November 12, 2025 • 40 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian explore how your financial plan should stay steady even when the economy doesn’t follow the script. From the double-digit interest rates of the 1980s to the AI-fueled market surge of 2023–24, they unpack the mixed signals investors have faced over the last 40 years—and what you can learn from the surprises. They also dive into how innovations from State Street could reshape your 401(k), how to make smart open enrollment choices, and real-life listener questions about supporting aging parents and adult kids, selling a business, managing inconsistent income, and dealing with old annuities.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I guys just say we now have a fighting chance
to our veterans act.
Speaker 2 (00:05):
Thank you.
Speaker 3 (00:05):
I'd do it again if I could. Fifty five KRC.
The talk station.
Speaker 4 (00:16):
Canight what financial planning looks like when the economy doesn't
necessarily follow the proverbial script. You're listening to Simply Money,
presented by all Worth Financial on Bob Sponsler along with
Brian James. Stocks are rising, the labor market is weakening.
Speaker 2 (00:31):
Inflation is kind of just hanging around, Tariff.
Speaker 4 (00:34):
Policy is still, you know, up for discussion, and geopolitical
tensions remain. The economy often sends mixed signals, but your
financial plan should not. And tonight we're going to take
kind of a walk down memory lane here over the
last I don't know, forty years or so, Brian, and
look historically at a few things have been going on
(00:55):
that maybe people didn't see coming. And the point here
is you don't want to completely upset the apple cart
and bail on your plan, but there are opportunities out
there to make some nuanced adjustments to things like tax planning,
acid allocation, how your portfolio was structured. And you know,
it's very interesting that you know, when you look in
(01:16):
the rear view mirror.
Speaker 2 (01:17):
Which is always easy. It's easy to be a Monday
morning quarterback a lot.
Speaker 4 (01:21):
Oftentimes some of the best opportunities out there, nobody saw
them coming. And if you just sit there with it
like a deer in the headlights and don't react, you're
kicking yourself, you know, down the road after the fact.
So let's take us back to the eighties.
Speaker 2 (01:35):
We talked.
Speaker 4 (01:35):
We love talking about the eighties. We did that last week. Yeah,
great rock and roll. Joe Strecker reminds me of did
your hair look different back then?
Speaker 2 (01:44):
Bob? Can you describe your hair in the eighties? I
had some Okay, there was hair.
Speaker 4 (01:49):
I still required haircuts in the nineteen eighties, all right,
But hey, carry the ball here, walk us back to
the eighties and what was going on.
Speaker 1 (01:58):
In I was more of a nineties kid, so I
was all grunge, and I had the shaggy hair and
the flannel and all that.
Speaker 2 (02:03):
And now I only have the flannel anyway.
Speaker 1 (02:06):
So these types of of mixed signals can create behavioral issues.
And this is I'm gonna go offscript for one second here, Bob.
This is something I think about all the time. I
think that the generations that have money. Now, look at
the eighties and the nineties were literally nothing bad happened, right,
You can't even find nineteen eighty seven October eighty seven,
you can't find it on a chart anymore because it's
been so much crazier ever since then. I think those
(02:28):
were the anomaly, and I think people got once we
hit the internet bubble bursting in one to two, in
that recession in nine to eleven, and all that, then
we had two thousand and eight. I think people viewed
those items as the anomalies, like, that's not supposed to happen.
But if you look over a couple hundred years worth
of history of this country, it was the eighties and
the nineties that wasn't supposed to happen. You're not supposed
to have a period of prosperity that freaking long. But
(02:49):
we did, and that created what we all thought was
the economy. This is how it's supposed to work, and
everything else is wrong, So it is how it's supposed
to work.
Speaker 2 (02:58):
The NASDAK is supposed to go up to twenty seven percent.
Speaker 1 (03:00):
Of your companies don't need to make money, they just
need to have flashy internet websites and not really a
business plan. So but anyway, so yeah, mixed signals. This
drives behavioral issues. When we get crazy stuff we don't expect,
we tend to want to do something about it. Sometimes
action feels so much better than inaction. So we're going
to talk about some of these things that kind of
were headfakes economically speaking, in the market speaking, so in
(03:21):
nineteen eighties, we had double digit interest rates but also
really strong growth That kind of seems counterintuitives, but that
would go the other.
Speaker 2 (03:29):
Way, right.
Speaker 1 (03:29):
We had we had stagflation through the seventies and we
needed to beat that down. The answer to that was
really really high interest rates to tamp down the growth
of everything. And that that did work and did it
hurt a lot for those people who are remembering this time,
this time of the economy. But by the mid eighties,
all of a sudden we had explosive GDP growth and
(03:50):
that resulted in what we just talked about and again
became kind of the formative this is how it's.
Speaker 2 (03:54):
Supposed to work thought for a lot of people.
Speaker 1 (03:55):
Broke inflation, that put confidence back in place, and then
the demographic trans stepped in to kind of.
Speaker 2 (04:01):
Fuel that growth.
Speaker 4 (04:03):
Yeah, let's let's pivot to the early two thousands, of mean,
two thousand and eight, two thousand and nine, coming out
of the housing crisis, we had zero interest rates, zero
for it seemed like forever, but no runaway inflation because
we we were very extended, you know, credit wise, if
you could fog a mirror, you could qualify for a mortgage,
(04:24):
stated income loans, you could you could buy five or
six you know, condos pre construction down in Florida by
just filling out an application. What could possibly go wrong?
You get a house, you get a house, you get
three condos. Everything was off to the races, and then wow,
the housing crisis hit. Banks were in default, human you know,
(04:45):
regular consumers were in default. It was a really wild
period there for a couple.
Speaker 1 (04:49):
So I just used a banking term that I was
working for a bank at that time. And I remember
the head of the local lending facility there the mortgage
area was complete, super honest guy and all clearly on
the up and up, but he was confused by these
stated income loans, which literally that sounds like a fancy term.
All that means is you walk in, you state your income,
you get a mortgage. I make a bazillion dollars cool,
(05:09):
we can loan you o two thirds of a bazillion
dollars to borrow home. No proof was required, it was
just a lot easier. That's the environment that our leadership
wanted us in, and not talking about the bank, I'm
talking about the entire country. That's the environment that we
wanted to be. And when we reduced regulation on the
rules of all that kind of stuff, and that did
lead to, you know, kind of overdoing it, which we
tend to do here well.
Speaker 4 (05:30):
In rate stayed low for so long because it took
a while for consumers and banks to just deleverage. Everybody
had borrowed so much money because it was free, it
was cheap, and money was really not moving around for
a while, and that's what makes the economy go. So
you know, that's why rate stayed low. It was it
was a very interesting time, all right, two thousand and
(05:51):
nine to twenty thirteen. Even when we had a bunch
of stimulus coming in from the government, inflation did not
really spike because again, we were trying to bail this
economy out of that tremendous housing crisis. And you would
have thought that inflation would be off to the races
when all this government stimulus money was flowing around, but
(06:12):
it didn't, Brian, and wow, what a great time to
be invested in stocks it was.
Speaker 1 (06:17):
And so let's talk about what was the right move
to have made at that time in response to what
we just talked about. While aggressive rebalancing and taking risk
right put risk into your portfolio, a lot of Heineworth
investors were overly overly conservative posts two thousand and eight,
and they missed They ate a lot of the downside
and missed most of the upside. So if you have,
but you have, if you had a plan in place,
you understood the history, you would have sidestepped that because
(06:39):
there would be no need to protect your long term
ass That's because you would have already set up your
short term assets, which would not have been affected by
it at all.
Speaker 4 (06:47):
All right, and then let's move forward to the dreaded
COVID discussion twenty twenty. You know, stocks actually surged during
a global pandemic as the GDP shrank by over thirty
percent in the second quarter of twenty twenty, unemployment hit
fourteen point seven percent. Boy, that that's a great reminder,
I forget about that high unemployment rate, and yet the
(07:10):
SP five hundred hit all time highs by August.
Speaker 2 (07:13):
Of that year.
Speaker 4 (07:14):
Why more government stimulus, more fed action, a bunch of
money flying around, And when free money is flying around,
it finds its way into real estate, into stocks, into
speculative growth assets.
Speaker 2 (07:27):
And we were off.
Speaker 4 (07:28):
To the races after that, the fastest and most serious,
you know, bear market in US history. That market dropped
well over thirty percent in a heartbeat. It really froze
people for a few months. And if you bailed on
the market then and went to cash, boy were you
sorry just a few months later.
Speaker 1 (07:47):
But I'll add Bob that I don't know most of
my clients don't really remember the market collapsing that much,
not like in two thousand and eight, because two thousand
and eight was real, not that, not that the COVID
downturn wasn't, but it was over with relatively click, and
it happened due to a stimulus that came out of
left field. Those those kinds of things tend to become
a catalyst right underneath all of that. When you removed
(08:08):
the when you remove the COVID vacs or the COVID issue.
The economy was relatively strong before that, so all that
happened was we had a brief panic, and then everybody
exhaled and said, Okay, you know what, I think, maybe
this isn't that big of a deal. This is not
the virus from Hollywood that's coming to kill us all.
And then it became a catalyst because the entire world
had to shift to working from home, which means Dell
made a bunch of money. I can confirm that here
(08:30):
on my own desktop. Zoom came out of nowhere was created.
Technology had to shift to allow the whole world to
have a second workspace, and that was a catalyst for
the stock market that trickled through in a huge way.
Speaker 4 (08:42):
What were a couple of the huge financial planning techniques
during that whole time period during COVID tax lost harvesting
and rough conversions. When the market's tanked in March of
twenty twenty before rebounding, people that had an advisor and
were paying attention, man, this is when you know smart
investing really came into vogue because you could just swap
(09:03):
one S and P five hundred ETF for another harvest
Those losses stay fully invested and you know, bank bank
those losses to use later on to offset future gains.
Wonderful time for tax loss harvesting and roth conversions man convert,
you know, converting iras to roth during a thirty percent downturn.
(09:24):
Wonderful opportunity. And then you catch the rebound completely tax free.
We had a lot of people doing both of those things,
and uh, it really moved the needle financially for them.
Speaker 1 (09:33):
Yeah, and that can be a tough trigger to pull
because remember, you're doing that in a face of headlines
that are screaming the end is near, and you're doing
this roth conversion going no, it's not, matter of fact,
I'm going to move this over to the tax free
So when the pendulum ultimately swings back the other way,
it'll be tax free now. And I paid a lot
less than taxes to get it done. That's winning the game.
Speaker 2 (09:50):
All right.
Speaker 4 (09:51):
We get through COVID and now we're in twenty twenty two.
