Simply Money

Episode Transcript

(00:06):
Today we are talking the real impactof inflation in what you are apparently willing
to still splurge on if you're listeningto Simply Money, presented by all Worth
Financial Imami Wagner along with Steve Ruby. I got to tell you so you've
I've been doing the show for yearsand years and years, and there were
many years where the word inflation wasreally never talked about. It was kind
of an afterthought, you know.It was at the federal reserves sort of

(00:28):
target rate or maybe below, Itjust really wasn't a thought. Over the
past few years, I feel likewe've used the word inflation until we're blue
and the face. But it's notjust a word. There is a very
real impact that inflation has had onall of our ability to save, on
all our ability to invest, andalso our ability to plan for retirement.
Yeah, and to be clear,financial advisors have always baked inflation into the

(00:53):
financial plans. Yes, they wasin the background right work. Yes,
Yes, it is always there.It's something that we are aware of,
but it has been much more frontand center for everybody else over the last
couple of years. And obviously,as you said, this is something that
is continuing to create issues and impactingretirement for many Americans. There's some that

(01:15):
are even delaying or abandoning their retirementplans as they continue to battle inflation.
This is according to a new subsurvey published by Nationwide. More than six
and ten investors said their expectations forretirement have changed significantly in the last five
years, while about half of therespondents said that their dreams for retirement have

(01:36):
been delayed, altered, or evencanceled as a result of the current economic
conditions and that of the past fiveyears. That same research some figures yeah,
yeah, well, in that sameresearch said four and ten investors think,
first of all, having a sortof savings target or investment target for
retirement or a very specific goal makessense. Would I would say everyone probably

(01:59):
need to figure out not a goal, it's like a one size fits all,
but what your goal is. Butthen four in ten also said the
magic number needed to retire comfortably betweena million and two million to and ten.
So that's more than two million.You can look at these numbers,
and there's been some recent numbers thatcame out and kind of pegged this number

(02:20):
at about a million and a halfis what you need to retire comfortably.
I'd like or I appreciate the factthat inflation has more of us thinking about
what we really need to retire.Right. We think about the effects that
we've seen of it over the pastfew years, and I think, then
it becomes very real. Gosh,if I'm going to be retired for twenty

(02:40):
years, what could the impact ofinflation be? Then I really need to
get this figured out. So Iappreciate the fact that inflation has us thinking
more and more about what we needto do to plan for retirement. I
think the impact of that looks differentfor everyone. Wa Ha to have a
positive spin on inflation. Anything thatgives us talking and thinking and planning,

(03:01):
at least on some level, Ithink is not a terrible thing. Yeah,
I can appreciate it. You know, I made a comment I don't
know if you caught it a minuteago, when you said people need one
and a half million dollars to retire, said sure, whatever. By the
way, when you're building a financialplan, it's these these generalities that they
don't apply to you. A financialplan is based on your individual financial situation,

(03:24):
needs and goals, and inflation againhas always been baked in. But
yes, where we are today,the current economic environment. It is making
everyday folks more and more aware ofthe real impact of inflation over the long
run, which is why we invest. It's not just to get rich quick

(03:45):
or you know, find the nextbig thing. It's stocks help you keep
up with inflation. And that's somethingthat you know the conversation, more and
more people are aware of and thatyou're right, that is a good thing.
So anyways, inflation and real numbers. The typical US household they needed
to pay two hundred and twenty sevenmore dollars per month to purchase the same

(04:08):
goods and services that they did oneyear ago. That figure was based on
March of twenty twenty four versus Marchof twenty twenty three, two years ago.
It's gone up by seven hundred andeighty four dollars. So I understand
why this is more and more inthe face of everyday people, because that's
you go grocery shopping and you filla path a cart and you're paying double

(04:30):
what you used to. That's awful. You know what I also find very
interesting though the consumer habits right.We go to the grocery store and it's
costing more. Many of our billsare costing more utilities things like that,
and so it's like, okay,what gives, right, if we're going
to start to pull back on spending, what are we going to pull back
on. Well, you can lookat earning supports of certain companies where they're
starting to see a pullback and say, Okay, we're spending less of Donald's

(04:55):
right now, We're spending less atStarbucks. Sorry, Starbucks. I don't
think that's necessarily a terrible thing.Right home Depot. These are consumer centric
companies that kind of surprise with weakerthan expected results. And the takeaway for
these companies is they're trying to figureout, Okay, we've got less revenue
coming in, is people are spendingless and less on these things. Interestingly,

(05:15):
though, there are other places wherepeople are still spending, and I
think some of this is sort ofholdover from the pandemic. Travel continues to
be something that people are saying,I will pay whatever it takes to travel.
Now. I think some airline costshave maybe gone down a little bit
over the summer, at least I'mseeing that bear out in some numbers.

