1 00:00:05,880 --> 00:00:09,840 Speaker 1: Tonight, a deeper dive into the Fed's latest interest rate cut, 2 00:00:09,880 --> 00:00:13,480 Speaker 1: plus how to unlock those golden handcuffs, and a lesson 3 00:00:13,520 --> 00:00:16,840 Speaker 1: on faith based investing. You're listening to Simply Money, presented 4 00:00:16,840 --> 00:00:20,720 Speaker 1: by all Worth Financial umbob Sponsller along with Brian James. Well, 5 00:00:20,800 --> 00:00:23,480 Speaker 1: yesterday we told you that the FED lowered interest rates 6 00:00:23,480 --> 00:00:26,680 Speaker 1: by a quarter of a percent to no one's surprise. 7 00:00:27,360 --> 00:00:30,280 Speaker 1: Let's spend a couple of minutes dissecting what Fed chaired 8 00:00:30,320 --> 00:00:34,360 Speaker 1: Jerome pal actually said after the FED announcement to gather 9 00:00:34,479 --> 00:00:37,240 Speaker 1: some clues on what might be coming up next. 10 00:00:37,240 --> 00:00:41,400 Speaker 2: Brian, Yeah, while the actual rate cut or hike or 11 00:00:41,440 --> 00:00:44,440 Speaker 2: whatever the interest rate update is is rarely the headline itself. 12 00:00:44,560 --> 00:00:45,760 Speaker 3: Usually we kind of see it come in. 13 00:00:45,800 --> 00:00:48,680 Speaker 2: So it's more about what we're saying in between the lines, 14 00:00:49,040 --> 00:00:51,800 Speaker 2: or in this particular case, exactly precisely o the words 15 00:00:51,800 --> 00:00:54,280 Speaker 2: that came out of his face. So the major takeaway 16 00:00:54,320 --> 00:00:56,960 Speaker 2: from Chair Powell was this quote quote and I am 17 00:00:57,040 --> 00:00:59,640 Speaker 2: quoting here, I can no longer say the labor market 18 00:00:59,680 --> 00:01:01,040 Speaker 2: is very solid end quote. 19 00:01:01,320 --> 00:01:01,880 Speaker 1: So what he was. 20 00:01:01,800 --> 00:01:04,560 Speaker 2: Saying is telling the reporters that labor demand has softened 21 00:01:04,600 --> 00:01:07,560 Speaker 2: and the recent pace of job creation seems to be 22 00:01:07,720 --> 00:01:10,120 Speaker 2: currently running below the break even rate that we need 23 00:01:10,160 --> 00:01:12,640 Speaker 2: to keep that unemployment rate constant. Remember that's the Fed's 24 00:01:12,720 --> 00:01:15,640 Speaker 2: dual mandate keep unemployment where we need as low as 25 00:01:15,640 --> 00:01:18,800 Speaker 2: possible without being zero, and also keep inflation under control. 26 00:01:18,840 --> 00:01:22,200 Speaker 1: Well, my answer to that is no kidding. When you 27 00:01:22,240 --> 00:01:26,880 Speaker 1: get a job's revision revising down almost a million jobs 28 00:01:27,520 --> 00:01:30,240 Speaker 1: between April of twenty twenty four in March of twenty 29 00:01:30,280 --> 00:01:33,679 Speaker 1: twenty five, it's no doubt. It shouldn't come as anyone's 30 00:01:33,720 --> 00:01:38,160 Speaker 1: surprise that Fed Palace saying the labor market is not 31 00:01:38,360 --> 00:01:40,360 Speaker 1: very solid. I mean this goes back to what we've 32 00:01:40,360 --> 00:01:43,640 Speaker 1: talked about a few times now. And I'm trying to 33 00:01:43,640 --> 00:01:46,600 Speaker 1: be a political and I mean this, it doesn't matter 34 00:01:47,120 --> 00:01:49,720 Speaker 1: who's in the White House or whatever. The data that 35 00:01:49,760 --> 00:01:53,480 Speaker 1: we're getting from the Bureau of Labor Statistics is flawed. 36 00:01:54,120 --> 00:01:57,040 Speaker 1: And it's just baffling to me why we can't use 37 00:01:57,080 --> 00:02:00,920 Speaker 1: the internet in twenty twenty five and collect better data 38 00:02:01,480 --> 00:02:04,760 Speaker 1: so the Federal Reserve, you know, can actually stay on 39 00:02:04,800 --> 00:02:07,320 Speaker 1: top of this stuff. But there's my little rant for 40 00:02:07,360 --> 00:02:08,240 Speaker 1: a Thursday morning. 41 00:02:08,600 --> 00:02:10,919 Speaker 2: No, I think you're spot on. I'm a huge fan 42 00:02:10,960 --> 00:02:13,720 Speaker 2: of actual data. My brain works that way because I 43 00:02:13,720 --> 00:02:15,760 Speaker 2: don't like I don't like sitting with a client and 44 00:02:15,800 --> 00:02:17,840 Speaker 2: making up a financial plan on the fly. I want 45 00:02:17,960 --> 00:02:19,800 Speaker 2: numbers in front of my face so that we know 46 00:02:19,840 --> 00:02:21,720 Speaker 2: what the numbers are there. That numbers are always the 47 00:02:21,720 --> 00:02:23,800 Speaker 2: elephant in the room. Are we right or are we wrong? Well, 48 00:02:23,880 --> 00:02:25,640 Speaker 2: let's get the right numbers. I have a thousand percent 49 00:02:25,680 --> 00:02:27,240 Speaker 2: agree with you, Bob. Let's get the right numbers and 50 00:02:27,280 --> 00:02:29,680 Speaker 2: react to them accordingly. And that goes to whether I'm 51 00:02:29,720 --> 00:02:31,880 Speaker 2: sitting in front of an individual person or a married couple, 52 00:02:32,240 --> 00:02:34,520 Speaker 2: or three hundred and thirty million people in this in 53 00:02:34,560 --> 00:02:35,120 Speaker 2: this country. 54 00:02:35,360 --> 00:02:37,640 Speaker 3: That's all right, Sorry that our government view it. 55 00:02:37,880 --> 00:02:41,800 Speaker 1: Yeah, sorry to digress there. Talk about what happens next? Well, 56 00:02:41,880 --> 00:02:43,799 Speaker 1: where do you where do you see the dot plot 57 00:02:43,840 --> 00:02:44,399 Speaker 1: headed here? 58 00:02:45,440 --> 00:02:47,240 Speaker 2: Now you're talking to me like a Mandy stout, But 59 00:02:47,280 --> 00:02:48,400 Speaker 2: my brain is not that big. 60 00:02:49,600 --> 00:02:51,440 Speaker 3: But yeah, well, what we're talking about here, So the 61 00:02:51,480 --> 00:02:52,440 Speaker 3: dot plot, So the. 62 00:02:52,800 --> 00:02:55,440 Speaker 2: Dot plot is is basically every time we get an 63 00:02:55,480 --> 00:02:57,720 Speaker 2: update from the Federal Reserve. Remember there's a board of 64 00:02:57,720 --> 00:02:59,280 Speaker 2: governors here, there's not we have we have the head 65 00:02:59,280 --> 00:03:01,840 Speaker 2: of the Federal Reserve, Droum Palell, but we also have 66 00:03:02,000 --> 00:03:04,000 Speaker 2: the rest of the Board of Governors, who all have 67 00:03:04,080 --> 00:03:07,679 Speaker 2: their own opinions. The dot plot tracks what those opinions are, 68 00:03:08,040 --> 00:03:09,840 Speaker 2: and that can tell us, you know, kind of where 69 00:03:09,880 --> 00:03:12,400 Speaker 2: everybody stands when all those votes come through around the 70 00:03:12,440 --> 00:03:12,760 Speaker 2: next time. 71 00:03:12,919 --> 00:03:14,600 Speaker 3: Is everybody in a good mood, bad mood, whatever. 72 00:03:15,000 --> 00:03:18,280 Speaker 2: So the policymakers updated their economic projections this time around, 73 00:03:18,320 --> 00:03:21,840 Speaker 2: and they now see two additional quarter point cuts this year. 74 00:03:22,360 --> 00:03:25,320 Speaker 2: That's one more than projected in June. So, in other words, 75 00:03:25,360 --> 00:03:26,840 Speaker 2: that's why we do the dot plot. By the way, 76 00:03:26,880 --> 00:03:29,120 Speaker 2: we knew what they were thinking in June, and we 77 00:03:29,160 --> 00:03:31,800 Speaker 2: know what they're thinking now. And there's an increasing number 78 00:03:31,800 --> 00:03:35,080 Speaker 2: of those of Fed Board governors looking for rate cuts 79 00:03:35,120 --> 00:03:38,800 Speaker 2: in twenty twenty six and another one to hear twenty seven. 80 00:03:39,760 --> 00:03:42,920 Speaker 1: Yeah, I think we should all ignore those forecasts for 81 00:03:43,000 --> 00:03:45,480 Speaker 1: a quarter point cut in twenty twenty six and twenty 82 00:03:45,520 --> 00:03:48,600 Speaker 1: twenty seven, because no one knows what's going to happen 83 00:03:48,640 --> 00:03:51,760 Speaker 1: between now and then. You know, to me, Brian, correct 84 00:03:51,760 --> 00:03:53,600 Speaker 1: me if you think I'm wrong. I think the two 85 00:03:53,720 --> 00:03:58,040 Speaker 1: additional quarter point cuts that are likely coming, you know, 86 00:03:58,120 --> 00:03:59,840 Speaker 1: before the end of this year, have to do with 87 00:04:00,040 --> 00:04:03,640 Speaker 1: two things. Inflation due to tariffs is coming in a 88 00:04:03,680 --> 00:04:07,640 Speaker 1: little less hot than expected, and these labor numbers are 89 00:04:07,680 --> 00:04:10,600 Speaker 1: coming in worse than expected, so it would make sense 90 00:04:10,680 --> 00:04:13,920 Speaker 1: that we cut rates, you know, an additional quarter point 91 00:04:14,000 --> 00:04:16,040 Speaker 1: two more times going into the end of the year. 92 00:04:16,160 --> 00:04:18,640 Speaker 1: That you know, to the point I think you're driving 93 00:04:18,680 --> 00:04:23,200 Speaker 1: home here. That's what good data based to research and 94 00:04:23,240 --> 00:04:27,440 Speaker 1: decision making should look like. And the markets factoring that in, 95 00:04:27,680 --> 00:04:31,520 Speaker 1: and we saw futures headed higher this morning. So hey, 96 00:04:31,560 --> 00:04:34,279 Speaker 1: anytime the cost of money comes down, that tends to 97 00:04:34,279 --> 00:04:37,400 Speaker 1: be a good thing for consumers and the stock market 98 00:04:37,839 --> 00:04:40,320 Speaker 1: and everyone's let's have a great fourth quarter. 99 00:04:40,839 --> 00:04:42,400 Speaker 3: Yeah. Now, I want to throw out one thought there. 100 00:04:42,480 --> 00:04:44,880 Speaker 2: I agree with you in terms of I wouldn't I 101 00:04:44,880 --> 00:04:47,880 Speaker 2: don't want I don't agree with ignoring the dot plot. 102 00:04:47,920 --> 00:04:49,400 Speaker 2: And I don't think this is really what you were saying. 103 00:04:49,680 --> 00:04:52,200 Speaker 2: I think we should be careful and not treated as gospel. 