Amy: Tonight, the biggest mistakes we see investors make and how you can avoid them. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby.

It's our job, right? I mean, we're talking to the investors that we work with every day, we're talking to listeners here on the show, and we're trying to make sure that you're not making major financial mistakes that you can't recover from. And so tonight, Steve and I are just going to throw out some of the biggest ones that we'd say we've seen and probably maybe the most common ones. And the first one is, oh, it's a tough one, it's when you let your feelings get the best of you and you try to time the market.

Steve: Yeah. So this is something that...it's human nature almost because we feel fearful, we feel greedy, different emotions take control, and we think that we can make decisions based on those emotions. And that can really railroad your retirement. If you wait and sell when we're at the bottom, for example, I've seen this all too often, a big part of our job, you said it yourself, is coaching people to not make a decision that can harm them. People all too often get fearful after the markets drop, but that's part of the game, so to speak. When we invest, it comes with volatility.

So we need to find that sweet spot for how much risk you have to keep you invested during those periods of volatility, because that's when the best days happen. If we sell at the bottom, we are missing out on the best days during those periods of volatility. It's something that I've seen happen too often. And it's the type of thing that can really throw a curveball in your long-term financial plan.

Amy: You look at the daily fluctuations of the market, and usually, they're not huge, but often, coming off of a bottom is a huge fluctuation a day when we've got a huge kind of rebound. Well, you wouldn't ever wake up that morning and be like, "Oh, today is going to be a good day in the markets," right? Most of the time, the financial headlines on those days are still terrible, right? And so there's nothing out there that would point you toward, okay, I took my money out last week, or last month, or yesterday, but today is a good day to get back in. And those are the days that you miss, and there are all kinds of charts that show the difference if you miss just 5, 10, 15, 20 of those days. It's huge.

Steve: Chief Investment Officer, Andy Stout of Allworth Financial, he put together one, and it shows that if you had invested in the S&P 500 $100,000 over the span of 25 years, starting back in '97, if you just sat it and forgot it, that is, then that money would have turned into over $1 million. If you missed the 10 best days, $470,000, not even half of what that could have been worth just by letting it ride.

Amy: Yeah. One of the other things that drives me crazy and is a major mistake I see people making, and this is a conversation I have all too often, is when we start getting on the topic of saving for retirement and, "Oh, are you putting enough money into the 401(k) to get the full company match?" or, "Have you bumped up how much your savings?" And there's always a, "Yeah, I get how important that is. I really do. And I'm 100% on the same page with you."

Here's the thing. My son is on this travel soccer team. This is really expensive. And so once we get off this travel soccer team, then we're going to start saving. We've got this big vacation coming up next summer. Once that vacation's...there's always going to be something, right? And by waiting until the next something, then there's going to be something else on the horizon after that. And you're putting off that power of compounding and all the time that you have, that's what you're missing out on. So these excuses really are only hurting. It's like your current self is hurting your future self. And if your future self could go back and talk to you, they would say, "Listen, we get the travel soccer team, we get the big trips, but retirement now looks a lot different because we made those decisions."

Steve: Because we didn't get that compounding interest.

Amy: Yes. Don't do that to yourself.

Steve: So another one is taking too much or too little risk with your investments. When we work with folks, we're building financial plans that map out all of your financial goals, and we run scenarios. The point there is when you have a financial plan, it tells you the level of risk that you need to take to meet your goals that you can afford to take based on your financial situation. And then getting to know you and going through some questionnaires can shine light on your risk tolerance. I see situations where people try taking too much risk when they're knocking on the door to retirement or even too little risk when they are retired.

One of the biggest challenges that we face in retirement, believe it or not, is inflation. Now, we've been talking about it a lot over the last year because it's spiked, but inflation is a silent killer. If you do not take enough risk in stocks, because that's what keeps up with inflation, then you risk losing purchasing power on your money. When that happens, you can't buy as much goods or services with the dollars that you've managed to save up. So we need to find that sweet spot where you are subjecting your money to gain potential, but not too much, especially if you're knocking on the door to retirement.

