Simply Money

Episode Transcript

(00:06):
Tonight, there was oh so muchtalk about recessions. Whatever happened to that?
Will we ever see one? You'relistening to simply money present of I
all Worth Financial Ammi Wagner along withSteve Ruby. If you were to go
back in time, not that farreally, just the end of twenty two,
everywhere you turned, financial headlines everywheretalked about an impending recession of recession

(00:29):
along the likes that we have neverseen in our lifetime, predicting for the
first quarter of twenty twenty three.Then it didn't happen. Then it was
a second quarter of twenty twenty three, nothing happened, third quarter of three.
You get my drift, lots ofpredictions, nothing happened. Yeah,
So what a new analysis shows duringthe latest round of quarterly earnings calls.

(00:51):
This is according to facts, thatthe number of S and P five hundred
companies that actually mentioned the word recessionfell to its lowest number since the fourth
quarter of twenty twenty one. Now, during that time frame, if you've
remember and didn't block that out ofyour memory, that was right around the
time of the economy reopening after thepandemic completely rocked job market and global shipping

(01:15):
and the global supply chain overall.It was a mess, right, we
all remember what a mess it wasduring that time. Lots of companies talking
about the possibility of a recession,how they were planning one, what they
think the impact of that could beon their company. Fast forward to today,
twenty twenty four, twenty nine offive hundred companies that make up the

(01:36):
S and P five hundred, right, the five hundred largest companies in the
American economy, just twenty nine ofthose uttered the word recession during recent call.
That's even beyond the average for thepast ten years, even long before
the pandemic. So it's just sointeresting because as an individual investor, if

(01:57):
you can remember back during that timewhen everyone was calling for as if you
pulled money from the market or thoughtseriously about pulling money from the market because
so many people were talking about recessions, one had to be coming and you
were just going to get out ofit. It didn't turn out well for
you. Yeah, Chief investment OfficerAndy Stout of all Worth Financially, he
put together this this wonderful chart thatI pull up in a lot of meetings.

(02:20):
I have this thing ready in prettymuch every meeting that I sit in
in case somebody starts talking about thisis different, this is the next big
thing. This is what's going tochange the face of the markets as we
know it for the rest of eternity. And it's called the Wall of Worry.
And it shows all of the timesthat this has been different, with
all the huge global events that youcan think of, all the way back

(02:42):
until the since the Great Depression,not recession depression, and all it is
is an arrow that goes up intothe right. Yeah, that's what happens
over time. Now that doesn't meanthat it doesn't sting, to put it
lightly, sure, when there isa big recession, but it's it's com
paired with a bear market. It'simportant to remember that it's still going to

(03:05):
be like walking up the stairs whileplaying with a yoyo. As Nathan Backrach
used to say, Well, andI think is there's all this talk of
recession during different times. One ofthe things, as you're mentioning Andy Stout,
our chief investment officer, he alsohas an all Worth recession scorecard,
which just is really looking forward atthe next six to nine months and saying,
okay, there's about fourteen leading economicindicators that if these start to change

(03:28):
from green to red, we needto be worried. To be honest,
that recession scorecard also was read forthe past year or so, we were
not having the conversation with clients eventhough that recession scorecard was run for the
Hills. But at this point intime, it's no longer red. It's
actually yellow. And I was lookingat it earlier today. Of those fourteen

(03:51):
leading economic indicators that we look reallyclosely at, four of them are red,
ten of them are green. Yeah, I mean, obviously it's a
better place to be than looming recessionrun for the Hills. Things have changed
for the better at this point intime. But you know, when will
there be a recession. We don'tknow for certain, but there will be

(04:12):
one. One is coming. Oneis coming, just don't know what it's
going to be. One is alwayscoming. Because what you have to understand
as an investor, it is avery normal part of the economic cycle.
Now, if you are an investorwho gets really nervous when there's talk of
a recession, or even if there'sa day when the markets are down and
they're down a little under half ofthe time, right, I mean it

(04:33):
happens quite often, and if thatmakes you incredibly nervous, then you just
have to pack your brain full ofhistoric perspective to understand. Even if it
makes you nervous, you've got tostay put, because here's the thing about
recessions. They come, they go, Some are worse than others, some
less longer than others. But ifyou are a baseball fan, you will

