2/4/26 What Is a Pension and How Does It Work?

The Moneywise Radio Show and Podcast Wednesday, February 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 facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management 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.

• 0:38Speaker 00

  Now, let's start the Money Wise Show.

• 0:41Speaker 01

  That's right. Let's start the Money Wise Show. I'm your host today, Chris Pelster, joined with?

• 0:47Speaker 02

  Seth Perry. So glad to be here, KP.

• 0:50Speaker 01

  And behind the glass over there is the one and only Stephen Nicholas.

• 0:54Speaker 02

  We made it.

• 0:55Speaker 01

  We're your Money Wise team today. I am a lot more ready and prepared and calm this week than I was last week. If you remember last week, I came running in last minute and forgot my computer. Cause we're still getting settled into the basement here, the Woolworths Building downtown Bakersfield, which by the way is amazing. So if you haven't been down here, come down here, have a hot dog, have a burger.

• 1:14Speaker 02

  Chili, had chili for lunch, man. It was delicious.

• 1:16Speaker 01

  Yeah. Thanks Seth for having chili in a small office, in a small studio we're in right now.

• 1:20Speaker 02

  You got it.

• 1:21Speaker 01

  Uh, so, uh, we have a great show for you today. No guests, but we have some great, uh, topics and questions that come in. So we always love the questions. You are what make the show great listeners. Uh, if you have a question or a thought or a concern, there's probably the likelihood of somebody else having the same concern. So throw it at us, 661-396-1000. You can call and speak to Stephen over there or you can send them the message. And if you don't want to talk today, you can send in at any time. And that's usually what a lot of these questions come through. They come through later in the night. Somebody's listening to the podcast later in the night, uh, the question comes in and we follow it up on the next day. So I'm really excited about some of these topics and questions that came in.

• 2:02Speaker 01

  Looking forward to getting into that here in just a little bit, but for right now, here on the fourth day of February, which I cannot believe we're already into the second month here of 2026. Welcome folks. Um, yeah. So markets, markets taking a little bit of a chill pill. Uh, not surprising. It's been on a rampage for a while. So, uh, we always try to talk about perspective. We always try to talk about. Look in the rearview mirror, not that it always, you know, tells you what's going to happen in the future, you know, doesn't guarantee results, but like, just kind of try to get an understanding of where we're at, because fear and panic can set in, just like greed can set in. And, and those are two things that you don't want to have in your portfolio. What is that? You don't want to have fear in your portfolio? You don't want to have greed in your portfolio.

• 2:46Speaker 01

  So just a little bit of, uh, deep breath, thinking about things. And what's interesting right now is the biggest movers and shakers that people are freaking out about. When I've had a lot of calls about the markets going crazy, isn't it? Well, no, the stock market is, is taking a little bit of a breather, but not majorly, but gold, silver, cryptocurrencies, or, or, or definitely experiencing maybe a larger than normal kind of a pullback. And so then, then it kind of feels like the sky is falling. Everything's crashing. Is this what's going on? What do I need to do? You know, hopefully you have a good plan going into any market fluctuations. So, deep breath, let's talk about it. So today, the S and P 500, the Standard and Poor's 500, the 500 largest companies

• 3:27Speaker 01

  that are the United States index, uh, that we look at as kind of like the scoreboard. So you can kind of go, how did the 500 largest companies do? They were down half a percent today. Year to date, we're still positive in positive territory, but not much, point three percent.

• 3:42Speaker 02

  Pretty flat.

• 3:43Speaker 01

  Pretty flat.

• 3:44Speaker 02

  Mm hmm.

• 3:44Speaker 01

  But then why I say, why is rearview mirror important? Because we go, okay, wait, let's look back 12 months. 14% positive.

• 3:52Speaker 02

  14%.

• 3:52Speaker 01

  So yes, the market's kind of flat. Yes, we're, we're flattening out a little bit. What's, what's that? What do we need to do?

• 3:59Speaker 02

  I'm just making a quick correction to, uh, the Dow and the NASDAQ, because I even confused myself, because a lot of, uh, listeners might be confused too, because the Dow is up 0.5%. NASDAQ is down one and a half percent. And so what's taking place right now is kind of a swapping, if you will. A lot of big institutional investors are moving out of some of the tech companies, right? They're, they're, they're keeping their gains and they're moving into more value companies, which would be seen as, you know, chemical companies and stuff like that, that we would see.

• 4:32Speaker 01

  Caterpillar.

• 4:33Speaker 02

  Caterpillar, those types of companies.

• 4:34Speaker 01

  Which is the Dow. Now, even though we call it the dumb Dow, you know, just remember that because that's a very small index. That's only 30 companies, but that is one of the trend that we're seeing right now. NASDAQ, we've always said is a very tech-heavy type of stock exchange. Mainly, mainly focused, I think 80% or something of the stocks that trade on the NASDAQ exchange are technology-based. And we can maybe clarify that, but I think it's, it's up there. So definitely seeing a big pullback in those texts. Those are also the ones that have played a major role in a lot of the growth that we've seen in a lot of the indexes and, and, and S and P 500. And so just kind of trying to take a deep breath. You should be invested appropriately for your situation and where you're at.

• 5:18Speaker 01

  If you're needing money in a short period of time, or if you're taking distributions or income from your account, you should have some sort of buckets approach or some sort of focus on the protection side of where you're taking your income out of. And then on the growth side, you're still wanting to let good investments do what they're going to do. And the best investments do fluctuate. The best stocks out there, the best stocks that are going to do awesome for the next five years. They might be down heavily, or at least right today. That's a big day in, in, on the NASDAQ, a 1.5% move to the negative. But again, the one year on the S and P 500 is still 14%.

• 5:54Speaker 01

  Kind of interesting news, no big shocker, I think, to Californians. But kind of making headlines is that a lot of insurers are still pulling back and, and, and getting out of California. So for those that are like us, loving California and love having our family in this beautiful state. And especially here in beautiful Bakersfield, California. You know, it's a little bit unnerving because you're seeing all these insurers exiting out, which, which creates a forced monopoly for those that are still around and they're going to look at it like, hey, we're taking on more and more risk by being the last ones here. And so typically with insurance, higher risk equals higher premiums. So hopefully we can all afford those premiums.

