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Speaker 1: The voices.

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Speaker 2: You know what, I'm gonna give you a piece of

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Speaker 2: my mind.

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Speaker 1: It's gross, gross incompetence of October.

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Speaker 3: People are scared fifty five krs the talk station.

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Speaker 4: Tonight, the retirement mirage. While your quote unquote number might

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Speaker 4: be a lie.

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Speaker 2: You're listening to simply Money presented by oh Worth Financial

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Speaker 2: on Bob Sponseller along with Brian James. You've worked hard,

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Speaker 2: save well, maybe maybe even hit that magical I don't know,

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Speaker 2: five million dollar number you've had circled for a decade

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Speaker 2: and now you're there.

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Speaker 4: But here's the potential curveball.

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Speaker 2: Now that you've quote unquote won the game, You're not

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Speaker 2: sure the scoreboard actually matters.

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Speaker 4: What are we talking about here, Brian, Well, there's always

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Speaker 4: the myth of the magic number out there.

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Speaker 5: There's a lot of people who in a lot of

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Speaker 5: companies who promote the idea that everybody has a number

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Speaker 5: out there, and that may that may be true, that

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Speaker 5: may not be.

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Speaker 4: But I think it's way too easy to simply.

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Speaker 5: Say, here's the finished line that I got to get

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Speaker 5: to and then everything is smooth sailing from here. Because

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Speaker 5: God tend to thinks he's funny, and life will intervene,

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Speaker 5: so that moving on or that that magic number may

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Speaker 5: move on you. So there might be two million, could

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Speaker 5: be five million, but you have to we have to

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Speaker 5: account for lifestyle tax obligations for both of those things

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Speaker 5: to change.

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Speaker 4: The complexity of your holdings.

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Speaker 5: The more complicated your portfolio is, the more out of

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Speaker 5: left field type of things you could have happen. For example,

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Speaker 5: you know, you give me two people with five million dollars,

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Speaker 5: they could have completely different outcomes depending on where that

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Speaker 5: money is. Is it pre tax, Bob, is it you know,

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Speaker 5: like four to oh one k they've just worked a

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Speaker 5: long time for another company, or is it after tax?

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Speaker 5: Maybe they sold their own company, inherited something, a combination

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Speaker 5: of everything, real estate, other business entities, that kind of thing.

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Speaker 5: All of it changes the calculus on what that magic

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Speaker 5: number might be and whether it stays that magic number.

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Speaker 2: Well, and it all depends on how you choose to

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Speaker 2: turn those assets into income, because let's face it, at

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Speaker 2: the end of the day, no matter what your net

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Speaker 2: worth is and how it's comprised, we all, Brian, need

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Speaker 2: to take this pile of stuff, as you said, whether

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Speaker 2: it's real estate, equity, business ownership, investment, we need to create.

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Speaker 4: We need to turn that into.

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Speaker 2: A paycheck to replace our day job if we really

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Speaker 2: want to retire. And planning and doing the most tax

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Speaker 2: efficient strategy on converting all that pile of assets into

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Speaker 2: income is really where the magic happened. And it requires

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Speaker 2: some planning. It it requires some proactive planning. All right,

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Speaker 2: another yeah, no, go ahead.

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Speaker 4: So let's yeah, So let's talk about taxes here. Let's

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Speaker 4: kind of break these down.

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Speaker 5: What are the different things that could drive different outcomes. Well,

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Speaker 5: if you let's say you're somebody who has worked for,

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Speaker 5: you know, a big company for a long time. This

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Speaker 5: is a Procter and gamble folks around town or maybe Kroger,

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Speaker 5: those kinds of things. Uh, you know, you might have

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Speaker 5: five million dollars in your four oh one k. Well,

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Speaker 5: if that's all pre tax dollars, because for somebody who

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Speaker 5: has worked in one place that long, that was the

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Speaker 5: only choice when you first started, pre tax was the

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Speaker 5: only option you had. There was no wroth, you know,

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Speaker 5: there were no other options. So that if that's a

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Speaker 5: pre tax number, that might really only be three and

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Speaker 5: a half million dollars after taxes, depending on the asset

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Speaker 5: types that are in there. So what that means is

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Speaker 5: you are set up for significant required minimum distributions at

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Speaker 5: age seventy three or seventy five, depending on when you

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Speaker 5: were born.

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Speaker 4: That's going to.

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Speaker 5: Affect your Social Security tax ability. You're probably going to

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Speaker 5: be facing something called IERMA in those years because you

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Speaker 5: will have a significant minimum amount of income. If you've

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Speaker 5: got five million in a pre tax account at age

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Speaker 5: seventy three, you're looking at probably two hundred and forty

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Speaker 5: two hundred and fifty thousand dollars worth of distributions that

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Speaker 5: you have to pay tax on. That's gonna definitely put

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Speaker 5: you into the second tier of IRMA. And so for example,

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Speaker 5: that's something you might want to be thinking about. What

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Speaker 5: can I do about that before I get to that age,

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Speaker 5: And the answer is pretty much, let's look at roth conversions,

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Speaker 5: or in the case of some companies Procter and Gamble

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Speaker 5: being a big one, you can do something called a

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Speaker 5: net unrealized appreciation transaction, which basically means you pull out

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Speaker 5: some of that Procter and Gamble shares from your profit

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Speaker 5: sharing side from the PST side, and you will pay

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Speaker 5: capital gains tax on them if it's done properly, not

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Speaker 5: income tax and you will have removed it from the

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Speaker 5: four oh one K. So, and that's not limited to

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Speaker 5: Procter and Gamble. That's just a very prominent example of

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Speaker 5: a company that has that feature. If you've got company

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Speaker 5: stock in your four oh one K, you might look

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Speaker 5: at something called net unrealized appreciation. Whether or not you

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Speaker 5: work at Procter and Gamble, for sure, that.

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Speaker 4: Can make a huge difference. All right.

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Speaker 2: Another thing that tends to get overlooked is something we've

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Speaker 2: we've talked about before on this show, something called sequence

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Speaker 2: of return risk. And what we mean there is volatility

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Speaker 2: in your portfolio when that portfolio actually has to start

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Speaker 2: creating monthly or annual income.

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Speaker 4: Here's what we mean.

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Speaker 2: You know, when you're accumulating money in your retirement plan

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Speaker 2: and you're just working and socking money away, you really

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Speaker 2: don't care much about volatility.

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Speaker 4: All you care about is.

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Speaker 2: The average long term return thing because, let's face it,

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Speaker 2: you're not spending any of that money. So if the

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Speaker 2: market goes down eight, twelve, fifteen percent, we know, if

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Speaker 2: we're still working and putting money away, it's always going

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Speaker 2: to recover it. Usually it always does, And you can

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Speaker 2: kind of put that out of your mind and just

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Speaker 2: keep piling away and working and socking money into your plan.

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Speaker 2: Well when you when it comes time to turn this

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Speaker 2: into a monthly income stream, Volatility matters a lot, and

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Speaker 2: we've you know, it's just math. We've run studies depending

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Speaker 2: on what that volatility is.

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Speaker 3: Uh.

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Speaker 4: Even if your average long.

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Speaker 2: Term return stays the same, if you don't manage volatility

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Speaker 2: while you're pulling money out of a portfolio, that can

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Speaker 2: really deplete your asset base even though the long term

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Speaker 2: return didn't change at all. It's counterintuitive, you know, for

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Speaker 2: a lot of people until you actually see these numbers

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Speaker 2: in action. And that's why it's important when it comes

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Speaker 2: time to retire, to sit down, you know, with a

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Speaker 2: good fiduciary advisor and walk through your income strategy and

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Speaker 2: make sure that you've got some money out of harm's

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Speaker 2: way to that you're going to spend the money you're

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Speaker 2: gonna spend in the next say, one to three years.

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Speaker 2: That gives you some protection against this what we call

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Speaker 2: sequence of return risk, because it is a real risk

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Speaker 2: out there.

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Speaker 4: It's just playing old mathematics.

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Speaker 5: Yeah, And a good mechanical way to test this is

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Speaker 5: by doing something we call a stress test, put together

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Speaker 5: your financial plan, figure out what your spending needs to be.

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Speaker 5: Fluff it if you want a little bit, just add

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Speaker 5: a little bit more and build inflation to it over

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Speaker 5: the years and figure I would also say, figure out

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Speaker 5: which goals you have, what spending goals you have that

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Speaker 5: won't exist forever. There's a mortgage in the mix that's

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Speaker 5: not going to be there. You know, if you're going

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Speaker 5: to retire at sixty and you have a mortgage for

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Speaker 5: another few years, that's not going to be there when

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Speaker 5: you're ninety. Don't bake that into your living expenses. It's

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Speaker 5: going to make things look unnecessarily negative. But then, so

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Speaker 5: run your numbers with a standard rate to return an

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Speaker 5: it's conservative, say five six percent. You should be able

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Speaker 5: to get more than that out of a decent investment program.

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Speaker 5: But we're simply projecting conservative projections here. So then once

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Speaker 5: you've done that, do it again, but take off, say

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Speaker 5: twenty percent of your financial networth.

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Speaker 4: Just make it go poof.

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Speaker 5: Lower the numbers by twenty percent, don't change anything else,

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Speaker 5: and run all the numbers again. That will tell you

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Speaker 5: if you can handle what some people went through in

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Speaker 5: twenty twenty one. Anybody retired in twenty twenty one. We

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Speaker 5: immediately went over the cliff in twenty two and most people,

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Speaker 5: if they didn't panic, have recovered nicely and are okay.

