Market Predictions, P&G Layoffs, and the Truth About Social Security Taxes
On this week’s Best of Simply Money podcast, bold market forecasts are flying, but how accurate have past predictions been? Bob and Brian break it down.
Plus, they clear up the confusion surrounding a viral Social Security tax email and discuss the mental trick that could boost your retirement savings.
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Bob: Tonight, new predictions on where the market is headed, confusion over whether you have to pay taxes on Social Security and more. You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James.
Brian, let's start off this show with a famous quote from Chinese philosopher Laozi, which goes like this, "Those who have knowledge don't predict, those who predict don't have knowledge." That being said, the predictions for where the markets will be next year are now starting to roll out, and that's where this gets fun. Morgan Stanley's chief strategist, Mike Wilson, says the S&P 500 could hit $7,200 by the middle of 2026. That's a 13% climb from where we are now. Brian, it's a bold call. Talk about how Mr. Wilson's prior calls have gone in terms of predicting the market's direction and magnitude of moves.
Brian: Well, first, I want to compliment you for quoting ancient philosophy. And I think I really want to adjust the show where we kick it off every day like that. I want to hear from Bob Sponseller on ancient philosophical points of view. I appreciate that. But on the Morgan Stanley...
Bob: Brian, I grew up in Green Hills, and I used to sit cross legged in Winton Woods and read books like this all the day. That's what my childhood was like, Brian.
Brian: A peek into the mind of Bob Sponseller. So, on to more serious things now. So, yeah, Morgan Stanley, you might have heard of them, big financial institution. Obviously, they know what they're doing. They've been around for a very long time. But the chief strategist is out there throwing out predictions. And it's interesting because he's got a little bit of history of this. And to be fair, every big financial institution has a history of this. They all make headlines making predictions. That's what they get paid to do.
So, he was one of the most bearish voices just a year ago, and not a whole lot of scary has happened with the exception of April. We haven't had that much craziness in the market over the past 12 months. So, he's calling this a broadening out rally, and he's referring to AI as something that's kind of boosted the market. We've talked about that frequently on this show as kind of a catalyst. Stronger earnings, we're in a really good earnings season so far, knock on wood. And just an overall, favorable, macroeconomic backdrop. Things are just kind of going well right now.
So, all this means, companies are making more money. The U.S. dollar's a little weaker. And remember, that is not a bad thing. Weak, it has a negative connotation. So, what that means is our products can become a little cheaper for the rest of the globe to buy. That's going to be volatile as we kind of go through these ebbs and flows of international relations here. But also, there's just a lot of hype going into AI. AI is the catalyst. That's going to be the catalyst of this time of year, of this time of the economic cycle. In the past, it's been the cloud, it's been mobile devices, it's been the internet, it's been real estate, or whatever. There's always something that somebody can get excited about.
So, anyway, he's kind of citing all of that as reasons to be positive about the overall market. He's expecting the Fed itself to start to play a role by cutting interest rates into early 2026. That would push price to earnings ratios a little bit higher. Basically, investors paying more for stocks if borrowing costs are lower, meaning I'm willing to pay more for these stocks and run the prices up. So, Bob, what about the history? Is this Wilson guy always right?
Bob: Well, I want to be clear, this is not a segment to pick on Morgan Stanley and their chief strategist, Mike Wilson. I'm sure he's a very bright guy and works very hard. The point of this segment is that it's very difficult to predict the timing and the magnitude of major market moves. And that's where we want to cite some of Mr. Wilson's prior predictions. In late 2022 and early 2023, Wilson warned that the S&P 500 could plunge to 3,000 to 3,200. Instead, the index soared, nearly 18% in 2023 to reach record highs. And then he came out later on and formally admitted, "We were wrong." In April 2024, after staying bearish through most of 2023, despite the rally continuing, Wilson stepped back from his prior index level predictions entirely, calling forecasting a "Humbling business."
And that's the point we're trying to make. It is a humbling business to sit out there and try to predict the timing and the magnitude of the stock market moves, interest rate moves. It's just a fool's errand. And yet we're always shocked, Brian, with how many people, their livelihood seems to depend on going out with bold predictions, getting out there on the media, getting their face on television, and making these predictions, which oftentimes, influence the behavior of ordinary investors out there to their detriment.
Brian: Yeah, let's set the table a little bit for Mr. Wilson. Remember, so what you just said, in late '22 and '23, he was warning of an S&P 500 plunge. That wasn't that outlandish back then because, first of all, we were still looking for the second leg down, right? That was a term that was used frequently by the talking heads on the media airwaves. Second leg down, right? This isn't over with. We're going down further. And we were also talking about, are we going to have a soft landing? Are we going to have a hard landing when this procession was going to finally hit?
Well, you know, and I've talked about this before, it seems like we had no landing, right? I think a soft landing is when you just stop talking about any kind of landing whatsoever. Because we just kind of moved on, and now, we're where we are and the market has moved up. But it wasn't that outlandish. Yes, we are picking on it a little bit because this isn't just one example of when one of these predictions didn't go the right direction. It's just a fairly recent one from a pretty prominent financial institution. But at the time, it wasn't that outlandish to hear.
So, here's another, the Federal Reserve itself is a little bit guilty of this, too. The Fed rate cut predictions, the Fed signaled a median projection of around three quarter point rate cuts in 2024. That was, they said that in December of 2023, and that never quite came to pass. Financial markets were increasingly betting on this, even talking about maybe there's going to be seven or more of these. But how many times did the Fed actually lower interest rates in 2024? The Fed did what they were going to do. It was the prognosticators in the media and the financial institutions who were wrong. So, we have to be careful exactly who we listen to.
Bob: You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. All right, Brian, let's pivot to some more recent, hot off the press headlines here today. And that's the earnings news and some layoff news and restructuring going on at Cincinnati's own Procter and Gamble. Let's get into the earnings call information and go from there. Brian, fill us in.
Brian: Yeah, so the P&G reported during its quarterly earnings call this morning that the tariffs that are coming out of the administration of President Trump are contributing to price hikes at the consumer goods giant, as it reported its slowest growth rate in nearly a decade. Andre Schulten is their Chief Financial Officer. And he basically characterized 2025 as a shocker, get this, "A challenging year." And they're citing a mixture of consumers pulling back on spending as well as the tariffs as well.
So, the company does expect to have to increase pricing on some of its products. And we can be sure that that's going to hit the headlines as a sign of inflation triggered directly by the tariffs for those that want to Trump it that. So, he's expecting prices to go up by about 2% to 2.5%, which if you think about it, and he cited this too, that's kind of typical inflation in terms of prices. But since it's a big company that's hitting a little close to home, that's going to feel like getting tied directly to the inflationary headlines that are out there, anyway.
Bob: Well, and he also had a little bit to say during the conference call this morning about a planned restructuring that could result in layoffs of up to 15% of its non-manufacturing workforce. And that was announced in June and it's going to start to roll out here. And again, that's going to impact some of our friends here in Cincinnati. Brian, I know you've had some actual experience with folks that you work with around this. What can you talk about based on what you've seen so far with this non-manufacturing position rollout likely coming out here soon?
Brian: Yeah, I'm sure I'm not the only one in this hallway that's hearing from our clients about these kind of concerns. So, the headline is that P&G is going to shed 7,000 jobs by the end of fiscal year '27. And they're expecting to incur half the cost coming from this by the end of '26, and then spreading that into '27. So, that's what we're talking about. Now, how does it impact the individuals that are out there?
So, I had a meeting last week with somebody who... The rumors are flying around now. I'm sure those of you working for P&G or for companies supporting them because it has a ripple effect across all those. And I believe there's about 10,000 people in Cincinnati who either work directly for P&G or work for a company that supports them. So, one little pebble leaves a lot of ripples out there. But in any case, what we are hearing is that the pink slips are expected to be heard, obviously, over the remaining package of this year. Packages possibly going out in August. This is pure speculation, just people thinking out there. There may be packages, there may be no packages, but a lot more clarity coming here in the month of August.
