Amy: Tonight, do you have a plan? Why now, is the most important time to stick with it? You're listening to "Simply Money," I'm Amy Wagner along with Steve Sprovach. We never said it would always be easy, right? We did say you need a plan.

Steve: No kidding.

Amy: And I think you need to plan exactly for times like this. Joining us as he does every Monday, thank goodness, Andy Stout, the chief investment officer here at Allworth Financial, you know, guiding billions and billions of dollars from right here in Cincinnati. So he's keeping a close eye on these things. Andy, there's no way around it, last week was rough.

Andy: Yeah, it was not a good week at all. I mean, if you just look at basically any market index, I mean, it was tough, right.

Amy: Brutal. It was brutal.

Andy: Yeah. Well, we can thank the central banks for that, and not blaming them in terms of doing what they should or should not be doing, but just the fact that they came out much more aggressive than what the markets were already expecting, was really kind of like the clear catalyst for that [crosstalk 00:01:06.707].

Amy: Andy, I wouldn't take into that quickly, because the actual action that the Fed took should not have been a surprise to the markets, three-quarter of a percentage point rate hike, that's exactly what was expected. So I'm assuming it's the tone that the Fed chair, Jerome Powell, took in his comments afterwards that really set markets off.

Andy: Well, it wasn't just the tone, which was a big part of it and what he was saying. It was also what the Fed put out in what's called their summary of economic projections, they put these out every quarter, where they all forecast like where they think the unemployment rate might be for the end of the next upcoming calendar years. Same thing on GDP, which is how quickly our economy is growing, essentially, and also the Fed funds rate. So, and this one's important.

So where does the Fed think... And they pull each member individually on all of these, by the way. Where do they think the Fed funds rate, which is the interest rate that the Fed controls, the overnight, short-term interest rates that have a ripple effect, affect every other interest rate out there, essentially, where they expect those to be at the upcoming calendar years. And it's these economic projections, that really threw the market off.

I mean, basically, you know, they increased what they were expecting on the unemployment rate, they brought down what they were expecting for economic growth. And also, the hikes that the Fed is kind of penciling in for the market to take cues from was more aggressive than what was expected. I mean, they're pricing in now from the Fed another 1.25% in hikes this year, and at least one more next year. So taking this all together, kind of the big, big takeaway is that the Fed wants the market and consumers and everybody to know to expect higher than expected interest rates for longer than expected.

Steve: So we've got a reprieve in October, they don't meet in October. November, are you expecting another three-quarters of a point?

Andy: Yeah, I wouldn't be too shocked at that at all. I mean, if I'm looking at where the market's pricing in right now, it's another three-quarter rate point hike on November 2nd, when they meet, and then December 14th, probably a half point, like, that's what's getting priced in the dark. And that's what the Fed's saying they're going to do. Obviously, a lot will depend on how the data comes in between now and then.

And, you know, there's some risks with what the Fed is doing, because they've been pretty aggressive this year. But Steve, we don't know what the economic implications are for this yet, because there is a lag with monetary policy, meaning the Fed hikes rates, and it doesn't get into the economy for about 6 to 12 months. So maybe the Fed's already being too aggressive. And there's a lot of people who think they are.

Steve: I was gonna bring that up, because they may have done more than they need to, yet, they're continually showing that, "Hey, we're serious about this. We're gonna keep raising rates until we get inflation down." And if history holds true, the first reduction in inflation due to their increased interest rates won't have happened yet. I mean, how do you how do you plan around that?

Andy: Well, the Fed is just really worried about inflation sticking around. They're worried about what's called inflation becoming unanchored, so people expect high inflation in the future and becomes a self-fulfilling prophecy. And they're worried about mistakes, repeating the mistakes they made in the 1970s when they were probably off to a good start, when it comes to fighting inflation. And we obviously know what happened in the early '80s.

But what they ended up doing was they took their foot off the pedal there, and they saw the economy slowing, so they went in, like your rate cut mode, if you will, and wanted to support the economy. That ended up having the disastrous effects in the '80s and that's what the Fed doesn't want to repeat. And that's probably why they're coming out so aggressively, even though they have no clue about what their actions will have on the economy in the months ahead that they've already taken, but they're just going to keep going, keep raising rates in order to try to make sure that inflation doesn't take hold. And we don't see a repeat of the early '80s.

