Amy: Tonight, the first big inflation report of 2024. A little bit of surprise, a lot of reaction from the market. And hey, maybe just don't check your 401(k) statement today. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Ruby. It is no surprise to anyone, right? We are paying more for the things that we buy this time than we were just a year ago. How much more, though, is the topic of debate and a lot, a lot of work from the Federal Reserve, our nation central bank? And today we got the latest report card on inflation. And this is one of the first numbers that we're seeing actually from 2024. They're not terrible numbers, but the market is maybe saying...terribly reacting to this one.

Steve: Yeah, they're not terrible, but they're a little worse than what people expected. And when something like that happens, when there's an unexpected piece of news, that can obviously have an impact on the markets. But you said it yourself a moment ago, a terrible day. Just because it's a bad day in the markets doesn't mean that we need to react and make changes to our long-term investments because this is just one day. Now, why this is happening, it's because of headline inflation. We've been talking about inflation for years now, and it had been trending down, and technically, it is still trending down. But what happened is something the Fed didn't want to see. There was a little temporary tick-up in inflation. They want to see it at 2%. 3.1 is a far cry. That's where we are now from the 9% that we saw peak out at last year. But again, it rose a little bit more than expected. Economists were looking at maybe 2.9, and then the headline fell to, or went up to, 3.1, that is.

Amy: It's funny, as I'm listening to you talk, I'm thinking about something that I was reading recently, which is it's not so much what people's words, what they're saying that people pay attention to. A lot of it is nonverbals in tone. Your tone as you're talking about this headline inflation number being a tick above what was expected is the same tone that you would say, I'm going to head to work. I'm going to pick up Nova on my way. It's very matter of fact, you are not screaming like your hair is on fire, run for the hills. This is terrible. And I hope that we can all learn something from that because the market's response is a little more to the extreme than what you're having, which is exactly what you should have. When you look at these numbers, okay, it's a tick-up. That's exactly what the Federal Reserve has been expecting during this time. They have been saying, listen, we were up north of 9%. Our goal is to bring inflation down to 2%. The closer we get to 2%, the harder it's going to be to get us there. And I am sure, as much as we would like for this to be a linear, no step backward kind of a situation, as we know, life just doesn't go that way. It's like when you're trying to save money for a goal or lose weight for something, those initial pounds, that initial money, it's so much easier. But the closer you get to the goal, the longer you've been doing it, the harder it gets to get there. It doesn't mean you're not going to get there eventually. Maybe you have to double down, maybe you have to be more focused. But setbacks along the way are to be expected. So for anyone who's looking at these numbers saying, oh, my gosh, this is terrible. This is the worst news ever. It's not. This is a very kind of expected tiny little minor setback, if you will, on the path to what we will expect is lowering inflation rates as we continue on.

Steve: Yeah, honestly, I don't even see it as a setback in the long-term scheme of things, which is why I come at this with a level of comfort because it's expected. You said it yourself, the Fed's been saying it, the closer they get to that 2% goal, I just want to echo this, it's going to be harder to the finish line. So this little [inaudible 00:04:05] of what was expected, it's normal because the data is not... You know, in this situation, the why they argue that it's because of rent and housing, which acts of all the hikes. It takes a year to [inaudible 00:04:17] on rent and housing because of the average [inaudible 00:04:19]

Amy: And we've been saying that for a while, saying it's going to take time when it comes to rent forces to work their way out of the CIS cases, which would reflect [inaudible 00:04:27] sort of state of the economy, to get out there. So this part of it, you know, Fed wants to see, but also I don't cue to your point. It's a huge surprise to anyone. Only 3 economists out of 68, actually, that Bloomberg really talks to about these things, sort of even said this is the way that they think things are going. But, gosh, if there's anything we've seen over the past couple of years, it's that these economists, they might get paid well, they might be really smart people, they may have heck of an education, but they don't always get it right. In fact, sometimes they can be not just a couple of a tenths of a percent off, but sometimes they can be way, way off.

Steve: [inaudible 00:05:08]

Amy: Exactly. And we still keep listening.

