Simply Money

Episode Transcript

Speaker 1 (00:06):
Night, inflation continues to move in the right direction. Why
raising the full retirement age may not actually fix our
social security problem? And we are playing retirement fact or fiction.
You're listening to simply money presented by all Worth Financial.
I mean me Wagner along with Steve Ruby. For those
of you who love to Monday Morning quarterback, First of all,
I don't think you can complain much about Joe Burrow

(00:27):
because we finally won a Bengals game yesterday. And for
those of you who like to critique even maybe the Fed,
our nation Central Bank and Jerome Pal, while we've got
more information out that shows that maybe they did make
a really good call joining us tonight with his take
on that as our chief investment officer, Andy Stout, joining
us as he does every Monday. All right, let's talk

(00:49):
PCE Andy what that is and why it might want
to make you pat Jerome Pal on the back and
tell him he did a good job.

Speaker 2 (00:59):
Well, is what the Federal Reserve, which is our nation
central Bank, considers to be the preferred inflation measure. Now
you probably hear more about CPI, which is understandable. That
just gets all the publicity. However, pcees a little bit
different than CBI for a few reasons. Just a very

(01:19):
very quick backdrop without boring everyone too too much. It
includes other things besides this out of pocket consumer spinning.
So employer sponsored healthcare, medicare, and medicaid costs includes all
of those things. That's one of the biggest differences of
those inclusion of extra costs. Now, the Federal Reserve of

(01:40):
looks at that, but then they look at what's called
core pcees, which excludes food and energy prices because those
are really volatile, and the FED doesn't really want to
make monetary decisions or interest rate decisions based on the
price of food or energy. But just think back to
two thousand and seven. You saw oil at one hundred
and fifty dollars a barrel. Should have Fed have raised
rates then, right when we were on the verge of

(02:00):
one of the worst financial crises since the Great Depression.
Probably not that would have been a really bad idea,
would have made things ton worse. So the FED kind
of ignores that the food energy prices are all over
the place anyways. Core pce those up two point seven
percent on a year over year basis. Now the FED
target's a two percent inflation rate. So we're still well
above that, right, So you might be thinking, well, why

(02:21):
is that Fed cutting if we're still that high, that
much higher than that two percent rate at two point seven, Well,
the simple answer is is that it's trending lower. So
if we look at the result that came out for
the month of August, we saw on a monthly change
was zero point one to three percent, and that's that's
pretty good. Now when we think about the trend lower,

(02:43):
what we like to look at is the last three
months and also the last six months of data, and
we can look at an annualized number just to kind
of make it easier to think about. So the twelve
month core pcees two point seven percent, again higher than
the two percent target. The six month annuallyzed rate is
two point four still higher than two percent target, but
better than the twelve month. Right into the three month

(03:05):
is at two point one. So you got two seven
two four two one. So we're trending in the right
direction and that's giving the Federal Reserve confidence that it
is able to uh continue to cut rates to help
the economy.

Speaker 3 (03:19):
You didn't address that, Amy said that the Fed has
done a good job. You dodge that one.

Speaker 1 (03:26):
You're not padding drum? Is that what you're telling me?

Speaker 2 (03:31):
He's done an okay job. I mean, there's they didn't
do too bad B plus I guess uh. Recently they
did a very nice job of communicating the ability to
go to a half point rate cut at their meeting
on September eighteenth, uh, and not insite panic across the market.
So that's pretty good. And to be fair, the Fed

(03:52):
does need to get rates lower or quicker. They can't
do a quarter point at a time because we are
seeing these cracks in the labor mark, I mean the
unemployment rates that's at four point two percent. We're going
to get a new reading this Friday. But at the
Feds go back to June. They had forecast that the
unemployment rate at the end of December would be four
point two percent, and then the July unemployment rate, where

(04:16):
to come in at, came in at four point three percent.
So literally two days after the Fed's June meeting, the
unemployment rate already went higher than what it had thought
it would be at the end of the year. So
we're seeing some weakness there. Right now. The FED expects
the unemployment rate to be four point four percent by
the end of the year. Uh. And if you look
at where markets are pricing and interest rates, there's about

(04:40):
seventy five basis points or zero point seventy five percent
of additional rate cuts expected this year. I think we'll
either get that point well, because there's only two meetings
on here's the problem, so they hibit they'd have to
do another point five percent cut and a point twenty
five percent cut to get there, or they'll end up
doing two quarter point cuts. I think think we could

(05:00):
see that half point cut if the unemployment rate gets
to four point four percent a little bit earlier than
the year, or even gets above it at any point.
If we get above at any point, I think we
see you can see the half point cut at one
of their two remaining meetings.

