Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight. It is called the Great Wealth Transfer, and it
could imprack you. Let's get into that you're listening to
simply when he presented by all Worth Financial Immi Wagner
along with Steve Ruby. Until four years ago, the baby
Boomers made up the largest portion of the US population.
They were born after World War Two, and a lot

(00:27):
of them, over the course of the past several decades
have amassed quite a bit of wealth.

Speaker 2 (00:34):
Yeah, they sure have boom boomers that they have decent
nest eggs for the most part.

Speaker 1 (00:38):
Here, can I just tell you that I'm forty seven
and that my fourteen year old son calls me a boomer? Yes,
because all the time he's like, okay, boomer, Okay, boomer.
So just two levels that I'm not actually a boomer.
I'm gen X.

Speaker 2 (00:52):
What do you call him? How do you get back
at You don't just let that slide, do you?

Speaker 1 (00:56):
Well? No, I don't, I don't. I don't know what
I should come up with, something even meaner, more kind
of there's nothing meaner than calling me a boomer when
I'm not a boomer. But all respect to boomers because
they've earned it, and they've also earned quite a bit
of wealth over the years.

Speaker 2 (01:12):
Yeah, you know, there's those out there that say that
that boomers were in the right place at the right time.
Following World War Two, there was an immense economic growth, prosperity,
golden opportunity to accumulate a lot of wealth in their lifetime. Boomers, again,
these are born individuals born between nineteen forty six and
nineteen sixty four. They are currently the wealthiest generation on

(01:33):
the planet. Their net worth falls anywhere between about nine
hundred and seventy thousand and one point two million dollars
to fortune.

Speaker 1 (01:39):
What's stuff for a second there, this is their mean
net worth right like, that is a lot of money.
I'm assed. I mean, we talk about the fact that
we have a retirement crisis in this country. Boomers are
doing pretty well, and we know right they're they're retiring
in droves right now. I mean, part of the issue
that we have with the social security system is more

(02:00):
more of them are retiring, right and drawing social security.
But yeah, these are people who've done pretty well for themselves.
And I also want to throw out there many of
them are some of the last to have pensions.

Speaker 2 (02:11):
Yeah, that's a good point too. You could do it okay,
you could work, You could live relatively well without attending
a college. You could work the trades for with the
same company. You worked hard for that same company for many,
many years, and you walked away with a pension. So
there didn't have to necessarily be a ton of savings,
especially when you bought a house at a relatively decent

(02:32):
price compared to what your income was, and then the
house value just boomed over those years. So that's where
a lot of this net worth is accounted for. That's
not just investable assets. That's the fact that people bought
houses for forty thousand dollars and now they're worth seven
hundred and fifty thousand.

Speaker 1 (02:46):
Well, and I also think this is a generation who
I don't know, but going back, I don't know that
the starter home concept started with them, where we have
to start with the home and then we move, and
we move and we move. I mean I think about
you know, my dad, like many times you just bought
a house and you stayed there. So that was a difference.
You also mentioned though this generation did pretty well and

(03:07):
they didn't necessarily have a college income. Now many of
them did, but those that didn't also came out of
or were able to get a job and not incur
so much student loan debt. Right as we see now
gen xers and millennials, you know, trying to start lives
in drowning and student loan debt at the same time.

Speaker 2 (03:27):
Yeah. Part of the problem for current generations is that
inflation has outpaced wages for certain aspects of expenses in
this world, including college. For example, college has become exponentially
more expensive. And that's a topic in and of itself
as to why that happened, because maybe student loan availability
led universities to artificially inflate prices, which creates a crisis

(03:51):
in and of itself. But for boomer generations, you were
able to work part time and just pay for college.
That was possible for a lot of universities. Now you're
walking away with one hundred thousand dollars in debt.

Speaker 1 (04:04):
Yes, I mean, and I met with someone recently who
had forty plus thousand dollars worth of debt, has been
paying on it for ten years, and the needle has
hardly moved.

Speaker 2 (04:12):
That's what I graduated with forty thousand dollars in debt,
and that was twenty years ago.

Speaker 1 (04:16):
You were aggressive, right, or did you just pay them off?

Speaker 2 (04:19):
They've been paid off for several years now. But because
I was aggressive, but it also slowed down my ability
to start a family, build wealth in another way, to
build wealth in other ways, to get you know, we
did start with a starter home for example. Yeah, but
now we're in a long term home because the student
loans are paid. It delayed things a bit.

