Episode Transcript
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Speaker 1 (00:05):
Tonight we are talking about your sweet spot and what
the heck does that have to do with your money.
We'll get to that. You're listening to Simply Money, presented
by all Worth Financial Ammi Wagner along with Steve Spovac,
who's in for Steve Ruby tonight. And it is perfect
timing because when we talk about the sweet spot, there's
actually a principle out there. You can apply it to
work life balance, you can apply it to how you invest,
(00:27):
how you think about retirement. It's finding your sweet spot.
There's no person I think of that comes to mind
before you. Steve Spovac. You are fantastic at maintaining balance
in your life. You did this all the years that
you were working, and I really learned a lot from you.
Speaker 2 (00:44):
Well maybe images everything. I'm not sure I did. But yeah,
when I think of sweet spot, I think of like
playing darts. It's somewhere between one and four beers. You know.
That's I'm not sure that's your sweet spot out of
my life that people should know about.
Speaker 1 (00:57):
But not the sweet spot we're referring to here.
Speaker 2 (01:00):
Yeah, Now, in all seriousness, Yeah, work life balance it
gets talked about a lot in the workplace. But you know,
how do you actually get there and how does it
translate to your investments? I mean I always with work,
I always work towards efficiency, maximum income, minimum effort, with
the ideal, and obviously you never get there making tons
(01:22):
of money and never working. Yeah, you know that's that's
kind of a neat neat concept. But you know, seriously,
how do you get to that kind of goldilocks area where,
you know, especially in investing, where Okay, I don't want
to have this run my life. And I've seen investors
like that where you know, they come in and you
know they're considering hiring me in the company, and and
(01:45):
the first thing they want to do is let you
know how much they know about this, and it becomes
apparent very quickly that you know, money is really what
this person's life revolves around. And I'm not sure that's
a real healthy attitude to take.
Speaker 1 (02:01):
I agree with you, and I think you know finding
your sweet spot when it comes to your investments. And
this is part of why we do a financial plan,
but it's probably part of it that we don't talk
about a lot, and that is once we run your
plan with what your financial goals are, what you need
to live off of in retirement or what you're living
on now, what your budget looks like, and then how
much you have saved. We look at those investments that
(02:23):
we say, what is the minimum return that we can get,
the minimum risk that we can get, and let you
meet that goal. If you have gazillions of dollars coming
out of your ears and you get your retirement, you
don't have to be one hundred percent in stocks, right
you can. In fact, you could probably put all that
money in a high heeled savings account, take no risk
on them, and live out the rest of your days really,
really well.
Speaker 3 (02:43):
So we want to figure out, Okay, what's the maximum
return we can get for the minimum amount of risk.
What do we need to get you from where you
are now to where you need to be to live
comfortably in retirement? That little Goldilocks place is where you
should live.
Speaker 1 (02:58):
And it doesn't change base on what's going on in
the global economy. It doesn't change based on who's in
the oval office, it doesn't change based on what the
stock market is doing that week. You figure out where
you need to be, then you just stay there. You
kind of set up camp.
Speaker 2 (03:13):
Yeah, and you know, I mentioned work life balance. Okay,
and that's again that's something that's discussed about, but an
awful lot. But you also have investment balance. You know.
I mentioned how some people take investing so seriously that
it runs their lives, and it can be you know,
it can be debilitating if all they think about is
(03:35):
how to get the best return, how not to make mistakes.
And you know what balance comes into investments in the
form of diversification. We talk about diversification across the board.
Don't put your eggs, all your eggs in one basket,
but you know, really what it means is once you
step outside of the realm of banks and credit unions,
(03:57):
you have to accept that money value go down as
well as up, and especially if you're talking about the
stock market. I know this is an earth shattering news,
but yeah, they go up and down. And the key is,
can I find something that is going up when my
other investments are going down and vice versa. I mean,
the perfect portfolio is a straight line because everything going
(04:21):
up is offset by everything else going down, and it
doesn't exist. But you can get pretty darn close through
diversifying not just between stocks, bonds, and money markets, but
also within the stock market between US stocks, foreign stocks,
emerging growth stocks, value stocks. That's diversification, and that's good
(04:43):
balance that everybody needs.
Speaker 1 (04:45):
Small cap, large cap, Right, There's lots of ways to
look at diversification. And I agree with you, the more
diversified you are, the better you are. What that does
not look like is going all in on mean stocks,
going all in on in video or the Magnificent seven.
You know. I think about a couple that I talked
to several years ago, and they lived in California for
(05:05):
a while, and they just saw all these internet companies
right late nineties, like could not lose, and you know,
year after year their friends were talking about the amazing
returns that they got, and they went all in with
their retirement on those docks in the late nineties, Yes, right,
because how could they lose? How could they lose? Everything
(05:26):
in their retirement was planned out. They were going to
retire at fifty five. You want to finish the story,
You want to guess what happened to them around two thousand.
Speaker 2 (05:34):
No.
Speaker 1 (05:34):
I lived it.
Speaker 2 (05:35):
I was there. Yeah it went when last bubble burst,
Oh my goodness, to me, that was just as bad
as O eight nine oh eight.
Speaker 4 (05:42):
No.
Speaker 2 (05:43):
Nine was really really scary when when we saw this
almost a depression in stock and real estate values. But
everybody forgets about what happened when the bubble, when the
tech bubble burst in ninety nine, for three years in
a row, two thousand and one and two, stock races
went down, and you know, they glimmer of hope they'd
(06:04):
bounce up, Hey we're finally out of it, and then
drop even more.
Speaker 1 (06:07):
So.
Speaker 2 (06:07):
I mean, this is a perfect example of why you
need to diversify, not just you know, between asset classes
like stocks, bonds, and cash, but also within that area
of the stock market, between emerging companies, US companies, foreign companies.
You really need to spread your investment risk out because
(06:30):
when you reduce the risk in your portfolio, guess what,
you reduce the stress in your life. You're not thinking
about your investments every day as you hear and see
bad news come across the board.
Speaker 1 (06:44):
Which is why we call it the sweet spot. Right,
you're listening to Simply Money presented by all Worth Financial
and Memi Wagner along with De Spuff because.
Speaker 3 (06:50):
We talk about something we don't often talk about on
the show, but this is a principle called the sweet spot.
Speaker 1 (06:55):
Principle. You can apply it to your investments, you can
apply you can apply it to your retirement planning and
you can retire. You can apply it to your everyday
life when it comes to work life balance right, And
we've kind of talked about one of the keys to
this is being properly diversified. It's taking on the least
amount of risk that you can take on in order
to get the biggest return. And then I think it
(07:17):
is once you're finding that sweet spot, you got to
stay there. And part of that looks like rebalancing.
Speaker 4 (07:22):
Right.
Speaker 1 (07:23):
If you've decided that you should be in seventy percent
stocks and thirty percent bonds, and then there's just a
heck of a year in the market and all of
a sudden that you check and that becomes eighty percent
stocks and twenty percent bonds, there's a pretty big shift there.
There's a pretty big drift. You have to rebalance, right,
Sell some of those stocks, buy some more bonds, and
get yourself back to that sweet spot that you had
(07:44):
predetermined was the best place for you in regard to risk.
Speaker 2 (07:48):
Well, it's called paying attention. I mean, you can't just
set it and forget it. Even if you hire somebody
to help you manage your money, you've got to pay
some attention to what you're doing. It's not fun for
most people. Most people, you know, they enjoy spending time
planning vacations, going on vacations. But you know what, if
you want to have that really long vacation called retirement
without a lot of stress, once or twice a year,
(08:10):
pay attention to what's going on, Analyze your investments, talk
to your advisor, and just run through. Hey, here's what
I got. Oh it's not quite what I had two
years ago because this segment went up and this segment
went down. All right, then maybe you need to fix it.
And that's part of paying attention to your investments. I mean,
I retired at the end of last year. Other than
(08:31):
coming in and fill like this, yeah yeah, But the
reason you know that, I am very comfortable and not
stressed out, and I'm a warrior. I think I've told
you I am a huge warrior. But I spent the
last couple of years as I was preparing for retirement,
updating my financial plan plan going through my spending needs,
(08:52):
which is hugely important. That's what keeps most people from
doing a financial plan in the first place, they don't
want to address. All right, here's where the money goes.
That's it. You don't have to say you can't spend
this anymore. You just have to know where the money
goes and how much it costs to live the way
you want to live. And if you spend time going
into that sort of thing, paying attention to your investments,
(09:14):
when it comes time to live off of those investments,
you don't worry as much.
Speaker 1 (09:17):
Yeah, I think this sweet spot also applies to your
personal life and the fact that you know, many of
us work really hard, and we've spent a lot of
focus on that part of our lives. But like, what
are hobbies? What are you doing to develop interests outside
of work? It's going to make you more fulfilled now.
But I'll tell you what in retirement. And I used
to joke with you about this, but it came true.
