HOLISTIC RETIREMENT THE NEW
Emerging Risks for American Savers... and How to Overcome Them With Long Game Thinking
MARTIN H. RUBY, FSA BECKY RUBY SWANSBURG NEIL WILDING
The New Holistic Retirement E MAENR DG I HN OG WR ITS OK SO FVOE RR CAOMMEER ITCHAENMS WA VI TE HR S … LONG GAME THINKING
Martin H. Ruby, FSA Becky Ruby Swansburg Neil Wilding
Stonewood Financial LOUISVILLE, KENTUCKY
Copyright © 2025 by Martin H. Ruby. Ad il sl t rr ii gbhuttse dr,e os er r vt readn. sNmoi t tpeadr ti no fa nt hyi sf oprumb l iocra tbi oyn a mn ya ymbe ea nrse, pi rnocdl uudciendg, pwhi toht oo uc ot pt yh ien gp, r ri oe rc owr dr ii tnt ge ,n opr eor tmh ei srs ieol ne c ot rf otnhi ec op ru bml ies chhe ar n, iecxacl emp te ti nh otdhse, cnaosnecoofmbmrieerf cqiauloutasetisopnes remmitbtoeddiebdy cinopcryirtiigchalt rlaewvi.ews and certain other S1t0o0nMewaolloarddFCinreaenkciRaload Suite 200 Louisville, KY 40207 502-588-7155 www.StonewoodFinancial.com BT ho oe kNleawy oHuot l©i s2t i0c 1R3e tBi roeomk De ne st /i gMn Taer tmi npHl a.tRe su. cboymw i t h N e i l Wilding & Becky Ruby Swansburg. —4th ed. ISBN 9780000000000000
Contents Prologue ......................................................................................................... i Watershed Moments — Why They Matter................................. i Meet Your Guides.................................................................................iii Is This Book for Me? ............................................................................ v The Long Game........................................................................................... 1 A New(ish) Phenomenon .................................................................. 1 Preparing for a Long and Happy Retirement ...........................2 Complete vs. Incomplete ................................................................... 3 Today's Long Game .............. ................................................................ 4 Our Commitment To You................................................................... 5 America’s Spending Problem ...................................... ......................... 7 Spending Spree ...................................................................................... 7 If Not Now, When?................................................................................ 9 De bt Correction Tools ............................................... .... ................... 10 A Marathon, Not a Sprint ................................................................ 1 2 Long Game Challenge #1: Growth & the Market ...................... 15 A Childhood Passion ......................................................................... 16 A Long Game Look at the Market................................................ 17 Lessons from History ....................................................................... 17 Winners and Losers .......................................................................... 19 What Comes Next? ............................................................................ 22 Why it Hurts So Much When the Market Crashes................ 24 The Impact of Volatility................................................................... 25
The Flip Side of the Coin ................................................................. 27 L...o..n...g....G...a..m....e....C...h...a..l.l..e..n...g..e....#...2...:....P...e..r..s...i.s..t..e..n...t.l..y......L..o...w.......I..n...t.e...r..e..s..t...R...a...t2es9. The Past and the Present................................................................ 30 Why Low Interest Rates are Here to Stay ............................... 32 The Saver’s Dilemma........................................................................ 33 What’s a Saver to Do?....................................................................... 3 4 Um, Is That All? ................................................................................... 3 5 Long Game Challenge #3: Income.................................................. 37 A Quick Look at History .................................................................. 37 New Approach to Long Game Income ...................................... 39 Newly Discovered Risks.................................................................. 40 Long Game Income............................................................................ 46 But Wait! There’s More. .................................................................. 47 Taxes. Taxes. Taxes. .............................................................................. 49 How Americans Save . . ................................................................... 50 Your Hidden Debt .............................................................................. 52 Your Silent Partner ........................................................................... 54 Legislative Risk ................................................................................... 55 The Great American Savings Myth ............................................. 56 Macro vs. Micro................................................................................... 58 A Macro Analysis .................................................................................... 61 Analyzing Taxes Through a Macro Lens .................................. 61 “ Retirement Tax Bill ” Analysis ..................................................... 62 Crunching Numbers.......................................................................... 63 The Cost of Conversion ................................................................... 66
Mandatory vs. Optional ................................................................... 68 The Future of Taxes............................................................................... 71 Three Ways Your Taxes Could Rise ........................................... 71 Prepare for the Rise .......................................................................... 76 How High Could the Taxes Go?......................................................... 77 Forget the Highest Rate Already ................................................. 77 The Middle What? .............................................................................. 79 Rising Taxes.............................................................................................. 81 Dollars and Cents ............................................................................... 81 Rising Taxes . . . In Dollars and Cents ........................................ 82 Your Long Game Approach to Taxes ......................................... 83 That’s Right—It’s Not Too Late ................................................... 84 Marty’s New Strategy....................................................................... 85 Crafting Your Long Game Retirement .......................................... 87 Need Help?............................................................................................ 88 A Retirement Workout .................................................................... 89 Final Thoughts .................................................................................... 90 Pay It Forward ............................................................................................A T hNe eNwe wR uRl eusl ef so ro ft hRee Nt i re ex mt Ge en nt eSraavt ii no gn . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. AE TC rhies iOs lidn RAuml eesr iocfaR. . .e. .t. .i.r. .e. . m. . . . e. . .n. . .t. . S. . .a. .v. . .i.n. . .g. . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .GJ R uTl eh r#e1e: RKunloe ws f Yo ro ua rBReitst ke r. . . F. . .u. . .t. u. . .r. .e. . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .MK Your Three Biggest Risks ................................................................. N
