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Speaker 1: Recent events has made me listen to.

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Speaker 2: The radio a lot more, a lot more for every day,

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Speaker 2: whether forecasts, do I wash my car today or not?

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Speaker 3: For everyone, traffic reports we have lots of new construction

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Speaker 3: every day is definitely listen.

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Speaker 4: Can I ride my motorcycle to work today for free?

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Speaker 4: I need the weather forecast on air and on the iHeartRadio.

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Speaker 2: The talk shows are like my TV shows on fifty

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Speaker 2: five KRC the talk station.

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Speaker 1: Tonight, The financial impact of a government shut down, the

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Speaker 1: best financial advice that often gets ignored, and more. You're

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Speaker 1: listening to Simply Money present up by all Worth Financial

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Speaker 1: Bob sponsorller along with Brian James. Well, the government is

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Speaker 1: at least partially closed for business at this point. Why

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Speaker 1: Democrats and Republicans are locked in a standoff over extension

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Speaker 1: of i'm a Care healthcare subsidies in the most recent

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Speaker 1: recent legislation package. Brian, I know you like to study history.

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Speaker 1: Walk us through this. Why does the government shut down?

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Speaker 2: Well, Bob, the way this works as US government runs

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Speaker 2: on twelve appropriations bills. They're passed each year by Congress

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Speaker 2: and have to be signed off by the President. So

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Speaker 2: this isn't like a new thing. That we always have

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Speaker 2: these discussions. It's not happening because we're about to shut down.

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Speaker 2: It's just how it's always worked. So in fiscal years

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Speaker 2: like the one that's about to start when all twelve

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Speaker 2: bills aren't yet adopted by October first, and that is

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Speaker 2: the start of the fiscal year, by the way, if

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Speaker 2: it had mentioned that October one today. So but anyway,

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Speaker 2: the current count is zero for keeping score. Congress and

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Speaker 2: the President will keep the government humming by passing these

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Speaker 2: short term extensions of current funding. And these are what

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Speaker 2: are called continuous resolutions, just to kind of keep the

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Speaker 2: oil in the engine and keep things going. And if

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Speaker 2: they can't agree to a continued resolution, then the government

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Speaker 2: has what's called a funding gap. That's where we are

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Speaker 2: right now, and federal agencies need to take steps to

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Speaker 2: shut down, which is happening literally today. So for this

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Speaker 2: fiscal year twenty twenty five, we had passed three funding patches.

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Speaker 2: The last one happened in March, and then we kicked

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Speaker 2: the can all the way down the road till right now.

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Speaker 1: Bob Well, there have been fourteen shutdowns since nineteen eighty one,

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Speaker 1: ranging in duration from a single day to the infamous

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Speaker 1: thirty five days shut down in twenty eighteen to twenty nineteen.

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Speaker 1: Before nineteen eighty one, agencies operated mostly as normal during

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Speaker 1: funding gap BA gaps, their expenses covered retroactively once a

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Speaker 1: deal with was reached. Shutdowns over spending disagreements are different

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Speaker 1: and way less grave than what would happen if the

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Speaker 1: US breached its debt ceiling and defaulted on some of

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Speaker 1: its obligations. That's never happened, though the US came close

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Speaker 1: in twenty twenty three. So in other words, Brian, at

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Speaker 1: least from what I'm seeing, despite all the headlines and

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Speaker 1: all the rhetoric coming from both sides of the aisle,

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Speaker 1: about eighty five percent of the government will continue to

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Speaker 1: function here during the quote unquote shutdown. It's just these

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Speaker 1: you know, irritating things like closing national parks and not

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Speaker 1: having park rangers available to help things that the American

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Speaker 1: people actually pay for and want to see function. It's

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Speaker 1: just to get us all riled up and upset and

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Speaker 1: cause us inconvenience.

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Speaker 5: Yeah, so let's talk about what keeps going here.

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Speaker 2: Right, So when we go through these shutdowns, like you said,

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Speaker 2: not everything completely shuts down Cold Turkey. So entitlement programs

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Speaker 2: like Social Security and Medicare. That's that's mandatory spending. So

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Speaker 2: those were never on the table anyway. They don't need

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Speaker 2: annual appropriations to continue to distribute money to support those programs.

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Speaker 5: That doesn't mean they're guaranteed to be unaffected.

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Speaker 2: Obviously, there are employees and departments and there are many,

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Speaker 2: many things that are supporting these different programs. But the

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Speaker 2: money will keep flowing. So what is unique about this shutdown?

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Speaker 2: Why is this happened? What's the special thing here? Well,

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Speaker 2: if a deal isn't reached by Friday, we're not going

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Speaker 2: to get a September jobs report, and that report, you know,

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Speaker 2: whether you believe in it or not, that's data that

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Speaker 2: we're either going to I guess we'll make it up

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Speaker 2: if we don't have anything. But that's what the Federal

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Speaker 2: Reserve looks at as it decides what to do with

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Speaker 2: interest rates. So there are some parts of the federal

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Speaker 2: government they're going to be flying blind, and the impact

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Speaker 2: on the markets overall is very likely going to be

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Speaker 2: some short term volatility. There have been six government shutdowns

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Speaker 2: since nineteen seventy eight that lasted.

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Speaker 5: Five days or more, and the S and p.

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Speaker 2: Five hundred actually gained in the foremost recent one, so

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Speaker 2: expect some turbulence, but this is not anything where we

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Speaker 2: feel like we've got our toes hanging over the cliff.

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Speaker 5: Here's the all Worth advice.

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Speaker 1: A government shutdown is noisy, not permanent, and don't let

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Speaker 1: short term politics derail your long term plan. And I'll

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Speaker 1: just simply add here from an editorial standpoint, might be

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Speaker 1: a great opportunity to buy the dip if we get one.

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Speaker 1: You're listening to Simply Money, presented by all Worth Financial.

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Speaker 1: I'm Bob spun Seller along with Brian James. All Right,

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Speaker 1: another story we're following is this ongoing socialecurity saga, in

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Speaker 1: particular the social security retirement age. Last week we spoke

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Speaker 1: about how important it is to know your age. Well,

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Speaker 1: so many people are confused about this that the government

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Speaker 1: is trying to step in and help by making the

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Speaker 1: language easier to understand. I laughed when I read this story.

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Speaker 1: But fill us in on this.

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Speaker 2: PA, So this isn't whenever we talk about social security,

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Speaker 2: people are kind of instantly attuned to the idea that

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Speaker 2: they're going to change the.

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Speaker 5: Math or take it away or do whatever. This has

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Speaker 5: nothing to do with that.

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Speaker 2: This is attempting to clarify because before we know what

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Speaker 2: we stand to lose our gain, we got to understand

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Speaker 2: how it works in the first place. So the government

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Speaker 2: is attempting to clarify by changing some terms around. This

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Speaker 2: has nothing to do with the actual calculation of the

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Speaker 2: benefits and all that, but the reason for this.

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Speaker 5: Here's an example.

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Speaker 2: So about twenty one percent of the eighteen hundred adults

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Speaker 2: that were surveyed by the Nationwide Retirement Institute, only only

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Speaker 2: about a fifth of them one out of five could

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Speaker 2: identify the age which they qualify for full Social Security benefits.

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Speaker 2: So again that's job security for myself and Bob spont

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Speaker 2: sell Or. If people understood this kind of stuff, then

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Speaker 2: we probably go unemployed. But fortunately for us, eighty percent

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Speaker 2: of people don't.

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Speaker 5: So the solution here.

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Speaker 2: Earlier this month, the House Ways and Means Committee decided

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Speaker 2: to push forward the Cleaning Age Clarity Act. This is

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Speaker 2: a bipartisan bill. That's a word I haven't heard in

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Speaker 2: a long time. Forty one to one. That's how bipartisan

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Speaker 2: this was. This is athermoted against this. Yes, let's make

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Speaker 2: it harder. Somebody stood up and said no, people want

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Speaker 2: things more difficult.

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Speaker 5: Who's that clown anyway? So this is just this is

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Speaker 5: just coming out of the committee.

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Speaker 2: It has not yet, of course hit the hit the

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Speaker 2: floor of the Senator or the House, but a version

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Speaker 2: has been proposed there. The proposed changes are again targeted

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Speaker 2: at making the language substantially clearer. According to the Bipartisan

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Speaker 2: Policy Center, So basically, at age sixty two, this is

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Speaker 2: what has currently been known as the early eligibility age.

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Speaker 2: That's going to become quote the minimum benefit age, and

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Speaker 2: that reflect the permanent benefits reduction the claimants see if

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Speaker 2: they start that soon. So the words sixty two is

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Speaker 2: the earliest you can ever you can file for Social Security.

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Speaker 2: It's also the lowest check you'll ever see.

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Speaker 1: So, in other words, replacing early eligibility age with minimum

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Speaker 1: benefit age is going to eliminate all the confusions for

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Speaker 1: confusion for sixty two year olds in the country, according

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Speaker 1: to one.

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Speaker 2: According to forty one of forty two people in the

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Speaker 2: House Ways and Means Committee, yes that's exactly, but the

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Speaker 2: other guy agrees with you, bob, But it's not going

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Speaker 2: to do anything.

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Speaker 5: But some more ages here, more more more words.

