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How Can I Afford Retirement

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As many Arkansans make plans for the future amidst widespread financial and political uncertainty, "How Can I Afford Retirement" addresses relevant topics – such as Social Security, 401ks, investments, longevity and expense strategies – and viewer questions. Experts will be available to answer viewer concerns and provide information about preparing for retirement. Key subject matter featured in the five-segment special include: "Taking the Mystery Out of Retirement," "Closing the Gap: Investing and Expense Strategies for Late Starters," "Investing Wisely to Avoid the Financial Risk of Longer Life Expectancy," "Protecting Your Investments: The Best Defense is a Wise and Safe Investor," and a closing question and answer session featuring viewer questions.

Panelists participating in the discussion will be: Dr. Craig G. Rennie, associate professor of finance, Sam M. Walton College of Business, University of Arkansas; Owen McNulty, investment executive, Raymond James Financial Services, Simmons Investor Services; Glenn Atkins, financial advisor and fixed income portfolio manager, Garrison Financial; and A. Heath Abshure, commissioner, Arkansas Securities Department. Steve Barnes hosts.

This is a previously recorded program. Please do not call phone numbers provided.

"How Can I Afford Retirement" is underwritten in part by a grant from the Arkansas Securities Department and the Investor Protection Trust.

Transcript

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

LET ME START BY SAYING THAT YOU INTRODUCED THE TOPIC OF "RETIREMENT PLANNING." WITH THE IDEA OF FREEDOM. I LIKE THE SOUND OF THAT, BECAUSE THAT IS REALLY WHAT PLANNING FOR YOUR RETIREMENT IS ALL ABOUT. I WOULD LIKE TO THINK IN TERMS OF RETIREMENT FINANCIAL PLANING IN TERMS OF FIVE PARTS. FIRST ONE IS SETTING UP GOALS. PEOPLE HAVE TO HAVE GOALS. AND IT'S GOING TO INCLUDE SHORT-TERM, INTERMEDIATE TERM AND LONG-TERM GOALS, BUT THE PEOPLE TYPICALLY THAT HAVE GOALS ARE THE PEOPLE THAT ARE MOST PREPARED EITHER FOR RETIREMENT OR REALLY ANYTHING AS IT COMES THROUGH LIFE, BUT PARTICULARLY TRUE IN THE CASE OF RETIREMENT PLANNING. SECONDLY, YOU HAVE TO HAVE TIME HORIZONS THAT ARE SPECIFIC TARGET DATES FOR THINGS THAT YOU WANT TO ACCOMPLISH WITH THOSE GOALS. THIRD, YOU NEED TO CREATE AND UNDERSTAND YOUR NET WORTH STATEMENT AND ALSO YOUR CASH FLOW STATEMENTS. I'M GOING TO SAY A LITTLE BIT MORE ABOUT THOSE IN A COUPLE OF MINUTES. FOURTH, YOU HAVE TO LOOK AT SOURCES OF CASH FOR YOUR RETIREMENT, HOW YOU ARE GOING TO FUND IT? AND FIFTH, HOW YOU CAN MANAGE YOUR CASH THROUGH RETIREMENT? THAT IS WATCH YOUR SPENDING AND THAT KIND OF THING. SO LET ME TALK ABOUT FIRST GOALS.

PLEASE.

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

IRAS AND 403-B PLANS FOR THOSE WHO WORK FOR NON-PROFITS, LIKE THE UNIVERSITY. THOSE ARE ALL VERY IMPORTANT WAY OF BASICALLY FUNDING YOUR RETIREMENT. AND ALSO I WANT TO TALK BRIEFLY ABOUT INVESTMENT VEHICLES. MOST PEOPLE USE MUTUAL FUNDS, SAY WITHIN THEIR 401(K) PLANS AT WORK. AND THEY MAY HAVE THEM IN ACCOUNTS THAT ARE NOT REGISTERED, BASICALLY REGULAR MUTUAL FUND ACCOUNTS. TYPICALLY THE MUTUAL FUND INVESTMENTS ARE IN STOCKS, BONDS OR COULD BE CASH SECURITIES, LIKE MONEY MARKET SECURITIES. AND I HAVE A SLIDE UP THAT YOU CAN ACTUALLY PULL IT THAT TALKS ABOUT THE RELATIVE PERFORMANCE. THIS IS A SLIDE OF ONE-YEAR RETURNS AFTER INFLATION. THEY ARE ANNUAL RETURNS. THE FIRST BAR SHOWS THE RETURNS ON THE UPSIDE AND THE DOWN-SIDE CASE FOR STOCKS AND YOU SEE THE UPSIDE CASE THE BEST IT'S UP 66%, THE PERIOD FOR 1802-1919 AND THE WORST CASE DOWN 40. SO YOU ARE TAKING A LOT OF RISK WITH STOCKS RELATIVE TO BONDS. IF YOU GO TO THE NEXT SLIDE, YOU WILL SEE THE VOLATILITY OF THE STOCKS COMES DOWN. THE ORANGE BAR IS BONDS AND THE OTHER IS TREASURY BONDS AND SAY IF YOU ARE INVESTING FOR INTERMEDIATE GOALS, PROBABLY WANT TO GO WITH BONDS, BUT DEFINITELY NOT STOCK BECAUSE OF THE RISK. ON THE THIRD SLIDE, YOU WILL SEE ON A 20-YEAR BASIS, THE STOCKS CONTINUE TO BE THE HIGHEST RATE OF RETURN, BUT EVEN IN THE WORST CASE, THEY STILL GENERATE CLOSE TO 2%, WHEREAS BONDS AND CASH YOU COULD ACTUALLY LOSE MONEY. SO IF YOU ARE LOOKING AT SAVING INVESTMENTS TOWARDS YOUR LONG-TERM RETIREMENT GOALS, TYPICALLY PEOPLE WANT TO INCLUDE SOME STOCK TO MAKE SURE THAT THEY DON'T OUTLIVE THEIR RETIREMENT PORTFOLIO.

TO A SIGNIFICANT PORTION OF OUR AUDIENCE, ONE SUSPECTS THE IDEA OF RISK SENDS A SHIVER UP THEIR SPINE, REALLY NO MATTER WHAT YOUR AGE. THE WHOLE IDEA OF RISK. HOW TO DETERMINE WHAT LEVEL OF RISK? THERE IS RISK IN EVERYTHING. EQUITIES OR BONDS.