Amy: Yeah. A very delicate dance, and that certainly we don't know how it will play out anytime soon. You're listening to "Simply Money" here on 55KRC. Andy Stout joins us as he does every Monday, to try and make sense of what was a brutal week last week in the markets, based on the Fed's announcements of where we can expect to go in the future here. Andy, I'm gonna guess that there are some people listening who have ridden it out this far, but after last week, might be on the fence, right? They might be ready to jump off a cliff when it comes to, "I'm not sure I'm gonna stick in this because, you know, I wrote it out, markets seemed like they were rebounding, and then another brutal week." What do you say to people who are thinking of getting out right now?

Andy: Well, I mean, if you look at where we're at in terms of the market movement, where we've come from, where we're at today, history and statistics are on the side... If you're a long-term investor, first of all, that now could be an attractive entry point into the markets if you've got three to five-year money. Short term, near term if we're talking, you know, the next six months, who the heck knows? I mean, there's certainly a lot of uncertainty out there that would absolutely suggest that you could see lower prices, it wouldn't shock me at all.

But if you're going to tell me you can pick that exact bottom, when that will happen, or how far it's going to go down, you know, good for you, you're about one in a million of the people who can actually maybe do that somewhat accurately. What's really in your best interest in general, when we look at the statistics, at least, is looking at the longer term. I mean, past 50 years, Amy, if you look at every single calendar year, 80% of them are positive.

If you look at where we're at with consumer sentiment, and essentially how people are feeling, people are really kind of down in the dumps right now. That's actually a good thing for the market. Because the market looks at what's called, like, contrarian investing and doing the opposite, whatever people think you should be doing. That when sentiment is as low as it is now, historically, at least, that's resulted in some pretty strong future returns over the next year.

Again, who knows what's going to happen? There is no guarantee. But if I'm looking at all of these statistics, and after the market's fallen, you know, 20% from its highs, which is basically what it's done historically, again, you see some pretty strong poor [SP] returns. Now, I know economic uncertainty is high. I know, recession risk is high. But what I will say is that if you got three to five-year money, odds are in your favor that, you know, this could be an attractive entry point, and I wouldn't be surprised at all... You know, it would surprise me more, Amy, if this was not attractive prices looking back three years from now, I'd be shocked.

Steve: Andy, I'm with you 100% on that over 40 years of being in this business. I know that there are no positive signs at a bottom. I mean, it's when there are no more buyers, stocks are generally at their cheapest and there aren't a lot of buyers out there right now. My concern is, has the market already priced in the bad news and we're near a bottom? Or do you think the Fed may actually change their policy even more and be even more aggressive, more hawkish in the future, driving prices down further?

Andy: Again, I wouldn't be shocked if we did see lower prices. I mean, there are some indicators out there that would suggest that the bottom, like the ultimate bottom bottom has not been put in. That's like some technical oversold indicators. They're not really flashing a bottom quite yet. But by the time they're flashing a bottom, like you said, the average investor, and even your professional investors, their emotions take over, right, and it becomes really hard to go, you know, the opposite of what you, you know, feel like you should be doing.

Because you know, as you said, news is best at tops and worst at market bottoms. But when it's worse at the market bottoms, fear takes over and you're going to often end up doing yourself more harm than good because that's usually when you want to be buying, you wanna buy when others are selling. You wanna, you know, buy when there's blood in the streets as they say. You know, we're probably not at the blood-in-the-street point yet, but when you get to the blood-in-the-street point, it's really hard mentally to actually do that. That's why most people are better off doing to sticking to a longer-term plan.

Amy: Don't sign me up for the blood in the streets please.

Andy: All right, deal.

Amy: That does not sound like a fun time. What also of course, does not sound like fun, a recession. And this is something that you keep a very close eye on, you've got the recession scorecard. What is that telling us right now?

