AriseTV Xchange – Retiring Amid Low Interest Rates

AriseTV interviews Michael W. Conway of the Conway Wealth Group to discuss retirement planning amid low interest rates.


Host: Welcome back to Arise Xchange. Millions of Americans are facing a short fall in retirement savings. New national survey found almost 1/3 of workers have less than $1,000 in savings. Can you believe it? And well over half have less than $25,000 for a lifetime’s worth of work. In fact, many of those financially unprepared expect to continue to work for pay during their so-called golden years. Well, Michael Conway, founder and CEO of Conway Wealth Group, is here to talk about this looming retirement crisis. I call it more of a nightmare than anything else.

You know what’s amazing, Michael, I had a guy come to my house to work some plumbing fixtures. He was 76 years old, and I hate to say it, one foot in the grave and the other on a banana peel. He had a hard time moving around working, but yet and still he was doing it. I have to believe he probably didn’t have enough saved up. What’s going on?

Michael Conway: Well, listen. There’s a lot going on. There’s a lot of moving pieces to this conversation, but the environment is very much different today. We’re looking at low interest rates, and we’ll talk about that, but a lot of people do have to work more years to make their money work and last throughout retirement.

Host: Well, what is it? I mean, you remember the 401(k) plan, that was supposed to be the golden parachute for the average worker. Is it not enough money these days to sustain a person or two or more in their retirement years.

Michael Conway: There’s probably not. The expenses of educating the kids, saving for retirement, paying the monthly bills, most people don’t set enough money aside and it’s a big issue. People really need to focus on it.

Host: I think, there’s also another factor here for a lot of people, the financial crisis back in 2006/2008. A lot of people had to go digging into their retirement accounts just to stay afloat. I’m sure that probably had somewhat to do with this.

Michael Conway: It had a big piece to do with it. A lot of people got laid off, and you lose work, you’re digging into these savings. That creates a problem as you try to plan for the future and gain employment back. Years and years ago, back in the ’90s, there was a study done by a financial planner that said, “You could take 4% out of your savings per year.” That made the assumption that you had money, 50% in a stock portfolio and 50% in a bond portfolio, the issue today and some of things we’re talking about is, so you could take 4% and if you did that with inflation, you would have enough money to last 30 years for your assets during retirement. The issue now is, I said before, the interest rate environment is so much different. That’s a big factor today.

Host: Okay, so we have this huge morass here for people who are struggling now to stay afloat in their golden years trying to survive. Of course, many people are working. Of course, that’s if they can find work. The question is there are a lot of people that can’t find work, Michael?

Michael Conway: No, that’s a big problem. People need to really hyper-focus on, obviously, we need to pay the monthly bills, but beyond that we need to look for what is retirement. You talked about your plumber, so he has hopefully a plan in place that says if I retire at 75 and live to be 95, do I have enough money to do what I need to do?

Host: All right, here’s a question, okay. Here we are. We’re in this nightmare right here. We’re in the dark seas. The waves are 15 feet high, and someone has stuck a pin in my life raft. What does one do now to try to salvage a bad situation? What can they do?

Michael Conway: Well, one of the things I want your viewers to pay attention is I don’t want them to reach. Don’t go out to high-risk investments to try to get more yield on a bond portfolio because that could come back to bite you. So when I was talking to off-air was saying, “Yeah, but we should have money in our stock portfolio,” and the answer to that is absolutely, you should have some money allocated to stock. But think about it this way, the stock market when it hit its bottom, I think around March 9th of 2009 to the end of 2014 is up over 240%.

Host: Wow.

Michael Conway: So don’t go put a lot of your retirement money now. Talk to your advisor and figure out what a good allocation is, but it’s important not to reach for yield in the bond portfolio or too much risk in equities.

Host: All right. For a person … real quick, we have 30 seconds left … who has $1,000 to their name in savings, what do they do?

Michael Conway: I think they need to continue to work because you do owe other than social security, you do need to put more capital. It’s a big deal.

Host: Yeah, okay. We kind of run out of time here, but also even people who have pensions are also having a hard time as well. Look, I’m glad you gave us some good advice.

Michael Conway: Thank you so much.

Host: Michael Conway, thank you so much. All right.

Next is the invasion of the drones. What could stop them from taking flight? When Arise Xchange returns. Thank you.