12.23.25 Ask An Advisor With Wes Moss

The Secret to Affordable Healthcare & Will Mortgage Rates Go to 5% Soon? Wes Moss reveals a critical, little-known healthcare secret that can save early retirees, job-leavers, and other Americans thousands of dollars a month on medical coverage before age 65. Hear the incredible story of Rebecca, who thought she was stuck paying $2,500/month for COBRA but discovered a way to slash her premium to less than $200 through the ACA, thanks to enhanced subsidies. Wes walks through how to use free resources to save big. Also, Wes breaks down the latest Fed rate cut and explains why it may not mean cheaper mortgages. Mentioned on the show: Calculator: ACA Enhanced Premium Tax Credit National Association of Benefits and Insurance Professionals Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the December 23, 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

• 0:00Speaker 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.

• 0:15Speaker 01

  UKG is the workforce operating platform with unified HR, payroll, and workforce management, built to solve the unique challenges of frontline work. Powered by People First AI and decades of labor data, UKG turns workforce intelligence into real-time decisions around staffing, pay, compliance, and productivity, enabling every worker to confidently take action as work happens. Because when work works, everything works. Learn more at ukg.com/work. UKG, HR, Pay, and Workforce Management.

• 0:50Speaker 02

  Welcome to Ask an Advisor. I'm Krista DeBias here with Mr. Wes Moss, who is an investment advisor.

• 0:57Speaker 03

  Yes, that's true. That is true.

• 0:59Speaker 02

  And we're going to talk about some really interesting topics today. It's healthcare enrollment system for so many, including the ACA.

• 1:07Speaker 03

  Season.

• 1:08Speaker 02

  Yeah.

• 1:08Speaker 03

  And system.

• 1:09Speaker 02

  Yeah. Oh, season.

• 1:10Speaker 03

  Yeah. Healthcare enrollment system. The first enrollment period ended mid-December, but now we're in another enrollment period until mid-January. So that if you're enrolling now through the ACA, it would be for coverage the beginning of Feb. So there's still time.

• 1:29Speaker 02

  Okay. And you have a very interesting, compelling story to share with everyone about trying to find healthcare, even if you're well under the age of 65. A lot of people ask us about retirement healthcare, and I actually have a question for you about that today.

• 1:42Speaker 03

  And there's been a lot of changes in policy, and I think it's a confusing period of time of what those supplements might be. The cost of healthcare has skyrocketed in the last decade. It's really, besides a mortgage, and for some families, even more so than a mortgage is the cost of healthcare. It's dramatic.

• 1:59Speaker 02

  And then we did see a Fed rate cut again a couple of weeks ago, and you're going to talk about that and what we're seeing and what the implications of that are. And should we be so concerned every time we hear about the Fed cutting or raising? Raising rates.

• 2:10Speaker 03

  Right, or be worried about or waiting for lower mortgage rates. And I know a lot of people are waiting for lower rates in order to make a home purchase or move. And I just don't know if that's coming anytime soon, even though the Fed just cut again. Talking about that.

• 2:26Speaker 02

  And we, of course, we'll get to your questions. You can submit those at Clark.com/ask.

• 2:32Speaker 03

  Why don't we start with this? And this applies to, this is a story I'll, I'll share today. That it's more common than most people might think. And it does apply, applies to anybody looking for healthcare under the age of 65. So if you haven't qualified for Medicare yet at 65, and you're an early retiree, think of this as anybody that has to get coverage before they're getting to Medicare age of 65. So it's any early retiree, but it's also for people that have lost a job and don't want to pay COBRA because it might be super expensive, which it typically is. So anybody that's lost a job, anyone that's lost a spouse, and all of a sudden now your healthcare is kind of up in flux.

• 3:15Speaker 03

  Because it was with your spouse's company and now that's no longer. Yes, you have the option to pay COBRA. But that gets really expensive. And that brings me to a story of someone that I worked with and, and trying to help through this over the past, past month or so. Young widow in her 40s, we'll call her Rebecca. And the conversation around financial planning, it started with, hey, how do we, how do we figure out your current issue today? We'll talk about retirement in a minute, but let's figure out, how are you paying the bills right now? What are your biggest costs? And for her and her two children, still young, one in elementary, one in middle.

• 3:58Speaker 03

  The biggest cost was, hey, my, the COBRA I'm being offered is like $2,500 a month.

• 4:06Speaker 02

  And that's her husband, that was her, her late husband's.

• 4:09Speaker 03

  And that was by far the biggest line item in their budget, even though she wasn't working.

