Amy: Tonight, is the Fed finally finished hiking interest rates? Well, it sure sounds like it. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner along with Steve Sprovach.

Steve, it's almost like what used to be the headline was, "Are We Hiking or Not?" But it almost seems like now we're in a place where the real headline comes from what Fed Chair Powell says after that's announced, which talks about maybe what we can expect in the future. That is really, I think, what the markets respond to now.

Steve: Well, his prepared statement is just his lips are moving, but he didn't really say anything. That's not an accident, Amy.

Amy: Nope.

Steve: He's learned his lesson...

Amy: The hard way.

Steve: ...as those before him have learned that, wow, why is the market down 600 points? Oh, his lips are moving. Because if he's being honest about where the economy's at, it hadn't been good news. When he comes out and says we have to do this, we have to do that, and things are pretty serious, markets don't like that.

Really now, the bulk of the good information we're getting is when he answers questions. One thing I appreciate about Chairman Powell, he tends to be pretty transparent and pretty open and honest with his statements. I was watching him talk yesterday and I'm watching the market and I'm like, "Okay, the market's doing okay. The market's doing okay." All he really said, he kind of hinted strongly that the Federal Reserve may be done raising rates and markets like that.

Amy: Well, keep in mind, right, they've raised them 11 times just in a year and a half since March of 2022. So he's kind of been on center stage since then. Not that he hasn't always been important, obviously, it's always been an important role, but when you're doing something that affects so many Americans on a daily basis, right, you're going to get a lot of attention for that. And so, you know, it was like, are they going to hike again or not? And, of course, yesterday they did not. No surprises there. There was like a 99.999% chance they weren't going to hike yesterday.

But there are still some questions out there. Will they hike again this year? And I think the more he talked yesterday, Fed Chair Powell, the more we realize he may kind of feel like they've done enough, right? There's two kind of looming rate hikes out there that we haven't seen sort of the full lag time that you would expect for that to continue to tighten the economy, right? There's usually about a nine-month to a year after that happens where you can expect some tightening to continue. We haven't fully run the course. And I think his point is we may have done enough. The data, at least that's coming in, is starting to show that maybe we have. They also, though, Steve, have a little bit of a bump in the form of what's going on with some treasuries right now. Longer term bonds.

Steve: Yeah, he got a little help on this one. Yeah, the market, it's really interesting, and I don't want to go into the weeds too much in the bond market, but the U.S. government is borrowing record amounts of money right now because of the deficit. The national debt is the highest it's ever been. It's around $32 trillion. Well, how do you raise that money for your country to operate just like a bank does? A bank issues CDs. When you go to the bank and buy a CD, what you're actually doing is giving the bank money for them to use for whatever purpose, which is going to be lending it back out at higher interest rates. Well, that's what the government does with treasury bills, treasury bonds, and treasury notes. It's debt issued by the government.

And when you buy a treasury bond or a treasury bill, you're giving the government money so the government can operate. And when I say you, I'm talking about the biggest buyers like other countries buy our debt because, believe it or not, we are still the safest place to invest in. And we are the reserve currency. All the problems in this country still, we are the best out there. So yeah, we're issuing a ton of debt, and when you issue a ton of debt like that, well, buyers want a little bit higher interest.

And we have seen interest rates creep up in the open marketplace in the bond market from 4.5% to we actually hit 5% for the first time in about 50 years on the 10-year treasury debt. So, you know, when you hit 5%, keep in mind this debt was being issued at under 1% about two years ago. So that's good news for investors that are trying to earn interest on the money. Bad news for our country's finances because we are now paying 5% interest when we were paying 1% interest.

And I kind of blame a little bit of that on Janet Yellen because, just like you would want your 30-year mortgage at 2.5%, not at the current 7.5% or higher percent, Janet Yellen could have issued a lot more 20 and 30-year debt at 1%, whereas now they're being forced to pay 4%, 4.5%, 5%. So there's a lot going on there. But the bottom line is, as the marketplace interest rates are rising, the Fed's like, "Well, you know what, that's going to slow down the economy. We don't have to raise that one rate that we control. The market's doing it for us. So we can sit tight and see how this slows the economy down."

Amy: You're listening to "Simply Money" presented by Allworth Financial here on 55KRC. I'm Amy Wagner, along with Steve Sprovach as we talk about what Fed Chair Powell said yesterday, right? What it means for the future, what it could mean to you. No hikes and we don't expect maybe any hikes in the coming days, the coming months as we end out 2023.

