1 00:00:05,840 --> 00:00:10,440 Speaker 1: Tonight, what if everything you've been told about retirement, well 2 00:00:10,440 --> 00:00:14,319 Speaker 1: it ends up being somewhat meaningless. You're listening to simply money. 3 00:00:14,360 --> 00:00:16,959 Speaker 1: He presented by all Worth Financial. I'm Bob Sponseller along 4 00:00:17,000 --> 00:00:21,120 Speaker 1: with Brian James. We're doing this segment tonight as a 5 00:00:21,160 --> 00:00:25,160 Speaker 1: result of a conversation our producer of this show actually 6 00:00:25,200 --> 00:00:28,800 Speaker 1: had recently and it really did resonate with us. He 7 00:00:28,920 --> 00:00:31,760 Speaker 1: was talking with a widow whose husband had worked his 8 00:00:32,440 --> 00:00:35,239 Speaker 1: entire life, did everything in the right way, followed all 9 00:00:35,280 --> 00:00:39,319 Speaker 1: the rules, the savings, all that. He retired and then 10 00:00:39,360 --> 00:00:43,600 Speaker 1: his health declined pretty darn quickly, and she believes, in 11 00:00:43,680 --> 00:00:47,360 Speaker 1: hindsight it's because he didn't really have anything to retire too. 12 00:00:48,040 --> 00:00:51,720 Speaker 1: No hobbies, no real social circle, no structure at all. 13 00:00:52,200 --> 00:00:55,840 Speaker 1: His identity was his work, his career, and when that 14 00:00:56,000 --> 00:01:00,400 Speaker 1: suddenly stopped, well everything stopped on a dime. Brian. And 15 00:01:00,760 --> 00:01:04,240 Speaker 1: this is coming up more and more often as we 16 00:01:04,360 --> 00:01:07,800 Speaker 1: navigate people through retirement. I know you see it all 17 00:01:07,840 --> 00:01:11,080 Speaker 1: the time too, Brian. You know this, this idea of 18 00:01:11,160 --> 00:01:14,120 Speaker 1: retiring at fifty five or sixty and just sitting on 19 00:01:14,120 --> 00:01:17,559 Speaker 1: the beach for the rest of your life isn't ending 20 00:01:17,640 --> 00:01:20,600 Speaker 1: up being as you know, as cracked up as people 21 00:01:20,640 --> 00:01:22,839 Speaker 1: thought it was going to be maybe twenty or thirty 22 00:01:22,920 --> 00:01:23,280 Speaker 1: years ago. 23 00:01:24,200 --> 00:01:26,280 Speaker 2: Yeah, And I think this is something that comes up 24 00:01:26,280 --> 00:01:28,800 Speaker 2: in a lot of meetings where the way I'll phrase 25 00:01:28,840 --> 00:01:31,360 Speaker 2: it is, I'd like to try to get people's focus 26 00:01:31,520 --> 00:01:34,240 Speaker 2: off of the money, right, because we all tend to 27 00:01:34,240 --> 00:01:36,760 Speaker 2: and I'm trying to be careful of this myself, for 28 00:01:37,200 --> 00:01:40,160 Speaker 2: you know, my wife and I focusing too much on 29 00:01:40,200 --> 00:01:42,720 Speaker 2: the pile of money and not focusing on what am 30 00:01:42,760 --> 00:01:44,600 Speaker 2: I about? What will I do when I'm not the 31 00:01:44,600 --> 00:01:47,840 Speaker 2: most important guy at my company anymore and I've retired 32 00:01:47,880 --> 00:01:48,680 Speaker 2: and nobody really. 33 00:01:48,480 --> 00:01:50,120 Speaker 3: Cares whether I got out of bed that day or not. 34 00:01:50,920 --> 00:01:54,040 Speaker 2: Because we all tend to hide behind the mountain of 35 00:01:54,320 --> 00:01:55,040 Speaker 2: financial fear. 36 00:01:55,080 --> 00:01:56,760 Speaker 3: There's not enough, there's not enough, there's not enough. 37 00:01:56,800 --> 00:01:58,000 Speaker 2: And then we get to this point where we do 38 00:01:58,000 --> 00:02:00,320 Speaker 2: a financial plan and we realize, oh, my goodness, actually 39 00:02:00,320 --> 00:02:03,000 Speaker 2: is enough now what? So that can be a scary decision, 40 00:02:03,000 --> 00:02:06,120 Speaker 2: that that financial celebration sometimes can only last, you know, 41 00:02:06,240 --> 00:02:10,080 Speaker 2: so long before it becomes positively intimidating that you've got 42 00:02:10,120 --> 00:02:13,240 Speaker 2: all of this extra time left and uh and and 43 00:02:13,240 --> 00:02:15,360 Speaker 2: and and no real idea of what you want to 44 00:02:15,400 --> 00:02:15,720 Speaker 2: do with it? 45 00:02:15,760 --> 00:02:17,440 Speaker 3: What what are what? What are you about? If you're 46 00:02:17,440 --> 00:02:18,119 Speaker 3: not going to work? 47 00:02:18,440 --> 00:02:21,560 Speaker 2: And this is a it's a problem from a standpoint 48 00:02:21,600 --> 00:02:24,400 Speaker 2: of It can cause issues with marriages, It can cause 49 00:02:24,440 --> 00:02:27,440 Speaker 2: issues with just overall happiness, and that that triggers into 50 00:02:27,480 --> 00:02:28,440 Speaker 2: other health problems. 51 00:02:28,800 --> 00:02:28,920 Speaker 1: Uh. 52 00:02:28,960 --> 00:02:31,280 Speaker 2: You know, in more extreme cases, it can cause people 53 00:02:31,320 --> 00:02:32,880 Speaker 2: to drink a little more than they used to, right, 54 00:02:32,960 --> 00:02:34,680 Speaker 2: just because I got nothing else to do today. Let's 55 00:02:34,840 --> 00:02:36,960 Speaker 2: you know, let's tap in and and and let's see 56 00:02:36,960 --> 00:02:37,880 Speaker 2: where we go today. 57 00:02:38,280 --> 00:02:39,160 Speaker 3: So it's and and and. 58 00:02:39,280 --> 00:02:41,640 Speaker 2: Ironically, the sad part about that is it was never 59 00:02:41,760 --> 00:02:43,800 Speaker 2: about money. A matter of fact, those problems were all 60 00:02:43,840 --> 00:02:46,040 Speaker 2: triggered by arguably too much money. 61 00:02:46,240 --> 00:02:46,720 Speaker 3: We've got. 62 00:02:46,720 --> 00:02:48,720 Speaker 2: We are okay, therefore what are we about? So this 63 00:02:48,760 --> 00:02:52,320 Speaker 2: is an extremely important time to be thinking about what 64 00:02:52,480 --> 00:02:54,200 Speaker 2: is it that I will do what makes me me 65 00:02:54,800 --> 00:02:56,720 Speaker 2: once I've got to hit the point where I don't 66 00:02:56,720 --> 00:02:58,800 Speaker 2: have to do somebody else's bidding for a living. 67 00:02:59,800 --> 00:03:01,480 Speaker 1: Yeah, yeah, Brian, I go back, and I think I've 68 00:03:01,480 --> 00:03:04,920 Speaker 1: shared this story before. Very early on in my career, 69 00:03:04,960 --> 00:03:07,919 Speaker 1: when I went to an industry conference just getting started. 70 00:03:08,000 --> 00:03:10,480 Speaker 1: You know, this is back in the early nineties, I 71 00:03:10,520 --> 00:03:13,960 Speaker 1: heard an older gentleman give an excellent talk about retirement 72 00:03:14,000 --> 00:03:16,680 Speaker 1: and estate planning, and I never forgot what he said 73 00:03:16,720 --> 00:03:19,799 Speaker 1: from the podium. This was a wise, older gentleman who 74 00:03:19,800 --> 00:03:23,440 Speaker 1: had been in our industry for decades, and I never 75 00:03:23,480 --> 00:03:26,800 Speaker 1: forgot what he said. He said, Listen, money doesn't give 76 00:03:26,880 --> 00:03:30,600 Speaker 1: you happiness, It doesn't give you fulfillment, on and on. 77 00:03:30,760 --> 00:03:35,080 Speaker 1: It gives you one thing, choices, And I never forgot 78 00:03:35,080 --> 00:03:38,160 Speaker 1: that talk. That really resonates with that with me, And 79 00:03:38,200 --> 00:03:41,240 Speaker 1: so I think, you know, what we're trying to encourage 80 00:03:41,280 --> 00:03:45,120 Speaker 1: people to do here is take advantage of having choices 81 00:03:45,160 --> 00:03:48,800 Speaker 1: in your life and plan ahead, not just with your money, 82 00:03:49,200 --> 00:03:52,680 Speaker 1: but really what we're talking about is planning ahead to 83 00:03:52,840 --> 00:03:56,960 Speaker 1: construct your ideal life after you stop working full time. 84 00:03:57,440 --> 00:03:59,360 Speaker 1: What do you want to do, where do you want 85 00:03:59,400 --> 00:04:01,480 Speaker 1: to do it, Who do you want to do it with? 86 00:04:01,960 --> 00:04:04,680 Speaker 1: What purpose does it bring you? Those are the kind 87 00:04:04,720 --> 00:04:07,320 Speaker 1: of things that we need to be talking about just 88 00:04:07,400 --> 00:04:09,600 Speaker 1: as much as we talk about the pile of money. 89 00:04:10,320 --> 00:04:14,320 Speaker 2: Yeah, I agree, and I think everybody goes through this 90 00:04:14,520 --> 00:04:17,120 Speaker 2: for a long time when we're in the accumulation mode, right, 91 00:04:17,120 --> 00:04:19,279 Speaker 2: which is most of our adult lives. You spend thirty 92 00:04:19,320 --> 00:04:22,640 Speaker 2: forty years working and building a pile. And during that 93 00:04:22,720 --> 00:04:25,680 Speaker 2: time you are making decisions between this is the road 94 00:04:25,720 --> 00:04:28,640 Speaker 2: to financial failure, this is the road to financial success. Right, 95 00:04:28,680 --> 00:04:31,599 Speaker 2: These are good versus bad decisions fairly obvious. What I 96 00:04:31,600 --> 00:04:34,000 Speaker 2: mean by that is is it is it a better 97 00:04:34,040 --> 00:04:35,720 Speaker 2: idea for me to save more and my four oh 98 00:04:35,720 --> 00:04:37,599 Speaker 2: and K? Or is it a better idea for me 99 00:04:37,680 --> 00:04:40,279 Speaker 2: to go buy this Ferrari and drive it back and 100 00:04:40,320 --> 00:04:41,920 Speaker 2: forth to work every day, just because I've got the 101 00:04:41,960 --> 00:04:43,600 Speaker 2: money to do it. That's a black and white good 102 00:04:43,640 --> 00:04:47,560 Speaker 2: idea versus bad idea decision. Those decisions are fairly obvious. 103 00:04:47,600 --> 00:04:50,400 Speaker 2: If I save more, if I manage my credit correctly, 104 00:04:50,560 --> 00:04:52,760 Speaker 2: and I don't panic when the market wobbles, then I'm 105 00:04:52,800 --> 00:04:55,560 Speaker 2: going to be on a really good path to get 106 00:04:55,600 --> 00:04:58,200 Speaker 2: to the harder decisions when it gets tougher. Is when 107 00:04:58,240 --> 00:05:00,440 Speaker 2: you've got that optionality, right, that's the goal I want 108 00:05:00,480 --> 00:05:02,480 Speaker 2: my freedom. Well, freedom means you got to choose stuff. 