October 10, 2025 • 38 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian James reveal how trillions in family wealth could quietly end up with the IRS instead of your heirs. They explain why a will isn’t enough, how advanced estate planning tools like trusts and gifting strategies can protect your legacy, and why communication among family members matters just as much as the money.
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Episode Transcript
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Speaker 1 (00:06):
Tonight, how to keep the irs from becoming the biggest
heir of your estate. You're listening to simply money, becauseided
by all Worth Financial on Bob spun Seller along with
Brian James, trillions that's trillions with a T are about
to change hands over the next two decades. It's the
biggest wealth transfer in history. And here's the kicker. A
(00:28):
whole lot of it will not go to the kids
or the grandkids, or even to chosen charities. Too much
of it's gonna be going straight to Uncle Sam. Walk
us through some of the latest data from Vanguard and Fidelity, Brian.
Speaker 2 (00:41):
Well, Bob Let's first, let's kind of set some ground
rules here. What are we talking about with regard to
a stay taxes? The state taxes and things are not
are not the scary things that you might think, right.
A lot of people simply assume that just because they've died,
they're gonna have to pay a stay tax. That's not
really the case. So the way this works now, about
twenty some years ago, under the first second Bush administration,
(01:04):
estate taxes began to come down significantly in terms of
when they kick in. So as we're sitting here right now,
you really need to have in the ballpark of fourteen
million dollars per individual person. You can basically double that
for a married couple before any of these things are
a problem. Now realizing that that doesn't affect a lot
of people out there, but there are some people that
it does. So we want to share information for everybody
(01:25):
to be useful.
Speaker 1 (01:26):
So with the time, we're doing this segment to help
people like you, Brian, where this is going to come
into the mix. How to protect your one hundred million
dollars state. So walk us through how to do that.
Speaker 2 (01:37):
Yes, let's talk exactly about how my wine and cheese
and champagne lifestyle is going to play out here when
I'm dead. It's a of course, new research from Van
Garden Fidelity about seventy percent of families people with this
is a fluent families, which Fidelity defines as multiple millions,
but about seventy percent of them have not done advanced
state planning. That's going to keep more of that money
(01:59):
in the family, and that means billions or even trillions
of dollars over the next several decades can quietly slip
away the taxes that didn't have to be paid just
because people thought that having a will was the same
as having a plan, and it doesn't work that way, right,
So you know, one of the miss out there is
of I've got a will, then that's all I need,
you know, because I know plenty of people don't have
wills at all. That's not me. I've got a will
(02:19):
in place, so that's all I need. A will only
exists for one moment in time. It just says who
gets what, and it guarantees that these assets are going
to go through probate, because probate is the act of
reading a will and that and the government has to
be involved in that the way the laws work. So
that's why you have to go through the county to
get it, got to pay an attorney to do it,
so on and so forth. It doesn't say how this
(02:39):
stuff is distributed or when or even how much of
it the irs gets. A will is just a legal
document that puts names on assets. An estate plan, however,
is a strategy and that can bring in that can
bring in time, It can bring in methods of distribution.
It can assign people who are in charge over time
to make make sure these things are distributed. And this
is all things that kick in after you have passed,
(03:01):
but you're still able to kind of pull the strings
because you took these these steps before your death. Most
people never actually take that second step of figuring out, Okay,
I've got my will and now in my name beneficiaries
and my accounts. They just assume their lawyer or their
financial advisor has already taken care of it for them,
simply because they had a brief conversation about it. But
the truth is, Bob, if you haven't set up things
(03:23):
like trusts or gifting strategies or used your lifetime exemptions
and you're in this window of pretty significant wealth, then
you've basically written a tax plan as opposed to an
estate plan that you didn't mean to. In the irs,
they're waiting there, of course, with baited breath, just just
waiting to collect your dollars when you pass.
Speaker 1 (03:41):
Most of the time, when we get into into estates
that are as large as ones that are going to
be impacted by federal inheritance taxes. I mean, let's face it,
in today's world, it's thirty million dollars in up. A
lot of times, these people are business owners. They've built
large businesses, and so you know, you got to get
into strategies in This is where it's important to sit
down and do a financial plan and figure out how
(04:03):
much money do you need? And it might seem laughable
to some like you know you can't get buying on
thirty million dollars. Well most people can obviously, but you
want to find that sweet spot on how much money
do we need or want to retain control over during
our life our lifetime to fund what we want to do,
and then look at other things like how do I
(04:25):
minimize the tax bill by doing you know, charitable giving,
you know, with the maximum maximum tax advantage as possible,
things like charitable remainder trust and then if you if
you want to get your children involved or other people
involved in the business. You know, the key thing here
is taking advantage of things called minority discounts. It makes
sense to do some gifting responsibly during your lifetime, shelling
(04:51):
out assets to other people that are going to inherit
this business or asset anyway, but being willing to part
with some of it during your lifetime and getting those
minority discounts up front can really make a huge difference
down the road. In the estate taxes you will have
to pay, but you got to be proactive about it.
(05:12):
You got to set you know, firm goals in place.
You got to communicate with family members and you get
you got to sit down with good advisors, a financial advisor,
a fiduciary advisor, a CPA, and an attorney to work
together to craft these kind of strategies because they do
get complicated, they can seem expensive, and sometimes they are,
(05:34):
but it comes down to the value added in the end,
because uh, millions of dollars in estate taxes can be avoided.
And I've seen this happen myself, Brian. I've worked with
business owners to you know, with these other advisors to
see this, see this all come to light. You got
to be proactive and get out in front of this
early because the longer you wait, you know, the problem
(05:57):
just compounds and it could become a tax nightmare down
the road.
Speaker 2 (06:02):
So that's why, So how do we get this right?
What are the tools that are out there? Well, this
is where things like life insurance, charitable giving strategies or
trusts come into play. And you're gonna run across a
lot of acronyms. Tools like slats s l A T,
which stands for spousal lifetime access trust or maybe a
dynasty trust, charitable reminder trusts. These can make a huge
difference in what's ultimately getting taxed here. Now, again, these
(06:24):
are for these are situations where we've got a significant
amount of dollars. So, yes, there are expenses in setting
these up. There are legal expenses involved, there are expenses
for insurance and all that kind of thing. But these
are the kind of tools for very specific advanced planning strategies,
which is what you need at this dollar amount if
you truly want it to be efficient. If the you know,
I think it could be a we have a tendency
(06:46):
sometimes to be a bit penny wise and pound foolish
in terms of I don't want to pay a lawyer
and accountant, you know, these extra dollars just to set
all this stuff up. But you got to make sure
you understand what you're sacrificing. If you don't, there will
be an impact in terms of what the bill when
the bill comes due on your beneficiary after you're gone
and can't do anything about it. So you want to
make sure that you you've put the time into understanding
(07:06):
these things. And you know, we spend a lot of
time picking investments, Bob Right, we looked to agonize over
what am I going to invest in? You know, but
we avoid this estate stuff for years because it's an
uncomfortable thing to think about. Nobody wants to think about
their own death or worry about their you know, what's
going to happen to their kids. But would you rather
have that conversation now, when you've got time and energy
to build, to build a solution for it, or dump
(07:29):
it in the lap of your heirs who may not
be prepared to have done it after losing forty percent
of what you built to the irs.
Speaker 1 (07:35):
Yeah, and just taking the whole tax thing off the
table for a moment. What really needs to happen, too
is just communication among the family members. And I could
think of a situation that you know, I helped a
client work through earlier this year, where again it was
a business situation. There's not any federal state taxes involved here,
but it is still a very large estate. And this
(07:57):
this husband and wife came in and they had not
yet work through who's going to get the business and
when and how are we going to equalize things for
our other children that we want to treat fairly, and
it's a difficult, delicate, you know matter, and sometimes the
kids could try to manipulate mom and dad into thinking, well,
(08:18):
I deserve this or that because I work in the
business or what have you. These people when they came
in had not thought about any of that kind of stuff,
and I was able to bring in a very good,
trusted attorney that I've worked with for years. We had
some very candid conversations and we were to work out
a very good plan where you know, again, taxes weren't
(08:40):
an issue. The issue was communication and building a plan.
So everybody feels good about what's going to happen, and
they know what's going to happen when mom and dad
pass away, and you know, all the money stuff aside,
it's gonna I think, prevent some family discord and misunderstand
(09:00):
and hurt feelings once mom and dad do pass away,
and you know, that kind of stuff's worth way more
than money most of the time, at least in my opinion.
Speaker 2 (09:09):
Brian, Yeah, I would agree, And I'm thinking of a
story as you're talking through that some of the unpredictable
things that can happen when in a state gets settled
so I had a situation a few years ago where
everybody was pretty well aware where all the assets were.