(09:38):
I didn't worry about you transitioning into retirement because you
have seven hundred and eighty seven different hobbies. You know,
maybe that's not balance, but figuring out where the balance
is in your personal life between things that fill you
up and between work. And then also there's a sweet
spot when it comes to your budget. And I mean
when you are looking at how much and you say,
(09:59):
and I agree with you. People don't like to look
at budgets. That's not a fun thing. But you've got
to find your sweet spot in the budget between how
you're saving and investing for your future and how you're
living your life right now. And it's a balance between
your current self and your future self. And I have
met with so many people through the years, and I
understand it's really hard to think about your future self.
What you're thinking about is now, the vacation you want
(10:22):
to go on, the car you want to buy, right,
those kinds of things. But you've got to balance that
sweet spot between spending money now in saving money and
planning for your future.
Speaker 2 (10:32):
I'm going to add something to that, amy don't forget
your family, your spouse, your relationships. Okay, that's part of
the sweet spot and a lot of people, especially when
they get wrapped up and I've got to save for retirement,
I've got a work harder so i can get ahead,
and that sort of thing. Maybe you don't always think
about your relationships as much as you should. And one
(10:56):
of the things that keeps you happiest in life is
to be present. Okay, we're you've already done the work,
all right. I'm going to set aside an hour to
look at my investments. And once I've done that and
rebalanced and did whatever I have to do, then I'm
going to go with my spouse and we're going to
go and just enjoy the day. Okay, you've got to
You've got to do that to have good balance, both
(11:17):
at home and while you're working at work or if
you're in retirement not worrying about money.
Speaker 1 (11:22):
It's a different way of thinking, right, But it's kind
of like when you're thinking about your budget or if
you've got this like kind of anxiety over how much
you've been spending lately and inflation, taking a toll because
you know tuna fish is what did you say fifteen
dollars instead of eleven dollars at Costco now?
Speaker 2 (11:38):
Right?
Speaker 3 (11:39):
What you got to do is ask yourself, okay, what's
my sweet spot here?
Speaker 4 (11:43):
Right?
Speaker 1 (11:43):
And apply it to your work life balance, apply it
to your personal life, to your family, to your investments.
When you figure out what your sweet spot is, I
think anxiety and worry become less and less of an issue.
Here's the all Worth Advice. Finding and maintaining that sweet
spot is going to help you achieve better findinguancial outcomes
and a more fulfilling life. Coming up next, we're talking
(12:04):
about the best ways to protect your wealth. You're listening
to Simply Money, presented by all Worth Financial here in
fifty five KRC the talk station. You're listening to Simply Money.
You're presented by all Worth Financial. I mean you Wagner
along with Steve Sprovac and for Steve Ruby. Tonight, if
you can't listen to our show every night, you don't
(12:24):
have to miss a thing we talk about. We've got
a daily podcast for you, or you can just subscribe
to Simply Money on the iHeart app or wherever you
get your podcasts. Come up at six forty three, we're
gonna talk about two financial concepts that should go hand
in hand, growth and income. We'll get into that in
a minute. But you know, I'm a big sports fan,
and for anyone who spends much time, well, if you
(12:46):
want to know where I spend my time on the weekends,
I'm a basketball games. My son is a freshman. Basketball
is his sport. I think I've logged seven hundred and
ninety eight million hours in the stands in what I
have for.
Speaker 2 (12:58):
Kids are at that age where you're going busy with
them doing something.
Speaker 1 (13:02):
I feel like we play on seven basketball teams at
the same time. And luckily I love basketball. It's one
of my favorite sports. But what I have learned is
that defense can win the game as much as offense can.
You know, you don't pay as much attention to the
defense as the three pointers that are coming from mid court,
but man, they make a difference. And the same applies
(13:23):
to your money. When you are working, you are kind
of on the offensive right. You are putting baskets, you
are putting points on that scoreboard. You are making the money.
But when you get to retirement, there is a big
shift there, and that is you start to play defense
that with this points that you put it there, you
don't want to lose any of those points. And so
I'm going to talk about this a little bit.
Speaker 2 (13:44):
Yeah, I don't know how many times I've heard, Hey,
I can't afford to lose much because I'm not putting
any money back. I'm retired, okay, And I'm not just
talking about retires. I think everybody this is part of
risk tolerance nobody likes to lose, you know, and it's money. Okay,
this gets personal, and you know it's it's good to
think about not losing, but you also have to realize
(14:08):
once you step and I've said this a ton of times,
once you step outside the bank or the credit union,
your money is going to go up and down. I mean,
that's just the name of the game. And I'm thinking, wow,
just hit me. This is probably twenty five years ago.
I remember somebody saying, Okay, I just got my statement.
These three things are down, get rid of them. I
don't want losers, okay. And if you do that, you're
(14:30):
gonna not You're not gonna own anything. We had a
good discussion after that about thanks versus versus investing. But
you know, it's kind of natural. As you get older,
you can't make it back, and so you think about,
all right, how can I keep myself from losing more
than I'm comfortable with? And part of that is it
(14:51):
sounds weird, but you've got to learn a new language.
You need to learn the financial language and a little
bit more about investing, so that whether you're a do
it yourself or you've hired somebody, you understand why, and
understanding why helps put it in perspective of Okay, this
isn't going to keep going down to zero, or maybe
I'm in something that could go down to zero. Maybe
(15:13):
I need to just take it back a little bit
and reduce the risk of the mix of investments I'm
using currently because I didn't realize I bought what I
bought until I learn more about it.
Speaker 1 (15:24):
Yeah, I think you have to educate yourself, or if
you work with a financial advisor. I feel like my
job isn't to make your money decisions for you. It's
to educate you right so that you can make the
best decisions for you and confidence. I'm not going to
tell you what to do, but I'm going to make
sure that you have all the information and you fully
understand if you make this decision and go down this path,
(15:46):
here's the result. And if you make this decision and
go down this path, here's the difference in that result.
And then I leave it up to the person, the
investor that I'm working with. But you've got to have
that education and that baseline so that you can make
those kinds of informed decisions. Then gosh, this makes me
want to pull my hair out. People spending more than
they make right. We often will come up with these
financial plans and say, okay, this is what you have
(16:08):
to live on on a monthly basis when you get
to retirement. You know, and then a year goes by
and someone's been spending two thousand dollars more a month
than what we had budgeted for. We don't like having
these conversations, but they're a necessity of sometimes. Hey, you
keep spending this way and you're going to spend yourself
out of money. Well, you still have ten years left
(16:29):
to live, likely.
Speaker 2 (16:30):
You know, hang on except the first year or two
of retirement. Okay, that's a well you.
Speaker 1 (16:37):
Just planned for that. You plan to spend more.
Speaker 2 (16:40):
I told people for years and I'm living this life
right now. If you don't spend more than expected your
first year or two of retirement, you're doing it wrong, okay,
because you worked your butt off all those years to
enjoy yourself. And don't take your health for granted. I mean,
I had a heart attack at sixty. You know who knew,
and you know this is something where you want to
enjoy and do the things you do while you can.
(17:02):
As long as you get back to roughly and I'm
not saying penny pinch by any stretch, but you know,
to what you thought your spending need was going to be,
how much you were gonna spend in retirement, And I'll
tell you what we talked already about. You know, let's
let's get rid of the stress. Let's have some balance. Well,
you know what, if you've laid the groundwork and you've
(17:24):
got that emergency fund, and you've done your financial plan
and you updated every year, so if you did put
an assumption in there that was a little bit off,
you can correct it and recast it and see how
the plan works out from that point. Oh no, I
still don't run out of money, even if I live
to be one hundred and ten. Okay, then you could
stop worrying, you can be present, and you can have
(17:45):
a very comfortable retirement.
Speaker 1 (17:48):
I remember the first time, this is probably about ten
years ago. I just started working. It's simply money at
the time, and went to speak to a really cool
group of retirees from a church in the Kenwood area
and we sat down to lunch and I was like, oh,
every single one of these conversations is exactly the same.
I want more money, and I don't want to lose
a dollar. That is the mindset, you know when you're
(18:11):
quit working. Yeah, and I'm like, well, I wish I
had a seed that you could plant in your backyard
and that money tree was just going to grow and
you didn't have to worry about it. Right, But this
is why you've got to figure out the balance between
playing a little offense and playing a little defense when
it comes to your money, especially when you've made that
transition into retirement, and.
Speaker 3 (18:29):
It looks like also being really diversified, not necessarily following
your NVIDIAs so we're the next big stock, but stock indexes,
you know where you've got a big basket of fun
so that when some are doing well others, you know,
others can lag and then next year those are likely
the lags are going to be the ones that are
doing well.
Speaker 1 (18:49):
In understanding what that proper diversification looks like.
Speaker 2 (18:52):
Yeah, and you know the step by step on it.
We can go into a lot of detail, but understand
the language. Understand your investment. Don't blindly trust anybody that
you hire, and if you do it yourself, it's more
important to learn language. But check into who's got your
best interests at heart, and I think that boils down
(19:12):
to a fiduciary. What's a fiduciary Somebody who works for you,
not their own company and their own they're legally held
to such a high standard that they not just ethically,
but legally have to work in your best interest. And
that's usually a fee based advisor. There's lots of good
ones out there.
