Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
Tonight, why financial flexibility is the new financial freedom. You're
listening to Simply Money present up by all Worth Financial
on Bob Sponseller along.
Speaker 2 (00:15):
With Brian James.
Speaker 1 (00:17):
We've all heard the American dream save enough money so
you never have.
Speaker 2 (00:21):
To work again.
Speaker 1 (00:23):
But what if that's the wrong goal. Today we're flipping
that script because financial flexibility, Brian, might be the new
American dream.
Speaker 2 (00:33):
So yeah, so things have changed.
Speaker 3 (00:35):
Financial freedom used to be here's my retirement date and
I'm going to mark all these ex's on the calendar
until it's time to no longer go into the office
ever again, and I'm just going to spend the rest
of my life on the beach. But now people are
feeling a little bit differently, and we hear this every
day here at all Worth as we're sitting down with
clients and prospective clients talking about financial planning. And it's
people who come in and they say, you know, I
(00:55):
thought I wanted to just do a bunch of nothing,
but now I know. So I got family members, I
got friends who have retired and have gone ahead of me,
and sometimes they're just not as happy because they don't
have that sense of purpose anymore. So people are thinking
a little bit differently about something called financial flexibility.
Speaker 2 (01:10):
So you know, tend you're a.
Speaker 3 (01:11):
Family with maybe one to five million dollars, and it
might be a more realistic, fulfilling target here. Flexibility means
you don't really have to stop working. You just choose
how you work when and with whom. And a lot
of times this conversation, you know, comes in the form of,
let's talk about what you might do when when this
particular job, this particular career is no longer necessary. Maybe
you're not ready to completely hang it up and let
(01:33):
the dust collect on you, but maybe it's time to
seek a new job in a spot where, you know,
where it's not the salary that matters, and maybe it's
not the benefits because you've already kind of won that game,
you know, but it might be something where you're still
bringing a little bit in come to help bridge the
gap during retirement, but you're not quite ready to completely
hang it up and have no reason to get out
of that anymore.
Speaker 1 (01:53):
Yeah, I'm finding I'm having this discussion more and more
with folks that are retiring today than I did with
folks that I started working with twenty to thirty years ago.
Speaker 2 (02:03):
I agree.
Speaker 1 (02:04):
It used to be Hey, I'm fifty eight, fifty nine,
show me how I can get out of there. Now
I can't wait to get out of there and never
go to work anymore.
Speaker 2 (02:13):
And that's not the case anymore.
Speaker 1 (02:15):
A lot of folks, even in their late sixties and seventies,
they want they want a way to do something. They
want to stay involved. They got a lot of experience
in acquired wisdom and value to add to whether it's
the company they worked for for thirty or forty years,
or nonprofits or serve on ministry boards, anything like that.
(02:37):
They just don't want to be chained to a sixty
to seventy hour work schedule. And I'm finding that companies
and institutions are way more flexible than maybe they ever
have before in allowing these folks to be involved and
do some things because it really is a win win
for both parties. Are you finding that with any of
your clients, Brian.
Speaker 3 (02:58):
Absolutely, And one of the big companies around here that
does this is General Electric, so they seem to be
the gold.
Speaker 2 (03:03):
Stand exactly the company I'm thinking of exactly.
Speaker 3 (03:06):
Yeah, there's a conga line of people who have their
retirement dinner and then the very next week are coming back.
Speaker 2 (03:11):
As a as a.
Speaker 3 (03:13):
Consultant or doing whatever they do, and that's just a
well worn path. It's almost I can't remember the last
time I had somebody tell me that they were ready
to retire from General Electric and they had zero intent
on taking that step.
Speaker 2 (03:24):
So it really seems like a good move. Though.
Speaker 3 (03:26):
Those seem to be some pretty happy people because they
get to slough off some of the duties that they
had before. They feel they they do. They do feel
entitled and able to say no to things, whereas when
you're when you're working and you're you're in the grind,
when you're their thirties, forties, fifties, you're just part of
the machine and so forth. But those folks do seem
to have a little more flexibility and they do seem
to be a little more relaxed. And it's a great
baby step into retirement, and I think that can be
(03:48):
a great thing for anybody, just the idea of, you
know what, I'm going to start to back off a
little bit, rather than that cold water shock of today.
I get out of bed and I go for my
last day of work, and then I have my retirement dinner,
say goodbye to everybody, and then tomorrow what am I
going to do? That can be a really, really scary thing.
So these sort of baby steps into retirement can be
very powerful.
Speaker 2 (04:06):
Well, let's talk.
Speaker 1 (04:06):
About a different way of maybe creating those baby step
steps into something else.
Speaker 2 (04:11):
And here's what I mean by that, Brian.
Speaker 1 (04:13):
We've just kind of talked about maybe the ge executive
that work fifty sixty hours a week, they want to
stay involved, but they want to do it on a
ten to fifteen to twenty hour a week basis. We've
got some other folks that say, I want to make
a complete different career path decision. Maybe I worked in
it or in engineering or what have you for thirty
(04:34):
to thirty five years.
Speaker 2 (04:35):
For thirty thirty five years.
Speaker 1 (04:37):
I want to open up a wood shop, or I
want to work with orphan children in Zimbabwe, I want
to do something like that. I'm seeing more and more
of those conversations come up. Let's talk about what we
need to be doing as we think about those dreams
and goals and actually make it come into fruition or reality.
(04:59):
What do we need to do in terms of planning
and getting your finances in.
Speaker 3 (05:03):
Order right So what you're looking at there is if
you want to be able to figure out, you know,
what you can get away with here. First of all,
you got to make sure that you understand your current
situation right, So you have a current budget, right, whatever
it is that you may not be paying attention to it.
You may not be putting money in envelopes or making
sure that we only spend exit the grocery store or whatever,
but you do have some kind of a lifestyle out there,
presumably if you if you are unaware of your budget,
(05:25):
then you are either a very very very financially stable
person where you just know that you're bringing in more
than you're spending, or you're a complete train wreck. So
we'll assume that we're talking to the people who you
kind of have things you know on autopilot and they're okay,
But you need to look really in depth at that
to see what that actually is, because you got to
figure out what is my minimal, what's a bare minimum
(05:45):
I need to get going here? And a good easy
way to do that is to simply take a look
at your take home pay. This is you don't need
to fill out a spreadsheet full of here's my magazine subscriptions,
and here's what we spend at Applebee's on the weekends
and whatever. You can simply look at your take home
pay and figure out what's going where. Top line is,
here's what hits the bank from all of our resources,
from all of our income sources at the beginning of
the month, and then here's where it goes. This goes
(06:06):
to the mortgage that'll be gone in two three. However,
many years we always carve out and put a little
bit into savings. Maybe that's a goal you don't have
to have anymore. This is going to college tuition or
college savings right now, that's a finite goal, and so forth.
Once you knock off all those finite things that have
a limited lifespan, then you will be down to the
money you just spend to be you on a monthly basis.
Speaker 2 (06:25):
That is your target.
Speaker 3 (06:26):
Start with that, and then figure out how can I
replicate that income from my existing sources. And therefore, here
is a gap I need to make, and I can
promise you if you're one of these stable people, it's
probably a lot less than you think it is.
Speaker 2 (06:37):
Most of the time we come up with happy surprises
in those.
Speaker 1 (06:40):
Discussions Yep, you're listening to simply Money presented by all
Worth Financial. I'm Bob Sponseller along with Brian James and Brian.
This is where having a really sound tax strategy comes
into play, and we talk about this often. This is
where having different buckets or sources from which you could
take income, diverse sources of income I RaSE four oh
(07:02):
one k's after tax accounts, WROTH accounts, blending an income
strategy from those different sources. That's where we can really
create some nice tax efficiency of that gap income as
you call it, and then really make this thing hum
in the later years.
Speaker 3 (07:20):
Yes, Now this is where things get more complicated. Right,
So when for people who have worked very hard and
built built their plans and created several different resources. Right,
you've got social security history, you've got pre tax dollars
in your four oh one K four or three B.
You might have WROTH in the mix. Maybe you've got
some taxbos to all this other stuff. Then everything gets
harder when you get you hit a point where you've.
Speaker 2 (07:40):
Got a lot of resources.
Speaker 3 (07:41):
All those resources are labeled and painted differently with regard
to taxes. There are going to be taxed differently. When
we are working slaves. You're paying ordinary income taxes.
Speaker 2 (07:49):
That's it. You got to work.
Speaker 3 (07:50):
Somebody gives you a check, You're going to get taxed
at the ordinary income rates. Period, end of story. When
you've created all of these different resources, now you've got
a choice to make. And congratulations, things just got harder,
and Bob and Brian just got a little more job security.
Because there are any number of ways you can combine
these things into an income stream that will keep you stable.
But each one of them is going to have its
own pros and cons. So let me throw out one
(08:12):
thing though, for somebody who is thinking about this. I
want to make sure that everybody knows of something called
the rule of fifty five. Remember the rule of fifty five? Bob, Yes,
so what we do there? I hate those rules because
everybody's different. You can't apply this rule of whatever to everybody,
because everybody's situation is different.
Speaker 2 (08:33):
But I don't want to take you off. That's okay.
Speaker 3 (08:35):
And I threw this softball there and it was a
little I almost hit you in the helmet. Sorry about that,
But no, the rule of fifty five, this one does
apply to everybody, which is nothing more than when you
are fifty five years old. You get to pull money
out of your four oh one K without paying penalties.
So if you are a person who is considering an
earlier retirement and one of your resources is pre tax
dollars in your four oh one K, then know that
(08:57):
you can pull money from the four oh one K
without only paying income taxes. No ten percent penalty, no
early withdrawal penalty. That does not apply to IRA. You'll
notice I said the word four oh one K six
or seven times in that whole exchange there. The IRA
age is fifty nine and a half. That's what most
people think everything is. But if it's a four oh
one K, it's fifty five. You can draw on that
(09:18):
without penalty.
