12.16.25 Ask An Advisor With Wes Moss

How To Feel Good About Spending in Retirement & Big Changes to Your 2026 Taxes Are you a lifelong saver struggling to spend your retirement nest egg? You're not alone! Many people who successfully save a significant amount face a major psychological hurdle when it comes time to shift from an accumulation mindset to a distribution (spending) mindset. Wes Moss breaks down how to overcome the psychological barrier of watching your retirement balance go down and how to finally feel good about enjoying the money you worked so hard to save. Also, Wes tackles the most timely and impactful tax changes coming up, including a checklist of six critical actions to consider before the end of the year to potentially lower your tax bill for 2026. Mentioned on the show: How To Find and Choose a Financial Advisor Best Financial Advisors in 2025 Year-End Tax Moves Worth Your Time IRS Announces New Tax Brackets and Other Changes for 2026 What Brokerage Do You Recommend for First-Time Investors or Kids? Uniform Transfers to Minors Act (UTMA): What It Is and How It Works Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the December 16, 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. 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

• 0:04Speaker 00

  Welcome to Ask an Advisor. I'm Krista Dibias here with Mr. Wes Moss.

• 0:09Speaker 01

  Hi Krista.

• 0:10Speaker 00

  Hello Wes. All right, we are getting close to the end of the year and I know that later on in this show today, you're going to talk about end of the year, tax planning for 2026, big changes, right?

• 0:22Speaker 01

  There's still some time left and there's been a lot of tax changes in 2025 with the one, the OBBB and there's still some time to do a little coordination before the end of the year, heading into 2026. I want to talk about that and some of the big changes for next year.

• 0:40Speaker 00

  Awesome. And then I have a question for you and I did show you this and you were like, I want to go more in depth with this question. So we're going to start with a question, which is not what we usually do. And then you're going to answer Cliff from Idaho's question and then expand upon it. Basically, talking about just transitioning from being in a saver mindset to a spender mindset in retirement, right?

• 1:02Speaker 01

  Yeah, when you asked me about it, it felt longer than just a quick Q and A. It prompted me to really think about it and it's an overarching question that pretty much everybody faces. And the way you brought this up from our listener question, there's more to it and it's going to take a little explanation. So I thought, hey, I'm going to write an article about this and I did that and I thought this is a great segment for you and I to do here.

• 1:27Speaker 00

  All right. So Cliff, thank you for this question and here it is. Wes, how do you coach clients to feel good about taking retirement from accounts? This paradigm seems to be one of the most difficult hurdles for people who rely on a monthly income their whole life and save monthly but never touch the account, an account that grows beyond what they've ever handled in their lifetime. The problem of creating the nest egg but not feeling comfortable with using it in retirement because it sits in one giant lump sum like lottery winnings. It's like the 401k is almost not real to people.

• 2:01Speaker 01

  Like a lotto.

• 2:02Speaker 00

  They can do them, mhm, they can do the math and say, I've earned a million dollars in my lifetime, but having a million dollars in an account with $75,000 Income doesn't seem legitimate. Even having two to three years of dry powder in a liquid account seems like far more money than most are used to seeing in their bank account at any given time. In my research, even people who were really good savers throughout their lives can't always handle having large sums in their account at a given time. For instance, most articles you see about lottery winners are lower income people who haven't saved much their whole life. And as a result, they spend that money recklessly in a few short years. However, I've even read a really sad story about a retired couple who were financially secure, living in a comfortable existence.

• 2:46Speaker 00

  The wife kept a Lotto win secret from her husband and took out loans against it and ended up spending more than she won, causing them to go into debt and eventually ruining their long-term marriage. Even when normal people recognize what they have in their 401k makes them a legit millionaire, their monthly income doesn't correlate and they just think they're middle class. So retiring and having to withdraw from a 401k seems painful or counterintuitive to them. How do retirees overcome this mentally?

• 3:16Speaker 01

  And you can see why this is a really larger topic. And essentially, anybody that's going to get to a retirement where they will be comfortable and you, if you've saved enough, you're going to have to kind of go through this psychological transition. It's a very real problem for some people and the way this listener question came in, I think he encapsulates the essence of it, which is, hey, I've been making mostly a middle-aged income for many, many years and I've been scrimping and saving and budgeting and saving and budgeting and saving. And all of a sudden I look up one day and there's this big balance. It's a million dollars.