Steve: Well, you know, one could argue that there's a couple of factors here to take into consideration. Warmer inflation readings, it could be because of annual changes and how the government calculates prices in the CPI index. It'll take a month or two to see how that falls, you know, how the cards fall there. Also, a lot of companies, they raise prices at the beginning of the year. So CPI is, you know, supposed to adjust for those increases. But sometimes that formula that's used can be off base. It's hard to predict this stuff, which is, again, one of the reasons why I come at this with a lack of surprise, because as we get closer to 2%, there's going to be blips, you know, that seem like we're no longer trending in the wrong direction or in the right direction. But we are.

Amy: You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Ruby, as we digest these latest inflation numbers that are just coming out a tick above where we had hoped that we were going to be, but I think the big thing is let's not freak out about those numbers. But what's the Fed going to do with this? What's the Fed going to do with these numbers as they're taking in so much data trying to figure out what their next move is? Well, there was a time when the market was really kind of pushing for the next sort of major move by the Fed being next month, and maybe even starting to lower interest rates. I think that's becoming more and more off the table, but yeah, what they do next remains to be seen.

Steve: Yeah, I think at this point, if you see something out there about, you know, are Fed's going to hike interest rates again, I think that's pretty much off the table that there's...not enough time has gone by for us to...for the Fed, that is, to digest how, you know, aggressively the hikes were are going to affect inflation over the coming months. I certainly do see a situation where they're going to pause in March and certainly not reduce interest rates, maybe even in May, pause again rather than reducing.

Amy: You know, I think the interesting thing is there has been a disconnect, and we've been talking about this a lot on the show, between what the markets are kind of projecting is going to happen and what the Federal Reserve has said they're going to do. It almost kind of makes me laugh. It's like the markets are putting their fingers in theirs, you know, humming, like, no, no, no, we're not listening to what you're saying, Fed. You're saying we're going to take our time. We're going to be patient. We're going to continue to digest this. We are not talking about an imminent reduction in interest rates anytime soon, right? Those are the words that the Federal Reserve has said. Yet markets keep saying, yeah, we don't really believe you. We think we're actually going to start seeing you lower things, right? And so on days like today, when the markets have kind of a strong reaction to this news, it's almost like, well, come on, what were you expecting? This is what the Fed has been saying will likely happen. They're not going to make a major about-face here. There's not going to be a major pivot in what the Fed's going to do because we're a tad, tiny little bit off of what the projection was going to be. You know, yet the markets have this, like, oh, huge, like, shrug off, you know, as a result of something happening that's absolutely to be expected.

Steve: Yeah, that's why I think that this is a short-term blip as far as what happened in the markets today. Excuse me. The Fed, they don't just look at CPI, they also look at PCE. It's used to track the cost of doing business for businesses, and it's viewed as more accurate. Recent reading for PCE shows inflation slipping below 3%. So this is good information intertwined with some of these unexpected increases in CPI, for example. So what does this mean for us, for investors, for our 401(k)s, for our cash? First of all, don't react on short-term news and make changes to how you're investing. I will say, though, when we have cash parked on the sidelines that is tied to an emergency fund or a short-term goal, not long-term investments, but short-term, now is certainly a good time to explore leveraging CDs or treasuries while interest rates are still high.

Amy: Not only that, but there's savings that count out there that are going to pay close to 5%, right? So not even... You know, this is fully liquid, your money doesn't have to be tied up for any amount of time, great place for that emergency fund to be. So for those of you who have been slow to adapt, you like walking into that sort of brick-and-mortar building as your bank, now is the time. Those kinds of banks are likely still paying 0.001%, maybe not that low. You're not making a lot of interest off of that money. Now is the time to do your research. It may be an online bank that makes sense. Just make sure that it's FDIC-insured. So if something were to happen to that bank, you know, up to $250,000 of what you have in there would be completely fine. So do your research, look around, now is the time to kind of do that, to take advantage of the fact that, you know, the Fed funds rate is higher right now and some of these other interest rates are higher as the result of that. And then, on the flip side, man, for those of you who carry credit card debt, you've got to get this paid off. You are paying way so much more than you need to be in interest. And this is not something that's going to go way down anytime soon.

Steve: No, it's not. And some people may take... This may be surprising to some people. I know folks I work with are certainly surprised with it when I make the recommendation. Obviously, you know, you need to have a financial plan and talk to advisor before you take advice like this. But I can view sometimes credit card debt as an emergency. So there are situations where actually deploying your emergency fund to wipe out credit card debt is a good decision, especially with interest rates where they are currently. Credit card debt is more expensive than it has been in a very long time. If you don't have the credit card debt and you do have cash on the sidelines, put it to work. Get it in a high-yield savings account, a CD, a treasury. Take advantage of the high-interest rate environment that we are still in and will likely maintain for just a little bit longer.

