Amy: Today, we've got Steve Sprovach's dirty little secrets. Okay. No, not really. We've got dirty little secrets about retirement and how you can plan ahead for them. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. Were you scared for a second there?

Steve: I've already had one heart attack. I don't need another. Skeletons? That's skeletons.

Amy: We're just gonna pull all the skeletons out of your closet tonight.

Steve: Nothing to see here, folks.

Amy: All right. Well, I honestly don't think there's many skeletons in there. So, we're gonna do something that will really do some good for some people, and that is talk about some issues that we have seen people have through the years, right? Dirty little secrets. One of the things that Nathan Backrock, one of our founders, said to me that made so much sense about retirement is he said, "Find someone who's gone before you and ask them what they wish they had known, the mistakes that they'd made, the things that kind of tripped them up." And I think what we're talking about tonight is a lot of that. You can go into retirement planning all that you possibly can, but there's still gonna be some things that catch you off guard. Hopefully, these are some of the things we're gonna cover.

Steve: Yeah. You know, Amy, you can learn from people who've done things right, but you can also learn from people who've done things wrong.

Amy: I think you learn a lot more when people are honest about what they've done wrong.

Steve: Well, I've seen a lot of the latter. I've seen people retire and it hasn't worked out well, and a lot of it boils down to a couple of areas. You know, we say it's the little secrets. It's not really secrets, it's just something that, you know, maybe a myth, maybe something people don't talk about or don't fully understand. I'll give you one, and we did a segment on this the other day about, you need $3 million to $5 million worth of net worth. We argued that, and the reason I would argue it is, what is net worth? Net worth is your total value, and I don't think that's a number that matters that much in retirement. Cash flow is the concept that matters a lot more to me in retirement. Net worth, not so much.

Amy: And also what you spend, right? I mean, that's a number that's a big one. And it's interesting to me because so many people wrongly assume that when you get to retirement, you're gonna spend less money. I don't think working is a really expensive proposition. I don't know, maybe, you know, you go to lunch with some people every couple of days or whatever that is, or dry cleaning, or the cost to commute. But for a lot of people, that's not a ton of money. But think about what you do on the weekends, right? I mean, those are the things you're gonna be doing when you're retiring.

Do you play golf? Do you travel, spend time with the grandkids? I know every time, you know, my parents have taken my kids, it's like, "Well, we're gonna go for a movie," or, "We're gonna go to a festival." Those things cost money and they add up. So, I think one of the eyes-wide-open sort of things about retirement is knowing how much are you really going to spend in retirement. And then, to your point, what is the cash flow that you can expect, and do those numbers jive well?

Steve: Let's talk first about the net worth side of it. Because I hear a lot of people say, "Yeah, you know, I've got the big house that we needed when the kids were growing up, but yeah, we're gonna downsize." And two things about that. First of all, you can't eat the bricks. I don't care if your house is big, small, or intermediate. That's not generating any cash flow. It's the place you live, so disregard the value of the house.

Second, I'll argue that, oh, you're gonna downsize, are you? And the new house isn't gonna need any work, any maintenance, and you're gonna take that difference in price, no commissions on the sale or the buy, and you're gonna bank all that extra money. You talk to people that have downsized in retirement to a smaller home, I would argue that almost every single one of them not only didn't bank money but maybe spent a little bit mostly on improvements on the new place.

Amy: And I was gonna say, yeah, like your square footage might be smaller. You might go from a two-story to a ranch floor plan. But at the same time, let's face it. Like, over the years, our tastes tend to change, and many times they tend to get better and all of a sudden you're like, "You know, I want marble countertops," or, "I want..."

Steve: Yeah, exactly.

Amy: ... you know, whatever the thing is. And I'm telling you as someone who built a house in the past few years, anything you even think about, right, these builders have monetized to a level in which, like, "Wait for a second. Like, that's how much?" So, if you're buying or building, the kinds of things that you think you want in that new home, even if it is smaller, they don't necessarily downsize your mortgage payment.

Steve: No, I agree with you 100% on that. And, you know, we don't like using the B word, the budget word, and I'm not going to. I'm gonna say let's put together a spending plan. I routinely have people say, "Yeah, okay, so, in retirement, what do I need? Like 80% of what I'm making now?" Where did that come from? You know, it's in my opinion, and you nailed it when you said, okay, you might cut out a little bit of commuting costs and things like that, but you're gonna, you know...retirement is a weekend.

