Amy: Tonight we're talking about how the fight against inflation has actually had minimal impact on your portfolio, if...if you're a little bit like Rip Van Winkle. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. Steve, you know Rip Van Winkle, right? This fictional character, drank too much...

Steve: It's a guy that drank too... He got blacked-out drunk, and instead of waking up the next day with a huge head, he woke up 20 years later.

Amy: Yeah, do wonder what exactly he was drinking.

Steve: I've been to parties like that. That reminds me of college.

Amy: It's quite a hangover. But anyway, he woke up 20 years later, and the world was a lot different. But we often use, kind of, the example of Rip Van Winkle in the financial world, in the economy, to say, man, the day-to-day, a lot can happen, but, if you're smart, if you have a long-term plan, you can go a long time, right, and ignore things, and really bad things can happen, and the economy kind of cycles back through. For an example, if you fell asleep, right, 16 months ago, your portfolio probably looked pretty good at that time. If you woke up yesterday, checked your portfolio again...

Steve: Yeah.

Amy: ...wouldn't think a thing...

Steve: We're pretty much where we were.

Amy: Yeah. Isn't that crazy?

Steve: I know. It really is. There are, and this didn't take me 40 years to learn. You could see this, you know, right in the beginning of my career. There are two types of investors. There's the type that watches the market every day, checks their account, and when I say maybe two or three times a day, I've sat down with people where I, you know, we manage their money, and they look at it 10 times a day. You know, people that are super engaged, they worry like crazy. They feel like, you know, "I need to make some sort of move. I'm hearing these things in the market." And there is the other type of investor who, you know what, "I've got somebody handling my money. I'm not gonna worry about it. I'm just gonna enjoy life, play with the grandkids, not make any changes, not be a bother," and guess what? They both wind up in the same place, unless they start doing stupid market timing things, you know, so, which one has the better quality of life? And, you know, that's where we're at right now. There hasn't exactly been a lot of fantastic news in the last four or five months. But if you look at year-to-date returns, the Dow, from January 1st through now, is up about 8%. The Standard and Poor's 500 is up about 20%. The NASDAQ has gone crazy. Have you seen that?

Amy: Yes.

Steve: It's nuts. It's up 37% year-to-date, probably because it was down about that much at one point last year.

Amy: Good point.

Steve: But still, it's up 37%. It hasn't been up that much in the first half a year since 1975. I mean, we're looking at some pretty darn good returns. And you're absolutely right, Amy. If you fell asleep 16 months ago and just opened your eyes today, you'd say "Oh, what? Something happened? This looks pretty much like it was when I fell asleep."

Amy: And I love using this as an example because this isn't the first time this has applied. You know, I've been doing this show for years now, and I know several times, we've kind of talked about Rip Van Winkle in the course of, you know, major changes. And you had the Brexit, and you had, you know, trade wars with China, and all different kinds of things that could really, really freak people out. Yet, during the course of that time, you know, if you were really glued to the headlines, it could scare you. Yet, if you stayed with your long-term financial plan, you maybe lost a little ground, and then you gained it right back, and so if you're looking at maybe 12-year increments, or 18-month increments, all of a sudden, it's like, oh, well, yeah, all those things happened, but I'm probably pretty okay right now. And it's the cycle of the economy, and I think that's why you and I have always kind of taken this tact with the show, you know, looking at historical cycles, to say, hey, you might think, and I love your point that the foremost dangerous words when it comes to your money is "This time is different." Right?

Steve: Yeah, yeah, yeah.

Amy: Because you can always convince yourself then. And there's a thousand ways why everything that we deal with is different [inaudible 00:04:06] than anything before. Yet when you start thinking that way with your money, then you wanna do something with your money, and we've seen far too many people go down that rabbit hole, and it ends up being a really dangerous one to go through, as far as your money.

