Simply Money

Episode Transcript

(00:06):
To night answering the biggest worries ofthose who want to retire soon. And
maybe some of these might sound familiarto you. You're listening to Simply Money,
presented by all Worth Financial I MemiWagner along with Steve Ruby. You
know, we've been doing this fora while. We've helped more than a
few people retire and retire well.And you start to see a pattern,
right of questions, of pressing issuesof things that people are worried about when

(00:31):
they get close to retirement. Sotonight, let's kind of dive into some
of the main ones that we hearand what you need to know in order
to overcome these sort of fears.And these worries actually come from a survey
done by all Worth with our clientsand some of the advisors. So yeah,
so this is items that people thatwe work with have shined light on

(00:52):
and you know from the chair Isaid, and a lot of this doesn't
come as a surprise. The numberone concern that most people want to have
addressed when they're sitting down and workingwith a financial advisor for the first time,
The big question is will I outlivemy savings? And it's not just
all Worth clients that are worried aboutthis. Right. You and I have
been doing this show for a longtime. I have seen so much research

(01:17):
on this. The number one concernin every single research project and every single
survey that's done of those close toretirement or in retirement. Number one concern
when it comes to money is outlivingtheir money. Number of reasons for this
right. Many of us don't havepensions anymore. There's concerns about social security
and how much of that benefit willbe there when some of us get to

(01:37):
retirement. We're living longer, youknow, have we saved enough? I'm
always surprised too, how many peoplewant a magic formula. Yesterday was it
a big lunch meeting and the personsitting next to me said, but how
much do I need? And Ikind of laughed because I kind of thought
she was kidding, and she said, no, really, just tell me
how much. And I'm like,I don't know your financial such a there's

(02:00):
no formula, there's no magic number. You have to figure out what that
number is for you kind of basedon your spending, and then we can
tell you. Is there a concernthat you will outlive your savings? Yeah?
Building a financial plan can help youanswer that question because it takes a
list of what your expenses are inretirement, some of your major financial goals.

(02:21):
Are you still paying for college?Are you going to pay for grandchildren's
college? Do you have any debt? Being debt free as a major help
in making sure that your money liveslonger than you do. Do you want
to travel while you're entering retirement,while you're in your go go years and
you have energy and you're motivated andyou want to get out there and see
the world. It really depends.When you ask a financial planner or a

(02:43):
question like well, outlive my savings, the answer is going to be I
don't know. It depends, andit depends on a lot of factors.
And once you build that plan andyou start running some models and looking at
the digging into the numbers behind thescenes, you can get an answer to
that question. And that's one ofthe great parts about the work that that
I do with folks every day isanswering that question, will you live longer

(03:04):
than your money? And it comesto some surprise for people we've talked,
We've had entire segments on this before, and that's longevity We plan for the
worst. Worst case scenario is youlive for a really long time. So
if you're sixty five years old,there's a twenty five percent chance that a
man will live past the age ofninety two. If you're sixty five years
old and a woman, there's atwenty five percent chance you will live past

(03:25):
the age of ninety four. Sowe plan for longevity's sake as well to
plan for the worst. So thereare ways to answer this question, but
it makes sense why it's one ofthe number one biggest questions and concerns that
folks have when they answer retirement.And you don't want a generic answer to
this question. You want a personalizedone. And that's why we feel like

(03:45):
the plan is really just the cornerstoneof building that retirement and figuring that out
for yourself. Here's another big one. When should I take Social Security?
You know, this is a governmentprogram, so everything about it is just
clear as mud. There's just somany things about it. You pay to
the system all these years, butthen you get close to it, you're
like, I don't really understand it. I mean, how do they determine

(04:08):
how much I get? So onething you have to understand is social Security
is based on your thirty five highestearning years. They don't send out the
statements anymore. So if you havenot looked at what you can expect to
get, go to my SSA dotgov. My SSA dot gov set up
that account right that gives you atleast a starting place of what you can

(04:28):
expect. But yeah, when toclaim social Security, there's lots of different
claiming strategies in reasons why it canmake sense to wait longer, or for
some people maybe it makes sense toclaim it at the age of sixty two
the earliest that you can. AndI know, once again, this is
not a one size fits all answer, but it's just not that simple.
It's a little more complicated than that. It's not even close to one size