Speaker 4 (19:30):
Yeah.
Speaker 1 (19:31):
I think as you make this transition, you got to
start focusing on defense. And there's the number of ways
to play that defense. And I was ay, first thing
to do is make sure you've got that emergency fund
in place. Coming up next a massive data breach. We're
going to get into that, what you need to know
about it, and also what you got to do to
protect yourself. You're listening to simply Money presented by all
Worth Financial here in fifty five krs the talk station.
(19:59):
You're listening to simply Money presented by all Work Financial.
I'm Amy Wagner. Another day, another data breach, this one
though huge in scope, and you might be surprised the
company that ended up being the victim.
Speaker 4 (20:13):
Here.
Speaker 1 (20:13):
We're going to get into that and what you can
do about it. Tonight we are joined by our tech
expert Dave Hatter from intrust It. Dave, let's start first
with which company this is, because I think this part's
a little crazy.
Speaker 4 (20:27):
Yeah, Amy, it's a company called National Public Data, which
most people have probably never heard of. Nope, And this
is a perfect example of why you and I have
discussed so many times in the past, to the extent possible,
you should limit your data out there, because you have
these data brokers like National Public Data, where their entire
existence and revenue stream is based around buying and selling
(20:49):
your data, aggregating data about you, making it available to
companies for background checks or whatever other purposes they have.
They're essentially kind of a known data broker that's got
all of this data. And in this case, unfortunately for
US consumers, we see, once again, due to no national
privacy law, sort of a hodgepodge mixture of state privacy laws,
(21:11):
some of which don't have much teeth, there probably will
be very few consequences for these folks, And now almost
three billion records, for very sensitive records we can get
into the details on that in a minute, are now
out there on the dark web for sale.
Speaker 1 (21:25):
Unfortunately, I just got a letter in the mail last week.
I think it was Ticketmaster Live Nation and some of
my information exposed there, and it's just like, oh my gosh,
it feels like this never ends in this particular data
breach though, Dave, you mentioned sensitive information. What are we
talking about that got out there?
Speaker 4 (21:42):
Yeah, it's pretty crazy. So for what it's worth for
people that want to do a bit of a deeper
dive into this, the Los Angeles Times just put an
article out that goes into quite a bit of detail
about this. But per their reporting social Security numbers and
other sensitive data, this is a quote. If this in fact,
I'm sorry. If this is in fact pretty much the
(22:02):
whole dossier on all of us. It is certainly much
more concerning than prior breaches, and if people weren't taking
precautions in the past what they should have been doing,
they should be a five alarm wake up call. So,
I mean, if you think about the kind of information
you would need to do a background check on somebody,
obviously it's very, very extensive, and it's important for a
couple of reasons. I mean, anytime someone has your social
Security number, there's a potential for identity theft and fraud
(22:25):
related to that. But if I know everywhere you've worked,
everywhere you've lived. The ability for me to impersonate you
for any sort of fraud just goes through the roof.
And again, this is one of the reasons why in general,
the less apps you have the better, The less information
you put out there the better. But this is a
unique case here because in so many instances, like if
you're applying for a job, right and they want to
(22:46):
do a background check on you, you have to cough
up this information. And now we see a case where
and again I don't have any inside information on this,
but whether shoddy cybersecurity practices, this could be insider theft.
There could be any number of ways the bad guy
got their hands on this data from this company. It
just goes to show you that, unfortunately, and I got
the same letter regarding Ticketmaster Amy. You know, as our
(23:10):
society gets increasingly digital and hackers and thieves get smarter
and more devious, if they can get extensive and voluminous
information about you like this, it really does put you
at risk. And unfortunately, short of forcing companies to take
the right kind of steps to protect your data, none
of which are fool proof, and then having laws that
(23:30):
have teeth and I'm generally an anti regulation guide, but
we're all going to suffer as a result of this breach.
We're the ones that are going to be impacted.
Speaker 1 (23:37):
You know, Dave, you mentioned in that quote that you
were just saying about this particular data breach. This should
be a five alarm wake up call for everyone. The
gene's kind of already out of the bottle as far
as our information, and I think many of us have
kind of come to terms with the fact that our
information is out there. But with that in mind, with
this five alarm wake up call, what do we need
(23:58):
to wake up and do? How can we protect ourselves?
Speaker 4 (24:01):
Yeah, well, that's that's the right question to be asking, Amy,
and it's a lot of the stuff we've talked about
in the past. The first thing is always awareness, right,
knowing that your data is participate. It's again almost three
billion people, so your data is probably in there. You know,
if you've gotten a notification from someone else, you should
(24:21):
act on the advice they gave you. They have not
National public data so far has not confirmed this. They
have not sent out any information, but eventually they'll probably
be forced to send you the letter that says Hey,
your data has been breached. Here's to you three years
of credit monitoring. So awareness, skepticism, and vigilance. When I
have all this information about you, whether I want to
impersonate you and try to create accounts in your name,
(24:43):
or I want to fool you because I have information
about you to make it appear I'm your legitimate bank
or whatever. Healthy does to skepticism, Understand this stuff is
out there. Anything you get could be spoofed, could be fraudulent,
and the bad guys will use this information to try
to convince you it's legit. So freeze your credit, take
the credit monitoring, turn on the identity monitoring from these companies.
(25:06):
If they give you two free years of identity monitoring,
turn it on. That's not going to be fool proof either.
But the key thing I think people miss when they say, well,
I could do that myself. Okay, can you monitor all
your accounts and look for fraud and you see if
your data is showing up out there. But the most
important thing is you know, in most of these things
like LifeLock, they have attorneys that will come in and
help you in the event your identity has been stolen.
(25:27):
You know, trying to unwind that can be very difficult.
So freeze your credit, watch your bank accounts, carefully, be
super vigilant and extra skeptical. And unfortunately, Amy, that's just
the world we live in now. I mean, yes, there
really is nothing you can do that's going to protect
you one hundred percent from this, but taking those basic steps.
Anytime you get that data breach notification, you really should
take them up on the free services. You should freeze
(25:49):
your credit, you should do all those things because it
will at least make you a much more difficult target.
And in most cases, the bad guys are going to
move on to the soft targets, the people that aren't
doing this stuff.
Speaker 1 (26:00):
You just mentioned something, actually, David, I've never heard before,
which is that with some of these programs like LifeLock,
you also have access to an attorney. Now. I know,
years ago my aunt was a victim of one of
these leaks and her information got out and they did
some terrible things with it. It was so overwhelming for
her to try to unwind this stuff, and she didn't
(26:21):
know how to navigate the system. So you're telling me
that with some of these programs, if you have been
the victim of a breach, and they're offering one of
the things that if you are a victim, they can
offer up someone who might be an expert in helping
you to navigate how to get yourself through that.
Speaker 4 (26:37):
Yeah, you got to look at the specific terms of
whatever service you sign up for, but that to me,
that's usually the reason why these things are valuable. Ye me.
First off, unless you're super disciplined, you're not going to
be able to watch all your accounts. So there's value
in that in my opinion, especially if someone else is
paying for it, because of course your account was hacked.
But it's the illegal help. It's having experts and attorneys
(26:58):
who can swing into action and help you. Now, thankfully,
I have not been a victim of identity theft yet,
but I have talked to several people like your aunt
that have, and it is very traumatic, very stressful, very
time consuming, and very difficult typically to undo the damage
that's been done to you in these cases. That's why again,
if you just go ahead and freeze your credit, you
(27:18):
can always unfreeze it, you know, get your annual credit reports,
take advantage of the monitoring, check your accounts for fraud,
you know, lock stuff down and then the stuff we
always say, you know, use multi factor authentication on all
your accounts, get a strong secure password manager you can
make yourself even though your data is already out there.
And I'm sure this is going to happen again and
(27:39):
again until we get to a place where, whether it's
through insurance premiums that are unmanageable and these companies go
out of business when they get hit, or it's regulations,
you know, like Kentucky's new Consumer Data Privacy Act. You're
liable for up to seven five hundred dollars per breach
if I remember correctly, I'm going from memory. Ohio doesn't
(27:59):
have that law yet they should, I know, it's in
the pipeline. People that live in Ohio should demand this
because we keep seeing these cases here and then when
companies have these kind of breaches, they pay potentially substantial penalties,
and they would have then an incentive to not have
that happen and increase their security. Again, nothing's fool proof,
(28:19):
but you know, did National did this company do what
they should have done to protect your data? I don't know,
but we just keep seeing this over and over again.
Speaker 1 (28:28):
Yeah, and we have no control over what companies are
doing to protect our data. We do have some control
over what's out there, but honestly not really, especially in
this case where it's background checks. Right, you want that job,
they are going to do that background check. Indeed, Hotter,
I love your perspective on just the fact that it's
really on us we have to take these extra steps.