(04:56):
understand that batting of thousand is areally good thing in our our economy,
our country, our stock market.Batting a thousand for rebounding from recessions,
and you never know, many timesthe really good days in the market come
on the heels of really bad days, even during recessions. So you're going
to miss out on a lot ofpotential upswing. And I'm confident that's not

(05:16):
going to change either, that we'restill going to be bat in one thousand.
As far as upswings after major recessionsare concerned. There's been seven recessions
since nineteen seventy five. Some ofthem have lasted a long time, some
of them were little blips, sometalking COVID was one of the shortest recessions
we've ever seen, and it didn'tfeel like it should be no. I
mean, honestly, maybe this isrecency bias, but it did feel a

(05:39):
little different because we hadn't had anactual, real pandemic. I would say
a global pandemic is a bit different. Yeah, in normal days, in
one hundred years, but it's stillbounced right back. Companies still want to
make money, and they found waysto pivot to do just that. They
weren't able to sell as much boozebecause every place was shut down, so
they made hands sanitized, yes,and they still generated profits. So betting

(06:03):
against the stock market is betting againstgreed. Yeah, is betting against corporate
greed. It's betting against capitalism.It's betting against the United States itself,
which I'm not a fan of doing. So, you know, recessions come
and go, they will happen.You bring up a good point. Educate
yourself if you're somebody that feels likeyou need to run for the hills with
one looming at some point. Again, we don't know when, but it

(06:26):
will happen. It's normal. We'relistening to Simply Money presented by all Worth
Financial. I Meani Wagner along withSteve Ruby, as we talk about a
recession. So much talk about onecoming, how bad it was going to
be, how much it was goingto wipe us all out, impact our
four to one case, and we'restill waiting. And I think, you
know, that's really good perspective foranyone that was tempted to move your money

(06:47):
out of the market during that time, or to do anything different. I
got a text from a friend ofmine not too long ago who said,
Hey, not being political here,but my husband and I feel like,
regardless of who ends up at theOval office in November, that a recession
is coming right after that. Sowe're thinking we should just take our money
out of the markets now. Sonot being political, not being political,

(07:10):
she was saying, we're not red, we're not blue. We just think
it's going to be really bad forour green, and what really would be
bad for their green would be takingit out of the market entirely. And
everyone can spin up a thousand differentreasons why you think it makes sense to
pull your money out of the market, and I get it, it can
be scary. You were just mentioningthe pandemic. The markets were in free

(07:30):
fall for about a month. Wewere talking about the economy closing down.
I remember sitting in front of justthe TV, just you know, glued
to it about what's coming and whatit could mean. Taking my son to
the grocery store and just shoving foodoff of shelves into the cart, and
he was on the verge of tears. He's like, Mom, you don't
normally act this way. And Ididn't. But I didn't pull my money

(07:54):
out of the market. And thecrazy thing is if I had, there
would be no reason to realize thatthe market was now on an upswing,
right, coming back up. Economywas still shut down, things were still
really scary, and yet for whateverreason, stock market was rebounding and it
continued to grow and grow and grow. I know people who got out of
the market during that time who stillhaven't gotten back in. It makes me

(08:16):
so sad. That is awful.That is really really terrible, because the
markets have been in a terror.Yes, I mean twenty twenty two was
still a bit of an anomaly yearbecause we had interest rates rising as quickly
as they did and stocks and bondswent down together. But outside of that,
I mean twenty twenty three, twentytwenty four year to date, we've

(08:37):
been in a great place. Soyou know, when a recession hits,
if some people find as an excuseto run for the hills and move their
money to something safer like cash.Again, we've been talking about the high
interest rate environment that we're still inand being able to capitalize on cash for
your short term assets. Do notget tempted to move your long term assets

(09:00):
into cash, because the best dayshappen during the worst periods in the markets.
You will not you will take longerto recover if you attempt to do
something like moving your assets to cash. It just doesn't work. And I
think in so many people's brains youcan justify it of like it's just bad
right now, so I'm just gonnaget it out and then I'm just gonna
I'll figure out the best time toput it back in. And we go

(09:24):
back to yeah, I know well, and we go back to Andy's analysis
Andy Staler, Chief Investment Officer,because it's just so good. But he
has even looked at if you putone hundred thousand dollars in the s and
P five hundred it was it twentyfive thirty years ago and just let it
ride right, how much you wouldhave versus if you miss the ten best
days in the in the economy,or the ten beessdays in the stock market,

