January 5, 2026 • 39 mins
On this episode of Simply Money presented by Allworth Financial, Bob, Brian, and Allworth Chief Investment Officer Andy Stout dig into what the economy and the markets might hold in 2026. Plus, Bob and Brian dive into the cognitive and health risks of retiring too early, the financial tune-ups every empty nester should consider, and why having five advisors isn’t a financial strategy—it’s a coordination problem. Real-life stories, real retirement challenges, and advice that high-net-worth families won’t want to miss.
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Speaker 1 (00:06):
Tonight look at what the economy and the markets might
hold for us in twenty twenty six. You're listening to
Simply Money, presented by all Worth Financial on Bob Spondseller
along with Brian James. Well, it's the first Monday of
twenty twenty six, and many might be wondering will the
market have another banner year? Is a recession on the table.
(00:26):
We want to kick things off with the new year
with ALWORS Chief Investment Officer Andy Stout as a reminder,
Andy manages a little more than thirty five billion dollars
worth of investments for all WORS clients from right here
in Cincinnati, Ohio. Andy, thanks for being with us tonight
and walk us through just some highlights to remember from
(00:48):
twenty twenty five, and then kick us off on what
we might expect here in the new year.
Speaker 2 (00:55):
Thanks for having me in Happy twenty twenty six. And
when we look back at last year, there's a lot
of things I think investors forgot about. To be honest
with you, I mean, if you think back about a
year ago, not quite a year ago from now, but
that's when we started to see a pretty large sell
off start to occur. I mean the market s and
P five hundred fell about nineteen percent from February to
(01:19):
early April period. And if you if you recall we
had Liberation Day where we had President Trump, you know,
holding up that board with all these different terarif rates,
and you know, the market panic and you know we're
going to see massive trade wars, We're gonna see inflation
spiral out of control, and basically the world will come
to an end as we know it. That obviously did
(01:41):
not happen, right, the world did not end. We are
still here. It is twenty twenty six. We were able
to make it through the year. And inflation during that
time period, it was elevated, it was sticky, but it
was nowhere near the fear that the levels that people
feared about. And when you look back at economic growth, yeah,
you saw some front running on those terraffs.
Speaker 1 (02:02):
Right.
Speaker 2 (02:03):
If you remember, we actually had negative GDP and Q
one we did not have a recession last year, but
we did see about half a percent negative. But we
saw a massive rebound in Q two where the second
quarter of GDP went up to about three point eight percent.
So for the entire year, we obviously don't have the
fourth quarter data yet, but we'll probably end up somewhere
(02:24):
around two and a half to three percent for the
entire year. So despite those big concerns on the terror
side of the world, you.
Speaker 1 (02:31):
Know, we progressed, we moved forward.
Speaker 2 (02:34):
We also had the other big concern in last year
because people you know, may have they probably didn't forget
this one because it's still top of mind. It says
AI evaluations.
Speaker 1 (02:43):
Right.
Speaker 2 (02:43):
When we think about the stock market, we think about
the gains being concentrated in a few names as artificial
intelligence names. Uh, and really we'll probably see a little
bit of a shift and we'll talk about that when
we get into twenty twenty six on the AI side
of the world. But those companies, the capital expenditures or
(03:03):
that business spending that they were doing continued and that
did actually help with the overall economy. You know, it
wasn't just something to talk about on the margin. It's
the investment in these data centers that these large companies
are doing, and the reinvestment in themselves to help foster
AI overall growth really did help the broad economy and
(03:25):
did help the stock market too. So if you're an investor,
I know, AI might be a little scaries sometimes but
most likely benefitted from it.
Speaker 3 (03:32):
Hey, Eddie.
Speaker 4 (03:32):
One of the big headlines all year long and twenty
twenty five was interest rates, which in looking back now
that you know hindsight of course being twenty twenty, would
you say the Fed's rate decisions were proactive meaning they
were trying to affect the future direction or were they
more reactive waiting for news to appear and then making
a decision based on that.
Speaker 2 (03:52):
I think they wanted to appear data dependent, but when
push came to shove, I think they were really just
kind of listening to the market and following the market's
lead up. I mean, they're trying to be trying to
be data pended. But then we had to shut down
and then there was like not much data to actually
be data that depended on and still the FED cut
rates during that time period. So a little bit of
(04:15):
irony right there. But from the FEDS overall perspective, you know,
I think they did a decent job of trying to
be proactive. I mean, I mean, let's just flate face it.
Inflation hasn't gone away. It's still elevated, and at the
same time we've seen the job market. You know, we
can there's cracks. It's not crashing, but there are certainly cracks.
And we'll talk about that slowing momentum in the bit
(04:36):
that said that puts the FED in a tough position,
right because of inflation's eye, interest rates should be high
to fight that, but if the job market's weak, interest
rates should be low. They can't have both at the
same time. So, you know, they're trying to navigate this
transition period and I think they're doing an okay job
as far as that goes, because it's not a perfect
situation for them by any stretch of the imagination, but
(04:58):
they're they're navigating it. Not a basis I would say.
Speaker 3 (05:01):
Well, okay.
Speaker 4 (05:01):
So with regard to asset allocation diversification, there's always, you know,
there's always if you're going to spread your risk out,
there's always one asset class that does really well and
one that kind of lags.
Speaker 3 (05:11):
What would you say, let's talk about the laggards.
Speaker 4 (05:13):
What would you say, was the some of our weaker
asset classes that we saw and then do you see
that continuing or do you feel like maybe it's, uh,
we're gonna see things that rotate a little bit.
Speaker 2 (05:23):
Yeah, Well, last year. I mean, we saw a lot
of winners in all honesty, whether you're looking at large caps,
mid caps, or small caps. It happened in spurts. I mean,
at the beginning of last year, small caps were the
big lagger, but they certainly made up some ground near
the end of the year. So you know, from that perspective,
the returns weren't materially different in all honesty when you
(05:46):
look at it at the sector level. I mean, what
you saw you saw Tex essentially on telecom, which is
you know, some tech companies in there as well. Those
were the big winners. And again similarly to just large
cap space in general, you know a lot of their
games that come in the i'll call it the first
two to three quarters of last year. The fourth quarter
wasn't nearly as strong for tech compared to some other areas,
(06:09):
but you know, they were the leaders. Now, whether or
not they continue to be the leaders, that's where it's
going to be really interesting, because they essentially had a
really good twenty twenty five because of the business spending,
because of the cap X, because of the implied demand
that other businesses would have. When it comes to AI,
what we expect to see this year is a bit
(06:30):
of a transition on the AI side. It's really going
from who's spending to who's benefiting. So we want to
be able to see as AI moves from capax and
paying attention to the business spending to see where that
margin improvement is coming. So it's not going to be,
you know, a January or February story, It's going to
be a full year story where do we see margins
(06:52):
improving because of artificial intelligence? And it's that bottom line
benefit to earnings that's really going to support the overall
market if that is able to progress.
Speaker 1 (07:03):
Well, Andy, listening to those points you just made, and
then also following up with Brian's question about asset allocation,
you know that that leads directly into my question, which
is do you expect a broadening out on where some
of the growth or returns from stocks are going to
happen in twenty twenty six? Case in point, when I
look at a even cap weighted sm P five hundred index,
(07:25):
we really didn't have a whole lot of movement during
twenty twenty five. You know, most of the gains that
we got that sixteen eighteen percent gains in the overall
market were in these big cap tech stocks. To the
point that you just made, is this going to start
to broaden out in terms of return because now hopefully
the companies that invested wisely in AI technology are going
(07:48):
to actually see their margins improve irrespective of what industry
they're in. Is that something to look for in twenty
twenty six. Yeah.
Speaker 2 (07:56):
I mean if you look at the like an equal
weight INDEXO as opposed to a market cap index, which
will have like your apples, your amazons, your metas of
the world really influencing the overall turns, but instead everybody
gets treated equally in terms of an allocation perconage. I mean,
you saw definitely a pick up in the basically the
(08:17):
last half of the fourth quarter last year. Now will
that continue? You know, I think there's a good chance
that it does continue, that we do see and that
spread out just because you have started to see when
you look under the hood, a little bit of a
rotation at the individual equity side. When it comes to that,
and when you have these types of rotations, they usually
(08:40):
start for a reason. The question is whether or not
they'll continue, and that reason is the benefiting on the
margin side. But it's also valuations, these companies are more
attractive from a valuation standpoint. I mean, if you look
at how much you're paying for a dollar of earnings,
you know they are much much more. You know, they're
just less expense and so I don't want to say
(09:00):
they're cheaper, because they're still not cheap by need to
stretch of imagination, but they are You're paying a lot
less per dollar earnings when you look at that price
to earnings ratio. So, you know, without getting too much
into the weeds, because you know, that's probably not too
fun for many of the listener listeners out there, you know,
I would say, you know, the broad exposure, the broad
(09:22):
participation that we've already seen at the end of last year,
there's a good chance that it does continue.
Speaker 5 (09:27):
Andy, do you think there's anything looking back again twenty
twenty five, Is there anything that didn't get the attention
of the markets that you thought it should have, And
do you think if there is such a thing, do
you think that'll resurface here in twenty twenty six.
