November 27, 2025 • 37 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian challenge the traditional idea of retirement by asking: what if financial freedom isn’t about quitting work forever, but having the power to choose how you work, when, and with whom? They dive into the growing trend of financial flexibility and how high-net-worth individuals are redefining their retirement goals. From part-time consulting at GE to opening woodshops or working at Costco for healthcare, the conversation covers how purpose, planning, and portfolio management play a role in these transitions. Plus, they explain how to fund this lifestyle shift with smarter income strategies, tax diversification, and tools like the Rule of 55. Later in the show, they explore why clinging to outdated investments might be holding your financial plan back, how to think differently about downsizing your home, and why your future success often comes down to basic math.
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Speaker 1 (00:06):
Tonight, why financial flexibility is the new financial freedom. You're
listening to Simply Money, presented by all Worth Financial on
Bob Sponseller along with Brian James. We've all heard the
American dream save enough money so you never have to
work again. But what if that's the wrong goal. Today
we're flipping that script because financial flexibility, Brian, might be
(00:31):
the new American dream.
Speaker 2 (00:33):
So yeah, so things have change.
Speaker 3 (00:35):
Financial freedom used to be here's my retirement date, and
I'm going to mark all these ex's on the calendar
until it's time to no longer go into the office
ever again, and I'm just going to spend the rest
of my life on the beach. But now people are
feeling a little bit differently, and we hear this every
day here at all Worth as we're sitting down with
clients and prospective clients talking about financial planning. And it's
people who come in and they say, you know, I
(00:55):
thought I wanted to just do a bunch of nothing,
but now I know. So I got family members, I
got friends who have retired and have gone ahead of me,
and sometimes they're just not as happy because they don't
have that sense of purpose anymore. So people are thinking
a little bit differently about something called financial flexibility. So
you know, tend you're a family with maybe one to
five million dollars, and it might be a more realistic,
fulfilling target here. Flexibility means you don't really have to
(01:18):
stop working. You just choose how you work when and
with whom. And a lot of times this conversation, you know,
comes in the form of, let's talk about what you
might do when when this particular job, this particular career
is no longer necessary. Maybe you're not ready to completely
hang it up and let the dust collect on you,
but maybe it's time to seek a new job in
a spot where, you know, where it's not the salary
(01:39):
that matters, and maybe it's not the benefits because you've
already kind of won that game, you know, but it
might be something where you're still bringing a little bit
in come to help bridge the gap during retirement, but
you're not quite ready to completely hang it up and
have no reason to get out of that anymore.
Speaker 1 (01:53):
Yeah, I'm finding I'm having this discussion more and more
with folks that are retiring today than I did with
folks that I started working with twenty to thirty years ago.
Speaker 2 (02:03):
I agree.
Speaker 1 (02:04):
It used to be Hey, I'm fifty eight, fifty nine,
show me how I can get out of there. Now
I can't wait to get out of there and never
go to work anymore. And that's not the case anymore.
A lot of folks, even in their late sixties and seventies,
they want they want a way to do something. They
want to stay involved. They got a lot of experience
(02:25):
in acquired wisdom and value to add to whether it's
the company they worked for for thirty or forty years,
or nonprofits or serve on ministry boards, anything like that.
They just don't want to be chained to a sixty
to seventy hour work schedule. And I'm finding that companies
and institutions are way more flexible than maybe they ever
(02:47):
have before in allowing these folks to be involved and
do some things because it really is a win win
for both parties. Are you finding that with any of
your clients.
Speaker 3 (02:58):
Brian, Absolutely, And one of the big companies around here
that does this is General Electric, so they seem to
be the gold.
Speaker 2 (03:03):
Stand exactly the company I'm thinking of exactly.
Speaker 3 (03:06):
Yeah, there's a conga line of people who have their
retirement dinner and then the very next week are coming back.
Speaker 2 (03:11):
As a as a consultant or doing whatever they do,
and that's just a well worn path.
Speaker 3 (03:16):
It's almost I can't remember the last time I had
somebody tell me that they were ready to retire from
General Electric and they had zero intent on taking that step.
Speaker 2 (03:24):
So it really seems like a good move. Though.
Speaker 3 (03:26):
Those seem to be some pretty happy people because they
get to slough off some of the duties that they
had before. They feel they they do are They do
feel entitled and able to say no to things, whereas
when you're when you're working and you're you're in the grind,
when you're their thirties, forties, fifties, you're just part of
the machine and so forth. But those folks do seem
to have a little more flexibility and they do seem
to be a little more relaxed. And it's a great
baby step into retirement, and I think that can be
(03:48):
a great thing for anybody, just the idea of, you
know what, I'm going to start to back off a
little bit, rather than that.
Speaker 2 (03:52):
Cold water shock of today.
Speaker 3 (03:54):
I get out of bed and I go for my
last day of work, and then I have my retirement dinner,
say goodbye to everybody, and then tomorrow what am I
going to do? That can be a really, really scary thing.
So these sort of baby steps into retirement can be
very powerful.
Speaker 2 (04:06):
Well, let's talk.
Speaker 1 (04:06):
About a different way of of maybe creating those baby
step steps into something else.
Speaker 2 (04:11):
And here's what I mean by that, Brian.
Speaker 1 (04:13):
We've just kind of talked about maybe the ge executive
that worked fifty sixty hours a week. They want to
stay involved, but they want to do it on a
ten to fifteen to twenty hour a week basis. We've
got some other folks that say, I want to make
a complete different career path decision. Maybe I worked in
it or in engineering, or what have you for thirty
(04:34):
to thirty five years.
Speaker 2 (04:35):
For thirty thirty five years.
Speaker 1 (04:37):
I want to open up a wood shop, or I
want to work with orphan children in Zimbabwe. I want
to do something like that. I'm seeing more and more
of those conversations come up. Let's talk about what we
need to be doing as we think about those dreams
and goals and actually make it come into fruition or reality.
(04:59):
What do we need to do in terms of planning
and getting your finances in order right.
Speaker 3 (05:03):
So what you're looking at there is if you want
to be able to figure out, you know, what you
can get away with here. First of all, you got
to make sure that you understand your current situation right.
So you have a current budget, right, whatever it is.
You may not be paying attention to it. You may
not be putting money in envelopes or making sure that
we only spend exit the grocery store or whatever, but
you do have some kind of a lifestyle out there
presumably if you if you are unaware of your budget,
(05:25):
then you are either a very very very financially stable
person where you just know that you're bringing in more
than you're spending, or you're a complete train wreck. So
we'll assume that we're talking to the people who you
kind of have things you know on autopilot and they're okay,
But you need to look really in depth at that
to see what that actually is, because you got to
figure out what is my minimum, what's a bare minimum
(05:45):
I need to get going here? And a good easy
way to do that is to simply take a look
at your take home pay. This is you don't need
to fill out a spreadsheet full of here's my magazine subscriptions,
and here's what we spend at Applebe's on the weekends
and whatever. You can simply look at your take home
pay and figure out what's going where. Top line is,
here's what hits the bank from all of our resources,
from all of our income sources at the beginning of
the month, and then here's where it goes. This goes
(06:06):
to the mortgage that'll be gone in two three. However,
many years we always carve out and put a little
bit into savings. Maybe that's a goal you don't have
to have anymore. This is going to college tuition or
college savings right now, that's a finite goal, and so forth.
Once you knock off all those finite things that have
a limited lifespan, then you will be down to the
money you just spend to be you on a monthly basis.
Speaker 2 (06:25):
That is your target.
Speaker 3 (06:26):
Start with that, and then figure out how can I
replicate that income from my existing sources. And therefore, here
is a gap I need to make, and I can
promise you, if you're one of these stable people, it's
probably a lot less than you think it is. Most
of the time we come up with happy surprises in
those discussions.
Speaker 1 (06:40):
Yep, you're listening to Simple Money presented by all Worth Financial.
I'm Bob Sponseller along with Brian James and Brian. This
is where having a really sound tax strategy comes into play,
and we talk about this often. This is where having
different buckets or sources from which you could take income
divers sources of income I RaSE four oh one k's
(07:02):
after tax accounts, WROTH accounts, blending an income strategy from
those different sources, that's where we could really create some
nice tax efficiency of that gap income as you call it,
and then really make this thing hum in the later years.
Speaker 3 (07:20):
Yes, Now this is where things get more complicated. Right,
So when for people who have worked very hard and
built built their plans and created several different resources. Right,
you've got social security history, you've got pre tax dollars
in your four oh one K, four or three B.
You might have WROTH in the mix. Maybe you've got
some taxbos to all this other stuff. Then everything gets
harder when you get you hit a point where you've
(07:40):
got a lot of resources. All those resources are labeled
and painted differently with regard to taxes. Are all going
to be taxed differently? When we are working slaves you're
paying ordinary income taxes.
Speaker 2 (07:49):
That's it. You got to work.
Speaker 3 (07:50):
Somebody gives you a check, You're going to get taxed
at the ordinary income rates. Period, end of story. When
you've created all of these different resources, now you've got
a choice to make. And congratulations, things just got harder,
and Bob and Brian just got a little more job security.
Because there are any number of ways you can combine
these things into an income stream that will keep you stable.
But each one of them is going to have its
own pros and cons. So let me throw out one
(08:12):
thing though, for somebody who is thinking about this. I
want to make sure that everybody knows of something called
the rule of fifty five. Remember the rule of fifty five? Bob, Yes,
so what we do there? I hate those rules because
everybody's different. You can't apply this rule of whatever to
everybody because everybody's situation is different.
Speaker 2 (08:33):
But I don't want to take you off. That's okay.
Speaker 3 (08:35):
And I threw this softball there and it was a
little I almost hit you in the helmet. Sorry about that,
But no, the rule of fifty five, this one does
apply to everybody, which is nothing more than when you
are fifty five years old. You get to pull money
out of your four oh one K without paying penalties.
