Amy: Tonight, retiring well isn't easy, right? It can be complicated. No. We are gonna simplify this down to 10 things that you can do, and they're not hard to do. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. I did use to love Dave Letterman's Top 10 List.

Steve: Oh, they were awesome.

Amy: Oh, it was so good. So good. Our top 10 list will not maybe be as funny, but certainly very useful. I'll put it that way.

Steve: Well, if I do it, it might be funny.

Amy: All right. Well, then I'll tee you up. Go for it, Sprovach. Better be funny.

Steve: And I don't necessarily agree this is number one, but yeah, let's keep in mind, take the free money. If your employer has a match, and just about everyone out there does, make sure you're putting in enough money in your 401(k) to get the free money. And by the way, there's a very important word that you have to learn with your employer's match, vesting.

Amy: Yeah. Good point.

Steve: Vesting. Very important. Yeah. I happen to know somebody who left his company six months before he was vested, and it was called cliff vesting. Cliff vesting is where your employer matches not your money at all, until in this case, six years have passed, and then all of it is yours. And he left and said, "Where's the rest?" And his employer said, "Well, you left before you were vested." Important thing to know. "It was on my statement, right? It's mine if it's on my statement." No, no. If it's on your statement, it doesn't mean it's yours. Your money's always yours, but your employer's money is not yours until you are vested in the plan.

Amy: That's a great point. Full disclosure, this happened to me in my 20s.

Steve: Oh.

Amy: And it still hurts me. Like it still hurts. It wasn't a ton, right? It wasn't a lot of money, but still, it hurts because I did, I saw that amount on the statement and thought it was mine. Didn't check. I should have. You know, sometimes we learn lessons the hard way when it comes to money. Thankfully, I learned that in my 20s.

Steve: I'm sure you're not thinking about how much that money would be worth today.

Amy: Don't even go there.

Steve: And if you weren't thinking about it, you are now.

Amy: You're gonna text me later actually, with the amount, just so I know, and just so I really feel that pain. Here's another thing we would say on our top 10 list of, hey, if you can do these things, you're gonna probably set yourself up pretty well when it comes to retirement. This is saving a percentage of what you're making automatically every month. Some people will say, maybe start with 10% when you're in your 20s. We would say though, man, if you can get the closer to 15% to 20% throughout your life, I mean, if you can do that consistently, I think this probably pretty much takes care of everything else.

Steve: It really does. And, you know, every once in a while, somebody will say to me that I've been working with for years, "Hey, my kid's fresh out of college, got their first job. Would you sit down and just kind of give 'em some basics?" I might tell 'em the same thing mom or dad told them, but because it's somebody else, they'll listen.

Amy: Sure.

Steve: You know, we deal with this with our kids all the time. And one of the first things I say is, "Hey, put 10% in your 401(k). Just forget that money even exists." And every once in a while, somebody does that and I...

Amy: Somebody actually listens?

Steve: Yeah, exactly. No, I know of two kids that are not kids anymore because they're my kids, and they started off with 10%. And I'll tell you what, you wanna get ahead of the curve, that will do it in very short order. Here's the way the numbers work out, Amy. Let's just forget compounding. Let's just say 10 grand. Somebody gifted you 10 grand and you're 20, 25 years old, and you say, "You know what, I'm not gonna touch that 10 grand." If you're earning 7% on that money, which would be aggressive, no question about it, but if you're earning 7%, you divide 7 into 72, rule of 72. That means that money doubles in roughly 10 years.

Amy: Ten years.

Steve: So, that 10 grand, by the time you're 30, becomes 20, by the time you're 40 becomes 40, by the time you're 50, doubled, becomes 80, by the time you're 60, 160 grand. I'll give you one better. Put 1,000 bucks a month away when you're 25 years old, it's gonna be worth $1.8 million at 6% in 40 years, 1.8 million, 1,000 bucks a month. You get started later, guess what, it takes a whole lot more to get to that same 1.8 million. And I am proof of that because we got a late start. Kids came early, college came quicker than I expected. More expensive.

Amy: Yeah, that was us.

Steve: You know, and that's what catchup provisions are all about.