• 4:17Speaker 03

  Well, she was under the impression that she had to go get a job, a full-time job in order to get healthcare, knowing it was going to be so expensive to pay out of pocket to continue COVID coverage. And a lot of people find themselves in this situation. Again, this is a really difficult case because this is someone who's now a single mother, widow, but this is anybody who has lost a job. This is anybody who is retiring early and trying to figure out how to get healthcare coverage. So her story, the punchline of it is that she thought she was going to be paying $2,000 or $2,500 a month. The reality is she's going to be paying probably less than $200 a month. It may be even free, depending on how much other income she decides to have, or how much she decides to work. And that

• 5:02Speaker 03

  is the crux of this. And then you get into the world of finding healthcare through the ACA, the Affordable Care Act. And you go to healthcare, we all have heard, you go to healthcare.gov and you look up your state, you either get coverage through the overarching plan, or if your state, like our state, the state of Georgia, has their own plan, Georgia Access, but you still go to healthcare.gov and it takes you to the site. And it's very, very similar. So the policy question, this goes back to the government shutdown a couple months ago. The policy fight was about these subsidies. So what happened is that we had a certain level of subsidies, depending on your income, based on the FPL, the federal

• 5:46Speaker 03

  poverty limit, between if you were anywhere from 100%, so right on the federal poverty line, as far as your household income, all the way up to 400%. If you're in that range, you were going to get some kind of supplement. If you were at poverty line, or even lower, you're going to get, you may even be Medicaid at that point, but you're going to have very reduced, if not zero, healthcare costs because the subsidies would be really high. So instead of paying a thousand a month, you might pay $50 a month or zero. And then those got expanded. Those got expanded during COVID. So it made it so that the subsidies were even greater. And this was surprising to see this in real life, where you would see people that have retirees

• 6:28Speaker 03

  who were still not Medicare, yet they're 63 or so, they went to the exchange. They had really good incomes. They weren't, but by no means strapped or on the line of not being able to pay their monthly bills, yet they still got pretty big supplements. And that's what one of the big disagreements now in Washington is because those subsidies now essentially sunset at the end of this year. So starting 2026, we kind of go back to what they used to be before they were expanded. They're still significant though, and I think that's the message I have here today. And they're going to go back to this range of 100 to 400% of the FPL, the federal poverty line.

• 7:10Speaker 03

  In some states, it's 133% to 400, but it's, it goes, it's going back to the way they used to be. So that's where we stand. So back to Rebecca's story. We looked at her expected income and she's going to get some spousal social security benefits and that'll count towards her household income, which will then count towards how much her healthcare is going to cost. But there's two resources that if you're in this situation that you can use. One is kff.org. It's the Kaiser Family Foundation. And they have a link that will show you the new 2026 levels of how much your healthcare will get supplemented because you'll put in your income.

• 7:53Speaker 03

  You'll put in your dependents, how many people in the family, how, what are the age of the kids? And your zip code, and this goes by zip code in America. So it's looking at your income relative to your zip code in your county. And that will show you what kind of supplement you may or may not get. And after putting in this data for Rebecca.

• 8:14Speaker 03

  I got to the point where it was showing something closer to $190 a month.

• 8:21Speaker 02

  Way better, obviously.

• 8:22Speaker 03

  95% cheaper than $2,500 a month, depending on how much, let's say, part-time income. So, so what does that mean? One, dramatic cost reduction, huge relief for her and her family. Two, another relief that she might not have to go, she doesn't necessarily have to go back to work full-time just to get healthcare, or at least right away. And she can choose now to work part-time and then supplement that income. Now, that gets a little tricky too. How much do you want to work? How much income do you want so that those subsidies either stay in place or they start to go away? You go to kff.org, you put in your income, and this is important when you do this to not,

• 9:04Speaker 03

  to try to be as accurate as possible, because if you underestimate your income, let's say, you say, "I'm going to make $40,000 will be my total income for the year." And you end up with a really big supplement throughout the year, but you end up making $60,000. They will come back and increase. You'll have to pay the difference of what it would have been if your income was in fact higher than you had, that you had stated. It works the other way too. If you say, "I'm going to make $50,000 a year," and you get some level of supplement, and you end up making 25, you can end up getting a credit for your healthcare coverage at the end. But you do want to be accurate about it, and I love that calculator to give you an idea of what it's going to cost. And again, I'm not in the healthcare industry, so I'm not an expert at this, but I, I've helped

• 9:47Speaker 03

  a lot of families navigate this, so I think this should be really helpful. And then I talked to a healthcare consultant that does this full-time to see if the numbers at KFF were accurate, and it turns out they really were. They were within a few dollars when he ran this through his system. But I think the other thing to look at would be, there's another organization called the NABIP, which is the National Association of Benefits and Insurance Professionals, N-A-B-I-P.org.

