Episode Transcript
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Speaker 1 (00:06):
Tonight some strategies to help keep you sane when you're
stressing about money. Plus, we are answering a lot of
your questions and much more. You're listening to simply Money
presented by all Worth Financial. I mean you Wagner, along
with Steve Sproback and for Steve Ruby. Okay, I don't
think I need to tell anyone this that money can
be a major source of stress in your dress.
Speaker 2 (00:27):
Stress over money. I know experienced that.
Speaker 1 (00:31):
Oh it can.
Speaker 2 (00:32):
Reck's more like stressover lack of money.
Speaker 1 (00:35):
Yeah, yeah, well, and I think you can feel like
you're all set with money and then something happens, right,
someone loses a job, an unexpected medical expense comes, and
how are we going to pay for this bill? You know,
whatever it is we were it's something from my son's school.
Over the weekend, my husband was talking to someone who
had been laid off a while ago, and he was
just talking about how stressful it was to find a
(00:55):
new job. And he was saying the stress on our marriage, right,
Ye spend so hard and so for anyone who has done.
I can't imagine anyone getting to the age of thirty, forty,
fifty sixty without having some kind of money stress at
some point in your life. Right, you know, how do
you how do you keep things in check? How do
you keep things under control the best that you can?
Speaker 2 (01:18):
Well, you know you don't always, is the short answer.
And as I've gotten to know you over the years,
you grew up in a very different environment than I did.
Your your parents. You weren't wealthy, no question about that,
but your parents' money was openly discussed.
Speaker 3 (01:36):
Yeah, and it was a tool that.
Speaker 2 (01:38):
Your parents taught you from an early age what to do,
what not to do. My parents were always broke, and
you know, it was always a big stress point over
you know, what bill can we pay? Which ones do
we have to put off this month? I don't think
they ever had a savings account. And there's a lot
of people I think out there that that can relate
to this.
Speaker 3 (01:57):
Yeah, it's a problem.
Speaker 2 (01:58):
And you know, we we take a look at a
lot of surveys, We get a lot of information and
data points. And it's no surprise to me that, according
to bankrate dot com, half of US adults said money
has a very negative impact on their mental health.
Speaker 3 (02:15):
I get that completely.
Speaker 1 (02:17):
You know what I think is really interesting about that
those deve is that so many people get used to
whatever that feels like, that stress, that they're almost afraid
to do something about it to get the stress out
of their lives, like they would be too painful of
the process of digging out of that credit card debt
or whatever that looks like. So I think first it's like, hey,
acknowledging the situation that you're in in the way that
(02:38):
it makes you feel, and then deciding I'm going to
take some steps to try and get this under control.
Speaker 2 (02:45):
Well, and okay, what are those steps? I mean, the
sound basic. We can talk about it. We'll just build
an emergency fund. If you're not paying your bills, you
don't have the ability to build up an emergency fund.
And if you're trying to pay off credit card debt.
The reason you may have gotten into credit card debt
is because your income is not matching your expenses. And
(03:07):
maybe your expenses are legitimate. Maybe you're not going out
to dinner every night of the week. Maybe it's because
you needed breaks on the car. You didn't save up
money for that, and oh my goodness, it won't be
paid off this month because I threw it on visa,
and next month is looking pretty diceal. So it is
a big stress issue for a lot of people. And
(03:28):
one of the other things bankery dot Com came up
with is sixty percent more than half of the people
out there that were surveying, they're having trouble just meeting
day to day expenses, I mean, just normal stuff, never
mind the surprises. How do you build up an emergency
fund if you can't meet the normal expenses, never mind
(03:48):
the surprises.
Speaker 1 (03:49):
This is one of the first conversations I have with
someone when they walk into my office. Was talking to
someone yesterday who was talking about the fact that she
was pulling out of her driveway and got an un
expected call from her CPA telling her that she owed
a major amount of money, and she was actually saying
that it was difficult for her to even figure out
(04:10):
how to put the car and park. It was so
overwhelming this news from out of nowhere. And part of
the problem and why it was overwhelming is because that
emergency fund wasn't there. So when you get this call,
it's like, what am I going to do? Where am
I going to get this money? So agreed, emergency fund
is the first step that you take in order to
combat some of this stress, right, it can it can
(04:32):
reduce a lot of that stress once you have I'll.
Speaker 3 (04:36):
Argue that a little bit.
Speaker 2 (04:36):
I think if you're carrying a balance on your credit card,
that's step number one, because you can have a ten
thousand dollars emergency fund. But if you've got ten thousand
dollars and balances on one or more credit cards.
Speaker 3 (04:50):
You don't have an emergency fund.
Speaker 2 (04:51):
And I have a family member that years ago I
helped threw an issue like this, and a lot of
people that have balances built up on on credit cards,
they're in denial of the total amount because they can't
wrap their heads around I really owe fifteen thousand dollars
on this credit card or ten thousand dollars. And you know,
(05:12):
if you're just looking at well, I can make that
minimum payment. I can meet the forty dollars minimum payment
or the eighty dollars minimum payment.
Speaker 3 (05:19):
I'm getting fined just by.
Speaker 2 (05:21):
And if I meet the minimum payment, I can go
ahead and put some money in savings and do what
these people on the radio are telling me about. No,
you cannot deny how much credit card date you've got.
And in my opinion, step number one is put a
plan together to attack your credit card debt, because if
you keep doing the same thing time after time, the
(05:41):
outcome is not going to change.
Speaker 1 (05:43):
Yeah, I can get behind that. You're listening to Simply
Money presented by all Worth Financial Immi Wagner along with
Steve Sprovac. This is the stress show.
Speaker 2 (05:50):
I feel on stress from talking about well and it's.
Speaker 1 (05:53):
What can you control? You can't control the inevitable things
that they come from leftfield, that you weren't expecting, that
are cost but you can control how you deal with them.
In one of those things is yeah, don't have that
overwhelming credit cards that have that emergency fund in place.
And then I'm gonna tell you the next step is
you walk up up to the mirror and you take
(06:13):
a good look at yourself and you ask, how do
I deal with spending and saving? Are you someone who
when you get stressed goes shopping, You buy stuff online
that you don't need. Do you have that kind of yolo?
You only live once? You know thought, but you know
that's fun and all the vacations and all the concerts
and all the things you do now, but that yolo
self that's living right now, your future self you're gonna
(06:36):
hate it, you know, because there's not gonna be any
money there that you've saved. And so figuring out I
love the fifty to thirty twenty role. This is you know,
the money that's coming in fifty percent goes to your needs, right.
This is you know your your rent or your mortgage,
and your groceries and your.
Speaker 3 (06:53):
Yes, yes, yes, you need to do this.
Speaker 1 (06:55):
Yeah. And the next thing is the twenty percent of
this is saving. Man, if you are saving twenty percent
from the time you're graduating from college and get that
first job until you retire, I mean, you don't ever
have to listen to this show because you're you're never
gonna need any of this and you're going to be
smooth sailing every step of the way. And then thirty
percent of that is the ones, the fun stuff. And
(07:17):
I'm gonna tell you this, sometimes the needs right during inflation,
they become more than fifty percent, or sometimes the savings, right,
but you can't give on those two things that thirty
percent those once that's where the give room is.
Speaker 2 (07:31):
I'm glad you brought up inflation because if you do shopping,
which I'm not allowed to do for obvious you're.
Speaker 1 (07:38):
Banned from the grocery store by your wife. Don't stick
to the list.
Speaker 2 (07:42):
My wife has been sick the last couple of days,
so I've gone to Kroger or myself unsupervised. Not pretty
pretty last twenty feet they put that stuff out there
for me.
Speaker 1 (07:54):
You have a freezer full of you have a freezer
full of ice cream right now, and a pantry full
of candy bars.
Speaker 3 (08:00):
How do you have a key to the house.
Speaker 1 (08:01):
Oh, I know you, I know.
Speaker 3 (08:03):
You know.
Speaker 2 (08:04):
The reason I want to talk about inflation is this
same study said, it's not just okay, you know, let's
let's take a look at where the stress is.
Speaker 3 (08:13):
You know, it is it? This area? Is it? You know?
Paying for rent?
Speaker 2 (08:17):
Inflation is the number one concern of consumers.
Speaker 3 (08:22):
Right now in whether or not.
Speaker 2 (08:24):
They're stressed out by their ability or inability to pay
the bills by more than two times. Any other concern, yeah,
interest rates, Yeah, that's a concern, keeping my job keeping
study income, Yeah, that's a concern. Inflation number one because
the people that are just getting by, and again I
grew up this way. The people that are just getting by,
all of a sudden, they're paying more for staples for
(08:47):
you know, just food, and their bill that used to
be fifty dollars is eighty dollars and they weren't saving
thirty dollars before prices went up, So that's thirty dollars
they can't spend somewhere else, maybe on gas or something
else that they need to do. So inflation is really
crushing the middle and lower income class out there.