(05:35):
But yeah, I think people aresaying, regardless of what it costs.
I appreciate experiences and I'm willing tospend more on those. Yeah, you
said it yourself that people have becomemore selective about where they're spending their dollars.
I'm all about those experiences. Takinga vacation after pent up, not
being able to do anything during COVIDversus you know, whatever, you get

(05:59):
it Starbucks for twelve dollars. Imean it's yeah. I like seeing people
having more experiences and kicking to thecurb, the idea of splurging on something
that you could get at home fora dollar. You're listening to Simply Money,
presented by all Worth Financial Immi Wagneralong with Steve Ruby, as we
talk about inflation, the impact thatit's having on you today, how you're

(06:21):
changing what you spend money on basedon it, but also it's changing how
you're thinking about your future and retirement. You've got some people who are saying,
well, maybe I won't even retireat all, which I would say
is not a retirement plan, andwe've seen that not work out for many
many people, but it's for manyothers it's changing their expectations. I might
have to save more, I mighthave to invest more, and I also

(06:43):
think Steve, it's changing how peopleinvest. One interesting thing to me is
when people go and kind of makethat transition from your trying to get more
money into those retirement assets to you'retrying to spend it down. It's like
you want to flip this switch andall of a sudden, you want no
risk. Like I've amassed all ofthis money and I don't want any of

(07:04):
it exposed to the market. Idon't want any risk. I don't want
any of it to be lost.But at the same time, if you
are healthy and you are retiring atthe age of sixty five, you can
live to the age of ninety fiveone hundred. And if that money isn't
invested in the market and it doesn'thave chance to grow, it's called growing.
It's called going broke safely. Andthat means that all of a sudden,

(07:25):
inflation is taking a bigger and biggerbite out of those investments, and
then there's nothing left. Yeah,it's always been a concern from the eyes
of the certified financial planner, because, yeah, cash is a guaranteed way
to lose purchasing power over time.We had a conversation recently about the rule
of seventy two and using that todetermine how long it takes to double your

(07:48):
money. But you can also flipthat on its head and divide by the
inflation rate to determine how long itwould take the value of the dollar to
get chopped in half, and atthree percent inflation takes about twenty four years
before you lose half of your purchasingpower. This is why having dialogue about
inflation and using it as a catalystto make sure that we stay invested in

(08:13):
no matter what the markets are doingis very important because inflation is a silent
killer, especially in retirement. Whenyou've heard your whole life, well,
you know, I'm in the accumulationphase of retirement savings. I need to
crush as much money as I caninto retirement accounts and I can invest aggressively.
And then you flip the switch andyou start taking money out as you
enter the de accumulation phase of retirementplanning, and you're beginning to spend from

(08:37):
your portfolio assets. And at thatpoint you think, well, I need
to be conservative. Well going tooconservative as a way to safely guarantee growing
broke. Stocks are the only thingthat have kept up with inflation over the
long term, and that is avaluable lesson that we can all pull out
of the current high interest rate environmentthat we're in. It is, though,
not a rare situation where someone willcome into our office instead of cross

(09:00):
and be very very proud of thecolor coded Excel spreadsheets and in front of
them, and they really just wantsort of a pat on the back of
like, Hey, this is myretirement plan. Here is this color coded
spreadsheet. I figured it out.I'm good to go. Pat me on
the back and tell me I'm goodto go for retirement. And you look
at the spreadsheet and you ask onequestion, did you account for inflation in

(09:26):
this? And you just see thelook on their face and it's like,
oh, miss that. And itwent from the numbers working out right and
looking really really good to all ofa sudden, those numbers don't work out
anymore it and changes have to bemade. So an inflation the silent killer
of retirement, right, you haveto have to come up with a financial

