Simply Money

Episode Transcript

Speaker 1 (00:07):
Tonight, why smart people still make dumb money decisions.

Speaker 2 (00:11):
You're listening to simply Money present up by all Worth Financial.
I'm Bob sponseller along with Brian James. All Right, have
you ever made a financial decision that looking back makes
zero sense even though you knew better.

Speaker 1 (00:24):
We've all been there. But here's the twist.

Speaker 2 (00:27):
The smarter you are, the more likely you are to
make some of the worst money decisions ever. And if
you've built real wealth, well the stakes only get higher.

Speaker 1 (00:37):
Brian.

Speaker 3 (00:38):
Yeah, So what we know here is that brains are
not bulletproof. One of the biggest miss in finance, Bob,
is this idea that being smart means I'm never going
to make a financial mistake in my life. That's just
not the case, and research shows it so that this
surface is in a lot of ways in flawed decision
and we tend to get confident in ourselves and kind
of double down on it. So one of the things
we run across is something called confirmation. By this is

(01:00):
when we find ourselves seeking out groups or people or
searching everything until we find the opinion that we already
have and then we can go cee cc, I know
I was right. This isn't just a financial thing. This
surface is in a lot of areas it surfaces and
politics and family discussions and so forth. So it's one
of the challenges though that can cause us to make
bad financial decisions and get us in trouble.

Speaker 2 (01:22):
Well, Brian, you know you mentioned politics, and you took
the words out of my mouth. I think with this,
you know, very divided political environment we're in and the way.

Speaker 1 (01:31):
The whole media business is structured.

Speaker 2 (01:34):
Now, you know, we can all live in our little
echo chambers and only consume news and information that fits
our you know, preconceived biases, and that only feeds that
confirmation bias. And I've seen that confirmation bias just grow
and grow and grow, i'd say, over the last ten years,
and it's something we really got to be aware of.

Speaker 3 (01:55):
Yeah, there's a lot of passion out there too, because
that's just where Honestly, my personal opinion is that our
political leadership and our media is making an awful lot
of money and gaining an awful lot of power out
of keeping us angry and terrified at all times. And
this leads to conversations at the dinner table that you
didn't want to have. It leads to decisions maybe made
with your spouse, where you're having arguments over things that

(02:17):
really may not have been that important to you, but
for whatever reason, we're all just kind of geared to
fight first nowadays. So the best thing to do is
whenever your face was one of these challenges is take
a breath, sleep on things. Don't make a decision right now,
but just make sure you're not doing something just off
the cuff just because you feel the pressure to make
that decision.

Speaker 2 (02:37):
Here's another behavior we come across a lot, and that
we'll just call that the state of inertia, and we
go back to Newton's first law of motion. An object
in motion will stay in motion, an object at rest
will stay in rest.

Speaker 1 (02:52):
At stay at rest, Brian, and.

Speaker 2 (02:54):
That we find that to be a common thing among
especially highly intelligent, high net worth people. In other words,
doing nothing even when you know you need to act.
It happens, you know, when the stakes are high, the
fear of making a wrong move just becomes paralyzing and
people do nothing. And this comes up all the time,

(03:15):
especially in the area of estate planning.

Speaker 3 (03:17):
Yeah, procrastination. As always, whenever there's a big scary decision
to be made. It's easier not to do anything. I
look at this option and it's got pros and cons.
And here's another option, and there's pros and cons there.
You know what, I'm going to talk about this. I'll
think about this some other time because I just can't
make a choice. And you're right. This leads to situations
where clients will walk in with a will that was
written thirty five forty years ago and maybe doesn't include

(03:39):
half the children that they now have because they didn't
know the steps to take and they were busy that
week and can't get to it, and then that stretches
into months and years in frankly decades. So but that
can also obviously lead to problems. That's when we'll hear
from eventually we'll hear from the airs where they had
a situation that they'll come in and they'll say, I
don't want to do this to my children. Mom and
dad just didn't get around to organizing things to make

(04:02):
it easy, and we had to go through an awful
lot to get things retitled, Things had to go through
probate that could have been easily avoided, and that kind
of thing, and they'll say, I don't want to do
this for my children, and we'll give them a list
of a checklist, here, go do these things, and then
it'll take them themselves months to complete it. These decisions
are hard, but they're not going to go away. And
it does involve some discipline. It's really no different honestly

(04:23):
than personal training or a diet or whatever. If you
want the results, you've got to put in the work.

