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Speaker 1: I guys just say we now have a fighting chance

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Speaker 1: to our veterans act.

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Speaker 2: Thank you.

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Speaker 3: I'd do it again if I could. Fifty five KRC.

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Speaker 3: The talk station.

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Speaker 4: Canight what financial planning looks like when the economy doesn't

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Speaker 4: necessarily follow the proverbial script. You're listening to Simply Money,

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Speaker 4: presented by all Worth Financial on Bob Sponsler along with

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Speaker 4: Brian James. Stocks are rising, the labor market is weakening.

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Speaker 2: Inflation is kind of just hanging around, Tariff.

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Speaker 4: Policy is still, you know, up for discussion, and geopolitical

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Speaker 4: tensions remain. The economy often sends mixed signals, but your

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Speaker 4: financial plan should not. And tonight we're going to take

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Speaker 4: kind of a walk down memory lane here over the

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Speaker 4: last I don't know, forty years or so, Brian, and

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Speaker 4: look historically at a few things have been going on

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Speaker 4: that maybe people didn't see coming. And the point here

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Speaker 4: is you don't want to completely upset the apple cart

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Speaker 4: and bail on your plan, but there are opportunities out

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Speaker 4: there to make some nuanced adjustments to things like tax planning,

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Speaker 4: acid allocation, how your portfolio was structured. And you know,

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Speaker 4: it's very interesting that you know, when you look in

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Speaker 4: the rear view mirror.

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Speaker 2: Which is always easy. It's easy to be a Monday

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Speaker 2: morning quarterback a lot.

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Speaker 4: Oftentimes some of the best opportunities out there, nobody saw

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Speaker 4: them coming. And if you just sit there with it

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Speaker 4: like a deer in the headlights and don't react, you're

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Speaker 4: kicking yourself, you know, down the road after the fact.

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Speaker 4: So let's take us back to the eighties.

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Speaker 2: We talked.

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Speaker 4: We love talking about the eighties. We did that last week. Yeah,

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Speaker 4: great rock and roll. Joe Strecker reminds me of did

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Speaker 4: your hair look different back then?

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Speaker 2: Bob? Can you describe your hair in the eighties? I

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Speaker 2: had some Okay, there was hair.

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Speaker 4: I still required haircuts in the nineteen eighties, all right,

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Speaker 4: But hey, carry the ball here, walk us back to

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Speaker 4: the eighties and what was going on.

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Speaker 1: In I was more of a nineties kid, so I

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Speaker 1: was all grunge, and I had the shaggy hair and

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Speaker 1: the flannel and all that.

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Speaker 2: And now I only have the flannel anyway.

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Speaker 1: So these types of of mixed signals can create behavioral issues.

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Speaker 1: And this is I'm gonna go offscript for one second here, Bob.

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Speaker 1: This is something I think about all the time. I

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Speaker 1: think that the generations that have money. Now, look at

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Speaker 1: the eighties and the nineties were literally nothing bad happened, right,

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Speaker 1: You can't even find nineteen eighty seven October eighty seven,

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Speaker 1: you can't find it on a chart anymore because it's

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Speaker 1: been so much crazier ever since then. I think those

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Speaker 1: were the anomaly, and I think people got once we

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Speaker 1: hit the internet bubble bursting in one to two, in

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Speaker 1: that recession in nine to eleven, and all that, then

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Speaker 1: we had two thousand and eight. I think people viewed

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Speaker 1: those items as the anomalies, like, that's not supposed to happen.

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Speaker 1: But if you look over a couple hundred years worth

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Speaker 1: of history of this country, it was the eighties and

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Speaker 1: the nineties that wasn't supposed to happen. You're not supposed

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Speaker 1: to have a period of prosperity that freaking long. But

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Speaker 1: we did, and that created what we all thought was

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Speaker 1: the economy. This is how it's supposed to work, and

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Speaker 1: everything else is wrong, So it is how it's supposed

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Speaker 1: to work.

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Speaker 2: The NASDAK is supposed to go up to twenty seven percent.

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Speaker 1: Of your companies don't need to make money, they just

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Speaker 1: need to have flashy internet websites and not really a

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Speaker 1: business plan. So but anyway, so yeah, mixed signals. This

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Speaker 1: drives behavioral issues. When we get crazy stuff we don't expect,

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Speaker 1: we tend to want to do something about it. Sometimes

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Speaker 1: action feels so much better than inaction. So we're going

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Speaker 1: to talk about some of these things that kind of

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Speaker 1: were headfakes economically speaking, in the market speaking, so in

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Speaker 1: nineteen eighties, we had double digit interest rates but also

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Speaker 1: really strong growth That kind of seems counterintuitives, but that

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Speaker 1: would go the other.

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Speaker 2: Way, right.

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Speaker 1: We had we had stagflation through the seventies and we

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Speaker 1: needed to beat that down. The answer to that was

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Speaker 1: really really high interest rates to tamp down the growth

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Speaker 1: of everything. And that that did work and did it

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Speaker 1: hurt a lot for those people who are remembering this time,

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Speaker 1: this time of the economy. But by the mid eighties,

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Speaker 1: all of a sudden we had explosive GDP growth and

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Speaker 1: that resulted in what we just talked about and again

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Speaker 1: became kind of the formative this is how it's.

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Speaker 2: Supposed to work thought for a lot of people.

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Speaker 1: Broke inflation, that put confidence back in place, and then

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Speaker 1: the demographic trans stepped in to kind of.

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Speaker 2: Fuel that growth.

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Speaker 4: Yeah, let's let's pivot to the early two thousands, of mean,

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Speaker 4: two thousand and eight, two thousand and nine, coming out

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Speaker 4: of the housing crisis, we had zero interest rates, zero

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Speaker 4: for it seemed like forever, but no runaway inflation because

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Speaker 4: we we were very extended, you know, credit wise, if

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Speaker 4: you could fog a mirror, you could qualify for a mortgage,

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Speaker 4: stated income loans, you could you could buy five or

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Speaker 4: six you know, condos pre construction down in Florida by

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Speaker 4: just filling out an application. What could possibly go wrong?

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Speaker 4: You get a house, you get a house, you get

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Speaker 4: three condos. Everything was off to the races, and then wow,

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Speaker 4: the housing crisis hit. Banks were in default, human you know,

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Speaker 4: regular consumers were in default. It was a really wild

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Speaker 4: period there for a couple.

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Speaker 1: So I just used a banking term that I was

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Speaker 1: working for a bank at that time. And I remember

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Speaker 1: the head of the local lending facility there the mortgage

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Speaker 1: area was complete, super honest guy and all clearly on

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Speaker 1: the up and up, but he was confused by these

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Speaker 1: stated income loans, which literally that sounds like a fancy term.

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Speaker 1: All that means is you walk in, you state your income,

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Speaker 1: you get a mortgage. I make a bazillion dollars cool,

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Speaker 1: we can loan you o two thirds of a bazillion

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Speaker 1: dollars to borrow home. No proof was required, it was

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Speaker 1: just a lot easier. That's the environment that our leadership

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Speaker 1: wanted us in, and not talking about the bank, I'm

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Speaker 1: talking about the entire country. That's the environment that we

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Speaker 1: wanted to be. And when we reduced regulation on the

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Speaker 1: rules of all that kind of stuff, and that did

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Speaker 1: lead to, you know, kind of overdoing it, which we

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Speaker 1: tend to do here well.

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Speaker 4: In rate stayed low for so long because it took

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Speaker 4: a while for consumers and banks to just deleverage. Everybody

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Speaker 4: had borrowed so much money because it was free, it

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Speaker 4: was cheap, and money was really not moving around for

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Speaker 4: a while, and that's what makes the economy go. So

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Speaker 4: you know, that's why rate stayed low. It was it

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Speaker 4: was a very interesting time, all right, two thousand and

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Speaker 4: nine to twenty thirteen. Even when we had a bunch

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Speaker 4: of stimulus coming in from the government, inflation did not

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Speaker 4: really spike because again, we were trying to bail this

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Speaker 4: economy out of that tremendous housing crisis. And you would

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Speaker 4: have thought that inflation would be off to the races

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Speaker 4: when all this government stimulus money was flowing around, but

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Speaker 4: it didn't, Brian, and wow, what a great time to

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Speaker 4: be invested in stocks it was.

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Speaker 1: And so let's talk about what was the right move

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Speaker 1: to have made at that time in response to what

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Speaker 1: we just talked about. While aggressive rebalancing and taking risk

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Speaker 1: right put risk into your portfolio, a lot of Heineworth

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Speaker 1: investors were overly overly conservative posts two thousand and eight,

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Speaker 1: and they missed They ate a lot of the downside

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Speaker 1: and missed most of the upside. So if you have,

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Speaker 1: but you have, if you had a plan in place,

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Speaker 1: you understood the history, you would have sidestepped that because

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Speaker 1: there would be no need to protect your long term

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Speaker 1: ass That's because you would have already set up your

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Speaker 1: short term assets, which would not have been affected by

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Speaker 1: it at all.

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Speaker 4: All right, and then let's move forward to the dreaded

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Speaker 4: COVID discussion twenty twenty. You know, stocks actually surged during

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Speaker 4: a global pandemic as the GDP shrank by over thirty

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Speaker 4: percent in the second quarter of twenty twenty, unemployment hit

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Speaker 4: fourteen point seven percent. Boy, that that's a great reminder,

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Speaker 4: I forget about that high unemployment rate, and yet the

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Speaker 4: SP five hundred hit all time highs by August.

