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Speaker 1: Tonight, the hidden ways that wealth buys freedom and where

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Speaker 1: it doesn't. You're listening to Simply Money, presented by all

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Speaker 1: Worth Financial on Bob spond Seller along with Brian James. Tonight,

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Speaker 1: we're talking about something that doesn't show up on your

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Speaker 1: account statements, but it might matter more than any number

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Speaker 1: ever could. Brian, and we're talking about freedom. A recent

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Speaker 1: survey show that more affluent Americans are rethinking what they

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Speaker 1: actually want to do with their money, not just see

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Speaker 1: it grow, but they wanted to free them from obligations

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Speaker 1: they don't enjoy. Imagine that things like freeing up time,

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Speaker 1: reducing mental clutter, and creating flexibility in their life. Brian,

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Speaker 1: I love this whole thought process. Let's dig into it

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Speaker 1: a little bit tonight.

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Speaker 2: Yeah.

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Speaker 3: So the questions they're asking, what am I really getting

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Speaker 3: with all this effort, all this investing.

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Speaker 2: What's the point of all this?

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Speaker 3: And they've probably done most of the heavy lifting already,

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Speaker 3: so not becomes a question of intentionality.

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Speaker 2: Okay, I built something. I don't know what this machine

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Speaker 2: does that.

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Speaker 3: I built, but I want to start thinking about it

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Speaker 3: now and taking advantage of it. So where does wealth

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Speaker 3: buy freedom? Well, the first most obvious one is time.

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Speaker 3: Money buys back hours that you're not spending working and

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Speaker 3: slaving away for somebody else so that they will pay

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Speaker 3: you and you can buy food and shelter and clothing

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Speaker 3: for your family. Maybe so this this sometimes translates into

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Speaker 3: retiring a little earlier than the crowd. Or maybe it's

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Speaker 3: outsourcing this stuff you hate. Pay somebody to do the

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Speaker 3: yard work, deal with your taxes. You know, you can

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Speaker 3: get grocery shopping done and all that kind of thing now,

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Speaker 3: and that frees you up to spend time on time

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Speaker 3: on things that matter. Another level of freedom, up decision

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Speaker 3: making power. Wealth gives you the luxury of walking away

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Speaker 3: from let's say, maybe a toxic work environment or a

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Speaker 3: bad business partnership, something that sucks out more energy that

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Speaker 3: gives you, or even just that daily nine to five

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Speaker 3: grind that no longer suits your values.

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Speaker 1: Yeah, I want to jump in here for a minute.

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Speaker 1: I mean, we talk about time and freeing up time

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Speaker 1: and that is wonderful, But we talk about this all

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Speaker 1: the time. You know, Brian, and I know you and

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Speaker 1: I both run into this occasionally with our clients that

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Speaker 1: are about to retire. You better think through what you're

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Speaker 1: gonna do with all that time that you free up,

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Speaker 1: because some people are pretty shocked by all that extra

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Speaker 1: free time, and that can create some issues that they

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Speaker 1: need to work through, not only themselves but with their spouse.

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Speaker 3: Absolutely, and that can you know, being around too much.

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Speaker 3: As the old saying goes, I think it's an old saying.

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Speaker 3: I've been saying it for.

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Speaker 2: A long time. I can't miss you until you're gone.

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Speaker 3: Therefore, if you're in the house all the time and

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Speaker 3: you've got nothing to do and you're constantly pasting me,

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Speaker 3: I'm probably gonna get a little bit annoyed. So yeah,

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Speaker 3: what you're talking about there is is that I always

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Speaker 3: kind of feel like there's a People look at money

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Speaker 3: as the big mountain they have to get over in

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Speaker 3: order to retire, but there's another one hiding behind that,

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Speaker 3: and that is that vacuum of time.

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Speaker 2: What will I do with all of that free time?

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Speaker 3: We mostly hide behind the money worry, worry, worry that

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Speaker 3: there's not enough, and then all of a sudden we

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Speaker 3: finally do get around to working with a financial advisor

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Speaker 3: and building a plan, and then all of a sudden

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Speaker 3: we realize maybe we could have retired two years ago.

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Speaker 3: Oh my gosh, I want to retire right now. But

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Speaker 3: what am I going to do?

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Speaker 2: What? What do I get out of bed? And I

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Speaker 2: have nothing on the agenda?

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Speaker 3: What does that actually mean when when I'm no longer

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Speaker 3: the important person in the meeting and in my world

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Speaker 3: has kind of shrunk? Is that really gonna you know?

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Speaker 3: Will the dog respect me as much as my employees do?

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Speaker 3: Am I ready for that?

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Speaker 1: Well? The positive spin on this, we bring up a

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Speaker 1: third opportunity and we'll just call that opportunity freedom. You

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Speaker 1: get to say yes to that once in a lifetime

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Speaker 1: trip with your family, maybe invest in a business that

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Speaker 1: your kid wants to start, or support a cause both

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Speaker 1: financially and with your time acquired expertise, you know, through

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Speaker 1: charities or other endeavors that really lights your fire, you know,

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Speaker 1: really taps into passions that you've had building up inside

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Speaker 1: of you for years and have not been able to

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Speaker 1: tap into because of your job. That's the positive spin

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Speaker 1: on properly planning for you know, retirement so to speak.

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Speaker 1: Opportunity freedom.

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Speaker 3: Yeah, and then of course there's also peace of mind

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Speaker 3: right just means that you've built a machine that can

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Speaker 3: cover emergencies, that can pay for health care, even fun

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Speaker 3: long term care, without derailing everything else. So that is huge,

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Speaker 3: right that that The ability to say, Okay, I got this,

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Speaker 3: I don't like this, I don't want to write the check,

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Speaker 3: but fortunately I can write this check might make me mad,

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Speaker 3: but it's not a matter of affecting where our next

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Speaker 3: meal is coming from. And that's something you can actually

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Speaker 3: feel and not just track on a spreadsheet because you

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Speaker 3: built it for yourself and your family. And uh again,

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Speaker 3: it's a it's a money machine. You got to turn

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Speaker 3: it on. But there's good ways to do it, bad

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Speaker 3: ways to do Let's pivot to to where where don't

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Speaker 3: we get freedom from this?

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Speaker 2: Bob? Well, the first one is mental clutter.

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Speaker 3: Just because you have more money and we've addressed all

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Speaker 3: those issues we just went through, that doesn't mean you

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Speaker 3: worry any less. In fact, it can actually increase the stress. Okay,

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Speaker 3: how do I invest this big pile of money? Who

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Speaker 3: do I trust? You know, my CPA, my attorney, my

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Speaker 3: investment advisor, my financial planner. I got all these people

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Speaker 3: talking to me, Am I doing enough for my kids?

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Speaker 3: Or even am I am I maybe doing too much for

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Speaker 3: my kids? It's it does You're not going to eliminate

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Speaker 3: those questions. You're going to introduce a whole bunch of

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Speaker 3: new ones. That's not a bad thing. But don't don't

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Speaker 3: be surprised by the fact that you are still worried

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Speaker 3: about something.

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Speaker 2: It's just different than it used to be.

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Speaker 1: Yeah, Brian, I run into this all the time with folks.

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Speaker 1: I mean, let's face it, we work with successful people

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Speaker 1: all day. They're used to running or managing something that's successful,

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Speaker 1: and they've got their nose in it for ten, twelve,

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Speaker 1: fifteen hours a day. They're used to managing every aspect

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Speaker 1: of it. They're used to winning, and they're used to

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Speaker 1: dotting the i's, crossing the t's, and diving into details.

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Speaker 1: And then when that's gone, you know, they need to

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Speaker 1: focus on something, and they tend to focus on their money,

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Speaker 1: and they tend to sometimes consume too much media, too

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Speaker 1: many ideas about how to invest, too much going on

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Speaker 1: in the world, you know, with political turmoil, and they

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Speaker 1: can get them, they can get themselves mentally, you know,

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Speaker 1: all bound up here because they're consuming too much and

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Speaker 1: thinking about too much and trying to manage that all themselves.

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Speaker 1: Can create a whole lot of stress. And then if

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Speaker 1: they're not careful, you know, by by pushing and pulling

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Speaker 1: levers they shouldn't be. They can take a big pile

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Speaker 1: of money and create some problems and watch some of

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Speaker 1: that money start to evaporate for sure.

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Speaker 3: And again these are the things that sneak up on

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Speaker 3: us unless we're gonna sit down and uh and and

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Speaker 3: think about what have we built and what does this

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Speaker 3: all actually mean? So, you know, another concern here is

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Speaker 3: family dynamics. Wealth doesn't solve family conflict if there were

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Speaker 3: conflicts before a lot of times, it can make it

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Speaker 3: even worse. Sometimes you know, it's inheritance question. Who's in charge,

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Speaker 3: who's making the decisions on behalf of mom and dad?