ABOUT THE AUTHORS ........................................................................... S Martin H. Ruby, FSA ............................................................................. S Neil Wilding............................................................................................ U Becky Ruby Swansburg.................................................................... W ACKNOWLEDGMENTS ............................................................................ Y
Prologue W ATERSHED - \WAW- TER - SHED \ NOUN : A CRUCIAL DIVIDING POINT , LINE , OR FACTOR : A TURNING POINT he COVID-19 pandemic has changed our future: as a country, as citizens, and as savers. When COVID began spreading across America in 2m0o2n0t ,h smaahneya do.f Huoswt hl oonugg hwt oaubl do utth et hree swt rei cetki os nasnlda s t ? B u tWahse nt hweo uyledatrhs i nhgasvgeo pbaascsketdo, nwo rem’ v ae l ? realize d things will never return t o the old “normal.” The way business is conducted? The trajectory of our eircroenvoomcayb?lyOimurpancatteidonth’sempuablll.ic policy? The pandemic has We must adapt to a new version of “normal.” And now, it’s time to plan for this new reality. This is especially true when it comes to retirement. The f i uture you’ll retire into is vastly different than the one you magSion,edwbehfaotre tchaenpaynoduemdioc. today to position your rTehtiisr ebmoeonkt wt oi l l bheenl pe fai tn sfwr oemr t hwaht aqtu et shtiiso nn. e w f u t u r e h o l d s ? Watershed Moments — Why They Matter Tt hhaet , CbOy VnI eDc epsasni tdye, mc hi ca ni sg ea swwaht ea rt schoemd e—s aanf t ei nr f il te. c t i o n p o i n t T
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i i • RU BY, WILD ING & SWANSBURG This isn’t the first watershed moment for American savers, and it won’t be the last. We need to understand what makes this moment unique asanvdinhgo, awndtospmenadkiengthoeurnweeceasltsha.ry adjustments to growing, Throughout history, savers have lived through eras that dramatically impacted our economy and markets. The Great Depression of the 1920s and '30s uncovered tehmeb af rraggoi loi tfyt hoef 1 a9n7 0 us nerxepgousleadt eAdmsetroiccka ’ smr ealrika entc. e Tohnef oOr ePiEg Cn ob iul r tsot opfo wt heer eoaur rl y e2c o0 n0 o0ms isch oe wn geidn etsh. eTdh ae ntgeecrhsnoofl obgayl l bo ou nb ibnl ge st ot o c kt hper i cAe ms . eArni cda, nt h edmr eoarmt g a goef c rgi sr ioswoifn 2g 0 0w7 -e0a8l t hg a vteh rpoauugshe homeownership. None of these watershed moments took down America’s ar ebqi lui tiyr e dt oa dsjauvset maenndt s pf or er psaarvee rfsowr ht oh ew af unttue rde t. oSat ci lhl , i etvhee yt h eailrl pre-crisis financial goals. We are living in another watershed moment as we move deeper into the 2020s—one perhaps larger than aDneyptrheisnsgi o no. uJro bc so, u cnot rmy m he racs e , e xa pn edr i emnacrekde t ss i nhcaev e t hael l Gbreeeant impacted in the U.S. and abroad. But, as we’ll discuss in this book, there’s reason for hp oa np de .e mI ni c f apcrt ,e slei knet s moapnpyo rwt uant ei trisehs e df o rm otmh oesnet s , s at vheer sC OwVhI Do understand the new risks being created and uncovered. And that is why we wrote this book. First, to help you understand today's emerging risks . Second, to help you reposition your retirement savings to
THE NEW HOLISTIC RETIREMENT • i i i o d v e e se rc rv o e m . e these risks and achieve the happy retirement you whaItncofamcet,scnoenxsti.der this book as a roadmap for navigating Meet Your Guides Ha boowu tdti dh et hf ue ttuhrree eo faruetthior er ms oefntthsi sa vbionogk? c o m e t o g e t h e r t o w r i t e Each of us comes from a different background, and we lt ea nk de ttuhrant s uwn ri qi tui ne g pcehrasppteecrtsi vt eh atto r et hl yi so bn oooukr. vTaor i de do et hx pi se, rwt i see’ l.l Martin Ruby, FSA, is an actuary. The English words “c aocntnuoa treys” “aansdt a“ taec touf af la”c st ”t eomr “ftrhoamt wt hhei csha mi s er eLaal .t”i nA nr oaoctt, uwa rhyi cihs ai n dmu sattrhye mr eal itei cs so netxhpeemr t ,t oaindde n ttihf ey afni ndamn ci tiiagla taenrdi s ki.n s u r a n c e Actuaries certainly have a stereotype: They’re the math gj oekeek:s“ Wo f htaht ei si na ns uarcatnucaer yi?n Ad uCsPt rAy .wPi tehrohua tp tsh ye opue’ rvseo nh ae lai rt yd. ”t h e While Marty has more personality than the joke-tellers gc ai vr ee ehri md ecvreel do ipt i fnogr , i nh se ui rs adnec fei npi treol dy uac tms aatnhdg el eeakd. iHn eg ’ sf i mn aandcei aal cWo hmepna anni easl y. Hz eedl oc vo er rs encut lmy , bMe rasr tbye bc ae ul i seev ensu nmubme rbse ar sr ec aa nb stoe ll ul tues. mu nudcehr taabkoi nugt lhi feel,d e suppe ctioa l l tyh ei t s l ifgi hn ta nocfi a la ns ai dl yes. i sA nbyy f ianpapnlci ei adl as uc tcuc ae reidailn gs ct hi eannc eo n ewwi l li t hhoauvt es u ac h bmeuncehf i t . bTeht ti es rh ocl dh sa ndcoeu b ol yf true for retirement planning.
iv • RU BY, WILD ING & SWANSBURG w i t hB eac kvye rRyu bdyi f fSewr eannts bkuirngd s po ef n nt uhme rb eerasr—l y c coaurnetei nr gd evaol itne gs dc aurrei ne rg i hne trh et iWmhei t ei nH oWu saesuhni ndgetro nG,e oDr g. Ce. WS. hBeu s hb.eSghaen whe enrt oo fn t oC ownogrrke sfso r ot hne SCpaepaikt oe rl o fHtihl le Hwohuesree a nsdhoet h ehro mn eedm bheer sr communication and policy skills. During her time in the Capitol, Becky became interested i c n ho h ic o e w s t s h a e ve d rs eci m si a o k n e s . in Th W us a , sh B i e n c g k t y on sp d e ir n e t ctl m y u i c m h pa o c f t h th e e r taws seunrtei es s u se ntthrae tn, cwh ehdi l e itnh i st asxo u nadnsd l i ksea vai ndgus l l pooblsiec ys s. i o(nS ht oe tnhaetioanve’sracagpeitraela.)der, it was quite a popular obsession in our Neil Wilding is a student of the markets. He’s spent his ce adrueceart i nagt tf ihnea n fcoi ar le f r ao dn vt i s oo fr s c oonns u mh oe wr f i tnoa n cailai gl n a dtvhi ec ei r, recommendations with the needs of American savers. The market is always developing, and Neil has a keen es ayve e rf os .r I tr’ se cl oi kgen iGz oi nogg l eh oMwa ptsh, ei sne a dwe av ye .l oI fp my oeun’ rt se owni l al ci me rpt aa icnt pd oa tehs nt ’ot rme tei ar ne my eonut caannd’ t t ha er rr iev’ se aant ay cocui dr ednet s ot irn raot iaodn c. l Yo os uu r jeu, si tt need help recalculating the route home. And that’s what brought us together: Our shared desire taodhe ec lapd se aavgeor,swc ea l fcouul antdeetdh ae cboems t praonuyt et so tdoo rjeutsi rt et mh aetn. t . N e a r l y w h e Lr ei k et hael l rf ientai rnecmi ael netx psearvtisn, gws e i enadcuhs thr ayv ei s o uhre aodwend . t aWk ee ’ov ne ss apveenrts cwo uenl ltpl ersesp a rhe do ufrosr t hdee bf uattui nrge a nwdhwi c hh i c ha raer ae sa s pfoi nsde a consistent challenge.