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Speaker 2: Of that year.

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Speaker 4: Why more government stimulus, more fed action, a bunch of

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Speaker 4: money flying around, And when free money is flying around,

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Speaker 4: it finds its way into real estate, into stocks, into

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Speaker 4: speculative growth assets.

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Speaker 2: And we were off.

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Speaker 4: To the races after that, the fastest and most serious,

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Speaker 4: you know, bear market in US history. That market dropped

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Speaker 4: well over thirty percent in a heartbeat. It really froze

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Speaker 4: people for a few months. And if you bailed on

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Speaker 4: the market then and went to cash, boy were you

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Speaker 4: sorry just a few months later.

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Speaker 1: But I'll add Bob that I don't know most of

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Speaker 1: my clients don't really remember the market collapsing that much,

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Speaker 1: not like in two thousand and eight, because two thousand

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Speaker 1: and eight was real, not that, not that the COVID

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Speaker 1: downturn wasn't, but it was over with relatively click, and

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Speaker 1: it happened due to a stimulus that came out of

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Speaker 1: left field. Those those kinds of things tend to become

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Speaker 1: a catalyst right underneath all of that. When you removed

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Speaker 1: the when you remove the COVID vacs or the COVID issue.

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Speaker 1: The economy was relatively strong before that, so all that

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Speaker 1: happened was we had a brief panic, and then everybody

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Speaker 1: exhaled and said, Okay, you know what, I think, maybe

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Speaker 1: this isn't that big of a deal. This is not

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Speaker 1: the virus from Hollywood that's coming to kill us all.

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Speaker 1: And then it became a catalyst because the entire world

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Speaker 1: had to shift to working from home, which means Dell

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Speaker 1: made a bunch of money. I can confirm that here

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Speaker 1: on my own desktop. Zoom came out of nowhere was created.

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Speaker 1: Technology had to shift to allow the whole world to

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Speaker 1: have a second workspace, and that was a catalyst for

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Speaker 1: the stock market that trickled through in a huge way.

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Speaker 4: What were a couple of the huge financial planning techniques

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Speaker 4: during that whole time period during COVID tax lost harvesting

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Speaker 4: and rough conversions. When the market's tanked in March of

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Speaker 4: twenty twenty before rebounding, people that had an advisor and

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Speaker 4: were paying attention, man, this is when you know smart

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Speaker 4: investing really came into vogue because you could just swap

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Speaker 4: one S and P five hundred ETF for another harvest

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Speaker 4: Those losses stay fully invested and you know, bank bank

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Speaker 4: those losses to use later on to offset future gains.

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Speaker 4: Wonderful time for tax loss harvesting and roth conversions man convert,

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Speaker 4: you know, converting iras to roth during a thirty percent downturn.

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Speaker 4: Wonderful opportunity. And then you catch the rebound completely tax free.

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Speaker 4: We had a lot of people doing both of those things,

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Speaker 4: and uh, it really moved the needle financially for them.

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Speaker 1: Yeah, and that can be a tough trigger to pull

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Speaker 1: because remember, you're doing that in a face of headlines

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Speaker 1: that are screaming the end is near, and you're doing

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Speaker 1: this roth conversion going no, it's not, matter of fact,

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Speaker 1: I'm going to move this over to the tax free

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Speaker 1: So when the pendulum ultimately swings back the other way,

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Speaker 1: it'll be tax free now. And I paid a lot

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Speaker 1: less than taxes to get it done. That's winning the game.

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Speaker 2: All right.

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Speaker 4: We get through COVID and now we're in twenty twenty two.

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Speaker 4: The Fed has to, you know, pump the brakes on

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Speaker 4: all this free money flying around.

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Speaker 2: So what do they do. They raise interestraights seven times.

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Speaker 4: The labor market came back, you know, everybody went back

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Speaker 4: to work and man, we had a horrible year in

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Speaker 4: both the bond and.

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Speaker 2: The stock market.

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Speaker 4: They usually doesn't happen because usually, you know, you buy

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Speaker 4: bonds to protect yourself from stocks. Man In twenty twenty two,

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Speaker 4: nothing worked, and that was an interesting time. But that's

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Speaker 4: when for the first time in many, many years, we

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Speaker 4: talked to people about treasury bills, treasury bonds, some of

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Speaker 4: these high yield savors accounts, parking some money, getting very

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Speaker 4: nice interest rates, you know, fighting back against the current environment.

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Speaker 4: And it was a good opportunity, great time to have

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Speaker 4: an emergency fund.

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Speaker 2: It really was.

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Speaker 1: The other that was when we were all reminded that

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Speaker 1: you are indeed allowed to get paid not real dollars

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Speaker 1: on your on your depository type accounts, your safe money.

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Speaker 1: It had been decades since we had that opportunity. One

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Speaker 1: of things I like to point out to my clients

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Speaker 1: is exactly how bad that year was. We don't really

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Speaker 1: think of twenty two. Twenty two didn't have a story right,

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Speaker 1: It didn't come along with any crazy but it was

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Speaker 1: one of the five worst market years we've had on record,

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Speaker 1: and that includes two thousand and eight, includes in nineteen

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Speaker 1: thirty seven, it includes nineteen seventy three one to oh two.

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Speaker 1: It's up there with those worst years we've ever had,

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Speaker 1: but it doesn't get thought of that way because it

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Speaker 1: didn't come along with one great story like the Depression

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Speaker 1: or the Great Recession or anything like that. But anyway,

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Speaker 1: so at that time, yeah, that was that was the

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Speaker 1: time to kind of take take stock of what your

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Speaker 1: situation really is. It was a great time to have

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Speaker 1: an emergency fund, not only to take advantage of those

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Speaker 1: interest rates, but also to not have to sell out

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Speaker 1: your long term assets that we're getting hammered at the time.

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Speaker 4: And then the last but not least twenty twenty three,

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Speaker 4: twenty twenty three to twenty twenty four, despite higher than

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Speaker 4: normal interest rates in inflation, I don't think anybody saw

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Speaker 4: this coming, Brian, to this extent.

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Speaker 2: We had great stock market years both of those years.

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Speaker 4: Why the influx of AI enthusiasm, new technology coming in,

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Speaker 4: better than expected, corporate earnings, and economic resilience which.

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Speaker 2: Usually always overcome these short term fears.

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Speaker 4: Just proving once again that the American people, American companies

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Speaker 4: are very resilient. They find a way, and boy, if

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Speaker 4: you were out of the market in twenty three and

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Speaker 4: twenty four Just because you were afraid of what was

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Speaker 4: going to happen in the world, you missed out on

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Speaker 4: some great returns.

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Speaker 1: Yeah, that's right, and the move then would have been

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Speaker 1: We're big fans of direct indexing. Here if you can

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Speaker 1: do it, which basically means own own a pile of

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Speaker 1: individual securities instead of mutual funds, if you can in

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Speaker 1: a taxable account, replicate that index and take advantage of

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Speaker 1: the tax loss harvesting opportunity.

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Speaker 2: Here's the all Worth advice.

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Speaker 4: When the economy doesn't necessarily follow the proverbial rules or scripts,

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Speaker 4: smart investors don't panic. They reach for the right tool

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Speaker 4: in the toolbox. A giant in the retirement plan world

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Speaker 4: is starting to shake things up. We'll show you what

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Speaker 4: that means potentially for your four to one k, your

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Speaker 4: asset allocation and your long term income plan. You're listening

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Speaker 4: to Simply Money presented by all Worth Financial on fifty

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Speaker 4: five KRC.

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Speaker 2: The talk station.

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Speaker 5: Is additional pressure building in the system.

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Speaker 4: Hundreds of flights cancelled heading into the weekend because of.

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Speaker 3: The government shut down. The day's news several people fell

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Speaker 3: ill at Joint bas Andrews. Suspicious package arrived at the

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Speaker 3: facility fifty five KRZ the talk station.

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Speaker 5: All Worth Financial a registered investment advisory firm. Any ideas

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Speaker 5: presented during this program are not intended to provide specific

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Speaker 5: financial advice. You should consult your own financial advisor, tax consultant,

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Speaker 5: or a state planning attorney to conduct your own due diligence.

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Speaker 4: You're listening to Simply Money, presented by all Worth Financial

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Speaker 4: on Bob Sponseller along with Brian James. If you can't

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Speaker 4: listen to Simply Money live every night, subscribe and get

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Speaker 4: our daily podcasts. And of course, if you have family

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Speaker 4: or friends that need some financial advice, let them know

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Speaker 4: about us as well. Just search Simply Money on the

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Speaker 4: iHeart app or wherever you find your podcasts. Straight ahead

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Speaker 4: of six forty three How to juggle the financial demands

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Speaker 4: of aging parents and adult kids, What to do with

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Speaker 4: old annuities that are laying around collecting dust, and why

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Speaker 4: a big payday from selling your business isn't always as

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Speaker 4: simple as it might seem. Let's dig into a story

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Speaker 4: that could have implications for your retirement planning toolbox. Brian

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Speaker 4: The asset management firm State Street, one of the biggest

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Speaker 4: providers in the etf target date space is making moves

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Speaker 4: in the defined contribution or for lack you know, what

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Speaker 4: we like to call the retirement plan world. That could

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Speaker 4: change how four one K plans look and behave in

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Speaker 4: the pretty near future.

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Speaker 2: Yeah.