(04:49):
fits all answer. Again, thisis an area where having a financial plan,
looking at what your expenses are goingto be in retirement, at least
having an idea of what some ofyour big financial goals are going to be.
You mentioned earlier that that most peoplein this day and age aren't going
to have a pension, so thebig source of fixed income and retirement is
Social Security. But that only makesup about forty percent of your pre retirement

(05:12):
income. That's why it's supposed toonly make up for Yeah. Yeah,
So you know when to take socialsecurity is another thing that can be answered
based on building a financial plan anddiving into the numbers and running scenarios,
because as financial planners, they canshow you what a break even point is
going to be if you use oneparticular social security strategy versus another, and

(05:34):
that just has to do with howlong you're going to live. Nobody knows
that. So it's a matter oflooking at the numbers and playing with the
financial plan to determine when might bethe best time for you to collect social
security. And we'll say this,the longer you wait to claim, the
higher the benefit is. And ifyou do not have some sort of you
know, critical diagnosis, some sortof medical condition that makes you think that

(05:58):
longevity may not be there. Ifyou are healthy when you get close to
claiming social security, then you haveto understand that benefit grows every year that
you put off taking it, upto full retirement age and even up through
seventy years old, right, guaranteedeight percent every year. Now, when
you're thinking about your financial picture,does more money right make sense for that

(06:19):
benefit? Well, I think fora lot of people it does. If
you've planned well right, if youhave another source of income to get you
to full retirement age or to theage of seventy and again you expect to
live along somewhat healthy life, thenyou know, waiting longer can make a
lot of sense for many people.You're listening to simply money presented by all
Worth Financial. I Mei Wagner alongwith Steve Ruby, as we look at

(06:42):
the people that we work with,right, hundreds thousands of people that we
have helped retire through the years,and say, Okay, here's what they
come to us concerned about what islike when I retired? Does it make
sense to move? Can I stayput? Two places one place? This
is a big thing. The interestingthing, I would say, Steve,
is a lot of people think aboutit, but far fewer actually end up

(07:08):
making a significant change and where they'regoing to live in retirement. Yeah.
Usually from my experience, it's becauseproximity to family is the number one consideration.
Yes, that's it. Where areyour roots? Where are your grandchildren
going to be? Where are yourchildren? Where are your friends? Where's
your doctor, where's your dentist,where's your social network. It can be

(07:29):
very challenging to leave all that behindand completely relocate. That's why we have
those of us that are fortunate enoughto be snowbirds, bouncing between a warmer
climate and wherever your roots are.It is certainly a big question that needs
to be answered, and planning accordinglycan help you determine where that might be
for you. Another thing, andI think all investors right worry about a

(07:51):
major financial crisis and the impact thatwill have. But you know, if
you're thirty years old or forty fiveyears old, if there is a large
financeial crisis of a major dip inthe market, so recession, a bear
market, you know that you havetime to recover. When you get close
to retirement, it can be like, oh my gosh, really like this

(08:11):
is happening right now? Can Irecover from this? I'm going to go
back to the financial plan that wewere talking about, because one of the
things that we'd like to do withthose plans is try to blow them up.
We say, okay, what ifmarkets were down twenty percent or thirty
percent for a prolonged amount of time. What if inflation got incredibly high like
we have seen over the past fewyears. Right, We throw all these

(08:33):
scenarios at the plan and then saydoes it still work? And our goal
is to be able to say,yeah, you're good. We will likely
see a financial crisis of some sortover the course of your retirement and you're
going to be just fine. Youtalk about the peace of mind that comes
from having that plan that has beenstress tested in front of you, and
it's a huge difference for a lotof retirees. Yeah, when I stress

(08:56):
test a plan and a lot ofplanners that I know that that do the
same thing. We increase longevity,we increase spending, we decrease portfolio performance,
and we increase downturns. Meaning theyear you retire, the markets get
kicked in the teeth hypothetically, yeah, and then still have another bad year
after that. And if you canweather all of those storms, then it's

(09:18):
going to be very, very difficultfor you to spend all your money before
the end of your plant. Oneof the biggest and maybe most overlooked things
that people get to retirement in arereally shocked about is medicare. You're paying
into the system all of these years, and you think, great, when
my boss is no longer supplying orsupplying most of my health insurance. I

