Business Innovators Radio - Interview with Erich Castillo, Founder of Cornerstone Wealth Management – Building a Reliable Retirement Income Plan-part 2

Episode Date: March 14, 2025

Erich Castillo is the founder of Cornerstone Wealth Management established in 2004. He began his professional career in 1997 at American Express Financial Advisors, achieving numerous accolades and awards. Erich is currently an Investment Advisory Representative. He also has his Life, Accident, Health, Insurance and Annuity designation so he can act as a comprehensive resource for his clients. To round out his financial education, he holds a Chartered Life Underwriting Designation and Chartered Financial Consultant Designation.Originally from San Francisco, he has traveled and lived all around the world, eventually landing in Lexington, Kentucky. While earning a Bachelor’s degree in both Finance and Education at the University of Kentucky, Erich had the opportunity to work as an athletic trainer for several sports teams at the University of Kentucky, where he met Emily, his wife, and mother of his two sons, Brandon and Carson. Though Erich has an accomplished career, his greatest treasure is his beautiful family. Erich met his wife, Emily, at the University of Kentucky.Learn more: http://www.retirewithcwm.com/ – http://kentuckyretirementpros.com/Investment Advisory Services offered through Southland Equity Partners, LLC an SEC Registered Investment Advisor.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-erich-castillo-founder-of-cornerstone-wealth-management-building-a-reliable-retirement-income-plan-part-2

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us, Eric Castillo, who's the founder of Cornerstone Wealth Management, and we'll be covering part two in our series of building a Reloeverty. Reliable Retirement Income Plan.

Eric, welcome back to you the program. Hey, Mike. Thanks for having me. I appreciate it. Hey, I've enjoyed this conversation so much. And I'm glad we wanted to put this into two different segments because we want to make sure that we're covering all of the aspects really, really clearly. And I love the idea of a reliable retirement income plan because it gives the connotation

of cash flow and it gives the connotation of having something consistently hitting your account and not just having money build up into some, you know, account way off there. So let's just dive right in. Can you explain what reliable income is, number one? And then why is it an important consideration when you're putting together that financial plan? That is a great question. Let me share with you my story. And this is very similar to a lot of people that I meet all around the country.

For years, I've been focusing on building up assets, growing my portfolio. investing in real estate. I love these strategies and the complexity of it all. A couple months ago, I asked my wife, Emily, what do you really want from all this? And her answer is really simple. What she told me was, I just want money to hit the bank account every month so I can enjoy life and not worry about all this noise. And what it did for me is, in that moment, it changed my perspective. Instead of just focusing on growing the biggest portfolio, because we all want to grow the portfolio,

but it's the why. What is the purpose? Why am I doing what I'm doing? And so I really needed to ask myself that question, and it's a different type of question. And at the end of the day, why do I do this? Well, I want to make sure that my why family, she never has to worry about where a paycheck is coming from.

And that's what reliable income is all about. It's not just about having the biggest portfolio, having a lot of money. It's about having that consistent, predictable income stream that you can count on no matter what happens in the market. And then once you have that, then you can do all the other stuff.

but when I can make sure that my wife is taken care of, then all is good. You know, I think your wife and my wife must be distant cousins because my wife takes the same approach. Like, oh, yeah, yeah. I can see that some other people get some astronomical rates of return and, oh, that sector in the market looks great, but I don't care. I want conservative. I want consistent.

I want safe and protected. And, you know, it's like the tortoise and the hair story. There's a time in place for taking some risk and taking aggressive actions, but maybe that's in your 20s and 30s. So can you think of an example like when you've implemented that for a client? Because you gave your story, that's a wonderful. But how does that look in a client? Yeah, I had a client that I recently spoke with. And their biggest concern was running out of money.