Speaker 2 (04:28):
Another emotional behavior, or emotionally driven behavior we got to
fight against is that feeling of overconfidence. And Brian, I'm
sure you've been there. I've been there too with clients
and really personally as well. You know, we're all very smart,
we're well read, we've done research, and we think we
can outsmart everything out there. In other words, you know,

(04:49):
I built this business from nothing. I know I can
manage my own investments, or I can I can perform
orthopedic surgery or brain surgery. Certainly, I know how to
allocate an investment portfolio. I don't need a second opinion.
I don't need any help. I know what I'm doing,
you know, on and on and on.

Speaker 3 (05:08):
Yeah, and because YouTube videos, right, I can do surgery
because there's a YouTube video on there about about how
to do it, and not that what we do every
day is rocket science. It's it's not simple either. But
at the same time, there if there were a list
bob of steps everyone should take right, if it was
just a checklist process, these are all good things and
here's all the bad things to avoid. If it was

(05:29):
the same for everybody, then yeah, you could do it. It
would everybody would do their financial planning off of a
blog somewhere that has that checklist to follow. I think
the notion that a lot of people have is that
I'm a hard worker. I'm willing to do more research
than the next guy. So if I just look at
this next page about cryptocurrency and how to make a
bazillion dollars, then I'm gonna be all set. And none
of that leads to leads to good places. I can

(05:51):
remember when I got started in this industry, it used
to be about my guy or my lady who gave
me a good stock tip twenty years ago, and then
we hang on that. I remember my dad and my
uncles would pass around their brokers that would give them
this great stock idea, and none of them were good
for maybe one or two in a row, and Eventually
that kind of colored my career. And I started off

(06:11):
when at the very beginning, thinking that that's all they
need to do, just be the guy with the hot
stock tip. Well, none of that works, and I quickly
figured out that it's all about planning because that's what
people really are worried about. Am I gonna run out
of money? That's all anybody cares about, not the hot
stock tip from yesterday. But there is this notion that
if I just do a little more research than the
next guy, and I know I'm capable of that because
I'm smarter than the next guy, then I'm gonna be bulletproof.
And that's just not the case.

Speaker 2 (06:32):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponseller along with Brian James. All Right, we've
identified a couple of you know, mindset driven behaviors that
we all experience. Brian, let's get into what we need
to do about it. You know it starts with a
mindset shift, right, Yeah, and.

Speaker 3 (06:49):
I've complaining about what the problem is. What do we
do about it? Let's be proactive. So first off, let's
accept that intelligence is not a defense against your emotion.
Emotion is going to drive the day in a lot
of cases, and just being a smart person, which most
people certainly are. Not everybody, but a lot of people
certainly are, but that often is not enough to fight
off the emotion. So think about Warren Buffett. Warren Buffett

(07:10):
is probably the most emotionless investor in history. That's how
he got to where he is. So the reason he's
done that is he's built systems and he has a
trusted team around him to help him override his instincts
and help him figure out when he might be going
a little too far down a rabbit hole of his
own creation.

Speaker 2 (07:27):
So that gets into one of the things we always
recommend for our clients here at all Worth build an
actual personal investment policy.

Speaker 1 (07:35):
What does that mean.

Speaker 2 (07:36):
It's like having a written blueprint for how you're going
to invest. We assess what kind of assets you have,
your tax situation, how much risk you're comfortable with, when
to rebalance having a written plan, and the benefit when
emotions run hot, like what when we experience volatility allah
the first couple weeks in April, people can go back

(07:58):
and refer to their actual place and that keeps people
from making emotional or headline driven decisions, you know, in
a rush, and keeps us on track and avoids big,
big time you know, mistakes that we can't oftentimes recover
from if we make them and don't.

Speaker 3 (08:16):
I don't view this, you know, an investment policy statement.
Some of you might be recognizing those words as big
fancy talk from a committee meeting or something like that.
I'm not really talking about a big, formal, laid out
policy that is separate from your financial plan, and often
oftentimes it can be just part of your financial plan,
because you know, if you have a financial plan, that
means you've looked at here's where we are right now,
and we need to get to hear in five, ten, fifteen,

(08:38):
twenty years. That's really the basic point of a plan.
Along the way, stuff is going to happen. Life is
going to happen, The market's going to happen. How will
we react when it does. If you've done a proper plan,
then you know you will have stress tested your goals,
you will have figured out Okay, if nothing bad happens,
then here's how it looks. But if crazy stuff happens
in the short run, this is the impact, and here's
when we need to worry. But more importantly, here's when

(08:58):
we need to when we I we don't have to
worry because we've done the stress test. So again, just
make sure that you understand what you're trying to accomplish
in the first place. That can be an investment policy.

Speaker 2 (09:09):
Another thing we'd like to talk to clients about with
Brian is to purposely and intentionally introduce a little friction
or short term delay to making big decisions when it
comes to money. For example, you know you feel like
dumping a stock that you've got a large position in
set of at least a.