• 10:24Speaker 03

  Where you can find someone in your area to then not only go through the plans that are offered in your area, but figure out what company and what level of plan makes sense. And it goes beyond just the cost. So if you're in a metro area, you're going to get five to, you may get eight different carriers. If you're in a really rural community, it may be two or three carriers. But even then, Krista, you have to make a lot of decisions on the level. Is it gold, silver, bronze? What is the monthly premium? What's the max amount of pocket? And then more importantly, or most importantly, does the plan that you choose keep the doctors

• 11:05Speaker 03

  you like? And/or keep the medications you like? If they're maintenance medications and these are common, any plan should be fine. They shouldn't be expensive. But if you have one of those, I would call them TV prescriptions. Any prescription that you see commercials on regularly, those are the really expensive ones. Those are the injections, those are the biologics, those are the $1,000, $2,000 a month medications. Some plans will cover them, some plans won't. So when you go through, either you call someone through the ACA, or you get an independent advisor through NABIP, they will help you navigate not just the supplement that you may get relative

• 11:46Speaker 03

  to your income, but navigate the plan options and the company you choose to get healthcare from. And it's doable. I said, well, how long would it take if I wanted to start today to get an insurance card? Two to three weeks.

• 11:58Speaker 02

  Okay. All right. Well, my heart goes out to your client and anyone else who's in that kind of situation this time of year, especially. It must be so hard. I can't even imagine.

• 12:09Speaker 03

  They're really tough.

• 12:09Speaker 02

  So, all right.

• 12:10Speaker 03

  Piece of the equation.

• 12:11Speaker 02

  We're going to go to some questions. This one is sort of related. Jeannie in Arkansas says, "I'm 10 years younger than my spouse. We've saved and saved and saved. Our financial advisor recommended I retire at 60. He believes we have enough funds to support our current frugal and happy lifestyle. My husband agrees. I'm fearful of stopping working because I won't have medical insurance coverage or will have to pay very high premiums for five years." Worthless medical coverage. Their point is, I should stop at 60 because my husband will be 75 years old if I keep working until I'm 65. They think we will miss valuable time to enjoy retirement together. And if I wait until 65, my husband could be in declining health and not enjoy as much retirement as much. And that we will regret those wonderful years together.

• 12:54Speaker 02

  Right now, the plan is for me to keep working. How do you know when to retire?

• 12:59Speaker 03

  Genie, I think the simple answer is that if the numbers work, and this is the power of a written financial plan. Written is maybe the wrong word here because it's usually a bunch of numbers. But a visual financial plan, and if you're giving them accurate numbers, your advisor, and saying, here's our spending approximately. It doesn't have to be to the dollar, but if you're pretty accurate about that. The other pieces of the equation are also, they're assumptions. We can take, let's say, 4% each year from the balance and never run out of money, 4% rule of thumb. Those tend to really be pretty accurate over time. I've seen them work for three years, five years, seven years, almost 20 years.

• 13:41Speaker 03

  And there's real power in seeing that mathematically, visually. And if the plan numbers work and the assumptions are conservative. So you're not saying, we expect to make 12% per year, every year. If we expect to make maybe a conservative assumption, 5%, then I don't know why it wouldn't work out. But, but you're genie, I think what's happening with you, you've got this age gap, which is a reality. You're, it sounds like you're 60, your husband's 70. It is a psychological barrier and you're worried about healthcare. We just talked about healthcare. The great thing about being in retirement without wage income, you get to really control your adjusted gross income.

• 14:25Speaker 03

  And that's one really big piece of the equation that people overlook. When you get into retirement, you only need to pull out what you need to spend. So you give, you only need an extra 30 or 40 or $50,000. And you said you guys live a frugal lifestyle. Then you limit your IRA withdrawals. You pull from the after-tax accounts, which shouldn't count towards your income unless you have giant capital gains. And you very well could qualify for a pretty big supplement. So that takes care of the healthcare piece, Jeannie. I think the biggest part for you is understanding, yeah, we've got a written plan.

• 15:07Speaker 03

  Two, we can take care of healthcare, but it's the psychological component of saying, gosh, I'm only 60 and I'm going to be retired. Your advisor is right. I think your husband is right, and I think your intuition here is right. By the time your husband's 75, that's a lot of lost years. That's a half a decade of lost years of freedom and happy retirement. And I'm a big advocate, if you can do it mathematically and it works on, if it works out on paper, then I say, go for it. The only other caveat I would say is if you're still really worried about it, you may want to transition to retirement and work, maybe not till you're 65, but work during age 61

• 15:48Speaker 03

  or 60, maybe 61, and really try to do it part-time and as flexible as possible. So you can ease into retirement and then before you're completely stop working. But I say, go for it, Jeannie.

• 16:01Speaker 02

  Joy in Pennsylvania says, I'm new to your show. I wish I had discovered it sooner. A financial advisor at my credit union recently recommended adding principal protected notes to my traditional IRA strategy. I'm not familiar with these. What is your perspective on them?

• 16:15Speaker 03

  I think we had a question similar to this about six months ago. Joy in Pennsylvania, Joy, the principal protected note, it's like, I call it a financial burrito. Do you remember this?

• 16:27Speaker 02

  Yes.