ONE OF THE KEY CONCEPTS IN INVESTMENTS OF COURSE IS THE IDEA THAT THERE IS A TRADE-OFF BETWEEN RISK AND RETURN. YOU GET HIGHER EXPECTED RETURNS IN EXCHANGE FOR TAKING HIGHER RISKS. BUT ONE OF THE ISSUES WITH BEING ABLE TO AFFORD RETIREMENT IS IN SOME RESPECTS THE GREATEST RISK OF ALL IS TO NOT TAKE ANY RISK. THAT IS IF YOU INVESTSTRICTLY IN TREASURY BILLS YOU WON'T HAVE ANY VOLATILITY IN YOUR PORTFOLIO OR VERY LITTLE, BUT YOU WILL ALSO BE EATEN ALIVE BY INFLATION. SO THESE ARE THINGS THAT PEOPLE HAVE TO TAKE INTO ACCOUNT.

ALL RIGHT AND WE'RE GOING TO RETURN IN JUST A MOMENT WITH MORE ON THAT SUBJECT AND FIRST CLOSING THE GAP, INVESTMENT STRATEGIS FOR LATE-STARTERS. OWEN MCNULTY, INVESTMENT EXECUTIVE WITH RAYMOND JAMES FINANCIAL AND SIMMONS INVESTOR SERVICES IN JUST A MOMENT. THEY SAY IT'S NEVER TOO LATE TO STOP SMOKING. THAT IS WHAT THE DOCTORS SAY, NEVER TOO LATE TO START INVESTING, BUT VERY FEW OF US HAVE THE SOPHISTICATION TO WEED THROUGH THE ENORMOUS OFFERINGS AND EVEN THE MATERIAL THAT WE GET THROUGH THE MAIL, UNSOLICITED, LET ALONE THOSE WE FIND IN A BANK LOBBY. HOW DO WE GO ABOUT DOING IT?

GOOD QUESTION, STEVE. ONE THING WE TRY TO REMIND PEOPLE IT'S NEVER TOO LATE TO GET STARTED. THERE ARE MANY REASONS WHY PEOPLE GET STARTED LATE, WHETHER THEY HAVE PUT ALL OF THEIR MONEY INTO RAISING THEIR KIDS AND PAY FOR COLLEGE.

CASH FLOW.

YES, AND WITH THE RECENT RECESSION IN 2008, A LOT PEOPLE LOST THEIR JOBS AND INVESTMENTS AND TAKING CARE OF PARENTS, AND A FINANCIAL BURDEN. ONE THING WE TRY TO DO IS CLOSE THE INCOME GAP, BECAUSE WHEN THEY GET READY TO RETIRE THEY WILL HAVE MANY SOURCES OF INCOME. LIKE WE HAVE ON THE NEXT SLIDE THERE, THERE IS DIFFERENT WAYS WITH THE INCOME GAP HOW WE WANT TO CLOSE IT. AND MANY INDUSTRY EXPERTS SUGGEST THAT WE'RE GOING TO NEED AT LEAST 80% OF OUR RETIREMENT INCOME TO KEEP OUR CURRENT STANDARD OF LIVING IN RETIREMENT. OBVIOUSLY THIS IS GOING TO VARY WITH EVERY PERSON, BUT WHEN WE SIT DOWN AND AND GET A PLAN TOGETHER FOR SOMEONE, WE WANT TO MAKE SURE WE CREATE ENOUGH INCOME FOR THEM TO LIVE THE STANDARD OF LIFE THAT THEY WANT TO.

FOR EXAMPLE, SOMEBODY WHO MAKES $10,000 WOULD NEED $8,000 ANNUALLY IN RETIREMENT.

YES. AS WE SEE ON THE SLIDE, THERE ARE DIFFERENT WAYS THAT INCOME COMES IN. YOU KNOW, DR. RENNIE TALKED ABOUT SOCIAL SECURITY. THAT IS GOING TO BE ONE WAY THAT THEY WILL HAVE -- THAT IS GOING TO BE INCOME THAT THEY HAVE EVERY MONTH COMING IN. SOCIAL SECURITY WOULD SEND YOU A FLIER TELLING YOU HOW MUCH YOU WOULD GET AND NOW YOU HAVE TO GO ONLINE AND GET IT. THE SECOND IS QUALIFIED RETIREMENT BENEFITS, PENSION INCOME FOR PEOPLE WHO HAVE PENSION PLANS. OVER THE LAST 20 AND 30 YEARS WE HAVE SEEN PENSION PLANS GO AWAY AND NOT AS MANY PEOPLE HAVE THEM. SO WHAT THAT WILL DO IS INCREASE THE RETIREMENT GAP THAT THEY HAVE TO FUND. HOW DO WE DO THAT? THERE ARE SEVERAL DIFFERENT WAYS HOW WE DO FUND THAT RETIREMENT GAP. ONE THING WE DO IS TELL PEOPLE NOT TO STOP, NO MATTER HOW FAR YOU THINK YOU ARE BEHIND. IF YOU TOOK -- IF YOU HAD $40,000 AND PUT IT IN AN INVESTMENT EARNING 5% IN TEN YEARS YOU WILL HAVE ABOUT $65,000. IF YOU ADDED JUST $100 A MONTH WITH THAT, YOU ARE GOING TO HAVE OVER $70,000. IF YOU DO OVER $200 A MONTH, YOU WILL HAVE ABOUT $97,000 A YEAR. AND THAT ALL COMES BECAUSE OF COMPOUND INTEREST. ALBERT EINSTEIN SAID COMPOUND INTEREST IS THE MOST POWERFUL FORCE IN THE UNIVERSE AND IF WE PULL UP THE NEXT SLIDE WE LOOK AT THE RULE OF 72. YOU TAKE THE RATE OF RETURN YOU WILL GET AND DIVIDE INTO 72. 6%, YOUR MONEY DOUBLES EVERY 12 YEARS AND THIS IS IMPORTANT, BECAUSE WE'RE GOING TO LIVE A LONG TIME -- WE PLAN ON LIVING A LONG TIME PAST OUR RETIREMENT. NO ONE KNOWS WHEN WE WILL GO AND I LIKE TO SAY WE WANT MORE DOLLARS THAN DAYS OUT THERE. SO IT'S IMPORTANT TO KNOW BECAUSE ALSO AS YOU TALKED ABOUT INFLATION, IF THE COST OF LIVING IS GOING UP AT 3% A YEAR AND DIVIDE THAT INTO 72, YOUR COST OF LIVING WILL DOUBLE IN 24 YEARS. SO RETIRING AT 60, BY THE TIME YOU ARE 84 THE COST OF LIVING HAS PROBABLY DOUBLED. I WANTED TO TALK ABOUT HOW TO TAP YOUR ASSETS ONCE YOU DO GET INTO RETIREMENT. THERE ARE SEVERAL WAYS. MANY PEOPLE THINK WHEN YOU RETIRE, YOU ROLL OVER YOUR 401(K) AND DRAW OFF OF IT. THE PROBLEM IS THAT YOU WANT TO MAKE IT LAST AS ALONG AS YOU DO. AND SO WE WANT TO FIND INVESTMENTS THAT GENERATE INCOME FOR THEM. A LOT OF PEOPLE DON'T THINK OF THE STOCK MARKET AS A PLACE TO GET INCOME FROM. BUT WHEN YOU HAVE -- YOU BUY COMPANIES THAT PAY DIVIDENDS, THAT IS A GOOD WAY FOR THEM TO GET INCOME AND IN SOME CASES RISING INCOMES. WHETHER IT'S INDIVIDUAL STOCKS, WHETHER IT'S MUTUAL FUNDS WITH EQUITIS THAT PAY DIVIDENDS OR INDIVIDUAL BONDS THAT PAY INTEREST. IT'S A WAY TO GENERATE INCOME FOR THEIR RETIREMENT. ALSO WHEN WE'RE LOOKING AT HOW TO TAP THE ASSETS OUT OF THE ACCOUNT, YOU NEED TO LOOK AT THE TAX IMPLICATIONS, WHETHER IT BE A TAXABLE ACCOUNT? TAX DEFERRED ACCOUNT OR LIKE A ROTH IRA, WHEN IT'S TAX-FREE ACCOUNT. OBVIOUSLY EVERY SITUATION IS DIFFERENT AND YOU NEED TO FIGURE OUT WHERE ARE THE TAX IMPLICATIONS ONCE YOU TAKE THEM OUT.

