Simply Money

Episode Transcript

Speaker 1 (00:00):
Is making sense.

Speaker 2 (00:01):
Come join the conversation. As vice president, she was a
complete failure. Fifty five KRC the talk.

Speaker 3 (00:07):
Station tonight, I feel like we need a drum roll.

Speaker 1 (00:16):
For the first time in four.

Speaker 3 (00:18):
Years, the Federal Reserve, our nation central bank is lowering
interest rates. You're listening to simply when you're presented by
all Worth Financial, I mean you Wagner, along with Steve Ruby,
we have talked about it for months. The markets have
been anticipating this for months, and today no more waiting. Right,
our nation central Bank has lowered rates. Not only that, Steve,

(00:40):
they just dove right in.

Speaker 4 (00:42):
They sure did, so you heard it here first right.
This has been a long time coming. We've been anticipating
for a long time what that interest rate cut was
going to be, and we knew it was going to
be either twenty five basis points or fifty basis points.
And they went a little bit stronger and they did
that point five percent rate cut. That's the fifty basis

(01:02):
points why. I mean all Worth chief investment Officer Andy Stout,
he explained it perfectly on Monday.

Speaker 1 (01:08):
Is a smart guy. He said this was coming.

Speaker 5 (01:10):
Yes, yeah, you know this well. He said it might
be coming.

Speaker 3 (01:14):
I tried to pin him be well, I was going
to say, he actually said, this is what he believes
the FED should do based on the data that he has.

Speaker 4 (01:24):
Exactly, and you know, he really gave some good reasons.
And you know what the Fed is saying the justification
behind a half point rate cut. First, the unemployment rate.
It shot up in July more than people expected. It
moved all the way up to four point three percent.
Now it has dropped, you know, it went down to
four point two percent. But that that four point three

(01:45):
that really spooked the markets. They thought that maybe the
Fed had had waited too long with with keeping interest
rates high and needed to act quickly or else things
were going to get out of control.

Speaker 3 (01:57):
And keep in mind, the Federal Reserve has two jobs.
They've been uber focused on the first one over the
past couple of years, which is, of course keeping inflation
under control, right, but they also have a secondary job,
not a secondary they're both equally important, and that is
a stable job market, right. You know, the the American
economy moving forward with a very stable job market, and

(02:21):
so when you see unemployment rates start to tick up,
it's almost like the Feed has had their eye on
one ball, and all of a sudden, they're like, oh,
we need to keep an rs on both balls at
this point. And to do that, what makes the most
sense is to lower interest rates. Go ahead and dive
in with a half point cut rather than that quarter
point cut.

Speaker 4 (02:41):
Yeah, you know, the markets they did not like when
when unemployment rate showed at four point three percent. It
was a very quick overreaction that that was several mondays
ago the SMP dropped three percent.

Speaker 5 (02:53):
That hurt, and as what's that it hurt?

Speaker 3 (02:55):
I mean it didn't hurt because oh, my gosh, three percent,
But we had been in this period of just zero volatility.
I mean, we hadn't seen a day in the market
in the year prior to that where we had seen
more than a point and a half, you know, two
percent fluctuation.

Speaker 1 (03:13):
So we've gotten used to really really steady waters.

Speaker 3 (03:16):
And so that day, I think for many of us
sticks out as like, okay, that right is over. We're
back to normalcy really with some volatility, and that volatility
specifically in response to wait a second, this labor market
has been absolutely impervious to what the Federal Reserve has
been doing as far as raising interest rates and now
we are seeing cracks in the foundation, like we need

(03:37):
to slow down and figure out what we need to
do next.

Speaker 1 (03:39):
You know.

Speaker 4 (03:40):
Yeah, the second thing that they're looking at here is
the manufacturing side of the economy. Obviously it's been flat
for quite some time, but you know that's by design.
When interest rates are increased, it's to purposely make things
a little bit more expensive, so there's a little bit
less output, and then it drives prices down, affecting inflation
on the flip side, making inflation go down of course,

(04:02):
so manufacturing hasn't gone anywhere for quite some time. You
decrease interest rates, it costs less to borrow, it drives
things forwards, and we see more of that, So that
one is by design. But at the same time, you
don't want to see manufacturing flat for too long of
a period of time.

Speaker 3 (04:19):
Well, we can't have this conversation about the economy without
also looking at the housing market. You know, we've got
our housing expert, our real estate expert, Michelle Sloan, who
comes on the show, you know, at least once a month,
and she's been saying for months now, there's not a
lot of movement in the housing market. There's not a
lot of inventory. Why is that, Well, because people aren't
moving because interest rates have pushed, you know, high enough

(04:41):
where people aren't comfortable with mortgage rates.

Speaker 1 (04:44):
First of all, we were a bit spoiled by.

Speaker 3 (04:46):
Three percent, sub three percent, sub four percent, Right, that's
not historically the norm, but we certainly got spoiled by it.
And then when you've got rates up close to eight percent,
nothing's happening.

Speaker 1 (04:58):
And so in order to get that housing.

Speaker 3 (05:00):
Market moving again, lowering rates by this much, the Federal
Reserve making this move. It's like dominoes that fall. One
of the subsequent dominoes that will fall will be mortgage rates.