Now, how are people reacting to it? I would call it apprehensive. You know, this is not a new thing for P&G. Every few years, this is just part of the process, and really lots of companies do this, look to reduce costs by encouraging retirements and then replacing those positions with lower-paid younger people, just kind of resetting the table. And it tends to come with a little bit of apprehension because people are having to consider retirement maybe a little bit earlier than they were otherwise, and that can be a little bit of a cold water shock for people. If the package has come around, that can reduce a lot of the financial stress of it, but you don't know until you know.
So, what I would say is, and not just to my P&G folks out there, you should have a financial plan in place. Because if this does come your way, again, P&G or not, if unexpected things happen to your job, your career, or your spouse's, then you should already know what position you're in. Then you can clearly define, okay, new information, we're losing an income, income's being reduced, maybe somebody has to retire, whatever, what kind of impact does that have on the plan that we thought was our stable, go-forward plan? And that will help you reduce a lot of the stress related to these big decisions.
Bob: All right, good stuff, Brian. Here's the Allworth advice, focus on quality and diversification and have a financial plan in place for events coming down the pike like what we just talked about. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. If you can't listen to "Simply Money" every night, subscribe, and get our daily podcast, you can then listen the following morning during your commute or at the gym or in your walks around the neighborhood at night. And if you think your friends could use some financial advice, tell them about us as well. Just search "Simply Money" on the iHeart app or wherever you find your podcasts.
Straight ahead at 6:43, the mental trick that could boost your retirement savings by up to 14%. Did you hear about this email from Social Security that recently went out to folks saying nearly 90% of people won't owe in taxes on their Social Security benefits anymore? Yeah, it turns out that was not exactly true. And it sounds like the Social Security administration is starting to clumsily roll back that "advice."
Brian: Yeah, anytime we talk about tax reduction, that gets a lot of attention. And, you know, somebody behind the scenes at Social Security was really focusing more on the how do we get people to pay attention, and less on the how do we get the truth out there? So, this came from their blog, the Social Security blog. This is not just talking heads and influences out there. This is Social Security administration themselves. The blog post basically said, "Hey, huge tax relief. Most of you aren't going to pay taxes on Social Security anymore." Just a few days later, though, "Hey, heaven forbid." That post just quietly went away. And the truth is really not much about how Social Security benefits or tax is actually changing.
There was a small temporary deduction coming through in the new tax law up to about $6,000 for single filers over 65 and 12,000 for couples. Now, that's a deduction. So, if you qualify for this, for the small window people who get it, the $6,000 if you're in let's say you're in a 15% bracket, that means $900 coming back your way. You know, for a single and 12,000, maybe you get $2,000 coming back. That is a far cry from your Social Security no longer being taxed. Super confused. The comments section basically exploded on the Social Security administration blog. And lawmakers at this point are saying, "Hey, I know we're in the misinformation era at this point, but this one, we need to get right and get out some new message." So, sorry, folks, the moose out front to the told you that you're still getting taxed on your Social Security.
Bob: All right. Well, Brian, this brings up a question and this is an honest question. I'm putting you on the spot here. If you don't know the answer, we'll both need to go look this up. But this $6,000 deduction for single filers over 65, and $12,000 deduction for couples, is that an itemized deduction or is that a separate deduction against Social Security benefits? Because depending on what that answer is, that really makes a difference in terms of the actual tax outcome for folks. Do you happen to know the answer to that question? Because I don't.
Brian: Well, it's the famous answer that everybody hates, it depends on your tax situation, whether you're going to be able to benefit from this. It's not everybody. So, nobody should be looking for that one checkbox on the 1040 form that says, "Yes, please give me a $6,000 deduction." There are moving parts to it and the majority of people will not qualify for it.
Bob: Okay, moving on. So, yeah, like you said, sorry, folks, the moose out front should have told you. All right. We know not everybody is deep into crypto, but this news caught our attention. Telegram. It's a messaging app you might use for family chats or even fantasy football trash talking. Believe it or not, they just rolled out a built-in crypto wallet to all 87 million U.S. users of Telegram. Ryan, what could possibly go wrong here? Allowing Telegram users to exchange and trade crypto right there on a messaging app, wow.
Brian: So, Bob, I have a feeling a lot of people are kind of raising their eyebrows going "Telegram. What is that? I've never heard of this." Well, there's 87 million U.S. users. There's a billion around the globe. So, this is much more of an everywhere but the U.S. type of a thing. Not that there aren't users here. There certainly are, but it's a much bigger focus elsewhere.
But anyway, so what's happening here is they have something called TON, short for The Open Network. That's right inside the Telegram app. I think it's a good example to look at because this is probably not the last time we're going to hear some things like this. So, you've already got an app on your phone you're using to communicate, and then all of a sudden, poof, you have a crypto wallet right there in your chat app. So, what Telegram is trying to do is make crypto as easy as sending a text. So, meaning, if you want to pay for something, you can send crypto right to somebody else's wallet just the way you'd Venmo them right inside your conversation thread where you're already texting them about whatever you owe them for, anyway.
Now, Bob, the first thing that jumps off the page here is I have not heard of people actually using crypto as a currency. As a matter of fact, we don't even call it cryptocurrency anymore, it's just crypto. It's something that people speculatively invest in. We're not looking to pay somebody back at Starbucks for buying me a cup of coffee. This is something that gets hoarded and speculated against.
I remember when, maybe four or five years ago, I think Tesla and I think Apple and a few other companies were briefly accepting crypto for their products and services that they sell. But then they realized that a big, publicly-traded company cannot have its accounts receivable bouncing up and down because it's denominated in some kind of currency that is extremely volatile. So, that quietly went away. I'm not real sure that this is going to get a whole lot of traction anytime soon.
Bob: Well, the thing that jumps out to me and, I guess, this is just, I don't know, a warning shot across the bow to maybe kids and grandkids out there of our listeners. I know enough about this stuff to be dangerous, but I do know, any of these "wallets," the first thing they want to do, you know, whether it's Venmo or any of this stuff, is they want you to enter your bank account information. They want access to your bank account. And that's where things can go or arrive very quickly if, you know, there's hacking or there's fraud or anything like that. Or as you said, just the volatility of cryptocurrency, some people could be in for some real rude awakening here. So, that that's kind of what we're saying here. Look out, be careful, warn those folks in your life, your younger loved ones out there. Don't be too quick to jump on board here, and be real careful about sharing your banking information.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. Anything you want to add to this whole TON crypto thing?
Brian: Well, I mean, at first, TON, that's just Telegram's flavor of it. I mean, other companies are going to follow in kind. Everybody wants on the crypto bandwagon, no matter what they do. Remember what Telegram is, this is not a crypto company, they were a communications company. But now, because they are out there, they're in the infrastructure, they're all on the network with people's phones, then it's an easy way to kind of build on to that. But I think, crypto in general, it's a thing, it's not going away. And it's going to, at some point, show itself as a way to kind of diversify a portfolio and something to be useful to be invested in. I don't think that time is now, though, Bob, because it's just it's nothing more than a speculative asset.
I get questions every now and then, "Well, how about we should we put some crypto in the portfolio?" And my thought there is we don't know enough yet about how it behaves in different environments. We haven't seen every kind of environment like we have, you know, with the overall stock market. I can tell you what cyclical companies will do in up markets and down markets. I can tell you what growth companies will do, because there's a century plus worth the history there. As far as crypto as an asset and overall portfolio, I think right now, it's a lottery ticket, and nobody thinks of it as I'm going to use this to offset something. That's the way it was originally positioned, it'll offset currency, you know, normal currency fluctuations, it can protect against stock market fluctuation, so on, and so forth. But it seems to be just as volatile so far.
