Simply Money

Episode Transcript

(00:06):
Tonight, we're talking retirement mistakes thatmight not only haunt you for the rest
of your life, but could evenaffect your loved ones after you. You're
listening to simply money present, I'mall Worth Financial, I'm Amie Wagner along
with ste Ruby. Years ago,I remember hearing someone kind of presented this
way for the first time. Like, our biggest job as financial advisors is

(00:28):
to prevent people from making mistakes withtheir money that they can't recover from anything
else. Anything else is secondary tothat. But pulling money out of the
markets during a crucial time and notputting it in right. Those are mistakes
that people cannot recover from, andwhen it comes to retirement, getting certain
things wrong can absolutely change the entiretrajectory of what those years look like.

(00:53):
So tonight, let's really kind ofdrill down on some of these that we
would say, Hey, everyone makesmiss money mistakes. I've made some.
You no, you would never I'ma single one. Why are you even
asking me question? I was justtrying to tee you up to just be
believable with everyone. Is I've alsomade money. You can't even do that.

(01:14):
I can't think of one. Okay, So Steve Ruby is the only
person on the planet who's never evermade a money mistake. So we're just
going to move forward, and you'rejust going to have to just know that
he's perfect, and so every wordthat he says is going to be absolutely
spot on for the rest of us. You're mortals who have made money mistakes.
We know some of those you kindof learn from and you move on,

(01:34):
and others you spend the rest ofyour life regretting. Yeah, we
want to make sure you're not makingthose exactly. So at the end of
the day, one of the primarygoals of financial planning not only is it
to help you from not making mistakes, but it's to make sure that your
money lasts longer than you do withthe expectation that you're going to be around
for a very long time. So, in no particular order, some of
the biggest mistakes that we see thatfolks regret putting off saving for retirement.

(01:57):
This is one of the biggest redregrets. There's always a survey, and
this one was done by Forbes ofAmericans and baby boomers especially express regret at
a much higher rate than younger respondentsas far as not saving early enough yeah.
And why is it for the boomers, Well, because those are the
people who are currently either retiring orin retirement, right, and they know

(02:22):
it's like they've gotten to this pointand you always feel like, oh,
there's always more years ahead. Soonce I get through this vacation, once
I pay off this medical bill,once I get out of this credit card
that I am, I'm going tostart saving and then something else comes.
Well, they have the experience ofbeing at the point of retirement and looking
back, I'm out of time.I'm out of time. Wish I would
have started saving early. And formost people, you start even thinking seriously

(02:46):
about retirement in your forties or fifties. But man, if you had started
saving for it or in your twentiesor thirties, that's when you've got that
beautiful time and that power of compounding. And don't get me wrong, earlier
generation are going to have the sameregret to there there yet. Yeah,
I mean that's just by default,the data just simply isn't there. But

(03:07):
with a pivot moving away from pensionsto retirement planning falling on your shoulders as
an individual investor via our workplace savingsplans primarily for a one case. If
we put off saving and we don'tlet compounding interests to help our money make
more money for us, then that'sgoing to be a regret for every single

(03:29):
generation moving forwards. Now, speakingof four to one K is another regret
that we see. Are are folksborrowing from their four a one case.
I can't tell you how many timesthrough the years someone has walked through the
doors here and said, I hadthis bill come up. I didn't expect
it. I've decided to help mykid pay for whatever it is. There's
a thing, And then the kneejerk reaction to that is always I'm going

(03:51):
to take money out of my fourto one K. And I understand why
that is because you get this statementright, you likely see that that money
is growing over time you're not currentlyusing it. It almost feels like a
waste to your current self, rightbecause money is there. I actually had
friends several several years ago who boughta BMW with a four to one K

(04:13):
one they're very nicecar, with thedown payment pulled out of their four oh
one K. It just made menauseous that there are, you know,
certain circumstances we're absolutely borrowing from yourfour one k as is your only option.
Yeah, as a last resort,it can be your only option,
and you know, you gotta dowhat you gotta do with some in some
situations. But often I would sayit's not, Yeah, that's the that's

(04:35):
the key here if it's not theonly option, and you go right towards
that, because when when you borrowfrom your four one K, you're taking
away compounding interest. And again,with generations current and future not having pensions
and the four to one K beingthe primary bucket that we generate income from
in retirement, if we take awaythe ability to let those dollars grow for

