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Bullseye Retirement: Hit the Mark with Today's Financial Steps! · Money In Motion with Klaas Financial

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And our phone lines are open for you right now. Six oh eight three
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two one thirteen ten. That's three two one thirteen ten. Love to have
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you join us this morning with our retirement planning professionals from Class Financial. Joined
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this week by CJ. Closs and Malia Quavis. As mentioned, they come
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to us from Class Financial to website Class Financial dot com. That's k l
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aa S Financial dot com. They're telephone number six O eight four four two
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five six three seven. No charge for that initial get to know you appoinment
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Achlass Financial. It will be complimentary to you again. They're number six oh
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eight four four two five six three seven the number to get on the air
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this morning, six O eight three two one thirteen ten. That's three two
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one thirteen ten. As mentioned, Joined this morning by CJ. Closs and
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Malia Quavis of Class Financial. CJ. How you doing this week? I'm
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doing great? How are you? Sean? Doing really well? Great to
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chat with you, Malia? How are you on this beautiful morning? Very
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good? Looking for some more rain drops? I think I think so.
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And I'm looking at that forecast and we'll get a couple here and there for
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sure, and we've got got a show ahead talking about some important stuff when
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it comes to the right amount to put away when it comes to your retirement
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accounts. So I know that's a big question for a lot of folks,
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and that right target number for future retirement savings. We'll get into those details
1:11
with CJ and Malia. In just a moment. I had mentioned the website
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costs Financial dot com. That's k l aa S Financial dot com, but
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I failed to tell you anything about it. Well we'll tell you now.
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It's a fantastic website and resource learn more about class financial. There's separate divisions.
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You can also sign up right online for the weekly market Paul's newsletter.
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It's a really cool weekly email that you'll receive give you a little link to
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what's been happening in the markets, as well as the link to the most
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recent podcast. Speaking of the podcast, that's available for you at cossfinancial dot
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com. That's k l a a S Financial dot com. It's there as
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well, and the number six o eight four four two five six three seven.
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No charge for that initial get to know your appointment at Loss Financial.
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It will be complementary to you again their number six oh eight four four two
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five six three seven cool thing we do on this show each and every week
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is the Class Quiz Quitch the week chance for you to win a fantastic prize
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from our friends at Class Financial. This week you have a chance to win
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a twenty five dollars gift card to Ace Hardware. Tell you how you can
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win that a little bit later on the program, Little tiptough I would say,
2:07
listen close to the show because oftentimes built the question and answer to the
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Class Quiz question of the week come up during the program, and before we
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get rolling on this week's topics, let's take a look back at last week's
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question the week and get the question and answer there as well. Malia,
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Yeah, so last week we had a great conversation about spousal Social Security benefits,
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just so that people could understand maybe they're going to be looking at their
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own benefit or maybe an ex spouse's benefit, et cetera, et cetera.
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So a really great conversation on that, and if that applies to you,
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please listen back to last week's Our question was what is the earliest age that
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you can file for or receive spousal benefits from Social Security? Is it age
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sixty two or age seventy. So we had one listener who was listening very
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very clearly, and Emily I v wannakee congratulations to her. She said that
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the correct answers age sixty two, which is correct, So write that down.
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Listen carefully for today's question. And as Malia mentioned, if you missed
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any part of last week's show or today, I know sometimes in the morning
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you get a little little busy step out of the car, grab some coffee,
3:13
maybe dropping the kiddos, the grandkids off at school. You miss part
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of the program. You can always listen back at class financial dot com.
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You'll find the podcast right there. That's class k l aa S Financial dot
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com. Telph umber six o eight four four two five six three seven and
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the number to get on the air this morning six eight three two one thirteen
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ten. That's three two one thirteen ten gets you on the ear with Malia
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and CJ of Class Financial. Now today we're going to talk about finding that
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right target number for your future retirement savings and h CJ. I got to
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ask, how would you suggest we even begin to figure out what the right
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amount is that we would need to be putting away into our retirement accounts?
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Today as we kind of look towards and plan towards the future. Sean.