So if you are a person who is considering an
earlier retirement and one of your resources is pre tax
dollars in your four oh one K, then know that
(08:57):
you can pull money from the four oh one K
without only paying income taxes. No ten percent penalty, no
early withdrawal penalty. That does not apply to IRA. You'll
notice I said the word four oh one K six
or seven times in that whole exchange there. The IRA
age is fifty nine and a half. That's what most
people think everything is. But if it's a four oh
one K, it's fifty five. You can draw on that
(09:18):
without penalty.
Speaker 1 (09:20):
Yeah, and let's not ignore the whole healthcare question, because
what we're talking about here.
Speaker 2 (09:24):
Is these bridge years.
Speaker 1 (09:26):
You know, if you want to retire early and transition
into something else, and let's face it, if you go
from a for profit business into a nonprofit, a ministry
something like that, the benefits often are not as great,
and you got to sometimes self insure yourself between when
you retire from your company job and when you get
to medicate. We got we got to help people transition
(09:47):
and get you know, good sound medical coverage, and uh,
sometimes people overlook that.
Speaker 2 (09:53):
I know.
Speaker 1 (09:53):
I heard of one lady yesterday who I mean, she
could work anywhere, she's brilliant, but she just decided to
go work part time at Costco, working in some department
of Costco that sold widgets or garden equipment or something
that she was really interested in, solely to get over
there for about ten hours a week, work part time,
(10:14):
but get healthcare coverage. Between her late fifties and when
she could go on Medicare, she's totally happy with her life.
She goes in there, rolls in for her ten hours
a week, she does something completely different, she's out of there,
but she's got that healthcare coverage and good health care
coverage to bridge that gap to sixty five.
Speaker 3 (10:36):
Yeah, and I think that's a great outcome here. I
want to throw out one caveat something to keep in mind.
Eye and I'm going back to this goes back twenty
thirty years when I first started in this industry and
home depot and lows, the big box hardware stores were
kind of new, and there were a lot of always
tend to be older men who want to retire from
my job. I love working with my hands, so I
want to help people do that. That sounds like fun.
(10:57):
So I'm going to go be an hourly guy at
home Depot and lows and that. You still see this
every now and then, but these are hardworking people who
have their stuff together and they will eventually recognize that, hey,
this this store isn't running as as efficiently as it could.
Speaker 2 (11:09):
I'm going to fix it. I'm going to do things.
Speaker 3 (11:11):
And all of a sudden, management notices and you get
a promotion, and then that happens a couple three times,
and all of a sudden, you have a new career
that you didn't want. You only wanted to help people
with their hardware projects a few hours a week. So
just be careful of that trap.
Speaker 1 (11:22):
That's good. Here's the all Worth advice. The question isn't
when can I retire? It's when can I start living
the life I want to live? Coming up next, why
clinging to old investments might be the one thing holding
your whole retirement plan back. You're listening to Simply Money
presented by all Worth Financial on fifty five KARC the
(11:43):
talk station. You're listening to Simply Money presented by all
Worth Financial on Bob sponseller along with Brian James. Hey,
if you can't listen to Simply Money every night, subscribe
and get our daily podcast. You can listen in the
following morning during your commute to work or at the gym.
(12:04):
Just search Simply Money on the iHeart app or wherever
you find your podcasts. Straight Ahead at six forty three.
The lessons you can learn from going into a retirement
time machine, Brian, that's gonna be that's gonna be kind
of fun, all right.
Speaker 2 (12:20):
We see it all the time.
Speaker 1 (12:21):
Someone walks into our office with a portfolio they built
over twenty or thirty years, and it's filled with all
kinds of stuff, Brian. The stocks they love, mutual funds
from Therefore, when k days, maybe even some company shares
from a past employer, and when we sit across the
desk and ask them why they own these certain things,
(12:42):
the answer is often well, I've just always had it,
or it's done well for me, or even it's part
of my story.
Speaker 2 (12:50):
What do you say to those people, Brian?
Speaker 3 (12:52):
You know, Bob, I'm going through this literally today the
other day and through this weekend, just in a slightly
different area of life, and I'm referring to my garage.
I have a lot of unfinished little projects out there
that they're all sitting in the garage about maybe eighty
ninety percent state of completion. And I'm sure whatever they
are where was important to me the day that I
was working on it, but I've completely forgotten about it,
(13:12):
and it's just they're just kind of there. And so
that's a lot of times, that's that's what happens to people,
And frankly, that's what drives people in the door, because
eventually they step way back and finally look at the
forest instead of the individual trees, and they go, what
is all of this stuff?
Speaker 2 (13:25):
What does it mean to me?
Speaker 3 (13:26):
And I've realized and they realized, I'm not even that
interested really in maintaining this stuff anymore. And Bob, that
defines me. I can't remember the last time I changed
my oil in my lawnmower, but it still starts the
day that it doesn't start. All probably higher professional but anyway, So, yeah,
the big people come in and they've got this grab
bag of just stuff that they some of it they inherited,
some of it they bought because they were interested in
investing a while ago or something. Like that, but they've
(13:48):
never figured out exactly what role does all this money
play when they're trying to knit it all together into
something that can help them retire or accomplish their financial goal.
Speaker 2 (13:55):
Yeah.
Speaker 1 (13:55):
The point we're trying to make here is your investment portfolio.
Speaker 2 (13:59):
It's not a scrapbook.
Speaker 1 (14:01):
It's not a half rebuilt Harley Davidson in your garage
with a bunch of tools laying around.
Speaker 3 (14:08):
Or a family photo album. Because dad, grandpa, mom used
to work at this company and that's why we all
own the stock, even though none of us pays attention
to the company anymore.
Speaker 2 (14:15):
Yeah, and you do need to change the oil on
your lawnmower button. Not yet, not yet. I don't it
started this weekend, Bob.
Speaker 1 (14:20):
You'll be surprised when that day comes, all right. The
point with this whole collection of investments is.
Speaker 2 (14:27):
It is a tool. You know, it should be built
to do a job.
Speaker 1 (14:31):
And if it's not doing that job anymore, meaning you're consolidated,
coordinated investment and tax strategy, it might be time to
let some of those things go. And letting some of
those components of your portfolio go it doesn't mean you
were wrong before. It just means you're evolving. And we
talk about all the time investment. This investment business and
(14:53):
that particularly the tax benefits and tax opportunities around investing
has changed in a evolved dramatically over the last ten
to fifteen years. And we find a lot of times
people aren't even aware that some of these strategies even exist.
Speaker 3 (15:09):
Right, So let's take an example here, and I think
you know, having been in this industry both of us here, Bob,
for several decades now. One of the big stories in
the stock market over the last several decades has been
Apple throwing out as an example.
Speaker 2 (15:22):
Because Apple's great companies, strong company.
Speaker 3 (15:23):
They are not going away, but not quite the shining
beacon that they that they once were. Steve Jobs is gone.
Everybody has an iPhone. Things just don't seem to be
innovating the way they used to. But if you've owned
Apple for a few decades, then you have a pretty
good chunk of stock. And also you probably have some
notion that if you were to sell it, if it's
a taxable account, you were to sell it, you're going
(15:44):
to pay taxes. Most people go, oh, I just can't
sell it. I'm gonna have to pay taxes. I can't
deal with that, don't want to have to think about it.
Speaker 1 (15:49):
Well, and then that whole portfolio attachment things comes into play.
Speaker 2 (15:53):
And here's what I mean by that.
Speaker 1 (15:54):
We love I mean we love staring at a statement
or an online know portfolio summary, and we love seeing
that four hundred percent gain every day. It proves to
us emotionally that we were right. We bought a stock
and it went up and we made a bunch of money.
And you just sit there at that and stare at
(16:16):
that big percentage gain and say, this is done.
Speaker 2 (16:19):
Great for me? Why would I ever sell it?
Speaker 1 (16:22):
I you, but a lot of people don't look at
what the performance of that nice stock position is done
maybe in the last three to five years, as opposed
to a diversified portfolio. Do you ever find that?
Speaker 3 (16:37):
I do, absolutely, And then I'll go back to my
garage full of projects. Sometimes you have a statement full
of projects that had a purpose at one point in
your past. So so really, I think that the goal
here is, Okay, now you've got something, what are you
going to do with it?
Speaker 2 (16:48):
So? What what could people do? Let's get into that, bob.
So if this is.
Speaker 3 (16:52):
All money, right, these are all financial instruments and they
should somehow be supporting you otherwise what was the point.
So something you might think about if you've got these
kind of assets out there, if you are charitably inclined
and you've got appreciated stocks, then you should look into
something called a donor advice fund. You can donate those
shares to a donor advice fund. You will reap the
benefits of a deduction which you may not have anymore.
(17:13):
Right when we swit, when the standard deduction became a
lot larger, a lot of people lost the benefit of
deducting charitable contributions. But this is the way a donor
advice one would allow you to make a contribution now,
but not ultimately have the charity receive it until a
time of your choosing. So you make an irrevocable deduction,
now give it to the charity over the same two, three, four,
(17:35):
five years you would have intended anyway.
Speaker 1 (17:36):
Especially if you're one of those folks that's still writing
checks or putting currency into the offering plate at church,
or writing a check to chosen charities, and you're not
even able to take advantage of the much larger standard
deduction for married couples.
Speaker 2 (17:51):
This is a miss that we find all the time.
Speaker 1 (17:54):
And it's great that people are giving money to charity,
but there's just better ways to do it. And to
your point, you can kind of scale out of that
large concentrated position and do it on a much more
tax efficient basis. Another thing that we've talked about recently
and it's worth mentioning here again is direct invest direct indexing.