Speaker 1 (09:20):
Yeah, and let's not ignore the whole healthcare question, because
what we're talking about here is these bridge years. You know,
if you want to retire early and transition into something else,
and let's face it, if you go from a for
profit business into a nonprofit a ministry something like that,
the benefits often are not as great, and you got
to sometimes self insure yourself between when you retire from
(09:43):
your company job and when you get to medicate. We
got we got to help people transition and get you know,
good sound medical coverage, and uh, sometimes.
Speaker 2 (09:52):
People overlook that.
Speaker 1 (09:53):
I know, I heard of one lady yesterday who I mean,
she could work anywhere, she's brilliant, but she just decided
to go work part time at Costco, working in some
department of Costco that sold widgets or garden equipment or
something that she was really interested in solely to get
over there for about ten hours a week, work part time,
(10:15):
but get healthcare coverage. Between her late fifties and when
she could go on Medicare, she's.
Speaker 2 (10:23):
Totally happy with her life.
Speaker 1 (10:25):
She goes in there, rolls in for her ten hours
a week, she does something completely different, she's out of there,
but she's got that healthcare coverage and good health care
coverage to bridge that gap to sixty five.
Speaker 3 (10:36):
Yeah, and I think that's a great outcome here. I
want to throw out one caveat something to keep in mind,
and I'm going back to this goes back twenty thirty
years when I first started in this industry and home
depot and lows, the big box hardware stores were kind
of new and there were a lot of always tend
to be older men who want to retire from my job.
I love working with my hands, so I want to
help people do that. That sounds like fun. So I'm
(10:57):
going to go be an hourly guy at home Depot
and Lows. And then you still see this every now
and then, But these are hardworking people who have their
stuff together and they will eventually recognize that, hey, this
this store isn't running as as efficiently as it could.
Speaker 2 (11:09):
I'm going to fix it.
Speaker 3 (11:10):
I'm going to do things, and all of a sudden,
management notices and you get a promotion, and then that
happens a couple three times, and all of a sudden,
you have a new career that you didn't want. You
only wanted to help people with their hardware projects a
few hours a week. So just be careful of that trap.
Speaker 1 (11:22):
That's good. Here's the all Worth advice. The question isn't
when can I retire? It's when can I start living
the life I want to live? Coming up next, why
clinging to old investments might be the one thing holding
your whole retirement plan back. You're listening to Simply Money
presented by all Worth Financial on fifty five KARC the
(11:43):
talk station. You're listening to Simply Money presented by all
worth financial on Bob Sponseller along with Brian James. Hey,
if you can't listen to Simply Money every night, subscribe
and get our daily podcast. You can listen in the
following morning during your commutal work or at the gym.
(12:04):
Just search Simply Money on the iHeart app or wherever
you find your podcasts. Straight ahead at six forty three.
The lessons you can learn from going into a retirement
time machine, Brian, that's gonna be that's gonna be kind
of fun, all right.
Speaker 2 (12:20):
We see it all the time.
Speaker 1 (12:21):
Someone walks into our office with a portfolio they built
over twenty or thirty years, and it's filled with all
kinds of stuff, Brian. The stocks they love, mutual funds
from theirfore when k days, maybe even some company shares
from a past employer. And when we sit across the
desk and ask them why they own these certain things,
(12:42):
the answer is often well, I've just always had it,
or it's done well for me, or even it's part
of my story.
Speaker 2 (12:50):
What do you say to those people, Brian?
Speaker 3 (12:52):
You know, Bob, I'm going through this literally today the
other day and through this weekend, just in a slightly
different area of life and I'm referring to my garage.
I have a lot of unfinished little projects out there
that they're all sitting in the garage about maybe eighty
ninety percent state of completion. And I'm sure whatever they
are where it was important to me the day that
I was working on it, but I've completely forgotten about it,
(13:12):
and it's just they're just kind of there. And so
that's a lot of times that's what happens to people,
and frankly, that's what drives people in the door because
eventually they step way back and finally look at the
forest instead of the individual trees, and they go, what
is all of this stuff?
Speaker 2 (13:25):
What does it mean to me?
Speaker 3 (13:26):
And I've realized and they realized, I'm not even that
interested really in maintaining this stuff anymore. And Bob, that
defines me. I can't remember the last time I changed
my oil in my own my lawnmower, but it still
starts the day that it doesn't start. All probably high professional,
but anyway, So, yeah, the people come in and they've
got this grab bag of just stuff that they some
of it they inherited, some of it they bought because
they were interested in investing a while ago.
Speaker 2 (13:47):
Or something like that.
Speaker 3 (13:48):
But they've never figured out exactly what role does all
this money play when they're trying to knit it all
together into something that can help them retire or accomplish
their financial goal.
Speaker 1 (13:55):
Yeah. The point we're trying to make here is your
investment portfolio. It's not a scrapbook. It's not a half
rebuilt Harley Davidson in your garage with a bunch of
tools laying around.
Speaker 3 (14:08):
Or a family photo album because dad, grandpa, mom used
to work at this company and that's why we all
own the stock, even though none of us pays attention
to the company anymore.
Speaker 2 (14:15):
Yeah, and you do need to change the oil on
your lawnmower, but not yet, not yet. I don't it
started this weekend, Bob.
Speaker 1 (14:21):
You'll be surprised when that day comes, all right. The
point with this whole collection of investments is it is
a tool. You know, it should be built to do
a job. And if it's not doing that job anymore,
meaning you're consolidated, coordinated investment and tax strategy, it might
be time to let some of those things go. And
(14:41):
letting some of those components of your portfolio go, it
doesn't mean you were wrong before it just means you're evolving.
And we talk about all the time investment. This investment
business and that particularly the tax benefits and tax opportunities
around investing has changed in a evolved dramatically over the
(15:02):
last ten to fifteen years. And we find a lot
of times people aren't even aware that some of these
strategies even exist.
Speaker 3 (15:09):
Right, So let's take an example here, and I think
you know, having been in this industry both of us here, Bob,
for several decades.
Speaker 1 (15:16):
Now.
Speaker 3 (15:16):
One of the big stories in the stock market over
the last several decades has been Apple throwing out as
an example.
Speaker 2 (15:22):
Because Apple's great companies, strong company.
Speaker 3 (15:23):
They are not going away, but not quite the shining
beacon that they that they once were. Steve Jobs is gone.
Everybody has an iPhone. Things just don't seem to be
innovating the way they used to. But if you've owned
Apple for a few decades, then you have a pretty
good chunk of stock. And also you probably have some
notion that if you were to sell it, if it's
a taxable account, you were to sell it, you're going
(15:44):
to pay taxes. Most people go, oh, I just can't
sell it. I'm gonna have to pay taxes. I can't
deal with that, don't want to have to think about it.
Speaker 1 (15:49):
Well, and then that whole portfolio attachment things comes into play.
Speaker 2 (15:53):
And here's what I mean by that.
Speaker 1 (15:54):
We love I mean we love staring at a statement
or an online you know, portfolio summary, and we love
seeing that four hundred percent gain every day. It proves
to us emotionally that we were right. We bought a
stock and it went up and we made a bunch
of money. And you just sit there at that and
(16:16):
stare at that big percentage gain and say, this is done.
Speaker 2 (16:19):
Great for me? Why would I ever sell it?
Speaker 1 (16:22):
I you, But a lot of people don't look at
what the performance of that nice stock position is done,
maybe in the last three to five years, as opposed
to a diversified portfolio. Do you ever find that?
Speaker 3 (16:37):
I do, absolutely, And then I'll go back to my
garage full of projects. Sometimes you have a statement full
of projects that had a purpose at one point in
your past. So so really, I think that the goal
here is Okay, now you've got something, what are you
going to do with it?
Speaker 1 (16:48):
So?
Speaker 3 (16:48):
What what could people do? Let's get into that, bob.
So if this is all money, right, these are all
financial instruments and they should somehow be supporting you otherwise
what was the point. So something you might think about
if you've got these kind of assets out there, if
you are charitably inclined and you've got appreciated stocks, then
you should look into something called a donor advised fund.
You can donate those shares to a donor advised fund.
(17:10):
You will reap the benefits of a deduction, which you
may not have anymore. Right when we swit, when the
standard deduction became a lot larger, a lot of people
lost the benefit of deducting charitable contributions. But this is
the way a donor advice one would allow you to
make a contribution now, but not ultimately have the charity
receive it until a time of your choosing. So you
(17:30):
make an irrevocable deduction, now give it to the charity
over the same two, three, four, five years you would
have intended anyway.
Speaker 1 (17:36):
Especially if you're one of those folks that's still writing
checks or putting currency into the offering plate at church,
or writing a check to chosen charities, and you're not
even able to take advantage of the much larger standard
deduction for married couples. This is a myss that we
find all the time. And it's great that people are
giving money to charity, but there's just better ways to
(17:58):
do it.
Speaker 2 (17:59):
And to your point, you can kind of scale.
Speaker 1 (18:01):
Out of that large concentrated position and do it on
a much more tax efficient basis. Another thing that we've
talked about recently and it's worth mentioning here again is
direct invest direct indexing. There are strategies where you can
exchange that low cost basis stock for a fully diversified
portfolio stocks and not have to take the tax hit.
(18:25):
It's a wonderful strategy.
Speaker 3 (18:26):
Yeah, and that's a way too Again you're putting diversification
into your portfolio.
Speaker 2 (18:30):
So let's give a quick example here. We're here in Cincinnati.