Amy: Well, I was gonna say, yeah, I mean, talking about what you should do in your 20s versus what you should do maybe later in life to try to catch up is taking advantage of those catch-up contributions, right? I mean, the government has given us, once you're over the age of 50, the ability to save more in your 401(k), in those IRAs. And I mean, for those of you, and I think this is a, it's a large boat to find yourself in, right? If you are in the place where kids are all of a sudden maybe in college or out of college, and all of a sudden, you're looking at retirement and you're thinking, "This is not that far away."

Steve: That came up quick. Yeah, exactly.

Amy: Yes. And you're thinking, "Gosh, even if I maxed out what I could put into that 401(k) and got the full company match, and all the things, it's still not going to be enough." This is the time when the government says, "Okay, you can catch up, you can put additional money depending on if the 401(k) versus the IRA, but usually 5,000 extra, 7,000 extra, depending on what the account is." But I'm telling you, it could make a big difference. And, Steve, you said you have been there, but I think a lot of others find themselves there as well.

Steve: Oh, I mean, every excuse in the book, I have been there. I mean, by the time you start getting ahead, "Oh, that's right. You go to college next year. Well, that money I thought I was putting away is not gonna be put away. It's going to college."

Amy: Sure.

Steve: "Oh, it's how much?" You know? Yeah, life gets in the way, and by the time you hit 50, you're starting to get serious about, "Wow, I gotta bear down. I gotta figure out this is how much I need, and this is how I'm gonna get there." And that's the key, finding out how to get there. You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach, along with Amy Wagner, and we're giving you our top 10 hit list for retirement. And, you know, one of the big things, Amy, and I'm sure you agree with me on this, don't take withdrawals out of your 401(k) before you're retired.

Amy: I totally agree. And I think about my grandpa, right? He retired from Cincinnati Milacron. He had a pension. It was money that was set aside for his retirement, but here's the caveat, he could not touch it. He could see how much was in that account, right? He could check it. He knew how much was there, but he couldn't get to it. And I think that's the problem with our 401(k)s, the way that they're set up. You can take loans out. You can take hardship withdrawals.

Steve: Sometimes they make it too easy. They really do.

Amy: I do, and I've said this on the show before, but I know friends who bought a really nice car and took the down payment out of their 401(k). Well, that car is long gone now. They are two cars removed from that, but what isn't there is the money that could have been in the 401(k) if they hadn't pulled that money out. Even with the loan, yes, you're paying yourself back, but you're missing the time that that money was out of it, that it's not compounding. I mean, we kind of joke about it, but compounding is like the seventh wonder of the world. The eighth wonder of the world.

Steve: Oh, it's incredible.

Amy: You know, I mean, it is so amazing when you look at it, and even for people who understand numbers, almost it's like, "Wait, how does that work? The money makes money, and the money the money makes, makes more. It just keeps growing."

Steve: Say that three times fast.

Amy: I know, right? But truly, like, that's what you're missing out on. And it's so easy because it's so hard in this moment to look at the bills or look at the fact that your grocery bill is so much more because of inflation or all the things. It's much harder, I think, to think of your future self, but you're literally, your current self is taking money away from your future self. And I think if you think of it that way. And many times we've got people coming into our office and they're saying, "Listen, I have this thing." And they'll name the thing, right? "It's gonna be more expensive than I thought, or it was an unexpected expense, but I figured it out. I'm just gonna take this much from my 401(k)," right?

Steve: Yeah. Especially, if you were gonna borrow it, it's like, "I'm paying myself back. How can I lose, right?"

Amy: Right. "What's the problem with it?" Yes. And often if they do come to us, we can say, "Have you thought of this?" "Nope." "Here's another option, have you thought?" "Nope. Nope." Many times. It's like you see how much money is on that statement, you have this need in the moment, and you just go there. You don't consult with your financial planner. You don't truly think it through. And if you can just simply put that money inside of a retirement account, think of it as a pension. Hands off, right?

Steve: Hands off. Yep.

Amy: Don't touch it. When you get to retirement, you are really going to thank yourself. Here's a small thing, it's kind of an inconvenient thing, but it can add up, shopping around for better insurance rates. After the pandemic, right, your car insurance probably went down. You may not have noticed it, but people weren't driving as much, and a lot of insurance companies dropped rates. Well, people are out there driving again. Rates are on the rise. How often do you shop around? Have you looked at bundling home and car, right? Have you done the research? It's not a fun thing to do on an annual basis, but I've seen study after study that shows there are significant savings there if you do that. Then once you shop around and you find the savings, invest the difference, right? That's the key.

