Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
Tonight, are you treating your investments as though they are
red or blue?
Speaker 2 (00:11):
And is that costing you money?
Speaker 1 (00:14):
You're listening to simply Money present up by all Worth
Financial on Bob Sponseller along with Brian James. We're about
halfway through the year now and apparently, Brian, many Americans
are shaping their portfolios not by fundamentals but by political
party lines.
Speaker 2 (00:31):
Yeah.
Speaker 3 (00:31):
New poll out there from Gallup shows us that Democrats
are about fifty nine points more bearish than Republicans. Obviously,
Democrats are a little grumpy. Things didn't go their way
in November and they're still kind of feeling it. Republicans
are forty seven points more bullish. This is kind of
a weird comparison. We're comparing, you know, the grumpy people
versus the happy people. But the point is that it's
not the numbers, it's the difference. This is the widest
(00:53):
gap we've seen since two thousand and one. Another study
from UBC tells us that from twenty three thirteen into
the future, investors started picking stocks related to their political affiliations.
So Republicans focused on oil, Democrats focused on green energy,
things like that. So that wasn't so much of a
thing prior to that, but you know, a little more
(01:13):
than a decade ago, we did start picking our making
our investments based on who was in control and whatever
the political beliefs that we hold.
Speaker 1 (01:19):
All right, Brian, I've got I can tell you stories
upon stories of actual clients that I experienced this with.
You know, are you in the same camp. I knew
that this country was very politically divided. I mean, that's
not you don't have to be a rocket science to
figure that out. But I literally have people come into
(01:40):
the office and I can tell within thirty seconds you
know which side of the aisle they vote on, and
the mood is dramatically different. Are you seeing the same
thing with with with some of your clients? And more importantly,
how do you deal with it?
Speaker 2 (01:56):
Yeah?
Speaker 3 (01:56):
And it's definitely different. So you know, I've been doing
this for sneaking up on thirty years now, and I
don't remember a time where politics were as much in
the room when we're discussing financial planning topics as I
do right now. Now, that's that I don't know. This
is kind of interesting to me. People are passionate, but
they're very guarded. You can, like you said, and I
think this is what you were saying. You can you
(02:17):
can figure out which way they lean, but they're not
necessarily flying the flag, right. I don't have people that
come in and say, you know, the Democrats are going
to ruin this, the Republicans are where it's at, or
vice versa. They just make comments that where you can
kind of tell where it's going. So it's it's in
their forethought in terms of how they're going to make
their decisions, but they're not necessarily really trying to advocate
for one side or another. But that's not really the point.
I just find it interesting that, yes, they're passionate, but
(02:38):
they do kind of keep it quiet because they don't
want to. They know. I think at this point my
clients maybe years are the same. They know what I'm
gonna say that if they start leaning toward picking their
investments or making financial planning decisions based on their political beliefs,
they know I'm going to tell them that they're probably
going down the wrong path because that's a that's a
way to, you know, to kind of make bad decisions
(03:00):
because it doesn't necessarily have any impact on the outcome
over the long term.
Speaker 1 (03:04):
Well, and let's face it, we all deal with very
smart people. And I've said this for years and I
and this is what I say to clients. One of
the first things I ask them is what are your
news sources? What are you listening to and consuming every day?
And and that applies to both right and left leaning people.
I mean, we can all go out and find things
(03:26):
that will amplify and repeat. You know, are our biases
that we want to hear repeated every day?
Speaker 2 (03:32):
Right?
Speaker 1 (03:32):
So, uh, usually when you can figure out what people
are consuming every day, you can understand how they're feeling. Again,
we're dealing with smart people. You know, they're well read.
They like to keep up on things. But if you've
got certain messages being drum beaded into your head day
after day, week after week, it's going to impact you, know,
(03:54):
how you feel about the economy and the world.
Speaker 2 (03:56):
Would you agree, Brian, absolutely?
Speaker 3 (03:58):
And And this is I I think this comes from
a place where people really just want things to be
black and white. If I take step A, I want
step B to occur in a predictable manner. And that
is really really it takes a long time, you know,
set aside the political stuff. It takes a long time
for people to get used to the idea that we
all have less control over the finances than we want.
(04:19):
Things will happen in your lives that you can't control,
that you'll have to deal with. Things will happen to
all of us via the economy, the overall markets, and
that kind of thing that we can't control either.
Speaker 2 (04:28):
We have to.
Speaker 3 (04:28):
It's not about trying to control those things. That's a
waste of time. It's about knowing how to react to it.
It can be really hard to overcome this, and you know,
to bring it back to what we're talking about, we're
talking about political parties and who's in power and how
should that affect my decisions. People tend to worry that
if my party is not in control, then that's going
to have some kind of impact, and I should prepare
for that because those other people they're just plain idiots
(04:49):
and they're going to destroy the destroy the thing as
we know it. And you noticed I said that very carefully.
I'm not picking an aisle. Both sides do this, and
people in general will pick one team versus the other
and declare you know that we're headed down the wrong path.
If the wrong team is in charge, it does not
work that way.
Speaker 1 (05:04):
It doesn't, Bob, it doesn't there and there are plenty
of idiots, you know, both sides of the political aisle too.
So all right, you're listening to simply money presented by
all Worth Financial. I'm Bob sponseller along with Brian James. Thankfully,
we have our own in house data that our chief
investment officer, Andy Stout, always puts together for us every year.
(05:27):
And I'm one of the reasons, among many, that I'm
so thankful for Andy is he always plays it right
down the middle. You will never detect any bias on
his part. It's always about the facts, the numbers, the data,
and he's got a great team that crunches numbers, you know,
month in, weekend, year out, and they provide a lot
(05:48):
of great data, you know, for us to look at
and review with clients. For example, from nineteen forty nine
to twenty twenty four. Obviously, this encompasses a lot of
years and a lot of geopolitical events. The average return
of the S and P five hundred in the first
term of any presidency was twelve percent. Average annual return
(06:11):
fifteen percent average return for a democratic administration, nine percent
for a Republican first term administration. So the point is,
the market's gone up in the first term of any
president presidency, regardless of which political party is occupying the
White House. And that's why we all have to remember
(06:31):
there are so many factors involved in where market returns
come from. I mean, the federal reserve is a factor,
tax policy is a factor, Stimulus packages are a factor.
We can always print money out of thin air and
inject it into the economy. And that's not even mentioning
Congress and how the congressional congress, you know, the congressional
(06:55):
balance of parties and congresses. So there's there's just a
lot of factors that the stock market that have nothing
to do with political bias.
Speaker 3 (07:05):
And I think it's so important to understand this because
because it's so loud nowadays, Bob Right, we're surrounded. You
can't get away from the news cycle. And it's not
even the you know, thirty years ago, it was just
we had a few networks to deal with that we're
pumping information into our faces and into our brains. Now
it's every single individual politician because of social media. They're
on Twitter, they're on Instagram, they're on all these different places,
(07:27):
and you simply cannot get away from it, and so
it's really hard not to allow that information to affect
your decision making. But I think it's important to know
that the market just doesn't care. It doesn't matter, it
doesn't care who which flavor is in office. It just
wants to know which one. That's why last year was
a bit of a wander until we knew what you know,
how the election came out. Then the market and companies
(07:47):
are able to say, all right, we have this kind
of administration, the rules are going to probably look like
this historically speaking. Now we can start to move forward.
But if you look at any of these numbers, whether
it's the first year of an administration Democrat or Republican,
or the full four year term, it just doesn't make
any difference. The numbers are all great no matter what
it as long as you are a long term oriented investor.
Speaker 1 (08:08):
Well, and to drive your point home that you just
made with some actual data, here's some additional data from
our friends at Dimensional Fund Advisors. Since nineteen twenty six,
we've had twenty four presidential elections. In twenty of those
twenty four years, the markets were up for the year
twenty out of twenty four times. Obviously the other four
(08:28):
the market was down, but you can argue that factors
other than who won the presidential election played a role
in the market going down those four years. For example,
in nineteen thirty two we were in the middle of
the Great Depression, in nineteen forty we were in the
midst of the start of World War two. And in
two thousand, when the market went down, the dot com
(08:49):
boom was in the middle of impacting the markets. And
then obviously in two thousand and eight we were dealing
with the Great Financial Crisis, a major housing crisis. So again,
going back to nineteen twenty six, Republicans have had control
of the White House and Congress in thirteen of those years.
(09:10):
Democrats had total control the White House and Congress for
thirty four years. Which party coincided with greater returns for
the S and B five hundred neither. According to Dimensional
Fund Advisors who did this research, the average return of
the market the S and P five hundred was fourteen
(09:30):
percent for both scenarios. Irrespective of which political party, you know,
occupied the White House and Congress at the same time,
it really has not mattered.
Speaker 2 (09:41):
And there you go there's the data to back it up.
Speaker 3 (09:43):
But Bob, But Bob, I want to be passionate, right.
