Amy: Tonight, it is official. According to the Federal Reserve, interest rate hikes are over, but don't expect any rate cuts anytime soon. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Ruby.

We have been talking a lot about the Federal Reserve, our nation's Central Bank, over the last several years. And it's interesting, Steve, because I think in normal life, normal times, most people don't pay attention to the Federal Reserve. They're there in the background doing their job. People don't pay attention until inflation gets, what, upwards of 9%, and then everyone is paying attention because the decisions that the Federal Reserve make affect every one of us on a daily basis.

So we just came out of this time where we were increasing interest rates on a pretty regular basis. And so yesterday was a really important day for the Fed. Not that we expected them to do anything, but it told us a lot about where we might be heading in the future.

Steve: Yeah, it did. And, you know, it's interesting that the conversation for so long now has been, how much longer are they going to hike rates? When are they going to stop? Well, they've effectively stopped. We are at that pause where now we're waiting to see when rates are going to fall. But what just happened is, at this point, fourth straight meeting that the Fed did not touch interest rates. But they did make some significant changes to the language that they use when they kind of drop hints almost about what will happen. And it's looking good for some decreases in probably the May timeframe at this point.

Amy: Yes. And so what he said...and listen, it's what they do. That's one thing. And then what he says, and when I'm talking about he, I'm talking about Jerome Powell, who is chair of the Fed. There's, like, remarks that are released initially, right? Like, reading from a statement and then taking questions. And all of those things are dissected a thousand different ways to try to figure out what it means. Markets will, of course, react accordingly.

And what he said yesterday, at least the good news part of this is that, yeah, they're moving away. They're not considering any adjustments, including increasing the benchmark rate. And they had talked about the potential of another hike because they just weren't sure whether the previous hikes had brought us down to that 2% inflation rate goal that they had been heading for. So he did kind of establish that as the baseline of, hey, we did it. We think we did it. We think we're comfortable with where we are. And so the markets that are always looking six, nine months, a year out are like, "Great, let's move. Let's cut these rates now." And that's where he was like, "Yeah, not so fast."

Steve: Yeah. So a touch of bad news, of course, sprinkled in here is clearly they're not ready to cut rates in March. It's not going to happen because they need more confidence that we are not just going to touch 2% as far as inflation is concerned, but sustainably remain at 2%. And, you know, there's still this realm of good news is bad news and bad news is good news.

And obviously, the fourth quarter GDP rising more than forecast, it sounds like good news on the surface, but it also gives the Fed a reason to continue to pause rather than cut sooner rather than later so that inflation can... Well, they can continue to look at the numbers to see how much more inflation might go down with the hikes that have already happened. So, you know, the bad news is the pause continues.

Amy: And I think for anyone who's ever tried to lose weight, you have this goal in mind, right, however many pounds or whatever pair of jeans you want to get into or whatever it is. And it's like, well, what if you woke up one morning and you got on the scale and you were there? Then you got on the scale the next day and you were never there again. Or you were able to wear those jeans one time and never again. That's what the Fed's saying here. We don't just want to touch it. We want to live in this place. We want this to be the norm and we're not sure that we can get there by cutting interest rates at this point.

And I also think it's so interesting the power that the Fed has right now to move the markets. You don't even have to watch the press conference. You just have to watch the markets, and you can say, "Okay, that point right there, that must have been when he said we're not cutting. Don't expect a rate cut in March," right? You could literally see the blip on the graph.

Steve: It is amazing. We've had entire segments in the past about the hawkish or dovish language that the Fed uses and Powell uses when they have these meetings and talk about the fallout. And it's really remarkable to see how quickly the markets react to something that is...it's a short-term blip. That's the reality of the situation. It's important to remember that even with these changes, or in this case, not changes because the Fed paused again, that the markets are still going to be like walking up the stairs while playing with a yo-yo. They're going to go up over the long term, but some of this noise, in this case, comments that Powell makes hinting that we are not going to decrease the next time, they move the market. And that's something that we don't want to take that information and try to time anything.

Amy: You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner along with Steve Ruby as we digest what the Federal Reserve, our nation's Central Bank, did and said yesterday, right? Markets a little all over the place as a result of that. You know, I think the anticipation was, okay, we're going to start talking about cutting rates. And what Powell said was, listen, this is a highly consequential move and we are not ready to make it.