You know, it's interesting, Steve, too, because when we came into 2023, there were a lot of people that thought, "Hey, maybe by mid-year this year, we might actually see rate cuts." Didn't happen. Won't happen this year. But now we're actually getting to a point where people who are voting members of the Federal Reserve, right, they're starting to talk about it and saying, "Hey, maybe next year, 2024, we will get to a point where we can loosen things a little bit. But we do expect that the economy is going to continue to tighten until we get to that point."

Steve: Yeah, I'm glad you brought that up because a lot of people are looking at their 401(k) statements and saying, "Okay, I see stocks were down a little bit last month or last quarter. But bonds look like they're down. Are bonds bad? Is that something I should get out of?" Keep in mind, bonds go up and down based on one big variable, and that's, what are interest rates doing since I bought my bonds? Okay? So if interest rates went up a ton, which they did in the past year and a half, you saw bonds drop in value. If and when interest rates come back down, you make that money back. You'll see your bonds go back up in value.

Well, the Fed, they control the interest rates. They're already telling us... When they published their dot plot last month, they already told us, "Yeah, we're going to be reducing interest rates sometime over the next 12 to 18 months." Our bet is probably mid-year next year we may start seeing some rate cuts in the market. Is kind of saying, "Yeah, most likely three rate cuts by the Federal Reserve in 2024." If you own bonds, that's good news, because once they start cutting rates, bonds should start going back up the ladder.

Amy: Okay, so that's what it means, rate for bond owners, bond investors. Let's talk about what it means for anyone who's been looking to buy a house, right, who's probably been sidelined during this time because, you know, interest rates, you almost have whiplash with how fast interest rates went up. You know, it went from, you know, 2%, you know, somewhere around there, south of 3%, certainly to, I just saw yesterday, 8%. And so maybe you've been...

Steve: Can you believe that?

Amy: It made me a little nauseous, right? I mean, no one likes to look at that. And I think a lot of people now are saying, "I'm going to stay put for a while." But if you're staying put wondering when you can move, well, you're looking very closely at when the Federal Reserve is sort of putting out there that they might start to cut rates because that's when things will start to loosen up for you as well.

Steve: Yeah, and there's a lesson to be learned out of this. And nothing lasts forever. I mean, 2.5% was not normal for 30-year mortgages. But then again, 8% is not normal for 30-year mortgages. So, you know, everything reverts to the mean at some point and, okay, you missed your chance to get a 2.5% mortgage. But even though the Federal Reserve doesn't directly impact interest rates on mortgages, I mean, they're not setting mortgage rates, but they're all interrelated. And if the Fed starts cutting rates mid-year next year, and we'll be talking to Michelle Sloan in a little bit, I think you'll see mortgage rates come down a little bit too. I don't think they'll get back down anywhere near 3%, but are they gonna stay as high as 8%? No.

And I just talked to a realtor right before we went on air. And she told me, when I asked her if it just shut down, she said actually, this current market is good for people that are trying to buy, especially first-time home buyers, because they're not seeing 20 and 30 offers in the first 48 hours of a listing. They're actually having time to look at houses and decide what's best. And how they finance it, well, they'll finance it however they can right now, but they can always refine if rates come back down.

Amy: So it's kind of removed the frenzy out of the market a little bit.

Steve: Yeah. Which isn't a bad thing.

Amy: Yeah, no, I agree. Also though, what does this mean to you if you have...? If you listen to us every day, you've been smart about this and you have an emergency fund running around, right? We talk about six to nine months of these critical expenses. You want this money. This is the cornerstone of a financial plan because if something goes wrong in your life, and it inevitably will, something's going to break down, the car, the HVAC unit, there's going to be a diagnosis that someone wasn't expecting, and if you don't have this emergency money, then whatever ends up happening usually is you go into debt, right? You take on bad decisions there.

So you have this emergency fund. Well, for years, we've had people coming to us saying, "Yeah, but where do I put it?" Because if you had it in a savings account, you were making 0.00001% on that money. Now there are options out there. And Steve, right before the show, I got online, there are some online savings accounts, some of them with no minimums that are north of 5% interest.

Steve: I know. And we're not talking risk, and not insured, and goes up and down, and I don't understand. We're talking money markets that they don't move. They have no risk. You know, money market accounts, fully liquid. You can move it into your checking account an hour after you put money in the money market if you want.