And they had spent years and years and years just building in their 401K. And they knew how to do that when it comes to building their assets in their retirement plan. The question then was, great. Well, why are you building up this 401K? And she told me, well, I just want to make sure that I've got enough money in retirement and everything's going to be okay. I'm like, what's the plan? She didn't really have one. So what I did is I repartition a portion of her assets and I created a real,

reliable income stream. And so when we combine that with Social Security, this reliable income stream, we used an income type of annuity or private pension. And the benefit of that, when you think about these annuities are backed by the claims paying ability of an insurance company. So we want to use good companies. But when you combine that with then the other side, which is we can let the rest of the portfolio grow over a longer period of time, having that, reliable income stream, it takes a lot of the heavy lifting on the portfolio to perform. Because there's going to be a time when the portfolio or the markets, they don't perform. Well, are you prepared for that?

And if you build it just in a market-only approach, you're going to get bitten. It's going to hurt. And why let it hurt when you are in a position where you can take control? And that's what she wanted. She wanted to maintain control over her income. She didn't want to rely on the markets doing the heavy lifting. Let the markets grow, let the income be income. And so when we created that balance for her, she felt more financially secure.

It really gave her that confidence. And I believe that people deserve that confidence going into retirement. And without getting into the weeds, but that example that you just gave. So I think when people think, oh, this income that's coming every month, I'm getting X number of dollars every month. That's wonderful. I like the sound of that.

But does that mean that my balance is going down accordingly? So if you had a million dollars and I'm taking out $2,000 a month, does that mean I've got $998,000 in that account? Probably not because if you set it up with the right type of account, then you're getting that income every single month like clockwork, but you're about. is staying there for lifetime, right? Is that something that is another aspect of peace of mind? Yeah. So on one side, yeah, we're drawing money out of that income bucket. But on the other side, we're letting the other part of it let it continue to grow. So over a long period of time,

now we're just having to pull out a little bit just to complement their Social Security and their other reliable income. But we're not letting the portfolio do all the heavy lifting, which is really, really important when you start thinking about making sure that the money that you've built up will last the rest of your life. 100%. And you also mentioned some people, like just let that 401k grow, grow, grow, or an IRA. And this approach to creating a reliable retirement income is different than that because you're now wanting to structure in this flow of money to you.

So what are some of the advantages and disadvantages of relying on that reliable income? in retirement versus just building up a big balance. Yeah, I think the key takeaway is when you have this reliable, predictable income stream, that's going to create that financial stability. But it's also really, really important to strike that balance between security and flexibility. So the advantages of building in this reliable income stream is, number one, peace of mind. There's no stress over market performance affecting your income. A lot of clients, when we work with them, that's really, really important.

They love that idea. It makes budgeting easier because they know exactly money that they're going to be bringing in each and every month. And so it's just easier to manage expenses. And then if we need to draw a little bit from the rest of the portfolio, we can do that. But once again, we're not doing it in a way where we're. we're liquidating things when maybe markets are down, right? Right. I like the idea also, it's longevity protection, meaning that we don't know how long

we're going to live. No one knows. And so it prevents outliving your savings because it's designed to last as long as you do. It takes also a lot of the emotions out of what might happen. So what I mean by that is sometimes we might tend to. to overspend. So it reduces that temptation. Or if the markets are down, there's that panic selling and you're like, oh, oh, I need to get out. Well, you know, we have that balance in place. And I think another part and probably the most important for me, at least, is that spousal security. I'm going to make sure

that my spouse continues to receive income even when I pass away. So those are some of the big advantages. Now, there are going to be some disadvantages as well. There's less flexibility. And what I mean by that is some of these reliable income sources, they're not really designed for big withdrawals or big liquidity events. And so, again, we want to have that balance. When it comes to inflation risk, sometimes some of that income doesn't adjust for inflation, which could lose purchasing power. That's why we want to have money invested in the market, creating that balance. And then there's this opportunity costs where money allocated and reliable income, it may not have the same returns as a growth portfolio. So those are going to be some of the disadvantages. But at the end of the

day, it's not putting all your eggs in one basket. It's not putting it all in a reliable income plan. It's about creating the right balance so you have money when you need it, but you also still allow your portfolio to grow. 100%. Yeah. So I think it's always neat to take a concept and apply it to what you've already done, like your personal story or an example. Is there a real life example of incorporating this predictable income where someone really took it to the next level of implementing this to make a difference in their life and move it from, man, I'm just draining my retirement accounts, but I'm enjoying the predictable income. Yeah. One of my clients, he was a 61-year-old.

