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Speaker 1: Tonight, a strong jobs report earlier this morning, our take

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Speaker 1: on a specific type of annuity, and as always we

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Speaker 1: answer your questions. You're listening to Simply Money, presented by

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Speaker 1: all Worth Financial on Bob's Fund Seller along with Brian

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Speaker 1: James Well. A lot of eyes were focused on the

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Speaker 1: release of the delayed January jobs report earlier this morning.

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Speaker 1: In this morning, they saw some pretty positive results.

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Speaker 2: Brian, yep, So let's start with those big headline numbers.

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Speaker 2: We like these the normers when they come out in

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Speaker 2: decent okay at least, but the US added one hundred

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Speaker 2: and thirty thousand jobs in January. The estimate was sixty

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Speaker 2: five thousand. Now that's double the expectations, right, because remember,

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Speaker 2: as we always talk about, we don't really care what

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Speaker 2: the number was. We care whether the estimate was right

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Speaker 2: to begin with. But anyway, one hundred and thirty thousand

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Speaker 2: is not some crazy blowout number. But when you beat

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Speaker 2: expectations that cleanly well, markets are to pay attention to

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Speaker 2: that the more jobs we add, the better the economy

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Speaker 2: must must be doing.

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Speaker 3: And that's the assumption.

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Speaker 2: We kind of roll forward with unemployment, which is also

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Speaker 2: a piece of this came in about four point three percent.

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Speaker 2: Of course, economists, we're expecting four point four. The four

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Speaker 2: point four was kind of baked into the market, so

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Speaker 2: unemployment ticked down when it was supposed to tick up.

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Speaker 2: There's another positive surprise, and hourly earnings rose about zero

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Speaker 2: point four percent. That's also stronger than expected. That's a

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Speaker 2: strong number, and that tells us that workers are seeing

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Speaker 2: pay growth. With what's going on out there in the economy,

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Speaker 2: consumers still have income, which is the engine of the economy,

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Speaker 2: so we still have fuel in the tank.

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Speaker 3: And you know what, we'll.

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Speaker 2: Have to see how things go forward, and we'll see

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Speaker 2: if these numbers continue.

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Speaker 1: Yeah, some good news again, not huge numbers, but on

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Speaker 1: the manufacturing front too, manufacturing jobs rose by five thousand.

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Speaker 1: That may not sound like a huge number, but manufacturing

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Speaker 1: job growth has been a bit soft in this economy

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Speaker 1: for a while now, so just moving back into positive

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Speaker 1: territory is pretty meaningful, especially for sections of the country

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Speaker 1: like the Midwest. And then, you know, something we always

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Speaker 1: like to look at is the labor force participation rate

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Speaker 1: that rose slightly from sixty two point five percent from

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Speaker 1: sixty two point four percent. That means more and more

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Speaker 1: people are actually entering the workforce. And here's the key.

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Speaker 1: Unemployment still fell even though more people started looking for jobs,

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Speaker 1: and that rarely happens, So that's healthy. Sometimes unemployment rate

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Speaker 1: falls because people give up and leave the workforce. That

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Speaker 1: doesn't seem to be the case here. So you know,

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Speaker 1: the strength here with some with some depth in the economy.

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Speaker 1: I think what this means for the FED. You know,

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Speaker 1: we've been seeing estimates for a FED you know, rate

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Speaker 1: cut probably in June, and I would think, Brian, after

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Speaker 1: this report, you know that probably is going to get

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Speaker 1: pushed out at least till until July, because the old

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Speaker 1: saying goes, if it ain't broke, don't fix it. And

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Speaker 1: it appears like we're at least moving in the right direction.

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Speaker 3: Yeah.

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Speaker 2: The thing we haven't heard a lot about is the

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Speaker 2: battle going on between the White House and the Federal Reserve.

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Speaker 2: And because for a while the Trump administration wanted rates

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Speaker 2: cut yesterday and that we're willing to destroy the individual

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Speaker 2: who was at the head of the Federal Reserve anyway

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Speaker 2: to get that done. But that's been very, very quiet,

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Speaker 2: and I'm kind of wondering. I agree with you. I mean,

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Speaker 2: historically speaking, when we hit a point like this where

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Speaker 2: we're in good shape and we're looking like we're about

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Speaker 2: where we want to be, not perfect, but close enough,

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Speaker 2: then yeah, why disturb the system that we've got going.

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Speaker 3: But you know, politically is a little bit different.

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Speaker 2: Our political will these days seems to be to disturb

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Speaker 2: everything and clean up the mess later. So I have

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Speaker 2: a feeling that that talk is going to ramp up

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Speaker 2: the closer we get to May, when Powell's term is

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Speaker 2: supposed to be up.

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Speaker 3: Anyway, So what remains to be seen.

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Speaker 2: So we've got some good numbers coming out, and we'll

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Speaker 2: hope for some continued prosperity, and like Bob says, it

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Speaker 2: ain't broke, don't fix it all right.

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Speaker 1: Also, tonight we to break down an important social security

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Speaker 1: tax development that could impact millions of retirees, especially those

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Speaker 1: who recently got a bump in benefits. You know, after

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Speaker 1: last year Congress passing that Social Security Fairness Act. You

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Speaker 1: know a lot of folks out there you probably remember

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Speaker 1: this windfall elimination provision and government pension offset that basically

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Speaker 1: reduced social Security benefits for many public sector workers like teachers, firefighters,

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Speaker 1: police officers, folks that had paid into the social Security system,

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Speaker 1: but were not getting benefits because they are getting a

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Speaker 1: government pension. And that law went into effect last year

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Speaker 1: and you know, that eliminated that windfall elimination provision. That's

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Speaker 1: a good thing. People started getting their checks in twenty

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Speaker 1: twenty five. But Brian, it looks like those checks and

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Speaker 1: a lot of these were lumped some checks making up

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Speaker 1: for lost time so to speak, you know, in terms

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Speaker 1: of you know, benefits made up that should have been

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Speaker 1: paid out. You know, great news here, those benefits are

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Speaker 1: going to be taxable in twenty twenty five, and some

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Speaker 1: legislation is starting to be crafted and maybe work through

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Speaker 1: the system to eliminate taxation on that makeup windfall benefit.

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Speaker 3: Yeah.

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Speaker 2: So on one hand, you know, you want to be

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Speaker 2: outraged by this, but because we we well we we

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Speaker 2: when we pass laws than things like this to improve situations,

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Speaker 2: we do tend to whitewash over the here's what the

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Speaker 2: downside is going to be. Uh you know, we we've

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Speaker 2: done that a number of times with these tax cuts.

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Speaker 3: There's always some way that we have to recover the

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Speaker 3: cost that we've spent there.

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Speaker 2: Uh So yeah, and then this, if you think about it,

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Speaker 2: if this law had never been in place, if we

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Speaker 2: had never had the windfall elimination provision in the GPO

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Speaker 2: government Pension Offset, then those benefits would have been paid

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Speaker 2: out and they would have been taxed. So on one hand,

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Speaker 2: that makes sense that these would be taxed. However, this

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Speaker 2: is a lump sum to catch people up, and so

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Speaker 2: that can be pushing people into higher tax brackets. And

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Speaker 2: there's definitely a case to be made for you know,

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Speaker 2: maybe it doesn't need to be fully taxed. Maybe we

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Speaker 2: should think about this a little bit. But would have

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Speaker 2: been great, wouldn't it, Bob, if they had thought of

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Speaker 2: this when they put this act together in the first place.

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Speaker 2: Some of those math nerds out there, the actuaries who

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Speaker 2: put the numbers behind all this stuff, had to have

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Speaker 2: known that this was going to come up.

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Speaker 3: Yet we choose not to talk about it.

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Speaker 2: We wait until we actually have people seeing it in

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Speaker 2: their taxes and they raise their hands and say, hey,

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Speaker 2: wait a minute, is this fair. So anyway, what they're

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Speaker 2: looking to do to fix this that the bill that

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Speaker 2: they're looking to put in here is called the the

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Speaker 2: aptly named No Tax on Restored Benefits Act, introduced by

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Speaker 2: Representative Lance Gooden, who's a Republican out of taxes and

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Speaker 2: go figure, it's a bipartisan one. The co sponsor is

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Speaker 2: a Democrat, Shelley Pingree of Maine. And what it's going

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Speaker 2: to do is fairly simple. I mean, it's kind of

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Speaker 2: right there in the name.