109 00:05:02,520 --> 00:05:05,640 Speaker 2: Freedom isn't actually free. There's work involved in it, so, 110 00:05:06,160 --> 00:05:07,599 Speaker 2: and that has everything to do with it. When do 111 00:05:07,680 --> 00:05:10,320 Speaker 2: I want to retire? So it's important to remember that 112 00:05:09,920 --> 00:05:12,679 Speaker 2: that choice can be scary. It's good to have choices, 113 00:05:12,720 --> 00:05:15,359 Speaker 2: but oftentimes we are stuck between a good choice, a 114 00:05:15,360 --> 00:05:17,480 Speaker 2: better choice, and a bad choice. All of them are good, 115 00:05:17,480 --> 00:05:20,120 Speaker 2: positive things, but you do have to make a decision eventually, 116 00:05:20,160 --> 00:05:23,880 Speaker 2: so make sure you understand the different pros and cons 117 00:05:23,960 --> 00:05:26,520 Speaker 2: what all those options are, Brian. 118 00:05:26,279 --> 00:05:29,240 Speaker 1: I think a great idea, Well, I'm going to suggest 119 00:05:29,320 --> 00:05:31,240 Speaker 1: it's a great idea. I want you to weigh in 120 00:05:31,279 --> 00:05:33,640 Speaker 1: on whether you like this idea or not. It's an 121 00:05:33,680 --> 00:05:36,279 Speaker 1: idea I've kicked around on the show before, but I've 122 00:05:36,320 --> 00:05:38,760 Speaker 1: never seen anyone do it that I know. I've not 123 00:05:38,920 --> 00:05:41,520 Speaker 1: done it, so I kind of if I think it's 124 00:05:41,520 --> 00:05:43,840 Speaker 1: a great idea, I need to eat my own cooking 125 00:05:43,880 --> 00:05:45,640 Speaker 1: here and actually go do it. And what I'm talking 126 00:05:45,640 --> 00:05:49,479 Speaker 1: about here is do a two week or just a 127 00:05:49,560 --> 00:05:54,760 Speaker 1: ten day staycation, meaning test drive retirement. Go to a 128 00:05:54,839 --> 00:05:56,919 Speaker 1: place you think you're going to want to live with, 129 00:05:57,040 --> 00:05:59,440 Speaker 1: the people, you want to be with, your spouse, all 130 00:05:59,520 --> 00:06:01,840 Speaker 1: that activities you think you're going to want to be 131 00:06:01,960 --> 00:06:06,360 Speaker 1: involved with, and test drive it. Test drive normal life 132 00:06:06,480 --> 00:06:10,720 Speaker 1: in retirement, and then have some meaningful conversations with your 133 00:06:10,720 --> 00:06:15,039 Speaker 1: spouse over dinner. Take some notes. What worked well? What 134 00:06:15,160 --> 00:06:18,599 Speaker 1: are some areas where we need to continue to dialogue 135 00:06:18,680 --> 00:06:21,000 Speaker 1: and work on and what are some things that made 136 00:06:21,000 --> 00:06:24,680 Speaker 1: me unsatisfied during that staycation? What do you think about 137 00:06:24,760 --> 00:06:28,240 Speaker 1: that as an idea for pre planning retirement. 138 00:06:28,960 --> 00:06:32,360 Speaker 2: I like anything that triggers conversation because you know, for 139 00:06:32,520 --> 00:06:34,480 Speaker 2: married couples, a lot of times these are things we 140 00:06:34,560 --> 00:06:37,640 Speaker 2: never talk about. One of the downsides of financial success 141 00:06:38,160 --> 00:06:40,200 Speaker 2: is that there's really no pressure to think ahead and 142 00:06:40,240 --> 00:06:42,200 Speaker 2: most of the time, and these can be scary thoughts. 143 00:06:42,240 --> 00:06:44,400 Speaker 2: This is hard work, you know, figuring out what are 144 00:06:44,440 --> 00:06:46,920 Speaker 2: we once the kids are up and out and we 145 00:06:46,960 --> 00:06:50,000 Speaker 2: are no longer just our careers and just maintaining this house. 146 00:06:50,000 --> 00:06:50,760 Speaker 3: Well, what does that leave? 147 00:06:50,800 --> 00:06:53,240 Speaker 2: What are we A lot of couples are afraid to 148 00:06:53,279 --> 00:06:55,960 Speaker 2: talk about that. So anything that triggers that conversation is 149 00:06:56,000 --> 00:06:58,640 Speaker 2: a good thing. And don't go into that notion that 150 00:06:58,640 --> 00:07:01,600 Speaker 2: that dinner or whatever, that you're whatever venue you're going 151 00:07:01,640 --> 00:07:03,760 Speaker 2: to have with the idea that we're going to nail 152 00:07:03,800 --> 00:07:05,400 Speaker 2: all this by the time we have dessert. 153 00:07:05,480 --> 00:07:06,239 Speaker 3: That's not going to happen. 154 00:07:06,240 --> 00:07:09,480 Speaker 2: You're really just starting the conversation and you are going 155 00:07:09,520 --> 00:07:11,920 Speaker 2: to be asked questions by your partner that you didn't 156 00:07:11,960 --> 00:07:12,240 Speaker 2: think of. 157 00:07:12,880 --> 00:07:13,920 Speaker 3: And that's the whole point of this. 158 00:07:14,000 --> 00:07:16,640 Speaker 2: Discussion because you know, now we're getting out what is 159 00:07:16,680 --> 00:07:18,320 Speaker 2: in everybody's head and how do we want to react 160 00:07:18,360 --> 00:07:18,840 Speaker 2: to these things. 161 00:07:18,840 --> 00:07:20,640 Speaker 3: What are your priorities, what are my priorities? 162 00:07:20,640 --> 00:07:22,320 Speaker 2: How do we make these things combined so that we 163 00:07:22,360 --> 00:07:24,320 Speaker 2: can have as much fun as possible during retirement. 164 00:07:25,200 --> 00:07:27,240 Speaker 1: Yeah, maybe maybe a different way to look at this, 165 00:07:27,320 --> 00:07:30,000 Speaker 1: a different goal to achieve is instead of you know, 166 00:07:30,120 --> 00:07:32,480 Speaker 1: just cutting things off one hundred percent and being one 167 00:07:32,560 --> 00:07:36,480 Speaker 1: hundred percent quote unquote retired and doing nothing, think about 168 00:07:36,520 --> 00:07:40,480 Speaker 1: retirement as optionality. So instead of you know, cutting things 169 00:07:40,520 --> 00:07:44,680 Speaker 1: off one hundred percent, meaning you know, have a little optionality, 170 00:07:44,800 --> 00:07:47,640 Speaker 1: meaning you wake up and decide what you want to do, 171 00:07:48,240 --> 00:07:51,160 Speaker 1: not what you have to do. And for some people, 172 00:07:51,200 --> 00:07:53,560 Speaker 1: and I think a growing number of people, that could 173 00:07:53,640 --> 00:07:59,240 Speaker 1: be part time work, consulting, volunteering, passion projects, or even 174 00:07:59,280 --> 00:08:03,760 Speaker 1: continuing to work but completely on your terms for the 175 00:08:04,120 --> 00:08:07,680 Speaker 1: for the company from which you retired. That's becoming more 176 00:08:07,720 --> 00:08:11,400 Speaker 1: and more of a thing. And there's another benefit to that. Financially, 177 00:08:11,960 --> 00:08:14,920 Speaker 1: you know, your portfolio doesn't have to carry one hundred 178 00:08:14,960 --> 00:08:17,720 Speaker 1: percent of the load if you and your spouse are 179 00:08:17,760 --> 00:08:21,320 Speaker 1: out there, you know, for reasons that are important to you, 180 00:08:21,320 --> 00:08:24,600 Speaker 1: you're deriving a little bit of earned income, and you're 181 00:08:24,640 --> 00:08:26,720 Speaker 1: involved every day. You have a reason to get up 182 00:08:26,760 --> 00:08:28,840 Speaker 1: in the morning at a certain time and get out 183 00:08:28,880 --> 00:08:33,040 Speaker 1: there and benefit the world a little bit. That optionality 184 00:08:33,240 --> 00:08:36,600 Speaker 1: seems to be what's taking hold for a lot of 185 00:08:36,640 --> 00:08:40,120 Speaker 1: people that are retiring here in the the mid you know, 186 00:08:40,240 --> 00:08:44,520 Speaker 1: twenty twenty twenty five, instead of people that retired twenty 187 00:08:44,600 --> 00:08:47,640 Speaker 1: years ago. Are you seeing a similar trend with the 188 00:08:47,640 --> 00:08:48,600 Speaker 1: folks you're talking to. 189 00:08:49,040 --> 00:08:52,679 Speaker 2: Absolutely, because a lot of people we do the financial 190 00:08:52,720 --> 00:08:54,560 Speaker 2: planning process, and again, like I was saying, most people 191 00:08:54,600 --> 00:08:57,000 Speaker 2: hide behind that mountain of I just don't have enough money, 192 00:08:57,080 --> 00:08:59,320 Speaker 2: and then they realize eventually there's a bigger mountain hiding 193 00:08:59,360 --> 00:09:01,080 Speaker 2: behind it, which is now I have a bunch of time. 194 00:09:01,400 --> 00:09:04,040 Speaker 2: So yes, I do oftentimes see that when I encourage 195 00:09:04,040 --> 00:09:06,000 Speaker 2: people to do is especially those who have if you've 196 00:09:06,000 --> 00:09:09,079 Speaker 2: built something from nothing, then you're probably pretty are already 197 00:09:09,120 --> 00:09:12,120 Speaker 2: pretty well ingrained with a work mindset, and it's probably 198 00:09:12,120 --> 00:09:13,800 Speaker 2: not going to sit well to retire anyway, at least 199 00:09:13,840 --> 00:09:16,080 Speaker 2: not immediately. So what I encourage people to do is 200 00:09:16,160 --> 00:09:19,280 Speaker 2: go on indeed, dot com or any job site out there, 201 00:09:19,440 --> 00:09:22,920 Speaker 2: and go google keywords for stuff you're interested in, and 202 00:09:23,000 --> 00:09:25,280 Speaker 2: maybe that's your career, but I wouldn't even start there. 