Amy: Think of this as Goldilocks and the three bears, right? It's finding for you the perfect place, not too hot, not too cold, but exactly right or exactly the right size for you. It's going to be different for everyone, but yeah, I think the goal for your financial plan should be to take on the least amount of risk as possible and still reach those goals. It's going to look different for everyone. And for a lot of you, it's going to be, okay, how much stock exposure can you have while still being able to sleep at night?

Steve: Exactly.

Amy: You know. But you want to eat well, and you also want to sleep well. And so you have to figure out what that middle ground is that's right for you in order for you to be able to do both things and get there well.

Steve: Exactly. So another one is planning on working indefinitely rather than planning your finances.

Amy: This is one that drives me crazy. Study after study shows the average person retires at the age of 62. Yet, many times, I'll talk to someone and they'll say, "I don't know, I really like my job. My husband really likes his job. We're not really going to save for retirement. We're just going to keep working." Anything can happen between now and then. I don't care if you're 62 or 42 or 32. And we talk about four different kinds of sick. You can get sick of your job, right? I mean, you can have the best boss in the world, and then, all of a sudden, you come in next Monday and there's a completely different person in that office. That could change things, you know, a lot.

Steve: Very quickly.

Amy: Yes, exactly. Your boss could honestly get sick of you. You may be in a great situation now....

Steve: That wouldn't happen to us.

Amy: I mean, not you and I, but some people, right? That could happen too. And then there's the unfortunate situations where maybe you get sick or your spouse or someone that you love gets sick, and you need to take care of them. And so I say, listen, if this is your plan, you love your job, great. You still plan on retiring at 62 or 65. You run those numbers. If it comes to that, then you're going to be okay. If you can still work until you're 70 or 75, you know, my dad's roommate from college who was just in town from Houston, he's an economics professor, he worked until he was 75 because he just loves it. Now, he's retired and he still goes into the office every day for a few hours, and he doesn't even get paid for it. Great.

Steve: Good for him.

Amy: That worked out well for him, but he was ready to retire financially at 65. And then everything else is just kind of gravy on top. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby, as we talk about some of the major mistakes that we have seen far too often people making when it comes to planning for their money and their retirement. We just want to say, here's our warning to you tonight to make sure that this is not something you're not falling for.

Steve: And to go back to what you were just saying, I do want to highlight that, when somebody feels like they're going to keep on working, when they tell me that, I kind of pivot and talk about we're not necessarily planning for a retirement timeframe then, we're planning for financial freedom, the freedom to not have to work in case life throws you a curveball and you're not able to. Ideally, you want to find yourself in a situation where if you have a really bad day at work, you just don't have to go ever again. And if you don't plan accordingly, then that might not be your situation.

So we've talked about Social Security a lot. It's a big part of many people's retirements. Collecting too young is an issue that I've seen all too often. People just want to get that paycheck. They want to get back some of what they put in. Key point there is some. Because if you collect early, you are missing out on guaranteed bigger benefits for the rest of your life. It's about 8% more per year until full retirement age and then another, we'll call it about 8% until you reach 70, which is a 30% difference between 62 and 70. That's a big deal, guaranteed rate of return that you're leaving on the table. Secondarily to that, if you are working and you decide to collect Social Security before full retirement age, you get a reduced benefit.

Amy: Yeah. And I don't know that...when you look at statistics, it shows that the lion's share of Americans take Social Security the earliest day. It's like, turn 62, "Give me my Social Security," not thinking through where else can you get a guaranteed 8%? I think of a family friend of ours who worked really hard for years, I mean, crazy hours. He was always at work, and he'd done a good job of saving for retirement. He turned 62, and he started claiming Social Security. I said, "Well, why? Why did you do that? I'm assuming that you probably have enough saved." "Yeah, I've got plenty saved," he said, "but you know, my parents both died early, died young." Okay. "Well, what happened with them?" "Well, they were really overweight and, you know, heart issues."

