Episode Transcript
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Speaker 1 (00:06):
Night.
Speaker 2 (00:06):
We have a lot to get to. We are tackling
tax brackets, open en rolls, support cent role, and a
lot more.
Speaker 1 (00:13):
You're listening disimplay money because of my all worth financial
I Meami Wagner, along with Steve Ruby, hard to believe
we're already kind of getting close to the end of
twenty twenty four. And for those who are in any way,
shape or form taking in any kind of financial media,
you have probably heard or read something about Trump tax
(00:33):
cuts sunsetting at the end of twenty five. And I
say that because I've got people in my office asking
about it. So I think there's a lot of conversation
out there, and tonight I think it's worth discussing what
this could mean to you.
Speaker 3 (00:47):
Yeah, the Tax Cuts and Jobs Act tcgaaka the Trump
tax cuts that was passed back in twenty seventeen, and
these tax cuts are set to sunset at the end
of twenty twenty five, like you said, so, I think
it's important that this information is front and center from
a tax planning perspective, which is obviously an important part
of financial planning. So what happens after twenty twenty five?
(01:10):
You know, at this point, the Trump tax cuts they
were signed in the law. When they were signed in law,
lowered individual tax rates, provided a higher, larger standard deduction
than it had been in the past, and it limited
certain deductions such as state and local tax So it
made it so that you were less likely to itemize, yeah,
and more likely to take that standard deduction. But it
helped to a level that did lower taxes for many folks.
Speaker 1 (01:32):
I think the statistics I've seen since center about ninety
percent of people take the standard deduction rather than itemize.
Speaker 2 (01:39):
It's crazy.
Speaker 1 (01:40):
I guess this is just a commentary on how much
time flies. But at the time I would being like, oh,
this is these are nice. I mean a lot of
these were improvements in the tax situation for a lot
of people, and it felt like, oh, we've got forever.
You know that we can take advantage of this lower
tax brackets and you know, standard deduction. And then all
of a sudden, it's like, oh, all right, that's all
that time is almost up. We have no idea what
(02:02):
Congress will do, if they will do anything about this.
But if nothing is done, let's talk about what that
impact could look like.
Speaker 2 (02:11):
Well, first of all.
Speaker 1 (02:12):
It would likely mean higher marginal tax rate, so currently
those rates are anywhere from ten to thirty seven percent
would likely go up, So on the high end, you're
looking at closer to maybe a forty percent of thirty
nine point six percent tax bracket.
Speaker 3 (02:28):
Yeah, this is for folks that are in a lot
of money. Yes, you know, if you're in the thirty
seven tax thirty seven percent tax bracket right now, you're
doing pretty well. Yeah, but you would we.
Speaker 2 (02:35):
Do really really really really well.
Speaker 3 (02:38):
Yeah, you know, you would move into the thirty nine
point six tax tax bracket, which doesn't exist right now. Yeah,
but it would come twenty twenty six. Obviously, there would
be a reduction in the standard deduction, which is the
higher number that we're able to deduct. Limiting the fact
that many people are not itemizing right now, capital gains
dividend tax rates they could be affected as well. They
(03:01):
weren't directly reduced, However, the higher ordinary income could push
more individuals into higher capital gains tax brackets.
Speaker 2 (03:13):
What I hear you saying is this would be a
huge impact.
Speaker 1 (03:16):
You know, I mean, you don't have a huge impact
on what you're paying on your ordinary taxes, how you
file your taxes. Whether the standard deduction would make sense
moving forward, or whether you would go back to itemizing,
which I think it's interesting because I remember when that
standard deduction came out, there were a lot of people
up in arms about it, you know, and then it's
just kind of like, well, we've gotten used to it.
Speaker 2 (03:35):
I actually think it's probably made tax filing.
Speaker 1 (03:38):
A lot easier for a lot of people, unless you
have really high medical out of pocket medical expenses and
things like that. For most people, that standard deduction is
actually what works. And then to your point, even capital gains,
let's get into that. So there's short term and long
term capital gains, and this would be on brokerage accounts,
(03:59):
so not qualified accounts, not your retirement accounts like iras
and four H win k's, but any money that you
have invested beyond that in a standard brokerage account. Right,
as long as you hold that investment for over a year,
then it's taxed at a long term capital gains rate,
which is often kind of half of your ordinary income rate.
Speaker 2 (04:18):
So there's a huge benefit to that. Well, here's the deal.
Speaker 1 (04:21):
If your ordinary income rate goes up, right, if you're
bumped up into a higher tax bracket, that could then
also bump up how much you're going to pay on
that long term capital gains.
Speaker 3 (04:33):
Yes, and for again the very high earners, the people
on the very top, there could be the additional three
point eight percent net investment tax that applies to certain
investment income. So, for example, if you're a married couple
filing jointly and you're fortunate enough to make five hundred
and fifty thousand dollars a year, you fall into the
thirty seven percent tax bracket. You paid twenty percent on
(04:54):
long term capital gains after twenty twenty five from the
Trump's tax cuts sunset. At that point, the top income
BRAXIT in top income bracket increases to thirty nine point
six percent plus the three point eight percent potentially net
investment income tax. So you can see for folks that
aren't planning accordingly, you could get rocked with some additional taxes.
Speaker 1 (05:16):
Here you're listening to simply Money presented by all Worth
Financial and Memi Wagner along with Steve Ruby. As we're
talking about the tax cuts in Jobs Act. Any of
you refer to them as the Trump tax cuts, right,
They have been around since twenty seventeen set to sunset
at the end.
Speaker 2 (05:31):
Of twenty twenty five. So tonight we are.
Speaker 1 (05:33):
Digging into what that means to you, which I think
can mean both headaches and opportunities, right, and so I
think it's really important to understand what the likely impact
of this could be so that.
Speaker 2 (05:46):
You can take advantage of what you can take advantage of.
Speaker 3 (05:49):
Yeah, qualified dividends are another place that would be impacted,
So dividends from stocks and mutual funds inside of your
brokerage account. Again, this is not inside your tax not
inside of your tax deferred qualified accounts like an I
RA aird. Okay, this is the brokerage account that you
were just talking about here. Mutual funds or stocks inside
of that qualified dividends or taxed at the same rate
as long term capital gains, but ordinary dividends are taxed
(06:10):
at ordinary income tax rates. So this creates another issue
within that brokerage account because if your tax brack increases
after twenty twenty five, then the tax you pay on
the dividends could increase as well. So I mean, long
story short, it impacts a lot for most of us,
and the more money you make, the more impact this
may have.
Speaker 2 (06:30):
I say a couple of things about this.
Speaker 1 (06:32):
First of all, if you're working with the CPA and
a fiduciary financial advisor, I think it's worth reaching out
to them or the next time you're in their office
having the conversation, what do you think the impact of
these changes will be on me?
Speaker 2 (06:46):
And is there any way I can take advantage of this.
A lot of people right now are.
Speaker 1 (06:51):
Talking about Roth conversions, and I think it's really interesting
because there's also kind.
Speaker 2 (06:55):
Of different schools of thought.
Speaker 1 (06:57):
Right if you're in your higher income earning years, you know,
there are some people who make the case you shouldn't
you should not do Wroth conversions, right, you should wait
until and see if maybe in retirement, if you're in
a lower tax bracket. But we do have this situation
on the horizon of the current tax brackets sunsetting. So
if you are in the twenty two percent tax bracket
(07:18):
right now and these are going to sunset next year,
and you're asking yourself, where do I think taxes might
go in the future, what you would be doing if
you did a Roth conversion today, or putting money into
a wroth account today would be locking in today's tax rate.
Speaker 2 (07:32):
I do not have a crystal ball, but.
Speaker 1 (07:35):
I do have an educated guess about where we might
be going with taxes, and my guess.
Speaker 3 (07:41):
Is up financial planning software this day and age. When
we have a baseline financial situation for somebody built into
the plan with understandings about how much you're saving, how
you're invested, making assumptions about market performance in the future,
using modeling to do that, excuse me, then we can
actually play around with future tax rate assumptions. And when
(08:04):
you plug in ROTH conversions into the financial planning software,
it can give you dollars and cents as to how
much you could save by actually doing this. So it's
something that can be mapped out. And I want to
be clear roth conversions, they're not going away, but right now.
The reason why it's front and center on a lot
of people's minds is because of the Trump tax cut sunsetting,
So they are more beneficial now then they are. It's
(08:27):
easier for them to be more beneficial now than a
couple of years from now.
Speaker 1 (08:31):
Yeah, And I think one of the reasons why it's
worth considering those are, first of all, you're locking in
this tax right now, assuming they will go up in
the future. But second, I'm a huge fan of the
paying taxes now and then those gains grow tax free.
You know, the farther away you are from retirement, the
farther you are from needing to take distributions from those accounts,
the more time those accounts can grow, those investments can grow,
(08:54):
and that power of compounding, man, we see it all
the time, can make a huge difference. You pay taxes, now,
how that money grows at compounds and then you don't
have to pay taxes on it on the other side
of it.
Speaker 3 (09:04):
Yeah, it's a beautiful thing. I really do like wroth
conversions and roth savings when it makes sense today, other
ways to mitigate the impact of some of these changes
on the horizon with tax rates, tax sas harvesting. So
again this is inside of your taxable brokerage account. It
involves selling investments at a loss to offset capital gains
on other investments that are sold in those gains are realized.