Steve: Yeah. No question. And, you know, people when I say the next one, Amy, think, "Well, of course that's your business. Of course, you're gonna tell people to do that." But if you got IRAs and 401(k)s all over the place, and the average person changes, you know, jobs six, seven times over the course of their career.

Amy: A dozen times.

Steve: Yeah. I mean...

Amy: At least for me.

Steve: Yeah. Consolidate them. And if you don't wanna use an investment advisor, if you're a do-it-yourselfer, fine, just consolidate them. "Well, isn't that putting all my eggs in one basket?" No. If you're using a single custodian, I will argue that you're not really non-diversified as long as you split your investments up within that one custodian. In other words, you can have one IRA, but have 30 different investments in it, and you're diversified as far as I'm concerned. But if you think you have trouble keeping track of your current employer's 401(k), tell me you're keeping better track of the five or six other IRAs and 401(k)s. No. Get 'em all together and stay on top of them.

Amy: Here's one that's easy to say, not easy to do. Figure out what your budget is and live within your means. Especially, in this culture where there's so much social media out there, you're looking at your college buddy and you're like, "Ah, how does he afford that house or that car? Or how did they afford that vacation?" Or whatever. And you're constantly comparing yourself to other people. What you don't know, and what I wish, honestly, this is of course never going to happen, but I wish that social media also came with disclaimers. Like, "This person has a credit score of 550. This person has $70,000 in credit card debt." Right, it's just...

Steve: Everybody's got three mortgages, right? Come on.

Amy: Yes. Exactly. Exactly. Like, the truth isn't out there, it's just the rosy, rosy pictures, which I think makes it so much harder for our culture now to live within our means because we feel like everyone else is their means are so much higher than ours.

Steve: I'll go along with that, but can we call it a spending plan and not a budget?

Amy: Call it whatever you want.

Steve: I wanna call it a spending plan because I wanna know where I'm spending the money. I'm not saying we're cutting back. As soon as you say budget, you're gonna think cut back. Where is the money going? And that way, if you spent more than you expected one month and didn't put any money away in savings, you already kind of know where it went because you knew where your dollars were allocated for that month, and something came up that was a little bit of a surprise. And that's okay, as long as it doesn't happen month after month after month. That's the key is to know where your money's going, that way you can retire comfortably.

Amy: Another major one, of course, credit card debt. Pay it off, right? Do not continue along on this cycle. We have seen people just get so far beyond the eight ball, and then they can't... It's hard to recover. The one thing I can honestly say I've never done, and I've made lots of money mistakes. I've never ever carried a balance on my credit card. And I am... It was like, it wasn't even an option for me to do it.

Steve: I will stay out of this conversation.

Amy: Well, this is thanks to Gary Wagner who, like, ingrained this in my brain, but it is one thing I've never had to deal with. If you are dealing with it, please, please pay it off, and vow to never, ever kind of get in that cycle again. And another one that I love, of course, contributing to an HSA, health savings account. If a high deductible healthcare plan makes sense for your family, when you get to retirement, the healthcare costs, they're going to surprise you in a bad way.

Steve: And number 10, and maybe this should be number one, but listen, we all pay attention to our health, we all go to see our doctor once a year. How about seeing a professional, an investment advisor once a year and just say, "Hey, this is what I'm doing. Does this make sense or am I missing something here?" That's okay to hire somebody to do that. Just to either confirm that what you're doing is correct or to give you another option.

Amy: Yeah. To make sure you're on the right path, right?

Steve: Exactly.

Amy: Here's the Allworth advice, name of the game. Having enough money to fund the lifestyle that you want once you retire. This is 10 of dozens of things you can do to get there, but we would say these are 10 solid ones to follow. Coming up next for those of you who are part of the sandwich generation, which could be you or someone you know, we've got help. 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 night, well, we've got a daily podcast for you. Listen to it any time. Maybe you've got a friend who needs a little bit of extra money, help spread the word to them as well. All you've gotta do is search "Simply Money." It's on the iHeart app or wherever you get your podcast. Coming up at 6:43, everyone's favorite game. We know you love it. "Retirement Fact or Fiction." We've got some good questions on there for you today.