You know, it's a constant weekend, and you're gonna go out more. You're gonna travel more. The things that you couldn't do when you were working nine to five, these things cost money, Amy. And, in my opinion, if you're not spending more the first couple years that you're retired than you expected, you're doing it wrong. Because that's the whole point. You wanna enjoy life while you can enjoy it, and those things cost money.

So, don't penny-pinch on, "Yeah, I can get by with this much. I can get by with that much." No. Plan on, "Yeah, I wanna take this trip. I wanna do that. We're gonna visit the grandkids. We're spending two weeks there instead of just a long weekend." Add all those numbers up, make sure they're part of your spending plan, and then figure out, "Do I have the cash flow to do it all?" I hope the answer is yes.

Amy: You're listening to "Simply Money" tonight here on 55KRC, retirement and the dirty little secrets that just tend to trip people up. We're exposing them tonight so that maybe you can go into it a little more prepared than some people that have gone before you. You know, we're talking about kind of that nest egg, and for most people, that money is set aside in a 401(k).

So, you're looking at that balance on your 401(k), and I don't know, you've got a million dollars, say. Well, that's fantastic. But is it in a traditional 401(k)? Because that entire balance isn't yours. That money went in tax-deferred and HAs grown tax-free. And when you pull it out, uncle Sam now wants his piece of the pie. And depending on what tax bracket you're in, that's how much of that money is not yours. And that can catch people off guard.

Steve: You think? Maybe a little bit.

Amy: In a really ugly way.

Steve: Yeah. You know, and one of the things we talk about quite a bit is, "How much can I pull out of these accounts on a regular basis and not worry about running out of money?" And, you know, I still stick with that 4% guideline. I won't call it a rule because it's more of a guideline.

Amy: I think a guideline is a smart way of putting it.

Steve: Yeah. But just in round numbers, if you got a million dollars, you should be able to pull 40 grand out a year from that account. Well, how much winds up in your pocket? Not 40 grand. Maybe, you know, 34, 35 after tax, and that's if you're in one of the lower tax brackets of 12%, you know. So, yeah, when you say, "Yeah, that 40 grand's gonna come in handy," well, that 34 grand is gonna come in handy.

And, by the way, Social Security, no, they don't tax that, do they? Yeah, they do. Okay. If you have minimal, almost zero income, maybe not, but chances are at least half of your Social Security benefit will be taxed and more likely 85% of that Social Security benefit's gonna be taxed. And with taxes going higher and the budget deficit getting higher and Social Security in bad shape, do you think that's gonna go down anytime soon?

Amy: Yeah. Where do you think taxes are going in the future?

Steve: Yeah, exactly. Good luck. Yeah.

Amy: Not a betting moment, but if I had to bet, I would say up, which is why I think a Roth makes a lot of sense.

Steve: Yeah. Awesome.

Amy: If you have a Roth 401(k) option, I put a lot of my 401(k) money into the Roth. Yeah. And now some companies are doing matches even into the Roth. And, you know, if you qualify for a Roth IRA or Roth conversions maybe later in life, there's a lot of kind of details that you have to think through with your specific situation. But those can make a lot of sense.

And I just like having options. And we talk about diversification, but diversifying the taxes that are paid on the different kinds of accounts that you have, the tax treatments are a huge part of that. And you're gonna have a lot more options when you get to retirement if that money is in different kinds of investment vehicles.

Steve: Yeah. And you might say to yourself, "Well, I just retired last year. It's too late. I don't have a Roth." Well, you know, I don't wanna go into the weeds on what a Roth conversion is, but you know what, if you just went from a high-paying job to being retired with a lower tax bracket, you may wanna shift some of that money from your traditional 401(k) or IRA into a Roth. Talk to your tax advisor first because it is a taxable event, but yeah, you can start shifting some money after retirement into a Roth through a conversion.

I'll tell you, one of the things that really concerns me as I age is what happens with your health in retirement. And I don't mean, you know, that you're only gonna make it five years after retirement or anything like that, but nursing home care and out-of-pocket health costs, man, they can dig deep into what you thought was gonna be money for travel and everything else.