RIGHT.

A COUPLE OF THINGS THAT PEOPLE CAN DO, ONCE YOU DO RETIRE. THERE ARE A COUPLE OF WAYS YOU CAN GENERATE INCOME, WHETHER IT IS JUST GO TO PART-TIME. THAT MAY GET YOU SOME BENEFITS AS WELL AND PRODUCE A LITTLE MORE INCOME. IF THERE IS A HOBBY YOU ENJOY, MAKE IT A INCOME-PRODUCER HOBBY, A CONSULTANT AND HAVE FUN WITH IT. BECAUSE IF YOU ARE PLANNING ON RETIRING YOU WANT TO ENJOY. IT YOU MENTIONED THE FREEDOM AND THAT IS ONE WAY TO HAVE FUN AND CREATE THAT FREEDOM.

SHOULD SOMEONE IN THEIR 50S RIGHT NOW, SAY 55, 60, WHAT IF THEY ARE SAYING TO THEMSELVES, ALAS, TOO LATE, WHAT WOULD YOU TELL THEM?

IT'S NEVER TOO LATE. YOU WILL HAVE TO DO SOMETHING TO CREATE THAT INCOME. IT MAY NOT BE THE INCOME THAT THEY WANT. THEY MAY HAVE TO WORK LONGER THAN THEY WANT TO, BUT ONE OF THE BIGGEST THINGS I COME ACROSS IS PEOPLE WHO HAVE STARTED LATE AND SAY, YOU KNOW, I AM BEHIND. SHOULD I BE MORE AGGRESSIVE AND TRY TO CATCH UP FASTER? WHAT THEY HAVE TO MATTER IS MORE RISKS EQUALS MORE RETURN, BUT THAT DOOR SWINGS BOTH WAYS. IT ALSO MEANS YOU COULD HAVE MORE LOSS AS WELL. SO TO CREATE A PLAN, THEY HAVE TO BE COMFORTABLE WHAT THEY OWN.

AND FROM THAT POINT FORWARD, DISCIPLINE IS INVOLVED AS WELL

IT'S VERY IMPORTANT. THE MARKET IS GOING TO GO UP-AND-DOWN. IT'S INHERENTLY NON-LINEAR. SO YOU WILL ALWAYS HAVE THAT VOLATILITY, THAT WON'T GO AWAY. BUT WHEN WE ARE BUYING, YOU HAVE TO REMEMBER WHY YOU ARE BUYING THOSE INVESTMENTS. IF IT'S A MULTIFUND OR STOCK THAT PRODUCES INCOME. ONCE YOU GET INTO THAT RETIREMENT MODE, MAYBE DOWN-SIZE AND MAYBE YOU DON'T NEED THAT LARGE HOUSE THAT YOU RAISED YOUR KIDS IN OR MOVE TO A SMALL HOUSE OR CONDO, IF YOU DON'T WANT TO DO THE YARD UPKEEP AND ALL OF THAT GOOD STUFF. SO THERE ARE DIFFERENT STRATEGIES INVOLVED. HOW MUCH DO YOU WANT TO SPEND? YOU HAVE TO SAVE THAT AMOUNT AND AS WE TALKED ABOUT EARLIER CLOSING THE INCOME GAP.

WE WILL DELIGHT IN TAKING YOUR QUESTIONS AT THE END OF THE BROADCAST. 800-662-2386 AND EMAIL QUESTIONS AT PAFFAIRS@AETN.ORG. INVESTING WISELY TO AVOID THE FINANCIAL RISK OF LONGER LIFE EXPECTANCY. GLENN ATKINS, FINANCIAL ADVISOR AND FIXED INCOME PORTFOLIO MARK WITH GARRISON FINANCIAL, IN A MOMENT. GLENN TALKED THROUGHOUT THE PROGRAM ABOUT RISK AND THE ELEMENT OF RISK IN ANY KIND OF FINANCIAL INVESTMENT. YOU LOOK AT TWO OTHER BIG RISKS.