• 16:27Speaker 03

  Think of this as a bond wrapped around a stock market vehicle or an option. So it's a complex, it's a fairly complicated financial vehicle where a bank, remember, these are backed by the bank. So there is no guarantee on any of these. It's just the, and Lehman Brothers did a lot of these, I remember back in 2005, 67. It's a Lehman Brothers principal protected note. Nobody's focusing on the fact of where it came from. It's just, well, I get my, I get to participate because of the stock part of the option. I get 100% of the stock market upside, but no downside. Why wouldn't everybody do that? Well, the problem could be that the company behind it ends up having trouble and the whole thing's worthless. So that's the first thing.

• 17:10Speaker 03

  The second thing is that typically you're not getting any dividends, which is it can make up a fairly big portion of total return for the S and P 500 within these principal protected notes. Number three, there's a real illiquidity piece of the equation. So once you buy one of these and maybe it's a five-year note or a six or a seven-year note, it's really hard to get out of it without losing a whole bunch of money. So it, the money does get tied up and locked up and it can work out if the market's up over that period of time, then you do usually capture a similar return and you usually are capped at least of getting your money back in most of these notes. And again, there's a lot of different variations on this. But for me, it's a really long period of time

• 17:55Speaker 03

  and over five to seven years, it's really hard for, let's say, even a conservative, especially a conservative asset, like a bond ETF or a bond portfolio, to lose money over that long period of time. It's almost like there, a note is, one of these notes is psychologically allowing you to lock yourself up so that you, it's almost putting yourself in jail so you don't touch your investments. When in reality, if you just don't touch your investments for seven years, it's hard to lose money.

• 18:25Speaker 02

  Okay. Rich in Arkansas says, Wes, I retired at 48 and my wife followed three years later.

• 18:30Speaker 03

  Whoa.

• 18:31Speaker 02

  Currently, we spend

• 18:32Speaker 03

  Forty-eight, okay.

• 18:33Speaker 02

  We spend $58,000 a year on basic living expenses, no mortgage, and an additional 10K for golf and 35K for travel. Our net worth is 3.2 million comprised of a home valued at 450K and 2.7 million invested in a 66% stock, 34% bond portfolio. We have enough liquid assets to get us well past age 59 and a half when we can begin to tap our 401Ks and Roth IRAs. We anticipate claiming social security at age 70, which would net us an additional 86K per year. As you can guess, we find ourselves overfunded for retirement. In fact, since we've retired, our portfolio's outpaced the money we spend each year, which means our first five years of retirement were free and our next four years are already

• 19:16Speaker 02

  paid for. Well, this is a great problem to have. I'm sure a lot of people like that. Problem. My gosh. I'd like your advice on pursuing a two pronged investment approach. One, potential ways to de-risk the pot of money we have for retirement. And two, investing more aggressively with the remainder of our funds to create the generational wealth. We anticipate leaving for our heirs and favorite charities. And P S. We are very happy retirees and excellent health and love to vacation regularly. Golf. We play more than 150 rounds per year. Plus bike, run, kayak, backpack, volunteer regularly, cook great food, go to the theater and comedy clubs, read, play chess and teach ourselves piano and guitar. Money isn't everything, but it does provide the freedom for us to maximize our enjoyment of these activities.

• 20:00Speaker 02

  And to be there when our family and friends need us, just like you were described in your happiest retirees book.

• 20:06Speaker 03

  Rich, I want to hang out with Rich.

• 20:08Speaker 02

  I know. My gosh, I want to be rich.

• 20:10Speaker 03

  Rich plays 100 rounds of golf a year.

• 20:12Speaker 02

  Well, I don't know if I want that, but yeah.

• 20:14Speaker 03

  That's, that's golf one out of every three days. That's not too much. That's like pushing the limit though. That is pushing it.

• 20:20Speaker 02

  But they're, they're living the life. They're living the life. It's great.

• 20:23Speaker 03

  I think 50 rounds of golf a year is, is a really good number. Once a week on average. But Rich, I like what you're doing.

• 20:30Speaker 02

  I mean, what he's doing is the dream.

• 20:32Speaker 03

  I'd say I, I don't know if there's any, I should probably know this because I study early retirement. We're going to figure out the statistics, but it's pretty rare to be, have someone quote, fully stopped working in their 40s. That's pretty rare. I'd say that's one in a thousand. That's a one in a thousand number. Once you get into your 50s, it gets a little bit more common. But here's what I was jotting down is you just rapidly read through these questions and give me no time to really figure them out. But, and this one, I think here's what I got. 58 plus 10 plus 35 is 103 grand. That's the spending. I love that 10 K of that is golf money. And 3.2 million in net worth, but 2.7 million rich in.

• 21:18Speaker 03

  Liquid assets and you essentially have a two third stock, one third bond overall allocation. Not to mention when you're 70, you're going to get 86 grand a year, which takes care of most of your spending right there. So if I do the math on that 103,000 today before you're able to get social security, 103,000 divided by 2.7 million, it's 3.8%. So you've landed squarely, well, just under what I would call the safety zone. That's a great level to be at. You're not fully maxing out what you could pull out from your portfolio, but you're also not, not using your portfolio.