That part was communicated pretty clearly across the family. But
what wasn't known is that one of the spouses had
run up a bunch of debt, a bit of a
gambling problem out there as well, as you know, I
(09:32):
feel like it sort of came from a little bit
of lifestyle create plenty of money floating around, lots of
ability to do kind of whatever they wanted, and I
think this one spouse just took advantage of that and
just really got sucked into the idea that I can
just go out and buy whatever I want and we'll
just finance all this stuff. And again the gambling problem
and all that. Well, the good news about that once
(09:52):
the initial shock war off of oh my gosh, you know,
you know, this person wasn't quite what we thought they were,
and that's painful. Anyway, set the money aside, but kind
of learned arning about some of these you know, skeletons
in the closet. The best part about that, Bob, was
the heirs didn't have to pay for it, because the
surviving spouse was not aware of it. That person's name
was not on any of these debts. And when the
individual passed away, while the credit the creditors did, of
(10:16):
course come looking for it, as you can expect they would,
the surviving spouse was not liable for those debts. And
while while they were, you know, that person really wanted
to just kind of set things up and make everything
clean and keep it nice and neat, and they were
ready to write significant, big checks for these debts that
they didn't even know existed, but they didn't have to
because what they were not marital debts. They were just
the debts of the deceased, and the credit card companies
(10:38):
had to write them off. So these are the kind
of things if you take a breath and you understand
how it works, and this is what professionals can help
you understand in terms of, you know, to take care
of what you need to, what you're obligated to, but
also understand what you're not. You're not on the hook
for absolutely everything, whether whether even though it might feel
like you should be in that particular case. So that
was one of that was one of the times where
(10:58):
I really felt like I went home that day like
we did a good job today. Helping this person understand
what they do not have to do.
Speaker 1 (11:03):
Yeah, I'm sure you did. All right. Here's the Allworth advice.
If you haven't yet, could taken control of your estate
planning strategy, especially as that net worth is really really climbing,
Get on it now, don't don't procrastinate, don't put it off,
and especially when it comes to a looming tax bill.
If you don't have a strategy, someone else definitely has one.
(11:25):
And his name is Uncle Sam and he does not
miss a deadline. Coming up next, changes are coming to
help save these accounts in twenty twenty six, Plus one
airline's latest move that'll have travelers literally sitting up and
taking notice. You're listening to Simply Money presented by Allworth
Financial on fifty five KRC the talk station. You're listening
(11:53):
to Simply Money presented by Allworth Financial. I'm Bob Sponseller
along with Brian James straight Ahead at six forty three.
What did you after selling a business? How to balance
a pension with an investment portfolio, and the smart way
to think about rental properties. Starting in twenty twenty six,
millions more Americans will be able to tap into health
(12:14):
savings accounts not just for medical bills, but as a
stealth retirement weapon. If you think your plan currently disqualifies
you listen closely, Brian. This has the potential to help
a lot of folks.
Speaker 2 (12:29):
Yeah, so what we're talking about here is bronze and
catastrophic plans on the Affordable Healthcare marketplace Affordable Care Act
marketplace plans that didn't previously qualify for health savings accounts
are now going to become HSA eligible. And again, this
is a good thing because, as we always talk about,
we love hsas because they can be triple tax free,
no tax when you put the dollars in, and no
(12:51):
tax on the growth. Important staff we always want to
say this, you've got to get it invested in something.
Most of the time, when your employer offers you an HSA,
it's going to be go into some simple bank account
what doesn't have a lot of options. You do not
not not have to keep those dollars there. That might
be where they land initially, but you can move them
to different places. If you want to benefit from all
three phases of the tax benefits there, you've got to
(13:14):
get those dollars invested in something. And the third facet
of that is when you pull those dollars out, if
they are used for healthcare expenses, then they're going to
come out tax free as well. That's triple tax free,
not before, not during, and not after. And then one
more cool trick with HSA is, Bob, you can pay
your medical bills. Your current expense is out of pocket
right now, ignore that HSA. Just keep funding it, let
(13:36):
it grow over time, and then you can pull out
those receipts fifteen twenty years later and then take the
distribution for a tax free benefit off of expenses that
you incurred twenty years before. So that's what an HSA
does for us. And you're going to be able to
use that more and more because there are more plans
on the ACA marketplace that are going to be eligible
for it too.
Speaker 1 (13:57):
All right, And for twenty twenty six, the IRS has
now officially set the contribution limits and they've gone up
one hundred dollars a year for an individual. It was
forty four hundred dollars a year or forty three hundred
dollars a year this year twenty twenty five, that's going
going up to four thousand, four hundred dollars a year
for twenty twenty six, and the family plan is going
(14:20):
up by two hundred dollars from the eight thousand and
seven fifty for twenty twenty five. I'm sorry, eight thousand,
five hundred and fifty for twenty twenty five, and it's
going to be eight thousand, seven hundred and fifty for
twenty twenty six. So the IRS is allowing us to
even put more money away in these things. Brian, My
(14:40):
question is how many people are going to be able
to take advantage of this. I mean, if someone's out
there on an ACA marketplace subsidized healthcare plan, are do
they have the discretionary income to even be thinking about
an HSA or does this you think this is going
to apply to a lot of people.
Speaker 2 (14:58):
It's it's it's a narrowing window of people people, for sure.
I mean you really really if you're thinking of the
HSA as as a you know, a tax benefit investment
type account, yeah, you do have to have the extra
dollars available to set aside. Uh. And you know some
people do consider the idea of maybe I want to
reduce my four oh one K so they can route
money over to the HSA. That's not a terrible idea.
(15:18):
Just make sure you're not doing it. Make sure you're
still getting that full match on the four oh one
K side, and make sure you're not going to use
those dollars if you really want to benefit from the
investment side, make sure you're setting this up in a
manner where you can let those dollars go and let
them grow. Otherwise you're not going to benefit fully from
the tax advantages. You could simply use your four oh
one k for that. So yeah, I do think it
a lot of times we get very excited about these
(15:39):
different things and lose sight of the fact that it
doesn't help everybody. If the cash flow isn't there, then
it's just not there.
Speaker 1 (15:45):
Yep. All right, Hey, just when you thought airlines couldn't
squeeze another penny out of our flight experience, Canadian airline
WestJet has introduced a brand new charge, and this is
not a sprint, a fee to recline your seat. The
seats in question are now they're on their new Boeing
(16:06):
seven thirty seven Max eight airplanes in west Jets west
jets new standard fare class. The seats will only recline
if you pay an extra fee before you get on
the plane, Brian. So they've got this thing wired up
somehow where if you hit the button, the seat won't
even move if you haven't paid to do it. You know,
(16:28):
some crazy day, What did they spend to wire these
seats to do all this fancy electronics? And are they
even recouping that cost with the you know, the reclined fee.
Speaker 2 (16:38):
It's crazy, right, and I got it. And I can
just picture the room full of nbas who ran spreadsheets
looking at absolutely every tiny little experience that happens on
a plane and levying a menu of charges against all
of the different things. You know, So next is going
to be pay toilets in the airplanes? Is that where
we're going with It? Wouldn't shock me in the least
at all. But so this is just more of the
(17:00):
same that we keep seeing from the airline industry as
they're just trying to squeeze every last bit of profit
from every last little corner of that airplane at this
at this rate, the only the only thing free on
a flight's gonna be the the air that already went
through ten sets of lungs that you're now breathing in.
There's gonna be a charge for that too. Eventually, I guess.
Speaker 1 (17:16):
All right, every Sunday you'll find our all Worth Advice
in the Cincinnati Inquire And here is a preview. Brian
Off tossed this one to you. R W in Cincinnati says,
I make about two hundred thousand dollars a year, and
I know I'm fortunate compared to most, but I'm still
worried about money. And yes, I even still have credit
(17:36):
card debt. Does this feeling ever go away? Do I
just need to try and keep earning more? What's your
advice to good old RW Brian.
Speaker 2 (17:45):
Well, I would say, r W, I kind of wonder
if you, if you have you done a budget, do
you know where the money is going? If you have
credit card debt and and you're making you know, a
good six digit income and there's still credit card debt
out there? Is that old stuff left over from the
past or is it new debt that's coming on because
because the INDs are not meeting the outs in terms
of cash flow. So I would look look really hard
(18:06):
at that and then put prioritize those credit cards. I mean,
whatever payments you're making, hopefully you are making payments on those,
but if there's any kind of balance. I'm gonna go
ahead and guess you're probably paying twenty five, twenty seven,
twenty eight percent for the privilege of owing a bank money.
So that is the biggest hole in your bucket. So
attack that first and foremost. You know it needs to
go away. Don't get paralysis by analysis and agonize about
(18:28):
you know, the other ten financial things you're thinking about.
