Amy: Tonight it is called the great wealth transfer, and it could impact you. Let's get into that. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. Until four years ago, the baby boomers made up the largest portion of the U.S. population. They were born after World War II. And a lot of them, over the course of the past several decades have amassed quite a bit of wealth.

Steve: Yeah, they sure have. Boomers, they have decent nest eggs for the most part here.

Amy: Can I just tell you that I'm 47 and that my 14-year-old son calls me a boomer? Yes...

Steve: He calls you boomer?

Amy: ...all the time he's like, "Okay, boomer. Okay, boomer. " So just to levels that I'm...I'm not actually a boomer. I'm Gen X.

Steve: What do you call him? How do you get back at it? You don't just let that slide, do you?

Amy: Well, no, I don't know what I should...I should come up with something even meaner. But...

Steve: We'll work on it later.

Amy: There's nothing meaner than calling me a boomer when I'm not a boomer. But all respect to boomers, because they've earned it and they've also earned quite a bit of wealth over the years.

Steve: Yeah, you know, there's those out there that say that boomers were in the right place at the right time. Following World War II, there was immense economic growth, prosperity, golden opportunity to accumulate a lot of wealth in their lifetime. Boomers again, these are individuals born between 1946 and 1964. They are currently the wealthiest generation on the planet. Their net worth falls anywhere between about $970,000 and $1.2 million...

Amy: Let's stop.

Steve: ...according to Fortune.

Amy: Let's stop for a second there. This is their mean net worth, right? Like, that is a lot of money amassed. I mean, we talk about the fact that we have a retirement crisis in this country. Boomers are doing pretty well, and we know, right. They're retiring in droves right now. I mean, part of the issue that we have with the Social Security system is more and more of them are retiring, right, and drawing Social Security. But these are people who've done pretty well for themselves. And I also wanna throw out there, many of them are some of the last to have pensions.

Steve: Yeah, that's a good point too.

Amy: They're doing okay.

Steve: You could work...you could live relatively well without attending a college, you could work the trades with the same company. You worked hard for that same company for many, many years and you walked away with a pension. So there didn't have to necessarily be a ton of savings, especially when you bought a house at a relatively decent price compared to what your income was and then the house value just boomed over those years. So that's where a lot of this net worth is accounted for. That's not just investible assets. That's the fact that people bought houses for $40,000 and now they're worth $750,000.

Amy: Well, and I also think this is a generation who, I don't know, but going back, I don't know that the starter home concept started with them, where we have to start with the home, and then we move and we move and we move. I mean, I think about, you know, my dad, like, many times you just bought a house and you stayed there. So that was the difference. You also mentioned though, this generation did pretty well and they didn't necessarily have a college income. Now, many of them did, but those that didn't also came out of or were able to get a job and not incur so much student loan debt, right?

Steve: Exactly.

Amy: As we see now, Gen Xers and millennials, you know, trying to start lives and drowning in student loan debt at the same time.

Steve: Yeah, part of the problem for current generations is that inflation has outpaced wages for certain aspects of expenses in this world, including college, for example. College has become exponentially more expensive. And that's a topic in and of itself as to why that happened because maybe student loan availability led universities to artificially inflate prices, which creates a crisis in and of itself. But for boomer generations, you were able to work part-time and just pay for college. That was possible for a lot of universities. Now you're walking away with $100,000 in debt.

Amy: Yes, I mean, and I met with someone recently who had $40,000-plus worth of debt, has been paying on it for 10 years and the needle has hardly moved.

Steve: That's what I graduated with, $40,000 in debt, and that was 20 years ago.

Amy: You were aggressive, right, or did you just pay 'em off?

Steve: They've been paid off for several years now because I was aggressive. But it also slowed down my ability to start a family...

Amy: Build wealth in other ways.

Steve: ...to build wealth in other ways, to get...You know, we did start with a starter home, for example but now we're in a long-term home because the student loans are paid. It delayed things a bit.

Amy: We're talking about the silent generation and also boomers. Silent generation is those above boomers. Between the two of them, listen to this number, they're getting ready to pass down $85 trillion in assets between now and 2045. So in the next two decades, we have a major shift in money. This is the great wealth transfer that we're talking about, right, as the silent generation and boomers pass this wealth that they have accumulated. Later in the show, we're talking to Mark Reckman about rental properties, about vacation homes, right, and sort of passing those on. And I know I've talked to Mark about this before. Generations before this didn't even have homes that they could pass on, vacation homes, beach homes, lake homes. It wasn't even a thing. People didn't have that kind of money. This is a change, this is a generational change. And as we have kind of this first generation, this first American generation to really in droves be able to accumulate this kind of assets they're not spending in their lifetime, that money is now being passed down or will soon be passed down to Gen X and to millennials.