Amy: Well, in long-term care insurance, you used to have dozens of options. There were dozens of companies that offered these plans and, you know, you could even wait until you were a little bit older to get them. Fewer and fewer companies are now offering these policies, which means, I think, that you have to start younger looking at your options. Not necessarily when you or your spouse is on the verge a couple of months out from needing kind of long-term care, but maybe yours before that.

And I'm not saying that long-term care insurance is your only option because the premiums can be incredibly expensive, but can you self-insure, right? What are your plans? Have you looked at the options of, you know, maybe keeping a loved one at home, and how much is that versus being in that skilled care facility? And do you have a way to pay for that? All of these things have to be thought through.

Steve: Yeah. And I hate to say it, but I know a few people that have never thought this would happen and years ago decided, "No, it's too expensive. I'm not gonna spend $300, $350 a month for the rest of my life on something I may never use." And that's one of the arguments against buying long-term care insurance. I know somebody right now that's dealing with a pretty sudden onset that this person is gonna need extended long-term care ,and it's gonna wind up really hurting them financially.

So, you know, I'm not here selling long-term care policies by any stretch, but I used to think, "Okay, after I turn 60, maybe that sweet spot is 60 to 65, that's when I'll sit down and figure out, you know, do I wanna spend the money on a long-term care policy, and then I have a triple bypass at 60." Well, guess what? Just got more expensive, you know.

Amy: How'd that work for you? Yeah.

Steve: So I'm re-shopping. It's a lot more expensive, and I'm gonna buy some because I don't want Anne to worry about if Steve continues to head down this mental path that's not in a good situation, that she's gonna be okay, you know, or vice versa. You know, that's the concern is the healthy spouse you wanna make sure is gonna be left financially stable in the event of something, a health event like that.

Amy: And if you think that the past year has had money headaches, right, and the fact that your 401(k) has likely been down and you're paying more for everything in the way of inflation, imagine if you're a retiree, right? I mean, you know, they're living off of a certain income and all of a sudden everything's costing more and their investments are worth less, that's a tough place to be in.

And I know a lot of people, yeah, this past year was difficult, but inflation, if you're not planning for it over the long haul in retirement, for many people, this is called going broke safely, right? The cost of inflation is going up, but your investments aren't going up at that same pace. And that can be a really scary predicament to be in.

Steve: Yeah. More and more people now that we're finally getting some interest on savings are saying, "You know what, I'm just tired of this craziness of the stock market, and I can get 3% on a CD." That might be fine for the short term, but in the long run, are you gonna beat inflation with whatever CD rates are? No, not at all. There's a reason the stock market exists and a reason that most people put at least some of their money in the stock market. And that's because it's the only area, the only asset long-term that most likely is gonna continue to outpace inflation, whatever inflation happens to be. And that's why inflation's a big concern.

Amy: Another thing I think that people kind of get tripped up on in retirement is how long you'll live. I mean, you're almost betting against yourself. Like, "I've got plenty of money to make it until I'm 75." Well, okay, the average life expectancy in the U.S. right now is 77. And if you make it to the age of 65, there's a good chance, about 1 in 5, 65-year-olds are gonna make it past the age of 90.

Steve: Yeah.

Amy: And the interesting thing is, we're living longer, but we're not necessarily healthier.

Steve: Exactly.

Amy: You know, like the kind of healthcare that we're getting doesn't necessarily prolong those healthy years.

Steve: You're talking about me, I know you are.

Amy: I am not looking at you or pointing at you right now, but I mean, it is something to consider. You know, so just making sure that, you know, maybe you work a couple of extra years or whatever that looks like in order to just give yourself the peace of mind that you're not going to outlive your money.

Steve: One more mile on the treadmill. That's what you're telling me. That's what you're telling me.

Amy: One more.

Steve: And it's true. You know, a lot of people I've worked with over the years say, "Okay, I don't care. I'm not gonna go past 75." What happens if you have bad luck and you live a good, long life? You know, let's plan on living long and building up enough wealth so that you don't run out of money.

Amy: Here's the Allworth advice. Get educated about these kinds of dirty little secrets of retirement so they're not catching you off guard when it comes time for you to stop working. Coming up next, do you think maybe an inheritance is your future, some kind of windfall? We're gonna tell you how to prepare for that. 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. If you can't listen to our show every single night, well, you don't have to miss a show because you can subscribe and get our daily podcasts really easily. Search "Simply Money" on the iHeart app or wherever you turn to, to get your podcast. Coming up at 6:43, we've got deductions, insurance, HELOCs, and more.