And I'm looking at this man. He works out every day. He eats really well. And I was like, "Okay, look at yourself, right? There's a very different situation. So you're making a lot of assumptions about yourself, and in doing so, you're losing out on hundreds, thousands of dollars, probably, over the course of your retirement," assuming that this man has made all these healthy decisions and will likely have a very long life.

Steve: We want to plan for longevity. We want to plan like you're going to be around for a long time, because, worst-case scenario, your money has to last longer. That's the way I look at it. And eventually, you hit a break-even point on Social Security where if you defer it...

Amy: And usually, it's early 80s.

Steve: Late 70s, early 80s is certainly possible. And if you live past that time frame, then you win. You get more money back than you would have if you collected at an earlier age.

Amy: It's like beating the system.

Steve: It is beating the system.

Amy: Who doesn't want to beat the system?

Steve: It's a mistake that I see all too often, and it's something that's worth sitting down and talking to a fiduciary financial planner about before you pull the trigger on collecting your Social Security benefits.

Amy: Another one I want to hit is not taking full advantage of a health savings account if one makes sense for you. You knew I was going to go there because...

Steve: Yeah, I like them too, Amy.

Amy: I love them. It's a triple tax advantage. It's a gift from the government. We all know this. The government doesn't give out many gifts in this kind of form. So if a high deductible health care plan makes sense for you and your family, and listen, I get it, for a lot of families, it doesn't make sense, but if it does make sense for you, often your employer will even seed that account because it's way cheaper for them to pay for a high deductible health insurance plan than a regular plan. So there's a financial incentive there.

And then I say, "Okay, if you can, at all, if you have an emergency fund where you can pay those medical expenses as they come out of pocket, then you make sure that the money in that HSA is invested, and you just keep sending it forward for retirement. When you get to retirement, you have a nice little pot of money set up for the medical expenses." And I think, on average, medical expenses for a couple that retires today at the age of 65, it's like $250,000+.

Steve: Yeah, it could be even higher than that. That's the reality of the situation. So take advantage of the HSA, triple tax advantage, deductible contribution, gross tax-free, tax-free when you use the money for non-reimbursed qualified medical expenses.

Amy: Nothing else like it. Here's the Allworth advice. If you can overcome maybe just some of these investing challenges, you're going to immediately get yourself closer to being able to retire and retire well.

Coming up next, the results of a massive survey about what you expect when you get financial advice. 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 Hruby. If you can't listen to "Simply Money" every night, you do not have to miss a thing. 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 podcasts. Coming up at 6:43, does it make sense to gift stock to your kids who are adults, or should you wait for them to inherit it? We're going to ask the advisor that and many more questions coming up. Speaking of advisors, the one that maybe you're working with, sitting down across the table with, is always putting your best interests first, right? Well, new research shows that may be what you're expecting, but what are you really getting?

Steve: So there's an AARP survey. It was conducted nationally with adults ages 50 and plus to determine how many adults expect professional financial advice to actually be in their best interest and how many think it should be required.

Amy: When we talk about this, I feel like maybe some listeners are like, "This is absurd. What do you mean? I'm working with a financial advisor. Why wouldn't they be putting my best interest before theirs?" You think about working with an attorney or working with a doctor, so many other financial professionals that you turn to to help you make important decisions about your life. Of course, they're giving you the best advice that they possibly can for you. Unfortunately, in our industry, there are some shady people, not only, but there are also some parts of the industry that are set up in a way not to take advantage of you but to be able to sell you commissioned products. If someone's going to say, "Well, it may not be in your best interest, but it's suitable. I mean, it's not a bad thing for you to have," that sounds insane.

Steve: Suitability is the key there. That's the word you used, and historically, that's what's been used. Because if you can find a reason to justify a situation where maybe a certain commissioned product or solution might be suitable for somebody, then you can sell it to them. That is the standard.

Amy: It's like my teenagers. It's like the teenagers in my house being able to justify something that they did, right? Of course, they're going to find a way to justify it. Does it make sense? Was it the best decision that they could have made? Probably not, right? And it sounds insane, but there's an insurance industry that is set up out there that doesn't always work in your best interest. It's not the standard that they're held to. All they have to say is, "This is a suitable product," to sell someone. And then far too often what happens is they come through the doors at Allworth, and they have an annuity or a permanent insurance product that makes zero sense for them.

