Simply Money

Episode Transcript

(00:06):
Tonight. One of our favorite thingswe are yes ripping apart the headlines and
revealing mistakes you need to avoid ifyou're five years from retirement, and of
course we've got much much more you'relistening to simply when you're presented by all
Worth Financial, I mean me Wagneralong with Steve Ruby. If you've been
listening at all lately, one ofthe major things that we have been talking
about is the fact that there hasbeen very little volatility in the market over

(00:31):
the past more than a year.I mean we're talking no more than two
point one five percent up or downin any given day. I mean,
that is very calm. Waters.Here's the problem with that. If you
are someone who is writing headlines andwriting articles that's trying to get people's attention,
what do you do when nobody's worriedabout the market? Create worry?

(00:52):
And that is what we're seeing.In fact, we just looked one day,
right, one day, one snapshotin time yesterday, the very first
day of July, and said,okay, halfway through the year, what
are these people saying? And itis like they are making stuff up in
order to freak investors out, inorder to get clixed. Yeah. That's

(01:14):
one of the reasons why I actuallydo this every day. Yeah, is
because once upon a time I didfour to one K customer service and people
would call in worried because they sawsome headline and they wanted to stop contributing
or move everything to cash. Andall I could say was, great,
you reached the right place. I'mhappy to help you with that. Anything
else we can do to mess thingsup for your financial fee soul crushing as

(01:34):
it was for you to process thatfor people. I couldn't say anything like
that second half. But you know, if somebody's listening and they're a regular
listener and they see these headlines andthen they think about what you and I
talk about and they pause and maybedon't make that type of decision, then
that's a huge win. Because justyesterday, you know, headline one and
no particular order. July is historicallya great month for US stocks. Will

(01:57):
twenty twenty four be different? Andthis is from MarketWatch, who, by
the way, in May said shouldyou sell in May and go away right,
and had all of this research behindwhy the next six months after May
are actually very very bad times inthe market, and maybe you should sell
all your stocks, get out ofthe market and think about coming back in

(02:22):
maybe after Halloween. Right, Andnow here we are a couple of months
later, and once again they're saying, is July has historically been a good
month? What are there things outthere right now that make us think something
is different? And if you arereading that, are you looking at it
and saying, oh, well,if this is going to be different,

(02:43):
I should do something. What shouldI do? Yeah, if you actually
dig into the article a little bit, which is funny, you bring up
the sell and may go away.This is a contradiction of that, because
they used Dow Jones data and found, according to this article that since nineteen
twenty eight, July has emerged asthe best month of the year on average
for stock market performance. Stop rightthere. I get annoyed when anyone's using

(03:05):
research looking solely at the Dow It'sthirty stocks. And actually we were just
talking about the fact that what theS and P five hundred is up about
fifteen percent so far this year?The Dow is around four percent, you
know, But it's like this iswhat everyone used as the measure, right,
the litmus test of how the marketsare doing. And it makes zero

(03:25):
sense. So I say, automatically, if an article is using research based
on the Dow, I'm not goingto put a lot of stock in it
at that point. Yeah, well, they do look at some other indexes.
In the same article, it showsthat in July, the same data
that was talking about the Dow herealso shows that the S and P five
hundred finishes the month higher sixty percentof the time. The Nasdaq, apparently

(03:51):
in July historically begins the worst fourmonths of the year. These, these
numbers, these figures, we don'tneed to act on. I just want
to be clear about that. Isthis is generating noise during periods of calm
so that you click on the article, you share the article, and they
get more marketing money. Yeah,that is what it is. Clickbait,

(04:11):
pure and simple. Here's another headlinefor you. Is the market peaking?
Not yet, but we're getting closer. Oh, I better click on that.
You have the crystal ball. Itsays, Okay, it's going to
happen, and we're getting closer andcloser to us. Again, this is
a market Watch article. I'm notgonna lie. This is the first website
I usually check on a daily basisto say Okay, what's going on in

(04:33):
my world? And there's lots ofgreat information on there, and then there
is lots of terrible headlines like thisone. And I don't want to single
out market Watch because I think itdoesn't matter where you go. The concept
is the same during times like rightnow, when investors feel pretty good about
the fact that they're checking there forone K is on average they're up.