We're going to ask the advisor. You know, Steve, I don't know if most people end up getting an inheritance, but I do know a lot of people think they're going to get one. How it all shakes out isn't always the way that you thought, but I think this is important to talk about. You know, if you think one is coming your way, first of all, how do you prepare for that if one is imminent? There are some things that we would say you need to be doing right now.

Steve: Well, there are, and this is true of windfalls, too, I mean, not just inheritances. But I think step number one is find out if there really is a lot of money coming to you before you spend it, okay? Too many people are like, "Well, you know, sorry to hear Aunt Mary passed on. But woohoo, I'm buying a boat. I'm buying this." It doesn't always work that way. I know of someone, a widow, had quite a bit of money, and she wound up giving it all to charity, and it was a big number. And the people that she left behind, she didn't have any children of her own,...

Amy: But they weren't happy.

Steve: ...well, not only were they kind of unexpectedly negatively surprised, but they were also... I mean, you've gotta have an executor, in this case, there was a trust, they were named trustees. They had to do a lot of work and got absolutely nothing, you know, from it because she wanted to give it all to charity. And, you know, she had her reasons, I'm sure, but, you know, these people were kind of expecting it. Don't count your chickens before they hatch.

Amy: Eighty percent of people who have inherited money say that it was significantly less than either they had been promised or that they had assumed they had gotten, whether it's the great-uncle, the great-aunts, the grandparents, maybe even your own parents. You know, some people look like they live life a certain way, but when you get to the dollars and cents of what's left behind, it's a mere fraction of what you thought.

Or even I think about my grandparents who were super, super frugal people, and my dad was an only child, so it wouldn't have been without, you know, outside of the realm of possibility think like he would inherit everything, except that my grandpa got Parkinson's at the age of 86 and he went into a long-term care facility, and then my grandma went into assisted living. They were literally blowing through thousands of dollars every month till what was left in the end was a tiny, tiny portion of what they had saved. I mean, that skilled care facility took tens of thousands of dollars.

Steve: Well, and the average inheritance is about 50 grand. I mean, 50 grand is a nice number, but it's not a big number. I think a lot people...

Amy: It's not a game changer.

Steve: It it's really not. Yeah. And, you know, sometimes taxes enter the picture now. You know, talk to your tax advisor before you go nuts on this comment, but inheritances aren't taxed but the estate certainly is, okay? So, you know, there may be taxes that need to be paid by the estate before it gets dispersed. I'll give you another example. There was a non-qualified annuity. That's just an annuity that was purchased that wasn't part of an IRA or a 401(k). And because the next generation was listed as beneficiaries, taxes had to be paid on those distributions, you know. So, again, check your tax advisor on this sort of stuff, but sometimes taxes do enter the picture on inheritances.

Amy: Okay. So, say you are getting a pretty good chunk that's coming your way. What do you do with it? How do you plan for it? We would say the first thing that you need to do immediately is to do nothing immediately.

Steve: Take a deep breath. Exactly, exactly. Two years ago, you know, this would be a situation where you say, "Yeah, but I'm not making anything in the bank." Well, guess what? There are interest rates being paid these days, and it's not a bad idea to just park the money in the bank. Don't necessarily tie it up for two years, but park the money in a bank, zero risk, earn a little bit of interest, and start interviewing people.

And, of course, I'm always gonna say, find a fiduciary. Forget if they earn a commission, they've got too much of their own interest at risk there. Stick with a fiduciary, maybe a fee-based advisor, and interview two or three. Find out who you're comfortable with, who has been recommended, what their references are, and that sort of thing, and pick their brain before you start signing paperwork.

Amy: They will have some ideas, right, that you probably haven't thought through about, ways that you can use that money to grow. And, you know, I mean, for some people, it can be a generational difference if you're really smart about that money. So, kind of thinking through those things. But yes, finding a financial advisor that you can count on and it's not pushing you, right? If there's someone who's saying, "We can take this money and we can turn it around and we can make X percent on it," or, you know, kind of making all these sorts of crazy options, no, no, no, no. Step away from that kind of person. That's not who you want to help you with this money.