You know, we're finally getting decent rates, but I'm going to edit that a little bit, most of the time. There are some big banks in town. And this is a good German town where people pay attention to interest rates. And people are getting lazy. And there are a couple of big banks in town that are still paying under one-tenth of 1% interest on money markets.

And if you don't know what your interest rate is and you've got an emergency fund of $20,000, $30,000, maybe even 6 figures and you're not getting at least 2%, 2.5%, I think you might want to shop around a little bit or at least let your bank know you're shopping around and maybe they can come up with something better.

Because yesterday I sat down with a person who just sold their vacation home, put the money in their very large, very well-known bank here in Cincinnati, in the money market, because that's what we tell people, and she showed me her statement, 0.03% on six figures, 0.03%. And almost any other bank in town is going to give her at least 2%, 2.5%, maybe even 4%. And if you go with, like you said, some of the big brokerage firm money markets, maybe even over 5%.

Amy: Yeah, so now is the time to shop around, do your research if you haven't already. Here's the Allworth advice. Be strategic when you're deciding what to do with your cash, right? Lots of takeaways from what the Federal Reserve has been doing lately.

Coming up next, we just found out the amount of money that you can contribute to your retirement accounts in 2024. Here's a hint for you. You can stock away more.

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 Sprovach. If you can't catch our show every night, you don't have to miss the thing we talk about. We've got a daily podcast for you. It's called "Simply Money." Just search for it on the iHeart app or wherever you turn to to get your podcast.

Coming up at 6:43, we've got one of the biggest misconceptions that you might have on the road to retirement. Speaking of retirement, one of the main vehicles that all of us use, right, to save for retirement is now our 401(k) and often IRAs as well. We just are getting the numbers out of how much you can save for all of those supersavers out there that max it out every year.

Steve: Yeah. And, you know, it's one of those things that most of these contribution limits, Amy. They're adjusted for inflation as they should be. And we've had some pretty high inflation, so you're able to put more money away. So right about when I was starting to memorize how much you can put away, we're getting into 2024 and the numbers have changed. So that's my problem, not anybody else's.

But now the good news is if you're trying to max out, if you're a late starter or a late investment bloomer and you want to start putting more money away in 2024, you're going to be able to do that. 401(k)s that were limited to $22,500 of your own money, now it's $23,000. That's more than a 2% increase over 2023. So, you know, if you want to increase what you're putting away in your 401(k), talk to HR, talk to payroll, they can figure out how to max it. But the answer is, it's going to be quite a bit more.

And IRAs are up also. IRAs are up. The limit this year in '23 was $6,500. That bumps to $7,000. And if you're over age 50, yep, you still get to put an extra $1,000 catch-up. So instead of being limited to $7,500, if you're over 50, it'll be $8,000 in 2024. By the way, there's also a catch-up for the 401(k) limit. Yeah, that's going to be pretty nice also, an extra $7,500 if you're over age 50.

Amy: You know, they announce these new thresholds every year. This is kind of right in line with what I would have expected, don't you think? It usually takes up about 500 bucks on every level. Another thing to keep in mind, though, we talk about Roth options, right? And that's where you pay taxes now. You lock in today's tax rate, and then whenever you need to access that money in retirement, you pull that money out tax-free as opposed to kind of a tax-deferred traditional 401(k).

Well, the thing about Roth IRAs is when you get to a certain income threshold, you can no longer put money into a Roth IRA, right? And so they are also increasing that amount. If you're an individual filer and you made between $146,000 and $161,000, right, that might limit your Roth IRA contributions for married couples. You can make up to $240,000 now and still put money into a Roth. So that's, you know, crapped up quite a bit over the last several years. A great option.

Steve: It has, especially for single individuals that might get a nice year-end bonus. Yeah, you go to your accountant in April and they say, "Oh, you put money in a Roth. You aren't eligible." Oh, my goodness. They can be fixed. Okay. It's not a big deal, but you have to be aware just because it's a Roth doesn't mean you're allowed to put money in. If you're lucky enough to make some serious dollars, check with an accountant, check with a tax advisor before you make that contribution.

Amy: The things that we are still waiting for from the IRS, the adjustments for tax brackets for next year, standard deduction amounts, right? Hold your breath. We will get back to you on those.

Steve: Just get around to it.

