01.27.26 Ask An Advisor With Wes Moss

Is the Middle Class Shrinking? & the Quiet Power of Dividend Growth The middle class is shrinking — but perhaps not for the reason you’ve been told. While headlines often paint a bleak picture of economic decline, the underlying data reveals a much more complex and surprising transformation. Wes Moss dives into the "missing" middle class, using recent data to uncover where those families have actually gone since 1979. Also, Wes pulls back the curtain on a hidden force in the stock market: the math of dividend durability. While many investors are distracted by flashy price targets, they are overlooking a component that has historically accounted for over a third of the market's total return. Wes breaks down why a company’s dividend policy is one of the most reliable signals of financial strength and how the "quiet persistence" of dividend growth has consistently outpaced inflation for over sixty years. Mentioned on the show: Fee Only Network - Find A Financial Advisor What Is a Fiduciary Financial Advisor and Do I Need One? How To Find and Choose a Financial Advisor Retirement Calculator Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the January 27, 2026, Ask an Advisor episode of the Clark Howard podcast. Submit your questions at clark.com/ask. We hope you enjoy our weekly Ask An Advisor episodes. Let us know what you think in the comments! Learn more about Wes: BOOKS BY WES MOSS Wes Moss, CFP® Wes Moss - Clark.com Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:01Speaker 00

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• 0:48Speaker 03

  Welcome to Ask an Advisor. I'm Krista Duvias. You're with Wes Moss.

• 0:52Speaker 04

  I'm Wes Moss.

• 0:53Speaker 03

  We're going to have some Ask Wes Moss questions coming up later on.

• 0:57Speaker 04

  Yes, we do.

• 0:58Speaker 03

  But first, we're going to talk about the middle class. Is the middle class shrinking?

• 1:02Speaker 04

  I want to talk about dividends. I want to talk about the dividend durability today.

• 1:06Speaker 03

  We are going to talk about that later.

• 1:07Speaker 04

  But we're going to start out with how the middle class is shrinking in America. And probably not the way you might think right out of the gate because it's shrinking because people are moving up. So we're going to just dive right into that.

• 1:23Speaker 03

  Okay.

• 1:24Speaker 04

  Depending on when you're watching this, there recently was the World Economic Forum at Davos. World Economic Forum at Davos has hundreds of CEOs, world leaders, politicians, but it's really about business and economics. So as you can imagine, there is the, we're what, three, around three years into artificial intelligence, which is the biggest technology of our time, really since the internet, probably mobile phone, then internet, then artificial intelligence. And the real worry, and we've covered it here before, is about jobs and will artificial intelligence take jobs? And then this to me relates back to this question about middle class and incomes in America. And Jensen Huang, who's the CEO of Nvidia, and I always, Krista, I always think of it as what?

• 2:10Speaker 04

  Are people saying these things just because it helps their business? And is it helped their cause? And I would say out of the gate, sure, this is a guy that's powering a lot of artificial intelligence through his technology companies. But then I also think these guys are close, he's not a billionaire, but he's close to a billionaire. So it's not as though he, he, he's fine. And it's almost as though you would expect someone in that state that he doesn't need to really, he doesn't need to fit or lie or twist things because he's, he's okay no matter what. So I do take some stock in who is arguably one of the most well-respected CEOs on the

• 2:51Speaker 04

  planet and has been open and transparent about what he thinks AI is going to do. And some CEOs have said it's going to ruin a bunch of jobs. But when it comes to the middle class, what he's talking about, and let me just start by giving you the definition of incomes when it comes to what the American Enterprise Institute, Steven Ross and Scott Winship at AEI just published an article about the middle class. And I think we need to start with the numbers of what they mean when it comes to income and where that lands. So I don't know whether you agree with this or not. These seem pretty reasonable to me. It'd be hard to disagree with these numbers, but they're not mine. They're from the AEI. So the poor or near poor category are families. And this is, it's a family of three.