Speaker 1 (09:26):
Twenty four to forty eight hour rule.

Speaker 2 (09:29):
You know, internally saying hey, I'm not gonna I'm not
gonna make that decision until I sleep on it. Let
a little time pass, Maybe get some advice, pray about it,
make sure you discuss it with your spouse. Something where
you're not just making that mouse click and making a
huge financial decision. It can often her role just to

(09:49):
have that twenty four to forty eight hours that's.

Speaker 3 (09:52):
Yeah, that's the slower role rule. Just make sure you're
not moving in something just within pure passion and no logic.
You have to have a little bit in the little
mixture of both something else. And when you come up
with these ideas, bringing a devil's advocate, bounce it off
somebody smart. People actually love being challenged, actually intellectually right.
People love to have discussions about you know, politics and
just ideas they have and that kind of thing. But

(10:12):
financially we don't like to do that at all. We
are all raised that finances were to be kept private
within the family and so forth, so we never really
talk to each other and we wind up in our
own little echo chambers when it comes to big, huge
financial decisions, which makes things an awful lot harder. So
look for somebody out there that you can bounce these ideas.
Obviously a spouse, uh who should probably be in the
mix anyway on these bigger decisions. Maybe you have an

(10:33):
advisor or even a peer, just somebody you know is
think similarly to you and has the same kind of
you know, similar challenges, that kind of thing. Say, Hey,
I was thinking about this. What am I not seeing?
I'm too close to my own trees so I can't
see the whole forest. Help me understand what I might
be missing. And this isn't about getting yourself talked out
of something that's you know, it could be a great idea,
but it's about just hearing a counterpoint that you may

(10:54):
not have thought about from somebody who's an arms length
the way. Super super helpful for business owners who are
used to call on the shot solo as well.

Speaker 2 (11:02):
Here's one last piece of advice, and something I think
virtually nobody does, but this is a great idea for
those that do some journaling and writing things down. Schedule
an annual what we call a bias review. In other words,
once a year. Ask yourself, did I ignore advice because
it didn't match my you know, my viewpoint or my presupposition.

(11:25):
Did I delay action because I was uncomfortable? Did I
trust my gut when I should should have run the
numbers first. Those are great questions to ask and write
those answers down because oftentimes it will save us from
some mistakes and put you in a better position, you know,
in which to make decisions moving forward.

Speaker 3 (11:45):
And work with a fiduciary advisor. A good advisor is
not there to be smarter than you. They're there to
help outmaneuver your biases. We all have them. Advisors have them,
have them to we make the same human mistakes. We
just know exactly the dumb things that we're doing while
we're doing them.

Speaker 1 (12:00):
Here's the all Worth advice.

Speaker 2 (12:01):
The most financially successful people we know don't go it alone.
They build teams, They build systems and structure because they
know that at the end of the day, they're just
human like everyone else. If you're on deck for retirement,
what's your biggest worry? See what your peers say about it. Next,
you're listening to Simply Money, presented by all Worth Financial

(12:22):
on fifty five KARC the talk station. You're listening to
Simply Money presented by all Worth Financial. I'm Bob Sponsller
along with Brian James. Hey, if you can't listen to
Simply Money every night, subscribe to get our daily podcast.
You can listen the following morning during your commute, maybe

(12:44):
at the gym. And if you think your friends could
use some financial advice, tell them about us as well.
Search Simply Money on the iHeart app or wherever you
find your podcasts. How much risk should you really be
taking if you already have enough to retire comfortably?

Speaker 1 (13:00):
Well?

Speaker 2 (13:00):
Answer that question and more coming up at six forty
three tonight, Brian we pay homage to gen X. The
folks who were born between nineteen sixty five and nineteen eighty,
they're inching closer and closer to retirement, and they've seen
it all, dot com bubbles, the two thousand and eight crash,
COVID inflation, you name it. But the biggest concern right

(13:23):
now that gen xer seemed to have as retirement looms
isn't just about money. It's healthcare.

Speaker 3 (13:31):
Yep, you're talking about me, Bob. I am gen X,
and I think you might be. You might be as well.
But it's funny. I remember whenever I'm whenever that topic
comes up, I still feel like the first time I
heard gen X was talking about my generation, how we
were going to change the world and so forth. And
now I'm the establishment and all the ones behind me
are going to change the world. So anyway, I think
every generation past the nineties honestly has has come up

(13:54):
through chaos the eighties and the nineties. My opinion that
was the that was the anomaly, because really nothing bad
happened for twenty straight years, and this drives a lot
of the generational differences between opinions on how things should work.
Baby Bombers didn't see a whole lot of bad stuff
during their primary earnings years and their primary savings years,
and then starting around two thousand, we started to see

(14:15):
a heck of a lot more chaos as things returned
to the mean. So, but a lot of people out
there are worried about this. So Gen xers are feeling
like they are behind. About fourteen percent of Americans between
forty four and age fifty nine believe they've saved enough.
This is coming from a Schroeder survey that was done recently.