You know, we've been talking a lot, too, about, you know, is there the possibility for a soft landing where the Federal Reserve can get inflation into check at the same time not hiking us into a recession? And there's very little precedent for this. It's not an easy thing to do. I liken it to the miracle on the Hudson, landing an airplane on water, right? It doesn't happen well all of the time. And there's a number of factors that have to be just exactly right to be able to pull it off. And it's almost like the Federal Reserve is saying, "Okay, we knew this was unlikely. We think we've pulled it off. We're not sure that we're trusting that it's the case just yet."

Steve: Yeah, Powell was literally asked, "Is a hard landing off the table?" And he responded, "Overall, it's a pretty good picture." So it's...

Amy: It's not political, but he is political, right? I mean, he is.

Steve: Yeah. That's a good way to dodge the question without exactly answering it, because they've had all these conversations, especially last year, about bringing the pain, the expectation that these interest rate hikes are probably going to tank the economy. They wanted to have people understanding that this is how they bring inflation down, by increasing interest rates, bringing some of that money supply out of the economy. That trickles down to higher cost of debt for consumers. It trickles down to oftentimes job loss. It's the pain that they're talking about.

It didn't really come the way that they thought that it might. So, yeah, he's dancing around that answer as to whether or not the hard landing is off the table, because it is still to be seen. But optimistically, maybe we did have that soft landing.

Amy: Well, you look at the GDP numbers, right, gross domestic product, which tells us how healthy the American economy are. Out last week, way better than anyone was predicting, which I think goes to show the resilience of the American economy during all of this. And we expected that most of us or some of us would be worried about losing our jobs. That's what happens during a recession. Companies cut back. And so that was one of the anticipated consequences of this. But it didn't really happen.

Now, I think it did maybe slow down the labor market from the point where we were in this crazy time where there was like two jobs, two and a half jobs for every one person. You literally didn't like what your boss wore to work one day or they looked at you in a way you didn't like, and you could absolutely say, "Take this job," and shove it.

Steve: Never go back.

Amy: You were going to land on your feet the next day in a new job that was likely going to pay you even more money. I think the pendulum has swung back away from that. I don't think we're there anymore. But I also don't think we're in a place where we're in a recession and we're worried about losing our jobs and we're cutting what we're spending because we're worried that the paycheck is going to stop coming in or the paycheck is going to be smaller.

So yeah, I think that we can maybe say where a year ago we would say, "This would be best case scenario." We have maybe landed in best case scenario. And I think the Federal Reserve, as they should be, aren't quick to make any next moves. There's a lot of data that they're looking at and they want to make sure. And there's also precedence of cutting rates too soon and then things get really, really bad, right?

Steve: Exactly. This was back in the '80s. And Powell has made it very clear that he doesn't want to repeat the mistakes of Paul Volcker when they slam the economy into a double dip recession...

Amy: Nobody wants that.

Steve: ...because they increased interest rates too quickly. They decreased them too quickly. And then they had to do it all over again. What a nightmare. That was a scenario that obviously they're trying to avoid. And optimistically, maybe they did. That doesn't mean that there's not going to be a recession eventually, because that's a natural part of the economic cycle. And at the end of the day, it's not something to particularly be afraid of when we have a long term investment strategy built for ourselves. But, you know, maybe this time is one of those different times where we didn't take the economy to bring down inflation.

Amy: Yeah, it's funny we always say, right, this time is different, are really bad words to think as an investor. But this time, legitimately, is different. And in one way is the fact that the Federal Reserve really only has one tool to deal with inflation, and that is either raising or lowering interest rates, right? But they also pulled another tool kind of out of the air during the pandemic. And they started to flood the bond market, right, with money as a way to just bring liquidity into the economy. And that was called quantitative easing.

And so what they have to do at this time then is to kind of unwind that balance sheet and sell back, you know, billions and billions if not trillions of dollars of treasuries that they bought during that time. This part is unprecedented. So you're doing this trying to bring inflation down at the same time you have this other thing working in the background, quantitative tightening, now. And so I think it's smart of the Federal Reserve to say, "Let's just give this a little time to see how it all kind of works itself out."

Steve: Yeah, it's the opposite of quantitative easing.

Amy: Easy to say.

Steve: Thank you. Yeah. So it's the opposite of that. And what they're doing is they're letting $60 billion of treasuries and $35 billion of mortgage-backed securities fall off the balance sheet each month simply by letting them come to maturity. That's all they're doing. And that effectively takes that out of the money supply, which is the equivalent of increasing interest rates. That's kind of what they're doing here to reduce...