Amy: Yeah, that's the smartest thing you can do during this time is to look around and say, okay, how can I take advantage of this current situation, right? There are some not-so-great things about it and some really good things that you can do. Here's the Allworth advice, don't be spooked by how the markets are reacting to news like this. History shows gains will continue over the long term.

Coming up next, how to account for sports betting wins and losses. Does it even make sense on your tax return? 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 Ruby. If you can't listen to our show every night, you don't have to miss a thing we talk about. We've got a daily podcast for you. Just search "Simply Money." It's right there on the iHeart app or wherever you get your podcast.

Coming up at 6:43, we're tackling some reasons why you would ever want to claim Social Security early. We'll help you think through this major decision because getting it right can be the difference between tens of thousands of dollars in your pocket over the course of your lifetime. Ladies, listen up. If all of a sudden your husband is offering to go grocery shopping for you, I'm going to help you decipher what's likely going on. Kroger is installing sports betting kiosks into a number of their stores. Your husband is going to Kroger to place a bet and to pick up the bread.

Steve: There's gonna be 86 sports betting kiosks through the Cincinnati and Dayton area Kroger stores.

Amy: Oh, my gosh.

Steve: Can't we just do that on our phones?

Amy: I don't know. I don't bet on sports, but yes, I believe that's exactly how my husband does it. So I guess you don't leave... Do the kiosks do anything that you can't do on your phones?

Steve: Honestly, I don't know. I'm not a sports gambler. I haven't. Maybe I should get into it. Maybe I should go to Kroger sometime and check one of them out. Well, the teams I like tend to lose, that's the problem. And I don't want to bet for the teams that I don't like.

Amy: I know. It's a lot to think through, but a lot of people are doing it. And I have a feeling this could be a draw for some people who like to bet to go into Kroger's, check out these kiosks. Listen, you're gonna be doing it. Kroger is very smart in leveraging ways to make more money. So, you know, we're always rooting for the hometown team. So whether it's the Reds that you're betting on, the Bengals, or some other team, Kroger is definitely gonna make good on this. Before we even start talking really about sports betting, and there's some tax implications to this that we want to get into, I want to remind you that while this is legal, legal does not necessarily mean smart or the best thing for your long-term financial plan. So, for couples, if one of you is really interested in sports betting, make sure that both of you are on the same page about this. I'm always very, very honest and transparent about what goes on in my house, probably too much, though my kids and husband probably hate it. But my husband was big in a sports betting for years before we were really together. When we got together, I said I can't get behind this. I feel really strongly that every dollar that you earn should be put to good use

Steve: Does he go to Kroger more often now?

Amy: Yes, my husband is all of a sudden... Actually, he did go to Kroger yesterday.

Steve: Oh, I'm sorry, Amy.

Amy: He offered to do it. So we need to think through this. But we had to have a conversation to really get on the same page about... You know, in the end, ultimately, we decided was X number of dollars. It's not a lot of kind of fun money that's on the side that can be used for this and nothing else. But for those of you who have gotten into sports betting, there are some things that you need to think through when it comes to taxes. So as long as you and your spouse or whoever it is, you and your partner are on the same page, everyone's okay with this, this is not money that should be in your 401(k), right, or anything else as far as long-term investing, now then you can start thinking through the tax implications of this money.

Steve: I mean, what you're talking about here is making sure that you can afford to use that money. This is your fun money. What you're gambling with, you need to have the expectation that it can just go away. That's money that can...

Amy: It is literally like going to Vegas and playing the slots. I know that many of you think you're very smart about the teams and the system and the thing, but it is just like putting money into a slot machine. I know a lot of people are going to disagree with me, but this is my take on it.

Steve: Is that what your husband said? I have a system, I can't lose.

Amy: He doesn't say that because he knows better than to say something like that to me. But I think I even shared this with you. I have a dear friend whose son is 18. And so he was talking about how many hours he needed to work in order to have the money that he needed for college. And he actually said this in front of me. He said, I haven't decided how many hours I'm going to work yet because I've been doing really well on sports betting recently. And I was like, I think you knew me well enough to not say things like that in front of me. And so it launched into a, you need to work the hours and get the money. And you probably, at the age of 18, don't have money left over to be doing these things. So don't do these things.

