give them some opinion and idea about their retirement plan, and where they could focus their energy and efforts.

00;04;19;17 - 00;04;51;16
Brandon
But if you need a more hands on guidance type approach, I am not an advisor. I will not take on that task. I do, however, have relationships that I could send you to. If you're looking for that sort of person with all of that out of the way. Let's get into the really cool details of today's discussion by talking about the actual people that I have had a role in assisting through the process of adopting a more income focused approach to greatly diminish the chances that they will actually run out of money.

00;04;51;19 - 00;05;21;17
Brandon
So our first scenario involves a widow named Jane, who accumulated a pretty decent sum of money in her for one $800,000, and not a particularly financially sophisticated individual. I accumulated by sheer virtue of of the growth of the stock market over the last several decades, and ended up retiring with a decent pot of money, but didn't have any clear focus on what would actually happen, what the plan would be for income.

00;05;21;20 - 00;05;44;07
Brandon
So talking through some things we didn't necessarily need to build in this case, a specific income plan in the direction of rate. How much money do you spend each month, and what are we going to do to create the money that that meets that number? Because the truth of the matter was, there was a decent amount of income relative to a rough sketch of the income numbers.

00;05;44;07 - 00;06;14;19
Brandon
We knew we were going to have a good amount of margin to work with here. So we also had, in addition to the 400 K balance, $1,800 a month of Social Security income that we knew was going to be fairly instrumental in covering some fixed. They got to be covered in all situations, monthly expenses. So the investment income we knew was largely going to to cover the discretionary expenditures, which were not particularly significant.

00;06;14;21 - 00;06;48;19
Brandon
But there was the big question, how do I ensure that this, this money that is a good bit more than I ever thought I was going to actually accumulate, doesn't go to zero and and doesn't get wasted. So the the strategy was to take some not all of the money, roughly $650,000 of it and position it into a combination of various income style investments to include closed end funds, rates and dividend focused ETFs, things that participate in covered calls and stuff of that nature.

00;06;48;22 - 00;07;15;28
Brandon
So doing that, we were able to create a portfolio that generated $55,000 roughly annually of investment income. So here we have $55,000 or somewhere in the neighborhood of almost $4,600, plus 1800 bucks a month for Social Security income. We also took $150,000 of that 800,000 and intentionally decided this was going to be the cushion, so to speak. So we're not going to take that and put it in anything but cash.

00;07;15;28 - 00;07;36;19
Brandon
It sat in the money market and by virtue of interest rates being where they are these days, that cash position generates an additional $500 a month of income that we didn't really build into the original plan. So no happy accident. We have an additional $500 a month of income. Yay! One of the upsides of of higher interest rates, I suppose.

00;07;36;21 - 00;08;15;22
Brandon
So this situation for Jane puts her in a place where she definitely has more income, capacity. And I'm going to focus on that term capacity and revisit that in just a little bit. So more income capacity than she needs regarding her month to month expenditures, which is a really great thing that has allowed her to take excess income and invest it into the portfolio of things that is generating income, which means over the years of being retired, actual income capacity has increased since retirement started, which is a fantastic thing.

00;08;15;22 - 00;08;38;07
Brandon
That's fantastic way to hedge inflation, if you will. Just simply not have to take all of your your possible income generation and be able to reinvest some of it into what you're doing to further grow your income over time. That's an enviable position. Understood. Not everybody's going to have quite as much margin, but it works out in this case, which is a really, really great thing.

00;08;38;07 - 00;09;03;18
Brandon
And I would also argue that based on the way the market has boomed over the years, a lot of people find themselves in this position when they really didn't think they would. Now, this income that's being produced from the passive investments, the $55,000 annually, plus the Social Security income at $1,800 a month, that actually puts Jane in a position where she is creating retirement income.

00;09;03;20 - 00;09;40;22
Brandon
It's actually a little bit higher than her pre retirement income while she was working. So obviously the ability to not overspend the foundations there, because she was used to a situation where she simply had less income to work with on a month to month basis. So hooray for her for those circumstances. Account balance since retirement to current day has grown, probably not as much as it would have if she were sitting in something like an S&P 500 index fund, and especially if she hadn't spent any money out of the S&P 500 index fund.