• 3:57Speaker 01

  By the way, you have to usually earn more than the million than after taxes to actually have a million. So it's a really powerful amount, even if it's just grown over time. It's still, you look up one day and you have a balance of a million or two million or three million dollars. And then the shift is very psychologically different, difficult. It's the millionaire's paradox is what happens, particularly the millionaire, millionaire next door, who is frugal. And the whole reason they end up with a million or $2 million is because they've been frugal. Now you wake up and you're supposed to spend it. So first of all, on the surface, it is a little bit like winning the lottery. You're not really feeling like a millionaire because you know you have to continue to put in the work to get there.

• 4:42Speaker 01

  And then when you do stop working, you realize, wow, we really do have a lot of money. It's over a million dollars. Well, when you win the Lotto, this is amazing. When you win something like a lottery, you have sudden wealth and that usually leads to sudden spending. And that's the problem with that is that you haven't had to accumulate and go through the pain to get to the money. It just appeared one day out of the blue and it's really easy to spend it quickly, as quickly as you made it or received it. It's different for you and for 99% of Americans that do get to retirement. It's a long journey to get there. So it's slow wealth accumulation, which leads to slow wealth distribution. And that's the key here.

• 5:27Speaker 01

  So you've, you've done this, think of it this way, and let's talk about median income for a minute. Median household income in the United States right now, as of the latest survey is about 80, a little less than $84,000. That's the median income in the United States. Now to be in the top 10% of wealth in the United States, your net worth has to be 1.8 million.

• 5:50Speaker 00

  That's median household income or individual?

• 5:53Speaker 01

  It's household.

• 5:53Speaker 00

  Okay.

• 5:54Speaker 01

  It's household. So that's husband and wife, or depending on if both are working or not work, or maybe just one person is working. But to have a net worth household in the United States that is in the top 10%, more than 90% of others is 1.8 million. About 18%, so call it about one in five Americans in the United States have a million dollar net worth.

• 6:17Speaker 00

  Okay.

• 6:18Speaker 01

  It's about one in five, but only 5% of folks, and again, this is rare sliver to be in statistically, only about 5% of Americans have a million dollars in just retirement accounts, not counting brokerage accounts. So it's taken you a really long time to get there and you can do, and this is another great example. Someone never making more than around the median income or even less in this question, but he still ends up with this tremendous amount of money and spending starts to feel wrong because all you've ever done is save and contribute and build and delay and protect and invest and let the balance grow. And then all of a sudden, one day you're supposed to just do the opposite of that, which is, well, now I have to start using all that money.

• 7:03Speaker 01

  And sometimes it doesn't feel real and you say, I can't spend that. What if the money does go away? I hate watching the balance go down if there's market fluctuations. So there's a lot to this transition of you save for 30 or 40 years. And now you're supposed to spend for the next 20 or 30. So the first step in order to overcome what is very much a psychological issue, the psychology of money is so important in the planning that, that we do that I see every day,

• 7:34Speaker 01

  is to build some sort of written plan that has the inputs that over time should be relatively conservative, but play out conservative market returns, assumptions, a real inflation assumption of what it's going to continue to cost to live. When are you going to start turning on social security? When are those inputs going to start coming in? What are the guardrails that you may want to think about? I like to look at max spending, meaning that I know what I can take out just to cover my needs, but the portfolio and my other income streams, what if I really wanted to max this out? So that I end up running out of money at the very end? What does that number look like? And I think that's a helpful number because usually it's much higher than what you really

• 8:19Speaker 01

  need to spend and that's can give you some psychological comfort. And then you look at this over long periods of time, 10 and 20. 30 years. And once you see that math, you can start to say to yourself, all right, well, this is based on the, am I following the 4% plus rule, which is a rule that we know that has been tested over the course of market history that can help us understand that we are not going to run out of money as long as we are within these parameters and continue to be able to keep pace with inflation. So if you have a plan and then you understand how your withdrawal adheres to that really important rule, that 4% rule, which today

• 8:59Speaker 01

  is actually above four, it's really in the four to four and almost 5%, 4.7% safe range. And I think that acts a little bit like a permission slip to help you get over the worry of, hey, wait a minute, this feels weird pulling money out as opposed to putting money in. And then you can start to think, well, wait a minute, this is not reckless at all. This is what my, the system that I built, this is what it allows for, this is what it was built for. Step three is to make sure that your portfolio, the way that million or $2 million is situated, you have a good understanding of the balance and diversification and know that there's no way to guarantee market returns over time. But you can do