Steve: Oh, yeah. And there's always something to worry about, and, you know, with the internet, there's plenty of experts out there that are gonna say something that's gonna scare the bejesus out of you. You know, there's always some... And you figure, there's always some concern. You figure, "Okay, smart guy. Maybe he knows something I don't know, because I don't spend eight hours a day studying this stuff. This guy does, and he says, you know, market's gonna crash tomorrow." Well, you know what? For every one of those, there's gonna be somebody that says, you know, "The market may take off tomorrow," and if you watch the news enough, one day you're gonna see one viewpoint, the next day, you're gonna see the next. The truth is usually somewhere in the middle. I've just learned over the years, Amy, that being a Rip Van Winkle is actually a pretty smart investment move, because it keeps you from making changes, it keeps you from trying to, you know, worry about, "I'd better sell. I'd better buy back in. Is this a good time?"

And if you let good investments go, and you're within your risk tolerance, which is the key... Some people are 100% stock people. Some people are 0% stock people. Find out where your comfort zone is, and then let the investments do their thing, and enjoy life. Don't worry about the day-to-day, because when you look at the chart of the stock market from two inches away, it's scary. There's some big drops. You look at it from 20 feet away? "Huh? Why would you not be in stocks? That's almost a straight line." And life is more of a 20-foot-away experience than it is a 2-inch-away experience.

Amy: You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. As we talk about Rip Van Winkle, right, we would recommend, if you are smart, long-term investor, that you take the Rip Van Winkle approach. Now, I know that Steve often quotes "Animal House." We're not saying that you drink so much that you wake up 20 years later, or a year later. But we are saying, yeah, you can know what's going on in the economy. You can pay attention to the headlines, as long as it's not affecting what you're doing with your money. As long as you're not saying, "Well, I should take my money out of the stock market today, and then maybe I'll put it in in six months. Oh, but six months from now, there's something else going on, so this doesn't feel like a good time either." You get in that kind of a cycle, it's really hard to figure out how to get back in. I've seen so many people with plans to get out and get back in who are paralyzed, trying to figure out when is the right time, and months and years go by. Meanwhile, the market's going up, up, up, right? But maybe on that individual day that they're looking at, it goes down, so today's not the day. So anyway, it just, it's a dangerous place to be in, I think, when it comes to your money.

Steve: Yeah. And Amy, you know, I was doing my thing last night, playing old guy baseball.

Amy: Ah, yes.

Steve: For those who don't know, I play in the Roy Hobbs League. Thirty years. Thirty years I've been in this league.

Amy: So cool. I love that.

Steve: Yeah. It's fun, and I'm feeling the impact of catching eight innings last night...

Amy: How are your knees?

Steve: ...as a 60-plus-year old, but... No, one of my buddies on the bench, you know, he obviously knows what I do for a living, and he says, "Yeah, yeah. Yeah, I got out. Things have topped out, and, you know, you'd be crazy to go back in, right?" No. I didn't exactly agree with him. And I know the game was exciting, and we should have been paying attention to, you know, our play... But this is what we talk about, that, and the medicines we take, on the bench. A little bit different than, you know, what Reds players talk to [crosstalk 00:07:40]

Amy: Thirty years ago, when you started in that league, a little bit different than the conversations?

Steve: Yeah. Exactly. But, you know, I started thinking about it, and it's like, yeah, you know what? Why has the market taken off the first six months of this year, when there's so much bad news? Well, when you take a step back and think about where we've come from and where we are today, yeah, we had a bad quarter for earnings for a lot of companies. But you know what? They probably have bottomed out, and companies are starting to get back on track. Manufacturing has slowed, consumers have slowed their spending. Exactly what the Fed wants to see. Inflation is down a lot more than a lot of people were expecting it to be at this point, one year later. Yeah, we got a little bit more to go, but rate cuts are now being discussed for next year, maybe as many as five one-quarter-point rate cuts in 2024. The speed bumps to...that you see all the time in investing, they're slowly kind of going away. And that doesn't mean the market's gonna go up in a straight line, because it never does. But you know what? There's a lot fewer concerns today than there were six months ago, and the market always moves six, eight, nine months ahead of the news. So, you know, it's no...in hindsight, it's no big surprise that we're looking at a pretty good market.

Amy: Yeah, and speaking of market concerns, one of them that was a huge concern a year ago, that seems to be at least abating a bit, of course, is inflation.

Steve: Yeah.

Amy: And different theories about where we're headed with this, one having to do with money supply, which is actually something I think that you bring some great perspective on, because you remember the last time we had...

