9/4/26 Trade Wars, Rate Cuts & Retirement Fears: What's Really Going On?

The Moneywise Radio Show and Podcast Friday, September 4th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com https://www.moneywiseguys.com/ facebook: Moneywise_Wealth_Management https://www.facebook.com/moneywiseguys/ LinkedIn: Moneywise_Wealth_Management https://www.linkedin.com/company/moneywise-wealth-management-bakersfield/ The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths building in downtown Bakersfield. Call or text in at 661-396-1000.

• 0:09Speaker 01

  I need a dollar, dollar, dollar, that's what I need. Hey, hey. Well, I need a dollar, dollar, dollar, that's what I need. Hey, hey. Said I need a dollar, dollar, dollar, that's what I need. And if I share with you my story, would you share your dollar with me? Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the Money Wise Show.

• 0:40Speaker 02

  Hey, welcome to the Money Wise Show. Welcome to the Friday edition, the Labor Day Friday edition. We're what's keeping you away from a three-day weekend is what's happening right now.

• 0:52Speaker 03

  Almost there.

• 0:52Speaker 02

  You're almost there. Just a, just a few more hours, you'll be there. We are live from the basement here in the historic Woolworths building in downtown Bakersfield. So for the next hour, you're on News Talk 96.1 and 1230 AM K E R N, streaming live at MoneyWiseGuys.com. Or you can definitely listen to this show or any past show on Spotify, Apple iTunes, podcasts, anywhere you get your podcasts. Just right after you download the true crime, right? Go, go get the Money Wise one after that.

• 1:25Speaker 03

  Right. Those are popular.

• 1:27Speaker 02

  Yeah, my wife loves the true crime ones. I don't know. Maybe, maybe she's trying to plan something.

• 1:31Speaker 03

  I hope not.

• 1:32Speaker 02

  She better not be. Um, well, we're your host today. I'm Justin Leland here with?

• 1:37Speaker 03

  Dustin Weaver.

• 1:37Speaker 02

  Dustin Weaver. How you doing, man?

• 1:39Speaker 03

  It's, it's great.

• 1:41Speaker 02

  It's very good. It is a ghost town in here. It is a ghost town. Like two thirds of our company is gone because of the three-day weekend.

• 1:49Speaker 03

  Well, and there was a few of us out doing the give back this morning.

• 1:51Speaker 02

  We did do a give back this morning. Uh, that was, that was great. And, um, yeah, but, uh, yeah, it's, it's pretty much, uh, tumbleweeds running through the hallways, uh, right now. So we're-

• 2:02Speaker 03

  A little quiet, but I'll tell you what, there's a lot of people down there getting coffee this morning and-

• 2:06Speaker 02

  That was-

• 2:06Speaker 03

  Yesterday, we actually had, uh, Sam and Jake in here talking about, uh, what they have going on in reverb and their background and-

• 2:14Speaker 02

  Right.

• 2:14Speaker 03

  Uh, where the name came from.

• 2:16Speaker 02

  Oh, yeah.

• 2:17Speaker 03

  Somebody sent in a comment that says, great interview with these guys. I love their Biggie Smalls drink. And they make pink donuts and I'm in heaven.

• 2:24Speaker 02

  Yeah. So the, the, the Biggie Smalls or the Figgy Smalls is the, the name of this.

• 2:30Speaker 03

  Oh, that's right.

• 2:31Speaker 02

  The Figgy Smalls, right?

• 2:32Speaker 03

  I didn't even catch that.

• 2:33Speaker 02

  Yeah, the Figgy Smalls. Uh, that one I like a lot. The other one I really like. If, if you are somebody who likes Diet Coke, um, the, the fridge cig.

• 2:42Speaker 03

  Fridge cig.

• 2:42Speaker 02

  The fridge cig is, uh, but I've been really kind of stuck on the Aracano. It's an aerated Americano, which I like. So that's-

• 2:50Speaker 03

  So do they put coffee in with the Diet Coke or Diet Coke in with the coffee?

• 2:54Speaker 02

  Yeah, it's basically a dirty, you know, dirty coffee kind of a situation. So-

• 2:58Speaker 03

  Sounds like a fridge cig.

• 2:59Speaker 02

  Pretty good. Yeah. It kind of tastes like one.

• 3:02Speaker 03

  That sounds horrible.

• 3:03Speaker 02

  It's honestly-

• 3:04Speaker 03

  It sounds horrible.

• 3:05Speaker 02

  It's so good. It really is. Uh, text, you know what? Steven, you're gonna have to go upstairs and test it out, right?

• 3:12Speaker 03

  I'm not a big coffee person, but, uh, you know, maybe.

• 3:16Speaker 02

  Yeah, a little.

• 3:17Speaker 03

  I liked the Heath Richards when they did that.

• 3:19Speaker 02

  That one was pretty good. Um, I did like that one. Yeah, there's, there's, yeah, it's, it's fantastic.

• 3:25Speaker 03

  Well, we, we brought them in because for the whole month of September, if you are a pumpkin spice latte person, they kind of switched it up and they had the, the smashing pumpkin.

• 3:35Speaker 02

  Mm-hmm.

• 3:36Speaker 03

  And, uh, 100% of, uh, all money buying that pumpkin spice drink will go to, uh, our neighbors over at Cap K.

• 3:45Speaker 02

  Yeah, take that Starbucks.

• 3:46Speaker 03

  They said they're smashing hunger.

• 3:48Speaker 02

  The smashing hunger. Well, with smashing pumpkins, it kind of rolls into the 90s reverb. It's good. It's good. Um, well, we're gonna do what we do. Well, first I want to congratulate Stan Cranky, right? For, for buying the, the Angels.

• 4:04Speaker 03

  That's a good thing, right?

• 4:05Speaker 02

  That is a fantastic thing. As an Angels fan, I am ecstatic that-

• 4:11Speaker 03

  I figured you would.

• 4:12Speaker 02

  Oh, man, I can actually go to a baseball game now in Anaheim and not feel bad about it.

• 4:17Speaker 03

  So I'm, I'm ignorant. Who's Mr. Cranky?

