Steve S: Tonight, what company earnings might say about where the economy is headed. You're listening to "Simply Money," presented by Allworth Financial. I'm Steve Sprovach, along with Steve Hruby. So, today officially begins what we all call earnings season. What it actually is are companies reporting their earnings for the first quarter of 2023. To help us analyze this all is Allworth Chief Investment Officer, Andy Stout. Andy manages billions of dollars of investments from right here in Cincinnati. So, Andy, first thing I wanna hit you with is, why are we paying such attention to earnings right now? Why are earnings such a big deal?

Andy: Well, the reason we're watching them really, really closely is because of the banking crisis from a few weeks ago, and there's still a lot of uncertainty on how many of these banks have responded to that crisis. The federal funds rate, which is the interest rate the Federal Reserve controls, has been increased tremendously over the past year and a half. And that has really weighed on banks in this specific area, where the bonds they own as part of their balance sheet, have dropped in value. As a result, they are having to write down those bond values, and that means they might have to tighten lending standards in order to shore up their balance sheet. And that could result in what's called a credit crunch, less spending and less lending. And as a result, that could slow down the broad economy. And now, what we're more concerned about, Steve, is the smaller regional banks. Not necessarily the bigger ones like JP Morgan, Citi, Bank of America.

Steve H: Well, they think it's important to set that expectation.

Steve S: Yeah. And they just came out with some incredibly strong profits though, didn't they? The larger banks?

Andy: Yeah. Last week, we got JP Morgan, Wells Fargo, and Citi [inaudible 00:02:06] report. And when you look at how they've handled it, they've seen an increase in what's called their net interest income, which is the money they get from lending. They've also seen deposits increase. So, there are depositors, or savers, taking their money and moving it to the more safe companies. Now, when you look at that, do these banks believe these deposits are sticky or going to stay there? You know, they have been pretty clear in saying, "We do not expect these deposits to stay at these levels. You know, we think that what people will probably do is, you know, diversify out once this passes a little bit, and maybe look for higher interest rates in money market funds, or other sources like that."

Steve H: Okay. So, shifting gears a little bit, we hit on the drop in inflation last week for March, but haven't had a chance to discuss the findings of the PPI report that came out with you yet. Can you elaborate on what that shows us?

Andy: Well, we got a few different inflation reports from last week. We got PPI, which is producer inflation. CPI is consumer inflation. We also got inflation expectations. And we got import and export prices last week. So, there was a ton of inflation data. You asked about producer inflation, or PPI, which is basically the cost of the goods that go into making other goods. It's like, what the manufacturers are paying, and things like that. So, these producer costs, what we saw there is they dropped by half a percent in March, which is a sizable decrease, especially considering economists were looking for no change in that number. On a year-over-year basis, the PPI number is now only 2.7% higher. So, that's actually quite good, from that perspective. And when we look at what happened last week with the markets, they were up on average. The biggest gains came on Thursday of last week, which also happened to be the day the PPI number came out, because what it showed is a continuation of softening inflation. So, PPI was one of the more important releases that came out last week, but I think CPI was probably the most important release.

Steve S: And yeah, CPI was important, and that was down. But core CPI, I mean, that's where you cut out energy and food, that actually went up a little bit. That's kind of concerning, isn't it?

Andy: Well, to a degree, yes. When we look, is, at the consumer prices, you can kind of break it down into four major areas. You got food, you got energy, you got the core services, and core goods. And when you look at it, you know, from that perspective, the core part, which you're talking about, you know, we did see it come in line with expectations. It rose 0.4% on a monthly basis. Whereas the total CPI, or total inflation, which includes that food and energy, it increased only 0.1%. And that was actually a really good reason. And the reason that happened was because energy costs dropped 3.5% in March, and food costs were unchanged. And putting that all together, that brought down the total CPI to 0.1%. But when you look at that core inflation, the increase of 0.4%, it was due to a few factors.