Bob: Here's the Allworth advice, just because an app puts crypto in your pocket doesn't mean it belongs in your portfolio. Coming up next, there's a new warning tonight from one of tech's biggest names, what it could mean for your money. We're going to have our tech and cybersecurity guru, and I do mean guru, Dave Hatter is in next to give us the latest in some of these fraud warnings. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James, joined tonight by our technology and cybersecurity guru Dave Hatter. We always love having Dave on the show. And, Dave, you've got a real important topic to cover tonight. This is something to wake up and pay attention to, Sam Altman, the CEO of OpenAI came out with some stark warnings about AI's ability to mimic our voices and use that to hack into our accounts. Let's get into this because this is important stuff, Dave.
Dave: Yeah, it really is important. So, Sam Altman, again, CEO of OpenAI, the people that make ChatGPT and other fairly well known generative AI products warned about this. Now, many people have warned about this for some time. And I think you guys know this, you know, in my spare time, I'm the mayor of Fort Wright, we confirmed with our bank a long time ago that you can't use voice authentication to do any sort of banking. So, voice authentication would be, you know, in addition to, like, I get a six digit code via text or something, I use my username and password to log in, I can use my voice to confirm it's me.
So, here you have Sam Altman go to the Fed and warn, now let me read a direct quote, "Altman immediately brought up how powerful AI models are now capable of perfectly reproducing anyone's voice based on a few short audio samples and issued us warning. A thing that terrifies me is, apparently, there are still some financial institutions that will accept the voice print as authentication for you to move a lot of money or do something else. That's the craziest thing to still be able to do. AI has fully defeated that." So, that's end quote.
And, yeah, I confirmed that our bank does not allow this a long time ago. I would never use this anyway. Because I can tell you, guys, right now, either one of you can go do a search, you can find a website that will clone someone's voice, create a deep, fake clone of their voice, and you're them in less than 15 minutes. And the question I always get, guys, is, "Well, Dave, I'm not a celebrity. I'm not on the radio like Bob and Brian, how would I get their voice, or get...?" And then my answer is...
Brian: I'm just going to be quiet for the rest of this entire segment to protect myself and my family. Bob, you got it.
Dave: There you go, Brian. Do you have a voicemail greeting? Because if you do, and I call your phone, I have your voice. I can record that, feed that into one of these models that are free, and I could now potentially access your bank as you and steal all your money. Now, again, I know this sounds crazy to people, but this is an old doomsday Dave warning you. It's Sam Altman, the CEO of OpenAI telling the Fed this is a real thing, and that banks have to stop allowing this practice.
Brian: All right. Well, Dave, just for the record, I trust Dave Hatter as much as I trust anyone that I've ever known, met, or read about on these topics. So, let's just cut to the chase. Are you aware of any financial institutions that are still taking voicemail messages or voiceovers to give access to accounts? Is that still happening out there? Are you seeing people where that's still happening?
Dave: I mean, I can't say for sure, Brian, that I've seen it. The bank we use for the city, my own bank, USAA, doesn't allow it anymore. But what I would encourage people to do is check with your bank. If your bank allows this, ask them to disable it for your account, or any sort of financial institution, or really anywhere. Anywhere that you could potentially be authenticated using your voice, you should disable that feature, ask that institution to disable that feature. And if you can't, then I would suggest you find a different institution because the risk is getting increasingly high.
And I know, again, people are going to say, "Well, how would you get my voice?" Anywhere in some video on social media that perhaps your kids posted, in your voicemail greeting on your phone. Someone could potentially get that, and now, they are you in a short period of time. I encourage all your listeners, go check themselves, and either disable this, or if you have to, consider switching institutions, because the risk is that great.
Brian: Yeah. So, Dave, one of the places I run into this frequently with my clients, and really all advisors do, is people's retirement plans. Because that's not something... Normally, people are logging into the website to get the information they need, which is just to move the investments around or whatever, but some things require that you speak to a warm body on the other end. And very many of these, I can tell, as we're sitting on hold waiting for the robots to get us through to that warm body, I can tell that the client has set up that voice print thing. So, that's a very frequent place and people might forget that. We think about our bank accounts only, but the retirement plans are the big one there, I think, in terms of people being able to dig into your finances. And maybe that's stuff we might forget.
Bob: You're talking about, like, 401(k) plans, right, Brian?
Brian: Absolutely, 401(k), 403(b), that kind of thing. I run into that all the time, sitting at the table, where we got to do a rollover or whatever. And that's how the client has before we met, has set up their password to get into there when they make phone calls. I think the big thing here is to make sure you're using the technology, the web-based side of things more often than you are the humans. I feel like there's just about everything we need to get done, we can get done without pulling the people in, which would prevent the need to make the phone call in the first place.
Dave: Well, you make an important point there, Brian. And, yeah, anytime you can initiate something yourself without clicking a link, like you get an email from the purported institution and you click a link and go there, that could be phishing. Could you get a human being on the other end that's a trained con artist that's scamming you? Yes, you could. Anytime you initiate something, that's always better. You go to raymondjames.com, or edwardjones.com, or whatever it is, I'm not here to support any particular institution, but you start that transaction, if you can do things over the web, if you can authenticate yourself using a strong, unique password for every account and multi-factor authentication, that's going to be better than anything that is a weaker form of authentication.
And this voice print thing, again, I just can't stress enough to people, if you're using your voice to authenticate yourself in any way, it could easily be stolen, cloned, and you could potentially, find that your accounts are drained. So, I encourage people to check that out and act quickly. Strong unique password in every account, multi-factor authentication, you're going to be much better off than most people, certainly anyone who still allows these weaker mechanisms to identify themselves.
Brian: So, Dave, I think you kind of answered the question I was about to ask, but in terms of, okay, so what does Dave like? So, multi-factor authentication, that kind of thing. Do you use authenticator apps? For example, I know Google has the Google authenticator, that kind of thing. Are those becoming... I see it every now and then, but I don't see it everywhere I expect to. Do you anticipate that more and more financial institutions are going to allow that kind of an app? And actually, maybe could you describe that a little bit too?
Dave: Sure. I hope the answer is yes or pass keys. I'll come back to that in a second. And I know we don't have a ton of time. Maybe we'll talk about pass keys in a future segment. But the bottom line is, any sort of multi-factor authentication, minus the voice, is better than none because it creates an additional barrier for the bad guys to get over. They've got to get that six digit code. It's much easier to intercept the text than it is if you're using an authenticator app like you mentioned.
Now, guys, I try to avoid anything from Google. Microsoft has an authenticator app. There are third party apps like Authy. An authenticator app, basically, requires that the bad guys can access your device, unlock your device, and open the authenticator app to get the encrypted code that has been sent, as opposed to just a clear text that was sent to you from some institution. The bar is much higher. I could sim swap your phone and get that text. There's all kinds of ways I could potentially get that text message. With an authenticator app, these are free by the way, Authy is free, for example, the Microsoft authenticator app is free, typically, you would go into your account. You'd go into multi-factor authentication. You'd say, "I want to set up an app." You scan a QR code inside that app. It connects the app to there. Now, the codes are being sent in encrypted form only to the app on your device. It's connected to your device.
So, again, I've got to have your device, aka your phone. I've got to unlock the phone. I've got to open that app to get that encrypted code. It's much more secure than just a plain text. Text better than nothing, guys. Turn on the text-based MFA for sure if that's all you can do or all you know how to do. But an authenticator app, raises the bar one more level, makes you a much more difficult target. Then real quick, a passkey, it's a way for you to create essentially a key, a secret encryption key that's shared between you and a website. So, they've got to steal your device to get that key. It's a little more complicated than that. That's not a perfect description. And we don't really have time to get into it. But if a site supports passkeys, much, much harder to crack.
Bob: All right. We'll have to leave it there for today. Great stuff as always, Dave. Thanks as always for coming on with us. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. You have a financial question you'd like for us to answer, there is a red button you can click while you're listening to the show right there on the iHeart app. Simply record your question and it will come straight to us.