(04:55):
You may not be checking these websitesas much. Right that That freaks some
people out, and they're trying toget your attention by saying by leaning in,
Wait, wait a second, yousay we're getting closer to a market
peak. That means something bad isgoing to happen to my four oh one
K to my portfolio. I needto figure out what it is in what
I should do about it? Right. I think that's the fear that I

(05:15):
have that investors are reading headlines andarticles like this and that's how they're responding.
And if you do read this article, it does delve into those that
have the crystal ball in quotations.There. It's a team of quantitative individuals
for Bank of America that look atten different quantitative measures that historically signal bull
market tops, and four of thoseten say that we're there, but apparently

(05:42):
that doesn't actually happen. We're notactually at the top until seven of the
ten indicators trigger warnings. Yeah,so you dig a little bit deeper,
and even the article itself proves thatthe headline is alarmist, right, buried
somewhere, not in the headline,right, not mentioned anywhere in the headline
or in the first few paragraphs.Then the article actually says market timing markets

(06:02):
doesn't work right, and a fewpeople actually get it right because you have
to get two major decisions right,when to get out and when to get
back in. And we've seen fartoo many people make that first decision getting
out, and then they've missed greatdays, great returns in the market.
And then it it then becomes thiswhole mind thing of like, wells tomorrow,
the day should wait until Friday,should wait until next week, you

(06:25):
know. And I think you canthen constantly get yourself in this place.
Where are you out? You in? You're out, you're in. Meanwhile
you're on the sidelines and you're missingout. Yeah, you just read the
headline. You might act if youread the whole article, then you realize
that they are saying, don't timethe market if you miss the ten best
days and your money doesn't do aswell. You're listening to Simply Money presented
by all Worth Financially Memi Wagner alongwith Steve Ruebey as we do one of
the things that is my favorite thingto do on the show, and that's

(06:46):
because we're so passionate about it.I feel like there are a lot of
people in the media industry when itcomes I mean really across the board,
but certainly in this area finance andmarkets and the economy, that are absolute
alarmists. And for those who arealready somewhat maybe nervous investors, you feel
like, oh, I'm going tocheck these these headlines every day and just

(07:10):
make sure that everything's are everything's okay. And then it's like, gosh,
there's all these terrible headlines when nothing, nothing bad is going on right now.
And we have our own sort ofrecession index here at all Worth.
I was just looking at it yesterday. It was on red all of last
year, even though we did notsee a recession. Now it's on yellow.
We're pulling back from that. There'snot enough leading economic indicators pointing towards

(07:33):
bad times coming. Now, eventuallyit will. That's that's a healthy part
of the market cycle. But man, these headlines feel like something is coming
tomorrow or next week and you betterdo something about it. Yeah. Case
in point are the third article thatwe looked at again just from yesterday.
Again, this one was on marketWatch. The market is in a huge
bubble, but you'd be wrong aboutagainst it. It's like contradicting itself in

(07:57):
one headline. This is a problem. No, it's not a problem,
right. Pay attention to me,Pay attention to me more, is the
way I look at that. Butthis was an interview done with some big
big wig over at THEO Trade,which is, I guess a trading education
firm where you can go to learnhow to do your own stock picking and

(08:18):
and and the bubble apart. Apparently, what they're arguing is that thanks to
machine run algorithms, tech stocks inparticular are rising to unsustainable levels because of
this technology automatically. These are algorithmsbuying in and out throughout the day very
quickly. They even use the termalgos instead of algorithms, which I don't

(08:41):
like when you make up a wordlike that. And pretend like it's a
normal word. You've already lost me. You've already lost me. Listen,
We've been saying on this show forweeks and weeks now that the tech stocks
are doing really well. Now youknow, history shows this that one sector
outpaces others for a while and thenthere's a pullback there and then another sector
does better. Should you be doinganything other than making sure you are truly

(09:03):
diversified? Absolutely not. Yeah,So it's it's arguing that these these you
would be missing out to go againstthe algos, as they put I don't
like that word. I don't thinkI'm going to say that word anymore say
that word. Yeah, it's almostuncomfortable. But the algorithms that ignore the
fundamentals and just look at you know, what is the stock doing today,

(09:24):
How do we compare it to howhigh it's been? How do we compare
it to how low it's been,and make decisions to buy and sell very
quickly for arbitrage opportunities to get littletiny bits again using these computer algorithms which
you know a lot of places dothis. And this articles is the flip
side of it, where yeah,it might be a bubble, but you'd