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So, Mollie and I are certainly financial advisors and are part of the leadership
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team here at Class Financial, but we are also just lay people who who
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live life and have friends who are not clients of ours in our communities and
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our kids friends, and so it's always interesting for us to hear people talk
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in the community about this and don't worry, we're not judging you when you
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talk about this, and you're not clients of ours, but we are listening,
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and so often we will hear these misnomers, right, like, oh,
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I was just reading this article in Wall Street Journal or in Barons or
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whever, and man, they're saying, now, with inflation, I need
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like two and a half million to hellers to retire successfully, and like I'm
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just not on pace to do that. And I'll be frank with you.
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Hear that, I'm like, oh, you so need a financial advisor.
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Oh my goodness, you need some help and direction, because random numbers plucked
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out of thin air are meaningless. So listen. Most of the time those
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articles are trying to sell you on something, right, like oh, you
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need two and a half million dollars come invest with us, right, and
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so I just cannot encourage you enough. We're going to we're going to dig
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into this a little bit today, but even what we tell you today is
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not going to be is not going to fully illuminate your retirement. Let me
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repeat that, even what we discuss here today is rules of thumb, which
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will hopefully be more academic than where you're going to read it in an article
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somewhere, but it still is only a rule of thumb and will not apply
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to your situation. So if you really want to get a sense of how
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much do you need, tip number one go work with somebody to actually run
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the calculation, because it will look different for you than what we're about to
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talk about here. So you know, being that many of our listeners are
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likely over fifty years old, retirement that looked like it was quite a few
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years away is now maybe only ten or fifteen years or less away. So
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the question is, of course have I done enough or am I doing enough
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to retire comfortably? So the question that many people struggle with is how much
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will you or how much will I really need in retirement and investment accounts?
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When I retire to maintain a consistent and standard of living. Now, experts
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will often say that you generally need between seventy to eighty percent of your pre
6:06
retirement income as you enter retirement. However, I just want to warn you
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that is a huge rule of thumb that may not even be close to what
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you need. You could need more, or you could need way less.
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It actually depends on your circumstances, surprise, surprise. And here'd be a
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simple example of this. If I'm earning one hundred thousand dollars a year,
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and let's say between my federal taxes, my state income taxes, my FIKA
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known as Social Security, and Medicare, which is about seven and a half
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percent of my income, my health insurance, my dental insurance, and four
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to oh one K contribution, and the list goes on and on. Let's
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say for one individual, that's seventy percent of their income, but for another
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individual that's fifty percent of their income goes to all those taxes and benefits.
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Well, you can already see that number or percentage of gross pre retirement income
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does not translate the same way to those same two individuals. And if that's
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not confusing enough, let's add one more layer. What if I pay off
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my mortgage before I retire, right before I retire. Well, suddenly the
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two thousand dollars a month that was going towards my principal and interest payment on
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the mortgage, I don't need any more in retirement, and so my need
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for income replacement is lower given that I have mitigated debt. So I know
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for many people who are not numbers folks, your heads might be spinning right
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now. You might be saying, what is he talking about? And so
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listen, this is why people like us have jobs. As a matter of
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fact. To kind of really make a strong point about this, I was
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talking to our surgeon, and yes, I do say our surgeon, because
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my wife, myself, and our daughter have all torn our acls, believe
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it or not. And we were speaking to our surgeon, because the same
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surgeon who's reconstructed all of our acls. And he made this funny comment to
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me that it was just so enlightening. He said, CJ, I'm really
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just a glorified construction worker. And I said what, he goes, Yes,
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I do the same thing that you know. That's somebody who's in the
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trades, does I take some hammer and nails, and I cut some stuff
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and I put it back together. What is the point that he's making.
