Episode Transcript
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Speaker 1 (00:06):
Tonight. Sometimes it just takes a little while for markets
to digest big news, and let's get into what happens
after it does some good perspective for you. You're listening
to simply Money presented by all Worth Financial, I mean,
you Wagner along with Bob Sponseller. Sometimes I can't even
remember what I ate for lunch yesterday, Bob. So I'm
just gonna set the stage and remind everyone. Right, we'll
(00:28):
go back a little over a month to April second,
and this is we'll set the scene in the White House,
Rose Garden when President Trump announced his liberation day, right,
and he had that whole board you referred to it
on the show many times of all the countries and
the reciprocal tariffs that were going to be enforced moving forward,
(00:51):
and markets well took a little bit to digest that.
Speaker 2 (00:57):
When that big board came out, Amy, and I was
watching it live. I mean I could see jaws drop
you on live television. Yeah, I mean I think everybody
expected these terrorists, but nobody expected one hundred and thirty
countries and a big, large board, you know, simultaneous.
Speaker 1 (01:13):
Visual of it all, right, Yeah.
Speaker 2 (01:14):
Yeah, yeah, So understandably there was quite a big reaction
after that board came out, nearly a twelve percent drop
in the S and P five hundred over a week,
just one week. And why uncertainty. That's what we talk
about all the time. That's what usually moves markets in
the short term uncertainty. But what a difference, you know,
(01:36):
a week made. The market recovered about ten percent in
just one day. So a lot of lessons to be
learned here over the last thirty days. And thankfully it
only takes thirty days of time right now for folks
that have been paying attention to learn from some of
the things we talk about all the time on this
(01:57):
show about what really moves markets and what should not
cause you to make short term, drastic, emotionally driven decisions.
Speaker 1 (02:06):
Yeah, and I think one thing that you have to
understand as a long term investor about the markets is
they're always looking six months out and kind of want
to know exactly what can be expected to happen. You
and I were talking about this earlier today. We both
have kids who are brilliant and super hard workers, but
(02:28):
we have one in each of our families that and
I was kind of using this as an example. Needs
to know before we go on vacation two weeks in advance,
exactly where she's sitting on the plane and who she's
sitting next to. Right, she wants to know what to
prepare for. I think the markets are very similar. You
(02:49):
throw a curveball and it's a little bit hard for
people like that to digest. Right, same with the markets.
It was like, Okay, we've been talking about tariffs. We've
been talking about but in black and white, right when
markets and investors are looking at those boards, right seeing
all of the reciprocal tariffs that we will now actually
(03:10):
not only be enforcing, but companies are going to have
to figure their way through. You know that through a
huge curveball of uncertainty into the equation. You could no
longer look out six months because you were having to
digest what was going to happen in the next twenty
four hours, and it was nothing but uncertainty on the
horizon there.
Speaker 2 (03:31):
Yeah, Amy, I think I said this the day after
this big, you know, tariff announcement was made to me,
this was just the beginning of the negotiation process. And thankfully,
when we look at the actual behavior of most of
our clients, almost all of them at all worth. In
addition to studies we've seen from big self directed investment
(03:52):
firms like Charles Schwab and Vanguard and folks like that,
I think a lot of people understood what was going
on and they didn't panic. They you know, most investors
did not panic. And I think that's for a couple
of reasons. I think one, most people understand that all
of these this tariff policy is driven by one person, unilaterally,
(04:13):
the President of the United States. He can put these
tariffs on and he can immediately take them off. And
I think people are now used to the way President
Trump kind of rolls, so to speak. It's very unconventional.
It can be unsettling for some. But people did not
take the bait. They did not take the big media
(04:34):
headline driven bait. And thankfully most people stayed fully invested
during this time. And obviously, you know, looking back thirty days,
that was that was the right course of action.
Speaker 1 (04:45):
Well, and you and I can can do the show
day in and day out and preach certain things that
we think are important to understand as long term investors,
but I really appreciate when the markets then kind of
prove it out to us, right, And we've always said, hey, listen,
the best days in the market are often on the
heels of the worst days in the market, and no
one can predict that they're coming.
Speaker 3 (05:06):
Right.
Speaker 1 (05:07):
So you go back to the beginning of April. April second,
right when those tariffs were announced. You know what you mentioned,
market tanks down nearly twelve percent in one week. What
happens then just a week later, Okay, well, now we're
stepping back from those tariffs. We're getting a reprieve. Markets
are up about ten percent, how to, raised a lot
of what they had lost over the course of the
(05:28):
past week. If you had gotten out, there would be
no way to know, oh, hey, this is the day
I should jump back in, and you would have missed
the recovery. You would have locked in the losses and
not then regained what smart long term investors and it
to your point. You know, we could see this research
from self directed investors and many of them just were like, okay, Like,
(05:50):
no one likes to go through this uncertainty. No one
likes to see your four oh one K balance go down.
Yet I think people are starting to understand the historical
perspective that these markets will recover. You're listening to simply
money presented by all Worth Financial. I mean, you Wagner,
along with Bob Sponseller, taking you in the way back machine,
really just way back a month ago, to give you
(06:11):
some perspective on how markets react and how if you
truly understand them. I have an investor, it can be
a lot easier to stomach the ride.
Speaker 2 (06:24):
Well in the spirit of truly understanding what moves markets
over a reasonable period of time, Amy, I can say
this with one hundred percent confidence because this never changes.
Speaker 4 (06:34):
Here's what moves markets up or down.
Speaker 2 (06:38):
Employment, inflation, interest rates, and earnings.
Speaker 4 (06:43):
That that's the fundamental data.
Speaker 2 (06:45):
If you take the headlines and whatever the president says
versus what he does and how the media reacts and
all that, those four things are what impact the market.
And let's not forget you know, the President didn't come
out and put but you know, all of these tariffs
on a ninety day hold. I mean, that's what really
moved the markets back up. He put the tariffs on,
(07:07):
he took them right back off, and we're in this
negotiating phase right now. The market seems to think that
this is going to sort itself out. We still don't know.
I mean, there have not been any major trade deals announced,
So you know, we're not saying the proverbial coast is
clear here. But when you look at inflation, interest rates, employment,
(07:32):
and corporate earnings, we're still sitting right now in a
pretty healthy economy, Amy, and I think that's why the markets,
both the bond and the stock market have responded in kind.
Speaker 1 (07:44):
There are political events, there are global events that will
rock the markets from time to time. I've been doing
the show long enough. This is not my first rodeo. Right,
We've dealt with Brexit, We've dealt with debt ceiling fights,
government shutdowns, you name it, you know, COVID, and we've
seen markets needing time to digest what exactly is happening
(08:06):
and then responding and rebounding, and Bob to your point,
what they actually respond to is the fundamentals of our
companies going to find their waste through whatever the situation
put in front of them, is to continue to make money.
And time and time again, not only the American economy,
(08:27):
but the global economy has been incredibly resilient and rebounded,
not only rebounded, but responded coming back to new highs
after they were at Low's well.
Speaker 2 (08:37):
And why well, while companies always adjust, as you talk
about all the time, and it's always a great point
when you make it, I think in this case, the
President of the United States is adjusting as well. I mean,
he's getting data, he's listening to his advisors. I think
I mentioned on the show last week I heard a
very good interview with the CEO of Ford Motor Company.
Speaker 4 (08:57):
Just talking about how all of this is in pacting.
Speaker 2 (09:00):
The auto industry, and the CEOs of Ford and GM
and other they're in there talking to the president and
his administration and they're working through this stuff.
Speaker 4 (09:10):
So I think everybody adjusts.
Speaker 2 (09:13):
No one is interested in throwing this economy into a
steep recession and ur Mageddon and all the things that
we might hear about in the news. It's a process,
it takes time. We're still in the middle of the process.
Very interesting to watch. But again, I think the last
thirty days is a wonderful case in point. Yes, educational
(09:34):
example of why you don't panic and make drastic short
term decisions with your money.
Speaker 3 (09:41):
Yeah.
Speaker 1 (09:41):
I think April second going back was uh, oh, what's
worst case scenario here?
Speaker 3 (09:46):
Right?
Speaker 1 (09:47):
How are companies going to respond? And then as the
past few weeks have you know, unfolded now that I
think there's kind of building confidence that maybe that worst
case scenario isn't where we are. You know, there's certainly
still things that need to be figured out. We're kind
of in a pause. Uh, you know, to your point,
(10:07):
President Trump, some many of these companies coming to the
negotiating table. We'll see how that all plays out. But
regardless of how it plays out, what we do know
is markets will respond in the near term, but then
in the long term rebound to new highs. They've done
one hundred percent of the time.