• 22:01Speaker 03

  So it's a really nice balance. I see you having here, Rich, and you will continue to grow this wealth, even if you're, especially if you're taking sub 4%. So it should continue to grow on over time. Now, the caveat I will say is that you feel as though this has happened to anybody who's done a financial plan in the last five years, they find themselves in this situation, Rich, is that you're, you're ahead of schedule because we plan for four and a half to five and a half percent rates of return. Your portfolio is probably, it's done a lot better than that because the stock market has done better than that. This S and P 500 has averaged, call it 15%

• 22:42Speaker 03

  a year for the last several years, which is really, not only is it way above what you projected, but it's also above its normal annual rate of return. Plans over time account for that, that we're going to have a couple, we could have really good years above expectations, but then they, they're meant to also be trying to offset the rough years where we're making less than we projected. So I wouldn't feel as though you're that far ahead because you need that cushion for some of the down years.

• 23:14Speaker 03

  As far as becoming more aggressive or not, or less aggressive, I like the balance that you're in now. I think that 2/3 of your assets are at risk in equities that those are inflation fighters. And that's a really good level to be at. Remember, the 4% plus world is predicated on having between 50% in stocks and about 70. And you're right there in the middle of that pie chart. So I don't know if I would get any more aggressive to have more generational wealth. I also don't know if I'd be a whole lot more conservative either. So I think your balance is already good. You're following these rules of thumb. And even though you're ahead, I think that's just part of planning over time. We're going

• 23:59Speaker 03

  to have years where we're beyond expectations and years that disappoint, and it averages out over time. And you should still be able to grow that net worth over the course of the next 30 years of retirement and be able to leave your legacy that's significant.

• 24:16Speaker 02

  Okay, so we're going to take a quick break and then talk about the Fed rate cut and Fed rate cuts in general.

• 24:23Speaker 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.

• 24:53Speaker 01

  UKG is the workforce operating platform with unified HR, payroll, and workforce management. Built to solve the unique challenges of frontline work. Powered by People First AI and decades of labor data, UKG turns workforce intelligence into real time decisions around staffing, pay, compliance, and productivity, enabling every worker to confidently take action as work happens. Because when work works, everything works. Learn more at ukg.com/work. UKG, HR, Pay, and Workforce Management.

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• 26:35Speaker 03

  Welcome back to Ask an Advisor. Wes Moss along with Krista DeBias. We're going to dive. Did the Federal Reserve sound exciting to you? Does this seem like a, this seems like a ho-hum topic?

• 26:47Speaker 02

  No, I don't think it's ho-hum because it's, it just feels like it's, it's something we all are supposed to care about. And it's going to be a big deal and the markets move with it. People are anticipating it.

• 26:58Speaker 03

  It's like a groundhog.

• 26:59Speaker 02

  Yeah.

• 26:59Speaker 03

  You don't hear about it, it still pops its head up on Tuesday.

• 27:02Speaker 02

  Right.

• 27:03Speaker 03

  You don't hear about it. Oh, wait, but there's a Fed meeting. And then what did the Fed say? And was it a cut? Was it a dovish cut or is it a hawkish cut? What does that mean for interest rates? What does that mean for the stock market? What does it mean for real estate and mortgages? And that's why we cover the Fed because it does impact everyone. We know that the, the Fed is the driver of the car of the United States economy. One of our listeners wrote in and said it was more like that they control the fuel line. The guy had said they control the gas tank, but they do control the fuel line. And the more they open it up, which would be low, cheap interest rates where money's cheap and easy to Borrow, you're goose in the economy, you're goose in the engine. And then they, let's say they taper the fuel line and there's less gasoline into the engine. Everything slows down a little bit. That would be raising rates and that's the cycle that we've gone through in the last several

• 27:48Speaker 03

  years. We've seen, we live for a decade with a zero interest rate policy and it really fueled the economy. And then it was one of many things that created this massive inflation. So the Fed had to tighten and tighten the gas line and step on the brake. And to do that, they're raising interest rates to slow everything down. Everything gets more expensive, harder to borrow. And that's why we've seen some of the lowest housing activity as far as moving. I read an Axios article the other day. We have seen on record, the lowest amount of people moving in the United States than we've, we've ever seen on record. I don't know how far back they're going. I don't think they

• 28:29Speaker 03

  were looking at the Oregon Trail days, but as far as in modern economic history, it's something like only 11% of people moved, which is on the really low end. And why? It's because people like Krista, very smartly, and probably a lot of our listeners here on the Clark Howard Show locked in super low interest rates and those interest rates are there as long as you want to stay on the house and pay it off. Today, rates are at six and a quarter to depending on your credit score, but 30 year mortgage rates are over, well over six. And that is a question of when are they going to go down? If the Fed lowers like they did recently, why aren't my mortgage rates not going down? Well, there's a couple of reasons. One, the Fed only controls that really short-term