Speaker 1 (04:38):
We're talking about the silent generation and also boomers, so
that's the generation. Silent generation is those above boomers between
the two of them, listen to this number. They're getting
ready to pass down eighty five trillion dollars and assets
between now and twenty forty five. So in the next
two decades we have a major shift in money. This

(05:00):
is the great wealth transfer that we're talking about, right
as the sisent generation and Boomers pass on past this
wealth that they have accumulated. Later in the show, we're
talking to Mark Rekman about rental properties, about vacation homes,
right and sort of passing those on. And I know
I've talked to Mark about this before. Generations before this

(05:20):
didn't even have homes that they could pass on. Vacation homes,
beach homes, lake homes wasn't even a thing. People didn't
have that kind of money. This is a change. This
is a generational change. And as we have kind of
this first generation, this Firsut American generation to really in droves,
be able to accumulate this kind of assets so that
they're not spending in their lifetime that money is now

(05:43):
being passed down or will soon be passed down to
Gen X and to millennials.

Speaker 2 (05:48):
Yeah, the transfer of wealth, it's going to create a
lot of changes for younger generations and in their ability
to purchase homes, pay off student debt. Like the person
you were talking to the other day that has forty
thousand dollars in loans and they've been making their payments
but they haven't even put a dent in it because
of the interest on them. There's going to be more travel,
the ability to buy products and invest in the stock market,

(06:10):
a lot of these changes. It may be a challenge
for some of these individuals to navigate this new found
wealth in making sure that they make good decisions with
those dollars.

Speaker 1 (06:22):
You're listening to Simply Money presented by all Worth Financial.
I Meani Wagner along with Steve Ruby. As we talk
about the great wealth transfer. It is coming and for
many of us that will likely impact our lives as well.
We're talking about the Silent generation and Baby Boomers and
the wealth that they have amassed that they will at
some point in the next twenty years pass on to

(06:43):
Gen X and millennials right to us. And what does
that mean? You're talking about a little nervous about this,
right because of what can be done. We've talked on
the show many times about what happens when someone wins
the lottery, right when it's just like kind of windfall
that falls into your lap and there's not play for that,
and we've seen people just blow through that money in

(07:03):
no time, you know. I think another consideration though, for
this is if you were to you know, Gen X,
my generation, many of us are in our peak earning years, okay,
and so if money were to come a lump sum.
I think on average it's about a quarter million dollars
that most inheritances that are coming from this generation coming down.

(07:24):
That's significant. You get all of that in one fell swoop,
and you are like stratosphere when it comes to tax brackets.

Speaker 2 (07:32):
That's a good point. I mean, that's That's one of
these challenges that people are going to have to deal
with is understanding, especially for those that haven't had the
opportunity to invest because they've been held back from different expenses,
higher home costs, student loans that they're shackled with. You're
inheriting this wealth, you don't have any idea how to invest,

(07:53):
you have no idea what the tax implications are of
spending some of those dollars. That that could create major
problem where you're absolutely kicked in the teeth by the irs.
For example, Now think about millennials here that there's there's
reports out there that show that the greatest, the Silent
and boomer generation wealth transfer is going to actually make
millennials the richest generation in American history. Wow, think about that.

Speaker 1 (08:18):
Yeah, that's huge, and that's going to be a substantial
change in fortune, right. I mean, they've grown up with recessions,
they understand what that looks like. Now, they are paying
these exorbitant college costs. They're trying to buy their first houses,
some of them and can't even get into the market.
They've got insane interest rates in so much competition to
even try to buy, and they're trying to maintain, maintain

(08:39):
a lifestyle. You know, we always say we want to
we want our kids' lives to be a little better
than ours, right, I mean millennials, that is tough to
keep up with your parents when you've got all these
other headwinds working against you. And so yeah, so this
is this could be a game changer for them. My
concern is for both millennials and Gen X if they

(09:01):
have been dealing with debt in issues like that and
all of a sudden this windfall occurs, not having the
background of how to be diversified, how to figure out
what your risk tolerance, how to go from not having
money to invest suddenly to having substantial money to invest.
And I would say, if this is you, or you

(09:23):
think it's coming, make sure you are surrounding yourself with
a team of people that you can trust. I mean,
we mentioned potential tax implications here. Do you have a
good CPA that you're working with. All the tax software
in the world right may not be able to give
you the face to face advice for a situation like this.