• 9:41Speaker 01

  a lot of things and put a lot of things into place where you know that you've built a real fortress around it. And I think that's maybe the third step to give you some emotional insulation around this big change. So if you have a written plan, you understand how the withdrawing of money still is sustainable. So 4% plus rule, how it works within the plan, and you keep a balanced portfolio, that really will help you make that millionaire paradox go away, help you with this emotional or psychological transition. And very simply, remember that this was not the Lotto. We didn't get here out of luck. It was work. And that you earned it and you deserve to be able to spend it.

• 10:23Speaker 01

  That I think can help folks have the permission to freely spend what you need to spend without all the guilt in retirement. Maybe it'll save a marriage or two.

• 10:35Speaker 00

  I love it. Matt in Colorado wrote in to you and he said, I've taken Clark's and Wes's advice over the years. Something I've been wondering, as well as others I've talked to, not specific to Wes at all, but to advisors in general. If advisors are able to give great advice to various stocks and bonds and they can speak to how the market's moving, then why are they even working? They should all be millionaires or billionaires. I know Wes does not say anything is a sure thing, but if advisors follow the majority of what they advise, shouldn't they be making money hand over fist? I talked to my advisor at Fidelity and they slug it out every day nine to five. I'm thinking they would rather not work, but if they could follow their own advice, then they should be able to stay home and just manage their accounts. Don't get me wrong.

• 11:18Speaker 00

  This is not a criticism of Wes, just a question. And by the way, I'm writing this while I'm standing in the queue in Rome, Italy, waiting for my flight to Valencia, Spain. So sorry if the grammar or spelling is not perfect.

• 11:30Speaker 01

  That it's funny that if you think about it, remember if we ever, we've talked about the mappiness project.

• 11:35Speaker 00

  Yes.

• 11:36Speaker 01

  Where it's the 40 daily activities that we spend the most time in ranked on the things that we like the best and we hate the most, if you will, at the bottom of the list. By the way, work is number 39 on the list. Number 40 in the list, there's the worst thing is being sick and bad. But just above 30, I think it's 38 or 37 is standing in line, standing in a queue. People do not like doing that. You feel like you're really wasting your time. So maybe that Matt's feeling a little agitated and he said, wait a minute, why advisors even, why are you working if you're so smart with markets or you're so good at this? The here's the reality is that the wealthier people are.

• 12:16Speaker 01

  In the world, in America particularly, the more you need help managing all the complexity, because it does get complex. I think that's the first thought here. Advisors build wealth the same slow, steady way everyone else does. Remember, what is the statistic, though, that I just talked about earlier? It's only about 5% of folks have a million dollars in a retirement account in America, and only 18% have a net worth of a million. To be in the top 10%, you've got to have almost $2 million. So I think a lot of advisors, though, choose to continue guiding families because that complexity is, solving that is really meaningful. It's a really, it's a meaningful career and meaningful work. And the reality is there are millions and millions of people.

• 13:01Speaker 01

  So 20% of a giant population, that's millions of people that do that kind of net worth, and they really do need help. So advisors, though, what do advisors really do? They're not in the business of sudden wealth. Advisors are not there to create an overnight windfall. They're not market whispers, and they're not even professional mutual fund managers. That's all they do is pick stocks. Even that group has a difficult time beating overall markets. So the reality is that advisors are not there to deliver for you or themselves magical rates of return and piles of money overnight.

• 13:42Speaker 00

  If they say they are, you need to shop your advisor.

• 13:45Speaker 01

  You need to be running. Advisors are there, though, to help avoid big mistakes. I think that's a huge part of this. Build sustainable long-term plans. That's super important. Manage your taxes. Stay invested through volatility, which is the psychology of money, which is really difficult. Help protect families with bigger picture planning. Avoid emotional decisions, which is also psychological. Look at the estate planning. And if you're in your 20s or 30s, you may not need that. You may not really even be thinking about that. But when you get closer to retirement, you really do start thinking about that. And then make that transition from work accumulation to distribution. Those are all the things that an advisor, which is really a guide