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Speaker 1: So the gist of this is that normally, when we

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Speaker 1: think of four oh one k's, we think of traditional

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Speaker 1: mutual funds, which have been around for I don't know

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Speaker 1: one hundred some years. I believe nineteen twenty four, matter

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Speaker 1: of fact was the first one. Anyway, those have been

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Speaker 1: around forever, and that has evolved into target date funds,

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Speaker 1: which are still mutual funds. Those are the ones that

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Speaker 1: have a year in the name of them. When you're

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Speaker 1: looking at four oh one K, and that year is

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Speaker 1: roughly when you might retire, and that indicates a portfolio

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Speaker 1: that might be appropriate, although you've got to look under

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Speaker 1: the hood because not all target date funds, you know,

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Speaker 1: with the year twenty sixty five, are the same for example,

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Speaker 1: and played old index funds is where most people familiar with.

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Speaker 1: But State Street is coming around saying we're going to

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Speaker 1: innovate this space, and they have launched some target date

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Speaker 1: strategies that include private markets exposure as well as public market.

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Speaker 1: State Street is a big firm, one point seven trillion

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Speaker 1: dollars in exchange traded funds. If you've ever heard of spiders,

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Speaker 1: which are the S and P five hundred ETF.

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Speaker 2: That's their flavor of them. But that's State Street behind that.

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Speaker 1: So this could be significant for higher earnerge You're already

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Speaker 1: thinking about more than just allocation. You're looking for I'm sorry,

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Speaker 1: more than just accumulation. You're looking for diversification. You're going

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Speaker 1: to need income generation in the future. You want some

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Speaker 1: things out there to kind of offset the swings of

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Speaker 1: the market, meaning alternative assets certainly need tax planning, those

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Speaker 1: kinds of things. So when a retirement plant provider starts

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Speaker 1: offering these hybrid solutions, what that means is your four

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Speaker 1: to one K is no longer just a commodity play.

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Speaker 1: It's not the same as all the other ones. It

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Speaker 1: can become part of a more sophisticated asset allocation strategy

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Speaker 1: involving a whole bunch of other topics.

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Speaker 2: Well, let's look under the hood here for a minute.

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Speaker 4: Let's say you've got a four to one K and

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Speaker 4: you've got you know, seven hundred and fifty thousand, a

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Speaker 4: million couple million dollars in there, and maybe it isn't

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Speaker 4: a target date fund or some other index funds. With

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Speaker 4: these new structures coming from State Street, and I'm sure

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Speaker 4: other other providers are going to be following suit here,

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Speaker 4: you might be able to get access inside the plan

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Speaker 4: to private equity, private credit infrastructure funds. That's the kind

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Speaker 4: of model that State Street and others are starting to build.

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Speaker 2: I see pros and cons with all of this. Mainly pros.

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Speaker 4: I think for some of these larger plan sponsors, I

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Speaker 4: think some of the the traditional you know, potential objectives

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Speaker 4: to adding these asset out these asset areas to these plans,

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Speaker 4: i e. Fees and transparency and lock up periods. I

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Speaker 4: have to think that if you're going to put them

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Speaker 4: in some of these multimillion dollar four or one K plans,

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Speaker 4: that a lot of those traditional hurdles are going to

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Speaker 4: start to go away.

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Speaker 2: And I think that's a good thing.

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Speaker 1: Yeah, And then make no mistake what the motivation is

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Speaker 1: here behind this. Of course, State Street is a for

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Speaker 1: profit entity, as are many of them and us and

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Speaker 1: individuals in this country, so rest assured they are looking

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Speaker 1: to make a profit by providing people something that doesn't

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Speaker 1: exist right now because there is literally twelve trillion dollars

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Speaker 1: in the retirement space, retirement plan space, mostly locked up

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Speaker 1: in traditional mutual funds, and they're viewing this as an

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Speaker 1: area that is ripe for.

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Speaker 2: Some different options out there.

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Speaker 4: Yeah, let's face it, if everybody just piles into index funds,

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Speaker 4: it's a pretty low margin business because the internal operating

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Speaker 4: expenses of those funds are very low. So again, I

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Speaker 4: see pros and cons to all this. You know, if

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Speaker 4: these alternative asset classes do their job, which is to

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Speaker 4: potentially increase your return with lower risk adjusted volatility, it

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Speaker 4: can be a good thing as long as you don't

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Speaker 4: get sucked dry on fees. So again we're just calling

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Speaker 4: it out to you know, let you know this stuff

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Speaker 4: is coming. But I think it's good to look under

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Speaker 4: the hood and see what the deal terms are are,

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Speaker 4: so to speak, to make sure you're really getting good

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Speaker 4: bang for your buck if you venture into.

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Speaker 2: Some of these things. Yeah, so let's talk about what

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Speaker 2: are the pros and cons.

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Speaker 1: We talked about the pros, right, So these these are

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Speaker 1: these are could be decent opportunities to get into things

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Speaker 1: beyond traditional mutual funds, you know, but private markets often

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Speaker 1: do lock up capital.

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Speaker 3: Right.

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Speaker 1: These aren't things that are priced every day. They're not

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Speaker 1: liquid every day like a traditional investment. So if you're

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Speaker 1: used to that and you've been using your four oh

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Speaker 1: one K as part of your near retirement plan, then

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Speaker 1: this could be something that locks up a chunk of

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Speaker 1: your assets in something that you cannot get to, so

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Speaker 1: you need to plan around that. Also, while they all

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Speaker 1: they will provide access to assets that historically only your

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Speaker 1: ultra high network folks have been able to get into.

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Speaker 1: This could improve your return potential, but it's also going

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Speaker 1: to change your risk profile around. You should expect the

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Speaker 1: unexpected if you're going to invest in these different types

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Speaker 1: of assets.

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Speaker 2: Let's take a practical scenario.

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Speaker 4: Let's say you're fifty eight years old, your four oh

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Speaker 4: one K has a little over a million dollars in it,

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Speaker 4: and you're projecting retirement at sixty two, so you're already

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Speaker 4: planning to take you know, income from your portfolio here

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Speaker 4: ie or four to one K that might get rolled

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Speaker 4: over to an IRA within.

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Speaker 2: Say four years.

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Speaker 4: If your plan sponsor eventually offers these vehicles that has

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Speaker 4: this private market exposure, you just want to make sure

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Speaker 4: that you're going to be able to get access to

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Speaker 4: your money if and when you need it again. The

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Speaker 4: proof is in the putting. You know, you got to

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Speaker 4: read the fine print and see what's coming down the

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Speaker 4: pike here before you get too involved in these kind

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Speaker 4: of alternative assets.

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Speaker 1: Yeah, so, just just like anything, be mindful of what

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Speaker 1: you're getting into.

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Speaker 2: Understand what it is.

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Speaker 1: There are lock up periods, there are extra fees, and

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Speaker 1: just understand what the investment is that it's underlying it

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Speaker 1: because it may not match what the market is doing.

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Speaker 1: If that's what you primarily pay attention to, that's what

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Speaker 1: you're asking for. You know, we want something difference. Why

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Speaker 1: they call them alternative assets. But just understand that you're

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Speaker 1: venturing into a world that you have not ventured into before.

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Speaker 1: There are nuances.

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Speaker 2: Here's the all worth of advice.

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Speaker 4: Don't just treat your four toh one k like a

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Speaker 4: pile of money sitting over there that you completely forget about.

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Speaker 4: Treat it like a key piece of your portfolio. Know

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Speaker 4: what's inside it, Demand choice and align with you. Align

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Speaker 4: everything with your timeline and your liquidity needs.

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Speaker 2: All right, open enrollment is here, But.

441
00:20:19,560 --> 00:20:23,000
Speaker 4: Which of the optional choices should you actually sign up

442
00:20:23,040 --> 00:20:23,560
Speaker 4: and pay for.

443
00:20:23,840 --> 00:20:25,639
Speaker 2: We'll explore that question next.

444
00:20:25,880 --> 00:20:28,360
Speaker 4: You're listening to Simply Money, presented by all Worth Financial

445
00:20:28,400 --> 00:20:30,960
Speaker 4: on fifty five KRC, the talk.

446
00:20:30,760 --> 00:20:35,840
Speaker 3: Station Nancy Pelosi, I will I've KRC an iHeartRadio station.

447
00:20:40,800 --> 00:20:43,400
Speaker 4: You're listening to Simply Money, presented by all Worth Financial

448
00:20:43,480 --> 00:20:45,880
Speaker 4: on Bob Sponsller along with Brian James.

449
00:20:46,560 --> 00:20:46,879
Speaker 2: Well.

450
00:20:46,880 --> 00:20:49,719
Speaker 4: Open enrollment is upon us, and for some the choices

451
00:20:49,760 --> 00:20:52,560
Speaker 4: are pretty simple in terms of health insurance. In fact,

452
00:20:52,680 --> 00:20:56,000
Speaker 4: many plans just roll over your choices from last year.

453
00:20:56,680 --> 00:20:59,320
Speaker 4: But there are some options that you can pay extra

454
00:20:59,440 --> 00:21:01,840
Speaker 4: for and are worth taking a look at. These are

455
00:21:01,880 --> 00:21:05,480
Speaker 4: items that you can choose from through your company during

456
00:21:05,600 --> 00:21:06,480
Speaker 4: open enrollment.

457
00:21:06,840 --> 00:21:08,280
Speaker 2: Brian, let's dig into some of this.

