Simply Money

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Episode Transcript

(00:05):
Tonight, why timing stock purchases oftenfails, Plus why we care about the
major company that's ending. It's fouroh one k match. You're listening to
Simply Money, presented by all WorthFinancial. I'm Steve Sprovac along with Steve
Ruby. You know, in theworld of stocks, there are winners every
year, there are losers every year, and sometimes the same stocks that were

(00:28):
winners are now losers and vice versastocks you might own in your portfolio.
Just check this out. Last year'slosers pretty much are this year's winners.
Last year's worst twenty five stocks inthe S and P five hundred have gained
an average of thirty two and ahalf percent so far this year, the

(00:48):
worst are the best. Last year'stwenty five best have lost an average just
under one percent. Fun. Yeah, this isn't a surprise to me.
This is usually the way it worked. Yet a lot of people out there
think, Wow, these were thegood stocks last year. These are the
ones I want to own. Yeah, these are always going to be the
winner. So look at Navidio forexample. It was up two hundred and

(01:10):
fourteen percent through last week. That'sthe artificial intelligence company. Yeah, last
year in the Video was among theworst. It was down fifty percent,
yeah, fifty percent, which underperformedfour hundred and seventy five of the other
stocks within the S and P fivehundred. Similar story with blue chip stocks
that make up the Dow Jones.Last year's worst performer was sales Force.

(01:32):
It was down forty eight percent sofar year to date sixty percent up.
Yeah, yeah, And you knowagain, a lot of people put,
you know, stats like this rightalong the same lines as going to the
casino. Okay, I'm on ahot streak. I'm on a cold streak.
And too many people think these thingsare either going to go down in

(01:53):
a straight line forever, or whichcan be a lot more dangerous, up
in a stare right line forever.Years for years and years, people would
buy Money magazine in January of everyyear and look at last year's best mutual
funds, and I was guaranteed toget phone calls January and February, Hey,

(02:15):
Steve, how come we don't ownthis one? How can we don't
own that one? And the answeris, if a mutual fund, or
for that matter of stock is goingto be one of the hottest in any
period of time, it doesn't lastforever. I mean, if it keeps
going up and up and up.Yeah, maybe it's that one in one
hundred or one in a thousand andhas a new breakthrough, a new product,

(02:37):
a new new process. But ingeneral, it caught some buying attention
that drove it up. And likeanything in the stock market, a lot
of times stocks go up more thanthey should and a lot of times they
go down more than they should,and trying to guess which is which it's
just kind of a failing game.Yeah, those are interesting conversations, you

(02:57):
know, I've been having in mywhole career. I'll have people that come
in for an annual review and they'llbring their statement and they'll say, this,
this one, this one, andthis one. These are the ones
I want to sell them. Yeah, why, Well, because they're the
ones lost. Yeah, they're theones that lost in the short period of
time that you're looking at. What'sgoing to happen eventually is those losers are
gonna swing back up. So afully diversified, diversified portfolio is going to

(03:21):
have winners and losers at any giventime because there's almost no one out there
that can pick well, there's there'sno one out there I can There's no
one that can pick nothing. Yeah, it's not even almost knowing. There's
no one out there that can pickonly winners. When you have a diversified
portfolio, some are going to beup, some are going to be down.
And what money managers will do financialadvisors ideally is that we are selling

(03:42):
the ones that have done well,locking in some of those proceeds, and
buying some of the ones that havedone poorly. So, okay, how
do you find out the difference betweena company that's literally having breakthrough after breakthrough.
They're growing, they're becoming more profitable. That's the reason it's going up
and may continue to go up.I mean, if you sold Apple in

(04:02):
the early days when it was uptwenty percent, saying I got my win,
nothing else got me twenty percent,I'm getting out of it, except
you would have short changed yourself byoh a few hundred thousand. Yeah,
yeah, exactly. So you know, how do you determine which ones are
the future Apples or which ones arejust catching a short term wave and last

(04:25):
year's best or this year's best isgoing to be next year's worst. I
mean, that's the key. Youcast a wide net you do, that's
it. Yeah, I mean,you can put all your eggs in one
basket. But that's akin to gambling, and I don't like to talk about
gambling when I'm talking about investing.When you do a diversified portfolio, that's
gonna it's like walking up the stairswhile playing with a yoga It's going to
go up over the long term,but in the short term it's going to

(04:46):
be swing. So what causes someof these swings? You know, main
cause year to year is reversals aninvestor sentiment. Yeah, yeah, that's
the big one. And and alongwith that is the fear of missing out.
You know, people shorten that tofomo. I don't like, you
know, catchy phrases like that,but the fear of missing out is a
real thing. Hey, did youhear about XYZ? It's already up a