Speaker 4 (05:12):
Yeah, it's hard to move when you have a two
and a half percent interest rate and you need to
take on a seven percent interest rate mortgage. So people
are sticking around in their homes for longer. And this
is obviously a sticking point. Fourth, and we've talked about
this a lot lately, consumers have tapped into their savings.
I mean, the savings rate all the way down to
two point nine percent. This is the lowest that's been

(05:35):
in a very long time. You know, we're talking During
COVID it was over thirty percent.

Speaker 1 (05:39):
Yes, thirty two percent at one point.

Speaker 4 (05:42):
Yeah, no, nobody could really get out and spend money.
We had lockdowns, we had stimulus money coming in.

Speaker 2 (05:47):
It was.

Speaker 4 (05:49):
It was out of the ordinary. And two point five
percent is certainly on the low end.

Speaker 3 (05:54):
Yeah, this is also out of the ordinary. And this
is where I'm a little bit nervous. Right when I
look at all this data, I say, Okay, this is
you know, this is all probably in line with what
we would be expecting at this point. When you have
the FED kind of on this odyssey that they've been
on over the past couple of years to lower inflation
at the same time, consumers just spending and spending and spending.

Speaker 1 (06:15):
It feels like we're reckless abandoned.

Speaker 3 (06:17):
Because you also look at how much debt consumers have
taken on over the course of the past year or so,
and this is two point nine percent that we're currently at.
It does it makes me incredibly nervous. It's it's very
far south of what.

Speaker 1 (06:28):
The norm is.

Speaker 3 (06:30):
And so I think at some point you got to
look around main Street and people are going to be saying, well,
I've got nothing left to spend, right, and then when
people stop spending, that's when you have a recession. And
so that's why I think it makes a lot of
sense what the Federal Reserve did today, going ahead and
trying to loosen things up as much as they can
with a half point rate cut. You're listening to simply

(06:51):
money presented by all Worth Financial. I Memi Wagner along
with Steve Ruby, as we digest what the Federal Reserve
did today making a decision about lowering interest rates. And
I also want to talk about, Okay, what does this
mean to you?

Speaker 5 (07:03):
Right?

Speaker 3 (07:03):
What can we expect now the first domino has fallen?
What are the other dominoes that will fall in? I
don't even know. I'm not going to say a short
amount of time, because some of these things are going
to fall a lot more quickly than others, exactly exactly in.

Speaker 1 (07:18):
One of those is the bond market.

Speaker 4 (07:20):
Yeah, so the bond market. When interest rates drop, bond
prices go up. Obviously, this is something I could benefit
people nearing retirement.

Speaker 6 (07:28):
Now.

Speaker 4 (07:28):
I remember this happens because bonds, most of them pay
a fix rate anyways, So fixed bonds they become more
attractive when interest rates fall, which will drive up the
demand for those bonds with higher interest rates increasing.

Speaker 5 (07:40):
Their market value.

Speaker 4 (07:41):
That's how you explain the inverse relationship between interest rates
and bonds.

Speaker 5 (07:44):
That's the bond seesaw.

Speaker 4 (07:45):
So we are going to see that, which is a
welcome reprieve because twenty twenty two the bond market in
the stock market hadn't gone down in tandem like it
did in fifty years.

Speaker 5 (07:58):
That was out of the ordinary.

Speaker 4 (08:00):
People have been waiting for the bond side of the
portfolio to go back up for quite some time. And
this is something that will happen as the Fed continues
to decrease interest.

Speaker 1 (08:10):
Rates well, and as we're cheering right about this.

Speaker 3 (08:13):
We haven't been able to talk about luring interest rates
in four years. You know. The good thing about where
we came from, the silver lining of higher interest rates
was that savers could actually make some money in their
savings accounts during that time. We hadn't seen that in
a long long time. I mean close to five percent.
You could have and really really safe accounts, right money

(08:35):
market accounts, highield savings accounts. Now, this wasn't across the board,
this wasn't at every bank, but man, if you were
to shop around, certainly online banks were offering much higher
interest rates. But this was a great opportunity for a
lot of savers. Now, the interesting thing was when the
FED started to raise interest rates, it was like the
banks were all playing a game of chicken.

Speaker 1 (08:57):
It was like first, who's gonna go first and raise
their rates?

Speaker 3 (09:00):
Because every you know, consumers are going to do their research,
they're going to go to that bank. They waited a while,
so this wasn't like something we could take advantage of immediately.
But eventually one bank caved, and then others caved, and
then there became opportunities for us as consumers to make
some money on our savings. Now we're in this period
where rates are now going down, and some banks, even

(09:22):
in anticipation of that, have started to lower rates a
little bit. I will tell you this is where I'm
kind of pleasantly surprised. A lot of banks are kind
of taking a weight and see approach, understanding that, hey,
we don't want our consumers rate, our clientele to make
a mass exodus to pull their money out of our bank,
so we lower rates too quickly, and they may also

(09:45):
pull their money out really quickly, So wait and see
approach on that. I honestly, they don't think it's going
to take too long for these rates to start to
come down.