Ever wish you could save a few percentage points more, put more money away without changing your paycheck or your investment choices? There's new research out there showing a mental trick that can help you sock away more money each year. Brian, I'm anxious to get your take on this. It just seems like a lot of psychological mumbo jumbo to me. But what say you?
Brian: Sure. Yes, well, that's coming from some pretty smart people at Harvard Business School. So, a decade long study was concluded. They tracked 14 people over 10 years, more specifically, in terms of their activity, and then they did surveys over 106 more. And so, one of the key takeaways from this study, Bob, was that retirees usually struggle when their vision of happiness is unclear or lacks purpose. Now, that's the statement that came out of the study. You and I spend lots of time sitting at these tables with financial planning and I can guarantee you that's the case.
One of the conversations I always have with my clients is, let's not hide behind the money. A lot of people hide behind the money. There's not enough, there's not enough. I've got to save, save, save. And they spend absolutely no time, no energy thinking about, what am I going to do in that vacuum of time hits, and it's Tuesday and I've had my fourth cup of coffee 10:00 in the morning and I have no idea what I'm going to do that day? So, Harvard is proving something that financial advisors have already had conversations about.
But anyway, so another study coming out of Indiana University discovered that about 80% of the time, people who think about their future start by thinking about the present. Now, that kind of makes sense. The present is what we know. So, I'm assuming my future is going to, at least, kind of sort of rhyme with that. So, they wanted to spin that a little bit. And they tried something different by asking people not where they were or how they planned to get to retirement. Instead, they said, where do you want to end up? Not how are we going to get there. It's what do you want it to look like when you do get there? And just that shift kind of helped people to get past those mental roadblocks and start saving more. And that's a planning technique that we use as well. Forget everything you know. Just think about, what would make you happy in the future. If you wind up happy, what are the things that got you to get there? If you wind up unhappy, what are those things that got you to get there?
Bob: All right. I guess I'll show my age here, Brian. To me, this is just some data out there, studies, whatever you want to call it. And the term that comes to my mind is just delayed gratification. Instead of just thinking about today, you do need to think about what your life's going to look like 10, 20, 30 years down the road. That's called being an adult. That's called planning ahead. It's called saving for tomorrow instead of spending everything today. Am I just a grumpy, old man, Brian?
Brian: Yes, but we already knew that. So, that's not really news today, but let's look at another study, Bob, since you had so much fun with the first two. Here's a third one. So, this one came out of Sweden, 6,700 customers of a Swedish fintech company. People with low balance savings accounts were 14% more likely to invest in a long-term savings product when they were prompted to think about their future selves first. And the simple prompt that they used was, and I'm quoting here, "The year is 2034. Rewind back to 2024, and consider saving for 2034."
This is honestly, yeah. This is not unlike what we do for a living here, Bob. We're always talking about, what is it going to look like? When you need to think about your retirement, what is that going to look like? And that's an important question. A lot of people don't like it. People come in thinking financial planning is simply about, "I've got a pile of money that's this big. I simply need a bigger pile of money and all of my questions will be answered." And that is just not how life works. We need to think with the goal in mind, what do you want your retirement to look like? That means, when is it going to happen? What will you need to spend to keep yourself happy? What kind of fudge factor should we build into it to account for the fact that you want to travel a lot more than you are right now, for example, but you don't have the time to do it? Those kinds of things.
Bob: You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. All right, Brian, let's get into some interesting self-experiments that folks could try as part of this study. Some things, that practical advice to get people thinking about their futures.
Brian: Yeah, sure. So, you can start with some silly things just to get yourself in the mood. There's some platforms out there that will let you upload a photo of yourself and ask what you're going to look like at specific ages. That's a little bit on the silly end, but other ones suggest writing a letter to yourself at age 75, basically saying, "Here's what was in my brain at age 45," or whatever it is that I am now. "Here's how I want to feel, spend and give." And that's something you can file away and pull out later and see if it still sticks. But at least, you'll know you'll be able to get back in touch with your past self and know where you were at one time.
And sometimes it's simply just take a few minutes to walk through retirement. What is a typical day like 10, 20, 30 years from now? Where are you? Where do you live? What makes you happy? How are you occupying yourself? And what are the things that are most important to you? This can be a pour beverage and sit there and stare off into the distance and think. That is a good exercise, I think, for a lot of people that when we focus too much on the money, we kind of forget that the lunch meat between our ears is where it's all going to matter.
Bob: Here's the Allworth advice, make your future self feel like your present self, and your wallet will thank you later. Coming up next, we've got Brian's bottom line with some warnings out there about falling into lifestyle creep. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. And it's time for Brian's bottom line, where Brian is the adult in the room today warning all of us about the dangers of lifestyle creep. All right, I'm bracing for your wise advice here, Brian.
Brian: Saves like wisdom here. No. So, this is something that affects all of us, right? So, we spend a lot of time talking to people about what lifestyle is like, what they think is going to happen, what they think they're going to do prior to retirement, and then what actually happens. Sometimes those can be very, very different. Some people wind up doing a lot less than they thought because they find out that all that traveling they wanted to do can be really kind of exhausting, so they do less. Some people never thought about what they wanted to do, and were surprised by how much they're out there. "Now, I've got time to do it, so I'm going to go see all my friends all over the country, all over the world," or whatever. And what happens is they fall into something that we call lifestyle creep, basically, spending more than you used to because your lifestyle has changed. Whenever we have a vacuum of time, we tend to fill it with spending.
So, what does that look like? So, when you're working, you're a busy person. You have structure, you got routine, and there's not a lot of time to spend money during the day. But when you have retired, Bob, every day is Saturday, and Saturdays can get pricey, right? I got all day long. I'm going to go to that restaurant in every winter. I'm going to squeeze in nine holes, and then I'm going to go to another restaurant because a friend just texted me who also has the same situation. And all of a sudden, we're just kind of making it rain all over town. That's not a bad thing. That's kind of awesome, especially for the first few months and years of retirement. But if that becomes habit, you may be adjusting your financial plan.
So, we also saw a recent MarketWatch story. There was a couple who retired with about a million and a half dollars in savings. But in about a year and a half, their monthly expenses jumped by about 30% because of all these things that we were talking about. They've got the time, so they're going out and doing things. And they run across friends who are in the same situation. In a group of friends, it only takes one or two of them to say, "Hey, there's a new restaurant on the other side of town. Let's go try it out. None of us has anything to do tonight."
Bob: Yeah, now, that part resonates with me because I see this happen often. Folks, their activities will tend to correlate to what their friends are doing. And not all of our friends have the same income that we do or net worth that we do or ability to spend that we do. So, you do have to watch that. Just because your friends are doing something doesn't mean that you're able to participate in all of those things. Because as you pointed out, it can cost more money and things can add up. So, maybe I need to just think about my retirement activities as just picking weeds in the yard, or as our friend Steve Ruby likes to say, "Take a long walk in the woods." These are all things that don't cost any money, Brian. Am I on the right track?
Brian: No, you're absolutely on the right track. And I think if you're somebody who is...if you feel like you have a tendency to need to keep up with the Joneses, that's easy to tamp that down when you're working and you're too busy, anyway, to do anything with the Joneses. But that can be really, really impactful down the road when you've got nothing, but time. And if you run around with spend to your friends, then that might be something to be paying attention to.
So, what do we do about this, Bob? Well, first of all, know what your spending plan is. So, you have to have a plan in place. Know what your current lifestyle is. Just if you, you know, the simple hunky dory, nothing bad happens, this is just what it costs us to live. And then here is how much surplus income that we can count on a monthly basis. Then now, you have guardrails. So, I know what it costs, you know, to keep the basics, you want to keep the ship afloat, but now, I know what the other guardrail is. We've got X amount we can spend every month. And sometimes we're going to go above that, but there'll be other months where there's just not much going on and it'll kind of cancel out as well. And there's a difference, Bob, between one-time splurges and recurring habits. A two-week vacation is different from upgrading to first class for every single flight. So, be very mindful of that as well.