Steve: Yeah, the transfer of wealth, it's gonna create a lot of changes for younger generations in their ability to purchase homes, pay off student debt, like the person you were talking to the the other day that has $40,000 in loans and they've been making their payments, but they haven't even put a dent in it because of the interest on 'em. There's gonna be more travel, the ability to buy high-end products, invest in the stock market. A lot of these changes, it may be a challenge for some of these individuals to navigate this newfound wealth in making sure that they make good decisions with those dollars.

Amy: You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner along with Steve Hruby, as we talk about the great wealth transfer, it is coming, and for many of us, it will likely impact our lives as well. We're talking about the silent generation and baby boomers and the wealth that they have amassed that they will at some point in the next 20 years pass on to Gen X and millennials, right, to us. And what does that mean? You're talking about, "A little nervous about this," right, because of what can be done. We've talked on the show many times about what happens when someone wins the lottery, right, when it's this just, like, kind of windfall that falls into your lap, and there's not planning for that. And we've seen people just blow through that money in no time. You know, I think another consideration though for this is if you were to...you know, Gen X, my generation, many of us are in our peak earning years. Okay. And so if money were to come a lump sum, I think on average it's about a quarter-million dollars that most inheritance that are coming from this generation coming down. That's significant. You get all of that in one fell swoop and you are like...stratosphere when it comes to tax brackets.

Steve: That's a good point. That's...

Amy: I mean, ouch.

Steve: That's one of these challenges that people are gonna have to deal with is understanding...especially for those that haven't had the opportunity to invest because they've been held back from different expenses, higher home costs, student loans that they're shackled with. You're inheriting this wealth. You don't have any idea how to invest, you have no idea what the tax implications are of spending some of those dollars. That could create some major problems where you're absolutely kicked in the teeth by the IRS, for example. Now, think about millennials here. There's reports out there that show that the silent and boomer generation wealth transfer is gonna actually make millennials the richest generation in American history.

Amy: Wow.

Steve: Think about that.

Amy: Yeah, that's huge. And that's gonna be a substantial change in fortune, right? I mean, they've grown up with recessions, they understand what that looks like, now they are paying these exorbitant college costs, they're trying to buy their first houses, some of them, and can't even get into the market, they've got insane interest rates and so much competition to even try to buy, and they're trying to maintain a lifestyle. You know, we always say we want our kids' lives to be a little better than ours, right? I mean, millennials, that is tough to keep up with your parents when you've got all these other headwinds working against you. So this could be a game changer for them.

My concern is for both millennials and Gen Xers, if they have been dealing with debt in issues like that, and all of a sudden this windfall occurs, not having the background of how to be diversified, how to figure out what your risk tolerance, how to go from not having money to invest suddenly to having substantial money to invest. And I would say if this is you, or you think it's coming, make sure you are surrounding yourself with a team of people that you can trust. I mean, we mentioned potential tax implications here. Do you have a good CPA that you're working with? All the tax software in the world, right, may not be able to give you the face-to-face advice for a situation like this. So a good CPA that you can trust. And we're huge fans, of course, of fiduciary financial advisors who can say, "We've helped people walk this path before. This can feel overwhelming to you when you didn't have money in that account six months ago and now you look at it and you're overwhelmed by the balance in a good way. But where do you get started? We can help figure that out."

Steve: Well, we're also huge advocates of communication. That's a trend that you hear us talk about constantly. And this is an opportunity for those of you that are going to be passing on wealth to younger generations. I think opening that door to having that conversation sooner rather than later is very valuable for both parties involved. Having proper expectations on how you would like to see those dollars used is something that may sway behavior. And if you think that it doesn't or won't, then maybe sit down with an estate planning attorney. There are ways to map out a financial future for your money when you're gone via proper estate planning.

Amy: To sort of protect it from things that you would not want to happen. Say there's a son-in-law in the equation that maybe makes you a little bit nervous, right, there are definitely things that you can do there.

Steve: You could even see it as protecting your children or grandchildren from making bad decisions themselves...