The Fed has to, you know, pump the brakes on
all this free money flying around.
Speaker 2 (09:57):
So what do they do. They raise interestraights seven times.
Speaker 4 (10:01):
The labor market came back, you know, everybody went back
to work and man, we had a horrible year in
both the bond and.
Speaker 2 (10:08):
The stock market.
Speaker 4 (10:09):
They usually doesn't happen because usually, you know, you buy
bonds to protect yourself from stocks. Man In twenty twenty two,
nothing worked, and that was an interesting time. But that's
when for the first time in many, many years, we
talked to people about treasury bills, treasury bonds, some of
these high yield savors accounts, parking some money, getting very
(10:30):
nice interest rates, you know, fighting back against the current environment.
And it was a good opportunity, great time to have
an emergency fund.
Speaker 2 (10:39):
It really was.
Speaker 1 (10:39):
The other that was when we were all reminded that
you are indeed allowed to get paid not real dollars
on your on your depository type accounts, your safe money.
It had been decades since we had that opportunity. One
of things I like to point out to my clients
is exactly how bad that year was. We don't really
think of twenty two. Twenty two didn't have a story right,
It didn't come along with any crazy but it was
(11:00):
one of the five worst market years we've had on record,
and that includes two thousand and eight, includes in nineteen
thirty seven, it includes nineteen seventy three one to oh two.
It's up there with those worst years we've ever had,
but it doesn't get thought of that way because it
didn't come along with one great story like the Depression
or the Great Recession or anything like that. But anyway,
so at that time, yeah, that was that was the
(11:20):
time to kind of take take stock of what your
situation really is. It was a great time to have
an emergency fund, not only to take advantage of those
interest rates, but also to not have to sell out
your long term assets that we're getting hammered at the time.
Speaker 4 (11:34):
And then the last but not least twenty twenty three,
twenty twenty three to twenty twenty four, despite higher than
normal interest rates in inflation, I don't think anybody saw
this coming, Brian, to this extent.
Speaker 2 (11:45):
We had great stock market years both of those years.
Speaker 4 (11:48):
Why the influx of AI enthusiasm, new technology coming in,
better than expected, corporate earnings, and economic resilience which.
Speaker 2 (11:58):
Usually always overcome these short term fears.
Speaker 4 (12:01):
Just proving once again that the American people, American companies
are very resilient. They find a way, and boy, if
you were out of the market in twenty three and
twenty four Just because you were afraid of what was
going to happen in the world, you missed out on
some great returns.
Speaker 1 (12:17):
Yeah, that's right, and the move then would have been
We're big fans of direct indexing. Here if you can
do it, which basically means own own a pile of
individual securities instead of mutual funds, if you can in
a taxable account, replicate that index and take advantage of
the tax loss harvesting opportunity.
Speaker 2 (12:33):
Here's the all Worth advice.
Speaker 4 (12:34):
When the economy doesn't necessarily follow the proverbial rules or scripts,
smart investors don't panic. They reach for the right tool
in the toolbox. A giant in the retirement plan world
is starting to shake things up. We'll show you what
that means potentially for your four to one k, your
asset allocation and your long term income plan. You're listening
(12:55):
to Simply Money presented by all Worth Financial on fifty
five KRC.
Speaker 2 (12:59):
The talk station.
Speaker 5 (13:02):
Is additional pressure building in the system.
Speaker 4 (13:05):
Hundreds of flights cancelled heading into the weekend because of.
Speaker 3 (13:07):
The government shut down. The day's news several people fell
ill at Joint bas Andrews. Suspicious package arrived at the
facility fifty five KRZ the talk station.
Speaker 5 (13:17):
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 4 (13:35):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. If you can't
listen to Simply Money live every night, subscribe and get
our daily podcasts. And of course, if you have family
or friends that need some financial advice, let them know
about us as well. Just search Simply Money on the
iHeart app or wherever you find your podcasts. Straight ahead
(13:57):
of six forty three How to juggle the financial demands
of aging parents and adult kids, What to do with
old annuities that are laying around collecting dust, and why
a big payday from selling your business isn't always as
simple as it might seem. Let's dig into a story
that could have implications for your retirement planning toolbox. Brian
(14:19):
The asset management firm State Street, one of the biggest
providers in the etf target date space is making moves
in the defined contribution or for lack you know, what
we like to call the retirement plan world. That could
change how four one K plans look and behave in
the pretty near future.
Speaker 2 (14:39):
Yeah.
Speaker 1 (14:39):
So the gist of this is that normally, when we
think of four oh one k's, we think of traditional
mutual funds, which have been around for I don't know
one hundred some years. I believe nineteen twenty four, matter
of fact was the first one. Anyway, those have been
around forever, and that has evolved into target date funds,
which are still mutual funds. Those are the ones that
have a year in the name of them. When you're
looking at four oh one K, and that year is
roughly when you might retire, and that indicates a portfolio
(15:02):
that might be appropriate, although you've got to look under
the hood because not all target date funds, you know,
with the year twenty sixty five, are the same for example,
and played old index funds is where most people familiar with.
But State Street is coming around saying we're going to
innovate this space, and they have launched some target date
strategies that include private markets exposure as well as public market.
State Street is a big firm, one point seven trillion
(15:24):
dollars in exchange traded funds. If you've ever heard of spiders,
which are the S and P five hundred ETF.
Speaker 2 (15:29):
That's their flavor of them. But that's State Street behind that.
Speaker 1 (15:32):
So this could be significant for higher earnerge You're already
thinking about more than just allocation. You're looking for I'm sorry,
more than just accumulation. You're looking for diversification. You're going
to need income generation in the future. You want some
things out there to kind of offset the swings of
the market, meaning alternative assets certainly need tax planning, those
kinds of things. So when a retirement plant provider starts
offering these hybrid solutions, what that means is your four
(15:53):
to one K is no longer just a commodity play.
It's not the same as all the other ones. It
can become part of a more sophisticated asset allocation strategy
involving a whole bunch of other topics.
Speaker 2 (16:03):
Well, let's look under the hood here for a minute.
Speaker 4 (16:05):
Let's say you've got a four to one K and
you've got you know, seven hundred and fifty thousand, a
million couple million dollars in there, and maybe it isn't
a target date fund or some other index funds. With
these new structures coming from State Street, and I'm sure
other other providers are going to be following suit here,
you might be able to get access inside the plan
(16:26):
to private equity, private credit infrastructure funds. That's the kind
of model that State Street and others are starting to build.
Speaker 2 (16:35):
I see pros and cons with all of this. Mainly pros.
Speaker 4 (16:39):
I think for some of these larger plan sponsors, I
think some of the the traditional you know, potential objectives
to adding these asset out these asset areas to these plans,
i e. Fees and transparency and lock up periods. I
have to think that if you're going to put them
in some of these multimillion dollar four or one K plans,
(17:01):
that a lot of those traditional hurdles are going to
start to go away.
Speaker 2 (17:04):
And I think that's a good thing.
Speaker 1 (17:06):
Yeah, And then make no mistake what the motivation is
here behind this. Of course, State Street is a for
profit entity, as are many of them and us and
individuals in this country, so rest assured they are looking
to make a profit by providing people something that doesn't
exist right now because there is literally twelve trillion dollars
in the retirement space, retirement plan space, mostly locked up
(17:26):
in traditional mutual funds, and they're viewing this as an
area that is ripe for.
Speaker 2 (17:31):
Some different options out there.
Speaker 4 (17:33):
Yeah, let's face it, if everybody just piles into index funds,
it's a pretty low margin business because the internal operating
expenses of those funds are very low. So again, I
see pros and cons to all this. You know, if
these alternative asset classes do their job, which is to
potentially increase your return with lower risk adjusted volatility, it
(17:56):
can be a good thing as long as you don't
get sucked dry on fees. So again we're just calling
it out to you know, let you know this stuff
is coming. But I think it's good to look under
the hood and see what the deal terms are are,
so to speak, to make sure you're really getting good
bang for your buck if you venture into.
Speaker 2 (18:13):
Some of these things. Yeah, so let's talk about what
are the pros and cons.
Speaker 1 (18:16):
We talked about the pros, right, So these these are
these are could be decent opportunities to get into things
beyond traditional mutual funds, you know, but private markets often
do lock up capital.
Speaker 3 (18:25):
Right.
Speaker 1 (18:25):
These aren't things that are priced every day. They're not
liquid every day like a traditional investment. So if you're
used to that and you've been using your four oh
one K as part of your near retirement plan, then
this could be something that locks up a chunk of
your assets in something that you cannot get to, so
you need to plan around that. Also, while they all
they will provide access to assets that historically only your
ultra high network folks have been able to get into.
(18:48):
This could improve your return potential, but it's also going
to change your risk profile around. You should expect the
unexpected if you're going to invest in these different types
of assets.
Speaker 2 (18:57):
Let's take a practical scenario.
Speaker 4 (18:58):
Let's say you're fifty eight years old, your four oh
one K has a little over a million dollars in it,
and you're projecting retirement at sixty two, so you're already
planning to take you know, income from your portfolio here
ie or four to one K that might get rolled
over to an IRA within.
Speaker 2 (19:14):
Say four years.
Speaker 4 (19:16):
If your plan sponsor eventually offers these vehicles that has
this private market exposure, you just want to make sure
that you're going to be able to get access to
your money if and when you need it again. The
proof is in the putting. You know, you got to
read the fine print and see what's coming down the
pike here before you get too involved in these kind
of alternative assets.
Speaker 1 (19:36):
Yeah, so, just just like anything, be mindful of what
you're getting into.
Speaker 2 (19:39):
Understand what it is.
Speaker 1 (19:40):
There are lock up periods, there are extra fees, and
just understand what the investment is that it's underlying it
because it may not match what the market is doing.
If that's what you primarily pay attention to, that's what
you're asking for. You know, we want something difference. Why
they call them alternative assets. But just understand that you're
venturing into a world that you have not ventured into before.
There are nuances.
Speaker 2 (19:59):
Here's the all worth of advice.
Speaker 4 (20:00):
Don't just treat your four toh one k like a
pile of money sitting over there that you completely forget about.
Treat it like a key piece of your portfolio. Know
what's inside it, Demand choice and align with you. Align
everything with your timeline and your liquidity needs.
Speaker 2 (20:17):
All right, open enrollment is here, But.
Speaker 4 (20:19):
Which of the optional choices should you actually sign up
and pay for.
Speaker 2 (20:23):
We'll explore that question next.
Speaker 4 (20:25):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk.
