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Joe Lucey

Investment Strategy Insights

When I was growing up in the 1980s, I remember the all-too-real threat of having my mouth washed out with soap for using a naughty word. Recently, a naughty word has been making the rounds among economists and market observers who claim we’ll all suffer from its bad taste. That word is “stagflation” – a cycle characterized by slow growth, high unemployment, and high inflation. So, is there real cause for concern? Or is this another instance of the media selling fear? Let’s see what the numbers have to say:

April Showers. . .

In April, the stock market saw a downturn, attributed in part to diminishing hopes of interest rate cuts by the Federal Reserve. While The Fed has acknowledged inflation remains stubbornly above their target rate of 2% and short-term interest rates will be maintained, there have also been murmurs of an interest rate hike. The Consumer Price Index (CPI), reported higher-than-expected inflation rates in April, while first-quarter GDP was lower than expected. Both reports seem to be trending in the wrong directions with higher inflation and lower growth fueling stagflation worries.

May Flowers?

May’s start eased inflation concerns with the help of positive earnings reports lifting spirits. Two defensive sectors – utilities and consumer staples– led the rebound after being some of the S&P 500’s worst performers over the past year. In the long term, the stock market is driven by earnings growth. Despite the economic slowdown’s potential impact, the market’s resilience and overall strength remain evident, with the S&P nearly 30% higher than October’s woes.

Valuation Adjustments Incoming

In terms of stocks, analysts are raising their eyebrows over the continued burgeoning valuations of certain growth stocks, particularly in tech. Recently, some hot stocks have cooled, providing opportunities in other, previously-overlooked sectors. It seems as if stock valuations do indeed matter again. While the S&P 500 trades slightly above historical averages in terms of valuation measures, the expectation is for valuations to adjust as earnings continue to grow.

These Things Alone Do Not A Recession Make

Many economists predict that the long-anticipated recession will arrive with a “soft landing”, rather than a deep recession. The recessions of the last 25 years were all caused by large-scale events – tech crash, financial crisis, and COVID. Higher inflation, ballooning deficits, and geopolitical events can make the economy more vulnerable in combination but are likely not enough to cause a recession. The normal state of the economy is growth and expansion; only when an event occurs does it contract. For this reason, we at Secured Retirement do not believe a recession is inevitable.

The Final Word On That “Naughty Word”

Inflation remains stubbornly higher than we’ve experienced over the past couple of decades, so it is important to account for this in your retirement planning. And there is a chance, albeit relatively small, that we will experience a period of that naughty word stagflation. However, the ongoing growth of our population and access to more disposable incomes, coupled with rapid technological advancements continue to contribute to the great American growth story. For now, we remain optimistic about the stock market’s prospects and foresee sustained growth in the long term. 

To learn more about stagflation-proofing your retirement planning, give us a call today at 952-460-3290.

Nathan Zeller Secured Retirement

Nate Zeller

Chief Investment Strategist
Secured Retirement

Are You Hoping For Long Shots? Or Betting On Boring?

For many, myself included, the Kentucky Derby represents spring’s true entrance. This Saturday marks the 150th year of this iconic race – the longest-running sporting event in the US.

More than 150,000 spectators will gather at Churchill Downs to sip mint juleps and witness the thoroughbreds thunder down the track with incredible speed.

While I’ve always wanted to see the event with my own two eyes, it will remain on my bucket list another year. Someday, I’ll get to see the most exciting two minutes in sports in person!

The thrilling highs and lows of the Kentucky Derby are the exact opposite of what we’re trying to achieve every day in our approach to retirement planning. There are no risky bets, there is no spectacle, there are no split-second make-or-breaks.

We’d be the worst Kentucky Derby planners in its storied history because what we’re going for is boring, measured, by-the-book.

We’re not the place to go to get rich quick. We’re not the ones you come to for aggressive wealth accumulation strategies.

We focus on helping clients make the most of the money they do have – using tax and income planning to maximize take-home dollars. This has achieved results for decades. 

For many people, retirement is a gambling game. They might take on too much risk for payouts that never come, maybe they follow “experts” that over-promise and under-deliver, or, worst of all, they’re not making any preparations for retirement at all.

