Biggest Retirement Mistakes: Part 1
Freddie: Many retirees make the mistake of going all in on cash or annuities, thinking it protects them, when in reality it could leave them vulnerable to inflation and long-term shortfalls. True retirement security means balancing safety with growth to preserve purchasing power. Today, we'll explore smarter strategies that generate income without taking on full market risk.
Leibel Sternbach is here with us today to talk about these strategies. Hello Leibel. How are you today?
Leibel: Good, how are you?
Freddie: Unbelievable. You know, I don't like making mistakes. A lot of retirees make the mistake of going all in on cash or annuities thinking it protects them when in reality, you've told us before, that it leaves us vulnerable to inflation and long term
shortfalls. So true retirement security means balancing safety with growth to preserve purchasing power. Today, let's look at some smarter strategies that generate income without taking on the full market risk. So my first question in this regard Leibel, why is going in all in on cash or annuities one of the biggest mistakes that a retiree can make?
Leibel: The biggest issue with cash, right, is that you're not growing faster than inflation, right? You're going negative, right? So every year that you see that inflation headline every year that you're paying more money at the grocery store for your groceries, that is money coming out of your pocket, right?
And so, although your account balance doesn't go down. The purchasing power goes down, right? So you need to really consider that to be a negative and the biggest danger in retirement, right? It's not that you're gonna lose 50% of your money to the market, it's that you're gonna take your money out when the market is down.
And now when the market is down, we can see our account balances down. But when we look at our bank account, we're like, oh, well our bank account is the same. We're spending money out of it. We are kind of, you know, ignoring the thing that we can't see, which is inflation. And inflation is really eroding our buying power.
And so when you add inflation to market losses, all of a sudden you've got a killer scenario, which is kind of where we find ourselves right now. We've got a huge amount of volatility. And we have really high inflation. And, uh, you know, the federal government just doesn't seem to wanna do anything to really fix this long term.
And so inflation is probably here to stay for a while, which means we need to make sure our cash is growing as aggressively as possible.
Freddie: Everyone we're talking with Leibel Sternbach about some of the mistakes that retirees make. I'm wondering, talk about the inflation eroding a safe retirement portfolio and why is at risk often overlooked?
Nobody wants to see their an erosion in any type of instrument.
Leibel: So like everything, right? It's the squeaky wheel is what gets the oil right? And when you look at what are the things that get our attention, right? The headlines get our attention. Our account value going down in value gets our attention.
But when we look at our bank account, when we look at high yield savings, right? We're like, oh okay, it's keeping steady, right? And we kind of ignore it. But the reality is, is when you take what we're getting and you deduct how much inflation we're losing and buying power, we're actually going negative.
Right? And so it doesn't get a lot of attention. It's not sexy. It's, you know, financial advisors don't talk about it because it's hard to compete. They may not have a strategy. That's why I launched my YFYA ETF was because a strategy didn't really exist in the market for it. We were the first to come out with an all income ETF strategy, JP Morgan, and BlackRock, and, you know, all the big boys came and saw our filing and decided to copy us.
But we were the category creator, right? We came out and we created this category of you need something that's kind of low risk, but is going to get more returns than cash. And so it's really, really important to make sure that your cash is growing even more than the growth, right?
There's lots of ways to get growth, but if your safe money isn't growing, then by definition it's going backwards, right? As all the MBAs like to say in the nineties, right? If you ain't growing, you're dying. And that's, that's really true when it comes to your retirement savings
Freddie: That's in everybody's lives these days.
Yeah. Thank you so much for the great information and that website once again, in case you missed it, is yields4U.com. We gotta leave it right there. And we've learned today that playing it safe with cash or annuities can leave your retirement vulnerable to inflation and income shortfalls.
Nobody wants that. The goal isn't to eliminate risk as Leibel's told us, but to manage it wisely with strategies that balance stability and growth together with the right approach you can preserve your wealth and stay ahead of rising cost.