There are strategies where you can exchange that low cost
(18:18):
based stock for a fully diversified portfolio stocks and not
have to take the tax hit. It's a wonderful strategy.
Speaker 3 (18:26):
Yeah, and that's a way too. Again you're putting diversification
into your portfolio. So let's give a quick example here.
We're here in Cincinnati. So let's say one of us
has a bunch of P and G stock, another one
of us has a bunch of GE and other ones
has a bunch of Kroger and keep adding to the list. Well,
if we sell those because we want to diversify, then yeah,
we're gonna incur capital gain because we sold the stock
and took the game. However, if we all contribute in
(18:48):
kind those shares to another fund, and then we redistribute
shares of that fund to ourselves. Now we have a
more diversified portfolio, and no one has actually executed a
sale resulting in a capital gain. Well, that's called an
exchange fund, and it's another way to deal with the
risk of a position that's got a little too big.
Speaker 2 (19:06):
Yeah, So it comes down to when to reevaluate.
Speaker 1 (19:08):
And the way I look at this is we all
have to ask ourselves. Does this investment that I'm holding
still align with my current needs? Is it helping me
hit my long term plan? Or am I just holding
it because I'm afraid.
Speaker 2 (19:22):
To let it go?
Speaker 1 (19:23):
Or I don't want to walk out into that garage
and clean up all the stuff laying on the floor.
Speaker 2 (19:28):
Starting to sound like my spouse, Bob, I got one
of those two.
Speaker 1 (19:32):
Hey, if you don't know the answer, that's the sign
it's time for a review. Whether it's an old mutual fund,
a legacy annuity, or a chunk of employer stock, you
owe it to yourself to reassess, and reassess that with
a good fiduciary advisor who can help you look at
your various options.
Speaker 2 (19:50):
Here's the all worth advice. Your money isn't your identity.
Speaker 1 (19:53):
It's a tool to build the life you want today, tomorrow,
and into retirement.
Speaker 2 (20:00):
Coming up next.
Speaker 1 (20:00):
It's the most emotional and most overlooked retirement decision, and
we're going to get into it. Coming up next. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC, the talk station. You're listening to Simply
Money presented by all Worth Financial on Bob's sponseller along
(20:22):
with Brian James. We talk a lot about how to
downsize your portfolio, but today we want to talk about
downsizing something far more emotional. And Brian, we run into
this often with clients, the whole topic of downsizing your home.
Speaker 3 (20:41):
Yeah, so this comes up in a lot of ways
during financial planning. It comes up in a form of,
you know, people will realize that, you know what, we
don't do we want to be in this house anymore.
The kids are up and out and now it's just
a bunch of bedrooms I gotta clean and that kind
of thing. But what I find, Bob is frequently people
who have come to that conclusion will decide to move,
and then they move into a house that is the
(21:01):
same size.
Speaker 2 (21:02):
I think we get into our heads.
Speaker 3 (21:03):
That well, if I've always lived in a five bedroom house,
that's just kind of what I need. Was just you know,
I don't want to it's too scary to go smaller.
But then inevitably we'll find people, you know, talking about
how they bought too much house and heaven forbid.
Speaker 2 (21:15):
You know, a lot of times there winds up being
a mortgage against it.
Speaker 3 (21:17):
Don't be one of those people who retires and then
puts a thirty year mortgage in place for a bigger
home that you you're just gonna fill with stuff that
someday you're gonna have to drag your good will.
Speaker 2 (21:25):
Well.
Speaker 1 (21:26):
We also talk with families that are struggling with Hey,
they deep down know that this big house that they
raise their kids in and where they've got a ton
of memories and it's been paid off for years, and
they kind of swore to each other they'd never leave
the house. You know, they just feel like they can't
leave because of all these memories. They want to have
(21:47):
a place for their kids to come back, all good stuff,
but sometimes those maintenance costs, taxes, upkeep, it just becomes
a huge burden to them that prevents them from traveling
and doing some other things that they might otherwise like
to do if they didn't have this huge house to
take care of it.
Speaker 3 (22:05):
And Bob, I think this is where some war stories
from our financial planning tables here at all Worth can
come in. So what I'm speaking about is when we've got,
you know, the heirs of their parents. My mom and
dad have passed away, it's time to settle the estate,
and it's time for everybody has received their distributions, and
the very first thing that they wind up talking about
is we're going to get rid of this house.
Speaker 2 (22:26):
Mom and Dad were convinced that we wanted it. We
just didn't know.
Speaker 3 (22:30):
None of us, the siblings, nobody wanted this house because
we've all got our own houses and we're happy where
we are. I think people tend to convince themselves that
I have these warm, wonderful memories and this isn't to
take any of that away, that is important stuff, But
I have these warm, wonderful memories in this structure. Therefore
it must be maintained and passed down. And your kids
have those warm wonderful memories too, and they know it's
important to you. They may not be being upfront with
(22:52):
you as to whether they really want this house. Most
of the time, one of the very first calls that
happens during the settlement of the state is a real
estate agent because we can't let that house sit empty.
Speaker 2 (23:00):
We got to deal with it.
Speaker 3 (23:01):
Something's going to go wrong with it if nobody's paying
attention to it, and we're going to eat property taxes
and expenses as long as we have it, so they're
going to sell it relatively quickly. So you know, we
make make decisions based on that knowledge as you move
forward on your own plan.
Speaker 1 (23:14):
Well, the other thing to keep in mind, Brian, is
the larger the house and the longer you've lived there.
And my wife and I went through this personally, you
know about four years ago, the more accumulated crap you've
got in that house to use your garage and tool example.
Speaker 2 (23:30):
I mean, you stay in.
Speaker 1 (23:31):
A house for seventeen, eighteen twenty years, you raise a
few kids there, and all you got a whole bunch
of stuff laying around in there that you don't need
and nobody wants. And if you end up dying with
that big house and all the crud that's in it,
that can create a whole other set of burdens for
your kids, Like, what are we how are we going
(23:51):
to get rid of all this stuff? Yeah?
Speaker 3 (23:53):
I always think back to seventh grade chemistry over ats
Ainty Nation's on there on the west side when I
think about this a gas element. One of the characteristics
of a gaseous element is that it expands to fill
the container it's in.
Speaker 2 (24:05):
And I got news for you about so do we.
Speaker 3 (24:07):
If I have a big house, I'm gonna fill it
with stuff I probably don't need, but I got the
room for it, So why not.
Speaker 1 (24:12):
You're listening to Simply Money, presented by all Worth Financial
Lumbob spond Seller along with Brian James. Let's get into
taxes and numbers a little bit. Brian, what are some
of the benefits in addition to unburdening yourself with the
huge house and all the stuff that's in it, Let's
talk about tax planning opportunities if you decide to make
a change.
Speaker 2 (24:30):
Yeah.
Speaker 3 (24:31):
So, one of the things that most people are comfortable
is the concept of well, if I own something anything
a stock, a mutual fund, collectibles, crypto, whatever, if I'm
gonna sell it at a gain, then the irs is
gonna come sniffing around for some taxes.
Speaker 2 (24:44):
And that is true most of the time, but not
in this case.
Speaker 3 (24:46):
So if you're sitting on a house that has a
good chunk of equity built into it and you there's
some rules you gotta follow. But basically, with the moment
you downsize that home to a smaller house, you will
have incurred. Again, you can always roll the game forward.
When you're buying a bigger house, that's never a thing.
But when you are, by buying a smaller house, you
get a one time, lifetime exemption where you can take
(25:08):
up to a two hundred and fifty thousand dollars gain
if you're an individual a half million dollar gain per couple, uh,
and you can avoid paying any capital tax capital gain
taxes on that at all. And again this is specific
to a house. You have to have lived in it
for two of the previous five years and that right,
there's no flipping a property here in the short term.
It has to be really be your house, and so
there's some hoops you got to jump through there, But
(25:29):
the point is you can get out from under that
home and avoid capital gain taxes.
Speaker 2 (25:33):
Yeah, one more thing to throw out there.
Speaker 1 (25:35):
If you're if you're thinking and we're not trying to
sell people on, you know, liquidating their home. But a
lot of times people I think they want to make
a change, they just don't know how to go about it.
You know, you talked about the tax implications. One other thing,
just from an emotional and lifestyle standpoint is test it out.
Go rent something that for three to six months or
(25:57):
a year that might be in your wheelhouse or where
you think you might want to live from a lifestyle
standpoint and home standpoint, and see how it works before
you pull the trigger and buy something else or sell
that home that you've been in for twenty years. Test
it out, make sure it's the right move, and then
you're not going to regret your decision down the road.
(26:18):
Here's the all Worth advice. Your home has served your family,
perhaps for decades now, it's time to ask is it's
still serving you. Coming up next, how a retirement time
machine can keep you from making bad financial decisions. You're
listening to Simply Money presented by all Worth Financial on
fifty five KRC the talk station. You're listening to Simply
(26:46):
Money presented by all Worth Financial. I'm Bob Sponseller along
with Brian James. Do you have a financial question you'd
like for us to answer. Well, there's a red button
you can click while you're listening to the show right
there on the iHeart app. Simply record your question and
it will come straight to us. We all want to
know what retirement will look like, but most of us
(27:07):
are making choices today without fully understanding the future impact
at all. What if you could climb into a time machine,
Brian and see the results of your decisions fifteen to
twenty years down the road.
Speaker 2 (27:20):
Wouldn't that be fun? Yeah? This is really an important
part of financial planning.
Speaker 3 (27:24):
So I think a lot of people get hung up
on the idea that you know that I don't know.
I can't predict the future. I don't know what's going
to happen. Therefore I shouldn't bother making any decisions right now.
And that impacts things from how much should I be
saving my four?
Speaker 1 (27:36):
Oh?