Speaker 3 (05:15):
So, with the FED having a dual mandate, you would
say that the trend is in the right direction for inflation,
and at this point a lot of the moves are
going to be more about dealing with the labor market.

Speaker 2 (05:26):
Well, yes, but I would also caution that there is
some risk on the inflation side that we're watching really closely.

Speaker 3 (05:34):
Yeah, we are opinion right as too.

Speaker 2 (05:37):
Well, we had a dissenting and pending. Yeah, Michelle Bowman
was the first FED governor to dissent, and you know
quite some time since the two decade in the two thousands, uh,
and you know that's was interesting. Now we've had FED
president's descent before or but they don't have as wide
of a mandate as a governor. Governor sees more of

(05:59):
the national picture and what they call the federal reserve. Presidents, Uh,
they look at their region or their territory. So that
we did have a descent, But what I'm probably more
worried about. Don't really care too too much about what
Michelle Bowman's descent is or was, But what I'm more
worried about is the risk with any potential strike on

(06:22):
the ports. But A and also some data that was
economic data that was revised last week. So we have
these ports that you know are very well could see
a strike tonight starting at midnight, and that would have
a pretty big impact on the economy. So it's thirty
major East Coast and Gulf Coast ports. They're represented by

(06:45):
with the ILA, which is the International Longshoreman's Association. There's
a fun bit of trivia for your cocktail parties we
want to talk about what the ISLA is. They are right,
they will be hits right, But if we do see
a shutdown and it starts to prolong, the estimates are

(07:05):
as much as like seven and a half billion dollars
a week it could cost the economy. So that's that's
a big number because you're forty three percent of imports
into the United States come through those ports, so it's
a it's a pretty big number. And you think about
like automobiles of affecting the supply chain there just the
other general supply chain issues that we've seen in the past.

(07:26):
You could see a repeat of that if we do
see some sort of extended period of a strike here.
So you know, that's something to watch up pretty closely.
I know the President can step in, the unions have
asked him not to for the time being, But what
the White House could do would be to step in
and invoke what's called the nineteen forty seven Half Heartlely Act.
Essentially that would allow the President to invoke an eighty

(07:49):
day cooling off period so the nation still continues to operate.
Now you can make the argument about political games, some
ship not going to go there, But for the time
certainly is not stepping in to avoid that, So you know,
that's one of the main things. The other one that
I do want to mention just real quickly is the

(08:10):
savings rate for consumers. There was a massive revision over
the past few years that we just got last week,
and what it showed was that the savings rate is
now a full two percentage points higher than where they
had originally reported. We had the end of July data
showing a two point nine percent savings rate and it
was revised up to four point nine percent. It's now
at four point eight but that's a lot lower or

(08:31):
a lot higher than what it was, and that suggests
consumers have a lot more runway, if you will, and
so that could increase demand for prices, demand for goods
lifting prices. So from a supply demands perspective, when you're
thinking about inflation, you have the potential for maybe a
little bit higher demand than was anticipated and the potential
for some lower supply with the report strikes. So putting
that together, you know there is the risk of an

(08:53):
inflationary impulse of something to watch really closely.

Speaker 1 (08:55):
You're listening to simply money presented by all Worth Financial,
I Meanbi wagnerre long with Steve Ruby, and Andy's out
joining us to make sense of what's going on in
the economy. Right now, Andy, I want to ask you
about this, the S and P five hundred flirting with
the rise of twenty percent or more in two consecutive years. Right,
the last time we saw this happen. You know, people
can investors can get really excited about this, but the

(09:17):
last thing that's happened was ninety eight, and we know
what happened after that, right, the dot com bubble burst.
There's all kinds of financial headlines out there about you know,
things are too high, over priced, doom coming. What do
you think.

Speaker 2 (09:32):
Markets going cycles? Yes, we could see some sort of pullback,
could be a bear market, could be a correction. If
we do have a recession that coincides with it, wouldn't
it be surprised by a pretty sizable pullback. I mean,
if you just look amy at the actual data relative

(09:53):
to prior cycles from for the stock market, the average
bear mar has seen a decline roughly thirty five percent.
So I mean that's not encouraging, right, No one wants
to thirty five percent, And there's been there's been twelve

(10:16):
bear markets since nineteen fifty. So the thing is, though
you don't know exactly when it's going to happen, you
don't know how long it's going to be. I mean,
we've seen some pretty short bear markets. We had a
one month bear market in twenty twenty, right, but we
had a longer bear market back in two thousand and
eight when that one dragged out for a much longer