(09:26):
You can also use those losses to carry forward for
future offsets of gains and up to three thousand dollars
against your ordinary income tax. Now, there are strategies that
exist for some individuals in this day and age inside
of your taxable brokerage account where we can use something
like a separately managed account for direct indexing. Rather than
holding exchange traded funds that mirror an index, you can
(09:48):
actually work with an advisor to buy stocks directly in
that index, so that you have let's say that Russell
three thousand has almost three thousand stocks in it, and
if you buy three three hundred and six hundred of them,
then you can tax loss harvest almost daily in that situation.
Speaker 2 (10:06):
Within those individual investments.
Speaker 3 (10:08):
Within those individual investments. And you know, we look back
a few weeks ago that the Wrestle three thousand was up.
However there was about thirty five percent of the stocks
and the Rustle three thousand were down that week. So
that means a constant opportunity for tax loss harvesting when
you're in a separately managed account that's doing direct indexing.
Speaker 2 (10:28):
Yeah, and that's the thing. If this sounds like it's
over your head or overwhelming, you just.
Speaker 1 (10:34):
Need to know that you can talk to a fiduciary
financial advisor or a CPA and ask them, does this
makes sense for me? How can I take advantage of
tax loss harvesting?
Speaker 2 (10:45):
You know, are there opportunities here for me?
Speaker 1 (10:47):
Doesn't mean you have to fully grasp how to how
to fully execute these things. I think the key here
is having the education at least enough to know which
questions to ask. And you know, we're always big fans
of diversify being diversified, and in one of the ways
that we think diversification is important is in the tax
treatments of the accounts that you are saving in for retirement.
(11:09):
And so that means having some money and roth accounts,
having some money and tax deferred accounts, and having some
money in taxable accounts. That gives you flexibility and retirement
to choose which account to go to when you're drawing
down money, and so I just it gives you lots
of flexibility. So I think it's really important to understand
first of all, there could be an opportunity in the
(11:30):
next year, year and a half or so, but also
there are strategies that you can be employing year round,
regardless of whether we've got these Trump tax cuts in
working now or whether we're beyond them. And the key
is to be taking advantage of those strategies.
Speaker 3 (11:46):
Yeah, so sit down with a financial planner, have that conversation,
map out your financial plan and discuss what how this
could impact you, so that proper steps are being taken
to take advantage of certain opportunities that exist today. And
we want to.
Speaker 1 (11:59):
Quickly mention and we are offering free tax reviews from
now through November thirtieth. We just talked about kind of
all of this stuff the ways that it can help you.
So to sign up, go to Allworth Financial dot com
slash tax. That's Allworth Financial dot com slash tax coming
up next. Why nearly thirty thousand workers are suing over
(12:19):
their retirement plans. Plus we're gonna help you navigate open enrollment.
You're listening to Simply Money, presented by all Worth Financial
here in fifty five KRC the talkstation. It's done by
all Worth Financial, I Meanan wagnerl Pee Ruby.
Speaker 2 (12:37):
If you can't listen to our show every night, you
don't have to miss a thing. We have a daily
podcast for you. Just search Simply Money.
Speaker 1 (12:43):
It's on the iHeart app or wherever you get your
podcasts Shradahand at six forty three, we are tackling whether
the four percent rule still applies? Is this something you
should be using for your retirement? Nearly thirty thousand Cornell
University employees.
Speaker 2 (12:59):
Are are really upset.
Speaker 1 (13:01):
Why about their four oh one K plans, their retirement plans.
In fact, they're so upset they're actually suing over it.
Speaker 3 (13:08):
Yeah, the lawsuit claims that the retirement plans are charging
excessive record keeping fees. Now, this isn't something that is
unheard of post nineteen seventy four the Employee Retirement Income
Security Act. This is ARISA prohibits employers from engaging in
transactions with third parties and less they're necessary to operate
(13:29):
for the benefit of the plan and the cost of
the plan are reasonable. Now, the plaintiffs in Cornell's case
say the fees paid by the plans were expensive, too excessive,
and essentially barred by law.
Speaker 1 (13:39):
I think the problem here is there is no bar
for what is excessive, what's not excessive, What is called
for here, what's not called for. In fact, this was
one of roughly two dozen lawsuits just like it filed
kind of beginning in twenty sixteen, many of them accusing
colleges and universities of violating these policies not monitor earning
(14:00):
retirement plans. There's underperforming funds in them that maybe shouldn't
even be offered, that are offered, fees aren't limited, and
so this will be kind of reaching the US Supreme Court,
who said, listen, we need to get involved here.
Speaker 2 (14:14):
If like, we need to get in the ring and
help figure out.
Speaker 1 (14:17):
What should be the standard so that we don't have
employees wondering whether they're being taken advantage of or And
keep in mind too, for so many people out there,
these plans are the number one vehicle you have to
getting you to retirement. If you can't trust that what
your employer is offering you has decent investments available to you,
(14:38):
whether you're not paying excessive fees. I just I just
think it's a really slippery slope.
Speaker 3 (14:43):
These plaintiffs do win. You know, I'm not saying that's
what's going to happen this time. I don't have you
know what's happening on happening behind the scenes here, but
it does happen from time to times that the court
comes in and says, yeah, this plan kind of sticks,
and they make the company fix it and sometimes reburse employee.
Speaker 1 (15:00):
It is everybody's favorite time of the year. We're talking
pumpkin spice lattes, We're talking Amy's birthday. We're also talking
open enrollment season.
Speaker 3 (15:13):
The most exciting thing for birthday. Oh, I thought it
was going to be open enrollment. Taxes, open enrollment. Yeah,
I do love credit scores.
Speaker 2 (15:21):
I do love open enrollment season.
Speaker 1 (15:23):
In fact, I've been talking to a lot of people
about it recently because I think it's really easy to
set it and forget it when it comes to open enrollment. Oh,
I've got a health insurance plan. It has been working
just fine. But what you're missing out on is when
you're not doing the research on what makes the most
sense for you and your family, you could be leaving
(15:43):
dollars on the table. We talk all the time about
kind of if you're not taking advantage of that full
company match just doesn't make sense. You're leaving free money
on the table. Well, are you taking full advantage of
the best plans for you? And this requires a little
bit of time and a little bit of research.
Speaker 3 (15:58):
Yeah, yeah, I mean. And sixty five million Americans one
hundred and sixty five million get their healthcare through work. Yeah,
they spend about forty five minutes a year on average.
Speaker 2 (16:09):
I actually am throwing the flag on that.
Speaker 1 (16:11):
I think forty five minutes is higher, Yeah, than a
lot of people are spending.
Speaker 3 (16:14):
Probably probably you know, I've I've certainly seen it in
my office where people just aren't spending much time on this,
but they should be. You know, cost costs arising, and
I think that's no surprise to anyone. You know, for employers,
those costs increase or reaching post pandemic highs. You know,
research from wt W, which is formally it's a consulting
(16:36):
firm formerly known as Willis Towers Watson US employers actually
project at their healthcare costs will increase by about seven
point seven percent in twenty twenty five, twenty twenty four
is an increase of six point nine twenty twenty three,
six point five, so that the costs, that the higher
costs are trending upwards. And for most of us, we're
going to feel that as as employees.
Speaker 1 (16:57):
Yeah know that likely most of you have two options, right,
two different kinds of plans. One with a higher monthly
cost that's your premium and usually a lower deductible which
is the amount you have to shell out before your
employer's plan kicks in, or on the reverse side, an
option with higher out of pocket costs but lower premiums.
What you have to ask yourself, and I think this
(17:19):
is a really important question is does a high deductible
healthcare plan make sense for you and your family if
there's not a lot of chronic illnesses and things like that,
I think a higher deductible plan can make sense. Why
do I like them because they often come with a
health savings account?
Speaker 3 (17:34):
How did I know you?
Speaker 2 (17:35):
You know I was going to go down this and
I get.
Speaker 3 (17:37):
To talk about it too. A health savings account, I'm
seeing you ariple tax advantage. It's where you put money
in on a tax deductible basis when you invest. And
it's important because not everybody invests with the money inside
their HSA, but when you do, it grows tax free.
You just like a roth. And then when you use
those dollars ideally in the future when you are retired,
not prior, because this is a great vehicle for building
(17:59):
wealth boards your healthcare goal and retirement, when you take
that money out for a non reimburse qualified medical expense,
also tax free distribution. Now again, you're only eligible for
this if you have a high deductible health plan. Personally,
I made the switch at one point and I was like, oh,
this is great. I maxed out my HSA and then
a health issue came up that's chronic in my family,
(18:20):
and now I'm back to the PPO. Yeah with no
HSA because it depends. This is an individual or family
based conversation, and if you can use the high deductible plan,
then the HSA is a beautiful vehicle.
Speaker 1 (18:37):
And the reason one of the reasons why I'm such
a huge advocate of knowing your benefits and making sure
you are fully maximizing them. I had a super sweet
couple in my office last week and they have an
HSA and I was like, great, how is it invested
and he was like and she yeah, and he was like.
He was like, it is invested, and she was like,
(18:58):
it's not invested. We pull out the statement and the
money is sitting there in cash.
