Amy: Tonight, we've got the latest inflation numbers and also the very real impact it's having on you. You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. Steve, you don't always get what you want.

Steve: That would make a good song.

Amy: You can't always get what you want, what's the song?

Steve: You thought you get what you need. We don't need these numbers.

Amy: No, it's true.

Steve: These inflation numbers were not good that came out today, and markets sure didn't appreciate them.

Amy: Yeah, so we were thinking, "Okay, we've seen maybe peak inflation, and it's going to continue to fall the year-over-year number down slightly, but the month-over-month up, right, up a little bit. When economists were thinking we would be down a 10th of a point, we're up a 10th of a point. And then when you get out all the volatile stuff in these numbers, which is, of course, the energy prices...

Steve: Things we don't need, food and gas, yeah.

Amy: Yeah, the things that we don't really pay for on a regular basis like food and energy. You know, we're up, what, six-tenths of a percent. So, we're moving in the wrong direction on a lot of these numbers.

Steve: Yeah, this is really concerning. I mean, the Consumer Price Index, CPI, that's the broad-based inflation index and that's what most people look at. That was expected to drop from 8.5% year over year to 8%. These are the August numbers that just came out. Well, they dropped, but only to 8.3. So, okay, a little bit of a mess. We were hoping for a half a percent drop, we got two-tenths of a percent drop. But a drop's a drop. It's the core CPI that's got everybody upset. And we joke about it but, you know, the two most volatile components, gas, and food, they go all over the place. And so, what a lot of analysts wanna do, Amy, is strip those out to see what the core Consumer Price Index is doing.

And that was expected to just stay about the same. It was 5.9% last month. It was expected to come in 5.96%. It jumped to 6.3%. And in the world of economics, that is a huge, huge surprise, and not in a good way. Because, you know, what are we talking about here? We're talking about, can the federal reserve get inflation back under control? It was under 2% for years, decades even.

Amy: Years.

Steve: Yeah. Yeah. And it's gotten out of control. And what does the Fed need to do? And the more the inflation numbers increase, the more the Fed has to do, and the more the Fed has to do, the more the likelihood of a recession and possibly a strong recession. Markets don't like these numbers, and they reacted negatively.

Amy: I was watching the price of the futures, right? Everything in the green this morning, all the markets looking good.

Steve: Oh, it was great up until about 9:30. Yeah.

Amy: Yeah. Yeah. As soon as these numbers hit this morning, and it was at 8.30, it was like foam, you know, just dial down, you know, everything down. And, again, it's because what this means, what this little piece of economic data means is that the Federal Reserve will continue down this path that's incredibly aggressive. And if you think back, Steve, it was not that long ago, just a few months ago, that there were a lot of economists saying, "Okay, we think that by the end of the year, maybe rates could even start to go back down. If not, maybe by, you know, not Q4 of this year, then maybe Q1 of next year. Well, now, we're looking at a very likelihood of another three-quarter of a point hike next week.

Steve: Oh, that's a given. Yeah. Yeah.

Amy: Maybe another one. And now, 2023 seems to like, okay, what's gonna happen then? We might continue down this aggressive route. And you've made this great point many times, but I think it's worth repeating. This is not happening in real-time, right? The Fed is getting this data, they're making these decisions, but the lag time on what they do is six to nine months before we actually feel what they have done. And so, it's an incredibly difficult position to be in to make these very real-time decisions and not have the data back on exactly what the last rate hike happened.

Steve: Yeah. The last rate hike and maybe the rate hike before it. I mean, keep in mind, they surprised everybody with three-quarters of a percent rate increases last couple of times they got together, and maybe that is enough. Okay? Maybe that's more than enough. We don't know because six months haven't passed yet. And that's...

Amy: Yes. Too soon to tell.

Steve: Exactly. They waited too long, and maybe they're doing too much, you know, too soon. I don't know... Nobody knows that. That's the biggest problem. Here's the concern to me, Amy, and I've been talking about this for two weeks now. You've got a lot of components. I mean, you go out and shop for your family. My wife just told me lunch meat. She wouldn't buy roast beef for me if it was over 10 bucks a pound. It's up to 13 bucks a pound, so I guess Steve's not getting roast beef anymore. But, no, it's...

