The Big Question Pile

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Every day we try to open up the dough.

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Tom and Don are talking real money.

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Steve, this is going to be a weird day for me today, I can already tell

Q&A Kickoff

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you. A timely topic that has something to do with money. And sometimes we really do feel like, and you probably do too. Come on, you're smart people. Like, wow, that's a stretch.

SPEAKER_01 0:28

Or been there done that. Or been there done that.

SPEAKER_02 0:31

But but we have to do a lot of those been there done that's because people come back or don't come back every every show. They they you know drop in from time to time. We have new listeners, and you know, we have to we have to cover some of the basics again.

SPEAKER_01 0:45

Well, and and you don't go to church once, right? You go more than once. You've got to get the message over and over until you get it right.

unknown 0:52

Right.

SPEAKER_02 0:52

I mean think about it. I was told I haven't gotten it right, but that's it really is one big two-part book that that if you read the whole thing, you'd think you'd get it, but apparently they have to keep telling us. Yeah, so I'm happy to do it. So that's what we're doing, except my good book is much thinner than their good book, the Financial Physics book. Anyway, today though, we decided to do something a bit different. There's a reason. The reason is Tom has 44 printed questions in front of him, and we were looking at that stack going, if they keep coming in at this rate, we're not gonna get through it. So we're thinking that you're demanding an episode totally dedicated to your questions, and that is what you're gonna get right now. A special midweek QA edition of the Talking Real Money Podcast with your hosts Don McDonald and Tom Cock, the official question reader, because he loves fondling paper.

SPEAKER_01 1:52

Well, I'm a little worried about all these questions. I don't want Seattle to turn out like Rome. You know, it's just in Rome, they have like three trees. And it was a hundred degrees. So I don't want Seattle to be like that. So I'm not sure. Now think about that.

SPEAKER_02 2:04

That that was probably something that uh occurred about 2,000 years ago. Yeah. And uh because I bet you those seven hills were heavily forested at one point. I bet you're right. Yeah. So somebody hacked them down to make questions. So fill it out. Yeah, make wait a minute. No, papyrus was made of reeds. They did not do wood pulp paper 2,000 years ago, did they? I feel a whole lot better. They made scaffolding for the Colosseum.

SPEAKER_01 2:32

For good use, too, by the way. They had 65 elevators, did you know that? To pull things up to the uh full. MODIS elevators like electric. These are ones to like bring up the animals and let them.

SPEAKER_02 2:45

How did they power the elevator? They used a counterweight system. Yeah, but you still have to have some force moving it.

SPEAKER_01 2:52

I think that was uh the you know aforementioned slaves, etc.

SPEAKER_02 2:56

So slave labor again. Works out. So yeah, we have a lot of questions. Darn mean. Yeah. Uh we have a lot of questions. We have uh we're gonna do I think we're gonna do like seven or eight today, something like that. I don't know. We'll just start piling. What we're gonna do, we're gonna do a couple of the tree questions that Tom has in his grubby little hands, and then Tom's gonna take a call, and then we'll go back to a few of the tree questions and comments and stuff. So let's get this show going with the first question that came in from TalkingRealMoney.com on the ask a question button form thing. Do it.

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And it comes from Murana, Arizona, near

Life Insurance Necessity

SPEAKER_01 3:32

Tucson. It's David. He writes, Hi Don and Tom. My question is when should you decide to keep life insurance in your senior years if you have an existing 401k portfolio? If you have a 401k and you pass away, the beneficiaries would have the uh money from the 401k. So I so I do not see the need for insurance. Good, wise decision.

SPEAKER_02 3:56

You own insurance to protect against, well, in the case of life insurance, to protect against some unforeseen event or unforeseeable event uh that might cause someone financial distress. In your case, if you have a house and the house burns down, well, most people don't have the cash to rebuild the house. If you do, then maybe you can self-insure. Some companies do that. When it comes to life insurance, you only should have life insurance to make sure someone doesn't suffer financially from your demise. That would be a spouse or significant other, a child, uh someone who depends on you for income and you don't have other assets. You carry life insurance to keep them going in your absence if you're the primary breadwinner. But when you're retired and you have a lot of money in your portfolio, well, that should take care of whatever those who follow you need. If it will, there is absolutely no need for life insurance. None.