• 3:36Speaker 04

  So it's, it's a couple and, and one child, household of three. Forty thousand or less is considered poor in their research. Lower middle class, forty to just shy of seventy thousand, so sixty seven thousand. Core, middle class, which is the, the area that we're talking about that gets a lot of attention in the United States, particularly in midterm election years. Core middle class is sixty seven to one hundred and thirty three K for the household. And then upper middle class, one hundred and thirty three thousand to four hundred K income annually. And then the quote, rich at four hundred thousand. And what Jensen Huang said is that if you really look at what happens, and this is

• 4:17Speaker 04

  the, it's an economic principle called the Jevons, J E V O N S paradox, which says that once something becomes more efficient and easier to use, then it actually gets more use and there's more utilization of it. So what Jensen Huang is saying is that because, first of all, the build out of artificial intelligence, which now will be multiple years, they require a lot of people and they're skilled jobs. It's plumbers, electricians, steelworkers, construction, network technicians, data center specialists. These are not necessarily PhD jobs, but they are solidly in that upper middle class range oftentimes. So think about,

• 4:59Speaker 04

  that's a boom right there. Then think about the healthcare industry and think about how, if healthcare was, have you talked to anyone recently that says, oh, I had a great healthcare experience. I was able to get an appointment. I was able to pop right in when I was sick. Every story I hear about healthcare is the opposite of that.

• 5:21Speaker 03

  Right.

• 5:22Speaker 04

  It's, I just talked to a friend and a family I work with the other day, breast cancer. Okay. How long did it take her to even get an answer about the, her MRI and then to get an appointment and then to schedule a surgeon? And you have people in America that are in this, just this purgatory of fear and then it's months away before you can get any help. So clearly the system is inefficient. Now imagine now artificial intelligence makes the system far more accurate, more correct, quicker. The utilization might actually go up a lot. So it's, it's not gonna, it shouldn't take jobs. As an example, Jensen Huang says

• 6:02Speaker 04

  you're going to need even more nurses and more radiologists and more doctors. So he thinks there could even be a job, not a job shortage, but a labor shortage in the future because of artificial intelligence. I think that ties into-

• 6:18Speaker 03

  He thinks, you said, he thinks there's gonna be a-

• 6:20Speaker 04

  Labor shortage, not enough labor, not a job shortage, a labor shortage. People, enough people to-

• 6:26Speaker 03

  Need more workers.

• 6:27Speaker 04

  Need more workers. Which goes into what Rose and Winship say. Again, always have to look at where these people are coming from. From what I can tell, one of these guys is more of a Democrat and one's more of a Republican. So I look at this as kind of a bipartisan white paper that they wrote. I gave you the income ranges. In 1979, 10% of families, only 10% of families were upper middle class. Now, these numbers are inflation adjusted. So this is the equivalent of the numbers that I just gave you. Today, 54% were in the middle class.

• 7:02Speaker 03

  Really?

• 7:02Speaker 04

  So 10% were upper middle class, 54% were core middle class. Makes sense. By 2024, 31% of families were upper middle class. So it went from 10 to 31, a triple. Only 35% are below core middle class, while it used to be 54%.

• 7:23Speaker 03

  That's good.

• 7:24Speaker 04

  So we've, we've seen a, a maybe, maybe the middle class has graduated in large part to the upper middle class in America. Again, big shift, nobody talks about core middle class has shrunk. 36% now down to 31%. Poor, lower middle class shrank even more. And the upper middle class, that 133 to 400,000 job range has exploded in the United States. And that's before you even look at how people are better off just from what they're able to purchase with their inflation adjusted incomes today, far more than we, we saw in 1980. So the message here is that you're going to keep hearing that

• 8:09Speaker 04

  the, the middle class is ignored, the middle class is shrinking, the middle class has been graduating and moving up the income ladder.

• 8:17Speaker 03

  All right. You ready for questions?

• 8:19Speaker 04

  Sure.

• 8:20Speaker 03

  Ally in California sent this one and she said, hi Wes, my husband and I disagree on how much liquid cash emergency savings we need. Currently, we have three months plus enough for insurance deductibles and property taxes. We have very dependable jobs and my husband also gets a pension, which would probably cover half our monthly expenses. We also have long-term disability insurance in case of illness or injury, keeping us out of work. Is three months enough or do we need closer to six? I love the having to resolve a dispute.