Speaker 2 (10:26):
Yeah, So again, kudos to all of our clients, and
I think most folks out there that have been well
educated did not respond emotionally, and we live to fight
an under another day. Amy after a very volatile and
unsettling thirty days in the US financial markets.
Speaker 1 (10:46):
We're not saying this is yeah, we're not saying this
is over yet. But man, if you look at the
last wave and just really truly digest what we've all
been through collectively as investors over the past month, it
was a lot. But you know, I check the S
and P five hundred year today to almost every day
and talking with clients, and it's amazing to see how
(11:07):
it's rebounded over the course of just the past few weeks.
Here's the all Worth advice man. The market's job is
to digest chaos. Your job is to understand your plan,
to stay focused on it, and to understand that you
are a long term investor. Coming up next, if you've
got the dollars to do this one thing, you're going
to go from walking toward financial freedom to maybe sprinting
(11:29):
toward it. The problem is only two and ten investors
are doing it. We'll tell you what it is. Next.
You're listening to Simply Money presented by all Worth Financial
here on fifty five krs. The toxation. You're listening to
Simply Money presented by all Worth Financial. I mean you
Wagner along with Bob spond Seller. If you miss our
(11:50):
show one night, you don't have to miss anything we
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got a daily podcast. Just search Simply Money right there
on the iHeart app or wherever you get your podcasts.
Coming up at six forty three. It is really hard
to make heads or tails of all the documents sitting
around your house. What do you need? What can you
get rid of? Will help you sort through all of
(12:12):
that coming up next, you know, Bob, I've always kind
of scratched my head on this one. But we know
we have a retirement crisis in our country, and yet
the government sets a cap on how much we can
put into our retirement accounts. But there is a way
that those who are getting closer to retirement can actually
(12:32):
set aside some extra dollars. Problem is a lot a
lot of people are taking advantage of it.
Speaker 2 (12:37):
Yeah, thanks to Secure two point zero, the four oh
one K catch up limit has jumped to eleven two
hundred and fifty dollars for workers AD sixty to sixty
three in twenty twenty five. So that brings the maximum
deferral amount all the way up to thirty four seven
hundred and fifty dollars pre tax for these investors, or
(12:58):
even after tax if you put it in a wrath.
So there are opportunities. And Amy, I will call this
segment and you talk about this all the time, and
I love it. Control what you could control. Yeah, you know,
the last segment we talked about dealing what you can't control.
This is one hundred percent what you can control if
in fact you've got the discretionary income you know to
(13:21):
put to work here. So let's continue to get into
some of this. I mean, only fifteen percent of employees
participated in any kind of catchup contributions in twenty twenty three,
according to a latest survey from Vanguard that we got
on investor behavior and retirement plans.
Speaker 4 (13:39):
Fifteen percent is pretty low.
Speaker 1 (13:40):
Amy, Yeah, and I want us at this stage for
why I think these ketchup contributions are so important. I'm
dealing with several young families right now who are kind
of just getting into investing, and I think of one
of them who just had their second baby, so both
of their kids are super young, and they're trying to
get everything laid out right. They're putting money into HSA's,
(14:03):
they're making sure it's invested, they're maxing out kind of
their roth contributions, and they're fo o o kay. They're
making some really smart decisions as investors. But you and
I know, as parents, the reality as these kids grow
up and they start playing travel sports and maybe then
you need you babysitters to help. Would they get incredibly expensive,
(14:23):
and so sometimes we start to fall behind where we
had planned on being when it comes to saving for retirement.
Life happens along the way we get that these ketchup
contributions are a great way, and most of the time
the way that they time out is kids are in college,
are out of college, and it's like, Okay, we got
to get serious about saving for ourselves if we want
(14:47):
work to be an option at some point, right, not
an obligation. And about that time the government says, okay,
you can start saving more. Right, the limits on how
and how much you can save are going up and
makes me a little bit sad that not more investors
are taking advantage of this, because I think the scenario
that they just laid out is one that a lot
(15:09):
of people find themselves in.
Speaker 2 (15:11):
It comes down to sitting down with your fiduciary financial
advisor and taking stock at where you are in terms
of being on track to retire in the manner in
which you'd like to retire, and then making adjustments accordingly.
So a lot of people do that. Most people, unfortunately
don't do that. And when you've got these opportunities to
(15:33):
take advantage of these catchup provisions, you know, to your point,
once the kids are out of school and maybe the
mortgage is paid off and you do have that discretionary
income with which to do some retirement savings and do
so on a tax advanced advantage basis.
Speaker 4 (15:50):
What you don't want to do is just fall into.
Speaker 2 (15:52):
That default provision of well, we're going to take you know,
three vacations instead of one, or we're going to buy
a more expensive.
Speaker 4 (15:58):
Car, or we're going to do style creep. Yeah, lifestyle creep.
Speaker 2 (16:02):
If the money is in the account, you feel like
you can spend it, and you got to make sure
you're taking advantage of some opportunities here to put money
away when you're in.
Speaker 4 (16:13):
Your fifties and sixties, so you.
Speaker 2 (16:15):
Aren't regretting that you didn't do it when you're in
your late seventies, because obviously at that point it's too late.
Speaker 1 (16:21):
Hopefully my husband doesn't get mad at me for saying
this here, but he turns fifty next year and I'm
already making sure that we are budgeting for the fact
that we will put the Ketchup contributions in. I'm like, sweet,
we've made it to Ketchup contribution time. Let's make sure
we're taking.
Speaker 4 (16:38):
So Jason's golf trip has already been canceled.
Speaker 1 (16:40):
Is that what you're saying, There is no golf trip
for his fiftieth birthday, There are only ketchup contributions.
Speaker 4 (16:46):
I wanted to tell him, I'll let you deliver that news.
Speaker 1 (16:50):
That's fine. And I also like the fact that you
know this this added window now that we're giving investors
between the age of sixteen and sixty three, which by
the way, I think is so rarerandomly arbitrary. We're going
to give it to you for three years and then
the Medicare age isn't until sixty five. But you can't
do it when you're sixty four or sixty five. I
don't necessarily understand that, but you know, it's like, we
(17:13):
got a color within the lines that we're given, so
let's steak full advantage of it.
Speaker 2 (17:18):
Yeah, and you don't have to wait till you're sixty
to do some of these things. A lot of catchup
provisions start at age fifty. To your point. One of
them is IRA contributions. You get an extra thousand dollars
a year to put either into a regular or a
raw IRA. The contribution limit to both of those regular
or raw IRA accounts goes up to eight thousand dollars
(17:39):
from seven thousand dollars for folks that are fifty or
older this year. And then there's also catch up provisions
for the HSA accounts. Amy, and I'm not going to
steal your thunder on that one. Tell us about HSA accounts, well.
Speaker 1 (17:55):
You know, I love these so much. Triple tax advantage,
nothing like them. If a high deductible health care plan
makes sense right for you and your family, I love these.
And in the strategy that I employ right with an
HSA is I make sure that we have extra cash
reserves on the sidelines and then we actually pay for
(18:15):
our medical bills out of those cash reserves as we go.
Money in the HSA is invested. It has to be
invested to truly kind of maximize this account, but then
it just grows tax free. And if you take it
out for qualified healthcare expenses at some point in your life,
and you and I have seen this many times in
working with clients. They can be the healthiest people in
(18:35):
the world, but at some point they're going to need
a specialist, they're going to need extra medication, whatever it is,
and those HSA funds that have grown in some cases
for decades and can be a great source of income
in retirement.
Speaker 2 (18:50):
Well, and unfortunately, most people are not using HSA accounts
in the way that you and your husband are. Only
eighteen percent of participants are actually investing the dollars in
their HSA accounts. I think the rest of the folks
amy are spending those dollars as soon as they hit
the account. And you talk about this all the time,
(19:10):
you know, running the numbers on the benefits of investing
that money and putting it in there when you're in
your thirties, forties, and fifties, and taking full advantage of
all the tax benefits for later on down the road
when the likelihood of needing bigger dollars higher numbers for
healthcare costs goes up and up.
Speaker 4 (19:30):
We've got work to do in that area.
Speaker 2 (19:32):
Again, because of only eighteen percent of people that have
an HSA account are investing those dollars for the long term.
