Simply Money

Episode Transcript

(00:06):
Tonight a new inflation report. Isthis the one you're floral and k has
been waiting for pluck? Do youneed to start spending more money? You're
listening to simply money presented by allWorth Financial. I mean, you Wagner
along with Steve Ruby, new evidencetonight that suggests maybe a further cooling down
of the economy, joining us toget into it all worse. Chief Investment

(00:26):
Officer Andy Stout. You know,he just manages twenty billion dollars of assets
from right here in Cincinnati. Askhim a question and he can throw out
numbers out of his head. It'sthe most amazing thing which shows us,
Andy, that you follow these numbersabout how the economy is doing insanely closely.
Well, there are many numbers needingto follow, and yeah, we

(00:49):
gotta stay on top of it.I mean, that's just that's just part
of the job. I love that. That's what you do on your weekends
too. It's like you grill owed, so you do a couple of projects
around the house, had spreadsheets everybody. I love it. I love it.
So P eight or the Consumer PriceIndex came out. It's what gets

(01:11):
all the headlines, obviously, butthe Fed looks at PCE. Give give
us a reminder of what that isand why the Fed cares so much about
it and what we've seen here recentlywith PCE. So the Fed's preferred inflation
measure is PCE, it's not CPI, And we did get an update on
pc last week. We'll get tothat in a second. But why they
like PCE over CPI, it's fora few reasons. One is that CPI

(01:34):
really just focuses on out of pocketconsumer spinning, whereas PCE is broader.
It will include uh consumer prices orconsumer inflation based on healthcare that your employer
pays. It also covers what thegovernment might pay for you know, the
average person thinking like Medicare or Medicaidand the inflation in there. So it's

(01:56):
a bigger picture perspective on inflation.All so, PCE does a much better
job of taking into consideration changing spendinghabits. Specifically, if something is expensive
at the grocery store, you mightsubstitute to something else. PCE will take
that substitution into effect, whereas CPIdoes a poorer job of doing that.

(02:17):
So overall, that's why the Fedprefers PCE. And when the FED is
looking at inflation. What they targetis they target a core inflation rate of
two percent. That means it excludesthe food and energy prices for a couple
of reasons. One, they're veryvolatile and we don't want to necessarily manage

(02:37):
inflation or monetary policy excuse me,based on something that can change, you
know, very abruptly from month tomonth. Also, they don't have too
much control over food and energy.I mean, they don't do much with
oil prices. They can't make oilgo up or down. Food is dramatically
impacted by what might be going onin the weather, right and FED obviously

(02:59):
cannot control the way they can barelycontrol inflation. We're ful weather. So
when we look at core PCE,we saw the smallest monthly increase for the
April data that just came out lastweek. It rose zero point two percent.
That's the smallest this year. Andas a result, the year over
year change dropped from two point eightone to two point seventy five. So

(03:22):
not too much of them over there, but it did drop a little bit.
Still, it's still above that FED, the Fed's two percent target,
And if you look at the datafrom twenty twenty three. It's going to
be hard to get to two percentbecause those twenty twenty three data points from
May through December they're going to fallout of that calculation. And those are
some pretty low numbers in all honesty, and we've seen some, you know,

(03:44):
stubbornly high numbers this year. SoI don't think we'll get to that
two percent target this year. Thatdoesn't mean the FED doesn't cut this year,
because what the FED wants to seeit's not just that we get to
two percent, but that we reallyin order for them to cut, but
that we get a sustainable trend tothat level. So if they get confidence
that we're headed to two percent,then you can start to see rate cuts.

(04:06):
Any One of the things that we'vebeen talking about for the past couple
of years as the FED has beenon this mission to bring down inflation,
is that bad news for the economyis actually good news for the FED.
And we have just some kind ofnew numbers out about GDP, which we
would say is kind of a reportcard on the health of the economy,
and that might also look like goodnews for the FED. Yeah, so

(04:30):
we did get the second of threeupdates on GDP for the first quarter originally
came in at one point six percent, but when the federal earned the FED,
I'm sorry, the BEEA, theBureau of Economic Analysis, when they
release GDP, they don't have allof the data yet for the quarter.
They're making estimates based on what they'vegot so far before the first estimate or