(04:58):
us, then that's a big problem. It's the beauty of a pension,
not only the fact that it's youremployer that's put it, but you can't
touch the money. It was neveravailable to you before you got to retirement.
I would say my one kind ofmajor issue with the four oh one
K is that, and I thinkthere, you know, it's like the
good and the bad. It's onyou. But it's also good that it's
on you because you have the abilityto control that. Also, you have

(05:20):
the ability to take money out ofit. And I've seen far too many
people turn to that. I've alsothose seen some workplace programs that offer some
additional education around this. And you'llgo to put in the paperwork to have
the money withdrawn, and it'll say, like another screen will come up and
say have you thought through X,Y, and Z first. It kind

(05:41):
of gives you kind of rudimentary lookat the impact to you long term by
taking the money out, and Ithink, gosh, even just having that
extra little moment of pause to say, is this really my only option?
Are there other things that I coulddo? And to really look at the
numbers in black and white in frontof you and say, oh, if
I take this money out, now, here's likely the impact that can pave
down the road. Yeah. Onceupon a time, when I started in

(06:03):
this industry years ago, I wasin a four toh one K customer service
role where a big part of ourjob was processing hardship withdrawals. I bet
that was eye opening. It was. It was very eye opening. And
you're right, there are programs andsystems in place now that can show the
impact of that. So if you'reconsidering one, maybe take a look and
see how that could affect you.You're listening to simply Money presented by all
Worth Financial. I'm Ami Wagner alongas d Ruby. As we talk about

(06:26):
mistakes when it comes to retirement andyour money that you may not be able
to recover from, right, wewant to make sure that you're protecting yourself
from those. One of course,is just waiting too long to save.
Another is you're saving in your fourO one K and you're taking money out
of it. And another one isyou're avoiding the stock market altogether. You

(06:46):
know what's going to go up,but you also know it's going to go
down at some points in those downperiods of time, that volatility is too
much for you to handle. Yeah, this is why we need to step
back and you know, just developa fund plan and understand where our financial
what financial goals are working towards,how much we have to save, how
much risk we need to take tomeet those financial goals. At minimum,

(07:09):
understand your risk tolerance. Because themarkets we do reach periods of volatility.
I think everybody knows that that's theticket to play. You're going to experience
a volatility, But at the sametime, the markets are like walking up
the stairs while playing with a yoyo stole that from Nathan Backrack. I'm
going to say for the rest ofmy career because I love it. It's
a great analogy. Yeah, andthe markets will be higher over the long

(07:29):
run, but there's going to bebumpy periods where things go down. Now,
it's important to also remember that theonly way to keep up with inflation
over the long run is with stocks. Sitting on the sidelines in cash,
being in too much bonds, it'snot going to keep up with inflation,
and you are going to safely losepurchasing power on your dollars. Stocks are

(07:50):
the only way to keep up withinflation over the long run. So whether
or not you're saving now and youhave a long runway, or you are
retired, we still need to havestocks to help us not lose purchasing power.
Animal. I remember years ago,this was probably the first time I
spoke to a huge group of peoplewho were retired. It was actually a
church in Kenwood, and I wassitting at the table we were eating lunch,

(08:15):
and the people at the table wereall saying, you know, now
that there's not the paycheck coming in, you know, I'm looking at my
investments. It makes me a littlebit nervous. And I'm just wondering,
you know, like, what canI put my money in where I'm not
going to lose any but it's stillgoing to grow. I was like,
there's a magic seed that you canplant in your backyard and there's just going
to be a money tree that growsand you're going to be good to go.

(08:35):
I wish I could say that.Right as the afternoon war on,
every single person I came into contactwas literally looking for the same thing.
The Unicorn fund. That's what itis. Yeah, I am afraid of
the stock market because I'm afraid ofany losses. At the same time,
what can I put my money inthat growth? And all I can do
is point you to Tina, thereis no alternative better than the stock over

(09:00):
time. Now, you can't adjusthow much exposure you have to the stock
market, and that of course makesa lot of sense as you retire,
but you have to have enough exposureto your point. We've seen inflation at
nine plus percent over the last coupleof years. If you had your money
out of the stock market and therewas zero growth in it, can you
imagine how nauseous you'd be every daylooking at just that money eroding in your

(09:24):
accounts and there's nothing you can doabout it. It's dangerous because you don't
see it, you don't feel it. There's no red numbers when you're parked
in cash on the sidelines. Yes, so it's a way to safely guarantee
losses. And by the way,I broke safely. Yeah. And I
was talking about this with a prospectiveclient once and I said, you know
the Unicorn fund and they said,what's the ticker for that? We'll get

