Simply Money

Episode Transcript

Speaker 1 (00:05):
Tonight we are talking about the dirty little secrets about
retirement and how you can plan ahead for them. You're
listening to Simply Money, presented by all Worth Financial Amimi
Wagner along with Steve Ruby, a show about dirty little secrets. Steve,
I'll let you start just kidding. I don't want to
know your dirty little secrets out there, Amy, you can

(00:26):
keep them in the closet. Let's talk about money and retirement. Please.

Speaker 2 (00:31):
That's funny. I had a couple lined up for you.
This could have been a really good, juicy show.

Speaker 1 (00:36):
I'm going to save us all from that right now.

Speaker 2 (00:38):
Well, well, thank you. I appreciate that. So you know,
it's no secret that that having financial freedom later in
life is a goal for many of us that have
spent so long working and saving. But there are issues
that could come up that might derail your financial plans.
So you know, thinking about first of all, net worth.
I mean this is something I don't know about you.
I look at mine from time to time. It's fun

(01:01):
to see as time goes by, your net worth growing.
That's that's your nest egg. It's the value of everything
you own, your investments, your home, less your liabilities. When
people set retirement savings goal that they really don't oftentimes
think about how much they're going to need on a
monthly basis when it comes to creating a paycheck as

(01:24):
a transition into retirement, and your net worth doesn't necessarily
translate to what that paycheck can be.

Speaker 1 (01:31):
I think there's a I agree with you. I like
to know net worth. It's interesting. It's kind of like
a G whiz thing, but because part of it, a
large part of it for many of us is our home,
which for most of us, will will not fund our
retirement in any way, shape or form. It's kind of
like a G whiz kind of a figure. But it

(01:51):
doesn't necessarily matter. To your point, you got to figure
out what you need to live on in retirement, what
do those monthly expenses look like? And by the way,
can we please be realistic about that. I've got a
lot of people who come into my office and they're like,
I think I can do it on you know, X
dollars a month, and I'm like, well, I can just
tell by the tone in your voice that that doesn't
even sound like fun to you. I would rather have

(02:14):
a realistic number of what it's really going to cost,
and that's not living off of ramen, noodles or taco bell.
Great if you love those things, but if you don't,
I don't want you to have to eat those things.
And what you'd eat what you normally do. Plan for
what those retirement expenses are, and then from there, let's
figure out what your sources of income are can they

(02:36):
cover it? And I think starting with net worth just
kind of gets you off on the wrong path here
because your home is likely not a part of that equation.

Speaker 2 (02:45):
Exactly the value of your vehicles, your home. This isn't
money that you're going to unlock to create part of
your income plan. Having an income plan is looking at
the diversified income streams that you have between you know,
maybe a pension if you're fortunate, probably social Security investment
assets that you've accumulated in four to one k's iras
after tax brokerage accounts, and then not going into retirement

(03:08):
with an old rule of thumb assumption like I'm going
to need eighty percent of my pre retirement income, you
know whatever for back of the nap and planning. Sure,
but in my opinion, not good enough because oftentimes when
people transition into retirement expenses are going to be higher
out the gate because they're in their go go years
of retirement. That means that you are no longer working. Ideally,

(03:31):
you're starting to check off bucket list items like big
travel goals, visiting family that maybe lives out of state,
whatever that might be. It could be an investment in
your home because you anticipate staying in it for the
rest of your life, so you want to throw some
money at it to get it set up in a
way that's perfect for you and your spouse. You know
that there's inflated expenses that you may not be considering,

(03:52):
and if your net worth is the number you're going
off of when you're not actually unlocking equity from some
of that property, might not cut it for you.

Speaker 1 (04:01):
Yeah, so we've established okay, don't start with a networth,
start with actually, what are you going to need monthly
in retirement? And you can also yes, throw in those
kind of travel goals and bucket list items. What is
the ticket price associated with those things? And then secondly
it's how am I going to pay for those? And
you could be really, really proud of yourself. You could

(04:21):
have so much money socked away in your four o
one K that you just know you're going to be great,
But are you looking at it realistically from a tax standpoint,
Meaning you've got a million or two million dollars whatever
that figure is in your four to one K. If
it's all in tax deferred dollars, okay, every time you
pull money from that account, every time you take a distribution,

(04:42):
you're going to have to pay taxes on that amount.
So you've got a million dollars, but you're in the
twenty two tax bracket. Okay, then you've got about eight hundred, right,
So you gotta understand not only how much you're gonna pay,
but how you're going to pay for it. In the
tax implications of pulling money from those accounts, it is
very very different way of thinking than when you are

(05:04):
supporting your lifestyle based on a paycheck that's coming home
every two weeks.

