10.06.26 Ask An Advisor With Wes Moss

Interest Rate Spike: Panic or Opportunity? & 7 Most Important Ages In Retirement Planning Why are bond yields climbing so rapidly, and what does it mean for your money? Wes Moss breaks down the massive shift in the $51 trillion U. S. bond market and why higher interest rates might actually be good news for your portfolio. Plus, Wes walks through the seven most important retirement planning ages every investor needs to mark on their calendar. Mentioned on the show: KFF is a nonpartisan health policy organization The Overlooked 'Rule of 55' Could Unlock an Earlier Retirement A Simple Rule for When To Take Social Security - Clark Howard What Is Umbrella Insurance and Do You Need It? - Clark Howard Roth vs. Traditional 401(k): What's the Difference? - Clark Howard All this and more on the October 6, 2026, Ask an Advisor episode of the Clark Howard podcast. Submit your questions: WesMoss.com/ask Discover the research-backed path to a happier retirement – order The Retire Sooner Method by Wes Moss today at retiresoonermethod.comWe 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

• 0:00Speaker 00

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• 1:04Speaker 02

  Welcome to Ask an Advisor. Where we here on the Clark Howard Show go deeper on all things investing and saving for your retirement. I'm Krista DeBias here with Wes Moss.

• 1:15Speaker 03

  Hey Krista De.

• 1:16Speaker 02

  Hello. And today you're going to talk about, first of all, the interest rate raise.

• 1:21Speaker 03

  Spike.

• 1:22Speaker 02

  Spike.

• 1:23Speaker 03

  An interest rate spike.

• 1:24Speaker 02

  Mm hmm.

• 1:25Speaker 03

  Is it a problem? There's a little bit of sense of, I'm not, I don't want to say the word panic, but I'll say the word panic when it comes to a market that's that massive and there's such a big change, we have to take a look at it.

• 1:38Speaker 02

  And then we're going to go to questions that came in for you, Wes, at wesmoss.com/ask. And then you're going to talk about some very important key dates and key ages in your retirement planning.

• 1:50Speaker 03

  There are so many mile markers when it comes to ages that unlock. Some of them are mandates, some of them are opportunities. So there's a lot to filter through. We're going to go through those ages.

• 2:01Speaker 02

  All right.

• 2:03Speaker 03

  So why don't we start with what has happened in the bond market? And when I say the bond market, I'm really talking about yields. So what has happened to interest rates? And I was just looking here, October of last year. So let's go back about one year. The 10 year treasury yield, which matters more than any other yield out there. It sets rates for almost everything and almost everything is predicated on what that interest rate is, was 4.1%. This week, we saw the 10 year interest rate go over five and a quarter. Now, again, does that sound like a lot? Maybe not, but it's over a full one.

• 2:46Speaker 03

  It's well over 1% starting from a base that's only four. That means rates have gone up 25, 30%. That's a big move. And when you start thinking about how massive the bond market is, and we think of this two ways. One, what does it do to the economy? And what does it mean for you as an investor in your 401k? Because if we talk about dry powder and safety assets, what are we talking about? We're talking typically about bonds and cash and cash is made up, by the way, of short-term bonds for the most part. So this really matters. And as rates have gone up, I started thinking, this market is so big. How can rates move this dramatically so quickly? And I think that's the first thing to examine.

• 3:29Speaker 03

  By the way, how big is, how big is the bond market? The US just treasury bond market is 32 trillion.

• 3:36Speaker 02

  Wow.

• 3:37Speaker 03

  I'm rounding here. The overall bond market in the United States is 51 trillion. $51 trillion of debt swimming around out there. Now, those numbers kind of make sense when you think about, well, just our government debt alone is 40 trillion. And a lot of that obviously is funded, that is funded primarily through government bonds. So those numbers, even though they're wow statistics, they start to make some sense. And I'm thinking, okay, you've got this, the largest tanker ship you've ever seen in the history of the world out there in the middle of the ocean, and that's the bond market. And how does that move on, almost on a dime? Well, here are the mechanics.