Amy: Absolutely.

Steve: ...if you think that that might be the case for the money that you're probably gonna be leaving behind.

Amy: I'm glad you brought up communication though, because there's a huge disconnect, and I've seen this many times. Someone will come in and part of their financial plan, part of their retirement plan will be an inheritance, right? "I think my parents have done well, I think my grandparents have done well, I think they might have this much." You have no idea how much they have, no idea how much they're spending, no idea what they're planning to do with that money yet you're planning on getting it and using it to help you retire or reach other financial goals. There's a huge disconnect, I think, between what many people are expecting to inherit and the reality and numbers bear that out too. A lot of people say, "I'm probably gonna get about $350,000." In reality maybe it's more like $250,000, still a windfall, but not necessarily what you expected.

Steve: I would call expecting an inheritance to fill in the blanks for your lack of a retirement plan a complete lack of planning.

Amy: Yes, lazy, stupid. I've got other words for it too. Sorry.

Steve: Harsh.

Amy: It's the truth. You know, this could be a game changer for a lot of people and if you think it's you, please plan for it. Here's the Allworth advice. The great wealth transfer, it's going to impact society in countless ways. We would recommend you talk with your family to figure out whether it's going to have an impact on you. Coming up next, we're breaking down how many years you should be financially prepared to live once you stop working. You're listening to "Simply Money" presented by Allworth Financial here on 55KRC THE Talk Station.

...Financial. I'm Amy Wagner, along with Steve Hruby. If you can't listen to "Simply Money" every night, 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, we're playing everybody's favorite game, retirement fact or fiction. I actually think you might learn a thing or two from this one. Do you have any idea how long you'll live or how long you'll work? I mean, these are questions that if we had definitive answers, well, it would be scary. But we could also probably make decisions differently than we do. We just don't have answers for these things and it makes it a lot more difficult to plan.

Steve: Yeah, if you listen regularly, then you've heard me talk about there's a 25% chance that if you make it to 65 and you're a woman, that you're gonna see the age of 94. If you're a man that hits 65, 25% chance you're gonna see the age of 92. A recent TIAA study shows that only 1 in 10 U.S. adults have a clear idea of how long retirees, especially those around the age of 65, actually tend to live. And their numbers come in...what they look at is a 65-year-old woman has a 40% chance of reaching the age of 90. So that's kind of in line with what we use as far as building financial plans are concerned, as well as a lot of other fiduciary financial planners in the industry that I know. A 65-year-old man has about a 30% chance of living to the age of 90.

Amy: Less than 5% of 65-year-old women will not live past 70. I mean, so it's interesting. You get to these numbers and it's like, gosh, once you make it to 65, 70, the odds of you living to 80, 85, 90 are pretty high.

Steve: They are.

Amy: There's a term for this, and it's longevity literacy. And you have to understand these numbers when you are thinking about retirement, otherwise, you're cutting yourself short. I mean, you're saying, "My grandparents lived to the age of 65, or my parents did." Well, did they smoke? Did they quit moving? Did they sit on the couch and eat bonbons all the time? I mean, if your lifestyle is drastically different than that, if you're active, if you eat healthy. I just think we blame genetics for so many things when a lot of it is like our current lifestyle choices. And if you're making pretty good ones, the odds of you living longer are actually pretty good.

We were just talking about, a few minutes ago, the great wealth transfer. You know, as we talk about these numbers, another pattern that you see in them, women are outliving men. And so women, if you are listening and your husband or your partner is the one that controls all of the money, and you just feel like you don't understand, please understand there's likely going to be a time when you are the one controlling the money when the wealth is transferred to you, when they're no longer here to be part of the conversation. And this is why you have to start paying attention, asking questions, do your research. I'm a huge proponent and very passionate about empowering women to be part of this conversation, and this is exhibit A for why they should be.

Steve: It's unfortunate that sometimes it's almost like pulling teeth to have a couple that I work with agree to come in together. Oftentimes it's one or the other that's the decision maker. And sometimes, you know, for example, a woman will be on the sidelines. "I'm comfortable, I know that they're making the right decisions for our family." Pump the brakes a little bit, please. We want you in this meeting, I wanna get to know you. There's a pretty good chance that you and I are gonna be working together in the future without your husband in the picture because you're 10 years younger and women already live longer than men. So it's extremely important to have your finger on the pulse of what's going on in your financial plan with your investments and have that understanding if you're a woman.