Speaker 2 (09:40):
You know, one thing I think we're going to see
resurface early this year that it got the attention it
deserved early on, but then faded was the big beautiful bill,
So most people kind of forgot about that because they're like, oh,
it passed and this is going to be great, but
then no one really saw much much benefits from it.
Now people are getting ready to pay their taxes, file
(10:01):
the taxes, and what you're going to see is you're
going to see a larger than normal refund and this
is a fiscal easing, if you will. That's going to
have a direct impact on GDP in this first quarter.
So when we look at fiscal support for the US,
it's essentially front and loaded into the first quarter. So
what I would expect, I would expect that we actually
(10:22):
see a pretty decent Q one GDP reading. We'll see
where this all pans out. But we got the fiscal
support early on. From a monetary policy perspective of the Fed,
we have seen that improve right, I mean a year
and a half ago, we were at five and a
half percent an hour, about three and three quarters. The
thing to keep in mind, what people don't appreciate to
(10:43):
get your exact question, Brian, is that there's a lag
defect on these things. So when the Fed lowers rate,
it usually takes about six to nine months for it
to really impact the broad economy. So we're getting to
that point in time to where the early part of
those rate cuts, in the middle part as well are
going to start to have a positive improven So when
(11:03):
you look at the fiscal support from the government, you
look at the monetary easing and the lag effects now
impacting the economy in addition to continued AI spending at
least on the front end of things, you know, we're
looking at a pretty solid setup for twenty twenty six,
and we do. And what that means is, you know,
low recess and risk to start the year, probably through
(11:24):
the next quarter as well, and more broadly, just continue
to growth. And I do want to sound like some
sort of you know, eternal optimist if you will, but
we are set up for twenty twenty six in a
way that should be broadly positive for the economy.
Speaker 1 (11:40):
Would you say the same thing is going to positively
potentially impact GDP with all these accelerated depreciation rules as well,
Is that going to accelerate or maybe pull forward some
capex spending into the early part of twenty twenty six
on the part of companies.
Speaker 2 (11:55):
Yeah, So when you're talking about the early depreciation. What
that means is businesses can spend end on things, big items,
big ticket items, you know, all of a sudden, they're
able to essentially you know, expense those overall right away,
and that's going to lower their tax impact. So that's
what that's what you mean right there, And yeah, that
can have a big impact. I think it will be
(12:16):
very helpful for the overall economy. And that is another
you know, impact or a lever that we're going to
see getting pulled here early on. And I think it's
going to be something that does continue. And I think
when you think about the big picture side of the world,
you also have to think about inflation and the labor market.
But when you put it all together, you know, inflation
(12:39):
is still sticky for some time, but probably still starts
to a mediate labor market I'll call it. We're starting
the year off of some weak momentum, but with a
strong enough consumer and we got that GDP levers that
we've just talked about, you know, that should keep the
labor market aflow.
Speaker 1 (12:56):
All right, We'll have to leave it there for jo
N and Andy. As always, it's going to be real
fun to sit back and watch what actually happens this year.
A lot of people dream of early retirement, But what
if stopping work too soon actually hurts your health and
shortens your life. We've got new research to discuss on
that topic. Next, you're listening to Simply Money, You're said
of my Allworth Financial on fifty five KRC, the talk station.
(13:24):
You're listening to Simply Money, You've said of my all
Worth Financial arm Bob Sponsorer along with Brian James. If
you can't listen to Simply Money live every night, subscribe
and get our daily podcasts. Just search Simply Money on
the iHeart app or wherever you find your podcast. Straight Ahead,
Eric's wrestling with a big tax hit on new stock appreciation.
(13:45):
You know, Karen's portfolio just got too complex to manage
on our own. And Joe's wondering if downsizing makes sense
Right now, real questions will hopefully provide some smart answers.
Straight Ahead at six forty three, so many Americans, maybe
even you, dream of retiring early. Get out of the
(14:05):
rat race. No more meetings, no more commutes, just absolute freedom.
But there's a new conversation taking place, Brian, and it's
not about whether you can retire early, based on whether
you have enough money. It's about whether you should because
it might not be as good for you as you think.
Speaker 3 (14:25):
Well, I don't think that's a new conversation.
Speaker 4 (14:27):
That's in a conversation that I have every single day
in my office, and I'm sure you do too through
the planning process. But USA Today picked up on it,
so therefore it's new to them anyway. So so polling
coming from USA Today, a sixty percent of Americans say
that their dream is to retire early. But we get
some figures that from the National Bureau of Economic Research
that did a study of people in China, a little
(14:48):
bit of a different mindset over there, but when they
take early retirement over there, through this new pension program
they have, they see about a thirteen percent drop in
cognitive performance, memory, attention span, brain functioning, you know, the
kind of stuff that actually can make retirement fun if
it's in good order.
Speaker 3 (15:03):
And that's this is.
Speaker 4 (15:04):
Why we all say we want to retire earlier here
in the United States. Well, over there it's such a
work driven economy that as soon as it was going
to say, on, yeah.
Speaker 1 (15:13):
If I lived in China, Brian, I think I'd want
to be retired too, but go.
Speaker 4 (15:16):
Ahead, yeah and so, but basically the brain shut off
and I'm just gonna go out on a limb here
and say, there just might not be as much of
a dream of retirement and freedom and all that kind
of thing over there in China as there is here.
So the so, how do we compare that to the
United States? Well, similar results. So there was a study
published by the Journal of Epidemiology and Community Health found
that people in the United States who were retired at
(15:38):
fifty five were twice as likely to die early compared
to those who are retired at sixty five. Now that
this don't don't assume that this means that your job
is the only thing standing between you and the great beyond.
But what it does suggest, though, is that retirement when
it's early and unstructured, in other words, a.
Speaker 3 (15:53):
Miserable hate this job. Got to get out of this
and I'll figure out what I'm going to do later.
Speaker 4 (15:57):
Without a plan, that can lead to a lot of isolation,
which leads to less daily movement, physical movement, and fewer
reasons to stay mentally sharp. And all of a sudden,
the hill, the downhill ride is kind of steepening on
you a little bit.
Speaker 1 (16:10):
Yeah, Brian, I think you raised a good point before.
I mean, we when we have people come in and
talk about retirement now, very few people are saying, Hey,
I can't wait to just quit my job and do
nothing and sit in a rocking chair on the front porch,
or just play golf, you know, sixteen hours a day.
You know, people are already more thoughtful about this. People
(16:32):
are talking about what am I gonna do with my
time and energy and my mind, you know, to your
prior point in advance. So I think we've seen a
healthy evolution in this whole retirement processing in advance. But
for those that maybe are starting to think about this,
here's three questions to ask yourself. Do you want to
(16:52):
stop working or just stop doing your current job? And
how how will you stay mentally and socially active if
you do retire early? Those are big questions to answer
and hopefully answer in advance. In other words, is early
retirement your really your goal? Or is just flexibility having
more flexibility and freedom in your life your real priority.
(17:15):
I think those are three wonderful questions to ask.
Speaker 4 (17:18):
Yeah, and I think a lot of times, you know
it's exactly that, and you know, a lot of people
wind up frustrating their careers. You know that they've gone
as far as they want to, or maybe as far
as they can, or maybe the writing is just on
the wall and the company is kind of moving on
beyond there in their level of interest.
Speaker 3 (17:30):
But that doesn't mean they're ready to retire yet either.
Speaker 4 (17:32):
So I think the really, really, really important thing to
be thinking about is we all tend to hide behind
the dollars and waiting until I, you know, I think
I have enough perceived money that I can actually get
away with retirement, And we tend to focus on that
to the detriment of the time because once we do
get that, oh by the way, hey, people who focus
on that number tend to work too long and they
(17:55):
wind up surpassing that number because they didn't have a
plan to begin with, so they might hit that and
plow right past it because now they don't know exactly
what they want to do, and retirement just becomes terrifying.
So start to think about what it is you might do.
Are there smaller organizations where your skills would be valuable
and you could potentially go work for them for some
level of income. But remember the whole point of this
is you don't need the salary anymore, and you probably
(18:18):
don't need the benefits as much as you used to either.
So think big, think outside the box. Go on websites
like indeed and type in random words of stuff you're
interested in. Just a keyword search, see what kind of
jobs that are out there. You'd be shocked at the
kind of things that people will pay you to do,
to take advantage of the skills that are in your
brain that you developed over all those years. But don't
(18:39):
focus only on the light at the end of the tunnel.
I got to get out of this job and I'll
worry about the rest later. That hits like a freight train.
You really have got to spend some time thinking about
how you will fill the vacuum of time that you
will have when you no longer have to work.
Speaker 1 (18:52):
Yeah, the real sweet spot here to me, Brian, is
being in a position where you can make decisions based
on what you want, want to do and feel called
to do, not what you feel like you have to do.
That that's really retirement freedom, and there's a lot of
factors that go into that. Obviously, money is won, but
you got to plan ahead and kind of look around
(19:14):
here at how you're going to fill your time and energy.