But I'm telling you, if you do, you will be
(28:49):
glad that you did, because then you make yourself a
much more difficult target, and then they are they're going
to move on to someone who is much easier. Great perspective,
as always from our tech expert Dave Hatter. You're listening
to Simply Money presented by all Worth Financial here in
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial. I mean you Wagner
(29:11):
along with Steve Scrovac. You have a financial question keeping
you up at night. There's a red button you can
click on while you're listening to the show. It's right
there on the iHeart app. Record your question. It's coming
straight to us. We'll help you figure it out and
straight ahead. It's just like a fun day, right. You
go into work and you sit down with the boss,
and you find out a bonus is coming right, or
some extra money is coming your way. Before you spend
(29:34):
all that money, before it even hits your accounts, We're
gonna talk to you through some ways to think about
that money so that you can have maybe some fun
with it now, but also some lasting impact with those dollars,
you know, a financial planning. We use this term all
the time on the show. It can be a complex process.
It doesn't have to be. So many people want to know,
(29:54):
what's the magic formula, what's the magic number? You tell
me what it is, and I'll figure out a way
to get there. I wish it was that simple, but
it is a very unique process of figuring out what
your kind of magic number is.
Speaker 2 (30:08):
You know, my dad's generation, a lot of probably most companies,
they have pensions. Yeah, okay, and everybodying of the past, yeah,
and everybody. The terminology is different. People say, yeah, my
retirement will be you know, two thousand dollars a month,
and then with Social Security it brought it up to
thirty five hundred dollars whatever. They didn't worry. Well, the
(30:30):
four oh one K didn't exist back when my dad
was you know, at least in his early days of working.
So the onus was on the company to provide retirement
security for the employees. Those days are gone. They really
who's got a pension now? Teachers? Okay, some companies, the
bigger companies, some still have pensions. Yeah, and the corporate
(30:53):
pensions they don't have cost of living increases, so inflation
really eats away at those. So how do you come
up with what's my number? What when can I afford
to retire? And you know, we talk a lot about
financial planning, but you know what, we can kind of
simplify it a little bit because a rule of thumb,
and there's a lot of argument about it, but I
(31:15):
kind of stick with the four percent rule. You know,
you can pretty much bank on being able to draw
four percent off of your investments. Not the house, Okay,
this is money you've got set aside in different investment
accounts and savings accounts. Draw four percent off of those
accounts and probably not outlive that as long as you
(31:35):
don't dig in and grab more than four percent in
any one year. What's that mean? Well, on a million
dollars forty thousand dollars a year, roughly thirty five hundred
dollars a month. Can you live on that plus your
social Security? And if you're married, your spouse's social security.
Can you get by on that? Can you live comfortably
on that? If the answer is yes, that's your number.
If the answer is no, well then find out what
(31:57):
your number is. Maybe it's two million and you need
seven thousand dollars a month plus social Security. It's such
an individual choice, and I hate those rules of thumb
about well, you probably are going to spend eighty percent
of what you're making right now. No, No, everybody's different.
Everybody's different.
Speaker 1 (32:16):
I remember years ago, Nathan Backgrack, one of our founders,
put it, I thought in in a brilliant way, and
I don't know that a lot of people think of
it this way, but he said, you don't retire on
a pile of money. You actually retire on the stream
of income that that pile of money generates for you.
You know. So it's not necessarily how many millions that
(32:36):
you have. It's when you figure out, okay, what percent
can I draw off of that every year and not
take on too much risk, great risk of running out
of money when you have to take into account that
money has to take care of inflation, in healthcare and
all the things that need to be incorporated in that
pile of money. Can you pull a stream of income
off of that money and live off of it? And yeah,
(32:58):
that's really what your magic number of a comms. And
then I think you've got to look at you know
what stock market. The stock market has historically done. Right
from nineteen seventy four to the end of last year,
the S and P five hundred average analized returns about
eleven percent.
Speaker 2 (33:14):
I'm not using that number, not if I'm drawing out
what I need to save. Yeah, you know, to me,
that's a really you know what I used when I
was ten years away from retirement. I plugged in six percent.
I was even uncomfortable with that for a rate of growth.
But you know what, you've got to start somewhere and
all right, what do I need to put away? I've
got this much money in iras in four oh one case,
(33:37):
that's going to grow to not a number that I
need to retire on. So how much do I need
to add per month or per paycheck to that? And
this gets into Okay, maybe you have to learn how
to use a business calculator. Great, buy a forty dollars
business calculator. Spend an hour trying to figure out how
it works, read the instruction manual, and guess what your
life changes? You know, because now you know, this is
(33:59):
how much which I need to put away to have
this much at this age, and four percent of that
equals such and such. I'm starting to get comfortable with
that number. But don't use eleven percent. Use a much
lower assumed rate to return for stocks and even lower
for bonds.
Speaker 1 (34:15):
I like the fact that you're talking about being conservative here,
because I've sat across the table from a number of
people who've come in and said, I've done all the
math and I've figured it out, and i can retire
and I'm going to be just fine. Yeah, And then
they're making an assumption of like a twelve percent annual
return on their stocks in order to make that work.
If you're assuming six percent annual return and you get
(34:35):
eight percent or eleven percent, good for you, I sing
on the cake. But what if you're assuming twelve percent
to make those numbers work, and you've got four or
five bad years in the market or not great years
in the market, right, and then all of a sudden,
you're like, what am I going to do now? I'm
going to have to work X number longer of years
or you give yourself less and less options when you're
more and more aggressive with you.
Speaker 2 (34:56):
You just described most public pensions. You want to know
why a lot of state pensions. Yeah, features are in
trouble because they did assume eleven and twelve percent so
that they didn't have to put as much money into
those plans because of the way the math worked out,
and when they didn't get eleven percent. Guess which plans
are in trouble? You know it's self fulfilling prophit.
Speaker 1 (35:15):
Yeah, and unfortunately there's a number of them out there.
Here's the all Worth advice. If this sounds overwhelming to you,
A qualified financial professional is someone who's going to come
together to help you marry your income needs, your time horizon,
and your risk for tolerance to figure out what your
sort of magic number is. Come you have next, the
best way to deal with bonuses, extra income, any kind
(35:37):
of money, pot of money coming in. You're listening to
Simply Money presented by all Worth Financial here in fifty
five KRC. The talk station you're listening to simply money
presented by all Worth Financial. I meanywag you're along with
stevebe Okay. We know this doesn't happen every day you
go into work and you're talking to your boss. But
every once in a while, right, you'll sit down across
(35:59):
from your boss say, okay, a company did well this year.
We're looking at a merit bonus. We're looking at you
know whatever it is, profit sharing, and here's the piece
of your pie. In the seconds that after those words
come out of your boss's mouth, where does your brain go.
I'm guessing that for many of you it's that vacation
that car that new thing. Right, spend, spend, spend. I
(36:21):
don't know, would you say I'm wrong here, Stu?
Speaker 2 (36:23):
I you know, I don't know that feeling, but I'm
willing to give it a try.
Speaker 1 (36:29):
Tell me more.
Speaker 2 (36:30):
You know, I remember my dad always is and a
lot of people have gone through this. If I hit
the lottery, here's what I'm going to do, and it's
always buy something, you know, buy something, And you know,
as an investment advisor, one of my job responsibilities is
to keep somebody from doing something stupid financially stupid that's
(36:51):
going to hurt them in the long run, and going
out and spending that money on a depreciating asset is
generally not the smartest thing to do. I always coach people,
if you came in to a lump sum from any source,
just take a step, take take a you know, take
a breath, just take a little bit of time. Put
(37:12):
it in the bank, get it off of your plate,
don't even think about it for a few days. Put
it in something ultra ultra safe like the bank, but
don't even think about it for a while, and then
you know, okay, what would be the smartest thing to
do with this money? And what everybody forgets is the
first thing I look at is all right, what are
the taxes do on this? Because if you spend it
all and realize, oh I got to pay tax on that,
(37:34):
I don't have that money for taxes, you got a problem. Yeah.
Speaker 1 (37:37):
Yeah, that's a great place to start. I also think
an emergency fund. Listen, this sounds really boring. It's not sexy,
it's not fun. It's not as exciting as a europe
trip or taking the whole family to Mexico to an
all inclusive resort. I get that, but you're going to
be really glad if you don't have an emergency fund
set aside that this is where you started, and we're
talking like three to six months of your critical expenses.
(37:59):
This will pay off later. I mean, talk about a
bonus in life when something comes unexpected. And it's not
if something comes, it's when something comes, you're going to
be so glad this is where you started with this money.
So i'd say that first and foremost, if you've got
any debts, right, that has to be considered here paying
off high interest debts. And I just think, you know,
we can easily go to like liter all the fun
(38:20):
things and and I don't want to be the fun sponge.
My kids sometimes call me that, but I really really
not a fun sponge all the time. I think you
can have some fun with this money, but I also think, heck,
it would be really fun if also you invested part
of it. And when you got to retirement, then you've
got more options. So just a lot to think through here.
