Simply Money

Episode Transcript

(00:04):
Tonight, we've got a push toprovide more guaranteed income for all of us
once we stop working. Is thishelp? Could let's get into it.
You're listening Disimply wenty presented by allWorth Financial. I Meani Wagnera along with
Steve Ruby. Tonight we're taking adeeper dive into something we've been talking about
the past couple of weeks, guaranteedincome. I wouldn't say there's necessarily a

(00:26):
growing need for it. I wouldsay there's a growing interest in it.
I mean, I think we likethe thought of it. But the problem
is are you giving up some ofyour freedom and investing in order to get
it? The answer is usually yesand yes. The need hasn't necessarily changed
here, but the interest has.Recently, we did a segment about the

(00:47):
first quarter of this year and howmuch more people are chasing after fixed income
via annuities. Annuity sales at anall time high, right exactly. And
you know when there comes times ofvolatility uncertainty, it's easy for annuity salespeople
to pray on fear. That isa huge motivator for making a sale.
And when it's an election year forexample, and inflation remains sticky and there's

(01:11):
war in the Mid East. It'seasy to say, well, I have
an investment for you that can't lose, but it's going to guarantee income for
life. That guarantee can be usedwhen it's not only an investment product but
an insurance product. That is thekey there, because with investments there's no
guarantees, but with insurance there canbe. So that's where a lot of

(01:33):
these annuity sales people are carrying peopleacross the finish line and making those sales
guaranteed income. Sign me up,right, I would love to know that
I have a pension waiting for mein retirement and it is money that I
can count on and that I don'tneed to worry about. My concern is
the conversation around that guaranteed income doesnot include the fact that, well,

(01:57):
you can give us this money now, right you would ties it you can
lock it into a guaranteed stream ofincome later. But at the same time,
if that same lump sum of moneywas invested in something, what it
could provide later could actually be fargreater than this guaranteed income. And in
fact, if you look back athistorical returns, it likely would provide greater

(02:21):
income for you. Yeah, overthe course of my career, I've been
doing this for over ten years atthis point. There have been plenty of
folks that have come to me withbuyer's remorse, a stee if we want
to build a financial plan, wewant to make sure money lasts longer than
we do. We have questions byour investment strategy. But they locked in
a significant portion of their assets intoannuities that they then realize aren't generating the

(02:42):
type of gains that they had originallyanticipated, and they're paying higher fees,
so that there are obviously issues withannuities. But on the flip side,
we've also talked about the fact thatpensions have gone to the wayside, so
now it's counting on yourself via yourfour to one K or other investment vehicles
and social secure, so that thereare some talks here a growing number of

(03:04):
companies that are offering the ability topurchase annuities withinside of your four to one
K plan. This is kind ofan interesting subject and it's relatively new.
Black Rock is offering this. Iwould imagine that other companies will soon offer
them to My concern is and atleast My understanding of these at this point
is that this could also be likea default on your four to one K,

(03:28):
so if you're not in there activelypicking other options. We've spent many,
many shows, many hours on thisshow talking about something called target date
funds, and this is sort ofa really default way of investing your money
in your four to one K.And it's like, Okay, Amy Wagner,
you're going to retire in the yeartwenty fifty, so we're going to

(03:50):
invest you in in this sort ofbox or a basket of stocks and bonds.
It's going to get more conservative.It's called a glide path, to
get more and more conservative the closeryou get to that time. The problem
with target date funds it can getyou to retirement, but it's a very
one size fits all approach, right, and it's not going to be your

(04:11):
specific and unique situation and goals forretirement. Well, that has become the
default in a lot of four toone ks, right, that that target
date fund. And now there's somecompanies that are saying, okay, we
can have an annuity that sort ofbuilt into this target date fund and this
then becomes your default. Yeah,So the interesting part here in the twist
to how things have been handled priorto this idea of using about thirty percent

(04:38):
of your four oh one K assetsto purchase annuity. What it looks at
is at the age of fifty five, this target date retirement fund portion of
your four to oh one K transitionsto an annuity contract that you can buy
into when you turn sometime between theage of fifty nine and a half and

(05:00):
seventy two years old. So theremaining seventy percent of your four oh one
K portfolio remains invested in stocks orbonds however you have that built. But
this thirty percent can then be usedto purchase an annuity contract with institutional fees.
That's the key here. Institutional meansthe buying power of all of these
four toh one k's combined brings downthe fee for everybody else. So it