• 4:19Speaker 02

  He's, he owns the Rams. He owns, uh, the Colorado Avalanche. He owns Arsenal. He owns, he, he owns so much, right? Um, uh, and he's won basically everywhere he's gone, right? As an owner, like the Rams have won two Super Bowls, the Avalanche have won a Stanley Cup. You know, he, he basically buys these play, these teams and turns them around. Well, the Angels need a turnaround and Artie Moreno was not doing it. He was, he was literally the worst-

• 4:48Speaker 03

  Team he knew you bought. I think he thought he was buying the Dodgers.

• 4:52Speaker 02

  No, no.

• 4:55Speaker 02

  That, that is not correct.

• 4:56Speaker 03

  Wrong California team.

• 4:58Speaker 02

  Wrong California team, wrong colors. Uh, but yeah, I'm looking forward to the next couple of years as an Angels fan. Um, he's, he's the kind of guy that comes in and, and really, um, elevates a club from the bottom up. So like from the, I, I would expect him to spend a lot of money on the minors and on, uh, you know, the minor leagues and everything and getting things put together. Um, and building a team that is going to be successful for a, a long time to come. So-

• 5:28Speaker 03

  Well, he'll probably have some time after this lockout to, uh, put a plan together.

• 5:31Speaker 02

  Yeah. Yeah, we may not have baseball next year, but maybe we need another Mark McGuire going after-

• 5:39Speaker 03

  Yeah, bring back the steroids.

• 5:40Speaker 02

  Bring back the steroid era and maybe, maybe we won't have a lockout or maybe we'll save baseball afterwards. Uh, but we're gonna do what we do best here. We're gonna get down to some numbers. Uh, Dustin, what is happening in the markets today?

• 5:52Speaker 03

  So there is more red than green. We've got the S and P 500 down 0.4%. The Dow 30 down 0.5. NASDAQ down 0.36. So around a half a percent for each of those three. The Russell 2000, those are the smaller companies are, it's green, but just a little bit, like 0.1%. Uh, gold is down, volatility is down, Bitcoin's down about 3%. One of the ones that stood out to me, we look at these trending tickers from time to time and a financial one stood out. FICO from the FICO score-

• 6:24Speaker 02

  Yeah.

• 6:25Speaker 03

  Is down. And so looking into that a bit.

• 6:27Speaker 02

  It's down what? 15, 16%?

• 6:30Speaker 03

  Okay. Mm-hmm. And that's, that stood out. Usually you don't-

• 6:33Speaker 02

  That's a big move.

• 6:33Speaker 03

  Doesn't move a whole lot. So the director of the Federal Housing Finance Agency, Bill Pulte, uh, basically is pulling back on what he's calling a monopoly on the mortgage credit scoring company. So, you know, Freddie Mac, Fannie Mae traditionally would use the, this FICO score, but now they're gonna be using the Vantage Score System as well. So it's not just FICO. So that was a, but that's financial, uh, topic for the day.

• 7:00Speaker 02

  Yeah. So FICO though, that is only for mortgages or do they do also like auto loans and other loans?

• 7:05Speaker 03

  They do, yeah.

• 7:06Speaker 02

  Pretty much everything.

• 7:07Speaker 03

  A lot of different things. And they, he was mostly criticizing FICO because apparently over the last six years, they've increased their prices 1800%.

• 7:17Speaker 02

  Well, that would take-

• 7:18Speaker 03

  Not 18%, 1800.

• 7:19Speaker 02

  1800.

• 7:20Speaker 03

  Yeah.

• 7:21Speaker 02

  Wow. Okay, but that's-

• 7:22Speaker 03

  That's one way to get on the radar.

• 7:23Speaker 02

  Well, and I mean, it's one of those things like when you're signing mortgage documents, you're not looking at the credit score cost that's being rolled into that document, right?

• 7:33Speaker 03

  Certainly has a cost for it.

• 7:33Speaker 02

  And there's a cost for doing that, right? So you're just signing your pay, you're signing your life away, signing that mortgage and they ran the credit score and it was, you know, 1,200 bucks for them to run the score when it should be like 35, you know, that's a problem.

• 7:46Speaker 03

  Yeah, 1,800% is a lot.

• 7:48Speaker 02

  That's a lot.

• 7:49Speaker 03

  So this Vantage Score, which competes with them, is owned by three big credit bureaus that you'd recognize, Equifax, Experian and TransUnion.

• 7:57Speaker 02

  Yeah.

• 7:58Speaker 03

  So that'll be one to watch for sure.

• 8:00Speaker 02

  It'll be interesting. And so markets are down and I'm kind of wondering a little bit why. And I think it's, we got two big things that are happening at the same time. But the, uh, jobs number came out for August and it was really good. Okay. The jobs number comes out, says we, the U S has added 162,000 jobs in August. But what's even better than that was that the last two months, June and July, which were actually, um, not negative, but they were definitely under par. Um, those were upwardly revised by a combined 55,000 jobs. So that's good. Um, the jobs, uh, the, the unemployment rate stayed at 4.1%,

• 8:40Speaker 02

  which is still very good. Um, and so all of these things would portend like, oh, this is good news for the economy. Um, maybe bad news for the stock market, um, because it just gives more credence because inflation is still being very sticky. It doesn't, doesn't want to go away and may be a position where the Fed might have to start thinking about raising interest rates. Now, that's not a good thing for the stock market, but probably the right thing for the economy. But then on the flip side,

• 9:18Speaker 02

  this is breaking news that Donald Trump is doubling down on threatening that he's going to stop all trade with company, with countries where we have a deficit, unless the Fed lowers interest rates. Let me be very clear about this lowering interest rates at this point in time with inflation high and unemployment low is the absolute worst thing you can do in this economy.

• 9:48Speaker 03

  It historically hasn't helped inflation, right?

• 9:49Speaker 02

  It it actually increases inflation if we look at the statistics. If you lower interest rates, there's more money flowing through the system. We're already highly inflated and it just makes inflation even that much more higher. So we're sitting at 4% or so inflation and lowering interest rates would actually be the wrong lever to pull if you're the Fed. And so.

• 10:11Speaker 03

  It feels right if you're a buyer trying to go.

• 10:14Speaker 02

  Right. If I'm gonna try go and buy it. Yeah, if I want to buy a house, I really want that loan at 4%.

• 10:19Speaker 03

  Or if you're a business owner trying to expand your business.

