Pod Insights The Clark Howard Podcast 01.28.25 Ask An Advisor With Wes Moss - Is It Ever Too Late To Save for Retirement? and Big Social Security Change for Millions About this episode Is It Ever Too Late To Save for Retirement? Fee-only fiduciary financial advisor Wes Moss has an answer, backed by years of research. Also, a major Social Security change in 2025 is set to positively impact nearly three million people. Wes explains everything you need to know, including who will see an increase in their checks. Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the January 28, 2025, 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, in which Christa and Wes discuss investing and retirement savings in depth. Let us know what you think in the comments! Learn more about Wes: Wes Moss, CFP® Read Wes’ 5 Keys To Be a Successful Investor APELLA WEALTH - Advice For Life Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:00 Speaker 00 At Edward Jones, we believe rich is about taking care of what gives your life meaning. That's why your financial advisor personalizes your plan to help you preserve your progress and create something that lasts. Let's find your rich. Edward Jones. Member SIPC.
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0:50 Speaker 02 Welcome back to Ask an Advisor. I'm Krista Debiass here with Wes Moss, who is a fiduciary, the only advisor. We are back to answer your investment questions, and we really appreciate everything you've done so far, Wes. I know there's been great feedback here. And today, you're going to address something I know to begin that we hear about a lot on the Clark Howard Show, which is, is it too late for me to start saving for retirement? People start to panic, because, truthfully, most people don't save anything for retirement.
1:20 Speaker 03 Right.
1:20 Speaker 02 And so I'm really excited about that. And what else are you going to talk about today?
1:24 Speaker 03 There's also the biggest, you could call this the biggest change since they introduced COLA, which is the cost of living adjustment for Social Security, back in, I want to say, the 1950s. I mean, there's been some seminal changes to Social Security over the last 50 years plus. But at the beginning of this year, I would say this is the biggest game changer in Social Security in many decades. Now, it only applies to, let's call it, 3 million people. But I think almost every one of us knows a teacher, a nurse, fireman, policeman, local government worker in the family. And it's a big impact to, again, about 3 million people. And it's a good one. It's a really good news story around Social Security. So that, we'll cover that, too.
2:08 Speaker 02 Awesome. All right. So is it ever too late to start saving?
2:12 Speaker 03 I've researched this over the years. So first of all, I think our audience is pretty diligent when it comes to saving money, but nobody ever feels like they have enough saved. I had a conversation this week with a family that's been trying to get to a certain level. And when you get to a certain level, even if you reach it and it's in your retirement plan, you still think, well, I might need a little bit more. If you have 2 million, that was your goal, then you get there and you're thinking, well, maybe I need three. Or your goal was three, maybe you need four. So none of us ever really feel like we fully have enough. But I think it's, it's an even harder problem for people who feel like they really have no saving momentum. And they say, it's, I just, I'm never going to get there. The statistics around this are, are really telling. And the Federal Reserve keeps
2:57 Speaker 03 statistics around this. You can go look it up and see how many people have a certain amount of money and overall savings and net worth. So the numbers are very, very public around this. And I think the way I look at it is the median numbers, not the average or the mean. And the median numbers really tell the story because the median is the middle point. And that means that if the middle point, which is for people that have, and these are the age ranges, I think where people are thinking, ah, it's too late to save for retirement, 55 to 64, the median savings is about 185 grand, which means that 50% of the country has that or less. So half of America. 65 to 74, the median
3:39 Speaker 03 is 200,000. That's already supposed to be in retirement. Again, that means that that's the middle point of America and every 50% has less than that. So we know it's a problem. We know people have trouble savings. America is expensive. We've just gone through hyperinflation. And a lot of people find it difficult to save anything because that, the cost of living in the big city in America, where the majority of the population lives, it's just tough to do. But I have seen over and over and over again, that it is never too late to start. So there's a couple of examples here. One of them I wrote about, and you can retire sooner than you think. I'll call them today, late savers, late start Larry and Lisa. So I'll talk about late start Larry.