(05:25):
gives you the opportunity to essentially purchasean annuity inside of your four to one
K without the same types of feesthat you would see if you did it
outside of your four oh one K. Realsten dis simply money presented by all
Worth Financial I Memi Wagner along withSteve Ruby. As we are talking tonight
about a new option that could beavailable to you within your four oh one

(05:46):
K could be also the default investmentoption, which would be sort of a
target date fund that when you getto the age of fifty five then converts
some of that money into the potentialto buy an annuity contract. To be
thirty percent of that you don't haveto purchase an annuity contract or the point
that you just made. The feeson that annuity would likely be a lot

(06:09):
lower than what we traditionally see withannuities. And I think one of my
top concerns about these often when they'resold to people is they're not completely clear
on how much they're paying in commissionsand surrender charges. And my understanding of
this particular investment vehicle or this particularcontract is while new appears that it doesn't

(06:29):
have all of those funds and orthose fees and surrender charges and commissions could
be an okay option. I thinkas long as you fully understand what you're
getting yourself into and as a default. My concern here is no one understands
exactly how an annuity works unless someoneis in front of them, right if
fiduciary explaining exactly how this works.So my concerns people are going to be

(06:53):
buying annuities that don't really understand whatthey're doing. I don't even understand this
yet. This is a new way. Yes, this is a new idea
here, and I certainly have myquestions. But if it done right,
could be a really good opportunity toguarantee income in retirement, especially if the
institutional fee opportunity presents itself in away that you're not putting a significant chunk

(07:17):
of that thirty percent of your portfoliotowards the commission. But then the question
remains who pays for it? That'sthat's what boggles my mind here, because
when it comes to longevity increasing atthe rate that it has, if you
know, an individual male living hittingage sixty five has a twenty five percent

(07:38):
chance of making it to ninety two, a female hitting the age sixty five
has a twenty five percent chance tolive past the age of ninety four.
So, with longevity increasing like likelike never before, where does this fixed
income stream come from in perpetuity withoutcharging some of those fees. The reason
why so many companies walked way frompensions was because it was incredibly expensive for

(08:03):
them to be on the hook forpaying for your retirement for the rest of
your living years, right. Andit was like, once the four to
one k was discovered inside the taxcode, it was like, yes,
sign me up for that, rightbecause as a company, I'm off the
hook for paying for retirement for allof my workers. Put a little bit
in there is a company match,right, and we'll call it a day.

(08:24):
And I think this sounds like afantastic solution for people then who are
sort of missing that feel that holeof you know, I would like to
have guaranteed income. There are justso many things that are unknown in addition
to the fact that what can youeven expect to get, right, what
does it look like? How muchis that monthly amount? If you're only
able to put thirty percent in,you know, how much are you even

(08:48):
able to count on? Is theregoing to be a difference maker at all?
Or is it just saying we're providingyou with guaranteed income even if that
income doesn't make much of a difference. Yeah, it really is interesting because
if it's a small amount than that, guaranteed income isn't going to be much
either. I'm talking to you,here's your forty five dollars a month paycheck
for the rest of your life.How is that going to move the needle
versus somebody that has a two milliondollar four O one K and then that

(09:09):
could look pretty nice. One ofthe biggest challenges that a lot of retirees
that I'm helping transition in retirement faceis how do they generate a paycheck once
they're no longer working? You know. Proponents of adding this feature to four
O one K is obviously it's it'san easy solution, especially if the fees
are low. It's going to helpyou understand, Okay, here's how much

(09:31):
you're going to generate based on thebalance of your four to one K,
specifically thirty percent of the balance ofyour four O K. It's it's a
very interesting concept done wrong though thatthe fees. This is the part that
everything that I've seen about this sofar, it doesn't go into the level
of detail that I feel like Ineed to provide any actual recommendations on this,
because again the question mark remains,how is this money going to last?