I want to support my political beliefs, and I really
want to, you know, hurt the other side. How can
I do things? Why can't this be black and white?
Why can't ones I'd be bad and ones I'd be good.
Why doesn't it work that way? Bob?
Speaker 1 (09:56):
Well, I I know you're kind of have some fun
with this, but I've had I've literally had a half
dozen meetings this year where people are trying to convince me.
And these are very smart people, very accomplished people. They
are trying to convince me that this time it's is different.
And I don't want to get off on a political tangent.
(10:19):
But you know, I had the same thing. You know,
obviously these people are not big fans of President Trump.
Had the same kind of conversations go on, you know,
during the last administration and when President Obama took over,
and everybody was wrong if they allowed their money to
turn red or blue instead of just remembering that our
(10:40):
money is green.
Speaker 3 (10:41):
Here's the artworth go up, not down. The whole financial
planning experience is more far more of an art than
a science it is. It's about numbers. They look like numbers,
but it's far more artsy.
Speaker 1 (10:52):
Yep, here's the all Worth advice. Don't let politics pave
your portfolio. Let discipline, fundamentals and diversification do the work.
Speaker 2 (11:01):
All right, Are you flying blind with your money?
Speaker 1 (11:04):
A surprising number of Americans say they are, and it
could be a huge costly mistake. We'll explain what's driving
this trend and why it's the exact opposite, wrong time
to abandon your plan. You're listening to Simply Money presented
by all Worth Financial on.
Speaker 2 (11:20):
Fifty five KRC, the talk station.
Speaker 1 (11:30):
You're listening to Simply Money presented by all Worth Financial
on Bob Sponseller along with Brian James. If you're close
to or already in retirement, what should you actually do
with your investments?
Speaker 2 (11:41):
Right now?
Speaker 1 (11:42):
We've got a practical checklist tailored for retirement success in
uncertain times and that's coming up straight ahead at six
forty three. All right, if you have a financial plan,
you're on the right track. But when was the last
time you reviewed your financial plan? That's what has us
a little concerned tonight, Brian. A new study from the
(12:04):
Certified Financial Planning Board has some startling statistics about how
people are just kind of letting this stuff sit around
and fly blind.
Speaker 3 (12:12):
Right now, Well, yeah, this is this is on its face,
this seems like an opportunity for us as financial planners,
but it's also a little bit alarming that people seem
to have stepped away a little bit from the mindset of,
you know, I need to be thinking ahead and kind
of looking at the headlines going well, everything is chaos,
therefore I'm not going to bother putting any energy into it.
So specifically, though, the survey found that about forty percent
of Americans aren't engaging are not engaging in financial planning
(12:35):
at all. This means no budgeting, no investing, they're not
intentionally saving, They're just living their lives and letting whatever happens,
you know, happens. This is a six percent increase from
last year in people who say they don't do any
financial planning at all. So that again, forty percent of
the households that we're interviewed here are just opting out
of the basic stuff. And this isn't just people who
(12:56):
don't have, you know, a lot of resources. This is
this is all across the range of different asset levels.
So it's not simply people who are are kind of
in a tough spot and therefore not trying to plan
for the future. It's people who have resources that give
them options, and the options are good, but it always
makes the plan more complicated. But those people too aren't
(13:16):
paying a whole lot of attention to what's going on.
Speaker 2 (13:19):
Well, let's get into why this might be happening.
Speaker 1 (13:22):
And again, according to this study, six and ten say
inflation makes it difficult to plan at all, and they
blame the economy. Shoot, we can always blame inflation in
the economy. Four and ten cite political division, which we
just talked about, and political division and.
Speaker 2 (13:38):
Unrest is a major stressor.
Speaker 1 (13:40):
And I think these folks, again, these are forty percent
of all people out there just throwing their hands up
and saying, you know, the world's in chaos, the administration
is chaotic, there's nothing I can do. Therefore, I'm going
to bury my head in the sand and do nothing.
And again to your point, Brian, even among higher net
worth households, there's this creeping set that planning doesn't matter
(14:02):
if the world feels out of control. And since I
can't control the world, I'm gonna do nothing.
Speaker 3 (14:07):
Yeah, And I think a good chunk of this, Bob,
is is we all. We all have that, you know,
that procrastinator inside of us that says, this is going
to be hard. Financial planning is hard. I'm gonna have
to make hard decisions, I'm gonna have to learn things,
and I have a day job in kids, and I
just don't want to think about it. I really think
that that, you know, these these are excuses to just say,
you know what, it was going to be painful anyway. Always,
I don't like financial planning, but so I just don't
(14:28):
want to think about it. Therefore, this week I'm gonna
blame inflation. So you know, inflation is a thing, but
at the same time, it's not. I don't know anybody,
Bob yet, who has truly truly changed their daily routine
their lives, you know, because of inflation, other than we
all make time to complain about it. Right, as long
as we're eating more than just eggs for dinner, then
(14:49):
inflation has not touched every single part of your life
and has not really driven you should not have driven
you to a point where you have to skip meals
that kind of thing. But but no, the whole point
is to me inflation is that that makes it necessary. Right,
It's an outside sort of a catalyst, right at every
period of time has something going on that could be
a threat to your financial plan. But you have if
(15:11):
you have no idea what your plan is, right, you
have a plan, even if you haven't sat down and
put one together. You got a plan. Something's gonna happen, good, bad,
or and different. If you don't know what trajectory you're on,
then you have no idea what inflation is going to
do to it. It may have a huge impact, it
may not have any but you got to understand where
you were trying to go in the first place before
you can determine whether something has knocked you off course.
(15:33):
So I would say this should be the opposite. Inflation
is a thing. It's a thing for this regeneration of
near and soon to be retirees to worry about, more
so than in the past. But if you don't have
a plan, it's gonna have a much harder impact on you.
If you have, then it will if you have some
idea where you ahead of in the first place.
Speaker 1 (15:51):
Well, Brian, you see back up the points that you
just made you know again. According to this study, those
who have a written financial plan are significant more confident.
Ninety percent of those with the written plans say they
feel more in control of their finances. So it's not
that we you know, people came and did a financial
plan with a good advisor and all of a sudden,
(16:12):
inflation went away, political division went away. They sat down
and did a plan with a good fiduciary advisor, and
all of a sudden, ninety percent of them feel more
in control of their finances. Eighty percent of all people
say they feel better prepared for inflation and prepared for
market downturns with a good financial plan.
Speaker 2 (16:33):
And here's again the kicker.
Speaker 1 (16:35):
Eighty percent of all folks report lower stress related to
money as a result of actually doing a financial plan.
Speaker 2 (16:43):
So this is all counterintuitive.
Speaker 1 (16:45):
You know, we bury our head in the sand because
we don't want to think about it and think things
are out of our control. Yet when folks actually come
into an office, sit down with a good advisor, and
put together a sound financial plan and strategy, they have
way more peace in their life, way more confidence. It's
the results, you know, double in terms of the amount
(17:07):
of peace people have yeah.
Speaker 3 (17:08):
And we can't speak, of course, for other financial advisors
and the experiences people are having with them, but just
speaking for all worth itself, and people who who find
us are already seeking educational information. They're aware of this
show and the online resources and the things that we have.
That means they're already geared toward learning. And those people
are usually in pretty solid shape. So it's very, very
(17:29):
very frequent that I'll put a plan together for a
new client and they will fall all over themselves thanking
me for the wonderful news that I've given them. And
the first thing I say is I didn't do anything yet.
All I did was step back and help. I pulled
you back from the tree so that you can look
at the whole forest. This is your situation. I just
shined a bright light on it. That's just step one.
But I would say eighty ninety percent of the time
(17:50):
when we review that plan, they're in solid shape to
begin with. They just never took the time to understand
what they wanted in the first place and whether they
had the resources to get there. They just worried themselves
to death for the prior several decades, and that drives
saving and all those responsible decisions, but they had no
idea the impact it was having. So once we've established that, yeah,
you are in good shape, the basics are you can
(18:10):
eat the expensive cat food. If it comes to that, right,
you'll be okay. But then that we can turn the
plan toward the optimization right, So we first want to
get past the idea of black and white. Am I
on a good path? Will I be able to retire
do the things that I want to do? And then
that's a black and white yes or no question. Once
we get that, yes, you've won the game. Now you
have enough money, you can do the things you want
(18:31):
to do. Now we have to focus more on the
more specific things. Do we have the right investments in place?
Do we need to use things like buffer btfs or
perhaps a tax loss harvesting in place? Do we need
to be doing roth conversions, when's the best time to
choose to set up social security? Those different kinds of things.
That is about optimization, and that's kind of where our
questions start. But we can't get there until we know
(18:52):
whether we were on the right course in the first place.