(09:45):
or the five best days or thetwenty best days. And the difference
is hundreds of thousands of dollars andlost potential gains by sitting it out.
That's why it blows our mind whensomebody asks questions like that, when your
friend asks, not political, butafter the political events, we're thinking that
something's going to happen, so wewant to move to cash. Oh no,
please, please don't do that.In a situation like that, you

(10:09):
could really derail your ability to retirethe way that you want to. Recession
is always coming. It's just areally normal part of the cycle, and
I would even argue a healthy partof the cycle. Warren Buffett says,
be fearful when others are greedy,and greedy's when other are fearful. So
when markets are down, look atit as a buying opportunity. But certainly
we would say don't run for thehells. Here's the all Worth advice.

(10:31):
Don't let the word recession scare you, because we come out of each one
and hit record highs every single time. All Right, If you know someone
who's going to be going through divorceright now, there might be a new
way to help that person get backon their feet. This is a brand
new concept. We're talking divorce registries, not wedding registries. We'll get into

(10:52):
it. You're listening to Simply Money, presented by all Worth Financial here on
fifty five KRC, the talk station. You're listening to your Simply Money pasent
my own Worth Financial I Meani Wagneralong with Steve Ruby. If you miss
our show, you don't have tomiss any of the money advice that we
give out. We've got a dailypodcast for you. Just search Simply Money

(11:13):
on the iHeart app or wherever youget your podcasts. Coming up at six
forty three. Five myths about socialSecurity we want to debunk as the Social
Security Trust Fund runs out of money. What you need to know and okay,
this is so unfair for people whoare just trying to buy their first
houses or anyone. Houses just costso much more right now than they ever

(11:35):
have. But once you finally getinto that house, right after all of
the competition and the cash offers andthe higher interest rates, and you finally
get settled in that house, whatyou don't understand and what could really catch
you off guard, is the actualcost of maintaining that home has also gone
through the actual roof. Yeah,you need to pay special attention to this.

(11:56):
If you know somebody that's about tobuy their first home, yes,
and share it with them because bankrates new hidden cost of ownership home ownership
study came out and medium home pricesthey've climbed to about four hundred thousand dollars.
Nationally, the average cost of owningand maintaining a single family home in
the US is twenty six percent highernow than it was four years ago in

(12:20):
twenty twenty, right, I meanit's that was not that long ago.
A lot of things that they tookinto account here, energy, internet,
cable bills, property taxes have goneup for a lot of people, you
know, homeowners insurance premiums have goneway up. I mean it's just like
chi ching, cha ching, chaching. So when you are planning that

(12:41):
budget for that new house and you'retrying to fit that mortgage payment in,
make sure you're also fitting in allof these additional costs, because it would
be terrible to get into a houseand then realize, okay, we can
no longer afford to eat or putgas in our car because we have to
pay these other bills as well.Yeah, this one, this was surprising
to me. They have kind ofa figure for what the average home maintenance

(13:05):
cost is and they estimated about twopercent per year for the value of the
home. Yeah, added two percent, So that's something to keep in mind.
In Ohio, twelve thousand, ninehundred and seventy five dollars a year
is the typical upkeep for all ofthese Yeah, all these things that you
just brought up. In Kentucky,it's a little bit lower, eleven five

(13:26):
hundred and fifty nine, which isactually the lowest in the country, highest
California, Hawaii, Massachusetts. Yeah, I don't think any surprise is there.
This is surprising to me. Youknow, everyone's familiar with wedding registries.
When people are getting married, youoften, you know, pull up
their registry, you buy them somethingthat they have said that they want.
But we also know that sometimes thosemarriages and in divorce, and when you

(13:52):
think about it, someone is essentiallystarting over. They have to buy all
new things. And now horse registriesare becoming a thing. This is a
trend towards breaking the stigma of brokenmarriages. Divorce parties formal divorce announcement announcements
akin to wedding and marriage news.So the thought here is sending flowers,

(14:16):
bottles of wine. I'm sorries,maybe congratulations, I guess, depending on
how the divorce panned out, obviouslycoming from support from friends and relatives that
don't really think about the need forthe new things that you may need to
acquire upon separating from your spouse.There's even a company called Fresh Starts who

(14:39):
has partnered with Amazon, and theyhave a bundle of items, bundles of
items ranging from ninety nine to fivehundred dollars, and you can even break
it down by rooms like I needa kid's room, who is this age?
I need kitchen stuff and it'll justyou just pay for it and they'll
send all the things to you.Listen, I am someone who has been
through a divorce, and it isit's so many things emotional at that time.