Speaker 3 (20:30):
Station Nancy Pelosi, I will I've KRC an iHeartRadio station.
Speaker 4 (20:40):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponsller along with Brian James.
Speaker 2 (20:46):
Well.
Speaker 4 (20:46):
Open enrollment is upon us, and for some the choices
are pretty simple in terms of health insurance. In fact,
many plans just roll over your choices from last year.
But there are some options that you can pay extra
for and are worth taking a look at. These are
items that you can choose from through your company during
open enrollment.
Speaker 2 (21:06):
Brian, let's dig into some of this.
Speaker 4 (21:08):
Tell us what we should consider and what we should
just let walk on by here as we enter open
enrollment period for folks that are actively working at an
employer and have a bunch.
Speaker 1 (21:19):
Of options in front of that, that's right, Bob, tis
this season to watch the fall, the leaves fall, and
sip my pumpkin spice latte and go through my health
insurance options, because that's what we do in Q four
here in the fall, So you know, but let's start
with life insurance.
Speaker 2 (21:33):
That's one of the choices you're going to make.
Speaker 1 (21:34):
Most employers will fut the bill for some level of
life insurance up to say, two times your annual earnings.
Speaker 2 (21:39):
But do you need more? And if so, what do
you do? Then?
Speaker 1 (21:41):
Well, if you need more, you've got the option usually
you know, to choose three, four, five times maybe even
more your salary, but you're going to pay for it,
and you know so if you do decide you need that,
a term policy is probably what's going to do the
job best for you. It's affordable, it's going to cover
you for a set period, and that premium is going
to be locked in. So I wouldn't look decides you
need more insurance, I wouldn't look at your benefits plan.
Speaker 2 (22:03):
It's not gonna be the most cost effective way to
do it.
Speaker 1 (22:05):
Figure out what you need insurance wise, because that is
probably not going to change as often as open enrollment
comes around. So figure out what the mortgage is, what
your family would need if something happened to you, and
perhaps you know whatever college expenses. Right, those are calculable
timeframes that you can figure out and to do the
math that won't change a year to year However, the
premium you would have to pay to go through your
(22:26):
group benefits would so now on the term or that's
term insurance. Permanent life insurance is exactly what it sounds like.
That's going to be around your entire life, which isn't
necessarily a bad thing, but obviously that's more expensive because
you're virtually guaranteeing that the insurance company is going to
have to pay out a sizeable amount.
Speaker 2 (22:41):
Term insurance is just that.
Speaker 1 (22:43):
Tie it to your mortgage, which might be twenty years left,
thirty years left or whatever. Tie it to the kids
needing to go to school. That's a calculable timeframe. Use
term insurance for those permanent is when there will always
be a need.
Speaker 2 (22:55):
For death benefit out there.
Speaker 4 (22:56):
All right, a couple thoughts on this whole life insurance
through your company benefit plan. You know, the good thing
is you get guaranteed underwriting because you're getting underwritten as
part of a big group your fellow you know, co workers.
The bad thing is if you really are in a
lower class underwrite, you know, non smoker, not overweight, very
very healthy, you can qualify usually for much better rates
(23:19):
in terms of premiums by getting underwritten on the outside.
So this is where it makes sense to just like
we talk about all the time, do a financial plan,
as Brian said, figure out how much life insurance you
actually need and for how long, and then don't be
afraid to go out and price this thing through your
company and through you know, a fiduciary advisor, and you
might you might be surprised at what the difference in
(23:41):
premiums actually are. All Right, moving to disability insurance, most
employers cover this, A lot of people don't even know
what it is, and Brian, I think this is a
vastly overlooked part of the whole benefit menu that more
people should be taking advantage of.
Speaker 2 (23:58):
That's right in a survey that just fifty six percent
of workers can say for sure whether their employer even
offers a disability insurance benefit.
Speaker 1 (24:05):
That's a study of twenty twenty four from Limar and
Life Happens, that's a nonprofit that looks at insurance education.
So this is like, like Bob says, this is a
misunderstood area. Most people don't run into these types of things, right,
getting becoming disabled on the job is not necessarily something
or off the job that prevents you from working That's
not a common occurrence, but.
Speaker 2 (24:23):
It does happen to people. These are reasonably priced options.
Speaker 1 (24:26):
I would definitely go through Start with your group for
this because that's available, and that is this is more
of a year to year thing, but it's the cheapest
way to get disability coverage. Remember to understand the difference
between how will they trigger your benefit. Is it because
you can't do your job or is it because you
can't do any job? That is a huge, huge difference
(24:48):
in terms of how that coverage work.
Speaker 2 (24:50):
If you can flip burgers.
Speaker 1 (24:51):
You might not get it, but you know it's that's
definitely something to pay attention to when you're gonna look
at this. That said, when you get closer and closer
to retirement, you'll eventually hit point where you know what,
maybe I don't need disability insurance because if something really happened,
I would just blame retire and not do any job anymore.
Speaker 4 (25:06):
Well, and most of the time, short term disability is
paid for by the company. It's very inexpensive, and it
covers a short period of time, very finite period of time.
What I want to encourage everybody to do is, you know,
almost everybody out there is take that long term disability option.
It's typically going to ensure about sixty percent of your income.
(25:27):
And like Brian said, I mean, even irrespective of the
qualification of disability, in terms of what it actually costs,
it's pretty darn inexpensive relative to the benefit that you
get if a real catastrophe comes down the pike, a
severe illness, an automobile accident, something like that. Let's face it,
(25:48):
at the end of the day, your ability to earn
an income is your largest asset, and you really do
need to look at ensuring that. Brian, give us your
take on voluntary accident insurance.
Speaker 1 (26:00):
So yeah, this is accidental insurance will give you payments
in addition to the medical benefits when you or your
en old family members has an accident.
Speaker 2 (26:07):
You know, this is the ones.
Speaker 1 (26:08):
It's been a long time since I've seen one, but
these are the ones where it'll say, if you lose
one hand, it's this dollar amount.
Speaker 2 (26:13):
If it's two hands, you get this much. Oh.
Speaker 1 (26:15):
I haven't seen that about twenty years, but that always
kind of made me giggle though.
Speaker 2 (26:17):
With the way there's a menu that.
Speaker 1 (26:18):
You can choose from anyway, So this is it's to
cover out of pocket expenses on your medical plants, such
as the deductible and co insurance, that result from some
kind of an accident, so usually a fairly small payout,
you know, looking for broken bones, burns or you know,
missing limbs, that kind of stuff.
Speaker 2 (26:34):
If you're a high earner, this is really not essential.
And honestly, the.
Speaker 1 (26:38):
The lower, relatively low likelihood that this is going to
happen to anybody. I'm not a huge fan of voluntary accident insurance.
I've been ignoring it for years. I'm willing to kind
of gamble. But that said, maybe if you're a mountain climber,
you do a lot of physically active stuff that does
put you at risk, can be, you know, not the
worst idea to invest in.
Speaker 4 (26:54):
All right, That voluntary accident insurance is followed closely by
voluntarily critical illness insurance. So let's say you have a
heart attack, a stroke, kidney failure, cancer, you know, this
insurance protects you with out of pocket covering out of
pocket expenses that your health insurance doesn't cover. We all
remember the flat commercials that talk about this.
Speaker 2 (27:17):
That was an ex Can you do that again? It
didn't quite hear, thank you? Well, one more time one
more time. I'm I'm not a big fan of this stuff.
Speaker 4 (27:23):
I mean, at some point you can just throw insurance
premiums out the window, that would you know, if you
factor in the probability of any of this stuff actually happening,
you're better off just raising your contributions to your four
to one K plan put your money.
Speaker 2 (27:39):
Away that way. But what say you about this kind
of I.
Speaker 1 (27:42):
Mean, if you if this is an obvious family hereditary topic,
you know, everybody winds up with cancer, or everybody winds.
Speaker 2 (27:48):
Up with you know, cardiac issues or whatever, then yeah,
you might think about it.
Speaker 1 (27:51):
But if you don't already know that about your family,
then I would say it's not that big of an issue.
And yeah, no, I'm not a big fan of an
individual insurance policy for each and every bad thing that
might happen to you.
Speaker 2 (28:02):
All right, and no good benefits.
Speaker 4 (28:03):
Segment is complete without talking about voluntary pet insurance. Brian,
give us your thoughts on pet insurance.
Speaker 1 (28:10):
My thoughts on pet insurance is that for the cost
of the premium, I can probably die five more of
that little thing that occasionally I enjoy and sometimes annoys me.
Speaker 2 (28:18):
All right, how was that? Did I do.
Speaker 1 (28:22):
I was thinking you actually said it, which is great.
I'm gonna pay for that when I get home to Mecca.
Speaker 4 (28:27):
I succeeded in making you be inappropriate on the radio.
All right, well, here's the all Worth advice during open enrollment.
Don't just default to last year's choices. Review your benefits
with fresh eyes, because your situation, in all seriousness, may
have changed. Next, real questions from people like you, Questions
about selling a business, supporting parents and kids, managing an
(28:51):
uneven income stream, and what to do with those old
annuities you've had for years.
Speaker 2 (28:56):
We'll do our best to break all of that down.
Speaker 4 (28:59):
Coming up, you're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the talk station.
Speaker 3 (29:06):
These eventful times for the first time in history, this
is the right time. It's time to have this fight.
Speaker 4 (29:12):
Wake four eventful days, many more days like this one,
some interesting days. In any event, Socialist see of New
York City, the longest shutdown in American history.
Speaker 3 (29:22):
It needs to end.
Speaker 2 (29:23):
Terminate the filibuster. It's the only way you can do
challenging Trump's terrors.
Speaker 3 (29:27):
The Supreme Court will rule congressional power, not a presidential powers.
Check in, keep up with the latest. Fifty five KRC
the talk station. Are welcome to here.
Speaker 4 (29:38):
Why do we keep letting thousands of people come over
and do nothing about it?
Speaker 2 (29:41):
My family's safety is at risk?
Speaker 3 (29:43):
Fifty five KRC The talk station.
Speaker 4 (29:50):
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob sponseller along with Brian James. 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. If you're listening to the show on the
iHeart app, simply record your question and it will come
straight to us. All right, Brian, get ready for Mark
(30:10):
in Mainville, who says, our advisor keeps pushing alternative investments.
I wonder why how do you tell the difference between
genuine diversification and just a high feel fee sales pitch. Yeah,
so what alternative is?