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Speaker 5: People who did panic and decide that I'm now retired,

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Speaker 5: this is scary. I have to protect my assets. Well,

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Speaker 5: then they probably changed permanently the trajectory of their retirement plan.

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Speaker 5: So do that before illustrate it, before those kinds of

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Speaker 5: things happen.

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Speaker 4: Your number may come up that could happen to you.

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Speaker 5: There's only so much you can do in moving investments

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Speaker 5: around to protect from it. We need to be able

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Speaker 5: to withstand it and maneuver ourselves around the stress of

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Speaker 5: that happening. So just run those numbers with that happening

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Speaker 5: and make sure your plan still floats.

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Speaker 4: All right.

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Speaker 2: Another factor to consider it, no matter how big your

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Speaker 2: quote unquote pile of assets is, is just longevity and

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Speaker 2: potential family obligations. Here's what I mean. And I see

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Speaker 2: this more and more happening, Brian. I don't know if

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Speaker 2: you do, but I see this happening a lot. Many

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Speaker 2: high net worth families are simply becoming multi generational banks.

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Speaker 2: And you know, I'm sure when they sat down fifteen,

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Speaker 2: twenty twenty five years ago. They never expected to be

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Speaker 2: in a situation where they're supporting their adult children, maybe

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Speaker 2: more or beyond what they had planned. They never expected

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Speaker 2: to have to support financially their own parents or other relatives.

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Speaker 2: And once that bank, you know, is shown to become

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Speaker 2: available and you start dispensing money, you know, human nature

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Speaker 2: being what it is, the assumptions can be, well, this

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Speaker 2: support is always going to be permanent, and if that's

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Speaker 2: really the case, you got to factor that into your plan.

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Speaker 2: If it's not the case, you got to do some

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Speaker 2: heavy duty communicating. But you first got to look at

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Speaker 2: the numbers and say, what can we board to continue

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Speaker 2: to do if some of this support that we hadn't

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Speaker 2: planned to be generating continues, and then you know, make

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Speaker 2: adjustments as needed. Do you see that happening more and

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Speaker 2: more with your clients, Brian, because I certainly.

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Speaker 5: Do, absolutely, And I find myself thinking about all, right,

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Speaker 5: I know, I've I've got three kids who are that

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Speaker 5: are just getting to their own level of independence, and

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Speaker 5: I worry about that all the time. I think about

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Speaker 5: it a lot more, I think than my parents had

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Speaker 5: to because it was a little easier to get started

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Speaker 5: in those days. So but I think I think Bob

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Speaker 5: would be easiest. We went through some examples. We've got

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Speaker 5: some examples prepared here of actual client situations, real people,

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Speaker 5: but fake names, and it's just kind of how they've

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Speaker 5: navigated things and how they get to where they've gotten to.

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Speaker 4: So first off, yeah, run us through one. Yeah, So

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Speaker 4: let's take Steve. Steve was sixty seven years old.

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Speaker 5: He's got a net worth of six point two million dollars,

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Speaker 5: most of that having come up come from a having

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Speaker 5: sold a business about five years ago, and about four

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Speaker 5: million of that networth is now.

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Speaker 4: Tied up in real estate.

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Speaker 5: He's got a couple rental properties, vacation home, and then

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Speaker 5: about one point two is in his pre tax for

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Speaker 5: a one kay million dollars in a taxable broker's account there.

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Speaker 5: So he basically came in thinking that six million means

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Speaker 5: set for life and didn't have to worry about it.

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Speaker 4: And mathematically, yeah, that's usually you know in the ballpark.

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Speaker 5: But the problem is that rental income is not consistent

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Speaker 5: and it's it's become a bit of a burden to

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Speaker 5: maintain those properties rights. It's one thing to look at

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Speaker 5: a piece of paper that says you own a couple

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Speaker 5: of nice rental properties and here's the rental.

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Speaker 4: That they average.

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Speaker 5: You know, but but if it's inconsistent and you're dealing

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Speaker 5: with tenants, that changes everything because you're the one that

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Speaker 5: has to pick up the phone. So the point was

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Speaker 5: what brought him in was the idea that he wants

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Speaker 5: to He wanted to change his six million dollars worth

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Speaker 5: of assets around to make it simpler. And so the

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Speaker 5: challenge was how do we do this and generating the

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Speaker 5: income that he needs without relying on so much of

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Speaker 5: a business in the rental real income. He had already

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Speaker 5: ruled out the idea that, well, I could hire a

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Speaker 5: property manager to do all this, but then that really

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Speaker 5: kind of sucks all the return out of the owning

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Speaker 5: a real estate in the first place and makes it

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Speaker 5: kind of just not that impactful in terms of generating

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Speaker 5: income net income. And so basically his problem was he

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Speaker 5: had a lot of net worth but just about no flexibility.

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Speaker 5: So that retirement number he had identified, a six million

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Speaker 5: dollars set for life figure didn't really work for him

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Speaker 5: anymore because of the asset location, because of what he did.

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Speaker 5: So we helped him basically get through the idea of

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Speaker 5: let's consider selling these properties, change your mindset from what

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Speaker 5: you thought was going to be the best way to go,

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Speaker 5: and then let's just look at things a little bit

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Speaker 5: differently to give you a less involved quote unquote business

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Speaker 5: of retirement. And he's been pretty much happy ever since.

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Speaker 5: And all we did was shine a bright light on

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Speaker 5: situation you're in. In the situation, you could be in

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Speaker 5: good stuff.

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Speaker 2: All Right, we'll run through one more actual example. We'll

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Speaker 2: call this couple Denise and Mark. They're sixty four and

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Speaker 2: sixty six. They have a net worth of about five

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Speaker 2: million dollars. They retired in late twenty twenty one after

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Speaker 2: strong markets boosted their portfolio, and their advisor said, yeah,

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Speaker 2: you're totally fine withdrawing two hundred thousand dollars a year.

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Speaker 2: Your plan will quote unquote work assuming six percent average

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Speaker 2: returns continue forever. The problem, as we all know, twenty

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Speaker 2: twenty two was a down year. The stock market was down,

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Speaker 2: the bond market was down. That five million dollar portfolio

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Speaker 2: dropped to a little over four million dollars, and they

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Speaker 2: still pulled the two hundred thousand dollars out.

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Speaker 4: So that's a.

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Speaker 2: Real withdrawal of over seven percent of their capital in

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Speaker 2: a down market, and that just compounds the losses the

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Speaker 2: the The answer to this is proactively in advance, have

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Speaker 2: a bit of a bucket strategy where you've got some

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Speaker 2: assets not subject to market volatility that can supply your

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Speaker 2: income needs over that one two three year time frame

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Speaker 2: where you're not subject to all that down downside sequence

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Speaker 2: of return risk. It makes a huge difference. And these

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Speaker 2: folks finally got the message and they're living happily ever

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Speaker 2: after now because they've got some money set aside in

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Speaker 2: different places for different reasons, and they're taking some of

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Speaker 2: that short term spence of return risk off the table.

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Speaker 4: Here's the all Worth advice.

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Speaker 2: Your retirement success isn't about how much you've saved, It

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Speaker 2: about how that money is actually put to.

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Speaker 4: Work to achieve your actual goals.

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Speaker 2: A lot of people dream of early retirement, but what

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Speaker 2: if stopping work too soon actually hurts your health and

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Speaker 2: shortens your life.

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Speaker 4: We've got new research to discuss on that topic.

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Speaker 2: Next, you're listening to Simply Money, presented by all Worth

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Speaker 2: Financial on fifty five KARC, the talk station. Yes full

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Speaker 2: shutdown in American history.

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Speaker 5: President Trump can deploy National Guard troops to Portland, Oregon.

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Speaker 1: Day's news, we will send in the National Guard. He's

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Speaker 1: on fifty five KRC, the talkstation.

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Speaker 6: All Worth Financial a registered investment advisory firm. Any ideas

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Speaker 6: presented during this program are not intended to provide specific

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Speaker 6: financial advice. You should consult your own financial advisor, tax consultant,

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Speaker 6: or a state planning attorney to conduct your own due diligence.

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Speaker 2: You're listening to Simply Money by all Worth Financial, our

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Speaker 2: Bob sponsorer, along with Crime and James. If you can't

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Speaker 2: listen to Simply Money live every night, subscribe and get

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Speaker 2: our daily podcasts. Just search Simply Money on the iHeart

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Speaker 2: app or wherever you find your podcast. Straight Ahead, Eric's

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Speaker 2: wrestling with a big tax hit on new stock Appreciation Unit,

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Speaker 2: Karen's portfolio just got too complex to manage on our own,

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Speaker 2: and Joe's wondering if downsizing makes sense Right now real

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Speaker 2: questions will hopefully provide some smart answers. Straight Ahead at

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Speaker 2: six forty three, So many Americans, maybe even you, dream

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Speaker 2: of retiring early.

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Speaker 4: Get out of the rat race.

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Speaker 2: No more meetings, no more commutes, just absolute freedom. But

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Speaker 2: there's a new conversation taking place, Brian, And it's not

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Speaker 2: about whether you can retire early based on whether you

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Speaker 2: have enough money. It's about whether you should because it

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Speaker 2: might not be as good for.

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Speaker 4: You as you think. Well, I don't think that's a

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Speaker 4: new conversation.