203 00:09:25,559 --> 00:09:28,200 Speaker 2: Start with stuff that has nothing to do with what 204 00:09:28,240 --> 00:09:30,240 Speaker 2: you've done for a living. And however you've built all 205 00:09:30,240 --> 00:09:34,120 Speaker 2: that wealth, that can be a wonderful change there anyway. Also, 206 00:09:34,200 --> 00:09:36,520 Speaker 2: it has the added bonus of making you the dumbest 207 00:09:36,520 --> 00:09:38,440 Speaker 2: person in the room at that new organization. You don't 208 00:09:38,440 --> 00:09:40,160 Speaker 2: want to be the smartest person in the room. If 209 00:09:40,200 --> 00:09:42,319 Speaker 2: that's what you want, then don't retire. You want to 210 00:09:42,320 --> 00:09:44,080 Speaker 2: be the dumbest person in the room now so that 211 00:09:44,200 --> 00:09:46,000 Speaker 2: people will leave you alone. You can go do your 212 00:09:46,040 --> 00:09:48,079 Speaker 2: job something you care about. But you're not the one 213 00:09:48,080 --> 00:09:50,400 Speaker 2: who owns all the major decisions. There's somebody else out 214 00:09:50,440 --> 00:09:52,240 Speaker 2: there for that. But again, just to kind of get 215 00:09:52,280 --> 00:09:54,600 Speaker 2: your hit your mind going, and that that does have 216 00:09:54,640 --> 00:09:57,319 Speaker 2: a trickle down effect on the finances because if there 217 00:09:57,400 --> 00:10:00,640 Speaker 2: is a stream of income, remember you're not chasing salary. 218 00:10:00,840 --> 00:10:03,199 Speaker 2: It can be tough for successful people to think this way. 219 00:10:03,240 --> 00:10:04,760 Speaker 2: I'm going to look for a job where I don't 220 00:10:04,760 --> 00:10:06,560 Speaker 2: care about the salary and I don't care about the 221 00:10:06,559 --> 00:10:09,560 Speaker 2: benefits package. Yes you are, because this has nothing to 222 00:10:09,600 --> 00:10:13,240 Speaker 2: do with finances. It helps financially but that's not the objective. 223 00:10:13,280 --> 00:10:15,679 Speaker 2: The objective is purpose. Make sure you've got some kind 224 00:10:15,720 --> 00:10:18,000 Speaker 2: of purpose and you can benefit from it. If there 225 00:10:18,080 --> 00:10:20,240 Speaker 2: is income coming off of it, that's great. That means 226 00:10:20,280 --> 00:10:22,360 Speaker 2: we can leave the investments alone a little longer, things 227 00:10:22,400 --> 00:10:25,200 Speaker 2: will compound a little longer, you can pay the bills 228 00:10:25,240 --> 00:10:28,600 Speaker 2: with a stream of income that didn't exist before. So 229 00:10:28,640 --> 00:10:31,760 Speaker 2: there are financial impacts to it, but again, the psychological 230 00:10:31,800 --> 00:10:34,160 Speaker 2: impacts are much more important in a situation like this 231 00:10:34,440 --> 00:10:38,240 Speaker 2: because a lot of people simply don't really spend any 232 00:10:38,280 --> 00:10:41,320 Speaker 2: time thinking about what that cold Turkey retirement approach is 233 00:10:41,360 --> 00:10:45,079 Speaker 2: going to feel like about two weeks. In first couple weeks, fantastic, 234 00:10:45,200 --> 00:10:46,599 Speaker 2: don't have a schedule to do whatever I want to 235 00:10:46,640 --> 00:10:49,520 Speaker 2: do today. Then you get to February and it's cold 236 00:10:49,520 --> 00:10:51,680 Speaker 2: and it's gross outside and you don't have any reason 237 00:10:51,720 --> 00:10:52,920 Speaker 2: to get out of bed, and now all of a 238 00:10:52,960 --> 00:10:55,839 Speaker 2: sudden we start the spiral. So very important to put 239 00:10:55,880 --> 00:10:56,719 Speaker 2: some thought into this. 240 00:10:57,640 --> 00:11:00,080 Speaker 1: Yeah, said another way, what we're talking about in this 241 00:11:00,080 --> 00:11:03,600 Speaker 1: segment is just the risk that far too few people 242 00:11:04,040 --> 00:11:07,280 Speaker 1: ever account for. We spend so much time talking about 243 00:11:07,360 --> 00:11:11,319 Speaker 1: stock market risk, inflation risk, all those kind of numerical 244 00:11:11,480 --> 00:11:14,880 Speaker 1: economic kind of risk, but we don't talk enough about 245 00:11:15,080 --> 00:11:18,720 Speaker 1: something we call lifestyle risk or purpose risk, the risk 246 00:11:18,760 --> 00:11:21,960 Speaker 1: of building a life where everything meaningful to you is 247 00:11:22,000 --> 00:11:24,559 Speaker 1: tied to your career, and then when that gets ripped 248 00:11:24,600 --> 00:11:28,320 Speaker 1: out overnight, you got to make some adjustments and no 249 00:11:28,559 --> 00:11:32,600 Speaker 1: spreadsheet or financial planning software is going to account for that. 250 00:11:32,800 --> 00:11:35,880 Speaker 1: Here's the all Worth advice. Don't just plan to stop working. 251 00:11:36,559 --> 00:11:41,319 Speaker 1: Plan to create your ideal life and be very proactive 252 00:11:41,480 --> 00:11:46,880 Speaker 1: about choosing what comes next. You've spent decades building your portfolio, 253 00:11:46,960 --> 00:11:49,320 Speaker 1: but what if the real mistake is not having a 254 00:11:49,360 --> 00:11:52,480 Speaker 1: plan to actually use it. We'll talk about that coming 255 00:11:52,520 --> 00:11:55,000 Speaker 1: up next. You're listening to Simply Money, presented by all 256 00:11:55,000 --> 00:12:03,719 Speaker 1: Worth Financial on fifty five KRC. The talk station you're 257 00:12:03,760 --> 00:12:06,600 Speaker 1: listening to Simply Money is by all Worth Financial Lumbob 258 00:12:06,679 --> 00:12:10,280 Speaker 1: spun Seller along with Brian James. You've got a seventy 259 00:12:10,480 --> 00:12:14,079 Speaker 1: thirty portfolio. How much cash should you really be holding? 260 00:12:14,480 --> 00:12:17,760 Speaker 1: How do you protect against the sequence of return risks? 261 00:12:18,200 --> 00:12:22,080 Speaker 1: And what happens if market surge or stumble right when 262 00:12:22,080 --> 00:12:25,000 Speaker 1: you're ready to retire. These are all questions we'll cover 263 00:12:25,280 --> 00:12:28,480 Speaker 1: coming up straight ahead. If you think about it, most 264 00:12:28,480 --> 00:12:33,600 Speaker 1: people spend thirty forty years focused on one thing, building wealth, 265 00:12:33,880 --> 00:12:36,880 Speaker 1: but then retirement hits. It's no longer how do I 266 00:12:36,960 --> 00:12:39,120 Speaker 1: grow this pile of money anymore? It's how do I 267 00:12:39,240 --> 00:12:42,679 Speaker 1: turn this pile of money into a paycheck? And that's 268 00:12:42,720 --> 00:12:47,000 Speaker 1: where most plans can sometimes fall apart because people don't 269 00:12:47,000 --> 00:12:50,280 Speaker 1: actually have an income strategy. They just got a bunch 270 00:12:50,280 --> 00:12:53,400 Speaker 1: of accounts or, as you like to say, Brian, piles 271 00:12:53,440 --> 00:12:55,160 Speaker 1: of money. And that's not a strategy. 272 00:12:56,000 --> 00:12:58,880 Speaker 2: Yeah, and by this time of life where we're starting 273 00:12:58,880 --> 00:13:00,400 Speaker 2: to think of how am I going to turn into 274 00:13:00,400 --> 00:13:03,200 Speaker 2: a stream of income, well that means we were probably 275 00:13:03,240 --> 00:13:05,360 Speaker 2: at the tail end of our thirty to thirty five 276 00:13:05,440 --> 00:13:08,720 Speaker 2: maybe forty year accumulation period where we've been working since 277 00:13:08,720 --> 00:13:12,040 Speaker 2: our twenties and just basically saving, saving, saving saving. This 278 00:13:12,120 --> 00:13:14,720 Speaker 2: is the very, very first decision that people you know, 279 00:13:14,960 --> 00:13:16,520 Speaker 2: it kind of it's funny, It kind of blows people's 280 00:13:16,559 --> 00:13:17,920 Speaker 2: minds that, wait a minute, I got all this pile 281 00:13:17,920 --> 00:13:19,640 Speaker 2: of money, but I have no idea how I'm going 282 00:13:19,679 --> 00:13:21,600 Speaker 2: to tap into it, let alone. How do I get 283 00:13:21,600 --> 00:13:23,520 Speaker 2: it from that IRA into my checking account? How does 284 00:13:23,600 --> 00:13:23,960 Speaker 2: that work? 285 00:13:24,600 --> 00:13:26,559 Speaker 3: How do I know which account that tap into? I've 286 00:13:26,559 --> 00:13:27,040 Speaker 3: got pre. 287 00:13:26,960 --> 00:13:29,440 Speaker 2: Tax dollars, I got raw dollars, I've got the after 288 00:13:29,520 --> 00:13:31,720 Speaker 2: tax dollars. You know which, How do I make that choice? 289 00:13:31,840 --> 00:13:34,000 Speaker 2: And so a lot of people will revert to rules 290 00:13:34,000 --> 00:13:34,360 Speaker 2: of thumb. 291 00:13:34,440 --> 00:13:34,560 Speaker 3: Right. 292 00:13:34,600 --> 00:13:36,280 Speaker 2: This is the first thing you look at if you're 293 00:13:36,280 --> 00:13:38,120 Speaker 2: looking on the internet for this type of advice, just 294 00:13:38,240 --> 00:13:39,920 Speaker 2: for these questions, You're going to see all the rules 295 00:13:39,920 --> 00:13:42,000 Speaker 2: of thumb out there. First one, let's talk about this. 296 00:13:42,240 --> 00:13:44,800 Speaker 2: So the just take four percent right. This is based 297 00:13:44,800 --> 00:13:47,600 Speaker 2: off of a This is pretty a pretty common number 298 00:13:47,600 --> 00:13:49,080 Speaker 2: of people through out there. It's based off a study 299 00:13:49,080 --> 00:13:51,000 Speaker 2: that was done that I won't beat it to death here, 300 00:13:51,160 --> 00:13:54,320 Speaker 2: but essentially says that looking over thirty year periods going 301 00:13:54,360 --> 00:13:56,560 Speaker 2: back through most of the last century, if you took 302 00:13:56,600 --> 00:13:58,959 Speaker 2: out four percent every year, you would not have deleted 303 00:13:58,960 --> 00:14:02,640 Speaker 2: the portfolio depleted the portfolio because of what the market 304 00:14:02,679 --> 00:14:04,560 Speaker 2: had done. So that's a somewhat realized it is a 305 00:14:04,559 --> 00:14:05,960 Speaker 2: good rule of time. This is one where I'm like, 306 00:14:05,960 --> 00:14:08,240 Speaker 2: that's a good base. I don't normally like rules of time. 307 00:14:08,320 --> 00:14:11,800 Speaker 2: I think they take the the pressure off of making 308 00:14:11,840 --> 00:14:14,240 Speaker 2: an intelligent, educated decision and putting in the work to 309 00:14:14,280 --> 00:14:14,640 Speaker 2: get there. 