Speaker 1 (09:07):
And I think a lot of people too think, Okay,
I know my risk tolerance, right, But you often figure
this out when markets are up, and it's like, oh,
give me all the stock exposure in the world, right, Nah,
I ask yourself, Okay, how am I going to feel
when markets are down ten percent? How did I do
during the pandemic, when markets were in a free fall
in early twenty twenty? How did I deal with that?
And you know, it's interesting someone came into my office
(09:29):
last week who said, you know, I've dialed back a
lot lately my risk exposure. But when I looked at
the totality in someone who has money in seven different places, right,
when I put it all together, it wasn't the risk
tolerance at all that he thought he had. And so
I think that's something that you've got to think about
(09:50):
there is not only what is my risk tolerance, but
really looking at that portfolio and saying is that adequately
reflect that well?
Speaker 2 (09:57):
And you're talking about putting to to gather a strategy
for investing in a panic. I mean, if you are
approaching retirement and you've got nowhere near the amount saved
up that you want or feel you should have saved up,
you might do something rash and take on more risks
than your hitting the lottery. Is not a financial plan.
(10:18):
You know, you've got to watch yourself out there. And Okay,
if you're getting up and closer to retirement and you're
not where you want to be, well dial expectations down
of how you're going to live in retirement. But you
know you always want to invest within your risk Alish,
I'm gonna add one more thing amy an umbrella policy,
and I'm not talking about for you know, rain, but
(10:41):
you know we're the biggest concern as you start to
get your financial act together is something coming out of
the blue and just wiping out what you've been working on.
And that could be a guy that you hired to
trim some limbs that falls out of the tree and
sues you, and it turns out he wasn't bonded like
you told you, he wasn't insured like you told you.
(11:02):
And now all of a sudden that you're getting a
summons in the mail and you're worried about are they
going to take my houseware?
Speaker 3 (11:09):
Are they going to do this? Talk last less?
Speaker 2 (11:11):
Yeah, for less than four hundred dollars a year, you
can get for most people, you can get a million
dollar umbrella policy, which means, okay, that's the insurance company
going to bat for you, their lawyer is going to
bat for you, and they will pay up to a
million dollars. You can get two million, you can get
three million dollars worth. It's a very, very relatively cheap
(11:34):
way to just take away that last concern of will
this wipe me out if something goes bad. It's a
really important part of any financial plan. And unfortunately a
lot of people have not heard about umbrella policies. You
want to make your insurance agency say hey, do I
have an umbrella policy?
Speaker 3 (11:51):
How much is it? Do I need it?
Speaker 2 (11:53):
And yeah, most likely if you don't have it, they're
going to recommend yet you probably should, and it might
be it might need to be bad as much as
your net worth.
Speaker 1 (12:02):
Yeah, it's funny that you bring up the umbrella policy.
I did an event for women several months ago called
Wine Women in Wealth, and one of my dear friends
came and they are as buttoned up financially as anyone
can be.
Speaker 2 (12:12):
Right.
Speaker 1 (12:13):
They are very open, transparent, They've got clear goals, and
so I thought, well, she's going to come and she
may not learn a thing. The first thing she did
when she got home was purchased an umbrella policy.
Speaker 4 (12:23):
Right.
Speaker 1 (12:23):
I mean, there's neighborhood kids that play on their property
with their son. Anything can go wrong, and it's something
they had never considered. But now that she's aware of
that possibility of something, this is a great way to
protect yourself and talk about cutting down on stress when
something really stressful could come your way. This is incredible
help with that. Here's the all Worth advice. If you
want less financial stress, you got a plan ahead. It's
(12:46):
going to make your financial life a whole lot easier.
Coming up next, something you need to make sure you
are prepared for. It's important. We're going to talk about
it next. 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 because I'm by all word financial.
(13:07):
I Meani Wagner along with Steve Sprovak. If you can't
listen to our show every night, you don't have to
miss a thing. We've got a daily podcast for you.
It's Simply Money. Just search it on the iHeart app
or wherever you find your podcast. Coming up at six
forty three. We got lots of questions from you this
week about roth IRA's four one k's, does it make
sense to retire overseas? And a lot more. It's time
(13:29):
to ask the advisor and just a few minutes, you know,
I think, honestly, if there was a theme to the show, Steve,
it would be financial stress and what you can do
about it. I'm actually glad that we're tackling this because
on a day to day basis, it's not what's happening
on Wall Street that makes the most difference in your home.
It's these kinds of stressors that can really really kind
of tear at the fabric of your life. And I
(13:51):
got to say one of those things is, man, the
cost of healthcare when you are working. I don't think
most of us have any idea how much our employer
is paying right for their part of our health insurance.
Oh yeah, but when we get close to retirement, it's
a different ballgame.
Speaker 2 (14:08):
I remember sitting down with some employees at a company
we had a contract with to provide financial help for
and they were complaining because their premiums went up like
ten dollars a month to forty dollars. You know, this
is crazy, wet you know what's going on around here?
And do you know what the average person pays for
(14:28):
health insurance? I had to go. I retired in December
and had to buy my own health insurance until I
hit Medicare, which next week, and so okay, I found
out what the company was paying, which was about ninety
five percent of the premium, even though I was still
paying a pretty good chunk out of my paycheck. And
(14:49):
if I had kept that going, it would have been
under it's called cobra, where you have the same plan
except you pay the entire cost and your guaranteed acceptance
in it went wound up moving on to the exchanges
and buying privately, and it was still sixteen hundred dollars
a month for health insurance for this eight month period.
I mean, most people have no clue that's what health
(15:10):
insurance costs for somebody who's not covered by an employer.
And guess what, when you're retired, just because you're on
Medicare doesn't mean oh okay, well I guess everything's covered now.
Speaker 3 (15:20):
Far from it?
Speaker 1 (15:22):
Well, and I think yeah, And I think for anyone
who knows your story, they could be listening and be like, well,
maybe Steve's insurance would be a little more because he
had a you know, a heart concern, heart issue a
few years ago. Oh no, here are the numbers. Right.
Fidelity has done this research and says, a sixty five
year old who is retiring today, one person right can
expect to pay out of pocket about one hundred and
sixty five thousand dollars over the course of your retirement.
(15:45):
For someone who's super healthy. It's like, no, that's not
going to happen to me. But who knows what's going
to happen down the road, what kind of processions specialists?
And I think also there's this terrible surprise for a
lot of people of like, wait a second, I thought,
so when I got to sixty five, Medicare had this right,
like Steve, if you're talking about bridging the gap before
you turn sixty five. By the way, happy early birthday
(16:09):
to you turning sixty five.
Speaker 2 (16:11):
Over the weekend till Saturday.
Speaker 3 (16:13):
I'm just trying to get through today.
Speaker 2 (16:15):
I'm not so optimistic to say, yeah, I turned sixty
five Saturday.
Speaker 3 (16:19):
I want to get through today.
Speaker 1 (16:20):
All right, Well, assuming we get there to sixty five
this weekend, you know, okay, you've made it to that
Medicare age. Greats. That isn't free. It's still not free.
Speaker 2 (16:29):
No, And here's by the way, you mentioned one hundred
and sixty five thousand dollars over the course of your
life if you retire at sixty five, Well, guess what
for a married couple multiplied by two double three hundred
and thirty thousand dollars. How are you feeling about that?
Half a million dollar four oh one k. Now if
three hundred and thirty thousand is going towards just health costs,
(16:51):
here's a breakdown. I mean, you're probably going to draw
Social Security when you retire. Well, Medicare costs this year
about one hundred and seventy five five bucks a month.
Speaker 3 (17:00):
Okay, that means the twenty five.
Speaker 2 (17:02):
Hundred dollars you were going to get from Social Security
isn't twenty five hundred, it's twenty three to twenty five
because that one seventy five comes directly out of Social Security.
Speaker 3 (17:11):
Before you get that money. Part B.
Speaker 2 (17:14):
Most people take a drug benefit, not MUNCH, but there's
a fifty five dollars cost there. And if you don't
have meda GAP, which is the it's a private insurance
policy that you buy. You see all the commercials between
October and December for changing plans. If you buy a
medagap policy, which most people should, it's usually about another
(17:35):
one fifty a month or so. That adds up to
that one hundred and sixty five thousand dollars number. And
guess what that doesn't None of these numbers include a
nursing home. If you wind up in a nursing home,
that's even more money because Medicare does not pay for
a nursing home.
Speaker 1 (17:51):
I'm sitting here listening to you thinking chi ching, Chi ching,
chi ching. Right, with every additional cost that's adding up,
you can see how you can quickly get to that
one hundred and sixty five thousand dollars figure. That seems
so astronomical before. I mean this alphabet soup of all
these different parts of Medicare and figuring out what's the
best fit for you. And I also want to throw
this in right here and say your open enrollment a period.
(18:14):
Once you get on Medicare becomes incredibly important. So if
you're someone who for years and years and years just
kept the same insurance through your workplace, these policies change
year to year. What's covered and in your situation changes.
Maybe this year you got put on a new medication
or there's a different kind of specialist you have to see.