Because at the end of the day, whether it's your work,
volunteer work, you know, relationships in the community. Everyone wants
to have some purpose and meaning in their life and
they want to have contact with other people. And if
you don't have those things, some true community in your life,
(19:35):
I don't care whether you're worth five dollars or fifty
million dollars, your life's going to be empty. Here's the
all Worth advice. If you're dreaming of early retirement, that's great,
but make sure you're planning for more than just financial freedom.
Plan for purpose too. Coming up next, we've got the
money makeover for all you empty nesters out there. You're
listening to Simply Money presented by all Worth Financial on
(19:56):
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial on Bob Sponsor along
with Brian James. There's this moment every parent eventually hits
you after the last kid moves out, when you walk
past that empty bedroom and it just socks you right
(20:20):
in the mouth. Oh, while it's quiet in there. I've
experienced that. Brian, my wife has as well, and right
after that you start thinking, Okay, what do we do
with all this space and potentially what do we do
with all this money we've been spending on travel, baseball
and college tuition and all that. So, you know, the
(20:41):
point we're trying to make tonight and kind of walk
through is when you hit that empty nester phase, it's
not time to just you know, go out and spend
all that extra money you might have have laying around
or think you have laying around. It's time to take
some inventory on where does life actually pan out right now,
(21:02):
and maybe some some tune up work that needs to
be done to your overall financial plan.
Speaker 4 (21:07):
Yeah, so an empty nester money makeover, I think, is
what you're referring to there. So you already refer to
the expenses that may be gone, all those things that
the kids were into that you know aren't costing money anymore.
Speaker 3 (21:17):
So let's talk about the house.
Speaker 4 (21:18):
So the structure of the house, of course, is still
the same in congratulations because it's still standing.
Speaker 3 (21:22):
That's a good thing.
Speaker 4 (21:23):
But you don't need all that space. So what about
that old bedroom. Maybe it becomes a yoga room or
a guest suite, or the sports bar, but probably what
it will become first is a glorified storage unit for
you know, twenty band, twenty years of marching band trophies
and old posters, legos.
Speaker 3 (21:38):
And that kind of thing.
Speaker 4 (21:39):
So money works the same way. When the kids are gone.
It's sort of like you just cleared a giant room
in your financial house. So what do you want to
do with those resources that you have next? Well, one
of the first things to look at is that cash flow.
So as we mentioned, a lot of those regular expenses
are gonna disappear. Your grocery bill's gonna drop when they
hit a certain age. Eventually, your car insurance is gonna drop,
you'll hand off their cell phone, those college payments go away.
(22:01):
But without some kind of planning those extra the absence
of those expenses is going to give you extra spendable money,
and it could result in we've got this stuff, so
we might as well blow it on things, and you
maybe you wind up with a fancy your car, more
eating out, and then you may wind up regretting that
you didn't really have a plan for it.
Speaker 3 (22:18):
So just think about it in advance. Think about it
like this.
Speaker 4 (22:21):
If you take down a wall in your house, you
could fill that new space with clutter, or you could
open it up and make it more functional for something
you actually want to do. But the point is you
will have fought in advance for what you want to
do with those new added resources that you have. So
maybe it's funding those catchup contributions in your four one okay,
increase that amount, or IRA contributions roth IRA backdoor contributions
(22:42):
if if that's something that you're familiar with. If you're
over fifty, you can put in a little extra each year,
and for those in their early sixties, there's even a
new catchup So these dollars sometimes aren't present at the moment,
but remember these opportunities when you do hit this empty
nest stage of life.
Speaker 1 (22:58):
Well, Brian speaking to take that wall down and having
the option of just having a bunch of clutter. My
wife and I are living this right now, so I'm
giving you a preview of what your life is likely
going to become. All three of our kids are out
of college. They're all living on their own now in
their own separate homes and dwellings, but a lot of
their crap is still in our house. You know, it's funny.
(23:21):
We my wife will go through. She does a wonderful
job of keeping our home clean and clutter free, but
she'll periodically go through and find all you know. You
use the analogy of marching band trophies. I mean, whether
it's that or athletic trophies, are just close, you know,
stuff laying around and she'll go to the kids and say, hey,
you moved out. Are you going to take this stuff
with you? Nope, don't have room for that. Can you
(23:43):
keep it? So a lot of the stuff never goes away.
It's a process, all right. Speaking of the house, and
this is a topic that comes up a lot. People
talk about wanting to downsize or right size their home.
This this is a big emotional and financial topic. Some
people dream about downsizing, while others love their current home
(24:07):
and plan to stay put, even if they have two
or three bedrooms that are completely empty. The point I
make here, Brian, is a lot of times people talk
about downsizing. I don't know about you. I have yet
to see the client. And I've been doing this for
thirty five years. I've yet to see somebody sell their
primary residence and move somewhere that ends up costing less money.
(24:31):
It might be smaller, but it ends up being newer
with you know, with nice, with nice furnishings. It never
costs less money. People want to rationalize this by making it,
you know, calling it downsizing. It's really not when it
comes to finances. So just you know, buyer beware out
(24:52):
there when you start talking about the whole downsizing conversation.
Does this ring true with you and your clients as well?
Speaker 4 (24:59):
There's no such thing is a financial downsizing. When it
comes to your house. There's an effort and work downsizing.
You can reduce the amount of work you got to
put into it, but you're not gonna save any money.
Even if you buy a smaller house, it's most likely
going to be in a nicer neighborhood or an area
you always wanted to live in that kind of thing,
and you're probably not the only one who wanted to
live there. Therefore, the expense the purchase it goes up.
So don't think money when you think downsizing. So what
(25:22):
do we do about this, Well, you can do what's
called a retirement rehearsal. So once the how you've noticed
the house is quiet and that budget is a little lighter,
well that's the time for a test drive. So maybe
live for six months on what you think your expected
retirement income is gonna be, and that might be so security,
pension investment withdraws or rental, real estate income, that kind
of thing. See how that feels, and you're gonna learn
(25:42):
quickly if the plan works, because you'll know right away
when you're dipping into more than what you thought you
were going to. And then you're gonna be because this
is you're not making a real sacrifice at this time.
You're just kind of test driving, so you're gonna you'll
know if you need a little tune up before that
paycheck stops. So it's kind of like taking the RV
on a weekend trip right before you actually buy it
for real, before you hit the road full time. You're
gonna want to test it before you're thousand miles from
(26:03):
home and see if you run across any problems you
didn't anticipate.
Speaker 1 (26:06):
One more thing. I think that is a wonderful idea
and I wish more people did this, And I'm in
the middle of crying to do this right now, you know,
with my wife actually constructing a budget and looking at
what this is really gonna look like. If life's gonna
resemble what we think it might resemble. I think it's
really good to test drive this in advance. But go on, Yeah,
(26:29):
and so one more thing to do.
Speaker 4 (26:30):
When you've got this free time you're gonna be Remember
the whole point of this is that the kids are
going they're out on their own. You're gonna start paying
attention to what it is they do and how they
live their lives. That's gonna be a bit of an
estate planning tune up for you. So you're gonna need
help sooner or later. Someday you're probably already in a
situation where you yourself are helping your own parents, and
so this is the time to learn which kid might
make the best executor, who is the one who can
(26:52):
make decisions on your behalf. This is yes, this is
years into the future, but you sooner you put this
stuff into place, the sooner you cannot think about it,
enjoy and enjoy retirement more. And then you'll be thinking
about which of my kids are good on their own
and I can trust them, you know, inheriting money at
my death, Which of them made me have some more
challenges and may require a little extra care for which
(27:12):
I might need a trust and a trustee in place.
So estate planning isn't just about passing that money. It's
about making life easier for the family later, especially for
those of you who have been through a difficult estate
settlement process, for maybe your own parents. So think of
it like labeling those boxes in that remodeled home. You're
saving everyone from chaos down the road by planning ahead.
Speaker 1 (27:31):
Here's the all with advice. An empty nest is your
chance to reimagine and possibly refill your future. You know
you should be diversified, but what does being quote unquote
two diversified look like. It's one of the questions we'll
answer next. You're listening to Simply Money presented by all
Worth Financial on fifty five KRC the talk station. You're
(27:58):
listening to Simply Money presented by all Worth Financial. Um
Bob Sponsller alone with Brian James. Do you have a
financial question you'd like for us to answer. There's a
red button you can click while you're listening to the
show right on the iHeart app. Simply record your question
and it will come straight to us. All right, Brian
tim and Hyde Park says. Our advisor keeps saying we're
(28:18):
on track. But it doesn't feel that way to us.
What's the difference between being mathematically fine and being truly
financially free? This is a great question.
Speaker 4 (28:28):
Yeah, I really think so. So this if you if
it doesn't feel that way. First of all, that's not
that's not necessarily a negative thing. That's that you know,
that's that Jiminy cricket on your shoulder telling you to
be careful. That's the same voice that that that has
been telling you all along to save, safe, save. It
can be hard to tamp that voice down and turn
that freighter around psychologically, which is a very slow process
(28:50):
to spending your assets from putting nuts away for the winner.
So the difference between mathematically fine and being truly financially free,
tim is confidence. So it sounds like you just need
to go through your plan some more. And who knows,
maybe the advisor is missing something. We're all humans. Sometimes
things don't go well. So if there's something you mathematically
agree with, pinpoint that for the advisor and ask them
to explain it again and again until you understand it.