(09:41):
just flip to Medicare, easy,breezy. Oh No, there's a lot
more to it. It is incrediblyconfusing. There's sort of an alphabet soup
of plans. You've got part B, parts C, all the things.
But what you have to understand isthat what the government provides for you,
right, Medicare that you've paid intois going to cover everything. So you're
likely going to need maybe a metagap insurance policy. These are sold by

(10:05):
private insurance companies and they can bepretty pricey, so you actually can be
paying much more out of pocket forhealthcare than you ever anticipated. Yeah,
and there's a misconception that Medicare isgoing to cover long term care facility and
that is just not the case.Remember that Medicare does cover rehab stay in
a skilled nursing facility when you're onphysical therapy living there, but only up

(10:30):
to a certain number of days.So having supplemental policies and metagap as you
had mentioned, and long term careto cover your long term needs is a
very important cushion to your long termfinancial plan and another reason I think why
a financial planner is so important.Even if you've been doing it yourself for
years to say, hey, haveyou thought through the healthcare expenses? If

(10:52):
you planned for these, Let's makesure that when you get there, if
you need some sort of nursing careor skilled care, that you're going to
have the means to be able tosupport that. Here's the all Worth advice
your retirement is. It's unique toyou. Your primary financial concerns, though
may be shared by millions of others, and we think hiring a qualified financial

(11:13):
advisor who can provide some advice toyour questions is absolutely key. Do you
trust your partner when it comes tomoney? Are you keeping any secrets?
What couple said when they were askedpoint blank. You're listening to Simply Money
presented by all Worth Financial here onfifty five KRC, the talk station.

(11:33):
You're opening to Simply Money presented byall Worth Financial. I mean Wagner along
with Steve Ruby. If you can'tlisten to our show every night, you
don't have to miss any of ourmoney advice. We've got a daily podcast
for you. Just search Simply Money. It's right there on the iHeart app
or wherever you turn to to getyour podcasts. Straight ahead at six forty
three. We're showing you all theways that you can screw up your retirement

(11:56):
savings, a little bit of whatnot to do. You know, we
have couples sitting across from us atthe table in our office all day long,
and I think the question for manyis how long do you communicate about
money? Do you really trust eachother? Many say they do. Let's
take a look at this. Soa money couples, money and couple study

(12:18):
done by a Mayor Price Financial saythat nine and ten American investors that are
in committed relationships do overwhelmingly trust theirspouses or their partners when it comes to
money sharing, similar goals for retirement. What about that other one intent?
Well, you know. And theinteresting thing is too, this stat does
not line up with people who admitthey have committed some sort of financial infidelity,

(12:41):
which is like one in three,right, So it's like, oh,
I trust them. Meanwhile, Ihave an account they don't know about.
Yeah, And you know what theywill say is will I trust them
very much in making decisions for money. What they do also say is we're
not all was on the same pagewhen it comes to money. One in

(13:01):
four said they and their partner don'talways come to an agreement on what they
need for retirement or what retirement isgoing to look like. And so I
think I'm a huge proponent of this. You know that, Steve, But
it's having these money conversations often.And I also want to make this suggestion
if if you guys are in verydifferent places when it comes to all money

(13:22):
decisions, right, Like he comeshome and he's bought something and you're like,
why would you buy that? Oron the flip side, you plan
this vacation and he's like, that'sway too much money, right, and
you just feel like we can't geton the same page. One exercise that
I like to take people through islike, hey, let's figure out what
our shared values are. Like,what's the most important thing to you as
a couple. Is it adventure?Is its security and retirement? Is it

(13:46):
your family? Is it educating yourchildren? Okay, then let's put all
of our financial goals like through thatlens and any decision that we need to
make. Does that trip make sense? Does this thing that I bought make
sense? Does it take a closerto that or farther away from that?
I think if you can just agreeon what's most important to you. It
can help you make more informed moneydecisions and get on the same page.

(14:11):
Yeah, the value thing is importantthere. How are you going to spend
your time in retirement? Do youvalue experiences, travel, spending time with
family, being charitably inclined or doyou want to have things? I think
that's a big one. I'm moreof a travel get out and see the
world, have those experiences, supportfamily where I can things like that.