• 4:19Speaker 03

  If you think about the government bond market, only about 1 trillion, 1.2 trades in any given day. So whatever happens to that one sliver of this giant market sets the new prices. Kind of like if we had a house, if we had a neighborhood of 10 homes, nobody else is selling, one home sells, all of a sudden, that one home sale now sets the new prices for all nine other houses. That's kind of what's happening in the bond market. So the idea that there's some panic in the bond market, people have to be selling their bonds in order for rates to be going up and the world is dumping bonds, getting rid of their bonds, that's making rates spike, just does not seem to be the case. So I don't see this as a panic.

• 5:04Speaker 03

  It's just a function of many of the economic variables that we already know about. The $40 trillion worth of debt, the hyperscalers, the AI build out, there have been a lot of corporate borrowing, some more supply, banks are edging up the interest rates people, those companies have to pay, and a really strong economy. And a strong economy means more inflation. The latest GDP numbers are being tracked by the Atlanta Fed or could come in at over 5%. And then you've got oil spike that continues to remain persistently high. So the move from four to over five, I know that's a really big move for rates, but I don't see it out there as some big dysfunction, broken bond market panic.

• 5:48Speaker 03

  It's just a function of a really strong economy, creating more inflation, Fed's raising rates, the market knows it, rates have gone up. What matters for us, for you, is that yield is the biggest predicator for how bonds do over time. So the sliver, whether you have 1% or 100% in bonds, zero or 100, your bond returns, there's studies that'll show that about 81% of your bond return in a fund or an ETF, et cetera, comes from the starting interest rate. So that means that today with rates starting in the five range for 10, and they're over

• 6:30Speaker 03

  five for even shorter term bonds, government bonds. It just means that that's a more favorable asset class from at least a not, like an overall percentage rate of return, better than it was a year ago, better than it was two years ago, way better than it was five years ago or six years ago when rates were at zero. So I think the good news is I don't see a panic in the bond market and it just means for bond investors, the next five years plus, we're in better shape or should end up being more favorable than, than starting at a really low interest rate.

• 7:04Speaker 02

  All right. Let's go to some questions. Worried Wanda in North Carolina sent this one in.

• 7:09Speaker 03

  I love the, I love we're getting creative with names. Worried?

• 7:12Speaker 02

  Worried Wanda. Hi Wes, I'm a big fan and I just received your book today. I can't wait to read it. In October, I will be 61, that's this month now, and my husband will be 66. We're ready to retire. He will take social security at 67. My biggest worry is healthcare. I will take Cobra for 18 months and then go out on the marketplace. My husband will be on Medicare. Do you find this plan to be successful with most retirees? Combined across different types of accounts, we have more than $2 million set aside for retirement, but I'm so worried about having great healthcare. That's the only thing holding me back.

• 7:51Speaker 03

  Worried Wanda, worry no longer. Because yes, I see this play out and work out very well for retirees. And it's very different. Before we had healthcare.gov, it was really hard to be able to retire before Medicare. Age 65. Everybody gets Medicare. But go back before we had the exchange and you had diabetes or had cancer or some other issue. At 61, 62, 63, you may not have been able to get coverage. The world before the overall exchange for early retirees was harder.

• 8:27Speaker 02

  But it's gotten so much more expensive, even on the exchange. It's brutal.

• 8:31Speaker 03

  It is brutal, but for someone like you, Wanda, so here are the numbers. This is the national average and it could be a little more, a little less in your particular state, and it's predicated on your income, whether you get a subsidy or not, and your zip code. So those are the variables. If you go to the Kaiser Family Foundation, kff.org, you can put in your zip code and your age, the number of dependents, et cetera, a little bit of general family information, and they are going to give you what the cost of a silver plan would be. Looking at the US average, it's around 1,300 bucks. Now, this, could yours be 1,500? Could it be 1,100? Sure.

• 9:14Speaker 03

  But it's within that range. And so that's 12 to 18 K a year. These are not small potatoes. These are big potatoes. But relative to your assets, you should be able to withdraw $80,000 to $100,000 a year, plus social security from your husband. That should be very affordable. Not very. It's affordable. You can handle it. Make sure you get a plan that coordinates with the doctors that you like. But bottom line is I've seen it work out well for many retirees.

• 9:47Speaker 02

  Tom in Arizona says, why, when talking about diversification, is the discussion always about having a certain percentage of assets and equities and bonds or dry powder, and nothing based on a specific number of years? For example, if you have $4 million, what's wrong with planning for 10 years of living expenses in bonds and treasuries, which is a million, and let everything else, 3 million, ride in an S and P 500 index and international stock fund?