Speaker 4 (09:53):
That's already gonna happen. This is the one that's going
to go down, probably faster than anything else. And the
online banks the ones that come out on top here
because they don't have brick and mortar locations, so it's
easier for them to offer higher rates with lower costs
to do business. And you know, I have someone that
I worked with. They forwarded me an email last week
that it was from their online bank that said, hey,

(10:15):
we have good news. We are still offering and it
was a lower rate than what they were currently getting.
So they tried to put that positive spin on the mirrors. Yeah,
they put the positive spin on the fact that they're
still paying. You know, it was a good rate, let's
not get that wrong. But this is something we've been
screaming about for quite some time, which is get your
cash to work again. This is your cash, not your investments.

(10:37):
You're never supposed to pull investments out to put them
into a high yield savings account or a CD or
treasuries or whatever. But for your intermediate term positions, cash
has been paying well, but that will be decreasing here
as interest rates decrease.

Speaker 3 (10:51):
Yes, speaking of that intermediate money, right, it might make
a lot of sense if you have a certificate of
a deposit that has recently come to maturity to go
ahead and going to rate now and maybe on a
longer term CD like three years now, that three year
CD probably isn't going to pay you the interest rate
that a shorter term would, but over the long haul
you're probably going to come out ahead. And again this

(11:12):
is we can't control what the Federal Reserve is doing,
or has done, or will do. All we can do
is educate you on what you can be doing to
take advantage of this situation, what you can proactively start
to do in order to take advantage of the highest
rates that you can, or figure out how the lower
rates are really going to impact you in a good way.

Speaker 5 (11:33):
Yeah.

Speaker 4 (11:33):
So, the other thing that we're going to see come
down that we touched on and we have been discussing
recently is homeowners and home buyers. Homeowners with adjustable rate mortgages,
they're going to see lower monthly payments when interest rates drop.
Home Buyers are going to have obviously the opportunity to
lock in at lower rates when it comes time to buy.
In theory, workers should benefit as well because rate cuts
they're there to stimulate the economy because companies are then

(11:57):
more willing to invest, which should bode well for the
labor market. That's part of the feds dual mandate with
keeping unemployment not too high. So with lower interest rates,
firms are going to be able to hire more employees
and invest in more projects.

Speaker 5 (12:09):
For example.

Speaker 1 (12:10):
Kay, I think there's just maybe a lot of opportunity.

Speaker 3 (12:12):
I mean, this is definitely a day that we have
been anticipating. You know, we expect that, yes, the housing
market will open up a little bit, and yeah, I
think when you look at the fact that the labor
market has been seizing up a little bit, what you
would expect in a time when markets are lower is that, yeah,
that we're moving in that direction. Here's the all Worth
advice and me take some time for the market. It's
to digest all of this news and to settle down.

(12:34):
Don't worry about that. This is short term. And if
you make more than one hundred thousand dollars a year,
there's something you need to be doing to achieve financial
and dependence.

Speaker 1 (12:41):
We'll talk about it next.

Speaker 3 (12:42):
You're listening to Simply Money, presented by all Worth Financial
here on fifty five KRC the talk station.

Speaker 2 (12:48):
The talk Station.

Speaker 7 (12:50):
All Worth Financial a registered investment advisory firm. Any idea
is presented during this program are not intended to provide
specific financial advice. You should consult your own financial advisor,
tax consultant, or a state planning attorney to conduct your
own due diligence.

Speaker 3 (13:09):
We're listening to Simple Money and presented by all Worst Financial.
I mean you Wagner along with Steve Ruby. If you
miss our show one night, you don't have to miss
a thing that we talk about. We've got a daily
podcast for you. Just search Simply Money. It's right there
on the iHeart app or wherever you get your podcasts
and coming up at six forty three. Or we're looking
at one of the tools people use for retirement that

(13:30):
you might actually want to avoid.

Speaker 1 (13:32):
We'll take a deep dive on that one.

Speaker 3 (13:35):
You know, when you think about retirements, times have changed,
you know. I think about my grandpa, Hubert Wagner, who
retired from Cincinnati Millicron after working there for decades and
decades and decades.

Speaker 1 (13:46):
He had a pension. His kiss company was taking care of.

Speaker 3 (13:50):
Him and retirement today looks a lot different than that.

Speaker 4 (13:54):
Yeah, those of us that get a pension are very fortunate.
It's far and few between and this date. Fidelity recently
did a survey where two thirds of the respondents actually
said that they are planning some kind of a gradual
or phased in retirement. A large portion of these respondents
for gen z ers and millennials that actually say a

(14:15):
traditional retirement doesn't really appeal to them. The idea here
is that maybe they work later, but in a less demanding,
more enjoyable setting.

Speaker 1 (14:27):
I think this sounds great.

Speaker 3 (14:29):
I also think that you've got people who are far
away from retirement making predictions about what they'll want decades
down the road.

Speaker 2 (14:36):
Right.

Speaker 3 (14:37):
But I would also caution those of you who this
is your plan to say it may not be an option.
We've done research on this and we've been talking about it.
It's less than ten percent of employers are offering this
as an option. So if you are close to retirements
and this is your plan, please please please go to HR.