Andy: Well, recession risk is high. I mean, if you look at leading economic indicators which are data points that move before the broad economy moves, they're pointing to negative future growth. Now, I know we had negative economic growth in the first quarter of 1.6%, and in the second quarter, negative 0.6%. And the rule of thumb recession is two straight quarters of negative GDP for recession. It may happen, but I don't think they'll eventually say that's the start of a recession. I mean, odds are, they probably won't, just because there's a lot of other indicators that suggest there was a growth in the quarter. Because what happened in the second quarter was a trade imbalance was really out of whack. And then inventories in the second quarter was really out of whack, so business inventories. If you were to remove both of those, we have positive growth. And if you look at some other economic indicators, in the first and second quarter, like GDI, which is gross domestic income, also what I call Core GDP, which is business spending, X inventories, personal spending and what we sell to other countries, so our exports, that was solidly around 2%, in both the first and second quarter.

So, and part of the other reason that, you know, I think we probably, we're not in a recession, which, you know, time may say, you know, that we were, but really the other main indicator is the NBER, which is the National Bureau of Economic Research, which is kind of the official arbiter of saying when we're in recession. They're looking at manufacturing and trade sales, the job market, employment levels, manufacturing, like industrial production. They're looking at about five or six different criteria that they've stated historically, in the past, they look at, only this manufacturing, and what's called trade sales is consistently negative currently. So, that's one other reason I don't think we're probably in a recession.

With all that being said, sorry for that little bit of a history lesson there, Amy. With all that being said, if we look at where we're at today, and we look at the leading economic indicators, certainly suggests we could be seeing slowing to negative growth, like real negative growth, which could be recessionary, possibly, maybe in start of the first quarter, or maybe even the last quarter of this year, depending on what the Fed does in terms of their aggressiveness and how we actually see what the Fed actions, that they've already occurred, how that starts to influence the market.

So yeah, we'll continue to watch it really closely, the recession risks out there. But, I mean, here's another interesting tidbit. Recessions are normal, they're not fun, but they are normal. We've had 17 recessions over the past 100 years. They happen. It's the cost of investing. I mean, there's no free lunch, as they say, there's no easy... If you can withstand the volatility and withstand the market turbulence, and you have a financial plan to guide you during that time, we believe, certainly believe that you're going to do all right and be able to meet your financial goals.

Amy: Yeah. They feel anything but normal, but they actually are a very normal part of the cycle. Here's the "Simply Money" point, the key to weathering financial storms like we're in right now, making sure your financial plan has already planned for them. If your plan doesn't account for that, make sure you're hiring a qualified financial pro to help fix that as soon as possible.

Coming up, diversifying your portfolio is a must, so is tax diversification. Know how that works. We're gonna talk about 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, 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 podcast.

Straight ahead to some advice, if you are ever offered an early retirement package, we get these calls all the time, a lot to think through here, we'll tell you where to start. All right, major breaking news. Nobody ever saw this coming. Set your calendar now for a second, yes my friends, a second Amazon Prime Day this year.

Steve: When does it become just another sale? I mean, didn't these...

Amy: Just another day.

Steve: Yeah, really. Didn't Amazon start doing these on Black Friday, the day after Thanksgiving? Anyway, all of a sudden they're twice a year. Now, they're like, whenever. But, you know, when Amazon stock is down about 30% year to date, I think they'll do anything they can do to scramble. So yeah, they're having another one coming up. And yeah.

Amy: I think the pandemic forced us in this whole new weird shopping cycle for the holidays, where to your point that Black Friday and Cyber Monday, they used to be these huge retail...

Steve: It was a big event.

Amy: ...holidays, and, you know, gazillions of dollars would come in and then all of a sudden people weren't going into stores anymore. And you were ordering things online and you could price-comparison shop online and no one was really waiting for those days anymore. I think Amazon's trying to capitalize on some kind of a momentum, some kind of big draw to their sites. And I think what they realize is that holiday shopping has already started, you know.

Steve: It has. And so they're having another...they call it Prime Early Access Sale. But it's gonna be on October 11th, and 12th in 15 countries. And if it's anything close to July, is they sold over 300 million items in 48 hours. So yeah, I can see why they're doing it again. It just amazes me how if it worked once, it'll probably work 30 or 40 times.