Speaker 1 (19:39):
Yeah, and I think you know, the key here to
understand is if you feel like you're behind in saving
for retirement, you're not alone. There's lots of people who
find themselves in that situation. But there are things like
ketchup contributions, a new ketchup contribution that this Secure Act
two point zero allows starting at the age of sixty.
There's health savings accounts that you can can maximize. So
(20:01):
it's employing strategies. They can say, Okay, maybe we're a
little behind now, but man, we are going to be
super intentional. We're going to focus on saving for retirement
and we're going to take full advantage of all the
opportunities that are out there. And the numbers show us
not enough people are taking advantage of them. Here's the
all Worth advice. The amount of money you're going to
have in the future could be a lot higher if
(20:21):
you are taking advantage of these catchup contributions. Come be
up next to the pros and cons of leaving property
to your heirs. You're listening to Simply Money presented by
all Worth Financial here on fifty five krs the talk station.
You're listening to Simply Money presented by all Worth Financial.
I mean you Wagner along with Bob's bond seller. Oftentimes
(20:45):
someone ends up in our offices and they're trying to
figure out their talk through some estate planning, and either
they have their own property where they raise their children
and have all these beautiful memories in or maybe it's
a vacation property or or something like that, and they're
thinking of leaving that then to their children. Is that
(21:05):
a good idea from an estate planning perspective? Joining us
tonight as our good friend Britt Scarce, you know, but
I think there's a lot of things to think through.
But I also think you you cannot divorce from this
conversation the fact that there's a lot of emotions tied
up in pieces of property and our homes and our
(21:25):
vacation homes, and that's kind of where you got to
start when you're thinking through should we leave this to
our children?
Speaker 3 (21:32):
I would agree there are there are a lot of
pros and cons and things to think through. I mean,
there's liquidity issues, there's you know, uh, the location of
the property. You know, there's expenses associated with inheriting a property.
There's also some finance, you know, some family dynamics that
sometimes make this a challenge as well. I mean we
(21:54):
can kind of jump into, you know, several of these,
but you know, when you leave a home to your heirs,
I mean that is something that is it's an ill
liquid asset, which means they need to do something with it, right,
They're going to need to have the wherewithal to know
what to do with it. Are they going to keep
it as a rental property? Are they going to want
(22:15):
to live in it? Do they simply you know, is
this in a location that is far away from where
they currently live and they have no desire of living
in that property to where they have somewhat of a
burden of having to figure out how to you know,
sell the property or liquidated or you know that sort
(22:35):
of thing. So there are multiple things to think about here.
Speaker 2 (22:39):
Yeah, Britt, I think you and Amy bring up some
excellent points. And as I listened to you talk, I've
had you know, clients come into the office and talk
about you know, and unfortunately it's after someone passes away.
But you know, one one one child's ill liquid asset
can quickly become another child's liquid asset, meaning not all
(22:59):
thekids are going to agree on how to handle that
vacation home. Because the kids might be spread out all
over the country. Some people might need or want the
immediate liquidity input of being able to you know, convert
that property to cash. Other kids are deeply emotionally tied
to that vacation property. And so my message to clients
(23:22):
is always, let's have this conversation well in advance, while
everybody's healthy, everybody's mind is clear, and let's think through
what everybody wants in the situation so we don't come
up with some unexpected turbulence, so to speak, when one
spouse or the other passes away.
Speaker 3 (23:41):
That's exactly right. And you know the other thing that
I see sometimes people inherit a property and they would
love to keep it. They would love to keep it
as a vacation home, or it's you know, the family
home that they grew up in, and they would love
to keep it and move into it. But not all
of the error necessarily have the financial capability of being
(24:04):
able to actually keep that home. You got to think
of all the different costs that are going to be
involved with owning a piece of real estate, even if
it's inherited. I've actually seen some folks that were ill
prepared and ill equipped financially, even with their financial knowledge
and their financial skills to handle the weight of an
(24:26):
inherited property. I saw one client many years ago inherited
a free and clear property. When their parents passed, they
moved into the property and immediately every year and a
half or so they refinanced and pulled cash out of it.
And they did it so many times that eventually they
had no more equity in the home and they ended
up losing the home to foreclosure.
Speaker 1 (24:47):
Wow, that's a fantastic point to make for right. And
I also am a huge proponent of communication right when
you're still here. I have some very dear friends whose
parents have a league house downing, Kentucky. We go down
once a year. We love this property. There's four or
five different siblings, and so the parents have always said, hey,
(25:09):
would we pass away, We want you guys to keep
this lake house and we want you to come here together.
That's what the parents say they want, but they've never
asked actually the kids how they want that property handled.
And there's a couple of families that go down all
the time and love it, and one or two families
that could actually use proceeds from that home pretty quickly
if into everyone's on a different page, and so we think, hey,
(25:33):
we can often you know, as the parents kind of
romanticize what will happen after we're gone, and we're leaving
property behind. But it's important to hear from the next
generation about really what they want and what might serve
them best as.
Speaker 3 (25:46):
Well exactly and can they afford the upkeep of that home?
Can they afford the property taxes? Can they afford the utilities,
the home insurance, the maintenance, you know, the homeowners' association fees,
all of those sorts of things. Is that going to
end up becoming you know, a burden to them now?
You know, they certainly have you know, the opportunities to uh,
(26:08):
you know, to also interact with family members, family dynamics.
I have seen many a closing where people are where
the inherited home is being sold and all the siblings
have to come and sign you know, the documents to
sell the property, and it is everyone's upset with each
(26:30):
other because one wanted to keep the property, the others
wanted the money immediately. You know this this can sometimes
really be you know, a real, a real challenge rather than.
Speaker 2 (26:43):
Well, Amy, you brought up the point I was going
to make and look as someone who my wife and
I now have three adult kids, one in their early thirties,
two in their mid twenties, and yeah, the whole Norman
rockwell romanticized view of this is very palatable to us
as parents. You know, a great place to gather the family.
(27:04):
Everybody comes once a year, and oh, by the way,
we pay.
Speaker 4 (27:08):
For everyone to come and do them.
Speaker 2 (27:10):
You know, it's great for mom and dad to have
a place to collect all the kids and future grandkids
and all be together. But to the point both of
you have made once we're gone, you know, one or
more the kids might not be able to even afford
to travel to that place, much less pay for the upkeep.
So again, and you we've all used the word communication,
(27:33):
it's important to sit down and really think through and
take the emotion out of what you know feels wonderful
to mom and dad and think through what's really going
to happen or likely happen.
Speaker 4 (27:45):
When one mom and dad aren't aren't around anymore.
Speaker 3 (27:48):
Yes, now, there are also some great pros. You know,
being able to inherit a home that you can move into,
and by having no mortgage and having the ability to
be able to afford the upkeep and so forth, and
having that continue to appreciate and grow in value, that's
(28:09):
something that you could eventually sell. And there certainly. I
don't want to get too deep into tax advice or anything,
but there's you know, some step up basis and so
forth that you know they can benefit from, and there
could be a real blessing there, you know, as far
as you know financially, it could actually leave certain errors
(28:30):
could be you know, left way better off by being
able to inherit a seven or eight hundred thousand dollars
property that they can live in that they might not
have been able to afford to purchase, you know, on
their own if it wasn't inherited.
Speaker 1 (28:43):
Lots of pros and cons to think through. You bring
up some great points. The key here is communication, and
I would say two way communication right between whoever's leaving
that property and those who might inherit it as well,
so that they are inheriting it with eyes wide open. Again,
great perspective from scares. You're listening to simply Money presented
by all Worth Financial here on fifty five krs. The txtation.
(29:09):
You're listening to simply Money presented by all Worth Financial.
I Memi Wagner along with Bob Sponsor or. Do you
have a financial question you need a little help figuring out?
There's a red button you can click on while you're
listening to the show. It is right there on the
iHeart app record your question and it's coming straight to us.
Speaker 4 (29:24):
Bob.
Speaker 1 (29:24):
I have a very dear friend who several years ago
I took some classes online got into like all that
fun shwe organization and stuff, and she ended up coming
to me and saying.
Speaker 4 (29:36):
Wait, funk funk shway, what what is that?
Speaker 1 (29:41):
It's essentially like how to make your house more I
don't know zen and flow better. Point being, we ended
up in my office at some point and she was like,
what is happening in here? There were realms and reams
of paper statements? I had Duke Energy bills from nineteen
ninety not I mean I had everything in.
Speaker 4 (30:02):
This is in your office.
Speaker 1 (30:03):
This was in my office several years.
Speaker 4 (30:07):
It was bee okay.
