Pod Insights The Clark Howard Podcast 04.28.26 Ask An Advisor With Wes Moss About this episode Why Retirement Confidence Is Plunging & Fiduciary vs. Financial Advisor Wes Moss breaks down a troubling shift in the American economy: the rapid decline of retirement confidence. Drawing on three decades of data from the Employee Benefit Research Institute (EBRI), Wes highlights a staggering trend where worker confidence has dropped in 2026. This pessimistic outlook is mirrored by the University of Michigan Consumer Sentiment index, which has hit an all-time historical low. Wes identifies the primary culprit. Also, Wes tackles the crucial question of who you should trust to manage your money during these uncertain times. He demystifies the industry by comparing financial advisors to peppers in a grocery store: while they may look identical on the outside, their "heat" levels vary wildly. Wes discusses why transparency is key and provides actionable advice on how to check your advisor's contract to ensure your investments are working for you, not for your advisor's bottom line. Mentioned on the show: WSJ - America’s Most Tortured Retirement Regulation Is Struck Down (Again) How To Find and Choose a Financial Advisor Best Financial Advisors in 2026 - Clark Howard What Is a Fiduciary Financial Advisor and Do I Need One? What Is an HSA Account and How Does It Work? - Clark Howard Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the April 28, 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. Visit megaphone.fm/adchoices
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1:04 Speaker 02 Welcome to this week's edition of Ask an Advisor on The Clark Howard Show. I'm Krista DeBias, here with Mr. Wes Moss.
1:12 Speaker 03 Hi Krista DeBias.
1:13 Speaker 02 Hello Wes. And thank you for joining us again this week as we delve deeper into investments, retirement, and the economy, actually.
1:24 Speaker 03 We can touch on it. We can talk about all of it.
1:27 Speaker 02 So today, in addition to the questions I have for you Wes, which you can ask a question, we have a new forum that you can ask a question directly to Wes at wesmos.com/ask. And if you have a question for Clark, you go to clark.com/ask. Today's show, you're going to talk about unfortunately, Americans' retirement confidence is plunging.
1:48 Speaker 03 It really is. The numbers do not look good.
1:51 Speaker 02 Yeah. And then later on, we're going to talk about, we get so many questions about, how do I tell if an investment advisor is a fiduciary, non-fiduciary, or we'll just get questions from people who are clearly with non-fiduciary advisors that are in a bad situation. So if you choose to have a financial advisor, not everyone does, then how do you do that? How do you tell the difference?
2:11 Speaker 03 It's so confusing that I had to come up with a brand new analogy and it ended up a food analogy to try to tell the difference.
2:19 Speaker 02 I love a food analogy. Your financial burrito, you've had the slow cooker.
2:24 Speaker 03 The crock pot.
2:25 Speaker 02 The crock pot.
2:26 Speaker 03 Different kinds of apples.
2:28 Speaker 02 All right. All right. So we'll get to that. So but first, we're going to start about talking about Americans' retirement confidence.
2:35 Speaker 03 So Americans' confidence in retirement over the last several years has been plunging. And I usually try to stay away from those hyperbolic words, but when you see a really big shift in the percentage of folks who are feeling good about whether it's retirement, if they're working and they're looking forward to it, or those are in retirement. There's a new study from E B R I, the Employee Benefit Research Institute, that does a perennial study. And they've been doing it now for the better part of three decades. So when you have a study that is year after year after year, you can really start to see trends as opposed to a brand new study. So that's why I like the E B R I and what they do and their research. Number two, some of the economic data that is not, that really is just government
3:20 Speaker 03 data from the Bureau of Labor Statistics is also showing signs of a lack of confidence. There's a couple of reasons for it. So we're going to talk about E B R I's numbers and then we're going to talk about the University of Michigan Consumer Sentiment, which again, you could find if you go to FRED, which is the Federal Reserve Economic Database out of St. Louis Fed, and you can look these numbers up and they've changed a lot recently.
3:44 Speaker 02 Can I ask a quick question?
3:45 Speaker 03 Sure.
