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Money Monday with Brian James · Brian Thomas

0:00
Speaker 1: At fifty five KRCD talk station. Brian Thomas right here
0:02
Speaker 1: wishing everybody a very happy Monday and expressing very happy
0:06
Speaker 1: thoughts that I see Joe Strecker back where he belongs
0:10
Speaker 1: in the executive producer booth. Good having you back, Joe Strecker,
0:12
Speaker 1: and God rest to your father's soul. Welcome back to
0:15
Speaker 1: the fifty five carssee Morning Show, Brian James, from all
0:18
Speaker 1: with Financier to what we call money Monday over here
0:20
Speaker 1: on the fifty five carssee Morning Show at this time.
0:22
Speaker 1: Brian's always good talking with you.
0:23
Speaker 2: Yeah, absolutely good to hear your voice as well, and
0:26
Speaker 2: I echo your thoughts on this Strekker family.
0:28
Speaker 1: Yeah, no question about it, Brian James. I see that
0:31
Speaker 1: Air Canada. I think this Air Canada is just an
0:33
Speaker 1: illustration of a lot of changes coming our way as
0:36
Speaker 1: a consequence of the increase in jet fuel prices. Of course,
0:39
Speaker 1: we're all struggling with an increase in fuel prices, and
0:41
Speaker 1: real quick, I just had to point this out before
0:43
Speaker 1: you get pivot over to airic Canada. What it's done
0:46
Speaker 1: in the price of jet fuel. My wife and I
0:48
Speaker 1: were watching an old movie from nineteen forties and it
0:51
Speaker 1: was a boguard movie to have him to have not.
0:53
Speaker 1: And he's a boat captain and he tells his client
0:55
Speaker 1: he needs to fill the tank up, and the guy says, well,
0:58
Speaker 1: how much is that going to be? And so humphy,
1:00
Speaker 1: it's as well, twenty eight cents a gallon mull times
1:02
Speaker 1: tied forty forty gallons, and we're looking at each other like,
1:05
Speaker 1: twenty eight cents a gallon, Oh.
1:07
Speaker 3: My god, twenty is that American sense? Really?
1:10
Speaker 1: Well? You know the funny thing about it is I
1:12
Speaker 1: immediately went over to an inflation calculator. What was a
1:15
Speaker 1: dollar worth of nineteen forty versus what it's worth today?
1:18
Speaker 1: You know what that twenty eight cents translates into modern dollars?
1:21
Speaker 1: Tell me six dollars and change. So it wasn't as
1:25
Speaker 1: good as it sounded. So you know, you got to
1:27
Speaker 1: keep inflation in there. And to that end, I just
1:30
Speaker 1: look at the price of gasoline during COVID and as
1:33
Speaker 1: a consequence of some of the green initiatives that have
1:35
Speaker 1: gone in, our refusal to drill and tap in and
1:37
Speaker 1: all that kind of thing, it artificially drives the price up.
1:40
Speaker 1: It's out there. It could be a part of the
1:42
Speaker 1: pool of you know, gas or oil or jet fuel
1:45
Speaker 1: that's out in the world. So that's an artificial creation.
1:48
Speaker 1: This war is a temporary phenomenon that has not stopped
1:52
Speaker 1: necessarily the existence of oil or its future production. It's
1:57
Speaker 1: only held it back because, of course there's a conflict
2:00
Speaker 1: in the straight up horror moves which it deals with
2:01
Speaker 1: twenty percent of the world's energy, you know, other resources.
2:04
Speaker 1: But it's certainly having a profound impact, and it's resulting
2:07
Speaker 1: in some significant changes in airlines, notably back to Air Canada, Bryan.
2:11
Speaker 2: Air Canada suffering a little bit so so jet fuel
2:14
Speaker 2: has jumped from two dollars and fifty cents to about
2:16
Speaker 2: four dollars and thirty two cents per gallon. You know,
2:19
Speaker 2: it's kind of funny. I never really thought about it,
2:21
Speaker 2: but that's close to what I think of when I
2:22
Speaker 2: when I stand at the pump and.
2:24
Speaker 1: Maybe my guests, maybe one of the other day Brian
2:27
Speaker 1: seventy five cents for premium.
2:29
Speaker 2: Yeah, but the airlines complaining about exactly well, I mean,
2:32
Speaker 2: we're all used to what it used to be and
2:34
Speaker 2: we weren't prepared quite for what it is. And that
2:37
Speaker 2: that that applies whether you're driving a minivan or seven
2:39
Speaker 2: forty seven.