• 10:12Speaker 03

  Tom, you are asking the right show here on the Clark Howard Show, Ask an Advisor. You're right. I think a lot of financial media talks about percentages. This percentage in bonds, the 60-40 portfolio, 30. We here start with years. And by the way, the reason we use years, just like you're suggesting, so you're a genius for suggesting this, is that the three years' worth of dry powder as a minimum is because market history tells us that that's the amount of time we should be able to get through the vast majority of market drawdowns. It comes from the average time bear markets bottom and start coming

• 10:51Speaker 03

  back. So you're right. We should be using years. If you need 100K in spending and you don't want to touch your stock assets because they're down, the dry powder principle says at least three of the three, times that, so that's 300K. That's what matters. And if you have 3 million, it's 10%. If you have 1 million, it'd be 30%. But that's the second, and that's not unimportant. I think the percentage is still important, but I still like your idea, which is what we've talked about here now for many years, is start with a number of years, fund that. That gives you the availability to be more equity, stock oriented with the rest of the pie.

• 11:32Speaker 02

  Okay. And Kat D. in California says, you mentioned that you consistently spend your HSA. Help me understand why you don't prioritize funding and investing this triple tax advantage account over funding any other retirement savings accounts. Thank you very much for continuing to share useful information that enables our happy retirement. I was thinking this too, when you said that. Clark would be not happy about that.

• 11:55Speaker 03

  I think part of it is that when you've got four kids, and we have had some medical issues in our house, healthcare has kind of come really fast and unpredictable. And it's a very tax advantageous account to use in the given year. We have a high deductible plan where I work, and that allows me to put in money, and there's a, there's a match. So I'm able to fully fund it, but it essentially, our spending for that particular account because of the healthcare needs we have in our family, have just burned through it very quickly. So rather than continuing to fund it, and then, and then going back and trying

• 12:38Speaker 03

  to pay for bills later from an HSA, which you can do, I think just as a parent, we've, parents, we've just had to do the best we could in any given year, and that's why we've used HSA. I've spent it every year. Yeah, could you, could you optimally do that a little bit better? Sure. But that's part of healthcare spending for us.

• 13:00Speaker 02

  Okay. Coming up next, you're going to talk about specific ages that are very important when we're planning for our retirement.

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• 15:54Speaker 03

  Welcome back to Ask an Advisor. I'm Wes Moss here on the Clark Howard Show, Ask an Advisor, along with Krista DiBiase. How many numbers are there?

• 16:03Speaker 02

  Oh, don't quiz me.

• 16:04Speaker 03

  How many numbers do we have to know when it comes to retirement planning? You can probably guess.

• 16:11Speaker 02

  Let me think. 55.

• 16:14Speaker 03

  If you're, if you're listening on your walk.

• 16:15Speaker 02

  I'd say five.

• 16:16Speaker 03

  It's close. It's, it's seven slash eight.

• 16:19Speaker 02

  Oh, well, that's not close.

• 16:20Speaker 03

  So no wonder everybody, it's confusing. It's age 55, 59 and a half, 62, 65, 67, 70, 73, 75. What are all these numbers? Some of them are mandates. Some of them are windows of opportunity that open up. So let's just go through these. We've talked about rule of 55. It's one of my favorite rules when it comes to accessing your retirement money for years, the whole, I still think the world thinks it's 59 and a half. The reality is 55 is when if you leave your employer and you've got a 401k there, then you should be able to access that money penalty free, not with the 10% penalty at age 55. Doesn't work if you leave at 54, but if you leave 55 or later, and you leave your money in

• 17:05Speaker 03

  the 401k, that money is available to you with no penalty. So that's a huge age. 59 and a half is the age where, for the most part, everything is unlocked. Your IRA money, 401k money, 403B, 457, well, not, those are actually earlier, but 401k, which is the largest asset we have in America, becomes totally available. Retirement accounts, IRAs, totally available without the penalty at age 59 and a half. Then 62, we know what happens there. That's the first window that opens for social security. You can start taking social. They've actually thought about changing how they, the verbiage behind this. They're thinking about making it sound more punitive, as opposed to, this is the

• 17:46Speaker 03

  first year you can take it. Congress has batted around saying, you can take it with a penalty, and it may discourage people from taking it too early. That's interesting. We also know that 67 is your FRA, or your full retirement age for, for most Americans listening right now. And you have a decision of whether to take it at 62, or wait all the way to 67, or postpone 67 and go all the way to 70, where you would maximize our social security. And again, there's a lot behind whether we take it early, middle, or late. And I think about social security as optimizing, as opposed to just maximizing. We know what to maximize. You just wait till 70. But is that the right decision for you? And then in the middle of those numbers, something very important happens. Medicare.