4:21 Speaker 03 And Lisa, and this is really based on a very true story that I've seen happen over and over again. Lisa and Larry didn't really have much in savings because they had three kids. They were moving around the country, trying to get to the right job. And then their kids went through college and that was really expensive and they, in this case, they wanted to help their kids pay for college without a whole lot of student debt. So it was all on the family. It was all on Larry and Lisa. And they looked up in their late 40s and they really had almost no savings at all. And you can say, well, I'm 48 or I'm almost 50. How, I can't start now. The reality is you can. And here's the way I look at this, even if you're 50. And usually the bigger spending areas are hopefully behind us with college as one of them.
5:06 Speaker 03 Yes, you still maybe have a mortgage for, for a lot of America mortgage rates were locked in really low a couple of years ago. And now it's time for anyone in a late start, Larry and Lisa in this case, to get going. Now the limits today for 401k savings are, are tremendous. Once you hit age 50, with the catch up provision, it's 31 grand per person. Now you may say, Wes, I, that, that's a whole lot for me to save, but the reality is nobody said it was easy. Like this is a hard thing to do, but this was a real life opportunity and this was, let's call it 15 years ago. And they essentially started with zero and ended up with 2 million bucks for retirement over the course of 15 to 20 years.
5:51 Speaker 03 So here's the math behind it. 31,000 for Larry, he's able to save. 31,000 for Lisa, she's able to save. That's 62 grand a year. Put another 10 on top of that in after tax money, and I'm not even counting the match here. And putting that into investing it versus just saving it. They were able to grow that. And essentially, if you do the math behind it, even at, let's call it an 8% rate of return. And I'm not looking at the high end of where market returns have been, but let's call it 8% rate of return. They contribute over 15 years, about a million bucks, 62 in 401k, another 10, that's 72,000.
6:31 Speaker 03 With the growth on that, they're at a million five in 15 years. Again, nobody said that's easy, but I've seen people do it. If you get a 10% rate of return and we, if we happen to have good markets and we don't know, it would be 1.75, almost $2 million. And I've seen that happen over and over again. And it's really about just saying, look, I know I'm late, but I got to get started. Now imagine if they started at 10 years sooner and they were 40. You could still argue, well, you haven't saved anything in your 40. They could essentially do half of what I just said. So let's cut all those contributions in half. So not 72, but between two 401ks of 15, five each, another five grand annually, 36 a year.
7:12 Speaker 03 Well, if they're 40 and they play that out over, let's call it 25 years to get to 65, they've saved around the same amount as the example I started at age 50. In this case, about $900,000. But the value of that at 8% is about two and a quarter million dollars. So it doesn't take a giant amount of savings to be able to get a huge nesting. And the, and the last way I'd look at this, and again, this is just the math of compounding. And it's important to, to say, look, we're, if we're investing in equities, we don't know where returns are going to be. The long-term average rates of return have been 10, 11% for the S and P 500. I'm running these numbers at seven. So let's just say that we don't have great markets, but we have okay markets over the course of the, let's call the next 20 years.
7:57 Speaker 03 How do you start from zero and get to a million bucks? I think this is kind of easy to remember at a 7% rate of return. If you save 20, basically two grand a month, $24,000 a year, you'll have over a million dollars. So we have the vehicles to do it. We've got 401ks and 403Bs. A lot of America has that. If you don't, you're just going to have to save in an IRA or Roth IRA, and then some after-tax money, but that's the math here. But I do see folks that are getting into their late 40s, early 50s. They, they've been paying for the family and paying for kids and cars. And then they say, wait a minute. Larry and Lisa look at each other and they say, it's time for us to save for each other. And you can really pile it in. And if you're really disciplined about it.
8:43 Speaker 03 It's amazing what can happen over a decade, decade and a half. So the way I would summarize this Krista DBOZ is that A, we got to save. That's a no brainer. We know we need to do that, but it's not enough to save. It's got to be invested. So one is save, two is invest because we need that tailwind of markets. Even if it's five or 6%, we don't know where markets will be. And then the last part here is I would really think about your future income streams because that's a huge part of this too. So we know we can wait for social security all the way to age 70. That for some people can optimize late starters so they get the maximum social security benefit. So you would add that, again, let's assume that not that many people have pensions anymore.