Speaker 1 (18:55):
Well, and the things that you just listed off, Brian,
those are all things we can control, can do proactive
tax planning, you know, regardless of what the tax law
is or how it might change, there's always opportunity to
do planning, and there's always a great opportunity to look
at the overall risk profile of your portfolio and make
sure you've got money structured correctly given the time frame
(19:19):
within which you need to use your money, always a
good time to sit down and review your plan. And again,
those are things that you can and should be in
control of, no matter how out of control or uncertain
the world or the country might seem. Here's the all
Worth advice. Uncertainty isn't a reason to quit planning. It's
(19:39):
the reason you need a plan. Coming up next, the
newest way scammers are trying to rip you off. 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 Sponseller along
with Brian James. Joined to night by our good friend
(20:01):
Josil Erlik from the Greater Cincinnati Better Business Bureau. Josile,
thanks for making time for us tonight, and I know
you've got a lot of good updated information to share
with us about scams that are out there.
Speaker 4 (20:16):
Oh, there were so many to pick from. It's really unfortunate.
But scammers impersonating the government, including the Federal Trade Commission,
is nothing new. But here's a new twist. Scammers are
now calling themselves FTC agents, and they're giving you fake
badge numbers and fake ID cards, all to convince you
(20:36):
that they are who they say they are. Now, just
so we're clear, the FTC does not have agents. These
scams usually start with somebody reaching out about a supposed
urgent problem. Maybe it's a computer pop up saying you
have a virus and you need to call tech support.
We've all heard about that scam, or someone claiming to
be Amazon or your bank insisting there's something wrong with
(20:59):
your account. They might even say your identity has been
stolen or somebody's trying to take money out of your account.
Once they've got your attention with these critical issues, they
transfer you to this alleged FTC agent to supposedly help
you resolve the issue. Now, that person may give you
proof that they're from the FTC, like that picture of
(21:20):
an ID with a badge number, both of which are fake.
This agent may even try to enlist your help to
catch the bad guys as a way to gain your trust.
Their ultimate goal, though, is to convince you to give
them access to your money. That is something you don't
want to fall for now. Along the same lines as
(21:41):
the FTC scam, we've talked before about the jury duty scam,
where some official calls you to say you have a
warrant out for your arrest for not showing up for
jury duty, but if you pay the fine, it'll all
go away. Well, the other day, one of my associates
was called by one of these guys, so she decided
to play along, And I just wanted to tell your
(22:02):
listeners exactly how this went down with her and how
easy it is for somebody to get caught up in
a scam like this. She got a call from both
a sergeant and a lieutenant alleging she had a federal
warrant out for her arrest for not showing up for
grand jury summons. These guys even knew her home address
and said she'd signed for the summons then never showed up,
(22:25):
which resulted in the federal arrest warrant. Oddly enough, they
couldn't give her a copy of the alleged signed summons.
As according to the scammers, this was an active investigation.
They said she now had two felony warrants for her
arrest and needed to post bond of more than fifteen
thousand dollars to avoid jail time, and if she didn't
(22:45):
post the bond, she'd have to pay one hundred and
fifteen thousand dollars for her failure to appear. They also
told her she was under a gag order not to
say this, not to share this active case with anybody else, meaning,
don't tell anybody who might convince you that you are
being scammed. Here's the interesting part. She was supposed to
(23:06):
meet this bondsman at a gas station to make this
fifteen thousand dollars bond payment. Can you believe it?
Speaker 2 (23:13):
Now?
Speaker 4 (23:14):
This is how this is how nice our government is,
they told her. Since this was a federal court case,
and in lieu of her having to drive all the
way to Washington, d C. To pay the bond, our
government conveniently offers roving bail bondsmen. Isn't that fabulous now?
They told her, once she paid the bond, a date
would be set for pre trial and sentencing. These guys
(23:37):
were so convincing, and they lead with one scare tactic
after another. They also told her if she even set
foot on any government property, she was going to be arrested, booked,
and jailed immediately, which means don't involve the police, who
may tell you you're being scammed. They even texted her a
picture of the alleged signed and notarized arrest warrant from
(23:59):
the US District Court. Now, this is a great example
of how somebody can get caught up in a scam.
These guys are good at what they do, and in
the heat of the moment, when they're coming at you
rapid fire with scare tactics, when you think you're cut
off from discussing with your friends and family and you're
afraid to go to the police, it's easy to believe
what you're being told.
Speaker 3 (24:21):
Yeah, those are some scary stories. It does seem easier
to get to people when we bring the government into it,
because people are terrified of hearing directly from any government agency.
Another one I'm hearing a lot about is the DMV.
There's a lot of texting things going around, and I
hear that from my own clients. And that has happened
in my own family. Think I've got I bet if
I look at my spam fold er, I've got some myself.
Right now, I've gotten you.
Speaker 2 (24:42):
I've gotten five of them in the last six weeks. Brian.
Speaker 3 (24:45):
Well, knowing you, Bob, those could be legit, you might
want to head down to the DMV.
Speaker 2 (24:49):
I'm getting the DMV and being arrested. I got a
lot going on in my life.
Speaker 1 (24:53):
You'll tell us, tell us about the tell us about
the DMV stuff.
Speaker 4 (24:59):
Well, I got you both. There was one week where
I got three or four of these a day. So
the text says, if you don't pay, they're going to
report you to the DMV violation database, whatever that might be.
They're going to suspend your vehicle registration, They're going to
suspend your driving privileges. You could be prosecuted and your
credit scare will be affected. Now they've got you coming
and going with anything that you might be afraid of there,
(25:21):
including not being able to drive. In another version of
the scam, the text comes from a toll company like
easy Paths, and they want you to pay for an
unpaid toll or you're going to be subject to the
same penalties the exact same verbiage in that text. In
both scenarios, they demand immediate payment via the link they provide,
or you're going to get your license suspended or have
(25:42):
further legal action. Interestingly, both versions have a note reply why,
like you see on a text to confirm that you
have a doctor's appointment or whatever and you're going to
be there. They have reply why. Of course, reply why
means that it's just confirming to the scammers that they
have an active phone number and your number was now
going to be passed around as fodder for a whole
(26:03):
host of other text related scams. Now, the newest scam
naming the DMV, is tied to your real ID. And
this is how that scam works. You get a text
or email from somebody who says they're from the DMV
or sometimes the Department of Homeland Security. They say you
can skip the line and expedite your application for a
real ID. You just have to click a link to
(26:24):
share your information or pay a fee. It's a phishing
scam just to steal your money or your personal information.
The only way to get a real ID is by
going to the DMV in person. You cannot submit an
application online or by mail, and nobody can expedite the process.
One final thing is the texting scams from the USPS
(26:46):
or any delivery service. They tell you that you have
a package missing. It's out for delivery. We have a
wrong address, you name it. That text message will say
click a link to fix the problem. That is a scams.
Scammers want you to click the link, and their message
to do it will take them take you to a
bogus website that looks exactly like the USPS website or
(27:10):
the delivery website. Clicking the link may install malware on
your phone or whatever device you're using, giving scammers access
to all the information you have stored on that device.
If you think a text is about a real delivery,
don't go to the website given. Go to the actual
website where you ordered the product from and find the
(27:32):
tracking information there.
Speaker 2 (27:34):
All right, Wow, a ton of stuff to be thinking
about today. And I don't know.
Speaker 1 (27:39):
About you, Brian, This is infuriating to me to just
know that all this is going on out there. But
Joe Cio, thank you to you and your team for
being out there, you know, studying, monitoring all this stuff
and bringing it to our attention today, really appreciate all
the great advice. If you're listening to Simply Money, presented
by all Worth Financial on fifty five KRC, the talk station.
(28:07):
You're listening to Simply Money because by all Worth Financial
Bob spond Seller along with Brian James. Do you have
a financial question you'd like for us to tackle. There's
a red button you can click on while you're listening
to the show right there on the good old iHeart app.
Simply record your question and it will come straight to us.
If you're staring at your retirement portfolio wondering whether to buy,
(28:30):
sell or hold, you're not alone. This year has been
quite a roller coaster so far, and when you're no
longer contributing to your four one K or just about
to start drawing from it, that volatility quickly feels very personal. Brian,
Let's get into some of the challenges here for folks transition,
(28:50):
transitioning into retirement and the things that we need to
be looking at. You know, when we turn that pile
of money into an income distribution.
Speaker 3 (28:59):
Strategy, sequence of return risk, Bob, that's really where that's
a thing that retirees face early on, whether it happens
or not to them. Obviously, that's a matter of what
the universe wants to do to us on a daily basis.