104 00:04:52,520 --> 00:04:54,480 Speaker 2: All it is is, here's where we stand right now, 105 00:04:54,480 --> 00:04:55,760 Speaker 2: here's what we're going to do today. That was the 106 00:04:55,839 --> 00:04:58,200 Speaker 2: rate cut boom. That's black and white. The dot plot 107 00:04:58,320 --> 00:05:00,240 Speaker 2: just helps us. No, here's what's in their minds, because 108 00:05:00,240 --> 00:05:02,240 Speaker 2: they're going to be just because we only hear from them, 109 00:05:02,279 --> 00:05:04,320 Speaker 2: you know, once a month or however often they have 110 00:05:04,360 --> 00:05:06,839 Speaker 2: meeting doesn't mean they're not thinking about it in between time. 111 00:05:07,080 --> 00:05:07,760 Speaker 3: That's their job. 112 00:05:07,760 --> 00:05:09,640 Speaker 2: We've got a bunch of people who make these decisions. 113 00:05:09,800 --> 00:05:12,280 Speaker 2: The dot plot tells us what are they thinking right 114 00:05:12,320 --> 00:05:14,760 Speaker 2: now any given time, and it does change. Like we said, 115 00:05:14,800 --> 00:05:17,400 Speaker 2: you know, in June there was there was less of 116 00:05:17,400 --> 00:05:19,880 Speaker 2: an expectation of further rate cuts. Now there is more 117 00:05:19,880 --> 00:05:22,599 Speaker 2: of an expectation, and that actually matches. Like you said, 118 00:05:22,680 --> 00:05:25,080 Speaker 2: that matches what we're seeing in these jobs numbers. We 119 00:05:25,160 --> 00:05:26,800 Speaker 2: are now in an environment where it makes sense to 120 00:05:26,800 --> 00:05:29,000 Speaker 2: do rate cuts. And one here, let me throw one 121 00:05:29,000 --> 00:05:31,400 Speaker 2: out here. One Fed official, this is only one of them, 122 00:05:31,640 --> 00:05:34,039 Speaker 2: actually projected that the policy rate's going to drop another 123 00:05:34,160 --> 00:05:37,680 Speaker 2: one and a quarter percentage points by December. That's mind blowing, 124 00:05:37,680 --> 00:05:39,760 Speaker 2: and that's kind of way out there for me. That 125 00:05:39,800 --> 00:05:43,000 Speaker 2: would be literally five more rate cuts between now and 126 00:05:43,040 --> 00:05:44,560 Speaker 2: the end of the year. I don't see that at all. 127 00:05:44,640 --> 00:05:47,080 Speaker 2: But I'm also not a FED official, so somebody else. 128 00:05:46,960 --> 00:05:49,520 Speaker 1: Well, I don't know who that Fed governor was. I 129 00:05:50,400 --> 00:05:53,119 Speaker 1: have to assume it was the newly sworn in FED 130 00:05:53,160 --> 00:05:56,520 Speaker 1: Governor Stephen Moran, who voted for a half point rate 131 00:05:56,560 --> 00:06:00,840 Speaker 1: cut yesterday. It's no secret that he's an appointee of 132 00:06:00,880 --> 00:06:03,560 Speaker 1: President Trump. He wants these rates to come down. I 133 00:06:03,640 --> 00:06:05,760 Speaker 1: have to think that's the guy that you know is saying, 134 00:06:05,800 --> 00:06:07,600 Speaker 1: I think they're gonna come down a point and a half. 135 00:06:07,839 --> 00:06:11,840 Speaker 1: I don't see it happening. But let's pivot here. Let's 136 00:06:11,839 --> 00:06:15,200 Speaker 1: talk about what we should be doing with our cash. 137 00:06:15,360 --> 00:06:18,039 Speaker 1: I'm looking at the treasury yield curve right now, and 138 00:06:18,080 --> 00:06:20,960 Speaker 1: it's very interesting. I mean, the one month treasuries are 139 00:06:21,040 --> 00:06:24,440 Speaker 1: yielding still over four percent, and then you have an 140 00:06:24,520 --> 00:06:27,800 Speaker 1: inverted yield curve all going all the way out to 141 00:06:28,240 --> 00:06:31,279 Speaker 1: the ten year treasury, which is sitting a little over 142 00:06:31,520 --> 00:06:35,560 Speaker 1: four point one percent. So I don't think in my mind, Brian, 143 00:06:35,839 --> 00:06:39,080 Speaker 1: nothing has changed in terms of how to manage cash. 144 00:06:39,320 --> 00:06:42,000 Speaker 1: You got to look at your short term lump some 145 00:06:42,200 --> 00:06:46,880 Speaker 1: spending needs and get money out of harm's way into 146 00:06:46,920 --> 00:06:49,800 Speaker 1: the market. If you've got short term goals, you can 147 00:06:49,880 --> 00:06:53,440 Speaker 1: still get close to or right at four percent on 148 00:06:53,640 --> 00:06:56,839 Speaker 1: risk free short term money for money that is designed 149 00:06:56,839 --> 00:07:00,280 Speaker 1: by those for those kind of purposes. Really nothing has 150 00:07:00,400 --> 00:07:03,080 Speaker 1: changed here in terms of, you know, the need to 151 00:07:03,240 --> 00:07:06,960 Speaker 1: really make drastic changes as far as how we manage 152 00:07:06,960 --> 00:07:09,560 Speaker 1: our emergency funds and cash needs. 153 00:07:10,120 --> 00:07:13,080 Speaker 3: Yeah, yeah, I think these are important points, Bob. 154 00:07:13,120 --> 00:07:15,680 Speaker 2: I'm glad you're bringing it up because, and I would say, 155 00:07:15,960 --> 00:07:17,320 Speaker 2: there's probably a lot of people. I know there's a 156 00:07:17,320 --> 00:07:18,640 Speaker 2: lot of people out there because I see this at 157 00:07:18,640 --> 00:07:21,040 Speaker 2: my table every single day meeting with clients. If you're 158 00:07:21,080 --> 00:07:23,040 Speaker 2: sitting on a pile of cash, right, A lot of 159 00:07:23,080 --> 00:07:25,520 Speaker 2: times we come into windfalls inheritances or we sold some 160 00:07:25,600 --> 00:07:27,600 Speaker 2: asset or something, and there's a pile of cash, and 161 00:07:27,640 --> 00:07:29,400 Speaker 2: a lot of people have been fact dumb and happy 162 00:07:29,400 --> 00:07:30,840 Speaker 2: with a big pile of cash in the bank and 163 00:07:30,880 --> 00:07:33,120 Speaker 2: we're riding high because the stock market is currently as 164 00:07:33,160 --> 00:07:35,640 Speaker 2: we're sitting here, at all time highs. But what that 165 00:07:35,680 --> 00:07:38,000 Speaker 2: can do, the move you haven't made that you should 166 00:07:38,040 --> 00:07:40,240 Speaker 2: have and it shouldn't have taken a rate cut to 167 00:07:40,320 --> 00:07:44,400 Speaker 2: do it is is thinking logically about your cash, the truly, truly, 168 00:07:44,440 --> 00:07:47,280 Speaker 2: truly liquid stuff. Don't fall asleep with the notion that 169 00:07:47,320 --> 00:07:48,920 Speaker 2: I can just throw in the bank and get four percent. 170 00:07:48,920 --> 00:07:50,280 Speaker 3: I haven't had that in my entire life. 171 00:07:50,320 --> 00:07:52,560 Speaker 2: That's true. But at the same time, you're going to 172 00:07:52,640 --> 00:07:54,760 Speaker 2: lose that four percent. So what I'm really getting at 173 00:07:54,760 --> 00:07:56,880 Speaker 2: here is figure out what you truly, truly need to 174 00:07:56,880 --> 00:07:59,920 Speaker 2: have liquid for what Bob just said, you've got expenses 175 00:08:00,000 --> 00:08:01,520 Speaker 2: coup we know you're going to spend money in a 176 00:08:01,600 --> 00:08:03,760 Speaker 2: very short period of time, then that's fine, leave that liquid. 177 00:08:03,880 --> 00:08:06,000 Speaker 2: But if you've got a bigger pile than that and 178 00:08:06,200 --> 00:08:08,280 Speaker 2: beyond what you need for your your six to twelve 179 00:08:08,320 --> 00:08:10,880 Speaker 2: months emergency funds and whatever projects you've got coming up, 180 00:08:11,120 --> 00:08:12,560 Speaker 2: that should mean and if you truly want it to 181 00:08:12,600 --> 00:08:14,400 Speaker 2: be safe, that ought to be getting locked up in 182 00:08:14,440 --> 00:08:16,840 Speaker 2: a treasury bond, a CD or something. Take advantage of 183 00:08:16,840 --> 00:08:19,760 Speaker 2: these rates and lock them in, right, that's the opportunity 184 00:08:19,760 --> 00:08:21,920 Speaker 2: you might be missing. But that advice is not different 185 00:08:22,080 --> 00:08:23,760 Speaker 2: just because we had a rate cut. You should have 186 00:08:23,800 --> 00:08:24,560 Speaker 2: done that a while ago. 187 00:08:25,000 --> 00:08:27,680 Speaker 1: Absolutely, you're listening to Simply Money, presented by all Worth 188 00:08:27,680 --> 00:08:31,119 Speaker 1: Financial on Bob spun Seller along with Brian James. All Right, Brian, 189 00:08:31,200 --> 00:08:34,160 Speaker 1: let's pivot to something that's going to impact just about 190 00:08:34,240 --> 00:08:38,160 Speaker 1: everybody collecting Social Security, and that's the upcoming cost of 191 00:08:38,280 --> 00:08:43,520 Speaker 1: Living adjustment for twenty twenty six. And that news is 192 00:08:43,559 --> 00:08:46,880 Speaker 1: scheduled to come out on October fifteenth, and that datea 193 00:08:46,880 --> 00:08:49,600 Speaker 1: is creeping up here. That's because that's when the Social 194 00:08:49,640 --> 00:08:54,760 Speaker 1: Security Administration officially announces what are you know, twenty twenty 195 00:08:54,800 --> 00:08:57,800 Speaker 1: six RAIS is going to be. And while the headlines 196 00:08:57,840 --> 00:09:01,760 Speaker 1: will likely say, you know, quote unquote historic increase, the 197 00:09:01,840 --> 00:09:06,320 Speaker 1: reality it's a little more complicated than that, Brian, and yeah, 198 00:09:06,400 --> 00:09:08,800 Speaker 1: walk us through this, because there's some nuances to this 199 00:09:09,320 --> 00:09:11,960 Speaker 1: that people might not be completely aware of. 200 00:09:12,600 --> 00:09:13,840 Speaker 3: Yeah, so here's what's happening. 201 00:09:14,320 --> 00:09:16,760 Speaker 2: So, for the fifth year in a row, social Security 202 00:09:16,800 --> 00:09:18,960 Speaker 2: is cost of living adjustment or COLA is what that 203 00:09:19,000 --> 00:09:22,280 Speaker 2: stands for, is expected to hit a right around at 204 00:09:22,360 --> 00:09:24,600 Speaker 2: least two and a half percent, could be slightly higher. 