Amy: Tonight, a surprising jobs report and how that is impacting our recession risk and your 401(k). You're listening to "Simply Money," I'm Amy Wagner, along with Andy Shafer, who's in for Steve Sprovach this week. And we have the A team for you tonight, Andy, Amy, and yes, Andy Stout joins us every Monday. He's Allworth's Chief Investment Officer managing, you know, billions of dollars from right here in Cincinnati. So, he keeps a close eye on this economic data. Andy, surprise late last week, right? We expected the jobs report to start showing signs of kind of the economy tightening, heading toward a recession, and we saw anything but that.

Andy Stout: Well, it was a blowout jobs report. What it showed was that businesses added a whopping 528,000 new jobs. And when I looked under the hood, we saw gains in every single major industry. Education and health service were leading the way, but we also saw some real strength in the leisure and hospitality sector. And here's the thing, if you look at the total number of jobs that are now in the economy, we are back above where we were before the pandemic. So, we just eclipsed the February 2020 high watermark.

Andy Shafer: Hey, Andy. There's some unemployment rate data that I just came across and saw that the unemployment rate ticked down to about 3.5% and matched its lowest level since 1969. Can you talk a little bit about that?

Andy Stout: Yeah. So, when we think about the jobs report, there's two parts. There's one where the government surveys businesses, that's the number of jobs in the economy, and the other is where they survey households, and that's where we get the unemployment rate. And it did tick down matching the lowest level since 1969, 3.5%. And we look at why. It did it for two reasons. One reason was good, one reason not so good, right? The not-so-good one was that 63,000 people left the labor force causing the labor force participation rate to drop from 62.2% to 62.1%. So, that's the not-so-good reason as to why the unemployment fell. But it also fell because 179,000 people found jobs compared to the five months, so we had a total number of employed increase. So, that was a good part of it. So, when we look at that collectively, what we see is, you know, we see businesses adding jobs, we see more people finding jobs, and from that perspective, it's actually pretty good.

Amy: Andy, what the heck is wrong with these people? How do they miss it so badly? And were you surprised? Were you surprised by these numbers?

Andy Stout: Well, the 528,000 new jobs, that was more than double what economists were expecting, which was 250,000. So, yeah, if you're an economist, I mean, you can miss off by a really good amount, and it doesn't really matter too much, yeah.

Amy: It's like being a weatherman. It's like being a meteorologist, like, "Oh, I said it was gonna rain, but it's sunny today. I said that, you know, we were gonna lose jobs and we gained half a million."

Andy Stout: Yeah. Well, it's a tough job, either one. But there's another part of the jobs report I wanna talk about, Amy and Andy, and that is the average hourly earning. So, it shows wages from people who are getting jobs and working. And what we see, or what we saw, at least in the month of July is that the change from July to June, we saw wages increase by 0.5% and that's pretty quick. And that's not necessarily a good thing, I know it might be a good thing if you have a job you get a raise. However, that means inflation, right? And economists were, again, wrong, but they were looking for a 0.3% monthly increase and it increased by 0.5%.

So, that's an issue when it comes to the Fed and what it means for possible Fed rate hikes. So, I'll kind of sum up the job report. The unemployment rate dropped to the lowest level matching the lowest level since 1969. Businesses added many more jobs than what was expected, and wages were accelerating. What that means is that the Fed will stay aggressive in their rate hikes for two reasons. The first is that inflation is still...it's too hot due to that wage number, and the second is the economy can handle the hikes because of the massive payroll number.

Andy Shafer: Andy, there were also some other top economic releases last week and show that the economy is growing. What did the ISM manufacturing and services sectors tell us?

Andy Stout: Yeah, the ISM, which is the Institute of Supply Management, this is an organization that surveys purchasing managers to give us an idea of what the manufacturing sectors of the economy looks like and also the service sector so we can kind of separate the U.S. economy to manufacturing and services. And what we saw was that both of those surveys pointed to more economic growth. We saw a tick-up in business activity, so that's very good from that perspective. Now, the other big takeaway from these surveys was that price pressures appear to be easing some. So, there's different parts of these surveys and, you know, I just mentioned the business activity, but there's also prices, and there was a big drop in prices. Now, it still showed prices increasing, but at a significantly slower pace than what was experienced in the prior month.