(10:36):
period of time. You don't know how things are going
to recover, you don't know when things are going to happen.
That market timing gets really dangerous. And I've seen the parallels.
I've seen the charts that look, you know, if you
look at the chart from like nineteen eighty two to
you know, the year two thousand essentially, which kind of
captures the end of this period you're talking about. And
if you look at the period of two thousand and

(10:56):
eight to where we are now, those charts look really similar.
And you can go back to even like the nineteen
fifty to nineteen seventy recover, you're nineteen to the beginning
of seventies. It's almost like you see twenty years and
kind of a I don't want to say a lost
decade if you will. But you do see these kind
of like super cycles, and you know we could have that.
But what I would say is that that is a

(11:17):
sample size of two. I'm not willing to say, Okay,
well it happened one time or two times, well must
happen again. I mean, that's ridiculous. You got to look
at the evidence. You got to just know going in
eyes wide open. Markets go in cycles. There are periods
where they go down, and it will not be fun,

(11:37):
it will not be enjoyable. That being said, if you
have a or if you're able to know that ahead
of time, stay disciplined, avoid market timing, you're going to
be in pretty good shape to get that recover because
you don't know when the market will bottom. You don't
know when the market's going to top, and I can
guarantee you your emotions will take over because news is
always best at the top and works at the bottom.
And if I went to you in March of two

(11:58):
thousand and nine and said, hey, go put all of
your money in the stock market, take out five mortgages
and do that's like you're crazy, but it probably would
end up being one of the best financial decisions ever.

Speaker 1 (12:06):
Great perspective, Annie coming up with raising your full retirement age,
fixed social securities, trust fund problem. What new calculations show us. Next,
you're listening to Simply Money presented by all Worth Financial.
Here in fifty five KRC the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean,

(12:27):
you Wagner along with Steve Ruby. If you can't listen
to our show every night, you do not have to
miss the thing. We've got a daily podcast for you.
Just search Simply Money right there on the iHeart app
or wherever you get your podcasts, and straight ahead at
six forty three, we are playing retirement fact or fiction.
What you need to know about your money. I'm sad

(12:47):
that I have even have to say this. There is
research out that shows that maybe your children are taking
financial advice from places where they shouldn't be. I mean,
if it's like, at least as it comes out, I'm like,
this isn't a saying that I even need to say this.
Your children are taking money and investing advice from social media.

(13:07):
And if you're wondering whether you should be alarmed about that,
the answer is a resounding yes.

Speaker 3 (13:13):
Yeah. One fourth of social media users, in fact, have
fallen victim to some kind of bad financial advice. One
in five have gotten duped multiple times and not learn
from the mistake the first time around. Those that are
most susceptible gen zers, teens, college students, young adults who
maybe just centered the workforce. They're going on to social

(13:35):
media to get advice. This is a it's a huge
problem because social media has no fiduciary responsibility to make
sure that the advice that they're giving is worth anything
to you. And it's also not tailored to the individual.
It's blanket statements.

Speaker 1 (13:49):
I have a theory about this. You know, we were
kind of the last generation to not grow up with
these devices in our hands, and I think as the
result of that, we're all a little skeptical warry about
what's being said on these places. Our children grew up
with these devices in their hands, like all most of
the information that they take in. Sometimes my son will

(14:12):
say something about history and I'm like, good job, I
like you learn that in class. Nope, I learned it
on TikTok, called on TikTok, and so you know, it's
like he isn't going to differentiate between you know what
someone's saying on TikTok that's good advice, and what's not
he's getting good gaming tips on there. So clearly maybe

(14:32):
this should be good money advice. And so please make
sure that your children understand there's a difference between the
gaming tips and the clothing tips or the hair whatever,
whatever it is that they're learning from social media and
actually smart long term decisions about their money.

Speaker 3 (14:49):
Yeah, I mean, it's an opportunity to explain what a
fiduciary financial planner is. A certified financial planner somebody that
actually has your best interests front and center, that's going
to give advice based on you our individual financial situation
needs and goals. Again, not some social media talking head
who just wants to get clicks for marketing revenue that
doesn't have that fiduciary standard to provide good advice for you.

(15:12):
It's important to differentiate that for your children.

Speaker 1 (15:15):
Case in point, remember several years ago when every Super
Bowl commercial was about cryptocurrency. I do all these celebrities
touting all these crypto exchanges, and they were going on
their social media saying the same thing, and then they
lost their shirts. Did they talk about losing their shirts
on social media. Nope.