Thanks for listening. You've been listening to Simply Money presented
(38:40):
by all Worth Financial here in fifty five KRC the
talk station
Tonight we are talking about your sweet spot and what
the heck does that have to do with your money.
We'll get to that. You're listening to Simply Money, presented
by all Worth Financial Ammi Wagner along with Steve Spovac,
who's in for Steve Ruby tonight. And it is perfect
timing because when we talk about the sweet spot, there's
actually a principle out there. You can apply it to
work life balance, you can apply it to how you invest,
(00:27):
how you think about retirement. It's finding your sweet spot.
There's no person I think of that comes to mind
before you. Steve Spovac. You are fantastic at maintaining balance
in your life. You did this all the years that
you were working, and I really learned a lot from you.
Speaker 2 (00:44):
Well maybe images everything. I'm not sure I did. But yeah,
when I think of sweet spot, I think of like
playing darts. It's somewhere between one and four beers. You know.
That's I'm not sure that's your sweet spot out of
my life that people should know about.
Speaker 1 (00:57):
But not the sweet spot we're referring to here.
Speaker 2 (01:00):
Yeah, Now, in all seriousness, Yeah, work life balance it
gets talked about a lot in the workplace. But you know,
how do you actually get there and how does it
translate to your investments? I mean I always with work,
I always work towards efficiency, maximum income, minimum effort, with
the ideal, and obviously you never get there making tons
(01:22):
of money and never working. Yeah, you know that's that's
kind of a neat neat concept. But you know, seriously,
how do you get to that kind of goldilocks area where,
you know, especially in investing, where Okay, I don't want
to have this run my life. And I've seen investors
like that where you know, they come in and you
know they're considering hiring me in the company, and and
(01:45):
the first thing they want to do is let you
know how much they know about this, and it becomes
apparent very quickly that you know, money is really what
this person's life revolves around. And I'm not sure that's
a real healthy attitude to take.
Speaker 1 (02:01):
I agree with you, and I think you know finding
your sweet spot when it comes to your investments. And
this is part of why we do a financial plan,
but it's probably part of it that we don't talk
about a lot, and that is once we run your
plan with what your financial goals are, what you need
to live off of in retirement or what you're living
on now, what your budget looks like, and then how
much you have saved. We look at those investments that
(02:23):
we say, what is the minimum return that we can get,
the minimum risk that we can get, and let you
meet that goal. If you have gazillions of dollars coming
out of your ears and you get your retirement, you
don't have to be one hundred percent in stocks, right
you can. In fact, you could probably put all that
money in a high heeled savings account, take no risk
on them, and live out the rest of your days really,
really well.
Speaker 3 (02:43):
So we want to figure out, Okay, what's the maximum
return we can get for the minimum amount of risk.
What do we need to get you from where you
are now to where you need to be to live
comfortably in retirement? That little Goldilocks place is where you
should live.
Speaker 1 (02:58):
And it doesn't change base on what's going on in
the global economy. It doesn't change based on who's in
the oval office, it doesn't change based on what the
stock market is doing that week. You figure out where
you need to be, then you just stay there. You
kind of set up camp.
Speaker 2 (03:13):
Yeah, and you know, I mentioned work life balance. Okay,
and that's again that's something that's discussed about, but an
awful lot. But you also have investment balance. You know.
I mentioned how some people take investing so seriously that
it runs their lives, and it can be you know,
it can be debilitating if all they think about is
(03:35):
how to get the best return, how not to make mistakes.
And you know what balance comes into investments in the
form of diversification. We talk about diversification across the board.
Don't put your eggs, all your eggs in one basket,
but you know, really what it means is once you
step outside of the realm of banks and credit unions,
(03:57):
you have to accept that money value go down as
well as up, and especially if you're talking about the
stock market. I know this is an earth shattering news,
but yeah, they go up and down. And the key is,
can I find something that is going up when my
other investments are going down and vice versa. I mean,
the perfect portfolio is a straight line because everything going
(04:21):
up is offset by everything else going down, and it
doesn't exist. But you can get pretty darn close through
diversifying not just between stocks, bonds, and money markets, but
also within the stock market between US stocks, foreign stocks,
emerging growth stocks, value stocks. That's diversification, and that's good
(04:43):
balance that everybody needs.
Speaker 1 (04:45):
Small cap, large cap, Right, There's lots of ways to
look at diversification. And I agree with you, the more
diversified you are, the better you are. What that does
not look like is going all in on mean stocks,
going all in on in video or the Magnificent seven.
You know. I think about a couple that I talked
to several years ago, and they lived in California for
(05:05):
a while, and they just saw all these internet companies
right late nineties, like could not lose, and you know,
year after year their friends were talking about the amazing
returns that they got, and they went all in with
their retirement on those docks in the late nineties, Yes, right,
because how could they lose? How could they lose? Everything
(05:26):
in their retirement was planned out. They were going to
retire at fifty five. You want to finish the story,
You want to guess what happened to them around two thousand.
Speaker 2 (05:34):
No.
Speaker 1 (05:34):
I lived it.
Speaker 2 (05:35):
I was there. Yeah it went when last bubble burst,
Oh my goodness, to me, that was just as bad
as O eight nine oh eight.
Speaker 4 (05:42):
No.
Speaker 2 (05:43):
Nine was really really scary when when we saw this
almost a depression in stock and real estate values. But
everybody forgets about what happened when the bubble, when the
tech bubble burst in ninety nine, for three years in
a row, two thousand and one and two, stock races
went down, and you know, they glimmer of hope they'd
(06:04):
bounce up, Hey we're finally out of it, and then
drop even more.
Speaker 1 (06:07):
So.
Speaker 2 (06:07):
I mean, this is a perfect example of why you
need to diversify, not just you know, between asset classes
like stocks, bonds, and cash, but also within that area
of the stock market, between emerging companies, US companies, foreign companies.
You really need to spread your investment risk out because
(06:30):
when you reduce the risk in your portfolio, guess what,
you reduce the stress in your life. You're not thinking
about your investments every day as you hear and see
bad news come across the board.
Speaker 1 (06:44):
Which is why we call it the sweet spot. Right,
you're listening to Simply Money presented by all Worth Financial
and Memi Wagner along with De Spuff because.
Speaker 3 (06:50):
We talk about something we don't often talk about on
the show, but this is a principle called the sweet spot.
Speaker 1 (06:55):
Principle. You can apply it to your investments, you can
apply you can apply it to your retirement planning and
you can retire. You can apply it to your everyday
life when it comes to work life balance right, And
we've kind of talked about one of the keys to
this is being properly diversified. It's taking on the least
amount of risk that you can take on in order
to get the biggest return. And then I think it
(07:17):
is once you're finding that sweet spot, you got to
stay there. And part of that looks like rebalancing.
Speaker 4 (07:22):
Right.
Speaker 1 (07:23):
If you've decided that you should be in seventy percent
stocks and thirty percent bonds, and then there's just a
heck of a year in the market and all of
a sudden that you check and that becomes eighty percent
stocks and twenty percent bonds, there's a pretty big shift there.
There's a pretty big drift. You have to rebalance, right,
Sell some of those stocks, buy some more bonds, and
get yourself back to that sweet spot that you had
(07:44):
predetermined was the best place for you in regard to risk.
Speaker 2 (07:48):
Well, it's called paying attention. I mean, you can't just
set it and forget it. Even if you hire somebody
to help you manage your money, you've got to pay
some attention to what you're doing. It's not fun for
most people. Most people, you know, they enjoy spending time
planning vacations, going on vacations. But you know what, if
you want to have that really long vacation called retirement
without a lot of stress, once or twice a year,
(08:10):
pay attention to what's going on, Analyze your investments, talk
to your advisor, and just run through. Hey, here's what
I got. Oh it's not quite what I had two
years ago because this segment went up and this segment
went down. All right, then maybe you need to fix it.
And that's part of paying attention to your investments. I mean,
I retired at the end of last year. Other than
(08:31):
coming in and fill like this, yeah yeah, But the
reason you know that, I am very comfortable and not
stressed out, and I'm a warrior. I think I've told
you I am a huge warrior. But I spent the
last couple of years as I was preparing for retirement,
updating my financial plan plan going through my spending needs,
(08:52):
which is hugely important. That's what keeps most people from
doing a financial plan in the first place, they don't
want to address. All right, here's where the money goes.
That's it. You don't have to say you can't spend
this anymore. You just have to know where the money
goes and how much it costs to live the way
you want to live. And if you spend time going
into that sort of thing, paying attention to your investments,
(09:14):
when it comes time to live off of those investments,
you don't worry as much.
Speaker 1 (09:17):
Yeah, I think this sweet spot also applies to your
personal life and the fact that you know, many of
us work really hard, and we've spent a lot of
focus on that part of our lives. But like, what
are hobbies? What are you doing to develop interests outside
of work? It's going to make you more fulfilled now.
But I'll tell you what in retirement. And I used
to joke with you about this, but it came true.