Steve: Because I'm old. Just say it. Because I'm old. [crosstalk 00:09:17]

Amy: I am simply saying that you are wise, that you are sage, that you bring so much to the table.

Steve: No. And I started in the business in 1981, and that was right in the middle of the last big inflation scare. And it was worse than this one. I mean, it was a lot worse. The chair of the Federal Reserve, his name was Paul Volcker, used to, constantly had this huge stogie in his mouth. I mean, definitely old-school banker, okay? And he attacked inflation, as he needed to, and when he, you know, did quarter-point increases and they didn't get the job done, he started hammering, with heavy rate increases. And it seemed like, you know, here I am, fresh out of college, getting my start in the industry, and every day, the headline is money supply numbers. "M1, M2, M3 is such-and-such worse than expected." That's all everybody focused on was the money supply, and then I never heard about it again after about 1982. Well, we haven't heard about money supply in this inflation scare until, I just saw my first article a couple days ago, and it was a really interesting article, and without getting into the weeds, it showed a chart of money supply. Money supply is just how many dollars are out there floating around, because inflation is, at its most, you know, basic, is too many dollars chasing too few goods. Yeah. If you got a lot of money chasing too few goods, prices go up, okay?

So, if there's a lot of dollars floating around, and that number of dollars is increasing, we gotta kind of get a gauge on that. And the chart showed that about a year before inflation hit, the money supply went nuts. It just went up drastically. Well, guess what it's been showing over the last six, eight months or so? The money supply is crashing, and it's actually at a lower level than it was at three, four years ago, and the argument is, "Okay, that means within a year, we may see inflation as low as zero," which actually is a whole new set of concerns because we don't wanna head into disinflation.

Amy: Right.

Steve: But it was kind of interesting that here is a huge positive on inflation coming down, not just to that 2% target that the Fed is having such a hard time finding, but maybe even lower.

Amy: Well, and to your point, if you wanna look at money inflation as potentially a gauge of where we're heading with inflation, we have to talk about how we got there.

Steve: Yeah.

Amy: You know, I mean, keep in mind, 2020, the entire literal American economy shut down...

Steve: Yeah.

Amy: ...for a while. I mean, you had companies that were not producing goods. So, during that time, right, the federal government, and I would say that for some of this, it, some of it was necessary.

Steve: Yeah.

Amy: How do we keep people afloat? And so, there was all kinds of money that was, you know, given out, in different kinds of programs, right, and in...

Steve: Oh. Yeah. Writing checks like crazy. Yeah.

Amy: Exactly. And so, all of this money was flowing into the economy, more so than any goods or services could have possibly been produced at that time.

Steve: Exactly.

Amy: That money takes a while to work its way through the system, you know, so, for anyone who was really kind of caught off-guard by inflation, well, I think there's a lot of ways, and pointing to that as one of them, money supply, that maybe we should have seen the writing on the wall when it came to this one.

Steve: Yeah, maybe, and also gives us a heck of a lot of optimism, because if the money supply is shrinking that much, that's another reason why the Fed should be looking at some rate cuts next year, and no more increases, which is kind of what it seems to be the way they're heading. I mean, we might be done with rate cuts, and we might start seeing...or, with rate increases, and we might start seeing significant rate cuts as early as early 2024.

Amy: We'll see. Coming up next, we've got a look at whether you have maybe too much exposure to stocks, or not enough. You're seem to "Simply Money" here on 55KRC, THE talk station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. If you can't catch our show every single night, you still don't have to miss a thing. We've got a daily podcast for you. Just search "Simply Money." It's on the iHeart app, or wherever you get your podcasts. Coming up at 6:43, how to prepare for what could be a mind-boggling cost of healthcare later in life - what you need to know. All right, we've got good news from one of the rock-solid staples on Wall Street and rock-solid staples right here at home in Cincinnati, Procter & Gamble.

Steve: Yeah. I mean, Procter & Gamble is Cincinnati, isn't it?

Amy: It is.