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Speaker 3: Who gets what? That can erode the piece and not

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Speaker 3: build it. And so it's another and another good Once

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Speaker 3: you've got all this time, a good thing to start

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Speaker 3: thinking about is how is this gonna work in my family?

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Speaker 3: Do I need to have clear conversations now rather than

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Speaker 3: just putting it all down on a piece of paper

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Speaker 3: and letting them figure out what I meant before I

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Speaker 3: died when they don't have a chance to ask you

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Speaker 3: about it.

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Speaker 1: Another another thing that you know does not get bought

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Speaker 1: with wealth that we got to watch out for, or

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Speaker 1: something we'll just call time traps. Brian, I'm curious. Do

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Speaker 1: you run across this from time to time? I know

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Speaker 1: I do. A lot of successful people they replace that

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Speaker 1: high powered job in the stress of work with and

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Speaker 1: they just immediately refill their schedule with a bunch of shoulds,

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Speaker 1: things like board commitments, managing real estate holdings, meeting with

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Speaker 1: five different investment professionals or attorneys or accountants to just

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Speaker 1: quote unquote manage their money. And all of a sudden,

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Speaker 1: they've got a full schedule of stuff to do, and

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Speaker 1: they're not really experiencing any joy out of their retirement.

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Speaker 1: You know, a wise older gentleman told me many years ago.

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Speaker 1: He said, Bob, you got to learn how to say

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Speaker 1: no to a lot of quote unquote good things. So

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Speaker 1: you have the freedom to say yes to the best things.

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Speaker 1: And sometimes the best things are just you know, taking

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Speaker 1: a hike with your wife in the woods on a

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Speaker 1: sunny fall day, things that you couldn't do, you know,

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Speaker 1: when you were working fifteen hours a day.

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Speaker 3: Yeah, and that is a huge, huge mental shift, because

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Speaker 3: a lot of people who are at this level of

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Speaker 3: success got there by by doing that twenty four to

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Speaker 3: seven grind, always worried about something, always looking for that

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Speaker 3: next opportunity. And you can do that right until you've

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Speaker 3: got all your feet in the grave. And that's the

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Speaker 3: scary part, right. So I've had I have had a

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Speaker 3: lot of situations with clients, as I'm sure you have,

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Speaker 3: where we do the financial plan and they realize not

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Speaker 3: only can they retire, they could have retired five.

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Speaker 2: Six, seven years ago. And that's not always a sigh

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Speaker 2: of relief.

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Speaker 3: I've told this story a lot of times, but we

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Speaker 3: have a client that completely fell apart at the table

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Speaker 3: when we told her she could have retired five six,

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Speaker 3: seven years ago.

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Speaker 2: That is normally signed somewhat happy.

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Speaker 3: News, but she totally fell apart because she was thinking

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Speaker 3: not of the future and all the freedom. She was

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Speaker 3: thinking of the freedom she missed out on, which could

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Speaker 3: have been spent with her grandchildren who were now growing up.

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Speaker 3: She had always had the thought in her mind she

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Speaker 3: wanted to be involved in their lives on a more

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Speaker 3: day to day basis, but assumed she had to work.

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Speaker 3: She was wrong because she had never stepped back to

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Speaker 3: look at the forest for the trees, to understand exactly

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Speaker 3: what she had built for herself and when it could

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Speaker 3: take her to that freedom place.

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Speaker 1: Yeah, exactly. If you're waiting until some future milestone to

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Speaker 1: enjoy the fruits of all your hard work and planning,

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Speaker 1: be careful not to wait too long, Brian. We see

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Speaker 1: this from time to time. People work too long, or

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Speaker 1: they just put off, or to your point, they haven't

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Speaker 1: done the planning and realizing the amount of space and

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Speaker 1: cushion they do have in their financial plan, and they

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Speaker 1: don't take that cruise, they don't spend the time, you know,

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Speaker 1: unique experiences with their grandchildren, and then lo and behold,

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Speaker 1: they get into their late seventies early eighties and health

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Speaker 1: concerns start to crop up, and they really missed out

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Speaker 1: on some wonderful life changing opportunities. And that's one of

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Speaker 1: the great benefits of having a financial plan and having

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Speaker 1: a good fiduciary advisor who can actually tell you, hey,

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Speaker 1: go spend some of that money, go do some things

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Speaker 1: that are really meaningful to you.

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Speaker 2: Yeah, and I would. I would also throw out getting

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Speaker 2: hung up on a number.

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Speaker 3: Right when we get near, especially when the market's at

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Speaker 3: a high, you know, we get close to that more

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Speaker 3: money than I've ever had my entire life, and I'm

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Speaker 3: sneaking up on a maybe it's not one million now

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Speaker 3: it's two, or it's been six for a long time,

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Speaker 3: it's about to be seven.

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Speaker 2: I want to wait until I see that number.

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Speaker 3: I want to see a piece of paper with my

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Speaker 3: name on it and that dollar amount so I know

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Speaker 3: that I won that game. Well, you know that doesn't

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Speaker 3: have anything to do you know a lot of times mathematically,

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Speaker 3: it's not going to have any impact on your financial

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Speaker 3: success and retirement.

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Speaker 2: What number.

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Speaker 3: That whole thing starts with. Figure out what you want

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Speaker 3: out of life, and then pull a trigger when the

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Speaker 3: machine can support it. Don't get hung up on a

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Speaker 3: dollar amount because the market can take it away just

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Speaker 3: as quickly, and that will lead to a lot of

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Speaker 3: frustration with somebody saying, you know what, I could have retired.

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Speaker 3: I was going to it, could have done it two

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Speaker 3: years ago, but I just chose not to because I

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Speaker 3: got obsessed with this number.

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Speaker 1: All right, Hey, Brian, in the last couple of minutes

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Speaker 1: we have left for this segment, I know you've helped

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Speaker 1: hundreds of people retire and retire. Well, walk us through

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Speaker 1: a process that you'd recommend people followed to make sure

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Speaker 1: we check all these boxes and have the right conversations

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Speaker 1: so that you have a plan not just for your money,

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Speaker 1: but for your life, you know, heading into retirement.

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Speaker 3: Bob, that's a great question and it's something everybody runs

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Speaker 3: into it. So if you want to really want freedom,

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Speaker 3: then then first of all, think it about. Think about

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Speaker 3: it as freedom from worrying about money.

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Speaker 2: Start there. Most people go the other way.

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Speaker 3: I'm going to have all this free time, so I'm

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Speaker 3: going to do nothing but worry about money, and those

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Speaker 3: people are don't end up happy. So reframe what freedom

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Speaker 3: means to you. Only you can do that, because only

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Speaker 3: you know yourself and what drives you. So start by

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Speaker 3: getting clear on that. Is it time with family, is

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Speaker 3: it's travel, volunteering, building something new again? Set the numbers aside.

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Speaker 3: Second step, build your plan financially backwards from those answers,

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Speaker 3: here's what I want to do?

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Speaker 2: What would it cost me to get there?

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Speaker 3: Now we're starting to talk about the numbers a little bit,

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Speaker 3: but it's not a pile of money. It's how do

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Speaker 3: I generate income out of it to support the things

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Speaker 3: I've identified? Not about hitting that number. It's what the

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Speaker 3: number allows you to do and then number three, simplify it.

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Speaker 3: If you have too many accounts, look under the hood.

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Speaker 3: You know a lot of people get obsessed with the

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Speaker 3: idea of well, if I put my money in a

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Speaker 3: bunch of different investment type of arrangements, then that is diversification.

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Speaker 2: Well, not necessarily.

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Speaker 3: You're going to realize that a lot of financial firms

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Speaker 3: you follow something called modern portfolio theory at its core,

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Speaker 3: so you're generally generally gonna see the same approaches. If

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Speaker 3: you see something that wanders too far off the reservation,

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Speaker 3: that might be a red flag. Anyhow, so, decide whether

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Speaker 3: it's worth having all this money spread out all over

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Speaker 3: the place, all the rental properties, all those different things.

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Speaker 3: And finally number four, talk about it. Talk with your spouse,

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Speaker 3: your advisor, your adult kids. The more alignment everybody has,

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Speaker 3: the more your wealth supports, not only your values, but

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Speaker 3: theirs as well, not just your net worth. It's not

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Speaker 3: about a pile of money, Bob.