One, housing, or shelter cost, I should say, increased 0.6%. That matters because shelter costs are 34.5% of all of CPI. So that's going to be the biggest factor. Now, 0.6% sounds high, and it's certainly not low. But I'll also say that that increase was actually the slowest pace since April of '22. So, you know, that's a move in the right direction. We are seeing this. And we do expect, actually, shelter costs to continue to decelerate, because shelter, inflation's really driven a lot by lease agreements. And the price increases that we've been seeing in these lease agreements will start to slow in the coming months, or will slow even more in the coming months. So it's a positive sign from that perspective, and that should help bring down overall core inflation.

Steve S: You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach, along with Steve Hruby. And if it's Monday, we must be talking to Andy Stout. Andy's the Chief Investment Officer of Allworth Financial. Andy, okay. So, you're really not concerned about shelter costs continuing to increase at the rate that they have, yet we just saw minutes from the Federal Reserve, and they have some significant concerns about a recession. Do you share those concerns, and is that something the average investor should be aware of and possibly even react to?

Andy: So, the Federal Reserve released its minutes from the March meeting, where they did raise interest rates. And what the minutes showed was that the Fed staff, not the Fed voting members, but the Fed staff, which is, you know, I don't wanna say the people who go fetch the coffee. I mean, they still have PhDs. But they're the lackeys there in the hierarchy of the order. And what it showed was that they are expecting a mild recession later this year. And that's really unusual for a central bank to put anything like that out there. Because oftentimes, when that's out there, that really does become a self-fulfilling prophecy because, well, if people think, "Oh, you know, the people who control the U.S. money think there's gonna be a slowdown. Maybe I should start saving now for the slowdown." And that essentially speeds up a recession. It becomes a negative feedback loop and, you know, a self-fulfilling prophecy.

So, when you look at that projection by the Fed staff, you know, it is a bit concerning, because I think that probably could lead to it just by even putting it out there. Now, even before that...you know, the reason they're talking about it is because of the constraints by the higher interest rates. Banking crisis is going to be an impact on the economy as well. When we look at those, you know, we do see a decent chance that the economy slows in the second half of this year. It would not surprise us at all, you know, if we did slip into recession. Steve, you asked what it means for investors. Well, it probably means volatility. Probably means a little bit more downside. But the question is, when does it happen?

Knowing exact bottoms and tops is nearly impossible to figure out. And when you look at basically how the market's done over the past 25 years, which has included, you know, a few recessions along the way, in the early 2000s, the Great Recession, and obviously, the COVID recession as well, when you look at all of that, still, if you were an investor and you put roughly a hundred thousand dollars into maybe an S&P 500 index fund, as an example, that $100,000, over the past 25 years, from January of '98 through December of '22, would've grown to around $630,000. Now, if you missed just the 10 best days because you're trying to figure out, "Okay, the economy's slowing. Let me get out here and get back out here." If you miss just those 10 best days, Steve, that $100,000 only climbs to $289,000. Again, if you stayed invested, it climbed to $630,000. You miss those 10 best days, you're only getting $289,000. So you essentially are leaving almost, you know, $340,000 on the table.

Steve H: Yeah. The opportunity cost of trying to time the market can be extremely detrimental to your long-term financial plan. Now, Andy, you just spoke about how the Fed staff feels about future economic outlooks. What about consumer sentiment? I know that the University of Michigan sentiment survey came out. Can you tell us a little bit about what that found?

Andy: Well, what it showed, that consumers still feel okay about the economy. Not really much changed in the most recent release compared to the prior month. The thing that stood out, though, from that survey, is inflation expectations. The one-year inflation expectation soared from 3.6% to 4.6%. May not seem like a big increase, but that's a really big increase.

Steve S: That's a big one. Yeah.

Andy: And it can be a problem, because that could signal that inflation is becoming unanchored. What that means is that consumers expect inflation to rise, so instead of being at this 3.6% level they had, it's starting to rise. And when you see rising inflation expectations, that can actually lead to more inflation. It becomes another self-fulfilling prophecy. We see a lot of these feedback loops like that in the finance world. And that is a concern, you know, that I'm watching, is that one-year number. Now, fortunately, the longer-term inflation expectations, the 5 to 10-year number, you know, it did remain at 2.9%, but that one-year number is something worth watching, because that has some implications on what the Fed does. Because if inflation does become an anchor, that can lead to more wage inflation, and then maybe instead of just hiking one more time this year by a quarter point, maybe the Fed needs to do a little bit more if that does play out.