Steve: I mean, and there's a reason why people love the company, and, you know, love its stock long-term. With all the problems we've been going through with inflation, and supply chain disruptions, their fourth quarter numbers just came in. Sales were up 8% in the fourth quarter. I mean, just solid quarterly earnings, $1.37 a share, versus the estimate was $1.32, so they beat estimates. Strong finish to a strong year, and they're saying 2024 should be even better.

Amy: When you look at a big company like this, and you look at earnings, one way to kind of dig deeper and say, "Are they really healthy? How are they doing?" is to look at organic sales, right? And that's not all the mergers and acquisitions and kind of foreign market stuff. This is simply, they had a plan, right, to sell more goods and to make more money off of those goods, and did it work? And each of Procter & Gamble's 10 product categories, each of its 7 global sales regions, every single one of those things, across the board, growing in organic sales during this quarter.

Steve: Yeah. Yeah.

Amy: As the CEO of a company, as anyone who... You can't ask for better than that.

Steve: No, you can't. And, you know, there's kind of good news, bad news. Good news is, yeah, their earnings are up. The bad news for consumers is, well, the reason their earnings are up is, well, they raised...

Amy: You're paying more, my friend.

Steve: ...they raised prices quite a bit, and, you know, whatever the reasons are for raising prices, their costs went up or whatever, that is the definition of inflation, increased prices. So, yeah. We might be paying a little bit more for Tide, but you're paying a little bit more for everything out there, and at least Procter & Gamble as a company is doing well as a result.

Amy: Now to a question we deal with every day at Allworth, and this is investors coming in, wondering, "Am I invested in too much stock? Is there not enough?" And now there's some kind of new research coming out from Fidelity that can maybe help as part of this conversation, although I might also say take it with a grain of salt.

Steve: Yeah. And I love the fact that Fidelity, which has, again, another company with a huge local presence, they do a lot of research, and they publish a lot of their findings and studies, and some of them are interesting, but I agree with you, Amy. I'm not sure I'm buying into everything in this study. What they came out with was they feel that 4...roughly 4 in 10 baby boomers have more stock than Fidelity would recommend for their particular life stage. In other words, they're a little bit higher risk than Fidelity thinks they should be. And that's just such... You know, you can't quantify what's the correct amount of stock, I don't think. I think every individual is individual. And they're saying, "Well, okay, when you compare what we have in our target date portfolios, in other words, we expect you to retire in the year 2025, and that's why we have this mix of stock," and they're saying, "Yeah, but most people that they, or 4 out of 10 people that they had studied in this research, have more stock than we use in our target date funds." Does that mean people have higher stock allocations than they should? Or does that mean their target date portfolios have less stock than they should? That's my question.

Amy: Yeah, and I think that's... Well, that's the important thing to take away from this study, is the benchmark that they're using is a target date fund. If you've listened to the show for any amount of time, you know that we're, like, kind of iffy on target date funds. You know, fine if you're in your 20s, you just graduated from college, you're just starting to put money away in that 401(k), it can be a great way to get you started. But once that money starts growing...

Steve: Yeah, once it's real money...

Amy: ...and you look at the balance that's in there, right, and you're looking at it and you're thinking, "It took me how many years to get this much money in this account," right? When it becomes whatever real money looks like to you, a lot of times, then, you have to take it off of autopilot, which these target date funds are very kind of one-size-fits-all. "For anyone who might be retiring in X year, here's how much stock we think you should have. Here's how much bonds we think you should have." Well, that's well and good, but, you know, Steve, you and I, if we were the same age, we would have very different plans for retirement...

Steve: No question. Yeah.

Amy: ...how much we've already saved. There's so many factors that go into this. So, I say that this study is interesting, you know, and you can look at it and say, "Okay, maybe this is something that I should revisit. Maybe as I'm getting closer to retirement, maybe I do have too much stock exposure. Maybe I don't." But don't compare it to some target date fund. Figure out what your own mix is that's right for you. It's a very personal thing.

Steve: You're listening to "Simply Money," on 55KRC. I'm Steve Sprovach, along with Amy Wagner. And we're talking about a study done by Fidelity that more or less concludes the average baby boomer likely has 10% more stock than Fidelity feels they should. And this is not a knock on Fidelity when we talk about target date funds.

Amy: No.