Speaker 1 (14:31):
That's a low number.

Speaker 3 (14:32):
That is a very low number, but it kind of
reflects you know, when I talk to my peers, I
know that a lot of them are concerned about these things.
And we don't talk numbers because that's again that's not
something we do in this country. But you can kind
of see behind their eyes that they've got some concerns.
Most are estimating they're going to need over a million dollars,
but the average Gen extra Bob expects to retire with
about six hundred thousand. So that's quite a gap to

(14:54):
cross there.

Speaker 2 (14:55):
Well, and add to that the fact, you know, studies
we see say that you know a couple retiring today
at age sixty five could need on average about three
hundred thousand dollars just to cover medical expenses over the
rest of their lifetime. And Brian, that number doesn't even
include long term care, which, as we know, can wipe
out a nest egg in very short order if you're unprepared.

Speaker 3 (15:18):
Yeah, and let's be really clear about that. So when
we talk about this all the time, three hundred thousand
dollars for to cover healthcare, that's about one hundred thousand
of that is just going to be the premiums themselves
over thirty years on Medicare in some kind of supplemental policy,
with the rest being out of pocket expenses, doctor's visits
and all those kinds of things. But again, let's reiterate,
I want to say this very loudly, that is not

(15:39):
the cost of long term care. That if that occurs
to someone, that's going to be itself about another three
hundred thousand based off of an approximately one hundred and
fifteen thousand dollars two and a half year stay. So
why is Generation X fueling this so strongly? First generation
ever to pretty much mostly retire without pensions. Right, So,
a lot of our parents, a lot of our grandparents

(16:00):
retired with pensions and that was that became their definition
of what retirement is. I'm going to turn on my
pension and I'll get my check and I'll go fishing.

Speaker 1 (16:07):
Well.

Speaker 3 (16:07):
This generation is the first to where the majority will
have to make their own pension and you can't do
that overnight. That has to have been done over your
entire working career. Plus, Bob, it's also the Sandwich generation
helping kids and often parents. This is going to go
on for a very long time. Many generations are going
to go through this because of life expectancy being so
much longer. You've got kids that you're trying to get started.

(16:29):
You've got your parents that may need your help as well.
So that's double financial duty and that's going to suck
up a lot of your own retirement planning.

Speaker 1 (16:35):
Yeah.

Speaker 2 (16:36):
Another thing adding to some of the stress for this
generation of you know, pre retirees is we've had some
volatile income years. I mean, flat wages during the two thousands,
two major recessions and a pretty big bout with inflation
have made saving considerably harder.

Speaker 1 (16:53):
And now they're.

Speaker 2 (16:53):
Starting, you know, staring down these rising health costs and
all the Sandwich generation stuff. It's a lot to overcome,
but we got to keep encouraging these folks. Don't just
bury your head in the sand and you know, just
declared defeat. You got to make some adjustments here and
get things back in order before it becomes too late.

Speaker 3 (17:13):
So let's talk about that. What can we do about it?
First off, estimate your own health care costs. Talk to
a fiduciary financial advisor, somebody who understands Medicare and long
term care planning and preferably has worked with a lot
of individuals and clients who have gone through these who
have gone before you. I think that's the most value
any advisor can bring is to be able to say,
here are what people who look like you but are

(17:35):
a little bit older, further down the path. Here's how
they dealt with it. So, but some tactical things. If
you are eligible, a health savings account is one of
the best tools out there. Triple tax protected, tax deductible contributions,
tax free growth, and tax free withdrawals from medical expenses.
Also consider don't buy, but consider long term care insurance.
Learn about it. If you're going to do it. The

(17:56):
earlier you do it, the lower the premiums are going
to be and don't hold often too your sixties. If
you're concerned, what other ideas you have, Bob Well, one
idea is to stay healthy.

Speaker 1 (18:05):
You know.

Speaker 2 (18:06):
One of the ways to combat these, you know, looming
health care costs is don't let yourself get in a
situation where you're vastly overweight and are dealing with you know,
adult on set diabetes. Maybe cut back on the alcohol
and the smoking, get some exercise, you know, put yourself
in a situation where you are healthy and that has

(18:27):
a lot of benefits, financial benefits and just overall lifestyle
and happiness benefits. The key here is to stay healthy
so that you bring down these future health care costs
as much as you can. Obviously, there are things that
are out of our control, but there's still a lot
of things that are in our control and we need
to take advantage of that. Here's the all Worth advice.