• 10:22Speaker 02

  Capex, you know, building the business makes sense. You might want to do that. Unfortunately, the with the macroeconomic piece of this being a large, you know, large economy and we have high, high inflation and in, you know, the labor market is still strong. You know, staying put with interest rates actually makes sense. There's a, there's a school of thought that says maybe even raising interest rates may be beneficial. But lowering them is actually the wrong pull right now. But we have a president who's saying, hey, if you don't lower those interest rates, I'm gonna cut off all trade to these countries where we have deficits, which let's put it this way, United States basically has deficits with all of our trading partners.

• 11:06Speaker 02

  There's, I can't think of a partner that we have a surplus in trade with. Frankly, we are a, we are that nation that buys everything.

• 11:16Speaker 03

  And going back to the interest rates for just a second, the rate that they control is the federal funds rate, which right now is at around just over 3.6. If you go back the last 75 years, the average is closer to 4.6.

• 11:31Speaker 02

  Right.

• 11:31Speaker 03

  So we have recency bias where these COVID years of super cheap interest rates on houses at, you know, 2.75, 2.625.

• 11:42Speaker 02

  Well, and then the, yeah, the Fed's funds rate, even after 2008, the 2008 financial crisis here, that's almost 20 years ago now. It's 18 years ago that that happened. We immediately went to 0% interest rates on the Fed funds rate and we stayed there until recently, until like 2022. We started to kind of raise them a little bit. We got up to about two and a half or 3% and we'd have a recession. It would drop back down to zero. We were, we've basically been at 0% federal funds rate effectively for the past 18 years.

• 12:11Speaker 03

  Yeah.

• 12:12Speaker 02

  Until just recently in 2022, when we started to raise them again.

• 12:15Speaker 03

  That's right.

• 12:16Speaker 02

  And so his long-term historical average of 4, you know, 4% or so, 4.5%, you know? So, you know, it's probably not the right move, but that's probably what's pulling the market in a lot of different ways because the, you know, numbers and the, the economy is saying raise interest rates. We have a president saying lower interest rates. What is the, what does Wall Street hate? Uncertainty.

• 12:41Speaker 03

  Yeah.

• 12:42Speaker 02

  That is the, the epitome of uncertainty is, is that dichotomy.

• 12:46Speaker 03

  Someone sent in a good question. It says, did I hear that mortgage rates are the highest it's been in a long time too? Like 7, 8%? Yes. So I happen to have a mortgage loan officer that lives in my house. We were talking about this last night. The 30-year rate was hovering around 6.9, so just under 7%, which that's a hike even in the last month or two.

• 13:06Speaker 02

  Right. But historical averages for mortgage rates is around 8%. Right? If we go back the last 100 years, you know, since mortgages were invented, long-term it's been seven and a half to 8% is long-term average. Right? And so I, again, you said recency bias, absolutely right. Everybody out there that's holding a mortgage at sub 3% is, you know, pride out of my cold dead hands, right?

• 13:33Speaker 03

  Right. We got a couple other good questions. I know we're gonna have to go into a break here. And when we come back from that, a good question about 401K and what it looks like to convert to a Roth, which is a question we get a lot.

• 13:46Speaker 02

  We get a lot of those. We'll be right back.

• 13:54Speaker 02

  Welcome back.

• 13:58Speaker 03

  Name that song.

• 14:01Speaker 02

  Tom Petty.

• 14:02Speaker 03

  There it is.

• 14:02Speaker 02

  My favorite.

• 14:04Speaker 03

  I think that's why he played it.

• 14:05Speaker 02

  Oh, yes, he did.

• 14:08Speaker 02

  All right. Welcome back. I'm your host, Justin Leland, here with Dustin Weaver. You've got us wall to wall on this Labor Day Friday.

• 14:19Speaker 02

  And, you know, it looks like the weather's gonna be kind of nice this.

• 14:23Speaker 03

  I didn't look. What are you seeing?

• 14:24Speaker 02

  We have a little bit of tropical, you know, clouds right now, so it's gonna keep it kind of cool.

• 14:30Speaker 03

  It was cooler this morning.

• 14:31Speaker 02

  Might be a little bit more humid than usual, but it's gonna be cooler than what it could be on a early September weekend. So great time for grilling and.

• 14:42Speaker 03

  You're grilling this weekend?

• 14:43Speaker 02

  I think I might be grilling this weekend. You coming over?

• 14:47Speaker 03

  I never pass up grilling, man. I think the last time this topic came up, you guys were doing those baseball steaks.

• 14:53Speaker 02

  Yeah, yeah, certainly the baseball.

• 14:56Speaker 03

  Friends over at Wooddale? I've, I've stepped away from the grill.

• 14:59Speaker 02

  Yeah.

• 15:00Speaker 03

  I found out the steak on my, my skillet is much better.

• 15:04Speaker 02

  Hmm.

• 15:05Speaker 03

  Indoors?

• 15:05Speaker 02

  Yep.

• 15:06Speaker 03

  Okay.

• 15:07Speaker 02

  Yeah, flash fry it in a skillet and then finish it off in the oven. It's actually, it's, it's fantastic.

• 15:11Speaker 03

  It is.

• 15:12Speaker 02

  You know?

• 15:12Speaker 03

  Little sear.

• 15:13Speaker 02

  Little, little butter, a little, a little garlic.

• 15:16Speaker 03

  Yeah.

• 15:16Speaker 02

  Yeah.

• 15:17Speaker 03

  I'm sold. Making me hungry, man.

• 15:20Speaker 02

  I'll be making maybe some smash burgers on the old Blackstone. Might do something like that.

• 15:26Speaker 03

  Burgers?

• 15:27Speaker 02

  Uh huh.

• 15:27Speaker 03

  I think I'm over burgers.

• 15:28Speaker 02

  Yeah. We're kind of at a burger joint.

• 15:31Speaker 03

  Unless it's, unless it's upstairs. Exactly.

• 15:35Speaker 02

  Right.

• 15:35Speaker 03

  It's like chili. I smell chili every morning about 4:15, 4:30. I'm like, oh my God.

• 15:40Speaker 02

  That and the grilled onions. I'm walking in at 8 o'clock in the morning to get to the office and it's like you just get hit in the face with the smell of the caramelized onions.