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He is so good at what he does that he understands the simplest form of
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it. It's just cutting and reconnecting. In a similar way, we as
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retirement planners would say to you, we understand so deeply how this topic works
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that for us we could do this in our sleep. I could spend ten
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minutes with you and tell you about how long how much you would need to
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replace your income to have a similar lifestyle in retirement. But for you,
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the idea of doing knee surgery or the idea of having to figure out what
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it would take to replace your income is overwhelming, right, just like for
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me the idea of doing surgery is overwhelming. But just recognize this is why
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people like us have jobs. We exist because we get deep down into the
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weeds on these topics every single day, and for us, it's not difficult
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to figure out what you would need to replace your lifestyle. Talking this morning
9:09
with CJ. Closs and Malia Quavis, they are a retirement planning professionals from
9:11
Class Financial. Their website class financial dot com. That's Class Klaas Financial dot
9:18
Com. Deph it over for the office right here in Madison. Six oh
9:20
eight four four two five six three seven. No charge for the initial get
9:24
to know your appointment at Class Financial. It will be complimentary to you again
9:26
their number six oh eight four four two five six three seven. Phone lines
9:31
are open as well if you've got a question. Six oh eight three two
9:33
one thirteen ten. That's three two one thirteen ten. Head down the road
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to Stoton and Bill joins us. Bill, welcome to the program. You're
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on the air with CJ. Closs and Malia Quavis. Hey, guys,
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how you doing good? How are you good? So my thing is is,
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so I've got three six years in the Fedtle government, and so I've
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got my pension and I'm tickling a million in my search savings. So I'm
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looking at it. And we've paid off for how and we don't have any
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major debts. We make sure we have a few other things. I'm only
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fifty seven, so I'm looking at this going. You know, I could
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retire a year ago, but because I had the time in So my question
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is, is you with what we've seen in the last three years, you
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know, having you know a million or a million and a half and you
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know in investments and not not coming your house. Are we I mean,
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do we need to go to kick the ball down the road more or do
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you think that we're in a position where we can successfully make a goal of
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retirement. I love that you called in, Bill, thank you so much.
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So listen everybody. Bill is asking such a good question. He's saying,
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Hey, you're talking about replacement of income here today and how much I
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need. And I'm one of those people where I've been working for the government
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for a long time and my pension, Bill, you don't have to answer
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this, but my pension probably replaces a really solid portion of my income over
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that timeframe, or even your president income, and so you know, and
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I'm pretty young compared to the average person when they retire. So do I
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have enough now? Obviously, build the answers, I don't know. I
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don't know. You know what you spend and if there's any other debts besides
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paying off the mortgage, you know, so on and so forth. So
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there's my disclaimers. But generally speaking, my comment to be, we work
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with people like you all the time, Bill, who do retire at fifty
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seven Now does that mean you should, because because often I remind people retirement
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just isn't just about money. It's often about psychology, and it's about mental
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health, and it's about routine and purpose. Right, So you get my
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point. Retirement is much more than just money. But numerically, you could
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be the prime example of somebody who could retire at fifty seven and not even
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need your investments much. Right, great, you know, the it just
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comes down to with the uncertainties and you know, the hard the hard cost
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that's gone up roughly twenty percent over the last three and a half years.
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I mean, I don't want to be that person that you know, like
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we remember my great grandparents and stuff like that, and they retired in the
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seventies and then all of a sudden, Jimmy Carter came along and everything came
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on glue, and all of a sudden, they had their social security because
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everybody relied on social security back then. So they had that, and they
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had the farm and they had a little bit of acreage and whatever, and
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they thought they were fine. Well then all of a sudden, not that
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their investments stayed where they were because it was stagnant. Because they owned land
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and of course the land dropped, So I don't want to be that person
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that has to sell land in retirement so that I can maintain my lifestyle totally.