458
00:21:08,480 --> 00:21:11,159
Speaker 4: Tell us what we should consider and what we should

459
00:21:11,200 --> 00:21:14,280
Speaker 4: just let walk on by here as we enter open

460
00:21:14,359 --> 00:21:17,760
Speaker 4: enrollment period for folks that are actively working at an

461
00:21:17,800 --> 00:21:19,240
Speaker 4: employer and have a bunch.

462
00:21:19,080 --> 00:21:21,240
Speaker 1: Of options in front of that, that's right, Bob, tis

463
00:21:21,280 --> 00:21:24,080
Speaker 1: this season to watch the fall, the leaves fall, and

464
00:21:24,240 --> 00:21:27,440
Speaker 1: sip my pumpkin spice latte and go through my health

465
00:21:27,440 --> 00:21:30,240
Speaker 1: insurance options, because that's what we do in Q four

466
00:21:30,240 --> 00:21:32,400
Speaker 1: here in the fall, So you know, but let's start

467
00:21:32,400 --> 00:21:33,160
Speaker 1: with life insurance.

468
00:21:33,160 --> 00:21:34,399
Speaker 2: That's one of the choices you're going to make.

469
00:21:34,480 --> 00:21:36,600
Speaker 1: Most employers will fut the bill for some level of

470
00:21:36,600 --> 00:21:39,360
Speaker 1: life insurance up to say, two times your annual earnings.

471
00:21:39,440 --> 00:21:41,119
Speaker 2: But do you need more? And if so, what do

472
00:21:41,160 --> 00:21:41,640
Speaker 2: you do? Then?

473
00:21:41,880 --> 00:21:44,399
Speaker 1: Well, if you need more, you've got the option usually

474
00:21:45,040 --> 00:21:47,359
Speaker 1: you know, to choose three, four, five times maybe even

475
00:21:47,400 --> 00:21:49,359
Speaker 1: more your salary, but you're going to pay for it,

476
00:21:50,040 --> 00:21:51,879
Speaker 1: and you know so if you do decide you need that,

477
00:21:51,920 --> 00:21:54,040
Speaker 1: a term policy is probably what's going to do the

478
00:21:54,119 --> 00:21:56,280
Speaker 1: job best for you. It's affordable, it's going to cover

479
00:21:56,320 --> 00:21:58,240
Speaker 1: you for a set period, and that premium is going

480
00:21:58,320 --> 00:22:00,520
Speaker 1: to be locked in. So I wouldn't look decides you

481
00:22:00,560 --> 00:22:03,600
Speaker 1: need more insurance, I wouldn't look at your benefits plan.

482
00:22:03,640 --> 00:22:05,320
Speaker 2: It's not gonna be the most cost effective way to

483
00:22:05,320 --> 00:22:05,600
Speaker 2: do it.

484
00:22:05,720 --> 00:22:07,959
Speaker 1: Figure out what you need insurance wise, because that is

485
00:22:08,000 --> 00:22:10,960
Speaker 1: probably not going to change as often as open enrollment

486
00:22:11,000 --> 00:22:13,480
Speaker 1: comes around. So figure out what the mortgage is, what

487
00:22:14,320 --> 00:22:16,560
Speaker 1: your family would need if something happened to you, and

488
00:22:16,600 --> 00:22:19,800
Speaker 1: perhaps you know whatever college expenses. Right, those are calculable

489
00:22:19,880 --> 00:22:22,359
Speaker 1: timeframes that you can figure out and to do the

490
00:22:22,359 --> 00:22:24,399
Speaker 1: math that won't change a year to year However, the

491
00:22:24,440 --> 00:22:26,000
Speaker 1: premium you would have to pay to go through your

492
00:22:26,000 --> 00:22:29,040
Speaker 1: group benefits would so now on the term or that's

493
00:22:29,119 --> 00:22:31,960
Speaker 1: term insurance. Permanent life insurance is exactly what it sounds like.

494
00:22:31,960 --> 00:22:35,000
Speaker 1: That's going to be around your entire life, which isn't

495
00:22:35,040 --> 00:22:37,480
Speaker 1: necessarily a bad thing, but obviously that's more expensive because

496
00:22:37,480 --> 00:22:39,960
Speaker 1: you're virtually guaranteeing that the insurance company is going to

497
00:22:40,040 --> 00:22:41,399
Speaker 1: have to pay out a sizeable amount.

498
00:22:41,720 --> 00:22:43,000
Speaker 2: Term insurance is just that.

499
00:22:43,080 --> 00:22:45,320
Speaker 1: Tie it to your mortgage, which might be twenty years left,

500
00:22:45,320 --> 00:22:47,600
Speaker 1: thirty years left or whatever. Tie it to the kids

501
00:22:47,640 --> 00:22:51,639
Speaker 1: needing to go to school. That's a calculable timeframe. Use

502
00:22:51,760 --> 00:22:54,679
Speaker 1: term insurance for those permanent is when there will always

503
00:22:54,760 --> 00:22:55,400
Speaker 1: be a need.

504
00:22:55,240 --> 00:22:56,320
Speaker 2: For death benefit out there.

505
00:22:56,440 --> 00:22:58,800
Speaker 4: All right, a couple thoughts on this whole life insurance

506
00:22:58,840 --> 00:23:01,760
Speaker 4: through your company benefit plan. You know, the good thing

507
00:23:01,840 --> 00:23:04,600
Speaker 4: is you get guaranteed underwriting because you're getting underwritten as

508
00:23:04,640 --> 00:23:07,240
Speaker 4: part of a big group your fellow you know, co workers.

509
00:23:07,720 --> 00:23:10,520
Speaker 4: The bad thing is if you really are in a

510
00:23:10,840 --> 00:23:14,560
Speaker 4: lower class underwrite, you know, non smoker, not overweight, very

511
00:23:14,640 --> 00:23:18,719
Speaker 4: very healthy, you can qualify usually for much better rates

512
00:23:19,040 --> 00:23:22,240
Speaker 4: in terms of premiums by getting underwritten on the outside.

513
00:23:22,280 --> 00:23:24,439
Speaker 4: So this is where it makes sense to just like

514
00:23:24,480 --> 00:23:26,800
Speaker 4: we talk about all the time, do a financial plan,

515
00:23:27,119 --> 00:23:29,600
Speaker 4: as Brian said, figure out how much life insurance you

516
00:23:29,800 --> 00:23:32,639
Speaker 4: actually need and for how long, and then don't be

517
00:23:32,640 --> 00:23:34,640
Speaker 4: afraid to go out and price this thing through your

518
00:23:34,680 --> 00:23:38,199
Speaker 4: company and through you know, a fiduciary advisor, and you

519
00:23:38,280 --> 00:23:41,159
Speaker 4: might you might be surprised at what the difference in

520
00:23:41,200 --> 00:23:45,919
Speaker 4: premiums actually are. All Right, moving to disability insurance, most

521
00:23:45,920 --> 00:23:49,679
Speaker 4: employers cover this, A lot of people don't even know

522
00:23:49,720 --> 00:23:52,159
Speaker 4: what it is, and Brian, I think this is a

523
00:23:52,320 --> 00:23:56,880
Speaker 4: vastly overlooked part of the whole benefit menu that more

524
00:23:56,960 --> 00:23:58,639
Speaker 4: people should be taking advantage of.

525
00:23:58,840 --> 00:24:01,480
Speaker 2: That's right in a survey that just fifty six percent

526
00:24:01,520 --> 00:24:04,040
Speaker 2: of workers can say for sure whether their employer even

527
00:24:04,080 --> 00:24:05,919
Speaker 2: offers a disability insurance benefit.

528
00:24:05,920 --> 00:24:08,240
Speaker 1: That's a study of twenty twenty four from Limar and

529
00:24:08,280 --> 00:24:11,280
Speaker 1: Life Happens, that's a nonprofit that looks at insurance education.

530
00:24:11,400 --> 00:24:13,800
Speaker 1: So this is like, like Bob says, this is a

531
00:24:13,800 --> 00:24:17,520
Speaker 1: misunderstood area. Most people don't run into these types of things, right,

532
00:24:17,560 --> 00:24:20,520
Speaker 1: getting becoming disabled on the job is not necessarily something

533
00:24:20,640 --> 00:24:22,360
Speaker 1: or off the job that prevents you from working That's

534
00:24:22,400 --> 00:24:23,440
Speaker 1: not a common occurrence, but.

535
00:24:23,400 --> 00:24:26,040
Speaker 2: It does happen to people. These are reasonably priced options.

536
00:24:26,080 --> 00:24:28,720
Speaker 1: I would definitely go through Start with your group for

537
00:24:28,800 --> 00:24:32,200
Speaker 1: this because that's available, and that is this is more

538
00:24:32,200 --> 00:24:34,760
Speaker 1: of a year to year thing, but it's the cheapest

539
00:24:34,760 --> 00:24:38,880
Speaker 1: way to get disability coverage. Remember to understand the difference

540
00:24:38,920 --> 00:24:41,879
Speaker 1: between how will they trigger your benefit. Is it because

541
00:24:41,920 --> 00:24:44,639
Speaker 1: you can't do your job or is it because you

542
00:24:44,680 --> 00:24:48,560
Speaker 1: can't do any job? That is a huge, huge difference

543
00:24:48,680 --> 00:24:50,320
Speaker 1: in terms of how that coverage work.

544
00:24:50,320 --> 00:24:51,640
Speaker 2: If you can flip burgers.