310 00:14:14,760 --> 00:14:15,800 Speaker 3: But it's good enough for now. 311 00:14:15,880 --> 00:14:17,800 Speaker 2: So that can be a starting point, but it doesn't 312 00:14:17,800 --> 00:14:21,800 Speaker 2: account any anything for taxes, or market conditions or real life. 313 00:14:22,000 --> 00:14:24,680 Speaker 2: It's one thing to throw it all into a hypothetical spreadsheet, 314 00:14:25,000 --> 00:14:28,000 Speaker 2: but you'll be doing this. The spreadsheet doesn't go through 315 00:14:28,280 --> 00:14:31,680 Speaker 2: family situations. It doesn't go through the global you know, 316 00:14:31,760 --> 00:14:33,640 Speaker 2: craziness that can happen from time to time. 317 00:14:34,000 --> 00:14:34,480 Speaker 3: It doesn't. 318 00:14:34,840 --> 00:14:36,960 Speaker 2: It doesn't have to be a human brain thinking its 319 00:14:37,000 --> 00:14:40,120 Speaker 2: way through the different emotions that can come when we're 320 00:14:40,160 --> 00:14:42,440 Speaker 2: talking about financial things. So, you know, especially the more 321 00:14:42,480 --> 00:14:44,960 Speaker 2: money you have, obviously the stakes are higher. The planning 322 00:14:45,000 --> 00:14:47,280 Speaker 2: has to be more precise. Where you pull that money 323 00:14:47,320 --> 00:14:49,720 Speaker 2: from matters just as much as how you get it there. 324 00:14:49,960 --> 00:14:51,000 Speaker 3: So we got an example. 325 00:14:51,200 --> 00:14:53,320 Speaker 2: Tell us about Bob and Jane, fake people that we 326 00:14:53,360 --> 00:14:54,920 Speaker 2: are going to walk through an example. 327 00:14:54,960 --> 00:14:59,160 Speaker 1: Bob, Well, let's let's take Pop and Jane. They recently retired. 328 00:14:59,280 --> 00:15:01,560 Speaker 1: I don't know, they got three or four million bucks saved. 329 00:15:01,680 --> 00:15:04,840 Speaker 1: They're in great shape on paper. They've always heard that 330 00:15:04,880 --> 00:15:08,120 Speaker 1: four percent rules, so they decide, hey, we can take 331 00:15:08,240 --> 00:15:10,680 Speaker 1: we we're even even worse, smart enough to pull out 332 00:15:10,680 --> 00:15:13,600 Speaker 1: a calculator and take three and a half million times 333 00:15:13,600 --> 00:15:16,240 Speaker 1: four percent. That's one hundred and forty thousand dollars a year. 334 00:15:16,640 --> 00:15:20,800 Speaker 1: Sounds reasonable on the surface. However, here's what they're overlooking. 335 00:15:21,000 --> 00:15:24,240 Speaker 1: Most of their money is in pre tax retirement accounts 336 00:15:24,320 --> 00:15:26,440 Speaker 1: for one keys, you know, all the things that they 337 00:15:26,480 --> 00:15:30,520 Speaker 1: did right accumulating that pile. So every single dollar they 338 00:15:30,560 --> 00:15:33,240 Speaker 1: pull is fully taxable, so that one hundred and forty 339 00:15:33,240 --> 00:15:36,640 Speaker 1: thousand dollars, well, after taxes, it might only be you know, 340 00:15:36,640 --> 00:15:39,040 Speaker 1: one hundred and fifteen, one hundred and twenty thousand, and 341 00:15:39,080 --> 00:15:42,840 Speaker 1: their lifestyle is built around spending more than that. Now 342 00:15:42,880 --> 00:15:45,720 Speaker 1: they either have to cut back or they have to 343 00:15:45,760 --> 00:15:49,760 Speaker 1: even pull more from their portfolio to compensate for the taxes. 344 00:15:49,880 --> 00:15:53,400 Speaker 1: And that's how a quote unquote safe number four percent 345 00:15:53,480 --> 00:15:58,000 Speaker 1: rule withdrawal strategy can sometimes you know, create more risk 346 00:15:58,080 --> 00:15:59,600 Speaker 1: in your long term financial plan. 347 00:16:00,160 --> 00:16:03,200 Speaker 2: Yeah, so needing to make sure you understand what the 348 00:16:03,240 --> 00:16:05,280 Speaker 2: impact of all these different things. So let's talk about this. 349 00:16:05,600 --> 00:16:07,400 Speaker 2: So which account do I hit first? If that's one 350 00:16:07,440 --> 00:16:09,040 Speaker 2: of the big questions, Well, this is where we see 351 00:16:09,040 --> 00:16:11,160 Speaker 2: that big gap. You know, we've got all these different 352 00:16:11,200 --> 00:16:13,960 Speaker 2: tax treatments here, and you know, so let's let's go 353 00:16:14,000 --> 00:16:16,680 Speaker 2: through another example here. Now we have Susan She's a widow. 354 00:16:16,720 --> 00:16:19,480 Speaker 2: She recently retires to go about five million dollars. You know, 355 00:16:19,480 --> 00:16:21,800 Speaker 2: she's got that spread across three different buckets. She's got 356 00:16:21,800 --> 00:16:24,280 Speaker 2: a pre tax IRA, a brokeri'e account, which is that 357 00:16:24,400 --> 00:16:26,720 Speaker 2: that's the fancy word for not an IRA, not a ROTH, 358 00:16:26,960 --> 00:16:29,320 Speaker 2: and she does have a ROTH, and she she just figures, okay, 359 00:16:29,320 --> 00:16:30,800 Speaker 2: I'll just take a little bit from each each year. 360 00:16:30,960 --> 00:16:32,960 Speaker 2: I'll just take it out proportionally, and that, you know, 361 00:16:33,000 --> 00:16:35,600 Speaker 2: seems reasonable. It's better than you know, not really thinking 362 00:16:35,600 --> 00:16:37,840 Speaker 2: about it at all, I suppose, But it's not very efficient. 363 00:16:38,120 --> 00:16:42,240 Speaker 2: She's she's triggering unnecessary taxes from that IRA. She also 364 00:16:42,320 --> 00:16:44,880 Speaker 2: could be using the uh you know, those those early 365 00:16:45,280 --> 00:16:47,560 Speaker 2: low tax years, so she is not of the age 366 00:16:47,600 --> 00:16:50,280 Speaker 2: of where she needs to take require minimum distributions, hasn't 367 00:16:50,280 --> 00:16:53,080 Speaker 2: turned on Social Security yet, so she is missing an 368 00:16:53,080 --> 00:16:56,320 Speaker 2: opportunity to take those lower brackets and not spike the football. 369 00:16:56,320 --> 00:16:58,760 Speaker 2: I say this all the time, Bob, having a year 370 00:16:58,800 --> 00:17:01,280 Speaker 2: where you paid you know, a tiny percentage in taxes, 371 00:17:01,320 --> 00:17:03,920 Speaker 2: that's not something to celebrate. That's a missed opportunity. We 372 00:17:03,920 --> 00:17:07,520 Speaker 2: should purposely be pushing ourselves into that ten fifteen, maybe 373 00:17:07,560 --> 00:17:11,080 Speaker 2: twenty twenty two percent bracket with WROTH conversions. Because if 374 00:17:11,119 --> 00:17:13,000 Speaker 2: for somebody who has this much money, she's got five 375 00:17:13,040 --> 00:17:15,000 Speaker 2: million dollars in her early sixties, now, well that's going 376 00:17:15,040 --> 00:17:17,160 Speaker 2: to be an enormous amount of money twenty five years 377 00:17:17,160 --> 00:17:19,400 Speaker 2: from now or fifteen years from now when she hits 378 00:17:19,480 --> 00:17:22,800 Speaker 2: required minimum distribution age. So we should be taking advantage 379 00:17:22,840 --> 00:17:24,480 Speaker 2: of this that The problem is not that she can't 380 00:17:24,480 --> 00:17:27,480 Speaker 2: afford her bills. That's not the issue. She's missing opportunities 381 00:17:27,520 --> 00:17:30,920 Speaker 2: to be efficient simply because she doesn't understand how those 382 00:17:30,960 --> 00:17:34,080 Speaker 2: different outcomes can work. And that's perfectly understandable. This is 383 00:17:34,080 --> 00:17:35,440 Speaker 2: you know, unless you do this for a living, look 384 00:17:35,480 --> 00:17:37,040 Speaker 2: at it every single day, you're not going to know 385 00:17:37,080 --> 00:17:40,080 Speaker 2: these things. But that's where the opportunity lies. It is 386 00:17:40,119 --> 00:17:42,480 Speaker 2: in the how do I take how do I pay 387 00:17:42,480 --> 00:17:42,879 Speaker 2: my bills? 388 00:17:42,880 --> 00:17:43,160 Speaker 3: First? 389 00:17:43,160 --> 00:17:45,600 Speaker 2: And then what efficiency opportunities are there out there to 390 00:17:45,640 --> 00:17:48,399 Speaker 2: move money between my pre tax, my WROTH and my 391 00:17:48,480 --> 00:17:50,520 Speaker 2: after tax piles of money. So just make sure you 392 00:17:50,600 --> 00:17:52,920 Speaker 2: understand that there are alternatives out there, and if you 393 00:17:52,960 --> 00:17:55,200 Speaker 2: can't pull the trigger on any one of them, hire 394 00:17:55,240 --> 00:17:57,240 Speaker 2: somebody who will tell you from an arms length the 395 00:17:57,240 --> 00:17:59,400 Speaker 2: way here is what is beneficial to you and here 396 00:17:59,560 --> 00:17:59,880 Speaker 2: what is. 397 00:17:59,800 --> 00:18:04,040 Speaker 1: Not Yeah, Brian, and some of these efficiency opportunities need 398 00:18:04,080 --> 00:18:07,560 Speaker 1: to get started before you're two years away from retirement 399 00:18:07,640 --> 00:18:11,200 Speaker 1: or right when you retire. Meaning it's how these buckets 400 00:18:11,200 --> 00:18:14,960 Speaker 1: of money are accumulated while you're saving the money that matters. 401 00:18:15,320 --> 00:18:19,159 Speaker 1: You know, raw accounts or taxable brokerage accounts don't just happen. 402 00:18:19,520 --> 00:18:22,040 Speaker 1: So you have these buckets of money from which to 403 00:18:22,119 --> 00:18:24,880 Speaker 1: create a strategy. You got to be proactive as well 404 00:18:24,960 --> 00:18:28,719 Speaker 1: about how you accumulate the money, you know, while you're working. 