Speaker 1 (30:09):
It was the opposite of what she was trying to achieve.
But I think there's a lot of people who find
themselves insues similar to mine, which is what do we need,
what do we need to keep? What can we get
rid of? You probably do not need those Douke Energy
statements from nineteen ninety nine anymore, but let's talk through
what's worth keeping and what's not.
Speaker 2 (30:30):
Yeah, I think that I think this comes down to
just personality differences between different folks. You know, there's folks
that want to save and organize everything, and I know
you're a highly organized person, Amy, and that's to your benefit.
I mean, you get a lot done and you do
a great job. And I think there are people that
are like that. And then there are people like, hey,
(30:51):
if I don't need this piece of paper in the
next thirty seconds, it's out of here. And those are
the people that have no idea what their account balances are.
You know, if they get audited for tax purposes, they
can't find their records. So we've got to find a
happy medium here. So let's get into it. Monthly statements.
Once you've checked your monthly bank statement and your credit
card statements against your records, you know you can go
(31:13):
ahead and shred them after a year.
Speaker 4 (31:15):
You don't have to keep.
Speaker 2 (31:16):
Forty or fifty years worth of bank statements or credit
card statements. So there's some reasonable reasonable lists around reasonableness,
say that fifteen times around that unwanted offers and old
receipts like pre approved credit card offers and receipts that
aren't needed, you don't want them, you didn't.
Speaker 4 (31:36):
Use the credit card offer.
Speaker 2 (31:38):
There is zero reason to keep all that Just get
in your kitchen to just collect and collect, get rid
of that stuff and shred it because it does have
information on there that you don't want people to get
a hold of.
Speaker 4 (31:50):
So there are.
Speaker 2 (31:52):
Cleanliness and organizational reasons for a lot of this, but
there's also identity theft reasons around declubing a lot of
these financial records.
Speaker 1 (32:02):
Yeah, we kind of talk often too about you know,
certain things that have to do with your money and
your financial planning that are worth revisiting about once a year.
I think this kind of audit of your financial records
should happen about once a year because one thing too
is documents expire over time. Maybe you have old insurance
(32:23):
policies they are no longer you know, in service, there contracts,
old warranties.
Speaker 3 (32:29):
You know.
Speaker 1 (32:30):
I keep paperwork on appliances when we first get them,
and then we're two appliances past the old one and
they're still here. Is this is probably a look into
my life that no one ever needed. But I do
think there's people out there too who are like I
might need this, you know, I don't want to not
have it, but you know, again, every year, every couple
(32:52):
of years, it's worth going through all of it and
getting rid of what doesn't apply anymore.
Speaker 4 (32:58):
I think another important one is legal documents.
Speaker 2 (33:01):
If you've got wills, trust, powers of attorney, things that
you did fifteen, twenty, thirty years ago, and then you've
updated those documents and replaced them, get rid of the
old ones. There is no reason to keep them. And
in fact, if you do keep those lying around in
a folder, you've got the you've got the possibility of
really bringing some confusion to the table, you know, at
(33:23):
the point where you do pass away and people are
looking through these folders saying what does the real will
and trust say?
Speaker 4 (33:30):
And if you've got something.
Speaker 2 (33:31):
Dated thirty years ago in a paper file and your
attorney has an electronic file of what the real documents are,
that can create some confusion. And I've actually seen that
happen amy with clients in their errors their kids.
Speaker 3 (33:45):
Yeah.
Speaker 1 (33:45):
And when it comes to tax documents, okay, this is
where you hold onto your returns and all those supporting
documents for at least seven years. I have a file
and I put you know, the current year's tax returns
in push the years back behind it, and after we
get to seven years, I have now started shudding those
documents because you don't need them anymore. Property ownership all
(34:09):
documents related to any property you own, deeds, receipts for
major home improvements for as long as you own the property,
and even for maybe seven years for tax purposes beyond
maybe when you sell it. Those are all worth keeping
your hands on.
Speaker 2 (34:26):
Yeah, and then another one we want to cover is
investment statements.
Speaker 4 (34:29):
I mean, the good thing now, amy.
Speaker 2 (34:30):
Is virtually all advisors that you're going to work with,
everyone keeps this stuff electronically archived. Even if you're a
self directed investor through like a Schwab or Fidelity or
what have you, you can always pull your monthly statements
up online through a PDF file.
Speaker 4 (34:46):
There is not a reason.
Speaker 2 (34:47):
To keep boxes in boxes, these statements laying around because
again they have your name and account number on them,
and to say nothing of taking up.
Speaker 4 (34:57):
Room in your house.
Speaker 2 (34:58):
So yeah, good, good reason to just keep what you
need to keep and get rid of everything else.
Speaker 1 (35:03):
Yeah, you know you mentioned to state planning, but it's
important that your updated estate planning documents are easy to
be found, communicated with your loved ones, updated passwords, everything
like that easily communicated so that people know where to
find them when they need them. Here's the all Worth advice.
Use these tips not only safeguard your information, but also
(35:24):
make sure your financial plans are up to date and
reflect your long term goals. Coming up next, a little
dose of Wagner wisdom. You're listening to Simply Money presented
by all Worth Financial. Here on fifty five krs the
talk station. You're listening to Simply Money presented by all
Worth Financially, I meet me Wagner along with colabsponseller. I
(35:46):
guess one thing you need to know if you come
into contact with me is anything that you share with
me will likely then be used on this show. My
husband and I recently went to dinner with some good
friends of ours who these are smart financial people. They
have been long term investors forever. They plan for things,
(36:08):
and they were a little bit beside themselves because they
have a boat. They've had one for years and unexpectedly
it needed a new motor to the tune of twenty
something thousands of dollars. Right in Not everyone necessarily has
a boat, but I think we all have something that
(36:28):
we know will inevitably come down the pike that is
a large ticket thing that needs to be addressed. And
where does that money come from? And you know, again,
these people have a good plan, They have cash reserves.
Even though they had a little heartburn over the fact
that they had to spend that much money on something
they didn't want to spend money on, they knew where
(36:48):
it was coming from. And I cannot stress enough this
is why it's so important to have that emergency cash
sitting there in liquid where you can get to it easily.
Speaker 4 (36:58):
Twenty thousand dollars is a nice motor amy. I'd hardly
call that an emergency. But good for you, good.
Speaker 1 (37:04):
For your favor, right, not an emergency.
Speaker 4 (37:06):
But if you will do it.
Speaker 2 (37:08):
Yeah, that's the lesson here, right, If you're if you're
going to do that, have the money set aside for
that specific purpose.
Speaker 4 (37:14):
So that's great.
Speaker 3 (37:15):
Yeah.
Speaker 1 (37:16):
Yeah. And you know what I've seen far too often,
whether it's a legitimate emergency or something that you want
to take advantage of or something that would impact your lifestyle,
is when you do not have that cash sitting on
the sidelines, then it's where do we go. People go
to take out equity in their homes and pay way
(37:36):
too much an interest on that. You put it on
your credit card and triple the interest you would be
paying at that point. Or you start looking at well,
i could take this money out of my four one
k I'm essentially taking it, you know alone, from myself,
and then I'll pay it back over time. And all
of those options have long term impacts. They might solve
(37:58):
your problem short term, but this is why you got
to have that emergency fund.
Speaker 2 (38:03):
Well, or the places where you buy these items are
more than happy to finance them for you at like
a twelve.
Speaker 4 (38:08):
Percent interest rate.
Speaker 2 (38:10):
Had I've had that come up, you know, I don't
like it when it happens, but it comes up once
or twice a year. Somebody will just drop this on
me in an annual review. Oh, by the way, we
just bought a one hundred and fifteen thousand dollars RV
and we financed it at eleven point eight percent for
seven years. And I'm like, I just gulp, and I'm
like what so, Yeah, it's it's very expensive to make
(38:34):
impulse purchases, which I think is your point where you've
not planned ahead and it sounds like in this case
your clients did they had the money set aside.
Speaker 4 (38:44):
It's all good. I hope they enjoy the new motor.