(05:08):
ton, and they're supposed to goup even more. And people talk to
people and then you know, computerprograms are written and so on and so
forth. My experiences when everybody's excited, well where are the new buyers coming
from? You know, when everybodysays it's the greatest stock in the world.
Great, that means you're out ofnew buyers or pretty much at the
end of the line, which meansif there aren't new people buying it,

(05:30):
at some point the buyers dry up. Guess what direction of stock goes.
Yeah, exactly. And I couldsay that with the same on the down
side, when everybody says this company'sthe worst unless they are on their way
to filing bankruptcy, at some pointthe sellers dry up and one new buyer
can bring the stock off its bottom. You're listening to Simply Money. I'm
fifty five KRC. I'm Steve Sprovacalong with Steve Ruby, and we're talking

(05:54):
about market timing, why it doesn'twork, why some stocks continue to go
up continue to go down. Andwe're at that time of year where we
actually see some pretty wide swings inthe stock market, not because of fundamentals,
not because of Federal Reserve interest ratechanges, but because a lot of

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the institutions, the mutual funds,pension funds, and so on, they
do some things towards the end ofthe year that a lot of average investors
don't, and that makes the stockprices change, and in some cases dramatically.
Yeah, investments that are already downon the year. Oftentimes, these
big mutual funds money managers, they'regoing to look at the investments that have
done poorly and leverage those losses tooffset gains, meaning tax loss selling occurs

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towards the end of the year.If they have gains in that mutual fund
throughout the rest of the year,they sell the duds. Now all of
a sudden, they can use thatto offset the tax liability, which can
further bring down the price of thatstock that makes up that portion of the
mutual and tax laws selling is somethinga lot of investors they just don't do,
and probably they just don't understand itor they're just not paying enough attention.

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But I'll give you an example.Procter and Gamble local example. Let's
just say you bought it at onehundred and twenty dollars a share, it
goes down to one hundred at somepoint during the year, and the next
year you see it at some pointright back where it was at one hundred
and twenty dollars a share. Soyou can if you do nothing, you
can say, oh, okay,it was down for a little bit,

(07:25):
but at least I'm back where Istarted. Okay, all right, nothing
bad nothing good. It just itis okay. Whereas if it dropped from
one hundred and twenty to one hundredsometime, especially towards the end of the
year, let's say now, andyou sell it at one hundred dollars a
share, Oh wow, why wouldI sell it? It's down I lost

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money. Yeah, but you candeduct your losses on your tax as you
can offset them with any gains youhad, so, in other words,
it might wipe out your tax liability. You can off set up to three
thousand dollars a year off of yourjust ordinary income if you don't have any
gains and you know that's something.Where As long as if you want to

(08:07):
own Procter and gamble for the longrun, as long as you wait at
least thirty one or thirty one days, at which the IRS says, okay,
you put your money at risk,will allow you to take that loss
even though you bought it back.If you wait thirty one days to buy
it back and it's still around onehundred dollars a share, now you've made
money. When it goes back upto one hundred and twenty, So you

(08:28):
took a nothing something. I wentfrom one hundred and twenty bucks a share
down to one hundred, back toone hundred and twenty. You took a
nothing and saved a lot of moneyin taxes and ultimately made money on the
stock. That's kind of a winwin. Yeah, And exactly what you're
talking about here is something that candrive a share price down in the market.
Yeah. If there's a lot ofyour in tax selling, you're wondering,

(08:48):
wait, there's no bad news onthat stock. Why is it going
down so much? Why is thereso much selling because of tax selling?
Because you've got large investors, mutualfunds, pensions, and whatnot selling to
take the loss, and a goodchunk of them may very well be buying
that stock back a month from now. Yeah. Yeah, this is one
of those tax benefits that you know, as financial advisors, we help folks

(09:09):
that we work with with this.But you know, I understand where it
can be a little bit confusing whatyou're talking about here, But believe it
or not, this is one ofthe benefits that the IRS gives us as
investors to wipe out the gains becausethere's unlimited carry for it as well.
And you're also going to hear aphrase that you never hear in Actually,
even in investing, it's not awell known phrase, not used a lot,

(09:31):
but window dressing and window dressing isreally nothing more than usually a mutual
fund company that has to report toshareholders of what they own. They're getting
rid of dogs. They're getting ridof the ones that are not working out,
replacing those stocks with something else thathopefully will work out better. And
that way they don't have to standin front of shareholders who are asking them,