405 00:18:28,840 --> 00:18:31,199 Speaker 1: So the sooner you can get out in front of 406 00:18:31,200 --> 00:18:34,080 Speaker 1: this and work with the good fiduciary advisor to help 407 00:18:34,119 --> 00:18:39,520 Speaker 1: you build an actual wealth accumulation strategy which turns into 408 00:18:39,600 --> 00:18:43,520 Speaker 1: a great distribution strategy at retirement. The sooner you can 409 00:18:43,560 --> 00:18:46,119 Speaker 1: get on that, the better, the more options you're gonna have. 410 00:18:46,400 --> 00:18:49,040 Speaker 1: Here's the all Worth advice. Don't just build wealth, build 411 00:18:49,080 --> 00:18:52,760 Speaker 1: a plan to turn it into a reliable, tax efficient 412 00:18:53,119 --> 00:18:58,280 Speaker 1: income stream. Building your quote unquote forever home sounds like 413 00:18:58,359 --> 00:19:01,000 Speaker 1: the dream, But what if forever is a lot shorter 414 00:19:01,160 --> 00:19:04,200 Speaker 1: than you think. Coming up next, how that six thousand 415 00:19:04,200 --> 00:19:08,280 Speaker 1: square foot dream home can quietly turn into a massive 416 00:19:08,560 --> 00:19:11,679 Speaker 1: headache you're listening to Simply Money presented by Alworth Financial 417 00:19:11,800 --> 00:19:19,879 Speaker 1: at fifty five krs e D talk station. You're listening 418 00:19:19,920 --> 00:19:22,600 Speaker 1: to Simply Money presented by Allworth Financial on Bob's Fund 419 00:19:22,600 --> 00:19:25,480 Speaker 1: Seller along with Brian James. Joined tonight by our good 420 00:19:25,480 --> 00:19:30,119 Speaker 1: friend and real estate expert Michelle Sloan, owner of Remax Time. Michelle, 421 00:19:30,160 --> 00:19:33,000 Speaker 1: thank you as always for making time for us tonight, 422 00:19:33,680 --> 00:19:36,320 Speaker 1: and we want to talk about that term that gets 423 00:19:36,359 --> 00:19:40,560 Speaker 1: thrown around all the time, the quote unquote forever home. 424 00:19:41,200 --> 00:19:45,600 Speaker 1: And a lot of times people, you know, they say, well, 425 00:19:45,600 --> 00:19:48,760 Speaker 1: they're gonna buy this big, expensive house because it's our 426 00:19:49,200 --> 00:19:53,600 Speaker 1: quote forever home. And you're somebody that actually works with 427 00:19:53,760 --> 00:19:58,000 Speaker 1: people before and after these forever homes are purchased, and 428 00:19:58,040 --> 00:20:00,840 Speaker 1: you know how the sausage is made out in the 429 00:20:00,880 --> 00:20:04,840 Speaker 1: real world. Talk about the psychology of the forever home 430 00:20:05,359 --> 00:20:08,439 Speaker 1: and why you might not get, you know, so emotionally 431 00:20:08,480 --> 00:20:09,720 Speaker 1: attached to that decision. 432 00:20:10,560 --> 00:20:13,760 Speaker 4: Well, a forever home is a nice concept. It's one 433 00:20:13,800 --> 00:20:17,560 Speaker 4: that I feel like, you know, moving is a royal 434 00:20:17,640 --> 00:20:22,919 Speaker 4: pain in the butt, and most people, once they go 435 00:20:23,040 --> 00:20:25,119 Speaker 4: through it, they're like, I don't want to do this again. 436 00:20:25,520 --> 00:20:27,240 Speaker 4: So if I'm going to move, I want to move 437 00:20:27,280 --> 00:20:31,480 Speaker 4: into my forever home. And you know, buyers aren't just 438 00:20:31,560 --> 00:20:36,600 Speaker 4: purchasing a square footage. They're looking for stability, identity. They're 439 00:20:36,640 --> 00:20:39,800 Speaker 4: looking at the future and what their needs are and 440 00:20:39,840 --> 00:20:42,320 Speaker 4: the security of their home. But you're right, if you 441 00:20:42,440 --> 00:20:46,480 Speaker 4: find your forever home and it's this ginormous property with 442 00:20:46,600 --> 00:20:52,280 Speaker 4: eight thousand square foot footprint and three acres and this 443 00:20:52,359 --> 00:20:55,960 Speaker 4: is your forever home, after a while, that. 444 00:20:56,640 --> 00:20:58,399 Speaker 5: May become too big. 445 00:20:59,080 --> 00:21:04,680 Speaker 4: And so a forever home isn't necessarily about size or 446 00:21:05,520 --> 00:21:08,240 Speaker 4: you know, if you have granite countertops or you know, 447 00:21:08,280 --> 00:21:11,680 Speaker 4: there's you have to decide what is important to you 448 00:21:12,359 --> 00:21:16,720 Speaker 4: for really the next ten years, and a forever home 449 00:21:17,040 --> 00:21:21,400 Speaker 4: is one that it means something different to all buyers. 450 00:21:22,000 --> 00:21:24,360 Speaker 4: And we have to as an agent, as a real 451 00:21:24,440 --> 00:21:27,280 Speaker 4: estate agent for twenty years, you know, I have worked 452 00:21:27,280 --> 00:21:30,120 Speaker 4: with so many people who say this is my forever home. 453 00:21:30,160 --> 00:21:32,520 Speaker 4: I'm never going to buy again, I'm never going to 454 00:21:32,600 --> 00:21:36,280 Speaker 4: sell this property. And then I hear from them about 455 00:21:36,359 --> 00:21:39,240 Speaker 4: ten years later and they're like, Okay, Michelle, we're ready 456 00:21:39,240 --> 00:21:39,439 Speaker 4: to go. 457 00:21:40,400 --> 00:21:43,040 Speaker 2: Ready to go, Michelle, I've got a quick story for 458 00:21:43,400 --> 00:21:44,720 Speaker 2: you here when we get your reaction to this. So 459 00:21:44,960 --> 00:21:46,639 Speaker 2: I have we have some close friends of the family 460 00:21:46,720 --> 00:21:51,400 Speaker 2: who basically bought a family compound with their extended family. 461 00:21:51,920 --> 00:21:53,200 Speaker 3: And they knew what they were getting into. 462 00:21:53,240 --> 00:21:57,879 Speaker 2: This was a multi acre property, beautiful out in the woods. 463 00:21:57,920 --> 00:22:01,000 Speaker 2: There's a lake, and there's just all these beautiful area there. 464 00:22:01,160 --> 00:22:02,560 Speaker 2: And they knew they were gonna pull out of work 465 00:22:02,560 --> 00:22:02,800 Speaker 2: into it. 466 00:22:02,880 --> 00:22:02,960 Speaker 1: Right. 467 00:22:03,000 --> 00:22:04,359 Speaker 2: You don't just you don't go out there for the 468 00:22:04,359 --> 00:22:06,359 Speaker 2: weekend and sit there and enjoy the nature for a while. 469 00:22:06,359 --> 00:22:07,880 Speaker 3: You got a weed whack, you got a trail blaze. 470 00:22:07,880 --> 00:22:08,840 Speaker 3: You got to do all these things. 471 00:22:09,040 --> 00:22:11,720 Speaker 1: Is their last name? Is their last name Clampet by 472 00:22:11,720 --> 00:22:12,280 Speaker 1: any chance? 473 00:22:13,440 --> 00:22:15,400 Speaker 3: No, these are very much not the Clampits. 474 00:22:15,400 --> 00:22:18,280 Speaker 2: Now this is a again, this is a It was 475 00:22:18,320 --> 00:22:21,119 Speaker 2: a very wise idea. It was a great opportunity for 476 00:22:21,200 --> 00:22:23,399 Speaker 2: him at the time, Uh, because the whole family agreed 477 00:22:23,440 --> 00:22:24,639 Speaker 2: this was a good thing to do and it was 478 00:22:24,640 --> 00:22:26,680 Speaker 2: a good investment and so forth. But I think that 479 00:22:26,720 --> 00:22:29,200 Speaker 2: what what what caught them off guard was how quickly 480 00:22:29,800 --> 00:22:32,320 Speaker 2: they would they would tire of the need to go 481 00:22:32,440 --> 00:22:34,520 Speaker 2: out there and it would be seventy five percent work, 482 00:22:34,680 --> 00:22:37,040 Speaker 2: twenty five percent, uh, you know, enjoyment. 483 00:22:37,080 --> 00:22:38,639 Speaker 3: So do you see this coming? 484 00:22:38,800 --> 00:22:41,120 Speaker 2: I mean, like like in my place when people say 485 00:22:41,160 --> 00:22:42,680 Speaker 2: they want to buy a bunch of land, and we're 486 00:22:42,680 --> 00:22:43,640 Speaker 2: going to work that into the plan. 487 00:22:43,720 --> 00:22:44,040 Speaker 3: That's great. 488 00:22:44,080 --> 00:22:46,320 Speaker 2: I'm also gonna budget twenty thousand dollars for the biggest 489 00:22:46,320 --> 00:22:48,120 Speaker 2: tractor you've ever seen and ever thought you would own, 490 00:22:48,359 --> 00:22:50,280 Speaker 2: because you're gonna have think that way. So do you 491 00:22:50,320 --> 00:22:52,600 Speaker 2: Can you see it coming when somebody is looking at 492 00:22:52,600 --> 00:22:54,800 Speaker 2: that kind of thing and not really anticipating what the 493 00:22:54,840 --> 00:22:56,919 Speaker 2: real uh uh needs are going to be? 494 00:22:58,080 --> 00:23:01,000 Speaker 4: Yes and no, because you know, I can't obviously get 495 00:23:01,000 --> 00:23:05,440 Speaker 4: into the minds completely, but I know that if you're 496 00:23:05,440 --> 00:23:07,600 Speaker 4: buying a property like that, and it is going to 497 00:23:07,640 --> 00:23:10,480 Speaker 4: be a lot of work, and you may be up 498 00:23:10,480 --> 00:23:12,960 Speaker 4: for it for the first couple of years, but you're 499 00:23:13,040 --> 00:23:16,920 Speaker 4: right After a time, it gets tiring, and if you're 500 00:23:16,920 --> 00:23:20,200 Speaker 4: spending all of your free time taking care of the property, 501 00:23:20,680 --> 00:23:26,320 Speaker 4: you're really over extending your personal time, your private time, 502 00:23:26,880 --> 00:23:30,159 Speaker 4: and so that can become an issue. 503 00:23:30,200 --> 00:23:31,840 Speaker 5: You know, you see a lot of people. 504 00:23:31,720 --> 00:23:35,200 Speaker 4: Especially in the Cincinnati area and out in the country 505 00:23:35,320 --> 00:23:40,160 Speaker 4: and the surrounding suburbs, where families have owned family farms 506 00:23:40,200 --> 00:23:41,600 Speaker 4: for a really long time. 507 00:23:42,200 --> 00:23:44,600 Speaker 5: That's a lot of work and a lot of. 508 00:23:44,480 --> 00:23:48,240 Speaker 4: The children of these family farmers who own acres and 509 00:23:48,280 --> 00:23:51,679 Speaker 4: acres of land don't want all of the work that 510 00:23:51,720 --> 00:23:55,080 Speaker 4: goes along with it. So again, that could be someone's 511 00:23:55,119 --> 00:23:58,080 Speaker 4: forever home. It's the family farm that they've had in 512 00:23:58,119 --> 00:24:01,359 Speaker 4: their family for generations. But then there could be that 513 00:24:01,520 --> 00:24:05,719 Speaker 4: generation at some point that says, I can't do it, 514 00:24:05,760 --> 00:24:08,600 Speaker 4: I don't want to do it. And so there's a 515 00:24:08,600 --> 00:24:12,000 Speaker 4: lot of emotion into the word, you know, into that 516 00:24:12,119 --> 00:24:14,520 Speaker 4: phrase forever home, and. 517 00:24:14,760 --> 00:24:16,400 Speaker 5: You hope that you will raise. 