Steve: Or 10 permanent insurance products that make zero sense for them.

Amy: It's frustrating and sad.

Steve: It's an unfortunate situation because this study showed that 9 in 10 people expect that the advice that they're receiving from any financial professional that they're talking to to actually be in their best interest. But 4 in 10 have financial professional that they don't know whether or not they've actually acted in their best interest. This is a problem. I mean, we look at a brokerage firm, for example. And the individuals that work for these places, maybe they're credentialed financial advisors, maybe they have a CFP, maybe they're good people, and they want to help you the best that they can, but they're hamstrung by their employer to sell only what that employer offers. Same thing with a bank. An advisor at a bank could be a credentialed advisor, but they're limited to the products and solutions that that bank and the advisory company under that bank offer.

Insurance products, same thing. We talked about it. You might walk in the door here and sit down for a financial review, and you have 10 insurance policies that you didn't need to buy, but the person that sold them to you got commissions each and every time they did. That's the frustrating part in that situation, because some of these organizations, you walk in the door, and I equate it to them saying, you know, "We have a size 6 shoe. What size do you wear, 8? Okay, cool. We'll make it work."

Amy: Yeah, 6 is good enough.

Steve: Yeah, good enough.

Amy: It's still a shoe.

Steve: Yeah. It's suitable. It covers your foot. It might hurt a little bit, but it works.

Amy: You can never walk in it, but...

Steve: Yeah. It's very frustrating to me as a financial professional because there are bad actors in the industry that have oversold products and solutions that they didn't need to.

Amy: We are huge proponents of the word fiduciary, and I have to say, you know, here at Allworth, going back 20-plus years, we were fiduciaries before the word was even cool, before anyone else was ever talking about it. And it just means we don't have conflicts. When we are talking to you about what we think is best for your future, we are absolutely putting your best interest forward. We're not saying, "Oh, my buddy actually has this great investment, and I'm invested in it. You should probably invest in it," right? There's conflicts of interest like that along the way. A fiduciary could never, ever do that.

And so if you're wondering, "Okay, well, I've been working with this person for a long time," I don't even know. There's one question you need to ask them. Are you a fiduciary 100% of the time when you are working with me and you are making those recommendations? Ask that question, and shut up and listen, right? If they start to backpedal, if everything they say afterwards doesn't make sense, if they're throwing out a lot of big words, in financial lingo, please run for the door.

Steve: If there's discomfort, if they start squirming around in their chair, yeah, they get a bead of sweat on their forehead, they get nervous. A secondary question to that is, how are you paid? How are you compensated? What do you receive when I accept your financial advice? There are registered investment advisory firms out there where you pay a wrap fee. You pay a percentage of assets under management, and that's it. All the other financial planning services go along with that because these companies, like Allworth and other registered investment advisors, they're not tied to one particular solution when we're talking about other aspects of financial planning, like insurance, like estate planning, like retirement planning. You're not forced to sell a particular product, and you can truly give fiduciary advice when you're in that type of situation. Ask those questions.

Amy: I think it's hard to find someone who you can trust. And I think, for most of us, we come across someone that we're working with because someone else recommended them. And I think about someone in my family going back years and years and years, they were in their 30s, came across someone, started working with them, put together a financial plan, felt good about it, and didn't realize until years later that this was someone who had sold them some annuities, some insurance products that really weren't necessary. Also, the person wasn't checking in with them on at least an annual basis. The only time they heard from them was when they were reaching out to the advisor, not when the advisor was reaching out to them. "Hey, let's check in. What are your goals? What's changed since the last time we met?"

These are all important things, and if they're not happening in your relationship with advisor, as the survey says, most of us agree someone should be putting our best interests first. If you're concerned about that or not sure that the relationship you're in is actually doing that, ask questions. And if you are not getting clear answers, run for the door. Here's the Allworth advice. When looking for financial advice, you do, you want an advisor who's legally bound to work in your best interest.