Amy: You might have baloney soon because, honestly...

Steve: I'm okay with that.

Amy: ... I think Turkey's up to that.

Steve: I'm okay with that. But when we see chicken wings market price just like a lobster, we've got issues. And I've actually seen that. But the one that really worries me, and they call this is inflation getting anchored. Anchored means it ain't going anywhere anytime soon. And I've said this for a couple of weeks, I'm really worried about rents, rent prices, because, you know, we've seen this craziness of, "Wait a second, my house is worth how much? That doesn't sound right. I just bought it 10 years ago and it's gone up that much in the past year, last two years." Well, if you're a landlord, if you own a couple of rental properties and you see the value of your rental property go up drastically, you can't raise the rent to reflect the current market...

Amy: Immediately.

Steve: ...immediately. Most leases are 12 months. So, you've got basically up to a 12-month lag on raising rates. So, in other words, real fancy way of saying it is, you may not see inflation at least in the rental market stop increasing for up to a year after the real estate market has settled down. And granted it's settled down but, again, we may see continuing rate increases on rents. And that's a big, big concern.

Amy: You're listening to "Simply Money" here on 55KRC, the latest inflation numbers are in, and they're not so good. We're not where we wanted to be, and that means the Federal Reserve will continue to likely be incredibly aggressive, including what is about 100% chance of a three-quarter of a point hike next week. Let's talk about the very real impacts of all of this. First of all, Kroger, right, big local company, knowing that we are at the point where we are changing our shopping habits. Maybe when we first started talking about inflation at the end of last summer, he kind of shrugged it off, but at this point, I don't think there's anyone, regardless of what your paycheck is, who are completely shrugging this off and at least not thinking or being a little more intentional when they go to the grocery store, Kroger knows that.

Steve: You have to.

Amy: Yeah. So, they're saying, okay, you may not be buying the name brands anymore, you might be looking for more generic store brands, and they've got a new offering.

Steve: Well, and, Kroger, you know, they didn't get where they are because they're making stupid decisions.

Amy: Definitely not.

Steve: And this is not just being a nice guy either. I mean, you know, they have their Kroger brands. They have their in-house brands. And they took about 150 non-perishable items, basically, canned peas, can whatever, stuff that's non-perishable. And they're combining products from their 16 existing Kroger brands and they're putting them all under one roof that's gonna be more recognizable for shoppers. And because this is a consolidation, they're saving money, they're gonna be able to offer these non-perishable foods at a much lower price than even they had been recently. So, in other words, it's one way that you can continue to buy what you need for your family at lower prices so that inflation is not impacting at least what you're paying for those items. And because of the efficiency, and guess what? I'm sure Kroger is gonna make a few extra bucks, you know, they're doing it for profits.

Amy: Win-win. Right. I mean, yeah.

Steve: Win-win. Absolutely.

Amy: When Kroger is telling you, I don't even know, Dole something, Sunny Delight, whatever it is, their profit margins are razor thin, but when they are actually producing the products, much higher profit margin. So they know that you are out there looking for ways to save. And I think actually, from a marketing standpoint, the name of this new line, it's called Smart Way, I think it's brilliant, right? I mean, people are trying to make smarter choices about how they're spending their money. So, all of these different products that maybe you didn't even notice before will now be branded all the same way under the Smart Way brand. And I think it's a smart move from Kroger, it is a win for Kroger, and I think it's probably a win for consumers as well. But more choices, lower price, we'll take it.

Steve: Yeah. And here's where I'm really concerned because, you know, lower to middle lower-income households, they're getting crushed by inflation, right? I mean, it affects everybody. But, you know, for you or I, if we have to spend an extra 20 or 30 bucks on our gas tank, we will probably still go out to dinner once or twice this week, you know? And this is where I grew up, lower to middle-income families, they don't have that freedom. When they have to spend an extra 20 or 30 bucks on gas or an extra you know, 50 or 60 bucks at the grocery, it comes out of somewhere else. And we're seeing, and there have been a lot of polls that are, you know, looking at how this is impacting people, we're seeing people make real changes in their decision-making.