2:40
Speaker 3: I guess so.
2:41
Speaker 2: Uh so, Air Canada has decided to pull the trigger
2:44
Speaker 2: to make some adjustments for their own budgets. You know,
2:47
Speaker 2: some of us spend less at the grocery store. Well,
2:49
Speaker 2: Air Canada suspends flights, so there are fewer flights from
2:52
Speaker 2: JFK to Toronto and Montreal from June to October. And
2:57
Speaker 2: they're just they're basically saying, some of these routes are
2:59
Speaker 2: no echoically feasible. It's just not going to work anymore
3:02
Speaker 2: for the temporary, you know, for the time being.
3:04
Speaker 3: We hope we'll.
3:04
Speaker 1: See okay economic feasibility. And I asked myself, is it
3:10
Speaker 1: that they can't find the fuel to buy at a
3:14
Speaker 1: higher price? Or I mean, my thought was, why not
3:16
Speaker 1: just increase the fare to cover the additional fuel costs.
3:19
Speaker 1: It could still be economically feasible to fly these smaller routes,
3:22
Speaker 1: but you're gonna have to pay a hole of a
3:23
Speaker 1: lot more for the ticket. Or is it the fact
3:25
Speaker 1: that they just can't find enough aircraft fuel to go
3:27
Speaker 1: around their fleet and deal with the larger one.
3:30
Speaker 2: I think your ear analysis there leaves out the other half, right,
3:33
Speaker 2: So yeah, they could do it. They could pay for
3:35
Speaker 2: the fuel and raise the and cover the cost by
3:37
Speaker 2: raising it. But I think what they're saying is it's
3:39
Speaker 2: not economically feasible from a standpoint of Yeah, we could
3:41
Speaker 2: do that, but who will buy those tickets? So their
3:44
Speaker 2: analysis is saying that, while you're correct, there is not
3:48
Speaker 2: a supply problem.
3:48
Speaker 3: The supply is.
3:49
Speaker 2: There, we have access to it. It's is it worth
3:51
Speaker 2: trying to sell these routes because people are going to say,
3:54
Speaker 2: forget it, I just don't need to go to these places,
3:55
Speaker 2: or I'll just find another airline.
3:57
Speaker 1: Well, in the old days, you could always count on
3:59
Speaker 1: business travel. They had to fly, they had to you know,
4:02
Speaker 1: get to where they were going to conduct business meetings,
4:04
Speaker 1: and so they could fall back on the business customers
4:06
Speaker 1: who always ended up playing full fair, full fair anyway,
4:09
Speaker 1: at least by comparison to we out here in the
4:11
Speaker 1: unwashed masses, who buy early so we can get a
4:13
Speaker 1: savings on it. But I guess after COVID people realize
4:17
Speaker 1: you can get on a zoom conference and you know,
4:18
Speaker 1: you don't have to fly to New York City to
4:20
Speaker 1: conduct business from Montreal exactly.
4:23
Speaker 2: So that's why they're a lot quicker to cancel these
4:25
Speaker 2: routes because because the potential customers are a lot quicker
4:28
Speaker 2: to say, forget it, We'll just switch all these in
4:30
Speaker 2: person meetings to zoom and we'll save on the bar
4:32
Speaker 2: tab at the end of the night too. So it's
4:35
Speaker 2: affecting a lot of different areas. But we have to
4:37
Speaker 2: look at night. It's not just the price of fuel,
4:39
Speaker 2: it's the way we make decisions. COVID had an awfully
4:42
Speaker 2: large impact. I could say that from my own employer.
4:44
Speaker 2: We do stuff a lot more or a lot less,
4:46
Speaker 2: you know, a lot less travel to get everybody together.
4:48
Speaker 2: It's just easier, and it's easier on lives too, right,
4:51
Speaker 2: it's fun for you know, fun to see the crowd
4:52
Speaker 2: maybe once a year or so, but you know once
4:55
Speaker 2: a quarter that kind of thing. Those things I think
4:57
Speaker 2: are dead and gone and people are just much more
5:00
Speaker 2: quick to pivot to react to these headlines.