Speaker 2 (19:03):
He thought it was invested. It wasn't invested. And so
it's like, you have to know your.
Speaker 1 (19:08):
Benefits and you have to know if you're fully maximizing them.
Speaker 2 (19:13):
We were talking earlier today with a group of us.
Speaker 1 (19:15):
We've got a fitness enrollment here where they'll cover some
of the cost of if you want to go to
a personal trainer or a gym. Right, there's all kinds
of options like that that many of you don't even
know about that. Your employer, you know, employer wellness benefits
and things like that, understand what they are.
Speaker 3 (19:31):
You should be looking at life and disability insurances. Yes,
and potentially I mean talking with a fiduciary financial planner
that can look at what you have through your employer
and potentially supplement and outside of the employer sponsored benefits
for something that's portable.
Speaker 1 (19:45):
You know, I think people think about life insurance, but
often not disability incredibly important as well.
Speaker 2 (19:51):
Here's the all Worth advice.
Speaker 1 (19:53):
Do your due diligence during open enrollment, pay close attention
to what your company offers. Gon Up next a batch
of scams. Warn you about that impact your healthcare, your pets, utilities.
Speaker 2 (20:03):
And much more.
Speaker 1 (20:04):
You're listening to Simply Money presented by all Worth Financial
here in fifty five krs the talk station.
Speaker 3 (20:13):
You're listening to Simply Money presented by all Worth Financial.
I'm Steve Ruby, and today we have Joe sil Erlik,
President and CEO of the Cincinnati Better Business Bureau. She's
going to be bringing us up to speed on some
recent scams that we need to be aware of. Boy,
that there are some really smart people out there that
are using their knowledge and their energy to rip us off,
(20:35):
and it just gets under my skin because had they
used this energy elsewhere, maybe they could make the world
a better place. But instead, here we are talking about
ways that we need to protect ourselves from these bad actors. So, Josia,
what bring us up to speed a little bit on
some of these recent trends that we need to watch
out for in order to protect our money.
Speaker 4 (20:56):
You know, we're getting into the holiday season, so people
are doing a lot of online line shopping, and even
the best, smartest, most savvy people can get caught up
in things. What we're seeing now is what we're calling
the credit card declined scams. And you know, of course,
there's always valid reasons why your credit card might be declined,
(21:19):
maybe you've missed some payments or you've exceeded your credit limit,
but online credit card declined messages could be a sign
of a new twist on online shopping scams. And what
we're seeing is along the lines of you try to
buy something online on a seemingly legitimate website, or you
click on an offer you got through a text or
(21:41):
an email. Then when you try to check out, your
card is unexpectedly declined, and it's declined multiple times. Even
if you try another card or you refresh the page,
you get the same error message. So you call your
credit card company and you find out that charges were
actually made, and oftentimes for much more than the price
(22:03):
of the item that you were trying to buy. So
by attempting to buy something on an unfamiliar website, you've
now unintentionally given scammers your credit card information, and now
you're going to have to deal with the aftermath, like
notifying the credit card company that the charges weren't authorized.
You might have to cancel your card, maybe even redirect
(22:25):
any autopay bills assigned to that card to another card.
It's just a waste and drain of your time and energy.
So a couple things to prevent this from happening is,
when you are buying from a website that you are
not familiar with, check the website's legitimacy. Look really closely
(22:47):
at the spelling of the URL, because sometimes they're trying
to mimic a noted retailer. An Amazon could be spelled
with two ms or just picktt, Macy's could be spelled
i ees or something. Really look at that website name
(23:07):
check that the website is secure by verifying that you
see the HTTPS in front of the URL. And if
you're buying something because you think this is a great deal,
stop right there. Compare the right that you're seeing on
that website to what other retailers are offering right there
and then, and if it is significantly different, it really
(23:31):
could be a scam. Don't risk it, and always research
unfamiliar websites at BBB dot org.
Speaker 3 (23:38):
Yeah, so there are ways that we can be diligent
when it comes to making sure that we don't fall
victim to some of these scams, especially as we enter
the holiday shopping season. Now, another thing that many of
us are doing that are still employed, you know, we're working.
We're in the accumulation phase retirement savings. Healthcare so open
enrollment season, and I understand that there's some potential cons
(24:02):
that exist out there around open enrollment season at this point.
Speaker 4 (24:06):
Right open enrollment starts on the fifteenth of October and
goes through December. Healthcare dot gov open enrollment begins November first.
This time of year, it's like Christmas for scammers. They're
just dialing for dollars as they impersonate Medicare insurance agents.
So during this open enrollment period, you might get a
call or a text from somebody claiming to be a
(24:28):
Medicare representative. Even the caller ID might say it's Social
Security or Medicare. Don't ever trust caller ID. In one
version of the scam that we're seeing, they ask if
you have received a new, updated Medicare card and to
read off the card number. In another, they offer to
enroll you in a better and cheaper plan than you
(24:50):
already have. Then they ask for your Medicare or your
Social Security number. Once they have that information, they can
steal your identity, or if you give them your Medicare number,
they can commit Medicare fraud. Another tactic is to tell
you that you have to pay to apply for Medicare
or Healthcare dot Gov plan, so they'll need your bank
(25:12):
or your credit card information. Don't fall for it. You
could find that your bank account gets emptied or you
find unauthorized charges on your credit card. Remember, legitimate Medicare
employees already have your Medicare number on file. They don't
need to ask you for it. Anybody who asks you
for your Medicare number red flags should be going up immediately.
(25:35):
They don't need to ask for it, and they don't
call you out of the blue asking for your personal information.
You'll usually get a letter in the mail before you
ever get a phone call from any government agency. And
as I said before, don't ever trust caller ID displayed
on your phone. Scammers can fake caller ID in a heartbeat.
(25:57):
And if you do want to make changes to your
healthcare plan, go directly to Medicare dot gov or Healthcare
dot gov. Don't do it over the telephone when somebody
calls you.
Speaker 3 (26:09):
You're listening to simply Money presented by all Worth Financial
on fifty five Caresee. I'm Steve Ruby, along with Josille Erlick,
the president and CEO of the Cincinnati Better Business Bureau.
We're talking about different scams that we need to keep
an eye out on. Another one that we wanted to touch
on today is a utility company and personation scams.
Speaker 4 (26:28):
Well, we've talked about these in the past, but of
course there's another spin on this scam. There is always
a new spin on these scams. Scammers are calling people
pretending to be from a utility company. They might even
be pretending to be from your TV spectrum account or
something like that. It doesn't have to be a utility.
They all work about the same way. They are threatening
(26:51):
to shut off your utility because you've missed payments. They
say that you didn't pay your bill. But lucky you,
there's a way to avoid shutoff and the fees associated
with it. They will send you a scannable bar code
or a QR code by text or email so you
can go to your nearest Walgreens or CVS or something
(27:12):
like that and pay your bill. Don't fall for it.
That barcode, that QR code is directing money to the scammers,
not to any utility company. Scammers create this false sense
of urgency and demand you pay in a way that
makes it hard for you to get your money back.
If you do owe money for a utility bill, your
(27:33):
real utility company is going to work with you on
a payment plan. They are not going to scare you
into paying immediately, and they won't send you a barcode
or a QR code and insist you take it to
a store to pay now. If you think you might
be behind on your bills, call your utility company using
the number on your bill, or do you on the
(27:56):
utility company's website. As I said, they are always willing
to work with you to help you establish a repayment plan.
No pressure, just honest work.
Speaker 3 (28:09):
You know, great perspective. As always, these conversations are important
to help us stay in front of the scammers that
are constantly changing their strategies. You've been listening to Simply
Money presented by all Worth Financial on fifty five KRC,
the talk station.
Speaker 1 (28:28):
We're listening to Simply Money presented by all Word Financial.
Speaker 2 (28:31):
I mean, you Wagner along with Steve Ruby. Do you
have a financial question you need a little help with.
Speaker 1 (28:35):
We've got a red button you can click on while
you're listening to the show.
Speaker 2 (28:38):
It's right there on the iHeart app.
Speaker 1 (28:39):
Record your question and it is coming straight to us
and straight ahead where it might be less difficult to
retire than in some other places.
Speaker 2 (28:48):
If you're thinking about moving, you definitely want to stay tuned. Okay,
So there are rules.
Speaker 1 (28:54):
Of thumb when it comes to retirements, and then sometimes
we like to weigh in and say, is it a
rule of thumber?
Speaker 2 (28:59):
Is it a rule of dumb? One rule of thumb?
Speaker 1 (29:02):
I think that has kind of existed in our industry,
has been the four percent role, which is, you know,
can you live off of distributions taking kind of a
four percent distribution of the principle every.
Speaker 2 (29:15):
Year in retirement? And is that a good way to plan?
Speaker 3 (29:18):
Yeah, I mean it's it's been widely used as kind
of just a high level guide.
Speaker 1 (29:23):
Yeah.
Speaker 3 (29:23):
And it assumes that you have a growth with income portfolio,
so a sixty forty portfolio, and you're drawing that four
percent each year index with inflation, and then if that's
the case and your your money should be able to
last about thirty to forty years. That's what it says.
