1 00:00:07,200 --> 00:00:11,600 Speaker 1: Tonight the number one mistake that successful savers and investors make. 2 00:00:12,200 --> 00:00:14,760 Speaker 1: You're listening to simply Money presented by all Worth Financial. 3 00:00:14,760 --> 00:00:18,439 Speaker 1: I'm Bob sponseller along with Brian James. You've done a 4 00:00:18,480 --> 00:00:21,400 Speaker 1: great job building up that nest egg. You think you've 5 00:00:21,440 --> 00:00:24,680 Speaker 1: done everything right, So why are you still making. 6 00:00:24,480 --> 00:00:26,040 Speaker 2: Rookie mistakes with your money? 7 00:00:26,840 --> 00:00:31,440 Speaker 1: The mistake we're talking about a bad strategy, or perhaps 8 00:00:31,560 --> 00:00:32,720 Speaker 1: no strategy at all. 9 00:00:32,840 --> 00:00:33,200 Speaker 2: Brian. 10 00:00:33,920 --> 00:00:36,840 Speaker 3: Yeah, sometimes, Bob, people accumulate accounts but not a plan. 11 00:00:36,920 --> 00:00:38,280 Speaker 3: In other words, I have a stuff, I have a 12 00:00:38,280 --> 00:00:40,120 Speaker 3: lot of stuff, but I have nowhere to put my stuff, 13 00:00:40,159 --> 00:00:42,519 Speaker 3: and there's no organization to all my stuff. But I'm 14 00:00:42,520 --> 00:00:44,440 Speaker 3: going to push back on one word you said in there. 15 00:00:44,560 --> 00:00:47,120 Speaker 3: I don't think this is a rookie mistake. A rookie mistake, 16 00:00:47,159 --> 00:00:49,640 Speaker 3: in my opinion, is never having saved all this stuff 17 00:00:49,680 --> 00:00:51,280 Speaker 3: in the first place. And we see people every now 18 00:00:51,320 --> 00:00:53,200 Speaker 3: and then who come in their fifties and say they're 19 00:00:53,240 --> 00:00:56,600 Speaker 3: ready to start retirement planning and things don't work that way. 20 00:00:57,120 --> 00:00:58,680 Speaker 3: You can work around that, but that's not what we're 21 00:00:58,720 --> 00:01:00,920 Speaker 3: talking about today. What we're talking about today is somebody 22 00:01:00,920 --> 00:01:03,000 Speaker 3: who has put all that energy in there they got 23 00:01:03,040 --> 00:01:05,600 Speaker 3: a four oh one K account, broker's accounts, investment accounts, 24 00:01:05,600 --> 00:01:09,360 Speaker 3: some old iras, old retirement plans from former employers, they've 25 00:01:09,400 --> 00:01:12,640 Speaker 3: never done anything about, and there's no sense of coordination 26 00:01:12,720 --> 00:01:14,600 Speaker 3: to it. So this is not quite a rookie mistake. 27 00:01:14,680 --> 00:01:15,800 Speaker 3: This is a little bit of we'll call it a 28 00:01:15,800 --> 00:01:19,360 Speaker 3: double A or maybe a triple A mistake, or maybe a. 29 00:01:19,240 --> 00:01:22,560 Speaker 1: Football team without a playbook. You might win a few plays, 30 00:01:22,840 --> 00:01:25,960 Speaker 1: but you're not gonna win the long game. And yeah, 31 00:01:26,000 --> 00:01:28,920 Speaker 1: I agree with you. Getting that money saved is the 32 00:01:28,959 --> 00:01:33,120 Speaker 1: real objective. We can always help people recover, but we 33 00:01:33,160 --> 00:01:35,399 Speaker 1: can't create money out of thin air for people. 34 00:01:35,800 --> 00:01:37,640 Speaker 3: That's right. And it's not only about money. This is 35 00:01:37,680 --> 00:01:40,040 Speaker 3: about time because if you're not making these decisions, you 36 00:01:40,040 --> 00:01:43,480 Speaker 3: don't have a plan, you're losing time. The saddest thing 37 00:01:43,480 --> 00:01:45,120 Speaker 3: that I hear every now and then, and Bob, I'm 38 00:01:45,160 --> 00:01:47,480 Speaker 3: sure you see this happened occasionally too. You know a 39 00:01:47,520 --> 00:01:49,840 Speaker 3: lot of times we'll have, you know, maybe a client's 40 00:01:49,920 --> 00:01:51,960 Speaker 3: kid or somebody come in who just hasn't had a 41 00:01:52,040 --> 00:01:54,960 Speaker 3: sit down to talk about finances, and they'll pull out 42 00:01:54,960 --> 00:01:56,960 Speaker 3: their old four oh one K or their IRA or 43 00:01:57,000 --> 00:01:59,320 Speaker 3: something that they set up when they were super young. 44 00:01:59,320 --> 00:02:01,280 Speaker 3: Now they're maybe in their mid late twenties. And what's 45 00:02:01,320 --> 00:02:04,040 Speaker 3: the first thing we see, Bob. It was never invested. 46 00:02:04,080 --> 00:02:06,040 Speaker 3: It's been sitting in some kind of money market fund 47 00:02:06,160 --> 00:02:08,160 Speaker 3: because they made the assumption that all I got to 48 00:02:08,160 --> 00:02:10,000 Speaker 3: do is throw money into this account and it will 49 00:02:10,000 --> 00:02:12,800 Speaker 3: magically do a thing. But they've never taken the step 50 00:02:12,880 --> 00:02:15,440 Speaker 3: to decide how to invest it. Meaning they've also never 51 00:02:15,520 --> 00:02:17,440 Speaker 3: learned about the market, so the ups and downs of 52 00:02:17,480 --> 00:02:19,480 Speaker 3: the markets, they have participated in it at all. That's 53 00:02:19,560 --> 00:02:22,239 Speaker 3: kind of an extreme example, but that's a big thing. 54 00:02:22,560 --> 00:02:25,040 Speaker 3: That's just an illustration of how we can lose time 55 00:02:25,080 --> 00:02:27,160 Speaker 3: with these kinds of things. What other examples do you have, bum. 56 00:02:27,560 --> 00:02:30,200 Speaker 1: Well, A good example is mutual funds. You know, we 57 00:02:30,280 --> 00:02:32,200 Speaker 1: see a lot of folks come in that have owned 58 00:02:32,240 --> 00:02:35,639 Speaker 1: and rightly so, mutual funds for decades, and they've been 59 00:02:35,760 --> 00:02:39,640 Speaker 1: diligent and saving and investing, and I think they've just 60 00:02:39,880 --> 00:02:43,840 Speaker 1: missed a lot of times the evolution of the financial 61 00:02:43,880 --> 00:02:47,200 Speaker 1: services industry. I'll say, over the last ten to fifteen years. 62 00:02:47,480 --> 00:02:51,320 Speaker 1: What do I mean by that? Tax management? Holding mutual 63 00:02:51,400 --> 00:02:55,120 Speaker 1: funds in a taxable account can be a very tax 64 00:02:55,160 --> 00:02:58,680 Speaker 1: efficient way of moving forward, especially when you're trying to 65 00:02:58,720 --> 00:03:01,720 Speaker 1: convert this into a cash flow. And Brian, this is 66 00:03:01,880 --> 00:03:05,880 Speaker 1: a good time to remind folks that the capital gains 67 00:03:05,960 --> 00:03:08,639 Speaker 1: rate this year in twenty twenty five for a married 68 00:03:08,720 --> 00:03:13,480 Speaker 1: filing joint couple is zero percent if they have taxable 69 00:03:13,480 --> 00:03:17,079 Speaker 1: income under ninety six seven hundred dollars. So there are 70 00:03:17,240 --> 00:03:20,440 Speaker 1: opportunities there if we can get under the hood and 71 00:03:20,480 --> 00:03:23,919 Speaker 1: look at the entire situation where we can help people 72 00:03:24,000 --> 00:03:29,040 Speaker 1: make that gradual conversion from tax inefficient mutual funds to 73 00:03:29,160 --> 00:03:33,160 Speaker 1: more tax efficient ETFs and save people a lot of 74 00:03:33,160 --> 00:03:36,480 Speaker 1: money not only this year, but set up a strategy 75 00:03:36,520 --> 00:03:39,520 Speaker 1: for down the road that'll be much more tax efficient 76 00:03:39,600 --> 00:03:43,360 Speaker 1: when it comes time to generate income from a portfolio 77 00:03:43,840 --> 00:03:44,880 Speaker 1: in retirement years. 78 00:03:45,080 --> 00:03:46,600 Speaker 3: Yeah, and I want to make sure that we hit 79 00:03:46,640 --> 00:03:49,040 Speaker 3: on an important point within there, because we were talking 80 00:03:49,080 --> 00:03:51,640 Speaker 3: about a couple different things mutual funds and exchange traded 81 00:03:51,680 --> 00:03:54,120 Speaker 3: funds and those kinds of things. Mutual funds, and some 82 00:03:54,200 --> 00:03:55,720 Speaker 3: of you may have learned this the hard way over 83 00:03:55,760 --> 00:03:58,960 Speaker 3: the decades. A mutual fund must must must by law 84 00:03:59,080 --> 00:04:02,360 Speaker 3: distribute any game means it has in December of every year. 85 00:04:02,600 --> 00:04:05,360 Speaker 3: So worst case scenario Let's say you buy a mutual 86 00:04:05,360 --> 00:04:09,080 Speaker 3: fund on December first, and it sold something earlier in 87 00:04:09,200 --> 00:04:11,480 Speaker 3: the year. Maybe it's here's an extreme example, if they 88 00:04:11,520 --> 00:04:14,200 Speaker 3: sold their apple position or a portion thereof that they've 89 00:04:14,200 --> 00:04:16,560 Speaker 3: been sitting on for twenty years. That's got a fat, 90 00:04:16,640 --> 00:04:18,839 Speaker 3: juicy gain in it. And if you didn't own the 91 00:04:18,839 --> 00:04:21,719 Speaker 3: fund until December first of this year, but you own 92 00:04:21,760 --> 00:04:24,359 Speaker 3: it during December, then you are going to receive a 93 00:04:24,400 --> 00:04:27,120 Speaker 3: distribution on that fund of that giant, fat juicy gain 94 00:04:27,200 --> 00:04:29,480 Speaker 3: even though you didn't benefit from it. So a lot 95 00:04:29,480 --> 00:04:32,160 Speaker 3: of people out there probably you're probably nodding your head, going, oh, 96 00:04:32,200 --> 00:04:34,440 Speaker 3: that's why I get that big, stupid ten ninety nine 97 00:04:34,440 --> 00:04:36,400 Speaker 3: that I didn't see coming. And there's always a big change, 98 00:04:36,400 --> 00:04:39,440 Speaker 3: you know, in December. Mutual funds have to distribute those gains. 