9:28 Speaker 03 It's more like a quarter of America, it used to be 50% of America. But again, one in four people will have a pension as well. So I think pension plus social one for Larry, social two for Lisa. And they get to, let's call it a million dollars using the, call it 4% rule. That's another 40 to 50 grand a year. May not be a tremendous amount, but at least it gives them some real flexibility in retirement.
9:52 Speaker 02 I also want to mention, I have some friends and their income wasn't high enough to support a lot of savings and they made some really drastic changes. They took the house that they had planned on living in forever, which was way too big for them because their kids were gone. They sold it. They moved out to a far suburb and rented a very, moved to an apartment, which they thought they would never do, invested the money that they had in that house. A lot of people are sitting on a lot of equity. Maybe not something that would always, an advisor might suggest, but they made some really drastic changes to then have money to invest, hopefully in the future.
10:26 Speaker 03 That's a really good point too. I mean, the first year we say savings and there's a lot to do with savings. It usually also means sacrifice. And the story I've written about, and you can retire sooner than you think. And I've been writing in kind of a follow-up here, almost 15 years later. I talk about a couple named the Benjamins, their last name was the Benjamins. They both worked, not everybody has dual income family, but they both worked. And they had this really seminal moment when they were in their 30s, where they were making pretty good money and they could afford a really nice house, a million dollar house, and they put money down on that house. And in the 11th hour, they looked at each other and said, it's just too much house.
11:08 Speaker 03 We can't afford it, but then we're not going to be able to save all that much. So they actually backed down the deal. They lost at least a little bit of their escrow money. But instead, they chose to pay down their student debt. They got out of student debt early and 10 years later, they were able to buy the house they wanted. They even have a lake house now. And it was a big sacrifice from a million dollar house to a two bedroom rented apartment. But the sacrifice worked in the long run.
11:34 Speaker 02 All right, we're going to start with some questions now. And this just goes to show you, even people with a lot of money sometimes feel like they don't have enough saved. Sean in California says, my wife and I are both 57 years old. We have $3.8 million saved. We're both 100% in the S and P 500 and we have no debt. The problem I have is when do we have enough? When do we move on to a more conservative investment selection? I think we plan to retire at 62 or so. And once we reach $4 million, we can pull 4% and receive $160,000 per year.
12:08 Speaker 03 Again, this is a great example. They probably did a retirement plan. Sean and his wife did a retirement plan and said, hey, we want to be able to spend, let's call it 200,000 a year when we stop working or close to that. And they're pretty much there. I would assume this, so first of all, again, great example. They get to their goal and then now they think they need more. Almost everybody feels that way. And that's why I think planning is so important is that it really kind of continues to reinforce. Well, hey, if we get to 4 million, that's 4% of that, which is using the 4% rule. 4% of that initial balance plus inflation over the course of time. The simple answer is yes, they're on track and they can do this, period.
12:49 Speaker 03 The other thought is that they probably at least will have $50,000 worth of social security. Maybe not at 62, but if they wait a couple of years, it could be more than that. Because they, it sounds like they've been making a fair amount of money. So I would look at this as they have not just the 160 for the 4% rule, but they have another 50 coming. So that's 210. If you can live on $210,000, and particularly if there's mortgages paid off, then that plan works. And here's why it works. They're really predating their retirement, and I would say this is the most important number in all financial planning, is that 4% rule. I call it the 4% plus rule. Because it's really, there is no perfectly set number. But William Bangen, back in the 90s, essentially went back and studied every market if I retired
13:34 Speaker 03 in January of 1929, February of 29, March of 1932, and then played it out. If you were withdrawing 4%, increasing for inflation every year, how often did the money run out and how soon? And I've redone these numbers. So Bangen did it in the 90s. Our team has done it every year now for the last almost decade. It still works. And if you have a balanced portfolio, it works 99% of the time. And the one scenario where you can find that it actually runs out, where you're never adjusting and you're just taking your 4% plus inflation, it still lasts 30 years. Meaning that they would be able to take that 160 plus inflation.
14:19 Speaker 03 So by the time they're in their 80s, it's probably more like $200,000 a year. So this is all about adjusting for inflation. And that's why the portfolio, though, has to be based at least 50% to 75% in diversified equities. And in the studies, Bangen used the S and P 500, we've done the same thing. But the market growth over time has allowed for the inflation adjustment and not running out of money. Now, interestingly, this is their question about when do I diversify? It also works, the 4% rule, 97% of the time if you have 100% in stocks. The only problem is that 3% of scenarios gets pretty dour/dire.