Amy: And if this is eye-opening to you, like, "Gosh, I never really thought that I might be living this long, that I might be forced with making these financial decisions," what can you do now? Well, I think there's several things. First of all, if you're still in your working years, max out those retirement accounts. I'm a huge fan, and this is a surprise to no one, of health savings accounts, HSAs. If you have a high deductible healthcare plan, I am huge proponent of you maxing these out and then making sure that that money is invested. Why? Well, because we know healthcare costs are gonna be astronomical in retirement. And the longer you live, likely, the more expensive things get, maybe the more prescriptions that you have, the more specialists that you have, right?

Steve: Yeah.

Amy: Whatever it takes for you to live more comfortably in those later years and those costs add up. So to have a pot of money that, by the way, is never taxed, triple tax advantage if you're using it for qualified healthcare expenses, is one great way to set yourself up for longevity and a retirement where you're not staying up all night, every night wondering, am I going to outlive my money?

Steve: Yeah, I think that's great advice. Leveraging the HSA, if you have access to one, making sure that you are saving if you have the ability to save. If you're already retired. I think it's important to come in with an expectation that we do need to stay invested through retirement because prior to two years ago, we weren't talking about inflation a ton.

Amy: We never talked about it on the show.

Steve: Correct. Because it was low.

Amy: No one talked about it.

Steve: Even when it's low, it's still a bit of a silent killer because if you just have cash parked on the sidelines, then you are guaranteed to safely lose money via purchasing power risk. What that means is, as inflation rises, the value of your dollars drop. It's one of the reasons why we invest in retirement, because about every 20, 22 years, the value of the dollar is gonna chop in half. So making sure that you're staying invested and having an understanding of how you're invested is also very important to ensure that we're planning for longevity. Remember, there's a 25% chance that you're gonna see 92 if you're a man, 25% chance that you're gonna see 94 if you're a woman that has reached the age of 65.

Amy: Yes, so not letting that catch you off guard, you know, having a plan for it so that those years are spent not in worry, but enjoying what you can in retirement. So yes, longevity literacy, if this is something that you don't have, please, please start looking at these statistics. They can be eye-opening.

Steve: You had mentioned genetics. I'm a little biased on this one because men in my family die at 57 years old. That what happens.

Amy: It's not happening for you.

Steve: I'm gonna blow that out of the water. And people will joke, like, "You know, nobody lives that long." What I say in that situation is, well, now you're gonna live until you're 105 because you're not planning accordingly.

Amy: Yes, exactly.

Steve: And you don't wanna run out of money when you're 85 years old.

Amy: Definitely not. Here's the Allworth advice. Having enough money to last the rest of your life requires planning and something a fiduciary financial pro can help you with. But it all starts with this literacy of understanding how long you could likely live. Coming up next, questions to ask if you end up getting a vacation home at some point, not buying it, it's passed down to you. You're listening to "Simply Money" presented by Allworth Financial here on 55KRC THE Talk Station.

You are listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. One of my favorite things every summer is going to a friend's lake house that has been in their family for years. And the plan someday for that house is that the next generation will inherit it and that the siblings will share it. The interesting thing is not all the siblings want it. So how does all of this work out? Joining us tonight is our estate planning expert from the Law Firm of Wood & Lamping, Mark Reckman. Mark, does this situation sound familiar at all to you?

Mark: Oh, boy. You sure...you bet. And I think within the last generation it's been especially so. I think that the generation of our parents was the first generation that had the resources to buy vacation property. And by the way, it's not just vacation property that is involved in these multi-generation changes, but it can be a family farm or a family residence.

Amy: Sure. So...

Mark: Now, the problem...

Amy: ...what does this look like and how...And Mark, when you are the person setting up the estate planning, and I'm just gonna go back to the situation that I just talked about, you know, the parents were assuming that their children and grandchildren would all want to equally share in the house. The problem is one family is really interested in it, one is, I don't know, maybe in, maybe out, another family not really interested at all, but the conversation isn't happening and I'm assuming that communication has to be a big part of this.

