Avoid Overspending: 5 Tips to Save More Money!

Episode 13: Audio automatically transcribed by Sonix

Episode 13: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to All Things Financial, the show that helps upgrade your financial literacy. Trey Peterson and Yellows Coots are retirement planning specialists here to provide a unique and conservative approach to managing your money. Now here are your hosts, Trey Peterson and Yellow C coots.

Speaker3:
Good morning. Welcome to the All Things Financial Podcast. Trey Peterson, dwelling specialist, and my business partner Alyssa Coots. We've got an exciting show today. We talk about inflation. We get to talk about a few different questions uh, that we've been getting. We talk about investments to avoid during retirement. One of the conversations I was having with somebody yesterday is how do I shift the way that I invest in retirement? And it doesn't just mean that you get more conservative. In fact, depending on your expenses, guaranteed income, uh, you may keep your risk the same. Obviously, there's a lot of variables that inflation proofing your retirement. What does it look like to invest in a way that helps fight inflation. So we've got a great show today. Uh, let's start off with some financial wisdom.

Speaker4:
And now for some financial wisdom. It's time for the quote of the week.

Speaker3:
Uh, inflation.

Speaker5:
Is a form of tax, a tax that we all collectively must pay. And that's Henry Stuart Hazlitt. Uh, he's an American journalist who wrote about business and economics for the Wall Street Journal, The Nation, uh, Newsweek and the New York Times. Um, anyone else tired of inflation? I don't mean, like, you know, inflation itself, but like the topic. Yeah. It's one of those things that like, we're we're constantly having to talk about because, uh, you know, I think more so than in, in recent history, right. Since the 80s, we've had to experience the effect of that. And, uh, you know, we're in the industry, we're talking about finances. We're talking about, uh, budgeting, retirement planning, making projections. And it's just, you know, it's the topic that is probably everybody's sick of it at this point.

Speaker3:
Well, you and I were recently at a conference for financial advisors, and there was an economist from Harvard that was specifically talking about inflation. And I don't know about you, but when someone says they're like Harvard, I tend to think they probably have something to say. And he was talking about two things that nobody's talking about. One is the compounding effect of inflation. So he was just saying, if you look at 2020, 21 and 22 over those three years, inflation jumped up 20%. And what he said is, well, they're trying to get under control. Nobody's talking about all that 20%. We're never getting any of that back. Right.

Speaker5:
So we're never going back down.

Speaker3:
Never going back down. So specifically, you know, as we continue, whether it's at that three, four, you know, five plus rate, uh, that 20% over three years was damaging specifically to those that make less than a quarter million a year. I actually I saw an article from a pretty liberal news station, and it said inflation only impacts those that make less than 400,000 a year. That's. Yeah. And I was like only those that make 400,000 a year. Wow. I don't know who their readers are, but when I look at things, uh, the majority of the US population is not making that. In fact, I know that if you make over a half a million a year, you're like in the top 5%. So if you're in the 95%, that's the only people that inflation is impacting. I mean, that's.

Speaker5:
Just the I don't know, I, I'm not a fan of the way that that that type of thinking just because, uh, I mean, everybody's affected by it, right? It doesn't matter how much money you make. Uh, but maybe just because you can weather the storm and, you know, maybe you're not as upset about it because you have the resources, like, everyone's still affected by it. Everyone still has to, uh, you know, think about their purchasing power and how far their dollars can go. And also, if you're spending more dollars on on groceries, milk, cheese, whatever it is, uh, you know, you get fewer dollars to spend on, on, you know, things that you actually want to do, leisure activities, fun stuff. So anyways, everyone's affected. Obviously we'd be differently, but affect.

Speaker3:
One, uh, survey by Schroders just said that 68% of retirees are worried about running out of money because of inflation. So, you know, a lot of them, uh, they were doing projections. So, by the way, if you've never sat down with a retirement planning specialist to look at how much assets you have based on your expenses based on inflation and very specific outputs, how long the money lasts. One of the things I was showing a couple yesterday is if inflation averages 3% the next 30 years, they're going to have a. Million box loft with are both age 90, he said. But if inflation hits, 4% is an average for those same basically 25 to 30 years at age 90, they run out of money. So I'm just showing them that just by inflation, averaging an extra 1% over their retirement is the difference of leaving a million bucks or running out of money at age 90. Now a lot of people say, well, I don't want to live to age 90 anyways. And I agree, but you want the option to without having to ask your kids or grandkids or maybe a neighbor or someone in retirement assets. So there's some, some, some significant impacts of inflation. What are some of the other things that you're thinking about.

Speaker5:
Yeah. Well obviously a huge, huge percentage of people are worried about running out. Uh, you know, and surprisingly, 89% of respondents are concerned about inflation reducing the value of their assets. Well, I would say stop being concerned and stop wondering. That's exactly what's happening. I mean, that is what inflation is. You know, I feel like if you don't if you can't see that, if you don't understand that inflation is absolutely eroding the value of your assets. And in a dramatic way, these last couple of years, I mean, if you look at obviously a 30 year projection is very difficult to make. It's hard to know what inflation is going to be. Uh, you know, we're always looking at the next monthly report, obviously telling us about the previous month and, uh, and, and, you know, the guesses are all over the board. Uh, the expectations are all over the board. Um, you know, so it's really difficult to make these types of projections, but it's interesting that a 1%, uh, average rate of inflation has that type of effect on somebody's retirement savings. And that's really and it's based on the difficulty of making accurate projections, because expenses can have a similar effect like that. Rates of return can have an additional effect. And these are all things that for the most part, when we're making these projections, these are all assumptions that we have to make.

