Simply Money

Episode Transcript

(00:06):
Tonight, how to accomplish something withyour money that only three out of ten
others are actually doing. Plus whatto do with your cash if the FED
lowers the interest rates. You're listeningto Simply Money, presented by all Worth
Financial a Meimi Wagner along with SteveRuby. You know, we talk about
a financial plan and I think there'sa lot of people who listen to us,
and they listen to us because theydo it themselves, you know.

(00:29):
And I think as you're working andtrying to set aside money, you can
look at the four oh one k'sand those accounts and think I'm doing pretty
well on my own, and thenyou get to the point of retirement.
And Steve, what I see somany times with people is they want to
crawl up around their money and protectit. And what they don't miss or
what they miss here is they don'tget right is the fact that one of

(00:52):
the ways they can protect that moneyis from a tax standpoint. Yeah,
so part of financial planning is taxplanning. Yes, obviously this is a
hot topic. I love it becauseit's a way to have more money in
your pocket. Poke Uncle Sam inthe eye with a stick, you know.
Expand expand your money and have itwork harder for you and you're paying
less than taxes. It's a winwin for you. So a new study
from Northwest Mutually, they released itsannual Planning and Progress Study, and you

(01:18):
know, unfortunately we're not surprised bythe results here. It showed that only
three intent of three intent Americans havea plan to minimize the taxes that they
pay in retirement. Now, differentstrategies that we could deploy include making withdrawal
strategically from different buckets, meaning youryour pre tax, your after tax,
traditional WROTH money, maybe using charitabledonations. We talk about that qualified charitable

(01:42):
distributions from your RMDS health savings account. That's one of Amy's favorite vehicles right
there. Yeah, I mean it'striple tax advantage here. And in the
way that I always say that youshould use health savings account, especially when
you're in that accumulation phase of allthose years of working, is if that
high deductible healthcare plan makes sense toyou, you set up the health savings
account. You also, though maybeoverfund or put more money in that emergency

(02:07):
fund, and then you don't actuallyuse that HSA for anything health related.
You make sure that that money isinvested, and then it grows and grows
and grows to retirement. What weknow is that in retirement healthcare expenses are
going to be exorbitant. I thinkit's really hard to think through that because
you know, many of us arehealthy now, like, well, also
be healthy when I'm sixty five,Okay, well what about seventy five,

(02:29):
eighty five? Right? Things canchange, and I think it's really hard
to think about your future self.Yet this is a great way to plan.
And also you have to use theword strategies here because you have to
understand that these are absolute strategies ofthinking through what makes sense. So you
can you can accumulate a lot ofmoney, and you can get to retirement

(02:52):
and feel pretty good about what youhave. But then all of a sudden
things get complicated when in a fewyears you have to start paying require minimum
distributions on those tax deferred traditional fouroh one case. Right, it's like,
well, oh gosh, you know, I've never done anything like this
before. And so before you evenget to that point, there are some
strategies that you can employ that canbe incredibly beneficial by the time you get

(03:15):
to that age. Yeah, Youbring up a good point earlier when you
said that a lot of folks thatlisten to the show are di wires,
meaning they handle their own their owninvestments. They do research, they're comfortable
picking and choosing, you know,their their asset allocation, their stock to
bond ratio. They're comfortable knowing whatresearch to even comb through to help them
make decisions and discider people. Yeah, they've done it well. Yeah,

(03:36):
they decide between small cap, MidCap, large cap, domestic international stocks,
bonds, and they have a processand they are comfortable with it. That
is something that doesn't change too often. Whereas tax laws do. Tax laws
are confusing, tax laws are boring. Combing through tax law is awful,
and sometimes the IRS, sometimes thegovernment acts before or the IRS has an

(04:00):
opportunity to really understand what they're doingand they put out their guidance and there's
still questions about what the end resultof these tax laws are. So obviously
there's a hang up here because tryingto understand the fundamentals of tax planning can
be very confusing, no matter howsolid of a process you have as a
DIY investor. We just had aquestion the other day from someone who was

(04:23):
asking should I think about Wroth conversionsbefore the election, like, well,
no, I don't think you shouldthink about it before the election. I
don't think you should do anything differentwith your money based on politics. However,
if you are aware or not aware, you know, by the end
of next year, the current taxbrackets as they are are going to sunset.