205 00:09:24,880 --> 00:09:26,360 Speaker 3: That hasn't happened since the nineties. 206 00:09:26,400 --> 00:09:28,680 Speaker 2: We're talking about a stretch from nineteen eighty eight to 207 00:09:28,720 --> 00:09:31,840 Speaker 2: nineteen ninety seven where those colas were consistently that high. 208 00:09:32,000 --> 00:09:34,880 Speaker 2: We really haven't seen that inflation driven bump in almost 209 00:09:34,920 --> 00:09:35,320 Speaker 2: three decades. 210 00:09:35,320 --> 00:09:36,679 Speaker 3: And now let me kind of clarify. 211 00:09:36,280 --> 00:09:38,160 Speaker 2: What I just said, because a lot of people are 212 00:09:38,200 --> 00:09:40,079 Speaker 2: disappointed that they just heard me say two and a 213 00:09:40,120 --> 00:09:43,320 Speaker 2: half percent, because everybody got super excited about those nine 214 00:09:43,360 --> 00:09:46,600 Speaker 2: percent increases that we got a few years ago when 215 00:09:46,640 --> 00:09:48,439 Speaker 2: inflation was absolutely on fire. 216 00:09:48,679 --> 00:09:51,040 Speaker 3: That's not a good thing. That's not a sustainable pace. 217 00:09:51,080 --> 00:09:55,520 Speaker 2: It was nice that that got built into our beneficiaries checks, 218 00:09:55,640 --> 00:09:59,880 Speaker 2: but at the same time not sustainable. So the inc 219 00:10:00,000 --> 00:10:03,120 Speaker 2: preases that we're seeing are higher than average. But the point, 220 00:10:03,120 --> 00:10:05,360 Speaker 2: the historic point of this is that we're back to 221 00:10:05,480 --> 00:10:09,840 Speaker 2: a consistent level of higher, slightly higher increases versus the 222 00:10:09,880 --> 00:10:12,079 Speaker 2: absolute lack of increases that we have for a good 223 00:10:12,120 --> 00:10:14,920 Speaker 2: long period of time, you know, about fifteen years ago 224 00:10:14,960 --> 00:10:16,880 Speaker 2: up until you know three for five years. 225 00:10:17,480 --> 00:10:20,120 Speaker 1: Well it's all peg to inflation, right, so you know, 226 00:10:20,160 --> 00:10:24,720 Speaker 1: people could celebrate nine percent increases, but when inflation is 227 00:10:24,800 --> 00:10:27,440 Speaker 1: nine percent, you're not gaining any ground. Here's what I 228 00:10:27,520 --> 00:10:30,560 Speaker 1: want to make sure we cover here. And you know, 229 00:10:30,720 --> 00:10:34,200 Speaker 1: with a with a two point seven whatever percent social 230 00:10:34,240 --> 00:10:38,240 Speaker 1: Security increase that we're going to get on average, that's 231 00:10:38,000 --> 00:10:40,880 Speaker 1: that's going to be around fifty four dollars a month 232 00:10:41,400 --> 00:10:45,480 Speaker 1: for the average you know social Security beneficiaries starting in January. 233 00:10:46,000 --> 00:10:50,080 Speaker 1: Not a big deal. Here's the big deal. Medicare Part 234 00:10:50,160 --> 00:10:54,600 Speaker 1: B premiums, which are automatically deducted from solid security checks. 235 00:10:54,960 --> 00:10:57,720 Speaker 1: Those are expected to jump by eleven and a half 236 00:10:57,800 --> 00:11:03,320 Speaker 1: percent in twenty twenty six. So really, Brian people aren't 237 00:11:03,320 --> 00:11:05,440 Speaker 1: going to get any kind of a raise at all. 238 00:11:05,480 --> 00:11:09,320 Speaker 1: Next year, their net social Security check is likely going 239 00:11:09,400 --> 00:11:12,559 Speaker 1: to go down because of the social security premium. 240 00:11:12,240 --> 00:11:15,040 Speaker 2: Increase, right, and Bob, I want to throw out one 241 00:11:15,040 --> 00:11:17,320 Speaker 2: more bullet that we found here, because I just I 242 00:11:17,640 --> 00:11:20,480 Speaker 2: love this concept of this organization. I'm derailing slightly, but 243 00:11:20,480 --> 00:11:21,920 Speaker 2: I wanted to squeeze this one in when I first 244 00:11:21,960 --> 00:11:24,480 Speaker 2: read it. So there's an organization out there called the 245 00:11:24,520 --> 00:11:27,840 Speaker 2: Senior Citizens League, which entertains me to no end because 246 00:11:27,840 --> 00:11:29,679 Speaker 2: I picture something like the Hall of Justice with a 247 00:11:29,679 --> 00:11:31,360 Speaker 2: bunch of rocking chairs in front of it, with people 248 00:11:31,400 --> 00:11:33,920 Speaker 2: doling out advice that the rest of us, well, we 249 00:11:34,080 --> 00:11:36,360 Speaker 2: will realize was very good, but we didn't pay attention 250 00:11:36,400 --> 00:11:36,959 Speaker 2: to it early enough. 251 00:11:37,000 --> 00:11:39,040 Speaker 3: But anyway, they sound like superheroes to me. Anyway. 252 00:11:39,080 --> 00:11:42,240 Speaker 2: They So this opinion is not relegated only to the 253 00:11:42,280 --> 00:11:44,680 Speaker 2: Federal Reserve. Senior Citizens League obviously a think tank of 254 00:11:44,760 --> 00:11:47,360 Speaker 2: very smart people paying attention to things and telling people 255 00:11:47,400 --> 00:11:50,240 Speaker 2: what to expect. They're expecting the twenty six kola to 256 00:11:50,280 --> 00:11:53,360 Speaker 2: come in around two point seven percent. Other analysts similar 257 00:11:53,400 --> 00:11:55,520 Speaker 2: are even saying maybe two point eight percent. So if 258 00:11:55,520 --> 00:11:57,320 Speaker 2: that holds, the average higher ee is going to get 259 00:11:57,320 --> 00:11:59,480 Speaker 2: another fifty four bucks a month starting in January. 260 00:11:59,559 --> 00:12:02,440 Speaker 3: These are not life changing numbers year over year. 261 00:12:02,480 --> 00:12:04,800 Speaker 2: However, it is where we are back to a point 262 00:12:04,840 --> 00:12:07,480 Speaker 2: where a social scurity is more consistently keeping up with 263 00:12:07,520 --> 00:12:09,840 Speaker 2: inflation than it used to, which is not a bad thing. 264 00:12:10,920 --> 00:12:13,479 Speaker 1: Here's the all Worth advice. This is just another reminder 265 00:12:13,559 --> 00:12:16,480 Speaker 1: that you should have a portfolio that doesn't have to 266 00:12:16,800 --> 00:12:20,520 Speaker 1: just rely on outside forces or government benefits that you 267 00:12:20,600 --> 00:12:24,840 Speaker 1: can't control to keep pace with inflation and make sure 268 00:12:25,000 --> 00:12:27,880 Speaker 1: your financial plan works long term. All right, we're just 269 00:12:27,920 --> 00:12:31,240 Speaker 1: getting started tonight. Next how to keep golden handcuffs from 270 00:12:31,280 --> 00:12:34,440 Speaker 1: holding you back from the next chapter in your career. 271 00:12:34,480 --> 00:12:37,200 Speaker 1: You're listening to Simply Money presented by all Worth Financial 272 00:12:37,200 --> 00:12:45,120 Speaker 1: on fifty five KRC the talk station. You're listening to 273 00:12:45,160 --> 00:12:48,079 Speaker 1: Simply Money presented by all Worth Financial on Bob Sponseller 274 00:12:48,080 --> 00:12:52,400 Speaker 1: along with Brian James. Got a big required minimum distribution. 275 00:12:52,520 --> 00:12:55,760 Speaker 1: You don't need wondering if a buyout makes sense or 276 00:12:55,800 --> 00:12:59,080 Speaker 1: if one point five million dollars is enough to go 277 00:12:59,160 --> 00:13:02,040 Speaker 1: it alone. We're going to tackle those questions and more 278 00:13:02,120 --> 00:13:04,640 Speaker 1: straight ahead at six forty three. All Right. We hear 279 00:13:04,679 --> 00:13:07,400 Speaker 1: from people all the time who are thinking about making 280 00:13:07,440 --> 00:13:11,480 Speaker 1: a career move. Maybe it's a better title, more flexibility, 281 00:13:11,640 --> 00:13:15,280 Speaker 1: or just time for a change. But then comes the hesitation. 282 00:13:15,960 --> 00:13:19,280 Speaker 1: I don't want to walk away from my restricted stock 283 00:13:19,400 --> 00:13:22,840 Speaker 1: units or stock options, or I'll lose part of my pension. 284 00:13:23,320 --> 00:13:25,640 Speaker 1: And that's what we refer to, you know, as the 285 00:13:25,800 --> 00:13:29,040 Speaker 1: golden handcuffs, so to speak. So we're going to get 286 00:13:29,080 --> 00:13:31,280 Speaker 1: into a little bit of that tonight and how to 287 00:13:31,320 --> 00:13:35,080 Speaker 1: evaluate all this as you consider your next career move. 288 00:13:36,600 --> 00:13:38,480 Speaker 3: So this is not easy, though, is it, Bob. 289 00:13:38,559 --> 00:13:40,720 Speaker 2: So this can be tricky if you're in your forties 290 00:13:40,760 --> 00:13:43,240 Speaker 2: and fifties, especially, you know, if you have a net 291 00:13:43,280 --> 00:13:45,040 Speaker 2: worth of a few million dollars, maybe you're trying to 292 00:13:45,040 --> 00:13:46,920 Speaker 2: figure out how a job change fits into your long 293 00:13:47,040 --> 00:13:49,480 Speaker 2: term financial plan. We run into this all the time 294 00:13:49,520 --> 00:13:52,360 Speaker 2: with people who have built something that can sustain them 295 00:13:52,880 --> 00:13:55,840 Speaker 2: and they could be okay, but they kind of sort 296 00:13:55,880 --> 00:13:58,400 Speaker 2: of know that, but they also kind of can't figure out. 297 00:13:59,080 --> 00:14:01,640 Speaker 2: It's very terrible, find very scary to leave and do 298 00:14:01,679 --> 00:14:04,400 Speaker 2: something different. So and the companies know this. Therefore they 299 00:14:04,400 --> 00:14:07,000 Speaker 2: build structures to keep you in place. Let's talk about 300 00:14:07,000 --> 00:14:09,839 Speaker 2: some of these different tools that they use. So restricted 301 00:14:09,880 --> 00:14:12,640 Speaker 2: stock units or RSUs, if you work for a publicly 302 00:14:12,679 --> 00:14:15,160 Speaker 2: traded company. There's a good chance that you've