But sequence of return risk isn't something that we think
about when we're saving, or it doesn't really matter when
I'm saving. I'm young, I'm twenty thirty years old, and
(29:20):
I'm putting money my four O one. Okay, the market's
going to go up, it's going to go down. I
don't really care when, because I've got such a long
frame of such a long period of time. But when
I retire, that nest egg that I've spent the better
part of my life building will play some role in
producing income for me to live off of. Maybe I'm
going to push it to the back end of retirement
and lean on my other sources of income for a
little while, or maybe I need to tap into it
(29:42):
right away. That's different by every individual that we do
a financial plan for, but sequence of return risk simply
means when does the market do what. The worst thing
that can happen to anybody in retirement is if we know,
for example, take anybody who retired in twenty twenty one,
the immediate thing that they were faced with was twenty
twenty two, believe it or not, was one of the
we don't think of it this way, but it was
(30:02):
one of the five worst years that we've ever had
in the stock market. So if you retired in twenty
twenty one, the first thing your nest egg did was
take a giant step down. That's a problem. It doesn't
have to be a ship sinker, but it can happen
to anyone. So you want to kind of make sure
that when you're doing your financial plan, build something that
you can kind of consider what I call the hunky
dory scenario. In other words, nothing bad ever happens again,
(30:23):
and we get an average of I don't know, five
to six maybe seven percent rate of return? How does
it look? And then right side by side with that,
you can do a stress test, which basically means, let's
take twenty percent of my assets and make them go
poof and then run all the numbers again. Now, am
I okay? If your plan is still successful with that,
then you are able. Then that indicates that you are
indeed able to handle sequence of return. Us we can't
(30:45):
control it, the dangerous part, Bob. So for those retirees
in twenty twenty one, who have had to face twenty
twenty two because the universe selected them. They were very,
very tempted to I'm retired, now I've got to protect, protect, protect, Therefore,
I'm going to take my assets out of the market
because the market is now scary. The market didn't change,
you did, The markets still doing the same thing it
has always done. You can't try to time it that
(31:06):
way and be protective. You will lock in those losses
and you miss out on the twenty three and twenty
four that would have given you all that money back,
and then some yeah.
Speaker 1 (31:13):
A couple things just to react to what you laid
out there. I mean, I think this sequence of return
risk is often new. It's something people don't consider as
they head into retirement. And here's why. When you're in
that accumulation phase, you really don't care what the market
does volatility wise on a year to year basis. All
you care about is what's my average rate of return
(31:34):
over the long term? And am I amassing enough money?
When you turn that into a monthly paycheck, you know,
this is where volatility can really eat into your portfolio.
If you've got everything in stocks, or you don't have
a plan and you know, Brian, I love.
Speaker 2 (31:51):
The bucket approach.
Speaker 1 (31:52):
I mean, last time I checked, the market goes up
even in any kind of major market ninety four percent
of the time over any three year holding period, the
market's up.
Speaker 2 (32:06):
What do I mean by that?
Speaker 1 (32:08):
You can eliminate a lot of this sequence of return
risk by just getting some money out of harm's way
meaning one to three years worth of living expenses or
cash flow needs, get it out of the market all together,
and have it at more conservative investments. And that way
people have the peace of mind of knowing, Hey, I
got my three year you know nut covered here. I
(32:31):
don't need to worry about, you know, any short term
market volatility because I've got some money out of harm's way.
Speaker 2 (32:37):
I think.
Speaker 1 (32:38):
The other thing sometimes people don't think about is what
they're actually planning to spend. This has been one of
the most surprising things that I've run into in my
career is and I'm talking about people with a lot
of money, with high income people, when you ask them
what they actually need to spend or want to spend
in retirement, they haven't thought about it because they just
(32:58):
live off the they've been living off that very high paycheck,
and that it really hasn't dawned on them that that
paycheck's gonna go away. And now, you know, not that
we need to budget down to the level of, you know,
how many packs of gum you buy per month, but
you at least need to have some round numbers of
what your spending's gonna be, uh, because that can surprise
(33:19):
some folks if they don't do any planning.
Speaker 3 (33:21):
Yeah, And and honestly, I think one of the things
I talked to my clients about, and there's people out
there who are in this situation. The market is essentially
we're a little bit below the all time high that
we had in February, but we've gotten back the initial
tear related panic that bottomed in early April. We're kind
of back to where we were before that. So if
you are somebody who's in this situation, if what Bob
just said resonated, Hey, we got it. We wanted to,
(33:43):
you know, put fifty thousand dollars into the kitchen, or
we need to buy a car or whatever. We know
there's something, there's money, there's a need for spending coming
up soon. Well, you know what, now is the time
to go ahead and carve those assets out because it
will be far more important that need is coming up
no matter what, right, you know you're gonna have to
spend the dollars for whatever the thing is, and that
it's just life. So you want to take it when
it's the most advantageous time. Guess what that time is.
(34:05):
Now the money is there, and take it. And then
I would also say it would be a good idea
to think to the next one and is there another
something coming up in the next two or three years
that we should be planning for Differently, Now is the
time to carve that out and take and make hay
while the sun shines, because sooner or later the market's
going to go the opposite direction. You'll still have that expense,
but then you'll have to take the loss.
Speaker 2 (34:26):
Yeah.
Speaker 1 (34:27):
Again, working with an advisor who really understands this, converting
people from pre retirement to retirement makes a huge difference,
and sit down and do the work in advance so
you don't have surprises coming down the road. Here's the
all Worth advice in retirement. Market volatility isn't just noise.
It's an opportunity to fine tune your income strategy and
(34:48):
stay on track for the long haul coming up next
Brian's bottom Line where he gets into some long term
care planning. You're listening to Simply Money presented by all
Worth Financial on fifty five krs the talk station.
Speaker 3 (35:05):
In the moment.
Speaker 1 (35:06):
You're listening to Simply Money presented by all Worth Financial.
Speaker 2 (35:09):
I'm Bob Sponseller.
Speaker 1 (35:10):
Along with Brian James, and it's time for Brian's bottom
Line where he shares some wisdom about long term care.
And this is a guy that's been dealing with clients
for almost thirty years. Brian can't wait to hear what
you have to share with us today.
Speaker 3 (35:24):
So, Bob, this comes from some meetings I've had very
very recently. Obviously, long term care is it can be
the boogeyman when it comes to financial planning because it's
an expensive it's an expensive proposition for people to have
to face. So let's throw some numbers out just so
we know exactly what we're shooting at. Long term care where,
of course we're talking about end of life type care
where you need a little extra help, can no longer
(35:46):
really be independent and trying to make you comfortmle. Not
quite hospice. We're not talking about that. We're talking about
you know, those last few years there. But so just
cost wise, what we're thinking, what we're looking at in
this area, it's about one hundred and fifteen thousand somewhere
in that neighborhood. One fifteen, one hundred and twenty per
year for a stay in a nice long term care facility.
(36:07):
The average stay for end of life care is two
and a half to three years. So put differently, I
need about three hundred and fifty thousand dollars to cover
my long term care needs. And people hear that they
in they kind of freak out a little bit, don't they, Bob,
because they all go, well, that's three hundred and fifty thousand,
that's an extra hundred something per year. Oh my gosh,
I already have to spend all of these things. Well,
the first thing we want to look at is that
(36:28):
that expense. Yes, it's it's a it's a fat one,
there's no doubt about it. But it's gonna it's gonna
replace a lot of the things that you're budgeting for now.
When we do long term care planning, we're usually in
the picture of health in our sixties, maybe early seventies,
just talking about what's the what is the risk what
will the impact be. But when we get there, we're
in our late eighties, early nineties. Well, at this point, Bob,
the travel is done. We're not buying cars anymore. A
(36:50):
lot of the expenses that you're paying to the nursing
home are things you won't have to do anymore. You're
not going to the grocery store, you're not paying the
electric bills so much anymore. Perhaps you're gonna maintain the house,
maybe you won't, but it's not one hundred and fifteen
thousand dollars on top of all of your current expenses.
A lot of it will replace some things, and you
can rearrange your finances so it's not just a straight
(37:11):
new expense you have to deal with. In addition, you'll
have insurance. Insurance is going to cover a lot of
the things out there. And these are all the decisions
we should look at before we consider buying long term
care insurance. Matter of fact, that's to be honest, nowadays,
that's rarely a solution that we actually employ because a
lot of people out there are in a good position
where they actually if you look at the dollars you'll
have left over, if you've got a solid financial plan now,
(37:33):
and it gets to grow for another twenty twenty five,
maybe even thirty years spending. How young you are, then
you may have enough. You probably do have enough in
that case to go ahead and self insure. But again,
don't go down the rabbit hole of all of my
long term care expenses are going to be new and
layered right on top of my existing living expenses. That's
just not the case, and so we don't want anybody
getting too worried about that. It's important to look at
(37:54):
the math, but don't get too panicked.
Speaker 1 (37:56):
Yeah, if I hear you correctly, I'm saying, hey, do
not panic here, but just take a look of the numbers.
Speaker 2 (38:00):
Make sure things are going to work for you. All right,
good stuff, Thanks for listening.
Speaker 1 (38:04):
Tune in tomorrow we will talk about the one hundred
billion dollar investment that has us sounding some alarms. You've
been listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station
Tonight, are you treating your investments as though they are
red or blue?