• 8:51Speaker 04

  Welcome to my office. Ally from Cali and her husband, and I don't know which one, see what's interesting about that, I don't know which side either of them are on. I don't know if it's Ally that says three and her husband says six, or her husband says six and Ally says three.

• 9:07Speaker 03

  Okay.

• 9:07Speaker 04

  But leave it like that because it's an, this is unbiased.

• 9:10Speaker 03

  I like that.

• 9:11Speaker 04

  It's just, I don't know who wants what. So sure, six months is kind of a standard and it's hard to argue with six months of emergency money and that's not dry powder, that's just actual cash, cash that is highly liquid, ready to be spent, it's not in bonds, this is emergency money. So I'd say the default answer is six, Ally, but you guys have a pension that's coming in that covers half the income.

• 9:38Speaker 04

  So really you don't need six months of spending, you only need half of that, so you only need three months because you have the pension coming in, because you have insurance already sitting in that account, you have your property taxes already sitting in that account. So, and you have long-term disability insurance in case something happens to, to your job or your husband's job. So because of all those variables, I would actually lean closer to three months. If you have all these other income sources coming in that are essentially guaranteed and they're there for safety, which reduces how much safety cash you have to have. So tie goes to three versus six. I don't know who, who I sided with, but that's my take.

• 10:22Speaker 03

  But you both win because you already have enough and the person who wanted six months was just trying to be extra careful.

• 10:28Speaker 04

  Okay, everyone gets a trophy. Everyone gets a trophy.

• 10:32Speaker 03

  I do not like that everyone gets a trophy, I'm with you. Okay, Daniel in Georgia says, hi Wes, my wife and I are considering getting a financial advisor. We currently have one child with a second on the way, congratulations. I've been doing our financial planning for our family ever since we were married. Now with the second kid on the way, things feel more complex than ever. We have some goals that we would like to achieve. We want to save at least 20% of our income toward retirement. We want to save for college, we want to purchase a new house in the next five years. My wife, who's a teacher. Wants to go part time once our second is born. With these savings goals, increased expenses and decreased income, I feel like now's the time to get serious about our finances. I simply do not know where to start.

• 11:16Speaker 03

  Are there financial advisors out there who will take a look at our situation and build us a plan? Well, I have to move my money to their management. The thought of not being hands on with our finances makes me queasy. What should I look for and what should I be wary of? Where should I start? Help me, Obi West Kenobi, you are my only hope.

• 11:35Speaker 04

  God bless you, Daniel.

• 11:38Speaker 04

  Yes. Why wouldn't you? Think about what Daniel is just saying. Life is easy if it's just you. And then it's still pretty easy if it's just you and your spouse. And then it's a child. And then it gets a little more complicated because two people are working and you have a child. And then, and I've gone through this exact stage of life and had the exact question you have, Daniel. You have a second child. By the way, what happens when you have a third? Or a fourth? Then it gets even more complicated. And you have a lot of goals, like a lot of responsible Americans. But this is, you're in the super responsible category because you want 20% savings. You want to save for college. You want a new home, which is a big lift.

• 12:22Speaker 04

  You'd like your wife to go part time. You'd probably like your wife to go not work at all because the cost of daycare and childcare may exceed what she's even making when it comes to after tax income. So that's a huge inflection point. And that, that is actually, by the way, one of the biggest challenges in America. If you think about inflation, affordability, cost of childcare, and then whether you work or not, that's a huge question mark for a lot of people. And then who's going to actually work with you? So to one, why, why would people not want a financial advisor? When it comes to all of the complexities in the world

• 13:03Speaker 04

  and you move to just you and just your spouse, to you and a family and a lot of moving parts and different goals and different jobs. Doesn't it make sense to have a quarterback or a coach or an architect or someone to give you a blueprint or keep you accountable, keep you rational and be thinking clearly? So I'm, I'm a believer that, you know, I get, we get a lot of questions like, do I need a financial advisor? Should I get a financial advisor? Yeah, I don't know why people wouldn't.