(09:46):
plan that bakes inflation into those numbers. And the then kind of a subcomponent
of that is healthcare expenses, whichinflated a much higher level. Do you
have those expenses baked into that planas well, and is that inflation level
higher than the average rate of inflation. If you can, you know,
put check marks in boxes next tothose things, you might be Okay,

(10:09):
your plan might really work. Yeah. When we build financial plans that there
is software that we use, andthe software can account for different financial goals.
I look at things like your dayto day your housing, utilities,
groceries, gas, and we backthat out with a separate inflation figure than
your healthcare or if you're saving forcollege for children or grandchildren, that's going

(10:31):
to have your highest inflation figure bakedinto to the financial plan. There's other
goals that have expenses that fall off. But keep in mind when we're having
this conversation. What I'm explaining rightnow is inflation is something that we've always
baked into financial plans at different ratesfor different goals. So this is always
something that we're mindful of. Rightnow, consumers are feeling it more and

(10:52):
more because you go to the grocerystore and you're getting half of what you
used to get for double the price. We can't let that remove our desire
to save for retirement because that's whatthe survey show there's people saying, well,
it's never gonna happen. I'm nevergoing to be able to retire because
I can't afford groceries. I knowit's very challenging right now, but this
is not the new norm. Inflationwill go down, the rate of inflation

(11:16):
will go down, income will goup. We owe it to ourselves to
continue to stay invested because that ishow you keep up with inflation over the
long run. I think the keyhere to understand is they are both short
term and long term impacts of inflation, and many times we haven't had to
think about the short term ones becausethey were just happening in the background,

(11:37):
very slowly. It's in our facemore now. But the key is to
plan for both of them and notlet either of them catch you off guard.
When it comes to your money.Here's the all Worth advice. There's
a number of ways to overcome inflationas long as you're planning for it and
are disciplined in your approach. Comingup next, what's the best way to
grow your cash right now? Savingsaccounts, the CD treasuries, all of

(11:58):
the above. I'll get into thatnext. You're listening to simply Money presented
by all Worth Financial. Here onfifty five KRC, the talk station you're
listening to Simply Money, presented byall Worth Financial, I Memi Wagner along
with Steve Ruby. If you can'tlisten to our show every night, you
don't have to miss the thing wetalk about. We've got a daily podcast

(12:18):
for you. Just search Simply Money. It's right there on the iHeart app
or wherever you get your podcasts.Coming up at six forty three, tackling
your questions in our Ask the Advisorsegment. You might learn something from these
questions too. Okay, we cameacross this article in Bloomberg and immediately thought
of you, mister Ruby. We'llhave to tell them a little bit about

(12:39):
your life story to make you understand. But rents in New York City right
now so high. Get this,Only five percent of apartments were actually affordable
for the average local worker. Ibelieve it. The reason why I received
a shout out here is because onceupon a time I lived in the shadow
of Manhattan and Jersey City, Neweryand oh my god, was it a

(13:03):
shock how expensive it was. It'sabsolutely it was. This was over a
decade ago, and it was ridiculousat that point. And where I lived
in Jersey City wasn't a bad area. But if my apartment was a mile
to the east in Manhattan, itwould have been six thousand dollars probably,
But at the time it was onethousand, eight hundred and fifty, which
was great for a two bedroom witha very tiny yard that we could have

(13:26):
a grill in. So the costof living in these areas exorbit And here's
the new numbers. New Yorkers,on average, they earned just under about
eighty nine thousand dollars per year lastyear, meaning they could afford an apartment
or a mortgage of twenty two hundreddollars per month if they didn't go above
the thirty percent threshold of their annualincome. Now, the problem here is

(13:50):
factoring in average upfront costs, whichinclude and get this, this is this
is the barrier to get into apartment. It's just so ridiculous because it's oftentimes
first month rent, security deposit,last month threat brokerage fees. We're talking
just that first month can be overten thousand dollars to rent an apartment,
right, I mean the rent anapartment, Yeah, I mean you think