Speaker 2 (00:11):
And is that costing you money?
Speaker 1 (00:14):
You're listening to simply Money present up by all Worth
Financial on Bob Sponseller along with Brian James. We're about
halfway through the year now and apparently, Brian, many Americans
are shaping their portfolios not by fundamentals but by political
party lines.
Speaker 2 (00:31):
Yeah.
Speaker 3 (00:31):
New poll out there from Gallup shows us that Democrats
are about fifty nine points more bearish than Republicans. Obviously,
Democrats are a little grumpy. Things didn't go their way
in November and they're still kind of feeling it. Republicans
are forty seven points more bullish. This is kind of
a weird comparison. We're comparing, you know, the grumpy people
versus the happy people. But the point is that it's
not the numbers, it's the difference. This is the widest
(00:53):
gap we've seen since two thousand and one. Another study
from UBC tells us that from twenty three thirteen into
the future, investors started picking stocks related to their political affiliations.
So Republicans focused on oil, Democrats focused on green energy,
things like that. So that wasn't so much of a
thing prior to that, but you know, a little more
(01:13):
than a decade ago, we did start picking our making
our investments based on who was in control and whatever
the political beliefs that we hold.
Speaker 1 (01:19):
All right, Brian, I've got I can tell you stories
upon stories of actual clients that I experienced this with.
You know, are you in the same camp. I knew
that this country was very politically divided. I mean, that's
not you don't have to be a rocket science to
figure that out. But I literally have people come into
(01:40):
the office and I can tell within thirty seconds you
know which side of the aisle they vote on, and
the mood is dramatically different. Are you seeing the same
thing with with with some of your clients? And more importantly,
how do you deal with it?
Speaker 2 (01:56):
Yeah?
Speaker 3 (01:56):
And it's definitely different. So you know, I've been doing
this for sneaking up on thirty years now, and I
don't remember a time where politics were as much in
the room when we're discussing financial planning topics as I
do right now. Now, that's that I don't know. This
is kind of interesting to me. People are passionate, but
they're very guarded. You can, like you said, and I
think this is what you were saying. You can you
(02:17):
can figure out which way they lean, but they're not
necessarily flying the flag, right. I don't have people that
come in and say, you know, the Democrats are going
to ruin this, the Republicans are where it's at, or
vice versa. They just make comments that where you can
kind of tell where it's going. So it's it's in
their forethought in terms of how they're going to make
their decisions, but they're not necessarily really trying to advocate
for one side or another. But that's not really the point.
I just find it interesting that, yes, they're passionate, but
(02:38):
they do kind of keep it quiet because they don't
want to. They know. I think at this point my
clients maybe years are the same. They know what I'm
gonna say that if they start leaning toward picking their
investments or making financial planning decisions based on their political beliefs,
they know I'm going to tell them that they're probably
going down the wrong path because that's a that's a
way to, you know, to kind of make bad decisions
(03:00):
because it doesn't necessarily have any impact on the outcome
over the long term.
Speaker 1 (03:04):
Well, and let's face it, we all deal with very
smart people. And I've said this for years and I
and this is what I say to clients. One of
the first things I ask them is what are your
news sources? What are you listening to and consuming every day?
And and that applies to both right and left leaning people.
I mean, we can all go out and find things
(03:26):
that will amplify and repeat. You know, are our biases
that we want to hear repeated every day?
Speaker 2 (03:32):
Right?
Speaker 1 (03:32):
So, uh, usually when you can figure out what people
are consuming every day, you can understand how they're feeling. Again,
we're dealing with smart people. You know, they're well read.
They like to keep up on things. But if you've
got certain messages being drum beaded into your head day
after day, week after week, it's going to impact you, know,
(03:54):
how you feel about the economy and the world.
Speaker 2 (03:56):
Would you agree, Brian, absolutely?
Speaker 3 (03:58):
And And this is I I think this comes from
a place where people really just want things to be
black and white. If I take step A, I want
step B to occur in a predictable manner. And that
is really really it takes a long time, you know,
set aside the political stuff. It takes a long time
for people to get used to the idea that we
all have less control over the finances than we want.
(04:19):
Things will happen in your lives that you can't control,
that you'll have to deal with. Things will happen to
all of us via the economy, the overall markets, and
that kind of thing that we can't control either.
Speaker 2 (04:28):
We have to.
Speaker 3 (04:28):
It's not about trying to control those things. That's a
waste of time. It's about knowing how to react to it.
It can be really hard to overcome this, and you know,
to bring it back to what we're talking about, we're
talking about political parties and who's in power and how
should that affect my decisions. People tend to worry that
if my party is not in control, then that's going
to have some kind of impact, and I should prepare
for that because those other people they're just plain idiots
(04:49):
and they're going to destroy the destroy the thing as
we know it. And you noticed I said that very carefully.
I'm not picking an aisle. Both sides do this, and
people in general will pick one team versus the other
and declare you know that we're headed down the wrong path.
If the wrong team is in charge, it does not
work that way.
Speaker 1 (05:04):
It doesn't, Bob, it doesn't there and there are plenty
of idiots, you know, both sides of the political aisle too.
So all right, you're listening to simply money presented by
all Worth Financial. I'm Bob sponseller along with Brian James. Thankfully,
we have our own in house data that our chief
investment officer, Andy Stout, always puts together for us every year.
(05:27):
And I'm one of the reasons, among many, that I'm
so thankful for Andy is he always plays it right
down the middle. You will never detect any bias on
his part. It's always about the facts, the numbers, the data,
and he's got a great team that crunches numbers, you know,
month in, weekend, year out, and they provide a lot
(05:48):
of great data, you know, for us to look at
and review with clients. For example, from nineteen forty nine
to twenty twenty four. Obviously, this encompasses a lot of
years and a lot of geopolitical events. The average return
of the S and P five hundred in the first
term of any presidency was twelve percent. Average annual return
(06:11):
fifteen percent average return for a democratic administration, nine percent
for a Republican first term administration. So the point is,
the market's gone up in the first term of any
president presidency, regardless of which political party is occupying the
White House. And that's why we all have to remember
(06:31):
there are so many factors involved in where market returns
come from. I mean, the federal reserve is a factor,
tax policy is a factor, Stimulus packages are a factor.
We can always print money out of thin air and
inject it into the economy. And that's not even mentioning
Congress and how the congressional congress, you know, the congressional
(06:55):
balance of parties and congresses. So there's there's just a
lot of factors that the stock market that have nothing
to do with political bias.
Speaker 3 (07:05):
And I think it's so important to understand this because
because it's so loud nowadays, Bob Right, we're surrounded. You
can't get away from the news cycle. And it's not
even the you know, thirty years ago, it was just
we had a few networks to deal with that we're
pumping information into our faces and into our brains. Now
it's every single individual politician because of social media. They're
on Twitter, they're on Instagram, they're on all these different places,
(07:27):
and you simply cannot get away from it, and so
it's really hard not to allow that information to affect
your decision making. But I think it's important to know
that the market just doesn't care. It doesn't matter, it
doesn't care who which flavor is in office. It just
wants to know which one. That's why last year was
a bit of a wander until we knew what you know,
how the election came out. Then the market and companies
(07:47):
are able to say, all right, we have this kind
of administration, the rules are going to probably look like
this historically speaking. Now we can start to move forward.
But if you look at any of these numbers, whether
it's the first year of an administration Democrat or Republican,
or the full four year term, it just doesn't make
any difference. The numbers are all great no matter what
it as long as you are a long term oriented investor.
Speaker 1 (08:08):
Well, and to drive your point home that you just
made with some actual data, here's some additional data from
our friends at Dimensional Fund Advisors. Since nineteen twenty six,
we've had twenty four presidential elections. In twenty of those
twenty four years, the markets were up for the year
twenty out of twenty four times. Obviously the other four
(08:28):
the market was down, but you can argue that factors
other than who won the presidential election played a role
in the market going down those four years. For example,
in nineteen thirty two we were in the middle of
the Great Depression, in nineteen forty we were in the
midst of the start of World War two. And in
two thousand, when the market went down, the dot com
(08:49):
boom was in the middle of impacting the markets. And
then obviously in two thousand and eight we were dealing
with the Great Financial Crisis, a major housing crisis. So again,
going back to nineteen twenty six, Republicans have had control
of the White House and Congress in thirteen of those years.
(09:10):
Democrats had total control the White House and Congress for
thirty four years. Which party coincided with greater returns for
the S and B five hundred neither. According to Dimensional
Fund Advisors who did this research, the average return of
the market the S and P five hundred was fourteen
(09:30):
percent for both scenarios. Irrespective of which political party, you know,
occupied the White House and Congress at the same time,
it really has not mattered.
Speaker 2 (09:41):
And there you go there's the data to back it up.
Speaker 3 (09:43):
But Bob, But Bob, I want to be passionate, right.