• 6:39Speaker 02

  If we only had an expert, Chris, that would be coming in to, to share this with us, right? Steven is an awesome, awesome producer and we have Mr. Mike Alexander coming in from State Farm here in a few days and he's going to talk to us about some of these things.

• 6:56Speaker 00

  The 18th.

• 6:57Speaker 02

  The 18th.

• 6:58Speaker 01

  There you go.

• 6:59Speaker 02

  So if you have questions for him, you let us know and tag it there for Steven and I'd be curious to hear because I'm with State Farm. I've been with them, been very happy with them. I do know they're one of the ones that won't write new homeowners in California. So listeners, who have you switched to or who? Who do you recommend that we might do a little homework on as far as one of the big names in California that's still writing homeowners because we don't do as much property and casualty insurance at MoneyWise?

• 7:26Speaker 01

  So you know, you know, it's interesting. I'll throw this out here real quick. So just like you, I too have a history in education. And there is a California focused insurer called Cal Casualty. And they do home, auto and all that stuff and they focus on police, fire and educators. And because they kind of go to that population, I think there's maybe considered some lower levels of risk at insuring those folks. So we've always had really good rates through them and because they're called Cal Casualty, I hope they'll continue to write

• 8:00Speaker 01

  California casualty. We're not, we're no longer doing California. Well then what in the world are you guys doing? Anyways, long story short, I've been blessed because if you, if you, I used to be a teacher. So that was when we started that. And we've always kind of checked numbers and, and maybe there's someone else out there close, but as I've seen all these other insurers kind of leaving the state. We've been lucky, but again, if they're the last ones around and they raise their rates, crazy rates, well, I don't know what I'm going to be able to do. So hopefully.

• 8:27Speaker 02

  The military, USAA. And so you have to have family that's military? Okay. And Gronk, is Gronk still their spokesperson?

• 8:34Speaker 01

  He's trying, he's trying, I think he's going to have to try to marry somebody who's in the military.

• 8:39Speaker 02

  Is that how it works?

• 8:39Speaker 01

  Yeah.

• 8:39Speaker 00

  That's what I did.

• 8:41Speaker 01

  There you go.

• 8:41Speaker 02

  Right on.

• 8:42Speaker 01

  There you go.

• 8:42Speaker 00

  I got you on that one Gronk.

• 8:44Speaker 01

  Yeah.

• 8:45Speaker 00

  You might have the Super Bowls and the.

• 8:47Speaker 02

  If you can find the soundbite, yo soy fiesta from way back in the day. If you can find that, man, lunch is on me, Steven.

• 8:54Speaker 00

  I've seen what you eat for lunch. I don't think I want that.

• 8:58Speaker 02

  But I do, I do love that chili.

• 9:00Speaker 01

  There you go. Big headlines as far as economic stuff. Layoffs are down, but hiring is slowing down. So that's kind of one of the things that the economic data is showing. Companies are just quietly slowing hiring. They're not necessarily laying people off, but they're not necessarily bringing people on. So we need to see a lower layoffs and hiring to really be kind of in a boom for the economy. So that's why, you know, the feds, the last few times have lowered interest rates. Obviously Trump has mentioned wanting the rates to continue to come down, but we only want the feds to do things. If it warrants it based on what the feds are supposed to be doing to try to help our economy. Whether that be slow it down if things are moving too fast or speed things up.

• 9:42Speaker 01

  If things are coming to a standstill because we want to kind of take out the highs and the lows. Pain points of economic cycles. So that's what the feds mandate is. And so some of that stuff, consumer spending, they're still spending, but they are spending differently.

• 9:57Speaker 02

  Yep.

• 9:58Speaker 01

  So you're seeing kind of a shift in consumer spending, cutting back on the bigger items, which bigger items. TVs are still super cheap, so they still might be buying big TVs.

• 10:09Speaker 02

  Who said something yesterday in our meeting or how big is 70 inches, $200, something weird like that.

• 10:15Speaker 01

  Well, no, Sammy mentioned like a hundred and something inch TV is 900 bucks.

• 10:21Speaker 02

  Wow.

• 10:22Speaker 01

  120 inch TV or something at Costco or Sam's Club or something like that's $900.

• 10:26Speaker 02

  Remember my brother, you know, T-Bone, right?

• 10:28Speaker 01

  Yeah, T-Bone.

• 10:28Speaker 02

  I remember he got one of the first plasma TVs and this is back early 90s, early, late 90s. And it was like two, over 2,000 bucks back then. It was not very big.

• 10:38Speaker 01

  Yeah, it's crazy. It's crazy to see some technology have gotten cheaper and it's interesting to always look over that. So.

• 10:44Speaker 02

  You know, I've actually heard my brother used to be a manager over at Best Buy and he always told me, if you're going to buy a TV, wait until the Monday after the Super Bowl. Oh, yeah.

• 10:56Speaker 00

  He said tons of people will buy a bunch of TVs for the Super Bowl parties and then they immediately return them. So they have to sell the open box discount.

• 11:04Speaker 02

  That's so sketchy. That's so sketchy. We, we had a unnamed close family friend who would buy all kinds of decorations for her house and, and they were, they were well to do folks, you know, nice, you know, income was fine and she would keep the tags on everything and just cycle through and I just can't, I couldn't do that. It's, it's kind of sketchy.

• 11:24Speaker 00

  I don't even like to take a shirt back after I buy them. Like, man, babe, can you take this back when you go next time? But yeah, I, I couldn't do it, especially with the TV or something like that.

• 11:34Speaker 02

  Sometimes I think I'd rather, you know, go into a burning house to try to rescue a small cat than to return something. Is it just me? Like, I feel like I'm a, I'm a man's man, you know, I'm, I'll handle my business. But when it comes to that, dude?

• 11:48Speaker 00

  No, I can't.

• 11:49Speaker 01

  Well, you need to take a page out of some of the people's book at like Costco then.

• 11:54Speaker 02

  Oh, they just, they don't care.

• 11:55Speaker 01

  Cause you know, they've been walking in with something that they've been using for seven years.

• 11:58Speaker 02

  Yes, yeah.

• 11:59Speaker 01

  I'm not happy with this item. It's like, well, that's weird. You've been using it for seven years.