00;09;40;26 - 00;10;05;23
Brandon
Now, had she been withdrawing, 4%, for example, from that, would she be above where she is today? I'm not so sure about that. But in any event. So account balance is higher than it was when she retired. She has been distributing somewhere close to like 30 ish thousand dollars a year since since retirement started from the retirement account, which is in an IRA.

00;10;06;00 - 00;10;26;08
Brandon
So all of the retirement assets are in an IRA and they produce income. Earlier I mentioned something about income capacity. And what I mean by that is by by virtue of this setup. And I'm not saying it's the right set up 100% of the time. In fact, I would I would argue a lot of people to try and diversify a little bit beyond her exposure in this case.

00;10;26;11 - 00;10;51;26
Brandon
But things work out the way they do. So the capacity to create $55,000, it's a little more than that now, but it was originally $55,000 of income. Does not mean she has to recognize $55,000 every year as income. She only recognizes the income that she withdrawals from the IRA to meet the expenditures that she faces each and every single month.

00;10;52;01 - 00;11;17;09
Brandon
So even though her assets are producing a certain amount of money, that's not necessarily creating a burden in terms of taxes, because all of that income is being recognized. The day that the distributions get paid, for example, that does differ from people who hold brokerage style money, where it's not sitting in any kind of retirement account. Whenever the distributions get paid, that would be recognized as income.

00;11;17;09 - 00;11;50;11
Brandon
Just to clarify or differentiate those two things. She's also somebody who took advice. I give almost everybody, and she actually did it. So I think if you have the ability to sign up for a credit card that gives you some sort of rewards, you should do it. You should absolutely pay balances off every month. But if you're going to spend the money anyway and there's something you can do to gain some other benefit for something that that is meaningful to you, you ought to, get something out of the the fact that money is flowing from you to someone else.

00;11;50;14 - 00;12;27;20
Brandon
So in her case, she signed up for a cash back credit card. And she simplifies the accounting process when it comes to the distribution from the IRA with the credit card in place. Because in general, every expense that she can process through the card gets done that way. And at the end of the billing period, she withdraws money from the IRA to then pay the balance off for the credit card versus having to try and and constantly take distributions from the IRA to meet expenses or anticipate when expenses are going to come do that doesn't happen in this case.

00;12;27;22 - 00;12;44;20
Brandon
And then, of course, the Social Security money that primarily covers the things that you simply don't have the option to pay with a credit card, because there are certain things out there that that won't accept a credit card payment for one reason or another. And those are best pages with cash that sits in a in a savings account or checking account.

00;12;44;20 - 00;13;05;20
Brandon
And that's where the Social Security money lands anyway. Now, since retiring, she has not sold a single asset that she has bought into. So no reason to sell money to or a someone to sell assets to raise money to go out and make a big expenditure or even a small expenditure. That's that's not happening at all. Sufficient cash cushion.

00;13;05;20 - 00;13;29;18
Brandon
As I mentioned earlier, if there were some sort of emergency situation to cover those things, plus excess income anyway, that's that's not necessarily building the cash cushion that's being reinvested to increase the income that's being produced, but has has the sufficient means to deal with, emergency situations. If they were to come up and the threat of running out of money is very, very small here.

00;13;29;18 - 00;14;03;12
Brandon
In fact, there is a much, much larger likelihood that she will end up passing the assets that she has invested in on to her children. And so long as they don't change the investment options, they'll just continue to collect the income that she had been collecting all along in retirement. So while I favor a scenario where people plan for this ahead of time, even if you don't, as was the case with Jane, it's possible it's very possible to transition into an income plan once you get to retirement and make things work quite well.

00;14;03;15 - 00;14;36;10
Brandon
Now we'll we'll talk about, very different situation with, a couple name Richard and Barbara, who had a decent sum of money, accumulated about $1.2 million, but they knew with absolute certainty that they wanted nothing to do with investments in the traditional traditional stock market, and instead wanted this $1.2 million to provide guaranteed income. And they would just build their life around whatever the income budget was that they could produce on a month over month basis.

00;14;36;13 - 00;15;19;07
Brandon
So given that fact pattern, the obvious, financial asset of choice is annuities. So what we did here was build a kind of basket of different annuities to provide them with an income of roughly $109,000 a month, which was pretty close to pre-retirement income. And they were thrilled with this. So this allowed them to understand with absolute certainty how much income they were going to be collecting each and every single month, and they would take that income and live whatever life they have planned based on that budget.