SPEAKER_01 5:00

That is the financial answer. The psychological answer can be different, right? Sometimes people For life insurance? I think so, because even though you have the portfolio, many people are saying, but I still have that little policy there, it's ready, I something happens to me. Cash amount that comes in. I'm I'm saying I said psychological. I run into this a lot.

SPEAKER_02 5:22

I can see it with property and casualty insurance, yes, psychological. Even if you can cover your losses, you don't want to, and you let the insurance company cover it. It's playing the insurance lottery.

SPEAKER_01 5:36

Exactly. So and and as I just had met met with a friend yesterday who still has a significant amount of life insurance, and I said it's gonna get kind of expensive. He said it's level until age 75 or something. Because then that's it's over. I'm not keeping it anymore after that. And he he said he has the money. If you have the money, you're right, you don't need the insurance.

SPEAKER_02 5:56

Yeah, but if you don't need the insurance, why keep spending the money? That's the other thing. Are you try uh literally, are you just buying someone else a death lottery ticket? That's really what it comes down to. You know, that that premium you pay for term life, if you you the pe the people who you would leave don't need it, then basically you're just buying lottery tickets with that premium and uh hoping you die and it pays off? I don't know. It's doesn't make sense to me.

SPEAKER_01 6:26

We go from Ariz Arizona to Tacoma, Phoenix, Arizona, all the way. Isn't there song to wait to Tacoma?

SPEAKER_02 6:34

Yeah, there is Philadelphia, Atlanta, LA.

SPEAKER_01 6:37

Yeah, okay. Hey, look how that wasn't that far off. Bob Bob writes us from uh beautiful Tacoma. Thank you for all the funny and interesting programs.

Floating-Rate Fund Risks

SPEAKER_01 6:46

Thank you, Bob. Question: What is your opinion of short-term bank loan ETFs? We own PFRL, P is in Paul, F is in Frank, R is in Ron, L as in Larry, and like the yield. We may take our next 100 K C D when it comes due this month and buy F L R T, S-E-I-X, and some more PFRL. He goes into a few other topics in here, but uh he says the short-term bank loan ETF PFRL yields 5.8%.

SPEAKER_02 7:23

Yeah. Okay. Here's your Why? Why does it edit it?

SPEAKER_01 7:27

Why does it yield so much?

SPEAKER_02 7:28

Uh well, it's because let's just double check here and see. Um the uh but it's well it's non-rated paper. Let's explain what that means by that. It means there's that that there's no they don't put an in for a rating on the paper. And generally that means that it's not of particularly high quality. Yes. They don't want a rating. And you you can look at these portfolios and see that the rate that the high quality paper in these things is generally ten to twenty percent and the rest is low quality. Maybe fifty percent.

SPEAKER_01 8:07

Meaning there's the the potential for the high risk of default, yes.

SPEAKER_02 8:11

Even if it hasn't defaulted, in a bad economy, it could default. And so th there's a there is always the high yield is always there for a reason, and in this case, the high yield is there because there's a higher risk. It's just a a trade-off. And the other problem with these things, uh you can get a nice, reasonably safe bond fund like BND for what, three one hundredths of one percent a year? Yeah. How much is this? This is well, the the uh F L R T is uh six-tenths of a percent a year, sixty basis points. Which is still pretty spendy for an income fund. It's very spendy. And the other one, which which was P F I just lost it. Plus, P F R L. R L Perful. Yeah. Oh, the PGIM floating rate. That was the one. Floating rate. Yeah.

SPEAKER_01 9:06

Kind of spendy, as I said.

SPEAKER_02 9:08

Expensive, and the yield is the yield for a reason. And uh despite the fact that, hey, they have done well, lots of things did do well in the past, and then failed to do so when the conditions of the market changed. And I'll refer you back to collateralized mortgage obligations, collateralized debt obligations, uh, collateralized loan obligations, auction rate notes, all of these little gimmicky products that were supposed to yield more ended up eventually. They yielded more for a while until they stopped.

SPEAKER_01 9:46

Yeah, and this is a very important thing to pay attention to. If you're buying this as fixed income, uh st which should be of the highest quality because that's where you want the ballast when things get bad. You're not getting that here. You're getting stock like characteristics in some cases.