• 12:04Speaker 00

  Sammy has talked about it on this show.

• 12:06Speaker 01

  Yeah. Christmas trees, 30 days later.

• 12:09Speaker 00

  He'll talk about furniture and I'm like, man, you can't take furniture back. He said, yeah, Costco you can. You get a three or four year. I'm like, really?

• 12:16Speaker 02

  And that business model works for them because look at how big, every, every time you go into Costco, it's just people out the door.

• 12:23Speaker 00

  Yeah, they're not hurting.

• 12:24Speaker 02

  They're not hurting. And so it's just volume. It's kind of the same thing with the free returns for Amazon, man. Yeah, that's, they're successful.

• 12:30Speaker 01

  Yeah. I mean, they're giving, they're giving you back what you paid for it though, I imagine. So with inflation, they're making money because they're like, you bring back your used underwear. You paid $2 for them. Those same underwear now are six bucks. Go spend money in our store.

• 12:42Speaker 02

  There it is. Used undies.

• 12:44Speaker 01

  We'll give you back two bucks.

• 12:45Speaker 02

  You never know, man. You're just flipping through the dial right now and, and, and here we go. But.

• 12:49Speaker 01

  Well, there you go. So, uh, so yeah.

• 12:52Speaker 02

  Cutting back, it looks like on some of the big item purchases out there, uh, spending is still pretty solid on travel and food and experiences. But the bad news, credit card balances are continuing to keep higher.

• 13:04Speaker 01

  People are, people are threading the needle or bridging the, the spending issue with things getting more expensive. Unfortunately, uh, when you start to see credit card balances climb, it's not a good thing. Money's still being spent in our economy, which is good, but when it's being done on high interest, uh, debt, that's not a good thing. The big picture thing to take away, and I think you mentioned it earlier, Seth, is remembering right now, there's not panic sales going on. There's, there's money shifting around the markets and, and, and that's the real fancy word for that is sector rotation.

• 13:35Speaker 02

  Yep.

• 13:35Speaker 01

  Right? So, so money is maybe, maybe they've kind of gone, okay, maybe some of these tech stocks, maybe some of these things have kind of ran their course. And so some of the money, large money managers, mutual funds, all that money that's out there in Wall Street is shifting around a little bit from maybe the flashier fund stocks, uh, over to dividend paying, uh, value oriented stocks. And so sometimes there's a focus on what kind of stocks do you have in your portfolio? Value oriented or growth oriented and growth companies are not paying dividends. They're taking all their revenues and they're trying to continue to grow. Buy other companies, invest in technology, invest in growth.

• 14:15Speaker 01

  Value companies are trying to create impressive profit, pay dividends to stockholders. They're different types of stocks. So sometimes we simplify things down so much to say like, how much stock do you own? How much bond do you own? Well, not all stocks are created equal. Not all bonds are created equal. Some bonds, which are tend, tend to be kind of like the, the, the boring side of your portfolios. Some bonds are more risky than a lot of stocks, you know?

• 14:40Speaker 02

  They call them junk bonds and they're basically, uh, corporations with really weak financials. They're not very healthy financially.

• 14:47Speaker 01

  So to get your money, they have to pay super high interest.

• 14:50Speaker 02

  Super high interest.

• 14:51Speaker 01

  So you're getting a nine percent yield on that bond, but you're taking on huge amounts of risk because it's, it's, it's a little bit of a sketchier.

• 14:58Speaker 02

  It's the same with a, a young person getting a new credit card, or if you've had some mistakes with your credit history, you're, that's why they're charging you so much. It's not that they hate you, but you are a much higher risk because you've proven to be a higher risk. Or you don't have enough history.

• 15:10Speaker 01

  And speaking of credit cards, we had a great comment come in about question, uh, credit cards and interest rates. So we're going to jump into that. And another one that I'm so passionate about because it really hinges on everything we do here at MoneyWise as far as helping most folks plan for retirement, transition into retirement and live comfortably in retirement, which is pensions. And unfortunately, they're kind of going away. So we'll talk a little bit about pensions and what are they and who gets them and what, what does that mean for you and your family?

• 15:39Speaker 02

  There you go, Grant. Let's take a break. We'll be right back.

• 15:43Speaker 00

  Have you been putting off your finances? Seize the day. Call the MoneyWise office at 661-847-1000 or email [email protected] for more information.

• 16:09Speaker 01

  Welcome back. This is how we do it. This is the MoneyWise radio show and podcast. We are very, very happy to have you listening in or joining.

• 16:18Speaker 02

  Ninety-four?

• 16:19Speaker 01

  Podcast.

• 16:20Speaker 02

  Nineteen ninety-five, Steve.

• 16:23Speaker 01

  Which many years later, I was, I was blown away to find out that dude's like six foot seven. Did you know that?

• 16:29Speaker 02

  Big dog?

• 16:30Speaker 01

  Montell Jordan?

• 16:31Speaker 02

  That was Montell Jordan?

• 16:33Speaker 01

  Am I, am I tripping here?

• 16:35Speaker 02

  No, you're right. I think he says it in the song. That's what I said in the song. I'm standing six, seven.

• 16:43Speaker 01

  Does he say it in the song?

• 16:44Speaker 02

  Just flexing the height, right?

• 16:46Speaker 01

  You can tell I really listen to lyrics very intently.

• 16:49Speaker 02

  I'm just going to throw it out there because I find it interesting. If you could be, and this is good for the listeners too, if you could be any person, not just to, to want their money or anything, but physically, if you could be any person for a week, who would you want to be? I'll kick things off. Shaquille O'Neal. Just to be able to physically intimidate.

• 17:09Speaker 01

  You know what I mean?

• 17:10Speaker 02

  Yes. Yeah. And that was nineteen ninety-five. Four hundred now. It was ninety-five? Yeah. Nice.

• 17:15Speaker 01

  So Shaq, hmm.

• 17:16Speaker 02

  Shaq, who would you be and why? That's a tough one. I would want to be able to shake people's hands and just kind of bury their hand in mine? No?

• 17:27Speaker 01

  Dude, have you ever heard when somebody asked?

• 17:29Speaker 02

  It's me.