Speaker 2 (05:09):
Yeah, Understanding how to create your income flow as tax
efficiently as possible is a big opportunity for saving money
in retirement and having your dollars last longer. I'm talking
about making sure that you plan ahead to diversify the
future tax liabilities with WROTH savings, for example, and if
you didn't accumulate ROTH assets. Then when you transition into retirement,

(05:33):
sit down with a fiduciary financial planner a CPA, run
the numbers to see about doing WROTH conversion so that
you can create ROTH assets that will grow tax free
moving forwards, but also not be part of required minimum
distributions once you hit seventy five. At this point, for
those that are still far from retirement seventy three, currently you're.

Speaker 1 (05:56):
Listening to Simply Money presented by all Worth Financial and
Memi Wagner along with Steve Ruby. What are the dirty
little secrets about retirement that? Man, if you had these
figured out and had a plan to get around them,
retirement would be so much smoother. Right, if you're looking
at net worth, it's probably not going to get you
where you need to go. You need to start with
figuring out what your expenses are going to look like.

(06:18):
One other dirty little secret is making sure that you've
got different, you know, tax accounts set up with taxes
affecting them in different ways so that nothing everything isn't
in those tax deferred accounts. And then this is the
silent killer of retirement. Many times we're talking about inflation.

(06:39):
I know so many people who when you get to retirement,
you shift out of this accumulation phase into this I
want to curl up in a fetal position around this
ball of money because it is all I have to
live off of, and I don't want any market exposure. Right.
I've talked to many people through the years who feel
that way. The problem is when you do curl up

(06:59):
in the fetal position around that money, if you are
to pull it out of the market, then you've got
inflation slowly chipping away at that money. And the question
is will you have enough at the end of your life.
I think most of us will need some retirement assets
that have some market exposure, because that is what outpaces

(07:20):
inflation historically.

Speaker 2 (07:23):
Yeah, and specifically, when you say market exposure, you're talking
about stock. Yes, that is what we're talking about here,
because stock is what's kept up with inflation the most
over the history of investing, and inflation is a silent killer.
You don't see it happening because you can keep the
same amount of money if you put it in a

(07:43):
checking account. It's not going to grow, it's not going
to lose, and some people feel like that's good enough.
But inflation has also kicked us in the teeth the
last few years. Go to the grocery store. You'll see
what I'm talking about. Everybody's familiar, obviously, But what happens
slowly is about about every twenty two years, the dollar,
the doll the value of the dollar gets chopped in half.

(08:04):
So if you're not investing, then you're losing half of
your purchasing power in a couple of decades, and that
is a problem. I've seen a lot of di wires
come in and they've built spreadsheets and they present it
to me like, hey, I feel pretty good about where
I am.

Speaker 1 (08:18):
Cool.

Speaker 2 (08:18):
How did you How did you write an inflation into
your spreadsheet? Well, you know I didn't. It shouldn't be
too big of a problem. Well you're yeah, Unfortunately it is,
and you need to plan for it accordingly. Same thing
with some of these di wires. You know that they'll
also assume that they're going to live till I don't know,
seventy nine years old, and that's just not good enough.

(08:40):
When when when a certified financial planner is building a
financial plan for you, oftentimes they're going to try to
stretch longevity as long as you're comfortable with it. What
I'm talking about is using ninety two for a man,
ninety four for a woman, because it's about a twenty
five percent chance you're going to see that age, and
that is good enough to have to plan for it.
Because what happens if you're ninety five years old and

(09:01):
you're out of money.