(09:45):
be fool to go against it.The flip side is you still need to
invest in these same securities or elseyou're going to miss out on all the
games. Very interesting article, conflictingitself in multiple ways. Well you what
another interesting one. I want toget to this one quickly. This one
is no Nvidia in your portfolio youare just joast. Oh boy. You

(10:05):
know it's an interesting one because thevideo is single handedly driving S and p
Fifi, and you know there's aMagnificent seven, there's a Big three,
and then there's the one. There'sNavidia that is driving it. So you
know, this one, I'll givethem a little bit of grace, I
guess, because if you have adiversified portfolio of exchange traded funds, passively
managed, low cost chances are youhave Navidia. And that's what I think

(10:28):
this article is missing, is it. Most people who are already diversified,
they not only own in Vidia,they own the next in Vidia whatever,
up and coming company that we don'teven know yet, that's in some little
niche thing right that that is goingto continue to expand and grow and we
don't know what they're doing, butthey're going to be the next big thing,

(10:50):
and if you are properly diversified,you already own it, so you
don't have to figure out what thatis. You don't have to go all
in on one company, one stock. There are It is like and video
is a media darling right now.And it's so interesting because anywhere you look
there are all kinds of articles,some saying bye bye bye, some saying
sell, sell sell, some sayingthey're at the top, someone's say some
saying they're nowhere near the top,you know, And I think, gosh,

(11:13):
if you are just paying attention tothis one stock and all the headlines
about it, you could absolutely loseyour mind. Nobody's on the same page.
And that's because nobody has a crystalball. Nobody knows what's going to
happen. So what do you do. You have a diversified portfolio that not
only has Nvidia and tech stocks,it has small cap value stocks, It
has emerging markets, it has somebond exposure. Right, all of those

(11:37):
things are going to give you thediversification you need. Here's the all Worth
advice. If you have a highlydiversified portfolio, right, and you just
stick to your long term financial plan, you're not jumping in and jumping out
based on what the headlines tell you. You're going to be okay, You're
going to get there. Coming upnext, imagine being able to make stock
trades twenty four hours a day.I already have a headache from these headlines,

(12:00):
and now we're getting into this soundslike a nightmare. We're going to
tell you why you're listening to SimplyMoney, presented by all Worth Financial here
in fifty five KRC, the talkstation Amy Wagner along with Steve Ruby.
If you can't listen to our showevery night, you don't have to miss
a thing we talk about. Wehave a daily podcast for you. Just

(12:22):
search Simply Money. It's right thereon the iHeart app or wherever you get
your podcasts. Coming up at sixforty three, we're talking about the financial
mistakes you need to avoid if youare so close to retirement, right maybe
within five years. It's like you'recircling the airport getting ready to land.
We want to make sure that youdo not make any mistakes. This is
an interesting one and it's one thatI'm starting to think, like this doesn't

(12:46):
even surprise me. It's becoming harderand harder. To watch the sports that
you care about, you need eightyseven thousand different kinds of streaming services.
Well, now the National Football Leaguehas been ordered to pay close to five
billion dollars in damages because there's beena ruling that the NFL broke anti trust
laws. You know, if youwanted that Sunday ticket, those those games

(13:07):
that you can't find anywhere else,they make it so difficult to get it
and so expensive that now there's aclass action lawsuit against the NFL. Yeah,
the payment could actually balloon to morethan fourteen billion dollars because damages are
actually able to be tripled under federalanti trust laws. So you know,
the NFL could get rocks by thisto an extent. I mean, obviously

(13:30):
they have a lot of money,and it's not a movement. It might
be okay, yeah, but inneight person jury actually determined that the NFL
broke the law by selling it Sundayticket game access to games at a price
that was too high, but alsorestricted competition by offering Sunday ticket only through
a satellite provider. So that's wherethe anti trust part comes in, because

(13:52):
there's essentially a monopoly on access tosome of these games that we want to
watch. Now, if you arewondering maybe if you could join this class
action lawsuit, well, honestly,if you had subscribed over it's like the
course of the past year, goingback to twenty eleven through twenty twenty two,
there were two point four million residentialsubscribers, right, you and I

(14:13):
and our homes who paid for this. In addition forty eight thousand businesses.
Right, think of all the barsand restaurants out there that were showing this.
You have to actually opt out ofthe lawsuit if you paid for this,
because you are already in. AndI think if it's like, what
does it mean for me? Thisis not chump change, It's not like
thirty bucks. You could get abouttwo thousand dollars if you were part of