(18:48):
A solid retirement plan doesn't just grow your money, it
protects you from the rising cost of health care. All Right,
you've made your money, Now what next? How to build
a per personal brand that keeps you relevant after dialing
it down a bit following a successful career, you're listening
to Simply Money presented by all Worth Financial on fifty

(19:09):
five KRC the talk station. You're listening to Simply Money
presented by Allworth Financial.

Speaker 1 (19:19):
I'm Bob Sponseller along with.

Speaker 2 (19:21):
Brian James, and we're joined right now by our career
expert and our good friend Julie Bouk, who's going to
talk to us today about building a personal brand as
you start to wind down a very successful career, but
you're not quite yet ready yet to get completely out
of the workforce. Julie, I'm sure you are counseling a

(19:43):
lot of people in this area right now. Tell us
what that looks like out there.

Speaker 4 (19:48):
You know, when we start to get to that point
where we have to really think about what's next, we
see the end of the road workwise. The most important
thing to do is start building your post work life
while you're still working. Because I'm going eighty miles an
hour and then I'm going to throw the brakes on.

(20:08):
Fully is really jarring. It is not the healthiest way
I go about it, and it's why over the years,
many people who have poured everything into their careers died
soon after retirement because they've lost their sense of purpose,
and so you don't wait until the last day to
start thinking about your next stage. You think about it

(20:29):
before so that you're actually retiring to something instead of
just from something.

Speaker 2 (20:35):
You talked about high achievers, and we deal with a
lot of those here at All Worth. You know, you're
going eighty miles an hour to quote you know what
you just said, it's very hard to be going ninety
miles an hour and then hit stop and.

Speaker 1 (20:48):
Come up and say, well, now what do I do?

Speaker 2 (20:50):
What are some of the biggest challenges you face as
you counsel folks when they're trying to rewire so to speak,
instead of just retire.

Speaker 4 (21:01):
So the people that have the hardest time with this
transition or people who solely or mostly identify with their careers.
So we see this in Washington with politicians hanging on
on both sides way too long, and that happens in
the private sector as well. And so the more you

(21:22):
identify is Joe Blow from the Jones Company as your
primary source of your identity, the harder that the hearder
that moving away is going to be. And so moving
into thinking about what do you want to be known
as after you retire, So it could be you could
be a thought leader on something, You could have an

(21:43):
area of expertise that served you well in your career.
So it's switching that mindset from I'm the person in
charge to I potentially I'm going to coach and mentor
and be an example for those in charge, and we
overstay are welcome because no one really recognizes. It's like

(22:04):
your parent never recognizes themselves when it's time to give
up driving, but everybody around it, everybody around you see
it way before you do. And so it's it's really,
you know, it's really important to have those people around
you that help you think about how can I take
what I've accomplished in the last forty years, take a

(22:25):
piece of that that really really likes my fire, and
then how can I build around that so that I'm
not necessarily stopping all work after I retire, But maybe
I'm drilling down to the stuff i'm beat at and
I focus on growing that while I'm also doing other
things I'm interested in.

Speaker 3 (22:46):
See, one of the things with that we've almost always
come up with and when helping someone figure out how
to retire is we discovered that they've spent almost no
time thinking about what life is going to be like,
you know, kind of what you were just hinting at,
what will life be like when I'm when I'm not
the big, the big, big person in the room anymore.
And they start to think. You know, a lot of
people kind of get distracted by the idea that I'm
just exhausted, I got nothing left to make the finish line,

(23:07):
and they start to think about, you know, I just
want to be done, and then we point out there's
an awful lot of time you know, that you're going
to have to spend doing nothing. One of the things
that they'll start to think is that, well, I'll just
I can work on an arrangement. I'll work less hours
doing the same job that always seems to end badly
in my opinion. That's why I'd like to get your opinion,
because you know, the people still dump the same amount

(23:27):
of stuff on your desk because you are determined to
be that person. You are the person who does the things,
and nobody cares that you're only working twenty hours a
week nowadays. So my advice is to go somewhere where
you can use your skills but still be the dumbest
person in the room. In terms of not being that person.
Does that make am I giving good advice there? Or
do you ever run across that situation?