(14:58):
Go to your boss, make the case for why you
think this makes sense, but don't build a financial plan
around this before you know whether your company is actually
on the same page as you are, because their plan
might be that when it's time for you to retire,
you go from working five days a week forty hours
to suddenly you've now trained your replacement and you're out

(15:19):
the door. So that gradual sort of phased in retirement
may not be an option. If it is, great, but
make sure everyone's on the same page first.

Speaker 4 (15:29):
The thing that worries me about this trend is the
fact that some may think that they don't need to
plan accordingly when it comes to saving for retirement. If
you think that you are going to be able to
work and continue to earn income, and then your ability
to work goes away, maybe some kind of injury, health situation,

(15:53):
whatever work you do becomes obsolete, there are issues that
could obviously arise without proper or planning. But on the
flip side of what you said, I do see this
in practice from time to time, but we've built it
into financial plans in a way that make sure that
you have the savings to support yourself in the event

(16:13):
that you can't work. Yes, and then the transition to
part time work is more or less a quality of
life adjustment, and it doesn't necessarily have to be with
your same employer that you've spent all these years with.
A lot of the time people changed to I don't know,
working at a golf course, doing some kind of consulting work,
ten ninety to nine income, going out on their own.

Speaker 3 (16:34):
I think the key here, and this is what really
really worries me, is whether you're planning on a phased
in retirement. I've talked to many people who say, I'm
just not ever going to retire. I'm going to retire
when I'm seventy five or eighty, and that becomes a
crutch for not saving.

Speaker 1 (16:48):
Yeah, and we just know time.

Speaker 3 (16:49):
After time, most people on average retire at the age
of sixty two. Many of them not because they chose
sixty two, because it was chosen for them. So, you know,
I think this is an actual excellent option. But it's
almost like the gravy on top, Like you've planned to
just go ahead and retire, and you've got the money
to do that, and if all of a sudden it

(17:09):
becomes an option for you to do this phased and retirement,
then great money isn't an issue. It just maybe helps
you kind of mentally get in that place of retiring.
At the same time, it helps your boss. My dad
did this. My dad did this several years ago. By
the way, he retired from the same company where he
interned in college, so he had so much institutional knowledge

(17:31):
built up in his head.

Speaker 1 (17:32):
And my dad is so amazing.

Speaker 3 (17:35):
But I also have a feeling that just knowing him,
he probably wasn't super intentional through the years as he
got closer and closer to retirement to say I'm going
to share this with you and I'm going to share
this too.

Speaker 1 (17:44):
So probably got to the point where it.

Speaker 3 (17:46):
Was like, oh, Gary's getting ready to go, and when
he walks out the door, we might be in trouble.

Speaker 5 (17:50):
It made himself very valuable.

Speaker 1 (17:52):
Heel very valuable. So he went Gary from five days.

Speaker 3 (17:56):
To four days he's a smartman, down to three days.

Speaker 1 (18:00):
So he was able to ease into retirement.

Speaker 3 (18:02):
At the same time, they were able to get more
and more people in the room with him in order
to get that knowledge out and so that they could
continue into the future with what he knew.

Speaker 1 (18:11):
So it made a lot of sense. I've seen this firsthand.
I've seen it go well.

Speaker 3 (18:16):
I just don't know if it as many of us
have that option, as we'd like to think we do.

Speaker 5 (18:20):
Yeah, that's a great point. Not everybody has that option.

Speaker 4 (18:22):
And for those of you that are thinking that this
might be you eventually, one of the issues that you
might run into is if you retire before sixty five
years old, what are you going to do for healthcare? Yes,
that can be a major expense. If you're able to
switch to Cobra from the position that you do leave from,
that's eighteen months of coverage, but that's like five times
the premium that you are used to paying for because

(18:44):
your your employer pays a significant chunk of what that
healthcare costs. If you're not going to do Cobra, then
it's finding another job that offers health care. But then
maybe you're not even stepping down as far as responsibilities
are concerned. And that's what the goal here is for
transitioning into retire slowly is to move away from something
where you have a lot of responsibilities and a large
time commitment to something that's a little bit less stressful.

(19:07):
So one of the issues here that I would also
shine light on for people that plan for this is
how are you going to pay for health care? If
indeed you pull the trigger on transitioning into retirement before
you turn sixty five.

Speaker 1 (19:19):
That's a huge part of this.

Speaker 3 (19:20):
And I also want to go back to something that
you said before, which is you don't necessarily have to
continue working for the same place where you were working before.
If you were in this high stress, you know, just
completely burnt out on a job, you have other options.

Speaker 1 (19:34):
And thinking of someone who I knew who several.

Speaker 3 (19:36):
Years ago had a pretty fat paycheck coming in, made
a great salary, didn't see it coming, but they were
let go and they were a few years away from
where they would retire. Well, they ended up going to
work at Great American Ballpark. Is an usher now. Was
there a huge discrepancy between what they're making now and
what they're making before?

Speaker 5 (19:54):
Absolutely a little bit.

Speaker 3 (19:56):
But the key here was they were not drawing on
their retirement account. They gave those retirement accounts several more
years to grow and compound. They made enough to live
off of during that time. And so the key for
them and for making their financial plan work wasn't that
they had to make oodles and noodles of money. It
was that they shouldn't touch that money for a few
more years and then they were going to be just fine.