Speaker5:
We don't know for sure what your portfolio will average. We don't know exactly what type of unexpected expenses might arise in retirement that could really dramatically affect your portfolio. So it's important to to have, uh, you know, not just one plan, but to have kind of, uh, an alternative strategy to to be able to course correct when you need to, to maintain the flexibility within your portfolio and to have somebody that you're meeting with regularly because you have to monitor these things. You can't just put together a report ten years ago. And, you know, it's kind of like on the estate planning side, we meet people all the time and they're like, yeah, I created an estate plan. Well, when you do it, you know, 15 years ago, you think I should get an update? Should I get it reviewed? Like, well, has anything changed? I mean, yeah, probably, you know, so and of course, you know, the topic is renow inflation. But you know, a lot of these things, uh, they really coincide together. And a lot of the things that you can, you can say about inflation is true on a variety of topics.

Speaker3:
Yeah. Well, I think too, one of the things that, you know, Paul is saying is that he doesn't anticipate that we're going to get it under control as fast as we thought at first. Right? So if you look during Covid, there was an 18 month period where we printed, uh, 35% more money than we had in, like the previous 35 years or something, just, you know, significant. And so, you know, one of the things that we look at is for people borrowing money, typically yellow people, whether they're buying their first home or they'll relocating you to work or they're upsizing because now they have more kids, that's who it's really hurting, uh, because, you know, buying a home, even a starter home, $300,000 or whatever that is, 200, 300,008% interest rate compared to that 3 or 4, which obviously three and four was historically low, but they saw their friends and family members buying at that rate, and all of a sudden they can't afford to buy. Or now, instead of covering their mortgage being 25% of their take home pay, it ends up being 45 or 50%. And obviously, it's really tough to budget if you already have your fixed expenses taking over that big of a chunk of your money. So for borrowers, it's been very difficult. But for those in retirement, one of the nice things is they're finally saying that savers are actually making some money on their money. Any any, uh, thoughts on that?

Speaker5:
Yeah. Well, I mean that that is the silver lining, right? Because, um, if if you're not in that category for a long time, you know, people, you know, would complain, like, hey, you know, these interest rates where they're at, you know, all time lows, you're you're robbing the people who are hoping to save. Right? Doing the things that we all used to do. We used to buy CDs. We used to get, uh, high yield savings accounts and treasuries and and, you know, cash equivalents like that. And you can get a decent rate of return. And for a long time, like, those were like less than 1%, like it was a, you know, you'd be losing to inflation even though inflation was, you know, obviously more in control than it is today. Um, yeah. So, you know, that is the silver lining. And, and uh, in many of our, our clients have taken advantage of that. You know, when a money market account where you can take the money out literally at any time, right, there's no time restriction, you know, as it would be with many. Hoodies or CDs where you have to maintain the term in order to get the rate of return. Um, a money market account that's paying 5% or even more than 5%. Treasuries are a great alternative, right? Depending on on the term. Also, you know, they're exceeding 5%. Uh, you know, in recent, recent, um, I don't know, the last couple, I would say year and a half or so. Um, so there's all types of alternatives. There's, you know, things that weren't necessarily available to us and may not be available again. Right. This is a unique time for many people who are saving where you can have, uh, you can limit your risk, your market risk exposure and also get a decent rate of return.

Speaker5:
But I don't think people are really excited about that, you know, um, because, you know, people don't want inflation, like, they certainly don't want inflation. And at the same time, they don't want the higher rates. Right. And in order to get rid of the inflation, we need to have higher rates. Um, we need to have restrictive policies. And you know, even though rates are higher, they've come up, uh, I don't know how restrictive they are because when we look at and we've talked about this before, um, you look at household debt, the household debt and credit report that that comes out, um, quarterly. You know, it doesn't suggest that we have a restrictive policy. Trey and I were just talking about this, like household debt. It's like it's up to over $17 trillion. Mortgage balances are up, uh, balances on auto loans. Those are up as well. And the worst part about all of it is, um, there's like about I think it's like 10% of credit card balances and something close to that in terms of auto loans have reached, uh, delinquency. So delinquency rates are at an all time high. And that's, that's really problematic. You know, that's, um, you know, it speaks to, uh, the economic policy that we have and also just like, um, people in their relationship in terms of, uh, the, you know, their financial, the relationship with their finances, uh, their budgeting, their ability to make good decisions. Um, that's all going to have an impact.

Speaker3:
Well, on three of the the big things that we just read is total household debt rose by 184 billion to a total of $17.69 trillion. Mortgage balances increased in the US by 190 billion. I think people were borrowing more based on those lower rates. And then car loans is interesting. Auto loans by themselves went up 9 billion. I read an article I wish I could give the exact article, I just I read so many, but has said that the average auto payment per month went up from 450 to like 750 over the last couple of years. So you think about that. People's income, you know, people's incomes had increased that much. But you look and people are you know, it used to be that the average loan was spread out over 48 months, and now, uh, 84 months is the average because people are spending six figures on cars and, uh, you know, they did it in a low interest rate environment, but they're carrying more debt than ever before. And a lot of these people are just carrying more debt, but they're upside down with their vehicle because they're spreading out the payments over so many years.