Speaker 4 (23:46):
No, you absolutely are giving great advice. We absolutely do
not give enough attention to how to make that transition.
And everybody I know over sixty says, this is way
harder than I thought it was going to be, because
I really thought that I was just going to go
sit on the porch somewhere. Well, after a few weeks

(24:06):
of doing that at most, you realize that by seven
thirty eight o'clock you've had your coffee, you've caught up
all the things you'd like to read in the morning.
Maybe you can play golf a couple of days a week,
but that's not probably going to be enough. And so
starting to imagine how you're going to spend your weeks
and start to say, you know, maybe I might like

(24:28):
to work, I might like to try something new, or
I might like to take a section of what I've
done in the past and really build maybe a practice
around it where I work, where where I only say
yes to the things that I'm absolutely going to love
and look forward to. And I think at this stage
of life there's a really big question you have to
understand the difference between what you can do and what

(24:52):
you want to do, and that there's a real big
difference because we get really caught up and why I
could do this or I could do this. So the
truth is you don't want to do all those things equally.
So getting really clear around if I could spend if
I'm only going to spend two days a week in
active work related to what I did in the past,
what would I do during those dates? What would I

(25:15):
do and what would I avoid? What was I yes to?
What would I say no to? Then how am I
going to fill the rest of that time? If you
don't actively plan how to fill your time, then you
will fall back into what you know. And it gets
to it said earlier. If you don't have a good
relationship with your partner and home is not a place
where you want to spend more time, or you don't

(25:37):
have anything in the community you're involved in in any way,
if you've been one hundred percent work person, retirement is
going to be very, very painful for you. And so
instead of kicking the can down the road and waiting
until the day when it's become obvious to everyone, maybe
accept you that it's time for you to go. You

(25:58):
have to start thinking about your rateful exit and then
what do you most past? What do you most firmly
want to do in this last section of your life?
Because really that's what it is. Can I recommend a
book Wisdom at Work? Wisdom at Work by Chip Conley
is the best book I've read to help you go
through that and figure that out. How do you transform

(26:20):
yourself into a wise mentor instead of a doer?

Speaker 2 (26:23):
You're listening to Simply Money presented by all Worth Financial
on fifty five KRC the talk station.

Speaker 1 (26:34):
You're listening to.

Speaker 2 (26:34):
Simply Money presented by Allworth Financial. I'm Bob Sponseller along
with Brian James. You have a financial question for us?
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'll come straight to us. Speaking
of questions, Brian, the first one comes from Dan in
Mount Washington and he asks how much risk should I

(26:57):
really be taking if I already have enough to tire comfortably?

Speaker 3 (27:01):
Yeah, this is a great question because it comes up
every single time where we do a financial plan for somebody.
If you've put yourself in a strong position, then you
might find yourself feeling like you've got more than enough
to make it and you don't have to take any risk.
And that's a perfectly logical As long as you've done
done the research and made sure you've done some stress

(27:22):
testing and those kinds of things, then it's very fair
to say, I don't need to take much risk. I
want to put this in super safe investments and maybe
just keep up with inflation and otherwise not worry about it.
And that's a perfectly sound financial plan as long as
the math works. Now, what you will wrestle with at
some point you're gonna go, wait a minute, this money's
gonna sit here for twenty twenty five, thirty years, and
I'm gonna spend the interest. But otherwise it's just gonna

(27:43):
kind of sit there, and aren't I kind of taking
it out of my kid's mouths if I don't let
it grow. So a lot of times people come to
that conclusion, and the answer intends to be somewhere in
the middle. I don't need to lock it down and
bury it in the backyard, but I also don't need
to throw caution to the wind. So maybe I'll take
a sort of mid range risk position, so I'm still
great rowing it over time. But again it all comes
down to stress testing and understanding those the possible outcomes

(28:04):
of that.

Speaker 2 (28:05):
Well, and it's not just the financial outcomes, but it's
how can you sleep at night and actually enjoy your
retirement without worrying about money every day?

Speaker 1 (28:14):
That's right.

Speaker 3 (28:15):
The pendulum swings both ways. Right, You'll have those sleepless
nights when we're having scary headlines, but also you'll question
yourself when the market is going great guns. Both of
those things will happen several times throughout the remainding of
your life. So again, just set your course according to
what you're comfortable with. Next question, Don and Montgomery asks,
what's a smarter way that I can plan for long
term care rather than just buying insurance? What do you

(28:36):
think of that?

Speaker 2 (28:36):
Bob, Well, I'd say to Don, you know, obviously not
buying insurance, your self insuring, and yeah, there's a lot
of ways to do that if you get out in
front of it, you know, ahead of time, and plan
one way. And Brian talked about this in a prior segment.
Take full advantage of that health savings account. If you're
in a high dedectable healthcare plan, you can suck that

(28:57):
money away pre tax, let it grow, don't spend it
every year, Let that stuff stockpile.

Speaker 1 (29:03):
So you've got that.