I’ve said it before and I’ll say it again: At Secured Retirement, we want to make a significant impact on the families we serve so that they can live comfortably, spend confidently, and pay taxes consciously.

So, as we welcome another Derby Day, I hope you feel the rush of the racetrack but ultimately know that your peace of mind can extend past one day’s winnings. 

When it comes to retirement, we believe that it’s best to bet on boring. How about you? Are you hoping for long shots to keep you on track? Or taking the slow and steady approach? I’d love to hear from you at 952-460-3290.

Happy spring!

Cup of Joe

CUP OF JOE

From Joe Lucey, Founder of Secured Retirement

There’s something about sitting down with a steaming cup of coffee that always kicks my day into high gear. And it’s not just because of the caffeine it sends coursing through my veins.

Throughout my career, some of my biggest revelations have come to me in conversation with my mentor over a cup of joe. Good conversation and personal connection can pick you up in a special way. It’s that feeling that I’m hoping to bring to you with my new series, your Cup of Joe.

Why ‘Review Beneficiary Forms’ Should Top Your Spring Cleaning To Dos

Marriage, divorce, birth, and death – some of these life events are certainly more fun than others. But when they happen, they each demand our attention and often trigger a set of to-dos. Amidst the celebration (or chaos) that unfolds, updating beneficiary forms rarely tops the priority list. However, overlooking these (frankly) mundane administrative tasks can have real consequences for the legacy you’re diligently building.

So, if reviewing the beneficiary forms associated with your accounts is something you haven’t gotten around to in a while, why not add them to your spring cleaning list? Let’s break down why maintaining current, accurate designated beneficiary forms is so important and walk through an easy-to-follow checklist to ensure your estate planning is up-to-date.

Why Beneficiary Forms Matter

Beneficiary forms lay out how your assets will be distributed upon your death, particularly for
retirement accounts and life insurance policies.

  • Asset Distribution: Beneficiary forms override your will when it comes to certain assets like retirement accounts. Regardless of what is stated in your will, these assets will be distributed according to the designated beneficiaries listed on the forms.
  • Avoiding Probate: Assets with designated beneficiaries typically bypass the legal process of settling your estate, ensuring a smoother and quicker transfer of wealth to your intended recipients upon your passing.
  • Flexibility: Beneficiary forms allow you to update your preferences without having a lawyer present, meaning you can easily update your forms to adapt to life changes like marriage, divorce, births, or deaths in the family.

The Beneficiary Form Checklist

Now, as you sit down to review your forms, here’s what to double-check:

  • Location of Forms: Hey, where are those things anyway? It’s crucial to know right where your beneficiary forms are kept. Make sure they are easily accessible and well-organized. If you have a fireproof safe or a locked filing cabinet, that’s a great spot for them!
  • Form Verification: Take this opportunity to verify that the copies you have match the records held by trustees, custodians, or plan providers. If you find any discrepancies, correct them in short order to avoid any confusion later down the road. Keeping a record of the dates of revision additionally can be helpful.
  • Contingent Beneficiaries: “Contingent beneficiaries” are those who will receive the assets if the named primary beneficiary is unable or unwilling to do so. If you haven’t already named them for each account, now’s the time to do so. As unpleasant as it sounds, unforeseen circumstances do happen and primary beneficiaries may predecease you. Be prepared for all cases.
  • Clarity and Specificity: Clearly state each beneficiary’s share of the assets designated to them. If there are multiple beneficiaries, specify the percentage or portion of the assets allocated to each individual. This clarity helps prevent future misunderstandings among recipients.
  • Integration with Estate Plan: Your estate plan should encompass all aspects of your financial and asset management, including beneficiary designations. Ensure that your beneficiary forms align with the overall goals outlined in your estate plan, especially where retirement assets are concerned.

While updating beneficiary forms is as mundane a task as cleaning your oven or unclogging your gutters, it’s a relatively simple task that can have a huge impact on your legacy. Taking a few minutes to arrange your beneficiary information now will save your loved ones huge time and headaches in the future and ensure your assets are distributed according to your wishes.

Between window washing and firing up the lawn mower this spring, spare a bit of time for this important administrative chore. And should you need any assistance, give us a call: 952-460-3290.