I want to support my political beliefs, and I really
want to, you know, hurt the other side. How can
I do things? Why can't this be black and white?
Why can't ones I'd be bad and ones I'd be good.
Why doesn't it work that way? Bob?
Speaker 1 (09:56):
Well, I I know you're kind of have some fun
with this, but I've had I've literally had a half
dozen meetings this year where people are trying to convince me.
And these are very smart people, very accomplished people. They
are trying to convince me that this time it's is different.
And I don't want to get off on a political tangent.
(10:19):
But you know, I had the same thing. You know,
obviously these people are not big fans of President Trump.
Had the same kind of conversations go on, you know,
during the last administration and when President Obama took over,
and everybody was wrong if they allowed their money to
turn red or blue instead of just remembering that our
(10:40):
money is green.
Speaker 3 (10:41):
Here's the artworth go up, not down. The whole financial
planning experience is more far more of an art than
a science it is. It's about numbers. They look like numbers,
but it's far more artsy.
Speaker 1 (10:52):
Yep, here's the all Worth advice. Don't let politics pave
your portfolio. Let discipline, fundamentals and diversification do the work.
Speaker 2 (11:01):
All right, Are you flying blind with your money?
Speaker 1 (11:04):
A surprising number of Americans say they are, and it
could be a huge costly mistake. We'll explain what's driving
this trend and why it's the exact opposite, wrong time
to abandon your plan. You're listening to Simply Money presented
by all Worth Financial on.
Speaker 2 (11:20):
Fifty five KRC, the talk station.
Speaker 1 (11:30):
You're listening to Simply Money presented by all Worth Financial
on Bob Sponseller along with Brian James. If you're close
to or already in retirement, what should you actually do
with your investments?
Speaker 2 (11:41):
Right now?
Speaker 1 (11:42):
We've got a practical checklist tailored for retirement success in
uncertain times and that's coming up straight ahead at six
forty three. All right, if you have a financial plan,
you're on the right track. But when was the last
time you reviewed your financial plan? That's what has us
a little concerned tonight, Brian. A new study from the
(12:04):
Certified Financial Planning Board has some startling statistics about how
people are just kind of letting this stuff sit around
and fly blind.
Speaker 3 (12:12):
Right now, Well, yeah, this is this is on its face,
this seems like an opportunity for us as financial planners,
but it's also a little bit alarming that people seem
to have stepped away a little bit from the mindset of,
you know, I need to be thinking ahead and kind
of looking at the headlines going well, everything is chaos,
therefore I'm not going to bother putting any energy into it.
So specifically, though, the survey found that about forty percent
of Americans aren't engaging are not engaging in financial planning
(12:35):
at all. This means no budgeting, no investing, they're not
intentionally saving, They're just living their lives and letting whatever happens,
you know, happens. This is a six percent increase from
last year in people who say they don't do any
financial planning at all. So that again, forty percent of
the households that we're interviewed here are just opting out
of the basic stuff. And this isn't just people who
(12:56):
don't have, you know, a lot of resources. This is
this is all across the range of different asset levels.
So it's not simply people who are are kind of
in a tough spot and therefore not trying to plan
for the future. It's people who have resources that give
them options, and the options are good, but it always
makes the plan more complicated. But those people too aren't
(13:16):
paying a whole lot of attention to what's going on.
Speaker 2 (13:19):
Well, let's get into why this might be happening.
Speaker 1 (13:22):
And again, according to this study, six and ten say
inflation makes it difficult to plan at all, and they
blame the economy. Shoot, we can always blame inflation in
the economy. Four and ten cite political division, which we
just talked about, and political division and.
Speaker 2 (13:38):
Unrest is a major stressor.
Speaker 1 (13:40):
And I think these folks, again, these are forty percent
of all people out there just throwing their hands up
and saying, you know, the world's in chaos, the administration
is chaotic, there's nothing I can do. Therefore, I'm going
to bury my head in the sand and do nothing.
And again to your point, Brian, even among higher net
worth households, there's this creeping set that planning doesn't matter
(14:02):
if the world feels out of control. And since I
can't control the world, I'm gonna do nothing.
Speaker 3 (14:07):
Yeah, And I think a good chunk of this, Bob,
is is we all. We all have that, you know,
that procrastinator inside of us that says, this is going
to be hard. Financial planning is hard. I'm gonna have
to make hard decisions, I'm gonna have to learn things,
and I have a day job in kids, and I
just don't want to think about it. I really think
that that, you know, these these are excuses to just say,
you know what, it was going to be painful anyway. Always,
I don't like financial planning, but so I just don't
(14:28):
want to think about it. Therefore, this week I'm gonna
blame inflation. So you know, inflation is a thing, but
at the same time, it's not. I don't know anybody,
Bob yet, who has truly truly changed their daily routine
their lives, you know, because of inflation, other than we
all make time to complain about it. Right, as long
as we're eating more than just eggs for dinner, then
(14:49):
inflation has not touched every single part of your life
and has not really driven you should not have driven
you to a point where you have to skip meals
that kind of thing. But but no, the whole point
is to me inflation is that that makes it necessary. Right,
It's an outside sort of a catalyst, right at every
period of time has something going on that could be
a threat to your financial plan. But you have if
(15:11):
you have no idea what your plan is, right, you
have a plan, even if you haven't sat down and
put one together. You got a plan. Something's gonna happen, good, bad,
or and different. If you don't know what trajectory you're on,
then you have no idea what inflation is going to
do to it. It may have a huge impact, it
may not have any but you got to understand where
you were trying to go in the first place before
you can determine whether something has knocked you off course.
(15:33):
So I would say this should be the opposite. Inflation
is a thing. It's a thing for this regeneration of
near and soon to be retirees to worry about, more
so than in the past. But if you don't have
a plan, it's gonna have a much harder impact on you.
If you have, then it will if you have some
idea where you ahead of in the first place.
Speaker 1 (15:51):
Well, Brian, you see back up the points that you
just made you know again. According to this study, those
who have a written financial plan are significant more confident.
Ninety percent of those with the written plans say they
feel more in control of their finances. So it's not
that we you know, people came and did a financial
plan with a good advisor and all of a sudden,
(16:12):
inflation went away, political division went away. They sat down
and did a plan with a good fiduciary advisor, and
all of a sudden, ninety percent of them feel more
in control of their finances. Eighty percent of all people
say they feel better prepared for inflation and prepared for
market downturns with a good financial plan.
Speaker 2 (16:33):
And here's again the kicker.
Speaker 1 (16:35):
Eighty percent of all folks report lower stress related to
money as a result of actually doing a financial plan.
Speaker 2 (16:43):
So this is all counterintuitive.
Speaker 1 (16:45):
You know, we bury our head in the sand because
we don't want to think about it and think things
are out of our control. Yet when folks actually come
into an office, sit down with a good advisor, and
put together a sound financial plan and strategy, they have
way more peace in their life, way more confidence. It's
the results, you know, double in terms of the amount
(17:07):
of peace people have yeah.
Speaker 3 (17:08):
And we can't speak, of course, for other financial advisors
and the experiences people are having with them, but just
speaking for all worth itself, and people who who find
us are already seeking educational information. They're aware of this
show and the online resources and the things that we have.
That means they're already geared toward learning. And those people
are usually in pretty solid shape. So it's very, very
(17:29):
very frequent that I'll put a plan together for a
new client and they will fall all over themselves thanking
me for the wonderful news that I've given them. And
the first thing I say is I didn't do anything yet.
All I did was step back and help. I pulled
you back from the tree so that you can look
at the whole forest. This is your situation. I just
shined a bright light on it. That's just step one.
But I would say eighty ninety percent of the time
(17:50):
when we review that plan, they're in solid shape to
begin with. They just never took the time to understand
what they wanted in the first place and whether they
had the resources to get there. They just worried themselves
to death for the prior several decades, and that drives
saving and all those responsible decisions, but they had no
idea the impact it was having. So once we've established that, yeah,
you are in good shape, the basics are you can
(18:10):
eat the expensive cat food. If it comes to that, right,
you'll be okay. But then that we can turn the
plan toward the optimization right, So we first want to
get past the idea of black and white. Am I
on a good path? Will I be able to retire
do the things that I want to do? And then
that's a black and white yes or no question. Once
we get that, yes, you've won the game. Now you
have enough money, you can do the things you want
(18:31):
to do. Now we have to focus more on the
more specific things. Do we have the right investments in place?
Do we need to use things like buffer btfs or
perhaps a tax loss harvesting in place? Do we need
to be doing roth conversions, when's the best time to
choose to set up social security? Those different kinds of things.
That is about optimization, and that's kind of where our
questions start. But we can't get there until we know
(18:52):
whether we were on the right course in the first place.