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Speaker 1: Here's the all worth advice. Wealth can certainly buy you

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Speaker 1: time and choices, but real freedom comes from using it

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Speaker 1: with purpose. A thirty two trillion dollar wave is coming,

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Speaker 1: and it's not in the stock market. What you need

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Speaker 1: to know before riding that wave. You're listening to Simply

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

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Speaker 1: the talk station. You're listening to Simply Money, presented by

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Speaker 1: all Worth Financial on Bob's spot on seller. Along with

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Speaker 1: Brian James early retirement worries a business windfall in a

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Speaker 1: portfolio that no longer fits. We tackle your toughest money

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Speaker 1: questions straight ahead at six forty three. We've spoken about

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Speaker 1: alternatives before. Alts in quotes is short for alternative investments

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Speaker 1: assets outside of traditional stocks, bonds, or cash. These can

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Speaker 1: include things like private equity, hedge funds, real estate commodities,

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Speaker 1: and private credit, and they're often used for diversification and

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Speaker 1: potentially higher returns. Brian, people are pouring money into these things.

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Speaker 1: The numbers are absolutely staggering.

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Speaker 3: Alternatives means just really something that's beyond the normal things

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Speaker 3: we've become accustomed to, such as the index funds, those

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Speaker 3: kinds of things. It does not mean those kids, for

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Speaker 3: those of you who grew up in the nineties, those

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Speaker 3: kids wearing the big baggy jeans and chains and hanging

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Speaker 3: out with the warehouse down and over the rite a

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Speaker 3: little bit different.

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Speaker 2: We're talking about the investment world.

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Speaker 3: So outside traditional stocks, bonds, this is private equity, hedge funds,

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Speaker 3: real estate commodities, private credit, things like that used for diversification.

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Speaker 2: This is not the core of a portfolio.

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Speaker 3: Yes, you can get potentially higher returns, but guess what

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Speaker 3: that comes along with little higher risk. And so there's

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Speaker 3: a lot of moving parts into these. But Bob, you

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Speaker 3: said it, there's people are pouring money into these. So

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Speaker 3: recent industry surveys indicating global assets under management in alternative

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Speaker 3: investments are forecast to hit about thirty two trillion dollars

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Speaker 3: by twenty thirty. That is only five really make it

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Speaker 3: four years from now, just about. So if most of

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Speaker 3: your portfolio has been public large cap equity stocks, think

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Speaker 3: the S and P five hundred, or maybe bond ladders,

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Speaker 3: meaning a bond that comes, you know, a pile of

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Speaker 3: bonds that comes due a little bit every year. Maybe

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Speaker 3: real estate alternatives might feel like stepping out of that

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Speaker 3: comfort zone. But if billions of dollars of institutional money

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Speaker 3: and moving that way, you may want to ask, maybe

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Speaker 3: my portfolio should be considering this.

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Speaker 1: Maybe you should, Brian, I'm still confused. You know from

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Speaker 1: your prior comment. When you sit down with a client

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Speaker 1: and explain, you know, buffer ETFs or edge funds. Do

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Speaker 1: you really use the analogy of a kid walking around

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Speaker 1: on Fountain Square with his genes halfway down his rear

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Speaker 1: end and and his change hanging out? Is that is

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Speaker 1: that the analogy you used to describe these things.

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Speaker 2: That's not where the warehouse was, Bob.

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Speaker 3: It was up and over the rhine, and it was

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Speaker 3: this is back in the days when over the Rhine

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Speaker 3: wasn't quite what it is right now. But that's where

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Speaker 3: that's where all the alternative kids hung out.

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Speaker 1: Thirty thirty, Now, I get it.

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Speaker 2: You were Okay, you were. I'm gonna guess you were

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Speaker 2: a little more straight laced.

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Speaker 3: You were.

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Speaker 2: You were at the local McDonald's drinking coffee. I'm gonna

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Speaker 2: go out a living guess. Anyway, Why are we talking about?

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Speaker 1: I behaved myself in high school, Brian. But hey, let's

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Speaker 1: talk about the pros and cons of alternative investments. Let's

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Speaker 1: get into some of the pros. The first one is diversification.

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Speaker 1: Benefit Alternatives do come, and it's why you build or

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Speaker 1: mix them in with a you know, a good diversified

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Speaker 1: investment strategy. The whole idea here is to get things

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Speaker 1: in your portfolio that have low correlation with the stock

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Speaker 1: and bond market. Think when one thing's zigging another one zagging.

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Speaker 1: Lower volatility can be a good thing, especially when you're

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Speaker 1: withdrawing money out of your portfolio during retirement. And then

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Speaker 1: along with that some of these things. You know, let's

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Speaker 1: face it, if you're going to take additional risk and

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Speaker 1: pay higher fees and all that, there is an enhanced

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Speaker 1: return potential in some of these things, you know, private equity,

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Speaker 1: private credit, infrastructure funds. Oftentimes they do and have good

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Speaker 1: track records of producing higher returns, especially over multi year

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Speaker 1: time horizons. But Brian, when you get into some of

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Speaker 1: these specialized investment vehicles, you know, this tends not to

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Speaker 1: be a do it yourself proposition. These things need to

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Speaker 1: be vetted with some folks that know how to kind

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Speaker 1: of pick through and separate the wheat from the chaffs,

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Speaker 1: so to speak.

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Speaker 3: Yeah, So what we're talking about, probably the most common

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Speaker 3: example that people really can kind of comprehend is obviously

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Speaker 3: everyone's core portfolio probably owns index funds in it, right,

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Speaker 3: So you know your four oh and k, these more

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Speaker 3: simple investments, which which probably is focused on the S

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Speaker 3: and P five hundred, which is just the five hundred

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Speaker 3: largest publicly traded companies in the United States, No more,

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Speaker 3: no less than that. An alternative is also companies, but

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Speaker 3: they're not publicly traded. That's what hence the word private.

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Speaker 3: These are private equity type companies. You know, think of

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Speaker 3: little businesses you've seen, you know, I would think of

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Speaker 3: a veterinary clinics in HVAC shops. If you've noticed some

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Speaker 3: of these places that you know, you've known, have been

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Speaker 3: there forever, but all of a sudden, there's a shiny

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Speaker 3: new logo and a shiny new sign out front of

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Speaker 3: that little house that it's been operating out of for decades.

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Speaker 3: You can kind of rest assured that there's private equity

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Speaker 3: behind that. Good and bad comes with that. But the

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Speaker 3: whole point of it is that's an investment in a company,

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Speaker 3: a small company that might have a lot more upside

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Speaker 3: than just your normal publicly traded types of things. But

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Speaker 3: like Bob says, you need somebody who can really vet

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Speaker 3: these things. Somebody who can look into that vet clinic

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Speaker 3: and how it's going to combine with these other twelve

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Speaker 3: to make a profitable business. And is that worth investing in.

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Speaker 3: So nowadays the risk is still no matter what, but

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Speaker 3: you do have the ability to buy something that kind

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Speaker 3: of behaves a little like a mutual fund in a

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Speaker 3: roundabout way in terms of it's got a lot of

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Speaker 3: these different types of entities in it. None of them

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Speaker 3: are publicly traded, that's the point. But you're not going

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Speaker 3: after one little business at a time looking at balance sheets.

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Speaker 3: Someone else is doing that on your behalf. This didn't

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Speaker 3: exist twenty thirty years ago. But with the benefit of

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Speaker 3: technology and the way we can organize information, now smaller

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Speaker 3: investors can start to get involved in these things.

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Speaker 1: Yeah, and some of the traditional you know, cons or

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Speaker 1: watchouts with these investments are slowly starting to go away.

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Speaker 1: Here's what I mean, you know, liquidity risk. Oftentimes your

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Speaker 1: money was tied up for years in these things. You know,

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Speaker 1: let's face it, When trillions of dollars start to pile

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Speaker 1: into these asset classes, that's good for investors. I mean,

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Speaker 1: think about, you know, buying a television from the local

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Speaker 1: hardware store versus buying it through Amazon or a big

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Speaker 1: back big box store. Volume tends to bring down prices

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Speaker 1: and increases options over time. The same thing is happening

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Speaker 1: now in this alternative investment space. That's a good thing.

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Speaker 1: The same thing applies to fees. A lot of people

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Speaker 1: are probably used to the old two and twenty term,

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Speaker 1: meaning the investment manager is going to take two percent

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Speaker 1: off the top and they're going to take twenty percent

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Speaker 1: of the upside. Well, that two and twenty stuff is

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Speaker 1: starting to go away as competition increases and the fees

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Speaker 1: are coming down. That's always a good thing for investors.

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Speaker 1: And then the access you've already mentioned it, accessum and

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Speaker 1: minimum investment amounts, those continue to come down as well,

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Speaker 1: So again, be careful about what you buy. But the

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Speaker 1: good thing is this landscape is opening up, and opening

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Speaker 1: up big time. It can be a huge opportunity. Here's

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Speaker 1: the all Worth advice. Big trends like a thirty two

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Speaker 1: trillion dollar alternatives boom deserve your attention, but only if

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Speaker 1: you match the attention with your liquidity needs, timeline fees

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Speaker 1: and your overall financeancial fit. Do you know how your

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Speaker 1: investments are taxed? We'll talk about the fine print that

437
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Speaker 1: matters coming up next. You're listening to Simply Money, presented

438
00:20:08,760 --> 00:20:12,520
Speaker 1: by all Worth Financial on fifty five KRC. The talk station.