Speaker 1 (09:02):
Yeah, one dirty little secret about retirement is you might
actually live longer than you were planning to. Right, And
I've built these plans for people before where there's not
enough money, and all of a sudden you start to
look at red x's when they get to seventy eight,
seventy nine, because there's nothing left at that point. If
you're in your early sixties and that's what it looks like,

(09:23):
well then you've got choices that you can make. You
can work longer, you can spend less, you can maybe
get a part time job in retirement. At least you
have those answers on the outset. But if your just
plan is well, you know, my dad only lived to
seventy and so I'm probably not going to make it
much past seventy, there could be a thousand different reasons
why you could live longer, And maybe it's lifestyle choices

(09:45):
that you've made different from other people in your family,
So you can't go off of what the two generations
before you ended up doing. Build that planned to ninety two,
ninety four years old. This is called longevity literacy. Understand
how long you could live. If you don't live that wrong,
that's okay, There'll be an inheritance for your kids. But

(10:06):
I would much prefer that than having the stress of
if I lived to this time next year, I'm not
going to have dollars to support it. Right. That is
not a position anyone wants to be. And when you're
in your seventies or eighties.

Speaker 2 (10:17):
I love stress testing financial plans. We assume bad performance,
We assume longevity beyond your wildest imagination. Right, we assume
that you're going to need to spend more. And when
I can't blow somebody's financial plan up, that that that
brings a lot of peace of mind. Yeah, and you

(10:38):
know these kind of tie in these these these dirty
little secrets of your financial plan. Another one to think
about tied to longevity is long term care. So in
this day and age, we've kind of reached a point
where long term care is very expensive. It doesn't mean
that you shouldn't explore purchasing it as an option for

(10:59):
covering your legacy, so to speak. When you're gone, there's
about a fifty to fifty shot that you're going to
need to have long term care or use long term
care to some capacity. So we're at a point where
a lot of folks will just self insure, which means
if we run a plan and you have enough money
left over at the end, towards the end of your life,
then that's fine if you're comfortable. What I mean by

(11:23):
that's fine not buying long term care insurance. But if
you want to make sure that there's a level of
guarantee that there's comfort towards the end that's not going
to wipe out your nest egg to leave behind the
loved ones when you're gone, that's when it's worth exploring
long term care. And if it's too expensive in and
of itself, you could always explore some kind of a
life insurance policy with a long term care rider, which

(11:45):
can reduce the expenses but still give you some coverage
for long term care.

Speaker 1 (11:49):
You have options. And another kind of jourty little secret,
and this is not necessarily a financial one, is you
could be at bored. I know many people who your
life in your schedule is very much wrapped around what
you do, your career, your job, and once that's no
longer on the table, you don't know what to do
with yourself. I have a client this week and I
was like, oh my gosh, she should write a book.

(12:11):
She's seventy seven. I don't know how she ever had
time to work. She goes to temple three times a
week for classes, she hosts majong games that are housed,
she has seventeen different things that she's in, a classics
reading club at the library. She's so busy. And she said,
this didn't happen by accident. I planned for it. I

(12:34):
knew I would want to have some structure in my life,
and I planned where I would have enough that my
life was fulfilling, but not so much that I was overwhelmed.
And she hit the perfect balance. And I think there's
a lot we can learn from that. Here's the all
Worth advice. Please get educated about these dirty little secrets
when it comes to retirement, so they're not blindsiding you

(12:55):
when it comes time for you to stop working. Coming
up next, looking for an old four. There is now
a Lost and Found database. We're going to talk about
that next, plus estate planning tips from the investing King himself,
Warren Boffett. What can we learn? You're listening to Simply Money,
presented by all Worth Financial. Here in fifty five KRC
the talk station Santa Baby. Just slip a sable under

(13:21):
the tree. You're listening to Simply Money. You're presented by
all Worth Financial, Amy Wagner along with steviebef. You can't
listen to our show every night. You don't have to
miss a thing. We have a daily podcast where you
just search some money. It's right there on the iHeart
app or wherever you get your podcasts. Coming up at
six forty three, we are answering your questions about stock
sales five twenty nine, plans for one k's and a

(13:42):
lot more. Are you one of the people who have
switched jobs a number of times and now all of
a sudden you started to think, wait, where is that
four one K from that second job I had from
maybe twenty seven years old to thirty I'm not exactly
sure where that is. Well, you're not alone, and now
the government's going to help you track that down.

Speaker 2 (14:05):
Pretty cool if you ask me. You know, it's almost
like a little treasure hunt finding finding some money at
the end of the rainbow. I love it when I'm
working with somebody and they forget that they had a
four oh one K and we do this little game
where we track it down and sometimes you find that
little that little pot of gold, so to speak. And
it's going to be a lot easier now, which obviously
is something to be thankful for. This is a change

(14:27):
under Secure Act two point zero from twenty twenty two
that the Labor Departments Employee Benefit Security Administration was directed
to create a Lost and Found for retirement savings that
the database is actually currently being worked on now and
it's set to go live on December twenty ninth.