Listen, this is a really tough spot to be in, Steve. I was just talking to my very best friend recently. She has a seven-year-old and she's an only child, and she has a dad who recently had a surgery and he's just starting to age, and he's got healthcare concerns. And she just feels stuck with her time, with her money, with all of her resources. And I said, "Oh my gosh. We talk about this on the show all the time. You are in the sandwich generation. You are right there."

Steve: Yeah. And I've been there, and I could vouch for it not being a lot of fun. I mean, I lost my mom when she was very young. Dad never remarried. And when he started running into financial and health issues later in life, here I am 600 miles away with two kids in college, and dad needs help. He needs a lot of help. And how would you like to be in this boat? Eleven hundred bucks coming in, a third of that goes to a car payment, another third towards cigarettes, which not a healthy lifestyle choice, but at that point, you know, that's where he was at. And okay, kids, I need to talk to you a little bit. That puts you in a rough spot when you're paying for college. You know, I was the sandwich. I was the middle of that sandwich. Tough situation.

Amy: Sixty-six percent say you are at least somewhat stressed, right? If you are in this situation about taking on the care of parents while you're still raising your family. Here's the disconnect, 32% are discussing the financial needs of this, right? What happens with the money part of this with their parents? So, it's like quietly happening. You're watching your parents suddenly take on more and more need, right? And some of that is financial, and nobody's speaking up about what you can afford. So, if you're in this situation, let's talk about, like, what can you do? And I think first of all, it starts with conversations.

Steve: It does. And, you know, everybody wants to help out their parents. They raised you for crying out loud, you know. But, you know, about a third of the people that were surveyed said, "Yeah, I would borrow money to take care of mom or dad." But you know what, would you take on debt at the expense of taking care of your own children? That's where it gets sticky, because, you know, dollars aren't endless. And one of the first things you need to do if you've got a parent in this situation, and you need to help them, is the parent has to be willing to open up. A lot of parents don't want to, this is private, this is personal. And, you know, for them to say, "Hey, I'm in a bad spot. I need to talk to you. You're my son, you're my daughter." That's a big step. And frankly, it's a step some people can't make. First, you have to get mom or dad, "Hey, Mom, Dad, we need to have a frank discussion. I need to ask you some tough questions. Are you willing to sit down with me?" I did that with my dad, and it took a while, but after a while, he said, "Yeah, it's about time I talked to you and your sisters about this." Okay. That worked out great and communication solved all ills. But it's a tough road to get there.

Amy: Well, you definitely have to know the full scope of the situation, right? What are you looking at? What is the need there? But first of all, I think you have to start with yourself. And Ed Fink, one of our founders, I think said it so well, "You know when you get on an airplane and they're doing the announcements at the beginning, they say, 'Hey, if the oxygen masks comes down, you put on yours first. You literally can't help anyone else if you can't breathe.'" This is how it works financially too. You have to first of all sit down and look at, "Okay, this is how much money I have coming in, and this is how much it takes to run our family, right? Is there any leftover for mom and dad at that point?" And then you start the conversation of what are your needs? And if there's other siblings, what can they contribute? And part of this can be looking at are there ways to save on what you're spending right now and what you're spending on your children and that kind of thing? But you really don't have options to make a ton of cuts here, right? And what I see is people not making any changes, right? You're not changing your lifestyle. You're not asking your parents to change theirs, but you're gonna start to drown under the debt of it. And then all kinds of bad things can come up from that.

Steve: I have had people sit down with me, "Steve, I need to take some money. I need to take care of Mom or Dad." Okay. If I ask them the question, "Are you willing to go bankrupt in order to help mom or dad?" Every single one of 'em is gonna say no. Okay. "Well, maybe not today. How about 10 years from now? Are you willing to be bankrupt in 10 years?" "No." "How about 15 years?" Well, that's what's gonna happen if you keep doing this. So, we need to have a talk about how much help you wanna provide, how often, and where is the cutoff point. And the only way you can get there is if you know mom or dad's finances inside and out. And that's very... To me, that's the first step. "Hey, Mom, Dad, do you have your legal documents? Yes. No. Okay, let's address that. Hey, Mom, Dad, why are you in this situation? How can I help? How did you get here? Let's sit down together and figure this out." That's the key conversation.

