‘Ride the wave, but have an eye for the exit’


Myles Udland and Brian Sozzi of Yahoo Finance speak with Ken Moraif, Senior Retirement Planner at Retirement Planners of America, on how to plan for retirement and achieve financial goals.

Video transcript


MYLES UDLAND: Welcome to Yahoo Finance Live this Thursday morning. Stocks are currently trading at an all time high, as we saw a dozen times in August. And when stocks are soaring at such a speed, most people certainly sit back and wonder, should I change or rethink my retirement plans?

And Ken Moraif, Senior Retirement Planner at Retirement Planners of America, is joining us now to talk about it. Ken, nice to talk to you again. Let’s start with this question in the stock market, S&P is up 20% this year. We doubled down in March 2020. How do you talk about this kind of market with one of your clients who might have a five-year retirement horizon, might have a 30-year retirement horizon, how do you break it down these two components?

KEN MORAIF: Well, what’s important to us is that we work with people who are within five years of retirement or in those first five years of retirement, this decade. This decade is extremely important. In fact, we think this is the most important decade of your entire financial life, because no matter how far you get there, if you suffer a big loss like 2008 or a year 2000 or so. others, it could have an impact on your ability to retire or stay in retirement.

Our philosophy is therefore very conservative and we therefore believe in implementing strategies to mitigate the drawbacks. So the conversations we have with clients right now are that we want to ride the wave for as long as possible. But we still want to keep an eye on the exit. We always want to have a strategy in place to protect ourselves against the downside.

As you know, our fearless prediction at the start of this year was that the Dow Jones would hit 35,000. At the time, that might sound a bit ambitious, but we got there. I haven’t changed it. I think we’re going to continue to see new all-time highs, but I don’t think it will be with the speed and pace of increase we’ve seen in the first two quarters of this year.

BRIAN SOZZI: So Ken, what strategies have you put in place to protect a portfolio against any downside risk?

KEN MORAIF: Well, our strategy is proprietary. We call it investing and protecting. And in fact, last year, the day before the pandemic, our strategy signaled to us that it was time to take our customers out. It is therefore a program designed for people over 50 years old. I would say if you are younger than that you might have time to play around with those kind of fixes and those kinds of inconveniences. But again, if you are in this decade, the most important decade of your financial life, we believe that being conservative, diverse, with a strategy to mitigate this downside is extremely important.

MYLES UDLAND: You know, Ken, for this demographic that you primarily work with, a lot of these people are going to have a lot of their wealth in their homes. Maybe they own it, maybe they have a lot of equity in the house, they’ve lived there for a long time, and so on. How does that fit into that kind of a plan, especially in this environment where people might have had a chance to sell their house for a value, you know, they might not have been able to dream that five or seven years ago?

KEN MORAIF: You know, the equity in your home is something that allows you to make a lot of strategic decisions. In some rare cases with our clients, you may have someone you know, this is where their home equity is all they have. If that were to be the case, then you know, a home equity loan could be something that could be appropriate.

In other cases, what is more predominant is our clients when they retire, they want to downsize. So they can sell their house, use the equity because right now house prices are ridiculously high. And so selling their home, downsizing to something that’s more lifestyle-friendly, and taking the difference in what they sold for, and investing that to create an income is a strategy they can use. So there is a lot of equity in your home.

The bottom line, however, that we tell our clients is that when you retire, your debt must be paid off. And so if customers, if you have a mortgage, we really encourage people to have no debt, no car loans, no credit cards, no home loans, be completely debt free. The reason we say this is because you know, hopefully we won’t have another Great Depression or a really bad economic time, but we have to plan for these things. We plan for the worst and hope for the best.

And so if something like that happens, the bank won’t say you know, I get it, your investments aren’t doing well right now, you don’t have to make your mortgage payment anymore. I mean it may be. We’ve seen it with the easing of rents, but that might not happen. You can’t count on it. So not having debt if bad things happen, you know technically you can live with very, very little if you had to if you didn’t have any debt. So, again, with the mortgage on your home and the equity you have, there are a lot of planning opportunities out there.

MYLES UDLAND: All right, we’ll leave the conversation there. Ken Moraif, Senior Retirement Planner at Retirement Planners of America. Ken, always appreciates the time. Thanks for hopping on it.

KEN MORAIF: Well, thank you for having me.


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