(14:11):
about people around here struggling to saveenough money for the down payment on a
house, and there are people inNew York who don't even can't even afford
essentially the deposit necessary to rent anapartment. It does really make you appreciate
where we are here in the Midwest. The cost of living. Yeah,
I mean, yes, rents areexorbitant everywhere, but my goodness, these

(14:33):
upfront costs and the monthly cost tojust have a roof over your head incredible.
So yeah, super grateful to beliving here in Greater Cincinnati without a
doubt. You know, we're talkingabout ways to fight inflation a lot on
the show these days. In oneof those ways is okay, how can
you make even the cash that youhave sitting on the sidelines work for you

(14:56):
and the short term and for finallywe have options. I mean it used
to be, you know, youwould check your savings account and you made
one penny over the course of ayear on all the money that you had
in that savings account. One ofthe sort of silver linings of this place
that we're in with higher interest ratesis you should be able to make a
little more. But where does yourmoney really belong? What are the pros

(15:16):
and cons to your options here.And let's be clear that there are folks
that I meet with that are stillparked in savings savings accounts at some of
the big banks and towns that paypoint zero one percent on their cash.
You do need to shop around.Please, if this is you, listen
closely because there are options to getyour cash working for you. And when
I say cash, this isn't pullingout of investments to leverage these high yield

(15:41):
options that exist because we're in ahigher interest rate environment. I'm talking about
your cash, your emergency fund,or money that's parked on the sidelines for
maybe a financial goal six or twelvemonths down the road, in no particular
order. Highyield savings accounts, thisis just a savings account that can pay
up to ten to twelve times anAFRO national average of standard savings accounts.

(16:02):
Oftentimes this is going to be foundvia your online banks so that they can
steal away that business because they don'thave brick and mortar locations, so the
overhead costs go down and they flowthose benefits through to the account holders,
which could be you having a highyield savings account. A couple of things
just to keep in mind about highyield savings accounts. First of all,

(16:22):
sometimes there's minimums and an amount ofmoney that you need to keep into that
account in order to earn that kindof interest, So just be aware of
those. And also, you know, sometimes there's limited check writing, if
there's even any check writing out ofthat account, so lots of things you
have to figure out whether this makessense. But hey, for an emergency
fund, this can be a greatway to actually earn a little bit of
money at the same time that moneyis sitting there ready to jump in if

(16:45):
something does happen to you. ACertificate of deposit a CD it's another kind
of type of savings account. Itpays a fixed interest rate, so you
kind of know upfront what you're goingto make, and then it's held for
an agreed upon period of time sixmonths, y're you know, usually these
aren't long term investments, but moreshort term intervals. You can actually have
a little bit of fun with CDs. I know people that will pit banks

(17:07):
against each other saying it sounds likefun. Yeah, well, I am
all about shopping for deals. I'mactually one of those people that likes buying
a car because I want to negotiateas much as I can. CDs,
you can shop around between different banksand see if one can offer you a
deal that would keep your business thereand with the interest rate environment that we're

(17:30):
in. I know a lot ofpeople and I've helped people build CD ladders.
So you buy a three month CD, a six month, and nine
month, and a twelve months,so you create that liquidity every three months
while capturing the interests that the CDspay. Treasury is another option. Okay,
so these are backed by the fullfaith and credit of the US government.
They're kind of divided into three primarycategories according to kind of how long

(17:52):
it takes for them to mature.Treasury bills, Treasury bonds, Treasury notes.
T bills have the shortest range ofmaturity of all government bonds, and
there's the kind of five terms youcan do four weeks, eight weeks,
thirteen weeks, twenty six weeks,fifty two weeks. Can be a great
sort of strategy for any money thatyou you know, aren't going to invest
for you know, twenty years orsomething like that, but you can make

(18:15):
some money off of these. Ithink it's really Steve just kind of figuring
out what the best strategy is foryou when it comes to some of this
money that's in that shorter term bucket. Yeah, I mean, when high
yield savings accounts make sense, youdon't take any risk on depositing your cash
into a high yield savings account.It's FDIC insured up to two hundred and
fifty thousand dollars. But again,it's not your best way to grow wealth

(18:38):
over the long term. Right now, we're in a high interest rate environment.
But if you have a high yieldsavings account, the banks and credit
unions that offer them are already sendingout emails and letters saying, hey,
we have great news for you.We're still paying this interest rate, but
it's gone down that they're actually reducingthe interest rates in anticipation for the FED
reducing interest rates. So you're goingto see begin to fall over time back

(19:02):
to a level that's a little bitmore normal, because right now we are
spoiled. It's one of the positivesof being in a high interest rate environment.
But keep in mind that these interestrates, they are going to fall
over time, so this is notfor long term investing. I need to
make that clear as I think aboutit. You know, We wouldn't even
have been able to have this conversationand talk about this several years ago because
there just weren't many options out there. Understand this is an option now.