Speaker 3 (18:32):
So let's say one of us has a bunch of
P and G stock, another one of us has a
bunch of GE and other ones has a bunch of
Kroger and keep adding to the list. Well, if we
sell those because we want to diversify, then yeah, we're
gonna incur capital gain because we sold the stock and
took the game. However, if we all contribute in kind
those shares to another fund and then we redistribute shares
of that fund to ourselves. Now we have a more
(18:53):
diversified portfolio, and no one has actually executed a sale
resulting in a capital gain. Well, that's called an exchange fund,
and it's another way to deal with the risk of
a position that's got a little too big.
Speaker 1 (19:06):
Yeah, So it comes down to when to reevaluate. And
the way I look at this is we all have
to ask ourselves. Does this investment that I'm holding still
align with my current needs? Is it helping me hit
my long term plan? Or am I just holding it
because I'm afraid to let it go? Or I don't
want to walk out into that garage and clean up
(19:26):
all the stuff laying on the floor.
Speaker 2 (19:28):
Starting to sound like my spouse, Bob, I got one
of those two.
Speaker 1 (19:32):
Hey, if you don't know the answer, that's the sign
it's time for a review. Whether it's an old mutual fund,
a legacy annuity, or a chunk of employer stock, you
owe it to yourself to reassess, and reassess that with
a good fiduciary advisor who can help you look at
your various options. Here's the all Worth advice. Your money
isn't your identity. It's a tool to build the life
(19:55):
you want today, tomorrow, and into retirement.
Speaker 2 (20:00):
Coming up next.
Speaker 1 (20:00):
It's the most emotional and most overlooked retirement decision, and
we're going to get into it.
Speaker 2 (20:06):
Coming up next.
Speaker 1 (20:07):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station. You're listening to
Simply Money presented by all Worth Financial on Bob's sponsller
along with Brian James. We talk a lot about how
to downsize your portfolio, but today we want to talk
(20:30):
about downsizing something far more emotional. And Brian, we run
into this often with clients, the whole topic of downsizing
your home.
Speaker 3 (20:41):
Yeah, so this comes up in a lot of ways
during financial planning. It comes up in a form of,
you know, people will realize that, you know what, we
don't do we want to be in this house anymore.
The kids are up and out and now it's just
a bunch of bedrooms I gotta clean and that kind
of thing. But what I find, Bob is frequently people
who have come to that conclusion will decide to move,
and then they move into a house that is the
(21:01):
same size.
Speaker 2 (21:02):
I think we get into our.
Speaker 3 (21:03):
Heads that well, if I've always lived in a five
bedroom house, that's just kind of what I need with
just you know, I don't want to it's too scary
to go smaller. But then inevitably we'll find people, you know,
talking about how they bought too much house and heaven forbid.
You know, a lot of times there winds up being
a mortgage against it. Don't be one of those people
who retires and then puts a thirty year mortgage in
place for a bigger home that you you're just gonna
fill with stuff that someday you're gonna have to drag
(21:24):
your good will.
Speaker 2 (21:25):
Well.
Speaker 1 (21:26):
We also talk with families that are struggling with Hey,
they deep down know that this big house that they
raise their kids in and where they've got a ton
of memories and it's been paid off for years, and
they kind of swore to each other they'd never leave
the house. You know, they just feel like they can't
leave because of all these memories. They want to have
(21:47):
a place where their kids to come back, all good stuff,
but sometimes those maintenance costs, taxes, upkeep, it just becomes
a huge burden to them that prevents them from traveling
and doing some other things that they might otherwise like
to do if they didn't have this.
Speaker 2 (22:04):
Huge house to take care of it.
Speaker 3 (22:05):
And Bob, I think this is where some war stories
from our financial planning tables here at all Worth can
come in. So what I'm speaking about is when we've got,
you know, the heirs of their parents. My mom and
dad have passed away, it's time to settle the estate,
and it's time for everybody has received their distributions, and
the very first thing that they wind up talking about
is we're going to get rid of this house.
Speaker 2 (22:26):
Mom and Dad were convinced that we wanted it. We
just didn't know.
Speaker 3 (22:30):
None of us, the siblings, nobody wanted this house because
we've all got our own houses and we're happy where
we are. I think people tend to convince themselves that
I have these warm, wonderful memories and this isn't to
take any of that away, that is important stuff, But
I have these warm, wonderful memories in this structure. Therefore
it must be maintained and passed down. And your kids
have those warm wonderful memories too, and they know it's
important to you. They may not be being upfront with
(22:52):
you as to whether they really want this house. Most
of the time, one of the very first calls that
happens during the settlement of a state is a real
estate agent because we can't let that house sit empty.
Speaker 2 (23:00):
We got to deal with it.
Speaker 3 (23:01):
Something's going to go wrong with it if nobody's paying
attention to it, and we're going to eat property taxes
and expenses as long as we have it, so they're
going to sell it relatively quickly. So you know, we
make make decisions based on that knowledge as you move
forward on your own plan.
Speaker 1 (23:14):
Well, the other thing to keep in mind, Brian, is
the larger the house and the longer you've lived there.
And my wife and I went through this personally, you know,
about four years ago, the more accumulated crap you've got
in that house to use your garage and tool example.
Speaker 2 (23:30):
I mean, you stay in.
Speaker 1 (23:31):
A house for seventeen, eighteen twenty years, you raise a
few kids there, and all you got a whole bunch
of stuff laying around in there that you don't need
and nobody wants. And if you end up dying with
that big house and all the crud that's in it,
that can create a whole other set of burdens for
your kids, Like, what are we how are we going
(23:51):
to get rid.
Speaker 2 (23:52):
Of all this stuff?
Speaker 1 (23:53):
Yeah?
Speaker 3 (23:53):
I always think back to seventh grade chemistry over at
s Ainty Nation's on there on the west side when
I think about this aas just element. One of the
characteristics of a gaseous element is that it expands to
fill the container it's in. And I got news for
you about so do we If I have a big house,
I'm gonna fill it with stuff I probably don't need,
but I got the room for it.
Speaker 2 (24:10):
So why not.
Speaker 1 (24:12):
You're listening to Simply Money, presented by all Worth Financial
Lumbob Sponsller along with Brian James. Let's get into taxes
and numbers a little bit. Brian, what are some of
the benefits in addition to unburdening yourself with the huge
house and all the stuff that's in it, Let's talk
about tax planning opportunities if you decide to make a change.
Speaker 2 (24:30):
Yeah.
Speaker 3 (24:31):
So, one of the things that most people are comfortable
is the concept of well, if I own something anything
a stock, a mutual fund, collectibles, crypto, whatever, if I'm
gonna sell it at a gain, then the irs is
going to come sniffing around for some taxes, and that
is true most of the time, but not in this case.
So if you're sitting on a house that has a
good chunk of equity built into it and you there's
(24:51):
some rules you gotta follow. But basically, with the moment
you downsize that home to a smaller house, you will
have incurred. Again, you can always roll the forward when
you're buying a bigger house, that's never a thing. But
when you are, by buying a smaller house, you get
a one time, lifetime exemption where you can take up
to a two hundred and fifty thousand dollars gain if
you're an individual a half million dollar gain per couple, uh,
(25:14):
and you can avoid paying any capital tax capital gain
taxes on that at all. And again this is specific
to a house. You have to have lived in it
for two of the previous five years and that right,
there's no flipping of property here in the short term
has to be really be your house, and so there's
no poops you got to jump through there. But the
point is you can get out from under that home
and avoid capital gain taxes.
Speaker 2 (25:33):
Yeah, one more thing to throw out there. If you're
if you're thinking.
Speaker 1 (25:36):
And we're not trying to sell people on, you know,
liquidating their home. But a lot of times people I
think they want to make a change, they just don't
know how to go about it. You know, you talked
about the tax implications. One other thing, just from an
emotional and lifestyle standpoint is test it out. Go rent
something that for three to six months or a year
(25:58):
that might be in your wheelhouse or where you think
you might want to live from a lifestyle standpoint and
home standpoint, and see how it works before you pull
the trigger and buy something else or sell that home
that you've been in for twenty years. Test it out,
make sure it's the right move, and then you're not
going to regret your decision down the road. Here's the
all Worth advice. Your home has served your family, perhaps
(26:22):
for decades now, it's time to ask is it's still
serving you. Coming up next, how a retirement time machine
can keep you from making bad financial decisions. You're listening
to Simply Money presented by all Worth Financial on fifty
five KRC the talk station. You're listening to Simply Money
(26:46):
presented by all Worth Financial. I'm Bob Sponseller along with
Brian James, Do you have a financial question you'd like
for us to answer. Well, there's a red button you
can click while you're listening to the show right there
on the iHeart app. Simply record your question and it
will come straight to us. We all want to know
what retirement will look like, but most of us are
(27:07):
making choices today without fully understanding the future impact at all.
What if you could climb into a time machine, Brian
and see the results of your decisions fifteen to twenty
years down the road. Wouldn't that be fun?
Speaker 2 (27:21):
Yeah? This is really an important part of financial planning.
Speaker 3 (27:24):
So I think a lot of people get hung up
on the idea that you know that I don't know.
I can't predict the future. I don't know what's going
to happen. Therefore I shouldn't bother making any decisions right now.
And that impacts things from how much should I be
saving my four?
Speaker 1 (27:36):
Oh?
Speaker 2 (27:36):
And okay, when do I turn on my Social security?
Speaker 3 (27:39):
Can we afford to take this big vacation, or you know,
retire at a certain time or whatever?
Speaker 2 (27:43):
It's never about right now.
Speaker 3 (27:45):
Most people are able to make the decision that they
want and do what their gut tells them they want
to do right now, but we can't pull the trigger
because we cannot see fifteen twenty years into the future.