Mark: It is a big part of it. And Amy, I've been doing this for 40 years and I've seen vacation properties, cabins, farms, things like that handed down over the years. And I don't think I can remember a single case where it worked out well for the next generation. It's one of these things that sounds like a great idea. In practice there are endless complications. And I always discourage my clients from doing it. I try to get them to think it through. If they really want to try to do it, I've sort of developed a list of factors for them to consider in planning ahead. But you most certainly need to sit down with the family and think this stuff through, hopefully beforehand. Hopefully by doing that, you'll understand the complications. But what you just said a moment ago is critical, and that is that not all of the children or grandchildren approach this joint ownership with the same enthusiasm, with the same level of affection, they don't all envision the same goals, and boy, it goes off the rails quickly.

Amy: So Mark, mentioned that you have kind of a list of considerations that you would say, "Hey, if you are really determined that you're gonna leave behind either this vacation property or this family property to your children to split equally, here's this list of considerations." Let's talk through these because I'm sure there's other people listening tonight who are in the same boat here.

Mark: You bet. Item number one is to talk about who will manage the property. Will one of the owners be a manager or do you want to hire a professional manager? Professional managers relieve you of a lot of work, but they get paid a lot of money. Now, where the professionals are particularly valuable is if you're renting this vacation property to defer some of the ownership costs. In that case, having a professional manager is a big plus, but you will pay for it.

Amy: That makes sense. And obviously everyone has to be on the same page as far as who that will be and how much it will cost in paying them. What other considerations are there here?

Mark: How will the use of the property be determined is a big one, Amy. In other words, if it's shared ownership, what weeks do I get, what weeks did my brother get, what holidays are coming up? And these things can be planned in advance, you can set up a schedule, but whatever it is, it's important to put it in writing. That doesn't mean that you can't make changes. And certainly people can trade off and adjust their times as needed, but having a plan laid out in advance is a real good idea. The same thing applies Amy, to expenses. How are the expenses gonna be covered, and plan that out in advance. Are the family members gonna pay an equal amount into a pot, who's gonna manage that pot, what kind of expenses are paid from that pot as opposed to expenses that are outside of that pot? I've had many families where somebody uses the lake house for the summer and decides that the furniture, the deck furniture is worn out and they want to buy new deck furniture, and the brother from out of town is in a financial pension, he had a brand new baby, he doesn't have money to contribute to that, there can be some real discord, and sometimes family members will say, "Okay, I'll pay for the new furniture, and it's not coming out of the pot." But these are the kinds of things that should be discussed ahead of time and some kind of rule of thumb established going forward.

Amy: Mark, I'm just sitting here shaking my head, listening to what you're talking about, so many considerations. And I know how difficult it is to get multiple family members on the same page. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby, and we are joined by our state planning expert, Mark Reckman from the Law firm of Wood & Lamping, as he discusses what happens when you wanna hand down your home or the vacation home that your family has enjoyed so much to the next generation or the generation after that. It sounds so beautiful. It can be emotional and sentimental, and it actually can also be a major headache for that next generation. So, Mark, as you're telling us what we need to think through, you know, I think one of those considerations too is how long do we try this? I we're not all on the same page, how long are we dedicated to trying to make this work?

Mark: Well, that's right. And of course, different people have different levels of usage. So it may look very different to someone who lives in California and inherited a household at Lake Cumberland compared to her sister who lives in Covington, Kentucky and has a place in. So you just really need to think through how it affects everybody and understand how different people are gonna react. One of the big issues, of course, is these properties almost always have occasional capital expenses. And by capital expenses, Amy, I mean major expenses. The deck wears out, we need a new deck. Well, you know, a deck's gonna cost $25,000, or what happens if there is significant damage from a storm, or if it's a lake house and it comes with a boat, that boat's gonna eventually wear out, you're gonna need a new boat, and what kind of a boat, are you gonna get a pontoon boat or a ski boat, you're gonna get it new or is it gonna be used, is it a $20,000 boat or a $50,000 ski specialty boat? You can imagine that there's a whole range of answers depending on individuals. I may love skiing, my brother may love fishing from a pontoon boat. You can't do both from the same kind of boat.

Amy: So much to think through. And I mentioned too, Mark, before, you know, how long do you make a go of this if everyone isn't on the same page? But are there usually an exit strategy sort of built into these kinds of plans or not because I imagine that after trying this for a few years, it happens quite often where one, if not everyone is like, "This just isn't working out."