SPEAKER_02 10:04

So you have to lose the the yield mindset.

SPEAKER_01 10:07

Yep, exactly. Totally.

SPEAKER_02 10:08

Stop looking for yield. Build the yield from your entire portfolio. And by the by the by, when you look back at this fund, uh the the the uh F well, the one that's been around for a while, the the other one hasn't. FLRT, the PACER fund, has been around for more than a decade. And its 10-year average annual return. Average annual return was only 4.82 percent. Now you see there's a nice yield, but the return has actually been below what the yield is currently, which says, oh, look back, they did lose a little money once in a while, and in a major market downturn of some sort, you see, we didn't have a real bear market in that 10 years. Very good. If we have a real bear stock market that causes the economy fits, you're in trouble. You could be in trouble, couldn't you?

SPEAKER_01 11:02

I agree. You you want to have the safety there.

SPEAKER_02 11:04

So next question. One more before we go to your phone call.

SPEAKER_01 11:09

Okay. Uh Sarah writes from Cave Creek, Arizona.

Bonds in Roth Accounts

SPEAKER_01 11:12

I've heard you say, in quote, in quotes, so many words, unquote, bonds in a Roth account are not a good idea. I have only Roth accounts, 403B, IRA, and HSA. I have about 10 to 15 percent in bonds. I really don't want to be a hundred percent in stock index funds. Your thoughts.

SPEAKER_02 11:34

We we say that as a rule, and again, back to the the thing uh that we have to do on the show, and we s we paint with really broad strokes. Generally speaking, you you want to put your highest returning vehicles in a tax-advantaged account. So you don't have to pay taxes on those high returns. However, there's nothing wrong with having bonds in an IRA, particularly if that's all you have. No, Roth. And that's the only way you're gonna get them, a Roth IRA or a regular IRA, either one.

unknown 12:03

Yeah.

SPEAKER_02 12:03

You want to you want to have the portfolio that's right for you, and which accounts that happens in doesn't really matter except you we try to fit a little bit of tax planning in. But in your case, you absolutely are gonna own bonds in your Roth.

SPEAKER_01 12:19

Yeah, and and I think the case that may have come up here that would be slightly confusing to people is when we get a portfolio and we look at the whole portfolio as we've done in the program, and people have bonds in their Roth when they could own them instead in their 401k or IRA. That's the situation. We really want to have the proper portfolio design and then fit in those assets where it's most tax efficient.

SPEAKER_02 12:44

So we may have said that in that occasion, but it's not an absolute, none of these are absolute across the board answers. Everything is an it depends on you answer. Now, one of the things we do, we take all these questions that you send in, Tom gets them all, the big pile, and he goes through them. And if he finds one that really requires a give and take, a conversation, well, then he gets on the phone with you.

SPEAKER_01 13:10

Thanks, Don. Let's go to the phones and Orlando, Florida. I think that's just down the road from Don, so maybe he should be just coming by and having a one-on-one.

Rebalancing Retirement Mix

SPEAKER_01 13:18

But let's use the phone anyway, because she's on here. Laura, thank you for uh joining us on Talking Real Money. How can we help?

SPEAKER_04 13:28

Well, um we have two 401ks, and we currently have um 10% in bonds and 90% in mutual funds and um stocks, I guess. And we want to know how, since my husband's 57, we want to know how to gradually um up the bond amount and decrease the stocks amount just for a little bit more stability as we get closer to retirement.

SPEAKER_01 14:03

So you're gonna you so I'm I guess a couple of questions, even before we get into the sort of the mechanics. The move to less risk, right? Because you're moving from a portfolio that is very aggressive, 90 10 to 70 30. That's been thought through in terms of your retirement plan to make sure that that that's gonna create the you know the growth that you're going to need to retire at some point. I think so. Okay. I mean, because that would be the starting point for me. In other words, any anybody who's invested any dollars should know how much they're trying to make on the money and how much volatility they're willing to accept to make that. So I'm happy to still talk about the mechanics of it, but that would be the starting point for me. And I can tell you, for example, my portfolio, which is still pretty aggressive, but I'm still gonna keep working. So I I know I have the income still for a while. So in your case, I would be saying we're gonna work X more years. We need X number of dollars at that point, plus or minus, to uh create the income off of that when we've looked at our Social Security and pensions and all the rest of it, and work my way backwards to say, okay, with that in mind, here's how much we need to make on the money that we're saving. So that would be the starting point. But so that's something to work on, I think, for you guys. But but but you're back to the mechanics. Um do you have outside, do you have money outside of the uh the couple million in the in the uh retirement plans?