Speaker5:
Yeah. Well, you know, and uh, as far as just making good financial decisions, I think that like, um, you know, we, we talk about this a lot how like, time is the biggest advantage you have when you're a young person? Uh, it's it's more important to start young and start investing early than it is to start investing, uh, larger dollar amounts at an older age, like, it's it's really difficult to play the catch up game. And if you're burdened by student loan debt, if you just got a giant mortgage because really, you know, it's it's, you know, it might be a giant mortgage by, you know, the standards from ten years ago. But by today's standards, like, that's just an ordinary mortgage, like everybody's buying their starter home at three, $400,000, it seems, um, you know, so if you're saddled with that type of debt, if, if, uh, if that prevents you from, you know, making good decisions in terms of family planning, and now you have to, uh, you know, maybe you have young children, maybe you're considering, uh, paying for their student loans or helping them out, and it's preventing you from making good decisions in terms of your own retirement planning and ends up being a huge setback. So, you know, there's a cascading effect in terms of inflation and interest rates and how it all affects us, just how we can go on about our ordinary lives and make good decisions. And and really, we have to weigh all those things in and consider everything. Absolutely.

Speaker3:
Well, the silver lining of interest rates, obviously savings account rates are up, CDs are up, treasuries are up. Money market's up. You know. So if you're a saver and set up having that 100,000 or 300,000 sitting in checking savings, uh, making half a percent, you can get four and a half to 5% in the money market or a CD, which I think is really nice, especially for those, again, that are in retirement that have a chunk of money that they've been living off of to keep their taxes low. I had a couple yesterday. They said, hey, uh, we have a rental property. Should we pay it off with the 300,000 that we have in checking savings? We owe about 270? Or do we keep paying the mortgage? And I said, what's your interest rate? And they said, it's 3%. I said, what are you making on the money market account? They said, somewhere around 5%. I said, man, as long as you're getting 5% and you borrowed money at 3%, which is, you know, almost free, I said, you guys will just keep making the payments out of the money market account that's getting five. Being that your rate is so low, I said, but once that drops, you know, then you probably want to knock that out. So those are the things that we have questions on today.

Speaker5:
I actually I met with somebody yesterday and they had a huge amount of money in a checking savings account. And what I asked them about it, they said, yeah, I mean, the checking and savings account, it's paying about 5%, but but mine isn't earning anything. And then when we took a look at it, like, sure enough, they were just in a regular checking savings account that wasn't earning anything, but they were under the impression because everybody's talking about how, hey, savers are finally making some money, but like, you actually have to pursue those types of accounts, right? Yeah. Not every bank is going to have the the most competitive rates on their CDs. Just like, you know, they're the money market accounts. Like you have to do a little bit of research and make sure that, you know, sometimes we fall into these talking points of, hey, you know, savings accounts are making so much, but you have to make sure that yours is as well, uh, they were hardly earning anything. And when you consider how much they could have earned over the last couple of years, they had their money there. Um, you know, it's a some cost there.

Speaker3:
Yeah. And mostly the most financial experts. We are expecting the fed to cut rates at least twice starting in September versus the six times that you talked about earlier. So one of the things that you and I talk about all the time is mortgage rates. As you know, we both love real estate. And uh, even though they're cutting it, one of the things I think, you know, that you and I know is even if rates drop, I don't think we're going to see that 3 to 4% again. What do you think?

Speaker5:
No, not any time soon. So just like you said, you know, initially everybody thought this year 2024 the fed is going to do six rate cuts. Um yeah. Expectations are down to two. Uh, we might get one in September or November. And Jerome Powell has has said as much. You know he's he's talked about how we haven't met our expectations. And um we have to let the restrictive policy do its work. And obviously there's a there could be a conversation on how restrictive it is. Um, but yeah, I mean, mortgage rates, they're, you know, they're at they're at record highs. Right? I think it's above 8% now. Is that right, Trey.

Speaker6:
Yeah.

Speaker3:
Well, I'm depending on your credit. We're seeing you know, I just had a client. We just had a client that got a seven and a quarter. Uh, what? I think you know, that seven, 5 to 7, seven, five is what's most common right now. What's interesting is you and I were talking about some of these stats from the US labor of statistics. And one of the things that we see is we have more and more clients that keep, uh, they either are working longer or they're consulting or they're starting a part time business. And a lot of times, just to offset the medical because they didn't realize medical would be so expensive. And instead of pulling more money out of the retirement account every single month, they're like, hey, I don't mind working part time. And in fact, it's nice to be around others. And so I know we have a large percentage of our clients that have done a great job saving and they can afford to not work, but they choose to work either because their spouse said they need to. They want to stay married. Yeah, that's that was my little joke.

Speaker3:
Bad joke. Uh, but most of the time we're seeing people continuing to work even part time just because of inflation. And so one of the things that surprised me is we saw a stat that said that people age 75 and older yellow, say think about 75 and older. They expect those people, uh, that a lot of people that are still working over age 75 to grow by 96.5% just over the next six years, by 2030, uh, pretty rare for us to have seen people over age, uh, 75 working, but we're seeing more and more of it. Uh, we're seeing people not necessarily work full time, but shift to part time. A lot of them are working, whether it's a golf course or they're consulting or they're something retail. And one of the things that's interesting is if we show them bringing in an extra thousand or $1,500 net a month for 4 or 5, six, seven years, it actually has a big impact on how long their money lasts, because now all of a sudden, they're not drawing down the extra 12 to 20,000 net a year to meet their expenses.