Speaker 3 (15:32):
Another publicists said, shut up about it exactly and just
deal with the lawsuit because that's what happened.

Speaker 1 (15:38):
Yes, educate your children on these things. Okay, turning now
to the topic that listen, Congressional leaders do not want
to touch it with a ten foot poll. It is
a political hot potato, but it is something that we're
going to have to deal with at some point. We
are talking about the Social Security Trust Fund problem.

Speaker 3 (15:54):
Yeah, We've been talking about different time frames over the years,
and right now that the magic year is twenty thirty four.
That's when the Social Security Trust Fund will run out
of money and everyone collecting will get a twenty percent
reduce benefit and as including for those already collecting and
those that will be collecting.

Speaker 2 (16:14):
Yeah.

Speaker 1 (16:14):
So there is a Democratic representative, Brendan Boyle, and listen,
I don't care what you think about politics. I do
appreciate that someone in Congress is at least starting the
conversation about what the options are. So he is the
ranking member of the House Committee on the budget, so
smart right that he is looking into this, and he
wanted to see what would happen if they were to

(16:35):
theoretically raise the full retirement age over time. So now right,
the maximum benefit that you can get is at the
age of seventy What if they raise that to seventy two,
so you could start taking benefits sixty two, but the
highest amount you could get a seventy two. And what
if they phased in full retirement age, moving it closer

(16:55):
to sixty nine.

Speaker 3 (16:57):
Yeah, it would be if you're born in nineteen sixty five.
Then just in this this hypothetical situation that they worked
out full retirement age at sixty five would be sixty
seven and three months. Every year after they add another
three months on there until you get that full benefit.
You know, for somebody born in nineteen seventy two claiming

(17:17):
Social Security at the earliest would still be sixty two
years old, but it would be a forty percent reduced
benefit as opposed to what it is today thirty percent
reduced benefit.

Speaker 1 (17:29):
And then if you look at how those benefits work
out over the course of what would be, you know,
a normal life period, these changes would give you, on average,
at least, according to these numbers, thirteen percent less than
you are getting over the course of your lifetime claiming
Social Security. The interesting thing about this, okay, so as
you're listening, you're like, Okay, well, worse for anyone who

(17:51):
is getting these benefits. But does it stem the problem. Nope,
it actually doesn't.

Speaker 3 (17:58):
That's that's the frustrating part. Henry Aaron, a senior fellow
of economics Studies at Brookings Institution, said that the full
retirement age would affect new Social Security beneficiaries, not existing beneficiaries,
and it would account for just five percent of total spending.

(18:19):
This huge sweeping change increasing the age to collect would
only account for five percent increase in the longevity of
the Social Security Trust Fund essential.

Speaker 1 (18:30):
And here's another thing to think about, right this twenty
thirty four date, someone didn't just park this in our
lap last week. We haven't known this. I mean, I've
been doing the show for about a decade now. We've
been talking about this forever. If they're going to do
something about this right in, increase full retirement age and
phase it in, they wouldn't even have it phased in

(18:50):
by the time the trust fund ran out of money.

Speaker 3 (18:53):
That's so silly.

Speaker 1 (18:55):
It's like, why are we not having more conversations about
this right now?

Speaker 3 (19:00):
It's easy because it's an increase in taxes, is the solution.
That's the unfortunate reality that we're dealing with here. That
that's why nobody in Congress wants to talk about it.
This guy he steps up and he says, all right,
I want to talk about solutions. And the solution is
increase full retirement age. And it doesn't work and it's
not a solution. Yeah, it's at least having the dialogue
and you know, attempting to have the conversation, but I

(19:22):
don't think it's really going to bring what they need
to bring to the table, which is actual solutions. And
unfortunately nobody wants to talk about that. That's why the
cans getting kicked down the road so far as because
nobody wants to increased taxes. But if they're going to
address the issue, then it could be something like removing
the cap, the wage cap. You hit one hundred and
sixty thousand dollars and you're no longer paying into Social

(19:43):
Security taxes. So they get rid of that wage cap.
That fixes the whole problem. But that means that higher
earners are going to continue to pay, but they have
a capped benefit, which is not fair. So it's always
going to be a problem, I think until they talk
about what the real solutions are, and that's increased taxes,
unfortuate well.