• 15:48Speaker 03

  Yeah, I'm not complaining.

• 15:49Speaker 02

  I'm not complaining.

• 15:50Speaker 03

  So what I'm hearing you say is I need a burger with chili and grilled onions. Okay.

• 15:53Speaker 02

  Yeah, add a fried egg if you want. Well, yeah, we're, we're back and thank you for joining us. I actually went to an event last night, the, the John Brock Awards. I actually ran into a, a super fan. So Vicky, if you're out there, you know, it was good meeting you and glad you're listening.

• 16:12Speaker 03

  Did she call herself a super fan?

• 16:13Speaker 02

  She, she seemed like a big super fan, like I walk up and I'm, you know, introducing myself to a couple of other folks that I know and they're like, and do you know, this is Justin and Vicky and he, you know, where do you work? I work for MoneyWise. Like all of a sudden it was like, I'm meeting a celebrity. And I'm like, no, you're not. You're absolutely not.

• 16:31Speaker 03

  It's surprising, man. Like you think, you never know how many people are listening or not.

• 16:36Speaker 02

  Oh, yeah.

• 16:36Speaker 03

  But you wear that MoneyWise shirt every once in a while.

• 16:38Speaker 02

  People catch it.

• 16:39Speaker 03

  I get stopped like, oh, you got, you know, the MoneyWise guys? I listen to the show for years.

• 16:43Speaker 02

  Yeah, I'm the guy that produces it.

• 16:45Speaker 03

  No, I've never heard of them. I actually.

• 16:46Speaker 02

  Never heard of them. I just got this shirt at the, at the, at the Goodwill.

• 16:53Speaker 03

  Well, I just appreciate that we have so many good listeners and they send in good questions.

• 16:57Speaker 02

  Oh, yeah.

• 16:57Speaker 03

  Actually, our friend Ed sent one in.

• 16:59Speaker 02

  Yeah, great.

• 16:59Speaker 03

  He said, hey, happy Friday. This is Ed and I'm wondering if I'm allowed to convert half of my 401K to a separate Roth before I retire or is that a no-no? Have a great weekend.

• 17:10Speaker 02

  Yeah, this is a great question. So you can do a couple of things here and it really kind of depends on your age and it also depends on the plan document in, in the company in which you work.

• 17:21Speaker 03

  So what's a plan document?

• 17:22Speaker 02

  The plan document is the governing document that basically says what you can and cannot do within that particular 401K. You could actually get it from like your summary plan description. It's usually online with your provider to kind of give you the, the what's what of what you can and can't do. So most 401Ks, if you're over the age of 59 and a half, if you are over the age of 59 and a half, most 401Ks will allow for you to do what's known as an in-service withdrawal or an in-service rollover. Okay? Meaning, hey, I have $500,000 in my 401K. It's all in pre-tax. I don't like the options that I have and I'm getting close to retirement. I'd like to work with an advisor or I'd like to do it myself.

• 18:06Speaker 02

  And you decide you want to take, you know, $200,000 or $300,000 of your 401K and roll it into an IRA that you have elsewhere.

• 18:14Speaker 03

  And one of the key things that you said there was in-service.

• 18:17Speaker 02

  Yes.

• 18:17Speaker 03

  So to define that.

• 18:18Speaker 02

  You're still working.

• 18:19Speaker 03

  You're still working.

• 18:20Speaker 02

  Yeah, you're not terminated. Yeah, you're in-service. You're not terminated. And so you're doing an in-service rollover. Now, most of the time, people are doing it as a, you know, pre-tax to pre-tax qualified, you know, regular 401K to a traditional IRA and not necessarily going the Roth direction.

• 18:39Speaker 03

  Same tax treatment.

• 18:40Speaker 02

  Same, same tax treatment. So there's no tax event or anything like that. You're just taking that 200 or 300 and you're putting it in another IRA for, for a different purpose. Now, you can and definitely want to talk to a CPA. This is obviously not, you know, tax advice or anything. You can, and if you do the math and you figure it out that it makes sense for you to do so. Yes, you can do an in-service rollover from your 401K. Again, if you have the right rules in your plan to take those monies from your 401K, roll that into a Roth IRA. Here's the problem, you're gonna get a 1099 for that Roth conversion, which means you're gonna have to pay taxes on that large lump that you just rolled out.

• 19:25Speaker 03

  So in that example that you used, that was a pretty big number.

• 19:28Speaker 02

  Yeah.

• 19:29Speaker 03

  Two, 250,000. If you add that much extra income in one year on top of your other income.

• 19:34Speaker 02

  You're in a new bracket.

• 19:35Speaker 03

  Or two.

• 19:36Speaker 02

  Or two.

• 19:36Speaker 03

  Yeah.

• 19:37Speaker 02

  Yeah, you're, you're moving.

• 19:38Speaker 03

  So not, not likely.

• 19:40Speaker 02

  No.

• 19:41Speaker 03

  I mean, it's a good, good question, but definitely not half of it. If it didn't mean depending on how much is in there.

• 19:47Speaker 02

  Depending upon the size. Now, one of the things that is also potentially available now that Roth 401Ks are basically law across, you know, every 401K now in the, in the most recent, um, so because of Secure Act 2.0, in the most recent, um, restatement of these plans, all of them have Roth options. Because if you're a highly compensated employee and you're over 50 and you're doing the catch-up, well, guess where the catch-up has to go? Has to go to Roth.

• 20:16Speaker 03

  Right.

• 20:16Speaker 02

  You can't, so all plans now have Roth options available. Most of those plans now, double check again your, your plan document. You could potentially do a in-plan Roth conversion. You can have pre-tax dollars, you know, again, kind of using the, the large scenario, but you have pre-tax dollars in your 401K plan. And because you have the Roth availability, you should be able to, with the plan document, be able to do an in-plan conversion. So you can determine, hey, I want to do $10,000 conversion from my traditional into the Roth. You can do that, okay? Just check your plan document, call your HR department, figure out if that's even something that's available for you.

• 20:59Speaker 03

  And you said in-plan a few times, so that stays inside that.