(29:13):
But again, that's the difference between mathematically fine and financially
free is confidence. Yes, I see this plan, and I
understand that things the light doesn't always work out that way.
But I have stress tested this plan several different times
for many reasons, and now I feel confident that anything
crazy that comes out of left field we can handle.
Confidence is the difference to him. David in Blue Ash.
(29:33):
David has a question for you, Bob, and he says,
we always talk about being diversified, but is it possible
to be too diversified, and if so, what does that
look like?
Speaker 1 (29:40):
Bob, Well, David, The most common situation we come across is,
you know, people feel diversified, but they might have you know,
thirteen to seventeen different large cap mutual funds or ETFs,
either in their retirement plan or in their broker's account.
They've just been collecting these products over time, and people
have the sense of, you know, the more funds or
(30:02):
investment options I own, I'm automatically diversified. Well, true diversification
is having some non correlated asset classes to complement, you know,
in my example, the large cap growth positions. So a
little bit of bonds, a little bit of small cap,
a little bit of international, maybe some private equity, maybe
(30:23):
some bufferdtfs thing, you know, the whole idea behind having
a long term diversified portfolio is to have a portfolio
that over time gives you the highest rate of return
per unit of risk. That's what that modern portfolio theory
that you know, all financial advisors should be modeling portfolios
after it. That's what that's how and why it works.
(30:45):
So we have to define what diversified means, and the
only way to do that is kind of look under
the hood and see what you actually own. But that's
my answer. Oftentimes people feel diversified by having a bunch
of options in one particular asset class, and that's where
you might feel like you're diversified, but you're really not.
(31:07):
Hope that helps, all right, Eric and fort Mitchell says,
my company just offered me restricted stock units, and I
don't fully understand how they're taxed. How do I build
a plan around something like that that fluctuates in value?
Speaker 4 (31:21):
Broum, So, first off, congratulations, because you obviously you work
for a company it's been successful enough it wants to
reward its employees by giving them a little piece of
the action.
Speaker 3 (31:29):
So that's fantastic.
Speaker 4 (31:30):
So those can be an excellent form of compensation, but
they do have unique tax and planning challenges because their
value depends on one company's stock price, and there's just
no way to tell what direction one company is going
to go or what the market's going to do to it.
Speaker 3 (31:44):
So, but here are the facts.
Speaker 4 (31:45):
When you're granted those restricted stocks units, you don't owe
any taxes yet because you technically.
Speaker 3 (31:50):
Don't own anything.
Speaker 4 (31:51):
They're restricted until they're not, so they're just a promise,
so that transaction at the very beginning.
Speaker 3 (31:55):
Is not a taxable one.
Speaker 4 (31:57):
They all have a vesting date, though, and once they
vest they hit that date.
Speaker 3 (32:01):
Now they're yours.
Speaker 4 (32:02):
Now the value of them is treated as ordinary income,
just as if they had increased your salary a little bit.
So the value of those shares are going to be
added to your W two income. Federal, state, and payroll
taxes are going to apply, and they will be withheld.
Oftentimes you'll have a choice though through what they call
share withholding, or they're going to sell some shares to
cover and then after those vests, so you've paid income
(32:23):
taxes for what you're sitting on now, you just don't stock. Now,
you just don't shares as if you had bought them
on your own, and if you sell them within a
year of having been granted them, then if there's any
gains above what you paid for when when they came unvested,
then you're going to pay income taxes on that as
a short term gain. If you sit on them for
more than a year, now you get the lower capital gains.
(32:43):
Right now, it's always a crapshoot as to whether you
should hold or sit on them. Only you'll know your
company better than anybody else. Treat it like an investment
hit if you had bought it on your own or
inherited or whatever, then think about it if that's something
you want to keep for the long term. But hopefully
that helps with some of the questions you might have
had out there. And again, congratulations for the for the
future windfall. So moving on to Karen and Loveland. Karen
(33:03):
says they've been careful with money, but now they're in
that sandwich generation where they're helping they're spending more helping
their own aging parents, not to mention keeping their own
situation afloat.
Speaker 3 (33:12):
So how do you how do you spread it all out? Bob?
Speaker 4 (33:14):
How do you support those aging parents without sacrificing their
own security?
Speaker 1 (33:19):
Great question, Karen here's my answer. Don't just leave it
to chance. And here's what I mean. First, build build
a financial plan and update it if you already have one,
and run some different scenarios. What do our aging parents,
you know, what are they gonna we think we're gonna
need and for how long? And put those expenses into
your plan, and then factor in your own social security.
(33:41):
As you pointed out your question, have a plan, run
different scenarios, and stress test that plan and see how
it's gonna work. And usually one of three things you
know might need to happen. You know, if you and
or your spouse might need to work maybe one or
two or three extra year in order to pull all
this off. You might have to spend a little bit
(34:04):
less money in order to help your aging parents. Uh,
there's a lot of different variables there, and the important
thing is get out in front of it now, run
those scenarios so you have more control over those levers
that you pull. And then i'd say the last thing
is communication. You know, if you get to the point
where you can't just bankroll everything for your aging parents,
(34:26):
the sooner you can sit down and have those tough
conversations right now, the better everything's going to be you know,
down the road. I don't know. If you have siblings
that are in the mix, you know, it might involve
some communication with them. But that's my answer. Run a
good financial plan and then communicate. Communicate, communicate. Don't just
hope all this works out at the end. You know,
(34:48):
make some adjustments now when you have the ability to
do so. Next, I've got my two cents on picking
a financial advisor. You're listening to Simply Money, presented by
all Worth Financial on fifty KRC, the talk station. You're
listening to Simple Money, Allworth Financial on Bob Sponsller along
(35:10):
with Brian James. All Right, Brian, we talk all the
time about having a properly diversified investment portfolio. But you know,
from time to time we run into folks that think
it's a good idea to be diversified in terms of
the number of quote unquote financial advisors they have, and
I want to touch on that a little bit. I rarely,
(35:33):
if ever, find this to be a good idea where
people are getting ideas from four to five different quote
unquote advisors, when really all they are is just people
that they've bought product from over the years. And you know,
at the end of the day, a lot of these
clients aren't really looking for an advisor. They're looking for
a bunch of different ideas and they want to be
(35:55):
their own advisors. So the analogy I want to use is,
you know, because of a heart valve, you know thing
that I was born with. Uh, I've seen a cardiologist
for shoot thirty years now, and when it comes time
to having somebody keep me alive, I'm not googling it.
I'm not talking to six different cardiologists. I asked around.
(36:18):
I found a good one and then I let him
manage my care over the long term. And I don't
need to get into all the details, but he's done
a wonderful job of keeping my heart healthy. It's because
I found a good cardiologist. I trusted him, I trusted
his process. I trusted the fact that he has always
(36:38):
ordinated my care with my primary physician, and it's been
a good outcome. The same thing should apply to your
financial advisor. A big thing that we run into, Brian,
is there's no coordination from a tax standpoint, you know,
with a client CPA or even proactive tax strategy. And
(36:59):
I'll say if even if You've got five different quote
unquote advisors out there, and no one's doing any proactive
tax planning and coordinating with your CPA. You do not
have a good financial plan. You got a couple of
good ideas, you got a bunch of people trying to
retain wallet share in terms of your assets under management,
but you really don't have a good financial plan. So
(37:21):
I'm yeah, go job, John.
Speaker 4 (37:24):
I want I want to lean on your your your
your cardiologist example there, because I've had a similar situation
where I've got a minor thing going on that isn't
to worry about, but I got to pay attention to it.
And when it first surfaced about fifteen years ago, I
went to the closest place because I really wasn't I
didn't know how to think about this stuff. And it
took probably about six months before I realized that was
not their specialty, and they were kind of flailing a
(37:44):
little bit trying to figure out that this wasn't a
traditional cardiologist. It was somebody recommended to me by by
the hospital for the in the er that I went to,
and I realized that, you know what, I really need
somebody who does this all day long and that's all
that they do. And I figured out that that was
a very different experience, and they got me squared away.
And I go every few years and they say, go away.
You're in pretty good health. But let us know anything
(38:05):
else happens, which is a good thing. Same thing with
financial advisors. Figure out what your challenges are. If your
financial advisor isn't teaching you things that you didn't already know,
they're not doing you any good. They're probably just selling
you product.
Speaker 3 (38:16):
They should be. It shouldn't.
Speaker 4 (38:18):
A financial advisor should never tell you exactly precisely, here's
what you need to do in black and white terms.
If you have built a solid financial situation for yourself,
that should mean you have options, and options come with
pros and cons, and it's not for an advisor to
tell you which to do. It's for the advisor to
help you clearly understand the pros and cons because they're
all good ideas. One of them will be better than
the others.
Speaker 3 (38:38):
That is your call.
Speaker 4 (38:39):
But you need an advisor there to tell you which
to do. It's never black and white. When you've reached
a level of financial success.
Speaker 1 (38:45):
Yeah, and to use your example, and it's one that
I lived through with that cardiologist as well. I mean,
you get to a certain point where I had a
high degree of respect for someone that says, hey, I've
reached the limits of what I'm able to do personally.