• 17:31Speaker 01

  Have you, have you seen the, uh, the interview with Wilt Chamberlain? When, uh, they were asking Wilt Chamberlain, like, you know, peak Wilt Chamberlain versus peak.

• 17:42Speaker 02

  Was he sitting in the big bed?

• 17:43Speaker 01

  Uh, well, it's basically this, they're, they're kind of the same type of guys, but the NBA, when Wilt Chamberlain was in it was not nearly as, as physical, but like he changed the game. Like Wilt Chamberlain, such a huge imposing powerhouse like guy and like he changed the game at that time. And he said, he goes, and dude, dude could bench almost 600 pounds. Wilt Chamberlain.

• 18:09Speaker 02

  Really?

• 18:10Speaker 01

  So he said, he goes, like, it's hard to say because like we were not playing basketball like, like Shaquille O'Neal played basketball. He goes, but I was benching almost 600 pounds. So he goes, if I had to go up against peak Shaquille O'Neal, he goes, I think I could have handled him, you know? Like it would have been an interesting, and they're both big old dudes and, and it would have been crazy to watch, but.

• 18:30Speaker 02

  I got something for your show that I, I want to be invited on to talk about. And it has to do with hand size.

• 18:38Speaker 01

  That sounds like a great.

• 18:39Speaker 02

  No, no, no.

• 18:40Speaker 00

  What kind of show you think we are doing?

• 18:41Speaker 02

  Listen carefully, listen carefully. Are they that?

• 18:44Speaker 01

  Tune in on Wednesday. We're talking about hand sizes.

• 18:47Speaker 02

  Are they that good? Are they that good? Or is it a function of their enormous hands? Top 10 largest hands in NBA history. See if any of these rattle a bell. Number 10, Wilt Chamberlain. Number nine, The Claw, Kawhi Leonard. It's his nickname, The Claw.

• 19:05Speaker 01

  Yeah.

• 19:06Speaker 02

  I don't know about this guy.

• 19:08Speaker 01

  Best laugh in the NBA also.

• 19:09Speaker 02

  Does this ring a bell? Number eight, you know, he used to drive like, what was it? Like a suburban or something? He'd signed his big contracts and he was still driving the same old, I love that. That's why we're talking about this personal finance. Number eight, Michael Jordan. Number seven, Dr. J, Julius Irving. I honestly don't know. Number six, Noah Volch, Volch.

• 19:30Speaker 01

  Yeah.

• 19:31Speaker 02

  So number five, Connie Hawkins, never heard of Greg Smith. Now, uh, number three, Giannis Antetokounmpo.

• 19:38Speaker 01

  Can I just throw out one thing?

• 19:40Speaker 02

  We're talking hand size?

• 19:41Speaker 01

  Yes, I'm going to throw out one thing. There's lots of people with humongous hands.

• 19:47Speaker 01

  That cannot handle a ball like Michael Jordan.

• 19:49Speaker 02

  Right.

• 19:49Speaker 01

  Is all I'm saying.

• 19:50Speaker 02

  Right.

• 19:50Speaker 01

  So I, I agree with you that like, there's no doubt that these dudes have monstrous hands, but there's lots of people that are seven feet tall or six foot eight. And you're like, you must've been in the NBA. Like, nope. Like, so I'm just saying.

• 20:04Speaker 02

  To counter your argument, tens of thousands of people have been in the NBA. These are the greats. So just.

• 20:10Speaker 01

  So you're saying, you're saying.

• 20:12Speaker 02

  Shaquille O'Neal's number two. Shaquille O'Neal's number two and number one. Boban Marjanovic. He's a decent center, but still.

• 20:18Speaker 00

  My new bull is not on there.

• 20:20Speaker 02

  Nope. No, sir.

• 20:22Speaker 01

  That's why.

• 20:22Speaker 02

  He was tallest.

• 20:23Speaker 01

  Yeah.

• 20:23Speaker 00

  Well, he was.

• 20:25Speaker 02

  Was.

• 20:25Speaker 00

  Was.

• 20:26Speaker 02

  Who's taller?

• 20:28Speaker 00

  I think Yao is taller.

• 20:30Speaker 02

  Yeah, I mean, that was a short-lived run.

• 20:32Speaker 00

  Yeah.

• 20:33Speaker 02

  How's the, how's the skinny spur doing, man? The tall, lanky guy? He's unbelievable.

• 20:38Speaker 00

  Continuing to grow.

• 20:39Speaker 02

  He's so big.

• 20:40Speaker 00

  They, they were, they did a special on him. He's grown like four inches this offseason. I'm like, okay, that's what happens when you draft him right out of high school.

• 20:49Speaker 01

  It's crazy. All right.

• 20:52Speaker 02

  Sorry, guys.

• 20:53Speaker 00

  Sorry, man.

• 20:55Speaker 02

  Let's get back on track, KP.

• 20:57Speaker 01

  Yeah.

• 20:58Speaker 02

  We're leading us astray, man.

• 20:59Speaker 01

  I apologize, listeners.

• 21:00Speaker 02

  I have to hand it to you for bringing us back on.

• 21:02Speaker 01

  Ay, ay, ay. All right. So I mentioned before we went to break that with all the, so here, great, great question. We were talking about interest rates. We're talking about credit cards a little bit because unfortunately we've seen credit card balances climb, which is what you start to see when things start to slow down or things get more expensive. Incomes aren't increasing at the same pace that, that goods and services are going up. You start to see those balances climb. With recent talk on credit card and credit interest, is there a website that you guys could suggest that shows the best, worst credit cards to apply for?

• 21:40Speaker 02

  Nerd Wallet's one of them.

• 21:42Speaker 01

  Nerd Wallet's probably the most commonly known one.

• 21:44Speaker 02

  Yep.

• 21:45Speaker 01

  And I believe there are some people that would say, don't do it.

• 21:50Speaker 02

  Yep.