Amy: Maybe. Or maybe it gets watered down, you know, I don't know. I don't know, we'll see. But they're offering this, of course, the same kinds of huge deals, and they're gonna have a huge list of the biggest holiday gift items, toys we love, holiday gift guides as part of this sale. And they're saying there will be, you know, tens of thousands of things on sale. If you're someone who is a huge Amazon fan, and you take huge advantage of the Prime Day, well, you've got another one coming up very soon.

We talk about diversity a lot when it comes to your investments, right? There's different kinds of things that you can invest in. But another component of having a diverse portfolio has to do with the tax treatment of where you're invested.

Steve: Amy, I'm glad we're talking about this, because this is...

Amy: It's a big deal.

Steve: It's a really big deal. And, you know, there are people that are just incredibly good and efficient savers. And then it comes time to retire and they're like, "Well, where am I gonna take the money out of?" "Well, where you saved." I mean, I met with someone who has well over $2 million in 401(k)s that became IRAs. And that's by far, it's like 99.9% of their net worth outside of their house. And I'm like, "Well, take it out of your IRA." "Yeah, but I'll pay tax on that." "Yes, because you never paid tax on it before. It's okay," you know. But if you have all of your eggs in one tax basket, you're limited to your options. And it makes a lot of sense to have money set aside, not just emergency funds and 401(k)s, but also maybe some other tax, maybe not so efficient vehicles.

Amy: And let's talk about what the options are here, right? What you recommend to people when they come in. Because I think you're right. For most people, most of the money that you have saved for retirement is in a tax deferred 401(k), a traditional 401(k), maybe some traditional IRAs. That balance looks fantastic until you start pulling that money out and you have to pay Uncle Sam the piece of the pie at the tax rate that you're currently at. So what are your other options? Well, there's Roth options. There's options that are taxed at a capital gains rate, which can be much more favorable. So how do you talk people through this?

Steve: Yeah, let's talk about that one for a little bit. You know, we cover Roths an awful lot. But we don't talk a lot about plain old taxable accounts. I mean, if you're married, you can have a joint bank account, you can also have a joint investment account. And I'm just shocked at how many people say, "Well, what do you mean, like an IRA?" "No, no, no, just a plain old joint investment account." "Well, I thought I can only put so much money in an IRA." "No, this is just an investment. You can put as much money as you want in a joint investment account. And if you're not married, in an individual account, but they're both taxed when taxable earnings are declared."

So in other words, you buy a bunch of mutual funds, bunch of bonds, bunch of stocks, whatever you buy, whenever they pay dividends, whenever they pay interest, whenever you sell something at a profit, you're gonna pay your tax on it, okay? And because you are doing that, you don't have to hold on to it till you're 59 and a half or any particular age, that money is yours, that money's liquid. So it's a good idea to have three buckets of tax money, the emergency fund, that's your emergency, the retirement account that's tax deferred, and something in the middle, that's a taxable investment account. We can get into the tax, maybe never, like Roth IRAs. But those are the three main buckets that you need to have some money in.

Amy: Another one I would throw out there, and you know, it's just because I'm such a fan...

Steve: I know where you're heading.

Amy: ...is HSA, Health Savings Account, never taxed bucket, this is a very tiny bucket, right? Because there's nothing else in it. But yes, a Health Savings Account, if of course, that high-deductible healthcare plan makes sense for you, this can be a great thing, because it's triple tax advantage, you don't pay taxes on the money when you put it in, right, you can invest it, it grows tax free. And then if you take it out for qualified medical expenses, or you can even take it out above a certain age and it becomes like a de facto 401(k), you pay taxes on it at that time. But let's face it, for most of us, there's going to be substantial medical costs in retirement. This is also a great bucket to be saving in.

Steve: No question about it. And I don't wanna just completely eliminate Roth IRAs. They make sense. We'll talk about Roth conversions some other time. But Roth IRAs if you've had them for five years, and you're over 59 and a half, in most cases, tax free on distributions.