Speaker 3 (27:36):
Okay, when do I turn on my Social security? Can
we afford to take this big vacation, or you know,
retire at a certain time or whatever? It's never about
right now. Most people are able to make the decision
that they want and do what their gut tells them
they want. To do right now, but we can't pull
the trigger because we cannot see fifteen twenty years into
the future. So let's go through some mathematical examples here
to kind of help people understand what this is about. First,
(27:59):
we'll take a Mikes, young guy. He's established in his career, married,
he's got a couple kids, brings in one hundred and
fifty thousand dollars a year. Mike's big question this is
we get this all the time. Am I putting enough
away in my four to oh one K? And the
answer to that is, well, what are you trying to
accomplish with it? Are you one of these fire people
you know, financial independence, retire early? Well, then the answer
is put as much as you can possibly afford and
(28:20):
not mess up your current bills. Or are you somebody
who wants to live a certain lifestyle. You're just trying
to make sure you're putting away a minimum of enough.
So Mike right now is putting ten percent into his
four oh one K. That's pretty average, that's pretty pretty standard.
We try to get everybody to double digits and then
you'll be in the ballpark of OK. But he's wondering, well,
what if we sacrifice some things now and instead of ten,
I put twenty percent in and my pay drops, my
(28:40):
take on pay drops now.
Speaker 2 (28:42):
But at the same time, I'm putting away more money.
Speaker 3 (28:44):
So his original plan, Bob, if he's putting away ten
percent and we get a seven percent annual return, right
that is that's kind of the Goldilock zone.
Speaker 2 (28:51):
That's not too high, not too low.
Speaker 1 (28:52):
It's not unreasonable, good balance portfolio, long term, not super responsible,
responsible return of something.
Speaker 3 (28:59):
Yeah, now forty year guy could be more aggressive. That's
a little bit of a different story. So we're just
trying to keep the number simple. So if Mike does that,
he works for twenty five years and now he's got
roughly nine hundred thousand dollars in today's dollars, that's a
nice pile. He's going sixty five, and he's sixty five,
so he's forty. Now we did this for twenty years,
what's the difference. So he right now could generate about
maybe a reliable fifty thousand dollars a year worth of
(29:21):
income off of that. On top of his he'll have
SoC security and some other things as well, and that's
pretty good, but it might limit them. They may maybe
back off on the travel, or maybe there's not as
much going to the grandkids the rest of the family.
So let's look at it again. Mike, who is again
now forty, decides, you know what, let's forego some of
the take home pay. I'm going to bump to twenty percent.
What does that result in now putting twenty percent of
(29:41):
his salary away for twenty five years, Now he's got
one point eight million.
Speaker 2 (29:46):
This is just math. This is the snowball effect. You know.
Speaker 3 (29:49):
The bigger the numbers, the larger the snowball gets. And
this really starts to change the game because now we're
talking ninety thousand dollars in sustainable retirement income. Again that's
in addition to Social Security. All that stuff is back
on the table. Retiring earlier, taking the bigger trips, helping
the grandkids, all of it's back.
Speaker 1 (30:05):
Well, and we we we need to talk about one thing.
And I'm going back in time, you know, reverse time machine.
Remember Mike's forty and he has two kids. Uh, those
two kids cost money. So Mike's probably right in the
middle of travel, sports, music lessons, you know, ballet lessons,
all that stuff. He's probably saying, yeah, Bob and Brian,
(30:26):
it'd be great to put twenty percent of my income away,
but I got bills, you know, to cover today, so
it is a balancing act. It's easy for us to
pull out a calculator and say, yep, you could have
one point eight million dollars if you save all this money.
I think the point we're trying to make is at
least run some numbers and just don't hope all this
(30:47):
works out at age sixty five, seventy seventy five. Run
some numbers when you're early in your early forties, and
then you can make some informed decisions on hey, if
I sacrifice a little bit, now, here's the benefit that
it's going to pay down there.
Speaker 3 (31:01):
And as a financial advisor, I would say to Mike, yes,
that's exactly correct. You've got stuff screaming for money now.
But I would say, Mike, do you know your own worth?
You've been at your job for a couple of decades now,
and you're a loyal guy and so forth. Are you
sure you're being paid what your experience says your worth?
Have you looked at other opportunities out there? Have you
talked to your bosses about you?
Speaker 1 (31:19):
Know?
Speaker 2 (31:19):
Where you are?
Speaker 3 (31:19):
So sometimes you can simply increase what's coming in at
the top, then you can find extra dollars. But again
that comes back to knowing what your value is and
not wasting a bunch of time getting underpaid.
Speaker 1 (31:28):
You're listening to Simply Money, presented by all Worth Financial
on Bob Spon Seller along with Brian James. Brian introduced
us to Lisa. Let's look at another test case here.
Speaker 3 (31:38):
Okay, so a little bit of a different situation. So
Lisa's got she is a little bit nervous, and so
she's got a half million dollars that she has put away.
We don't know where it came from. Of course, maybe
she inherited it. She just let it build up over time.
This is not retirement money, but it's just sitting in
a money market fund earning about three percent. So she's
got about thirteen years until retirement, which means at that
(31:58):
three percent good safe rate, that's going to grow to
about seven hundred and twenty five thousand dollars. And she's
also in her retirement account, she's got an extra two
fifty so now she's got about nine to seventy five total,
and that's not terrible, but she's drawing down that principle
pretty quickly, and so mathematically Lisa will be out of
money by the time she's eighty or thereabouts. So let's
do this again. Let's say that she takes that half
(32:21):
million and doesn't buy into the notion that the stock
market could go poof tomorrow. I always love that argument, Bob,
where people so well the stock market it goes down
because so and so lost all his money. I'm looking
at the S and P five hundred right now, it
still exists, Kroger is still open, P and.
Speaker 2 (32:33):
G is still open. Stock market doesn't go away.
Speaker 3 (32:36):
So if she puts it in a conservative balanced portfolio,
that would earn about six and a half percent by
average on by about eight sixty five. Now her half
million is one point one million dollars. Add her existing
two fifty to that. Now she's retiring with a net
worth of a one and a half million dollars. That
is a big difference between scraping and by just paying
the bills and having a nice, comfortable life.
Speaker 1 (32:55):
Well, and it's a huge change. And the nice thing
is it didn't require any sacrifice. She didn't have to
earn more money, she didn't have to cut back on
her current spending. All she had to do was change
her investment strategy and be open to something that has
worked for decades and decades and decades, and just take
advantage of what the markets give you over a long
(33:16):
period of time. And again, she didn't get an extra
twenty years to save her money. She didn't win the lottery.
She just made smarter, more intentional choices now in order
to get those huge dividends down the road with making
no other changes in her lifestyle. Here's the all Worth advice.
The future isn't a mystery. Oftentimes it's a math problem,
(33:38):
and the earlier you solve it, the better your retirement
story will probably end. You're listening to Simply Money presented
by all Worth Financial on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial
on Bobs fun Seller along with Brian James and Brian
(33:59):
on Mike two. I'm gonna give you my two cents here,
just another story on this whole Should I switch to
a different house scenario and we talked about a couple
of them during the prior segment. I'm gonna share one
that I've run across more often than not, and I
want to spend a few minutes on it, get your
take on it in a story time with Bob's Bonds
story time. A lot of times people say, hey, Bob,
(34:22):
we want to downsize. We want to sell our big
house and we want to buy a ranch with everything
on the first floor in a big great room. And
so we're gonna sell our four or five bedroom house.
We're gonna pocket all that money, and we're gonna be
able to go out and get this beautiful ranch that
has everything on the first floor, and that'll solve all
(34:42):
our problems going forward. What they find, what I find
oftentimes is they have not gone out and looked at
the cost of this ranch home. Factored in the part
that everybody wants a ranch home with the main bedroom
and bathroom on the first floor in the big great room,
and those houses cost a lot of money. And when
(35:03):
people go out and start looking at it, they find
that they're really not going to save any money. And oftentimes,
by the time they fix up that ranch house, they're
looking at spending more money than the what their current
house is worth. And it was they rationalized making a
decision quote unquote downsizing, and they didn't really downsize at all.
Speaker 2 (35:25):
Have you ever seen that one come down? The Absolutely?
Speaker 3 (35:27):
And I think this is a big supply and demand
discussion because there's tons of You can drive anywhere around
Cincinnati and see new subdivisions going up.
Speaker 2 (35:33):
How many of them are full of ranch homes? Right?
Speaker 3 (35:35):
And I'm not referring to the ones where are all
patio homes retirement type communities.
Speaker 2 (35:39):
A lot of people aren't quite ready to take that
step yet.
Speaker 3 (35:41):
They want a ranch home in a more traditional neighborhood,
but those don't exist anymore because the builders can't make
as much to build them.
Speaker 1 (35:46):
Yeah, and here's the point I'm trying to make here.
Count the cost and take your time before you delve
into this. Oftentimes, if you spend a little bit of
money on an architect and take your existing four bedroom
home with the master bedroom and bath on the second floor,
and convert your first floor to accommodate all that, you
can find that you can spend less money staying put,
(36:08):
putting a little money into that is existing home, staying
in that neighborhood that you love and have been there forever,
and really win as opposed to just making a rational
short term decision that you might be surprised at how
much money and aggravation it costs you.
Speaker 3 (36:24):
Yeah, I've had some clients go through this where and
I joke with them, and there's more than one where
they almost financially speaking, built a house inside of a house.
They spent a significant amount of money improving their place
for this exact reason, but it prevented them from having
to buy a whole new place and incurring those expenses.
So even though it was significant to reconfigure their house
to something that would make them happy, it wasn't near
what a brand new house would cost.
Speaker 1 (36:44):
Well, and a lot of people like all that first
floor stuff, the master bath, the master.
Speaker 2 (36:49):
Bedroom, the great room.