• 21:51Speaker 01

  But there's nothing wrong with having a good credit card. If you are going to have a credit card, get the best interest rate possible. Nothing wrong with that. Credit card companies, remember, there's study after study that's been shown is that when you're using the credit card money versus your own money out of your debit card or your own money out of your wallet, you spend more money because it seems like it's funny money, like it's not real money. So you spend, you know, 10 to 20% more than you would if it was like money coming out of your wallet. Like you make different decisions when you're using a debit card or cash versus a credit card because the credit cards, oh, I'll just pay it off. Even if you pay it off at the end of the month, you're spending 10 to 20% more is what statistics show us. So just remember that. So

• 22:36Speaker 01

  even though you're not paying interest, which is a good thing, you're typically statistically, according to studies, spending 10 to 20% more. Yep. So just understand that.

• 22:45Speaker 02

  It's by design too. And they make the credit cards look really cool. They're metallic. Some are, you know, have have these nice reflective features.

• 22:52Speaker 01

  I actually bought mine because it could also be self-defense.

• 22:54Speaker 02

  If you need to, right? That's not a bad idea.

• 22:57Speaker 01

  Yeah, it's like a Chinese star almost.

• 22:58Speaker 02

  Guys, if you don't, if you don't believe us out there, I want you to do a test. I want you to go home tonight. If you happen to have a hundred dollar bill, set a credit card, just randomly, do this with your wife, your kids, whatever. Don't say anything. Set a credit card on the counter about a foot or two away, set a $100 bill and you tell me which one gets more attention. It's because money, we all know what it feels like, it smells like all of that, right? And it just, it's harder to give that up. But plastic credit card, just swipe.

• 23:25Speaker 01

  Yeah, you don't even have to swipe anymore.

• 23:28Speaker 02

  Because the app?

• 23:29Speaker 01

  You just touch it. You just touch it.

• 23:30Speaker 02

  Oh, yeah, yeah. Do the, do the touch deal.

• 23:32Speaker 01

  Whatever they call it.

• 23:33Speaker 02

  Chris, when do you think we're going cashless? If you had to guess, honestly?

• 23:36Speaker 01

  Well, I mean, it's, we're pretty close already. Like, I mean, there's so many merchants or vendors and stuff that are like, they don't even take cash, which I think would be illegal.

• 23:48Speaker 02

  Or they stopped printing pennies, I heard too. Or is that just locally that they're taking pennies out of circulation?

• 23:53Speaker 01

  Yeah, they, they created the last ones because we talked about on the show not that long ago that they like, the last ones minted sold for way above what they're technically worth as pennies, like millions of dollars, you know, like, say they created a million dollars worth of pennies and it sold for like four million dollars.

• 24:08Speaker 02

  Yeah.

• 24:09Speaker 01

  Because everybody wanted to have the last pennies ever created. So, yeah, pennies are out of circulation.

• 24:13Speaker 02

  It's meant to be.

• 24:14Speaker 01

  Ay yi yi, this gay and the dad jokes. Alright. Uh, so hopefully that just kind of reminds you on credit cards. It's a good place to go. Um, manage credit well. There's nothing wrong with that, but just remember some of those realities of credit cards. So try to be careful with those because we want everyone to be money wise.

• 24:31Speaker 02

  How much do they have in the bank? This is somebody that either has had credit card debt, trouble in the past, or they're just getting started. What do you say? Rule of thumb? Because this made me cringe a little reading the question because I just hope that this person is genuinely looking to build credit. They understand they have to pay it off at the end of every month. They should never have an outstanding credit card balance if possible. The majority of people, when I work with them and if they happen to do still have some credit card debt, I'll ask, you know, we're, we're putting my, putting information into our, uh, financial planning software. I say, okay, so you have this Best Buy card. What's the interest rate on that? And you just get kind of a confused look. You know what? I don't know. I've just never really, never really paid attention.

• 25:11Speaker 02

  Guys, look at your credit card statement. They do not make it easy to see, but by law it has to be on there. But I guarantee the majority of credit cards people are using regularly are 23 to 29.99%. It's, and it, it compounds daily.

• 25:27Speaker 01

  So even like the benefits you get from some credit cards, I tell people literally if you carry a balance on accident for one month, if you got benefits for a year, you usually will give all those benefits you got back in one month of carrying even a small balance. Uh, so anyways, just, just take that, you know, with a grain of salt, you know, we always say three to six month worth of, uh, savings. We also understand that that is not easy. We're sitting here talking about goods and services getting more expensive. Um, and wages not necessarily.

• 25:55Speaker 02

  Days is if they have one to two months, you feel a lot better.

• 25:57Speaker 01

  Anything, anything. It makes everything better. It's, it's financial stability. It's not greed. It's not whatever. And it's so hard. Once that money's sitting there, it's amazing how many things seem like emergencies. But once you have that money sitting there, once you have that, there are so many things that happen, then it's just a little bit of like, okay, if I had to, I'll use it, but you can really start to find creative ways to not even have to dip into it. And you just. Have that nest egg there. You have that little bit of emergency savings and you keep focusing on everything else. So Uh, good chat. Why don't we take a break? When we come back, we are going to talk about pensions because I think pensions are Um, sometimes uh, misunderstood pensions. Sometimes people think that that's synonymous with like a 401k.

• 26:41Speaker 01

  Uh, it all falls under like employer sponsored plans, but we'll talk a little bit about a pension or what is a pension, what it's not. Uh, how many people have them and uh, and uh, the great question that we had come in. So stick around. We'll be right back.

• 26:53Speaker 00

  Money Wise Wealth Management is the only locally owned independent firm that uses a comprehensive wealth tax and estate approach. Working closely with a highly trusted CPA and attorney. For information on how Money Wise can help you invest and plan for your future, call 661-847-1000.

• 27:20Speaker 01

  Welcome back to the Money Wise Show. You are what make the show great. So if you want to add to the conversation, add another comment or question. 661-396-1000. I'm just trying to find any reason to talk over Someone's singing.

• 27:39Speaker 01

  Welcome back. We're gonna uh, finishing up. By the way, we, we mentioned nerd wallet, nerd wallet. I did want to say bank rate is another Uh, really popular website where you can go do some of that stuff. Look up a lot of different bank rates, CD rates that are popular right now. You can look all kinds of different things up on bank rate. Um, just remember, uh, best card depends on how you use it. Rewards only matter if you pay it off because if not, you're giving All the way, the, the rewards back. Uh, don't carry a balance, uh, be cautious with teaser rates. Even um, 0% introductory rates, you pay a rate to move it over there. It may be advantageous, but um, I've seen people play that game before where you're moving things around a lot. Sometimes it might make sense. Just be careful because it's kind of one of those things.