been given 303 00:14:15,200 --> 00:14:17,319 Speaker 2: stock because you've just shown up day after day after 304 00:14:17,360 --> 00:14:19,720 Speaker 2: day and done a good job and the company still exists, 305 00:14:19,760 --> 00:14:21,840 Speaker 2: first of all, and maybe it's even grown over time, 306 00:14:22,280 --> 00:14:24,920 Speaker 2: so they might give you stock that vests over time, 307 00:14:24,960 --> 00:14:27,480 Speaker 2: meaning of course, and most people know this, but meaning 308 00:14:27,480 --> 00:14:29,440 Speaker 2: you don't actually get access to it. It has your name 309 00:14:29,480 --> 00:14:31,040 Speaker 2: on it, but you don't get to open the present 310 00:14:31,120 --> 00:14:35,600 Speaker 2: until some stated time in the future. Common vesting schedule, 311 00:14:35,640 --> 00:14:37,960 Speaker 2: for example, is twenty five percent of it every year 312 00:14:37,960 --> 00:14:40,400 Speaker 2: for four years. The company's intent, of course, is that 313 00:14:40,480 --> 00:14:43,440 Speaker 2: you stick around. If you leave before it's fully vested, 314 00:14:43,560 --> 00:14:45,480 Speaker 2: you leave it on the table. So let's pretend you 315 00:14:45,520 --> 00:14:48,200 Speaker 2: get four hundred thousand dollars worth of restricted stock units 316 00:14:48,280 --> 00:14:50,800 Speaker 2: or RSUs, and you're two years in. That means two 317 00:14:50,880 --> 00:14:52,640 Speaker 2: hundred is years walk away. Take it if you want 318 00:14:52,720 --> 00:14:54,600 Speaker 2: the other two hundred, Well, that's going to keep you 319 00:14:54,800 --> 00:14:56,920 Speaker 2: quote unquote handcuffed to your job. 320 00:14:56,800 --> 00:14:57,720 Speaker 3: Whether you like it or not. 321 00:14:58,320 --> 00:15:00,320 Speaker 2: It doesn't mean you got to stay, but it it's 322 00:15:00,320 --> 00:15:02,600 Speaker 2: definitely going to make you think twice before you actually leave. 323 00:15:02,800 --> 00:15:04,640 Speaker 2: And that's not just money on a piece of paper. 324 00:15:04,640 --> 00:15:07,120 Speaker 2: That's a couple of years of private college tuition or 325 00:15:07,560 --> 00:15:10,840 Speaker 2: second home down payment. That's what makes these decisions so difficult. 326 00:15:10,840 --> 00:15:12,160 Speaker 2: I may not be able to get out of bed 327 00:15:12,200 --> 00:15:14,640 Speaker 2: anymore to go to this job, but I would walk 328 00:15:14,680 --> 00:15:18,560 Speaker 2: away from such in financial resources if I chose to 329 00:15:18,560 --> 00:15:20,800 Speaker 2: make a different move. That the money is not the 330 00:15:20,880 --> 00:15:23,160 Speaker 2: reason for the decision, but it's a major factor. 331 00:15:24,360 --> 00:15:26,840 Speaker 1: Yeah. And other things like stock options I mean, very 332 00:15:27,360 --> 00:15:31,360 Speaker 1: somewhat similar to rsues, except you're given the chance to 333 00:15:31,360 --> 00:15:34,000 Speaker 1: get actual shares given to you when they vest. And 334 00:15:34,480 --> 00:15:37,400 Speaker 1: you know, most people just exercise these options for the 335 00:15:37,440 --> 00:15:40,000 Speaker 1: difference between the grant price and the current price of 336 00:15:40,040 --> 00:15:45,200 Speaker 1: the stock when they vest. And another big part of 337 00:15:45,320 --> 00:15:48,960 Speaker 1: executive compensation something you need to factor in. Another thing 338 00:15:49,040 --> 00:15:51,920 Speaker 1: is bonuses Brian. Some of these bonuses are paid quarterly, 339 00:15:52,360 --> 00:15:56,120 Speaker 1: but more often than not they're paid annually or you know, 340 00:15:56,480 --> 00:15:59,880 Speaker 1: given in long term incentive bonuses. So depending on how 341 00:16:00,360 --> 00:16:04,240 Speaker 1: someone's compensation is structured, you might have to repay a 342 00:16:04,320 --> 00:16:07,160 Speaker 1: signing bonus if you leave early, or you might miss 343 00:16:07,160 --> 00:16:10,840 Speaker 1: out on a year end performance bonus if your departure 344 00:16:10,920 --> 00:16:14,400 Speaker 1: date is before a certain cutoff. Those are things that 345 00:16:14,440 --> 00:16:16,360 Speaker 1: we have to help people look at as well. 346 00:16:17,000 --> 00:16:19,280 Speaker 2: Yeah, and then some of the other things we see 347 00:16:19,320 --> 00:16:21,520 Speaker 2: that this is a little little bit. We're seeing it 348 00:16:21,640 --> 00:16:24,400 Speaker 2: less and less these days, of course, but pensions, so 349 00:16:24,600 --> 00:16:28,080 Speaker 2: there's a lot of scenarios where, especially for older higher 350 00:16:28,160 --> 00:16:32,200 Speaker 2: level employees executives at legacy companies still have vestiges of 351 00:16:32,240 --> 00:16:34,960 Speaker 2: the you know, the fifties and sixties, when you didn't 352 00:16:34,960 --> 00:16:36,600 Speaker 2: work for a four h one k, you worked for 353 00:16:36,600 --> 00:16:39,080 Speaker 2: a pension. The design back then, the way that we 354 00:16:39,120 --> 00:16:41,640 Speaker 2: as a society wanted our businesses to run was we 355 00:16:41,680 --> 00:16:45,320 Speaker 2: wanted employees to come work their entire careers at one place, 356 00:16:45,480 --> 00:16:48,720 Speaker 2: and we wanted to attract them by offering them financial 357 00:16:48,760 --> 00:16:50,400 Speaker 2: stability well after they retire. 358 00:16:50,680 --> 00:16:51,200 Speaker 3: This worked. 359 00:16:51,800 --> 00:16:54,080 Speaker 2: Life expectancy wasn't quite as long in the fifties and 360 00:16:54,120 --> 00:16:56,400 Speaker 2: sixties as it is today, so. 361 00:16:56,400 --> 00:16:58,120 Speaker 3: The math has kind of worked against that. 362 00:16:58,280 --> 00:17:00,760 Speaker 2: A company wanting that now, I want somebody to work 363 00:17:00,760 --> 00:17:03,120 Speaker 2: for me for you know, thirty, maybe forty years, and 364 00:17:03,160 --> 00:17:03,840 Speaker 2: I want to pay. 365 00:17:03,640 --> 00:17:04,720 Speaker 3: For them for the rest of their lives. 366 00:17:04,720 --> 00:17:06,119 Speaker 2: Well, the rest of their lives now can be an 367 00:17:06,119 --> 00:17:10,240 Speaker 2: additional thirty or maybe even forty years themselves. So pensions 368 00:17:10,400 --> 00:17:12,440 Speaker 2: have kind of gone a little bit by the wayside 369 00:17:12,440 --> 00:17:15,240 Speaker 2: partially for that reason, and interest rates were so low 370 00:17:15,560 --> 00:17:19,000 Speaker 2: over the last couple decades that a pension couldn't conservatively 371 00:17:19,040 --> 00:17:22,600 Speaker 2: invest prudently and still get the bills paid, so we 372 00:17:22,640 --> 00:17:24,600 Speaker 2: don't see them so much anymore. But here's an example. 373 00:17:24,640 --> 00:17:27,879 Speaker 2: Let's say you're eligible for full pendefit pension benefits at 374 00:17:27,920 --> 00:17:30,040 Speaker 2: age sixty, but you're fifty eight. Now you get that 375 00:17:30,119 --> 00:17:32,199 Speaker 2: dream job offer you've always wanted, and you won't know 376 00:17:32,200 --> 00:17:33,600 Speaker 2: in the back of your head, while I'm on my fifties, 377 00:17:33,600 --> 00:17:35,800 Speaker 2: I'm not going to get more opportunities like this. If 378 00:17:35,800 --> 00:17:38,439 Speaker 2: you leave now, that pension could be permanently reduced, sometimes 379 00:17:38,480 --> 00:17:40,920 Speaker 2: by as much as thirty percent. That doesn't mean don't 380 00:17:41,000 --> 00:17:44,399 Speaker 2: do it, however, it does very much mean that we 381 00:17:44,440 --> 00:17:46,440 Speaker 2: need to We need to really think twice before making 382 00:17:46,440 --> 00:17:46,960 Speaker 2: it a big move. 383 00:17:47,720 --> 00:17:51,679 Speaker 1: And don't forget about four oh one K match vesting schedules. Remember, 384 00:17:51,760 --> 00:17:55,320 Speaker 1: while your own contributions are always yours, the employer match 385 00:17:55,480 --> 00:17:58,880 Speaker 1: often vests over a few years. Most of the time 386 00:17:58,920 --> 00:18:01,480 Speaker 1: we see vesting schedule of three to five years. So 387 00:18:01,480 --> 00:18:04,680 Speaker 1: if you're thinking about leaving your current position and you're 388 00:18:04,720 --> 00:18:07,600 Speaker 1: not fully vested in the match, you could be walking 389 00:18:07,600 --> 00:18:11,480 Speaker 1: away from thousands, if not tens of thousands of dollars. So, 390 00:18:12,000 --> 00:18:13,879 Speaker 1: you know what the point we're trying to make here is, 391 00:18:13,920 --> 00:18:18,480 Speaker 1: here's where life lifestyle choices come into play. And like 392 00:18:18,560 --> 00:18:20,720 Speaker 1: a lot of things in life, you've got to count 393 00:18:20,800 --> 00:18:24,399 Speaker 1: the cost, you know, and the opportunity cost of leaving 394 00:18:24,520 --> 00:18:27,959 Speaker 1: versus staying in your current position. And uh, you know, 395 00:18:28,000 --> 00:18:31,440 Speaker 1: maybe the place that you're going through, going to financially 396 00:18:31,760 --> 00:18:36,000 Speaker 1: or for non financial reasons, is just much more exciting 397 00:18:36,040 --> 00:18:38,960 Speaker 1: and much more palatable than where you are. But the 398 00:18:39,000 --> 00:18:41,560 Speaker 1: point we're trying to make here is this is why 399 00:18:41,600 --> 00:18:44,000 Speaker 1: you need to sit down, have a good financial plan 400 00:18:44,119 --> 00:18:47,199 Speaker 1: before you pull the trigger on something like this, and 401 00:18:47,280 --> 00:18:51,040 Speaker 1: actually run the numbers. And that helps people make these 402 00:18:51,080 --> 00:18:53,920 Speaker 1: decisions with their eyes wide open. Yep. 403 00:18:53,960 --> 00:18:55,320 Speaker 2: And I want to throw out there too, don't be 404 00:18:55,400 --> 00:18:58,240 Speaker 2: terrified of the decision, dig into those numbers and look 405 00:18:58,320 --> 00:19:00,159 Speaker 2: under every stone for the savings could be. 406 00:19:00,240 --> 00:19:01,080 Speaker 3: So I went through this once. 407 00:19:01,200 --> 00:19:02,960 Speaker 2: Matter of FACTI but when I joined, When I joined, 408 00:19:02,960 --> 00:19:04,440 Speaker 2: what was simply money back in the day. 409 00:19:05,000 --> 00:19:07,080 Speaker 3: I had to go through a process of Okay, what's 410 00:19:07,160 --> 00:19:08,879 Speaker 3: the what am I gaining? What am I giving up? 411 00:19:08,920 --> 00:19:10,320 Speaker 2: One of the big things I didn't really even think 412 00:19:10,320 --> 00:19:12,960 Speaker 2: about was the idea of no longer working downtown where 413 00:19:12,960 --> 00:19:15,000 Speaker 2: I was for my prior few years. I didn't have 414 00:19:15,040 --> 00:19:17,720 Speaker 2: to pay for parking, there was no city taxes. There 415 00:19:17,960 --> 00:19:20,880 Speaker 2: are hidden savings sometimes to making a job job change, 416 00:19:20,920 --> 00:19:22,800 Speaker 2: so make sure you take all of that into account. 