Amy: You're listening to "Simply Money" tonight here on 55KRC. We are joined as we are every Monday by Andy Stout, our Chief Investment Officer, to make sense of a lot of these economic numbers that are going out. I mean, Andy, we talk about a stellar jobs report, we've got manufacturing data coming in better than expected. So, that kind of puts the Fed...sort of backs them further into a corner, as you mentioned, to be more aggressive. What do you think this all means to our 401(k)s?

Andy Stout: Well, it really just depends on quite a few things. I mean, our 401(k)s, you know, they're going to be dependent on not just what the Fed does, but also what the economy does, what corporate profits are doing, what companies are earning because earnings are really one of the biggest if not the biggest driver when it comes to long term stock performance. And when we, you know, look at the Fed, you know, they are going to raise rates again. Their next meeting is in September, and what the market is pricing in and what the market's expecting is most likely another 0.75 percentage point rate hike.

We've already had two of those in the last two meetings, so it looks like we might have a third, at least based on where the market's trading at right now. What that would do is that would push the Fed funds rate, which is the overnight rate that banks can lend to each other, to a range of about 3% to 3.25%. And that will have an effect and slow down the economy. I know it works in a little bit of a lag, but there's gonna be an immediate effect there, too, because it also has an impact on mortgage rates and other borrowing aspects.

For example, when you go to a bank, you might see if you look up all those numbers they have listed on their bulletin boards, you know, their prime rate. The prime rate by definition is the interest rate that banks lend to their best customers, their most credit-worthy customers. And mathematically, it's a formula. It's the Fed funds rate plus three percentage points. So, when the Fed is raising rates, that's having an immediate impact on the cost of borrowing throughout the economy, and that will slow down the economy. Will we fall into a recession? Eventually. Don't exactly know when. I mean, the jobs data certainly suggest we're not in one right now, but when we think about your 401(k), you know, there might be some volatility, there might be some uncertainty. There's no question about it.

But, you know, if you're investing for the next three months, probably might not be the best idea to be having any sort of exposure to that if you need that cash. You wanna make sure you have an ample cash reserve, regardless, and really what should be invested should be more for your intermediate and long-term goals, not to pay your mortgage next month, right?

Andy Shafer: Andy, over the weekend, the Senate approved the Inflation Reduction Plan. Will that actually reduce inflation?

Andy Stout: It's probably one of the bigger misnomers out there as far as naming conventions go. I mean, the Senate's looking to spend $430 billion. I understand the argument is that they're raising $300 billion more than that, and that's why they're saying it could reduce inflation and also have a price cap on certain types of drugs just through letting Medicare essentially negotiate their own drug prices. But, yeah, will it have an impact on the economy and move things too much? You know, it's not that big of a package to really move the needle too much in one direction or another. I mean, it's probably just more of a rounding error when we look at what it'll be for GDP, just because that money is not hitting all at once, too.

And, you know, there's gonna be some other implications like how will the $430 billion...? Where's the money from that coming? Well, already mentioned, talked about Medicare negotiating drug prices on its own, but they're also putting a minimum corporate tax of 15%. So, that could have some repercussions on earnings, could raise some uncertainty, and looks like it's gonna go to the House, at least as I saw, probably on Friday. The House is on recess right now, but they're gonna come back for a day and then go back on their vacations.

So, you know, when we look at that, the impact, probably not a tremendous impact on the economy itself. I don't think it will lower inflation. Now we'll probably see inflation go down over the intermediate term, just because we're coming from such high levels, but I not for one second would attribute any of that to the Inflation Reduction Act.

Amy: Well, and Andy, on the inflation front, if anyone has filled up their gas tank recently, it's getting a little bit brighter out there. Oil price is below 90 bucks a barrel for the first time since February. We're moving in the right direction. Do you think that's gonna loosen some things up?

Andy Stout: A lot of it does depend on how the Russia-Ukraine war evolves clearly. But with that said, you know, we've seen oil come down to the lowest level since February, I think even late January after this morning's drop from what we've seen in the price of oil. We'll see where it settles at for the day. However, you know, we haven't seen it completely flow through to the gasoline side. So, I mentioned we're at the lowest level since February or January. The national average gas price, Amy, it's at $4.07 right now. It was $3.50 in February.