But the problem with the four percent rule, according to
this professor, Michael Fink is his name. He believes it's
it's blind to the new reality of what you experience
(29:44):
as a retiree. It overlooks the fact that nobody knows
exactly what investment returns will be in the future. It
ignores the ability to tweak spending in response to you know,
real life market return. So in otherwise, it's not personalized.
And you know, that's that's fair.
Speaker 1 (30:01):
I think it's static, and none of our lives and
certainly none of our retirements are static. So what if
you retire and the market just goes on a tear
for like five to seven years right after you retire,
and you've got a lot more than you would have otherwise,
do you still draw down only four percent? Also, and
(30:22):
you make this great point about retirement and it's not
the same day one of retirement that it is day
ten thousand, seven hundred and sixty five, Meaning you go
through different phases in retirement, and those different phases will
have different costs associated with them.
Speaker 3 (30:38):
Yeah, when you hit retirement, you're in your go go
years of retirement where you want to get out, you
want to go do stuff, you want to check items
off your bucket list. This can cost for so when
I build financial plans, we actually add in higher expenses
for X amount of years to reflect that. The four
(30:59):
percent rules wouldn't be able to take that under consideration
because it's just assuming a four percent withdrawal rate. You
might actually have higher withdrawal rates right when you enter retirement,
before you hit your slowgo years when you're not doing
quite as much, maybe you know, feel up to it,
you're not traveling to Europe or anything like that, and
then you have your no goo years or you're just
grumpy and yell at kids to get off your lawn
or whatever, where you know, your day to day expenses
(31:21):
might go down, but honestly, your your healthcare expenses might
go up.
Speaker 1 (31:25):
So I think what he is this, this guy who
is you know, kind of against this, is saying, listen, like,
let's give some more flexibility to it. And honestly, what
he is advocating for is what we advocate for, which
is a personal approach to retirement. So many people just
kind of want this one size fits all. Just tell
me what the formula is. I will plug in the
numbers and then in very black and white, it will
(31:46):
tell me like am I good to go? Can I retire?
Will I be fine? Will I outlive my money? Or
will I'm not outlive my money? And it's just not
that simple. And you know what he is saying here
for is, listen, you need a little more flexibility to
spend certain times in retirement. See to your point, certain years,
certain periods of time during that retirement are going to
be more expensive than others. And also let's be a
(32:08):
little responsive to what the returns are. You know, when
we build a financial plan for someone, I always say,
this is a living breathing document like this is the
first draft, and we will go through so many different
iterations of this in response to changes in your life,
changes in your goals, changes in markets up down. Now,
(32:29):
it doesn't necessarily mean you change your investment strategy, but
when you get to retirement and you're living off of
a certain amount of money, it could change things.
Speaker 3 (32:38):
Yeah. Absolutely. And you know one thing that when you
dig into the article and you actually read it, that
there's kind of a list of talking points for solutions
that this gentleman shares, and one of them on that
list is provides a clear understanding of the lifestyle benefit
of allocating a portion of savings to a product that
reduces longevity risk. That's right from the article. So if
you read between the lines, unfortunately there is a touch
(33:01):
of an agenda there, because what that really means is
as argument for selling a new yah, which you know
it can certainly help reduce the risk of running out
of money, but it's something you need to be careful
with for who you buy it from and what the
motivation is for them selling it to you. If it's
a fiduciary financial planner that determines that this does make
(33:22):
sense in your financial situation. Then then that's that's great.
You know, you want to make sure that you're not
being oversold a product that isn't really necessary in your
financial situation. So, while I agree with the majority of
this article because it points towards tailored financial planning and
stepping away from a simple rule of thumb that doesn't
(33:42):
have really any flexibility, it does maybe drip on the
idea of using annuities to close the gap, which is
not always necessary.
Speaker 1 (33:52):
Yeah, we wouldn't necessarily agree with I just think for
so many you know, it's just what is the formula?
What is the solution here? And I would the solution
is a personalized plan for you. And I'm not saying
you have to work with a financial advisor to do that.
You know, some people are perfectly capable of doing it yourself.
You just have to make sure you're taking everything into
account here and not just relying on one standard formula
(34:16):
for your retirement.
Speaker 2 (34:17):
Here's the all worth advice.
Speaker 1 (34:18):
A fiduciary financial advisor's job is to come up with
the best withdrawal strategy for you. It could be four percent,
but it actually also may not be coming up next
where it might be easier to achieve a comfortable retirement.
Speaker 2 (34:32):
Are you living in the right place.
Speaker 1 (34:33):
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 me,
Wagner along with Steve Ruby, you ever give any thought.
Speaker 2 (34:48):
To I know you have given thought to retiring someday.
But where do you think you would want to end up?
Will you guys stay here? Will you go somewhere else?
Speaker 3 (34:57):
I like the ocean, and my wife f likes the mountains.
Speaker 1 (35:01):
So there's really not anything I can think of right
now that gift you bub it's.
Speaker 3 (35:05):
You know, expensive areas. Yeah, New England in California, I
can you know do with that. But there's plenty of
areas that are beautiful within the state, but it's expensive,
right And I've never been to the Pacific Northwest, but
that probably fills the gap. Yeah, there you go, that
would solve for both. What about you?
Speaker 2 (35:22):
Well, yeah, I got to tell you. I always thought Beach.
Speaker 1 (35:25):
I always thought Florida, and then obviously the last few years,
like I'm kind of rethinking.
Speaker 3 (35:31):
It's challenging. Yeah, insurance.
Speaker 1 (35:33):
Yeah, homeowners insurance in one hurricane after another and uh,
you know, you look at the housing market there and
it's just absolutely tanking now because I think homeowners insurance
is up four hundred percent of where it was. This
is a good conversation to have if you have ever
daydreamed had these conversations with your spouse. Right, where will
(35:53):
we go in retirement? Go Banking Rates just released the
results of a study on the yearly cost of a
comfortable retirement and kind of breaks it down to us
for US state by state. I think no surprise here
for those of you who have said Hawaii is just beautiful,
That's where I want to be in retirement, where you
better be saving. It has the highest average retirement expenses
(36:14):
in the country. You're going to need an estimated one
hundred and thirty thousand dollars a year to live comfortably there.
Speaker 3 (36:23):
Jeez, that does give ocean mountains. I've never been go
I've certainly looked a lot of pictures, like, Hey, I'd
really like to visit here someday, let alone live there
at one hundred and thirty thousand dollars a year. On
the flip side, Hawaii is twice as expensive as Mississippi,
which is the lowest cost of living when it comes
to what you need in retirement, showing up at about
(36:44):
sixty one thousand dollars. Has ocean you could go to Biloxi,
no mountains.
Speaker 1 (36:48):
Yeah, maybe just like ocean and gambling. I don't know
if that.
Speaker 2 (36:54):
Satisfies what you're looking. Here's how they calculated this.
Speaker 1 (36:57):
They look at the annual retirement cost for America and
so we're sixty five and older.
Speaker 2 (37:01):
In each state. They looked at food, shelter, transportation, healthcare,
utility expenses, and housing.
Speaker 1 (37:09):
Really, when it comes down to what makes the biggest
difference in where you're going to live, housing is the
biggest kind of differentiator. Now, the cost of a comfortable
retirement in Ohio about sixty five thousand dollars, In Kentucky
about sixty four thousand.
Speaker 2 (37:22):
No surprise, Midwest, it's cheaper here. It's relatively inexpensive.
Speaker 1 (37:27):
And there's also been a number of other surveys recently
pointing to the fact that this is a great place
to live in retirement.
Speaker 3 (37:34):
Yeah, you know, you're talking about natural disasters, for example,
that there's not many of them in this area. Yeah,
and that's refreshing because you know, we look at Florida
and that's seventy one thousand at this point. But you know,
again there's I think there's going to be challenges continuing
with homeowners insurance in that area, with a lot of
homeowner insurance companies kind of walking away from that racket.
(37:59):
Arizona seventy six thousand, almost seventy seven, California about one
hundred and one thousand.
Speaker 2 (38:04):
Listen.
Speaker 1 (38:04):
For those who have ever just kind of thought through this,
I would say a couple of things. One, be realistic,
run numbers, look at things like the cost of insurance
to homeowners insurance in that area. And then second of all,
do a practice retirement there.
Speaker 2 (38:18):
It sounds great.
Speaker 1 (38:19):
To live in Florida in January, but go in July
for a few weeks and see if you still feel
the same way.
Speaker 2 (38:25):
Do your research before you make the jump. Thanks for listening.
Tune in tomorrow.
Speaker 1 (38:29):
We're talking about navigating both financial and legal matters during
a really difficult time. You've been listening to Simply Money
presented by all Worth Financial here in fifty five KRC.
Speaker 2 (38:38):
The talk station Free.
Speaker 3 (38:39):
Tax Review offers for a limited period between September twenty eighth,
twenty twenty four and November thirtieth, twenty twenty four. Tax
services are provided by all Worth Tax Solutions and affiliate
of all Worth Financial. Acceptance of this offer is not
an obligation to become a client of all Worth Financial
or Allworth Tax Solutions.
Speaker 2 (38:54):
Allworth Financial does not provide tax preparation advice.
Speaker 3 (38:57):
To learn more about this offer, please visit all Worth
Financial dot com slash tax. Additional terms and conditions may apply.