417 00:19:22,840 --> 00:19:24,560 Speaker 2: It can make the decision a lot easier and you 418 00:19:24,560 --> 00:19:26,040 Speaker 2: can go in eyes wide open. 419 00:19:26,840 --> 00:19:29,040 Speaker 1: What if you hadn't come to Simply Money and all 420 00:19:29,040 --> 00:19:33,080 Speaker 1: Worth you would have bypassed this multimillion dollar radio contract 421 00:19:33,119 --> 00:19:35,680 Speaker 1: that you enjoy right now? Aren't you glad you made 422 00:19:35,680 --> 00:19:36,359 Speaker 1: the move? Brian? 423 00:19:36,880 --> 00:19:37,960 Speaker 3: I'm sorry. Who's doing what now? 424 00:19:37,960 --> 00:19:38,200 Speaker 1: Bob? What? 425 00:19:38,320 --> 00:19:40,000 Speaker 3: What again? What contract do you have that I was 426 00:19:40,040 --> 00:19:40,560 Speaker 3: not informed of? 427 00:19:41,000 --> 00:19:44,320 Speaker 1: Here's the all Worth advice. Golden handcuffs only work if 428 00:19:44,320 --> 00:19:46,679 Speaker 1: you don't have a plan. Know the true cost of 429 00:19:46,760 --> 00:19:50,720 Speaker 1: leaving and the true value of staying before you make 430 00:19:50,760 --> 00:19:54,720 Speaker 1: your next career move. Next, we dive into investment solutions 431 00:19:54,760 --> 00:19:58,280 Speaker 1: designed for those who want their portfolios to align with 432 00:19:58,400 --> 00:20:01,600 Speaker 1: their values. Listening to Simply Money presented by all Worth 433 00:20:01,640 --> 00:20:10,199 Speaker 1: Financial on fifty five KRC the talk station. You're listening 434 00:20:10,200 --> 00:20:12,640 Speaker 1: to Simply Money presented by all Worth Financial. I'm Bob 435 00:20:12,680 --> 00:20:16,360 Speaker 1: sponseller along with Brian James, and we're joined again by 436 00:20:16,520 --> 00:20:20,679 Speaker 1: all Worth Chief investment Officer Andy Stout. Andy, thanks for 437 00:20:20,720 --> 00:20:24,240 Speaker 1: sticking on with us tonight. And we occasionally have clients 438 00:20:24,280 --> 00:20:26,680 Speaker 1: across our firm that come to us and say, hey, 439 00:20:26,720 --> 00:20:32,320 Speaker 1: we would like our investment portfolio positioned based on our 440 00:20:32,400 --> 00:20:36,040 Speaker 1: personal religious values. We want things skewed in that direction, 441 00:20:36,359 --> 00:20:39,080 Speaker 1: and we want to take some time and just talk 442 00:20:39,119 --> 00:20:42,159 Speaker 1: about what the options are out there to do that. 443 00:20:43,160 --> 00:20:45,800 Speaker 1: Our industry has evolved quite a bit in the way 444 00:20:45,840 --> 00:20:48,960 Speaker 1: of being able to screen out companies and industries to 445 00:20:49,119 --> 00:20:53,480 Speaker 1: cater to folks that want specific values reflected in their 446 00:20:53,640 --> 00:20:57,879 Speaker 1: investment portfolio. Walk us through that, Andy, what's available out there? 447 00:20:58,000 --> 00:21:01,600 Speaker 1: And I guess, more importantly, what are people coming to 448 00:21:01,680 --> 00:21:03,880 Speaker 1: you asking for on a regular basis? 449 00:21:04,240 --> 00:21:06,119 Speaker 4: Well, I guess a lot of times when they come 450 00:21:06,160 --> 00:21:07,840 Speaker 4: to me and ask for I might be at some 451 00:21:08,040 --> 00:21:10,800 Speaker 4: you know, church festival on the weekend, whether it be 452 00:21:11,080 --> 00:21:13,720 Speaker 4: IHM where my kids went to or I know, Brian, 453 00:21:15,080 --> 00:21:19,480 Speaker 4: your kids went to Mother Teresa, so oddly, uh, you 454 00:21:19,880 --> 00:21:22,720 Speaker 4: might get questions there and you know, kind of makes 455 00:21:22,720 --> 00:21:25,960 Speaker 4: sense because you know you're there, But when you look 456 00:21:26,000 --> 00:21:29,679 Speaker 4: at what's out there, I mean the changes that have 457 00:21:30,280 --> 00:21:34,040 Speaker 4: the fund offerings that have become available in the just 458 00:21:34,400 --> 00:21:38,399 Speaker 4: broad investment strategies for someone who looking to invest alongside 459 00:21:38,440 --> 00:21:42,200 Speaker 4: with their values, They've really broad and that's been a 460 00:21:42,440 --> 00:21:46,440 Speaker 4: key to helping investors become more comfortable with their investments 461 00:21:46,480 --> 00:21:48,800 Speaker 4: because you know, I think a lot of people, most 462 00:21:48,840 --> 00:21:51,600 Speaker 4: people at least listening to this program, I would think, 463 00:21:51,800 --> 00:21:54,919 Speaker 4: you know, they're positioning themselves for retirement and trying to 464 00:21:55,320 --> 00:21:59,640 Speaker 4: you know, get themselves as situated as possible to enjoy, 465 00:21:59,760 --> 00:22:02,399 Speaker 4: you know, some financial peace of mind. A lot of 466 00:22:02,440 --> 00:22:05,760 Speaker 4: times though, depending on how they how people might be 467 00:22:05,760 --> 00:22:08,239 Speaker 4: thinking about things, they might want to be I'll call 468 00:22:08,280 --> 00:22:12,320 Speaker 4: it investing alongside their values. And there's a number of 469 00:22:12,359 --> 00:22:14,720 Speaker 4: ways you can do this. And what we're talking about 470 00:22:14,760 --> 00:22:17,240 Speaker 4: here is really, you know, what sort of Christian value 471 00:22:17,359 --> 00:22:20,240 Speaker 4: investing options that there are out there. I mean, there's 472 00:22:20,240 --> 00:22:23,080 Speaker 4: other types of ways that you can invest alongside your values, 473 00:22:23,119 --> 00:22:25,760 Speaker 4: but from the Christian standpoint, there's a few things that 474 00:22:25,840 --> 00:22:30,200 Speaker 4: you can do. We do have access to a lot 475 00:22:30,240 --> 00:22:35,120 Speaker 4: of institutional quality research and institutional quality funds, and right 476 00:22:35,119 --> 00:22:38,200 Speaker 4: now what's available just for the broad marketplace, there's lots 477 00:22:38,200 --> 00:22:41,080 Speaker 4: of exchange traded funds or ETFs as they are known, 478 00:22:41,400 --> 00:22:46,159 Speaker 4: or mutual funds that have an objective dedicated to investing 479 00:22:47,320 --> 00:22:50,919 Speaker 4: with Christian values in mind. And so one thing that 480 00:22:50,960 --> 00:22:52,639 Speaker 4: we've done here at all Worth, which I think is 481 00:22:52,640 --> 00:22:59,720 Speaker 4: pretty cool, we've essentially created investment strategies centered around those funds. 482 00:23:00,080 --> 00:23:04,320 Speaker 4: So if you want to invest in heavier investments aligned 483 00:23:04,359 --> 00:23:07,679 Speaker 4: with Christian values, you know we can tailor that. So 484 00:23:07,920 --> 00:23:11,200 Speaker 4: you could have a very aggressive portfolio one hundred percent stock, 485 00:23:11,440 --> 00:23:14,320 Speaker 4: zero percent bonds. It could be maybe more conservative, like 486 00:23:14,359 --> 00:23:18,800 Speaker 4: a thirty stocks seventy percent bond type of strategy. Either way, 487 00:23:18,920 --> 00:23:21,399 Speaker 4: all of these investments that we would look to put together, 488 00:23:21,760 --> 00:23:25,080 Speaker 4: every single one has an objective and this is critical. 489 00:23:25,160 --> 00:23:27,359 Speaker 4: They're objective is Christian values. 490 00:23:27,440 --> 00:23:27,760 Speaker 1: First. 491 00:23:27,960 --> 00:23:30,080 Speaker 4: It's not something that it's kind of back into like 492 00:23:30,119 --> 00:23:31,960 Speaker 4: hey look at we have all a sudden No, it's 493 00:23:31,960 --> 00:23:37,400 Speaker 4: like a pre screening sort of upfront filter, if you will, 494 00:23:37,600 --> 00:23:41,240 Speaker 4: in order to make sure that how these funds are structured. 