Amy: Tonight, you may have seen these headlines. We saw them. We didn't like 'em. Tonight we are sounding off. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. We talk a lot about the fact that to really understand markets, you've gotta look back at history, and we're big proponents, right?

Steve: Sure.

Amy: There's sometimes when you can feel, oh, freaked out. What's gonna happen now? What's gonna happen with this presidential election? And we can look back and say, okay, this is why you need to remain calm. But sometimes, we can look back and freak ourselves out, as is what is happening right now, over the past few weeks, I guess there's just been no financial news going on. And so, someone sat in a meeting somewhere and said, "Oh, it is the 36th anniversary of a major market collapse. Let's talk about that. Not only let's talk about what happened then, let's freak people out that the fact that it could happen again today." And that's where we are.

Steve: Why does October have such a bad rap?

Amy: It does.

Steve: You know, the bad stuff in the stock market always seems to happen in October. Now, I lived through October of 1987. You were in, like, grade school or something, I think. Yeah.

Amy: I was, yes. Maybe fifth grade.

Steve: Scares me. But no, in 1987, we saw a monster market crash. Actually, I think it was the original flash crash. I mean, we've talked about these flash crashes since, but, you know, you go back to 1987, we started hearing a phrase that we had never heard previous, called "computer program trading." It was in its infancy. And I'll tell you what, we saw a meltdown in 1987. It was almost exactly, you know, an anniversary. It was a couple days ago, 37 or whatever years ago, 36 years. But the bottom line is it was a brutal day, where we saw the Dow Jones Industrial average lose 22% in one day. One day. I remember, I'm there at the office, and my wife, and this is pre-cell phones, my wife calls me up and says, "Steve, they're interrupting the news. Are you okay? What's going on?" And I'm like, "I can't talk. I'm sorry. I can't talk to you right now."

Amy: Right. Yes. Not okay. Definitely not okay.

Steve: But the market, 22%. Just imagine 22% in one day. I mean, that's a massive... That's like 6,000 points, you know, in one day, in today's market.

Amy: Yes. Well, and it's black Monday, right?

Steve: Yeah.

Amy: Referred to as "Black Monday." And we do look back on it and say, "Okay, what went wrong there? You know, what can we prevent?" And I think there's a number of systems and procedures that have changed since then to put something like that, you know, to make it not as likely. But I do think that someone must have been sitting around in the last couple of weeks saying, drumming their fingers, saying, "Well, we've got nothing to cover. Oh, 36 years." And then here's the headline. And this is really what's concerning to me. "How likely is a 1987-style stock market crash today?" The answer, they have this in the headline, "Likelier than you'd think."

Steve: Where do they get these numbers from? I mean, the bad news is the odds aren't zero, zero chance of having this happen again. You can never say it'll never happen again about anything, you know, but, you know, is a meteor gonna fall on my noggin this afternoon? Well, it's not zero, but it ain't likely, you know.

Amy: Right. Not likely at all.

Steve: I don't think so. Is it? Maybe I should stay indoors.

Amy: Well, I'm sitting really close to you right now, so I'm hoping it's not gonna happen right now. Here's, though, the research that went into this, and here's what they came up with, right? They're saying it's likely that it could happen again. They're saying there's a one in five chance, so 20% chance, that, not this year, not next year, over the next 30 years...

Steve: Yeah. That's pretty worthless, isn't it?

Amy: ...the U.S. market is going to suffer a 20%-plus single-day plunge. So, this entire headline that you're reading about, gosh, you know, if you didn't live through this, you've heard about it. It was a terrible day for the stock market, scared investors to death. And here's a headline saying, listen, we've done some research and we're telling you this could happen again. And if you don't read several paragraphs down, you learn, okay, there's a 20% chance this could happen again in the next 30 years.

Steve: And tell me that that serves any useful purpose...

Amy: No, it doesn't.

Steve: ...having a stat like that, I mean...

Amy: Freaking people out.