THE NEW HOLISTIC RETIREMENT • v Initially, we each approached these questions from our unique perspectives. Neil, with his background in managed money, was fboocoums e- da n odn- b tuhset cmy ac lrekse tw. eW soauwl d f tr ho em m2a0r0k0e-t2s 0r0e9t ,u ronr wt oo tuhl de tt hh er oy u gchoonut ti ntuhee 2t0o1 0ps r? oHd ouwc e w tohuel d bmual lr k emt avrokl ea tt si l i t wy ei m ps aa cwt savers’ ability to grow their wealth? Marty, with his actuarial expertise and experience di netveer leospt i nr ag t ea sn da npdr i ct ihnegi r f i inma np ca icat l opnr o gdeunc et sr ,a toi fnt ge nr edti isrceums seendt ii nn ct eorme set. Fr oa trebs awb yi l lb oboe mreerl ast ilvi keel yh il mo w, t hf oerr et hi se ar erseta locf htahnecier li inf ce ot immee sv. e hAi sc l erse tt oi r eme ist i ghaat ve em ahri skteotr irci sakl l yi n rreelti ierde moenn t foi xveedr long periods of time, this poses a big problem. w eq a u s a B t f e i o o c c n k u — y s , e k d w e e i o t p n h i n t h g a e x r t e h s g a . o t G v r w e o r e w n a m i l n t e h g n t w m a e a n a tt l d e th r p e w d o , l a ic s t y o o o b n . a l F y c o k h r g a r l o e f v u e t n h r d d4 0o l1l a( kr )gsr, ot wh en IiRnSptoapkuelsa ra tcauxt-.dHe foewr r ebdi gv ea hci uc lte ws liilkl et hIeRyA st aakned? Are savers prepared? In the end, we realized the answer was not, “Which one ipsr tehpea rbei gfgoer s at lcl ot nh cees renc?o” nbcuetr, nr sa?t ”h eTrh, a“ Ht roewa ldi zoa twi oenh leel dp tsoa vt ehri ss book. Is This Book for Me? Tt hhee caonms wi negr ,pma goesst il mi k eplayc, ti sa yl me so. sTt hael l cAh ma l el erni cgaens swaev’el lrds i tsoc us sosmi ne degree, and there’s a good chance you’re underprepared for
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vi • RU BY, WILD ING & SWANSBURG at least some of these emerging risks. But, if you’re curious how the pages ahead might speak to you as a saver, ask yourself the following questions: • Hi naav et ayxo- du esfaevr er eddpvaer th oi crl ea, l ll i ok fe y4o0u1r(rke)tsi roermI Re An ts ?f u n d s • Ainrethyeoyuecaornscaehrenaedd?the stock market may be volatile • Dthoanyothuebyealireevteodtaaxye?s could be higher in the future • Are you worried about growing and protecting your retirement funds? • AthreeIyRoSuincurreitoiuresmhoenwt?much total taxes you may pay If you answer “yes” to these questions, congratulations! This book is for you. By the time you finish reading it, we're confident that yp oo us t’ l-lC bOeV IbDe tet er ar po rf eApma reerdi c af onr hai sstuocr cye. sIst f’ su la r be ti gi r epmr oemn ti sien, bt huet wtheis’rperceofnacfiedaenndt, waghreene.you finish this book, you’ll look back on
CHAPTER ONE h t ehna ni t l oc no gm- teesr mt o graeitni rs e. mS oe, nyto, us hhoarvte- A New(ish) Phenomenon Gr eot i rbeamc ke nitn b ha irsetloyr ye x ai s the ud n. dI fr eydo uy ewa er sr ,e aanl idv et haen dc oanbcl ee p, ty oouf wwoerrekeildl,. iWnjuhreendy, oorudqeuaidt. working, it was likely because you T The Long Game his is a book about playing the long game. No, we’re not talking about your golf swing or a baseball game stretched into extra innings. ar ebtoi ruet mh oe nwt .y Wo ue ’ pr eo sti at ilokni nygo ua rb os auvt i nt hg es , sf ion tahnecyi al la sl to tnhgr oguagmheo—u t Retirement, after all, is a long game—a marathon, not a sfoprritnhte. Wlenegnteheodf troetpirreempaernetnaohtejauds.t for the act of retiring, but How do you play the long game when it comes to retirement? The long game is all about identifying and executing steps today that set you up for long-term success tomorrow. t t e o r p m l P a w u n t i f n o a s r n m t o h t a e h t e l t o r e n r w g f a a g r y a : l m e W s e s .
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2 • RU BY, WILD ING & SWANSBURG All of that changed in the 1880s when Otto von Bismar c k, Chancellor of the Prussian Empire, proposed go ol dveesrtn mcei tni zt -efnusn. dGe de r mf iannayn cei avle nst uu aplpl yo r ta p pf orro v et dh e t hnea tpi ol ann’ s, ps er voevni dt yi n. g( Tf hi nea ni mc ipa al cats swi sat sann’ct evteor yc i tsiizgenni fsi cwa nh to: lMi voe sdt pcai tsitz ea ng es didn’t live that long.) ¹ Fast forward fifty years, and America created the Social SHeacdu rtiht ye sl oy ns tge mg a mw iet hf i na na l liyn i ct ioaml ree tt ior erme tei nr et ma ge en t o? f Hs ai xrtdyl-yf .i vIen. 1l i f9e3e5x, pwehc teann ct hy eo fS oa nc i aAlmSeerciucraint ywAacst awr oaus npda as sgeedf ,i ftthye- eai gvhetr.a g e By the 1970s, life expectancies in the U.S. creeped pwaistht sreevtiernetmy,enatn.d, suddenly, we had a long game problem fyi ev ae r-S s y i e n i a n c r e o r t e l h d t e i r w e 7 m o 0 m s e , n a i n t t . ’ sc oounl dl y egxoptet ec tn t wo ol irvsee .mI no r e2 0t 1h 9a n, at ws iexnt tyy- ² That represents nearly one quarter of her life. Now, savers needed a long game retirement. Preparing for a Long and Happy Retirement Dp roonb’ ta lbel ty t ha il rs et aa dl ky opf r“ el ot tnyg ggoa omde ar te tt ihr ienmk ienngt ”l ownogr-rt ye rymo uw; yhoeun’ riet comes to your future. After all, when did you start saving for retirement? Was it three years ago? Five years ago? 1 h tSt pa rs a: /h/ Lwaws kwo. wt h. eTaht lea nAttilca. nc ot imc . /Mb auys i2n6e ,s 2s /0a2r2c h. “iHv eo/w2 0R1e 4t i/r 1e m0 /ehnotwW- raest iI rnevme ne tnetd- . ” was-invented/381802/ 2 STSASTAS. /Mtaayb,le246c,62.0h2tm2.l“Actuarial Life Table.” https://www.ssa.gov/oact/
THE NEW HOLISTIC RETIREMENT • 3 No. It was likely decades ago. In general, most of us are pretty good at thinking long term about retirement. SToh,ewtrhuythdiids,wmeawnyriotfeutshiasrebonookt?very good at thinking long tt eh ri nmk itnh ea lhl at rhde wr i og rhkt ipsl aocveesr wo nhceen wi te c’ voemseasv et od reentoi ruegmh emn ot . nWe ye. But, in some ways, the hard work is just beginning. What do we mean? This book will show you. Complete vs. Incomplete Ft hoer tchoeu pn at rs yt ssepveear ka il nyge at ros , stahvee trhs r lei ek eo f yuosuh. aI vn e ftarcatv, ewl eed’ vaec rmo se st thousands and thousands of your peers. And, based on those we've met, almost all of you likely hapavperoaocnhe. thing in common: an incomplete retirement WAshaaut tdhoorws eomf tehaisnbboyo“kinacnodmepxlpeetret?s” in our fields, we have itderemntiwfihedenthitreceomareesastowrheetirreeAmmenetr:ican savers must think long • Growth , or how you build and maintain your retirement funds • Income , or how you use your retirement funds to support your lifestyle • Taxes yours ,toorkeheopw much of your retirement funds are We’ll detail each of these areas in the pages ahead.