• 18:31Speaker 03

  That starts and kicks in at age 65. You've got three months prior, then the month you turn 65, then three months after. You have to make sure you're signing up for Medicare. Otherwise, for the longer you go without it, the more permanent the price hike is for some of your Medicare costs. So that one, I'd say that's a mandate to make sure you're getting signed up if you don't already have coverage at work. Then 73, 75. What is that? That's, it used to be 70 and a half. Those were required minimum distributions. When you have to take money out of your IRA, or else you'll be penalized. They moved the age up through COVID. Now it's at 73, if you're born in 1959 or before. But if you're

• 19:15Speaker 03

  born in 1960 or later, it's not until 75. And I think that I got used to for so many years, thinking 70 and a half, 70 and a half. 75 is very different. It's four and a half years later. So how do you manage all this is the, is the question. And it's really hard to remember all these ages, these windows of opportunities. Some are opportunities, some are mandates. If we get it on a timeline and we draw this out and we look at our, and this is why I love to do planning when it comes to looking at the years out into the future and what ages will we be in those particular years? And it makes for a really easy way to say, oh goodness,

• 19:55Speaker 03

  in 2031, that means I'll be 59 and a half. That means I can access all of my retirement money without a penalty. Well, wait a minute. And what did I talk to Clark about a couple of weeks ago about most Americans say they're going to retire at 65, but they end up retiring early because they're forced out? What's the answer to preparing for that? It's doing a timeline and say, well, okay, I'd like to work to 2031, but what if I get to only work till 2028? And what does that mean? Well, maybe that means I'd have to use the rule of 55 in that case. So being able to look at your financial timeline, the year in the future

• 20:37Speaker 03

  and what your age is going to be, it actually makes what seems like a complicated soup, a lot more digestible and it can help you plan and utilize these rules in the year that makes sense for you.

• 20:52Speaker 02

  All right. This question from Steve in Iowa may be sort of similar. It's about when to take money. Steve says, would you please discuss what order to take money from your retirement accounts? I have an IRA, an inherited IRA recent and a Roth IRA, but I don't understand the most tax advantaged way to withdraw from these accounts. Should I start with one and drain it fully before moving to the next?

• 21:16Speaker 03

  Okay. So typically the rule of thumb, and why does this matter, Steve? It matters because we're trying to manage our income and our, and our tax rate in retirement. And if we can manage it in the 20% range, it's a lot better than having it jump to the 35% range for obvious reasons. The rule of thumb is brokerage money first, then retirement money or IRA money. And then we let the Roth crock pot bake as long as it can, because it's the most wonderful valuable dish we have, because it comes out tax free. But in your case with an inherited IRA, you've got to think about that 10 year provision, because

• 21:56Speaker 03

  the rules on an inherited IRA are that it needs to come out by year 10. And if it's a big inherited IRA, how you space it out really matters. Now, there's a nuance. If the person that left you the IRA was already taking RMDs, then you have to continue doing those RMDs. But that's in the three to 4% range for you. In order to withdraw the money over a 10 year period, you may need to take more like 10%, 10, 11%. What's 10 divided by? How do we take 100% over 10 years? Well, we're probably going to have to take around

• 22:35Speaker 03

  10%. And for a bigger IRA that's inherited, imagine it's a $2 million IRA as an example. You wait, you wait, you wait, it grows. And then all of a sudden you have to take all of it out. Now it's $3 million. And managing your tax bill at the end of the 10 years, it could be, it would be the max, max, max, federal, state, you're talking 40%. But if you spread the inherited IRA, which in your case is a big part of the equation, because you have to take it out over 10, then you may be able to end up being in more like the 20, 22, 25% tax bracket as opposed to 40. And that could save you hundreds of thousands

• 23:15Speaker 03

  of dollars worth of taxes. So in your case, I would probably be doing the inherited IRA as your, as your primary vehicle, supplement with the brokerage, and then still wait to the most valuable dish in the Roth till later.