545
00:24:51,280 --> 00:24:54,320
Speaker 1: You might not get it, but you know it's that's

546
00:24:54,359 --> 00:24:56,199
Speaker 1: definitely something to pay attention to when you're gonna look

547
00:24:56,200 --> 00:24:58,520
Speaker 1: at this. That said, when you get closer and closer

548
00:24:58,560 --> 00:25:00,879
Speaker 1: to retirement, you'll eventually hit point where you know what,

549
00:25:00,920 --> 00:25:03,679
Speaker 1: maybe I don't need disability insurance because if something really happened,

550
00:25:03,680 --> 00:25:05,960
Speaker 1: I would just blame retire and not do any job anymore.

551
00:25:06,640 --> 00:25:09,879
Speaker 4: Well, and most of the time, short term disability is

552
00:25:09,880 --> 00:25:12,679
Speaker 4: paid for by the company. It's very inexpensive, and it

553
00:25:12,720 --> 00:25:16,000
Speaker 4: covers a short period of time, very finite period of time.

554
00:25:16,480 --> 00:25:19,159
Speaker 4: What I want to encourage everybody to do is, you know,

555
00:25:19,240 --> 00:25:23,480
Speaker 4: almost everybody out there is take that long term disability option.

556
00:25:23,560 --> 00:25:27,200
Speaker 4: It's typically going to ensure about sixty percent of your income.

557
00:25:27,640 --> 00:25:31,639
Speaker 4: And like Brian said, I mean, even irrespective of the

558
00:25:32,119 --> 00:25:36,399
Speaker 4: qualification of disability, in terms of what it actually costs,

559
00:25:36,440 --> 00:25:40,359
Speaker 4: it's pretty darn inexpensive relative to the benefit that you

560
00:25:40,440 --> 00:25:43,840
Speaker 4: get if a real catastrophe comes down the pike, a

561
00:25:43,880 --> 00:25:48,240
Speaker 4: severe illness, an automobile accident, something like that. Let's face it,

562
00:25:48,280 --> 00:25:50,880
Speaker 4: at the end of the day, your ability to earn

563
00:25:50,920 --> 00:25:54,399
Speaker 4: an income is your largest asset, and you really do

564
00:25:54,520 --> 00:25:56,919
Speaker 4: need to look at ensuring that. Brian, give us your

565
00:25:56,960 --> 00:25:59,520
Speaker 4: take on voluntary accident insurance.

566
00:26:00,080 --> 00:26:03,520
Speaker 1: So yeah, this is accidental insurance will give you payments

567
00:26:03,520 --> 00:26:05,800
Speaker 1: in addition to the medical benefits when you or your

568
00:26:05,880 --> 00:26:07,520
Speaker 1: en old family members has an accident.

569
00:26:07,560 --> 00:26:08,200
Speaker 2: You know, this is the ones.

570
00:26:08,680 --> 00:26:10,119
Speaker 1: It's been a long time since I've seen one, but

571
00:26:10,119 --> 00:26:11,840
Speaker 1: these are the ones where it'll say, if you lose

572
00:26:11,840 --> 00:26:13,320
Speaker 1: one hand, it's this dollar amount.

573
00:26:13,359 --> 00:26:14,800
Speaker 2: If it's two hands, you get this much. Oh.

574
00:26:15,000 --> 00:26:16,760
Speaker 1: I haven't seen that about twenty years, but that always

575
00:26:16,800 --> 00:26:17,720
Speaker 1: kind of made me giggle though.

576
00:26:17,720 --> 00:26:18,880
Speaker 2: With the way there's a menu that.

577
00:26:18,840 --> 00:26:21,600
Speaker 1: You can choose from anyway, So this is it's to

578
00:26:21,680 --> 00:26:24,080
Speaker 1: cover out of pocket expenses on your medical plants, such

579
00:26:24,080 --> 00:26:26,760
Speaker 1: as the deductible and co insurance, that result from some

580
00:26:26,880 --> 00:26:29,400
Speaker 1: kind of an accident, so usually a fairly small payout,

581
00:26:30,160 --> 00:26:32,760
Speaker 1: you know, looking for broken bones, burns or you know,

582
00:26:32,800 --> 00:26:34,159
Speaker 1: missing limbs, that kind of stuff.

583
00:26:34,320 --> 00:26:36,800
Speaker 2: If you're a high earner, this is really not essential.

584
00:26:36,840 --> 00:26:38,199
Speaker 2: And honestly, the.

585
00:26:38,280 --> 00:26:40,840
Speaker 1: The lower, relatively low likelihood that this is going to

586
00:26:40,880 --> 00:26:43,680
Speaker 1: happen to anybody. I'm not a huge fan of voluntary accident insurance.

587
00:26:43,720 --> 00:26:46,040
Speaker 1: I've been ignoring it for years. I'm willing to kind

588
00:26:46,080 --> 00:26:48,639
Speaker 1: of gamble. But that said, maybe if you're a mountain climber,

589
00:26:48,680 --> 00:26:50,640
Speaker 1: you do a lot of physically active stuff that does

590
00:26:50,680 --> 00:26:52,480
Speaker 1: put you at risk, can be, you know, not the

591
00:26:52,520 --> 00:26:53,680
Speaker 1: worst idea to invest in.

592
00:26:54,480 --> 00:26:58,920
Speaker 4: All right, That voluntary accident insurance is followed closely by

593
00:26:59,040 --> 00:27:02,760
Speaker 4: voluntarily critical illness insurance. So let's say you have a

594
00:27:02,760 --> 00:27:06,160
Speaker 4: heart attack, a stroke, kidney failure, cancer, you know, this

595
00:27:06,400 --> 00:27:09,439
Speaker 4: insurance protects you with out of pocket covering out of

596
00:27:09,480 --> 00:27:13,800
Speaker 4: pocket expenses that your health insurance doesn't cover. We all

597
00:27:13,840 --> 00:27:16,919
Speaker 4: remember the flat commercials that talk about this.

598
00:27:17,920 --> 00:27:19,119
Speaker 2: That was an ex Can you do that again? It

599
00:27:19,119 --> 00:27:21,199
Speaker 2: didn't quite hear, thank you? Well, one more time one

600
00:27:21,240 --> 00:27:23,720
Speaker 2: more time. I'm I'm not a big fan of this stuff.

601
00:27:23,760 --> 00:27:26,639
Speaker 4: I mean, at some point you can just throw insurance

602
00:27:26,680 --> 00:27:30,199
Speaker 4: premiums out the window, that would you know, if you

603
00:27:30,240 --> 00:27:33,320
Speaker 4: factor in the probability of any of this stuff actually happening,

604
00:27:33,359 --> 00:27:36,800
Speaker 4: you're better off just raising your contributions to your four

605
00:27:36,840 --> 00:27:39,400
Speaker 4: to one K plan put your money.

606
00:27:39,160 --> 00:27:41,760
Speaker 2: Away that way. But what say you about this kind

607
00:27:41,760 --> 00:27:42,080
Speaker 2: of I.

608
00:27:42,040 --> 00:27:45,640
Speaker 1: Mean, if you if this is an obvious family hereditary topic,

609
00:27:45,720 --> 00:27:48,760
Speaker 1: you know, everybody winds up with cancer, or everybody winds.

610
00:27:48,560 --> 00:27:50,800
Speaker 2: Up with you know, cardiac issues or whatever, then yeah,

611
00:27:50,800 --> 00:27:51,480
Speaker 2: you might think about it.

612
00:27:51,520 --> 00:27:53,560
Speaker 1: But if you don't already know that about your family,

613
00:27:53,880 --> 00:27:56,120
Speaker 1: then I would say it's not that big of an issue.

614
00:27:56,520 --> 00:27:58,880
Speaker 1: And yeah, no, I'm not a big fan of an

615
00:27:58,880 --> 00:28:01,080
Speaker 1: individual insurance policy for each and every bad thing that

616
00:28:01,160 --> 00:28:01,720
Speaker 1: might happen to you.

617
00:28:02,080 --> 00:28:03,600
Speaker 2: All right, and no good benefits.

618
00:28:03,600 --> 00:28:08,119
Speaker 4: Segment is complete without talking about voluntary pet insurance. Brian,

619
00:28:08,680 --> 00:28:10,480
Speaker 4: give us your thoughts on pet insurance.

620
00:28:10,560 --> 00:28:12,360
Speaker 1: My thoughts on pet insurance is that for the cost

621
00:28:12,400 --> 00:28:14,280
Speaker 1: of the premium, I can probably die five more of

622
00:28:14,280 --> 00:28:18,280
Speaker 1: that little thing that occasionally I enjoy and sometimes annoys me.

623
00:28:18,680 --> 00:28:20,480
Speaker 2: All right, how was that? Did I do.

624
00:28:22,080 --> 00:28:24,919
Speaker 1: I was thinking you actually said it, which is great.

625
00:28:25,520 --> 00:28:27,480
Speaker 1: I'm gonna pay for that when I get home to Mecca.

626
00:28:27,560 --> 00:28:30,760
Speaker 4: I succeeded in making you be inappropriate on the radio.

627
00:28:30,800 --> 00:28:34,920
Speaker 4: All right, well, here's the all Worth advice during open enrollment.