Speaker5:
Yeah, it's it's a huge growing trend. Like I mean, obviously people have always gotten jobs in retirement sometimes because they needed to and sometimes because they want to, um, you know, but but I feel like the whole topic of semi-retirement has just, like, become a thing now, because, you know, I think that more people than ever need to and, and I think that a lot of people said, like they said, like they just simply want to, um, you know, the US Bureau of Labor Statistics, they track like a million things related to labor trends. And, uh, one of the things is, uh, labor force participation based on age groups, age segments. So, you know, we're not trying to pick on any specific group. But I thought this was interesting that their projections on labor force participation, for those that are 16 people that are 16 years old that are older, it's projected to decline over this decade, uh, for those that are 16 to 24, same thing projected to decline for those between the age of 25 and 54. It's actually, uh, projected to hold steady. It's going to be about the same. The only group really that is expected to increase, as Trey mentioned, is those that are 75 and older, and they're not just expected to increase at like a small rate. They're expected to increase by like 96%. Um, you know, in fact, by by 2030, right. When we, you know, at the end of the decade, um, all baby boomers will be at least 65 years old by then. Um, but here's the thing. Those that are over 65, as Trey mentioned, like they're they're expected to make up about 10% of our labor force.

Speaker5:
We're talking about people in retirement who normally when you think of retirement, like that's when you're quitting your job, you're no longer working. But 10% of those people that are over the age of 65, I'm sorry, 10% of our entire labor force will be made up of people that are in retirement. Well, supposedly that's a huge number, you know, and I don't think it's all just because people are bored. Or maybe, you know, your spouse wants to get you out of the house. I think it just I think it also speaks to the growing need, uh, to make sure that you have enough to make sure you can make it to the end of retirement, because the last thing anybody needs, you know, we had a client who said it perfectly, uh, and. Somebody that you met with a couple of years ago talking about long term care, where he said, I planned to have enough to make it into my 80s. Right. I did everything I could to make sure that I have enough money to make it till I'm 85, right? But what if I live until age 90? What are the demands that that's going to place on my children? And most people don't want to be a burden to their children. And not that he necessarily would, but most people would like to have enough resources and have the means to be able to take care of themselves without placing additional demands on the people that they love. And that's something that is very real and something that people need to consider, especially in terms of medical expenses and expenses related to long term care.

Speaker6:
Yeah.

Speaker3:
Well, one of the other things that we're seeing, it's actually kind of fun. Obviously, this isn't available to everybody, but we're seeing more and more people that leave their job. And then their company says, hey, we can't afford to lose you. And they're making just as much consulting. 1099 for their company, uh, 28 hours a week or 25 hours a week as they made full time. So one of the things I'd say is if you're in a position where your company has consultants and you want more of your time back and you're not ready to retire, but you still enjoy what you're doing, you should explore some of those options. I've met with so many people that we deserve you, Eliza, that have said, man, if I knew I could have been consulting and making what I make now or close to what I make. I should have started this three four years ago. So I think one of the things I encourage is you need to be aware of are you in a position that your company can lose you, or do they want to fight for you? Because one of the things that you and I both know as business owners is it's really difficult to find people that are producers, people that do what they say they're going to do and that are proven. And there's a real cost for a company to lose a valuable employee, where now they have to go try to hire somebody else.

Speaker3:
That first person may not work out, the second person may not work out, and companies are aware of that. So a lot of them, they're willing to pay key players to stay, even if it's part time, even more than you're making. And one of the things I've found in my life is the power of the ask. Most people don't get what they deserve because they don't have the courage to ask for more. And so one of the things I would just encourage you, if you're listening and you've been with your company for a long time and you're considering retiring, you know, think of a way to softly bring up, hey, if I retire in a year or two years, you know, is there a need to to keep me on part time? And we have one client who say that he was going to retire, and his company gave him a 50% pay raise because they wanted him to stay in trade and a couple people for the next three years. It was like, yeah, thank God I brought up that I was considering retiring, making the same amount. And you know, your company's not going to say anything about paying you more if you're thinking about retiring. Find out what your options are. And obviously you have to be thoughtful and all. You do it. Yeah.

Speaker5:
For every person who mentions that to their employer and and gets a raise, there's probably a handful that don't. And you have to be careful. You know, you don't want to you don't want to jump the gun on that one.

Speaker3:
Uh, that's what I call awareness. You have to be aware the need you. Right? Yeah. So. Okay. Uh, what other things do you want to touch on?

Speaker5:
Well, I also want to add to, you know, obviously, lots of people get a job in retirement out of necessity to help bridge the financial gap. Uh, but for everything I've said, that might come across as a little negative. Uh, there actually is some interesting, uh, reporting from Pew Research. Right. The Pew Research Center, uh, they had an article last year and it talked about this. It talked about people who are happy with their job, people who enjoy working. And, uh, you know, obviously these are just surveys that they do. But one thing that's interesting is that those over the age of 65, two thirds of them who found work in retirement or after the age of 65, found it extremely or very satisfying. They were satisfied with their overall job, which is, uh, highest. The highest percentage of people were over the age 65 compared to other age categories. So overall satisfaction with your employment. And I think, you know, obviously if you're getting a huge raise, maybe that could lead to that. But I think a lot of times people are doing things that they actually love to do, and maybe they're not stuck in the job that they have for the last 20 or 30 years, but they're pursuing the type of employment that brings more satisfaction in general. So that is something very positive, uh, especially when you're comparing that to those that are younger, um, and maybe earlier on in their career.

Speaker6:
Right.

Speaker3:
Well, uh, one of the things I'll work on to say, too, it's not related to, to necessarily income, but one of the things that I've found in all the families that we get to serve, and when I say that, I mean that like one of the things you'll say, as I think you and I both really value what we get to do. And for anybody listening, if you've had a job that was really just that, a job which I've had. I was in commercial insurance and lots of great industry, and for me that was like a fish out of water. I felt like I worked ten times harder than I work. Today, doing things that I didn't enjoy in a way that didn't matter where. Now, one of the things I love is I feel like we need to make a difference for people. But one of the one of the ways I love making a difference isn't necessarily in just saving money or saving taxes, but it's helping people enjoy their retirement. So on Monday, I was sitting with a gentleman and his wife that we get to serve, and I was asking her. I said, hey, you've been retired for a year now. And I said, how is retirement? And she paused. And then she looked at me and she said, honestly? She said, I'm not enjoying it at all. And what was interesting is this woman, uh, we'll just call her June. Uh, June was working 60, 70 hours a week as a scientist in a really important role, making an impact, I would say positive impact on a lot of people.