(09:43):
So a good CPA that you can trust. And we're
huge fans, of course of fiduciary financial advisors who can say, oh, yeah,
we've helped people walk this path before. This can feel
overwhelming to you when you didn't have money on that
account six months ago and now you look at it
and you're overwhelmed by the balance. Good way, but where
do you get started? We can help, we can help
figure that out well.

Speaker 2 (10:04):
We're also huge advocates of communication that that's a trend
that you hear us talk about constantly, and this is
an opportunity for for those of you that are going
to be passing on wealth to younger generations. I think
opening that that door to to having that conversation sooner
rather than later is very valuable for both parties involved.

(10:25):
Having proper expectations on how you would like to see
those dollars used is something that may sway behavior, And
if you think that it doesn't or won't, then maybe
sit down with an estate planning attorney. There are ways
to map out the financial future for your money when
you're gone via proper estate planning.

Speaker 1 (10:46):
To sort of protect it from things that you would
not want to happen. Say, there's a sun and law
in the equation that maybe makes you a little bit
nervous right there. There are definitely things that you can
do there.

Speaker 2 (10:57):
You could even see it as protecting your your your
children or grandchildren from making bad decisions themselves. Absolutely, if
you think that that might be the case for the
money that you're probably going to be leaving beyond.

Speaker 1 (11:08):
I'm glad you brought up communication, though, because there's a
huge disconnect, and I've seen this many times. Someone will
come in in part of their financial plan, part of
their retirement plan, will be an inheritance. I think my
parents have done well. They think my grandparents have done well.
I think they might have this much. You have no
idea how much they have, no idea how much they're spending,
no idea what they're planning to do with that money.

(11:31):
Yet you're planning on getting it and using it to
help you retire or reach other financial goals. There's a
huge disconnect I think between what many people are expecting
to inherit in the reality and numbers bear that. I'll too,
A lot of people say I'm probably going to get
about three hundred and fifty thousand. In reality, maybe it's
more like two hundred and fifty thousand. Still a windfall,

(11:52):
but not necessarily what you expect it.

Speaker 2 (11:54):
I would call expecting an inheritance to fill in the
blanks for your lack of a retirement plan and a
complete lack of planning.

Speaker 1 (12:01):
Yes, lazy, stupid, I've got other words for it too. Sorry,
it's the truth.

Speaker 3 (12:08):
You know.

Speaker 1 (12:09):
This could be a game changer for a lot of people,
and if you think it's you, please plan for it.
Here's the all Worth Advice the Great Wealth Transfer. It's
going to impact society in countless ways. We would recommend
you talk with your family to figure out whether it's
going to have an impact on you. Coming up next,
we're breaking down how many years you should be financially
prepared to live once you stop working. You're listening to

(12:32):
Simply Whinny, presented by all Worth Financial here in fifty
five KRC, the talk station Financial let me wagneralong with
Steve Ruby. If you can't listen to Simply Money every night,
we've got a daily podcast for you. Just search Simply Money.
It's right there on the iHeart app or wherever you

(12:52):
get your podcasts. Coming up at six forty three, we're
playing everybody's favorite game, Retirement fact or Fiction. I actually
thank you might learn a thing or two from this one.
Do you have any idea how long you'll live or
how long you'll work. I mean, these are questions that
if we had definitive answers, well, it would be scary,
but we could also probably make decisions differently than we do.

(13:13):
We just don't have answers for these things, and it
makes it a lot more difficult to plan.

Speaker 2 (13:18):
Yeah, if you listen regularly, then you've heard me talk
about there's a twenty five percent chance that if you
make it to sixty five and you're a woman, that
you're going to see the age of ninety four. If
you're a man that hit sixty five, twenty five percent
chances you're going to see the age of ninety two.
Recent TIAA study shows that only one in ten US

(13:39):
adults have a clear idea of how long retirees, especially
those around the age of sixty five, actually tend to live,
and their numbers come in what they look at as
a sixty five year old woman has a forty percent
chance of reaching the age of ninety So that's kind
of in line with what we use as far as
building financial plans or concern as well as a lot

(14:00):
of other fiduciary financial planners in the industry that I know,
a sixty five year old man has about a thirty
chance thirty percent chance of living to the age of ninety.