• 13:30Speaker 03

  I mean, it's kind of like, though, in a way, someone might say, well, it's like you're asking a doctor. Should I go see a doctor?

• 13:35Speaker 04

  And the doctor is rightly going to say, yes, you should be a doctor. Or Warren Buffett says, if you ask a barber, need a haircut, of course, he's going to say you need a haircut. But the, I just don't know that downside of it, unless you get somebody bad. Now, the downside for you, so the downside is, is yes, fees. You got to pay somebody to do a plan. You may pay someone to help manage those assets. I guess that is the downside, or you could get bad advice. But if you go to feeonlynetwork.com, you're going to find lots of people in your area, your zip code, your county, all over the United States, not just in the, in the state of Georgia. And I've, I've looked at these resources. I can't vouch for these folks, but there's a lot of them.

• 14:19Speaker 04

  Now, there are also, there's some transparency there. A lot of them will say, best for the folks with a million dollars or more. This is fee only folks, but they still can manage your assets and managing those assets, they're going to get a fee to do that. But if you keep going and you look a little deeper, there are other financial advisors that say they specialize in young couples, new families, people starting out in retirement. And for those folks, you may not have a whole lot to even manage. So you may just be paying for a plan. And I think that that's a tremendous resource. And yes, you can find folks. Now, it's totally fine to have a financial advisor that's virtual.

• 15:02Speaker 04

  I work with a lot of families in other states, but those people I have met in person at some point or met many times in person. So you do want someone, I think, in your state that you can meet with in person for the first couple of times before you make it more convenient and go virtual. But you do want someone who can think objectively, unemotionally, lay out a plan. And that may be all you need in the early years here. And you'll just pay a one-time fee to do that. And I think that that can, is worth more than the fee that you pay. On the asset management side, you may want to manage your assets and there are a lot of people that do that and do so effectively. But there are a lot of people that just don't want to do it.

• 15:45Speaker 04

  And because you don't want to do it, you usually don't do a great job. So a lot of times those fees that are, they're a lot, a percentage of assets, a half a percent, 1%, that's a lot of money. But in the net, net of it over time, does it cost you anything for a lot of people? And the answer is, in a lot of cases, it on a net basis, may not be costing you anything because you're better off than you would have been if you had, had, had completely done it on your own. And that's my take, and I may be a barber about a haircut, but that's what, that's really what I

• 16:20Speaker 03

  But if you are using someone to manage your money, fiduciary?

• 16:25Speaker 04

  Fiduciary fee only, which means there's no commissions. There's no products that someone gets compensated to sell you on. And I think that eliminates the conflict of interest that has existed in the investment industry for a lot of years, which is a firm pushing a product to an advisor, then the advisor has to turn around and sell it to a client. And that happens when you have financial incentives for different products. If, if you're on a flat fee basis or a purely percentage basis, and there are no particular commissions, then it really should be removing financial conflicts.

• 17:02Speaker 03

  All right. And then Ron in North Carolina says, I invested in a gold ETF and physical bars as an alternative growth asset and as a hedge against stocks in the event of a major stock correction. But with the rise of gold prices, I now wonder what would happen to the price of gold upon a major stock correction? Do they still hold a low correlation? And they are still very different types of assets.

• 17:25Speaker 04

  They really are. So let's talk about correlation, Ron. Correlation, think about correlation of one means that this asset class goes up by 10%. And a one to one correlation means this asset class goes up by the same. This one goes down 10, this one goes down 10. That's a 1-1 correlation. A negative one correlation would just move the opposite. So if if two assets are negative one correlated, this one goes up by 10. This one goes down by 10 and vice versa. Gold essentially has a zero correlation. So it's not inverse. It's just zero, meaning that sometimes gold goes up and stocks go up. Sometimes stocks go down and gold goes up, vice versa.

