1 00:00:06,400 --> 00:00:09,360 Speaker 1: Tonight, we're gonna shoot pretty straight with you on personal 2 00:00:09,480 --> 00:00:14,040 Speaker 1: responsibility when it comes to investing in your future. You're 3 00:00:14,080 --> 00:00:16,520 Speaker 1: listening to simply money presided by all Worth Financial. I'm 4 00:00:16,560 --> 00:00:20,480 Speaker 1: Bob Sponseller along with Brian James. Tonight we're going to 5 00:00:20,520 --> 00:00:22,880 Speaker 1: talk about a group of people Brian, you and I 6 00:00:22,960 --> 00:00:26,640 Speaker 1: run into from time to time. They don't feel broke 7 00:00:26,720 --> 00:00:28,960 Speaker 1: at all, but on the other hand, they don't feel 8 00:00:29,080 --> 00:00:32,720 Speaker 1: very secure about their long term retirement plan. And a 9 00:00:32,720 --> 00:00:34,840 Speaker 1: lot of these people have done a lot of things right. 10 00:00:34,920 --> 00:00:38,760 Speaker 1: They've saved, they've invested, they've built a net worth of 11 00:00:38,840 --> 00:00:42,200 Speaker 1: say a million dollars or more, and yet the question 12 00:00:42,440 --> 00:00:45,559 Speaker 1: still lingers out there. Is this actually going to be 13 00:00:45,760 --> 00:00:49,360 Speaker 1: enough to allow me to retire with the lifestyle with 14 00:00:49,400 --> 00:00:52,160 Speaker 1: which I've become a customed. It's an issue from time 15 00:00:52,200 --> 00:00:53,280 Speaker 1: to time, it is. 16 00:00:53,320 --> 00:00:55,600 Speaker 2: And here's where things get uncomfortable, Bob, because you know, 17 00:00:55,640 --> 00:00:58,600 Speaker 2: when you're in that in between stage, it's really really 18 00:00:58,600 --> 00:01:00,640 Speaker 2: easy to start drifting into a you know, this this 19 00:01:00,840 --> 00:01:04,319 Speaker 2: quiet version of a victim mindset, right, this is this 20 00:01:04,360 --> 00:01:05,240 Speaker 2: is happening to me. 21 00:01:05,400 --> 00:01:07,480 Speaker 3: I'd have no control, you know. 22 00:01:07,520 --> 00:01:09,560 Speaker 2: But at the same time, you know, the things just 23 00:01:09,600 --> 00:01:11,720 Speaker 2: aren't working out, and you know this is a little different, 24 00:01:11,840 --> 00:01:13,960 Speaker 2: not obvious. You're not saying I can't make ends meet, 25 00:01:14,560 --> 00:01:16,520 Speaker 2: but it's just something more subtle, kind of throwing up 26 00:01:16,520 --> 00:01:18,360 Speaker 2: your hands and saying, I've done everything I can. The 27 00:01:18,400 --> 00:01:20,080 Speaker 2: market's going to just do what it does, I guess, 28 00:01:20,080 --> 00:01:22,320 Speaker 2: and I just hope this works out well. This is 29 00:01:22,319 --> 00:01:25,040 Speaker 2: where personal responsibility takes on, you know, a bit of 30 00:01:25,040 --> 00:01:25,920 Speaker 2: a different meeting. 31 00:01:25,680 --> 00:01:28,000 Speaker 3: Because you know earlier in life, you know, for. 32 00:01:28,000 --> 00:01:30,520 Speaker 2: Your twenties, thirty forty something like that, you know, the 33 00:01:30,560 --> 00:01:33,800 Speaker 2: advice is pretty simple, save consistently, just get started, build 34 00:01:33,840 --> 00:01:35,720 Speaker 2: your momentum, don't make a mess with your credit, don't 35 00:01:35,760 --> 00:01:38,840 Speaker 2: make your responsible decisions. But eventually, when you get to 36 00:01:39,160 --> 00:01:41,560 Speaker 2: an older stage, you know, the responsibility makes it look 37 00:01:41,600 --> 00:01:44,040 Speaker 2: like those intentional decisions. 38 00:01:43,520 --> 00:01:45,480 Speaker 3: About what you've already built are where it's all at. 39 00:01:45,800 --> 00:01:47,840 Speaker 2: And this is where people make a critical mistake when 40 00:01:47,880 --> 00:01:50,880 Speaker 2: we make that shift from you know, a good idea 41 00:01:50,960 --> 00:01:53,120 Speaker 2: versus bad idea. Right, it's a good idea to save, 42 00:01:53,160 --> 00:01:54,760 Speaker 2: it's a bad idea to spend more than a half. 43 00:01:54,760 --> 00:01:56,600 Speaker 2: That's a pretty easy decision. But when you get to 44 00:01:56,640 --> 00:01:59,680 Speaker 2: a point where you've built something, you've got something to protect, 45 00:02:00,000 --> 00:02:02,760 Speaker 2: and now those decision points are pretty critical and it 46 00:02:02,800 --> 00:02:04,800 Speaker 2: won't be as obvious. It gets a lot harder when 47 00:02:04,840 --> 00:02:07,200 Speaker 2: you've given yourself options because you have to pick one. 48 00:02:07,400 --> 00:02:09,720 Speaker 2: You have to understand I have option A, B, and C. 49 00:02:09,880 --> 00:02:12,160 Speaker 2: They're all kind of good ish because I've built something 50 00:02:12,160 --> 00:02:14,079 Speaker 2: that I can rely on. But now I have to 51 00:02:14,200 --> 00:02:16,200 Speaker 2: understand the pros and cons of each one of those 52 00:02:16,560 --> 00:02:19,239 Speaker 2: and pick the right one for me. And that's it's 53 00:02:19,280 --> 00:02:21,080 Speaker 2: never black and white. This is where I always say, 54 00:02:21,160 --> 00:02:23,360 Speaker 2: if there was a you know, a ten step process 55 00:02:23,400 --> 00:02:25,840 Speaker 2: to financial planning that worked for everybody, then we would 56 00:02:25,840 --> 00:02:28,040 Speaker 2: all be following a TikTok video that walks us through 57 00:02:28,080 --> 00:02:31,320 Speaker 2: those steps. It's different for absolutely everybody out there, based 58 00:02:31,360 --> 00:02:33,280 Speaker 2: on the resources you have and the goals you're trying 59 00:02:33,280 --> 00:02:33,760 Speaker 2: to achieve. 60 00:02:35,120 --> 00:02:37,400 Speaker 1: Yeah, I would say, just to break this down and 61 00:02:37,480 --> 00:02:40,280 Speaker 1: keep it even simpler, Brian to me and feel free, 62 00:02:40,600 --> 00:02:43,280 Speaker 1: you know, by the way to disagree. That's what makes 63 00:02:43,360 --> 00:02:46,800 Speaker 1: you know, life interesting is having good, healthy dialogue. But 64 00:02:47,480 --> 00:02:49,919 Speaker 1: you know, we talk about all the time the issue 65 00:02:49,919 --> 00:02:53,360 Speaker 1: of optimization. You know, we talk about wrath conversions and 66 00:02:53,480 --> 00:02:58,000 Speaker 1: income strategy to minimize taxes, subtle changes to your asset 67 00:02:58,040 --> 00:03:01,760 Speaker 1: allocation strategy. Yeah, those things will move the needle. They 68 00:03:01,800 --> 00:03:05,560 Speaker 1: will make things more optimized and efficient. But Brian, we 69 00:03:05,600 --> 00:03:08,400 Speaker 1: all know the two things that really move the needle 70 00:03:08,800 --> 00:03:11,840 Speaker 1: are the year in which you decide to retire, meaning 71 00:03:11,880 --> 00:03:15,480 Speaker 1: you're shutting off your earned income and replacing that with 72 00:03:15,520 --> 00:03:18,359 Speaker 1: whatever you've built. And then the elephant in the room 73 00:03:18,480 --> 00:03:21,240 Speaker 1: sometimes is how much are you going to actually spend? 74 00:03:21,360 --> 00:03:23,360 Speaker 1: And this is where these people that are kind of 75 00:03:23,440 --> 00:03:26,560 Speaker 1: will call these in between category, people that have some 76 00:03:26,680 --> 00:03:30,760 Speaker 1: money but yet don't feel very secure. They they just 77 00:03:30,880 --> 00:03:34,480 Speaker 1: make a default decision on one or two or both 78 00:03:34,600 --> 00:03:37,960 Speaker 1: of those decisions the year in which I retire and 79 00:03:38,000 --> 00:03:40,840 Speaker 1: how much I spend. They just make a decision and 80 00:03:40,920 --> 00:03:43,880 Speaker 1: then just hope it all works out. And that's where 81 00:03:43,960 --> 00:03:46,280 Speaker 1: you know, we try. We try to counsel people to 82 00:03:46,320 --> 00:03:49,040 Speaker 1: do a little bit more planning before you pull the 83 00:03:49,080 --> 00:03:52,160 Speaker 1: trigger on those decisions. And I can think of clients 84 00:03:52,240 --> 00:03:55,000 Speaker 1: right now as I'm talking about this that have just 85 00:03:55,160 --> 00:03:58,200 Speaker 1: made these decisions and then they they want us to 86 00:03:58,240 --> 00:04:00,560 Speaker 1: work our magic and make it all work, and it 87 00:04:00,880 --> 00:04:02,960 Speaker 1: just doesn't. It just doesn't work that way. Do you 88 00:04:03,040 --> 00:04:04,040 Speaker 1: run into the same. 89 00:04:03,880 --> 00:04:07,160 Speaker 2: Thing, Yeah, I think there are there are people out 90 00:04:07,200 --> 00:04:10,240 Speaker 2: there who have sort of these these these preconceived notions 91 00:04:10,240 --> 00:04:12,520 Speaker 2: of how things should work, And by god, that's what 92 00:04:12,560 --> 00:04:14,240 Speaker 2: I'm going to do. I'm going to make those decisions 93 00:04:14,240 --> 00:04:16,880 Speaker 2: based off of what I was taught thirty and forty 94 00:04:16,960 --> 00:04:20,159 Speaker 2: years ago, you know, And and I think it's it's interesting. 95 00:04:20,200 --> 00:04:22,760 Speaker 2: I mean, I've mentioned this before. I thought a lot 96 00:04:22,800 --> 00:04:25,640 Speaker 2: about the different generations and how they were raised thinking 97 00:04:25,640 --> 00:04:29,159 Speaker 2: about money. Some of these preconceived notions come from. You know, 98 00:04:29,320 --> 00:04:32,279 Speaker 2: the the generation that is now retiring has a set 99 00:04:32,279 --> 00:04:34,880 Speaker 2: of parents who retired in a whole different. 100 00:04:36,279 --> 00:04:37,280 Speaker 3: Frame of mind. 101 00:04:37,279 --> 00:04:41,159 Speaker 2: Because that older group retired work worked hard for pensions. 102 00:04:41,200 --> 00:04:43,240 Speaker 2: You know, you just stick with this job and we'll 103 00:04:43,279 --> 00:04:45,440 Speaker 2: we'll we'll make sure you're okay for the next twenty 104 00:04:45,480 --> 00:04:46,600 Speaker 2: thirty years into retirement. 