There are serious issues that are happening right now making this one of the most challenging times in this country to retire.

We have serious headwinds and these obstacles are making it very difficult for people to be able to retire.

These are real things that you have possibly felt yourself already but didn’t understand.

These are things that after you hear them will realize that they are not earth-shattering. These are things that you’ve lived through and you’ll relate to and understand.

But they are also alarming because there is no good solutions at least none that have been made available to the average person, so here they are…


The first thing is that the retirement landscape has changed. If you have been working in this country anywhere from like the 1970s until today, you’ve seen a complete sea change.

It started with the ERISA Act of 1974 when personal retirement accounts for the first time became available to everybody in America.

Now there have been a number of things that have changed in the internal revenue code since then but 1978 is when the section 401(k) was added and that’s the first time that a lot of companies started offering a retirement plan for employees to participate in.

This is significant because by 1980 you started to see companies, really big companies like Proctor and Gamble, Anheuser Busch and Boeing, all started coming out with their first retirement plans in the early ‘80s.

When we look at what’s happened from then until today, pensions have almost entirely gone the way of the dinosaur. They almost don’t exist; very rarely do we see them anymore unless you work for the government.

During this time, the baby boomer generation, which is the largest generation, starting to put money into retirement plans for the first time.

Now, when we look at the stock market, we see it goes through these different time periods where for the most part the returns were fairly minor but there’s one part that really spikes. It really stands out form 1980-1999.

For 1980 to 1999, one of the things that we had happen was again this huge amount of people in this country having access to retirement plans and then on top of that they hit their prime earning years right around 1990 until 2000.  So, there is no mystery why all of a sudden the stock market was up.

The stock market is really as simple as supply and demand. If there is more people buying, prices go up and if there’s more people selling, prices go down. This is all the more complicated the stock market really is.

Now, if you have this huge group of people and then all of the sudden for the first time were putting money automatically into these 401(k)s or other types of retirement plans for the first time, you’re going to get this huge run up in the market because there’s a lot more buyers than there are sellers.


2016 was the first year that baby boomers are turning 70-1/2 and if you know what 70-1/2 means. It means that you have required minimum distributions. Required minimum distributions whether you’re taking them already or you’re not quite there just means that for the first time the same people who put all this money into these retirement plans are going to be taking that money out.

Now there’s trillions of dollars in retirement plans and you have the largest chunk of that owned by baby boomers and when people have to take money out, you actually have to sell your investments before you can take the money out.

So with this, what’s going to happen? Well you’re going to have all these people that are selling. They used to be buyers for years and years and now whether they want to or not, they’re going to be forced to sell those retirement plans.

We are all seeing two massive things that we’ve never had to deal with in this country happening right now and that is all these people that contributed to this huge run up in the market are now going to be contributing factors to selling pressure on the market.

You’ve got a number of dynamics that are really different today about the retirement landscape.

This is an entirely different retirement. All the things that maybe worked for people in the ‘80s and ‘90s, they don’t work anymore because the dynamics completely changed. The landscape as we know it is different.

To give you some perspective on this, almost $1 of every $5 are in a retirement plan. If we don’t think that it’s going to make an impact when all of that money all of the sudden has to start being sold off then, we’re making a really big mistake.

On top of that, since pensions are largely gone, one of the things that we have to worry about is the need for retirement income.  For income to be created, we probably would have to start selling something.


People are investing differently today than they did 20 years ago which is putting pressure on the stock market and that has to do with interest rates.

Now if it was let’s say 1985 and I wanted to make sure I’ve generated $10,000 a year from my retirement savings, you could invest in Government Bond that was 100% backed by the full faith and tax and authority of the U.S. Government, and was paying in the neighborhood of 9%.

It would have only required me to have about $110,000 to generate a $10,000 guaranteed interest payment for 10 years. Principle fully backed again by the U.S. Government.

Today if I want to generate that same $10,000 of retirement income with interest rates at 1.6%, I’m going to need somewhere closer to say $650,000 to $700,000 today to generate the exact same amount of retirement income I could’ve gotten in the same vehicle in 1985.

Well, how long is it going to take or will it ever happen, that we ever see interest rates up that high ever again?  And if we do, one of the things that come with that is double-digit inflation.

If you recall, it wasn’t too long ago that money markets were paying 5% and are now paying close to zero.

If you want to generate income in retirement, it’s a totally different ballgame.

What’s happening is you are seeing more and more people use stocks or stock type investments, growth investments or they’re taking more risk.

A lot of times they’re taking risk, they don’t even realize their taking because they’re seeking that higher yield.  It is a reality that we live in today with ultra-, ultra-low interest rates.


We could have interest rates that are very, very low for a very long time and really the only reasons that we would ever raise interest rates is typically to fight off inflation. If we don’t have a massive inflation problem, you’re going to have very low interest rates.

Probably the other reason why I don’t see rates going up significantly anytime soon is because at the end of the day there is a huge debt problem in this country.

This is the gross public Federal national debt. If we have that number, we’ll say it is $20 trillion, and if you’re only paying 1% on $20 trillion it’s a $200 billion per year interest payment. That’s the Government’s cost for borrowing that money. What if all the sudden those interest rates were 5%, and that payment goes to $1 trillion?