5:02
Speaker 1: Yeah, I understand that, and I guess the other component,
5:05
Speaker 1: at least for Air Canada, they do have they're going
5:09
Speaker 1: to continue flying into Newark and La Guardia, so it's
5:13
Speaker 1: not like they're not going to be getting anybody into
5:15
Speaker 1: the Greater New York City area. They just decided that
5:17
Speaker 1: it was I guess more convenient to stick with Newark
5:19
Speaker 1: and LaGuardia. So if you do have to fly from Montreal,
5:22
Speaker 1: at least you can get to an airline an airport
5:25
Speaker 1: that's closed.
5:26
Speaker 2: Yeah, that's true, and so let's not just because we're
5:28
Speaker 2: focused on Air Canada.
5:29
Speaker 3: That's just the headline that hit the right on the airline. Yea.
5:33
Speaker 2: But yeah, the routes they're suspending, they're going to eliminate
5:36
Speaker 2: about one percent of their network, which really isn't In
5:38
Speaker 2: some of these routes you would say, okay, yeah, that's
5:40
Speaker 2: a big city, like Salt Lake City is suspended until
5:42
Speaker 2: twenty twenty seven. The vaunted Vancouver to Fort McMurray route
5:46
Speaker 2: has been suspended. Also, you can no longer get to
5:49
Speaker 2: from Toronto to yellow Knife.
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Speaker 1: Right right. That's so funny that you mentioned this too,
5:54
Speaker 1: because they circled those in the article, like, I don't
5:56
Speaker 1: even I'd never even heard of Fort McMurray or yellow Knife,
5:59
Speaker 1: not that I have any you know, expertise in geography,
6:02
Speaker 1: but I suspect that ending flights to Fort McMurray and
6:05
Speaker 1: Yellowknife really aren't going to impact a whole lot of people.
6:08
Speaker 3: Yeah, we're probably gonna survive this.
6:09
Speaker 2: So you can tell which parts of these headlines were
6:11
Speaker 2: in the big font, which was in the little font.
6:13
Speaker 1: Well, and we can keep hearing reports. Give it some time,
6:16
Speaker 1: Give it some time, and these prices will go down.
6:18
Speaker 1: And I think that's inevitable. I can't admit, well here
6:21
Speaker 1: I am being optimistic about how long this conflict's going
6:23
Speaker 1: to laugh, but.
6:24
Speaker 3: I think you said that a month ago.
6:25
Speaker 1: Yeah, I know, if the conflict ends, then this impediment
6:28
Speaker 1: will disappear and things ultimately will get back on track again.
6:32
Speaker 1: This isn't some legislation that will need to be repealed.
6:34
Speaker 1: This isn't some lack of supply that you know, a
6:36
Speaker 1: supply that was online that completely disappeared. This is the
6:40
Speaker 1: obvious perils of war when you engage in it.
6:43
Speaker 3: Yeah, and I always look at the market.
6:45
Speaker 2: The stock market is a great indicator of the overall
6:48
Speaker 2: mood of the planet and how we're going to react to,
6:51
Speaker 2: you know, whatever the headlines are.
6:52
Speaker 3: So if you take this headline this morning that Iran has.
6:54
Speaker 2: Closed the straight of hormones, which I guess that was
6:56
Speaker 2: yesterday's headline, you know that you travel us back thirty
7:00
Speaker 2: years and read that headline, what happens that's out and
7:02
Speaker 2: out panic because we have choked off the you know,
7:04
Speaker 2: the only oil supply. I was before the United States
7:06
Speaker 2: was a leader in oil production, right, that would have
7:08
Speaker 2: been a huge impact right now futures as we're sitting
7:11
Speaker 2: here down about half percent. So we kind of wink
7:13
Speaker 2: at these things now. It's just not that big of
7:15
Speaker 2: a deal. Not to mention, we are desensitized to crazy headlines.
7:18
Speaker 2: Heavin knows in the last really ten years, you know, honestly,
7:22
Speaker 2: going back to September eleventh, I remember when before September eleventh,
7:26
Speaker 2: breaking news was really breaking news. Ever since September eleventh,
7:29
Speaker 2: breaking news, it will say breaking news, no changes announced
7:32
Speaker 2: at the whatever meeting. So everything is breaking news nowaday nowadays,
7:36
Speaker 2: and our politicians have doubled down on that, and that
7:38
Speaker 2: has desensitized us to these crazy headlines, which I don't
7:41
Speaker 2: think is the worst thing, because it's keeping us from
7:43
Speaker 2: making knee jerk decisions on our on our long term plans.
7:47
Speaker 2: I know my clients are a lot calmer with crazy
7:49
Speaker 2: headlines than they were, you know, twenty years ago.