105 00:04:46,800 --> 00:04:47,599 Speaker 3: But that's very different. 106 00:04:47,640 --> 00:04:49,960 Speaker 2: That changed in the late seventies early eighties to a 107 00:04:50,040 --> 00:04:52,520 Speaker 2: situation where well, we're not going to worry about you, 108 00:04:52,520 --> 00:04:54,440 Speaker 2: you know, as the employeer. We're going to let you go, 109 00:04:54,480 --> 00:04:56,120 Speaker 2: give you a four to one k, let you invest 110 00:04:56,120 --> 00:04:57,520 Speaker 2: in it, and you're going to retire with a big 111 00:04:57,560 --> 00:05:00,240 Speaker 2: pile of money, as opposed to a you know, a 112 00:05:00,240 --> 00:05:02,800 Speaker 2: an ongoing stream of income and that makes it harder 113 00:05:02,839 --> 00:05:06,239 Speaker 2: to make decisions. So nobody has really been trained yet. 114 00:05:06,560 --> 00:05:08,280 Speaker 2: That first group that had to retire in a four 115 00:05:08,279 --> 00:05:10,000 Speaker 2: to one case, which we're kind of in the middle 116 00:05:10,000 --> 00:05:12,800 Speaker 2: of those folks. Now, those folks were trained that the 117 00:05:12,839 --> 00:05:14,880 Speaker 2: eighties and the nineties were normal. The market just goes 118 00:05:14,960 --> 00:05:18,320 Speaker 2: up and there's nothing bad ever happens. Well, this second 119 00:05:18,360 --> 00:05:20,160 Speaker 2: wave we've got has now been kind of trained the 120 00:05:20,200 --> 00:05:22,720 Speaker 2: opposite that's just just NonStop chaos the way it's been 121 00:05:22,720 --> 00:05:25,320 Speaker 2: for twenty five years. Both of them are doable. But 122 00:05:25,400 --> 00:05:27,560 Speaker 2: what we really have is we've had the last two 123 00:05:27,600 --> 00:05:31,080 Speaker 2: generations have seen the extremes, a whole bunch of nothing happening, 124 00:05:31,480 --> 00:05:33,760 Speaker 2: you know, nothing bad at all in the eighties, nineties, frankly, 125 00:05:33,800 --> 00:05:35,680 Speaker 2: and then a whole bunch of chaos. And now we've 126 00:05:35,720 --> 00:05:38,520 Speaker 2: got this third generation of retirees coming up that is 127 00:05:38,560 --> 00:05:41,000 Speaker 2: really kind of having to choose what reality is. So 128 00:05:41,760 --> 00:05:44,640 Speaker 2: these preconceived notions don't match their parents, and they don't 129 00:05:44,640 --> 00:05:45,680 Speaker 2: match their grandparents. 130 00:05:45,760 --> 00:05:46,800 Speaker 3: So there's an awful lot. 131 00:05:46,640 --> 00:05:49,560 Speaker 2: Of strange conversations I think that happened at dinner tables 132 00:05:49,600 --> 00:05:52,080 Speaker 2: around how did you do this? And what is it 133 00:05:52,120 --> 00:05:53,800 Speaker 2: that we can do? Why this feels so much different 134 00:05:53,839 --> 00:05:54,800 Speaker 2: than what I've heard in the past. 135 00:05:55,880 --> 00:05:58,200 Speaker 1: All right, well, let's get into a couple of hypothetical 136 00:05:58,279 --> 00:06:02,480 Speaker 1: examples here. Let's take two two people, same situation. Both 137 00:06:02,480 --> 00:06:05,479 Speaker 1: are fifty five years old, both have about two million 138 00:06:05,560 --> 00:06:09,240 Speaker 1: dollars saved, and both are thinking about retiring and let's 139 00:06:09,279 --> 00:06:13,240 Speaker 1: say eight to ten years person a. This is the 140 00:06:13,320 --> 00:06:16,200 Speaker 1: positive path they take some ownership. They sit down and 141 00:06:16,240 --> 00:06:20,760 Speaker 1: ask what does retirement actually cost me? Meaning, list out 142 00:06:20,800 --> 00:06:24,080 Speaker 1: what you're planning to spend, what all your fixed expenses are, 143 00:06:24,279 --> 00:06:28,239 Speaker 1: What are your want to expenses, you know, vacation, second home, 144 00:06:28,760 --> 00:06:32,600 Speaker 1: remodeling the basement, you know, replacing vehicles, all those kind 145 00:06:32,680 --> 00:06:36,320 Speaker 1: of things. What is that all going to actually cost me? 146 00:06:36,520 --> 00:06:40,480 Speaker 1: And then what are my biggest tax risks? Factorying taxes 147 00:06:40,720 --> 00:06:43,440 Speaker 1: depending on how this money and where it was accumulated. 148 00:06:43,960 --> 00:06:46,920 Speaker 1: And then how should the portfolio shift as they get older, 149 00:06:46,960 --> 00:06:50,240 Speaker 1: So they make a few key decisions. They do start 150 00:06:50,240 --> 00:06:53,800 Speaker 1: doing some Wroth conversions during those lower income years. They 151 00:06:53,839 --> 00:06:58,280 Speaker 1: adjust their portfolio to balance growth and income. They get 152 00:06:58,360 --> 00:07:02,240 Speaker 1: clear on their spending what matters, what is not essential, 153 00:07:02,600 --> 00:07:06,520 Speaker 1: nothing drastic, just being intentional. And then, like you and 154 00:07:06,560 --> 00:07:09,600 Speaker 1: I talk about all the time, stress testing this whole 155 00:07:09,640 --> 00:07:12,280 Speaker 1: plan to make sure it's going to hold up at 156 00:07:12,360 --> 00:07:15,800 Speaker 1: least cover all the essentials, you know, regardless of the 157 00:07:15,840 --> 00:07:20,840 Speaker 1: market situation. Fast forward ten years, they can retire with confidence, 158 00:07:20,920 --> 00:07:24,200 Speaker 1: not because the market was perfect, not because something didn't 159 00:07:24,240 --> 00:07:27,800 Speaker 1: go wrong in these intervening ten years. It's because they 160 00:07:27,880 --> 00:07:31,480 Speaker 1: built a plan, they constantly monitored it, and they were 161 00:07:31,520 --> 00:07:34,440 Speaker 1: in a position to make the plan work. That's what 162 00:07:34,520 --> 00:07:38,000 Speaker 1: we're talking about tonight, Brian walk us through the alternative. 163 00:07:38,440 --> 00:07:42,280 Speaker 1: The person b that just throws up their hands and says, well, 164 00:07:42,320 --> 00:07:43,400 Speaker 1: we hope it all works out. 165 00:07:43,760 --> 00:07:46,320 Speaker 2: Yeah, with what has gotten us, what we've done for 166 00:07:46,360 --> 00:07:48,440 Speaker 2: the last thirty or forty years, that's gotten us here, 167 00:07:48,480 --> 00:07:50,200 Speaker 2: so that must be the right thing to do. And 168 00:07:50,280 --> 00:07:52,960 Speaker 2: let's just pretend that really nothing changes through retirement. So 169 00:07:53,240 --> 00:07:55,160 Speaker 2: they'll say, you know, I think we're fine. Let's just 170 00:07:55,240 --> 00:07:57,240 Speaker 2: lead things as the arting broke. We don't fix it, 171 00:07:57,680 --> 00:08:00,320 Speaker 2: so we'll adjust later if we need to. So the 172 00:08:00,360 --> 00:08:02,760 Speaker 2: result of that is that they don't revisit their plan. 173 00:08:02,880 --> 00:08:05,960 Speaker 2: They don't adjust for taxes, not really don't adjust, or 174 00:08:05,960 --> 00:08:08,120 Speaker 2: not only don't adjust, but you aren't even paying attention 175 00:08:08,160 --> 00:08:10,440 Speaker 2: to have taxes are changed. You know, these are the 176 00:08:10,520 --> 00:08:12,320 Speaker 2: kind of folks who miss out on the on those 177 00:08:12,600 --> 00:08:15,800 Speaker 2: little deductions. You know, there's one now for senior citizens 178 00:08:15,800 --> 00:08:18,840 Speaker 2: of a certain age where you can if your income 179 00:08:18,840 --> 00:08:20,360 Speaker 2: has arranged a certain way, you'll get an extra bit 180 00:08:20,360 --> 00:08:22,400 Speaker 2: of a deduction. But if these folks aren't paying attention 181 00:08:22,400 --> 00:08:24,280 Speaker 2: to how the rules have changed, because they're in there, 182 00:08:24,640 --> 00:08:27,000 Speaker 2: they're kind of their pattern of how they manage their finances. 183 00:08:27,000 --> 00:08:30,119 Speaker 2: They're just acting passively, so they don't really talk about 184 00:08:30,160 --> 00:08:32,640 Speaker 2: what what does enough look like? What is it that 185 00:08:32,800 --> 00:08:34,960 Speaker 2: makes us us? And how do we know when we 186 00:08:35,000 --> 00:08:36,720 Speaker 2: have enough so that we don't have to worry about, 187 00:08:36,920 --> 00:08:40,160 Speaker 2: you know, things more. This isn't reckless behavior. It's just 188 00:08:40,240 --> 00:08:42,920 Speaker 2: kind of too passive, just you know, letting things float 189 00:08:42,960 --> 00:08:46,960 Speaker 2: along and results oftentimes in missing opportunities. So let's fast 190 00:08:47,000 --> 00:08:49,640 Speaker 2: forward ten years. On both of these folks, the markets 191 00:08:49,679 --> 00:08:52,000 Speaker 2: were okay, not great, not terrible, but you know, just 192 00:08:52,080 --> 00:08:54,600 Speaker 2: decent enough to make things work. But all of a sudden, 193 00:08:54,600 --> 00:08:57,600 Speaker 2: in this situation, taxes are a little bit higher than expected. 194 00:08:57,640 --> 00:09:00,360 Speaker 2: This makes the withdrawals feel a bit uncomfortable, feels like 195 00:09:00,400 --> 00:09:03,320 Speaker 2: money's getting tighter on a month to month basis, which 196 00:09:03,360 --> 00:09:06,000 Speaker 2: results in uncertainty around spending. And then that's where we 197 00:09:06,080 --> 00:09:09,280 Speaker 2: have the difficult discussions at the dinner table, where one 198 00:09:09,320 --> 00:09:11,160 Speaker 2: person wants one thing and the other is getting a 199 00:09:11,160 --> 00:09:14,040 Speaker 2: little antsy about what the outcomes might be. But the 200 00:09:14,080 --> 00:09:17,160 Speaker 2: biggest problem here is that they no longer feel in control. 