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And that's the biggest there. Okay, go ahead, You're you're exactly
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right. So to your point, Bill, it doesn't you're getting into the
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weeds around. Hey, if I retire at fifty seven, I could be
12:50
around for a long time and over that time frame if I have one primary
12:54
source of income, which is my government pension, plus you know, decent
12:56
investments, but those investments are contributed to anymore. What if we run and
13:01
do hyperinflation like we did in the seventies, late seventies, early eighties Carter
13:05
Reagan administration era. What could that do? And could it put me in
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a position where I felt like I was good at fifty seven, but at
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eighty five I'm running low on cash? The answer is absolutely. That's a
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very legitimate concern, and it's the reason why while I love that you called
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in to give an example of how people can retire in their fifties, it
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doesn't mean you should, right. It depends who you are, what you're
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trying to accomplish, Your risk aversion, your flexibility. As a matter of
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fact, flexibility is a big part of it. What we tell people is
13:33
if your goal is to retire and your job's killing you, we can help
13:35
you do that, but you're just going to have to be flexible because the
13:39
time frame that you're retiring over is so long that you're asking for trouble.
13:43
Right. We can't create guaranteed plans over fifty year timeframes, as you can
13:48
imagine, and so flexibility is a big part of whether or not somebody should
13:52
retire early. But Bill love that you called in such a great question,
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and no, people, we did not plant him as a caller, So
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thank you. Yes, a good question to feel great to hear from you
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this morning, and that clears open line. If you've got a question for
14:03
cgen Malia, our retirement planning professionals from Class Financial love to get you on
14:07
the air six oh eight three two one thirteen ten. That's six soh eight
14:09
three two one thirteen ten. The website class financial dot com. They're tel
14:13
for number six so eight four four two five six three seven. No charge
14:16
that the initial gets no the appointment tech Loss Financial. It will be complimentary
14:20
to you and CJ we were talking about yet you had a great example of
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that income discussion. Let's kind of talk about some of those action steps and
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things that folks should be doing to be proactive here. Yeah, So in
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the midst of this discussion, which is all about how much do I need
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to save to replace my standard of living when I get to retirement, which,
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as we just laid out and as Bill you know, so eloquently called
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in and kind of really hammered home, it depends. It depends on your
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circumstances. But here's some action steps to to really increase the probability that you
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will have more than enough. Action number one is regarding your like four oh
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one K and four h three B accounts. If you have one of these
15:05
accounts, the question is are you maximizing your your contribution every single year?
15:09
So in twenty twenty four, if you're fifty or older, you can be
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contributing up to twenty three thousand dollars and then adding a catch up contribution if
15:18
you're over the age of fifty for seventy five hundred dollars for a total of
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thirty thousand, five hundred dollars. So again, if you're over fifty,
15:26
you could be putting in as much as thirty thousand, five hundred dollars into
15:28
your retirement account. So there's one way to say, hey, if I
15:33
feel like I'm behind it all or if I don't know, well, then
15:35
take advantage of saving as much as you can into one of those tax preferred
15:39
employer sponsored retirement plans. Another action step would be, what if you know,
15:43
if I don't have access to a four h one K or if I
15:46
want to save even more, then are you at least contributing to an IRA
15:50
and individual retirement account? Those limits are seven thousand dollars if you're under the
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age of fifty or eight thousand dollars if you're over the age of fifty when
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you add the catchup contribution, So you get the idea here, am I
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contributing to a four oh one K account? Am I contributing to an IRA
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account? There's also within these buckets there's known as WROTH options, so there's
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pre tax and WROTH. We're not going to get too deep into this today
16:18
because we're just focused on are you saving enough? But you know where you
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save and how you save into what tax bucket matters, and you could talk
16:25
to your accountant or financial advisor about that. And remember that whether you're adding
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to a WROTH or the traditional four oh one K, these limitations we're talking
16:34
about are combined limitations. So when we say you can put you know,
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thirty thousand, five hundred dollars into your four oh one K in twenty twenty
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four, if you're over the age of fifty, that's not thirty thousand,
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five hundred into the pre tax four oh one K plus thirty thousand, five
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hundred into the WROTH four o one K. It's actually a total singular combined
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employee contribution maximum. And then you know, a couple other just quick action
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steps here to think about would be if you get a promotion or a raise,
17:03
consider increasing your contribution to your retirement account. Accordingly, we actually have
17:07
this adage in our firm, when in doubt, create a robotic behavior.
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So let me repeat that, when in doubt, create a robotic financial behavior.