• 23:35Speaker 02

  Okay. Roger in Connecticut has a question about umbrella insurance. Hi Wes, I've heard several sources, including both you and Clark, recommending people have umbrella insurance coverage to match their net worth, but it seems to me to be false logic. Someone with $1 million versus someone with $5 million could both be sued for $10 million and then be wiped out. In one sense, the deeper pockets might make you a bigger target as there's a bigger payday. The law firm will have larger budget for research, expert witnesses, et cetera, because the judgment is more likely to pay off big. Well, I agree, the more affluent you are, the more insurance you should carry. But how much should you carry to really protect yourself?

• 24:14Speaker 03

  Roger, the short answer is, I mean, you're choosing between the lesser of two evils. So if you don't have umbrella insurance, then you could get wiped out. You accident, you hit somebody, they pass away, or they're disabled, they take everything. So in my opinion, there's really no choice. Yeah, great logic. You maybe make yourself a bigger target, but at least you have a shield. Would you rather not have a shield? So it's a lesser of two evils. And you've got to choose the lesser of those two is to have the coverage. So I think that answered, that right out of the gate, I think answers the question. The other thing I don't think most people understand, and this is kind of the secret sauce behind having an umbrella policy. Well, first of all, it's super inexpensive. I mean,

• 24:58Speaker 03

  for a couple hundred bucks a year, you can get, again, don't quote me on the quoting here, but a million dollars.

• 25:04Speaker 02

  But we have heard a lot of companies are suddenly spiking these umbrella insurance policy premiums too.

• 25:10Speaker 03

  Thanks to Clark.com, you're going to still be able to find inexpensive umbrella insurance coverage. So you want it. And I think if you can continue to get decent rates, you can get even at least up to your net worth, if not more of a cushion. Because here's the secret sauce. In the rare event that something happens to somebody at your home or because you're driving, it's all about the legal system and the tort system that is chasing after a pot of money that's easy to get to. And insurance money is easy for a law firm to get to. So there's the ease of that. They're going to go after what is the easiest and

• 25:54Speaker 03

  quickest. And because you have an insurance company, they're going to be fighting for you as well, because they don't want to have to pay. So you get a build in defense team. You get easy access to money that when it comes to litigation, these lawyers suing you in the terrible event that something happens, they want to get paid. They want to have a result and not have to drag it out over five years and try to repossess your home and illiquid assets. They want the easy liquid money. And that is maybe the secret sauce behind why you want an umbrella. And it doesn't necessarily make you a bigger target.

• 26:33Speaker 02

  But maybe you should, if you can afford it, you might want to insure for more than your net worth, you're saying?

• 26:39Speaker 03

  There's really no reason to go way beyond. There's no, but you should at least match your overall net worth with an umbrella policy.

• 26:47Speaker 02

  Okay. This is from John in Alaska. As a state employee for Alaska, I have the option to leverage deferred comp as a vehicle for investment through Empower. When or why should I choose deferred comp over investing in a Roth?

• 27:02Speaker 03

  John, this is just this classic, whether you do a Roth 401k or a regular 401k, deferred comp is your, your retirement plan at work. And most people at most income levels should be doing the Roth part of the equation. If you're in the 10, 20, maybe even 25%, 30% bracket even, you're wanting to do the Roth. It's only for super high earners when you're in the 35% bracket or the 37% bracket, which is hard to get to for a lot of folks, that you still may be better off in the regular deferred comp, which is inside your retirement plan. But for most people, John, unless you're making a million dollars a year, the Roth

• 27:46Speaker 03

  side of the equation within your plan is likely the better idea.

• 27:50Speaker 02

  All right. That's going to do it for us this week on Ask an Advisor.

• 27:54Speaker 03

  I love these questions.

• 27:55Speaker 02

  They were great. We appreciate everybody who listens, everybody who subscribes, everybody who shares an episode with a friend. We'll be back next week with a new episode and Clark is back tomorrow.