Amy: Yeah. We're still up, but...

Andy Stout: Yeah. But it's come down from where it was. I guess that's a good thing, but, I mean, anecdotally, it seems like, you know, gas stations are always quick to raise the price of gas when oil goes up but pretty slow to bring it down. So, we'll get there eventually if oil stays in this area here. But I understand also, you know, gas companies have the cost of the gasoline that was refined based on that higher oil price from a few days ago. So, it just might take some time to get to there.

Amy: It's Monday, Andy, so I just like to focus on the bright spots as we begin our week. So, we'll do that. Here's the "Simply Money" point. "The labor market is still strong, so the Fed will likely have to remain aggressive, and, of course, the markets will respond to that. There will be some volatility. Understand though, if you are a long-term investor, it's kind of another blip on the radar." Coming up, do you have a true understanding of the financial risks you might face later in life? And are your current money decisions kind of accounting for those risks? It's a big topic and we're gonna unpack it next. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

You're listening to "Simply Money." I'm Amy Wagner along with Andy Shafer. If you can't listen to "Simply Money" every night, subscribe to our weekly podcast. It's the best of "Simply Money." You'll find it on the iHeart app or wherever you get your podcast. Straight ahead, it's 6:43. We're gonna help you avoid some key mistakes on your road to retirement. Your older self will thank us very much. You know, Andy, you and I are both from here, we're big fans of this area, and I love because now it's like every time a new list comes out about something positive about a city to live in or the real estate market or whatever it is, Cincinnati is usually doing pretty well, and today we have yet another example of that.

Andy Shafer: Yeah. Researchers from a Seattle-based real estate brokerage firm called Redfin analyzed data from 98 cities to rank them on their chances of having a market downturn. And Cincinnati was built as one of the most resilient markets, ranking number six on the list of places with the lowest chance of downturn, and that was tying Boston. And Amy, I understand it because I love living in Cincinnati. There's a lot to do. I think Cincinnati's come a long way over the last 15 years. I live near Downtown, I love to enjoy Washington Park, Findlay Market, the new soccer venue. You start to see a lot more international workers that are coming to the city. And I think there's a lot of positivity in our city, and I think that's gonna be here for a while.

Amy: Yeah. Well, and you look about the fact that just over the past couple of years the real estate market has just been on this crazy mediocre, like, craziness. And, you know, you wonder, "Are we just gonna bottom out here?" And I love to see that, you know, Cincinnati would be among the lowest risk for that because things are so stable here and so good and we are growing. Keep it up, Cincinnati. As we talk about risk a lot on this show, Andy, what we're talking about is, you know, how much risk can you handle being exposed to the market? Right? That's a lot of what we talk about. But there's actually a lot of risks that come later on in life when you get to retirement. But if you're not planning for them now, things can get kind of ugly.

Andy Shafer: There's a lot of things that I think people forget to consider, especially as you age. In retirement, you're going to face many risks. I think the first one and the one that scares most retirees, are you gonna outlive your money? And, you know, with the longevity of health these days, you know, you see people living well into their 90s. I have many clients who, you know, have parents that are in their late 90s, and you see that more often now. I think some other things to continue are investment losses, you know. Obviously, the market's volatile. We recognize that. We're going through right now as far as the market's concerned. You might have unexpected health expenses.

And one I think a lot of people don't think about is maybe some unforeseen needs by family members. I've had some situations where I have a client and their sibling might not have prepared well for retirement and they need to take on that burden. And the other possibility is maybe even some retirement benefit cuts. We don't know what legislation is gonna look like down the road, so I think those are a lot of things to consider.

Amy: Yeah. So, how do you even begin here? Right? Well, the regular market risks, you know, hopefully, you're working with someone that you trust and you've taken kind of a risk assessment and you've figured out, "Okay, what is the most amount of risk that I can take on, right, and continue to grow this money that I've invested, at the same time be able to sleep at night?" Right? Once you've got that figured out... It's so interesting to me how people bet against themselves. Like, I'll hear people all the time saying, "Oh, my parents died in their early 70s, so I'm not gonna..." Do you really wanna count on that?