Speaker 1 (36:50):
And if you do take the time to reconfigure a
current home, if you stay in it and your heirs
do decide to sell it down the road, they sell
it a lot quicker because it's been fixed up the way,
you know, to meet that supply and demand that we
talk about.
Speaker 2 (37:04):
All right, thanks for listening.
Speaker 1 (37:05):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station
Tonight, why financial flexibility is the new financial freedom. You're
listening to Simply Money, presented by all Worth Financial on
Bob Sponseller along with Brian James. We've all heard the
American dream save enough money so you never have to
work again. But what if that's the wrong goal. Today
we're flipping that script because financial flexibility, Brian, might be
(00:31):
the new American dream.
Speaker 2 (00:33):
So yeah, so things have change.
Speaker 3 (00:35):
Financial freedom used to be here's my retirement date, and
I'm going to mark all these ex's on the calendar
until it's time to no longer go into the office
ever again, and I'm just going to spend the rest
of my life on the beach. But now people are
feeling a little bit differently, and we hear this every
day here at all Worth as we're sitting down with
clients and prospective clients talking about financial planning. And it's
people who come in and they say, you know, I
(00:55):
thought I wanted to just do a bunch of nothing,
but now I know. So I got family members, I
got friends who have retired and have gone ahead of me,
and sometimes they're just not as happy because they don't
have that sense of purpose anymore. So people are thinking
a little bit differently about something called financial flexibility. So
you know, tend you're a family with maybe one to
five million dollars, and it might be a more realistic,
fulfilling target here. Flexibility means you don't really have to
(01:18):
stop working. You just choose how you work when and
with whom. And a lot of times this conversation, you know,
comes in the form of, let's talk about what you
might do when when this particular job, this particular career
is no longer necessary. Maybe you're not ready to completely
hang it up and let the dust collect on you,
but maybe it's time to seek a new job in
a spot where, you know, where it's not the salary
(01:39):
that matters, and maybe it's not the benefits because you've
already kind of won that game, you know, but it
might be something where you're still bringing a little bit
in come to help bridge the gap during retirement, but
you're not quite ready to completely hang it up and
have no reason to get out of that anymore.
Speaker 1 (01:53):
Yeah, I'm finding I'm having this discussion more and more
with folks that are retiring today than I did with
folks that I started working with twenty to thirty years ago.
Speaker 2 (02:03):
I agree.
Speaker 1 (02:04):
It used to be Hey, I'm fifty eight, fifty nine,
show me how I can get out of there. Now
I can't wait to get out of there and never
go to work anymore. And that's not the case anymore.
A lot of folks, even in their late sixties and seventies,
they want they want a way to do something. They
want to stay involved. They got a lot of experience
(02:25):
in acquired wisdom and value to add to whether it's
the company they worked for for thirty or forty years,
or nonprofits or serve on ministry boards, anything like that.
They just don't want to be chained to a sixty
to seventy hour work schedule. And I'm finding that companies
and institutions are way more flexible than maybe they ever
(02:47):
have before in allowing these folks to be involved and
do some things because it really is a win win
for both parties. Are you finding that with any of
your clients.
Speaker 3 (02:58):
Brian, Absolutely, And one of the big companies around here
that does this is General Electric, so they seem to
be the gold.
Speaker 2 (03:03):
Stand exactly the company I'm thinking of exactly.
Speaker 3 (03:06):
Yeah, there's a conga line of people who have their
retirement dinner and then the very next week are coming back.
Speaker 2 (03:11):
As a as a consultant or doing whatever they do,
and that's just a well worn path.
Speaker 3 (03:16):
It's almost I can't remember the last time I had
somebody tell me that they were ready to retire from
General Electric and they had zero intent on taking that step.
Speaker 2 (03:24):
So it really seems like a good move. Though.
Speaker 3 (03:26):
Those seem to be some pretty happy people because they
get to slough off some of the duties that they
had before. They feel they they do are They do
feel entitled and able to say no to things, whereas
when you're when you're working and you're you're in the grind,
when you're their thirties, forties, fifties, you're just part of
the machine and so forth. But those folks do seem
to have a little more flexibility and they do seem
to be a little more relaxed. And it's a great
baby step into retirement, and I think that can be
(03:48):
a great thing for anybody, just the idea of, you
know what, I'm going to start to back off a
little bit, rather than that.
Speaker 2 (03:52):
Cold water shock of today.
Speaker 3 (03:54):
I get out of bed and I go for my
last day of work, and then I have my retirement dinner,
say goodbye to everybody, and then tomorrow what am I
going to do? That can be a really, really scary thing.
So these sort of baby steps into retirement can be
very powerful.
Speaker 2 (04:06):
Well, let's talk.
Speaker 1 (04:06):
About a different way of of maybe creating those baby
step steps into something else.
Speaker 2 (04:11):
And here's what I mean by that, Brian.
Speaker 1 (04:13):
We've just kind of talked about maybe the ge executive
that worked fifty sixty hours a week. They want to
stay involved, but they want to do it on a
ten to fifteen to twenty hour a week basis. We've
got some other folks that say, I want to make
a complete different career path decision. Maybe I worked in
it or in engineering, or what have you for thirty
(04:34):
to thirty five years.
Speaker 2 (04:35):
For thirty thirty five years.
Speaker 1 (04:37):
I want to open up a wood shop, or I
want to work with orphan children in Zimbabwe. I want
to do something like that. I'm seeing more and more
of those conversations come up. Let's talk about what we
need to be doing as we think about those dreams
and goals and actually make it come into fruition or reality.
(04:59):
What do we need to do in terms of planning
and getting your finances in order right.
Speaker 3 (05:03):
So what you're looking at there is if you want
to be able to figure out, you know, what you
can get away with here. First of all, you got
to make sure that you understand your current situation right.
So you have a current budget, right, whatever it is.
You may not be paying attention to it. You may
not be putting money in envelopes or making sure that
we only spend exit the grocery store or whatever, but
you do have some kind of a lifestyle out there
presumably if you if you are unaware of your budget,
(05:25):
then you are either a very very very financially stable
person where you just know that you're bringing in more
than you're spending, or you're a complete train wreck. So
we'll assume that we're talking to the people who you
kind of have things you know on autopilot and they're okay,
But you need to look really in depth at that
to see what that actually is, because you got to
figure out what is my minimum, what's a bare minimum
(05:45):
I need to get going here? And a good easy
way to do that is to simply take a look
at your take home pay. This is you don't need
to fill out a spreadsheet full of here's my magazine subscriptions,
and here's what we spend at Applebe's on the weekends
and whatever. You can simply look at your take home
pay and figure out what's going where. Top line is,
here's what hits the bank from all of our resources,
from all of our income sources at the beginning of
the month, and then here's where it goes. This goes
(06:06):
to the mortgage that'll be gone in two three. However,
many years we always carve out and put a little
bit into savings. Maybe that's a goal you don't have
to have anymore. This is going to college tuition or
college savings right now, that's a finite goal, and so forth.
Once you knock off all those finite things that have
a limited lifespan, then you will be down to the
money you just spend to be you on a monthly basis.
Speaker 2 (06:25):
That is your target.
Speaker 3 (06:26):
Start with that, and then figure out how can I
replicate that income from my existing sources. And therefore, here
is a gap I need to make, and I can
promise you, if you're one of these stable people, it's
probably a lot less than you think it is. Most
of the time we come up with happy surprises in
those discussions.
Speaker 1 (06:40):
Yep, you're listening to Simple Money presented by all Worth Financial.
I'm Bob Sponseller along with Brian James and Brian. This
is where having a really sound tax strategy comes into play,
and we talk about this often. This is where having
different buckets or sources from which you could take income
divers sources of income I RaSE four oh one k's
(07:02):
after tax accounts, WROTH accounts, blending an income strategy from
those different sources, that's where we could really create some
nice tax efficiency of that gap income as you call it,
and then really make this thing hum in the later years.
Speaker 3 (07:20):
Yes, Now this is where things get more complicated. Right,
So when for people who have worked very hard and
built built their plans and created several different resources. Right,
you've got social security history, you've got pre tax dollars
in your four oh one K, four or three B.
You might have WROTH in the mix. Maybe you've got
some taxbos to all this other stuff. Then everything gets
harder when you get you hit a point where you've
(07:40):
got a lot of resources. All those resources are labeled
and painted differently with regard to taxes. Are all going
to be taxed differently? When we are working slaves you're
paying ordinary income taxes.
Speaker 2 (07:49):
That's it. You got to work.
Speaker 3 (07:50):
Somebody gives you a check, You're going to get taxed
at the ordinary income rates. Period, end of story. When
you've created all of these different resources, now you've got
a choice to make. And congratulations, things just got harder,
and Bob and Brian just got a little more job security.
Because there are any number of ways you can combine
these things into an income stream that will keep you stable.
But each one of them is going to have its
own pros and cons. So let me throw out one
(08:12):
thing though, for somebody who is thinking about this. I
want to make sure that everybody knows of something called
the rule of fifty five. Remember the rule of fifty five? Bob, Yes,
so what we do there? I hate those rules because
everybody's different. You can't apply this rule of whatever to
everybody because everybody's situation is different.
Speaker 2 (08:33):
But I don't want to take you off. That's okay.
Speaker 3 (08:35):
And I threw this softball there and it was a
little I almost hit you in the helmet. Sorry about that,
But no, the rule of fifty five, this one does
apply to everybody, which is nothing more than when you
are fifty five years old. You get to pull money
out of your four oh one K without paying penalties.
So if you are a person who is considering an
earlier retirement and one of your resources is pre tax
dollars in your four oh one K, then know that
(08:57):
you can pull money from the four oh one K
without only paying income taxes. No ten percent penalty, no
early withdrawal penalty. That does not apply to IRA. You'll
notice I said the word four oh one K six
or seven times in that whole exchange there. The IRA
age is fifty nine and a half. That's what most
people think everything is. But if it's a four oh
one K, it's fifty five. You can draw on that
(09:18):
without penalty.
