October 2, 2025 • 41 mins
On today’s episode of Simply Money presented by Allworth Financial, Bob and Brian explain why most of the government keeps running during a shutdown—and why investors shouldn’t panic. Plus, wealthy Americans are giving less to charity. We unpack the reasons and show you smarter ways to give using donor-advised funds and IRAs. And—what’s the best financial advice people ignore? We share the simple strategies that too many high-net-worth families overlook. Also: answers to your biggest money questions—from stock options and Roth conversions to creating flexibility with your 401(k).
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Episode Transcript
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Speaker 1 (00:01):
Recent events has made me listen to.
Speaker 2 (00:03):
The radio a lot more, a lot more for every day,
whether forecasts, do I wash my car today or not?
Speaker 3 (00:11):
For everyone traffic reports we have lots of new construction
every day is definitely listen.
Speaker 4 (00:18):
Can I ride my motorcycle to work today for free?
I need the weather forecast on air and on the iHeartRadio.
Speaker 2 (00:24):
The talk shows are like my TV shows on fifty
five KRC the talk station.
Speaker 1 (00:36):
Tonight, The financial impact of a government shut down, the
best financial advice that often gets ignored, and more. You're
listening to Simply Money, presented by all Worth Financial Bob
sponsorller along with Brian James. Well, the government is at
least partially closed for business at this point. Why Democrats
and Republicans are locked in a standoff over extension of
(01:00):
i'm a Care healthcare subsidies in the most recent recent
legislation package. Brian, I know you like to study history.
Walk us through this. Why does the government shut down?
Speaker 2 (01:12):
Well, Bob, the way this works as US government runs
on twelve appropriations bills. They're passed each year by Congress
and have to be signed off by the President. So
this isn't like a new thing. That we always have
these discussions. It's not happening because we're about to shut down.
It's just how it's always worked. So in fiscal years
like the one that's about to start when all twelve
bills aren't yet adopted by October first, and that is
(01:33):
the start of the fiscal year, by the way, if
it had mentioned that October one today. So but anyway,
the current count is zero for keeping score. Congress and
the President will keep the government humming by passing these
short term extensions of current funding. And these are what
are called continuous resolutions, just to kind of keep the
oil in the engine and keep things going. And if
they can't agree to a continued resolution, then the government
(01:55):
has what's called a funding gap. That's where we are
right now, and federal agencies need to take steps to
shut down, which is happening literally today. So for this
fiscal year twenty twenty five, we had passed three funding patches.
The last one happened in March, and then we kicked
the can all the way down the road till right now.
Speaker 1 (02:11):
Bob Well, there have been fourteen shutdowns since nineteen eighty one,
ranging in duration from a single day to the infamous
thirty five days shut down in twenty eighteen to twenty nineteen.
Before nineteen eighty one, agencies operated mostly as normal during
funding gap BA gaps, their expenses covered retroactively once a
(02:34):
deal with was reached. Shutdowns over spending disagreements are different
and way less grave than what would happen if the
US breached its debt ceiling and defaulted on some of
its obligations. That's never happened, though the US came close
in twenty twenty three. So in other words, Brian, at
least from what I'm seeing, despite all the headlines and
(02:57):
all the rhetoric coming from both sides of the aisle,
about eighty five percent of the government will continue to
function here during the quote unquote shutdown. It's just these
you know, irritating things like closing national parks and not
having park rangers available to help things that the American
people actually pay for and want to see function. It's
(03:17):
just to get us all riled up and upset and
cause us inconvenience.
Speaker 5 (03:21):
Yeah, so let's talk about what keeps going here.
Speaker 2 (03:24):
Right, So when we go through these shutdowns, like you said,
not everything completely shuts down Cold Turkey. So entitlement programs
like Social Security and Medicare. That's that's mandatory spending. So
those were never on the table anyway. They don't need
annual appropriations to continue to distribute money to support those programs.
Speaker 5 (03:40):
That doesn't mean they're guaranteed to be unaffected.
Speaker 2 (03:43):
Obviously, there are employees and departments and there are many,
many things that are supporting these different programs. But the
money will keep flowing. So what is unique about this shutdown?
Why is this happened? What's the special thing here? Well,
if a deal isn't reached by Friday, we're not going
to get a September jobs report, and that report, you know,
whether you believe in it or not, that's data that
(04:03):
we're either going to I guess we'll make it up
if we don't have anything. But that's what the federal
Reserve looks at is it decides what to do with
interest rates. So there are some parts of the federal
government they're going to be flying blind, and the impact
on the markets overall is very likely going to be
some short term volatility. There have been six government shutdowns
since nineteen seventy eight that lasted.
Speaker 5 (04:21):
Five days or more, and the S and p.
Speaker 2 (04:23):
Five hundred actually gained in the foremost recent one, so
expect some turbulence, but this is not anything where we
feel like we've got our toes hanging over the cliff.
Speaker 5 (04:32):
Here's the all Worth advice.
Speaker 1 (04:33):
A government shutdown is noisy, not permanent, and don't let
short term politics derail your long term plan. And I'll
just simply add here from an editorial standpoint, might be
a great opportunity to buy the dip if we get one.
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob spun Seller along with Brian James. All Right,
(04:56):
another story we're following is this ongoing socialecurity saga, in
particular the social security retirement age. Last week we spoke
about how important it is to know your age. Well,
so many people are confused about this that the government
is trying to step in and help by making the
(05:17):
language easier to understand. I laughed when I read this story.
But fill us in on this.
Speaker 2 (05:24):
PA, So this isn't whenever we talk about social security,
people are kind of instantly attuned to the idea that
they're going to change the.
Speaker 5 (05:31):
Math or take it away or do whatever. This has
nothing to do with that.
Speaker 2 (05:34):
This is attempting to clarify because before we know what
we stand to lose our gain, we got to understand
how it works in the first place. So the government
is attempting to clarify by changing some terms around. This
has nothing to do with the actual calculation of the
benefits and all that, but the reason for this.
Speaker 5 (05:49):
Here's an example.
Speaker 2 (05:50):
So about twenty one percent of the eighteen hundred adults
that were surveyed by the Nationwide Retirement Institute, only only
about a fifth of them one out of five could
identify the age which they qualify for full Social Security benefits.
So again that's job security for myself and Bob spont
sell Or. If people understood this kind of stuff, then
we probably go unemployed. But fortunately for us, eighty percent
(06:10):
of people don't.
Speaker 5 (06:11):
So the solution here.
Speaker 2 (06:13):
Earlier this month, the House Ways and Means Committee decided
to push forward the Cleaning Age Clarity Act. This is
a bipartisan bill. That's a word I haven't heard in
a long time. Forty one to one. That's how bipartisan
this was. This is athermoted against this. Yes, let's make
it harder. Somebody stood up and said no, people want
things more difficult. Who's that clown anyway? So this is
(06:35):
just this is just coming out of the committee. It
has not yet, of course, the hit the floor of
the Senator or the House, but a version has been
proposed there. The proposed changes are again targeted at making
the language substantially clearer. According to the Bipartisan Policy Center,
so basically, at age sixty two, this is what has
currently been known as the early eligibility age. That's going
(06:56):
to become quote the minimum benefit age, and that reflect
the permanent benefits reduction the claimants see if they start
that soon. So the word sixty two is the earliest
you can ever you can file for Social Security. It's
also the lowest check you'll ever see.
Speaker 1 (07:10):
So, in other words, replacing early eligibility age with minimum
benefit age is going to eliminate all the confusions for
confusion for sixty two year olds in the country, according to.
Speaker 2 (07:25):
According to forty one of forty two people in the
House Ways and Means Committee, yes that's exactly, but the
other guy agrees with you, bob, But it's not going
to do anything. But some more ages here, more more
more words for us to chew ones fro age sixty
six to sixty seven. That's commonly known as full retirement age.
This is what is the most prominent thing displayed on
your Social Security reports. Depending on when you were born,
(07:47):
it's somewhere between age sixty six and sixty seven for
full retirement age. That's that will now be referred to
as standard benefit age.
Speaker 5 (07:57):
Just making things a little simpler.
Speaker 2 (07:59):
And finally, and we move on to age seventy, which
is that's the latest age for benefit increases. That's no
longer going to be called the delayed retirement age. Instead,
that's going to be referred to as the go figure,
the maximum benefit age to offset the minimum benefit.
Speaker 5 (08:13):
Age of sixty two.
Speaker 2 (08:14):
So for every year, just so everybody knows how this works,
for every year an individual the delays claiming from full retirement. Right,
by the way, retirement is different from filing for Social Security.
You do not have to tell your boss to shove
it in the morning and go to the Social Security
office in the afternoon on the same day. It could
be very different decisions based on your financial situation. But
for every year you delay filing for Social Security and
(08:35):
accepting that benefit, you get an eight percent increase in benefit.
So that's a big decision for everybody, and that's where
we always encourage make sure you have a financial plan
behind all of your decisions so that you can make
them in an educated manner. And so look for those
eight percent increases ranging from age sixty two to the
earliest you can get it now known as the minimum
(08:56):
benefit age, all the way to age seventy otherwise known
as the maximum benefit age eight percent.
Speaker 5 (09:01):
Every year you ignore it.
Speaker 1 (09:03):
I think this is a big nothing burger, this story.
But here here's the real advice. You know, and we
talk about this often and we'll repeat it again. It's
really important to go and open up your own Social
Security count account at SSA dot gov creative login and password,
and pull up your annual Social Security reports so you
(09:24):
know where things stand right now. Make sure that data
contained in that report is accurate. And then as you
start to do your financial planning and sitting down hopefully
with your fiduciary advisor to look at options, provide that
data to him or her to factor that into your
long term plan and help your advisor arrive at the
(09:45):
right claiming strategy for you. But before we can get there,
you at least got to pull out the report or
know how to get it. And as a reminder, the
government used to mail paper reports out to everybody on
an annual basis.
Speaker 5 (09:57):
They pretty much stopped doing that. A a taxpayer.
Speaker 2 (10:00):
Appreciate that because nobody read those things and I was
paying to have them sent all over the country. All right,
anything else you want to talk about with this with
this since it came up, Yeah, just some again reminders
on Social Security too. As Bob mentions, Yeah, it's a
great idea to get that profile set up. Do that
sooner rather than later. That is now a way that
people are stealing identities. If you set it up with
(10:21):
your own phone and email addressed, then you'll be informed
if somebody tries to change it. However, if you have
never set up your Social Security profile at SSA dot gov,
that means anybody with the right amounts of information on
you can set it up for you and steal your identity.