SPEAKER_04 15:32

Just um a a couple like um 200,000 in a in a Roth.

SPEAKER_01 15:38

Okay. So then my starting point would be as follows. First of all, in the Roth, because those get the tax-free treatment, which is so wonderful. I would put those, well, first of all first of all, once I decided on if it's going to be the 70, 30, that's great. So now the first part of the equity exposure would be in those Roth IRAs. In other words, that would be the riskiest part. That might be international small cap value or U.S. small cap value or the riskiest assets. Why? Well, because we hope that those get the greatest return over time and they're growing tax-free. So that would, so that would be a starting point. Then I would build the 401ks around that. Because remembering, in those 401ks, you can buy or sell anything you like without any tax ramification. Same is true, of course, in your Roth IRA. So, okay, so then, okay, so here if if we just agree that we're gonna go from a 9010 to a 7030 over the next 24 months for sake of argument.

unknown 16:32

Okay.

SPEAKER_01 16:32

I would simply this this would be pretty easy to do actually in the 401ks. I would simply be rebalancing each year. So let's just say, for example, next January, you decide, well, okay, we're gonna slowly move. So we're gonna move from a 90 10, that's 90% in stocks, 10% in bonds, to 80% in stocks, 20% in bonds. So now we already know the Roth IRA is gonna be 100% stock, right? That's gonna be the risky stuff. Now we're gonna look at the rest of the portfolio and say to get to that 8020, we need to make this portfolio, you know, like 60, 40, whatever it is, you know, run the calculation. So we're gonna be selling stocks, right? Stock funds. And you did share with me your your portfolio holdings, which look pretty good, um, and buying bonds in those 401ks. You're gonna be making the shift there. Um, and so so once you rebalance everything, you're sort of selling stocks and buying bonds, bond funds, these are all we're all talking funds here. Uh, you're gonna be doing that. That gets you to the 8020, you know, maybe in January. Then the following January, we do this again. We're selling stocks, stock funds, and we're buying bond funds, rebalancing the portfolio so that overall, when you look at the whole thing, that's what I was trying to get to. When you look at the Roth that has all in stocks, and yes, I would you also ask a question, and we didn't touch on this, but I would continue tributing to those Roth IRAs because I love in retirement having various sort of tax buckets, if you will, because the Roth gets completely different treatment, as you know, than the 401ks. Those are gonna be taken out and you have to pay tax on them. So I would still make the backdoor Roth IRA contributions. But then when you look at the whole portfolio overall, you have that much in Roth, okay. Then we add that to the how much you have in the 401ks, and then we're gonna times that times 40% in or 30% in bonds, 70% in stocks, and build the portfolio with that in mind. So when you look at it, it's a holistic approach. But the but the actual mechanics of rebalancing that are not gonna be very hard because you're just gonna be selling the stock funds to keep to the percentages that you want and buying bonds. It's not a difficult process at all.

SPEAKER_04 18:49

Okay. So a follow-up question.

SPEAKER_01 18:52

Yeah, so please.

SPEAKER_04 18:53

Um like if I have, for example, I have like the Fidelity 500 index, the Vanguard small cap, um, some real estate, and a little bit of international, and and of course my 10% in bonds. How much of each of those should I take? Like, should I take just a little bit from each?

SPEAKER_01 19:13

No, that's pretty easy because here's what you're going to do. Um, prior to that, you're going to say, in my stock portfolio, I want to have, you know, 60% of it be in the US markets, 40% international. I want to have whatever percentage you want in large and whatever percent you want in small. So that's gonna be the baseline, right? So that when you look at this in January, you're going to be selling the things that don't fit that overall structure. In other words, um, in the last year, international's gone up way more than the U.S. So you may be selling more international so that it fits those percentages, right? So you're gonna have the the right amount in international, the right amount in US, the right amount in large, which is this S P 500, the right amount in small. So that's that's simply gonna be a matter of when you make that rebalance. Then you're gonna wait another year and you're gonna do it again because the next year maybe US makes more, international makes more, we don't know, or smaller, whatever it is. So you're gonna be rebalancing that again in another year to get back to those percentages. But you're gonna establish those first, then you're going to rebuild the portfolios.