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Here's the idea. When money comes in, whether that be we find
17:21
money on the sidewalk or we get a promotion, are something happens in our
17:26
brains and we think about all the things we can do or spend that money
17:32
on. So if we're charitably inclined, Suddenly all the charitable thoughts go out
17:37
of our brains, right, we just don't think rationally about it anymore.
17:40
Or if we're retirement inclined, suddenly our desire to save into retirement goes away.
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It's because something chemically is happening in our brain that is overriding those typical
17:48
responses that we would have. So therefore, we encourage families or spouses to
17:52
sit down and say, if we add one more dollar to our income,
17:57
what will be the breakout of that dollar? Right? And say say it's
18:02
ten percent towards your charity. This is known as like a tithe. So
18:04
say it's ten percent towards your church, your charity, ten percent towards retirement,
18:10
ten percent towards the kids, and seventy percent towards lifestyle. This is
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just hypothetical. Well, then when you get that raise or promotion or cost
18:19
of living adjustment, there's no question you've already determined the robotic behavior, and
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that is one of the keys to a successful retirement is delayed gratification. You
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must be disciplined enough to delay your gratification, and one of the best ways
18:36
to do that is create robotic behaviors. And finally, remember that building up
18:41
your health savings account can also be another great way to bring down your taxable
18:45
income and kick some money out into the future when your medical expenses might be
18:48
higher. So remember hsas. You have to have an HSA qualifying health insurance
18:53
plan to even be eligible to contribute to an HSA, and there's some limits
18:59
on these. So you're an individual, the max you can put in is
19:02
four thy one hundred and fifty and for a family, the the amount is
19:06
eight thousand, three hundred dollars. And then there's an additional catchup contribution of
19:10
one thousand dollars per individual if you're over the age of fifty five. So
19:15
you get the idea here, there's you can again be saving into a health
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It's almost like a health IRA, if you want to think about it that
19:23
way. I'm getting a deduction when I put the money in, but it
19:26
is for health related expenses only, and I may not need that money today,
19:30
but all that money can live on into the future and be available for
19:33
my future health related expenses. Talking this morning with CJ. Coss and Malia
19:38
Quavis, they are our retirement planning professionals from Class Financial phone lines are open
19:42
for you if you've got a question. Six oh eight three two one thirteen
19:45
ten. That's three two one thirteen ten. Gets you on here with CJ
19:48
and Malia. Don't forget you. Learn more about Class Financial on their website
19:52
colssfinancial dot com. That's k Laasfinancial dot com or twel phone number six soh
19:56
eight four four two five six three seven. No charge for that initial gets
20:00
to know You appointment tech Loss Financial. It will be complimentary to you again
20:03
their number six oh eight four four two five six three seven. CJA talking
20:07
about a relatively new thing out there, that health Savings account. We're going
20:11
to talk about some of the things that they think about, maybe traditional things
20:12
like savings and checking CDs, those type of things. We'll talk with Malia
20:17
about that. Next has Money in Motion with Class Financial continues right here on
20:19
thirteen ten WIB eight talk this morning with our retirement planning professionals, c J.
20:26
Class and Malia Quavis. The website Class Financial dot Com. That's k
20:30
l a as Financial dot com. They're telephone number six oh eight four four
20:33
two five six three seven. No charge for that initial gets know You appointment
20:37
Tech Loss Financial. It will be compliment to reach you again their number six
20:41
O eight four four two five six three seven, talking about looking for that
20:45
right target and how to get to it and get some great conversations, some
20:49
great calls as well. Don't forget you can always listen back to the podcast
20:52
at COSS financial dot com and Malia, what about things like you know,
20:56
bank old fashion savings or checking accounts, cd ease or maybe some other type
21:00
of cash accounts. What if folks need to be thinking about there? Yeah,
21:04
so you know, those are all preferable when you compare that against putting
21:11
it under your pillow, your mattress, or in your in your ground,
21:14
in the ground surrounding your house. I've heard everything, you know, money
21:17
in the freezer, I've heard everything. So we really, we really want
21:21
to pause for a moment and tell our listeners that putting away money in most
21:26
of these sources is only going to help you as you approach retirement. So
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CJ and I rarely hear people say I have saved too much for retirement.