Speaker 5 (10:35):
So that's a way to be careful about it.
Speaker 2 (10:37):
Also, when you get a hold of that report, what
you're looking for is not only your benefits, you also
want to look at your earnings history. That's going to
have a display of basically every year that you've worked
and paid into Social Security and make sure it's right.
It's not that uncommon where we see somebody who moved
maybe from the public sector to the private sector, government
jobs to commercial jobs or vice versa, or moved from
(10:59):
state to something like that, that Social Security misses a
couple of years worth of income, and that calculates into
your thirty five highest years of earning. So that's what
you want to look for, not just the benefits, look
for the data behind it. Make sure it makes sense
based on your understanding of your history exactly.
Speaker 1 (11:15):
All right, Fewer wealthy Americans are giving to charity? What's
behind the drop? And how could you give smarter with
less stress. You're listening to simply money presented by all
Worth Financial on fifty five KRC, the talk station The
Schumer shutdown.
Speaker 5 (11:31):
Republicans in want to protect your healthcare.
Speaker 4 (11:34):
There are Democrats demanding health care for illegal aliens.
Speaker 1 (11:36):
The day's news Democratic are demanded healthcare is on Ridiculous
thirty five R see the talk station.
Speaker 3 (11:45):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or a state planning attorney to conduct your own due diligence.
Speaker 1 (12:04):
You're listening to Simply Money, presented by all Worth Financial
on Pops fun Seller along with Brian James. If you
can't listen to Simply Money every night, subscribe and get
our daily podcast. You can listen the following morning during
your commute or at the gym. And if you think
your friends or family could use some financial advice, tell
them about us as well. Just search Simply Money on
(12:24):
the iHeart app or wherever you find your podcast. Retirees
worried about income, stock options and avoll little market, and
whether private equity belongs in your portfolio. We'll tackle your
toughest questions coming up straight ahead at six forty three. Well, Brian,
a new study from Bank of America in collaboration with
(12:46):
the Indiana University Lily Family School of Philanthropy, has found
a slight drop in the percentage of affluent households making
charitable donations. Let's dive into what's behind all of that. Well,
it's apparently are getting a little tighter.
Speaker 2 (13:01):
I'm actually not surprised to hear this, And we're going
to talk about this here shortly, but I think this
has a lot to do with the Tax Cuts and
Jobs Act. So let's set the table here first, Bob, So,
last year eight and ten, households that were worth more
than a million in assets or had a two hundred
thousand plus annual income amount reported giving to charity. So
eighty percent of households at that point is still said
(13:23):
that they donated at that level. So that's still pretty
good nine to ten a decade ago, So dropping down
a little bit. So on the surface, the total dollars
given are up. That's not too shocking because asset levels
are up, of course, as.
Speaker 5 (13:35):
They normally are.
Speaker 2 (13:35):
When you look over a longer period of time, average
charitable giving among these households has increased in nominal terms,
just the number of dollars that they've given is increased.
Speaker 5 (13:44):
Over where it was a decade ago.
Speaker 2 (13:47):
But when you factor in inflation the value of a
dollar that giving is actually trending back downward. So the
most commonly cited reason in this study, more affluent households
are basically using the reasoning that they need to quote
unquote take care of family needs first. So about in
twenty twenty four, about half of the half of the
families households that did not donate said their first priority
(14:08):
is their family. That's up from three to ten and
twenty fifteen, so three out of ten households cited their
family coming first back in twenty fifteen. Now it's about
half of the families that don't donate anymore.
Speaker 1 (14:21):
Yeah, I'm with you, Brian, I'm not too surprised about
this data. I mean we talk often about the quote
unquote sandwich generation. I mean a lot of affluent families
right now are dealing with other family needs, you know,
outside of their own, their parents' long term care needs.
The cost of a college education has absolutely gone through
(14:42):
the roof.
Speaker 5 (14:43):
Same thing with the cost of weddings.
Speaker 1 (14:45):
I mean, things are expensive, and not everybody has the
financial means to be able to go and write checks
for these things. So the folks that have more of
an affluent situation are often asked or want to step
in and help.
Speaker 5 (15:01):
I'm not surprised by any of this.
Speaker 1 (15:03):
You brought up the Tax Cut, Cut and Jobs Act,
which increased the standard deduction. Walk through that too, because
I think you're spot on. I think that has a
lot to do with this. When you can't itemize these deductions.
You know, people respond. Human beings always respond to incentives,
and when you take some incentives away, like a tax deduction,
(15:23):
people are gonna generally behave accordingly.
Speaker 2 (15:27):
Yeah, So this happened with the the Tax Cuts and
Jobs Act from the first Trump administration, and what happened
was the standard deduction was raised well above what it was,
was almost doubled at the time. Basically, what that means,
standard deduction means everybody gets it. If you can fog
a mir or you get a standard deduction. And if
you have deductions that are over and above that standard
deduction and everybody gets then you can do what's called itemizing.
(15:49):
And that's when the benefits of you know, deducting mortgage
interest perhaps as well as charitable donations, that kind of thing. Currently,
for this year twenty twenty five, if you're married filing jointly,
the standard deduction is thirty six hundred dollars. If you're
a single person, it's fifteen to three exactly half head
a household is in the middle at twenty two nine
to fifty if you're in that situation. So what the
(16:12):
end result here is, since people don't have to don't
have to make these donations to get the deduction. They
get the standard deduction. There's just been less interest in
doing so. And I've been kind of waiting to hear
these numbers really ever since twenty seventeen, to hear that
people are kind of catching on it. I think it
took a while, Bob, for people to realize that, you
know what, why am I keeping all these receipts from
Goodwill for these bags of clothing that I get that
(16:34):
I donate every now and then when it doesn't do
me any good anyway? So I think we finally, we
finally are seeing the numbers trickling through the showing the
impact on charities.
Speaker 1 (16:43):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Brian, let's pivot now,
and let's talk about some planning opportunities for how folks
can take advantage of current tax law and really be
thoughtful and more strategic about the strategic giving or charitable giving,
because there's a lot of good stuff out there.
Speaker 5 (17:05):
Let's talk.
Speaker 1 (17:05):
Let's start with a donor advised fund. I know you've
used that a lot with your clients. I have as well.
It's a wonderful tool, and I've never had one client
that we help get, you know, set up in one
of these ever, regretted. It's a wonderful giving strategy.
Speaker 2 (17:21):
So first, if you know you want to give a
given charity a certain fixed amount of money every single year,
and you're just gonna do that, then really the question
on a donor of whether a donort advice fund will
help you is are you getting a tax benefit out
of that? So, for example, let me make up something here.
Let's say you know you're going to give your church
or ten thousand dollars every year, you know, nate nine
(17:43):
hundred bucks a month something like that if you want. So,
that's not enough to outpace the standard deduction. So if
you would like a tax benefit out of that, what
you can do is set up a donor advice fund
and you donate, you know, let's say five years worth
of that fifty thousand dollars straight into the donor advice fund.
Now you're done, you are done carving out money from
your checking account, your bank accounts. You have given that
(18:03):
money away permanently. A donor advice fund is considered a
completed gift, you can't get it back.
Speaker 5 (18:08):
But what the benefit.
Speaker 2 (18:10):
Is is you're able to take that deduction all in
one year, even though the charity behind it does not
know that you've done that, because you can still control
the timing of those gifts. So if I write one
check now for fifty thousand dollars, I've almost doubled my
standard deduction. I get a tax benefit out of it.
But I can write checks once a year the same
way I've always done, and my charity doesn't start to
(18:32):
expect much larger sums rather than giving it all at once.
So I think donor advice funds are very very much
a thing that people should understand and take advantage of,
especially if you've got a situation maybe you're going to
sell a business, you inherited something, and you've got a
big fat tax here. Well, that can be a great
year to pull some of those future donations forward.
Speaker 5 (18:49):
So saying a long.
Speaker 1 (18:50):
Hey, one final thought on that, just as a reminder,
if you give away appreciated stock or mutual funds or ets,
not only do you get the itemized deduction for the
gift if it's above the standard deduction, you also completely
eliminate all the capital gains taxes on that asset. So
it's a wonderful strategy. Let's pivot to qualified charitable distributions.
(19:12):
This is an off and overlooked one Brian, So qualified
charitable distributions.
Speaker 2 (19:16):
This is when you hit age seventy and a half,
you're eligible to make a qualified teritable distribution from your
pre tax IRA. Yes, I said seventy and a half.
That no longer matches the required minimum distribution age which
is now seventy three, but you can still do a
qualify a QCD qualified charitable distribution.
Speaker 5 (19:34):
What that means is you.
Speaker 2 (19:34):
Can direct up to one hundred thousand dollars from your
IRA to a charity, and that qualified charitable distribution gets
excluded from taxable income. Now rest assured, you are still
giving money away. These are your own dollars that you
were choosing to give it to a charity out of
the kindness of your heart. However, it gets excluded from
your income period. In other words, it didn't even happen,
So you get to care.
Speaker 5 (19:55):
You don't even need to itemize to take advantag is.
Speaker 2 (19:58):
All you're doing here is you're filling out a form
of specific way because the dollars do have to go
straight from your IRA custody into that charity, and each
custodian has a special form for it. But the thing
I want to be really really clear about I don't
think a lot of people get is that these dollars
again do not count as incomes, so they're not pushing
your pushing you higher into a certain bracket. They just
go away. They leave your account, get the you don't
(20:18):
pay any taxes on it. Charity gets the benefit, but
you get to stay in a lower bracket, which helps
with things like IRMA which affects your Medicare premium payments,
and a lot of other things too. So some complicated
moving parts to it, but it's definitely something for people
to look at. Again, you're eligible at age seventy and
a half and it does count towards your requirement of distribution,
which will kick in around seventy three.
Speaker 5 (20:37):
Here's the all Worth advice.
Speaker 1 (20:39):
Make giving part of your annual budget, and when it's
time to donate, look for smarter ways than just writing
a check, like using your IRA or a donor advised fund.
Coming up next, the best financial advice that often gets ignored.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station the search.
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Speaker 1 (21:33):
You're listening to Simply Money? Is that by all Worth Financial?
On Bob Sponseller along with Brian James. Well, last night
we talked about the worst financial advice you could ever
receive that seems to make sense on the surface. Well,
tonight we're flipping it and we're discussing the best financial
advice that often gets ignored, and we've got some examples
(21:54):
to share. Brian will walk us through example number one.