The biggest hole in your bucket is that credit card debt.
Prioritize that, make it go away, and then figure out,
once you've done that, what can those the payments you've
been making toward that credit card? What is the next
thing screaming for money? So figure out how to prioritize
and attack those goals one by one, and yes, that
feeling will go away.
Speaker 1 (18:47):
Yeah, this definitely sounds like a spending problem, not an
earning problem. And my concern here is you're already making
great money and if you just keep spending and spending
and feeling like you always go out and earn more,
you're just gonna wear yourself out and anxiety is gonna
cripple you and it's no way to live. So, like
(19:07):
Brian said, try to get the spending under control, live
within your means and by all means. In the very
very very short term, develop a plan to make that
twenty plus percent credit card debt go away, and you'll
thank yourself big time later. All right, Well, AI eventually
take your job? How to future proof your career? Coming
(19:28):
up next? You're listening to Simply Money presented about all
Worth Financial on fifty five KRC the talk station. You're
listening to Simply Money presented about all Worth Financial. I'm
Bob Spunseller along with Brian James, joined tonight by our
career expert Julie Balk and Julie thanks as always for
(19:49):
spending some time with us tonight. We want to talk
tonight about AI in your career. It's a topic of
conversation everywhere right now. Is AI is pretty much becoming ubiquitous?
Is AI going to take our job? How do we
future proof our career? And what are the opportunities out
there using AI for in a positive way?
Speaker 3 (20:12):
You know, it really depends on your job and your age. Frankly,
the older you are, it depends on your job. It
depends on where you are. Those of us who are
older exers and boomers. I think it's really helpful to
understand what the capabilities of AI. AI are, But you're
probably not going to be in the workplace long enough
(20:34):
for it to really take over your life or your
job because it's still developing. But to put up put
on blinders and say, don't even say that around me,
I don't know what it is and I don't care
is a signal to a client, it's a signal to
a potential employer. It's the signal to your colleagues that
you aren't willing to learn.
Speaker 2 (20:53):
So, Julie, are you hearing from people who want to
adjust their skills to be open to AI? Or do
you hear from when they say I want to find
a career for the or a job for the last
balance of my career to get away from AI. How
do people approach it?
Speaker 3 (21:08):
You know, it's funny a little bit of both. So
there are when you look at what AI can and
can't do, there are real advantages that you have as
an older worker in using AI. And let me explain.
So what AI is wonderful at, in fact so good
that it's really scary, is that it finds information, it
(21:30):
can analyze the information, and it can really speed up
your work. What it can't do, what it doesn't have
is wisdoms, your knowledge, your experience, and so to just
have a group of twenty five year olds making company
decisions based on what they find on AI, it's not
wrapped inside of wisdom, experience, wisdom and experience, they're going
(21:53):
to be making a lot of mistakes. And so we
see these stories. I've seen several stories where people use
it as an end all and be all, as the
one hundred percent correct answer and way to go and
it and then it comes back to bite him in
the rear. So we're not to the point yet where
it has the wisdom and experience that we accumulate throughout
(22:17):
our careers that we need to apply for that to
decide what to do with what we learn after we
use AI for something, all.
Speaker 1 (22:26):
Right, Julie. I work with someone every day. His name's
Brian James, who I have sat and watched. You never
heard AI into what he does every day, and his
knowledge of this is ramping up quickly, and it's quite impressive.
I think for the most of us out there, correct
me if I'm wrong. Most people out there they know
AI is coming, or it's even present in our workplace,
(22:49):
and we all want to be relevant, we all want
to stay up to speed. Let's take the fear out
of it. What should the average person working in industry today?
What should they or we proactively be doing to ramp
up on this stuff so we can maximize the benefits
of AI, stay relevant in our career, and you know,
(23:10):
be prepared for the next five to ten years. Is
this stuff really takes hold? What should we be doing?
Speaker 3 (23:17):
First of all, it is overwhelming, It is overwhelming. I
get it. All these new phrases being thrown around. So
I always say, pick one thing, just pick one thing,
pick like, pick one what they call large language model.
So GPT is a large language model. We normally hear
cat GPT, but GPT is a large language model. Something
(23:37):
called Gemini is Google's large language model. And that's almost
like this huge platform in which the information is all
sitting just to make it just as basic as possible.
And then there are apps like cat GPT Perplexity. It
goes out and find what's sitting out there in this
(23:58):
vast database, bring it together, makes it make sense to us,
and so it's not as complex as it sounds. If
you pick one thing to try I had a friend
who said she's want to go on a trip to Ireland.
And she put in plan a trip to Ireland, and
here are my parameters. I want to say, you know,
here's the kind of trip I want. It came back
(24:18):
with the most beautiful itinerary. Now is she going to
just take that as the gospel and do everything? It said? No?
Then you take what it does is it can speed
up your research, it can speed up your process, but
you're still the one of us make decisions. So I
would pick one thing, maybe it's chat GPT, and you say,
and you just start asking it questions and see what
(24:39):
it comes back with. And the next thing, just to
get comfortable with it. I did this in chat GPT.
I said, who is Julie Balki and what does she believe?
And I'm going to tell you it came back with
the most comprehensive outline of who I am, what I believe,
what my work does, what I think is important and
(25:00):
so eloquent. I was like, holy moly, and so it's
really powerful, but it doesn't have to be scary. The
second thing I'd.
Speaker 2 (25:06):
Say is I have a question for that on that
for you, do you think that's because it has gotten
to know you, or did it just go find whatever
it could find that you've posted on the internet, since
there's plenty of that out there.
Speaker 3 (25:16):
Yeah, it's that the second one because I haven't used
it well enough for it for it to know me.
I haven't used it enough. But figure out how is
it being used in your profession so you don't have
to learn everything. Let's say you're in financial planning. Let's
say you're a pairalegal. Let's say you are an accountant
and auditors find out just even just ask it at
(25:39):
ask it at tet gp GPT, how is tech GPT
being used in public accounting or auditing, and then keep
asking follow up questions so the more follow up questions
you ask, the better information. And then say, okay, it
looks like everybody in financial planning is using this particular application.
Now just go taken one class, Just go on watch
(26:03):
some YouTube videos. You've got to find a place to
jump in in order to develop your comfort. You can
use it to write poems. It's amazing. But just you've
got it, you can't be so afraid that you're not
going to get out there, that you're not going to
get out there and try. Will you ever become an expert? Yeah,
most of us won't, but you can't. The worst thing
you can do is put your hands over your ears
(26:24):
and eyes, will say, don't talk to me about this,
and then expect to work ten more years. You can't.
Speaker 1 (26:30):
Now that that is great advice, Julie. All right, thanks
for joining us tonight. As always, you're listening to Simply
Money presented by all Worth Financial on fifty five KRC,
the talk station. You're listening to Simply Money presented by
all Worth Financial on Bob Sponsller along with Brian James.
(26:50):
Do you have a financial question you'd like for us
to answer. There's a red button you can click while
you're listening to the show right on the iHeart app.
Simply record your question and it will come straight to us.
All right, let's kick things off Brian with Jeff in Mainville,
who says, Hey, I just sold a business. I got
a pretty good payout. What's the smart first step? Pay
(27:11):
off the mortgage invest it set it aside for taxes.
Speaker 2 (27:15):
Well, congratulations, Jeff, that's a great story. I'd love to
hear you know what the business was sometime and exactly
what came of how you built it and all that.
But yeah, so great opportunity. Now what you're looking at
is the wonderful frustration of, oh my gosh, there are
so many things I could do, which one should I do?
This is when financial planning gets harden, when it's no
longer black and white. Right, there's dumb ideas and good
(27:37):
ideas for about thirty years. Then you build something successful,
and now you got to decide what's the best thing.
These are all good things. Paying off the mortgage, investing taxes,
something else. Entirely, these are all important things. So I
would say, what is your plan telling you to do?
What is your plan? If you have a financial plan,
then it should be relatively obvious. What's the biggest what's
the biggest thing screaming for money right now? But I'll
(27:57):
give you here's the indicators I would look at if
you're more you know, we don't know anything about Jeff
other than he says he has a mortgage. If this
mortgage came from the last three or four years, maybe
you just built a new house or something like that,
then it's probably at a higher interest rate. You might
look at up. I don't know about paying it down,
paying it off. You might look at recasting it and
trying to get to take some of that money lower
the principle, you're not going to lower the interest rate much,
(28:18):
very very much currently, but you could get the payment
down a little bit. Investing is always the default. Whatever's
left over, Yes, of course we want to invest that
after you've set aside enough for the emergency fund. Certainly,
taxes get an idea, hopefully you've got a CPA in
the mix, and tell you what's what's coming do. But
again it all comes back to the plan which will
help you prioritize. Here's the ten things screaming for money,
and here's the order in which I care about them.