4 • RUBY, WILDING & SWANSBURG We know the most successful retirees have long-term pwl ea nms efeotr t yg rpoi cwa tl lhy, hi nacsoomn el y, ao nn de ot ar xt ews o. Bo uf tt hneesaer al yr eeavse cr oy vsearveedr. In fact, less than 10 percent of people we meet have adequately prepared for all three areas of long-term focus. LItedssoethsna’nt 1m0epanertcheenot!ther 90 percent don’t have plans or hsoamveetshuecwcersosnignprleatnirse. Tmheenirt.strategies likely position them for But, we believe that their plans are not complete because t a h s e se y t ’r s e . not focused on all the areas of long-term risk to their And, if their plans are not complete, then the success of their retirement strategy may not be complete, either. Today's Long Game Ap as nwd ee mmi ce nht iaosn ecdr eaatt et hd e ab e wg i antneirnsgh eodf t ehvee bn ot o fko, rt hAe mCeOrVi cI aD. Nothing after will be quite the same as it was before. The pandemic didn’t create the need for a long game retirement, but it sure made it more important than ever. Why? O ne of the biggest long-term impacts of the 2020s pp aa nn dd ee mm ii cc i tws ei lllf . Tbeen , tthwee ngtoy ,v eorrntmhei rnt ty’ sy eraersspfornosme n ot ow , twh ee we ni al lc st t i l lt of de ea ly —t h ea nrde p etrhcousses i o ndse coi sf i tohnes d ewc iisl li o nismlpa awcmt aykoeur sr retirement. So, if you’ve never thought about the themes in this book before, now is an incredibly important time to do so.
THE NEW HOLISTIC RETIREMENT • 5 FTihrestgsotoedp:nGeewtseidsu, bcaytreeda. ding this book, you’re already on your way. Our Commitment To You Yt eoauc’hr ey ao bu oaubt otuo t sypoeunrd l ot hneg -nt ee xr mt h rui ns kdsr ei nd rpeatgi rees mwei nt ht auns da sh owwe to address them today. wr eet i rpI e r f m o y m o e u n is t r e e y y a o o d u u w ’ v w e it i h l a l c l e w u m r a i e y o r s s g i e t h y b o a p e n t e t d d e r ta t p o k r e e l t p i h v a e e r . s e e d Y i o f s o u s r u ’l l e t h s h e t a o k v i h e n e d a t h r o t e f , knowledge and tools to plan a long game retirement.
CHAPTER TWO
America’s Spending Problem (and How It Impacts Your Retirement) By Becky Swansburg ei nf oc or em ew, ea nl do ot ak x ea st , wl o en gn egeadmt oe i sdterna tt ief gy i teos d faoyr’ s grri sokws t ihn, each of these areas. And there's no better place to start than with America's spending problem. Spending Spree Ii tf ’ tsh e rt eh’iss :o n eEtvheirnyg I ’ vg eo vl eear rnnmeednftr o ma cmt iyo ny e a hr sa si n Wuansi nh ti ne ng tdoend, consequences. The COVID-19 pandemic began sweeping across America in March of 2020. Businesses shut down. Schools closed. The B
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8 • RU BY, WILD ING & SWANSBURG m pe a r r c k e e n t t s . dropped 26 percent. Unemployment rose to near 15 ³ TS oh,e Coount lgoroeks sw agso td i rt oe f do ro ionugr nwaht ai ot n Ca loencgorneos sm yd.o e s b e s t : spending money. In response to COVID’s economic impact, the government pu na sesme dp l osyeevde rwaol r kset irms ua nl uds f l opuanc kdaegrei nsg ba iums iende s saet s . s u p p o r t i n g The price tag on the initial set of stimulus packages was around $2.2 trillion. ⁴ This spending increased uP nr oegmr apml o y(mP PePn)t l oba enns ,eaf int sd, e xppraonvdi deeddM ePdaiyc ac hi de cakc c ePs sr.o t e c t i o n It also added TRILLIONS of dollars of new debt to the national deficit. Government spending is a common way countries battle tshoeu gehcto tnoo ms pi ec nidmopua rc t woafy doi surtuopft i tvhee eGvreenatts .DTe ph er e sNsei own , Daenadl bs toi mt huGl uesopr ga ec kWa g. e Bs ut os ha dadnrde sBs at rhaec2k 0O0 b8 arme cae sussi ho enr. e d i n l a r g e But COVID-related spending has eclipsed almost asinzyetahnindgspoueerdc.ountry has experienced in the past—in both In fact, the stimulus packages of 2020 generated the mhisotsotryd.eficit spending the U.S. has incurred in modern ⁵ 3 “ UTnEeDm(pTlhoey mE ceonnt orma tiec rDi saei lsy t)o. Ur e. Sc. oBrudr he iaguh o1f 4L. 7a bpoerr Sc et antti si nt i cAsp. Mr i la2y 02260, . 2” 0 2 2 . hhtigtphs-1:/4/-wpowiwnt.-b7l-s.gov/opub/ted/2020/unemployment-rate-rises-to-record- percent-in-april-2020.htm l 4 h id S t 3 e tp n 2 s a D : t / 8 o / 2 r w 0 M w 6 i F t w c B h . 1 c o 5 M n E c g 4 C r 8 o e D n ss 3 n . A g e o l 2 l v . 0 C / E b o 3 i n l C l g / 6 r 1 7 e 1 A ss 6 1 . t E M h 6 - a c 0 y o 2 n 2 0 g 6 4 r , e 2 s 0 s 2 /s 2 e . n “S a . t 3 e 5 -b 4 i 8 ll/ - 3 C 5 A 4 R 8 E / S te A x c t t # .” toc- 5 " SEemn ai ltye CAopcphrroavneesa$n2dTNriicl lhi oonl aSs tFi ma nudl uoss .ATf ht eer NBei pwa rYtoi sraknTDi me aels. ”. M a y 2 2 , 2 0 2 1 .