SPEAKER_04 20:23

Okay. And then maybe this is uh too detailed of a question, but how do I know? I the figuring out the percentage part is the hard. Like I never know.

SPEAKER_01 20:36

Yeah, that's this is this is the part where the rubber kind of no, that's this is kind of the part where the rubber meets the road. And that's why, like our friend Paul Merriman just says, make it easy. Um he says, you know, half, I think still says half in US, half in international, half in large stocks, half in small stocks, half in growth stocks, half in value. Sometimes a little harder to do in your 401k. And that's why I'd suggest that, and by the way, when we do this, we're like 65% in US and 35% in international, because that reflects the global market cap right now. But maybe that's too sophisticated, too crazy. So you just do, I here's what I suggestion. I would just do 60% US, 40% international. I would try to do as close as I can to half in large, half in small, and as close as I could to half in growth kind of stocks and half in value stocks, if that's possible. That may be difficult. However, in those Roth IRAs, you can really stock up on a fund like AVUV, for example, because that's US small cap value. So then when you look at the whole thing, you don't have as much of that in your 401k because you already have it in your Roth. But defining the percentages, you could go to Paul's got a website, Paul Merriman.com, where he puts all the percentages right up there for you, those portfolios. I think ours are still the one funders, because it's just try to keep it simple for people doing it on their own. But you asked the $64,000 question, what's the right amount? There is no right amount because nobody knows what the future is going to hold. Um, but I think the big decision for you, Laura, is first to write the plan to see what rate of return you need on the money, then agree between you and her husband, okay, with that in mind, we're gonna be 70% in stocks, 30% in bonds, because that should get us to the promised land. Then we're gonna rebuild the overall portfolio and say start with having 100% in stocks in those Roth IRAs and build the 401ks around them.

SPEAKER_04 22:33

Okay, that sounds great. Thank you so much.

SPEAKER_01 22:38

It is always our pleasure. Thank you for listening, and I hope we get to chat again. You take care.

SPEAKER_04 22:43

All right, thank you.

SPEAKER_01 22:44

You bet, Laura. Bye-bye.

SPEAKER_02 22:45

And you see why he gets on the phone? See, there was a conversation there. You need it needed a conversation. But sometimes questions just need an answer. And today we're doing a special QA only show, not the Friday one, but a uh a special midweek

Spending More, Saving Less

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edition. And Tom has some more paper questions.

SPEAKER_01 23:03

I do. From Houston. Duck writes, Don and Tom. I called the show two years ago, and one of the advice you gave our family was to spend more and save a little less. Wouldn't that be a nice thing to hear, huh? Uh, we followed your advice and used that extra money for traveling, and it's been great. Made a lot of great memories as a family. Good for you. A little recap.

SPEAKER_02 23:23

I'm Hey, that by the way, this is Tom's philosophy of life. He lives his advice.

SPEAKER_01 23:31

He doesn't just give it, he lives it. Okay, thank you. I and and that this gets back to you giving me a bad time about expensive vacations. Of course it does. I knew this was headed. Of course it does. Uh back to the recap. You know me too well, Tommy. C's 42, wife is 39, make uh 210 a year, two young kids, ages four and eight, stable jobs, but maintain one year of emergency fund for peace of mind. Wow, it's great. Bought our home, 15 year fixed, still have 10 years to pay at 2.25 interest. Love that.

SPEAKER_02 24:02

Um better than my rate. Good for you.

SPEAKER_01 24:06

They reduced their uh investment per year from 25% to 19. They're savings. I mean, 25% is awesome.

unknown 24:13

Right.

SPEAKER_02 24:14

So they're saving 20% in spending. No, they're saving 19.

SPEAKER_01 24:17

Yeah, okay.

SPEAKER_02 24:18

Whatever.