(15:03):
But at the same time, ourold office used to be right down
the street from Home Goods. Iremember going there during my lunch break one
day and piling up two carts fullof towels and sheets and all the things
we needed to start over. Andso from a practical standpoint, I really
get this. I wonder if it'sreally going to take off and really become

(15:24):
a thing. But I will saymy friends weren't buying me something off of
a registry or whatever, but theywere incredibly supportive during that time, and
I can imagine that if there werespecific things that I needed that I really
couldn't afford if it was too much, they would have helped. And I
think people do want to help duringtimes like that. Would you have done
this if it was available at thetime. No, Now, I know

(15:46):
I definitely would not have done it, but hey, I understand for people
who need help that it could bea godsend. So I would expect that
we might see more and more ofthese. I don't know, get used
to the concept. This is somethingthat you do for someone that you know
that's going through because you had peoplethat supported you, You had people that

(16:07):
were there to lend a hand withwhatever was needed. And this is an
additional way to support someone, Iwould say, and get them what they
really need during that time, especiallyif it was a particularly nasty divorce where
somebody took things from you that youdidn't expect them to take. Every Sunday,
you're going to find our all WorthAdvice in the Cincinnati Inquirer. We

(16:29):
give you a preview on Friday's show. JWN fort Mitchell says, please help.
My father recently passed away with fiftythousand dollars in debt. Am I
now responsible to pay all this off? By the way, my mother already
passed a few years ago. Sosorry for JW. First of all,
for the loss of your father,and then for having to worry about this
debt too. Yeah. So obviouslywhen something like this happens, it makes

(16:55):
it that much more miserable when youcome across information about a debt that maybe
you didn't even know about. Butthe good news is that there is And
we're not lawyers here, but childrenare typically not responsible for their parents' debts.
That's you PERSONALLYJW. You are notpersonally liable. But those debts do

(17:17):
pass on to your father's estate.Yes, So if you're the executor of
the estate and there's assets that mightbe there to that might be needed to
be liquidated to pay for those liabilities, then that is something that certainly could
happen, but that doesn't fall onyour assets personally. So if you have
to sell the house right in thecar, and that money goes toward paying

(17:40):
off the debt, and there's debtleftover that's still not paid off. That's
not yours, right, that debtdoes not get repaid. So definitely understand
that unless that is joint debt,meaning you and your father have a shared
credit card that he then racked upa bunch of debt in or you co
signed on a loan for him,in which case that then debt becomes yours.

(18:03):
But yeah, really important to understandduring this time. You know,
I've gone through this a couple oftimes, unfortunately, and I received letters
because both of my parents had debts, and I did receive letters from different
attorneys asking like, oh, you'rethe fiduciary that was overseeing their estates,
here's the debt call us. No. Yeah, no. If you're getting

(18:23):
harassed by somebody that says that youcould be personally liable, then that is
something that you need to report tothe Consumer Financial Protection Bureau because those are
not your debts unless, like yousaid, you co signed up. Next
question comes from Andrew and Finnytown.You've mentioned you don't recommend closing credit cards,
but I've had one for just afew years, and now the annual

(18:45):
fee went up again. I don'treally use it. The fee seems high.
What should I do? I mean, you're right, Typically we're not
going to recommend closing a credit cardbecause in that situation it can have a
negative impact on your credit score ina couple of different ways. One by
reducing your credit his because maybe it'sbeen open for a long time. The
other is your credit utilization ratio,because in that situation, when you close

(19:07):
a credit card, you're going tohave less credit available exactly. So those
components together, they bring together it'sabout half of what constitutes your FICO credit
score. So one thing to thinkabout here, though, and I've done
this. I actually had a travelcredit card. It had travel benefits on
it, and I was like,gosh, this is insane. I mean,

(19:27):
it went up considerably year over year. I called the company and said,
can we take this down to adifferent kind of credit card, so
you know, same visa or whatever, but just maybe not as many perks
and also not as high of anannual fee. And we were absolutely able
to do that, and then itdidn't hit my FIICO score whatsoever. Coming
up next, we're talking about howto handle a situation older couples are dealing