(28:40):
All right, so we'll move on to John in Cold Spring.
John's got a pension, so scirty and investments, and he's wondering,
how do I tap into those in retirement? How do
you determine what that order is, Bob.
Speaker 1 (28:50):
Well, John, with pension and social security, you've got some
options on when to take them, you know, based on
what age you want to start, when you want to retire,
all those kind of things, So you can evaluate whether
it makes sense to take a lump sum pension or
whether you just want to take the pension income and
at what age social security. There is no lump sum option,
but obviously you can decide when you want to start,
(29:12):
and then whatever you got left in investments. So the
smartest order to tap those investments comes down to the
decisions on that pension and social security, and then I
always default to trying to create for people the most
tax efficient stream of income we can come up with
when combining all of those sources. So there's a lot
(29:32):
in play here. You've got a lot of options. You know,
I recommend sitting down with a good fiduciary advisor and
in way the pros and cons of each claiming strategy
and your pension and constructing your investment portfolio. And you
know that oftentimes you're going to take some of all
of it, you know, so it's not just complete one
(29:52):
and then go to the other. Oftentimes it comes down
to responsibly taking a mix of all three, and in
most cases that gives you the best solution. All right,
Bill and Liberty Township asks. He says, I've got multiple
rental properties. Should I treat them like part of my
retirement portfolio?
Speaker 2 (30:10):
Brian, Yeah, yeah, if you Well, there's two types of
people who ow in real estate. There are people who
own several like it sounds like you are, and who
have figured out the game and understand how to deal
with tenants and broken stuff and all those kinds of things,
and have built it into a kind of a routine,
and you have your network of handy people who can
do things for you. Then there's the people who thought
(30:30):
they were going to get into it and realize that
they don't like it at all and can't wait to
get rid of it. So you sound like the former,
where you've kind of built it into into a little
bit of a business that's helping you out. So I
absolutely would treat that as part of a retirement portfolio. Heck, Bill,
everything you own is part of your retirement portfolio. Anything
that spits out any kind of growth opportunity you know,
or generates income or whatever that is going to help
(30:53):
you through retirement. I would think of it sort of
like your you know, maybe like your bond portfolio. And
by that I mean if it's a significant enough part
of your net worth, then that's going to generate steady
generate steady interest as long as you can keep them,
keep them from being vacant for extended period of time.
Sounds like you figured that game out though, But to
have that generate income and let the rest of your
portfolio perhaps be more aggressive.
Speaker 1 (31:16):
Yeah, Brian, I want to just add one thing here,
And I've had this happen with several clients over the years.
As people age and they don't want to maintain and
manage these rental properties anymore. They want to slowly unwind them.
Most people have depreciated these properties down to near a
zero cost basis, so you do have to factor in
if and when you want to start to unwind these things,
(31:37):
you got to factor in taxes in the equation, you know,
as you as you redeploy assets elsewhere. Just one other
thing to add in there. Yeah.
Speaker 2 (31:45):
No, that's a great point. And for those of you
out there who might have been thinking about getting into
real estate because of the tax benefits, you give some
of that back at the end. What Bob's referring to
their is you do get a deduction on the value
the depreciation amount of that piece of property every year,
but eventually, when you sell it, you have to pay
capital gains on a much larger amount of that gain
because you've been taking that depreciation over the years. That's
(32:06):
just something the government put in place a long time
ago to make it attractive to invest in real estate.
And this is why real estate developers are always always
looking for that next development. Real estate developers never get
to a point where they just stop building entirely. They
need something because eventually they run out of deductions depreciation
deductions on the existing properties. Therefore, I got to have
one cooking anyway, all right, So we'll move on from Bill,
(32:28):
and we're gonna move to Frank and Kenwood. Frank says,
if I never planned to spend all of my assets
and I do have airrors that I care about, should
I be investing these more aggressively.
Speaker 1 (32:39):
Well, potentially, Frank. The way I address risk profile this
way number one is what do you need to earn
in the way of return to meet all your financial goals?
And it sounds like you've already got that box checked.
You're in good shape. So then it comes down to
emotional risk tolerance. And if you can be growth oriented
(33:00):
and take the highs and lows and the swings and
the ebbs and flows of the market and really stay
invested long term, you're going to benefit from doing that,
i e. Investing more aggressively both from a rate of
return standpoint and a tax efficiency standpoint, because the more
of your assets you can keep in that capital gain
ledger versus ordinary income ledger, the better off you're going
(33:23):
to be. To say nothing of the fact that when
you pass away, you get a stepped up cost basis
on capital gain assets and your heirs pay nothing in taxes.
So I think you're on the right track here. Just
make sure that your emotional risk tolerance truly fits with
what you're talking about here, and I think you're going
to be in great shape, all right, Jackie and Mount Adams.
Brian says, what do your most successful retired clients do
(33:47):
differently than everyone else? That's a great question, Jackie.
Speaker 2 (33:50):
My happiest, most successful retired clients stop looking at their
money every single day, and I'll contrast that, my most
miserable clients look at it every day. They worry about
what the market does, they worry about what the government's doing.
They can't peel their eyes off the TV in the headline,
So understand what the actual impact of your of your
financial plan is and understand when you're okay. I think
(34:13):
it's extremely important for absolutely everybody out there to uh
to to understand when they have met success. When did
you make it to the end, and when did you know? When?
When are you okay? Because you by that time you
will have built your financial plan, you will have stress
tested it for good times and bad times, and you'll
know that when the scary headlines do happen. And that's
one of the few guarantees we can give people that
(34:34):
you're going to be okay.
Speaker 1 (34:35):
Coming up next, I've got my two cents on the
benefits of proactive family communication when it comes to money.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station. You're listening to
Simply Money. You're sent up by all Worth Financial on
Bob Spon Seller along with Brian James. Brian, I want
(34:59):
to spend a a couple of minutes talking about an
actual meeting I had here a couple days ago that
ended with a happy ending. I love happy endings, and
here's what I'm talking about. I'm talking about the benefits
of proactive communication among family members and intergenerational planning between
parents and kids, and when it works, it works really well,
(35:20):
if people get proactive and communicate. For example, had a
client review meeting and these folks have plenty of money,
they've saved, well, they don't spend what they have. And
they said, hey, Bob, we want to start to help
out our younger adult son. He doesn't know anything about investing,
he's just started in his career. We want to get
some seed money put to work and we want you
(35:42):
to get him started with a financial plan. And I said, great,
how much money are we talking about? And they gave
me a number, And so I was able to contact
the Sun and say, hey, here's what's going on, here's
what your mom and dad want to do. Would you
like to meet with me? Would you like to talk
about building your financial plan? He goes, that sounds great.
So as of yesterday, fast forward, we were able to
(36:05):
talk about the pros and cons of different investments, talk
about risk profile strategy, review his retirement plan at work,
and I'm proud to announce we got his wroth IRA
opened and funded with some money for twenty twenty five.
The parents are going to put more money in in
twenty twenty six. The Sun is thrilled. The parents are
(36:27):
happy because their son is now launched with a good
financial plan. This is how things should work, Brian, if
people are willing to sit down and talk amongst themselves
and help their offspring get prepared for retirement. Yeah.
Speaker 2 (36:43):
I just had a really good story just from yesterday
from a meeting clients, clients who are new to me,
and the parent and child adult child came in to
kind of work on things, and parent is wanting to
gift assets now to watch their family benefit from it
in the short run because they remember at that time
of life when they had kids and things were just expensive,
(37:03):
a little bit of extra money would have helped. And
parent has more than enough. So big discussion there, but
the child it was very heartwarming. Actually the child said, Okay,
I appreciate that, but we need to talk to Brian
and see what is there other things we're not thinking of, taxes,
other scary things. What should we be planning for. So
we basically had a long conversation and just kind of
built out, yes, you can do this, but you probably
(37:23):
can't do that because the last thing you want to
do if you're trying to help your children is put
yourself at risk, because that's just going to cause stress
for your child, who obviously loves you so much, they're
slowing you down from giving them money. That is in contrast,
Bob to when I was very very young. I was
a baby adviser about twenty five twenty eight years ago,
and I once got a call from somebody who was
in the hearse on their way from their parents' funeral,
(37:45):
wanting to stop by on the way home and pick
up the check for their inheritance. So I'm glad those
days are over in my career. But anyway, that's sometimes
how people think now.