Bob: Absolutely. Yeah. All right. Good stuff, Brian. Thanks for listening. You've been listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
Brian, let's start off this show with a famous quote from Chinese philosopher Laozi, which goes like this, "Those who have knowledge don't predict, those who predict don't have knowledge." That being said, the predictions for where the markets will be next year are now starting to roll out, and that's where this gets fun. Morgan Stanley's chief strategist, Mike Wilson, says the S&P 500 could hit $7,200 by the middle of 2026. That's a 13% climb from where we are now. Brian, it's a bold call. Talk about how Mr. Wilson's prior calls have gone in terms of predicting the market's direction and magnitude of moves.
Brian: Well, first, I want to compliment you for quoting ancient philosophy. And I think I really want to adjust the show where we kick it off every day like that. I want to hear from Bob Sponseller on ancient philosophical points of view. I appreciate that. But on the Morgan Stanley...
Bob: Brian, I grew up in Green Hills, and I used to sit cross legged in Winton Woods and read books like this all the day. That's what my childhood was like, Brian.
Brian: A peek into the mind of Bob Sponseller. So, on to more serious things now. So, yeah, Morgan Stanley, you might have heard of them, big financial institution. Obviously, they know what they're doing. They've been around for a very long time. But the chief strategist is out there throwing out predictions. And it's interesting because he's got a little bit of history of this. And to be fair, every big financial institution has a history of this. They all make headlines making predictions. That's what they get paid to do.
So, he was one of the most bearish voices just a year ago, and not a whole lot of scary has happened with the exception of April. We haven't had that much craziness in the market over the past 12 months. So, he's calling this a broadening out rally, and he's referring to AI as something that's kind of boosted the market. We've talked about that frequently on this show as kind of a catalyst. Stronger earnings, we're in a really good earnings season so far, knock on wood. And just an overall, favorable, macroeconomic backdrop. Things are just kind of going well right now.
So, all this means, companies are making more money. The U.S. dollar's a little weaker. And remember, that is not a bad thing. Weak, it has a negative connotation. So, what that means is our products can become a little cheaper for the rest of the globe to buy. That's going to be volatile as we kind of go through these ebbs and flows of international relations here. But also, there's just a lot of hype going into AI. AI is the catalyst. That's going to be the catalyst of this time of year, of this time of the economic cycle. In the past, it's been the cloud, it's been mobile devices, it's been the internet, it's been real estate, or whatever. There's always something that somebody can get excited about.
So, anyway, he's kind of citing all of that as reasons to be positive about the overall market. He's expecting the Fed itself to start to play a role by cutting interest rates into early 2026. That would push price to earnings ratios a little bit higher. Basically, investors paying more for stocks if borrowing costs are lower, meaning I'm willing to pay more for these stocks and run the prices up. So, Bob, what about the history? Is this Wilson guy always right?
Bob: Well, I want to be clear, this is not a segment to pick on Morgan Stanley and their chief strategist, Mike Wilson. I'm sure he's a very bright guy and works very hard. The point of this segment is that it's very difficult to predict the timing and the magnitude of major market moves. And that's where we want to cite some of Mr. Wilson's prior predictions. In late 2022 and early 2023, Wilson warned that the S&P 500 could plunge to 3,000 to 3,200. Instead, the index soared, nearly 18% in 2023 to reach record highs. And then he came out later on and formally admitted, "We were wrong." In April 2024, after staying bearish through most of 2023, despite the rally continuing, Wilson stepped back from his prior index level predictions entirely, calling forecasting a "Humbling business."
And that's the point we're trying to make. It is a humbling business to sit out there and try to predict the timing and the magnitude of the stock market moves, interest rate moves. It's just a fool's errand. And yet we're always shocked, Brian, with how many people, their livelihood seems to depend on going out with bold predictions, getting out there on the media, getting their face on television, and making these predictions, which oftentimes, influence the behavior of ordinary investors out there to their detriment.
Brian: Yeah, let's set the table a little bit for Mr. Wilson. Remember, so what you just said, in late '22 and '23, he was warning of an S&P 500 plunge. That wasn't that outlandish back then because, first of all, we were still looking for the second leg down, right? That was a term that was used frequently by the talking heads on the media airwaves. Second leg down, right? This isn't over with. We're going down further. And we were also talking about, are we going to have a soft landing? Are we going to have a hard landing when this procession was going to finally hit?
Well, you know, and I've talked about this before, it seems like we had no landing, right? I think a soft landing is when you just stop talking about any kind of landing whatsoever. Because we just kind of moved on, and now, we're where we are and the market has moved up. But it wasn't that outlandish. Yes, we are picking on it a little bit because this isn't just one example of when one of these predictions didn't go the right direction. It's just a fairly recent one from a pretty prominent financial institution. But at the time, it wasn't that outlandish to hear.
So, here's another, the Federal Reserve itself is a little bit guilty of this, too. The Fed rate cut predictions, the Fed signaled a median projection of around three quarter point rate cuts in 2024. That was, they said that in December of 2023, and that never quite came to pass. Financial markets were increasingly betting on this, even talking about maybe there's going to be seven or more of these. But how many times did the Fed actually lower interest rates in 2024? The Fed did what they were going to do. It was the prognosticators in the media and the financial institutions who were wrong. So, we have to be careful exactly who we listen to.
Bob: You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. All right, Brian, let's pivot to some more recent, hot off the press headlines here today. And that's the earnings news and some layoff news and restructuring going on at Cincinnati's own Procter and Gamble. Let's get into the earnings call information and go from there. Brian, fill us in.
Brian: Yeah, so the P&G reported during its quarterly earnings call this morning that the tariffs that are coming out of the administration of President Trump are contributing to price hikes at the consumer goods giant, as it reported its slowest growth rate in nearly a decade. Andre Schulten is their Chief Financial Officer. And he basically characterized 2025 as a shocker, get this, "A challenging year." And they're citing a mixture of consumers pulling back on spending as well as the tariffs as well.
So, the company does expect to have to increase pricing on some of its products. And we can be sure that that's going to hit the headlines as a sign of inflation triggered directly by the tariffs for those that want to Trump it that. So, he's expecting prices to go up by about 2% to 2.5%, which if you think about it, and he cited this too, that's kind of typical inflation in terms of prices. But since it's a big company that's hitting a little close to home, that's going to feel like getting tied directly to the inflationary headlines that are out there, anyway.
Bob: Well, and he also had a little bit to say during the conference call this morning about a planned restructuring that could result in layoffs of up to 15% of its non-manufacturing workforce. And that was announced in June and it's going to start to roll out here. And again, that's going to impact some of our friends here in Cincinnati. Brian, I know you've had some actual experience with folks that you work with around this. What can you talk about based on what you've seen so far with this non-manufacturing position rollout likely coming out here soon?
Brian: Yeah, I'm sure I'm not the only one in this hallway that's hearing from our clients about these kind of concerns. So, the headline is that P&G is going to shed 7,000 jobs by the end of fiscal year '27. And they're expecting to incur half the cost coming from this by the end of '26, and then spreading that into '27. So, that's what we're talking about. Now, how does it impact the individuals that are out there?
So, I had a meeting last week with somebody who... The rumors are flying around now. I'm sure those of you working for P&G or for companies supporting them because it has a ripple effect across all those. And I believe there's about 10,000 people in Cincinnati who either work directly for P&G or work for a company that supports them. So, one little pebble leaves a lot of ripples out there. But in any case, what we are hearing is that the pink slips are expected to be heard, obviously, over the remaining package of this year. Packages possibly going out in August. This is pure speculation, just people thinking out there. There may be packages, there may be no packages, but a lot more clarity coming here in the month of August.