(19:48):
with more than ever before. You'relistening to Simply Money, presented by all
Worth Financial. Here in fifty fiveKRC, the talk station. You're listening
to Simply Money all Work Financial.I mean, you Wagner along with Steve
Ruby. You know, as someonewho knows right, I've been through a
divorce myself, getting divorced. It'sincredibly difficult on so many levels. And

(20:10):
I will say I'm so grateful thatI have the financial background that I do
because going through that, I knewexactly what smart money decisions to make.
But there is a growing trend whenit comes to divorce that makes these financial
decisions even more difficult, and thatis that people are getting divorced later and

(20:30):
later in life. Yeah, there'sa name for it called gray divorce and
wild divorce rights. They have fallenin the US over the past twenty years.
They're increasing for older couples, somemore gray divorces than ever before.
Currently almost four and ten of thosegetting divorced age are age fifty or older.
At this point, I think itkind of makes sense. I mean,
I've talked to people who are inmarriages you know, through the years,

(20:52):
not necessarily happy, but they don'twant to split up while the kids
are still at home. Right,So that's agree fifty years older, it's
like, okay, kids are aftercollege or out of college. They're definitely
out of the house. And maybeit's that they don't realize they don't actually
like each other much until the kidsare out of the house. But for
whatever reason, you know, fiftyor older seems to be increasing increasing,

(21:17):
and for those over the age ofsixty five, the divorce rate his triple
triple. I'm like, you're sixtyfive. I don't know you've made it
this long? Are you sure youcan't make it a little longer? And
here's the problem, because financially,you probably have one mortgage or maybe no
mortgage at all, and now you'regoing to take these costs, you're going
to double them, right because you'reboth paying toward these things. And now

(21:37):
everyone's going to have to have aseparate house to live in and separate expenses
and utilities and things like that.And then you're going to have to cut
take those retirement assets and you haveto come in half. Obviously, there's
problems financially. But when you getdivorced, depending at the age rage that
you are, it can be amagnitude more different. Cult put it that

(22:00):
way, if you're knocking underdoor toretirement, maybe the reason why you had
mentioned children out of the house,So you know you're fifty years old or
so and you've held off to thatpoint you pulled the triggern divorce when you're
sixty five. It could be maybebecause you have different viewpoints about what retirement
looks like. Maybe you did justretire and you're like, wow, I
really don't want to spend this muchtime with this person. Now we're both

(22:22):
stuck here all day, every dayand it's not working. I had no
idea. I haven't hung out withyou this much in twenty thirty forty years.
So when it comes to those challengesthough, when you've built those retirement
that retirement savings together, splitting itgoing through qualified domestic relations order for a
four O one K that's called aquadro, this is going to create all

(22:47):
kinds of challenges for your financial plan. Interestingly, it affects older women more
than anyone else. Women fifty andolder say that they're experiencing a forty five
percent decline and their standard of livingonce they on the other side of that
divorce. Only twenty percent of men, one in five of men are seeing
that. And I think there's anumber of factors for this, you know,
I talked to so many women whoand I did this when my kids

(23:10):
were young. When I had myfirst child, my daughter, Grace,
I was out on a maternity leaveand my boss called me and said,
there's someone here in the office thatwants to job share. I said,
Amy would never be interested in doingthat because she loves her job so much.
It wasn't even out of his mouth, and I was already overwhelmed by
the thought of leaving this tiny littlehuman who I loved so much, and

(23:30):
I said, I will job share. Well, of course, that cuts
your income, and many moms arethe ones who make that decision. You
either leave the workforce, or youmaybe work part time to take care of
kids, or maybe it's aging parents. But it seems to come down on
women more often than men. Thenyou fast forward to later in life,
if you're looking for a divorce,well, then there's just less assets there.

