Power Up Wealth podcast – episode 4 transcript:
James Derrick 0:00
I’m James Derrick. Today I will be hosting the SFS Power Up Wealth Podcast as we discuss what has become known as The Great Resignation. My guest will be the financial expert and guru, my good friend Sharla J. Jessop.
Sharla Jessop 0:25
Welcome to the SFS Power Up Wealth Podcast where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
James Derrick 0:49
Sharla, thank you for being here today.
Sharla Jessop 0:51
Hi, James. Great to be here.
James Derrick 0:53
Sharla Jessop is the President of Smedley Financial Services Inc.® Has over 30 years experience in the financial industry and is also a Certified Financial Planner. And typically, the host of this podcast, which she is most graciously offered to let me take over as I interview her. Sharla, how are you? Good?
Sharla Jessop 1:11
Good.
James Derrick 1:11
I’m really excited about being able to host this podcast today and ask you about your executive message in the SFS Money Moxie, which we mail and email out. It’s also available on a blog on our website. You wrote about The Great Resignation? Could you explain for everybody as an introduction, what that term means for those who haven’t heard it? And why you chose to write about it?
Sharla Jessop 1:37
Well, you know, I’ve worked in this industry, as you mentioned, for many years, and I think we’ve just gone through an unprecedented time where an enormous number of people have decided to change jobs from their career they had or the employer that they had, and even more have decided just to leave the workforce altogether. So much so that we’re seeing it in all aspects of our lives. As far as when you go, I imagine that you’ve probably seen hiring signs, everywhere you go, we see ads all the time, but also it impacts a lot of people who’ve left the workforce, and they’re not planning to come back.
James Derrick 2:13
That’s fascinating. So we call it The Great Resignation. But really, how great has it been?
Sharla Jessop 2:19
Well, when you’re talking about retirees, it’s big. In 2019, maybe 48% of retirees, people that age were retiring. And last year, it went up to 50%. 2% doesn’t sound like much of a change. But that’s 3.5 million Americans who retired. And those are people who are not expected to return to work. These aren’t people who’ve just taken a temporary sabbatical or have decided to change a career these people have actually fully retired.
James Derrick 2:50
So is this why we see such a shortage of labor now?
Sharla Jessop 2:53
Well, when you think about it, people who’ve retired have left openings in positions. So that creates an opportunity for people to move up the chain in careers. So people who are working may be at entry levels or lower levels have been able to move forward and have other opportunities. And it doesn’t matter in what industry you’re in. Whether it’s a professional industry or an industry like the food industry or recreation industry, everyone is experiencing that and seeing those openings.
James Derrick 3:20
And we definitely see that across the board. And there are far more openings than there are workers available. Do you think you mentioned that these retirees are probably not coming back? What about others? You mentioned child care in your article. How does that fit into this?
Sharla Jessop 3:38
Well, to answer your question in another way, one of the areas where we saw a big vacate in the workforce was in women working women. Or even working men who have a spouse that works and they’ve decided to be at home. And that was but mostly it hit women. So during the pandemic, women became the caregivers for their family. Educators, because a lot of the children now we’re not going to school, they were doing school remotely. Daycare became a problem because a lot of daycares closed down during the pandemic because they weren’t unable to function. Or maybe they had to reduce the number of children that they had for space constraints. So daycare became more expensive. And so we saw this trend of women who had been working and had careers, who had maybe a spouse that was also contributing to the family income, where they’ve looked at it and decided, you know what, I think we can make it on just one income. We’re going to save on childcare, we’re not going to have the extra expenses. So rather than being a two-income family, we’re going to go to a one-income family.
James Derrick 4:40
Do you think that those individuals are likely to come back?
Sharla Jessop 4:44
I think it’s very likely that they will come back, especially if they get through a period of time where maybe daycare is more available and affordable. Because daycare is a pretty large expense for a working family. But if they can manage daycare, get a position where they have a good Income, I think that we’ll see them go back into the workforce specifically for the reason that they will probably need to to help plan for retirement and their future.
James Derrick 5:09
Okay, let’s, let’s pivot back, circle back to the retirees. So how does it impact the business of financial advice, your job, when you’re sitting down with somebody who has a sudden retirement. Maybe they’ve been thinking about it for a while, but now it’s upon them.
Sharla Jessop 5:26
We see a lot of people who hit that once they start thinking about retirement, it’s not that long before they actually do retire. But it makes our job even more important to make sure that they are taking into consideration all of the different aspects of retirement. Expenses. What they’re going to do with their time? When they’re going to retire to? How they’re going to afford it? Is their nest egg going to be able to cover what what their expenses are going to be? What about health care? You know, are they age where they’re going to be going on to Medicare? Or are they going to have to have private insurance for a few years, you know, if they’re younger than 65. There are a lot of different implications that they have to consider navigate through the different costs and expectations. And on top of this, they’re living longer. So they’re going to be in retirement longer than other generations before them. Their planning has to be more specific.
James Derrick 6:20
This sounds really complicated, which I guess is why people come to you to get help. As I’m listening to everything you’re saying, though, I can’t help but wonder. Do people ever regret an early retirement? You know, healthy, productive individuals that retire early? I mean, what’s your advice to them?