(09:48):
back to you on that one.Yeah. I think they didn't understand what
I was getting at. So anothermistake that we see folks make is downsizing
your four one K contributions while you'reworking. In a perfect world, we
find a way to maybe do toan automatic increase program so that when your
income goes up each year, youput away another percent or two. But
there are situations where I've seen peoplethat have taken on debt and they've said,

(10:09):
well, you know, I canI can pause some of those contributions
for now and tackle that debt whileI get my finances back in order.
If there's free money on the table, that is not the solution. We
talk about living off of the fiftyto thirty twenty rule. And this is
like fifty percent of what you're bringinghome goes to your absolute needs, your
mortgage, if you have your housea rent, if you don't, your

(10:30):
utilities, your major bills that arecoming in. Thirty percent, that's the
fun money that you have going outon the weekends, planning trips. And
then twenty percent, we would say, is what you save. Here's the
deal though, that twenty percent,I would say, is the non negotiable
part. And also, of coursewe know the fifty percent the needs your
bills, those aren't going to change. So if for a while you're looking

(10:52):
at another expense, taking money outof what you're putting into the four owing
K isn't the answer. It mightbe less vacations, it might be less
eating out. I get that it'sless of the fun stuff. But over
time you're going to be glad youmade that decision putting money into the four
oh one K and then saying,ah, I'm just going to back off
my contributions this month. It's notgoing to build that sustainable kind of retirement

(11:13):
that most of us, no onewants to get to retirement and being like,
ah, well we can eat outthe Taco Bell today. Nothing against
Taco Belt's great food, but youmay want more than Taco Bell at some
point you may not have the option. If these are the kinds of decisions
that you're making exactly. Yeah,So finding a balance between how you're living
your life now how much you're savingnow so that you continue to live the

(11:35):
life that you want when you makethe transition into retirement is very important.
Steve Ruby has never made a moneymistake. For the rest of us mere
mortals, we need to make surethat we're not making mistakes we can't recover
from, which is the Simply Moneypoint. We're all going to make mistakes,
all of us. I'm calling yourwife after the show because I know
you've made them. Well, shemakes mistakes, many of them. You
learn from and move on. Thekey there is to avoid making mistakes that

(11:56):
you cannot recover from, especially whenit comes to retirement. Next, you
want to retire early. Great,here's the question for you. How are
you going to pay for your healthcare? We'll look at your options. Next.
You're listening to Simply Money presented byall Worth Financial here in fifty five
KRC the talk station. If you'relistening to Simply Money, presented by all

(12:18):
Worth Financial. I mean you Wagneralong with Steve Ruby. If you miss
anything on a show one night,you don't have to miss the show at
all. We've got a daily podcastfor you. Just search Simply Money.
It's right there on the iHeart appor wherever you get your podcasts, and
straight ahead at six forty three,How and when to take advantage of a
Wroth account? Does it make sensefor you? We'll look at that.

(12:39):
Okay, So thousands of people aren'tworking by the time they turn sixty five,
regardless of what their plan is.There's all kinds of studies out there
that say it just doesn't happen.Whether it's your choice, whether it's your
boss's choice, lots of things cango wrong. The problem with that sixty
five age as being the magic ageis that's when you qualify for Medicare.

(13:00):
Before then, if you are nolonger working, the major question that you
have to ask yourself, and Ithink you know for those who are doing
it on their own planning to retireearly, this is the major hiccup for
most people. How are you goingto pay for health care? And it
can be a big one because itis expensive big. Those costs add up
very quickly. Now, I wantto be clear that just because health care

(13:20):
is expensive, it doesn't mean thatyou can't retire early without proper planning and
resources. I have folks I workwith that are terrified sometimes to make the
transition into retirement, even though weplan for the added expense that will exist
when you pull the plug early andneed to pay for coverage to some capacity.

(13:43):
Yeah, So we think the keyhere is understanding what it looks like,
because, let's face it, whenwe're working, we're a little bit
spoiled. Whatever healthcare premium that you'repaying is a tiny percent. In fact,
the average employer pays seventy eight percentof what you would pay if you've
had a single coverage plan, sixtysix percent if you've got a family plan.