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Speaker 2: For us to chew ones fro age sixty six to

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Speaker 2: sixty seven, that's commonly known as full retirement age. This

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Speaker 2: is what is the most prominent thing displayed on your

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Speaker 2: Social Security reports. Depending on when you were born, it's

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Speaker 2: somewhere between age sixty six and sixty seven for full

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Speaker 2: retirement age. That's that will now be referred to as

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Speaker 2: standard benefit age.

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Speaker 5: Just making things a little simpler.

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Speaker 2: And finally, and we move on to age seventy, which

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Speaker 2: is that's the latest age for benefit increases. That's no

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Speaker 2: longer going to be called the delayed retirement age. Instead,

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Speaker 2: that's going to be referred to as the go figure,

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Speaker 2: the maximum benefit age to offset the minimum benefit age

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Speaker 2: of sixty two. So for every year, just so everybody

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Speaker 2: knows how this works, for every year an individual the

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Speaker 2: delays claiming from full retirement. Right, by the way, retirement

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Speaker 2: is different from filing for Social Security. You do not

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Speaker 2: have to tell your boss to shove it in the

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Speaker 2: morning and go to the Social Security office in the afternoon.

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Speaker 5: On the same day.

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Speaker 2: It could be very different decisions based on your financial situation.

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Speaker 2: But for every year you delay filing for Social Security

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Speaker 2: and accepting that benefit, you get an eight percent increase

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Speaker 2: in benefit. So that's a big decision for everybody, and

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Speaker 2: that's where we always encourage make sure you have a

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Speaker 2: financial plan behind all of your decisions so that you

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Speaker 2: can make them in an educated manner. And so look

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Speaker 2: for those eight percent increases ranging from age sixty two

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Speaker 2: to the earliest you can get it now known as

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Speaker 2: the minimum benefit age, all the way to age seventy

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Speaker 2: otherwise known as the maximum benefit age eight percent.

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Speaker 5: Every year you ignore it.

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Speaker 1: I think this is a big nothing burger, this story.

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Speaker 1: But here here's the real advice. You know, and we

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Speaker 1: talk about this often and we'll repeat it again. It's

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Speaker 1: really important to go and open up your own Social

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Speaker 1: Security count account at SSA dot gov creative login and password,

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Speaker 1: and pull up your annual Social Security reports so you

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Speaker 1: know where things stand right now. Make sure that data

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Speaker 1: contained in that report is accurate. And then as you

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Speaker 1: start to do your financial planning and sitting down hopefully

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Speaker 1: with your fiduciary advisor to look at options, provide that

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Speaker 1: data to him or her to factor that into your

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Speaker 1: long term plan and help your advisor arrive at the

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Speaker 1: right claiming strategy for you. But before we can get there,

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Speaker 1: you at least got to pull out the report or

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Speaker 1: know how to get it. And as a reminder, the

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Speaker 1: government used to mail paper reports out to everybody on

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Speaker 1: an annual basis.

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Speaker 5: They pretty much stopped doing that.

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Speaker 2: As a taxpayer, appreciate that because nobody read those things

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Speaker 2: and I was paying to have them sent all over

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Speaker 2: the country. All right, anything else you want to talk

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Speaker 2: about with this with this since it came up, Yeah,

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Speaker 2: just some again reminders on Social Security too. As Bob mentions, Yeah,

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Speaker 2: it's a great idea to get that profile set up.

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Speaker 2: Do that sooner rather than later. That is now a

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Speaker 2: way that people are stealing identities. If you set it

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Speaker 2: up with your own phone and email addressed, then you'll

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Speaker 2: be informed if somebody tries to change it. However, if

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Speaker 2: you have never set up your Social Security profile at

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Speaker 2: SSA dot gov, that means anybody with the right amounts

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Speaker 2: of information on you can set it up for you

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Speaker 2: and steal your identity.

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Speaker 5: So that's a way to be careful about it.

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Speaker 2: Also, when you get a hold of that report, what

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Speaker 2: you're looking for is not only your benefits, you also

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Speaker 2: want to look at your earnings history. That's going to

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Speaker 2: have a display of basically every year that you've worked

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Speaker 2: and paid into Social Security and make sure it's right.

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Speaker 2: It's not that uncommon where we see somebody who moved

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Speaker 2: maybe from the public sector to the private sector, government

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Speaker 2: jobs to commercial jobs or vice versa, or moved from

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Speaker 2: state to something like that, that Social Security misses a

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Speaker 2: couple of years worth of income, and that calculates into

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Speaker 2: your thirty five highest years of earning. So that's what

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Speaker 2: you want to look for, not just the benefits, look

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Speaker 2: for the data behind it. Make sure it makes sense

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Speaker 2: based on your understanding of your history.

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Speaker 5: Exactly.

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Speaker 1: All right, fewer wealthy Americans are giving to charity? What's

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Speaker 1: behind the drop? And how could you give smarter with

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Speaker 1: less stress? You're listening to simply money. Presented by all

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Speaker 1: Worth Financial on fifty five KRC, the talk station the

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Speaker 1: Schumer shutdown.

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Speaker 4: Republicans didn't want to protect your healthcare. There are Democrats

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Speaker 4: demanding health care for illegal aliens.

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Speaker 1: The day's news Democratic are demanded healthcare is on Ridiculous

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Speaker 3: All Worth Financial a registered investment advisory firm. Any ideas

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Speaker 3: presented during this program are not intended to provide specific

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Speaker 3: financial advice. You should consult your own financial advisor, tax consultant,

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Speaker 3: or a state planning attorney to conduct your own due diligence.

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Speaker 1: You're listening to Simply Money, presented by all Worth Financial

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Speaker 1: on pop spun seller along with Brian James. If you

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Speaker 1: can't listen to Simply Money every night, subscribe and get

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Speaker 1: our daily podcast. You can listen the following morning during

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Speaker 1: worried about income, stock options and avoll little market, and

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Speaker 1: whether private equity belongs in your portfolio, We'll tackle your

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Speaker 1: toughest questions coming up straight ahead at six forty three. Well, Brian,

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Speaker 1: a new study from Bank of America in collaboration with

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Speaker 1: the Indiana University Lily Family School of Philanthropy has found

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Speaker 1: a slight drop in the percentage of affluent households making

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Speaker 1: charitable donations.

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Speaker 5: Let's dive into what's behind all of that. Well, it's

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Speaker 5: apparently are getting a little tighter.

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Speaker 2: I'm actually not surprised to hear this, and we're going

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Speaker 2: to talk about this here shortly, but I think this

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Speaker 2: has a lot to do with the Tax Cuts and

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Speaker 2: Jobs Act. So let's set the table here first, Bob, So,

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Speaker 2: last year eight and ten, households that were worth more

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Speaker 2: than a million in assets or had a two hundred

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Speaker 2: thousand plus annual income amount reported giving to charity. So

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Speaker 2: eighty percent of households at that point is still said

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Speaker 2: that they donated at that level. So that's still pretty

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Speaker 2: good nine to ten a decade ago, So dropping down

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Speaker 2: a little bit. So on the surface, the total dollars

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Speaker 2: given are up, that's not too shocking because asset levels

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Speaker 2: are up, of course, as they normally are. When you

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Speaker 2: look over a longer period of time, average charitable giving

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Speaker 2: among these households has increased in nominal terms, just the

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Speaker 2: number of dollars that they've given is increased.

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Speaker 5: Over where it was a decade ago.

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Speaker 2: But when you factor in inflation the value of a

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Speaker 2: dollar that giving is actually trending back downward. So the

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Speaker 2: most commonly cited reason in this study, more affluent households

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Speaker 2: are basically using the reasoning that they need to quote

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Speaker 2: unquote take care of family needs first. So about in

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Speaker 2: twenty twenty four, about half of the half of the

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Speaker 2: families households that did not donate said their first priority

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Speaker 2: is their family. That's up from three to ten and

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Speaker 2: twenty fifteen, so three out of ten households cited their

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Speaker 2: family coming first back in twenty fifteen. Now it's about

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Speaker 2: half of the families that don't donate anymore.

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Speaker 1: Yeah, I'm with you, Brian, I'm not too surprised about

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Speaker 1: this data. I mean we talk often about the quote

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Speaker 1: unquote Sandwich generation. I mean a lot of affluent families

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Speaker 1: right now are dealing with other family needs, you know,

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Speaker 1: outside of their own, their parents' long term care needs.

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Speaker 1: The cost of a college education has absolutely gone through

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Speaker 1: the roof the same thing with the cost of weddings.

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Speaker 1: I mean, things are expensive, and not everybody has the

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Speaker 1: financial means to be able to go and write checks

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Speaker 1: for these things. So the folks that have more of

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Speaker 1: an affluent situation are often asked or want to step

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Speaker 1: in and help.

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Speaker 5: I'm not surprised by any of this.

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Speaker 1: You brought up the Tax Cut, Cut and Jobs Act,

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Speaker 1: which increased the standard deduction.

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Speaker 5: Walk through that too, because I think you're spot on.

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Speaker 1: I think that has a lot to do with this

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Speaker 1: when you can't itemize these deductions. You know, people respond.

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Speaker 1: Human beings always respond to incentives, and when you take

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Speaker 1: some incentives away, like a tax deduction, people are gonna

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Speaker 1: generally behave accordingly.

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Speaker 2: Yeah, So this happened with the the Tax Cuts and

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Speaker 2: Jobs Act from the first Trump administration. And what happened

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Speaker 2: was the standard deduction was raised well above what it was,

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Speaker 2: was almost doubled at the time. Basically, what that means,

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Speaker 2: standard deduction means everybody gets it. If you can fog

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Speaker 2: a mir or you get a standard deduction. And if

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Speaker 2: you have deductions that are over and above that standard

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Speaker 2: deduction and everybody gets then you can do what's called itemizing.