Speaker 1 (09:20):
Yeah, and let's not ignore the whole healthcare question, because
what we're talking about here.
Speaker 2 (09:24):
Is these bridge years.
Speaker 1 (09:26):
You know, if you want to retire early and transition
into something else, and let's face it, if you go
from a for profit business into a nonprofit, a ministry
something like that, the benefits often are not as great,
and you got to sometimes self insure yourself between when
you retire from your company job and when you get
to medicate. We got we got to help people transition
(09:47):
and get you know, good sound medical coverage, and uh,
sometimes people overlook that.
Speaker 2 (09:53):
I know.
Speaker 1 (09:53):
I heard of one lady yesterday who I mean, she
could work anywhere, she's brilliant, but she just decided to
go work part time at Costco, working in some department
of Costco that sold widgets or garden equipment or something
that she was really interested in, solely to get over
there for about ten hours a week, work part time,
(10:14):
but get healthcare coverage. Between her late fifties and when
she could go on Medicare, she's totally happy with her life.
She goes in there, rolls in for her ten hours
a week, she does something completely different, she's out of there,
but she's got that healthcare coverage and good health care
coverage to bridge that gap to sixty five.
Speaker 3 (10:36):
Yeah, and I think that's a great outcome here. I
want to throw out one caveat something to keep in mind.
Eye and I'm going back to this goes back twenty
thirty years when I first started in this industry and
home depot and lows, the big box hardware stores were
kind of new, and there were a lot of always
tend to be older men who want to retire from
my job. I love working with my hands, so I
want to help people do that. That sounds like fun.
(10:57):
So I'm going to go be an hourly guy at
home Depot and lows and that. You still see this
every now and then, but these are hardworking people who
have their stuff together and they will eventually recognize that, hey,
this this store isn't running as as efficiently as it could.
Speaker 2 (11:09):
I'm going to fix it. I'm going to do things.
Speaker 3 (11:11):
And all of a sudden, management notices and you get
a promotion, and then that happens a couple three times,
and all of a sudden, you have a new career
that you didn't want. You only wanted to help people
with their hardware projects a few hours a week. So
just be careful of that trap.
Speaker 1 (11:22):
That's good. Here's the all Worth advice. The question isn't
when can I retire? It's when can I start living
the life I want to live? Coming up next, why
clinging to old investments might be the one thing holding
your whole retirement plan back. You're listening to Simply Money
presented by all Worth Financial on fifty five KARC the
(11:43):
talk station. You're listening to Simply Money presented by all
Worth Financial on Bob sponseller along with Brian James. Hey,
if you can't listen to Simply Money every night, subscribe
and get our daily podcast. You can listen in the
following morning during your commute to work or at the gym.
(12:04):
Just search Simply Money on the iHeart app or wherever
you find your podcasts. Straight Ahead at six forty three.
The lessons you can learn from going into a retirement
time machine, Brian, that's gonna be that's gonna be kind
of fun, all right.
Speaker 2 (12:20):
We see it all the time.
Speaker 1 (12:21):
Someone walks into our office with a portfolio they built
over twenty or thirty years, and it's filled with all
kinds of stuff, Brian. The stocks they love, mutual funds
from Therefore, when k days, maybe even some company shares
from a past employer, and when we sit across the
desk and ask them why they own these certain things,
(12:42):
the answer is often well, I've just always had it,
or it's done well for me, or even it's part
of my story.
Speaker 2 (12:50):
What do you say to those people, Brian?
Speaker 3 (12:52):
You know, Bob, I'm going through this literally today the
other day and through this weekend, just in a slightly
different area of life, and I'm referring to my garage.
I have a lot of unfinished little projects out there
that they're all sitting in the garage about maybe eighty
ninety percent state of completion. And I'm sure whatever they
are where was important to me the day that I
was working on it, but I've completely forgotten about it,
(13:12):
and it's just they're just kind of there. And so
that's a lot of times, that's that's what happens to people,
And frankly, that's what drives people in the door, because
eventually they step way back and finally look at the
forest instead of the individual trees, and they go, what
is all of this stuff?
Speaker 2 (13:25):
What does it mean to me?
Speaker 3 (13:26):
And I've realized and they realized, I'm not even that
interested really in maintaining this stuff anymore. And Bob, that
defines me. I can't remember the last time I changed
my oil in my lawnmower, but it still starts the
day that it doesn't start. All probably higher professional but anyway, So, yeah,
the big people come in and they've got this grab
bag of just stuff that they some of it they inherited,
some of it they bought because they were interested in
investing a while ago or something. Like that, but they've
(13:48):
never figured out exactly what role does all this money
play when they're trying to knit it all together into
something that can help them retire or accomplish their financial goal.
Speaker 2 (13:55):
Yeah.
Speaker 1 (13:55):
The point we're trying to make here is your investment portfolio.
Speaker 2 (13:59):
It's not a scrapbook.
Speaker 1 (14:01):
It's not a half rebuilt Harley Davidson in your garage
with a bunch of tools laying around.
Speaker 3 (14:08):
Or a family photo album. Because dad, grandpa, mom used
to work at this company and that's why we all
own the stock, even though none of us pays attention
to the company anymore.
Speaker 2 (14:15):
Yeah, and you do need to change the oil on
your lawnmower button. Not yet, not yet. I don't it
started this weekend, Bob.
Speaker 1 (14:20):
You'll be surprised when that day comes, all right. The
point with this whole collection of investments is.
Speaker 2 (14:27):
It is a tool. You know, it should be built
to do a job.
Speaker 1 (14:31):
And if it's not doing that job anymore, meaning you're consolidated,
coordinated investment and tax strategy, it might be time to
let some of those things go. And letting some of
those components of your portfolio go it doesn't mean you
were wrong before. It just means you're evolving. And we
talk about all the time investment. This investment business and
(14:53):
that particularly the tax benefits and tax opportunities around investing
has changed in a evolved dramatically over the last ten
to fifteen years. And we find a lot of times
people aren't even aware that some of these strategies even exist.
Speaker 3 (15:09):
Right, So let's take an example here, and I think
you know, having been in this industry both of us here, Bob,
for several decades now. One of the big stories in
the stock market over the last several decades has been
Apple throwing out as an example.
Speaker 2 (15:22):
Because Apple's great companies, strong company.
Speaker 3 (15:23):
They are not going away, but not quite the shining
beacon that they that they once were. Steve Jobs is gone.
Everybody has an iPhone. Things just don't seem to be
innovating the way they used to. But if you've owned
Apple for a few decades, then you have a pretty
good chunk of stock. And also you probably have some
notion that if you were to sell it, if it's
a taxable account, you were to sell it, you're going
(15:44):
to pay taxes. Most people go, oh, I just can't
sell it. I'm gonna have to pay taxes. I can't
deal with that, don't want to have to think about it.
Speaker 1 (15:49):
Well, and then that whole portfolio attachment things comes into play.
Speaker 2 (15:53):
And here's what I mean by that.
Speaker 1 (15:54):
We love I mean we love staring at a statement
or an online know portfolio summary, and we love seeing
that four hundred percent gain every day. It proves to
us emotionally that we were right. We bought a stock
and it went up and we made a bunch of money.
And you just sit there at that and stare at
(16:16):
that big percentage gain and say, this is done.
Speaker 2 (16:19):
Great for me? Why would I ever sell it?
Speaker 1 (16:22):
I you, but a lot of people don't look at
what the performance of that nice stock position is done
maybe in the last three to five years, as opposed
to a diversified portfolio. Do you ever find that?
Speaker 3 (16:37):
I do, absolutely, And then I'll go back to my
garage full of projects. Sometimes you have a statement full
of projects that had a purpose at one point in
your past. So so really, I think that the goal
here is, Okay, now you've got something, what are you
going to do with it?
Speaker 2 (16:48):
So? What what could people do? Let's get into that, bob.
So if this is.
Speaker 3 (16:52):
All money, right, these are all financial instruments and they
should somehow be supporting you otherwise what was the point.
So something you might think about if you've got these
kind of assets out there, if you are charitably inclined
and you've got appreciated stocks, then you should look into
something called a donor advice fund. You can donate those
shares to a donor advice fund. You will reap the
benefits of a deduction which you may not have anymore.
(17:13):
Right when we swit, when the standard deduction became a
lot larger, a lot of people lost the benefit of
deducting charitable contributions. But this is the way a donor
advice one would allow you to make a contribution now,
but not ultimately have the charity receive it until a
time of your choosing. So you make an irrevocable deduction,
now give it to the charity over the same two, three, four,
(17:35):
five years you would have intended anyway.
Speaker 1 (17:36):
Especially if you're one of those folks that's still writing
checks or putting currency into the offering plate at church,
or writing a check to chosen charities, and you're not
even able to take advantage of the much larger standard
deduction for married couples.
Speaker 2 (17:51):
This is a miss that we find all the time.
Speaker 1 (17:54):
And it's great that people are giving money to charity,
but there's just better ways to do it. And to
your point, you can kind of scale out of that
large concentrated position and do it on a much more
tax efficient basis. Another thing that we've talked about recently
and it's worth mentioning here again is direct invest direct indexing.
There are strategies where you can exchange that low cost
(18:18):
based stock for a fully diversified portfolio stocks and not
have to take the tax hit. It's a wonderful strategy.
Speaker 3 (18:26):
Yeah, and that's a way too. Again you're putting diversification
into your portfolio. So let's give a quick example here.