(14:03):
That's a big share of what thatplan looks like. In fact,
the average single coverage close to eightthousand dollars for a family coverage twenty two
thousand dollars. All of a sudden, you went from paying a small portion
of that to all of that eightthousand dollars twenty two thousand dollars. If
it's for both of you, that'sa huge thing to understand. And I
think to your point, it's notthat you can't do it, but you

(14:26):
have to have the knowledge and youhave to have the plan first, or
you get to that point and I'mgoing to jump all in, I'm going
to retire early. Oh I didn'tthink about that. Yeah, I didn't
think about the increased premium that you'regoing to have to pay, because you
know, when we build plans andother financial advisors build plans and people are
planning on retiring early, we willinflate the cost of health care significantly before

(14:50):
sixty five years old. How wefill that gap is you know some of
the stuff we're going to look attoday. So first of all, COBRA,
so this is when you separate fromyour employer, you can maintain up
to eighteen months of coverage that youhave grown used to. It's the same
coverage that you had through your employer. But but yeah, this is a
big one. The cost can easilybe four to six times the premium that

(15:13):
you were expecting because your employer isno longer covering that portion that they had
been. So well, yeah,so we are spoiled to an extent.
But this this gives us a lotof flexibility so that we don't have to
change doctors. For example. It'sthe same exact coverage, but it comes
with a big priced head. Anotheroption that you have, you know,
especially if you think about the factthat if you want to retire at the

(15:35):
age of sixty one or sixty two, eighteen months of cobradge, even if
you can afford it's not long enoughto get you to sixty five. So
okay, what about the exchange right, the Affordable Care Act? The marketplace,
it's usually far less expensive than probablythe plan carrying the entire premium that
your employer was paying for you.And if you have you have to make

(15:58):
less than two hundred thous dollars andincome to qualify. In some parts of
the country, you can also getthough a subsidy, a federal subsidy,
So you're paying for these premiums,but you're getting some money for it,
and it's also an option if youmake more than that. Here's I think
the problem with that marketplace. Whenit was first when President Obama Obama first

(16:18):
enacted this right and first came tothe marketplace, there were all kinds of
options, all these insurance companies wereoffering everything. Well, I think as
time has gone on, there's lessand less options in that marketplace. And
the problem is, and I talkedto a family about this a few years
ago who lives in northern Kentucky.They both do freelance works. They don't
have the option of an employer payinga lot of the premium, so they

(16:41):
have to get it through the marketplace. There were no options in the state
of Kentucky for them to be ableto take their child their children to a
pediatrician in here. Come on,literally, that's how limited the options were.
And I think people across the countryare kind of finding some hiccups in
this marketplace. So it's just aperfect plan. If this is the route

(17:02):
that you think you're going to go, I would say do a deep dive
on this one. Do your researchon the plans that you are looking at.
Try to think through every possible scenarioto make sure that you really do
have the coverage that you need.Here. Yeah, it's a tricky one
because if you do find a planthat works for you from the Affordable Care
Act on the exchange, then itcan reduce the expenses significantly depending on our

(17:26):
income situation. If we have noincome, then you can conceivably get coverage
as long as it's actually covering everymember of your family at a very low
cost. And as opposed to privateinsurance, the ACA plans that they don't
allow coverage to be canceled based onpre existing conditions, which is nice.

(17:47):
So the private insurance, which isthe next stop and option, they can
disallow you for coverage based on priorhealth conditions. So it's a tough one
because, as you said, youknow somebody in Kentucky that ACA wouldn't even
cover their children, So that's obviouslya disaster. That's not going to work.
Yeah, unless they were going todrive like an hour and a half
away to Louisville to see a pediatricianevery time, which no one wants to

(18:08):
do that. It just wasn't aperfect situation or anywhere close to that for
them. There's a last resort.It could be through a Social Security disability
designation if that were to work outto you for you, but I would
say probably one far more likely optionif you can find it, is you
know a lot of people will retire. They'll be just burn out on what

(18:29):
they've always been doing, and theylook for like a little late career pivot.
And maybe that doesn't even involve fulltime work. Maybe it's part time
work. But there's a lot ofemployers out there, Starbucks, Trader Joves
that are offering health insurance coverage totheir employees. So you have more flexibility,
right, maybe don't even have towork full time, but you're also
getting part of this coverage paid for. And to be clear, these companies

(18:52):
they offer health insurance for part timeworkers. Yes, that's that's the key
here to attract good workers exactly.So if you wonder why your barista is
sixty three years old, that thatcould be a very real reason. The
o why you're paying nine dollars forthat cup of coffee, Well, just
don't put a Starbucks. It's outrageous. But that is a good point because
you know there are opportunities for thosethat maybe want to step back that they're

(19:18):
not looking at retirement, they're lookingat financial freedom. Yes, meaning they
don't have to do their high stressjob, very demanding, their working nights,
they're working weekends, but they're worriedabout health coverage. You can make
the transition to a part time jobwith minimal responsibility and still receive health insurance
through that employer. Here's the allWorth advice. If you do want to

(19:40):
stop working before sixty five, areyou're forced too, You've got to have
a plan for that. If youhave no choice, they'll understand there are
options out there. Do your homework. Coming up next, this is a
weird one, but how to keepdown the cost yes of dying. You're
listening to Simply Money, presented byall Worth Financial here in fifty five krs
the talk station. You're listening tosimply Money presented by all Worth Financial.