(09:56):
Hey, I saw at the endof the year you own X y
Z. That was a real dog. Why do did you buy that in
the first place. They get ridof them window dressing, try to make
themselves look good and if enough,if enough money managers do that, it
can have a swing on the shareprices. And that's why you see so
much activity towards the end of theyear when there's in some cases really not

(10:16):
much news going on. I've alsoseen window dressing for winners. I mean,
if you are having a rough yearas a mutual fund manager, you
might want to sell a stock thatyou think is going to be good next
year and the year after that.You might want to sell it before the
end of the year to be ableto declare profit and say, yeah,
but we had this one winner.Look what we just returned to investors,

(10:39):
which kind of stinks because that's ataxable game. Yeah right, yeah,
yeah, And that's that's the otherthing you got to watch out for end
of the year is capital gains declarationson mutual funds. Not too much exchange
trade of funds they to justice,but really just mutual funds. And if
you've had a good year, andbelieve it or not, the first half
of this year for the stock marketwas above average. We saw a pretty

(11:01):
good rebound earlier this year. Ifyou haven't looked at your mutual funds,
you may very well want to lookat them, because usually around the end
of November early December, you're gonnahave capital gains distribution declarations and you may
very well owe a lot of taxbecause that mutual fund made a lot of
money earlier in the year and itmay actually be down on the year,

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and yet you're still going to geta ten ninety nine showing those taxes.
Some things that you want to lookout for year end. Here's the all
Worth advice. Take it from investinglegend Warren Buffett, who famously said be
fearful when others are greedy, andbe greedy when others are fearful. That's
a good bit of advice on howto make money in the stock market without

(11:46):
following the rest of the crowd.Coming out next with income tax brackets will
you fall into next year? Theirs just finally revealed tax brackets for next
year. We'll have that for younext. You're listening and simply Honey,
I'm fifty five KRC the talk station. Yes, fifty five KRC. All

(12:07):
Worth Financial a registered investment advisory firm. Any ideas presented during this program are
not intended to provide specific financial advice. You should consult your own financial advisor,
tax consultant, or a state planningattorney to conduct your own due diligence.
If you're listening to Simply Money,presented by all Worth Financial, I'm

(12:28):
Steve Scroback alone with Steve Ruby.Hey, if you can't listen to Simply
Money every night very next day,you can get it on our daily podcast.
If you think you got some friendsthat could use some financial advice,
tell them too. Just search SimplyMoney on the iHeart app or wherever you
get your podcasts. Straight ahead ofsix forty three, why being frugal once

(12:48):
you hit retirement could actually do youmore harm than good. All right,
So there's certain days of the yearwe pay a lot of extra attention.
To give you an example, wepay attention when the annual Social Security Costs
a Living adjustment is announced. Wealso wait for the day that the IRS
announces changes to its income tax bracketsfor the following year. And that's what

(13:11):
we've got for you tonight. Wejust learned for twenty twenty four tax brackets.
Yes, they were increased, soyou can make a little bit more
money before you get bumped into thenext tax bracket. Yeah. So this
is actually a good thing because beingable to make more money and staying in
the same tax bracket can reduce yourtaxes essentially. You know, keep in

(13:35):
mind that these tax bracket changes,they are based on tax or earnings in
twenty twenty four. Yeah, forwhen you file your taxes in twenty twenty
four. In April of twenty twentyfive, so we're looking forward quite a
bit here. But for married filingjointly, the twelve percent tax bracket will
go up to the capping the earningsat ninety four three hundred. Yeah,

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what they are right now is eightynine thousd four hundred and fifty. So
there's a little bit of wiggle fivegrand, Yeah, a little bit of
wiggle room there for increased earnings withoutfinding yourself into that next marginal tax bracket
of twenty two percent. And wepay a lot of attention to that tax
bracket because that's the biggest, oneof the biggest jumps in tax brackets.

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The ninety four thousand, three hundreddollars tax bracket an under is a twelve
percent tax bracket. Yeah, ifyou make ninety four thousand, three hundred
and one dollars, that extra dollarbumps you up into the twenty second or
twenty two percent tax brack that's amassive jump. But remember this is only
for dollars earned above. In thissituation, again, we're talking about tax

(14:41):
rates for twenty twenty four. Fordollars earned above ninety four thousand, three
hundred, it does jump from twelveto twenty two percent. Now, that
twenty two percent tax bracket caps outnext year in at two hundred and one
thousand, fifty dollars right now,one hundred and ninety thousand and change.
Yeah, So that's more than tengrand y. You know, that's one
of the only good things about inflationis the IRS. Yeah, they do

(15:03):
it just tax brackets to avoid taxbracket creep. I mean, yeah,
that's one word for it. Imean that's yeah, if you've got to
pay increase or social security increase becauseof inflation, well that could bump you
into the next tax brackets. Sothe IRS makes these adjustments. And you
know, we watch that particular twelvepercent tax bracket because that affects ROTH conversions.