(14:31):
Are you on the same page asyour spouse? Funny enough, it kind
of seems sometimes like we are notonly financial planners, but but almost marriage
counselors. Absolutely, sitting down witha fiduciary financial planner can really be eye
opening for couples that have not hadthese conversations. When we start to ask
questions and dig into the financial situation, needs and goals so that we can

(14:54):
provide advice. Sometimes we shine lighton things that people didn't really realize that
they weren't on the safe same wavelengthabout. And it can be eye opening.
But it's also a valuable exercise becausebeing on the same page can help
avoid a lot of stress to andthrough retirement when it comes to your money.
Something else, though, that Ifind that's really interesting about couples is

(15:15):
if they sense that it's going tobe a difficult conversation, if they sense
that maybe the other person isn't exactlyon the same page, they will avoid
the conversation altogether because they don't evenwant to go there. Right. It's
kind of like, well, Idon't I don't want to create any tension
around this, so we're just notgoing to talk about it, which fast
forward down the road five years,ten years, twenty years, whatever it
is. Not talking about it onlycreates larger gaps in bigger problems. So

(15:41):
I would say, hey, ifyou're someone who kind of senses that you're
not on the same page about moneyand planning for retirement and what your goals
look like, rather than putting offthat conversation because you think it might be
a difficult one, go ahead andhave it. Start having it more often
so that talking about money doesn't feeloverwhelming. And I wouldn't start the conversation
with like, you do this thingwith money and it drives me crazy,

(16:03):
and I think it's totally going toderail our plans. Right, No,
don't start there. I think it'sstarting with like, let's get on the
same page about what we want toaccomplish, and then let's step back from
there and figure out individually what we'redoing to either get us closer to that
or maybe farther away from it.You sound like a marriage consulor right there,
I feel as opposed to you are. You don't want to accuse,

(16:27):
You want to make sure you're openingup the conversation about what you observe.
By the way, the study thatwe're talking about from Ameror Prize, it
talked to fifteen hundred American couples withat least one hundred thousand dollars in investable
assets between the ages of forty fiveand seventy, many of which have either
retired in the last decade or plannedto do so in the next ten years.

(16:47):
So these are people just like manyof the listeners today in that age
range. In that timeframe. Now, remember it was nine out of ten
say they fully trusted their partner.Of those who say they didn't trust their
partner, half said they had asecret account with at least ten thousand dollars
in it. One in four ofthose folks said they had at least fifty

(17:08):
thousand dollars hidden from their partner.Those numbers do surprise me. You will
often uncover something that you know,maybe everyone didn't know about, but ten
thousand dollars or fifty thousand dollars thatyou're keeping secrets. I was talking to
women recently who was ending up.She was going to be separated from her

(17:29):
husband. But she talked about thefact that money had always been an issue
in their marriage and that something hadhappened, you know, twenty plus years
ago where she realized they very muchweren't on the same page. So they
operated. They just decided, Hey, the best thing for our marriage is
to keep our finances completely separate.They figured that out early on in their
marriage, and that's kind of howthey were. So if there was an
account with fifty thousand dollars, shedidn't know about it. The problem was

(17:52):
there was a credit card that hada ton of debt on it. Her
name also on that credit card.She had no idea d right, So
these kinds of like, oh,it's just a tiny little thing, and
you know, I know people whospend more than their spouse knows, right,
there's more coming from Amazon, andthen they're aware of it kind of
starts in many times it's a reallyharmless place, but it can really grow

(18:15):
out of control. Yeah, surecan. I mean telltale signs of financial
infidelity. It's it's hiding purchases,intentionally getting cash back without telling your spouse,
having that secret savings account, stashingbills, opening secret credit cards,
new accounts, playing some kind ofa dollar for dollar game, keeping up
with your spouse. There's plenty ofways to practice financial infidelity, and you

(18:41):
know reasons for it. Anxiety,secret hoarding or spending can fulfill a deep
emotional need. I've seen that argumentalmost an addiction, right that you don't
you don't want to share. Yeah, I mean it's a form of deception
and a coping mechanism almost, Andthese are not things that you want to
have in a marriage. So beingopen and communicating, like you had mentioned,

(19:03):
is very very important when you werekind of joking about couple's therapy.
But some of these things, ifthey're deep rooted, you know, shame
along with some sort of terrible spendingpatterns, can be things that actually you
need to seek therapyfore, but itcan have a real life impact when it
comes to your money. Here's theall Worth advice. If you cannot get
on the same page with your partnerwhen it comes to money. Maybe this