• 18:07Speaker 04

  But over a really long period of time, it's essentially a zero correlation and a very unstable correlation, because sometimes they move in the exact same direction. If you go back a week or so during Davos, in a giant stock market sell off, the S and P 500 was down 2% in a day. That same day, gold was up almost 4% in a day. So it did work in that particular scenario. But over time, it's just a zero correlation. And that's still a good thing. That most assets, particularly risk assets, are somewhat correlated, if not perfectly correlated. And gold at least is zero. So I think it's still a good diversifier. And just because it's done well lately doesn't mean it's still not a nice diversifier for you.

• 18:52Speaker 03

  All right. And we're going to take a quick break. We're going to come back, get to more of your questions. And then Wes, you're going to talk about one of your favorite children, dividends.

• 19:01Speaker 04

  Yes, ma'am.

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• 21:16Speaker 04

  Welcome back to Ask an Advisor. I'm Wes Moss, along with Kristin Ebiass. We are diving into more questions and we're talking about dividends. Clark has his favorite children. How many children does he have as his favorites?

• 21:31Speaker 03

  I mean, we say in terms of investing Vanguard, Schwab, Fidelity. But then he loves Costco. He used to love, well, he called Southwest Airlines one of his girlfriends at one point. But Southwest and Clark are totally on the outs.

• 21:45Speaker 04

  That's right. They're kind of broken up.

• 21:46Speaker 03

  Right. I mean, the whole private equity takeover.

• 21:50Speaker 04

  Clark loves private equity. We know that.

• 21:52Speaker 03

  Yeah.

• 21:53Speaker 04

  Particularly in 401k plans, which.

• 21:56Speaker 04

  He makes a great point. We'll see how that, how that happens in 2026 or later, 26, probably 2027 before we really see it.

• 22:05Speaker 03

  But dividends are definitely one of your favorites.

• 22:07Speaker 04

  Dividends are, if I had to pick a favorite child, it would be, it would be dividends and particularly the growth of dividends and dividends. And I've gotten, I think we had a question a week or two ago that said, nobody ever talks about income investing or dividends. And I said, wait a minute. I'm not talking about it enough. So I want to talk about today, but the, the numbers behind dividend durability. Dividends are not just, they are an afterthought, but they shouldn't be. And I understand today why they're a little bit of an afterthought. The, the price of the stock market has gone up so much that the dividend yield right now in the S and P 500 is only about 1.2%. So it's one and a quarter, big whoop. What's the big deal? You don't even notice it.

• 22:53Speaker 04

  Well, over the course of history though, if you go back to 1960 until last year, dividends made up 37% of the total return of the stock market, 37. So call it over a third. Remember, we're all after the same exact equation, total return. We want our money to grow. The formula to get there, pretty uncomplicated. It's just growth plus income. So you can have a scenario where your stocks rise and 95% of all of your gains are just because the price appreciates. Or you can have a situation where you have part growth and part income and that adds up to your long-term total rate of return. Over the course of history, again, the

• 23:38Speaker 04

  income that you receive from, this is just the S and P 500, it's almost 40% of the total return has been because of dividends. Now there have been periods of time when S and P dividend is three and three and a half and 4%. Today it's lower than it's been, but there are still plenty of companies out there that pay 3%, 3 and a half percent, 4%. So it's not as though you can't find higher yields. Now, let's also talk about, I think, right out of the gate, when a company pays a dividend, it's a very big decision. The board sits down, they say, how are we going to allocate capital? We're making money. What are we going to do with that money? Well, we're going to reinvest, we're going to build a new plant, and then we're going to distribute a dividend, 100,

• 24:18Speaker 04

  200, 500 million dollars worth of our profits, our cash, to shareholders. And once they start that, it's really hard to go back on it. It's a sign of weakness. It's a sign that something's wrong at the company. So, once a company starts and establishes a dividend policy, they really do not want to change it. They really don't want to lower it. And they want to show strength by increasing it as many times as they can, year after year after year. And that's the kind of dividend stock that, to me, can really, really be helpful, not just total return, but to outpace inflation. If you look at the growth of just dividends, so think of a company paying 10 cents a year, then paying 12 cents, then 15 cents,

• 25:02Speaker 04

  and 17 cents. And by the way, that's why they get no press. Dividends are in cents. Nobody cares about cents.