Steve: It is. And I think, first, we need to just say, "Hey, just forget about that, okay? This isn't 1987." I won't say it can never happen again. I won't say that about anything. But realistically, is it something you should worry about? No. No. I mean, when you say things are different today, and that's very unlikely to happen, yeah, there were no circuit breakers back then. Computer trading was in its infancy. And what we learned after October of 1987 was that, you know what, when selling starts to hit the market, it starts to cascade with certain circumstances.

I'll give you an example. If you wanna borrow money to buy stock, you have to put down collateral. Okay? Well, when that stock that you're using as collateral drops in value, you don't have enough collateral, and you have to sell some of your stock to have, you know, whatever the margin requirement is, 50% as an example. So, in other words, it forces you to sell when you don't wanna sell, when things are going down, and that brings the market down, which may force somebody else to sell, and so on, and so on, and so on. So, you know, we have a different situation today. We have circuit breakers, where the market just is halted, and everybody kind of gathers themselves together...

Amy: Yes. And it's almost like, because I think when...people have this natural tendency, if everyone else is selling, what am I missing? I should be selling too. So, you don't only have these huge computer trading programs, but you also have just individual investors that are saying, "Something bad..."

Steve: They get scared. Yeah.

Amy: Right. But if you were to hit a stop, which is what happens with these circuit breakers, it's like, everyone, let's take a collective deep breath here for an hour or two, then we'll reopen the markets. And often, I've seen this happen, things tend to stabilize.

Steve: Here's what people forget about October of 1987. The stock market actually finished up that year. If you look from January 2nd, the first day of trading, through December 31st, the stock market made 2%. Yeah, it dropped 22% in one day, but it recovered. And at the end of the year, if you didn't panic, and there's a lesson to be learned out of this, you actually came out just fine and made a few bucks.

Amy: You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach, as we talk about some headlines that have really just made us angry recently, because they were put out there to freak investors out and to freak you out for no reason.

Steve: And get you to read their articles and look at their advertisers.

Amy: Yes, exactly. Yeah. So, they're going back to, you know, 36 years ago, and talking about what happened, and could it happen again today? And also, in the same article, someone's making a recommendation about how you should invest, based on the fact that there could be a day like this, where you lose 20%-plus, and it's so terrible, the advice that they're giving, that I'm thinking, who is reading this stuff? But if there was someone who read it, and took that advice about, literally they were talking about options trading. You should have 90% of everything in really low-risk stuff, and then 10% should be leveraged, and... Things that we would never, ever say.

Steve: What can go wrong?

Amy: Yes, exactly. The opposite of what Warren Buffett or any smart long-term investor would tell you to do with your money. And that's what they're saying, "Listen, we're predicting this could happen again." And as a result of that, we're also giving you terrible advice about what to do with your investments.

Steve: Yeah. Rule of thumb, if you're looking for a better return than you can get with a guarantee at a local bank, you're gonna have a period where your money loses something for a period of time. Okay? So, I mean, that's just part of the game. Acknowledge that, oh no, it doesn't go up in a straight line. It never has, never will. But if you're gonna invest in the stock market, which is really about the only way to stay ahead of inflation, you're gonna ride through some volatility. Here's 42 years of experience, Amy. I'm gonna sum it up in Sprovach's two rules, okay? Rule number one, when markets get volatile and start to nosedive, don't panic. Sit tight and let the market recover. Rule number two, there's gonna be a period of time where you say, "This is different. There's some weird stuff going on." I'm hearing this a lot right now, Amy.

Amy: Sure.

Steve: "There's some weird stuff going on. This time it's different." When you start hearing that, and saying that to yourself, go back to rule number one.

Amy: Yes.

Steve: Don't panic. It recovers every time. Not as fast as you want it to, but it does.

Amy: Well, I wanna throw out a couple of examples, right? Because there really wasn't anything, if you look back to that day in 1987, there wasn't anything major in the headlines...

Steve: There wasn't, no.

Amy: ...that would've induced panic from people. But let's face it, since then, we've had a number of things. September 11th, right? "This time is different?" That day, we all woke up and it was different, right? I mean, terrorist attacks, planes flying into buildings. They actually ended up shutting the stock market down for several days. But on that particular day, it did actually go down, S&P 500, about 11%. Dow, about 7%. Not this free fall of 20%, right? And then you go back to the pandemic. We were shutting down the entire U.S. economy. That had not happened. And I remember walking through the halls of Allworth that day and thinking, "This feels different." Every single advisor, everyone had headphones on. You were going from one client to another client to another investor.