Night.
Speaker 2 (00:06):
We have a lot to get to. We are tackling
tax brackets, open en rolls, support cent role, and a
lot more.
Speaker 1 (00:13):
You're listening disimplay money because of my all worth financial
I Meami Wagner, along with Steve Ruby, hard to believe
we're already kind of getting close to the end of
twenty twenty four. And for those who are in any way,
shape or form taking in any kind of financial media,
you have probably heard or read something about Trump tax
(00:33):
cuts sunsetting at the end of twenty five. And I
say that because I've got people in my office asking
about it. So I think there's a lot of conversation
out there, and tonight I think it's worth discussing what
this could mean to you.
Speaker 3 (00:47):
Yeah, the Tax Cuts and Jobs Act tcgaaka the Trump
tax cuts that was passed back in twenty seventeen, and
these tax cuts are set to sunset at the end
of twenty twenty five, like you said, so, I think
it's important that this information is front and center from
a tax planning perspective, which is obviously an important part
of financial planning. So what happens after twenty twenty five?
(01:10):
You know, at this point, the Trump tax cuts they
were signed in the law. When they were signed in law,
lowered individual tax rates, provided a higher, larger standard deduction
than it had been in the past, and it limited
certain deductions such as state and local tax So it
made it so that you were less likely to itemize, yeah,
and more likely to take that standard deduction. But it
helped to a level that did lower taxes for many folks.
Speaker 1 (01:32):
I think the statistics I've seen since center about ninety
percent of people take the standard deduction rather than itemize.
Speaker 2 (01:39):
It's crazy.
Speaker 1 (01:40):
I guess this is just a commentary on how much
time flies. But at the time I would being like, oh,
this is these are nice. I mean a lot of
these were improvements in the tax situation for a lot
of people, and it felt like, oh, we've got forever.
You know that we can take advantage of this lower
tax brackets and you know, standard deduction. And then all
of a sudden, it's like, oh, all right, that's all
that time is almost up. We have no idea what
(02:02):
Congress will do, if they will do anything about this.
But if nothing is done, let's talk about what that
impact could look like.
Speaker 2 (02:11):
Well, first of all.
Speaker 1 (02:12):
It would likely mean higher marginal tax rate, so currently
those rates are anywhere from ten to thirty seven percent
would likely go up, So on the high end, you're
looking at closer to maybe a forty percent of thirty
nine point six percent tax bracket.
Speaker 3 (02:28):
Yeah, this is for folks that are in a lot
of money. Yes, you know, if you're in the thirty
seven tax thirty seven percent tax bracket right now, you're
doing pretty well. Yeah, but you would we.
Speaker 2 (02:35):
Do really really really really well.
Speaker 3 (02:38):
Yeah, you know, you would move into the thirty nine
point six tax tax bracket, which doesn't exist right now. Yeah,
but it would come twenty twenty six. Obviously, there would
be a reduction in the standard deduction, which is the
higher number that we're able to deduct. Limiting the fact
that many people are not itemizing right now, capital gains
dividend tax rates they could be affected as well. They
(03:01):
weren't directly reduced, However, the higher ordinary income could push
more individuals into higher capital gains tax brackets.
Speaker 2 (03:13):
What I hear you saying is this would be a
huge impact.
Speaker 1 (03:16):
You know, I mean, you don't have a huge impact
on what you're paying on your ordinary taxes, how you
file your taxes. Whether the standard deduction would make sense
moving forward, or whether you would go back to itemizing,
which I think it's interesting because I remember when that
standard deduction came out, there were a lot of people
up in arms about it, you know, and then it's
just kind of like, well, we've gotten used to it.
Speaker 2 (03:35):
I actually think it's probably made tax filing.
Speaker 1 (03:38):
A lot easier for a lot of people, unless you
have really high medical out of pocket medical expenses and
things like that. For most people, that standard deduction is
actually what works. And then to your point, even capital gains,
let's get into that. So there's short term and long
term capital gains, and this would be on brokerage accounts,
(03:59):
so not qualified accounts, not your retirement accounts like iras
and four H win k's, but any money that you
have invested beyond that in a standard brokerage account. Right,
as long as you hold that investment for over a year,
then it's taxed at a long term capital gains rate,
which is often kind of half of your ordinary income rate.
Speaker 2 (04:18):
So there's a huge benefit to that. Well, here's the deal.
Speaker 1 (04:21):
If your ordinary income rate goes up, right, if you're
bumped up into a higher tax bracket, that could then
also bump up how much you're going to pay on
that long term capital gains.
Speaker 3 (04:33):
Yes, and for again the very high earners, the people
on the very top, there could be the additional three
point eight percent net investment tax that applies to certain
investment income. So, for example, if you're a married couple
filing jointly and you're fortunate enough to make five hundred
and fifty thousand dollars a year, you fall into the
thirty seven percent tax bracket. You paid twenty percent on
(04:54):
long term capital gains after twenty twenty five from the
Trump's tax cuts sunset. At that point, the top income
BRAXIT in top income bracket increases to thirty nine point
six percent plus the three point eight percent potentially net
investment income tax. So you can see for folks that
aren't planning accordingly, you could get rocked with some additional taxes.
Speaker 1 (05:16):
Here you're listening to simply Money presented by all Worth
Financial and Memi Wagner along with Steve Ruby. As we're
talking about the tax cuts in Jobs Act. Any of
you refer to them as the Trump tax cuts, right,
They have been around since twenty seventeen set to sunset
at the end.
Speaker 2 (05:31):
Of twenty twenty five. So tonight we are.
Speaker 1 (05:33):
Digging into what that means to you, which I think
can mean both headaches and opportunities, right, and so I
think it's really important to understand what the likely impact
of this could be so that.
Speaker 2 (05:46):
You can take advantage of what you can take advantage of.
Speaker 3 (05:49):
Yeah, qualified dividends are another place that would be impacted,
So dividends from stocks and mutual funds inside of your
brokerage account. Again, this is not inside your tax not
inside of your tax deferred qualified accounts like an I
RA aird. Okay, this is the brokerage account that you
were just talking about here. Mutual funds or stocks inside
of that qualified dividends or taxed at the same rate
as long term capital gains, but ordinary dividends are taxed
(06:10):
at ordinary income tax rates. So this creates another issue
within that brokerage account because if your tax brack increases
after twenty twenty five, then the tax you pay on
the dividends could increase as well. So I mean, long
story short, it impacts a lot for most of us,
and the more money you make, the more impact this
may have.
Speaker 2 (06:30):
I say a couple of things about this.
Speaker 1 (06:32):
First of all, if you're working with the CPA and
a fiduciary financial advisor, I think it's worth reaching out
to them or the next time you're in their office
having the conversation, what do you think the impact of
these changes will be on me?
Speaker 2 (06:46):
And is there any way I can take advantage of this.
A lot of people right now are.
Speaker 1 (06:51):
Talking about Roth conversions, and I think it's really interesting
because there's also kind.
Speaker 2 (06:55):
Of different schools of thought.
Speaker 1 (06:57):
Right if you're in your higher income earning years, you know,
there are some people who make the case you shouldn't
you should not do Wroth conversions, right, you should wait
until and see if maybe in retirement, if you're in
a lower tax bracket. But we do have this situation
on the horizon of the current tax brackets sunsetting. So
if you are in the twenty two percent tax bracket
(07:18):
right now and these are going to sunset next year,
and you're asking yourself, where do I think taxes might
go in the future, what you would be doing if
you did a Roth conversion today, or putting money into
a wroth account today would be locking in today's tax rate.
Speaker 2 (07:32):
I do not have a crystal ball, but.
Speaker 1 (07:35):
I do have an educated guess about where we might
be going with taxes, and my guess.
Speaker 3 (07:41):
Is up financial planning software this day and age. When
we have a baseline financial situation for somebody built into
the plan with understandings about how much you're saving, how
you're invested, making assumptions about market performance in the future,
using modeling to do that, excuse me, then we can
actually play around with future tax rate assumptions. And when
(08:04):
you plug in ROTH conversions into the financial planning software,
it can give you dollars and cents as to how
much you could save by actually doing this. So it's
something that can be mapped out. And I want to
be clear roth conversions, they're not going away, but right now.
The reason why it's front and center on a lot
of people's minds is because of the Trump tax cut sunsetting,
So they are more beneficial now then they are. It's
(08:27):
easier for them to be more beneficial now than a
couple of years from now.
Speaker 1 (08:31):
Yeah, And I think one of the reasons why it's
worth considering those are, first of all, you're locking in
this tax right now, assuming they will go up in
the future. But second, I'm a huge fan of the
paying taxes now and then those gains grow tax free.
You know, the farther away you are from retirement, the
farther you are from needing to take distributions from those accounts,
the more time those accounts can grow, those investments can grow,
(08:54):
and that power of compounding, man, we see it all
the time, can make a huge difference. You pay taxes, now,
how that money grows at compounds and then you don't
have to pay taxes on it on the other side
of it.
Speaker 3 (09:04):
Yeah, it's a beautiful thing. I really do like wroth
conversions and roth savings when it makes sense today, other
ways to mitigate the impact of some of these changes
on the horizon with tax rates, tax sas harvesting. So
again this is inside of your taxable brokerage account. It
involves selling investments at a loss to offset capital gains
on other investments that are sold in those gains are realized.