518 00:24:16,200 --> 00:24:18,840 Speaker 4: Your kids and grow old in this home. But at 519 00:24:18,840 --> 00:24:22,400 Speaker 4: the same time, once you've raised your kids, a lot 520 00:24:22,440 --> 00:24:26,359 Speaker 4: of us and myself included, it is like, you know, 521 00:24:26,440 --> 00:24:30,440 Speaker 4: this isn't my forever home anymore because my life has changed. 522 00:24:31,040 --> 00:24:34,680 Speaker 4: And so you have to understand that it's okay if 523 00:24:34,680 --> 00:24:37,720 Speaker 4: it's your forever home while your kids are in school, 524 00:24:37,840 --> 00:24:41,440 Speaker 4: and you know, you're allowed to make a change, You're 525 00:24:41,480 --> 00:24:44,560 Speaker 4: allowed to change your mind, and a lot of people 526 00:24:44,680 --> 00:24:47,880 Speaker 4: will do that. And you know, I feel like, if 527 00:24:47,920 --> 00:24:49,800 Speaker 4: you want land and you want the kids to be 528 00:24:49,840 --> 00:24:52,800 Speaker 4: able to drive four wheelers around and you have those 529 00:24:52,800 --> 00:24:58,399 Speaker 4: are memories and your home is filled with memories of 530 00:24:58,560 --> 00:25:03,160 Speaker 4: family members, and I don't take that away from anyone 531 00:25:03,280 --> 00:25:06,160 Speaker 4: because if you're enjoying your home when you buy it, 532 00:25:06,480 --> 00:25:09,040 Speaker 4: and as long as you have it, then that's a 533 00:25:09,080 --> 00:25:10,080 Speaker 4: special place. 534 00:25:09,840 --> 00:25:10,440 Speaker 5: In your heart. 535 00:25:10,760 --> 00:25:14,080 Speaker 4: And then from there, yeah, it's time to call Michelle 536 00:25:14,160 --> 00:25:15,960 Speaker 4: and see if we can find you something else. 537 00:25:17,280 --> 00:25:19,800 Speaker 1: So Michelle, you know, we obviously just talked about the 538 00:25:19,800 --> 00:25:22,160 Speaker 1: big land purchase, you know, moving out in the country, 539 00:25:22,200 --> 00:25:24,800 Speaker 1: having the acreage, all about all of that take us 540 00:25:24,920 --> 00:25:29,080 Speaker 1: to some other psychological reasons for buying this forever home. 541 00:25:29,240 --> 00:25:32,280 Speaker 1: And what I'm talking about here is the oversized mc 542 00:25:32,320 --> 00:25:37,120 Speaker 1: mansion in the suburbs. People rationalizing maybe biting off more 543 00:25:37,119 --> 00:25:39,760 Speaker 1: than they can chew, you know, just in a Mason 544 00:25:39,880 --> 00:25:42,280 Speaker 1: or Loveland or some of these huge homes that are 545 00:25:42,320 --> 00:25:43,800 Speaker 1: available in the suburbs. 546 00:25:44,400 --> 00:25:47,760 Speaker 4: Yeah, we call that a bit of lifestyle inflation creep. 547 00:25:47,880 --> 00:25:52,120 Speaker 4: And what happens is over time you buy the McMansion, 548 00:25:52,800 --> 00:25:57,199 Speaker 4: it's not a cheap aspect. If after twenty years you 549 00:25:57,320 --> 00:26:00,719 Speaker 4: need new windows and that's a twenty third thousand dollars 550 00:26:00,840 --> 00:26:04,880 Speaker 4: expence or maybe two hundred thousand dollars expence, it's it's 551 00:26:05,320 --> 00:26:12,120 Speaker 4: very very expensive. So you have higher utilities, higher insurance taxes, landscaping, 552 00:26:12,760 --> 00:26:16,159 Speaker 4: the just taking care of a home like that, you 553 00:26:16,280 --> 00:26:19,159 Speaker 4: have to take that into some consideration. Now, if you 554 00:26:19,240 --> 00:26:23,199 Speaker 4: have all the money in the world, I applaud you. 555 00:26:24,520 --> 00:26:27,639 Speaker 4: I think that's awesome, but you do have to understand 556 00:26:27,680 --> 00:26:31,760 Speaker 4: that you could get into a situation where over time 557 00:26:32,440 --> 00:26:36,439 Speaker 4: it becomes too much. And so I like to tell 558 00:26:37,160 --> 00:26:41,720 Speaker 4: and explain to people. Listen, over time, you know you're 559 00:26:41,760 --> 00:26:43,840 Speaker 4: gonna need new windows, You're gonna need a roof, You're 560 00:26:43,840 --> 00:26:47,280 Speaker 4: gonna need a HVAX, you know, heating and cooling system, 561 00:26:47,720 --> 00:26:50,000 Speaker 4: and that's going to cost more. The bigger the house, 562 00:26:50,400 --> 00:26:53,280 Speaker 4: the bigger the expenses, and some will say the bigger 563 00:26:53,280 --> 00:26:56,960 Speaker 4: the headache. So again, you love it, you live it, 564 00:26:57,160 --> 00:27:00,240 Speaker 4: and when it comes time, the nice thing is you 565 00:27:00,320 --> 00:27:04,360 Speaker 4: always have a piece of property. You always have an 566 00:27:04,480 --> 00:27:06,639 Speaker 4: asset that you can sell. 567 00:27:07,720 --> 00:27:11,240 Speaker 1: Yeah. In other words, forever might be more temporary than 568 00:27:11,280 --> 00:27:14,040 Speaker 1: we might think, depending on how our life evolves and 569 00:27:14,119 --> 00:27:21,320 Speaker 1: changes over time. Yeah, yeah, all right, great perspective. As always, Michelle, 570 00:27:21,320 --> 00:27:23,359 Speaker 1: thanks so much for joining us tonight. You're listening to 571 00:27:23,400 --> 00:27:26,400 Speaker 1: Simply Money presented by all Worth Financial on fifty five 572 00:27:26,480 --> 00:27:34,480 Speaker 1: KRC the talk station. You're listening to Simply Money presented 573 00:27:34,520 --> 00:27:37,880 Speaker 1: by all Worth Financial on Bob Sponseller along with Brian James. 574 00:27:38,200 --> 00:27:40,239 Speaker 1: If you have a financial question you'd like for us 575 00:27:40,280 --> 00:27:42,720 Speaker 1: to answer, there's a red button you could click while 576 00:27:42,720 --> 00:27:46,080 Speaker 1: you're listening to the show. If and only if you're 577 00:27:46,119 --> 00:27:49,959 Speaker 1: listening on the iHeart app, simply record your question and 578 00:27:50,000 --> 00:27:53,120 Speaker 1: it will come straight to us. All right, Brian, get 579 00:27:53,160 --> 00:27:55,520 Speaker 1: ready for Tom and Mason. He says, I've got about 580 00:27:55,560 --> 00:27:59,359 Speaker 1: a million and a half dollars invested in. A twenty 581 00:27:59,400 --> 00:28:02,840 Speaker 1: percent market drop obviously would mean a three hundred thousand 582 00:28:02,880 --> 00:28:05,520 Speaker 1: dollars hit to my portfolio. How do I decide if 583 00:28:05,560 --> 00:28:09,400 Speaker 1: that level of risk is appropriate before I retire? 584 00:28:10,160 --> 00:28:12,639 Speaker 2: So that, yeah, that's exactly the right way to frame it. 585 00:28:12,680 --> 00:28:14,720 Speaker 2: So don't think in terms of percentage, And it's kind 586 00:28:14,720 --> 00:28:17,560 Speaker 2: of start time to start thinking in dollars, because when 587 00:28:17,600 --> 00:28:20,680 Speaker 2: we're in retirement, volatility isn't just an abstract thing out 588 00:28:20,680 --> 00:28:22,560 Speaker 2: there anymore. You're going to feel it a lot more 589 00:28:22,640 --> 00:28:25,760 Speaker 2: because you are retired. It's easy when we're working, and 590 00:28:25,840 --> 00:28:27,639 Speaker 2: most time, most of the time, when the market pulls back, 591 00:28:27,640 --> 00:28:30,320 Speaker 2: people who understand market history, people kind of go, all right, cool. 592 00:28:30,359 --> 00:28:32,560 Speaker 2: I kind of root for this sometimes because I know 593 00:28:32,640 --> 00:28:35,360 Speaker 2: what it's like when when the inevitable upswing comes back, 594 00:28:35,400 --> 00:28:37,760 Speaker 2: the market recovers quickly and then goes on to greater heights. 595 00:28:37,800 --> 00:28:39,719 Speaker 3: But that happens in a very very quick period. 596 00:28:39,920 --> 00:28:41,840 Speaker 2: Look back for the twenty twenty two market and look 597 00:28:41,840 --> 00:28:43,760 Speaker 2: into twenty three and you'll see that happening, and it 598 00:28:43,800 --> 00:28:47,360 Speaker 2: happens before the headline. So but that you know, we 599 00:28:47,600 --> 00:28:50,400 Speaker 2: stop rooting for it once we are retired, and it 600 00:28:50,440 --> 00:28:52,280 Speaker 2: becomes a little more painful because now you feel like, 601 00:28:52,320 --> 00:28:54,120 Speaker 2: you know, there's the old adage, I want to fixed income. 602 00:28:54,160 --> 00:28:56,280 Speaker 2: I can't take this this kind of hit. So you 603 00:28:56,320 --> 00:28:58,640 Speaker 2: need to be prepared for what can happen. The market 604 00:28:58,640 --> 00:29:00,360 Speaker 2: doesn't care whether you're working or not. It's going to 605 00:29:00,400 --> 00:29:02,760 Speaker 2: do what it does. So you know, figure out what 606 00:29:02,800 --> 00:29:05,160 Speaker 2: that how it impacts your income. Don't think about just 607 00:29:05,160 --> 00:29:07,560 Speaker 2: your pile of money. Ultimately, now we're talking about income. 