00;15;19;10 - 00;15;55;09
Brandon
Now, one of the annuities that was used in this, this, situation was intentionally selected for its ability to increase its income amount over time based on certain circumstances, which wasn't necessarily or isn't necessarily tied to any specific inflation data point. But it can work as a great mechanism to combat the effects of inflation as time goes on, which is just a further, benefit to a very regimented income desire.

00;15;55;11 - 00;16;25;08
Brandon
Because normally speaking, when we want flat out guaranteed income, we don't usually get much in the way of increases over time. There are a couple of ways to approach this. One might be laddering annuities to turn income features on later on down the road to, to increase the income amount. Or, this situation here where we have an income benefit that can increase over time to help deal with the potential effects of inflation.

00;16;25;10 - 00;16;50;21
Brandon
Life's pretty simple for these people, and it always was. In many respects. They're not CNBC types. They're not money magazine types. They don't want to spend any time in retirement reading through various articles about investments or high finance or any of that stuff. They just desperately wanted an income amount that they could trust and then build their lives around that.

00;16;50;21 - 00;17;08;07
Brandon
In fact, a good portion of the $1.2 million was actually a rollover from a pension. And this really came down to this is what the pension gives us. And if there are annuity products out there that can beat that income, we want those things because at the end of the day, the biggest monthly income number is the winner.

00;17;08;07 - 00;17;30;26
Brandon
For us. That's that's how they viewed it. That's what they did. Now there is a there's a small relatively speaking, cash position $201,000 that sits in CDs. That's that's the emergency fund. So they have that set aside. But, they, they, they really the, the piece that was most crucial to figure out. And there was a lot of hand-wringing up to the point that they they settled on the final decision.

00;17;30;29 - 00;17;54;15
Brandon
It really was about establishing guaranteed income that they knew with zeroed out was going to be there for them each and every single month. And they would just build their lives around that. And certainly not everybody operates this way. But there are a certain number of Americans who knew and just understand that you don't have to go the route of of certain other riskier investments.

00;17;54;15 - 00;18;22;05
Brandon
There are things like annuities that can place strong guarantees in place for you if if you want to go that route, not a huge percentage of population, but for for that group, it's there and it matches up very, very well. The last scenario that I want to go through is it's an interesting one, and quite honestly, it's one that I have the most amount of empathy for.

00;18;22;07 - 00;19;09;09
Brandon
And the reason I say that is because it is an example of a couple who did everything right by the traditional book, and yet they felt very, very not at ease about their retirement circumstances. So this couple, Adam and Sarah, they are the textbook definition of super savers. They saved an incredibly high percentage of their pre-retirement income in there for low income, and they were thrifty to be very understated in their spending behavior.

00;19;09;11 - 00;19;32;27
Brandon
And by the time I met them, they had actually been retired for a little over ten years. And their income plan was very, very simple. We're simply going to spend as little money as possible to ensure that we don't run out of money. There were very, very, very occasional splurges, but their day to day life was ruled by thrift.

00;19;32;29 - 00;20;03;08
Brandon
And they they had relatively modest pre-retirement incomes, but they saved, relatively speaking, a pretty substantial sum of money. When you think about the kind of income they were working with throughout their their entire professional employed lives and their account balance, which by the time I met them was around $500,000, was slightly larger than what they started out at in retirement.

00;20;03;10 - 00;20;48;23
Brandon
But the only reason that it was slightly larger than it was when they started out in retirement was because they had the the good fortune of inheriting some money. Actually, there were two different events that happened throughout their retirement where they they inherited money from family members who had passed away. And that played a very instrumental role in them, one having more money at this point and little more than ten years after retiring than they started out with, but also putting them in a position where they weren't kind of in a almost code red emergency about how much money was left, because quite frankly, $500,000 is not a ton of money for two adults to

00;20;48;23 - 00;21;20;27
Brandon
live off in retirement. But they were making do and they were spending very, very little money. They also were collecting Social Security at about $2,300 a month. So that that helped obviously deal with the day to day or month to month expenses, expenditures and then spending as little as possible beyond that, from their retirement assets to cover other expenses as they came up.