99 00:04:39,640 --> 00:04:41,400 Speaker 3: So but a lot of times you also might be 100 00:04:41,520 --> 00:04:44,159 Speaker 3: stuck with them because you yourself are in a higher 101 00:04:44,160 --> 00:04:47,320 Speaker 3: income situation. Therefore you can't pull the trigger and sell it. 102 00:04:47,480 --> 00:04:49,960 Speaker 3: But like Bob was just saying, if you maneuver yourself, 103 00:04:50,160 --> 00:04:51,600 Speaker 3: and a lot of times this happens. You know, right 104 00:04:51,640 --> 00:04:54,280 Speaker 3: after retirement, if you've got the ability to maybe give 105 00:04:54,320 --> 00:04:57,680 Speaker 3: yourself a low income year after you retire, no more salaries, 106 00:04:57,720 --> 00:05:00,479 Speaker 3: maybe the income is minimal, best case scenario off of 107 00:05:00,520 --> 00:05:03,039 Speaker 3: savings or something. You're literally not in a bracket. You 108 00:05:03,080 --> 00:05:05,360 Speaker 3: don't pay any taxes because you're not in a bracket. 109 00:05:05,480 --> 00:05:08,000 Speaker 3: That's a great opportunity to pull the trigger and eat 110 00:05:08,040 --> 00:05:10,919 Speaker 3: some of these capital gains and minimize the taxes as 111 00:05:11,000 --> 00:05:13,880 Speaker 3: much as possible. Then move to something more tax efficient, 112 00:05:13,960 --> 00:05:16,160 Speaker 3: such as an exchange traded fund that does not have 113 00:05:16,240 --> 00:05:18,080 Speaker 3: that capital gain annual requirement. 114 00:05:19,000 --> 00:05:22,360 Speaker 1: Yeah, shifting capital gains or roth conversions or both, it's 115 00:05:22,400 --> 00:05:24,880 Speaker 1: something to definitely take a look at, you know, during 116 00:05:24,920 --> 00:05:28,560 Speaker 1: those intervening years between the time you retire and you're 117 00:05:28,640 --> 00:05:32,120 Speaker 1: in a very low tax bracket and when those required 118 00:05:32,160 --> 00:05:35,640 Speaker 1: minimum distributions rear their ugly head at age seventy three, Brian, 119 00:05:35,680 --> 00:05:39,960 Speaker 1: here's something else we see all the time concentrated stock positions, 120 00:05:40,000 --> 00:05:41,880 Speaker 1: and we know why. You know, folks work for a 121 00:05:41,920 --> 00:05:45,320 Speaker 1: company their whole life and lo and behold sixty percent 122 00:05:45,400 --> 00:05:47,520 Speaker 1: of your net worth is tied up in one stock. 123 00:05:48,040 --> 00:05:51,640 Speaker 1: That's not a strategy. That's a potential liability. And the 124 00:05:51,680 --> 00:05:54,680 Speaker 1: good news is there are a lot of creative solutions 125 00:05:54,720 --> 00:06:00,360 Speaker 1: out there. Direct indexing, charitable giving strategies, Brian, and get 126 00:06:00,400 --> 00:06:02,320 Speaker 1: into some of those things that we like to talk 127 00:06:02,480 --> 00:06:05,680 Speaker 1: you know, clients through and help them with these concentrated 128 00:06:05,720 --> 00:06:06,640 Speaker 1: stock positions. 129 00:06:07,000 --> 00:06:08,880 Speaker 3: Yeah, we're fortunate to live in an area here, Bob, 130 00:06:08,880 --> 00:06:10,960 Speaker 3: where there are a lot of Fortune five hundred companies 131 00:06:10,960 --> 00:06:13,720 Speaker 3: that have been very successful. And it's always interesting to 132 00:06:13,760 --> 00:06:16,400 Speaker 3: me after doing this job for several decades, you can 133 00:06:16,440 --> 00:06:19,120 Speaker 3: tell where somebody lives by what they own. Cincinnati people 134 00:06:19,160 --> 00:06:21,279 Speaker 3: tend to own P and G and Smuckers and some 135 00:06:21,360 --> 00:06:23,000 Speaker 3: of the other stuff that the P and G has 136 00:06:23,000 --> 00:06:25,919 Speaker 3: spit out over the years. Fantastic company. But like we 137 00:06:25,960 --> 00:06:28,520 Speaker 3: always say, sitting on one huge position is much more 138 00:06:28,520 --> 00:06:30,760 Speaker 3: of a liability than a benefit. So what can I 139 00:06:30,800 --> 00:06:34,080 Speaker 3: do about it? Well, there are some creative solutions out there. 140 00:06:34,240 --> 00:06:37,599 Speaker 3: Something called direct indexing is a tool that more high 141 00:06:37,600 --> 00:06:39,560 Speaker 3: net worth families are starting to look at because that's 142 00:06:39,600 --> 00:06:41,520 Speaker 3: a way that you can spread your risks out by 143 00:06:41,520 --> 00:06:44,800 Speaker 3: owning these individual stocks. In One way to get into that, 144 00:06:44,839 --> 00:06:47,640 Speaker 3: because remember we're talking about a concentrated position, there are 145 00:06:47,680 --> 00:06:50,960 Speaker 3: things called exchange funds where you can take your giant 146 00:06:51,000 --> 00:06:54,160 Speaker 3: position contribute it to a pulled fund full of other 147 00:06:54,279 --> 00:06:58,160 Speaker 3: people just like you, who also have concentrated positions, and 148 00:06:58,279 --> 00:07:01,400 Speaker 3: rather than everybody sitting on their one concentrated position, you 149 00:07:01,440 --> 00:07:04,760 Speaker 3: all have pulled your big fat piles of stock and 150 00:07:04,800 --> 00:07:06,960 Speaker 3: now you each own a share of it. So it's 151 00:07:07,000 --> 00:07:08,960 Speaker 3: not going to be a perfect replica of the S 152 00:07:09,000 --> 00:07:11,320 Speaker 3: and P five hundred index, but generally speaking, there it's 153 00:07:11,320 --> 00:07:13,840 Speaker 3: a pile of pretty well respected companies. That's how people 154 00:07:13,920 --> 00:07:16,400 Speaker 3: end up with these concentrated positions. That is a way 155 00:07:16,400 --> 00:07:19,040 Speaker 3: that you can move your money around reduce the risk 156 00:07:19,080 --> 00:07:22,440 Speaker 3: of that concentrated position. But not you haven't sold anything. 157 00:07:22,480 --> 00:07:25,280 Speaker 3: You've simply contributed to a different pile in exchange for 158 00:07:25,400 --> 00:07:28,160 Speaker 3: a share of the of the larger pile. So there's 159 00:07:28,160 --> 00:07:30,400 Speaker 3: also if you're just worried about the prices. Yeah, Bob, 160 00:07:30,440 --> 00:07:32,160 Speaker 3: I think you've got some experience with things like callers. 161 00:07:32,200 --> 00:07:33,360 Speaker 3: Can you tell us a little bit about that. 162 00:07:34,360 --> 00:07:34,560 Speaker 2: Yeah. 163 00:07:34,680 --> 00:07:38,640 Speaker 1: Callers is simply where you have some option trades tied 164 00:07:38,680 --> 00:07:42,600 Speaker 1: to an individual stock position where you can protect the downside. 165 00:07:42,880 --> 00:07:45,280 Speaker 1: You know, they're called put options where you can buy 166 00:07:45,440 --> 00:07:49,200 Speaker 1: put protection or insurance on your large stock position, and 167 00:07:49,240 --> 00:07:52,480 Speaker 1: you can oftentimes pay for that protection by selling and 168 00:07:52,640 --> 00:07:54,880 Speaker 1: out of the money call position. So you limit your 169 00:07:54,960 --> 00:07:58,480 Speaker 1: upside growth in that stock, but you take that premium 170 00:07:58,520 --> 00:08:01,320 Speaker 1: you know, in other words, the premium you took in 171 00:08:01,400 --> 00:08:04,680 Speaker 1: by selling that call option, and that helps pay for 172 00:08:04,760 --> 00:08:06,080 Speaker 1: that downside protection. 173 00:08:06,560 --> 00:08:07,800 Speaker 2: It's a wonderful. 174 00:08:07,400 --> 00:08:12,960 Speaker 1: Way to mitigate the huge risk that's inherent in having 175 00:08:13,000 --> 00:08:15,200 Speaker 1: a ton of your net worth tied up into one company. 176 00:08:15,200 --> 00:08:18,280 Speaker 1: And Brian going back to those exchange funds, I'm finding 177 00:08:18,320 --> 00:08:21,160 Speaker 1: that when we talk to folks about this, most people 178 00:08:21,280 --> 00:08:24,679 Speaker 1: have never even heard of such a thing, much less 179 00:08:24,720 --> 00:08:27,600 Speaker 1: being aware that it can be done. You know, through 180 00:08:27,640 --> 00:08:30,760 Speaker 1: your financial advisor. That's a real opportunity for people to 181 00:08:30,800 --> 00:08:33,880 Speaker 1: take a closer look at because it can change the 182 00:08:33,920 --> 00:08:38,200 Speaker 1: game powerfully from a tax standpoint. You're listening to simply 183 00:08:38,320 --> 00:08:41,000 Speaker 1: money presented by all Worth Financial. I'm Bob Sponseller along 184 00:08:41,040 --> 00:08:44,240 Speaker 1: with Brian James. Brian, let's not forget about a state 185 00:08:44,320 --> 00:08:47,200 Speaker 1: planning in the midst of all this retirement planning. 186 00:08:47,840 --> 00:08:50,280 Speaker 3: Yeah, so one big thing to remember and a lot 187 00:08:50,320 --> 00:08:52,520 Speaker 3: of people, you know, a kind of bank on this 188 00:08:52,760 --> 00:08:55,800 Speaker 3: if what lies behind all of this right now is 189 00:08:55,800 --> 00:08:57,920 Speaker 3: something caught a step up in cost basis. So yes, 190 00:08:58,160 --> 00:09:02,120 Speaker 3: if you have a huge game built into something and 191 00:09:02,280 --> 00:09:04,680 Speaker 3: you let you hang on to it until you pass 192 00:09:04,800 --> 00:09:07,880 Speaker 3: and your errors inherited as part of the settlement of 193 00:09:07,880 --> 00:09:09,719 Speaker 3: your state, then they will get a step up in 194 00:09:09,800 --> 00:09:11,800 Speaker 3: cost bass You might be on the receiving end of 195 00:09:11,800 --> 00:09:13,240 Speaker 3: this too, those of you listening out there who may 196 00:09:13,280 --> 00:09:17,760 Speaker 3: even have inherited something where the cost basis quote unquote 197 00:09:17,760 --> 00:09:20,200 Speaker 3: the purchase price. It's as if you purchased it the 198 00:09:20,320 --> 00:09:24,680 Speaker 3: day that your benefactor passed away. The data death prices 199 00:09:24,800 --> 00:09:26,920 Speaker 3: is what's known as the is the cost basis when 200 00:09:26,960 --> 00:09:29,360 Speaker 3: you inherit stock. Now the other hand, the other side 201 00:09:29,360 --> 00:09:30,760 Speaker 3: of this is you have to be super careful if 202 00:09:30,760 --> 00:09:33,200 Speaker 3: it's a deathbed gift. In other words, at the end 203 00:09:33,240 --> 00:09:35,559 Speaker 3: of life, somebody hands you a pile of stock, then 204 00:09:35,600 --> 00:09:38,320 Speaker 3: you have also inherited their cost basis. That could go 205 00:09:38,400 --> 00:09:41,800 Speaker 3: back decades. We see sometimes where stocks have been passed 206 00:09:41,800 --> 00:09:45,000 Speaker 3: down for you know, two, maybe even three generations. Nobody 207 00:09:45,000 --> 00:09:46,960 Speaker 3: has any record, but there was some you know, at 208 00:09:46,960 --> 00:09:48,920 Speaker 3: the holidays, everybody gets a pile of stock. Well, you're 209 00:09:48,960 --> 00:09:51,520 Speaker 3: also getting a very low cost basis with that, so 210 00:09:51,600 --> 00:09:54,800 Speaker 3: be very mindful of that and understand what your situation 211 00:09:54,920 --> 00:09:58,000 Speaker 3: really is. Also, make sure you have these assets titled 212 00:09:58,080 --> 00:10:01,959 Speaker 3: correctly that not only is it in your name, probably 213 00:10:01,960 --> 00:10:04,040 Speaker 3: as anyway, you're not having this conversation, but where does 214 00:10:04,080 --> 00:10:07,480 Speaker 3: it go after you pass? The simplest thing that everyone, 215 00:10:07,600 --> 00:10:10,439 Speaker 3: everybody ought to do is take all of your individual 216 00:10:10,480 --> 00:10:14,120 Speaker 3: accounts and even your joint accounts and name beneficiaries. Right, 217 00:10:14,160 --> 00:10:16,640 Speaker 3: I'm talking about not only investments but also banks. The 218 00:10:16,679 --> 00:10:19,959 Speaker 3: investments world, we call it a tood transfer on death. 