(04:56):
after the first estimate for the secondwhat they don't have they don't have the
complete picture on personal spending, ontrade which is like imports and exports,
and also been business inventory levels.So now we have a more complete picture,
and we saw it drop from onepoint six percent in the first quarter
to a one point three percent firstquarter growth. So it's really driven mostly

(05:16):
by softer consumer spending. That wasthe driver to lower that and still indicates
positive economic momentum. So that's good, but is good from an inflation perspective
because if spending is coming down alittle bit, you know, that does
suggest demand to uh drop, whichwould or which had h you know,

(05:40):
cause some disinflationary pressures out there,and that's what they were demanding. That's
what we've been aiming for. Soat this point I'm curious to know what
the latest predictions are on when theFed might actually cut interest rates. Yeah,
So if you look and we canlook at these predictions based on where
certain you know, financial securities trade. They're called Federal fun futures, and

(06:03):
it's where Wall Street analysts are buyingand selling. It's a very liquid market,
and that can just tell you canback into the probability of a rate
cut. And when we look atwhat's going on right now. The next
meeting is next week for the Fed, it's on June twelfth, there's basically
a zero percent chance they do anythingat that point in time. There's a
July thirty first meeting, it's afifteen percent, So nothing's going to happen

(06:27):
there unless something changes dramatically out ofthe left field. Then things get a
little bit more interesting. September meeting, there's about a two thirds chance that
they do cut rates. When wego out to the November meeting, almost
ninety nine percent chance of a ratecut at that point in time. December,
we're you know, more than onehundred percent chance of at least one

(06:49):
rate cut. So when we lookat the movement by the Federal Reserve and
what's being the movement by the marketsregarding Federal Reserve rate cut pricing. You
got a chance in September, yougot an early strong chance in November and
December of having at least one bythe There's an outside chance you get two

(07:10):
cuts this year, but a lot, a lot will depend on how the
inflationary environment evolves this year. You'relistening to Simply Money, presented by all
Worth Financial Ammi Wagner, along withSteve Ruby and Andy Stouder, chief investment
Officer, who joins us every Mondayto make sense of maybe what the Federal
Reserve is seeing as good news,good news hopefully for all of our four

(07:30):
oh one ks, and inflation continuingto come down. Any speaking of markets,
some volatility last week you might expect, you know, if the S
and P five hundred is up,the dolls, but the Dallas kind of
all over the place last week.Let's get into why specifically you think that
was. Well, we can seeexactly why that was. You can look,

(07:54):
there's there's some thirty stocks in there, so it's going to be driven
by you know, maybe one ortwo stocks that do really good or really
bad. And when you look atwhat happened last week, you know that
the big driver really was Salesforce,Uh. You know that's a you know
company that does relation customer relations,soft management software, and they took a

(08:18):
twenty percent hit on prey on theirsock price when they released their earnings.
So they had some bad revenue numbers, but more importantly, they had some
they had a poor forecast for theirguidance or their future earnings. So that
resulted in Salesforce being down thirteen percentuh for the week, and it was

(08:43):
you know, thirty to twenty percentfor that single day. And some other
stocks that did not have a greatweek that had a big impact would have
been a United Health and Microsoft.You when you look at all of those,
you know, those were the bigdrivers of what happened last week in
terms of the weakness that you sawat the DAL. Those are testaments to

(09:03):
a constant reminder that we're always talkingabout, don't have more than five or
ten percent of one company stock makingup your entire portfolio, because it can
get kicked in the teeth pretty quickly, seemingly out of nowhere. Now,
Andy, we have an important jobsupport coming out this week. Talk about
that and what else you might belooking at moving forwards here. Yeah,

(09:24):
when you see the start of themonth. Like we have right here,
it's always packed with some critical economicupdates, and the most important one is
going to come out on Friday,and that is the job market data for
the month of May. What economistsare looking for, they're looking for new

(09:46):
jobs being added by employers of aroundone hundred and ninety thousand, and they're
also thinking that the unemployment rate willremain at three point nine percent, So
that's a still a pretty healthy labormarket. I mean, what the Federal
Reserve wants to see, they wantto see the job market remain relatively strong,

(10:07):
but inflation come down. So aslong because what the Federal Reserve targets,
by the way, where their mandateis, it's full employment and stable
inflation. We're still we're close enoughto full employment still, I mean,
I know, we're a little higherthan where we were, you know,
six months ago in around three anda half percent. Now it's three point
nine percent, but that's still apretty low number by historical measurements. So