Speaker 1 (14:45):
Here's the data. There were more than twenty nine million
forgotten flooral one k amounts twenty nine million worth one
dollars actual billion dollars. Yes, as of May of last year.
That is a lot of money that people do know
know where it is, and so this database is going
to be incredibly important. And if you are one of
these people who now you're starting to think, wait, where

(15:07):
is that old account? Please? This is not something to
delay on, you know, to put off for you know,
a few more years. They'll all figure it out when
I get closer to retirement. The more time goes by
that you do not know where that money is, the
harder it will be to track down. This database will
be helpful, but this is something to figure out as
soon as possible.

Speaker 2 (15:25):
One of them most Yeah, I mean, you don't want
that money just sitting around out there. You have no
idea how it's invested. If you forgot about it, and
if it has a completely conflicting investment strategy from the
rest of your strategy, then that's a problem. Maybe it's
sitting in cash and the market's been in a tear
these last couple of years and you've missed out on
any potential gains. So definitely, you know, if you think

(15:45):
you might have something flowing around out there, then then
count down the days till you can actually use this
database and go find your four oh one k talk
to an advisor about what you should do with it.

Speaker 1 (15:54):
Yeah, jump on it as soon as it opens. December
twenty ninth. Okay, one of the most overlooked aspects of
financial planning is having an estate plan. Many people hear
that word a state and you think, well, I do
not have a tree lined, gated entrance to my house,
so I probably don't need this. I do not have
an estate. But do you have a car, do you
have a home? Do you have a four one K?
Then you actually do have an estate and you need

(16:16):
to plan for it. And you guys know, I am
a huge Warren Buffett fangirl, and this week he was
sharing openly and I very much appreciate that he does
some updates on his own thinking behind his estate planning.

Speaker 2 (16:30):
Yeah, and he's hoping that others will learn from these
estate planning tips with the not having blinders on that
it's only for the richest of the rich. As you
said yourself, everybody needs to have some kind of an
estate plan. Usually a will, power attorney, financial medical, health
care directive is what we need to have. But back

(16:52):
to Buffett here, he actually shared the details of his
estate plan and a letter that was published openly to
the public last week and sh knowing that he plans
to give most of his assets to charitable causes, He's
going to continue contributions to certain charities while he's still
alive and kicking. You know, some of these plans are
going to remain in his estate and move into a

(17:13):
charitable trust overseen by his daughter and his two sons.
The three must decide unanimously which charitable organizations to donate
to and in what quantity, so they'll have some say
in how the money is donated. But I think it's
interesting to see some of the transparency here and appreciate
the fact that he's open about it.

Speaker 1 (17:35):
Rarely, if ever, have I criticized warream Buffett. I mean,
I just think he's brilliant. One tiny little issue I
see with this plan is he is expecting that his
three children are going to agree on something unanimously after
he's gone. I've been doing this long enough and seen
enough family dynamics to know unanimously agreeing on how to

(17:57):
spend parents' money once they're gone is not necessarily the
easiest thing. Now, maybe because there is the charitable component
to it and it's not going to necessarily any of
those individual children, maybe that makes this easier. But what
I like about estate planning is you can outline everything
for your children, for your heirs, for your loved ones,

(18:19):
so that they don't have to guess, They don't have
to figure things out on their own. They don't have
to cause World War three because they're not all in agreement.
So I love that he is encouraging people to set
up a state plans. I think it's incredibly important. I
just a little bit question having all three kids unanimously
on the same page.

Speaker 2 (18:38):
What's kind of funny. He also named three younger trustees
to succeed his children should my children pass before the
trust runs out, so they'll be even more people helping
to make these decisions. But you know, it's important to
realize that not all of us are going to have
a charitable remainder trust, but a lot of us do
have donor advise funds. This is a cheaper way to

(18:58):
have philothrampic wow charitable book. Yeahah, thank you appreciate that.
That's why we're a team here. Sometimes I need words.

Speaker 1 (19:06):
I'm here.