00;21;20;29 - 00;21;48;26
Brandon
Now, very interestingly about these two, they kind of sat on different ends of the spectrum when it came to risk and their objectives with their retirement money. So Adam, he he kind of liked the process of dabbling with investment strategy, liked to go out and root out certain investment ideas that he thought were going to go gangbusters and make them more money.

00;21;48;26 - 00;22;13;09
Brandon
And and he had this weird obsession about growing the account balance to a million bucks like that was that was his mission. And he thought that a lot of really great things were going to happen if they ever got to that point. Sarah, on the other hand, wanted none of that. She was incredibly risk averse. She did not care about the account balance growing, necessarily.

00;22;13;09 - 00;22;34;06
Brandon
She just cared about not about protecting loss or from protecting them from loss. She didn't want to lose any money, so she would have been perfectly happy if the scenario existed. For them to go down as a local bank, give it all to to the local bank and CDs and and just collect interest on that. That would be great.

00;22;34;11 - 00;23;06;11
Brandon
But, throughout a lot of their retirement, interest rates were fairly low. So that as a strategy wasn't going to get them very far. And for that reason, they accepted the reality of moving into riskier things inside the stock market and bond market as a way to grow their account balances in a meaningful way that would allow them to sell some assets here, to spend money when they needed to, but then try to continue to to grow the account balance, which really wasn't working out all that well for them.

00;23;06;15 - 00;23;32;04
Brandon
They move money around way too often. They would often buy high and sell low because of their attempts to grow the balance at certain points, but then get scared if there was a pullback and just cut losses and run. So it it wasn't working out super well and there was a decent amount of anxiety they held despite having been retired for over a decade.

00;23;32;07 - 00;23;48;09
Brandon
You know, for a lot of people, retirement is really scary in the beginning. But after you've been a few years through it, you get a little comfortable with the new norm and you kind of have a sense of of what you're doing. And that for these people, didn't really develop and something else that was going on for them.

00;23;48;09 - 00;24;11;21
Brandon
And this is a topic for another day, for sure, in terms of elaborating on what I mean. But they didn't really have a very healthy relationship with money. And it sounds weird to say that given the fact pattern here, they were great savers. They were definitely good at identifying wants versus needs. Actually, probably too good. And that's one of the reasons I say they didn't have a wonderful relationship with money.

00;24;11;24 - 00;24;37;09
Brandon
But I think that for for a certain segment of the population, there is an unhealthy relationship with money. And most of us just default think that means they spend too much. But that's not necessarily always true. And I think for for everybody out there, if you can't acknowledge that your relationship with money may not be great, that's going to be a huge impediment to setting up a plan.

00;24;37;09 - 00;25;11;17
Brandon
Financial plan, a retirement plan that is really conducive towards moving forward. So you get hung up on a lot of really silly things when you don't have a great relationship with money. So, not super surprisingly, in all honesty, when I originally met them and made suggestions about a more income focused plan, they rejected it. It just did not pacify the concerns that they had individually.

00;25;11;17 - 00;25;37;03
Brandon
So the weird issue here is most of the time when when people like me make recommendations, we're kind of dealing with concerns that the couple has. But in this case, we had concerns that they individually had that were kind of the two of them wrestling with one another and then wrestling with the fact that my recommendation didn't really solve the problem for either one of them.

00;25;37;05 - 00;25;58;11
Brandon
For Adam, there was an understanding that going this route meant that the chances of hitting that $1 million account balance were going to go down, and they were going to go down considerably because we were going to forfeit growth for income. And then for Sarah, the real chief concern was the understanding that these are assets that do fluctuate day to day on the market.

00;25;58;14 - 00;26;28;20
Brandon
And so if we go that route, there's a wildly good chance that that account balance could go down. And that, that that really was a nonstarter for her. So that that aspect of both of them having their own unique issue, that they were kind of at odds with one another on. And then looking at at what I had suggested, it just it did not satisfy the, the problems, so to speak, that either one of them came to the table with.

00;26;28;22 - 00;26;56;08
Brandon
So they both pretty happily decided together. Yeah, we're not going to do that now. Interestingly, time went on, a few years went by and they resurfaced. They resurfaced because they tried to do things the way they had been doing them all along. And they weren't really getting any further ahead. Account balance actually had gone down some, and they were getting more and more worried about the fact that they were trying to live comfortably in retirement.