439
00:20:17,119 --> 00:20:19,560
Speaker 1: You're listening to Simply Money Presided by all Worth Financial

440
00:20:19,600 --> 00:20:23,000
Speaker 1: on Bob Spondseller along with Brian James. When it comes

441
00:20:23,040 --> 00:20:27,639
Speaker 1: to investing, most people just focus on performance along with

442
00:20:27,720 --> 00:20:31,159
Speaker 1: diversification and risk, all good things to focus on, but

443
00:20:31,240 --> 00:20:36,000
Speaker 1: there's another key factor that quietly eats away or sometimes

444
00:20:36,040 --> 00:20:40,359
Speaker 1: saves you on the sidelines, and that's taxes. How and

445
00:20:40,440 --> 00:20:44,080
Speaker 1: when your investments or tax can significantly impact your real

446
00:20:44,160 --> 00:20:48,000
Speaker 1: return in your taxable investment accounts. And let's face it,

447
00:20:48,080 --> 00:20:52,600
Speaker 1: different types of investments come with very different tax treatments. Brian,

448
00:20:52,640 --> 00:20:55,239
Speaker 1: this is a good topic to get into, especially as

449
00:20:55,280 --> 00:20:57,000
Speaker 1: we get into the last couple months of the year

450
00:20:57,040 --> 00:21:00,680
Speaker 1: where some actual planning should probably be taking place right

451
00:21:00,720 --> 00:21:02,360
Speaker 1: now between now and the end of the year.

452
00:21:02,760 --> 00:21:05,359
Speaker 3: Q four it is the fourth quarter of the year, Bob,

453
00:21:05,400 --> 00:21:07,560
Speaker 3: tis the season to be really mad at your mutual

454
00:21:07,560 --> 00:21:09,040
Speaker 3: fund for spitting out a capital gain.

455
00:21:09,119 --> 00:21:10,080
Speaker 2: So why does that happen?

456
00:21:10,359 --> 00:21:12,439
Speaker 3: Mutual funds can have what we kind of consider a

457
00:21:12,480 --> 00:21:16,040
Speaker 3: sneaky tax there, good for diversification, but they also come

458
00:21:16,080 --> 00:21:17,800
Speaker 3: with this twist that'll catch you off guard, and you

459
00:21:18,119 --> 00:21:20,639
Speaker 3: might have seen it even if you don't sell your

460
00:21:20,720 --> 00:21:23,280
Speaker 3: mutual fund shares, you can still owe taxes. Right, you

461
00:21:23,359 --> 00:21:26,600
Speaker 3: might have bought that fund this year, but perhaps it's

462
00:21:26,640 --> 00:21:29,600
Speaker 3: sold a position it has owned for twenty years. If

463
00:21:29,600 --> 00:21:33,000
Speaker 3: this is a mutual fund type arrangement, they're required by

464
00:21:33,080 --> 00:21:35,439
Speaker 3: law to distribute just about all of their income and

465
00:21:35,480 --> 00:21:38,119
Speaker 3: capital gains to shareholders every single year. So if the

466
00:21:38,160 --> 00:21:40,960
Speaker 3: fund manager sells something that it is held for twenty years,

467
00:21:41,160 --> 00:21:42,920
Speaker 3: you're going to have to pay tax on that gain

468
00:21:43,040 --> 00:21:45,520
Speaker 3: even though you only own the fund for about six months.

469
00:21:45,560 --> 00:21:47,680
Speaker 3: This is one of the reasons we are big fans

470
00:21:47,680 --> 00:21:49,960
Speaker 3: of exchange traded funds because they can get the same

471
00:21:50,040 --> 00:21:52,720
Speaker 3: job done with regard to diversification, but the way they

472
00:21:52,760 --> 00:21:56,560
Speaker 3: build those portfolios is much more efficient, and the holding

473
00:21:56,600 --> 00:21:59,320
Speaker 3: period of the assets that are underneath it are specific

474
00:21:59,400 --> 00:22:01,919
Speaker 3: to you and when you bought it, not when the

475
00:22:01,960 --> 00:22:05,399
Speaker 3: exchange train fund bought it, you know, decades ago. So

476
00:22:05,720 --> 00:22:07,399
Speaker 3: that's one of the things that can sneak up. And

477
00:22:07,440 --> 00:22:09,240
Speaker 3: this is it's usually December where you'll get a big,

478
00:22:09,240 --> 00:22:11,720
Speaker 3: fat distribution. And this is not a not really a

479
00:22:11,720 --> 00:22:14,560
Speaker 3: money making opportunity either, because what happens is the share

480
00:22:14,600 --> 00:22:18,119
Speaker 3: price drops by roughly the amount of the distribution itself,

481
00:22:18,119 --> 00:22:19,440
Speaker 3: so you end up with a net zero.

482
00:22:19,280 --> 00:22:21,000
Speaker 2: Effect, but a big fat tax bill.

483
00:22:21,240 --> 00:22:23,960
Speaker 3: Mutual funds are notorious for this, and that's something to

484
00:22:24,040 --> 00:22:25,919
Speaker 3: understand about it. If you're making choices, try to lean

485
00:22:25,960 --> 00:22:28,040
Speaker 3: towards the ETF side. If you can't. This is in

486
00:22:28,080 --> 00:22:29,440
Speaker 3: taxable accounts, not ir.

487
00:22:29,840 --> 00:22:31,879
Speaker 1: Yeah, and it doesn't mean mutual funds are bad. I mean,

488
00:22:31,960 --> 00:22:34,080
Speaker 1: let's face it, folks have on them for decades and

489
00:22:34,119 --> 00:22:36,600
Speaker 1: done extremely well. What we're talking about here is just

490
00:22:36,680 --> 00:22:40,440
Speaker 1: the evolution of the industry to make things more tax

491
00:22:40,480 --> 00:22:43,280
Speaker 1: efficient for people that you know, have the know how

492
00:22:43,359 --> 00:22:46,280
Speaker 1: and get the proper advice to transition into a more

493
00:22:46,359 --> 00:22:50,359
Speaker 1: tax efficient environment moving forward. You know, let's talk about dividends.

494
00:22:50,400 --> 00:22:53,919
Speaker 1: People love dividends, Brian, and we got to differentiate between

495
00:22:54,119 --> 00:22:58,080
Speaker 1: ordinary dividends that are tax at regular income tax rates

496
00:22:58,480 --> 00:23:02,880
Speaker 1: and qualified dividends those paid by US companies and even

497
00:23:02,960 --> 00:23:06,919
Speaker 1: certain foreign companies. As long as those those you know,

498
00:23:07,400 --> 00:23:11,679
Speaker 1: those stocks are held for a specific period. The qualified

499
00:23:11,680 --> 00:23:15,560
Speaker 1: dividends are taxed at the much preferred lower long term

500
00:23:15,600 --> 00:23:18,600
Speaker 1: capital gains rates. And it's important to know how your

501
00:23:18,600 --> 00:23:23,600
Speaker 1: portfolio is structured and make sure you make adjustments accordingly,

502
00:23:23,800 --> 00:23:27,320
Speaker 1: especially if you're in a high tax bracket. Another good

503
00:23:27,359 --> 00:23:31,439
Speaker 1: thing to watch as you construct your your ongoing investment portfolio.

504
00:23:32,119 --> 00:23:34,439
Speaker 3: Yeah, so let's say I briefly mentioned it, but then

505
00:23:34,520 --> 00:23:37,000
Speaker 3: then we move to ETFs. These are the tax efficient

506
00:23:37,080 --> 00:23:39,560
Speaker 3: cousins of mutual funds, kind of the same level of risk.