(23:51):
I mean, look even just atsocial security, right, social security
is based on your highest thirty thirtyfive earning years of earnings. When you
back out of the workforce for afew years, that's going to take a
huge debt there. It can takea huge debt, and it causes one
of the big problems here is thatif you haven't been able to do your
own savings as a woman because youwere at home tending to children, you

(24:14):
know, raising a family, thosetypes of things, it can take your
savings way down and your Social Securitybenefit rate way down. So it causes
more women to have to re enterthe workforce at older ages than men.
It's not a fair situation when itcomes to a great divorce for those reasons.
We make fun of me for thisall the time, but when I'm

(24:37):
out, these are the conversations thatI'm having with people. I recently was
with some friends in Louisville and itcame around to the subject of money,
and I was so amys. There'sprobably ten women there, most of them
seven or eight of them were like, I have no idea. I don't
know what we're invested in. Idon't know what we have. I leave
that up to my husband. Well, maybe you have the best marriage in

(24:59):
the world, but all, sostatistics show that women are going to outlive
men. So if you are partof a relationship a couple and one of
you is not paying attention to money, you are doing a major disservice,
whether you are happily married for therest of your life or not. First
of all, I think two voicesat the table are always better than one,
but you never know what's going tohappen to that other person. Those

(25:19):
are great points. When I'm workingwith folks, I try my best to
encourage both planning partners to come intogether so they have an understanding of what
their financial plan looks like. Alot of times it spawns conversation and people
realize that maybe they're not on thesame page as far as how they visualize
retirement, what they value, what'simportant to them. So sitting down and

(25:42):
having those conversations together in marriage withthe fiduciary financial planner can be very eye
opening and it you know, we'vesaid it before, it almost feels like
we're marriage counselors sometimes often very often, and having that financial plan is going
to force you to have the conversationswith each other so that at least there's
an open dialogue around expectations, andyou are prepared if something were to happen,

(26:07):
either through a divorce or the lossof a loved one. It amazes
me how many couples live together andspend so much time together. Yet they
sit down in front of us forthe first time, and maybe they're forty
five, fifty to fifty five,and the topic of divorce comes up,
and they look at each other likethey're complete strangers, Like the words coming
out of the other person's mouth they'venever heard. That's your plan for retirement.

(26:30):
I didn't know you wanted to dothat, right, And it's like,
well, at least you're hearing thisnow. And I think when you
look at these gray divorce statistics,so many of these things happen because people
aren't openly communicating earlier in their marriages, you know, and if you're going
to I got divorced in my earlyforties. It had very little financial impact
on me because I knew what decisionsto make. I knew not to fight

(26:52):
for the house that we had raisedthe children in because we were paying for
that house with both of our incomes. You get later on life, the
decisions become I mean, you're closerand closer to retirement, they become larger.
Yeah, you know, more critical, and you know, it just
makes me worried for people who arenot having these conversations and who are not

(27:14):
both involved in the money decisions ofthe household. Yeah, communication is key.
That's that's a theme. If you'rea regular listener to the show,
having open communication about your financial situation, about what goals you have and share
together is extremely important when it comesto financial planning. I think with divorce,
as it was with me, therewere many years when I thought this

(27:34):
will never happen to me. Youknow, I hear about other people getting
a divorce and be like, that'sjust never gonna happen to us. Until
it does. And you know,this is one thing that you can do
regardless of what situation your marriage isin, that can just help you and
protect you. And you're never goingto feel like it's lost time. When
you've spend an understanding more about yourfinancial situations. Always time well spent.

(27:56):
Here's the all Worth advice. Notburing your head in the sand during your
marriage will serve you financially if youget divorced or whatever happens coming up next,
We've got five myths about Social Security. As the trust fund risks running
out of money, we want tomake sure that you are making smart decisions
about your money. You're listening toSimply Money because I'm all worth financial Here

(28:18):
in fifty five krs the talk station. You're listening to Simply Money, because
then am I all worth financial?I mean, you wag you're along with
Steve Ruby. If you've got afinancial question that is just stressing you out,
there's a red button you can clickon while you're listening to the show.
It's right there on the iHeart app. Record your question and it's coming
to us. We'll help you figureit out. And straight ahead. I've

(28:40):
got major feelings on this. We'retalking tipping. The wild amount of money
people tip based purely on guilt.I'm starting to get to the point where
i don't feel so guilty about this. We'll get to that in just a
few minutes. We've spoken time andtime again about the troubles with the Social
Security program and that it's trust funto run out of money in about a

(29:00):
decade. But I think that informationhas led to a lot of misinformation,
and I think the problem with that, Steve is people are making uninformed decisions
that will affect them for the restof their lives when it comes to claiming
Social Security. Yeah, so payclose attention because we don't want you to
be one of the uninformed that aremaking decisions based on misinformation. So myth