Steve: Yeah. Well, let's talk about the taxation here a little bit because the IRS does expect you to report your winnings on your federal income returns.

Amy: Yeah, it's income. It's a source of income.

Steve: Well, keep in mind the payer, so this could be a casino, state lottery, an online sportsbook, they may issue an IRS Form W-2G, I guess G for gambling in this situation. And even if your winnings exceed a certain amount, the payer may actually withhold 24% for taxes right off the top.

Amy: Yeah. And I think you can expect that to happen. If that's not happening, you got to keep track of it. Listen, you can keep track of not only your wins, but your losses, and some of those losses can be deducted from some of the winnings. If you itemize, most Americans at this point with the way that the tax code is set up, most of us take the standard deduction. But this is still something that has to be reported, can't be overlooked. You can't think like, hmm, I don't do it too often, or I won big a few times. No, no, any source of income, just like if you were to get a bonus from work that's fully reported to the IRS, this also has to be reported.

Steve: Well, I mean, the reality of the situation here is the house always wins. I think that's the goal here.

Amy: Uncle Sam being the house here, right?

Steve: Yeah, Uncle Sam being the house...the bookie, I guess it would be, could be the house as well for, you know, whoever you're gambling through. And in this situation, you keep in mind that, yes, we are supposed to be reporting our winnings. If you're gambling enough and you have losses, then remember, itemizing gives you an opportunity to offset those winnings if you have enough losses, so that it is worth your while to keep track of this if gambling is a big part of your life.

Amy: The funny thing is the people who might itemize those losses are probably not talking about them. I've never, ever talked to anyone who likes to gamble and does it regularly that ever, ever talks about the losses. You hear about the big wins, but you never hear about the losses. So the takeaway here is at least keep track of them for Uncle Sam's purposes. Here's the Allworth advice. Listen, Uncle Sam is always, always going to get his. Make sure if this is something you are doing, that you keep good records and listen above all else. If you are going to gamble, gamble with not long-term money that you need, not retirement money. This is fun money that you have on the side that both you and your partner have agreed to. Coming up next, a warning, thieves accessing your money despite using two-factor authentication: What you need to know. 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 Ruby. If you listen to our show at all, you know that we are huge proponents of taking every step that you possibly can to protect yourself, your data, your privacy. And one of the things that we say is you've got to use that two-factor authentication. Well, joining us tonight, our tech expert, Dave Hatter from Intrust IT. All right, Dave, this is not what we want to hear. We tell people to use two-factor authentication, and then sometimes it's not even enough.

Dave: Well, Amy, you know, the advice from anyone out there that knows anything about this is still use two-factor/multi-factor authentication. But you're right. Sometimes, it's not enough. You know, the point for both of you to get out to the listeners really is it still raises the bar substantially and it makes it much more difficult for the bad guys. But they're smart and they're devious and they want to steal your money. So, they're increasingly figuring out ways to get around it, and there are other technologies out there that can, you know, basically augment your defensive posture and make it more difficult. But yeah, I would strongly recommend to anyone that's hearing this, turn on multi-factor authentication or two-factor authentication anywhere and everywhere you can, because again, it really raises the difficulty bar for the bad folks. And in many cases, they're just going to move on to the softest target where they can get money the fastest.

Amy: Start by telling us what happened in this specific circumstance where two-factor authentication was not enough.

Dave: Well, honestly, Amy, that's a good question. So the headline on this story was Maryland woman loses $17,000 in SIM card swap scam despite two-factor authentication. And I'll be honest, I don't think the reporting on this really adequately addresses what happened here because the problem based on what I've seen is not really multifactor authentication. It's the fact that they pulled a SIM card swap on her and there's really not... It really has nothing to do with two-factor authentication per se based on what I've seen on the reporting. So SIM swapping, and this is an increasing crime. People need to be aware of this as crazy as this sounds. Okay. It's also sometimes called SIM jacking. So if you see SIM swap or SIM jacking, basically what it boils down to is someone is swapping your phone number to another phone and then potentially able to defeat, you know, whatever passwords you have, you know, all the stuff we talk about all the time, strong, unique passwords, password managers, multifactor authentication. If all of that is set up to go to your phone and now your phone is essentially in my hands because I SIM swapped you, well, you got a huge problem. So here's how this works. And again, while this is not something that's often targeted to the average person, it's increasingly being targeted to average people because the bad guys know if I can take over your "phone," I potentially have access to everything about you.