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Speaker 5: That's in a conversation that I have every single day

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Speaker 5: in my office, and I'm sure you do too through

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Speaker 5: the planning process. But USA Today picked up on it,

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Speaker 5: so therefore it's new to them anyway. So so polling

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Speaker 5: coming from USA Today, a sixty percent of Americans say

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Speaker 5: that their dream is to retire early. But we get

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Speaker 5: some figures that from the National Bureau of Economic Research

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Speaker 5: that did a study of people in China, a little

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Speaker 5: bit of a different mindset over there. But when they

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Speaker 5: take early retirement over there through this new pension program

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Speaker 5: they have, they see about a thirteen percent drop in

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Speaker 5: cognitive performance, memory, attention span, brain function, you know, the

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Speaker 5: kind of stuff that actually can make retirement fun if

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Speaker 5: it's in good order. And that's this is why we

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Speaker 5: all say we want to retire earlier here in the

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Speaker 5: United States. Well over there, it's such a work driven

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Speaker 5: economy that as soon as it was gonna say on Yeah, if.

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Speaker 2: I lived in China, Brian, I think I'd want to

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Speaker 2: be retired too, But go ahead.

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Speaker 5: Yeah and so, but basically the brain shut off, and

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Speaker 5: I'm just going to go out on a limb here

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Speaker 5: and say, there just might not be as much of

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Speaker 5: a dream of retirement and freedom and all that kind

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Speaker 5: of thing over there in China as there is here.

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Speaker 5: So the so, yeah, how do we compare that to

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Speaker 5: the United States? Well, similar results. So there was a

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Speaker 5: study published by the Journal of Epidemiology and Community Health

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Speaker 5: found that people in the United States who retired at

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Speaker 5: fifty five were twice as likely to die early compared

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Speaker 5: to those who are retired at sixty five. Now that

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Speaker 5: this don't don't assume that this means that your job

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Speaker 5: is the only thing standing between you and the great beyond.

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Speaker 5: But what it does suggest, though, is that retirement when

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Speaker 5: it's early and unstructured. In other words, I miserable, hate

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Speaker 5: this job. Got to get out of this and I'll

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Speaker 5: figure out what I'm gonna do later. Without a plan,

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Speaker 5: that can lead to a lot of isolation, which leads

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Speaker 5: to less daily movement physical movement, and fewer reasons to

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Speaker 5: stay mentally sharp and all of a sudden the hill

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Speaker 5: the downhill ride is kind of steepening on you a

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Speaker 5: little bit.

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Speaker 2: Yeah, Brian, I think you raised a good point before.

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Speaker 2: I mean, we when we have people come in and

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Speaker 2: talk about retirement, now, very few people are saying, Hey,

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Speaker 2: I can't wait to just quit my job and do

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Speaker 2: nothing and sit in a rocking chair on the front porch,

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Speaker 2: or just play golf, you.

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Speaker 4: Know, sixteen hours a day.

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Speaker 2: You know, people are already more thoughtful about this. People

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Speaker 2: are talking about what am I going to do with

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Speaker 2: my time and energy and my mind, you know, to

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Speaker 2: your prior point in advance. So I think we've seen

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Speaker 2: a healthy evolution in this whole retirement.

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Speaker 4: Processing in advance.

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Speaker 2: But uh, for those that maybe are starting to think

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Speaker 2: about this, uh, here's three.

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Speaker 4: Questions to ask yourself.

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Speaker 2: Do you want to stop working or just stop doing

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Speaker 2: your current job? And how how will you stay mentally

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Speaker 2: and socially active if you do retire early? Those are

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Speaker 2: big questions to answer and hopefully answer in advance. In

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Speaker 2: other words, is early retirement your really your goal?

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Speaker 4: Or is just.

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Speaker 2: Flexibility having more flexibility and freedom in your life your

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Speaker 2: real priority. I think those are three wonderful questions to ask.

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Speaker 5: Yeah, And I think a lot of times, you know,

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Speaker 5: it's exactly that, And you know, a lot of people

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Speaker 5: wind up frustrating their careers. You know that they've gone

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Speaker 5: as far as they want to, or maybe as far

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Speaker 5: as they can, or maybe the writing is just on

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Speaker 5: the wall and the company's kind of moving on beyond

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Speaker 5: there in their level of interest. But that doesn't mean

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Speaker 5: they're ready to retire yet either. So I think the really, really,

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Speaker 5: really important thing to be thinking about is we all

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Speaker 5: tend to hide behind the dollars and waiting until, you know,

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Speaker 5: I think I have enough perceived money that I can

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Speaker 5: actually get away with retirement, and we tend to focus

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Speaker 5: on that to the detriment of the time because once

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Speaker 5: we do get that, oh, by the way, hey, people

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Speaker 5: who focus on that number tend to work too long

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Speaker 5: and they wind up surpassing that number because they didn't

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Speaker 5: have a plan to begin with. So they might hit

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Speaker 5: that number and plow right past it because now they

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Speaker 5: don't know exactly what they want to do, and retirement

404
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Speaker 5: just becomes terrifying. So start to think about what it

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Speaker 5: is you might do. Are there smaller organizations where your

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Speaker 5: skills would be valuable? And you could potentially go work

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Speaker 5: for them for some level of income. But remember the

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Speaker 5: whole point of this is you don't need the salary

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Speaker 5: anymore and you probably don't need the benefits as much

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Speaker 5: as you used to either. So think big, think outside

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Speaker 5: the box. Go on websites like indeed and type in

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Speaker 5: random words of stuff you're interested in. Just a keyword search,

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Speaker 5: see what kind of jobs here that are out there.

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Speaker 5: You'd be shocked at the kind of things that people

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Speaker 5: will pay you to do to take advantage of the

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Speaker 5: skills that are in your brain that you developed over

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Speaker 5: all those years. But don't focus only on the light

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Speaker 5: at the end of the tunnel. I got to get

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Speaker 5: out of this job and I'll worry about the rest later.

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Speaker 5: That hits like a freight train. You really have got

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Speaker 5: to spend some time thinking about how you will fill

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Speaker 5: the vacuum of time that you will have when you

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Speaker 5: no longer have to work.

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Speaker 4: Yeah, the real sweet.

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Speaker 2: Spot here to me, Brian, is being in a position

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Speaker 2: where you can make decisions based on what you want

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Speaker 2: to do and feel called to do, not what you

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Speaker 2: feel like you have to do. That's really retirement freedom,

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Speaker 2: and there's a lot of factors that go into that. Obviously,

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Speaker 2: money is won, but you got to plan ahead and

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Speaker 2: kind of look around here at how you're going to

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Speaker 2: fill your time and energy, because at the end of

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Speaker 2: the day, whether it's your work, volunteer work, you know,

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Speaker 2: relationships in the community. Everyone wants to have some purpose

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Speaker 2: and meaning in their life and they want to have

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Speaker 2: contact with other people. And if you don't have those things,

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00:20:04,359 --> 00:20:07,800
Speaker 2: some true community in your life, I don't care whether

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Speaker 2: you're worth five dollars or fifty million dollars, your life's

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Speaker 2: going to be empty. Here's the all Worth advice. If

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Speaker 2: you're dreaming of early retirement, that's great, but make sure

441
00:20:15,920 --> 00:20:18,480
Speaker 2: you're planning for more than just financial freedom.

442
00:20:18,760 --> 00:20:20,400
Speaker 4: Plan for purpose too.

443
00:20:20,920 --> 00:20:23,760
Speaker 2: Coming up next, we've got the money makeover for all

444
00:20:23,800 --> 00:20:26,639
Speaker 2: you empty nesters out there. You're listening to Simply Money

445
00:20:26,640 --> 00:20:29,600
Speaker 2: presented by all Worth Financial on fifty five KRC, the

446
00:20:29,920 --> 00:20:30,760
Speaker 2: talk station.

447
00:20:30,960 --> 00:20:36,000
Speaker 6: What's Happening, Presidents, Olenski's coming in five KRC and iHeartRadio station.

448
00:20:41,200 --> 00:20:43,800
Speaker 2: You're listening to Simply Money presented by all Worth Financial

449
00:20:43,840 --> 00:20:46,200
Speaker 2: on Bob Sponsller along with Brian James.

450
00:20:47,080 --> 00:20:50,080
Speaker 4: There's this moment every parent eventually hits it.

451
00:20:50,200 --> 00:20:53,280
Speaker 2: You after the last kid moves out, when you walk

452
00:20:53,440 --> 00:20:57,199
Speaker 2: past that empty bedroom and it just socks you right

453
00:20:57,240 --> 00:21:01,200
Speaker 2: in the mouth. Oh, while it's quiet in there. I've

454
00:21:01,240 --> 00:21:05,120
Speaker 2: experienced that, Brian, my wife has as well. And right

455
00:21:05,200 --> 00:21:08,439
Speaker 2: after that you start thinking, Okay, what do we do

456
00:21:08,520 --> 00:21:12,000
Speaker 2: with all this space and potentially what do we do

457
00:21:12,119 --> 00:21:15,480
Speaker 2: with all this money we've been spending on travel, baseball

458
00:21:15,680 --> 00:21:19,080
Speaker 2: and college tuition and all that. So, you know, the

459
00:21:19,119 --> 00:21:21,200
Speaker 2: point we're trying to make tonight and kind of walk

460
00:21:21,280 --> 00:21:25,880
Speaker 2: through is when you hit that empty nester phase, it's

461
00:21:25,960 --> 00:21:28,880
Speaker 2: not time to just you know, go out and spend

462
00:21:28,920 --> 00:21:31,679
Speaker 2: all that extra money you might have laying around or

463
00:21:31,720 --> 00:21:34,320
Speaker 2: think you have laying around. It's time to take some

464
00:21:34,480 --> 00:21:39,240
Speaker 2: inventory on where does life actually pan out right now,

465
00:21:39,280 --> 00:21:42,320
Speaker 2: and maybe some some tune up work that needs to

466
00:21:42,320 --> 00:21:44,200
Speaker 2: be done to your overall financial plan.