THE NEW HOLISTIC RETIREMENT • 9 Since then, Congress hasn't curbed its appetite for slapregnedtianxga. nInd fsapcetn, Cdoinnggbreilslss.continues to debate - and pass - w i l l Ihtamv ei gahltassut irnpgriims epyaocut ot on yl eoaurrnrtehtai rteaml letnhti.s n e w s p e n d i n g If Not Now, When? “WOekahya,v”eyoaub’irgedtheifnickitin.”g, “I get it. Congress spent a lot of money. Most savers know this. But, have you considered how lmonasgsioveurdecfoicuitnstrpyenwdiinllg?bAe ndde, ahlainveg ywouithpretphaereimd fpoarcitt?of this Back in March 2020, when the government was on its historic stimulus spending spree, a reporter asked then - Uc o. Sn. c eTr rneeads uarbyo u tS et hc ree tdaerfyi c i t S. tAe fvteenr a lMl , nt hu ec hgi no v eirfn mheen t wh aads just added two trillion dollars to our nation’s IOUs. ⁶ Mnuchin acknowledged the historic deficit spending, and tnhoetnthaedtdimede: t“oInwdoirfrfyeraebnotuttimit.e”s, we’ll fix the deficit. This is ⁷ Did you catch that? Former Secretary Mnuchin didn’t say, “We don’t hreasvoelvetothwe ogrrroywaibnogudtetfhiceit.d”eficit,” or “We have a plan to He just said we shouldn't worry about the deficit right now . 6 https://www.congress.gov/bill/117th-congress/house-bill/1319/text 7 HCo luasuedSi ae eGkrsi s$a1l eTs ,r Ki l lei ol sne yF rSonme l lC, oa nn dg rSeus ss ai nn DC oa rvoi sn. aNvPi rRu. sMRaeyl i 3e f1 P, 2u0s h2 .2” . h“ tWt phsi:t/e/ ww wa vwe -. no pf -re. mo regr/g2e0n2c0y /- f0u3n/d1i n7 g/ -8t1o6- a8d2d2r2e1s 5s -/ccoornognraevsisr-uws e i g h s - n e w - m a s s i v e -
10 • RU BY, WILD ING & SWANSBURG In the middle of a global pandemic, there was some dmeaf ye nhs ae vteo hb iese anr gt hu em ep nr ito. rPi rt oy ,p pe vi negn uipf ai t f ml a iel ianngt Ug .rSo. we ci no ng oomu yr deficBitu.t Congress continues to spend, and those "different tdiemfiecsit" swtihllenhatvheenS'tecmreattaerryialpizreomised we would address the d . In fact, in the years since the pandemic, the deficit has only grown bigger. ⁸
Source: U.S. Department of Treasury, National Debt So, we need to ask: How will the future America address our ballooning deficit? D ebt Correction Tools First, let me be clear. The “future America” Secretary Mnuchin referenced d idn't mean future generations—it mean t our generations in the future - and that future is now . The de bt has grown too fast and too large to simply assume the problem can wait forty years to fix. So how do we—as a country— address this debt ? 8 0 fi 1 s" Wc/a1hl 0da/at 2t ia5s . ttarhneead snauavrt ayi oi. lgnaoabvl l /edaeombn tel ?i rn" i ecF:ai shs c-t fati pln sDa: n/a c/t ae -Cg euni dt ee r/, nUa. tSi . oTnrael a- ds eu br yt /, A c c e s s e d
THE NEW HOLISTIC RETIREMENT • 11 America can reduce our deficit in several ways, so let’s l t o h o e k at the options and their likelihood of addressing recent spending increases. • Reduce Government Spending — The government can reduce the debt by reducing the amount of money it spends each year. While this sounds appealing in theory, in practice it is difficult for even the most fiscally committed President to achieve. That’s because the majority of U.S. spending is not dependent on new laws or bills Congress and the President can control. Mandatory government spending—which includes Social Security, Medicare, Medicaid, and interest on government debt—is usually more than 60 percent of total government spending each year. ⁹ What’s more, the national appetite for spending is strong: Today’s voters are asking for more programs and services , not less. In summary, Congress likes to spend money. Americans, by and large, like benefits paid for by government spending. So, a dramatic reduction in government spending seems, to me, like an unlikely solution to our debt problem. • Taxes from Economic Growth —
Nc aenwutsaext roepv ae yn udeo wg enn tehr ea tdees f mi c iot .nAe ys ot huer ge oc ov ne ronmmye n t eo xc pc ua rn, dasn, dn enwe wj osbesr va irceecs raeraet epdu, rncehwa sterda—n saalcl t i o n s pg oovt eenr nt ima l el yn ct .rUe antfionrgt unneawt etlayx, irte’ sv ue nnuc lee faorrhtohwe s o o n sustained, robust economic growth will return.
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12 • RUBY, WILDING & SWANSBURG
• Taxes from Individuals — Here’s an approach we’ve seen time and time again. Our government wants to spend more money. How does it get more money to spend? It raises taxes on Americans. Sometimes this is through adjusting tax brackets, and sometimes this is through other changes to the U.S. tax code. Either way, the end result is more tax revenue for the IRS—and potentially less money for you to keep. It’s likely our government could attempt a combination owfea lbl eol ife vt he e steh es t rgaot evgeirensmienn tt h ewyi lel a rl se atno cmo omset . Bhue at ,v bi l yy f aorn, the approach of raising taxes. As outlined above, long- term, sustained reduced government spending is so unlikely wexepeccatend caot nmsioddeerstitrataesnfoonr -ysetaarrtserd.ueEctoontohme ic growth is lasting global itma xpeascat r eo fa tCtOhVe ItDo-p1o9f aanvde rhyisghho rdtelbi stt loefvoepl st.i oInt ’ss. c l e a r r i s i n g The takeaway? It’s imperative your retirement is pfrroomteactreidsifnrgomtaxaellntvhiersoenmopetniot.ns—and particularly protected A Marathon, Not a Sprint Do you know anyone who runs marathons? (If you do, Ir’umnnsiunrgemyaoruatkhnoonws.)—marathon runners love to talk about Aa dnddi t iiot 'nsa letqauxarl el yv eunnucel et oa rr eidf uCc eo nt hger edsesb tw, ooru lsdi mupsl ye uussetoit.a. s. an opportunity to spend more. Which leads
THE NEW HOLISTIC RETIREMENT • 13 One of my good friends is an amateur marathon ca oc rmo ps se tti ht oer .c Lo iuknet rmy aannyd ast oh ml e teet si m, sehse acroomu npde t tehs ei nwmo ral rda. tShhoen’ ss raunnd iinnSWouatshhAinmgteornicaS.tate and Washington, D.C., in Europe, Training for these races can be a challenge because the eimnvpiarcotnhmeernstucacreosusnads ahreurnunperc.oming race can dramatically Is the race taking place in a hilly location while she has bh ei gehne rt realienvi antgi o onnwfiltaht l gorwo eurn do ?x yWg einl l ctohne c emnat rr aa tt ihoonn t hbaen ast h ae ims auksi endg itto ma ot rheocmh ea ?l l eWn gi liln pg of ol l ru thi oe rn t bo eb hr ei ga ht h ae t? tHhaes rsahcee bsei et en, training in 90º F Texas, only to run the race in 50 º F Maine? These are all considerations athletes like my friend must address. Each one can derail their success. I t ’ s nToht ej us asmt tehies tprruoedfuocrt ys oyuorur eutsi ree mt oe ns at vsea voi nr ghso. w y o u chose to invest. Your entire retirement approach lives in an ei nnfvl ui reonncme se)n. tW ht ihl ea t y o uW ca as nh 'i tn gc toonnt r o lc ot hn et r oe lnsv i r(oonrm eant t bl ee iansgt pe nr ev si rc or inbme de n ft raonmd pWo saist hi oi nn gyt oo unr, s ey lof uf o rc as nu c caecsksnwo wi t hl ei dn gi et . At hnadt that's what this book will help you do. So, let’s start with the challenge you likely know best: Hapopwrotaochg.row and protect your money with a long game
CHAPTER THREE
Long Game Challenge #1: Growth & the Market will Bbeuta, dI idsocuksnsoiown tohfatth,ewmheanrkyeot.u tune into the news, there In the American financial industry, the stock market is a touchstone of nearly all financial advice. And, for good reason: The stock market is the primary tool we use to grow wealth. Do you have some of your retirement funds in mutual fcuonndg sr ?a t uTl aa trigoent s ! dYaot eu ’ rfeu ndde sp?e nIdni vnegs tomn etnhte as tcoc coku nmt sa?r k Ieft fsoor, growth. T By Neil Wilding urn on Fox News or CNN. Pick up the Wall Street Journal or the New York Times . Open up your hometown newspaper. What will you likely see? Discussions of the mark N e o t w . , I don’t know if you’re reading this book in January ok nr oJ uwn ei f. cI odmo nm’ teknnt ao two ri sf tahr ee mf e ae rl iknegt bi se ua rpi sohr od ro bwunl l ti os hd aoyn. Iwdhoenr ’et stocks are heading.