Look at these policies every year to figure out which
(18:35):
one makes the most sense to you. It may not
be the same one year to year.
Speaker 2 (18:39):
Yeah, review your investments at least once here review your
health insurance coverage. And by the way, if these numbers
are upsetting to you, hopefully you still have a little
bit of time you can put some money away, increase
your four oh one K contributions, or do your favorite thing,
the health savings account.
Speaker 1 (18:55):
I was just going to say, I can't believe we
haven't talked about this. If a high deductible health care
plan makes sense for you, and I would also say
if you have a large emergency fund where I think
you've got the most value because that HSA is triple
tax advantage. Money goes in tax free, grows tax free,
you take it out for qualified medical expenses again tax free.
Nothing else like it. And if you can let that
(19:16):
money grow, right, it goes into an HSA and is
invested for years, and then you pay the medical expenses
out of pocket as you go. Won't work for everyone,
but man, when it does, then you have a pile
of money there for those health care expenses and retirement.
Here's the all Worth advice. You've got a plan ahead
for health care cost later in life. If you don't,
you could get stuck with massive bills that could just
(19:38):
wreck your retirement. Coming up next, talking about dealing with
financial stress when it comes to all parts of your life, right,
what can you do to get things under control? You're
listening to Simply Money presented by all Worth Financial here
on fifty five KRC the talk station. You're listening to
Simply Money presented by all Worth Financial, Amy Wagner. When
(20:01):
you are stressed about money, right, just periods of time
when there's a lot of financial stress in your life.
Do you ever think about how far reaching the impact
of that is? Does it impact you at work? You
might be surprised by the answer. Joining us tonight is
our good friend Al Riddick from Game Time Budgeting talking
to us about the fact that employee financial wellness actually
(20:23):
has a huge impact on all of us. Let's get
into this out.
Speaker 4 (20:27):
So yes, miss Amy. First of all, when you think
about financial stress, it can occur in two different arenas,
on the job and inside your home. But first let's
tackle how it looks on the job. So if you
come to work financially stressed, obviously you're going to be
less focused. So there are a number of people listening
to my voice right now that have the types of
(20:49):
jobs where you definitely need to be focused and engaged
so that you can take care of certain projects and
meet dead lives. In addition to that, when you have
funnancial stress, it can impact the attitude that you bring
to work, So, believe it or not, when you're financially stressed,
you can impact morale inside your business unit, or inside
(21:12):
your team, or even on the floor that you work on.
And let's throw out one more Amy. When you have
financial stress, a lot of times, people will start looking
for a job that pays more money because they're thinking
that if they just made I don't know, an extra
ten thousand per year, or let's say extra two or
three dollars per hour, we tend to think that that's
(21:35):
going to solve our financial problems. But both of you
and I know amy. Making more money can sometimes compound
financial problems if you don't have the correct mindset, behaviors,
and systems in place so that you can live a
more fiscally fit financial life.
Speaker 1 (21:53):
And let's talk about that out. How do we get
to the point where we can have those systems in place?
What does that look like, to the point where this
financial stress isn't following us to work and following us
back home again when we're dealing with our spouses and
our children. You know, how do we get ourselves set
up where our financial life is just that and it's
(22:15):
a healthy one.
Speaker 4 (22:16):
So we're going to start at a place where you
might not expect Amy. I call it peeling the onion. Right,
So let's talk about myself. For example, I'm nothing more
than a larger version of who I was when I
was a child. Hopefully I have attained a certain level
of maturity. Right. However, there are certain behaviors that I
(22:38):
may have observed growing up around my parents, whether it
was something that was taught to me through an action
or something that was taught to me through verbal instruction.
So as we age in life and become adults, a
lot of the times we don't take a step back
to realize how we develop certain beliefs and behaviors. Now,
(22:59):
unfortunate amy, a lot of these beliefs and behaviors are
not correct, meaning that they are not conducive to a
financial life that someone might be proud of.
Speaker 1 (23:11):
Right, Yeah, we've carried them with us all these years.
Speaker 4 (23:14):
Right, oh, with our questions, So first let's start there.
But just to bring things up to date, one of
the best things I think people could ever do is
to take a look at where their money has gone
in the past. So how does that look? I dare
the listeners right now to pull out your most recent
credit card statement, or even take a look at your
checking account statement and just go down line by line
(23:38):
to have an account of all of the financial decisions
that you made. Now, some things you may be surprised by,
meaning that you're shocked that you're spending so much money
in a particular area, but you'll also be pleasantly surprised
by the fact you can easily identify opportunities to make
the gap between income and spending as wide as possible.
(24:01):
Is that making sense so far? Amy, Yeah?
Speaker 1 (24:03):
Absolutely?
Speaker 4 (24:04):
So Can I throw out one more thing? Yeah, So
when it comes to these systems, I'll just throw out
one as an example, Like my wife and I, because
our house is paid off, of course, we don't have
the luxury of like escrowing the real estate taxes or
property taxes, right, so because I know, let's just make
the math easy. So let's just say our property taxes
are six thousand dollars per year, right, So in our
(24:27):
monthly budget, it's a lot easier just to transfer five
hundred dollars a month to a savings account strictly put
in place to pay real estate taxes than it is
to wait thirty days before that big bill is due
and then to try to come up with the money.
So that is one of the small systems, and I
(24:47):
call that the rule of twelve. By the way, it
just makes it easier to manage cash flow. Because I
think we're probably similar in this sense. Amy, Both you
and I we'd like to have fun in life, right,
so we DoD be it stressed out about money when
you don't have to be.
Speaker 1 (25:06):
Well, you know, I like that rule of twelve, and
I think it actually works in a number of ways. Right,
you're talking about saving for major expenses that happen once
a year, right, putting that money aside. But I also
think we can easily look at something like one more
streaming service, right and say, oh, it's only ten dollars
a year, twenty dollars a year or a month, right,
(25:26):
And that's not a lot, okay, But what is that
over the course of a year one hundred and twenty,
over the course of year two hundred and forty, over
the course of a year. You know, you add a
bunch of those up, and all of a sudden, it's
one thousand dollars over the course of a year for
something that you've got nothing to show for. And so
I always, when I'm talking to my kids about things,
will say, hey, think about this, over the course of
an entire year, how much you're going to spend Do
(25:48):
you value this thing enough to do it? So sometimes
I think, yeah, it's just kind of turning those mindsets
upside down in getting yourself to a point where you're
thinking in a really smart, healthy way about money. And
I want to also ask you when you think about
work and your salary. So many people when they're looking
at a new job, all they're thinking about is what's
(26:11):
that paycheck? What's that paycheck? But you say, there's benefits
there that many people aren't taking advantage of that they
need to or should be. Let's talk about that.
Speaker 4 (26:21):
Yeah, So I'll give you a quick example. So my
wife is employed at a major consumer products company. Okay,
as a part of their benefit package, if you just
get one physical per year with your blood work and
then maybe take like an online course about making your
life better, can you believe you can make up to
three hundred dollars right? Yeah, shin out And I'm like,
(26:44):
this is easy money. So in addition to that, many
years ago they added something new to the benefit package,
so you can actually pay a very small amount for
access to legal services. So, like I said, way back
in the day we were getting our trust prepared, we
got it done for an extremely low amount of money,
(27:08):
but it was done in a very professional way that
meant all of our needs. In addition to that, First
of all, Amy I have to say, most people don't
read their employee benefit package word for words, which is said,
but you more than likely your employer, if they are
large enough, they probably have relationships with various vendors who
(27:29):
supply goods and services to you and that you can
get at a discount. So it's kind of like you're
throwing away money as well. But it's funny when we
just talk about those benefit packages. I wish more people
would read them because there are a lot of services
that you have access to that could enhance your life
at a lower cost than if you were to just
(27:51):
go buy it off the general market, so to speak.
Speaker 1 (27:54):
Well, you know, we always joke that people spend more
time planning their vacations and they do understanding their full
life and how it works, or understanding their company benefits.
But if you think about it this way, if you
fully understand the company benefits and you are taking full
advantage of everything you can, you're saving yourself money so
that that next trip right is much more affordable because
(28:15):
you're not spending that money on things that you could
be saving on that your company might help you in
that way. So I love that way of thinking about
things definitely.
Speaker 4 (28:24):
And as you know, saving is a beautiful thing amy
because when you save money, you put yourself in a
better position to make financial decisions that pay off for
years to come, whether that's putting more money in your
retirement plan or just be a better preparer for life emergencies.
Speaker 1 (28:41):
We always appreciate your perspective on financial stress, financial wellness,
how to take the best advantage of all of those
benefits in your package. Make sure you're paying attention. That's
Alriddy from Game Time Budgeting. You're listening to Simply Money,
presented by all Worth Financial here on fifty five KRC,
the talk station. You're listening to Simply Money because anybody
(29:05):
all Worth Financial, I mean me Wagner along with Steve Sprovac.
Are you happy with your net worth or does your
net worth make you happy? We're gonna look what many
of us think is just enough money to have to
make us happy. And you have a financial question you
want us to answer. You need a little help with it.