Steve: Mm-hmm.

Dave: It happened to Jack Dorsey, the former CEO of Twitter, some time ago. So, let's say, for example, because of all the data breaches that are out there and because people will always say, well, I have nothing to hide. I don't care that all these apps are sucking up all my information, etc. I'm able to get my hands on an enormous amount of information about you, like all of the answers to your security questions and so forth. I know your mother's maiden name. I know all that stuff. And now, especially thanks to deepfake voice cloning, I can call Verizon because I know your phone number. I know your email address. I know what high school you went to and all that stuff I'm gonna need to impersonate you. I'm gonna call Verizon, and I'm gonna sound like a woman when I call, and I'm gonna say, hey, I lost my phone. I want you to switch my phone number to a new phone. Or in this case, apparently, the criminals walked into a Verizon store and they impersonated the victim and they had her phone number switched to a new phone. I would bet you, every one of your listeners either has done this or knows someone that's lost a phone or something. I've had to do it myself and had the phone number transported to a different device. Well, guess what? Now, all of the two-factor authentication codes, all of the email password resets are going to the phone the bad guys have. Does this make sense so far?

Steve: It does. It scares me. Every time we have you on, I'm scared.

Amy: It's just so frustrating.

Dave: Yeah. Well, I'm sorry, Steve, but I appreciate you guys, you know, trying to help get the word out there because, you know, this this woman lost $17,000 because they were able to raid her bank accounts once they got into her phone. And this is a tricky problem to solve because if I can impersonate you, and if the people at your cellular carrier aren't skeptical enough, they may go ahead and do this transfer. And while there are some defenses against this, and I'll get to two specifically here in a minute, this is a tricky problem to solve, because, again, if I can impersonate you and I'm credible and confident and a good con man, they may switch the phone over. So this isn't really a knock on Verizon or any carrier. It's bad guys are smart and they wanna steal your money, and they know how to do these things.

So, here are two concrete steps you can take that while it will not completely bulletproof you against this, again, raising the bar, trying to get the bad guys to move on to a softer target. One is contact your cellular carrier and see if they have the option to set up an additional PIN or passphrase or something. It's required to swap your phone number. That way, even if someone happens to know all this other information, ideally, they are not going to know that PIN, passphrase, or whatever, and your cellular carrier is not going to switch the phone number to a different phone and allow them to basically destroy your life.

Amy: It's like another line of defense.

Steve: Just to be clear, the two-factor authentication wasn't necessarily the problem here. It's still adding to the benefit of additional security. What this article didn't really go into depth about was the fact that this is actually SIM card swapping. So, these additional pieces of advice from you are to add even more security above and beyond multi-factor authentication.

Dave: That's a perfect analysis, Steve. Again, I don't think the article really addresses what really happened here. It's not the fact that the two-factor authentication, or MFA failed. It's they SIM swapped her, at which point then all the codes and everything the hackers needed to get into her accounts were going to a different phone. So adding this...

Steve: [crosstalk 00:25:50] code would be your first piece of advice.

Dave: Yes. This additional PIN. Correct. Set that up with your carrier. And then the second piece is... Again, MFA, 2FA, turn it on, but there are additional mechanisms you can use to make that more difficult. For example, an authenticator app, Microsoft makes one, Authy makes one. Rather than you get the code via text to your phone, there is an app you install on your phone, it syncs up with these sites, the codes go to the app, they're encrypted, and you then have to have physical possession of my phone. SIM swapping my phone number to another phone will not allow you to get those codes because they're sent an encrypted form to the app on my physical device. So, it's another layer of friction for the bad guys, really raises the bar for MFA in general. And in fact, I don't use the one-time passcodes via text. I only do it via authenticator apps. So someone literally has to physically steal my phone, unlock the phone, unlock the authenticator app to get the codes. Does that make sense?

Amy: Yeah. You take it up several levels, and you know, to me is that always the frustrating thing, Dave, is the onus is on us.

Dave: Yes.