(29:22):
number one social Security is or willbe bankrupt. That is not the case.
Social Security is not going to runout of money because it's the program
is financed by payroll taxes, soas long as people are working, then
money is going into the system.The problem with a trust fund is when
Social Security was first set up inthe nineteen thirties, the full retirement age

(29:45):
was sixty five. Nobody was livingto sixty five, so it was like
this great idea, but no oneactually claimed it. So the money piled
up and piled up because people wereworking and paying into the system. Yet
very few people, because of healthcareat the time, made it to the
age of sixty five. Well,now full retirement age is sixty six sixty
seven in most cases, and we'vehad all these amazing advances in healthcare and

(30:08):
medical breakthroughs. We're living longer.People are living longer, and they are
retiring in droves. Right the babyboomers are retiring in record numbers, and
we don't have a large enough populationthat are paying into the system now,
so there's this imbalance. You've gotpeople paying into the system, but more
people claiming these benefits that ever havebefore if nothing has done to fix that.

(30:33):
We just saw the new Social SecurityTrustee report come out in just the
past few days. Now they're sayingin twenty thirty five, that trust fund
looks like it will be depleted.Okay, if that fund is depleted,
doesn't mean you're not going to getany money. It means you're going to
get the latest projection I saw eighteenpercent reduction and benefits. Yeah, So
to be clear, it is thetrust fund reserves that are projected to become

(30:56):
depleted. And the analogy there wouldbe if you personally have a financial crisis
in your household and you use upyour emergency fund, but you're still working
and still bringing in money. That'sthe analogy here. So there would still
be benefits, and we've talked aboutit before, it would be a reduced
benefit for everybody collecting and set tocollect in the future. One thing I

(31:19):
do want to bring up, andthis is something that I think We're just
starting to get some clarity around inthe past when there has been an issue
with Social Security. Right when wesaw this years ago when they raise a
full retirement age to sixty seven,and this was a cross partisan lines,
there was sort of a miracle.I don't know if Washington can pull that
off yet again, but one ofthe things it did was it said we're

(31:40):
not going to change anything for peoplewho are already claiming these benefits. It
now appears that those even claiming benefitswould have a reduced benefit at that time,
not just those that are years awayfrom claiming, you know, millennials
and Gen zers. But this couldhave a larger impact. Again, though
this is a Congress has nothing totouch this plan. I can't imagine anything

(32:04):
that Americans are more invested in.Yeah, it's than Social Security. I
gotta think Congress is going to dosomething. But we've had several Congress We've
had several Senators on the show inthe past, really grateful that they've come
on when I ask them about SocialSecurity, and I'm telling you, I
fit them every which way. FromSunday, nobody has a lot of clarity
on what's going to happen here.Or even what they think should happen.

(32:25):
Here. The problem is whatever decisionthey make, it's going to make some
people angry. That's the key here. So something. Maybe I'm just naive,
but I do. I'm with you. I do believe that something will
happen. But politicians they're not goingto pull their head out of the sand
until they absolutely have to, untilthe eleventh hour. So myth number two,
young adults won't benefit from Social Security, it's not accurate. Now there's

(32:47):
going to be some kind and againmaybe that's just the optimist in me for
some of this, and you know, there's still going to be some benefits
available for younger generations. It's justat this point without any changes reduced.
And I think that's the number onemyth that we see in so many people
coming into our office. Is hereat all worth saying, you know,

(33:08):
does not count on Social Security becauseI know I'm not going to get any
Well that's fine, you can builda plan that way, but it's just
not the truth. No one's sayingyou're going to get zero percent. We're
saying you're going to get probably eightypercent. And that again is if Congress
does nothing, If no changes yes, and I can't imagine that voters are
are going to allow that to happenwithout Congress having to take a stab at

(33:31):
fixing this some way. I agreethey're going to kick the can down the
road as long as they possibly can, but at the eleventh hour they're going
to have to address us. Andwho knows what they're going to do.
Right, they could raise full retirementage, they could means test it mean
those who've saved more, longer,better, right might have to take ever
reduce benefit and those who don't haveas much money. Doesn't sound fair,

(33:52):
right, And again this is backto someone's going to be upset about this,
you know, but who knows whatthe ultimate plan is. But so
many people then are saying, becausewe don't know what they're going to do,
the first day that you can possiblycollect Social Security benefits at the age
of sixty two, you should.Yeah, this is myth number three that