Steve: Every mutual fund company out there has them. And I agree with you 100%, Amy, that, you know, if you're just getting started, and you don't know investment advisors, you don't wanna do research, not something you grew up with, maybe this is a stopgap, using a target date retirement-type fund, but I'm just not sure that you can say, "You're too risky, even though I don't know anything about you." That's the problem I've got with it. I think everybody needs to take a look at what's my risk tolerance? How much do I have saved for retirement? Do I need to take more risk to achieve my financial goals? And these are things that you really can't answer without a little soul-searching, and with a good, comprehensive financial plan.

Amy: I would say if you find yourself in what I would call a very elite group, where the air is very rare, and that is, those getting close to retirement who just have more money than they need, right? Then those people can maybe look at it and say, "Okay. I'm gonna back down my risk, you know, my exposure to stock, because I don't need to take on all this risk," but for everyone else, I think a level of exposure to the stock market, depending on how healthy you are and how long you might live, is probably quite necessary. So, figuring out what that is for you individually, that's the key here.

Here's the Allworth advice. Make sure you're constantly checking in with a qualified financial professional, monitoring your allocation and deciding whether you need to stay on that course, or maybe go a different route. Coming up next, a look at whether aging in place is the right move for your loved one, or even for you. You're listening to "Simply Money" here on 55KRC, THE talk station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. As you start to notice that your parents are maybe getting older, I would say if you ask them, most would respond with, "I'd like to stay here in our home. I'd like to age in place." But as their loved, one, how do you decide what is the best thing for them? Should they stay there? Should they get extra care somewhere else? Joining us tonight is our expert on this, our estate planning expert from the law firm of Wood + Lamping, Mark Reckman. Mark, this is a really tough, tough thing for families to even really start talking about.

Mark: Talking is the starting point for all of it, though. There's no question about that. But keeping in your home through all the end of life is not easy to do.

Amy: So, where do you begin?

Steve: It's not, and I've got a sister who's dealing with some health issues, and, you know, sometimes you don't have the support network around. But one thing we learned, there are some great resources that can help you age in place. Nursing care actually coming to the house doesn't necessarily have to be crazy expensive.

Mark: Well, and we're very fortunate here in Cincinnati to have a very good delivery system, in so many ways. But to accomplish staying in the home, you really need to take steps to protect your physical, mental and your financial welfare. Because, Steve, you're right. It's not as expensive as you and I might imagine, but it will look very expensive to your parents.

Steve: I agree.

Amy: So, how do you... You start this conversation, and you're talking about the different resources that we have here. How do you, though, decide, right? Because if your parents are saying, "I just wanna stay," but you're feeling otherwise, how do you know?

Mark: Well, it's very, very hard. And clearly, you start with safety. You've gotta start, to be sure that your family member has a safe place to live, where they can live independently, where they can be comfortable regardless of their age or their ability, their ability to function. And that really means controlling access to the home. It means managing chronic diseases. It means a safe environment. It means mobility. All of which have to be factored into a successful plan.

Amy: So, Mark, once you have that plan in place, where do you go from there? And how do you get parents on board, maybe, if they're not?

Mark: Well, clearly, the starting point, Amy, is you've got to start the conversation. And the issue for most families is that this comes up gradually over a long period of time. There rarely is an event or a moment at which you say, "Now is the time to talk about this." So, you've got to be proactive. You've got to sit down, with the, as a family, you gotta sit down and say, "What is the best thing we can do now to assure long-term success?" And it starts with accessibility in the home. And by that I mean eliminating clutter, trip hazards, which can mean anything from area rugs to things laying around on the floor. Keep the house clean. It means having a bedroom and a bathroom on the same level as the main living quarters. Not everybody can do that, but that's a huge benefit. It means an emergency alert system of some kind. Nowadays with cell phones, that's not really very hard to do, but there are also these emergency alert buttons that you can wear on your wrist or around your neck. It also means arranging for yard care. And some way, some system by which family members or neighbors check on the house and on the people in the house on a regular basis.

Steve: Well, I think you make a great point about, there's a lot to managing and decluttering a house, but this can get expensive. I mean, if, you know, someone's in a wheelchair or has very difficult mobility, that can mean a pretty expensive bathroom renovation, as an example, if they can't get in and out of a shower or tub.