(04:44):
Unless Congress does something to change that, you are likely in a lower
tax bracket now than you would bein the future, and it could make
sense in your particular situation to thinkabout doing some Wroth conversions right now.
You know, do you know ifthat strategy makes sense? You do you
understand why we're saying this. Thisis where I think it gets a little

(05:04):
more complicated. And I've had somany people in my office who say,
I've just I've done this myself foryears. You know, it's hard for
me to think about trusting someone elsewith this. But I'm starting to be
up late at night wondering what makesthe most sense about which accounts I pull
from, or I hear people talkingabout Roth conversions and I don't know.

(05:27):
I don't understand exactly required minimum distributions. And I think that awareness of you
don't know what you don't know canbe a powerful motivator and at least sitting
down and talking to someone to seewhat your options are. And remember not
all advisors are created equal. Yeah, we definitely tout using a fiduciary financial
planneror somebody with credentials CFP after theirname. You know, there's different letters

(05:50):
that support you working as a fiduciary, meaning putting the client's best interests ahead
of your own. And remember that, you know, I've worked for several
different types of firms I come from. I was born and raised at a
discount brokerage firm, and then Iwent to a full service bank before landing
with registered investment advisors and like allWorth Financial for example. And when you're

(06:14):
at a discount brokerage firm, thoseare the big ones, Fidelity, Vanguard,
you know, Schwab, these places. They they when you ask an
advisor a question about taxes, theysay, well, you got to talk
to a tax you got to talkto an accountant. That's all it is.
It stops right there. There's nofurther discussion. So making sure that
you're doing your due diligence when youdo decide it's time to get somebody that
can help you answer the questions thatyou don't know you should be asking about

(06:38):
tax planning. Make sure you're sittingdown with a fiduciary financial planner's that that
has some kind of access to CPA'stax planners, somebody that actually does the
filing, not just the tax planningitself, because there are so many different
opportunities out there to save money ontaxes. You're listening to simply Money presented
by all Worth Financial and medi Wagnerlongwith Steve Ruby, as we talk about
something that only three and ten ofyou are going to get right, are

(07:00):
going to think about, are goingto plan for, and that is when
you get to retirement, right,you've spent all of those years working in
putting money aside and that four ohone K and those iras and however you're
saving. Then you flip the switchand there's no longer money coming in.
It is all money going out.So many you know, want a croll
up in the fetal position around thatmoney, and I completely understand that,

(07:23):
but you're not taking into account.One great way to do that, One
great tool that is available to youis some tax planning. And there are
some great strategies that we can employhere. And you know, for those
who have always done it yourself,and I'm not saying there's anything wrong with
that, but I want to giveyou some perspective here. When you are
sick, right, maybe the firstday you're not feeling well, you've got

(07:46):
a headache, you take tylan,no, you take hypoprofen. Whatever.
If a week later it's still there, you might think about going to the
doctor. You might think about somethingelse is going wrong. I guess you
could jump on WebMD in self diagnoseand give yourself all the possible treatment,
which is the scariest thing possible,because you can diagnose yourself with some really

(08:07):
scary stuff that you didn't even knowexisted. You're probably not going to get
it right. You're probably not goingto figure out the best thing that's for
you. Most of the time,you will trust a doctor who is an
expert right in diagnosing any medical conditionsand getting you treatment. I think the
same thing applies here. You canbe very very good at what you do,

(08:28):
and you could have been pretty successfulthrough the years at putting aside money
in saving and investing for retirement.But now as where it gets a little
more technical and we're diagnosing things correctly. The difference here isn't in getting the
diagnosis wrong. It's tens of thousandsof dollars. Yeah, I mean.
Some other examples will be Let's sayyou worked for a place that gave you

(08:48):
a lot of company stock PNG intown. For example, Practer and Gambles
four one K plan. They receivecompany's preferred shares of company stocks a lot
of PNG lifers. They have anopportunity for something called ANUA net unrealized appreciation,
which can be a massive tax saver. But then you also end up
with an oversaturation of a single companystock. So what do you do about

(09:09):
it? At that point, yousit down, you look at your options.
Maybe you don't even know what theyare, but maybe you could sell
options against it to generate some incomeoff of it and do so in a
tax efficient manner, so that there'sways that you can have your money work
for you in ways that are taxefficient, saving money in the process.
Let's say you have charitable goals,but you don't know the best way to