SPEAKER_01 24:18

I'm rounding. But you got to pay taxes. Um and now they have a total of 1.15 all in e index funds and ETFs approved by you guys. Well, that's really great. I really have a I don't really have a question right now, but I just want to write and say thank you both for always giving us sound and consistent advice. Please continue with your banter every day on Talking Real Money. I look forward to listening to it, especially Tom's Dad jokes. That's I just that's right there. That's I think that's a good thing. Yeah, I know.

SPEAKER_02 24:46

People, I do not know. Well, okay, here's the thing. It's a male writing that, right?

SPEAKER_01 24:51

I believe that is correct.

SPEAKER_02 24:52

Yes. So it's a dad praising dad jokes.

SPEAKER_01 24:55

Dad, bad dad jokes to bad dad jokes. Yeah, they have to do that.

SPEAKER_02 24:59

It's in the pact. Fair enough. Fair enough.

SPEAKER_01 25:04

All right.

SPEAKER_02 25:05

Uh and by the way, just so you know, for for for total transparency, uh Tom, like any day now, is taking another expensive vacation. Just wanted you to know.

SPEAKER_01 25:15

Rather than we're going to do it. Exactly. John from Fort

Brokerages as Banks

SPEAKER_01 25:21

Collins, Colorado. Hey, can you discuss the pros and cons of doing all of your banking at a brokerage like Fidelity or Schwab? I'm thinking about consolidating everything under one roof for simplicity in retirement. Good idea. But how hard is it? Can you do it? Can you pay the bills from Schwab? Yes. Yes. Okay. I do. It's a bank. They have their own bank. So because I I obviously have my accounts hooked up to the brokerage, but go it just goes to my credit union and then I spend it from there. I don't know. I mean, I guess it does make it a little simpler to if you can do bill pay from um from a brokerage account. So yeah. And I don't think they charge you anything for that, probably.

SPEAKER_02 25:58

Yeah, no, no, no. They have they have a bill pay service built in. Now they re bear in mind, Schwab and Fidelity both have national banks. They own FDIC insured banks. So yeah, they uh they they have bill pay. I have never used it, so I don't know how robust it is. And and uh you know I know the Bank of America bill pay system is very, very stuff's all automated.

SPEAKER_01 26:24

You're still gonna be paying the electric bill fifteen years after.

SPEAKER_02 26:27

I am all automated already.

SPEAKER_01 26:28

The money's gonna keep going out.

SPEAKER_02 26:29

So my B of A account is really good. And and I know Debbie's truest account is not nearly as friendly. It's just kind of a pain in the city.

SPEAKER_01 26:37

That's what you get when you pay 0.01.

unknown 26:40

Exactly.

SPEAKER_02 26:42

Tech side is no, there's nothing in the world wrong with that. It does simplify your life. Make it simpler, sure.

SPEAKER_01 26:48

Okay, yeah. Uh from Northport, Alabama, Eugene. Wait a minute, is this the last one? And we got

Social Security Cap Debate

SPEAKER_01 26:56

two more.

SPEAKER_02 26:56

Okay. Oh. All right, good.

SPEAKER_01 26:58

Ending the cap on Social Security would make up only 53 to 75 percent of the Social Security deficit, still kicking the can down the road. One half the tax is paid by employers, which means we all pay more for goods and services, not just the worker. You should do your research before making blanket statements. This response is a very good thing.

SPEAKER_02 27:16

Okay, wait a minute. I remember when we talked about this and we said that it would make a difference, that it would be a very good thing.

SPEAKER_01 27:21

Oh, I think I think I think I said it would solve it because I thought it did.

SPEAKER_02 27:24

Okay, it's not a total solution, but it's a but I'm telling you, fifty plus percent is a long way toward a solution.

SPEAKER_01 27:33

And I'm telling you another thing about this. Here's the thing, to be realistic about politics. If this is what ends up happening, which Don and I have publicly stated is a good idea, then we're high earners. Something will be have to give up on the other side because this will be viewed as a tax increase, right? Oh, you're paying more in taxes. So that means something like, well, uh probably waiting until 64 to get Social Security. I mean, these are For the early, yeah.

SPEAKER_02 28:01

Make instead of 62, it's 64. Something has to be traded off here. So move FRA up to 68 and a half or something. Yep.