(15:28):
I mean, that's an ongoing conversationwe have with clients of we call
it filling up the tax bracket.But if you make fifty thousand dollars and
the tax bracket is now ninety fourto three, well you might want to
go ahead and consider putting forty threethousand, three hundred dollars from your traditional
IRA or four one k into yourwroth IRA. Yeah, you pay tax

(15:48):
on it, but it's all beingdone at twelve percent. I mean we're
getting out there a little bit.That's one thing you talk to your tax
advisor about before signing any paperwork.But this gives you an extra five thousand
dollars if you're married filing jointly toput into a rock conversion. Standard deductions
also went up, and I thoughtit was pretty good when they were twenty
five thousand. They're up even higher. Yeah, twenty nine two hundred dollars

(16:11):
for married couples filing jointly bumped upfifteen hundred dollars for the standard deduction for
individuals. That's that's going up sevenhundred and fifty dollars. Ye, up
to fourteen thousand, six hundred.Well, which means even if you give
a lot of money away to charityand you've got quite a few tax deductions,
you may very well be under twentynine thousand, two hundred dollars.
So yeah, you know, youtake the standard deduction and that just brings

(16:33):
your adjusted grows down that much morenext year. Yeah, it certainly does.
And in a time of rising costs, you know, the increase of
these sizes that they certainly matter,the upward adjustment that they're again they're meant
to adjust bracket creep. As youhad said, So inflation has pushed up
our income, and you know theIRS are actually they're doing something nicer.

(16:56):
I don't say too many nice thingsabout the IRS. I say almost not.
I know, a big, bigpart of my role as of financial
advisors to find ways to poke themin the eye with a stick. But
this one is a you know,I'm thankful for it, all right.
So we're getting towards the end ofthe year, and we've got some some
things that we want to talk aboutbecause there are some ways before the end

(17:17):
of the year that you can,in your words, poke the irs and
the ie with a stick. Let'stalk first about four oh one k's and
what you could do there. Yeah, so remember your four to one K.
It's it's the max that you canput in if you're under the age
of fifty. This year is twentytwo five hundred. You get a catch
up contribution the year you turn fifty, but those contributions have to enter your
four to one K during that taxyear. It's not like your IRA contributions

(17:41):
where you have until you file yourtaxes the following year. So if you
have the cash flow to support savingmore and you do want to put more
into your four oh one K,now is the time to make that adjustment
because it can take one to twopay periods before that change takes effect.
You're listening to simply money on fiftyfive KRC. I'm Steve Sprovac Long with
Steve Ruby, and we're trying tohelp you out with some year en ideas

(18:03):
to save money on taxes. Okay, you might want to max out your
four oh one K in the fewpay periods you have less this year.
We've got a few other things IRAcontributions. You've actually gotten into tax filing
next year. But if you thinkthe market's gonna go up, there's nothing
keeping you from doing it now beforethe end of the year. Yeah,

(18:26):
exactly, what about your withholding?So it's not too late to check how
much income taxes with held from yourpaychecks because we want to avoid surprises.
And unfortunately, where we stand inthis day and age is that seventy percent
of tax paying amy with hold toomuch. That amazes me. Seventy percent
people intentionally have too much tax withheldso that they get a refund as opposed
to saving the money on their own. This is not a way to poke

(18:48):
Uncle Sam and the eye with astick, because what you're doing is you're
giving them an interest free loan.Yeah, I would rather owe a few
hundred they get a few thousand back, because that means that few thousand could
have been working in a high yieldsavings account for me, well, a
couple of years ago, it didn'treally matter because you weren't getting any interest.
But you can get three four fivepercent on money today just an interest,

(19:11):
zero risk at the bank. We'renot talking about investments, So why
would you be planning on getting afive six, seven thousand dollars tax refund
if instead you can put that moneyin your own account, pay Uncle Sam
what you owe them, but notmore than yoem, and earn that interest
for your own benefit. Yeah,and let's pivot and talk about healthcare for

(19:32):
a moment, because if you havea high deductible health savings plan puts you
in a position where you are eligiblefor a health savings account, which is
a triple tax advantage vehicle. Youput money into it, it's tax deductible,
you invest with the money, itgrows tax free. You use those
dollars for non reimburse medical expenses taxfree distribution. Your flexible spending account doesn't
roll over a year over year likeyour health savings account does. Gott us