(19:23):
is the time when you need alittle couples counseling. We would say,
a qualified financial professional who can actas a referee and help both of you
get on that same page can beinvaluable. Coming up next, the one
mistake that could really cost your lovedones literally. You're listening to Simply Money
presented by all Worth Financial here infifty five KRC the talk station. You're

(19:48):
listening to Simply Money presented by allWorth Financial. I Meemy Wagner a long
WHISTI ruby. One of the mostunderrated parts of financial planning is one that
many people don't want to touch.Right a state planning. It's never fun,
it's never exciting to think about what'sgoing to happen after you're gone.
But I think it is also alabor of love because when you think through

(20:10):
these things, it makes it muchmore easy for the people who you leave
behind. And I think on anemotional level, but also on a practical
level. Right, if you don'tkind of get some help right when when
making these decisions, you can actuallycost that love one a lot of money.
Yeah, we've seen mistakes in thereal world that people have made that

(20:30):
have cost them a lot. Realworld scenario number one, divorce decades pass
in that time, maybe you createa solid financial plan. In that plan,
you have an IRA and old fouroh one K, big pile of
money, but you never updated thebeneficiary. If you don't update the beneficiary

(20:51):
in that account and something happens toyou, remember that the beneficiary supersedes anything
in your will. So I haveactually heard of sin where people have left
significant piles of money to X spouses. Yeah, you'd think you've done all
the estate planning in the world,right, and you forget about those old
accounts. People don't check beneficiaries allthe time. It's funny. It's one

(21:14):
of the first things when we takeon new investors right to work with,
we look at the beneficiaries. Wehave them go back and look at those
because it is incredibly important that itreflects your current situation. I mean,
that's a I mean, I guessso good thing in that situation as you're
already gone, but you're going tohave a really angry current spouse who thought
they had X dollars coming and nowyour ex is like swimming in the money

(21:37):
that they thought they were going toailerate your money. Yeah, you wanted
to go to your current spouse.Not the best situation. Here's another scenario
we've seen. Maybe you've got alot of money in a brokerage account and
then a lot of money in attax to for retirement account. One of
those accounts, because they're equal,you're going to leave to your your child,

(21:59):
say you're but the other one youwant to leave to charity, charity
that's very near and near to yourheart. Which account you choose actually makes
a huge difference when it comes towhat happens to your child and paying taxes.
Yeah, so the child, let'ssay that you leave them the qualified
money, the IRA or the fouroh one K, the retirement account,
the retirement account. Yeah, yeah, the retirement account, and they're earning

(22:22):
a pretty decent money at this pointin their life. What happens when they
inherit those pre tax dollars is thattax obligation obligation becomes theirs. If you
leave money in a taxable brokerage accountto a charity of some kind, then
it's going to receive a step upand basis which your child could have received.

(22:44):
But it's a moot point anyways,because that charity is not going to
have to pay taxes either way,whether it's the qualified account or the tax
taxable account. Essentially you got itwrong. If you had left the brokerage
account to your child, right,the equities or whatever's in that account they
receive. The cost base is sothe cost of whatever those investments were at
the time that you died. Soeven if they decide to sell them the

(23:07):
next day, right, they're notgoing to have this huge tax bill for
it. If you give them anIRA, it's like dumped on top of
the income that they already have.It could bump them up to another tax
bracket. So, yeah, they'regetting a lot of money, but they're
going to have to pay I hecka lot of it back to Uncle Zam
in taxes. So the way thatyou distribute these different kinds of accounts actually

(23:29):
makes a big difference. By theway, charities don't ever have to pay
taxes on that money. Yeah,and I love one of the great parts
about the work that we do isgetting to know folks and hearing about their
families, and a lot of peopleare very proud of what their children do.
I have folks that have children thatare doctors, lawyers, judges,
that have high paying, powerful jobs. And if your child is one of
them, Let's say they live inNew York, they're an attorney, they

(23:52):
could lose up to half of thatIRA to taxes if you left that to
them instead of the taxablek Okras account. So this is a real world example
of why sitting down and actually havingthat estate planning conversation is so important.
This is one of the things forthe folks that I work with. I
tell them that because many people theyput these conversations off. They're dreary,

(24:14):
their topics that they don't want tothink about because it has to do with
death and none of that is particularlyfun. But I'll tell them I'm going
to keep ugging about it until theyget it done or they tell me to
shut up. Yeah, And I'mmean, it's part of your job,
right. I Mean, when wetalk about financial plans, it's not just
hey, what's your money invested in? It is have you planned for what
happens after you're gone? Right,You've done all of this hard work to
accumulate this money. We want tomake sure that after you're here, it's