467
00:21:44,480 --> 00:21:46,919
Speaker 5: Yeah, so an empty nester money makeover, I think, is

468
00:21:46,920 --> 00:21:48,840
Speaker 5: what you're referring to there. So you already refer to

469
00:21:48,880 --> 00:21:51,399
Speaker 5: the expenses that may be gone, all those things that

470
00:21:51,440 --> 00:21:54,280
Speaker 5: the kids were into that you know aren't costing money anymore.

471
00:21:54,800 --> 00:21:56,639
Speaker 5: So let's talk about the house. So the structure of

472
00:21:56,640 --> 00:21:58,840
Speaker 5: the house, of course, is still the same. In congratulations,

473
00:21:58,880 --> 00:21:59,720
Speaker 5: because it's still standing.

474
00:21:59,800 --> 00:22:00,400
Speaker 4: That's good thing.

475
00:22:00,960 --> 00:22:02,720
Speaker 5: But you don't need all that space. So what about

476
00:22:02,720 --> 00:22:05,119
Speaker 5: that old bedroom. Maybe it becomes a yoga room or

477
00:22:05,160 --> 00:22:08,439
Speaker 5: a guest suite or the sports bar, but probably what

478
00:22:08,520 --> 00:22:11,119
Speaker 5: it will become first is a glorified storage unit for

479
00:22:11,280 --> 00:22:13,720
Speaker 5: you know, twenty band, twenty years of marching band trophies

480
00:22:13,760 --> 00:22:16,600
Speaker 5: and old posters, legos and that kind of thing. So

481
00:22:16,720 --> 00:22:18,680
Speaker 5: money works the same way. When the kids are gone.

482
00:22:18,680 --> 00:22:20,600
Speaker 5: It's sort of like you just cleared a giant room

483
00:22:20,640 --> 00:22:22,520
Speaker 5: in your financial house. So what do you want to

484
00:22:22,560 --> 00:22:25,280
Speaker 5: do with those resources that you have next? Well, one

485
00:22:25,280 --> 00:22:27,399
Speaker 5: of the first things to look at is that cash flow.

486
00:22:27,440 --> 00:22:29,480
Speaker 5: So as we mentioned, a lot of those regular expenses

487
00:22:29,520 --> 00:22:32,880
Speaker 5: are gonna disappear. Your grocery bill is gonna drop when

488
00:22:32,880 --> 00:22:35,119
Speaker 5: they hit a certain age. Eventually, your car insurance is

489
00:22:35,160 --> 00:22:38,119
Speaker 5: gonna drop, you'll hand off their cell phones, college payments

490
00:22:38,119 --> 00:22:41,439
Speaker 5: go away. But without some kind of planning those extra

491
00:22:41,920 --> 00:22:44,639
Speaker 5: the absence of those expenses is gonna give you extra

492
00:22:44,720 --> 00:22:48,760
Speaker 5: spendable money, and it could result in we've got this stuff,

493
00:22:48,800 --> 00:22:50,520
Speaker 5: so we might as well blow it on things, and

494
00:22:50,560 --> 00:22:52,200
Speaker 5: you maybe you wind up with a fancy of your car,

495
00:22:52,480 --> 00:22:54,800
Speaker 5: more eating out and then you may wind up regretting

496
00:22:54,840 --> 00:22:56,119
Speaker 5: that you didn't really have a plan for it.

497
00:22:56,160 --> 00:22:58,560
Speaker 4: So just think about it in advance. Think about it

498
00:22:58,640 --> 00:22:58,840
Speaker 4: like this.

499
00:22:58,880 --> 00:23:00,639
Speaker 5: If you take down a wall of your house, you

500
00:23:00,640 --> 00:23:03,160
Speaker 5: could fill that new space with clutter, or you could

501
00:23:03,200 --> 00:23:05,040
Speaker 5: open it up and make it more functional for something

502
00:23:05,040 --> 00:23:06,720
Speaker 5: you actually want to do. But the point is you

503
00:23:06,760 --> 00:23:09,080
Speaker 5: will have thought in advance for what you want to

504
00:23:09,119 --> 00:23:12,000
Speaker 5: do with those new added resources that you have. So

505
00:23:12,080 --> 00:23:14,960
Speaker 5: maybe it's funding those Ketchup contributions in your four one okay,

506
00:23:14,960 --> 00:23:20,960
Speaker 5: increase that amount, or IRA contributions roth IRA backdoor contributions.

507
00:23:19,920 --> 00:23:21,959
Speaker 4: If that's something that you're familiar with.

508
00:23:22,280 --> 00:23:24,320
Speaker 5: If you're over fifty, you can put in a little

509
00:23:24,320 --> 00:23:26,760
Speaker 5: extra each year, and for those in their early sixties,

510
00:23:26,760 --> 00:23:29,840
Speaker 5: there's even a new ketchup. So these dollars sometimes aren't

511
00:23:29,880 --> 00:23:33,159
Speaker 5: present at the moment, but remember these opportunities when you

512
00:23:33,200 --> 00:23:34,879
Speaker 5: do hit this empty nest stage of life.

513
00:23:36,000 --> 00:23:38,760
Speaker 2: Well, Brian speaking of taking that wall down and having

514
00:23:38,800 --> 00:23:41,919
Speaker 2: the option of just having a bunch of clutter, My

515
00:23:42,000 --> 00:23:44,200
Speaker 2: wife and I are living this right now, so I'm

516
00:23:44,200 --> 00:23:46,879
Speaker 2: giving you a preview of what your life is likely

517
00:23:46,920 --> 00:23:47,480
Speaker 2: going to become.

518
00:23:48,080 --> 00:23:49,800
Speaker 4: All three of our kids are out of college.

519
00:23:49,800 --> 00:23:52,280
Speaker 2: They're all living on their own now, in their own

520
00:23:52,400 --> 00:23:55,959
Speaker 2: separate homes and dwellings, but a lot of their crap

521
00:23:56,200 --> 00:23:58,280
Speaker 2: is still in our house. You know, it's funny. We

522
00:23:58,720 --> 00:24:01,600
Speaker 2: my wife will go through a wonderful job of keeping

523
00:24:01,600 --> 00:24:04,600
Speaker 2: our home clean and clutter free, but she'll periodically go

524
00:24:04,720 --> 00:24:07,560
Speaker 2: through and find all you know, you use the analogy

525
00:24:07,600 --> 00:24:10,080
Speaker 2: of marching band trophies. I mean, whether it's that or

526
00:24:10,400 --> 00:24:14,080
Speaker 2: athletic trophies, are just close, you know, stuff laying around

527
00:24:14,119 --> 00:24:16,359
Speaker 2: and she'll go to the kids and say, hey, you

528
00:24:16,480 --> 00:24:19,000
Speaker 2: moved out. Are you gonna take this stuff with you? Nope,

529
00:24:19,080 --> 00:24:21,080
Speaker 2: don't have room for that. Can you keep it?

530
00:24:21,560 --> 00:24:26,040
Speaker 4: So it is a lot of the stuff never goes away.

531
00:24:27,000 --> 00:24:29,600
Speaker 2: It's a process, all right. Speaking of the house, and

532
00:24:29,960 --> 00:24:33,280
Speaker 2: this is a topic that comes up a lot. People

533
00:24:33,359 --> 00:24:36,680
Speaker 2: talk about wanting to downsize or write size their home.

534
00:24:37,080 --> 00:24:40,720
Speaker 2: This is a big emotional and financial topic. Some people

535
00:24:40,880 --> 00:24:44,959
Speaker 2: dream about downsizing, while others love their current home and

536
00:24:45,040 --> 00:24:47,440
Speaker 2: plan to stay put, even if they have two or

537
00:24:47,480 --> 00:24:51,399
Speaker 2: three bedrooms that are completely empty. The point I make here, Brian,

538
00:24:51,520 --> 00:24:54,240
Speaker 2: is a lot of times people talk about downsizing.

539
00:24:54,359 --> 00:24:55,280
Speaker 4: I don't know about you.

540
00:24:55,440 --> 00:24:58,200
Speaker 2: I have yet to see the client and I've been

541
00:24:58,200 --> 00:25:01,200
Speaker 2: doing this for thirty five years. I've yet to see

542
00:25:01,240 --> 00:25:07,000
Speaker 2: somebody sell their primary residence and move somewhere that ends

543
00:25:07,080 --> 00:25:11,159
Speaker 2: up costing less money. It might be smaller, but it

544
00:25:11,240 --> 00:25:14,919
Speaker 2: ends up being newer with you know, with nice with

545
00:25:15,119 --> 00:25:19,960
Speaker 2: nice furniturings. It never costs less money. People want to

546
00:25:20,080 --> 00:25:23,919
Speaker 2: rationalize this by making it, you know, calling it downsizing.

547
00:25:24,400 --> 00:25:27,639
Speaker 2: It's really not when it comes to finances. So just

548
00:25:27,800 --> 00:25:30,320
Speaker 2: you know, buyer beware out there when you start talking

549
00:25:30,320 --> 00:25:32,560
Speaker 2: about the whole downsizing conversation.

550
00:25:33,040 --> 00:25:35,760
Speaker 4: Does this ring true with you and your clients as well?

551
00:25:35,760 --> 00:25:38,800
Speaker 5: Most there's no such thing as a financial downsizing When

552
00:25:38,800 --> 00:25:39,600
Speaker 5: it comes to your house.