I mean, more than 1 in 10 respond, about 12% of the people are buying cheaper goods. They're going with generic brands, 10% eating out less, buying fewer groceries, 7%, they've gone ahead and gotten a second job or worked more hours. I mean, people have to make changes. And, you know, I was joking before, Amy, about price of roast beef is up considerably, well, that's across the board. Groceries in the past year are up 13%, rents are up over 6%. And I read an article where they said, "But the good news is real wages are actually down." Well, if your wages are down or not keeping pace with inflation, you don't consider that good news. You know, but it does mean...

Amy: Good economic news for the broader economy, but not for you, the individual out there shopping trying to buy the same.

Steve: Exactly.

Amy: Right? It's costing more, and your pay is not keeping up with that. Yeah, I mean, just talking about the very real impact of this, this is recent research, 56% of those responding say, "Hey, these price increases are causing what you consider financial hardship for your households," right? I mean, we're at a point now where people are making some more drastic decisions. And then it goes even further. And keep in mind, in just January of this year with less than 50%, 49%. So, we're moving in the wrong direction here. And of those who are saying, "Hey, we're in a place of hardship, 12% say it's severe, 44% say moderate," but let's face it, the longer we're in this place, and as we're seeing inflation numbers come out today, I think the more people are going to move into that, "This is severe for our house."

Steve: It is. And I think this is the first time we've seen that number go over 50%. So, whenever you see more than half the people affected, politics go out the window, you care about your family. I mean, you know, most people right now, they don't care about global warming, or, you know, can guys compete in women's athletics, they care about feeding their families and driving to work. That's what's important right now, especially when you see real wages down a little bit. That's not good. It is kind of, I won't say unintended, it's a consequence of what the Federal Reserve is doing. The whole idea is slow down the economy so prices quit rising. And if enough people say, "I can't afford to buy that," well, then the prices eventually will come down. This is the way it plays out. It sure doesn't mean it's fun, but it does mean that maybe we're just beginning to see the economic slowdown that the Federal Reserve is looking for, but today's numbers, they were not welcomed.

Amy: Here's the "Simply Money" point, hopefully, we have seen peak inflation, hopefully, it's in the rearview mirror, but you can expect the Fed to remain aggressive, because, keep in mind, their goal is 2%. And that might mean we all have to make changes to our spending in the meantime. Coming up, mortgage rates essentially doubling overnight, what local home builders are doing to try and get more consumers to build, and my alma mater, yes, opening investment accounts for students. Is this a good idea? We'll tackle that next. You're listening to "Simply Money here on 55KRC THE Talk Station.

You're listening to "Simply Money. I'm Amy Wagner along with Steve Sprovach. If you can't listen to our show every night, well, subscribe to our weekly podcast. It's the best of "Simply Money." You'll find it on the iHeart app or wherever you get your podcasts.

So, you wanna make sure you do not regret retiring. There are some factors to consider. If you think you'll have to go back into the workplace, that's a hard at 643. It's called unretiring, and lots of people are doing it. All right. So, Steve, you essentially have this situation with the Federal Reserve increasing rates where mortgage rates doubled in a matter of weeks.

Steve: A couple of weeks. Yeah.

Amy: Yes. Crazy. And so, that has completely slowed down the housing market. And when you make your money off of building homes, well, it's not a good place to be.

Steve: Can you imagine, especially a first-time homebuyer, I can't imagine what they're going through but, you know, you're finally gonna build your first new home or, you know, whatever, you're talking to some home builder, and all of a sudden, when you're starting the conversation, you were at maybe 2.5%, 2.6% on a 30-year mortgage, and then by the time you're ready to sign papers, you're almost 6%. I mean, that's what a lot of people have gone through. And the question is, I don't know if I can commit to anything if these rates keep rising.