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Speaker 3: It's going to.

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Speaker 2: Exclude those retroactive Social Security benefit payments from federal taxable income. So,

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Speaker 2: in plain English, if that lump sum you received because

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Speaker 2: of the Fairness Law would have triggered a tax bill,

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Speaker 2: this new law is going to make that income tax

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Speaker 2: free so long as it's under this bill.

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Speaker 1: Yeah, and I think that's good. I mean what people

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Speaker 1: don't like is surprises. And you know, at first blush,

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Speaker 1: I mean, everybody knows. I think everybody knows that the

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Speaker 1: Social Security benefits are taxable. So it should not have

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Speaker 1: come as a surprise to people that got this makeup

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Speaker 1: checkso to speak, that it was going to be taxable.

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Speaker 1: But as we talk about all the time on this show,

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Speaker 1: if you get this lump someum payment in twenty twenty five,

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Speaker 1: and that bumps your the rest of your income up

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Speaker 1: to where you're maybe paying higher IERMA taxes or paying

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Speaker 1: you know, a higher marginal rate on other income. That

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Speaker 1: is a surprise, and it was a surprise that people

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Speaker 1: weren't able to prepare for for in advance. And I

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Speaker 1: think that's why you know, this bipartisan bill is being floated.

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Speaker 1: You know, hey, if you give us a surprise, you

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Speaker 1: got to figure out how to you know, try to

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Speaker 1: fix it. I don't think this is a big dollar amount,

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Speaker 1: but it is a big dollar amount and a potentially

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Speaker 1: big impact to the folks that are impact by this bill.

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Speaker 1: We did get, you know, some Social Security tax relief

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Speaker 1: as part of the big beautiful bill in twenty twenty

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Speaker 1: five that might help offset some of this. But again, Brian,

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Speaker 1: like you say all that we agree on it, it's

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Speaker 1: like this stuff gets passed and then by people that

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Speaker 1: have no idea sometimes how the economy actually works on

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Speaker 1: main Street, and then they scramble around after the fact

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Speaker 1: to try to repair it. My concern here is we're

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Speaker 1: already in twenty twenty six. People have to file their

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Speaker 1: tax return here in the next you know what, sixty

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Speaker 1: sixty days or so, if you start filing an extension

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Speaker 1: or have to come back and do an amended return

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Speaker 1: just to claw back some of these taxes. If Congress

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Speaker 1: even passes this bill, the cost of updating your tax

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Speaker 1: return might offset any benefit you get from the tax relief.

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Speaker 1: So again, it just can turn into a big mess.

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Speaker 2: Yeah, so it's something to pay attention to it. And

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Speaker 2: this is going to get louder and louder. I think,

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Speaker 2: as you know, we're really just at the beginning of

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Speaker 2: tax season where people have just gotten their ten ninety

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Speaker 2: nine's and all that to their tax repairers and are

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Speaker 2: jumping into turbo tax and all that stuff. But they're

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Speaker 2: going to hit that number and realize that that lump

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Speaker 2: sum check pushed them somewhere they don't want to be.

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Speaker 3: And so I think there's.

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Speaker 2: Going to be a much louder over the next several weeks,

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Speaker 2: much louder support for this as people are.

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Speaker 3: Seeing it coming through.

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Speaker 2: But once again just sheer disappointment that how do we

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Speaker 2: not see this stuff coming? Why couldn't this have been

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Speaker 2: written into just one extra little line in the bill

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Speaker 2: from somebody who knew this was coming. I am sure

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Speaker 2: there's a conference room where this was all hashed out

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Speaker 2: and somebody pointed this out and was promptly shouted down

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Speaker 2: because they were saying, let's only give the good news,

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Speaker 2: and we will worry about the bad news later.

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Speaker 3: That's where we are, right anyway, off myself, Bob, all.

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Speaker 1: Right, Well, I'm trying to not even get on mine

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Speaker 1: because I want to keep this thing friendly and cordials,

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Speaker 1: so you know, I'll go back to my point I

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Speaker 1: make all the time, nobody turns down a paycheck increase

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Speaker 1: because you got to pay a little taxes on it. Right,

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Speaker 1: So it's a positive getting rid of this windfall elimination thing.

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Speaker 1: It's a good thing. We just got to clean up

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Speaker 1: a little bit of a mess as we get and implemented.

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Speaker 1: All right, Foreign stocks are on a tear, and Wall

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Speaker 1: Street has a new product as always promising international upside

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Speaker 1: with less downside risk. Sounds perfect, right, Well, we'll slow

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Speaker 1: this down and get into what some of the details

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Speaker 1: it all like we just talked about. The devil is

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Speaker 1: in the details. We'll talk we'll talk about these new

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Speaker 1: annuity products. Next. You're listening to Simply Money presented by

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

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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 straight Ahead at

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Speaker 1: six forty three, we've got listener questions coming from you.

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Speaker 1: They hit close to home, such as does a quote

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Speaker 1: unquote high probability of success? Is that really enough to

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Speaker 1: retire on? How much does it matter where your money

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Speaker 1: is saved? And what if a market doesn't cooperate with

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Speaker 1: the plan you have down on paper? Right now, we're

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Speaker 1: going to walk through all of those coming up here

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Speaker 1: in a bit. All right, anytime you hear the word annuity,

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Speaker 1: you should immediately slow the conversation down, because not all

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Speaker 1: annuities are bad. They're not all created equal, but because

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Speaker 1: they are complex by design, and there's a new term

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Speaker 1: you might be hearing about for the first time. A

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Speaker 1: lot of people are hearing about this for the first time,

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Speaker 1: and that's our ILA that stands for Registered index linked Annuity, Brian.

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Speaker 1: It never ceases to amaze me how many of these

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Speaker 1: products our friends in the insurance and annuity industry can

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Speaker 1: dream up. Let's talk about this next.

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Speaker 2: One, Yea, and I would say though the way these

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Speaker 2: come across our desks here and again.

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Speaker 3: Like I've said, annuities aren't bad. They're just tools.

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Speaker 2: You got to understand how they work so you understand

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Speaker 2: whether they apply to you or not, and so I

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Speaker 2: think most people don't understand them. Somebody walks you through them,

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Speaker 2: and then people will bring their statements and they'll.

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Speaker 3: Say, I bought this two or three years ago. I

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Speaker 3: really I don't know how it works.

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Speaker 2: And it just kind of boggles my mind because they

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Speaker 2: almost always have significant back end penalties on them. So

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Speaker 2: people are entering into these kind of not knowing exactly

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Speaker 2: how they work, but apparently knowing that they're locking their

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Speaker 2: money up for six or seven years and something in

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Speaker 2: a black box.

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Speaker 3: They don't quite understand it.

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Speaker 1: And Brian and Brian, why do they have back end penalties?

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Speaker 2: Because these are frankly, these are built for the insurance companies.

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Speaker 2: You know, if you think about it, if you're going

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Speaker 2: to lock your money up for six, seven, eight, nine,

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Speaker 2: ten years, then you weren't gonna sell anyway because you can't. Well,

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Speaker 2: you can save an awful lot of money by not

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Speaker 2: paying for these guarantees that at no point in history

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Speaker 2: have they been truly helpful in terms of reacting to

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Speaker 2: the market, because the market simply doesn't stay down that long.

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Speaker 3: It doesn't work that way.

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Speaker 1: Well, and I'll throw out another reason. It's because front

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Speaker 1: end commissions are paid on these things. The person selling

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Speaker 1: it to you only has to make it sound like

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Speaker 1: a great idea for enough time to get you to

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Speaker 1: sign on the bottom line and buy the contract, and

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Speaker 1: then they get paid. They're gone. You got to deal

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Speaker 1: with this, you got todjust your financial plan. Accordingly, that's

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Speaker 1: why there's backhand surrender charges on annuities. But let's get

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Speaker 1: let's I digress. Let's get into what this RelA product

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Speaker 1: actually is.