219 00:10:20,200 --> 00:10:22,520 Speaker 3: The bank calls it a POD payable on death, but 220 00:10:22,559 --> 00:10:26,080 Speaker 3: it's the same thing. You are simply naming beneficiaries so 221 00:10:26,120 --> 00:10:28,600 Speaker 3: that those assets do not have to pass through probate. 222 00:10:28,800 --> 00:10:30,640 Speaker 3: All the airs need to do is produce a death 223 00:10:30,679 --> 00:10:33,320 Speaker 3: certificate and open accounts in their own names, or if 224 00:10:33,320 --> 00:10:35,560 Speaker 3: it happens to be an IRA, that's got its own 225 00:10:35,640 --> 00:10:38,400 Speaker 3: beneficiary on it too, so you'd open an inherited IRA. 226 00:10:38,600 --> 00:10:40,079 Speaker 3: Jump through some of those hoops. But these are things 227 00:10:40,120 --> 00:10:41,920 Speaker 3: to plan now, not last second. 228 00:10:42,559 --> 00:10:45,040 Speaker 1: Yeah, we just went through a lot of stuff here quickly. 229 00:10:45,080 --> 00:10:47,120 Speaker 1: And the thing we want to remind folks you don't 230 00:10:47,240 --> 00:10:50,800 Speaker 1: need to go it alone. A good financial plan pulls 231 00:10:50,840 --> 00:10:55,400 Speaker 1: in investment strategy, it coordinates that with tax planning, estate planning, 232 00:10:55,840 --> 00:11:00,400 Speaker 1: risk management, everything, and a good fiduciary advisor should be 233 00:11:00,440 --> 00:11:02,480 Speaker 1: able to sit down and help you map out an 234 00:11:02,520 --> 00:11:05,280 Speaker 1: actual plan and an actual strategy. 235 00:11:05,559 --> 00:11:06,679 Speaker 2: Here's the all Worth advice. 236 00:11:06,840 --> 00:11:11,920 Speaker 1: Wealth without a strategy is just expensive guessing. Get coordinated, 237 00:11:12,000 --> 00:11:16,240 Speaker 1: get clarity, and get your plan on paper. Coming up next, 238 00:11:16,960 --> 00:11:20,360 Speaker 1: if the market drops ten percent, would your portfolio be Okay? 239 00:11:20,840 --> 00:11:23,520 Speaker 1: We're going to talk about buffer ETFs and why they 240 00:11:23,600 --> 00:11:26,320 Speaker 1: could be a smarter way to ride out the storm. 241 00:11:26,600 --> 00:11:29,240 Speaker 1: You're listening to Simply Money presented by all Worth Financial 242 00:11:29,280 --> 00:11:37,280 Speaker 1: on fifty five KRC, the talk station. You're listening to 243 00:11:37,320 --> 00:11:40,400 Speaker 1: Simply Money presented by all Worth Financial. I'm Bob Sponseller 244 00:11:40,440 --> 00:11:43,080 Speaker 1: along with Brian James. Hey, if you can't listen to 245 00:11:43,120 --> 00:11:46,800 Speaker 1: Simply Money every night, subscribe and get our daily podcast. 246 00:11:47,240 --> 00:11:50,400 Speaker 1: And if you think your friends could use some financial advice, 247 00:11:50,520 --> 00:11:53,480 Speaker 1: tell them about us as well. Just search Simply Money 248 00:11:53,480 --> 00:11:56,840 Speaker 1: on the iHeart app or wherever you wherever you find 249 00:11:56,880 --> 00:12:00,720 Speaker 1: your podcast straight ahead at six forty three. Whither set 250 00:12:00,720 --> 00:12:05,160 Speaker 1: it and forget it approach might fail you after age sixty? 251 00:12:05,880 --> 00:12:08,240 Speaker 1: All right, tonight, we're going to delve into a strategy 252 00:12:08,280 --> 00:12:13,360 Speaker 1: that more investors are asking about lately, buffered ETFs. What 253 00:12:13,520 --> 00:12:16,680 Speaker 1: are they and why do they even matter, Brian. 254 00:12:17,320 --> 00:12:19,680 Speaker 3: What are they, Bob, Well, at the very core of 255 00:12:19,720 --> 00:12:22,200 Speaker 3: buffer ETF is an exchange traded fund, right, So, an 256 00:12:22,240 --> 00:12:24,760 Speaker 3: exchange traded fund is a very collective term. It's like 257 00:12:24,800 --> 00:12:27,720 Speaker 3: saying kleenex is the word for tissues. An exchange traded 258 00:12:27,720 --> 00:12:30,199 Speaker 3: fund does not really tell you anything about what's underneath 259 00:12:30,240 --> 00:12:31,840 Speaker 3: it. It could be an index fund, it could be a 260 00:12:31,880 --> 00:12:34,000 Speaker 3: pile of bonds, it could be a whole lot of 261 00:12:34,000 --> 00:12:36,480 Speaker 3: different things. So these are very specific types of exchange 262 00:12:36,480 --> 00:12:40,199 Speaker 3: traded funds or ETFs that offer some level of downside protection. 263 00:12:40,600 --> 00:12:42,640 Speaker 3: These are set up to limit your losses to a 264 00:12:42,640 --> 00:12:45,120 Speaker 3: certain point. You know, the buffer might be ten percent. 265 00:12:45,160 --> 00:12:47,719 Speaker 3: The market goes down fifteen percent, my statement is only 266 00:12:47,800 --> 00:12:49,199 Speaker 3: going to go to I will see that it only 267 00:12:49,280 --> 00:12:51,080 Speaker 3: took a ten percent hit. There is a there is 268 00:12:51,120 --> 00:12:53,840 Speaker 3: a stop to the downside. Now, of course, there's no 269 00:12:54,280 --> 00:12:56,120 Speaker 3: you know, there's no free rides here, Bob. There's also 270 00:12:56,200 --> 00:12:58,280 Speaker 3: a cap to the upside. So what you're doing is 271 00:12:58,280 --> 00:13:00,839 Speaker 3: you are setting buffers on the downside and on the 272 00:13:00,920 --> 00:13:04,320 Speaker 3: upper side. But the benefit of these, though, is that 273 00:13:04,400 --> 00:13:06,800 Speaker 3: they trade their exchange traded funds. They trade all day, 274 00:13:06,880 --> 00:13:09,800 Speaker 3: every day, so you're not locking yourself into any kind 275 00:13:09,840 --> 00:13:12,480 Speaker 3: of time structure of those kinds of things. So these 276 00:13:12,520 --> 00:13:14,680 Speaker 3: are for people who who are really just kind of 277 00:13:14,679 --> 00:13:16,280 Speaker 3: looking for in the short run. You know, maybe I'm 278 00:13:16,320 --> 00:13:18,360 Speaker 3: about to retire'm about to transition. Things are going to 279 00:13:18,400 --> 00:13:20,040 Speaker 3: happen here. Maybe I want to have something in my 280 00:13:20,120 --> 00:13:22,920 Speaker 3: portfolio to take the stress off of that the market 281 00:13:22,960 --> 00:13:24,440 Speaker 3: may not cooperate when I need it to. 282 00:13:25,440 --> 00:13:28,560 Speaker 1: Yeah, and there's you know, in terms of implementing a 283 00:13:28,600 --> 00:13:31,280 Speaker 1: strategy like this, you know, I know, what are folks 284 00:13:31,280 --> 00:13:33,360 Speaker 1: here at all worth doing? It's not just buying one 285 00:13:33,520 --> 00:13:37,120 Speaker 1: of these buffer ETFs. It's it's building a portfolio of 286 00:13:37,160 --> 00:13:41,800 Speaker 1: them that work together and developing an actual strategy. And 287 00:13:41,880 --> 00:13:44,199 Speaker 1: I will add this too, this is not a this 288 00:13:44,280 --> 00:13:47,120 Speaker 1: is not a do it yourself proposition. In my opinion, 289 00:13:48,160 --> 00:13:51,320 Speaker 1: these things have different caps. They have you know, higher 290 00:13:51,360 --> 00:13:53,760 Speaker 1: fees and a lot of cases you got to watch 291 00:13:53,800 --> 00:13:57,200 Speaker 1: the taxes, the tax impact of trading in and out. 292 00:13:57,120 --> 00:13:57,800 Speaker 2: Of these things. 293 00:13:58,600 --> 00:14:01,760 Speaker 1: It can get pretty complicated in a hurry, but it 294 00:14:01,800 --> 00:14:04,520 Speaker 1: is a very good strategy that does give you a 295 00:14:04,559 --> 00:14:08,120 Speaker 1: lot of flexibility as opposed to some of the other 296 00:14:08,240 --> 00:14:11,840 Speaker 1: things out there that people use to mitigate investment risk, 297 00:14:12,240 --> 00:14:16,720 Speaker 1: like index annuities or things like that which are embedded 298 00:14:16,760 --> 00:14:21,160 Speaker 1: with you know, extremely high fees, surrender charges, lock up periods. 299 00:14:21,600 --> 00:14:25,480 Speaker 1: This is a lot more flexible approach to manage some 300 00:14:25,640 --> 00:14:27,360 Speaker 1: downside risk in your portfolio. 