Well, two big, local home builders, Fischer and Drees, they've come up with what I think is an excellent answer to that. Fischer paired up with Victory Mortgage. Drees paired up with First Equity Mortgage, and they're offering basically a freeze on rates, a freeze on mortgages. So, if you sign on the dotted line, they will guarantee you that your mortgage rate will not increase for up to 240 to 270 days the time it takes to build your house. That gives just an extra level of reassurance to someone that's considering buying a new house. And I'll tell you what, you know, when they've seen their business that was going just great gums up until April and then the rates started jumping in May, they saw a massive, massive slowdown. So, they're looking at anything and anything they can do to go ahead and spur sales.

Amy: This is creative, and I also think...

Steve: It is.

Amy: ...it's much needed as someone who recently built a house with one of these builders. And I don't know if the process is sped up now because I know there were supply chain issues and even just worker shortages during the time when we built ours, but it took about 11 months from the time that we purchased the lot until the time we were actually moving in. That's a long time to wake up every day, checking these rates, holding your breath, right? It's a lot of stress. So, this rate lock program, I think it'll be interesting to see how this plays out, but I imagine it will be pretty popular.

All right. So I'm a huge UK fan. If you've listened to the show for any time, you know, that's my school, that's my basketball program, that's my football program. Love the school. But we're not talking about that for any athletic reasons right now. But because UK is looking at what I would call a pretty cutting-edge program, Steve,...

Steve: Yeah, it is.

Amy: ...they're going to get investment accounts into the hands of all of their students, open those through Fidelity Investments where if you're a freshman, if you're a senior, it doesn't matter who you are, if you want an investment account, they'll open one for you.

Steve: And I think it's great. And I think what really hit me was you mean, nobody's ever done this before? So, congratulations to UK. I mean, they've got investment courses, and economics, and that sort of thing, but they paired up with Fidelity, and they are starting up...it's a groundbreaking concept of we're gonna offer investment accounts, no fees, no minimums. I mean, literally, it's as good a deal as you can get to... And they're starting... They're gonna roll it out with student-athletes first and expand it over the next year to all students. But they're opening up investment accounts that will allow students to invest. They think they know what kids are like. You can't just buy crypto with this money. They're allowing them to buy mutual funds.

So, they've got some guardrails on the investments, and the college is gonna give them money. And they're gonna give them anywhere from 1,000 to 6,000 bucks a year. And it's based on their behavior. If they start taking some financial education courses, they'll get a deposit. If they do whatever is required of their ethics, Code of Conduct, they get a deposit. If they keep their grades up, they get a deposit. It's a great program. And what the kids do with that money is totally their call. But, again, they've got guidelines on just four mutual funds, so they can't get stupid with it. Dynamite idea. Love it.

Amy: I think this is kind of, like, investing with training wheels. Because when you talk about what could possibly go wrong, okay, so there's that app, Robin Hood, which became incredibly popular before the pandemic, but certainly, during the pandemic, and there's some horror stories about kids, right, college-age kids who got it over their head, they traded cryptocurrency. There's a horrible, horrible story about one kid who woke up, checked to the account, had a negative account balance of $700,000, ended up killing himself, right, was just so stressful. This is not possible here because there's no day trading, there's no cryptocurrency, right? These are mutual funds. There's several of them, carefully crafted for students. I think with this ultimately, though, it introduces them at a very young age to smart, long-term diversified investing.

Steve: Well, you know, you've gotta pay attention to what schools are teaching your kids. I mean, when kids come out of high school and they go to work at a fast food place, they don't even have numbers on the cash registers anymore. They got a picture of a Big Mac, or a hot dog, or something like that. Yeah, you wanna mess with a kid, you have a bill for $6.05...

Amy: Ask them to make a change.

Steve: Yeah. And give me a $10 bill and a nickel, and they're gonna ask you, "Why did you give me a nickel?" Or if it's 6.05, and we wanna really screw them up, give them a $5 bill, a single, and a nickel, "Why are you giving me all of this extra..." or $10 bill and $1 bill and a nickel, "Why are you giving me all this extra money?" I mean, you know, they don't know what to do, which I learned when I was 14 or 15. So, if we're gonna release these kids out in the real world, let's give them real-world investment knowledge. And this is a great program. And I hope it expands across the country. Great idea.