Amy: Also a great option. Here's the Allworth advice, having the proper tax strategy could save you thousands in retirement. Coming up next, specific ways to protect yourself from ID theft on social media. 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. You may not be thinking about it every time you get on Facebook, Instagram, Twitter, you name the social media platform that you spend the most time on, but you could be giving tidbits of information out every time you interact with those social media platforms that could lead to identity theft. So joining us tonight with ways that you can protect yourself, what you need to know, is our tech expert Dave Hatter from Intrust IT. I think we've become so accustomed, Dave, to interacting with social media, that we don't even think about the information we're putting out there that could potentially be used against us.

Dave: Amy, I think you're exactly right. I'm not sure that the average non-tinfoil hat wearing person, which obviously excludes me, really understands just how much information these apps can potentially collect. And that again, as I've said, so many times when we've talked, when you use an app like TikTok, again, privacy, security, dumpster fire, I can't stress enough, you should immediately delete TikTok if you use it, don't take my word, go do your own research and see that it's just a continuous stream of bad news on the privacy and security front. Not to mention, it's owned by a Chinese company, you know, in China, subject to China's laws, which means that the Chinese government has access to all of the data it collects, which is everything that it can. So whether it's TikTok or whatever else, you are their product, right? They're making these platforms, these apps, these tools free, or at nominal cost, and in some cases, even maybe hardware too, the actual devices themselves...

Amy: Dave, I think that's such an important...

Dave: ...because they wanna collect your data.

Amy: Yeah. And I think that's such an important point to make. Because we use the social media, right? It provides entertainments to us, so we don't necessarily think of ourselves as a product. Once you do, right, you're the product because they're taking your information as you interact with these platforms and selling it to other people, I think everything changes.

Dave: Yeah, I think you're exactly right, Amy. I think you're right, most people don't think of it from that perspective. And, you know, you go download the latest app, some new social media platform that's gotten hot, because your kids talk about it or whatever. You download this stuff and, you know, especially when you don't read the Terms of Service, and, you know, hat tip to Apple, they've now made it a requirement that these companies must disclose to you what information they're going to collect about you. Now, obviously, you may not read it. And you also have the option to opt out and still use the app, right. And Google's kind of catching up in this space on the Android platform.

But I think if most people would stop and actually see all the information they collect, and then realize there are hundreds of data brokers who do nothing but buy this data, and then sell it to other companies, aggregate it, turn it into giant dossiers about you, which can then be used to do things like, "Hey, you know, would Amy Wagner be a good renter?" "I don't know, let's buy a bunch of data about her and run her through our magic algorithm that we believe can determine if someone is a good renter, or whether I should give them health insurance or whatever."

Amy: Creepy.

Dave: "And no, no, she wouldn't." So you don't get it. And you don't even know why.

Amy: So what can we do, right? I mean, this is how information is being used, and certainly will likely be used in the future. How do we protect our information? What can we do to lock it down?

Dave: So, you've already touched on it a little bit, you know, don't just download the first thing you run across. If you do download an app, and you decide to stop using it, then delete it, so it can't continue to collect information about you. And then, you know, think about all these different social media apps that are out there. I'm not saying don't use Facebook. I'm not saying don't use LinkedIn or whatever, I'm saying understand the trade-off is you're using these things for free, and they're capturing your data. And that's the deal, right? And then not only understanding that deal, but, you know, learning how to limit your digital footprint. If you are going to use Facebook, for example, they're one of the most notorious organizations for this kind of data collection. Don't use the Facebook app. Don't use WhatsApp or any of their apps. Only use Facebook through a privacy friendly browser like Firefox, with all the security settings turned up where you can severely restrict what they can collect. Be careful what you post.

Amy: I was just gonna ask you what you do. Because it's not like Dave Hatter is preaching to us from on high and never interacts with social media. You do. You're on Facebook, you're on Twitter, we're friends, we're connected. I see you on there all the time. So how do you do it?