Speaker 1 (37:55):
And the point I really want to drive home, you know,
with with these stories, is just we talk about all
these exotic strategies and all that on the show all
the time. Often the most important impactful things are just
the simple things getting started, getting money put away where
it can compound tax free for decades and decades, and again,
(38:16):
sometimes simple is best. Thanks for listening tonight. You've been
listening to Simply Money, presented by all Worth Financial on
fifty five KRC, the talk station
Tonight, how to keep the irs from becoming the biggest
heir of your estate. You're listening to simply money, becauseided
by all Worth Financial on Bob spun Seller along with
Brian James, trillions that's trillions with a T are about
to change hands over the next two decades. It's the
biggest wealth transfer in history. And here's the kicker. A
(00:28):
whole lot of it will not go to the kids
or the grandkids, or even to chosen charities. Too much
of it's gonna be going straight to Uncle Sam. Walk
us through some of the latest data from Vanguard and Fidelity, Brian.
Speaker 2 (00:41):
Well, Bob Let's first, let's kind of set some ground
rules here. What are we talking about with regard to
a stay taxes? The state taxes and things are not
are not the scary things that you might think, right.
A lot of people simply assume that just because they've died,
they're gonna have to pay a stay tax. That's not
really the case. So the way this works now, about
twenty some years ago, under the first second Bush administration,
(01:04):
estate taxes began to come down significantly in terms of
when they kick in. So as we're sitting here right now,
you really need to have in the ballpark of fourteen
million dollars per individual person. You can basically double that
for a married couple before any of these things are
a problem. Now realizing that that doesn't affect a lot
of people out there, but there are some people that
it does. So we want to share information for everybody
(01:25):
to be useful.
Speaker 1 (01:26):
So with the time, we're doing this segment to help
people like you, Brian, where this is going to come
into the mix. How to protect your one hundred million
dollars state. So walk us through how to do that.
Speaker 2 (01:37):
Yes, let's talk exactly about how my wine and cheese
and champagne lifestyle is going to play out here when
I'm dead. It's a of course, new research from Van
Garden Fidelity about seventy percent of families people with this
is a fluent families, which Fidelity defines as multiple millions,
but about seventy percent of them have not done advanced
state planning. That's going to keep more of that money
(01:59):
in the family, and that means billions or even trillions
of dollars over the next several decades can quietly slip
away the taxes that didn't have to be paid just
because people thought that having a will was the same
as having a plan, and it doesn't work that way, right,
So you know, one of the miss out there is
of I've got a will, then that's all I need,
you know, because I know plenty of people don't have
wills at all. That's not me. I've got a will
(02:19):
in place, so that's all I need. A will only
exists for one moment in time. It just says who
gets what, and it guarantees that these assets are going
to go through probate, because probate is the act of
reading a will and that and the government has to
be involved in that the way the laws work. So
that's why you have to go through the county to
get it, got to pay an attorney to do it,
so on and so forth. It doesn't say how this
(02:39):
stuff is distributed or when or even how much of
it the irs gets. A will is just a legal
document that puts names on assets. An estate plan, however,
is a strategy and that can bring in that can
bring in time, It can bring in methods of distribution.
It can assign people who are in charge over time
to make make sure these things are distributed. And this
is all things that kick in after you have passed,
(03:01):
but you're still able to kind of pull the strings
because you took these these steps before your death. Most
people never actually take that second step of figuring out, Okay,
I've got my will and now in my name beneficiaries
and my accounts. They just assume their lawyer or their
financial advisor has already taken care of it for them,
simply because they had a brief conversation about it. But
the truth is, Bob, if you haven't set up things
(03:23):
like trusts or gifting strategies or used your lifetime exemptions
and you're in this window of pretty significant wealth, then
you've basically written a tax plan as opposed to an
estate plan that you didn't mean to. In the irs,
they're waiting there, of course, with baited breath, just just
waiting to collect your dollars when you pass.
Speaker 1 (03:41):
Most of the time, when we get into into estates
that are as large as ones that are going to
be impacted by federal inheritance taxes. I mean, let's face it,
in today's world, it's thirty million dollars in up. A
lot of times, these people are business owners. They've built
large businesses, and so you know, you got to get
into strategies in This is where it's important to sit
down and do a financial plan and figure out how
(04:03):
much money do you need? And it might seem laughable
to some like you know you can't get buying on
thirty million dollars. Well most people can obviously, but you
want to find that sweet spot on how much money
do we need or want to retain control over during
our life our lifetime to fund what we want to do,
and then look at other things like how do I
(04:25):
minimize the tax bill by doing you know, charitable giving,
you know, with the maximum maximum tax advantage as possible,
things like charitable remainder trust and then if you if
you want to get your children involved or other people
involved in the business. You know, the key thing here
is taking advantage of things called minority discounts. It makes
sense to do some gifting responsibly during your lifetime, shelling
(04:51):
out assets to other people that are going to inherit
this business or asset anyway, but being willing to part
with some of it during your lifetime and getting those
minority discounts up front can really make a huge difference
down the road. In the estate taxes you will have
to pay, but you got to be proactive about it.
(05:12):
You got to set you know, firm goals in place.
You got to communicate with family members and you get
you got to sit down with good advisors, a financial advisor,
a fiduciary advisor, a CPA, and an attorney to work
together to craft these kind of strategies because they do
get complicated, they can seem expensive, and sometimes they are,
(05:34):
but it comes down to the value added in the end,
because uh, millions of dollars in estate taxes can be avoided.
And I've seen this happen myself, Brian. I've worked with
business owners to you know, with these other advisors to
see this, see this all come to light. You got
to be proactive and get out in front of this
early because the longer you wait, you know, the problem
(05:57):
just compounds and it could become a tax nightmare down
the road.
Speaker 2 (06:02):
So that's why, So how do we get this right?
What are the tools that are out there? Well, this
is where things like life insurance, charitable giving strategies or
trusts come into play. And you're gonna run across a
lot of acronyms. Tools like slats s l A T,
which stands for spousal lifetime access trust or maybe a
dynasty trust, charitable reminder trusts. These can make a huge
difference in what's ultimately getting taxed here. Now, again, these
(06:24):
are for these are situations where we've got a significant
amount of dollars. So, yes, there are expenses in setting
these up. There are legal expenses involved, there are expenses
for insurance and all that kind of thing. But these
are the kind of tools for very specific advanced planning strategies,
which is what you need at this dollar amount if
you truly want it to be efficient. If the you know,
I think it could be a we have a tendency
(06:46):
sometimes to be a bit penny wise and pound foolish
in terms of I don't want to pay a lawyer
and accountant, you know, these extra dollars just to set
all this stuff up. But you got to make sure
you understand what you're sacrificing. If you don't, there will
be an impact in terms of what the bill when
the bill comes due on your beneficiary after you're gone
and can't do anything about it. So you want to
make sure that you you've put the time into understanding
(07:06):
these things. And you know, we spend a lot of
time picking investments, Bob Right, we looked to agonize over
what am I going to invest in? You know, but
we avoid this estate stuff for years because it's an
uncomfortable thing to think about. Nobody wants to think about
their own death or worry about their you know, what's
going to happen to their kids. But would you rather
have that conversation now, when you've got time and energy
to build, to build a solution for it, or dump
(07:29):
it in the lap of your heirs who may not
be prepared to have done it after losing forty percent
of what you built to the irs.
Speaker 1 (07:35):
Yeah, and just taking the whole tax thing off the
table for a moment. What really needs to happen, too
is just communication among the family members. And I could
think of a situation that you know, I helped a
client work through earlier this year, where again it was
a business situation. There's not any federal state taxes involved here,
but it is still a very large estate. And this
(07:57):
this husband and wife came in and they had not
yet work through who's going to get the business and
when and how are we going to equalize things for
our other children that we want to treat fairly, and
it's a difficult, delicate, you know matter, and sometimes the
kids could try to manipulate mom and dad into thinking, well,
(08:18):
I deserve this or that because I work in the
business or what have you. These people when they came
in had not thought about any of that kind of stuff,
and I was able to bring in a very good,
trusted attorney that I've worked with for years. We had
some very candid conversations and we were to work out
a very good plan where you know, again, taxes weren't
(08:40):
an issue. The issue was communication and building a plan.
So everybody feels good about what's going to happen, and
they know what's going to happen when mom and dad
pass away, and you know, all the money stuff aside,
it's gonna I think, prevent some family discord and misunderstand
(09:00):
and hurt feelings once mom and dad do pass away,
and you know, that kind of stuff's worth way more
than money most of the time, at least in my opinion.
Speaker 2 (09:09):
Brian, Yeah, I would agree, And I'm thinking of a
story as you're talking through that some of the unpredictable
things that can happen when in a state gets settled
so I had a situation a few years ago where
everybody was pretty well aware where all the assets were.