3:46 Speaker 02 So when you say confidence in retirement, what is it exactly? Confidence that they'll be able to retire, confidence that their retirement will be comfortable?
3:54 Speaker 03 Okay, so here's the language they use in this study is either, and these are for workers. So let's start with these numbers. 61% of workers say they are very or somewhat confident they'll have enough money for a comfortable retirement.
4:10 Speaker 02 So both kind of they'll have enough money to retire and for it to be comfortable.
4:13 Speaker 03 Right. And again, these surveys or studies or research can be a lot of different ways of asking the question, but I think the reason I like this one is that it has been the same question over and over again.
4:24 Speaker 02 Data, lots of data.
4:26 Speaker 03 So the level's important, but then the change is really important. And this is a big change in 2021, which if you think about 2021 was a pretty scary year. It was COVID and the world was shut down. Now, we had a giant stock market correction, but then we had a giant rebound too, in fairness. So it was a bad year and a good year all at the same time. And during that year, the confidence level, someone saying, I think I'll have enough money and I think I'll be comfortable in retirement was 72%.
4:55 Speaker 02 Wow.
4:56 Speaker 03 So it went from 72% in 2021, then it went down to 67% last year. And now this year in 2026, it's all the way down to 61%. Now, I look at that on the flip side to some extent, and I say, you'll hear people say that it's really only the one percenters or the top five percenters in America that are going to be able to retire. This says something different than that. So even though levels are lower, that still means it about that 40% of people do feel confident or they feel somewhat are very confident about they will have enough money in retirement. But clearly, the number is going in the wrong
5:36 Speaker 03 way. It's a little bit better for retirees. The number is 73%. 73% of those who are already in retirement feel confident or very confident that their money will last and they'll have enough money for the duration of their retirement. The second survey point, which is very telling, because this goes back, I have this going all the way back to 1976, which is the University of Michigan Consumer Sentiment.
6:09 Speaker 03 And this is again, a perennial study that happens every month that the University of Michigan process goes out and asks thousands, I don't know the exact number, but let's call it thousands of people about how they're feeling today, their confidence in the future. And it's a list of questions that say, well, do you feel comfortable making a purchase over this amount? As an example, and that has changed dramatically and it's the lowest reading that it's ever gotten.
6:38 Speaker 02 Wow.
6:38 Speaker 03 Ever. If I look at the scale, their scale is from, let's call it zero to 140. And it's not a percentage of people that feel good or bad. It's just, that's the measuring stick, if you will. Most of economic history over the past 50 years, it's around 80. The consumer confidence reading is around 80. When people are really confident, as an example, kind of right before COVID in 2019, that was in my mind, almost the peak of calm and peace. The economy had had had a whole decade to recover from the financial crisis. We hadn't had COVID yet. There were less scary things happening in the year 2019.
7:21 Speaker 03 My family will joke. We had a family kind of reunion this weekend and we talked about the year 2019. My little brother got married. He got married in this, this gorgeous ranch in Colorado. And we thought like, this was peak life, but it was 2019. And so was consumer confidence. Those levels were over a hundred on the University of Michigan consumer sentiment. Then as you could imagine during COVID, they got down into the, let's call it 55, 60 range. So huge drop in consumer sentiment. I don't feel good about the economy. But what's wild is that today it's at 47.6. And again, that's the lowest reading in history.
8:04 Speaker 03 The other piece of the equation, if you were to look at this chart that I did the other day, if you plot oil prices on top of that, and it's not just oil prices, but it's a very clear relationship between oil prices going up and consumer sentiment going down. Oil prices coming down, consumer sentiment going up because oil and gasoline is the very first, it's really kind of the front line of inflation. If you get inflation, you immediately see it. So the question is, what is the main culprit? And in both cases, the EVRI study of folks saying they feel less confident about retirement, the culprit is the same in many ways as why US consumer sentiment is down, and that is
8:48 Speaker 03 the cumulative impact of inflation. Remember, inflation is a lot like a speed bump that never goes down. It just gets higher. It just gets higher. Now, the speed of it getting higher can slow, and that's what the Fed is looking for. The Fed wants a speed bump of the hurdle in our lives to just go up a little bit every year, but it never really goes down. Yes, there are some months in economic history where prices actually go down, but for the most part, in any given year, it's only getting more expensive. And I think what we're seeing is that the cumulative effect of the inflation that we saw that was hyperinflation in 2022, that hasn't gone away, and the recent shock of oil prices spiking because of everything that's happening in the Middle East, that's
9:33 Speaker 03 kind of a double inflation whammy. And I think that is one weighing on the larger picture because people feel like they can't afford their original retirement budget because prices have gone up so fast, they feel like they can't keep up. Then you throw on top of that an oil shock, an oil price shock, and you end up with consumer sentiment that is as low as we've ever seen.