• 29:13Speaker 03

  interest rates, the federal funds rate, which is, it is the beginning. That would be a short, super ultra short-term bond, but they don't have control over what the 10-year Treasury yields. And mortgage rates are predicated on the 10-year Treasury rate. So they, Fed can lower rates three, four, five, six, eight times. On the short end of what they call the yield curve and the 10-year treasury could stay exactly where it is, might even go up a little bit because that is more reflective of where we're headed as an economy. And I think that in the last Fed meeting, even though they lowered rates by a quarter of a percent, and now the range we're in is this three and a half to three, seven, five percent range.

• 29:56Speaker 03

  So not low rates, but also not high, call these Goldilocks interest rates. That's kind of where we are right now. They, they were hawkish, meaning that they essentially said, look, don't get used to this. We've lowered rates now several times in a row and we don't really know if we need to do this anymore. That was the message from Jerome Powell. That was the message from the Fed. And there's all the, you'll hear about the dissents in the Fed very, usually the Federal Reserve all, call it 12 voters, all vote the same way. We saw multiple voters disagree with this. So there's dissension in the Fed. Some people don't think we should be lowering rates. Some people think we should, and there's a lot of commentary that we should lower than even more.

• 30:40Speaker 03

  But the reality is it doesn't look like the Fed is ready to cut anymore. So the market kind of got what it wanted, lower interest rates, but hey, don't get used to it. Don't expect it again. Right? Don't expect it. So why would rates not continue to go down? Again, why does the Fed want to lower rates? To increase the economy, to goose the economy, open up the fuel line, step on the accelerator. I don't know that we really need that. If you look at some of the economic signs here, the economy is still strong. Jobless claims are still very low. When we measure how many people are saying, I just got laid off. That's a really low number right now, historically. The unemployment rate is still, even though it's crept up a little, but it's still very low in the, in the mid to low 4% range.

• 31:26Speaker 03

  That's still low on a historical basis. And we've got things like rents have become more affordable. We've actually seen rental prices on average slowly come down over the last 30 months, almost consecutively. So people will be able to have more affordable rent. And household net worth is just hit another record, something like $160 trillion of household wealth in the United States. That's home equity, it's 401k accounts, it's investment accounts, it's value of your businesses, it's cash. So the United States consumer, the average American family is a lot wealthier today than they were a year ago, three years ago, and five years ago. And all of that wealth at some point can be spent.

• 32:11Speaker 03

  So I don't see the consumer falling off a cliff here anytime soon. And we've got it, an enormously diversified economy here in the United States. It's, we've got healthcare, technology, banking, finance, energy, of course, artificial intelligence. You put that all together, we have a very diversified economy here in the United States relative to some other countries that are more one-trick ponies.

• 32:34Speaker 02

  Can I ask you a question?

• 32:36Speaker 03

  Yeah, please.

• 32:36Speaker 02

  So I think a lot of people might say, well, yes, the wealthy are getting wealthier, but people who don't have investments, people who are working more blue collar jobs, things are so much more expensive, I can't eat out like I used to, I can't, you know what I mean? I think some people are feeling the squeeze where maybe they wouldn't have before.

• 32:56Speaker 03

  But the Fed's looking at the economy as a whole.

• 32:59Speaker 02

  I know. I'm just saying, like, I think we should acknowledge that for sure, at least.

• 33:02Speaker 03

  And it's very true, and that's why we've heard so much about the K-shaped economy in 2025, where you have one group of us is headed higher and wealthier and making more money and having more assets, and the other is actually getting squeezed and their wages are going up slower than inflation. So they're, they feel less, they feel poorer because of that.

• 33:26Speaker 02

  Right.

• 33:27Speaker 03

  And the Fed does acknowledge all of it, but if you look at the dollars getting spent, it's still, let's call it the totality shifts towards that upper part of the K, it's still making up for it. So in totality, the economy is doing well, even though a lot of people aren't, and the Fed is looking at not overheating the entire economy.

• 33:48Speaker 02

  Yeah, I got it.

• 33:49Speaker 03

  I think that's, that's their, that's, it's a hard job. They have to thread that needle and acknowledge that the K-shaped economy is very real. So what does this mean for mortgage rates? It means to me, yes, rates have come down from seven down to the lower sixes. But as long as we have the totality of the US economy doing fairly well and not headed lower, or in retraction, which there's really not a, you can always have a recession, but the recession odds, another thing, we were, go back a couple of years, we were at a 60% chance of recession. Today, those odds are less than 5%. So as long as the economy stays in relatively good shape, the Fed doesn't feel like they need to lower rates anymore.