I'm going to refer you to this specialist over here.
That's good advice. Thanks for listening tonight. You've been listening
to Simply Money, presented by all Worth Financial on fifty
(39:08):
five KRC, the talk station
Tonight look at what the economy and the markets might
hold for us in twenty twenty six. You're listening to
Simply Money, presented by all Worth Financial on Bob Spondseller
along with Brian James. Well, it's the first Monday of
twenty twenty six, and many might be wondering will the
market have another banner year? Is a recession on the table.
(00:26):
We want to kick things off with the new year
with ALWORS Chief Investment Officer Andy Stout as a reminder,
Andy manages a little more than thirty five billion dollars
worth of investments for all WORS clients from right here
in Cincinnati, Ohio. Andy, thanks for being with us tonight
and walk us through just some highlights to remember from
(00:48):
twenty twenty five, and then kick us off on what
we might expect here in the new year.
Speaker 2 (00:55):
Thanks for having me in Happy twenty twenty six. And
when we look back at last year, there's a lot
of things I think investors forgot about. To be honest
with you, I mean, if you think back about a
year ago, not quite a year ago from now, but
that's when we started to see a pretty large sell
off start to occur. I mean the market s and
P five hundred fell about nineteen percent from February to
(01:19):
early April period. And if you if you recall we
had Liberation Day where we had President Trump, you know,
holding up that board with all these different terarif rates,
and you know, the market panic and you know we're
going to see massive trade wars, We're gonna see inflation
spiral out of control, and basically the world will come
to an end as we know it. That obviously did
(01:41):
not happen, right, the world did not end. We are
still here. It is twenty twenty six. We were able
to make it through the year. And inflation during that
time period, it was elevated, it was sticky, but it
was nowhere near the fear that the levels that people
feared about. And when you look back at economic growth, yeah,
you saw some front running on those terraffs.
Speaker 1 (02:02):
Right.
Speaker 2 (02:03):
If you remember, we actually had negative GDP and Q
one we did not have a recession last year, but
we did see about half a percent negative. But we
saw a massive rebound in Q two where the second
quarter of GDP went up to about three point eight percent.
So for the entire year, we obviously don't have the
fourth quarter data yet, but we'll probably end up somewhere
(02:24):
around two and a half to three percent for the
entire year. So despite those big concerns on the terror
side of the world, you.
Speaker 1 (02:31):
Know, we progressed, we moved forward.
Speaker 2 (02:34):
We also had the other big concern in last year
because people you know, may have they probably didn't forget
this one because it's still top of mind. It says
AI evaluations.
Speaker 1 (02:43):
Right.
Speaker 2 (02:43):
When we think about the stock market, we think about
the gains being concentrated in a few names as artificial
intelligence names. Uh, and really we'll probably see a little
bit of a shift and we'll talk about that when
we get into twenty twenty six on the AI side
of the world. But those companies, the capital expenditures or
(03:03):
that business spending that they were doing continued and that
did actually help with the overall economy. You know, it
wasn't just something to talk about on the margin. It's
the investment in these data centers that these large companies
are doing, and the reinvestment in themselves to help foster
AI overall growth really did help the broad economy and
(03:25):
did help the stock market too. So if you're an investor,
I know, AI might be a little scaries sometimes but
most likely benefitted from it.
Speaker 3 (03:32):
Hey, Eddie.
Speaker 4 (03:32):
One of the big headlines all year long and twenty
twenty five was interest rates, which in looking back now
that you know hindsight of course being twenty twenty, would
you say the Fed's rate decisions were proactive meaning they
were trying to affect the future direction or were they
more reactive waiting for news to appear and then making
a decision based on that.
Speaker 2 (03:52):
I think they wanted to appear data dependent, but when
push came to shove, I think they were really just
kind of listening to the market and following the market's
lead up. I mean, they're trying to be trying to
be data pended. But then we had to shut down
and then there was like not much data to actually
be data that depended on and still the FED cut
rates during that time period. So a little bit of
(04:15):
irony right there. But from the FEDS overall perspective, you know,
I think they did a decent job of trying to
be proactive. I mean, I mean, let's just flate face it.
Inflation hasn't gone away. It's still elevated, and at the
same time we've seen the job market. You know, we
can there's cracks. It's not crashing, but there are certainly cracks.
And we'll talk about that slowing momentum in the bit
(04:36):
that said that puts the FED in a tough position,
right because of inflation's eye, interest rates should be high
to fight that, but if the job market's weak, interest
rates should be low. They can't have both at the
same time. So, you know, they're trying to navigate this
transition period and I think they're doing an okay job
as far as that goes, because it's not a perfect
situation for them by any stretch of the imagination, but
(04:58):
they're they're navigating it. Not a basis I would say.
Speaker 3 (05:01):
Well, okay.
Speaker 4 (05:01):
So with regard to asset allocation diversification, there's always, you know,
there's always if you're going to spread your risk out,
there's always one asset class that does really well and
one that kind of lags.
Speaker 3 (05:11):
What would you say, let's talk about the laggards.
Speaker 4 (05:13):
What would you say, was the some of our weaker
asset classes that we saw and then do you see
that continuing or do you feel like maybe it's, uh,
we're gonna see things that rotate a little bit.
Speaker 2 (05:23):
Yeah, Well, last year. I mean, we saw a lot
of winners in all honesty, whether you're looking at large caps,
mid caps, or small caps. It happened in spurts. I mean,
at the beginning of last year, small caps were the
big lagger, but they certainly made up some ground near
the end of the year. So you know, from that perspective,
the returns weren't materially different in all honesty when you
(05:46):
look at it at the sector level. I mean, what
you saw you saw Tex essentially on telecom, which is
you know, some tech companies in there as well. Those
were the big winners. And again similarly to just large
cap space in general, you know a lot of their
games that come in the i'll call it the first
two to three quarters of last year. The fourth quarter
wasn't nearly as strong for tech compared to some other areas,
(06:09):
but you know, they were the leaders. Now, whether or
not they continue to be the leaders, that's where it's
going to be really interesting, because they essentially had a
really good twenty twenty five because of the business spending,
because of the cap X, because of the implied demand
that other businesses would have. When it comes to AI,
what we expect to see this year is a bit
(06:30):
of a transition on the AI side. It's really going
from who's spending to who's benefiting. So we want to
be able to see as AI moves from capax and
paying attention to the business spending to see where that
margin improvement is coming. So it's not going to be,
you know, a January or February story, It's going to
be a full year story where do we see margins
(06:52):
improving because of artificial intelligence? And it's that bottom line
benefit to earnings that's really going to support the overall
market if that is able to progress.
Speaker 1 (07:03):
Well, Andy, listening to those points you just made, and
then also following up with Brian's question about asset allocation,
you know that that leads directly into my question, which
is do you expect a broadening out on where some
of the growth or returns from stocks are going to
happen in twenty twenty six? Case in point, when I
look at a even cap weighted sm P five hundred index,
(07:25):
we really didn't have a whole lot of movement during
twenty twenty five. You know, most of the gains that
we got that sixteen eighteen percent gains in the overall
market were in these big cap tech stocks. To the
point that you just made, is this going to start
to broaden out in terms of return because now hopefully
the companies that invested wisely in AI technology are going
(07:48):
to actually see their margins improve irrespective of what industry
they're in. Is that something to look for in twenty
twenty six. Yeah.
Speaker 2 (07:56):
I mean if you look at the like an equal
weight INDEXO as opposed to a market cap index, which
will have like your apples, your amazons, your metas of
the world really influencing the overall turns, but instead everybody
gets treated equally in terms of an allocation perconage. I mean,
you saw definitely a pick up in the basically the
(08:17):
last half of the fourth quarter last year. Now will
that continue? You know, I think there's a good chance
that it does continue, that we do see and that
spread out just because you have started to see when
you look under the hood, a little bit of a
rotation at the individual equity side. When it comes to that,
and when you have these types of rotations, they usually
(08:40):
start for a reason. The question is whether or not
they'll continue, and that reason is the benefiting on the
margin side. But it's also valuations, these companies are more
attractive from a valuation standpoint. I mean, if you look
at how much you're paying for a dollar of earnings,
you know they are much much more. You know, they're
just less expense and so I don't want to say
(09:00):
they're cheaper, because they're still not cheap by need to
stretch of imagination, but they are You're paying a lot
less per dollar earnings when you look at that price
to earnings ratio. So, you know, without getting too much
into the weeds, because you know, that's probably not too
fun for many of the listener listeners out there, you know,
I would say, you know, the broad exposure, the broad
(09:22):
participation that we've already seen at the end of last year,
there's a good chance that it does continue.
Speaker 5 (09:27):
Andy, do you think there's anything looking back again twenty
twenty five, Is there anything that didn't get the attention
of the markets that you thought it should have, And
do you think if there is such a thing, do
you think that'll resurface here in twenty twenty six.
Speaker 2 (09:40):
You know, one thing I think we're going to see
resurface early this year that it got the attention it
deserved early on, but then faded was the big beautiful bill,
So most people kind of forgot about that because they're like, oh,
it passed and this is going to be great, but
then no one really saw much much benefits from it.