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Speaker 2: And that's when the benefits of you know, deducting mortgage

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Speaker 2: interest perhaps as well as charitable donations that kind of thing. Currently,

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Speaker 2: for this year twenty twenty five, if you're married filing jointly,

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Speaker 2: the standard deduction is thirty six hundred dollars. If you're

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Speaker 2: a single person, it's fifteen to three exactly half head

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Speaker 2: a household is in the middle at twenty two nine

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Speaker 2: to fifty if you're in that situation. So what the

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Speaker 2: end result here is, since people don't have to don't

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Speaker 2: have to make these donations to get the deduction. They

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Speaker 2: get the standard deduction. There's just been less interest in

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Speaker 2: doing so. And I've been kind of waiting to hear

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Speaker 2: these numbers really ever since twenty seventeen, to hear that

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Speaker 2: people are kind of catching on. I think it took

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Speaker 2: a while, Bob, for people to realize that, you know what,

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Speaker 2: why am I keeping all these SAT receipts from Goodwill?

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Speaker 2: For these bags of clothing that I get that I

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Speaker 2: donate every now and then when it doesn't do me

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Speaker 2: any good anyway. So I think we finally, we finally

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Speaker 2: are seeing the numbers trickling through the showing the impact

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Speaker 2: on charities.

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Speaker 1: You're listening to Simply Money, presented by all Worth Financial

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Speaker 1: on Bob Sponseller along with Brian James. Brian, let's pivot now,

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Speaker 1: and let's talk about some planning opportunities for how folks

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Speaker 1: can take advantage of current tax law and really be

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Speaker 1: thoughtful and more strategic about the strategic giving or charitable giving,

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Speaker 1: because there's a lot of good stuff out there.

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Speaker 5: Let's talk.

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Speaker 1: Let's start with a donor advised fund. I know you've

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Speaker 1: used that a lot with your clients. I have as well.

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Speaker 1: It's a wonderful tool, and I've never had one client

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Speaker 1: that we help get, you know, set up in one

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Speaker 1: of these ever, regretted. It's a wonderful giving strategy.

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Speaker 2: So first, if you know you want to give a

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Speaker 2: given charity a certain fixed amount of money every single year,

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Speaker 2: and you're just gonna do that, then really the question

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Speaker 2: on a donor of whether a donort advice fund will

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Speaker 2: help you is are you getting a tax benefit out

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Speaker 2: of that? So, for example, let me make up something here.

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Speaker 2: Let's say you know you're going to give your church

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Speaker 2: or ten thousand dollars every year, you know, nate nine

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Speaker 2: hundred bucks a month something like that if you want. So,

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Speaker 2: that's not enough to outpace the standard deduction. So if

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Speaker 2: you would like a tax benefit out of that, what

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Speaker 2: you can do is set up a donor advice fund

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Speaker 2: and you donate, you know, let's say five years worth

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Speaker 2: of that fifty thousand dollars straight into the donor advice fund.

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Speaker 2: Now you're done, you are done carving out money from

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Speaker 2: your checking account, your bank accounts. You have given that

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Speaker 2: money away permanently. A donor advice fund is considered a

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Speaker 2: completed gift, you can't get it back.

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Speaker 5: But what the benefit.

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Speaker 2: Is is you're able to take that deduction all in

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Speaker 2: one year, even though the charity behind it does not

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Speaker 2: know that you've done that, because you can still control

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Speaker 2: the timing of those gifts. So if I write one

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Speaker 2: check now for fifty thousand dollars, I've almost doubled my

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Speaker 2: standard deduction. I get a tax benefit out of it.

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Speaker 2: But I can write checks once a year the same

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Speaker 2: way I've always done, and my charity doesn't start to

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Speaker 2: expect much larger sums rather than giving it all at once.

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Speaker 2: So I think donor advice funds are very very much

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Speaker 2: a thing that people should understand and take advantage of,

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Speaker 2: especially if you've got a situation maybe you're going to

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Speaker 2: sell a business, you inherited something, and you've got a

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Speaker 2: big fat tax here. Well, that can be a great

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Speaker 2: year to pull some of those future donations forward.

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Speaker 1: So saying a long hey, one final thought on that,

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Speaker 1: just as a reminder, if you give away appreciated stock

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Speaker 1: or mutual funds or ets, not only do you get

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Speaker 1: the itemized deduction for the gift if it's above the

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Speaker 1: standard deduction, you also completely eliminate all the capital gains

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Speaker 1: taxes on that asset. So it's a wonderful strategy. Let's

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Speaker 1: pivot to qualified charitable distributions. This is an off and

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Speaker 1: overlooked one, Brian, So qualified charitable distributions.

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Speaker 2: This is when you hit age seventy and a half,

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Speaker 2: you're eligible to make a qualified teritable distribution from your

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Speaker 2: pre tax IRA. Yes, I said seventy and a half.

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Speaker 2: That no longer matches the required minimum distribution age which

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Speaker 2: is now seventy three, but you can still do a

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Speaker 2: qualify a QCD qualified charitable distribution. What that means is

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Speaker 2: you can direct up to one hundred thousand dollars from

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Speaker 2: your IRA to a charity, and that qualified charitable distribution

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Speaker 2: gets excluded from taxable income. Now rest assured, you are

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Speaker 2: still giving money away. These are your own dollars that

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Speaker 2: you were choosing to give it to a charity out

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Speaker 2: of the kindness of your heart. However, it gets excluded

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Speaker 2: from your income period. In other words, it didn't even happen,

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Speaker 2: So you get to care.

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Speaker 5: You don't even need to itemize to take advantage.

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Speaker 2: Is all you're doing here is you're filling out a

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Speaker 2: form of specific way because the dollars do have to

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Speaker 2: go straight from your IRA custody into that charity, and

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Speaker 2: each custodian has a special form for it. But the

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Speaker 2: thing I want to be really really clear about I

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Speaker 2: don't think a lot of people get is that these

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Speaker 2: dollars again do not count as incomes, so they're not

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Speaker 2: pushing your pushing you higher into a certain bracket. They

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Speaker 2: just go away. They leave your account, get the you

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Speaker 2: don't pay any taxes on it. Charity gets the benefit,

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Speaker 2: but you get to stay in a lower bracket, which

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Speaker 2: helps with things like IRMA which affects your Medicare premium payments,

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Speaker 2: and a lot of other things too. So some complicated

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Speaker 2: moving parts to it, but it's definitely something for people

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Speaker 2: to look at. Again, you're eligible at age seventy and

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Speaker 2: a half and it does count towards your requirement of distribution,

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Speaker 2: which will kick in around seventy three.

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Speaker 5: Here's the all Worth advice.

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Speaker 1: Make giving part of your annual budget, and when it's

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Speaker 1: time to donate, look for smarter ways than just writing

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Speaker 1: a check, like using your IRA or a donor advised fund.

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Speaker 1: Coming up next, the best financial advice that often gets ignored.

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Speaker 1: You're listening to Simply Money, presented by all Worth Financial

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Speaker 1: on fifty five KRC the talk station the search.

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Speaker 1: Foles checking throughout the day, every single day.

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Speaker 4: Fifty five KRC an iHeartRadio station.

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Speaker 1: You're listening to Simply Money? Is that by all Worth Financial?

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Speaker 1: On Bob Sponseller along with Brian James. Well, last night

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Speaker 1: we talked about the worst financial advice you could ever

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00:21:42,359 --> 00:21:46,159
Speaker 1: receive that seems to make sense on the surface. Well,

441
00:21:46,240 --> 00:21:49,800
Speaker 1: tonight we're flipping it and we're discussing the best financial

442
00:21:49,880 --> 00:21:53,960
Speaker 1: advice that often gets ignored, and we've got some examples

443
00:21:54,000 --> 00:21:56,840
Speaker 1: to share. Brian will walk us through example number one.

444
00:21:56,880 --> 00:21:59,320
Speaker 1: So I'm living example number one. Smartest thing I ever

445
00:21:59,359 --> 00:22:01,560
Speaker 1: did was just automate savings and investing.

446
00:22:01,640 --> 00:22:01,800
Speaker 5: Right.

447
00:22:01,960 --> 00:22:04,160
Speaker 2: I'm in this industry. I know what I'm doing because

448
00:22:04,160 --> 00:22:06,560
Speaker 2: I've been doing it for thirty years. But the smartest

449
00:22:06,560 --> 00:22:08,160
Speaker 2: thing that I ever did was set up my four

450
00:22:08,240 --> 00:22:09,879
Speaker 2: oh one K and then proceed to ignore it for

451
00:22:10,359 --> 00:22:12,680
Speaker 2: literally about thirty years now other than I have andy

452
00:22:12,680 --> 00:22:14,960
Speaker 2: stout worry about what goes into it.

453
00:22:15,400 --> 00:22:16,240
Speaker 5: So let's take an example.