608 00:29:07,600 --> 00:29:09,440 Speaker 2: So if you're planning to take out say four percent 609 00:29:09,440 --> 00:29:12,000 Speaker 2: a year, that three hundred thousand dollars, that doesn't just 610 00:29:12,080 --> 00:29:14,960 Speaker 2: hurt because my pile is smaller. That actually could reduce 611 00:29:15,000 --> 00:29:17,600 Speaker 2: your sustainable income by about twelve thousand dollars a year. 612 00:29:17,760 --> 00:29:19,920 Speaker 2: That doesn't mean you should avoid that type of risk 613 00:29:20,000 --> 00:29:22,400 Speaker 2: because we got to have something growing. But the real 614 00:29:22,480 --> 00:29:25,480 Speaker 2: question is if markets drop early, am I comfortable adjusting? 615 00:29:25,520 --> 00:29:27,800 Speaker 2: Can I fix the problem by adjusting my spending amount? 616 00:29:28,040 --> 00:29:30,960 Speaker 2: If you have some discretionary if spending baked into your plan, 617 00:29:31,040 --> 00:29:33,480 Speaker 2: and your reaction, which is very common, would be to, 618 00:29:33,600 --> 00:29:35,400 Speaker 2: you know what, we'll just we'll vacation a little less 619 00:29:35,400 --> 00:29:35,640 Speaker 2: this year. 620 00:29:35,640 --> 00:29:36,200 Speaker 3: We're going to let the. 621 00:29:36,160 --> 00:29:38,719 Speaker 2: Market recover, let the portfolio recover a bit. And this 622 00:29:38,760 --> 00:29:41,040 Speaker 2: is what most people do. If if your plan is 623 00:29:41,080 --> 00:29:43,880 Speaker 2: based off of some discretionary income, that's okay. That can 624 00:29:43,920 --> 00:29:46,400 Speaker 2: be a way to you know, a stress reliever there, 625 00:29:47,040 --> 00:29:49,680 Speaker 2: you know, and also stress tests that timing risk, not 626 00:29:49,760 --> 00:29:51,520 Speaker 2: just the magnitude of the risk. It's not it's not 627 00:29:51,560 --> 00:29:54,080 Speaker 2: so much how much the drop is. It's wind as 628 00:29:54,120 --> 00:29:55,720 Speaker 2: it occur. It's that drop in the first three to 629 00:29:55,800 --> 00:29:57,800 Speaker 2: five years of retirement. And this is what Bob and 630 00:29:57,880 --> 00:30:00,360 Speaker 2: I are talking about, seems like every day and more, 631 00:30:00,480 --> 00:30:03,560 Speaker 2: which is stress testing. Figure out what your plan looks 632 00:30:03,560 --> 00:30:05,800 Speaker 2: like if everything is honky dory, nothing bad ever happens 633 00:30:05,840 --> 00:30:08,440 Speaker 2: again and then do the same number with the exact 634 00:30:08,440 --> 00:30:11,600 Speaker 2: dollar amount that Tom is talking about. Eliminate twenty percent 635 00:30:11,640 --> 00:30:13,920 Speaker 2: of your financial assets and then run the numbers again. 636 00:30:14,000 --> 00:30:16,000 Speaker 2: See how it looks that's a stress test, make sure 637 00:30:16,000 --> 00:30:18,760 Speaker 2: it actually works. So we'll move on to Larry in 638 00:30:18,800 --> 00:30:21,480 Speaker 2: Fort Thomas. Larry says he's got seventy percent in stocks 639 00:30:21,480 --> 00:30:23,600 Speaker 2: and thirty percent bonds, and he's wondering if there's a 640 00:30:23,640 --> 00:30:26,400 Speaker 2: clear way to test whether that mix can handle those 641 00:30:26,440 --> 00:30:27,680 Speaker 2: withdrawals without guessing. 642 00:30:28,840 --> 00:30:31,360 Speaker 1: Well, Larry, I would say Brian did a great job 643 00:30:31,440 --> 00:30:35,200 Speaker 1: of pretty much answering your question as he addressed Tom's question, 644 00:30:35,640 --> 00:30:38,040 Speaker 1: And it comes down this is the beauty of having 645 00:30:38,480 --> 00:30:43,400 Speaker 1: wonderful financial planning software that has those Monty Carlo analysis 646 00:30:43,440 --> 00:30:46,400 Speaker 1: baked into it, where you know, based on your piles 647 00:30:46,400 --> 00:30:50,040 Speaker 1: of money and income streams and spending goals and your 648 00:30:50,080 --> 00:30:53,080 Speaker 1: chosen asset allocation, which in your case is seventy percent 649 00:30:53,080 --> 00:30:56,360 Speaker 1: in stocks thirty percent in bonds, we can easily stress 650 00:30:56,400 --> 00:30:59,840 Speaker 1: test that over a period of time with basic assumption 651 00:31:00,200 --> 00:31:03,800 Speaker 1: on not only when do we get volatility in the markets, 652 00:31:04,160 --> 00:31:06,800 Speaker 1: but to what extent we get it when we get it, 653 00:31:07,200 --> 00:31:11,000 Speaker 1: and how that volatility is mixed with your withdrawal strategy. 654 00:31:11,320 --> 00:31:15,000 Speaker 1: And that's really where Monte Carlo analysis, you know, is 655 00:31:15,040 --> 00:31:17,600 Speaker 1: beautiful to look at. And so yeah, you got to 656 00:31:17,640 --> 00:31:20,440 Speaker 1: sit down with somebody that has those tools to work with, 657 00:31:20,840 --> 00:31:23,800 Speaker 1: that can walk you through those things. And most people 658 00:31:24,040 --> 00:31:26,880 Speaker 1: when they see those tools in action, you know there's 659 00:31:26,920 --> 00:31:29,640 Speaker 1: going to be a response, an emotional response to that, 660 00:31:30,160 --> 00:31:33,120 Speaker 1: and that, you know, tends to tee up good conversations 661 00:31:33,120 --> 00:31:35,960 Speaker 1: about hey, are we planning to spend too much or 662 00:31:36,000 --> 00:31:39,800 Speaker 1: too little? Or are we more aggressively you know, allocated 663 00:31:39,840 --> 00:31:42,800 Speaker 1: than we want to be, or too conservative? You know. 664 00:31:42,920 --> 00:31:46,320 Speaker 1: So the this is the beauty of financial planning software 665 00:31:46,360 --> 00:31:50,400 Speaker 1: and actually having a good fiduciary advisor that can walk 666 00:31:50,440 --> 00:31:53,000 Speaker 1: you through these kinds of things. All right, Ben and 667 00:31:53,080 --> 00:31:55,040 Speaker 1: ken Wood says, I'm trying to figure out how much 668 00:31:55,080 --> 00:31:58,360 Speaker 1: cash we should really be holding onto as we move 669 00:31:58,400 --> 00:32:02,000 Speaker 1: into retirement. Is there a practical way Brian to think 670 00:32:02,040 --> 00:32:04,200 Speaker 1: about that without overdoing it? 671 00:32:05,320 --> 00:32:07,600 Speaker 2: You know, this is this is honestly the root of 672 00:32:07,600 --> 00:32:10,240 Speaker 2: a financial plan. This is to me, cash is oil 673 00:32:10,280 --> 00:32:13,240 Speaker 2: in the engine. The presence of cash can be you know, 674 00:32:13,640 --> 00:32:16,360 Speaker 2: what keeps everything else running smoothly. So this is a 675 00:32:16,400 --> 00:32:18,720 Speaker 2: great question and the key to answering is this. Stop 676 00:32:18,760 --> 00:32:21,520 Speaker 2: thinking about cash as a return asset, right that's for 677 00:32:21,560 --> 00:32:23,720 Speaker 2: your long term assets, the stuff that needs to grow 678 00:32:23,800 --> 00:32:25,200 Speaker 2: and is going to be volid on all that kind 679 00:32:25,200 --> 00:32:28,360 Speaker 2: of stuff. Start thinking about as a risk management tool 680 00:32:28,440 --> 00:32:30,400 Speaker 2: for timing. Right, so we don't put oil in our 681 00:32:30,440 --> 00:32:32,880 Speaker 2: cars so it'll go faster. We put it in so 682 00:32:32,920 --> 00:32:35,320 Speaker 2: it'll run more smoothly. So think about it this way. 683 00:32:35,360 --> 00:32:38,280 Speaker 2: Anchor it to spending, not the portfolio size. So instead 684 00:32:38,280 --> 00:32:40,719 Speaker 2: of saying, let's hold ten percent in cash, right, if 685 00:32:40,760 --> 00:32:42,760 Speaker 2: you got five million dollars, so that means a half 686 00:32:42,760 --> 00:32:44,800 Speaker 2: million dollars sitting there doing nothing, that's probably a little 687 00:32:44,840 --> 00:32:47,600 Speaker 2: too much. So translate it into months or year's worth 688 00:32:47,640 --> 00:32:49,880 Speaker 2: of spending. If you need eight thousand dollars a month, well, 689 00:32:49,920 --> 00:32:52,360 Speaker 2: then one year cash. That's an easy math. That's ninety 690 00:32:52,360 --> 00:32:54,840 Speaker 2: six thousand dollars rounded up to one hundred. That immediately 691 00:32:54,880 --> 00:32:56,720 Speaker 2: is going to make it more concrete and purposeful and 692 00:32:56,760 --> 00:32:59,800 Speaker 2: more logically thought out than simply a ten a percentage. 693 00:32:59,800 --> 00:33:00,200 Speaker 3: There. 694 00:33:00,480 --> 00:33:03,120 Speaker 2: You'll also think of it as a withdrawal buffer, not 695 00:33:03,160 --> 00:33:05,600 Speaker 2: just a pile of idle cash. So the goal isn't 696 00:33:05,600 --> 00:33:07,800 Speaker 2: really to maximize the cash it's about. It's to avoid 697 00:33:07,880 --> 00:33:10,320 Speaker 2: selling investments in a downturn. That's what an emergency fund 698 00:33:10,440 --> 00:33:12,840 Speaker 2: is for, not necessarily that something crazy happened to you 699 00:33:13,000 --> 00:33:15,160 Speaker 2: or somebody in your family, although that is another definition 700 00:33:15,200 --> 00:33:18,120 Speaker 2: of it. But an emergency fund is there to prevent 701 00:33:18,160 --> 00:33:21,920 Speaker 2: you from needing, from being forced into dipping into the 702 00:33:21,960 --> 00:33:24,880 Speaker 2: longer term investments when the market is not ideal. So 703 00:33:24,920 --> 00:33:27,120 Speaker 2: we have clients that will do this when the market 704 00:33:27,120 --> 00:33:29,920 Speaker 2: takes you know, for example, in April of twenty twenty five, 705 00:33:29,920 --> 00:33:31,560 Speaker 2: when the tariffs took a giant fight out of the 706 00:33:31,600 --> 00:33:36,280 Speaker 2: stock market, then people were able to not take withdrawals 707 00:33:36,280 --> 00:33:39,000 Speaker 2: off their investments and rely on that cash, draw down 708 00:33:39,040 --> 00:33:41,479 Speaker 2: the emergency fund for a brief period of time, and 709 00:33:41,520 --> 00:33:44,240 Speaker 2: then replenish the emergency fund on the other side when 710 00:33:44,240 --> 00:33:47,200 Speaker 2: the market inevitably recovered. That's a cycle that is identifiable 711 00:33:47,560 --> 00:33:51,240 