For many Americans approaching retirement, worry about various things is top of mind. Finances and health are usually at the top of the list, yet there are other concerns retirees face, such as:

• Financial security: This is probably the number one concern. Retirees need more money to cover their living expenses for the rest of their lives. Healthcare costs, inflation, and outliving their savings are all big worries.

• Healthcare costs: Medical expenses are a significant drain on retirement savings. Medicare covers some costs but not everything. Retirees worry about affording long-term care or unexpected medical bills.

• Staying healthy: People live longer, but that doesn't mean they're more nutritious. Retirees worry about staying healthy and independent as they age.

• Boredom and loneliness: Retirement can be a time of great freedom but can also lead to boredom and loneliness. People who have built their identities around their work may need to find new ways to fill their time and stay connected to others.

Unsurprisingly, finances are a top priority for people approaching retirement age. Knowing how much you need to retire comfortably and confidently is extremely important. Yet, it can be challenging, as inflation and the increase in the cost of living will quickly erode your ability to retire. So, how can you address your concerns effectively and efficiently?

1. Estimate Your Expenses: Consider how your spending might change in retirement. Some costs, like commuting, may decrease, but healthcare can rise significantly. A rule of thumb is to plan for 70-90% of your pre-retirement income. Other considerations are that you may have significant personal expenses paid, such as your vehicles and home. However, these expenses cost you money to keep them in good condition. So be sure to calculate, based on what age you plan on retiring, how many times you may need to replace/ repair these more significant personal expenses.

2. Factor Income Sources: In most cases, this is where retirees, or those planning for retirement, go wrong. You have been putting money away, investing, and saving. If you follow any amount of news, then you know that Social Security in America today is not at all what was projected for many retirees when it was first implemented. The system is failing, and the responsibility has shifted from the government and enormous company responsibilities to the individual. This highlights a big problem many retirees do not understand or even consider when investing early in their careers.

The Great Retirement Deception

I’m sure that you have heard financial planners and money managers say that the market will rise and fall, in some cases dramatically or even crash, but that in the LONG RUN, the market always goes up in value; therefore, if you start investing when you're in your twenties, you should have enough to retire. The problem is that there are several “worse case” scenarios that are not that uncommon, and you could very well be affected by them.

1. Inflation:

   We all know, to a degree, that our currency (what we call money) is not backed by anything, and if you did not know that, well, now you do! Our dollars were at one time backed by gold. Meaning that for every dollar in circulation, there was an equal and equivalent amount of gold held by the Federal Reserve. That is no longer the case, and as the government needs more money, they pass a spending bill, drafted and signed by Congress, and “voila”… more money. The problem with this solution is that as the amount of currency in circulation increases so do the costs of goods, products and services. Hence, inflation. We can see this clearly over the past few years. I’m writing this blog in late March 2024. In Florida, my state of residence, I have seen a property that was worth $260K increase to $425K in a matter of 2 ~ 3 years! Thats ridiculous! How can a retiree, who is on a fixed income, account for that 30, 40, 50+ years ago!?

2. Cash-Flow:

   At the end of the day, a retiree who is living on a fixed income, is wholly focused on what their monthly cash flow is. However, retirees are not the only ones looking for cash flow. Many investors want to diversify their investments into cash-flowing assets so as to supplement their monthly, quarterly, or even annual earnings. Diversifying your investment into cash-flowing assets is a great way to make your dollar work for you in the here and now. Cash-flowing investments have traditionally seen annual returns between 6 - 9%. While not an investment that will take you to the moon, they are typically dependable and safer than equity investments and have risk mitigation measures to prevent you from “riding the wave” or volatility of equity investments like the stock market. Inflation greatly affects cash flow, and if you are heavily invested in cash-flowing assets, you may find yourself behind the power curve significantly in an economy whose inflation is out of control.

3. Equity:

   Equity is a great tool for building generational wealth. You buy assets that you believe will significantly increase in value over the long haul, and as you cash out of these appreciating assets later in life, you can roll those earnings into cash-flowing assets, thereby supplementing your income. The downside is that equity investments typically have a long time frame, and you are exposed to market fluctuations during the lifetime of your investment. Depending on when you end up selling your equity assets, you may find yourself in the red as far as value goes, significantly hampering your ability to reinvest into cash-flowing assets in the future.

Investment Planning Solutions

So, what are we left with? After reading the above, you may think there is no hope and that your investments are for nothing. Well, hold on, there is a way forward. Here are seven tips on how you can properly plan for your retirement.

1. Estimate retirement needs: Figure out how much money you'll need to live comfortably in retirement. This will consider your desired lifestyle, expected expenses, and healthcare costs. I have provided a simple yet helpful retirement calculator at the bottom of this article to help you get started.

2. Start saving early: The earlier you start saving, the more time your money has to grow through compound interest. Aim to save 10-15% of your pre-tax income annually, or more if possible.

3. Maximize employer contributions: If your employer offers a retirement savings plan, like a 401(k), contribute enough to get the full employer match. This is essentially free money that boosts your retirement savings.

4. Invest wisely: Learn about different investment options and choose a diversified portfolio that aligns with your risk tolerance and retirement timeline. Consider factors like stocks, bonds, and mutual funds.

5. Pay down debt: High-interest debt can eat away at your retirement savings. Focus on paying off debt, especially credit cards, to free up more money for saving.

6. Review your plan regularly: As your life circumstances and retirement goals change, revisit your retirement plan and adjust your saving and investment strategies accordingly.

7. Seek professional guidance: Consider consulting a financial advisor who can help you create a personalized retirement plan based on your unique financial situation and goals. While I am not an investment advisor or financial planner, I do help investors be exposed to creative and alternative investments not typically offered by your planner, advisor, or CPA.

Retirement Income Calculator

Below, you will find a helpful retirement calculator I developed to help you understand how much you need to invest and where you should invest your retirement to expect to see the type of returns you're looking for.

First, you will want to put into the top field how much you expect to need to live on as you ride off into the sunset. Then you have two options. Investing in dividend-paying stock and investing in Blue Bay Fund I, which is secured to investment real estate and generates monthly cash flow. Input what typical annual returns are being projected by most dividend-paying stocks or mutual funds. Our research shows that the average is 3.25%. If you find a mutual fund that projects more and has a history of providing more, then input that funds returns in the second field. The number below will show you how much you have to have invested in that type of investment to generate the annual return you input in field one.

Second, I have input the average return for most of our investors who invest in Blue Bay Fund I. This is on the low end and can be more depending on the investments you choose within the fund. You can play around with the numbers and see, but on average, our investors are earning between 8.25 - 9.5% annually, so input anything in between. Below the third field, you will see how much you would have to invest in Blue Bay Fund I to generate the annual income amount you put into field one. One thing is for sure: what my investors earn within the fund greatly outweighs the returns investors earn in dividend-paying investments. I have even had investors decide to take the investment amount put into field three, invest in Blue Bay Fund, and then continue to invest the remaining of their investment into other investments and see a tremendous value in diversification and a steady increase in their portfolio’s worth.

If you see the value of investing in Blue Bay Fund, and desire to earn stable, dependable, monthly cashflow from investment secured to real estate then i would encourage you to reach out and lets jump on a call to discuss. You can also watch a brief webinar I put together about recession-proofing your investments below as well. If you would like to receive regular investment education and tips directly to your email every week, then signup for my investment club. Its 100% free and it is not a sales pitch or marketing gimmick. I look forward to helping you build, protect, and preserve your families generational wealth in the coming months.

With Honor,
Edwin D. Epperson III,
Manager and CEO

Soli Deo Gloria