(19:26):
Who knows how long this window willbe opened, so look into this now.
If this makes sense for you,here's the all Worth advice making money
on shirt short term cash. It'sa no brainer. Choosing the right vehicle
should be based on what you needthose dollars for. Coming up next,
we're tackling one of the most importantaspects of estate planning. You're listening to

(19:47):
Simply Money presented by all Worth Financialhere in fifty five KRC the talk station.
You're listening to Simply Money presented byall Worth Financial and Amy Wagner along
with Steve Ruby. This is apart of the estate planning process that nobody
likes to think about, but parents. If you have kiddos under the age
of eighteen, it is critical whathappens to your children right, where do

(20:10):
they go? Who's taking care ofthem if you and your spouse are no
longer here to take care of them? Joining us tonight with years right decades
of experience helping families make these criticaldecisions is are a state planning expert Mark
Grekmaan from the law Farm of Woodand Lamping. I don't think Mark,
I can overstate how emotional of adecision this is. I mean, it's
one thing to be talking about dividingup your assets. It's another thing to

(20:33):
talk about what happens to your kids. Well, for many many folks,
they don't think about it at all. They can't for that very reason.
Yeah, it seems overwhelming. AndI remember when my kids were born,
you know, having this conversation,and it was it wasn't an easy one.
You know, my husband and Iweren't always on the same page.

(20:55):
There were certain people who thought theyshould be chosen and for certain reasons,
they didn't seem like the perfect fitfor us. So there's a lot that
goes into making this decision, andit's individualized for each family and each child.
I mean, you have to assessthe needs of the child as well
as the attributes of the persons you'reconsidering to name. So what do you

(21:18):
say, how do you what doyou think through in order to make sure
that you're coming up with the bestdecision for your family. I think the
starting point is parenting skills. Youhave to evaluate whether or not the person
you're appointing or that you're nominating hasthe kind of parenting skills that fit your

(21:40):
family. Recognize that your children,they'll be traumatized by your deaths. It's
a big big deal to them.Their guardians are going to be patient,
they're going to need compassion, andthey're going to have to deal with the
grief and the process by which yourkids will evolve after you're gone. You

(22:00):
know, it's funny when we firstwhen we first made this decision for our
children when they were younger, chosea family member that doesn't live close by,
that didn't have kids yet, andit just made sense of the time,
someone who definitely, you know,loved our children a lot. But
as then this family had their ownchildren, we realize the parenting styles were

(22:21):
incredibly different and it wouldn't have ultimatelybeen the best fit. So I think
this is something that you cannot setit and forget it, right, Like,
this is something parents, if youfigured this out a few years ago,
you need to revisit this from timeto time. And I would add
to that amy that try not tothink about this as the one time you

(22:42):
get to make this decision. Manyof my clients get overwhelmed at the notion
that they're picking someone that's going tobe the guardian for the next eighteen years,
and they get frozen by the challenge. Think about this in terms of
where your children are now, whatkind of guardianship environment would be best for
them based on their age and theirabilities today, and then you can reevaluate

(23:07):
it later. And by the way, the probate courts in this area,
they're going to take the interest ofthe children into consideration if the children are
older. So if, for example, you've died and your surviving children are
fifteen, sixteen, seventeen years old, the probate court is going to listen
to that child's preferences and they willoverride the nomination in a guardian ship nomination

(23:30):
when appropriate. That makes a lotof sense. You talk about parenting skills
as being part of it. Imentioned though, that we'd also chosen someone
who didn't even live in the samestate. It was okay when my kids
were toddlers to make that decision,but once they're enrolled in schools and sports
and clubs, then have friends,that becomes a very different kind of situation.