Amy: We'll get back to you on that one as soon as the IRS gets back to us on that one. One thing that you do not have to wait around for is making some money on cash. I was talking about this earlier in the show, but Steve, this is the time where if you have your money sitting in a savings account somewhere and it's making 0.001% or whatever it has been for years, you need to shop around now because there are options. This is kind of one of the best benefits of rising interest rates, you know, and for the longest time. Well, when the Federal Reserve started to raise interest rates, we kept saying eventually these banks will start to raise the interest that you're making in your accounts. It took a while to get there, but we're there.

Steve: And if you've got an emergency fund with $50,000, $60,000, $80,000, maybe even north of $100,000 in it and you look at your month-end statement and you see $5, I guess interest rates are pretty slow to move up, no, talk to your bank because you should be getting a lot more than that. And some banks are holding back and seemingly don't care if they lose you.

It's not unusual to see less than 1% on a money market at a bank, but they're not all like that. You can go to other banks that have the same insurance, the same FDIC limits, and they're paying 2.5%, 3% on the exact same type of investment. It's called a money market fund, and you can move it into checking from the money market anytime you want. It just pays better interest. And some banks pay a lot more than others.

I'll tell you the other thing that you wanna take a hard look at is brokerage money markets. And there are some big mutual fund companies that pay even higher, Amy. I'm seeing north of 5% with zero risk. Now, they don't have the same insurance, so you wanna just see if you're comfortable with that. But if you're looking to keep a decent amount of cash on hand that you need to be fully liquid, 5% is not out of the question.

Amy: Yeah, just keep in mind, right, there's a slight difference if that money is in a brokerage account. It's not insured the same way when we had some banks failing earlier that year. That was a huge thing. If you've got up to $250,000 in an account with the bank and something happens, that bank goes under, you're fully insured. You're going to get that money back. So it works a little bit differently. But, you know, I will say that's obviously not the norm that these banks or major brokerage firms would be going under, but something to keep in mind here.

But yeah, I think finally, as an investor, you have...it used to be TINA. We used to talk about TINA. There's no alternative. The only place to put your money is the stock market. Now you've got options.

Steve: Yeah, you do. And, you know, investors have seen the volatility in the stock market, volatility in the bond market. So, you know, okay, well, I can get 4% or 5% with no risk. You know, I might pull some money out and sit on the sidelines for a while. Guess what? We're at almost record amounts in money market funds for investors. We're at $5.6 trillion. That's close to as high as it's ever been in money markets. Asset managers, on average, have about a fifth of their money on the sidelines. Believe it or not, yeah, that's a sign of the volatility and the frustration in stocks and bonds, Amy. It's also one of the most bullish signs out there because that money has to go back to work at some point. Money managers are not going to keep that money sitting in the money market forever. And when it goes back into the stock market, supply and demand, guess what goes up? It's a nice sign.

Amy: Here's the Allworth advice. If your long-term portfolio has too much cash in it, you could lose out on thousands and thousands of dollars over time, right? So just make sure money is where it needs to be and to be working as hard for you as it possibly can.

Coming up next, we've got an update on the local housing market. Are there some cracks? Finally emerging. 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 Sprovach.

We were just talking earlier in the show about the fact that the Federal Reserve met this week, big announcement, no hiking of interest rates. In fact, maybe they're starting to telegraph that sometime in the next year or so we might actually see rates being cut. Joining us tonight as a real estate expert, Michelle Sloan. Michelle, is that music to your ears? Maybe music to buyers' ears?

Michelle: Absolutely. Because the biggest thing is a lot of buyers are buying all of the headlines and they're a little bit scared. Or maybe they can't afford the home that they want, so they are waiting for those interest rates to go down. Mortgage interest rates right now have hit the 8% mark, which is another kind of watermark that we have not seen. It's actually the highest point, the highest mortgage rate we've seen in 23 years. Isn't that crazy?

Amy: Yeah, it is.

Michelle: So you can see why some people will be scared because for the last 20 years, their rates have been lower than that. So people have expectations.

Amy: Much lower.

Michelle: Absolutely. Just two years ago, it was 3%. So imagine 8% and imagine you just can't buy as much house as you used to be able to even just a couple of years ago.

Steve: Well, but 2.5% for 30-year mortgages, that wasn't normal. I can't believe 8% is normal, yet my first house, and this was I'm thinking 1985, was 11% because we went through almost exactly back then what we're going through right now, the Federal Reserve increasing interest rates because of high inflation. They come back down.

Michelle: Thank you.

Steve: Yeah. Are you expecting a significant drop over the next 6 to 12 months, or do you have any guess the rates will be?