(14:33):
this, and who knows, there'sappeals and all the things, Like the
legal process is a long one,but I think it does go to speak
to just how frustrating it is tobe a fan of a team and just
want to watch a game and haveto have four different streaming services to the
tune of one hundred dollars a monthin order to be like that is not

(14:54):
fair. It's blacked out what doyou mean it's blacked out? I'm here,
why, I think? Why can'tI watch it? No, you
have to buy this service, butyou already have to own that service,
So it's getting ridiculous. So Iuh, if you are part of this
class action a lotso good for you. I hope that I hope that money
comes soon. We'll see how thisone plays out. Okay, So for
the average investor, we preach thesimple things, right, we say,

(15:15):
a diversified portfolio. Let time takeits course, you know. And I
think for those people who are jumpingin and jumping out, I feel so
bad for my kids. Right,they're growing up in a world where what's
in their hands, their their phones, these devices, and all the social
media that they're exposed to is justbombarding them with information, and you know,

(15:37):
it's hard for them to even figureout what's right and what's wrong.
But a lot of what's on thereis absolute crap when it comes to an
investing standpoint, and it's like,you know, go all in on this
one company. I mean, MemeStocks and Robinhood and these trading platforms that
allow you to have access all thetime, and now it looks like traders
or investors are going to have evenmore access, and that makes me really

(15:58):
nervous. Yeah, I mean,what we're talking about here is twenty four
seven stock trading, not just whenthe markets are open from nine thirty to
four, where we're talking about twentyfour to seven access. And this can
create obviously a lot of challenges,and a lot of this has spawned by
the fact that retail traders with accessto platforms like robin Hood. For example,

(16:22):
in the pandemic, a lot ofpeople had extra money, nothing to
do, and they caught wind ofsome of these meme stocks, and they
hopped on board and started, youknow, following stuff that maybe they saw
on Wall Street bets and taking realrisk with their money. And then you
right, then they make these headlinesabout these people who you know, two
people or three people, a handfulof people, right, those are the

(16:45):
ones that get the coverage who madeall this money. And then I think
this lingering thought out there for investorsis Okay, if I can just figure
out what the next one is.Maybe I didn't make it on Game Stop
or maybe I didn't make it onAMC, but I'll figure out what the
next one is. And if youare someone who first of all, has
a personality where you can get addictedto things easily. Please understand that the

(17:06):
stock market could be one of those. Right you're trying to figure out what
the next big thing is. It'sit can become like gambling when you are
looking at this twenty four seven andyou're looking at individual companies, individual stocks
in an effort to make yourself richquickly in a short amount of time,
especially when you're comparing yourself to othersonline and you know, TikTok or Facebook

(17:27):
or something, and you know,you have these traders and quotations that made
the big bucks and now they're drivinga Corvette and have a yacht. You're
like, ooh, I could dothat. That's easy enough. All you
have to do is put all mymoney into some kind of a high risk
investment and if it hits, I'mgolden. If it doesn't, I guess,
you know, nothing really changes inmy life. You know what this
reminds me of. So my sontre is fourteen, and he is,

(17:49):
you know, on some social media. He loves to play video games in
basketball and things like that, andthere are what they call influent influencers.
And I say this with air quoteswho live in LA and they give these
tours of their houses, and they'dsay they've made millions and millions of dollars
how by playing video games all dayand talking about it on social media.

(18:10):
So my son then thinks this isa viable career choice for him, right,
just because he sees it on socialmedia. It worked for these other
people, They're all over the internet. Why wouldn't it work for him.
My concern is there are people exposedto logic like that that really isn't logical,
that are then going to say Ican trade all night long, you

(18:30):
know, up all night, nosleep, trying to make decisions about what
the next best thing is. Ithink about the election when President Trump was
elected and it was not what wasanticipated, and you looked at the futures
that night, right and they wereabsolutely tanking. Why because the markets hate
uncertainty and that was not expected andyou could have right sold everything, gotten

(18:56):
out of the market. Okay,Well, then the market's open the next
morning. By ten ten, themarkets had already digested the information and we're
rebounding. And this is just oneexample of why I think if you had
accessed overnight right to buying and sellingand trading based on what was going on.
You could have jumped out, andman, you would have missed a
good day. Yeah, I mean, and that's a great example. Another