There's a red button you can click them while you're
listening to the show. It's right there on the iHeart app.
(29:26):
We're recording your question and it's coming straight to us.
We've got questions tonight. First one comes from Shannon, who
lives in Pendleton County. I'm changing jobs and want to
roll over my Wroth four o one K to my
roth Ira. How does the five year rule work in
a situation like this?
Speaker 2 (29:42):
Boy?
Speaker 1 (29:44):
It works?
Speaker 3 (29:45):
Gainst you, it does?
Speaker 2 (29:47):
And can the government make some of these things any
more complicated? I'm almost afraid to say that because the
answer is sure they could. There's a five year rule
in wroth four o one k's roth IRA's. Basically, the
government says we want this money put away for five
years before you're going to take the money out and
not have to pay tax on it, which is a
(30:07):
huge incentive to have a roth Ira or roth four
oh one k. If it's been put away for five
years and you're fifty nine and a half or older,
the money most likely will be tax free on distribution.
It's a great way to pay for a car or
something like that. But man, they make it complicated. If
you roll money out of a four oh one k,
(30:27):
a Roth four oh one K that you might have
had for twenty years at your company, and roll it
into a roth Ira, guess what that five year starts
all over again. The five year rule starts all over
and if you take money out a year after rolling
it over into a roth ira from your wroth four
oh one k, you're going to have some tax on that.
It's a ridiculous rule, It really is.
Speaker 1 (30:49):
So understand Yeah that like the clock resets when you
do that rollover to January first of that year, and
you've got five years until you can touch that money.
You know, a lot of people are talking about roth
conversions right now, right with who's going to be president
and not knowing what's going to happen with tax brackets
in the future. You know, make sure you're taking this
into account if you are considering a roth conversion, because
(31:11):
if you need that money in the next five years,
this may not work for you.
Speaker 2 (31:13):
Yeah, before you do anything with a wroth conversion rollover,
talk to an accountant please, because the rules are complex
and you want to know what the ramifications are before
you sign the paperwork.
Speaker 1 (31:25):
Yeah. Next question from Nick in Oakley. We've recently started
discussing the possibility of moving overseas to England for retirement.
What are some of the financial hurdles we might face
if we decide to do this.
Speaker 2 (31:38):
Yeah, you know, it's kind of neat to think about
moving to a different country in retirement. I know somebody
really well that went to Costa Rica Amy and she
absolutely loves it down there. But guess what, Medicare doesn't
pay for your health expenses in a foreign country. That's
the biggest thing she learned right off the bat. There's
always different rules between different countries income requirement for partial
(32:02):
residency or EXPAI expat residency. But the big one is,
or one of the big ones is, certainly, wow, Medicare
doesn't cover me. I guess I have to buy private
health insurance or go to a local hospital and sign
up with their plan health.
Speaker 1 (32:17):
And I think that's just the whole healthcare system in general.
Right is a consideration. Right, we get used to American
hospitals and the American system and wherever it is that
you go. And I'm one of those people when I travel,
I start to think what would it be like to
live here?
Speaker 2 (32:30):
Right?
Speaker 1 (32:30):
Happens to me here every time? And is you get
closer to retirement, and then it's like could we retire here?
But you've really got to think about, Okay, we're here
for a week or ten days and we're on the
beach and this is so much fun. But what does
real life look like here? And I would also say,
just beyond the healthcare expenses and things like that, also
(32:51):
go for a month first, rents an airbnb or something
and really live there before you commit to moving your
life out of the country.
Speaker 2 (32:59):
I'll tell you there a big concern that this woman
that went to Costa Rica learned very quickly. Moving money
overseas is not a piece of cake.
Speaker 3 (33:06):
It's not like.
Speaker 2 (33:07):
Transferring from your money market to your checking account to
pay a bill. It's a process, and you're going to
be subject to money laundering rules and requirements. You'll have
to sign some additional paperwork. There are only certain banks
that can do it. It is not easy to get
chunks of money from the US to a foreign country
on a regular basis. Yeah, it can be complex, so
(33:29):
look into everything before you decide. Hey, I just signed
a one year lease. I'm not sure how it works,
but I'm going to give it a shot.
Speaker 1 (33:37):
I want to quickly get to this next question because
it's a version of when we hear all the time,
this is Don and Cleeves.
Speaker 3 (33:43):
We just inherited some Kroger stock from my aunt who
worked there for a long time and never sold a share.
Do we have to pay taxes on it? And how
do we know if we should keep it or sell it?
Speaker 1 (33:54):
So the good news about inheriting stock is the way
the system is set up, you inherited a stepped up basis,
meaning just for simple terms, say your aunt bought that
Kroger stock for a dollar a share right and by
the time you inherited it, by the time she passed
away on the day of her death, it was at
ten dollars. If you decide to sell it, you don't
(34:15):
have to pay the gains from that dollar of when
she bought it. It becomes a stepped up basis of
the ten dollars at the time of inheriting it, and
then it becomes a look at your entire portfolio. You know,
one thing that we sometimes worry about is are we
we have too much of our portfolio in an individual stock?
Are we too concentrated? But if you still like Kroger
and Kroger makes sense for your portfolio, maybe you hold
(34:36):
it for a while. That can work.
Speaker 2 (34:38):
Do I think if you just ask yourself if I
had let's say you inherited one hundred thousand dollars a
Kroger stock. If I had one hundred thousand dollars in
my savings account, would I go out and put that
money into Kroger. If the answer is no, you probably
want to sell it and diversify into you know, just
the S and P five hundred or or you know,
a balanced portfolio. But you know, if that's the case,
(35:00):
just realize that inheritances are not in almost every case text,
so you get by Scott free on that, and that
stepped up basis means okay, if you sell it for
the same price that it was at on the date
of your aunt's death, guess what?
Speaker 3 (35:14):
No tax? Nice?
Speaker 1 (35:15):
Yeah? Come up next, we're talking about net worth and
its relationship to your happiness. 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 along with Steve
Sprovac when it comes to money, can it buy you happiness? Well,
(35:39):
there is a financial advice website called card rates that
found that Americans actually put a dollar amount on Hey,
if I have this amount of liquid net worth, I
think I'd be pretty happy.
Speaker 2 (35:53):
It might not be able to buy you happiness, but
I've been totally can rent you happiness. But that's a
different survey.
Speaker 3 (36:00):
No, and this surprised me.
Speaker 2 (36:01):
This survey said the average American said, you know what,
if I had a liquid net worth in other words,
money and four oh one k's and savings, that was
around the two hundred thousand dollars range, I think I'm covered.
That scares me because that doesn't go real far. And
I'm not just saying, you know, you buy yachts and
you know, second third homes and all that kind of No,
(36:23):
if you have two hundred thousand dollars rule of four
percent at the most, you can draw eight thousand dollars
a year off that seven hundred and fifty bucks a
month on top of social Security, it's not a lot
of money. And if you have to go out and
buy a car, which you will in retirement at some point,
what's that forty to fifty grand for something halfway decent
that's going to last you a while? Okay, Well, now
(36:45):
you're down one hundred and fifty thousand and four percent
of that's a lot less than seven to fifty a month.
I would shoot your site and set your sights a
little bit higher than two hundred thousand.
Speaker 1 (36:54):
Well, and I guess the only thing I can surmise
from this is feeling like you have two hundred thousand
dollars gives a sense of peace of like if an
emergency were to come up. But to your point, once
you have to start drawing on that money, you know,
it's becomes a completely different reality because what you're looking
at is your sources of income. Right, for most of us,
there's not even a pension there, it's just social security.
(37:15):
And then beyond that, right, what it takes to live
off of every month? How do you fill that gap?
So you fill it with what you have saved, and
is that enough? And so I don't know, maybe happiness
looks different when you're in your working years than it
does when you're retired. I know that this study looked
at people between eighteen and forty three. I think probably
this number would be a lot different for people in retirement.
Speaker 2 (37:37):
Oh yeah, yeah. I think if you talk to the
average retiree or somebody within five years or so a retirement,
they'd say, maybe add a zero to that. Okay, it
sounds a million, two million dollars sounds like a ton
of money, and it is. But that's really what I
think should be the average person's target from the day
they start working. How do you get there? Well, you
(37:57):
mentioned it earlier. If you can put ten percent of
your money into four oh one k from day one,
you should get there. You should get way past there,
as a matter of fact. But if you're fifty five
and just starting a four to oh one K, it
might be impossible, and you got to just set expectations
lower here.
Speaker 1 (38:14):
I think is interesting about this research. Gen Z said
they need a million dollars to be happy, and like,
you know what, my daughter who just left for college,
she's in gen Z. These kids are bombarded with messages
on social media all the time. You need this, You
need that. It doesn't surprise me that they think a
million dollars. But man, you know, I think this number
is very individual for each of us. And another set
(38:38):
of research that I've seen is that if you can
buy things that save you time that you don't enjoy doing,
there's also happiness in that. Thanks for listening tonight, you've
been listening to simply money presented by all Worth Financial.