301 00:14:27,800 --> 00:14:30,000 Speaker 3: Yeah, and we're definitely not saying that everybody should run 302 00:14:30,000 --> 00:14:32,080 Speaker 3: out and get these. These are things to understand and 303 00:14:32,200 --> 00:14:35,120 Speaker 3: consider maybe adding to your portfolio if you happen to 304 00:14:35,200 --> 00:14:37,400 Speaker 3: check the right boxes. But you know, in those index 305 00:14:37,440 --> 00:14:40,680 Speaker 3: based annuities, we don't think annuities are evil by any 306 00:14:40,680 --> 00:14:43,400 Speaker 3: stretch of the imagination. They're tools, right. A tool is 307 00:14:43,480 --> 00:14:45,600 Speaker 3: just used for a specific purpose. If you got the purpose, 308 00:14:45,680 --> 00:14:48,160 Speaker 3: use the tool. If I got a hammer in my hand, 309 00:14:48,160 --> 00:14:49,560 Speaker 3: I can build a birdhouse with it, or I can 310 00:14:49,600 --> 00:14:52,560 Speaker 3: hit somebody in the head. So these different investment products 311 00:14:52,600 --> 00:14:55,520 Speaker 3: serve different purposes. The scary thing about annuities in this 312 00:14:55,600 --> 00:14:58,440 Speaker 3: case is that they do lock up. You don't have 313 00:14:58,760 --> 00:15:00,760 Speaker 3: the ability to pull out when whatever you might want, 314 00:15:00,800 --> 00:15:03,440 Speaker 3: as opposed to a buffer detf which again they trade 315 00:15:03,480 --> 00:15:05,200 Speaker 3: all day every day, so you could change your position 316 00:15:05,240 --> 00:15:08,000 Speaker 3: pretty quickly. Now we're certainly not advocating that you do that, 317 00:15:08,120 --> 00:15:10,600 Speaker 3: because Bob already kind of hinted at it. If you 318 00:15:11,160 --> 00:15:13,040 Speaker 3: happen to have a gain in one of these and 319 00:15:13,080 --> 00:15:15,640 Speaker 3: you go ahead and sell it out, then that's most 320 00:15:15,680 --> 00:15:18,040 Speaker 3: likely going to be a short term gain. Because if 321 00:15:18,040 --> 00:15:19,840 Speaker 3: we're trying to use these to ride out a shorter 322 00:15:19,920 --> 00:15:22,160 Speaker 3: term market period and you build a gain in, that's 323 00:15:22,160 --> 00:15:24,160 Speaker 3: a short term gain which is taxable as income. 324 00:15:24,960 --> 00:15:27,960 Speaker 1: Well, and Brian, that's why I like these things again 325 00:15:28,040 --> 00:15:32,680 Speaker 1: for certain situations because of the flexibility that's embedded in 326 00:15:32,720 --> 00:15:36,840 Speaker 1: this strategy. If we have a change in the economic environment, 327 00:15:36,960 --> 00:15:40,400 Speaker 1: you know, a big change in interest rates or tax law, 328 00:15:40,800 --> 00:15:43,520 Speaker 1: or a market correction, you can adjust on the fly 329 00:15:44,200 --> 00:15:47,920 Speaker 1: and protect that downside risk and then change and adapt 330 00:15:47,960 --> 00:15:53,520 Speaker 1: the portfolio as economic conditions change, or your personal financial 331 00:15:53,600 --> 00:15:57,880 Speaker 1: goals liquidity goals, spending goals might change. So it's a 332 00:15:57,920 --> 00:16:02,120 Speaker 1: great strategy because it can can evolve and adapt to 333 00:16:02,240 --> 00:16:05,520 Speaker 1: the changing things going on in the economy or with 334 00:16:05,600 --> 00:16:07,720 Speaker 1: the client's personal you know situation. 335 00:16:08,280 --> 00:16:08,600 Speaker 2: Brian. 336 00:16:08,680 --> 00:16:11,080 Speaker 1: I know you've talked to clients about you know, buffer 337 00:16:11,120 --> 00:16:14,040 Speaker 1: DTS yourself and your practice. Can you give us an 338 00:16:14,120 --> 00:16:16,920 Speaker 1: example maybe where this has been a good fit for 339 00:16:17,000 --> 00:16:18,440 Speaker 1: somebody and where where did. 340 00:16:18,280 --> 00:16:20,320 Speaker 2: You use it, you know, with an actual client. 341 00:16:20,840 --> 00:16:22,680 Speaker 3: So in the past I've been I've been doing this 342 00:16:22,960 --> 00:16:25,840 Speaker 3: almost three decades now, and in the past, bonds or 343 00:16:25,880 --> 00:16:28,880 Speaker 3: fixed income where we're kind of the the agreed upon 344 00:16:29,000 --> 00:16:31,040 Speaker 3: rudder for the portfolio to keep things on the straight 345 00:16:31,040 --> 00:16:33,600 Speaker 3: and narrow. But over the past several decades we've seen 346 00:16:33,640 --> 00:16:36,160 Speaker 3: bonds move more in the direction of the of the 347 00:16:36,200 --> 00:16:38,840 Speaker 3: overall stock market. So that doesn't mean bonds are a 348 00:16:38,840 --> 00:16:40,920 Speaker 3: bad investment either, But at the same time, this is 349 00:16:40,960 --> 00:16:43,160 Speaker 3: another alternative where you can put a little bit in 350 00:16:43,200 --> 00:16:45,880 Speaker 3: there to kind of straighten out the the overall ups 351 00:16:45,880 --> 00:16:48,000 Speaker 3: and downs to the portfolio. And like I mentioned that, 352 00:16:48,040 --> 00:16:50,960 Speaker 3: the specific scenarios I'm thinking of where clients where we 353 00:16:51,040 --> 00:16:54,600 Speaker 3: have used this is where, for example, perhaps we have 354 00:16:54,920 --> 00:16:57,520 Speaker 3: let's say we have two spouses. One spouse makes all 355 00:16:57,520 --> 00:16:59,560 Speaker 3: the financial decisions, the other spouse is kind of arms 356 00:16:59,600 --> 00:17:02,080 Speaker 3: length away, only wants to be involved when he or 357 00:17:02,120 --> 00:17:05,120 Speaker 3: she has to be well. Then if the financial deciding 358 00:17:05,119 --> 00:17:08,639 Speaker 3: spouse passes away all of a sudden, surviving spouse, you know, 359 00:17:08,720 --> 00:17:11,120 Speaker 3: unexpectedly has to get up to speed really really quick 360 00:17:11,160 --> 00:17:13,399 Speaker 3: on things and all. And they may be super nervous 361 00:17:13,480 --> 00:17:16,200 Speaker 3: about all these about the ups and downs in the market. 362 00:17:16,240 --> 00:17:18,440 Speaker 3: They need a cycle or two to maybe get used 363 00:17:18,440 --> 00:17:21,879 Speaker 3: to it. So that's a case where bufferdtfs can temporarily 364 00:17:24,400 --> 00:17:26,560 Speaker 3: lessen the stress that person might be feeling because they 365 00:17:26,600 --> 00:17:28,520 Speaker 3: don't know the ups and downs in the market. So 366 00:17:28,560 --> 00:17:30,399 Speaker 3: we've used those in those cases because it is a 367 00:17:30,440 --> 00:17:32,240 Speaker 3: shorter term scenario. And then they can get used to 368 00:17:32,320 --> 00:17:33,560 Speaker 3: kind of dip a toe in the water and get 369 00:17:33,600 --> 00:17:34,919 Speaker 3: used to the ups and downs, and then we can 370 00:17:34,960 --> 00:17:37,440 Speaker 3: talk about whether it continues to be necessary. These are 371 00:17:37,480 --> 00:17:39,720 Speaker 3: not and really nothing nothing is set it and forget 372 00:17:39,760 --> 00:17:41,960 Speaker 3: it and forget about it forever. That's not the case here. 373 00:17:42,119 --> 00:17:45,880 Speaker 3: These aren't magical things that guarantee upside and no downside. 374 00:17:45,880 --> 00:17:48,600 Speaker 3: That's not the point. It offsets the stuff that drives 375 00:17:48,640 --> 00:17:51,920 Speaker 3: the upside because that anything invested in the stock market, 376 00:17:52,000 --> 00:17:54,720 Speaker 3: of course, is going to have its bumps, and bufferdtfs 377 00:17:54,760 --> 00:17:56,639 Speaker 3: can smooth it out without forcing you to make a 378 00:17:56,680 --> 00:17:58,240 Speaker 3: long term commitment to them. 379 00:17:58,680 --> 00:18:01,600 Speaker 1: You're listening to simply Money, I Allworth Financial. I'm Bob 380 00:18:01,680 --> 00:18:04,560 Speaker 1: Sponseller alone with Brian James Bryan. In the example that 381 00:18:04,600 --> 00:18:06,280 Speaker 1: you cited, which I think is a good one, I 382 00:18:06,280 --> 00:18:08,520 Speaker 1: think the key here is you were talking to folks 383 00:18:08,520 --> 00:18:13,640 Speaker 1: that had, you know, maybe limited experience with the ups 384 00:18:13,640 --> 00:18:16,120 Speaker 1: and downs of the financial markets and the stock market, 385 00:18:16,680 --> 00:18:19,159 Speaker 1: and I run across people that just they they know 386 00:18:19,280 --> 00:18:21,560 Speaker 1: they need to earn a positive return on their money 387 00:18:21,560 --> 00:18:25,040 Speaker 1: that outpaces inflation, but they just do not want to 388 00:18:25,080 --> 00:18:29,520 Speaker 1: be sixty seventy eighty percent in stocks, which we know 389 00:18:30,160 --> 00:18:33,679 Speaker 1: is the asset class that outperforms everything else over the 390 00:18:33,720 --> 00:18:37,280 Speaker 1: long term. But sometimes people don't care about that. They say, look, 391 00:18:37,520 --> 00:18:40,280 Speaker 1: that's fine, I get it, but I don't want to 392 00:18:40,320 --> 00:18:44,719 Speaker 1: sit there and watch my portfolio decline by twenty percent 393 00:18:44,840 --> 00:18:47,840 Speaker 1: or fifteen percent, even in the short term. I want 394 00:18:47,880 --> 00:18:51,240 Speaker 1: some protection embedded in my portfolio, and that could be 395 00:18:51,280 --> 00:18:53,720 Speaker 1: a great place for these And you brought up bonds. 396 00:18:53,760 --> 00:18:56,000 Speaker 1: I mean, look, twenty twenty two is a great example 397 00:18:56,800 --> 00:19:00,600 Speaker 1: historically that, you know, the old traditional approach to acid allocation, 398 00:19:01,000 --> 00:19:03,359 Speaker 1: just put a bunch of money in bonds and that'll 399 00:19:03,359 --> 00:19:06,080 Speaker 1: cushion the blows, so to speak. That did not work 400 00:19:06,160 --> 00:19:09,080 Speaker 1: so well in twenty twenty two when the Federal Reserve 401 00:19:09,160 --> 00:19:12,000 Speaker 1: raised interest rates set you know seven times in one year. 402 00:19:12,400 --> 00:19:14,800 Speaker 1: Bonds took a hit, stocks took a hit. A lot 403 00:19:14,800 --> 00:19:17,080 Speaker 1: of things took a hit. And that's where something like 404 00:19:17,119 --> 00:19:20,520 Speaker 1: a buffer ETF strategy could have helped people, whether that 405 00:19:20,760 --> 00:19:24,199 Speaker 1: albeit short term storm, and had them not in a 406 00:19:24,280 --> 00:19:27,560 Speaker 1: situation where they're upset or panicking about their portfolio. 