9:58 Speaker 02 Wow. Okay. Well, thank you for that. I've got some questions.
10:01 Speaker 03 Supposed to be slightly optimistic, but remember 40% of people do still feel good about retirement. And I think it's a pretty good number.
10:07 Speaker 02 It is. Okay. Mike in Tennessee wrote into you, Wes. He said, I'm conflicted on whether or not I should be putting more money into my 457 retirement plan rather than my 401k. Can you give me some direction for background? I'm 47. I'm in the 24% tax bracket. I fully fund a Roth IRA. My 401k match is only $50 per month. I'm funding my work retirement accounts 80% to the Roth 401k and 20% to the Roth 457. They both offer generally the same low-cost Vanguard and Fidelity index funds. I also have a pension that will pay about 50% of my working salary and I plan to retire at 55.
10:47 Speaker 02 So my question, should I flip that 80/20 ratio to make the 457 the majority account, which I add my retirement savings to cover my retirement between 55 and 60? Also, should I consider balancing traditional and Roth accounts?
11:02 Speaker 03 Mike, there's a bunch of questions that you had because really you're asking Roth versus regular. So Roth 401k, regular 401k, Roth 457, or regular 457. You're also asking about the ratio between those two and you plan to retire early. And I think that's the common to not, that's the crux of this question is access. And it seems to me if the investments are the same, you only have an, it's 50 bucks, I think, maybe a month in the 401k, which it's not nothing, but it's probably not enough to really move the meter on making the choice.
11:41 Speaker 03 And you are on that 24% bracket and below where we typically say that it still leans Roth versus traditional. So I think that answers the question. I still keep leaning Roth versus traditional. The good news about the 401k is that at age 55, remember the early access rule of age 55, you can still get money out of the 401k if you leave that job and you leave that 401k, 55 or older. That's that early access rule. It's not 59 and a half. You now, if you leave at 49 or 54 and 11 months, you don't qualify for that rule. So the tie, in my opinion, goes to the 457
12:23 Speaker 03 because that automatically gives you access at age 55, when you leave your employer. Even if you left before that, you don't have to to have the get to 55 rule like you do in the 401k. So I would be if the investments are pretty much the same, the only slight advantage is 50 bucks a month in the 401k. And you've got a pension coming, Mike, that's going to be 50% of your income. I would swap it. You're doing 80, 20, I would do 20, 80. So I would do 20% 401k because it's so good to have some there and you may very well have access to it. And I would do the majority in the 457.
13:02 Speaker 02 All right. This one's from Nathan in Oregon. Since my wife uses my employer's insurance instead of hers, her employer makes a monthly contribution $800 into an HRA account with H and then they say the name of the company, which is this.
13:17 Speaker 03 Oh, no, no, that's not that. VIBA is a kind of HRA.
13:21 Speaker 02 Oh, I didn't know that.
13:22 Speaker 03 You may have been thinking Voya.
13:23 Speaker 02 Oh, I was.
13:24 Speaker 03 You're thinking Voya, but that's VIBA, which is super important for this because a VIBA is a voluntary employee version. It's a benefit voluntary employee benefit of an HRA. But keep going.
13:39 Speaker 02 Okay. Learn something new every day. I've never heard of that. Looking at the details of her plan, she can use this money in retirement for healthcare related expenses. Could you offer advice on how to treat this account for retirement planning? Should I look at it the same way as an HSA and any other caveats I should be aware of with these plans? Thanks for all the useful information you provide.