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16 • RUBY, WILDING & SWANSBURG There’s nothing wrong with that approach—most Ar emt i er er imc aenn ts af uv enrdss u. Bs eu tt h, ae ss tsoa cvke rms ,awr kee tn ae se da gt or ouwntdhe vr sethainc dl e tfho er market and where it may be headed in the years to come. A Childhood Passion I’ve been trading since I was eight years old. No, not stocks. Not bonds. Not even commodities. (Well, nthoetirthliefecsoamvimngosd.)ities most people consider when investing LMi ky e ymoaunt hy fkuild se, nI tthrua sdieads mb a sfeobr a ltlrcaadridnsg. c a r d s g a v e m e ipnossi igthi ot sn i In gs tmi l ly craeltli roenm teondt af yu,npdas ritni ctuhlea rml ya rwk ehte. n i t c o m e s t o For example, I learned early on that, in baseball cards, rt hoeo keime seor gf tienng gpel at yael lr os fatnhde ba tette on nt i ownh. Ii ct hwoa ns eesx cwi toi nugl dt omwa kaet ciht be xi gc.i tHi nogwreovoekr ,i etsh ebrueta lwciat hr dvveat el ur ea sn wpel aryeenr so twf ohuon db uwi l itt ht htehier coaf rFeaemr se wd iot ehsyne’ ta cr aarfet ei rf yy oe aurhoafvpeeor nf oer mg r ae na ct es .eAa fstoenr —a l li ,t ’tsh ae bHoaul tl performance over your lifetime. The same is true when it comes to your retirement sthtrealtoenggy—gaHmaell. of Fame retirements are built on success over It reminds me of a Babe Ruth quote I loved as a kid: “ySotuurdmy othneeyg.a”me, accept advice, keep fit, and, above all, save The perfect advice for a baseball-loving kid who grew up to be a market-focused adult.
THE NEW HOLISTIC RETIREMENT • 17 The Bambino was right—about baseball and retirement spar ve ipnagr. i Tn gh efroer i sp omt eu nc ht i awl er icsakns . l eWa ren hbayv set ut od ysi enegkt haed vg iacme ef raonmd tahcoc os eu nwt si tsht a yu nf iitqouvee ri nt shieg hl ot sn.g Wr uen onfe er edt i rt eomme natk. eA nsdu,r ae b oovuer all, we need to save money! A Long Game Look at the Market So , a er n a d w ? h hoawt dwo iel sl ti thma tetahni nt ok itnhgi nbkel oi mn gp taecrt me da ibnotuhtet hpeo ms t -aCr Ok eVtI, D Throughout this book, when we reference the “market,” we’ll largely be referring to the S&P 500 ® , which mT heias s iusr easn tihned e5x0 0t hl aa tr geecsot nsot omciksst so on f ttehne nu as et i oansa la epx rcohxayn gfeosr. the overall health of the stock market. Lessons from History Imn a rdki es ct ui ss sai ntgr i ctkhye bme aasrtk. eI tt , c aI ’nl l cahcaknngoewdl readmg ea t iuc pa lf lryo ny te: a rT bh ye yaecahra(lsleonmgeet.imes even day by day!), making future projections So, sometimes it’s helpful to look at the past to better understand the present. LTohoek1b9a9c0ksawt ethree 1b9oo9m0si.ng days in the market. You might rwehmeer me ab es troscokmb reot kh ei nr gl i ct earl lael dl y “tDhar er twFau nd da rs t. ”aTt ha esshee we teorfe sftuonc dk ss and invested in whichever ones the dart hit. You know what?
18 • RU BY, WILD ING & SWANSBURG Dg oaor dt fmu nodnsewy . eTrhe emma ka ri nkge tgwo oads mg ooi nn eg yu! pE, vuepr,yut hpi. n g w a s m a k i n g We all know what happened after the feel-good years of the '90s: the dot-com bubble burst. We started the new century in 2000 with three straight 2y e0a0r2s, tohf emNaArSkDe tA Ql o sl os sets .7 F8 rpoemr c Me natroc hf i tosf v2a0l u0e0. Tt oh eOSc&t oPb5e 0r 0o f ® fell nearly 40 percent. ¹⁰ Many people’s retirement awcacso ut hnat st 4w0e1r(ek s) se vhearde lbye de ne prleedt eudc .e dA trou 2n 0n 1i n(gk )jso. k e a t t h e t i m e Enmeshed in market turmoil, the government responded. At hf et eFr eydeearrasl Ro fe sreari svien fgi ni na ltleyr el oswt rear teeds i nl etaedr ei nsgt ri antteos tihne2b0u0b2b. l e , ¹¹ As America emerged from the 2000 financial crisis, the Ft heed rme at ur kr ne te dr et oc osvl oe wr eldy . r Ta ihsoi ns ge rwa teerse. Aonk da ,yf ryoema r2s .0 0M2otsot 2o0f 0u8s, wa cecroeu tnrtysi, nbgu tt oa te al erans tb tahc ek mwahrakt ewt we ha sa dh el ol psitnign uosuar l or entgi r. e m e n t markTehtecnr,atshheinrgeaalgaeisnta. te bubble burst in 2008, sending the This time, the market crashed fast, with the S&P 500 ® losing 37 percent of its value in a few weeks. ¹² ¹⁰ httYpash:/o/ofiFniannacnec.yea. “hGoSoP.cCoHmi/sqtouroictea/l %Pr5icEeGsS.”PC/history?period1=951782400&peri od2=1035849600&interval=1d&filter=history&frequency=1d&includeAdjusted Close=true ¹¹ Luka Nikolic. Foundation for Economic Education. August 1 0 , 2019. “A Tale of Tf ewe .oo rBgu/ba br tl iecsl :e Hs /oaw- t at hl ee- oFfe- tdwCor-absuhbebdl et hs -eh To ewc-ht haen- df e tdh- ec rHa os hu es di n- gt hMe -at rekc eht-sa. n” dh -ttthpes -: / / housing-markets/ 12 httYpash:/o/ofiFniannacnec.ey.a“hGoSoP.cCoHmi/stqouroictael/%Pr5icEeGsS” PC/history?period1=1199145600&pe riod2=1230768000&interval=1d&filter=history&frequency=1d&includeAdjuste dClose=true