ONE OF THE THINGS THAT WE TRY TO EDUCATE INVESTORS ON, STEVE, RELATED TO RETIREMENT IS THE RISK OF OUTLIVING YOUR MONEY. AND THEN INFLATION. WE LIKE TO EDUCATE CLIENTS THERE ARE TWO KINDS OF RISK THAT RELATE TO FINANCIAL MARKETS AND INVESTING. ONE IS THE RISK OF BEING IN THE MARKET, LIKE WE HAVE ALL EXPERIENCED IN THE LAST 10, 15 YEARS AND EVEN BACK TO THE GREAT DEPRESSION AND MARKET CRASH OF THE '20S. THE OTHER RISK IS THE RISK OF RUNNING OUT OF MONEY BEFORE YOU DIE. LIKE IT OR NOT, INVESTORS WILL BE PUT INTO A SITUATION OF TAKING MARKET RISK AND TRYING TO EMBRACE IT, OR ON THE BACKSIDE, TAKING THE RISK OF RUNNING OUT OF MONEY BEFORE THEY DIE. SO IT'S IMPORTANT TO NOT BE TOO RISKY AND IT'S IMPORTANT TO NOT BE TOO CONSERVATIVE. A LOT OF TIMES AS INVESTORS APPROACH RETIREMENT, THEY TEND TO GET MORE CONSERVATIVE. BUT THEY HAVE TO PLAN ON LIVING IN RETIREMENT ANOTHER 25 OR 30 YEARS OF LIFE EXPECTANCY. AND IT'S DIFFICULT TO PLAN FOR THAT. THE OTHER THING THAT HUGELY AFFECTS THE SUCCESS OF RETIREMENT IS THIS NOTION OF INFLATION AND INFLATION IS NOTHING MORE THAN THE RISE IN COST OF LIVING YEAR IN AND YEAR OUT, AS YOU GO THROUGH TIME. AND THAT CAN HAVE A HUGE IMPACT ON INVESTORS AND THEIR SUCCESS IN THE 20-30 YEARS OF THEIR RETIREMENT. THE OTHER KEY THING IS FOR INVESTORS TO SET THE RIGHT WITHDRAWAL RATE. IN OTHER WORDS,, WHAT PERCENTAGE OF THEIR INVESTMENT PORTFOLIO CAN THEY SAFELY WITHDRAW EVERY YEAR IN RETIREMENT AND LIVE OFF OF? HISTORICALLY.

WITHOUT OUTLIVING.

WITHOUT OUTLIVING THEIR INVESTMENTS, EXACTLY. HISTORICALLY, INVESTOR PROFESSIONALS WOULD SAY SAFELY TAKING 5-6% AND IF STOCKS RETURN 10% ANNUALLY AND YOU TAKE OUT 5-6 AND GET HIT WITH INFLATION OF 3 YOU ARE BARELY MAINTAINING YOUR STANDARD OF LIVING, BUT WITH THE KINDS OF MARKETS WE HAVE BEEN IN LAST 10 TO 20 YEARS, THE MORE APPROPRIATE WITHDRAWAL RATE IS SOMETHING WITHIN THE 4% RANGE, BECAUSE MARKETS HAVEN'T PERFORMED AS WELL IN THE LAST 20 TO 30 YEARS AS THEY HAVE HISTORICALLY. SO I THINK THE CURRENT THINKING IS TO PERHAPS LOWER THAT WITHDRAWAL RATE TO SOMETHING IN THE PERHAPS THE 4% RANGE.

ON BASIS OF BETTER SAFE THAN SORRY, JUST BEING CONSERVATIVE.

BETTER SAFE THAN SORRY. YOU KNOW, AGAIN, GETTING BACK TO THE POINT OF NOT RUNNING OUT OF MONEY BEFORE YOU DIE. WE HAVE GOT A SLIDE HERE, I THINK, THAT SHOWS SOME LIFE EXPECTANCIES, IF AN INVESTOR WOULD RETIRE AT AGE 65. THE TAKEAWAY FROM THIS SLIDE, STEVE, INVESTORS HAVE TO PLAN TO LIVE ANOTHER 25 OR 30 YEARS. AND MANY OF THEM DO. WE HAVE GOT ANOTHER SLIDE HERE THAT IS REALLY, TO ME, THE KEY OF THIS WHOLE NOTION OF NOT OUTLIVING YOUR MONEY, YES, NOT OUTLIVING YOUR MONEY. EVEN AT AN INFLATION RATE OF LET'S SAY 3% ANNUALLY, THE COST OF LIVING FOR A RETIREE AT 3% INFLATION ANNUALLY IS GOING TO DOUBLE IN ABOUT 22 TO 23 YEARS. SO IF A MAN AND WIFE GO TO THE GROCERY STORE TODAY, AND IT COSTS $100, AND THEY ARE 65,20, 25 YEARS FROM NOW, THAT SAME TRIP TO THE GROCERY STORE IS GOING TO COST THEM $200. AND THEY HAVE GOT TO PLAN FOR THAT. AND THEY HAVE GOT TO MAKE SURE THAT THEY HAVE THE RIGHT MIX BETWEEN STOCKS AND BONDS TO EARN THAT RETURN TO NOT OUTLIVE THEIR MONEY.

HARD TO IMAGINE, BUT THERE THEY ARE, THOSE ARE THE NUMBERS.

THEY ARE, INDEED. THEY ARE, INDEED. AND YOU KNOW, SOMEWHERE BETWEEN TAKING TOO MUCH RISK AND PUTTING THE MONEY UNDER THE MATTRESS IS A MIX BETWEEN STOCKS AND BONDS THAT INVESTORS CAN BE COMFORTABLE WITH AND SLEEP AT NIGHT AND MEET THEIR GOALS.

I THINK IT WAS DR. RENNIE EARLIER ON THE PROGRAM WHO SAID THERE IS THE RISK OF NOT BEING IN THE MARKET. THAT MAY BE THE GREATEST RISK.

THERE IS A LOT OF RISK TO THAT. IF YOU LOOK AT MARKET PERFORMANCE BACK SINCE THE 1920S, WHICH INCLUDES THE GREAT DEPRESSION, A WORLD WAR, SEVERAL REGIONAL CONFLICTS, THE OIL SHOCK OF THE '70S, ALL OF THOSE EVENTS WE HAD, THE TECH CRASH AND FINANCIAL CRISIS OF 2008. IF YOU MISSED SOMETHING ON THE ORDER OF THE BEST 42 OR 44 MONTHS SINCE THE 1920S, YOU MIGHT AS WELL HAD YOUR INVESTMENTS IN CASH OR CDS. SO IT'S IMPORTANT TO BE IN THE MARKET AND EMBRACE THE RISK OF THE MARKET THAT WE TALKED ABOUT. OR YOU ARE GOING TO BE FORCED TO EMBRACE THE RISK OF RUNNING OUT OF MONEY BEFORE YOU DIE. SO WE WOULD COUNSEL INVESTORS AND RETIREES TO TAKE THAT MARKET RISK AND UNDERSTAND IT, AND USE A PROFESSIONAL TO MANAGE THROUGH IT, RATHER THAN WAKE UP 20 YEARS DOWN THE ROAD, 25 YEARS DOWN THE ROAD AND BE COMPLETELY OUT OF MONEY.