Here in fifty five krs, the talk station
Tonight some strategies to help keep you sane when you're
stressing about money. Plus, we are answering a lot of
your questions and much more. You're listening to simply Money
presented by all Worth Financial. I mean you Wagner, along
with Steve Sproback and for Steve Ruby. Okay, I don't
think I need to tell anyone this that money can
be a major source of stress in your dress.
Speaker 2 (00:27):
Stress over money. I know experienced that.
Speaker 1 (00:31):
Oh it can.
Speaker 2 (00:32):
Reck's more like stressover lack of money.
Speaker 1 (00:35):
Yeah, yeah, well, and I think you can feel like
you're all set with money and then something happens, right,
someone loses a job, an unexpected medical expense comes, and
how are we going to pay for this bill? You know,
whatever it is we were it's something from my son's school.
Over the weekend, my husband was talking to someone who
had been laid off a while ago, and he was
just talking about how stressful it was to find a
(00:55):
new job. And he was saying the stress on our marriage, right,
Ye spend so hard and so for anyone who has done.
I can't imagine anyone getting to the age of thirty, forty,
fifty sixty without having some kind of money stress at
some point in your life. Right, you know, how do
you how do you keep things in check? How do
you keep things under control the best that you can?
Speaker 2 (01:18):
Well, you know you don't always, is the short answer.
And as I've gotten to know you over the years,
you grew up in a very different environment than I did.
Your your parents. You weren't wealthy, no question about that,
but your parents' money was openly discussed.
Speaker 3 (01:36):
Yeah, and it was a tool that.
Speaker 2 (01:38):
Your parents taught you from an early age what to do,
what not to do. My parents were always broke, and
you know, it was always a big stress point over
you know, what bill can we pay? Which ones do
we have to put off this month? I don't think
they ever had a savings account. And there's a lot
of people I think out there that that can relate
to this.
Speaker 3 (01:57):
Yeah, it's a problem.
Speaker 2 (01:58):
And you know, we we take a look at a
lot of surveys, We get a lot of information and
data points. And it's no surprise to me that, according
to bankrate dot com, half of US adults said money
has a very negative impact on their mental health.
Speaker 3 (02:15):
I get that completely.
Speaker 1 (02:17):
You know what I think is really interesting about that
those deve is that so many people get used to
whatever that feels like, that stress, that they're almost afraid
to do something about it to get the stress out
of their lives, like they would be too painful of
the process of digging out of that credit card debt
or whatever that looks like. So I think first it's like, hey,
acknowledging the situation that you're in in the way that
(02:38):
it makes you feel, and then deciding I'm going to
take some steps to try and get this under control.
Speaker 2 (02:45):
Well, and okay, what are those steps? I mean, the
sound basic. We can talk about it. We'll just build
an emergency fund. If you're not paying your bills, you
don't have the ability to build up an emergency fund.
And if you're trying to pay off credit card debt.
The reason you may have gotten into credit card debt
is because your income is not matching your expenses. And
(03:07):
maybe your expenses are legitimate. Maybe you're not going out
to dinner every night of the week. Maybe it's because
you needed breaks on the car. You didn't save up
money for that, and oh my goodness, it won't be
paid off this month because I threw it on visa,
and next month is looking pretty diceal. So it is
a big stress issue for a lot of people. And
(03:28):
one of the other things bankery dot Com came up
with is sixty percent more than half of the people
out there that were surveying, they're having trouble just meeting
day to day expenses, I mean, just normal stuff, never
mind the surprises. How do you build up an emergency
fund if you can't meet the normal expenses, never mind
(03:48):
the surprises.
Speaker 1 (03:49):
This is one of the first conversations I have with
someone when they walk into my office. Was talking to
someone yesterday who was talking about the fact that she
was pulling out of her driveway and got an un
expected call from her CPA telling her that she owed
a major amount of money, and she was actually saying
that it was difficult for her to even figure out
(04:10):
how to put the car and park. It was so
overwhelming this news from out of nowhere. And part of
the problem and why it was overwhelming is because that
emergency fund wasn't there. So when you get this call,
it's like, what am I going to do? Where am
I going to get this money? So agreed, emergency fund
is the first step that you take in order to
combat some of this stress, right, it can it can
(04:32):
reduce a lot of that stress once you have I'll.
Speaker 3 (04:36):
Argue that a little bit.
Speaker 2 (04:36):
I think if you're carrying a balance on your credit card,
that's step number one, because you can have a ten
thousand dollars emergency fund. But if you've got ten thousand
dollars and balances on one or more credit cards.
Speaker 3 (04:50):
You don't have an emergency fund.
Speaker 2 (04:51):
And I have a family member that years ago I
helped threw an issue like this, and a lot of
people that have balances built up on on credit cards,
they're in denial of the total amount because they can't
wrap their heads around I really owe fifteen thousand dollars
on this credit card or ten thousand dollars. And you know,
(05:12):
if you're just looking at well, I can make that
minimum payment. I can meet the forty dollars minimum payment
or the eighty dollars minimum payment.
Speaker 3 (05:19):
I'm getting fined just by.
Speaker 2 (05:21):
And if I meet the minimum payment, I can go
ahead and put some money in savings and do what
these people on the radio are telling me about. No,
you cannot deny how much credit card date you've got.
And in my opinion, step number one is put a
plan together to attack your credit card debt, because if
you keep doing the same thing time after time, the
(05:41):
outcome is not going to change.
Speaker 1 (05:43):
Yeah, I can get behind that. You're listening to Simply
Money presented by all Worth Financial Immi Wagner along with
Steve Sprovac. This is the stress show.
Speaker 2 (05:50):
I feel on stress from talking about well and it's.
Speaker 1 (05:53):
What can you control? You can't control the inevitable things
that they come from leftfield, that you weren't expecting, that
are cost but you can control how you deal with them.
In one of those things is yeah, don't have that
overwhelming credit cards that have that emergency fund in place.
And then I'm gonna tell you the next step is
you walk up up to the mirror and you take
(06:13):
a good look at yourself and you ask, how do
I deal with spending and saving? Are you someone who
when you get stressed goes shopping, You buy stuff online
that you don't need. Do you have that kind of yolo?
You only live once? You know thought, but you know
that's fun and all the vacations and all the concerts
and all the things you do now, but that yolo
self that's living right now, your future self you're gonna
(06:36):
hate it, you know, because there's not gonna be any
money there that you've saved. And so figuring out I
love the fifty to thirty twenty role. This is you know,
the money that's coming in fifty percent goes to your needs, right.
This is you know your your rent or your mortgage,
and your groceries and your.
Speaker 3 (06:53):
Yes, yes, yes, you need to do this.
Speaker 1 (06:55):
Yeah. And the next thing is the twenty percent of
this is saving. Man, if you are saving twenty percent
from the time you're graduating from college and get that
first job until you retire, I mean, you don't ever
have to listen to this show because you're you're never
gonna need any of this and you're going to be
smooth sailing every step of the way. And then thirty
percent of that is the ones, the fun stuff. And
(07:17):
I'm gonna tell you this, sometimes the needs right during inflation,
they become more than fifty percent, or sometimes the savings, right,
but you can't give on those two things that thirty
percent those once that's where the give room is.
Speaker 2 (07:31):
I'm glad you brought up inflation because if you do shopping,
which I'm not allowed to do for obvious you're.
Speaker 1 (07:38):
Banned from the grocery store by your wife. Don't stick
to the list.
Speaker 2 (07:42):
My wife has been sick the last couple of days,
so I've gone to Kroger or myself unsupervised. Not pretty
pretty last twenty feet they put that stuff out there
for me.
Speaker 1 (07:54):
You have a freezer full of you have a freezer
full of ice cream right now, and a pantry full
of candy bars.
Speaker 3 (08:00):
How do you have a key to the house.
Speaker 1 (08:01):
Oh, I know you, I know.
Speaker 3 (08:03):
You know.
Speaker 2 (08:04):
The reason I want to talk about inflation is this
same study said, it's not just okay, you know, let's
let's take a look at where the stress is.
Speaker 3 (08:13):
You know, it is it? This area? Is it? You know?
Paying for rent?
Speaker 2 (08:17):
Inflation is the number one concern of consumers.
Speaker 3 (08:22):
Right now in whether or not.
Speaker 2 (08:24):
They're stressed out by their ability or inability to pay
the bills by more than two times. Any other concern, yeah,
interest rates, Yeah, that's a concern, keeping my job keeping
study income, Yeah, that's a concern. Inflation number one because
the people that are just getting by, and again I
grew up this way. The people that are just getting by,
all of a sudden, they're paying more for staples for
(08:47):
you know, just food, and their bill that used to
be fifty dollars is eighty dollars and they weren't saving
thirty dollars before prices went up, So that's thirty dollars
they can't spend somewhere else, maybe on gas or something
else that they need to do. So inflation is really
crushing the middle and lower income class out there.