(20:07):
I mean E Wagner along with SteveRuby. There is the saying, right,
nothing in life is guaranteed except fordeath and taxes. And we often
focused on taxes on this show,but tonight we're going to focus on the
dying part. And of course specificallythis is simply money, the cost of
it. I mean, I thinkthis is something that many of us don't
worry about until what we don't becausewe're gone. But there is it cost

(20:30):
a pretty penny to die. Yeah, Unfortunately, it's a it's not fair.
I know, it really isn't.And this is something that we talk
about with folks that we work witha state planning and of life planning.
It's important because these costs are arebecoming kind of astronomical. The median costs
of burial in twenty twenty three wasten thousand dollars. Yeah, that's a
six percent increase from twenty twenty one. And that figure includes a cost for

(20:55):
everything prior to burial, including acasket, but didn't include the actual cemetery
plot or or monument or gravestone marker. If you want to go all out
and have you know, ten thousanddollars to die, get put into a
casket, but other than that you'regonna have to pay there's added costs.
It's insane. It is absolutely insane. Which is interesting because I was actually

(21:15):
just thinking about this recently, howfunerals that I've gone to recently a lot
more people have been cremated than buried, and I was thinking, well,
I don't know what's the reason peopleare much cheaper. It's actually cheaper.
There's a monetary reason. There's thesignificant difference between how much you're going to
pay to be cremated and how muchyou're going to pay to be buried.
And you know, for loved oneswho are left behind having to shoulder this

(21:38):
pretty enormous cost. Sometimes they haveto make the decision on what's the cheapest
option. Yeah, I mean that'swhy it's important to have the conversation while
you're still around, so that yourwishes are fulfilled in you know, the
transition to death. Here, it'sit's it's it's important that that we set
those expectations about what we want.And you know, the cost by the
way of cremation with with a containerand earned twenty twenty three six thousand dollars.

(22:03):
It's crazy. That is crazy.That's way too much. I just
want to be you know, wrappedin a sheet and thrown in the Ohio
river. How about that. That'sactually not an option. So yeah,
it's just not a thing. Allthose bodies floating in the river would be
really gross. So that's not athing, right Lake Erie where I'm from
in Cleveland. Now, none ofthese things are options. You know what's
interesting, I just recently heard thatsome people who were spreading ashes in places

(22:26):
have gotten in trouble because they don'thave permission to and it's like dessecrating an
area or whatever. There's lots ofrules really around, Like you know,
you want to do it someone wantedto do in a ballpark, because it
was like really dealers fan or somethinglike that. Lots of things you think
through here. My grandparents actually,you know, they were in their nineties
when they passed away, and theydid the pre planning. There was a

(22:48):
gift to us in that and theythey had made the decisions for themselves.
And the reason why I say thatit was a gift is because my mom
passed away at the age of sixty. She was way too young. She
died of cancer. She didn't havethe she didn't go, you know,
and plan all these things. Soit's a very emotional time. We had
just lost our heart broken, andthen you were put in this room with

(23:10):
all these caskets, all these optionsat the time nothing. It was like
the most expensive thing was the onlything that I wanted because it seemed like
the best thing for her. Ifmy mom were still there, she would
be like, what what are youthinking? Don't do you pay that for
me? But it is such emotionaltime, and so I actually think that
this is a very loving gift toyour loved ones, regardless of how old

(23:30):
you are, is to least putaside some money or spell out some wishes
about what you would want, sothat people aren't in the very heartbreaking place
trying to make decisions that have verylarge financial implications for them on what you
would want. So I think it'sa very nice act of love to not

(23:51):
only have it written down or planfor, but communicate that with your loved
ones. You know, you reallydo bring up a good point because loss
obviously emotional. When we're em itcan drive poor money decisions. You know,
this is the only thing that wouldmake me happy that the twenty thousand
dollars cast get in the headstone.Yeah, so planning accordingly so that you
know, your mother in this situationcould have said, what are you thinking?