IS IT POSSIBLE FOR THOSE WHO MAY BE ON THE CUSP OF RETIREMENT ALREADY OR CERTAINLY WITHIN SIGHT, TOO FIND A COMFORT LEVEL AND STILL GET A RETURN?

IT IS POSSIBLE.

IF THEY HAVE NEVER BEEN IN EQUITIES BEFORE OR IN THE MARKET BEFORE? IF THEY HAVE BEEN STRICTLY CD PEOPLE?

IT'S POSSIBLE AND THE KEY TO IT IS DON'T TAKE MORE RISK THAN YOU NEED TO MEET WHATEVER YOUR GOALS AND DIVERSIFY THE PORTFOLIO, WHETHER THAT IS THROUGH FOUR OR FIVE MUTUAL FUNDS OR 20 OR 30 STOCKS, 40 STOCKS, PERHAPS, OR THE SAME THING IN BONDS. SO IN OTHER WORDS, DON'T PUT ALL OF YOUR EGGS IN ONE BASKET.

RIGHT.

IF AN INVESTOR IS IN FOUR STOCKS AND TWO OF THEM ARE DOWN 50%, NOBODY WINS. BUT IF THEY ARE IN A VERY DIVERSIFIED POOL LIKE A MUTUAL FUND FOR EXAMPLE, THOSE KIND OF MOVEMENTS IN INDIVIDUAL STOCKS TEND TO WORK THEMSELVES OUT OVER TIME.

PROTECTING YOUR INVESTMENT, THE BEST DEFENSE IS A VERY WISE AND SAFE INVESTOR AND WE'RE GOING TO TALK ABOUT THAT IN A MOMENT WITH COMMISSIONER A. HEATH ABSHURE WITH THE ARKANSAS SECURITIES DEPARTMENT. STAY TUNED. AND BEFORE WE GO TO THE COMMISSIONER, A REMINDER THAT YOUR PHONE CALLS ARE EAGERLY ANTICIPATED WITH YOUR QUESTIONS FOR OUR PANEL OF EXPERTS, 1-800-662-2386 AND EMAIL AT PAFFAIRS@AETN.ORG.

COMMISSIONER, WELCOME TO THE PROGRAM.

ONE I DID WANT TO ADD WAS UNDERSTANDING LIQUIDITY NEEDS. IT'S VERY IMPORTANT FOR SENIOR CITIZENS TO UNDERSTAND ON THE FRONT END HOW MUCH IT'S GOING TO COST THEM TO GET OUT OF AN INVESTMENT, BUT ALSO WHETHER OR NOT A MARKET FOR THAT INVESTMENT IS ACTIVE? AND NOTHING IS GOING TO BE MORE UNFORTUNATE IF A SENIOR CITIZEN ENCOUNTERS A NEED FOR IMMEDIATE FUNDS AND LEARNS THAT THEY ARE EITHER PAYING A SUBSTANTIAL WITHDRAWAL PENALTY, LIKE IS OFTEN THE CASE WITH VARIABLE ANNUITIES OR IF THERE IS NOT ACTUALLY A MARKET OUT THERE FOR THE SECURITY THAT THEY NEED TO LIQUIDATE, WHICH IS SOMETIMES THE CASE IN THINGS LIKE NON-TRADED REAL ESTATE INVESTMENT TRUSTS OR BUSINESS DEVELOPMENT COMPANIES.

STOCK IN A VIDEO RENTAL COMPANY.

EXACTLY. SO I AT THINK IT'S VERY IMPORTANT FOR SENIOR CITIZENS TO

AND WE'RE BACK WITH ALL FOUR MEMBERS OF OUR PANEL AND COMMISSIONER, I WOULD LIKE TO GO BACK TO YOU, IF I CAN. LET ME GO DOWN THE LINE. AND THIS ISN'T WITH THE SPECIFICS OF INVESTING, BUT GOES TO THE LEVEL OF TRUST THAT I THINK REGARDLESS OF AGE, WE'RE DOING THIS BROADCAST AND HOURS EARLIER TODAY CAME WORD OF A POTENTIAL 13 OR LARGER $13 BILLION FINE OR SETTLEMENT WITH ONE OF THE MOST RESPECTED OR ONE OF THE LARGEST INVESTMENT BANKING FIRMS IN THE COUNTRY. WE'RE COMING THROUGH A FIVE OR SIX OR EIGHT-YEAR PERIOD WHERE ONE OF THE MOST VENERABLE HOUSES IN THE AMERICAN CAPITAL WENT UNDER AND OTHERS WERE ON THE SAVED BY MASSIVE GOVERNMENT INTERVENTION. ARE PEOPLE MORE RELUCTANT TO GET IN?

IT ABSOLUTELY DOES AND THAT IS WHAT WE'RE SEEING WITH SENIOR INVESTORS RIGHT NOW. THEY HAVE SEEN THE VALUE OF THEIR RETIREMENT PORTFOLIOS OF STOCKS, MUTUAL FUNDS, MAYBE T-BILLS, CDS, DROP. AND THEY SEEN THE HORROR STORIES OF WHAT IS GOING ON WITH BIG-BOARD STOCKS AND WITH THE BIG INVESTMENT BANKING FIRMS AND THEY ARE MOVING INTO WHAT ARE CALLED SO-CALLED ALTERNATIVE INVESTMENTS, THAT HAVE BEEN HISTORICALLY HELD BY INSTITUTIONALLY INVESTORS AND CERTAIN ASPECTS MAKE THEM THE SUITABILITY FOR A RETIREE VERY QUESTIONABLE. THEY ARE TYPICALLY VERY SPECULATIVE AND VERY ILLIQUID, BUT THE TRADITIONAL FEARS OF MARKET.

ILLIQUID, MEANING TOUGH TO MARKET.

TAKE THE EXAMPLE OF A NON-TRADED REIT. YOU OWN AN INTEREST IN AN ENTITY THAT OWNS REAL ESTATE. WELL, THERE MIGHT NOT BE -- I MEAN, THE ENTITY MIGHT HAVE A BUY-BACK PROGRAM, BUT USUALLY THOSE ARE VOLUNTARY. SO YOU ARE STILL GOING TO GET A RETURN, BUT YOU CAN'T GET OUT. YOU MIGHT BUY A PRIVATELY PLACED SECURITY IN A SMALL COMPANY AND THERE IS JUST NO MARKET FOR IT. THE SAME THING WITH PROMISSORY NOTES AND ALL OF THOSE THINGS AND WE'RE SEEING INVESTORS THAT HISTORICALLY HAVEN'T INVESTED IN THOSE TYPES OF SECURITIES AND INVESTING IN THEM BECAUSE THEY ARE SCARED OF TRADITIONAL MARKET AND THEY HAVE SEEN WHAT HAPPENED TO THEIR 401(K) PLAN OR THEIR IRA AND THEY HAVE SEEN THE VALUES DROP AND ALSO THE NEED FOR YIELD ON A DAY TO DAY BASIS TO PAY LIVING EXPENSES.