(09:38):
I didn't worry about you transitioning into retirement because you
have seven hundred and eighty seven different hobbies. You know,
maybe that's not balance, but figuring out where the balance
is in your personal life between things that fill you
up and between work. And then also there's a sweet
spot when it comes to your budget. And I mean
when you are looking at how much and you say,
(09:59):
and I agree with you. People don't like to look
at budgets. That's not a fun thing. But you've got
to find your sweet spot in the budget between how
you're saving and investing for your future and how you're
living your life right now. And it's a balance between
your current self and your future self. And I have
met with so many people through the years, and I
understand it's really hard to think about your future self.
What you're thinking about is now, the vacation you want
(10:22):
to go on, the car you want to buy, right,
those kinds of things. But you've got to balance that
sweet spot between spending money now in saving money and
planning for your future.
Speaker 2 (10:32):
I'm going to add something to that, amy don't forget
your family, your spouse, your relationships. Okay, that's part of
the sweet spot and a lot of people, especially when
they get wrapped up and I've got to save for retirement,
I've got a work harder so i can get ahead,
and that sort of thing. Maybe you don't always think
about your relationships as much as you should. And one
(10:56):
of the things that keeps you happiest in life is
to be present. Okay, we're you've already done the work,
all right. I'm going to set aside an hour to
look at my investments. And once I've done that and
rebalanced and did whatever I have to do, then I'm
going to go with my spouse and we're going to
go and just enjoy the day. Okay, you've got to
You've got to do that to have good balance, both
(11:17):
at home and while you're working at work or if
you're in retirement not worrying about money.
Speaker 1 (11:22):
It's a different way of thinking, right, But it's kind
of like when you're thinking about your budget or if
you've got this like kind of anxiety over how much
you've been spending lately and inflation, taking a toll because
you know tuna fish is what did you say fifteen
dollars instead of eleven dollars at Costco now?
Speaker 2 (11:38):
Right?
Speaker 3 (11:39):
What you got to do is ask yourself, okay, what's
my sweet spot here?
Speaker 4 (11:43):
Right?
Speaker 1 (11:43):
And apply it to your work life balance, apply it
to your personal life, to your family, to your investments.
When you figure out what your sweet spot is, I
think anxiety and worry become less and less of an issue.
Here's the all Worth Advice. Finding and maintaining that sweet
spot is going to help you achieve better findinguancial outcomes
and a more fulfilling life. Coming up next, we're talking
(12:04):
about the best ways to protect your wealth. You're listening
to Simply Money, presented by all Worth Financial here in
fifty five KRC the talk station. You're listening to Simply Money.
You're presented by all Worth Financial. I mean you Wagner
along with Steve Sprovac and for Steve Ruby. Tonight, if
you can't listen to our show every night, you don't
(12:24):
have to miss a thing we talk about. We've got
a daily podcast for you, or you can just subscribe
to Simply Money on the iHeart app or wherever you
get your podcasts. Come up at six forty three, we're
gonna talk about two financial concepts that should go hand
in hand, growth and income. We'll get into that in
a minute. But you know, I'm a big sports fan,
and for anyone who spends much time, well, if you
(12:46):
want to know where I spend my time on the weekends,
I'm a basketball games. My son is a freshman. Basketball
is his sport. I think I've logged seven hundred and
ninety eight million hours in the stands in what I
have for.
Speaker 2 (12:58):
Kids are at that age where you're going busy with
them doing something.
Speaker 1 (13:02):
I feel like we play on seven basketball teams at
the same time. And luckily I love basketball. It's one
of my favorite sports. But what I have learned is
that defense can win the game as much as offense can.
You know, you don't pay as much attention to the
defense as the three pointers that are coming from mid court,
but man, they make a difference. And the same applies
(13:23):
to your money. When you are working, you are kind
of on the offensive right. You are putting baskets, you
are putting points on that scoreboard. You are making the money.
But when you get to retirement, there is a big
shift there, and that is you start to play defense
that with this points that you put it there, you
don't want to lose any of those points. And so
I'm going to talk about this a little bit.
Speaker 2 (13:44):
Yeah, I don't know how many times I've heard, Hey,
I can't afford to lose much because I'm not putting
any money back. I'm retired, okay, And I'm not just
talking about retires. I think everybody this is part of
risk tolerance nobody likes to lose, you know, and it's money. Okay,
this gets personal, and you know it's it's good to
think about not losing, but you also have to realize
(14:08):
once you step and I've said this a ton of times,
once you step outside the bank or the credit union,
your money is going to go up and down. I mean,
that's just the name of the game. And I'm thinking, wow,
just hit me. This is probably twenty five years ago.
I remember somebody saying, Okay, I just got my statement.
These three things are down, get rid of them. I
don't want losers, okay. And if you do that, you're
(14:30):
gonna not You're not gonna own anything. We had a
good discussion after that about thanks versus versus investing. But
you know, it's kind of natural. As you get older,
you can't make it back, and so you think about,
all right, how can I keep myself from losing more
than I'm comfortable with? And part of that is it
(14:51):
sounds weird, but you've got to learn a new language.
You need to learn the financial language and a little
bit more about investing, so that whether you're a do
it yourself or you've hired somebody, you understand why, and
understanding why helps put it in perspective of Okay, this
isn't going to keep going down to zero, or maybe
I'm in something that could go down to zero. Maybe
(15:13):
I need to just take it back a little bit
and reduce the risk of the mix of investments I'm
using currently because I didn't realize I bought what I
bought until I learn more about it.
Speaker 1 (15:24):
Yeah, I think you have to educate yourself, or if
you work with a financial advisor. I feel like my
job isn't to make your money decisions for you. It's
to educate you right so that you can make the
best decisions for you and confidence. I'm not going to
tell you what to do, but I'm going to make
sure that you have all the information and you fully
understand if you make this decision and go down this path,
(15:46):
here's the result. And if you make this decision and
go down this path, here's the difference in that result.
And then I leave it up to the person, the
investor that I'm working with. But you've got to have
that education and that baseline so that you can make
those kinds of informed decisions. Then gosh, this makes me
want to pull my hair out. People spending more than
they make right. We often will come up with these
financial plans and say, okay, this is what you have
(16:08):
to live on on a monthly basis when you get
to retirement. You know, and then a year goes by
and someone's been spending two thousand dollars more a month
than what we had budgeted for. We don't like having
these conversations, but they're a necessity of sometimes. Hey, you
keep spending this way and you're going to spend yourself
out of money. Well, you still have ten years left
(16:29):
to live, likely.
Speaker 2 (16:30):
You know, hang on except the first year or two
of retirement. Okay, that's a well you.
Speaker 1 (16:37):
Just planned for that. You plan to spend more.
Speaker 2 (16:40):
I told people for years and I'm living this life
right now. If you don't spend more than expected your
first year or two of retirement, you're doing it wrong, okay,
because you worked your butt off all those years to
enjoy yourself. And don't take your health for granted. I mean,
I had a heart attack at sixty. You know who knew,
and you know this is something where you want to
enjoy and do the things you do while you can.
(17:02):
As long as you get back to roughly and I'm
not saying penny pinch by any stretch, but you know,
to what you thought your spending need was going to be,
how much you were gonna spend in retirement, And I'll
tell you what we talked already about. You know, let's
let's get rid of the stress. Let's have some balance. Well,
you know what, if you've laid the groundwork and you've
(17:24):
got that emergency fund, and you've done your financial plan
and you updated every year, so if you did put
an assumption in there that was a little bit off,
you can correct it and recast it and see how
the plan works out from that point. Oh no, I
still don't run out of money, even if I live
to be one hundred and ten. Okay, then you could
stop worrying, you can be present, and you can have
(17:45):
a very comfortable retirement.
Speaker 1 (17:48):
I remember the first time, this is probably about ten
years ago. I just started working. It's simply money at
the time, and went to speak to a really cool
group of retirees from a church in the Kenwood area
and we sat down to lunch and I was like, oh,
every single one of these conversations is exactly the same.
I want more money, and I don't want to lose
a dollar. That is the mindset, you know when you're
(18:11):
quit working. Yeah, and I'm like, well, I wish I
had a seed that you could plant in your backyard
and that money tree was just going to grow and
you didn't have to worry about it. Right, But this
is why you've got to figure out the balance between
playing a little offense and playing a little defense when
it comes to your money, especially when you've made that
transition into retirement, and.
Speaker 3 (18:29):
It looks like also being really diversified, not necessarily following
your NVIDIAs so we're the next big stock, but stock indexes,
you know where you've got a big basket of fun
so that when some are doing well others, you know,
others can lag and then next year those are likely
the lags are going to be the ones that are
doing well.
Speaker 1 (18:49):
In understanding what that proper diversification looks like.
Speaker 2 (18:52):
Yeah, and you know the step by step on it.
We can go into a lot of detail, but understand
the language. Understand your investment. Don't blindly trust anybody that
you hire, and if you do it yourself, it's more
important to learn language. But check into who's got your
best interests at heart, and I think that boils down
(19:12):
to a fiduciary. What's a fiduciary Somebody who works for you,
not their own company and their own they're legally held
to such a high standard that they not just ethically,
but legally have to work in your best interest. And
that's usually a fee based advisor. There's lots of good
ones out there.
