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The Secret Key to Retirement Success? Revealed!

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Welcome back to another episode of The Retire One Show! Your hosts, Johnathan and Melissa Rankin discuss a recent article that explains how the only thing that determines a person's standard of living in retirement is the performance of the stock and bond markets. Is that really the case?

We also discuss a recent article in the Wall Street Journal, where a newly retired couple shares their thoughts on maintaining separate spaces in their home. Studies have shown that couples who spend all of their time together in retirement are not as fulfilled as those who don’t.

Read the articles: https://www.marketwatch.com/story/your-standard-of-living-in-retirement-is-largely-determined-by-this-surprising-thing-ca4a8851


Have questions about your retirement? Email us at Retire@theoremwm.com or use the link below to schedule some time with a member of our team.


Hello, and welcome back to another episode of the Retire Once show. I'm

your host, Johnathan Rankin, the founder and CEO of Theorem Wealth

Management. Very happy to be here. We are in the midst of summer. The

fun heat is upon us, and today we're gonna be talking about setting

yourself up for retirement success, both financially and mentally. Now, we

know that's a big part of it, but before we jump into any of that now, what

do we want people to do?


We want you to subscribe. We want to never miss one of these amazing

episodes or our take on the weather.


That's right, take on the weather. And our weekly retirement newsletter

comes out every Friday, so make sure you hit that subscribe button. Join

the newsletter, join the show. We're happy to be here. And yeah, our take

on the weather. I mean, it's hot. I did see some reprieve for that. With

Costco now coming out with their Halloween stuff, they started putting

that out on the shelf.


It's hard to think about, like, face painting or anything like that, or

walking around in a full blown costume, even with the kids just walking

around the block. I can't even imagine that when it's this hot out.


Yeah, see, I feel like this is the one thing that makes me feel older and

older every single year, is I complain louder and louder about how early

they're actually starting to put things on shelves.


I mean, come on, it's super early.


For October, July, and now we're putting out Halloween stuff. And it's just

we just know Labor Day is coming, which means Christmas stuff, holiday

stuff is going to be on the shelves, and we're going to be complaining. But

then you realize there are still people out there that October 31 are

putting together a homemade costume for their kids because they couldn't

make it to the store over the past four months.


They had a little bit of time is what you're saying.


They had a little bit of time. I mean, if you're the store, whether you're

Target, Walmart, Costco, you name it, they're thinking, hey, look, we gave

you four months. How long do you need? I mean, if you can't get a

costume or some Christmas gifts by then, I don't know what it's going to



So just like we don't want you to be unprepared for any time of year,

halloween, Christmas, or whatever, we also don't want you to be

unprepared for retirement.


That's right.


We'll bring it right back on.


Let's dive right in. First thing we want to talk about today is an article

that I came across. The title of the article was your standard of living in

retirement is largely determined by this surprising thing. I wonder what it





Very surprising. And they talked about the single biggest detriment having

more importance than all other factors combined is the performance of

the stock and bond markets.


Yeah, right.


Okay, I understand that. That makes sense. I think the article title was a

little bit more to see.


Oh, I was like that was the surprising part.


That was the surprising part is that the performance of the stock and bond

markets are going to basically determine your standard of living. Yes.

Everything that we do for retirement, whether it's nowadays or even going

back when there were pensions, had some sort of rate of return that was

needed to achieve that success. But the problem with that is that you have

no control.


It's really out of your hands.


I don't know if the article was talking about, hey, well, retirement success

is out of your hands, which I don't think neither one of us believe it is.


I guess it's kind of well, either.


Way, it shows this chart that we'll put up on the screen here shows how the

correlation, how close a correlation is between stock and bond markets,

and on the other hand, the return of retirement portfolios. And they move

in lockstep, which shocking, kind of makes sense simply because as we've

progressed, especially over these years, the more and more, I would say,

use of target date funds has been, which brings people closer to that 60 40

portfolio. But why I bring all this up because, yes, we all know market

performance is going to dictate standard livings in retirement at some

point. If most people aren't retiring from cash that they just saved in their

bank, even under the mattress or whatever, who does that?


I don't know, but they always say.


That people do that. Yeah, breaking Bad does that.


Oh, yeah.


But I don't think anybody's running a Breaking Bad scheme. If you are,

you're probably not watching this or listening to this.


You're probably not concerned about your retirement, honestly.