Amy: Tightening the economy.

Steve: Yeah, tighten the economy and further bring down inflation. So it is an interesting maneuver that's being leveraged right now. And it's just part of the information that they need to look at when they're making decisions about when to cut interest rates.

Amy: A lot going on here. Here's the Allworth advice. Rate hikes appear to be finished. Rate cuts, probably not at the immediate future. But listen, neither of those scenarios should have a major impact on your long-term financial plan.

Coming up next, a contributing reason why the Social Security Trust Fund could go broke in a decade from now. You maybe never thought about this one.

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 miss our show and you do not have to miss a thing, we have a daily podcast for you. Just search Simply Money on the iHeart app or wherever you get your podcasts.

So how much money should you have if you are going to wait and maybe not retire until you get to your 70s? We're going to ask the advisor about that, coming up at 6:43. A lot of talk if you are on Social Security every year about COLA, the cost-of-living adjustment that happens. And there's already some numbers and percentages being floated around for what we can maybe expect for 2025 COLA. And they're saying, this is according to the Senior Citizens League, they're saying expect about 1.4% for 2025. I feel like this is a little bit early to get really caught up in.

Steve: Yeah, that's not too exciting, is it, 1.4% down from 3.2% for this year's change. So if that were to come to fruition, that would be the lowest hike in Social Security benefit from the cost-of-living adjustment since 2020. But yeah, you said it yourself. This is something that could change because the official announcement, it doesn't actually come out until October. And the average has been about 2.6% over the last 20 years. So that 1.4% number, that's pretty low.

Amy: It is low, but I also think it's low because inflation is expected to move in that direction, to continue to go down. I mean, when we had north of an 8% COLA, we also had 9% inflation at that time. And so it was like what one hand giveth, the other hand taketh away. And I think the frustration, and fittingly, for a lot of people on Social Security, is at the same time you're looking at this cost-of-living adjustment, Medicare often goes up every year.

Steve: Isn't that fun how that works? You have Medicare Part B premium.

Amy: Yeah, so it's literally like the government's giving you extra money and you're giving it back to the government. I'm sure this feels like a vicious, unfair cycle.

Steve: Yeah, you'd think they'd want to give you a bigger raise and then just raise Medicare Part B premium more as well to just keep that money for themselves.

Amy: Yeah, and that's exactly what's going on here. So listen, don't get worried about what this is actually going to look like yet. I think it's way too early in the year. There's way too much data that's going to come in. But just understand, yeah, it can be really exciting to know that you're getting 8% more each year, but then when you're also paying that much more for eggs, milk, healthcare, and all the things that you're buying, it really isn't going to move the needle. You're not going to have more left over in that checking account every month. You know, and I think understanding Social Security is incredibly important for understanding how to plan for it and how much of it to plan for.

Steve: Yeah, obviously it makes up a significant portion of most of the U.S. population. Unfortunately, that's the reality of the situation.

Amy: Too much.

Steve: Yeah, 90% of the population, it makes up a significant portion of their actual income and retirement. And there's been talks for years about the trust fund that backs Social Security being completely insolvent by 2033 if nothing is done to bolster it. Now, that doesn't mean that Social Security goes away. I want to be very clear about that. Social Security is not disappearing. But if no changes happen, then benefits could be slashed by about 23%. That's what experts are looking at. And it's happening for a couple of reasons. First of all, fewer workers are contributing to the benefits as baby boomers retire. [crosstalk 00:15:42.287].

Amy: There are so many boomers, right? So many baby boomers. And this is their peak retirement time. You know, and I think about the fact that my mom was one of eight children and then I had two kids. So there's less workers coming in, paying into the system that more people are drawing from. I mean, this is an easy mathematical equation that says, "Hey, there's probably not going to be enough money there."

Now, there are lots of fixes that Congress can look at to make this problem better. They can make it take longer, right? Full retirement age, push that back. They can tax certain things. There's all different kinds of things that they can do. I think the issue is it's a political hot potato. I mean, we've had Congressmen...

Steve: It's a nightmare.

Amy: Yeah, we've had Congressmen on the show before and we've asked them point-blank about this. And it's like a political hot potato. They're like, you know, "Look at that red ball going there." They just don't want to talk about it because any way that you slice this, I think you're going to, you know, upset some subset of voters. So this is something Congress needs to tackle. I don't think they're going to tackle it anytime soon. But as we look...