GENTLEMEN, ANY THOUGHTS ?

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

I AGREE WITH THAT AND ONE THING WITH OUR CLIENTS YOU WANT THEM TO OWN QUALITY. LIKE THE COMMISSIONER WAS SAYING, IF YOU BUY THAT NON-TRADED REIT, IT'S ILL-LIQUID AND WE WANT OUR CLIENTS TO OWN QUALITY NAMES THAT HAVE PAID DIVIDENDS FOR A LONG TIME AND THAT ARE GOING TO CONTINUE TO PAY THOSE DIVIDENDS AND GIVING THEM THAT INCOME DURING RETIREMENT.

DR. RENNIE?

JP MORGAN THAT YOU GAVE THE EXAMPLE OF THE $13 BILLION FINE, THE MARKET MAY HAVE BEEN EXPECTING A CERTAINLY SUBSTANTIALLY BIGGER FINE AND IT'S RELATED TO WASHINGTON MUTUAL, WHO THEY TOOK OVER AS A FAVOR TO THE GOVERNMENT AT THE TIME. WITHOUT COMMENTING ON THE SPECIFICS OF THAT, SOMETHING THAT GLENN MENTIONED, THE IMPORTANCE OF DIVERSIFYING YOUR INVESTMENTS SAY WITH A STOCK PORTFOLIO AND ALSO WITH BONDS AND OTHER SECURITIES, BUT DIVERSIFICATION IS KEY. SO EVEN IF A COMPANY GETS INTO TROUBLE AND HAS TO PAY A $13 BILLION FINE, IF YOU ARE IN A DIVERSIFIED PORTFOLIO YOU WILL SPREAD THAT RISK AMONG OTHER COMPANIES.

WOULD ANY OF YOU JUST REFLECT ONLY ANNUITIES AS A VEHICLE FOR RETIREMENT?

I THINK IT'S A GOOD QUESTION.

PROS AND CONS?

I THINK IT'S DEFINITELY GOING TO DEPEND ON THE PERSON AND THEIR NEEDS. THERE IS ALL KINDS OF ANNUITIES OUT THERE. SOME OF THEM MAY BE GOOD, SOME MAY BE BAD, BUT IT'S GOING TO BE WHAT THAT PERSON'S NEEDS ARE? WE TALKED ABOUT EARLIER COMING UP WITH A PLAN. EVERYBODY'S PLAN IS DIFFERENT. THERE IS NOT ONE SPECIFIC PLAN. YOU CAN'T SAY YOU NEED THIS ALLOCATION, YOU NEED THIS VEHICLE. THERE IS NOT JUST ONE INVESTMENT FOR EVERYBODY.

IT'S LIKE WE MENTIONED EARLIER FOR SOMEONE TO GIVE REASONABLE INVESTMENT ADVICE, THEY HAVE TO UNDERSTAND A LOT ABOUT THE CLIENT. AS WE MENTIONED THE CLIENT'S AGE, RISK, TOLERANCE, ALL OF THESE THINGS. THE ONE THING ABOUT ANNUITIS THAT ARE A LITTLE DIFFERENT THAN THE OTHER INVESTMENTS, IN ARKANSAS, CLIENT DO NEED TO UNDERSTAND THAT THE DUTIES OWED BY THE SELLERS OF THOSE PRODUCTS ARE MUCH DIFFERENT. AN INSURANCE AGENT THAT IS SELLING AN ANNUITY DOESN'T OWE THE DUTY TO A CLIENT THAT A BROKER-DEALER OWES, WHICH IS KIND OF QUASI-FIDUCIARY. I'M STRETCHING A LITTLE BIT, BUT WITH AN INVESTMENT ADVISOR IT'S AN OUTRIGHT FIDUCIARY DUTY. SO THERE IS A BIG DIFFERENCE AND TYPICALLY WHAT WE SEE IN THE FREE-LUNCH SEMINARS ARE VARIABLE ANNUITY SALES AND I'M NOT SAYING THAT VARIABLE ANNUITIS ARE A BAD INVESTMENT. CERTAINLY FOR SOME INVESTORS I THINK THEY WOULD MAKE HAD A PERFECTLY GOOD PART OF AN OVERALL PORTFOLIO, BUT TO THE ISSUE THAT I HAVE OR THE FREE-LUNCH SEMINARS WITH THE INSURANCE AGENT, WHO HAS NO OBLIGATION TO ANYONE THERE AND STANDS UP IN THE FRONT OF THE ROOM SAYING THAT EVERYBODY NEEDS TO BUY AN ANNUITY AND MAKING A RECOMMENDATION BASED ON NOT KNOWING THEM, HE IS NOT TRYING TO OFFER PERSONALLY INVESTMENT ADVICE HE IS TRYING TO MOVE A PRODUCT.

WE DON'T DO ANNUITIS IN OUR PRACTICE. ONE SPECIFIC CASE I HAVE SEEN THEM WORK IF YOU HAVE AN INVESTOR WHO HAS INHERITED SOME MONEY AND THEY TEND TO BE SPENDY AND THEY TEND TO SPEND A LOT OF IT, IT MIGHT BE AN APPROPRIATE TO PUT THEM IN AN ANNUITY WITH A FIXED CASH FLOW OVER A LONGER PERIOD OF TIME.

WHO DO THEY FIT?

EXACTLY, WHO DO THEY FIT? SO IF YOU HAVE AN INVESTOR WHO SPENDS A LOT OF MONEY AND MIGHT RUN OUT OF MONEY BEFORE THEY DIE IT MIGHT BE APPROPRIATE.

ONE VIEWER WANTS TO KNOW ABOUT MUNICIPAL BONDS.