I mean, I talked to a man several years ago who works out for two hours every day. His parents died, but they were also both morbidly obese. He's in great shape, he eats well, and to think that he's making financial decisions, planning against himself, it just doesn't make sense.

And you're right, every survey that I've ever seen about people in retirement when it comes to money, the number one thing that keeps you up at night at that point is being worried about outliving your money. So, the best way to not have that worry is to plan for it, and I think what goes hand-in-hand with that is planning for healthcare, which is a huge expense. And if you're in your 40s or 50s and you feel good, it's really difficult to say, "Oh, but I'm gonna need hundreds of thousands of dollars when I get into retirement." Yet, I think the most recent number I saw from Fidelity is like $380,000 for couples retiring right now that they'll need to have to plan for out-of-pocket healthcare expenses.

Andy Shafer: And that doesn't even include long-term care costs, right?

Amy: No, great point.

Andy Shafer: So, you know, I was out to lunch with my cousin, Emily, a week or so ago, and, you know, we were just talking about aging family members, you know, and how to prepare. And I have a particular client where her husband just passed away, and their kids have already moved her into an assisted living care facility. Well, at this point, the kids are trying to have their mother disclaim some of her inheritance from her husband so that they can get to Medicaid eligibility. The problem is just what we're going back to talking about before is, you know, they've planned all of their life and saved enough money to where the, you know, Medicaid might not be a function of her future, and you just don't know, you know, how long you're gonna live or if you're going to need long-term care during that period of time and how that's gonna impact your investment savings. So, my advice in that arena is, you know, prepare for the worst, and you can always pass that money onto your kids later in life, but that's a significant risk for anybody in retirement.

Amy: Well, and I think you make a great point. I mean, I think that long-term care is something that so many people just don't forget about, or you overlook, or you think, "I'm not going to need it." But statistics show that one out of two people will probably need some kind of extra care later in life, so not preparing for it, and especially while you're well, right? Look into long-term care policy. I know my grandpa, you know, years ago, super, super healthy, but at 86 he was diagnosed with Parkinson's and he had to go into a skilled care facility. He and my grandma were super frugal. They had saved very, very well. They are German, they are through and through, right?

Andy Shafer: Same.

Amy: Yeah, they are savers to the core, yet my grandpa, you know, tens of thousands of dollars going out the window almost every month, and all of a sudden, you know, they were kind of at the end of that. They hadn't planned for it. My dad, as a result of seeing that... I think he was in his 50s when he actually bought a long-term care policy just preparing for, "Hey I wanna make sure that I'm set up as well as I possibly can be, and that you are taken care of Amy, you know, as well as you can be later in life." And these are just all things we have to think through.

Andy Shafer: Yeah. And I think the other thing that you need to understand is, you know, some of the things that you perceive that might not be an issue can be an issue. And there are studies out there where a lot of investors don't believe that there's gonna be a problem, whether it's market volatility, or risk, or longevity, and in reality, it is very significant.

Amy: Yeah. I think educating yourself, and if you're listening to the show right now, you're already someone who's probably more into this than others. But, you know, you mentioned legislative risk. Well, we are what? Twelve, 13 years away from the Social Security Trust Fund running out. At that point, you can expect about 75% of your promised benefit. That's a huge hit.

Andy Shafer: You know, that's crazy that you just said about 12 or 13 years. That just dawned on me, you know, because we always talk about 2034, 2035, and all of a sudden, it's 2022 and almost 2023, and we've been working together for 6, 7, 8 years, and now all of a sudden, it's on the horizon. So, it's possible that there could be some reductions in Social Security benefits and you wanna make sure. And, you know, you and I are both in our mid-40s, so we definitely have to plan for that.

Amy: Here's the "Simply Money" point. "Preparing for risks you could face later in life should be baked into any meaningful plan that you have for your money." Coming up next, how to combat our financial surveillance system. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. Your data, right? Every time you pick up a device, you sign up for something, more information is going out there about you. And oftentimes, you have no idea who's getting it, how they're using it. Joining us tonight is our tech expert, Dave Hatter, with Intrust IT. Dave, we've talked about this subject many times, but I don't think any of us truly understand all the ways this information is being used, and also how it can be affecting us in a negative way.