495 00:23:41,440 --> 00:23:44,520 Speaker 4: They are structured very intently for that. 496 00:23:44,760 --> 00:23:46,439 Speaker 3: So, andy, what is somebody giving up? 497 00:23:46,440 --> 00:23:48,320 Speaker 2: I mean this is important stuff, right, this is your 498 00:23:48,359 --> 00:23:51,199 Speaker 2: your investment decisions are important anyway. And then when you 499 00:23:51,240 --> 00:23:54,560 Speaker 2: couple them with with your your deepest held beliefs, it 500 00:23:54,720 --> 00:23:56,639 Speaker 2: just kind of goes up that much more in the 501 00:23:56,680 --> 00:24:00,520 Speaker 2: important scale. So, if this is something someone is inclined 502 00:24:00,600 --> 00:24:02,720 Speaker 2: to do, what what should we keep in mind that 503 00:24:02,760 --> 00:24:05,399 Speaker 2: they might be sacrificing. Is there any real sacrifice for this? 504 00:24:07,000 --> 00:24:09,080 Speaker 4: Well, I mean we could always go back to the 505 00:24:09,119 --> 00:24:14,360 Speaker 4: past performances. You know, no guarantee of future results. But 506 00:24:14,520 --> 00:24:19,120 Speaker 4: you know, with that said, a lot of the overall 507 00:24:19,160 --> 00:24:24,600 Speaker 4: returns that investors get is more it's really determined most 508 00:24:24,640 --> 00:24:28,760 Speaker 4: by acid allocation. So how much stocks relative to bond 509 00:24:28,800 --> 00:24:31,240 Speaker 4: you there's lots of studies that support this. It's not 510 00:24:31,320 --> 00:24:33,399 Speaker 4: so much as to you know, necessarily what's in your 511 00:24:33,440 --> 00:24:36,479 Speaker 4: stocks is if you're diversified. You know, that's you know, 512 00:24:37,000 --> 00:24:40,200 Speaker 4: really the key from that perspective, it's that overall allocation. 513 00:24:40,320 --> 00:24:42,760 Speaker 4: So would you be giving up some Maybe maybe not. 514 00:24:42,880 --> 00:24:45,439 Speaker 4: It depends on you know, what outperforms in a various cycle. 515 00:24:45,600 --> 00:24:47,840 Speaker 4: So if you happen to go into a cycle where 516 00:24:47,840 --> 00:24:51,640 Speaker 4: all of a sudden, you know, alcohol stocks are doing 517 00:24:51,760 --> 00:24:53,840 Speaker 4: really really good. Although I guess to be fair, there 518 00:24:53,920 --> 00:24:57,400 Speaker 4: is a lot of alcohol at those church festivals that 519 00:24:57,480 --> 00:25:00,119 Speaker 4: you go to, but they you know, you know, what 520 00:25:00,160 --> 00:25:00,600 Speaker 4: I mean. 521 00:25:00,720 --> 00:25:04,640 Speaker 2: Uh, weren't raised in Cincinnati, so that is a very 522 00:25:04,640 --> 00:25:05,640 Speaker 2: familiar fair. 523 00:25:05,720 --> 00:25:10,240 Speaker 4: Yeah, but broader, more broadly speaking, those types of sin stocks, 524 00:25:10,240 --> 00:25:13,240 Speaker 4: if you will, uh, if they do better than the 525 00:25:13,280 --> 00:25:15,719 Speaker 4: broad market, you might underperform a little bit. But in 526 00:25:15,720 --> 00:25:18,679 Speaker 4: all honesty, those types of stocks don't really make up 527 00:25:18,680 --> 00:25:22,479 Speaker 4: too much of the overall market. So really you're getting 528 00:25:22,600 --> 00:25:25,040 Speaker 4: rid of some of those things on the margin. That's 529 00:25:25,040 --> 00:25:26,919 Speaker 4: going to help to sleep better at night because you 530 00:25:26,960 --> 00:25:30,320 Speaker 4: know you're investing alongside your values and that's going to 531 00:25:30,320 --> 00:25:33,040 Speaker 4: give you some comfort, right and when you know push 532 00:25:33,160 --> 00:25:36,840 Speaker 4: comes to shove, market volatility will happen. If you're investing 533 00:25:37,040 --> 00:25:39,600 Speaker 4: in a way that you believe in your heart is 534 00:25:39,600 --> 00:25:42,600 Speaker 4: the right thing to do and you're not uh and 535 00:25:42,640 --> 00:25:46,520 Speaker 4: you still have broad diversification, uh, you know, you're probably 536 00:25:46,520 --> 00:25:49,360 Speaker 4: more likely to avoid those costly emotional decisions that really 537 00:25:49,440 --> 00:25:52,320 Speaker 4: hurt investors across the board. When you see markets go 538 00:25:52,440 --> 00:25:54,760 Speaker 4: down and you're really worried about the world coming to 539 00:25:54,800 --> 00:25:56,920 Speaker 4: an end, or you know, markets rallying and you don't 540 00:25:56,920 --> 00:25:59,439 Speaker 4: want to miss out that fear of missing out, So 541 00:25:59,600 --> 00:26:03,880 Speaker 4: those types of emotions can really derail a financial plan. 542 00:26:03,960 --> 00:26:07,520 Speaker 4: But if you're investing alongside your values. It's sometimes it's 543 00:26:07,520 --> 00:26:09,080 Speaker 4: a little easier to look at a longer run. 544 00:26:10,200 --> 00:26:13,560 Speaker 1: And you mentioned these institutional investing firms that the folks 545 00:26:13,640 --> 00:26:17,040 Speaker 1: that run these ETFs to specifically screen out, you know, 546 00:26:17,160 --> 00:26:21,119 Speaker 1: various companies and industries. Can you give us an example 547 00:26:21,160 --> 00:26:24,560 Speaker 1: of what that looks like, you know, practically, when we 548 00:26:24,600 --> 00:26:29,040 Speaker 1: look at a Christian Values fund, what are these institutional 549 00:26:29,400 --> 00:26:32,359 Speaker 1: firms screening out of these portfolios? On average? 550 00:26:32,800 --> 00:26:35,359 Speaker 4: Well, it is going to be those types of sind stocks. 551 00:26:35,359 --> 00:26:38,800 Speaker 4: And there's a number of companies out there that do this. 552 00:26:38,960 --> 00:26:43,280 Speaker 4: I mean, there's like Guidestone Funds, there's Timothy Plan Event 553 00:26:43,400 --> 00:26:46,720 Speaker 4: TID I mean those are not endo worstments of anything whatsoever, 554 00:26:46,720 --> 00:26:48,880 Speaker 4: by the way, that's just some of the funds out there, 555 00:26:48,960 --> 00:26:53,520 Speaker 4: fund companies that are you know, doing this screening to 556 00:26:53,600 --> 00:26:58,239 Speaker 4: exclude those sin types of stocks like alcohol tobacco as 557 00:26:58,280 --> 00:27:01,640 Speaker 4: an example. So when you look at that, I mean, 558 00:27:01,680 --> 00:27:03,520 Speaker 4: that's something that can be done with the funnelovel. Another 559 00:27:03,520 --> 00:27:06,000 Speaker 4: another thing you can do, Bob is at the individual 560 00:27:06,040 --> 00:27:09,280 Speaker 4: stock level, with like a direct index, you can actually 561 00:27:09,760 --> 00:27:12,919 Speaker 4: kind of create your own sort I'll call it, you know, 562 00:27:12,960 --> 00:27:14,760 Speaker 4: Christian Values. You might say, hey, let's just get rid 563 00:27:14,800 --> 00:27:16,520 Speaker 4: of these and I can still have access to other 564 00:27:16,560 --> 00:27:19,200 Speaker 4: areas too, So it's certainly a lot of choices out there. 565 00:27:19,520 --> 00:27:22,439 Speaker 1: Yeah, so this really can be individualized on a client 566 00:27:22,480 --> 00:27:26,520 Speaker 1: by client basis based on their deeply held values and beliefs. 567 00:27:27,040 --> 00:27:29,919 Speaker 1: Thanks for joining us as always Tonight, Andy, you're listening 568 00:27:29,920 --> 00:27:32,520 Speaker 1: to Simply Money presented by all Worth Financial on fifty 569 00:27:32,600 --> 00:27:40,080 Speaker 1: five KRC the talk station. You're listening to Simply Money 570 00:27:40,160 --> 00:27:42,760 Speaker 1: presented by all Worth Financial on Bob Sponseller along with 571 00:27:42,800 --> 00:27:45,600 Speaker 1: Brian James. Do you have a financial question you'd like 572 00:27:45,600 --> 00:27:47,560 Speaker 1: for us to answer. There's a red button you can 573 00:27:47,600 --> 00:27:50,000 Speaker 1: click while you're listening to the show right on the 574 00:27:50,040 --> 00:27:53,720 Speaker 1: iHeart app. Simply record your question and it will come 575 00:27:53,760 --> 00:27:57,120 Speaker 1: straight to us. Speaking of questions, Bill and fort Wright 576 00:27:57,240 --> 00:27:59,840 Speaker 1: leads us off tonight, Brian. He says, I'm seventy seven, 577 00:28:00,359 --> 00:28:03,679 Speaker 1: I'm pulling a huge rm D every year, more than 578 00:28:03,720 --> 00:28:07,280 Speaker 1: I actually need to spend. What strategies can help reduce 579 00:28:07,359 --> 00:28:08,240 Speaker 1: the tax? Bye? 580 00:28:09,000 --> 00:28:11,720 Speaker 2: Well, congratulations Bill obviously on if you've got a huge 581 00:28:11,800 --> 00:28:13,800 Speaker 2: rm D, that means you have a huger four oh 582 00:28:13,840 --> 00:28:16,200 Speaker 2: one k And apologies to my English teachers out there 583 00:28:16,880 --> 00:28:19,720 Speaker 2: because a requirementimum distribution of any size comes from a 584 00:28:19,720 --> 00:28:21,479 Speaker 2: pretty sizeable four oh one K. So for those who 585 00:28:21,520 --> 00:28:23,880 Speaker 2: may not know, when you hit a certain age, it's 586 00:28:23,880 --> 00:28:26,080 Speaker 2: either seventy three or seventy five, depending on your year 587 00:28:26,119 --> 00:28:28,639 Speaker 2: of birth. The IRS says, hey, the gravy train has 588 00:28:28,640 --> 00:28:30,520 Speaker 2: come to a stop. You got to start paying taxes 589 00:28:30,560 --> 00:28:33,400 Speaker 2: on these pre tax dollars. And that's the situation Bill 590 00:28:33,440 --> 00:28:35,639 Speaker 2: is in. So he's asking what does he need to do. 591 00:28:35,680 --> 00:28:37,480 Speaker 2: He doesn't need these dollars. And by the way, the 592 00:28:37,480 --> 00:28:39,479 Speaker 2: IRS doesn't care what you do with these dollars. They 593 00:28:39,560 --> 00:28:41,880 Speaker 2: just lose the tax shelter. You can take them out 594 00:28:41,880 --> 00:28:43,160 Speaker 2: and stick them in the bank, you can throw them 595 00:28:43,160 --> 00:28:44,920 Speaker 2: on the floor, roll around it and it doesn't matter. 596 00:28:45,040 --> 00:28:46,800 Speaker 2: But the point is they lose the tax shelter and 597 00:28:46,800 --> 00:28:48,440 Speaker 2: you've got to pay the income taxes on it. So 598 00:28:48,480 --> 00:28:50,520 Speaker 2: he's asking what he can do to reduce the tax bite. 599 00:28:50,840 --> 00:28:55,800 Speaker 2: The answer is not really a ton unless you're charitably inclined, right, 600 00:28:55,840 --> 00:28:57,480 Speaker 2: So you can't. The R and ds are what they are. 601 00:28:57,560 --> 00:28:59,440 Speaker 2: There's no way to reduce them. They're pretty much written 602 00:28:59,440 --> 00:29:01,480 Speaker 2: in stone. On Year's Eve every year, that's when you 603 00:29:01,560 --> 00:29:03,400 Speaker 2: know what you'll have to take out for the following year. 604 00:29:03,880 --> 00:29:05,880 Speaker 2: But one thing you can do if you're charitably inclined, 605 00:29:05,880 --> 00:29:09,760 Speaker 2: there is something called a QCD or qualified charitable distribution. 