(09:54):
Because companies got rid of pensions fora reason, they weren't able to
make the payments with longevity and retireesincreasing like never before. Here's the all
Worth advice that desire for guaranteed andcome right, it sounds great and retirement
it is real. You just wantto be careful about how you go about

(10:15):
getting it. Read the fine print, make sure you understand this. Coming
up next, how to take advantageof tax savings now before tax laws could
potentially change. You're listening to SimplyMoney, presented by all Worth Financial.
Here in fifty five krs the talkstation. You're listening to Simply Money persented

(10:37):
by all Worth Financial. I Meananwag. You're along with Steve Ruby. If
you can't listen to our show everynight, you don't have to miss a
thing. We've got a daily podcastfor you. Just search Simply Money.
It's right there on the iHeart appor wherever you get your podcasts. How
much money should you have if youhave plan on retiring in your seventies?
Right? Does this make a bigdifference? We're going to ask the advisor

(11:00):
coming up at six forty three.All right, Well, every time a
new president takes office, a newCongress is elected, the laws we have
now could change. And that goesfor tax laws. Many of you may
have forgotten about this, but actuallywe have been in a pretty good place
when it comes to tax laws overthe past few years. That could be

(11:20):
changing soon. Yeah, the Trumptax cuts certainly did us some favors.
And this is set to sunset onDecember thirty first, twenty twenty five.
Some of these tax laws that cameinto effect back in twenty seventeen. Technically
an extension is possible, but itwould demand cooperation between legislators, so I'm
not so sure that that's going tohappen. In fact, you know,

(11:41):
a lot of the conversations and I'mhaving that a lot of fiduciary financial planners
and CPAs are having with clients areplanning accordingly for certain tax maneuvers before these
laws sunset, because, believe itor not, we are at historically low
tax rates right now. Yeah,because of that tax law changing in twenty
seventeen, you likely drop down onto a lower tax bracket or you are

(12:01):
at least paying less right in thatmarginal tax bracket. And when the sun
said, if you're like the highestincome tax payers, well then your rates
are going to go from like thirtyseven percent to almost forty percent. You
know, from twenty four percent toeither twenty eight or thirty three percent.
This is going to make a hugedifference. And you know, we talk
about roth often and say, youknow, does it make sense if you're

(12:24):
a higher income earner right to goahead and put that money into a wroth
I array or a wrath or OLand K or you know, to leave
it in a traditional account. Well, I like the flexibility of locking in
today's tax rates now because I knowwhat they are and if I have to
guess about where they're going to goin the future, I'm going to guess
they're going up. Yeah. Sothere's when it comes to financial planning,

(12:48):
there's a lot of areas that thatfinancial planners will discuss, and one of
them is tax planning. That's nottax filing. That's different. This is
a strategy. Yeah, tax filingis filling out the paperwork, and that's
what a CPA or your tax accountand does tax planning looks at ways to
poke cocle Sam and the ie witha stick. And one of them has
to do with WROTH. You justbrought it up. Wroth conversions or a

(13:09):
big one, especially before the possibilityof some of these tax bracket sunsets.
And twenty twenty six. Meaning ifyou have a pile of pre tax money
that you've saved over the course ofyour career, and you have a four
to one k or an ira andnot a lot of wroth dollars, and
maybe you're not working anymore, soyour income has gone down. What you

(13:33):
do is you look at filling upcertain tax brackets with conversions of your pre
tax dollars. You pay the taxesnow and slide those moneies into your wroth
ira so that they will continue togrow tax free for the rest of your
life. So not only is therea benefit in the back end with the
tax free gains, but there's alsoa way to manage expectations around future required

(13:54):
minimum distributions when you turn seventy threeor seventy five, depending on how how
old you are right now, aswe talk about the fact that the tax
law could be changing right based onwhatever Congress does or does not decide to
do, and you mentioned there's differentstrategies that you can employ that make a
lot of sense, especially the closeryou get to retirement and when you get

(14:15):
into retirement, and understanding them isa big deal. Let's talk about any
other changers that might be coming downthe pike. First of all, one
thing that we talk about on theshow is something called tax loss harvesting,
and this is essentially when you havelike individual positions in stocks that just had
a bad year, then you cansell those an offset the offset some of

(14:37):
the gains so you don't have topay the taxes on all of those gains.
This is a really nice sort ofstrategy that can make a lot of
sense. I don't see this onebeing touched in a major way when the
law changes, No, not atall. This has to do with money
that you hold in an after taxnon retirement account, because your retirement accounts
are tax deferred, so it doesn'tmatter what you're buying or selling. But
in a taxable brokerage account, thatis a place where if you place trades