• 28:23Speaker 01

  I kind of equate credit cards sometimes to Vegas, the house always wins, kind of a mentality. Um, you know, they're, they're not necessarily your friends, but I get it. Sometimes you gotta do what you gotta do, but just be very careful. We want our clients' money to be as effective and efficient as possible in making them money wise and setting them up for their future, which leads us into the next question, which I love. It is a topic that I've been talking about for, for 20 years, over 20 years now with my wife. Um, it says, a lot of folks around here don't have pensions anymore. How can someone build their own retirement paycheck? So they're not just relying on social security. Thank you and listening to the show now, Claudia. All right.

• 29:08Speaker 01

  It is a great question. Um, first off clarity, uh, when you're talking about a pension, some people refer to their 401k where they work as their pension, um, because some people do that. But I think what's being talked about right here is a pension in the sense of, uh, a dying offer that, that employers used to offer, which is a lifelong income stream. You used to, it used to be much, much more common that when you worked for a, a company for a number of years, there was a, you know, credit building, year building process where you were, you were gaining credits in a pension program. And based on what your pay was when you were working and how many years you worked there,

• 29:53Speaker 01

  when you quit working, they would pay you X amount of dollars the rest of your life. So, uh, you know, coming into this industry and studying all the testing and all this stuff 20 years ago, retirement planning used to be what they called a three-legged stool. Okay. There was social security. You had a little amount from social security. You had a company pension. So you, maybe it wasn't a huge amount, but you had a little bit coming in from company pension and then you had your own personal savings. So that three-legged stool altogether would replace your working income. You transition into retirement, you have social security, you have your personal savings and you have your company pension. Well, unfortunately, that's a dying offer for companies.

• 30:38Speaker 01

  As companies have tried to increase their profitability, increased their worth and their value, which like on the Wall Street, that's what you're wanting companies to do. But unfortunately, it's come at the expense of sometimes the American worker. So a lot of times the pension has basically been replaced with the 401k. And if you go out there into the wild, wild world of online and social media, and people have all these comments about the good and the bad and the ugly of 401ks, and it's the worst thing ever. And I would say, yeah, if every company out there could make great profits and offer every single employee pensions, that'd be great. But pensions can also blow up if a company blows up. And you were anticipating on getting $2,000 a month pension, and the company goes bankrupt.

• 31:22Speaker 01

  Well, a lot of times now you're only getting $100 a month when you thought you were going to get 2,000, because the company was mismanaged. So it wasn't perfect either. Okay, but a lot of people want to try to find a great job at a great company that offers a pension. And unfortunately, I wanted to share how rare that is anymore. Back in the 80s, about 40% of private companies offered a pension. So you go to get a job, you're getting out of college, or you're out of high school, and your uncle has a good job, or your dad has a great job, and get a good job here, it has a pension, you know. And so you might jump on board because of some of these factors. 40% of companies used to have a government pension, or, excuse me, not a government pension, but a pension.

• 32:02Speaker 01

  Now, back in 2022, 23, when they did a study on this Bureau of Labor Statistics, Bureau, right?

• 32:09Speaker 02

  Yep.

• 32:09Speaker 01

  Yep.

• 32:09Speaker 02

  Billis.

• 32:10Speaker 01

  15% now in the private sector offer a pension.

• 32:14Speaker 02

  Jeez.

• 32:15Speaker 01

  So, I mean, only about 1 in 10.

• 32:17Speaker 02

  And it's only the monster companies too, because they can afford to do it. They feel secure enough in how massive their workforce is.

• 32:23Speaker 01

  Yep. So some of the big names, ConocoPhillips, Boeing, Amgen, Philip Morris, Citigroup, they offer a pension. So these are some of these companies that are going out to the really great colleges, and maybe trying to get people to jump on board. They're trying to get great employees that are going to keep their company moving forward. Like you said, they may feel confident that, hey, if we keep hitting these numbers, we can offer a pension program. But even some of those big companies, if things start to Get tight, they may go in there and ax it. New hires don't get it anymore. Sorry, you get a 401k, you get a match.

• 32:55Speaker 02

  Can they do both, Chris? Can they have a pension and then also put money in?

• 32:58Speaker 01

  Yep, they can definitely do both. You can have a 401k with a match and a pension and that kind of a thing. And that's what I mean to say where if you don't have a pension, unfortunately, that means your retirement plan is your own. But this wonderful question that came in said, how do folks plan their own retirement paycheck, basically? Unfortunately, it's going to take a little bit harder work and planning. But one of the big things that you can do is start early because then one of the things that you have on your side is something called compound interest, right? It's this, what did Einstein say, the eighth wonder of the world or whatever? You know, it really truly works. If you start early and let your money start to be invested and keep it invested,

• 33:39Speaker 01

  your money starts to make money and the money that you made starts to make money and it starts to compound and it starts to take off. It takes a long time though. It takes 15 or 20 years. And unfortunately, most of us don't get serious until we're about 45 or 50 for retirement savings, which means we only have 15 years to retirement, which means most of us don't get to participate in compound interest. It doesn't mean that you still shouldn't save. It just means that you don't get that kind of wonder drug that is compound interest in your investments. So I did want to say that most of the pensions that we see nowadays and why people kind of pursue these jobs, you see them in government jobs, law enforcement, firefighting. You do see it a lot in manufacturing.

• 34:22Speaker 01

  So a lot of states might have a big manufacturing unions. They might still have pensions. So people have jobs that don't seem like the most sexy or exciting jobs and careers, but it pays decent and you get a pension. And so people go into those. Another one that you see a lot is utilities. So like Pacific Gas and Electric, which I don't even know if they offer it to new employees. But those are the types of jobs that sometimes will offer those. A utility company, they figure the utility company is going to be around for 30 years because people are going to need gas, they're going to need electric. So they try to get good employees jumping on board. You work for a company for 20, 30 years, you're going to have a 401k with a match plus. Possibly a pension as well. So those are pensions. They're going away. Back to the fact of the question, right?