Steve: It was scary. Yeah.

Amy: It was scary. Yet, didn't go down 20%. It did go down 30% over the course of several weeks, and then it popped right back up. So, I think, to your point, you can look at any individual day or set of circumstances, and we've been through a lot of them in the U.S. since 1987, that were incredibly different from the day before, yet, every time, stock market recovers.

Steve: You know, the average person gets worked up and upset over, oh, boy, I'm reading things that, we could have another 1987, we could have another 2008. Yeah, markets have come down a bit in the last month or two. It happens. Again, they don't go up in a straight line. I think that the S&P was up 18% up until about two months ago, and then pulled back 6%. Okay, that's a big swing, 18%. It never goes up 18% and then up to 30% and then up to 50%, and then... No. It has a pullback. You look at any chart, that's what happened. But I have a different experience over four decades, and that's, I almost get happy when times are bad like this. It's really weird.

But because of what history tells us about what happens after a big drop in the market, I'm like, "Ooh, this is gonna be nice." I mean, we're talking about 1987. Yeah, the market dropped 34% over about three months, but guess what? It went up right after that, over 580%, over fivefold, over the next 11 years. Eleven years. You made a ton of money. So, it's like, thank you very much for that drop. Now I can put money in, have it work for me, and we can do well. Oh, 2008? Yeah, that was pretty brutal. We saw a drop of 57%. All right, well, how about a 400% increase over the next 10 years? Okay? I mean, it's the way the market works. When you have a downturn, you have a much longer recovery, and that's where you make your money, if you didn't panic.

Amy: And that's the thing. And I mean, how many times have you talked to someone through the years and it's because of the pandemic, it's because of 2008, it's because...

Steve: "This one is different, though."

Amy: Yes. It's because of whoever is being voted into office at the time, or who might be voted into office. There's always a reason, I think, that a lot of investors come up with, of, "I'm gonna pull my money out." And you just provided great examples of the fact that that's the exact wrong thing to do, because if you're gonna pull the money out on those days that go bad, right, and you're probably not gonna pull it out that day. It's gonna be the day or a few days after you get spooked.

Steve: When you've had enough. Yeah.

Amy: When are you going to put it back in? And nobody gets that timing correct. And most of the time, you're paralyzed by, well, maybe today, maybe not today. I'm gonna wait another week. I'm gonna wait another month. All of a sudden, couple of years have gone by. Meanwhile, the market is rebounding to new highs, and you're missing out on all of that growth.

Steve: Exactly. Well, just do what Will Rogers said. I'm going back a little bit, but Will Rogers said, "Just buy stocks that go up. If they don't go up, don't buy 'em." It's that simple.

Amy: Only it were that easy. Here's the Allworth advice. Scary stuff? It is going to happen, but your investments will grow over the long term, so ignore these, what I would say are terrible, scary headlines for no reason. Coming up next, the major mistake that one in four couples are making right now, and it can be fixed in just minutes. 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 a thing. We've got a daily podcast. Just search "Simply Money" right there on the iHeart app, or wherever you get your podcasts. Coming up at 6:43, you may be feeling a little negative about retirement. Halloween's coming up. Maybe you're outright scared of it. We'll talk you off of that ledge.

A few months ago, we were talking about GE, right? I mean, for the past several years, when GE would have these earnings calls, it would be like, "Oh, a little bit bleak." And then they came out with this announcement that GE Aerospace was gonna spin off from the mothership. It was gonna be its own standalone public company, and it was gonna be located right here in Cincinnati. Now we've got more details about that.