That part was communicated pretty clearly across the family. But
what wasn't known is that one of the spouses had
run up a bunch of debt, a bit of a
gambling problem out there as well, as you know, I
(09:32):
feel like it sort of came from a little bit
of lifestyle create plenty of money floating around, lots of
ability to do kind of whatever they wanted, and I
think this one spouse just took advantage of that and
just really got sucked into the idea that I can
just go out and buy whatever I want and we'll
just finance all this stuff. And again the gambling problem
and all that. Well, the good news about that once
(09:52):
the initial shock war off of oh my gosh, you know,
you know, this person wasn't quite what we thought they were,
and that's painful. Anyway, set the money aside, but kind
of learned arning about some of these you know, skeletons
in the closet. The best part about that, Bob, was
the heirs didn't have to pay for it, because the
surviving spouse was not aware of it. That person's name
was not on any of these debts. And when the
individual passed away, while the credit the creditors did, of
(10:16):
course come looking for it, as you can expect they would,
the surviving spouse was not liable for those debts. And
while while they were, you know, that person really wanted
to just kind of set things up and make everything
clean and keep it nice and neat, and they were
ready to write significant, big checks for these debts that
they didn't even know existed, but they didn't have to
because what they were not marital debts. They were just
the debts of the deceased, and the credit card companies
(10:38):
had to write them off. So these are the kind
of things if you take a breath and you understand
how it works, and this is what professionals can help
you understand in terms of, you know, to take care
of what you need to, what you're obligated to, but
also understand what you're not. You're not on the hook
for absolutely everything, whether whether even though it might feel
like you should be in that particular case. So that
was one of that was one of the times where
(10:58):
I really felt like I went home that day like
we did a good job today. Helping this person understand
what they do not have to do.
Speaker 1 (11:03):
Yeah, I'm sure you did. All right. Here's the Allworth advice.
If you haven't yet, could taken control of your estate
planning strategy, especially as that net worth is really really climbing,
Get on it now, don't don't procrastinate, don't put it off,
and especially when it comes to a looming tax bill.
If you don't have a strategy, someone else definitely has one.
(11:25):
And his name is Uncle Sam and he does not
miss a deadline. Coming up next, changes are coming to
help save these accounts in twenty twenty six, Plus one
airline's latest move that'll have travelers literally sitting up and
taking notice. You're listening to Simply Money presented by Allworth
Financial on fifty five KRC the talk station. You're listening
(11:53):
to Simply Money presented by Allworth Financial. I'm Bob Sponseller
along with Brian James straight Ahead at six forty three.
What did you after selling a business? How to balance
a pension with an investment portfolio, and the smart way
to think about rental properties. Starting in twenty twenty six,
millions more Americans will be able to tap into health
(12:14):
savings accounts not just for medical bills, but as a
stealth retirement weapon. If you think your plan currently disqualifies
you listen closely, Brian. This has the potential to help
a lot of folks.
Speaker 2 (12:29):
Yeah, so what we're talking about here is bronze and
catastrophic plans on the Affordable Healthcare marketplace Affordable Care Act
marketplace plans that didn't previously qualify for health savings accounts
are now going to become HSA eligible. And again, this
is a good thing because, as we always talk about,
we love hsas because they can be triple tax free,
no tax when you put the dollars in, and no
(12:51):
tax on the growth. Important staff we always want to
say this, you've got to get it invested in something.
Most of the time, when your employer offers you an HSA,
it's going to be go into some simple bank account
what doesn't have a lot of options. You do not
not not have to keep those dollars there. That might
be where they land initially, but you can move them
to different places. If you want to benefit from all
three phases of the tax benefits there, you've got to
(13:14):
get those dollars invested in something. And the third facet
of that is when you pull those dollars out, if
they are used for healthcare expenses, then they're going to
come out tax free as well. That's triple tax free,
not before, not during, and not after. And then one
more cool trick with HSA is, Bob, you can pay
your medical bills. Your current expense is out of pocket
right now, ignore that HSA. Just keep funding it, let
(13:36):
it grow over time, and then you can pull out
those receipts fifteen twenty years later and then take the
distribution for a tax free benefit off of expenses that
you incurred twenty years before. So that's what an HSA
does for us. And you're going to be able to
use that more and more because there are more plans
on the ACA marketplace that are going to be eligible
for it too.
Speaker 1 (13:57):
All right, And for twenty twenty six, the IRS has
now officially set the contribution limits and they've gone up
one hundred dollars a year for an individual. It was
forty four hundred dollars a year or forty three hundred
dollars a year this year twenty twenty five, that's going
going up to four thousand, four hundred dollars a year
for twenty twenty six, and the family plan is going
(14:20):
up by two hundred dollars from the eight thousand and
seven fifty for twenty twenty five. I'm sorry, eight thousand,
five hundred and fifty for twenty twenty five, and it's
going to be eight thousand, seven hundred and fifty for
twenty twenty six. So the IRS is allowing us to
even put more money away in these things. Brian, My
(14:40):
question is how many people are going to be able
to take advantage of this. I mean, if someone's out
there on an ACA marketplace subsidized healthcare plan, are do
they have the discretionary income to even be thinking about
an HSA or does this you think this is going
to apply to a lot of people.
Speaker 2 (14:58):
It's it's it's a narrowing window of people people, for sure.
I mean you really really if you're thinking of the
HSA as as a you know, a tax benefit investment
type account, yeah, you do have to have the extra
dollars available to set aside. Uh. And you know some
people do consider the idea of maybe I want to
reduce my four oh one K so they can route
money over to the HSA. That's not a terrible idea.
(15:18):
Just make sure you're not doing it. Make sure you're
still getting that full match on the four oh one
K side, and make sure you're not going to use
those dollars if you really want to benefit from the
investment side, make sure you're setting this up in a
manner where you can let those dollars go and let
them grow. Otherwise you're not going to benefit fully from
the tax advantages. You could simply use your four oh
one k for that. So yeah, I do think it
a lot of times we get very excited about these
(15:39):
different things and lose sight of the fact that it
doesn't help everybody. If the cash flow isn't there, then
it's just not there.
Speaker 1 (15:45):
Yep. All right, Hey, just when you thought airlines couldn't
squeeze another penny out of our flight experience, Canadian airline
WestJet has introduced a brand new charge, and this is
not a sprint, a fee to recline your seat. The
seats in question are now they're on their new Boeing
(16:06):
seven thirty seven Max eight airplanes in west Jets west
jets new standard fare class. The seats will only recline
if you pay an extra fee before you get on
the plane, Brian. So they've got this thing wired up
somehow where if you hit the button, the seat won't
even move if you haven't paid to do it. You know,
(16:28):
some crazy day, What did they spend to wire these
seats to do all this fancy electronics? And are they
even recouping that cost with the you know, the reclined fee.
Speaker 2 (16:38):
It's crazy, right, and I got it. And I can
just picture the room full of nbas who ran spreadsheets
looking at absolutely every tiny little experience that happens on
a plane and levying a menu of charges against all
of the different things. You know, So next is going
to be pay toilets in the airplanes? Is that where
we're going with It? Wouldn't shock me in the least
at all. But so this is just more of the
(17:00):
same that we keep seeing from the airline industry as
they're just trying to squeeze every last bit of profit
from every last little corner of that airplane at this
at this rate, the only the only thing free on
a flight's gonna be the the air that already went
through ten sets of lungs that you're now breathing in.
There's gonna be a charge for that too. Eventually, I guess.
Speaker 1 (17:16):
All right, every Sunday you'll find our all Worth Advice
in the Cincinnati Inquire And here is a preview. Brian
Off tossed this one to you. R W in Cincinnati says,
I make about two hundred thousand dollars a year, and
I know I'm fortunate compared to most, but I'm still
worried about money. And yes, I even still have credit
(17:36):
card debt. Does this feeling ever go away? Do I
just need to try and keep earning more? What's your
advice to good old RW Brian.
Speaker 2 (17:45):
Well, I would say, r W, I kind of wonder
if you, if you have you done a budget, do
you know where the money is going? If you have
credit card debt and and you're making you know, a
good six digit income and there's still credit card debt
out there? Is that old stuff left over from the
past or is it new debt that's coming on because
because the INDs are not meeting the outs in terms
of cash flow. So I would look look really hard
(18:06):
at that and then put prioritize those credit cards. I mean,
whatever payments you're making, hopefully you are making payments on those,
but if there's any kind of balance. I'm gonna go
ahead and guess you're probably paying twenty five, twenty seven,
twenty eight percent for the privilege of owing a bank money.
So that is the biggest hole in your bucket. So
attack that first and foremost. You know it needs to
go away. Don't get paralysis by analysis and agonize about
(18:28):
you know, the other ten financial things you're thinking about.
The biggest hole in your bucket is that credit card debt.