Speaker 1 (09:07):
And I think a lot of people too think, Okay,
I know my risk tolerance, right, But you often figure
this out when markets are up, and it's like, oh,
give me all the stock exposure in the world, right, Nah,
I ask yourself, Okay, how am I going to feel
when markets are down ten percent? How did I do
during the pandemic, when markets were in a free fall
in early twenty twenty? How did I deal with that?
And you know, it's interesting someone came into my office
(09:29):
last week who said, you know, I've dialed back a
lot lately my risk exposure. But when I looked at
the totality in someone who has money in seven different places, right,
when I put it all together, it wasn't the risk
tolerance at all that he thought he had. And so
I think that's something that you've got to think about
(09:50):
there is not only what is my risk tolerance, but
really looking at that portfolio and saying is that adequately
reflect that well?
Speaker 2 (09:57):
And you're talking about putting to to gather a strategy
for investing in a panic. I mean, if you are
approaching retirement and you've got nowhere near the amount saved
up that you want or feel you should have saved up,
you might do something rash and take on more risks
than your hitting the lottery. Is not a financial plan.
(10:18):
You know, you've got to watch yourself out there. And Okay,
if you're getting up and closer to retirement and you're
not where you want to be, well dial expectations down
of how you're going to live in retirement. But you
know you always want to invest within your risk Alish,
I'm gonna add one more thing amy an umbrella policy,
and I'm not talking about for you know, rain, but
(10:41):
you know we're the biggest concern as you start to
get your financial act together is something coming out of
the blue and just wiping out what you've been working on.
And that could be a guy that you hired to
trim some limbs that falls out of the tree and
sues you, and it turns out he wasn't bonded like
you told you, he wasn't insured like you told you.
(11:02):
And now all of a sudden that you're getting a
summons in the mail and you're worried about are they
going to take my houseware?
Speaker 3 (11:09):
Are they going to do this? Talk last less?
Speaker 2 (11:11):
Yeah, for less than four hundred dollars a year, you
can get for most people, you can get a million
dollar umbrella policy, which means, okay, that's the insurance company
going to bat for you, their lawyer is going to
bat for you, and they will pay up to a
million dollars. You can get two million, you can get
three million dollars worth. It's a very, very relatively cheap
(11:34):
way to just take away that last concern of will
this wipe me out if something goes bad. It's a
really important part of any financial plan. And unfortunately a
lot of people have not heard about umbrella policies. You
want to make your insurance agency say hey, do I
have an umbrella policy?
Speaker 3 (11:51):
How much is it? Do I need it?
Speaker 2 (11:53):
And yeah, most likely if you don't have it, they're
going to recommend yet you probably should, and it might
be it might need to be bad as much as
your net worth.
Speaker 1 (12:02):
Yeah, it's funny that you bring up the umbrella policy.
I did an event for women several months ago called
Wine Women in Wealth, and one of my dear friends
came and they are as buttoned up financially as anyone
can be.
Speaker 2 (12:12):
Right.
Speaker 1 (12:13):
They are very open, transparent, They've got clear goals, and
so I thought, well, she's going to come and she
may not learn a thing. The first thing she did
when she got home was purchased an umbrella policy.
Speaker 4 (12:23):
Right.
Speaker 1 (12:23):
I mean, there's neighborhood kids that play on their property
with their son. Anything can go wrong, and it's something
they had never considered. But now that she's aware of
that possibility of something, this is a great way to
protect yourself and talk about cutting down on stress when
something really stressful could come your way. This is incredible
help with that. Here's the all Worth advice. If you
want less financial stress, you got a plan ahead. It's
(12:46):
going to make your financial life a whole lot easier.
Coming up next, something you need to make sure you
are prepared for. It's important. We're going to talk about
it next. 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 because I'm by all word financial.
(13:07):
I Meani Wagner along with Steve Sprovak. If you can't
listen to our show every night, you don't have to
miss a thing. We've got a daily podcast for you.
It's Simply Money. Just search it on the iHeart app
or wherever you find your podcast. Coming up at six
forty three. We got lots of questions from you this
week about roth IRA's four one k's, does it make
sense to retire overseas? And a lot more. It's time
(13:29):
to ask the advisor and just a few minutes, you know,
I think, honestly, if there was a theme to the show, Steve,
it would be financial stress and what you can do
about it. I'm actually glad that we're tackling this because
on a day to day basis, it's not what's happening
on Wall Street that makes the most difference in your home.
It's these kinds of stressors that can really really kind
of tear at the fabric of your life. And I
(13:51):
got to say one of those things is, man, the
cost of healthcare when you are working. I don't think
most of us have any idea how much our employer
is paying right for their part of our health insurance.
Oh yeah, but when we get close to retirement, it's
a different ballgame.
Speaker 2 (14:08):
I remember sitting down with some employees at a company
we had a contract with to provide financial help for
and they were complaining because their premiums went up like
ten dollars a month to forty dollars. You know, this
is crazy, wet you know what's going on around here?
And do you know what the average person pays for
(14:28):
health insurance? I had to go. I retired in December
and had to buy my own health insurance until I
hit Medicare, which next week, and so okay, I found
out what the company was paying, which was about ninety
five percent of the premium, even though I was still
paying a pretty good chunk out of my paycheck. And
(14:49):
if I had kept that going, it would have been
under it's called cobra, where you have the same plan
except you pay the entire cost and your guaranteed acceptance
in it went wound up moving on to the exchanges
and buying privately, and it was still sixteen hundred dollars
a month for health insurance for this eight month period.
I mean, most people have no clue that's what health
(15:10):
insurance costs for somebody who's not covered by an employer.
And guess what, when you're retired, just because you're on
Medicare doesn't mean oh okay, well I guess everything's covered now.
Speaker 3 (15:20):
Far from it?
Speaker 1 (15:22):
Well, and I think yeah, And I think for anyone
who knows your story, they could be listening and be like, well,
maybe Steve's insurance would be a little more because he
had a you know, a heart concern, heart issue a
few years ago. Oh no, here are the numbers. Right.
Fidelity has done this research and says, a sixty five
year old who is retiring today, one person right can
expect to pay out of pocket about one hundred and
sixty five thousand dollars over the course of your retirement.
(15:45):
For someone who's super healthy. It's like, no, that's not
going to happen to me. But who knows what's going
to happen down the road, what kind of processions specialists?
And I think also there's this terrible surprise for a
lot of people of like, wait a second, I thought,
so when I got to sixty five, Medicare had this right,
like Steve, if you're talking about bridging the gap before
you turn sixty five. By the way, happy early birthday
(16:09):
to you turning sixty five.
Speaker 2 (16:11):
Over the weekend till Saturday.
Speaker 3 (16:13):
I'm just trying to get through today.
Speaker 2 (16:15):
I'm not so optimistic to say, yeah, I turned sixty
five Saturday.
Speaker 3 (16:19):
I want to get through today.
Speaker 1 (16:20):
All right, Well, assuming we get there to sixty five
this weekend, you know, okay, you've made it to that
Medicare age. Greats. That isn't free. It's still not free.
Speaker 2 (16:29):
No, And here's by the way, you mentioned one hundred
and sixty five thousand dollars over the course of your
life if you retire at sixty five, Well, guess what
for a married couple multiplied by two double three hundred
and thirty thousand dollars. How are you feeling about that?
Half a million dollar four oh one k. Now if
three hundred and thirty thousand is going towards just health costs,
(16:51):
here's a breakdown. I mean, you're probably going to draw
Social Security when you retire. Well, Medicare costs this year
about one hundred and seventy five five bucks a month.
Speaker 3 (17:00):
Okay, that means the twenty five.
Speaker 2 (17:02):
Hundred dollars you were going to get from Social Security
isn't twenty five hundred, it's twenty three to twenty five
because that one seventy five comes directly out of Social Security.
Speaker 3 (17:11):
Before you get that money. Part B.
Speaker 2 (17:14):
Most people take a drug benefit, not MUNCH, but there's
a fifty five dollars cost there. And if you don't
have meda GAP, which is the it's a private insurance
policy that you buy. You see all the commercials between
October and December for changing plans. If you buy a
medagap policy, which most people should, it's usually about another
(17:35):
one fifty a month or so. That adds up to
that one hundred and sixty five thousand dollars number. And
guess what that doesn't None of these numbers include a
nursing home. If you wind up in a nursing home,
that's even more money because Medicare does not pay for
a nursing home.
Speaker 1 (17:51):
I'm sitting here listening to you thinking chi ching, Chi ching,
chi ching. Right, with every additional cost that's adding up,
you can see how you can quickly get to that
one hundred and sixty five thousand dollars figure. That seems
so astronomical before. I mean this alphabet soup of all
these different parts of Medicare and figuring out what's the
best fit for you. And I also want to throw
this in right here and say your open enrollment a period.
(18:14):
Once you get on Medicare becomes incredibly important. So if
you're someone who for years and years and years just
kept the same insurance through your workplace, these policies change
year to year. What's covered and in your situation changes.
Maybe this year you got put on a new medication
or there's a different kind of specialist you have to see.