(09:26):
You can also use those losses to carry forward for
future offsets of gains and up to three thousand dollars
against your ordinary income tax. Now, there are strategies that
exist for some individuals in this day and age inside
of your taxable brokerage account where we can use something
like a separately managed account for direct indexing. Rather than
holding exchange traded funds that mirror an index, you can
(09:48):
actually work with an advisor to buy stocks directly in
that index, so that you have let's say that Russell
three thousand has almost three thousand stocks in it, and
if you buy three three hundred and six hundred of them,
then you can tax loss harvest almost daily in that situation.
Speaker 2 (10:06):
Within those individual investments.
Speaker 3 (10:08):
Within those individual investments. And you know, we look back
a few weeks ago that the Wrestle three thousand was up.
However there was about thirty five percent of the stocks
and the Rustle three thousand were down that week. So
that means a constant opportunity for tax loss harvesting when
you're in a separately managed account that's doing direct indexing.
Speaker 2 (10:28):
Yeah, and that's the thing. If this sounds like it's
over your head or overwhelming, you just.
Speaker 1 (10:34):
Need to know that you can talk to a fiduciary
financial advisor or a CPA and ask them, does this
makes sense for me? How can I take advantage of
tax loss harvesting?
Speaker 2 (10:45):
You know, are there opportunities here for me?
Speaker 1 (10:47):
Doesn't mean you have to fully grasp how to how
to fully execute these things. I think the key here
is having the education at least enough to know which
questions to ask. And you know, we're always big fans
of diversify being diversified, and in one of the ways
that we think diversification is important is in the tax
treatments of the accounts that you are saving in for retirement.
(11:09):
And so that means having some money and roth accounts,
having some money and tax deferred accounts, and having some
money in taxable accounts. That gives you flexibility and retirement
to choose which account to go to when you're drawing
down money, and so I just it gives you lots
of flexibility. So I think it's really important to understand
first of all, there could be an opportunity in the
(11:30):
next year, year and a half or so, but also
there are strategies that you can be employing year round,
regardless of whether we've got these Trump tax cuts in
working now or whether we're beyond them. And the key
is to be taking advantage of those strategies.
Speaker 3 (11:46):
Yeah, so sit down with a financial planner, have that conversation,
map out your financial plan and discuss what how this
could impact you, so that proper steps are being taken
to take advantage of certain opportunities that exist today. And
we want to.
Speaker 1 (11:59):
Quickly mention and we are offering free tax reviews from
now through November thirtieth. We just talked about kind of
all of this stuff the ways that it can help you.
So to sign up, go to Allworth Financial dot com
slash tax. That's Allworth Financial dot com slash tax coming
up next. Why nearly thirty thousand workers are suing over
(12:19):
their retirement plans. Plus we're gonna help you navigate open enrollment.
You're listening to Simply Money, presented by all Worth Financial
here in fifty five KRC the talkstation. It's done by
all Worth Financial, I Meanan wagnerl Pee Ruby.
Speaker 2 (12:37):
If you can't listen to our show every night, you
don't have to miss a thing. We have a daily
podcast for you. Just search Simply Money.
Speaker 1 (12:43):
It's on the iHeart app or wherever you get your
podcasts Shradahand at six forty three, we are tackling whether
the four percent rule still applies? Is this something you
should be using for your retirement? Nearly thirty thousand Cornell
University employees.
Speaker 2 (12:59):
Are are really upset.
Speaker 1 (13:01):
Why about their four oh one K plans, their retirement plans.
In fact, they're so upset they're actually suing over it.
Speaker 3 (13:08):
Yeah, the lawsuit claims that the retirement plans are charging
excessive record keeping fees. Now, this isn't something that is
unheard of post nineteen seventy four the Employee Retirement Income
Security Act. This is ARISA prohibits employers from engaging in
transactions with third parties and less they're necessary to operate
(13:29):
for the benefit of the plan and the cost of
the plan are reasonable. Now, the plaintiffs in Cornell's case
say the fees paid by the plans were expensive, too excessive,
and essentially barred by law.
Speaker 1 (13:39):
I think the problem here is there is no bar
for what is excessive, what's not excessive, What is called
for here, what's not called for. In fact, this was
one of roughly two dozen lawsuits just like it filed
kind of beginning in twenty sixteen, many of them accusing
colleges and universities of violating these policies not monitor earning
(14:00):
retirement plans. There's underperforming funds in them that maybe shouldn't
even be offered, that are offered, fees aren't limited, and
so this will be kind of reaching the US Supreme Court,
who said, listen, we need to get involved here.
Speaker 2 (14:14):
If like, we need to get in the ring and
help figure out.
Speaker 1 (14:17):
What should be the standard so that we don't have
employees wondering whether they're being taken advantage of or And
keep in mind too, for so many people out there,
these plans are the number one vehicle you have to
getting you to retirement. If you can't trust that what
your employer is offering you has decent investments available to you,
(14:38):
whether you're not paying excessive fees. I just I just
think it's a really slippery slope.
Speaker 3 (14:43):
These plaintiffs do win. You know, I'm not saying that's
what's going to happen this time. I don't have you
know what's happening on happening behind the scenes here, but
it does happen from time to times that the court
comes in and says, yeah, this plan kind of sticks,
and they make the company fix it and sometimes reburse employee.
Speaker 1 (15:00):
It is everybody's favorite time of the year. We're talking
pumpkin spice lattes, We're talking Amy's birthday. We're also talking
open enrollment season.
Speaker 3 (15:13):
The most exciting thing for birthday. Oh, I thought it
was going to be open enrollment. Taxes, open enrollment. Yeah,
I do love credit scores.
Speaker 2 (15:21):
I do love open enrollment season.
Speaker 1 (15:23):
In fact, I've been talking to a lot of people
about it recently because I think it's really easy to
set it and forget it when it comes to open enrollment. Oh,
I've got a health insurance plan. It has been working
just fine. But what you're missing out on is when
you're not doing the research on what makes the most
sense for you and your family, you could be leaving
(15:43):
dollars on the table. We talk all the time about
kind of if you're not taking advantage of that full
company match just doesn't make sense. You're leaving free money
on the table. Well, are you taking full advantage of
the best plans for you? And this requires a little
bit of time and a little bit of research.
Speaker 3 (15:58):
Yeah, yeah, I mean. And sixty five million Americans one
hundred and sixty five million get their healthcare through work. Yeah,
they spend about forty five minutes a year on average.
Speaker 2 (16:09):
I actually am throwing the flag on that.
Speaker 1 (16:11):
I think forty five minutes is higher, Yeah, than a
lot of people are spending.
Speaker 3 (16:14):
Probably probably you know, I've I've certainly seen it in
my office where people just aren't spending much time on this,
but they should be. You know, cost costs arising, and
I think that's no surprise to anyone. You know, for employers,
those costs increase or reaching post pandemic highs. You know,
research from wt W, which is formally it's a consulting
(16:36):
firm formerly known as Willis Towers Watson US employers actually
project at their healthcare costs will increase by about seven
point seven percent in twenty twenty five, twenty twenty four
is an increase of six point nine twenty twenty three,
six point five, so that the costs, that the higher
costs are trending upwards. And for most of us, we're
going to feel that as as employees.
Speaker 1 (16:57):
Yeah know that likely most of you have two options, right,
two different kinds of plans. One with a higher monthly
cost that's your premium and usually a lower deductible which
is the amount you have to shell out before your
employer's plan kicks in, or on the reverse side, an
option with higher out of pocket costs but lower premiums.
What you have to ask yourself, and I think this
(17:19):
is a really important question is does a high deductible
healthcare plan make sense for you and your family if
there's not a lot of chronic illnesses and things like that,
I think a higher deductible plan can make sense. Why
do I like them because they often come with a
health savings account?
Speaker 3 (17:34):
How did I know you?
Speaker 2 (17:35):
You know I was going to go down this and
I get.
Speaker 3 (17:37):
To talk about it too. A health savings account, I'm
seeing you ariple tax advantage. It's where you put money
in on a tax deductible basis when you invest. And
it's important because not everybody invests with the money inside
their HSA, but when you do, it grows tax free.
You just like a roth. And then when you use
those dollars ideally in the future when you are retired,
not prior, because this is a great vehicle for building
(17:59):
wealth boards your healthcare goal and retirement, when you take
that money out for a non reimburse qualified medical expense,
also tax free distribution. Now again, you're only eligible for
this if you have a high deductible health plan. Personally,
I made the switch at one point and I was like, oh,
this is great. I maxed out my HSA and then
a health issue came up that's chronic in my family,
(18:20):
and now I'm back to the PPO. Yeah with no
HSA because it depends. This is an individual or family
based conversation, and if you can use the high deductible plan,
then the HSA is a beautiful vehicle.
Speaker 1 (18:37):
And the reason one of the reasons why I'm such
a huge advocate of knowing your benefits and making sure
you are fully maximizing them. I had a super sweet
couple in my office last week and they have an
HSA and I was like, great, how is it invested
and he was like and she yeah, and he was like.
He was like, it is invested, and she was like,
(18:58):
it's not invested. We pull out the statement and the
money is sitting there in cash.