SPEAKER_01 28:10

So and I know that's not right for people that have physical labor jobs. That's not unfair because we can sit behind these microphones for 100 years, but if you're moving stuff from point A to point B, you can't do that at our advanced ages.

SPEAKER_02 28:23

So I think what what should have been said, and again, we kind of get hyperbolic sometimes, we admit it. Removing the cap will make a huge, huge difference in the magnitude of the mandatory cuts that might come if you're not sure. Which are about 20 percent. If the Social Security Trust Fund can't pay benefits anymore. So it would make a huge difference. It it would reduce that. If if they didn't do anything else, it would reduce it probably down to nine, eight percent reduction instead of twenty. Trevor Burrus, Jr.

SPEAKER_01 28:58

Which again, uh if you asked me today, I still expect no reduction that I think.

SPEAKER_02 29:03

I wouldn't that no. Because it's a social contract that was that has been made over the past almost 100 years.

SPEAKER_01 29:10

So many people rely on it so much it would be, you know, pitchforks at the Capitol. But which I guess we had months before. Um so uh back to this topic. This you pointed this out, and this is great. Senators who are being elected this fall are going to have to deal with this issue. So if you have a Senate campaign in your hometown, you might ask them, hey, during your term, you're gonna have to fix this. What's your plan? What are you gonna do? Yeah.

SPEAKER_02 29:36

It is time to have a plan. Okay. Exactly. We have kicked the can about as far down the road as it can be kicked. There needs to be. When was the last time we did a major overview?

SPEAKER_01 29:47

I think Reagan did something in the eight.

SPEAKER_02 29:48

No, it was um no, because I remember it being on West Wing, so it was during the Bartlett administration.

SPEAKER_01 29:55

Sorry, I must have missed that episode. Sorry. A show that I I really love. In fact, I might even watch that again. I love that show so much. But um My latest binge.

SPEAKER_02 30:05

We we we binged that, we binged madmen. Now we're we're binging Boston Legal.

SPEAKER_01 30:10

Oh, you're really going back there, William Shepard. Very funny. Yeah. The cigars every night on the uh on the deck after the big thing.

SPEAKER_02 30:17

I mean, it's totally unrealistic, but it's funny. Yeah. Shatner, I think, I honestly think that was Shatner's best work ever. It was really good work. Although he kind of plays himself.

SPEAKER_01 30:27

Um that's generally what actors do the best when they play themselves. So and one back to Congress. Two things Congress needs to do. Gotta do. Gotta deal with Social Security, whatever it's gonna be, and they've got to, and it's just everybody agrees, they gotta ban people in Congress uh buying and selling individual stocks. Quit it. It's just horrible. It looks awful. How could you how could you have a lot of people? The optics are beautiful. It's just on it and and then you still read these people that were on this committee and then they did this and they find out a week later, oh, that's right, they traded XYZ. No, cannot. Anyway, that's okay.

SPEAKER_02 31:04

Not on my soapbox, but he's gonna ask the last question that was in the talkingroomoney.com on the ask a question button form thing. Go ahead. What is

Retiring on Too Little

SPEAKER_02 31:14

it? Yeah.

SPEAKER_01 31:14

All right. It's from Glendora, California. It's DK. Don and Tom, thanks for everything you do for the community. Well, we really appreciate you saying that. I'm 53 with $2.8 million in pre-tax 401k assets. I guess that means traditional. I will plan to withdraw at 59 and a half and delay Social Security. Between now and 59 and a half, I plan to use my brokerage assets, 800,000. I need 150K a month. So let's see, 150 times 12 sounds like a lot of money. Um what? Give me the He needs 150K a month from the brokerage. Wait, he needs 150,000? That's what it says. A month? That's what it says. That doesn't sound right. Maybe you meant 15. Because even that's a little like so that because 15 needs.

SPEAKER_02 32:02

Nobody needs 150,000 a month.

SPEAKER_01 32:05

That's not true. No, needs when I was on the Amalfi coast, I looked off into the super yachts. You can't run those for less than 150K a month. So you're wrong. Okay, s no that the he it has to be a typo.

SPEAKER_02 32:21

Okay, so let's say it's fifteen. Okay, let's say it's fifteen. And he's got eight hundred. Because if it's 115, he's out of money less than a year. It's not gonna last. It's like six months, he's done.