(09:33):
fund them because donating cash, sure, there's deductions for doing that, but
what about opening up a donor advicefund and doing a large donation to your
donor advice fund, and then bunchingyour tax filing so that you're not taking
the standard deduction, but instead you'reitemizing once every two, three, four,
five years, so that you cancapitalize on the fact that we can

(09:56):
save money and taxes if we planaccordingly. And all of those are great
strategy, right, but strategies youwouldn't necessarily know about if you didn't sit
down and talk to someone. Oneof the questions that we are incredibly passionate
about you asking on this show,right when you decide you want to work
with someone, is how do youget paid? I love when people come
into my office and ask that questionbecause I am happy to explain right that

(10:20):
we take a fee of a percentageof the assets that we're managing, and
I can always explain the value ofthat. But I'm going to tell you
I think the value kicks up severalnotches when someone gets to retirement and we
can really employ these strategies because thedifference is it maybe in making an extra
percent or two percent, it's savinga lot of money in your pocket,

(10:43):
and that's not something that you canjust guess at. Yeah, get correct
A large taxable account. For example, during a year with volatility, if
your tax lost harvesting every thirty onedays, then you can have gains in
the account for the year the accountdollar at the end of the year.
Dollar amount can be higher at theend of the year, but you can
actually strategically realize losses to offset allthose gains and up to three thousand dollars

(11:07):
of your regular income taxes. Yeah, that takes a lot of work,
but that's why you hire an advisorto do the work for you, kind
of like you'd hire a doctor todiagnose why your head still hurts after two
weeks. Here's the all Worth advice. Don't take a chance on diying when
it comes to tax planning if youdon't know exactly what you're doing, Because
understand this, please, you couldbe leaving tens of thousands of dollars on

(11:28):
the table at a time when moneyis no longer coming in coming up if
and when the FED lower's interest rates. What should you do with all that
cash? Maybe making money in thathigh yield savings account. We're going to
tackle that question next. You're listeningto Simply Money presented by all Worth Financial
here on fifty five KRC, thetalk station. You're listening to Simply Money,

(11:52):
presented by all Worth Financial. Imean you Wagner along with Steve Reebe.
If you can't listen to our showevery single night, you do not
have to miss a thing that wetalk about. We have a daily podcast
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, we
are actually taking your questions and areask the advisor segment. Okay, hopefully

(12:13):
you have been listening to the drumwe have been beating over the past year
and a half, right, andthat is you know, if you have
any cash on the sidelines, andyou have that old school bricks and mortar
bank that's been paying point zero zerozero zero one percent, now has been
the time. I'm gonna say nowis the time several several months ago was
the time to move that money intoa highield savings account, a money market
account, a short term CD whereyou could actually make five and a half

(12:37):
percent. We haven't been able toget interest rates like that on our cash
that's been sitting on the sidelines inseveral years. But there's research out there
that shows that maybe we've got alittle overboard and how much cash we do
have sitting on the sidelines. Yeah, I think that's probably the case.
I see it my day to daywhen I sit down with the folks I

(12:58):
work with, because it's it's easyto pull your cash and get five percent
return on it and forget the factthat interest rates are going to go down.
Yeah, it's not five percent promiseforever. It's five percent right now,
right now, in this moment,which, by the way, investments
have done better than that. Soit's a fine line. And since the
Fed began raising interest rates, assetsand money market funds, they actually set

(13:22):
at a record six point one twotrillion dollars according to the Investment Company Institute
six point two six point one twotrillion dollars. So online brokeras from e
Torah. They released results of itsQ two Retail Investor Beat survey on Wednesday,
and it looked at ten thousand differentretail investors across twelve countries on three

(13:45):
different continents and found that the cashassets were still the most popular amongst a
different asset classes. Yeah, likeseventy percent of people around the globe who
are investors have money in cash,and then you hold that up against stocks,
and half of them have money inthe stock market, their local stock

(14:05):
market, wherever that is. AndI think that's really interesting. I do
think there is definitely a place forcash in your overall portfolio, right and
I would say that belongs in youremergency fund, and I love that right
now. I mean, it isa really difficult conversation to have with people,
especially in the past, when we'retelling you to have money on the

(14:26):
sidelines and you're looking at the stockmarket and it's going gangbusters and you're not
getting anything in that savings account,right So, at least now, I
think this is an easier pill toswallow. But the problem is it feels
so comfortable and it's not going tolast. Fear and greed always plays into
that right there, because when themarkets are doing well, people are like,
hey, I don't want to havean emergency fund. Can I invest