Speaker 1 (38:47):
Yeah. Well, and you know, on a more serious note, residents,
it's an unexpected medical bill, right, an unexpected diagnosis, something
happening to your home, your vehicle. You never know. But
I'm telling you, having this money sitting there on the sidelines,
even though it's not necessarily invested in making you a
ton of money, will more than pay itself off in
dividends later on. Thanks for listening. You've been listening to
(39:08):
Simply Money, presented by all Worth Financial here on fifty
five krs the talk station
Tonight. Sometimes it just takes a little while for markets
to digest big news, and let's get into what happens
after it does some good perspective for you. You're listening
to simply Money presented by all Worth Financial, I mean,
you Wagner along with Bob Sponseller. Sometimes I can't even
remember what I ate for lunch yesterday, Bob. So I'm
just gonna set the stage and remind everyone. Right, we'll
(00:28):
go back a little over a month to April second,
and this is we'll set the scene in the White House,
Rose Garden when President Trump announced his liberation day, right,
and he had that whole board you referred to it
on the show many times of all the countries and
the reciprocal tariffs that were going to be enforced moving forward,
(00:51):
and markets well took a little bit to digest that.
Speaker 2 (00:57):
When that big board came out, Amy, and I was
watching it live. I mean I could see jaws drop
you on live television. Yeah, I mean I think everybody
expected these terrorists, but nobody expected one hundred and thirty
countries and a big, large board, you know, simultaneous.
Speaker 1 (01:13):
Visual of it all, right, Yeah.
Speaker 2 (01:14):
Yeah, yeah, So understandably there was quite a big reaction
after that board came out, nearly a twelve percent drop
in the S and P five hundred over a week,
just one week. And why uncertainty. That's what we talk
about all the time. That's what usually moves markets in
the short term uncertainty. But what a difference, you know,
(01:36):
a week made. The market recovered about ten percent in
just one day. So a lot of lessons to be
learned here over the last thirty days. And thankfully it
only takes thirty days of time right now for folks
that have been paying attention to learn from some of
the things we talk about all the time on this
(01:57):
show about what really moves markets and what should not
cause you to make short term, drastic, emotionally driven decisions.
Speaker 1 (02:06):
Yeah, and I think one thing that you have to
understand as a long term investor about the markets is
they're always looking six months out and kind of want
to know exactly what can be expected to happen. You
and I were talking about this earlier today. We both
have kids who are brilliant and super hard workers, but
(02:28):
we have one in each of our families that and
I was kind of using this as an example. Needs
to know before we go on vacation two weeks in advance,
exactly where she's sitting on the plane and who she's
sitting next to. Right, she wants to know what to
prepare for. I think the markets are very similar. You
(02:49):
throw a curveball and it's a little bit hard for
people like that to digest. Right, same with the markets.
It was like, Okay, we've been talking about tariffs. We've
been talking about but in black and white, right when
markets and investors are looking at those boards, right seeing
all of the reciprocal tariffs that we will now actually
(03:10):
not only be enforcing, but companies are going to have
to figure their way through. You know that through a
huge curveball of uncertainty into the equation. You could no
longer look out six months because you were having to
digest what was going to happen in the next twenty
four hours, and it was nothing but uncertainty on the
horizon there.
Speaker 2 (03:31):
Yeah, Amy, I think I said this the day after
this big, you know, tariff announcement was made to me,
this was just the beginning of the negotiation process. And thankfully,
when we look at the actual behavior of most of
our clients, almost all of them at all worth. In
addition to studies we've seen from big self directed investment
(03:52):
firms like Charles Schwab and Vanguard and folks like that,
I think a lot of people understood what was going
on and they didn't panic. They you know, most investors
did not panic. And I think that's for a couple
of reasons. I think one, most people understand that all
of these this tariff policy is driven by one person, unilaterally,
(04:13):
the President of the United States. He can put these
tariffs on and he can immediately take them off. And
I think people are now used to the way President
Trump kind of rolls, so to speak. It's very unconventional.
It can be unsettling for some. But people did not
take the bait. They did not take the big media
(04:34):
headline driven bait. And thankfully most people stayed fully invested
during this time. And obviously, you know, looking back thirty days,
that was that was the right course of action.
Speaker 1 (04:45):
Well, and you and I can can do the show
day in and day out and preach certain things that
we think are important to understand as long term investors,
but I really appreciate when the markets then kind of
prove it out to us, right, And we've always said, hey, listen,
the best days in the market are often on the
heels of the worst days in the market, and no
one can predict that they're coming.
Speaker 3 (05:06):
Right.
Speaker 1 (05:07):
So you go back to the beginning of April. April second,
right when those tariffs were announced. You know what you mentioned,
market tanks down nearly twelve percent in one week. What
happens then just a week later, Okay, well, now we're
stepping back from those tariffs. We're getting a reprieve. Markets
are up about ten percent, how to, raised a lot
of what they had lost over the course of the
(05:28):
past week. If you had gotten out, there would be
no way to know, oh, hey, this is the day
I should jump back in, and you would have missed
the recovery. You would have locked in the losses and
not then regained what smart long term investors and it
to your point. You know, we could see this research
from self directed investors and many of them just were like, okay, Like,
(05:50):
no one likes to go through this uncertainty. No one
likes to see your four oh one K balance go down.
Yet I think people are starting to understand the historical
perspective that these markets will recover. You're listening to simply
money presented by all Worth Financial. I mean, you Wagner,
along with Bob Sponseller, taking you in the way back machine,
really just way back a month ago, to give you
(06:11):
some perspective on how markets react and how if you
truly understand them. I have an investor, it can be
a lot easier to stomach the ride.
Speaker 2 (06:24):
Well in the spirit of truly understanding what moves markets
over a reasonable period of time, Amy, I can say
this with one hundred percent confidence because this never changes.
Speaker 4 (06:34):
Here's what moves markets up or down.
Speaker 2 (06:38):
Employment, inflation, interest rates, and earnings.
Speaker 4 (06:43):
That that's the fundamental data.
Speaker 2 (06:45):
If you take the headlines and whatever the president says
versus what he does and how the media reacts and
all that, those four things are what impact the market.
And let's not forget you know, the President didn't come
out and put but you know, all of these tariffs
on a ninety day hold. I mean, that's what really
moved the markets back up. He put the tariffs on,
(07:07):
he took them right back off, and we're in this
negotiating phase right now. The market seems to think that
this is going to sort itself out. We still don't know.
I mean, there have not been any major trade deals announced,
So you know, we're not saying the proverbial coast is
clear here. But when you look at inflation, interest rates, employment,
(07:32):
and corporate earnings, we're still sitting right now in a
pretty healthy economy, Amy, and I think that's why the markets,
both the bond and the stock market have responded in kind.
Speaker 1 (07:44):
There are political events, there are global events that will
rock the markets from time to time. I've been doing
the show long enough. This is not my first rodeo. Right,
We've dealt with Brexit, We've dealt with debt ceiling fights,
government shutdowns, you name it, you know, COVID, and we've
seen markets needing time to digest what exactly is happening
(08:06):
and then responding and rebounding, and Bob to your point,
what they actually respond to is the fundamentals of our
companies going to find their waste through whatever the situation
put in front of them, is to continue to make money.
And time and time again, not only the American economy,
(08:27):
but the global economy has been incredibly resilient and rebounded,
not only rebounded, but responded coming back to new highs
after they were at Low's well.
Speaker 2 (08:37):
And why well, while companies always adjust, as you talk
about all the time, and it's always a great point
when you make it, I think in this case, the
President of the United States is adjusting as well. I mean,
he's getting data, he's listening to his advisors. I think
I mentioned on the show last week I heard a
very good interview with the CEO of Ford Motor Company.
Speaker 4 (08:57):
Just talking about how all of this is in pacting.
Speaker 2 (09:00):
The auto industry, and the CEOs of Ford and GM
and other they're in there talking to the president and
his administration and they're working through this stuff.
Speaker 4 (09:10):
So I think everybody adjusts.
Speaker 2 (09:13):
No one is interested in throwing this economy into a
steep recession and ur Mageddon and all the things that
we might hear about in the news. It's a process,
it takes time. We're still in the middle of the process.
Very interesting to watch. But again, I think the last
thirty days is a wonderful case in point. Yes, educational
(09:34):
example of why you don't panic and make drastic short
term decisions with your money.
Speaker 3 (09:41):
Yeah.
Speaker 1 (09:41):
I think April second going back was uh, oh, what's
worst case scenario here?
Speaker 3 (09:46):
Right?
Speaker 1 (09:47):
How are companies going to respond? And then as the
past few weeks have you know, unfolded now that I
think there's kind of building confidence that maybe that worst
case scenario isn't where we are. You know, there's certainly
still things that need to be figured out. We're kind
of in a pause. Uh, you know, to your point,
(10:07):
President Trump, some many of these companies coming to the
negotiating table. We'll see how that all plays out. But
regardless of how it plays out, what we do know
is markets will respond in the near term, but then
in the long term rebound to new highs. They've done
one hundred percent of the time.