(19:56):
have an FSA, make sure thatyou spend those dollars or else you have
made a mistake. Here's the allWorth advice. Now's a great time to
plan out financial goals for twenty twentyfour, like maxing out your four oh
one K, or checking to makesure the government is not hanging on the
money that could be yours right now. Coming up next, the major company
that is saying Sayonara T it's fouroh one K match while other companies follow

(20:21):
suit. We're going to talk aboutthat next. You're listening to Simply Money,
presented by all Worth Financial on fiftyfive KRC the talk station. This
is fifty five KRC, an iHeartRadiostation. You're listening to Simply Money,
presented by all Worth Financial. I'mSteve Sprovak along with Steve Ruby. So

(20:42):
what's the first thing we say wheneverwe talk about a four oh one K
we say get the company match becauseit's literally free money. What if your
company decided to do away with theircompany match, Well, you think they
might not do that. IBM hasis doing something kind of funky. Yeah.

(21:02):
I spent some time reading about thisjust today and I'm still trying to
wrap my head round out. SoIBM, what they're going to do is
they're going to replace their four toone K match with a different kind of
benefit that it's worrying financial advisors,and for a good reason, because,
first of all, I don't necessarilyunderstand it. Yeah, that's that's a
problem in it of itself. Yeah. In a memo to US based employees

(21:23):
last week, which isn't everybody,but still we're guessing somewhere around one hundred
thousand, one hundred thousand people,IBM is switching its five percent four to
oh one k company match and onepercent automatic company contribution to an automatic text
deferred five percent retirement benefit to anew retirement benefit account. So starting on

(21:45):
January one, So instead of puttingthat money into your four to oh one
k that is a company match,and you know, anybody with a four
oh one K that's participating, yousee your contribution, and you see your
company match contribution. This is awhole separate account that they're putting They're still
giving a five percent, but they'reputting it into something they're calling a retirement

(22:07):
benefit account. And you don't haveany say on how that money is invested.
It's just an automatic at least forthe time being, guaranteed six percent
ready to return. But sometime downthe road that apparently is going to float.
Why are they doing this that,That's one of the things I'm confused
about it. It says to putthe risk onto the employee, you know,

(22:29):
IBM that what they're saying is they'reguaranteeing a six percent return on the
money through twenty twenty six, andthen they're giving a time period the next
six years. They're guaranteeing the tenpercent or the ten year treasury yield that
is with a three percent floor,right, So you're getting a minimum.
It's like a fixed account. Yeah, it's like a fixed account of sorts.
What do you think. I'm notcrazy about it, And you know,

(22:52):
I don't care. I don't dealwith anybody from IBM. It's just
one company. But IBM was oneof the first companies to come out with
the four oh one K back inthe seventies, so they are a trendset
are in this field. But partI don't understand is there are really rigid
requirements to keep executives at a companyfrom loading up on a plan at the

(23:14):
expense of their employees not loading upand not using it. And they avoid
that auditing and that concern by puttinga three percent match in there. That's
why most companies match fifty cents onthe dollar of your first six percent or
just a flat three percent match.It avoids a massive cost for auditing the
four oh one K plan. AndI have never heard of this. I

(23:36):
don't know if they're avoiding costs.I don't know what they're doing. There's
probably enough high earners there that itdoesn't end up failing plan testing for anti
distrivation loss basis within four to onek, so it's it's probably not a
concern thing. But they did saybecause of the high cost of interest expense
these days, that this may savethe money, which worries me because if

(23:59):
they have to borrow money to makethem back contribution, what kind of shape
is a company? And I don'tknow, it's not a stockye research.
I don't know anything about the financialsof IBM. But this concerns me because
every US employee is going to havethis new account being set up where they're
not allowed to invest the money inanything they might not that they might want
to. And I have a questionof whether or not this separate account is

(24:22):
at risk if the company goes bellyup. Yeah, that's that's a good
point, yeah, in and ofitself, because if it's just some kind
of a plan credit in quotations,which is the way they're praising it,
instead of an actual contribution, thisis there's a lot of laws and regulations
that this is why I'm so confused. Something called ARISSA that was passed many

(24:45):
years ago. And ARISSA is outthere. It's a set of laws designed
to protect employees from their company goingbelly up and taking your retirement investments with
it. The Employee Retirement Income SecurityAct is the acronym stand for and that's
exactly correct what you just explained.And you know, this has some other
issues too, like potentially a disincentiveto save. They said it at the