Amy: Yeah. So, UK is starting it with student-athletes, right, because there's new NCAA rules where they can put... So, that's where the $1,000 to $6,000 comes in, is because they now pay student-athletes. But at the same time, this will be expanded to all students on campus. You want one, you don't want one, you don't have to have one. But if you do, by sometime in 2023, those will be available to you. I think this is a win. And I think it'd be really interesting to see how this kind of pilot program, this test program on UK's campus actually works. There's a "Simple Money" point. Whether this program is a huge success or not, that remains to be seen, but the concept, right? Exposing students to smart, long-term ways to invest, we call that a win in our book. Coming up, looking to buy or sell your business? Well, this is complicated. We've got an expert with easy steps to take next. You're listening to "Simply Money" here on 55KRC THE Talk Station.

You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. If you have ever started your own business or thought about it, it is like your baby, right? You put all of this blood, sweat, and tears in it, but at some point, you get to the point where maybe it's time to sell. How do you find the right buyer? How do you make that business worth every penny that you possibly can in order to sell it? Joining us tonight with some great insights, Dino Lucarelli, from Capital Tactics. You've got a great workshop coming up that's gonna help people do just that. Where do you even begin when you start to think about, "Okay, I've built this business up..." And I know it's a very emotional thing, Dino, for a lot of people, how do they figure out what's next?

Dino: There's a lot of preparation that would go into it, as you've alluded to, Amy. But I think it's important to start with, what is the psychology of the buyer? You wanna understand what the buyer will be looking for in your business and what their wants and fears are. Some of which are specific and others of which are vague. So you wanna understand the psychology of the buyer. Then you wanna understand what value elements is the buyer actually seeking. What hard fast criteria will make that buyer feel good about the business? You wanna know what are value killers? What are the things that will scare away a good legitimate buyer? And then you want to make sure that you have taken preparation to take care of the to-dos. What are the specific to-dos that play to your strengths that will cause that buyer to overcome the fear and the psychological concerns to say, "This is the right opportunity?"

Amy: Dino, I touched on the fact that this is, I think, is an emotional thing for a lot of people, right? You've built this business up to something that you're probably incredibly proud of. So, going down this path, and you're talking about things that could potentially scare a buyer away, any examples there of something we should be thinking through?

Dino: Absolutely. There are some things that buyers will be very, very concerned about. For instance, if the company is CEO-centric in terms of its sales model, meaning the CEO who is selling is central to the overall business development effort, that's a very, very daunting concern because the new buyer walks in and doesn't have those relationships, doesn't have that built-in opportunity to continue to grow, they have to forge new relationships. Other things, having a flawed leadership team. One of the things that happens, unfortunately, is as companies age and as sellers approach the age of retirement, they sometimes will not fill vital positions because they won't be around long enough to educate, train. So, you'll have holes in your organization, which, for the seller, might be important, but for the buyer, it could be deal killers. Things like bleeding out the company, not refreshing the plant and equipment, not upgrading the facilities so that the buyer comes in to a dilapidated company that's not relevant, not current, it was just enough to get the seller to make money their last year, but it's not a sufficient platform for growth, which is very scary. A poor safety record can be a deal killer. As important as safety is both for the associates and as well as for the customers, having a strong record of safety and a very strong risk management program matters, then the absence of that can be very, very damaging.

Amy: Dino Lucarelli is joining us tonight from Capital Tactics, an event coming up later this month. If you have your own business, what you need to do to kind of get your ducks in a row before you sell it. You know, Dino company culture has become such a big word. In fact, a buzzword, I think, post-pandemic. How do you make sure that your company culture is there? Because I imagine that's going to be something that's a pretty big consideration for a buyer.