Speaker 2 (19:07):
Yeah, so charitable goals. But you know, I think it's
important to also layer in the fact that all of
us need beneficiary designations. That means that your assets won't
go through probate if you have somebody listed on your accounts.
A simple will can also help designate how money will
be split up. I mentioned earlier power of attorney, advanced

(19:28):
directives things like that. That's what we all need. We
don't need what Buffett has, but we do need a
state plans.

Speaker 1 (19:34):
Here's the all Worth advice. Once you've established your state plan,
the most important thing you do communicate your wishes with
your loved ones often, just like warm Buffett does. Coming
up next, our real estate expert here to discuss the
state of the local housing market, mortgage rates and more.
If you're getting ready to buy or sell a home,
you're going to need to stay tuned. 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

(20:02):
presentably all Worth Financial, I mean Wagner along with Steve Ruby.
It is the holiday season, which doesn't usually coincide with
peak home buying season. But let's check in with a
real estate expert, Michelle Sloan. She's of course owner of
Remax Time and you can catch her show, Sloan Sells
Homes right here on fifty five KRC every Sunday afternoon.
What is kind of the state of the real estate

(20:23):
market right now? I know things are typically slow this time.

Speaker 3 (20:26):
Of year, they are but that's a that's okay, because
we're going to take a minute to look back at
the last twelve months. You know, it's kind of a
time where we're just sort of understanding where the market
has been and where it might be going in twenty
twenty five. So that's what we're going to do a
little bit today. We have seen some positive, uh it's

(20:49):
not really changes, but we've seen some positivity within the
market itself. We've also seen a slow down in ways
that we didn't expect so since the pandemic, and it's
interesting that we always seem to that's that's a marker
in history that I think we will be referring to
for a really long time. Since the pandemic, we cannot

(21:13):
really predict the future in ways that we had been
able to do in the twenty thirty forty to fifty
one hundred years prior to that. There is no new normal,
and that's what a lot of the experts are saying that,
you know, the rates are rising, but there's still a
lot of activity, but there's still very little inventory, and

(21:36):
so the changes that have occurred over the last five years,
we're still trying to figure it all out.

Speaker 2 (21:42):
Up is down, down is up. Hard to figure out
what's going on when things have changed so drastically in
a post COVID world.

Speaker 3 (21:49):
That was absolutely true, absolutely true. And right now, you
know the rates they're higher than I would have expected
this time of year, despite all of the changes that
the FED has made. You know, everything's going they're going down, down, down,
But mortgage rates are still pretty high. They're in the
in the Ohio and Kentucky market, we're at six point seven,

(22:10):
six point eight, so not really as low as it's
not low enough to actually make a difference. It's not
low enough for buyers to say, Okay, I'm going to
get out there and I need to get a home
right now. It's not low enough for sellers even to
make a decision to make a move because they're sitting
on these three or four percent mortgage rates, or they

(22:32):
don't have a mortgage and they're like, eh, I think
I'll just sit tight. And so everybody's just still sitting tight,
which I was hoping we would see a little more activetivity,
and I do think in the coming months, certainly in
the new year, in the spring market, we should see
some more activity. But again, who knows.

Speaker 1 (22:52):
Because we don't know right because we're in this kind
of we don't know what new normal looks like for
anyone who's maybe not going to buy or s all
before the holy but in twenty twenty five, whether it's
the beginning of the year in the spring, they're going
to look into that market, either jumping into buyer sell
or both. What's your advice to them? Is there anything
they need to be doing right now?

Speaker 3 (23:12):
Oh, there's always things that you can do. If you
are thinking about selling or thinking about making a move,
you can certainly do the things that will make you
get the most money for your home for the So
if I put my seller's agent hat on, it's really
important for sellers to keep deep cleaning, keep getting rid
of the junk, keep you know, doing clutter, declutter absolutely,

(23:36):
and do all of the things that you will need
to do. Also, you know, go on ahead and during
these slower months, maybe you're going to get a few
rooms painted, maybe you're going to get install some new flooring,
maybe you're going to do some upgrades that are really
going to make a difference, those kinds of things. Putting
that on your to do list as a home owner
is a great idea if I put on my buyer's hat. Okay,

(23:58):
Buyers now have to choose an agent, and this is
something new that has occurred over the course of the
last couple of months, where buyers are required to sign
a buyer's broker agreement with an agent in order to
view properties. And so this is a new thing that
a lot of people still don't understand. You know, my

(24:21):
mom was she lives in Tiffan, She's thinking about downsizing,
and I'm not there to help her. So she just
called a random agent on the internet and said, Hey,
I want to see this property and they said, well,
you're going to have to sign a contract with you
with me, And my Mom's.