(14:48):
with this? And I'll say,no, no, you can't. You
need to have a certain amount ofliquid cash for when the markets do go
down. You don't have to sellit a loss or take on debt or
you know, tap into retirement accounts. Right now, when cash is be
and paying so well, people areat tempted to pull out of the markets
to invest in cash. Cash isn'tan investment. It is a short term

(15:09):
place to hold money, maybe intermediate. If if you have a major purchase
coming up, a home purchase,you paying for a wedding, big vacation,
whatever, that might be sure youcan park some of it in cash
and keep that working for you.But as far as a long term investment
is concerned, you are guaranteed toslowly lose purchasing power. Well, and
I think there's a behavioral finance componentto this, of like recency bias,

(15:31):
right, And it's like, gosh, well, I've been doing pretty well
with my money in the bank andI haven't had to deal with any fluctuations
in the stock market. Understand thatis likely mostly in the rear view window,
right, and as you're looking forwardat what the future holds. We've
already seen some online banks that we'repaying pretty high interest rates notify their customers,

(15:52):
Ah, this is going down alittle bit. Now. Keep in
mind, right, the Fed,our nation central Bank has at lowered the
FED funds rate. Yea, they'regetting ahead of it. They're getting ahead
of it. They're anticipating what's goingto happen. You should be anticipating what's
going to happen too. But Ithink my biggest frustration when I look at
these cash numbers is your plan.Your asset allocation, where your money is
invested shouldn't change based on any particularcurrent situation in the economy. It should

(16:18):
be you figured out what's best foryou. Right, You're not pulling money
out of your what you have investedin the stock market to go to cash
because that feels a little bit betterto you right now. Right, that's
just not the smartest way to planlong term because then you're going to constantly
be reacting to market conditions. That'sa great point because when you have a

(16:38):
financial plan, you understand the levelof risk that you should be taking across
all of your accounts to meet yourdifferent financial goals. Maybe sometimes you have
different risk allocation for different goals.But cash, again, that's just for
the short term. Trying to timethe market moving in and out of cash
to stock. It's a feutile exercisethat it just starts not going to get
it right. Yeah, it doesn'twork in time again, you know.

(17:00):
Andy Stout, Chief investment officer ofall Worth Financially, he has some great
charts that he's put together based onresearch that he's done that shows how little
your money will grow if you missthe top ten best days in the markets
in an attempt to try to timethings. So you know right now.
Part of the problem with cash payingas high as it has recently is it's

(17:21):
almost a bit of a trap.You look back in the past a year,
two years, if you have actuallybeen in a high yield savings account,
CDs, money markets, something likethat, then you look back and
you're like, hey, this ispretty good. I feel like this is
easy. I could just sit incash moving forwards in perpetuity and everything will
be fine. No, that isnot the case. You will not keep
up with inflation. The best wayto do that is with stocks and furthermore,

(17:45):
a diversified portfolio between stocks, bonds, and a little bit of cash.
Yeah. I think the trap hereis this kind of false sense of
like this is so easy, thisis so good, and this is going
to continue long term, And thenyou can go to any financial website and
realize nobody knows what's going to happenin the future. I mean, Wall
Street made predictions back in December thatwe were going to see six rate cuts

(18:10):
this year. Have we seen oneyet and we're halfway through the year.
Nope, And I would say probablythe largest likelihood that we'll see is maybe
the fourth quarter of this year.So you could also be moving money in
and out of investments in an outof cash based on those predictions and where
they say things are going, andthey don't get it right. I mean,
honestly, most of the time,they don't get it right. Yeah,

(18:32):
And keep in mind we've just hada whole segment about tax planning,
so pivoting a little bit here.Taxes and fees obviously that can eat into
returns, especially when it comes tomoney market funds because those are generally tax
as ordinary income, not lower capitalgains rates or dividend income from stocks.
So you're paying more taxes on thegains that you're seeing, and you don't

(18:55):
have the same opportunity to do thingslike tax lost harvesting when you have an
investment portfolio of of stock. Soyou know, cash can not only is
it going to get eaten by inflationand start paying less on its interests,
but it's also not as tax efficientas a vehicle when it comes to saving
versus a diversified portfolio of stocks.So how do you really take advantage of

(19:17):
this? Well, hopefully when wefirst started talking about this, you moved
your emergency fund right those three tosix months, or if you're in retirement,
we would say maybe a year eighteenmonths worth of living expenses into something
that's getting some money. That's great, that's just like icing on the cake.
But changing up your entire asset allocationbecause you're making a little more on
cash right now, I think you'regoing to also miss out on the larger