Steve: Yeah. And, you know, the first inclination is, "I wanna buy this. I wanna buy that. I've always dreamed of that." Take a look at your debt first. And I hate to say it, but this is what we did when we had a small windfall not that long ago, and getting rid of debt is a big weight off your shoulders. I mean, it's a huge weight and that allows you to buy stuff down the road for cash maybe instead of additional debt. So, you know, consider paying down credit card balances first and then any other debt and work your way down on the line.

Amy: Just like when someone wins the lottery, right, you always hear about the people coming out of the woodwork...

Steve: Oh, I got some stories. Yeah.

Amy: ... and inheritance, very similar. You're gonna have all kinds of friends and family members that love you so much that you didn't even know existed before. It's okay to be selfish, especially as you're thinking through this, taking your time. You really wanna think, you know, "How can I make this money last and grow, not necessarily make everyone around me a little more rich?" And I'm telling you, they'll come for you.

Here's the Allworth advice. Be patient. Seek out a fiduciary, a professional financial advisor to help build a comprehensive plan. And lastly, fight to avoid loaning out that newfound wealth. Coming up next, something you might not have thought of when your big day comes up. How do you maximize the value of your birthday? We'll explain. 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. Do you have a big day coming up? Are you already planning the celebration? We would say maybe you should be planning something far bigger that has to do with your money. Joining us tonight, of course, our good friend Al Riddick from Game Time Budgeting. Al, you say there's ways that you can maximize the value of your birthday. Tell us what you're talking about here.

Al: So, one of the first things that people need to keep in mind is that on your birthday, you have an opportunity to take advantage of getting free stuff, Amy. So, let me tell you what I did or what I do for my birthday. You know, I take advantage of various reward opportunities at some of the local restaurants that I like to visit. So, I already know I'm gonna get like a free waffle, a free donut, my favorite free cookie, my favorite coffee or tea, and even a free sub sandwich from my favorite shop. So, that's just some of the fun stuff you can do. Well, all the more...

Amy: It's funny that you say that, Al, because over the weekend we were with some people, we were traveling with them and he does exactly this. I mean, he finds all of the birthday deals. And he was just saying that his Graeter's Sundae was about to expire and he needed to make sure he took care of that birthday Sunday. So, you're right, I mean, there's some stuff, some really good stuff out there that's free just for being born.

Al: Definitely. And just to, you know, of course, be a little bit more serious about this topic, you know, I think your birthday is a prime opportunity to take advantage of the opportunity, excuse me, for using the word opportunity so much, but start looking at your life in like 90-day increments or creating a 90-day game plan as it relates to your finances. You know, what could you do over the next 90 days that will have the greatest impact on your financial future?

For some people, it might be something as simple as making a budget, which, as you know, most people don't do these days. Or maybe you've been putting off the fact that you might need to get a new quote on your insurance premiums or something like that. But again, what can you do to make progress in your life over the next 90 days? And, to me, that's one of the things that most people don't think about as it relates to their birthday.

Steve: Al, I'm sorry, I heard blah, blah, blah after you talked about a free Sundae at Graeter's for my birthday. No, but...

Amy: Stuck on ice cream.

Steve: ...you make a good point. I tend to do this around Christmas time when I have a little bit of downtime after a really busy time of the year in my business. And, you know, picking a time, whether it's your birthday, whether it's the end of the year, but, you know, replace the batteries in your smoke alarm, and let's sit down and reevaluate where you are financially. I think that's fantastic advice.

Al: Definitely. And, you know, it's interesting that you mentioned that, Steve, because most people do make some type of plans around the Christmas holiday. But if you do it on the Christmas holiday and you don't do it that well, why not take advantage of the opportunity to revisit some of those goals, dreams, and plans on your birthday? And when you think about it, you know, of course, your birthday, it only happens once a year.

So, some people may be wondering, "Well, what questions do I need to be asking myself to make sure that my life is progressing as I think it should?" So, one of those questions could be, "What do I want my financial life to look like in the future, you know? What do I need to learn to move closer toward making that vision a reality?" So, for some people, they might need to go ahead and connect with a financial planner to discuss some of the more intricate details of their finances.

Maybe some people might even need to connect with like a basic money coach because they realize that their day-to-day financial behaviors are not producing the results that they desire. Or, maybe you might even wanna sit down and talk with an executive coach because your personal, excuse me, your professional life might be a little bit off-kilter as well. So, there are tons of things that you could do to make sure that you capitalize on the value of your birthday.