(19:17):
one is a surgeon game stock twentypercent recently. That was on a Sunday
evening in June. So that's like, oh, okay, well here's my
opportunity and then boom, you know, can go in the other direction just
as quickly like it did you knowwhen people were surprised about the outcome of
the election. Yeah, here's theall Worth advice. Too much temptation right,
can lead to too many bad decisionsthat ruin you financially long term,

(19:37):
So please don't get caught up inthis twenty four to seven cycle. Coming
up next, Know the difference betweenMedicare and medicaid. So many people get
so confused about this. There aresome major differences, and we've got a
state planning expert in next to helpyou figure out what they are. You're
listening to Simply Wheney presented by allWorth Financial here on fifty five KRC,
the talk station. You're listening toSimply Money percent of my all Worth Financial

(20:03):
and Ami Wagner, a long withSteve Ruby. Two programs that are available
to tax payers that are more confusedthan anything else, Medicare and Medicaid.
I am so surprised by how manypeople will come to me and use the
words interchangeably or not understand the difference. They're not a package, they're not
the same thing. Joining us tonightto help make sense of the differences in

(20:26):
what you need to know. Asour estate planning expert from the law firm
of Wood and Lamping, Mark Reckman, Yeah, they both address medical costs,
but they're very different programs. Mark, Well, that's right, And
of course they're easily confused because theyoverlap to some degree, and because they
both cover medical costs. But youknow, one's a federal program and one's

(20:48):
a state program. The federal governmentpays for both, but they're administered very
differently. To give you a littlebackground, Amy, back in the nineteen
sixties, John F. Cana hewas shot in Dallas and assassinated. He
was succeeded by his vice president,a Texan named Lyndon Johnson, and Johnson's
goal was to expand the social safetynet, and he called that program the

(21:11):
Great Society, and some of thesenior guys, remember those days. The
Great Society had three main pillars.One was an expanded Social Security. So
social Security was started back in thetwenties, but didn't have much money,
so they expanded Social Security. Theycreated Medicare that was a brand new federal

(21:32):
program, and they created Medicaid,which is a brand new state program that
was funded with federal money. Soagain, Medicare is federally subsidized health insurance.
It was designed for folks who wereotherwise uninsured because back in the sixties,
health insurance was not universal. Infact, many many jobs did not

(21:53):
include a health insurance. So Medicarecame along, and it covers everyone over
sixty five, which was the biggap, and it covers disabled people of
any age. Now for Medicare coverage, there are no financial conditions, just
age and disability. For example,Warren Buffett, Bill Gates, Donald Trump,

(22:15):
They're all eligible for Medicare because it'snot based on financial need. Now,
Medicare covers doctor bills, hospital bills, and if you elect and pay
a little extra, it can coverprescriptions, but it's not comprehensive, and
many folks elect to buy additional coverage, and the nickname for that is gap

(22:36):
filler or medic gap. These areinsurance policies you buy privately to fill in
some of the gaps if you will. In Medicare coverage. Medicare is pretty
cheap, but the premiums are scaledsuch that higher income people they will pay
higher monthly premiums. Premiums are almostalways deducted from Social Security before you get

(22:56):
your checks. Many people with medichere don't really have a sense that they're
paying for it because it comes outof their check before the check arrives.
It's funded and run by the federalgovernment. Often, the federal government will
hire private insurance companies to manage theclaims in the paperwork. So Medicare people,

(23:17):
I think I'll often wonder why amI talking to these private insurance companies
will they're often under a contract tomanage the paperwork and the claims for the
federal government. But most of all, Medicare is health insurance and it only
pays for medical care. And that'sa really important word in my world.
Just like health insurance that you wouldbuy from your employer, it's just for

(23:41):
health care treatment. Yeah, alot of people run into the issue.
Yeah, a lot of people runinto the issue not realizing that Medicare does
not cover our long term care.That's a huge gap. And you know,
Medicaid is at health insurance. It'smore of a welfare a welfare program.
Correct, well, that's exactly right. And because long term care that

(24:04):
you're talking about, which is wecall custodial care, really is not considered
medical treatment. So if you're ina nursing home and you're receiving room and
board but not medical treatment, Medicareisn't going to pay the bill. Health
medical treatment is treatment that improves amedical condition, whereas custodial care is simply

(24:27):
taking care of people who aren't gettingbetter. And so Medicare does not pay
for room and board in a nursinghome. It's not medical treatment. Medicaid,
Steve is different, and you're right, it's not health insurance. It's
not run by the federal government.It's paid for by the federal government,