(15:01):
and you realize those gains or losses, then you can use them to offset
future gains. Again, I don'tsee that going away. An area that
could be under attack is the stepup and basis that you receive in those
types of accounts. Again, thisis your taxable brokerage accounts. When you
pass away and you leave these accountsto beneficiaries, those beneficiaries receive a step

(15:26):
up in the tax basis which isused to calculate the taxes owed upon sale
of those positions to the date ofdeath. Some of the Biden administration laws
are looking at potentially limiting that exclusionand topping it at about five million dollars
in gains that you could receive astep up and basis on. What we
see very often, especially in thisarea, is grandma and grandpa mom or

(15:52):
dad bought Procter and Gamble stock innineteen sixty nineteen seventy, right. You
look at what they paid for it, and it's amazing the growth a company
has seen since this time. Andif you were going to then inherit that
Procter and Gamble stock and sell it, you don't have to pay taxes on
all that growth from the time grandmaand grandpa bought that stock back in nineteen

(16:15):
seventy two. You only have topay the difference from their date of death
what that stock was worth until thetime that you sell it. Huge advantage
to people inheriting stocks. Again,you mentioned Biden has kind of taken a
step in that direction, bying bylimiting that exclusion. I don't know that
this goes away altogether. No,No, probably not. This is one

(16:37):
that the irs actually does right andgives us a bit of a favor,
I would say for that step up, because there are situations, especially like
you said here in town with Procterand Gamble, where that cost basis is
so low that the owner of ittoday is almost locked in. They're not
going to sell it or else they'regoing to get rocked with taxes. Let's
talk about my favorite thing on theplanet when it comes to investments, health

(17:00):
savings accounts. Wait, we talkabout the fact that this is a gift
from the government. Nothing else likeit, in the fact that there's a
triple tax advantage to these accounts,right, there's nothing else that you can
do like it. Where you putmoney in, you invest that money,
that money grows, and if youtake it out for qualified healthcare expenses,
you never have to pay taxes oron that money. Do you see this

(17:22):
as something that Congress is going totarget? And if you do, let
me know, because I need tohave a serious conversation with someone in Congress.
Yeah, a thing or two tosay, you'd be leading the charge
of a pitchfor f under the lawnof the White House. It's it's no,
I do not see this one changing. Medical costs are just so figh
in this astronomical Yeah, this isa little place of reprieve. I mean

(17:44):
the problem with HSA is is thelimits to put money into it. They're
pretty low already. Yeah, soit's not like you're able to build a
huge tax advantage pool of money withthose dollars. But it is a wonderful
vehicle because of the triple tax advantagenature of that investment vehicle. So I
think there's just a number of strategiesthat you can look at that makes sense.

(18:07):
And the problem is all of themmaybe here today could be gone tomorrow.
And I think this is why wethink that relationship between a fiduciary financial
advisor, you your CPA makes somuch sense because you always talk about poking
Uncle Sam uh, you know,in the eye with a stick, like
the understanding these and how they work. That's how you get that's how you

(18:30):
keep more money in your pocket.Yeah, and these these are great conversations.
I actually find a lot of joyin having them because any way that
we can save folks that we workwith a little bit of money is a
way that you can have more moneyto invest with or maybe take vacations with,
have fun with. And planning accordinglyis very important because these changes are

(18:51):
are what if scenarios. They arenot known, but a fiduciary financial planner
that has a financial plan built foryou can show you how options A versus
option B versus option C may affectyour financial future and the longevity of your
assets, so that you can bearmed with making decisions even though there are
unknown factors on the horizons, suchas tax law changes. The one that

(19:14):
is that we're knocking on the doorto is twenty twenty six, but what
about maybe twenty thirty when entitlements areon the table. When it comes to
things like social security, obviously legislatorsare kicking the can down the road with
making any real decisions about that becauseit's not going to make everybody happy,
but eventually they're going to have todo something, and what that something might
be is raising taxes. So planningaccordingly and again finding ways to poke Uncle

(19:40):
Sam in the eye with a stickis a great conversation that you should be
having with your fuciary financial planner thatyou're working with. Here's the all worth
advice find ways to save on taxesnow, before those politicians start mucking up
the waters, we'll see what theydo. Coming up next, an inspirational
story of how a local man gothimself out of a mountain of debt and
the lessons he has for you.You're listening to Simply Money present of my