(20:18):
So I think there's several ways to look at this,
several options to looking at it. I think the key
is to going into this with eyes wide open. Here's
the all Worth advice. If you do want to gradually retire,
make sure you're working with a qualified financial advisor who
can help build that proper plan to help you get there.
Coming up next, we've got the emotional barriers to overcome

(20:39):
if an emergency happens, and maybe you're thinking you need
to shell out big.

Speaker 1 (20:42):
Bunks when you don't have to.

Speaker 3 (20:44):
You're listening Disimply Money, presented by all Worth Financial here
in fifty five KRC, the Talk station.

Speaker 2 (20:50):
Round one is in the books.

Speaker 6 (20:51):
She's destroying this country coming from someone who has been prosecuted,
and the.

Speaker 2 (20:55):
Reactions we're disappointed in the debate last night are rolling in.
This looks like it'sistent fifty five PRC the talk station.

Speaker 7 (21:04):
By texting sixty four thousand, you're good receive recruitment.

Speaker 3 (21:06):
This is fifty five KARC an iHeartRadio station. You're listening
to Simply Money with that of my all Worth Financial,
I mean me Wagner along with Steve Ruby, one of
the people. I think that there is just so much
to learn from and how he can take just a regular,

(21:27):
everyday occurrence and turn it into something that this aha
moment that we can all learn from. Is our good
friend Alreddick from Game Time Budgeting.

Speaker 5 (21:35):
Al.

Speaker 3 (21:35):
I was just saying earlier today, if I could like
embed you with my family for like a month, I
think they would look at everything differently, they would make
financial decisions differently. But you have yet again, a great
story for us, something that would have been an emergency
to the rest of us that we might have spent

(21:56):
quite a bit of money on.

Speaker 1 (21:58):
Not you, though, my friend.

Speaker 8 (22:00):
Yes, ma'am.

Speaker 6 (22:01):
So the most recent occurrence in my life, Amy, I
decided to surprise my dad because he was in Greenville,
North Carolina, having a medical procedure. So I already had
my plane ticket, but I didn't think about getting my
rental car until the night before my flight.

Speaker 2 (22:19):
So I get online.

Speaker 6 (22:21):
And I started searching for rental cars.

Speaker 8 (22:23):
And guess what, Amy, all the rental cars had been
booked for just about way actually every rental car agency
at the Raleigh Durham Airport.

Speaker 6 (22:33):
And then it hit me. I was like, oh man,
this is marsh madness, So no wonder there aren't any cars.
So obviously I'm like, what in the world am I
going to do? Because I needed to get from Raleigh,
North Carolina to Greenville, North Carolina, which is about an
hour and a half away.

Speaker 8 (22:50):
So then it.

Speaker 3 (22:53):
Because the average non Alriddic kind of person would then
go to, oh, I'm gonna have to suck it up
and uber or left and it's.

Speaker 1 (23:03):
Gonna be quite a bill. Or is there some kind of.

Speaker 3 (23:06):
Limousine service or something like that they can get me there.
I'm already in on this plane ticket, you know, so
it's probably just gonna cost me even.

Speaker 1 (23:16):
More to get there. But friends, as we know Alredy,
we know that is not That's not where you went.
You did not uber to your dad, did you?

Speaker 3 (23:25):
No?

Speaker 8 (23:25):
I did not. Amy.

Speaker 6 (23:26):
It occurred to me, Now I did think about that.
I'm not going to lie, but it occurred to me
that I had always wanted to ride, wait for Amy,
a Gray haund buts right, of course. So then I
get online and I discovered that I could catch a
Gray Held from Raleigh to Greenville, North Carolina for thirty

(23:49):
dollars avy. So I felt like I had hit the
lottery and even the bus ride itself when I got
on the bus.

Speaker 8 (23:56):
Now, of course, picture this big, long bus.

Speaker 6 (23:58):
There were only eight pass suggest for the entire trip,
so it was quiet. The seats were actually very comfortable,
and then I came to discover that I enjoyed the
sound of the engine.

Speaker 8 (24:10):
It was very relaxing. So I was like, man, this
is pretty cool.

Speaker 6 (24:14):
But my wife she did say, you know, riding Greyhound
with just eight people is a lot different than riding
it with a full bus load, so we'll have to
see it about that.

Speaker 5 (24:22):
It brings up a good point.

Speaker 4 (24:24):
I think next time around, if this happens again and
you have a packed bus, you might feel a little
bit different. But it sounds like it's a good experience
all things considered. You know a lot of times people
are going to choose that quick fix when it comes
to resolving some kind of a problem. And you know,
I love how you turn this into a positive experience
for yourself. Otherwise there could have been some real downsides exactly.