Steve: We do. And the Cincinnati Business Courier broke the story earlier today. Looks like GE is gonna spin off GE Aerospace and GE Vernova, which is their renewable energy subsidiary, or soon-to-be subsidiary, in March of 2024. They already spun off GE Healthcare earlier this year, in 2023. But okay, we've got dates on this, and the markets are loving this. I mean, we've seen a really good recent runup in GE stock prices. And I'll tell you what, on the earnings call, they just came out with year-to-date revenues of $23 billion and year-to-date profits through the first, I think it's three quarters, of about $4.5 billion. I mean, these are spectacular numbers. GE Aerospace is going to be Cincinnati's third-largest public company once this spinoff occurs, again, in March of 2024. Great news.

Amy: Well, and I think you make a great point, right? Everything is positive. All positive news coming out of GE right now. And I just wanna remind you, we have a sort of "Simply Money" way of living around here. There's no more than 10% of your entire portfolio, all of your investments in individual stocks. And I really wanna point this out right now, because we've had a longstanding relationship with General Electric. And I have spoken to groups of current employees and retirees many, many times, who very, you know, have such loyalty to that company, felt so strongly about it, lost out on a lot, because they didn't sell the stock when they should have.

Steve: Oh, that stock got crushed for a while. Yeah.

Amy: Yes. I mean, just absolutely crushed. And so, as you think about the fact that, oh, this company's coming here, we believe in them, and they've got a great plan, the future looks incredibly bright, I would still say, if you are buying individual stocks, no more than 10% in GE pro... In all...

Steve: Any individual stock.

Amy: Yes. All together, no more than 10%.

Steve: Exactly.

Amy: Just please, great rule to live by. Here's something to think about. One in four married couples is doing something with your money, and it needs to be fixed right now. The good news is you can actually make this fix in a mere minutes.

Steve: Yeah. It's interesting that we're looking at a pretty serious study that was done by the National Bureau of Economic Research. I'm not gonna bore you with the title of it, but it's one of those hardcore research studies that's been done, where they came up with a stat that one in four married couples don't take advantage of their employer's match fully. And I kind of get this. I mean, most people, every company has a... Well, I shouldn't say every company. A lot of companies have a match. It's free money. It's one of the few things that we see out there that, no, there's not a catch. Put your money in the plan. Take the free money.

But you know what? Their matches differ. You might be getting 100% match on your first 3%, and your spouse might be getting 50% match on the first 6%. You're still getting a 3% match, but in one plan, you gotta put more money away than the other. Well, what if you both say, "You know what, things are a little bit tight. Let's just put 5% in each. You put 5% in yours, 5% in mine." Well, if you're the one that gets a match on the first 6%, you're not getting all the free money. That's the bottom line. And how many couples talk about their 401(k)s together? Almost none.

Amy: And this research shows that on average, these couples are losing close to $700 a year. Right, you think about the fact that over the course of, you know, several decades of working, if you're losing out on that money, that money's not growing and compounding the way it could be if it's invested, this is a huge chunk of change that you could be walking away from. I think there's two components to this, Steve. I agree, part of it is communication. Also part of it is education. Knowing, right? Looking at both of your plans together. Does one of us have a better company match than the other? If we can only put X dollars into a 401(k) this year, if your plan's better than mine, maybe 100% of that goes into your plan. There's not a company match on my side, maybe we don't put the money into that. But you have to be looking at, you have to educate yourself about what your options are, to make sure that you're not leaving any of this free money on the table.

Steve: Amy, when somebody comes in to sit down with me and says, you know, generally it's, "Hey, I wanna retire at a certain age, and I don't wanna run outta money while I'm alive." Okay. Let's put together a financial plan. The two shortfalls, almost to every, almost 100% of the people that come in, they don't know what they spend. They have no budget. Some rare exceptions, but I would say 99% don't know what their monthly spending is. And number two, they have no clue what their company match is, or how their 401(k) is invested. And these are people that have consciously taken the time, and potentially spending some money, to sit down with a professional to go through their stuff. They've gone through a lot of this effort, and they don't know what their match is. And I think that's step one. If you're not sure what your match is, just call up the 800 number on your 401(k) statement or talk to somebody in HR. They'll be glad to tell you. And that's step one. Find out what your match is, and then sit down with your spouse, and spend maybe as much time as you spend on your summer vacation. I mean, that would be reasonable. Because this is not a summer vacation. This is how you're gonna live your life in retirement, and it could make a huge difference.