7:52
Speaker 1: Well, and that is a good thing, it really is.
7:54
Speaker 3: So there you have it.
7:56
Speaker 1: And you know, the big problem with Ron apparently, in
7:58
Speaker 1: the start of the on again and off again negotiations,
8:01
Speaker 1: the straits open, know, the straits closed. We're not shooting
8:03
Speaker 1: each other. We're shooting each other. Apparently, the Iranians are
8:07
Speaker 1: divided between political leaders who seem to want to sit
8:09
Speaker 1: down on the table and come up with some resolution.
8:11
Speaker 1: And then of course the military hardliners are at the
8:13
Speaker 1: Revolutionary Guard who do not want to give up their
8:15
Speaker 1: power and are pursuing a more warlike posture. So once
8:21
Speaker 1: they get their act together, maybe we'll have some semblance
8:23
Speaker 1: of peace in within the within the Iranian government. But
8:27
Speaker 1: until they figured out who's in charge, it looks like
8:29
Speaker 1: it's on again, off again into the future.
8:32
Speaker 3: Brian, that's my understanding.
8:33
Speaker 2: Yeah, until then, headline whiplash. So we'll just have to
8:35
Speaker 2: learn to tolerate it. But and you know, we do
8:37
Speaker 2: have an administration that wants to throw gas on that
8:39
Speaker 2: fire to force a you know, to force a resolution
8:42
Speaker 2: sooner rather than later by simply saying that, you know,
8:44
Speaker 2: it's staying things that aren't necessarily true.
8:46
Speaker 1: I know, I know, I know, we could have another
8:49
Speaker 1: hour long discussion on that, but We're not going to
8:51
Speaker 1: We're gonna pivot over to how tax free filing system,
8:54
Speaker 1: you know, having the IRS do your taxes for you,
8:56
Speaker 1: apparently victim of effective marketing.
8:59
Speaker 3: But ive p are the the talk station. Hey nineteen IF.
9:04
Speaker 1: Video KCD talk station A happy Monday, Money Monday, Brian James,
9:07
Speaker 1: I'm all with financials on the phone. We'll get to
9:08
Speaker 1: the money matters. But before we pivot off of Air
9:11
Speaker 1: Canada's trekers, like, what are those two cities you guys
9:14
Speaker 1: were talking about, Fort McMurray and Yellowknife, So don't worry
9:18
Speaker 1: about it. Those are nowhere near the United States. Fort
9:20
Speaker 1: McMurray somewhere near Calgary and Yellowknife up in the Northwest Territories.
9:25
Speaker 1: According to Jos Tracker, somewhere up in the Northwest Territory.
9:28
Speaker 2: Show, it's furiously changing his summer vacation plan, right, it
9:31
Speaker 2: really is.
9:32
Speaker 3: You and I are on our own. He's got to
9:33
Speaker 3: deal He's got to deal with this. Okay.
9:35
Speaker 1: Now, I looked up a real fun fact, Brian James,
9:38
Speaker 1: and I think I discovered the reason, not only behind
9:40
Speaker 1: why that no one's using this this free file portal
9:44
Speaker 1: from the IRS to have the IRS do their taxes,
9:46
Speaker 1: and you'll dive into the meat potatoes of that one.
9:48
Speaker 1: But real quickly, I think I've stumbled on the reality
9:50
Speaker 1: of why you and I can't have a flat tax one.
9:53
Speaker 1: They manipulate the hell out of her behavior using the
9:55
Speaker 1: tax code. But apparently it is a multi, multi multi
9:58
Speaker 1: billion dollar in industry. Taxpayers spend, according to artificial intelligence anyway,
10:03
Speaker 1: one hundred and forty eight billion annually and out of
10:05
Speaker 1: pocket costs for tax preparation. But when you account for
10:08
Speaker 1: the time spent the total economic compliance burden, it's north
10:12
Speaker 1: of four hundred and sixty four billion dollars every year.
10:16
Speaker 1: That is an entire industry built on a complex tax code.
10:19
Speaker 1: Brian James and I think we've also identified at the
10:22
Speaker 1: same time the reason that we haven't heard about that
10:25
Speaker 1: doing our taxes on an index card thing from Trump's
10:27
Speaker 1: first campaign, right.
10:28
Speaker 3: That went away immediately.