Speaker 6 (24:45):
So typically when most people find themselves in an uncomfortable position,
obviously we want to fix it as quickly as possible.
It's almost like this. Everybody has heard a baby cry, right,
and sometimes they cry because they're wet, so when you
change the diaper, then everything is good again. So as adults,

(25:05):
we rarely cry out loud. We cry with our emotions though,
and that could kind of create an emotional volcano where
we just want to do the first thing we think about,
no matter what it costs, because we want to go
from being uncomfortable to comfortable as quickly as possible. So
that was basically the reason that I decided to take

(25:29):
the bus because for me, obviously finances always plays a
part in the decisions that I make. But when you
make decisions typically based on your gut instinct or your
quick response or first thought, typically you're going to spend
a lot more money than you could have if you
just sit back and say, you know what needs to

(25:50):
happen for me to make this possible.

Speaker 8 (25:52):
Does that make sense?

Speaker 1 (25:53):
Makes perfect?

Speaker 3 (25:54):
Son to listening to simply Money presented by all Worth Financial,
I mean me Wagner.

Speaker 1 (25:58):
All Is, Steve Rubiez. We're talking to our.

Speaker 3 (25:59):
Good friend alverredk tonight right, he's getting ready to fly
to meet his dad, has a flight booked night before
realizes there's no rental cars. Rather than spending hundreds of
dollars on an uber or some other solution. He takes
a minute, takes a deep breath, and looks at all
of the options and comes up with the greyhound bus,
which ends up being thirty dollars. Now what this reminds

(26:23):
me of and I have seen this so many times
through the year. Even people that we work with who
are smart long term investors, something will come up. They
look at their four oh one K statement and say,
I don't have the money to pay for this.

Speaker 1 (26:36):
Medical bill or this unexpected expense.

Speaker 3 (26:39):
I'm just gonna pull it out of my four to
one k, right, it is the quickest fix. I know
the money's there, and I'm done. And once we talk
through it with them, there's actually many times other options
that they have that they haven't considered.

Speaker 1 (26:53):
They just didn't take the time to think through it.

Speaker 6 (26:55):
Exactly, Amy and almost Chreos when you gave that example,
because most people, well not most, a lot of people
do look at their four one K retirement savings as
their emergency fund, and I'm like, wait a minute. When
you put that money away, it is for a particular purpose,

(27:16):
and that is for your golden ages or your golden years.
And when you tap into it, obviously you're taken away
from the principle and you are also foregoing any capital
gains or dividy is or whatever you want to call it. Right,
So I'm like, why don't we just sit down in pause,
take a deep breath. What other options would you consider

(27:37):
if tap it into that four oh one K We're
not an option.

Speaker 8 (27:41):
So when you take that off the.

Speaker 6 (27:42):
Table, it forces people to be what I call financially
creative to come up with other ideas, because, let's be
real about it, if people really looked at how they
use money on a day in and day out basis,
most emergencies can be paid for with regular cash flow.
But you just have to planing so that you can
put money away for that unexpected event that you know

(28:06):
will happen sooner or later.

Speaker 5 (28:08):
So you know quickly.

Speaker 4 (28:09):
This is a great story about how you turned not
having rental vehicle into an experience. But after your return
flight to Cincinnati, I understand that you also had another
transportation challenge.

Speaker 5 (28:19):
Was that and what was the financial impact?

Speaker 8 (28:21):
So I had made arrangements.

Speaker 6 (28:24):
I thought with my wife that she was just going
to pick me up from the Cincinnati.

Speaker 8 (28:28):
Airport, right, but she got call. She got called into.

Speaker 6 (28:31):
A meeting at eight o'clock and my flight landed at
like eight twenty and her meeting is they always last
at least like an hour. So I was like, you know,
what what can I do to get my body from
the Cincinnati Airport back home? And then I remembered that
my wife parks in the garage downtown and I was like,
oh man, this is.

Speaker 8 (28:51):
My opportunity to ride the tank bus.

Speaker 6 (28:57):
So all right, So I hopped on the tank bus
dollar fifty cent, got dropped off at like Government Square,
walked one block north, got my wife's car out of
the garage, and went home. So I did that entire
trip for like a dollar fifty cent, But had I
taken like a ride share, it would have been probably

(29:17):
like sixty bucks.

Speaker 2 (29:18):
You know, wow, how quickly?

Speaker 1 (29:21):
How do you get people wired to think this way?

Speaker 3 (29:25):
Because I don't know that the way that you come
up with things is.

Speaker 1 (29:28):
The natural way that others would think.

Speaker 6 (29:32):
I like the way you say that, Amy, So for
what I've seen obviously, as you know, I do a
lot of workshops with corporate employees. One of the things
that I think I'm pretty good at is helping people
understand what are some of the root causes that makes
them think the way they do. And for most of us,
it goes back to things that we learned as children,

(29:53):
because of course it's ingrained in your mindset and you
just replay that video when you're presented with a particular challenge.
So it's really all about helping people get down to
the core of the way.

Speaker 3 (30:03):
Under unhealthy patterns right of banking with their money and
then correcting them.

Speaker 1 (30:09):
A'l. We learned so much from you.

Speaker 3 (30:11):
Thank you for always being willing to share your stories
with us. Al ridd it from Game Time Budgeting you're
listening to Simply Money, presented by all Worth Financial Here
on fifty five KRZ The Talk Station.

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Speaker 1 (31:02):
We're listening to.