• 21:02Speaker 02

  Yeah, you're, you're not rolling those funds outside of the plan. You're keeping them in the same plan. You're just changing the constitution of it from pre-tax to post-tax Roth. Right? So, um, just, I, I definitely would get in touch with your HR department if you have one. Uh, get in touch with, you know, look at the plan document and see what's available to you.

• 21:22Speaker 03

  Talk to your accountant, talk to your advisor.

• 21:23Speaker 02

  Exactly. Definitely talk to an accountant before you make that decision because it can be, it can be costly if you make the wrong decision. We will be right back.

• 21:39Speaker 02

  Welcome back. Steven, how did you know that I was playing Tool on the way to the office this morning? Were you, were you listening to my, like, did I have it too loud? And it definitely was a little bit of Jambi, a little bit of Invincible. I was, I was rocking out.

• 21:59Speaker 03

  Are those names of songs?

• 22:00Speaker 02

  Yes, they are. Sorry, it's not Chris Stapleton.

• 22:07Speaker 03

  Hey, I like Chris Stapleton.

• 22:08Speaker 02

  I know, I like him too, but you know, it's a Friday.

• 22:10Speaker 03

  But not on Friday.

• 22:10Speaker 02

  Yeah.

• 22:11Speaker 03

  I like the sound of Tool, I just don't know the song names.

• 22:14Speaker 02

  Yeah, they're, I'm a, I'm a Toolophile. Uh, that and Tom Petty, but can't be more different, right? Steven once told me I, I had the most eclectic bumper rotation in the, in the, in the office.

• 22:29Speaker 03

  I love it. You should get a bumper sticker that says Toolophile. I've never heard that name.

• 22:33Speaker 02

  Toolophile.

• 22:34Speaker 03

  I know what you mean. Been told, yes.

• 22:37Speaker 02

  Uh, geez. Hey, we got another question that came in here about, uh, let's see, what was it? About social security. Did you want to grab that one real quick there?

• 22:45Speaker 03

  Yes, it says, thanks for taking my social security question earlier this week. And you mentioned that social security has maybe five to seven years before it gets lowered. What happens if I'm set to pull from my social security in around 10 years? Will I get less?

• 23:01Speaker 02

  That's a great question.

• 23:02Speaker 03

  Well, there's some clarification to put in there, but yeah, good question. Go ahead, Justin.

• 23:05Speaker 02

  Great question. So as of right now, if the laws don't change and, and social security is not, um, uh, fixed in any meaningful way, uh, the social security trust fund will run out sometime in 20, in, uh, 2033 or 2034. Okay, depending upon which number, which study you're looking at, it's, it's.

• 23:29Speaker 03

  Believe it or not, I saw another one that said fourth quarter of 32 now.

• 23:32Speaker 02

  Yeah, so there, depending upon who you're, who you're looking at.

• 23:36Speaker 03

  It'll move between now and then.

• 23:37Speaker 02

  Right, we don't know exactly what it's gonna look like.

• 23:39Speaker 03

  In a few years.

• 23:40Speaker 02

  It's gonna be a few years. So if Congress, um, doesn't have the political will to actually do the things necessary to fix that, then the trust fund itself will run out of funds. Now, that doesn't mean that social security is bankrupt. Don't let anybody tell you that. That is incorrect, that is bad knowledge, that is bad information. Social security will still continue on. It just means that current retirees, under the current rules, they would get a haircut of about 22%, okay?

• 24:12Speaker 03

  There's a big if there.

• 24:13Speaker 02

  It's a big if.

• 24:14Speaker 03

  What, what Justin's saying here, so there's money coming in and money going out to the program. It's currently estimated to be short by about 22%.

• 24:21Speaker 02

  Right. So all of the workers that are currently paying into social security and all the employers that are doubling down and paying that 6.2% or whatever it is for each paycheck.

• 24:31Speaker 03

  If you're working, look at your paycheck, it says OASDI for Old Age Survivors Insurance Fund, right?

• 24:36Speaker 02

  Yeah.

• 24:37Speaker 03

  That, that's that portion.

• 24:38Speaker 02

  So that's what's paying roughly 80% of current retirees' benefits. Okay? Current benefits that are being paid out, it's about 78% is being paid by current workers that are putting money into the system. The, the overage, that extra 22% is coming from this, this social security trust fund. That is what's going to deplete over the next, uh, five, seven years, right?

• 25:06Speaker 03

  So that's the problem, it's gonna be short.

• 25:07Speaker 02

  It's gonna be short, right? Unless, unless something drastic happens in the next seven years, um, that's what we're looking at. So, um, the question is, will I get less if I'm gonna be start taking social security in 10 years? Yes, maybe. Yeah. If, if nothing changes, yes. If they make the changes and they fix social security, no, you'll probably be fine. But it's, as of right now, under the current rules and the way it's set up, we're looking at everybody getting about a, a 20% haircut on, on their benefits.

• 25:39Speaker 03

  So that's the bad news.

• 25:41Speaker 02

  Yeah.

• 25:41Speaker 03

  What is some of the good news in this?

• 25:43Speaker 02

  Um, is there any?

• 25:44Speaker 03

  Potential, potential good news.

• 25:46Speaker 02

  Potential good news is that, you know, they rectify this, they fix it, they close the, the loopholes and the, uh, the, the funding mechanism and kind of build up that, uh, that trust fund again.

• 26:00Speaker 03

  Yeah, we look at this a lot, we get questions on this a lot with clients. And I mean, it comes down to, there's the revenue side that they can change, meaning money coming in, right? And so they can lift or eliminate a payroll tax cap. Cause the current cap is $184,500 of income, meaning if you earn more than that, you're no longer paying into it on income above that amount.

• 26:25Speaker 02

  So, yeah, so to be clear on that, if you're, if, if you're an, if you're a, an employee, somebody making, let's say you're making $200,000 a year. You're done paying into social security probably in about September.

• 26:40Speaker 03

  At that 184,500.

• 26:41Speaker 02

  Once you get up to the 184,500, you're done paying social security. So that's what I think a lot of people don't realize, that that's a, that that's actually a thing. They think that all income is paid into social security. No, it's not. It stops at, at roughly $200,000, so.

• 26:59Speaker 03

  There are some proposals out there on both sides of the aisle. We got Senator Warren on one side, Moreno on the other, that are talking about lifting that cap. And how it's lifted is still being debated, right? It's, okay, so is it still at 185 or one, you know, 187, et cetera? Or do they do what's called a donut hole?