(34:13):
you're getting into here, And thereare different viewpoints on this perspective. If
there's going to be a shortfall andyou have the means and collect as soon
as you can so that you justcapitalize on getting that cash flow. Now,
if you're depending more on social securitythen, and you don't have a
lot of other savings, then maybeit is a good idea to continue to
differ. Another thing, another mythhere that we need to talk about,

(34:37):
and I've heard this one too.The federal government has rated the trust fund.
By law, every dollar of incomecoming into the Social Security Trust Fund
has to be invested in interest bearingSecurity is backed by the full faith and
credit of the US Right. Imean it's by law what that money has
to be used for. Not sayingthat that money hasn't been spent for other
government for other government needs. Butit means so security is not worthless.

(35:01):
Right, those ioues that are inthere, they have to be paid for.
Yeah, and backed by the fullfaith and trust of the US government.
Hopefully that means something. Hopefully thatmeans something. Here's the all Worth
advice. Social Security was only meantto cover forty percent of your income and
retirement. Please remember that. Rememberthat when planning your financial plan. Coming

(35:22):
up next, how to overcome theguilt around tipping. You're listening to simply
money presented by all Worth Financial herein fifty five KRC the talk station.
You're listening to simply money presented byall Worth Financial Immi Wagner, along with
the Steve Ruby things in recent yearshave gotten my blood boiling as much as

(35:45):
this debate over tipping. You know, we were just talking about the fact
that during the pandemic, you know, the people who are working in restaurants
trying to provide meals for people goingin, not sure whether it was safe
or not. I had so muchground attitude for them, and I think
people were really generous during that timeof tipping. But now people have gone

(36:06):
back to work, society has openedback up, right, things have become
a little more normal. Is theresult of that. Though everywhere you go
now they're asking for a tip.Someone is putting ice cream on top of
a cone and they want two dollarstip for that. They're putting donuts into
a box, and they're flipping thattip screen around in my face like enough

(36:27):
is enough. Yeah. Research froma pulling agency called Talker Research, they
pulled two thousand Americans with questions aboutwhat we're calling tip flation and found out
that Americans are spending about five hundreddollars a year more than they would like
to. You bring up guilt,That's what this is fueled by, just
like you when everything was shut downas far as you know, COVID shutdowns

(36:51):
were concerned. I was going torestaurants and getting carry out to support local
businesses, and guilt was causing me. You know, I'd look around and
be like, wow, I reallydon't I wouldn't want to be and these
people they are and then they're enablingthis business to stay open. They're they're
working for themselves to get a paycheck. They're giving me a delicious hamburger or
whatever it is, and I wastipping graciously. But when it comes to

(37:12):
where we are today, we're notthere. I went to a Reds game
last week or the week before,and they changed arounds how some of the
cafeteria that situation works and they havepre made food and then you ring it
out yourself and then a tip screakcomes. So you're serving yourself. You're
getting the food yourself, and theywant you to tip. I took a
plunge, Amy, you know whatI did? How would you do?

(37:36):
Didn't tip? Yes, that's myfirst time. I felt wrong. Still,
Well, but here's the difference.You don't have someone on the other
side of that screen looking at you. There was an attendance standing around in
case we had issues looking, didyou just like try to distract them,
like, hey, look at thatover there. I took the plunge and
I did it. She was lookingand I hit zero. You felt a
little guilty. My palms are sweatyjust talking about it. We're spending about

(38:00):
forty dollars a month on average dueto the pressure of tipping. You know,
the these screens that they turn aroundin your face. And it always
surprises me because all of a sudden, it's places that never asked for tips
before are suddenly asking for tips,and at least my thought processes. Okay,
I understand that in restaurants the hourlywage is lower because of the expectation

(38:22):
of tips, but at other placesthey're not. If you're making ice cream
or donuts or whatever it is,why are you asking me to tip on
this if you're already paid. Itjust took you thirty seven seconds to put
those donuts in that box. Yeah, I'll throw them a dollar maybe,
but at the days of giving fivedollars to put a donut a box or
over for me. We've got lotsof thoughts on this. Thanks for listening
tonight. You've been listening to SimplyMoney pausent I'm all worth financial here on

(38:44):
fifty five KRC, the talk station