628
00:28:35,119 --> 00:28:38,520
Speaker 4: Don't just default to last year's choices. Review your benefits

629
00:28:38,520 --> 00:28:42,920
Speaker 4: with fresh eyes, because your situation, in all seriousness, may

630
00:28:42,960 --> 00:28:47,280
Speaker 4: have changed. Next, real questions from people like you, Questions

631
00:28:47,320 --> 00:28:51,280
Speaker 4: about selling a business, supporting parents and kids, managing an

632
00:28:51,360 --> 00:28:54,360
Speaker 4: uneven income stream, and what to do with those old

633
00:28:54,400 --> 00:28:56,080
Speaker 4: annuities you've had for years.

634
00:28:56,600 --> 00:28:59,160
Speaker 2: We'll do our best to break all of that down.

635
00:28:59,320 --> 00:29:02,400
Speaker 4: Coming up, you're listening to Simply Money, presented by all

636
00:29:02,400 --> 00:29:05,960
Speaker 4: Worth Financial on fifty five KRC, the talk station.

637
00:29:06,720 --> 00:29:09,960
Speaker 3: These eventful times for the first time in history, this

638
00:29:10,000 --> 00:29:11,920
Speaker 3: is the right time. It's time to have this fight.

639
00:29:12,000 --> 00:29:15,120
Speaker 4: Wake four eventful days, many more days like this one,

640
00:29:15,280 --> 00:29:19,560
Speaker 4: some interesting days. In any event, Socialist see of New

641
00:29:19,640 --> 00:29:22,640
Speaker 4: York City, the longest shutdown in American history.

642
00:29:22,720 --> 00:29:23,600
Speaker 3: It needs to end.

643
00:29:23,840 --> 00:29:25,840
Speaker 2: Terminate the filibuster. It's the only way you can do

644
00:29:26,080 --> 00:29:27,200
Speaker 2: challenging Trump's terrors.

645
00:29:27,360 --> 00:29:30,840
Speaker 3: The Supreme Court will rule congressional power, not a presidential powers.

646
00:29:31,000 --> 00:29:34,600
Speaker 3: Check in, keep up with the latest. Fifty five KRC

647
00:29:35,120 --> 00:29:38,320
Speaker 3: the talk station. Are welcome to here.

648
00:29:38,360 --> 00:29:40,400
Speaker 4: Why do we keep letting thousands of people come over

649
00:29:40,440 --> 00:29:41,680
Speaker 4: and do nothing about it?

650
00:29:41,760 --> 00:29:43,200
Speaker 2: My family's safety is at risk?

651
00:29:43,360 --> 00:29:46,000
Speaker 3: Fifty five KRC The talk station.

652
00:29:50,200 --> 00:29:52,960
Speaker 4: You're listening to Simply Money, presented by all Worth Financial.

653
00:29:53,000 --> 00:29:56,000
Speaker 4: I'm Bob sponseller along with Brian James. You have a

654
00:29:56,040 --> 00:29:58,560
Speaker 4: financial question you'd like for us to answer. There is

655
00:29:58,720 --> 00:30:00,840
Speaker 4: a red button you can click while you're listening to

656
00:30:00,880 --> 00:30:03,440
Speaker 4: the show. If you're listening to the show on the

657
00:30:03,480 --> 00:30:07,200
Speaker 4: iHeart app, simply record your question and it will come

658
00:30:07,280 --> 00:30:10,800
Speaker 4: straight to us. All right, Brian, get ready for Mark

659
00:30:10,880 --> 00:30:15,440
Speaker 4: in Mainville, who says, our advisor keeps pushing alternative investments.

660
00:30:15,520 --> 00:30:18,360
Speaker 4: I wonder why how do you tell the difference between

661
00:30:18,880 --> 00:30:25,040
Speaker 4: genuine diversification and just a high feel fee sales pitch. Yeah,

662
00:30:24,640 --> 00:30:26,040
Speaker 4: so what alternative is?

663
00:30:26,080 --> 00:30:28,600
Speaker 1: What that really means is it's an alternative to your

664
00:30:28,640 --> 00:30:32,120
Speaker 1: traditional stocks and bonds. So this includes private equity type investments,

665
00:30:32,120 --> 00:30:36,440
Speaker 1: hedge funds, private credit, structured notes, real estate partnerships, commodities,

666
00:30:36,440 --> 00:30:39,160
Speaker 1: those kinds of things. And these aren't necessarily bad, but

667
00:30:39,200 --> 00:30:41,560
Speaker 1: the reason it's getting kind of loud about This is

668
00:30:41,560 --> 00:30:44,640
Speaker 1: because technology and efficiencies have allowed these types of things

669
00:30:44,720 --> 00:30:47,320
Speaker 1: to be more presentable to the masses. But you want

670
00:30:47,320 --> 00:30:50,080
Speaker 1: to make sure that you're actually getting real diversification. Is

671
00:30:50,440 --> 00:30:52,440
Speaker 1: this just some kind of hedge fund that ultimately matches

672
00:30:52,480 --> 00:30:54,640
Speaker 1: the S and P five hundred, in which case it's

673
00:30:54,720 --> 00:30:55,960
Speaker 1: just an expensive index fund.

674
00:30:56,760 --> 00:30:58,440
Speaker 2: Or is it maybe just different for the sake of

675
00:30:58,480 --> 00:30:59,040
Speaker 2: being different.

676
00:30:59,240 --> 00:31:02,600
Speaker 1: So real parsification should smooth out volatility and reduce your

677
00:31:02,640 --> 00:31:04,960
Speaker 1: overall portfolio risks, so make sure that's in there.

678
00:31:05,200 --> 00:31:08,120
Speaker 2: Also, follow the fees. There's a lot of layers of fees.

679
00:31:08,200 --> 00:31:10,760
Speaker 1: Oftentimes there's one to two percent management fees, just like

680
00:31:10,800 --> 00:31:14,400
Speaker 1: in a traditional portfolio, plus performance fees. If we make

681
00:31:14,440 --> 00:31:16,480
Speaker 1: you fifty percent, we're going to keep ten percent of it,

682
00:31:16,520 --> 00:31:19,320
Speaker 1: that's a twenty percent performance fee. Those don't exist in

683
00:31:19,360 --> 00:31:20,760
Speaker 1: your more traditional type investments.

684
00:31:20,800 --> 00:31:24,560
Speaker 4: And Brian no Hield high fee sales pitch would be

685
00:31:24,600 --> 00:31:28,880
Speaker 4: complete without presenting non traded real estate investment trust.

686
00:31:28,960 --> 00:31:31,320
Speaker 1: We all love those non public traded reads that you'll

687
00:31:31,360 --> 00:31:33,720
Speaker 1: be stuck with until lock your money up for ten

688
00:31:33,760 --> 00:31:34,520
Speaker 1: plus years.

689
00:31:34,680 --> 00:31:37,080
Speaker 2: They are wonderful, absolutely wonderful things.

690
00:31:37,120 --> 00:31:39,400
Speaker 1: And the quote unquote advisor behind those got paid a

691
00:31:39,400 --> 00:31:41,520
Speaker 1: commission and will never bother talking to you about it

692
00:31:41,520 --> 00:31:43,320
Speaker 1: again because his or her job is to go find

693
00:31:43,320 --> 00:31:44,960
Speaker 1: the next person to put them in and you'll be

694
00:31:44,960 --> 00:31:48,480
Speaker 1: stuck with it forever. Anyway, now that we're biased, are

695
00:31:48,480 --> 00:31:51,360
Speaker 1: we biased? You're not at all, not at least all right,

696
00:31:51,360 --> 00:31:54,880
Speaker 1: So we're gonna move on now to Greg and Lebanon,

697
00:31:54,880 --> 00:31:57,440
Speaker 1: and Greg is looking at selling a business. Congratulations, Greg,

698
00:31:57,440 --> 00:32:00,720
Speaker 1: it must have been pretty successful over the years. Spooked

699
00:32:00,720 --> 00:32:03,040
Speaker 1: by that liquidity event and feels kind of overwhelming, and

700
00:32:03,040 --> 00:32:05,400
Speaker 1: he's asking what is the smartest way to deploy that

701
00:32:05,440 --> 00:32:07,239
Speaker 1: cash without rushing into the next big thing.

702
00:32:07,280 --> 00:32:10,640
Speaker 4: Bob, Well, Greg, you hit, you hit on the best

703
00:32:10,720 --> 00:32:15,440
Speaker 4: point here, not rushing to do anything. First of all,

704
00:32:15,760 --> 00:32:18,960
Speaker 4: congratulations on being in a position to sell a business,

705
00:32:19,000 --> 00:32:22,000
Speaker 4: which I'm assuming you worked very hard to build and

706
00:32:22,120 --> 00:32:24,960
Speaker 4: get in a position to, you know, to move on from.

707
00:32:25,040 --> 00:32:27,840
Speaker 2: And that's a big event. You should be very proud

708
00:32:27,920 --> 00:32:28,120
Speaker 2: of that.

709
00:32:28,360 --> 00:32:31,640
Speaker 4: And along with that, just take a deep breath, let

710
00:32:31,680 --> 00:32:34,880
Speaker 4: the dust settle, don't let that big chunk of cash,

711
00:32:35,080 --> 00:32:37,320
Speaker 4: you know, burn a hole in your pocket. Take some

712
00:32:37,480 --> 00:32:41,200
Speaker 4: time to just breathe and relax and get a good

713
00:32:41,240 --> 00:32:46,080
Speaker 4: team around you. A good fiduciary advisor, financial advisor, CPA attorney,

714
00:32:46,640 --> 00:32:51,320
Speaker 4: and you know, build a financial plan based on all

715
00:32:51,360 --> 00:32:54,960
Speaker 4: this newfound liquidity that you have, dovetailing that with all

716
00:32:55,040 --> 00:32:59,200
Speaker 4: of your future goals, and then slowly deploy things, you know,

717
00:32:59,320 --> 00:33:02,280
Speaker 4: to make that financial plan come to life. That's my

718
00:33:02,400 --> 00:33:05,960
Speaker 4: advice is slow down, get some good advice, and don't.