(10:31):
we'll see how that plays out inregards to the May update. We'll also
get some other updates. We getthe ism, manufacturing and services surveys,
and by the way, the manufacturingdata came out earlier this morning, and
what it showed was that this industryremained in contraction territory. But fortunately we

(10:54):
did see a little bit of inflationeasing there, so that's good from that
perspective. Also, this week we'llget the vehicle sales, we'll get consumer
credit like how much people are borrowing, and also weekly jobless claims. Thanks
Sandy. Here's the all Worth advice. If there is any market volatility on
the horizon, don't worry about it. Stick with your long term financial plan,

(11:16):
which always, of course, shouldbe taking volatility into account. Coming
up next, the sacrifice that sixin ten out of you are likely making
and why it may be causing moreharm than good. You're listening to Simply
Money presented by all Worth Financial hereon fifty five cars the talk station.

(11:39):
You're listening to Simply Money presented byall Worth Financial. I mean Wagoner're along
with Steve Ruby. If you can'tlisten to our show every night, you
do not have to miss a thing. We've got a daily podcast for you.
Just search Simply Money on the iHeartapp or wherever you get your podcasts.
Straight ahead at six forty three.Why some people actually need to be
spending more money. Is this youWe'll get into that. One of the

(12:00):
most underrated aspects of financial planning involvesestate planning, and one of the most
important aspects of that involves, ofcourse, having a will. There's a
new trend out that also is surprisingbut also scary. Yeah, I mean,
being in the industry as long asI have it doesn't feel that new
because this is always one of thoseareas where I feel like I have the
bug folks that I work with toactually do their homework. It is a

(12:22):
miserable topic, but it's an importantone because it ensures that our final wishes
are met in the event that weexpire early, so to speak. And
the trend that we're talking about hereis a survey that was done by carring
dot com, the Will's in EstatePlanning Study from twenty twenty four. Only
three inten adults reported having a willthis year, three in ten. That's

(12:43):
not good. For as long asI've been doing the show a decade now,
we've talked about this several times ayear, and it's always been about
half people. Half of people havetheir wills. The fact that we're trending
in that direction. Listen, here'sthe reality. Everyone's going to die.
During COVID, more people got wills. And I think it's interesting because more

(13:03):
people were I guess, thinking aboutdying during that time. But just because
that global pandemic has passed doesn't meanthat your odds of never dying have gotten
better. It's still going to happen. Yeah, there's not this imminent threat
looming above our heads about an unknownpandemic, like, oh my god,
is this actually going to kill me? Like what's going on here? So
people were sitting down there, weredoing their trust, their wills, whatever

(13:24):
it was, in their estate plans, and here they are just getting a
little bit too laid back with it. I get it. You're right.
It's not something that people like todo. I had it on my to
do list for probably six months thelast time I needed to redo it.
But it is an important thing,and for those of you who are putting
it off, please think about itthis way. This is an act of

(13:46):
love, really to the people thatyou care about. If you pass away
and there is no will in place, it goes through probate and what you
intended doesn't necessarily end up happening.Lots of times it does. Sometimes it
doesn't. I was just made awareof a situation with a family member recently.
They knew someone was sick, theydidn't do anything about it. And

(14:07):
the person who was left, youknow, the spouse who was left.
It got passed on to the children, and his children not hers. She
might lose the house geez right,and so please please take care of this.
It makes a lot of sense.This trend three and ten is not
a good trend. And it's morethan just the will, because estate planning,

(14:28):
it could be a trust or awill. It's your healthcare directive,
your medical medical directive, your financialpow attorney, your healthcare power of attorney.
It doesn't just take dying to needto have a proper estate plan because
if you become medically incapacitated, who'sgoing to act on your behalf? If
the bills need to be paid andmoney needs to come out of an account
that nobody can access unless a courtappoints somebody to allow them to access your

(14:52):
money to pay those bills. There'sa lot of moving parts here with the
state planning, and we all havehorror stories about somebody not updating a beneficiary
money going to somebody else that theythought it would never see. So make
sure you're sitting down and working onthat estate plan. It's very important,
all right, from something that Americansaren't doing to something that far too many
are. This is a new bankRate survey. More than six in ten