Dave: Yeah. Amy, thanks for having me on as always. And, you know, I talk about this a lot. You and I have discussed it before because I think it's so important and people don't understand it. And they say, "Dave, you know, I don't have anything to hide, I'm boring, I don't care about privacy," and that sort of thing. And I think it's, to a large extent, because people don't understand how this data can be and is, in some cases, used against them. So, I found this article, and I'm gonna encourage your listeners to go find it. It's from "Money" magazine, you know, a reputable magazine that's been around a long time. And the title is "An Opaque Web of Credit Reports Is Tracking Everything You Do."

Amy: Well, that doesn't sound scary at all, does it?

Dave: Not a bit. And when you get into it, they give, you know, a fairly concrete example of how this kind of thing can come back to bite you. But they also, I think, do a really good job at a high level without getting too technical in quoting. They quote some experts that I think provide some insight here about our "financial surveillance" system, as they call it. And they're pointing out things that...you know. You have companies out there like Axiom. I think we've talked about them before. This is a giant data broker, one of hundreds if not thousands that basically make money off your data. They're buying your data from people like Google and Facebook and others and they're combining all of this into a giant data set, which, of course, then they can turn around and sell to others, or for that matter, they could get hacked and then...

Amy: Well, and Dave, to your point, I think many people assume like, "Okay, well, my information is being sold to marketers and they're using that in order to sell their product or maybe they're trying to target me better to sell me something." But what I hear you saying is, no, sometimes that information is used to paint this entire picture of us that companies can use to determine if they're going to do business with us or make decisions about us. Is that right?

Dave: That is exactly right, and that's the real concern in my mind. Honestly, you can make a strong case, in my opinion, that if companies are using your data to micro-target you with ads about stuff you might actually wanna buy, that's good for you. Saves you time, gets you in front of things you might actually be interested in.

Amy: I don't think that freaks a lot of people out. I think you're exactly right.

Dave: Yeah. I don't really have a problem with that, okay? And that's part of the trade-off you're making when you're using all these so-called free sites because, you know, you are the product, not the customer. But the flip side of that is, whether a site's free or not, everything is digital now, there's more and more data about us out there, some of which we can't control, unfortunately. These data brokers are buying this, and then there are companies out there who then buy this data because they claim they have some great algorithm that can analyze that data and do things like, say, "Well, you know, we looked at Amy's data. She's wanting to rent from you but she probably wouldn't be a good renter because of X, Y, or Z." Or, "You know, we'd really like to hire Joe, but we checked out Joe's data and we ran it through our system that determines who would be a good employee, and you know what? Yeah, Joe doesn't make the cut."

Amy: So, this is nothing that you would put on your own rental application, or application for a job, or resume. It's this information that you have no idea how long it's been out there, if it's correct or not, yet people are using it to make decisions about you.

Dave: Exactly. Here's a direct quote from this article, "There's a good chance your information is being logged, cross-referenced, bought, sold, and scored among a sprawling network of consumer data brokers, and that data can be used against you when it comes time to apply for a loan, land a job, rent a place to live, and even innocuous things like sign up for a new phone plan or bank account." So, this isn't crazy old Doomsday Dave making this stuff up. This is a known thing. People are not getting jobs, people are unable to rent apartments and, you know, maybe the information they're using is legit, maybe their algorithms are correct, and you really wouldn't be a good renter. But unlike your credit score, which you can at least go see and dispute, if you can say, "Well, you know, this is wrong," there's no way to see this stuff.

And for most people, except for thanks to people like you that let me talk about this crazy stuff, people don't even understand this is a thing. They don't understand that the reason why they might not have gotten a call back for a job that seemed like it was a good fit is because that employer is using one of these so-called systems to determine if you're gonna be a good employee or not, perhaps based on data that's totally bogus or maybe data you wish you wouldn't have put out there but never realized how it might come back to bite you at some future point.

Amy: You're listening to "Simply Money" tonight here on 55KRC. We're joined by our tech expert, Dave Hatter, with Interest IT with this interesting warning. And I think we all need to take this one incredibly seriously. The data that's out there may not just be used to give you ads about products that you're interested, but it actually might be being used for companies to decide if they're going to hire you, if they're going to give you a favorable rate for something, to make decisions about doing business. And, Dave, I think to your point, the really strange thing about this is you don't even know they're using these systems and you have no idea what information they're even seeing.