Investment Strategy Insights

After a hot first quarter, we’re left feeling that the market has begun to cool off just as the weather warms up here in the upper Midwest. With a mix of rising interest rates and tempered expectations for Federal Reserve rate cuts, we’ve begun to feel a slight market chill. Nevertheless, and despite some hubbub over inflation and interest rates, we believe the market will remain healthy. Our very own Chief Investment Strategist, Nate Zeller, breaks down why.

Q1 and Q2 In A Few Recording Breaking Numbers

Wall Street continued its hot streak in March, extending its rally to a fifth straight month.  The S&P 500 returned over 10% in the first quarter of the year; the best first-quarter performance for the index since 2019!

The second quarter has gotten off to a cool start for stocks as interest rates moved higher. Following comments from officials at the Federal Reserve, expectations for the number of interest rate cuts this year were damped, sending bond yields higher. Yields on 10-year U.S. Treasury bonds recently touched their highest point in 2024. 

What’s To Come of The Fed’s Hold Steady?

Investors remain cautious about the pace of the Fed’s rate-cutting timeline this year and how soon central bankers will be able to meet their 2% inflation target. As expected, the Fed held interest rates steady at their March meeting and officials have indicated they are in no hurry to cut as economic growth remains strong and inflation remains above target. 

Many “experts” and prognosticators on television and the internet would lead us to believe that if the Fed does not cut rates this year it could spell disaster for the stock market. We do not think this is the case, and, in fact, believe the opposite to be true. If the Fed does not cut rates, it is because economic activity and the labor market remain strong. Economic growth generally leads to corporate earnings growth, helping provide a tailwind for stocks. The Fed cutting rates as a result of slowing economic growth could be a bad omen for the stock market. 

An ideal scenario would be lower inflation while the economy remains healthy, but this may be unlikely since robust economic growth typically leads to inflation. There is also the prospect that inflation reverses course and moves higher, forcing the Fed to raise rates. While this may seem doubtful, it does remain a possibility, especially in light of the recent rise in commodity prices – namely oil.  

An Overvalued Stock Market and Broadening Momentum

Indications signal the overall stock market is overvalued when compared to historical measures. The question is whether earnings will continue to grow to support lofty share prices or if prices will fall to be more in line with long-term averages. Nothing mandates that stock prices must trade at certain valuations and, as we know, the market can remain irrational for a very long time. However, over time, the market always seems to “revert to the mean”, so eventually, we are likely to see either a pullback in prices or an acceleration in earnings growth.

The emergence of the “Magnificent Seven” stocks last year led markets higher but not all stocks and sectors participated in the rally. The performance of the major market indices was primarily driven by these seven stocks which now make up a large concentration of cap-weighted indices.  Currently, there is added risk in investing in passive strategies that track these indices, since they are heavily weighted to this small handful of stocks. 

We are not necessarily expecting a pullback in these names, since most are very strong companies with solid and rapidly growing earnings, but we do anticipate a broadening of the upward momentum to include a wider array of stocks in sectors outside of technology which will provide opportunities for active management strategies.   

Protection Strategies To Mitigate Your Investment Risk

With the stock markets trading near all-time highs and a sense the market is overbought, we fully understand there may be some trepidation amongst investors when it comes to putting new money into the market. Remember, stock market investing is a long-term endeavor and there are times of volatility.  Historically, patient and disciplined investors have been rewarded.  There are many protection strategies available which provide stock market participation while protecting against downside risk. If you’re interested in learning more about how various strategies might make sense for you, give us a call at 952-460-3290.

Nathan Zeller Secured Retirement

Nate Zeller

Chief Investment Strategist
Secured Retirement

Navigating the Most Dangerous Decade: How To Thrive In Transition

In terms of retirement, there’s one particular span of 10 years that is the most critical. Known as
the “most dangerous decade,” the five years prior and the five years post your retirement are
the greatest predictors of retirement outcome. The term “most dangerous decade” was coined
by retirement researcher Wade Pfau who found that over 80% of retirement outcomes are
determined during these ten years. Reasons for this include the general shift in lifestyle,
spending, and investment management.

As you navigate this fragile phase, careful planning and strategic decision-making become
important to ensuring long-term financial security and health in retirement. It’s key to receive the
advice of a trusted expert in this period especially; however, there are a few things you can do
to best position yourself for this crucial time.