Speaker 1 (14:10):
Less than five percent of sixty five year old women
will not live past seventy. I mean, so it's interesting
you get to these numbers and it's like, gosh, once
you make it to sixty five seventy, the odds of
you living to eighty eighty five ninety are pretty high.
There's a term for this, and it's longevity literacy. And
you have to understand these numbers when you are thinking

(14:33):
about retirement, Otherwise you're cutting yourself short. I mean you're saying, oh,
my grandparents live to the age of sixty five, or
my parents did well. Did they smoke, did they quit moving?
Did they sit on the couch and eat bombonds all
the time? I mean, if your lifestyle is drastically different
than that, if you're active, if you eat healthy. I

(14:54):
just think we blame genetics for so many things, and
a lot of it is like our current lifestyle choices,
and if you're making pretty good ones, the odds of
you living longer are actually pretty good. We were just
talking about a few minutes ago the great wealth transfer.
As we talk about these numbers, another pattern that you
see in them women are outliving men and so women.

(15:17):
If you are listening and your husband or your partner
is the one that controls all of the money and
you just feel like you don't understand, please understand. There's
likely going to be a time when you're the one
controlling the money, when the wealth is transferred to you,
when they're no longer here to be part of the conversation.
And this is why you have to start paying attention,

(15:38):
asking questions, do your research. I'm a huge proponent and
very passionate about empowering women to be part of this conversation,
and this is exhibit A for why they should be.

Speaker 2 (15:50):
It's unfortunate that sometimes it's almost like pulling teeth to
have a couple that I work with agree to come
in together. Yeah. Oftentimes it's one or the other that's
the decision maker, and sometimes you know, for example, a
woman will be on the sidelines. Yeah, I'm comfortable. I
know that they're making the right decisions for our family.
Pump the brakes a little bit. Please, we want you

(16:11):
in this meeting. I want to get to know you.
There's a pretty good chance that you and I are
going to be working together in the future without your
husband in the picture, because you're ten years younger and
women already live longer than men. So it's extremely important
to have your finger on the pulse of what's going
on in your financial plan with your investments and have
that understanding.

Speaker 1 (16:30):
If you're a woman, and if this is my opening
to you, like gosh, I never really thought that I
might be living this long, that I might be forced
with making these financial decisions. What can you do now? Well,
I think there's several things. First of all, if you're
still in your working years, max out those retirement accounts.
I'm a huge fan and this is too surprise to
know one of health savings accounts, Hi says, if you

(16:53):
have a high deductible healthcare plan, I am a huge
proponent of you maxing these out and then making that
that money is invested. Why Well, because we know healthcare
costs are going to be astronomical and retirement and the
longer you live, likely the more expensive things get. Maybe
the more prescriptions that you have, the more specialists that

(17:14):
you have, right, whatever it takes for you to live
more comfortably in those later years, and that does costs
add up. So to have a pot of money that,
by the way, is never taxed triple tax advantage if
you're using it for qualified healthcare expenses is one great
way to set yourself up for longevity and a retirement

(17:37):
where you're not staying up all night every night wondering
am I going to outlive my money?

Speaker 3 (17:42):
Yeah?

Speaker 2 (17:42):
I think that's great, great advice, leveraging the HSA if
you have access to one, making sure that you are saving,
if you have the ability to save, if you're already retired.
I think it's important to come in with an expectation
that we do need to stay invested through retirement because
prior to years ago, we weren't talking about inflation a ton.

Speaker 1 (18:02):
We never talked about it on the show.

Speaker 2 (18:04):
Correct because it was low.

Speaker 1 (18:06):
No one talked about it.

Speaker 2 (18:07):
Even when it's low, it's still a bit of a
silent killer because if you just have cash parked on
the sidelines, then you are guaranteed to safely lose money
via purchasing power risk. What that means is as inflation rises,
the value of your dollars drop. It's one of the
reasons why we invest in retirement because about every twenty

(18:28):
twenty two years, the value the dollar is going to
chop in half. So making sure that you're staying invested
in having an understanding of how you're invested is also
very important to ensure that we're planning for longevity. Remember,
there's a twenty five percent chance that you're going to
see ninety two if you're a man, twenty five percent
chance that you're going to see ninety four if you're
a woman that has reached the age of sixty five.

Speaker 1 (18:50):
Yes, so not letting that catch you off guard, you know,
having a plan for it so that those years are
spent not in worry but enjoying what you can in retirement.
So yes, longevity literacy. If this is something that you
don't have, please please start looking at these statistics. They
can be eye opening.