So let's go through some mathematical examples here to kind
of help people understand what this is about. First, we'll
take a min Mike is young guy, he's established in
his career, married, he's got a couple kids, brings in
one hundred and fifty thousand dollars a year. Mike's big
(28:07):
question this is we get this all the time. Am
I putting enough away in my four to oh one K?
And the answer to that is, well, what are you
trying to accomplish with it? Are you one of these
fire people you know, financial independence, retire early? Well, then
the answer is put as much as you can possibly
afford and not mess up your current bills. Or are
you somebody who wants to live a certain life style.
You're just trying to make sure you're putting away a
minimum of enough. So Mike right now is putting ten
(28:28):
percent into his four oh one K.
Speaker 2 (28:29):
That's pretty average. That's pretty pretty standard.
Speaker 3 (28:30):
We try to get everybody to double digits and then
you'll be in the ballpark of OK. But he's wondering, well,
what if we sacrifice some things now and instead of ten,
I put twenty percent in and my pay drops, my
take on pay drops now, but at the same time,
I'm putting away more money. So his original plan, Bob,
if he's putting away ten percent and we get a
seven percent annual return, right that is that's kind of
the Goldilock zone.
Speaker 2 (28:51):
That's not too high, not too low.
Speaker 1 (28:52):
It's not unreasonable, good balance portfolio, long term, not super responsible,
responsible return of something.
Speaker 3 (28:59):
Yeah, now forty guy could be more aggressive. That's a
little bit of a different story. So we're just trying
to keep the number simple. So if Mike does that,
he works for twenty five years and now he's got
roughly nine hundred thousand dollars in today's dollars, that's a
nice pile. He's doing sixty five and he's sixty five,
so he's forty.
Speaker 2 (29:13):
Now we did this for twenty years. What's the difference.
Speaker 3 (29:16):
So he right now could generate about maybe a reliable
fifty thousand dollars a year worth of income off of that.
On top of his he'll have SoC security and some
other things as well, and that's pretty good, but it
might limit them. They may maybe back off on the travel,
or maybe there's not as much going to the grandkids
the rest of the family. So let's look at it again. Mike,
who is again now forty, decides, you know what, let's
(29:36):
forego some of the take home pay. I'm going to
bump to twenty percent. What does that result in now
putting twenty percent of his salary away for twenty five years,
now he's got one point eight million.
Speaker 2 (29:46):
This is just math. This is the snowball effect. You know.
Speaker 3 (29:49):
The bigger the numbers, the larger the snowball gets. And
this really starts to change the game because now we're
talking ninety thousand dollars in sustainable retirement income. Again that's
in addition to Social Security. All that stuff is back
on the table. Retiring earlier, taking the bigger trips, helping
the grandkids, all of it's back.
Speaker 1 (30:05):
Well, and we we we need to talk about one thing,
and I'm going back in time, you know, reverse time machine.
Remember Mike's forty and he has two kids. Uh, those
two kids cost money. So Mike's probably right in the
middle of travel, sports, music lessons, you know, ballet lessons,
all that stuff. He's probably saying, yeah, Bob and Brian,
(30:26):
it'd be great to put twenty percent of my income away,
but I got bills, you know, to cover today, So
it is a balancing act. It's easy for us to
pull out a calculator and say, yep, you could have
one point eight million dollars if you save all this money.
I think the point we're trying to make is at
least run some numbers and just don't hope all this
(30:47):
works out at age sixty five, seventy seventy five. Run
some numbers when you're early in your early forties, and
then you can make some informed decisions on hey, if
I sacrifice a little bit, now, here's the benefit that
it's going to pay down there.
Speaker 3 (31:01):
And as a financial advisor, I would say to Mike, yes,
that's exactly correct. You've got stuff screaming for money now.
But I would say, Mike, do you know your own worth?
You've been at your job for a couple decades now,
and you're a loyal guy and so forth. Are you
sure you're being paid what your experience says your worth?
Have you looked at other opportunities out there? Have you
talked to your bosses about you know, where you are.
So sometimes you can simply increase what's coming in at
(31:22):
the top, then you can find extra dollars. But again
that comes back to knowing what your value is and
not wasting a bunch of time getting underpaid.
Speaker 1 (31:28):
You're listening to Simply Money, presented by all Worth Financial
on Bob Spon Seller along with Brian James. Brian introduced
us to Lisa. Let's look at another test case here.
Speaker 3 (31:38):
Okay, so a little bit of a different situation. So
Lisa's got she is a little bit nervous, and so
she's got a half million dollars that she has put away.
We don't know where it came from. Of course, maybe
she inherited it. She just let it build up over time.
This is not retirement money, but it's just sitting in
a money market fund earning about three percent. So she's
got about thirteen years until retirement, which means at that
(31:58):
three percent good safe rate, that's going to grow to
about seven hundred and twenty five thousand dollars. And she's
also in her retirement account, she's got an extra two
fifty so now she's got about nine to seventy five total,
and that's not terrible. But she's drawing down that principle
pretty quickly, and so mathematically Lisa will be out of
money by the time she's eighty or thereabouts. So let's
do this again. Let's say that she takes that half
(32:21):
million and doesn't buy into the notion that the stock
market could go poof tomorrow. I always love that argument, Bob,
where people so well the stock market it goes down
because so and so lost all his money. I'm looking
at the S and P five hundred right now, it
still exists, Kroger is still open, P and G is
still open. Stock market doesn't go away. So if she
puts it in a conservative balanced portfolio, that would earn
about six and a half percent by average on by
(32:42):
about eight sixty five. Now, her half million is one
point one million dollars at her existing two fifty to that.
Now she's retiring with a net worth of a one
and a half million dollars. That is a big difference
between scraping and by just paying the bills and having
a nice, comfortable life.
Speaker 1 (32:55):
Well, and it's a huge change. And the nice thing
is it didn't require any sacrifice. She didn't have to
earn more money. She didn't have to cut back on
her current spending. All she had to do was change
her investment strategy and be open to something that has
worked for decades and decades and decades, and just take
advantage of what the markets give you over a long
(33:16):
period of time. And again, she didn't get an extra
twenty years to save her money. She didn't win the lottery.
She just made smarter, more intentional choices now in order
to get those huge dividends down the road with making
no other changes in her lifestyle. Here's the all Worth advice.
The future isn't a mystery. Oftentimes it's a math problem,
(33:38):
and the earlier you solve it, the better your retirement
story will probably end. You're listening to Simply Money presented
by Allworth Financial on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial
on Bob Spuntseller along with Brian James and Brian on
(33:59):
My two I'm gonna give you my two cents here,
just another story on this whole Should I switch to
a different house scenario and we talked about a couple
of them during the prior segment. I'm gonna share one
that I've run across more often than not, and I
want to spend a few minutes on it, get your take.
Speaker 2 (34:16):
On it in a story time with Bob's bondsor story time.
A lot of times people say, hey, Bob, we want
to downsize.
Speaker 1 (34:24):
We want to sell our big house and we want
to buy a ranch with everything on the first floor
in a big great room. And so we're gonna sell
our four or five bedroom house. We're gonna pocket all
that money, and we're gonna be able to go out
and get this beautiful ranch that has everything on the
first floor, and that'll solve all our problems going forward.
(34:44):
What they find, what I find oftentimes, is they have
not gone out and looked at the cost of this
ranch home. Factored in the part that everybody wants a
ranch home with the main bedroom and bathroom on the
first floor in the big great room, and those houses
cost a lot of money, and when people go out
and start looking at it, they find that they're really
(35:06):
not going to save any money. And oftentimes by the
time they fix up that ranch house, they're looking at
spending more money than the what their current house is worth.
And it was they rationalized making a decision quote unquote downsizing,
and they didn't really downsize at all.
Speaker 2 (35:25):
Have you ever seen that one come down? The Absolutely?
Speaker 3 (35:27):
And I think this is a big supply and demand
discussion because there's tons of You can drive anywhere around
Cincinnati and see new subdivisions going up.
Speaker 2 (35:33):
How many of them are full of ranch homes? Right?
Speaker 3 (35:35):
And I'm not referring to the ones where are all
patio homes retirement type communities.
Speaker 2 (35:39):
A lot of people aren't quite ready to take that
step yet.
Speaker 3 (35:41):
They want a ranch home in a more traditional neighborhood,
but those don't exist anymore because the builders can't make
as much to build them.
Speaker 1 (35:46):
Yeah, and here's the point I'm trying to make here.
Count the cost and take your time before you delve
into this. Oftentimes, if you spend a little bit of
money on an architect and take your existing four bedroom
home with the master bedroom bath on the second floor
and convert your first floor to accommodate all that, you
can find that you can spend less money staying put,
(36:08):
putting a little money into that is existing home, staying
in that neighborhood that you love and have been there forever,
and really win as opposed to just making a rational,
short term decision that you might be surprised at how
much money and aggravation it costs you.
Speaker 3 (36:24):
Yeah, I've had some clients go through this where and
I joke with them, and there's more than one where
they almost financially speaking, built a house inside of a house.
They spent a significant amount of money improving their place
for this exact reason, but it prevented them from having
to buy a whole new place and incurring those expenses.
So even though it was significant to reconfigure their house
to something that would make them happy, it wasn't near
what a brand new house would cost.
Speaker 1 (36:44):
Well, and a lot of people like all that first
floor stuff, the master bath, the master bedroom, the great room.
And if you do take the time to reconfigure a
current home, if you stay in it and your heirs
do decide to sell it down the road, they sell
it a lot quicker because it's been fixed up the way,
you know, to meet that supply and demand that we
talk about.
Speaker 2 (37:04):
All right, thanks for listening.