201 00:09:17,520 --> 00:09:19,880 Speaker 2: So it doesn't matter how much you make. This can 202 00:09:19,880 --> 00:09:22,240 Speaker 2: be people making three hundred, five hundred thousand even more 203 00:09:22,280 --> 00:09:24,679 Speaker 2: every single year. They've built real wealth, but they get 204 00:09:24,760 --> 00:09:27,840 Speaker 2: stuck in this gray area, simply not confident enough to 205 00:09:27,840 --> 00:09:31,200 Speaker 2: pull the trigger and retire, not intentional enough to accelerate things, 206 00:09:31,280 --> 00:09:34,520 Speaker 2: and so they wait and they just hope and really 207 00:09:34,520 --> 00:09:37,400 Speaker 2: don't take any action to make things work out the 208 00:09:37,400 --> 00:09:40,480 Speaker 2: way that they want to. That is letting the market decide. 209 00:09:40,640 --> 00:09:43,120 Speaker 2: And let us be very very clear here, the market itself, 210 00:09:43,400 --> 00:09:46,400 Speaker 2: that's not a financial plan. Simply sitting and watching and 211 00:09:46,440 --> 00:09:49,319 Speaker 2: taking whatever happens. That's not a good plan for everybody. 212 00:09:49,760 --> 00:09:52,120 Speaker 2: So the whole point of financial planning is to make 213 00:09:52,160 --> 00:09:54,880 Speaker 2: sure you understand, again, what are my resources, what am 214 00:09:54,880 --> 00:09:57,400 Speaker 2: I trying to do with them? And what can I 215 00:09:57,480 --> 00:09:59,480 Speaker 2: expect in the good times? More importantly, what should I 216 00:09:59,480 --> 00:10:01,240 Speaker 2: expect in the times and if I can build a 217 00:10:01,240 --> 00:10:03,480 Speaker 2: plan that's going to float through all of those, then 218 00:10:03,520 --> 00:10:06,040 Speaker 2: that'll be okay. But it's never it's not set and 219 00:10:06,040 --> 00:10:08,600 Speaker 2: forget it before you leave the doc. It is making 220 00:10:08,640 --> 00:10:11,079 Speaker 2: adjustments along the way based on the conditions you see 221 00:10:11,080 --> 00:10:13,400 Speaker 2: ahead of you. It's really kind of never overbobbed. 222 00:10:14,360 --> 00:10:17,319 Speaker 1: Yeah, and again, going back to my prior point, most 223 00:10:17,360 --> 00:10:20,040 Speaker 1: of the time when these plans don't work, it's because 224 00:10:20,080 --> 00:10:25,080 Speaker 1: there's a spending problem, whether it's lifestyle creep. Because you 225 00:10:25,200 --> 00:10:27,400 Speaker 1: have a million or a million and a half dollars 226 00:10:27,480 --> 00:10:31,600 Speaker 1: of assets on paper, you feel rich. Therefore you maybe 227 00:10:31,640 --> 00:10:34,719 Speaker 1: allocate too much of your money towards, let's say your 228 00:10:34,800 --> 00:10:38,800 Speaker 1: kids are grandkids college education costs. I can think of 229 00:10:38,840 --> 00:10:41,679 Speaker 1: people right now, Brian, where where we run their plan. 230 00:10:42,360 --> 00:10:45,400 Speaker 1: They have about an eight percent probability of being able 231 00:10:45,440 --> 00:10:48,600 Speaker 1: to retire, but yet they are taking out loans and 232 00:10:48,640 --> 00:10:53,840 Speaker 1: writing big checks to send their kids to non state schools. 233 00:10:53,880 --> 00:10:56,440 Speaker 1: I mean, spending thirty to forty thousand dollars a year. 234 00:10:56,480 --> 00:11:00,000 Speaker 1: This is money they don't have, and they just throw 235 00:11:00,160 --> 00:11:02,200 Speaker 1: their hands up and say, well, this is what we've 236 00:11:02,240 --> 00:11:05,319 Speaker 1: decided to do, and somehow it's going to work out 237 00:11:05,440 --> 00:11:07,440 Speaker 1: and what I see on the back end of this. 238 00:11:07,520 --> 00:11:10,520 Speaker 1: Sometimes you know again, Brian, you and I have both 239 00:11:10,600 --> 00:11:13,480 Speaker 1: been doing this for over thirty years. What can happen 240 00:11:13,600 --> 00:11:16,240 Speaker 1: is you get into your mid to late eighties and 241 00:11:16,280 --> 00:11:18,880 Speaker 1: you start running out of money, and yeah, you are 242 00:11:18,920 --> 00:11:22,040 Speaker 1: all well intentioned, but what ends up happening You now 243 00:11:22,080 --> 00:11:26,640 Speaker 1: become a burden from a financial standpoint to exactly the 244 00:11:26,679 --> 00:11:30,079 Speaker 1: same people you were trying to help when they were 245 00:11:30,080 --> 00:11:32,760 Speaker 1: in their twenties. And that's why you know, a reality 246 00:11:32,880 --> 00:11:36,839 Speaker 1: check here with a good fiduciary advisor that does not 247 00:11:36,920 --> 00:11:40,199 Speaker 1: have any emotion in the game, can hopefully get out 248 00:11:40,200 --> 00:11:42,839 Speaker 1: in front of some of this stuff, mitigate it before 249 00:11:42,880 --> 00:11:44,560 Speaker 1: it becomes a longer term problem. 250 00:11:45,480 --> 00:11:47,600 Speaker 2: So here's the shift that we think everybody should be 251 00:11:47,600 --> 00:11:50,079 Speaker 2: taking here. If you find yourself at this crossroads of 252 00:11:50,280 --> 00:11:51,839 Speaker 2: here's what I want to do, but I'm not sure 253 00:11:51,880 --> 00:11:54,360 Speaker 2: I can get there, so shift the question that's a 254 00:11:54,440 --> 00:11:57,640 Speaker 2: very stressful situation, be changed the question. Stop asking yourself 255 00:11:57,720 --> 00:11:59,920 Speaker 2: is this enough? Because that's going to cause a lot 256 00:11:59,920 --> 00:12:02,760 Speaker 2: of stress and anxiety. Start asking yourself, what do I 257 00:12:02,840 --> 00:12:05,480 Speaker 2: need to do to make this enough? Here's what I 258 00:12:05,559 --> 00:12:07,560 Speaker 2: have and it needs to do this, this, and this 259 00:12:07,840 --> 00:12:09,600 Speaker 2: how do I make that happen? What are the steps 260 00:12:09,600 --> 00:12:11,880 Speaker 2: I can do today so that I get that outcome. 261 00:12:11,520 --> 00:12:12,080 Speaker 3: In the future. 262 00:12:12,360 --> 00:12:15,360 Speaker 2: One question creates anxiety, the other creates action. 263 00:12:16,480 --> 00:12:19,480 Speaker 1: Here's the all Worth advice, and it really is quite simple. 264 00:12:20,080 --> 00:12:25,199 Speaker 1: Don't just drift and hope, be proactive and build a plan. 265 00:12:25,679 --> 00:12:27,920 Speaker 1: Coming up next, we'll talk about a moment that sounds 266 00:12:27,960 --> 00:12:31,720 Speaker 1: great on paper but can quietly go very wrong if 267 00:12:31,760 --> 00:12:34,520 Speaker 1: you're not careful. You're listening to Simply Money, presented by 268 00:12:34,559 --> 00:12:38,000 Speaker 1: all Worth Financial on fifty five KRC the talk station. 269 00:12:42,720 --> 00:12:46,120 Speaker 1: You're listening Simply Money presented by all Worth Financial umbopspond 270 00:12:46,160 --> 00:12:49,079 Speaker 1: seller along with Brian James. Hey. If you can't listen 271 00:12:49,120 --> 00:12:52,440 Speaker 1: to Simply Money live every night, subscribe and get our 272 00:12:52,559 --> 00:12:55,679 Speaker 1: daily podcast. And if you think your friends or family 273 00:12:55,720 --> 00:12:59,320 Speaker 1: could use some financial advice, tell them about us as well. 274 00:12:59,440 --> 00:13:02,520 Speaker 1: Just search Empty Money on the iHeart app or wherever 275 00:13:02,960 --> 00:13:06,800 Speaker 1: you get your podcasts. When your wealth is spread across 276 00:13:06,920 --> 00:13:12,320 Speaker 1: multiple accounts, your income fluctuates, and markets don't quite cooperate, 277 00:13:12,800 --> 00:13:16,000 Speaker 1: how do you actually build a plan that holds up 278 00:13:16,000 --> 00:13:19,280 Speaker 1: in real life? We're breaking down the blind spots. Even 279 00:13:19,360 --> 00:13:24,920 Speaker 1: experience investors sometimes miss. Straight ahead tonight, we want to 280 00:13:24,960 --> 00:13:28,080 Speaker 1: talk about the good old financial windfall. Maybe it's a 281 00:13:28,120 --> 00:13:31,360 Speaker 1: big bonus payment, maybe you just sold a business, maybe 282 00:13:31,400 --> 00:13:35,480 Speaker 1: it's a large inheritance and suddenly there's a large amount 283 00:13:35,520 --> 00:13:38,840 Speaker 1: of cash sitting in your bank account. Now here's the 284 00:13:38,920 --> 00:13:43,199 Speaker 1: part most people don't expect, and this is very counterintuitive. 285 00:13:43,640 --> 00:13:47,720 Speaker 1: That moment right after that money hits, when you feel great, 286 00:13:48,360 --> 00:13:51,760 Speaker 1: is actually one of the highest risk moments in your 287 00:13:51,800 --> 00:13:55,120 Speaker 1: financial life. If you're not careful, Brian, let's get into 288 00:13:55,120 --> 00:13:58,240 Speaker 1: what we're talking about. With the highest risk moments, you 289 00:13:58,240 --> 00:14:00,520 Speaker 1: would think the opposite. Hey, I just got a big 290 00:14:00,600 --> 00:14:03,680 Speaker 1: cash bonus or inheritance. Life is good. What do we 291 00:14:03,720 --> 00:14:04,960 Speaker 1: need to watch out for here? 292 00:14:05,360 --> 00:14:07,280 Speaker 2: Yeah, a lot of people out there saying, what's risky 293 00:14:07,320 --> 00:14:09,360 Speaker 2: about a big pile of money falling out of the sky. 294 00:14:09,440 --> 00:14:10,760 Speaker 3: That seems to reduce the risk. 295 00:14:10,840 --> 00:14:14,079 Speaker 2: Well, it's all about opportunity, and so your instinct is 296 00:14:14,120 --> 00:14:15,840 Speaker 2: going to be to do something, got to get this invested, 297 00:14:15,920 --> 00:14:18,079 Speaker 2: We're going to pay something off, or we're going to 298 00:14:18,120 --> 00:14:19,920 Speaker 2: go buy the thing that we've always wanted to buy. 299 00:14:20,120 --> 00:14:23,280 Speaker 2: And it's always about moving quickly. Sometimes that that instinct 300 00:14:23,360 --> 00:14:26,520 Speaker 2: is where the mistakes happen. So if you're acting too quickly, 301 00:14:26,560 --> 00:14:28,440 Speaker 2: that means you're feeling the pressure, like, Okay, we've got 302 00:14:28,480 --> 00:14:30,080 Speaker 2: this big pile of money there, it's not it's sitting 303 00:14:30,120 --> 00:14:32,520 Speaker 2: there doing nothing in the bank. Interest rates are you know, 304 00:14:32,560 --> 00:14:33,800 Speaker 2: they're not as terrible as they used to be, but 305 00:14:33,840 --> 00:14:35,640 Speaker 2: they're not great either, So I need to put this 306 00:14:35,720 --> 00:14:37,360 Speaker 2: to work. I don't want to miss, you know, any 307 00:14:37,440 --> 00:14:38,800 Speaker 2: upswing in the market and so forth. 