So I'm living example number one. Smartest thing I ever
did was just automate savings and investing.
Speaker 5 (22:01):
Right.
Speaker 2 (22:01):
I'm in this industry. I know what I'm doing because
I've been doing it for thirty years. But the smartest
thing that I ever did was set up my four
oh one K and then proceed to ignore it for
literally about thirty years now other than I have andy
stout worry about what goes into it.
Speaker 5 (22:15):
So let's take an example.
Speaker 2 (22:16):
So if you're a couple in their early forties, you're
both earning six figure salaries, and you're not setting this
up in terms of putting money away systematically, then it's
easy to kind of nickel and din yourselfs People think they'll,
you know, when money builds up in the checking account,
well we'll invest at that point. In years go by,
with missed months where there's a big vacation coming up,
or some kind of big home expense or whatever, all
(22:37):
that stuff takes priority instead of having an extra seven
hundred thousand built up. Mathematically speaking, they're way behind where
they could be with that. So the advice, and this
goes back to the old advice lots of people have
heard many times, pay yourself first and then do all
those other things. The more you can automate it, the better.
If you get a raise. Let's say you get a
five percent raise, cool, go bump your four O one
K contribution by two or three percent. That way, you're
(22:58):
getting more money in your paycheck and you're putting money
away systematically, and.
Speaker 1 (23:01):
Brian, this is also a reminder to take advantage of
that company match.
Speaker 5 (23:05):
I mean it, just you know it.
Speaker 1 (23:07):
It boggles my mind sometimes when I see people that
are not taking advantage of their company match, which is
oftentimes fifty cents on the dollar up to the first
six percent of pay. You don't need the market to
do anything. You're giving a fifty percent return on your
money just by showing up and saving.
Speaker 5 (23:25):
You gotta do that. I do.
Speaker 2 (23:26):
I follow some I like to read what people are
talking about online, just in different you know, on Reddit
and things like that just kind of keeps me sharp.
And one of the movements out there is FIRE, which
is financial independence retire early. And one of the things
they talk about is sometimes as somebody will come in
and they'll say, why would I put money in my
poura one? Okay, it just ties it up till I'm
fifty nine and a half, which is ridiculous. My question
(23:48):
I always want to ask. I don't participate, it's just
not worth getting into it. But the question I've been
dying to ask is do you plan on being alive
after fifty nine and a half? So might it help
you if your company gave you a little more money.
So but anyway, get fixed? Can we bother?
Speaker 1 (24:00):
Nope? All right, let's get into example number two, which
kind of correlates to what we just talked about living
below your means. Imagine that, for example, a business owner
sells this company for several million dollars. The advice, no
matter how much you make, keep your lifestyle modest. Don't
let spending rise as quickly as your income. In other words,
(24:22):
don't fall into that trap of lifestyle creep. The consequence
of doing that, instead of sticking to a sustainable lifestyle,
this person buys a bigger house, multiple cars, and starts
funding every single luxury trip he or she can. Imagine
ten years later, the portfolio is half what it should
be or could be. The money that was supposed to
(24:44):
last for decades is now under real financial stress. I
run into this every so often. People feel like they
won the lottery and money just flies out the door.
Early after one of these big windfall situations.
Speaker 5 (24:57):
Yeah, like you didn't have enough.
Speaker 2 (24:59):
You didn't have much time time to get used to
the idea of how much more you have in abundance,
and that usually it usually usually doesn't go well because
we kind of convulse our way through figuring out what
our new world looks like and do a bunch of spending.
Here we all convince ourselves we deserve things we've been
denying ourselves, and there's some truth to that. You should
kind of treat yourself every now and then, but hopefully
when this happens, when the windfall occurs, if you've already
(25:20):
got a financial plan in place with the help of
a fiduciary advisor, then you'll know exactly, okay, cool, here's
the different opportunity. Here's the different weaknesses and opportunities that
I identified prior to in my plan. Now that there's
more money that has kind of dropped out of this guy,
which of them should I attack first? And you should
hopefully already have an idea of that before that windfall
ever happens.
Speaker 1 (25:39):
All right, Example number three, and this is a big
one Brian estate planning. For example, a retired couple in
their seventies with let's just say four million dollars in assets.
Speaker 5 (25:50):
Here's the advice.
Speaker 1 (25:51):
Update your will, your trust and your beneficiary designations and
keep your estate plan current. Review that thing at least
every three years. I'd say, review your beneficiary designations every
year with your advisor. But here's the consequence of not
doing that. Some people keep putting it off. When the
husband passes away, assets are tied up in probate accounts,
(26:15):
have outdated beneficiaries, and the family ends up in absolute turmoil.
Instead of an orderly transition to properly handle all of
that money that this couple spent decades earning, there's confusion,
there's delay and unnecessary cost.
Speaker 2 (26:32):
Brian, Yeah, and then we see this frequently when people
come in to build a financial plan and the first
thing that comes out is the stack of statements and
we have to kind of unwind. And again, this is
job security for me, so I'm not complaining. But some
of these things are fairly easy. We have to unwind
who owns what? Why is this account only in one
spouse's name, for example, without a beneficiary being the other spouse.
If not, just stick it in a joint account and
be done with it. But there are consequences to not
(26:54):
acting on those things. And if you've ever expressed frustration
about the probate process, make sure you're not inviting it
in the front.
Speaker 5 (27:00):
All right, Brian walk us through example number four.
Speaker 1 (27:03):
This is a big one as well, diversification, having much
too many of your eggs in one basket.
Speaker 2 (27:09):
So we work and we all live in an environment
surrounded by wonderful fortune. Five hundred companies that means we
have four oh one k's retirement plans. That's where most
of the wealth is in the in the Cincinnati, Ohio, Kentucky,
Indiana area. So it's you know, speaking of my Procter
and Gamble and Kroger friends out here. Successful executives oftentimes
have lots of their lives, not just their net work,
(27:30):
but lots of their lives tied up in a single company.
It's kind of almost by necessity. But again, don't put
all those eggs in one basket. The market treats Procter
and Gamble just like any other stock when it doesn't
like what it did. And I'm not picking on P
and G but that I think they're the poster child
for the how this can go wrong for people. The
market did not like Dirk Yager when they hired him
as a CEO in two thousand in the stock dot
(27:50):
cut in half, and I remember vivid, intense conversations with
people who really super wanted to retire at that time,
and they realized that over the course of about six
weeks that they have two or three, maybe four years
tacked onto their retirement plan because it took a while
to get all that money back.
Speaker 5 (28:05):
Here's the all Worth advice.
Speaker 1 (28:06):
The best financial advice is often simple and proven, but
ignoring it can cost you millions, from managing risk and
retirement to drawth conversion, stock options and even private equity.
We answer your toughest money questions coming up next. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC the talk station.
Speaker 4 (28:29):
A series of events.
Speaker 1 (28:30):
The most important events make four eventful days happening every day.
Speaker 2 (28:35):
The political violence in this country.
Speaker 4 (28:37):
I'm seeing more and more events like this. This is
a Trump shutdown, Russia refusers. She's fired in these eventful times,
very serious times, all the time. It's time for.
Speaker 5 (28:47):
Action in any event.
Speaker 4 (28:49):
We're following these events on.
Speaker 1 (28:50):
And off the field on the streets of our city.
Check in, check it out, checking into it fifty.
Speaker 4 (28:55):
Five KRS the talk station. Hey is Brian tell Us
with Steve Opinions. Are welcome to here.
Speaker 5 (29:01):
Why do we keep letting thousands of people come over
and do nothing about it. My family's safety is at risk.
Speaker 4 (29:06):
Fifty five KRC. The talkstation.
Speaker 1 (29:14):
You're listening to Simply Money, presented by all Worth Financial
Bob spond Seller along with Brian James. Do you have
a financial question you'd like for us to answer? There
is a red button you can click while you're listening
to the show right on the iHeart app. Simply record
your question and it always comes straight to us. All right,
Clara and Mason leads us off tonight Brian. She says,
(29:35):
we're both retired and our income looks fine on paper,
but the tax bill feels higher every year. Are there
strategies to flatten out our taxes over time?
Speaker 2 (29:46):
Well, Clara, that's that's a frustrating problem, but not an
uncommon one, right that. What that means is that you're
making more money every year, which is the end of
the day.
Speaker 5 (29:54):
That's why I was laughing. I'm thinking the same thing.
Speaker 2 (29:56):
Yeah, So, you know, nobody wants to pay taxes, and
there's no such thing is eliminating taxes.
Speaker 5 (30:01):
That's not going to happen, but you can mitigate.
Speaker 2 (30:03):
So we don't know Clara's age or much beyond what
she said there, but here's the kind of things that
if you find yourself, if that rang true and you
find yourself in a similar situation, here's what you to
be thinking about. So I'm gonna go ahead and assume
if you're stuck paying taxes, there's probably some pre tax
iras four oh and ks out there, and Clara's paying
income taxes on required minimum distributions which kick in at
eight seventy three or seventy five, depending when you were born.
(30:25):
So the way to offset that is first of all,
to travel back in time and do some Wroth conversions.
So maybe if you're in your sixties, spent before those
rmds hitting, before Social Security kicks in, before you've turned
on your income streams, maybe you're an unfortunate situation where
you can live off of savings for a little while.
That means you're going to be an extremely low bracket.
Rather than spiking the football and celebrating the fact that
you're in a really low bracket, take advantage of it.
(30:47):
Fill up some of those bottom level brackets with Wroth conversions.
Gradual Wroth conversions can shift money into these tax free accounts. Yes,
you're going to pay income taxes on it, but you
can probably stay in the twenty maybe twenty two percent bread,
which isn't that high relatively speaking to history. And that
will prevent you from being in a gigantic bracket when
RMD's kick in fully when both spouses are above seventy five.
(31:11):
So let's move hopefully that helps Ka Claire.
Speaker 5 (31:13):
That's one.
Speaker 2 (31:13):
That's one thing for you to look at. So let's
move on to Jeff and Kenwood. And Jeff's got stock
options in his world, and he's apout. Well, this is interesting,
he specifies. Most people just say I got stock options. Well,
it's important question are they non qualified or are they incentive?
So Jeff says he's got non qualified stock options. Bob,
what's the best way for him to exercise those without
creating a massive tax headache.