454
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Speaker 2: So if you're a couple in their early forties, you're

455
00:22:18,720 --> 00:22:21,800
Speaker 2: both earning six figure salaries, and you're not setting this

456
00:22:21,960 --> 00:22:25,480
Speaker 2: up in terms of putting money away systematically, then it's

457
00:22:25,520 --> 00:22:27,840
Speaker 2: easy to kind of nickel and din yourselfs People think they'll,

458
00:22:27,920 --> 00:22:30,040
Speaker 2: you know, when money builds up in the checking account,

459
00:22:30,080 --> 00:22:32,800
Speaker 2: well we'll invest at that point. In years go by,

460
00:22:32,880 --> 00:22:35,199
Speaker 2: with missed months where there's a big vacation coming up,

461
00:22:35,280 --> 00:22:37,040
Speaker 2: or some kind of big home expense or whatever, all

462
00:22:37,040 --> 00:22:39,720
Speaker 2: that stuff takes priority instead of having an extra seven

463
00:22:39,800 --> 00:22:43,600
Speaker 2: hundred thousand built up. Mathematically speaking, they're way behind where

464
00:22:43,640 --> 00:22:45,720
Speaker 2: they could be with that. So the advice, and this

465
00:22:45,760 --> 00:22:47,359
Speaker 2: goes back to the old advice lots of people have

466
00:22:47,400 --> 00:22:50,080
Speaker 2: heard many times, pay yourself first and then do all

467
00:22:50,160 --> 00:22:52,520
Speaker 2: those other things. The more you can automate it, the better.

468
00:22:52,520 --> 00:22:53,960
Speaker 2: If you get a raise. Let's say you get a

469
00:22:54,000 --> 00:22:56,159
Speaker 2: five percent raise, cool, go bump your four O one

470
00:22:56,200 --> 00:22:58,400
Speaker 2: K contribution by two or three percent. That way, you're

471
00:22:58,400 --> 00:23:00,720
Speaker 2: getting more money in your paycheck and you're putting money

472
00:23:00,720 --> 00:23:02,040
Speaker 2: away systematically, and.

473
00:23:01,960 --> 00:23:04,800
Speaker 1: Brian, this is also a reminder to take advantage of

474
00:23:04,880 --> 00:23:05,879
Speaker 1: that company match.

475
00:23:05,960 --> 00:23:07,399
Speaker 5: I mean it, just you know it.

476
00:23:07,640 --> 00:23:11,199
Speaker 1: It boggles my mind sometimes when I see people that

477
00:23:11,240 --> 00:23:14,320
Speaker 1: are not taking advantage of their company match, which is

478
00:23:14,359 --> 00:23:17,040
Speaker 1: oftentimes fifty cents on the dollar up to the first

479
00:23:17,040 --> 00:23:19,560
Speaker 1: six percent of pay. You don't need the market to

480
00:23:19,560 --> 00:23:23,000
Speaker 1: do anything. You're giving a fifty percent return on your

481
00:23:23,040 --> 00:23:25,160
Speaker 1: money just by showing up and saving.

482
00:23:25,200 --> 00:23:26,680
Speaker 5: You gotta do that. I do.

483
00:23:26,760 --> 00:23:29,280
Speaker 2: I follow some I like to read what people are

484
00:23:29,280 --> 00:23:31,359
Speaker 2: talking about online, just in different you know, on Reddit

485
00:23:31,400 --> 00:23:33,200
Speaker 2: and things like that just kind of keeps me sharp.

486
00:23:33,200 --> 00:23:35,720
Speaker 2: And one of the movements out there is FIRE, which

487
00:23:35,760 --> 00:23:39,080
Speaker 2: is financial independence retire early. And one of the things

488
00:23:39,119 --> 00:23:41,080
Speaker 2: they talk about is sometimes as somebody will come in

489
00:23:41,080 --> 00:23:42,280
Speaker 2: and they'll say, why would I put money in my

490
00:23:42,320 --> 00:23:44,040
Speaker 2: pourta one? Okay, it just ties it up till I'm

491
00:23:44,040 --> 00:23:48,440
Speaker 2: fifty nine and a half, which is ridiculous. My question

492
00:23:48,440 --> 00:23:50,280
Speaker 2: I always want to ask. I don't participate, it's just

493
00:23:50,320 --> 00:23:52,119
Speaker 2: not worth getting into it. But the question I've been

494
00:23:52,160 --> 00:23:54,280
Speaker 2: dying to ask is do you plan on being alive

495
00:23:54,359 --> 00:23:56,640
Speaker 2: after fifty nine and a half? So might it help

496
00:23:56,680 --> 00:23:58,320
Speaker 2: you if your company gave you a little more money.

497
00:23:58,320 --> 00:24:00,720
Speaker 2: So but anyway, get fix? Can we bother?

498
00:24:00,880 --> 00:24:03,800
Speaker 1: Nope? All right, let's get into example number two, which

499
00:24:04,280 --> 00:24:07,240
Speaker 1: kind of correlates to what we just talked about living

500
00:24:07,440 --> 00:24:11,560
Speaker 1: below your means. Imagine that, for example, a business owner

501
00:24:11,720 --> 00:24:15,199
Speaker 1: sells this company for several million dollars. The advice, no

502
00:24:15,280 --> 00:24:18,800
Speaker 1: matter how much you make, keep your lifestyle modest. Don't

503
00:24:18,880 --> 00:24:22,520
Speaker 1: let spending rise as quickly as your income. In other words,

504
00:24:22,960 --> 00:24:27,480
Speaker 1: don't fall into that trap of lifestyle creep. The consequence

505
00:24:27,520 --> 00:24:31,280
Speaker 1: of doing that, instead of sticking to a sustainable lifestyle,

506
00:24:31,720 --> 00:24:35,119
Speaker 1: this person buys a bigger house, multiple cars, and starts

507
00:24:35,160 --> 00:24:38,520
Speaker 1: funding every single luxury trip he or she can. Imagine

508
00:24:38,720 --> 00:24:41,760
Speaker 1: ten years later, the portfolio is half what it should

509
00:24:41,800 --> 00:24:44,560
Speaker 1: be or could be. The money that was supposed to

510
00:24:44,640 --> 00:24:48,320
Speaker 1: last for decades is now under real financial stress. I

511
00:24:48,400 --> 00:24:51,480
Speaker 1: run into this every so often. People feel like they

512
00:24:51,560 --> 00:24:54,880
Speaker 1: won the lottery and money just flies out the door

513
00:24:54,880 --> 00:24:57,520
Speaker 1: early after one of these big windfall situations.

514
00:24:57,600 --> 00:24:59,200
Speaker 5: Yeah, like you didn't have enough.

515
00:24:59,240 --> 00:25:00,760
Speaker 2: You didn't have much time time to get used to

516
00:25:00,800 --> 00:25:03,360
Speaker 2: the idea of how much more you have in abundance,

517
00:25:03,400 --> 00:25:06,119
Speaker 2: and that usually it usually usually doesn't go well because

518
00:25:06,119 --> 00:25:08,600
Speaker 2: we kind of convulse our way through figuring out what

519
00:25:08,640 --> 00:25:11,280
Speaker 2: our new world looks like and do a bunch of spending.

520
00:25:11,280 --> 00:25:13,159
Speaker 2: Here we all convince ourselves we deserve things we've been

521
00:25:13,160 --> 00:25:15,000
Speaker 2: denying ourselves, and there's some truth to that. You should

522
00:25:15,080 --> 00:25:17,520
Speaker 2: kind of treat yourself every now and then, but hopefully

523
00:25:17,520 --> 00:25:20,360
Speaker 2: when this happens, when the windfall occurs, if you've already

524
00:25:20,400 --> 00:25:22,600
Speaker 2: got a financial plan in place with the help of

525
00:25:22,640 --> 00:25:26,280
Speaker 2: a fiduciary advisor, then you'll know exactly, okay, cool, here's

526
00:25:26,359 --> 00:25:29,439
Speaker 2: the different opportunity. Here's the different weaknesses and opportunities that

527
00:25:29,480 --> 00:25:32,240
Speaker 2: I identified prior to in my plan. Now that there's

528
00:25:32,240 --> 00:25:33,920
Speaker 2: more money that has kind of dropped out of this guy,

529
00:25:34,160 --> 00:25:36,119
Speaker 2: which of them should I attack first? And you should

530
00:25:36,240 --> 00:25:38,960
Speaker 2: hopefully already have an idea of that before that windfall

531
00:25:39,000 --> 00:25:39,680
Speaker 2: ever happens.

532
00:25:39,960 --> 00:25:42,280
Speaker 1: All right, Example number three, and this is a big

533
00:25:42,280 --> 00:25:46,080
Speaker 1: one Brian estate planning. For example, a retired couple in

534
00:25:46,119 --> 00:25:49,960
Speaker 1: their seventies with let's just say four million dollars in assets.

535
00:25:50,320 --> 00:25:51,280
Speaker 5: Here's the advice.

536
00:25:51,880 --> 00:25:56,639
Speaker 1: Update your will, your trust and your beneficiary designations and

537
00:25:56,840 --> 00:26:00,520
Speaker 1: keep your estate plan current. Review that thing at least

538
00:26:00,560 --> 00:26:04,440
Speaker 1: every three years. I'd say review your beneficiary designations every

539
00:26:04,560 --> 00:26:08,040
Speaker 1: year with your advisor. But here's the consequence of not

540
00:26:08,240 --> 00:26:11,159
Speaker 1: doing that. Some people keep putting it off. When the

541
00:26:11,240 --> 00:26:15,240
Speaker 1: husband passes away, assets are tied up in probate accounts,

542
00:26:15,240 --> 00:26:20,320
Speaker 1: have outdated beneficiaries, and the family ends up in absolute turmoil.