Steve S: So, briefly Andy, you're expecting another one quarter of one percent increase at the May 3rd Federal Reserve meeting?

Andy: That's the most likely outcome at this time. And then after that, I can tell you what the market's pricing in. The market's pricing in cuts for the rest of the year, of about 0.75%, through January of next year. I don't know if I'm buying that. The reason being... I definitely see the hike. And I think they'll pause after that. I think it's more of a one and done, if you will. I don't think the Fed cuts, because if I look at market pricing, I think what it's actually taking into consideration is the middle point of two scenarios. The first scenario is just the base case, where it's a one and done, and the Fed pauses, waiting to see inflation come down. If the Fed cuts, they're gonna cut more than by three quarters of a point.

They would be cutting because of a deep credit crunch, and they would need to relieve that pressure. So, they would cut by, I could see 2%, in that situation. That would be not good for the overall economy if they are forced to do that. So, that 0.75% in cuts, that's really just the middle point of those two scenarios. So, more in the base camp of a one and done than any sort of deep credit crunch. I do see some tightening lending standards by banks. Some slow down, but anything require a 2% cuts, I think that's a lower-probability event.

Steve S: Great perspective from Andy Stout, Chief Investment Officer of Allworth Financial. Here's the Allworth advice. This week's earnings reports could lead to some market volatility, but avoid the noise. Stick to your long-term plan. Coming up next, how to recession-proof your portfolio. You're listening to "Simply Money" on 55KRC, THE Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Steve Sprovach along with Steve Hruby. If you can't listen to "Simply Money" every night, just subscribe to our daily podcast. You can listen the very next morning during your commute, at the gym, whatever you're doing. And if your buddies think they could use some financial advice, tell them too. Just search for "Simply Money" on the iHeart app or wherever you get your podcasts. Straight ahead at 6:43, a lesson on how to handle your money once you tell your boss to take this job and shove it. Okay. So, by now, everybody knows what the NFL Sunday Ticket, and you probably know that it's gonna be on DIRECTV...or, it's not gonna be on DIRECTV. It's gone to YouTube TV. If you're interested in getting it, here's what it's gonna cost you.

Steve H: A little expensive. So, YouTube TV is already $72 and 99 cents a month. The base Sunday Ticket package is gonna cost an additional $350 per season. Three fifty.

Steve S: Yeah. You know what? The first time my DIRECTV bill went over a hundred bucks, I went nuts. And I said, "We gotta cut this down." Now we're talking, okay, cost of Wi-Fi, cost of getting a provider, like YouTube. And then if you want any of these add-on packages, this is serious money.

Steve H: Yeah. RedZone is gonna be an additional $389 on top of that. You know, I see the appeal of paying for a service like this, you know, being a recovering Browns fan. When they were so awful, I had just as much fun rooting against the teams that I don't like. Which brought me to, you know, Steelers and Ravens games, and things like that. So I see the appeal, but that's a little steep.

Steve S: It's like going to a car race just to watch the wrecks. That's kind of what being a Browns fan is like, isn't it?

Steve H: It doesn't hurt me, Steve. You can't hurt me anymore with that.

Steve S: I know. Okay. Well, I don't know about you, "Airplane!", one of my all-time favorite movies. And when the stewardess tells the passengers, "Get into your crash positions," total chaos ensues. I mean, you know, people are draped across seats, hanging out from the overhead bins and every... So, let's talk about a recession, because Andy used that word, recession. He used the R-word. And we may see what sounds like might be a very slight recession later on this year, but a lot of people are already freaking out about it. So, what do you need to do?

Steve H: I mean, first and foremost, we talk about diversify all the time. But that's the key here. Diversify your portfolio. So, what happened so swiftly in mid March with certain banks in the U.S. and abroad collapsing, served as a very quick reminder that being oversaturated in one aspect [crosstalk 00:16:16]

Steve S: Yeah. If you were heavy in banking stocks, you probably got killed.

Steve H: Yeah. That can really kick your portfolio in the teeth. So have a diversified portfolio between stocks, bonds, little bit of cash, perhaps.