We're here in Cincinnati. So let's say one of us
has a bunch of P and G stock, another one
of us has a bunch of GE and other ones
has a bunch of Kroger and keep adding to the list. Well,
if we sell those because we want to diversify, then yeah,
we're gonna incur capital gain because we sold the stock
and took the game. However, if we all contribute in
(18:48):
kind those shares to another fund, and then we redistribute
shares of that fund to ourselves. Now we have a
more diversified portfolio, and no one has actually executed a
sale resulting in a capital gain. Well, that's called an
exchange fund, and it's another way to deal with the
risk of a position that's got a little too big.
Speaker 2 (19:06):
Yeah, So it comes down to when to reevaluate.
Speaker 1 (19:08):
And the way I look at this is we all
have to ask ourselves. Does this investment that I'm holding
still align with my current needs? Is it helping me
hit my long term plan? Or am I just holding
it because I'm afraid.
Speaker 2 (19:22):
To let it go?
Speaker 1 (19:23):
Or I don't want to walk out into that garage
and clean up all the stuff laying on the floor.
Speaker 2 (19:28):
Starting to sound like my spouse, Bob, I got one
of those two.
Speaker 1 (19:32):
Hey, if you don't know the answer, that's the sign
it's time for a review. Whether it's an old mutual fund,
a legacy annuity, or a chunk of employer stock, you
owe it to yourself to reassess, and reassess that with
a good fiduciary advisor who can help you look at
your various options.
Speaker 2 (19:50):
Here's the all worth advice. Your money isn't your identity.
Speaker 1 (19:53):
It's a tool to build the life you want today, tomorrow,
and into retirement.
Speaker 2 (20:00):
Coming up next.
Speaker 1 (20:00):
It's the most emotional and most overlooked retirement decision, and
we're going to get into it. Coming up next. You're
listening to Simply Money, presented by all Worth Financial on
fifty five KRC, the talk station. You're listening to Simply
Money presented by all Worth Financial on Bob's sponseller along
(20:22):
with Brian James. We talk a lot about how to
downsize your portfolio, but today we want to talk about
downsizing something far more emotional. And Brian, we run into
this often with clients, the whole topic of downsizing your home.
Speaker 3 (20:41):
Yeah, so this comes up in a lot of ways
during financial planning. It comes up in a form of,
you know, people will realize that, you know what, we
don't do we want to be in this house anymore.
The kids are up and out and now it's just
a bunch of bedrooms I gotta clean and that kind
of thing. But what I find, Bob is frequently people
who have come to that conclusion will decide to move,
and then they move into a house that is the
(21:01):
same size.
Speaker 2 (21:02):
I think we get into our heads.
Speaker 3 (21:03):
That well, if I've always lived in a five bedroom house,
that's just kind of what I need. Was just you know,
I don't want to it's too scary to go smaller.
But then inevitably we'll find people, you know, talking about
how they bought too much house and heaven forbid.
Speaker 2 (21:15):
You know, a lot of times there winds up being
a mortgage against it.
Speaker 3 (21:17):
Don't be one of those people who retires and then
puts a thirty year mortgage in place for a bigger
home that you you're just gonna fill with stuff that
someday you're gonna have to drag your good will.
Speaker 2 (21:25):
Well.
Speaker 1 (21:26):
We also talk with families that are struggling with Hey,
they deep down know that this big house that they
raise their kids in and where they've got a ton
of memories and it's been paid off for years, and
they kind of swore to each other they'd never leave
the house. You know, they just feel like they can't
leave because of all these memories. They want to have
(21:47):
a place for their kids to come back, all good stuff,
but sometimes those maintenance costs, taxes, upkeep, it just becomes
a huge burden to them that prevents them from traveling
and doing some other things that they might otherwise like
to do if they didn't have this huge house to
take care of it.
Speaker 3 (22:05):
And Bob, I think this is where some war stories
from our financial planning tables here at all Worth can
come in. So what I'm speaking about is when we've got,
you know, the heirs of their parents. My mom and
dad have passed away, it's time to settle the estate,
and it's time for everybody has received their distributions, and
the very first thing that they wind up talking about
is we're going to get rid of this house.
Speaker 2 (22:26):
Mom and Dad were convinced that we wanted it. We
just didn't know.
Speaker 3 (22:30):
None of us, the siblings, nobody wanted this house because
we've all got our own houses and we're happy where
we are. I think people tend to convince themselves that
I have these warm, wonderful memories and this isn't to
take any of that away, that is important stuff, But
I have these warm, wonderful memories in this structure. Therefore
it must be maintained and passed down. And your kids
have those warm wonderful memories too, and they know it's
important to you. They may not be being upfront with
(22:52):
you as to whether they really want this house. Most
of the time, one of the very first calls that
happens during the settlement of the state is a real
estate agent because we can't let that house sit empty.
Speaker 2 (23:00):
We got to deal with it.
Speaker 3 (23:01):
Something's going to go wrong with it if nobody's paying
attention to it, and we're going to eat property taxes
and expenses as long as we have it, so they're
going to sell it relatively quickly. So you know, we
make make decisions based on that knowledge as you move
forward on your own plan.
Speaker 1 (23:14):
Well, the other thing to keep in mind, Brian, is
the larger the house and the longer you've lived there.
And my wife and I went through this personally, you
know about four years ago, the more accumulated crap you've
got in that house to use your garage and tool example.
Speaker 2 (23:30):
I mean, you stay in.
Speaker 1 (23:31):
A house for seventeen, eighteen twenty years, you raise a
few kids there, and all you got a whole bunch
of stuff laying around in there that you don't need
and nobody wants. And if you end up dying with
that big house and all the crud that's in it,
that can create a whole other set of burdens for
your kids, Like, what are we how are we going
(23:51):
to get rid of all this stuff? Yeah?
Speaker 3 (23:53):
I always think back to seventh grade chemistry over ats
Ainty Nation's on there on the west side when I
think about this a gas element. One of the characteristics
of a gaseous element is that it expands to fill
the container it's in.
Speaker 2 (24:05):
And I got news for you about so do we.
Speaker 3 (24:07):
If I have a big house, I'm gonna fill it
with stuff I probably don't need, but I got the
room for it, So why not.
Speaker 1 (24:12):
You're listening to Simply Money, presented by all Worth Financial
Lumbob spond Seller along with Brian James. Let's get into
taxes and numbers a little bit. Brian, what are some
of the benefits in addition to unburdening yourself with the
huge house and all the stuff that's in it, Let's
talk about tax planning opportunities if you decide to make
a change.
Speaker 2 (24:30):
Yeah.
Speaker 3 (24:31):
So, one of the things that most people are comfortable
is the concept of well, if I own something anything
a stock, a mutual fund, collectibles, crypto, whatever, if I'm
gonna sell it at a gain, then the irs is
gonna come sniffing around for some taxes.
Speaker 2 (24:44):
And that is true most of the time, but not
in this case.
Speaker 3 (24:46):
So if you're sitting on a house that has a
good chunk of equity built into it and you there's
some rules you gotta follow. But basically, with the moment
you downsize that home to a smaller house, you will
have incurred. Again, you can always roll the game forward.
When you're buying a bigger house, that's never a thing.
But when you are, by buying a smaller house, you
get a one time, lifetime exemption where you can take
(25:08):
up to a two hundred and fifty thousand dollars gain
if you're an individual a half million dollar gain per couple, uh,
and you can avoid paying any capital tax capital gain
taxes on that at all. And again this is specific
to a house. You have to have lived in it
for two of the previous five years and that right,
there's no flipping a property here in the short term.
It has to be really be your house, and so
there's some hoops you got to jump through there, But
(25:29):
the point is you can get out from under that
home and avoid capital gain taxes.
Speaker 2 (25:33):
Yeah, one more thing to throw out there.
Speaker 1 (25:35):
If you're if you're thinking and we're not trying to
sell people on, you know, liquidating their home. But a
lot of times people I think they want to make
a change, they just don't know how to go about it.
You know, you talked about the tax implications. One other thing,
just from an emotional and lifestyle standpoint is test it out.
Go rent something that for three to six months or
(25:57):
a year that might be in your wheelhouse or where
you think you might want to live from a lifestyle
standpoint and home standpoint, and see how it works before
you pull the trigger and buy something else or sell
that home that you've been in for twenty years. Test
it out, make sure it's the right move, and then
you're not going to regret your decision down the road.
(26:18):
Here's the all Worth advice. Your home has served your family,
perhaps for decades now, it's time to ask is it's
still serving you. Coming up next, how a retirement time
machine can keep you from making bad financial decisions. You're
listening to Simply Money presented by all Worth Financial on
fifty five KRC the talk station. You're listening to Simply
(26:46):
Money presented by all Worth Financial. I'm Bob Sponseller along
with Brian James. Do you have a financial question you'd
like for us to answer. Well, there's a red button
you can click while you're listening to the show right
there on the iHeart app. Simply record your question and
it will come straight to us. We all want to
know what retirement will look like, but most of us
(27:07):
are making choices today without fully understanding the future impact
at all. What if you could climb into a time machine,
Brian and see the results of your decisions fifteen to
twenty years down the road.
Speaker 2 (27:20):
Wouldn't that be fun? Yeah? This is really an important
part of financial planning.
Speaker 3 (27:24):
So I think a lot of people get hung up
on the idea that you know that I don't know.
I can't predict the future. I don't know what's going
to happen. Therefore I shouldn't bother making any decisions right now.
And that impacts things from how much should I be
saving my four?
Speaker 1 (27:36):
Oh?