Steve: They're going to wait till the last minute.

Amy: Exactly. Yes. But as we look about the fact that, okay, yes, we've got less workers paying into the system, that's part of what's going on here. But I wonder how many of you really understand that the money that's in that trust fund isn't just sitting there. It is actually invested.

Steve: Yes, it is invested in a sense in that it is in treasuries.

Amy: Invested late?

Steve: Yeah, this is a legacy of when Social Security was born back in 1935 and Congress passed the law stating that Social Security funds were to be invested in treasuries. Now, the challenge here is that, you know, since 1940, the trust fund has earned an average of about 5.1% per year. That's less than half of the about 12% average return for the S&P 500. So there is an opportunity here. This conversation today comes from an opinion piece that was in MarketWatch. There's a viewpoint out there that exists that says one potential fix for increasing the longevity of Social Security is to invest in the trust fund that builds up that balance.

Amy: I'm going to tell you right now, this is not going to happen. I mean, it's not going to happen. There is inherently some risk in investing in the stock market. Smart, long-term investors know that historically the gains here far outweigh the risks. But this is something that was created in 1935 to keep us off the streets when we're elderly. It was only ever meant to replace 40% of our income. And it is not something that should likely be gambled with in any way, shape, or form. And it's not that I think that investing in the S&P 500 is gambling because I really... If something goes wrong with the 500 biggest American companies, we got bigger problems than Social Security Trust Fund at that point. But I actually like the way that the system is set up, even though it hasn't changed since 1935.

Steve: I agree with you on the flip side. There is the point to be made that the $2.8 trillion that's invested in the Social Security Trust Fund last year earned about $67 billion. That sounds absolutely fantastic and sure it is, whatever. But had it been in a 60/40 allocation of just some low-cost exchange-traded funds based on U.S. investments, it would have earned $450 billion more. Isn't that amazing? But how would a significant portion of the population react in a year like 2022 when the markets were down 20%? That is the challenge that blows this plan wide open, in my opinion.

Amy: Yeah. You look at the stock market when it's down and historically it's down far less than it's up, but it is down. It does go down. And during that time, can you imagine how taxpayers and voters would feel? It could get ugly. So this makes sense.

Here's the Allworth advice. This is yet another example why you shouldn't plan on Social Security to be your main source of income later in life. Count on the investments you do have control over.

Coming up next, we've got an inspirational story of how one of my favorite people got himself out of a mountain of debt and the lesson he has for you. 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 can throw statistics at you and we can tell you all kinds of stories about people who have gotten themselves out of debt, and it can just seem like, well, that worked for them, but it's not going to work for me. Well, tonight we are sharing a personal story for those of you who think you can't make it happen, our good friend, Britt Scearce. We've known Britt for years. He's our credit expert here on the show. He gives amazing advice, as he has been for years, about things that you need to know and understand about your credit. But this is a guy who knows where he's coming from when he tells you these things because, well, Britt, to be frank, you made some mistakes a long time ago.

Britt: I sure did. You know, I had great parents and great teachers, you know, growing up. But, you know, I really never had anyone really teach me about money. And I think a lot of us can say that, that we really didn't have anyone that truly just kind of, you know, walked us through budgeting and how money works and how credit works, and how to budget and things of that nature.

So basically, when I got out of school, I pretty much the financial world and the pool of the culture to be a spendthrift and kind of just get whatever you want, do whatever feels good. You know, that kind of culture pool just kind of sucks you in if you've had no one really teach you the proper way to manage money and budget.

Amy: And for you, it started with the truck, right? There was a car that you always wanted. You could buy that. And then it went from there.

Britt: Yeah, I went to hang out with my buddy one day and he had a new car. And of course, you know, if you're a young guy in your early 20s and your buddy gets a new car, [crosstalk 00:22:08.258].

Amy: You need one too.

Britt: Well, yeah. So I went and found a way to get myself an auto loan and got myself a truck and, you know, got myself a car loan. Well, that got me some credit. And, you know, once you establish some credit, it's amazing what the credit bureaus will do. They're so friendly and they're so nice. They start to sell your name and your contact information to all kinds of other people that want to sell you more debt once you have some debt. And that's kind of how it got started.

Amy: So you're getting the mail, right? You can have this credit card and that credit card. What'd you do? Sign up for all of them?