10:29
Speaker 2: There's a lot of money in bureaucracy, unfortunately, and that's
10:33
Speaker 2: literally what this is. So you know, let me give
10:35
Speaker 2: you a perfect example. We all do our taxes twice, right,
10:38
Speaker 2: we do our thing. We either you know, we're using
10:40
Speaker 2: TurboTax or whatever the tax layer, whatever the software is,
10:43
Speaker 2: or you're paying somebody to do it. You submit your
10:46
Speaker 2: taxes and then the taxing authorities will look at it
10:49
Speaker 2: too to make sure you didn't screw it up.
10:50
Speaker 3: Good point, and that's at the federal level. The state.
10:52
Speaker 2: Look, I have a client who happens live in California.
10:53
Speaker 2: I know there's a lot of passion around that in
10:55
Speaker 2: California is a high spendy tax state, of course, but this,
10:59
Speaker 2: this client of mine sold some property way back in
11:01
Speaker 2: twenty twenty one and we're due. I'm not going to
11:04
Speaker 2: claim to be an expert on California taxes, but they
11:06
Speaker 2: were due. The way it works out there a distribution
11:09
Speaker 2: from the state of California totally thirty eight thousand dollars.
11:12
Speaker 2: And these are not bazillionaires. This is a family that
11:14
Speaker 2: owned a couple of rental properties, not that big of
11:16
Speaker 2: a deal. California came to them and said, hey, this
11:19
Speaker 2: four year deadline is sneaking up on you. If you're
11:21
Speaker 2: not going to refile your twenty one taxes, we're going
11:23
Speaker 2: to keep your thirty eight thousand dollars. And it occurred
11:25
Speaker 2: to me, we do our taxes twice. California did their
11:28
Speaker 2: taxes correctly and informed them that they had overpaid. So
11:32
Speaker 2: why are we doing this? Why can't we turn the
11:33
Speaker 2: whole thing around? Tell me what you think my taxes are, government,
11:36
Speaker 2: and give me some time to review it, and then
11:38
Speaker 2: I will either approve or fight it. Why am I
11:41
Speaker 2: doing them just so that you can turn around and
11:43
Speaker 2: do them. But you just mentioned it because there's a
11:45
Speaker 2: half a trillion dollars moving around this industry.
11:47
Speaker 1: Man, that is just so so hard to fathom. And
11:50
Speaker 1: then to me, you know, my Libertonian and my little
11:53
Speaker 1: ill libertarian coming through here. But I just really detest,
11:57
Speaker 1: regardless of the amount of money that we spent in
11:58
Speaker 1: the economy that's built around complex tax code, I just
12:01
Speaker 1: really detest that our government uses it to manipulate our behavior.
12:04
Speaker 1: I mean, businesses make decisions that they never would make
12:07
Speaker 1: just because it inures to their benefit under some provision
12:10
Speaker 1: that was written into the tax code many times just
12:14
Speaker 1: for that specific company or industry. So it's the ultimate
12:18
Speaker 1: vehicle of control.
12:19
Speaker 3: Oh absolutely. And lobbying itself.
12:22
Speaker 2: Lobbying is a massive industry in this country, and everything
12:25
Speaker 2: that everything the sun shines on within the United States
12:28
Speaker 2: can be turned into profit. And that is just how
12:30
Speaker 2: we run this society, and we have for hundreds of years.
12:32
Speaker 2: If you want, people come all the time this time
12:34
Speaker 2: of year, going how can I lower my taxes?
12:36
Speaker 3: How can I lower my taxes?
12:37
Speaker 1: Well?
12:37
Speaker 3: Are you a W two wage slave? Do you own
12:40
Speaker 3: a business?
12:40
Speaker 1: No?
12:40
Speaker 2: Do you own property? Do you own rental real No? No, no, no,
12:43
Speaker 2: Well you lost all your deductions. You're not even keeping
12:45
Speaker 2: receipts at good will anymore because of the way they.
12:47
Speaker 3: Adjusted the standard deduction.
12:48
Speaker 2: The tax benefits, the tax the ability to manipulate the
12:51
Speaker 2: tax code goes to the highest payers.
12:54
Speaker 3: Right, that's where the that's where the lobbying happens.