• 34:32Speaker 03

  So I just think that it's going to be hard to see mortgage rates go much lower than the 6% level. Maybe we dip into the high fives. So I just won't want folks waiting and waiting by the phone, waiting it for the 5% mortgages to ring before they go out and make a purchase because they could be waiting for years and years.

• 34:53Speaker 02

  Housing prices have gone down in much of the country, so maybe it is a better time to buy, even though that 6% mortgage might go further. And historically, that's not a high mortgage rate anyway. We've talked about that too.

• 35:05Speaker 03

  Goldilocks.

• 35:05Speaker 02

  Okay. Doug in Ohio wrote in to you and said, I heard, I hear Clark and Wes recommend waiting to take social security until 70 quite often because it increases your payments 8% per year for each year you delay taking it. However, if you die before you start receiving it, all those years of delayed payments are lost. Does it make sense to take social security at 62 or at 67, even if you don't need it, and invest it? It seems that that would be a better option if you have the self-discipline to invest instead of spend it.

• 35:35Speaker 03

  Doug, there's no perfect answer here because we don't know when we're going to die. So if you knew your expiration date, you would know exactly when to take social security. So the reason that Clark says wait till 70, and I advocate till, waiting till 70 if you can, is that you're getting a guaranteed increase of almost 8% a year while you wait. In order for you to take this money at 62, so we know now you're chopping a third of it off of what it would be at your full age, then you're paying taxes on it likely, and then you're investing it. So you're already starting in the hole. What's the probability of you netting above 8%? Percent after taxes and then having to invest the money.

• 36:17Speaker 03

  It's a low probability when you are essentially given an almost eight percent rate of return. It's hard to not take that option. So I would take off the table. I'm not a big advocate of taking it, investing it. Might as well just wait and let it compound higher. But the real answer here, and it's a complicated decision and it is different for everyone. It's good. There's a unique set of fingerprints that will lead you to the right answer. But you're right. If you don't take social and you wait, you, let's say a month before your 70th birthday, you've waited and then you die, you collected zero. And that's just the reality. Yeah. If you live to your 95, then you're better off having waited till 70.

• 37:02Speaker 03

  There are scores of YouTubers that advocate taking social at 62. And they make a pretty good case. You just two folks, the two brother example. One brother starts at 62 with 1,700 bucks a month. The other brother waits till 67, five full years. He gets a higher payment. It's almost 2,400 bucks a month, but they have now collected the exact same amount of money. At what age? 80. So if you look at that and you say, well, what's the point of waiting? What's the point? The point here is that I would say that if you're doing some real financial planning, you take social security when it's most optimized, meaning that when it makes the most sense for you to take it, which means you take it when you start to need it.

• 37:47Speaker 03

  And that to me is optimizing social. If you can wait till 70 and you think you have a lot of longevity and you're going to live to your 90s, absolutely wait. But if not taking social security is damaging beyond four or five, let's call it five or six or seven percent withdrawals from your assets, then it may make sense to start taking social security earlier. But again, that is situational and there's no perfect answer for anyone.

• 38:13Speaker 02

  Okay. Steve in South Carolina says, I have a question on asset allocation. I'm recently retired with $1.6 million in a pre-tax IRAs and 400K in post-tax, a post-tax brokerage account. Of that 400K, I keep 250 in dry powder and the rest in fidelity zero funds. Between our pensions and social security, our essential expenses are met. My portfolio funds non-essential expenses. If I want to maintain a 60-40 allocation between stocks and bonds, do I consider the post-tax accounts as well? If I do, it pushes the pre-tax IRA more heavily into stocks due to the amount I keep dry.

• 38:51Speaker 03

  You're right. And Steve, that's how you do want to look at this. Look at the entire amount. If you want to have your overall allocation 60% in stocks, you're right. Because of the 250 you have in your dry powder out of 400, that brokerage account is 62% in the conservative side. So it's essentially a 40% equity, 60% bond cash account. But it's a smaller account. That means your $1.6 million IRA should then balance that out. And I don't know the exact math here, but that's, it's more likely that that'll be closer to 65 or 70% in equities and 30% fixed income. Put the two together and then you've got the

• 39:35Speaker 03

  allocation that you're looking for. So yes, combine all different accounts or anybody else in the same thought process. If you have 10 different accounts and three IRAs and a Roth for you and a brokerage account and your, and your spouse does as well, you want to look at the allocation of all of those accounts combined to meet what you're comfortable with.

• 39:54Speaker 02

  Okay. This came in from Almost Free Freddie in Illinois.

• 39:59Speaker 03

  Almost Free Freddie.

• 40:00Speaker 02

  Hi Wes. I'm planning to retire early next year in July of 26 at age 43. I'd love your thoughts on whether my plan has any blind spots. Here's my current picture. 457 deferred comp, 330K invested in the Vanguard total stock market.

• 40:17Speaker 02

  I have a Vanguard Roth IRA with 140K. Do you, I don't remember, I'm not going to read the investments unless you want them.