Dave: Well, you've definitely hit the nail right on the head. That's the real concern in my mind is you have no idea what data they have, how they got it, is it accurate? Is the algorithm they're using to analyze that data, does it have some kind of inherent bias in it? And that's a whole separate topic. That's a huge problem that many technology experts and ethical experts have warned about. And, you know, so some company says, I've got a tool you can use Mr. Employer, or Mr. Landlord or, or Ms. Loan Officer," or whatever, and they use these tools based on all this data they're buying from these data brokers, and they're making decisions about you and you have no way to know. And really, until you even understand this is a thing, no way to do anything about it because you're coming with the attitude of, "I don't have anything to hide. I'll just put it all out there. What have I got to worry about?"

Amy: Okay, so now that we know it is a thing, what can we do about it?

Dave: Well, that's really tricky. And I would say the first thing is once you have awareness of this, you know, unfortunately, there is a ton of these data brokers out there. The Consumer Financial Protection Bureau has a list, and you can get it from that "Money" article of the 60 largest consumer reporting companies out there. But, you know, it's estimated there are hundreds if not thousands. You can go out and try to figure out what information is available about you out there. In some cases, you can dispute it, but just knowing this is a thing and then as a result of knowing it's a thing, try to get in front of, "Well, okay, there's some unflattering stuff about me out there. If I'm gonna apply for a job or a loan or whatever, maybe I wanna try to get in front of that," and to then start to knowingly limit your digital footprint into the future. Turn off the location services on your phone, stop using questionable sites, use privacy-friendly browsers and search engines, and things like that so that there's less information available about you.

And, you know, I had this argument with my wife the other night. She's looking up medical information for a friend because she's trying to be helpful. I'm like, "You realize when you do that, the way you're doing it, that is gonna be associated with you and our family as a result of that. And when we can't get health insurance somewhere down the road, or our premium spike by, like, 400% because you're looking up brain cancer." And she's like, "Oh, that's not a thing." I'm like, "Okay, come read this article with me and let me help you understand why it is a thing and why you need to at least understand these things before you do these things because there are ways to search privately. There are ways to circumvent these systems, but if you're not even aware it's a thing, you're putting stuff out there, you know, you just happen to go to..." Who of your listeners, or me, or you, or Joe hasn't just gone down a rabbit hole on the internet?

Amy: Yeah. All of us.

Dave: You see a video, leads to another video. You search for something, leads to something else, and next thing you know you're off into some crazy thing. Guess what? That's all out there somewhere. It's all out there somewhere. Could people be making decisions about you based off some crazy thing that you just happened to stumble into? Yes, they could. And it's not just me saying this, it's all kinds of people warning about this, which is why you should care about what's out there and what you're doing.

Amy: So, you mentioned, Dave, and you were just talking that there are ways to search privately without that information going out there. What are some of the best ways to do that?

Dave: Yeah, that's a good question. First off, ditch everything from Google. Stop using Gmail, stop using Google Search engine, stop using anything from Google. They're, you know, if not the least, the second least privacy-friendly company in the world because they and Facebook make all their money off you. Use a privacy-friendly browser, Safari on Apple, Firefox, Brave. Use a privacy-friendly search engine, things like DuckDuckGo, or others out there. You can do things like use a virtual private network, which encrypts the data that you're sending, it obscures your location.

You know, when you couple something like Firefox, especially in strict mode where it's really locked down, and with something like Proton for email, which is what I use, it's all on end-to-end encryption, and something like DuckDuckGo or one of the other privacy-friendly search engines out there, and you throw a VPN on top of it, well, you're certainly not invisible. You are making it extremely difficult to be tracked from one site to another. And so, anything that you're not explicitly putting in there is gonna be very, very difficult to detect. And even that, then if you really wanna take it to the next level, you can use something like the Tor Browser where everything is encrypted and it's bounced all around there. The Tails operating system, you know. If you go...

Amy: You do have options, right?

Dave: You do.