Speaker 1 (24:36):
Like, oh, I don't know what that is.

Speaker 3 (24:40):
I don't you know. She's seventy five years old and
that's new and that is scary that you have to
sign a contract. So for buyers, the one thing that
I would strongly recommend going into the new year, if
you are planning to buy, connect with the real estate
agent that you know and trust, or at least you
have a recommendation from somebody else, so that you're working

(25:03):
with an agent who will represent you and explain to
you what these new agreements are all about and what
it means.

Speaker 2 (25:11):
You know, this might be a little out of left field,
but I'm curious to hear your perspective on You know,
this is kind of a post COVID thing where there's
been a really large uptick in working from home. Do
you see any kind of increase in inventory when more
and more companies say, Okay, we're done with this, it's
time to return to the office.

Speaker 3 (25:31):
You know, I haven't personally seen I've seen more and
more people that are still working from home at least
a few days a week.

Speaker 1 (25:39):
So I have.

Speaker 3 (25:40):
Several clients buyers especially, who are like, you know, I'm
going to be working at home. I only have to
drive into the office once or twice a week, so
I don't have to be as close as maybe I
would have been if I have to do that commute daily.
And so I do think that as more and more
companies get try to get the workers to come back.

(26:03):
Some workers actually left town. They said, if I can
do this remotely, I'm going to live somewhere where I
want to live. And so a lot of those workers
aren't local anymore. So forcing them to come back will
there will be a make or break kind of situation.
Either they may not come back at all, or they
may put their foot down and say, I don't even

(26:25):
live in the area anymore, and I'm still doing the
job that I always was doing. So either you're going
to have to let me go or let me continue
on as we have been doing it. So I think
there's a lot of change, especially for companies to think
about how their business has changed since the pandemic. And again,

(26:46):
it's it's funny, we're how many years removed already. We're
going on five years already and we're still talking about it,
and we will be talking about it, I think ten
or fifteen years from now, because that's how long I
expect the real estate market to be recovering from what
happened during that time.

Speaker 1 (27:04):
On that note of the pandemic, I have another thing
I want to talk about that's a little bit different here,
but Michelle, I remember during the pandemic when it was
an absolute frenzy in the housing market, people who had
never been in the real estate business before were jumping in.
They had dollar signs in their eyes. They were going

(27:25):
to make all kinds of money, and some of them did.
I mean because people were buying and selling like crazy.
Now we've come to kind of the other end of
the spectrum here, right, I mean, things have slowed down,
and if you don't have an established business, it's probably
pretty hard to make ends meet. How is that shaking
out now? For all those people who rushed into the
real estate industry, what's the state of that now?

Speaker 3 (27:48):
A lot of newer real estate agents are realizing that
this business is not as easy as some people make
it out to be. It is not easy and if
you want a stead income, an income that you could
actually make money in the real estate industry, you have
to be in full force twenty four to seven pretty much. Yeah,

(28:11):
you know, it's the it's the doctor of the real
estate world where you're always on call. So if you're
not one hundred percent in. We are seeing more and
more because our dues are due. So we have hundreds
of dollars of different dues that are that are coming
due in January, six hundred to one thousand dollars. There

(28:32):
are a lot of agents are going to say, well,
I didn't even make that much money last year, so
why should I continue to do this? I think I'm
just going to go back to a nine to five
or whatever. We are expecting that thousands over the course
of the entire industry, thousands and thousands of agents who
will be getting out of the business. And you know

(28:52):
that will leave you with the most experienced, most likely
the people who are in it to win it. And
one hundred percent.

Speaker 1 (29:02):
Yeah, and know and really understand this industry. Great advice
and expertise is always from a real estate expert. Michelle Sloan.
You're listening to Simply Money presented by all Worth Financial
here in fifty five KRC the talk station.

Speaker 2 (29:16):
I really can, but maybe it's cold outside.