(15:15):
parents who have children who are adultseighteen or older say they are currently sacrificing
or have sacrificed their money to provideassistance to their adult children. This does
not surprise me at all, now, it doesn't. I've talked about this
on the show plenty. One ofmy maid and motivating factors in life is
to give my daughter a better upbringing. And I had to provide more opportunities

(15:37):
for her than I had. AndI know a lot of folks share that
that line of thought, and itmakes it easier to ignore your own financial
plan at the cost of helping children. And we're seeing that more and more
of these days, with college expensesgoing through the roof and wages not necessarily
keeping up with inflation, the costof living is higher for our children now

(16:02):
than it was for us when wewere graduating college or entering the workforce at
whatever point that might have been.So it is tempting to continue to support
our children as long as some peoplehave been. Someone came into my office
recently, really sweet couple for thevery first time, had several children,

(16:22):
and when I asked about the children, they all smiles. Right. They
were so so proud, as allparents are, and they were talking about
the fact that they had put thosethree kids through a nice school, they
came out with zero student loan debt, and then also that they had purchased
nice cars for all of the childrenso that they didn't have to worry about

(16:45):
that once they got their new job. Right, they were really really proud
of what they've been able to doto help their children adult children. Then
we kind of flipped the script andstarted talking about retirement. They're a few
years away from wanting to retire,and they're really work close to where they
need to be in this. Ifit sounds familiar, if it feels familiar
to you, it's because it reallyis. So many of us are just

(17:08):
so used to We just love ourkids so much, and I understand this.
You sacrifice for them. What youlose perspective on is that they have
loans that they can get for college. There are no loans for retirement,
there are no scholarships, and ultimately, if you give give gift to your
kids and have nothing in retirement,your children are going to have to take

(17:29):
care of you. Yes, thatis one hundred percent accurate, and that's
one of the benefits of sitting downwith a fiduciary financial planner and building out
that financial plan, identifying your owngoals in the long run, understanding the
assets you have, how you're goingto generate that paycheck and retirement. If
you are gifting or giving too muchto your children to support your own retirement,
then a financial plan can be eyeopening to motivate the importance of having

(17:52):
a conversation for starters, with yourchildren that you're still supporting to some capacity,
to understand what you can offer andwhat might need to stop so that
your children don't have to support youfrom the ages of I don't know,
seventy to ninety five years old.Yeah, because you can't borrow money in
retirement to pay your living expenses.But if you're helping children with college,

(18:15):
for example, they can they canborrow money. It's a whole other topic
in and of itself, but atsome point there has to be an important
realization that maybe you can't support themat the level that you would want to
without completely derailing your own financial plan. You mentioned getting a plan. That's
incredibly important. I think it's probablyfor most people, going to confirm what

(18:36):
you already know in the back ofyour head, which is that by continuing
to pay cell phone bills and insuranceand rent or whatever it is for those
kids that you're getting farther and fartherbehind the eight ball. But the financial
plan gives it to you in blackand white. But I'm going to take
that a step further and say,if you're afraid to have this conversation with
your kids, you just can't doit. You don't like to have these
uncomfortable conversations. If you're working witha financial advisor, bring your children into

(19:00):
that advisor's office. Really, ifwe've got to be the bearer of bad
news, will be the bearer ofbad news. But we can have that
conversation in front of you and yourchildren. Of here's the numbers, here's
how they play out. If youdo not want mom and dad on your
couch in your home for twenty yearsat the end of their lives, something

(19:21):
has to change, and it hasto change now can be eye opening for
both parties involved in that meeting.You have to have that conversation. Here's
the all Worth advice. The sooneryour adult children can get on the road
to their own financial independence, thesooner that you're actually going to be able
to become financially independent, which iswhat so many of you have worked so
hard for. Coming up next,do you work in a profession that's of

(19:42):
particular interest to cyber criminals? Willbreak down their top targets next? What
you need to know? You're listeningto Simply Money presented by all Worth Financial
here in fifty five KRC the talkstation. You're listening to Simply Money presented
by all Worth Financial, I MemiWagner along with Steve Ruby. Which sectors