Rethinking Income Strategy

Many people think that achieving a savings goal is the single most important element of
preparing for retirement. The truth is that it’s even more important to create a strategy around
generating income in retirement. You simply don’t know how long savings will last. Creating an
income strategy in retirement equips you with an action plan that continues on. The more
diversified your income streams are, the better off you’ll be. Dividend-paying stocks, i-bonds,
real estate investments, annuities, and more all provide additional income streams. Diversifying
income streams enhances financial resilience and ensures a steady cash flow even as you
move out of the workforce.

Prepare for Healthcare Costs

Healthcare just keeps on improving! As medical advancements continue to progress, people are
living longer. That means retirement income has to stretch further as a result. Planning for
healthcare expenses is crucial, but it’s hard to anticipate these big things that haven’t happened
yet. Additionally, inflation for healthcare services continues to outpace the general economy. So,
costs for care are only going up, up, up.

A lot of people make the mistake of assuming Medicare will cover all of their medical bills in
retirement. But that’s simply not true. Medicare will cover some medical expenses. You’ll still be
on the hook for important things like vision, dental, and long-term care. While it’s difficult,
planning healthcare expenses early on is essential to mitigate financial strain in later years.
Even with the level of uncertainty, insurance premiums and medication costs are things you can
better plan for in advance.

Consider Your Investments

In retirement, your system of adding new money to your savings will shift and you’ll more
regularly be taking money out of your accounts. If the stock market is doing well, the money you take out might be balanced by new gains. But if the market is down for a while, every time you
take money out, it could be more like taking a slice from a shrinking pie. This is called sequence
of returns risk, and it’s something that all investors have to contend with.

If you retire when the market is up, you might be okay even if it goes down later. But if you retire
when the market is down, your savings might not bounce back. This risk is heightened during
the first decade of retirement when your portfolio balance is at its highest, and withdrawals may
have a more substantial impact on its sustainability. The market’s timing is beyond your
control, but you can take steps to minimize the risk. Regularly checking and adjusting your
investment mix every 6 to 12 months can help. Make sure your portfolio is diverse and matches
your age, goals, and how much risk you’re comfortable with. The important thing is to have a
plan!

Stay Active, Stay Healthy, and Stay In Touch

Beyond financial considerations, it’s extremely important to prioritize your health – mental and
physical – throughout the period right before and right after retirement. It’s a time of major life
shifts, disruption, and, frequently, some stress – no matter how welcome your retirement may
be! Staying active, engaging in meaningful activities, and maintaining social connections are
vital to a fulfilling retirement. By cultivating a healthy lifestyle, you not only enhance your quality
of life, you also reduce the risk of costly medical interventions in later years.

The most dangerous decade certainly sounds scary! And the truth is, it can have a huge effect
on your overall retirement. However, with planning and proactive strategies relative to your
income planning, healthcare costs, and investment portfolio, you will be well-positioned to
weather the storm. Your journey through retirement is not only about financial security; it’s about
living a fulfilling and purposeful life. Our comprehensive retirement planning aims to equip you
with the full package so you can do just that. To review the strategies for your “most dangerous
decade”, call us today at 952-460-3290.

Investment Strategy Insights

Secured Retirement’s Chief Investment Strategist, Nate Zeller, dives into the current trends shaping the US economy. As we wrap up the year’s first quarter, there are a number of market indicators shedding light on the year’s possible economic progression. Nate rounds up leading economist forecasts to help illuminate our way forward. Here’s where we’ve been and where we’re going in 2024:

Navigating Strong Currents and A Robust Economy

This year is starting out on a positive note with the stock markets continuing to move higher as we progress in 2024. The S&P 500 and Nasdaq closed at all-time highs at the end of February. And the market advance is not just limited to large-cap stocks, small-cap stocks, represented by the Russell 2000 Index, have also rallied. These stock market gains come on the heels of the U.S. economy remaining stronger than expected, with Q4 2023 GDP growing at more than 3% compared to the prior year. In turn, the Federal Reserve has been compelled to hold interest rates steady. Robust consumer spending rates and solid employment numbers are additional indicators of a strong economy. Unemployment has ticked slightly upwards, but the most recent numbers indicate an overall healthy labor market.