Speaker 1 (29:20):
Not to go. You're listening to Simply Money presented by
all Worth Financial. I mean Me Wagner along with stevee.
We you have a financial question, need help answering. There's
a red button you can click on while you're listening
to the show right there on the iHeart app. Record
your question. It's coming straight to us. Then let's get
straight to the question. Snight. First one comes from Maggie,
who lives in Westchester. I own some stock in Amazon

(29:41):
and have made a nice profit so far. Just wondering
how I'll eventually know when to sell. Maggie I will
say one thing here is don't make that decision based
on fear or greed. Right, what's the reason why you
bought that stock initially? This is one thing I don't
love about individual stock positions. They can drive you bonkers. Right,
you're probably checking every to see is Amazon up? Is

(30:01):
Amazon down? There are a few reasons why I think
it makes sense to sell a stock. You need the money, right,
you just need the money. It no longer fundamentally is
a good company. I don't see Amazon going that way. Ignore.
But when you start to look at it and you're like,
wait a second, I see changes in this sector, I
see changes in the space. Maybe the leadership's crazy, whatever

(30:24):
that is, it's like, I don't know if this is
a great thing anymore. And then also if you cheer,
your financial plan changes, and for some reason, this particular
stock does not line up with your your goals and objectives. Otherwise,
I think the trap that you can get into with
individual stocks is buying selling, buying selling, buying selling, and
I think you can drive yourself crazy with that.

Speaker 2 (30:46):
Yeah, if you hang on to it, it's going to
go down. If you sell it, it's going to go
way up. So just.

Speaker 1 (30:51):
It's basically a rule.

Speaker 2 (30:54):
Yeah, I mean, I agree with Amy entirely. I think
that's great feedback here. So Karen, and since let's hear
her question. We have a five twenty nine plan set
up for my daughter? Is this going to hurt her
when trying to get college aid? So I think it's
fantastic to have a five twenty nine. Five twenty nine
are more flexible than they've ever been. This is a
college savings vehicle. Or you put money in, the assets

(31:15):
grow tax free if you're investing. The money can be
used tax free for non reimburse qualified college expenses, and
they're more portable than ever. If you don't spend them,
then you can transition them to another beneficiary. You can
even use as long as the money's been in there
for I want to say fifteen years, and up to
thirty five thousand dollars can be transitioned over several years

(31:38):
to the beneficiary via roth IRA contributions once they have
earned income. But yes, if you are a parent and
you have a five twenty nine, then when you fill
out the FASTPA, the free application for Federal student Aid,
the parents owned five twenty nine assets. Have you know

(31:59):
it's like a five or six percent reduction factor against
against potential for benefits. And there are changes here recently
with grandparents owning five twenty nine where that is actually
going away it won't count towards income. Bottom line is
is I don't I would never encourage you not to
do a five to twenty nine plan because it affects

(32:21):
student aid. It's just not a reasonable approach that there's
minimal impact. Yeah, yes, there's too many benefits of the
five twenty nine to say, well, I'm not going to
do it because it could impact student A.

Speaker 1 (32:33):
Next question from Jim in Adams County.

Speaker 2 (32:36):
I'm fifty seven and just learned that my company allows
people to take out money from their four to oh
one K starting at age fifty five. Can this be right?

Speaker 1 (32:44):
So this is called the rule of fifty five. Not
every retirement plan on every four to one K is
set up, so it's important to know whether yours does
allow this. Apparently yours does. And this is if you
separate from that company in your fifty fifth year or beyond,
you can go ahead and pull those assets and use them.

(33:06):
This is kind of a one time deal. You've got
to get it right. But for some people who are
looking at early retirement, this can make sense.

Speaker 2 (33:14):
Yeah, so this is interesting because if you're separated, that's
where the world fifty five comes in the year you
turn fifty five, but you're not fifty nine and a
half yet, you can have access to penalty free withdrawals
if you're still employed. Honestly, I've never seen a plan
that offers a distribution at fifty five. It's almost always
fifty nine and a half. Technically, that doesn't mean that

(33:35):
it's not possible. I would ask your employer and call
the custodian or the four to oh one K for
some direction on that. But I would also say, hey,
maybe don't touch the money in your four oh one k.

Speaker 1 (33:44):
Yeah, important distinction, right, do you still need to be
working there? Need to be separated most of the time.
This rule applies to when you separate from that company.
But listen, if you're fifty five and you're retiring now,
that money needs to last for a really long time,
So just make sure you're not spending like crazy in
your fifties and then there's nothing left when you get
to your eighties and nineties. Let's get to jc Now

(34:07):
and Anderson.