507
00:23:40,119 --> 00:23:41,679
Speaker 3: You know, based on if you're buying, you know, the

508
00:23:41,760 --> 00:23:43,679
Speaker 3: S and P five hundred mutual fund versus the S

509
00:23:43,680 --> 00:23:45,600
Speaker 3: and P five hundred ETF, you're basically going to get

510
00:23:45,600 --> 00:23:49,040
Speaker 3: the same investment results. But they don't trigger capital gains

511
00:23:49,040 --> 00:23:52,040
Speaker 3: when investors buy or sell shares necessarily. That's thanks to

512
00:23:52,160 --> 00:23:55,400
Speaker 3: a clever mechanism called in kind creation and redemption. Those

513
00:23:55,440 --> 00:23:58,480
Speaker 3: shares are built the day you buy them, not the

514
00:23:58,920 --> 00:24:01,240
Speaker 3: day that you know. You're again not dealing with twenty

515
00:24:01,320 --> 00:24:04,680
Speaker 3: years worth of capital gains there. So with enough beating

516
00:24:04,720 --> 00:24:06,040
Speaker 3: that to death, I also want to move on to

517
00:24:06,119 --> 00:24:08,679
Speaker 3: municipal bonds. And now that interest rates are off the

518
00:24:08,760 --> 00:24:12,119
Speaker 3: mat Bob, people are starting to pay attention to what

519
00:24:12,160 --> 00:24:15,119
Speaker 3: can I do with fixed income? What are there different

520
00:24:15,119 --> 00:24:17,480
Speaker 3: things out there that I could invest in. Municipal bonds

521
00:24:17,520 --> 00:24:20,160
Speaker 3: are commonly known as muni's. These are issued by state

522
00:24:20,240 --> 00:24:23,600
Speaker 3: local governments and they fund projects like schools, bridges, water systems,

523
00:24:23,680 --> 00:24:26,320
Speaker 3: those types of things, and the reason people are attracted

524
00:24:26,320 --> 00:24:28,600
Speaker 3: to them though, is a tax treatment. Interest off of

525
00:24:28,640 --> 00:24:32,320
Speaker 3: the municipal bond is a state in federal tax free,

526
00:24:32,480 --> 00:24:34,920
Speaker 3: usually not always, it depends on the state you live in.

527
00:24:34,920 --> 00:24:38,040
Speaker 3: There's different rules for everything, but that's the attraction to it,

528
00:24:38,080 --> 00:24:39,560
Speaker 3: and so a lot of people will say, well, great,

529
00:24:39,560 --> 00:24:41,200
Speaker 3: I'm just gonna dump all these CDs and all these

530
00:24:41,200 --> 00:24:43,399
Speaker 3: corporate bonds and I'll flip everything into municipal bonds and

531
00:24:43,440 --> 00:24:44,399
Speaker 3: it'll be tax free.

532
00:24:44,480 --> 00:24:46,000
Speaker 2: You're still making a sacrifice.

533
00:24:46,040 --> 00:24:49,520
Speaker 3: Municipal bonds because they are tax free, do not have

534
00:24:49,640 --> 00:24:52,439
Speaker 3: to pay as much as a taxable bond because the

535
00:24:52,480 --> 00:24:54,640
Speaker 3: demand will still be there. And if you're a taxpayer,

536
00:24:54,720 --> 00:24:57,320
Speaker 3: you probably appreciate the fact that you're not paying as

537
00:24:57,400 --> 00:25:00,720
Speaker 3: much interest in that different entity. But in a higher

538
00:25:00,760 --> 00:25:03,440
Speaker 3: bracket than a lower rate of income that comes to

539
00:25:03,480 --> 00:25:06,160
Speaker 3: you tax free can be better than a higher rate

540
00:25:06,280 --> 00:25:08,240
Speaker 3: that ends up getting taxed thirty five to forty percent.

541
00:25:09,080 --> 00:25:12,640
Speaker 1: Yeah, and just to clarify here, the state tax exemption

542
00:25:12,960 --> 00:25:16,360
Speaker 1: usually only applies in your home state. So that's why

543
00:25:16,400 --> 00:25:19,560
Speaker 1: people in Ohio, for example, they buy Ohio munities and

544
00:25:19,600 --> 00:25:22,600
Speaker 1: so on. And so forth. There are some exemptions though

545
00:25:22,640 --> 00:25:27,040
Speaker 1: to these MUNI bonds some unis known known as private

546
00:25:27,080 --> 00:25:30,600
Speaker 1: activity bonds. They may be subject subject to the alternative

547
00:25:30,640 --> 00:25:33,600
Speaker 1: minimum tax. So another watch out there. That's why we

548
00:25:33,640 --> 00:25:36,040
Speaker 1: always like to coordinate all our planning with our clients

549
00:25:36,080 --> 00:25:38,119
Speaker 1: CPAs to make sure we don't run a foul of

550
00:25:38,119 --> 00:25:40,640
Speaker 1: that kind of stuff. Just another thing to watch out for.

551
00:25:40,760 --> 00:25:43,280
Speaker 1: All right, let's get into treasury bonds. We've used these

552
00:25:43,320 --> 00:25:46,679
Speaker 1: a lot in portfolios over the last few years. You know,

553
00:25:46,760 --> 00:25:51,600
Speaker 1: with with rates being high tax wise, treasury interest has

554
00:25:51,640 --> 00:25:55,040
Speaker 1: its own special carve out. It's exempt from state and

555
00:25:55,160 --> 00:25:59,280
Speaker 1: local income taxes. You pay taxes, you pay federal taxes

556
00:25:59,280 --> 00:26:01,760
Speaker 1: on what you earn, but you can avoid the state

557
00:26:01,800 --> 00:26:04,800
Speaker 1: and local tax So that's a benefit along with the

558
00:26:04,920 --> 00:26:08,000
Speaker 1: nice yield that people have gotten over the last few years,

559
00:26:08,840 --> 00:26:13,120
Speaker 1: that makes treasuries especially attractive to investors living in states

560
00:26:13,440 --> 00:26:18,640
Speaker 1: with very high tax rates New York. But like Muni's,

561
00:26:18,680 --> 00:26:22,720
Speaker 1: any capital gains from selling before maturity, well you're gonna

562
00:26:22,720 --> 00:26:24,480
Speaker 1: pay taxes at the federal level on that.

563
00:26:25,160 --> 00:26:26,880
Speaker 2: Yeah. And one more side note here.

564
00:26:27,040 --> 00:26:29,200
Speaker 3: If you run across something called a treasury bill, these

565
00:26:29,200 --> 00:26:31,280
Speaker 3: are things that are that come do within a year.

566
00:26:31,760 --> 00:26:34,640
Speaker 3: They won't spit out actual interest payments. Rather, you buy

567
00:26:34,680 --> 00:26:36,280
Speaker 3: it at a discount, and then it would when it

568
00:26:36,320 --> 00:26:37,160
Speaker 3: matures after.

569
00:26:37,000 --> 00:26:37,600
Speaker 2: A few months.

570
00:26:38,119 --> 00:26:40,119
Speaker 3: You might buy it at ninety eight percent of its value,

571
00:26:40,160 --> 00:26:41,960
Speaker 3: let's say, and it's gonna mature a one hundred percent.

572
00:26:42,000 --> 00:26:43,520
Speaker 3: That means you got a two percent gain on it.

573
00:26:43,520 --> 00:26:45,640
Speaker 3: That's the interest you're gonna pay taxes on that. You're

574
00:26:45,640 --> 00:26:47,240
Speaker 3: just not gonna see it like a traditional payment, so

575
00:26:47,240 --> 00:26:48,640
Speaker 3: it'll look a little bit different.

576
00:26:48,960 --> 00:26:49,320
Speaker 2: All right.

577
00:26:49,359 --> 00:26:51,399
Speaker 1: The thing, also, the big thing that we want to

578
00:26:51,400 --> 00:26:54,080
Speaker 1: make sure we cover is depending on the composition of

579
00:26:54,080 --> 00:26:57,160
Speaker 1: your portfolio, it might make sense to have certain things

580
00:26:57,240 --> 00:27:00,439
Speaker 1: owned in an IRA, in certain things own in a

581
00:27:00,520 --> 00:27:02,960
Speaker 1: taxable account. You know, if you've got a bunch of

582
00:27:03,040 --> 00:27:06,359
Speaker 1: bond holdings, you know an IRA is a great place

583
00:27:06,440 --> 00:27:08,840
Speaker 1: to have those, because, let's face it, everything coming out

584
00:27:08,880 --> 00:27:11,240
Speaker 1: of an IRA is going to be taxed at ordinary

585
00:27:11,280 --> 00:27:14,200
Speaker 1: income anyway, Brian. A lot of times we see people

586
00:27:14,280 --> 00:27:18,760
Speaker 1: have money in the wrong locations from a tax efficiency standpoint,

587
00:27:19,000 --> 00:27:21,040
Speaker 1: and that's a lot of good cleanup work that we

588
00:27:21,119 --> 00:27:23,760
Speaker 1: can do when we get involved with folks. Here's the

589
00:27:23,800 --> 00:27:27,440
Speaker 1: all Worth advice. Taxes might not make for exciting cocktail

590
00:27:27,520 --> 00:27:31,840
Speaker 1: party conversation, but they have a massive impact on your

591
00:27:31,920 --> 00:27:35,080
Speaker 1: real returns, because, after all, it's not what you make,

592
00:27:35,320 --> 00:27:38,959
Speaker 1: it's what you keep that matters. Coming up next, a

593
00:27:39,000 --> 00:27:43,200
Speaker 1: business sale, a tricky Roth conversion, and a mismatched portfolio.