(25:08):
beginning of the segment. One ofthe things that we it's low hanging fruit.
It's free money. When you geta company match, you better make
those contributions so that you get thatfree money. In this situation. Yes,
I want to make it clear.People are still getting free money in
a sense into this you know RBAwhatever they're calling it account, but you

(25:29):
you may not be saving in orderto get it. You're listening to simply
money on fifty five KRC. I'mSteve Sprovak Long with Steve Ruby, and
we're talking about IBM coming out witha controversial change to their four oh one
K where they are no longer matchingemployee contributions and instead putting a similar amount
into a separate account that is notthe employee forour oh one K, that

(25:52):
doesn't allow the employee to pick theirinvestments, and is put in this new
account as a credit, not actualdollars and cents. I'm going to bring
up something that that this may surprisepeople, But remember remember during eight oh
nine when the country was falling apartfinancially and a company named AIG was a

(26:12):
huge insurance company that got bailed outby the government and everybody was up in
arms at why they were bailed out. You know, one of the main
reasons was they didn't have a fouroh one K. They had a deferred
compensation program. So everybody from executivelevel down to you know, admin secretaries
and whatnot, they had a deferredcomp where they took some of their pay

(26:34):
just like in a four oh oneK and voluntarily put it in this retirement
account. Well, the primary differencewith deferred comp is it is an asset
of the company, and if thatcompany goes bankrupt, the deferred comp plan
goes away and you get nothing.And so they had tens of thousands of
employees, and again a lot ofthem low level, not you know,

(26:56):
the big wigs one percenters that weregoing to lose their entire retirement came counts
if the company went belly up.So the government stepped in, saved the
company, which saved the retirement assetsof these people. Yeah, I mean
that's exactly what we were talking abouta moment ago. Because your four one
K match is with real dollars andit's protected. Yes, this credit that
IBM is putting into this this thisaccount, there's no cash, it's just

(27:18):
listed on the book. So ifsomething happens to I b M, is
it considered a liability and does thatmatch go away for employees? That that's
my concern. It is maybe itis. I'm not a tax expert,
and I'm sure this is going tobe run through the court system. Uh,
and that question will be asked andeventually answered. You also, you
also worries man. You brought upthat IBM truly led the way on four

(27:41):
oh one case. It's also becausethey were one of the first companies to
get rid of pensions. Okay,that's also not by the way, yeah,
by the way, yeah, Sotake take that how you will.
This is concerning to me and it'sI'm excited to see where it goes,
hopefully nowhere. Well, we're goingto keep on top of this because your

(28:02):
company match is a big chunk ofyour four to oh one k and and
if other companies follow us out,we want to make sure. We want
to make sure it stays protected.You bet, here's the all Worth advice.
We can't stress it enough. Getyour company's four to oh one k
match, especially while it's still there. Coming out next, why frugal habits
and retirement could actually harm you.You're listening in Simply Money presented by all

(28:22):
Worth Financial on fifty five KRC thetalk station. The world's are on fire.
Things are happening people haven't dealt withbefore. With fall in the air.
Pour yourself a cup of conversation.Thanks for taking my call. I
got a lot to say. Fiftyfive krs the talk station. You're listening

(28:47):
and Simply Money presented by all WorthFinancial. I'm Steve Sproback along a Steve
Ruby. Hey if you've got afinancial question like for us to answer,
just click that red button while you'relistening to us on the iHeart app.
Record your question. Yo, welistened to him. We may even put
you on the air. Straight ahead, we're going to talk Turkey. The
cost of Thanksgiving this year is guessit's going up. Are you frugal?

(29:10):
If you are, yeah, youmay be able to end up financially independent
before all your buddies, But onceyou hit retirement, the frugality that got
you there could really do you adisservice in retirement. Yeah. So there's
habits that you may have developed preretirement that were very helpful, but as
you enter retirement and spend time inretirement, there are certain things that you

(29:33):
might want to spend a little bitmore on, Yes, especially if you
can afford them. The first isgood medical in church. Yeah. I
mean, if you were able toretire before medicare age, you're going to
be out there shopping and you maysay, hey, I'm pretty darn healthy.
I'm not paying sixteen hundred dollars amonth. Yeah. That's a real
number, by the way, folks. Yeah, unfortunately it is. Yeah,

(29:56):
as i've recently learned sixteen hundred bucksa month for a husband and wife
is not unusual, still with ahigh deductible, So you might say,
you know what, I'm not goingto pay that sixteen hundred. I found
a plan for eight or nine hundreddollars. It just doesn't cover a lot
of these expenses to any large degree, and it may have a much lower
cap on total out of pocket.Yeah, that can save you money,