Speaker 2 (19:09):
You had mentioned genetics. I'm a little biased on this
one because men and my family die at fifty seven
years old. They're just that's that's what happens.

Speaker 1 (19:16):
It's not happening.

Speaker 2 (19:17):
I'm going to blow that out of the water and
people will joke like, you know, nobody lives that long.
Would I say in that situation as well? Now you're
going to live till you one hundred and five because
you're not planning according Yes, exactly. I don't want to
run out of money when you're eighty five.

Speaker 1 (19:29):
Years old, definitely not. Here's the all Worth advice. Having
enough money to last the rest of your life requires
planning and something of financial fiduciary financial pro can help
you with. But it all starts with as literacy of
understanding how long you could likely live. Coming up next,
questions to ask if you end up getting a vacation
home at some point, not buying it, it's passed down

(19:51):
to you. You're listening Disimply Money presented by all Worth
Financial here in fifty five KRC the talk station you're
listening to Simply Money present of my all Worth Financial
I Meani Wagner along with Steve Ruby. One of my
favorite things every summer is going to a friend's lake
house that has been in their family for years, and

(20:13):
the plan someday for that house is that the next
generation will inherit it and that the siblings will share it.
The interesting thing is not all the siblings want it,
so how does all of this work out? Joining us
tonight is our estate planning expert for the law firm
of wood and Lamping, Mark Rekman Mark. Does this situation
sound familiar at all to you?

Speaker 2 (20:34):
Oh?

Speaker 3 (20:34):
Boy, sure you bet. And I think within the last
generation it's been especially so. I think the generation of
our parents was the first generation that had the resources
to buy vacation property. And by the way, it's not
just vacation property that is involved in these multi family,
multi generation changes, but it's also it can be a

(20:55):
family farm or a family residence.

Speaker 1 (20:58):
Sure, so what does this look like and how in Mark,
when you are the person setting up the estate planning.
And I'm just going to go back to the situation
that I just talked about. The parents were assuming that
their children and grandchildren would all want to equally share
in the house. The problem is one family is really

(21:20):
interested in it, one is I don't know, maybe and
maybe out another family not really interested at all. But
the conversation isn't happening. And I'm assuming that communication has
to be a big part of this.

Speaker 3 (21:33):
It is a big part of it. And Amy, I've
been doing this for forty years and I've seen vacation property, cabins, farms,
things like that handed down over the years. And I
don't think I can remember a single case where it
worked out well for the next generation. It's just it's

(21:53):
one of these things that sounds like a great idea.
In practice, there are endless complications. I always discourage my
clients from doing it. I try to get them to
think it through if they really want to try to
do it. I've sort of developed a list of things
to a list of factors for them to consider in
planning ahead. But you most certainly need to sit down

(22:14):
with a family and think this stuff through, hopefully beforehand.
Hopefully by doing that you'll understand the complications. But what
you just said a moment ago is critical, and that
is that not all of the children or grandchildren approach
this joint ownership with the same enthusiasm, with the same
level of affection. They don't all envision the same goals,

(22:39):
and boy, it goes off the trail. It goes off
the rails quickly.

Speaker 1 (22:43):
So Mark, you mentioned that you have kind of a
list of considerations that you would say, hey, if you
are really determined that you're going to leave behind either
this vacation property or this family property to your children
to split equally, here's this list of considerations. Let's talk
through these because I'm sure there's other people listening tonight
who are in the same boat.

Speaker 3 (23:04):
Here, you bet. Item number one is to talk about
who will manage the property. Will one of the owners
be a manager or do you want to hire a
professional manager. Professional managers relieve you of a lot of work,
but they get paid a lot of money. Now, where
the professionals are particularly valuable is if you're renting this
vacation property to defer some of the ownership costs. In

(23:26):
that case, having a professional manager is a big plus,
but you will pay for it.

Speaker 1 (23:31):
That makes sense, And obviously everyone has to be on
the same page as far as who that will be
and how much it will cost in paying them. What
other considerations are they here?