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Speaker 2: Our i l A stands for registered index linked annuity.

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Speaker 2: Now this is just another branch of things that have

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Speaker 2: existed for a long time. So at its core, an

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Speaker 2: r l A is an insurance project product.

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Speaker 3: It's not a mutual funds, not an ETF.

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Speaker 2: Your money is going to an insurance company, rest assured,

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Speaker 2: and that return is linked to an index. And these

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Speaker 2: types of products have been around for a while, very

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Speaker 2: long time really, but not directly invested in the index.

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Speaker 2: It's just a calculation that tracks what the index does.

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Speaker 2: So what makes a real different from other annuities is

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Speaker 2: this idea of these buffers or floors on the downside.

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Speaker 2: So the insurance company is saying the index goes down,

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Speaker 2: it's only gonna down your account's only go down so far,

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Speaker 2: we're gonna we're gonna eat that first chunk of losses. There,

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Speaker 2: you do give something up on the upside, so there's

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Speaker 2: a cap on how much you can make. For example,

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Speaker 2: if your cap is twelve percent and the market does

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Speaker 2: twenty plus percent, as what we've seen over the past

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Speaker 2: couple of years, then you only get twelve percent because

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Speaker 2: that was your capt's guess who keeps the difference. And

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Speaker 2: this is the part that I find a bit frustrating,

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Speaker 2: because people convince themselves that they absolutely have to have

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Speaker 2: these caps and insurance, you know, types of things placed

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Speaker 2: against their assets. But they've tied these assets up and

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Speaker 2: for the most part they can't get to them, and

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Speaker 2: really for the most part, they don't intend to get

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Speaker 2: to them. People put this still put money in this

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Speaker 2: accounts that they don't think they're going to be using

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Speaker 2: anytime soon, and they strap themselves down with all kinds

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Speaker 2: of expenses. These things can cost up to three to

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Speaker 2: four percent internally speaking, paying a lot more money than

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Speaker 2: you would have to if you simply sat in a

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Speaker 2: portfolio of balanced portfolio and just let it ride and

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Speaker 2: did not restrict yourself from access to those dollars.

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Speaker 1: Well, another thing that comes to mind is you talk

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Speaker 1: about caps, is you know, depending on the insurance company

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Speaker 1: and depending on the fine print of the actual contract.

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Speaker 1: And Ryan, I've seen this a lot of times, not

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Speaker 1: only with annuity contracts, but with life insurance policies tied

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Speaker 1: to an index. The caps can move. The insurance company

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Speaker 1: reserves the right to lower that upside cap based on

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Speaker 1: how these things perform over time, so your upside can

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Speaker 1: actually shrink over time remarkably, it never goes up, and

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Speaker 1: it's all about keeping the insurance company whole and making

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Speaker 1: sure their risk is paid for. One other reason to

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Speaker 1: be very careful before you wander into one of these things,

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Speaker 1: because you know, nobody likes the rules of the game

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Speaker 1: to change after the game has started. But that happens

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Speaker 1: frequently with any of these cap products index related products,

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Speaker 1: and like you've already alluded to, it gets very confusing

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Speaker 1: for the customer, especially three, four or five years after

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Speaker 1: they bought this thing. They don't remember what they bought,

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Speaker 1: why they bought it, and their actual financial plan might

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Speaker 1: have changed in the interim as well. So why are

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Speaker 1: these things suddenly so popular?

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Speaker 3: Well, and I think because they become popular.

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Speaker 2: Whenever we get to a point where where we start

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Speaker 2: to hear the chatter about, well, the market's out of peak,

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Speaker 2: there's a bubble, and you know, we think evaluations and

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Speaker 2: all that, and evaluations are actually that bad right now,

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Speaker 2: but lots of people feel like we are, we're over

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Speaker 2: sold or overbought right now because just simply because the

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Speaker 2: market has done so well in the past three years.

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Speaker 2: A lot of that comes from because we came out

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Speaker 2: of a pretty deep hole in twenty twenty two. So

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Speaker 2: whenever we get to these we've had a three year

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Speaker 2: run to the moon and we're still on it, and

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Speaker 2: so people get a little bit skittich. And the other

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Speaker 2: thing here, there's something else to talk about that is

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Speaker 2: going on in the markets, and you should be paying

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Speaker 2: attention to this, even you know, outside of this annuity discussion.

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Speaker 2: And that's the fact that international international stocks have done

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Speaker 2: a lot better than your American company. So as good

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Speaker 2: as the S and P five hundred has done, development

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Speaker 2: markets that are non US have done even better. And

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Speaker 2: simply that's simply put, that's because the United States is

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Speaker 2: there's there's a couple of things going on right now

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Speaker 2: that are changing the way that we're perceived by the

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Speaker 2: rest of the world world good, bad or in different

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Speaker 2: and the rest of the world is making deals with

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Speaker 2: each other around the United States. That is, that's just

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Speaker 2: capitalism the way it works, survival of the fittest. And

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Speaker 2: those deals that are happening between other countries and companies

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Speaker 2: based in those countries excluding the United States, are driving

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Speaker 2: international markets up. Good thing is you can invest this way,

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Speaker 2: and hopefully you already have been. This is why we

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Speaker 2: have an international component to asset allocations. And so the

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Speaker 2: reason we're bringing this up now is I've not heard

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Speaker 2: of this before before this time period, but these annuities

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Speaker 2: are now coming out with indexes that you can follow.

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Speaker 3: Where you can follow those developed markets.

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Speaker 2: Now, those options have always been there, it's the interest

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Speaker 2: in them that is now happening on the annuity side.

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Speaker 2: So people are starting to choose a instead of just

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Speaker 2: the S and P five hundred developed market index, you know,

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Speaker 2: to use against that cap.

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Speaker 1: Well, and they're putting emerging markets into some of these

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Speaker 1: annuity products as well, and that's not a bad thing.

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Speaker 1: It always goes back to once an asset class starts

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Speaker 1: to move and starts to really ramp up, especially when

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Speaker 1: it comes into the annuity market. You have the opportunity

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Speaker 1: to sell the combination of fear and fear of missing out,

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Speaker 1: and boy, that's a powerful sales presentation. And unfortunately some

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Speaker 1: people take debate, tie their money up, pay big fees,

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Speaker 1: and I will say, you know, if you really want

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Speaker 1: buffered downside risk, you could stay pretty much liquid in

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Speaker 1: some of these strategies we talk about all the time,

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Speaker 1: and save two or three percent fees, maintain flexibility, have

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Speaker 1: a balanced portfolio with small cap, large cap international, everything

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Speaker 1: rolled into one buffered etf managed strategy, and just avoid

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Speaker 1: all the surprises and high fees. You know, it all

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Speaker 1: comes down to the point you just made, having an

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Speaker 1: ever changing, ever evolving diversified acid allocation strategy that tends

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Speaker 1: to work in all markets over time.

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Speaker 2: Well a right, so in our last sixty seconds here,

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Speaker 2: so let's just talk about so what do we think

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Speaker 2: about these things.

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Speaker 3: If you already have a diversified portfolio.

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Speaker 2: Just making sure you've got that international exposure, like Bob said,

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Speaker 2: is a good idea, and this is true outside of

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Speaker 2: the annuity question.

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Speaker 3: Just make sure you've got some exposure there.

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Speaker 2: But make sure if you are looking at these products

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Speaker 2: that have these guarantees and all this stuff wrapped into them.

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Speaker 2: Just make sure you understand how they work, because that

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Speaker 2: salesperson who's talking to you is not likely going to

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Speaker 2: be super responsive. And I don't mean to paint anybody

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Speaker 2: with a broadbrush, but these frequently come across our desk

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Speaker 2: having been purchased, you know, two or three years ago,

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Speaker 2: and the person who sold it is either no longer

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Speaker 2: with the company or doesn't return calls or something like that.

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Speaker 2: So just understand it's a different world and make sure

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Speaker 2: you know what you're getting into.