Speaker 2 (10:26):
Yeah, So again, kudos to all of our clients, and
I think most folks out there that have been well
educated did not respond emotionally, and we live to fight
an under another day. Amy after a very volatile and
unsettling thirty days in the US financial markets.
Speaker 1 (10:46):
We're not saying this is yeah, we're not saying this
is over yet. But man, if you look at the
last wave and just really truly digest what we've all
been through collectively as investors over the past month, it
was a lot. But you know, I check the S
and P five hundred year today to almost every day
and talking with clients, and it's amazing to see how
(11:07):
it's rebounded over the course of just the past few weeks.
Here's the all Worth advice man. The market's job is
to digest chaos. Your job is to understand your plan,
to stay focused on it, and to understand that you
are a long term investor. Coming up next, if you've
got the dollars to do this one thing, you're going
to go from walking toward financial freedom to maybe sprinting
(11:29):
toward it. The problem is only two and ten investors
are doing it. We'll tell you what it is. Next.
You're listening to Simply Money presented by all Worth Financial
here on fifty five krs. The toxation. You're listening to
Simply Money presented by all Worth Financial. I mean you
Wagner along with Bob spond Seller. If you miss our
(11:50):
show one night, you don't have to miss anything we
talk about. Or maybe you've got a friend who missed
something and you want to share it with them. We've
got a daily podcast. Just search Simply Money right there
on the iHeart app or wherever you get your podcasts.
Coming up at six forty three. It is really hard
to make heads or tails of all the documents sitting
around your house. What do you need? What can you
get rid of? Will help you sort through all of
(12:12):
that coming up next, you know, Bob, I've always kind
of scratched my head on this one. But we know
we have a retirement crisis in our country, and yet
the government sets a cap on how much we can
put into our retirement accounts. But there is a way
that those who are getting closer to retirement can actually
(12:32):
set aside some extra dollars. Problem is a lot a
lot of people are taking advantage of it.
Speaker 2 (12:37):
Yeah, thanks to Secure two point zero, the four oh
one K catch up limit has jumped to eleven two
hundred and fifty dollars for workers AD sixty to sixty
three in twenty twenty five. So that brings the maximum
deferral amount all the way up to thirty four seven
hundred and fifty dollars pre tax for these investors, or
(12:58):
even after tax if you put it in a wrath.
So there are opportunities. And Amy, I will call this
segment and you talk about this all the time, and
I love it. Control what you could control. Yeah, you know,
the last segment we talked about dealing what you can't control.
This is one hundred percent what you can control if
in fact you've got the discretionary income you know to
(13:21):
put to work here. So let's continue to get into
some of this. I mean, only fifteen percent of employees
participated in any kind of catchup contributions in twenty twenty three,
according to a latest survey from Vanguard that we got
on investor behavior and retirement plans.
Speaker 4 (13:39):
Fifteen percent is pretty low.
Speaker 1 (13:40):
Amy, Yeah, and I want us at this stage for
why I think these ketchup contributions are so important. I'm
dealing with several young families right now who are kind
of just getting into investing, and I think of one
of them who just had their second baby, so both
of their kids are super young, and they're trying to
get everything laid out right. They're putting money into HSA's,
(14:03):
they're making sure it's invested, they're maxing out kind of
their roth contributions, and they're fo o o kay. They're
making some really smart decisions as investors. But you and
I know, as parents, the reality as these kids grow
up and they start playing travel sports and maybe then
you need you babysitters to help. Would they get incredibly expensive,
(14:23):
and so sometimes we start to fall behind where we
had planned on being when it comes to saving for retirement.
Life happens along the way we get that these ketchup
contributions are a great way, and most of the time
the way that they time out is kids are in college,
are out of college, and it's like, Okay, we got
to get serious about saving for ourselves if we want
(14:47):
work to be an option at some point, right, not
an obligation. And about that time the government says, okay,
you can start saving more. Right, the limits on how
and how much you can save are going up and
makes me a little bit sad that not more investors
are taking advantage of this, because I think the scenario
that they just laid out is one that a lot
(15:09):
of people find themselves in.
Speaker 2 (15:11):
It comes down to sitting down with your fiduciary financial
advisor and taking stock at where you are in terms
of being on track to retire in the manner in
which you'd like to retire, and then making adjustments accordingly.
So a lot of people do that. Most people, unfortunately
don't do that. And when you've got these opportunities to
(15:33):
take advantage of these catchup provisions, you know, to your point,
once the kids are out of school and maybe the
mortgage is paid off and you do have that discretionary
income with which to do some retirement savings and do
so on a tax advanced advantage basis.
Speaker 4 (15:50):
What you don't want to do is just fall into.
Speaker 2 (15:52):
That default provision of well, we're going to take you know,
three vacations instead of one, or we're going to buy
a more expensive.
Speaker 4 (15:58):
Car, or we're going to do style creep. Yeah, lifestyle creep.
Speaker 2 (16:02):
If the money is in the account, you feel like
you can spend it, and you got to make sure
you're taking advantage of some opportunities here to put money
away when you're in.
Speaker 4 (16:13):
Your fifties and sixties, so you.
Speaker 2 (16:15):
Aren't regretting that you didn't do it when you're in
your late seventies, because obviously at that point it's too late.
Speaker 1 (16:21):
Hopefully my husband doesn't get mad at me for saying
this here, but he turns fifty next year and I'm
already making sure that we are budgeting for the fact
that we will put the Ketchup contributions in. I'm like, sweet,
we've made it to Ketchup contribution time. Let's make sure
we're taking.
Speaker 4 (16:38):
So Jason's golf trip has already been canceled.
Speaker 1 (16:40):
Is that what you're saying, There is no golf trip
for his fiftieth birthday, There are only ketchup contributions.
Speaker 4 (16:46):
I wanted to tell him, I'll let you deliver that news.
Speaker 1 (16:50):
That's fine. And I also like the fact that you
know this this added window now that we're giving investors
between the age of sixteen and sixty three, which by
the way, I think is so rarerandomly arbitrary. We're going
to give it to you for three years and then
the Medicare age isn't until sixty five. But you can't
do it when you're sixty four or sixty five. I
don't necessarily understand that, but you know, it's like, we
(17:13):
got a color within the lines that we're given, so
let's steak full advantage of it.
Speaker 2 (17:18):
Yeah, and you don't have to wait till you're sixty
to do some of these things. A lot of catchup
provisions start at age fifty. To your point. One of
them is IRA contributions. You get an extra thousand dollars
a year to put either into a regular or a
raw IRA. The contribution limit to both of those regular
or raw IRA accounts goes up to eight thousand dollars
(17:39):
from seven thousand dollars for folks that are fifty or
older this year. And then there's also catch up provisions
for the HSA accounts. Amy, and I'm not going to
steal your thunder on that one. Tell us about HSA accounts, well.
Speaker 1 (17:55):
You know, I love these so much. Triple tax advantage,
nothing like them. If a high deductible health care plan
makes sense right for you and your family, I love these.
And in the strategy that I employ right with an
HSA is I make sure that we have extra cash
reserves on the sidelines and then we actually pay for
(18:15):
our medical bills out of those cash reserves as we go.
Money in the HSA is invested. It has to be
invested to truly kind of maximize this account, but then
it just grows tax free. And if you take it
out for qualified healthcare expenses at some point in your life,
and you and I have seen this many times in
working with clients. They can be the healthiest people in
(18:35):
the world, but at some point they're going to need
a specialist, they're going to need extra medication, whatever it is,
and those HSA funds that have grown in some cases
for decades and can be a great source of income
in retirement.
Speaker 2 (18:50):
Well, and unfortunately, most people are not using HSA accounts
in the way that you and your husband are. Only
eighteen percent of participants are actually investing the dollars in
their HSA accounts. I think the rest of the folks
amy are spending those dollars as soon as they hit
the account. And you talk about this all the time,
(19:10):
you know, running the numbers on the benefits of investing
that money and putting it in there when you're in
your thirties, forties, and fifties, and taking full advantage of
all the tax benefits for later on down the road
when the likelihood of needing bigger dollars higher numbers for
healthcare costs goes up and up.
Speaker 4 (19:30):
We've got work to do in that area.
Speaker 2 (19:32):
Again, because of only eighteen percent of people that have
an HSA account are investing those dollars for the long term.