308 00:14:39,040 --> 00:14:39,880 Speaker 3: I should be doing. 309 00:14:39,760 --> 00:14:41,360 Speaker 2: Something smart right now, but I don't know what the 310 00:14:41,360 --> 00:14:43,160 Speaker 2: smart thing is, so I'll just do nothing. 311 00:14:43,520 --> 00:14:44,480 Speaker 3: So really they're there. 312 00:14:44,520 --> 00:14:46,280 Speaker 2: But the way to think about this, though, is there's 313 00:14:46,320 --> 00:14:49,320 Speaker 2: really never a penalty for waiting and thinking about what 314 00:14:49,480 --> 00:14:53,200 Speaker 2: needs to happen. And oftentimes this this cash, this type 315 00:14:53,240 --> 00:14:56,040 Speaker 2: of windfall comes along with a lot of moving parts itself. 316 00:14:56,080 --> 00:14:58,680 Speaker 2: Perhaps if you're the one settling the estate or if 317 00:14:58,720 --> 00:15:01,160 Speaker 2: you're the one who is selling the business. All of 318 00:15:01,200 --> 00:15:04,840 Speaker 2: these are significant amounts of work unto themselves before you 319 00:15:04,880 --> 00:15:06,320 Speaker 2: get to the point where you're going to where you 320 00:15:06,360 --> 00:15:08,040 Speaker 2: decide what you're going to do with the proceeds or 321 00:15:08,040 --> 00:15:10,600 Speaker 2: whatever this transaction is, so you do not have to 322 00:15:10,680 --> 00:15:13,360 Speaker 2: rush to do anything. And you know, I'd also say 323 00:15:13,440 --> 00:15:15,680 Speaker 2: you know that you also should consider the idea that 324 00:15:15,720 --> 00:15:18,080 Speaker 2: there isn't There's almost never one idea that is the 325 00:15:18,120 --> 00:15:20,080 Speaker 2: most obvious that you should throw it all at the 326 00:15:20,120 --> 00:15:23,360 Speaker 2: one thing. Perhaps there are several things in your life 327 00:15:23,360 --> 00:15:25,800 Speaker 2: that could use some financial attention. So so the first 328 00:15:25,800 --> 00:15:27,960 Speaker 2: step here is before you do anything after one of 329 00:15:27,960 --> 00:15:31,200 Speaker 2: these transactions, just pause, let it go for a little bit, 330 00:15:31,480 --> 00:15:33,160 Speaker 2: you know, park that money in a high yield savings 331 00:15:33,200 --> 00:15:35,720 Speaker 2: account somethingay, you'll get a decent amount of interest on it, 332 00:15:36,160 --> 00:15:39,360 Speaker 2: you know, maybe hopefully three percent, something like that, and 333 00:15:39,360 --> 00:15:41,480 Speaker 2: then give yourself a month, two months, maybe even three 334 00:15:41,520 --> 00:15:44,600 Speaker 2: months before pulling the trigger in any major decisions, because 335 00:15:44,600 --> 00:15:48,080 Speaker 2: you're not buying yourself yield, you're buying yourself clarity. Worry 336 00:15:48,120 --> 00:15:51,880 Speaker 2: first about how do I How will I clearly understand 337 00:15:52,320 --> 00:15:55,680 Speaker 2: which of my financial moves, my financial things that need attention, 338 00:15:55,960 --> 00:15:58,280 Speaker 2: will make me feel the most confident if I execute 339 00:15:58,280 --> 00:16:00,000 Speaker 2: on that, that decision is not going to be clear. 340 00:16:00,080 --> 00:16:01,720 Speaker 2: On day one of that money hitting the bank, your 341 00:16:01,760 --> 00:16:04,080 Speaker 2: head's gonna be spending. But if you let it percolate 342 00:16:04,120 --> 00:16:06,160 Speaker 2: for a few weeks or a few months, then you'll 343 00:16:06,160 --> 00:16:08,120 Speaker 2: have a good feeling about what's going to feel the 344 00:16:08,120 --> 00:16:09,760 Speaker 2: most impactful to pull the trigger on. 345 00:16:10,680 --> 00:16:12,920 Speaker 1: Yeah, Brian, what tends to happen here when we're talking 346 00:16:12,920 --> 00:16:15,200 Speaker 1: about a large amount of money hitting your account in 347 00:16:15,240 --> 00:16:18,360 Speaker 1: the short term is there's emotion attached to that, and 348 00:16:18,400 --> 00:16:22,120 Speaker 1: there's very different emotions involved depending on who we're talking about. 349 00:16:22,360 --> 00:16:25,040 Speaker 1: For some people, it's greed, fear of missing well not 350 00:16:25,120 --> 00:16:27,720 Speaker 1: just greed, but just fear of missing out. Man, if 351 00:16:27,760 --> 00:16:30,440 Speaker 1: I don't get all this money invested today, I'm going 352 00:16:30,520 --> 00:16:32,320 Speaker 1: to miss out on a big market move and I 353 00:16:32,360 --> 00:16:35,560 Speaker 1: didn't make any money on that windfall. The other side 354 00:16:35,560 --> 00:16:38,040 Speaker 1: of that is fear. You know, I'm afraid to get 355 00:16:38,080 --> 00:16:41,040 Speaker 1: this money deployed because it could drop in value. So, 356 00:16:41,200 --> 00:16:47,200 Speaker 1: depending on the temperament of each person, different emotional different 357 00:16:47,240 --> 00:16:50,400 Speaker 1: emotions can drive these short term decisions. And this is 358 00:16:50,480 --> 00:16:54,000 Speaker 1: why in a perfect world it's good to sit down again. 359 00:16:54,440 --> 00:16:57,280 Speaker 1: Like we talked about in the last segment, working with 360 00:16:57,360 --> 00:17:00,720 Speaker 1: a good fiduciary advisor is gonna get a different set 361 00:17:00,760 --> 00:17:04,800 Speaker 1: of eyes and ears and whatever on this thing that 362 00:17:04,880 --> 00:17:09,639 Speaker 1: are not emotionally attached to the decision, and then dovetail 363 00:17:09,680 --> 00:17:13,600 Speaker 1: this large financial windfall with a long term financial plan. 364 00:17:13,960 --> 00:17:16,440 Speaker 1: And like you just said, it might be a combination 365 00:17:16,600 --> 00:17:20,120 Speaker 1: of things. This is an opportunity to build an emergency 366 00:17:20,119 --> 00:17:23,240 Speaker 1: fund and and adequately funded. If you don't have that 367 00:17:23,320 --> 00:17:26,320 Speaker 1: in place in some of it, you know, do some 368 00:17:26,400 --> 00:17:30,280 Speaker 1: different things where some cash is needed, like a roth conversion, 369 00:17:30,440 --> 00:17:34,359 Speaker 1: let's say. So sitting down with an advisor and taking 370 00:17:34,400 --> 00:17:38,040 Speaker 1: that big lump sum and factoring into an overall strategy 371 00:17:38,640 --> 00:17:41,680 Speaker 1: is the right way to go here, especially if you're 372 00:17:41,720 --> 00:17:45,240 Speaker 1: someone that's prone to just make short term emotional decisions. 373 00:17:45,680 --> 00:17:47,359 Speaker 2: Yeah, and then, as I would say, you mentioned that 374 00:17:47,400 --> 00:17:49,920 Speaker 2: emergency fund thing, a lot of people sort of make 375 00:17:49,960 --> 00:17:53,280 Speaker 2: a decision, you know, by default by not doing anything 376 00:17:53,280 --> 00:17:56,199 Speaker 2: with it. So oftentimes we'll have somebody who come in 377 00:17:56,240 --> 00:17:57,639 Speaker 2: and all of a sudden, we haven't seen him in 378 00:17:57,640 --> 00:17:59,360 Speaker 2: a while, and they've got you know, quarter million dollars 379 00:17:59,400 --> 00:18:01,160 Speaker 2: sitting in a bank. Well, where did that come from? 380 00:18:01,400 --> 00:18:03,119 Speaker 2: Oh that we inherited that from mom and dad. So 381 00:18:03,160 --> 00:18:05,000 Speaker 2: that's our emergency fund. It's going to We don't want 382 00:18:05,000 --> 00:18:07,360 Speaker 2: to do anything with that cash, because that's just that, 383 00:18:07,359 --> 00:18:10,080 Speaker 2: that's our emergency fund. Okay, did we calculate, did we 384 00:18:10,119 --> 00:18:12,879 Speaker 2: think of, you know, put some thought into what what 385 00:18:12,880 --> 00:18:15,239 Speaker 2: the emergency fund should be? Well, no, that's just it 386 00:18:15,280 --> 00:18:16,720 Speaker 2: was cash when we got it, so we're just going 387 00:18:16,800 --> 00:18:18,919 Speaker 2: to sit on it like that. That way, that's a 388 00:18:18,960 --> 00:18:22,280 Speaker 2: missed opportunity though when that happens, because you know that 389 00:18:22,280 --> 00:18:24,119 Speaker 2: that two hundred and fifty thousand dollars that could be 390 00:18:24,200 --> 00:18:26,720 Speaker 2: two years worth of spending for somebody, and if they're 391 00:18:26,720 --> 00:18:28,600 Speaker 2: not actually going to take advantage of it, then it's 392 00:18:28,640 --> 00:18:30,720 Speaker 2: not really helping them at all. So let's be let's 393 00:18:30,760 --> 00:18:34,160 Speaker 2: make an educated decision maybe maybe six, nine, twelve months, 394 00:18:34,200 --> 00:18:37,480 Speaker 2: and then figure out then declare that you have accomplished 395 00:18:37,520 --> 00:18:40,320 Speaker 2: the emergency fund goal. Right, So if your emergency fund 396 00:18:40,440 --> 00:18:42,880 Speaker 2: is fifty thousand dollars or it's one hundred thousand when 397 00:18:42,880 --> 00:18:45,480 Speaker 2: you were at that dollar amount, declare that to be zero. 398 00:18:45,600 --> 00:18:48,439 Speaker 2: Anything above that gives you the freedom to go tackle 399 00:18:48,440 --> 00:18:50,000 Speaker 2: one of your other goals. And it doesn't have to 400 00:18:50,000 --> 00:18:52,360 Speaker 2: be investing. It can be paying something off. It could 401 00:18:52,359 --> 00:18:54,280 Speaker 2: be taking the family on that trip you've always wanted 402 00:18:54,280 --> 00:18:54,480 Speaker 2: to do. 403 00:18:54,560 --> 00:18:54,919 Speaker 3: Whatever. 