(20:03):
all Worth Financial here in fifty fivekrs the talk station. You're listening to
Simply Money because I'm all Worth Financial, I mean Me Wagner along with Steve
Ruby. We can throw statistics atyou, and we can tell you all
kinds of stories about people who havegotten themselves out of debt and it can

(20:26):
just seem like, well, thatworked for them, but it's not going
to work for me. Well,tonight we are sharing a personal story for
those of you who think you can'tmake it happen. Our good friend Britt
Scarce. We've known Britt for years. He's our credit expert here on the
show. He gives amazing advice,as he has been for years about things
that you need to know and understandabout your credit. But this is a

(20:48):
guy who knows where he's coming fromwhen he tells you these things, Because
well, Brit to be Frank,you made some mistakes a long time ago.
I sure did you know. Ihad great parents, some great teachers,
you know, growing up, butyou know, I really never had
anyone really teach me about money.And I think I think a lot of

(21:08):
us can say that that we reallydidn't have anyone that truly just kind of,
you know, walked us through budgetingand how money works and how credit
works, and you know, youknow, how to budget and things of
that nature. So basically, whenI got out of school, I pretty
much the financial world, and youknow, the pool of the culture,

(21:33):
you know, to be a spendthrift and kind of just get whatever you
want, do whatever feels good.You know, that kind of culture pool
just kind of sucks you in ifyou've had no one really teach you,
you know, kind of the properway to manage money and budget. So
and for you, it started withthe truck, right there was a car
that you always wanted, you couldbuy that, and then it went from

(21:56):
there. Yeah, I went tohang out with my buddy one day and
he had a new car. Andof course, you know, if you're
a young guy in your early twentiesand your buddy gets a new car.
Well done too. Well, yeah, so I went and found a way
to get myself an auto loan andand got myself a truck and and you
know, got myself a car loan. Well that got my That got me

(22:19):
some credit. And you know,once you establish some credit, it's amazing
what the credit bureaus will do.They're so friendly and they're so nice.
They start to sell they start tosell your name, uh, in your
contact information to all kinds of otherpeople that want to sell you more debt.
Once you have some debt, andso you're getting kind and they all

(22:41):
writ have this credit card and thatcredit card. What'd you do? Sign
up for all of them? Well? Yeah, I mean they would send
me a you know, an offerin the mail and said that you know,
if you get this, if youapply for this visa card, there's
three thousand dollars out there. WellI didn't believe them, so I signed
up for it. They gave itto me, and guess what I just
started. You know, I hadto get accessories from my truck, and

(23:03):
you know, and and of course, you know, every little emergency,
it's so easy to just kind ofput it on a credit card, right,
Uh, you know, I liketo liken the uh the ability of
you know, to get into debt, kind of like the uh the story
that they always tell about cooking frogs. You know, if you take a
live frog and try to put itinto a boiling water pot of water,
you know it'll jump out immediately becausethey could tell it's going to be killed

(23:26):
right well, you know, ifbut if you put it in cold water
and you know, put it onthe stove and slowly turn the heat up
before it knows that it's cooked.And and that's exactly I know that's gross,
but that is exactly how it iswith us with debt. You know,
the easy monthly payments are very easyuntil you have so many of them
that they're not easy anymore. Andthat's what happened with me, is you

(23:48):
know, I started accumulating more andmore cards started to uh. You know,
the monthly payments were easy until theyweren't. And if you're ever lonely
and feel that no one cares,just miss a few payments on your credit
card or your car, and allof a sudden, everybody's reaching out.

(24:08):
Right, So if you could thinkingback, talk about your low point when
you decided this is out of controlpaint that picture for us. Well,
when I truly you know what endedup happening, you know, I bought
a truck, as you said,and then my I went to hang out
with my friend again one day andhe had traded his other car in for

(24:30):
one of those Burretta gtz's back inthe early nineteen nineties, and I thought
that was so cool. So ofcourse I had to go trade that in,
you know, for for a onefor myself. And of course it
came with a you know, hugecar payment, and it was just a
stupid move, you know, butit was it was impulsive. And you
know, I think when when youknow, when the Repo guy came to