Britt: Well, yeah. I mean, they would send me, you know, an offer in the mail and said that, you know, if you apply for this Visa card, there's $3,000 on there. Well, I didn't believe them, so I signed up for it. They gave it to me, and guess what? I started... You know, I had to get accessories for my truck. And of course every little emergency, it's so easy to just kind of put it on a credit card, right?

I like to liken the ability to get into debt kind of like the story that they always tell about cooking frogs. You know, if you take a live frog and try to put it into a boiling pot of water, it'll jump out immediately because they can tell it's going to be killed, right? Well, you know, but if you put it in cold water and, you know, put it on the stove and slowly turn the heat up before it knows that it's cooked...I know that's gross, but that is exactly how it is with us. With debt, you know, the easy monthly payments are very easy until you have so many of them that they're not easy anymore.

And that's what happened with me is, you know, I started accumulating more and more cards, started to... You know, the monthly payments were easy until they weren't. And if you're ever lonely and feel that no one cares, just miss a few payments on your credit card or your car...

Amy: And all of a sudden, everybody's reaching out, right? So if you could, thinking back, talk about your low point when you decided this is out of control. Paint that picture for us.

Britt: Well, you know, what ended up happening, you know, I bought a truck, as you said, and then I went to hang out with my friend again one day, and he had traded his other car in for one of those Beretta GTZs back in the early 1990s. And I thought that was so cool. So, of course, I had to go trade that in, you know, one for myself. And, of course, it came with a, you know, huge car payment. And it was just a stupid move, you know, but it was impulsive. And, you know, I think when the repo guy came to get that car because I had, you know, had some interruptions in my income and couldn't afford the monthly payments anymore, well, that was pretty much my signal that, hey, you're busted. You know, you really...

Amy: You no longer have a car.

Britt: Yeah, you don't have a car, and, you know, you've got all these people wanting to know when the next payment's coming or when you're going to pay them in full. So that was the lowest point, you know, when you have to go from driving a new car as a young guy to a beater car with a dent in the door that eventually the reverse went out of and I couldn't even afford to fix it, so I just kept driving it forward everywhere.

Amy: Oh, my gosh.

Britt: I was that broke.

Amy: So clearly a huge swing, right? You went from all these nice new things to then a beater. And I think there's an obvious mind shift that has to happen in between there. And I think for so many people, it feels like the ditch is too deep. I've just dug myself in too much here. There's no way I can possibly get out of it. Sounds like, though, you were pretty deep in. Your car had been repossessed. So then how did you get out?

Britt: Yeah, well, you know, you end up reassessing your life and you either decide to stay down and just be in complete financial ruin forever or you decide to take some action and start learning about money and start figuring out how to increase your income and find ways to...just figure out ways to kind of get your head above water. And, you know, you got to kind of build the four walls around yourself, you know, food, shelter, basic transportation and clothing, and you got to just do your best to ignore all the negative.

And, you know, you're not a bad person because you have debt and because you messed up. And you also need to understand that this is temporary. This isn't forever. You're not ruined forever because you made mistakes and, you know, maybe you have a lot of debt, maybe you have a lot of issues. But, you know, what you can do is you can reassess everything. You can list everything that you owe and, you know, start making agreements with your creditors, start to settle accounts, start to find ways to make more money.

You know, sometimes we get kind of down and we're like, "Oh, my gosh." You know, it's harder to be creative. But, you know, that's when you have to stop adding new debt and you have to start doing your best to create as much income as you can. And you just have to... You know, they say, how do you eat an elephant? You know, one bite at a time, right? So you just simply have to start somewhere.

You know, the debt snowball is referenced a lot. That's what I utilized. And you just simply, you know, pay your smallest debts first, settle them up. A lot of them will accept 50 cents on the $1. You know, if you call them up and talk nicely to them and say, "Hey, I don't have all this, but I can pay you this much, will you settle for that amount?" And, you know, you do it one at a time.

And then once you clear your debt, at that point... You know, I didn't start worrying about my... You know, a lot of people have this fear about their credit score. You know, they're like, "Oh, my gosh, you know, my credit score is so important. I've got to get my credit score up. I've got to get my credit score up." Well, you don't need to be worrying about your credit score while you're, you know, knee-deep in the debt trying to get yourself cleared of the debt.

Amy: Yeah. The focus is the debt.