Now, how are people reacting to it? I would call it apprehensive. You know, this is not a new thing for P&G. Every few years, this is just part of the process, and really lots of companies do this, look to reduce costs by encouraging retirements and then replacing those positions with lower-paid younger people, just kind of resetting the table. And it tends to come with a little bit of apprehension because people are having to consider retirement maybe a little bit earlier than they were otherwise, and that can be a little bit of a cold water shock for people. If the package has come around, that can reduce a lot of the financial stress of it, but you don't know until you know.
So, what I would say is, and not just to my P&G folks out there, you should have a financial plan in place. Because if this does come your way, again, P&G or not, if unexpected things happen to your job, your career, or your spouse's, then you should already know what position you're in. Then you can clearly define, okay, new information, we're losing an income, income's being reduced, maybe somebody has to retire, whatever, what kind of impact does that have on the plan that we thought was our stable, go-forward plan? And that will help you reduce a lot of the stress related to these big decisions.
Bob: All right, good stuff, Brian. Here's the Allworth advice, focus on quality and diversification and have a financial plan in place for events coming down the pike like what we just talked about. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. If you can't listen to "Simply Money" every night, subscribe, and get our daily podcast, you can then listen the following morning during your commute or at the gym or in your walks around the neighborhood at night. And if you think your friends could use some financial advice, tell them about us as well. Just search "Simply Money" on the iHeart app or wherever you find your podcasts.
Straight ahead at 6:43, the mental trick that could boost your retirement savings by up to 14%. Did you hear about this email from Social Security that recently went out to folks saying nearly 90% of people won't owe in taxes on their Social Security benefits anymore? Yeah, it turns out that was not exactly true. And it sounds like the Social Security administration is starting to clumsily roll back that "advice."
Brian: Yeah, anytime we talk about tax reduction, that gets a lot of attention. And, you know, somebody behind the scenes at Social Security was really focusing more on the how do we get people to pay attention, and less on the how do we get the truth out there? So, this came from their blog, the Social Security blog. This is not just talking heads and influences out there. This is Social Security administration themselves. The blog post basically said, "Hey, huge tax relief. Most of you aren't going to pay taxes on Social Security anymore." Just a few days later, though, "Hey, heaven forbid." That post just quietly went away. And the truth is really not much about how Social Security benefits or tax is actually changing.
There was a small temporary deduction coming through in the new tax law up to about $6,000 for single filers over 65 and 12,000 for couples. Now, that's a deduction. So, if you qualify for this, for the small window people who get it, the $6,000 if you're in let's say you're in a 15% bracket, that means $900 coming back your way. You know, for a single and 12,000, maybe you get $2,000 coming back. That is a far cry from your Social Security no longer being taxed. Super confused. The comments section basically exploded on the Social Security administration blog. And lawmakers at this point are saying, "Hey, I know we're in the misinformation era at this point, but this one, we need to get right and get out some new message." So, sorry, folks, the moose out front to the told you that you're still getting taxed on your Social Security.
Bob: All right. Well, Brian, this brings up a question and this is an honest question. I'm putting you on the spot here. If you don't know the answer, we'll both need to go look this up. But this $6,000 deduction for single filers over 65, and $12,000 deduction for couples, is that an itemized deduction or is that a separate deduction against Social Security benefits? Because depending on what that answer is, that really makes a difference in terms of the actual tax outcome for folks. Do you happen to know the answer to that question? Because I don't.
Brian: Well, it's the famous answer that everybody hates, it depends on your tax situation, whether you're going to be able to benefit from this. It's not everybody. So, nobody should be looking for that one checkbox on the 1040 form that says, "Yes, please give me a $6,000 deduction." There are moving parts to it and the majority of people will not qualify for it.
Bob: Okay, moving on. So, yeah, like you said, sorry, folks, the moose out front should have told you. All right. We know not everybody is deep into crypto, but this news caught our attention. Telegram. It's a messaging app you might use for family chats or even fantasy football trash talking. Believe it or not, they just rolled out a built-in crypto wallet to all 87 million U.S. users of Telegram. Ryan, what could possibly go wrong here? Allowing Telegram users to exchange and trade crypto right there on a messaging app, wow.
Brian: So, Bob, I have a feeling a lot of people are kind of raising their eyebrows going "Telegram. What is that? I've never heard of this." Well, there's 87 million U.S. users. There's a billion around the globe. So, this is much more of an everywhere but the U.S. type of a thing. Not that there aren't users here. There certainly are, but it's a much bigger focus elsewhere.
But anyway, so what's happening here is they have something called TON, short for The Open Network. That's right inside the Telegram app. I think it's a good example to look at because this is probably not the last time we're going to hear some things like this. So, you've already got an app on your phone you're using to communicate, and then all of a sudden, poof, you have a crypto wallet right there in your chat app. So, what Telegram is trying to do is make crypto as easy as sending a text. So, meaning, if you want to pay for something, you can send crypto right to somebody else's wallet just the way you'd Venmo them right inside your conversation thread where you're already texting them about whatever you owe them for, anyway.
Now, Bob, the first thing that jumps off the page here is I have not heard of people actually using crypto as a currency. As a matter of fact, we don't even call it cryptocurrency anymore, it's just crypto. It's something that people speculatively invest in. We're not looking to pay somebody back at Starbucks for buying me a cup of coffee. This is something that gets hoarded and speculated against.
I remember when, maybe four or five years ago, I think Tesla and I think Apple and a few other companies were briefly accepting crypto for their products and services that they sell. But then they realized that a big, publicly-traded company cannot have its accounts receivable bouncing up and down because it's denominated in some kind of currency that is extremely volatile. So, that quietly went away. I'm not real sure that this is going to get a whole lot of traction anytime soon.
Bob: Well, the thing that jumps out to me and, I guess, this is just, I don't know, a warning shot across the bow to maybe kids and grandkids out there of our listeners. I know enough about this stuff to be dangerous, but I do know, any of these "wallets," the first thing they want to do, you know, whether it's Venmo or any of this stuff, is they want you to enter your bank account information. They want access to your bank account. And that's where things can go or arrive very quickly if, you know, there's hacking or there's fraud or anything like that. Or as you said, just the volatility of cryptocurrency, some people could be in for some real rude awakening here. So, that that's kind of what we're saying here. Look out, be careful, warn those folks in your life, your younger loved ones out there. Don't be too quick to jump on board here, and be real careful about sharing your banking information.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. Anything you want to add to this whole TON crypto thing?
Brian: Well, I mean, at first, TON, that's just Telegram's flavor of it. I mean, other companies are going to follow in kind. Everybody wants on the crypto bandwagon, no matter what they do. Remember what Telegram is, this is not a crypto company, they were a communications company. But now, because they are out there, they're in the infrastructure, they're all on the network with people's phones, then it's an easy way to kind of build on to that. But I think, crypto in general, it's a thing, it's not going away. And it's going to, at some point, show itself as a way to kind of diversify a portfolio and something to be useful to be invested in. I don't think that time is now, though, Bob, because it's just it's nothing more than a speculative asset.
I get questions every now and then, "Well, how about we should we put some crypto in the portfolio?" And my thought there is we don't know enough yet about how it behaves in different environments. We haven't seen every kind of environment like we have, you know, with the overall stock market. I can tell you what cyclical companies will do in up markets and down markets. I can tell you what growth companies will do, because there's a century plus worth the history there. As far as crypto as an asset and overall portfolio, I think right now, it's a lottery ticket, and nobody thinks of it as I'm going to use this to offset something. That's the way it was originally positioned, it'll offset currency, you know, normal currency fluctuations, it can protect against stock market fluctuation, so on, and so forth. But it seems to be just as volatile so far.
Bob: Here's the Allworth advice, just because an app puts crypto in your pocket doesn't mean it belongs in your portfolio. Coming up next, there's a new warning tonight from one of tech's biggest names, what it could mean for your money. We're going to have our tech and cybersecurity guru, and I do mean guru, Dave Hatter is in next to give us the latest in some of these fraud warnings. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James, joined tonight by our technology and cybersecurity guru Dave Hatter. We always love having Dave on the show. And, Dave, you've got a real important topic to cover tonight. This is something to wake up and pay attention to, Sam Altman, the CEO of OpenAI came out with some stark warnings about AI's ability to mimic our voices and use that to hack into our accounts. Let's get into this because this is important stuff, Dave.