(24:14):
Don't get me that that it isa real opportunity to provide a service
to your love. Yes, inthat moment, you could have given me
the largest monument and I would say, that's what we want. She needs
sixty thousand dollars, no problem,you know. And then my dad's looking
at me like, well, Idon't know about that, you know,
And so we just think in thatstate of grief, it's a really difficult

(24:36):
decision to be making. And soand for those of you that it's a
big deal like environmentally, there's actuallygreen options, and there's a lot of
Americans who say they would be interestedin exploring green funeral options. And again,
I think there's probably options out therethat most of us have no idea
about, and we don't like tothink about these things. I always laugh,

(24:56):
I always have this list of thingsto do, right, this running
list of things to do. Ithink estate planning was on that list for
about eighteen months because it was justlike, this is the ichy part.
I want to do all the otherthings, but not the estate planning,
even though I knew if something wereto happen to me, that's the nicest
thing I can do to my familyis to have all those things planned out
in event. Professionally, I findit to be the one that I need

(25:18):
to bug people the most about toactually do their homework. And I tell
folks I work with, I'm goingto keep bugging you about this until you
get it done. You tell meshut up, one of two things is
going to happen, and for themost part, people say, you know,
bug me about it till I getit done, because it is easy
to put this stuff off. Bythe way you brought up the green stuff
planning a tree with cremated remains.It is a thing creating soil out of

(25:40):
human remains. I know, interestingstuff. This one creating tattoo with ink
infused from the cremated ashes. That'sthe grossest thing I know. These are
things that people are in no judgmenthere, you know, you do what
you want. But you know,my green plan is when no one is
looking, because apparently it's illegal there. You see though, on social media

(26:03):
people crowd sourcing go fundmes to helpcover funeral expenses, and I think you
know that is just a telltale signof the fact, yes, that it's
so expensive. And there's also somesome laws out there that people are trying
to say, hey, we needto be really upfront about the cost of
what these things, you know,before people are walking in heartbroken. Uh.

(26:26):
And apparently you do have to discloseif someone is calling or they're in
person, the cost of things.People do things online nowadays, right,
It's funny. Several years ago inthis show we actually started talking about the
fact, I don't know if youknow this, you can buy a casket
from costco okay, and there's otheroptions of the end of life things that

(26:47):
you can buy from Costco and Ithink it's it's it's just a testimony to
the fact that it's so insanely expensivethat we we need to have lower cost
options. But when someone has passedaway and you're walking into that funeral home,
that is not what you're thinking about. Yeah, that's a good point.
So you know, sit down andtalk to your financial advisor, have
the conversation with your family. Again, as you put it, it is
a service to your family to planahead for these matters. Yes, an

(27:11):
act of love. Absolutely, Pleasedon't skip that one. Here's the all
Worth advice. The last thing youwant on your loved one's grieving and going
into debt at the same time.So get those financial affairs in order before
that happens. And unfortunately none ofus know when that's going to happen.
Coming up next, we've got sometricks that could potentially save you thousands of
dollars in taxes. What you needto think about. You're listening to Simply

(27:34):
Money presented by all Worth Financial herein fifty five KRC the talk station.
You're listening to Simply Money presented byall Worth Financial. I mean you Wagner
along with Steve Ruby. You havea financial question that's keeping you up at
night. You and your spouse arejust not on the same page about There's
a red button you can click themwhile you're listening to the show. It's

(27:56):
right there on the iHeart app.Record your question. It's coming straight to
us. We'd love to help youfigure it out and straight ahead. Are
you one of those people who's alwayson, always connected, always checking your
email. Well, there's actually anegative impact of that. We're going to
get into that coming up in justa few minutes. You know. One
of the things we talk about,especially with just comprehensive financial planning, there's

(28:19):
a tax strategy part of this,and we're not talking about just tax preparation,
the part that you do in April, but a year round strategy that,
if done right, executed right,can save you thousands of dollars in
your own pocket rather than paying itto Uncle Sam. In one of those
is putting money into a roth iraor wroth for O one k. Yeah,

(28:41):
so I'm always a fan of findingways to pick up a stick and
poke Uncle Sam right in the eyewith it. Sign me up for that,
yeah, and roth accumulating wroth asa way to diversify your future tax
liability. That enables to do enablesto do just that retirement when we're trying
to pull from different buckets to beas tax efficient as we can. So

(29:02):
let's talk a little bit about howthere are ways to save for ross if
you make too much money. Sothe limits for twenty twenty four seven thousand
dollars contribution if you're under the ageof fifty eight thousand dollars if you qualify
for the catchup contributions, but yourincome levels have to be below a certain
limit. If you're a single filer, that limit is one hundred and forty