Speaker 2 (34:09):
I'm forty seven and use a target fund for my
four oh one K. Can I keep using this up
to retirement? Sure? Yeah, No, one's going to stop you.
That's what these things are designed for. In fact, for
somebody that's very hands off, doesn't work with an advisor,
is accepting a good enough strategy because it's going to
continually get safer the closer you get to retirement. Eventually

(34:31):
it'll transition to a retired fund that's oftentimes ultra conservative,
maybe two conservative, not giving you the option of keeping
up with inflation. But technically the answer is yes, you
can keep using this up until retirement. But I would
encourage you to kind of step back and see if

(34:52):
the asset allocation that that particular target date retirement fund
is giving you is what you actually need based on
and your financial situation needs and goals. Because that thing
is treating you the same as every other person investing
in it. There's no personal touch that you could get
by leveraging some of the other investments that are inside
of your for it.

Speaker 1 (35:12):
Okay, yeah, can you keep your money in a target
dat fun? Absolutely? Is it the best thing for you?
Probably not? Do some research on that coming up next
We've got a gem of advice from mister Steve Ruby.
You're listening to Simply Money presented by all Worth Financial
here on fifty five KRC, the talk station Black. You're

(35:35):
listening to Simply Money presented by all Worth Financial. I
me Me Wagner along with Steve Ruby and Ryan Stone
Cowboy means we're talking gems of advice. These are always
kind of financial tidbits, and this one's coming to you
from Steve.

Speaker 2 (35:49):
All right, let's say you've listened to our entire show
today and you caught the a block that's what we
call the top of the show where we're just getting started,
and we had a conversation about dirty little secrets as
you tray transitioned into retirement. And I think one that
we need to touch on that we didn't was not
all advisors are equal. Now the very first time, you know,

(36:11):
almost two years ago at this point that I was
a guest on the show when it was Amy Wagner
and Steve Sprovac. During that period of time, I talked
about some of my background and where I came from
and my path towards working for a fiduciary financial planning
firm like Allworth. You know, I was I was born

(36:32):
and raised at a big brokerage firm. You know, they
trained the hack Adia five securities licens certified financial planner.
But I had goals that were tied to selling proprietary
products for that firm. So my behavior was driven by
how I was compensated, and that's by design. Now that
doesn't mean that I don't think that I helped people.

(36:52):
I did the best that I could within the realm
of expectations that were put upon me by my employer.
There can still be really good advice is trying to
do the right things that maybe have their hands tied
by who they work for. I went onto a big
bank and within that bank was a major advisory firm
that we've all heard of one hundred percent commission. One

(37:15):
hundred percent. Do you think when somebody is one hundred
percent commission they can always have your best interests in mind.

Speaker 1 (37:20):
When they're relying on your decisions to put food on
their table. Nope.

Speaker 2 (37:25):
Yeah, So you know when we're talking about dirty little secrets,
and you know, if what we talked about today spurs
you to take action, to call an advisor, make sure
you're doing your due diligence, and you're finding somebody that
is a fiduciary financial planner that offers holistic financial planning
that includes investment management, estate planning, insurance planning, retirement planning,

(37:46):
helping with social security and giving you feedback through the
lens of what is in your best interest, not just
padding their own pocketbooks. You know, we had Bob Sponseller
on the other day, another advisor here at All, and
he talked about his history within the industry. He came
from an insurance outfit that he felt really good about,

(38:07):
and he knows that there was a lot of people
working there that had their client's best interests in mind.
So just because it is an insurance company or a
broken from doesn't mean you can't work with them. But
you want to make sure that you find advisors that
you trust and do have your best interest in.

Speaker 1 (38:22):
Mind Fully understand how that person is being compensated. Ask
that question very directly, and if they are not clear,
walk yourself clear out the door, right you don't belong there.
But secondly, I've hit a number of people in my
office recently who were interesting and interested in coming on
board as clients who felt like they were over promised
something by firms and then like really sold hard on

(38:45):
the front end and then never delivered. So ask a
lot of questions about what services are provided and how
often you'll hear from that person. All of these things
are important in making this decision. Thanks for listening tonight.
We hope you're going to tune in tomorrow. We're talking
about the specific order of withdrawals you need to make
when retirement does come. This is important. Get Simply Money's

(39:05):
straight talk advice. You've been listening to Simply Money, presented
by all Worth Financial here on fifty five KRC, the
talk station