404 00:18:55,240 --> 00:18:57,480 Speaker 2: But don't just designate a pile of cash to be 405 00:18:57,520 --> 00:18:59,919 Speaker 2: the emergency fund because it because it is just a 406 00:19:00,040 --> 00:19:02,640 Speaker 2: pile of cash. Figure out what you need and then 407 00:19:02,720 --> 00:19:06,400 Speaker 2: rearrange your portfolio accordingly so that you can take advantage 408 00:19:06,440 --> 00:19:09,439 Speaker 2: of the assets you've been given, your parents, your family 409 00:19:09,440 --> 00:19:11,399 Speaker 2: members who loved you and gave you that money, wanted 410 00:19:11,440 --> 00:19:14,280 Speaker 2: you to use it for their benefit, not refuse to 411 00:19:14,320 --> 00:19:15,640 Speaker 2: look at it, pretend it doesn't exist. 412 00:19:17,080 --> 00:19:19,120 Speaker 1: Well, and I don't want to be a kill joy here, 413 00:19:19,119 --> 00:19:21,680 Speaker 1: but you and I, Brian have both seen people, you know, 414 00:19:21,920 --> 00:19:24,960 Speaker 1: when we're talking about this large lump sum, people suddenly 415 00:19:25,080 --> 00:19:29,560 Speaker 1: redefine what emergency fund means. Sometimes people say, well, that's 416 00:19:29,600 --> 00:19:32,000 Speaker 1: our emergency fund. We don't want anything to happen to 417 00:19:32,040 --> 00:19:34,840 Speaker 1: it or touch it, when really what they're talking about 418 00:19:34,920 --> 00:19:36,639 Speaker 1: is they're going to spend it on a bunch of 419 00:19:36,680 --> 00:19:39,960 Speaker 1: stuff and they don't want us, as their financial advisor 420 00:19:40,000 --> 00:19:42,920 Speaker 1: to know about it. It could just become very interesting. 421 00:19:42,960 --> 00:19:45,600 Speaker 1: Here's the all Worth advice. When you receive a windfall, 422 00:19:45,760 --> 00:19:50,240 Speaker 1: don't rush to invest it or spend it. Plan, pause 423 00:19:50,720 --> 00:19:54,320 Speaker 1: and use the moment to make smarter long term decisions, 424 00:19:54,680 --> 00:20:00,439 Speaker 1: especially around taxes. Half of Americans are already using AI 425 00:20:00,760 --> 00:20:04,280 Speaker 1: in some form or fashion for financial advice. But just 426 00:20:04,359 --> 00:20:08,600 Speaker 1: because AI can manage your money, should it be doing that? 427 00:20:09,040 --> 00:20:11,840 Speaker 1: Next we'll give you our couple of cents here on 428 00:20:11,920 --> 00:20:14,920 Speaker 1: where it helps and where it can seriously hurt you 429 00:20:15,400 --> 00:20:17,760 Speaker 1: if you jump in the pool too far. Here in 430 00:20:17,880 --> 00:20:21,440 Speaker 1: terms of AI managing your money, you're listening to Simply Money, 431 00:20:21,440 --> 00:20:24,480 Speaker 1: presented by all Worth Financial on fifty five KRC the 432 00:20:24,840 --> 00:20:32,320 Speaker 1: talk station. You're listening to Simply Money presented by all 433 00:20:32,320 --> 00:20:36,560 Speaker 1: Worth Financial. I'm Bob sponsorller along with Brian James. Let's 434 00:20:36,600 --> 00:20:40,120 Speaker 1: talk about something that's quietly working its way into your 435 00:20:40,160 --> 00:20:43,800 Speaker 1: financial life, whether you realize it right now or not. 436 00:20:44,160 --> 00:20:48,440 Speaker 1: And it's artificial intelligence. It's in your banking app, it's 437 00:20:48,520 --> 00:20:51,720 Speaker 1: in your email account, it's in your investment account. It's 438 00:20:51,760 --> 00:20:57,240 Speaker 1: showing up in advertisements promising to find tax savings, automatically 439 00:20:57,320 --> 00:21:01,120 Speaker 1: cancel any of those unwonted subscriptions might have, and even 440 00:21:01,200 --> 00:21:05,320 Speaker 1: optimize your investment portfolio. Basically take over and run your 441 00:21:05,359 --> 00:21:09,080 Speaker 1: whole financial life if you'll let it. And Brian apparently 442 00:21:09,520 --> 00:21:12,160 Speaker 1: a lot of people starting to buy into this whole concept. 443 00:21:12,720 --> 00:21:16,040 Speaker 2: According to a twenty twenty five JD Power study, fifty 444 00:21:16,080 --> 00:21:19,320 Speaker 2: one percent of consumers have already used artificial intelligence for 445 00:21:19,400 --> 00:21:22,120 Speaker 2: financial advice, and another twenty seven percent can say they're 446 00:21:22,160 --> 00:21:25,000 Speaker 2: considering it. But the real question isn't really whether AI 447 00:21:25,119 --> 00:21:27,879 Speaker 2: is useful, it's when you should actually trust it with 448 00:21:27,960 --> 00:21:31,080 Speaker 2: your money and when should you not. So let's break 449 00:21:31,119 --> 00:21:33,800 Speaker 2: this down a little bit where AI actually does make sense. 450 00:21:34,000 --> 00:21:36,960 Speaker 2: It can be an incredibly powerful tool. We use it 451 00:21:36,960 --> 00:21:39,280 Speaker 2: ourselves here. I refer to it as Google on steroids. 452 00:21:39,280 --> 00:21:41,399 Speaker 2: Not only will it find the information that I need, 453 00:21:41,680 --> 00:21:44,040 Speaker 2: you know, perhaps on the newest tax codes or whatever, 454 00:21:44,080 --> 00:21:47,000 Speaker 2: but it'll also tell me how different structures, different techniques 455 00:21:47,040 --> 00:21:50,240 Speaker 2: can work within those tax codes and how they used 456 00:21:50,240 --> 00:21:50,520 Speaker 2: to work. 457 00:21:50,520 --> 00:21:51,040 Speaker 3: For example. 458 00:21:51,080 --> 00:21:53,800 Speaker 2: That's a good way that helps me help my clients 459 00:21:53,880 --> 00:21:56,160 Speaker 2: understand what are the changes. Why are we talking about 460 00:21:56,200 --> 00:21:58,720 Speaker 2: this now versus five years ago? Well, because things are different, 461 00:21:58,760 --> 00:22:01,560 Speaker 2: and here's why. So you can have a for a 462 00:22:01,560 --> 00:22:04,040 Speaker 2: financial planning. You can have an AI stress test your 463 00:22:04,080 --> 00:22:06,160 Speaker 2: retirement plan with a little bit of data. You can 464 00:22:06,200 --> 00:22:08,880 Speaker 2: ask it what happens if I retire five years earlier, 465 00:22:09,160 --> 00:22:11,640 Speaker 2: what are the tax implications of selling this business? 466 00:22:11,680 --> 00:22:11,840 Speaker 3: You know? 467 00:22:11,920 --> 00:22:14,720 Speaker 2: And what where are the potential weak spots in my strategy. 468 00:22:15,000 --> 00:22:17,200 Speaker 2: That's where AI shines. But it's only going to give 469 00:22:17,200 --> 00:22:20,560 Speaker 2: you the factual information. What it can't give you is, 470 00:22:20,640 --> 00:22:22,400 Speaker 2: you know, how have other people dealt with this? What's 471 00:22:22,440 --> 00:22:24,359 Speaker 2: it going to feel like when I go through this, 472 00:22:24,720 --> 00:22:27,960 Speaker 2: you know, where where are those points where it's one 473 00:22:27,960 --> 00:22:30,800 Speaker 2: thing to identify, here's the facts behind this decision, but 474 00:22:30,840 --> 00:22:32,919 Speaker 2: it's another thing entirely to talk about. What is it 475 00:22:32,960 --> 00:22:35,000 Speaker 2: going to feel like? What will I will? What's going 476 00:22:35,080 --> 00:22:36,760 Speaker 2: to scare me to death about this kind of thing? 477 00:22:37,119 --> 00:22:38,840 Speaker 3: And that's why I still feel like good. 478 00:22:39,040 --> 00:22:41,399 Speaker 1: Yeah, you know you're you're ten or eleven years younger 479 00:22:41,400 --> 00:22:45,080 Speaker 1: than me, and you're very experienced in this business. How 480 00:22:45,119 --> 00:22:48,000 Speaker 1: many people that you're talking to right now that come 481 00:22:48,000 --> 00:22:51,480 Speaker 1: into your office are walking in and saying, Hey, I 482 00:22:51,600 --> 00:22:55,600 Speaker 1: ran this scenario using chat GPT, here's what it spit 483 00:22:55,680 --> 00:22:59,199 Speaker 1: out for me. Please comment on that. Are those conversations 484 00:22:59,280 --> 00:23:03,280 Speaker 1: actually starting to happen where you know, clients or potential 485 00:23:03,320 --> 00:23:07,720 Speaker 1: clients are walking in actually having used AI for some 486 00:23:07,760 --> 00:23:11,480 Speaker 1: pretty complex calculations. Are you actually seeing that at this 487 00:23:11,560 --> 00:23:12,439 Speaker 1: point in your career? 488 00:23:13,200 --> 00:23:13,800 Speaker 2: Complex? 489 00:23:13,880 --> 00:23:14,960 Speaker 3: I think is the difference. 490 00:23:15,200 --> 00:23:17,240 Speaker 2: I think I've heard that one time where somebody had 491 00:23:17,280 --> 00:23:20,800 Speaker 2: taken their entire you know, financial situation and spent the 492 00:23:20,800 --> 00:23:24,520 Speaker 2: weekend arguing with GPT over how what. 493 00:23:24,480 --> 00:23:25,640 Speaker 3: They should do and that kind of thing. 494 00:23:25,960 --> 00:23:31,240 Speaker 2: But the lack of trust was definitely there because they 495 00:23:31,240 --> 00:23:33,240 Speaker 2: brought it all back into me and said, well, here's 496 00:23:33,240 --> 00:23:36,000 Speaker 2: what this says, and we probably agreed with half of it, 497 00:23:36,040 --> 00:23:38,119 Speaker 2: and the rest of it we were really not super 498 00:23:38,119 --> 00:23:39,920 Speaker 2: comfortable with, and we just kind of found another way 499 00:23:39,920 --> 00:23:42,120 Speaker 2: to attack it. So I think there's still a little 500 00:23:42,119 --> 00:23:44,000 Speaker 2: bit of suspicion about that there's not a human being 501 00:23:44,080 --> 00:23:45,720 Speaker 2: on the other end of this. Not that the information 502 00:23:45,760 --> 00:23:48,200 Speaker 2: is wrong, but people just have a hard time pulling 503 00:23:48,200 --> 00:23:50,919 Speaker 2: the trigger without looking somebody else in the eyes that 504 00:23:50,920 --> 00:23:53,120 Speaker 2: they trust and saying is this a good idea for 505 00:23:53,160 --> 00:23:55,560 Speaker 2: me or not. I don't think we're ready yet to 506 00:23:55,640 --> 00:23:58,320 Speaker 2: have a laptop substitute for another human being across the 507 00:23:58,359 --> 00:24:00,640 Speaker 2: table saying yes, that's a good idea, or know, here's 508 00:24:00,640 --> 00:24:01,760 Speaker 2: how you should probably tweak it. 509 00:24:01,760 --> 00:24:03,399 Speaker 3: I think we've got little ways to go before we 510 00:24:03,480 --> 00:24:03,880 Speaker 3: get there. 