(20:06):
are actually the top targets for cybercrime? It seems like everyone is a target
these days, but are there certainsectors that need to watch out for it
more than others? Joining us tonightas of course our security experts. Dave
Hatter from intrust It, Dave,this is interesting. Who really needs to
be aware of that? I guesseveryone does? First and foremost. Well,

(20:27):
Yeah, Amy, as always,thanks for having me on but you're
right, everyone needs to be aware. I mean, everywhere you turn,
there's just a steady stream of attacksand scams and fraud out there that are
leveraging the digital technology that we alluse every day. But I thought this
was pretty interesting. The World EconomicForum just recently put out an article about
this. Now they're raising awareness aboutthis in Europe, but I think the

(20:48):
same things apply here. And whenyou look at the sectors they're pointing out,
particularly critical infrastructure. You know,this has been a concern of mine
for a long time. We've talkedabout it before. The FBI in the
US has identified sixteen different segments ascritical infrastructure. Some of them are pretty
obvious, things like power plants,dams, water systems. Some may be

(21:08):
a little less obvious. But whenyou look at it, you can see
that the FBI, DHS, EPA, NSA, CIA, every three letter
government agency is warning about these andyou know the same is true based on
this research coming out of Europe.It's a real problem because as our society
becomes increasingly digital, you know,you have impacts in the real world.

(21:30):
Unfortunately, we've seen some of thoserecently. What are some of the impacts
that that we may see as asinvestors and everyday citizens. Yes, Steve,
well, that's a good question.I can't remember if we talked about
this or not, and maybe youguys have talked about it independent in me.
But you know, the SEC hascome up with some new reporting rules
for disclosure around cyber incidents. Sofor public companies, they've now got some

(21:53):
requirements to report this stuff. We'veseen some material reports where large companies hit
by these things. For example,Change, which was part of United Healthcare.
You know, at one point theirsystems were down for weeks. I
read somewhere like four out of fivedoctors had trouble getting payments, and roughly
one third of all Americans sensitive healthdata was potentially breached as a result of

(22:15):
that. So there's one third huhyeah, just only a third. Well
only in that one, Steve,trust me, all all three thirds of
us are out there somewhere in oneof these breaches, you know. And
that's while I don't want to gettoo far down that rabbit hole and burnt
up all my time. It's oneof the reasons why I'm so frustrated about
the lack of privacy laws in thiscountry, because these breaches happen your sensitive

(22:37):
data is stolen. As a consumer, you get the letter, you get
some free credit, monitoring, whatever, but you bear the brunt of these
crimes. And like the change healthCare for example, you know, there
are numerous health related agencies, againgetting back into the idea of critical infrastructure
that have been hit lately. Youknow, they're taking systems offline, doctors
can't treat patients. And that's whyit's so critical for people to take this

(23:02):
stuff seriously, both as an organizationthat's providing these services, as a consumer,
to put pressure on your representatives andthese agencies and organizations to take this
stuff seriously because, like I said, as the physical world becomes increasing reliant
on digital technology, you know,if you can shut down all the hospitals
in a particular network, you canpotentially deny services, you know, in

(23:25):
a wide area. Plus in manycases these are ransomware attacks. They're stealing
your data as well. So evenif the hospital has a good approach to
backup and has resilience in their systemsand can restore quickly, they've now stolen
your sensitive data which they're going touse to ransom the hospital right to get

(23:45):
them to pay even if they're notstill down, and then in many cases
they're going to use that information they'vestolen about you to impersonate you apply for
benefits or who who knows whatever else. So there's unforcedly now many facets to
the kind of attacks we're seeing.But when you just focus on this critical
infrastructure phase and when you see thealarm that's being raised by folks like Director

(24:08):
Ray and Harry Kocher, the newNational Security Director, it's pretty alarming.
Well, we know whose cyber criminalsare attacking. But you know, the
World Economic Forum got together and starteddiscussing some of this, and I'm curious
to know how they're kind of tacklingsome of the global cybersecurity challenges that they're
at least aware of. What arethey do it? Yeah, part of

(24:29):
it is awareness. Trying to raiseawareness and I think put out warnings like
this so that the organizations involved aretaking these things seriously. And you know,
let's be real, Steve, there'snothing you can do that will make
you completely impervious to a cyber attack. But there's a lot of basic cyber
hygiene things. Microsoft claims there's basicallyfive things. If you do those five
things, across your organization. Therest of the attacks that you would potentially