Dave: Yeah, it really is important. So, Sam Altman, again, CEO of OpenAI, the people that make ChatGPT and other fairly well known generative AI products warned about this. Now, many people have warned about this for some time. And I think you guys know this, you know, in my spare time, I'm the mayor of Fort Wright, we confirmed with our bank a long time ago that you can't use voice authentication to do any sort of banking. So, voice authentication would be, you know, in addition to, like, I get a six digit code via text or something, I use my username and password to log in, I can use my voice to confirm it's me.
So, here you have Sam Altman go to the Fed and warn, now let me read a direct quote, "Altman immediately brought up how powerful AI models are now capable of perfectly reproducing anyone's voice based on a few short audio samples and issued us warning. A thing that terrifies me is, apparently, there are still some financial institutions that will accept the voice print as authentication for you to move a lot of money or do something else. That's the craziest thing to still be able to do. AI has fully defeated that." So, that's end quote.
And, yeah, I confirmed that our bank does not allow this a long time ago. I would never use this anyway. Because I can tell you, guys, right now, either one of you can go do a search, you can find a website that will clone someone's voice, create a deep, fake clone of their voice, and you're them in less than 15 minutes. And the question I always get, guys, is, "Well, Dave, I'm not a celebrity. I'm not on the radio like Bob and Brian, how would I get their voice, or get...?" And then my answer is...
Brian: I'm just going to be quiet for the rest of this entire segment to protect myself and my family. Bob, you got it.
Dave: There you go, Brian. Do you have a voicemail greeting? Because if you do, and I call your phone, I have your voice. I can record that, feed that into one of these models that are free, and I could now potentially access your bank as you and steal all your money. Now, again, I know this sounds crazy to people, but this is an old doomsday Dave warning you. It's Sam Altman, the CEO of OpenAI telling the Fed this is a real thing, and that banks have to stop allowing this practice.
Brian: All right. Well, Dave, just for the record, I trust Dave Hatter as much as I trust anyone that I've ever known, met, or read about on these topics. So, let's just cut to the chase. Are you aware of any financial institutions that are still taking voicemail messages or voiceovers to give access to accounts? Is that still happening out there? Are you seeing people where that's still happening?
Dave: I mean, I can't say for sure, Brian, that I've seen it. The bank we use for the city, my own bank, USAA, doesn't allow it anymore. But what I would encourage people to do is check with your bank. If your bank allows this, ask them to disable it for your account, or any sort of financial institution, or really anywhere. Anywhere that you could potentially be authenticated using your voice, you should disable that feature, ask that institution to disable that feature. And if you can't, then I would suggest you find a different institution because the risk is getting increasingly high.
And I know, again, people are going to say, "Well, how would you get my voice?" Anywhere in some video on social media that perhaps your kids posted, in your voicemail greeting on your phone. Someone could potentially get that, and now, they are you in a short period of time. I encourage all your listeners, go check themselves, and either disable this, or if you have to, consider switching institutions, because the risk is that great.
Brian: Yeah. So, Dave, one of the places I run into this frequently with my clients, and really all advisors do, is people's retirement plans. Because that's not something... Normally, people are logging into the website to get the information they need, which is just to move the investments around or whatever, but some things require that you speak to a warm body on the other end. And very many of these, I can tell, as we're sitting on hold waiting for the robots to get us through to that warm body, I can tell that the client has set up that voice print thing. So, that's a very frequent place and people might forget that. We think about our bank accounts only, but the retirement plans are the big one there, I think, in terms of people being able to dig into your finances. And maybe that's stuff we might forget.
Bob: You're talking about, like, 401(k) plans, right, Brian?
Brian: Absolutely, 401(k), 403(b), that kind of thing. I run into that all the time, sitting at the table, where we got to do a rollover or whatever. And that's how the client has before we met, has set up their password to get into there when they make phone calls. I think the big thing here is to make sure you're using the technology, the web-based side of things more often than you are the humans. I feel like there's just about everything we need to get done, we can get done without pulling the people in, which would prevent the need to make the phone call in the first place.
Dave: Well, you make an important point there, Brian. And, yeah, anytime you can initiate something yourself without clicking a link, like you get an email from the purported institution and you click a link and go there, that could be phishing. Could you get a human being on the other end that's a trained con artist that's scamming you? Yes, you could. Anytime you initiate something, that's always better. You go to raymondjames.com, or edwardjones.com, or whatever it is, I'm not here to support any particular institution, but you start that transaction, if you can do things over the web, if you can authenticate yourself using a strong, unique password for every account and multi-factor authentication, that's going to be better than anything that is a weaker form of authentication.
And this voice print thing, again, I just can't stress enough to people, if you're using your voice to authenticate yourself in any way, it could easily be stolen, cloned, and you could potentially, find that your accounts are drained. So, I encourage people to check that out and act quickly. Strong unique password in every account, multi-factor authentication, you're going to be much better off than most people, certainly anyone who still allows these weaker mechanisms to identify themselves.
Brian: So, Dave, I think you kind of answered the question I was about to ask, but in terms of, okay, so what does Dave like? So, multi-factor authentication, that kind of thing. Do you use authenticator apps? For example, I know Google has the Google authenticator, that kind of thing. Are those becoming... I see it every now and then, but I don't see it everywhere I expect to. Do you anticipate that more and more financial institutions are going to allow that kind of an app? And actually, maybe could you describe that a little bit too?
Dave: Sure. I hope the answer is yes or pass keys. I'll come back to that in a second. And I know we don't have a ton of time. Maybe we'll talk about pass keys in a future segment. But the bottom line is, any sort of multi-factor authentication, minus the voice, is better than none because it creates an additional barrier for the bad guys to get over. They've got to get that six digit code. It's much easier to intercept the text than it is if you're using an authenticator app like you mentioned.
Now, guys, I try to avoid anything from Google. Microsoft has an authenticator app. There are third party apps like Authy. An authenticator app, basically, requires that the bad guys can access your device, unlock your device, and open the authenticator app to get the encrypted code that has been sent, as opposed to just a clear text that was sent to you from some institution. The bar is much higher. I could sim swap your phone and get that text. There's all kinds of ways I could potentially get that text message. With an authenticator app, these are free by the way, Authy is free, for example, the Microsoft authenticator app is free, typically, you would go into your account. You'd go into multi-factor authentication. You'd say, "I want to set up an app." You scan a QR code inside that app. It connects the app to there. Now, the codes are being sent in encrypted form only to the app on your device. It's connected to your device.
So, again, I've got to have your device, aka your phone. I've got to unlock the phone. I've got to open that app to get that encrypted code. It's much more secure than just a plain text. Text better than nothing, guys. Turn on the text-based MFA for sure if that's all you can do or all you know how to do. But an authenticator app, raises the bar one more level, makes you a much more difficult target. Then real quick, a passkey, it's a way for you to create essentially a key, a secret encryption key that's shared between you and a website. So, they've got to steal your device to get that key. It's a little more complicated than that. That's not a perfect description. And we don't really have time to get into it. But if a site supports passkeys, much, much harder to crack.
Bob: All right. We'll have to leave it there for today. Great stuff as always, Dave. Thanks as always for coming on with us. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. You have a financial question you'd like for us to answer, there is a red button you can click while you're listening to the show right there on the iHeart app. Simply record your question and it will come straight to us.
Ever wish you could save a few percentage points more, put more money away without changing your paycheck or your investment choices? There's new research out there showing a mental trick that can help you sock away more money each year. Brian, I'm anxious to get your take on this. It just seems like a lot of psychological mumbo jumbo to me. But what say you?