543
00:26:20,440 --> 00:26:25,080
Speaker 1: Instead of an orderly transition to properly handle all of

544
00:26:25,119 --> 00:26:30,280
Speaker 1: that money that this couple spent decades earning, there's confusion,

545
00:26:30,320 --> 00:26:32,600
Speaker 1: there's delay and unnecessary cost.

546
00:26:32,680 --> 00:26:35,000
Speaker 2: Brian, Yeah, and then we see this frequently when people

547
00:26:35,000 --> 00:26:36,680
Speaker 2: come in to build a financial plan and the first

548
00:26:36,680 --> 00:26:38,399
Speaker 2: thing that comes out is the stack of statements and

549
00:26:38,440 --> 00:26:40,119
Speaker 2: we have to kind of unwind. And again, this is

550
00:26:40,200 --> 00:26:42,639
Speaker 2: job security for me, so I'm not complaining. But some

551
00:26:42,680 --> 00:26:44,719
Speaker 2: of these things are fairly easy. We have to unwind

552
00:26:44,840 --> 00:26:47,000
Speaker 2: who owns what? Why is this account only in one

553
00:26:47,000 --> 00:26:50,600
Speaker 2: spouse's name, for example, without a beneficiary being the other spouse.

554
00:26:50,640 --> 00:26:52,399
Speaker 2: If not, just stick it in a joint account and

555
00:26:52,400 --> 00:26:54,600
Speaker 2: be done with it. But there are consequences to not

556
00:26:54,680 --> 00:26:57,000
Speaker 2: acting on those things. And if you've ever expressed frustration

557
00:26:57,040 --> 00:26:59,520
Speaker 2: about the probate process, make sure you're not inviting it

558
00:26:59,520 --> 00:27:01,000
Speaker 2: in the front, all.

559
00:27:00,960 --> 00:27:03,359
Speaker 5: Right, Brian walk us through example number four.

560
00:27:03,560 --> 00:27:07,160
Speaker 1: This is a big one as well, diversification, having too much,

561
00:27:07,400 --> 00:27:09,200
Speaker 1: too many of your eggs in one basket.

562
00:27:09,280 --> 00:27:11,760
Speaker 2: So we work and we all live in an environment

563
00:27:11,840 --> 00:27:14,720
Speaker 2: surrounded by wonderful fortune. Five hundred companies that means we

564
00:27:14,760 --> 00:27:16,760
Speaker 2: have four h one k's retirement plans. That's where most

565
00:27:16,800 --> 00:27:19,960
Speaker 2: of the wealth is in the in the Cincinnati, Ohio, Kentucky,

566
00:27:20,359 --> 00:27:23,600
Speaker 2: Indiana area. So it's you know, speaking of my Procter

567
00:27:23,640 --> 00:27:27,920
Speaker 2: and Gamble and Kroger friends out here. Successful executives oftentimes

568
00:27:27,960 --> 00:27:30,199
Speaker 2: have lots of their lives, not just their network, but

569
00:27:30,280 --> 00:27:33,000
Speaker 2: lots of their lives tied up in a single company.

570
00:27:33,040 --> 00:27:35,520
Speaker 2: It's kind of almost by necessity. But again, don't put

571
00:27:35,560 --> 00:27:37,600
Speaker 2: all those eggs in one basket. The market treats Procter

572
00:27:37,640 --> 00:27:39,480
Speaker 2: and Gamble just like any other stock when it doesn't

573
00:27:39,520 --> 00:27:40,120
Speaker 2: like what it did.

574
00:27:40,320 --> 00:27:41,520
Speaker 5: And I'm not picking on P and.

575
00:27:41,440 --> 00:27:43,320
Speaker 2: G, but that I think they're the poster child for

576
00:27:43,400 --> 00:27:45,919
Speaker 2: the how this can go wrong for people. The market

577
00:27:45,960 --> 00:27:48,400
Speaker 2: did not like Dirk Yager when they hired him as

578
00:27:48,400 --> 00:27:50,480
Speaker 2: a CEO in two thousand in the stock dot cut

579
00:27:50,520 --> 00:27:54,359
Speaker 2: in half, and I remember vivid, intense conversations with people

580
00:27:54,359 --> 00:27:56,800
Speaker 2: who really super wanted to retire at that time, and

581
00:27:56,840 --> 00:27:59,439
Speaker 2: they realized that over the course of about six weeks

582
00:27:59,600 --> 00:28:01,760
Speaker 2: that they have two or three, maybe four years tacked

583
00:28:01,800 --> 00:28:03,440
Speaker 2: onto their retirement plan because it took a while to

584
00:28:03,440 --> 00:28:04,320
Speaker 2: get all that money back.

585
00:28:05,040 --> 00:28:06,199
Speaker 5: Here's the all Worth advice.

586
00:28:06,240 --> 00:28:11,000
Speaker 1: The best financial advice is often simple and proven, but

587
00:28:11,200 --> 00:28:15,720
Speaker 1: ignoring it can cost you millions, from managing risk and

588
00:28:15,800 --> 00:28:19,600
Speaker 1: retirement to drawth conversion, stock options and even private equity.

589
00:28:19,640 --> 00:28:23,240
Speaker 1: We answer your toughest money questions coming up next. You're

590
00:28:23,280 --> 00:28:25,840
Speaker 1: listening to Simply Money, presented by all Worth Financial on

591
00:28:25,960 --> 00:28:28,440
Speaker 1: fifty five KRC the talk station.

592
00:28:29,160 --> 00:28:31,000
Speaker 4: A series of events.

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00:28:30,760 --> 00:28:35,120
Speaker 1: The most important events make four eventful days happening every day.

594
00:28:35,320 --> 00:28:37,040
Speaker 2: The political violence in this country.

595
00:28:37,119 --> 00:28:39,320
Speaker 4: I'm seeing more and more events like this. This is

596
00:28:39,360 --> 00:28:44,360
Speaker 4: a Trump shutdown, Russia refusers. She's fired in these eventful times,

597
00:28:44,440 --> 00:28:47,720
Speaker 4: very serious times, all the time. It's time for.

598
00:28:47,760 --> 00:28:49,320
Speaker 5: Action in any event.

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00:28:49,480 --> 00:28:50,920
Speaker 4: We're following these events on.

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00:28:50,920 --> 00:28:52,880
Speaker 1: And off the field on the streets of our city.

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00:28:53,040 --> 00:28:56,000
Speaker 1: Check in, check it out, checking into it fifty.

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00:28:55,640 --> 00:28:59,360
Speaker 4: Five KRS the talk station. Hey is Brian tell Us

603
00:28:59,440 --> 00:29:01,560
Speaker 4: with Steve Opinions. Are welcome to here.

604
00:29:01,640 --> 00:29:03,640
Speaker 5: Why do we keep letting thousands of people come over

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00:29:03,680 --> 00:29:06,440
Speaker 5: and do nothing about it. My family's safety is at risk.

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00:29:06,600 --> 00:29:09,800
Speaker 4: Fifty five KRC. The talkstation.

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00:29:14,200 --> 00:29:16,760
Speaker 1: You're listening to Simply Money, presented by all Worth Financial

608
00:29:17,000 --> 00:29:20,280
Speaker 1: Bob spond Seller along with Brian James. Do you have

609
00:29:20,320 --> 00:29:22,600
Speaker 1: a financial question you'd like for us to answer? There

610
00:29:22,680 --> 00:29:25,000
Speaker 1: is a red button you can click while you're listening

611
00:29:25,040 --> 00:29:28,240
Speaker 1: to the show right on the iHeart app. Simply record

612
00:29:28,320 --> 00:29:32,320
Speaker 1: your question and it always comes straight to us. All right,

613
00:29:32,440 --> 00:29:34,760
Speaker 1: Clara and Mason leads us off tonight.

614
00:29:34,800 --> 00:29:35,120
Speaker 5: Brian.

615
00:29:35,280 --> 00:29:38,200
Speaker 1: She says, we're both retired and our income looks fine

616
00:29:38,200 --> 00:29:42,080
Speaker 1: on paper, but the tax bill feels higher every year.

617
00:29:42,480 --> 00:29:45,760
Speaker 1: Are there strategies to flatten out our taxes over time?

618
00:29:46,120 --> 00:29:49,400
Speaker 2: Well, Claire, that's that's a frustrating problem, but not an

619
00:29:49,480 --> 00:29:51,280
Speaker 2: uncommon one, right that. What that means is that you're

620
00:29:51,280 --> 00:29:53,760
Speaker 2: making more money every year, which is the end of

621
00:29:53,800 --> 00:29:54,160
Speaker 2: the day.

622
00:29:54,440 --> 00:29:56,360
Speaker 5: That's why I was laughing. I'm thinking the same thing.

623
00:29:56,440 --> 00:29:56,520
Speaker 1: Ye.

624
00:29:57,520 --> 00:29:59,720
Speaker 2: So you know, nobody wants to pay taxes, and there's

625
00:29:59,760 --> 00:30:01,280
Speaker 2: no such thing is eliminating taxes.

626
00:30:01,320 --> 00:30:03,520
Speaker 5: That's not going to happen, but you can mitigate.