• 14:30Speaker 01

  to give you a higher probability of reaching that. Top 10% of America in savings. So advisors do this the same way. They do it the long, methodical way by consistent savings, diversification. I also think with this way, Krista, the reality is that we can outsource almost anything these days, or we could also choose to DIY almost anything. Most people could very easily do your own taxes. So you can, you don't need a CPA, but people do hire CPAs because of the complexity. With the day of artificial intelligence, a lot of folks could, they could be their own lawyer, they could be your own electrician, you could be your own mechanic. We still hire chefs, we still go to

• 15:15Speaker 01

  restaurants, we still hire personal trainers. So a lot of services that you could do on your own, and a lot of investors do do it yourself, DIY investing. But there's a huge percentage of the population that it gets complex enough that they want help, number one. Number two, another very large percentage of the population does not want to be in the weeds with their money decisions and think about it all the time. And if I think about the families that I work with over for many years, they don't enjoy investing, they don't enjoy the planning, they know they need to do it, a little bit like going to the dentist. It's not as though they they love it, but they know they need to do it. And they'd much rather have help with someone doing it for

• 15:58Speaker 01

  them and outsourcing a big chunk of it. So DIY investing is for a big chunk of the population, but there's a huge percentage that really just they want help. And it's a meaningful career for a lot of advisors, even if you could retire, and I think Clark could have probably retired 20 years ago, and he's still working and still giving advice.

• 16:17Speaker 00

  He did retire when he was like 31.

• 16:18Speaker 01

  And he's still working and

• 16:20Speaker 00

  He wants to teach. That's his whole thing. And he likes to work. Yeah.

• 16:23Speaker 01

  And I'm really the same way.

• 16:24Speaker 00

  To an extent.

• 16:24Speaker 01

  I mean, I could have, I could have stopped doing this maybe a long time ago, but I've got little kids. I don't want, there's only so much golf, pickleball, fun, travel I can do. And I think a lot of people still love working. So Matt, good, really smart question. And I love, you're clearly doing something right if you're standing in the queue at the Louvre, or I don't know where you are.

• 16:46Speaker 00

  Well, he was in Rome. Okay. And then just piggybacking on that, I don't know how much you would have.

• 16:50Speaker 01

  Oh, no, wrong country.

• 16:51Speaker 00

  Yeah. I don't know how much you'd have to add on to this, but Alex in Oregon also said, how do you know your financial advisor is looking out for you beyond looking at their portfolio performance? What should you look at? Like certainly not promising you 12% returns.

• 17:05Speaker 01

  Right.

• 17:06Speaker 00

  A month or year.

• 17:07Speaker 01

  You bring this point up a lot and the importance of you don't just say fiduciary lightly. I think that the first step is to have a fiduciary advisor that has that credential and they're set up, their business structure is set up that way, which is to avoid financial conflicts of interest. There are companies that are fiduciaries and financial companies that are fine to do commission-based work and they're motivated and it's not even their fault. It's the way the companies are set up. People get paid if they generate commissions in some environments. They may not always be looking out in your best interest because they're trying to make a living. Fiduciary, yes, you still pay them, but there's a lot of alignment with your own goals and they're, and they're there to make sure that they're doing things in the most cost efficient way.

• 17:52Speaker 01

  Doesn't mean it's free, but it is, it should be cost efficient and unconflicted, if you will. So that's kind of the table stakes starting out. Number two, your advisor needs, you need to know deep down that they really understand you. And you can get, humans, I think, can get a sense of that if you're just being sold to, or someone's really understanding you. So if you're, if your advisor is understanding you in their fiduciary, I think that goes a really long way and they show you a plan on how to get and reach your goals. And your conversations are more than just about the portfolio. And, and I think that you should feel listened to and that is, and there's no guarantee ever

• 18:36Speaker 01

  to find the world's greatest advisor, but if you're getting the sense of everything I just mentioned, you have a really good shot at having someone that is that guide for you throughout this entire journey.

• 18:47Speaker 00

  So I was at the dentist yesterday. I love my dentist.

• 18:50Speaker 01

  I don't know if, by the way, I've ever brought up a dentist analogy when it comes to our financial advice, but it's not that far off.

• 18:57Speaker 00

  Getting a financial root canal.

• 19:00Speaker 00

  My dentist was, I'm like, have my mouth, you know, jacked open or whatever, and she's telling me that her financial planner at a bank makes her feel like, she feels like dirty when she leaves. Like she's just trying to sell her on all this stuff. And I was like, err.