• 40:23Speaker 03

  Yeah, just the values.

• 40:25Speaker 02

  Um, a savings account on track to reach 350K by July of 26. A primary residence paid off valued at 450K. And a rental condo that's paid off valued at 200K rents for 1720 a month. I'm a disabled veteran receiving about 2,000 a month in VA benefits. I plan to sell my primary residence when I retire but keep the rental condo. My wife and I are planning to move back to Eastern Europe where we already built our dream home on land we purchased a few years ago. Pool, palm trees, the works. That sounds awesome. The property-

• 40:59Speaker 03

  Palm trees in Eastern Europe. Where is this?

• 41:02Speaker 02

  The property is worth about 600K. The cost of living is much lower in our family is there. Our quality of life would be much better, better there. With no mortgage or car payments, we'll ship two cars from the US. We can comfortably live off the condo rent and VA income. I currently work for a major city police department and will have 21 years of service at retirement. I'll become eligible to collect my pension at age 50, which was estimated to be around 5,600 a month. That means I'll have about seven years between retirement-

• 41:30Speaker 03

  5,600 a month, Krista. That's the key, okay?

• 41:34Speaker 02

  That means I'd have about seven years between retirement and the start of my pension. The numbers seem to work and I feel both excited and a bit nervous. Am I missing anything here? It almost feels too good to be true.

• 41:45Speaker 03

  Almost Free Freddy. I want to pull up a map, first of all, and try to figure out. I'd love, Freddy, don't tell us where it is, but I'd love to hear from our audience where they think that is. Think Eastern European, Europe with palm trees and the coast. What could that be?

• 42:03Speaker 02

  Croatia?

• 42:04Speaker 03

  Yeah. Well, this is the other thing I love about Freddy is that, I don't know why, this is almost like a Dear Abby column. Where we're getting a name that is relative to the question, Almost Free Freddy. I could see us doing more of that as a listener. So if you're maybe like Randy-

• 42:21Speaker 02

  Yeah.

• 42:22Speaker 03

  No Roth Randy or Social Security Seth. I don't know, but anyway, I think these are great. So feel free to do that because it's a nice way. It's probably better than changing a name when you're writing something in because you want to keep anonymous about it. So I love the-

• 42:38Speaker 02

  I just want to say also, thank you for your service Freddie, both in the military and then as a police officer, putting your life on the line every single day. That's no small feat.

• 42:48Speaker 03

  God bless you Freddie. And yes, thank you for your service and you do, it is not too good to be true, because I do see service members, because you have either pensions or in your case VA disability, and then you're going to start collecting more money at a pretty young age. You see a lot of early retirees that are service members. That is one of the benefits of taking that as also a career path. But I'm looking at the assets here, and the key that you said Krista is the $5,600 is the spending that they would like to have in some unknown magical Eastern European country that we can't figure out what it is. But the assets, if you sell the primary residence in America, which is about

• 43:32Speaker 03

  450, and you take the 330, the 140, and the 350, you will have about a million too. Now, some of that, it sounds like, well, and they already have a property over there that's already paid for.

• 43:44Speaker 02

  Yeah.

• 43:45Speaker 03

  So that is going to, that's essentially your liquid money is going to be in this 1.2 range, at least.

• 43:51Speaker 02

  Mm hmm.

• 43:52Speaker 03

  So then you've got your, in the, before you get, it sounds like your full pension, you have 2,000 in VA and you have 1,700 bucks in rental income. So that's 3,700 and you need 5,600, 3,700 minus 5,600. Your gap is, let's call it less than 2,000, but it's 2,000 bucks a month, or 24,000 a year, 24,000 a year divided by 1.2 million is 2% a year. So you only need Freddie, about 2% withdrawal rate on your assets, which the income alone, whether even on a balanced portfolio with equities and fixed income is going to probably

• 44:33Speaker 03

  produce more than 2%. So just your dividends, dividends, your interest, your distribution. So just a cash flow from a portfolio without taking anything would cover that monthly gap. So to me, it sounds like it's not too good to be true. If these numbers are the actual numbers, then your lower cost of living, I mean, $5,600 is a low cost of living, a paid for house, and then a bunch of pensions that kick in with a $1.2 million supplement. Again, I don't know the cost of living where you're going and how realistic that is, but if that's true, then you are very close to being free, my friend Freddie.

• 45:15Speaker 02

  Love it. Awesome. Well, happy holidays to everyone. We will be back next week with another show, but I hope that you enjoy your Christmas, if you celebrate, and thank you so much for being with us, listening, watching, and we hope that you'll subscribe and share this episode with a friend if you found something useful. Thank you, Wes.

• 45:36Speaker 03

  Thank you, Krista.

• 45:37Speaker 02

  Merry Christmas to you.

• 45:38Speaker 03

  Merry Christmas.

• 45:39Speaker 02

  Have a great day.

• 45:45Speaker 00

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