Speaker 3 (23:42):
How will the property, how will the use of the
property be determined? Is a big one amy In other words,
if it's shared ownership, what weeks do I get? What
weeks did my brother get? What holidays are coming up?
And these things can be planned in advance, that you
can set up a schedule, But whatever it is, it's
important to put it in writing. That doesn't mean that

(24:05):
you can't make changes, and certainly people can can trade
off and adjust their times as needed, But having a
plan laid out in advance is a real good idea.
The same thing applies amy to expenses. How are the
expenses going to be covered and plan that out in advance?
Is that are the family members going to pay an

(24:27):
equal amount into a pot? Who's going to manage that pot?
What kind of expenses are paid from that pot as
opposed to expenses that are outside of that pot. I've
had many families where somebody uses the lake house for
the summer and decides that the furniture, that deck furniture
is worn out and they want to buy a new

(24:47):
deck furniture. And the brother from out of town is
in a financial pench. She had a brand new baby.
He doesn't have money to contribute to that. There can
be some real discord and sometimes family members will say, Okay,
pay for the new furniture and it's not coming out
of the pot. But these are the kinds of things
that should be discussed ahead of time and some kind
of rule of thumb established going forward.

Speaker 1 (25:10):
Mark, I'm just sitting here shaking my head listening to
what you're talking about. So many considerations, and I know
how difficult it is to get multiple family members on
the same page. You're listening to simply twenty percented by
all Worth Financial Ammi Wagner long as Steve Ruby, and
we are joined by our state planning expert Mark Reckman
from the law firm of Wood and Lamping, as he
discusses what happens when you want to hand down your

(25:33):
home or the vacation home that your family has enjoyed
so much to the next generation or the generation after that.
It sounds so beautiful, it can be emotional and sentimental
and actually can also be a major headache for that
next generation. So Mark, is you're telling us what we
need to think through. You know, I think one of
those considerations too is how long do we try this

(25:56):
if we're not all on the same page, how long
are we dedicated to trying to make this work?

Speaker 3 (26:03):
Well, that's right, And of course different people have different
levels of usage. So it may look very different to
someone who lives in California and inherited a household of
a Cumberland compared to her sister who lives in Covington,
Kentucky and has a place. And so you just really
need to think through how it affects everybody and understand

(26:24):
how people are going to react. One of the big issues,
of course, is these properties almost always have occasional capital expenses.
And by capital expenses, Amy, I mean major expenses. The
deck wears out, we need a new deck. Well, you
know a deck's going to cost twenty five thousand dollars,
or or what happens if there's significant damage from a storm,

(26:45):
or if it's a lake house and it comes with
a boat, that boat's going to eventually wear out. You're
going to need a new boat. And what kind of
a boat are you going to get upon hoonboat or
a ski boat? You're getting a new or is it
going to be used? Is it a twenty thousand dollars
boat or a fifty thousand dollars ski specialty boat. You
can imagine that there's a whole range of answers depending

(27:06):
on individuals. I may love skiing, my brother may love fishing.
From a pontoon book, you can't do both on the
same kind of boat.

Speaker 1 (27:15):
So much to think through, and I mentioned too Mark
before you know, how long do you make a go
of this if everyone isn't on the same page? But
are there usually an exit strategy sort of built into
these kinds of plans or not, because I imagine that after
trying this for a few years, it happens quite often
where one, if not everyone, is like, this just isn't

(27:38):
working out.

Speaker 3 (27:40):
Well, that's right, and sadly people don't generally think about
what's going to happen if this doesn't work. Everybody feels
good about it, they're excited about it going forward, nobody
stops to think about an exit plan. That sort of
thing should be discussed and put in writing upfront. That
doesn't mean that you can't vary from what you write down,
but at least you have some initial starting point. And

(28:01):
there ought to be some kind of a buyout. And
how that buyout works is tricky because it may very
will be the person being bought out expects if they're
a fifty percent owner, they expect to get fifty percent
of the appraised value of the property, and in fact
the other side may say, look, i'll pay you, I'll
pay you ninety percent of that, but I'm not going

(28:21):
to pay you the whole amount. In other words, you
can't take the property and say your half is worth
half of that, because there are all kinds of expenses
involved in selling the property, real estate commission being one
of the biggest ones. If I go to sell my
If I own a house and go to sell it,
I'm not going to get the appraised value when I
go to the closing, I'm going to get the appraised
value minus a bunch of expenses. And so those are

(28:44):
the kinds of adjustments that need to be made when
you come up with a formula for buyouts.