Dino: This is important in terms of having some runway to set the stage. So, we recommend, best case, two to three years of preparation before you go to market. If you don't have that, you don't have it. But if you do, the culture is a function of the people that are leading the organization. So, if you have brand new leaders at the top, the culture will be suspect. But if you have burned in a good management team that operates well with a good board of advisors, then you will have protected yourself from significant cultural issues because you have an experienced team that work together, that have learned how to work together, that have coordinated with a board of advisors as well, best case, where the leadership and the operating management team are operating as one, that creates a positive culture for the buyer. And, Amy, that is potentially the most important thing that can scare off a buyer, is a bad culture or a culture that seems underdeveloped.

Amy: Absolutely. Dino, you've been in this space for how long?

Dino: Twenty years.

Amy: Twenty. Okay. So, decades of experience. Talk about how much the emotional side of this can get in the way of someone. And you mentioned kind of having two to three years before where you're working with someone that can help you get your business ready for sale. I think that's probably incredibly important because we tend to kind of look at the things that we've built with rose-colored glasses.

Dino: The emotional piece of this is very, very important to the seller. Sellers want to know that they are not just literally selling out and leaving their team to fend for themselves. So, the seller often will be very selective in terms of who they will work with to come in and buy the company. And we work with buyers as well, Amy. And one of the things we coach our buyers to do is to treat the seller with kid gloves, because that seller is not just looking for money. They're looking for a buyer who will continue the culture, who will foster sharing, collaboration, teamwork, and the seller wants their legacy to live on. Whether the name of the company changes or not, they want their people, and their vendors, and their customers to know that the seller did the right thing for all the parties. It's a hugely important issue that the buyer needs to pay attention to. And we have seen buyers make critical mistakes when we're talking to them and where, on the seller side, where the buyer becomes very autocratic, starts barking out orders of how they're gonna run the company, and it will kill most of deals.

Amy: Shut down the deal. Absolutely. Okay. So, Dino, tell us about this event. What do we need to know? Who's it for?

Dino: Well, this event is for people who are running businesses, whether you've decided to sell or not, at some point, there will be an exit. But particularly, if you're reaching the point in time where you think, "Well..." Once you start thinking, 'I should maybe get a valuation or maybe I should sell my company," that's the time you should be coming to our seminars. If your company is for sale, also, we can help you with some pointers. But this is for people who are at that point in their lives, in their career development, where they think it's time to go forward. Now, from the reverse side, if you're a buyer, you will glean many, many important factoids and details about what should matter to you, the kinds of things you should be looking for in a seller, what the seller should be doing and presenting.

And if the seller doesn't present properly, then you should have that as a major red flag. So, both buyers and sellers would be the audience. The event is at the Metropolitan Club and River Center in Covington. And it's Thursday, September 22nd. We'll start with a little mixer, 6:00 and 6:30, appetizers and cocktails, then we'll have an hour-long program with a little skit we've put in there. And then we'll have another networking event for an hour after that for people who wanna just dig deeper and talk to some of our sponsors. And we have some pretty marquee sponsors for this event.

Amy: Great. All right. So, if you have built a business that you are interested in maybe selling, exiting at some point, or if you're interested in buying one, this event is for you. So, for more information, go to capital-tactics.com. You're listening to "Simply Money" here on 55KRC THE Talk Station. You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. Straight ahead, do you know what your homeowners' insurance policy does and does not cover? We're gonna look at this a little closer, why you need to know that. All right. So did you or someone you know maybe retire and then regret it? Steve, there's this whole concept of unretiring. And it turns out, you know, we had huge numbers of people retiring during the pandemic, and now, huge numbers of people returning to the workforce.

Steve: You know, we're gonna learn so much out of the pandemic. I mean, what an exercise in a lot of things, but retirements, I mean, people working from home, saying, "Hey, I kind of like this, and I'm getting older, and, you know, that grind and going back to the...it doesn't sound... I'm just gonna call it here." And we had so many retirements, 4.2 million people left the labor force between fourth quarter of '19 and second quarter of '21. That's 2.4 million more than normal. I mean, that's basically double. You know, people just said, "I'm out of here." And you know what? And here we are, you know, a year, a year and a half later, whatever it is, and a lot of these people are saying, "I'm bored, and I'm feeling kind of broke. I think I'm gonna go back to work." They're coming to the conclusion that retirement isn't all it's cut out to be when you're young.