13:59 Speaker 03 Nathan, yeah, I'm glad you put in there that it's a one of these, it's a VIBA health retirement account because usually I just a regular HRA, it is almost like a, an expense account for healthcare, much like an HSA at your work, but you have to be at that job to use it. It's a huge difference. It's and that's why that's a pretty, you see those contributions. It's a higher amount too. You can't put almost 10 grand a year into an HSA. That's above. So there are some differences here, but the main difference is that you can't, it's not really portable. It's not yours forever. Once you leave. But an HRA with a VIBA really is an employee benefit that you can take with you long-term.
14:44 Speaker 02 Oh.
14:45 Speaker 03 So it is, I know there's a few nuances. I'd probably have to be looking at the rulebook to decipher between a, an HRA that is a VIBA and an HSA, but the reality is that they act very similarly. And the cool thing is here, you're getting, I mean, one of the nuances is there's more money that can go into these. I mean, that's almost 10 grand a year. So I would look at it very much like your own long-term healthcare account that you can use forever. The access is slightly different. That's the other thing. It's an HRA really has to be only medical, specific medical and healthcare costs where the HSA, you can
15:28 Speaker 03 take money out even without a medical cost. You do pay some penalties or taxes to do that, but you can't really do that with, with the HRA. So that's the nuance. But again, we're going to probably spend most of the money we save if it's specifically for healthcare because those costs almost never go down. So I would be treating it much like you would an HSA because it should be your money, your wife's money long-term.
15:51 Speaker 02 All right. Tanya in Colorado says, I have a Roth IRA, but it's not doing much. The funds don't seem to be growing. I'm wondering if I should invest in target date funds or Fidelity GO. I'm 54 years old and I want to make a little more money rather than having it sit still. I have a Fidelity account and I'm wondering which of these two investments you'd recommend?
16:13 Speaker 03 Tanya, so think about this. The stock market in general is up about 30%, 30, 35% over the course of the last year. So when I hear somebody that says, my account isn't doing much. There are two reasons for that. One, sometimes if you have a smaller account, and I don't know the size of this account, but if you have an account that's 10,000, and it's up 10%, and it goes to 11,000, people will say, I don't think that account's doing much. But if it were a million dollar account, and now it's 1.1 million, they'd say, wow, it's doing a lot. I made 100,000. So sometimes our perception of how things are doing is skewed
16:56 Speaker 03 a little bit when it comes to how much money did I really make? A thousand bucks an entire year, it's not really doing that much. So I would first question that. Try to find the percentage. Now, if it's literally in the last year done 3%, then we also know something else is the problem. And that's just that you've been invested in an ultra conservative fund that's probably just bonds or money market. So then that would be the culprit of why you haven't made any money over this past year. And that would mean, yes, if you were going to look at a target date fund, any target date fund that's out a while, so it's the year 2026, so a 2040 fund, which would be 14 years from now, means there'd be a lot of equity exposure
17:39 Speaker 03 in that any particular target date fund. So I would be thinking, if you really want equity exposure, then you want to be going out at least 10 years on the target date options. And that's at any mutual fund company. Fidelity GO, my understanding with that is that that's almost an algorithmic type of portfolio, that you choose the risk level from, let's call it one to 10. And 10 is going to be probably 100% in stocks, and a one would probably be all bonds and cash. So again, it goes, it's not just that it's the program, it is what you choose within the program. And if you want equity exposure, that probably needs to be on the scale of a six
18:23 Speaker 03 or seven or an eight, if you want equity exposure.
18:27 Speaker 02 All right. We're going to take a quick break. And when we come back, you're going to help people who want to know how to tell the difference between a regular investment advisor, fee only.
18:37 Speaker 03 We'll see. I'm going to give it a shot. It's a very hard thing to explain. We'll see if I can do it.
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20:44 Speaker 03 Welcome back to Ask an Advisor. I'm Wes Moss here on The Clark Howard Show. Krista DiBiase here next to me. What is our next topic?