553
00:25:39,640 --> 00:25:41,719
Speaker 4: There's an effort and work downsizing.

554
00:25:41,760 --> 00:25:43,280
Speaker 5: You can reduce the amount of work you got to

555
00:25:43,280 --> 00:25:44,920
Speaker 5: put into it, but you're not gonna save any money.

556
00:25:45,000 --> 00:25:46,880
Speaker 5: Even if you buy a smaller house, it's most likely

557
00:25:46,920 --> 00:25:49,400
Speaker 5: going to be in a nicer neighborhood or an area

558
00:25:49,480 --> 00:25:50,959
Speaker 5: you always wanted to live in, that kind of thing,

559
00:25:50,960 --> 00:25:52,600
Speaker 5: and you're probably not the only one who wanted to

560
00:25:52,640 --> 00:25:56,159
Speaker 5: live there. Therefore, the expense the purchase it goes up.

561
00:25:56,200 --> 00:25:58,520
Speaker 5: So don't think money when you think downsizing.

562
00:25:58,880 --> 00:25:59,760
Speaker 4: So what do we do about this?

563
00:25:59,800 --> 00:26:02,639
Speaker 5: Well, well, you can do what's called a retirement rehearsal.

564
00:26:02,720 --> 00:26:05,360
Speaker 5: So once the hew you've noticed the house is quiet

565
00:26:05,440 --> 00:26:07,439
Speaker 5: and that budget is a little lighter, well that's the

566
00:26:07,480 --> 00:26:09,520
Speaker 5: time for a test drive. So maybe live for six

567
00:26:09,560 --> 00:26:11,960
Speaker 5: months on what you think your expected retirement income is

568
00:26:11,960 --> 00:26:15,040
Speaker 5: gonna be. And that might be so security, pension investment withdraws,

569
00:26:15,080 --> 00:26:17,320
Speaker 5: or rental real estate income, that kind of thing. See

570
00:26:17,320 --> 00:26:19,680
Speaker 5: how that feels, and you're gonna learn quickly if the

571
00:26:19,720 --> 00:26:22,119
Speaker 5: plan works, because you'll know right away when you're dipping

572
00:26:22,119 --> 00:26:23,880
Speaker 5: into more than what you thought you were going to.

573
00:26:24,440 --> 00:26:26,520
Speaker 5: And then you're gonna be because this is you're not

574
00:26:26,560 --> 00:26:28,040
Speaker 5: making a real sacrifice at this time.

575
00:26:28,040 --> 00:26:29,439
Speaker 4: You're just kind of test driving, so.

576
00:26:29,440 --> 00:26:31,480
Speaker 5: You're gonna you'll know if you need a little tune

577
00:26:31,560 --> 00:26:33,639
Speaker 5: up before that paycheck stops. So it's kind of like

578
00:26:33,640 --> 00:26:35,840
Speaker 5: taking the RV on a weekend trip right before you

579
00:26:35,920 --> 00:26:38,440
Speaker 5: actually buy it for real, before you hit the road

580
00:26:38,440 --> 00:26:40,080
Speaker 5: full time. You're gonna want to test it before you're

581
00:26:40,119 --> 00:26:42,000
Speaker 5: thousand miles from home and see if you run across

582
00:26:42,000 --> 00:26:43,520
Speaker 5: any problems you didn't anticipate.

583
00:26:43,920 --> 00:26:44,479
Speaker 4: One more thing.

584
00:26:44,880 --> 00:26:47,679
Speaker 2: I think that is a wonderful idea, and I wish

585
00:26:47,760 --> 00:26:50,359
Speaker 2: more people did this, and I'm in the middle of

586
00:26:50,560 --> 00:26:52,879
Speaker 2: crying to do this right now, you know, with my

587
00:26:53,000 --> 00:26:56,720
Speaker 2: wife actually constructing a budget and looking at what this

588
00:26:56,880 --> 00:26:59,879
Speaker 2: is really gonna look like, if life's gonna resemble what

589
00:27:00,040 --> 00:27:03,800
Speaker 2: we think it might resemble. I think it's really good

590
00:27:03,840 --> 00:27:05,360
Speaker 2: to test drive this in advance.

591
00:27:05,400 --> 00:27:05,760
Speaker 4: But go on.

592
00:27:06,400 --> 00:27:08,560
Speaker 5: Yeah, and so one more thing to do when you've

593
00:27:08,560 --> 00:27:10,480
Speaker 5: got this free time. You're gonna remember the whole point

594
00:27:10,480 --> 00:27:11,880
Speaker 5: of this is that the kids are going they're out

595
00:27:11,880 --> 00:27:13,719
Speaker 5: on their own. You're gonna start paying attention to what

596
00:27:13,800 --> 00:27:15,720
Speaker 5: it is they do and how they live their lives.

597
00:27:15,960 --> 00:27:17,920
Speaker 5: That's gonna be a bit of an estate planning tune

598
00:27:18,000 --> 00:27:20,600
Speaker 5: up for you. So you're gonna need help sooner or later.

599
00:27:20,680 --> 00:27:23,360
Speaker 5: Someday you're probably already in a situation where you yourself

600
00:27:23,359 --> 00:27:25,840
Speaker 5: are helping your own parents, and so this is the

601
00:27:25,920 --> 00:27:28,480
Speaker 5: time to learn which kid might make the best executor,

602
00:27:28,960 --> 00:27:30,960
Speaker 5: who is the one who can make decisions on your behalf.

603
00:27:31,000 --> 00:27:32,679
Speaker 5: This is yes, this is years into the future, but

604
00:27:32,720 --> 00:27:35,040
Speaker 5: you sooner you put this stuff into place, the sooner

605
00:27:35,080 --> 00:27:38,080
Speaker 5: you cannot think about it, enjoy and enjoy retirement more.

606
00:27:38,320 --> 00:27:40,240
Speaker 5: And then you'll be thinking about which of my kids

607
00:27:40,240 --> 00:27:42,320
Speaker 5: are good on their own and I can trust them,

608
00:27:42,359 --> 00:27:46,200
Speaker 5: you know, inheriting money at my death, which of them

609
00:27:46,240 --> 00:27:48,840
Speaker 5: made me have some more challenges and may require a

610
00:27:48,840 --> 00:27:50,840
Speaker 5: little extra care for which I might need a trust

611
00:27:50,840 --> 00:27:53,399
Speaker 5: and a trustee in place. So estate planning isn't just

612
00:27:53,440 --> 00:27:56,000
Speaker 5: about passing that money. It's about making life easier for

613
00:27:56,080 --> 00:27:58,320
Speaker 5: the family later, especially for those of you who have

614
00:27:58,359 --> 00:28:01,680
Speaker 5: been through a difficult estates process, for maybe your own parents.

615
00:28:01,920 --> 00:28:03,840
Speaker 5: So think of it like labeling those boxes in that

616
00:28:03,880 --> 00:28:07,320
Speaker 5: remodeled home. You're saving everyone from chaos down the road

617
00:28:07,480 --> 00:28:08,359
Speaker 5: by planning ahead.

618
00:28:08,960 --> 00:28:11,240
Speaker 2: Here's the all Worth advice. An empty nest is your

619
00:28:11,359 --> 00:28:17,320
Speaker 2: chance to reimagine and possibly refill your future. You know

620
00:28:17,760 --> 00:28:21,400
Speaker 2: you should be diversified, But what does being quote unquote

621
00:28:21,480 --> 00:28:24,200
Speaker 2: two diversified look like. It's one of the questions we'll

622
00:28:24,240 --> 00:28:26,679
Speaker 2: answer next. You're listening to Simply Money presented by All

623
00:28:26,720 --> 00:28:29,680
Speaker 2: with Financial on fifty five KRC the talk.

624
00:28:29,480 --> 00:28:32,040
Speaker 1: Station Mark Levin.

625
00:28:32,280 --> 00:28:36,280
Speaker 7: We Americans, we patriots, are irrational people. Irreasonable people, the

626
00:28:36,320 --> 00:28:38,680
Speaker 7: people who know good from either right from wrong. We

627
00:28:38,760 --> 00:28:42,200
Speaker 7: also know hustlers and Marxists and fascists in islamis who

628
00:28:42,240 --> 00:28:45,480
Speaker 7: endanger our country every damn day. We're destroying our culture

629
00:28:45,600 --> 00:28:48,800
Speaker 7: into civil society. Who are breeding a youth that hates

630
00:28:48,840 --> 00:28:50,800
Speaker 7: America and embraces the wrong thing.

631
00:28:51,080 --> 00:28:54,800
Speaker 3: Mark Levin tonight at ten oh six on fifty five KRC,

632
00:28:55,240 --> 00:28:56,160
Speaker 3: the talk station.

633
00:28:57,000 --> 00:28:59,800
Speaker 1: Hey, your opinions are welcome to here. Why do we

634
00:28:59,800 --> 00:29:02,080
Speaker 1: cat letting thousands of people come over and do nothing

635
00:29:02,120 --> 00:29:05,120
Speaker 1: about it? My family's safety is at risk. Fifty five

636
00:29:05,200 --> 00:29:07,120
Speaker 1: KRS the talk station.

637
00:29:12,280 --> 00:29:14,760
Speaker 2: You're listening to Simply Money, presented by all Worth Financial.