Steve S: Types of stocks. Growth, value, international...

Steve H: Yes. Sub-asset classes are important.

Steve S: Yeah, yeah. I mean, that alone solves a lot of the problems. Yeah, in a recession, you may see some sort of pullback, but, you know, do you just go nuts and say, "Get me out. Get me back in?" No. Timing doesn't work. I actually...and here's a big case for diversification. Ran into a buddy who has a friend, not a mutual friend, but he told me about a dinner he had a year ago where this guy was just frustrated that his investment advisor wasn't following trends, wasn't putting money into crypto, wasn't doing this, wasn't getting... Basically, he wasn't trading the account more actively, and was taking a very low-key, low-risk route. And the guy had enough, and took control of his own account, and started investing on his own. And they got together a year later. This was about three weeks ago. He lost $400 grand because he went heavy in crypto. He was convinced it was gonna go in the right direction. That right there is a reason you stay diversified. It'll drive you nuts that you're not making as much money as maybe you thought you could have, but when things get volatile, it certainly helps.

Okay. So, you wanna be diversified. What next?

Steve H: So, build your boat when conditions are calm.

Steve S: What do you mean?

Steve H: What we mean by that is, make sure that you're ready ahead of time. Keep in the forefront of your mind, especially during good periods, because behaviorally, you're gonna second-guess your decisions during the bad ones. So that's what you're talking about with diversification. Now is the time to make sure you're diversified. Don't make emotional, knee-jerk reactions when and if things start to go south.

Steve S: Well, I think that's good advice, because your risk tolerance doesn't change, and yet most people wanna change. I remember, late in 2021, I had some elderly people that were diversified, had money sitting in CDs that wasn't earning much, saying, "Put that money to work for me. Put it in the stock market." Lot of money. And no, no. We're not doing that.

Steve H: To add to what I just said, you need to have shock absorbers in your portfolio. So, bonds had a terrible year last year, worst year in 50 years, but they still have a place in a portfolio. Especially when you're investing for the long term. That bond serves as a cushion or a pillow when the markets take a hit and affect stocks greatly.

Steve S: In addition to bonds, plain old cash. I mean, couple years ago, we were earning nothing, but you can get 3%, 4% on your cash. So, we can call it an emergency fund. I like to call it cash reserves. But you need money on the sidelines, so when markets are down, if you're drawing money out of your account in retirement to live on, maybe you wanna draw it outta savings.

Steve H: Yeah. One of the positives from interest rates going up, it has a little bit of a lag effect on the timeframe before short-term cash starts to pay a little bit, which, but it is now. But more importantly, cash buys you time against market loss, especially if you're a retired listener. This is important because when markets get volatile, if you have a pile of cash that you can draw from, that buys you time so you don't have to sell at a loss.

Steve S: Yeah. And finally, ignore the noise. When everybody else is screaming... And you can take two paths. You can say, "I'm losing, get me out." Or you can say, "I'm happy that there's a drop in investments. This allows me to move in at a lower price." You just have to buy into, are we gonna recover from this? Well, we always have. So it's a pretty good bet that we're gonna recover from today's and any future negative markets.

Here's the Allworth advice. If you want your portfolio to weather a recession, don't build your boat in the middle of a storm. Make your plan when the waters are calm. Coming up next, changes to student aid that could impact thousands of families, maybe even yours. You're listening to "Simply Money" on 55 KRC, THE Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Steve Sprovach, along with Steve Hruby. You're not there yet Hruby. I've been through it. Paying for college is one of the most stressful events in anybody's life. I mean, there's the cost, but when you set up a kid for college, you've gotta go through something called the FAFSA. And I think one of the Fs stands for Frustrating. And the other F, I can't say on the air. I mean, it's just one of those things you have to do when you're putting a kid through college, and it's the way you apply for student aid, but there are major changes coming to the FAFSA form.

Steve H: Steve, I am intimately familiar with the FAFSA because I'm the first person in my family that went to college. I filled it out on my own... I found out what it was on my own. I didn't have any help with that, so I filled it out each and every year.

Steve S: But you did your own. That's pretty cool.