Coming up next, we've got financial advice for a certain portion of the population that is often maybe not considered. 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 Hruby. Some of us envy them. Sometimes they're misunderstood. We are talking about couples known as DINKs, dual income, no kids. It's funny that we're talking about this because sometimes my husband and I will be talking about a couple and these amazing trips that they're going on or something. And we'll just look at each other and be like, "DINKs," you know, dual income, no kids.

Steve: It sounds so derogatory.

Amy: It's not, right? It's two people who are both working, who've never had kids. They've got two incomes coming in and not the, I will say this, financial drain of children. I love mine very much. But I mean, let's face it. I think the research says that the average cost of raising kids to the age of 18 is north of $237,000 for one kid.

Steve: That's a lot of vacations that DINKs can take that we can't.

Amy: You know, it's like cha-ching, cha-ching, cha-ching in your mind. You've got one kid. We've got four. So you multiply that times four.

Steve: I'm practically a DINK compared to you, huh?

Amy: Exactly. Yeah. You don't even know what I'm talking about here. But no, I mean, there's a lot of people who make this decision. You know, they get married or they want to get married, but they decide, for whatever reason, that they're not going to have kids. And their financial planning is different. Their financial situation is different.

Steve: Yeah. I mean, a couple of our best friends, actually, they're in this category, and they lived in Northern Kentucky. They worked at a school district, and they took a job in North Africa, in Morocco. They moved to Marrakesh, where the cost of living is almost nonexistent, but they're getting American wages. These two are just...

Amy: They're, like, rich, super rich.

Steve: Yeah, they're making bank, they're living in luxury, they're traveling all over Europe, Africa, Asia. They don't have any children.

Amy: Exactly.

Steve: There's a little bit of jealousy there, even though, like you said, I absolutely adore my daughter.

Amy: Of course.

Steve: I have an eight-year-old daughter at home, and she's amazing. I wouldn't trade her for anything.

Amy: Of course.

Steve: But, my God, the opportunity when you're in a situation where you don't have to pay for children is unmatched.

Amy: Yeah. And for many of the people who fall into this DINK category, the number one thing that they spend on is travel. Like, kind of like you're mentioning, the friends of yours. And I think that's where it comes down, right? When you've got families with kids, you're traveling to soccer tournaments, you know. Maybe you get a few days at the beach or whatever. These people are in Marrakesh, they're in Europe, they're doing all the things that we'd never... Their top spending category is often, yeah, discretionary income. And it's the travel...

Steve: Hobbies are second. I like this one. Pets came into a close third. It almost seems to me like they're trying to fill a missing niche. You know, they don't have children. So here's our fur babies. Here's our cats.

Amy: Exactly. And I know some like this, right? It's like the member of their family, all the conversations. Listen, wherever you fall on the spectrum, we're not saying there's anything wrong with any of the decisions that you're making, you know, if you've got kids and you're spending the money on them, and if you don't have kids and you're not spending the money on them, you know, that's the part that doesn't matter. It's how you understand that your financial planning is looking maybe a little bit different.

Steve: Yeah. So DINKs, they don't want to move. Again, it just feels so weird saying it, doesn't it? It's like it's derogatory, but it's not. You said it yourself.

Amy: No, not at all. It's a loving term.

Steve: Yeah, exactly. It's a personal decision, and obviously, planning is a little bit different. How you spend your money is a little bit different. There's the reality that if you do have children and you're a DINK, oftentimes you would have to move to a new city. And these people, they just don't want to. If they do...

Amy: And I think it's like, if you're worried about the school district that you're living in, right, you're in an urban area, you're living downtown, schools aren't the best, now you're looking at moving to the suburbs or figuring out what the best school district is and moving there, not necessarily where you want to live.

Steve: That's exactly what happened to us.

Amy: Is it really?

Steve: Oh, yeah. We were in Cincinnati, just having a good time. It's like, "Okay, we need to we need to move to the burbs now.

Amy: Yeah, right.

Steve: For the school district.