Speaker 1 (30:26):
What that really means is it's an alternative to your
traditional stocks and bonds. So this includes private equity type investments,
hedge funds, private credit, structured notes, real estate partnerships, commodities,
those kinds of things. And these aren't necessarily bad, but
the reason it's getting kind of loud about This is
because technology and efficiencies have allowed these types of things
to be more presentable to the masses. But you want
(30:47):
to make sure that you're actually getting real diversification. Is
this just some kind of hedge fund that ultimately matches
the S and P five hundred, in which case it's
just an expensive index fund.
Speaker 2 (30:56):
Or is it maybe just different for the sake of
being different.
Speaker 1 (30:59):
So real parsification should smooth out volatility and reduce your
overall portfolio risks, so make sure that's in there.
Speaker 2 (31:05):
Also, follow the fees. There's a lot of layers of fees.
Speaker 1 (31:08):
Oftentimes there's one to two percent management fees, just like
in a traditional portfolio, plus performance fees. If we make
you fifty percent, we're going to keep ten percent of it,
that's a twenty percent performance fee. Those don't exist in
your more traditional type investments.
Speaker 4 (31:20):
And Brian no Hield high fee sales pitch would be
complete without presenting non traded real estate investment trust.
Speaker 1 (31:28):
We all love those non public traded reads that you'll
be stuck with until lock your money up for ten
plus years.
Speaker 2 (31:34):
They are wonderful, absolutely wonderful things.
Speaker 1 (31:37):
And the quote unquote advisor behind those got paid a
commission and will never bother talking to you about it
again because his or her job is to go find
the next person to put them in and you'll be
stuck with it forever. Anyway, now that we're biased, are
we biased? You're not at all, not at least all right,
So we're gonna move on now to Greg and Lebanon,
and Greg is looking at selling a business. Congratulations, Greg,
(31:57):
it must have been pretty successful over the years. Spooked
by that liquidity event and feels kind of overwhelming, and
he's asking what is the smartest way to deploy that
cash without rushing into the next big thing.
Speaker 4 (32:07):
Bob, Well, Greg, you hit, you hit on the best
point here, not rushing to do anything. First of all,
congratulations on being in a position to sell a business,
which I'm assuming you worked very hard to build and
get in a position to, you know, to move on from.
Speaker 2 (32:25):
And that's a big event. You should be very proud
of that.
Speaker 4 (32:28):
And along with that, just take a deep breath, let
the dust settle, don't let that big chunk of cash,
you know, burn a hole in your pocket. Take some
time to just breathe and relax and get a good
team around you. A good fiduciary advisor, financial advisor, CPA attorney,
and you know, build a financial plan based on all
(32:51):
this newfound liquidity that you have, dovetailing that with all
of your future goals, and then slowly deploy things, you know,
to make that financial plan come to life. That's my
advice is slow down, get some good advice, and don't.
Speaker 2 (33:05):
Let that cash burn a hole in your pocket.
Speaker 4 (33:07):
All right, Emily and fort Wright says, we're helping support
both aging parents right now and our adult kids. How
do you plan for that kind of financial squeeze without
burning through some serious retirement savings.
Speaker 2 (33:20):
Well, Emily, welcome to the Sandwich generation.
Speaker 1 (33:23):
Roughly one in four adults in their forties and fifties
is now providing financial support to both an older parent
and a grown child. In the Midwest, this is having
an even bigger impact rising health care costs for parents
and housing and just a kind of overall family feel.
We stick with family. You do for family. That's what
we do here, and that's what gets expensive. So the
very first rule is put your own oxygen mask on first.
(33:45):
You can't do them any good if you yourself are
a mess, because you'll all wind up a mess well
down the road if you have spent your own assets
down so make sure you are in good shape. You
have to set clear boundaries with both sides. If it's
your parents, have an open conversation about long term care,
what their income sources are and what yours are, frankly,
and whether it's time to simplify their investments or do
something different for their living arrangements. Adult kids give them guidance,
(34:09):
not guarantees. That's the best thing you can do is
share your experience with them. They're gonna have to carry
most of their own weight. Help with budgeting, job planning,
and make sure that that support is conditional and time limited.
You'll be there to talk, but you're not going to
be an open wallet, all right. Ron and Amberley Village.
Ron says they're both self employed, and that means they
see pretty violent swings and income, and he's asking how
(34:29):
you build a savings and investment plan when that cash
flow is not really predictable.
Speaker 4 (34:34):
Ron, My advice here is just have a larger emergency fund.
You know, most conventional wisdom says, you know, have six
to six to twelve months worth of expenses covered in
a non risk savings account at the bank.
Speaker 2 (34:48):
We all know that.
Speaker 4 (34:49):
I think when you own a business, you're self employed,
you got things moving around a lot.
Speaker 2 (34:54):
You just need to give yourself a little more space.
Speaker 4 (34:57):
So oftentimes I tell people take that six to twelve
months and make it, you know, twenty four to thirty
six months most of the time. If you if you
know you've got your nut covered, so to speak, your
basic family operating expense is covered for two to three years.
Speaker 2 (35:12):
Will that will take a lot of stress off.
Speaker 4 (35:14):
The table and allow your longer term capital to stay
fully invested and most importantly for you and your wife
not to stress out about short term cash flow and
just focus on running your business.
Speaker 2 (35:27):
I mean, let's face it, owning a business comes.
Speaker 4 (35:29):
With a lot of upside potentially, but as you said,
a lot of volatility. So just give yourself some wiggle
room here in the form of a higher emergency fund balance,
and don't worry about doing that. I know that money
is not going to be making twenty percent a year,
but you'll be glad you have it if the furnace
breaks or the car breaks down, and you just don't
(35:50):
need the extra stress in your life by you know,
worrying about where your next penny's gonna come from. And
you certainly don't want to get into a situation where
you're running up a big credit card balance paying you know,
twenty nine percent.
Speaker 2 (36:02):
You talk about a stressor that'll cause it in a hurry.
Speaker 4 (36:05):
All right, last, we've got Greg in Bellevue tonight, Brian.
He says, we've got a few old annuities sitting in
our portfolio, and honestly, we're not sure what role they
play anymore. How do you evaluate whether to keep them
or just unwind them?
Speaker 1 (36:18):
Yeah, so annuities are annuities often get pitched as kind
of as evil, but that's not the case. They're just
simply complicated. They can be beneficial. There are some terrible
ones out there that are just expense and they just
exist for the insurance company to be happy. But it
depends on what these are. If these are simple fixed annuities,
and maybe you're beyond the surrender period where you could
pull the money if you wanted to look at the
(36:39):
interest rate and if you need, if you need an
emergency type fund and it's paying a decent rate, as
they often do, then maybe it just sits leave it alone.
You don't have a surrender period to worry about, so
you got past the painful part. Contrast that with if
it's a if it's an annuity that has say, income
riders on it that are a little more complicated, then
generally you're gonna want to turn those on as soon
as possible, you know, if you're going to use them,
(37:01):
because that's the way you'll you'll maybe benefit from those
from the insurance companies guarantee. But understand how the math
works and understand whether you should leave it in there
at all, because you can get out of those once
you're out of that surrender period. You can get at
them without paying any fees, taxes. You got to be
careful of certainly understand what that impact is.
Speaker 4 (37:18):
All right, coming up next, I've got my two cents
on a couple of nuances here to social security claiming strategies.
You're listening to Simply Money presented about all Worth Financial
on fifty five KRC the talk station. There's a lot
of stuff happening, military occupation in our city. Well we're
going in I'm seeing government shutdown.
Speaker 3 (37:36):
And you got a lot of stuff to do, so work, stuff.
Speaker 5 (37:39):
You kids, sports stuff, stuff around the house.
Speaker 3 (37:41):
So we'll stuff it all into news updates. People are
wise to this stuff, you know at.
Speaker 4 (37:45):
The top ended bottom of the hour for store, law
and order, public health, a change in the weather.
Speaker 3 (37:50):
President of booth and he knows where I stand. Check
you in. Often's a new day, it's a different day
for all this stuff you need to know. Fifty five
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Speaker 4 (37:59):
Hey, Brian, tell me I am so worried that next
month I have to choose between groceries for my kids
or gas for my car.
Speaker 3 (38:05):
Talk about it here fifty five KRC the talk station.
Speaker 4 (38:12):
You're listening to Simply Money said of by all Worth
Financial on Bob Sponseller along with Brian James. Brian, I
want to talk about a meeting I actually had yesterday
with a single lady who just turned sixty five, she's
going to be sixty six next year, and talking about
you know, how to take and when to take her
social Security and it just when we when we pulled
(38:32):
out the tax software and we started looking at the
implication implications of different decisions. Things have gotten a little
more complex here with the new tax lash legislation that
came out earlier this year, and I just want to
highlight that here, you know, to close things out tonight,
because now you've got a factor in two things. At
what threshold does your income cause most, if not all,
(38:55):
of your tax your Social Security be to be treated
as taxable income. And then we've we also have that
enhanced Senior deduction for folks sixty five and older. That's
a deduction of six thousand dollars for single taxpayers, twelve
thousand dollars for married filing joint You know, this is
what the President and others when they talked about Social
(39:17):
Security being tax free.
Speaker 2 (39:18):
Eh, kind of, but there's a phase out here.
Speaker 4 (39:21):
So you got to take a look at you know,
when you take Social Security how that dovetails with your
other income. Because in this case, waiting a couple of
months kept that we're gonna keep this lady from we're
gonna keep her in a twelve percent marginal tax bracket
next year instead of jumping into a twenty three percent
tax bracket because of some of the phase outs and
(39:42):
tax ability of Social Security.
Speaker 2 (39:44):
Yeah, so I want to make sure you mentioned the
phase out.
Speaker 1 (39:46):
Let's talk about what that is because a lot of
people just heard cool six thousand dollars deduction twelve thousand
single filers, you're gonna lose the ability to do that.
If you're modified adjusted gross is below seventy five thousand,
you're gonna lose out. If you're married, if it's a
I'm sorry, above seventy five, and if you're married, you
lose it if you're above one hundred and fifty.
Speaker 4 (40:03):
So just get with your CPA, get with your advisor
and make sure you're not surprised here by the taxability
of your entire situation when it comes to Social Security.
Thanks for listening tonight. You've been listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
talk station.
Speaker 3 (40:21):
In the morning, we.
Speaker 2 (40:21):
Have breaking news coming to you live right now.
Speaker 3 (40:24):
During lunch, beautiful afternoon before heading into winter.
Speaker 4 (40:27):
Maybe you want to get out and play some tennis
or some pickleball at work.
Speaker 3 (40:31):
After a few big moves by the government today, the
stock market is on a clear game.
Speaker 2 (40:36):
On the way home, ed, we have an accident blowing
things down on the freeway at home. Stunning events today.