Speaker 2 (29:04):
Three to four hundred thousand dollars account built up on
a tax free basis, and you've got that sitting there
ready to use when the time comes for healthcare expenses
in retirement. You know, another thing is to set aside
a separate account that you're building just for healthcare expenses.
And a good way to do that on a tax

(29:25):
efficient way is to have an account separate from your
retirement plan, your four to one K and iras that
is in a tax efficiently managed portfolio where you can
draw that money out for healthcare costs and not jack
up your tax exposure when you do it.

Speaker 1 (29:40):
So those are two thoughts off the top of my head.

Speaker 3 (29:43):
Brian, Yeah, and Bob, I would add on the front
end of this before you even get to those steps,
I would understand your situation to begin with. There's a
lot of people out there. Well, the headlines are scary,
of course, because that makes for good to keeps your
eyes on the screen and reading things. But there's a
lot of people out there who are going to be
able to self ensure. If you're somebody who made it
to retirement with a million, million and a half, you know,
maybe more than that, then that math that has gotten

(30:05):
you to that point is going to continue. Your assets
are going to continue to grow. You may be able
to self ensure. And don't think that when we say
you're going to need to spend an extra hundred thousand
on long term care, that that's layered on top of
all your other expenses. Remember, long term care is a
stay in a nursing home. You're not going to the
grocery store anymore. You're not going you're not traveling, you're
not doing all those other things. You may have sold

(30:25):
the house, the mortgage may be gone, you won't have
property taxes, housing expenses. It's not a pure hundred thousand
layered on top. You may very well be able to
fund it without worrying about insurance, but understand your situation
to begin with, then worry about whether you need to
take steps.

Speaker 1 (30:39):
Well, what you just explain is running some different scenarios
based on assumptions, so that you're going into this with
what eyes wide open and you actually have a plan,
not just leaving it to chance. All right, Brian Michael
and Fort Thomas asks, what's the best way to pass
a vacation property to my kids without causing drama? Yeah?

Speaker 3 (30:59):
This is so First off, Michael, I want to thank
you for defending us in Fort Thomas from those people
in Fort Wright. I which wonder if they shoot at
each other down there. But anyway a good way to
send vacation property to kids where I would start here, honestly,
make sure your kids want that property. I think everybody
needs to be open minded that something that means a
lot to you, it may mean a lot to your children,
but it may not mean as much as if you're

(31:21):
not there. If the family truly loves wherever this destination
is and they want to go for the memories and
all that, then that's fantastic. But it's very often that
I hear that somebody inherited something that they just don't value.
We remember, we loved going there with mom and dad,
but we've been there our entire lives. Mom and Dad
aren't here anymore, so it just doesn't have the same meaning.
So before you get too wound up and deciding how
they're going to own it. Make sure your children want

(31:43):
to own it in the first place. Bring them into
the conversation, determine whether they want that. Then you can
take appropriate steps. You may find that they say, we
love it, we appreciate you taking us here in this.
That's this benefit we've had, but after it's gone, we
don't think we'll use it. There's your answer, and be
okay that you've made them happy. You're gonna give them
cash by selling it and they can do what they
want with it, rather than burdening with something that they
were being too polite to tell you they didn't want.

(32:05):
Have that conversation first.

Speaker 1 (32:07):
I totally agree.

Speaker 2 (32:08):
I mean, all these complex you know, trusts and all
that can be great, but it really comes down to
proactive communication with your family, you know, knowing what everybody
wants in advance, and that's so key.

Speaker 1 (32:21):
All right, Brian, here's another one for you.

Speaker 2 (32:23):
VICKI and blue Ash asks, should I set up a
trust even if I'm not planning to leave a huge inheritance?

Speaker 3 (32:30):
Very very common question, right, Bob. We hear this very frequently.
People associate a decent amount of money with I must
have a trust in the mix.

Speaker 4 (32:37):
Here.

Speaker 3 (32:38):
Trusts are rarely bad. That that's not the case that
I'm going to make here, But they also sometimes can
be a sledgehammer to kill a nat. You know, it
really kind of depends if a lot of times you
can you can accomplish what you need to by simply
naming your beneficiaries. If you have a simple situation, a
couple kids, maybe they're adults, they're doing fine on their own,
and you trust them to make good decisions, and it's

(32:59):
pretty obvious you know who's gonna inherit all the money.
You may not need a trust just because there's a
lot of money involved. When in my mind, trusts come
in when there are different concerns, there are moving parts.
Perhaps this is a second marriage and there's you know,
two spouses have their own sets of kids. You have
to you do have to be very careful. That's where
you can get some very unexpected outcomes if you don't
pay attention to that. But that's so that's a whole

(33:19):
show in itself. But otherwise, just because you have money
doesn't mean you have to have a trust. Just make
sure you understand what it is that you want. A
trusted attorney will advise you I gotta be careful here.
We are not attorneys, but we can kind of share
some stories. So but at the same time, don't assume
you must have a trust.