Mark: Well, that's right. And sadly, people don't generally think about what's gonna happen if this doesn't work. Everybody feels good about it, they're excited about it going forward, nobody stops to think about an exit plan. That sort of thing should be discussed and put in writing upfront. That doesn't mean that you can't vary from what you write down, but at least you have some initial starting point and there ought to be some kind of a buyout. And how that buyout works is tricky because it may very well be the person being bought out expects if they're a 50% owner, they expect to get 50% of the appraised value of the property. And in fact, the other side may say, "Look, I'll pay 90% of that, but I'm not gonna pay you the whole amount." In other words, you can't take the property and say your half is worth half of that, because there are all kinds of expenses involved in selling a property, real estate commission being one of the biggest ones. If I own a house and go to sell it, I'm not gonna get the appraised value when I go to the closing. I'm gonna get the appraised value minus a bunch of expenses. And so those are the kinds of adjustments that need to be made when you come up with a formula for buyouts.

Amy: So many considerations here. Mark Reckman, our estate planning expert from the Law Firm of Wood & Lamping. So easy to romanticize, right, this vacation home, this property, all of the memories and things that are tied up in it, passing it down to the next generation, but a reality check here tonight on what really needs to be considered before moving forward with that sort of plan. 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've got a financial question you and your spouse are not on the same page about, or it's keeping you up at night, we can help you out. There's a red button you can click on while you're listening to the show right there on the iHeart app. Record your question, it's coming straight to us. We'll help you figure it out. And straight ahead, this is an easy way to waste money the next time you book an appointment or dinner reservation. We're gonna weigh in on our thoughts about this. We'll get to that in a few minutes, but first, it is time to play retirement fact or fiction. Let's dive right in. Mr. Hruby, fact or fiction? Maxing out a 401(k) account too early in the year can impact your employer match.

Steve: Fact. And this one is extremely important. I've seen it too many times over the span of my career. If you are fortunate enough to be able to max your 401(k) each year, and you're all excited, maybe it's the first time you've ever done it and your plan doesn't offer what's called a true up, keep in mind when you hit the limit, your 401(k) contributions are gonna shut off. And if your 401(k) contributions shut off, then that means you're not contributing. If you're not contributing and you don't get a true up, then you're not gonna get that company match. A true up is something that comes back and makes you whole on the assumption that you were contributing what you needed to to get that match so your company...

Amy: Over the course...

Steve: ...comes back and pays...

Amy: ...of the entire year.

Steve: Yeah, your company comes and pays you back. It is one of those things where I have just seen people be devastated. They're so happy that they hit the limit and then they're so sad that they got penalized for doing the right thing because they didn't get the free money that they thought they were entitled to.

Amy: If you are, like, gold star person and you're gonna max out your 401(k) before the end of the year, just reach out to your HR department and make sure that this is not going to impact you before you put, you know, a ton of money into that account and then walk away from that free money.

Steve: Absolutely. Fact or fiction, you can have too much money in a Roth IRA?

Amy: Well, hold on. I'm gonna say fiction on this, but with a caveat. You can put too much money into an IRA [crosstalk 00:31:27]...

Steve: You can over-contribute.

Amy: There are rules about how much you can put in on an annual basis, and so you can contribute too much, right? That's between you and the IRS. That's that issue. But as far as having too much money in a Roth account, absolutely not. I love Roth accounts. Huge fan. This is where you pay taxes now when that money goes into that account and you're essentially locking in your tax rate today. Now, it makes sense if you are in your early 20s, or we've been talking a lot lately too though, about the current tax code as it is now, sort of these marginal tax brackets sunsetting, right, the end of 2025, I think it is, 2025, 2026.

Steve: Yeah, 2026 is when they go away at this point.

Amy: Yeah, we're in lower tax brackets now than we were 10 years ago. And if those sunset, you're gonna go back to a higher tax bracket. So locking in today's tax rates right now actually make a lot of sense. So I'm a huge fan of Roth. And here's the deal, down the road, when you're in retirement and you need to buy a new car, you need to go on a vacation, whatever amount you need for that, that's the amount you take out. You don't have to take additional money out because you owe Uncle Sam at that point. You've already paid Uncle Sam.

Steve: Exactly, gross tax-free. That's one of the major components of wealth.

Amy: Love.

Steve: Absolutely.

Amy: Fact or fiction, here's this one, cash is king. And I might think more people would think this now than maybe in the past several years.