Amy: And I think that's the important thing to note, to take control of this. Do your research, understand this information is being used, and you can control what's out there. Great insights as always from Dave Hatter, our tech expert from Intrust IT. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

You're listening to "Simply Money." I'm Amy Wagner along with Andy Shafer. Straight ahead, some new proposals that might actually help you when an airline messes with your flight. We'll tell you what you need to know. There are some financial mistakes, unfortunately, that we see people making time and time again. Often they happen at certain stages of your life, but sometimes there are just universal no-nos. If you are 20, if you are 60, if you are 95, don't do these things. And one of them is just waiting to invest. Andy, we were actually having a conversation with our kids yesterday, the two oldest, 17 and 16. They both have jobs now. And we said, "Hey, if you guys put money into an IRA right now, a custodial IRA won't match what you put in." So, Jason pulls out his phone and he is doing these calculations trying to say, "$1,000 now is $54,000 when you retire." And he's like, "Wow, yes, sign me up for that." Yet it's funny. I think we know these things, but when we get that first paycheck coming in, many don't actually invest any of it.

Andy Shafer: I can't believe your kids are getting that old now, but I will say...

Amy: I know, I'm way too young for this.

Andy Shafer: I think in the moment they were probably excited, but it's one thing to be excited about it and another thing to give up part of your paycheck. So, I think this is a good one for parents to hear, you know, you shouldn't wait until you're making more money to start putting money away. Compounding interest and tax-deferred savings are significant for you to meet your retirement needs. And the more money you suck away now, the better that you're gonna have as far as choices later in retirement. And I know that's easier said than done. I know, you know, from a personal standpoint, when I got outta college, you know, and you have your first job and... I think my first job, I was an options trader at Charles Schwab and I think I was making $23,500 or something like that. Well, you know, that doesn't go a long way, and so it's harder to start to save. I think the most important thing is even if it's 15 bucks a month or $50 a month, at least get in good habits.

Amy: Yes. Well, and this is interesting. A study of more than 2,000 people found that 90% of them did not start saving for retirement in the first 5 years of working. And I think, yeah, you know, you're not making much, many people have student loans, but yes, any little bit can make a huge difference. And then not investing soon enough and then not investing enough. And I know people who are our age and, you know, life is expensive, and if you've got kids and you're planning vacations, and they've got travel, sports, and things like that. I hear excuses from people all the time, "Hey, yeah, I'm gonna start, like, kicking up my retirement savings next year when this thing happens, when I get that next bonus at work or that next promotion." There's always an excuse, but you just gotta dive in.

Andy Shafer: Yeah. And I think the other thing is a lot of times, you know, you might be taking less risk than what you need to take, particularly when you're younger. You know, Amy, you and I talk about that. We're both heavily invested in stocks. We take a lot of risk. You know, I've mentioned many times that I'm 100% stocks, I'm 46 years old, what do I care if we go through a recession? I'm not gonna retire from the...

Amy: We'll go through many more recessions before you and I get to retirement age.

Andy Shafer: Bingo. And so I don't really care about those risks. But I think what you have to understand is the more aggressive you are, the higher the inclined plane is gonna be on your ultimate investment goals. You might see a lot more volatility in the meantime, but in the long run, that's gonna be better for you if you were a little bit younger.

Amy: Yeah. It's what makes sense for you, right? I know lots of people who are my age and still like not the risk toddler, you know, and that's completely fine. It is, you know, how well can you save and invest and take on that risk, at the same time, how well can you sleep at night? Another thing I see people really falling into, especially lately, getting lured by fads, and I'm thinking cryptocurrency, I'm thinking of Dogecoin, I'm thinking of...right? There's so many things, and especially right now where there's volatility in the stock market. People are looking around what else can we do? Where else can we invest? And I read about it and I talk to people, and I'm not saying you can't invest in cryptocurrency, but I am saying that maybe the 401(k) shouldn't be... Do you know what I'm saying? If it's money on the sidelines that you have that you can lose and you're not gonna lose sleep over it, okay. If it's your kid's college fund, not okay.