12:56
Speaker 2: That's where the ability to find loopholes, not even loopholes,
12:59
Speaker 2: just straight up laws. You know, there's all kinds of
13:01
Speaker 2: things out there. If you're curious about this, look up
13:03
Speaker 2: something called qualified business income where if you're the right
13:06
Speaker 2: kind of business, you just get to you just get
13:08
Speaker 2: a twenty percent credit on your taxes. There are a
13:10
Speaker 2: lot of ways to generate to move properties around and
13:14
Speaker 2: do ten thirty five tax free exchanges on real estate,
13:16
Speaker 2: all that stuff. If you've never heard of it, then
13:18
Speaker 2: you probably aren't one of those people. But that's what
13:21
Speaker 2: we elect. We elect people to Congress who put those
13:23
Speaker 2: types of rules in place and take away the benefits
13:26
Speaker 2: on the other end. Here's another one occurred to me
13:28
Speaker 2: over the weekend. Can you hear them rolling?
13:29
Speaker 3: I'm getting my soapbox a little bit. I'm with you, brother.
13:32
Speaker 3: So here's another one that occurred to me. I had
13:33
Speaker 3: client last week.
13:35
Speaker 2: We were trying to figure out where this wroth portion
13:37
Speaker 2: of his four oh one K came from, and I
13:38
Speaker 2: was kicking myself.
13:39
Speaker 3: I shouldn't have seen this coming. He suddenly has a roth.
13:41
Speaker 3: He hadn't chosen that because he wants the pre tax benefits.
13:44
Speaker 2: Well what Then we finally realized that it came automatically
13:47
Speaker 2: because he was using the catchup provision. Right if you're
13:50
Speaker 2: over thirty or over fifty, rather you can put dollars
13:53
Speaker 2: over thirty thousand dollars into your four oh one k.
13:56
Speaker 2: The first twenty four or so is you can be
13:58
Speaker 2: whatever you want, pre tax or roth.
14:00
Speaker 3: That's your choice.
14:00
Speaker 2: But now new rule for twenty twenty six it has
14:03
Speaker 2: to be rough. You do not have a choice. So
14:05
Speaker 2: if you were wanting to use that catchup to save taxes,
14:08
Speaker 2: you just lost a deduction. That's how it's little things
14:11
Speaker 2: like this, how we pay for all these tax cuts
14:13
Speaker 2: that we purport to give, but you're not getting one
14:15
Speaker 2: as a wage slave trying to take advantage of that
14:18
Speaker 2: pre tax catchup you now have to pay taxes ought
14:21
Speaker 2: to put it on the raw side. That's not the
14:22
Speaker 2: end of the world. But you didn't get a choice.
14:24
Speaker 1: In you didn't get a choice, Brian James. We're gonna
14:26
Speaker 1: cut a little alarming for some folks out there when
14:29
Speaker 1: it comes. Made me mad, so I can hear it, man,
14:32
Speaker 1: But you know what, I share your anger along those
14:34
Speaker 1: lines coming up the six figure limit for Social Security? Wait,
14:39
Speaker 1: what social Security reform? You probably aren't gonna like it
14:42
Speaker 1: from my friends out there that may be made a
14:44
Speaker 1: little bit more and paid more into the program. But
14:47
Speaker 1: change is gonna have to come. It's going to be
14:48
Speaker 1: a train wreck if it doesn't. So hey twenty nine.
14:52
Speaker 1: Here I think about Kercity Talk Station. One more segment
14:54
Speaker 1: with Money Monday, Brian James, more financial. This one's gonna
14:58
Speaker 1: bother some people. It's gonna I be a welcome embraced
15:01
Speaker 1: from the wealth redistributionist out there in the world. We
15:04
Speaker 1: have to start from the proposition Soca's security is broken.
15:07
Speaker 1: Call it what you want, but that's how I'm going
15:09
Speaker 1: to boil it down to define it. So now they're
15:10
Speaker 1: proposing potential fixes. This is a white paper being circulated
15:14
Speaker 1: by some groups saying, well, we need to cap the
15:16
Speaker 1: amount that goes out into the world, in other words,
15:18
Speaker 1: income based determination of what your social security benefits are
15:21
Speaker 1: going to be. Brian, I don't know. Increase progressivity is
15:26
Speaker 1: mentioned specifically here. How's this going to work and is
15:30
Speaker 1: this going to actually fly? Brian James.
15:33
Speaker 2: Well, let's first of all kind of set the table
15:34
Speaker 2: a little bit here. This is not actual policy that
15:37
Speaker 2: has hit the floor of Congress. This is coming from
15:39
Speaker 2: the Committity for a Responsible Federal Budget. They're just a
15:42
Speaker 2: think tank. They are fairly nonpartisan, though, and so they
15:47
Speaker 2: mainly focus on reducing on the federal deficits, debt reduction,
15:49
Speaker 2: that kind of stuff, long term sustainabilities of programs like
15:52
Speaker 2: Social Security and medicare. And they've been around for close
15:55
Speaker 2: to fifty years, so probably an opinion worth listening to.