THE NEW HOLISTIC RETIREMENT • 19 Again, the government went to work. Congress passed ss pt i emnudliunsg . pTa hc ke a Fg ee sd, lboawn ekr ebda i li on ut et sr e, satn rda toetsh eorn cf oe r ma gsa ionf—ntehwi s time to historic lows. ¹³ From 2009 to 2022, the market saw an amazing bull run, ar antde sowu re rgeo kv ee pr nt ml oewn t( mwoorrek eodn ttoh i sk ei ne pt hi et nt heaxtt wc haayp. t eI nr )t e, raensdt os auvreer sc of enlot ml i kyebtehgi na gns two egrreolwo o. kSion, gaps rwe tet yegnot eorde. d 2 0 2 3 , m o s t But were they? Winners and Losers If we look at the last twenty-f ive years, it’s clear the mc l iacrkk ert i dheass buepe n t ah er o hl l iel rl caonads t epr l er ni dtey: polfe nstcyr eoaf mc l-iicnkd- uc lci icnkg- downfalls, as well. As most financial professionals will tell you, you gcoeansetrearl.ly come out on top if you ride the stock market roller Put another way: So far this century, if you didn’t get spcaanriecda nadn db usye l wl wh ehne nt h tehme amr kaer kt ewt aws ahsi gdho, wi f ny,o ui f jyuosut sdt ai dyne ’dt the course, you should be on top by now. RWigehllt, ?not quite. The market may have recovered, but it doesn’t necessarily mean retirement accounts are flourishing. ¹³ T wLou Bk au bNbi kl eosl :i cH. oF wo utnhdeaFt ieodn Cf roar sEhceodntohme iTc eEc dh uacnadt i ot hne. AHuoguussi nt g1 0M, a2r0k1e9t s. .“”Ah Tt tapl se: /o/f fheoeu.osringg/-amrtaicrlkeest/sa/-tale-of-two-bubbles-how-the-fed-crashed-the-tech-and-the-
20 • RU BY, WILD ING & SWANSBURG When I talk to savers across the country, I like to arestku: rnHeodwonmauvcehragdeothiysocuentthuirnyk? the stock market has Consider that question yourself for a moment. For the first part of this century —from 2000 to 20 2 4 —what did the market return on average? Go ahead and write down your answer. Most people remember the big individual years. The 20% years, even the 30% years. md i ov irdeS e o n , m d i o t s d . seurrapt er i s7e .s7 %m o-s t asnadv etrhsa tt o nluema rbne rt h ee vaenns wi necrl uids eas
THE NEW HOLISTIC RETIREMENT • 21
Chart shown for illustrative purposes only. Past performance is not indicative of future results. That’s right. The S&P 500 ® total return (including da ri voiudnedn d7s ). 7 0h a sp errecteunr tn esdo afna ra vt ehri sa g cee cnot umrpy o. uOnfd ec do urresteu, r nt h oa tf aDveec reamg eb e ri s 3 1t h, e2 0a2n4n. uRael t ur rent us r fno r f rs oo mm e oJ anneu awrhy o 1i n, v2e 0s t0e0d, ot no d i n i f v f e e s r t e m n t e n t d a w t e o s u l d m i g b h e t g b r e e a t l h y i g h a e f f r e c t o e r d l b o y w e w r , h e a t h n e d r t t h h e e i y r wb ui tth, dfrreowm f rpoomi ntth et oi r apcocionut ,n tt hdius r ipnegrai omd aor kf etthdei pSo&rPa 5s p0i0k®e , returned 7.70 percent a year. Now, I’m not saying 7.70 percent is good or bad. It’s just a lot less than people think. And, it gets even worse.
22 • RU BY, WILD ING & SWANSBURG That average return is a gross return. As we all know, ii nn vc leusdt me emnat sn aagreemheonut s feede si n. Svoe, hsioc ml e se oo rf tphoartt fgorl oi ows t thh awt i lol f tgeent ea ac ct eens s ebdy tfheaets r ye ot uur np ai ny at ot a ax - df ienfaenr cr ei adl accocmo upna tn, yl i. kAe nadn, IiRf Ay oour 4ta0x1e(sk. ), some of that growth will also get eaten up by future As a saver, you took all that risk—riding the roller coaster tyhoruomugahybbeooms and busts—and, in the end, it netted 5 to 6 percent a year after fees and taxes. F ive percent is okay, but i t's not the massive double digit returns savers often think of with the market. What Comes Next? Aoft 2th0e08en-2d0o1f92w01o9u,ldmcaonnyteinxupeerotrs cwroasnhd.ered if the bull market IMnaMrcahrchwoafs 20w2h0e,nwethgeot CpOarVtIoDf-o1u9r apnasnwdeemr. ic fully hit Aa cmr oe sr si c tah. eB yc omu indt-rMy .a Tr chho, ubsuasni dn se sosfe sA ma nedr isccahnosotl rs awn se irtei ocnl oe sdi nt og wthoermksineglvfersomwihthoomuet ,aajnodb tahtoaulls.ands more suddenly found ¹⁴ TB hy emmi da-rMk ea trsc hr e, tahcet eSd&. P 5 0 0 ® had fallen 26 percent. Since the initial crash, the S&P 500 ® has jumped around, making it clear we have entered a new phase of market volatility. ¹⁴ TED (The Economic Daily) . U.S. Bureau of Labor Statistics. May 31 , 202 2 . “hUt tnpesm: / p/ wl o wy mwe. bnlts .rgaot ve /roi speusbt/ot er de c/ o2r0d2 0h /i guhn 1e m4 . 7p lpo eyrmc ee nn tt -irna tAep- rr ii sl e2s0- 2t o0-.r” e c o r d - high-14-point-7-percent-in-april-2020.htm
THE NEW HOLISTIC RETIREMENT • 23 I’m concerned many savers don’t understand what volatility can do to their long-term savings. Take, for example, our chart above. From January 2000 to December 2019, the S&P 500 ® returned an average of 6.06 percent a year. If we instead calculated that number from January 2000 tSo&PM5ar0c0h 2020 (adding just three months to the chart), the ® returned an average of 4.42 percent a year. That’s aa vderroa pg eo. Af lnl ebaercl ay u1s .e7 opf ea rfceewn tc raa zyye awr eaeckrsoos fs mt haer ktewt evnotl ya -t yi l ei tayr. $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 $220,000 $240,000 $260,000 $280,000 $300,000 $320,000 $340,000 $360,000 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: Yahoo Finance GSPC Historical Prices 2020 S&P 500 ® Total Return: 2000 - March 2020 Average Annual Return 4.42% Shown for illustrative purposes only. Past performance is not indicative of future results. mi n ac lrukI d t e b e t d eg — co s n b th t e i e l n i e q u v u e e e s t t h t h i e i o s n a n : t W u sw r h b e e u r r l e i e s n d “ c o y e e w ? s e .” M g oa nf ryo me xhpeerret ?s —D ome ys st ehlef -9.10% -11.89% -22.10% 28.68% 10.88%4.91% 15.79% 5.49% -37.00% 26.46% 15.06% 2.11% 16.00% 32.39% 13.69% 1.38% 11.96% 21.83% 4.86% 31.46% -26.15% $40,000 $60,000 $80,000