Mark: There's no question about that, Steve. But when you compare the cost of that to the cost of living in an assisted care or skilled care facility, it would surprise you how much, how reasonable it can be.

Steve: So, if most people, and I think most people would choose aging in place, and living at home until they can't, what do you find is the toughest point to, you know, mom or dad, they can't stay at home anymore. It's just not working. What are the signs that maybe you need to have the discussion that aging in place is not a real option?

Mark: Well, obviously, health issues is the number one issue to look at. Number two is the level of alertness of the individual. How well are they maintaining the home? How well can they keep a safe living environment? And one of the biggest issues, Steve, on that score, is diet. Are they getting proper nutrition?

Steve: Okay.

Mark: And there's, as people age, it becomes harder to do your own cooking. Here in Cincinnati, we have a lot of options. Meals on Wheels is a big deal here in town. There are several of them in town, and in fact, I toured the one up in Price Hill many years ago. And man, they have a tremendous facility, a big kitchen, where they take fresh food, they prepare it, they flash-freeze it, and then they have a whole army of volunteers that deliver these, and each one of those volunteers is also responsible for checking in briefly with the homeowner, and looking for any signs of problems.

There are neighborhood senior centers, places of worship, and charities around town that do, that provide the same service. And, if you can't leave your home nowadays, there's services like DoorDash and Uber, who will bring food to you. And you've gotta be a little careful about that, though, because they're delivering restaurant food. And as we all know, restaurant food may not be the best nutrition on a regular basis.

Amy: Yeah, the healthiest, or the cheapest. But you're right. There are a lot more options out there now than maybe there were before. I mean, you know, even ride services and things like that, that can take older adults to appointments. Do you have any good place to turn for these resources? I mean, I don't know about many people, but I feel like it's like, one day everything's fine, and the next day, all of a sudden, you realize, "Gosh, we really need help," and it can be overwhelming trying to figure out, "How do we get this? And how do we make sure this is the right place to turn, or the right place for resources?"

Mark: We have an excellent organization here in town called the Cincinnati Area Senior Services, nicknamed "CASS," C-A-S-S. This is a nonprofit organization here in town, and this is exactly what they do. They respond to seniors who need help of all kinds, help staying in the home, or help finding medical care, help finding meals, help finding services to do yard care or to do housekeeping, and things of that kind. An excellent organization.

Amy: All right. So, if you are a family in a situation where you've got loved ones maybe heading in this direction, the key is to kind of assess the situation, right, communicate well, find some good resources, and then I think you have to, at some point, kind of check back and reassess. And it's probably just a cycle, right? Kind of an ongoing process.

Mark: Well, that's right. And the family members need to sit down and allocate who's gonna make contact, or, involve neighbors in making regular contact, and I mean eyes on the family members.

Amy: Yes. Great input, as always, from Mark Reckman, our estate planning expert from the law firm of Wood + Lamping. You're listening to "Simply Money," presented by Allworth Financial here on 55KRC, THE talk station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. If you've got a financial issue that's just bothering you, and maybe it's keeping you up at night, there's a red button you can click on while you're listening to the show. It's right there on the iHeart app. Record your question, and it's coming straight to us. We'd love to help you figure it out. And straight ahead, how to spend on experiences, at the same time without breaking the bank. One of the most important aspects of the entire financial planning process is figuring out healthcare expenses. And Steve, you've been doing this for a long time. This is becoming more and more a part of the conversation, right? I mean, because we know that healthcare expenses outpace inflation. So, if you were retiring in the '80s or the '90s, it's a different conversation than now, if you're retiring in the year 2023.

Steve: It is. And this is not a fun conversation to have, but, I mean, you gotta be prepared, because, you know, we're all getting older. I mean, that's the bottom line. Right now, a 65-year-old retiring this year should expect to spend about $157,000 over the remainder of their life on healthcare expenses. A hundred and fifty-seven. That means for a couple, we're looking at somewhere around $315,000. That's just for healthcare. That's not taking trips, that's not, you know, extra money to pay the bills, life expenses. That's just for healthcare, which is Medicare premiums, deductibles, copays, Medigap insurance,-over-the-counter medicines. That's a lot of money. I mean, it's hard enough to save up in your 401(k) for retirement. And then, yeah, here comes Sprovach saying, "Well, set aside $315 grand of that, because that's going out the window for healthcare." That's a tough nut.