Speaker 1 (37:05):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station
Tonight, why financial flexibility is the new financial freedom. You're
listening to Simply Money present up by all Worth Financial
on Bob Sponseller along.
Speaker 2 (00:15):
With Brian James.
Speaker 1 (00:17):
We've all heard the American dream save enough money so
you never have.
Speaker 2 (00:21):
To work again.
Speaker 1 (00:23):
But what if that's the wrong goal. Today we're flipping
that script because financial flexibility, Brian, might be the new
American dream.
Speaker 2 (00:33):
So yeah, so things have changed.
Speaker 3 (00:35):
Financial freedom used to be here's my retirement date and
I'm going to mark all these ex's on the calendar
until it's time to no longer go into the office
ever again, and I'm just going to spend the rest
of my life on the beach. But now people are
feeling a little bit differently, and we hear this every
day here at all Worth as we're sitting down with
clients and prospective clients talking about financial planning. And it's
people who come in and they say, you know, I
(00:55):
thought I wanted to just do a bunch of nothing,
but now I know. So I got family members, I
got friends who have retired and have gone ahead of me,
and sometimes they're just not as happy because they don't
have that sense of purpose anymore. So people are thinking
a little bit differently about something called financial flexibility.
Speaker 2 (01:10):
So you know, tend you're a.
Speaker 3 (01:11):
Family with maybe one to five million dollars, and it
might be a more realistic, fulfilling target here. Flexibility means
you don't really have to stop working. You just choose
how you work when and with whom. And a lot
of times this conversation, you know, comes in the form of,
let's talk about what you might do when when this
particular job, this particular career is no longer necessary. Maybe
you're not ready to completely hang it up and let
(01:33):
the dust collect on you, but maybe it's time to
seek a new job in a spot where, you know,
where it's not the salary that matters, and maybe it's
not the benefits because you've already kind of won that game,
you know, but it might be something where you're still
bringing a little bit in come to help bridge the
gap during retirement, but you're not quite ready to completely
hang it up and have no reason to get out
of that anymore.
Speaker 1 (01:53):
Yeah, I'm finding I'm having this discussion more and more
with folks that are retiring today than I did with
folks that I started working with twenty to thirty years ago.
Speaker 2 (02:03):
I agree.
Speaker 1 (02:04):
It used to be Hey, I'm fifty eight, fifty nine,
show me how I can get out of there. Now
I can't wait to get out of there and never
go to work anymore.
Speaker 2 (02:13):
And that's not the case anymore.
Speaker 1 (02:15):
A lot of folks, even in their late sixties and seventies,
they want they want a way to do something. They
want to stay involved. They got a lot of experience
in acquired wisdom and value to add to whether it's
the company they worked for for thirty or forty years,
or nonprofits or serve on ministry boards, anything like that.
(02:37):
They just don't want to be chained to a sixty
to seventy hour work schedule. And I'm finding that companies
and institutions are way more flexible than maybe they ever
have before in allowing these folks to be involved and
do some things because it really is a win win
for both parties. Are you finding that with any of
your clients, Brian.
Speaker 3 (02:58):
Absolutely, And one of the big companies around here that
does this is General Electric, so they seem to be
the gold.
Speaker 2 (03:03):
Stand exactly the company I'm thinking of exactly.
Speaker 3 (03:06):
Yeah, there's a conga line of people who have their
retirement dinner and then the very next week are coming back.
Speaker 2 (03:11):
As a as a.
Speaker 3 (03:13):
Consultant or doing whatever they do, and that's just a
well worn path. It's almost I can't remember the last
time I had somebody tell me that they were ready
to retire from General Electric and they had zero intent
on taking that step.
Speaker 2 (03:24):
So it really seems like a good move. Though.
Speaker 3 (03:26):
Those seem to be some pretty happy people because they
get to slough off some of the duties that they
had before. They feel they they do. They do feel
entitled and able to say no to things, whereas when
you're when you're working and you're you're in the grind,
when you're their thirties, forties, fifties, you're just part of
the machine and so forth. But those folks do seem
to have a little more flexibility and they do seem
to be a little more relaxed. And it's a great
baby step into retirement, and I think that can be
(03:48):
a great thing for anybody, just the idea of, you
know what, I'm going to start to back off a
little bit, rather than that cold water shock of today.
I get out of bed and I go for my
last day of work, and then I have my retirement dinner,
say goodbye to everybody, and then tomorrow what am I
going to do? That can be a really, really scary thing.
So these sort of baby steps into retirement can be
very powerful.
Speaker 2 (04:06):
Well, let's talk.
Speaker 1 (04:06):
About a different way of maybe creating those baby step
steps into something else.
Speaker 2 (04:11):
And here's what I mean by that, Brian.
Speaker 1 (04:13):
We've just kind of talked about maybe the ge executive
that work fifty sixty hours a week, they want to
stay involved, but they want to do it on a
ten to fifteen to twenty hour a week basis. We've
got some other folks that say, I want to make
a complete different career path decision. Maybe I worked in
it or in engineering or what have you for thirty
(04:34):
to thirty five years.
Speaker 2 (04:35):
For thirty thirty five years.
Speaker 1 (04:37):
I want to open up a wood shop, or I
want to work with orphan children in Zimbabwe, I want
to do something like that. I'm seeing more and more
of those conversations come up. Let's talk about what we
need to be doing as we think about those dreams
and goals and actually make it come into fruition or reality.
(04:59):
What do we need to do in terms of planning
and getting your finances in.
Speaker 3 (05:03):
Order right So what you're looking at there is if
you want to be able to figure out, you know,
what you can get away with here. First of all,
you got to make sure that you understand your current
situation right, So you have a current budget, right, whatever
it is that you may not be paying attention to it.
You may not be putting money in envelopes or making
sure that we only spend exit the grocery store or whatever,
but you do have some kind of a lifestyle out there,
presumably if you if you are unaware of your budget,
(05:25):
then you are either a very very very financially stable
person where you just know that you're bringing in more
than you're spending, or you're a complete train wreck. So
we'll assume that we're talking to the people who you
kind of have things you know on autopilot and they're okay,
But you need to look really in depth at that
to see what that actually is, because you got to
figure out what is my minimal, what's a bare minimum
(05:45):
I need to get going here? And a good easy
way to do that is to simply take a look
at your take home pay. This is you don't need
to fill out a spreadsheet full of here's my magazine subscriptions,
and here's what we spend at Applebee's on the weekends
and whatever. You can simply look at your take home
pay and figure out what's going where. Top line is,
here's what hits the bank from all of our resources,
from all of our income sources at the beginning of
the month, and then here's where it goes. This goes
(06:06):
to the mortgage that'll be gone in two three. However,
many years we always carve out and put a little
bit into savings. Maybe that's a goal you don't have
to have anymore. This is going to college tuition or
college savings right now, that's a finite goal, and so forth.
Once you knock off all those finite things that have
a limited lifespan, then you will be down to the
money you just spend to be you on a monthly basis.
Speaker 2 (06:25):
That is your target.
Speaker 3 (06:26):
Start with that, and then figure out how can I
replicate that income from my existing sources. And therefore, here
is a gap I need to make, and I can
promise you if you're one of these stable people, it's
probably a lot less than you think it is.
Speaker 2 (06:37):
Most of the time we come up with happy surprises
in those.
Speaker 1 (06:40):
Discussions Yep, you're listening to simply Money presented by all
Worth Financial. I'm Bob Sponseller along with Brian James and Brian.
This is where having a really sound tax strategy comes
into play, and we talk about this often. This is
where having different buckets or sources from which you could
take income, diverse sources of income I RaSE four oh
(07:02):
one k's after tax accounts, WROTH accounts, blending an income
strategy from those different sources. That's where we can really
create some nice tax efficiency of that gap income as
you call it, and then really make this thing hum
in the later years.
Speaker 3 (07:20):
Yes, Now this is where things get more complicated. Right,
So when for people who have worked very hard and
built built their plans and created several different resources. Right,
you've got social security history, you've got pre tax dollars
in your four oh one K four or three B.
You might have WROTH in the mix. Maybe you've got
some taxbos to all this other stuff. Then everything gets
harder when you get you hit a point where you've.
Speaker 2 (07:40):
Got a lot of resources.
Speaker 3 (07:41):
All those resources are labeled and painted differently with regard
to taxes. There are going to be taxed differently. When
we are working slaves. You're paying ordinary income taxes.
Speaker 2 (07:49):
That's it. You got to work.
Speaker 3 (07:50):
Somebody gives you a check, You're going to get taxed
at the ordinary income rates. Period, end of story. When
you've created all of these different resources, now you've got
a choice to make. And congratulations, things just got harder,
and Bob and Brian just got a little more job security.
Because there are any number of ways you can combine
these things into an income stream that will keep you stable.
But each one of them is going to have its
own pros and cons. So let me throw out one
(08:12):
thing though, for somebody who is thinking about this. I
want to make sure that everybody knows of something called
the rule of fifty five. Remember the rule of fifty five? Bob, Yes,
so what we do there? I hate those rules because
everybody's different. You can't apply this rule of whatever to everybody,
because everybody's situation is different.
Speaker 2 (08:33):
But I don't want to take you off. That's okay.
Speaker 3 (08:35):
And I threw this softball there and it was a
little I almost hit you in the helmet. Sorry about that,
But no, the rule of fifty five, this one does
apply to everybody, which is nothing more than when you
are fifty five years old. You get to pull money
out of your four oh one K without paying penalties.
So if you are a person who is considering an
earlier retirement and one of your resources is pre tax
dollars in your four oh one K, then know that
(08:57):
you can pull money from the four oh one K
without only paying income taxes. No ten percent penalty, no
early withdrawal penalty. That does not apply to IRA. You'll
notice I said the word four oh one K six
or seven times in that whole exchange there. The IRA
age is fifty nine and a half. That's what most
people think everything is. But if it's a four oh
one K, it's fifty five. You can draw on that
(09:18):
without penalty.