• 19:15Speaker 01

  Why don't you do this? Why don't you do this?

• 19:16Speaker 00

  To say stuff.

• 19:17Speaker 01

  This is available for a limited time.

• 19:19Speaker 00

  Yeah. By the end, I was like, you have got to get away from this person. You need a fiduciary. This is crazy. I mean, it was, it was unbelievable. Anyway, next, coming up straight ahead, tax planning for 2026.

• 19:33Speaker 01

  There's a lot to think about and there's still a couple of weeks left in the year.

• 19:37Speaker 00

  All right. We'll be right back.

• 19:40Speaker 01

  Welcome back to Ask an Advisor. Wes Moss here, along with Krista DiBiase, and we're going to tackle, it might not sound like the most exciting topic in the world, but it's maybe arguably a little more timely and maybe more impactful right now, over the next, next several weeks, and then of course through 2026. And that's all about the, the big tax changes to watch out for in 2026, and then what we can do before year end. So first of all, I always give the caveat, check with your CPA and make sure that you have vetted some of these ideas with either your CPA or your CFP, or potentially both, because

• 20:21Speaker 01

  everybody has, the more and more I, I will dive into taxes, the more and more I realize that it's, it's almost impossible to find two people alike. So it's a unique fingerprint when it comes to taxes, and that's why we all need to vet these. But here are six of these to watch out for this year and/or next year. So number one is the higher SALT deduction. What does that really mean? The SALT is state and local tax deduction. And what's changed, and this actually has already happened this year, so there's something you could potentially do about it. The SALT deduction went from 10,000 to 40,000. And what's the math on that? I did some quick math.

• 21:03Speaker 01

  If you're a married, married couple earning, let's say 450,000, high earners, and you pay a ton in either state taxes or your property taxes, and it comes out to 40 grand, last year you could only deduct 10 of it. This year in 2025, you could, you can potentially deduct 40. That's it. The difference between those two deductions, that saves you 10,500 bucks.

• 21:25Speaker 00

  Wow.

• 21:26Speaker 01

  Huge number. Now, the catch though, is that it comes with income phase out. So, once you go over 500K, it starts to phase out. Once you hit 600K in, in household income, you don't get it anymore.

• 21:39Speaker 00

  But that's pretty rare.

• 21:41Speaker 01

  It is rare, but if you're paying, if you have that big of a salt deduction.

• 21:45Speaker 00

  Yeah, you probably, yeah.

• 21:46Speaker 01

  You may be someone in that category.

• 21:48Speaker 00

  Got it.

• 21:49Speaker 01

  So, what you can do is if you know you're close, let's say you are, here we are in December, and you've got a couple of weeks left, and you know you're close to that 500 line or more, and you haven't already maxed out your 401K, or done everything you can family-wise to defer as much income as you can, maybe you could potentially accelerate it. So, that is something actionable by the end of the year. It may not be all that possible, but most people have already probably put in their 401K contributions for 2025, but it's, it's possible. And if nothing else, we know it for next year. Number two, charitable deduction rules, starting next year, do change, and they, and they water down the charitable deductions a little bit.

• 22:32Speaker 01

  What's changing? There's a new half a percent AGI floor. So, they, we look at, they take your adjusted gross income, and they say whatever a half a percent of that is, that amount of you deducting doesn't count. And then they cap it, there's now a 35% cap on the value of the tax benefit. So, what does that mean? Here's an example, high income donor giving, and I did some of these examples, giving 5,000 and 10,000, and the changes are really small. But if you're a bigger donor, in, let's say, this year and next year, let's say 50,000 is my example, this year you would get an $18,500 tax benefit for that. And again, assuming a 35% bracket.

• 23:16Speaker 01

  But in '26, with those new rules where you're getting some limits, it only saves you about 16,600. So, it's a little less than a $2,000 drop in tax impact, starting next year. What do you do with that? You'd be better if you're going to give money away either now or this or next year. It's a little more valuable in 2025 versus 2026 potentially. So it's, it's almost like we're full strength coffee today. Next year, it's a little more watered down, call it Americano. Number three, HSAs. HSAs are the health savings accounts that I think of them as healthcare 401ks. They can sit there, they can grow. You want to use that for healthcare costs.