(24:38):
going to where you want it togo and making the impact that you want
it to make. I mentioned steppedup basis speaking of real world scenarios that
we see all the time. Youknow, here in Cincinnati, lots of
people feel very very strongly about ourhometown teams, meaning your Procter and Gamble,
your Kroger. And we often getpeople whether it's you know, mom
and dad or grandpa and Grandpa workedat Procter and Gamble, or they just

(25:00):
love the company and feel very stronglyabout it, but they love these shares
of this company stock and they oftenpass it down. Great thing to understand
the tax implications of that stock whenit comes to you. Yeah, and
the tax obligations are essentially none whenit's passed you in a taxable account because
because of that stepped up basis resettingwhat's going to calculate the tax event when

(25:23):
it's sold. Now, keep inmind, if you sit on those shares
for a long time and they gainvalue, then you're going to owe taxes
on what has on the gains inthat account. But that step up and
basis is it's actually one of thenice things that the IRS does for us
as investors, giving us that opportunityto not burden our loved ones with a

(25:44):
huge tax hit for certain vehicles likea taxable account holding shares of for example,
Procter and Gamble. Every once ina while we get to say,
Washington, did this thing that makessense? It is actually very beneficial for
you. Right. It's nice whenwe can say that, not often,
but not why we can say thatspeaking of this stepped up basis, Something
else that happens quite often is whensomeone passes away, right, leaving real

(26:07):
estate, leaving property. You know, maybe it's your parents leaving their house
behind. We all love the storiesand our parents love to tell the stories
of you know, this house isworth you know, two hundred and fifty
thousand dollars now, but we paideighty thousand dollars for it back in the
day. So if they pass awayand you go to sell the house,

(26:27):
gosh, that would be a lotof gains between that eighty thousand dollars that
they originally paid. But that's notwhat you're looking at, because again,
this property is you receive it ata step up basis. So whatever the
market value of that home is onthe day that you inherit that money and
the day that they pass away,if you decide to sell it a month

(26:47):
later, that's what you're going tobe looking at. So this is another
place where some laws that are ineffect now make a lot of sense for
you. Yeah, and this canbe obviously very very beneficial for families who
purchased a home a long time ago, didn't pay much for it, and
then you received the step up basiswhen you inherit that property. A lot
of people think that they're going tohave to pay massive tax hits on property

(27:11):
that they inherit, but it's justnot the case. Someone was just telling
me, they know this family whosegreat grandparents bought this house in Santa Barbara,
California, yees years ago on thebeach, and they just got it
for a song, like it wasn'tlike the cool place that it is today.
And it's still in the family.They've added on to it as much

(27:32):
as they can. I mean,all this property is worth. You know,
they paid a few hundred thousand dollarsfor it's worth millions and millions of
dollars when they pass away, right, and it's at some point if they
decide to sell it outside of thefamily, the don't make so much money
on it. Can you imagine ifthey had to pay the taxes on what
was originally the cost of that home. You know, thankfully, that is
not the way these laws are setup, and this is how it can

(27:53):
work in your benefit. Here's theall Worth advice Number one. Make sure
you have an estate play, butalso make sure that it bakes in the
tax implication so that your loved onesaren't left shelling out tons of money to
Uncle Sam, or you're not bumpingthem up into a higher tax bracket.
Coming up next, keeping you fromscrewing up your retirement savings. What you

(28:15):
need to know. You're listening toSimply Money presented by all Worth Financial here
on fifty five KRC the talk station. You're listening to Simply Money presented by
all Worth Financial. I mean wig. You're along with Steve Rube. If
you've got a financial question it's keepingyou up at night. You'd like us
to help you get it figured out. There's a red button you can click
on while you're listening to the show. It's right there on the iHeart app.