Speaker 1 (09:20):
Yeah, and let's not ignore the whole healthcare question, because
what we're talking about here is these bridge years. You know,
if you want to retire early and transition into something else,
and let's face it, if you go from a for
profit business into a nonprofit a ministry something like that,
the benefits often are not as great, and you got
to sometimes self insure yourself between when you retire from
(09:43):
your company job and when you get to medicate. We
got we got to help people transition and get you know,
good sound medical coverage, and uh, sometimes.
Speaker 2 (09:52):
People overlook that.
Speaker 1 (09:53):
I know, I heard of one lady yesterday who I mean,
she could work anywhere, she's brilliant, but she just decided
to go work part time at Costco, working in some
department of Costco that sold widgets or garden equipment or
something that she was really interested in solely to get
over there for about ten hours a week, work part time,
(10:15):
but get healthcare coverage. Between her late fifties and when
she could go on Medicare, she's.
Speaker 2 (10:23):
Totally happy with her life.
Speaker 1 (10:25):
She goes in there, rolls in for her ten hours
a week, she does something completely different, she's out of there,
but she's got that healthcare coverage and good health care
coverage to bridge that gap to sixty five.
Speaker 3 (10:36):
Yeah, and I think that's a great outcome here. I
want to throw out one caveat something to keep in mind,
and I'm going back to this goes back twenty thirty
years when I first started in this industry and home
depot and lows, the big box hardware stores were kind
of new and there were a lot of always tend
to be older men who want to retire from my job.
I love working with my hands, so I want to
help people do that. That sounds like fun. So I'm
(10:57):
going to go be an hourly guy at home Depot
and Lows. And then you still see this every now
and then, But these are hardworking people who have their
stuff together and they will eventually recognize that, hey, this
this store isn't running as as efficiently as it could.
Speaker 2 (11:09):
I'm going to fix it.
Speaker 3 (11:10):
I'm going to do things, and all of a sudden,
management notices and you get a promotion, and then that
happens a couple three times, and all of a sudden,
you have a new career that you didn't want. You
only wanted to help people with their hardware projects a
few hours a week. So just be careful of that trap.
Speaker 1 (11:22):
That's good. Here's the all Worth advice. The question isn't
when can I retire? It's when can I start living
the life I want to live? Coming up next, why
clinging to old investments might be the one thing holding
your whole retirement plan back. You're listening to Simply Money
presented by all Worth Financial on fifty five KARC the
(11:43):
talk station. You're listening to Simply Money presented by all
worth financial on Bob Sponseller along with Brian James. Hey,
if you can't listen to Simply Money every night, subscribe
and get our daily podcast. You can listen in the
following morning during your commutal work or at the gym.
(12:04):
Just search Simply Money on the iHeart app or wherever
you find your podcasts. Straight ahead at six forty three.
The lessons you can learn from going into a retirement
time machine, Brian, that's gonna be that's gonna be kind
of fun, all right.
Speaker 2 (12:20):
We see it all the time.
Speaker 1 (12:21):
Someone walks into our office with a portfolio they built
over twenty or thirty years, and it's filled with all
kinds of stuff, Brian. The stocks they love, mutual funds
from theirfore when k days, maybe even some company shares
from a past employer. And when we sit across the
desk and ask them why they own these certain things,
(12:42):
the answer is often well, I've just always had it,
or it's done well for me, or even it's part
of my story.
Speaker 2 (12:50):
What do you say to those people, Brian?
Speaker 3 (12:52):
You know, Bob, I'm going through this literally today the
other day and through this weekend, just in a slightly
different area of life and I'm referring to my garage.
I have a lot of unfinished little projects out there
that they're all sitting in the garage about maybe eighty
ninety percent state of completion. And I'm sure whatever they
are where it was important to me the day that
I was working on it, but I've completely forgotten about it,
(13:12):
and it's just they're just kind of there. And so
that's a lot of times that's what happens to people,
and frankly, that's what drives people in the door because
eventually they step way back and finally look at the
forest instead of the individual trees, and they go, what
is all of this stuff?
Speaker 2 (13:25):
What does it mean to me?
Speaker 3 (13:26):
And I've realized and they realized, I'm not even that
interested really in maintaining this stuff anymore. And Bob, that
defines me. I can't remember the last time I changed
my oil in my own my lawnmower, but it still
starts the day that it doesn't start. All probably high professional,
but anyway, So, yeah, the people come in and they've
got this grab bag of just stuff that they some
of it they inherited, some of it they bought because
they were interested in investing a while ago.
Speaker 2 (13:47):
Or something like that.
Speaker 3 (13:48):
But they've never figured out exactly what role does all
this money play when they're trying to knit it all
together into something that can help them retire or accomplish
their financial goal.
Speaker 1 (13:55):
Yeah. The point we're trying to make here is your
investment portfolio. It's not a scrapbook. It's not a half
rebuilt Harley Davidson in your garage with a bunch of
tools laying around.
Speaker 3 (14:08):
Or a family photo album because dad, grandpa, mom used
to work at this company and that's why we all
own the stock, even though none of us pays attention
to the company anymore.
Speaker 2 (14:15):
Yeah, and you do need to change the oil on
your lawnmower, but not yet, not yet. I don't it
started this weekend, Bob.
Speaker 1 (14:21):
You'll be surprised when that day comes, all right. The
point with this whole collection of investments is it is
a tool. You know, it should be built to do
a job. And if it's not doing that job anymore,
meaning you're consolidated, coordinated investment and tax strategy, it might
be time to let some of those things go. And
(14:41):
letting some of those components of your portfolio go, it
doesn't mean you were wrong before it just means you're evolving.
And we talk about all the time investment. This investment
business and that particularly the tax benefits and tax opportunities
around investing has changed in a evolved dramatically over the
(15:02):
last ten to fifteen years. And we find a lot
of times people aren't even aware that some of these
strategies even exist.
Speaker 3 (15:09):
Right, So let's take an example here, and I think
you know, having been in this industry both of us here, Bob,
for several decades.
Speaker 1 (15:16):
Now.
Speaker 3 (15:16):
One of the big stories in the stock market over
the last several decades has been Apple throwing out as
an example.
Speaker 2 (15:22):
Because Apple's great companies, strong company.
Speaker 3 (15:23):
They are not going away, but not quite the shining
beacon that they that they once were. Steve Jobs is gone.
Everybody has an iPhone. Things just don't seem to be
innovating the way they used to. But if you've owned
Apple for a few decades, then you have a pretty
good chunk of stock. And also you probably have some
notion that if you were to sell it, if it's
a taxable account, you were to sell it, you're going
(15:44):
to pay taxes. Most people go, oh, I just can't
sell it. I'm gonna have to pay taxes. I can't
deal with that, don't want to have to think about it.
Speaker 1 (15:49):
Well, and then that whole portfolio attachment things comes into play.
Speaker 2 (15:53):
And here's what I mean by that.
Speaker 1 (15:54):
We love I mean we love staring at a statement
or an online you know, portfolio summary, and we love
seeing that four hundred percent gain every day. It proves
to us emotionally that we were right. We bought a
stock and it went up and we made a bunch
of money. And you just sit there at that and
(16:16):
stare at that big percentage gain and say, this is done.
Speaker 2 (16:19):
Great for me? Why would I ever sell it?
Speaker 1 (16:22):
I you, But a lot of people don't look at
what the performance of that nice stock position is done,
maybe in the last three to five years, as opposed
to a diversified portfolio. Do you ever find that?
Speaker 3 (16:37):
I do, absolutely, And then I'll go back to my
garage full of projects. Sometimes you have a statement full
of projects that had a purpose at one point in
your past. So so really, I think that the goal
here is Okay, now you've got something, what are you
going to do with it?
Speaker 1 (16:48):
So?
Speaker 3 (16:48):
What what could people do? Let's get into that, bob.
So if this is all money, right, these are all
financial instruments and they should somehow be supporting you otherwise
what was the point. So something you might think about
if you've got these kind of assets out there, if
you are charitably inclined and you've got appreciated stocks, then
you should look into something called a donor advised fund.
You can donate those shares to a donor advised fund.
(17:10):
You will reap the benefits of a deduction, which you
may not have anymore. Right when we swit, when the
standard deduction became a lot larger, a lot of people
lost the benefit of deducting charitable contributions. But this is
the way a donor advice one would allow you to
make a contribution now, but not ultimately have the charity
receive it until a time of your choosing. So you
(17:30):
make an irrevocable deduction, now give it to the charity
over the same two, three, four, five years you would
have intended anyway.
Speaker 1 (17:36):
Especially if you're one of those folks that's still writing
checks or putting currency into the offering plate at church,
or writing a check to chosen charities, and you're not
even able to take advantage of the much larger standard
deduction for married couples. This is a myss that we
find all the time. And it's great that people are
giving money to charity, but there's just better ways to
(17:58):
do it.
Speaker 2 (17:59):
And to your point, you can kind of scale.
Speaker 1 (18:01):
Out of that large concentrated position and do it on
a much more tax efficient basis. Another thing that we've
talked about recently and it's worth mentioning here again is
direct invest direct indexing. There are strategies where you can
exchange that low cost basis stock for a fully diversified
portfolio stocks and not have to take the tax hit.
(18:25):
It's a wonderful strategy.
Speaker 3 (18:26):
Yeah, and that's a way too Again you're putting diversification
into your portfolio.
Speaker 2 (18:30):
So let's give a quick example here. We're here in Cincinnati.