Speaker 4 (40:42):
We will have the late news coming up whatever the time,
wherever you may be, when you need us, Weird there
fifty five KRS, the Talk station
Speaker 2 (40:51):
All right, holiday time is
I guys just say we now have a fighting chance
to our veterans act.
Speaker 2 (00:05):
Thank you.
Speaker 3 (00:05):
I'd do it again if I could. Fifty five KRC.
The talk station.
Speaker 4 (00:16):
Canight what financial planning looks like when the economy doesn't
necessarily follow the proverbial script. You're listening to Simply Money,
presented by all Worth Financial on Bob Sponsler along with
Brian James. Stocks are rising, the labor market is weakening.
Speaker 2 (00:31):
Inflation is kind of just hanging around, Tariff.
Speaker 4 (00:34):
Policy is still, you know, up for discussion, and geopolitical
tensions remain. The economy often sends mixed signals, but your
financial plan should not. And tonight we're going to take
kind of a walk down memory lane here over the
last I don't know, forty years or so, Brian, and
look historically at a few things have been going on
(00:55):
that maybe people didn't see coming. And the point here
is you don't want to completely upset the apple cart
and bail on your plan, but there are opportunities out
there to make some nuanced adjustments to things like tax planning,
acid allocation, how your portfolio was structured. And you know,
it's very interesting that you know, when you look in
(01:16):
the rear view mirror.
Speaker 2 (01:17):
Which is always easy. It's easy to be a Monday
morning quarterback a lot.
Speaker 4 (01:21):
Oftentimes some of the best opportunities out there, nobody saw
them coming. And if you just sit there with it
like a deer in the headlights and don't react, you're
kicking yourself, you know, down the road after the fact.
So let's take us back to the eighties.
Speaker 2 (01:35):
We talked.
Speaker 4 (01:35):
We love talking about the eighties. We did that last week. Yeah,
great rock and roll. Joe Strecker reminds me of did
your hair look different back then?
Speaker 2 (01:44):
Bob? Can you describe your hair in the eighties? I
had some Okay, there was hair.
Speaker 4 (01:49):
I still required haircuts in the nineteen eighties, all right,
But hey, carry the ball here, walk us back to
the eighties and what was going on.
Speaker 1 (01:58):
In I was more of a nineties kid, so I
was all grunge, and I had the shaggy hair and
the flannel and all that.
Speaker 2 (02:03):
And now I only have the flannel anyway.
Speaker 1 (02:06):
So these types of of mixed signals can create behavioral issues.
And this is I'm gonna go offscript for one second here, Bob.
This is something I think about all the time. I
think that the generations that have money. Now, look at
the eighties and the nineties were literally nothing bad happened, right,
You can't even find nineteen eighty seven October eighty seven,
you can't find it on a chart anymore because it's
been so much crazier ever since then. I think those
(02:28):
were the anomaly, and I think people got once we
hit the internet bubble bursting in one to two, in
that recession in nine to eleven, and all that, then
we had two thousand and eight. I think people viewed
those items as the anomalies, like, that's not supposed to happen.
But if you look over a couple hundred years worth
of history of this country, it was the eighties and
the nineties that wasn't supposed to happen. You're not supposed
to have a period of prosperity that freaking long. But
(02:49):
we did, and that created what we all thought was
the economy. This is how it's supposed to work, and
everything else is wrong, So it is how it's supposed
to work.
Speaker 2 (02:58):
The NASDAK is supposed to go up to twenty seven percent.
Speaker 1 (03:00):
Of your companies don't need to make money, they just
need to have flashy internet websites and not really a
business plan. So but anyway, so yeah, mixed signals. This
drives behavioral issues. When we get crazy stuff we don't expect,
we tend to want to do something about it. Sometimes
action feels so much better than inaction. So we're going
to talk about some of these things that kind of
were headfakes economically speaking, in the market speaking, so in
(03:21):
nineteen eighties, we had double digit interest rates but also
really strong growth That kind of seems counterintuitives, but that
would go the other.
Speaker 2 (03:29):
Way, right.
Speaker 1 (03:29):
We had we had stagflation through the seventies and we
needed to beat that down. The answer to that was
really really high interest rates to tamp down the growth
of everything. And that that did work and did it
hurt a lot for those people who are remembering this time,
this time of the economy. But by the mid eighties,
all of a sudden we had explosive GDP growth and
(03:50):
that resulted in what we just talked about and again
became kind of the formative this is how it's.
Speaker 2 (03:54):
Supposed to work thought for a lot of people.
Speaker 1 (03:55):
Broke inflation, that put confidence back in place, and then
the demographic trans stepped in to kind of.
Speaker 2 (04:01):
Fuel that growth.
Speaker 4 (04:03):
Yeah, let's let's pivot to the early two thousands, of mean,
two thousand and eight, two thousand and nine, coming out
of the housing crisis, we had zero interest rates, zero
for it seemed like forever, but no runaway inflation because
we we were very extended, you know, credit wise, if
you could fog a mirror, you could qualify for a mortgage,
(04:24):
stated income loans, you could you could buy five or
six you know, condos pre construction down in Florida by
just filling out an application. What could possibly go wrong?
You get a house, you get a house, you get
three condos. Everything was off to the races, and then wow,
the housing crisis hit. Banks were in default, human you know,
(04:45):
regular consumers were in default. It was a really wild
period there for a couple.
Speaker 1 (04:49):
So I just used a banking term that I was
working for a bank at that time. And I remember
the head of the local lending facility there the mortgage
area was complete, super honest guy and all clearly on
the up and up, but he was confused by these
stated income loans, which literally that sounds like a fancy term.
All that means is you walk in, you state your income,
you get a mortgage. I make a bazillion dollars cool,
(05:09):
we can loan you o two thirds of a bazillion
dollars to borrow home. No proof was required, it was
just a lot easier. That's the environment that our leadership
wanted us in, and not talking about the bank, I'm
talking about the entire country. That's the environment that we
wanted to be. And when we reduced regulation on the
rules of all that kind of stuff, and that did
lead to, you know, kind of overdoing it, which we
tend to do here well.
Speaker 4 (05:30):
In rate stayed low for so long because it took
a while for consumers and banks to just deleverage. Everybody
had borrowed so much money because it was free, it
was cheap, and money was really not moving around for
a while, and that's what makes the economy go. So
you know, that's why rate stayed low. It was it
was a very interesting time, all right, two thousand and
(05:51):
nine to twenty thirteen. Even when we had a bunch
of stimulus coming in from the government, inflation did not
really spike because again, we were trying to bail this
economy out of that tremendous housing crisis. And you would
have thought that inflation would be off to the races
when all this government stimulus money was flowing around, but
(06:12):
it didn't, Brian, and wow, what a great time to
be invested in stocks it was.
Speaker 1 (06:17):
And so let's talk about what was the right move
to have made at that time in response to what
we just talked about. While aggressive rebalancing and taking risk
right put risk into your portfolio, a lot of Heineworth
investors were overly overly conservative posts two thousand and eight,
and they missed They ate a lot of the downside
and missed most of the upside. So if you have,
but you have, if you had a plan in place,
you understood the history, you would have sidestepped that because
(06:39):
there would be no need to protect your long term
ass That's because you would have already set up your
short term assets, which would not have been affected by
it at all.
Speaker 4 (06:47):
All right, and then let's move forward to the dreaded
COVID discussion twenty twenty. You know, stocks actually surged during
a global pandemic as the GDP shrank by over thirty
percent in the second quarter of twenty twenty, unemployment hit
fourteen point seven percent. Boy, that that's a great reminder,
I forget about that high unemployment rate, and yet the
(07:10):
SP five hundred hit all time highs by August.
Speaker 2 (07:13):
Of that year.
Speaker 4 (07:14):
Why more government stimulus, more fed action, a bunch of
money flying around, And when free money is flying around,
it finds its way into real estate, into stocks, into
speculative growth assets.
Speaker 2 (07:27):
And we were off.
Speaker 4 (07:28):
To the races after that, the fastest and most serious,
you know, bear market in US history. That market dropped
well over thirty percent in a heartbeat. It really froze
people for a few months. And if you bailed on
the market then and went to cash, boy were you
sorry just a few months later.
Speaker 1 (07:47):
But I'll add Bob that I don't know most of
my clients don't really remember the market collapsing that much,
not like in two thousand and eight, because two thousand
and eight was real, not that, not that the COVID
downturn wasn't, but it was over with relatively click, and
it happened due to a stimulus that came out of
left field. Those those kinds of things tend to become
a catalyst right underneath all of that. When you removed
(08:08):
the when you remove the COVID vacs or the COVID issue.
The economy was relatively strong before that, so all that
happened was we had a brief panic, and then everybody
exhaled and said, Okay, you know what, I think, maybe
this isn't that big of a deal. This is not
the virus from Hollywood that's coming to kill us all.
And then it became a catalyst because the entire world
had to shift to working from home, which means Dell
made a bunch of money. I can confirm that here
(08:30):
on my own desktop. Zoom came out of nowhere was created.
Technology had to shift to allow the whole world to
have a second workspace, and that was a catalyst for
the stock market that trickled through in a huge way.
Speaker 4 (08:42):
What were a couple of the huge financial planning techniques
during that whole time period during COVID tax lost harvesting
and rough conversions. When the market's tanked in March of
twenty twenty before rebounding, people that had an advisor and
were paying attention, man, this is when you know smart
investing really came into vogue because you could just swap
(09:03):
one S and P five hundred ETF for another harvest
Those losses stay fully invested and you know, bank bank
those losses to use later on to offset future gains.
Wonderful time for tax loss harvesting and roth conversions man convert,
you know, converting iras to roth during a thirty percent downturn.
(09:24):
Wonderful opportunity. And then you catch the rebound completely tax free.
We had a lot of people doing both of those things,
and uh, it really moved the needle financially for them.
Speaker 1 (09:33):
Yeah, and that can be a tough trigger to pull
because remember, you're doing that in a face of headlines
that are screaming the end is near, and you're doing
this roth conversion going no, it's not, matter of fact,
I'm going to move this over to the tax free
So when the pendulum ultimately swings back the other way,
it'll be tax free now. And I paid a lot
less than taxes to get it done. That's winning the game.
Speaker 2 (09:50):
All right.
Speaker 4 (09:51):
We get through COVID and now we're in twenty twenty two.
The Fed has to, you know, pump the brakes on
all this free money flying around.
Speaker 2 (09:57):
So what do they do. They raise interestraights seven times.
Speaker 4 (10:01):
The labor market came back, you know, everybody went back
to work and man, we had a horrible year in
both the bond and.