Speaker 1 (28:50):
So many considerations here, Mark Reckman are state planning expert
of the law firm of Wood and Lamping. So easy
to romanticize, right, this vacation home, this property, all of
the memories and things that are tied up in it,
passing it down to the next generation. But a reality
check here tonight on what really needs to be considered
before moving forward with that sort of plan. You're listening

(29:12):
to Simply Money presented by all Worth Financial Here on
fifty five KRC the talk station. We're listening to Simply
Money percent by all Worth Financial. I mean you Wagner
along with Steve Ruby. If you've got a financial question
you and your spouse are not on the same page about,
or it's keeping you up at night, we can help

(29:33):
you out. 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.
We'll help you figure it out and straight ahead. This
is an easy way to waste money. The next time
you book an appointment or dinner reservation, we're going to
weigh in on our thoughts about this. We'll get to
that in a few minutes, but first it is time
to play retirement fact or fiction. Let's dive right in,

(29:57):
mister Ruby, fact or fiction. Maxing out a four to
one K account too early in the year can impact
your employer match.

Speaker 2 (30:05):
Fact and this one is extremely important. I've seen it
too many times over the span in my career. If
you are fortunate enough to be able to max your
four to one K each year, and you're all excited,
maybe it's the first time you've ever done it, and
your plan doesn't offer what's called a true up, keep
in mind when you hit the limit, your four to
one K contributions are going to shut off. And if
your four oh one K contribution shut off, then that

(30:27):
means you're not contributing. If you're not contributing and you
don't get a true up, then you're not going to
get that company match. A true up is something that
comes back and makes you whole on the assumption that
you were contributing what you needed to to get that match.
So your company with the entire year, Yeah, your company
comes and pays you back. It's it is one of
those things where I have just seen people be devastated.

(30:49):
They're so happy that they hit the limit, and then
they're so sad that they got penalized for doing the
right thing because they didn't get the free money that
they thought they were entitled.

Speaker 1 (30:58):
If you are like gold star person and you're gonna
max out your four O and K before the end
of the year, just reach out to your HR department
and make sure that this is not going to impact
you before you put a ton of money into that
account and then walk away from that free money.

Speaker 2 (31:14):
Absolutely factor fiction. You can have too much money in
a roth IRA.

Speaker 1 (31:19):
Well you could put well hold on I'm gonna say
fiction on this, but with a caveat, you can put
too much money into an IRA.

Speaker 2 (31:28):
Now it can over contribute.

Speaker 1 (31:29):
There are rules about how much you can put in
on an annual basis, and so you can contribute too much,
right that's between you and the irs. That's that issue.
But as far as having too much money in a
Wroth account, absolutely not. I love Wroth account. It's a
huge fan. This is where you pay taxes now when
that money goes into that account and you're essentially locking

(31:51):
in your tax rate today. Now it makes sense if
you are in your early twenties or we've been talking
a lot lately too though about the current tax code
as it is is now sort of these marginal tax
brackets sunsetting right at the end of twenty twenty five
I think is twenty twenty five, twenty twenty six.

Speaker 2 (32:07):
Yeah, twenty twenty six is where I go away at
this point.

Speaker 1 (32:10):
Yeah, we're in lower tax brackets now than we were
ten years ago, and if those sunset, you're going to
go back to a higher tax bracket. So locking in
today's tax rates right now actually make a lot of sense.
So I'm a huge fan of Roth. And here's the
deal down the road. When you're in retirement and you
need to buy a new car, you need to go
on a vacation, you would whatever amount you need for that.

(32:31):
That's the amount you take out. You don't have to
take additional money out because you owe Uncle Sam. At
that point, you've already paid uncles see exactly.

Speaker 2 (32:38):
It grows tax free. That's one of the major components of.

Speaker 1 (32:42):
Absolutely factor fiction. Here's this one, cash is King, and
I might think more people would think this now than
maybe in the past several years.

Speaker 2 (32:51):
I mean, there's different ways to look at this one.
Because cash, sure, if you can't afford to buy something,
then you shouldn't be buying it. But if you have
a credit card and you're using it appropriately, We've had
entire segments on the benefits of using credit cards appropriately
in a way that you never pay interest. There's added
protection that you can get, there's points that you can get,

(33:14):
there's added warranties that you can get. So if you're
using a credit card versus cash to make a purchase,
that's that's great as long as you're not going to
owe interest because you pay that credit card off.

Speaker 1 (33:26):
I look at this one a little bit differently as
cash is king. Rather than investing money right I'm going
to keep it in cash, especially right now, because I
can actually earn not significant money, but three four five
percent having that money parked in a hygyeld savings account.
That sounds like a great return in very little risk,

(33:48):
and I understand that, but then your risk is going
broke safely because inflation will in time eat up that much.