Speaker 1 (20:00):
And it could be a combination of solutions right that
they end up coming up with. But we've got to
start the dialogue here. Here's the all Worth advice. Listen,
you cannot control what's going to happen to social security.
You can though, control how much you will eventually need,
and we would say you do not need to rely
on social Security totally. So you've got to be planning
in advance. Coming up next to the conversation. Too many

(20:22):
families are not having. You're listening to Simply Money present
of my all Worth Financial here in fifty five KRC
the talk station. You're listening to Simply Money. This persented
by all Worth Financial. I mean me WAGNERA along with
Steve Ruby. One of the number one questions I like
to ask when we have big workshops and big groups

(20:44):
of people together is how many of you grew up
in a family where there was just an open dialogue,
open conversation about money. I'm telling you, if there's one
hundred people in a room less than five yrcually raise
their hey. And so if this is you and you've
come from this background and listen. Obviously you're in good

(21:05):
company here, you're not alone. How do you then break
that cycle with your children? Right, we would say, hey,
it's time to start having these conversations.

Speaker 3 (21:14):
Yeah, I mean communication is so important when it comes
to your finances, whether it's with your spouse or your family.
Having those expectations set will make sure that your money
is used in the way that you desire, especially when
we're talking about how it may transition to our loved
ones when we are gone.

Speaker 1 (21:32):
Yeah, and so we think, first of all, hopefully there's
no point when you're starting to have these awkward conversations
because you've just been having these conversations all along, so
there's nothing awkward about them. We know research shows that
children have their relationship with money by the time they're
seven years old. If your voice is not being heard
in that conversation as they're starting to figure these things out, right,

(21:55):
what a waste. But say your children are in their
early twenties, right, and you're starting to age and maybe
looking at retirement and kind of later in life. If
you've never had these conversations before, I don't care what
stage you're in. Actually, it is time to start now,
set the stage for the first conversation. If you've never

(22:16):
had it can be.

Speaker 3 (22:17):
Really difficult to create this level of transparency, especially if
if your household hasn't had these conversations in the past.
But I know you can do it. I know you can.
It's as easy as this. You ready, I'd like to
have an open discussion about our family finances to ensure
we're all on the same page. Yeah, that's it. Yeah,
that's what starts it.

Speaker 1 (22:36):
Or I'm going to tell you what's up with our money, right.
I mean, it's so easy. And I think if you
start talking about yourself, right, maybe some mistakes that you've
made through the years, just being open about that, and
then where things currently stand. Hey, here's where we are
with retirement, here's what we've started to talk about. As
far as long term care. We either have a long

(22:57):
term care policy, or if something happened to one of us,
here's our wishes. You just kind of start down this path,
and I think what will likely happen if you start
being financially transparent with your children is they will start
to open up to you. And I think you might
be really surprised by what you learn about.

Speaker 3 (23:18):
That you don't want this to be a monologue. You
bring up a good point. You want this to be
a dialogue, a conversation back and forth, because it's important.
Financial transparency within the family is important. It helps manage expectations,
It helps you plan for future expenses, avoid potential conflicts
of interest. It sets the table to have that dialogue
so that those things don't become problems within your family.

Speaker 1 (23:39):
Well, and yeah, so you're setting kind of the basics
of the financial situation, like right, here's where we are now.
Maybe we're hoping to pay off the mortgage by the
time we retire, or the mortgage is paid off. Here's
some other debts that we have. Here's what our income
looks like, Here's what our expenses look like. And then
the part of the conversation I don't think anyone likes
to talk about, but this is where I say, this
is really an act of life, is talking about your

(24:02):
estate planning and inheritance. I think it's so interesting. From
time to time someone will come into my office. We'll
be talking about their financial situation, and they'll say, I
think I'm gonna get an inheritance from my parents. I think,
I sure, yeah, And I think it might be this
much based on a few things that my mom posted
on Facebook, you know, and it's like, wait a second,
hold on. You know you're gleaning information maybe off of

(24:24):
social media. You have no idea, you've never had these conversations,
and then people want to put this into their financial plan.
If you are planning on leaving a legacy to your children,
let them know about that legacy. And I think, you know,
it's an act of love for a number of reasons,
one of them because they know what's a plan for.
But secondly, if these conversations are never had and people

(24:46):
are expecting something that isn't exactly what's happening, then when
you're gone. I keep seen like terrible things happen in
family dynamics. When you know someone's making the decision that
they're the trustee of the estate and they're doing X,
Y Z, and it's what one of their siblings didn't
think was going to happen. It's just so much easier
to set the expectations. Now.

Speaker 3 (25:06):
Yeah, I've come across too many unfortunate stories or people
learn more about family than they ever wanted to. And
this is because proper planning and expectations were it's set,
so there can be you know, people that are contesting
a will or going after assets when you're gone. You
don't want that to happen, you know. Setting these proper

(25:27):
expectations around estate planning and inheritance helps people plan accordingly,
removes or helps alleviate the possibility that future conflicts will
come up within the family. It is important to have
these conversations.