Speaker 3 (31:03):
You simply money percent by all Worth Financial I Meti
Wagner along with Steveebe. If you've got a financial question
you just can't figure out on your own, will help.
There's a red button you can click on while you're
listening to the show. It's right there on your iHeart app.
Record your question. It's coming straight to us and straight ahead.
Have you ever thought about a time share? We're going
to dig into those. We're looking at both the pros

(31:24):
and the cons. Okay, so, if you've listened to the
show for a while, well, one of the topics that
we get into quite often here, and it's because I
think it's something that many people look at quite seriously,
is a target date fund.

Speaker 1 (31:36):
So tonight we're looking at the fact that there's a
lot of articles out there.

Speaker 3 (31:40):
Right if you're anyone who consumes any kind of financial media,
and if you listen to.

Speaker 1 (31:44):
The show you probably do.

Speaker 3 (31:46):
I think there's a lot of stuff out there that
makes these target date funds sound like a good option
for you for your four O one K, and so
I think it's just important to talk through that and
make sure you fully understand what you're signing up for.

Speaker 4 (31:59):
So that target it represents the time frame in which
you might be retiring to align with a certain level
of risk and reward potential that gets safer the older
that you get. So this means that it's kind of
like a form of passive management. It's a little bit
like taking a bust to retirement because everybody in that
fund gets the same treatment based on the destination that

(32:22):
they're going to, and that doesn't change to be to
treat you in any way special based on your needs
and goals.

Speaker 5 (32:30):
It's just that time frame alone.

Speaker 3 (32:33):
As four one ks have become more and more popular,
as there are more options, more of us relying on
them to retire, this becomes more and more a part
of the conversation.

Speaker 1 (32:43):
And listen, I get it.

Speaker 3 (32:44):
When you're starting a new job and you're sitting in
front of that HR person and you've got that stack
of papers that is like.

Speaker 1 (32:51):
A mile long.

Speaker 3 (32:52):
You know that you're trying to fill out and get
through about insurance and in all the things, you get
to the four to one K and it's like, oh, okay,
well I think I'm going to retire around this year,
here's the funds that up to support that.

Speaker 1 (33:04):
Sign me up. One last thing that I have to
think about and worry about.

Speaker 3 (33:07):
And this is why I am so passionate about making
sure that you understand exactly what you're getting. Because the
major players, I mean this is out there in Fidelity, Vanguard,
t row Price.

Speaker 1 (33:18):
You know, they.

Speaker 3 (33:18):
Collectively manage more than a trillion dollars in these target
date funds. They're accessible, they're easy to understand. And the
problem I think that many don't understand is it's a very,
first of all, one size fits all approach to retirement. Oh,
you're going to retire in twenty thirty five, so everyone
who is going to retire in roughly ten years, well

(33:39):
all of them need to start pulling back to you know,
fifty percent stocks and fifty percent bonds.

Speaker 1 (33:46):
That might be right, but it also may not be
right for you.

Speaker 3 (33:49):
And also what you have to understand is if you
kind of pull up the hood under these funds, many
of them are incredibly different. You can have one that
says to retirement, that says through retirement, and they can
be then built very very differently, and it may not
actually be in line with your your real risk tolerance.

Speaker 4 (34:10):
That's a very good point, because the two retirement is
going to represent something that is way more conservative. When
you're too conservative, you risk not allowing your money to
keep up with inflation. I have plenty of folks that
I've worked with over the years that have a sixty
percent stock forty percent bond allocation when they're at ninety
years old. Some of them even have roth iras with

(34:32):
one hundred percent stock because they know that this money
is going to be part of part of their legacy
plan and not anything that they're actually going to spend themselves.
It's going to be passed on to loved ones in
a tax efficient manner. Some of these through target date
retirement funds that represents a through retirement are going to
give you a little bit more risk on your dollars,
which many of us do need. A too retirement fund

(34:55):
may be too conservative.

Speaker 3 (34:57):
And I think when you're looking at if you were
going to look at all of the investment options available
to you, right, it can be overwhelming to know exactly
what's right.

Speaker 1 (35:06):
But if you were going to pick.

Speaker 3 (35:08):
Would you individually then pick the same stocks that are
part of these target date funds? Probably not? If you
want to see how the sausage is made. A lot
of these funds have some absolute dogs in them, like
just wouldn't They're not great performers, but they're trying.

Speaker 1 (35:25):
To get someone to invest in them. How do they
do it?

Speaker 6 (35:28):
Well?

Speaker 3 (35:28):
They stick it in the case exactly and you have
no idea. And you know, back to the point of
this kind of being overwhelming to pick and choose exactly
what you should put in your four O one K.

Speaker 1 (35:40):
We laugh about this, but it's not laughable.

Speaker 3 (35:42):
Many of us spend more time planning our summer vacation
than we ever do looking at our four O one K.

Speaker 1 (35:47):
You know, there is an option.

Speaker 3 (35:48):
For you to work with fiduciary financial advisors that can
actually manage your four oh one k right and say
this is what you should choose right in ninety nine
point nine percent of the time, it's not going to
be a target date fund. That's not the best thing
for you.