Speaker 2 (33:55):
I like that we interpreted this question in two different ways.

Speaker 1 (33:58):
Like we're in two different languages.

Speaker 2 (33:59):
Here is a resounding fiction.

Speaker 1 (34:02):
Yea.

Speaker 2 (34:03):
It is easy to answer that question.

Speaker 1 (34:05):
Because yours is fact.

Speaker 3 (34:07):
Yeah.

Speaker 2 (34:07):
If you're sitting in cash, then your money is guaranteed
those slowly lose purchasing power. The only way to keep
up with inflation over the long term is actually to invest,
So cash is certainly not king. I would say fiction
when we interpreted it as Amy's question. I like that
that happened fact or fiction. There is no such thing
as good debt. Ah.

Speaker 1 (34:26):
I'm actually gonna say facts on this. Some people like
to be more nuanced, and I think there are levels
of bad debt. Like I would say, bad debt is
credit card debt. You never need it, there's no benefit
of it. Some people might say that student loan debt
isn't bad debt because you're getting an education out of it,

(34:47):
and studies show that likely that college education will afford
you the opportunity to make more money over the course
of your life. However, people go into too much debt
for that. Other people say that a mortgage isn't necessarily
bad debt, but I think ultimately, especially for those who
are getting closer and closer to retirement, any kind of
debt that you can get rid of is good. So

(35:09):
any kind of debt is bad debt. That's how I
look at them coming up next and warning about an
easy way to throw money down the drain. The next
time you book that appointment, 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 Ruby.

(35:31):
It happens, has happened to all of us. You book
an appointment with a doctor, you make a reservation, and
then for whatever reason, like you don't go or you
show up really late, you're forced to not go. The
problem with that is it's not just that you're not
showing up. Now you might be paying a price because
you didn't show up.

Speaker 2 (35:50):
Yeah. Now, not just for doctor's offices, but now restaurants, hotels,
there's Salon's, personal trainers, even more people that they're they're
picking up on the opportunity to charge sometimes extravagant fees
for you canceling appointments.

Speaker 1 (36:06):
You mentioned it started with doctor's offices, and it was like,
you know, it's expensive. I can't even imagine what you know. Doctors,
you know, make a pretty good hourly wage. So if
you're not showing up right, that doesn't work out really well. Uh,
and so it's kind of started there, but yeah, to
your point, it's moved to a lot of other professions.
More beauty professionals actually are charging cancelation fees sixteen percent

(36:29):
on squares payment platform last year. That was up from
five percent and twenty twenty one. Kind of started during
the pandemic and it's becoming more and more popular. I
booked an appointment this week for over the weekend and
it said if you don't cancel, if you cancel within
twenty four hours, you're on the hook for fifty dollars.

Speaker 2 (36:48):
Okay, yeah, so fifty bucks.

Speaker 1 (36:49):
It's like, wait, what what if I get sick? What
if something happens to one of my kids. It does
give me a little anxiety sometimes when I'm booking an
appointment and I see that I'm like, oh, I hope
nothing comes up.

Speaker 2 (36:59):
Yeah, that's frustrating because there are legitimate reasons why we
may miss an appointment. This is something that took off
in late twenty twenty when businesses are absolutely rocked by
COVID shutdowns. There's technology that can streamline the payments and
it's made it easier to track late arrivals and no
shows when you're a business owner. So a lot of

(37:19):
these platforms are actually normalizing fees that these small businesses
can actually turn the tables on those of us that
need to miss an appointment. And when I say need,
that is the frustrating part because if you have a
family health emergency, then you're in a situation where you
simply can't show up to that appointment, and now you
need to pay the entire fee for something that you

(37:40):
didn't receive.

Speaker 1 (37:41):
This is interesting even barber shops. Right, the number of
barber shops that are now collecting payment information in advance
since twenty twenty forty three percent, and as a result,
they've seen forty five percent fewer cancelations. You've paid for
the haircut, you're going to show up. I see this
one both ways for the consumer. If something legitimate come up,
it's incredibly annoying to have to pay this fee. On

(38:03):
the other hand, for small business owners who are trying
to count on a certain income, you've booked an appointment,
they expect you to be there, So just to understand,
if you're booking these appointments, you could see this fee
and you need to plan accordingly. Thanks for listening tonight.
You've been listening to Simply Money, presented by all Worth
Financial here in fifty five krs, the talk station