(30:19):
but it also can can just destroyyour financial plan if one or both of
you come down with some major issue. Yeah, and not just in closing
the gap. If you retire beforethe age of sixty five, your Medicare
Part B premium, the baseline expensefor that is one hundred and sixty four
dollars and ninety cents per month,But it doesn't cover all of your medical
costs. Yeah. Now you've gotto get some sort of additional insurance for

(30:42):
the copays, maybe a drug benefit. And that's where you may still need
private insurance. And most people outfor private insurance after Medicare. Yeah.
You know, I've also seen astory of somebody that sold their car in
retirement to save money. That's done. I mean, that is frugality to

(31:03):
the extreme. You know, firstof all, I think you need to
live somewhere that has good public transportation, you know, like Cincinnati. Yeah.
Right, So in twenty twenty three, the average cost of owning and
operating a new vehicle is about twelvethousand dollars a year. This is according
to Triple A. So sure,whatever, you save one thousand dollars a
month, but you can spend thatto get around somewhere else. This is,
to me, that's silly. Youknow. If you got to this

(31:26):
stage in life where you can retireearly because you were frugal and you and
I have seen this as financial planners, the problem is the costs that you
generally are going to spend money onin retirement are going to be higher because
you were cutting costs to be ableto get to this point. But life
is for living and okay, I'mretired now what is my what is my

(31:49):
day going to consist of? I'vegot hobbies? Well, if you were
being frugal and you don't spend moneyon your hobbies, you know, what
else are you going to do withyour time? You know? Another example
is okay, we want to travelmore. Well, if you're going to
travel more you can easily spend awhole lot of money traveling that you weren't
spending before, which is fine ifyour financial plan includes those expenses, but

(32:12):
if you weren't honest with your advisoror when you plugged it in as to
do it yourself, or you mayfind that, oh boy, this I'm
going through money a lot quicker thanI was hoping because I wasn't frugal in
the entirement. When I build financialplans for the folks that I work with
and we review them, one ofour big goals as financial advisors is making
sure that the folks we work withit their money lasts longer than they do

(32:34):
ye with the expectation they're going tobe around for a long time. So
I do spend time stress testing thingsand trying to find ways to blow up
the plan, like spending more.Right, here's what would happen if you
spend more, And in my mind, it's an activity that can ideally get
somebody's you know, a light bulbto go off over their head to enjoy
theirselves more in retirement. Steve,I heard a story from another financial advisor,

(32:58):
and I got to kick out ofthis because every time he met with
with this couple, the wife wouldleave angry. Okay, and he didn't
know why. He called the husbandafter he said, what's going on here?
You know we're doing well. Youguys are doing well, and he
said to the advisor. The clientsaid to the advisor, my wife thinks

(33:20):
that you're calling her cheap. Yeah, yeah, because it was. You
know, she lived this life offrugality and was terrified to spend money in
retirements even though they could afford itwithout batan and eye. Yeah, that's
the key is if you plan onthe ability to spend that money and the

(33:40):
plan works, you know, ifyou don't spend it, your kids are
exactly you're listening to Simply Money onfifty five KRC. I'm Steve Sprovak along
with Steve Ruby, and we're talkingabout frugality, how you got to an
early retirement because you were careful withyour money, and how maybe this frugality
in retirement is the wrong way togo. You know. I I've got

(34:01):
a friend who's an advisor. Hisdad happens to be one of his clients,
and he tells his dad, whois a classic West Sider, to
you know, do not does notspend a lot of money. Just you
know, it's really really cautious withspending. He said, if you don't
start flying first class, I'm goingto when I inherit your money. That's
a good one, you know,because the whole point of life is lived

(34:25):
and great. This is what gotyou to this point. But don't be
afraid to enjoy life in retirement,especially if it's something that's going to keep
you happy, like your favorite hobbies. Because if you sit around and watch
OPRA all day, you're you're notgonna You're not gonna have a good,
healthy, vibrant retirement. That's agood point. What about if you're you're
hiring somebody because you need help withsomething, you know, house cleaner.