Speaker3:
And she got to see the direct result of her work. And she went from working 60, 65, 70 hours a week, feeling like she was making a difference to all of a sudden, now she's sitting at home and she doesn't know what to do with her time. So one of the things I'd encourage you, if you're listening and you're a driver, maybe like you and I, where you're you've got big dreams and goals and you're always chasing something. And, um, you're thinking about retiring. I want to encourage you don't retire until you know how you're going to spend some of your time. And so we sat here and said, well, what are some of the things you're passionate about? She goes, well, I really want to volunteer. And I said, where do you volunteer so far? She said, actually, I haven't. And I said, well, we're going to pause our conversation on taxes and finances, and I'm going to connect you with two different nonprofits, and you need to go search to see if these are things that are going to help you. And I said one of them, uh, it's called it's right here in Lakeville, and it's called like renewed, uh, renewed something. And basically people bring clothes and they donate things. And any time that shop to nonprofit sells something, all of that money goes to support, uh, widows and orphans and really good work.

Speaker3:
And so she's going to go knock on their door today and say, hey, do you have time for retail for me to come, sir? And then there's another one. Uh, we're right here in Burnsville, Minnesota. But I said, hey, Prince of Peace, Prince of Peace Church in Burnsville. They have one of the largest food shelves in the whole state, and they need volunteers so bad. And so I said, here's their phone number. I have a lot of clients that serve there. So the reason I say that is if you're preparing for retirement and you don't know how you're going to spend some of your time, you need to find a hobby or find a way to serve before you retire. Because the key to retirement isn't just to not be working, it's to enjoy your life and have more time to do the things that you love. So I just want to encourage you as knock on some doors, try some things. Maybe you volunteer somewhere and you're like, man, this is an enjoyable at all. One of the things I've found is just by trying things, you're going to find something that you love and that you're passionate about. And a lot of the things I love most about we get to do is help people find something that they enjoy in retirement, give it more than they did working.

Speaker6:
Yeah.

Speaker5:
And I think the same can be said, uh, about the job. You know, uh, hearing you talk about commercial, uh, insurance, it reminds me of when I was in banking as a as a part time teller. Am I allowed to say I was a maid?

Speaker3:
Yeah. It was always tell everybody he drove there on your scooter.

Speaker5:
When I was in college, I had a part time job. Uh, I don't know if I'm not supposed to mention this, but it was at Bank of America, and, uh, they had great benefits, and it helped me, uh, pay my way through school. But, boy, did I not enjoy that job.

Speaker6:
Uh.

Speaker5:
And, uh, it sounds a lot better, though, if I say I was in banking, so. But it was, um, I would say a little bit less sophisticated than.

Speaker6:
That, so.

Speaker5:
Yeah. Now, why would you love to do.

Speaker3:
Yeah, absolutely. All right. Rising costs. Let's talk about that in a minute. For a minute. One of the things that, you know, people are feeling is the rising cost of inflation, but specifically gas, you look at right now, the most expensive gate, uh, the most expensive states for gas is California. Uh, 528 a gallon for unleaded fuel. Regular. Amazing. Crazy. Hawaii, uh, $4.80. Washington, $4.64 Nevada 442. The list goes on. What are some of the least expensive states? Number one is Mississippi. Think about this. $3 and, uh, just over $3 a gallon, compared to 528 by the same gas driving the same miles, just in a different state, Oklahoma. Yellow said. I, we went to Oral Roberts University in Tulsa, Oklahoma. Maybe we move back there. The gas per gallon is $3.11. I'd like to pay that again. How about you?

Speaker5:
Yeah, yeah. I mean, Oklahoma just in general has one of the lowest cost of living. And one thing that I, you know, obviously gas is a very real thing. All of us experience that probably weekly at the pump. Uh, but there's also something that I mentioned on the previous podcast, uh, core inflation, core inflation, it does exclude food and energy. The reason for that is because they don't. All those the prices of gasoline doesn't always coincide with periods of high inflation, because there's so many other things that affect the price of gasoline. Um, and obviously we're not going to get into that in this podcast, but there's a lot of other items that could affect that. Um, geopolitically and, and otherwise. Uh, but yeah, we are experiencing that at the pump and the pressure of, of having to pay more just to be able to, to provide transportation for ourselves is a very real cost. And and it has gone up for sure, even in Oklahoma. I actually I remember one time I think it was like a dollar and uh, back when we were in college, I think it came back, um, uh, maybe it was Christmas break or something. And I remember seeing this is insane. It was like $1.50 or something like that per gallon. Um, you know, it just seems like that's those times are in the rear view mirror far behind us. And we could probably, uh, expect that it would stay that way.

Speaker3:
Well, and the other thing you do, something that almost nobody I know does. So when you buy gas, where do you buy it from and what does it save you? I think, you know, for those that are in return, uh.

Speaker6:
I think you're.

Speaker5:
Wrong about this. And and the reason you're wrong is, uh, the lines, uh, and how long it takes to get my gasoline, uh, at Costco or Sam's Club. Uh, it shows that I'm not the only one who's doing that.

Speaker3:
Know what I'm saying is, is you'll drive past ten gas stations to go to Costco because it saves you $0.02. So what? What is it? My sense, I think on average, and obviously it changes.