Okay, so the reason why I brought this up is because the author had these

very interesting market forecasts. So his forecast for the bond market over

the next ten years, he's expecting a 4.8% rate of return. Okay, sounds

pretty good. 4.8% in bonds would be nice. A lot more than what we got

from 2009 through last year. So pretty great return. Stocks, on the other

hand, uses eight indicators, and he's expecting a nominal rate of return of

annual rate of 1.3% between now and 2033 1.3% 1.3%. So in total, the 60

40 portfolio would deliver a 2.7% annualized rate of return. Now, we

talked about the 60 40 portfolio before. Is that still relevant? You name it.

Now, I think anything with returns like that might be a little challenging,



Is interesting because I actually came across a 2023 Natixis global survey

of individual investors who expected annual return of over 15.6%, which is

down from the exceedingly high 17.5%.


Yeah, I would love to have a conversation with the individual investors

who were expecting a 17 and a half percent rate of return, but even

15.6%, that's still really high. So one hand you have investor expectations,

and then you have a market forecaster in his. So somewhere in the middle

there's a big range. There is. My favorite part about this article is that he

pointed out that since 1793, the US. Stock market average rate of return

has been 6.1% annualized, and the long term treasury rate has been about

4% annualized. So those are the rates of return going back to 1793. Very



I was going to say. I feel like he's just throwing numbers out there then.


Very relevant. There's got to be a cap on when statistics can just be no

longer relevant.


1793, you're kind of like, I mean.


Okay, I feel like the 1700s, we just wipe any of those statistics. I feel like

the 18 hundreds, there's.


Got to be yeah, 18 hundreds even.


I think, like a rolling 80 year period.


Keep it relevant.


It's got to be somewhat relevant. Yeah.


A little more timely.


Yeah. Because 1793 is not relevant.


But it isn't.


I think that like, 1910 is still not really relevant. But I mean, we use it



That feels a little bit more relevant than oh, and dating back to 1793.


Like I said, I think like a good 70, 80 years is a good generational period.

But that's just my take on it. But there was an interesting chart by Davis

Advisors that showed the worst ten year periods for stocks. And I wanted

to find this because I was wondering, how realistic is this guy's forecast?

Is there a possibility that he's right? We obviously know that over a course

of a ten year period, the odds of having growth is going to be goes up as

you get longer in the tooth, but did show the worst ten year period. So we

had 29 through 1938 at negative 1.7%. Makes sense. Got the Great

Depression there, 1930 through 1939, basically flat. That makes sense. 65

through 74 1.2%. And then most recently, which we'll actually use as a

barometer, 2002 to 2011 or 2011, 2.9% rate of return.


So there have been periods of a ten year underperformance. So just

because over the last ten years we've had pretty good performance doesn't

necessarily mean the next ten years are going to be great, or that stocks

over the course of a ten year period do well. But most people, they're not

playing for a ten year retirement, I wouldn't think.


Yeah, I wouldn't hope.


And so what about 20 years?


A little more realistic.


And so found this chart by Crestmont Research going back to 1919. So,

okay, still in my relevant window. Thank God we use 1910 as relevancy

here, just for my sake. Now, this shows all 20 year periods have been

positive. So that's good.


That's good.


The lowest rate of return on average for a 30 year period or a 20 year

period was 2%. A little less than that. And that was ending in 1949. Now

you have to think that included the Great Depression, World War II. To

me, that makes sense.


Yeah, that tracks.


Now, aside from that, the annualized return average was between 5.1% up

to 15.4%.


Okay, now that's pretty good.


So back to the expectations and statistics survey. There have been times

where there's been a 20 year period where it's happened. Yeah, 15.4% has

happened, but that 17.5.


Is still way out there.


Way out there. Almost 90% of the time, the annual returns were 7% or

higher. So that's a nice solid rate of return 90% of the time. Now, people,

like I said, they're not planning a ten year retirement, hopefully not a 20

year retirement. We didn't even talk about 30 years.


We didn't even get into that.


Didn't even get into that. Because over a 30 year period, the worst 30 year

return was a total gain of a whopping. Only 850%.


Only 850%.


And that's going back to 1926.


Still in the time.


Still in the time, that's right. Still my relevancy period, the annual return

was 7.8%. Now, this included the peak you bought basically at the peak of

the Roaring Twenty s. So you had that big boom you're buying right at the

peak of that. And at one point you would have lost more than 80% of your

investment and still made only 850%.