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Speaker 1: Here's the all Worth advice. Don't let recent performance push

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Speaker 1: you into these complex insurance products. International exposure belongs in

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Speaker 1: a long term plan for sure, and it's not just

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Speaker 1: a short term product based fix. Coming up next, we're

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Speaker 1: protecting you and your money from scammers. You're listening to

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Speaker 1: Simply Money presented by all Worth Financial on fifty five

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Speaker 1: KRC the stations you're listening to Simply Money presented by

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Speaker 1: all Work Financial. I'm Bob Sponseller along with Brian James,

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Speaker 1: joined tonight by our good friend Josil Erls, president of

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Speaker 1: our Greater Cincinnati Better Business Bureau, Josia, We know you're

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Speaker 1: a busy lady. Thank you for making time for us

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Speaker 1: tonight and you're loaded for pare tonight on all kinds

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Speaker 1: of updates on scams that are out there. Uh, why

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Speaker 1: don't you start us off with some gold scams because

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Speaker 1: you know, we all know gold and silver have been

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Speaker 1: flying high here in recent days. That's going to get

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Speaker 1: a lot of people's attention, and we want to make

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Speaker 1: people aware of, you know, the scammers out there. No

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Speaker 1: people are paying attention to gold and silver as well.

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Speaker 1: What are you finding in your work helping protect people

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Speaker 1: from these scams.

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Speaker 4: Well, as you all know, gold is over five thousand

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Speaker 4: dollars an ounce now. That's up fifty percent almost from

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Speaker 4: six months ago. And if that's not enticing enough, there

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Speaker 4: are a lot of social media influencers out there that

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Speaker 4: are encouraging you to invest in gold right now. But

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Speaker 4: if you are thinking about buying gold, you need to

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Speaker 4: be really careful. As usual, scammers are out there to

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Speaker 4: take advantage at every turn. You might be phished via

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Speaker 4: email or more often you're going to get cold called.

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Speaker 4: They're going to make it sound like a safe bet.

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Speaker 4: Gold is stable, it's valuable. It keeps going up, so

436
00:21:25,600 --> 00:21:29,119
Speaker 4: gold is the smart move. Before you have time to

437
00:21:29,160 --> 00:21:30,879
Speaker 4: think about it, they start pressuring you.

438
00:21:31,200 --> 00:21:31,440
Speaker 1: Now.

439
00:21:31,600 --> 00:21:37,119
Speaker 4: Common tactics we've seen include impersonating law enforcement or government agencies.

440
00:21:37,680 --> 00:21:40,480
Speaker 4: They'll say they're from the FBI or the FTC and

441
00:21:40,560 --> 00:21:44,760
Speaker 4: tell you your bank accounts are compromised. Pretty scary stuff,

442
00:21:45,160 --> 00:21:47,439
Speaker 4: and the only way to protect your money is to

443
00:21:47,520 --> 00:21:51,000
Speaker 4: convert it to gold, or in a newer twist, they're

444
00:21:51,000 --> 00:21:53,600
Speaker 4: going to tell you to hand over your gold to

445
00:21:53,720 --> 00:21:57,680
Speaker 4: one of their careers for safe keeping. Imagine that. Don't

446
00:21:57,680 --> 00:22:00,840
Speaker 4: hand over gold, money, or anything of value to a

447
00:22:00,880 --> 00:22:04,600
Speaker 4: stranger promising to store it for you. There is absolutely

448
00:22:04,640 --> 00:22:06,680
Speaker 4: no reason to think that you are ever going to

449
00:22:06,720 --> 00:22:07,720
Speaker 4: see that gold again.

450
00:22:08,240 --> 00:22:08,600
Speaker 3: Decill.

451
00:22:08,680 --> 00:22:11,879
Speaker 2: I remember going back, going back maybe twenty years. This

452
00:22:11,920 --> 00:22:13,600
Speaker 2: goes back a long way, and this was legit. But

453
00:22:14,560 --> 00:22:17,960
Speaker 2: I remember there was some firm out there that was

454
00:22:18,280 --> 00:22:20,280
Speaker 2: that would send you a plastic bag and you would

455
00:22:20,280 --> 00:22:22,560
Speaker 2: put your jewelry in a ziplock bag and ship it

456
00:22:22,600 --> 00:22:24,600
Speaker 2: in so they would evaluate it and pay you for it.

457
00:22:24,760 --> 00:22:26,120
Speaker 3: And that actually I think was real.

458
00:22:26,240 --> 00:22:29,080
Speaker 2: They really did follow through on it, but it blew

459
00:22:29,160 --> 00:22:31,120
Speaker 2: my mind how many people were willing to just throw

460
00:22:31,160 --> 00:22:34,560
Speaker 2: it in a postage paid ziplock bag. Do we have

461
00:22:34,600 --> 00:22:36,880
Speaker 2: anything like that floating around there anymore?

462
00:22:37,720 --> 00:22:40,679
Speaker 4: Well, we have these courreers now that scammers are sending

463
00:22:40,680 --> 00:22:43,520
Speaker 4: out to pick up your gold, So yes, we do

464
00:22:43,640 --> 00:22:47,960
Speaker 4: have something like that. Now, occasionally you might run into

465
00:22:47,960 --> 00:22:52,680
Speaker 4: something that is legitimate, but a legitimate, honest company would

466
00:22:52,720 --> 00:22:56,040
Speaker 4: never ask you to put yourself at risk like that.

467
00:22:56,440 --> 00:22:59,119
Speaker 4: What could happen to that jewelry as you talked about

468
00:22:59,440 --> 00:23:02,560
Speaker 4: along the way, way before it even got to the

469
00:23:02,600 --> 00:23:06,639
Speaker 4: place that you were sending it. Anyway, Getting back to

470
00:23:06,680 --> 00:23:10,240
Speaker 4: the gold, in another version, scammers are pushing you to

471
00:23:10,280 --> 00:23:14,480
Speaker 4: buy gold right now before a supposed market crash, or

472
00:23:14,560 --> 00:23:17,360
Speaker 4: because they are they have a special low price that's

473
00:23:17,359 --> 00:23:20,439
Speaker 4: going to expire in a few hours. High pressure is

474
00:23:20,480 --> 00:23:24,399
Speaker 4: the key to a scam. If you hear high pressure, run,

475
00:23:24,600 --> 00:23:27,880
Speaker 4: run run. Another thing they're doing is claiming the gold

476
00:23:27,920 --> 00:23:31,520
Speaker 4: supply is in extremely limited or there's going to be

477
00:23:31,560 --> 00:23:33,639
Speaker 4: federal restrictions that are going to be put in place

478
00:23:33,680 --> 00:23:36,320
Speaker 4: that will limit how much gold you can own, so

479
00:23:36,400 --> 00:23:39,720
Speaker 4: you've got to act now. Another tactic is to try

480
00:23:39,760 --> 00:23:43,880
Speaker 4: to convince you the economy is collapsing, that traditional investments

481
00:23:43,920 --> 00:23:47,560
Speaker 4: are worthless and that gold is your only safe haven.

482
00:23:49,119 --> 00:23:51,639
Speaker 3: Legitimate I got.

483
00:23:51,480 --> 00:23:53,200
Speaker 2: To liquidate my four W and can put it in gold.

484
00:23:53,240 --> 00:23:54,560
Speaker 2: I'll be right back, Bobby got the show.

485
00:23:55,040 --> 00:24:00,160
Speaker 4: Absolutely, you go do that. Legitimate gold dealers are not

486
00:24:00,200 --> 00:24:03,200
Speaker 4: going to call investors out of the blue, and especially

487
00:24:03,440 --> 00:24:07,159
Speaker 4: don't demand that you act immediately. The best way to

488
00:24:07,200 --> 00:24:12,040
Speaker 4: protect yourself always do your homework. Only buy from established

489
00:24:12,080 --> 00:24:16,000
Speaker 4: and registered dealers, and of course at BBB, we always

490
00:24:16,040 --> 00:24:19,040
Speaker 4: recommend that you check the company's BBB rating and look

491
00:24:19,080 --> 00:24:24,000
Speaker 4: for BBB accreditation. A lot of reputable dealers become BBB

492
00:24:24,119 --> 00:24:29,000
Speaker 4: accredited because they understand the value of trust and integrity,

493
00:24:29,480 --> 00:24:31,160
Speaker 4: especially in this industry.