Inflation, Stubborn Inflation

Inflation, as measured by the Consumer Price Index, does continue to fall but remains stubbornly above the Fed’s comfort level of an annualized 2%. At the beginning of the year, it was expected that the Fed would cut interest rates six times over 2024. However, with the continued strength of the economy and the fact that inflation remains somewhat stubborn, current forecasts predict fewer cuts. Some economists even predict there may not be any rate cuts this entire year.

With the lowered likelihood of the Federal Reserve cutting interest rates, bond yields moved higher – the major bond indices showing negative performance year-to-date. Let this be a reminder that interest rates remain volatile and bonds may not provide the best protection for your portfolio.

Supply, Demand, Mortgage Rates

For a full 18 months (and counting), we’ve been experiencing an inverted yield curve, where short-term interest rates are higher than longer-term interest rates. If the Fed were to cut short-term rates, we’d expect the yield curve to normalize, since it’s unlikely that longer-term interest rates will move much this year. Sorry prospective home buyers, mortgage rates, which are tied closely to the US 10-year Treasury bond yield, may not move much either. If for some reason mortgage rates were to drop, more buyers could have the opportunity to enter the market. However, with supply remaining scarce, this may cause home prices to rise, further leading to inflation.

A “Landing” Economy? What’s That?

Over the past couple of years, we’ve been said to be in a “landing economy”.  “Landing,” refers to the anticipated slowdown caused by the inflation spike in 2022 and subsequent brisk pace of rate hikes by the Federal Reserve. Some forecasts predicted a “hard” landing, meaning the economy would fall into a moderate to deep recession, but more recently the majority of economists anticipate a “soft” landing with a rather mild recession. Given the current resilient state of the economy, the prevailing thought is of “no” landing, meaning the economy will not fall into a recession and continue to expand. How it will play out remains to be seen. In the case of no landing, the Fed would likely not cut interest rates for the foreseeable future out of concern for inflation rearing its ugly head as the economy expands.

The Fed and The Election

The Fed’s inaction could also be an effort not to influence November’s presidential election. Therefore, it may be unlikely they’ll do anything in July or September, leaving only two meetings (not including next week’s meeting where it is highly anticipated they will hold rates steady) for opportunities of rate cuts prior to the election, so chances are waning.  However, this forecast could change should we see the economy fall into a recession or conditions shift drastically, but this seems unlikely in the near term. And there are two meetings after the election this year, so odds of multiple rate cuts in 2024 do remain.  

Through the remainder of the year, we will be watching what effects the political landscape and upcoming elections have on the stock and bond markets. Historically stock markets perform well in election years, but what we have experienced over the past several years have been called “unprecedented” so there certainly is no guarantee we will follow history.

Cautiously Witnessing Tech Titans

The biggest concern we have now is the stretched valuations of the mega-cap tech stocks. In 2023, we saw the emergence of the “Magnificent Seven” stocks which led markets higher and accounted for 62% of the S&P 500’s return. But those original seven have now shrunken to the “Fabulous Four” so far in 2024, with Nvidia, Meta (Facebook), Microsoft, and Amazon accounting for 55% of the index’s returns through the end of February. We remain cautious as narrow market breadth can lead to drawdowns of major indices if that concentration of stocks were to lose value. It remains to be seen if the current market leaders will be able to generate enough earnings growth to justify their lofty valuations and as well as maintain such positive sentiment amongst investors. Until there is a broadening of market leadership, we remain slightly cautious on the markets.  

As laid out by market indicators and economists across the country, there are possibilities for how the economy will progress as 2024 continues to unfold. Inflation continues to play a role in the equation and the status as an election year leads us to closely monitor this delicate balance in the face of The Fed’s current inaction. However, the resilience of the U.S. economy, with its GDP growth, healthy consumer spending, and employment figures, sets a promising tone for the year ahead! 

For more insight into the wide world of finances and how economic trends factor into your retirement, don’t hesitate to reach out to us today at 952-460-3290.

Nathan Zeller Secured Retirement

Nate Zeller

Chief Investment Strategist
Secured Retirement

Danielle Christensen

Paraplanner

Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!