• 25:09Speaker 03

  Right, right.

• 25:11Speaker 04

  But a dollar 10 per share could be an enormous amount of annual income for you, depending on the number of shares you have. So, it doesn't get a lot of press because it's, you don't see a 30% move higher like you do in a stock. You might see a dividend go from a dollar 15 to a dollar 18. Doesn't get any press. But that quiet persistence of growth has been, in itself, a huge outpacing of inflation. If you look at what inflation has done since 1960, dividends paid out by the S and P 500 have grown at 150% of CPI. So, just dividends themselves have outpaced the cost of living gains that we've all had

• 25:54Speaker 04

  to endure. So, the policy of companies establishing a dividend, keeping a dividend, and then growing that dividend is really, really powerful for your paycheck and your purchasing power once you get to retirement. So, it's not just a, just an extra, it's a foundational

• 26:11Speaker 04

  Of investing. So dividends, again, if I looked at the S and P 500, you can look at the whole aggregate group. Back in 1975, it paid out about four bucks in dividends in aggregate. Last year, almost 80 bucks. So we've gone from four to 80 over that period of time. That's a 20-fold increase. It's a 20-fold increase. What about, do dividends go down sometimes? Yes, they do. 1973 to 74 bear market, stock prices fell 48%. Corporate earnings, what companies were making, dropped 18%. Dividends did not go

• 26:48Speaker 04

  down. 2002, stocks went down 49%, earnings went down 30%, dividends went down by 6% before they started to recover. The global financial crisis dividends did go down. Stock prices were down 57%, earnings 32%, dividends declined by 20%. But then, starting that next year, they've essentially risen every single year since then. So, the pattern is very durable. It is an extraordinarily strong tide that's hard to change and the direction is higher. I did this chart, Krista, we can't see it here. If you're watching or listening,

• 27:29Speaker 04

  you don't see it. But I went back to 1990 and looked at CPI versus dividends. CPI went from 130 to 326. That's a 151% increase, or went up two and a half times. Dividends went from 12 to 79. That's 6.6x. So they went up by 558%. So dividends rose 2.6x faster than CPI, which is over, it's 160%. And that's from 1990. So, we have seen this durability persist, and it's a big part of overall rate of return. And I think it gets particularly

• 28:13Speaker 04

  interesting when you need cash flow in retirement. Because dividends get paid out in cash. Now, you can reinvest and reinvest and reinvest while you're in the accumulation phase. But when you're in retirement, it's really nice. And in stock market declines, it's really nice to see the same amount of income coming in. It just gradually gets higher year after year after year. And if you go back and look, I just pulled some examples here. I'm not recommending these stocks, but as examples, American, I call it American Water, American States Water, they've essentially raised the dividend for seven decades. Genuine Parts, Emerson Electric, 68 years. Procter and Gamble, 68 years. Coca-Cola, over 60 years.

• 28:58Speaker 04

  Johnson and Johnson, 60 years. Federal Realty Investment Trust, 50 consecutive years and increase them over 20 years. McDonald's, Chevron, Lowe's, et cetera. There's a long list of companies that take this very seriously. And that means it can be a serious part of your total return, dividends.

• 29:17Speaker 03

  All right, we'll go to some questions. This is from Michael in Minnesota. Wes, I really enjoy your shows. I have a question.

• 29:24Speaker 04

  Oh, hey, Michael.

• 29:25Speaker 03

  My parents are now in their 70s and they have been a part of an investment club since the late 1980s. My understanding is the legal structure of the investment club is considered a partnership. They're now at the point in their retirement where they need to generate income from this portfolio by selling shares of the stock that the club holds. Their holdings within the club are fairly large, six figures, and they have large capital gains. I suggested they ask Charles Schwab, who's the custodian for the investment club and also where they hold their personal joint brokerage, to do an in-kind transfer of their portion of the investment club holdings to their joint brokerage account. But Schwab is saying they won't do this. My thought was by getting their portion of the holdings into their personal account,

• 30:08Speaker 03

  they can then sell them a bit at a time over the next 20 or so years to help control the realized capital gains and keep their income low enough to stay in the 0% capital gains tax bracket. Any thoughts on why Schwab's refusing to do this or how they could go about this in a different manner? I thought this would be easy since both accounts are at Schwab. P.S. I get why people set up and joined these clubs in the 80s, but this whole experience has made me appreciate how easy it is to get online with one of Clark's three favorite children and invest your own money cheaply and easily. Why join a group where you give up control of your assets when you can simply DIY? That's my lesson learned from this experience.