Now people are getting ready to pay their taxes, file
(10:01):
the taxes, and what you're going to see is you're
going to see a larger than normal refund and this
is a fiscal easing, if you will. That's going to
have a direct impact on GDP in this first quarter.
So when we look at fiscal support for the US,
it's essentially front and loaded into the first quarter. So
what I would expect, I would expect that we actually
(10:22):
see a pretty decent Q one GDP reading. We'll see
where this all pans out. But we got the fiscal
support early on. From a monetary policy perspective of the Fed,
we have seen that improve right, I mean a year
and a half ago, we were at five and a
half percent an hour, about three and three quarters. The
thing to keep in mind, what people don't appreciate to
(10:43):
get your exact question, Brian, is that there's a lag
defect on these things. So when the Fed lowers rate,
it usually takes about six to nine months for it
to really impact the broad economy. So we're getting to
that point in time to where the early part of
those rate cuts, in the middle part as well are
going to start to have a positive improven So when
(11:03):
you look at the fiscal support from the government, you
look at the monetary easing and the lag effects now
impacting the economy in addition to continued AI spending at
least on the front end of things, you know, we're
looking at a pretty solid setup for twenty twenty six,
and we do. And what that means is, you know,
low recess and risk to start the year, probably through
(11:24):
the next quarter as well, and more broadly, just continue
to growth. And I do want to sound like some
sort of you know, eternal optimist if you will, but
we are set up for twenty twenty six in a
way that should be broadly positive for the economy.
Speaker 1 (11:40):
Would you say the same thing is going to positively
potentially impact GDP with all these accelerated depreciation rules as well,
Is that going to accelerate or maybe pull forward some
capex spending into the early part of twenty twenty six
on the part of companies.
Speaker 2 (11:55):
Yeah, So when you're talking about the early depreciation. What
that means is businesses can spend end on things, big items,
big ticket items, you know, all of a sudden, they're
able to essentially you know, expense those overall right away,
and that's going to lower their tax impact. So that's
what that's what you mean right there, And yeah, that
can have a big impact. I think it will be
(12:16):
very helpful for the overall economy. And that is another
you know, impact or a lever that we're going to
see getting pulled here early on. And I think it's
going to be something that does continue. And I think
when you think about the big picture side of the world,
you also have to think about inflation and the labor market.
But when you put it all together, you know, inflation
(12:39):
is still sticky for some time, but probably still starts
to a mediate labor market I'll call it. We're starting
the year off of some weak momentum, but with a
strong enough consumer and we got that GDP levers that
we've just talked about, you know, that should keep the
labor market aflow.
Speaker 1 (12:56):
All right, We'll have to leave it there for jo
N and Andy. As always, it's going to be real
fun to sit back and watch what actually happens this year.
A lot of people dream of early retirement, But what
if stopping work too soon actually hurts your health and
shortens your life. We've got new research to discuss on
that topic. Next, you're listening to Simply Money, You're said
of my Allworth Financial on fifty five KRC, the talk station.
(13:24):
You're listening to Simply Money, You've said of my all
Worth Financial arm Bob Sponsorer along with Brian James. If
you can't listen to Simply Money live every night, subscribe
and get our daily podcasts. Just search Simply Money on
the iHeart app or wherever you find your podcast. Straight Ahead,
Eric's wrestling with a big tax hit on new stock appreciation.
(13:45):
You know, Karen's portfolio just got too complex to manage
on our own. And Joe's wondering if downsizing makes sense
Right now, real questions will hopefully provide some smart answers.
Straight Ahead at six forty three, so many Americans, maybe
even you, dream of retiring early. Get out of the
(14:05):
rat race. No more meetings, no more commutes, just absolute freedom.
But there's a new conversation taking place, Brian, and it's
not about whether you can retire early, based on whether
you have enough money. It's about whether you should because
it might not be as good for you as you think.
Speaker 3 (14:25):
Well, I don't think that's a new conversation.
Speaker 4 (14:27):
That's in a conversation that I have every single day
in my office, and I'm sure you do too through
the planning process. But USA Today picked up on it,
so therefore it's new to them anyway. So so polling
coming from USA Today, a sixty percent of Americans say
that their dream is to retire early. But we get
some figures that from the National Bureau of Economic Research
that did a study of people in China, a little
(14:48):
bit of a different mindset over there, but when they
take early retirement over there, through this new pension program
they have, they see about a thirteen percent drop in
cognitive performance, memory, attention span, brain functioning, you know, the
kind of stuff that actually can make retirement fun if
it's in good order.
Speaker 3 (15:03):
And that's this is.
Speaker 4 (15:04):
Why we all say we want to retire earlier here
in the United States. Well, over there it's such a
work driven economy that as soon as it was going
to say, on, yeah.
Speaker 1 (15:13):
If I lived in China, Brian, I think I'd want
to be retired too, but go.
Speaker 4 (15:16):
Ahead, yeah and so, but basically the brain shut off
and I'm just gonna go out on a limb here
and say, there just might not be as much of
a dream of retirement and freedom and all that kind
of thing over there in China as there is here.
So the so, how do we compare that to the
United States? Well, similar results. So there was a study
published by the Journal of Epidemiology and Community Health found
that people in the United States who were retired at
(15:38):
fifty five were twice as likely to die early compared
to those who are retired at sixty five. Now that
this don't don't assume that this means that your job
is the only thing standing between you and the great beyond.
But what it does suggest, though, is that retirement when
it's early and unstructured, in other words, a.
Speaker 3 (15:53):
Miserable hate this job. Got to get out of this
and I'll figure out what I'm going to do later.
Speaker 4 (15:57):
Without a plan, that can lead to a lot of isolation,
which leads to less daily movement, physical movement, and fewer
reasons to stay mentally sharp. And all of a sudden,
the hill, the downhill ride is kind of steepening on
you a little bit.
Speaker 1 (16:10):
Yeah, Brian, I think you raised a good point before.
I mean, we when we have people come in and
talk about retirement now, very few people are saying, Hey,
I can't wait to just quit my job and do
nothing and sit in a rocking chair on the front porch,
or just play golf, you know, sixteen hours a day.
You know, people are already more thoughtful about this. People
(16:32):
are talking about what am I gonna do with my
time and energy and my mind, you know, to your
prior point in advance. So I think we've seen a
healthy evolution in this whole retirement processing in advance. But
for those that maybe are starting to think about this,
here's three questions to ask yourself. Do you want to
(16:52):
stop working or just stop doing your current job? And
how how will you stay mentally and socially active if
you do retire early? Those are big questions to answer
and hopefully answer in advance. In other words, is early
retirement your really your goal? Or is just flexibility having
more flexibility and freedom in your life your real priority.
(17:15):
I think those are three wonderful questions to ask.
Speaker 4 (17:18):
Yeah, and I think a lot of times, you know
it's exactly that, and you know, a lot of people
wind up frustrating their careers. You know that they've gone
as far as they want to, or maybe as far
as they can, or maybe the writing is just on
the wall and the company is kind of moving on
beyond there in their level of interest.
Speaker 3 (17:30):
But that doesn't mean they're ready to retire yet either.
Speaker 4 (17:32):
So I think the really, really, really important thing to
be thinking about is we all tend to hide behind
the dollars and waiting until I, you know, I think
I have enough perceived money that I can actually get
away with retirement, And we tend to focus on that
to the detriment of the time because once we do
get that, oh by the way, hey, people who focus
on that number tend to work too long and they
(17:55):
wind up surpassing that number because they didn't have a
plan to begin with, so they might hit that and
plow right past it because now they don't know exactly
what they want to do, and retirement just becomes terrifying.
So start to think about what it is you might do.
Are there smaller organizations where your skills would be valuable
and you could potentially go work for them for some
level of income. But remember the whole point of this
is you don't need the salary anymore, and you probably
(18:18):
don't need the benefits as much as you used to either.
So think big, think outside the box. Go on websites
like indeed and type in random words of stuff you're
interested in. Just a keyword search, see what kind of
jobs that are out there. You'd be shocked at the
kind of things that people will pay you to do,
to take advantage of the skills that are in your
brain that you developed over all those years. But don't
(18:39):
focus only on the light at the end of the tunnel.
I got to get out of this job and I'll
worry about the rest later. That hits like a freight train.
You really have got to spend some time thinking about
how you will fill the vacuum of time that you
will have when you no longer have to work.
Speaker 1 (18:52):
Yeah, the real sweet spot here to me, Brian, is
being in a position where you can make decisions based
on what you want, want to do and feel called
to do, not what you feel like you have to do.
That that's really retirement freedom, and there's a lot of
factors that go into that. Obviously, money is won, but
you got to plan ahead and kind of look around
(19:14):
here at how you're going to fill your time and energy.
Because at the end of the day, whether it's your work,
volunteer work, you know, relationships in the community. Everyone wants
to have some purpose and meaning in their life and
they want to have contact with other people. And if
you don't have those things, some true community in your life,
(19:35):
I don't care whether you're worth five dollars or fifty
million dollars, your life's going to be empty. Here's the
all Worth advice. If you're dreaming of early retirement, that's great,
but make sure you're planning for more than just financial freedom.