Amy: It's the number one vehicle that people use to save for retirement. I agree. Nobody's spending enough time looking at it. But we're not just talking about couples here, because Vanguard did some separate research, and they found that 31% of its retirement plan participants, right? So, one in three, essentially, failed to claim at least some...

Steve: They left money on the table.

Amy: ...or all of those matching... It's free money. And that's, I think, the frustrating thing for me, is you can control this, and this is absolute free money, and it can make a huge difference. Here's the Allworth advice. Get your company's full 401(k) match. This simple move could add thousands of dollars to your portfolio over time. Coming up next, we've got the tricky part of buying a home, and it has nothing to do with mortgage rates, down payments, none of 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 Sprovach. More unmarried couples are buying homes together. What could possibly go wrong there? Joining us tonight with the answer, our real estate expert, Michelle Sloan. You can catch her show right here on 55KRC every Sunday afternoon, "Sloan Sells Homes." Of course, she's also the owner of RE/MAX TIME. And yes, Michelle, what could possibly go wrong when people who aren't married are buying homes together?

Michelle: Honestly, the list is sort of endless.

Amy: I'm sure it is.

Michelle: But we see now, the latest statistics are unmarried couples made up 18% of all first-time home buyers in the last year. So, 18% of home buyers, first-time home buyers, are deciding to get a home, buy a home together, before tying the knot. And frankly, sometimes I think that buying a home can be more difficult than it is to get married. So, you really have to think about that, because you are making yourself extremely vulnerable to your partner, or your friend, or whoever you're going to purchase a home with. You have to open up your financial history to them, I mean, completely and fully, because otherwise, you probably won't be able to get a loan together. So, it's a lot to consider. It's a lot to unpack, as they say.

Steve: Well, you make a good point. And I guess my first concern is, if you're not willing to commit to a marriage, but you're willing to commit to a 30-year loan, I mean, I question the whole basis of that. But, you know, in all seriousness, most arguments in marriage are based over money. You're starting off the relationship, or, you know, before you get married, with one of your biggest costs that you're gonna get involved with. I guess the first question I've got is, if you're buying it together, one of you probably has better credit than the other, and that's gotta be an absolute mess when you sit down and start doing applications. I mean, tell me, how does that process work if you're not married and both go in on a mortgage?

Michelle: Absolutely. So, you know, there's a lot of questions that are going to be asked. So, let's say one partner has really good credit, but they don't have the income. Then the other person has really bad credit, but making a lot of money. So, you have this, you know, but you can't really merge them easily in the world of mortgages unless you are actually married. So, like I said, you have to, all of the skeletons in your financial history are going to come out of the closet in this situation. And the one thing, the advice that I give is certainly to make sure you are willing and able to go down this road. And I suggest you do it sooner rather than later.

A lot of people who are planning to get married, and this has been not unusual for me over the last probably 10 years, that a lot of people will, if they're planning to get married, they'd love to find the home, and then get married and then go immediately or even move into their new home before they get married, so that they are settled and they have that part of the process completed. But, at the same time, I've had situations where people went through this process, were planning to get married, bought the house together, and then never went through with the marriage because one of them walked out. And that is kind of a scary proposition too, because if you're both on that loan, it's like a divorce. You have to figure out who's gonna get what in that separation.

So, it's smart to think about all of these things. Not that, you know, nobody really likes to think that 50% of marriages end up in divorce. When you are in love, just like when you're in love with a home, you don't think that you're ever gonna break up with that home, or break up with the person that you're going to be living in that home with together. But it happens, and it happens all the time. So, it's a difficult situation that you really need to think about.

Amy: All right, Michelle. So, I know that you have children that would be, you know, of the home-buying age. What if one of them came to you, right? And weren't married, and they said, you know, we've been together for a couple of years. We're serious. We wanna buy a house together. You're a parent, you're a realtor. How do you handle that?

Michelle: You know, the first question is, can you afford it? And I would sit down with both of these young people and say, all right, so, how much can you afford? Here's the thing. I may say, why don't you try renting together first, and see how you handle that? A lot of us in this world have, and it's not that as big of a commitment, to go ahead and live together and rent, and share those expenses. Because a lot of young people, too, they don't like to have joint accounts for anything. They like to have everything separate.