• 35:08Speaker 01

  What can you do to prepare? You have to know your situation. Do you have a pension? If you don't, it is going to solely be based on you. Do you have access to a 401k? That's going to give you free money or match? Absolutely take advantage of it.

• 35:22Speaker 02

  Always take the free match. Some people just won't, or they, well, I'm going to sign up eventually. There's literally free money they're giving you. Just do the minimum 4%. If you can't afford to do 4%, you really need to question what you're spending your money on. That's free money they're giving you. So if they take 50 bucks out of your check, the company's giving you 50, 100 goes into your 401k. That's easy money.

• 35:45Speaker 01

  So basically, retirement planning or creating your own retirement paycheck, as Claudia mentioned, literally is saving and building up enough income or enough assets, enough savings, that you can then keep that invested and pull money out of that confidently to where you're not going to run out of money. You basically create your own pension. Now, it's good and bad because you can take out however much you want per month to where a pension program says you get X amount of dollars the rest of your life. You can usually choose to do it on you and your significant other's life. And so you might get a little bit of a smaller monthly amount.

• 36:24Speaker 02

  How does that work? What do you mean?

• 36:25Speaker 01

  So if something happens to you, you get a smaller amount monthly. But if something happens to you, the full amount continues to go to your spouse, right? So a lot of people will choose that benefit when it's a pension program. You don't have that choice when you're talking about having to build your own retirement nest egg and retirement paycheck. You have complete freedom. That's good, but it's also bad if you mismanage it. If you're pulling out too much money per month, if you take out too many large one-time distributions for this reason or that reason, you now are eating away at the principal that you should be using to create your own pension payment, your own retirement paycheck. So I love the verbiage there of what Claudia talked.

• 37:08Speaker 01

  Talked about of of creating your own retirement paycheck. I love that old, uh, it's not perfect, but that old, I think it was a Voya commercial or something years ago where there were people walking around and they were holding a number.

• 37:19Speaker 02

  Holding their number, yeah.

• 37:19Speaker 01

  What's your number? And it's like, there's truth in that because hey, if I have my, maybe if I have my mortgage paid off and I get my car paid off and I do these few different things and I had X amount of dollars in my investments. And I, and I'm pulling out this much money for the rest of my life, you can be pretty confident that you're not going to be at risk of running out of money, even if there's a couple of oopsies or a couple of medical emergencies or, or whatever it is. You can put together a confident retirement plan for yourself. Again, we can't use that G word of guarantee like here because you're taking on risk. But what you're saying is, hey, if the stock market and the economy continue to kind of plug along and I stick with a good disciplined investment strategy that's taking a strategic amount of risk.

• 38:04Speaker 01

  Not stupid risk, not well, uh, not Vegas, like people say. Like I'm wanting to hold some of these stocks that I think are going to be worth a lot more in 20 years. I need to keep those in my portfolio.

• 38:16Speaker 02

  And there, there are products, right? They don't fit for everybody, but there are products. Let's say you have, you retire, you have 500,000 in a 401k. There are some products where you can take not all of it, but a portion, say one or 200,000 and goes into an annuity. And it with the annuity is, does carry some guarantees backed by whatever company it is, but these can often be pushed pretty hard on people because they, they feed on people's fear. And so if you're considering an annuity, uh, please ask as many questions as you can. And you don't feel comfortable about it, don't do it. Cause once it's in there, Chris, you can't just get your money out without pretty serious.

• 38:53Speaker 01

  Yeah. Usually there's like a, there's a schedule that you have to keep the money in there for so long. And if you take it out before, then you're going to pay penalties. And the thing I'll say is, um, you know, here at Money Wise, like we're fee-based advisors, you know, so we, we, we, we talk to people about these options. Um, with an annuity, what you're basically doing is the risk of outliving your money. You're taking that risk of outliving your money and you're putting it over on an insurance company.

• 39:21Speaker 02

  You're insuring that income for the rest of your life, which some people, it works out so well for them.

• 39:26Speaker 01

  Right, and it can really make sense. Now, the caveat is you have to play by the insurance company's rules. Meaning, just like the pension. If you choose a pension or you have a pension from your, where you're working, you can't call the pension program and say, "Hey, I want to put a shop in my backyard. Can I have 30,000 bucks?" No, you can't. You get a monthly paycheck. There might even be a cost of living adjustment that adjusts a little bit with inflation, which is great if you do have a pension program that has that. But when you, when you go to like an annuity product or something like that, you kind of have to play by the insurance company's rules. They do basically create a pension program.

• 40:06Speaker 01

  But you, you then, you don't want to necessarily go in and say, "Well, give me 5,000 extra bucks this year. I want to go on vacation." Because what you're going to end up doing is you're going to be, end up impacting some of those different things. And then if you're not doing that, and all you're doing is what a lot of our clients are doing is a well diversified portfolio. There's a couple of different ways that we can structure investments for clients and really make sense of a, an investment strategy that's in our clients' risk profile and they kind of understand the risks that they're taking on. And they can have a lot of confidence that, "Hey, we're going to navigate through what the market does." You know, it's not, you know, it's not perfect and we can't use the word guaranteed. But if we strategically take on risk and we weather the storms, that you can take out X amount of dollars per month.

• 40:48Speaker 01

  Usually you can make some adjustments over time as things get more expensive. You can give yourself a quote unquote, "Cost of living increase over time." A lot of times that, that is what we are discussing with clients. Well, what if I do want to pull X amount of dollars out and do this with it? How much is that going to impact my monthly paycheck? Is it, should I not do that or is it okay to do that? Obviously, it's their money, but we're trying to help them understand what that retirement paycheck and how it would impact it.

• 41:14Speaker 02

  That's one of my favorite things about what we do and getting to work closely with you is, is we, we basically. If there's a kind of an option A or an option B with with a client's retirement plan, we educate our clients. Here's option A, the pros and the cons. Here's option B, the pros and the cons. We lay it at their feet. Ultimately, they make the decision. A lot of things that people don't consider with, say they take a pension at work. A lot of folks in the medical industry, for example, let's say someone has six, seven, eight hundred thousand in a plan and they can basically annuitize that, turn that into life, lifetime income. Now, while it's rare, what if the, let's say it's a female nurse and her husband,

• 41:56Speaker 02

  what if something happens to both of them a year into receiving those pension payments? A lot of people don't fully understand. A lot of times then all you, that money is gone.