21:37
We really don't hear that very often. However, your situation is different than
21:44
everyone else's. However, again, what we want to make sure everyone listens
21:48
to today is that we're always always going to recommend that you have a savings
21:52
or emergency fund on hand that doesn't go away just because you're retired. So
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for some people a savings account would cover maybe one year of living expenses might
22:03
make sense. For others, a buffer of maybe two years might be in
22:07
order. It depends on so many different situations. Whether you have a pension,
22:11
h maybe you have extra debt, which we'll talk about in a moment,
22:15
but having a good buffer will really help you, you know, as
22:21
you look at your investments, maybe bobble up and down. That will give
22:23
you the peace of mind. And again, emergencies happen every single day.
22:29
Emergency meaning you know, the freezer goes out or whatever that might be.
22:33
So we want to make sure that your cash is sitting there now. Today
22:37
we're in an unusual situation where you know, we're not looking at making just
22:41
zero percent in our savings accounts, hopefully not. There is some good interest
22:45
out there that's being credited if you look at money markets CDs and high yield
22:52
performance savings accounts, So you want to make sure you know you're taking advantage
22:56
of that right now in those savings accounts maximizing. We're seeing three, four
23:02
or five percent still, and you know, if you look out a year
23:04
from now, perhaps that won't be the case. They might be declining somewhat.
23:08
But in the meantime, we want you to make sure you're maximizing your
23:11
cash that's sitting out there talking about Malia. I see some of those you
23:15
know, the numbers in black. What about the numbers in red? What
23:18
should be looking at when it comes to debt as we plan for retirement and
23:22
how it affects our savings and retirement plans. Yeah, so red technically is
23:26
a negative idea in your mind. Right, If you see red, it's
23:30
probably not positive usually except when we're looking at a bullseye. Okay, So
23:36
as we work toward accumulating those funds retirement, we need to look at the
23:40
one thing that hinders most people from getting to where they want to be,
23:45
which is debt. So we understand this is a difficult challenge because many people
23:48
are trying to help their kids with college. They might be updating their homes,
23:52
they might even want to take a vacation, or they have medical bills
23:56
that they're dealing with. But we want to remind you that dangers of debt
24:00
and how much that can look like. We'll get some good news here the
24:03
most recent lending Trees twenty twenty three first quarter analysis of baby boomers. Of
24:11
course, those people born between nineteen forty six nineteen sixty four. This group
24:15
has improved with the reduction of debt in the last two years. In fact,
24:18
the gen xers were right there as well, ages forty three to fifty
24:22
eight. They saw their non mortgage debt drop between twenty twenty one and twenty
24:27
twenty three, So good job there. That non mortgage debt dipped by twenty
24:33
six point four percent for the baby boomers and almost three percent for the gen
24:37
xers. That's positive news because we really, as we approach retirement, want
24:41
to make sure that the debt is under control. We look at average non
24:48
mortgage debt is approaching like twenty eight thousand, but mortgage debt, which we
24:56
all understand that with our houses, was down to ninety thousand, so again
25:00
that came down. So with that said, with those numbers in mind,
25:06
what we're telling you to do is action step two today is eliminate or bring
25:10
down debt levels as soon as feasibly possible and so the first step is always
25:15
to look at any credit card debt. I mean, that just makes me
25:19
want to scream when I see the amount that they're charging right now. And
25:26
so we looked at wallet hubs credit Card Landscape report and they reported that the
25:30
average credit card interest currently is twenty two point eighty seven percent for new offers
25:37
and almost twenty two percent for existing accounts. So you know, bottom line
25:41
is, we don't suggest our listeners carry much of anything on credit, and
25:45
they work as hard as they can to eradicate it. And also, you
25:49
know, we want you to start looking at good tools that are out there
25:52
because we are living in a world unfortunately of fraudsters who are trying to you
25:59
know, impersonate us, steal our identities and use our credit. So we
26:03
would appreciate for suggest for all our clients to look out out there at annual
26:10
Creditreport dot com, where you can get a free copy of your credit reports
26:15
from all of the three reporting agencies. You can also look at credit Karma
26:19
dot com. Both of these are free services unless you sign up for something
26:23
more. And we would also suggest for those people as they're approaching retirement or
26:30
in retirement, you may consider locking or freezing your credit. It just takes
26:34
a simple thaw of your credit when you want to use it. But we
26:40
really want to make sure there's no tampering. There's nobody out there opening credit
26:44
under your name, because certainly it's difficult enough to pay off your own debts.