Speaker 1 (18:55):
Well, and the things that you just listed off, Brian,
those are all things we can control, can do proactive
tax planning, you know, regardless of what the tax law
is or how it might change, there's always opportunity to
do planning, and there's always a great opportunity to look
at the overall risk profile of your portfolio and make
sure you've got money structured correctly given the time frame
(19:19):
within which you need to use your money, always a
good time to sit down and review your plan. And again,
those are things that you can and should be in
control of, no matter how out of control or uncertain
the world or the country might seem. Here's the all
Worth advice. Uncertainty isn't a reason to quit planning. It's
(19:39):
the reason you need a plan. Coming up next, the
newest way scammers are trying to rip you off. 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 Sponseller along
with Brian James. Joined to night by our good friend
(20:01):
Josil Erlik from the Greater Cincinnati Better Business Bureau. Josile,
thanks for making time for us tonight, and I know
you've got a lot of good updated information to share
with us about scams that are out there.
Speaker 4 (20:16):
Oh, there were so many to pick from. It's really unfortunate.
But scammers impersonating the government, including the Federal Trade Commission,
is nothing new. But here's a new twist. Scammers are
now calling themselves FTC agents, and they're giving you fake
badge numbers and fake ID cards, all to convince you
(20:36):
that they are who they say they are. Now, just
so we're clear, the FTC does not have agents. These
scams usually start with somebody reaching out about a supposed
urgent problem. Maybe it's a computer pop up saying you
have a virus and you need to call tech support.
We've all heard about that scam, or someone claiming to
be Amazon or your bank insisting there's something wrong with
(20:59):
your account. They might even say your identity has been
stolen or somebody's trying to take money out of your account.
Once they've got your attention with these critical issues, they
transfer you to this alleged FTC agent to supposedly help
you resolve the issue. Now, that person may give you
proof that they're from the FTC, like that picture of
(21:20):
an ID with a badge number, both of which are fake.
This agent may even try to enlist your help to
catch the bad guys as a way to gain your trust.
Their ultimate goal, though, is to convince you to give
them access to your money. That is something you don't
want to fall for now. Along the same lines as
(21:41):
the FTC scam, we've talked before about the jury duty scam,
where some official calls you to say you have a
warrant out for your arrest for not showing up for
jury duty, but if you pay the fine, it'll all
go away. Well, the other day, one of my associates
was called by one of these guys, so she decided
to play along, And I just wanted to tell your
(22:02):
listeners exactly how this went down with her and how
easy it is for somebody to get caught up in
a scam like this. She got a call from both
a sergeant and a lieutenant alleging she had a federal
warrant out for her arrest for not showing up for
grand jury summons. These guys even knew her home address
and said she'd signed for the summons then never showed up,
(22:25):
which resulted in the federal arrest warrant. Oddly enough, they
couldn't give her a copy of the alleged signed summons.
As according to the scammers, this was an active investigation.
They said she now had two felony warrants for her
arrest and needed to post bond of more than fifteen
thousand dollars to avoid jail time, and if she didn't
(22:45):
post the bond, she'd have to pay one hundred and
fifteen thousand dollars for her failure to appear. They also
told her she was under a gag order not to
say this, not to share this active case with anybody else, meaning,
don't tell anybody who might convince you that you are
being scammed. Here's the interesting part. She was supposed to
(23:06):
meet this bondsman at a gas station to make this
fifteen thousand dollars bond payment. Can you believe it?
Speaker 2 (23:13):
Now?
Speaker 4 (23:14):
This is how this is how nice our government is,
they told her. Since this was a federal court case,
and in lieu of her having to drive all the
way to Washington, d C. To pay the bond, our
government conveniently offers roving bail bondsmen. Isn't that fabulous now?
They told her, once she paid the bond, a date
would be set for pre trial and sentencing. These guys
(23:37):
were so convincing, and they lead with one scare tactic
after another. They also told her if she even set
foot on any government property, she was going to be arrested, booked,
and jailed immediately, which means don't involve the police, who
may tell you you're being scammed. They even texted her a
picture of the alleged signed and notarized arrest warrant from
(23:59):
the US District Court. Now, this is a great example
of how somebody can get caught up in a scam.
These guys are good at what they do, and in
the heat of the moment, when they're coming at you
rapid fire with scare tactics, when you think you're cut
off from discussing with your friends and family and you're
afraid to go to the police, it's easy to believe
what you're being told.
Speaker 3 (24:21):
Yeah, those are some scary stories. It does seem easier
to get to people when we bring the government into it,
because people are terrified of hearing directly from any government agency.
Another one I'm hearing a lot about is the DMV.
There's a lot of texting things going around, and I
hear that from my own clients. And that has happened
in my own family. Think I've got I bet if
I look at my spam fold er, I've got some myself.
Right now, I've gotten you.
Speaker 2 (24:42):
I've gotten five of them in the last six weeks. Brian.
Speaker 3 (24:45):
Well, knowing you, Bob, those could be legit, you might
want to head down to the DMV.
Speaker 2 (24:49):
I'm getting the DMV and being arrested. I got a
lot going on in my life.
Speaker 1 (24:53):
You'll tell us, tell us about the tell us about
the DMV stuff.
Speaker 4 (24:59):
Well, I got you both. There was one week where
I got three or four of these a day. So
the text says, if you don't pay, they're going to
report you to the DMV violation database, whatever that might be.
They're going to suspend your vehicle registration, They're going to
suspend your driving privileges. You could be prosecuted and your
credit scare will be affected. Now they've got you coming
and going with anything that you might be afraid of there,
(25:21):
including not being able to drive. In another version of
the scam, the text comes from a toll company like
easy Paths, and they want you to pay for an
unpaid toll or you're going to be subject to the
same penalties the exact same verbiage in that text. In
both scenarios, they demand immediate payment via the link they provide,
or you're going to get your license suspended or have
(25:42):
further legal action. Interestingly, both versions have a note reply why,
like you see on a text to confirm that you
have a doctor's appointment or whatever and you're going to
be there. They have reply why. Of course, reply why
means that it's just confirming to the scammers that they
have an active phone number and your number was now
going to be passed around as fodder for a whole
(26:03):
host of other text related scams. Now, the newest scam
naming the DMV, is tied to your real ID. And
this is how that scam works. You get a text
or email from somebody who says they're from the DMV
or sometimes the Department of Homeland Security. They say you
can skip the line and expedite your application for a
real ID. You just have to click a link to
(26:24):
share your information or pay a fee. It's a phishing
scam just to steal your money or your personal information.
The only way to get a real ID is by
going to the DMV in person. You cannot submit an
application online or by mail, and nobody can expedite the process.
One final thing is the texting scams from the USPS
(26:46):
or any delivery service. They tell you that you have
a package missing. It's out for delivery. We have a
wrong address, you name it. That text message will say
click a link to fix the problem. That is a scams.
Scammers want you to click the link, and their message
to do it will take them take you to a
bogus website that looks exactly like the USPS website or
(27:10):
the delivery website. Clicking the link may install malware on
your phone or whatever device you're using, giving scammers access
to all the information you have stored on that device.
If you think a text is about a real delivery,
don't go to the website given. Go to the actual
website where you ordered the product from and find the
(27:32):
tracking information there.
Speaker 2 (27:34):
All right, Wow, a ton of stuff to be thinking
about today. And I don't know.
Speaker 1 (27:39):
About you, Brian, This is infuriating to me to just
know that all this is going on out there. But
Joe Cio, thank you to you and your team for
being out there, you know, studying, monitoring all this stuff
and bringing it to our attention today, really appreciate all
the great advice. If you're listening to Simply Money, presented
by all Worth Financial on fifty five KRC, the talk station.
(28:07):
You're listening to Simply Money because by all Worth Financial
Bob spond Seller along with Brian James. Do you have
a financial question you'd like for us to tackle. There's
a red button you can click on while you're listening
to the show right there on the good old iHeart app.
Simply record your question and it will come straight to us.
If you're staring at your retirement portfolio wondering whether to buy,
(28:30):
sell or hold, you're not alone. This year has been
quite a roller coaster so far, and when you're no
longer contributing to your four one K or just about
to start drawing from it, that volatility quickly feels very personal. Brian,
Let's get into some of the challenges here for folks transition,
(28:50):
transitioning into retirement and the things that we need to
be looking at. You know, when we turn that pile
of money into an income distribution.
Speaker 3 (28:59):
Strategy, sequence of return risk, Bob, that's really where that's
a thing that retirees face early on, whether it happens
or not to them. Obviously, that's a matter of what
the universe wants to do to us on a daily basis.