(24:51):
get that car, because I had, you know, had some interruptions in
my income and couldn't afford the monthlypayments anymore. Well that was pretty much
my signal that you know, you'reyou're busted, you know, you you
really you no longer have a car. Yeah, you don't have a car,
and uh, you know, yougot all these people you know wanting
to uh wanted to know when thenext payment's coming or when you're going to

(25:12):
pay them in full. So thatwas that was the lowest point, you
know, and when you have togo from driving you know, a new
car, you know as a youngguy to uh, you know, a
Beater car with a dent in thedoor that eventually the reverse went out of
and I couldn't even afford to fixit, so I just kept driving it
forward and everywhere. How was thatbroke? So clearly a huge swing,

(25:37):
right, you went from all thesenice new things to then a beater,
And I think there's there's an obviousmind shift that has to happen in between
there. And I think for somany people it's just like it feels like
the ditch is too deep. I'vejust dug myself in too much here.
There's no way I can possibly getout of it. Sounds like though you
were pretty deep in your car hadbeen and repossessed. Then how you get

(26:02):
out? Yeah? Well, youknow, you you end up reassessing your
life, you know, and youknow, you either decide to stay down
and just be in complete financial ruinforever, or you you know, you
decide to you know, take someaction and start learning about money and start
figuring out how, you know,to increase your income and find ways to

(26:22):
uh, you know, just figureout ways to kind of get your head
above water. And you know,you've got to kind of build the four
walls around yourself, you know,food, shelter, basic transportation, and
clothing, you know, and you'vegot to just do your best to kind
of ignore all the negative. Andyou know, you're not a bad person
because you have debt and because youmessed up. And you also need to

(26:45):
understand that this is temporary. Thisisn't forever. This you're not ruined forever
because you make mistakes and maybe,you know, maybe you have a lot
of debt, maybe you have alot of issues. But you know what
you can do is you can reassesseverything you can. You can list everything
that you owe, and you know, start making agreements with your creditors,

(27:06):
start to settle accounts, start toyou know, find ways to make more
money. You know, sometimes weget kind of down and we like,
oh my gosh, and you know, it's it's harder to be creative.
But you know, that's when youhave to stop adding new debt and you
have to start doing your best tocreate as much income as you can.
And you just have to, youknow, they say, how do you

(27:26):
how do you need an elephant?You know, one bite at a time,
right, So you just simply haveto start somewhere. You know,
the debt snowball is referenced a lot. That's what I utilized, and you
just simply, you know, payyour smallest debts first, settle them up.
A lot of them will accept fiftycents on the dollar, you know,
if you call them up and talknicely to them and say, hey,

(27:48):
I don't have all this, butI can, I can pay you
this much. Well, you settlefor that about and you know, you
do it one at a time,and then once you clear your debt.
At that point, you know,I didn't start worrying about my uh.
You know a lot of people havethis fear about their credit score. You
know, they're like, oh mygosh, this is you know, my
credit score is so important. Igot to get my credit score up.
I got to get a credit scoreup. Well, you don't need to

(28:11):
be worrying about your credit score whileyou're you know, knee deep in the
debt, trying to get yourself clearedof the debt. An open heart.
Yeah, it's like having an openart surgery and saying, Okay, I
want to run a marathon. Youknow, the day after. I mean,
you can't really do that. Youhave to kind of, you know,
first heal the problem, get thedebt cleared, and then you can
re establish which how long did ittake you, How long did it take

(28:34):
you to get out of the debtto turn things around? It took about
two years. And you know,once I was able to kind of get
things cleared, then at that pointI was able to what I ended up
having to eventually find a way tofinance another car. Actually, obviously I

(28:55):
was much more reasonable with with thewith the car option, and I had
to pay an interest rate on thatcar loan on the car that I got
had to pay twenty five percent interest, So you know, I had,
you know, and I know whatkind of humiliation you know, goes with,
you know, having to go andtry to you know, rent an

(29:17):
apartment when you have bad credit,by a car, when you have bad
credit, or just in general funfunction in the financial world with bad credit.
It's it's very humiliating, and alot of people treat you very,
you know, very in a veryhumiliating way. A lot of them are
not nice, and I know there'snot supposed to be discrimination and that sort
of thing. But if you've everbeen in that situation, you know what
I'm talking about. People are justright right who feels like I can't it's

(29:44):
too much, you know. Butthank you for sharing your story and being
so vulnerable to say this is howit felt, this is what happened to
me. And also it took metwo years, but I did turn it
around. And I think the keyhere is for anyone to understand you can
also turn it around. Brit Scares, our credit expert. You're listening to
simply money present of my all worthfinancial here in fifty five KRC the txtation.