407 00:19:28,040 --> 00:19:29,560 Speaker 3: Yeah, so I want to throw out one quick thought 408 00:19:29,600 --> 00:19:31,320 Speaker 3: because you went start to go down this path of 409 00:19:31,800 --> 00:19:34,320 Speaker 3: settling for you know, something that beats inflation versus just 410 00:19:34,359 --> 00:19:36,240 Speaker 3: trying to grow as much as I can. If I've 411 00:19:36,240 --> 00:19:38,960 Speaker 3: got a financial plan, then that means I know what 412 00:19:39,040 --> 00:19:41,000 Speaker 3: I need and I may not need as much growth 413 00:19:41,040 --> 00:19:43,000 Speaker 3: as I wanted in my twenties and thirties. If I 414 00:19:43,040 --> 00:19:45,560 Speaker 3: have a certain rate of growth that makes my plan work, 415 00:19:45,600 --> 00:19:47,159 Speaker 3: then it's okay to put these things in there to 416 00:19:47,200 --> 00:19:49,840 Speaker 3: buffer around that. But that means I will not keep 417 00:19:49,920 --> 00:19:51,480 Speaker 3: up with the overall market, and I don't have to. 418 00:19:52,119 --> 00:19:54,480 Speaker 1: Here's the all Worth advice. You don't need to risk 419 00:19:54,560 --> 00:19:59,359 Speaker 1: everything to grow. There are smarter ways to play defense. Next, 420 00:19:59,400 --> 00:20:02,480 Speaker 1: we'll sure have to make smart spending moves that secure 421 00:20:02,520 --> 00:20:05,560 Speaker 1: your financial future in the first ten years of retirement. 422 00:20:05,960 --> 00:20:08,560 Speaker 1: You're listening to Simply Money presented by all Worth Financial 423 00:20:08,600 --> 00:20:11,359 Speaker 1: on fifty five KRC the talk station. 424 00:20:16,760 --> 00:20:18,000 Speaker 2: You're listening to Simply. 425 00:20:17,760 --> 00:20:20,640 Speaker 1: Money presented by all Worth Financial. I'm Bob sponseller along 426 00:20:20,680 --> 00:20:24,639 Speaker 1: with Brian James. If you're newly retired or planning to 427 00:20:24,760 --> 00:20:29,840 Speaker 1: retire soon, this next segment is for you because how 428 00:20:29,880 --> 00:20:33,160 Speaker 1: you spend in the first ten years of that retirement 429 00:20:33,240 --> 00:20:36,840 Speaker 1: period can determine how long your money lasts. And we're 430 00:20:36,840 --> 00:20:38,919 Speaker 1: talking about something I think a lot of us have 431 00:20:39,080 --> 00:20:43,080 Speaker 1: heard about or read about. There's been TV commercials about it, 432 00:20:43,280 --> 00:20:45,280 Speaker 1: the retirement red zone. 433 00:20:45,320 --> 00:20:46,240 Speaker 2: Brian, what is. 434 00:20:46,160 --> 00:20:49,480 Speaker 3: That, well, Bob, the retirement red zone is that time, 435 00:20:49,560 --> 00:20:52,000 Speaker 3: that's that couple of years where you start going, huh, 436 00:20:52,000 --> 00:20:53,520 Speaker 3: pretty soon, I'm going to have to turn on this 437 00:20:53,600 --> 00:20:56,720 Speaker 3: money machine and make it work for me so that 438 00:20:56,800 --> 00:20:58,640 Speaker 3: I can quit getting out of bed when I don't 439 00:20:58,680 --> 00:21:01,200 Speaker 3: want to anymore. So this is the most vulnerable stretch 440 00:21:01,200 --> 00:21:04,960 Speaker 3: of your life, and you're making a transition from saving suspending, 441 00:21:04,960 --> 00:21:07,160 Speaker 3: and that is a huge mental shift, Bob. I think 442 00:21:07,200 --> 00:21:09,800 Speaker 3: that you've seen this too, but a lot of clients 443 00:21:10,200 --> 00:21:13,719 Speaker 3: really really struggle with the idea that I have to 444 00:21:13,720 --> 00:21:15,720 Speaker 3: rely on my own savings. I've never done that before. 445 00:21:15,760 --> 00:21:18,800 Speaker 3: It's a huge psychological hurdle to get over because we 446 00:21:18,880 --> 00:21:21,320 Speaker 3: all have ground into our heads over decades. I have 447 00:21:21,400 --> 00:21:23,639 Speaker 3: got to save safe, save, I cannot touch these dollars. 448 00:21:23,640 --> 00:21:25,960 Speaker 3: That's not allowed. It's a failure. If I tap into 449 00:21:26,040 --> 00:21:28,680 Speaker 3: my retirement savings. That is a massive hurdle. We all 450 00:21:28,680 --> 00:21:31,520 Speaker 3: tend to hide behind that in terms of I just 451 00:21:31,520 --> 00:21:33,320 Speaker 3: got to keep working, got to keep working. And some 452 00:21:33,359 --> 00:21:37,200 Speaker 3: people work well beyond when they could have retired because 453 00:21:37,200 --> 00:21:39,560 Speaker 3: they're too scared to tap into those retirement assets. Again, 454 00:21:39,560 --> 00:21:41,760 Speaker 3: that's where I written financial plan comes in. 455 00:21:42,720 --> 00:21:45,840 Speaker 1: Well, and there's another risk, call this and some people 456 00:21:45,880 --> 00:21:48,439 Speaker 1: we don't see this a ton, but some people, Brian, 457 00:21:48,520 --> 00:21:51,040 Speaker 1: they retire and they're not working. 458 00:21:51,520 --> 00:21:52,040 Speaker 2: Maybe they're a. 459 00:21:52,040 --> 00:21:54,840 Speaker 1: Little bored, they're fine looking for something to do. So 460 00:21:54,880 --> 00:21:57,399 Speaker 1: they're like, all right, we're going to splurge on some things, 461 00:21:57,840 --> 00:22:00,520 Speaker 1: you know, three or four big trips, remodel the kitchen, 462 00:22:00,640 --> 00:22:03,320 Speaker 1: giving money to kids, and you know what, before long, 463 00:22:04,720 --> 00:22:07,240 Speaker 1: they've depleted a lot of money in a very in 464 00:22:07,280 --> 00:22:09,560 Speaker 1: a very short amount of time. Again, we don't see 465 00:22:09,560 --> 00:22:13,000 Speaker 1: that a lot, you know, often, but it does happen. 466 00:22:13,000 --> 00:22:15,439 Speaker 1: And sometimes we got to talk people off the ledge 467 00:22:15,480 --> 00:22:17,520 Speaker 1: from doing too much too soon. 468 00:22:18,040 --> 00:22:20,919 Speaker 3: Right, And that's that's an understandable desire. I've been working 469 00:22:20,960 --> 00:22:22,879 Speaker 3: my rear end off. If I'm married, my spouse and 470 00:22:22,920 --> 00:22:25,000 Speaker 3: I have been both been, you know, just hitting it 471 00:22:25,119 --> 00:22:27,040 Speaker 3: so hard and we're just tired, and we want to 472 00:22:27,040 --> 00:22:28,920 Speaker 3: celebrate and do some things and we feel like we've 473 00:22:28,960 --> 00:22:31,040 Speaker 3: been successful. And that's great and you should do that. 474 00:22:31,119 --> 00:22:33,720 Speaker 3: And the last person who should be discouraging you from 475 00:22:33,720 --> 00:22:36,640 Speaker 3: doing it is your financial advisor. However, all of you 476 00:22:36,680 --> 00:22:38,159 Speaker 3: need to agree on this is what we can get 477 00:22:38,160 --> 00:22:40,600 Speaker 3: away with, but here's what we can't. And so that's 478 00:22:40,640 --> 00:22:43,520 Speaker 3: where this that's where a full projection will come into play. 479 00:22:43,520 --> 00:22:45,800 Speaker 3: In other words, taking a look at what your resources are, 480 00:22:46,080 --> 00:22:48,760 Speaker 3: which is your streams of income that might be so security, 481 00:22:48,800 --> 00:22:51,239 Speaker 3: it could be pensioned, maybe there's an inheritance or some 482 00:22:51,240 --> 00:22:53,240 Speaker 3: real estate out there, something like that that's spitting out 483 00:22:53,240 --> 00:22:56,680 Speaker 3: income for you. And then looking at your piles of assets. 484 00:22:56,720 --> 00:22:59,159 Speaker 3: These are your iras and your investments. You've got piles 485 00:22:59,160 --> 00:23:01,720 Speaker 3: of money and streams of income, and then a long 486 00:23:01,760 --> 00:23:04,359 Speaker 3: discussion about what do we actually need this to do. 487 00:23:04,440 --> 00:23:06,960 Speaker 3: That's living expenses, the stuff we have to deal with 488 00:23:07,000 --> 00:23:09,359 Speaker 3: the rest of our lives. That's perhaps there's still a 489 00:23:09,359 --> 00:23:11,400 Speaker 3: mortgage in the mix, or you're supporting kids or maybe 490 00:23:11,440 --> 00:23:13,640 Speaker 3: your own parents or whatever. Let's figure out what these 491 00:23:13,680 --> 00:23:16,679 Speaker 3: costs are now that we have a combination of the 492 00:23:16,720 --> 00:23:19,639 Speaker 3: resources and the needs, we can run some projections, and 493 00:23:19,720 --> 00:23:22,119 Speaker 3: across those projections, we will mix up the rates of 494 00:23:22,160 --> 00:23:26,320 Speaker 3: return on the market because there's something called sequence of 495 00:23:26,400 --> 00:23:29,960 Speaker 3: returns risk, which simply means that if the market takes 496 00:23:30,000 --> 00:23:32,399 Speaker 3: a hit in early in my retirement, that's going to 497 00:23:32,400 --> 00:23:34,439 Speaker 3: have a bigger impact than if it happens later. And 498 00:23:34,480 --> 00:23:36,119 Speaker 3: this is something that happened to a lot of people 499 00:23:36,119 --> 00:23:38,000 Speaker 3: in twenty twenty one when we went over the cliffs 500 00:23:38,240 --> 00:23:39,680 Speaker 3: for a little while in twenty twenty two. 501 00:23:40,800 --> 00:23:44,880 Speaker 1: Yeah, this sequence of return risk is real and it's counterintuitive. 502 00:23:44,960 --> 00:23:47,960 Speaker 1: I mean, I was shocked to see the impact of 503 00:23:48,000 --> 00:23:49,960 Speaker 1: this when I first started to look at this, you know, 504 00:23:50,040 --> 00:23:56,119 Speaker 1: many years ago, and even very experienced, very intelligent clients 505 00:23:56,760 --> 00:23:58,960 Speaker 1: have a hard time grasping this at first. 506 00:23:58,960 --> 00:23:59,480 Speaker 3: Blush. 507 00:24:00,119 --> 00:24:03,160 Speaker 1: When you're accumulating money, you know, saving money, you really 508 00:24:03,240 --> 00:24:06,040 Speaker 1: don't care what the year by year return is. 509 00:24:06,720 --> 00:24:08,800 Speaker 2: You care about what the average. 