But sequence of return risk isn't something that we think
about when we're saving, or it doesn't really matter when
I'm saving. I'm young, I'm twenty thirty years old, and
(29:20):
I'm putting money my four O one. Okay, the market's
going to go up, it's going to go down. I
don't really care when, because I've got such a long
frame of such a long period of time. But when
I retire, that nest egg that I've spent the better
part of my life building will play some role in
producing income for me to live off of. Maybe I'm
going to push it to the back end of retirement
and lean on my other sources of income for a
little while, or maybe I need to tap into it
(29:42):
right away. That's different by every individual that we do
a financial plan for, but sequence of return risk simply
means when does the market do what. The worst thing
that can happen to anybody in retirement is if we know,
for example, take anybody who retired in twenty twenty one,
the immediate thing that they were faced with was twenty
twenty two, believe it or not, was one of the
we don't think of it this way, but it was
(30:02):
one of the five worst years that we've ever had
in the stock market. So if you retired in twenty
twenty one, the first thing your nest egg did was
take a giant step down. That's a problem. It doesn't
have to be a ship sinker, but it can happen
to anyone. So you want to kind of make sure
that when you're doing your financial plan, build something that
you can kind of consider what I call the hunky
dory scenario. In other words, nothing bad ever happens again,
(30:23):
and we get an average of I don't know, five
to six maybe seven percent rate of return? How does
it look? And then right side by side with that,
you can do a stress test, which basically means, let's
take twenty percent of my assets and make them go
poof and then run all the numbers again. Now, am
I okay? If your plan is still successful with that,
then you are able. Then that indicates that you are
indeed able to handle sequence of return. Us we can't
(30:45):
control it, the dangerous part, Bob. So for those retirees
in twenty twenty one, who have had to face twenty
twenty two because the universe selected them. They were very,
very tempted to I'm retired, now I've got to protect, protect, protect, Therefore,
I'm going to take my assets out of the market
because the market is now scary. The market didn't change,
you did, The markets still doing the same thing it
has always done. You can't try to time it that
(31:06):
way and be protective. You will lock in those losses
and you miss out on the twenty three and twenty
four that would have given you all that money back,
and then some yeah.
Speaker 1 (31:13):
A couple things just to react to what you laid
out there. I mean, I think this sequence of return
risk is often new. It's something people don't consider as
they head into retirement. And here's why. When you're in
that accumulation phase, you really don't care what the market
does volatility wise on a year to year basis. All
you care about is what's my average rate of return
(31:34):
over the long term? And am I amassing enough money?
When you turn that into a monthly paycheck, you know,
this is where volatility can really eat into your portfolio.
If you've got everything in stocks, or you don't have
a plan and you know, Brian, I love.
Speaker 2 (31:51):
The bucket approach.
Speaker 1 (31:52):
I mean, last time I checked, the market goes up
even in any kind of major market ninety four percent
of the time over any three year holding period, the
market's up.
Speaker 2 (32:06):
What do I mean by that?
Speaker 1 (32:08):
You can eliminate a lot of this sequence of return
risk by just getting some money out of harm's way
meaning one to three years worth of living expenses or
cash flow needs, get it out of the market all together,
and have it at more conservative investments. And that way
people have the peace of mind of knowing, Hey, I
got my three year you know nut covered here. I
(32:31):
don't need to worry about, you know, any short term
market volatility because I've got some money out of harm's way.
Speaker 2 (32:37):
I think.
Speaker 1 (32:38):
The other thing sometimes people don't think about is what
they're actually planning to spend. This has been one of
the most surprising things that I've run into in my
career is and I'm talking about people with a lot
of money, with high income people, when you ask them
what they actually need to spend or want to spend
in retirement, they haven't thought about it because they just
(32:58):
live off the they've been living off that very high paycheck,
and that it really hasn't dawned on them that that
paycheck's gonna go away. And now, you know, not that
we need to budget down to the level of, you know,
how many packs of gum you buy per month, but
you at least need to have some round numbers of
what your spending's gonna be, uh, because that can surprise
(33:19):
some folks if they don't do any planning.
Speaker 3 (33:21):
Yeah, And and honestly, I think one of the things
I talked to my clients about, and there's people out
there who are in this situation. The market is essentially
we're a little bit below the all time high that
we had in February, but we've gotten back the initial
tear related panic that bottomed in early April. We're kind
of back to where we were before that. So if
you are somebody who's in this situation, if what Bob
just said resonated, Hey, we got it. We wanted to,
(33:43):
you know, put fifty thousand dollars into the kitchen, or
we need to buy a car or whatever. We know
there's something, there's money, there's a need for spending coming
up soon. Well, you know what, now is the time
to go ahead and carve those assets out because it
will be far more important that need is coming up
no matter what, right, you know you're gonna have to
spend the dollars for whatever the thing is, and that
it's just life. So you want to take it when
it's the most advantageous time. Guess what that time is.
(34:05):
Now the money is there, and take it. And then
I would also say it would be a good idea
to think to the next one and is there another
something coming up in the next two or three years
that we should be planning for Differently, Now is the
time to carve that out and take and make hay
while the sun shines, because sooner or later the market's
going to go the opposite direction. You'll still have that expense,
but then you'll have to take the loss.
Speaker 2 (34:26):
Yeah.
Speaker 1 (34:27):
Again, working with an advisor who really understands this, converting
people from pre retirement to retirement makes a huge difference,
and sit down and do the work in advance so
you don't have surprises coming down the road. Here's the
all Worth advice in retirement. Market volatility isn't just noise.
It's an opportunity to fine tune your income strategy and
(34:48):
stay on track for the long haul coming up next
Brian's bottom Line where he gets into some long term
care planning. You're listening to Simply Money presented by all
Worth Financial on fifty five krs the talk station.
Speaker 3 (35:05):
In the moment.
Speaker 1 (35:06):
You're listening to Simply Money presented by all Worth Financial.
Speaker 2 (35:09):
I'm Bob Sponseller.
Speaker 1 (35:10):
Along with Brian James, and it's time for Brian's bottom
Line where he shares some wisdom about long term care.
And this is a guy that's been dealing with clients
for almost thirty years. Brian can't wait to hear what
you have to share with us today.
Speaker 3 (35:24):
So, Bob, this comes from some meetings I've had very
very recently. Obviously, long term care is it can be
the boogeyman when it comes to financial planning because it's
an expensive it's an expensive proposition for people to have
to face. So let's throw some numbers out just so
we know exactly what we're shooting at. Long term care where,
of course we're talking about end of life type care
where you need a little extra help, can no longer
(35:46):
really be independent and trying to make you comfortmle. Not
quite hospice. We're not talking about that. We're talking about
you know, those last few years there. But so just
cost wise, what we're thinking, what we're looking at in
this area, it's about one hundred and fifteen thousand somewhere
in that neighborhood. One fifteen, one hundred and twenty per
year for a stay in a nice long term care facility.
(36:07):
The average stay for end of life care is two
and a half to three years. So put differently, I
need about three hundred and fifty thousand dollars to cover
my long term care needs. And people hear that they
in they kind of freak out a little bit, don't they, Bob,
because they all go, well, that's three hundred and fifty thousand,
that's an extra hundred something per year. Oh my gosh,
I already have to spend all of these things. Well,
the first thing we want to look at is that
(36:28):
that expense. Yes, it's it's a it's a fat one,
there's no doubt about it. But it's gonna it's gonna
replace a lot of the things that you're budgeting for now.
When we do long term care planning, we're usually in
the picture of health in our sixties, maybe early seventies,
just talking about what's the what is the risk what
will the impact be. But when we get there, we're
in our late eighties, early nineties. Well, at this point, Bob,
the travel is done. We're not buying cars anymore. A
(36:50):
lot of the expenses that you're paying to the nursing
home are things you won't have to do anymore. You're
not going to the grocery store, you're not paying the
electric bills so much anymore. Perhaps you're gonna maintain the house,
maybe you won't, but it's not one hundred and fifteen
thousand dollars on top of all of your current expenses.
A lot of it will replace some things, and you
can rearrange your finances so it's not just a straight
(37:11):
new expense you have to deal with. In addition, you'll
have insurance. Insurance is going to cover a lot of
the things out there. And these are all the decisions
we should look at before we consider buying long term
care insurance. Matter of fact, that's to be honest, nowadays,
that's rarely a solution that we actually employ because a
lot of people out there are in a good position
where they actually if you look at the dollars you'll
have left over, if you've got a solid financial plan now,
(37:33):
and it gets to grow for another twenty twenty five,
maybe even thirty years spending. How young you are, then
you may have enough. You probably do have enough in
that case to go ahead and self insure. But again,
don't go down the rabbit hole of all of my
long term care expenses are going to be new and
layered right on top of my existing living expenses. That's
just not the case, and so we don't want anybody
getting too worried about that. It's important to look at
(37:54):
the math, but don't get too panicked.
Speaker 1 (37:56):
Yeah, if I hear you correctly, I'm saying, hey, do
not panic here, but just take a look of the numbers.
Speaker 2 (38:00):
Make sure things are going to work for you. All right,
good stuff, Thanks for listening.
Speaker 1 (38:04):
Tune in tomorrow we will talk about the one hundred
billion dollar investment that has us sounding some alarms. You've
been listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station
Simply Money News
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!