(24:52):
be subject to are like, youknow, way outside of the standard distribution
of the average bell curve, andit's things like zero truck MFA, things
we talk about all the time.So it's partially awareness, Partially it's workforce
development. You know, I sawa similar or I saw a number in
this report that they believe there's fourmillion cybersecurity related jobs that are going unfilled
currently. I think there's a lotof reasons for that, and we won't

(25:15):
have time to dig into that,but it's it's workforce development, it's education
and awareness, it's putting out resourcesto help these agencies. Because if you
think about it, if you're asmall water plant and let's say the appellation
part of Ohio or Kentucky, doyou do you even understand these risks?
Do you have the resources to addressthem? Are you doing the low hanging

(25:36):
fruit kind of things that will makeit much much more difficult for the bad
actors? Maybe not. So youknow, a lot of it is around
making resources available, not necessarily employeesper se, but you know, education
and awareness, simple tools, pointingto companies that can help. And I
think just trying to raise the awarenessthat these attacks are real, they're occurring.

(25:57):
We've seen several water plants attack inthe not too distant past, and
I can promise you this isn't justtenful hat Dave Hatter warning about it again.
It's folks like the FBI. Soyou know, thankfully people are paying
attention. You've seen our federal governmentget much more engaged in this through organizations
like SISA, and it not onlyalerts they're putting out, but again tools

(26:19):
and resources to help these organizations tryto prepare and defend against these kinds of
attacks. I think the key Daveis being on kind of higher learn all
the time. And you know,from a personal standpoint, you know,
I know the first time I gota letter about a breach that my information
was involved, and was like,oh my gosh, this is scary.

(26:41):
Honestly, now it's just about likejunk mail. It's like, uh,
another day, another letter about abreach. We've almost come to expect these
things. And I think you knowat the works in the workplace too,
you can never let your guard down. One of the things that our companies
started doing several years ago, andI think I complained to you about this.
At one point, they would sendus emails that looked like they were

(27:03):
legit, but they weren't trying totrick us. But over time, you
start to be able to spot thesefakes, and I actually think they've probably
gone a long way in helping usbe able to keep people safe. So
I almost think you have to beon high alert all the time as just
as a person and as an employee, and then it's on employers to train
you to know what to keep aneye out for. I completely agree Amy

(27:26):
unfortunate, and I know people don'twant to hear this again. There's certain
there's several things that are relatively inexpensiveand more or less frictionless to do that
organizations should do. Part of thatis education and awareness. And I would
argue, what's your discribment. You'relike, the fish testing is a key
part of it. You know,there are great products out there like no
before that are relatively inexpensive. Yousign up for it. You can control

(27:48):
how realistic the fish tests are.But the fact of the matter is I
agree with you one hundred percent,and the metrics show it. Over time,
people start to you know, casingthey click on the easy one.
You keep ratcheting up the difficulty,but people learn how to spot these things.
And you know, now we'll say, with AI in the mix,
whether it's voice cloning or just generativeAI and the ability to create more realistic

(28:11):
emails, I think that the needfor this kind of fish testing is only
more important. But you know,you get metrics, people get training,
they get smarter because one of theweakest links. You know, you can
apply all of the most intense securitytools and processes and practices out there.
But if someone clicks a link tofrom a phishing email and that downloads ransomware

(28:33):
into your environment and they have thepermission for that to run, well they
the bad guys have now just circumventedall those other controls. And it really
is, unfortunately a scenario where youneed to stay constantly vigilant. You need
to be skeptical of everything. Yougot to put on your Dave hat or
tinfoil hat, and everyone needs tobe vigilant. Right, well, well,
did you know what sectors are specificallybeing targeted? Just to assume everyone

(28:56):
is a target, keep your guardup at all times. Great insights as
always from our tech expert Dave Hatteryou're listening to Simply Money presented by all
Worth Financial. Here in fifty fiveKRC the talk station, you're listening to
Simply Money presented by all Worth Financial. I mean you Wagner along with Steve
Ruby. Do you have a financialquestion you want us to answer. Maybe

(29:18):
you and your spouse aren't on thesame page, or it's just keeping you
up at night. There's a redbutton you can click on while you're listening
to the show. It's right thereon the iHeart app. Record your question.
It's coming straight to us and straightahead Heart collectibles. People are apparently
making money on what do we think? Oh, we will weigh in.
We've got lots of thoughts on thisone. Okay, ask yourself this question.