Speaker 1 (19:39):
Yeah, and I think you know, the key here to
understand is if you feel like you're behind in saving
for retirement, you're not alone. There's lots of people who
find themselves in that situation. But there are things like
ketchup contributions, a new ketchup contribution that this Secure Act
two point zero allows starting at the age of sixty.
There's health savings accounts that you can can maximize. So
(20:01):
it's employing strategies. They can say, Okay, maybe we're a
little behind now, but man, we are going to be
super intentional. We're going to focus on saving for retirement
and we're going to take full advantage of all the
opportunities that are out there. And the numbers show us
not enough people are taking advantage of them. Here's the
all Worth advice. The amount of money you're going to
have in the future could be a lot higher if
(20:21):
you are taking advantage of these catchup contributions. Come be
up next to the pros and cons of leaving property
to your heirs. You're listening to Simply Money presented by
all Worth Financial here on fifty five krs the talk station.
You're listening to Simply Money presented by all Worth Financial.
I mean you Wagner along with Bob's bond seller. Oftentimes
(20:45):
someone ends up in our offices and they're trying to
figure out their talk through some estate planning, and either
they have their own property where they raise their children
and have all these beautiful memories in or maybe it's
a vacation property or or something like that, and they're
thinking of leaving that then to their children. Is that
(21:05):
a good idea from an estate planning perspective? Joining us
tonight as our good friend Britt Scarce, you know, but
I think there's a lot of things to think through.
But I also think you you cannot divorce from this
conversation the fact that there's a lot of emotions tied
up in pieces of property and our homes and our
(21:25):
vacation homes, and that's kind of where you got to
start when you're thinking through should we leave this to
our children?
Speaker 3 (21:32):
I would agree there are there are a lot of
pros and cons and things to think through. I mean,
there's liquidity issues, there's you know, uh, the location of
the property. You know, there's expenses associated with inheriting a property.
There's also some finance, you know, some family dynamics that
sometimes make this a challenge as well. I mean we
(21:54):
can kind of jump into, you know, several of these,
but you know, when you leave a home to your heirs,
I mean that is something that is it's an ill
liquid asset, which means they need to do something with it, right,
They're going to need to have the wherewithal to know
what to do with it. Are they going to keep
it as a rental property? Are they going to want
(22:15):
to live in it? Do they simply you know, is
this in a location that is far away from where
they currently live and they have no desire of living
in that property to where they have somewhat of a
burden of having to figure out how to you know,
sell the property or liquidated or you know that sort
(22:35):
of thing. So there are multiple things to think about here.
Speaker 2 (22:39):
Yeah, Britt, I think you and Amy bring up some
excellent points. And as I listened to you talk, I've
had you know, clients come into the office and talk
about you know, and unfortunately it's after someone passes away.
But you know, one one one child's ill liquid asset
can quickly become another child's liquid asset, meaning not all
(22:59):
thekids are going to agree on how to handle that
vacation home. Because the kids might be spread out all
over the country. Some people might need or want the
immediate liquidity input of being able to you know, convert
that property to cash. Other kids are deeply emotionally tied
to that vacation property. And so my message to clients
(23:22):
is always, let's have this conversation well in advance, while
everybody's healthy, everybody's mind is clear, and let's think through
what everybody wants in the situation so we don't come
up with some unexpected turbulence, so to speak, when one
spouse or the other passes away.
Speaker 3 (23:41):
That's exactly right. And you know the other thing that
I see sometimes people inherit a property and they would
love to keep it. They would love to keep it
as a vacation home, or it's you know, the family
home that they grew up in, and they would love
to keep it and move into it. But not all
of the error necessarily have the financial capability of being
(24:04):
able to actually keep that home. You got to think
of all the different costs that are going to be
involved with owning a piece of real estate, even if
it's inherited. I've actually seen some folks that were ill
prepared and ill equipped financially, even with their financial knowledge
and their financial skills to handle the weight of an
(24:26):
inherited property. I saw one client many years ago inherited
a free and clear property. When their parents passed, they
moved into the property and immediately every year and a
half or so they refinanced and pulled cash out of it.
And they did it so many times that eventually they
had no more equity in the home and they ended
up losing the home to foreclosure.
Speaker 1 (24:47):
Wow, that's a fantastic point to make for right. And
I also am a huge proponent of communication right when
you're still here. I have some very dear friends whose
parents have a league house downing, Kentucky. We go down
once a year. We love this property. There's four or
five different siblings, and so the parents have always said, hey,
(25:09):
would we pass away, We want you guys to keep
this lake house and we want you to come here together.
That's what the parents say they want, but they've never
asked actually the kids how they want that property handled.
And there's a couple of families that go down all
the time and love it, and one or two families
that could actually use proceeds from that home pretty quickly
if into everyone's on a different page, and so we think, hey,
(25:33):
we can often you know, as the parents kind of
romanticize what will happen after we're gone, and we're leaving
property behind. But it's important to hear from the next
generation about really what they want and what might serve
them best as.
Speaker 3 (25:46):
Well exactly and can they afford the upkeep of that home?
Can they afford the property taxes? Can they afford the utilities,
the home insurance, the maintenance, you know, the homeowners' association fees,
all of those sorts of things. Is that going to
end up becoming you know, a burden to them now?
You know, they certainly have you know, the opportunities to uh,
(26:08):
you know, to also interact with family members, family dynamics.
I have seen many a closing where people are where
the inherited home is being sold and all the siblings
have to come and sign you know, the documents to
sell the property, and it is everyone's upset with each
(26:30):
other because one wanted to keep the property, the others
wanted the money immediately. You know this this can sometimes
really be you know, a real, a real challenge rather than.
Speaker 2 (26:43):
Well, Amy, you brought up the point I was going
to make and look as someone who my wife and
I now have three adult kids, one in their early thirties,
two in their mid twenties, and yeah, the whole Norman
rockwell romanticized view of this is very palatable to us
as parents. You know, a great place to gather the family.
(27:04):
Everybody comes once a year, and oh, by the way,
we pay.
Speaker 4 (27:08):
For everyone to come and do them.
Speaker 2 (27:10):
You know, it's great for mom and dad to have
a place to collect all the kids and future grandkids
and all be together. But to the point both of
you have made once we're gone, you know, one or
more the kids might not be able to even afford
to travel to that place, much less pay for the upkeep.
So again, and you we've all used the word communication,
(27:33):
it's important to sit down and really think through and
take the emotion out of what you know feels wonderful
to mom and dad and think through what's really going
to happen or likely happen.
Speaker 4 (27:45):
When one mom and dad aren't aren't around anymore.
Speaker 3 (27:48):
Yes, now, there are also some great pros. You know,
being able to inherit a home that you can move into,
and by having no mortgage and having the ability to
be able to afford the upkeep and so forth, and
having that continue to appreciate and grow in value, that's
(28:09):
something that you could eventually sell. And there certainly. I
don't want to get too deep into tax advice or anything,
but there's you know, some step up basis and so
forth that you know they can benefit from, and there
could be a real blessing there, you know, as far
as you know financially, it could actually leave certain errors
(28:30):
could be you know, left way better off by being
able to inherit a seven or eight hundred thousand dollars
property that they can live in that they might not
have been able to afford to purchase, you know, on
their own if it wasn't inherited.
Speaker 1 (28:43):
Lots of pros and cons to think through. You bring
up some great points. The key here is communication, and
I would say two way communication right between whoever's leaving
that property and those who might inherit it as well,
so that they are inheriting it with eyes wide open. Again,
great perspective from scares. You're listening to simply Money presented
by all Worth Financial here on fifty five krs. The txtation.
(29:09):
You're listening to simply Money presented by all Worth Financial.
I Memi Wagner along with Bob Sponsor or. Do you
have a financial question you need a little help figuring out?
There's a red button you can click on while you're
listening to the show. It is right there on the
iHeart app record your question and it's coming straight to us.
Speaker 4 (29:24):
Bob.
Speaker 1 (29:24):
I have a very dear friend who several years ago
I took some classes online got into like all that
fun shwe organization and stuff, and she ended up coming
to me and saying.
Speaker 4 (29:36):
Wait, funk funk shway, what what is that?
Speaker 1 (29:41):
It's essentially like how to make your house more I
don't know zen and flow better. Point being, we ended
up in my office at some point and she was like,
what is happening in here? There were realms and reams
of paper statements? I had Duke Energy bills from nineteen
ninety not I mean I had everything in.
Speaker 4 (30:02):
This is in your office.
Speaker 1 (30:03):
This was in my office several years.
Speaker 4 (30:07):
It was bee okay.