Speaker5:
But I think for a full tank, on average, it'll save you five bucks. Okay. Yeah. So if you fill up every week, which I typically do once a week, that's, you know, 52 times five. There you go. That's my annual savings on gasoline. And if you took that approach with everything in your life, think about the savings you would have.

Speaker3:
I think about, you know, the the hour that you wait in line. And if that's worth my $5.

Speaker6:
That I've.

Speaker5:
Never been a full.

Speaker6:
Hour.

Speaker3:
I actually think it's helpful. Like if you're in retirement and you're looking for ways to save, that's actually a super helpful tip. Use your Costco card or, you know, like yellow. Same until you have one. Use your neighbors.

Speaker5:
We all do what we can in periods of high inflation and restrictive monetary policy.

Speaker3:
Okay. Getting serious, one of the things I will say is one of the things we hear a lot is yellow. And I have the opportunity. We teach 60 financial classes a year across our community for different classes Social Security and Medicare, taxes and retirement estate planning and retirement planning, EDC. And what I think is interesting is when we meet with people, a lot of times they either manage their own money and they feel like they've done a pretty good job in the 400, one K, the IRA, the IRA, wherever it's at. But they've really never had a second opinion to say, hey, am I doing well enough that I'm actually saving money? Or am I costing myself money by not having a professional? And for some people, doing it yourself is the right decision. But have you ever had a second opinion from somebody who's an expert in the field that maybe now you're not just accumulating assets, but you realize that you're walking into a new season of life, and it's pretty tough to calculate what some of the mistakes can cost, and we can actually help with some of that.

Speaker3:
But one of the things that we hear a lot is we meet with a lot of people, and they have a financial advisor that they've worked with for five, ten, 15, 30 years. One couple the other day, they've been there for 40 years and they've never had a second opinion. What other service do we have that we don't check to make sure that we're still getting the best. And so the reason I say that is what a lot of people don't realize is that there are different types of financial advisors, most of them just like a doctor. They're generalist, which means they're there and they serve everybody. And in the accumulation phase, I think a journalist could do a really good job. But what they don't realize is, as they are preparing for retirement, what you need is a specialist. Just like if you're going in for a heart surgery, I don't want the same guy that's looking at people's feet or their hands, or they're looking at your head. I want the heart specialists, right. And so I know there's bigger words for those.

Speaker6:
I'm trying the feet specialist.

Speaker5:
No, I don't want that guy, you know.

Speaker6:
You know.

Speaker3:
I'm trying to be like Don not speak at an eighth grade level. Uh, whether he does it out of wisdom or it's because that's all he knows. But I'm saying I have to say is that one of the things I hear people say is, man, my whole life my advisor has just said things might be down, but it's just a paper loss. But now I'm looking and saying, hey, it doesn't feel like just a paper loss because I'm actually pulling from that account to pay for my expenses because I no longer have a paycheck. The other thing I hear a lot of advisors say is hang in there and be long term. I had somebody the other day, they said, hey, we came to your class. You were talking about different investments and preservation. Are you guys big on a new. So I said, man, uh, no fee annuities definitely could play a role in what you need, but it's less than 25% of what we do for people that want safe money, you know? So you need to look at all the different tools out there to say what best fits you, because a lot of the people we meet with, they don't need to significantly reduce their risk. They just need a portfolios that are more efficient depending on their expenses. And then the other thing that we all know is we hear people say, you haven't lost until you've sold. While that's true when you're in retirement, with very few exceptions, you are selling stocks. You are selling bonds to get that paycheck. It's supplementing your Social Security. If you have a pension, your pension, you are pulling money from your accounts.

Speaker3:
And when the market's up, it feels great. You know, you always say, one of the things I think about is I've been in the financial world for 12 years now, and my first ten years, or I should say about nine years. Every time somebody pulled money out, they were selling at a high. And then 2020 and 2022 were the first years that if they didn't have a safe annuity or if they didn't have enough money in money market or a CD or a t-bill, now they're selling bonds at a loss, they're selling stocks at a loss. And so one of the reasons I bring that up is, do you have a plan for where you pull money from when the market's up, but also when it's down. And if you've never put together a spend down plan to show you where to pull money from in what order, I think one of the things that we uniquely do very well is that we have tax advisors on us, and one of the things that we find is most people have a generalist for a financial advisor, and they have a tax preparer, or maybe they use TurboTax and you have a simple plan, which is a W-2, and maybe Social Security, which works great. Most people are missing the tax advisor. And I think that's where really where we come in and partner with people in an area that they haven't needed help before, and now they do, and they don't have anybody that offers that. Anything you want to add to that?

Speaker5:
Yeah, I think that what's challenging and can be a little misleading for folks is, um, everything you said, like I call those like the one liners in our industry that everybody seems to fall back on. It's just a paper loss. Hang in there. Be long term. You have a loss until you've sold and there's a million others. The problem is there's like a lot of truth to those statements. The thing that people miss is it really just that advice has to change as you approach and get closer to retirement. Um, that advice is fantastic for someone who's in their 20s. That person has no need to draw on their IRA. In fact, they wouldn't because there's a 10% penalty for taking it out before 59.5, right? That person is in the accumulation stage in life. But as you get closer to the distribution stage, like Trey mentioned in 2020, when the market corrected due to Covid, uh, in 2022, and we had like the worst performance in the S&P in the Dow since 2008. Like those were years where people still had to take distributions because that's what paid their bills. And if they didn't have a strategy in place to course correct to pull from different places, they had to realize those losses.