15:03 Speaker 03 If you end up retiring and your 100% equity is in a really bad market for the first several years of retirement, that's when the rule can kind of go sideways and you can run out as short as 15 to 17 years. So how do you adjust for that scenario? That's the balance of the portfolio. So that most of the time staying 100% stocks still works over 30, 40 plus years. But to kind of account for that scenario where you get unlucky and you retire and we have a bad stock market for a long period of time, that's where that safety zone of the 40% in fixed income or safety assets dampens the overall portfolio coming down because we're
15:43 Speaker 03 using a little bit every single year. So I would say that they're 58, they're probably really close to their goal. I would start heading towards that balance as opposed to 100%. Maybe they start today and they add 20% and still have 80% in stocks. But the long run, the 4% rule is predicated on 50 to 75 at the max because beyond 75% in stocks, if you're really trying to take out that 4% every year, increase it for inflation, you can run into some scenarios where we have bad markets and the diversification is really set to get us from 97% to close to 100 over time. So I would try to be diversified, fully diversified, meaning 60% stocks, 40% of bonds by the time they start taking money.
16:28 Speaker 02 Got it. Okay. This one's from Dan in Ohio. Do you have any advice for couples on different retirement roads? One is a spender and doesn't plan for retirement and the other is lukewarm and saves a little for retirement.
16:42 Speaker 03 One's a giant spender and one hates saving.
16:44 Speaker 02 Yeah, it's a tough one.
16:45 Speaker 03 Yeah, it's a tough one. The, it sounds like couples therapy is the short answer. I don't know what to tell you, Dan. I thought this question was coming as one person likes to save a bunch and the other person doesn't. That's, I've seen that many a time. But what he's trying to tell me here is, or what he's asking is that neither of us really like to save and we both like to spend. I guess he's lukewarm on saving. I think they need a visit from the ghost of Christmas future. Remember the Christmas Carol?
17:17 Speaker 02 Oh yes, of course.
17:18 Speaker 03 That's the scariest ghost.
17:19 Speaker 02 Yeah, for sure.
17:20 Speaker 03 The past, it's like, oh, it's already over. The present, I already know, but I don't know the future. But the future looks pretty bad when the ghost of the future comes and he's a miserable guy and yeah, he's got all his money, but he's, you know, he's, it's a nightmare for him. So it's the same way. And I think that any sort of financial advisor, so any sort of fiduciary, anyone that will help them sit down and do a cash flow plan. These cash flow plans, retirement plans, they're not hard. You can draw them out on a piece of paper. You can go to an online tool and put in, I'd like to have five grand a month or eight grand a month when I retire. How much do I need to save? And it'll tell you, you need X amount. It'll account for inflation. It'll account for how much you need to increase your spending.
18:03 Speaker 03 So the tools are readily available and they're free. But that's not going to work because a couple can't sit down, even if they're excited about saving, and come to, it's hard for a couple to come to an actionable plan. So any sort of advisor, CFP, fiduciary, to sit down and do that with Dan and his wife, will be that financial mediator. And it's the person that is sitting down and having this become real to them. And the ghost of Christmas future is, hey, when you're 65 and you only have $122,000 saved, you're basically living on social security and that looks pretty scary.
18:47 Speaker 03 So yeah, you're going to get up, so you sit down with, with a third party intermediary that's there to kind of navigate this, maybe mediate it, maybe act a little bit as therapy, and show you in black and white that you're going to not be able to spend any money when you're 62. That means no travel. That means harder to go visit the grandkids. That means harder to do the things that you want to do. And you're really limited. That can be pretty scary on black and white. Now, you're going to get some color charts. So it's not just black and white, but you'll see where your assets go and then how they run out. And that is a come to Jesus financial moment.
19:22 Speaker 02 Yeah.