(19:37):
gains that you could be seeing.Here's the all Worth advice. A decision
like this really needs to come downto one question. What is your purpose
for these dollars? And does thismake the most sense with your long term
financial plan? Coming up next ourkitchen and bathroom remodels necessary or just nice?
We'll take a look at that.You're listening to Simply Money presented by
all Worth Financial here on fifty fiveKRC. The station listening to Simply Money

(20:04):
presented by all Worth Financial, Imean E. Wagner along with Steve Ruby.
We talk a lot about real estate, whether to move or not to
move. But for those who arestaying point, you can often look around
your house and say, I don'tknow, I think it's time for an
update. Often one of the roomsthat you're looking at is your kitchen,
maybe your bathroom. But here's thequestion for you. Is it necessary to

(20:25):
remodel those rooms, especially if maybeyou're going to sell it soon or is
it just a nice thing to have. Joining us to answer that question is,
of course, a real estate expertMichelle Sloan. You can catch her
every Sunday here on fifty five KRC. Sloane sells homes and of course owner
of Remax Time. I think Ido this after I've been into a home
for like several years, I'm like, time for an update. But is

(20:48):
it something that's necessary in order tosell the home or is it just something
that's kind of nice to have.That's a really good question. It really
depends on how long you've been inyour home. We get tired of our
home, like you said, afterfive or six years, we're like,
oh, I'm so I'm tired ofthe same cabinets, countertop flooring, whatever
the case may be. Maybe you'reseeing a lot of wear patterns in your

(21:10):
carpet, and you're like, it'stime. I just need to change.
Just like every once in a while, you want to do a spring clean
and maybe move the furniture around inyour house, just to give it a
different look, in a different feel. It's not always necessary, though,
to do the remodels, especially thefull on remodels where you're going to spend
thousands and thousands twenty to thirty thousanddollars. It's probably not necessary to go

(21:34):
that extreme. Unless your home isforty or fifty years old, then that's
the time that if you want todo that major upgrade, that's a good
idea. If you're deciding between akitchen and a bathroom remodel, which one
is more important, that's a goodquestion. Now I'm going to answer that
question with a question, which whichroom in the home do you spend the

(21:57):
most time in? Probably the kitchenexactly. It took me too long to
answer that, but it's probably thekitchen. Yeah, right. Actually,
the kitchen is like kind of theI mean where everyone congregades in our house.
And I also want to point outto Michelle, you know you've said

(22:18):
in recent segments, people are stayingin our homes for longer, so I
think more of us probably do havethis itch to remodel, and you're saying,
maybe the best focus is your kitchen. Absolutely, the kitchen, I
would say, is always the focalpoint. The primary bathroom is also a
pretty big selling feature. The whatI would call kids bathrooms are not as

(22:41):
much of a It's not on thetop of the list because those kids' bathrooms
are probably going to get trashed anyway, because kids are slobs for the most
part, unless you've got a reallyneat kid. But the top upgrade not
a thing I know, but thetop upgrade sellar plan to make. Certainly,

(23:02):
forty nine percent of all sellers saythey need to do a little something
in the bathroom before they put theirhome on the market, and forty eight
percent say they need to do somethingin the kitchen to update it before they
sell. So pretty smart. Mostupgrades are not necessary, but they're very
nice. So that's kind of whatwe're looking at today. What's absolutely necessary

(23:23):
are the things in your kitchen oryour bathrooms that are not functioning. If
you have a hole in your countertop, that's a must do, right,
that's absolutely you need to replace thatcountertop. Get something that's a hard surface.
If you have a lamin at countertopnow that has chips on it and
burns and all these kinds of things, yes, one hundred percent I recommend

(23:44):
that you go ahead and replace thatbefore putting your home on the market.
Now, a lot of my clientswill say, well, I don't want
to put something in that somebody elsedoesn't want. And so that's the one
thing is I would always say weput something in that's neutral, because people
can get past something that's really Imean, they can look at something that's

(24:07):
really nice and say, okay,I can live with this. But if
it's something that has to be replacedas soon as they purchased the home,
that's gonna stick in their brain andin their crawl and they're gonna feel like
that's gonna be that's gonna cost meso much money. So I'm going to
try to get less and less frommy cellar. From the cellar. So
I remember several years ago we sawlisting in our neighborhood and in just it