00;26;56;10 - 00;27;46;25
Brandon
And despite the fact that they were great savers and definitely not spendy people, they felt like they were falling behind. And in all honesty, they kind of were. So we revisited the whole income thing. And another thing that that that I kind of discussed the first time around and brought back up the second time, was this focus on on growing the balance to this arbitrary round number of $1 million to note that, hey, you know, if you ever got there, that probably creates a whole new level of anxiety that's going to be problematic when it comes to spending money, because if you get there, I think what's going to happen is you are going to

00;27;46;25 - 00;28;13;08
Brandon
clamp down expenses even further in your efforts to preserve this $1 million balance. So if you get to a million bucks and there's an option to spend money, but that's going to bring you down to $999,000, you're going to say no because you want to stay at $1 million. So there's a really good chance that if you get there, you're spending is going to get even less than it is today.

00;28;13;08 - 00;28;42;10
Brandon
And that could create even more anxiety then you have based on the fact that you're just simply not there. And that was sort of an moment that, that, that there was an admission that, you know, if we ever if that were to happen, that would probably be true, that we would, would make serious efforts, probably to our detriment, to preserve a $1 million account balance and there was something else that we we briefly touched on the first time around that that needed to come back up, and it needed to be further investigated.

00;28;42;17 - 00;29;09;24
Brandon
So for individuals that are thrifty who do not like spending money, that tends to be applicable universally. And what I mean by that is not only do they not like going out and spending money at the grocery store or whatever place they're going because they have to make a purchase on something, but they also tend to be a bit reserved.

00;29;09;26 - 00;29;48;24
Brandon
And, making efforts to reduce things like taxes that they pay. And this couple did that in an extraordinary way. Their retirement assets were structured in a very specific way that sought to minimize the taxes that they would pay. And I don't just mean the income taxes. I mean every potential tax that they face. And so, for example, they really liked, US treasuries because the state they live in doesn't generally tax Treasury income for state income tax purposes.

00;29;48;24 - 00;30;19;23
Brandon
So to them, treasuries were were this fantastic asset despite the fact that they had kind of mediocre yields. They were a great thing because we don't have to pay state income taxes on that income that we we get. And so I asked of what seemed like a very simple question to me, and that was, well, okay, but if there were other assets you could buy and the yield that you got from those increased your income by like 4 or 5 times, which was a realistic situation, compared treasuries to some of the other options that are out there.

00;30;19;26 - 00;31;10;13
Brandon
How how confident are you that you won't at that point come out ahead net net after paying taxes because you just simply have that much more income. And there was a of prolonged silence. And this moment of realization that perhaps, perhaps there is a path to more for them by virtue of creating more income from assets and even having to pay taxes in certain situations, because the net, after its all done, is still higher than the other asset that you were buying into because you were trying to keep your income low enough to not incur some sort of tax to you're trying to avoid versus just having a bunch of income and paying the taxes

00;31;10;13 - 00;31;37;16
Brandon
that are there and taking the difference, which was a bigger number. At the end of the day, they had never once given that any consideration. That very dramatically shifted their thinking this time around. And we came up with a plan that took them from a very, very meager $8,000 of annual investment income off what they were trying to put together to something that produced 34 ish thousand dollars per year in income.

00;31;37;18 - 00;32;09;01
Brandon
Now, relative to their Social Security income, that means we more than doubled the income capacity that they had, and that after taxes of of whatever they were trying to avoid, put them in a position where they just had more money to go do the things that they wanted to do, because even though they were really good at managing their expenses and not going overboard with them, their people, they have things they want to do to pass their lives in retirement.

00;32;09;03 - 00;32;49;19
Brandon
So they've been a little slower to adopt some of the recommendations, but they're they're much more open and on board than was the case the first time around. And there has certainly been a change in focus. And I perceive a, a greater sense of, of peace of mind because now there is no longer the big question of, well, we have X amount of dollars and we want to spend some money on this thing, but if we take that money out of circulation, we sell the asset and we take it and we we go buy the thing.