Speaker 1 (31:32):
Well, first of all, Jeff, congratulations on being in a
position in your company and being in a company that
offers these things. They can offer tremendous leveraged upside, you know,
assuming your company stock continues to perform. Well, what most
people do is something called a cashless exercise. You basically say, yep,
I'm ready to exercise, and you take the difference between
(31:53):
the grant price and the current price of the stock
and say just send me a check. And you know, unfortunately,
from a tax standpoint, you have to pay ordinary income
taxes plus fight at taxes you know on that benefit.
And so what you want to take take a look
at is what your income needs are, what the maturity
(32:16):
date on those options are. You want to make sure
you do exercise them before they mature. And then you
want to take a look at your income situation and
pick years where you're not jumping into a higher tax bracket.
And it becomes somewhat of an art more than a science,
because you are timing the point in which you sell
the stock when you do this.
Speaker 5 (32:36):
But that would be my advice. Sit down and have.
Speaker 1 (32:39):
A good fiduciary advisor walk you through this within the
context of a comprehensive plan and develop a strategy in
advance for what we're going to do and when, rather
than just wait till the end where you're you got
a gun to your head and say I got to
exercise these things by next week or they go away.
Speaker 5 (32:59):
So hope that helps.
Speaker 1 (33:01):
Ryan Back in Mason, we got a lot of Mason
folks asking.
Speaker 5 (33:04):
A busy today. They're doing a lot of financial thinking.
Speaker 1 (33:07):
All right, Brian, We've saved well, but nearly all of
it is tied up in retirement accounts. How do we
create more flexibility with our money before required minimum distributions
kick in?
Speaker 2 (33:19):
Hey, well, congratulations and welcome to Cincinnati. As I mentioned,
with most of us work for Fortune five hundred companies
or other companies that support them. Therefore, our wealth is
tied up in four oh one k, which is exactly
Ryan's problem. Definitely not a bad thing, you know, but
more wealth is certainly makes life easier. We want to
want that situation, but it sounds like Ryan's starting to
feel like maybe there's something else they should do. So hopefully,
(33:40):
if there's a financial plan in the background here, then
what you might be looking at is is maybe you've
done enough. Maybe you've hit a point where you could
you know, where the four oh and k, the pre
tax tax shelter dollars are at a good spot. Well,
you can simply you are allowed. You don't have to
max your four oh one k out. You can do
other things. So if you prefer, you know, knows, maybe
there's some kind of private equity investment type thing that
(34:03):
you want to get involved in. You don't want to
do that inside your IRA. Sometimes that's not possible. It's
unnecessarily complicated for those kinds of things. It's okay to
back off on your four oh one K if you
feel like you've accomplished that goal. Don't go below the
free money, of course, drop it back to maybe six
percent or something like that, and then the goal there
would be building up money in a non tax sheltered account,
(34:24):
just a plain old taxable or joint account.
Speaker 5 (34:25):
There's a downside to that.
Speaker 2 (34:26):
Yes, you're gonna get a ten ninety nine, it's going
to spit out dividends and capital gains.
Speaker 5 (34:30):
That's part of the game.
Speaker 2 (34:31):
But that gives you access to those dollars for different
things you might want to do in the shorter term
without having to wait till you reach the magical age
of fifty nine and a half for an IRA. Now
let me throw out one more thought. Don't think it's tight.
It may not be as tied up as you think
it is. If these dollars are literally in a four
to h one K or a four H three B.
Because there's something called the rule of fifty five. Why
(34:51):
is this, I don't know, Because because Congress never ties
two things together that are kind of similar. But anyway,
if these dollars are in are in a four to
oh one K or four or three B, you can
draw on them at the age of fifty five without
paying that ten percent early withdrawal Penelty Christin Lovelin is
looking at Roth conversions and he's wondering about that upfront
tax hit.
Speaker 5 (35:10):
So this is this is how do we calculate that
break even? Right?
Speaker 2 (35:13):
So, how do we know when it's worth making a
Roth conversion and when it's not? Bobbedy think, well, there's
a lot of considerations that go into this. You want
to look at your tax rate today, what you think
it's going to be.
Speaker 5 (35:24):
Down the road.
Speaker 1 (35:24):
You want to look in an assumed you know, investment
rate of return. And then you also, if you're going
to do a Wroth conversion at all, you've got to
make sure you've got some money socked away in a
non IRA account to pay the taxes with it. Generally,
the math does not generally work if you're using IRA
money to pay the taxes.
Speaker 5 (35:44):
That's usually not a good situation.
Speaker 1 (35:46):
So, uh, make sure you've got cash available to do
these conversions, you know number one, and then sit down,
run some different scenarios, look at your longer term financial planning,
you know, projections, particularly as it relates to future.
Speaker 5 (36:02):
Income and tax brackets.
Speaker 1 (36:04):
And that that's where this financial planning software works, wonders
because if you if you put in good assumptions that
you feel comfortable with, it'll dial it up and tell
you whether it really makes sense and how much makes
sense to do, because we don't want to run a
foul of paying more in Medicare premiums, you know, hitting
that RMA threshold. There's a lot to consider here. Most
(36:27):
of the time it makes sense to sit down with
a good fiduciary advisor and help.
Speaker 5 (36:31):
You walk through all of this. All right.
Speaker 1 (36:33):
Coming up next, Brian has his bottom line on what
to do or maybe more importantly, what not to do
during a government shutdown. You're listening to Simply Money presented
by all Worth Financial on fifty five KRC the talk station.
Speaker 4 (36:47):
Every day, every day we're seeing more products roll off,
see something happens, rescue our nation's capital from crime. And
every day it's something we thought we would never see,
that something growing economy happens here.
Speaker 1 (37:00):
This is for everyday goods continue to decline peace talks.
Speaker 4 (37:03):
President invited me a noble peace press.
Speaker 5 (37:07):
All the day's.
Speaker 4 (37:08):
Happenings, not just another headline right here, A lot of
good things are happening. Fifty five krs the talk station.
Speaker 2 (37:15):
Worried that next month I have to choose between groceries
for my kids or gas for my car.
Speaker 4 (37:20):
Talk about it here fifty five krc the talk station.
Speaker 1 (37:27):
You're listening to simply money because I'm a byt all
Worth financial bomb sponsorller along with Brian James, and it's
time for Brian's bottom line. Brian's going to walk us
through how to navigate a government shutdown.
Speaker 5 (37:38):
Lay it on U, bro, Well, Bob, as always, it's
time to panic, right.
Speaker 2 (37:42):
I have a client that actually calls in with it
whenever there's a scary headline, and that's his first question.
He's kidding, of course, but he's just wondering. His question is, Okay,
stuff happened. Do I panic now? Do I panic now?
Do I panic now? And the answer is always no,
but scary headline? So let's talk about you know what
does a government shutdown mean? Well, if you work for
the federal government or your contractor, you could be looking
at furloughs, delayed paycheck, those kinds of things. This comes
(38:03):
back to hopefully there's an emergency fund with at least
three three to six months worth of expenses. If you
don't have that one, well then you're gonna need to
start cutting back some discretionary spending, those kinds of things.
But hopefully you've got that in place, and then we
should be anticipating these kinds of things if you're a
federal worker, because it's not like this is the new
one here. So in terms of the investments markets, that's
(38:23):
really where most people kind of focus a little bit.
So let's talk about historically speaking, what has happened during
market shutdowns.
Speaker 5 (38:30):
So if we look at.
Speaker 2 (38:33):
Periods of time from nineteen seventy six on where there
have been twenty shutdowns, about half the time the stock
market actually goes up in What that means is shutdowns
aren't usually all that stronger. They're really reliable market indicators
or really drive the market. It's just a little bit
of a short term distraction. In twenty thirteen we had
a sixteen day shutdown. The S and P five hundred
actually gained about three percent over that span. The big
(38:56):
one was twenty eighteen, twenty nineteen. We're gonna be talking
about this a lot, I'm sure over the next several
weeks as until we wind this one down. But twenty
eighteen and nineteen we had a thirty five day shutdown.
During that period, the S and P five hundred was
up ten percent. It was good for the market, So
you know, go figure, what are the reasons behind this?
Well on some analysis suggests that around those twenty shutdowns
we've had since nineteen seventy six, the market was positive
(39:18):
over half the time, average gains on the order of
a few tenths of a percent, sometimes a little bit higher.
But markets typically ignore excitement, and they ignore all the
crazy stuff, and we just don't tend to panic anymore,
which is a good good sign.
Speaker 1 (39:31):
Wouldn't you say from a market stamp, I mean, from
a paycheck standpoint, you know, if your paychecks are delayed,
this is serious stuff, and we're not making light of
it at all. But separating the pocketbook issue short term
with the market, isn't it safe to say that there
is zero stock market correlation between how the market performs
and a government shutdown. I mean, there's no data to
(39:54):
suggest that it impacts it really one way.
Speaker 2 (39:56):
Or these Sometimes the reporting that we do is to
report that there is no report.
Speaker 5 (40:00):
That's kind of the case here. These usually tend to
be UH.
Speaker 2 (40:03):
And I've got my fingers crossed here, but these usually
tend to be a big nothing burgers. The duration is
usually short of a market of a government shutdown, you
a few a few weeks at most, UH, and the
markets tend to look ahead and they're they're they're pricing
and expectations not just for that shutdown, but they're also
looking forward to when the shutdown does resolve, when things
will come back to normal. U of this this could
make for interesting earnings headlines or earnings reports in the
(40:25):
first quarter. We'll see what happens from companies who are
dependent on the US government for contracts and maybe they're
a supplier to the government. But at the same time,
we've seen this before, and I'm not running around talking
to my clients and making any changes based on the
headline we got yesterday.
Speaker 1 (40:39):
Yeah, I'll just add here, if your long term financial plan,
you know, warrants this, and you've got some dry powder
on the sidelines, if we do get that four or five, six,
eight percent pullback in the market, and I'm not predicting
that for a second, but if we get it, it
might end up being a wonderful buying opportunity heading into
the year end. Here all right, thanks for listening. You've
(41:01):
been listening to Simply Money, presented by all Worth Financial
on fifty five KRC the Talk Station.
Speaker 4 (41:07):
Something is happening. It's time to end the failed experiment
of open borders. Your countries are going to hell. Something
in our country, Charlie Kirk, I forgive him.
Speaker 3 (41:17):
Antifa across this country would be Trump assess and Ryan
Ruth guilty on all five charges.
Speaker 4 (41:21):
Something in our world. NATO countries should shoot down Russian
ear crash in all day they enter their airspace. It's
always something, yes, I do. It's a very important moment.
Speaker 1 (41:32):
Fifty five KRC The Talk Station Finding great candidates to
hire can
Recent events has made me listen to.