638
00:29:14,760 --> 00:29:18,080
Speaker 2: I'm Bob Sponseller alone with Brian James. Do you have

639
00:29:18,080 --> 00:29:20,680
Speaker 2: a financial question you'd like for us to answer. There's

640
00:29:20,720 --> 00:29:22,640
Speaker 2: a red button you can click while you're listening to

641
00:29:22,680 --> 00:29:25,600
Speaker 2: the show right on the iHeart app. Simply record your

642
00:29:25,680 --> 00:29:28,920
Speaker 2: question and it will come straight to us. All right,

643
00:29:28,920 --> 00:29:32,400
Speaker 2: Brian tim and Hyde Park says, our advisor keeps saying

644
00:29:32,480 --> 00:29:35,240
Speaker 2: we're on track, but it doesn't feel that way to us.

645
00:29:35,360 --> 00:29:40,080
Speaker 2: What's the difference between being mathematically fine and being truly

646
00:29:40,320 --> 00:29:41,320
Speaker 2: financially free?

647
00:29:41,360 --> 00:29:42,480
Speaker 4: This is a great question.

648
00:29:42,880 --> 00:29:45,600
Speaker 5: Yeah, I really think so so this if you if

649
00:29:45,640 --> 00:29:47,640
Speaker 5: it doesn't feel that way. First of all, that's not

650
00:29:47,840 --> 00:29:50,240
Speaker 5: that's not necessarily a negative thing. That's that you know,

651
00:29:50,440 --> 00:29:52,520
Speaker 5: that's that Jiminy cricket on your shoulder telling you to

652
00:29:52,560 --> 00:29:56,680
Speaker 5: be careful. That's the same voice that that that has

653
00:29:56,680 --> 00:29:58,600
Speaker 5: been telling you all along to save safe, save. It

654
00:29:58,600 --> 00:30:01,400
Speaker 5: can be hard to tamp that voice down and turn

655
00:30:01,480 --> 00:30:04,560
Speaker 5: that freighter around psychologically, which is a very slow process

656
00:30:04,680 --> 00:30:08,000
Speaker 5: to spending your assets from putting nuts away for the winner.

657
00:30:08,120 --> 00:30:11,720
Speaker 5: So the difference between mathematically fine and being truly financially free,

658
00:30:11,760 --> 00:30:14,440
Speaker 5: Tim is confidence. So it sounds like you just need

659
00:30:14,440 --> 00:30:15,960
Speaker 5: to go through your plan some more, and who knows,

660
00:30:15,960 --> 00:30:19,040
Speaker 5: maybe the advisor is missing something. We're all humans. Sometimes

661
00:30:19,040 --> 00:30:21,480
Speaker 5: things don't go well. So if there's something you mathematically

662
00:30:21,520 --> 00:30:24,480
Speaker 5: agree with, pinpoint that for the advisor and ask them

663
00:30:24,480 --> 00:30:27,360
Speaker 5: to explain it again and again until you understand it.

664
00:30:27,440 --> 00:30:30,560
Speaker 5: But again, that's the difference between mathematically fine and financially free.

665
00:30:30,640 --> 00:30:31,280
Speaker 4: Is confidence.

666
00:30:31,360 --> 00:30:34,000
Speaker 5: Yes, I see this plan, and I understand that things

667
00:30:34,120 --> 00:30:36,320
Speaker 5: the light doesn't always work out that way. But I

668
00:30:36,400 --> 00:30:40,520
Speaker 5: have stress tested this plan several different times for many reasons,

669
00:30:40,760 --> 00:30:43,160
Speaker 5: and now I feel confident that anything crazy that comes

670
00:30:43,200 --> 00:30:44,520
Speaker 5: out of left field we can handle.

671
00:30:44,600 --> 00:30:45,680
Speaker 4: Confidence is the difference.

672
00:30:45,720 --> 00:30:48,920
Speaker 5: Tim David in Blue Ash David has a question for you, Bob,

673
00:30:48,960 --> 00:30:51,440
Speaker 5: and he says, we always talk about being diversified, but

674
00:30:51,560 --> 00:30:53,960
Speaker 5: is it possible to be too diversified, and if so,

675
00:30:54,080 --> 00:30:54,880
Speaker 5: what does that look like?

676
00:30:54,960 --> 00:30:57,280
Speaker 4: Bob Well David.

677
00:30:57,280 --> 00:31:00,240
Speaker 2: The most common situation we come across is, you know,

678
00:31:00,320 --> 00:31:03,800
Speaker 2: people feel diversified, but they might have you know, thirteen

679
00:31:03,840 --> 00:31:07,800
Speaker 2: to seventeen different large cap mutual funds or ETFs, either

680
00:31:07,800 --> 00:31:10,200
Speaker 2: in their retirement plan or in their broker's account. They've

681
00:31:10,240 --> 00:31:14,560
Speaker 2: just been collecting these products over time, and people have

682
00:31:14,680 --> 00:31:17,840
Speaker 2: the sense of, you know, the more funds or investment

683
00:31:17,880 --> 00:31:24,160
Speaker 2: options I own, I'm automatically diversified. Well, true diversification is

684
00:31:24,200 --> 00:31:28,280
Speaker 2: having some non correlated asset classes to complement, you know,

685
00:31:28,480 --> 00:31:32,080
Speaker 2: in my example, the large cap growth positions, so a

686
00:31:32,120 --> 00:31:34,040
Speaker 2: little bit of bonds, a little bit of small cap,

687
00:31:34,080 --> 00:31:37,720
Speaker 2: a little bit of international, maybe some private equity, maybe

688
00:31:37,760 --> 00:31:39,200
Speaker 2: some buffer ETFs thing.

689
00:31:39,320 --> 00:31:39,520
Speaker 4: You know.

690
00:31:39,560 --> 00:31:43,640
Speaker 2: The whole idea behind having a long term uh diversified

691
00:31:43,680 --> 00:31:47,200
Speaker 2: portfolio is to have a portfolio that over time gives

692
00:31:47,280 --> 00:31:50,680
Speaker 2: you the highest rate of return per unit of risk.

693
00:31:51,120 --> 00:31:54,200
Speaker 2: That's what that modern portfolio theory that you know, all

694
00:31:54,240 --> 00:31:57,880
Speaker 2: financial advisors should be modeling portfolios after it.

695
00:31:57,960 --> 00:31:59,920
Speaker 4: That's what that's how and why it works.

696
00:32:00,120 --> 00:32:05,280
Speaker 2: So we have to define what diversified means, and the

697
00:32:05,280 --> 00:32:07,000
Speaker 2: only way to do that is kind of look under

698
00:32:07,000 --> 00:32:08,840
Speaker 2: the hood and see what you actually own.

699
00:32:09,360 --> 00:32:10,760
Speaker 4: But that's my answer.

700
00:32:11,080 --> 00:32:15,600
Speaker 2: Oftentimes people feel diversified by having a bunch of options

701
00:32:15,680 --> 00:32:19,560
Speaker 2: in one particular asset class, and that's where you might

702
00:32:19,680 --> 00:32:22,760
Speaker 2: feel like you're diversified, but you're really not. Hope that helps,

703
00:32:23,240 --> 00:32:25,920
Speaker 2: all right, Eric and Fort Mitchell says, my company just

704
00:32:26,000 --> 00:32:29,720
Speaker 2: offered me restricted stock units, and I don't fully understand

705
00:32:29,720 --> 00:32:30,560
Speaker 2: how they're taxed.

706
00:32:30,880 --> 00:32:32,400
Speaker 4: How do I build a plan.

707
00:32:32,280 --> 00:32:35,320
Speaker 2: Around something like that that fluctuates in value?

708
00:32:35,320 --> 00:32:39,320
Speaker 5: Bron So, first off, congratulations, because you obviously you work

709
00:32:39,320 --> 00:32:41,200
Speaker 5: for a company it's been successful enough it wants to

710
00:32:41,240 --> 00:32:43,440
Speaker 5: reward its employees by giving them a little piece of

711
00:32:43,480 --> 00:32:43,800
Speaker 5: the action.

712
00:32:43,920 --> 00:32:44,800
Speaker 4: So that's fantastic.

713
00:32:44,880 --> 00:32:48,240
Speaker 5: So those can be an excellent form of compensation, but

714
00:32:48,280 --> 00:32:50,880
Speaker 5: they do have unique tax and planning challenges because their

715
00:32:50,960 --> 00:32:54,360
Speaker 5: value depends on one company's stock price, and there's just

716
00:32:54,400 --> 00:32:56,720
Speaker 5: no way to tell what direction one company is going

717
00:32:56,760 --> 00:32:58,320
Speaker 5: to go or what the market's going to do to it.

718
00:32:58,360 --> 00:32:59,680
Speaker 4: So, but here are the facts.

719
00:33:00,240 --> 00:33:03,239
Speaker 5: When you're granted those restricted stocks units, you don't owe

720
00:33:03,280 --> 00:33:05,720
Speaker 5: any taxes yet because you technically don't own anything. They're

721
00:33:05,760 --> 00:33:08,480
Speaker 5: restricted until they're not, so they're just a promise, so

722
00:33:08,520 --> 00:33:11,360
Speaker 5: that transaction at the very beginning is not a taxable one.

723
00:33:11,560 --> 00:33:14,520
Speaker 5: They all have a vesting date, though, and once they

724
00:33:14,680 --> 00:33:15,800
Speaker 5: vest they hit that date.

725
00:33:15,840 --> 00:33:16,520
Speaker 4: Now they're yours.

726
00:33:16,840 --> 00:33:19,440
Speaker 5: Now the value of them is treated as ordinary income,

727
00:33:19,560 --> 00:33:21,720
Speaker 5: just as if they had increased your salary a little bit.