Speaker 2 (19:03):
He thought it was invested. It wasn't invested. And so
it's like, you have to know your.
Speaker 1 (19:08):
Benefits and you have to know if you're fully maximizing them.
Speaker 2 (19:13):
We were talking earlier today with a group of us.
Speaker 1 (19:15):
We've got a fitness enrollment here where they'll cover some
of the cost of if you want to go to
a personal trainer or a gym. Right, there's all kinds
of options like that that many of you don't even
know about that. Your employer, you know, employer wellness benefits
and things like that, understand what they are.
Speaker 3 (19:31):
You should be looking at life and disability insurances. Yes,
and potentially I mean talking with a fiduciary financial planner
that can look at what you have through your employer
and potentially supplement and outside of the employer sponsored benefits
for something that's portable.
Speaker 1 (19:45):
You know, I think people think about life insurance, but
often not disability incredibly important as well.
Speaker 2 (19:51):
Here's the all Worth advice.
Speaker 1 (19:53):
Do your due diligence during open enrollment, pay close attention
to what your company offers. Gon Up next a batch
of scams. Warn you about that impact your healthcare, your pets, utilities.
Speaker 2 (20:03):
And much more.
Speaker 1 (20:04):
You're listening to Simply Money presented by all Worth Financial
here in fifty five krs the talk station.
Speaker 3 (20:13):
You're listening to Simply Money presented by all Worth Financial.
I'm Steve Ruby, and today we have Joe sil Erlik,
President and CEO of the Cincinnati Better Business Bureau. She's
going to be bringing us up to speed on some
recent scams that we need to be aware of. Boy,
that there are some really smart people out there that
are using their knowledge and their energy to rip us off,
(20:35):
and it just gets under my skin because had they
used this energy elsewhere, maybe they could make the world
a better place. But instead, here we are talking about
ways that we need to protect ourselves from these bad actors. So, Josia,
what bring us up to speed a little bit on
some of these recent trends that we need to watch
out for in order to protect our money.
Speaker 4 (20:56):
You know, we're getting into the holiday season, so people
are doing a lot of online line shopping, and even
the best, smartest, most savvy people can get caught up
in things. What we're seeing now is what we're calling
the credit card declined scams. And you know, of course,
there's always valid reasons why your credit card might be declined,
(21:19):
maybe you've missed some payments or you've exceeded your credit limit,
but online credit card declined messages could be a sign
of a new twist on online shopping scams. And what
we're seeing is along the lines of you try to
buy something online on a seemingly legitimate website, or you
click on an offer you got through a text or
(21:41):
an email. Then when you try to check out, your
card is unexpectedly declined, and it's declined multiple times. Even
if you try another card or you refresh the page,
you get the same error message. So you call your
credit card company and you find out that charges were
actually made, and oftentimes for much more than the price
(22:03):
of the item that you were trying to buy. So
by attempting to buy something on an unfamiliar website, you've
now unintentionally given scammers your credit card information, and now
you're going to have to deal with the aftermath, like
notifying the credit card company that the charges weren't authorized.
You might have to cancel your card, maybe even redirect
(22:25):
any autopay bills assigned to that card to another card.
It's just a waste and drain of your time and energy.
So a couple things to prevent this from happening is,
when you are buying from a website that you are
not familiar with, check the website's legitimacy. Look really closely
(22:47):
at the spelling of the URL, because sometimes they're trying
to mimic a noted retailer. An Amazon could be spelled
with two ms or just picktt, Macy's could be spelled
i ees or something. Really look at that website name
(23:07):
check that the website is secure by verifying that you
see the HTTPS in front of the URL. And if
you're buying something because you think this is a great deal,
stop right there. Compare the right that you're seeing on
that website to what other retailers are offering right there
and then, and if it is significantly different, it really
(23:31):
could be a scam. Don't risk it, and always research
unfamiliar websites at BBB dot org.
Speaker 3 (23:38):
Yeah, so there are ways that we can be diligent
when it comes to making sure that we don't fall
victim to some of these scams, especially as we enter
the holiday shopping season. Now, another thing that many of
us are doing that are still employed, you know, we're working.
We're in the accumulation phase retirement savings. Healthcare so open
enrollment season, and I understand that there's some potential cons
(24:02):
that exist out there around open enrollment season at this point.
Speaker 4 (24:06):
Right open enrollment starts on the fifteenth of October and
goes through December. Healthcare dot gov open enrollment begins November first.
This time of year, it's like Christmas for scammers. They're
just dialing for dollars as they impersonate Medicare insurance agents.
So during this open enrollment period, you might get a
call or a text from somebody claiming to be a
(24:28):
Medicare representative. Even the caller ID might say it's Social
Security or Medicare. Don't ever trust caller ID. In one
version of the scam that we're seeing, they ask if
you have received a new, updated Medicare card and to
read off the card number. In another, they offer to
enroll you in a better and cheaper plan than you
(24:50):
already have. Then they ask for your Medicare or your
Social Security number. Once they have that information, they can
steal your identity, or if you give them your Medicare number,
they can commit Medicare fraud. Another tactic is to tell
you that you have to pay to apply for Medicare
or Healthcare dot Gov plan, so they'll need your bank
(25:12):
or your credit card information. Don't fall for it. You
could find that your bank account gets emptied or you
find unauthorized charges on your credit card. Remember, legitimate Medicare
employees already have your Medicare number on file. They don't
need to ask you for it. Anybody who asks you
for your Medicare number red flags should be going up immediately.
(25:35):
They don't need to ask for it, and they don't
call you out of the blue asking for your personal information.
You'll usually get a letter in the mail before you
ever get a phone call from any government agency. And
as I said before, don't ever trust caller ID displayed
on your phone. Scammers can fake caller ID in a heartbeat.
(25:57):
And if you do want to make changes to your
healthcare plan, go directly to Medicare dot gov or Healthcare
dot gov. Don't do it over the telephone when somebody
calls you.
Speaker 3 (26:09):
You're listening to simply Money presented by all Worth Financial
on fifty five Caresee. I'm Steve Ruby, along with Josille Erlick,
the president and CEO of the Cincinnati Better Business Bureau.
We're talking about different scams that we need to keep
an eye out on. Another one that we wanted to touch
on today is a utility company and personation scams.
Speaker 4 (26:28):
Well, we've talked about these in the past, but of
course there's another spin on this scam. There is always
a new spin on these scams. Scammers are calling people
pretending to be from a utility company. They might even
be pretending to be from your TV spectrum account or
something like that. It doesn't have to be a utility.
They all work about the same way. They are threatening
(26:51):
to shut off your utility because you've missed payments. They
say that you didn't pay your bill. But lucky you,
there's a way to avoid shutoff and the fees associated
with it. They will send you a scannable bar code
or a QR code by text or email so you
can go to your nearest Walgreens or CVS or something
(27:12):
like that and pay your bill. Don't fall for it.
That barcode, that QR code is directing money to the scammers,
not to any utility company. Scammers create this false sense
of urgency and demand you pay in a way that
makes it hard for you to get your money back.
If you do owe money for a utility bill, your
(27:33):
real utility company is going to work with you on
a payment plan. They are not going to scare you
into paying immediately, and they won't send you a barcode
or a QR code and insist you take it to
a store to pay now. If you think you might
be behind on your bills, call your utility company using
the number on your bill, or do you on the
(27:56):
utility company's website. As I said, they are always willing
to work with you to help you establish a repayment plan.
No pressure, just honest work.
Speaker 3 (28:09):
You know, great perspective. As always, these conversations are important
to help us stay in front of the scammers that
are constantly changing their strategies. You've been listening to Simply
Money presented by all Worth Financial on fifty five KRC,
the talk station.
Speaker 1 (28:28):
We're listening to Simply Money presented by all Word Financial.
Speaker 2 (28:31):
I mean, you Wagner along with Steve Ruby. Do you
have a financial question you need a little help with.
Speaker 1 (28:35):
We've got a red button you can click on while
you're listening to the show.
Speaker 2 (28:38):
It's right there on the iHeart app.
Speaker 1 (28:39):
Record your question and it is coming straight to us
and straight ahead where it might be less difficult to
retire than in some other places.
Speaker 2 (28:48):
If you're thinking about moving, you definitely want to stay tuned. Okay,
So there are rules.
Speaker 1 (28:54):
Of thumb when it comes to retirements, and then sometimes
we like to weigh in and say, is it a
rule of thumber?
Speaker 2 (28:59):
Is it a rule of dumb? One rule of thumb?
Speaker 1 (29:02):
I think that has kind of existed in our industry,
has been the four percent role, which is, you know,
can you live off of distributions taking kind of a
four percent distribution of the principle every.
Speaker 2 (29:15):
Year in retirement? And is that a good way to plan?
Speaker 3 (29:18):
Yeah, I mean it's it's been widely used as kind
of just a high level guide.
Speaker 1 (29:23):
Yeah.
Speaker 3 (29:23):
And it assumes that you have a growth with income portfolio,
so a sixty forty portfolio, and you're drawing that four
percent each year index with inflation, and then if that's
the case and your your money should be able to
last about thirty to forty years. That's what it says.