Amy: And I do think that for so many parents, like getting there, right? There's shame involved in it.

Steve: Sure. Sure.

Amy: "How did I get here and how am I putting my family in this situation?" And this is why I'm always such a proponent of having these open, honest conversations about money, because if you've always been talking about money, first of all, it's not gonna catch you off guard that they need help. But secondly, the thought of having this conversation that help is needed isn't gonna be so overwhelming for anyone. So, those conversations have to start early and often. And also, the conversation about, "Hey, life insurance. Do you have life insurance, disability insurance, right?"

Steve: Long-term care insurance. Yeah.

Amy: Long-term care for you, maybe for your parents as well. All of these considerations are part of figuring out, "Okay, I'm in the middle, right? I am the middle of the sandwich. And where do we go from here?" Here's your Allworth advice. If you find yourself caring for your children and your parents at the same time, you always have to remember to care for you first. Coming up next, who owns your home? Sounds like a simple question. The answer, though, is incredibly important. We're gonna explain why next. You're listening to "Simply Money" here on 55KRC, THE Talk Station.

You're listening to "Simply Money," brought to you by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. Sounds like an easy question, maybe even a dumb question, how do you own your home? But it's far more complicated than that. Joining us tonight to explain why you need to know, what you need to know about this is of course, Mark Reckman, our estate planning expert from the law firm of Wood + Lamping. How do you own your home? What are we even talking about here?

Mark: Well, you know, the question is, whose name is on the deed? Amy and everybody says, "Well, my name is, or my wife's name, my husband's name," but are you sure? And it's important, so you'd better check on that. So, the way this works, Amy, is that when you buy a piece of property, most of the time, the closing is handled by a title company. And about a week or so before the closing, somebody at the title company, or maybe it's your real estate agent, calls you on the phone and says, "How do you wanna take title to your home?" And it's a simple little question. You give 'em a simple little answer. Maybe you say I want my name, or I want myself and my spouse on there. And the title agent then takes that information, they prepare a deed, and when you go to the closing, you see the deed, but you don't really look at it. You have a stack of papers that's, you know, an inch thick. They keep the deed because it has to go to the county. So, you don't really take it home and look at it. Maybe a month later, the original recorded deed comes in the mail, and you stick it in your file, but have you really looked at it?

Amy: And why is this so important? Like, what are the ramifications of it long term?

Mark: Well, there's lots of different ways that you can take title. For example, the title could be in your name alone, in which case you wanna be sure that it's spelled correctly. But you also wanna be sure that owning the house in your name alone is the right idea. Now, when I was a young lawyer, I was concerned about exposure, legal liability for some kind of a mistake or something. And so, I wanted my house in my wife's name alone. And for years and years, that's the way we kept it. And so, it was our plan, and we intended that it be in one name alone. But, you know, the reality is most people have both husband and wife on the deed together. And that's where it gets a little sticky, because there are different ways that you can have two names on a deed. Two different ways.

You can own a property together as with survivorship or without survivorship. And the question is, which one do you want? With survivorship means that if I die, my wife gets the house with all you have to do is file a copy of the death certificate in the county. If it does not have survivorship, and I die, my half of the house has to go through probate. Now, guys, probate's not the end of the world. It's not a terrible, terrible thing, but it's still gonna cost you $2,000 or $3,000 minimum just for the house, and it's gonna take three to six months. And the truth is, it's a nuisance. So, getting the property into survivorship makes good sense for a married couple.

Steve: Well, I think most married couples when you say, yeah, just register it or title it as joint, just assume it's gonna be survivorship. Is that the case or is it sometimes in tenancy in common?

Mark: Sometimes it is, Steven. I had a case... Just I've had two cases in the last three weeks where a husband and wife bought a property together. Both their names went on the deed, and in both cases, they were not given survivorship. I don't know why.

Steve: Wow.