• 24:00Speaker 01

  What's changing is that starting in 2026, and this potentially could hit hundreds of thousands, maybe millions of people. I don't know the answer to that, but people with, with the ACA plan that is either bronze or the catastrophic plan through ACA, plus those with a subscription style primary care become HSA eligible when they may otherwise not have been. Meaning that if you maybe didn't, weren't allowed to have an HSA last year, if you're in the ACA bronze or catastrophic plan, now you should be able to do that. What are the ACA limits for 2026? For someone single, it's 4,400.

• 24:43Speaker 01

  For a family, it's, it's almost nine grand. It's $8,750 plus an extra thousand bucks in catch up if you're 55 or older. So kind of the analogy here, HSAs are like a tax-free super fridge where your healthcare dollars can sit in that fridge and they can grow and can stay cold and used indefinitely. And according to what my research on this, potentially now millions more people can have these HSAs that were not otherwise allowed to do so. Number four, now there's not a lot of time on this one, Krista, but last chance to get the $3,200 clean energy credit that expires at the end of this year.

• 25:27Speaker 01

  I don't know if this is, is possible because there's not a whole lot of time left in this year. You do have to have energy efficient windows or a new heat pump or a heat pump, water heater before December 31. You have to have it installed. Okay. Has to be installed to claim the full $3,200 credit. Again, you have to obviously spend that much to get that credit. Number five, return of 100% bonus depreciation. 100% bonus depreciation. What does that mean? It's a bonus of depreciation. Meaning that this is for business owners, real estate investors, et cetera. Bonus depreciation goes back to 100% for assets with a 20-year life expectancy. So here's an example. Tom has a small landscaping company.

• 26:12Speaker 01

  He needs to buy a new truck or a truck and it's going to be $30,000. Before this rule change, he could only deduct a portion of that $30,000 as a business expense. It has, it has to, the deduction gets spread out over a bunch of years. Now, 100% bonus depreciation, he can deduct the entire 30 grand this year. Or in, I'm sorry, in the year he buys it. So it's a bonus of being able to appreciate the whole, let's say it's a $10,000 lawnmower, the whole thing this year versus spreading out the deduction. That's why they call it bonus depreciation, if you will. A little bit of an incentive for a business owner to go ahead and spend on equipment that they do need.

• 26:55Speaker 01

  And number six, more flexibility with, we get a lot of 529 questions here. More flexibility coming up at 2026 for 529 plans. What's changing? Well, pre-college expenses now allowed, materials, tutoring, tests up to, it was 10K for that in 2025. It's going to 20K in 2026. So broader use of 529 funds. Parents, even adults, upskilling can even benefit. So just know that they, 529 plans used to be kind of just this one trick pony. Now we're getting some broader use of the 529 plan. Now a little more like a Swiss army knife.

• 27:38Speaker 01

  So one, check your 2025 income, the 500K limit. It can, we'll start to phase out that new higher potential SALT deduction. Two, potentially accelerate charitable giving in 2025. Three, review your HSA eligible insurance options.

• 27:56Speaker 01

  And if you have a couple of weeks left and you're doing some energy upgrades, gotta get it done before the end of the year.

• 28:04Speaker 00

  All right, let's go to some questions. This one came in from Massimo in New Jersey. I have a question regarding our new grandson. Congratulations. I would like to set up some sort of fund every year, like a thousand dollars or more each year, but not a 529 plan because this is already taken care of by his other grandparents. What do you recommend? For example, opening an investment account that can be used once he's 18 years old, or a joint account, or anything else you would recommend? My thought is eventually when he gets to a certain age, he would probably need to buy a car, or maybe use the money for college, and that would help him and the family.

• 28:41Speaker 01

  Massimo is a great granddad here. My favorite is the custodial Roth, because the custodial Roth will grow tax-free. It becomes their money, and it continues to grow tax-free. And it's a flexible type of account where even when you're younger, you could potentially use some of the contributions, but...

• 29:03Speaker 00

  Wouldn't the baby have to work?

• 29:04Speaker 01

  The problem is the baby has to work. So that's really for someone who would be in their teen years, and they're doing some sort, they have some wage income. And then you could help them with a custodial Roth. But since you're a new grandfather, that's not going to work right now.

• 29:19Speaker 00

  Well, maybe if the baby is like really good-looking, see if he can be a model.

• 29:23Speaker 01

  That's possible. That is possible.

• 29:25Speaker 00

  Clark's Kids did some of that.