• 27:20Speaker 02

  Which I think the Biden administration had, had, had proposed this, right?

• 27:24Speaker 03

  Which is, okay, so it still stops at the 184,500, which is still inflated each year, but maybe it kicks back in at 250 or 300 or 500,000 of income where at different thresholds.

• 27:38Speaker 02

  I had heard the, the Biden administration said 400,000, so it would kick back in at 400, but then each year that 185 would go to 187, 192. And eventually it would go, it would catch up to that 400,000 and then all money that was, yeah, so there wouldn't be no more donut hole at that point.

• 27:56Speaker 03

  So the other aspect of the revenue side is what percentage that we are paying in. And when I say we, it's you and your employer, both are kicking in. They can increase that, even 1% makes a big difference.

• 28:10Speaker 02

  Right.

• 28:10Speaker 03

  Nobody loves and gets excited about an extra tax, it's just something they're talking about.

• 28:15Speaker 02

  Right.

• 28:16Speaker 03

  Uh, we don't know exactly what they're gonna do, but.

• 28:18Speaker 02

  So currently you pay 6.2% and your employer pays another 6.2%.

• 28:23Speaker 03

  Right.

• 28:23Speaker 02

  Right.

• 28:24Speaker 03

  And if you're self-employed, there's the self-employment tax where you're paying both sides.

• 28:28Speaker 02

  You're getting hammered on both sides of that, that coin.

• 28:31Speaker 03

  So that's on the revenue side, but then on the benefit side, they could make several different changes. One is they've talked about adjusting how they do the cost of living adjustment. So for short, they call it a COLA.

• 28:43Speaker 02

  Yeah.

• 28:43Speaker 03

  Right? Which is an increase in your social security benefits over the years tied to the Consumer Price Index. Well, one of them.

• 28:51Speaker 02

  It's like the, yeah, the CPI of 1981 or whatever.

• 28:54Speaker 03

  Yeah. So they're talking about adjusting that, which means maybe the haircut comes in less raises over time.

• 29:02Speaker 02

  Right.

• 29:03Speaker 03

  Right? And so, yeah, there, there's a lot of different solutions and what's likely to happen is, you know, they're gonna wait till the last minute to, to get this figured out.

• 29:15Speaker 02

  This is, this is one of those things that always winds up going to the 11th hour.

• 29:18Speaker 03

  And it'll probably be a combination, right?

• 29:20Speaker 02

  It probably will be a combination of all, which this also ties into, and so, you know, um, yeah, so planning for this is difficult because you don't know what social security is gonna look like, which then dovetails into the thought process that we have, um, baby boomers are entering retirement with a, a record amount of debt, right? And half of Americans fear they'll never fully retire.

• 29:45Speaker 03

  I was surprised by the the half. That sounds like a lot.

• 29:48Speaker 02

  That.

• 29:48Speaker 03

  But it's probably accurate.

• 29:50Speaker 02

  But it's probably accurate. Again, we're dealing with kind of a K shaped, you know, recovery in many ways. You know, people that don't have stocks or 401ks are probably doing a lot worse off, you know, because of inflation and everything else. Wage growth is really not there. So when we look at this and we say that forty seven, forty seven percent of workers doubt they will ever be able to retire completely, meaning done with work and raising grandkids and helping and traveling and sitting on the beach with a Mai Tai, that kind of stuff.

• 30:19Speaker 03

  Retiring to something, not just from something.

• 30:21Speaker 02

  Right, exactly. Right. Only fifty eight percent of workers think they'll have enough money to retire on schedule. Okay, that's, I think that the social security conversation we just had.

• 30:32Speaker 03

  That's a part of that.

• 30:32Speaker 02

  That kind of dives into that a little bit. It's like, well, if I was planning on getting three thousand in social security, but I'm only going to get twenty four hundred, that, what am I going to do to make up that six hundred difference? Like, they're not, they're planning for that ahead of time, right?

• 30:47Speaker 03

  Six hundred dollars in retirement, so that's a real number.

• 30:50Speaker 02

  That is a real, it is, right? If you're on a fixed income, that is a real number. Um, and over a third, thirty six percent of workers expect to continue earning an income in retirement, meaning still working, right? Even if it's a part time gig or, you know, something like that, you're a greeter at Walmart or whatever, but you're still working.

• 31:09Speaker 03

  And we hear about the gig economy now, right?

• 31:11Speaker 02

  The gig economy, driving for Uber, um, that kind of a stuff. I mean, it happens.

• 31:17Speaker 02

  But then the flip side of that is

• 31:20Speaker 02

  we have so many baby boomers that are entering retirement with record amount of debt. It used to be the case that you would retire when, you know, hey, my house is paid off, my cars are paid off, I don't have any credit card debt, I can live off of my income from social security and or whatever savings else savings I have, and I'm good, right? Well, it's a little bit different than that because we have a situation where baby boomers, seventy percent of baby boomers are carrying some level of debt.

• 31:57Speaker 03

  And did they talk about the, like, average amount of debt?

• 32:01Speaker 02

  Yes, they, I mean, the median is sixty two thousand dollars worth of debt, so most of that is tied up in, in house, you know, mortgage debt.

• 32:09Speaker 03

  Mortgages.

• 32:11Speaker 02

  There is a little bit that's in credit card, but not much, maybe a little bit in cars. But this is a little bit of a different scenario because, like I said, you know, forty or fifty years ago, when people were retiring, you didn't hear of people retiring with a mortgage. I'm actually hearing of people retiring and still have student loan debt.

• 32:29Speaker 03

  Right.

• 32:29Speaker 02

  Right? That they haven't paid off because they went back to school maybe in their forties and they still have the student loan debt that they have to pay off. It's wild. And so when you take all these things into account, I mean,

• 32:40Speaker 03

  Yeah, seventy percent is a big, big number.

• 32:42Speaker 02

  Yeah, it can be concerning. Um, so all boomers, that's seventy percent, older boomers, so people born between forty six and fifty five, sixty two percent are carrying debt, forty three thousand is the median, and younger boomers born between fifty six and sixty four, seventy five percent, three and four are carrying debt into retirement. So those statistics are not getting a whole lot better. So hopefully Congress and and people can figure out how to maybe shore up social security so we're not having to, um, make that even a little bit more concerning.