494
00:24:32,000 --> 00:24:34,320
Speaker 1: All right, Josia, I know you're equipped to talk about

495
00:24:34,359 --> 00:24:37,280
Speaker 1: the latest Ponzi scam. Please get into that. I always

496
00:24:37,400 --> 00:24:40,680
Speaker 1: love trying to get inside the mind of a criminal. Here,

497
00:24:41,400 --> 00:24:44,480
Speaker 1: the complex mind, how these people pull these things off.

498
00:24:44,800 --> 00:24:47,640
Speaker 1: What's the latest Ponzi scam floating around out there?

499
00:24:48,920 --> 00:24:52,040
Speaker 4: Well, the Ponzi scams, you think that it's something of

500
00:24:52,200 --> 00:24:54,320
Speaker 4: twenty or thirty years ago, but they are still out

501
00:24:54,359 --> 00:24:57,919
Speaker 4: there and they're getting more sophisticated. Here's how it works

502
00:24:58,119 --> 00:25:00,240
Speaker 4: for people who might not be familiar with with it.

503
00:25:00,440 --> 00:25:04,400
Speaker 4: Early investors get paid not from real profits but from

504
00:25:04,440 --> 00:25:09,040
Speaker 4: money contributed by newer investors, and as long as fresh

505
00:25:09,080 --> 00:25:12,800
Speaker 4: cash keeps coming in, the scheme looks legitimate. You might

506
00:25:12,880 --> 00:25:15,720
Speaker 4: even hear success stories from people who got in early.

507
00:25:16,280 --> 00:25:18,439
Speaker 4: They make it sound like a safe bet. There are

508
00:25:18,520 --> 00:25:25,359
Speaker 4: consistent returns, no volatility, guaranteed growth, all that garbage. But

509
00:25:25,520 --> 00:25:29,440
Speaker 4: once recruitment slows or investors start asking for big withdrawals,

510
00:25:29,920 --> 00:25:32,840
Speaker 4: the whole thing collapses, and when it does, you lose

511
00:25:33,040 --> 00:25:37,360
Speaker 4: everything that you have put into that scam. Now, advances

512
00:25:37,400 --> 00:25:40,840
Speaker 4: in AI and digital tools will continue to make these

513
00:25:40,880 --> 00:25:46,120
Speaker 4: scams harder and harder to spot. Fraudsters use polished websites,

514
00:25:46,600 --> 00:25:52,080
Speaker 4: fake performance dashboards, and even AI generated testimonials to look legitimate,

515
00:25:52,560 --> 00:25:55,280
Speaker 4: and they can move money now faster and hide their

516
00:25:55,320 --> 00:26:00,080
Speaker 4: tracks more effectively than ever before. Don't fall for the

517
00:26:00,320 --> 00:26:03,679
Speaker 4: false promises of risk free investing. As you guys know,

518
00:26:04,480 --> 00:26:08,240
Speaker 4: if it sounds too good to be true, it probably is. Again,

519
00:26:08,520 --> 00:26:11,119
Speaker 4: the best way to protect yourself is do your homework,

520
00:26:11,560 --> 00:26:15,760
Speaker 4: verify the company's credentials, check for BBB accreditation, and look

521
00:26:15,760 --> 00:26:21,080
Speaker 4: for transparency. Legitimate investment firms don't guarantee returns. And they

522
00:26:21,200 --> 00:26:23,600
Speaker 4: never pressure you to act fast.

523
00:26:24,280 --> 00:26:26,080
Speaker 3: Okay, Josie, let's pivot to credit.

524
00:26:26,160 --> 00:26:28,439
Speaker 2: So some of the headlines that are hitting lately is

525
00:26:28,480 --> 00:26:31,080
Speaker 2: that people are more over extended on credit than ever,

526
00:26:31,160 --> 00:26:34,000
Speaker 2: and that's oftentimes a sign of a decently strong economy.

527
00:26:34,000 --> 00:26:36,119
Speaker 2: People are just kind of spending, spending, spending. So of

528
00:26:36,119 --> 00:26:38,679
Speaker 2: course along with this come the scammers. What's going on

529
00:26:38,720 --> 00:26:39,240
Speaker 2: in that world?

530
00:26:40,760 --> 00:26:43,600
Speaker 4: Okay, you're going to see ads or get cold called

531
00:26:43,600 --> 00:26:46,480
Speaker 4: by someone claiming that they can guarantee a credit score

532
00:26:46,480 --> 00:26:49,680
Speaker 4: boost or a race bad credit. They make it sound

533
00:26:49,720 --> 00:26:54,320
Speaker 4: like the perfect solution. Then before you have time to think,

534
00:26:54,359 --> 00:26:57,359
Speaker 4: they're pressuring you to make a quick decision something like

535
00:26:57,480 --> 00:27:01,360
Speaker 4: spot limited. Sign up now this pressure and your low

536
00:27:01,400 --> 00:27:05,400
Speaker 4: credit score, you pay that upfront fee, which, by the way,

537
00:27:05,440 --> 00:27:08,879
Speaker 4: is illegal. According to the Federal Trade Commission, credit repair

538
00:27:08,920 --> 00:27:13,520
Speaker 4: companies can't legally take your money before they do work

539
00:27:13,560 --> 00:27:16,600
Speaker 4: for you. Now, it doesn't stop there. Once they get

540
00:27:16,600 --> 00:27:19,520
Speaker 4: you to pay the upfront fee, they might keep charging

541
00:27:19,560 --> 00:27:22,400
Speaker 4: you every month with no explanation of what you're paying for,

542
00:27:22,880 --> 00:27:26,000
Speaker 4: or they'll suggest you get a fake Social Security number

543
00:27:26,560 --> 00:27:30,080
Speaker 4: to create a new credit identity for you. That's not

544
00:27:30,200 --> 00:27:34,119
Speaker 4: just shady it's fraud and if you use that false identity,

545
00:27:34,440 --> 00:27:37,920
Speaker 4: you could face criminal charges. They might also tell you

546
00:27:37,960 --> 00:27:42,000
Speaker 4: to file fake disputes with the credit bureaus. That rarely works,

547
00:27:42,040 --> 00:27:45,080
Speaker 4: and you can end up freezing your credit. So instead

548
00:27:45,119 --> 00:27:47,520
Speaker 4: of fixing your credit, you end up losing even more

549
00:27:47,560 --> 00:27:50,240
Speaker 4: money and possibly getting into legal trouble.

550
00:27:51,560 --> 00:27:54,640
Speaker 1: All right, a lot of great information tonight, as always, Josio,

551
00:27:54,800 --> 00:27:57,359
Speaker 1: thanks as always for joining us. You're listening to Simply

552
00:27:57,400 --> 00:28:00,439
Speaker 1: Money presented by all Worth Financial on fifty five KRC,

553
00:28:01,000 --> 00:28:10,959
Speaker 1: the talk station. You're listening to Simply Money presented by

554
00:28:11,000 --> 00:28:14,200
Speaker 1: all Worth Financial. I'm Bob Sponseller along with Brian James.

555
00:28:14,520 --> 00:28:16,879
Speaker 1: Do you have a financial question you'd like for us

556
00:28:16,880 --> 00:28:19,240
Speaker 1: to answer. There's a red button you can click while

557
00:28:19,280 --> 00:28:21,840
Speaker 1: you're listening to the show. If you're listening on the

558
00:28:21,880 --> 00:28:25,560
Speaker 1: iHeart app, simply record your question and it will come

559
00:28:25,600 --> 00:28:28,800
Speaker 1: straight to us. All right, Brian, We're starting off with

560
00:28:28,920 --> 00:28:32,000
Speaker 1: Karen and Hyde Park. Karen says, we've always been careful

561
00:28:32,000 --> 00:28:34,840
Speaker 1: with money, and now that we don't have to be

562
00:28:34,960 --> 00:28:37,960
Speaker 1: as strict, I'm not sure how to loosen up without

563
00:28:38,040 --> 00:28:43,320
Speaker 1: feeling irresponsible. How do you make that shift? Brian car

564
00:28:43,600 --> 00:28:46,160
Speaker 1: this is right in your wheelhouse. I've watched you do

565
00:28:46,280 --> 00:28:48,680
Speaker 1: this countless times, and you're a master at it.