• 30:47Speaker 04

  Well, the whole point of an investment club is there's DII with help. And you have a collective group where you discuss what companies you want to own. They were a much bigger thing in the 80s and 90s. I haven't heard of many new investment clubs starting, but there's still lots of Americans that are in these investment clubs. So I think it's a cool idea. I like it. It's a constructive way to get together and be social and invest. So it's a great concept still, but you're running into a tax problem. Don't cash these things out because if you cash out a hundred or 200 grand, you're going to have a huge capital gain and your parents are going to have to pay at much higher rates relative to your idea, which is slowly sell over time and stay in the zero bracket. That's what you really want to do.

• 31:31Speaker 04

  And it is one of Clark's favorite children, Schwab, and mine as well. The reason they're giving you problems with it is that it's a disliked, it's an unlike name to name. It's a partnership versus an individual brokerage account. And you gotta remember, these brokerage firms are constantly under attack when it comes to fraud and people trying to move money and transfer money. So they're hyper, hyper vigilant about the rules they set to protect people. And that's why they're making a big deal out of this is that from a policy standpoint, they're trying to protect people. And this may be one that is a little over the line because it makes it so that you can't just move the stocks into your personal name.

• 32:16Speaker 04

  So what do you do? If Schwab is persistently not going to help with that, I have read that fidelity is a little more flexible around these. So you may just have to transfer the whole thing to fidelity to then have your parents' portion put in their own account. If that doesn't work and you end up with a bunch of people that don't agree to do that, then you're stuck. You can still get the money out, but it's going to be cashed out and there's going to be capital gains. So then the last resort option, if you really are stuck, which I don't, I think you're going to find help somewhere at another brokerage firm that's more flexible. But if that doesn't work, then just slowly take the money out over time. That's the rational

• 32:58Speaker 04

  thing to do here is say, well, we only need $5,000 or $10,000 from our money this year. Just send me that portion. And then that's as a partnership should flow through proportionally to your parents and still keep taxes low.

• 33:14Speaker 03

  All right. Dana in Georgia says, when a specific amount is recommended for a comfortable retirement, is there a system that tells if this amount needed for retirement is if you're married per person, the age at one retires, the amount of social security and other monthly income aside from assets? So Dana sounds like just really looking for a really good, like, how do I know how much money I need?

• 33:37Speaker 04

  Yeah, because there are, I see these every day, Krista, Dana, I see these articles every day. There was one recently, maybe she saw the same thing I saw, maybe it was CNBC, I can't remember, but it said the amount needed to retire per state. It was like 1.9 million in New York and California, and it was 780,000 in Alabama. I remember it being less than a million in Georgia, it was 850,000 in Georgia. And those numbers get you thinking, you're thinking, oh, I need 857,000 in order to retire. Those studies, Dana, are very,

• 34:21Speaker 04

  very one size fits all, and they're very, they're very formulaic, and they get us, I think these numbers are directionally correct, but they're not correct for you, because there's so many other variables that go into it. Almost every time I see this, it is per the household. So it's a household of two retirees need X. So that would answer the first question. Now that arguably makes it easier for a couple. And that's true. It's harder to be solo in retirement because your expenses are not that much lower than you would be as a couple. But you only have one income, one savings, one investment account. So it's harder. It is harder.

