Ep 1 – Financial Awareness 

Brian Carlson

Regional Vice President of Jackson Annuity

Diane Gallagher

Vice President of DCIO Practice Management at American Century

Welcome to Season 1, Episode 1 of Meet the Expert® with Elliot Kallen! 

In this episode, Elliot is bringing on Brian Carlson and Diane Gallagher to discuss market updates, how to plan for retirement income, and how to help your children develop financial awareness.

Brian Carlson

Our current recession is an exogenous shock. The most important thing to do is to stay invested.

brian carlson

regional vice president, jackson annuity

Investors should understand the major difference between the current COVID-19 recession and a structural recession: Unlike the 9/11 and 2008 recessions, our current recession is an “exogenous shock,” which is used to describe an unpredictable change that affects an economy. 

If you examine a hundred-year look at the market, you’ll see a trend that we’ll call “the bumpy ride.” This trend shows that historically, the market swings up and down like a roller coaster. The downturns occur about 25 percent of the time. In every single instance, we see a significant recovery—which is usually much longer than each downturn!

The most important thing to do is to stay invested. Many people decide they want to sell or get out if they can, but it’s usually not to your best interest. It’s a better deal to hold out until the market recovers—and it always recovers.

One retirement challenge is the sequence of returns. In short, it’s crucial to time your distributions correctly. Poorly timed withdrawals can cause a hugely negative impact on your retirement portfolio

We can’t control what the market does when we retire. If you care about protecting the compounding effect in our portfolio, it’s important to work with an experienced, trusted Fiduciary Financial Advisor to ensure you have a diversified portfolio that can hedge against market downturns.

The next retirement challenge is longevity. Unfortunately, this is completely unpredictable. Most people will retire at 65, and the average American’s life expectancy is about 80 years. However, you might not be average at all! You might be less than average, and you might be significantly more than average.

There are a few ways to eliminate that longevity risk. For one, you should have the right financial plan in place. That includes having proper diversification. Another option is an annuity, which promises something that nothing else can—guaranteed income and guaranteed growth in the market.

Jackson has over 130 funds to choose from. You can enjoy growth when the market doesn’t do well, but you can also fully participate int he market when it does. You have a 6 percent safety net and guaranteed income for life on the back-end!

If you’d like to discuss whether annuities are right for your retirement income strategy, click here to schedule a consultation with Elliot.

Diane Gallagher

Parents should talk [to their kids] about values and money, which is the foundation of talking to our kids about money. Discussing financial values will help our kids understand concepts and nuances.

Diane Gallagher

vice president, DCIO practice management, american century

Millions of parents across the country are suddenly finding themselves in the position of educator. It’s important for parents to speak, very candidly, about our own expenses and past mistakes.

One of the biggest worries we have for parents is their ability to have enough money to pay for their kids’ education. Today’s high school students are extremely worried about their ability to pay back student loans. In fact, they really examine cost as an influence in their decision of whether to go to college at all.

Some key statistics:

  • 64 percent of teens depend on parents or caregivers for information on how to manage money
  • More than one-third don’t believe they will be financially independent by age 30

As you can see, it’s very important to have these conversations with our kids so they can become familiar with the concept of money.

Parents should also talk about values and money, which is the foundation of talking to our kids about money. Discussing financial values will help our kids understand concepts and nuances, such as:

  • Needs vs. wants
  • Saving and investing
  • Budgeting and borrowing
  • Giving back through philanthropy

You’ll also want to teach kids about the concept of earning money, possibly by attaching chores to allowances. You can also encourage kids to put extra effort toward earning by babysitting, mowing lawns, dog-siting, and more. This teaches kids about consistency and committing to completing a task. 

It’s a good idea to familiarize your kids with the concepts of saving, spending, and giving. Give your kids the choice of how they’d like to allocate their money. Set up a checking account. Help them set financial goals with a wishlist of desired items. Consider matching their contributions toward large purchases, just like an employer would for your 401(k) plan. And finally, engage your kids in philanthropy early on.

You can also teach risk and reward by playing the stock market game. Have your kids pick a few stocks from their favorite companies, then ask them to track it for 30 days. This is a lesson in paying attention to market trends and influences, as well as the parallel concept of opportunity costs.

As our kids start to grow older, we need to think about saving for college. We can do this through a 529 Plan. When Grandma and Grandpa send a gift for a birthday or holiday, that money should go straight into the 529 account. Does your teen plan on working a summer job? Take a portion of it and add it to the 529 account. Your teen will feel like they have skin in the game as they contribute toward their own education.

Take advantage of scholarships. Scholarships are available for everything from high academic achievement to artistic and athletic ability.

Finally, it’s important to instill a sense of financial reality into your kids. Our kids won’t develop a good grasp on monthly bills, incidentals, or credit cards until they can see tangible expenses on a piece of paper or e-bill. Show them the monthly utility bill, let them sign the restaurant check, and educate them about credit scores, credit reports, and avoiding credit card debt.

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Prosperity Financial Group and Meet the Expert® with Elliot Kallen do not make specific investment recommendations on Meet the Expert® with Elliot Kallen or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of the Meet the Expert® with Elliot Kallen guests, and not necessarily of Elliot Kallen or Prosperity Financial Group.