Sharla Jessop 6:39
Well, what we’ve seen in the past, not so much this year, but in past years, people would retire we saw big retirement back in 2007. For those who remember the great recession period of time. We saw a large number of retirees, but a lot of them that went back to work because they feared what was happening with their, with their retirement nest egg. They had extra time on their hands. There was a need for them. So a lot of them did consulting and other things. We see many people go back to work. Some because they need the income, but mostly just because they want to be active. They want to keep their minds active. They want to have something to do they want to have purpose and cause. So some are going back to work for money, and some are just going back as volunteers.
James Derrick 7:22
You mentioned, part-time, how realistic is that for most people to kind of move into retirement gradually.
Sharla Jessop 7:32
A lot of people will transition where they rather than just going cold turkey I’d call it. Which can be a real shock for someone who’s worked 30 plus years in a career and had something going on every single day. A lot of their social environment works around the people that they work with day to day, you know, that become part of their network. So slowly retiring is really common, where people go part-time, reduced hours for a period of time, and then maybe for a year two and then retire.
James Derrick 8:01
I think that’s fascinating. And it seems like a very good road to go down if it’s possible.
Sharla Jessop 8:07
It’s a great transition.
James Derrick 8:08
Yeah, it sounds like it would be. What final advice do you have for those in retirement, near retirement, and planning for retirement way off in the future?
Sharla Jessop 8:20
I think that part of retirement planning is not so much your age, or whether or not you want to work. I think retirement planning really comes down to if you’re financially in a position where you can retire. Sometimes when when they people look at retirement, they think well, I have enough money right now today where I could live on this. But there are so many different factors that can impact that inflation being one of them, which we’re experiencing right now high levels of inflation. And for retirees, the inflation rate is much higher, because health care costs and some of the other things tend to go up or you need more services as we age. Inflation, as far as retiree is concerned, can be greater than even Consumer Price Index inflation. So they have to take that into consideration. Having a plan will help make sure that you’re preparing for some of the unforeseen things. You know, inflation will be one of them. Longevity, which I mentioned earlier is a big concern. You know, people are living longer, it takes more money to live longer. And at the end of life, the older we are, the more likely it is that we need some type of care whether it’s in your home, someone coming in to help with care or in assisted living or something like that. Those are some of the events that we have to help plan for. Health care expenses and then just how are you going to spend your money and your time, along with market risk. Market risk is a big concern in retirement. People oftentimes think that when I retire, I need all my money to be conservative. So I’ve got to reduce all of my risk, but the reality is, risk is a good thing. Risk can can help you accomplish some of your goals and in order to help offset that longevity and inflation You’ve got to have some risk in your portfolio. So having a Lifetime Income Plan, which helps balance risk with your needs and timeframe, and take into consideration those items that I mentioned earlier, will help you be better prepared.
James Derrick 10:15
Let’s take just one one last moment to drill down into this Lifetime Income Plan. So this is where we have some money that is conservative, and some is that is moderate, some that is aggressive. How do you segment the money? How do you decide how much goes in each place? What’s the purpose of each segment?
Sharla Jessop 10:38
Well, the basis of the plan really focuses on an individual’s or a couple’s values and goals. So we’re determining exactly what their expenses are going to be, what their needs are, what they’re hoping to accomplish throughout retirement. And then we help break that down into segments of risk and timeframe. So you might say, for the first five years of retirement, I’m going to need this amount of money to help supplement my retirement on a monthly basis. So we do the calculations to determine how much we need to set aside in a more conservative space, where we can limit the risk or greatly reduce the risk. If we do that, and then we increase the risk in segments, you know, five or 10 year periods, we’re able to keep the money that’s invested in the market invested longer, because we can manage the emotional side of investing. And in retirement, the emotional side of investing becomes very real. You know, if you’ve got a nest egg, and you’re invested, and you’re watching it go up and down, and you’re thinking I need that was my accounts have lost, the amount of money I might need to supplement for my entire year. That fear causes people to pull back and maybe want to get out of the out of the market. But we’re able to help keep people invested if they know that they have money set aside for a certain period of time where we don’t even have to worry about what the markets doing. That gives investments in the market more time to grow. And to withstand any volatility.
James Derrick 12:00
I can see the real advantage to that. And I like the idea of not having to sell assets maybe when they’re down in order to supplement your income. Also, psychologically, it’s got to have that benefit, knowing that the most risky money is going to be invested longer. And of course, we know that the longer you stay invested in a diversified portfolio, the more likely you are to have a positive outcome. So I really like the sound of that. Probably helps a ton with inflation, which is a topic for a whole other interview. Sharla, thank you for joining me today. Really appreciate your expertise.
Sharla Jessop 12:37
Thanks, James
Shane Thomas 12:41
Thank you for joining the Power-Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn.
The views expressed are Smedley Financials and should not be construed directly or indirectly, as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. o Securities offered through Securities America. Inc., Member FlNRA/SIPC. Roger M. Smedley, Sharla J. Jessop, James R. Derrick, Shane P. Thomas, Mikal B. Aune, Jordan R. Hadfield, Lorayne B. Taylor, Registered Representatives. Investment Advisor Representatives of Smedley Financial Services, Inc.®. Advisory services offered through Smedley Financial Services, Inc.® Smedley Financial Services, Inc.®, and Securities America, Inc. are separate entities.
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