Amy: And then your whole lifestyle, right? It changes a lot, you know, and that's just kind of part of that decision-making. I think a few things. First of all, we would say, and this is, I don't know, if you're a DINK and if you're not a DINK, if you've got kids as well, that fully funded emergency accounts, right, that's going to make such a difference. And if the two of you are putting money into that, stacking savings in there, it's just going to give you so much more flexibility to focus on whatever is important to you.

Steve: Yeah. I mean, you still have to plan, and that's the thing, because part of DINK is dual income. So there's oftentimes situations where it can be easy to live a little bit more extravagantly, to spend money on these vacations, because you don't have to spend money on children. But you do need that emergency fund. You need that financial foundation. You both should be saving in 401(k)s. You both need to take advantage of the savings opportunities that are available to you.

Amy: You know, and I think one of the things you have to keep in mind here, too, is if everyone's on the same page, right, dual income, and you are aligned on your goals, it's just that much easier to get there. Much of the show we talk about, okay, you're helping kids save for college, pay for college, at the same time, you're saving for your own retirement. When that's out of the picture, what are your goals? Let's work on them together. And I think you can get there, you know, a lot faster. And then, I think, then you can look at, "Okay, we're fully funding retirement accounts. We're doing great with that. We also want to go to Europe." Maybe that becomes that much easier. So I think it's just aligning on those goals, getting on the same page.

But then I think estate planning looks very different because you don't have children or inheritance necessarily that you're thinking through. And so I think estate planning becomes more important, because, think about it, if you don't have a will in place and this goes through probate, they're going to find your closest living relative. Maybe you're close to them. Maybe you're not. Maybe you want your money to go to the college that you went to or a philanthropy or a nephew or something like that. You need to make sure that that's very clear in all of your estate planning so that your wishes are carried out when you're no longer here.

Steve: Estate planning is always an important part of the financial planning conversation, but you're right, it is a little bit different. If anything, it becomes a little bit more important because you need to have an idea of where you want your money to go in the event that something were to happen to you and your spouse prematurely. So sitting down, having that conversation, drafting up the proper documents to get your assets in order is a major planning maneuver that anybody needs to do. But with things, in particular, who is that money going to? Is it going to a niece, a nephew, a brother, a friend, a child of a friend? These are real conversations that you need to have.

And I have plenty of folks that I work with that don't have children. The reality of the situation is, obviously, there's less money that you need to spend on children, if you don't have them, obviously. And you have incredible savings potential when you have double incomes without that added expense. I have people that have retired early. They've lived the lifestyle that they wanted to live. They've traveled. They've had their hobbies. And then they retired early because they saved very aggressively. It is an opportunity when you find yourself in a position where you are a DINK.

Amy: It just gives you, I think, more flexibility, you know. I mean, that's a lot of money when you look at about $240,000 per kid to raise them to the age of 18. So, yeah, I think you've got that flexibility. I think, on the flip side, though, long-term care insurance and things like that become that much more important. I mean, for most of us, when we have kids, we would say the goal is not that our kids are taking care of us someday. But if it were necessary, I think our kids probably would.

Steve: Could step up to the plate.

Amy: Hopefully step up. When you don't have that option, that conversation about what happens to one of us or both of us if we can no longer take care of each other. You know, we don't have that next generation coming behind us that we can lean on. So a long-term care insurance policy becomes more important or figuring out at least if you can self-fund those situations, if you need to go into, like, a skilled care facility. So there's just different nuances, I think, that come along with this situation. Lots of opportunities as well. The key is to understand them all fully.

Here's the Allworth advice. While those without kids may have some financial advantages, you still need proper planning to make sure you can maximize what you have. Coming up next, we're answering your questions. We are asking the advisor. 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 Hruby. Straight ahead, we're looking at whether this might be something you want to try, paying your credit card every two weeks rather than once a month. We'll get into that. Do you have a financial question that's keeping you up at night? You and your spouse maybe aren't on the same page. There's a red button you can click on while you're listening to our show. It's right there on the iHeart app. It's really easy. Record your question. It's coming straight to us. We'd love to help you figure it out. In fact, we're answering some of your questions right now. The first one comes from Dale in Colerain Township who says, "I'm torn between paying for my kids' schooling and saving for retirement. What should I do?"