Amy: I like the idea of the kind of reassessing where you are, right? Where do you wanna go? But I think for a lot of people, if they have the audacity, right, to say, "I'm going to get..." And I'm not saying that this is audacious, but like, you know, it sounds like a big step. "I'm going to get out of debt," or, "This is the year I'm really going to start putting aside X percentage in savings for retirement," whatever it looks like. I think for a lot of people then, "Okay, great, like, I have this thing that I wanna do, but how the heck do I get there if I've never done anything like this before with my money?"

Al: So, one of the things that I would suggest, and just about everybody can do this, Amy, because it is so simple. Think about that individual in your life who might already be excelling at a particular skill that you want to develop, right? So, what's wrong with reaching out to this individual, whether it is by phone call or email and just say something like, "You know what, Amy, I've recognized that you are very good with money, and that's an area I want to be better at." Or they can say the same thing to Steve as well. "How about I treat you to a cup of coffee so you can teach me how you became so successful at this skill?" So, think about it. First of all, I'm giving you a compliment, both of you, right?

Steve: Sure.

Al: How likely is it...

Amy: I'll take that.

Al: ... that you're gonna turn me down? You know, because...

Amy: Sure, yes.

Al: ...I'm giving you the opportunity to kinda brag on yourself, but not in a braggadocious kinda manner. I just need information, and I'm asking you nicely to share it with me.

Amy: I have to tell you, I think for a lot of people, like, you know, grew up in households maybe where talking about money is taboo. Even though when I'm sitting down with friends and it's not necessarily about money or that one person's gonna teach the other person, I have learned that when you are open about things that you do with your money, I have always walked away from these conversations.

Like, that's a great thing for me to think about. That's a great thing for us to do or for us to consider, or I hadn't even thought about it that way. So, I also think that maybe one good sort of thing for your birthday is to just start having open, honest conversations this year about people who, first of all, the ones that you know that have made great decisions with their money, and even those that haven't. I think you learn from the mistakes, as well as the successes.

Al: Definitely. So, when you're asking those questions and having those open conversations, one of the tips that I always give people, whatever question you ask, make sure it begins with what, when, or how, right? And I always say kind of shy away from why do you do a certain thing, because depending on the way you phrase the question, some people might get offended by the word why.

But typically, if you're asking a question that begins with how, what, or when, you're generally going to get better information that you can use to make more productive decisions in your own life. And, again, being that birthday only comes around once per year, that, to me, is the prime opportunity to make sure that you are having the conversations, making sure that they're open and honest, and getting the information that you need to make sure that that next birthday is even better than the one you just had.

Steve: So, Al, okay, you've met with a mentor. They talk about how they got to where they've gotten. You say, "That's great. Here's how I can do it in my life." How do you translate that into, "All right, that's my goal, but now I need to figure out how to get there," because that's the important point. I need to take concrete steps or else a goal is just a dream that probably won't happen, right?

Al: Exactly. So, let's just say as an example that my goal was to get out of debt or pay off, like, let's say a $1,200 worth of debt over the next year, right? So, then I would be getting to ask myself, "What does my current spending behavior look like?" Because obviously, there's a reason that I'm getting into debt, right? So, then I might wanna pay attention to the income that's coming into my household, as well as creating an itemized list of where I'm spending my money. When you do that, more than likely you're gonna figure out or start to see where you might be overspending in a certain category.

So, if I see that I'm overspending by 100 bucks in eating out, right, the smart thing would be to say, "Hey, you know what, if I put away, or if I reduced my eating out budget by $100 a month and I redirected that money to the debt reduction goal in 12 months, I'm gonna hit that goal." So, you have to start thinking with the end goal in mind, but then reverse engineer the math so that you can implement certain strategies or systems in the present time to make sure that you hit your future goals. Steve, did that make sense, sir?

Steve: Absolutely. Yeah.

Amy: Makes perfect sense. So, the next time, right, you're celebrating a birthday, if you wanna give yourself a gift, ask yourself these questions. "How do I make my financial life better in the next year, and then what can I do to get there?" Great advice as always from Al Riddick, our friend from Game Time Budgeting. 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. Straight ahead, everyone hates paying those car insurance premiums, but we've got some ways that you can save. And if you've got a financial question you'd like for us to talk about here on the show, we'd love to talk about it. So, there's a red button to click on while you're listening to the show. It's on the iHeart app. Record your question, it's coming straight to us. Our first question tonight comes from Jeremy in Montgomery. "I turned 51, and I see how expensive long-term care insurance is and how it costs more if I keep waiting to buy it. So, are there any alternatives to long-term care insurance?"