Speaker 2: and repeatable, so hopefully that helps. But yeah, cash is 712 00:33:51,280 --> 00:33:53,520 Speaker 2: no longer a return asset at this point. It is 713 00:33:53,560 --> 00:33:55,960 Speaker 2: something that is there to keep things running smoothly. We 714 00:33:56,040 --> 00:33:59,360 Speaker 2: got time for one more from David in Milford. David 715 00:33:59,440 --> 00:34:01,560 Speaker 2: said he's heard a lot about sequence of returns risk, 716 00:34:01,600 --> 00:34:03,760 Speaker 2: but he's not sure what he's supposed to actually do 717 00:34:03,880 --> 00:34:05,280 Speaker 2: differently about it, Bob. 718 00:34:05,920 --> 00:34:08,799 Speaker 1: Well, David, I, at the risk of repeating what we've 719 00:34:08,800 --> 00:34:12,200 Speaker 1: already talked about just in this segment, I would say, 720 00:34:12,320 --> 00:34:15,120 Speaker 1: sit down with somebody that has the software and the 721 00:34:15,160 --> 00:34:19,120 Speaker 1: tools to actually run your financial plan with sequence of 722 00:34:19,160 --> 00:34:23,000 Speaker 1: return risk which defining that is basically what happens if 723 00:34:23,040 --> 00:34:27,239 Speaker 1: you have some outsize down years early on in retirement 724 00:34:27,360 --> 00:34:30,520 Speaker 1: while you're withdrawing money, you know, stress tests your overall 725 00:34:30,560 --> 00:34:33,040 Speaker 1: financial plan for that and just make sure things are 726 00:34:33,040 --> 00:34:37,440 Speaker 1: going to work properly. Does your portfolio contain pricey collectibles? 727 00:34:37,719 --> 00:34:40,319 Speaker 1: Coming up next, how to avoid a planning problem your 728 00:34:40,400 --> 00:34:43,840 Speaker 1: family may not be ready for. You're listening to Simply 729 00:34:43,880 --> 00:34:47,279 Speaker 1: Money presented by Allworth Financial on fifty five KRC, the 730 00:34:47,640 --> 00:34:53,399 Speaker 1: talk station. You're listening to Simply Money presented by all 731 00:34:53,400 --> 00:34:57,239 Speaker 1: Worth Financial. I'm Bob Sponseller along with Brian James. There 732 00:34:57,239 --> 00:34:59,719 Speaker 1: are some out there who have more than just four 733 00:34:59,800 --> 00:35:04,080 Speaker 1: one ks and IRA accounts and taxable brokerage accounts as 734 00:35:04,120 --> 00:35:07,440 Speaker 1: part of their portfolios. In other words, more than just 735 00:35:07,600 --> 00:35:11,640 Speaker 1: dollars and cents on paper. They have collectibles, art cars, 736 00:35:12,160 --> 00:35:16,239 Speaker 1: bottles of bourbon, watches, sports memorabilia, all the above. These 737 00:35:16,239 --> 00:35:20,200 Speaker 1: are collections that in some cases can be worth quite 738 00:35:20,200 --> 00:35:23,479 Speaker 1: a bit of money. Brian, But you got a plan 739 00:35:23,640 --> 00:35:26,480 Speaker 1: for some of this, especially as you move through life. 740 00:35:26,480 --> 00:35:29,080 Speaker 1: And think about what's going to happen to this stuff 741 00:35:29,880 --> 00:35:31,760 Speaker 1: if and when I pass it on to my errors. 742 00:35:32,680 --> 00:35:34,800 Speaker 2: Yeah, so this is a this is a pretty common 743 00:35:34,840 --> 00:35:37,799 Speaker 2: problem where you know, people wind up with these things 744 00:35:37,840 --> 00:35:39,759 Speaker 2: that are not financial assets. But we all have a 745 00:35:39,840 --> 00:35:41,480 Speaker 2: rough idea of the value of all of the stuff 746 00:35:41,480 --> 00:35:43,600 Speaker 2: that's in our houses and things like that, so something 747 00:35:43,600 --> 00:35:45,239 Speaker 2: to pay attention to so often that you know, this 748 00:35:45,320 --> 00:35:49,440 Speaker 2: starts as a passion, right collecting stuff that's identity, it's community, 749 00:35:49,719 --> 00:35:52,720 Speaker 2: over time becomes something else. It's all eventually a meaningful 750 00:35:52,719 --> 00:35:54,480 Speaker 2: piece of your net worth. Right, so this could be 751 00:35:54,520 --> 00:35:58,600 Speaker 2: classic cars, baseball card, whatever, artwork, those kinds of things. 752 00:35:58,960 --> 00:36:00,480 Speaker 3: So this is where it gets kind of interesting. 753 00:36:00,800 --> 00:36:02,680 Speaker 2: Unlike your four to oh one k or anything that's 754 00:36:02,719 --> 00:36:05,880 Speaker 2: denominated in dollars, it's a little tougher to divide, not 755 00:36:06,000 --> 00:36:08,640 Speaker 2: to mention, you know, everybody has the same value of 756 00:36:08,680 --> 00:36:11,279 Speaker 2: a dollar, so that's easy. Split up the dollars by percentages, 757 00:36:11,320 --> 00:36:14,640 Speaker 2: that's easy to do. One person, however, may value a 758 00:36:14,640 --> 00:36:18,200 Speaker 2: piece of artwork a lot differently than another sibling. And 759 00:36:18,239 --> 00:36:19,799 Speaker 2: now you have a case where you have to figure out, 760 00:36:19,800 --> 00:36:21,680 Speaker 2: how do we treat this fairly. If somebody in the 761 00:36:21,680 --> 00:36:24,480 Speaker 2: family wants to handle it. And there's also something else 762 00:36:24,480 --> 00:36:28,879 Speaker 2: to pay attention to here is the taxes. So collections 763 00:36:28,880 --> 00:36:31,399 Speaker 2: can get subject to different tax capital gains tax rule 764 00:36:31,440 --> 00:36:36,560 Speaker 2: that it's not a favorable situation because the capital gains 765 00:36:36,560 --> 00:36:39,839 Speaker 2: on collectibles can be very, very different, especially if we're 766 00:36:39,840 --> 00:36:42,719 Speaker 2: talking about significant values of these different things, and the 767 00:36:42,760 --> 00:36:44,360 Speaker 2: irs is going to want to know where that money 768 00:36:44,360 --> 00:36:46,239 Speaker 2: came from. Oh, you sold a piece of artwork for 769 00:36:46,280 --> 00:36:48,760 Speaker 2: how much a couple hundred thousand dollars. Okay, there's taxes 770 00:36:48,800 --> 00:36:51,040 Speaker 2: due on that, and it's not the fifteen percent long 771 00:36:51,120 --> 00:36:53,920 Speaker 2: term capital gain. So make sure you don't get blindsided 772 00:36:53,920 --> 00:36:56,080 Speaker 2: by any of these types of things. So the important 773 00:36:56,080 --> 00:36:58,520 Speaker 2: thing to do was is, first of course, get a 774 00:36:58,560 --> 00:37:01,239 Speaker 2: hold of an inventory. Make sure somebody knows somewhere what 775 00:37:01,320 --> 00:37:03,479 Speaker 2: the list of all the stuff is and where it's 776 00:37:03,560 --> 00:37:08,080 Speaker 2: located in a dated time stamped valuation on these things. 777 00:37:08,080 --> 00:37:10,279 Speaker 2: And yes, you may have to pay somebody to help 778 00:37:10,320 --> 00:37:12,160 Speaker 2: you get a real valuation on it. But then you 779 00:37:12,160 --> 00:37:14,920 Speaker 2: can think about, all right, if if Kid A wants 780 00:37:15,200 --> 00:37:19,120 Speaker 2: the painting that's been handed down to the family through time, 781 00:37:19,400 --> 00:37:21,680 Speaker 2: that's worth roughly this at this point, that means Kid 782 00:37:21,680 --> 00:37:23,960 Speaker 2: B who has no interest in the artwork should get 783 00:37:24,719 --> 00:37:26,759 Speaker 2: a slightly higher percentage of the four oh one k 784 00:37:26,920 --> 00:37:29,360 Speaker 2: the iras all the other investable assets out there, just 785 00:37:29,360 --> 00:37:30,360 Speaker 2: a different way think about it. 786 00:37:30,960 --> 00:37:33,280 Speaker 1: Yeah, one other thing to throw in here on this topic, 787 00:37:33,320 --> 00:37:35,480 Speaker 1: and this actually came up, you know, with a client 788 00:37:35,480 --> 00:37:37,640 Speaker 1: of mine about a month ago. He called and said, hey, 789 00:37:37,760 --> 00:37:41,080 Speaker 1: my dad's got a bunch of collectible you know, silver coins, 790 00:37:41,120 --> 00:37:44,560 Speaker 1: not just hard silver, but these were collectibles and you know, 791 00:37:44,600 --> 00:37:46,759 Speaker 1: they had determined as a family that it was time 792 00:37:46,840 --> 00:37:48,600 Speaker 1: to part with some of this stuff, and they did 793 00:37:48,640 --> 00:37:51,080 Speaker 1: not know what to do or where to turn. And 794 00:37:51,120 --> 00:37:52,839 Speaker 1: we all know this. You know, when you get into 795 00:37:52,880 --> 00:37:55,560 Speaker 1: the collectibles business, you want to stay away from these 796 00:37:55,640 --> 00:37:58,880 Speaker 1: pawn shops or you know, predatory buyers. You want to 797 00:37:58,920 --> 00:38:02,920 Speaker 1: develop it's important to develop a relationship with somebody that 798 00:38:03,040 --> 00:38:05,520 Speaker 1: is going to treat you properly and with respect and 799 00:38:05,560 --> 00:38:08,680 Speaker 1: dignity and integrity, you know when you part with some 800 00:38:08,719 --> 00:38:11,040 Speaker 1: of these things. So we were able to network around 801 00:38:11,080 --> 00:38:13,600 Speaker 1: a little bit and find a good coin dealer in 802 00:38:13,640 --> 00:38:16,279 Speaker 1: this case, and the client was very happy. But the 803 00:38:16,320 --> 00:38:18,960 Speaker 1: important thing is they got out in front of this 804 00:38:19,080 --> 00:38:22,200 Speaker 1: ahead of time and planned ahead and they're benefiting from 805 00:38:22,200 --> 00:38:24,759 Speaker 1: that as we speak. Here's the all Worth advice. If 806 00:38:24,800 --> 00:38:28,040 Speaker 1: your passion has turned into an asset, make sure your 807 00:38:28,120 --> 00:38:31,359 Speaker 1: plan treats it like one. Thanks for listening tonight. You've 808 00:38:31,360 --> 00:38:34,280 Speaker 1: been listening to Simply Money, presented by all Worth Financial 809 00:38:34,280 --> 00:38:36,920 Speaker 1: on fifty five KRC, the talk station