(23:52):
You know you mentioned they're already reelingfrom the loss of their parents,
and now you know it may notmake so much sense, even if it's
someone who who loves them very much, to completely uproot them. Well,
this just reinforces the point you Mahad earlier, which is that this decision
isn't You can't just make this decisionand leave it alone and walk away.
You have to revisit it. Yourkids are going to be different when they're

(24:15):
twelve and fourteen than they are whenthey're two. Once they're in school and
involved in these activities that you mentioned, the stability of staying in school and
staying with their friends and their activitiesmay be important to their mental health,
in which case moving them across thestate or across the country to a different
guardianship to a different set of parentsmay not be in their best interest.

(24:37):
So think about where the guardian livesbased on the age of the children.
As you said, the older thechildren get, the more the location matters.
What other considerations, Mark would yousay, Because it is it's such
an overwhelming emotional decision When you're counselingfamilies on how to make this, what
else do you bring up as aconsideration. I think religion, politics,

(25:03):
and moral beliefs are a part ofthis. I think that you pick someone
who is compatible with your religion andyour politics, or at least will be
supportive of your child's own differences.If your child has a different set of
politics or religion, the guardian needsto be able to respect that. The

(25:26):
guardian's age makes a difference if manypeople, if they don't have siblings nearby,
they will defaul to their own parents. That's fine if your parents are
fifty or sixty, it may notbe such a good idea if they're seventy
five or eighty. So think aboutthe age of the parents, think about
the age of your children. Thinkabout the living arrangements as well. The

(25:48):
guardian needs to live in a place, in a house and a neighborhood and
the school district that fits for yourchildren. It's the house big enough,
are there other children living in thehouse of those things are helpful for your
child to adjust. And one ofthe big ones I think about a lot
amy is that this is this takingcare of your children is going to be

(26:10):
a significant financial burden to whoever youname. Yeah, and it's just not
okay to say take care of mykids. And oh, by the way,
you have to pay for it.That's just not okay. You've got
to make some arrangement, either throughlife insurance or retirement accounts or a trust.
You've got to make some arrangement tocover the cost of rearing your children,

(26:33):
unless your guardian, of course,has significant financial resources of their own.
But even then, it's not fairto ask your guardian to pay for
your kids education or their cost ofliving. And this is the conversation too,
write Mark, like, you can'tchoose someone and just put it in
a document and then something happens toyou in surprise. You're taking care of

(26:56):
our children. That conversation needs tohappen with the caregiver. And I was
say, if the children are older, don't make it a scary conversation,
but it might be good to gettheir input as well. I think that's
excellent point. Certainly your child isgoing to be much more adjusted or much
more comfortable with these events if theynumber one had a chance to give some

(27:18):
input, and number two they're fullyinformed, kind of know what to expect.
Yeah, exactly, And Amy,there is one more point before we
wrap up, and that is thatmany times people will say to me they
want to name a couple, youknow, a married couple as guardians That's
that's really not the way the guardianshipsystem works. You name an individual,

(27:41):
not a couple. And what Isuggest to people is that it's always a
good idea to have a backup sothat in your will you may say,
I nominate my sister to be theguardian and if she's not available, then
I nominate my brother, so thatyou have somebody on the bench. And
by the way, you don't haveto do a guardianship nomination and a will.

(28:04):
There is a process in both Kentuckyand Ohio in which you can do
with a guardianship dominate a nomination asa standalone document. Most people, however,
put them in their wills. Butif you've got a will and you
don't want to change your will,but you want to change the guardian ship
nomination, you can do that bya separate document all by itself, without

(28:25):
redoing your whole will. Great insights, as I was from Mark Rerekman,
are a state planning excerpt for thelaw firm of Wood and Lamping. You're
listening to simply money presented by allWorth Financial Here in fifty five KRC,
the talk station you're listening to.You simply Money, presented by all Worth
Financial. I mean you Wagner alongwith Steve Ruby, straight ahead. So

(28:47):
many financial documents, so many paperslying around your house? What do you
need? What can you toss?What should you shred? We'll get to
that coming up in just a fewminutes. Do you have a financial question
you want us to answer? There'sa red button you can click them while
you listening to the show. It'sright there on the iHeart app. Really
easy to use. Record your questionand it's coming straight to us. Let's

(29:07):
get to this week's questions are firstcomes from Paul, who lives in Madeira,
Hey, Amy and Steve. I'msixty one. I know that if
I claim Social Security early, mybenefit will be reduced. But will my
benefit increase once I reach full retirementage? It depends. So this is
a tricky question because if you arenot working, then the answer is no.