(24:48):
but they don't run it. Medicaidis a welfare program. It's run by
the state welfare department in every state. The cost of it is covered for
the most part by the fi it'salthough not all, and it is designed
for poor folks and poor folks,only you have to be broke to receive
Medicaid. You have to in orderto qualify. There are no premiums to

(25:14):
pay when you get Medicaid, butit's not the sort of thing steed that
you have aspire to. You don'tseek to get medicaid unless you have no
better choice. Medicaid is sort ofyour it's what you settle for if you
don't have your your better choice atyour avenue of last resort. Well,
Mark, I think you make anexcellent point there. No one is aspiring

(25:36):
to be eligible for Medicaid yet.If there is a diagnosis leader in life
rate in a couple or a familyhas amassed some assets, yet they don't
have long term care insurance and someonehas to go into a skilled care nursing
home, you can run through alot of money in a relatively short amount

(25:56):
of time. So where maybe fiveyears ago or even two years ago,
Medicaid wasn't even anywhere on the radar, all of a sudden it becomes part
of the conversation. Well, that'sright. And this is where a lot
of people get confused. Because Medicaredoes pay for short stays in nursing homes.
Because if you are in a hospitaland you get discharged and you were

(26:18):
sent to a nursing home or areheab facility for medical treatment to make you
better, Medicare will pay a shortterm visit because that is considered part of
your medical treatment, but it runsout. For example, there's one hundred
percent reimbursement under Medicare for the firsttwenty days, there's eighty percent coverage for

(26:40):
the next eighty days. After thatgets cut off and yeah, fire away.
Not many people make it to onehundred days because Medicare just doesn't have
any money. They cut people offfor a lot sooner than one hundred days.
So I have folks that I workwith that have asked me questions about
a Medicaid asset protection trust. Whendoes that actually make sense for someone?

(27:00):
And what are some of the highlevel pros and cons So Medicaid, as
who said before, as a welfareprogram. So Steve, really, when
people say how do I get onthat, well, you have to be
broke. So then the question thenbecomes, are there ways that I can
put money aside or set up myaffairs in such a way that I will

(27:21):
qualify for Medicaid? Well, theanswer is that Medicaid's got a bunch of
very strict rules about that process.If you give away money for the purpose
of qualifying for Medicaid, you areautomatically disqualified for a period, and that
period can run anywhere from zero tofive years. Now, there are some
exceptions. There are always exceptions toevery rule. But if you don't meet

(27:45):
one of those exceptions, giving moneyaway or putting money into an irrevocable trust
for the purpose of qualifying for Medicaidgenerally is followed by a periadi of ineligibility.
Now that still may be worth it, but it's not easy. And
by the way, those Medicaid qualifyingtrusts, they're unique. They need to
be done by somebody who really knowswhat they're doing. You don't go to

(28:07):
a general practitioner or to someone who'sjust a basic estate planner and get that
kind of work done. This ishighly sophisticated work. It can lead to
mistakes that end up costing you moneyif you put your trust into the wrong
person, you bet, because ifthe Medicaid trust is not done right,
you just qualify yourself for Medicaid entirely, and that disqualification can last up to

(28:29):
five years and that's a long time. Now. There are techniques, but
they are very very limited. Well, I think, like so many of
these things, you're not an expert, right, like Mark is our expert.
You need to find an estate planningexperts, you know, but trying
to navigate these new waters and atime of uncertainty can be incredibly frustrating and

(28:51):
it can actually cost you so greatinsights and as always on the difference between
Medicare and Medicaid and why it's socritical to understand both programs from our estate
planning expert from the law firm ofWood and Lamping, Mark Rerekman. You're
listening to Simply Money presented by allWorth Financial. Here in fifty five KRC
the talk station. You're listening toSimply Money presented by all Worth Financial,

(29:15):
I Memi Wagner along with Steve Ruby. If you have a financial question you
need a little help figuring out,there's a red button you can click them
while you're listening to the show.It's right there on the iHeart app.
Record your question. It is comingstraight to us and straight ahead. The
problem with paying the price for thatsummer vacation, right would you put it
on your credit card, would yougo into debt? All this really makes

(29:37):
me nervous. We're going to getinto this next. Okay, so imagine
this, right, you're five yearsaway from retirement, like the end is
in sight. Maybe you even havethe date circled on the calendar. Or
if you're like my son who's gotto countdown until he can drive on his
phone, Like I thought you're gonnasay a countdown to retirement as oh no,
no, we're not there yet.His countdown is until he can drive.