Speaker 4 (36:03):
Yeah, I mean a target date retirement fund. You pull back,
you lift up the hood, and you're going to see
oftentimes an expense ratio that you can reduce by using
some of the other investments that exist inside of the
menu that your employer gives you to pick and choose
from in your four to one K, especially if you
have low cost institutional index funds. If you'd pick the
best out of those to build that custom portfolio for

(36:24):
you as an investor, then it's going to be a
lot more effective than taking a bus to retirement. It's
going to be more like taking a taxi or an uber.

Speaker 3 (36:32):
And if you have a portfolio other investments outside your
four oh one K, which many people do, it's like
there's this disconnect between everything else you're doing in your
financial life and this major investment that you have in
a target date fund in your four one K. All
of those things are not working together harmoniously to get
you to where you need to go. So I think

(36:53):
at some point, if you listen, if you have kids
or grandkids who are in their twenties and they're just
starting to invest, starting to put money in that four
one K, this is not a terrible option for them,
But at some point someone looks at that statement and
that becomes real money, and then I think at that
point it should not be a one size fits all
approach to retirement. Here's the all worth advice. If you're

(37:13):
a younger investor. You've got little financial knowledge. Okay, fine,
a target date fund could make sense for you, but
as you get older, we would say you need to
take a more customized approach. Coming up next, when a
timeshare might make sense and when it doesn't. You're listening
to Simply Money presented by all Worth Financial. Here in
fifty five KRC, the talk station, the.

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Speaker 3 (38:17):
You're listening to Simply Money, presented my all Worth Financial.
I mean you Wagner along with Steve Ruby.

Speaker 1 (38:23):
You know is people.

Speaker 3 (38:24):
Think about summer vacations and vacationing something that often comes
up timeshares, Right, does this make sense?

Speaker 1 (38:31):
And I think which you also have to understand is
that timeshares are not one size fits all. There's lots
of different flavors of these.

Speaker 3 (38:39):
So before it's something you consider, we want to make
sure that you know what you're really looking at.

Speaker 4 (38:44):
Yeah, types of timeshares versus a fixed week, this is
where the buyer actually owns the rights to a specific
unit in the same week, year in and year out,
for as long as the contract is written.

Speaker 1 (38:56):
Another one is floating.

Speaker 3 (38:57):
Right, So you're given like a different period of the year,
a given period of the year, and you can you know,
go any time during that time. But listen, what you
have to understand is there's other people who own the timeshare,
and if there's like spring break and everyone wants spring break,
the likelihood of you getting that week at that place
that you're hoping becomes less and less. Yeah, So then
you think about, well, if I wasn't tied to this

(39:19):
time share, I could go anywhere that week, And now
all of a sudden, I'm financially tied to this place
and I can't even go when I want to.

Speaker 4 (39:27):
Well, there are other types right to use. For example,
in this arrangement that the buyer leases the property for
a given amount of time each year for a set
amount of years. So that might give you a little
bit more flexibility than you know, fighting over the times
that that people are going to want, like spring break
for example.

Speaker 1 (39:44):
And there's another option.

Speaker 3 (39:45):
I think this is the one that I hear about
people using the most and it's you know points, right,
and you use your points, or you can save your
points maybe one year not go and then you know,
you accrue those points and you get to go to
a bigger place.

Speaker 1 (39:57):
The problem I think with these and it's kind.

Speaker 3 (39:59):
Of like, well, I know my it's like, oh well, yeah,
I could go to Florida this year, or I could buy.

Speaker 1 (40:04):
Even more points or pay.

Speaker 3 (40:06):
Even some extra money and go somewhere even nicer, when
actually financially it may not be the best thing for you.
And I guess when I come back to personally what
works for me, it makes me a little nervous to
be so tied to one place, one company that may
not be the best value or the best option for
your family.

Speaker 5 (40:27):
Yeah.

Speaker 4 (40:27):
I mean there's certainly more cons I would say to
timeshares than there are pros annual fees that you have
to pay. You're at the mercy of any increases in
those fees. Time shares, they are hard to sell. There
are so many of them on the market that there's
actually businesses out there that specialize in trying to get
you out of time shares.

Speaker 5 (40:45):
That you have buyers are morse.

Speaker 3 (40:46):
For I've gotten the postcards in the mail, right I'm
an expert at getting you out of a timeshare, and
I'm thinking, well, this must be something that a lot
of people are interested in.

Speaker 1 (40:53):
A couple of ways that these can make sense.

Speaker 3 (40:55):
First of all, if you like to go to the
same place and stay exactly in the same place every year.
I have a friend who had a timeshare in Myrtle Beach.
They meet the same people there every year. They absolutely
love it. I have another friend who has points and
they say they've gone to places that they could have
not afforded and would have not gone without it. You
have to do your research and make sure you maximize

(41:15):
these things if you're going to buy into them. Here's
the all Worth advice. A timeshare can help create some
wonderful memories. You have to make sure You're careful with these,
make sure it jives with the kind of lifestyle and
the kinds of vacations you like to take. Thanks for
listening tonight. You've been listening to Simply Money, presented by
all Worth Financial. Here in fifty five KRC The Talk Station.

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I know Donald Trump's site.

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Some choices aren't difficult, tip a no brainer when you
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You saying, you know, I like Trump, but now I
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