Speaker 2 (00:03):
The radio a lot more, a lot more for every day,
whether forecasts, do I wash my car today or not?
Speaker 3 (00:11):
For everyone traffic reports we have lots of new construction
every day is definitely listen.
Speaker 4 (00:18):
Can I ride my motorcycle to work today for free?
I need the weather forecast on air and on the iHeartRadio.
Speaker 2 (00:24):
The talk shows are like my TV shows on fifty
five KRC the talk station.
Speaker 1 (00:36):
Tonight, The financial impact of a government shut down, the
best financial advice that often gets ignored, and more. You're
listening to Simply Money, presented by all Worth Financial Bob
sponsorller along with Brian James. Well, the government is at
least partially closed for business at this point. Why Democrats
and Republicans are locked in a standoff over extension of
(01:00):
i'm a Care healthcare subsidies in the most recent recent
legislation package. Brian, I know you like to study history.
Walk us through this. Why does the government shut down?
Speaker 2 (01:12):
Well, Bob, the way this works as US government runs
on twelve appropriations bills. They're passed each year by Congress
and have to be signed off by the President. So
this isn't like a new thing. That we always have
these discussions. It's not happening because we're about to shut down.
It's just how it's always worked. So in fiscal years
like the one that's about to start when all twelve
bills aren't yet adopted by October first, and that is
(01:33):
the start of the fiscal year, by the way, if
it had mentioned that October one today. So but anyway,
the current count is zero for keeping score. Congress and
the President will keep the government humming by passing these
short term extensions of current funding. And these are what
are called continuous resolutions, just to kind of keep the
oil in the engine and keep things going. And if
they can't agree to a continued resolution, then the government
(01:55):
has what's called a funding gap. That's where we are
right now, and federal agencies need to take steps to
shut down, which is happening literally today. So for this
fiscal year twenty twenty five, we had passed three funding patches.
The last one happened in March, and then we kicked
the can all the way down the road till right now.
Speaker 1 (02:11):
Bob Well, there have been fourteen shutdowns since nineteen eighty one,
ranging in duration from a single day to the infamous
thirty five days shut down in twenty eighteen to twenty nineteen.
Before nineteen eighty one, agencies operated mostly as normal during
funding gap BA gaps, their expenses covered retroactively once a
(02:34):
deal with was reached. Shutdowns over spending disagreements are different
and way less grave than what would happen if the
US breached its debt ceiling and defaulted on some of
its obligations. That's never happened, though the US came close
in twenty twenty three. So in other words, Brian, at
least from what I'm seeing, despite all the headlines and
(02:57):
all the rhetoric coming from both sides of the aisle,
about eighty five percent of the government will continue to
function here during the quote unquote shutdown. It's just these
you know, irritating things like closing national parks and not
having park rangers available to help things that the American
people actually pay for and want to see function. It's
(03:17):
just to get us all riled up and upset and
cause us inconvenience.
Speaker 5 (03:21):
Yeah, so let's talk about what keeps going here.
Speaker 2 (03:24):
Right, So when we go through these shutdowns, like you said,
not everything completely shuts down Cold Turkey. So entitlement programs
like Social Security and Medicare. That's that's mandatory spending. So
those were never on the table anyway. They don't need
annual appropriations to continue to distribute money to support those programs.
Speaker 5 (03:40):
That doesn't mean they're guaranteed to be unaffected.
Speaker 2 (03:43):
Obviously, there are employees and departments and there are many,
many things that are supporting these different programs. But the
money will keep flowing. So what is unique about this shutdown?
Why is this happened? What's the special thing here? Well,
if a deal isn't reached by Friday, we're not going
to get a September jobs report, and that report, you know,
whether you believe in it or not, that's data that
(04:03):
we're either going to I guess we'll make it up
if we don't have anything. But that's what the federal
Reserve looks at is it decides what to do with
interest rates. So there are some parts of the federal
government they're going to be flying blind, and the impact
on the markets overall is very likely going to be
some short term volatility. There have been six government shutdowns
since nineteen seventy eight that lasted.
Speaker 5 (04:21):
Five days or more, and the S and p.
Speaker 2 (04:23):
Five hundred actually gained in the foremost recent one, so
expect some turbulence, but this is not anything where we
feel like we've got our toes hanging over the cliff.
Speaker 5 (04:32):
Here's the all Worth advice.
Speaker 1 (04:33):
A government shutdown is noisy, not permanent, and don't let
short term politics derail your long term plan. And I'll
just simply add here from an editorial standpoint, might be
a great opportunity to buy the dip if we get one.
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob spun Seller along with Brian James. All Right,
(04:56):
another story we're following is this ongoing socialecurity saga, in
particular the social security retirement age. Last week we spoke
about how important it is to know your age. Well,
so many people are confused about this that the government
is trying to step in and help by making the
(05:17):
language easier to understand. I laughed when I read this story.
But fill us in on this.
Speaker 2 (05:24):
PA, So this isn't whenever we talk about social security,
people are kind of instantly attuned to the idea that
they're going to change the.
Speaker 5 (05:31):
Math or take it away or do whatever. This has
nothing to do with that.
Speaker 2 (05:34):
This is attempting to clarify because before we know what
we stand to lose our gain, we got to understand
how it works in the first place. So the government
is attempting to clarify by changing some terms around. This
has nothing to do with the actual calculation of the
benefits and all that, but the reason for this.
Speaker 5 (05:49):
Here's an example.
Speaker 2 (05:50):
So about twenty one percent of the eighteen hundred adults
that were surveyed by the Nationwide Retirement Institute, only only
about a fifth of them one out of five could
identify the age which they qualify for full Social Security benefits.
So again that's job security for myself and Bob spont
sell Or. If people understood this kind of stuff, then
we probably go unemployed. But fortunately for us, eighty percent
(06:10):
of people don't.
Speaker 5 (06:11):
So the solution here.
Speaker 2 (06:13):
Earlier this month, the House Ways and Means Committee decided
to push forward the Cleaning Age Clarity Act. This is
a bipartisan bill. That's a word I haven't heard in
a long time. Forty one to one. That's how bipartisan
this was. This is athermoted against this. Yes, let's make
it harder. Somebody stood up and said no, people want
things more difficult. Who's that clown anyway? So this is
(06:35):
just this is just coming out of the committee. It
has not yet, of course, the hit the floor of
the Senator or the House, but a version has been
proposed there. The proposed changes are again targeted at making
the language substantially clearer. According to the Bipartisan Policy Center,
so basically, at age sixty two, this is what has
currently been known as the early eligibility age. That's going
(06:56):
to become quote the minimum benefit age, and that reflect
the permanent benefits reduction the claimants see if they start
that soon. So the word sixty two is the earliest
you can ever you can file for Social Security. It's
also the lowest check you'll ever see.
Speaker 1 (07:10):
So, in other words, replacing early eligibility age with minimum
benefit age is going to eliminate all the confusions for
confusion for sixty two year olds in the country, according to.
Speaker 2 (07:25):
According to forty one of forty two people in the
House Ways and Means Committee, yes that's exactly, but the
other guy agrees with you, bob, But it's not going
to do anything. But some more ages here, more more
more words for us to chew ones fro age sixty
six to sixty seven. That's commonly known as full retirement age.
This is what is the most prominent thing displayed on
your Social Security reports. Depending on when you were born,
(07:47):
it's somewhere between age sixty six and sixty seven for
full retirement age. That's that will now be referred to
as standard benefit age.
Speaker 5 (07:57):
Just making things a little simpler.
Speaker 2 (07:59):
And finally, and we move on to age seventy, which
is that's the latest age for benefit increases. That's no
longer going to be called the delayed retirement age. Instead,
that's going to be referred to as the go figure,
the maximum benefit age to offset the minimum benefit.
Speaker 5 (08:13):
Age of sixty two.
Speaker 2 (08:14):
So for every year, just so everybody knows how this works,
for every year an individual the delays claiming from full retirement. Right,
by the way, retirement is different from filing for Social Security.
You do not have to tell your boss to shove
it in the morning and go to the Social Security
office in the afternoon on the same day. It could
be very different decisions based on your financial situation. But
for every year you delay filing for Social Security and
(08:35):
accepting that benefit, you get an eight percent increase in benefit.
So that's a big decision for everybody, and that's where
we always encourage make sure you have a financial plan
behind all of your decisions so that you can make
them in an educated manner. And so look for those
eight percent increases ranging from age sixty two to the
earliest you can get it now known as the minimum
(08:56):
benefit age, all the way to age seventy otherwise known
as the maximum benefit age eight percent.
Speaker 5 (09:01):
Every year you ignore it.
Speaker 1 (09:03):
I think this is a big nothing burger, this story.
But here here's the real advice. You know, and we
talk about this often and we'll repeat it again. It's
really important to go and open up your own Social
Security count account at SSA dot gov creative login and password,
and pull up your annual Social Security reports so you
(09:24):
know where things stand right now. Make sure that data
contained in that report is accurate. And then as you
start to do your financial planning and sitting down hopefully
with your fiduciary advisor to look at options, provide that
data to him or her to factor that into your
long term plan and help your advisor arrive at the
(09:45):
right claiming strategy for you. But before we can get there,
you at least got to pull out the report or
know how to get it. And as a reminder, the
government used to mail paper reports out to everybody on
an annual basis.
Speaker 5 (09:57):
They pretty much stopped doing that. A a taxpayer.
Speaker 2 (10:00):
Appreciate that because nobody read those things and I was
paying to have them sent all over the country. All right,
anything else you want to talk about with this with
this since it came up, Yeah, just some again reminders
on Social Security too. As Bob mentions, Yeah, it's a
great idea to get that profile set up. Do that
sooner rather than later. That is now a way that
people are stealing identities. If you set it up with
(10:21):
your own phone and email addressed, then you'll be informed
if somebody tries to change it. However, if you have
never set up your Social Security profile at SSA dot gov,
that means anybody with the right amounts of information on
you can set it up for you and steal your identity.
Speaker 5 (10:35):
So that's a way to be careful about it.
Speaker 2 (10:37):
Also, when you get a hold of that report, what
you're looking for is not only your benefits, you also
want to look at your earnings history. That's going to
have a display of basically every year that you've worked
and paid into Social Security and make sure it's right.