Well, that would be almost a third of the entire national budget obligated to paying interest on the national debt.  Further, we have to think about what direction the national debt is going.   It’s going up!


Now, you may be thinking there is nothing you can about any of this.  After all, you don’t have control over markets, inflation, government decisions, the economy and least of all an aging population.

However, there are simply ways you can help navigate these headwinds and have a retirement plan that can withstand the pressures that accompany the things we covered in this report.

All you have to do is follow a simple formula for retirement that the wealthy use to navigate these headwinds.

And when I say “the wealthy” you may immediately think of Jeff Bezos, Warren Buffet, Bill Gates and folks at this level but you will be surprised to learn that the world’s greatest investors are actually not people at all.

Some of the greatest investors who have the most wealth accumulated are actually university endowments such as MIT, Columbia, Notre Dame, Duke, and Yale.

These are multi-billion dollar endowments run by some of the smartest people in the world and what’s happening is they’re generating substantially higher returns and doing it with substantially lower risk than the average investor.

The way they manage money is entirely different than the way the typical person manages money and I can assure you most of them are not going to a local broker to get their advice.

They’re not going online and using a computer to just answer 10 questions and have it produce a risk tolerance that they plug into an automatic portfolio for a low fee. That’s not how they’re managing money.  They’re doing it differently.

What they do really well is they protect their money alot better than the average investor.  Really successful investors, one of the first things they do is they focus on not having huge losses.

I mean there’s an inherent amount of volatility and risk in everything that we do but we have to make sure that our focus is on the right things and if you’re focus is on nothing else it should be on not having large losses.

If you invested in the S&P500 over the last 35 years or so with all the ups and down the average return would have been 8.51%.

If you miss the best days of the market, the average return would have been just under 4%. If you took out the worst days, the average shoots up to over 14%.

So, what we find is that missing the worst days is far more important than missing the best days and again your investment strategy, especially during retirement, should be largely focused on avoiding big losses and that’s got to be rule number one.

You see the S&P can be up 20% one year, maybe the next year it’s down 5%, the next year it’s up 10% and then it’s down 20% and then it up again 30%.

These endowments, they don’t usually have that type of return. Instead they have a fairly steady return.

One of the reasons why they have a steady return is most of those endowments are focused on growing their portfolio through income generating assets since the endowment is actually used to cover the operating costs of the university.

They have to have consistent returns. If you don’t have consistent returns and you start taking distributions, every time you have a bad year you’re actually compounding your loss by selling after losing money and then it makes it even harder to keep up.

If you lose 10%, it takes 11% to get back to break even.

If you lose 30%, it takes 43% to get back to break even.

If you lose half of your money that means you have to double it to get back to where you started from, so a 50% loss requires a 100% gain just to be made whole.

Well, if you have a 50% loss and you took out distributions, you have to have more than a 100% gain to make up for the loss and the distribution.

If you haven’t connected the dots yet, you are alot like these great investors already. You just need to invest more like them and change your thinking away from all capital appreciation.

What is capital appreciation?  Capital appreciation is growing your money through something increasing in value.

A couple of examples of this would be a stock.  You buy a stock for $10 and over time, hypothetically, it grows to $20.  Well that $10 growth is your capital appreciation.  You went from $10 to $20.

Another example would be a house.  You buy a home for $100,000, it appreciates to $150,000, that $50,000 is your capital appreciation.  That’s one way to approach investing or trying to grow your wealth.

The preferred method for generating consistent returns is to focus on producing passive income.  An example of this would be rental property.  Say you have a rental property that’s worth $100,000 and you have a renter in that home that’s paying you rent each month, which is income back to you.

This income can be used to live on or it can be used to purchase more income producing assets.

So, your growth comes from the income your assets are generating not simply the hope that the asset appreciates in value.

There are other programs that can be used to create income such as private equity, private debt, annuities, businesses and other forms of real estate.

Regardless of the specific mechanism for creating the income, the goal is to preserve the asset and utilize the income off of that asset.

This is what the wealthy do differently and is something you can recreate for yourself with the right programs and coaching.

Interested in discussing how to combat these headwinds or learning more about what the wealthy do with their money? Let me know!



Securities offered through Kalos Capital, Inc., Member FINRA/SIPC/MSRB and investment advisory services offered through Kalos Management, Inc., an SEC registered Investment Advisor, both located at11525 Park Wood Circle, Alpharetta, GA 30005. Kalos Capital, Inc. and Kalos Management, Inc. do not provide tax or legal advice. Skrobonja Financial Group, LLC is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.

The opinions in the preceding commentary are as of the date of publication and are subject to change. Information has been obtained from a third party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete. This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. We may execute transactions in securities that may not be consistent with the report’s conclusions. Investors should consult their financial advisor on the strategy best for them. Past performance is no guarantee of future results.

There are material differences between the terms under which endowments and individuals can invest in alternative investments. These differences include, but are not limited to commissions and fees, conflicts of interest, access to investment opportunities, size, investment time horizons, and the ability to tolerate illiquidity. There is no standard or exact definition of the endowment model.