Speaker 1 (25:41):
And it's also important if the bank of mom and
dad is still open and continually open in to start
having the conversation about the impacts of doing that. Now,
if you have a money tree in your backyard and
money's coming out of your ears and your retirement is
going to be completely fine, and you're still helping your
adult children, good for you, right, if that's what you

(26:01):
want to do, Good for you. Most people aren't in
the situation, so the bank of mom and dad is open,
and that pulls away from what they're able to do
with retirement. And I've started to make this kind of
a normal part of the conversation that I'm having with
people when I'm working with them, because it is amazing
to me how many people are making these decisions sacrificing

(26:24):
for their adult children, who, by the way, could pay
for these bills themselves or could figure out how to
and they really don't know how they're going to live
beyond the age of seventy because they have like four
years of retirement expenses set aside.

Speaker 3 (26:37):
When I'm meeting with somebody for the first time, this
comes up, Yeah, I do you know, I ask questions
about family, you know, do you have children, are they
still on the payroll? What does that look like? How
long are they on the payroll? Because that's part of
understanding how your money flows when you're saving for retirement
towards different financial goals, whether it's retirement, supporting adult children.

(26:58):
Obviously we all have competing financial priorities, but having an
understanding of what that looks like so you can set
proper expectations with your children is very important. You know,
saying something like we're happy to support you as you
transition into full independence. Yeah, and setting that comment in
and of itself sets the expectation that it's not going
to last forever, because we expect that you will be

(27:21):
financially independent. So let's maybe talk about what that looks
like so we can help you achieve your financial goals.
You know, saying this to your your adult children that
you're still supporting opens up that dialogue.

Speaker 1 (27:31):
Well, I think speaking of financial independence, one thing that
you can continually help them with is financial literacy.

Speaker 3 (27:38):
Absolutely.

Speaker 1 (27:38):
I mean, you and I are angry a lot of
the time over the fact that you know, high schools
aren't teaching, aren't making this kind of education mandatory. It's
so frustrating. So you've got to control what you can
control in your own home or even if your adult
children are living outside of your home. Start having these conversations.
Some of my kids who are home from college recently,

(28:00):
and one of them has her first credit card and
she was talking about her credit score and the one
thing that's holding her back is the lack of credit history. Right,
we talked through all of that. She understands how the
credit score works. She's starting to invest. We actually moved
some money out of a savings account into exchange traded
funds ETFs over the weekend and it was like, gosh,

(28:21):
all of this stuff moving in the right direction. She's
twenty years old.

Speaker 3 (28:24):
That's awesome, you know, it's fantastic.

Speaker 1 (28:26):
She's understanding these concepts because we talk openly about them.
So imagine when she's twenty five, she will probably be
okay on her own because she understands these things. If
your children are not, because you're not having these conversations,
it's really time to start having that.

Speaker 3 (28:42):
And maybe your children are financially independent at this point,
it is a good idea at some time as they
needed to maybe introduce them to your advisor. Yeah, to
fold your advisor into the conversation. To make sure that
your children understand what looking what it looks like to
work with an advisor, how they've helped you in the asked,
and maybe how they could help them moving forwards.

Speaker 1 (29:03):
I always say too to clients that I work with,
I'm happy for your children to come in sometime and
I can just go over some basics. Sure, you know
with them is part of what I'm doing for you
because I think, you know, educating that next generation is
so important. As we talk about, you know, maybe opening
up to the first meeting that you've ever had about
these topics. It's not a one and done situation. So
if you've had this first meeting, hopefully it went well,

(29:26):
and then you kind of set up you know, maybe
we're going to do this quarterly or twice a year.
Once a year, we're just going to do a check in.
We're going to update you on how things are doing,
and then maybe everyone else can kind of chime in
and then, you know, one of the things you can
talk about in those meetings is financial goals for the
next year, you know, and then maybe you can celebrate
those things all together when someone does kind of reach

(29:47):
those goals. So there's lots of headway I think that
you can make. If you've never had these conversations in
your family before. Here's the all Worth Advice talking about
family finances with your adult children. This is a vital
step and ensuring both finance security and harmony in your family.
Come get next. We're testing your knowledge and your financial
literacy learn along the way as we play Retirement Factor fiction.