Prioritize that, make it go away, and then figure out,
once you've done that, what can those the payments you've
been making toward that credit card? What is the next
thing screaming for money? So figure out how to prioritize
and attack those goals one by one, and yes, that
feeling will go away.
Speaker 1 (18:47):
Yeah, this definitely sounds like a spending problem, not an
earning problem. And my concern here is you're already making
great money and if you just keep spending and spending
and feeling like you always go out and earn more,
you're just gonna wear yourself out and anxiety is gonna
cripple you and it's no way to live. So, like
(19:07):
Brian said, try to get the spending under control, live
within your means and by all means. In the very
very very short term, develop a plan to make that
twenty plus percent credit card debt go away, and you'll
thank yourself big time later. All right, Well, AI eventually
take your job? How to future proof your career? Coming
(19:28):
up next? You're listening to Simply Money presented about all
Worth Financial on fifty five KRC the talk station. You're
listening to Simply Money presented about all Worth Financial. I'm
Bob Spunseller along with Brian James, joined tonight by our
career expert Julie Balk and Julie thanks as always for
(19:49):
spending some time with us tonight. We want to talk
tonight about AI in your career. It's a topic of
conversation everywhere right now. Is AI is pretty much becoming ubiquitous?
Is AI going to take our job? How do we
future proof our career? And what are the opportunities out
there using AI for in a positive way?
Speaker 3 (20:12):
You know, it really depends on your job and your age. Frankly,
the older you are, it depends on your job. It
depends on where you are. Those of us who are
older exers and boomers. I think it's really helpful to
understand what the capabilities of AI. AI are, But you're
probably not going to be in the workplace long enough
(20:34):
for it to really take over your life or your
job because it's still developing. But to put up put
on blinders and say, don't even say that around me,
I don't know what it is and I don't care
is a signal to a client, it's a signal to
a potential employer. It's the signal to your colleagues that
you aren't willing to learn.
Speaker 2 (20:53):
So, Julie, are you hearing from people who want to
adjust their skills to be open to AI? Or do
you hear from when they say I want to find
a career for the or a job for the last
balance of my career to get away from AI. How
do people approach it?
Speaker 3 (21:08):
You know, it's funny a little bit of both. So
there are when you look at what AI can and
can't do, there are real advantages that you have as
an older worker in using AI. And let me explain.
So what AI is wonderful at, in fact so good
that it's really scary, is that it finds information, it
(21:30):
can analyze the information, and it can really speed up
your work. What it can't do, what it doesn't have
is wisdoms, your knowledge, your experience, and so to just
have a group of twenty five year olds making company
decisions based on what they find on AI, it's not
wrapped inside of wisdom, experience, wisdom and experience, they're going
(21:53):
to be making a lot of mistakes. And so we
see these stories. I've seen several stories where people use
it as an end all and be all, as the
one hundred percent correct answer and way to go and
it and then it comes back to bite him in
the rear. So we're not to the point yet where
it has the wisdom and experience that we accumulate throughout
(22:17):
our careers that we need to apply for that to
decide what to do with what we learn after we
use AI for something, all.
Speaker 1 (22:26):
Right, Julie. I work with someone every day. His name's
Brian James, who I have sat and watched. You never
heard AI into what he does every day, and his
knowledge of this is ramping up quickly, and it's quite impressive.
I think for the most of us out there, correct
me if I'm wrong. Most people out there they know
AI is coming, or it's even present in our workplace,
(22:49):
and we all want to be relevant, we all want
to stay up to speed. Let's take the fear out
of it. What should the average person working in industry today?
What should they or we proactively be doing to ramp
up on this stuff so we can maximize the benefits
of AI, stay relevant in our career, and you know,
(23:10):
be prepared for the next five to ten years. Is
this stuff really takes hold? What should we be doing?
Speaker 3 (23:17):
First of all, it is overwhelming, It is overwhelming. I
get it. All these new phrases being thrown around. So
I always say, pick one thing, just pick one thing,
pick like, pick one what they call large language model.
So GPT is a large language model. We normally hear
cat GPT, but GPT is a large language model. Something
(23:37):
called Gemini is Google's large language model. And that's almost
like this huge platform in which the information is all
sitting just to make it just as basic as possible.
And then there are apps like cat GPT Perplexity. It
goes out and find what's sitting out there in this
(23:58):
vast database, bring it together, makes it make sense to us,
and so it's not as complex as it sounds. If
you pick one thing to try I had a friend
who said she's want to go on a trip to Ireland.
And she put in plan a trip to Ireland, and
here are my parameters. I want to say, you know,
here's the kind of trip I want. It came back
(24:18):
with the most beautiful itinerary. Now is she going to
just take that as the gospel and do everything? It said? No?
Then you take what it does is it can speed
up your research, it can speed up your process, but
you're still the one of us make decisions. So I
would pick one thing, maybe it's chat GPT, and you say,
and you just start asking it questions and see what
(24:39):
it comes back with. And the next thing, just to
get comfortable with it. I did this in chat GPT.
I said, who is Julie Balki and what does she believe?
And I'm going to tell you it came back with
the most comprehensive outline of who I am, what I believe,
what my work does, what I think is important and
(25:00):
so eloquent. I was like, holy moly, and so it's
really powerful, but it doesn't have to be scary. The
second thing I'd.
Speaker 2 (25:06):
Say is I have a question for that on that
for you, do you think that's because it has gotten
to know you, or did it just go find whatever
it could find that you've posted on the internet, since
there's plenty of that out there.
Speaker 3 (25:16):
Yeah, it's that the second one because I haven't used
it well enough for it for it to know me.
I haven't used it enough. But figure out how is
it being used in your profession so you don't have
to learn everything. Let's say you're in financial planning. Let's
say you're a pairalegal. Let's say you are an accountant
and auditors find out just even just ask it at
(25:39):
ask it at tet gp GPT, how is tech GPT
being used in public accounting or auditing, and then keep
asking follow up questions so the more follow up questions
you ask, the better information. And then say, okay, it
looks like everybody in financial planning is using this particular application.
Now just go taken one class, Just go on watch
(26:03):
some YouTube videos. You've got to find a place to
jump in in order to develop your comfort. You can
use it to write poems. It's amazing. But just you've
got it, you can't be so afraid that you're not
going to get out there, that you're not going to
get out there and try. Will you ever become an expert? Yeah,
most of us won't, but you can't. The worst thing
you can do is put your hands over your ears
(26:24):
and eyes, will say, don't talk to me about this,
and then expect to work ten more years. You can't.
Speaker 1 (26:30):
Now that that is great advice, Julie. All right, thanks
for joining us tonight. As always, you're listening to Simply
Money presented by all Worth Financial on fifty five KRC,
the talk station. You're listening to Simply Money presented by
all Worth Financial on Bob Sponsller along with Brian James.
(26:50):
Do you have a financial question you'd like for us
to answer. There's a red button you can click while
you're listening to the show right on the iHeart app.
Simply record your question and it will come straight to us.
All right, let's kick things off Brian with Jeff in Mainville,
who says, Hey, I just sold a business. I got
a pretty good payout. What's the smart first step? Pay
(27:11):
off the mortgage invest it set it aside for taxes.
Speaker 2 (27:15):
Well, congratulations, Jeff, that's a great story. I'd love to
hear you know what the business was sometime and exactly
what came of how you built it and all that.
But yeah, so great opportunity. Now what you're looking at
is the wonderful frustration of, oh my gosh, there are
so many things I could do, which one should I do?
This is when financial planning gets harden, when it's no
longer black and white. Right, there's dumb ideas and good
(27:37):
ideas for about thirty years. Then you build something successful,
and now you got to decide what's the best thing.
These are all good things. Paying off the mortgage, investing taxes,
something else. Entirely, these are all important things. So I
would say, what is your plan telling you to do?
What is your plan? If you have a financial plan,
then it should be relatively obvious. What's the biggest what's
the biggest thing screaming for money right now? But I'll
(27:57):
give you here's the indicators I would look at if
you're more you know, we don't know anything about Jeff
other than he says he has a mortgage. If this
mortgage came from the last three or four years, maybe
you just built a new house or something like that,
then it's probably at a higher interest rate. You might
look at up. I don't know about paying it down,
paying it off. You might look at recasting it and
trying to get to take some of that money lower
the principle, you're not going to lower the interest rate much,
(28:18):
very very much currently, but you could get the payment
down a little bit. Investing is always the default. Whatever's
left over, Yes, of course we want to invest that
after you've set aside enough for the emergency fund. Certainly,
taxes get an idea, hopefully you've got a CPA in
the mix, and tell you what's what's coming do. But
again it all comes back to the plan which will
help you prioritize. Here's the ten things screaming for money,
and here's the order in which I care about them.
(28:40):
All right, so we'll move on to John in Cold Spring.