627
00:30:03,560 --> 00:30:05,600
Speaker 2: So we don't know Clara's age or much beyond what

628
00:30:05,720 --> 00:30:07,360
Speaker 2: she said there, but here's the kind of things that

629
00:30:07,400 --> 00:30:09,160
Speaker 2: if you find yourself, if that rang true and you

630
00:30:09,240 --> 00:30:11,200
Speaker 2: find yourself in a similar situation, here's what you to

631
00:30:11,200 --> 00:30:13,520
Speaker 2: be thinking about. So I'm gonna go ahead and assume

632
00:30:13,520 --> 00:30:16,320
Speaker 2: if you're stuck paying taxes, there's probably some pre tax

633
00:30:16,360 --> 00:30:18,800
Speaker 2: iras four oh and ks out there, and Clara's paying

634
00:30:19,000 --> 00:30:22,840
Speaker 2: income taxes on required minimum distributions which kick in at

635
00:30:22,840 --> 00:30:25,280
Speaker 2: eight seventy three or seventy five, depending when you were born.

636
00:30:25,520 --> 00:30:27,360
Speaker 2: So the way to offset that is first of all,

637
00:30:27,440 --> 00:30:29,880
Speaker 2: to travel back in time and do some Wroth conversions.

638
00:30:30,360 --> 00:30:32,880
Speaker 2: So maybe if you're in your sixties, spent before those

639
00:30:33,000 --> 00:30:36,520
Speaker 2: rmds hitting, before Social Security kicks in, before you've turned

640
00:30:36,560 --> 00:30:39,000
Speaker 2: on your income streams, maybe you're an unfortunate situation where

641
00:30:39,000 --> 00:30:40,600
Speaker 2: you can live off of savings for a little while.

642
00:30:40,640 --> 00:30:42,480
Speaker 2: That means you're going to be an extremely low bracket.

643
00:30:42,760 --> 00:30:45,240
Speaker 2: Rather than spiking the football and celebrating the fact that

644
00:30:45,240 --> 00:30:47,520
Speaker 2: you're in a really low bracket, take advantage of it.

645
00:30:47,680 --> 00:30:50,560
Speaker 2: Fill up some of those bottom level brackets with Wroth conversions.

646
00:30:50,840 --> 00:30:54,640
Speaker 2: Gradual Wroth conversions can shift money into these tax free accounts. Yes,

647
00:30:54,640 --> 00:30:56,960
Speaker 2: you're going to pay income taxes on it, but you

648
00:30:56,960 --> 00:31:00,000
Speaker 2: can probably stay in the twenty maybe twenty two percent bread,

649
00:31:00,680 --> 00:31:03,400
Speaker 2: which isn't that high relatively speaking to history, and that

650
00:31:03,440 --> 00:31:06,400
Speaker 2: will prevent you from being in a gigantic bracket when

651
00:31:06,600 --> 00:31:10,000
Speaker 2: rmds kick in fully when both spouses are above seventy five.

652
00:31:11,320 --> 00:31:13,400
Speaker 2: So let's move hopefully that helps Ka Claire.

653
00:31:13,440 --> 00:31:14,720
Speaker 5: That's one. That's one thing for you to look at.

654
00:31:14,760 --> 00:31:16,360
Speaker 5: So let's move on to Jeff and Kenwood.

655
00:31:16,960 --> 00:31:19,440
Speaker 2: And Jeff's got stock options in his world, and he's about, well,

656
00:31:19,440 --> 00:31:21,400
Speaker 2: this is interesting, he specifies. Most people just say I

657
00:31:21,440 --> 00:31:23,200
Speaker 2: got stock options. Well, it's a important question. Are they

658
00:31:23,200 --> 00:31:26,200
Speaker 2: non qualified or are they incentive? So Jeff says he's

659
00:31:26,240 --> 00:31:29,240
Speaker 2: got non qualified stock options. Bob, what's the best way

660
00:31:29,280 --> 00:31:32,320
Speaker 2: for him to exercise those without creating a massive tax headache.

661
00:31:32,640 --> 00:31:35,320
Speaker 1: Well, first of all, Jeff, congratulations on being in a

662
00:31:35,320 --> 00:31:37,960
Speaker 1: position in your company and being in a company that

663
00:31:38,040 --> 00:31:42,160
Speaker 1: offers these things. They can offer tremendous leveraged upside, you know,

664
00:31:42,200 --> 00:31:45,760
Speaker 1: assuming your company stock continues to perform. Well, what most

665
00:31:45,760 --> 00:31:49,720
Speaker 1: people do is something called a cashless exercise. You basically

666
00:31:49,800 --> 00:31:52,160
Speaker 1: say yep, I'm ready to exercise, and you take the

667
00:31:52,200 --> 00:31:55,200
Speaker 1: difference between the grant price and the current price of

668
00:31:55,240 --> 00:31:58,440
Speaker 1: the stock and say just send me a check. And

669
00:31:59,160 --> 00:32:03,680
Speaker 1: you know, unfortunately, from a tax standpoint, you have to

670
00:32:04,200 --> 00:32:07,600
Speaker 1: pay ordinary income taxes plus fight at taxes you know

671
00:32:07,680 --> 00:32:10,720
Speaker 1: on that benefit. And so what you want to take

672
00:32:10,960 --> 00:32:14,160
Speaker 1: take a look at is what your income needs are,

673
00:32:14,360 --> 00:32:18,080
Speaker 1: what the maturity date on those options are. You want

674
00:32:18,120 --> 00:32:20,760
Speaker 1: to make sure you do exercise them before they mature.

675
00:32:21,400 --> 00:32:23,080
Speaker 1: And then you want to take a look at your

676
00:32:23,080 --> 00:32:27,240
Speaker 1: income situation and pick years where you're not jumping into

677
00:32:27,280 --> 00:32:31,040
Speaker 1: a higher tax bracket. And it becomes somewhat of an

678
00:32:31,160 --> 00:32:33,840
Speaker 1: art more than a science, because you are timing the

679
00:32:33,920 --> 00:32:36,440
Speaker 1: point in which you sell the stock when you do this.

680
00:32:36,920 --> 00:32:39,280
Speaker 5: But that would be my advice. Sit down and have.

681
00:32:39,240 --> 00:32:42,640
Speaker 1: A good fiduciary advisor walk you through this within the

682
00:32:42,640 --> 00:32:46,600
Speaker 1: context of a comprehensive plan and develop a strategy in

683
00:32:46,720 --> 00:32:50,880
Speaker 1: advance for what we're going to do and when, rather

684
00:32:50,960 --> 00:32:53,600
Speaker 1: than just wait till the end where you're you got

685
00:32:53,640 --> 00:32:55,360
Speaker 1: a gun to your head and say I got to

686
00:32:55,440 --> 00:32:59,360
Speaker 1: exercise these things by next week or they go away.

687
00:32:59,480 --> 00:33:01,480
Speaker 5: So hope that helps. Ryan.

688
00:33:01,600 --> 00:33:03,880
Speaker 1: Back in Mason, we got a lot of Mason folks

689
00:33:04,360 --> 00:33:05,440
Speaker 1: asking a busy today.

690
00:33:05,480 --> 00:33:06,880
Speaker 5: They're doing a lot of financial thinking.

691
00:33:07,000 --> 00:33:09,600
Speaker 1: All right, Brian, we've saved well, but nearly all of

692
00:33:09,640 --> 00:33:12,560
Speaker 1: it is tied up in retirement accounts. How do we

693
00:33:12,960 --> 00:33:18,320
Speaker 1: create more flexibility with our money before required minimum distributions

694
00:33:18,400 --> 00:33:18,760
Speaker 1: kick in?

695
00:33:19,120 --> 00:33:22,480
Speaker 2: Hey, well, congratulations and welcome to Cincinnati. As I mentioned,

696
00:33:22,480 --> 00:33:24,840
Speaker 2: with most of us work for Fortune five hundred companies

697
00:33:24,920 --> 00:33:27,640
Speaker 2: or other companies that support them. Therefore, our wealth is

698
00:33:27,680 --> 00:33:29,600
Speaker 2: tied up in four oh one k, which is exactly

699
00:33:29,680 --> 00:33:32,160
Speaker 2: Ryan's problem. Definitely not a bad thing, you know, but

700
00:33:32,200 --> 00:33:36,120
Speaker 2: more wealth is certainly makes life easier. We want to

701
00:33:36,240 --> 00:33:38,320
Speaker 2: want that situation, but it sounds like Ryan's starting to

702
00:33:38,360 --> 00:33:40,920
Speaker 2: feel like maybe there's something else they should do. So hopefully,

703
00:33:40,960 --> 00:33:43,920
Speaker 2: if there's a financial plan in the background here, then

704
00:33:43,960 --> 00:33:46,280
Speaker 2: what you might be looking at is is maybe you've

705
00:33:46,320 --> 00:33:48,400
Speaker 2: done enough. Maybe you've hit a point where you could

706
00:33:48,480 --> 00:33:50,840
Speaker 2: you know, where the four oh and k, the pre

707
00:33:50,920 --> 00:33:53,720
Speaker 2: tax tax shelter dollars are at a good spot. Well,

708
00:33:53,760 --> 00:33:55,880
Speaker 2: you can simply you are allowed. You don't have to

709
00:33:55,920 --> 00:33:57,840
Speaker 2: max your four oh one k out. You can do

710
00:33:58,000 --> 00:34:00,480
Speaker 2: other things. So if you prefer, you know, knows, maybe

711
00:34:00,520 --> 00:34:03,800
Speaker 2: there's some kind of private equity investment type thing that

712
00:34:03,840 --> 00:34:05,360
Speaker 2: you want to get involved in. You don't want to

713
00:34:05,400 --> 00:34:08,120
Speaker 2: do that inside your IRA. Sometimes that's not possible, it's

714
00:34:08,200 --> 00:34:11,080
Speaker 2: unnecessarily complicated for those kinds of things. It's okay to

715
00:34:11,160 --> 00:34:12,719
Speaker 2: back off on your four oh one K if you

716
00:34:12,719 --> 00:34:15,360
Speaker 2: feel like you've accomplished that goal. Don't go below the

717
00:34:15,400 --> 00:34:17,880
Speaker 2: free money, of course, drop it back to maybe six

718
00:34:17,960 --> 00:34:19,960
Speaker 2: percent or something like that, and then the goal there

719
00:34:19,960 --> 00:34:24,160
Speaker 2: would be building up money in a non tax sheltered account,

720
00:34:24,160 --> 00:34:25,880
Speaker 2: just a plain old taxable or joint account.