24 • RUBY, WILDING & SWANSBURG But, I’m not here to scare you with talk of the next great cmr aa rs khe. tI n ms t ee aa dn ,s I ’ mf o rh et rhee t oe qhueiltpi eys o- eux pe vo as el uda t pe owr thi oa tn a ovfo lyaot iul er rsetitcikrewmiethntusacfcoorumnatsn,ybyeecaarussetotchoismies. an issue that’s going to Why it Hurts So Much When the Market Crashes Hc eel re eb’ rs aat ovreyr ymcooondc rwe ht ee ne xaa cmr pa sl eh eo df wmhayr ks ea tv es tras rmt s atyo nr oe tc obveeirn. a wheFnotlhloewminargkiest adrcohpasr:t of the growth needed for recovery The Impact of Volatility
Gf orro rwe tcho vneereyd e d Market Drop
That’s right. If the market drops 50 percent, your account nt heee dms at or kgerto wd r ob py p1e0d0 2p 2e r cpeenr ct et on tmi ank e2 0u0p2t haant dl ows se. nSto , uwp h 2e n8 phaedrcne’tnet ainrn2e0d0b3a,cmk eavneyrysathvienrgs twheeyrehastdillloustn. der water: They
THE NEW HOLISTIC RETIREMENT • 25 Let me put it another way. You have $10. You lose 50 pp ee rr cc ee nn tt . oNf oiwt . Ny oouwh ya ov ue $h7a. v5e0 . $Y5o. uY’ roeu sgt irlol w$ 2 t. 5h0a ts hmoor nt eo yf wb hy e5r 0e you started. The Impact of Volatility IUm. Sa. gmi naer kyeotuhhi satdo rt yo . sAa vme adr uk reitnsgo t bh ae dwyoorus t wdoe uc al dd, eo inn amv eo rdaegren, lose money every year. A market that saw not just one but two crashes that wiped out more than a third of your savings’ value. We feel for our parents and grandparents who lived thherroeu’ sg ha tshuartpkr ii sned: oTf hme iar r kg ee nt ewr iatthi otnh ei sGnr’ te at th eD eopnrleys soi no en . tBh ua tt hdaidd, ttooos.ave during one of the worst markets in history. You The years 2000 through 2009 are estimated to be the shienagrlde wi t ocrasltl edde ctahde e “ il no s St &dPe c5a0d0e ®o fh ii sntvoersyt.i nYgo”u bme ci ga hu ts eh at hv ee market that decade ended lower than it started. If you had a 401(k) with $100,000 in it, completely invested in the S&P 500 ® , ¹⁵ what would have happened o th v e e rp rt he ce efdi ri sntgdcehcaardt emoaf rtkhei sd ,c“eAnnt un ruya?l WT oetlal ,l lRoeotku ra nt tohf et hl ien eS &o Pn 500 ® .” This represents your account value. Then, the market crashes from 2000 to 2002. It takes you four years to earn ¹⁵ theIst'tsonckost pthoastsmiblaekteouipnvthesetSd&irPe5ct0ly0 in an index. However, one can invest in ® or purchase shares of a mutual fund that tracks the S&P 500 ® Index. How bad was it?
26 • RU BY, WILD ING & SWANSBURG bwaactke rw. Thhaetny, ionu2’ v0e0 8l o, syto, ua nl ods ef iint aallllya, gbayi n .2 0 0 6 , y o u ’ r e a b o v e You saw some good years. The market was up 28 percent it no 2e 0a r0n3 ba na cdk2t6h pe emr coennet yi ny 2o u0 0l 9o s. Bt uwt h, ye on ut hu es emd at hr koes te db ri go pg pa iends. Sthoe, yt?hose gains really didn’t reflect forward progress, did In fact, it’s even less progress than you think. G2 0u 0e s0s wt hhr oa tu gyho u r2 040091, ( ki )f eiat r nweads a ni nnvueasltl ey d, o nw ha vo el lrya gien, f r“ tohme market?” Four percent? Three percent? The answer may surprise you. It’s negative 1 percent. Tonhaatv’serraigghetp. eFroryetahre. entire decade, you lost about 1 percent $180,000
$160,000
Average Annual Return -1.0%
$140,000
$120,000
5.49%
15.79%
$100,000
26.46%
-9.10%
4.91%
10.88%
$80,000
-11.89%
28.68%
-37.00%
$60,000
-22.10%
$40,000
00 01 02 03 04 05 06 07 08 09
Shown for illustrative purposes only. Past performance is not indicative of future results.
THE NEW HOLISTIC RETIREMENT • 27
If you were a young saver during this lost decade of ihnavde sptlienngt, yy oo uf tpi mr oeb at ob l ymda ikden ’ut ph at hv oe steo lwo sosrersy. tBhuatt, mf our c sha. vYeorus nt heea rmi nagr kreett mi r eamy ehna tv—e tohrr ot hwons ea ba il gr ewa dr eynrceht ii rne ydo—u rv opllaatni lsi .t y i n The closer you are to retirement—or the further into rr ee tt ii rr ee mm ee nn tt f uynodus haalvree at od yr e saproen—d tthoem alreks es t teulrabsut ilceint yc e . y o u r The Flip Side of the Coin Oinfvecostuerdsein, It’hme sntootckasmsuarmkientg. your retirement funds are all In American retirement savings, we like to diversify our ai nssstertus m. We net so, f lfiskeet Cv Do lsa, tbi loi tnydisn, at nh de mm oa rnkeeyt mwai trhk efti xfeudn di ns .c To mh i es is especially true as we enter and live in retirement. Well, today we’re facing an uphill battle to balance gexropwlatihn wahnyd. protection. In the next chapter, Marty will The “Lost” Decade of Investing
CHAPTER FOUR
Long Game Challenge #2: L ow Interest Rates Long-Term By Martin Ruby, FSA s of the writing of this book, I’m in my 70s . Ar entdi r, e mt reunt ht fwu lol uy ,l d fmo ri r rmo ra nt hy e yr eetairrse mIe nats ms uympeadr e mn tys enjoyed. My father was a small businessman, owning a cohuirl dhroemn ’ es icnl oKt he inntgu cskt yo.r eW ihne nS ohuet hr ee rt inr eIdn, dhi ae naan dj u smt ynmo rot ht h eorf lliavdedderoefdf CaDvse. ry common retirement strategy at the time: With this strategy, my parents shifted their retirement fI un ns tdesa da ,wtahye yf r roeml i etdh eo nr i sf ki x ea dn di nvcool ma t ei l i itny sot rf utmh ee ns tt os ctko mp raor tkeectt. their money until they needed it for income in retirement. Of course, this was a winning strategy back then. In 1980, a three-month CD was earning 18 percent. ¹⁶ ¹⁶ Spencer Tierney. Nerd Wallet. May 20 , 202 2 . “Historical CD Rates: Highs, Lhottwpss:,/a/nwdwthwe.nSetordriwesalBleeth.cinodmT/ahretmic.l”e/banking/historical-cd-rates A
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