Speaker 4 (19:30):
Yeah.
Speaker 1 (19:31):
I think as you make this transition, you got to
start focusing on defense. And there's the number of ways
to play that defense. And I was ay, first thing
to do is make sure you've got that emergency fund
in place. Coming up next a massive data breach. We're
going to get into that, what you need to know
about it, and also what you got to do to
protect yourself. You're listening to simply Money presented by all
Worth Financial here in fifty five krs the talk station.
(19:59):
You're listening to simply Money presented by all Work Financial.
I'm Amy Wagner. Another day, another data breach, this one
though huge in scope, and you might be surprised the
company that ended up being the victim.
Speaker 4 (20:13):
Here.
Speaker 1 (20:13):
We're going to get into that and what you can
do about it. Tonight we are joined by our tech
expert Dave Hatter from intrust It. Dave, let's start first
with which company this is, because I think this part's
a little crazy.
Speaker 4 (20:27):
Yeah, Amy, it's a company called National Public Data, which
most people have probably never heard of. Nope, And this
is a perfect example of why you and I have
discussed so many times in the past, to the extent possible,
you should limit your data out there, because you have
these data brokers like National Public Data, where their entire
existence and revenue stream is based around buying and selling
(20:49):
your data, aggregating data about you, making it available to
companies for background checks or whatever other purposes they have.
They're essentially kind of a known data broker that's got
all of this data. And in this case, unfortunately for
US consumers, we see, once again, due to no national
privacy law, sort of a hodgepodge mixture of state privacy laws,
(21:11):
some of which don't have much teeth, there probably will
be very few consequences for these folks, And now almost
three billion records, for very sensitive records we can get
into the details on that in a minute, are now
out there on the dark web for sale.
Speaker 1 (21:25):
Unfortunately, I just got a letter in the mail last week.
I think it was Ticketmaster Live Nation and some of
my information exposed there, and it's just like, oh my gosh,
it feels like this never ends in this particular data
breach though, Dave, you mentioned sensitive information. What are we
talking about that got out there?
Speaker 4 (21:42):
Yeah, it's pretty crazy. So for what it's worth for
people that want to do a bit of a deeper
dive into this, the Los Angeles Times just put an
article out that goes into quite a bit of detail
about this. But per their reporting social Security numbers and
other sensitive data, this is a quote. If this in fact,
I'm sorry. If this is in fact pretty much the
(22:02):
whole dossier on all of us. It is certainly much
more concerning than prior breaches, and if people weren't taking
precautions in the past what they should have been doing,
they should be a five alarm wake up call. So,
I mean, if you think about the kind of information
you would need to do a background check on somebody,
obviously it's very, very extensive, and it's important for a
couple of reasons. I mean, anytime someone has your social
Security number, there's a potential for identity theft and fraud
(22:25):
related to that. But if I know everywhere you've worked,
everywhere you've lived. The ability for me to impersonate you
for any sort of fraud just goes through the roof.
And again, this is one of the reasons why in general,
the less apps you have the better, The less information
you put out there the better. But this is a
unique case here because in so many instances, like if
you're applying for a job, right and they want to
(22:46):
do a background check on you, you have to cough
up this information. And now we see a case where
and again I don't have any inside information on this,
but whether shoddy cybersecurity practices, this could be insider theft.
There could be any number of ways the bad guy
got their hands on this data from this company. It
just goes to show you that, unfortunately, and I got
the same letter regarding Ticketmaster Amy. You know, as our
(23:10):
society gets increasingly digital and hackers and thieves get smarter
and more devious, if they can get extensive and voluminous
information about you like this, it really does put you
at risk. And unfortunately, short of forcing companies to take
the right kind of steps to protect your data, none
of which are fool proof, and then having laws that
(23:30):
have teeth and I'm generally an anti regulation guide, but
we're all going to suffer as a result of this breach.
We're the ones that are going to be impacted.
Speaker 1 (23:37):
You know, Dave, you mentioned in that quote that you
were just saying about this particular data breach. This should
be a five alarm wake up call for everyone. The
gene's kind of already out of the bottle as far
as our information, and I think many of us have
kind of come to terms with the fact that our
information is out there. But with that in mind, with
this five alarm wake up call, what do we need
(23:58):
to wake up and do? How can we protect ourselves?
Speaker 4 (24:01):
Yeah, well, that's that's the right question to be asking, Amy,
and it's a lot of the stuff we've talked about
in the past. The first thing is always awareness, right,
knowing that your data is participate. It's again almost three
billion people, so your data is probably in there. You know,
if you've gotten a notification from someone else, you should
(24:21):
act on the advice they gave you. They have not
National public data so far has not confirmed this. They
have not sent out any information, but eventually they'll probably
be forced to send you the letter that says Hey,
your data has been breached. Here's to you three years
of credit monitoring. So awareness, skepticism, and vigilance. When I
have all this information about you, whether I want to
impersonate you and try to create accounts in your name,
(24:43):
or I want to fool you because I have information
about you to make it appear I'm your legitimate bank
or whatever. Healthy does to skepticism, Understand this stuff is
out there. Anything you get could be spoofed, could be fraudulent,
and the bad guys will use this information to try
to convince you it's legit. So freeze your credit, take
the credit monitoring, turn on the identity monitoring from these companies.
(25:06):
If they give you two free years of identity monitoring,
turn it on. That's not going to be fool proof either.
But the key thing I think people miss when they say, well,
I could do that myself. Okay, can you monitor all
your accounts and look for fraud and you see if
your data is showing up out there. But the most
important thing is you know, in most of these things
like LifeLock, they have attorneys that will come in and
help you in the event your identity has been stolen.
(25:27):
You know, trying to unwind that can be very difficult.
So freeze your credit, watch your bank accounts, carefully, be
super vigilant and extra skeptical. And unfortunately, Amy, that's just
the world we live in now. I mean, yes, there
really is nothing you can do that's going to protect
you one hundred percent from this, but taking those basic steps.
Anytime you get that data breach notification, you really should
take them up on the free services. You should freeze
(25:49):
your credit, you should do all those things because it
will at least make you a much more difficult target.
And in most cases, the bad guys are going to
move on to the soft targets, the people that aren't
doing this stuff.
Speaker 1 (26:00):
You just mentioned something, actually, David, I've never heard before,
which is that with some of these programs like LifeLock,
you also have access to an attorney. Now. I know,
years ago my aunt was a victim of one of
these leaks and her information got out and they did
some terrible things with it. It was so overwhelming for
her to try to unwind this stuff, and she didn't
(26:21):
know how to navigate the system. So you're telling me
that with some of these programs, if you have been
the victim of a breach, and they're offering one of
the things that if you are a victim, they can
offer up someone who might be an expert in helping
you to navigate how to get yourself through that.
Speaker 4 (26:37):
Yeah, you got to look at the specific terms of
whatever service you sign up for, but that to me,
that's usually the reason why these things are valuable. Ye me.
First off, unless you're super disciplined, you're not going to
be able to watch all your accounts. So there's value
in that in my opinion, especially if someone else is
paying for it, because of course your account was hacked.
But it's the illegal help. It's having experts and attorneys
(26:58):
who can swing into action and help you. Now, thankfully,
I have not been a victim of identity theft yet,
but I have talked to several people like your aunt
that have, and it is very traumatic, very stressful, very
time consuming, and very difficult typically to undo the damage
that's been done to you in these cases. That's why again,
if you just go ahead and freeze your credit, you
(27:18):
can always unfreeze it, you know, get your annual credit reports,
take advantage of the monitoring, check your accounts for fraud,
you know, lock stuff down and then the stuff we
always say, you know, use multi factor authentication on all
your accounts, get a strong secure password manager you can
make yourself even though your data is already out there.
And I'm sure this is going to happen again and
(27:39):
again until we get to a place where, whether it's
through insurance premiums that are unmanageable and these companies go
out of business when they get hit, or it's regulations,
you know, like Kentucky's new Consumer Data Privacy Act. You're
liable for up to seven five hundred dollars per breach
if I remember correctly, I'm going from memory. Ohio doesn't
(27:59):
have that law yet they should, I know, it's in
the pipeline. People that live in Ohio should demand this
because we keep seeing these cases here and then when
companies have these kind of breaches, they pay potentially substantial penalties,
and they would have then an incentive to not have
that happen and increase their security. Again, nothing's fool proof,
(28:19):
but you know, did National did this company do what
they should have done to protect your data? I don't know,
but we just keep seeing this over and over again.
Speaker 1 (28:28):
Yeah, and we have no control over what companies are
doing to protect our data. We do have some control
over what's out there, but honestly not really, especially in
this case where it's background checks. Right, you want that job,
they are going to do that background check. Indeed, Hotter,
I love your perspective on just the fact that it's
really on us we have to take these extra steps.