(24:30):
wasn't pictures, it was just awrite up and it said brand new granite
countertops and marble floors, and Iwas thinking, wow, like this is
this is going to be amazing.At the time, my this is a
while ago. My parents were lookingat maybe moving closer to us, and
so we went through this house.We walk in the door, those marble
floors were red, oh marble floors, and the count were gold granite countertops,

(24:56):
and it was like, Okay,they are the kinds of things,
but the absolute wrong colors. Andso I think you're going about please pick
neutral, especially if you're looking tosell. It doesn't matter. It could
be the nicest possible product. Ifit's the wrong color forgetting, nobody wants
it no right. And there aresome cultures that love those bright colors,

(25:21):
and they bring the product from othercountries into our area and they just think
that it's absolutely exquisite. But what'sexquisite to one person is maybe not as
beautiful to the next. So Ido recommend before you do a big overhaul
of your kitchen, bathroom, anyof those areas, talk to your real

(25:44):
estate agent, because we have apretty good idea of what buyers are looking
for. Buyers just want a movein ready home that they can make their
own, and so it doesn't meanyou have to spend Like I said,
thousands and thousands of dollars, maybea couple thousand dollars. You know,
most of the time I end uptelling my clients, if you make five

(26:07):
thousand dollars worth of upgrades in yourhome, you're probably gonna get eight to
ten thousand dollars back on doing thoseupgrades. So the return on investment is
usually very positive. Now, ifyou do something like you said with bright
reds or something that's completely different,then that's not going to help you.

(26:29):
So return on investment that catches myattention as a financial planner, as a
financial advisor, I'm curious to knowif I'm if I'm thinking about selling a
home, or one of our listenersthinking about selling a home, what are
the trends that you could make updateson in your house to have the best
return on investments when you're going toturn around and sell it. Absolutely,
there are some really easy things thatcan be done. So the faucets,

(26:53):
if you have old school fawcets thatdon't have the stoppers anymore in your sinks,
especially in the bathroom, replace thosefaucets. It's not a huge expense,
but again it's not gonna be thatglaring thing that's gonna stand out within
the uh, your buyer's eyes.So replacing faucets a fresh coat of paint

(27:17):
can certainly go a long way.And you're like, well, I don't
want to spend and it's honestly,you may have a little bit of sticker
shock if you aren't going to bedoing it yourself and hiring a painter to
do painting of a whole house.It could cost you several thousand dollars.
But I'll tell you what. Thatfresh coat of paint and a neutral color

(27:37):
agreeable gray or or accessible beige orthose the go to colors, and you
do that for the whole house.So there's no transitions. That's gonna make
your house look like a new homeand it's gonna it's gonna be like a
thousand bucks. It's gonna look great. That's what you want. Michelle,
quick question for you. I lovehome rama, I love the home shows.

(28:00):
I go every year. There's alwaysa new trend Matt Black appliances,
UH brass fixtures. When you're doingthese updates, do you go for the
latest trend or do you go forclassic? I usually recommend classic because a
lot of the gold fixtures are backreally kind of grassy gold. Yeah,

(28:23):
that's back in style. I personallywould say, let's just keep it as
neutral as possible. I don't likegoing with the trends most of the time.
That's not the recommendation I'm going togo. Unless you're planning to live
in the home for the next tento fifteen years. So if you're planning
to sell, okay, we sayneutral, neutral, neutral. If you're

(28:44):
planning to live there for a longtime, do whatever the heck you want.
Be happy in your home because youdo have to live there. And
so that's the difference between and thesame thing goes with staging. When you're
staging your home to live in,it's completely different from staging your home for
to sell sale because you want somuch less in the home when you're selling,

(29:07):
and when you're living in it,you can you know, again,
you can have your own style.Great advice and insights, as always from
a real estate expert, Michelle Sloane. You're listening to Simply Money presented by
all Worth Financial here on fifty fivekrs the talk station. You're listening to
Simply Money percented by all Worth Financial. I Meani Wagner along with Steve Ruby,

(29:29):
you have a financial question keeping youup at night. You and your
spouse are fighting over it. What'sthe right answer. Well, there's a
red button you can click on whileyou're listening to the show. It's right
there on the iHeart app. Recordyour question. It's coming straight to us.
We will get you out of thedoghouse, or we will help you
sleep a little better. Tonight.Speaking of those questions, here's our first
one tonight. It comes from Gregin deer Park. Hi, Amy,