(29:30):
But if you are working and youearn a certain amount, then that's
where you get that reduced benefit upto a dollar for up to two dollars
for every dollar earned or three dollarsfor every earned. Now that money is
actually being paid into Social Security andonce you hit full retirement age, if
you collect early, then that willincrease your benefit later on. I think
it's not working those Yeah, ifyou're not working, then the answer is

(29:52):
a resounding no. You have lockedinto that lower benefit amount for the rest
of your life. And I thinkpeople think that I'm just going to the
lower benefit at sixty two as soonas I can and ride that out and
I want to get to full retirementage. I'm going to take that amount,
right, the full promise amount.No, no, no, no,
no. You get to do thisonce. There's a couple of tiny
loopholes, but mostly you get todo this once and whenever you lock in,

(30:17):
that's your benefit. It's not changing. Coming up next, we've got
a Trish from Betavia. Thanks fortaking my question. What's the difference between
a money market account and savings accountand which is better for an emergency fund?
So a money market account is actuallyinvested, but it's invested in very

(30:38):
short term securities, so technically thereis a sprinkle more risk than you're just
cash sitting there in savings which isnot invested to any capacity. That's why
if you have a big bank andyou're sitting in a savings account, they're
going to pay you a point zeroone percent, whereas a money market in
a high interest rate environment like we'rein, you're gonna get a little more
than that. But technically, youknow, back in the Great Recession,

(31:02):
the money markets broke the buck iswhat it's called, and they went below
the value of a dollar. Sothere's more risk than just cash. However,
I would say that it's so minuteand minimal that I like the money
market in a high interest rate environmentfor an emergency fund much more than regular
old, boring cash. These arevery very similar, you know. I

(31:25):
mean, I think if you're tryingto figure out what to do for an
emergency fund, you can't go wrongwith either. Because you need money that's
easily liquid. Money markets can havea little more flexibility. Many of them
can come with like a debit cardand you can write maybe a few checks
a month out of that account,So that can make it easier to get
to than just a savings account.We have to walk into that book and
mortar bank sometimes to get the money. But at the same time, off

(31:48):
in money market accounts will have higherminimums and higher balances that you have to
keep for opening the account and keepingin there. So really it's just what
works best for you. But honestly, especially right now where if you're smart
and with an online bank you canget higher interest rates. I think they're
very, very similar. Just kindof figuring out the quirks of each one

(32:08):
and which works best for you makessense. But I wouldn't say one is
like heads and tails above the other. Next, we've got Daniel in Newport.
I'm facing about six thousand dollars incredit card debt and have about fifty
thousand dollars saved in my four ohone K. Should I withdraw money from
the four oh one K to clearthat debt? I'm in my early thirties,

(32:30):
So, Daniel, this is aquestion we get pretty often, and
I always find it interesting because whenwhen someone finds themselves in any sort of
financial pickle, whether it is acredit card debt or an unexpected bill,
the first thing they go to isthat four to oh one K, right,
because you know you have the moneysocked there, and while you are
thirty and you have years until retirement. The good thing about that money and

(32:52):
that foural one K is it hasyears to grow and compound. Right,
your money makes money, and themoney that money makes makes more money.
My suggestion for you, rather thanpulling money out of that foural on and
K to pay off that debt isthat you get serious now about paying off
that debt because it's probably you know, twenty plus percent interest that you're paying

(33:13):
on that. So even if itmeans you're going out less, less vacations,
whatever it is, laser focus onpaying off that debt. Keep the
money in that four one K,get that debt paid off, and then
get out of the cycle totally.That six thousand dollars could turn into a
really fancy boat or a down paymentfor a big vacation home. In retirement.
You're only thirty. Those dollars havea long time to work for you.