510 00:24:08,359 --> 00:24:10,919 Speaker 1: Return is because you're not spending any money from your 511 00:24:11,000 --> 00:24:14,200 Speaker 1: four to one K. Once you start to convert this, 512 00:24:14,520 --> 00:24:18,720 Speaker 1: you know, mass of accumulated wealth into a paycheck, you know, 513 00:24:18,800 --> 00:24:23,120 Speaker 1: to to replace your paycheck, volatility matters and even if 514 00:24:23,160 --> 00:24:26,919 Speaker 1: your long term return is identical to what it was 515 00:24:27,000 --> 00:24:30,119 Speaker 1: when you were saving and investing. If that, if that 516 00:24:30,240 --> 00:24:33,600 Speaker 1: return gets volatile in the short term while you're pulling 517 00:24:33,640 --> 00:24:37,639 Speaker 1: money out every month or every quarter every year, that money, 518 00:24:37,680 --> 00:24:40,840 Speaker 1: once it's pulled out cannot be replaced at all. And 519 00:24:40,880 --> 00:24:44,879 Speaker 1: that's why you got to manage this sequence of return risk. 520 00:24:45,000 --> 00:24:46,960 Speaker 1: All while what you were starting to talk about in 521 00:24:47,000 --> 00:24:49,480 Speaker 1: your example of cash flow planning, Yeah. 522 00:24:49,320 --> 00:24:52,119 Speaker 3: A good financial professional and anybody worth their salt in 523 00:24:52,160 --> 00:24:53,960 Speaker 3: this industry is going to help you come up with 524 00:24:53,960 --> 00:24:57,520 Speaker 3: a spending strategy where everyone agrees upon here's what we 525 00:24:57,600 --> 00:24:59,639 Speaker 3: need and here's where we're gonna get it from. We're 526 00:24:59,640 --> 00:25:01,960 Speaker 3: gonna hit the roth ira first, or maybe we're going 527 00:25:02,000 --> 00:25:04,240 Speaker 3: to hit the traditional ira first, or perhaps it's something 528 00:25:04,240 --> 00:25:07,440 Speaker 3: else entirely, but we have a plan. And if something happens, 529 00:25:07,480 --> 00:25:10,640 Speaker 3: as life tends to do, because God has a sense 530 00:25:10,680 --> 00:25:13,440 Speaker 3: of humor, so if something zigs when we wanted to zag, 531 00:25:13,480 --> 00:25:15,120 Speaker 3: well then we know how we're going to handle that. 532 00:25:15,119 --> 00:25:17,159 Speaker 3: That lessens the stress a lot and it prevents us 533 00:25:17,160 --> 00:25:20,760 Speaker 3: from making bad decisions. Taxes play a massive role in this, Bob, 534 00:25:20,840 --> 00:25:23,960 Speaker 3: because you know, obviously different things get taxed differently, and 535 00:25:24,760 --> 00:25:27,800 Speaker 3: depending on your own situation as well as the overall 536 00:25:27,800 --> 00:25:30,760 Speaker 3: situation we've got in the country, we may want to 537 00:25:30,880 --> 00:25:33,600 Speaker 3: choose from one account versus another so that we can 538 00:25:33,680 --> 00:25:36,960 Speaker 3: maximize the efficiency of those taxable distributions. 539 00:25:36,960 --> 00:25:39,919 Speaker 1: Well, and having that first one to two years of 540 00:25:39,960 --> 00:25:43,520 Speaker 1: spending one to two years of plan spending completely out 541 00:25:43,520 --> 00:25:46,040 Speaker 1: of harm's way, you know, in a high yield savings 542 00:25:46,080 --> 00:25:48,399 Speaker 1: account or short term bonds or something like that can 543 00:25:48,440 --> 00:25:50,879 Speaker 1: help cushion the blow as well, and it's critical that 544 00:25:50,920 --> 00:25:54,639 Speaker 1: you develop a strategy to get that in place. Here's 545 00:25:54,640 --> 00:25:57,879 Speaker 1: the all Worth advice your early retirement years, set the pace, 546 00:25:58,480 --> 00:26:03,159 Speaker 1: spend smart and your money will last. Next, why automated 547 00:26:03,200 --> 00:26:06,680 Speaker 1: investing can fail you when you need it most. You're 548 00:26:06,720 --> 00:26:09,359 Speaker 1: listening to Simply Money presented by all Worth Financial on 549 00:26:09,480 --> 00:26:18,760 Speaker 1: fifty five KRC the talk station. You're listening to Simply 550 00:26:18,800 --> 00:26:21,800 Speaker 1: Money presented by all Worth Financial. I'm Bob sponsorer along 551 00:26:21,840 --> 00:26:24,680 Speaker 1: with Brian James. Do you have a financial question you'd 552 00:26:24,760 --> 00:26:27,199 Speaker 1: like for us to answer. There's a red button you 553 00:26:27,200 --> 00:26:30,040 Speaker 1: can click while you're listening to the show right there 554 00:26:30,119 --> 00:26:33,840 Speaker 1: on the good old iHeart app. Simply record your question 555 00:26:34,040 --> 00:26:37,240 Speaker 1: and it will come straight to us, straight ahead, a 556 00:26:37,400 --> 00:26:41,480 Speaker 1: five minute task that could save you from financial fraud. 557 00:26:42,119 --> 00:26:44,679 Speaker 1: In the good news, it's totally free. 558 00:26:45,320 --> 00:26:45,639 Speaker 2: All right. 559 00:26:45,680 --> 00:26:48,560 Speaker 1: If you're over sixty and still relying on a set 560 00:26:48,560 --> 00:26:51,800 Speaker 1: it and forget it approach with your investments, we need 561 00:26:51,840 --> 00:26:56,639 Speaker 1: to talk look target date funds, auto rebalancing, and low 562 00:26:57,280 --> 00:27:01,520 Speaker 1: maintenance portfolios, Brian. They're all rate when you're saving, but 563 00:27:01,600 --> 00:27:06,800 Speaker 1: once you retire, it can quickly become an entirely different ballgame. 564 00:27:07,320 --> 00:27:09,439 Speaker 3: That's right, Bob. And then the reason that happens is 565 00:27:09,440 --> 00:27:12,760 Speaker 3: because now your money has a different job description. Your 566 00:27:12,840 --> 00:27:15,720 Speaker 3: pile of money's job description for probably thirty, maybe even 567 00:27:15,840 --> 00:27:18,480 Speaker 3: forty years was just to grow, just be a bigger pile, 568 00:27:18,520 --> 00:27:20,439 Speaker 3: and that's all I need for the first chunk of 569 00:27:20,440 --> 00:27:23,240 Speaker 3: my life. But now that we've successfully created that pile 570 00:27:23,280 --> 00:27:26,800 Speaker 3: and transitioned into retirement or are transitioning, now, it's about 571 00:27:26,840 --> 00:27:28,960 Speaker 3: cash flow, isn't it, Bob. We need more than just 572 00:27:29,000 --> 00:27:31,960 Speaker 3: a bigger pile. So it becomes about which accounts are 573 00:27:32,000 --> 00:27:34,960 Speaker 3: we going to hit first, and that triggers certain taxes. 574 00:27:35,280 --> 00:27:38,000 Speaker 3: Later down the road, you'll be dealing with required minimum distributions. 575 00:27:38,040 --> 00:27:41,119 Speaker 3: You have to work that in and certain methods that 576 00:27:41,160 --> 00:27:43,720 Speaker 3: you follow to simply pay your bills can cause things 577 00:27:43,760 --> 00:27:47,200 Speaker 3: like medicare to premiums to spike. That's something called erma, 578 00:27:47,960 --> 00:27:50,520 Speaker 3: which is our maaa is one of these fancy acronyms 579 00:27:50,520 --> 00:27:53,320 Speaker 3: that everybody learns about once they retire, which simply means 580 00:27:53,320 --> 00:27:55,040 Speaker 3: that if two years ago I had a bunch of income, 581 00:27:55,040 --> 00:27:57,600 Speaker 3: then I might see a spike in my Medicare premiums. 582 00:27:57,600 --> 00:27:59,680 Speaker 3: And that's never a fun thing. Sometimes it's unavoidable, but 583 00:27:59,720 --> 00:28:02,640 Speaker 3: it's to see things, see these things coming on the horizon. 584 00:28:02,720 --> 00:28:05,280 Speaker 3: So what about Social Security, Bob, have you had had 585 00:28:05,280 --> 00:28:07,600 Speaker 3: anybody with with any issues They're getting that settled in? 586 00:28:08,800 --> 00:28:10,440 Speaker 2: Well, we always have to run the number. 587 00:28:10,520 --> 00:28:14,000 Speaker 1: I mean again, people always ask, you know, and it's 588 00:28:14,119 --> 00:28:16,760 Speaker 1: human nature is for as soon as somebody is willing 589 00:28:16,800 --> 00:28:19,080 Speaker 1: to write you a check every month, you know, the 590 00:28:19,160 --> 00:28:22,640 Speaker 1: default position position is yep, sign me up. I want 591 00:28:22,680 --> 00:28:25,600 Speaker 1: to take it, Send me that money. But the point 592 00:28:25,600 --> 00:28:28,359 Speaker 1: you brought up, it's important to run some projections on 593 00:28:28,440 --> 00:28:32,280 Speaker 1: how that's going to impact your income, taxes, your future 594 00:28:32,320 --> 00:28:35,440 Speaker 1: Medicare premiums, all that kind of stuff. And that's why 595 00:28:35,480 --> 00:28:38,920 Speaker 1: it's important to do some advanced planning. Uh and Brian, 596 00:28:38,960 --> 00:28:41,120 Speaker 1: I want to get your take on target date funds 597 00:28:41,160 --> 00:28:43,400 Speaker 1: because we run into a lot of folks that come 598 00:28:43,480 --> 00:28:45,440 Speaker 1: to us, you know, to hire us to do this 599 00:28:45,560 --> 00:28:48,680 Speaker 1: kind of planning for them and it you know, they're 600 00:28:48,800 --> 00:28:51,480 Speaker 1: always they always come to us, are usually come to 601 00:28:51,600 --> 00:28:55,040 Speaker 1: us with that default you know position in their four 602 00:28:55,080 --> 00:28:58,000 Speaker 1: to one K plan, a retirement fund. You and I 603 00:28:58,080 --> 00:29:00,760 Speaker 1: haven't talked a whole lot and kicked this back and forth. 