But the problem with the four percent rule, according to
this professor, Michael Fink is his name. He believes it's
it's blind to the new reality of what you experience
(29:44):
as a retiree. It overlooks the fact that nobody knows
exactly what investment returns will be in the future. It
ignores the ability to tweak spending in response to you know,
real life market return. So in otherwise, it's not personalized.
And you know, that's that's fair.
Speaker 1 (30:01):
I think it's static, and none of our lives and
certainly none of our retirements are static. So what if
you retire and the market just goes on a tear
for like five to seven years right after you retire,
and you've got a lot more than you would have otherwise,
do you still draw down only four percent? Also, and
(30:22):
you make this great point about retirement and it's not
the same day one of retirement that it is day
ten thousand, seven hundred and sixty five, Meaning you go
through different phases in retirement, and those different phases will
have different costs associated with them.
Speaker 3 (30:38):
Yeah, when you hit retirement, you're in your go go
years of retirement where you want to get out, you
want to go do stuff, you want to check items
off your bucket list. This can cost for so when
I build financial plans, we actually add in higher expenses
for X amount of years to reflect that. The four
(30:59):
percent rules wouldn't be able to take that under consideration
because it's just assuming a four percent withdrawal rate. You
might actually have higher withdrawal rates right when you enter retirement,
before you hit your slowgo years when you're not doing
quite as much, maybe you know, feel up to it,
you're not traveling to Europe or anything like that, and
then you have your no goo years or you're just
grumpy and yell at kids to get off your lawn
or whatever, where you know, your day to day expenses
(31:21):
might go down, but honestly, your your healthcare expenses might
go up.
Speaker 1 (31:25):
So I think what he is this, this guy who
is you know, kind of against this, is saying, listen, like,
let's give some more flexibility to it. And honestly, what
he is advocating for is what we advocate for, which
is a personal approach to retirement. So many people just
kind of want this one size fits all. Just tell
me what the formula is. I will plug in the
numbers and then in very black and white, it will
(31:46):
tell me like am I good to go? Can I retire?
Will I be fine? Will I outlive my money? Or
will I'm not outlive my money? And it's just not
that simple. And you know what he is saying here
for is, listen, you need a little more flexibility to
spend certain times in retirement. See to your point, certain years,
certain periods of time during that retirement are going to
be more expensive than others. And also let's be a
(32:08):
little responsive to what the returns are. You know, when
we build a financial plan for someone, I always say,
this is a living breathing document like this is the
first draft, and we will go through so many different
iterations of this in response to changes in your life,
changes in your goals, changes in markets up down. Now,
(32:29):
it doesn't necessarily mean you change your investment strategy, but
when you get to retirement and you're living off of
a certain amount of money, it could change things.
Speaker 3 (32:38):
Yeah. Absolutely. And you know one thing that when you
dig into the article and you actually read it, that
there's kind of a list of talking points for solutions
that this gentleman shares, and one of them on that
list is provides a clear understanding of the lifestyle benefit
of allocating a portion of savings to a product that
reduces longevity risk. That's right from the article. So if
you read between the lines, unfortunately there is a touch
(33:01):
of an agenda there, because what that really means is
as argument for selling a new yah, which you know
it can certainly help reduce the risk of running out
of money, but it's something you need to be careful
with for who you buy it from and what the
motivation is for them selling it to you. If it's
a fiduciary financial planner that determines that this does make
(33:22):
sense in your financial situation. Then then that's that's great.
You know, you want to make sure that you're not
being oversold a product that isn't really necessary in your
financial situation. So, while I agree with the majority of
this article because it points towards tailored financial planning and
stepping away from a simple rule of thumb that doesn't
(33:42):
have really any flexibility, it does maybe drip on the
idea of using annuities to close the gap, which is
not always necessary.
Speaker 1 (33:52):
Yeah, we wouldn't necessarily agree with I just think for
so many you know, it's just what is the formula?
What is the solution here? And I would the solution
is a personalized plan for you. And I'm not saying
you have to work with a financial advisor to do that.
You know, some people are perfectly capable of doing it yourself.
You just have to make sure you're taking everything into
account here and not just relying on one standard formula
(34:16):
for your retirement.
Speaker 2 (34:17):
Here's the all worth advice.
Speaker 1 (34:18):
A fiduciary financial advisor's job is to come up with
the best withdrawal strategy for you. It could be four percent,
but it actually also may not be coming up next
where it might be easier to achieve a comfortable retirement.
Speaker 2 (34:32):
Are you living in the right place.
Speaker 1 (34:33):
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 me,
Wagner along with Steve Ruby, you ever give any thought.
Speaker 2 (34:48):
To I know you have given thought to retiring someday.
But where do you think you would want to end up?
Will you guys stay here? Will you go somewhere else?
Speaker 3 (34:57):
I like the ocean, and my wife f likes the mountains.
Speaker 1 (35:01):
So there's really not anything I can think of right
now that gift you bub it's.
Speaker 3 (35:05):
You know, expensive areas. Yeah, New England in California, I
can you know do with that. But there's plenty of
areas that are beautiful within the state, but it's expensive,
right And I've never been to the Pacific Northwest, but
that probably fills the gap. Yeah, there you go, that
would solve for both. What about you?
Speaker 2 (35:22):
Well, yeah, I got to tell you. I always thought Beach.
Speaker 1 (35:25):
I always thought Florida, and then obviously the last few years,
like I'm kind of rethinking.
Speaker 3 (35:31):
It's challenging. Yeah, insurance.
Speaker 1 (35:33):
Yeah, homeowners insurance in one hurricane after another and uh,
you know, you look at the housing market there and
it's just absolutely tanking now because I think homeowners insurance
is up four hundred percent of where it was. This
is a good conversation to have if you have ever
daydreamed had these conversations with your spouse. Right, where will
(35:53):
we go in retirement? Go Banking Rates just released the
results of a study on the yearly cost of a
comfortable retirement and kind of breaks it down to us
for US state by state. I think no surprise here
for those of you who have said Hawaii is just beautiful,
That's where I want to be in retirement, where you
better be saving. It has the highest average retirement expenses
(36:14):
in the country. You're going to need an estimated one
hundred and thirty thousand dollars a year to live comfortably there.
Speaker 3 (36:23):
Jeez, that does give ocean mountains. I've never been go
I've certainly looked a lot of pictures, like, Hey, I'd
really like to visit here someday, let alone live there
at one hundred and thirty thousand dollars a year. On
the flip side, Hawaii is twice as expensive as Mississippi,
which is the lowest cost of living when it comes
to what you need in retirement, showing up at about
(36:44):
sixty one thousand dollars. Has ocean you could go to Biloxi,
no mountains.
Speaker 1 (36:48):
Yeah, maybe just like ocean and gambling. I don't know
if that.
Speaker 2 (36:54):
Satisfies what you're looking. Here's how they calculated this.
Speaker 1 (36:57):
They look at the annual retirement cost for America and
so we're sixty five and older.
Speaker 2 (37:01):
In each state. They looked at food, shelter, transportation, healthcare,
utility expenses, and housing.
Speaker 1 (37:09):
Really, when it comes down to what makes the biggest
difference in where you're going to live, housing is the
biggest kind of differentiator. Now, the cost of a comfortable
retirement in Ohio about sixty five thousand dollars, In Kentucky
about sixty four thousand.
Speaker 2 (37:22):
No surprise, Midwest, it's cheaper here. It's relatively inexpensive.
Speaker 1 (37:27):
And there's also been a number of other surveys recently
pointing to the fact that this is a great place
to live in retirement.
Speaker 3 (37:34):
Yeah, you know, you're talking about natural disasters, for example,
that there's not many of them in this area. Yeah,
and that's refreshing because you know, we look at Florida
and that's seventy one thousand at this point. But you know,
again there's I think there's going to be challenges continuing
with homeowners insurance in that area, with a lot of
homeowner insurance companies kind of walking away from that racket.
(37:59):
Arizona seventy six thousand, almost seventy seven, California about one
hundred and one thousand.
Speaker 2 (38:04):
Listen.
Speaker 1 (38:04):
For those who have ever just kind of thought through this,
I would say a couple of things. One, be realistic,
run numbers, look at things like the cost of insurance
to homeowners insurance in that area. And then second of all,
do a practice retirement there.
Speaker 2 (38:18):
It sounds great.
Speaker 1 (38:19):
To live in Florida in January, but go in July
for a few weeks and see if you still feel
the same way.
Speaker 2 (38:25):
Do your research before you make the jump. Thanks for listening.
Tune in tomorrow.
Speaker 1 (38:29):
We're talking about navigating both financial and legal matters during
a really difficult time. You've been listening to Simply Money
presented by all Worth Financial here in fifty five KRC.
Speaker 2 (38:38):
The talk station Free.
Speaker 3 (38:39):
Tax Review offers for a limited period between September twenty eighth,
twenty twenty four and November thirtieth, twenty twenty four. Tax
services are provided by all Worth Tax Solutions and affiliate
of all Worth Financial. Acceptance of this offer is not
an obligation to become a client of all Worth Financial
or Allworth Tax Solutions.
Speaker 2 (38:54):
Allworth Financial does not provide tax preparation advice.
Speaker 3 (38:57):
To learn more about this offer, please visit all Worth
Financial dot com slash tax. Additional terms and conditions may apply.
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