(29:26):
six thousand dollars. If you're marriedfiling jointly, two hundred and thirty thousand
dollars. If we're above those thresholds, what do we do well? I
do want to be clear here too. When it comes to a wroth for
a one K, Yeah, thosesame income limits do not apply. This
is only for the roth IRA.If you are close to that, right,
you and your spouse make two hundredand forty five thousand dollars and the

(29:48):
cutoff is two hundred and thirty thousand. You're like, Oh, I'd actually
really like to take advantage of thatroth IRA, I just can't. There
are some things that you can doin order to lower that taxable income in
one of them in and these areall things too, by the way,
that are going to help you laterin life when it comes to retirement.
Maxing out those four oh one Kcontributions right, not only getting the full
company match, but the maximum amountthat buy lall you can put into those

(30:11):
accounts every year, right, lowersyour taxable income and can get you potentially
within that threshold where you can putmoney into that wroth IR yues. As
long as you're putting the money pretax into your form, that's a good
point, not the wroth Ford.Yeah, that removes that money from your
income, so it lowers the incomethat you've earned, which lowers where you

(30:32):
fall in that threshold to be ableto make wroth IRA contributions separate from your
four oh one K. Another wayto lower your income further is the Health
Savings account of one of your favoritetypes of investment vehicles, because it is
triple tax advantaged. When you putmoney into the HSA, it is a
deductible contribution. If it's deductible,then that can lower us in that threshold

(30:53):
to be able to make the rothIRA contributions and then that money right grows
in h thre three. Yes,and then you can also take it out
tax free for qualified medical expenses.There's literally nothing else like it that the
government options. Is a gift fromthe government. So I say, if
a high deductible healthcare plan makes sensefor you, and listen, I get
it. For some families, itdoesn't. If there's chronic illnesses and things

(31:15):
like that, a high deductible planmay not make sense. But if this
does make sense to you, anHSA is a great tax planning tool,
retirement planning tool. It can bein lots of different ways. There's lots
of flexibility there, so that canbe one thing, and you can put
if you're an individual up to fortyone hundred dollars, families up to eighty
three hundred, right, So againyou're putting money into something that's going to

(31:37):
help you later at the same timelowering your taxable income that can put you
into that threshold where then you canput money into that roth IRA. Yeah,
absolutely, So how about making themost of your deductions. So this
is a tax filing, tax planningmaneuver. Combined. For example, if
you're a member of the armed forceson active duty and you move because of

(31:59):
a change in your station, youmight be eligible to claim a moving expense
tax deduction in any way that wecan lower our taxes in the situation.
Remember, the conversation we're having rightnow is a very specific one. It's
ways to enable yourself to save moneyin a roth ira. If you're right
up against that income limit, thenwe can still find ways to reduce that

(32:19):
to make the roth ira contribution.So in this situation, making the most
of your deductions when you file.Yeah, and if you have, if
you own your own business rate soself employed, there could be some options
there as well. I want totalk about though, another option for you
if you make too much money,and this is a backdoor wroth right backdooring
money into a roth ira. Andthen this is also an option where you

(32:43):
put money into a traditional ira firstand then it gets converted to a roth
So you're paying the taxes at thatpoint of conversion. But it's actually relatively
easy thing to do. Yeah,it's confusing the first time you do it.
Yeah, I think that's the wayto look at this. Well,
it's almost like Wait, you cando that. Doesn't even make sense that
you can do that. Yeah,you know it's a loophole, yeah,

(33:06):
because you're not making a contribution toa roth ira, you're converting to a
roth ira immediately though. Yeah,now this is something that you do need
to sit down and talk to aCPA, a CFP, a fiduciary planner
that can help you map out whatthat strategy looks like the first time you
do it, because it is aneasy one to make mistakes. For example,
for roth back door conversions. Ifyou have traditional IRA or rollover IRA

(33:29):
money and you try to implement thestrategy, it creates a tax imaar.
Yeah, so you need to havea certain situation for this to even be
an option that I would ever recommend. But in the situation that we're talking
about right where you're putting money intoso you knowe that money is coming directly
out of your account into that,it can make a lot of sense.
You know, we're talking about aroth iray And I think we need to

(33:52):
back up from this and say doesthis even make sense for everyone? There's
some people where it makes a lotof sense. In some people where we
would say you shouldn't even consider this. Yeah, a lot of it depends
on how high your income is,how close you are to retirement. There's
a lot of moving parts here.But you know, if you're knocking on
the door to retirement, you're makinga ton of money and you're about to
transition to lower paychecks, why wouldyou voluntarily pay more taxes? Now?