(29:57):
It can be an exciting time,right, I mean, you're getting
your final ducks in a row,and so we want to make sure that
you are doing everything you can tobe able to get there and that you're
not making any major mistakes. Andthere's a few mistakes that we see pretty
often we want to make sure thatyou avoid. Yeah. So first one
is failing to maximize retirement contributions.So oftentimes we're in our peak earning years

(30:19):
when we're about five years out fromretirement, we are allowed to contribute more
money to tax qualified retirement savings plansthe year that we turn fifty, so
the limits go up a lot higher. When we're talking about a four oh
one k for example, where you'reable to put in thirty thousand, five
hundred dollars per year in twenty twentyfour, it'll probably go up a little

(30:40):
bit in twenty twenty five. Butfailing to do so is a missed opportunity
because if you're doing pre tax thenand you're a high earner, then you're
deferring taxes till you're in a lowertax bracket when you retire. If you
need to diversify your future tax liabilityand you don't have any wroth, maybe
now is a good time to implementthat strategy on the you know, on
the flip side. But obviously youneed to talk to an a tax planner

(31:00):
about that. But the bottom lineis failing to contribute what we can be
during our highest earning years could bean issue. I think there are a
lot of people who are behind.You know you're behind, You're not where
you need to be. And Iam so grateful for Steve Sprovac, who
was one of our co hosts onthe show for a long time, who
was so transparent and honest and vulnerableabout the fact that they put everything into

(31:23):
their kids' college education and then theywere like we are behind, and how
then was he able to retire ontime, retire well, be able to
travel, be able to spend moneyon grandkids. They took advantage of these
catchup contributions, right, I meanthey sat down every month with pencil and
paper looking at what they were spending. They cut back in places that they

(31:44):
needed to in order to maximize thesecontributions. If you are one of those
people who feels like you might bebehind, there might be some sacrifices needed
along the path. But this isdoable, and we have an example of
someone who's pulled it off. Yeah, yeah, we do. And next
thing to talk about would be anot analyzing social security options. So obviously
this is a big decision with alot of moving parts. There's timeframes,

(32:07):
there's amounts, there's how much doyou need? There's one do you need
it? Most people full retirement agefalls between sixty five and sixty seven.
I would say sixty seven is morepopular at this point in time, but
you can collect as early as sixtytwo or as late as seventy and most
people collect the first say they turnsixty two, whether or not financially it

(32:28):
makes the most sense for them ornot, And that's why I think,
Man, you've got to run thenumbers. You've got to look at this
every way that you possibly can.Does it make sense to take you at
sixty two and lock in that lowerrate or do you have other options of
money that you can live off ofduring those years you work longer? Maybe
that paycheck is still coming in andyou wait till a full retirement age getting
a guaranteed what six seven eight percentmore every year. Yeah, A big

(32:50):
mistake is if you're going to keepworking and you collect because before full retirement
age, because then you get areduce benefit and you're paying taxes on it.
So it can be a real bummerof a situation if you don't plan
accordingly with Social Security, taking onunnecessary debt. I think there's a certain
sort of mindset that goes along withthis. Unfortunately, it's like you're in
your fifties or your early sixties andthe kids are finally out of the house

(33:13):
and there's finally an empty nest andyou feel like you have been pouring financially
into them for years. Now,it's like, it's our turn. We
should go to Europe. Now,we should do this big project that we've
been doing around the house. Maybewe'll take on some credit card debt.
Maybe we'll pull it out of oneof our investment accounts. Maybe maybe we'll
pull out of the emergency fund,whatever it is. And it's like,

(33:34):
now is me time? Okay?Well, me time now is at the
expense of me time later in retirement. And I think you've got to ask
yourself, whatever it is that youare justifying taking on that debt for,
will it be worth it to youten years down the road? In otherwids,
that's the opposite of what Steve's provacted. Yeah. Yeah, he got

(33:54):
his kids off the pay really puthim through college, and then he saved
more rather than spent the year,you know, spent more investing. Like
you're still twenty five. So ifyou're on the highway and you're approaching the
exit and you're typically slowing down asopposed to when you're twenty five years old,
you get a long distance before youreach your destination. You're driving down

(34:15):
the highway and the fast lane,you know, passing cars, and you
owe it to yourself to pull backon the risk a little bit when you're
starting to knock on the door toretirement, because if the markets do get
kicked in the teeth within that runwayto retirement, then that can derail things
for you. I think this isa know your self proposition. You know.
I know many people who get way, way, way more conservative with