Still, I mean, it makes you wonder how many people would have actually

held on during that time.


You get to that point where once you're down, I would say over 80%, you

just go, well, what am I going to do by cashing it out? I mean, you think of

if you had $100 and it's down to 15, you kind of go, what's, $15 going to

do this?


When we get a cash, I'll just leave it there.


Yeah, but I think aside from just holding, and we've seen this happen with

large tech companies, whether it's Amazon or Apple, where they've had

periods of these major corrections, and obviously they've done quite well

for themselves. I think Apple's doing okay these days. But not just if you

held. I think about could you have kept buying? We talk about before in

previous episodes, how a big part of retirement is just continuing to buy,

how people have stopped their contributions, have reduced their

contributions because of bad times in the economy. We've seen that. Well,

if you've gone through Great Depression, World War Two, and my guess is

that what else happened between 1926 and 1956? My guess is a lot of

other things happened that probably weren't the most positive headlines.

Could you have continued to contribute to your retirement? And I think all

this just shows me that there's always headlines and things that are going

to be bad, always.


We talked about this before. You can't control that. Remember last year it

was, well, this warn Ukraine is going to it's going to cause everything that

global meltdown going to affect us, but yet now we have oil prices back

below their all time highs, well off their all time highs. We've had the

market recover to a certain degree. So this is not about trying to time

anything or you really can't no, you focus on what you can control. I think

if you take anything away from what I take away from this article was

focus on what you can control. You can't control what the stock market is

going to do. And this guy's right. And we have another ten year number of,

what do you say, 1.1 point something? Yeah. 2.7% would be the total 60 40

annualized rate of return. So 2.7%. And if you get 2.7% over the next ten



All right, well, one thing is for sure. You have to continue to contribute,



You might want to start putting in a little bit more, just if you.


Can yeah, if you could save more, that at least get up to that match,

because that's going to help you. So focus on what you control, which is

saving your spending and then how often you're planning, because we're

going to have periods of underperformance. We're going to go through

bear markets and recessions. And guess what? We talked about it last

year, next year. Do you know what next year is? Oh, I'm so excited. It's a

presidential election, so, you know, the questions are coming. It's kind of

like right now, it's July and Costco is coming out with their Halloween

stuff. So come Labor Day, they're going to start rolling out their

Christmas stuff. Come November, the questions are going to start coming

in. How's the presidential election going to impact the markets always

happens every two years because of the midterms, but every four years for



So looking forward to getting to that one. But just in advance, a spoiler

alert. Don't sell all your investments because of whoever is going to be

running or sitting in the presidential office. There's no need. I just

wouldn't do it. Don't do it. Not good advice.


No, don't do that.


No. Do not sell all of your vestments because there's a presidential

election coming up next year.


Absolutely. Let's move on because let's shift away from that a little bit.


No, we're going to go to a much more uplifting segment here because

retirement is about more than money. And we've talked about this before,

how we want people to live a fulfilled life in retirement. And that is once

you hit that number of, okay, I've got my monthly distribution or I've got

my income taken care of, I don't need to worry about money anymore.

Does that mean you're going to live a happy retirement?


Not necessarily, no.


We've seen very wealthy people have miserable retirements now. They're

not going to say it's miserable.


Right. I was going to say, I don't think people come right out and say that



No, but they tell us that's fine, you just get a different vibe, different

attitude from them when you're having conversations before when they

were working. So we've seen it. People often find themselves lost, and

we've talked about how great divorce is on the rise. So that's why I feel

like we got to talk about how to create.


A fulfilling retirement, which is funny and kind of crazy that you say that,

because I came across an article about Steve and his wife Karen. They

recently retired, but it jumped out at me because it was we have

discovered we each need to cave a cave to call our own in retirement. So

it's like they want to be together, but they still need their own space.


Yeah, I can see that.


I mean, that makes sense. I think that would probably help avoid some of

those great divorces. Yeah.


And I love the quote from the article. If we did anything right to prepare

for retirement together, it was to build out caves where we can be apart.


I like that they call them caves. I don't know why.


Picture a little cave, little room. You've heard the term man cave before.

And I guess that Karen was looking.


For a I also want my cave.


I think she called it a she den or a because if she tried to type in woman

cave, it didn't come up.