Michelle: Here's the thing, I don't know that it will be significant, but 8%, we might get to 8.5%, and we're actually seeing a little bit of 8.5% right now as well. So a little history for you, 30-year mortgage rate in the United States averaged 7.74% from 1971 until 2023. So really, we are right there in that average, but you're right. So the last few years have been really low, 3% and 4%, kind of crazy, but the highest rate ever recorded, 18.63% in 1981.

Amy: Good perspective.

Steve: Okay, '81.

Michelle: Yeah. So those are great statistics that we can look at and realize it's fine. We're going to be fine. People are kind of actually getting used to it, which is something that I love because we've had some challenges over the last few months of buyers just kind of retreating and trying to figure out what's going to happen, trying to understand how much their money can...how far your money could go. And yeah, if the cycle will continue, people will still buy homes. And if you can afford it now is actually a great time because there are opportunities for you that there isn't for some buyers.

Amy: Are there opportunities? Because every month we have you on the show and the crazy thing has been there's just no inventory in Cincinnati, right? So is it starting to kind of ease up a little bit where, hey, if maybe you are able to and willing to pay that 8% upfront, you know, you can always refinance? Are there properties out there that you can buy?

Michelle: There are. And surprisingly, I went out just this week and I showed one buyer seven properties in one day. I haven't done that. I haven't been able to do that for years since the pandemic. Usually, we're doing one and gun and one and run, but I was able to show this client, in a specific price range, seven properties in the Cincinnati area. That was really exciting to me, and actually kind of it was a little nostalgic because that was the way it was 5, 6, 10 years ago. We were able to show multiple properties. So there are opportunities out there. Is it a grand amount? No. But at the same time, if you're not in, you're not looking, you're never going to find what you're looking for. Go ahead.

Steve: So my question is, all right, if your budget is whatever, 1,500 bucks a month for a mortgage, at 3%, that bought a house at a lot more higher price than an 8% mortgage will buy you. So are you expecting home prices to drop because of higher interest rates?

Michelle: We are definitely seeing a bit of a leveling off and just a slight downtick, but for the most part in the Cincinnati market, we haven't seen a whole lot of change. It's not going up as rapidly as it was last year and the last couple of years, which is actually really, really good. And if we stay constant and even, I think that's a win. I really, really do.

And sellers have to also be realistic in the fact that they may not be able to list their home the same as their neighbor did a year or a year and a half ago. It may have to be slightly lower, a few thousand dollars, and again, it may take a little bit longer also to sell because there aren't as many buyers out there looking. That's why I say buyers get your butts out there and keep looking.

Amy: Well, you know, Michelle, it has been a heck of a time for first-time home buyers, right, because they're usually in that lower price range. One of the things I found really interesting that you've said is it's kind of across every price point. There just wasn't much inventory out there, even if you get up to, you know, $0.5 million homes and $1 million homes. What about now? I mean, if there was an opportunity in one sort of price point, where would you say that is?

Michelle: I believe the opportunities are still in a little bit of a higher price point. I do think anything below $200,000 in the Cincinnati market is going to get snapped up really quickly. It's interesting too that my sister, quick story, my sister called me and said that her son, my nephew, called and said, "I can't believe, mom, I'm never going to be able to afford a house because I need to make more money. I need to get a second job, and I can't find anything for less than $200,000." And my sister who hasn't purchased a home for a really long time, she said, "Oh, that's silly. You can get something for $100,000 or $125,000." And I said, "Call my nephew and tell him he's right. You're wrong."

Amy: This is your wake-up call sister.

Michelle: It is. You know, life has changed and it's changed dramatically over the last 10 years. So if you haven't bought or sold in the last 10 years, you really do need that wake-up call. You need to listen to the experienced agent who is going to help you through the process and have you realize where we are because it has changed a lot.

Steve: One of the things that I just... I'm so happy I'm not in this position, first-time home buyers. I mean, when I was just starting out and my wife and I were looking at our first home, it was bad enough, because you're broke and maybe you just got married or just started a family or whatever the case happens to be, and money is an issue. You need a mortgage. You can't pay cash. And in this market, it was so crazy that you're up against all these cash buyers that are making offers with almost no contingencies in the first day of a listing. I would hope that this slowdown is helping first-time home buyers. Are you seeing that?