594
00:27:43,600 --> 00:27:47,640
Speaker 1: We answer your real money questions with real advice. You're

595
00:27:47,640 --> 00:27:50,040
Speaker 1: listening to Simply Money, presented by all Worth Financial on

596
00:27:50,119 --> 00:27:57,919
Speaker 1: fifty five KRC, the talk station. You're listening to Simply

597
00:27:57,920 --> 00:28:00,480
Speaker 1: Money presented by all Worth Financial on Bob's Bond Seller

598
00:28:00,520 --> 00:28:03,560
Speaker 1: along with Brian James. Do you have a financial question

599
00:28:03,640 --> 00:28:05,680
Speaker 1: you'd like for us to answer. There's a red button

600
00:28:05,720 --> 00:28:07,920
Speaker 1: you can click while you're listening to the show. If

601
00:28:07,920 --> 00:28:11,639
Speaker 1: you're listening from the iHeart app, simply record your question

602
00:28:11,760 --> 00:28:14,439
Speaker 1: and it will come straight to us. All right, We

603
00:28:14,520 --> 00:28:17,399
Speaker 1: lead things off tonight with Tom and Mason. He says,

604
00:28:17,400 --> 00:28:19,480
Speaker 1: we finally hit the point where we don't have to

605
00:28:19,560 --> 00:28:22,840
Speaker 1: worry about money on a day to day basis, but

606
00:28:22,920 --> 00:28:26,000
Speaker 1: I can't shake the fear of making one bad move.

607
00:28:26,080 --> 00:28:31,160
Speaker 1: How do you rebalance or balance confidence with caution once

608
00:28:31,280 --> 00:28:34,360
Speaker 1: we feel like we've won the game. This is a

609
00:28:34,440 --> 00:28:35,600
Speaker 1: common question.

610
00:28:35,400 --> 00:28:36,320
Speaker 2: Brian, Yeah, it really is.

611
00:28:36,480 --> 00:28:39,000
Speaker 3: And Tom You're not the only one to worry about this.

612
00:28:39,040 --> 00:28:41,440
Speaker 3: So I would say two things. First off, hopefully you

613
00:28:41,480 --> 00:28:43,440
Speaker 3: have it. You have a financial plan in the first place,

614
00:28:43,480 --> 00:28:46,280
Speaker 3: so if you've decided you did hit that point right,

615
00:28:46,320 --> 00:28:48,000
Speaker 3: so you must have figured out a way to identify that.

616
00:28:48,040 --> 00:28:49,640
Speaker 3: I'm guessing there's a plan in the mix because of

617
00:28:49,640 --> 00:28:52,160
Speaker 3: the way you phrase your question. So my first question

618
00:28:52,200 --> 00:28:54,720
Speaker 3: for you, Tom is have you stress tested that Take

619
00:28:54,760 --> 00:28:57,280
Speaker 3: that Take that point, whatever that dollar amount is that

620
00:28:57,320 --> 00:28:59,760
Speaker 3: you're sitting on right now, Knock off twenty twenty five percent.

621
00:28:59,840 --> 00:29:02,240
Speaker 3: Let's just pretend it's a two thousand and eight type scenario.

622
00:29:02,400 --> 00:29:05,280
Speaker 3: Take twenty five percent away. Does it still work? If

623
00:29:05,320 --> 00:29:07,120
Speaker 3: it does well, then great, You've built a heck of

624
00:29:07,120 --> 00:29:09,400
Speaker 3: a machine that's gonna support you. You may not be

625
00:29:09,440 --> 00:29:11,440
Speaker 3: happy if we go through that situation, but that's really

626
00:29:11,480 --> 00:29:13,440
Speaker 3: what you're trying to defend against. Nobody will be happy

627
00:29:13,520 --> 00:29:15,440
Speaker 3: going through it, but it doesn't necessarily mean you have

628
00:29:15,480 --> 00:29:17,160
Speaker 3: to change your expectations.

629
00:29:17,160 --> 00:29:19,040
Speaker 2: And the scariest thing you can do in an environment

630
00:29:19,080 --> 00:29:19,800
Speaker 2: like that is.

631
00:29:19,840 --> 00:29:23,240
Speaker 3: Actually try to protect yourself and sell it losses. Don't

632
00:29:23,240 --> 00:29:25,400
Speaker 3: do that, but run the numbers and make sure that

633
00:29:25,440 --> 00:29:28,480
Speaker 3: you can see what that impact actually would be. That's

634
00:29:28,520 --> 00:29:30,920
Speaker 3: just called stress testing your plan and the other thing

635
00:29:30,920 --> 00:29:32,480
Speaker 3: that's going to happen. Just be aware of now that

636
00:29:32,520 --> 00:29:34,040
Speaker 3: you know, once you do retire, you're gonna have a

637
00:29:34,040 --> 00:29:34,800
Speaker 3: lot more time.

638
00:29:34,840 --> 00:29:36,680
Speaker 2: And I can tell already you're a worried, a little

639
00:29:36,680 --> 00:29:38,160
Speaker 2: bit of a warrior, and there's nothing wrong with that. That

640
00:29:38,120 --> 00:29:39,640
Speaker 2: has helped you get to this point to begin with.

641
00:29:39,920 --> 00:29:41,600
Speaker 3: But that means when you come up with a lot

642
00:29:41,640 --> 00:29:43,840
Speaker 3: more time, you're gonna start paying attention to all these

643
00:29:43,880 --> 00:29:46,400
Speaker 3: headlines and you're gonna feel like all these stories are

644
00:29:46,480 --> 00:29:50,160
Speaker 3: happening just because you're retired. They've been happening all along,

645
00:29:50,280 --> 00:29:52,120
Speaker 3: you just didn't have time to pay attention to them.

646
00:29:52,160 --> 00:29:54,640
Speaker 2: Don't lose sight of that fact. All right, Let's move

647
00:29:54,640 --> 00:29:55,960
Speaker 2: on to Rachel in Batavia.

648
00:29:56,040 --> 00:29:58,680
Speaker 3: Rachel says her husband wants to retire early, but she's

649
00:29:58,680 --> 00:30:01,800
Speaker 3: worried about that healthcare gap before Medicare. Medicare kicks in

650
00:30:01,840 --> 00:30:04,240
Speaker 3: at sixty five. So, Bob, how do you run the

651
00:30:04,320 --> 00:30:06,560
Speaker 3: numbers without letting fear dictate that discussion.

652
00:30:07,440 --> 00:30:10,760
Speaker 1: Well, first of all, Rachel, good for you for you

653
00:30:10,760 --> 00:30:14,080
Speaker 1: know knowing ahead of time that you're gonna have to

654
00:30:14,160 --> 00:30:17,240
Speaker 1: pay for some health insurance before you and your husband

655
00:30:17,240 --> 00:30:20,719
Speaker 1: get to medicare. Like a lot of things, you know,

656
00:30:20,880 --> 00:30:24,440
Speaker 1: fear tends to dissipate when you actually have a financial plan.

657
00:30:24,560 --> 00:30:28,760
Speaker 1: So my advice is, go shop for some medical insurance now.

658
00:30:28,880 --> 00:30:31,720
Speaker 1: I obviously not do not know what your health insurance

659
00:30:31,720 --> 00:30:34,840
Speaker 1: situation looks like right now. Through your employer. You know,

660
00:30:34,960 --> 00:30:37,720
Speaker 1: my guess is they pay for some of the coverage

661
00:30:37,720 --> 00:30:39,720
Speaker 1: and you kick in some of the premium as well.

662
00:30:40,080 --> 00:30:43,680
Speaker 1: Obviously that whole thing shifts when you retire and you're

663
00:30:43,680 --> 00:30:45,920
Speaker 1: on your own, so to speak, for those gap years.

664
00:30:46,080 --> 00:30:49,240
Speaker 1: So you know, look at whether you have cobrant coverage

665
00:30:49,240 --> 00:30:51,960
Speaker 1: available through your employer, what that might look like from

666
00:30:51,960 --> 00:30:54,720
Speaker 1: a cost standpoint, and then go out and shop some

667
00:30:54,840 --> 00:30:58,520
Speaker 1: individual healthcare plans now before you even need to buy them,

668
00:30:58,960 --> 00:31:02,520
Speaker 1: and run the numbers. Incorporate that into your financial plan.

669
00:31:03,000 --> 00:31:07,200
Speaker 1: That should hopefully confirm whether you can or cannot afford

670
00:31:07,280 --> 00:31:10,280
Speaker 1: to retire, and you know what you're spending, you know,

671
00:31:10,360 --> 00:31:12,480
Speaker 1: goals and needs and all that should be when you

672
00:31:12,520 --> 00:31:16,080
Speaker 1: actually pull the trigger, and that will hopefully eliminate some

673
00:31:16,160 --> 00:31:19,400
Speaker 1: of the fear before you make the ultimate retirement decision.