Steve H: Yeah. It helped quite a bit. We were very, very poor, so I got the maximum grants, and subsidized loans, so I'm thankful.

Steve S: But it's not the most easy to understand form.

Steve H: No. It's terrible.

Steve S: It's incredibly confusing.

Steve H: Hopefully some improvement. So, FAFSA stands for the Free Application for Federal Student Aid. Aid, that is. It's a form you fill out for any financial aid from the government for college. Each year, 13 million students who file for FAFSA get $120 billion in grants.

Steve S: Yeah. And that's the first step. You have to fill, even if you're not gonna get any money, you have to fill it out because it gives you a score that determines what kind of aid you may or may not get. Major changes.

Steve H: Yeah. The score is what's changing. So, the Department of Education, it's getting ready to release a new streamlined FAFSA later this year, actually. It's currently in its drafts form, which technically means it's open for public comment, if you wanna go out there and make some comments that probably won't be listened to. That's a different point. Congress passed the FAFSA Simplification Act in 2020, which aims to reduce the number of questions on the application, and make Pell Grants and other federal aid more accessible.

Steve S: But what I don't get is they're not including the number of family members going to college. Which, to me, is, like, really important, because if you've got three kids, you're even more broke than if you only have one kid going to college.

Steve H: It's a good point. Let's make a public comment on it. What do you think, Steve?

Steve S: No.

Steve H: So, expected family contribution is historically what the FAFSA determines, and that's the estimated amount that you and your family can pay per year. Moving forwards, it's going to be the Student Aid Index. Used to be EFC. It's changing to SAI. This will serve the same purpose but it uses a different formula, just like you said. What it does is, students with an SAI between 0 and 1500 will qualify for the maximum Pell Grant, but there's actually going to be a possible negative score too, which identifies those with the greatest need, rather than having everybody lumped together at a $0 EFC. So it's supposed to identify those with greater need, which is kind of the point of the FAFSA.

Steve S: And because of these changes, the FAFSA this year will not be filed until December. Usually you've gotta have it done by October.

Steve H: Yes, correct.

Steve S: Which I think is kind of ridiculous, because most people don't know where their finances are in October of any given year. Tax time, to me, makes more sense, but hey, it's the government, it's their program and they're gonna do it the way they want.

Steve H: Public comment Steve. It's open.

Steve S: Yeah. I don't have enough time for that. But, you know, it brings up some points, because college has gotten ridiculously expensive over the years. And I think a lot of parents are starting to say, you know, "Does it make sense for me to pay, in some cases, $60 grand, $70 grand a year to send my kid through school, especially if it's, you know, for a major that may not be applicable to a job right outta college? I mean, there are some ways to cut down on costs.

Steve H: Yeah. So, with costs being outta control, most families, I would say, need some kind of help to pay. You know, just because your child might wanna go to an out-of-state school doesn't mean that you should be putting your family into debt, or removing your ability to save for your own retirement to make that happen. There are other options.

Steve S: Well, I think every parent wants their kid to have the advantages they didn't have. But does that mean because they want to go out of state, "Yeah, just keep Johnny happy?" I mean, in my case, okay. My older son, he had a pretty darn good scholarship to go to Ohio State, but he was set on Rose-Hulman for engineering, which I learned to find is consistently ranked number one in engineering and undergrad program. So, you know, in that case, yeah, Ohio State's got a good engineering program, but Rose-Hulman was exceptional. Was I willing to pay for that? I was. Did it make the most sense? Yeah, he's an engineer. But if he had changed from engineering to philosophy or something like that, no. It wasn't gonna happen.

Steve H: That would've been a big problem for the pocketbook.

Steve S: It would've. Okay. So, what else can parents do to reduce costs?

Steve H: So, this is one that I, you know, think about, and I look back at my own history. I went to a four-year college, and part of me wonders how different my life would be had I started out at a two-year. Here, in Cincinnati, Cincinnati State is a wonderful option. It's more affordable.

Steve S: They have great programs.

Steve H: Yeah. There's teachers with real-world experience. And it launches you to a different school. You can go to a four-year school...

Steve S: I think you can go from there to UC or wherever you want.

Steve H: Exactly. Yeah. So, it's a much more cost-effective path towards a college degree, if your desired career even needs one.