Michelle: Well, no, I think there's always going to be a challenge for first-time home buyers over the course of the next few years. I don't see that that's going to change a whole lot. The one thing that I would encourage, my best advice for first-time home buyers, figure out what your credit score is and make it better. Find out ways to make it better. Save as much as you can for a down payment. The more you have in a down payment, the better your overall payment is going to be. If you can do 20% down... You can certainly buy a home with a lot less, you can buy a home with 3% down, but then you're going to have additional money being taken out for private mortgage insurance. So your best bet is to save, save, save, and then understand your debt-to-income ratio.

If this is all, like, foreign to you, if you're a first-time home buyer, you know someone who's a first-time home buyer, they should talk to an agent. They should talk to a lender. They should ask the questions, how much do I need? How much do I need to save? What should my credit score be? How do I find my credit score? These are kind of basics that we don't talk about enough as far as I'm concerned. I don't think we learn this. I don't think first-time home buyers even have no knowledge on what to do and how to get started.

Amy: Great advice as always from Michelle. So, Michelle, I'm marking this down on my calendar. The first time we've talked to you in a long time that you said there is some opportunity out there for buyers. If you've been on the sidelines, maybe it's time to jump in.

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 Sprovach. If you've got a financial issue you can't figure out, maybe you and your spouse just aren't on the same page. There's a red button you can click on while you're listening to the show. It's right there on the iHeart app. Record your question. It's coming straight to us. We'd love to help you figure it out or maybe weigh in on that situation.

And straight ahead, we're looking at the tax breaks that you can get just by fixing up your home. All right, so there's a lot of things I think, Steve, when people start thinking about retirement. They come in and start talking to us and we're like, "That's not exactly right," right? There's a lot of misconceptions out there that people have, and one of them is what the retirement age is going to be for them. And one of the, I think, also big things is that they have control over when they're going to retire. Sometimes you do, often you don't.

Steve: I love the Woody Allen quote. Woody Allen said, "Hey, if you want to make God laugh, just tell Him about your plans." There are so many people that when you sit down and you say, "Okay, what's your preferred retirement age?" "Oh, yeah, yeah, I'm going to go until 67," or, "I'm going to go till 70," whatever the case is. I hope they don't say, "Well, the way it looks, I might have to work forever." That's not a good one.

But the average desired retirement age is about 66. That's when people want to hang it up. It's close enough to full retirement age for Social Security that, okay, I'll go that far, but I don't want to go to 70. But unfortunately, the reality is the average actual retirement age is more like 62, which tells me, okay, maybe the majority of people aren't exactly having their dreams the way that they had hoped on how long they're going to work. They were snatched away from them.

Amy: Well, yeah, there's a retirement confidence survey that said almost half of retirees said they left the workforce earlier than they had planned on, right? So maybe you go in, you work with a financial planner, they say, "Okay, what's your goal? When do you want to retire?" "Oh, 66." "Okay, great. Here's the problem."

There are four different kinds of sick that a lot of people can come up against, right? One of them is that you get sick, right? You had no idea. You didn't see the diagnosis coming, but suddenly you can't make it in every morning anymore. It's exhausting. You're not feeling well. You've got doctor's appointments, treatment, whatever it is, it's not working for you. Also, someone you love gets sick, right, and you have to leave your job in order to become a caregiver for them. That happens pretty often too.

But there's other kinds of sick as well. And one of them is your boss gets sick of you. You've got no control over that, right? Your boss says you're done. There's a severance package, whatever that looks like. And you could get sick of that job. You may love it right now, and next Monday morning, you may walk into a brand new boss, brand new situation, right? You've got no control over it. And all of a sudden that job that you love for decades or years, you can't stand going in and you need some flexibility then about when you can walk away.

Steve: Yeah, you want some stress in your life. Most people have not sat down with a financial planner, you know, in their 50s and really mapped out this sort of thing. So, you know, if you're like most people and haven't done that, you're chugging along doing fine. Okay, there's cycles in businesses, and sometimes there's a downturn. And there's nothing like hearing from your boss or a company announcement, "Yeah, we're going to be laying off 10% of the workforce. And you may be part of a class that's going to be impacted. It's voluntary. And if we don't get a certain amount of people to sign up, it may become involuntary." That goes on all the time, unfortunately. And I've dealt with people that, you know, "Hey, I don't want to take this, but I sure don't want to give up this package, because they may cut my job if I don't take it." That's between a rock and a hard place. And it happens all the time.