John's got a pension, so scirty and investments, and he's wondering,
how do I tap into those in retirement? How do
you determine what that order is, Bob.
Speaker 1 (28:50):
Well, John, with pension and social security, you've got some
options on when to take them, you know, based on
what age you want to start, when you want to retire,
all those kind of things, So you can evaluate whether
it makes sense to take a lump sum pension or
whether you just want to take the pension income and
at what age social security. There is no lump sum option,
but obviously you can decide when you want to start,
(29:12):
and then whatever you got left in investments. So the
smartest order to tap those investments comes down to the
decisions on that pension and social security, and then I
always default to trying to create for people the most
tax efficient stream of income we can come up with
when combining all of those sources. So there's a lot
(29:32):
in play here. You've got a lot of options. You know,
I recommend sitting down with a good fiduciary advisor and
in way the pros and cons of each claiming strategy
and your pension and constructing your investment portfolio. And you
know that oftentimes you're going to take some of all
of it, you know, so it's not just complete one
(29:52):
and then go to the other. Oftentimes it comes down
to responsibly taking a mix of all three, and in
most cases that gives you the best solution. All right,
Bill and Liberty Township asks. He says, I've got multiple
rental properties. Should I treat them like part of my
retirement portfolio?
Speaker 2 (30:10):
Brian, Yeah, yeah, if you Well, there's two types of
people who ow in real estate. There are people who
own several like it sounds like you are, and who
have figured out the game and understand how to deal
with tenants and broken stuff and all those kinds of things,
and have built it into a kind of a routine,
and you have your network of handy people who can
do things for you. Then there's the people who thought
(30:30):
they were going to get into it and realize that
they don't like it at all and can't wait to
get rid of it. So you sound like the former,
where you've kind of built it into into a little
bit of a business that's helping you out. So I
absolutely would treat that as part of a retirement portfolio. Heck, Bill,
everything you own is part of your retirement portfolio. Anything
that spits out any kind of growth opportunity you know,
or generates income or whatever that is going to help
(30:53):
you through retirement. I would think of it sort of
like your you know, maybe like your bond portfolio. And
by that I mean if it's a significant enough part
of your net worth, then that's going to generate steady
generate steady interest as long as you can keep them,
keep them from being vacant for extended period of time.
Sounds like you figured that game out though, But to
have that generate income and let the rest of your
portfolio perhaps be more aggressive.
Speaker 1 (31:16):
Yeah, Brian, I want to just add one thing here,
And I've had this happen with several clients over the years.
As people age and they don't want to maintain and
manage these rental properties anymore. They want to slowly unwind them.
Most people have depreciated these properties down to near a
zero cost basis, so you do have to factor in
if and when you want to start to unwind these things,
(31:37):
you got to factor in taxes in the equation, you know,
as you as you redeploy assets elsewhere. Just one other
thing to add in there. Yeah.
Speaker 2 (31:45):
No, that's a great point. And for those of you
out there who might have been thinking about getting into
real estate because of the tax benefits, you give some
of that back at the end. What Bob's referring to
their is you do get a deduction on the value
the depreciation amount of that piece of property every year,
but eventually, when you sell it, you have to pay
capital gains on a much larger amount of that gain
because you've been taking that depreciation over the years. That's
(32:06):
just something the government put in place a long time
ago to make it attractive to invest in real estate.
And this is why real estate developers are always always
looking for that next development. Real estate developers never get
to a point where they just stop building entirely. They
need something because eventually they run out of deductions depreciation
deductions on the existing properties. Therefore, I got to have
one cooking anyway, all right, So we'll move on from Bill,
(32:28):
and we're gonna move to Frank and Kenwood. Frank says,
if I never planned to spend all of my assets
and I do have airrors that I care about, should
I be investing these more aggressively.
Speaker 1 (32:39):
Well, potentially, Frank. The way I address risk profile this
way number one is what do you need to earn
in the way of return to meet all your financial goals?
And it sounds like you've already got that box checked.
You're in good shape. So then it comes down to
emotional risk tolerance. And if you can be growth oriented
(33:00):
and take the highs and lows and the swings and
the ebbs and flows of the market and really stay
invested long term, you're going to benefit from doing that,
i e. Investing more aggressively both from a rate of
return standpoint and a tax efficiency standpoint, because the more
of your assets you can keep in that capital gain
ledger versus ordinary income ledger, the better off you're going
(33:23):
to be. To say nothing of the fact that when
you pass away, you get a stepped up cost basis
on capital gain assets and your heirs pay nothing in taxes.
So I think you're on the right track here. Just
make sure that your emotional risk tolerance truly fits with
what you're talking about here, and I think you're going
to be in great shape, all right, Jackie and Mount Adams.
Brian says, what do your most successful retired clients do
(33:47):
differently than everyone else? That's a great question, Jackie.
Speaker 2 (33:50):
My happiest, most successful retired clients stop looking at their
money every single day, and I'll contrast that, my most
miserable clients look at it every day. They worry about
what the market does, they worry about what the government's doing.
They can't peel their eyes off the TV in the headline,
So understand what the actual impact of your of your
financial plan is and understand when you're okay. I think
(34:13):
it's extremely important for absolutely everybody out there to uh
to to understand when they have met success. When did
you make it to the end, and when did you know? When?
When are you okay? Because you by that time you
will have built your financial plan, you will have stress
tested it for good times and bad times, and you'll
know that when the scary headlines do happen. And that's
one of the few guarantees we can give people that
(34:34):
you're going to be okay.
Speaker 1 (34:35):
Coming up next, I've got my two cents on the
benefits of proactive family communication when it comes to money.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station. You're listening to
Simply Money. You're sent up by all Worth Financial on
Bob Spon Seller along with Brian James. Brian, I want
(34:59):
to spend a a couple of minutes talking about an
actual meeting I had here a couple days ago that
ended with a happy ending. I love happy endings, and
here's what I'm talking about. I'm talking about the benefits
of proactive communication among family members and intergenerational planning between
parents and kids, and when it works, it works really well,
(35:20):
if people get proactive and communicate. For example, had a
client review meeting and these folks have plenty of money,
they've saved, well, they don't spend what they have. And
they said, hey, Bob, we want to start to help
out our younger adult son. He doesn't know anything about investing,
he's just started in his career. We want to get
some seed money put to work and we want you
(35:42):
to get him started with a financial plan. And I said, great,
how much money are we talking about? And they gave
me a number, And so I was able to contact
the Sun and say, hey, here's what's going on, here's
what your mom and dad want to do. Would you
like to meet with me? Would you like to talk
about building your financial plan? He goes, that sounds great.
So as of yesterday, fast forward, we were able to
(36:05):
talk about the pros and cons of different investments, talk
about risk profile strategy, review his retirement plan at work,
and I'm proud to announce we got his wroth IRA
opened and funded with some money for twenty twenty five.
The parents are going to put more money in in
twenty twenty six. The Sun is thrilled. The parents are
(36:27):
happy because their son is now launched with a good
financial plan. This is how things should work, Brian, if
people are willing to sit down and talk amongst themselves
and help their offspring get prepared for retirement. Yeah.
Speaker 2 (36:43):
I just had a really good story just from yesterday
from a meeting clients, clients who are new to me,
and the parent and child adult child came in to
kind of work on things, and parent is wanting to
gift assets now to watch their family benefit from it
in the short run because they remember at that time
of life when they had kids and things were just expensive,
(37:03):
a little bit of extra money would have helped. And
parent has more than enough. So big discussion there, but
the child it was very heartwarming. Actually the child said, Okay,
I appreciate that, but we need to talk to Brian
and see what is there other things we're not thinking of, taxes,
other scary things. What should we be planning for. So
we basically had a long conversation and just kind of
built out, yes, you can do this, but you probably
(37:23):
can't do that because the last thing you want to
do if you're trying to help your children is put
yourself at risk, because that's just going to cause stress
for your child, who obviously loves you so much, they're
slowing you down from giving them money. That is in contrast,
Bob to when I was very very young. I was
a baby adviser about twenty five twenty eight years ago,
and I once got a call from somebody who was
in the hearse on their way from their parents' funeral,
(37:45):
wanting to stop by on the way home and pick
up the check for their inheritance. So I'm glad those
days are over in my career. But anyway, that's sometimes
how people think now.
Speaker 1 (37:55):
And the point I really want to drive home, you know,
with with these stories, is just we talk about all
these exotic strategies and all that on the show all
the time. Often the most important impactful things are just
the simple things getting started, getting money put away where
it can compound tax free for decades and decades, and again,
(38:16):
sometimes simple is best. Thanks for listening tonight. You've been
listening to Simply Money, presented by all Worth Financial on
fifty five KRC, the talk station
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