(34:46):
I've done this, okay, andyou did? You have the cheapest possible.
Absolutely. I used to have anacre and a quarter. One of
the reasons we moved is because Ihad an acre and a quarter. It's
expensive and hard work. And wehad a lot of pinoaks, and pinoaks
are notorious for their limbs just saggingto the ground. So we had a
guy, I'll never forget this guy. Every Sunday for about a month,

(35:08):
he would just pull in my driveway, knock on the door and say,
hey, I do tree trimming fora living. I want to trim your
trees. Okay, how much?Now? Too much? And he'd come
back, come back. Finally hecame in. And you know, I
almost felt bad on how little quotedme, but I really didn't care about
it that much. And hired aguy. And I guarantee you this guy

(35:29):
was not in short, you know. And I'm sure I had umbrella insurance.
And umbrella insurance is one of thesmartest things you can do because it
protects you against things like this.It's an umbrella property and casualty policy over
and above your homeowners and car andeverything else to protect you against lawsuits.
And yeah, we hired this guy, but it could have gone south in

(35:52):
a hurry if he fell out ofthe tree. Yeah, you gotta be
careful with that kind of stuff.Don't be afraid to spend the money.
Here's the all Worth advice. Theysay, you get what you pay for.
Don't short change yourself in retirement afterworking so hard to become financially free.
Coming up next, have you shelledout money for your Thanksgiving feast?
We're going to compare costs this yearto last year. You're listening to Simply

(36:15):
Money, presented by all Worth Financial. I'm fifty five KRC the talk station.
Let's take the illegal guns off thestreet. We got people talking.
See how much that brings climb down? Even it brings out ten percent.
Fifty five krs the talk station.You're listening to Simply Money, presented by

(36:37):
all Worth Financial. I'm Steve Strobackalong with Steve Ruby. It's incredible.
This year is flown by Thanksgiving isgoing to be here next week. It's
crazy. So the question is howmuch are you shelling out this year because
last year prices were a little biton the high side. Yeah, turkeys
are cheaper this year compared to withlast November. Yeah, we had a

(37:00):
last year. Avian flu killed theestimate. I saw a seven million turkey
and I saw some not you know, it's not I'm not allowed to go
shopping, so I'm not really thego to person for costs of food.
But yeah, the prices were skyhigh last year. Anybody that bought a
Thanksgiving turkey last year, you knowhow high they got. That's about the

(37:21):
only thing that's coming down this year. It looks like birds are down.
I don't know I've seen anywhere froma buck thirty nine, buck forty nine,
although my wife told me this morningKroger is running a sale right now
thirty nine. I'm sorry, fortynine cents a pound. Seriously, yeah,
it's almost worth it. Turkey isthe worst meat. You are so
sad. This is a great Igo myself. I love meat, don't

(37:43):
get me wrong, But and Ieat it. You've never got into a
turkey coma. It's oh yeah,I don't, don't get me wrong.
I so you hate the meat,but you'll eat it until you hate yourself.
I don't hate it. It's justthe It's like the tofu of meat.
It just soaks up the flavors ofeverything around it, the gravy,
the potatoes. Yeah, no,I love it. I love it.

(38:04):
And the fact that it's come downis good. But then Cranberry's, yeah,
they got expensive. They're they're upsixty percent. Potatoes are up,
yeah, everything else. Potatoes areup all time high a buck seventeen a
pound, which is a fourteen percentincrease from last year. Yes, turkey
went down eight percent, but whenwhen these side dishes that actually make turkey
enjoyable go up in price. That'swhere we run into problems. All right,

(38:28):
I'll give you an example. Iknow you know something about beer and
wine. Upper down, a thingor two upper down. Come on,
it's everything's up. Yeah, everything'sup, I know. And you know
what it's worth cooking at home becauseit's it's I think it's better. And
the costs are down for most youknow, turkeys down quite a bit.
But I will say one of thebest turkey meals I ever had was a
couple of years ago, middle ofCOVID. Couldn't see the kids, grandkids

(38:52):
because of somebody or other head COVID, and we ate a cracker barrel and
we had a heck of a Thanksgivingmeal. It was good. Cracker barels
open on Thanksgiving it was that year. Did they make turkey good? Yes?
They did? In bite what youthink? Don't get me wrong,
you know, are such a hater? Well I do, I do like
it. But yes, this issomething to be mindful of because yeah,

(39:14):
yeah, there's deals out there foryour turkey, So shop around a little
bit. Steve's sharing that Kroger headedat forty nine cents a pound. Prices
have gone up for everything else,but at least we get a little bit
of reprieve there because there's no Avianflu this year. Hey, thanks for
listening. Tune in tomorrow. We'regoing to break down the October inflation data
coming out in the morning. You'vebeen listening as Simply Money, presented by
all Worth Financial on fifty five KRC, the Talk Station. Happening now,

(39:38):
negotiations to avoid a shutdown, breakingnow the peachment inquiry and to President Joe
Biden headline, making North Korea andRussia now a new access of evil at
the top end, thirty minutes pastthe hour, it's your world right now.
What's happening right now and what canchange your world tomorrow? Changes that

(39:59):
we care about you and the knowsexactly what we want to know and in
the now, right now, fiftyfive KARC, The Talk Station