Speaker 2 (10:08):
The stock market.
Speaker 4 (10:09):
They usually doesn't happen because usually, you know, you buy
bonds to protect yourself from stocks. Man In twenty twenty two,
nothing worked, and that was an interesting time. But that's
when for the first time in many, many years, we
talked to people about treasury bills, treasury bonds, some of
these high yield savors accounts, parking some money, getting very
(10:30):
nice interest rates, you know, fighting back against the current environment.
And it was a good opportunity, great time to have
an emergency fund.
Speaker 2 (10:39):
It really was.
Speaker 1 (10:39):
The other that was when we were all reminded that
you are indeed allowed to get paid not real dollars
on your on your depository type accounts, your safe money.
It had been decades since we had that opportunity. One
of things I like to point out to my clients
is exactly how bad that year was. We don't really
think of twenty two. Twenty two didn't have a story right,
It didn't come along with any crazy but it was
(11:00):
one of the five worst market years we've had on record,
and that includes two thousand and eight, includes in nineteen
thirty seven, it includes nineteen seventy three one to oh two.
It's up there with those worst years we've ever had,
but it doesn't get thought of that way because it
didn't come along with one great story like the Depression
or the Great Recession or anything like that. But anyway,
so at that time, yeah, that was that was the
(11:20):
time to kind of take take stock of what your
situation really is. It was a great time to have
an emergency fund, not only to take advantage of those
interest rates, but also to not have to sell out
your long term assets that we're getting hammered at the time.
Speaker 4 (11:34):
And then the last but not least twenty twenty three,
twenty twenty three to twenty twenty four, despite higher than
normal interest rates in inflation, I don't think anybody saw
this coming, Brian, to this extent.
Speaker 2 (11:45):
We had great stock market years both of those years.
Speaker 4 (11:48):
Why the influx of AI enthusiasm, new technology coming in,
better than expected, corporate earnings, and economic resilience which.
Speaker 2 (11:58):
Usually always overcome these short term fears.
Speaker 4 (12:01):
Just proving once again that the American people, American companies
are very resilient. They find a way, and boy, if
you were out of the market in twenty three and
twenty four Just because you were afraid of what was
going to happen in the world, you missed out on
some great returns.
Speaker 1 (12:17):
Yeah, that's right, and the move then would have been
We're big fans of direct indexing. Here if you can
do it, which basically means own own a pile of
individual securities instead of mutual funds, if you can in
a taxable account, replicate that index and take advantage of
the tax loss harvesting opportunity.
Speaker 2 (12:33):
Here's the all Worth advice.
Speaker 4 (12:34):
When the economy doesn't necessarily follow the proverbial rules or scripts,
smart investors don't panic. They reach for the right tool
in the toolbox. A giant in the retirement plan world
is starting to shake things up. We'll show you what
that means potentially for your four to one k, your
asset allocation and your long term income plan. You're listening
(12:55):
to Simply Money presented by all Worth Financial on fifty
five KRC.
Speaker 2 (12:59):
The talk station.
Speaker 5 (13:02):
Is additional pressure building in the system.
Speaker 4 (13:05):
Hundreds of flights cancelled heading into the weekend because of.
Speaker 3 (13:07):
The government shut down. The day's news several people fell
ill at Joint bas Andrews. Suspicious package arrived at the
facility fifty five KRZ the talk station.
Speaker 5 (13:17):
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 4 (13:35):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. If you can't
listen to Simply Money live every night, subscribe and get
our daily podcasts. And of course, if you have family
or friends that need some financial advice, let them know
about us as well. Just search Simply Money on the
iHeart app or wherever you find your podcasts. Straight ahead
(13:57):
of six forty three How to juggle the financial demands
of aging parents and adult kids, What to do with
old annuities that are laying around collecting dust, and why
a big payday from selling your business isn't always as
simple as it might seem. Let's dig into a story
that could have implications for your retirement planning toolbox. Brian
(14:19):
The asset management firm State Street, one of the biggest
providers in the etf target date space is making moves
in the defined contribution or for lack you know, what
we like to call the retirement plan world. That could
change how four one K plans look and behave in
the pretty near future.
Speaker 2 (14:39):
Yeah.
Speaker 1 (14:39):
So the gist of this is that normally, when we
think of four oh one k's, we think of traditional
mutual funds, which have been around for I don't know
one hundred some years. I believe nineteen twenty four, matter
of fact was the first one. Anyway, those have been
around forever, and that has evolved into target date funds,
which are still mutual funds. Those are the ones that
have a year in the name of them. When you're
looking at four oh one K, and that year is
roughly when you might retire, and that indicates a portfolio
(15:02):
that might be appropriate, although you've got to look under
the hood because not all target date funds, you know,
with the year twenty sixty five, are the same for example,
and played old index funds is where most people familiar with.
But State Street is coming around saying we're going to
innovate this space, and they have launched some target date
strategies that include private markets exposure as well as public market.
State Street is a big firm, one point seven trillion
(15:24):
dollars in exchange traded funds. If you've ever heard of spiders,
which are the S and P five hundred ETF.
Speaker 2 (15:29):
That's their flavor of them. But that's State Street behind that.
Speaker 1 (15:32):
So this could be significant for higher earnerge You're already
thinking about more than just allocation. You're looking for I'm sorry,
more than just accumulation. You're looking for diversification. You're going
to need income generation in the future. You want some
things out there to kind of offset the swings of
the market, meaning alternative assets certainly need tax planning, those
kinds of things. So when a retirement plant provider starts
offering these hybrid solutions, what that means is your four
(15:53):
to one K is no longer just a commodity play.
It's not the same as all the other ones. It
can become part of a more sophisticated asset allocation strategy
involving a whole bunch of other topics.
Speaker 2 (16:03):
Well, let's look under the hood here for a minute.
Speaker 4 (16:05):
Let's say you've got a four to one K and
you've got you know, seven hundred and fifty thousand, a
million couple million dollars in there, and maybe it isn't
a target date fund or some other index funds. With
these new structures coming from State Street, and I'm sure
other other providers are going to be following suit here,
you might be able to get access inside the plan
(16:26):
to private equity, private credit infrastructure funds. That's the kind
of model that State Street and others are starting to build.
Speaker 2 (16:35):
I see pros and cons with all of this. Mainly pros.
Speaker 4 (16:39):
I think for some of these larger plan sponsors, I
think some of the the traditional you know, potential objectives
to adding these asset out these asset areas to these plans,
i e. Fees and transparency and lock up periods. I
have to think that if you're going to put them
in some of these multimillion dollar four or one K plans,
(17:01):
that a lot of those traditional hurdles are going to
start to go away.
Speaker 2 (17:04):
And I think that's a good thing.
Speaker 1 (17:06):
Yeah, And then make no mistake what the motivation is
here behind this. Of course, State Street is a for
profit entity, as are many of them and us and
individuals in this country, so rest assured they are looking
to make a profit by providing people something that doesn't
exist right now because there is literally twelve trillion dollars
in the retirement space, retirement plan space, mostly locked up
(17:26):
in traditional mutual funds, and they're viewing this as an
area that is ripe for.
Speaker 2 (17:31):
Some different options out there.
Speaker 4 (17:33):
Yeah, let's face it, if everybody just piles into index funds,
it's a pretty low margin business because the internal operating
expenses of those funds are very low. So again, I
see pros and cons to all this. You know, if
these alternative asset classes do their job, which is to
potentially increase your return with lower risk adjusted volatility, it
(17:56):
can be a good thing as long as you don't
get sucked dry on fees. So again we're just calling
it out to you know, let you know this stuff
is coming. But I think it's good to look under
the hood and see what the deal terms are are,
so to speak, to make sure you're really getting good
bang for your buck if you venture into.
Speaker 2 (18:13):
Some of these things. Yeah, so let's talk about what
are the pros and cons.
Speaker 1 (18:16):
We talked about the pros, right, So these these are
these are could be decent opportunities to get into things
beyond traditional mutual funds, you know, but private markets often
do lock up capital.
Speaker 3 (18:25):
Right.
Speaker 1 (18:25):
These aren't things that are priced every day. They're not
liquid every day like a traditional investment. So if you're
used to that and you've been using your four oh
one K as part of your near retirement plan, then
this could be something that locks up a chunk of
your assets in something that you cannot get to, so
you need to plan around that. Also, while they all
they will provide access to assets that historically only your
ultra high network folks have been able to get into.
(18:48):
This could improve your return potential, but it's also going
to change your risk profile around. You should expect the
unexpected if you're going to invest in these different types
of assets.
Speaker 2 (18:57):
Let's take a practical scenario.
Speaker 4 (18:58):
Let's say you're fifty eight years old, your four oh
one K has a little over a million dollars in it,
and you're projecting retirement at sixty two, so you're already
planning to take you know, income from your portfolio here
ie or four to one K that might get rolled
over to an IRA within.
Speaker 2 (19:14):
Say four years.
Speaker 4 (19:16):
If your plan sponsor eventually offers these vehicles that has
this private market exposure, you just want to make sure
that you're going to be able to get access to
your money if and when you need it again. The
proof is in the putting. You know, you got to
read the fine print and see what's coming down the
pike here before you get too involved in these kind
of alternative assets.
Speaker 1 (19:36):
Yeah, so, just just like anything, be mindful of what
you're getting into.
Speaker 2 (19:39):
Understand what it is.
Speaker 1 (19:40):
There are lock up periods, there are extra fees, and
just understand what the investment is that it's underlying it
because it may not match what the market is doing.
If that's what you primarily pay attention to, that's what
you're asking for. You know, we want something difference. Why
they call them alternative assets. But just understand that you're
venturing into a world that you have not ventured into before.
There are nuances.
Speaker 2 (19:59):
Here's the all worth of advice.
Speaker 4 (20:00):
Don't just treat your four toh one k like a
pile of money sitting over there that you completely forget about.
Treat it like a key piece of your portfolio. Know
what's inside it, Demand choice and align with you. Align
everything with your timeline and your liquidity needs.
Speaker 2 (20:17):
All right, open enrollment is here, But.
Speaker 4 (20:19):
Which of the optional choices should you actually sign up
and pay for.
Speaker 2 (20:23):
We'll explore that question next.
Speaker 4 (20:25):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk.
Speaker 3 (20:30):
Station Nancy Pelosi, I will I've KRC an iHeartRadio station.
Speaker 4 (20:40):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponsller along with Brian James.
Speaker 2 (20:46):
Well.