SPEAKER_01 32:31

Okay. So let's say it's fifteen. Yeah. So it's one hundred fifty plus another thirty, so it's one eighty a year on eight hundred. Even that's a pretty aggressive withdrawal rate for five years. 200 on 800?

SPEAKER_02 32:44

That's incredibly aggressive withdrawal rate.

SPEAKER_01 32:47

So um love to hear on how I can make this happen.

SPEAKER_02 32:51

You can't.

SPEAKER_01 32:51

I don't know. I don't know. No, 150K, no way. 15 gonna be magic?

SPEAKER_02 32:56

Magic. Magic. Magic would be the answer. Yes. Uh uh.

SPEAKER_01 33:01

Okay, but you're 53. A magic lamp. He's 53. 53. I mean, what are you gonna do? Really?

SPEAKER_02 33:12

I'm with you. I that's but that's okay.

SPEAKER_01 33:15

That's what you that's your dream. That's your dream.

SPEAKER_02 33:17

If you want to do it, good luck, but you can't. No. Not that early. Maybe save maybe go fifty-five and save an extra couple hundred thousand dollars.

SPEAKER_01 33:27

Okay. That if you're at a million and you've got to draw on that for five years, that that could work. Although it's still Barely You're gonna spend it. That's gonna spend it all. That's gone, yeah. But you know, okay. Because you've got to pay tax on whatever you do there, too.

SPEAKER_02 33:39

So And the other thing is is you can't earn anything on it really because you're depending on it. So it can't go into the market to potentially get five or six or seven percent. So yeah, you gotta play it really safe. So good luck.

SPEAKER_01 33:51

Yeah. That's the name of that.

SPEAKER_02 33:55

Good luck, have fun, don't die.

SPEAKER_01 33:57

Don't die. That's pretty very good things. So we appreciate them all. So there you go. Those are all the questions, sir.

SPEAKER_02 34:04

Tom, that was an amazing performance on your part. You worked extra hard on this program. I don't know about that. All of us, I speak for all of us listening when I say we are so grateful that you fit in on an entire QA episode before your next vacation. Thank you so much. All of America thanks you.

SPEAKER_01 34:24

I salute you, sir. When I hear this, it's that close to sincerity. That close. Like this, right? You're right. Really? It's not.

SPEAKER_02 34:32

Trust me, you're mishearing. There is no sincerity at all. That is about as insincere as I get. You're a great actor, which could be pretty insincere, actually. All right. Thank you all. Thank you, thank you, thank you for being a part of the podcast. We truly do appreciate you, and we do appreciate you when you call us on the carpet. It's okay, we don't mind. What we don't appreciate are your one-star reviews when you listen to every episode of the show and actually get a kick out of it. You could say we we we're wrong about stuff, but give us at least a three-star. Something. It means the show is okay. You just disagree with what we have to say. If you hate the show that much, I have a better idea.

SPEAKER_01 35:14

Click.

SPEAKER_02 35:16

That's it. How did he know?

SPEAKER_01 35:19

Because every time people say I hate that show, I'm like, why are you watching it then? I have no idea. I hate this show.

SPEAKER_02 35:25

Turn it off. All right, thank you. Take care of yourselves. Oh, by the way, if you want to meet with an advisor, yeah. Here's the the only ad we ever have. It's the only ad we have in the show, and it's an ad for something free. You get to talk to somebody free. Free. And and I know you're always thinking, oh yeah, sure, that free consultation thing, they're gonna sell me something. Nope. Not gonna do it. Just gonna help. You know why? Because it's actually more effective than trying to sell you something at getting clients, apparently. I don't know. It really works. So we don't have to try to sell you anything. We're just gonna help you out. Karma marketing. Go to talkingrealmoney.com, click on the button that says meet an advisor, and then you can meet with a true fiduciary advisor who doesn't sell product, isn't on commissions, and isn't going to strong arm you into becoming his or her client. And sometimes that person is even Tom. So do it. Go to talkingrealmoney.com, click on meet an advisor, or ask us a question, or listen there, or whatever it is you do, and tell a friend or two or ten and keep listening to Talking Real Money.

SPEAKER_03 36:32

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SPEAKER_00 36:46

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SPEAKER_00 37:28

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