Plan for purpose too. Coming up next, we've got the
money makeover for all you empty nesters out there. You're
listening to Simply Money presented by all Worth Financial on
(19:56):
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial on Bob Sponsor along
with Brian James. There's this moment every parent eventually hits
you after the last kid moves out, when you walk
past that empty bedroom and it just socks you right
(20:20):
in the mouth. Oh, while it's quiet in there. I've
experienced that. Brian, my wife has as well, and right
after that you start thinking, Okay, what do we do
with all this space and potentially what do we do
with all this money we've been spending on travel, baseball
and college tuition and all that. So, you know, the
(20:41):
point we're trying to make tonight and kind of walk
through is when you hit that empty nester phase, it's
not time to just you know, go out and spend
all that extra money you might have have laying around
or think you have laying around. It's time to take
some inventory on where does life actually pan out right now,
(21:02):
and maybe some some tune up work that needs to
be done to your overall financial plan.
Speaker 4 (21:07):
Yeah, so an empty nester money makeover, I think, is
what you're referring to there. So you already refer to
the expenses that may be gone, all those things that
the kids were into that you know aren't costing money anymore.
Speaker 3 (21:17):
So let's talk about the house.
Speaker 4 (21:18):
So the structure of the house, of course, is still
the same in congratulations because it's still standing.
Speaker 3 (21:22):
That's a good thing.
Speaker 4 (21:23):
But you don't need all that space. So what about
that old bedroom. Maybe it becomes a yoga room or
a guest suite, or the sports bar, but probably what
it will become first is a glorified storage unit for
you know, twenty band, twenty years of marching band trophies
and old posters, legos.
Speaker 3 (21:38):
And that kind of thing.
Speaker 4 (21:39):
So money works the same way. When the kids are gone.
It's sort of like you just cleared a giant room
in your financial house. So what do you want to
do with those resources that you have next? Well, one
of the first things to look at is that cash flow.
So as we mentioned, a lot of those regular expenses
are gonna disappear. Your grocery bill's gonna drop when they
hit a certain age. Eventually, your car insurance is gonna drop,
you'll hand off their cell phone, those college payments go away.
(22:01):
But without some kind of planning those extra the absence
of those expenses is going to give you extra spendable money,
and it could result in we've got this stuff, so
we might as well blow it on things, and you
maybe you wind up with a fancy your car, more
eating out, and then you may wind up regretting that
you didn't really have a plan for it.
Speaker 3 (22:18):
So just think about it in advance. Think about it
like this.
Speaker 4 (22:21):
If you take down a wall in your house, you
could fill that new space with clutter, or you could
open it up and make it more functional for something
you actually want to do. But the point is you
will have fought in advance for what you want to
do with those new added resources that you have. So
maybe it's funding those catchup contributions in your four one okay,
increase that amount, or IRA contributions roth IRA backdoor contributions
(22:42):
if if that's something that you're familiar with. If you're
over fifty, you can put in a little extra each year,
and for those in their early sixties, there's even a
new catchup So these dollars sometimes aren't present at the moment,
but remember these opportunities when you do hit this empty
nest stage of life.
Speaker 1 (22:58):
Well, Brian speaking to take that wall down and having
the option of just having a bunch of clutter. My
wife and I are living this right now, so I'm
giving you a preview of what your life is likely
going to become. All three of our kids are out
of college. They're all living on their own now in
their own separate homes and dwellings, but a lot of
their crap is still in our house. You know, it's funny.
(23:21):
We my wife will go through. She does a wonderful
job of keeping our home clean and clutter free, but
she'll periodically go through and find all you know. You
use the analogy of marching band trophies. I mean, whether
it's that or athletic trophies, are just close, you know,
stuff laying around and she'll go to the kids and say, hey,
you moved out. Are you going to take this stuff
with you? Nope, don't have room for that. Can you
(23:43):
keep it? So a lot of the stuff never goes away.
It's a process, all right. Speaking of the house, and
this is a topic that comes up a lot. People
talk about wanting to downsize or right size their home.
This this is a big emotional and financial topic. Some
people dream about downsizing, while others love their current home
(24:07):
and plan to stay put, even if they have two
or three bedrooms that are completely empty. The point I
make here, Brian, is a lot of times people talk
about downsizing. I don't know about you. I have yet
to see the client. And I've been doing this for
thirty five years. I've yet to see somebody sell their
primary residence and move somewhere that ends up costing less money.
(24:31):
It might be smaller, but it ends up being newer
with you know, with nice, with nice furnishings. It never
costs less money. People want to rationalize this by making it,
you know, calling it downsizing. It's really not when it
comes to finances. So just you know, buyer beware out
(24:52):
there when you start talking about the whole downsizing conversation.
Does this ring true with you and your clients as well?
Speaker 4 (24:59):
There's no such thing is a financial downsizing. When it
comes to your house. There's an effort and work downsizing.
You can reduce the amount of work you got to
put into it, but you're not gonna save any money.
Even if you buy a smaller house, it's most likely
going to be in a nicer neighborhood or an area
you always wanted to live in that kind of thing,
and you're probably not the only one who wanted to
live there. Therefore, the expense the purchase it goes up.
So don't think money when you think downsizing. So what
(25:22):
do we do about this, Well, you can do what's
called a retirement rehearsal. So once the how you've noticed
the house is quiet and that budget is a little lighter,
well that's the time for a test drive. So maybe
live for six months on what you think your expected
retirement income is gonna be, and that might be so security,
pension investment withdraws or rental, real estate income, that kind
of thing. See how that feels, and you're gonna learn
(25:42):
quickly if the plan works, because you'll know right away
when you're dipping into more than what you thought you
were going to. And then you're gonna be because this
is you're not making a real sacrifice at this time.
You're just kind of test driving, so you're gonna you'll
know if you need a little tune up before that
paycheck stops. So it's kind of like taking the RV
on a weekend trip right before you actually buy it
for real, before you hit the road full time. You're
gonna want to test it before you're thousand miles from
(26:03):
home and see if you run across any problems you
didn't anticipate.
Speaker 1 (26:06):
One more thing. I think that is a wonderful idea
and I wish more people did this, And I'm in
the middle of crying to do this right now, you know,
with my wife actually constructing a budget and looking at
what this is really gonna look like. If life's gonna
resemble what we think it might resemble. I think it's
really good to test drive this in advance. But go on, Yeah,
(26:29):
and so one more thing to do.
Speaker 4 (26:30):
When you've got this free time you're gonna be Remember
the whole point of this is that the kids are
going they're out on their own. You're gonna start paying
attention to what it is they do and how they
live their lives. That's gonna be a bit of an
estate planning tune up for you. So you're gonna need
help sooner or later. Someday you're probably already in a
situation where you yourself are helping your own parents, and
so this is the time to learn which kid might
make the best executor, who is the one who can
(26:52):
make decisions on your behalf. This is yes, this is
years into the future, but you sooner you put this
stuff into place, the sooner you cannot think about it,
enjoy and enjoy retirement more. And then you'll be thinking
about which of my kids are good on their own
and I can trust them, you know, inheriting money at
my death, Which of them made me have some more
challenges and may require a little extra care for which
(27:12):
I might need a trust and a trustee in place.
So estate planning isn't just about passing that money. It's
about making life easier for the family later, especially for
those of you who have been through a difficult estate
settlement process, for maybe your own parents. So think of
it like labeling those boxes in that remodeled home. You're
saving everyone from chaos down the road by planning ahead.
Speaker 1 (27:31):
Here's the all with advice. An empty nest is your
chance to reimagine and possibly refill your future. You know
you should be diversified, but what does being quote unquote
two diversified look like. It's one of the questions we'll
answer next. You're listening to Simply Money presented by all
Worth Financial on fifty five KRC the talk station. You're
(27:58):
listening to Simply Money presented by all Worth Financial. Um
Bob Sponsller alone with Brian James. Do you have a
financial question you'd like for us to answer. There's a
red button you can click while you're listening to the
show right on the iHeart app. Simply record your question
and it will come straight to us. All right, Brian
tim and Hyde Park says. Our advisor keeps saying we're
(28:18):
on track. But it doesn't feel that way to us.
What's the difference between being mathematically fine and being truly
financially free? This is a great question.
Speaker 4 (28:28):
Yeah, I really think so. So this if you if
it doesn't feel that way. First of all, that's not
that's not necessarily a negative thing. That's that you know,
that's that Jiminy cricket on your shoulder telling you to
be careful. That's the same voice that that that has
been telling you all along to save, safe, save. It
can be hard to tamp that voice down and turn
that freighter around psychologically, which is a very slow process
(28:50):
to spending your assets from putting nuts away for the winner.
So the difference between mathematically fine and being truly financially free,
tim is confidence. So it sounds like you just need
to go through your plan some more. And who knows,
maybe the advisor is missing something. We're all humans. Sometimes
things don't go well. So if there's something you mathematically
agree with, pinpoint that for the advisor and ask them
to explain it again and again until you understand it.
(29:13):
But again, that's the difference between mathematically fine and financially
free is confidence. Yes, I see this plan, and I
understand that things the light doesn't always work out that way.