Speaker 3 (27:36):
Okay, when do I turn on my Social security? Can
we afford to take this big vacation, or you know,
retire at a certain time or whatever? It's never about
right now. Most people are able to make the decision
that they want and do what their gut tells them
they want. To do right now, but we can't pull
the trigger because we cannot see fifteen twenty years into
the future. So let's go through some mathematical examples here
to kind of help people understand what this is about. First,
(27:59):
we'll take a Mikes, young guy. He's established in his career, married,
he's got a couple kids, brings in one hundred and
fifty thousand dollars a year. Mike's big question this is
we get this all the time. Am I putting enough
away in my four to oh one K? And the
answer to that is, well, what are you trying to
accomplish with it? Are you one of these fire people
you know, financial independence, retire early? Well, then the answer
is put as much as you can possibly afford and
(28:20):
not mess up your current bills. Or are you somebody
who wants to live a certain lifestyle. You're just trying
to make sure you're putting away a minimum of enough.
So Mike right now is putting ten percent into his
four oh one K. That's pretty average, that's pretty pretty standard.
We try to get everybody to double digits and then
you'll be in the ballpark of OK. But he's wondering, well,
what if we sacrifice some things now and instead of ten,
I put twenty percent in and my pay drops, my
(28:40):
take on pay drops now.
Speaker 2 (28:42):
But at the same time, I'm putting away more money.
Speaker 3 (28:44):
So his original plan, Bob, if he's putting away ten
percent and we get a seven percent annual return, right
that is that's kind of the Goldilock zone.
Speaker 2 (28:51):
That's not too high, not too low.
Speaker 1 (28:52):
It's not unreasonable, good balance portfolio, long term, not super responsible,
responsible return of something.
Speaker 3 (28:59):
Yeah, now forty year guy could be more aggressive. That's
a little bit of a different story. So we're just
trying to keep the number simple. So if Mike does that,
he works for twenty five years and now he's got
roughly nine hundred thousand dollars in today's dollars, that's a
nice pile. He's going sixty five, and he's sixty five,
so he's forty. Now we did this for twenty years,
what's the difference. So he right now could generate about
maybe a reliable fifty thousand dollars a year worth of
(29:21):
income off of that. On top of his he'll have
SoC security and some other things as well, and that's
pretty good, but it might limit them. They may maybe
back off on the travel, or maybe there's not as
much going to the grandkids the rest of the family.
So let's look at it again. Mike, who is again
now forty, decides, you know what, let's forego some of
the take home pay. I'm going to bump to twenty percent.
What does that result in now putting twenty percent of
(29:41):
his salary away for twenty five years, Now he's got
one point eight million.
Speaker 2 (29:46):
This is just math. This is the snowball effect. You know.
Speaker 3 (29:49):
The bigger the numbers, the larger the snowball gets. And
this really starts to change the game because now we're
talking ninety thousand dollars in sustainable retirement income. Again that's
in addition to Social Security. All that stuff is back
on the table. Retiring earlier, taking the bigger trips, helping
the grandkids, all of it's back.
Speaker 1 (30:05):
Well, and we we we need to talk about one thing.
And I'm going back in time, you know, reverse time machine.
Remember Mike's forty and he has two kids. Uh, those
two kids cost money. So Mike's probably right in the
middle of travel, sports, music lessons, you know, ballet lessons,
all that stuff. He's probably saying, yeah, Bob and Brian,
(30:26):
it'd be great to put twenty percent of my income away,
but I got bills, you know, to cover today, so
it is a balancing act. It's easy for us to
pull out a calculator and say, yep, you could have
one point eight million dollars if you save all this money.
I think the point we're trying to make is at
least run some numbers and just don't hope all this
(30:47):
works out at age sixty five, seventy seventy five. Run
some numbers when you're early in your early forties, and
then you can make some informed decisions on hey, if
I sacrifice a little bit, now, here's the benefit that
it's going to pay down there.
Speaker 3 (31:01):
And as a financial advisor, I would say to Mike, yes,
that's exactly correct. You've got stuff screaming for money now.
But I would say, Mike, do you know your own worth?
You've been at your job for a couple of decades now,
and you're a loyal guy and so forth. Are you
sure you're being paid what your experience says your worth?
Have you looked at other opportunities out there? Have you
talked to your bosses about you?
Speaker 1 (31:19):
Know?
Speaker 2 (31:19):
Where you are?
Speaker 3 (31:19):
So sometimes you can simply increase what's coming in at
the top, then you can find extra dollars. But again
that comes back to knowing what your value is and
not wasting a bunch of time getting underpaid.
Speaker 1 (31:28):
You're listening to Simply Money, presented by all Worth Financial
on Bob Spon Seller along with Brian James. Brian introduced
us to Lisa. Let's look at another test case here.
Speaker 3 (31:38):
Okay, so a little bit of a different situation. So
Lisa's got she is a little bit nervous, and so
she's got a half million dollars that she has put away.
We don't know where it came from. Of course, maybe
she inherited it. She just let it build up over time.
This is not retirement money, but it's just sitting in
a money market fund earning about three percent. So she's
got about thirteen years until retirement, which means at that
(31:58):
three percent good safe rate, that's going to grow to
about seven hundred and twenty five thousand dollars. And she's
also in her retirement account, she's got an extra two
fifty so now she's got about nine to seventy five total,
and that's not terrible, but she's drawing down that principle
pretty quickly, and so mathematically Lisa will be out of
money by the time she's eighty or thereabouts. So let's
do this again. Let's say that she takes that half
(32:21):
million and doesn't buy into the notion that the stock
market could go poof tomorrow. I always love that argument, Bob,
where people so well the stock market it goes down
because so and so lost all his money. I'm looking
at the S and P five hundred right now, it
still exists, Kroger is still open, P and.
Speaker 2 (32:33):
G is still open. Stock market doesn't go away.
Speaker 3 (32:36):
So if she puts it in a conservative balanced portfolio,
that would earn about six and a half percent by
average on by about eight sixty five. Now her half
million is one point one million dollars. Add her existing
two fifty to that. Now she's retiring with a net
worth of a one and a half million dollars. That
is a big difference between scraping and by just paying
the bills and having a nice, comfortable life.
Speaker 1 (32:55):
Well, and it's a huge change. And the nice thing
is it didn't require any sacrifice. She didn't have to
earn more money, she didn't have to cut back on
her current spending. All she had to do was change
her investment strategy and be open to something that has
worked for decades and decades and decades, and just take
advantage of what the markets give you over a long
(33:16):
period of time. And again, she didn't get an extra
twenty years to save her money. She didn't win the lottery.
She just made smarter, more intentional choices now in order
to get those huge dividends down the road with making
no other changes in her lifestyle. Here's the all Worth advice.
The future isn't a mystery. Oftentimes it's a math problem,
(33:38):
and the earlier you solve it, the better your retirement
story will probably end. You're listening to Simply Money presented
by all Worth Financial on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial
on Bobs fun Seller along with Brian James and Brian
(33:59):
on Mike two. I'm gonna give you my two cents here,
just another story on this whole Should I switch to
a different house scenario and we talked about a couple
of them during the prior segment. I'm gonna share one
that I've run across more often than not, and I
want to spend a few minutes on it, get your
take on it in a story time with Bob's Bonds
story time. A lot of times people say, hey, Bob,
(34:22):
we want to downsize. We want to sell our big
house and we want to buy a ranch with everything
on the first floor in a big great room. And
so we're gonna sell our four or five bedroom house.
We're gonna pocket all that money, and we're gonna be
able to go out and get this beautiful ranch that
has everything on the first floor, and that'll solve all
(34:42):
our problems going forward. What they find, what I find
oftentimes is they have not gone out and looked at
the cost of this ranch home. Factored in the part
that everybody wants a ranch home with the main bedroom
and bathroom on the first floor in the big great room,
and those houses cost a lot of money. And when
(35:03):
people go out and start looking at it, they find
that they're really not going to save any money. And oftentimes,
by the time they fix up that ranch house, they're
looking at spending more money than the what their current
house is worth. And it was they rationalized making a
decision quote unquote downsizing, and they didn't really downsize at all.
Speaker 2 (35:25):
Have you ever seen that one come down? The Absolutely?
Speaker 3 (35:27):
And I think this is a big supply and demand
discussion because there's tons of You can drive anywhere around
Cincinnati and see new subdivisions going up.
Speaker 2 (35:33):
How many of them are full of ranch homes? Right?
Speaker 3 (35:35):
And I'm not referring to the ones where are all
patio homes retirement type communities.
Speaker 2 (35:39):
A lot of people aren't quite ready to take that
step yet.
Speaker 3 (35:41):
They want a ranch home in a more traditional neighborhood,
but those don't exist anymore because the builders can't make
as much to build them.
Speaker 1 (35:46):
Yeah, and here's the point I'm trying to make here.
Count the cost and take your time before you delve
into this. Oftentimes, if you spend a little bit of
money on an architect and take your existing four bedroom
home with the master bedroom and bath on the second floor,
and convert your first floor to accommodate all that, you
can find that you can spend less money staying put,
(36:08):
putting a little money into that is existing home, staying
in that neighborhood that you love and have been there forever,
and really win as opposed to just making a rational
short term decision that you might be surprised at how
much money and aggravation it costs you.
Speaker 3 (36:24):
Yeah, I've had some clients go through this where and
I joke with them, and there's more than one where
they almost financially speaking, built a house inside of a house.
They spent a significant amount of money improving their place
for this exact reason, but it prevented them from having
to buy a whole new place and incurring those expenses.
So even though it was significant to reconfigure their house
to something that would make them happy, it wasn't near
what a brand new house would cost.
Speaker 1 (36:44):
Well, and a lot of people like all that first
floor stuff, the master bath, the master.
Speaker 2 (36:49):
Bedroom, the great room.
Speaker 1 (36:50):
And if you do take the time to reconfigure a
current home, if you stay in it and your heirs
do decide to sell it down the road, they sell
it a lot quicker because it's been fixed up the way,
you know, to meet that supply and demand that we
talk about.
Speaker 2 (37:04):
All right, thanks for listening.
Speaker 1 (37:05):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station
Simply Money News
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