• 35:04Speaker 04

  So there's a little bit of a bias towards the, the couple retiring and needing X amount of money. You only have one social security payment. A couple would have two. So it's, it's even harder for you. Now you don't have two cars, but you still have the same amount of property taxes, insurance. Those are all solo bills, whether it's a couple or just you. So it's harder for you, Dana, if you're single. But the bigger question would be it's, it really comes down to what you need to spend. And, and there are lots of retirees that I work with that have really low spending needs because they've paid off their home. And they're in a, maybe a low tax state or low property taxes.

• 35:46Speaker 04

  And they have a decent amount of social security coming in and their social security might cover half of what they need to spend, maybe even more than that. So the amount on their assets doesn't need to be as much as maybe you see on those national studies that are very rule of thumby. And by the way, they all use the same formula. They do average cost of living. They say average social security. So that gives you a gap. Then they divide that by four because they're using the 4% rule. And it grosses it up or multiply that by 25 or divide by point four. That gives you your eight, 900 million dollar number that you, you see so frequently in those rule of thumb studies.

• 36:29Speaker 04

  They get you in the ballpark, but imagine going to the ballpark and not having a ticket. You're still a long way from your seat. So they get you to the ball in the ballpark, but to get to your exact seat, it takes a little bit of planning to know exactly what you need to spend. And then then you can arrive at a real number as a single retiree that really makes sense for you and not just some cool article.

• 36:55Speaker 03

  Yeah. And also, when you use the more complex in-depth retirement calculators, they're asking you, they're asking you for all this, what do you expect to receive from social security? And then what percentage of your income do you think you'll need when you retire? And so those, it's really about you and what you spend, where you live, all those things, right?

• 37:12Speaker 04

  All those things.

• 37:13Speaker 03

  So many factors.

• 37:14Speaker 04

  Like you said, okay, Gary in North Carolina sent in this one. When I look at investors

• 37:19Speaker 03

  such as Warren Buffett, he waits until stock prices are down to make most of his stock investments. It might be considered timing the market since we really don't know when the stock is truly on sale without research. Is dollar cost averaging still the best for most people? Or is there a set amount of research needed to follow his path and let the money grow in T-bills or safe investments until we see a stock on sale?

• 37:42Speaker 04

  Gary, remember what Buffett is. He's a money manager. He's a buyer of companies. They run a portfolio of companies and he, because they're such a giant institution, they're able to come in, I think during the financial crisis, I remember as an example, the bank stocks were down 80%, 90%. Nobody wanted to buy them because everyone was selling to cover other costs and margin, but Buffett had cash and he said, I think this thing is gonna, in fact, I think he lent money, he did a preferred stock deal with some of the big banks that gave them capital to actually help them get through the crisis and he got

• 38:22Speaker 04

  the stock all at the same time. So he was almost assisting them survive and got their stock price at a really low level. But he's an institution and that's what that, that's a company that's doing that for a living. And it is good advice that when stocks are on sale, that's the best, typically the better time to be buying. But it's also not realistic for somebody in retirement. I don't think Buffett would say, yeah, just wait till everything's on sale, buy. And when markets are high, sell. He's not gonna, he wouldn't promote that to an individual. But there's two different roles here. You are going into retirement, you're better to be well allocated and, and holding, buying and holding through your

• 39:07Speaker 04

  dollar cost averaging as an example, over the course of your entire retirement. If you are, you find yourself with more cash and it has not been put to work, end market sell off, then maybe sure, that's when you make additional purchases. But Buffett's a money manager and a business owner that does that for a living. You're a retiree, so I wouldn't, I wouldn't conflate the advice, even though he's not wrong. It doesn't really necessarily apply to you in retirement.

• 39:39Speaker 03

  Okay. Well, that's going to do it.

• 39:40Speaker 04

  Awesome questions. Thank you, Gary. Thank you, Michael. Thank you, Dana.

• 39:43Speaker 03

  Yes.

• 39:44Speaker 04

  Appreciate it.

• 39:44Speaker 03

  Please send in your questions at Clark.com/ask and you can say whether you want Clark or Wes to answer your question. Thank you for joining us as always. Hope you will subscribe or share this episode with a friend if you found it helpful and hope you have a great rest of your day. We'll be back next week with another new episode of Ask an Advisor and Clark is back tomorrow.

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