Steve: Yeah, there are, but not that much, unfortunately.

Amy: He's like, "There's gotta be something else," right? I get it.

Steve: Yeah. And I think most people need long-term care insurance because, especially if you're married and one of you winds up needing long-term care, it can bankrupt the spouse. I mean, I've seen some pretty ugly examples. Yeah, there's a type of hybrid policy that you might wanna look into because if you're 51, you probably still need a fair amount of life insurance, okay?

And you can buy life insurance policies that, they're called hybrid, because, well, if you wind up needing long-term care insurance, you can get a payout for long-term care instead of a death benefit or in lieu of a death benefit. And that's something that I think is gonna catch on and become a lot more popular because everybody needs one or the other and sometimes both. So, yeah, it might be a little bit more financially feasible for you to look at a hybrid policy like that. Just talk to a couple of different agents so you get some decent quotes.

Amy: The next question comes from Carol, who lives in Cold Spring. "If I want to replace my income in retirement, which deductions that are on my paycheck go away and which will be part of my post-retirement calculation?" I think it's funny how many people don't think through this, right?

Steve: I know.

Amy: I mean, part of your check now likely goes to a 401(k). Saving for retirement, that's absolutely kind of wiped off the picture. Also, your health insurance, whatever you have to pay for that, although now you're paying Medicare premiums usually when you get to retirement, so that cost can catch you off guard. So, I think it is smart to look at just that pay stub because some of the things will continue and some of them will not.

Steve: But, you know, I'd really break that down even more simply, Amy. I would say what's your take home, and how much of that take home do you routinely and consistently save, okay? Because if it's, "Okay, I don't save anything, it seems to, you know, come into my bank account and go away," that's how much you're spending. And how much you're spending is not gonna change that much. As a matter of fact, like we've talked about at other times, it may increase in retirement. So, yeah, take a hard look at what you're actually spending. And in retirement, I don't think it's gonna be much less, and it might be even more.

Amy: You're listening to "Simply Money" tonight here on 55KRC as we ask the advisor your questions. Next question comes from Don, who lives in Green Hills. "Do I have to use my parents' financial advisor when I inherit their assets, or is it better if my advisor is in my home state?"

Steve: You can use anybody you want, Don, you know. Just because your parents...

Amy: I'm sure that advisor would like for you to go ahead and use them...

Steve: Well, sure. Yeah.

Amy: ...but not a necessity.

Steve: Advisors get paid on assets under management, and they don't wanna see any assets go away. So, yeah, they're gonna try to convince you to use them. And your parents might have loved them, but you are not your parents. And in your case, Amy, I mean, you know, that's a situation where, okay, how do you feel about this? Would you necessarily stick with somebody just because they were your parents' advisor?

Amy: Oh, definitely not. Definitely not. Because my person is my person. And, you know, by now I've had a relationship with them for years, you know, and so I'm not going to absolutely change based on who they have. Now, you know, if you like that person, and I also think it's worth mentioning here that as your parents get older, it would be nice if you were involved in the conversation between them and their financial advisor...

Steve: Good point.

Amy: ...just to get a lay of the land. So, I think it's someone that you should know and probably have a relationship with, especially if your parents are starting to age, but no, you can use whoever you want.

Steve: I agree 100%. Peter and Anniston says, "Is it a good idea to get a home equity loan with a paid-off mortgage?" You just paid off your mortgage. What do you think, Amy? Take on more debt?

Amy: Yeah.

Steve: Why?

Amy: It's like taking steps forward to take steps backward. I always laugh because I think it's like when people see that 401(k) balance, right, that money is just sitting there, and they're like, "Well, I need to use that for something else." And I feel like it's the same with the equity in your home. Once you learn, you get on Zillow or whatever it is, you see how much your home is worth, it's like, "Well, that's just money that's tied up there. You know, how can I use it to my advantage?" I have seen this backfire far too many times.