26:48
You don't want to be paying off anybody else's, right, exactly,
26:51
what's that third action step, Malia. So this is what Sean's done.
26:55
I'm sure he has created a budget, and we really want you to take
26:59
advantage of that thought process with you or your partner sit down. There's many
27:04
apps available, many of them are free, that can help move you in
27:07
the right direction. You know, most people don't do a budget because they
27:11
really don't want to know where those dollars go because it kind of slap in
27:15
the face for them where they're wasting money perhaps, But if you set a
27:18
budget using an app like good Budget or empower, there's pocket Guard, there's
27:23
Honeydew, many many really good apps out there that really help you understand where
27:30
is that money going and where could I better deploy it? And perhaps I
27:33
could do some robotic savings. As CJ mentioned that it just goes in my
27:37
savings account and I didn't even know that or my retirement account. So you
27:41
really want to start understand where those dollars go because at the you know,
27:48
the final word I'll say is starting retirement with little or no debt is really
27:52
the best position to be and you will thank us years from now when when
27:56
you're in that situation. That's great advice, great guy IENs this morning from
28:00
Maleia Aquavas and CJ. Colss. They are are at retirement planning professionals from
28:03
Class Financial the website class financial dot com. That's k L aas Financial dot
28:07
com. They're tell number six so eight four four two five six three seven.
28:11
No charge for the financial get to know you appointment at Loss Financial.
28:14
It will be complimentary to you. Again they're number six so eight four four
28:17
two five six three seven. We'll take it down the home stretch and do
28:19
the class quiz question of the week next as Money in Motion with COSS Financial
28:23
continues right here on thirteen ten Wybas. Some moment's away from the class quiz
28:30
quesch the week your chance to win a twenty five dollars gift car to Ace
28:33
Hard or we'll do that for you in just a moment but kind of wrapping
28:37
things up when we talk about debt and other things. Of course, this
28:41
week's program specifically about that target number and those when it comes to retirement savings
28:47
mortgages, you talk about the kind of the biggest we think about the biggest
28:52
debt you're probably going to have in your life, it's probably your mortgage.
28:55
What about paying that off before retirement? Is that something you'd be suggesting,
29:00
No, we love debt, just keep it on the books. Yeah.
29:03
Yes, of course, for anybody who's listened to our show, we're big
29:10
advocates of keep it simple, work towards eliminating your debt. Debt debt equals
29:15
risk in your life, and certainly as you're getting older and getting closer to
29:18
retirement, you want to simplify your life and decrease your risk, and paying
29:23
off your mortgage is one of the easiest ways to do that. Now,
29:26
we would just caveat that with be cautious of where you're going to pay that
29:32
off, because every once in a while we'll have somebody come in and say,
29:34
I heard you on the radio, and I've listened to you for years,
29:37
and so I paid off my mortgage and I'm in here to work with
29:40
you, and we go, wow, that's great, awesome, Let's let
29:42
me ask you some questions. And in asking those questions, we come to
29:45
find out that they took one hundred thousand dollars retirement account distribution to pay off
29:51
their mortgage right before coming in to meet with us. Yes, this is
29:53
a real story. And the issue there becomes, oh, oh, oh,
29:59
you just took got a bunch of money that added to your taxable income,
30:02
and if you weren't the right age, it could even be penalized,
30:04
so on and so forth. So the idea being here, systematically move towards
30:10
aggressively eliminating your mortgage before you retire, but do so under the guidance of
30:15
somebody who knows some of the things to avoid, like penalties and excessive taxes.