Steve S: Yeah. It's something I think a lot more parents are gonna say, "Let's take a look at the better community colleges, because the difference, literally, can be over $50 grand a year, when you add it up. It's amazing. I'm gonna add one. Don't forget 529 plans, especially if you're a grandparent. Because grandparent 529s don't count on FAFSA forms, if I remember correctly.

Let me explain. A 529 is a college savings plan, and anybody can set it up. I, as a grandparent, have it for my grandkids. And what that means is, I'm putting money away that's in an account for their benefit, and if they go to college and it's used for college expenses, that money grows tax-free and comes out tax-free. Now, I get a little bit of a tax break because I'm using Ohio's plan....

Steve H: Yes. That's key.

Steve S: ...but it doesn't mean the kid has to go to an Ohio school. There's a big misconception about that. They can go to any college. And as a matter of fact, with the latest changes in rules, if they decide not to go to college and you still wanna let 'em have the money, they can use it for plumbing school or technical school.

Steve H: 529 plans are more portable than ever. Historically, you change the beneficiary, so it can be one grandchild to another, even back to yourself if you wanted to take some kind of continuing education. It doesn't matter what stage of life you're in, you can use it for that. Last change, with SECURE Act 2.0 is, if the 529's been in place for at least 15 years, so this means you get started when the child or grandchild is younger, then you can transition up to $35,000 of that into a Roth IRA in the child's name.

Steve S: Not a bad deal. So, if you're a parent, and especially a grandparent, consider 529 plans.

Steve H: And consider speaking with a tax advisor before you implement that.

Steve S: Here's the Allworth advice. Cost of college should be baked into your financial plan if your kids plan on going down that road. Coming up next, how to manage your money once you've decided it's time to stop working, and you can stop working. You're listening to "Simply Money" on 55KRC, THE Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Steve Sprovach, along with Steve Hruby. Do you have a financial question you'd like for us to answer? Well, just hit that red button on the iHeart app and record away. We will listen to it. Straight ahead, why some say they would buy an electric vehicle, and why some absolutely will not.

Okay, Hruby. So, a lot of focus on financial planning falls on the savings part, to make sure there's enough money left over when you decide to stop working, but what do you do once you get to that point? What do you do when you retire? Do you start drawing down? Do you stop investing? What's the next step at retirement?

Steve H: I mean, I say financial planning is all about making sure your money lives longer than you do.

Steve S: Yeah. That's the bottom line.

Steve H: So, things don't just stop when you stop working. You need to continue to regularly invest. Just because you're retired doesn't mean you stop investing, because your money will not keep up with inflation if you're just sitting in cash on the sidelines. It won't.

Steve S: And that worries me a little bit because, you know, we're finally getting interest on our money. And I remember years ago, and we're going back to the '80s on this, which is before you were born, I think. But anyway, what I...

Steve H: I was alive in the '80s, Steve. Thank you.

Steve S: I was alive in the '70s, and I've been told "if you remember the '70s, you weren't really there." But anyway, you know, that's the last time we had real serious interest being paid. And you can get 4% and 5% and 6% on CDs. And I'm worried that we're getting back to the point where people are gonna start saying, "You know what? I'm retiring next year and I'm just gonna live off the interest." It's really not possible.

Steve H: Yeah. The best way to combat inflation in the long term is through stocks. But you need to have a combination of stocks, bonds, and money markets to weather any market.

Steve S: Well, you do. And, you know, one of the points that I always make is, when somebody's gearing up for retirement, and we're getting within, like, a year to two years, don't change your expectations on what your money has to do for you, because, you know, we do plans based on people living well into their nineties. Now, the average age that people live to in the United States, it's about 76 years old.

Steve H: Yeah, 76.1. Let's not sell it short, Steve.

Steve S: All right. You're there for accuracy. But, you know, what if you happen to have the bad luck of living longer? You know, that's the way I explain it to people. Because why figure on spending all your money by age 76, and you happen to have a good run, and live to be 80, and now all of a sudden you're down to living on Social Security? Not a good plan.