(29:52):
and Steve. Is there any wayI can take money out of Myra early
without paying a penalty? I'm onlyfifty three, but likely retiring this year.
Hey, congratulations, sign me upfor that. They're retiring at fifty
three. That's that's huge. Ihope it's you know, I hope it's
good news. I hope this isa choice here. You know, if
it is a choice, then technicallythere are opportunities for for not having to

(30:15):
pay that early withdrawal penalty that goesaway when you turn fifty nine and a
half. And you know, outsideof what's called a seventy two T distribution,
which we'll get into, you knowthat there's there's you know, disability
for example, first time home purchase. But a seventy two T is substantially
equal periodic payments, that's what it'scalled through the I R S And and
you have to sit down and workit out so that you're taking out a

(30:38):
set amount at least annually for therest of your life. Now, the
challenge here is if you need moreor or less, that doesn't matter.
You are locked in. And ifyou deviate from that, that systematic withdrawal
that you have now locked into forthe rest of your life, then you
owe back penalties. And that isan awful situation to find yourself in,

(30:59):
but it is a way to voidthe early withdraw pedal. Right, So
you'd be locking that in at fiftythree, And then what about when you're
eighty five and you get a medicaldiagnosis and you actually need more that year?
Right, Like, you're you're absolutelylocked in. You mentioned a few
reasons why you can take these earlydistributions unreimbursed medical expenses if you're unemployed and
you need health insurance premiums. Likethere's there's some really kind of small,

(31:21):
sort of niche things that can happenthat make this make sense. But it
sounds like you are just looking for, you know, a way to have
a stream of income and retirement.And I would say, look at this
again and figure out if there's anyother way that you can have some money
without tapping that IRA. I always, I don't know. I always hate
getting into these things too early andlocking yourself into a decision that you made

(31:45):
it fifty three that may not makesense five years later, ten years later,
fifteen years later. If it's youronly option, then you do want
to retire earlier, and you havethe means to do so, then a
seventy two T distribution can certainly bethe solution. Yeah. Here's the next
question from Cligh, who lives inHighland Heights. I turned fifty five next
year, and I might retire atthat point as well. I've heard I

(32:06):
can take money out of my fouroh one K and not get penalized.
Is this correct? Okay, Kyle, good for you too. You know
this is this is a little theshow of early retire This one's easy for
Kyle too, because it's called therule of fifty five. Unfortunately Greg just
missed it. The year you turnfifty five, if you separate from your
employer for whatever reason, that isand you have a four oh one K,

(32:29):
then when you take distributions from thatfour oh one K, there are
no early withdrawal penalties. Now thereare challenges because maybe your four to one
K doesn't offer partial withdrawals. Nowthat would be a bit of a bummer.
But in that situation, you doone big distribution and you don't have
a penalty on it. You dopay taxes, but no early withdrawal penalty,
and you could live off that firstthat period of time. You know,

(32:51):
this is one where you obviously youreally should sit down with a financial
planner to map that out, butthe rule of fifty five can be very
helpful in that there is no earlywithdraw penalty at that point. Another thing
I would mention here, Kyle,just to be abundantly clear, is this
only works for your current employer's forone K that you have. If you
have old four oh one k's moneythat has been rolled into iras whatever,

(33:15):
that doesn't count once you separate fromthat company, rule of fifty five no
longer pertains to you. So ifyou've only been working for this company for
a few years, right, maybethere's not a lot of money in that
four oh one k you can accessit. You just have to make sure
if this is what you're planning onliving off of, is this going to
be enough? Right? Because thisis the only money that we would say
you could have access to penalty freeat the age of fifty five. Next

(33:38):
question, Rachel and Madeira. Ihave some old stock that I bought in
the nineties that I'd like to sell. However, I no longer have any
records to determine the cost spasis.What can I do? Uh, donate
it. There's the easiest, Kay, That's an easy one. Donated in
the cost base it becomes their problems. Yeah, cost basis doesn't matter at

(34:00):
that point if you give it toa charity because there's no taxes they Oh.
Other than that, I mean contactingyour brokerage firm to map out when
the shares are actually purchased if you, inde bought the stock from that particular
brokerage firm. You know, there'scomplicated processes that you can use to help