(33:36):
I agree, buckle down and findways to make payments towards the credit
card debt rather than touching any kindof retirement money. Absolutely all right.
Last question Tony and Westwood, Hey, guys, I just discovered that my
husband has a vastly different sense ofwhat retirement looks like for us. Do
you have any suggestions for how canwe find some common ground? I would

(33:59):
say sit down with a do youshare a financial planner and build out a
financial plan, because that's going tolight a fire up underneath you, guys,
to understand where you fall. Ifthere's gaps, how do we close
them if there's time left to doso? And it's going to start that
conversation because that's what you need tofocus on here is communication, sitting down,
finding what is important to you,What do you value? How do
you spend time and retirement? Sositting down and starting that financial plan is

(34:22):
kind of kind of force your handto have that conversation. You often joke
that as financial advisors we are oftencouples counselors as well, right, So
this is a good way to getbehind a third party, in front of
a third party that can help youfigure this out. Coming up next,
what do you do with all ofthose financial documents that are just laying around
your house. You're listening to SimplyMoney presented by all Worth Financial here in

(34:44):
fifty five krs the talk station you'relistening to you Simply Money presented by all
Worth Financial. I Meani Wagner alongwith Steve Ruby. This is one that's
kind of a head scratcher for alot of people. It's like financial documents,
and so we get so much paperslike into our house, and you
know, what do you need tokeep and what needs to be stored in

(35:06):
a fireproof safe, and what canyou shred and what can you throw away
tonight? We're helping you make senseof all of this. And I'm telling
you, once you kind of doone of these sort of financial paper organizations,
like you're like, oh, Icould get rid of so much stuff,
and now I feel so much moreorganized. So this is a great
thing to focus on. I wouldsay, you know, any time of
the year, so you don't havea huge room full of all old documents

(35:28):
from everything too. I'm not gonnalie. I used to a few years
ago, and then I got seriousabout this and was like, Okay,
I'm keeping every statement that I'm gettingevery month from my credit card from Duke
Energy and every bill that I pay. Why am I keeping these? You
know? I went online and madethem all digital where they're just emailed to
me, and then I went andthrew out a bunch of old stuff that

(35:49):
really didn't matter. So there aresome things that do matter, though,
Yeah, absolutely forever documents, obviousones, birth certificate, adoption papers,
death certificates, marriage divorce records,so security cards. You know, that's
something that we do need to showevery once in a while. Military service
records, including any kind of dischargedocuments, because if you are honorably discharged

(36:10):
a service member, then you areeligible to receive funeral and burial benefits.
Loan payoff statements, there's this listobviously is still kind of long on what
I'm talking about here, but ifit's important and you may need to come
back to it for some reason,that that's the differentiator here. The loan

(36:30):
payoff statement. For example, ifyou negotiated to pay less than what you
owed on a debt, then keepthat original agreement forever, because if that
debt is sold to another collector forpennies on the dollar, then a lot
of the information can be lost.For example, another thing that you may
have never thought of is your endpay steps. You don't have to keep
all of them, but if thecompany you're working for goes out of business

(36:51):
at some point, it is notso easy to remember. Wait a second,
where was that headquartered? Or theygot bought out by someone else,
And at least if you have theoriginal name and information, you've got a
much better starting point old retirement orpension records. I have a small pension
from my first two jobs working forcompany. It was terrible for a few

(37:13):
years after I left there trying toget any sort of records of how I
could contact them, and I hadto just call and call, and it
was really frustrating. So making sureyou're keeping track of those things also incredibly
important. Yeah, and same withthing with investment statements for taxable accounts,
because if you need to prove whatthe cost basis was of a particular security
from years ago, give me alittle bit of a headache if you don't

(37:36):
have those original documents now. Thingswhere it depends would be maybe the original
loan documents that you took out forsomething once once you have the documents proving
that the balance was paid in full. Receipts for big ticket items while you
own them. This would be forinsurance purposes in case of a fire,

(37:58):
theft, something like that. I'mtalking like a big screen TV, computer,
major appliances. These are things thatyou might need to prove that you
had in case there was some kindof a loss, but you don't need
to keep them longer than those thingsexist. For example, in tax records
three to seven years. That's whatthe IRS recommends. You don't have to
keep them any longer than that.Thanks for listening tonight. You've been listening

(38:21):
to Simply Money, presented by allWorth Financial here on fifty five krs the talk station