(28:37):
Record your question. It's coming straightto us and straight ahead. You
love your family members right, youlove your close friends but what happens when
they come to you and ask forfinancial help, maybe in the form of
co signing for a loan. We'vegot a warning before you ever even consider
that that's coming up in a fewminutes. You may have heard the phrase

(28:59):
the road to hell is paved withgood intentions. Right, Well, the
road to financial hell is paved exactlythe same way. Maybe you're making some
decisions or not making some decisions whenit comes to your money. You think
you're doing okay, and actually you'reputting yourself in a really bad place.
Yeah, Unfortunately, I've seen situationswhere people just don't even bother to save

(29:21):
because they read some kind of loudarticle that said, hey, you're gonna
need millions of dollars to retire,So why even bother that that's what happens
in that situation. There's no wayI can save up millions of dollars,
so I'm not even gonna save.Why do you need to believe that ridiculous
article. You probably don't need millionsof dollars to save. You probably don't
need to save millions of dollars toretire. That is because it depends on

(29:42):
your individual financial situation needs. Andgoals. Not saving is a massive mistake,
and I have seen it over thespan of my career. Absolutely well.
It's like how do you eat anelephant? Right, It can seem
overwhelming, but it's one bite ata time. You have to get started.
I meet so many people say,well, yeah, I know,
I know it's important. I'm goingto start like next year or after this

(30:03):
next big thing, or you know. I have a dear friend. She
owns her own business, her husbandowns his own business. Neither of them
obviously have four to one case throughwork. They're self employed, and so
their retirement plan initially was to justkeep working. Well that's great, but
we also know that things can change. Maybe you're not as passionate about that
job anymore, or someone gets sick, or you want to travel or whatever.

(30:27):
You've left yourself in an absolute cornerwith no options, and so we
kind of started to talk through that. And it's funny. It's like once
she started to taste what it waslike to have this sort of financial empowerment
and understand money and save some Nowshe's got four sisters, Her four sisters
call her for money advice. Justa year ago, she wasn't saving a

(30:48):
dime. Now she's got money ina health savings account, she's got you
know, set by a ray setup. They've got all these things set
up that they're putting money into,and it feels good to know that they're
moving in the right direction. SoI sometimes think it can seem overwhelming at
first, but man, once youget started, it can be incredibly overpopped
empowerful well over time. It's alittle different than when you give this analogy

(31:11):
of eating an elephant one bite ata time. Eventually, when you're saving,
compounding interest as your best friend,so it's almost like you're taking gigantic
bites of the elephant the more timethat goes by, because your money will
make money, and that money willmake more money for it, the bigger
the bites get. Exactly So WarrenBuffett, I think it was him that
said that the first one hundred thousanddollars is the hardest. Once you get

(31:32):
to that point, that's where yourmoney really starts to snowball and you notice
it. Another thing that we seepeople doing is just underestimating how much you're
going to need. If you thinkthat social Security right is the answer to
your retirement, then you are completelygetting it wrong. The program was never
set up to say, Okay,you work all your life and when you
get to sixty two or sixty fiveor sixty seven, you never work another

(31:55):
day and your Social Security is goingto completely then let you continue that life's
sile into retirement. Nope, notthe goal. The goal of this was
to keep you off the streets,right from living on the streets in your
later years, and so it's onlyset up to replace forty percent of what
you were making when you were working. Now, when you think about what
you want your retirement to look like, if you want forty percent of what

(32:16):
you were doing before, maybe it'sa good plan. Most of us,
oh, thank you don't want togo from being able to eat out once
or twice a week to eating offof Ramen noodles when we're in retirement,
right, that's not the goal.Social Security then cannot be your only solution
for retirement. And not automating yoursavings is another massive mistake that we see,
especially for those that have access toa four to one K where you

(32:37):
can automatically pull directly from your paycheck. If you're getting free money via company
match and you're not doing it.That's an awful thing. For those that
have an automatic increase program in therefour to one K, maybe that's something
you look at because as your incomerises each year, even if it's only
two to a half three percent,you can put in another percent your four

(33:00):
one K and you're not even goingto feel it. The money that's not
there is harder to spend because thosein your four and one K and it
starts to grow for you. Sonot automating your savings is a big mistake.
Also over complicating it, right,you're thinking about, gosh, we
need all this money when we getto retirement, and so there's got to
be all these different ways to doit. And we would say, really,

(33:20):
there's there's one. It's being asmart long term investor, right,
figuring out what your plan is andsticking to it. Now, I realize
that we're part of the financial media, but I think we're sort of fall
into a separate bucket than a lotof other financial media outlets. And the
fact that they want it to soundso complicated and like you need there's patterns
and you should get in the marketand out of the market, or this