19:22 Speaker 03 And the minute you have that awakening, I think it helps both spouses. Say, wait a minute, honey, let's, let's go from lukewarm on savings to like red hot. And we both get this thing together and now we can really plan for a fund retirement into the future. We can be happy retirees. Never too late to be a happy retiree, as we talked about earlier. Never too late to start saving, but they need a visit from the ghost of retirement future.
19:50 Speaker 02 I love that. And this may not be Dan. Maybe it's someone who knows her or a relative, and he could offer to pay for that as a gift. That session would be great. And I remember. Years ago, Clark talked about he was in a Wendy's picking up lunch.
20:02 Speaker 03 Of course he was.
20:03 Speaker 02 I know. And a woman in her late 70s who worked there came up to him and she said, "You tell people to save for retirement because I'm gonna have to work here until I can no longer work because I didn't save anything." I mean, working into your golden, you know, your golden.
20:19 Speaker 03 Seventy-five, eighty.
20:20 Speaker 02 Yeah. When it becomes really, really hard, it's very eye-opening. All right, and coming up next, you're gonna talk about the biggest change to happen in social security since COLA, right?
20:29 Speaker 03 I would say it's for 3 million people, it's the biggest post-holiday present that they could ever have imagined when it comes to social security. It impacts a lot of people.
20:40 Speaker 02 All right, so we'll get to that straight ahead.
20:43 Speaker 00 At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.
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22:54 Speaker 03 We are back and it's time to talk about this massive change. Attention all teachers, nurses, firefighters, police officers, local government employees. I've had multiple conversations with people in Georgia, California, that while we were planning for their retirement, and now some of these folks are in retirement, they're already impacted by two things that just got eliminated that hurt their social security. There's two main provisions. Back just at the beginning of January, Congress passed the Social Security Fairness Act. And the reason they call it fairness is that there are two provisions. One's called the WEP, the Windfall Elimination Provision, and the other is called the GPO, the Government Pension Offset.
23:39 Speaker 03 And anybody that had worked in, let's call it a public sector role, and they accrued a pension, and a lot of times people do that for 20 years, maybe 25 years. But they also, think about how long we work. If we're working from age 20 to age 65, that's 45 years. So very often, the same folks that accrued a pension elsewhere in a public sector environment also had social security from another job. So they worked elsewhere. So they had social security and they had this public sector pension once they started retiring. Well, the WEP, because originally they thought there may be some double dipping, and that's why they created these offsets.
24:22 Speaker 03 So the Windfall Elimination Provision essentially eliminated people's social security, or a big chunk of it, 40, 50% of it. So I'm going to give an example. Carol should have been getting $900 a month in her social, but the WEP knocked it all the way down to 400 bucks. And it did that perpetually. So that's all she got. The government pension offset does the same thing, or did the same thing, but even more so. And it essentially said that, again, if you'd never worked, you can still get 50% of your spouse's social security. So spouse gets, call it 3,000, you should get 1,500, even if you never worked. Well, if you have a $3,000 pension, the 2/3 of that goes and
25:06 Speaker 03 cuts down your social security. So a lot of folks ended up with zero social security because of their pension. And they would have been better off, or well, not necessarily better off, but they would have still gotten social security even if they'd never worked. That's the government pension offset. So there's been lobbying around this. So teachers, as an example, local state employees for years have tried to lobby and say, this thing is unfair. It's really unfair. And I've had conversations over many years with folks that are saying, gosh, my social security is basically nothing because of these two offsets. And finally, the lobbying, I guess, broke through. And in January this year, they eliminated the windfall elimination, and they offset or got rid of the GPO, the
25:49 Speaker 03 government pension offset. So this is a huge boon for folks. And it's not just moving forward. They did it retroactively for last year. Let's do two quick examples. Carol, she was supposed to get 900 bucks a month. She didn't, again, didn't work in the private sector all that long. That's why her social security was only $900. But because of her $300 a month teacher pension, it knocked, the web knocked her social down to 400 bucks. That's gone. What's gonna happen? It's gonna go up by, call it 500 bucks per month for life. It's a big difference.
26:27 Speaker 02 It's huge.