• 29:27Speaker 01

  Baby modeling?

• 29:28Speaker 00

  And they had Roths. Guess what?

• 29:29Speaker 01

  I believe, I'm sure they did. So it's possible, but not likely. Number two, you could just have a joint account with your grandson. That is, I would say, not preferred, because the minute he realizes that he would potentially have access to it, not just waiting till he's 18 or 21. So that's a possibility, but not the best option, in my opinion. So this goes back to the good old-fashioned UTMA, the Uniform Transfer to Minor Act account, that you can have in pretty much any brokerage account, so firm. Fidelity, Schwab, I believe Vanguard, you're the custodian, and...

• 30:06Speaker 01

  Your grandson is the beneficiary of that account. In a lot of states, I believe you can set the date it becomes available to them. It can be 18 or it could be 21. So I believe you as a custodian can make that choice. I like that option the best because then it's still you're in control of the money. But also look at this as a, as an overall partnership and being almost educational with your grandson. Again, today, if he's one or two, he's not going to understand what's happening. But when he's five, six, nine, 10, it's a really nice thing to have between whether it's a parent talking to children about money or a grandparent talking to their grandkids about money. It's a nice education and dialogue to have of, hey, there's money here. This is how we're investing it.

• 30:51Speaker 01

  This is why you want to let this accumulate and you can, it can be a really powerful resource for you down the line. And the earlier you have those conversations, I think the better the financial education is. It's just as important as the money itself.

• 31:05Speaker 00

  Okay. Kevin in Georgia sent this one in. 64 and planning to retire next summer. I have over a million dollars in my employee sponsored 401A plan with Tia Kref. It is all invested in a low cost mutual funds. My wife and I have smaller Roth plans with Vanguard and Fidelity. I'm interested in using some of the low cost options for financial planning offered by these latter two companies. Is it advisable for me to consolidate all of my retirement savings in one of these two companies? So I can use their low cost advisor.

• 31:38Speaker 01

  The 401A, the rules are really similar to a 401K.

• 31:44Speaker 00

  I've actually never heard of a 401A.

• 31:47Speaker 01

  I would believe that's a government oriented plan is the, as opposed to let's say a nonprofit. I think, I bet you it's a government type plan. But the rules are very, very similar. But when you're using Kref and Tia or Tia Kref, that's where the rules may be a little bit nuanced. The Kref side, if you go into your 401K, the way it is likely working for you.

• 32:13Speaker 01

  Kevin, is that the CREF side is the mutual funds where they're variable annuity type accounts where they're very much like mutual funds. So you're choosing an equity fund or an international fund or a bond fund. And if you have everything in CREF, they do make it easy to, if your plan allows for this, which it should, to just do a direct rollover to a, and consolidate into an IRA at either Fidelity, Vanguard, et cetera, TWAB, et cetera. The TIAA side is where it gets a little trickier because the TIAA side is the traditional annuity side. And that's almost like a fixed account where you're, you're getting a fixed number from TIAA. That account, if you have one of the

• 32:57Speaker 01

  newer plans, I think it's the TIAA plus or Choice Plus Plan, you may very well be able to roll that whole part out as well. But for some of the older plans where you have the TIAA dollars, they may put you on a schedule on how much you're allowed to roll out in any given year. And that could be long. It could be seven to potentially 10 years. But I do like the idea of that transition. I'm a big believer in having your retirement assets in one place, one custodian. You're not getting diversification by having four different firms with four different IRAs. That's a misnomer. You're losing control and vision of your dollars. So I'm a big believer in getting it all into one place.

• 33:42Speaker 01

  If you like one of those options and you would rather move from TIA, CREF, and the plan allows for it, which I think it should, I think a rollover is a great idea, potentially, as long as you're weighing all your other options.

• 33:54Speaker 00

  All right. So that, that's going to do it for us today. If you have a question for Wes, go to Clark.com/ask. You can also ask a question for Clark there as well. And we read through everything sometimes.

• 34:06Speaker 01

  Keep the questions coming. Love them.

• 34:08Speaker 00

  Keep them coming. The shorter the better, honestly. If there are multiple pages, definitely can't read those on the podcast. No.

• 34:16Speaker 01

  The longer the better.

• 34:19Speaker 00

  Anyway, thank you so much for being with us today. Hope you have a great rest of your day. We'll see you next week.