But I'm telling you, if you do, you will be
(28:49):
glad that you did, because then you make yourself a
much more difficult target, and then they are they're going
to move on to someone who is much easier. Great perspective,
as always from our tech expert Dave Hatter. You're listening
to Simply Money presented by all Worth Financial here in
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial. I mean you Wagner
(29:11):
along with Steve Scrovac. You have a financial question keeping
you up at night. There's a red button you can
click on while you're listening to the show. It's right
there on the iHeart app. Record your question. It's coming
straight to us. We'll help you figure it out and
straight ahead. It's just like a fun day, right. You
go into work and you sit down with the boss,
and you find out a bonus is coming right, or
some extra money is coming your way. Before you spend
(29:34):
all that money, before it even hits your accounts, We're
gonna talk to you through some ways to think about
that money so that you can have maybe some fun
with it now, but also some lasting impact with those dollars,
you know, a financial planning. We use this term all
the time on the show. It can be a complex process.
It doesn't have to be. So many people want to know,
(29:54):
what's the magic formula, what's the magic number? You tell
me what it is, and I'll figure out a way
to get there. I wish it was that simple, but
it is a very unique process of figuring out what
your kind of magic number is.
Speaker 2 (30:08):
You know, my dad's generation, a lot of probably most companies,
they have pensions. Yeah, okay, and everybodying of the past, yeah,
and everybody. The terminology is different. People say, yeah, my
retirement will be you know, two thousand dollars a month,
and then with Social Security it brought it up to
thirty five hundred dollars whatever. They didn't worry. Well, the
(30:30):
four oh one K didn't exist back when my dad
was you know, at least in his early days of working.
So the onus was on the company to provide retirement
security for the employees. Those days are gone. They really
who's got a pension now? Teachers? Okay, some companies, the
bigger companies, some still have pensions. Yeah, and the corporate
(30:53):
pensions they don't have cost of living increases, so inflation
really eats away at those. So how do you come
up with what's my number? What when can I afford
to retire? And you know, we talk a lot about
financial planning, but you know what, we can kind of
simplify it a little bit because a rule of thumb,
and there's a lot of argument about it, but I
(31:15):
kind of stick with the four percent rule. You know,
you can pretty much bank on being able to draw
four percent off of your investments. Not the house, Okay,
this is money you've got set aside in different investment
accounts and savings accounts. Draw four percent off of those
accounts and probably not outlive that as long as you
(31:35):
don't dig in and grab more than four percent in
any one year. What's that mean? Well, on a million
dollars forty thousand dollars a year, roughly thirty five hundred
dollars a month. Can you live on that plus your
social Security? And if you're married, your spouse's social security.
Can you get by on that? Can you live comfortably
on that? If the answer is yes, that's your number.
If the answer is no, well then find out what
(31:57):
your number is. Maybe it's two million and you need
seven thousand dollars a month plus social Security. It's such
an individual choice, and I hate those rules of thumb
about well, you probably are going to spend eighty percent
of what you're making right now. No, No, everybody's different.
Everybody's different.
Speaker 1 (32:16):
I remember years ago, Nathan Backgrack, one of our founders,
put it, I thought in in a brilliant way, and
I don't know that a lot of people think of
it this way, but he said, you don't retire on
a pile of money. You actually retire on the stream
of income that that pile of money generates for you.
You know. So it's not necessarily how many millions that
(32:36):
you have. It's when you figure out, okay, what percent
can I draw off of that every year and not
take on too much risk, great risk of running out
of money when you have to take into account that
money has to take care of inflation, in healthcare and
all the things that need to be incorporated in that
pile of money. Can you pull a stream of income
off of that money and live off of it? And yeah,
(32:58):
that's really what your magic number of a comms. And
then I think you've got to look at you know
what stock market. The stock market has historically done. Right
from nineteen seventy four to the end of last year,
the S and P five hundred average analized returns about
eleven percent.
Speaker 2 (33:14):
I'm not using that number, not if I'm drawing out
what I need to save. Yeah, you know, to me,
that's a really you know what I used when I
was ten years away from retirement. I plugged in six percent.
I was even uncomfortable with that for a rate of growth.
But you know what, you've got to start somewhere and
all right, what do I need to put away? I've
got this much money in iras in four oh one case,
(33:37):
that's going to grow to not a number that I
need to retire on. So how much do I need
to add per month or per paycheck to that? And
this gets into Okay, maybe you have to learn how
to use a business calculator. Great, buy a forty dollars
business calculator. Spend an hour trying to figure out how
it works, read the instruction manual, and guess what your
life changes? You know, because now you know, this is
(33:59):
how much which I need to put away to have
this much at this age, and four percent of that
equals such and such. I'm starting to get comfortable with
that number. But don't use eleven percent. Use a much
lower assumed rate to return for stocks and even lower
for bonds.
Speaker 1 (34:15):
I like the fact that you're talking about being conservative here,
because I've sat across the table from a number of
people who've come in and said, I've done all the
math and I've figured it out, and i can retire
and I'm going to be just fine. Yeah, And then
they're making an assumption of like a twelve percent annual
return on their stocks in order to make that work.
If you're assuming six percent annual return and you get
(34:35):
eight percent or eleven percent, good for you, I sing
on the cake. But what if you're assuming twelve percent
to make those numbers work, and you've got four or
five bad years in the market or not great years
in the market, right, and then all of a sudden,
you're like, what am I going to do now? I'm
going to have to work X number longer of years
or you give yourself less and less options when you're
more and more aggressive with you.
Speaker 2 (34:56):
You just described most public pensions. You want to know
why a lot of state pensions. Yeah, features are in
trouble because they did assume eleven and twelve percent so
that they didn't have to put as much money into
those plans because of the way the math worked out,
and when they didn't get eleven percent. Guess which plans
are in trouble? You know it's self fulfilling prophit.
Speaker 1 (35:15):
Yeah, and unfortunately there's a number of them out there.
Here's the all Worth advice. If this sounds overwhelming to you,
A qualified financial professional is someone who's going to come
together to help you marry your income needs, your time horizon,
and your risk for tolerance to figure out what your
sort of magic number is. Come you have next, the
best way to deal with bonuses, extra income, any kind
(35:37):
of money, pot of money coming in. You're listening to
Simply Money presented by all Worth Financial here in fifty
five KRC. The talk station you're listening to simply money
presented by all Worth Financial. I meanywag you're along with
stevebe Okay. We know this doesn't happen every day you
go into work and you're talking to your boss. But
every once in a while, right, you'll sit down across
(35:59):
from your boss say, okay, a company did well this year.
We're looking at a merit bonus. We're looking at you
know whatever it is, profit sharing, and here's the piece
of your pie. In the seconds that after those words
come out of your boss's mouth, where does your brain go.
I'm guessing that for many of you it's that vacation
that car that new thing. Right, spend, spend, spend. I
(36:21):
don't know, would you say I'm wrong here, Stu?
Speaker 2 (36:23):
I you know, I don't know that feeling, but I'm
willing to give it a try.
Speaker 1 (36:29):
Tell me more.
Speaker 2 (36:30):
You know, I remember my dad always is and a
lot of people have gone through this. If I hit
the lottery, here's what I'm going to do, and it's
always buy something, you know, buy something, And you know,
as an investment advisor, one of my job responsibilities is
to keep somebody from doing something stupid financially stupid that's
(36:51):
going to hurt them in the long run, and going
out and spending that money on a depreciating asset is
generally not the smartest thing to do. I always coach people,
if you came in to a lump sum from any source,
just take a step, take take a you know, take
a breath, just take a little bit of time. Put
(37:12):
it in the bank, get it off of your plate,
don't even think about it for a few days. Put
it in something ultra ultra safe like the bank, but
don't even think about it for a while, and then
you know, okay, what would be the smartest thing to
do with this money? And what everybody forgets is the
first thing I look at is all right, what are
the taxes do on this? Because if you spend it
all and realize, oh I got to pay tax on that,
(37:34):
I don't have that money for taxes, you got a problem. Yeah.
Speaker 1 (37:37):
Yeah, that's a great place to start. I also think
an emergency fund. Listen, this sounds really boring. It's not sexy,
it's not fun. It's not as exciting as a europe
trip or taking the whole family to Mexico to an
all inclusive resort. I get that, but you're going to
be really glad if you don't have an emergency fund
set aside that this is where you started, and we're
talking like three to six months of your critical expenses.
(37:59):
This will pay off later. I mean, talk about a
bonus in life when something comes unexpected. And it's not
if something comes, it's when something comes, you're going to
be so glad this is where you started with this money.
So i'd say that first and foremost, if you've got
any debts, right, that has to be considered here paying
off high interest debts. And I just think, you know,
we can easily go to like liter all the fun
(38:20):
things and and I don't want to be the fun sponge.
My kids sometimes call me that, but I really really
not a fun sponge all the time. I think you
can have some fun with this money, but I also think, heck,
it would be really fun if also you invested part
of it. And when you got to retirement, then you've
got more options. So just a lot to think through here.
Thanks for listening. You've been listening to Simply Money presented
(38:40):
by all Worth Financial here in fifty five KRC the
talk station
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