(29:41):
Are you a saverer? Are youa spender? And how do you
think you'll be when you retire?This ends up being a major dilemma for
a lot of people. Steve andI think you can understand why you've been
in this accumulation accumulation stage all ofthese years. When you're working right,
you're putting money away, you're puttingmoney away, you're squirreling it away,
and then all of a sudden youget to the point where you have to

(30:02):
start pulling that money out, andfor a lot of people, that's a
tough pill to swallow. I wouldgo as far as to say that most
folks that I work with are nervousabout pulling the trigger in retirement and making
that transition from saving to spending.It almost doesn't feel natural. There's fear
tied to it. Am I pullingfrom the right accounts? Will my money
lasts longer than I do? Whatif I make a mistake, I'm not

(30:22):
saving anymore, so I can't closegaps between where I am now and where
I need to be. So it'san intimidating jump. So make sure that
you go into retirement with an understandingof how you're spending money. It doesn't
need to be every single penny I'mtalking about. Just understand your housing,
utilities, groceries, gas. Understandwhat your major financial goals are so that

(30:47):
you know where your money is goingto be used. A lot of people
that they're on autopilot as well,and that they're just saving, saving,
saving, They might forget some ofthe other important parts, like how am
I invested? Do I need topivot and pull away my from being higher
risk to maybe a moderate risk asI transition into retirement. Another piece of
this puzzle, though, is wetalk about kind of diversity all the time,

(31:08):
right, diversity in your portfolio,but we also say, hey,
you should be diversified in the kindsof tax treatments that you have. So
if you have all of these money, all this money and tax deferred accounts,
right, so it's a traditional fourto one k and traditional irase and
you've got a lot of money you'vesaved and saved and saved well, and
you're afraid to spend it. Thenyou get to the age where you're required

(31:30):
to take minimum distributions out of thatmoney. That requirement simply on its face
could bump you into a higher taxbracket. So by spending money earlier in
your retirement from those specific accounts,it could actually save you money. Yeah,
it's a real bummer because a lotof good savers are penalized with tax

(31:51):
bombs. Yes, that's why Iwould look at it, because if you
have a lot of pre tax moneytouched away in a four to one k
iras, maybe you did a pensionroll over. Now you are thinking about
where you need to spend your moneydown from, and oftentimes that might be
taxable assets in a brokerage account,maybe you inherited some stock you're trying to
determine what to pull from. Itcan be a good idea to realize some

(32:14):
of those taxes and generate the paycheckfrom the pre tax assets so that that
money doesn't continue to grow to apoint where now you're seventy three or seventy
five years old and you're like,what, I have to take out one
hundred thousand dollars a year, right, I don't need to. I don't
need that much money. What amI supposed to do? That's going to
create an awful tax situation? Yeah, So planning accordingly about which accounts you

(32:36):
pull from can alleviate future tax headaches. You're listening to Simply Money presented by
all Worth Financial Memi Wagner along withSteve Ruby, as we talk about a
problem that sounds crazy, but alot of you might have it at some
point, and that is being ableto actually spend money and retirement. There's
so many examples of this that Ican think of. You know a couple

(32:57):
that had it built into their planthat they were actually to buy a new
home and retirement. They had plentyof money to do it, yet they
found a house that was maybe fiftythousand dollars more than they were thinking they
could absolutely do it, and theywere paralyzed at the aspect of pulling that
money out of their accounts, right. And I do think one thing that
you have to really understand and gointo retirement with eyes wide open is and

(33:21):
I don't understand so many people thinkthat retirement is going to be cheaper than
your life when you were in theworking world. I don't know. If
you've got a commute that's ten hourseach way, maybe that would be the
case. But for most of us, you know, the commute, the
dry cleaning bills, the lunch outwith colleagues, doesn't equate how much money
you're going to actually spend in retirementwhen you're spending time with the grandkids and

(33:43):
buying them ice cream and traveling more, maybe playing golf or pickleball or whatever
it is, buy new pickleball rackets. I don't know, but retirement ends
up being a little more expensive.Don't curl into a fetal position at that
time. You should have a financialplan that actually plans for that you'd be
able to spend some money. Yeah. The way I explain that is your
go go years of retirement and toretirement, it's time to check the bucket