Amy: So, kind of like a trial situation.

Michelle: Exactly. I would sort of recommend a trial. Yeah, absolutely. Because if you can't figure out, and you can't get along because one person is buying more of the groceries and the other person isn't paying enough of the utilities, thinking about getting on the mortgage, and then you have insurance and you have utilities and you have taxes, you have a lot of expenses. A lot of people will say, "Well, but I want to share those expenses with someone, because I can't do it on my own." And that's the reason why many, many more unmarried couples are purchasing a home together, is because financially, they can't do it alone. So, there's a lot to consider. Always, always talk to someone. You know, talk to a real estate agent, talk to your mortgage officer, talk to someone, to see how in the world you're going to afford it all, and then will your relationship survive? And that's another thing, too.

Steve: You mentioned, it can be ugly if they break up and both names are on the deed. Have you ever seen it where only one of the two people have their names on a deed? And what issues does that cause?

Michelle: I have seen that, and I have seen that it can be, also, you know, one person then... It just depends. I've seen it where one person would contribute all of the down payment money. So, they would be putting down a lot of cash, and then maybe they're both on the mortgage, but only one person is putting a lot of that money up front. It's like going through a divorce, seriously, because you have to have an agreement. There's also some advice where people who are not married, to maybe put that home in an LLC, and have an agreement ahead of time as to how much money have you put into this situation. You know, if maybe you're a 30% owner of this home and the other person is a 70% owner in this home, and figuring it out that way. Of course, you may need an attorney because that's well outside of my...

Amy: Yeah.

Steve: Oh, no kidding.

Michelle: That's more than I can do at that point. But, you know, Steve, everything and anything has happened, I'm sure.

Amy: So, bottom line, Michelle, I mean, for those who are out there thinking about buying a home with someone who they're not married to, and obviously, this is a growing thing that we're seeing, it's, you just have to understand what you're getting yourself into, and maybe take a little more caution than those who are already married.

Michelle: Absolutely. I think the cautionary tale is, be prepared. If you have debt, that's gonna be found out. If you have bad credit, that's gonna be found out. And if you haven't shared this information with your partner, they're gonna find out. So...

Amy: Now's the time.

Michelle: Now's the time. Exactly.

Amy: All right. Lots to think about there. Michelle Sloan, our real estate expert from RE/MAX 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. Do you have a financial question that maybe you and your spouse are not in agreement on? Maybe it's just something that's keeping you up at night. 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. We got all the answers around here. At least we think we do. Straight ahead, how you might get a break on the cost of shipping holiday gifts this year. Hard to believe, but that is right around the corner. Speaking of what's right around the corner, Halloween.

Steve: Halloween.

Amy: Yes. Yeah. And so, we think about scary things and spooky things. I was just with a friend over the weekend who was really being very vulnerable, saying that money is really scary to her, that she doesn't understand it, and really, doesn't save because of that. If you are someone who maybe can identify with that, or if you were to be asked, what's the scariest thing that comes to mind when you think about money, and it's retiring, right, not having enough money, we've got maybe some tricks. No, some treats. Not tricks.

Steve: Is that what it... Well, it's, one way or the other, it's kind of...

Amy: Tried to get creative with that. Not so much.

Steve: It's kind of depressing. Bankrate... And we love Bankrate. They do some fantastic surveys. And anyway, they did a survey of 2,500 American workers. This is legitimate. This is a good sample size. Six in 10 say they're behind where they should be with their retirement savings. And it's pretty much evenly split between Gen Xers and boomers. So, we're talking anybody from 43 to age 77, 6 or 7 out of 10 of those groups are saying, "I don't have enough." And that worries me. And the point I think I wanna make out of this is, okay, I don't think anybody has as much money as they'd like to have, but it's never too late. I mean, you can always do something about it unless you're already retired, and you're down that path.