Dave: Yeah. I don't use, like, well, I only use a limited number of social media platforms, primarily Twitter, Facebook, and LinkedIn. And I use these things from a privacy friendly browser, typically Firefox or Brave. They're both known for being very privacy and security friendly versus Chrome or anything from Google [inaudible 00:24:42.705].

Amy: You don't go directly through the app at all.

Dave: Yeah, I don't use... The apps are not installed on any my devices. I use a web browser, I log into Facebook, I do what I'm gonna do. I understand the trade-off of the data that they wanna collect. And I limit what I post out there. I only generally post things like, "Hey, tune in to Amy's show tonight, we're gonna be talking about things like this to keep you out of trouble, you know."

Amy: Which we always appreciate.

Dave: So, you know, I understand the trade-off. I limit what I post. I understand there's no real privacy when you use any of these platforms, because even if you have the privacy settings set right, if I share something, you see Amy, what stops you from just taking a picture of it with your phone and doing whatever you want with it?

Amy: Yeah.

Dave: So it's these simple things like this, understanding the value of your data and how it can come back to bite you. And then just being cognizant of the fact that when you use these things, think about what you're putting out there and how it could be used. You know, if I throw enough information out there about myself to make it easy to impersonate me, then, you know, that might lead to identity theft down the road, because the bad guys know people use these platforms. And there's a whole field in cybersecurity called OSINT, open-source intelligence. It's people using all this information that's freely and publicly available to perpetrate various crimes like identity theft. So, it's just thinking about these things.

Amy: You know, on a very practical standpoint, I think, okay, we always talk about enabling two-factor authentication. And then, you know, usually there's a drop-down menu with questions in it that you can say, "These are the questions I want you to ask me. What's your best friend's name? What's your mom's maiden name? What's your dog's name?" And I'm thinking, how many of those things people put out there on a very regular basis, that then can be used for some of these security questions. And it's really easy to find that information about you.

Dave: You're spot on. And this is something people almost never think about until someone brings it up, which is if you go online, and you take that quiz to figure out which Disney Princess you are, I'm not saying those are always nefarious. But many times, these quizzes are asking the kinds of things that would potentially come back to bite you on the security questions you're talking about.

Yeah. If you post your dog's name, your cat's name, you know, all this sort of stuff that's fun to post and fun to talk about, and so forth, and then you turn around and use that for... You know, if I can get on Facebook, and see you have a brother named Fred, and one of your security questions is, what's your brother's name? Well, as a bad guy, I can go to Facebook, see you got a brother named Fred, I can take a guess at it. Bam, I might get in. So yeah. It's very important to understand that the bad people out there are smart, and they're devious, and they're crafty. And they're going to use any kind of publicly available information to get at you or whomever, they're not necessarily even targeting you or me, you just become a target of opportunity, because you're making these kinds of mistakes that make it easy for them, right? So, you can...

Amy: Yeah. Quickly here, I wanna get to privacy settings. What do we need to know about those?

Dave: Well, in general, like I said before, I don't use any of these social media apps, I only use their browser-based web platforms. So if they don't have a browser-based web platform, I don't use them, aka TikTok, for example. But, you know, lock your privacy settings down as much as possible. Understand what they mean, and also understand that once you're connected to someone, once you're a friend or a connection, or whatever it's called on that platform, and you share something, you know, once it's out there, there's really no getting it back because you can't stop someone else, again, from taking a picture of it with their phone and then doing whatever they want with it.

So, just thinking about what you're putting out there both in terms of, "Can it come back to bite me somehow down the road? Or is it information that bad folks could use to impersonate me, steal my identity, attack me in some way?" And, you know, don't put that stuff out there. It's that simple.

Amy: A great warning as always, yes, from our tech expert, Dave Hatter, as far as understanding that you are a product when you are on social media, and they are gathering your information. Be careful what you put out there, hackers can use it against you. 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. Do you wanna save a little money when shopping online? Something you can try straight ahead. You know, it's often out of the blue, I think, Steve, that people go to work on a Monday or a Friday, doesn't matter what, and all of a sudden, they're called into the boss's office and out of the blue, right, offered an early retirement package. And this happens more often than I think a lot of you would ever believe.