26:28 Speaker 03 And she's now gonna get that change for every month in 2024. So she'll get 500 bucks times 12, she'll get another 6 grand as a check. So now, I would caution and just say, these are illustrative. Everyone's situation's a little bit different. They're gonna have to go to social security. Social security is the only arbiter to change this for you. Hopefully, they're gonna be updating this in the next couple of months, but it's a lot of people, so it may take some time. But you're gonna have to go directly to social security if you're impacted by a state or local pension that used to knock your social security down. Lisa, on the other hand, as another example...
27:06 Speaker 03 Would have been getting $1,200 a month, which was half her husband's pension. But because she had a $3,000 pension, 2/3 of 3,000 is, call it $2,000. $2,000 was more than what her spousal benefit would have been of 1,200 bucks. So how much did she get? Zero. Zero and zero and has been getting zero for years. That's gone now. The GPO is gone. It's eliminated. And now she will get 1,200 bucks for every month last year. So 1,200 times 12, that's a pretty, it's 14,4 in a check. And then her social security check will go from $0 all the way back to the 1,200.
27:47 Speaker 02 That's great.
27:48 Speaker 03 It's a big deal. The estimated average is that on average, people will get a 360, almost 400 bucks a month pop, but it's not just one month. It's for life. It's a big deal. So if you know teachers or anybody that's worked in the public sector, this is great news.
28:05 Speaker 02 That's awesome. All right, well, we'll go to some questions. This one came in from Mr. R. Fries on YouTube. Hi, Wes, welcome to the team. Look forward to your perspective. How much does fiduciary really mean? I understand the definition legally and ethically obligated to act in the party's best interests. But for example, the speed limit legally requires us to all drive under 55, but good luck finding someone going 55 miles per hour on I-95.
28:32 Speaker 03 So Mr. R. Fries, good question. And I think that the reason people have this question is, A, not everyone's the same. So not all advisors and not all fiduciaries are created equal. But the short answer is yes, the fiduciary is a big deal. And the vast, vast majority of the time, they're going to be looking out for your best interest. So it is important, but again, I can't say everyone's perfect. So.
29:00 Speaker 02 But it's a much bigger penalty for violating the fiduciary rule than like getting a speeding ticket on I-95. I mean, someone's risking their income, their licensing.
29:09 Speaker 03 But most fiduciary advisors are governed by the SEC, the Security and Exchange Commission. They don't mess around.
29:15 Speaker 02 Right.
29:16 Speaker 03 So here, here's what a fiduciary advisor is not supposed to do, that a non-fiduciary advisor is allowed to do, or it's just okay. A non-fiduciary advisor is held by a standard. They need to make investment choices that are prudent for you. And that means that it has to be pretty good, or it should be pretty good. And they, let's say there's five mutual funds they can choose from, and they're all pretty similar, but one of them pays the advisor, this is a non-fiduciary, pays them 1% extra per year. Well, the non-fiduciary can say, well, that fund is prudent, which kind of means pretty good. And it's totally fine for them to pick that fund for you, because it also benefits them. The fiduciary, the whole
30:01 Speaker 03 setup is different. The setup is that there is no product commission or fee that can come from any individual product. So the fiduciary looks at these five funds and just says, well, this fund is paying somebody. I'm not allowed to collect it. So it's just the extra cost to the client. So why would I choose it? Because the client's going to make less money. So there's no incentive. And one of my favorite rules in economics is that people respond to incentives. And if you're incentivized to choose something that pays you a little extra, and it's okay, then that's what normally happens. A fiduciary setup is that a situation where no commissions or fees from a product come back to an advisor.
30:45 Speaker 03 So there's just no incentive for them to choose that. They're really, their incentive is to choose something that's the lowest cost and in the best interest of the client. So I look at this as, instead of making sure it's a pretty good fit, it has to be in your best interest as a fiduciary.
31:01 Speaker 02 All right. This one's from Chris in Georgia. My grandfather, who has now passed away, purchased Home Depot stock for me and our children as gifts for birthdays and Christmas for a long time before he died.
31:12 Speaker 03 We're in the land of Home Depot.
31:13 Speaker 02 I am age 45, currently hold $50,000 in the stock, and my 16-year-old holds $10,000, and my 13-year-old holds $7,000. We want to make sure this money is in the best place it can be, given our ages. My wife and I have good jobs and have saved well for retirement so far, if that helps. We don't need the money right now or anytime soon. I just want to make sure it's in the right place to grow, grow the most in the next 15 to 20 years.