Speaker 4 (20:46):
Open enrollment is upon us, and for some the choices
are pretty simple in terms of health insurance. In fact,
many plans just roll over your choices from last year.
But there are some options that you can pay extra
for and are worth taking a look at. These are
items that you can choose from through your company during
open enrollment.
Speaker 2 (21:06):
Brian, let's dig into some of this.
Speaker 4 (21:08):
Tell us what we should consider and what we should
just let walk on by here as we enter open
enrollment period for folks that are actively working at an
employer and have a bunch.
Speaker 1 (21:19):
Of options in front of that, that's right, Bob, tis
this season to watch the fall, the leaves fall, and
sip my pumpkin spice latte and go through my health
insurance options, because that's what we do in Q four
here in the fall, So you know, but let's start
with life insurance.
Speaker 2 (21:33):
That's one of the choices you're going to make.
Speaker 1 (21:34):
Most employers will fut the bill for some level of
life insurance up to say, two times your annual earnings.
Speaker 2 (21:39):
But do you need more? And if so, what do
you do? Then?
Speaker 1 (21:41):
Well, if you need more, you've got the option usually
you know, to choose three, four, five times maybe even
more your salary, but you're going to pay for it,
and you know so if you do decide you need that,
a term policy is probably what's going to do the
job best for you. It's affordable, it's going to cover
you for a set period, and that premium is going
to be locked in. So I wouldn't look decides you
need more insurance, I wouldn't look at your benefits plan.
Speaker 2 (22:03):
It's not gonna be the most cost effective way to
do it.
Speaker 1 (22:05):
Figure out what you need insurance wise, because that is
probably not going to change as often as open enrollment
comes around. So figure out what the mortgage is, what
your family would need if something happened to you, and
perhaps you know whatever college expenses. Right, those are calculable
timeframes that you can figure out and to do the
math that won't change a year to year However, the
premium you would have to pay to go through your
(22:26):
group benefits would so now on the term or that's
term insurance. Permanent life insurance is exactly what it sounds like.
That's going to be around your entire life, which isn't
necessarily a bad thing, but obviously that's more expensive because
you're virtually guaranteeing that the insurance company is going to
have to pay out a sizeable amount.
Speaker 2 (22:41):
Term insurance is just that.
Speaker 1 (22:43):
Tie it to your mortgage, which might be twenty years left,
thirty years left or whatever. Tie it to the kids
needing to go to school. That's a calculable timeframe. Use
term insurance for those permanent is when there will always
be a need.
Speaker 2 (22:55):
For death benefit out there.
Speaker 4 (22:56):
All right, a couple thoughts on this whole life insurance
through your company benefit plan. You know, the good thing
is you get guaranteed underwriting because you're getting underwritten as
part of a big group your fellow you know, co workers.
The bad thing is if you really are in a
lower class underwrite, you know, non smoker, not overweight, very
very healthy, you can qualify usually for much better rates
(23:19):
in terms of premiums by getting underwritten on the outside.
So this is where it makes sense to just like
we talk about all the time, do a financial plan,
as Brian said, figure out how much life insurance you
actually need and for how long, and then don't be
afraid to go out and price this thing through your
company and through you know, a fiduciary advisor, and you
might you might be surprised at what the difference in
(23:41):
premiums actually are. All Right, moving to disability insurance, most
employers cover this, A lot of people don't even know
what it is, and Brian, I think this is a
vastly overlooked part of the whole benefit menu that more
people should be taking advantage of.
Speaker 2 (23:58):
That's right in a survey that just fifty six percent
of workers can say for sure whether their employer even
offers a disability insurance benefit.
Speaker 1 (24:05):
That's a study of twenty twenty four from Limar and
Life Happens, that's a nonprofit that looks at insurance education.
So this is like, like Bob says, this is a
misunderstood area. Most people don't run into these types of things, right,
getting becoming disabled on the job is not necessarily something
or off the job that prevents you from working That's
not a common occurrence, but.
Speaker 2 (24:23):
It does happen to people. These are reasonably priced options.
Speaker 1 (24:26):
I would definitely go through Start with your group for
this because that's available, and that is this is more
of a year to year thing, but it's the cheapest
way to get disability coverage. Remember to understand the difference
between how will they trigger your benefit. Is it because
you can't do your job or is it because you
can't do any job? That is a huge, huge difference
(24:48):
in terms of how that coverage work.
Speaker 2 (24:50):
If you can flip burgers.
Speaker 1 (24:51):
You might not get it, but you know it's that's
definitely something to pay attention to when you're gonna look
at this. That said, when you get closer and closer
to retirement, you'll eventually hit point where you know what,
maybe I don't need disability insurance because if something really happened,
I would just blame retire and not do any job anymore.
Speaker 4 (25:06):
Well, and most of the time, short term disability is
paid for by the company. It's very inexpensive, and it
covers a short period of time, very finite period of time.
What I want to encourage everybody to do is, you know,
almost everybody out there is take that long term disability option.
It's typically going to ensure about sixty percent of your income.
(25:27):
And like Brian said, I mean, even irrespective of the
qualification of disability, in terms of what it actually costs,
it's pretty darn inexpensive relative to the benefit that you
get if a real catastrophe comes down the pike, a
severe illness, an automobile accident, something like that. Let's face it,
(25:48):
at the end of the day, your ability to earn
an income is your largest asset, and you really do
need to look at ensuring that. Brian, give us your
take on voluntary accident insurance.
Speaker 1 (26:00):
So yeah, this is accidental insurance will give you payments
in addition to the medical benefits when you or your
en old family members has an accident.
Speaker 2 (26:07):
You know, this is the ones.
Speaker 1 (26:08):
It's been a long time since I've seen one, but
these are the ones where it'll say, if you lose
one hand, it's this dollar amount.
Speaker 2 (26:13):
If it's two hands, you get this much. Oh.
Speaker 1 (26:15):
I haven't seen that about twenty years, but that always
kind of made me giggle though.
Speaker 2 (26:17):
With the way there's a menu that.
Speaker 1 (26:18):
You can choose from anyway, So this is it's to
cover out of pocket expenses on your medical plants, such
as the deductible and co insurance, that result from some
kind of an accident, so usually a fairly small payout,
you know, looking for broken bones, burns or you know,
missing limbs, that kind of stuff.
Speaker 2 (26:34):
If you're a high earner, this is really not essential.
And honestly, the.
Speaker 1 (26:38):
The lower, relatively low likelihood that this is going to
happen to anybody. I'm not a huge fan of voluntary accident insurance.
I've been ignoring it for years. I'm willing to kind
of gamble. But that said, maybe if you're a mountain climber,
you do a lot of physically active stuff that does
put you at risk, can be, you know, not the
worst idea to invest in.
Speaker 4 (26:54):
All right, That voluntary accident insurance is followed closely by
voluntarily critical illness insurance. So let's say you have a
heart attack, a stroke, kidney failure, cancer, you know, this
insurance protects you with out of pocket covering out of
pocket expenses that your health insurance doesn't cover. We all
remember the flat commercials that talk about this.
Speaker 2 (27:17):
That was an ex Can you do that again? It
didn't quite hear, thank you? Well, one more time one
more time. I'm I'm not a big fan of this stuff.
Speaker 4 (27:23):
I mean, at some point you can just throw insurance
premiums out the window, that would you know, if you
factor in the probability of any of this stuff actually happening,
you're better off just raising your contributions to your four
to one K plan put your money.
Speaker 2 (27:39):
Away that way. But what say you about this kind
of I.
Speaker 1 (27:42):
Mean, if you if this is an obvious family hereditary topic,
you know, everybody winds up with cancer, or everybody winds.
Speaker 2 (27:48):
Up with you know, cardiac issues or whatever, then yeah,
you might think about it.
Speaker 1 (27:51):
But if you don't already know that about your family,
then I would say it's not that big of an issue.
And yeah, no, I'm not a big fan of an
individual insurance policy for each and every bad thing that
might happen to you.
Speaker 2 (28:02):
All right, and no good benefits.
Speaker 4 (28:03):
Segment is complete without talking about voluntary pet insurance. Brian,
give us your thoughts on pet insurance.
Speaker 1 (28:10):
My thoughts on pet insurance is that for the cost
of the premium, I can probably die five more of
that little thing that occasionally I enjoy and sometimes annoys me.
Speaker 2 (28:18):
All right, how was that? Did I do.
Speaker 1 (28:22):
I was thinking you actually said it, which is great.
I'm gonna pay for that when I get home to Mecca.
Speaker 4 (28:27):
I succeeded in making you be inappropriate on the radio.
All right, well, here's the all Worth advice during open enrollment.
Don't just default to last year's choices. Review your benefits
with fresh eyes, because your situation, in all seriousness, may
have changed. Next, real questions from people like you, Questions
about selling a business, supporting parents and kids, managing an
(28:51):
uneven income stream, and what to do with those old
annuities you've had for years.
Speaker 2 (28:56):
We'll do our best to break all of that down.
Speaker 4 (28:59):
Coming up, you're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the talk station.
Speaker 3 (29:06):
These eventful times for the first time in history, this
is the right time. It's time to have this fight.
Speaker 4 (29:12):
Wake four eventful days, many more days like this one,
some interesting days. In any event, Socialist see of New
York City, the longest shutdown in American history.
Speaker 3 (29:22):
It needs to end.
Speaker 2 (29:23):
Terminate the filibuster. It's the only way you can do
challenging Trump's terrors.
Speaker 3 (29:27):
The Supreme Court will rule congressional power, not a presidential powers.
Check in, keep up with the latest. Fifty five KRC
the talk station. Are welcome to here.
Speaker 4 (29:38):
Why do we keep letting thousands of people come over
and do nothing about it?
Speaker 2 (29:41):
My family's safety is at risk?
Speaker 3 (29:43):
Fifty five KRC The talk station.
Speaker 4 (29:50):
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob sponseller along with Brian James. 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. If you're listening to the show on the
iHeart app, simply record your question and it will come
straight to us. All right, Brian, get ready for Mark
(30:10):
in Mainville, who says, our advisor keeps pushing alternative investments.
I wonder why how do you tell the difference between
genuine diversification and just a high feel fee sales pitch. Yeah,
so what alternative is?
Speaker 1 (30:26):
What that really means is it's an alternative to your
traditional stocks and bonds. So this includes private equity type investments,
hedge funds, private credit, structured notes, real estate partnerships, commodities,
those kinds of things. And these aren't necessarily bad, but
the reason it's getting kind of loud about This is
because technology and efficiencies have allowed these types of things
to be more presentable to the masses. But you want
(30:47):
to make sure that you're actually getting real diversification. Is
this just some kind of hedge fund that ultimately matches
the S and P five hundred, in which case it's
just an expensive index fund.