Brian: Sure. Yes, well, that's coming from some pretty smart people at Harvard Business School. So, a decade long study was concluded. They tracked 14 people over 10 years, more specifically, in terms of their activity, and then they did surveys over 106 more. And so, one of the key takeaways from this study, Bob, was that retirees usually struggle when their vision of happiness is unclear or lacks purpose. Now, that's the statement that came out of the study. You and I spend lots of time sitting at these tables with financial planning and I can guarantee you that's the case.
One of the conversations I always have with my clients is, let's not hide behind the money. A lot of people hide behind the money. There's not enough, there's not enough. I've got to save, save, save. And they spend absolutely no time, no energy thinking about, what am I going to do in that vacuum of time hits, and it's Tuesday and I've had my fourth cup of coffee 10:00 in the morning and I have no idea what I'm going to do that day? So, Harvard is proving something that financial advisors have already had conversations about.
But anyway, so another study coming out of Indiana University discovered that about 80% of the time, people who think about their future start by thinking about the present. Now, that kind of makes sense. The present is what we know. So, I'm assuming my future is going to, at least, kind of sort of rhyme with that. So, they wanted to spin that a little bit. And they tried something different by asking people not where they were or how they planned to get to retirement. Instead, they said, where do you want to end up? Not how are we going to get there. It's what do you want it to look like when you do get there? And just that shift kind of helped people to get past those mental roadblocks and start saving more. And that's a planning technique that we use as well. Forget everything you know. Just think about, what would make you happy in the future. If you wind up happy, what are the things that got you to get there? If you wind up unhappy, what are those things that got you to get there?
Bob: All right. I guess I'll show my age here, Brian. To me, this is just some data out there, studies, whatever you want to call it. And the term that comes to my mind is just delayed gratification. Instead of just thinking about today, you do need to think about what your life's going to look like 10, 20, 30 years down the road. That's called being an adult. That's called planning ahead. It's called saving for tomorrow instead of spending everything today. Am I just a grumpy, old man, Brian?
Brian: Yes, but we already knew that. So, that's not really news today, but let's look at another study, Bob, since you had so much fun with the first two. Here's a third one. So, this one came out of Sweden, 6,700 customers of a Swedish fintech company. People with low balance savings accounts were 14% more likely to invest in a long-term savings product when they were prompted to think about their future selves first. And the simple prompt that they used was, and I'm quoting here, "The year is 2034. Rewind back to 2024, and consider saving for 2034."
This is honestly, yeah. This is not unlike what we do for a living here, Bob. We're always talking about, what is it going to look like? When you need to think about your retirement, what is that going to look like? And that's an important question. A lot of people don't like it. People come in thinking financial planning is simply about, "I've got a pile of money that's this big. I simply need a bigger pile of money and all of my questions will be answered." And that is just not how life works. We need to think with the goal in mind, what do you want your retirement to look like? That means, when is it going to happen? What will you need to spend to keep yourself happy? What kind of fudge factor should we build into it to account for the fact that you want to travel a lot more than you are right now, for example, but you don't have the time to do it? Those kinds of things.
Bob: You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. All right, Brian, let's get into some interesting self-experiments that folks could try as part of this study. Some things, that practical advice to get people thinking about their futures.
Brian: Yeah, sure. So, you can start with some silly things just to get yourself in the mood. There's some platforms out there that will let you upload a photo of yourself and ask what you're going to look like at specific ages. That's a little bit on the silly end, but other ones suggest writing a letter to yourself at age 75, basically saying, "Here's what was in my brain at age 45," or whatever it is that I am now. "Here's how I want to feel, spend and give." And that's something you can file away and pull out later and see if it still sticks. But at least, you'll know you'll be able to get back in touch with your past self and know where you were at one time.
And sometimes it's simply just take a few minutes to walk through retirement. What is a typical day like 10, 20, 30 years from now? Where are you? Where do you live? What makes you happy? How are you occupying yourself? And what are the things that are most important to you? This can be a pour beverage and sit there and stare off into the distance and think. That is a good exercise, I think, for a lot of people that when we focus too much on the money, we kind of forget that the lunch meat between our ears is where it's all going to matter.
Bob: Here's the Allworth advice, make your future self feel like your present self, and your wallet will thank you later. Coming up next, we've got Brian's bottom line with some warnings out there about falling into lifestyle creep. You're listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.
You're listening to "Simply Money", presented by Allworth Financial. I'm Bob Sponseller along with Brian James. And it's time for Brian's bottom line, where Brian is the adult in the room today warning all of us about the dangers of lifestyle creep. All right, I'm bracing for your wise advice here, Brian.
Brian: Saves like wisdom here. No. So, this is something that affects all of us, right? So, we spend a lot of time talking to people about what lifestyle is like, what they think is going to happen, what they think they're going to do prior to retirement, and then what actually happens. Sometimes those can be very, very different. Some people wind up doing a lot less than they thought because they find out that all that traveling they wanted to do can be really kind of exhausting, so they do less. Some people never thought about what they wanted to do, and were surprised by how much they're out there. "Now, I've got time to do it, so I'm going to go see all my friends all over the country, all over the world," or whatever. And what happens is they fall into something that we call lifestyle creep, basically, spending more than you used to because your lifestyle has changed. Whenever we have a vacuum of time, we tend to fill it with spending.
So, what does that look like? So, when you're working, you're a busy person. You have structure, you got routine, and there's not a lot of time to spend money during the day. But when you have retired, Bob, every day is Saturday, and Saturdays can get pricey, right? I got all day long. I'm going to go to that restaurant in every winter. I'm going to squeeze in nine holes, and then I'm going to go to another restaurant because a friend just texted me who also has the same situation. And all of a sudden, we're just kind of making it rain all over town. That's not a bad thing. That's kind of awesome, especially for the first few months and years of retirement. But if that becomes habit, you may be adjusting your financial plan.
So, we also saw a recent MarketWatch story. There was a couple who retired with about a million and a half dollars in savings. But in about a year and a half, their monthly expenses jumped by about 30% because of all these things that we were talking about. They've got the time, so they're going out and doing things. And they run across friends who are in the same situation. In a group of friends, it only takes one or two of them to say, "Hey, there's a new restaurant on the other side of town. Let's go try it out. None of us has anything to do tonight."
Bob: Yeah, now, that part resonates with me because I see this happen often. Folks, their activities will tend to correlate to what their friends are doing. And not all of our friends have the same income that we do or net worth that we do or ability to spend that we do. So, you do have to watch that. Just because your friends are doing something doesn't mean that you're able to participate in all of those things. Because as you pointed out, it can cost more money and things can add up. So, maybe I need to just think about my retirement activities as just picking weeds in the yard, or as our friend Steve Ruby likes to say, "Take a long walk in the woods." These are all things that don't cost any money, Brian. Am I on the right track?
Brian: No, you're absolutely on the right track. And I think if you're somebody who is...if you feel like you have a tendency to need to keep up with the Joneses, that's easy to tamp that down when you're working and you're too busy, anyway, to do anything with the Joneses. But that can be really, really impactful down the road when you've got nothing, but time. And if you run around with spend to your friends, then that might be something to be paying attention to.
So, what do we do about this, Bob? Well, first of all, know what your spending plan is. So, you have to have a plan in place. Know what your current lifestyle is. Just if you, you know, the simple hunky dory, nothing bad happens, this is just what it costs us to live. And then here is how much surplus income that we can count on a monthly basis. Then now, you have guardrails. So, I know what it costs, you know, to keep the basics, you want to keep the ship afloat, but now, I know what the other guardrail is. We've got X amount we can spend every month. And sometimes we're going to go above that, but there'll be other months where there's just not much going on and it'll kind of cancel out as well. And there's a difference, Bob, between one-time splurges and recurring habits. A two-week vacation is different from upgrading to first class for every single flight. So, be very mindful of that as well.
Bob: Absolutely. Yeah. All right. Good stuff, Brian. Thanks for listening. You've been listening to "Simply Money", presented by Allworth Financial on 55KRC, THE Talk Station.