511 00:24:04,640 --> 00:24:07,240 Speaker 1: Yeah, I totally agree from where I'm sitting. You know, 512 00:24:07,320 --> 00:24:10,080 Speaker 1: I haven't had people come in and have all this stuff, 513 00:24:10,160 --> 00:24:12,320 Speaker 1: you know, spit out. But like you, I use chat 514 00:24:12,359 --> 00:24:16,080 Speaker 1: GP all the time. I think it's wonderful. And I 515 00:24:16,160 --> 00:24:19,240 Speaker 1: also tell clients all the time the best client is 516 00:24:19,280 --> 00:24:23,160 Speaker 1: a more informed client. So the the fact that people 517 00:24:23,160 --> 00:24:25,960 Speaker 1: will go out and do some research, run some numbers, 518 00:24:26,080 --> 00:24:29,760 Speaker 1: you know, look at some historical numbers on investing and 519 00:24:29,800 --> 00:24:32,680 Speaker 1: inflation and taxes. Those are all good things. That makes 520 00:24:32,680 --> 00:24:36,360 Speaker 1: for more informed people walking in the door. And then 521 00:24:36,440 --> 00:24:39,000 Speaker 1: to the to the point I think you're making. You know, 522 00:24:39,040 --> 00:24:41,760 Speaker 1: if people walk in and they've already run some numbers 523 00:24:41,800 --> 00:24:45,639 Speaker 1: and it created sometimes more questions than answers, that what 524 00:24:45,840 --> 00:24:49,359 Speaker 1: That's what makes for a wonderful planning environment with a 525 00:24:49,359 --> 00:24:53,360 Speaker 1: good fiduciary advisor to to really put this whole thing 526 00:24:53,400 --> 00:24:58,520 Speaker 1: together and and help people actually make confident decisions with 527 00:24:58,600 --> 00:25:01,520 Speaker 1: their money. And that's why I'm a big fan of AI. 528 00:25:01,760 --> 00:25:04,560 Speaker 1: But I think it has its limits, at least right 529 00:25:04,600 --> 00:25:05,720 Speaker 1: now as we speak. 530 00:25:06,160 --> 00:25:08,639 Speaker 2: Right now, let's talk about what's coming with AI. Right 531 00:25:08,680 --> 00:25:11,159 Speaker 2: we just talked about the Google on steroids version. Just 532 00:25:11,280 --> 00:25:13,960 Speaker 2: ask you questions and it'll find information and then you 533 00:25:14,040 --> 00:25:16,679 Speaker 2: make decisions, and you, the human being behind all this, 534 00:25:16,720 --> 00:25:19,119 Speaker 2: still go off and do what you do. But now 535 00:25:19,200 --> 00:25:22,360 Speaker 2: there's something called agentic AI where AI is acting as 536 00:25:22,400 --> 00:25:24,760 Speaker 2: your agent. It's not just telling you what you should 537 00:25:24,760 --> 00:25:26,479 Speaker 2: do or sharing facts or there were things like that, 538 00:25:26,480 --> 00:25:28,320 Speaker 2: but it's actually going out and doing it for you. 539 00:25:28,640 --> 00:25:33,440 Speaker 2: This means moving money, placing trades, filing your taxes, reallocating portfolios. 540 00:25:33,680 --> 00:25:36,160 Speaker 2: And this is where things go from helpful to potentially 541 00:25:36,200 --> 00:25:40,000 Speaker 2: dangerous because you're making commitments to your banks, your financial institutions, 542 00:25:40,040 --> 00:25:44,159 Speaker 2: the irs that things are happening without you actually pushing 543 00:25:44,200 --> 00:25:46,080 Speaker 2: the buttons and pulling the leverage. I think we're ways 544 00:25:46,119 --> 00:25:47,720 Speaker 2: away from this. I know it's out there, so I 545 00:25:47,760 --> 00:25:49,800 Speaker 2: know it's on the horizon. There's going to be products coming. 546 00:25:49,960 --> 00:25:51,879 Speaker 2: They're purported to do all these things for you, But 547 00:25:52,200 --> 00:25:54,600 Speaker 2: I really just don't see a situation where people are 548 00:25:54,640 --> 00:25:56,920 Speaker 2: going to be so willing to take their eyes completely 549 00:25:57,000 --> 00:26:00,680 Speaker 2: off the ball. So the risk here isn't just bad advice, 550 00:26:00,720 --> 00:26:04,159 Speaker 2: it's real financial consequences. And we've already had some warning signs. 551 00:26:04,440 --> 00:26:07,040 Speaker 2: So in twenty twenty five, the Federal Trade Commission did 552 00:26:07,080 --> 00:26:10,199 Speaker 2: file a complaint against a company called air Ai for 553 00:26:10,320 --> 00:26:12,879 Speaker 2: over promising what its autonomous systems could do, and this 554 00:26:12,920 --> 00:26:16,600 Speaker 2: included concerns about unauthorized actions, you know, not being authorized 555 00:26:16,600 --> 00:26:19,800 Speaker 2: to actually move money around, and that cost their customers' 556 00:26:19,800 --> 00:26:22,399 Speaker 2: money in terms of penalties and just different things that 557 00:26:22,440 --> 00:26:25,160 Speaker 2: didn't go the right way. So that's the issue here. 558 00:26:25,200 --> 00:26:28,280 Speaker 2: These tools are being marketed like they're absolutely flawless, and we. 559 00:26:28,240 --> 00:26:29,120 Speaker 3: Know they're not right. 560 00:26:29,680 --> 00:26:33,680 Speaker 2: You know, Automated driving cars and those kinds of things 561 00:26:33,680 --> 00:26:35,480 Speaker 2: have their issues too. We see them hit the headlines 562 00:26:35,480 --> 00:26:36,040 Speaker 2: all the time. 563 00:26:36,560 --> 00:26:36,720 Speaker 3: You know. 564 00:26:36,720 --> 00:26:39,400 Speaker 2: I think we're going to start seeing headlines about machines 565 00:26:39,440 --> 00:26:42,119 Speaker 2: being allowed to move people's money around and then somebody 566 00:26:42,119 --> 00:26:44,200 Speaker 2: getting a nasty gram from the IRS because they weren't 567 00:26:44,240 --> 00:26:46,360 Speaker 2: paying attention to what that their robot had gone down 568 00:26:46,400 --> 00:26:47,760 Speaker 2: the wrong path for whatever reason. 569 00:26:48,840 --> 00:26:51,320 Speaker 1: Yeah, here's something else that doesn't get talked about. And 570 00:26:51,359 --> 00:26:55,159 Speaker 1: we came across a recent study. I found this very interesting, Brian. 571 00:26:55,520 --> 00:26:58,239 Speaker 1: And this is a study with folks that deal with 572 00:26:58,280 --> 00:27:01,760 Speaker 1: an actual advisor, and it suggests that using AI the 573 00:27:01,800 --> 00:27:05,360 Speaker 1: wrong way can actually damage that relationship. And they had 574 00:27:05,400 --> 00:27:09,240 Speaker 1: actual data saying people that walked in, you know, sitting 575 00:27:09,280 --> 00:27:11,920 Speaker 1: down with you, Brian, as their advisor that had actually 576 00:27:12,240 --> 00:27:14,960 Speaker 1: done some work on AI. It caused the advisor to 577 00:27:15,000 --> 00:27:19,560 Speaker 1: get frustrated and damage the relationship. I don't subscribe to 578 00:27:19,640 --> 00:27:21,560 Speaker 1: that at all. Like I already said, I think an 579 00:27:21,600 --> 00:27:23,800 Speaker 1: informed client is a better client. But it was a 580 00:27:23,880 --> 00:27:28,080 Speaker 1: very interesting study. Advisors don't seem to like AI being 581 00:27:28,119 --> 00:27:31,480 Speaker 1: involved in any way, shape or form. I found that interesting. 582 00:27:31,680 --> 00:27:34,800 Speaker 1: Here's the all Worth Advice. Use AI as a tool 583 00:27:34,960 --> 00:27:38,800 Speaker 1: to ask better questions, but continue to rely on thoughtful 584 00:27:38,880 --> 00:27:42,760 Speaker 1: financial planning and good advisors to actually make the decisions 585 00:27:43,359 --> 00:27:48,240 Speaker 1: that will shape your future. From bucket strategies to unpredictable 586 00:27:48,240 --> 00:27:52,640 Speaker 1: income to adjusting spending in volatile markets. What happens when 587 00:27:52,640 --> 00:27:56,720 Speaker 1: your financial plan meets the real world. We're diving into 588 00:27:56,800 --> 00:28:02,240 Speaker 1: the cracks that can actually derail even strong portfolios. You're 589 00:28:02,280 --> 00:28:04,760 Speaker 1: listening to Simply Money presented by all Worth Financial on 590 00:28:04,880 --> 00:28:12,680 Speaker 1: fifty five KRC, the talk station. You're listening to Simply 591 00:28:12,720 --> 00:28:15,560 Speaker 1: Money presented by all Worth Financial on Bob spot Seller 592 00:28:15,640 --> 00:28:18,840 Speaker 1: along with Brian James. You have a financial question you'd 593 00:28:18,880 --> 00:28:20,840 Speaker 1: like for us to answer. There's a red button you 594 00:28:20,840 --> 00:28:23,359 Speaker 1: can click while you're listening to the show right on 595 00:28:23,400 --> 00:28:27,120 Speaker 1: the iHeart app. Simply record your question and it will 596 00:28:27,160 --> 00:28:30,480 Speaker 1: come straight to us. Tom and Hyde Park leads us 597 00:28:30,520 --> 00:28:33,159 Speaker 1: off tonight. Brian. He says, I've been holding off on 598 00:28:33,320 --> 00:28:36,600 Speaker 1: selling some investments because of the tax hit, but now 599 00:28:36,600 --> 00:28:38,800 Speaker 1: they've grown into a bigger and bigger part of our 600 00:28:38,840 --> 00:28:42,840 Speaker 1: portfolio than I'm comfortable with. At what point does managing 601 00:28:43,040 --> 00:28:46,080 Speaker 1: risk outweigh managing the taxes? 602 00:28:46,960 --> 00:28:47,880 Speaker 3: Well, when the market. 