Amy: Timing is everything, right?

Steve: Yeah.

Amy: You know, for those who've retired during this time, unfortunately, it's like kind of worst-case scenario. You've got 40-plus year high inflation, so your money that's no longer coming in, you don't have the paycheck anymore, so you've got a fixed amount, you have to stretch it for more. Concerns of a recession. Maybe you're thinking, "Wait, if I went back to work, my Social Security benefit would be even higher, you know, if I gave this a few more years." So, I think a lot of people are rethinking. And I also think, I don't know, maybe a couple of months during the pandemic when nobody was leaving their homes made it look like, yeah, "I really wanna do this." But the reality of day in and day out, whether that's with your spouse, or, "What am I going to do, or, "I miss being in meetings, and I miss talking to people every day. I miss getting dressed up. I miss..." Whatever it is, I think there's a lot of people who were surprised that retirement wasn't for them everything they had hoped it was going to be.

Steve: Yeah, it's not a huge number, but it is over 3%, people that were retired a year ago are backward and again. And, you know, when you see your investment account take a pretty good nosedive like we've seen so far this year and, you know, you had inflation on top of that, I think a lot of people are coming to the conclusion of, "What was I thinking?" And you know what, Amy? And I talk about this all the time to people that are considering retirement. It's not just the money. It's what's your day like? "Oh, yeah, but I've been putting off this project, that project. I finally have time to get to that, work on my golf game. Yeah, I'm still restoring 74 MGB." And some people say, "You're never done restoring a 74 MGB."

But, at some point, I will finish that, and what do you do then? And I've seen this with so many people, if you're just wrapped up in your job, especially if you don't have friends outside of the job, if you don't have hobbies, I saw it in my own family with my dad. After a year, he was bored silly. And some people just don't think that part through. What is your day gonna be like? Do you have hobbies? Do you do volunteer today? If you wanted to volunteer, where would you volunteer? It doesn't have to necessarily be for money. You've gotta grow as a person in retirement and keep your mind as well as your body, but especially your mind, keep it active.

Amy: It's easy for this to happen because for so many years, when you think about retirement, you think about your 401(k), you think about saving for you, you think about the financial aspect of it, right?

Steve: Think about the money. Yup.

Amy: Yeah. And maybe when you're on vacation on the beach, or you've got a few days off, you're like, "Oh, retirement will be great someday." But the reality of it, it's every day. I mean, I jokingly will call my aunt who retired earlier this year and say, "Oh, happy Saturday." And she's like, "It's a Saturday? I don't even know. Every day, it's kind of the same. Weekends don't feel special anymore because it could be a random Tuesday." For a lot of people, that's great. For some people, it isn't. And I also, Steve, think one of the financial things to bring up here when it comes to Social Security is, if you have retired within the past year and started to claim Social Security, and you do get a redo, one time, if it's within the first year of claiming, you can say, "Hey, change my mind on that," you have to make sure you can give that money back. But you can essentially start over with Social Security later on.

Steve: And this is a common question, when somebody says, and they're not full retirement age, which for most people is about 67, when they say, "When should I claim Social Security?" My first question is, "Well, when you retire, are you gonna stay retired?" "What do you mean? "Are you thinking of going...? I mean, if you had a job that just fell in your lap, something that was fun, paid you decent money, you can do it...

Amy: You're passionate about.

Steve: ...falling out of bed..." Yeah. Yeah. "Would you take it?" "Well, I don't know, maybe if the right job came along." Well, and I'm not sure you should draw Social Security, because here's the thing, if you're not full retirement age, and, again, it's about age 67 for most people, and you start drawing your Social Security benefit and then take a job, if you start making more than 19 grand a year, which ain't much, you're gonna have a reduction...

Amy: You'll likely make more than that.