It's not that uncommon where we see somebody who moved
maybe from the public sector to the private sector, government
jobs to commercial jobs or vice versa, or moved from
(10:59):
state to something like that, that Social Security misses a
couple of years worth of income, and that calculates into
your thirty five highest years of earning. So that's what
you want to look for, not just the benefits, look
for the data behind it. Make sure it makes sense
based on your understanding of your history exactly.
Speaker 1 (11:15):
All right, Fewer wealthy Americans are giving to charity? What's
behind the drop? And how could you give smarter with
less stress. You're listening to simply money presented by all
Worth Financial on fifty five KRC, the talk station The
Schumer shutdown.
Speaker 5 (11:31):
Republicans in want to protect your healthcare.
Speaker 4 (11:34):
There are Democrats demanding health care for illegal aliens.
Speaker 1 (11:36):
The day's news Democratic are demanded healthcare is on Ridiculous
thirty five R see the talk station.
Speaker 3 (11:45):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or a state planning attorney to conduct your own due diligence.
Speaker 1 (12:04):
You're listening to Simply Money, presented by all Worth Financial
on Pops fun Seller along with Brian James. If you
can't listen to Simply Money every night, subscribe and get
our daily podcast. You can listen the following morning during
your commute or at the gym. And if you think
your friends or family could use some financial advice, tell
them about us as well. Just search Simply Money on
(12:24):
the iHeart app or wherever you find your podcast. Retirees
worried about income, stock options and avoll little market, and
whether private equity belongs in your portfolio. We'll tackle your
toughest questions coming up straight ahead at six forty three. Well, Brian,
a new study from Bank of America in collaboration with
(12:46):
the Indiana University Lily Family School of Philanthropy, has found
a slight drop in the percentage of affluent households making
charitable donations. Let's dive into what's behind all of that. Well,
it's apparently are getting a little tighter.
Speaker 2 (13:01):
I'm actually not surprised to hear this, And we're going
to talk about this here shortly, but I think this
has a lot to do with the Tax Cuts and
Jobs Act. So let's set the table here first, Bob, So,
last year eight and ten, households that were worth more
than a million in assets or had a two hundred
thousand plus annual income amount reported giving to charity. So
eighty percent of households at that point is still said
(13:23):
that they donated at that level. So that's still pretty
good nine to ten a decade ago, So dropping down
a little bit. So on the surface, the total dollars
given are up. That's not too shocking because asset levels
are up, of course, as.
Speaker 5 (13:35):
They normally are.
Speaker 2 (13:35):
When you look over a longer period of time, average
charitable giving among these households has increased in nominal terms,
just the number of dollars that they've given is increased.
Speaker 5 (13:44):
Over where it was a decade ago.
Speaker 2 (13:47):
But when you factor in inflation the value of a
dollar that giving is actually trending back downward. So the
most commonly cited reason in this study, more affluent households
are basically using the reasoning that they need to quote
unquote take care of family needs first. So about in
twenty twenty four, about half of the half of the
families households that did not donate said their first priority
(14:08):
is their family. That's up from three to ten and
twenty fifteen, so three out of ten households cited their
family coming first back in twenty fifteen. Now it's about
half of the families that don't donate anymore.
Speaker 1 (14:21):
Yeah, I'm with you, Brian, I'm not too surprised about
this data. I mean we talk often about the quote
unquote sandwich generation. I mean a lot of affluent families
right now are dealing with other family needs, you know,
outside of their own, their parents' long term care needs.
The cost of a college education has absolutely gone through
(14:42):
the roof.
Speaker 5 (14:43):
Same thing with the cost of weddings.
Speaker 1 (14:45):
I mean, things are expensive, and not everybody has the
financial means to be able to go and write checks
for these things. So the folks that have more of
an affluent situation are often asked or want to step
in and help.
Speaker 5 (15:01):
I'm not surprised by any of this.
Speaker 1 (15:03):
You brought up the Tax Cut, Cut and Jobs Act,
which increased the standard deduction. Walk through that too, because
I think you're spot on. I think that has a
lot to do with this. When you can't itemize these deductions.
You know, people respond. Human beings always respond to incentives,
and when you take some incentives away, like a tax deduction,
(15:23):
people are gonna generally behave accordingly.
Speaker 2 (15:27):
Yeah, So this happened with the the Tax Cuts and
Jobs Act from the first Trump administration, and what happened
was the standard deduction was raised well above what it was,
was almost doubled at the time. Basically, what that means,
standard deduction means everybody gets it. If you can fog
a mir or you get a standard deduction. And if
you have deductions that are over and above that standard
deduction and everybody gets then you can do what's called itemizing.
(15:49):
And that's when the benefits of you know, deducting mortgage
interest perhaps as well as charitable donations, that kind of thing. Currently,
for this year twenty twenty five, if you're married filing jointly,
the standard deduction is thirty six hundred dollars. If you're
a single person, it's fifteen to three exactly half head
a household is in the middle at twenty two nine
to fifty if you're in that situation. So what the
(16:12):
end result here is, since people don't have to don't
have to make these donations to get the deduction. They
get the standard deduction. There's just been less interest in
doing so. And I've been kind of waiting to hear
these numbers really ever since twenty seventeen, to hear that
people are kind of catching on it. I think it
took a while, Bob, for people to realize that, you
know what, why am I keeping all these receipts from
Goodwill for these bags of clothing that I get that
(16:34):
I donate every now and then when it doesn't do
me any good anyway? So I think we finally, we
finally are seeing the numbers trickling through the showing the
impact on charities.
Speaker 1 (16:43):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. Brian, let's pivot now,
and let's talk about some planning opportunities for how folks
can take advantage of current tax law and really be
thoughtful and more strategic about the strategic giving or charitable giving,
because there's a lot of good stuff out there.
Speaker 5 (17:05):
Let's talk.
Speaker 1 (17:05):
Let's start with a donor advised fund. I know you've
used that a lot with your clients. I have as well.
It's a wonderful tool, and I've never had one client
that we help get, you know, set up in one
of these ever, regretted. It's a wonderful giving strategy.
Speaker 2 (17:21):
So first, if you know you want to give a
given charity a certain fixed amount of money every single year,
and you're just gonna do that, then really the question
on a donor of whether a donort advice fund will
help you is are you getting a tax benefit out
of that? So, for example, let me make up something here.
Let's say you know you're going to give your church
or ten thousand dollars every year, you know, nate nine
(17:43):
hundred bucks a month something like that if you want. So,
that's not enough to outpace the standard deduction. So if
you would like a tax benefit out of that, what
you can do is set up a donor advice fund
and you donate, you know, let's say five years worth
of that fifty thousand dollars straight into the donor advice fund.
Now you're done, you are done carving out money from
your checking account, your bank accounts. You have given that
(18:03):
money away permanently. A donor advice fund is considered a
completed gift, you can't get it back.
Speaker 5 (18:08):
But what the benefit.
Speaker 2 (18:10):
Is is you're able to take that deduction all in
one year, even though the charity behind it does not
know that you've done that, because you can still control
the timing of those gifts. So if I write one
check now for fifty thousand dollars, I've almost doubled my
standard deduction. I get a tax benefit out of it.
But I can write checks once a year the same
way I've always done, and my charity doesn't start to
(18:32):
expect much larger sums rather than giving it all at once.
So I think donor advice funds are very very much
a thing that people should understand and take advantage of,
especially if you've got a situation maybe you're going to
sell a business, you inherited something, and you've got a
big fat tax here. Well, that can be a great
year to pull some of those future donations forward.
Speaker 5 (18:49):
So saying a long.
Speaker 1 (18:50):
Hey, one final thought on that, just as a reminder,
if you give away appreciated stock or mutual funds or ets,
not only do you get the itemized deduction for the
gift if it's above the standard deduction, you also completely
eliminate all the capital gains taxes on that asset. So
it's a wonderful strategy. Let's pivot to qualified charitable distributions.
(19:12):
This is an off and overlooked one Brian, So qualified
charitable distributions.
Speaker 2 (19:16):
This is when you hit age seventy and a half,
you're eligible to make a qualified teritable distribution from your
pre tax IRA. Yes, I said seventy and a half.
That no longer matches the required minimum distribution age which
is now seventy three, but you can still do a
qualify a QCD qualified charitable distribution.
Speaker 5 (19:34):
What that means is you.
Speaker 2 (19:34):
Can direct up to one hundred thousand dollars from your
IRA to a charity, and that qualified charitable distribution gets
excluded from taxable income. Now rest assured, you are still
giving money away. These are your own dollars that you
were choosing to give it to a charity out of
the kindness of your heart. However, it gets excluded from
your income period. In other words, it didn't even happen,
So you get to care.
Speaker 5 (19:55):
You don't even need to itemize to take advantag is.
Speaker 2 (19:58):
All you're doing here is you're filling out a form
of specific way because the dollars do have to go
straight from your IRA custody into that charity, and each
custodian has a special form for it. But the thing
I want to be really really clear about I don't
think a lot of people get is that these dollars
again do not count as incomes, so they're not pushing
your pushing you higher into a certain bracket. They just
go away. They leave your account, get the you don't
(20:18):
pay any taxes on it. Charity gets the benefit, but
you get to stay in a lower bracket, which helps
with things like IRMA which affects your Medicare premium payments,
and a lot of other things too. So some complicated
moving parts to it, but it's definitely something for people
to look at. Again, you're eligible at age seventy and
a half and it does count towards your requirement of distribution,
which will kick in around seventy three.
Speaker 5 (20:37):
Here's the all Worth advice.
Speaker 1 (20:39):
Make giving part of your annual budget, and when it's
time to donate, look for smarter ways than just writing
a check, like using your IRA or a donor advised fund.
Coming up next, the best financial advice that often gets ignored.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station the search.
Speaker 4 (21:01):
Of John Boldens Libation day in DC.
Speaker 5 (21:05):
We thought we would never see Epstein.
Speaker 1 (21:06):
Foles checking throughout the day, every single day.
Speaker 4 (21:12):
Fifty five KRC D Talk Station.
Speaker 3 (21:15):
This is Jeff for tri Statements of Vive KRC Cincinnati,
available everywhere with the iHeartRadio app now number one for podcasting.
Speaker 4 (21:24):
Fifty five KRC an iHeartRadio station.
Speaker 1 (21:33):
You're listening to Simply Money? Is that by all Worth Financial?
On Bob Sponseller along with Brian James. Well, last night
we talked about the worst financial advice you could ever
receive that seems to make sense on the surface. Well,
tonight we're flipping it and we're discussing the best financial
advice that often gets ignored, and we've got some examples
(21:54):
to share. Brian will walk us through example number one.