Amy: Like, it's not going to be as convenient when you have to rely on authenticators and multi-factor authentication and, you know, seven different screens to get into one account to check things or whatever it is. But it's necessary now in order to protect yourself.

Dave: Well, you're exactly right, Amy. And this is why I'm always crazy about privacy and people who say, I have nothing to hide and they don't care that these apps are sucking up all their data and it's being sold. You really hit the nail right on the head. The onus is always on the consumer. When these companies get breached or sell your data to someone that's breached or whatever, you're the one that suffers as a result. You're the one that has $17,000 stolen out of your bank account. There's no consequences for them other than a black eye and some free credit monitoring for you in most cases. So yes, if you want to avoid these kinds of scams, first off, awareness, knowing that it's a thing that you have to care about and then B, you know, deciding how much friction you want to inject in your life. Now you guys know, a tinfoil hat all the way. I'm going to make it as difficult as possible for these people to steal my money as I possibly can. And again, there's nothing foolproof, but if you continue to add these different layers, create the PIN with your carrier, use an authenticator app instead of the text-based authentication, it is going to be so much more difficult for them to hack you. And again, most cases, they're just going to move on, right? They just want your money.

Amy: Create friction, and then it makes it so much less likely that you are going to be the target. Let them move on to someone else. Great advice as always from Dave Hatter, our tech expert. 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 Ruby. If you have a financial question you and your spouse aren't on the same page about, maybe it's keeping you up at night, we'd like to help you out. 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. It's coming straight to us. We'll help you figure it out. And straight ahead, we've got questions you need to ask yourself if you're thinking about a major purchase. Speaking of questions, there are three that we get to ask more than any others, I would say. One is, how much am I going to need to retire? Second one is, when can I retire? And the third is, when should I take Social Security? And it's that third major question that we're going to focus on tonight. Lots of ways to think about this.

Steve: Yeah, and it's all tied together, but talking about Social Security, obviously, it's something we've shined a lot of light on over the years. First, the facts about it. Social Security, you can collect it any time between the ages of 62 and 70 years old. Full retirement age [crosstalk 00:29:40]

Amy: Big window there, right?

Steve: It is a big window. It's a constant conversation for folks that we work with. It's something that we review year over year as financial situations change, needs change, goals change. It's a big decision that you can't easily undo. There are some caveats within certain timeframes, but within that window between 62 and 70, full retirement age for anybody born 1960 or later is 67 years old. If you were born before that, then it gradually decreases. If you're born in 1959, for example, 66 and 10 months is full retirement age. But when we collect has a massive impact on the amount of dollars we get for the rest of our lives.

Amy: Yeah, so you mentioned 62 being the earliest youngest age that you can take Social Security. Yeah, your full retirement age for most is 66 or 67. So for every year before that full retirement age that you take it, you're going to take a decrease in that benefit. For every year that you wait, conversely, you're going to get more money. Now, once you hit full retirement age up to the age of 70, if you put that off, we can't use the word guarantee on this show very often. This is one of the few times that we can. It's a guaranteed 8% that you're going to get every year that you wait to take it. So, there's a very large financial consideration in that eight-year span between the fact that you can take your benefit at 62 and it makes no sense to wait beyond 70.

Steve: Well, what happens is there's a break-even point that you hit eventually where you get more money back from Social Security than you could ever get. And this is based on how long you live. So if you defer Social Security benefits as long as possible and you live past that break-even point, then it's more money in your pocket that you actually paid into during your working years to help fund Social Security for everyone, including yourself. So there are situations where, you know, in a perfect world, if we know we're going to be around for a long time, we defer as long as possible, and that guarantees more money. What about reasons to take Social Security early?

Amy: So if you are 62, right, you're turning 62, you're thinking about taking Social Security immediately, I would say the one time when I would really agree that it makes sense is there's a chronic health condition, you're not healthy, your life expectancy is not really long, then you want to get the benefit as early as you can so that you can take advantage of pulling that money out as long as possible. So I think the major consideration is a health consideration. And I've known people who have taken that benefit as early as they can based on their parents' history, and I would say, okay, that's a thing to consider, but if what was wrong with your parents, morbid obesity, you know, they were smokers, things like that, that are not lifestyle considerations for you, if you've made very different health decisions in your life, then you don't need to necessarily take into consideration here what your parents did.