Steve: Well, and a lot of people say, "Okay, but you know what, I would have a better interest rate when I go and buy my next car." Okay. So, you wanna buy a car, and if things head south on you, you're putting your house at risk instead of repossession of the car. I don't like it. Not at all.

Amy: Nope. Don't like it at all. Coming up next, we've got ways to save some money on your car insurance. 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. Car insurance. I feel like once you get it, you really never think about it. But sometimes like you get the bill in the mail the next year and you're thinking, "Wait a second, is that how much I paid the last year? That seems like a lot of money." And actually, I've seen several studies that say car insurance is on the rise. So, the question for you is, when was the last time you shopped around?

Steve: Yeah. And I know you're supposed to, and I know there are savings out there, but we may be on different sides of this, Amy, because I've got a 30-year relationship with our insurance agent, and it's because I've known her family for literally that long, if not longer. And I'll tell you what, the one big claim that we had, they jumped into action and they got a client for life. So, I'll shop around, I'll cost-compare. I'll ask her first if she can do anything to reduce our premiums, and she has come up with some ideas. So, shop around, but don't be afraid to go back to your existing relationship and say, "Here's what I'm hearing out there. Can you match or do better?"

Amy: Well, and to your point, I've, for the longest, used the same insurance company that my dad had used for years, right? And I never shopped around, never thought about it. And then when I got remarried, my husband was like, "Well, you can get this for cheaper." And I was like, "No. No. This company takes great care of me." And it was a big online provider, but I'm telling you, there was substantial savings. So, at least do the research to figure out what you could and go back to that company and say, "This is what, you know, online, they can do for me or whatever." And I think, to your point, when you do have an accident, that relationship does make it so much easier...

Steve: It does matter. Yeah.

Amy: ...to get through that. But shopping around, doing the research, it can never hurt.

Steve: Well, and there are certain basic things that, yeah, let's take a fresh look at it. Because, you know, our lives get so busy and, you know, you just don't have time to think about, "All right, do I have Netflix plus, Disney plus and, you know, all that kind of stuff?" And work your way down the list and do you ever get to your insurance? But, you know, what I found is, "Okay, I've got AAA because I've got a couple of old beater cars and I wanna make sure we've got roadside assistance." Why would I pay for roadside assistance through my regular car insurer if I've already got AAA or vice versa, okay? Good point. Why pay double for the same service?

Amy: Yes. Yes. And so, also the look at bundling, I mean, this is like a big kind of insurance term, and it can save you money and it can't. But I would definitely ask that person, "Okay, if I bundle my home and car, or if you have a motorcycle or a boat or some other fun toy that you have insurance, right? Can you bundle those things together and save on those policies?" Work the plan both ways and see if it ends up making sense to you.

Steve: Yeah. And one thing I did do years ago, and this was my agent bringing this up. I said, "You know, how can we reduce my cost because it's been bumping up every year?" And she said, "Well, why do you have such a low deductible?" "Well, because I don't wanna pay anything if I have a claim." "Steve, you haven't had a claim in, you know, whatever, 10 years, okay?" "Well, okay, bump it up then." And it dropped substantially. Our premiums dropped substantially when we raised the deductible, and I've never had a situation where I regretted that decision.

Amy: Well, and I would say the one thing to think about there, and I think for a lot of times it does make sense to raise a deductible is just to make sure that you have enough money sitting on the sidelines, somewhere that you can get to...

Steve: That's the emergency fund. Yeah.

Amy: ...quickly, right? Your emergency fund where if you are gonna have to pay up to that deductible, that you have that money you can get to it quickly, you're not putting it on a credit card or something else. I also think just reassessing how you drive. I mean, just a few years ago, pre-pandemic, every single day I was driving from Northern Kentucky to Allworth's offices. And then I was driving to Fox 19, and then I was driving to iHeart, and I was driving all over the place.

Steve: Fast. I've seen you, fast. Driving very fast.

Amy: And I also drive a tank, right, so the gas mileage isn't great, it's not cheap. But also, neither was the insurance to do that. And then the pandemic happened, and we figured out how to do the radio show from our closet. And I do TV from my basement, and I don't have to go to the office much anymore. And, as a result of that, I'm driving far less than my insurance company was insuring me to drive. So, I also think those conversations are good, along with just being a good driver. Thanks for listening tonight. You've been listening to "Simply Money," presented by Allworth Financial here on 55KRC, THE Talk Station.