But I have stress tested this plan several different times
for many reasons, and now I feel confident that anything
crazy that comes out of left field we can handle.
Confidence is the difference to him. David in Blue Ash.
(29:33):
David has a question for you, Bob, and he says,
we always talk about being diversified, but is it possible
to be too diversified, and if so, what does that
look like?
Speaker 1 (29:40):
Bob, Well, David, The most common situation we come across is,
you know, people feel diversified, but they might have you know,
thirteen to seventeen different large cap mutual funds or ETFs,
either in their retirement plan or in their broker's account.
They've just been collecting these products over time, and people
have the sense of, you know, the more funds or
(30:02):
investment options I own, I'm automatically diversified. Well, true diversification
is having some non correlated asset classes to complement, you know,
in my example, the large cap growth positions. So a
little bit of bonds, a little bit of small cap,
a little bit of international, maybe some private equity, maybe
(30:23):
some bufferdtfs thing, you know, the whole idea behind having
a long term diversified portfolio is to have a portfolio
that over time gives you the highest rate of return
per unit of risk. That's what that modern portfolio theory
that you know, all financial advisors should be modeling portfolios
after it. That's what that's how and why it works.
(30:45):
So we have to define what diversified means, and the
only way to do that is kind of look under
the hood and see what you actually own. But that's
my answer. Oftentimes people feel diversified by having a bunch
of options in one particular asset class, and that's where
you might feel like you're diversified, but you're really not.
(31:07):
Hope that helps, all right, Eric and fort Mitchell says,
my company just offered me restricted stock units, and I
don't fully understand how they're taxed. How do I build
a plan around something like that that fluctuates in value?
Speaker 4 (31:21):
Broum, So, first off, congratulations, because you obviously you work
for a company it's been successful enough it wants to
reward its employees by giving them a little piece of
the action.
Speaker 3 (31:29):
So that's fantastic.
Speaker 4 (31:30):
So those can be an excellent form of compensation, but
they do have unique tax and planning challenges because their
value depends on one company's stock price, and there's just
no way to tell what direction one company is going
to go or what the market's going to do to it.
Speaker 3 (31:44):
So, but here are the facts.
Speaker 4 (31:45):
When you're granted those restricted stocks units, you don't owe
any taxes yet because you technically.
Speaker 3 (31:50):
Don't own anything.
Speaker 4 (31:51):
They're restricted until they're not, so they're just a promise,
so that transaction at the very beginning.
Speaker 3 (31:55):
Is not a taxable one.
Speaker 4 (31:57):
They all have a vesting date, though, and once they
vest they hit that date.
Speaker 3 (32:01):
Now they're yours.
Speaker 4 (32:02):
Now the value of them is treated as ordinary income,
just as if they had increased your salary a little bit.
So the value of those shares are going to be
added to your W two income. Federal, state, and payroll
taxes are going to apply, and they will be withheld.
Oftentimes you'll have a choice though through what they call
share withholding, or they're going to sell some shares to
cover and then after those vests, so you've paid income
(32:23):
taxes for what you're sitting on now, you just don't stock. Now,
you just don't shares as if you had bought them
on your own, and if you sell them within a
year of having been granted them, then if there's any
gains above what you paid for when when they came unvested,
then you're going to pay income taxes on that as
a short term gain. If you sit on them for
more than a year, now you get the lower capital gains.
(32:43):
Right now, it's always a crapshoot as to whether you
should hold or sit on them. Only you'll know your
company better than anybody else. Treat it like an investment
hit if you had bought it on your own or
inherited or whatever, then think about it if that's something
you want to keep for the long term. But hopefully
that helps with some of the questions you might have
had out there. And again, congratulations for the for the
future windfall. So moving on to Karen and Loveland. Karen
(33:03):
says they've been careful with money, but now they're in
that sandwich generation where they're helping they're spending more helping
their own aging parents, not to mention keeping their own
situation afloat.
Speaker 3 (33:12):
So how do you how do you spread it all out? Bob?
Speaker 4 (33:14):
How do you support those aging parents without sacrificing their
own security?
Speaker 1 (33:19):
Great question, Karen here's my answer. Don't just leave it
to chance. And here's what I mean. First, build build
a financial plan and update it if you already have one,
and run some different scenarios. What do our aging parents,
you know, what are they gonna we think we're gonna
need and for how long? And put those expenses into
your plan, and then factor in your own social security.
(33:41):
As you pointed out your question, have a plan, run
different scenarios, and stress test that plan and see how
it's gonna work. And usually one of three things you
know might need to happen. You know, if you and
or your spouse might need to work maybe one or
two or three extra year in order to pull all
this off. You might have to spend a little bit
(34:04):
less money in order to help your aging parents. Uh,
there's a lot of different variables there, and the important
thing is get out in front of it now, run
those scenarios so you have more control over those levers
that you pull. And then i'd say the last thing
is communication. You know, if you get to the point
where you can't just bankroll everything for your aging parents,
(34:26):
the sooner you can sit down and have those tough
conversations right now, the better everything's going to be you know,
down the road. I don't know. If you have siblings
that are in the mix, you know, it might involve
some communication with them. But that's my answer. Run a
good financial plan and then communicate. Communicate, communicate. Don't just
hope all this works out at the end. You know,
(34:48):
make some adjustments now when you have the ability to
do so. Next, I've got my two cents on picking
a financial advisor. You're listening to Simply Money, presented by
all Worth Financial on fifty KRC, the talk station. You're
listening to Simple Money, Allworth Financial on Bob Sponsller along
(35:10):
with Brian James. All Right, Brian, we talk all the
time about having a properly diversified investment portfolio. But you know,
from time to time we run into folks that think
it's a good idea to be diversified in terms of
the number of quote unquote financial advisors they have, and
I want to touch on that a little bit. I rarely,
(35:33):
if ever, find this to be a good idea where
people are getting ideas from four to five different quote
unquote advisors, when really all they are is just people
that they've bought product from over the years. And you know,
at the end of the day, a lot of these
clients aren't really looking for an advisor. They're looking for
a bunch of different ideas and they want to be
(35:55):
their own advisors. So the analogy I want to use is,
you know, because of a heart valve, you know thing
that I was born with. Uh, I've seen a cardiologist
for shoot thirty years now, and when it comes time
to having somebody keep me alive, I'm not googling it.
I'm not talking to six different cardiologists. I asked around.
(36:18):
I found a good one and then I let him
manage my care over the long term. And I don't
need to get into all the details, but he's done
a wonderful job of keeping my heart healthy. It's because
I found a good cardiologist. I trusted him, I trusted
his process. I trusted the fact that he has always
(36:38):
ordinated my care with my primary physician, and it's been
a good outcome. The same thing should apply to your
financial advisor. A big thing that we run into, Brian,
is there's no coordination from a tax standpoint, you know,
with a client CPA or even proactive tax strategy. And
(36:59):
I'll say if even if You've got five different quote
unquote advisors out there, and no one's doing any proactive
tax planning and coordinating with your CPA. You do not
have a good financial plan. You got a couple of
good ideas, you got a bunch of people trying to
retain wallet share in terms of your assets under management,
but you really don't have a good financial plan. So
(37:21):
I'm yeah, go job, John.
Speaker 4 (37:24):
I want I want to lean on your your your
your cardiologist example there, because I've had a similar situation
where I've got a minor thing going on that isn't
to worry about, but I got to pay attention to it.
And when it first surfaced about fifteen years ago, I
went to the closest place because I really wasn't I
didn't know how to think about this stuff. And it
took probably about six months before I realized that was
not their specialty, and they were kind of flailing a
(37:44):
little bit trying to figure out that this wasn't a
traditional cardiologist. It was somebody recommended to me by by
the hospital for the in the er that I went to,
and I realized that, you know what, I really need
somebody who does this all day long and that's all
that they do. And I figured out that that was
a very different experience, and they got me squared away.
And I go every few years and they say, go away.
You're in pretty good health. But let us know anything
(38:05):
else happens, which is a good thing. Same thing with
financial advisors. Figure out what your challenges are. If your
financial advisor isn't teaching you things that you didn't already know,
they're not doing you any good. They're probably just selling
you product.
Speaker 3 (38:16):
They should be. It shouldn't.
Speaker 4 (38:18):
A financial advisor should never tell you exactly precisely, here's
what you need to do in black and white terms.
If you have built a solid financial situation for yourself,
that should mean you have options, and options come with
pros and cons, and it's not for an advisor to
tell you which to do. It's for the advisor to
help you clearly understand the pros and cons because they're
all good ideas. One of them will be better than
the others.
Speaker 3 (38:38):
That is your call.
Speaker 4 (38:39):
But you need an advisor there to tell you which
to do. It's never black and white. When you've reached
a level of financial success.
Speaker 1 (38:45):
Yeah, and to use your example, and it's one that
I lived through with that cardiologist as well. I mean,
you get to a certain point where I had a
high degree of respect for someone that says, hey, I've
reached the limits of what I'm able to do personally.
I'm going to refer you to this specialist over here.
That's good advice. Thanks for listening tonight. You've been listening
to Simply Money, presented by all Worth Financial on fifty
(39:08):
five KRC, the talk station
Simply Money News
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