(34:37):
their investments, and others who say, I'm actually I understand the risk of
the market. I understand, youknow, stock exposure. It's how I've
done well through my life. I'mgoing to have a larger emergency fund to
live off of if markets go southduring this time when I'm retired, and
so I think there are options here. The key is really knowing yourself and

(34:58):
what your plan requires. Oh mygosh, this next one. I cannot
stress enough overspending on your children.This is like when you get on an
airplane and they say you have toput your oxygen mask on first, and
if you're a parent, you're thinking, no, no, no, this
little one next to me, Ineed to get their oxygen mask on them.
Well, what if something happens andthen you can't get the oxygen mask
off on either one of you.I saw this recently in the form of

(35:22):
a couple who did everything right fortheir kids and they are so far behind
on retiring and on saving for theirretirement, and it is such a foreign
concept for them. They have tolearn how to put themselves first in order
to be able to get to retirement. Here's the all Worth advice. If
you can avoid making these missteps,and you have saved and invested well,

(35:42):
then maybe you are headed toward agreat retirement. Coming up. Next,
that summer vacation, right, you'recounting down. Can't wait for some though?
Are you taking on debt in orderto get there? We're going to
get into that next. You're listeningto Simply Money, presented by all Worth
Financial here on fifty five KRC,the talk station. You're listening to simply

(36:05):
when he presented by all Worth Financial, I mean way and you're along with
Steve Ruby. You know, formany it's like a ritual of summer getting
away, going to the beach,going to the mountains, going to Gatlinburg.
You pick your place. School isold. It's the perfect time.
You know, work is a littlebit slower. It seems like the perfect
time to get away and be together. Nothing wrong, nothing wrong with those
summer vacations unless you are taking ondebt in order to get away. Yeah.

(36:30):
A recent survey from bank Break showedthat four and ten Americans say they
actually plan to take on debt inorder to travel this summer. If you're
planning to take on debt in orderto travel, then maybe we could make
some financial decisions that help us planto save for vacation so that we don't
have to take on debt. Here'swhere it gets really ugly. Right for

(36:52):
people who said I don't really havethe cash set aside to be able to
pay for this, how are theygoing to pay for it? Well,
according to the research, some aregoing to take out personal loans. I
mean to the tune of what percentagerate that you're gonna have to pay that
that's terrible. Yeah, by nowpay later services, you miss a payment

(37:12):
and you're absolutely in a terrible ditchor borrowing from family and friends, I
mean, what could possibly go wrongwith that? I mean, and then
some others turn to just taking oncredit card debt. I'm just gonna pay
this out. Well, I can'tpay this off this month, but maybe
in three months or six months?Right? Oh? This is terrible.
Yeah, And obviously taking on debt, especially in the high trist rate environment

(37:35):
that we're in right now, canget very expensive, very quickly. If
you're not paying off that credit cardat the end of the month and you're
just using it for points like we'veadvocated for, then you're making a mistake
and you're paying for everybody else's benefitsthat subscribe to that credit card. So
it's a situation here where if youare planning on taking vacation, maybe sit
down and categorize your budget and understandwhere you're spending money, how you're spending

(38:00):
money, so that you can setsome extra money aside, or look at
ways to reduce the expenses of thatvacation in and of itself by being a
little bit more frugal. You know, if you get a place, maybe
don't go out to eat three timesa day and put that on a credit
card. You know, get abreakfast that you can make yourself at home,
or at home at your airbnb orat the hotel. Take advantage of

(38:22):
some of the amenities that are availableto you so that you're not taking on
high interest rate credit card that tohave that vacation. I'm all about experiences,
but doing so in a way thatis money wise is what we would
recommend. Our family loves to getaway. We're going on a trip in
a few weeks. We're taking acouple of friends. We can't afford to
pay for everyone to eat out allthe time, so we've said we'll order

(38:42):
pizza one night. We're going toplan a lot of meals. You know,
some of you will have your turnsto make dinner. We'll go out
and treat everyone one night, butthat's it. We can still have a
great time at the beach and notblow the budget. Thanks for listening tonight.
We hope you're tuning in tomorrow.We're going to talk about whether your
portfolio is really beating in flight.You've been listening to Simply Money, presented
by all Worth Financial here in fiftyfive KRC, the talk station