So I think the answer is, it's always going to be do the work, get your financial plan drawn up so you know what it looks like if you retire at 67, 66, 65, 64. And if a retirement offer comes down the pike and you already know that you can afford to retire at your current age, there's no stress. I mean, you already know it works. So, you know, this is where being ahead of the curve, just doing the work ahead of time can make a huge difference.

Amy: I'll tell you who makes me nervous. The kind of people who come in and say, "I'm going to work until I'm 70," or, "I'm never ever going to retire. I love my job. So I don't need to tuck money away in a 401(k) because I'm just going to work forever, okay?" Well, 1/3 of workers say they expect to retire at 70 or later, 6% of retirees actually pull that off, right? And so there's just a huge discrepancy there.

So that's why I say, "Hey, if you plan for 62, which is the current age, and then you can work longer, great." It's gravy on the boat. It's, you know, icing on the top of the cake. It's all the things that make your life far less stressful. And yeah, the longer you can work, the better it is. You're not pulling out of savings, right? Even if you're working part-time and you can not pull off of savings every year that goes by, you're better off. In some cases you're going to have healthcare benefits, health insurance benefits for longer. All of those things can make a ton of sense, but I think the key here is you have to know you may not be able to control that retirement age.

Steve: Yeah. And I'm living proof. I mean, I wasn't expecting to have a triple bypass at 61. You know, I figured I'm in big physical condition. Well, no, I was far from it. I just didn't know it. But, you know, having something like that happen to you makes you reevaluate what are your long-term work plans. And, you know, it certainly plays into my retirement decision. So, yeah, get your plan done. Know where you stand.

Amy: Here's the Allworth advice. If you work longer because you can and you want to, well, the financial benefits are great, but don't bank on that happening. Save now.

Coming up next, it's a win-win, fixing up your home and saving money and taxes at the same time. 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 Sprovach.

Okay, so for those of you who are completely scared off by 8% interest rates and you're saying, "I am not moving anytime soon," you may be looking not only at staying put but doing some upgrades around your house. Well, it's good to know that some of those things you might be able to do you might also get a tax break on.

Steve: Yeah, and some of these tax breaks are tax credits. And, well, yeah, I've got some deductions. No, no, no, no. Tax deductions, yeah, they help. Tax credits are awesome. A tax credit is if you've got a credit of $1,000 and you owe Uncle Sam $1,000, you don't owe them that money anymore if you've got a $1,000 tax credit. It comes right off of what you owe.

And there are some things you can do around the house that will give you tax credits. I think the biggest one out there is still solar panels. I mean, these things are not cheap to put up. I mean, they're definitely not cheap but, you know, for a whole house, they can save you as much as 1,500 bucks a year on electricity. But over and above that, you can get some significant tax credits out of it depending on how much and how expensive the panels are.

Amy: Yeah, so they're saying, at least according to "Forbes," you can save up to about $1,500 a year, right, by using solar panels, but not only that, the government, in most cases, will give you a 30% tax credit to cover the cost of that installation. It's funny, years ago, I remember seeing solar panels in a house for the first time and being like, "What is that?" You know, it looks different. Obviously, you see them on the roof. And all of a sudden now, I see them all the time.

Steve: I got the best kind. I got the kind somebody else paid for and I bought their house.

Amy: Oh, brilliant, right? That's fantastic. And the President just announced this last year the Inflation Reduction Act, and it does have some nice tax breaks for specific renovations that make your house more energy efficient. One of the things that you can do really easy is just getting your home audited, right? Energy audits. You get a $150 tax credit just for doing that. Doesn't take a lot of time. What it can do, though, is open your eyes to, oh, we're losing a lot of energy and a lot of heat in here through doors or windows or insulation. And so some of those things, you can replace and then save a lot more money on.

Steve: Yeah, if you get an energy audit done, probably it might be a little more than 150 bucks, but that person doing the audit probably knows what the deals are. So if you replace windows, he might be able to point you towards, yeah, this is eligible for tax credit, or that's eligible for tax credit. It can help.

Amy: Yeah, and if you're looking at your kitchen, right, as far as updates, look at energy-efficient appliances. There's a lot of them out there. We got some new ones recently. You might actually get new appliances, qualify for new appliances if you meet certain criteria there. So lots of options.

Thanks for listening tonight. We hope you're going to tune in tomorrow. We're talking about ways to help your aging parents manage their money. You've been listening to "Simply Money" presented by Allworth Financial here on 55KRC, THE Talk Station.