604 00:29:00,960 --> 00:29:04,040 Speaker 1: I'm interested in your thoughts on the pros and cons 605 00:29:04,080 --> 00:29:08,800 Speaker 1: of target date funds, especially as someone enters these retirement 606 00:29:08,880 --> 00:29:09,640 Speaker 1: years now. 607 00:29:10,600 --> 00:29:12,600 Speaker 3: In contrary to the way we kicked off this segment, 608 00:29:12,640 --> 00:29:14,280 Speaker 3: I do think there are some times where a set 609 00:29:14,320 --> 00:29:16,120 Speaker 3: it and forget it approach is okay. If you're a 610 00:29:16,160 --> 00:29:18,880 Speaker 3: young person and you're just getting started with that four 611 00:29:18,920 --> 00:29:20,760 Speaker 3: to oh one K and it's literally got a few hundred, 612 00:29:20,800 --> 00:29:23,440 Speaker 3: few thousand dollars in it, a target date fund can 613 00:29:23,600 --> 00:29:27,000 Speaker 3: be a perfect solution. However, even in this case, if 614 00:29:27,040 --> 00:29:29,320 Speaker 3: you are if that's what you're looking at, look under 615 00:29:29,320 --> 00:29:30,920 Speaker 3: the hood and just make sure you know what it owns. 616 00:29:30,920 --> 00:29:33,400 Speaker 3: So it may look like a super aggressive fund. It's 617 00:29:33,400 --> 00:29:36,080 Speaker 3: targeted for twenty sixty five forty years from now, I 618 00:29:36,120 --> 00:29:38,000 Speaker 3: saw one the other day, Bob that had twenty percent 619 00:29:38,040 --> 00:29:39,800 Speaker 3: bonds in it, and that's not something a twenty year 620 00:29:39,800 --> 00:29:42,160 Speaker 3: old needs. Twenty year old needs it definitely a set it, 621 00:29:42,200 --> 00:29:44,960 Speaker 3: forget it, an aggressive approach. Now, on the other hand, 622 00:29:45,000 --> 00:29:47,040 Speaker 3: when you're on the back end of this, I kind 623 00:29:47,040 --> 00:29:49,160 Speaker 3: of I like to use a golf analogy here. That 624 00:29:49,200 --> 00:29:51,080 Speaker 3: twenty year old is standing on the tee of a 625 00:29:51,120 --> 00:29:53,680 Speaker 3: six hundred yard golf hole and there is little debate 626 00:29:53,720 --> 00:29:55,640 Speaker 3: about which club they need to pull out of the bag, 627 00:29:55,920 --> 00:29:57,560 Speaker 3: the big fat one, and they're going to swing out 628 00:29:57,600 --> 00:29:59,920 Speaker 3: of their shoes. It's okay, you're gonna be in the 629 00:30:00,280 --> 00:30:01,880 Speaker 3: You're gonna be you know, you'll miss the fairway from 630 00:30:01,880 --> 00:30:04,040 Speaker 3: time to time, but you can recover. Now the closer 631 00:30:04,080 --> 00:30:06,440 Speaker 3: I get to the green, when I'm fifty sixty yards out, 632 00:30:06,520 --> 00:30:08,479 Speaker 3: now I got a choice. What am I hitting today? 633 00:30:08,920 --> 00:30:11,040 Speaker 3: Which way is the wind going? Which club do I hate? 634 00:30:11,040 --> 00:30:13,080 Speaker 3: Which club do I think I have? Do have confidence in? 635 00:30:13,280 --> 00:30:15,280 Speaker 3: You gotta be more specific the closer you get to 636 00:30:15,320 --> 00:30:17,120 Speaker 3: the goal. And so that's what we're talking about here. 637 00:30:17,120 --> 00:30:21,040 Speaker 3: Target date funds don't deliver on that requires for specificity 638 00:30:21,240 --> 00:30:23,040 Speaker 3: when I get super close to that to that goal 639 00:30:23,080 --> 00:30:23,480 Speaker 3: of mine. 640 00:30:23,800 --> 00:30:24,000 Speaker 2: Yeah. 641 00:30:24,040 --> 00:30:26,800 Speaker 1: I love that golf analogy because it's hitting pretty close 642 00:30:26,840 --> 00:30:29,320 Speaker 1: to home. Now you're talking about my golf game, Brian. 643 00:30:29,360 --> 00:30:31,360 Speaker 1: I mean, I stand out there on the tee with 644 00:30:31,440 --> 00:30:33,840 Speaker 1: a five hundred and some yard par five. 645 00:30:34,480 --> 00:30:35,920 Speaker 2: I pull out the driver. 646 00:30:36,200 --> 00:30:39,360 Speaker 1: Well intentioned, but I hit that little seventy yard worm 647 00:30:39,440 --> 00:30:42,520 Speaker 1: burner and hack it to the left. I got no 648 00:30:42,720 --> 00:30:47,040 Speaker 1: shot of getting to that green anywhere in regulation, and 649 00:30:47,080 --> 00:30:49,280 Speaker 1: it puts me behind the eight ball even before I 650 00:30:49,320 --> 00:30:51,480 Speaker 1: get started. And I think that's a good analogy to 651 00:30:51,600 --> 00:30:53,920 Speaker 1: use for your, you know, twenty five year old client. 652 00:30:54,320 --> 00:30:57,120 Speaker 1: So let's talk about what we do suggest, you know, 653 00:30:57,200 --> 00:31:01,000 Speaker 1: when we talk about a withdrawal strategy and the coordination 654 00:31:01,160 --> 00:31:03,600 Speaker 1: and everything we're talking about to get people set up 655 00:31:03,640 --> 00:31:06,080 Speaker 1: the right way for retirement income. 656 00:31:06,960 --> 00:31:07,200 Speaker 2: Yeah. 657 00:31:07,240 --> 00:31:09,040 Speaker 3: So I think a lot of this has to do 658 00:31:09,120 --> 00:31:11,640 Speaker 3: with what outcome do I want. There are some people 659 00:31:11,680 --> 00:31:14,200 Speaker 3: out there, Bob, who are in a situation where, you 660 00:31:14,240 --> 00:31:17,040 Speaker 3: know what, I don't really care about taxes. Maybe I don't. 661 00:31:17,040 --> 00:31:20,400 Speaker 3: I don't have kids, and taxes are going to be 662 00:31:20,400 --> 00:31:22,360 Speaker 3: what they are. I would rather live my life. I'm 663 00:31:22,360 --> 00:31:24,880 Speaker 3: not really worried about tax efficiency, and that's that's an okay, 664 00:31:24,920 --> 00:31:27,040 Speaker 3: as long as people understand, you know, what is the 665 00:31:27,080 --> 00:31:29,400 Speaker 3: tax impact of your various decisions going to be, That 666 00:31:29,560 --> 00:31:31,400 Speaker 3: is an okay outcome. What I would say is not 667 00:31:31,560 --> 00:31:34,280 Speaker 3: okay is having no idea what's going to happen and 668 00:31:34,280 --> 00:31:36,040 Speaker 3: just saying I really don't care and throwing caution to 669 00:31:36,080 --> 00:31:38,440 Speaker 3: the wind and kind of ignoring all of the impacts. 670 00:31:38,840 --> 00:31:40,280 Speaker 3: But yeah, some people say, you know what, I'm not 671 00:31:40,280 --> 00:31:43,320 Speaker 3: worried about taxation on my requirementimum distributions down the road. 672 00:31:43,360 --> 00:31:45,200 Speaker 3: It's just not important to me. On the other hand, 673 00:31:45,280 --> 00:31:47,000 Speaker 3: there are others who will say, you know what, I 674 00:31:47,080 --> 00:31:49,320 Speaker 3: just don't I don't trust this government. I feel like 675 00:31:49,400 --> 00:31:51,000 Speaker 3: taxes are going to go up, and I want to 676 00:31:51,040 --> 00:31:53,400 Speaker 3: do everything I can to control. So in that case, 677 00:31:53,440 --> 00:31:55,520 Speaker 3: you might be you might be a person who chooses 678 00:31:55,560 --> 00:31:58,960 Speaker 3: to pull your taxation forward. In other words, you know 679 00:31:59,080 --> 00:32:01,520 Speaker 3: a lot of times people will retire in their sixties 680 00:32:01,520 --> 00:32:04,000 Speaker 3: and maybe have some savings or some cash to decide 681 00:32:04,000 --> 00:32:06,440 Speaker 3: they can live off of, and they are sitting on 682 00:32:07,200 --> 00:32:09,239 Speaker 3: some years where they are not in a bracket at all. 683 00:32:09,240 --> 00:32:12,240 Speaker 3: They're literally not paying taxes because there's literally no income, 684 00:32:12,280 --> 00:32:13,960 Speaker 3: maybe a little bit spit out from a money market 685 00:32:13,960 --> 00:32:16,120 Speaker 3: fund or something like that. To me, that is not 686 00:32:16,200 --> 00:32:18,880 Speaker 3: something to be celebrated. That is a missed opportunity because 687 00:32:18,920 --> 00:32:20,880 Speaker 3: we ought to be filling the ten, the twenty two, 688 00:32:20,960 --> 00:32:24,320 Speaker 3: maybe even the twenty four percent bracket with roth conversions. 689 00:32:24,520 --> 00:32:27,400 Speaker 3: And that's what I mean when I say pulling taxation forward, 690 00:32:27,520 --> 00:32:30,160 Speaker 3: not waiting until I'm seventy three or seventy five when 691 00:32:30,200 --> 00:32:33,080 Speaker 3: my require minimum distributions come in and I got no choice, 692 00:32:33,400 --> 00:32:37,200 Speaker 3: but rather converting proactively paying taxes now spending some of 693 00:32:37,240 --> 00:32:39,040 Speaker 3: that money I've got on the sidelines to buy the 694 00:32:39,080 --> 00:32:43,040 Speaker 3: tax freedom of my pre tax dollars before I have 695 00:32:43,080 --> 00:32:44,200 Speaker 3: to pay the piper. 696 00:32:44,800 --> 00:32:47,400 Speaker 1: Good stuff, Brian. And here's the thing. This doesn't have 697 00:32:47,520 --> 00:32:50,440 Speaker 1: to be overly complex. It just has to be intentional. 698 00:32:50,960 --> 00:32:53,600 Speaker 1: You don't need twenty different accounts, but you do need 699 00:32:53,720 --> 00:32:56,920 Speaker 1: one cohesive plan, and that plan does need to be 700 00:32:57,000 --> 00:33:02,400 Speaker 1: built to evolve because life after six isn't static. Things change. 701 00:33:02,560 --> 00:33:05,600 Speaker 1: Your money should be flexible enough to change with it. 702 00:33:06,360 --> 00:33:07,560 Speaker 2: Here's the all Worth advice. 703 00:33:07,640 --> 00:33:10,840 Speaker 1: Retirement isn't the finish line. It's just the next phase, 704 00:33:11,440 --> 00:33:14,400 Speaker 1: and your investments need to graduate along with you. 705 00:33:15,280 --> 00:33:15,600 Speaker 2: Next. 706 00:33:15,760 --> 00:33:18,160 Speaker 1: One of the simplest and smartest things you can do 707 00:33:18,280 --> 00:33:22,200 Speaker 1: today to protect yourself and your family. You're listening to 708 00:33:22,240 --> 00:33:25,040 Speaker 1: Simply Money presented by all Worth Financial on fifty five 709 00:33:25,120 --> 00:33:34,240 Speaker 1: KRC the talk station. You're listening to Simply Money presented 710 00:33:34,240 --> 00:33:37,640 Speaker 1: by all Worth Financial. I'm Bob Sponseller along with Brian James. 