719
00:33:05,840 --> 00:33:07,800
Speaker 2: Let that cash burn a hole in your pocket.

720
00:33:07,960 --> 00:33:10,720
Speaker 4: All right, Emily and fort Wright says, we're helping support

721
00:33:10,760 --> 00:33:14,920
Speaker 4: both aging parents right now and our adult kids. How

722
00:33:14,920 --> 00:33:17,720
Speaker 4: do you plan for that kind of financial squeeze without

723
00:33:17,760 --> 00:33:20,520
Speaker 4: burning through some serious retirement savings.

724
00:33:20,600 --> 00:33:22,840
Speaker 2: Well, Emily, welcome to the Sandwich generation.

725
00:33:23,080 --> 00:33:25,760
Speaker 1: Roughly one in four adults in their forties and fifties

726
00:33:25,840 --> 00:33:28,600
Speaker 1: is now providing financial support to both an older parent

727
00:33:28,640 --> 00:33:31,400
Speaker 1: and a grown child. In the Midwest, this is having

728
00:33:31,400 --> 00:33:34,320
Speaker 1: an even bigger impact rising health care costs for parents

729
00:33:34,320 --> 00:33:36,960
Speaker 1: and housing and just a kind of overall family feel.

730
00:33:37,000 --> 00:33:39,680
Speaker 1: We stick with family. You do for family. That's what

731
00:33:39,720 --> 00:33:42,240
Speaker 1: we do here, and that's what gets expensive. So the

732
00:33:42,360 --> 00:33:45,440
Speaker 1: very first rule is put your own oxygen mask on first.

733
00:33:45,600 --> 00:33:47,800
Speaker 1: You can't do them any good if you yourself are

734
00:33:47,800 --> 00:33:50,760
Speaker 1: a mess, because you'll all wind up a mess well

735
00:33:50,800 --> 00:33:52,560
Speaker 1: down the road if you have spent your own assets

736
00:33:52,600 --> 00:33:54,560
Speaker 1: down so make sure you are in good shape. You

737
00:33:54,720 --> 00:33:57,640
Speaker 1: have to set clear boundaries with both sides. If it's

738
00:33:57,680 --> 00:34:00,400
Speaker 1: your parents, have an open conversation about long term care,

739
00:34:00,920 --> 00:34:03,120
Speaker 1: what their income sources are and what yours are, frankly,

740
00:34:03,280 --> 00:34:05,400
Speaker 1: and whether it's time to simplify their investments or do

741
00:34:05,480 --> 00:34:09,320
Speaker 1: something different for their living arrangements. Adult kids give them guidance,

742
00:34:09,400 --> 00:34:11,279
Speaker 1: not guarantees. That's the best thing you can do is

743
00:34:11,320 --> 00:34:13,600
Speaker 1: share your experience with them. They're gonna have to carry

744
00:34:13,640 --> 00:34:16,240
Speaker 1: most of their own weight. Help with budgeting, job planning,

745
00:34:16,520 --> 00:34:19,800
Speaker 1: and make sure that that support is conditional and time limited.

746
00:34:20,040 --> 00:34:21,400
Speaker 1: You'll be there to talk, but you're not going to

747
00:34:21,440 --> 00:34:24,320
Speaker 1: be an open wallet, all right. Ron and Amberley Village.

748
00:34:24,920 --> 00:34:27,040
Speaker 1: Ron says they're both self employed, and that means they

749
00:34:27,080 --> 00:34:29,839
Speaker 1: see pretty violent swings and income, and he's asking how

750
00:34:29,840 --> 00:34:32,240
Speaker 1: you build a savings and investment plan when that cash

751
00:34:32,239 --> 00:34:33,719
Speaker 1: flow is not really predictable.

752
00:34:34,600 --> 00:34:38,720
Speaker 4: Ron, My advice here is just have a larger emergency fund.

753
00:34:38,760 --> 00:34:42,879
Speaker 4: You know, most conventional wisdom says, you know, have six

754
00:34:42,920 --> 00:34:46,160
Speaker 4: to six to twelve months worth of expenses covered in

755
00:34:46,239 --> 00:34:48,560
Speaker 4: a non risk savings account at the bank.

756
00:34:48,600 --> 00:34:49,359
Speaker 2: We all know that.

757
00:34:49,480 --> 00:34:52,560
Speaker 4: I think when you own a business, you're self employed,

758
00:34:52,600 --> 00:34:54,279
Speaker 4: you got things moving around a lot.

759
00:34:54,640 --> 00:34:57,040
Speaker 2: You just need to give yourself a little more space.

760
00:34:57,160 --> 00:35:00,480
Speaker 4: So oftentimes I tell people take that six to twelve

761
00:35:00,480 --> 00:35:03,080
Speaker 4: months and make it, you know, twenty four to thirty

762
00:35:03,120 --> 00:35:05,440
Speaker 4: six months most of the time. If you if you

763
00:35:05,600 --> 00:35:07,960
Speaker 4: know you've got your nut covered, so to speak, your

764
00:35:08,000 --> 00:35:12,160
Speaker 4: basic family operating expense is covered for two to three years.

765
00:35:12,840 --> 00:35:14,920
Speaker 2: Will that will take a lot of stress off.

766
00:35:14,719 --> 00:35:18,280
Speaker 4: The table and allow your longer term capital to stay

767
00:35:18,320 --> 00:35:22,520
Speaker 4: fully invested and most importantly for you and your wife

768
00:35:22,560 --> 00:35:25,319
Speaker 4: not to stress out about short term cash flow and

769
00:35:25,400 --> 00:35:27,120
Speaker 4: just focus on running your business.

770
00:35:27,160 --> 00:35:30,000
Speaker 2: I mean, let's face it, owning a business comes.

771
00:35:29,640 --> 00:35:32,640
Speaker 4: With a lot of upside potentially, but as you said,

772
00:35:32,680 --> 00:35:35,360
Speaker 4: a lot of volatility. So just give yourself some wiggle

773
00:35:35,440 --> 00:35:39,400
Speaker 4: room here in the form of a higher emergency fund balance,

774
00:35:39,520 --> 00:35:42,000
Speaker 4: and don't worry about doing that. I know that money

775
00:35:42,040 --> 00:35:44,160
Speaker 4: is not going to be making twenty percent a year,

776
00:35:44,600 --> 00:35:47,200
Speaker 4: but you'll be glad you have it if the furnace

777
00:35:47,239 --> 00:35:50,680
Speaker 4: breaks or the car breaks down, and you just don't

778
00:35:50,680 --> 00:35:53,200
Speaker 4: need the extra stress in your life by you know,

779
00:35:53,280 --> 00:35:55,640
Speaker 4: worrying about where your next penny's gonna come from. And

780
00:35:55,640 --> 00:35:58,479
Speaker 4: you certainly don't want to get into a situation where

781
00:35:58,520 --> 00:36:01,279
Speaker 4: you're running up a big credit card balance paying you know,

782
00:36:01,360 --> 00:36:02,360
Speaker 4: twenty nine percent.

783
00:36:02,640 --> 00:36:05,120
Speaker 2: You talk about a stressor that'll cause it in a hurry.

784
00:36:05,400 --> 00:36:09,000
Speaker 4: All right, last, we've got Greg in Bellevue tonight, Brian.

785
00:36:09,080 --> 00:36:11,480
Speaker 4: He says, we've got a few old annuities sitting in

786
00:36:11,520 --> 00:36:14,520
Speaker 4: our portfolio, and honestly, we're not sure what role they

787
00:36:14,560 --> 00:36:17,560
Speaker 4: play anymore. How do you evaluate whether to keep them

788
00:36:17,640 --> 00:36:18,600
Speaker 4: or just unwind them?

789
00:36:18,719 --> 00:36:22,279
Speaker 1: Yeah, so annuities are annuities often get pitched as kind

790
00:36:22,320 --> 00:36:25,000
Speaker 1: of as evil, but that's not the case. They're just

791
00:36:25,040 --> 00:36:27,640
Speaker 1: simply complicated. They can be beneficial. There are some terrible

792
00:36:27,640 --> 00:36:29,360
Speaker 1: ones out there that are just expense and they just

793
00:36:29,400 --> 00:36:31,680
Speaker 1: exist for the insurance company to be happy. But it

794
00:36:31,680 --> 00:36:34,080
Speaker 1: depends on what these are. If these are simple fixed annuities,

795
00:36:34,080 --> 00:36:37,799
Speaker 1: and maybe you're beyond the surrender period where you could

796
00:36:37,800 --> 00:36:39,440
Speaker 1: pull the money if you wanted to look at the

797
00:36:39,480 --> 00:36:41,600
Speaker 1: interest rate and if you need, if you need an

798
00:36:41,600 --> 00:36:43,799
Speaker 1: emergency type fund and it's paying a decent rate, as

799
00:36:43,800 --> 00:36:46,320
Speaker 1: they often do, then maybe it just sits leave it alone.