(30:11):
You're listening to simply money present ofmy own word financial, I mean
me Wagner along with Stee Ruby.Straight ahead. Your credit score, maybe
it's not something you're exactly proud of. Well, we've got ways you can
boost it pretty quickly. We'll getinto that. And do you have a
financial question you'd like us to answer. There's actually a red button why you
can click on while you're listening tothe show. It's right there on the
iHeart op record your question and it'scoming straight to us. And we've gotten

(30:34):
several of these questions lately that we'regoing to get into tonight. Our first
question, though, comes from Kathyin Springdale. My granddaughter just graduated from
college. Can you share a fewmoney tips that she might find useful now
that she's no longer in school?I like this question a lot. Yeah,
I mean, there are incredible opportunitiesfor somebody that's just getting started now.

(30:56):
I'm curious to know does she havea job, did she land her
first position within her industry? Ifso, it's important to make sure that
we have that solid financial foundation.Don't don't take on any bad debt,
don't build credit card debt. Instead, build an emergency fund so that when
life throws us curveballs, we cantap into it. If you get a

(31:17):
four one K plan, it's agreat place to start. Start start where
you can, but make sure thatyou do your best to get the free
money that's on the table the companymatch if you're able to, especially if
your granddaughter got a good paying job. Now is the time to look at
what you've been living off of versuswhat kind of income you suddenly have,
and don't just fall into a patternof lifestyle creep where it's like, Hey,

(31:40):
I get to do everything, nowI'm gonna go on cruises and buy
a house and buy boat. Youhave an opportunity, or she will have
an opportunity to begin to grow significantwealth by getting started early when compounding interest
is on her side. There's agreat rule to live by. It's simply
money. Weigh the fifty to thirtytwenty rule. And I think if your
grandaughter can start off like in thefirst job, living this way, she's

(32:02):
going to be set for life.And it's this fifty percent of what you're
bringing home goes to your needs.This is if she's going to buy a
house or she's going to live anapartment, the rent, you know,
her food, her utilities, hercar payment, thirty percent that goes to
the fun stuff. Maybe she can'tafford that cruise because maybe she's making enough
money. But the key here istwenty percent. Think about it. If

(32:25):
we could all go back and startinvesting and saving twenty percent of what we
make from the time we got thatfirst paycheck, where would we all be
now you know what happens to socialsecurity in the future, that wouldn't matter
absolutely. Yeah, So I thinkthat that's some great advice for her.
Next question from Kirk and Alexandria there'sso much to focus on money when I

(32:49):
read about planning for retirement, Butwhat about everything else? He's kind of
asking me about the non financial part. How should I plan for my actual
life and retirement? Which is actuallya conversation we have quite often right beyond
the money part of it. Ohyeah, I mean, it's important to
make sure that you have some kindof a plan for how you're going to
spend your time, whether it's hobbies, whether it's remaining social, remaining healthy

(33:10):
to some capacity. Don't just belethargic, sleep in every day, sit
on the couch and watch TV.That's that's not a way to retire.
I mean, to each their own. Sure you could do that if you
really want to, But how dowe remain socially active and how do we
keep our minds sharp? A lotof that has to do with practicing those
those hobbies, finding those hobbies beforeyou retire. If you think you want

(33:31):
to move somewhere, rather than justtaking a plunge of mind in the house,
maybe rent somewhere in that community fora month or two to see how
it feels before you make a purchase. There's lots of ways that we can
make that transition. I'd say agood example of somebody that did this recently
that we all know is Steve Sprovac. That man was he has so many

(33:52):
hobbies and so many plans as hetransitioned into retirement that he's not going to
be bored. Yeah, he's notworried about what he's going to do with
his time. But I like thatsomeone is thinking along these lines because it
is so often just you look atthe floor one K balance and you look
at what you have in retirement accounts, and you're only focusing on your budget,
your money and what's going to becoming in, and you're not focusing