Look at these policies every year to figure out which
(18:35):
one makes the most sense to you. It may not
be the same one year to year.
Speaker 2 (18:39):
Yeah, review your investments at least once here review your
health insurance coverage. And by the way, if these numbers
are upsetting to you, hopefully you still have a little
bit of time you can put some money away, increase
your four oh one K contributions, or do your favorite thing,
the health savings account.
Speaker 1 (18:55):
I was just going to say, I can't believe we
haven't talked about this. If a high deductible health care
plan makes sense for you, and I would also say
if you have a large emergency fund where I think
you've got the most value because that HSA is triple
tax advantage. Money goes in tax free, grows tax free,
you take it out for qualified medical expenses again tax free.
Nothing else like it. And if you can let that
(19:16):
money grow, right, it goes into an HSA and is
invested for years, and then you pay the medical expenses
out of pocket as you go. Won't work for everyone,
but man, when it does, then you have a pile
of money there for those health care expenses and retirement.
Here's the all Worth advice. You've got a plan ahead
for health care cost later in life. If you don't,
you could get stuck with massive bills that could just
(19:38):
wreck your retirement. Coming up next, talking about dealing with
financial stress when it comes to all parts of your life, right,
what can you do to get things under control? You're
listening to Simply Money presented by all Worth Financial here
on fifty five KRC the talk station. You're listening to
Simply Money presented by all Worth Financial, Amy Wagner. When
(20:01):
you are stressed about money, right, just periods of time
when there's a lot of financial stress in your life.
Do you ever think about how far reaching the impact
of that is? Does it impact you at work? You
might be surprised by the answer. Joining us tonight is
our good friend Al Riddick from Game Time Budgeting talking
to us about the fact that employee financial wellness actually
(20:23):
has a huge impact on all of us. Let's get
into this out.
Speaker 4 (20:27):
So yes, miss Amy. First of all, when you think
about financial stress, it can occur in two different arenas,
on the job and inside your home. But first let's
tackle how it looks on the job. So if you
come to work financially stressed, obviously you're going to be
less focused. So there are a number of people listening
to my voice right now that have the types of
(20:49):
jobs where you definitely need to be focused and engaged
so that you can take care of certain projects and
meet dead lives. In addition to that, when you have
funnancial stress, it can impact the attitude that you bring
to work, So, believe it or not, when you're financially stressed,
you can impact morale inside your business unit, or inside
(21:12):
your team, or even on the floor that you work on.
And let's throw out one more Amy. When you have
financial stress, a lot of times, people will start looking
for a job that pays more money because they're thinking
that if they just made I don't know, an extra
ten thousand per year, or let's say extra two or
three dollars per hour, we tend to think that that's
(21:35):
going to solve our financial problems. But both of you
and I know amy. Making more money can sometimes compound
financial problems if you don't have the correct mindset, behaviors,
and systems in place so that you can live a
more fiscally fit financial life.
Speaker 1 (21:53):
And let's talk about that out. How do we get
to the point where we can have those systems in place?
What does that look like, to the point where this
financial stress isn't following us to work and following us
back home again when we're dealing with our spouses and
our children. You know, how do we get ourselves set
up where our financial life is just that and it's
(22:15):
a healthy one.
Speaker 4 (22:16):
So we're going to start at a place where you
might not expect Amy. I call it peeling the onion. Right,
So let's talk about myself. For example, I'm nothing more
than a larger version of who I was when I
was a child. Hopefully I have attained a certain level
of maturity. Right. However, there are certain behaviors that I
(22:38):
may have observed growing up around my parents, whether it
was something that was taught to me through an action
or something that was taught to me through verbal instruction.
So as we age in life and become adults, a
lot of the times we don't take a step back
to realize how we develop certain beliefs and behaviors. Now,
(22:59):
unfortunate amy, a lot of these beliefs and behaviors are
not correct, meaning that they are not conducive to a
financial life that someone might be proud of.
Speaker 1 (23:11):
Right, Yeah, we've carried them with us all these years.
Speaker 4 (23:14):
Right, oh, with our questions, So first let's start there.
But just to bring things up to date, one of
the best things I think people could ever do is
to take a look at where their money has gone
in the past. So how does that look? I dare
the listeners right now to pull out your most recent
credit card statement, or even take a look at your
checking account statement and just go down line by line
(23:38):
to have an account of all of the financial decisions
that you made. Now, some things you may be surprised by,
meaning that you're shocked that you're spending so much money
in a particular area, but you'll also be pleasantly surprised
by the fact you can easily identify opportunities to make
the gap between income and spending as wide as possible.
(24:01):
Is that making sense so far? Amy, Yeah?
Speaker 1 (24:03):
Absolutely?
Speaker 4 (24:04):
So Can I throw out one more thing? Yeah, So
when it comes to these systems, I'll just throw out
one as an example, Like my wife and I, because
our house is paid off, of course, we don't have
the luxury of like escrowing the real estate taxes or
property taxes, right, so because I know, let's just make
the math easy. So let's just say our property taxes
are six thousand dollars per year, right, So in our
(24:27):
monthly budget, it's a lot easier just to transfer five
hundred dollars a month to a savings account strictly put
in place to pay real estate taxes than it is
to wait thirty days before that big bill is due
and then to try to come up with the money.
So that is one of the small systems, and I
(24:47):
call that the rule of twelve. By the way, it
just makes it easier to manage cash flow. Because I
think we're probably similar in this sense. Amy, Both you
and I we'd like to have fun in life, right,
so we DoD be it stressed out about money when
you don't have to be.
Speaker 1 (25:06):
Well, you know, I like that rule of twelve, and
I think it actually works in a number of ways. Right,
you're talking about saving for major expenses that happen once
a year, right, putting that money aside. But I also
think we can easily look at something like one more
streaming service, right and say, oh, it's only ten dollars
a year, twenty dollars a year or a month, right,
(25:26):
And that's not a lot, okay, But what is that
over the course of a year one hundred and twenty,
over the course of year two hundred and forty, over
the course of a year. You know, you add a
bunch of those up, and all of a sudden, it's
one thousand dollars over the course of a year for
something that you've got nothing to show for. And so
I always, when I'm talking to my kids about things,
will say, hey, think about this, over the course of
an entire year, how much you're going to spend Do
(25:48):
you value this thing enough to do it? So sometimes
I think, yeah, it's just kind of turning those mindsets
upside down in getting yourself to a point where you're
thinking in a really smart, healthy way about money. And
I want to also ask you when you think about
work and your salary. So many people when they're looking
at a new job, all they're thinking about is what's
(26:11):
that paycheck? What's that paycheck? But you say, there's benefits
there that many people aren't taking advantage of that they
need to or should be. Let's talk about that.
Speaker 4 (26:21):
Yeah, So I'll give you a quick example. So my
wife is employed at a major consumer products company. Okay,
as a part of their benefit package, if you just
get one physical per year with your blood work and
then maybe take like an online course about making your
life better, can you believe you can make up to
three hundred dollars right? Yeah, shin out And I'm like,
(26:44):
this is easy money. So in addition to that, many
years ago they added something new to the benefit package,
so you can actually pay a very small amount for
access to legal services. So, like I said, way back
in the day we were getting our trust prepared, we
got it done for an extremely low amount of money,
(27:08):
but it was done in a very professional way that
meant all of our needs. In addition to that, First
of all, Amy I have to say, most people don't
read their employee benefit package word for words, which is said,
but you more than likely your employer, if they are
large enough, they probably have relationships with various vendors who
(27:29):
supply goods and services to you and that you can
get at a discount. So it's kind of like you're
throwing away money as well. But it's funny when we
just talk about those benefit packages. I wish more people
would read them because there are a lot of services
that you have access to that could enhance your life
at a lower cost than if you were to just
(27:51):
go buy it off the general market, so to speak.
Speaker 1 (27:54):
Well, you know, we always joke that people spend more
time planning their vacations and they do understanding their full
life and how it works, or understanding their company benefits.
But if you think about it this way, if you
fully understand the company benefits and you are taking full
advantage of everything you can, you're saving yourself money so
that that next trip right is much more affordable because
(28:15):
you're not spending that money on things that you could
be saving on that your company might help you in
that way. So I love that way of thinking about
things definitely.
Speaker 4 (28:24):
And as you know, saving is a beautiful thing amy
because when you save money, you put yourself in a
better position to make financial decisions that pay off for
years to come, whether that's putting more money in your
retirement plan or just be a better preparer for life emergencies.
Speaker 1 (28:41):
We always appreciate your perspective on financial stress, financial wellness,
how to take the best advantage of all of those
benefits in your package. Make sure you're paying attention. That's
Alriddy from Game Time Budgeting. You're listening to Simply Money,
presented by all Worth Financial here on fifty five KRC,
the talk station. You're listening to Simply Money because anybody
(29:05):
all Worth Financial, I mean me Wagner along with Steve Sprovac.
Are you happy with your net worth or does your
net worth make you happy? We're gonna look what many
of us think is just enough money to have to
make us happy. And you have a financial question you
want us to answer. You need a little help with it.