Speaker 1 (30:09):
It was the opposite of what she was trying to achieve.
But I think there's a lot of people who find
themselves insues similar to mine, which is what do we need,
what do we need to keep? What can we get
rid of? You probably do not need those Douke Energy
statements from nineteen ninety nine anymore, but let's talk through
what's worth keeping and what's not.
Speaker 2 (30:30):
Yeah, I think that I think this comes down to
just personality differences between different folks. You know, there's folks
that want to save and organize everything, and I know
you're a highly organized person, Amy, and that's to your benefit.
I mean, you get a lot done and you do
a great job. And I think there are people that
are like that. And then there are people like, hey,
(30:51):
if I don't need this piece of paper in the
next thirty seconds, it's out of here. And those are
the people that have no idea what their account balances are.
You know, if they get audited for tax purposes, they
can't find their records. So we've got to find a
happy medium here. So let's get into it. Monthly statements.
Once you've checked your monthly bank statement and your credit
card statements against your records, you know you can go
(31:13):
ahead and shred them after a year.
Speaker 4 (31:15):
You don't have to keep.
Speaker 2 (31:16):
Forty or fifty years worth of bank statements or credit
card statements. So there's some reasonable reasonable lists around reasonableness,
say that fifteen times around that unwanted offers and old
receipts like pre approved credit card offers and receipts that
aren't needed, you don't want them, you didn't.
Speaker 4 (31:36):
Use the credit card offer.
Speaker 2 (31:38):
There is zero reason to keep all that Just get
in your kitchen to just collect and collect, get rid
of that stuff and shred it because it does have
information on there that you don't want people to get
a hold of.
Speaker 4 (31:50):
So there are.
Speaker 2 (31:52):
Cleanliness and organizational reasons for a lot of this, but
there's also identity theft reasons around declubing a lot of
these financial records.
Speaker 1 (32:02):
Yeah, we kind of talk often too about you know,
certain things that have to do with your money and
your financial planning that are worth revisiting about once a year.
I think this kind of audit of your financial records
should happen about once a year because one thing too
is documents expire over time. Maybe you have old insurance
(32:23):
policies they are no longer you know, in service, there contracts,
old warranties.
Speaker 3 (32:29):
You know.
Speaker 1 (32:30):
I keep paperwork on appliances when we first get them,
and then we're two appliances past the old one and
they're still here. Is this is probably a look into
my life that no one ever needed. But I do
think there's people out there too who are like I
might need this, you know, I don't want to not
have it, but you know, again, every year, every couple
(32:52):
of years, it's worth going through all of it and
getting rid of what doesn't apply anymore.
Speaker 4 (32:58):
I think another important one is legal documents.
Speaker 2 (33:01):
If you've got wills, trust, powers of attorney, things that
you did fifteen, twenty, thirty years ago, and then you've
updated those documents and replaced them, get rid of the
old ones. There is no reason to keep them. And
in fact, if you do keep those lying around in
a folder, you've got the you've got the possibility of
really bringing some confusion to the table, you know, at
(33:23):
the point where you do pass away and people are
looking through these folders saying what does the real will
and trust say?
Speaker 4 (33:30):
And if you've got something.
Speaker 2 (33:31):
Dated thirty years ago in a paper file and your
attorney has an electronic file of what the real documents are,
that can create some confusion. And I've actually seen that
happen amy with clients in their errors their kids.
Speaker 3 (33:45):
Yeah.
Speaker 1 (33:45):
And when it comes to tax documents, okay, this is
where you hold onto your returns and all those supporting
documents for at least seven years. I have a file
and I put you know, the current year's tax returns
in push the years back behind it, and after we
get to seven years, I have now started shudding those
documents because you don't need them anymore. Property ownership all
(34:09):
documents related to any property you own, deeds, receipts for
major home improvements for as long as you own the property,
and even for maybe seven years for tax purposes beyond
maybe when you sell it. Those are all worth keeping
your hands on.
Speaker 2 (34:26):
Yeah, and then another one we want to cover is
investment statements.
Speaker 4 (34:29):
I mean, the good thing now, amy.
Speaker 2 (34:30):
Is virtually all advisors that you're going to work with,
everyone keeps this stuff electronically archived. Even if you're a
self directed investor through like a Schwab or Fidelity or
what have you, you can always pull your monthly statements
up online through a PDF file.
Speaker 4 (34:46):
There is not a reason.
Speaker 2 (34:47):
To keep boxes in boxes, these statements laying around because
again they have your name and account number on them,
and to say nothing of taking up.
Speaker 4 (34:57):
Room in your house.
Speaker 2 (34:58):
So yeah, good, good reason to just keep what you
need to keep and get rid of everything else.
Speaker 1 (35:03):
Yeah, you know you mentioned to state planning, but it's
important that your updated estate planning documents are easy to
be found, communicated with your loved ones, updated passwords, everything
like that easily communicated so that people know where to
find them when they need them. Here's the all Worth advice.
Use these tips not only safeguard your information, but also
(35:24):
make sure your financial plans are up to date and
reflect your long term goals. Coming up next, a little
dose of Wagner wisdom. You're listening to Simply Money presented
by all Worth Financial. Here on fifty five krs the
talk station. You're listening to Simply Money presented by all
Worth Financially, I meet me Wagner along with colabsponseller. I
(35:46):
guess one thing you need to know if you come
into contact with me is anything that you share with
me will likely then be used on this show. My
husband and I recently went to dinner with some good
friends of ours who these are smart financial people. They
have been long term investors forever. They plan for things,
(36:08):
and they were a little bit beside themselves because they
have a boat. They've had one for years and unexpectedly
it needed a new motor to the tune of twenty
something thousands of dollars. Right in Not everyone necessarily has
a boat, but I think we all have something that
(36:28):
we know will inevitably come down the pike that is
a large ticket thing that needs to be addressed. And
where does that money come from? And you know, again,
these people have a good plan, They have cash reserves.
Even though they had a little heartburn over the fact
that they had to spend that much money on something
they didn't want to spend money on, they knew where
(36:48):
it was coming from. And I cannot stress enough this
is why it's so important to have that emergency cash
sitting there in liquid where you can get to it easily.
Speaker 4 (36:58):
Twenty thousand dollars is a nice motor amy. I'd hardly
call that an emergency. But good for you, good.
Speaker 1 (37:04):
For your favor, right, not an emergency.
Speaker 4 (37:06):
But if you will do it.
Speaker 2 (37:08):
Yeah, that's the lesson here, right, If you're if you're
going to do that, have the money set aside for
that specific purpose.
Speaker 4 (37:14):
So that's great.
Speaker 3 (37:15):
Yeah.
Speaker 1 (37:16):
Yeah. And you know what I've seen far too often,
whether it's a legitimate emergency or something that you want
to take advantage of or something that would impact your lifestyle,
is when you do not have that cash sitting on
the sidelines, then it's where do we go. People go
to take out equity in their homes and pay way
(37:36):
too much an interest on that. You put it on
your credit card and triple the interest you would be
paying at that point. Or you start looking at well,
i could take this money out of my four one
k I'm essentially taking it, you know alone, from myself,
and then I'll pay it back over time. And all
of those options have long term impacts. They might solve
(37:58):
your problem short term, but this is why you got
to have that emergency fund.
Speaker 2 (38:03):
Well, or the places where you buy these items are
more than happy to finance them for you at like
a twelve.
Speaker 4 (38:08):
Percent interest rate.
Speaker 2 (38:10):
Had I've had that come up, you know, I don't
like it when it happens, but it comes up once
or twice a year. Somebody will just drop this on
me in an annual review. Oh, by the way, we
just bought a one hundred and fifteen thousand dollars RV
and we financed it at eleven point eight percent for
seven years. And I'm like, I just gulp, and I'm
like what so, Yeah, it's it's very expensive to make
(38:34):
impulse purchases, which I think is your point where you've
not planned ahead and it sounds like in this case
your clients did they had the money set aside.
Speaker 4 (38:44):
It's all good. I hope they enjoy the new motor.
Speaker 1 (38:47):
Yeah. Well, and you know, on a more serious note, residents,
it's an unexpected medical bill, right, an unexpected diagnosis, something
happening to your home, your vehicle. You never know. But
I'm telling you, having this money sitting there on the sidelines,
even though it's not necessarily invested in making you a
ton of money, will more than pay itself off in
dividends later on. Thanks for listening. You've been listening to
(39:08):
Simply Money, presented by all Worth Financial here on fifty
five krs the talk station
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