• 33:15Speaker 03

  Proposed solutions, there's probably going to be an argument or two.

• 33:18Speaker 02

  Oh, maybe.

• 33:20Speaker 03

  Or more, and then we'll see how it flushes out. It's kind of a wait and see.

• 33:24Speaker 02

  Exactly. Uh, we're going to take a quick break and we'll come into the final segment, getting you right into Labor Day. We'll be right back.

• 33:42Speaker 02

  Welcome back.

• 33:45Speaker 02

  Man, Stephen breaking out the bangers all day.

• 33:50Speaker 02

  This is another great concert.

• 33:52Speaker 03

  You been to this one?

• 33:53Speaker 02

  It was, it was a good concert.

• 33:56Speaker 02

  Jane's Addiction, that was a good concert until, uh, Perry decided to like.

• 34:02Speaker 03

  Bust open his wine bottle?

• 34:03Speaker 02

  Man, that was wild.

• 34:06Speaker 03

  Were you guys there together?

• 34:07Speaker 02

  No, no, but, uh, they played here in Bakersfield not too long ago. It was like the, the start of their, you know, US tour or whatever. By the end of that tour, the band broke up and there's huge lawsuits all over the.

• 34:20Speaker 03

  We'll never see them again.

• 34:21Speaker 02

  They're done. But it was fun while it lasted.

• 34:24Speaker 03

  Broke the addiction.

• 34:25Speaker 02

  Yeah, they, they did break the addiction. Sorry. Wow.

• 34:29Speaker 03

  Well said, Seth.

• 34:30Speaker 02

  Wow.

• 34:31Speaker 03

  I mean, Dustin. I can't help it.

• 34:33Speaker 02

  Oh, man.

• 34:34Speaker 03

  It's bad.

• 34:35Speaker 02

  Hey, um, be on the lookout. A couple of fraud and scam situations kind of going on out there. Bakersfield police are warning residents about the courier scam.

• 34:47Speaker 03

  Oh, I saw that.

• 34:47Speaker 02

  That is circulating. Scam alert. Scam alert, little bit of scam alert. So the BPD, um, put out a press release, uh, I'm guessing Sally did that. Our good friend Sally probably put out that press release. But the BPD, um, has received reports of scams involving the use of a courier to steal money from victims. Now, this is wild, but they said that the scammer basically tries to convince the victim that the bank is requiring them to withdraw their money to keep it safe while the bank conducts an investigation. They're posing.

• 35:23Speaker 03

  So does that start with a phone call?

• 35:24Speaker 02

  No, like showing up at your home. This courier showing up at your place, you're, you're basically saying, hey, I'm with the fraud department of such and such bank.

• 35:34Speaker 03

  And to keep the money safe.

• 35:36Speaker 02

  You need to withdraw it.

• 35:37Speaker 03

  Oh, my gosh. It's wild.

• 35:39Speaker 02

  Send their money to the courier to keep it safe to arrange a meeting with them. Yeah, so it's.

• 35:46Speaker 02

  Be careful.

• 35:47Speaker 03

  They just keep thinking of.

• 35:48Speaker 02

  New ways.

• 35:49Speaker 03

  Different ways to try and.

• 35:51Speaker 02

  So I see some of them is, some of them is phone calls. Yeah, some of it's phone calls, some of it's also.

• 35:56Speaker 03

  So they'll call and say, hey, we're from the bank.

• 35:58Speaker 02

  Right.

• 35:59Speaker 03

  We need you to withdraw the money and take it to this carrier.

• 36:02Speaker 02

  Yeah.

• 36:02Speaker 03

  For safekeeping.

• 36:03Speaker 02

  Right.

• 36:04Speaker 03

  Yeah, it's wild.

• 36:05Speaker 02

  I don't know how many red flags are in that one, but a lot.

• 36:09Speaker 03

  So what, what can we do as community members here to, to prevent some of these scams?

• 36:14Speaker 02

  Yeah, if you are feeling like there's something that's fishy when you're talking to somebody on the phone, just hang up the phone.

• 36:20Speaker 03

  It's a good start.

• 36:21Speaker 02

  Yeah.

• 36:21Speaker 03

  Don't answer it.

• 36:22Speaker 02

  Don't answer it. Do like I do and just send everybody to voicemail.

• 36:24Speaker 03

  Right. Yep.

• 36:27Speaker 02

  I'm a Gen Xer. Like, don't talk to me, send a text.

• 36:30Speaker 03

  Text me, I'll get back to you when I can. The other thing, if you think that something sounds legitimate, you can, there's nothing wrong with hanging up and then going direct to the source.

• 36:40Speaker 02

  Right.

• 36:40Speaker 03

  Right? Walk into the, the bank branch.

• 36:43Speaker 02

  Right.

• 36:43Speaker 03

  Talk to an employee, right? Or, or call them directly.

• 36:47Speaker 02

  Right.

• 36:47Speaker 03

  And I don't mean from the missed call number on your phone.

• 36:50Speaker 02

  Right.

• 36:50Speaker 03

  That doesn't, right?

• 36:51Speaker 02

  Right.

• 36:52Speaker 03

  That's probably just going back to the scammer, but.

• 36:54Speaker 02

  Yeah.

• 36:54Speaker 03

  Going direct to the source and saying, hey, Mr. Bank, uh, banker.

• 36:58Speaker 02

  Right, depend, you know. Hey, is this, is this a thing? Can you send me to the fraud department? Is this, is this an actual open case? And if they're like, we don't even know what you're talking about, yeah, you know it's a scam.

• 37:09Speaker 03

  I'd go as far as saying, never withdraw cash at the instruction of somebody else.

• 37:13Speaker 02

  Yeah, if somebody's telling you to take cash out of the ATM and that's, uh, no.

• 37:19Speaker 03

  Another red, another red flag is, um, and maybe they're doing the couriers now because people have got on to the fact. And if you haven't, um, you should never have to go to a grocery store or a Best Buy or.

• 37:31Speaker 02

  Yeah.

• 37:31Speaker 03

  Walk in and use these cash machines.

• 37:33Speaker 02

  Right.