606 00:29:10,200 --> 00:29:13,240 Speaker 2: If you are charitably inclined anyway, then you can send 607 00:29:13,280 --> 00:29:17,600 Speaker 2: those dollars straight to that charity. This is a little 608 00:29:17,640 --> 00:29:19,320 Speaker 2: different than taking it out. Matter of fact, it's very 609 00:29:19,320 --> 00:29:21,520 Speaker 2: different from taking it out sticking in checking account, than 610 00:29:21,520 --> 00:29:23,280 Speaker 2: writing a check to the charity. This is working with 611 00:29:23,360 --> 00:29:26,120 Speaker 2: the custodian of your IRA, whoever the financial institution is, 612 00:29:26,360 --> 00:29:30,800 Speaker 2: and instructing them those dollars a financial account in the 613 00:29:30,880 --> 00:29:33,960 Speaker 2: name of the charity. There's rules, there's other things out there, 614 00:29:34,000 --> 00:29:35,920 Speaker 2: but that's something I would look into, Bill, if that's 615 00:29:36,120 --> 00:29:38,160 Speaker 2: if that's on your mind. For those of you hearing 616 00:29:38,200 --> 00:29:40,040 Speaker 2: this thinking that might be you in the future, start 617 00:29:40,040 --> 00:29:42,480 Speaker 2: looking at ROTH contribute or what ROTH conversions. And I 618 00:29:42,480 --> 00:29:44,280 Speaker 2: can see we're going to talk about that here in 619 00:29:44,480 --> 00:29:46,320 Speaker 2: just a couple of minutes. So now we'll go to 620 00:29:46,440 --> 00:29:50,200 Speaker 2: Lisa in Montgomery. Lisa's sixty two and she's still working hard, 621 00:29:50,200 --> 00:29:53,400 Speaker 2: but her company is now offering her deferred compayout and 622 00:29:53,440 --> 00:29:55,480 Speaker 2: she's wondering whether she and what that means is she 623 00:29:55,480 --> 00:29:58,040 Speaker 2: has a retirement plan out there that GENEFA tax is 624 00:29:58,080 --> 00:29:59,920 Speaker 2: on yet and she was able to first some of 625 00:29:59,920 --> 00:30:01,800 Speaker 2: the income. It's now time to choose. 626 00:30:01,840 --> 00:30:04,640 Speaker 3: Does she want to lump stump some or does she 627 00:30:04,720 --> 00:30:07,400 Speaker 3: want installments without screwing up or taxes? What do you think? 628 00:30:07,440 --> 00:30:10,760 Speaker 1: Bob Well at leasta, What I always do with folks 629 00:30:10,800 --> 00:30:12,880 Speaker 1: when we look at this situation is you want to 630 00:30:12,920 --> 00:30:14,920 Speaker 1: look at two things you want to look at. You 631 00:30:14,960 --> 00:30:19,360 Speaker 1: want to do a calculation what's the net present value 632 00:30:19,440 --> 00:30:23,000 Speaker 1: of those installment payments? Meaning you take a stream of 633 00:30:23,040 --> 00:30:26,280 Speaker 1: payments over however many years the company is offering them, 634 00:30:26,880 --> 00:30:29,840 Speaker 1: and you discount that back to a lump some value 635 00:30:30,400 --> 00:30:34,320 Speaker 1: based on a interest rate, and you want to know 636 00:30:34,400 --> 00:30:37,240 Speaker 1: what that interest rate is that the company is offering 637 00:30:37,280 --> 00:30:40,600 Speaker 1: you to take installments, and then compare that to what 638 00:30:40,640 --> 00:30:44,560 Speaker 1: your personal investment risk tolerance is, So you know, depending 639 00:30:44,600 --> 00:30:47,520 Speaker 1: on the client, and depending on how risk averse you 640 00:30:47,600 --> 00:30:51,400 Speaker 1: are versus growth oriented you are, people make different decisions. 641 00:30:51,480 --> 00:30:55,000 Speaker 1: So I have been finding in recent years that those 642 00:30:55,080 --> 00:30:58,440 Speaker 1: numbers are coming much closer together than they used to. 643 00:30:59,080 --> 00:31:02,040 Speaker 1: Sometimes folks end up just saying, hey, I love the 644 00:31:02,120 --> 00:31:05,680 Speaker 1: idea of having a guaranteed income stream or something close 645 00:31:05,720 --> 00:31:08,080 Speaker 1: to that over a period of years. That allows me 646 00:31:08,120 --> 00:31:11,320 Speaker 1: to let the rest of my investment portfolio stay intact 647 00:31:11,360 --> 00:31:14,680 Speaker 1: and grow. Others say, Shoot, that interest rate that the 648 00:31:14,680 --> 00:31:17,560 Speaker 1: company's offering me is way less than I think we 649 00:31:17,560 --> 00:31:20,800 Speaker 1: can do by investing the money. Therefore, we take the 650 00:31:20,880 --> 00:31:22,840 Speaker 1: lump sum and invest it. So it has to do 651 00:31:22,960 --> 00:31:25,480 Speaker 1: with what kind of an offer you're being given in 652 00:31:25,600 --> 00:31:28,239 Speaker 1: terms of a rate of return, and then comparing that 653 00:31:28,640 --> 00:31:31,760 Speaker 1: to your personal risk tolerance. Hope that helps, all right, Tom, 654 00:31:31,840 --> 00:31:34,720 Speaker 1: and Madeira He says, I'm fifty seven. I got one 655 00:31:34,760 --> 00:31:36,760 Speaker 1: point five million dollars in my four to oh one 656 00:31:36,840 --> 00:31:40,440 Speaker 1: k plan. Do I start converting some to roth now 657 00:31:40,520 --> 00:31:43,440 Speaker 1: while taxes are lower, or just wait and take my 658 00:31:43,640 --> 00:31:46,640 Speaker 1: chances in retirement? Brian, I know you don't like to 659 00:31:46,680 --> 00:31:48,000 Speaker 1: take my chances. Answer. 660 00:31:48,440 --> 00:31:50,720 Speaker 2: Yeah, I'm not a fan of let's see what happens. No, 661 00:31:51,040 --> 00:31:54,280 Speaker 2: that's the opposite of planning. But sometimes, Tom, the answer 662 00:31:54,360 --> 00:31:56,480 Speaker 2: is in the question. You already know this. Do I 663 00:31:56,480 --> 00:32:00,000 Speaker 2: start converting some to roth now while taxes are lower? Yeah, 664 00:32:00,200 --> 00:32:02,480 Speaker 2: because the opposite would be waiting until they're higher, and 665 00:32:02,480 --> 00:32:03,840 Speaker 2: that's not what we want to do. Now, I'm being 666 00:32:03,880 --> 00:32:05,880 Speaker 2: a little facetious. I'm having some fun with Tom here, 667 00:32:05,880 --> 00:32:09,360 Speaker 2: but no, you've got the right path here. Now is 668 00:32:09,400 --> 00:32:11,120 Speaker 2: the time to do it. I think what Tom's really 669 00:32:11,200 --> 00:32:13,680 Speaker 2: saying is, is this idiotic to write this big and 670 00:32:13,720 --> 00:32:17,120 Speaker 2: this fat of checks to the irs voluntarily so that 671 00:32:17,200 --> 00:32:19,160 Speaker 2: I get some kind of tax re benefit out the 672 00:32:19,160 --> 00:32:21,160 Speaker 2: back end. And the answer is probably. It makes some 673 00:32:21,240 --> 00:32:23,880 Speaker 2: sense anyway, because somebody's going to pay taxes. You're either 674 00:32:23,960 --> 00:32:27,120 Speaker 2: doing yourself a favor by lowering your rmds because roths 675 00:32:27,120 --> 00:32:30,520 Speaker 2: will not have requirementimum distributions, or you're giving your kids 676 00:32:30,560 --> 00:32:32,880 Speaker 2: your heirs the benefit of tax regrowth. Remember if they 677 00:32:32,920 --> 00:32:35,440 Speaker 2: inherit a wroth, then they get not You get not 678 00:32:35,480 --> 00:32:37,960 Speaker 2: only the tax free growth for the remainder of your life, 679 00:32:38,240 --> 00:32:40,680 Speaker 2: your heirs get another ten years because of the way 680 00:32:40,720 --> 00:32:45,000 Speaker 2: the IRA inheritance rules work. So yeah, I definitely think 681 00:32:45,000 --> 00:32:47,080 Speaker 2: it's something to looking to just understand the math behind it. 682 00:32:47,280 --> 00:32:49,560 Speaker 2: Let's go on to John and Emily in Mount Washington. 683 00:32:49,680 --> 00:32:51,680 Speaker 2: They're in their mid sixties, two and a half million dollars, 684 00:32:51,840 --> 00:32:54,720 Speaker 2: and they're wondering how they balance spending on fun stuff 685 00:32:54,720 --> 00:32:56,920 Speaker 2: like travel without running the risk of running short. In 686 00:32:56,960 --> 00:33:00,560 Speaker 2: their eighties, Bob this pretty common one. What do you think, Yeah, 687 00:33:00,640 --> 00:33:01,320 Speaker 2: John and Emily. 