15:58
Speaker 2: At the end of the day, you know what you
15:59
Speaker 2: just hint to that sociecurity is broken, that math don't
16:02
Speaker 2: math anymore, not enough flowing in to fulfill what needs
16:05
Speaker 2: to flow out, and there's only two levers we can pull.
16:08
Speaker 2: We can either increase the inflow or we can decrease
16:11
Speaker 2: the outflow, and this would happens to fall in that
16:15
Speaker 2: second category. So what they are proposing capping Social Security
16:18
Speaker 2: benefits at one hundred thousand dollars a year for married
16:21
Speaker 2: couples and fifty thousand dollars for individuals who are at
16:23
Speaker 2: full retirement age, and this would adjust based on claiming age,
16:27
Speaker 2: maybe one hundred and twenty four thousand if you wait
16:29
Speaker 2: until seventy, or it's lower. There's a lower limit if
16:32
Speaker 2: you claim at sixty two, and that basically matches the
16:34
Speaker 2: ages that you can.
16:36
Speaker 3: File for Social Security.
16:37
Speaker 2: So the point of this is a very targeted benefit
16:40
Speaker 2: cap on high earners, not a universal cut across the board.
16:43
Speaker 2: So what we're talking about again is reducing the outflow
16:46
Speaker 2: to fix Social Security. So you can guess who's not
16:49
Speaker 2: gonna like this and who's gonna love it. And I
16:52
Speaker 2: would bet that if this ever hits the floor of Congress,
16:54
Speaker 2: it would be shot down very quickly because it's too
16:57
Speaker 2: easy to yell and scream about how we're reducing benefits
17:00
Speaker 2: that people paid for.
17:01
Speaker 1: Well, you know, this always provides a welcome opportunity to
17:03
Speaker 1: do Hm. What if what if we didn't have Social
17:06
Speaker 1: Security and I actually put into a four to one
17:08
Speaker 1: k roth or whatever personal account every paycheck the money
17:13
Speaker 1: they take out for Social Security. If I was able
17:15
Speaker 1: to keep it myself, and maybe I was mandated to
17:17
Speaker 1: withhold it and put it into an investment account, what
17:20
Speaker 1: would that translate into in terms of a monthly check
17:24
Speaker 1: at retirement versus what we are told were allowed to
17:28
Speaker 1: have from federal government.
17:29
Speaker 3: Brian James, Well, yeah, it would be It would be enormous.
17:32
Speaker 2: I'm not enormous the reason to do it, But what
17:34
Speaker 2: you're doing is you're saying, Okay, I want to put
17:36
Speaker 2: it in the stock market because my four one k
17:37
Speaker 2: has worked out well for me for the last half
17:39
Speaker 2: century or so. Yeah, And that's a true statement. The
17:43
Speaker 2: Social Security, though, is mainly funded by extremely safe investments.
17:47
Speaker 2: And and here's the big problem. Those extremely safe investments.
17:50
Speaker 2: While we were enjoying our two and three percent mortgages,
17:52
Speaker 2: those extremely safe investments were also yielding the same interest
17:56
Speaker 2: that we were paying on those mortgages, roughly that two
17:59
Speaker 2: and three percent. Meanwhile, Social Security has baked in those
18:03
Speaker 2: eight percent increases. Every year you don't file for it,
18:06
Speaker 2: you get an eight percent increase. And that is hard math.
18:08
Speaker 2: It doesn't float based on inflation, it doesn't float based
18:11
Speaker 2: on interest. It's just plain eight percent.
18:12
Speaker 1: Isn't that an easier fix, Brian? Maybe just tie it
18:15
Speaker 1: to inflation. I know you're gonna have some spikes when
18:17
Speaker 1: inflation is high, but yeah, most of the time you're
18:20
Speaker 1: riding around two three percent, right, you.