Steve: We've had entire segments about people's misunderstanding about longevity. If you make it to 65 years old and you're a man, there's a 25% chance that you're going to make it to 92 years old. Live beyond 92. If you make it to 65 as a woman, there's a 25% chance you're going to live past the age of 94. So if you're just saying, well, my folks didn't live that long, that's different than if you know if a doctor has delivered bad news to you. This is a real-life reason to collect Social Security benefits early. Another one I would say would be if your expenses are mounting. Let's say you've reached a point where maybe you can't work anymore or you truly don't want to. You have the means to retire, but it's close. You have portfolio assets that you've built up in 401(k)s, IRAs, taxable brokerage accounts. But if you pull from them, they're going to dwindle a little bit quicker than you want them to. So in a situation where if you're able to close the gap on your expenses by collecting Social Security benefits early and still live a long, meaningful life, making sure that your money lasts longer than you do, sure, you can collect Social Security benefits early to close those gaps.

Amy: Yeah, if you have no other source of income, right, and you need the money, okay, then take it then. Obviously, if you're getting ready to turn 70, take the money. There's zero benefit weeding beyond that 70th birthday. And I think there are those who would say, well, one of the reasons why I'm going to take my money as early as I can is because I'm worried about the trust fund running out. Well, first of all, you need to understand that people are still going to be working and paying into the system. So the trust fund is not going to zero. There are options that Congress has. We talked about full retirement age earlier in this segment. They could raise full retirement age. People are living longer. That's one option that makes sense. They could do means testing, meaning the more...and this doesn't feel fair to a lot of people, but the more you've saved, the better you've saved, the less you get in Social Security, keeping in mind that it was the system set up as kind of a safety net to keep us off the street. So there are fixes to the system. I don't necessarily agree with taking Social Security as early as possible because you're worried about what's going to happen. But, you know, who knows what Congress will do.

Steve: I'd say the only situation where that actually makes sense is if you are extraordinarily wealthy and you kind of don't really need Social Security.

Amy: Yeah, I guess. Let me know if that's you. Here's the Allworth advice. Your decision about Social Security, it is a big one. So get advice from a fiduciary financial advisor. Timing can be everything here. Coming up next, key questions to ask yourself before shelling out big bucks. 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 Ruby. We've all been there, right? There's a major purchase. You're maybe excited about it. You think it makes a lot of sense. You feel conflicted about it, all the things all at one time. So how do you make sure that you are asking yourself the right questions in order to figure out whether you really need this purchase or not?

Steve: Yeah, so what's the real cost? An example that I think about is somebody that regrets buying a boat. Now, I hate to think about this one because it is still a financial goal of mine one of these days to be a boat owner. Right now, it's just kayaks. But, you know, the CFP in me has, you know, led me to make the right decision or whatever. And I don't actually own a boat yet. But, you know, I do know individuals and families that have and they regretted it because at the end of the day, that boat became the only thing that they wanted to do on weekends because they felt like they had to put it to use. So it goes beyond the financial costs, which is still very steep for gas and all the other costs that are associated with it. It can be a time suck in ways that you don't want it to be.

Amy: I will take your kayak story and raise you a ski boat because my husband had one when we first got together, and we really like we had some great times on it with the kids. But as the kids have gotten older, it became harder and harder to get out there. The advisor, right, the money person inside of me finally looked at him, it was actually earlier last summer, and said, let's run the numbers. How much does it cost us because we're going...we're using this maybe three or four times a summer? And we looked at per-time usage, how much that cost us, and when he saw that number, he literally put it on the market the next day. He was like, this makes no sense, right? And so he thinks sometimes you have to look at the dollars and cents of decisions like this.

Steve: Yeah, the secret is just not to calculate those numbers. So you keep the boat and you keep having fun, right?

Amy: Yeah, well, not how my brain works. But yeah, exactly. Exactly. So, yes, I think it's really kind of getting to, as you're looking at a major purchase, at what cost is this coming? And then, second, you got to classify it. Is it a need or a want? We're not saying you can't have major purchases that are once, but, you know, needs, obviously, those are things that you can't really get away without once. Then I think there's another lens that you would hold up to it. And I would say what you have to do when you think about your financial goals is what are your major values, and if it lines up with those, then maybe that purchase makes sense. Thanks for listening tonight. You've been listening to "Simply Money," presented by Allworth Financial, here on 55KRC, THE Talk Station.