(34:14):
We can always convert later, butit's a case by case basis where you
really need to sit down and talkto a financial planner. On the flip
side, Right, we just wentthrough several years ago a change in the
tax structure, and most of usare at a lower tax bracket than we
were maybe even five, six,seven years ago. And if you think,
as you look at that sort oflandscape of the US and our debt

(34:35):
situation, and you think, hmm, there are taxes going to go in
the future, you might come tothe conclusion that you might be paying more
in taxes in the future, andwhich case, it might make sense then
to lock in today's tax rate now, So this is an option for you.
When I would say, hey,if this is something you're thinking about,
just make sure you've got a fiduciary, right, someone who's going to
put your best interests ahead of theirs. An advisor who's working with you to

(34:58):
help you make sure doing it thebest way for you. Here's the all
Worth Advice. A qualified financial procan best help you decide whether a wroth
retirement account is actually right for you. Coming up next, how to unplug
from work without all the guilt.You're listening to Simply Money, presented by
all Worth Financial here in fifty fiveKRC the talk station. You're listening to

(35:23):
Simply Money presented by all Worth Financial. I'm Amy Wagner along with Steve Ruby.
I think the concept of work lifebalance has talked about a huck of
a lot more now than it everwas before. Where do you Steve?
Where do you fall on the spectrum? Are you someone who when you're at
home on the weekends and you're gettingwork emails, are you constantly checking them?
Or are you able to unplug?I am not able to unplug.

(35:45):
I'm not either. I have badhabits. I have my work email on
my phone. I'm not answering callson the weekend. If one comes through.
I don't typically answer the emails unlessit's more of an urgent situation,
which is just let the anxiety buildbecause you know they're coming in. I
know what I'm going to have totackle come Monday morning, and that's obviously

(36:07):
not the best practice. Eight outof ten of us actually say admit,
we check our work email after hours. It's like the good and the bad
of technology. Now your work emailis in your pocket at all times.
Right. It used to be youhad to log in. You may not
even have a laptop at home.Now you constantly have access to it.
I have to say Steve Spovac,who just retired, he was old school

(36:30):
and always and this was one waywhere I actually was a little bit jealous
of him. Yes, he tookednine to five his butt off. I
mean Monday through Friday. He wasin the office. He wasn't skipping out
early. He was constantly involved withhis clients. When he left this building,
he left the building. He wasnot checking his emails on a Saturday

(36:52):
night. He was not eight o'clockat night being like, oh I just
got this email. I need tobe thinking through this. No, he
was able to on. And Ithink that for a lot of us,
we would admit on the days whenwe fully unplug, we're far better off
the next morning when we get towork. Yeah. Absolutely. And you
know, there was a survey.It was at Harvard, Notre Dame,

(37:13):
University of North Carolina. They cametogether and they looked at one hundred and
ninety four full time employees across arange of occupations and industries and they had
them complete three surveys a day fortwo weeks. And the findings are interesting.
Yeah. Actually the people who unpluggedfelt shame about it the next day
when they got to work, andthey said, okay, it wasn't just

(37:34):
that they felt shame. Those thatactually felt ashamed for taking time for themselves,
they were more likely to cut cornersat work, sometimes in ethically questionable
ways. This is such a conundrum. I think it's so interesting because I
think most of us would agree it'shealthier. I was just sitting in talking
to a client last week and hetalked about the fact that for the first

(37:54):
time ever over Christmas this year hetook a couple of weeks of vacation and
he did not check his working.He said, my wife and I had
more quality time than we have everever had. And he said, I
really never He's sixty five, Hesaid, really never thought about retiring before
all of a sudden. Now Ilike the concept of it because I enjoyed
not being constantly tethered to work,So I think there's a lot of great

(38:17):
emotional benefits of it if you're nottied to that shame. That's a good
point. And I did manage todo it once one time. Yeah,
one time, per recommendation of myboss, when I went on a big
trip to Europe and Africa, whichwas a kind of a once in a
lifetime thing for me. They said, delete the app from your phone,
and I did and it was wonderful. It took a week or so to

(38:37):
get used to it, but Irecommend it. Yes, I think you
have to be able to do itand not feel shame, and then you
reap the benefits. Thanks for listeningtonight. You've been listening to Simply Money
because I'm my all worth financial herein fifty five krs the talk station