So I'm living example number one. Smartest thing I ever
did was just automate savings and investing.
Speaker 5 (22:01):
Right.
Speaker 2 (22:01):
I'm in this industry. I know what I'm doing because
I've been doing it for thirty years. But the smartest
thing that I ever did was set up my four
oh one K and then proceed to ignore it for
literally about thirty years now other than I have andy
stout worry about what goes into it.
Speaker 5 (22:15):
So let's take an example.
Speaker 2 (22:16):
So if you're a couple in their early forties, you're
both earning six figure salaries, and you're not setting this
up in terms of putting money away systematically, then it's
easy to kind of nickel and din yourselfs People think they'll,
you know, when money builds up in the checking account,
well we'll invest at that point. In years go by,
with missed months where there's a big vacation coming up,
or some kind of big home expense or whatever, all
(22:37):
that stuff takes priority instead of having an extra seven
hundred thousand built up. Mathematically speaking, they're way behind where
they could be with that. So the advice, and this
goes back to the old advice lots of people have
heard many times, pay yourself first and then do all
those other things. The more you can automate it, the better.
If you get a raise. Let's say you get a
five percent raise, cool, go bump your four O one
K contribution by two or three percent. That way, you're
(22:58):
getting more money in your paycheck and you're putting money
away systematically, and.
Speaker 1 (23:01):
Brian, this is also a reminder to take advantage of
that company match.
Speaker 5 (23:05):
I mean it, just you know it.
Speaker 1 (23:07):
It boggles my mind sometimes when I see people that
are not taking advantage of their company match, which is
oftentimes fifty cents on the dollar up to the first
six percent of pay. You don't need the market to
do anything. You're giving a fifty percent return on your
money just by showing up and saving.
Speaker 5 (23:25):
You gotta do that. I do.
Speaker 2 (23:26):
I follow some I like to read what people are
talking about online, just in different you know, on Reddit
and things like that just kind of keeps me sharp.
And one of the movements out there is FIRE, which
is financial independence retire early. And one of the things
they talk about is sometimes as somebody will come in
and they'll say, why would I put money in my
poura one? Okay, it just ties it up till I'm
fifty nine and a half, which is ridiculous. My question
(23:48):
I always want to ask. I don't participate, it's just
not worth getting into it. But the question I've been
dying to ask is do you plan on being alive
after fifty nine and a half? So might it help
you if your company gave you a little more money.
So but anyway, get fixed? Can we bother?
Speaker 1 (24:00):
Nope? All right, let's get into example number two, which
kind of correlates to what we just talked about living
below your means. Imagine that, for example, a business owner
sells this company for several million dollars. The advice, no
matter how much you make, keep your lifestyle modest. Don't
let spending rise as quickly as your income. In other words,
(24:22):
don't fall into that trap of lifestyle creep. The consequence
of doing that, instead of sticking to a sustainable lifestyle,
this person buys a bigger house, multiple cars, and starts
funding every single luxury trip he or she can. Imagine
ten years later, the portfolio is half what it should
be or could be. The money that was supposed to
(24:44):
last for decades is now under real financial stress. I
run into this every so often. People feel like they
won the lottery and money just flies out the door.
Early after one of these big windfall situations.
Speaker 5 (24:57):
Yeah, like you didn't have enough.
Speaker 2 (24:59):
You didn't have much time time to get used to
the idea of how much more you have in abundance,
and that usually it usually usually doesn't go well because
we kind of convulse our way through figuring out what
our new world looks like and do a bunch of spending.
Here we all convince ourselves we deserve things we've been
denying ourselves, and there's some truth to that. You should
kind of treat yourself every now and then, but hopefully
when this happens, when the windfall occurs, if you've already
(25:20):
got a financial plan in place with the help of
a fiduciary advisor, then you'll know exactly, okay, cool, here's
the different opportunity. Here's the different weaknesses and opportunities that
I identified prior to in my plan. Now that there's
more money that has kind of dropped out of this guy,
which of them should I attack first? And you should
hopefully already have an idea of that before that windfall
ever happens.
Speaker 1 (25:39):
All right, Example number three, and this is a big
one Brian estate planning. For example, a retired couple in
their seventies with let's just say four million dollars in assets.
Speaker 5 (25:50):
Here's the advice.
Speaker 1 (25:51):
Update your will, your trust and your beneficiary designations and
keep your estate plan current. Review that thing at least
every three years. I'd say, review your beneficiary designations every
year with your advisor. But here's the consequence of not
doing that. Some people keep putting it off. When the
husband passes away, assets are tied up in probate accounts,
(26:15):
have outdated beneficiaries, and the family ends up in absolute turmoil.
Instead of an orderly transition to properly handle all of
that money that this couple spent decades earning, there's confusion,
there's delay and unnecessary cost.
Speaker 2 (26:32):
Brian, Yeah, and then we see this frequently when people
come in to build a financial plan and the first
thing that comes out is the stack of statements and
we have to kind of unwind. And again, this is
job security for me, so I'm not complaining. But some
of these things are fairly easy. We have to unwind
who owns what? Why is this account only in one
spouse's name, for example, without a beneficiary being the other spouse.
If not, just stick it in a joint account and
be done with it. But there are consequences to not
(26:54):
acting on those things. And if you've ever expressed frustration
about the probate process, make sure you're not inviting it
in the front.
Speaker 5 (27:00):
All right, Brian walk us through example number four.
Speaker 1 (27:03):
This is a big one as well, diversification, having much
too many of your eggs in one basket.
Speaker 2 (27:09):
So we work and we all live in an environment
surrounded by wonderful fortune. Five hundred companies that means we
have four oh one k's retirement plans. That's where most
of the wealth is in the in the Cincinnati, Ohio, Kentucky,
Indiana area. So it's you know, speaking of my Procter
and Gamble and Kroger friends out here. Successful executives oftentimes
have lots of their lives, not just their net work,
(27:30):
but lots of their lives tied up in a single company.
It's kind of almost by necessity. But again, don't put
all those eggs in one basket. The market treats Procter
and Gamble just like any other stock when it doesn't
like what it did. And I'm not picking on P
and G but that I think they're the poster child
for the how this can go wrong for people. The
market did not like Dirk Yager when they hired him
as a CEO in two thousand in the stock dot
(27:50):
cut in half, and I remember vivid, intense conversations with
people who really super wanted to retire at that time,
and they realized that over the course of about six
weeks that they have two or three, maybe four years
tacked onto their retirement plan because it took a while
to get all that money back.
Speaker 5 (28:05):
Here's the all Worth advice.
Speaker 1 (28:06):
The best financial advice is often simple and proven, but
ignoring it can cost you millions, from managing risk and
retirement to drawth conversion, stock options and even private equity.
We answer your toughest money questions coming up next. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC the talk station.
Speaker 4 (28:29):
A series of events.
Speaker 1 (28:30):
The most important events make four eventful days happening every day.
Speaker 2 (28:35):
The political violence in this country.
Speaker 4 (28:37):
I'm seeing more and more events like this. This is
a Trump shutdown, Russia refusers. She's fired in these eventful times,
very serious times, all the time. It's time for.
Speaker 5 (28:47):
Action in any event.
Speaker 4 (28:49):
We're following these events on.
Speaker 1 (28:50):
And off the field on the streets of our city.
Check in, check it out, checking into it fifty.
Speaker 4 (28:55):
Five KRS the talk station. Hey is Brian tell Us
with Steve Opinions. Are welcome to here.
Speaker 5 (29:01):
Why do we keep letting thousands of people come over
and do nothing about it. My family's safety is at risk.
Speaker 4 (29:06):
Fifty five KRC. The talkstation.
Speaker 1 (29:14):
You're listening to Simply Money, presented by all Worth Financial
Bob spond Seller along with Brian James. Do you have
a financial question you'd like for us to answer? There
is a red button you can click while you're listening
to the show right on the iHeart app. Simply record
your question and it always comes straight to us. All right,
Clara and Mason leads us off tonight Brian. She says,
(29:35):
we're both retired and our income looks fine on paper,
but the tax bill feels higher every year. Are there
strategies to flatten out our taxes over time?
Speaker 2 (29:46):
Well, Clara, that's that's a frustrating problem, but not an
uncommon one, right that. What that means is that you're
making more money every year, which is the end of
the day.
Speaker 5 (29:54):
That's why I was laughing. I'm thinking the same thing.
Speaker 2 (29:56):
Yeah, So, you know, nobody wants to pay taxes, and
there's no such thing is eliminating taxes.
Speaker 5 (30:01):
That's not going to happen, but you can mitigate.
Speaker 2 (30:03):
So we don't know Clara's age or much beyond what
she said there, but here's the kind of things that
if you find yourself, if that rang true and you
find yourself in a similar situation, here's what you to
be thinking about. So I'm gonna go ahead and assume
if you're stuck paying taxes, there's probably some pre tax
iras four oh and ks out there, and Clara's paying
income taxes on required minimum distributions which kick in at
eight seventy three or seventy five, depending when you were born.
(30:25):
So the way to offset that is first of all,
to travel back in time and do some Wroth conversions.
So maybe if you're in your sixties, spent before those
rmds hitting, before Social Security kicks in, before you've turned
on your income streams, maybe you're an unfortunate situation where
you can live off of savings for a little while.
That means you're going to be an extremely low bracket.
Rather than spiking the football and celebrating the fact that
you're in a really low bracket, take advantage of it.
(30:47):
Fill up some of those bottom level brackets with Wroth conversions.
Gradual Wroth conversions can shift money into these tax free accounts. Yes,
you're going to pay income taxes on it, but you
can probably stay in the twenty maybe twenty two percent bread,
which isn't that high relatively speaking to history. And that
will prevent you from being in a gigantic bracket when
RMD's kick in fully when both spouses are above seventy five.
(31:11):
So let's move hopefully that helps Ka Claire.
Speaker 5 (31:13):
That's one.
Speaker 2 (31:13):
That's one thing for you to look at. So let's
move on to Jeff and Kenwood. And Jeff's got stock
options in his world, and he's apout. Well, this is interesting,
he specifies. Most people just say I got stock options. Well,
it's important question are they non qualified or are they incentive?
So Jeff says he's got non qualified stock options. Bob,
what's the best way for him to exercise those without
creating a massive tax headache.