18:22
Speaker 2: Would think, and I think that I think that maybe,
18:24
Speaker 2: and I'm kind of speculating a little bit, maybe that
18:26
Speaker 2: fixed eight percent increase is what they baked in forever
18:29
Speaker 2: ago to go to offset the fact that they are
18:31
Speaker 2: investing pretty conservatively. And so I don't know, I don't
18:35
Speaker 2: even like the way I said. I'm just trying to
18:37
Speaker 2: think through that. Why would we have baked our painted
18:39
Speaker 2: ourselves into a corner like this? But regardless, you know,
18:42
Speaker 2: there are a lot of proposals coming. Nobody's gonna bring
18:45
Speaker 2: one of these to the floor of Congress until our
18:47
Speaker 2: backs are against the wall, meaning that you know, we're
18:51
Speaker 2: seven or eight years away from when we're supposedly going
18:53
Speaker 2: to be hitting the skids here.
18:55
Speaker 3: That means we are just now starting to elect the senators.
18:57
Speaker 3: Remember senators have six year terms. We are finally starting
19:01
Speaker 3: to put the people in office who will be in
19:03
Speaker 3: office when we finally hit this. Some of these people
19:05
Speaker 3: will be involved on the floor on a debate to
19:07
Speaker 3: decide which way are we going to go.
19:08
Speaker 2: We're going to reduce the outflows, We're going to increase
19:10
Speaker 2: the inflows. There are unteaen bazillion ways that we can
19:13
Speaker 2: do either of those things, but at the end of
19:15
Speaker 2: the day, that's all it is. So the people we're
19:17
Speaker 2: electing now are the ones who will be involved in
19:19
Speaker 2: those discussions.
19:20
Speaker 1: And no question about it. Well, if they don't do anything,
19:23
Speaker 1: you're going to expect. What is it a predicted to
19:24
Speaker 1: be a twenty five percent cut from whatever you're planning
19:27
Speaker 1: on getting right.
19:27
Speaker 3: Now, that's one of the proposals, right.
19:29
Speaker 2: It could be as simple as let's just cut everybody's
19:31
Speaker 2: benefits by twenty four percent. And actually, when I do
19:33
Speaker 2: financial planning for people who are in this situation, I'm
19:35
Speaker 2: in my early fifties. This is going to affect affect me.
19:37
Speaker 2: Whatever it is, then we'll do. I want people to
19:40
Speaker 2: understand the impact of it. Let's do the hunky door approach.
19:42
Speaker 2: Everything happens exactly as you were told it would. You
19:44
Speaker 2: get exactly the dollar amount on your Social Security report.
19:47
Speaker 2: And then let's run it again, and we're going to
19:49
Speaker 2: knock off twenty five percent from that Social Security income
19:51
Speaker 2: stream and make sure that you can make that gap
19:53
Speaker 2: if it does happen.
19:55
Speaker 1: Oh, Brian James, we all have our popcorn out on
19:57
Speaker 1: this one. But let's face it, this has been a
19:59
Speaker 1: train wreck unfolding in slow motion since I was in
20:02
Speaker 1: high school or maybe before that.
20:04
Speaker 2: It was one of the very first pop planning financial
20:06
Speaker 2: planning techniques that I learned, not technique but issues that
20:09
Speaker 2: I learned as a young CFP, and I remember thinking
20:12
Speaker 2: at the time, oh my gosh, this is going to
20:14
Speaker 2: happen tomorrow.
20:14
Speaker 3: That was thirty years ago. Brian. We just keep kicking
20:17
Speaker 3: the can. We always worry about it, but we never
20:19
Speaker 3: do anything about it.
20:20
Speaker 2: So the best thing I can do is, like I
20:22
Speaker 2: just said, let's run your numbers both ways and see
20:24
Speaker 2: if this is really something you have to sweat.
20:26
Speaker 3: Yep.
20:26
Speaker 1: Love that scenario you present, you know, the best case
20:29
Speaker 1: scenario all the way to the worst possible. Oh my god,
20:31
Speaker 1: we're all going to die scenario. So and you get
20:33
Speaker 1: confidence when you look at it over the course of
20:36
Speaker 1: how your investment plan has worked out and hopefully you
20:38
Speaker 1: have someone in your corner helping you out with that.
20:40
Speaker 1: And I appreciate Brian James what you're doing for your clients,
20:42
Speaker 1: and thank you for spending time with my listeners and
20:44
Speaker 1: me every Monday for this important segment.
20:46
Speaker 3: You bet you we will talk to you next week.
20:48
Speaker 3: And go Reds.
20:49
Speaker 1: Go Reds eight thirty five right now if you bou
20:51
Speaker 1: Kercity Talk Station and go Magistrate Susan Luken. She's running
20:55
Speaker 1: for municipal Court judge and we're going to learn what
20:57
Speaker 1: she's all about.