Mark: Both of these closings happened years and years ago. They never looked at their deed. But in both cases, the wife died, and in both cases, I'm gonna have to probate that half of the house to transfer it over to the husband. And here's where it gets sticky. In one of these cases, it was a second marriage, a long one. It was a 40-year second marriage, but it was still a second marriage. And as a result of that, because the wife had a child from a first marriage, and because she died without a will, one of her children is going to get a piece of her half of the house. So, the husband's not gonna get the house into his name alone. Now, this is a functional family. It's not gonna be a problem. Everybody gets along and we'll prepare the paperwork and transfer everything to dad's name. But thank goodness that this is a family where people get along well.

Amy: Because you've seen the other side of things, and it could be very sticky if, first of all, they're caught by surprise, right? Not knowing how the deed is written. And then all of a sudden there's children or other people coming out from the woodwork saying, "Wait a second, I got a piece of this."

Mark: Well, that's right. And although in this particular case, it's easy to fix my bill to this family's gonna be probably $2,500 to $3,000, the court fees are gonna be a couple of hundred dollars. It's gonna take, oh, a minimum of six months to get it done. If it had been in survivorship, the whole thing could have been handled with a $200 fee to file a copy of the death certificate, and that would've been it.

Steve: All right. So, let's say everything was done right, joint and survivorship, and unfortunately, one of the people in the couple passes away and you avoid probate, it was done correctly. Let's say the husband passes away and now the wife is sole ownership of the house, and she says, "Okay, that worked out so smooth, 200 bucks, and now it's in my name. I don't want my kids to have to go through anything like probate. How about I just put the kids' names on the deed now so that when I pass away, it goes to them?" Does that make sense?

Mark: It does, but there's another alternative that's even a little bit better. But the idea that you've got there, Steve, is a good one. And that is that if two people own a property, one of them dies, and there's survivorship, then the survivor gets the whole property in the survivor's name, but now it's just in one name, right? And so, if the survivor dies, it's gonna go through probate. So, yes, you can put your kid's name on the deed, and that's fine. However, if you do that and one of your children gets in some kind of trouble, they could have their interest in that house attached, or a lien put on it. Or if you go to sell the property later, you're gonna have to get your kids to sign off on the contract and the deed, including their spouses. And that's not a big deal, but there is a little bit better way to do it, and that's through the use of what we call transfer on death.

Steve: There you go.

Mark: And it's a beneficiary designation. It's a one-page piece of paper, two pages when you attach the legal description. And it says, "When I die, I want the house to go equally to my three daughters." And you list their names. You sign that, you file it with the county record, and the daughters become the owners after I die, but they have no interest in the house while I'm alive. And it's a beautiful thing.

Amy: So, Mark, I think you're so right, because when someone is going through the process of buying a home, you've got 85 million things on your mind. You're getting so many emails from the title company, the realtor, all the things. Just what should we drive home here about what is really important to remember when it comes to that deed?

Mark: I think what's important is for you to go back and look at your file, and in there you're gonna find a copy of your deed. If you can't find a copy of the deed, go online and go to the recorder's office, not the auditor's office. There is an auditor's record of ownership, but that's not the legal ownership, and your copy of your deed will not be on that website. You go to the recorder's office of the county where you live, you look at your deed and see if it says. "Mark and Lynn joint with right of survivorship," or "Mark and Lynn and to the survivor of them." It has to have survivorship language of some kind. If it does, and that's what you want, you're all set. If it doesn't, then call your lawyer and think through what your options are.

Amy: Great advice, as always, from our estate planning expert, Mark Reckman from the law firm of Wood + Lamping. 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. Do you have a financial question that's just kind of burning in your mind, you want us to answer? There's a red button you can click on while you're listening to the show. It's right there on the iHeart app. Super easy to use, record your question and it's coming straight to us. We'd love to talk about it here on the show.

Have you ever been the victim of a BIN attack? You might not even know what we're talking about here. We will explain what this is, how it can happen to you, and what you need to do to protect yourself. You know, we do this segment pretty often on our show, "Retirement Fact or Fiction." Often, it's a game show, but I think today there's kind of a theme that you're gonna see kind of present itself throughout these questions that we think has a, maybe a deeper kind of context that we need to think about here.

Steve: Yeah, I mean, the whole thing we're trying to accomplish is let's blow some of these myths out of the sky. And the problem is we don't live in a black and white world all the time, Amy. You know, some of these things are, "Okay, I can argue both sides." I'll give you an example. Fact or fiction, Amy. Should you use your home equity to fund your retirement?