20:53 Speaker 02 Financial advisors. We get so many questions about this. And then there's been so much confusion. You know, Clark has always just said, you want to feel only fiduciary, but then we've had some questions recently from people who they have a fee only fiduciary, who then takes off the fiduciary hat to sell insurance under a different like, but it'll be the same. It'll be like a separate company under the same firm kind of thing.
21:16 Speaker 03 Right. And then one of my team members this week sent me an article that I had found and read in the Wall Street Journal that said that the fiduciary advisor rule just got more complicated and got murkier. And I read through it and I couldn't even understand it.
21:33 Speaker 02 Really?
21:34 Speaker 03 Because, so I thought, how do people really understand something that is so nuanced in language? That's the problem here is language is really hard to understand. What is the difference? And this is what I'm going to try to explain. What's the difference between a financial advisor and a financial advisor who's a fiduciary? Here's the confusing answer is that the financial advisor, typical quote, financial advisor, has to follow what is called the rule of prudence, which sounds pretty good. I want to make sure that what I invest in for, or help you invest in is prudent for you. That sounds okay.
22:06 Speaker 02 Sounds good.
22:07 Speaker 03 But the fiduciary says, I want to make sure that what I'm investing for you is in your best interest. How are people supposed to really understand that? Best interest, prudent for me, best interest, financial advisor, fee only fiduciary advisor, but the financial advisor also charges a fee. So there's fees. So I wanted to go maybe to the root of the issue and explain this in a food analogy is the only thing I could come up with. And I, I walk into the produce section, you walk into the produce section. And you see the tomatoes and the potatoes and pretty much all potatoes are pretty similar, right? Onions, some variety between them, some sweets, some ones that'll really make you cry.
22:51 Speaker 03 But think about peppers. I want you to think about an orange pepper. And I want you to think about a middle sized, not perfectly shaped, orange, bright orange pepper. And there are two of them sitting next to each other and they look pretty much the same. The color is almost identical, the shape's pretty similar, the size is similar. And they're just two orange peppers. One's a financial advisor, one's a financial advisor who's a fiduciary. Again, they still look pretty much the same. One of those peppers is a bell pepper. And we know what that is. Super mild. You can eat those things raw in a salad. The other one is a habanero pepper. The other orange pepper is a habanero pepper.
23:32 Speaker 03 Imagine if you sliced that thing up and threw that in a salad and started eating chunks of habanero. Whoa, totally, totally different, Krista. They look the same. They act the same. They slice the same. To your everyday public, they're pretty much the same. Until you get into what really makes those two peppers tick. One's meant for super mild, one meant is for super spice. And that's the difference. The fee only fiduciary probably gets some pushback on this is the bell pepper. And the financial advisor is the habanero pepper. And I'm actually not making a commentary if one is bad and one is good. They are just different.
24:17 Speaker 03 And the bell pepper side is of a different standard that is called the fiduciary best interest standard. They're the decisions that particular kind of advisor to make for you is should be in your best interest. That means that from a product selection standpoint, there should be no conflict in the investments they're choosing and what they're getting paid. The other kind of pepper, it's totally fine to do that. The habanero pepper, the non-fiduciary standard, the quote, "regular financial advisor" can choose from 10 different things, as long as they're prudent or meaning good for you. Pretty good. These are supposed to be good investments.
24:59 Speaker 03 But they can select them on what potentially pays them a commission or a higher commission versus a lower commission. And that is the difference. Now, you can say one is better than the other.
25:12 Speaker 02 Clarkwood.
25:13 Speaker 03 Clarkwood. Don't take it from me because I'm already feeling fiduciary. So of course I would say that's better. I do believe it's better. But it's also not always a terrible thing that financial advisors have access to products that sometimes do pay them. And not all those products are bad. You clearly can see which way I lean here, the way Krista leans here. And I'm not trying to be totally neutral on this, but both peppers are an important part of the ecosystem. They both play a very big role in the system. And they can both be really helpful. But that is the best I can do to describe the difference between the two.
25:52 Speaker 02 All right. So as far as I know, if you're trying to tell if somebody's really a fiduciary, first of all, usually it'll be in writing.