Speaker 1 (33:37):
All right.

Speaker 2 (33:38):
Coming up next, we hear the bottom line from Brian
where he's gonna teach us about blending wroth and regular
contributions within your four to one k plan. You're listening
to Simply Money presented by all Worth Financial on fifty
five KRC the talk station.

Speaker 1 (33:57):
At this moment, you're listening this.

Speaker 2 (34:00):
Simply Money presented by all Worth Financial Limbob spond Seller
along with Brian James.

Speaker 1 (34:05):
All Right, Brian, give us your bottom line.

Speaker 3 (34:08):
So my bottom line here, Bob, I want to talk
about something that comes up very frequently when we're sitting
with clients and people who are within maybe two three
years of retiring. A lot of times they'll point out that, Hey,
you know what, I feel like I don't have a
lot on the wroth side. I feel like I should
have some tax free stuff. Ryan, what do you think?
And my answer is usually, look, you're you're in that
you didn't make a mistake right, You probably started your career.
If you're looking at retiring right now, you probably started

(34:30):
your career back when the only thing you could do
in your four oh one K was pre tax and
that's what you did in good job. So but people
now nowadays four oh one k roth, I'm not talking
roth Ira. You can also do it inside a four
oh one K four oh three B nowadays, that's fairly ubiquitous.
It's mostly available over the last five to seven years,
it seems like, so people are questioning, I've only got
a couple of years left. I've got a good pile

(34:52):
built up on my pretax side, but I really don't
have any on the ROTH side. What should I do
about that? Should I start putting in the wroth. Well,
there's a couple moving parts to that. First off, remember
roth Ira, WROTH four oh and k or Ira contributions
are not deductible. So if you're in a high bracket,
which is a good chance of that because you're in
your print, your peak earning years, you're gonna be paying
taxes on those dollars, not additional taxes. You just don't

(35:14):
get an induction, right, So that would be that would
be a downside to it. The other thing I would
suggest to think about is if roth is on your mind,
and it really should be for everybody. It may not
make sense right now, but it should be on the
horizon to at least consider, consider, and learn about. What
I might suggest is maybe try to start building up
some cash somewhere else in a taxable account, and what
you might do with this taxable account after you retire.

(35:37):
There will be likely a window of time where you
have a very low bracket. So you your spouse are retired,
you're not bringing in salaries like you used to because
you don't have to anymore. Maybe you can pay the
bills with savings for a little while and not even
turn on Social Security. That is a time where you
will be in the lowest bracket that you've seen in decades,
and that's the time to be thinking about Roth conversions.
So now where we're sitting here, two three, four years

(35:59):
out for retirement, it may behoove you to build up
some savings in a taxable not not traditional or not IRA,
not pre tax, not WROTH, just a plain old taxable
account with which you will pay the taxes on WROTH
conversions when you reach that point where you're in that
low bracket again. So it doesn't have to be contributed
now to get you some WROTH access. If you plan now,

(36:20):
you can trigger that later and in that window of
time where things get a little bit cheaper for you,
you can do some significant WROTH conversions. The window there
is when you've started your low income tax years and
until you reach your required minimum distribution age, which is
either seventy three or seventy five depending on when you
were born. That's my bottom line, all.

Speaker 2 (36:39):
Right, Brian, and just piggybacking off of that. And I've
seen this a few times myself, and I'm sure you
have as well. Sometimes very high earning people in the
peak earning years right before they retire, they hear about
WROTH four oh one K and they just automatically gravitate
to that. And we got to remind folks that, you know,
the WROTH four oh one K worked great. You know,

(37:01):
putting after tax contributions in it works better and better
the longer runway. You have to allow that money to grow.
And if you're in a very high tax bracket, we
oftentimes tell people just stick with what you're doing, take
the pre tax approach, and then do what you just.

Speaker 1 (37:18):
Talked about, you know, set aside that after.

Speaker 2 (37:21):
Tax non retirement plan asset, you know, to do the
tax planning with, because if you pay too much taxes
more than you should be in those very high earning years,
you know, we're kind of we're kind of working in
reverse of what we're trying to do in terms of
tax efficiency.

Speaker 1 (37:39):
Yeah.

Speaker 3 (37:39):
I think that's a great point. It does come up,
people question it, but understand the pros and kinds of it.

Speaker 1 (37:45):
Thanks for listening.

Speaker 2 (37:46):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station