Speaker5:
Like there was no way around that. That's what was paying for whatever the mortgage, the groceries, whatever they had. So you have to make sure that as you get closer to retirement, you have someone who's helping you, who helps retirees, who works with retirees daily, not just someone who's a generalist who really just doesn't encounter these types of conversations as often as we do. So it's important to make sure that you have advice for for the specific season of life that you were in. And I say that with a grain of salt because I know everybody's in a totally different position with unique resources and assets and, and income sources. Right. Some of us can live off of Social Security, maybe Social Security and your pension. Some of us aren't necessarily dipping into our retirement savings to a degree that it would actually compromise anything. But for others, and for many of us, we have to make sure that we're strategic when it comes to that. And we're not just applying these one liners that sound great because there is some truth to it.

Speaker3:
Yeah. Well said. Well, one of the things I want to talk about before we end our podcast today, excuse me, got the hiccups over here. But investments to avoid if you are nearing or currently in retirement. So one of the questions I get, I don't know, once a month, twice a month is Trey, should I have some cryptocurrency in my portfolio? Do you guys deal in that arena? And here's the deal. One of the things that I've done is a personal philosophy, as I only invest in things that I understand. And so while there's very likely going to be success in crypto in the future, I don't think we know which companies are going to make it. Typically, there's a top 2 or 3 companies that everybody else kind of falls. Uh, but when I look, if you're in a nearing retirement, the three things I would invest in my personal opinion, if you're a business owner, you should be investing in your business. If you read, uh, most millionaires have become millionaires through the business that they own by, you know, building something amazing. One if you're a business owner, you should be investing in your business. The second thing is you should be investing in the stock market, whether that's typical mutual funds, ETFs, bonds, stocks. The reason for that is if you understand it.

Speaker3:
And we know historically they've performed well. You're not investing to get rich, but you're investing for good returns. And what I would call a stability. And then the third thing is real estate. You know, a lot of financial advisors don't talk about real estate because we're not paid on it. One of the things I've loved talking to clients about is real estate, because, uh, let's say you and I both personally believe in real estate. Obviously, we're not getting paid on it unless it's in the portfolio. So one of the things that I encourage is stay away from cryptocurrency if you want to own some. Or one of the things I saw on social media the other day as it said, uh, cryptocurrency for men is the same as Mary Kay for women. And it's just like this thing for guys to talk about and share about, even though it's a scam. I'm not saying it's a scam. I think if you are in or nearing retirement, my opinion is either stay away or invest just enough that you know that if it falls, or if it's a loss, that it's something you can afford to lose, but maybe you have a little bit in the game just in case it does win. You know, some of these people are saying it'll do. What are your thoughts?

Speaker6:
I can feel.

Speaker5:
The glares from all the angry listeners right now who love their cryptocurrency.

Speaker3:
I think they're angry because the money they put in crypto isn't doing well.

Speaker6:
Yeah.

Speaker5:
Well, certainly they didn't buy low and they're probably not reaping the rewards. It just happens to go the other way.

Speaker3:
Well, uh, what are some other things to avoid for our listeners?

Speaker5:
Uh, you know, we talk about this all the time. Um, you know, when you say invest in the market, like that can look very different for everybody. Um, not only because we're talking about portfolio composition and the split between equities and bonds, but the type of equities you have. Uh, we see this all the time. I don't want to, you know, spend too much time on this specific point. Uh, but. Make sure you're not paying more in fees than you should be, right? Not only to your advisor. Make sure you're paying the going rate. Sometimes we see people paying 2 or 3 times the market rate just for an advisor who really isn't doing anything interesting. Anything that you can, you can get anywhere else for half the cost. So you want to make sure that you're not paying more in fees. Make sure you're working with somebody who's competent. But the other thing is within your portfolio, like mutual funds aren't all the same. Obviously, not only do they do, they have a different, um, different percentage of of of company stock between different companies, but also in terms of the fees that they charge sometimes, like we're comparing to different S&P 500 funds or two different funds that track a specific index. And like the expense ratio within that fund is very different. So sometimes you're paying 2 or 3 times more than you should be for a mutual fund or ETF that you can have that really has the same objectives and has the same composition. So not going to spend much time on fees. But it's an important thing, especially in retirement as we're trying to provide value in any way we can. And a lot of times that value is found through proper diversification. Sometimes it's by reducing your fees within your portfolio. Sometimes it's hiring somebody who can help you make those decisions because they have the expertise that you're looking for, and they're also charging you what they should be charging.

Speaker6:
So right.

Speaker3:
Well, one of the things I'll talk about that we also get a lot of questions on, I don't know, you know, how thoughtful we have to be in the way that we say things. But I, I tend to be very.

Speaker5:
Um, unthoughtful person. Is that what you're.

Speaker6:
I hope.

Speaker3:
So. Let me say it this way. If you think of 2020 until today, one of the things that's interesting to me is the families that we serve that have the most fear tend to be the conservative clients, which is really interesting, meaning that, you know, their their political stance seems to have driven more fear than maybe somebody that's more like it. Obviously we have clients all over the board, which I love. I want to have people around me that think differently. Uh, I think if you're surrounded by people that only think one way, I think it's dangerous and makes your world very small. But one of the things that that I get a lot is, hey, should I take a portion or a large percentage of my portfolio and literally buy physical gold or physical silver? And a lot of times people that'll say, hey, I've got this small group. We talk about stocks and bonds and investments, and everybody around me is doing this. And I think one of the mistakes that you and I see people make is they'll purchase bonds. Excuse me, they'll purchase gold or silver and they don't realize how illiquid it is. They don't think about when you're buying it. Typically you're paying somebody retail.