721
00:34:25,920 --> 00:34:26,880
Speaker 5: There's a downside to that.

722
00:34:26,960 --> 00:34:28,560
Speaker 2: Yes, you're gonna get a ten ninety nine, it's going

723
00:34:28,600 --> 00:34:30,040
Speaker 2: to spit out dividends and capital gains.

724
00:34:30,040 --> 00:34:30,799
Speaker 5: That's part of the game.

725
00:34:31,080 --> 00:34:34,320
Speaker 2: But that gives you access to those dollars for different

726
00:34:34,320 --> 00:34:36,200
Speaker 2: things you might want to do in the shorter term

727
00:34:36,480 --> 00:34:38,680
Speaker 2: without having to wait till you reach the magical age

728
00:34:38,680 --> 00:34:41,120
Speaker 2: of fifty nine and a half for an IRA. Now

729
00:34:41,280 --> 00:34:43,319
Speaker 2: let me throw out one more thought. Don't think it's tight.

730
00:34:43,400 --> 00:34:44,879
Speaker 2: It may not be as tied up as you think

731
00:34:44,920 --> 00:34:46,880
Speaker 2: it is. If these dollars are literally in a four

732
00:34:46,920 --> 00:34:48,360
Speaker 2: to h one K or a four H three B.

733
00:34:48,800 --> 00:34:51,000
Speaker 2: Because there's something called the rule of fifty five.

734
00:34:51,360 --> 00:34:52,000
Speaker 5: Why is this?

735
00:34:52,120 --> 00:34:54,600
Speaker 2: I don't know, Because because Congress never ties two things

736
00:34:54,640 --> 00:34:56,799
Speaker 2: together that are kind of similar. But anyway, if these

737
00:34:56,840 --> 00:34:58,759
Speaker 2: dollars are in are in a four to oh one

738
00:34:58,840 --> 00:35:01,319
Speaker 2: K or four or three B, you can draw on

739
00:35:01,440 --> 00:35:04,359
Speaker 2: them at the age of fifty five without paying that

740
00:35:04,440 --> 00:35:07,560
Speaker 2: ten percent early withdrawal Penelty Christin Lovelin is looking at

741
00:35:07,640 --> 00:35:10,520
Speaker 2: Roth conversions and he's wondering about that upfront tax hit.

742
00:35:10,640 --> 00:35:12,600
Speaker 5: So this is this is how do we calculate that

743
00:35:12,680 --> 00:35:13,480
Speaker 5: break even? Right?

744
00:35:13,520 --> 00:35:15,440
Speaker 2: So, how do we know when it's worth making a

745
00:35:15,520 --> 00:35:18,640
Speaker 2: Roth conversion and when it's not? Bobbedy think, well, there's

746
00:35:18,640 --> 00:35:20,919
Speaker 2: a lot of considerations that go into this. You want

747
00:35:20,920 --> 00:35:23,319
Speaker 2: to look at your tax rate today, what you think

748
00:35:23,360 --> 00:35:24,040
Speaker 2: it's going to be.

749
00:35:24,080 --> 00:35:24,760
Speaker 5: Down the road.

750
00:35:24,920 --> 00:35:27,400
Speaker 1: You want to look in an assumed you know, investment

751
00:35:27,480 --> 00:35:29,799
Speaker 1: rate of return. And then you also, if you're going

752
00:35:29,880 --> 00:35:32,279
Speaker 1: to do a Wroth conversion at all, you've got to

753
00:35:32,320 --> 00:35:35,719
Speaker 1: make sure you've got some money socked away in a

754
00:35:36,000 --> 00:35:39,400
Speaker 1: non IRA account to pay the taxes with it. Generally,

755
00:35:39,520 --> 00:35:43,000
Speaker 1: the math does not generally work if you're using IRA

756
00:35:43,200 --> 00:35:44,680
Speaker 1: money to pay the taxes.

757
00:35:44,719 --> 00:35:48,120
Speaker 5: That's usually not a good situation. So, uh, make.

758
00:35:48,000 --> 00:35:51,279
Speaker 1: Sure you've got cash available to do these conversions. You know,

759
00:35:51,400 --> 00:35:55,640
Speaker 1: Number one and then sit down, run some different scenarios,

760
00:35:56,120 --> 00:35:59,480
Speaker 1: look at your longer term financial planning, you know, projections,

761
00:35:59,560 --> 00:36:04,080
Speaker 1: particularly as it relates to future income and tax brackets,

762
00:36:04,640 --> 00:36:08,640
Speaker 1: and that that's where this financial planning software works wonders

763
00:36:08,640 --> 00:36:11,080
Speaker 1: because if you if you put in good assumptions that

764
00:36:11,120 --> 00:36:13,719
Speaker 1: you feel comfortable with, it'll dial it up and tell

765
00:36:13,760 --> 00:36:16,560
Speaker 1: you whether it really makes sense and how much makes

766
00:36:16,600 --> 00:36:19,120
Speaker 1: sense to do, because we don't want to run a

767
00:36:19,160 --> 00:36:23,080
Speaker 1: foul of paying more in Medicare premiums, you know, hitting

768
00:36:23,160 --> 00:36:27,280
Speaker 1: that RMA threshold. There's a lot to consider here. Most

769
00:36:27,320 --> 00:36:29,160
Speaker 1: of the time it makes sense to sit down with

770
00:36:29,200 --> 00:36:31,160
Speaker 1: a good fiduciary advisor and help.

771
00:36:31,040 --> 00:36:33,239
Speaker 5: You walk through all of this. All right.

772
00:36:33,280 --> 00:36:36,000
Speaker 1: Coming up next, Brian has his bottom line on what

773
00:36:36,120 --> 00:36:39,120
Speaker 1: to do or maybe more importantly, what not to do

774
00:36:39,560 --> 00:36:42,480
Speaker 1: during a government shutdown. You're listening to Simply Money presented

775
00:36:42,480 --> 00:36:45,960
Speaker 1: by all Worth Financial on fifty five KRC the talk station.

776
00:36:47,160 --> 00:36:50,080
Speaker 4: Every day, every day we're seeing more products roll off,

777
00:36:50,200 --> 00:36:53,800
Speaker 4: see something happens, rescue our nation's capital from crime. And

778
00:36:53,960 --> 00:36:56,479
Speaker 4: every day it's something we thought we would never see,

779
00:36:56,480 --> 00:36:59,600
Speaker 4: that something growing economy happens here.

780
00:37:00,000 --> 00:37:03,160
Speaker 1: This is for everyday goods continue to decline peace talks.

781
00:37:03,239 --> 00:37:09,359
Speaker 4: President invited me. No peace press. All the day's happenings,

782
00:37:09,360 --> 00:37:11,879
Speaker 4: not just another headline right here, A lot of good

783
00:37:11,880 --> 00:37:15,440
Speaker 4: things are happening. Fifty five krs the talk station.

784
00:37:15,760 --> 00:37:18,200
Speaker 2: Worried that next month I have to choose between groceries

785
00:37:18,200 --> 00:37:20,000
Speaker 2: for my kids or gas for my car.

786
00:37:20,239 --> 00:37:23,720
Speaker 4: Talk about it here fifty five krc the talk station.

787
00:37:27,360 --> 00:37:29,480
Speaker 1: You're listening to simply money because I'm about all Worth

788
00:37:29,520 --> 00:37:32,360
Speaker 1: financial bomb sponsorller along with Brian James.

789
00:37:32,360 --> 00:37:34,560
Speaker 5: And it's time for Brian's bottom line.

790
00:37:34,600 --> 00:37:37,400
Speaker 1: Brian's going to walk us through how to navigate a

791
00:37:37,520 --> 00:37:38,560
Speaker 1: government shutdown.

792
00:37:38,600 --> 00:37:40,719
Speaker 5: Lay it on a bro Well, Bob, as always, it's

793
00:37:40,760 --> 00:37:42,080
Speaker 5: time to panic, right.

794
00:37:42,120 --> 00:37:43,759
Speaker 2: I have a client that actually calls in with it

795
00:37:43,800 --> 00:37:46,120
Speaker 2: whenever there's a scary headline. And that's his first question.

796
00:37:46,160 --> 00:37:48,919
Speaker 2: He's kidding, of course, but he's just wondering. His question is, Okay,

797
00:37:48,960 --> 00:37:50,759
Speaker 2: stuff happened. Do I panic now? Do I panic now?