Speaker 3 (18:32):
So let's say one of us has a bunch of
P and G stock, another one of us has a
bunch of GE and other ones has a bunch of
Kroger and keep adding to the list. Well, if we
sell those because we want to diversify, then yeah, we're
gonna incur capital gain because we sold the stock and
took the game. However, if we all contribute in kind
those shares to another fund and then we redistribute shares
of that fund to ourselves. Now we have a more
(18:53):
diversified portfolio, and no one has actually executed a sale
resulting in a capital gain. Well, that's called an exchange fund,
and it's another way to deal with the risk of
a position that's got a little too big.
Speaker 1 (19:06):
Yeah, So it comes down to when to reevaluate. And
the way I look at this is we all have
to ask ourselves. Does this investment that I'm holding still
align with my current needs? Is it helping me hit
my long term plan? Or am I just holding it
because I'm afraid to let it go? Or I don't
want to walk out into that garage and clean up
(19:26):
all the stuff laying on the floor.
Speaker 2 (19:28):
Starting to sound like my spouse, Bob, I got one
of those two.
Speaker 1 (19:32):
Hey, if you don't know the answer, that's the sign
it's time for a review. Whether it's an old mutual fund,
a legacy annuity, or a chunk of employer stock, you
owe it to yourself to reassess, and reassess that with
a good fiduciary advisor who can help you look at
your various options. Here's the all Worth advice. Your money
isn't your identity. It's a tool to build the life
(19:55):
you want today, tomorrow, and into retirement.
Speaker 2 (20:00):
Coming up next.
Speaker 1 (20:00):
It's the most emotional and most overlooked retirement decision, and
we're going to get into it.
Speaker 2 (20:06):
Coming up next.
Speaker 1 (20:07):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station. You're listening to
Simply Money presented by all Worth Financial on Bob's sponsller
along with Brian James. We talk a lot about how
to downsize your portfolio, but today we want to talk
(20:30):
about downsizing something far more emotional. And Brian, we run
into this often with clients, the whole topic of downsizing
your home.
Speaker 3 (20:41):
Yeah, so this comes up in a lot of ways
during financial planning. It comes up in a form of,
you know, people will realize that, you know what, we
don't do we want to be in this house anymore.
The kids are up and out and now it's just
a bunch of bedrooms I gotta clean and that kind
of thing. But what I find, Bob is frequently people
who have come to that conclusion will decide to move,
and then they move into a house that is the
(21:01):
same size.
Speaker 2 (21:02):
I think we get into our.
Speaker 3 (21:03):
Heads that well, if I've always lived in a five
bedroom house, that's just kind of what I need with
just you know, I don't want to it's too scary
to go smaller. But then inevitably we'll find people, you know,
talking about how they bought too much house and heaven forbid.
You know, a lot of times there winds up being
a mortgage against it. Don't be one of those people
who retires and then puts a thirty year mortgage in
place for a bigger home that you you're just gonna
fill with stuff that someday you're gonna have to drag
(21:24):
your good will.
Speaker 2 (21:25):
Well.
Speaker 1 (21:26):
We also talk with families that are struggling with Hey,
they deep down know that this big house that they
raise their kids in and where they've got a ton
of memories and it's been paid off for years, and
they kind of swore to each other they'd never leave
the house. You know, they just feel like they can't
leave because of all these memories. They want to have
(21:47):
a place where their kids to come back, all good stuff,
but sometimes those maintenance costs, taxes, upkeep, it just becomes
a huge burden to them that prevents them from traveling
and doing some other things that they might otherwise like
to do if they didn't have this.
Speaker 2 (22:04):
Huge house to take care of it.
Speaker 3 (22:05):
And Bob, I think this is where some war stories
from our financial planning tables here at all Worth can
come in. So what I'm speaking about is when we've got,
you know, the heirs of their parents. My mom and
dad have passed away, it's time to settle the estate,
and it's time for everybody has received their distributions, and
the very first thing that they wind up talking about
is we're going to get rid of this house.
Speaker 2 (22:26):
Mom and Dad were convinced that we wanted it. We
just didn't know.
Speaker 3 (22:30):
None of us, the siblings, nobody wanted this house because
we've all got our own houses and we're happy where
we are. I think people tend to convince themselves that
I have these warm, wonderful memories and this isn't to
take any of that away, that is important stuff, But
I have these warm, wonderful memories in this structure. Therefore
it must be maintained and passed down. And your kids
have those warm wonderful memories too, and they know it's
important to you. They may not be being upfront with
(22:52):
you as to whether they really want this house. Most
of the time, one of the very first calls that
happens during the settlement of a state is a real
estate agent because we can't let that house sit empty.
Speaker 2 (23:00):
We got to deal with it.
Speaker 3 (23:01):
Something's going to go wrong with it if nobody's paying
attention to it, and we're going to eat property taxes
and expenses as long as we have it, so they're
going to sell it relatively quickly. So you know, we
make make decisions based on that knowledge as you move
forward on your own plan.
Speaker 1 (23:14):
Well, the other thing to keep in mind, Brian, is
the larger the house and the longer you've lived there.
And my wife and I went through this personally, you know,
about four years ago, the more accumulated crap you've got
in that house to use your garage and tool example.
Speaker 2 (23:30):
I mean, you stay in.
Speaker 1 (23:31):
A house for seventeen, eighteen twenty years, you raise a
few kids there, and all you got a whole bunch
of stuff laying around in there that you don't need
and nobody wants. And if you end up dying with
that big house and all the crud that's in it,
that can create a whole other set of burdens for
your kids, Like, what are we how are we going
(23:51):
to get rid.
Speaker 2 (23:52):
Of all this stuff?
Speaker 1 (23:53):
Yeah?
Speaker 3 (23:53):
I always think back to seventh grade chemistry over at
s Ainty Nation's on there on the west side when
I think about this aas just element. One of the
characteristics of a gaseous element is that it expands to
fill the container it's in. And I got news for
you about so do we If I have a big house,
I'm gonna fill it with stuff I probably don't need,
but I got the room for it.
Speaker 2 (24:10):
So why not.
Speaker 1 (24:12):
You're listening to Simply Money, presented by all Worth Financial
Lumbob Sponsller along with Brian James. Let's get into taxes
and numbers a little bit. Brian, what are some of
the benefits in addition to unburdening yourself with the huge
house and all the stuff that's in it, Let's talk
about tax planning opportunities if you decide to make a change.
Speaker 2 (24:30):
Yeah.
Speaker 3 (24:31):
So, one of the things that most people are comfortable
is the concept of well, if I own something anything
a stock, a mutual fund, collectibles, crypto, whatever, if I'm
gonna sell it at a gain, then the irs is
going to come sniffing around for some taxes, and that
is true most of the time, but not in this case.
So if you're sitting on a house that has a
good chunk of equity built into it and you there's
(24:51):
some rules you gotta follow. But basically, with the moment
you downsize that home to a smaller house, you will
have incurred. Again, you can always roll the forward when
you're buying a bigger house, that's never a thing. But
when you are, by buying a smaller house, you get
a one time, lifetime exemption where you can take up
to a two hundred and fifty thousand dollars gain if
you're an individual a half million dollar gain per couple, uh,
(25:14):
and you can avoid paying any capital tax capital gain
taxes on that at all. And again this is specific
to a house. You have to have lived in it
for two of the previous five years and that right,
there's no flipping of property here in the short term
has to be really be your house, and so there's
no poops you got to jump through there. But the
point is you can get out from under that home
and avoid capital gain taxes.
Speaker 2 (25:33):
Yeah, one more thing to throw out there. If you're
if you're thinking.
Speaker 1 (25:36):
And we're not trying to sell people on, you know,
liquidating their home. But a lot of times people I
think they want to make a change, they just don't
know how to go about it. You know, you talked
about the tax implications. One other thing, just from an
emotional and lifestyle standpoint is test it out. Go rent
something that for three to six months or a year
(25:58):
that might be in your wheelhouse or where you think
you might want to live from a lifestyle standpoint and
home standpoint, and see how it works before you pull
the trigger and buy something else or sell that home
that you've been in for twenty years. Test it out,
make sure it's the right move, and then you're not
going to regret your decision down the road. Here's the
all Worth advice. Your home has served your family, perhaps
(26:22):
for decades now, it's time to ask is it's still
serving you. Coming up next, how a retirement time machine
can keep you from making bad financial decisions. You're listening
to Simply Money presented by all Worth Financial on fifty
five KRC the talk station. You're listening to Simply Money
(26:46):
presented by all Worth Financial. I'm Bob Sponseller along with
Brian James, Do you have a financial question you'd like
for us to answer. Well, there's a red button you
can click while you're listening to the show right there
on the iHeart app. Simply record your question and it
will come straight to us. We all want to know
what retirement will look like, but most of us are
(27:07):
making choices today without fully understanding the future impact at all.
What if you could climb into a time machine, Brian
and see the results of your decisions fifteen to twenty
years down the road. Wouldn't that be fun?
Speaker 2 (27:21):
Yeah? This is really an important part of financial planning.
Speaker 3 (27:24):
So I think a lot of people get hung up
on the idea that you know that I don't know.
I can't predict the future. I don't know what's going
to happen. Therefore I shouldn't bother making any decisions right now.
And that impacts things from how much should I be
saving my four?
Speaker 1 (27:36):
Oh?
Speaker 2 (27:36):
And okay, when do I turn on my Social security?
Speaker 3 (27:39):
Can we afford to take this big vacation, or you know,
retire at a certain time or whatever?
Speaker 2 (27:43):
It's never about right now.
Speaker 3 (27:45):
Most people are able to make the decision that they
want and do what their gut tells them they want
to do right now, but we can't pull the trigger
because we cannot see fifteen twenty years into the future.