Speaker3:
Right. So you go to a gold shop that's local, or maybe you're a family member or a friend has a guy that they sell gold and silver, whether it's in coins or bars or whatever that looks like. And what people don't think about is, well, they're paying retail when they want to offload it because they feel better about the market or they want to liquidate it to purchase a deck for their house or whatever that thing is. When they go to sell it, they're not getting paid retail to sell it. Now. They're especially if they need it, they're they're selling it to somebody who is a distributor of it or who owns the business. And that person's going to pay you wholesale because they have a store they have to keep open. They have employees, they have all these costs that they have to make money like any other business. And so we've run into so many people that they buy physical gold and silver, and now all of a sudden they have a problem with liquidity. Or the other thing we see is they don't think about they sell off, you know, a portion of their IRA to go buy gold and silver, and now they have to pay taxes on that money as if they spent it before they go buy the gold and the silver.

Speaker3:
So one of the things I always tell everybody is buying silver and gold is less about diversification and more about peace of mind as far as having it physically in your home. So if you're thinking about buying bars of of silver or bars of gold or coins, have a safe in your house and pre-decide that when you purchase it. And in my opinion, you know, maybe you have 10,000, 20,000 or up to $50,000 typically my recommendation, uh, obviously not more than like 5% of your portfolio. Hopefully less than that. But what you should do is you should just decide that you're going to hold on to it until the day that you die. But that money is is strictly for peace of mind, and you're going to give it to your kids and grandkids, or that church or charity that ends up being your beneficiary. So if you're going to purchase it, you need to know, is this short term to make me feel good? Or do I hang on to it long term because it's kind of an end of the world, you know, plan. But what are your thoughts on it?

Speaker5:
Yeah, I think that for, for most people, um, you're better off buying any number of gold or silver or precious metal ETFs before you are before you should go out and buy physical gold and silver. And Trey mentioned, uh, just like logistically some of the things that are. You know, people think about, um, not only the cost, um, that maybe, you know, you're not you're not you're not getting as great of a deal as you think you are, but also just issues related to storage and liquidity and things like that. Uh, there's any number of ETFs that are available. And by the way, like, you know, gold has done really well recently. It's rallied several times this year. So it's not like it's a bad decision. It's actually it's a fantastic way to to further diversify your portfolio. And we can have that conversation. Just make sure you're being wise and that you're getting good counsel when you are making decisions related to precious metals.

Speaker6:
Yeah.

Speaker3:
Well good advice.

Speaker6:
Uh.

Speaker3:
What else do you want to cover before we wrap?

Speaker5:
I think it's time to close it out. I think we're, uh. I think we've said everything, especially, uh, on inflation. I think unless you want to circle back to that topic, we can we can do a little more on on that.

Speaker6:
But I think you were a little.

Speaker3:
Less filter today, a little more real. But let me be honest. Our the average client that we serve, what they mean by average is the median is 65 years old. And one of the things I've noticed is 65 year olds tend to have less of a filter than a 45 year old. And I heard a saying the other day had said that when you're in your 20s and 30s, you know you're worried about what everybody thinks about you. And then when you're in your 40s and 50s, you're worried. You're, you know, basically in your 40s and 50s, it hits you that, uh, nobody's actually thinking anything about you at all. They're thinking about yourself. But I think when you're 65, you realize, like, hey, life is too short. I'm going to say what I'm thinking. It doesn't mean you're rude, doesn't mean that you know, that you say ridiculous things, but you don't sugarcoat things as much. And I think that's part of what I love about serving baby boomers is that whether we have a client that is a huge Trump fan or whether, you know, they're, uh, on the complete left, we get to have real conversations in here based on their life experiences, why they stand where they do. And I think one of the things the media has done a really poor job of is helping people remember that while your experiences are different and your beliefs are different, most people are really good people and they believe what they do and they're fighting for what they do because they care about others. And so one of things I'll just end in saying is, you know, as we have conversations around these things, you know, one of the things that that we get to do is, is have these real conversations that I think actually lead to better investing, more thoughtful investing, because up until retirement, people save as much as they can, and the money just grows as fast as it can.

Speaker3:
But when you're in retirement, you know how you invest is often different. You know, the way that you invest your Roth money is probably more based on your kids age, because you realize that's legacy money. The way that you invest your pre-tax money is different because you're probably going to spend that money. And so all these conversations, in my opinion, lead to a better investment result, because the things that you believe oftentimes impact the way that you invest. So I'll just wrap up saying, if you're in a nearing retirement and you've never had a second opinion on your investments or your tax strategy or your spend down plan, or on how paying for health insurance for your spouse because you're retiring and they have a gap of three years from 62 to 65. Now all of a sudden, their health insurance is going to be more expensive. If you never walk through what those things look like, or what happens if you or your spouse needs long term care coverage, how does that impact how long the money lasts? We want to help you with that. You can reach us at google.com or our phone number below, but we would love to give you a second opinion to either confirm you're already doing all the right things, or point you in a direction that could improve your retirement. Uh, thanks for listening in. We appreciate it. Looking forward to more podcasts ahead. You listening? You want to say to wrap up?

Speaker5:
Yeah. Uh, the last thing I'll say is, you know, I think we need to change the podcast to unfiltered. And I've always, I've always wondered how, how is it that you relate so well to our 65 year old clients? And now I know it's because you share their filter. You've had a 65 year old filter since the age of six, which helps you to relate.

Speaker6:
I think that's true.

Speaker3:
So thank you everybody. Have a great day next week.

Speaker2:
Thanks for listening to all things financial. You deserve to work with retirement planning specialists who care about your money, and take a unique approach to your financial and retirement needs. Visit all things financial.com and set an appointment today.

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