728
00:33:21,920 --> 00:33:23,520
Speaker 5: So the value of those shares are going to be

729
00:33:23,520 --> 00:33:27,080
Speaker 5: added to your W two income. Federal, state, and payroll

730
00:33:27,120 --> 00:33:29,360
Speaker 5: taxes are going to apply, and they will be withheld.

731
00:33:30,000 --> 00:33:32,320
Speaker 5: Oftentimes you'll have a choice though through what they call

732
00:33:32,400 --> 00:33:34,600
Speaker 5: share withholding, or they're going to sell some shares to

733
00:33:34,640 --> 00:33:37,400
Speaker 5: cover and then after those vests, so you've paid income

734
00:33:37,440 --> 00:33:39,880
Speaker 5: taxes for what you're sitting on. Now you just down stock.

735
00:33:39,960 --> 00:33:41,440
Speaker 5: Now you just do own shares as if you had

736
00:33:41,440 --> 00:33:43,440
Speaker 5: bought them on your own. And if you sell them

737
00:33:43,440 --> 00:33:46,200
Speaker 5: within a year of having been granted them, then if

738
00:33:46,200 --> 00:33:48,719
Speaker 5: there's any gains above what you paid for when they

739
00:33:48,720 --> 00:33:50,760
Speaker 5: were when they came unvested, then you're going to pay

740
00:33:51,080 --> 00:33:54,160
Speaker 5: income taxes on that as a short term gain. If

741
00:33:54,200 --> 00:33:56,440
Speaker 5: you sit on them for more than a year, now

742
00:33:56,440 --> 00:33:58,440
Speaker 5: you get the lower capital gains. Right now, it's always

743
00:33:58,440 --> 00:34:00,680
Speaker 5: a crapshoot as to whether you should hold said on them.

744
00:34:00,720 --> 00:34:03,760
Speaker 5: Only you'll know your company better than anybody else. Treat

745
00:34:03,800 --> 00:34:05,480
Speaker 5: it like an investment hit if you had bought it

746
00:34:05,520 --> 00:34:08,120
Speaker 5: on your own or inherit it or whatever, then think

747
00:34:08,120 --> 00:34:09,560
Speaker 5: about it. That's something you want to keep for the

748
00:34:09,560 --> 00:34:11,680
Speaker 5: long term. But hopefully that helps with some of the

749
00:34:11,760 --> 00:34:13,920
Speaker 5: questions you might have had out there. And again, congratulations

750
00:34:13,920 --> 00:34:17,880
Speaker 5: for the future windfall. So moving on to Karen and Loveland,

751
00:34:17,920 --> 00:34:20,480
Speaker 5: Karen says they've been careful with money, but now they're

752
00:34:20,480 --> 00:34:23,040
Speaker 5: in that sandwich generation where they're helping. They're spending more

753
00:34:23,040 --> 00:34:25,359
Speaker 5: helping their own aging parents, not to mention keeping their

754
00:34:25,360 --> 00:34:26,480
Speaker 5: own situation afloat.

755
00:34:26,760 --> 00:34:28,879
Speaker 4: So how do you how do you spread it all out? Bob?

756
00:34:28,920 --> 00:34:31,799
Speaker 5: How do you support those aging parents without sacrificing their

757
00:34:31,840 --> 00:34:33,480
Speaker 5: own security?

758
00:34:33,840 --> 00:34:36,840
Speaker 2: Great question, Karen, here's my answer. Don't just leave it

759
00:34:36,880 --> 00:34:38,319
Speaker 2: to chance. And here's what I mean.

760
00:34:38,440 --> 00:34:40,480
Speaker 4: First, build build a.

761
00:34:40,480 --> 00:34:42,960
Speaker 2: Financial plan and update it if you already have one,

762
00:34:43,480 --> 00:34:47,400
Speaker 2: and run some different scenarios. What do our aging parents,

763
00:34:47,440 --> 00:34:48,919
Speaker 2: you know, what are they going to we think we're

764
00:34:48,920 --> 00:34:51,600
Speaker 2: going to need and for how long? And put those

765
00:34:51,680 --> 00:34:54,960
Speaker 2: expenses into your plan and then factor in your own

766
00:34:55,000 --> 00:34:57,760
Speaker 2: social security. As you pointed out your question, have a plan,

767
00:34:58,040 --> 00:35:02,759
Speaker 2: run different scenarios, and stress test that plan and see

768
00:35:02,760 --> 00:35:06,840
Speaker 2: how it's gonna work. And usually one of three things

769
00:35:06,920 --> 00:35:09,319
Speaker 2: you know might need to happen. You know, if you

770
00:35:09,440 --> 00:35:12,920
Speaker 2: and or your spouse might need to work maybe one

771
00:35:13,080 --> 00:35:15,319
Speaker 2: or two or three extra years in order to pull

772
00:35:15,360 --> 00:35:18,319
Speaker 2: all this off. You might have to spend a little

773
00:35:18,360 --> 00:35:22,080
Speaker 2: bit less money in order to help your aging parents.

774
00:35:22,800 --> 00:35:25,880
Speaker 2: There's a lot of different variables there, and the important

775
00:35:25,920 --> 00:35:27,440
Speaker 2: thing is get out in front of it.

776
00:35:27,560 --> 00:35:27,799
Speaker 4: Now.

777
00:35:28,080 --> 00:35:31,719
Speaker 2: Run those scenarios so you have more control over those

778
00:35:31,840 --> 00:35:34,000
Speaker 2: levers that you pull. And then i'd say the last

779
00:35:34,000 --> 00:35:37,000
Speaker 2: thing is communication. You know, if you get to the

780
00:35:37,040 --> 00:35:41,040
Speaker 2: point where you can't just bankroll everything for your aging parents,

781
00:35:41,080 --> 00:35:43,759
Speaker 2: the sooner you can sit down and have those tough

782
00:35:43,800 --> 00:35:47,319
Speaker 2: conversations right now, the better everything's gonna be, you know,

783
00:35:47,440 --> 00:35:48,040
Speaker 2: down the road.

784
00:35:48,080 --> 00:35:48,400
Speaker 4: I don't know.

785
00:35:48,440 --> 00:35:50,719
Speaker 2: If you have siblings that are in the mix, you

786
00:35:50,719 --> 00:35:54,160
Speaker 2: know it might involve some communication with them. But that's

787
00:35:54,200 --> 00:35:58,680
Speaker 2: my answer. Run a good financial plan and then communicate. Communicate, communicate.

788
00:35:59,280 --> 00:36:02,120
Speaker 2: Don't just hope all this works out at the end.

789
00:36:02,320 --> 00:36:05,280
Speaker 2: You'll make some adjustments now when you have the ability

790
00:36:05,280 --> 00:36:08,560
Speaker 2: to do so. Next, I've got my two cents on

791
00:36:09,360 --> 00:36:12,600
Speaker 2: picking a financial advisor. You're listening to Simply Money, presented

792
00:36:12,600 --> 00:36:16,480
Speaker 2: by all Worth Financial on fifty five KRC, the talk station.

793
00:36:17,200 --> 00:36:19,319
Speaker 8: In order to love your dream doesn't always involve a

794
00:36:19,320 --> 00:36:22,440
Speaker 8: pay cut, invest your time. Sometimes it involves a pay

795
00:36:22,480 --> 00:36:24,720
Speaker 8: cut to get moving and then move.

796
00:36:24,640 --> 00:36:26,360
Speaker 1: Up and invested in your future.

797
00:36:26,480 --> 00:36:28,440
Speaker 8: But I would want a path to make more than

798
00:36:28,440 --> 00:36:31,120
Speaker 8: I made, not less than I made. Dave Ramsey, There's

799
00:36:31,120 --> 00:36:32,920
Speaker 8: a lot of people need help in this world. I

800
00:36:32,960 --> 00:36:34,359
Speaker 8: want you to get clear. I want you to spend

801
00:36:34,400 --> 00:36:37,160
Speaker 8: some time very carefully going through what are your talents,

802
00:36:37,480 --> 00:36:40,840
Speaker 8: what are your passions, what are your skills? You know,

803
00:36:40,880 --> 00:36:42,080
Speaker 8: what is it you value?

804
00:36:42,920 --> 00:36:46,760
Speaker 3: Weekdays at seven on fifty five KRZ The Toxic.

805
00:36:47,239 --> 00:36:49,080
Speaker 2: I am so worried that next month I have to

806
00:36:49,160 --> 00:36:52,000
Speaker 2: choose between groceries for my kids or gas for my car.

807
00:36:52,239 --> 00:36:55,720
Speaker 3: Talk about it here fifty five krs the talk station.

808
00:37:00,120 --> 00:37:02,320
Speaker 2: Listening to Simply Money. He thought about all We're Financial

809
00:37:02,320 --> 00:37:03,960
Speaker 2: on Bob Spondseller along.

810
00:37:03,719 --> 00:37:04,880
Speaker 4: With Brian James.