(30:10):
You're listening to Simply Money presented by all Worth Financial.
Here in fifty five krs the talk station Simply Money
presented by all Worth Financial. I mean, you Wagner along
with Steve Rubud, you have a financial question you just
need a little help with. There's a red button you
can click on while you're listening to the show. It's

(30:31):
right there on the iHeart app. Record your question and
it's coming straight to us and straight ahead. How does
this sound? Luxury travel on a budget. We've got tips
for you. Time now to play retirement factor fiction. We
like to have fun with a really serious topic to
make sure that you really kind of know as you're
transitioning into retirement the truth of things when it comes

(30:54):
to your money. Here's the first one for you, Steve Ruby.
Fact or fiction. Your stock, bond, HSA, health savings account
investment allocation should match the allocation mix of all of
your other investments.

Speaker 3 (31:06):
I'm going to say fiction. And this is dependent on
your situation and where you are as far as time
frames are concerned, because maybe some of your investments shouldn't
match your other investments. Anyways, you know, we have our
short term for just that, especially in high interest rate environments,
our cash is working in high yield savings accounts, CDs,
treasuries whatever you know, Intermediate could be doing that. And

(31:27):
then our long term investments, you know, the wroth Ira assets.
I've certainly seen folks that that are more conservative. Maybe
they have sixty forty with everything else or seventy thirty,
but then they're ninety ten or one hundred percent stock
in the wroth IRA assets because it's the last money
they're ever going to touch your HSA. Ideally you set
it up where you are not touching those dollars and
you're investing with the with the account in the long term.

(31:51):
If so, you can take more risk with those dollars
if you do use it to cash flow medical expenses,
which we are not advocates of, but if that's the
way the cards fall and you find yourself needing to
do that, then you have no you should not be
aggressive with those assets. You should be more conservative. So,
you know, fiction dependent on your current financial situation.

Speaker 1 (32:13):
Yeah, depends on how you use that health savings account.
To your point, if this is a long term account
that you plan on using in retirement for healthcare expenses,
you can have maybe more stock exposure. And if you
need it and you're using it as you go right,
then you want less stock exposure there.

Speaker 3 (32:28):
Fact or fiction. You need less of an emergency fund
once you stop working, then you do now fiction.

Speaker 1 (32:35):
And this is a conversation that I have with a
lot of people that I'm working with when they get
closer to retirement. You know, a lot of them might
still choose to have a lot of stock exposure, totally
fine if they can still sleep really well at night
if there's a downturn. What this helps with is if
you can have like a full year of expenses maybe

(32:56):
set aside, and the market is down for a year,
you can kind of turn off that spicket of taking
those distributions so you're not pulling that money out at
a loss. You're living on that emergency fund. You know,
most of the time, history shows us that markets rebound
in a year to a year and a half. Then
you start taking those distributions again once the market has rebounded,

(33:16):
and then hopefully you're not pulling the money out of
that account at a loss. So I like a larger
emergency fund when I really like, is someone coming to
me maybe in their mid fifties, or we can start
planning ahead for these things and just have them set
up so that that transition into retirement is just a
really easy, breezy one. And one of the things I
think that goes hand in hand in that with that

(33:37):
is a larger emergency Yeah.

Speaker 3 (33:38):
That makes it a lot easier when you plan ahead
of time, and it makes it easier if you already
have it when you transition to retirement because it buys
you time against market volatility.

Speaker 1 (33:46):
Factor fiction for you. Some retirees regret not contributing to
a roth IRA earlier life.

Speaker 3 (33:53):
That's an easy one. Some retire sure, yeah, fact, I
mean the whole diversification of your future cash flowing is
a huge opportunity when you're planning ahead of time when
you're still in the accumulation phase of retirement planning, because
it gives you options when you are actually retired. So
there are plenty of folks that do have regrets that

(34:14):
they didn't do so ahead of time, and that doesn't
mean there's not an opportunity to get ROTH assets in retirement.
We've certainly had conversations about WROTH conversions. This is something
that you can implement a strategy when when you transition
to retirement, no longer earning what you have been earning,
you can take some of your pre tax money and
move it into WRATH. So it's not it's not something

(34:36):
that can't be fixed that you can tackle this regret,
but certainly getting it done ahead of time and having
all those tax free gains, that's something that you that's
where you feel to regret you didn't experience those tax
free gains on that runway up into retirement.

Speaker 1 (34:53):
I think no matter what age or stage of your
life that you're in, it's at least worth doing an
analysis to see, right, should that money be going into
row assets or traditional tax deferred so quickly.

Speaker 3 (35:04):
Because this one's important factor fiction. If you can max
out your four oh one K for the year, do
it as early as in the year as possible.