566
00:28:49,440 --> 00:28:52,680
Speaker 2: Well, and I mean any financial advisor who's been doing

567
00:28:52,680 --> 00:28:55,760
Speaker 2: this for a long time with successful people runs into this.

568
00:28:56,480 --> 00:28:59,560
Speaker 2: Everybody tends to hide behind us financial this big scary

569
00:28:59,600 --> 00:29:00,400
Speaker 2: financial mountain.

570
00:29:00,400 --> 00:29:02,600
Speaker 3: There's not enough money, So I got to save, save, safe, safe, save.

571
00:29:03,240 --> 00:29:06,000
Speaker 2: And then once you get past it, once you finally realize,

572
00:29:06,000 --> 00:29:08,640
Speaker 2: and usually that comes with having finally put together a

573
00:29:08,680 --> 00:29:10,920
Speaker 2: full financial plan and looking back at the big the

574
00:29:10,920 --> 00:29:13,360
Speaker 2: biggest of big pictures, then you realize, wow, I really

575
00:29:13,360 --> 00:29:13,800
Speaker 2: can do this.

576
00:29:14,320 --> 00:29:15,040
Speaker 3: I could retire.

577
00:29:15,280 --> 00:29:16,960
Speaker 2: And then all of a sudden you have to get

578
00:29:17,000 --> 00:29:19,800
Speaker 2: over this notion that I'm spending my own dollars. I'm

579
00:29:19,800 --> 00:29:21,640
Speaker 2: not allowed to do that. Mom and dad taught me

580
00:29:21,640 --> 00:29:23,800
Speaker 2: to save, safe, save, and I've been saving for forty years.

581
00:29:23,840 --> 00:29:26,240
Speaker 2: I can't spend these dollars. And people will come in.

582
00:29:26,280 --> 00:29:28,640
Speaker 2: It's kind of funny. People will come in, very sheepish. Well,

583
00:29:28,680 --> 00:29:30,320
Speaker 2: we had to take some money out of the IRA

584
00:29:30,560 --> 00:29:32,160
Speaker 2: because we wanted to do a vacation.

585
00:29:32,600 --> 00:29:34,040
Speaker 3: Cool, that's what it was for.

586
00:29:34,240 --> 00:29:36,000
Speaker 2: That's why you worked on it thirty years ago to

587
00:29:36,040 --> 00:29:37,880
Speaker 2: build it to what it is. Now, so you can

588
00:29:37,920 --> 00:29:39,960
Speaker 2: do those kinds of things. And I always tell people

589
00:29:40,080 --> 00:29:42,040
Speaker 2: you know, And also it comes up when people are

590
00:29:43,080 --> 00:29:45,200
Speaker 2: you know, I want to retire early because they've put

591
00:29:45,200 --> 00:29:47,040
Speaker 2: them themselves in a strong position and they'll go.

592
00:29:47,120 --> 00:29:48,800
Speaker 3: But we have to buy health insurance.

593
00:29:48,880 --> 00:29:51,080
Speaker 2: Oh yeah, cool, you get a couple three years of

594
00:29:51,120 --> 00:29:53,800
Speaker 2: your life back too. And if we do the math properly,

595
00:29:53,840 --> 00:29:55,479
Speaker 2: you'll see that you can afford it. You're not going

596
00:29:55,520 --> 00:29:58,000
Speaker 2: to like writing the check. That's different. I can't help

597
00:29:58,040 --> 00:30:00,000
Speaker 2: you smile when you write that check to the insurance

598
00:30:00,120 --> 00:30:02,320
Speaker 2: company prior to Medicare, But that doesn't mean you can't

599
00:30:02,360 --> 00:30:05,400
Speaker 2: afford it. So just make sure think about it, understand

600
00:30:05,440 --> 00:30:10,920
Speaker 2: what the impacts are, and separate irresponsible spending from intentional spending.

601
00:30:11,200 --> 00:30:14,040
Speaker 2: If it's something I can afford to do and I've

602
00:30:14,080 --> 00:30:16,440
Speaker 2: planned for it and it's not something I would have

603
00:30:16,520 --> 00:30:18,640
Speaker 2: done before, well that's a good thing. It means it

604
00:30:18,680 --> 00:30:20,440
Speaker 2: means I put myself in a position to live in

605
00:30:20,480 --> 00:30:22,640
Speaker 2: a way that I haven't lived before. And maybe my

606
00:30:22,680 --> 00:30:25,600
Speaker 2: parents were unable to live before. And when I say unable,

607
00:30:25,640 --> 00:30:29,240
Speaker 2: I mean more likely unwilling to. Because a lot of

608
00:30:29,240 --> 00:30:32,280
Speaker 2: the people who are retiring now with significant assets were

609
00:30:32,360 --> 00:30:35,320
Speaker 2: raised by people who either never had significant assets or

610
00:30:35,400 --> 00:30:37,720
Speaker 2: simply never spent because that is just not what you

611
00:30:37,760 --> 00:30:40,320
Speaker 2: were raised to do. So this is this generation of

612
00:30:40,320 --> 00:30:42,840
Speaker 2: retirees is having a different experience because of what the

613
00:30:42,840 --> 00:30:46,040
Speaker 2: market has done and because of the retirement structures that

614
00:30:46,080 --> 00:30:47,760
Speaker 2: were put in front of them, meaning four oh one

615
00:30:47,840 --> 00:30:50,440
Speaker 2: k's for thirty years as opposed to pensions at a

616
00:30:50,440 --> 00:30:52,840
Speaker 2: time where we've seen the best bull market the world

617
00:30:52,840 --> 00:30:55,800
Speaker 2: has ever seen. So yeah, this generation has to learn

618
00:30:55,840 --> 00:30:57,800
Speaker 2: how to retire with a pile of money instead of

619
00:30:57,840 --> 00:31:01,000
Speaker 2: a stream of income. Both can be says success. Arguably

620
00:31:01,000 --> 00:31:03,160
Speaker 2: the pile of money approach can be more successful, but

621
00:31:03,240 --> 00:31:06,160
Speaker 2: there's a psychological component to that too. Think about it.

622
00:31:06,280 --> 00:31:10,640
Speaker 2: And again, intentional spending versus irresponsible spending two different things.

623
00:31:11,320 --> 00:31:14,160
Speaker 2: Mike and Florida. Hey, Mike must be listening via that podcast.

624
00:31:14,200 --> 00:31:16,440
Speaker 2: I wonder if you push that red button. Mike says,

625
00:31:16,480 --> 00:31:18,960
Speaker 2: they are snowbirds and they're listening to the podcast.

626
00:31:19,240 --> 00:31:21,560
Speaker 3: I just stole the headline there.

627
00:31:21,920 --> 00:31:24,200
Speaker 2: They've got plenty saved, but most of it isn't accounts

628
00:31:24,200 --> 00:31:25,880
Speaker 2: and we don't want to touch it yet. So, Bob,

629
00:31:25,920 --> 00:31:28,560
Speaker 2: how do they create flexibility without undoing all that long

630
00:31:28,680 --> 00:31:29,120
Speaker 2: term plan.

631
00:31:30,360 --> 00:31:32,880
Speaker 1: Well, it sounds like Mike's kind of rubbing it in here.

632
00:31:32,960 --> 00:31:36,080
Speaker 1: He's reminding us that he's down, you know, enjoying a

633
00:31:36,080 --> 00:31:39,120
Speaker 1: glass of wine watching the sunset in CS two key,

634
00:31:39,160 --> 00:31:42,040
Speaker 1: while we're up here shoveling snow. So thank you for that, Mike.

635
00:31:42,360 --> 00:31:44,440
Speaker 1: It also sounds like you want to kind of do

636
00:31:44,560 --> 00:31:48,120
Speaker 1: some what I'll call, you know, hybrid financial planning. Do

637
00:31:48,200 --> 00:31:51,440
Speaker 1: a little bit of planning, but not interrupting your Florida vacation.