Britt: Yeah, it's like having open heart surgery and saying, "Okay, I want to run a marathon, you know, the day after." I mean, you can't really do that. You have to kind of, you know, first heal the problem, get the debt cleared, and then you can reestablish, which is why [crosstalk 00:28:34.086].

Amy: So, Britt, how long did it take you to get out of the debt, to turn things around?

Britt: It took about two years. And, you know, once I was able to kind of get things cleared, then at that point, I was able to... I ended up having to eventually find a way to finance another car, actually. Obviously, I was much more reasonable with the car option. And I had to pay an interest rate on that car loan, on the car that I got. I had to pay 25% interest. And I know what kind of humiliation, you know, goes with having to go and try to rent an apartment when you have bad credit, buy a car when you have bad credit, or just in general function in the financial world with bad credit. It's very humiliating. And a lot of people treat you in a very humiliating way. A lot of them are not nice. I know there's not supposed to be discrimination and that sort of thing, but if you've ever been in that situation, you know what I'm talking about. People just are not friendly.

Amy: So for anyone listening tonight, right, who feels like I can't, it's too much, you know, but thank you for sharing your story and being so vulnerable to say, "This is how it felt. This is what happened to me. And also it took me two years, but I did turn it around." And I think that the key here is for anyone to understand you can also turn it around. Britt Scearce is our credit expert.

You're listening to "Simply Money," presented by Allworth Financial here in 55KRC, THE Talk Station. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner along with Steve Ruby.

Straight ahead, your credit score, maybe it's not something you're exactly proud of, but we've got ways you can boost it pretty quickly. We'll get into that. And do you have a financial question you'd like us to answer? There's actually 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. And we've gotten several of these questions lately that we're going to get into tonight.

Our first question, though, comes from Kathy in Springdale. My granddaughter just graduated from college. Can you share a few money tips that she might find useful now that she's no longer in school? I like this question a lot.

Steve: Yeah, I mean, there are incredible opportunities for somebody that's just getting started. Now, I'm curious to know, does she have a job? Did she land her first position within her industry? If so, it's important to make sure that we have that solid financial foundation. Don't take on any bad debt. Don't build credit card debt. Instead, build an emergency fund so that when life throws us curveballs, we can tap into it.

If you get a 401(k) plan, it's a great place to start. Start where you can, but make sure that you do your best to get the free money that's on the table, the company match. If you're able to, especially if your granddaughter got a good-paying job, now is the time to look at what you've been living off of versus what kind of income you suddenly have. And don't just fall into a pattern of lifestyle creep where it's like, "Hey, I get to do everything now. I'm going to go on cruises and buy a house and buy a boat." You have an opportunity, or she will have an opportunity to begin to grow significant wealth by getting started early when compounding interest is on her side.

Amy: There's a great rule to live by, the "Simply Money" way, the 50/30/20 rule. And I think if your granddaughter can start off in the first job living this way, she's going to be set for life. And it's this, 50% of what you're bringing home goes to your needs. This is if she's going to buy a house or she's going to live in an apartment, the rent, her food, her utilities, her car payment. Thirty percent, that goes to the fun stuff. Maybe she can't afford that cruise because maybe she's making enough money. But the key here is 20%. Think about it. If we could all go back and start investing and saving 20% of what we make from the time we got that first paycheck, where would we all be now? It's incredible.

Steve: We wouldn't care what happens to Social Security in the future if that was the case.

Amy: It wouldn't matter. Absolutely.

Steve: It wouldn't matter.

Amy: Yeah. So I think that's some great advice for her. Next question from Kirk in Alexandria. There's so much to focus on money when I read about planning for retirement, but what about everything else? He's kind of asking about the non-financial part. How should I plan for my actual life and retirement, which is actually a conversation we have quite often, right? Beyond the money part of it.

Steve: Oh, yeah. I mean, it's important to make sure that you have some kind of a plan for how you're going to spend your time, whether it's hobbies, whether it's remaining social, remaining healthy to some capacity. Don't just be lethargic, sleeping every day, sit on the couch, and watch TV. That's not a way to retire. I mean, to each their own. Sure, you could do that if you really want to, but how do we remain socially active, and how do we keep our minds sharp?

A lot of that has to do with practicing those hobbies, finding those hobbies before you retire. If you think you want to move somewhere, rather than just taking the plunge behind the house, maybe rent somewhere in that community for a month or two to see how it feels before you make a purchase. There's lots of ways that we can make that transition. I'd say a good example of somebody that did this recently that we all know is Steve Sprovach. That man, he has so many hobbies and so many plans as he transitioned into retirement that he's not going to be bored.