Steve: Figure out if you can afford to save for both. That's the bottom line.

Amy: Yeah. It's a luxury, kind of, yeah.

Steve: Sit down, work with a fiduciary financial planner, build out a financial plan, map out your financial future, find a balance between your competing financial goals. Obviously, we want to have a situation for our children where they're better off than we were. That's a big motivation for me. You know, I would love to be able to help pay for my daughter's schooling when the time comes. But they can borrow for school if they need to. You cannot borrow for retirement if you put your savings off and didn't save enough.

Amy: Help comes in many different forms. And I think, for so many of us parents, we think of it as just financial help. I just want to help them pay for college. But sometimes if we're doing that to the detriment of our own future and our own retirement, it can look like conversations about, okay, what can you truly afford? You know, I think about my daughter, who's going to be a freshman in college next year, starting in middle school, she literally saw a school on Instagram that had palm trees and was like, "That's where I want to go."

Steve: I'm going there.

Amy: It's out of state. Not necessarily had the major that she wanted or she knew anything about it. She just saw the palm trees. And we had to have these tough conversations about the fact that, okay, an out-of-state school, right, you're going to pay out-of-state tuition. In Kentucky, we've got KEES money that goes toward in-state schools. Like, so out-of-state isn't an option for you. There's no money for that.

Steve: If you go farther enough south in Kentucky, can it support a palm tree in some of these areas?

Amy: I don't know, maybe for a couple of months in the summer, and then you bring it inside. I should just do that. Just take a palm tree to one of these campuses, take a picture, send it to her. She's good. But no, as she's gotten older, she's realized that's not something that we can afford. And so I think some of the conversations or some of the help that we can give are just really truthful conversations about what can be afforded and then talking to them about what they're planning on doing after school.

The Simply Money rule for all of this is always, hey, don't take out more in total student loans than you can expect to make in an income in that first year. So if you're taking out $80,000 in student loans and you're going to be making $40,000 that first year out of college, likely, probably not the best thing that you can do.

Steve: That's a big challenge to overcome.

Amy: Yeah. Maybe you don't live on campus. Maybe you stay at home. These are tough decisions. But again, I think parents can be involved in helping their kids make smart financial decisions without necessarily paying for everything. Next question comes from Carl and Cindy in Cleves. "From a tax standpoint, should we gift shares of stocks to our adult kids now or just let them eventually inherit those shares?

Steve: From a tax standpoint, no doubt about it. Letting them inherit the shares is a bigger benefit because those shares will receive a step up in basis, which is that baseline to calculate the tax liability once those shares are sold. So if you sell the shares on the date of death, then ultimately, there's no tax liability because there's been no gains. So it's a big opportunity. Now, if you're charitably inclined and you're looking to maybe get involved with a charity, then you can give your appreciated shares away in life, and you don't have to pay the capital gains taxes once you make that donation. To your children, not the same story. They would have to pay the capital gains taxes when they sold those shares if they were received in life.

Amy: I like that Carl and Cindy are asking this question because we are really fortunate here in the Cincinnati area in the fact that we've got huge companies, Procter & Gamble, Kroger, GE, Cintas, where people feel really strongly about maybe working for those companies or they buy that stock because we know and we love these companies and how much they do for our area. And so I think there's a lot of people in this situation where they do have a lot of company stock. So I think that probably most, if you want to give something to your adult children while you're still alive, cash is probably your best option at that point. Knowing that that stepped-up basis of when they inherit that stock, that it's much more tax-friendly to them makes a lot of sense.

Next question comes from Toni in Westwood. "I just discovered my husband has a vastly different sense of what retirement looks like. And hey, we're about five years away. Any suggestions for how we can find some common ground?" I love this question because, years ago, the first time my now ex-husband and I sat down to have this conversation, we were not only on different pages, we were on different planets.

Steve: How bad was it?