674
00:31:19,480 --> 00:31:23,400
Speaker 1: Hope that helps all right, Ron and Columbia. Tusculum says,

675
00:31:23,440 --> 00:31:27,280
Speaker 1: after years of growing our business selling it felt like

676
00:31:27,320 --> 00:31:32,360
Speaker 1: a relief until I realized I traded purpose for liquidity.

677
00:31:32,840 --> 00:31:36,560
Speaker 1: How do you turn a financial windfall into a fulfilling

678
00:31:36,920 --> 00:31:40,200
Speaker 1: next chapter of life? Wow? What a loaded question, but

679
00:31:40,240 --> 00:31:41,560
Speaker 1: a great one, Brian.

680
00:31:41,360 --> 00:31:43,760
Speaker 3: It really is a great one. So yeah, congratulations, Ron.

681
00:31:44,000 --> 00:31:46,120
Speaker 3: Obviously things went well for you. It sounds like you

682
00:31:46,120 --> 00:31:47,840
Speaker 3: put a lot of blood, sweat and tears into that

683
00:31:47,920 --> 00:31:50,800
Speaker 3: and successfully exited that business when it was in good

684
00:31:50,800 --> 00:31:53,320
Speaker 3: shape and and made a bunch of money off it,

685
00:31:53,320 --> 00:31:54,760
Speaker 3: and that was kind of the point all along.

686
00:31:54,760 --> 00:31:55,320
Speaker 2: So that's great.

687
00:31:55,480 --> 00:31:57,560
Speaker 3: But I would say maybe the part you missed, And

688
00:31:57,600 --> 00:32:00,680
Speaker 3: this isn't necessarily a shot at you, but it sounds

689
00:32:00,680 --> 00:32:03,000
Speaker 3: like maybe you didn't spend a lot of time thinking

690
00:32:03,000 --> 00:32:05,120
Speaker 3: about what this would feel like. Right, So what happens

691
00:32:05,120 --> 00:32:06,800
Speaker 3: when a big windfall drops out of the sky and

692
00:32:06,840 --> 00:32:08,040
Speaker 3: all of a sudden, I don't have to get out

693
00:32:08,040 --> 00:32:09,960
Speaker 3: of bed, I don't have to have an agenda every day,

694
00:32:10,400 --> 00:32:11,800
Speaker 3: but maybe I kind of want that agenda?

695
00:32:11,880 --> 00:32:12,840
Speaker 2: What do I actually do?

696
00:32:13,200 --> 00:32:16,160
Speaker 3: So I would advise anybody out there, as we say,

697
00:32:16,200 --> 00:32:18,840
Speaker 3: all the time, spend it. You know, you spend an

698
00:32:18,840 --> 00:32:20,680
Speaker 3: awful lot of time worrying about the money. How are

699
00:32:20,680 --> 00:32:22,560
Speaker 3: the bills going to get paid after I retire? Well,

700
00:32:22,560 --> 00:32:24,840
Speaker 3: worry about your time budget some too. What am I

701
00:32:24,840 --> 00:32:26,800
Speaker 3: going to do with all this extra time that I have?

702
00:32:27,200 --> 00:32:29,520
Speaker 3: That can be volunteering. Perhaps it's you know, Ron, Maybe

703
00:32:29,560 --> 00:32:31,600
Speaker 3: you can step in and help out, you know, at

704
00:32:31,600 --> 00:32:34,160
Speaker 3: that business that you've sold. Sometimes that's good. Sometimes it

705
00:32:34,160 --> 00:32:37,520
Speaker 3: can cause problems, but that can be an alternative. And

706
00:32:37,560 --> 00:32:40,120
Speaker 3: maybe maybe, you know, look at something entirely different. I

707
00:32:40,120 --> 00:32:43,200
Speaker 3: always encourage people go on indeed dot com and search

708
00:32:43,280 --> 00:32:45,680
Speaker 3: for keywords. This is a job search site. Search for

709
00:32:45,800 --> 00:32:49,000
Speaker 3: keywords of anything you're interested in, and forget your career.

710
00:32:49,040 --> 00:32:51,520
Speaker 3: Don't think about your career. Just type in things, your hobbies,

711
00:32:51,520 --> 00:32:54,080
Speaker 3: things you're interested in. You know, you can often find

712
00:32:54,200 --> 00:32:56,600
Speaker 3: jobs you would never know have existed because you haven't

713
00:32:56,600 --> 00:32:58,520
Speaker 3: been paying attention at that level. But these are the

714
00:32:58,600 --> 00:33:00,640
Speaker 3: kind of jobs that don't come with fantastic salaries, they

715
00:33:00,680 --> 00:33:03,120
Speaker 3: don't come with benefit packages. But the cool thing is, Ron,

716
00:33:03,360 --> 00:33:05,680
Speaker 3: you don't need them. That was the point of selling.

717
00:33:06,000 --> 00:33:08,080
Speaker 3: So some things for you to chase. Hope that works

718
00:33:08,080 --> 00:33:12,080
Speaker 3: out for you. Tom in Florence is looking at roth conversions,

719
00:33:12,080 --> 00:33:14,200
Speaker 3: He says, he knows they make sense on paper. Right,

720
00:33:14,200 --> 00:33:16,080
Speaker 3: If I move from pre tax to tax free, yay,

721
00:33:16,120 --> 00:33:18,640
Speaker 3: everybody likes tax free. But I can't get comfortable writing

722
00:33:18,640 --> 00:33:20,200
Speaker 3: a six figure check to the irs.

723
00:33:20,560 --> 00:33:22,240
Speaker 2: How do you decide? Neither can I?

724
00:33:22,640 --> 00:33:24,800
Speaker 3: But how do you decide, Bob, when it's worth paying

725
00:33:24,840 --> 00:33:27,520
Speaker 3: taxes now in exchange for some flexibility in the future.

726
00:33:28,640 --> 00:33:30,520
Speaker 1: Well, Tom, you have to have a plan, and you've

727
00:33:30,520 --> 00:33:34,160
Speaker 1: got to put some assumptions into this. You know, obviously

728
00:33:34,560 --> 00:33:37,120
Speaker 1: writing that check now comes with a cost. You are

729
00:33:37,160 --> 00:33:40,640
Speaker 1: parting with money, no question about it. But if you

730
00:33:40,640 --> 00:33:45,040
Speaker 1: have a well constructed plan with some responsible assumptions built

731
00:33:45,080 --> 00:33:48,320
Speaker 1: into to the plan that you're comfortable with, you know

732
00:33:48,840 --> 00:33:52,800
Speaker 1: you can see the hopefully multiple six figure benefit you

733
00:33:52,880 --> 00:33:56,040
Speaker 1: and your family are going to you know, have down

734
00:33:56,080 --> 00:33:59,000
Speaker 1: the road from writing a six figure check today. So

735
00:33:59,480 --> 00:34:02,080
Speaker 1: run the nine numbers, sit down with a good fiduciary

736
00:34:02,080 --> 00:34:06,240
Speaker 1: advisor who can run a bunch of different scenarios. And again,

737
00:34:06,440 --> 00:34:08,879
Speaker 1: like everything else we talk about, when people have a

738
00:34:08,920 --> 00:34:11,960
Speaker 1: plan and they can see the why behind some of

739
00:34:12,040 --> 00:34:14,960
Speaker 1: these decisions and the numbers actually do make sense and

740
00:34:15,080 --> 00:34:18,239
Speaker 1: line up, that can tend to reduce a lot of

741
00:34:18,239 --> 00:34:22,080
Speaker 1: the fear and give people confidence in making some decisions

742
00:34:22,080 --> 00:34:24,600
Speaker 1: that can really really benefit them down the road.

743
00:34:24,840 --> 00:34:27,200
Speaker 3: Hey, Bob, I want to attack a quick thought onto

744
00:34:27,200 --> 00:34:30,280
Speaker 3: that too. I think this is something something to consider.

745
00:34:30,320 --> 00:34:32,640
Speaker 3: Here is the idea of priorities. Right, If your priority,

746
00:34:32,640 --> 00:34:34,319
Speaker 3: your number one priority is I want to poke the

747
00:34:34,320 --> 00:34:36,839
Speaker 3: irs ANDEI and pay as little taxes and I want

748
00:34:36,880 --> 00:34:39,680
Speaker 3: to celebrate having a zero percent tax bracket, that may

749
00:34:39,760 --> 00:34:42,359
Speaker 3: actually be a missed opportunity because you may very well

750
00:34:42,360 --> 00:34:45,280
Speaker 3: be backloading your taxes when you're in your late seventies

751
00:34:45,320 --> 00:34:48,160
Speaker 3: because of the way required minimum distributions are work. So

752
00:34:48,200 --> 00:34:50,400
Speaker 3: make sure you understand how it works and don't sacrifice

753
00:34:50,440 --> 00:34:52,040
Speaker 3: the opportunity to make some moves.