Andy Shafer: Yeah. I think what people don't realize is there's over 14,000 different types of cryptocurrencies. So, you know, what's to say that one's gonna be the successful one that survives on. Yeah, and I've had friends that have bought in cryptocurrency at $50,000 and now it's in its low $20,000, you know. So, when you think that that is an area of safety, it's not. But like you say, Amy, if you do have some money on the side and you wanna speculate, whether it's crypto or meme stocks or anything like that, just be prepared to lose whatever you put in there and don't use your retirement money for those types of fads.

Amy: Yeah. It's just not regulated yet, right? Give it a little more time, let's see how this all plays out. A couple of other things I would say that you have to be prepared for, first of all, the right kinds of insurance. That's, like, the foundation for financial planning. You don't have that in place, something happens to you, right, you don't have the right kind of life insurance, that could really go bad for your family. Also not having an emergency fund. This is, like, the cornerstone. You talk about foundations. This is everything that you've saved won't matter if you're pulling money out of your 401(k) when your car breaks down. These are the things that you need to make sure you've got taken care of.

Here's a "Simply Money" point. "There are a lot of wrong turns that you can take on your road to retirement, but those who've got a solid plan usually end up taking the right ones." Coming up next, the proposals being considered that might just improve your flying experience. Yes, please. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

You're listening to "Simply Money." I'm Amy Wagner along with Andy Shafer. Andy, you and I both love to travel. And I gotta tell you I used to love everything about traveling, but in recent years, I don't know, post-pandemic, it's so crazy that I'm often finding myself thinking, like, just to get through the airline process of it, right? I'm hoping there's no cancellations, no changes, anything like that. So, it's interesting to hear that there might be some help on the way for travelers.

Andy Shafer: We'll see. You know, I'm getting to the point and I don't know if I'm getting old and grumpy, but if it's a trip that's less than 10 hours, sometimes...

Amy: You wanna drive?

Andy Shafer: ...I just choose to drive because by the time you get to the airport two hours early, you know, fight all those lines, get off, you need to get, you know, a rental car and all that, it's gonna be six or seven hours anyway, right?

Amy: I was just on Facebook last week. I saw a friend of mine was going to Hilton Head. They said it would have been a 10-hour drive, but they had just spent 20 hours in the airplane. I guess that was like...Yeah, to your point.

Andy Shafer: Yeah. But we'll see, you know. There are some things that, you know, Congress is doing that is designed to help the consumer. So, for the next 90 days, the FAA would like to hear your thoughts on the width and heights of seats, the pitch of the seats, the space between rows. And this is all being considered because flyersrights.org won Congressional support for minimum standards in 2018. So, personally, I would like to see the width and the length of the seats a little bit better, but how about you?

Amy: All the things. I'm not a large individual, and I find myself like I can't breathe. I'm like a sardine in these seats and I'm like, "Is it in my brain, or are these seats getting smaller? Am I getting a lot bigger?" They are actually shrinking and as a result, you know, of course, they wanna make as much money as they can, put as many people on these airplanes as they possibly can, but come on, people, I think this is crazy. They think that you should be able to get off of a plane for an emergency in 90 seconds, and I'm thinking "People don't de-plane in 90 minutes when we land. Like, how the heck are we supposed to do that?" So, they're really taking a look at this saying, "Well, maybe if we have more space between the seats, larger seats, people can get in and out of them more quickly." I say yes to all of those things.

And then another proposal, flight cancellations. If you've had a flight canceled this summer, and we know it's all over the place, there's kind of a new proposal out there to figure out what compensation you should get for that inconvenience. Airlines are all over the place. It's just kind of a mess.

Andy Shafer: Yeah. I have a trip with my wife, Kendra. We are going to a wedding in Montana, and I am praying that there are no delays during that period of time because like you said, you know, especially for a wedding, if we miss our flight and have to go the next day, that's gonna impact our experience at this wedding in Montana.

Amy: Yeah. Well, and another proposal that's out there, too, if you got a COVID voucher, I guess originally they had expiration dates, now they will not. So, if you're sick and you can't fly, you will have, you know, 5 years, 10 years, however long that you need. And again, this is all in conversation right now. If you've got strong feelings about these things, go to the FAA's website. You've got 90 days to weigh in. And, I mean, I think we can all say that there have been just not the best travel experiences lately, definitely pack your patience, but now at least you've got a voice. You've been listening to "Simply Money" here on 55KRC, THE Talk Station.