executive did very, very well. And he was worried about market volatility. So back in 2008, the reason why he was worried is at that time, he saw his portfolio drop by 40%. I mean, think about that, 40%. And he had to delay his retirement and wait five more years before the portfolio got back to even. What he realized is he lost something that was very important to him. And that was time. Yeah. The time to travel with his wife and kids, go on great vacation, the time to do things with his grandkids, the time where he could really enjoy his retirement.

Well, he can never get that back. And so the bottom line is he didn't want to risk another downturn. derailing his retirement. So what we did is we structured a reliable, predictable income stream in about $120,000 a year. That was the amount of money he needed for his lifestyle. And we built that into his plan to cover his lifetime as essential expenses, mortgage, health care, utilities, so time he's still just making sure that those needs were taken care of. But it allowed the rest of his portfolio to grow and grow uninterrupted. And so, Think about that over the last 10 years.

What do you think that part of the portfolio is worth? Well, it's worth a lot of money. Well, let's fast forward to 2020 and 2022. What happened to the markets? Well, number one, 2020 in the beginning, COVID, right? Markets pulled back hard. And then in 2022, the whole year, the market really pulled back. It lost almost 20%.

Well, the good thing is he wasn't forced to sell any, his investments in a loss. His income, it remained stable, and his portfolio was able to recover, and it's still going to this day. So for my client, having that strong, reliable income plan, it prepared him for the good times and the bad. And the right income strategy protects your future, but it also allows your investments to work for the long term. Yeah, huge. That's really, really important. So I think that too many people assume I work this many years. I build up money in my 401k, my IRA, and then I retire and take Social Security and start drawing down. And they don't think about what we've been talking about, building this reliable retirement income plan. What advice would

you give to our listeners that are just starting to realize this is even possible? When I think about income, it's either you need it because that's the, that's the, going to fit your lifestyle, or maybe you don't need it, but a lot of people that we talk to, they build up their retirement through qualified accounts like IRAs, 401Ks, 403Bs, their savings plans. Well, at some point in the future, they're going to have to take money out because of required minimum distributions. And so when you can start planning earlier for that, the more options you have, then it's going to allow you to create the retirement lifestyle. that you want. So I think the first part of that is you want to define your lifestyle goals. And really what

that means is how much income are you going to need to feel financially secure? Or if you don't need the money and you're letting it grow, at some point, Uncle Sam forces you take money out of the account. So what is that income number even on required minimum distributions? You have to have a plan around that. You don't want to rely solely on market performance. So if you can build a strategy that provides that stability regardless of what it's happening in the market, that's going to give your portfolio more success to not only last, but also grow over time. Just like anything, you want to diversify your income sources. So everyone talks about diversifying your portfolio. and that's always going to be important.

Why not diversify your income sources? Have different income sources to basically offset the risk. Social Security, pension, personal savings, maybe private pensions, all that works together to create that reliable income stream, which allows the rest of the portfolio to grow. And then the last is work with a specialist. I mean, retirement income planning isn't the same as investing. It's a different animal. The math is different. And so talk to a retirement income distribution expert, you know, someone who really understands how to structure reliable income for the long term. I always

like to say retirement isn't an age. It's a financial condition. The sooner you build a strategy for reliable income, the more freedom that you're going to have to enjoy the retirement that you've worked so hard for. Love it. Well, Eric, has been such a pleasure. learning from you and seeing your fresh and sane and safe perspectives. If someone is interested in learning more and reaching out and connecting with you, what's the best way that they can do that? They can reach me via email Eric, E-R-I-C-H at Retire with CWM,

so cornerstonewealthmanagement.com, or feel free to call my office, 859-381-055. Excellent. Well, Eric, thank you so much for coming back on. It was a real pleasure talking with you. Awesome. Thanks for having me. I appreciate it.

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