Amy: So, I would say that this is mostly fiction. Ideally, you would not use your home equity to fund your retirement. Ideally, you would have 401(k)s and IRAs, and I would say in a perfect world, a health savings account too, or, you know, long-term care insurance, everything set up where you don't ever have to think about your home equity when it comes to retirement.

Steve: But what if you're in a situation like I happen to have a relative who's pretty much out of money and still kicking, and this person really all of their equity in life, all of their dollars in life are tied up in their house, is that where maybe you should think about a reverse mortgage? Okay, now it's a last resort, but what if you're at a last resort? That's one case where I would argue maybe you need to consider a reverse mortgage if you're out of money. You know, so that's why I say it's not always black and white. Here's a case where, no, you should not use your home equity under most circumstances to fund your retirement, or certainly don't consider it as one of your early options. But you know what, if you're out of choices and it's a question of being homeless, maybe you should think about it.

Amy: All right. Here's a fact or fiction for you. If you're in a lower tax bracket, should you consider investing in a Roth IRA?

Steve: Okay. I'll argue both sides of this. If you're 70 years old, no. Okay. But if you're 40, wow. Yeah. Roth IRA...

Amy: Absolutely.

Steve: ...go for it. The younger you are. A Roth IRA is taking after tax dollars. So, if you're in a low tax bracket, you're not paying a large percentage in income tax to that money before it goes into the Roth. That differs from a traditional where likely you're gonna be able to take a deduction and it's pre-tax money. So, okay, it's after-tax dollars, why would I even bother? Because when you take that money out after you're 59 and a half, and it's been in there more than five years, that money is tax-free. Do you realize, Amy, how good it would be to have a couple of hundred grand in retirement tax-free as opposed to taxable? That would be spectacular. And that's why I love Roth IRAs if you're younger.

Amy: Yeah. Yeah. Those lower earning years, right? Those lower income years can be a huge asset for you. Here's another fact or fiction. If your mortgage rate is 3% and you have the opportunity to pay it off, you should invest that money instead. Fact or fiction?

Steve: Yeah. And again, I'm in the middle on this. I have had people say, "Hey, if I get 5% or 6% and I've got a 3% mortgage, I'd be stupid to pay that off." Stupid. That's a pretty harsh word. You know what, there's a lot of smartness in not having any debt whatsoever.

Amy: This is more nuanced. Yes. This is more nuanced.

Steve: Yeah. Not having debt is a good thing.

Amy: Well, I think there's just the mental weight of not having a mortgage. And we always say that money not going out is the same as money coming in.

Steve: You gotta believe it.

Amy: So, you're giving yourself a raise the day you pay that off, which is a huge thing. Nathan Bachrach, one of our founders, used to always use this term, the perfection of theory versus the mess of reality. And I think that very much applies here. Okay. The perfection of theory is, of course, I'm going to take every penny that I would have paid off that mortgage, and I'm going to invest it. But in reality, maybe a vacation comes up that you really wanna go on, or a car breaks down, or whatever it is, and all of a sudden, next month, or in six months, or next year I will start investing that money that I would have. And it just doesn't end up happening. This is kind of the mess of reality. So, I think this is one that's very much kind of part of a gray area.

Steve: You're listening to "Simply Money" on 55KRC. I'm Steve Sprovach, along with Amy Wagner, and we're talking about some of the facts, some of the fictions of investing. And Amy, here's one I think is pretty clear cut. Should you rebalance your portfolio when markets are down, but not when they're up? I think this is pretty black and white.

Amy: Yeah. Yeah. Absolutely. And I would say, yeah, no, you balance when they're down, right?

Steve: Nah, you know, I wouldn't go along with that.

Amy: No?

Steve: It depends on... Well, it depends. Well, maybe there is some middle ground here, because if you are 80% stock, and markets are down, that means you're rebalancing by selling off or buying into stocks when the accounts are down. Okay. Yeah. I guess I can argue that, but there again, I don't like to make major changes during really volatile markets.

Amy: And that's what gets me too, right? That's again, I think the perfection of theory.

Steve: Maybe it's not black and white. Yeah.