Speaker 1 (31:32):
Well, first of all, Jeff, congratulations on being in a
position in your company and being in a company that
offers these things. They can offer tremendous leveraged upside, you know,
assuming your company stock continues to perform. Well, what most
people do is something called a cashless exercise. You basically say, yep,
I'm ready to exercise, and you take the difference between
(31:53):
the grant price and the current price of the stock
and say just send me a check. And you know, unfortunately,
from a tax standpoint, you have to pay ordinary income
taxes plus fight at taxes you know on that benefit.
And so what you want to take take a look
at is what your income needs are, what the maturity
(32:16):
date on those options are. You want to make sure
you do exercise them before they mature. And then you
want to take a look at your income situation and
pick years where you're not jumping into a higher tax bracket.
And it becomes somewhat of an art more than a science,
because you are timing the point in which you sell
the stock when you do this.
Speaker 5 (32:36):
But that would be my advice. Sit down and have.
Speaker 1 (32:39):
A good fiduciary advisor walk you through this within the
context of a comprehensive plan and develop a strategy in
advance for what we're going to do and when, rather
than just wait till the end where you're you got
a gun to your head and say I got to
exercise these things by next week or they go away.
Speaker 5 (32:59):
So hope that helps.
Speaker 1 (33:01):
Ryan Back in Mason, we got a lot of Mason
folks asking.
Speaker 5 (33:04):
A busy today. They're doing a lot of financial thinking.
Speaker 1 (33:07):
All right, Brian, We've saved well, but nearly all of
it is tied up in retirement accounts. How do we
create more flexibility with our money before required minimum distributions
kick in?
Speaker 2 (33:19):
Hey, well, congratulations and welcome to Cincinnati. As I mentioned,
with most of us work for Fortune five hundred companies
or other companies that support them. Therefore, our wealth is
tied up in four oh one k, which is exactly
Ryan's problem. Definitely not a bad thing, you know, but
more wealth is certainly makes life easier. We want to
want that situation, but it sounds like Ryan's starting to
feel like maybe there's something else they should do. So hopefully,
(33:40):
if there's a financial plan in the background here, then
what you might be looking at is is maybe you've
done enough. Maybe you've hit a point where you could
you know, where the four oh and k, the pre
tax tax shelter dollars are at a good spot. Well,
you can simply you are allowed. You don't have to
max your four oh one k out. You can do
other things. So if you prefer, you know, knows, maybe
there's some kind of private equity investment type thing that
(34:03):
you want to get involved in. You don't want to
do that inside your IRA. Sometimes that's not possible. It's
unnecessarily complicated for those kinds of things. It's okay to
back off on your four oh one K if you
feel like you've accomplished that goal. Don't go below the
free money, of course, drop it back to maybe six
percent or something like that, and then the goal there
would be building up money in a non tax sheltered account,
(34:24):
just a plain old taxable or joint account.
Speaker 5 (34:25):
There's a downside to that.
Speaker 2 (34:26):
Yes, you're gonna get a ten ninety nine, it's going
to spit out dividends and capital gains.
Speaker 5 (34:30):
That's part of the game.
Speaker 2 (34:31):
But that gives you access to those dollars for different
things you might want to do in the shorter term
without having to wait till you reach the magical age
of fifty nine and a half for an IRA. Now
let me throw out one more thought. Don't think it's tight.
It may not be as tied up as you think
it is. If these dollars are literally in a four
to h one K or a four H three B.
Because there's something called the rule of fifty five. Why
(34:51):
is this, I don't know, Because because Congress never ties
two things together that are kind of similar. But anyway,
if these dollars are in are in a four to
oh one K or four or three B, you can
draw on them at the age of fifty five without
paying that ten percent early withdrawal Penelty Christin Lovelin is
looking at Roth conversions and he's wondering about that upfront
tax hit.
Speaker 5 (35:10):
So this is this is how do we calculate that
break even? Right?
Speaker 2 (35:13):
So, how do we know when it's worth making a
Roth conversion and when it's not? Bobbedy think, well, there's
a lot of considerations that go into this. You want
to look at your tax rate today, what you think
it's going to be.
Speaker 5 (35:24):
Down the road.
Speaker 1 (35:24):
You want to look in an assumed you know, investment
rate of return. And then you also, if you're going
to do a Wroth conversion at all, you've got to
make sure you've got some money socked away in a
non IRA account to pay the taxes with it. Generally,
the math does not generally work if you're using IRA
money to pay the taxes.
Speaker 5 (35:44):
That's usually not a good situation.
Speaker 1 (35:46):
So, uh, make sure you've got cash available to do
these conversions, you know number one, and then sit down,
run some different scenarios, look at your longer term financial planning,
you know, projections, particularly as it relates to future.
Speaker 5 (36:02):
Income and tax brackets.
Speaker 1 (36:04):
And that that's where this financial planning software works, wonders
because if you if you put in good assumptions that
you feel comfortable with, it'll dial it up and tell
you whether it really makes sense and how much makes
sense to do, because we don't want to run a
foul of paying more in Medicare premiums, you know, hitting
that RMA threshold. There's a lot to consider here. Most
(36:27):
of the time it makes sense to sit down with
a good fiduciary advisor and help.
Speaker 5 (36:31):
You walk through all of this. All right.
Speaker 1 (36:33):
Coming up next, Brian has his bottom line on what
to do or maybe more importantly, what not to do
during a government shutdown. You're listening to Simply Money presented
by all Worth Financial on fifty five KRC the talk station.
Speaker 4 (36:47):
Every day, every day we're seeing more products roll off,
see something happens, rescue our nation's capital from crime. And
every day it's something we thought we would never see,
that something growing economy happens here.
Speaker 1 (37:00):
This is for everyday goods continue to decline peace talks.
Speaker 4 (37:03):
President invited me a noble peace press.
Speaker 5 (37:07):
All the day's.
Speaker 4 (37:08):
Happenings, not just another headline right here, A lot of
good things are happening. Fifty five krs the talk station.
Speaker 2 (37:15):
Worried that next month I have to choose between groceries
for my kids or gas for my car.
Speaker 4 (37:20):
Talk about it here fifty five krc the talk station.
Speaker 1 (37:27):
You're listening to simply money because I'm a byt all
Worth financial bomb sponsorller along with Brian James, and it's
time for Brian's bottom line. Brian's going to walk us
through how to navigate a government shutdown.
Speaker 5 (37:38):
Lay it on U, bro, Well, Bob, as always, it's
time to panic, right.
Speaker 2 (37:42):
I have a client that actually calls in with it
whenever there's a scary headline, and that's his first question.
He's kidding, of course, but he's just wondering. His question is, Okay,
stuff happened. Do I panic now? Do I panic now?
Do I panic now? And the answer is always no,
but scary headline? So let's talk about you know what
does a government shutdown mean? Well, if you work for
the federal government or your contractor, you could be looking
at furloughs, delayed paycheck, those kinds of things. This comes
(38:03):
back to hopefully there's an emergency fund with at least
three three to six months worth of expenses. If you
don't have that one, well then you're gonna need to
start cutting back some discretionary spending, those kinds of things.
But hopefully you've got that in place, and then we
should be anticipating these kinds of things if you're a
federal worker, because it's not like this is the new
one here. So in terms of the investments markets, that's
(38:23):
really where most people kind of focus a little bit.
So let's talk about historically speaking, what has happened during
market shutdowns.
Speaker 5 (38:30):
So if we look at.
Speaker 2 (38:33):
Periods of time from nineteen seventy six on where there
have been twenty shutdowns, about half the time the stock
market actually goes up in What that means is shutdowns
aren't usually all that stronger. They're really reliable market indicators
or really drive the market. It's just a little bit
of a short term distraction. In twenty thirteen we had
a sixteen day shutdown. The S and P five hundred
actually gained about three percent over that span. The big
(38:56):
one was twenty eighteen, twenty nineteen. We're gonna be talking
about this a lot, I'm sure over the next several
weeks as until we wind this one down. But twenty
eighteen and nineteen we had a thirty five day shutdown.
During that period, the S and P five hundred was
up ten percent. It was good for the market, So
you know, go figure, what are the reasons behind this?
Well on some analysis suggests that around those twenty shutdowns
we've had since nineteen seventy six, the market was positive
(39:18):
over half the time, average gains on the order of
a few tenths of a percent, sometimes a little bit higher.
But markets typically ignore excitement, and they ignore all the
crazy stuff, and we just don't tend to panic anymore,
which is a good good sign.
Speaker 1 (39:31):
Wouldn't you say from a market stamp, I mean, from
a paycheck standpoint, you know, if your paychecks are delayed,
this is serious stuff, and we're not making light of
it at all. But separating the pocketbook issue short term
with the market, isn't it safe to say that there
is zero stock market correlation between how the market performs
and a government shutdown. I mean, there's no data to
(39:54):
suggest that it impacts it really one way.
Speaker 2 (39:56):
Or these Sometimes the reporting that we do is to
report that there is no report.
Speaker 5 (40:00):
That's kind of the case here. These usually tend to
be UH.
Speaker 2 (40:03):
And I've got my fingers crossed here, but these usually
tend to be a big nothing burgers. The duration is
usually short of a market of a government shutdown, you
a few a few weeks at most, UH, and the
markets tend to look ahead and they're they're they're pricing
and expectations not just for that shutdown, but they're also
looking forward to when the shutdown does resolve, when things
will come back to normal. U of this this could
make for interesting earnings headlines or earnings reports in the
(40:25):
first quarter. We'll see what happens from companies who are
dependent on the US government for contracts and maybe they're
a supplier to the government. But at the same time,
we've seen this before, and I'm not running around talking
to my clients and making any changes based on the
headline we got yesterday.
Speaker 1 (40:39):
Yeah, I'll just add here, if your long term financial plan,
you know, warrants this, and you've got some dry powder
on the sidelines, if we do get that four or five, six,
eight percent pullback in the market, and I'm not predicting
that for a second, but if we get it, it
might end up being a wonderful buying opportunity heading into
the year end. Here all right, thanks for listening. You've
(41:01):
been listening to Simply Money, presented by all Worth Financial
on fifty five KRC the Talk Station.
Speaker 4 (41:07):
Something is happening. It's time to end the failed experiment
of open borders. Your countries are going to hell. Something
in our country, Charlie Kirk, I forgive him.
Speaker 3 (41:17):
Antifa across this country would be Trump assess and Ryan
Ruth guilty on all five charges.
Speaker 4 (41:21):
Something in our world. NATO countries should shoot down Russian
ear crash in all day they enter their airspace. It's
always something, yes, I do. It's a very important moment.
Speaker 1 (41:32):
Fifty five KRC The Talk Station Finding great candidates to
hire can
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