Amy: Yeah. He's not worried about what he's going to do with his time. But I like that someone is thinking along these lines because it is so often just you look at the 401(k) balance and you look at what you have in retirement accounts and you're only focusing on your budget, your money, and what's going to be coming in. And you're not focusing on what day-to-day life is going to be like now that you don't have to be at the office, you know, 40, 50 hours, whatever it is a week. And it's a huge change and it's definitely one that needs to be planned for.

Next question comes from Philip in Bridgetown. I'm retiring soon. I'm going to have a pension. I can choose the single-life option or the joint survivor option. I am married. I'm assuming the joint one is the better choice.

Steve: Oh, there's a lot of moving parts on this one. This is where you need to sit down and talk to a fiduciary financial planner that can map out a retirement plan for you based around your goals, your financial needs. Age differences is a big one. Sure, if there's a big age gap, then there can be some major benefits for your spouse if they were to survive you, for example. But this is one where you really need to sit down and dive into a plan because there are some big differences in how much you will receive from that pension if you go single-life. It's going to be a lot more than if you go some kind of a joint survivor option. It's going to be much less cash flow.

Amy: I do have a cautionary tale here. A few years ago, close family friends, both lifetime educators, right, loved their jobs, helped so many children, but didn't necessarily make a lot. So they took the single-life option to have more money from the husband's pension, and he passed away from a heart attack just a few months after he retired.

Steve: Nightmare scenario. Yeah.

Amy: Yeah, so you just never know. Coming up next, how to boost your credit score right now. 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.

Your FICO score, maybe you don't obsess about it the way that I do. I probably have an unhealthy relationship with my credit score. But I also know that it makes a big difference in what you're going to pay over the course of your lifetime when it comes to your mortgage rate and buying a car and the opportunity to open credit cards. So if yours isn't so great, there's actually some things that you can take control of and kind of move the needle pretty quickly.

Steve: Yeah, so I guess this isn't the worst, bad habit you can have being obsessed with your credit score because it can save you some good money.

Amy: I know, right? Tell that to my husband. He thinks it's a really weird thing.

Steve: He thinks you're weird because you're always looking at it. What is it today? What was it last week?

Amy: Yeah.

Steve: Well, anyways, how do we bring that score up? Obviously, you have a lot of experience with this, but simply paying down credit card debt is the first way, making sure that you're making those payments on time. We've talked about credit to utilization ratio in the past. That is the amount you owe on your credit cards proportionate to the credit card limit. This was something that I did. It was very easy. It wasn't even a phone call. I used the app at my bank and I typed in, can you increase my credit limit?

Amy: Isn't it crazy?

Steve: And they came back and said, "Sure, we'll give you this much." And I was like, "Okay, well, all right." My credit utilization just went down.

Amy: So you've literally done nothing except for talk to a bot in a chat box, and you have improved your credit score because the amount of credit available to you has just gone up. And as long as you're not spending more money, putting more money on that credit card...

Steve: I'm not.

Amy: Yeah, easy breezy. And there's all kinds of studies out there that show it's actually relatively easy to do, and often you can do that. And you also mentioned just paying your bills on time. That's the number one thing. Your credit score is really just how responsible you are with money and credit, and that's what these lenders are looking at. So understanding that can make a huge difference. And also checking your credit report. There can be mistakes on those reports. So knowing exactly what's on there. I know people who are named something, and there's someone else in their family who has a similar name, and all of a sudden something from their credit information ends up on the wrong person's report.

Steve: I'd be so upset.

Amy: Right? You've got to know what's on there.

Steve: Yeah, and it's easy. The major credit agencies, again, that's Equifax, Experian, TransUnion. You can go to www.annualcreditreport.com and get a free report every 12 months that can give you insight as to whether or not there's something you need to keep an eye out for. And keep this in mind, if you missed a payment at some point in the past, and it was your fault, you can actually ask the credit bureaus to maybe reconsider, write a goodwill letter, and they can actually take that off.

Amy: Knowledge is power. Knowing what's on there, doing a few easy steps can make a huge difference when it comes to your credit score. Thanks for listening tonight. You've been listening to "Simply Money," presented by Allworth Financial on 55KRC, THE Talk Station.