603 00:28:48,000 --> 00:28:50,800 Speaker 2: When your investment falls apart, that's when that's when the 604 00:28:51,240 --> 00:28:54,000 Speaker 2: taxes should no longer wag the dog there. So the 605 00:28:54,040 --> 00:28:56,000 Speaker 2: way to think about this, though, is this is one 606 00:28:56,000 --> 00:28:58,240 Speaker 2: of the more common situations that you're that longer term 607 00:28:58,240 --> 00:29:01,240 Speaker 2: investments investors face. It's not really a math problem, it's 608 00:29:01,240 --> 00:29:04,240 Speaker 2: a behavioral one. So you know, you've got to reframe 609 00:29:04,280 --> 00:29:06,520 Speaker 2: what's actually happening. If the stock did well well, that 610 00:29:06,600 --> 00:29:09,800 Speaker 2: means it silently changed your portfolio's risk profile. You know, 611 00:29:09,840 --> 00:29:12,240 Speaker 2: maybe a five to ten percent position turns into twenty 612 00:29:12,280 --> 00:29:15,360 Speaker 2: thirty percent sometimes more. At that point, you're no longer diversified. 613 00:29:15,400 --> 00:29:17,800 Speaker 2: You're making a concentrated bet, you know, kind of whether 614 00:29:17,840 --> 00:29:20,520 Speaker 2: you wanted to or not. So separate the tax pain 615 00:29:20,640 --> 00:29:23,200 Speaker 2: from the risk decision. A lot of people freeze because 616 00:29:23,240 --> 00:29:25,880 Speaker 2: selling triggers capital gains. People generally don't know how capital 617 00:29:25,920 --> 00:29:27,360 Speaker 2: gains work. They just know it's going to be a 618 00:29:27,400 --> 00:29:30,720 Speaker 2: tax that they don't have a lot of experience with necessarily, 619 00:29:30,880 --> 00:29:33,080 Speaker 2: and that's terrifying, and they don't want to accidentally do 620 00:29:33,160 --> 00:29:35,480 Speaker 2: something that's going to cause them a million dollars in taxation. 621 00:29:35,960 --> 00:29:38,719 Speaker 2: So but the real question is, if you had fresh 622 00:29:38,800 --> 00:29:42,120 Speaker 2: cash today, would you put that much into into that 623 00:29:42,160 --> 00:29:44,640 Speaker 2: same stock, you know, would you hang onto these positions? 624 00:29:44,680 --> 00:29:47,160 Speaker 2: So don't think in all or nothing terms, you know, 625 00:29:47,240 --> 00:29:49,720 Speaker 2: get get the portfolio back to where it's. The important 626 00:29:49,720 --> 00:29:51,920 Speaker 2: thing is you know the risk here really, especially if 627 00:29:51,920 --> 00:29:54,080 Speaker 2: it's way out of whack. Don't worry so much about 628 00:29:54,120 --> 00:29:57,760 Speaker 2: the level of the you know, the the taxes that 629 00:29:57,800 --> 00:29:59,280 Speaker 2: are going to happen. Taxes are going to be what 630 00:29:59,320 --> 00:30:01,520 Speaker 2: they are. You need to worry first and foremost about 631 00:30:01,520 --> 00:30:03,440 Speaker 2: the things that could absolutely sink your ship. So I 632 00:30:03,440 --> 00:30:05,600 Speaker 2: think we should be focusing there a little more. 633 00:30:05,960 --> 00:30:07,560 Speaker 3: So let's move on to Dan and Cole Rain. 634 00:30:07,640 --> 00:30:10,920 Speaker 2: Dan says, we got some money in different buckets Ira Brokerage, 635 00:30:10,960 --> 00:30:12,760 Speaker 2: some cash that sounds like we got we're talking about 636 00:30:12,800 --> 00:30:15,240 Speaker 2: tax buckets here, but when it comes time to actually 637 00:30:15,360 --> 00:30:17,760 Speaker 2: use it, he's not sure how these pieces are supposed 638 00:30:17,800 --> 00:30:18,440 Speaker 2: to work together. 639 00:30:18,480 --> 00:30:19,520 Speaker 3: Bob, what would you say there? 640 00:30:20,320 --> 00:30:23,200 Speaker 1: Well, Dan, this is a common challenge that most people 641 00:30:23,280 --> 00:30:25,760 Speaker 1: run into when we move in move from what we 642 00:30:25,880 --> 00:30:31,200 Speaker 1: call the accumulation stage to the distribute distribution stage, meaning, hey, 643 00:30:31,240 --> 00:30:33,880 Speaker 1: we've built these piles of money, now it's coming time 644 00:30:33,920 --> 00:30:36,680 Speaker 1: to actually use the money. What's the best way to 645 00:30:36,800 --> 00:30:39,960 Speaker 1: use it. And this is where it really does make 646 00:30:40,040 --> 00:30:43,200 Speaker 1: sense to sit down with somebody, a good fiduciary advisor 647 00:30:43,320 --> 00:30:46,680 Speaker 1: if you're not comfortable putting all these pieces together on 648 00:30:46,720 --> 00:30:50,520 Speaker 1: your own, because there is an investment risk component to 649 00:30:50,600 --> 00:30:54,600 Speaker 1: this and also a tax efficiency component to this, And 650 00:30:54,640 --> 00:30:56,640 Speaker 1: like I say all the time, the important thing with 651 00:30:56,720 --> 00:30:59,800 Speaker 1: financial planning is telling your money what it needs to 652 00:30:59,840 --> 00:31:02,840 Speaker 1: do for you and when in advance. That's what a 653 00:31:02,880 --> 00:31:08,000 Speaker 1: financial plan is. So and it's not like we're magicians 654 00:31:08,040 --> 00:31:10,040 Speaker 1: over here and we pull a rabbit out of the hat. 655 00:31:10,080 --> 00:31:12,280 Speaker 1: We've got good tools to work with where we can 656 00:31:12,440 --> 00:31:15,840 Speaker 1: model different scenarios on what the best way to take 657 00:31:15,880 --> 00:31:19,520 Speaker 1: an income stream is from these different buckets of money. 658 00:31:19,600 --> 00:31:21,840 Speaker 1: So I would encourage you if you're not somebody that's 659 00:31:21,880 --> 00:31:25,240 Speaker 1: comfortable and have the tools and the inclination to want 660 00:31:25,240 --> 00:31:27,720 Speaker 1: to do this yourself, now is a great time to 661 00:31:27,760 --> 00:31:32,000 Speaker 1: go find a good fiduciary advisor and explore that relationship 662 00:31:32,520 --> 00:31:33,960 Speaker 1: and see if you could come out of here with 663 00:31:34,000 --> 00:31:38,440 Speaker 1: a confident income plan as you head into retirement. Great question, Dan, 664 00:31:39,000 --> 00:31:41,680 Speaker 1: All right, let's move on to Tammy and Lebanon. She says, 665 00:31:41,720 --> 00:31:45,760 Speaker 1: our plan assumes will adjust spending if markets get rough, 666 00:31:46,200 --> 00:31:49,240 Speaker 1: But I've never actually had to do that before. How 667 00:31:49,280 --> 00:31:52,760 Speaker 1: do you build a plan around something you've never practiced? 668 00:31:53,360 --> 00:31:56,880 Speaker 1: Love this question, and it's good that Tammy is getting 669 00:31:56,920 --> 00:31:58,800 Speaker 1: out in front of this. I think this is great 670 00:31:58,840 --> 00:32:00,240 Speaker 1: anticipation on her part. 671 00:32:00,680 --> 00:32:03,240 Speaker 2: Yeah, these are good thought experiments because these these you know, 672 00:32:03,280 --> 00:32:04,200 Speaker 2: these these types. 673 00:32:04,000 --> 00:32:05,280 Speaker 3: Of solutions aren't easy. 674 00:32:05,320 --> 00:32:08,000 Speaker 2: So what you're describing, that's a gap between a theoretical 675 00:32:08,080 --> 00:32:09,640 Speaker 2: plan and a behavioral plan. 676 00:32:09,760 --> 00:32:09,960 Speaker 1: Yep. 677 00:32:10,080 --> 00:32:12,640 Speaker 2: So you know, on paper, we'll just cut spending. That 678 00:32:12,760 --> 00:32:15,000 Speaker 2: sounds real simple, right that, that's just a solution. We 679 00:32:15,040 --> 00:32:18,080 Speaker 2: will pull that lever and everything will be easier. But 680 00:32:18,080 --> 00:32:20,160 Speaker 2: in real life, that's that lever is very very tough 681 00:32:20,160 --> 00:32:22,320 Speaker 2: to pull. So the goal should be, you know, make 682 00:32:22,360 --> 00:32:25,200 Speaker 2: that adjustment pre defined, figure out what it is you 683 00:32:25,240 --> 00:32:26,120 Speaker 2: will spend less on. 684 00:32:26,280 --> 00:32:26,400 Speaker 3: Right. 685 00:32:26,480 --> 00:32:29,600 Speaker 2: This This boils down to understanding the different categories where 686 00:32:29,640 --> 00:32:31,760 Speaker 2: you spend money. Some things are going to be fixed 687 00:32:31,760 --> 00:32:33,760 Speaker 2: costs you don't you know, for example, you can't choose 688 00:32:33,760 --> 00:32:36,080 Speaker 2: to pay less on the mortgage. Uh, that's going to 689 00:32:36,120 --> 00:32:38,160 Speaker 2: be an issue in the longer run. But you can 690 00:32:38,320 --> 00:32:40,360 Speaker 2: choose to you know, spend less on eating out or 691 00:32:40,400 --> 00:32:41,720 Speaker 2: something like that. But in order to get there, You 692 00:32:41,800 --> 00:32:43,520 Speaker 2: got to know where those dollars are going in the 693 00:32:43,520 --> 00:32:46,320 Speaker 2: first place. And also I would say figure out what 694 00:32:46,400 --> 00:32:48,600 Speaker 2: you know, figure out not only what the decision will be, 695 00:32:48,680 --> 00:32:50,960 Speaker 2: but figure out when you need to make it. Don't 696 00:32:51,040 --> 00:32:53,680 Speaker 2: just say when the market goes down, uh, you know, 697 00:32:53,760 --> 00:32:55,960 Speaker 2: we'll we'll then we'll adjust our spending or whatever. 698 00:32:55,720 --> 00:32:57,440 Speaker 3: Your solution is. Figure out what that means. 699 00:32:57,680 --> 00:32:59,719 Speaker 2: So that might mean when if our portfolio comes down 700 00:32:59,760 --> 00:33:02,360 Speaker 2: ten percent, and this is assuming you've already done the 701 00:33:02,920 --> 00:33:05,520 Speaker 2: stress testing to understand the impact to your situation when 702 00:33:05,520 --> 00:33:08,600 Speaker 2: the portfolio moves this much, portfolio down ten percent, here's 703 00:33:08,640 --> 00:33:10,240 Speaker 2: the areas we're going to focus on. If it comes 704 00:33:10,240 --> 00:33:12,160 Speaker 2: down another twenty percent, well then we know we're gonna 705 00:33:12,160 --> 00:33:15,200 Speaker 2: we're gonna put out these Maybe we planned on finishing 706 00:33:15,200 --> 00:33:17,720 Speaker 2: the basement or whatever, doing some to the house next year, 707 00:33:17,760 --> 00:33:19,560 Speaker 2: but maybe we'll put that out a couple of years, 708 00:33:19,560 --> 00:33:22,400 Speaker 2: because that's definiary discretionary thing. So it's not only the 709 00:33:22,440 --> 00:33:26,000 Speaker 2: decisions themselves, it's the timing of them. But again, I 710 00:33:26,000 --> 00:33:29,640 Speaker 2: think that the point here is to put concrete numbers 711 00:33:29,680 --> 00:33:31,680 Speaker 2: to it, not just you know, if the market goes down, 712 00:33:31,720 --> 00:33:34,080 Speaker 2: we'll do this, Uh you know, figure out what this 713 00:33:34,320 --> 00:33:37,560 Speaker 2: is and figure out how much down means. Moving on 714 00:33:37,640 --> 00:33:40,400 Speaker 2: here to UH to Rachel and blue Ash. Rachel says 715 00:33:40,680 --> 00:33:42,440 Speaker 2: she's starting to think more about what's going to happen 716 00:33:42,560 --> 00:33:45,520 Speaker 2: if one of us passes unexpectedly a little earlier. So 717 00:33:45,680 --> 00:33:47,840 Speaker 2: does that does that mean the investment strategy needs to 718 00:33:47,960 --> 00:33:49,880 Speaker 2: change depending on who's left managing things? 