Steve: And for some people, it's a godsend, for other people it's, "Wow." You wanna kick off some anxiety, tell them, "Okay, here's your deal. I don't know if you're going to be fired if you don't take it. But I need an answer soon." I mean, that's a tough one. And don't expect help from HR because they are legally very, very constricted on what they can tell you. So, you know, everybody that is out there that gets an early retirement offer, you gotta take a hard look at it, assuming, "Okay, if I don't accept it, there may be some bad news and I won't get this package." So, let's talk about what a typical early retirement package is.

Amy: And I also wanna say that I think there's two camps of people, those that don't know that early retirement packages usually come around at a certain time for people who have been there for a certain number of years, right? They're almost expecting it like, "Hey, the next time that comes around, like I'm jumping on it."

And then there are people who have no idea it is coming. And for those people, it's an incredibly emotional time. "Well, I've worked here for how many decades and all of a sudden you don't want me here anymore?" The problem with those who are incredibly emotional is it almost just stops you in your tracks, and you can't even process it. We hear from so many people who, "Hey, this happened to me, and I've been just so upset about it, I haven't been able to talk about it. I need to make a decision today." And you're like...

Steve: Yeah, exactly. I've gotten that call.

Amy: And you're like, "Well, we can't help you then. Yeah, we can't help you. Yes."

Steve: You know, if you've had a financial plan done for you, and you know you can retire basically yesterday, this is the best news. When I say it's a godsend, it's like, "Hey, I was planning on going out, I hadn't put my notice in yet. And now they're giving me all this extra money if I take the deal." I've had that happen. But if you've never had a financial plan drawn up, and you have no clue if you can afford to retire, it's extremely stressful.

So, you know, a typical package usually starts out with cash, usually, "Hey, you get, you know, two weeks' pay for every year you've been with us or one week's pay for every year you've been with us." So that can be a big chunk of money if you've been at the company for a while.

Amy: Sure. And then of course, what vacation time have you accrued or sick time that hasn't paid out? Some companies though, will also throw in employer-funded COBRA, right? That's a game changer.

Steve: That's a big deal. Yeah.

Amy: Because I think for so many people the question of, "Okay, this is great money. But the question is, how am I gonna cover my healthcare expenses between now and when Medicare kicks in?" And if this is an option for you. And I think, and I wanna get your take on this too. But sometimes, this can be negotiated.

Steve: Sometimes yes, not always. But, you know, the COBRA coverage, COBRA just means for 18 months after you've left a company, you are allowed to continue on your company healthcare plan. And if you've been paying 15 bucks a week or paycheck or 20 bucks a paycheck, whatever the deal is, you're gonna be shocked at how expensive...

Amy: At how much it actually is. Yeah.

Steve: Yeah, how much the company was paying on your behalf. I mean, if you go out on your own and buy health insurance, and you're in your early 60s, and not quite at Medicare age yet. I mean, it's not unusual for me to hear $1000 and $1200 a month for a husband and wife. You know, that's a lot of money for healthcare. So yeah, if you get offered health care, that's a big deal. And not every company offers that.

I'll tell you another one, Amy, every once in a while I'll see a bridge plan until you can draw Social Security. So if the group that is being offered early retirement, let's say is 60 and over, okay, you can't draw Social Security in most cases till you're 62, you might have a little enhancement of your payments to get you through that two-year period until Social Security kicks in.

Amy: I wanna talk through who this makes sense for and who this does not make sense for.

Steve: Sure.

Amy: Who is it that walks in your office and you're like, "Yes, you go for it." Like, they already have the plan in place. They're already, you know, on the path there. And you can look at the numbers and say, "Hey, absolutely take this. This makes sense." Right?