So let's go through some mathematical examples here to kind
of help people understand what this is about. First, we'll
take a min Mike is young guy, he's established in
his career, married, he's got a couple kids, brings in
one hundred and fifty thousand dollars a year. Mike's big
(28:07):
question this is we get this all the time. Am
I putting enough away in my four to oh one K?
And the answer to that is, well, what are you
trying to accomplish with it? Are you one of these
fire people you know, financial independence, retire early? Well, then
the answer is put as much as you can possibly
afford and not mess up your current bills. Or are
you somebody who wants to live a certain life style.
You're just trying to make sure you're putting away a
minimum of enough. So Mike right now is putting ten
(28:28):
percent into his four oh one K.
Speaker 2 (28:29):
That's pretty average. That's pretty pretty standard.
Speaker 3 (28:30):
We try to get everybody to double digits and then
you'll be in the ballpark of OK. But he's wondering, well,
what if we sacrifice some things now and instead of ten,
I put twenty percent in and my pay drops, my
take on pay drops now, but at the same time,
I'm putting away more money. So his original plan, Bob,
if he's putting away ten percent and we get a
seven percent annual return, right that is that's kind of
the Goldilock zone.
Speaker 2 (28:51):
That's not too high, not too low.
Speaker 1 (28:52):
It's not unreasonable, good balance portfolio, long term, not super responsible,
responsible return of something.
Speaker 3 (28:59):
Yeah, now forty guy could be more aggressive. That's a
little bit of a different story. So we're just trying
to keep the number simple. So if Mike does that,
he works for twenty five years and now he's got
roughly nine hundred thousand dollars in today's dollars, that's a
nice pile. He's doing sixty five and he's sixty five,
so he's forty.
Speaker 2 (29:13):
Now we did this for twenty years. What's the difference.
Speaker 3 (29:16):
So he right now could generate about maybe a reliable
fifty thousand dollars a year worth of income off of that.
On top of his he'll have SoC security and some
other things as well, and that's pretty good, but it
might limit them. They may maybe back off on the travel,
or maybe there's not as much going to the grandkids
the rest of the family. So let's look at it again. Mike,
who is again now forty, decides, you know what, let's
(29:36):
forego some of the take home pay. I'm going to
bump to twenty percent. What does that result in now
putting twenty percent of his salary away for twenty five years,
now he's got one point eight million.
Speaker 2 (29:46):
This is just math. This is the snowball effect. You know.
Speaker 3 (29:49):
The bigger the numbers, the larger the snowball gets. And
this really starts to change the game because now we're
talking ninety thousand dollars in sustainable retirement income. Again that's
in addition to Social Security. All that stuff is back
on the table. Retiring earlier, taking the bigger trips, helping
the grandkids, all of it's back.
Speaker 1 (30:05):
Well, and we we we need to talk about one thing,
and I'm going back in time, you know, reverse time machine.
Remember Mike's forty and he has two kids. Uh, those
two kids cost money. So Mike's probably right in the
middle of travel, sports, music lessons, you know, ballet lessons,
all that stuff. He's probably saying, yeah, Bob and Brian,
(30:26):
it'd be great to put twenty percent of my income away,
but I got bills, you know, to cover today, So
it is a balancing act. It's easy for us to
pull out a calculator and say, yep, you could have
one point eight million dollars if you save all this money.
I think the point we're trying to make is at
least run some numbers and just don't hope all this
(30:47):
works out at age sixty five, seventy seventy five. Run
some numbers when you're early in your early forties, and
then you can make some informed decisions on hey, if
I sacrifice a little bit, now, here's the benefit that
it's going to pay down there.
Speaker 3 (31:01):
And as a financial advisor, I would say to Mike, yes,
that's exactly correct. You've got stuff screaming for money now.
But I would say, Mike, do you know your own worth?
You've been at your job for a couple decades now,
and you're a loyal guy and so forth. Are you
sure you're being paid what your experience says your worth?
Have you looked at other opportunities out there? Have you
talked to your bosses about you know, where you are.
So sometimes you can simply increase what's coming in at
(31:22):
the top, then you can find extra dollars. But again
that comes back to knowing what your value is and
not wasting a bunch of time getting underpaid.
Speaker 1 (31:28):
You're listening to Simply Money, presented by all Worth Financial
on Bob Spon Seller along with Brian James. Brian introduced
us to Lisa. Let's look at another test case here.
Speaker 3 (31:38):
Okay, so a little bit of a different situation. So
Lisa's got she is a little bit nervous, and so
she's got a half million dollars that she has put away.
We don't know where it came from. Of course, maybe
she inherited it. She just let it build up over time.
This is not retirement money, but it's just sitting in
a money market fund earning about three percent. So she's
got about thirteen years until retirement, which means at that
(31:58):
three percent good safe rate, that's going to grow to
about seven hundred and twenty five thousand dollars. And she's
also in her retirement account, she's got an extra two
fifty so now she's got about nine to seventy five total,
and that's not terrible. But she's drawing down that principle
pretty quickly, and so mathematically Lisa will be out of
money by the time she's eighty or thereabouts. So let's
do this again. Let's say that she takes that half
(32:21):
million and doesn't buy into the notion that the stock
market could go poof tomorrow. I always love that argument, Bob,
where people so well the stock market it goes down
because so and so lost all his money. I'm looking
at the S and P five hundred right now, it
still exists, Kroger is still open, P and G is
still open. Stock market doesn't go away. So if she
puts it in a conservative balanced portfolio, that would earn
about six and a half percent by average on by
(32:42):
about eight sixty five. Now, her half million is one
point one million dollars at her existing two fifty to that.
Now she's retiring with a net worth of a one
and a half million dollars. That is a big difference
between scraping and by just paying the bills and having
a nice, comfortable life.
Speaker 1 (32:55):
Well, and it's a huge change. And the nice thing
is it didn't require any sacrifice. She didn't have to
earn more money. She didn't have to cut back on
her current spending. All she had to do was change
her investment strategy and be open to something that has
worked for decades and decades and decades, and just take
advantage of what the markets give you over a long
(33:16):
period of time. And again, she didn't get an extra
twenty years to save her money. She didn't win the lottery.
She just made smarter, more intentional choices now in order
to get those huge dividends down the road with making
no other changes in her lifestyle. Here's the all Worth advice.
The future isn't a mystery. Oftentimes it's a math problem,
(33:38):
and the earlier you solve it, the better your retirement
story will probably end. You're listening to Simply Money presented
by Allworth Financial on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial
on Bob Spuntseller along with Brian James and Brian on
(33:59):
My two I'm gonna give you my two cents here,
just another story on this whole Should I switch to
a different house scenario and we talked about a couple
of them during the prior segment. I'm gonna share one
that I've run across more often than not, and I
want to spend a few minutes on it, get your take.
Speaker 2 (34:16):
On it in a story time with Bob's bondsor story time.
A lot of times people say, hey, Bob, we want
to downsize.
Speaker 1 (34:24):
We want to sell our big house and we want
to buy a ranch with everything on the first floor
in a big great room. And so we're gonna sell
our four or five bedroom house. We're gonna pocket all
that money, and we're gonna be able to go out
and get this beautiful ranch that has everything on the
first floor, and that'll solve all our problems going forward.
(34:44):
What they find, what I find oftentimes, is they have
not gone out and looked at the cost of this
ranch home. Factored in the part that everybody wants a
ranch home with the main bedroom and bathroom on the
first floor in the big great room, and those houses
cost a lot of money, and when people go out
and start looking at it, they find that they're really
(35:06):
not going to save any money. And oftentimes by the
time they fix up that ranch house, they're looking at
spending more money than the what their current house is worth.
And it was they rationalized making a decision quote unquote downsizing,
and they didn't really downsize at all.
Speaker 2 (35:25):
Have you ever seen that one come down? The Absolutely?
Speaker 3 (35:27):
And I think this is a big supply and demand
discussion because there's tons of You can drive anywhere around
Cincinnati and see new subdivisions going up.
Speaker 2 (35:33):
How many of them are full of ranch homes? Right?
Speaker 3 (35:35):
And I'm not referring to the ones where are all
patio homes retirement type communities.
Speaker 2 (35:39):
A lot of people aren't quite ready to take that
step yet.
Speaker 3 (35:41):
They want a ranch home in a more traditional neighborhood,
but those don't exist anymore because the builders can't make
as much to build them.
Speaker 1 (35:46):
Yeah, and here's the point I'm trying to make here.
Count the cost and take your time before you delve
into this. Oftentimes, if you spend a little bit of
money on an architect and take your existing four bedroom
home with the master bedroom bath on the second floor
and convert your first floor to accommodate all that, you
can find that you can spend less money staying put,
(36:08):
putting a little money into that is existing home, staying
in that neighborhood that you love and have been there forever,
and really win as opposed to just making a rational,
short term decision that you might be surprised at how
much money and aggravation it costs you.
Speaker 3 (36:24):
Yeah, I've had some clients go through this where and
I joke with them, and there's more than one where
they almost financially speaking, built a house inside of a house.
They spent a significant amount of money improving their place
for this exact reason, but it prevented them from having
to buy a whole new place and incurring those expenses.
So even though it was significant to reconfigure their house
to something that would make them happy, it wasn't near
what a brand new house would cost.
Speaker 1 (36:44):
Well, and a lot of people like all that first
floor stuff, the master bath, the master bedroom, the great room.
And if you do take the time to reconfigure a
current home, if you stay in it and your heirs
do decide to sell it down the road, they sell
it a lot quicker because it's been fixed up the way,
you know, to meet that supply and demand that we
talk about.
Speaker 2 (37:04):
All right, thanks for listening.
Speaker 1 (37:05):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station
Simply Money News
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.