Steve: Yeah, you're gonna have a reduction in your Social Security benefit. You're already taking a cut for drawing Social Security earlier. Well, you're gonna have another reduction if you make more than $19,000 from a job. That's a big consideration. So, if you're even thinking about doing anything for any significant pay, maybe hold off drawing that benefit until you either decide, "Yeah, I'm gonna be retired, retired," or, "No, I'm gonna make enough to help me get by. I'll hold off Social Security so I can just draw a bigger amount later." Very important consideration.

Amy: Yes. Another part of this, social factor of it I want you to think about is look yourself in the mirror, how much of your identity, right, is wrapped up in what you do? For some people, it's like, "Ah, I don't ever even talk about work or when I'm outside of work..." But for some people, that's a huge deal. Leading that meeting, being that person, whatever it is to having that radio show or that voice out there, right? If you take that away, are you going to miss it? You know, those are all things you need to think through. Here's a "Simply Money" point. If you maybe think you should unretire because you want to, lots of options out there to help you so you don't go from all to nothing, to all, all over again.

So, do you know what your home insurance policy doesn't cover? We got the list for you, what you need to know next. You're listening to "Simply Money" here on 55KRC THE Talk Station.

You're listening to "Simply Money." I'm Amy Wagner along with Steve Sprovach. All right, Steve, I admit it, I spend a lot of time thinking about vacation, upcoming trips, what I'm doing over the weekend.

Steve: Why not? Yeah.

Amy: The fun stuff. I spend very little time thinking about my homeowners' insurance policy. I have a feeling I'm probably not alone here.

Steve: No, it's kind of important, especially... You know, I have a friend who's got a place out in Scottsdale out by Phoenix, and he had a sewer backup. And guess what? Some of these things are not covered by homeowners' policies. I mean, homeowner's policies, yeah, they cover things like your water pipe break-in, and if that causes mold, they'll cover but if your water pipe didn't break, and you've got mold, guess what? Chances are your homeowner's policy will not cover the remediation, which I can run into some money.

Amy: So, it's kind of accidents, right, things like...that happen, but also, like, if someone were to accidentally back into your garage door, not covered. But things that happen gradually over time, a termite infestation, right? Flooding because things were, you know, coming over time, certainly not covered.

Steve: Yeah, if it's preventable, it's usually, you know, that's on you. If it's an accident... And mine was covered when my son backed into our garage, caused a lot of damage, oh, my goodness. His foot slipped off the gas pedal, he was wearing flip-flops, slipped off the brake pedal while it was in reverse back and out of the garage and slipped onto the gas pedal. So, he basically mashed the gas pedal, took out that center supporting pier in a two-car garage.

Amy: Oh, that's bad.

Steve: And he thought I was gonna kill him. And I'm like, "No, I'm just glad you didn't get hurt." You know, that was a big deal. We had the best agent in the world. They had a crew on-site within hours, supporting it, making sure there was no more damage. And, you know, we're gonna talk about Shop Around and things like that, but make sure you know what your policy covers and doesn't cover because there are differences.

Amy: I have had heartbreaking situations back when I was doing general assignment news where, you know, huge rainfalls, flash flooding, things like that in someone's basement. I mean, literally things floating through the basement and they come to find out after the fact it's not covered. Right? You have to have additional coverage for that flood insurance. So, you gotta know these things upfront, especially if you're in an area, right, that's maybe more prone to flooding, that's something that's probably worth the extra money on the front side of things.

Steve: Well, how about just your jewelry and, you know, maybe you got a painting or something. If you've got some stuff that's worth a little bit of money, chances are, that's not covered, and you have to have a separate policy for the valuables in your apartment or in your house for it to be covered. And for that to hold water, you literally have to put a list together of what you own and how much it's worth. Talk to your agent about that.

Amy: I also recommend... I had a friend several years ago, lightning hit the house and fire, lost everything, when you have to go back in your brain and think through what you have...

Steve: What you have.

Amy: ...in your house, you miss things. The insurance company isn't gonna help you with that. So, even just going through and videoing what you have, keeping that somewhere safe, all of these things, great ideas, check that policy, make sure you understand what's covered. You've been listening to "Simply Money" here on 55KRC THE Talk Station.