Steve: Yeah, I've had that come up. But I've also had what you mentioned earlier, in the case where somebody says, "Hey, I gotta make a decision." "When?" "By this afternoon." I can't draw up a plan in two hours. I mean, it just doesn't happen. And that gets back to preparation. I mean, by the time you're 55, or 60, you should have sat down with someone and gone through, "Okay, can I afford to retire at this age?" "No? How about this age?" "How about this age?" And that way, when someone comes into my office, I just ask them, "Okay, what's the deal? What are you getting? What do you plan on doing with the money?" "Okay. And this, so you'll have payments into your 401(k) for 6 months more than you thought? Okay, let's add that to your plan, fantastic. Looks great." Five minutes, I can tell them that. But if you've never had a plan, then you don't have a clue. A lot of people haven't even sat down by the time they're 60 years old. "And here's how much I need to spend in retirement." If you don't know what you spend, you don't know when you're gonna run out of money. I mean, these are things you have to do way ahead of time to cut down the anxiety level if and when a deal like this gets offered to you.

Amy: Yeah. So that's the first step, right? How much am I going to need to live comfortably in retirement? And then, are you old enough to access any of those retirement accounts? What's your plan for healthcare? That's a huge one. What other sources of income do you have available right now? Will it have a negative impact on pension or anything like that? There's a number of things to think through.

Steve: How about mentally?

Amy: Yes.

Steve: Are you mentally ready to retire or are all your friends at work and you don't have any hobbies? You're gonna have a rough time transitioning. Are you gonna go back to work? "Okay, fine, they don't want me but I'm not ready to shut down yet." Can you get a job somewhere else? If you're going to get a job, "Should I file for Social Security or wait until I find something?" These are tough questions you have to ask yourself within a very short period of time.

Amy: Here's the Allworth advice, if you are offered an early retirement package, get with a qualified advisor to determine all the financial and personal implications of this decision before you actually make it. Coming up next, how you can save money, thanks to a term in online shopping called "cart abandonment." We'll tell you what we're talking about. 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. There's a term in online shopping, right, as we've all gotten used to online shopping, of course, a whole new vocabulary pops up. And there's a term called "cart abandonment." I've done this many, many times before. You're going through your shopping, you put it in the cart, and then for whatever reason, you leave it there, you never make the purchase. And it's having a huge impact on retailers, who are trying to in many cases, find a way to get you over that hump and get you to go ahead and buy it, and that can work out in your favor.

Steve: So you're saying you have cart abandonment issues?

Amy: I have cart abandonment issues.

Steve: Okay, there's therapy for that I'm sure. No, it's a big deal in retail. I mean, from a retailer's perspective, they look at it as, "You know what, we're losing about 75% of our sales to cart abandonment, we gotta do something about that." From my standpoint, it's like, "All right. I'll look into it and okay, maybe I'll put it on Save For Later and my wife will notice it and buy it for me." You know, that's the way I get her to pay for stuff, but she usually doesn't, but that's one of the reasons you know, I want to buy it later. Or, you know, shipping...25% of all shopping cart items that are abandoned, are abandoned because of shipping costs and I've been there.

Amy: I have too.

Steve: I bought a DVD once that was...or I was gonna buy it, that was $18, they wanted $25 to ship because they go by the cost, if it's below a certain cost, you've got to pay for extra shipping...

Amy: Shipping, yeah.

Steve: ...even though it's a DVD. Yeah.

Amy: Yeah. And that's the primary reason why people say, "Thanks, but no thanks." And other reasons why you just abandon that cart, maybe now all of a sudden you have to set up a new user account, not worth it. Maybe you've got concerns about online safety with payments, the lack of express shipping offered, lack of options there. But because this has become such a huge deal for so many retailers, what you will find some of them, you put it in the cart and the next day you get an email.

Steve: Oh, I've gotten those. They're kind of neat, yeah.

Amy: Yes, I have too.

Steve: "Hey, did you forget about this?" Yeah.

Amy: Yeah. "Hey, you forgot about this. It's in your cart. Here's a code 15% off, 20% off." So, sometimes it makes sense just to do that. For one reason of course, is because you might get, you know, some money off. But another thing too is for anyone who just buys and buys and then has regrets over it, I always say, put it in the cart, wait 24 hours, if you don't want it anymore, you didn't need it, right?

Steve: It's called downtime.

Amy: If you still want it, then buy it. But understand cart abandonment is an issue and it could save you money. You've been listening to "Simply Money" here on 55KRC THE Talk Station.