If you've got any time whatsoever, I did it. I was a late, late bloomer on investing, for various reasons, but, you know, you can't keep doing the same thing you've been doing if you wanna start saving money. You've gotta change your habits. Just like if you're gonna lose weight, you didn't put it on all at once. And you can't keep doing the same thing and expect to lose weight. You've gotta make a life decision. So, if you're not where you wanna be, like apparently 6 or 7 out of 10 people in this country are, let's make some, I wouldn't call 'em New Year's resolutions, but let's make some resolutions here, so that you can get to where you wanna be, and retire, and be financially healthy.

Amy: Well, and it's not just the fear that they don't have enough. There's numbers that back this up, right? Vanguard has this survey "How America Saves," and it says, listen, the average 401(k) balance is about $250,000, $260,000.

Steve: Yeah, which, to a lot of people, sounds like a lot of money.

Amy: Sounds like a lot. But if you are retiring at 64, 65, and you are relatively healthy at that time, you could live 30-plus years in retirement. All of a sudden, $250,000, $260,000 doesn't sound like nearly enough. And I think, for many people, what happens is, when you are scared about something, it's easier to just not face it than to say, "All right, I'm gonna plow forward and I'm gonna figure this out." And that's what you gotta do.

Steve: Yeah. Okay. So, if you're average, and you've got a quarter million dollars, again, sounds like a lot, and I'm not saying it's not a lot, but you know what? Buy a car, you know. Maybe you still have a kid in college...

Amy: Replace your roof.

Steve: Yeah, exactly. Things happen. Life happens. $256,000, if you draw 4% per year... And that's a starting number. It's not a be-all and end-all. But you know what, I don't wanna outlive this money. I want this money to last the rest of my life. How much can I draw off of it every year and not worry about running out? Well, let's start with 4%. Well, that's about $10 grand a year on $256,000, $850 a month. Oh, wait a second. It's all in my 401(k) or IRA. I gotta pay tax on that. Six hundred bucks a month. Okay? So, quarter million dollars, 600 bucks a month is what you wind up with in your pocket. So, if you don't have a pension, like most people, your social security, your spouse's social security, and 600 bucks extra. Is that gonna float your boat and help you live the way you wanna live?

If you just say, "Okay, I'd rather have a million dollars, and here's what I have to do to save up a million dollars. I'm gonna put more in my 401(k), I'm gonna do this, I'm gonna do that." And you know what? Maybe that should be worth a million dollars. Well, a million dollars is $40,000 a year that you can draw off, and I don't care if you live to be 125, and not worry, or shouldn't have to worry. And that's 3,300 bucks a month, Amy. 3,300 bucks a month is a lot of extra money on top of your social security. And that's why I think that should be a minimum target for the average person out there that's trying to figure out, how much do I need in retirement?

Amy: Well, yes. Where do you start? I think it starts with a budget, right? How much do I need to live on? But I also think you have to have that emergency fund as the foundation of it.

Steve: No question.

Amy: You've gotta have a plan for health insurance. I think they say the average couple retiring today is gonna need about $350,000 just to cover healthcare in retirement. So, having those facts, and a plan on here's step one, here's step two, here's how I'm going to address those things... And I think it also has to be this hyper-personalized plan.

Steve: No question.

Amy: Right? There's nothing online that's gonna say, "Oh, Steve Sprovach, Amy Wagner, here's what you need to do to get where you're going." It is kind of just vomiting all the numbers out there, right? Figuring it all out, and then saying, okay, here's step one. Here's where we're going from here. And I also am a huge fan of a plan, because I think that on days when the markets are down, when there's a ton of volatility, if you can just look back at that plan, right?

Steve: It keeps you grounded.

Amy: Yes. If you could say, okay, well, it says that, you know, these are the numbers, and if I project this out, then I'm gonna be just fine, I think it's almost like a life raft, right? On days when you feel like you're drowning with money decisions, to keep you afloat.