Speaker 1 (35:09):
This is fiction, and this is a really know your
four to one K and the way it's set up
kind of a situation. Some of them have a sort
of a true up feature in them, meaning your company
is going to put in the money throughout the year,
and if you were to get a bonus, say in
January or February, and all that money goes in, then

(35:30):
you are not going to be able to take full
advantage of the entire company match. So this is the
one where you know, I get really frustrated when people
spend more time planning their vacations and understanding their floural
one ks. It's important understand.

Speaker 3 (35:42):
If you don't have a true up and you hit
your limit early, then your contribution shut off. And if
your contribution shut off, then you're not getting any company match.
The true up isving free money on the table and
then make you a whole.

Speaker 1 (35:52):
Coming up next, how to experience high end adventures without
breaking the bank. You're listening to Simply Money, presented by
all Worth Financial here in fifth five krs the talk station.
You're listening to simply Money because by all were Financial,
I mean you Wagner along with Steve Ruby. How does
this sound traveling on a budget but not making it

(36:17):
feel like that? Right? How do you take advantage of
nicer flights, nicer hotels, nicer places to eat?

Speaker 3 (36:23):
Right?

Speaker 1 (36:23):
There are ways that you can do this. I think
one of the keys starts with planning ahead.

Speaker 3 (36:28):
Yeah, you know. Planning ahead specifically is the timing of
your trip. If you visit Europe in late September early October,
for example, you're gonna have less crowds, milder weather, and
oftentimes reduced rates. I can tell you, and I've brought
this up before. My wife and I we took our
honeymoon to Costa Rica, which when we got married at
the time, we did not have much, you know, as

(36:50):
far as means to travel worn. Yeah, uh huh, yeah,
and if you know anything about Costa Rica, which you know,
we didn't until we started planning. October. My wedding anniversary
is October fifteenth. October is the rainy season. And no,
we did that because you.

Speaker 1 (37:06):
Need it on purpose because it was cheaper. But did
it rate didn't? Did it rain the whole time?

Speaker 3 (37:09):
The whole time, the entire time? It was you know,
I was hoping for a little bit of reprieve. Yeah.
I saw the sun for like an hour and it
was really hot and I almost got sunburned, so you know,
it wasn't that bad. But the fact that our trip
was half off to stay in a place right on
the ocean, it was a big deal.

Speaker 1 (37:25):
Yeah. Yeah, So you're able to afford something that you
couldn't otherwise.

Speaker 3 (37:28):
And we went to the rainforest anyway, so who cares
about rain.

Speaker 1 (37:30):
It's going to be rain there anyway. Absolutely. I love
a good travel website. So this is where you can
book flights strategically, Scott's Cheap Flights and the Flight Deal
can you can set up an alert, so say you're
want to go on a trip in a few months,
you know it's several months out, set up an alert
and it'll let you know, hey, airfares are cheaper for
this weekend or for this particular time to this place,

(37:52):
which is a great thing to do or listen. I
love I use credit cards. I put everything on credit cards,
and I used travel rewards pay it off every month.
But I book hotel rooms, we booked flights through it,
and we've had so many free vacations or substantially cheaper
vacations because we use these points.

Speaker 3 (38:11):
It's some other websites worth looking add Secret Escapes, jet Setter,
Luxury Escapes. They offer heavily discounted you know, stays at
different luxury hotels, even Michelin Star restaurants. Sometimes I have
like smaller lunch menus that you can explore and still
have that luxury experience at a fraction of the cost.

Speaker 1 (38:29):
My husband is a super foodie, so that's when we
go to a new city. That's what he's looking at.
And I do love the idea of, hey we can
stilllet it these really nice restaurants. We're going to be full,
it's going to be amazing food, and then like you know,
you just have like a snack later on at night
and you don't need to eat again. So I think
it's really smart to kind of just plan around these things.
I think the cool thing about travel too is part

(38:50):
of it is planning far out, but then giving yourself
some room for kind of flash deals. Often there's flash
deals that can come up at the last minute.

Speaker 3 (38:58):
There's risk involved with that. Is rich to bring up a.

Speaker 1 (39:01):
Good point, But if you can cancel that hotel twenty
four hours out or forty eight hours out and you
can get a much better deal, it's worth taking advantage
of both things just to kind of hedge your bets.
Years ago, I remember my husband and I went to
New York. We booked actually when we landed, we stayed
in the nicest place in New York that I have
ever stayed in, and it was super cheap. So you know,
the deal is just knowing where to find the deals.

(39:24):
Thanks for listening. You've been listening. Disimplay Money presented by
all Worth Financial here on fifty five KRC, the talk
station