30:22
But again, I think everybody knows this. If you pay off your
30:25
mortgage, it's going to lower your outgoing cash flow and retirement right. If
30:30
you pay off your mortgage, it's going to reduce the amount of interest you're
30:33
paying to banks. If you pay off your mortgage, it makes you king
30:37
over your cash instead of somebody else's king over your cash. You pay off
30:41
your mortgage, you're gonna save four to five percent or in these days seven
30:45
to eight percent on the interest that you're paying to the bank for that mortgage.
30:48
The list goes on and on and on. Now there are a subset
30:52
of you listening to me right now going, oh my goodness. But he's
30:56
not addressing arbitrage. So arbitrage is the idea that I can put my money
31:00
into a CD at five percent and I'm paying three percent on my mortgage.
31:04
Why would I ever pay off my mortgage if I can do that? And
31:08
the answer is because debt equals risk. I don't want to have the risk
31:15
of a job loss. Yes, I may be able to earn more money
31:18
on my CD or on my stocks over time, but if I lose my
31:22
job suddenly, that mortgage is really dangerous to the life of my family.
31:27
So please, I'm not saying we're ignorant of arbitrage, and I'm not even
31:33
saying that you shouldn't, in some limited cases take advantage of some arbitrage.
31:37
What I am saying is be ever so cautious thinking that you can get a
31:41
free lunch of just lending at three investing at five. Unfortunately, when we
31:47
see that workout behaviorally, for people, by the time they get to retirement,
31:51
they regret that decision because now they've still got the mortgage. So anyways,
31:56
there's a few reasons to do that. And then action step number five
31:59
is understand and what your retirement savings goal actually are and how many years you
32:02
have left to achieve that goal. So Bill called in earlier basically with a
32:07
great example of how he at fifty seven may be very near retirement right now,
32:13
but he doesn't know right he doesn't know for sure. He's he's thinking
32:16
maybe, but he doesn't want to be dependent upon one income source, and
32:20
what about inflation in the future. And so this final step for Bill might
32:24
be action step number five, which is to like eventually hire an accountant or
32:29
financial advisor to sit down, run the numbers, see how he should be
32:32
allocated with his his thrift savings plan, what other income sources will be available
32:37
in the future, and whether or not you know he can retire. A
32:40
really great program as always this week, don't forget if you missed any part
32:44
of the show, you can always listen back online and subscribe to the podcast
32:47
right at Clossfinancial dot com. That's Klaasfinancial dot com. Great website. Telephone
32:53
number for the office right here in Madison six eight four four two five six
32:57
three seven. No charge for that initial get to know you dech Loss Financial.
33:00
It will indeed be complimentary to you again their number six oh eight four
33:04
four two five six three seven. You want to hold on to that number
33:07
now as well, because it's time for the coss Quiz question the week.
33:08
It works like this, just a moment, I'll ask you the coss Quiz
33:12
question a week. You will then have thirty minutes from the today's program to
33:14
call the Class Financial office here in Madison at six oh eight four four two
33:17
five six three seven. If you are the first call correct answer to win
33:21
this week's prize, which is a twenty five dollars gift card to Ace Hardware.
33:24
This week's closs Quiz question of the week is this, what is the
33:29
maximum amount I can save into my four oh one K plan at work if
33:34
I'm fifty five years old in twenty twenty four. Telephone number six soh eight
33:38
four four two five six three seven. First call with correct answer when that
33:42
twenty five dollars gift card Dace Hardware, don't forget as well. That's Coss
33:44
Financial's office right here in Madison. No charge that initial gets to know you.
33:47
Appointment at Loss Financial their number six oh eight four four two five six
33:52
three seven CJ. Maleia. It's always great chatting with both of you guys.
33:54
Enjoy this fantastic Dan, We'll do it all again real soon. Thanks
33:58
Shanks. News comes your next right here thirteen ten w I B eight