638
00:31:51,600 --> 00:31:53,880
Speaker 1: So let me do the best I can here. If

639
00:31:53,960 --> 00:31:56,800
Speaker 1: you've got accounts that you definitely don't want to touch

640
00:31:56,880 --> 00:32:00,720
Speaker 1: yet and you need to generate some money income from

641
00:32:00,720 --> 00:32:04,520
Speaker 1: your other accounts, well I would highly recommend at least

642
00:32:04,560 --> 00:32:07,360
Speaker 1: sitting down before you start pulling money out. You know,

643
00:32:07,400 --> 00:32:09,640
Speaker 1: I don't know whether you do this yourself, or with

644
00:32:09,680 --> 00:32:12,600
Speaker 1: a CPA, or with a financial advisor or all three.

645
00:32:12,840 --> 00:32:15,520
Speaker 1: Hopefully you're working as a team, but you want to

646
00:32:15,560 --> 00:32:19,440
Speaker 1: count the cost of quote unquote not touching certain accounts

647
00:32:19,800 --> 00:32:22,280
Speaker 1: and turning on the spickett from other accounts to make

648
00:32:22,320 --> 00:32:26,000
Speaker 1: sure you're being as efficient from a tax standpoint as

649
00:32:26,040 --> 00:32:29,960
Speaker 1: you can possibly be, so that you don't just get

650
00:32:30,080 --> 00:32:33,880
Speaker 1: a little bit lazy here and regret it down the road.

651
00:32:33,960 --> 00:32:36,720
Speaker 1: You know, I again, I don't know exactly what's going

652
00:32:36,760 --> 00:32:39,200
Speaker 1: on here based on how you phrase the question, but

653
00:32:39,680 --> 00:32:42,719
Speaker 1: you know, taxes do matter, and I realized, you know,

654
00:32:43,000 --> 00:32:45,720
Speaker 1: you probably already know why you don't want to touch

655
00:32:45,760 --> 00:32:48,680
Speaker 1: some of those accounts. Yet, just make sure you've weighed

656
00:32:48,720 --> 00:32:53,280
Speaker 1: your options, because maybe with shedding a little light on

657
00:32:53,360 --> 00:32:57,520
Speaker 1: some different options, it might create a little more flexibility

658
00:32:57,520 --> 00:33:00,480
Speaker 1: in your own mind than maybe you've thought of before.

659
00:33:00,640 --> 00:33:04,600
Speaker 1: Hope that helps enjoy those sunsets in Florida. All right,

660
00:33:04,640 --> 00:33:07,440
Speaker 1: Brian ed and Florence says, We've been told our plan

661
00:33:07,520 --> 00:33:10,719
Speaker 1: has a high probability of success, but I don't know

662
00:33:10,760 --> 00:33:14,600
Speaker 1: what that means for worst case outcomes. How do you

663
00:33:14,800 --> 00:33:19,160
Speaker 1: look past that headline high probability of success number?

664
00:33:19,640 --> 00:33:19,960
Speaker 3: Okay?

665
00:33:20,120 --> 00:33:20,160
Speaker 4: Ed?

666
00:33:20,240 --> 00:33:22,440
Speaker 2: First off, good on you for even being aware that

667
00:33:23,000 --> 00:33:25,840
Speaker 2: of what these of what the results of your plan is,

668
00:33:25,880 --> 00:33:28,080
Speaker 2: and more importantly, to step back further, you've got a plan,

669
00:33:28,160 --> 00:33:30,520
Speaker 2: so good job. Yeah, what I'm going to guess, Ed

670
00:33:30,600 --> 00:33:33,160
Speaker 2: is referring to here is something called Monte Carlo analysis,

671
00:33:33,160 --> 00:33:35,400
Speaker 2: which is a fairly common way of dealing with the

672
00:33:35,400 --> 00:33:37,440
Speaker 2: fact that, yeah, I can I can get comfortable with

673
00:33:37,480 --> 00:33:39,840
Speaker 2: what my inflows are, I can make estimates as to

674
00:33:39,880 --> 00:33:41,960
Speaker 2: what my spending is going to be, but I just

675
00:33:42,000 --> 00:33:44,400
Speaker 2: have no idea what the market's going to do and

676
00:33:44,440 --> 00:33:47,160
Speaker 2: more importantly, when it's going to do it. So what

677
00:33:47,200 --> 00:33:49,400
Speaker 2: we do as a financial planner is oftentimes we'll use

678
00:33:49,400 --> 00:33:52,440
Speaker 2: something called Monte Carlo analysis, which will literally take a

679
00:33:52,720 --> 00:33:54,920
Speaker 2: let's say a six percent average rate of return, nice

680
00:33:54,920 --> 00:33:58,120
Speaker 2: conservative rate, but mix that up year over year and

681
00:33:58,200 --> 00:34:00,320
Speaker 2: just say, you know the way the market actually works,

682
00:34:00,320 --> 00:34:02,200
Speaker 2: which is I'm up ten percent this year, Now I'm

683
00:34:02,240 --> 00:34:04,760
Speaker 2: down eight percent. Now I'm flat, Now I'm up twelve percent.

684
00:34:05,080 --> 00:34:07,520
Speaker 2: Mix that up again and again, and let's let's run

685
00:34:07,560 --> 00:34:10,200
Speaker 2: out the string of your of your remaining life expectancy

686
00:34:10,640 --> 00:34:13,040
Speaker 2: using all those spending and all those other income sources

687
00:34:13,040 --> 00:34:15,160
Speaker 2: you have, social Security, pensions, whatever else.

688
00:34:15,360 --> 00:34:16,640
Speaker 3: And let's see how many.

689
00:34:16,440 --> 00:34:18,440
Speaker 2: Times out of a thousand, or out of ten thousand

690
00:34:18,480 --> 00:34:20,560
Speaker 2: or whatever, how many times do you run out of money?

691
00:34:20,760 --> 00:34:23,160
Speaker 2: That's what you're hearing in terms of probability. How many

692
00:34:23,200 --> 00:34:25,359
Speaker 2: times do I have do I die with less than

693
00:34:25,400 --> 00:34:27,760
Speaker 2: a dollar in the bank. So now ED is focused

694
00:34:27,800 --> 00:34:30,800
Speaker 2: on the worst case scenarios, which is just that and

695
00:34:30,880 --> 00:34:32,640
Speaker 2: it sounds like you're kind of wanting to plan for that.

696
00:34:32,840 --> 00:34:34,920
Speaker 2: What I will say to that is, first off, you're

697
00:34:35,000 --> 00:34:37,160
Speaker 2: if that Monte Carlo analysis coming out with a pretty

698
00:34:37,200 --> 00:34:39,759
Speaker 2: high probability of success, that's good, be happy with that.

699
00:34:40,120 --> 00:34:42,520
Speaker 2: But that said, Monte Carlo has a weakness, and it

700
00:34:42,600 --> 00:34:46,520
Speaker 2: assumes too that those numbers never ever change. Realistically, for

701
00:34:46,600 --> 00:34:48,680
Speaker 2: all that spending you've thrown in there, and I'm assuming

702
00:34:48,680 --> 00:34:50,880
Speaker 2: you sound like a conservative guy, I'm assuming you've already

703
00:34:50,880 --> 00:34:54,480
Speaker 2: inflated it anyway. Realistically, if the market really hits a

704
00:34:54,920 --> 00:34:58,080
Speaker 2: really rough patch early in retirement, then you're probably going

705
00:34:58,120 --> 00:34:59,880
Speaker 2: to consciously reduce that spending.

706
00:35:00,120 --> 00:35:01,480
Speaker 3: All people will. We'll all do it.

707
00:35:01,480 --> 00:35:03,000
Speaker 2: We won't take that big trip. We're not going to

708
00:35:03,080 --> 00:35:04,840
Speaker 2: put the extension on the house or buy the condo

709
00:35:04,960 --> 00:35:07,759
Speaker 2: or whatever. So Monte Carlo does not reflect for that.