• 37:33Speaker 03

  Bitcoin machines. I mean, they're just trying to get our cash any way they can.

• 37:37Speaker 02

  Pretty much.

• 37:37Speaker 03

  What, what is those, the, the Bitcoin machines? I've seen them recently. Like, how, how do those work? Because of the privacy of where the money's going. Okay. Right? They're, they're having you send the cash to a place that's not traceable or trackable.

• 37:52Speaker 02

  Right, but if, but if you have your own wallet, like you know what your wallet is and you're just trying to put cash into.

• 37:58Speaker 03

  A Bitcoin or something?

• 37:59Speaker 02

  That you have your own key and you have, then, then you could use that to deposit it. But this is why they're giving you a, a different key or whatever to, to put that money into their.

• 38:10Speaker 03

  Of course.

• 38:11Speaker 02

  Right.

• 38:11Speaker 03

  Let me, let me hold that.

• 38:12Speaker 02

  Let me hold that money for you.

• 38:16Speaker 02

  Yeah, and so just be on the lookout for that. Not good, not good.

• 38:20Speaker 03

  They're getting sneakier and sneakier.

• 38:22Speaker 02

  Man, you have no idea. They definitely, uh, um, so anyhow, uh, the other thing is that California was trying to pass, and I know everybody that's listening to the sound of my voice absolutely loves flock cameras, right? Everybody loves flock cameras. I think like they're near one hundred percent approval rating on, uh, it, it's very bipartisan, uh, in hating on flock cameras. Okay.

• 38:51Speaker 02

  So anyhow, state of California, for the past four or five years, ever since like twenty twenty two, has been trying to pass some sort of legislation to, um, restrict how these flock cameras are used. So if you don't know what flock cameras are.

• 39:07Speaker 03

  That was my question.

• 39:08Speaker 02

  If you don't know what flock cameras are, that's basically cameras that are put up around the city and they are license plate, uh, identifiers, right? So that the technology is they're taking pictures of license plates and it gives law enforcement the ability, hey, if a, if a vehicle is stolen or it was involved in a crime and we have a great, uh, you know, look at the, the license plate, um, then they can track that vehicle throughout the city based on the location, based on these, these flock cameras.

• 39:39Speaker 02

  A lot of people are really upset about it because there's, you know, you never know who's looking at that information. And the

• 39:49Speaker 03

  So the

• 39:49Speaker 02

  The privacy piece of it, right? It's like if I'm driving my car down the street, I don't need the police knowing where I'm at. I haven't done anything wrong. I'm not hiding anything, but I don't necessarily need people tracking me, right?

• 40:00Speaker 03

  And like most systems that have a good intent behind them, there's always

• 40:04Speaker 02

  There's always the badass. There's always some jackass.

• 40:07Speaker 03

  There's, there's always the folks that are taking advantage of it or looking at ways to expose it or hack into it.

• 40:15Speaker 02

  Right. And so California was trying to pass this law to kind of, you know, restrict how these, you know, technologies are used. And it continues to get pushed down and not passed, which I don't understand for the life of me, why it's not at least having some restrictions on how it's being used. As of right now, I mean, we have stories of, you know, law enforcement, you know, tracking down their estranged spouse, you know, totally outside of the confines of the law.

• 40:49Speaker 03

  Not using it for its intended use.

• 40:51Speaker 02

  Totally outside the confines of law. There's other cases of people being pulled over because the flock camera transposed a three with an eight on a license plate and

• 41:03Speaker 03

  Oh, pulled over the wrong car.

• 41:04Speaker 02

  Right. They're pulling over the wrong car because the license plate says it's an eight, but it's actually a three. And they're saying that the car is stolen, right? Because it's maybe the one with an eight was actually legitimately stolen. It's been reported or whatever, but they pull over the wrong car. What is the, the modus operandi when dealing with a stolen car call as a traffic cop?

• 41:26Speaker 03

  So if you're getting pulled over.

• 41:28Speaker 02

  If it's a stolen vehicle, you're getting pulled out with guns drawn. That's, that's the

• 41:31Speaker 03

  That's the standard.

• 41:32Speaker 02

  That's the standard protocol with a stolen vehicle is put your hands on the wheel, step out of the vehicle, walk backwards to the sound of my voice. That kind of a stop, right? If you're not the one that actually, if you're in a, your vehicle.

• 41:49Speaker 03

  That's not stolen.

• 41:50Speaker 02

  Right. I would be like, wait, what?

• 41:53Speaker 03

  So you're saying the cameras are good, but not a hundred percent?

• 41:56Speaker 02

  Not a hundred percent. And so they, having some restrictions on how those things are used is vitally important. Not just from a libertarian standpoint of like, you know, hey, I shouldn't have people, you know, law enforcement tracking my every move. Seems a little bit over, you know, seems a little 1984. Big Brother kind of a thing. I'm, I'm not doing it.

• 42:18Speaker 03

  Why'd you pick that year?

• 42:18Speaker 02

  Well, that's the book.

• 42:20Speaker 03

  I'm just saying.

• 42:21Speaker 02

  Yeah. The book that then Animal Farm, 1984, Big Brother, you know, all of, all those scary books. So, um, yeah, just, yeah, I just got to be careful. Hopefully they can get that back up in the next session of, uh, in, in the legislature and actually kind of maybe do something about it.

• 42:39Speaker 03

  So that's something else to watch.

• 42:40Speaker 02

  Right, right. So, but anyhow, hey, it's gonna be a great weekend. It's gonna be a nice, a nice weekend. Good time to go out and grill, do some barbecue and cook a steak on the, uh, on the, the blacktop or in your oven. What Stephen does. Comes out like shoe leather. Right? Okay. Anyhow. He's a

• 43:02Speaker 03

  Shots fired.

• 43:04Speaker 02

  He's listening. Oh, boy. Um, yeah, just get out there, have some fun. Uh, it's a good three day weekend. Hopefully you're gonna do something safe. Um, and if you're somebody that, uh, wants to post on social media about where the police are set up, you're a horrible person. Uh, don't do that, right? It is a thing. You're a bad person if you do that. Just don't do that. Anyways, be smart, be safe, be money wise. We will be back on Tuesday. See you then.

• 43:33Speaker 01

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