(33:42):
is the investment that you need tobe in this year because this is going
to be the next big thing.We don't feel that way, and we
feel like over complicating it often putsyou behind where you would have been if
you just kind of set that strategybased on your individual needs and then let
it ride. Yeah, and onthe flip side of that, another huge
mistake that people make is being fearfulof the markets to the point where they

(34:06):
sit in cash because they feel it'ssafer. However, cash is a guaranteed
way to slowly lose purchasing power.Think about how much your first vehicle cost,
how much it used to cost togo out to dinner, how much
you used to fill up your ga, how much it used to cost to
fill up your gas tank. Thingsget more expensive about every twenty twenty two
years. The value the dollar getschopped in half. So if you're just

(34:27):
sitting in cash letting that do nothing, then that is a huge mistake.
Holding too much of your company stock. As much as you love that company
right, your blood, sweat andtears go into it. Understand that your
retirement right is often coming from yourcurrent paycheck is coming from there, so
your current livelihood and now you're puttingmuch of your retirement on that company.

(34:49):
And we've seen it happen just fartoo often companies that seem rock solid.
Something comes from left field and itcan make a huge difference. So do
not put all of your eggs intothat basket that can just go south really
quickly. Coming up next, we'vegot another way that you can screw up
your retirement savings, even though youmay think you're doing the honorable thing,
the kind thing for the people youlove. You're listening to Simply Money presented

(35:12):
by all Worth Financial here on fiftyfive KRC, the talk station. You're
listening to Simply Money presented by allWorth Financial. I mean Wagner Alone with
Steve Ruby. You know you loveyour people, right, your children,
your nieces, your nephews, yourbrother in law, your best friend.
You love your people. But whathappens if they need help with something financially,

(35:37):
Say they're taking out a loan andthey're asking you to co sign on
it. First of all, wewant you to understand what you are signing
yourself up for, and we wouldsay also why, we would say not
a great idea. Yeah, I'vecome across people that believe when they're co
signing alone that you're just really givingyour blessing. But that is not the

(35:57):
case. This is a good person. I like Steve Rue, he's a
great co host. So yeah,he wants me to co sign this loan.
I'm just gonna say, don't evenask. Don't even ask, absolutely
not, No, you shouldn't.I mean, because the risk falls on
you. That's the bottom line thatthat's what people don't realize when when you
co sign alone, you are nowentirely responsible for those payments if the person

(36:22):
you co sign with doesn't make them, and not half of it. Not
like okay, if they come intoan issue, they pay half, you
pay half. No no, nono. If they default on that loan,
it's coming to you, and you'regonna owe every penny of what's owed.
And understand this when it gets tothe point, right, many times
where that person is not able topay it, they're shamed. There's guilt,

(36:45):
there's all kinds of feelings. Theyprobably aren't going to come to you
and be like, hey, justso you know, you might want to
start saving up your money because you'regoing to oh all, they don't.
So then you find out about it, right, you're kind of backed into
a corner and it becomes a terrible, you know, terrible situation. By
the way, you likely co signedfor that loan because you cared about that

(37:05):
relationship. Now that relationship it's goingsouth. Oh yeah, I can have
a major impact in doing so.This is also affecting your credit. Remember
that when you co sign a loan, it goes on your credit report,
so you're utilizing a higher percentage ofyour available credit. It can ding your
credit score, raise interest rates inthe future of any loans that you apply
for moving forwards, limit your optionsfor borrowing money because this is essentially your

(37:30):
loan just as much as the cosigner, and a single missed payment,
depending on how that loan is structured, might mean that the entire amount is
due. So again you think maybeyou've co signed on this loan and you're
saying like, hey, I thinkthis is a good person. And then
you find out that they're defaulting,and then you find out that the entire
amount is not only owed by you, but it's not months from now.

(37:53):
It is all of it one lumpsum. Do immediately now you put yourself
in a situation where how are yougoing to dig yourself out of this hole?
I mean, unless you have ahuge emergency fund, you're in trouble.
So obviously there's ways who can help, whether it's financial coaching or maybe
a gift. If people come inwith a question about what they should do,
sign a loan or give a gift, I'm always going to say give

(38:14):
a gift because you can put morestrand in a relationship by saying yes than
saying no when it comes to cosigning alone. Absolutely, thanks for listening
tonight. You've been listening to SimplyMoney, presented by all Worth Financial here
in fifty five krs, the talkstation