Steve: You're listening to "Simply Money," on 55KRC. I'm Steve Sprovach, along with Amy Wagner, and we're talking about how many people are behind on their retirement savings. I wanna give you a great, real quick story. So, I meet with a guy, this is going back 10, 15 years or so, and he's just aggravated with his job. He wants to get out. And he says, "I'm retiring at 62." I ran a plan for him, and he could retire at 62, but if he lived past 80, he was in trouble, okay? So, I said, "Hey, here's what you need to do. Right now, 66 looks good, and you need to make these changes." Well, he made those changes and then some. He basically started saving more money and getting rid of debt. And by the time he turned 64, maybe 65, I was able to tell him, "Hey, you can pull the string now and not worry about how long you're gonna live." And now, he's a good 10 years into retirement now. It worked, but unless he had a financial plan drawn up, he would've quit at 62, not made those changes, and thought he was in good shape. That's why you need to sit down and crunch the numbers.

Amy: I think for so many of you, if you are scared about not having enough money in retirement, one of the things that you have to think about is, what's the worst thing that can happen. Right? And as you think about what that looks like, then I think it's like, okay, if I can handle that worst thing, well then I can take the steps forward to make it not so bad. And I think that's the direction you need to be heading. Here's the Allworth advice. The more you take control of your dollars, the less scared you're actually gonna feel. Coming up next, an update on how much you might pay to ship holiday gifts this season. We've got maybe a break on some of the prices. We'll tell you. You're listening to "Simply Money," presented by Allworth Financial here on 55KRC, THE Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. All right, well, we are in October, and Steve Sprovach has already finished his holiday shopping.

Steve: Is it Christmas Eve? That's when I start. I have done that.

Amy: I actually have a friend who is done by October 1st with all of the holiday shopping, and she just...

Steve: You hang around with a different crowd than I hang out with.

Amy: ...like, kicks back and makes cookies. Well, listen. That might be my crowd. It is not me. I haven't started. I have a kid who texted me today and said...she sent me her Christmas list. I'm like, "All right. We'll get to it in a few weeks." But, for those of you who do plan ahead, one of the things that you notice is, especially if you've got loved ones in different cities, and everyone's not going to be together, you're probably shipping a lot of packages. And if you're not shipping them, you know, ordering from Amazon, shipping them directly to their house, it can really add up. And so, you look at your FedEx and your UPS and your United States Postal Service. They all are making all kinds of projections about how many packages are gonna be shipped this year, and they're actually thinking we're gonna be shipping less. And so, I guess as an incentive to get you to ship more, they're trying to maybe lower prices a little bit.

Steve: I don't know where they're getting their estimates from. I mean, we just got some retail sales numbers for September. Retail sales were up 0.8%. That's huge. I mean, consumers are spending a ton of money. I don't...

Amy: We're still spending. Yes.

Steve: Yeah. I don't think people in September were buying, except maybe your friend, were buying Christmas presents. You know, so, but okay. If they think that we're gonna be slowing down on our spending, fine. As long as it gets me a better deal. But I didn't even know that U.S. Postal Service, they were charging surcharges last year. So, the big news is they're not charging as big of a surcharge.

Amy: Yeah. Up to $6.50 per package. So, you're paying to ship it anyway, and then you're paying $6.50 on top of that for the surcharge during peak season. I mean, you think about it. Gosh, I always feel bad for the mail carrier this time of year, when it gets closer to the holidays, because you know it's just bonkers for them. And then FedEx and UPS also say they are imposing demand surcharges. And this is from $1.35 to $7.50 a package, starting this month, running to mid-January. So, maybe you plan ahead. Maybe you go through the [crosstalk 00:38:04.892].

Steve: Yeah. And they're all coming out with the dates, you know, okay, you gotta mail it by this date, December 22nd for FedEx overnight to get it by Christmas Day, and so on and so forth. The post office is saying, I think tomorrow is the last date that they're gonna guarantee [crosstalk 00:38:20]

Amy: That they'll actually get it there? Yes.

Steve: Exactly.

Amy: The snail mail is still snail mail. But listen, I think the thing to think about is it's always smart to plan ahead. If you're sending packages, if you're sending holiday Christmas cards, that kind of thing, plan ahead. You know, it'll get there on time and you won't have to pay as much. Thanks for listening tonight. We hope you're gonna tune in tomorrow. We're talking about the surprising place that most impulse buys take place. You've been listening to "Simply Money," presented by Allworth Financial here on 55KRC, THE Talk Station.