811
00:37:05,600 --> 00:37:08,160
Speaker 2: All Right, Brian, we talk all the time about having

812
00:37:08,200 --> 00:37:13,120
Speaker 2: a properly diversified investment portfolio. But you know, from time

813
00:37:13,160 --> 00:37:16,239
Speaker 2: to time, we run into folks that think it's a

814
00:37:16,280 --> 00:37:19,800
Speaker 2: good idea to be diversified in terms of the number

815
00:37:19,840 --> 00:37:22,960
Speaker 2: of quote unquote financial advisors they have, and I want

816
00:37:22,960 --> 00:37:27,239
Speaker 2: to touch on that a little bit. I rarely, if ever,

817
00:37:27,640 --> 00:37:30,359
Speaker 2: find this to be a good idea where people are

818
00:37:30,360 --> 00:37:34,760
Speaker 2: getting ideas from four to five different quote unquote advisors,

819
00:37:34,800 --> 00:37:37,960
Speaker 2: when really all they are is just people that they've

820
00:37:37,960 --> 00:37:41,799
Speaker 2: bought product from over the years. And you know, at

821
00:37:41,840 --> 00:37:43,480
Speaker 2: the end of the day, a lot of these clients

822
00:37:43,520 --> 00:37:46,880
Speaker 2: aren't really looking for an advisor. They're looking for a

823
00:37:46,920 --> 00:37:49,319
Speaker 2: bunch of different ideas and they want to be their

824
00:37:49,320 --> 00:37:52,239
Speaker 2: own advisors. So the analogy I want to use is,

825
00:37:52,920 --> 00:37:56,279
Speaker 2: you know, because of a heart valve, you know thing

826
00:37:56,320 --> 00:37:59,720
Speaker 2: that I was born with. Uh, I've seen a cardiologist

827
00:37:59,800 --> 00:38:03,919
Speaker 2: for shoot thirty years now, and when it comes time

828
00:38:03,960 --> 00:38:07,680
Speaker 2: to having somebody keep me alive, I'm not googling it.

829
00:38:07,920 --> 00:38:11,800
Speaker 2: I'm not talking to six different cardiologists. I asked around.

830
00:38:12,160 --> 00:38:15,160
Speaker 2: I found a good one and then I let him

831
00:38:15,440 --> 00:38:18,399
Speaker 2: manage my care over the long term. And I don't

832
00:38:18,440 --> 00:38:20,359
Speaker 2: need to get into all the details, but he's done

833
00:38:20,360 --> 00:38:24,920
Speaker 2: a wonderful job of keeping my heart healthy. It's because

834
00:38:25,000 --> 00:38:28,800
Speaker 2: I found a good cardiologist. I trusted him, I trusted

835
00:38:28,800 --> 00:38:32,120
Speaker 2: his process. I trusted the fact that he has always

836
00:38:32,680 --> 00:38:36,759
Speaker 2: ordinated my care with my primary physician and it's been

837
00:38:36,800 --> 00:38:40,200
Speaker 2: a good outcome. The same thing should apply to your

838
00:38:40,200 --> 00:38:44,520
Speaker 2: financial advisor. A big thing that we run into, Brian

839
00:38:44,760 --> 00:38:49,279
Speaker 2: is there's no coordination from a tax standpoint, you know,

840
00:38:49,440 --> 00:38:53,480
Speaker 2: with a client CPA or even proactive tax strategy. And

841
00:38:53,520 --> 00:38:56,680
Speaker 2: I'll say, if even if you've got five different quote

842
00:38:56,760 --> 00:39:00,799
Speaker 2: unquote advisors out there and no one's doing an proactive

843
00:39:00,840 --> 00:39:04,440
Speaker 2: tax planning and coordinating with your CPA, you do not

844
00:39:04,600 --> 00:39:06,600
Speaker 2: have a good financial plan. You got a couple of

845
00:39:06,600 --> 00:39:09,000
Speaker 2: good ideas, you got a bunch of people trying to

846
00:39:09,400 --> 00:39:12,760
Speaker 2: retain wallet share in terms of your assets under management,

847
00:39:13,000 --> 00:39:15,239
Speaker 2: but you really don't have a good financial plan.

848
00:39:15,400 --> 00:39:17,759
Speaker 4: So yeah, go John.

849
00:39:17,800 --> 00:39:21,120
Speaker 5: I want to lean on your your your cardiologist example there,

850
00:39:21,160 --> 00:39:23,319
Speaker 5: because I've had a similar situation where I've got a

851
00:39:23,400 --> 00:39:25,040
Speaker 5: minor thing going on that isn't to worry about, but

852
00:39:25,080 --> 00:39:26,680
Speaker 5: I got to pay attention to it. And when it

853
00:39:26,760 --> 00:39:30,239
Speaker 5: first surfaced about fifteen years ago, I went to the

854
00:39:30,320 --> 00:39:32,480
Speaker 5: closest place because I really wasn't I didn't know how

855
00:39:32,520 --> 00:39:34,719
Speaker 5: to think about this stuff, and It took probably about

856
00:39:34,719 --> 00:39:37,160
Speaker 5: six months before I realized that that was not their specialty,

857
00:39:37,200 --> 00:39:39,600
Speaker 5: and they were kind of flailing a little bit trying

858
00:39:39,600 --> 00:39:41,960
Speaker 5: to figure out that this wasn't a traditional cardiologist. It

859
00:39:42,000 --> 00:39:44,520
Speaker 5: was somebody recommended to me by by the hospital for

860
00:39:44,600 --> 00:39:46,400
Speaker 5: the in the er that I went to. And I

861
00:39:46,440 --> 00:39:48,399
Speaker 5: realized that, you know what, I really need somebody who

862
00:39:48,400 --> 00:39:51,279
Speaker 5: does this all day long and that's all that they do.

863
00:39:51,440 --> 00:39:54,240
Speaker 5: And I figured out that that was a very different experience,

864
00:39:54,239 --> 00:39:56,200
Speaker 5: and they got me squared away and I go every

865
00:39:56,200 --> 00:39:58,120
Speaker 5: few years and they say, go away, you're in pretty

866
00:39:58,120 --> 00:39:59,759
Speaker 5: good health, but let us know anything else happens, which

867
00:39:59,760 --> 00:40:02,440
Speaker 5: is a goo thing. Same thing with financial advisors. Figure

868
00:40:02,440 --> 00:40:05,200
Speaker 5: out what your challenges are. If your financial advisor isn't

869
00:40:05,360 --> 00:40:08,200
Speaker 5: teaching you things that you didn't already know, they're not

870
00:40:08,239 --> 00:40:08,839
Speaker 5: doing you any good.

871
00:40:08,880 --> 00:40:12,000
Speaker 4: They're probably just selling you product they should be. It shouldn't.

872
00:40:12,400 --> 00:40:15,359
Speaker 5: A financial advisor should never tell you exactly precisely, here's

873
00:40:15,360 --> 00:40:16,960
Speaker 5: what you need to do, in black and white terms.

874
00:40:17,080 --> 00:40:19,760
Speaker 5: If you have built a solid financial situation for yourself,

875
00:40:19,880 --> 00:40:22,279
Speaker 5: that should mean you have options, and options come with

876
00:40:22,320 --> 00:40:24,680
Speaker 5: pros and cons, and it's not for an advisor to

877
00:40:24,719 --> 00:40:26,840
Speaker 5: tell you which to do. It's for the advisor to

878
00:40:26,880 --> 00:40:29,200
Speaker 5: help you clearly understand the pros and cons because they're

879
00:40:29,239 --> 00:40:31,600
Speaker 5: all good ideas. One of them will be better than

880
00:40:31,600 --> 00:40:33,799
Speaker 5: the others. That is your call, but you need an

881
00:40:33,800 --> 00:40:36,200
Speaker 5: advisor there to tell you which to do. It's never

882
00:40:36,320 --> 00:40:38,680
Speaker 5: black and white. When you've reached a level of financial success.

883
00:40:39,640 --> 00:40:42,279
Speaker 2: Yeah, and to use your example, and it's one that

884
00:40:42,360 --> 00:40:44,839
Speaker 2: I lived through with that cardiologist as well. I mean,

885
00:40:44,880 --> 00:40:46,880
Speaker 2: you get to a certain point where I had a

886
00:40:47,040 --> 00:40:49,839
Speaker 2: high degree of respect for someone that says, hey, I've

887
00:40:49,880 --> 00:40:52,440
Speaker 2: reached the limits of what I'm able to do personally.

888
00:40:52,800 --> 00:40:55,360
Speaker 2: I'm going to refer you to this specialist over here.

889
00:40:56,200 --> 00:40:59,400
Speaker 2: That's good advice. Thanks for listening tonight. You've been listening

890
00:40:59,440 --> 00:41:02,440
Speaker 2: to Simply presented by all Worth Financial on fifty five KRC,

891
00:41:02,880 --> 00:41:03,800
Speaker 2: the talk station.

892
00:41:04,719 --> 00:41:07,520
Speaker 1: I'm super grateful that I was able to leave him

893
00:41:07,560 --> 00:41:11,360
Speaker 1: financially giving thanks. It wasn't a good situation for me

894
00:41:11,400 --> 00:41:13,640
Speaker 1: and my kids, and I just have you to think

895
00:41:13,760 --> 00:41:16,279
Speaker 1: for that. For all the advice I told myself I

896
00:41:16,360 --> 00:41:19,319
Speaker 1: wasn't going to cry, and the guidance to make good decisions.

897
00:41:19,440 --> 00:41:21,000
Speaker 8: You got control of your life and I gave you

898
00:41:21,120 --> 00:41:22,160
Speaker 8: choices I'm proud of you.

899
00:41:22,280 --> 00:41:23,280
Speaker 1: The Ramsey Show.

900
00:41:23,480 --> 00:41:26,880
Speaker 4: It's definitely hard to get started, but once you get going,

901
00:41:26,960 --> 00:41:29,719
Speaker 4: it's super duper easy to pack your lunch every day and.

902
00:41:29,719 --> 00:41:30,799
Speaker 1: Not drink Starbucks.

903
00:41:30,800 --> 00:41:34,640
Speaker 3: Weekdays at seven on fifty five KRC, The Talk Stay