Steve: I mean, there's different ways to look at this one, because sure, if you can't afford to buy something, then you shouldn't be buying it. But if you have a credit card and you're using it appropriately...We've had entire segments on the benefits of using credit cards appropriately in a way that you never pay interest. There's added protection that you can get, there's points that you can get, there's added warranties that you can get. So if you're using a credit card versus cash to make a purchase, that's great as long as you're not gonna owe interest because you pay that credit card off.

Amy: I look at this one a little bit differently as cash is king rather than investing money, right? I'm going to keep it in cash, especially right now because I can actually earn not significant money, but 3%, 4%, 5% having that money parked in a high-yield savings account. That sounds like a great return in very little risk, and I understand that. But then your risk is going broke safely because inflation will in time eat up that money.

Steve: I like that we interpreted this question in two different ways.

Amy: It's like we're in two different languages here.

Steve: Well, yours is a resounding fiction.

Amy: Yes.

Steve: It is easy to answer that question because if you...

Amy: And yours is fact.

Steve: Yeah, if you're sitting in cash, then your money is guaranteed to slowly lose purchasing power. The only way to keep up with inflation over the long term is actually to invest. So cash is certainly not king. I would say fiction when we interpreted it as Amy's question. I like that that happened. Fact or fiction, there's no such thing as good debt?

Amy: I'm actually gonna say fact on this. Some people like to be more nuanced.

Steve: Sure.

Amy: And I think there are levels of, like, bad debt. Like, I would say bad debt is credit card debt. You never need it. There's no benefit of it. Some people might say that student loan debt isn't bad debt because you're getting an education out of it and studies show that likely that college education will afford you the opportunity to make more money over the course of your life. However, people go into too much debt for that. Other people say that a mortgage isn't necessarily bad debt, but I think ultimately, especially for those who are getting closer and closer to retirement, any kind of debt that you can get rid of is good. So any kind of debt is bad debt. That's how I look at it.

Coming up next, a warning about an easy way to throw money down the drain the next time you book that appointment. You're listening to "Simply Money" presented by Allworth Financial here on 55KR THE Talk Station. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. It's happened to all of us, you book an appointment with a doctor, you make a reservation, and then for whatever reason, like, you don't go or you show up really late, you're forced to not go. The problem with that is it's not just that you're not showing up, now you might be paying a price because you didn't show up.

Steve: Yeah, not just for doctor's offices, but now restaurants, hotels, salons, personal trainers, even more people, they're picking up on the opportunity to charge sometimes extravagant fees for you canceling appointments.

Amy: You mentioned it started with doctor's offices. And it was, like, you know, it's expensive. I can't even imagine what, you know, doctors, I mean, you know, make a pretty good hourly wage.

Steve: Yes, they do.

Amy: So if you're not showing up, right, that doesn't work out really well. And so it's kind of started there, but to your point, it's moved to a lot of other professions. More beauty professionals actually are charging cancellation fees, 16% on Square's payment platform last year, that was up from 5% in 2021. Kind of started during the pandemic and it's becoming more and more popular. I booked an appointment this week for over the weekend and it said, "If you cancel within 24 hours, you're on the hook for $50."

Steve: Okay.

Amy: So 50 bucks. It's like, "Wait, what? What if I get sick? What if something happens to one of my kids?" It does give me a little anxiety sometimes when I'm booking an appointment and I see that, I'm like, "I hope nothing comes up."

Steve: Yeah, that's frustrating because there are legitimate reasons why we may miss an appointment. This is something that took off in late 2020 when businesses were absolutely rocked by COVID shutdowns. There's technology that can streamline the payments and it's made it easier to track late arrivals and no-shows when you're a business owner. So a lot of these platforms, they're actually normalizing fees that these small businesses can actually turn the tables on those of us that need to miss an appointment. And when I say need, that is the frustrating part because if you have a family health emergency, then you're in a situation where you simply can't show up to that appointment and now you need to pay the entire fee for something that you didn't receive.

Amy: This is interesting, even barber shops, right? The number of barber shops that are now collecting payment information in advance since 2020, up 43%, and as a result they've seen 45% fewer cancellations. You've paid for the haircut, you're gonna show up. I see this one both ways. For the consumer, if something legitimate does come up, it's incredibly annoying to have to pay this fee. On the other hand, for small business owners who are trying to count on a certain income, you've booked an appointment, they expect you to be there. So just understand if you're booking these appointments, you could see this fee and you need to plan accordingly. Thanks for listening tonight. You've been listening to "Simply Money" presented by Allworth Financial here on 55KRC THE Talk Station.