(34:20):
estimate based on distributions that you've takenand the timing of them. But really
it's a conversation with your broker andrecord keeper of the shares to help you
determine what that was. And Ithink the company also keeps some records on
daily stock prices and fluctuations, soit's a particular company. You could also
try going to, like, youknow, the investor page on their website

(34:40):
or making a call. You know, you think about stocks trading all day
long, right, there can besome pretty big fluctuations depending on the time
of the day. You're not goingto get it exactly right unless you know
exactly what time of the day onthat day and nineteen ninety you purchase the
stock. I think the key hereand what the IRS is looking for is
that you get as close as possibleto that answer. Next question, Carl

(35:02):
and Marymont my wife and I aretrying to figure out if we should retire
at the same time or if itmakes more sense to space out our retirements.
Any thoughts either way, well,Carl and Carl's wife. It depends
on ages, timeframes, needs,But one of the big ones would be
what's the solution for healthcare? Youknow, how old are you? Is

(35:23):
one of you working? Are bothof you working? Are you of medicare?
Age? Is there going to besome kind of a gap that needs
to be addressed in order to supportyour cash flow needs in retirement. I'll
also throw out there, are yougoing to kill each other? Does one
of you need to get used tothis first, because I think part of
it isn't just financial. Coming upnext, ready to get out of dodge,

(35:44):
We've got some ways to find acheap last minute vacation. You're listening
to Simply Money presented by all WorthFinancial here in fifty five KRC the talk
station. You're listening to Simply Moneypresented by all Worth Financial. I mean
Wagner see Ruby. Some days youjust feel like I gotta go, right,
I gotta get out of dodge.Maybe it's your boss that's driving you

(36:07):
crazy. Maybe it's I don't knowsomething at home, whatever, and you
just feel like you need a trip. But you also don't want to break
the bank. Right, How doyou get away, maybe for just a
few days, and not absolutely breakthe bank? Travel in the off season,
you know, That's that's what Idid for my honeymoon. I don't
know if I've explained that. Actually, my wife and I we went to
Costa Rica in October, which isthe rainy season. Guess how much of

(36:29):
rain? Did it not rain atall? The whole time. We're so
rained the whole time, the wholetime, almost the whole time, I
think we have we had like aforty minute break and I'll tell you,
man, was it hot when thatrain broke. It was miserable. So
you actually liked it the fact thatit was raining. I mean, we
went to the rainforest, the beach, whatever. I learned how to surf.
And another matter, if it's rainingwhen you're in the water. So

(36:51):
literally half off on honeymoon, justbecause we traveled in the off season.
Just make sure you don't mind therain. Yeah, I mean when you
come into it with realistic expectations andyou and for it. It's fine because
it was half off to go somewherethat I can't afford, you know.
I couldn't afford to go to CoastFreak at the time, and we made
it happen because we went in theoff season, you know. And also
a lot of the travel websites,you know, Exmedia, Kayak, whatever,

(37:12):
will have last minute vacation deals,especially if you have some flexibility,
right, And I think many timesthese kind of last minute getaways are like
I just want to get away sometimein the next month or two Okay,
well, if that's the situation,get on there and look around. There
could be cruise deals. A lotof times there's packages of airfare and hotels
and it's something that you know mightbe coming up relatively quickly and it's not

(37:34):
sold out, so they're looking atways to unload those flights or those hotel
rooms at a cheaper price, andyou can get a really great deal.
And I know some people and thekey here again flexibility, but have had
some really amazing trips and I'm like, you did what for how much?
You know, some great deal justfrom deal shopping a little bit. Yeah,
So we actually talked about the Cincinnatibeing a destination daycation. Yeah,

(37:59):
maybe yesterday I think it might havebeen. Yeah, And the city that
you live in has a lot tooffer that you've probably not explored. So
a staycation is certainly an opportunity tojust get the stress off your plate and
not worry about work for a littlewhile and just experience something new and different
from your own town, your ownbackyard. That is a great way to

(38:21):
save money because you don't have tospend money in airfare or lodging, and
you can still have a ton offun. Yeah, and parents. Right
when kids are off for the summer, that feels like a really long time,
you know, and maybe especially formoms, so you know, even
just Indianapolis, the Children's Museum,something like that, there can be great
options just for the day to getout of town, change the scenery.
Thanks for listening tonight. Tune intomorrow. We're talking about should you be

(38:45):
comparing the AI stock boom to thedot com stock boom that went bust?
You've listening to Simply Money, presentedby all Worth Financial here in fifty five
KRC, the talk station