Steve H: I call that planning for the worst. Folks that I work with say, "Oh, I'm not gonna live past 75." I say, "With that attitude, you're gonna live till you're 110."

Steve S: Okay. So, what do you do? You're retired. What's the best advice you've got for people, not just with investing, but Social Security, which accounts to draw down and so forth?

Steve H: Well, let's talk about Social Security a little bit. And obviously, this is gonna depend on your own financial situation, but delaying Social Security is gonna get you about 8% more per year, up until the age of 70. That's quite a nice return on investment, just by not collecting Social Security.

Steve S: Yeah. It's about 6% from 62 to 67, about 8% after that.

Steve H: Thereafter.

Steve S: Assuming you live a long time, because there is a break-even of 12, 13 years. So, okay. If you think you might live to be 90, yeah, you might wanna delay. That means spending your own money.

Steve H: Yeah. Exactly. What about a Roth IRA? Contributing to a Roth IRA while you still got a little bit of time on your side is about diversifying your future tax liabilities. I'm all about finding ways that we can poke Uncle Sam in the eye, and a Roth IRA is one of our favorite, because it subjects those contributions to tax-free gains.

Steve S: You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach, along with Steve Hruby. And we're talking about steps. Steps you need to take in retirement to make sure your money lasts longer and maybe reduce your stress a little bit. I'll tell you, my biggest number-one piece of advice for a retiree or an upcoming retiree, get outta debt. You might have taken care of credit cards, you might have gained a lot of ground, kids are done with college. You're starting to set some money aside, but how about your mortgage? And, you know, I don't care if you've got a 2.6% mortgage or a 7% mortgage. If you do not have a mortgage payment in retirement, you have a ton less stress than someone who does.

Steve H: Oh, for sure. Absolutely. Well, what about the emergency fund in retirement? We talk about three to six months for people working. That number can actually be a little bit higher for those that are retired.

Steve S: I don't even like calling it an emergency fund. I like calling it just a reserve fund. Because it's not for your brakes going bad or, you know, replacing a hot water heater or something like that. In retirement, it gives you an option to draw from if your investments are down. If you're living on a thousand dollars a month off of your investments, nobody wants to sell investments when they're down. And, you know, they're gonna be down every few years. It's just part of the game. I would rather see you draw from a reserve fund that is stable, that's safe, it's a savings account, and then replenish it when your investments go back up, by selling at the highs, not at the lows. I think that's key.

Steve H: Exactly. Yeah. I mean, I love the idea of having cash on the sidelines to buy yourself time in the event of market volatility. One more that I wanna share is investing in yourself. And what I mean by that is, many doctors suggest that retirees continually challenge themselves mentally, to stave off deterioration that sometimes accompanies old age. So, stay active. Find ways to keep active. Maybe take some classes, keep learning. Invest in yourself.

Steve S: Here's the Allworth advice. Life doesn't end once you retire. In fact, some of the steps you're taking now financially shouldn't change once you stop working. Coming up next, would you buy an electric vehicle? Why? Or why not? The results of a new poll is next. You're listening to "Simply Money" on 55KRC, THE Talk Station.

Men Together: It's electric.

Steve S: You're listening to "Simply Money," presented by Allworth Financial. I'm Steve Sprovach, along with Steve Hruby. And I love it when Joe Strecker finds music that fits the subject. Hruby's over here busting a gut. Almost busting a move, but that's not a pretty sight. All right. So, when gas prices went sky high last year, electric vehicle interest, it just took off. And we say interest because not everybody's on board. There's a new poll out there, and it's kind of interesting.

Steve H: Yeah. Nearly half of Americans, in a new poll, say it's unlikely that they would purchase an electric vehicle as their next car.

Steve S: But that means half will.

Steve H: Yeah, it means half will. Main reason for this is, is because of the lack of charging options, and barrier of high cost of entry.

Steve S: They're expensive. Yeah.

Steve H: They are. They're a little pricey.

Steve S: Okay. Now, you happen to own one. You've had experience recharging, and having trouble finding recharging.