26:00 Speaker 03 In writing on the website.
26:01 Speaker 02 On the website. And then in person, do they sign an agreement? Is there any kind of fiduciary thing that you can get in writing?
26:09 Speaker 03 When you're engaging any financial advisor, you're going to sign account forms and usually a management type contract. In that contract, it should tell you the kind of advisor you're working with.
26:21 Speaker 02 Okay. Good to know.
26:22 Speaker 03 Now, in another segment, we will do, let's call it 10 things that a fiduciary financial advisor should be able to do for you beyond just investing. Because financial advisors do get this, there is a thought that they just help me invest my money. That is really just the tip of the iceberg and it's a whole nother segment.
26:43 Speaker 02 Okay. All right. Well, we've got questions that came in for you, Wes. Will in Kansas says, "My wife and I are in our mid 40s and just reached a $500,000 net worth about 200,000 in home equity, 60,000 in a brokerage account, and the rest is in retirement funds.
26:59 Speaker 03 How much was 6D?
26:59 Speaker 02 60 in a brokerage account. The rest is in retirement funds. We both grew up in divorced households where money was always tight. So we've worked hard to build stability for our family. Someone recently told us that their financial planning firm recommends a trust for anyone with over $250,000 in net worth. That seems low to me, but maybe I'm missing something. When does a trust actually make sense? Is it about net worth? Or is it more about complexity in the family situation? What are the advantages and downsides for someone in our position?
27:31 Speaker 03 Well, I think it's very much about the latter. It's complexity. It's when you have many different accounts, many different kinds of assets, brokerage assets, real estate assets. A living trust, which I think is kind of like the entry level starter trust, is the first thing that most people do. And do you need it because your net worth is at 250 or above? Not really. You can have the same exact complexity with somebody who has 2 million or somebody who has 200,000. One brokerage account, one house. Same exact. The asset level doesn't necessarily give it any more complexity. The will should say where those assets go when that person passes away.
28:16 Speaker 03 But if you have a will and you don't have a trust, then the will has to go to probate and then a court will say, okay, the will says this and it takes a long period of time. There's a real long probate process where the courts say, yeah, this goes there, this goes there. The living trust is a very inexpensive way to retitle your assets into the trust name, where you designate who's getting the money or who's getting the asset. So it makes all of that probate process, it almost eliminates most of it because you assign a trustee, you assign a beneficiary to the trust, and it happens very quickly. So I think it's a good thing for people to consider if they don't want their heirs to have to go through a long process to figure out who gets what.
28:59 Speaker 03 Then there are many other levels of trusts. That are irrevocable. So typically, a living trust is a revocable. You can change your mind if you want to, and you can change it again. But irrevocable trusts, where you can't change your mind, are meant for very different reasons. They're estate tax planning, regular tax planning, and asset protection, so that you ultimately give up full control of your money, so it's protected from your creditors. The complexity then would go back to how you're making a living. Are you a business owner? Do you have a liability potentially? Are you in a business where you can get sued a bunch? That's when these other pieces of trust planning come into play. But I don't, there's not a lot of downside to doing living trusts to title your assets,
29:45 Speaker 03 except for the cost of doing a living trust. But you can find, you can do that for a relatively reasonable price.
29:52 Speaker 02 I've also, I recently was looking into this, and I know there are a lot of tax implications that can come up too in a trust versus not in a trust. So it might be worth spending an hour with an attorney who specializes in wills of estates and trusts, just to see if it's necessary.
30:09 Speaker 03 It's very, very helpful.
30:10 Speaker 02 Brian in South Carolina says, "With high-interest savings accounts and money markets, and investment brokers paying around 3.5% to 4% interest, why bother with bonds? Isn't it good to keep a cash balance anyway?"