31:42 Speaker 03 So the short answer here is yes, I think they're in a good spot. And I've seen many families over the last 20-plus years do really well having chunks of stock that they either were granted, gifted, worked for the company, and they had a fair amount of it. And as long as you have a good company and a really long horizon, like Warren Buffett would tell you to do, forever is a nice holding period, then a lot of times that can work out really well. Now, I can't say, we can't recommend buy or sell any particular stock here. I will just say that I'm personally comfortable with Home Depot. We're in the city where Home Depot was essentially founded. So a lot of families around town have Home Depot
32:25 Speaker 03 stocks. I'm familiar with it. I also think there's a real tailwind. We're underbuilt with housing in the United States. And even though the housing market today is kind of in a logjam, and there's not a lot happening, at some point, we're going to have to catch up. We just don't have enough homes. We don't have enough multifamily. We don't have enough single family. We're underbuilding. That's not going away anytime soon. It's a multi, it's a decade-long trend that has to be fixed. Who's going to be a beneficiary of that? Well, could be the big home building service companies like Home Depot, could be Lowe's. But again, I'm not saying you should go run out and buy these companies, but it's totally fine to hold this stock, provided, the short answer is, as long as
33:07 Speaker 03 it's not over 10%. So if that becomes more than 10% of the Total portfolio, then you have to start being a little careful. And the way to fix that is pretty simple. You just add to more diversified areas. So if you've already got enough of a particular company, in this case, Home Depot, then you shouldn't be adding to that. You should be adding to something like a broad market index, a total stock market, S and P 500, that then diversifies you so that you don't have any more than 10% of one given company.
33:35 Speaker 02 So what about the kids having the stock? Should they just hold on to it?
33:40 Speaker 03 Even more so, yes. They should be able to hold on to that stock. But as the parents help them save, they should be adding to other areas so that you're getting more diversification and it's not 100% of their savings. It becomes 50, then it becomes 30, 20, because they're adding to more diversified areas. I think this prescription is the same for mom and dad as the kids.
34:02 Speaker 02 Jose in Florida says, I'm 54 and I have a traditional IRA with $10,000. What do you recommend I do with that money? Should I leave it in my savings account in my credit union?
34:13 Speaker 03 So I don't know if this is a larger question. The answer is sure, yes, the credit union is great. If you want to just keep that money safe, a credit union, one of the big banks, make sure. The catch on the big banks is they don't feel like they have to pay any interest. So if you're leaving money just in cash, cash checking account, you may be getting a 10th of a percent, a half a percent. So make sure you're at least in a money market account in one of the big banks or credit union where you're getting four, four and a half percent. That's the first step.
34:43 Speaker 03 But I think I go back to, and his first name again?
34:45 Speaker 02 Jose.
34:46 Speaker 03 Jose. I would go back to the, maybe the early theme of today, which is that it's never too late to start amassing enough to have a nest egg. And even if Jose saves $10,000 a year for, call it the next 10 years or 15 years, with some market growth, he could have $250,000. Again, is that, is he running around in private jets and yachts? No. But $250,000 is a, let's call that close to a thousand bucks a month if we're using the 4% rule, 4% plus rule, maybe not quite a thousand a month, maybe more like 800, but at least there's some flexibility there. So even though he's 50, it's never too late
35:30 Speaker 03 to start saving, never too late to be what I would call a happy retiree, which also goes into the core pursuits and super activities that become our daily purpose, once we stop working. And when we have a retirement balance, that just gives us some flexibility to do more of those things. And that's, money doesn't buy us happiness, but it gives us the flexibility to do the core pursuits that we love and give us daily purpose in retirement, once we stop working. So it's never too late, Jose.
35:59 Speaker 02 Awesome. Okay. Well, thank you so much, Wes. We appreciate you tuning in, watching.
36:03 Speaker 03 Send more questions. I love these.
36:05 Speaker 02 Yep.
36:05 Speaker 03 I think these are awesome, Krista.
36:07 Speaker 02 And make sure if you're watching on YouTube, please subscribe, share this episode wherever you listen. We really appreciate it and hope you have a great rest of your day.
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