800
00:36:46,400 --> 00:36:48,080
Speaker 1: You don't have a surrender period to worry about, so

801
00:36:48,120 --> 00:36:51,120
Speaker 1: you got past the painful part. Contrast that with if

802
00:36:51,120 --> 00:36:53,200
Speaker 1: it's a if it's an annuity that has say, income

803
00:36:53,280 --> 00:36:55,719
Speaker 1: riders on it that are a little more complicated, then

804
00:36:55,800 --> 00:36:57,960
Speaker 1: generally you're gonna want to turn those on as soon

805
00:36:58,000 --> 00:37:00,960
Speaker 1: as possible, you know, if you're going to use them,

806
00:37:01,000 --> 00:37:04,000
Speaker 1: because that's the way you'll you'll maybe benefit from those

807
00:37:04,160 --> 00:37:07,000
Speaker 1: from the insurance companies guarantee. But understand how the math

808
00:37:07,040 --> 00:37:09,040
Speaker 1: works and understand whether you should leave it in there

809
00:37:09,239 --> 00:37:12,359
Speaker 1: at all, because you can get out of those once

810
00:37:12,360 --> 00:37:13,799
Speaker 1: you're out of that surrender period. You can get at

811
00:37:13,840 --> 00:37:15,920
Speaker 1: them without paying any fees, taxes. You got to be

812
00:37:15,960 --> 00:37:17,840
Speaker 1: careful of certainly understand what that impact is.

813
00:37:18,239 --> 00:37:20,600
Speaker 4: All right, coming up next, I've got my two cents

814
00:37:20,640 --> 00:37:25,120
Speaker 4: on a couple of nuances here to social security claiming strategies.

815
00:37:25,160 --> 00:37:27,600
Speaker 4: You're listening to Simply Money presented about all Worth Financial

816
00:37:27,640 --> 00:37:31,600
Speaker 4: on fifty five KRC the talk station. There's a lot

817
00:37:31,640 --> 00:37:34,640
Speaker 4: of stuff happening, military occupation in our city. Well we're

818
00:37:34,680 --> 00:37:36,920
Speaker 4: going in I'm seeing government shutdown.

819
00:37:36,520 --> 00:37:39,480
Speaker 3: And you got a lot of stuff to do, so work, stuff.

820
00:37:39,280 --> 00:37:41,120
Speaker 5: You kids, sports stuff, stuff around the house.

821
00:37:41,280 --> 00:37:44,160
Speaker 3: So we'll stuff it all into news updates. People are

822
00:37:44,200 --> 00:37:45,960
Speaker 3: wise to this stuff, you know at.

823
00:37:45,840 --> 00:37:48,160
Speaker 4: The top ended bottom of the hour for store, law

824
00:37:48,239 --> 00:37:50,680
Speaker 4: and order, public health, a change in the weather.

825
00:37:50,800 --> 00:37:52,919
Speaker 3: President of booth and he knows where I stand. Check

826
00:37:52,960 --> 00:37:54,640
Speaker 3: you in. Often's a new day, it's a different day

827
00:37:54,719 --> 00:37:56,640
Speaker 3: for all this stuff you need to know. Fifty five

828
00:37:56,719 --> 00:37:58,520
Speaker 3: krs the talk station.

829
00:37:59,280 --> 00:38:01,680
Speaker 4: Hey, Brian, tell me I am so worried that next

830
00:38:01,680 --> 00:38:04,000
Speaker 4: month I have to choose between groceries for my kids

831
00:38:04,160 --> 00:38:05,200
Speaker 4: or gas for my car.

832
00:38:05,400 --> 00:38:08,880
Speaker 3: Talk about it here fifty five KRC the talk station.

833
00:38:12,640 --> 00:38:14,600
Speaker 4: You're listening to Simply Money said of by all Worth

834
00:38:14,680 --> 00:38:18,480
Speaker 4: Financial on Bob Sponseller along with Brian James. Brian, I

835
00:38:18,560 --> 00:38:20,880
Speaker 4: want to talk about a meeting I actually had yesterday

836
00:38:21,280 --> 00:38:25,520
Speaker 4: with a single lady who just turned sixty five, she's

837
00:38:25,520 --> 00:38:28,000
Speaker 4: going to be sixty six next year, and talking about

838
00:38:28,239 --> 00:38:30,040
Speaker 4: you know, how to take and when to take her

839
00:38:30,040 --> 00:38:32,879
Speaker 4: social Security and it just when we when we pulled

840
00:38:32,880 --> 00:38:35,200
Speaker 4: out the tax software and we started looking at the

841
00:38:35,239 --> 00:38:39,320
Speaker 4: implication implications of different decisions. Things have gotten a little

842
00:38:39,320 --> 00:38:42,759
Speaker 4: more complex here with the new tax lash legislation that

843
00:38:42,800 --> 00:38:44,799
Speaker 4: came out earlier this year, and I just want to

844
00:38:44,880 --> 00:38:47,960
Speaker 4: highlight that here, you know, to close things out tonight,

845
00:38:48,920 --> 00:38:51,319
Speaker 4: because now you've got a factor in two things. At

846
00:38:51,320 --> 00:38:55,040
Speaker 4: what threshold does your income cause most, if not all,

847
00:38:55,120 --> 00:38:58,200
Speaker 4: of your tax your Social Security be to be treated

848
00:38:58,239 --> 00:39:02,000
Speaker 4: as taxable income. And then we've we also have that

849
00:39:02,239 --> 00:39:06,319
Speaker 4: enhanced Senior deduction for folks sixty five and older. That's

850
00:39:06,320 --> 00:39:09,920
Speaker 4: a deduction of six thousand dollars for single taxpayers, twelve

851
00:39:09,960 --> 00:39:14,440
Speaker 4: thousand dollars for married filing joint You know, this is

852
00:39:14,440 --> 00:39:17,040
Speaker 4: what the President and others when they talked about Social

853
00:39:17,040 --> 00:39:19,120
Speaker 4: Security being tax free.

854
00:39:18,880 --> 00:39:21,399
Speaker 2: Eh, kind of, but there's a phase out here.

855
00:39:21,680 --> 00:39:23,799
Speaker 4: So you got to take a look at you know,

856
00:39:23,840 --> 00:39:26,960
Speaker 4: when you take Social Security how that dovetails with your

857
00:39:27,000 --> 00:39:31,040
Speaker 4: other income. Because in this case, waiting a couple of

858
00:39:31,120 --> 00:39:34,040
Speaker 4: months kept that we're gonna keep this lady from we're

859
00:39:34,040 --> 00:39:36,720
Speaker 4: gonna keep her in a twelve percent marginal tax bracket

860
00:39:36,760 --> 00:39:39,800
Speaker 4: next year instead of jumping into a twenty three percent

861
00:39:39,880 --> 00:39:42,520
Speaker 4: tax bracket because of some of the phase outs and

862
00:39:42,560 --> 00:39:43,920
Speaker 4: tax ability of Social Security.

863
00:39:44,000 --> 00:39:45,640
Speaker 2: Yeah, so I want to make sure you mentioned the

864
00:39:45,640 --> 00:39:46,040
Speaker 2: phase out.

865
00:39:46,120 --> 00:39:47,600
Speaker 1: Let's talk about what that is because a lot of

866
00:39:47,600 --> 00:39:50,400
Speaker 1: people just heard cool six thousand dollars deduction twelve thousand

867
00:39:51,000 --> 00:39:53,040
Speaker 1: single filers, you're gonna lose the ability to do that.

868
00:39:53,040 --> 00:39:56,480
Speaker 1: If you're modified adjusted gross is below seventy five thousand,

869
00:39:57,520 --> 00:39:59,320
Speaker 1: you're gonna lose out. If you're married, if it's a

870
00:39:59,360 --> 00:40:01,600
Speaker 1: I'm sorry, above seventy five, and if you're married, you

871
00:40:01,680 --> 00:40:03,480
Speaker 1: lose it if you're above one hundred and fifty.

872
00:40:03,960 --> 00:40:06,440
Speaker 4: So just get with your CPA, get with your advisor

873
00:40:06,520 --> 00:40:09,520
Speaker 4: and make sure you're not surprised here by the taxability

874
00:40:10,040 --> 00:40:12,680
Speaker 4: of your entire situation when it comes to Social Security.

875
00:40:12,719 --> 00:40:15,240
Speaker 4: Thanks for listening tonight. You've been listening to Simply Money,

876
00:40:15,400 --> 00:40:18,520
Speaker 4: presented by all Worth Financial on fifty five KRC, the

877
00:40:18,560 --> 00:40:19,080
Speaker 4: talk station.

878
00:40:21,000 --> 00:40:21,919
Speaker 3: In the morning, we.

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Speaker 2: Have breaking news coming to you live right now.

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Speaker 3: During lunch, beautiful afternoon before heading into winter.

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Speaker 4: Maybe you want to get out and play some tennis

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Speaker 4: or some pickleball at work.

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Speaker 3: After a few big moves by the government today, the

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Speaker 3: stock market is on a clear game.

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Speaker 2: On the way home, ed, we have an accident blowing

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Speaker 2: things down on the freeway at home. Stunning events today.

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Speaker 4: We will have the late news coming up whatever the time,

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Speaker 4: wherever you may be, when you need us, Weird there

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Speaker 4: fifty five KRS, the Talk station

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Speaker 2: All right, holiday time is