00;32;49;22 - 00;33;12;10
Brandon
It's gone at that point and we don't know that we'll get that back. Alternatively, now we have X amount of income that we produce every single month. And because our life was largely driven by Social Security and living around that budget, which was very small, we don't really spend that other money very frequently. So it accumulates as cash.

00;33;12;10 - 00;33;55;16
Brandon
And then once it's big enough to go buy the thing we want, we just go buy the thing we want. And we're not worried about the fact that we need to sell an asset to go do that. And that has dramatically lightened the anxiety for them. And again, they haven't fully implemented everything. So just doing part of what was recommended has already greatly shifted the anxiety and the direction of we'll worry less about these things, which is obviously a fantastic thing and again, significantly reduces the chances that they are going to run out of money.

00;33;55;19 - 00;34;35;09
Brandon
I want to point out that in all three of these situations, we never, ever sold assets. We're not selling 4% of any initial account balance. In fact, the yields that we have in all three cases are higher than 4% across the board. And we have a plan in place to increase the income as time goes on, because we're not using all of the money and or we have access income, capacity to further buy up more assets for income purposes, to increase our income as time goes on.

00;34;35;11 - 00;35;00;25
Brandon
This is solidly more reliable than the 4% rule, which basically entails starting out at retirement, selling 4% of your account balance, and then increasing it for inflation each year after that. The the backtesting on that which was done years and years ago suggested that that number 4% was the right number to pretty much insure that you probably won't run out of money.

00;35;00;28 - 00;35;23;14
Brandon
It's been argued many times since that there is a need to refine that figure. And maybe there is. Maybe there isn't. What I'm telling you is we can throw all of that out and just approach a different. We just adopt a different approach and significantly reduce, I would say statistically bring to zero the chances that you're going to run out of money.

00;35;23;15 - 00;36;23;26
Brandon
And I say that because if you're not selling assets, then the chances that those assets are going to go bankrupt is extremely small. And the more of them you own, the more you are eliminating the risk of experiencing the entire portfolios going to zero. And in addition to that, when you own assets that produce income, they are generally speaking less impacted by market corrections, market shocks when we see account balances or account values drop in more speculative or value driven assets, that happens because economic circumstances are shifting and the value of those assets is generally looked at as the future, a price that we think the underlying assets are going to be valued at.

00;36;24;03 - 00;36;50;00
Brandon
So an individual stock basis takes something like a tech heavy, or a tech focused company, something like, the in the Nasdaq, an Nvidia or, or an Amazon or a Facebook, things that don't really pay high yields. They are valued primarily by what we think the company is worth, not just today, but what we think they're going to grow to in value tomorrow, next week, next year, next five years.

00;36;50;02 - 00;37;15;17
Brandon
That's what drives a lot of the stock price of those assets. And when economic circumstances shift, that starts to cast doubt on whether or not we were correct about where those assets were going into the future. And that's what tends to drive a decline in price assets that are very income heavy, things that have higher yields through distributions, dividends, things like that.

00;37;15;19 - 00;37;52;20
Brandon
When economic circumstances shift, the real concern is, is if the company will maintain the dividend. And if that starts to subside as a fear, then we don't have near as much concern about the value of the asset because or part of the value of the asset is its capacity to create income in addition to all of that, if there is a pullback on the asset, one of the great things we have, opportunistically speaking, is the the chance to buy more of the asset at what is a higher yield if the dividend doesn't change.

00;37;52;22 - 00;38;18;14
Brandon
So when we have a basket of assets that are more income focused, the volatility of our portfolio is generally less. And while I don't think it's necessarily a great practice to stare at account balance day after day when you are income focused investing, there are people who are going to get a little worried from time to time about fluctuations in their liquid account value.

00;38;18;16 - 00;38;50;03
Brandon
And there is, in my experience, far less volatility or a wide swings in account balance when we are more income focused. So the chance of of it going to zero is near zero. But we also see a little less fluctuation in price levels, which does for people bring a certain amount of peace of mind, though I think once you have some experience with it, you just start to worry about it so much less, especially when you're looking at the income roll in month over month.

00;38;50;05 - 00;39;18;12
Brandon
That's it for me today. This one was a little bit of a long one, but I think worth going through the examples and scenarios. I have no worries though. I will be back next week with more tips and tricks to help you build a rock solid retirement. And until then, please remember real wealth doesn't just add up, it writes, checks.