719 00:33:49,920 --> 00:33:53,920 Speaker 1: Bob, Well, Rachel, you know I would answer it this way. 720 00:33:54,040 --> 00:33:57,640 Speaker 1: You you you know, your question said who's left managing things? 721 00:33:57,680 --> 00:34:00,280 Speaker 1: So that that poses a question for me is what 722 00:34:00,320 --> 00:34:03,600 Speaker 1: does management look like today? And what I mean by 723 00:34:03,600 --> 00:34:06,680 Speaker 1: that question is, oftentimes Brian and I talk to folks 724 00:34:06,680 --> 00:34:10,680 Speaker 1: who are quote unquote self directing their whole affairs and 725 00:34:10,680 --> 00:34:14,279 Speaker 1: their portfolios, and what tends to happen, especially in a 726 00:34:14,280 --> 00:34:18,120 Speaker 1: married situation. One spouse loves this stuff, eat, sleeps, and 727 00:34:18,200 --> 00:34:20,920 Speaker 1: drinks it, wants to be very involved. The other spouse 728 00:34:20,960 --> 00:34:22,719 Speaker 1: could care less. They just want to make sure there's 729 00:34:22,800 --> 00:34:27,120 Speaker 1: enough money there. And if that's your situation, and if 730 00:34:27,160 --> 00:34:31,280 Speaker 1: the person who's quote unquote managing things today suddenly passes 731 00:34:31,280 --> 00:34:34,920 Speaker 1: away unexpectedly, you're left without a plan, You're left without 732 00:34:34,920 --> 00:34:38,719 Speaker 1: a management strategy. So you know, my suggestion is talk 733 00:34:38,760 --> 00:34:42,120 Speaker 1: to your husband about this and have an honest conversation 734 00:34:42,200 --> 00:34:44,480 Speaker 1: about what would happen if one of us was no 735 00:34:44,560 --> 00:34:48,400 Speaker 1: longer here, And the answer might be starting to develop 736 00:34:48,600 --> 00:34:52,239 Speaker 1: a relationship with a good fiduciary advisor to fill in 737 00:34:52,280 --> 00:34:55,879 Speaker 1: that gap now, just so the family is prepared if 738 00:34:55,920 --> 00:34:59,799 Speaker 1: and when, you know, something unexpected happens. Coming up next, 739 00:35:00,000 --> 00:35:03,840 Speaker 1: I've got my two cents on the importance of managing 740 00:35:03,920 --> 00:35:08,480 Speaker 1: and monitoring your older life insurance policies, sometimes that have 741 00:35:08,960 --> 00:35:11,399 Speaker 1: a ton of cash value built up in them. You're 742 00:35:11,440 --> 00:35:13,960 Speaker 1: listening to Simply Money presented by all Worth Financial on 743 00:35:14,040 --> 00:35:22,360 Speaker 1: fifty five KRC the talk station. You're listening to Simply 744 00:35:22,400 --> 00:35:25,439 Speaker 1: Money presented by all Worth Financial on Bob Sponseller along 745 00:35:25,480 --> 00:35:28,600 Speaker 1: with Brian James Well Brian Tonight, I want to talk 746 00:35:28,640 --> 00:35:32,480 Speaker 1: about the importance of not just putting those old life 747 00:35:32,480 --> 00:35:36,840 Speaker 1: insurance policies, especially those permanent policies with a bunch of 748 00:35:36,920 --> 00:35:41,120 Speaker 1: cash value in them that people have contributed to for years. 749 00:35:41,239 --> 00:35:43,600 Speaker 1: Don't just put those in a drawer and forget them, 750 00:35:44,040 --> 00:35:48,040 Speaker 1: forget about them, because they could become really great tools, 751 00:35:48,360 --> 00:35:51,000 Speaker 1: you know, if you update your financial plan and use 752 00:35:51,040 --> 00:35:56,080 Speaker 1: those resources accordingly or appropriately or optimally. And then also 753 00:35:56,280 --> 00:35:58,880 Speaker 1: I'm running into this more and more with folks that 754 00:35:58,920 --> 00:36:01,160 Speaker 1: are now in their aim And I had a meeting 755 00:36:01,200 --> 00:36:05,520 Speaker 1: with a gentleman yesterday. He still did not understand completely 756 00:36:06,200 --> 00:36:10,879 Speaker 1: how his life insurance policy worked, the risks involved with it, 757 00:36:11,440 --> 00:36:14,960 Speaker 1: how much the performance of the policy was dependent on 758 00:36:15,160 --> 00:36:19,719 Speaker 1: market performance. And we had a fairly long meeting just 759 00:36:19,760 --> 00:36:23,040 Speaker 1: getting him up to speed on how all these things worked. 760 00:36:23,239 --> 00:36:26,720 Speaker 1: He really appreciated the meeting, but it opened his eyes 761 00:36:26,760 --> 00:36:29,759 Speaker 1: in a lot of areas because he really had forgotten 762 00:36:31,080 --> 00:36:35,920 Speaker 1: that market performance in these policies matters, you know a 763 00:36:35,960 --> 00:36:39,480 Speaker 1: lot on how this policy is going to actually perform. 764 00:36:40,000 --> 00:36:41,640 Speaker 1: And I know we can get into the weeds here 765 00:36:41,680 --> 00:36:44,640 Speaker 1: pretty quickly, but a lot of times when these policies 766 00:36:44,680 --> 00:36:47,120 Speaker 1: are sold, you know, they have a lot of moving 767 00:36:47,160 --> 00:36:50,520 Speaker 1: parts to them, especially these index based policies. They have 768 00:36:50,640 --> 00:36:53,200 Speaker 1: cap rates on the upside, they got a little bit 769 00:36:53,239 --> 00:36:57,360 Speaker 1: of protection on the doubt side. And people barely understand 770 00:36:57,400 --> 00:37:00,640 Speaker 1: these things sometimes when they buy them, and then as 771 00:37:00,680 --> 00:37:03,879 Speaker 1: time goes on, they understand less and less and less 772 00:37:03,920 --> 00:37:07,720 Speaker 1: about how they actually work. And when some like someone 773 00:37:07,840 --> 00:37:10,480 Speaker 1: like us comes along and actually starts to explain this 774 00:37:10,560 --> 00:37:14,640 Speaker 1: thing in plain English, sometimes people are very surprised about 775 00:37:14,680 --> 00:37:19,440 Speaker 1: what they actually own. It was a very interesting conversation yesterday. 776 00:37:20,160 --> 00:37:22,399 Speaker 1: The good thing is we're able to pivot and make 777 00:37:22,440 --> 00:37:25,120 Speaker 1: some changes here. But you know, again, I just bring 778 00:37:25,200 --> 00:37:28,360 Speaker 1: this up, especially for people that have these twenty to 779 00:37:28,400 --> 00:37:32,080 Speaker 1: thirty year old permanent life insurance policies, they do need 780 00:37:32,160 --> 00:37:35,239 Speaker 1: to be managed like everything else in your overall financial plan. 781 00:37:35,360 --> 00:37:37,320 Speaker 2: So if I can ask, was this a case where 782 00:37:37,400 --> 00:37:39,560 Speaker 2: we would what happened when you talked about the need 783 00:37:39,560 --> 00:37:42,239 Speaker 2: for death benefit. Was it still a strong need there 784 00:37:42,280 --> 00:37:44,520 Speaker 2: for that to maintain or it. 785 00:37:44,480 --> 00:37:47,600 Speaker 1: Wasn't a need. It was a very strong want. In 786 00:37:47,680 --> 00:37:50,799 Speaker 1: this situation, this is a large death benefit and it 787 00:37:50,880 --> 00:37:54,719 Speaker 1: is a cornerstone of this person's financial plan. Come hell 788 00:37:54,800 --> 00:37:57,200 Speaker 1: or high water. He wants to make sure his kids 789 00:37:57,239 --> 00:38:00,919 Speaker 1: get that money. So it then became a a case 790 00:38:00,960 --> 00:38:02,920 Speaker 1: of talking about, all right, what do we gotta do 791 00:38:03,040 --> 00:38:06,680 Speaker 1: to make sure that you know, we've stressed tests, so 792 00:38:06,760 --> 00:38:08,640 Speaker 1: to speak. We use that term all the time, and 793 00:38:08,680 --> 00:38:12,440 Speaker 1: it's appropriate. We stress tests the performance of that policy 794 00:38:12,840 --> 00:38:15,520 Speaker 1: for what happens in the market between now and when 795 00:38:15,560 --> 00:38:19,160 Speaker 1: he passes away. And in this case, we actually made 796 00:38:19,200 --> 00:38:22,400 Speaker 1: the decision to take a little bit less risk with 797 00:38:22,520 --> 00:38:25,560 Speaker 1: the cash value in the policy because this person is 798 00:38:25,600 --> 00:38:27,879 Speaker 1: in their mid eighties, they probably have about a ten 799 00:38:27,960 --> 00:38:31,319 Speaker 1: year lifespan, and there's no reason anymore to try to 800 00:38:31,360 --> 00:38:34,880 Speaker 1: balloon this cash value. We've kind of already quote unquote 801 00:38:34,880 --> 00:38:37,879 Speaker 1: won the game. Now we can move into protection mode 802 00:38:37,880 --> 00:38:40,400 Speaker 1: a little bit. And the good thing is we're able 803 00:38:40,440 --> 00:38:44,040 Speaker 1: to do that now before we have a potentially big 804 00:38:44,080 --> 00:38:48,160 Speaker 1: downturn in the market, which eventually will come, so again 805 00:38:48,280 --> 00:38:51,640 Speaker 1: important to review those policies. Thanks for listening tonight. You've 806 00:38:51,640 --> 00:38:54,440 Speaker 1: been listening to Simply Money, presented by all Worth Financial 807 00:38:54,480 --> 00:38:57,200 Speaker 1: on fifty five KRC, the talk station