Amy: It was really bad. You know, I wanted to retire around 65. I wanted to travel and spend time with the grandkids. And he was like, "I never want to retire. That didn't necessarily feel like you need to plan for it." Because, you know, the thought for him was that we'll just keep working. And it was like...and I just felt like, "Gosh, do we really even know each other?" And that didn't end up working out.

Steve: Not in this situation.

Amy: It didn't work out for our situation.

Steve: You're not doomed, Toni, in Westwood.

Amy: Yes, I'm not saying that that is the path that you're going down, but I'm saying that many people have found themselves in the same page. You're just doing life, and life doesn't always involve talking about what's going to happen 20 years in the future or even 5 years in the future. But now, you have this information. I think what needs to happen next is a lot of conversations about figuring out what a middle ground looks like, where maybe you're both giving up something but you're also getting something, and just kind of trying to get in some kind of alignment.

Steve: Build a plan. I mean, I sound like a broken record for some of this, but you need to sit down with a financial planner, build a plan, and understand not necessarily when retirement is but when financial freedom is. Because once you have that financial freedom, it opens the door up to have slightly different perspectives on how you're going to spend your time in retirement. But yeah, this is not just a retirement planning conversation. This is almost a counseling one. You need to have some serious conversations.

Amy: And I'm glad you said that because I actually think that, as financial advisors, that's often what we do, right? A lot of that has to do with just helping to figure out the way forward and knowing that we've helped many other couples get there too.

Coming up next, are there benefits to making two credit card payments each month instead of one? We're looking at that. 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 Hruby. Does your budget include a credit card payment once a month? What would happen then if you stepped it up and you made a credit card payment twice a month? Now, some of you might think that sounds crazy, but it actually can make sense for a lot of us.

Steve: Yeah. I mean, interest is constantly accruing. This isn't a...

Amy: Yes, every day.

Steve: Yeah, it doesn't build on, like, end of month, okay, here's all your interest. It is calculated on a daily basis based on your current balance. So that interest is building throughout the month each and every day. If you wait to make that payment, then what it does is it can affect your credit utilization ratio.

Amy: This is something my husband makes fun of me all the time, for whatever reason, or for many reasons, but one of them being I'm obsessed about my credit score.

Steve: Okay.

Amy: And one of the major components of our credit scores is credit utilization, and that means how much available credit is out there for you in the form of loans and how much is the entire amount that you can put on that credit card or that credit card limit and then how much are you actually taking advantage. And the lower that ratio is, the better. In fact, the people who've got the highest credit scores often take advantage of less than 10% of what's available to them. If you're having a month that you had an extra-large expense on that credit card, right, I often look at our credit card bill probably at least once a week, but if it's a little higher than it normally is, paying it off now so that that credit ratio looks better on that credit report can actually make a lot of sense.

Steve: It does because it lowers the credit utilization ratio, especially in a high-expense month. I do want to highlight something here that I did, and this is based on feedback that we had a show maybe last year. You can call your credit card company and say, "Can I have a higher credit limit?"

Amy: Yes. And if you're a good customer, it's like a large percentage of the time they'll say, "Okay."

Steve: Yeah. I actually did it online through the app, and it took a couple of minutes. I put a stupid high number. I did. And they came back and said, "Well, here's a slightly less stupid high number."

Amy: Yeah.

Steve: And I said, "Okay." And my credit utilization ratio went down, my credit score went up just by clicking a button on the phone app.

Amy: That's a great point. And I think, yes, some of the time, it's just kind of taking some steps and making sure that you're educated on how best to manage your credit score. And then I also think that just checking that balance on a weekly or a biweekly basis gets you much more in touch with your spending and your budget. So if things feel out of control and you're carrying a balance, looking at that, maybe then that next purchase, when you whip out that credit card, you're like, "Do I really need this? I looked at my balance this month and it's already really high. Do I really need?" So I think, for a lot of reasons, being more in touch and maybe making two credit card payments a month can make a lot of sense.

Thanks for listening tonight. You've been listening to "Simply Money," presented by Allworth Financial here on 55KRC, THE Talk Station.