Amy: And wanna clarify something here, because that actually excludes over-the-counter medications, any kind of dental work that you need done, long-term care, not in that $315,000. I mean, so, it's a lot of money that, you know, that you have to be thinking out, and you just have to understand, listen, we've been talking a lot about inflation, though most years, the amount that healthcare goes up far outpaces that. So, you know, you can be saving all the money in the world in a 401(k) or an IRA, right? But if you're not thinking about, okay, what portion of that is going to healthcare savings, right? You know, I've got... And I know lots of people who are very, very smart about money. But once they got close to that retirement age, and started researching Medicare, were like, "Wait. These premiums are a lot more expensive than I thought. They cover a lot less than I thought," and this whole healthcare process at that point becomes, in some cases, overwhelming. But definitely a lot more expensive, I think, than the average person going into retirement ever considers.

Steve: Yeah. And I think you touched on something I wanna expand on a little bit. Yeah, $315 grand for a couple. That alone is a bad number, but it's increasing at almost twice the rate of normal inflation. You know, you've got, "Yeah, okay. I just went to Kroger, paid an extra 20 bucks. Gas costs more. What's, you know, what else can happen?" Don't ask that question, because the answer is, yeah, inflation is almost twice the rate on health expenses. We plan on this. When I do a financial plan for somebody, we plug in that higher rate of inflation for medical expenses. We carve it out, so that we can grow that at a much higher clip. At least there's a little bit... I don't know if you'd call this good news, Amy. But, you know, if you're spending more on health costs as you age later in life, you're not spending as much that you might have planned on for travel, and things like that. So, I suppose there is a little bit of a wash in some of those dollars going out the door, but it's still, it's still a pretty big cost.

Amy: I think it's also difficult to think about saving for this, because, I don't know, if you're in your 40s, your 50s, your early 60s, right, you might feel great. You might have zero history of diabetes, cancer, heart disease, anything like that. And so, it's like, "I don't know. Maybe $315,000 for other people, but not for me, not for my spouse. We're really healthy people." And, likely, hopefully, in your first few years of retirement, that is the case. But we all know that as we age, right, those healthcare expenses start shifting, start becoming, to your point, more and more a part of that budget. You need specialists. You need special medication. And even looking at Medicare from year to year, different Medicare plans can change as far as what they cover and what you need, so that's something to be on top of. But this is a whole thing you have to be thinking through, "How am I going to pay for this?" I'm a huge fan of a health savings account, an HSA.

Steve: Oh, here she goes. Health savings account.

Amy: Here I go. I teed myself up for this one...

Steve: That's okay.

Amy: ...but you know, the triple...

Steve: That's okay. Yeah.

Amy: ...triple tax advantage. So, the money comes out of your paycheck. You're not paying taxes on it. That money grows, if it's invested, also tax-free. And if it comes out for qualified healthcare expenses, which are most of the things you would likely need in retirement, you never pay taxes on that money. There's not a single other pot of money that the government lets you have that you don't have to pay taxes on. So, I think, if a health savings account, and again, you have to have a high-deductible plan, so you have to figure out if this makes sense for your family. Steve, you've tried it in the past. Didn't like it.

Steve: It didn't work for me. But you know what? That's something I would revisit again, and without question. One of the issues with an HSA, though, is that once you hit Medicare, you can't do an HSA anymore, when you hit 65.

Amy: Yeah, you can't save in it. Yes.

Steve: You can't save it. Yeah, you can use your HSA for Medicare premiums. But yeah, that's something important to know. I just wanna add, you know, if you're a median household, half households spend more, half less, you're spending about 10% of the money going out the door is going towards health expenses. By the time you're 85, that's 20%. I mean, it's a bigger and bigger chunk as time goes on. So, you know, I, if we scared you a little bit, I wanna say, kind of, that's a good thing, if you're younger....