798
00:37:50,800 --> 00:37:52,320
Speaker 2: Do I panic now? And the answer is always no,

799
00:37:52,719 --> 00:37:55,200
Speaker 2: but scary headline. So let's talk about you know what

800
00:37:55,400 --> 00:37:57,759
Speaker 2: does a government shutdown mean? Well, if you work for

801
00:37:57,800 --> 00:37:59,839
Speaker 2: the federal government or your contractor, you could be looking

802
00:37:59,840 --> 00:38:02,959
Speaker 2: at furloughs, delayed paycheck, those kinds of things. This comes

803
00:38:03,000 --> 00:38:05,239
Speaker 2: back to hopefully there's an emergency fund with at least

804
00:38:05,320 --> 00:38:07,799
Speaker 2: three three to six months worth of expenses. If you

805
00:38:07,800 --> 00:38:09,880
Speaker 2: don't have that one, well then you're gonna need to

806
00:38:09,880 --> 00:38:12,759
Speaker 2: start cutting back some discretionary spending, those kinds of things.

807
00:38:13,560 --> 00:38:15,480
Speaker 2: But hopefully you've got that in place, and then we

808
00:38:15,520 --> 00:38:17,480
Speaker 2: should be anticipating these kinds of things if you're a

809
00:38:17,520 --> 00:38:20,080
Speaker 2: federal worker, because it's not like this is the new

810
00:38:20,120 --> 00:38:23,919
Speaker 2: one here. So in terms of the investments markets, that's

811
00:38:23,920 --> 00:38:26,239
Speaker 2: really where most people kind of focus a little bit.

812
00:38:26,239 --> 00:38:29,520
Speaker 2: So let's talk about historically speaking, what has happened during

813
00:38:29,800 --> 00:38:30,960
Speaker 2: market shutdowns.

814
00:38:30,680 --> 00:38:32,400
Speaker 5: So if we look at.

815
00:38:33,960 --> 00:38:36,360
Speaker 2: Periods of time from nineteen seventy six on where there

816
00:38:36,400 --> 00:38:39,359
Speaker 2: have been twenty shutdowns, about half the time the stock

817
00:38:39,400 --> 00:38:43,360
Speaker 2: market actually goes up in What that means is shutdowns

818
00:38:43,360 --> 00:38:46,440
Speaker 2: aren't usually all that stronger. They're really reliable market indicators

819
00:38:46,520 --> 00:38:48,160
Speaker 2: or really drive the market. It's just a little bit

820
00:38:48,200 --> 00:38:50,960
Speaker 2: of a short term distraction. In twenty thirteen we had

821
00:38:50,960 --> 00:38:53,200
Speaker 2: a sixteen day shutdown, the S and P five hundred

822
00:38:53,200 --> 00:38:56,520
Speaker 2: actually gained about three percent over that span. The big

823
00:38:56,560 --> 00:38:58,200
Speaker 2: one was twenty eighteen twenty nineteen.

824
00:38:58,200 --> 00:38:58,640
Speaker 5: We're gonna be.

825
00:38:58,640 --> 00:39:00,000
Speaker 2: Talking about this a lot, I'm sure over the next

826
00:39:00,320 --> 00:39:02,360
Speaker 2: several weeks as until we wind this one down. But

827
00:39:02,400 --> 00:39:05,200
Speaker 2: twenty eighteen and nineteen we had a thirty five days shutdown.

828
00:39:05,480 --> 00:39:07,040
Speaker 2: During that period, the S and P five hundred was

829
00:39:07,080 --> 00:39:08,960
Speaker 2: up ten percent. It was good for the market, So

830
00:39:09,080 --> 00:39:11,880
Speaker 2: you know, go figure, what are the reasons behind this?

831
00:39:12,000 --> 00:39:15,640
Speaker 2: Well on some analysis suggests that around those twenty shutdowns

832
00:39:15,680 --> 00:39:18,400
Speaker 2: we've had since nineteen seventy six, the market was positive

833
00:39:18,440 --> 00:39:21,279
Speaker 2: over half the time, average gains on the order of

834
00:39:21,320 --> 00:39:23,840
Speaker 2: a few tenths of a percent, sometimes a little bit higher.

835
00:39:24,239 --> 00:39:27,200
Speaker 2: But markets typically ignore excitement, and they ignore all the

836
00:39:27,239 --> 00:39:30,040
Speaker 2: crazy stuff, and we just don't tend to panic anymore,

837
00:39:30,040 --> 00:39:31,520
Speaker 2: which is a good good sign.

838
00:39:31,880 --> 00:39:34,200
Speaker 1: Wouldn't you say from a market stamp, I mean from

839
00:39:34,200 --> 00:39:37,120
Speaker 1: a paycheck standpoint, you know, if your paychecks are delayed,

840
00:39:37,160 --> 00:39:39,440
Speaker 1: this is serious stuff, and we're not making light of

841
00:39:39,480 --> 00:39:43,439
Speaker 1: it at all. But separating the pocketbook issue short term

842
00:39:43,480 --> 00:39:46,239
Speaker 1: with the market, isn't it safe to say that there

843
00:39:46,320 --> 00:39:51,240
Speaker 1: is zero stock market correlation between how the market performs

844
00:39:51,239 --> 00:39:54,120
Speaker 1: and a government shutdown. I mean, there's no data to

845
00:39:54,200 --> 00:39:56,720
Speaker 1: suggest that it impacts it really one way.

846
00:39:56,640 --> 00:39:58,719
Speaker 2: Or these Sometimes the reporting that we do is to

847
00:39:58,760 --> 00:39:59,920
Speaker 2: report that there is no report.

848
00:40:00,080 --> 00:40:02,400
Speaker 5: That's kind of the case here. These usually tend to

849
00:40:02,440 --> 00:40:03,239
Speaker 5: be UH.

850
00:40:03,280 --> 00:40:05,480
Speaker 2: And I've got my fingers crossed here, but these usually

851
00:40:05,480 --> 00:40:07,600
Speaker 2: tend to be a big nothing burgers. The duration is

852
00:40:07,680 --> 00:40:10,239
Speaker 2: usually short of a market of a government shutdown, you

853
00:40:10,360 --> 00:40:12,480
Speaker 2: a few a few weeks at most, UH, and the

854
00:40:12,520 --> 00:40:14,720
Speaker 2: markets tend to look ahead and they're they're they're pricing

855
00:40:14,719 --> 00:40:17,520
Speaker 2: and expectations not just for that shutdown, but they're also

856
00:40:17,560 --> 00:40:20,040
Speaker 2: looking forward to when the shutdown does resolve, when things

857
00:40:20,040 --> 00:40:22,719
Speaker 2: will come back to normal. U of this this could

858
00:40:22,800 --> 00:40:25,759
Speaker 2: make for interesting earnings headlines or earnings reports in the

859
00:40:25,760 --> 00:40:28,359
Speaker 2: first quarter. We'll see what happens from companies who are

860
00:40:28,360 --> 00:40:31,080
Speaker 2: dependent on the US government for contracts and maybe they're

861
00:40:31,080 --> 00:40:33,279
Speaker 2: a supplier to the government. But at the same time,

862
00:40:33,280 --> 00:40:36,279
Speaker 2: we've seen this before, and I'm not running around talking

863
00:40:36,280 --> 00:40:38,120
Speaker 2: to my clients and making any changes based on the

864
00:40:38,120 --> 00:40:39,200
Speaker 2: headline we got yesterday.

865
00:40:39,560 --> 00:40:43,000
Speaker 1: Yeah, I'll just add here, if your long term financial plan,

866
00:40:43,280 --> 00:40:46,040
Speaker 1: you know, warrants this, and you've got some dry powder

867
00:40:46,080 --> 00:40:49,640
Speaker 1: on the sidelines. If we do get that four or five, six,

868
00:40:49,680 --> 00:40:52,200
Speaker 1: eight percent pullback in the market, and I'm not predicting

869
00:40:52,239 --> 00:40:54,560
Speaker 1: that for a second, but if we get it, it

870
00:40:54,719 --> 00:40:58,600
Speaker 1: might end up being a wonderful buying opportunity heading into

871
00:40:58,640 --> 00:40:59,160
Speaker 1: the year end.

872
00:40:59,200 --> 00:41:01,160
Speaker 5: Here, all right, thanks for listening.

873
00:41:01,200 --> 00:41:03,520
Speaker 1: You've been listening to Simply Money, presented by all Worth

874
00:41:03,560 --> 00:41:06,959
Speaker 1: Financial on fifty five KRC the Talk Station.

875
00:41:07,800 --> 00:41:11,000
Speaker 4: Something is happening. It's time to end the failed experiment

876
00:41:11,040 --> 00:41:14,400
Speaker 4: of open borders. Your countries are going to hell. Something

877
00:41:14,440 --> 00:41:17,040
Speaker 4: in our country, Charlie Kirk, I forgive him.

878
00:41:17,160 --> 00:41:20,040
Speaker 3: Antifa across this country would be Trump assess and Ryan

879
00:41:20,120 --> 00:41:21,880
Speaker 3: Ruth guilty on all five charges.

880
00:41:21,960 --> 00:41:23,000
Speaker 4: Something in our world.

881
00:41:23,160 --> 00:41:27,000
Speaker 1: Jato countries should shoot down Russian ear crash in all

882
00:41:27,120 --> 00:41:28,640
Speaker 1: day they enter their airspace.

883
00:41:28,719 --> 00:41:32,400
Speaker 4: It's always something, yes, I do. It's a very important moment.

884
00:41:32,920 --> 00:41:37,480
Speaker 1: Fifty five KRC The Talk Station Finding great candidates to

885
00:41:37,560 --> 00:41:37,920
Speaker 1: hire can