IT'S THE SAME ANSWER AS THE VARIABLE ANNUITIES CASE. OVERALL, FIXED INCOME INVESTMENTS YOU LOOK WHETHER YOU HAVE A TAXABLE OR TAX-FREE ISSUE? YOU KNOW, MOST MUNICIPAL BONDS HAVE SOME SORT OF CREDIT ENHANCEMENT, WHETHER IT'S A LETTER OF CREDIT OR GUARANTEE FROM A CERTAIN GOVERNMENT ENTITY. A LOT OF TIMES THESE ARE CONDUIT FINANCING AND YOU HAVE TO LOOK AT WHAT THE UNDERWRITING ENTITY IS USING THE MONEY FOR? AGAIN I THINK THAT IS THE HARDEST THING TO TELL PEOPLE WHEN THEY ASK THE QUESTIONS. ARE MUNICIPALS GOOD? IT DEPENDS ON YOU. IT DEPENDS ON WHERE YOU ARE, WHAT YOU WANT TO DO AND THE LEVEL OF INCOME? AND LIKE THE THINGS THAT WE TALKED ABOUT EARLIER, YOU DON'T WANT TO BE AGGRESSIVE. YOU DON'T WANT TO BE TOO CONSERVATIVE AND ALL OF THESE THINGS CAN FIT IN THERE SOMEWHERE.

ESPECIALLY IN THE CASE OF MUNIS, WITH PEOPLE WHO ARE AT THE HIGH-MARGINAL TAX BRACKET BECAUSE THEY WILL BENEFIT BEST. THAT IS JUST ONE OF THE MANY FACTORS THAT GOES INTO THE ASSESSMENT THAT MR. ABSHURE IS TALKING WITH ABOUT RESPECT TO IDENTIFYING THE MIX.

A CARROLL COUNTY VIEWER SEEMED RATHER IRRITATED HE IS GOING TO BE COMPELLED TO START TAKING MONEY FROM A VERY LARGE ANNUITY AT 70.5. SUGGESTING THAT PERHAPS HE WOULD RATHER LEAVE IT THERE THAN TAKE IT. IS THAT ACCURATE?

THAT IS ACCURATE. IF IT'S AN IRA ANNUITY, IT IS. THERE IS AN IRS REGULATION THAT SAYS WHEN THE YEAR SOMEONE TURNS 70.5 THEY HAVE TO TAKE A REQUIRED MINIMUM DISTRIBUTION ORR MD, BECAUSE THAT MONEY INSIDE THE IRA HAS NOT BEEN TAXED BEFORE. IT'S PRE-TAXED MONEY. SO BASICALLY, WHAT THE GOVERNMENT IS SAYING THAT WE WANT TO TAX YOU ON SOME OF IT BEFORE YOU DIE. SO THERE IS THAT -- THAT IS AN IRS REGULATION THAT THEY HAVE.

NICE.

YES, THAT IS A REGULATION. AND THE PENALTIES NOT TO DO IT ARE VERY STIFF.

FROM WASHINGTON COUNTY VERBATIM, THIS INDIVIDUAL IS 59 HAS WORKED VARIOUS OR DIFFERENT PLACES AND HAS RETIREMENT FUND ACCOUNTS -- NOT CLEAR, IN SEVERAL PLACES. WOULD IT BE BEST TO CONSOLIDATE THOSE IN AN IRA IF POSSIBLE?

I THINK IT WOULD BE BEST, JUST FROM A MATTER OF PURE SIMPLICITY. IF YOU CONSOLIDATED AT ONE PLACE, YOU WOULD HAVE EVERYTHING AT ONE CONSOLIDATED STATEMENT, EASIER TO VIEW, EASIER TO KEEP TRACK OF. THE COUNTERARGUMENT TO THAT GETS TO THE THEME THAT WE TALKED ABOUT WAS DIVERSIFICATION. SO THE FLIP ARGUMENT TO THAT IS HAVE ONE OR TWO ADVISORS OR BROKERS, DEPENDING ON THE SIZE OF THE PORTFOLIO.

AND THE OTHER THING TO CONSIDER WHEN YOU HAVE MULTIPLE RETIREMENT ACCOUNTS HELD WITH MULTIPLE EMPLOYEES YOU ARE NO LONGER THERE AND NOT ELIGIBLE TO WEIGH IN QUESTIONS TO THE PLAN AND YOU ARE AT PERIL OF YOUR FORMER EMPLOYER AND CERTAIN CHANGES CAN MAY MADE NOT IN YOUR BEST INTEREST OR IN YOUR BEST INTEREST.

FROM DOWN SOUTH, A QUESTION THAT A LOT OF PEOPLE HAVE PARTICULARLY WHEN THEY TURN 60, 61, AT WHAT AGE DO I SEE YES? OR SHOULD I SAY YES TO SOCIAL SECURITY?

THAT IS GOING TO GO BACK TO WHAT THE COMMISIONER SAID EARLIER, EVERYBODY IS DIFFERENT. EVERYBODY'S NEEDS ARE DIFFERENT. WHAT I SAY WHEN I TALK TO CLIENTS IS THAT YOU HAVE SOME SAY THAT I WANT TO GET IT BECAUSE I WANT TO GET IT BEFORE IT GOES AWAY, YOU KNOW? THAT IS JUST SOME PEOPLE THINKING. YOU KNOW, I'M NOT SAYING IT'S GOING AWAY, BUT THAT IS WHAT THEY ARE THINKING. THE OTHER THING TO REMEMBER, TOO, THE LONGER YOU WAIT TO TAKE IT, THE MORE INCOME THAT THEY HAVE GOING DO YOU REMEMBER THE ROAD. BUT AGAIN, IT'S GOING TO BE CLIENT-SPECIFIC,

HOW ARE YOU FEELING TODAY?

WELL, WHAT THEIR INCOME NEEDS ARE? IF THEY DON'T NEED IT, IT MAY GROW FOR THEM.

THE HARD PART TO THAT IS THE SIMPLE ANSWER TO IT IS IF YOU KNEW EXACTLY WHEN YOU WERE GOING TO DIE, YOU WOULD KNOW EXACTLY WHEN TO BEGIN TAKING SOCIAL SECURITY, BECAUSE AS OWEN SAID, THE LONGER YOU WAIT, THE MORE YOU GET. BUT IT LITERALLY DEPENDS ON YOUR DATE OF DEATH, WHAT THAT DECISION IS? SO I THINK ONE OF THE BEST THINGS THAT AN INVESTOR COULD DO WHEN THE TIME COMES, LOOK AT THEIR HEALTH, LOOK AT THEIR PLANS, LOOK AT THEIR DIVERSIFICATION, ALL OF THE THINGS THAT WE HAVE TALKED ABOUT TONIGHT AND MAKE A DECISION THEN.

PULASKI COUNTY, WHO HAS ANY BUSINESS MESSING AROUND WITH GOLD? COMMISSIONER?