(34:13):
on what day to day life isgoing to be like now that you don't
have to be at the office,you know, forty fifty hours whatever it
is a week, and it's ahuge change and it's definitely one that needs
to be planned for. Next questioncomes from Philip and Bridgetown. I'm retiring
soon. I'm going to have apension. I can choose the single life
option or the joint survivor option.I am married. I'm assuming the joint

(34:34):
one is the better choice. Oh, there's a lot of moving parts on
this one. This is where youneed to sit down and talk to a
fiduciary financial planner that can map outa retirement plan for you based around your
goals, your financial needs. Agedifferences is a big one. Sure,
if there's a big age gap,then there can be some major benefits for
your spouse if you were if theywere to survive you, for example.

(34:54):
But this is one where you reallyneed to sit down and dive into a
plan because there are big differences andhow much you will receive from that pension.
If you go single life, it'sgoing to be a lot more than
if you go some kind of ajoint survivor option, it's going to be
much less cash flow. I dohave a cautionary tale here. A few
years ago, close family friends,both lifetime educators, right loved their jobs,

(35:17):
helped so many children, but didn'tnecessarily make a lot, So they
took the single life option to havemore money from the husband's pension, and
he passed away from a heart attackjust a few months after he retired.
Yeah, so you just never know. Coming up next how to boost your
credit score. Right now, you'relistening to Simply Money presented by all Worth
Financial here in fifty five KRC,the talk station you're listening to Simply Money,

(35:45):
presented by all Worth Financial. Imean me Wagner along with Steve Ruby.
Your FICO score. Maybe you don'tobsessed about it the way that I
do. I probably have an unhealthyrelationship with my credit score, but I
also know that it makes a bigdifference and what you're going to pay over
the course of your lifetime when itto your mortgage, rading in buying a
car, and you know, theopportunity to open credit cards. So if

(36:07):
yours isn't so great, there's actuallysome things that you can take control of
and kind of move the needle prettyquickly. Yeah. So I guess this
isn't the worst bad habit you canhave, being obsessed with your credit score,
because it can save you some goodmoney. No, right, tell
it to my husband. He thinksit's a really weird thing. He thinks
you're weird because you're always looking atit. What is it today? What
is it? What was it lastweek? Well, anyways, how did

(36:27):
we bring that score up? Obviouslyyou have a lot of experience with this,
but simply paying down credit card debtis the first way making sure that
you're making those payments on time.We've talked about credit credit to utilization ratio
in the past, that is theamount you owe on your credit cards proportionate
to the credit card limit. Thiswas something that I did. It was

(36:49):
a very easy It wasn't even aphone call. Used the app at my
bank and I typed in, canyou increase my credit limit is? And
they came back and said, sure, we'll give you this money. And
I was like, okay, well, all right, my credit utilization just
went went up. So you've literallydone nothing except for talk to a bot
in a chat box, and youhave improved your credit score because the amount

(37:12):
of credit available to you has justgone up. And as long as you're
not spending more money putting more moneyon that credit card, yeah, easy,
breezy. And there's all kinds ofstudies out there that show it's actually
relatively easy to do and often youcan do that. And you also mentioned
just paying your bills on time.That's the number one thing. Your credit
score is really just how responsible youare with money and credit, and that's

(37:34):
what these lenders are looking at,so understanding that can make a huge difference,
and also checking your credit report therecan be mistakes on those reports.
So knowing exactly what's on there.I know people who are named something and
there's someone else in their family wasa similar name, and all of a
sudden, something from their credit informationends up on the wrong person's report.
I'd be right. You've got toknow what's on there. Yeah, and

(38:00):
it's easy. The major credit agenciesagain, that's Equifax, Experience, TransUnion.
You can go to Annualcreditreport dot comwww dot Annualcreditreport dot com and get
a free report every twelve months.That can give you insight as to whether
or not there's something that you needto keep an eye out for. And
keep this in mind, if youmissed a payment at some point in the

(38:22):
past and it was your fault,you can actually ask the credit bureaus to
maybe reconsider, write a good willletter and they can actually take that off.
Knowledge is power. Knowing what's onthere, doing a few easy steps
can make a huge difference to whenit comes to your credit score. Thanks
for listening tonight. You've been listeningto Simply Money, presented by all Worth

(38:43):
Financial on fifty five KRC, thetalk station