Amy: We're kind of okay with that.

Steve: ...because yeah, you wanna set aside some extra money, either through an HSA, or additional monies in your 401(k). Just because you've got a couple hundred grand in a 401(k) doesn't mean you're set, when $315,000 of it is gonna be needed just for healthcare expenses.

Amy: And I do think, for so many, even thinking about retirement, right, that's, like, you've got so many needs in the present right now, thinking about your future self is difficult. But even thinking about your future self in your 80s and 90s, and what kind of healthcare expenses you might have, that can be a really hard thing to wrap your brain around, but it's a necessary thing for you to get there, and we know that the number one thing, the number one concern of anyone in retirement is outliving that money. You don't wanna have that.

Here's the Allworth advice. Regardless of what approach you take, there may be nothing more important than planning for healthcare costs later in life. Coming up next, the joy of spending on experiences, and the pitfalls you should avoid. You're listening to "Simply Money" here on 55KRC, THE talk station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. When it comes to spending money, right, there's a lot of things that I will say I cannot justify. But when it comes to an experience, travel, a concert, a festival, something like that that your family can do together, I am all about figuring out a way to make that happen.

Steve: So, I've got a question for you. Is your daughter a Swifty?

Amy: She is a Swifty.

Steve: Is she?

Amy: She is. Yes. Grace is... In fact, since she was a little girl. We had this little CD player in her crib, in her nursery when she was little. And we would always play Taylor Swift when she was a little girl, so she...

Steve: Oh, come on. Really?

Amy: ...she grew up on Taylor Swift. But I will tell you, she didn't go to the concert. Someone on my Facebook... You know, tickets were so difficult to come by. And someone came across on my Facebook page, and said, "I've found a way to get a suite, and it's only $1500 per person, and we have bathrooms right there. Let me know if you want this," right?

Steve: Oh. Let's get two. [crosstalk 00:36:27]

Amy: And we're literally shocked as I'm looking at all of these moms saying, "I'm in. I'm in. My daughter's in. My... Get two. Get two. Get three," or whatever. While I am all about experiences, I do have a cap on what I think is normal...

Steve: Yeah. Good for you.

Amy: ...rational thinking, and the Swiftiness, this [inaudible 00:36:41] while it was very cool, and I love her music, it went far above what I could justify to spend for Grace, for sure.

Steve: Well, the reason I ask you is the Federal Reserve has now acknowledged the economic impact of Taylor Swift and her tour. This is, this just blows me away. I mean, it's absolute... And also, Ed Sheeran. Same difference. I mean, they're, when they arrive in a town, it is incredible the amount of money that is generated in the local economy because of all these people coming in to see the concert. It's not just the concert. I mean, the average, at Taylor Swift, at least, the average individual is spending about 1300 bucks between, you know, and of course, the event tickets, they're crazy expensive, but outfits, merchandise, refreshments, travel, hotels. It's mind-boggling. It has a huge impact, and actually accounts for a percentage of the increase in GDP in the entire country.

Amy: Yeah. She's literally her one-woman economic force, right? And I actually saw some stats. I think it was in "The Wall Street Journal." And they're just kind of guessing here, putting numbers to it, because she isn't reporting numbers in the middle of the tour, but that each of her shows brings in $10 million. Ten million dollars, one person, one show. But it does get you thinking, right? Experiences versus other things. I have a cousin of mine who, every year, for Christmas, once their kids got a little older, started saying, "I'm gonna take you for a concert. I'm gonna take you for a game, for a team that matters to you." More so than "I'm gonna buy stuff that you're gonna forget about in a few weeks." And I love that idea. The only caveat I would say is, "If you have the money to pay for it," right? No experience is worth racking up credit card debt and getting yourself into a hole over.

Steve: No. No question. Unfortunately, a lot of people are doing exactly that. Credit card debt is getting nuts. If you can't pay off your credit card every month, you're overspending your income.

Amy: Thanks for listening tonight. We hope you're gonna tune in tomorrow. We're talking about financial considerations before deciding whether to get divorced. You've been listening to "Simply Money," presented by Allworth Financial here on 55KRC, THE talk station.