(34:07):
list, items off of your checklist, get out there, do things,
experience things while you're younger, haveenergy, want to see the world,
for example. And then you haveyour slow goo or things start to move
a little bit slower. Maybe you'renot spending as much money at that point.
Sure, some of your expenses couldfall off, but then on the
flip side, medical expenses go upas you hit your no go years of
retirement planning where you just I don'tknow, yelling at kids, you get

(34:30):
off your line or whatever. Yeah. So just understand, right, retirement
almost comes in different phases, andso many of us just kind of lump
it into this is how much I'llbe spending. You'll be spending different amounts
at different times on different things.But also understand there are strategies that you
can use in order to try tokeep as much of that money in your
pocket as possible, and that mightinclude spending money. Sounds crazy, but

(34:52):
there's a way to tax strategy thatcan make a lot of sense. Here
here's the all Worth advice life isfor a living. If you have saved
well, we encourage you to livewell as well in retirement. Coming up
next. It is a ridiculous investmentstrategy. A lot of people are talking
about it. We'll get into itnext. 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 percent by all WorthFinancial. I mean me Wagner along with
Steve Ruby. How does this soundfor a great investment strategy? VHS tapes,
whiskey, comic books. I can'teven say it without laughing. I

(35:35):
know, right, it's ridiculous,it really is. I mean, I
have friends that collect whiskey for fun, but they they at least drink it.
And you know, I have abuddy that he has an end with
a local liquor store and anytime theyget some kind of fancy new thing like
a Pappy van Winkle or something,it'll be the first to know and he'll
get that and he sometimes trades iton the secondary market, which is just

(35:55):
selling it to friends or family.But what we're talking about here, in
recent years, obvious collecting has surgeboth pastime more significantly an investment strategy.
So VHS comic books, I'm notso sure about that as opposed to your
traditional stocks and bonds. There's aforty two year old guy who put twenty

(36:15):
thousand dollars into It's an exchange youcan buy fractional ownership, and he bought
it. Was like some old iPhonesthat probably don't work anymore, some VHS
tapes I don't even know, somebottles of whiskey, and said, I
wish I would have invested more,right, because he thinks this is going
to pay off really, really bigfor him someday. When you are buying

(36:37):
a stock, you are buying apiece of company that has a lot of
people whose only mission is to finda way to make money, find a
way to generate revenue. That isthe ownership of stock. When you invest
into a collectible like a VHS today, someone can say there's a lot of
value in this goonies VHS tape,and tomorrow there could be zero market for

(37:00):
it, exactly. So it's somethingthat is speculative and entirely based on somebody
else's desire to own that thing.There's no corporate greed fueling the value of
a VHS tape as opposed to astock you're really betting on capitalism at that
point. Companies are going to findways to make money almost no matter what's

(37:21):
happening, as opposed to a VHSone hundred percent percent speculation. At that
point, it's the greater fool theory, Right. You're buying something and you
are then betting on the fact thatthere is a greater full out there that
will pay more than you did forthis. And you know, it's like
beanie babies, and there's so manyexamples of these things that were a frenzy

(37:43):
around them and then it just poofgoes away. It's spent a lot of
money on things. One thing inthis article that we're talking about here that
I do have memories of is whenI was a little like collective baseball cards,
and I remember looking at the valuesof my cards and cards that I
wish I had owned. One ofthem was a nineteen fifty two Mickey Mantle
that I used to see it andit was like fifty thousand dollars that was
like seven years old. That's that'samazing. I Washo owned one of those.

(38:05):
It did sell for twelve point sixmillion. Dollars at auction in twenty
twenty two. But that's going tobe your outliers. That's the loud thing.
That's what grabs your attention here andmakes you think that could be me.
Maybe I should buy some baseball cards. Yeah, it's that Michael Jordan
card that my son keeps thinking.Is someone's going to pay thousands of dollars
for that? It's not worth anything. Thanks for listening tonight. We hope
you're going to tune in tomorrow.We're talking about why you may have already

(38:28):
lost out on some hot stock games. You've been listening to Simply Money,
presented by all Worth Financial here onfifty five KRC, the Talk station