No, but it's only a man cave.


She den came up. But they love to spend time together, but they do need

their space where they could be alone. Because as they talk about the first

year, retirement is often the most difficult.


The biggest transition, as is the first year of marriage.


I wouldn't say that about the rank in household, but, hey, that's just me.

This is one side.


Our first year was what it bliss is what he means.


So I'm getting grades. I don't want to have a grade divorce.


I don't either. I don't think anybody sets out to have one.


No, I don't think so either. But one of the things that they talked about in

the article, that was this older article that was titled why Too Much

Togetherness Can Ruin Retirement. And it was this concept of parallel

play. Now, I love that they used in this article, and we'll link to all this in

the show notes. To me, they used the worst analogy ever, and I want to

read this.


You were really bothered by this.


I really was. It says, Try watching two children in a sandbox, a boy playing

with toy trucks, and a girl using a pail and shovel to build sandcastles.

Chances are that the toddlers will be quite content. They'll be next to each

other or moving further apart, silent at times and babbling to themselves

or each other at other times. They will no doubt resolve minor

disagreements if they occur, whereas they would probably be fighting if

they tried to play with the same toy in that sandbox. They clearly don't

have children.


I was going to say yeah. They've never witnessed two children play as.


As parents of a five and a six year old. No matter what. They could be

playing with their separate toys. If they're in the same sandbox, they're

going to fight about each other's toys no matter what.


No matter what, without question.


Now, if we're doing something wrong, if our kids are the outlier there and

they're not supposed to be fighting, please send us an email and tell us.

How could we?


Yeah, or if you I was going to say if you know how to prevent that. Yeah,

but we're open to that as well.


I get the point. They're talking about this concept of parallel play where

individuals who they want to have their own space, their own interests,

their own things to do. Because there have been studies that showed that

people who do everything together, who are joined at the hip are usually

unsatisfied or unfulfilled as couples. Whereas spouses that do have their

own interest and have new skills that they're developing, they're a lot

happier. And so I think bringing this up in this retirement show is really

about creating that retirement happiness. And as you're thinking about

going into retirement, if you're married, then it's something that you need

to start playing for that you're going to be spending a lot more time with

your spouse.


You need to be thinking about your cave.


That's right. Build out your cave or your she.


Den or your shed in. I think they should just both be called caves.


You want the Mel Cave.


Well, I just think it should just be cave. It doesn't have to be man cave.


But just cave grass. Okay, back either way, find your space. But think

about in the first part were talking about, okay, how are you going to

invest? What are you going to invest in? How is the market going to do?

But that aside, you can't control that, but you control all right, what's

your plan for what are you going to do in retirement? How are you going

to spend this time? How are you and your spouse or your partner going to

spend this time together to make sure that you're both happy? Because I

love you, but if we had to spend every day together, I think you'd grow

tired of me. I would never grow tired of you.


No, I think it would be tough. I think you would be tough.


I would be perfectly happy and conducted. I would be so happy. That is my

dream when I think about my retirement, is just to follow you, to be joined

at the hip. But make sure you're thinking about these things as you're

planning your retirement, because we want you to live a happy life, happy

retirement, and really be fulfilled. And think about retirement as more

than money, and that's the biggest it is more than money. It is. Once you

get that solved, there's only so many times you can solve how much you

need for retirement and when you're going to take Social Security and all

those other financial concepts.


Once that's all answered, once that's all.


Answered, you still have to spend time. That's right. So think about those

things. And while you're at it, while you're thinking about those things,

what do we want you to do?


We want you to subscribe.


That's right. Hit that subscribe button. Make sure you subscribe to our

weekly retirement newsletter. And with that, I'm Jonathan Rankin.


And I'm Melissa Rankin. Thank you so much for joining us. Yeah.

Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC.– Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. –  Advisory services offered through Sanctuary Advisors, LLC., an SEC Registered Investment Advisor. – Theorem Wealth Management is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC. This communication has not been reviewed for completeness or accuracy, does not necessarily reflect the views of Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and is not a recommendation or endorsement of any product, service, or issuer. Third party posts do not reflect the views of Theorem Wealth Management or Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and have not been reviewed for completeness and accuracy. All further communications from this representative must be sent from and received by johnathan@theoremwm.com. For additional information, please refer to one of the following consumer websites: www.FINRA.org, www.SIPC.org.

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