WELL, GOLD ITSELF IS ACTUALLY NOT A SECURITY. IT'S A COMMODITY AND UNFORTUNATELY IT DOESN'T FALL UNDER MY JURISDICTION. HOWEVER, I DO HAVE AN UPON.

SHOOT.

GOLD PRICES AND LITERALLY A LOT OF FOREIGN CURRENCY PRICES ARE SUBJECT TO FORCES THAT DRIVE THE PRICES UP-AND-DOWN THAT ARE NOT IN ANY WAY SIMILAR TO WHAT WE SEE IN THE EQUITY MARKETS OR IN ANY WAY SIMILAR TO THE DEBT MARKETS. YOU ASSUME IN THE FOREIGN CURRENCY MARKETS, AN EQUITY MARKET YOU ASSUME THERE IS TRANSPARENCY AND THERE IS NO NEFARIOUS ACTIVITY AND ANYBODY TRYING TO AFFECT STOCK PRICES. THERE IS NOT A COUNTRY OUT THERE THAT IS NOT TRYING TO AFFECT ITS CURRENCY VALUE AND GOLD IS THE SAME WAY. GOLD MOVES, PRECIOUS METALS MOVED BASED UPON ATTRIBUTES THAT ARE VERY MUCH UNIQUE TO THOSE GOLD AND PRECIOUS METALS AND TYPICALLY IT'S PRETTY SPECULATIVE. YOU HAVE TO HAVE A SPECIALIZED KNOWLEDGE. I WON'T TOUCH THEM.

I WOULD AGREE. IF YOU GO BACK TO WHEN THE DOLLAR WENT OFF THE GOLD STANDARD, I BELIEVE IN THE NIXON ADMINISTRATION, '74, FROM THAT TIME THROUGH PRESENT DAY, GOLD HAS NOT KEPT UP WITH INFLATION AS AN INVESTMENT. NOW IF YOU LOOK AT IT OVER THE LAST TEN YEARS OR SO, IT ABSOLUTELY HAS BEEN A GOOD INVESTMENT, BUT FROM THE TIME OF 1974 OFF THE GOLD STANDARD THROUGH TODAY, GOLD HASN'T EVEN KEPT UP WITH INFLATION. SO YOU ARE LOSING STANDARD OF LIVING IF YOU HAD BEEN IN GOLD SINCE FROM 1974 TO PRESENT DAY. SO IT GETS BACK TO WHAT THE COMMISSIONER SAID, IT'S VERY SPECULATIVE AND ITS PRICED ON THINGS THAT DON'T HAVE A LOT OF -- THEY ARE NOT BASED ON AN INTRINSIC VALUE. THEY SAY GOLD IS AN INTRINSIC INVESTMENT, BUT, IN FACT IT'S VERY ILL-LIQUID. YOU CAN'T EAT IT. IT COSTS TO STORE IT AND IT HASN'T KEPT UP WITH INFLATION HISTORICALLY.

A SOPHISTICATED INVESTOR SHOULD NOT APPLY.

AT THE RISK OF BEING A SLIGHT CONTRARIAN HERE, I AGREE THAT GOLD AND OTHER COMMODITIS ARE DRIVEN BY OTHER FACTORS AND FACTORS THAT TYPICALLY DRIVE STOCK RETURNS OR WHAT IS HAPPENING WITH BOND MARKETS, BOND RETURNS. BUT IF YOU HAVE A PROFESSIONAL INVESTOR ADVISOR WHO USES AS PART OF A DIVERSIFIED PORTFOLIO, IT MIGHT ADD SOME VALUE TO A PORTFOLIO. AGAIN, YOU REALLY NEED A PROFESSIONAL, EXCELLENT ADVISOR.

WE SEE THIS EVERY TIME THE MARKET GOES SOUTH. INEVITABLY THERE IS SOMETHING THAT IS OFFERED -- I CALL IT NEWSPAPER FRAUD, BUT WHEN YOU READ SOMETHING IN THE NEWSPAPER, IT ADDS LEGITIMACY TO A FRAUD SCAM BUILT AROUND THAT STORY, WHETHER IT'S IN RESPONSE TO THAT STORY OR ON THE BASIS OF THAT STORY. I AM SURE YOU HAVE SEEN THE SAME THING. IT'S THE PUSH FOR EVERYONE TO INVESTMENT IN IRAQI DENARDS FOLLOWING THE WAR IN IRAQ AND BUYING $3,000 WORTH OF DENARDS. WHAT ARE GOING TO DO WITH THEM? WHERE YOU ARE GOING TO SELL THEM? WE DON'T KNOW IRAQ WILL HAVE AN ECONOMY IN A COUPLE OF YEARS. PEOPLE BUY INTO THAT AND THE MARKET IS SOUTH AND READING WHEN THE WAR IS OVER AND THEIR ECONOMY IS BACK UP, I AM BUYING LOW AND COMING BACK HIGH. THAT ASSUMES THAT THE ECONOMY OF EVERY OTHER COUNTRY ON THE FACE OF THE EARTH STAYS STAGNANT AT THE SAME TIME.

SURPRISE, WE HAVEN'T GOTTEN THIS ONE SO FAR AND OUR TIME IS LIMITED. IT'S ALL OVER THE AIRWAYS FOR REVERSE MORTGAGES, GOOD, BAD, WHAT?

IT DEPENDS WHAT YOU WANT TO DO WITH IT. THE ONE THING I WILL SAY IF SOMEONE IS ENCOURAGING YOU TO ENTER INTO A REVERSE MORTGAGE IN ORDER TO MAKE AN INVESTMENT, DON'T DO IT BECAUSE THEY HAVE TAPPING YOUR LAST LINE OF CASH TO PUT INTO AN INVESTMENT. YOU KNOW, REVERSE MORTGAGES CAN BE A USEFUL FINANCIAL PLANNING TOOL FOR THE RIGHT PERSON WITH THE RIGHT GOALS AND THE RIGHT PLAN. BUT TO ENTER INTO A REVERSE MORTGAGE TO PULL ALL OF THE EQUITY OUT OF YOUR HOME AND THEN INVEST THAT EQUITY, YOU HAVE JUST GAMBLED WITH YOUR LAST DOLLAR

WELL, YOUR BIGGEST ASSET. GENTLEMEN, THANK YOU. WE ARE SIMPLY OUT OF TIME. WE APPRECIATE YOUR EXPERTISE AND YOUR TIME, AND YOURS. SEE YOU NEXT TIME.