711 00:33:38,320 --> 00:33:41,640 Speaker 1: Let's talk about something that could literally take you five 712 00:33:41,800 --> 00:33:46,720 Speaker 1: minutes but save you thousands of dollars potentially, and that's 713 00:33:47,080 --> 00:33:50,800 Speaker 1: freezing your credit. Brian, this is so simple, it's free 714 00:33:50,840 --> 00:33:53,600 Speaker 1: to do. This is the closest thing to a no 715 00:33:53,760 --> 00:33:56,600 Speaker 1: brainer we're probably gonna talk about here as far as 716 00:33:56,640 --> 00:33:56,880 Speaker 1: I know. 717 00:33:57,640 --> 00:34:01,040 Speaker 3: Yeah, freezing your credit simply means ain't nobody gonna open 718 00:34:01,040 --> 00:34:03,880 Speaker 3: a credit line in your name, including you. So what 719 00:34:03,920 --> 00:34:06,680 Speaker 3: this means is you're contacting the various credit bureaus and 720 00:34:06,720 --> 00:34:09,560 Speaker 3: you were jumping through their hoops to have your credit frozen, 721 00:34:09,600 --> 00:34:12,399 Speaker 3: meaning nobody can apply for anything. Obviously, you don't want 722 00:34:12,440 --> 00:34:14,000 Speaker 3: to do this right around when you're if you're gonna be, 723 00:34:14,360 --> 00:34:16,360 Speaker 3: you know, actually needing your credit, you're gonna have a 724 00:34:16,400 --> 00:34:19,080 Speaker 3: mortgage or something like that. But the good thing is 725 00:34:19,120 --> 00:34:22,400 Speaker 3: this is not a permanent decision. You're simply freezing it 726 00:34:22,400 --> 00:34:24,200 Speaker 3: for the time being. You also of course, have the 727 00:34:24,320 --> 00:34:26,560 Speaker 3: have the right to unfreeze it when you do need it. 728 00:34:26,560 --> 00:34:28,200 Speaker 3: But it is, like you said, it is a very 729 00:34:28,280 --> 00:34:31,440 Speaker 3: very easy way to protect yourself from somebody stealing your identity. 730 00:34:31,960 --> 00:34:34,640 Speaker 1: Yeah, and let's make sure we separate freezing your credit 731 00:34:34,760 --> 00:34:38,400 Speaker 1: from identity theft protection. You know, some service that you 732 00:34:38,480 --> 00:34:41,000 Speaker 1: pay for and subscribe to, And we're not saying don't 733 00:34:41,000 --> 00:34:44,200 Speaker 1: do that too. What we're saying is just freezing your 734 00:34:44,200 --> 00:34:46,759 Speaker 1: credit if you're in a situation where you just know 735 00:34:47,120 --> 00:34:49,840 Speaker 1: you're not gonna need or want to borrow any money 736 00:34:49,840 --> 00:34:53,440 Speaker 1: anymore or for the foreseeable future. This again is a 737 00:34:53,480 --> 00:34:57,919 Speaker 1: no brainer, because most identity theft starts with a new 738 00:34:58,000 --> 00:35:02,800 Speaker 1: credit application. Somebody is trying to impersonate you and borrow 739 00:35:02,920 --> 00:35:06,160 Speaker 1: money in your name, and the credit free stops that 740 00:35:06,360 --> 00:35:09,879 Speaker 1: at the source. No lender can approve a new line 741 00:35:09,880 --> 00:35:14,000 Speaker 1: of credit without your explicit permission to. 742 00:35:13,320 --> 00:35:15,240 Speaker 2: To unlock your report. Brian. 743 00:35:15,320 --> 00:35:17,919 Speaker 1: I've done this personally, you know, for myself, and it's 744 00:35:17,920 --> 00:35:21,359 Speaker 1: it's beautiful. It's like putting a padlock on your front door. 745 00:35:21,400 --> 00:35:24,600 Speaker 1: It doesn't stop people from trying, but it sure does 746 00:35:24,640 --> 00:35:26,319 Speaker 1: stop them from, you know, getting in. 747 00:35:26,840 --> 00:35:28,799 Speaker 3: Yeah, and I would throw out there too. Don't think 748 00:35:28,800 --> 00:35:30,880 Speaker 3: of just about yourself. Let's not be uh, let's not 749 00:35:30,920 --> 00:35:33,799 Speaker 3: be selfish here. You've got family and uh people, other 750 00:35:33,800 --> 00:35:36,200 Speaker 3: people you worry about. So if you've got kids out there, 751 00:35:36,320 --> 00:35:38,279 Speaker 3: then dude, here's a way to kill two birds with 752 00:35:38,320 --> 00:35:41,200 Speaker 3: one stone. First thing, put them on your and put 753 00:35:41,200 --> 00:35:43,839 Speaker 3: them on as authorized users on your credit card. That's 754 00:35:43,880 --> 00:35:45,759 Speaker 3: going to allow them to start building credit because they're 755 00:35:45,760 --> 00:35:47,960 Speaker 3: gonna inherit your score when they become independent. As soon 756 00:35:48,000 --> 00:35:50,879 Speaker 3: as you've done that, freeze their credit. Don't just freeze yours, 757 00:35:50,920 --> 00:35:53,360 Speaker 3: freeze theirs too, because they they are they they have 758 00:35:53,440 --> 00:35:55,799 Speaker 3: social Security numbers, they are living beings who can have 759 00:35:55,880 --> 00:35:58,719 Speaker 3: credit as well. Uh, their identities get stolen too. And 760 00:35:58,760 --> 00:36:01,320 Speaker 3: because they're not as connect of course as the adults 761 00:36:01,320 --> 00:36:03,720 Speaker 3: in this situation, a lot of times that can't surface 762 00:36:03,840 --> 00:36:06,000 Speaker 3: until it's way too late. Kids will find out years 763 00:36:06,080 --> 00:36:08,640 Speaker 3: later when they're applying for you know, sometimes student loans 764 00:36:08,719 --> 00:36:10,640 Speaker 3: or a mortgage down the road, that there's been some 765 00:36:10,680 --> 00:36:13,200 Speaker 3: debt that's been unpaid forever and nobody has any idea 766 00:36:13,280 --> 00:36:15,400 Speaker 3: what it is. So that's why it's important to freeze 767 00:36:15,400 --> 00:36:17,520 Speaker 3: these things. And Bob I would throw out there too, 768 00:36:17,840 --> 00:36:22,560 Speaker 3: another way that people are stealing identities is by looking 769 00:36:22,600 --> 00:36:25,160 Speaker 3: at places where you already have some kind of a presence. 770 00:36:25,239 --> 00:36:27,120 Speaker 3: Right if you're a client of a bank, then you 771 00:36:27,239 --> 00:36:30,480 Speaker 3: have the ability to do online banking. If you haven't 772 00:36:30,520 --> 00:36:33,319 Speaker 3: set it up, that means anyone can do it who 773 00:36:33,400 --> 00:36:35,279 Speaker 3: has the right amount of information for you. I have 774 00:36:35,320 --> 00:36:36,440 Speaker 3: a lot of clients that will say, you know, I 775 00:36:36,440 --> 00:36:38,560 Speaker 3: don't trust the Internet, I just don't want to do 776 00:36:38,640 --> 00:36:40,399 Speaker 3: these kinds of things. And that's all fine, you don't 777 00:36:40,440 --> 00:36:42,120 Speaker 3: have to use it, but I would still suggest set 778 00:36:42,200 --> 00:36:44,600 Speaker 3: up the online profile because that way, if somebody changes 779 00:36:44,640 --> 00:36:47,040 Speaker 3: the password, you're going to get notified on your phone, 780 00:36:47,320 --> 00:36:49,760 Speaker 3: in the mail, and you know a lot of different 781 00:36:49,760 --> 00:36:51,520 Speaker 3: ways versus if you never set it up at all 782 00:36:51,560 --> 00:36:53,520 Speaker 3: and you'll never hear that somebody has done that. You 783 00:36:53,560 --> 00:36:55,560 Speaker 3: can also do that with the federal government. They have 784 00:36:55,600 --> 00:36:58,279 Speaker 3: a system called id ME. That is another way that 785 00:36:58,320 --> 00:37:00,319 Speaker 3: people that is going to be ripe for, you know, 786 00:37:00,360 --> 00:37:02,719 Speaker 3: for people stealing identity. So own those things. You don't 787 00:37:02,719 --> 00:37:04,600 Speaker 3: have to use them, but I would definitely own them 788 00:37:04,600 --> 00:37:06,200 Speaker 3: and get them set up yourself so that you know 789 00:37:06,320 --> 00:37:08,200 Speaker 3: that you did it well. 790 00:37:08,239 --> 00:37:11,080 Speaker 1: And from a practical standpoint, again, this is easy to do, 791 00:37:11,160 --> 00:37:13,279 Speaker 1: but you do have to go online to do this. 792 00:37:13,440 --> 00:37:17,600 Speaker 1: So there are three credit bureaus out there, Equifax, Experience, 793 00:37:18,120 --> 00:37:20,960 Speaker 1: and TransUnion, and you do need to take the steps 794 00:37:20,960 --> 00:37:23,799 Speaker 1: and it's very quick and it's very free. You got 795 00:37:23,840 --> 00:37:26,640 Speaker 1: to freeze your credit at each bureau and Brian, you know, 796 00:37:26,680 --> 00:37:30,200 Speaker 1: we talk about the Sandwich generation all the time. This 797 00:37:30,239 --> 00:37:33,040 Speaker 1: is a good five to ten minute exercise that we 798 00:37:33,080 --> 00:37:35,839 Speaker 1: should sit down with our kids ado and then maybe 799 00:37:35,840 --> 00:37:38,120 Speaker 1: at the same time or in a follow up meetings, 800 00:37:38,160 --> 00:37:41,640 Speaker 1: sit down with our parents and do this. People sometimes 801 00:37:41,719 --> 00:37:44,760 Speaker 1: in their seventies or eighties, they and for good reason, 802 00:37:45,280 --> 00:37:47,600 Speaker 1: they don't know what's real and fake out there. We 803 00:37:47,719 --> 00:37:51,080 Speaker 1: counsel them about identity theft all the time. The last 804 00:37:51,080 --> 00:37:53,319 Speaker 1: thing somebody in their mid eighties wants to do is 805 00:37:53,400 --> 00:37:56,399 Speaker 1: sit down, you know, under their own devices, by themselves, 806 00:37:56,800 --> 00:38:00,080 Speaker 1: and navigate through these credit bureau websites. This is a 807 00:38:00,160 --> 00:38:02,799 Speaker 1: good thing to do for our parents and for our 808 00:38:02,920 --> 00:38:06,080 Speaker 1: kids to just lock everything up at the same time. 809 00:38:06,239 --> 00:38:07,480 Speaker 2: It's quick and easy to do. 810 00:38:08,120 --> 00:38:10,080 Speaker 3: Yeah, simple steps there are there are there are a 811 00:38:10,080 --> 00:38:11,560 Speaker 3: lot of things out there that we can do that 812 00:38:11,600 --> 00:38:13,319 Speaker 3: don't require a whole lot of energy. And this is 813 00:38:13,360 --> 00:38:15,520 Speaker 3: really an easy one. Pour a cup of coffee and 814 00:38:15,560 --> 00:38:17,560 Speaker 3: jump on these three websites and go lock your credit 815 00:38:17,560 --> 00:38:18,520 Speaker 3: and that of those you love. 816 00:38:19,400 --> 00:38:20,480 Speaker 2: Here's the all Worth advice. 817 00:38:20,520 --> 00:38:23,800 Speaker 1: A credit freeze is one of the easiest, smartest ways 818 00:38:23,880 --> 00:38:27,320 Speaker 1: to guard your identity. Do it, and do it today. 819 00:38:28,040 --> 00:38:30,760 Speaker 1: Thanks for listening. You've been listening to Simply Money, presented 820 00:38:30,800 --> 00:38:34,399 Speaker 1: by all Worth Financial on fifty five KRC, the talk 821 00:38:34,480 --> 00:38:34,800 Speaker 1: station