688 00:33:01,440 --> 00:33:03,720 Speaker 1: I mean, the simple answer is, sit down and have 689 00:33:03,800 --> 00:33:07,760 Speaker 1: a good fiduciary advisor, create a financial plan, you know, 690 00:33:07,960 --> 00:33:11,840 Speaker 1: for you based on varying goals, and you can play 691 00:33:11,880 --> 00:33:14,680 Speaker 1: the what if game. You can run different scenarios and 692 00:33:14,760 --> 00:33:18,680 Speaker 1: see how your plan performs into your late eighties to 693 00:33:18,760 --> 00:33:22,800 Speaker 1: mid nineties based on whatever spending assumptions you want to make. 694 00:33:23,440 --> 00:33:26,480 Speaker 1: And some people and Brian, we see this all the time. 695 00:33:26,560 --> 00:33:29,840 Speaker 1: We have people who refuse to travel now because they're 696 00:33:29,840 --> 00:33:32,320 Speaker 1: worried about running out of money in their late sixties, 697 00:33:32,360 --> 00:33:35,200 Speaker 1: and they really regret it later because now they got 698 00:33:35,240 --> 00:33:37,480 Speaker 1: this whole big pile of money left to leave to 699 00:33:37,520 --> 00:33:40,360 Speaker 1: their kids and grandkids and they and they did not 700 00:33:40,520 --> 00:33:43,560 Speaker 1: take that cruise or you know, those big trips that 701 00:33:43,600 --> 00:33:46,200 Speaker 1: they all And then we've got the other extreme where 702 00:33:46,560 --> 00:33:49,240 Speaker 1: people go a little crazy here in their sixties and 703 00:33:49,240 --> 00:33:51,160 Speaker 1: they want to give money away, they want to travel, 704 00:33:51,200 --> 00:33:53,840 Speaker 1: they want to do all those things, and they they 705 00:33:53,920 --> 00:33:57,200 Speaker 1: don't look at the impact of how that's going to 706 00:33:57,480 --> 00:34:01,400 Speaker 1: how that's going to manifest it self in the viability 707 00:34:01,440 --> 00:34:04,640 Speaker 1: of their long term plans. So long way of saying, 708 00:34:04,880 --> 00:34:09,280 Speaker 1: put a good financial plan together, running multiple assumptions and goals, 709 00:34:09,320 --> 00:34:12,279 Speaker 1: and I think working with a good advisor, you will 710 00:34:12,400 --> 00:34:15,000 Speaker 1: arrive at a plan that works. And this is just 711 00:34:15,040 --> 00:34:19,719 Speaker 1: another reminder that that plan could change and evolve as 712 00:34:19,760 --> 00:34:21,640 Speaker 1: time goes by. You don't have to lock it in 713 00:34:21,719 --> 00:34:25,200 Speaker 1: stone when you're sixty five. All right, Coming up next, 714 00:34:25,239 --> 00:34:28,600 Speaker 1: we're going to discuss the sneaky cost of raising our 715 00:34:28,640 --> 00:34:31,160 Speaker 1: standard of living. You're listening to Simply Money presented by 716 00:34:31,160 --> 00:34:34,640 Speaker 1: all Worth Financial on fifty five krs the talk station. 717 00:34:41,840 --> 00:34:44,280 Speaker 1: You're listening to Simply Money presented by all Worth Financial 718 00:34:44,320 --> 00:34:47,759 Speaker 1: on Bob Spondseller along with Brian James. Let's talk about 719 00:34:47,840 --> 00:34:51,560 Speaker 1: something that happens to just about everyone who starts making 720 00:34:51,640 --> 00:34:56,239 Speaker 1: more money, something called lifestyle create. Brian walk us through 721 00:34:56,239 --> 00:34:58,000 Speaker 1: it because this is a common topic. 722 00:34:58,640 --> 00:35:00,680 Speaker 2: Yeah, a lot of people are going to wreck themselves. 723 00:35:00,719 --> 00:35:03,200 Speaker 2: And I'm human too, I recognize me in this. I 724 00:35:03,200 --> 00:35:05,120 Speaker 2: remember when this happened to us, And it's happened. It's 725 00:35:05,120 --> 00:35:07,400 Speaker 2: happened even you know a couple of times. So it 726 00:35:07,440 --> 00:35:09,160 Speaker 2: goes like this, you got a raise or a bonus, 727 00:35:09,200 --> 00:35:11,560 Speaker 2: some kind of new income sources coming in, somehow, maybe 728 00:35:11,560 --> 00:35:13,239 Speaker 2: the business picks up and you think, you know what 729 00:35:13,680 --> 00:35:16,839 Speaker 2: I've done my time. I have earned this. So now 730 00:35:16,880 --> 00:35:18,680 Speaker 2: I'm going to get that next upgrade on the car. 731 00:35:18,719 --> 00:35:20,680 Speaker 2: I'm going to buy the higher level trim with all 732 00:35:20,680 --> 00:35:22,279 Speaker 2: the bells and whistles that I'm never going to read 733 00:35:22,280 --> 00:35:24,640 Speaker 2: the manual to learn how to use. You might move 734 00:35:24,680 --> 00:35:27,040 Speaker 2: to a nicer neighborhood. It has three more bedrooms that 735 00:35:27,040 --> 00:35:28,840 Speaker 2: you're never going to be inside of. Join the fancy 736 00:35:28,840 --> 00:35:32,279 Speaker 2: golf club, start flying first class. These aren't bad things, right, 737 00:35:32,560 --> 00:35:34,560 Speaker 2: I'm not. I'm being a little funny here, but these 738 00:35:34,560 --> 00:35:36,680 Speaker 2: aren't terrible things. These are things that, yeah, they're the 739 00:35:36,760 --> 00:35:39,120 Speaker 2: niceties of life. You can make life easier, make yourself 740 00:35:39,160 --> 00:35:41,080 Speaker 2: more comfortable, and take advantage of some of these things, 741 00:35:41,120 --> 00:35:43,800 Speaker 2: and you have earned it. They could just be fine 742 00:35:43,840 --> 00:35:47,320 Speaker 2: depending on your overall financial plan. But that's the point. 743 00:35:47,400 --> 00:35:49,200 Speaker 2: Did you have a plan? Do you know what you 744 00:35:49,200 --> 00:35:52,120 Speaker 2: can get away with? Lifestyle creep can be dangerous because 745 00:35:52,120 --> 00:35:54,759 Speaker 2: it is literally it's so quiet. It's like your own 746 00:35:54,880 --> 00:35:59,680 Speaker 2: little inflationary world. Some inflation we can control, some we can't. 747 00:35:59,680 --> 00:36:02,160 Speaker 2: But this is a case definitely where we are subconsciously 748 00:36:02,280 --> 00:36:05,160 Speaker 2: choosing to introduce inflation into our lives. It can be 749 00:36:05,600 --> 00:36:07,200 Speaker 2: an okay thing, but you got to know, you know, 750 00:36:07,200 --> 00:36:08,080 Speaker 2: if you can get away with it. 751 00:36:09,440 --> 00:36:11,799 Speaker 1: Yeah, Brian, I think the people we're talking to right now, 752 00:36:11,800 --> 00:36:14,960 Speaker 1: and I have more than a few meetings like this 753 00:36:15,239 --> 00:36:17,600 Speaker 1: every year with people that come in and want to 754 00:36:17,640 --> 00:36:21,120 Speaker 1: talk about planning for retirement. And one of my first 755 00:36:21,200 --> 00:36:23,920 Speaker 1: questions is, well, what do you want to spend you know, 756 00:36:24,000 --> 00:36:27,319 Speaker 1: every year, every month when you retire? And I get 757 00:36:27,320 --> 00:36:30,240 Speaker 1: this deer in the headlights. Look, they have no idea. 758 00:36:31,040 --> 00:36:36,040 Speaker 1: And what I suspect, which ends up almost always being true, 759 00:36:36,200 --> 00:36:39,600 Speaker 1: is these folks are working hard, making a lot of money, 760 00:36:40,000 --> 00:36:42,319 Speaker 1: you know, getting raises and all the things you just 761 00:36:42,400 --> 00:36:45,839 Speaker 1: talked about, and they just spend their net paycheck, you know, 762 00:36:45,880 --> 00:36:48,560 Speaker 1: they even though they do save responsibly in their four 763 00:36:48,520 --> 00:36:50,760 Speaker 1: to one K plans and do a lot of good things, 764 00:36:50,800 --> 00:36:55,120 Speaker 1: but they just assume that their current lifestyle is going 765 00:36:55,160 --> 00:36:58,319 Speaker 1: to be able to continue forever. And they've never run 766 00:36:58,360 --> 00:37:01,759 Speaker 1: the numbers, they've never looked at it. And uh, this 767 00:37:01,840 --> 00:37:06,560 Speaker 1: is where oftentimes, quote unquote rich people can get big 768 00:37:06,600 --> 00:37:10,160 Speaker 1: surprises as they start to approach retirement because they haven't 769 00:37:10,239 --> 00:37:14,880 Speaker 1: planned enough to have enough money to continue that lifestyle. 770 00:37:14,920 --> 00:37:18,800 Speaker 1: And that's where some tough decisions need or tough conversations 771 00:37:18,840 --> 00:37:19,439 Speaker 1: need to be had. 772 00:37:19,880 --> 00:37:21,399 Speaker 3: Yeah, but it's just it's all. 773 00:37:21,400 --> 00:37:23,360 Speaker 2: It's all about that that that you know, that that 774 00:37:23,840 --> 00:37:26,320 Speaker 2: conversation with yourself or with the rest of your family. 775 00:37:26,800 --> 00:37:29,000 Speaker 3: So how do we avoid this? What do we do 776 00:37:29,040 --> 00:37:30,839 Speaker 3: about it? Well? Track it, pay attention to it. 777 00:37:30,920 --> 00:37:33,360 Speaker 2: Every time your income goes up, make a rule to 778 00:37:33,480 --> 00:37:35,840 Speaker 2: save or invest at least half of that increase. So 779 00:37:35,920 --> 00:37:37,560 Speaker 2: for example, you know, if you if you get a 780 00:37:37,560 --> 00:37:40,480 Speaker 2: ten percent raise, that's fantastic, go over and bump your 781 00:37:40,520 --> 00:37:43,480 Speaker 2: four oh one k by five percent or go over 782 00:37:44,000 --> 00:37:47,680 Speaker 2: and you know, increase your savings. Maybe start doing backdoor 783 00:37:47,760 --> 00:37:50,080 Speaker 2: roth ire egg contributions. If you don't know what that is, 784 00:37:50,120 --> 00:37:52,120 Speaker 2: google it or whatever. But if you can do that, 785 00:37:52,200 --> 00:37:55,080 Speaker 2: take half that raise and squirrel it away, you're still 786 00:37:55,120 --> 00:37:57,719 Speaker 2: coming up with more spendable cash at the you know, 787 00:37:57,760 --> 00:37:59,440 Speaker 2: at the at the end of the month, and you're 788 00:37:59,440 --> 00:38:02,160 Speaker 2: saving more. So that way, it's almost canceling out your 789 00:38:02,200 --> 00:38:05,520 Speaker 2: default behavior is saving first and spending second. But because 790 00:38:05,520 --> 00:38:10,520 Speaker 2: you're still proactively starting to save more than you'll be 791 00:38:10,560 --> 00:38:12,719 Speaker 2: able to take that in stride and that lifestyle creep 792 00:38:12,760 --> 00:38:14,239 Speaker 2: is not going to In fact, you affect you so 793 00:38:14,320 --> 00:38:17,839 Speaker 2: much because you did it consciously alongside deeper savings there 794 00:38:17,960 --> 00:38:19,680 Speaker 2: and make sure you're on top of your spending ratio 795 00:38:19,719 --> 00:38:22,160 Speaker 2: to just just understand, am I still spending the same 796 00:38:22,200 --> 00:38:24,640 Speaker 2: percentage of my asset or of my income? If the 797 00:38:24,640 --> 00:38:27,160 Speaker 2: percentage is the same, then cool. Knock yourself out, do 798 00:38:27,239 --> 00:38:30,600 Speaker 2: what you want, but be paying attention and if you still. 799 00:38:30,280 --> 00:38:34,680 Speaker 1: Have questions, like Brian says, google it. Thanks for listening. 800 00:38:34,920 --> 00:38:37,279 Speaker 1: You've been listening to Simply Money, presented by all Worth 801 00:38:37,280 --> 00:38:40,600 Speaker 1: Financial on fifty five krc V talk station