Steve H: Yes. Let's be clear. I'm very happy that I do have one electric vehicle and one gas vehicle. Gas vehicle is now my long-distance vehicle until the infrastructure is there. This study has merit. So, my family and I, we went up to Cleveland, where I have family. Charging was not an issue on the way up there. They have these quick charge stations. Thirty-nine minutes from empty to fully charged, gets about 230 miles. By the way, this thing is a blast to drive. Fast as heck. You know, 0 to 60 in four seconds. It's really fun. But the infrastructure's a problem. So, on the way up there, not a problem at all. Went to Cleveland, went to Cedar Point, and then Toledo. Problem with the Toledo area is, at this time...this was last summer, I wanna say. They did not have the infrastructure for charging my vehicle in any less than 12 hours.

Steve S: Oh. That's not good.

Steve H: Not good at all. What do you do with that? I actually...

Steve S: I mean, if you're parked overnight, that's okay, but if...

Steve H: And we weren't. We were trying to get home. This was a Sunday. I got home at, like, 2:30 in the morning. I thought I had planned appropriately because the car itself will tell you where the next charge station is. It's supposed to be a quick-charge. In this situation, it was not.

Steve S: Oh. Okay. So, you've got an app where you can...you know where the charging stations are...

Steve H: Built into the car.

Steve S: ...and they'll tell you, "Okay, here's a charging station. Here's the speed of charge expected," but not always accurate, not always... Okay, it's online and you get there, and might not be.

Steve H: Offline. Exactly. Yeah. So, we had to backtrack, head back towards Cleveland on the turnpike to a quick charge...

Steve S: And now you're worried. Now you're worried. Are you gonna be stuck on the side of the road? Your kid was with you?

Steve H: Yeah, she was. Yeah. So, we turned it into a grand adventure, and it was exactly that. We will not be taking that electric vehicle on a long-distance trip until the infrastructure improves.

Steve S: Well, and that's what this administration is trying to solve. The White House, just in February, said it wants to see at least a half a million electric vehicle chargers on the country's roads by the end of the decade. And they've got a series of initiatives with commitments from the big companies, Tesla, General Motors, Ford, ChargePoint. So they're trying to get this done, but there's about half the people out there that are saying, "Thanks, but no thanks."

Steve H: Yeah. I mean, once that infrastructure is there... To me, this is about having a vehicle that is fun. It's fun. It's comfortable...

Steve S: So you're not doing it strictly for the environment. You're doing it for joy also.

Steve H: Yeah. I have a gas vehicle too, but I'll tell you, I fill up maybe three or four times a year at this point. We have not traveled much. And not having to drive the gas vehicle has been a major cost saver. So, if you're not driving a lot, it can be cost effective. Even with that barrier of entry.

Steve S: See, I'm in the camp of the other half. I have zero interest in buying an all-electric vehicle. And I'll tell you why. For me, it's the upfront costs. I mean, to spend $60 or $70 grand on a car that, somewhere around...and I know people are gonna be upset about this, but what happens when the battery is at the end of its life, which is 100,000 125,000 miles? It's not cheap. It's not cheap to replace. And you've gotta actually pay a disposal fee on top of... And I just had a...

Steve H: That's in 10 years, Steve. I'll worry about it then.

Steve S: Yeah. I'll probably be dead in 10 years. But, you know, that's the concern I've got. And, I don't know, just something about a car that goes "vroom" makes me happy. And that's why I'm not ready... I think we'll be there in another 10 years, but I'm not gonna rush it.

Steve H: My car fakes the noise, Steve.

Steve S: Does it?

Steve H: Yeah. Because they're silent if they don't. So, I don't know if it's some kind of a regulation, where they have to make sounds, but it makes a nice little "vroom" noise when I accelerate.

Steve S: I think it would be fun if you put that little Jetsons noise.

Steve H: I wish I could change the noise, because I would [crosstalk 00:38:23]. Yeah, it would make it, you know, funny.

Steve S: That would be fun. I'm not on board yet. We'll see where the technology goes. When there's charging stations every five miles, and you can do it in about the same time it takes to fill up your gas tank, that's when I'm interested. Hey, thanks for listening. Tune in tomorrow. We're gonna talk about Warren Buffett's million-dollar bet on you. You've been listening to "Simply Money," presented by Allworth Financial on 55KRC, THE Talk Station.