754
00:34:51,800 --> 00:34:55,400
Speaker 1: Now, excellent point. All right, we love our pets, but

755
00:34:55,480 --> 00:35:00,160
Speaker 1: are we letting Fido's future outrank our own. We've got

756
00:35:00,000 --> 00:35:02,160
Speaker 1: got some interesting data to share with you.

757
00:35:02,200 --> 00:35:02,480
Speaker 2: Next.

758
00:35:02,520 --> 00:35:04,960
Speaker 1: You're listening to Simply Money presented by all Worth Financial

759
00:35:05,000 --> 00:35:13,120
Speaker 1: on fifty five KRC the talk station. You're listening to

760
00:35:13,120 --> 00:35:16,279
Speaker 1: Simply Money presented by all Worth Financial on Bob Sponseller

761
00:35:16,320 --> 00:35:20,520
Speaker 1: along with Brian James. Brian, listening to that music makes

762
00:35:20,560 --> 00:35:24,239
Speaker 1: me nervous already. All right, we know that Americans love

763
00:35:24,360 --> 00:35:28,200
Speaker 1: their pets. It is a gazillion dollar industry. But listen

764
00:35:28,239 --> 00:35:32,480
Speaker 1: to this. Trust and Will, an online service to create

765
00:35:32,640 --> 00:35:36,200
Speaker 1: estate planning documents and handle the State Administration, reports that

766
00:35:36,320 --> 00:35:40,480
Speaker 1: eighty three percent of Americans recognize the importance of estate planning,

767
00:35:41,120 --> 00:35:46,360
Speaker 1: yet only thirty one percent have a will. Despite widespread awareness,

768
00:35:46,400 --> 00:35:51,440
Speaker 1: the majority of Americans remain unprepared, with procrastinations and misconceptions

769
00:35:51,480 --> 00:35:56,400
Speaker 1: about wealth fueling inaction. Here's the staggering number to me,

770
00:35:56,560 --> 00:36:00,000
Speaker 1: Brian will. Trust and Will also reports that ninety four

771
00:36:00,000 --> 00:36:03,799
Speaker 1: four percent of its actual users make provisions for a

772
00:36:03,880 --> 00:36:07,480
Speaker 1: pet in case of their death, but only forty percent

773
00:36:07,920 --> 00:36:09,800
Speaker 1: name guardians for their own kids.

774
00:36:10,239 --> 00:36:15,280
Speaker 3: I'm sorry, I'm not buying this one. I'm not because

775
00:36:15,440 --> 00:36:17,880
Speaker 3: we just because we find an article that has numbers

776
00:36:17,880 --> 00:36:20,400
Speaker 3: in it doesn't mean those numbers are ninety four percent

777
00:36:20,400 --> 00:36:22,680
Speaker 3: of people who use Trust and I. Bob, I've been

778
00:36:22,719 --> 00:36:24,560
Speaker 3: doing this for thirty years, and I cannot think of

779
00:36:24,600 --> 00:36:27,759
Speaker 3: a situation where someone actually said I want to make

780
00:36:27,800 --> 00:36:30,680
Speaker 3: sure Rover is cared for. Not that that shouldn't happen,

781
00:36:30,760 --> 00:36:33,040
Speaker 3: but that's not usually something people codify into a will.

782
00:36:33,160 --> 00:36:35,560
Speaker 3: And I'm simply not buying that ninety four percent of

783
00:36:35,560 --> 00:36:38,680
Speaker 3: people actually said something about that, you know, and so

784
00:36:38,800 --> 00:36:39,760
Speaker 3: But anyway.

785
00:36:39,600 --> 00:36:41,680
Speaker 1: Well, that's what I was gonna ask you. I mean,

786
00:36:41,719 --> 00:36:44,160
Speaker 1: I'm an old man. You're one of these young, hip,

787
00:36:44,320 --> 00:36:47,080
Speaker 1: gen X gen y people. Is this a new thing

788
00:36:47,200 --> 00:36:50,320
Speaker 1: with young folks? Because I've been doing this thirty five years.

789
00:36:50,320 --> 00:36:53,640
Speaker 1: I have never had a client come in and when

790
00:36:53,640 --> 00:36:58,359
Speaker 1: we're doing estate planning even bring up pets. Not one time, ever, ever, ever.

791
00:36:58,840 --> 00:36:59,239
Speaker 2: I want that.

792
00:36:59,280 --> 00:37:01,919
Speaker 3: I would like our anographer to read back that Bob

793
00:37:01,960 --> 00:37:04,279
Speaker 3: Spondseller called me young and hip, and.

794
00:37:04,200 --> 00:37:06,680
Speaker 2: I really appreciate that. You know, when I was when I.

795
00:37:06,600 --> 00:37:11,040
Speaker 1: Was hearing that one. Yeah, probably we're the one talking about. Yeah,

796
00:37:11,080 --> 00:37:13,520
Speaker 1: you're the one talking about hanging out at the warehouse

797
00:37:13,600 --> 00:37:16,399
Speaker 1: with your jeans halfway down your rear end. That's that's

798
00:37:16,400 --> 00:37:19,320
Speaker 1: what i'd call him. That was an That's a whole

799
00:37:19,360 --> 00:37:21,760
Speaker 1: different world than the one I live in. But let's

800
00:37:21,760 --> 00:37:22,920
Speaker 1: get back to this story.

801
00:37:23,080 --> 00:37:23,400
Speaker 2: Okay.

802
00:37:23,400 --> 00:37:27,799
Speaker 3: So remember Leona Helmsley. This was the mean lady. She

803
00:37:28,000 --> 00:37:30,839
Speaker 3: owned a hotel, a bunch of hotels, famously left her

804
00:37:30,880 --> 00:37:34,000
Speaker 3: dog twelve million dollars when she died. Now she had relatives.

805
00:37:34,120 --> 00:37:35,800
Speaker 3: This is the lady by the way that said taxes

806
00:37:35,840 --> 00:37:38,160
Speaker 3: her for little people. She was a real charmer, but

807
00:37:38,440 --> 00:37:40,200
Speaker 3: obviously for her family as well. She gave her dog

808
00:37:40,239 --> 00:37:42,200
Speaker 3: twelve million dollars because you know, a dog, you know,

809
00:37:42,320 --> 00:37:44,000
Speaker 3: needs to make sure that ends meat at that time

810
00:37:44,000 --> 00:37:46,279
Speaker 3: of their lives. But a judge kind of came in

811
00:37:46,320 --> 00:37:48,480
Speaker 3: and said, well, you know what a dog can really.

812
00:37:48,280 --> 00:37:50,160
Speaker 2: Make it with two million? Are we being honest?

813
00:37:50,200 --> 00:37:50,319
Speaker 1: Here?

814
00:37:50,320 --> 00:37:51,160
Speaker 2: Are we being honest?

815
00:37:51,320 --> 00:37:53,400
Speaker 3: And the rest went to two of her grandchildren. So

816
00:37:53,480 --> 00:37:56,560
Speaker 3: this dog was a white Mouteese named Trouble I'm sure

817
00:37:56,680 --> 00:37:59,080
Speaker 3: was a charmer himself. Died at the age of twelve,

818
00:37:59,080 --> 00:38:01,560
Speaker 3: and then those remaining fund wound up in Helmsley's charitable

819
00:38:01,560 --> 00:38:04,400
Speaker 3: trust and who knows where they went after that. But

820
00:38:04,520 --> 00:38:06,880
Speaker 3: any anyway, these are the kinds of things should you

821
00:38:06,920 --> 00:38:11,880
Speaker 3: buy pat insurance? Maybe, I mean, if pets are family,

822
00:38:11,960 --> 00:38:13,879
Speaker 3: I'm not to hear to say this is not important stuff.

823
00:38:13,920 --> 00:38:15,439
Speaker 3: But at the end of the day, should you write

824
00:38:15,440 --> 00:38:17,640
Speaker 3: them into your will? I'm gonna say, at the end

825
00:38:17,680 --> 00:38:19,560
Speaker 3: of the day, they're not gonna remember. They don't know

826
00:38:19,560 --> 00:38:20,600
Speaker 3: what you did this morning.

827
00:38:22,160 --> 00:38:24,759
Speaker 1: I think the great happy ending to this story is

828
00:38:24,760 --> 00:38:27,480
Speaker 1: that they fought over this twelve million dollars and it

829
00:38:27,560 --> 00:38:30,800
Speaker 1: all ended up going to charity anyway. That's great. That

830
00:38:30,960 --> 00:38:33,400
Speaker 1: just tells me God has a great sense of humor.

831
00:38:33,719 --> 00:38:36,320
Speaker 1: Thanks for listening tonight. You've been listening to Simply Money,

832
00:38:36,440 --> 00:38:39,600
Speaker 1: presented by all Worth Financial on fifty five KRC, the

833
00:38:39,920 --> 00:38:40,480
Speaker 1: talk station