• 42:05Speaker 01

  Right.

• 42:05Speaker 02

  Right? Versus had you done a rollover into an IRA, then you, you have a lot more control.

• 42:10Speaker 01

  And you get to leave all those money to your estate, to your beneficiaries, or to whoever you want to leave that money to. So definitely don't want to oversimplify that, but I would suggest, and one of the benefits of what you're talking about of working with an advisor that you trust, that you really truly like feel has your best interest in mind and is wanting to help you make the best decision for you, talk to an advisor. Obviously, that's what we do here. 661-847-1000. We'd love to talk to you. But, but yes, definitely make sure you're getting trusted advice so that you can think through those decisions because they do have lifelong impacts. If you, if you turn down a pension and roll your money out, you can't go back to the company six months later and, and ask for a redo. It's a decision that you make. That's why a lot of times you have to get, you have to get it

• 42:56Speaker 01

  notarized when you take it out and you turn that offer down because they're not wanting you to be able to come back and say somehow, some way you misunderstood what you were being offered.

• 43:04Speaker 02

  A great question came in, says, I mean, this is, this might be the best question of the year, to be quite honest with you guys. I mean, this is, this is amazing. Love the dad jokes. Keep them coming. When one hits, I'll steal it. Well, that, my hit rate is pretty low, so I don't know if you're gonna steal it.

• 43:22Speaker 01

  He or she is still waiting for one, I guess.

• 43:24Speaker 02

  This says, my wife hates my dad jokes. My question, I was a high school teacher, guys, so I literally had a book of them and used them daily. Anyway, my question, I've got some student loans and normal bills, but I keep hearing I should be investing early. What's a realistic way to start without feeling broke all the time? Great question. Chris, what's your take? And then I'll chime in.

• 43:44Speaker 01

  Yeah, I mean, I think that's one of the hard things is coming up with realistic expectations or realistic goals where you leave a little bit of wiggle room for for life and that I am like the whole thing of like time, time goes away and you have kids and you have things that you want to do, but everything feels like such a sacrifice at first, but once it starts to become common practice. So start with whatever you think you can. It's not, everything's going to be a sacrifice at first because obviously, right now, you're spending that hundred dollars or you're spending that $200 on something that that seems important enough to spend it on, right? So whenever you choose to finally start doing that hundred or $200 or whatever.

• 44:29Speaker 01

  If depending on your situation, a common goal, and when you say start early, I tell people if you start super early and you can get to where you're doing five to 10% of your pay. You're, you're going to make headwind on being in a great spot when you get into your 60s.

• 44:49Speaker 02

  The major goal, the, the golden number is 15%. If you can save 15% of your income, some into retirement and some in some regular investing or savings, whatever, you're going to be, you're going to have more money than all your friends in the end. Not that it's all about money, but that really is the way to go. Definitely make sure you have an emergency fund set up and take first step, take that free money. If whatever company you're working for, if they offer you that 401k, just start there. Say it's 4%, start with the 4% and get going that way. Great. Great question.

• 45:21Speaker 01

  Yeah. And, and like I said, I mean, we've all been there and, and taking that first step can, can be super difficult, but just start as much as possible. That's why like, you know, we do, we are fans like of the Dave Ramsey process where

• 45:35Speaker 02

  Thousand bucks is baby step one.

• 45:37Speaker 01

  Thousand bucks over an account. So then as you start to trim back your savings and maybe starting to dedicate some over to investments or a savings account or whatever, you have a little bit of wiggle room. You have a little bit of an account that you can go to if, if things get tight because say if you were going to start doing it out of your paycheck into a company sponsored plan. It's not like just in a savings account that you can go to. And that's why having that thousand bucks set to the side is good.

• 46:01Speaker 02

  I'm going to nickname this listener dad joke. And so my advice for dad joke too would be. Probably stay out, stay away from the internet for a while. Get a couple of really good books on investing and on investing strategies and how to get started early. Learn that way. Go online yourself, mess around with a few different calculators. And then once you realize, wow, man, a Roth IRA might be the best for me. Research what a Roth IRA is. The problem with going to TikTok, becoming TikTok educated is they usually have something they're trying to sell you. If you go old school and you buy a book or a used book on amazon.com, you know, you get really good used books on Amazon, then they've already sold you. You've bought their book, right? So they don't necessarily have a, a, a, a sales pitch coming, which that's usually what I see from most of these YouTube videos.

• 46:43Speaker 01

  I wonder if Amazon has ever thought about selling books online?

• 46:45Speaker 02

  That's how they got going, right? Isn't that, isn't that so funny? I literally did that. I joked about the fact that you can buy used books on Amazon when if you didn't know, listeners, that's how they started back in the day. If only Blockbuster would have done the same thing. Any radio listeners remember Mad Men video out there? Chris, do you remember Mad Men?

• 47:02Speaker 01

  I don't.

• 47:03Speaker 02

  Okay. Well, there it is.

• 47:05Speaker 01

  Hey, uh, so I guess there's a football game on Sunday.

• 47:08Speaker 02

  That's right.

• 47:10Speaker 01

  So we've talked a little bit about gambling and, and betting and, and all those things. And so have you seen the numbers of what they expect Americans to throw out there for betting?

• 47:22Speaker 02

  I have not.

• 47:22Speaker 01

  For this Sunday? 1.76 billion dollars with a B.

• 47:31Speaker 02

  Come on. I wanna, I wanna just throw it out there, guys. If you haven't heard, I heard about this just the other day. If you want, uh, I, my family and I will probably be turning to the, uh, Turning Point USA halftime show. It's not the best headliners, if you will, but it's, uh, geared around, uh, loving our country and all those different things. So if you want an alternative to what they're gonna show you, it's also a little more clean, less scantily clad women.

• 47:58Speaker 01

  There you go. But back to this, 1.76 billion dollars wagered on this weekend's Super Bowl is what they're anticipating, which will be nearly a 27% increase from last year. Continued growth and strength of legal, state and tribal regulated sports betting. Crazy as a financial advisor, probably not the best use of your money. Hey, thanks for making Money Wise what it is. Be smart, be safe, be money wise.

• 48:29Speaker 03

  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.