Amy: Yes, exactly. Like, ideally that would be the great time to do it. But I think if you're only waiting to rebalance four times when the market is down... We just came off of a time before this kind of latest 2022 started, where every year kind of the markets were up, right? And so, you know, it just seems like there would've never been a good time to rebalance. And so, I think to your point, yeah, it's never kind of black and white when it comes to these things. How about this one? Delay Social Security payments for as long as you can. Fact or fiction?

Steve: Oh, I'm gonna say more fiction than anything on that. And I get the argument, okay, from a full retirement age, which for most people is 67, from 67 to 70 you get an 8% per year increase in your Social Security benefit. That's awesome. Yeah. If you know you're gonna live another 20, 25 years, you're gonna pull a lot more money out of the system. I don't know anybody who knows how long they're gonna live. You know, and that's the thing. If you've got lots of your own money and longevity is in your family, maybe you wanna consider it. But you know what, if I'm in that boat, I think I'm gonna pull money out instead of spend my own money knowing that there's roughly a 12, 13-year break even that you've gotta live past when you draw money, if you wait to get more money out of this system than if you draw it early. That's a lot of years.

Amy: And there's a lot of considerations here about how much do you need the money, right? I mean, ideally, if you really needed the money, you would wait because you would be getting more money. At the same time, what do you live off of while you're waiting to draw Social Security, right? And kind of, if you don't need it, and all the things that can change with Social Security, we've just heard that we've dropped down within the kind of 10-year window of when the trust fund will run out of money.

Steve: Exactly.

Amy: At which point, if Congress doesn't do something to change it, you're gonna get about, what, 20% less, 25% less than you would have before. Just a lot of considerations around Social Security, and they are all very individual. So, to go on the show and to say it's one way or the other way really wouldn't be fair. Let's do another one here. Fact or fiction? Avoid using target-date funds.

Steve: You mean better than nothing funds? That's my new favorite phrase.

Amy: It's a great way of putting it.

Steve: I don't think you should avoid them. I mean, if you're not using an advisor and you're not up on this stuff yourself, it's not a horrible choice. But you know what, this is gonna be a significant portion of the money you've got to live off of in retirement. I would say hire somebody, do some research yourself, and find out if there are better choices in target date. But if you're not willing to do that, I'm okay with using 'em.

Amy: Coming up next, we've got a warning for you. If you have a credit card, a new kind of attack, how you can protect yourself. 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. Another day, another way that hackers are trying to attack you, and this might be one that you've never even heard about before.

Steve: I've never heard of a BIN attack, but a BIN attack, BIN stands for bank ID number, identification number. And if you ever bought something online and, you know, it says, "Credit card information," have you noticed sometimes, Amy, that you type in four, maybe five numbers and all of a sudden it pops up American Express or MasterCard or Visa? That's because those first few numbers tell the online company, which bank, which credit card you're using.

Amy: What we've learned through the years is the longer that these passwords are, right? The longer that these codes of numbers are, the harder it is to crack them. The problem is that scammers realize, "Okay, if we can just get these first few numbers, we know which bank it's coming from, that kind of thing, then it's far less digits of that number that we have to kind of randomly run to figure out." So, if I know that you have a Visa from Chase Bank, here's the numbers from that. All I gotta do is plug in these next numbers from Steve Sprovach, and suddenly we've cracked the code. This is a new way that they're doing it. And here's what you need to watch out for. I am the one, and everyone in my family rolls their eyes, but someday I'm going to save us from one of these attacks, and they're gonna... I'm the one that goes through our credit card bill every month with a fine-tooth comb. And I say to my husband, "Did you buy this? Did you buy that? Did you do this? Did you do that?" And he's like, "Oh my gosh, you're driving me crazy." But there could be charges on there. And what they do is they test these cards to see if there are fake charges on there. If you see something that doesn't look right, report it immediately.

Steve: And it's usually only a buck, okay? Or a buck and a half or something like that. In our production meeting this morning, four of us, two raised their hands when I said, "Hey, has anybody ever found a $1 charge that was not something you charged?" That's half, half the people.

Amy: Yeah. Keep that in mind. Keep an eye out for it. You've been listening to "Simply Money" tonight, presented by Allworth Financial here on 55KRC, THE Talk Station.