There's a red button you can click them while you're
listening to the show. It's right there on the iHeart app.
(29:26):
We're recording your question and it's coming straight to us.
We've got questions tonight. First one comes from Shannon, who
lives in Pendleton County. I'm changing jobs and want to
roll over my Wroth four o one K to my
roth Ira. How does the five year rule work in
a situation like this?
Speaker 2 (29:42):
Boy?
Speaker 1 (29:44):
It works?
Speaker 3 (29:45):
Gainst you, it does?
Speaker 2 (29:47):
And can the government make some of these things any
more complicated? I'm almost afraid to say that because the
answer is sure they could. There's a five year rule
in wroth four o one k's roth IRA's. Basically, the
government says we want this money put away for five
years before you're going to take the money out and
not have to pay tax on it, which is a
(30:07):
huge incentive to have a roth Ira or roth four
oh one k. If it's been put away for five
years and you're fifty nine and a half or older,
the money most likely will be tax free on distribution.
It's a great way to pay for a car or
something like that. But man, they make it complicated. If
you roll money out of a four oh one k,
(30:27):
a Roth four oh one K that you might have
had for twenty years at your company, and roll it
into a roth Ira, guess what that five year starts
all over again. The five year rule starts all over
and if you take money out a year after rolling
it over into a roth ira from your wroth four
oh one k, you're going to have some tax on that.
It's a ridiculous rule, It really is.
Speaker 1 (30:49):
So understand Yeah that like the clock resets when you
do that rollover to January first of that year, and
you've got five years until you can touch that money.
You know, a lot of people are talking about roth
conversions right now, right with who's going to be president
and not knowing what's going to happen with tax brackets
in the future. You know, make sure you're taking this
into account if you are considering a roth conversion, because
(31:11):
if you need that money in the next five years,
this may not work for you.
Speaker 2 (31:13):
Yeah, before you do anything with a wroth conversion rollover,
talk to an accountant please, because the rules are complex
and you want to know what the ramifications are before
you sign the paperwork.
Speaker 1 (31:25):
Yeah. Next question from Nick in Oakley. We've recently started
discussing the possibility of moving overseas to England for retirement.
What are some of the financial hurdles we might face
if we decide to do this.
Speaker 2 (31:38):
Yeah, you know, it's kind of neat to think about
moving to a different country in retirement. I know somebody
really well that went to Costa Rica Amy and she
absolutely loves it down there. But guess what, Medicare doesn't
pay for your health expenses in a foreign country. That's
the biggest thing she learned right off the bat. There's
always different rules between different countries income requirement for partial
(32:02):
residency or EXPAI expat residency. But the big one is,
or one of the big ones is, certainly, wow, Medicare
doesn't cover me. I guess I have to buy private
health insurance or go to a local hospital and sign
up with their plan health.
Speaker 1 (32:17):
And I think that's just the whole healthcare system in general.
Right is a consideration. Right, we get used to American
hospitals and the American system and wherever it is that
you go. And I'm one of those people when I travel,
I start to think what would it be like to
live here?
Speaker 2 (32:30):
Right?
Speaker 1 (32:30):
Happens to me here every time? And is you get
closer to retirement, and then it's like could we retire here?
But you've really got to think about, Okay, we're here
for a week or ten days and we're on the
beach and this is so much fun. But what does
real life look like here? And I would also say,
just beyond the healthcare expenses and things like that, also
(32:51):
go for a month first, rents an airbnb or something
and really live there before you commit to moving your
life out of the country.
Speaker 2 (32:59):
I'll tell you there a big concern that this woman
that went to Costa Rica learned very quickly. Moving money
overseas is not a piece of cake.
Speaker 3 (33:06):
It's not like.
Speaker 2 (33:07):
Transferring from your money market to your checking account to
pay a bill. It's a process, and you're going to
be subject to money laundering rules and requirements. You'll have
to sign some additional paperwork. There are only certain banks
that can do it. It is not easy to get
chunks of money from the US to a foreign country
on a regular basis. Yeah, it can be complex, so
(33:29):
look into everything before you decide. Hey, I just signed
a one year lease. I'm not sure how it works,
but I'm going to give it a shot.
Speaker 1 (33:37):
I want to quickly get to this next question because
it's a version of when we hear all the time,
this is Don and Cleeves.
Speaker 3 (33:43):
We just inherited some Kroger stock from my aunt who
worked there for a long time and never sold a share.
Do we have to pay taxes on it? And how
do we know if we should keep it or sell it?
Speaker 1 (33:54):
So the good news about inheriting stock is the way
the system is set up, you inherited a stepped up basis,
meaning just for simple terms, say your aunt bought that
Kroger stock for a dollar a share right and by
the time you inherited it, by the time she passed
away on the day of her death, it was at
ten dollars. If you decide to sell it, you don't
(34:15):
have to pay the gains from that dollar of when
she bought it. It becomes a stepped up basis of
the ten dollars at the time of inheriting it, and
then it becomes a look at your entire portfolio. You know,
one thing that we sometimes worry about is are we
we have too much of our portfolio in an individual stock?
Are we too concentrated? But if you still like Kroger
and Kroger makes sense for your portfolio, maybe you hold
(34:36):
it for a while. That can work.
Speaker 2 (34:38):
Do I think if you just ask yourself if I
had let's say you inherited one hundred thousand dollars a
Kroger stock. If I had one hundred thousand dollars in
my savings account, would I go out and put that
money into Kroger. If the answer is no, you probably
want to sell it and diversify into you know, just
the S and P five hundred or or you know,
a balanced portfolio. But you know, if that's the case,
(35:00):
just realize that inheritances are not in almost every case text,
so you get by Scott free on that, and that
stepped up basis means okay, if you sell it for
the same price that it was at on the date
of your aunt's death, guess what?
Speaker 3 (35:14):
No tax? Nice?
Speaker 1 (35:15):
Yeah? Come up next, we're talking about net worth and
its relationship to your happiness. 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 along with Steve
Sprovac when it comes to money, can it buy you happiness? Well,
(35:39):
there is a financial advice website called card rates that
found that Americans actually put a dollar amount on Hey,
if I have this amount of liquid net worth, I
think I'd be pretty happy.
Speaker 2 (35:53):
It might not be able to buy you happiness, but
I've been totally can rent you happiness. But that's a
different survey.
Speaker 3 (36:00):
No, and this surprised me.
Speaker 2 (36:01):
This survey said the average American said, you know what,
if I had a liquid net worth in other words,
money and four oh one k's and savings, that was
around the two hundred thousand dollars range, I think I'm covered.
That scares me because that doesn't go real far. And
I'm not just saying, you know, you buy yachts and
you know, second third homes and all that kind of No,
(36:23):
if you have two hundred thousand dollars rule of four
percent at the most, you can draw eight thousand dollars
a year off that seven hundred and fifty bucks a
month on top of social Security, it's not a lot
of money. And if you have to go out and
buy a car, which you will in retirement at some point,
what's that forty to fifty grand for something halfway decent
that's going to last you a while? Okay, Well, now
(36:45):
you're down one hundred and fifty thousand and four percent
of that's a lot less than seven to fifty a month.
I would shoot your site and set your sights a
little bit higher than two hundred thousand.
Speaker 1 (36:54):
Well, and I guess the only thing I can surmise
from this is feeling like you have two hundred thousand
dollars gives a sense of peace of like if an
emergency were to come up. But to your point, once
you have to start drawing on that money, you know,
it's becomes a completely different reality because what you're looking
at is your sources of income. Right, for most of us,
there's not even a pension there, it's just social security.
(37:15):
And then beyond that, right, what it takes to live
off of every month? How do you fill that gap?
So you fill it with what you have saved, and
is that enough? And so I don't know, maybe happiness
looks different when you're in your working years than it
does when you're retired. I know that this study looked
at people between eighteen and forty three. I think probably
this number would be a lot different for people in retirement.
Speaker 2 (37:37):
Oh yeah, yeah. I think if you talk to the
average retiree or somebody within five years or so a retirement,
they'd say, maybe add a zero to that. Okay, it
sounds a million, two million dollars sounds like a ton
of money, and it is. But that's really what I
think should be the average person's target from the day
they start working. How do you get there? Well, you
(37:57):
mentioned it earlier. If you can put ten percent of
your money into four oh one k from day one,
you should get there. You should get way past there,
as a matter of fact. But if you're fifty five
and just starting a four to oh one K, it
might be impossible, and you got to just set expectations
lower here.
Speaker 1 (38:14):
I think is interesting about this research. Gen Z said
they need a million dollars to be happy, and like,
you know what, my daughter who just left for college,
she's in gen Z. These kids are bombarded with messages
on social media all the time. You need this, You
need that. It doesn't surprise me that they think a
million dollars. But man, you know, I think this number
is very individual for each of us. And another set
(38:38):
of research that I've seen is that if you can
buy things that save you time that you don't enjoy doing,
there's also happiness in that. Thanks for listening tonight, you've
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Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
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