Speaker 2 (30:56):
Or is it maybe just different for the sake of
being different.
Speaker 1 (30:59):
So real parsification should smooth out volatility and reduce your
overall portfolio risks, so make sure that's in there.
Speaker 2 (31:05):
Also, follow the fees. There's a lot of layers of fees.
Speaker 1 (31:08):
Oftentimes there's one to two percent management fees, just like
in a traditional portfolio, plus performance fees. If we make
you fifty percent, we're going to keep ten percent of it,
that's a twenty percent performance fee. Those don't exist in
your more traditional type investments.
Speaker 4 (31:20):
And Brian no Hield high fee sales pitch would be
complete without presenting non traded real estate investment trust.
Speaker 1 (31:28):
We all love those non public traded reads that you'll
be stuck with until lock your money up for ten
plus years.
Speaker 2 (31:34):
They are wonderful, absolutely wonderful things.
Speaker 1 (31:37):
And the quote unquote advisor behind those got paid a
commission and will never bother talking to you about it
again because his or her job is to go find
the next person to put them in and you'll be
stuck with it forever. Anyway, now that we're biased, are
we biased? You're not at all, not at least all right,
So we're gonna move on now to Greg and Lebanon,
and Greg is looking at selling a business. Congratulations, Greg,
(31:57):
it must have been pretty successful over the years. Spooked
by that liquidity event and feels kind of overwhelming, and
he's asking what is the smartest way to deploy that
cash without rushing into the next big thing.
Speaker 4 (32:07):
Bob, Well, Greg, you hit, you hit on the best
point here, not rushing to do anything. First of all,
congratulations on being in a position to sell a business,
which I'm assuming you worked very hard to build and
get in a position to, you know, to move on from.
Speaker 2 (32:25):
And that's a big event. You should be very proud
of that.
Speaker 4 (32:28):
And along with that, just take a deep breath, let
the dust settle, don't let that big chunk of cash,
you know, burn a hole in your pocket. Take some
time to just breathe and relax and get a good
team around you. A good fiduciary advisor, financial advisor, CPA attorney,
and you know, build a financial plan based on all
(32:51):
this newfound liquidity that you have, dovetailing that with all
of your future goals, and then slowly deploy things, you know,
to make that financial plan come to life. That's my
advice is slow down, get some good advice, and don't.
Speaker 2 (33:05):
Let that cash burn a hole in your pocket.
Speaker 4 (33:07):
All right, Emily and fort Wright says, we're helping support
both aging parents right now and our adult kids. How
do you plan for that kind of financial squeeze without
burning through some serious retirement savings.
Speaker 2 (33:20):
Well, Emily, welcome to the Sandwich generation.
Speaker 1 (33:23):
Roughly one in four adults in their forties and fifties
is now providing financial support to both an older parent
and a grown child. In the Midwest, this is having
an even bigger impact rising health care costs for parents
and housing and just a kind of overall family feel.
We stick with family. You do for family. That's what
we do here, and that's what gets expensive. So the
very first rule is put your own oxygen mask on first.
(33:45):
You can't do them any good if you yourself are
a mess, because you'll all wind up a mess well
down the road if you have spent your own assets
down so make sure you are in good shape. You
have to set clear boundaries with both sides. If it's
your parents, have an open conversation about long term care,
what their income sources are and what yours are, frankly,
and whether it's time to simplify their investments or do
something different for their living arrangements. Adult kids give them guidance,
(34:09):
not guarantees. That's the best thing you can do is
share your experience with them. They're gonna have to carry
most of their own weight. Help with budgeting, job planning,
and make sure that that support is conditional and time limited.
You'll be there to talk, but you're not going to
be an open wallet, all right. Ron and Amberley Village.
Ron says they're both self employed, and that means they
see pretty violent swings and income, and he's asking how
(34:29):
you build a savings and investment plan when that cash
flow is not really predictable.
Speaker 4 (34:34):
Ron, My advice here is just have a larger emergency fund.
You know, most conventional wisdom says, you know, have six
to six to twelve months worth of expenses covered in
a non risk savings account at the bank.
Speaker 2 (34:48):
We all know that.
Speaker 4 (34:49):
I think when you own a business, you're self employed,
you got things moving around a lot.
Speaker 2 (34:54):
You just need to give yourself a little more space.
Speaker 4 (34:57):
So oftentimes I tell people take that six to twelve
months and make it, you know, twenty four to thirty
six months most of the time. If you if you
know you've got your nut covered, so to speak, your
basic family operating expense is covered for two to three years.
Speaker 2 (35:12):
Will that will take a lot of stress off.
Speaker 4 (35:14):
The table and allow your longer term capital to stay
fully invested and most importantly for you and your wife
not to stress out about short term cash flow and
just focus on running your business.
Speaker 2 (35:27):
I mean, let's face it, owning a business comes.
Speaker 4 (35:29):
With a lot of upside potentially, but as you said,
a lot of volatility. So just give yourself some wiggle
room here in the form of a higher emergency fund balance,
and don't worry about doing that. I know that money
is not going to be making twenty percent a year,
but you'll be glad you have it if the furnace
breaks or the car breaks down, and you just don't
(35:50):
need the extra stress in your life by you know,
worrying about where your next penny's gonna come from. And
you certainly don't want to get into a situation where
you're running up a big credit card balance paying you know,
twenty nine percent.
Speaker 2 (36:02):
You talk about a stressor that'll cause it in a hurry.
Speaker 4 (36:05):
All right, last, we've got Greg in Bellevue tonight, Brian.
He says, we've got a few old annuities sitting in
our portfolio, and honestly, we're not sure what role they
play anymore. How do you evaluate whether to keep them
or just unwind them?
Speaker 1 (36:18):
Yeah, so annuities are annuities often get pitched as kind
of as evil, but that's not the case. They're just
simply complicated. They can be beneficial. There are some terrible
ones out there that are just expense and they just
exist for the insurance company to be happy. But it
depends on what these are. If these are simple fixed annuities,
and maybe you're beyond the surrender period where you could
pull the money if you wanted to look at the
(36:39):
interest rate and if you need, if you need an
emergency type fund and it's paying a decent rate, as
they often do, then maybe it just sits leave it alone.
You don't have a surrender period to worry about, so
you got past the painful part. Contrast that with if
it's a if it's an annuity that has say, income
riders on it that are a little more complicated, then
generally you're gonna want to turn those on as soon
as possible, you know, if you're going to use them,
(37:01):
because that's the way you'll you'll maybe benefit from those
from the insurance companies guarantee. But understand how the math
works and understand whether you should leave it in there
at all, because you can get out of those once
you're out of that surrender period. You can get at
them without paying any fees, taxes. You got to be
careful of certainly understand what that impact is.
Speaker 4 (37:18):
All right, coming up next, I've got my two cents
on a couple of nuances here to social security claiming strategies.
You're listening to Simply Money presented about all Worth Financial
on fifty five KRC the talk station. There's a lot
of stuff happening, military occupation in our city. Well we're
going in I'm seeing government shutdown.
Speaker 3 (37:36):
And you got a lot of stuff to do, so work, stuff.
Speaker 5 (37:39):
You kids, sports stuff, stuff around the house.
Speaker 3 (37:41):
So we'll stuff it all into news updates. People are
wise to this stuff, you know at.
Speaker 4 (37:45):
The top ended bottom of the hour for store, law
and order, public health, a change in the weather.
Speaker 3 (37:50):
President of booth and he knows where I stand. Check
you in. Often's a new day, it's a different day
for all this stuff you need to know. Fifty five
krs the talk station.
Speaker 4 (37:59):
Hey, Brian, tell me I am so worried that next
month I have to choose between groceries for my kids
or gas for my car.
Speaker 3 (38:05):
Talk about it here fifty five KRC the talk station.
Speaker 4 (38:12):
You're listening to Simply Money said of by all Worth
Financial on Bob Sponseller along with Brian James. Brian, I
want to talk about a meeting I actually had yesterday
with a single lady who just turned sixty five, she's
going to be sixty six next year, and talking about
you know, how to take and when to take her
social Security and it just when we when we pulled
(38:32):
out the tax software and we started looking at the
implication implications of different decisions. Things have gotten a little
more complex here with the new tax lash legislation that
came out earlier this year, and I just want to
highlight that here, you know, to close things out tonight,
because now you've got a factor in two things. At
what threshold does your income cause most, if not all,
(38:55):
of your tax your Social Security be to be treated
as taxable income. And then we've we also have that
enhanced Senior deduction for folks sixty five and older. That's
a deduction of six thousand dollars for single taxpayers, twelve
thousand dollars for married filing joint You know, this is
what the President and others when they talked about Social
(39:17):
Security being tax free.
Speaker 2 (39:18):
Eh, kind of, but there's a phase out here.
Speaker 4 (39:21):
So you got to take a look at you know,
when you take Social Security how that dovetails with your
other income. Because in this case, waiting a couple of
months kept that we're gonna keep this lady from we're
gonna keep her in a twelve percent marginal tax bracket
next year instead of jumping into a twenty three percent
tax bracket because of some of the phase outs and
(39:42):
tax ability of Social Security.
Speaker 2 (39:44):
Yeah, so I want to make sure you mentioned the
phase out.
Speaker 1 (39:46):
Let's talk about what that is because a lot of
people just heard cool six thousand dollars deduction twelve thousand
single filers, you're gonna lose the ability to do that.
If you're modified adjusted gross is below seventy five thousand,
you're gonna lose out. If you're married, if it's a
I'm sorry, above seventy five, and if you're married, you
lose it if you're above one hundred and fifty.
Speaker 4 (40:03):
So just get with your CPA, get with your advisor
and make sure you're not surprised here by the taxability
of your entire situation when it comes to Social Security.
Thanks for listening tonight. You've been listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
talk station.
Speaker 3 (40:21):
In the morning, we.
Speaker 2 (40:21):
Have breaking news coming to you live right now.
Speaker 3 (40:24):
During lunch, beautiful afternoon before heading into winter.
Speaker 4 (40:27):
Maybe you want to get out and play some tennis
or some pickleball at work.
Speaker 3 (40:31):
After a few big moves by the government today, the
stock market is on a clear game.
Speaker 2 (40:36):
On the way home, ed, we have an accident blowing
things down on the freeway at home. Stunning events today.
Speaker 4 (40:42):
We will have the late news coming up whatever the time,
wherever you may be, when you need us, Weird there
fifty five KRS, the Talk station
Speaker 2 (40:51):
All right, holiday time is
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