30:23 Speaker 03 It is, Brian. So there's no problem to have cash. And especially with rates where they are today, interest rates are fairly, I would say, at a moderate level. They're not really that high relative to history, and they're certainly nowhere nearly as low as they were several years ago, when they were literally at zero for years and years and years. So as long as you're getting 3.5%, Brian, that is, it's working for you. The difference between high-yield savings accounts and bonds is that that rate will change, just like prices at the pump will change. The day rates change, or the day oil changes, is the day gas prices change. It's almost in reverse, though, because the day the Fed lowers rates is the day, maybe that next day,
31:07 Speaker 03 your interest rate will go down too. That's in a savings account or a high-yield savings account. What a bond investment Is meant to do is lock in rates for a longer period of time. So that we, we, we talk about bond investing, yield is destiny, meaning that over time, the starting yield of the bonds you are buying into, let's say it's a bond ETF, typically is your longer term rate of return. So that let's say you're, you have an ETF yielding 4%. It's very likely that over the next five years, you'll get about 4% per year. Whereas in a cash savings account, you may get three and a half percent this year. And if the Fed lowers rates, next year, you're only getting two. That's the big difference.
31:49 Speaker 02 Okay. And then this one's from Heather in South Carolina. How much money should we have set aside if we're thinking we will self insure our long-term care? My husband and I are in our mid 50s and we're considering some version of retirement in about five years. We're comfortable with the amount of retirement savings we have worked hard and made sacrifices to be able to accumulate. We want to keep a portion of our savings and retirement savings to earmark for potential long-term care instead of buying insurance. We will not use that portion in our calculations for how much we can spend in our retirement years. We are currently in relatively good health. How should we approach calculating how much to earmark? That's such a good question.
32:29 Speaker 03 It's an awesome question, Heather. If you end up getting to what I think are the money green zones where you have your million dollars in investable assets or more, and you have multiple income streams where you end up with the household income that you're super comfortable with and living with. You've now created your own retirement income. You're no longer working. So you've got your, your social security, one, social security, two, maybe a pension, maybe some rental income. But then you have your investment income and that's where those asset levels become, become so important because then they should be able to produce income for you. Or you can look at your asset levels investable relative to a withdrawal rate for four and a half percent per year.
33:13 Speaker 03 So on a million dollars, that's another 40 to $45,000 a year. And what that does Heather, it creates your new paycheck.
33:22 Speaker 03 And let's say that paycheck is eight or $10,000 a month and you've managed for that, that can continue to go up for inflation. That also should be able to take care of you from a healthcare perspective because what happens when you need healthcare, let's just call it $10,000 a month that you're spending on average, goes down because now you're not doing as much. It's less discretionary spending. You're not, if you have to utilize healthcare or long-term, if you would be in the situation to be using long-term care, you're not traveling, you're not taking trips with the grandkids as much because you're in a health situation. So your, your normal spending goes down, but your income should not go down. So then that income can now go towards healthcare.
34:06 Speaker 03 So as long as you're creating an income for the 30-year retirement that you are planning, if and when you need that healthcare money or for assisted living, it should double as that, meaning that it goes from discretionary spending to more essential spending and healthcare. And that's how I look at it without having to buy long-term care insurance.
34:29 Speaker 02 Which is really hard to find nowadays.
34:31 Speaker 03 It's hard to find. It's too expensive for people who don't have a lot of assets. People with a huge amount of assets don't need it. And those folks that find themselves in what's called the upper middle that can maybe afford it, it also feels unaffordable and the benefits have come down. So my opinion needs to be your income and retirement planning doubles as your long-term care planning as well.
34:54 Speaker 02 Yeah. And then HSAs, we've talked today about health retirement accounts. We've talked about HSAs before, all of that as well.
35:02 Speaker 03 That's a great point. I forgot to mention it, Krista. You're right. Think about the HSA accumulation you have at your work potentially. If you're only 55 and you have another five to 10 years before you stop working, it would be wonderful if you can sock as much money as possible into the HSA.
35:19 Speaker 02 All right. Well, that is going to do it for us today on Ask an Advisor. Thank you for tuning in again. If you have a question for Wes, you can ask that question at wesmos.com/ask at our brand spanking new form. And that's where wesmos.com, you can find out more about Wes. Hope that you have a great rest of your day. Clark's back tomorrow with a brand new episode.
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