710
00:35:07,800 --> 00:35:10,640
Speaker 2: It's a robot. It spends it's exactly what you told

711
00:35:10,640 --> 00:35:12,759
Speaker 2: it to spend. So just be aware you have the

712
00:35:12,800 --> 00:35:15,520
Speaker 2: ability to be flexible over time. And first of all,

713
00:35:15,560 --> 00:35:17,560
Speaker 2: I would look much more at that high probability of

714
00:35:17,560 --> 00:35:21,160
Speaker 2: success more so than worrying about how do I defend

715
00:35:21,200 --> 00:35:23,960
Speaker 2: against the worst case outcomes? If you still have windows

716
00:35:24,000 --> 00:35:26,600
Speaker 2: in your home, then that means you must not be

717
00:35:26,600 --> 00:35:28,799
Speaker 2: too worried about a tornado coming down the street. Don't

718
00:35:28,800 --> 00:35:32,680
Speaker 2: worry so much about the about those super negative outcomes.

719
00:35:33,000 --> 00:35:35,080
Speaker 3: Relax. You build something good, rely on it.

720
00:35:36,560 --> 00:35:40,320
Speaker 1: Still, I still have windows in my home, Brian, I feel.

721
00:35:40,040 --> 00:35:43,359
Speaker 3: You're an optimist. Bob all right.

722
00:35:43,480 --> 00:35:47,480
Speaker 1: Coming up next, Brian has his bottom line on factoring

723
00:35:47,520 --> 00:35:52,879
Speaker 1: in how ongoing inflation impacts your ongoing insurance premiums. You're

724
00:35:52,920 --> 00:35:55,319
Speaker 1: listening to Simply Money presented by all Worth Financial on

725
00:35:55,440 --> 00:36:03,080
Speaker 1: fifty five KRC, the talk station. You're listening to Simply

726
00:36:03,080 --> 00:36:05,320
Speaker 1: Money for said up by all Worth Financial. I'm Bob's

727
00:36:05,320 --> 00:36:08,680
Speaker 1: sponseller with Brian James, and it's time now for Brian's

728
00:36:08,719 --> 00:36:12,400
Speaker 1: bottom line. He's going to help us manage how inflation

729
00:36:12,680 --> 00:36:16,960
Speaker 1: is impacting those pesky increasing home and auto rates. Brian,

730
00:36:17,080 --> 00:36:19,160
Speaker 1: help us out here, because I still want to be

731
00:36:19,200 --> 00:36:22,560
Speaker 1: able to afford to have windows in my house. Help

732
00:36:22,640 --> 00:36:24,280
Speaker 1: me manage my insurance premiums.

733
00:36:24,640 --> 00:36:26,759
Speaker 2: Well, look at you in your luxury palace, you and

734
00:36:26,800 --> 00:36:30,160
Speaker 2: your windows, your blah blah blah. I'm a fancy person,

735
00:36:30,480 --> 00:36:32,879
Speaker 2: you know preferences. Well, guess what the reason I want

736
00:36:32,920 --> 00:36:34,919
Speaker 2: to talk about this today. I got an envelope, Bob,

737
00:36:34,960 --> 00:36:37,040
Speaker 2: and it had my new premium in it, and guess

738
00:36:37,080 --> 00:36:39,520
Speaker 2: what it went up. So I just been thinking a

739
00:36:39,520 --> 00:36:42,000
Speaker 2: lot about home and property casualty insurance and those kinds

740
00:36:42,000 --> 00:36:44,200
Speaker 2: of things. And I'm sure I'm not the only one

741
00:36:44,440 --> 00:36:46,359
Speaker 2: that's seeing this. So let's talk a little bit about

742
00:36:46,360 --> 00:36:49,359
Speaker 2: why this is happening. Car insurance is more expensive today

743
00:36:49,360 --> 00:36:52,560
Speaker 2: because cars are more computer than wheels. Right, These aren't

744
00:36:52,560 --> 00:36:54,920
Speaker 2: fancy lawnmowers anymore that you can get together with your

745
00:36:54,920 --> 00:36:58,000
Speaker 2: buddies under a shade tree and fix on your own. Now,

746
00:36:58,000 --> 00:37:00,680
Speaker 2: you've got to take it in somewhere who has the

747
00:37:00,760 --> 00:37:04,239
Speaker 2: right technology to figure out what's going on on the

748
00:37:04,280 --> 00:37:07,200
Speaker 2: homeowner side. Well, construction labor is more expensive, material is

749
00:37:07,200 --> 00:37:10,520
Speaker 2: more expensive. It's all inflation based. Rebuilding costs have served

750
00:37:10,520 --> 00:37:14,920
Speaker 2: since the pandemic, and as well, climate risk is being repriced.

751
00:37:14,960 --> 00:37:17,800
Speaker 2: So you might live in a wildfire zone, hurricane corder,

752
00:37:17,880 --> 00:37:21,799
Speaker 2: hail heavy Midwest state wherever insurance assurers are worried about

753
00:37:21,800 --> 00:37:23,200
Speaker 2: how much they're going to have to pay when all

754
00:37:23,239 --> 00:37:26,520
Speaker 2: this damage occurs. That's resulting in higher deductibles for these

755
00:37:26,520 --> 00:37:30,880
Speaker 2: catastrophe prone areas carriers just plane exiting certain states, meaning

756
00:37:30,880 --> 00:37:34,040
Speaker 2: there's less competition and the remaining carriers can raise their

757
00:37:34,080 --> 00:37:37,919
Speaker 2: prices and then tighter underwriting standards. Also, of course, as

758
00:37:37,960 --> 00:37:41,200
Speaker 2: is the American way, litigation and claim severity is rising.

759
00:37:41,239 --> 00:37:44,839
Speaker 2: Settlements are larger, medical costs are higher resulting from auto

760
00:37:44,880 --> 00:37:47,840
Speaker 2: claims for example, and fraud, of course, the ever present fraud.

761
00:37:48,160 --> 00:37:50,400
Speaker 2: So what can you do about this? Well, step one,

762
00:37:50,440 --> 00:37:53,440
Speaker 2: you might want to check what your dwelling coverage is now. Anyway,

763
00:37:53,560 --> 00:37:56,760
Speaker 2: many homeowners are under insured because they're focused on market value,

764
00:37:56,800 --> 00:38:00,839
Speaker 2: which is buying and existing home exactly like yours. Replacement costs,

765
00:38:00,840 --> 00:38:02,400
Speaker 2: which is, how do I tear down the wreckage of

766
00:38:02,440 --> 00:38:04,279
Speaker 2: the old and build and build the same thing that

767
00:38:04,360 --> 00:38:08,879
Speaker 2: I had. Make sure that policy realistically reflects those rebuild costs. Also,

768
00:38:09,080 --> 00:38:12,759
Speaker 2: raise your deductible strategically. If you have a strong emergency fund,

769
00:38:13,080 --> 00:38:15,520
Speaker 2: then maybe increasing your deductible from five hundred to one

770
00:38:15,520 --> 00:38:18,000
Speaker 2: thousand bucks on the car twenty five hundred bucks for homeowners,

771
00:38:18,040 --> 00:38:20,600
Speaker 2: maybe even more if you've got that significant emergency fund,

772
00:38:20,800 --> 00:38:23,400
Speaker 2: that can materially re reduce your premium. So take a

773
00:38:23,440 --> 00:38:25,640
Speaker 2: look at it also, and I'm guilty of this one

774
00:38:25,719 --> 00:38:29,520
Speaker 2: myself shop that policy every year. There is competition out there.

775
00:38:30,120 --> 00:38:32,359
Speaker 2: Other insurers want your business, and they might be willing

776
00:38:32,400 --> 00:38:34,400
Speaker 2: to do to price you a little bit better in

777
00:38:34,520 --> 00:38:35,080
Speaker 2: order to gain it.

778
00:38:35,520 --> 00:38:37,640
Speaker 1: All right, thanks for listening tonight. You've been listening to

779
00:38:37,680 --> 00:38:40,760
Speaker 1: Simply Money, presented by all Worth Financial on fifty five KRC,

780
00:38:41,239 --> 00:38:42,160
Speaker 1: the talk station