#247 – Retire with Confidence: Tackle Inflation, Family Planning, and Staying Calm in a Noisy Market

Wes Moss [00:00:50]:
Wes Moss here in studio with Christa DiBiase. Thank you for being here, Christa.

Christa DiBiase [00:00:55]:
Feels like we’re kind of on a roller coaster right now with the stock market and everything. And today you’re going to talk about a couple of things that are affecting us a lot. That, and then inflation. Right?

Wes Moss [00:01:07]:
Inflation. Sounds like we need to talk about inflation. We’ve. I don’t think we’ve done a segment around that. It’s always around us. And it’s scary, but it’s necessary. So we’ll talk about that too. But.

Wes Moss [00:01:19]:
Okay, but maybe we just start with the market. And I was watching. I didn’t watch this whole movie, but for some reason it was on. I don’t know if it was Netflix or one of the many subscription video on demand apps on our television. And the movie was Brother, Where Art Thou? Have you ever seen it?

Christa DiBiase [00:01:37]:
I have not seen that one.

Wes Moss [00:01:39]:
It’s. I wouldn’t. I’m not going to say it’s George Clooney’s finest role, but he’s kind of the main guy in it. And there’s this kind of hapless group of. He’s part of this kind of hapless group of guys going around. And I don’t remember exactly what they’re trying to do, but they’re walking on this riverbank. And I think I remember this because of the song is so powerful in this. And I think I had the Brother Where Art Thou? Soundtrack.

Wes Moss [00:02:03]:
And this goes back to the song of safety that comes from sirens, as in this alluring song that might lead you astray. Just like in the movie Brother, Where Art Thou, these guys are walking down the riverbank and there’s these three women kind of rise out of the water and they sing this magical, magically seductive, alluring song. It’s like, wait a minute. Oh, wow. And the actual Singers, they’re not in the movie, but it’s Allison Krause and he’s a phenomenal singer. And I think Gillian Welch and Emmylou Harris. So they’re like the most beautiful country voices of all time. And this is this song.

Wes Moss [00:02:44]:
And they are sirens. And what happens is these three, call them hapless guys that are on this adventure end up kind of ending up down by the riverbank. They end up getting pass out. They wake up dazed and confused. One of their buddies is missing. I think Pete is gone. And they listen to the song of the sirens, which is kind of, it seems like a good idea, but you end up in a bad spot. And I think that’s what happens when we go through market turmoil and there’s been a lot of market turmoil in 2025.

Wes Moss [00:03:19]:
I mean, you cannot go more than five minutes. If you’re watching the news, which I don’t always recommend, always watching the news. You’re going to have heard about tariffs and tariffs and tariffs. And the stock market’s been reacting like a roller coaster. And there’s been some real fear created in 2025. We’ve got a couple really placid years in the stock market, some really strong gains, not a lot of big pullbacks. But 2025, we’ve seen that. So what happens is that when we go into these tougher times and they get a little scared and we’re worried about the economy, we’re worried about the stock market, that siren song of come to safety really starts to be louder and louder.

Wes Moss [00:03:58]:
And that song of safety is, hey, just sit this thing out and go into, just wait this whole thing out in cash. And we don’t necessarily think as investors, we don’t always think of it as well, maybe I’ll have some cash. It’s really. We naturally go to, I just want to protect everything. I want to just make everything safe. Because this whole safety thing sounds really good right now. And it’s just the human emotion that drives us. And that’s why we’ve seen.

Wes Moss [00:04:26]:
And there’s been multiple reports throughout the year. And I’m sure this is only going to be exacerbated as the tariff worries kind of accelerate. More and more people are taking money out of just regular balance. Yes, they’re taking money out of stocks and putting in them to money markets or cash. They’re also taking out balanced accounts or target date funds have been. We’ve seen money pulled out of even a balanced account and just go to cash. And that feels okay for the really Short run. But what happens is when we listen to that song and it says, well, a, the world is scary.

Wes Moss [00:05:00]:
Go to cash. B, hey, this time is different is another real theme in that song, and that is what makes every correction characteristically scary, is that the sirens are saying, go to safety. And they’re also saying, because this time it’s different and this time it’s worse than ever and this thing is going to be harder to come back from. And we just naturally extrapolate to, wait a minute, maybe they’re right. Maybe, maybe they’re right. So maybe it would feel good to go to cash. And it does feel good. Cash.

Wes Moss [00:05:29]:
The problem is that markets inevitably recover, or they at least have in the past. There’s no guarantee of that. But the American economy figures a way out to kind of move forward, and then markets recover. In fact, a lot of the best days in the market we see biggest gains usually come right around the biggest losses. So it’s fear. Wait a minute, it’s not that bad. And sitting anything out ends up really having our money stagnant. And then we don’t build wealth.

Wes Moss [00:05:57]:
And here’s how I think we avoid those sirens and avoid that allure to just go to cash and keep everything in safety. 1. And hopefully, I think a lot of our listeners probably have the following. One, if you have some sort of plan, remember your financial plan is not predicated on the market steadily and perfectly going up every year. It’s just not part of financial planning is the understanding that markets do go up and down and there is volatility. So if you have a plan, I think it helps you avoid the riverbank here and avoid the song of the sirens. Number two, you’re already diversified. Because if you’re listening to this show, you’re probably not like a hedge fund that went all in on one specific sector, didn’t get all in on a few stocks that were doing really well, only to have that unravel so quickly that you see really big losses.

Wes Moss [00:06:47]:
So that just simple diversification really goes a long way to helping you avoid that alluring song that ends up putting you into cash missing out on markets. And then three, I think it’s always a good reminder, corrections are really normal. They are a fundamental part of the market, really. Without them, you wouldn’t have the average 10, 9, 10, 11% rate of return we’ve seen. There’s really no asset that’s just a nice easy guarantee walk in the park to have that bigger rate of return. So along with these great returns we see over time, naturally, comes some volatility and a little bit of pain. Otherwise everyone would participate. So this time, even though the situation every time is different and the market goes down for a new reason, it’s not different fundamentally because markets do eventually recover.

Wes Moss [00:07:41]:
So the siren’s job is to shake you out of the market, scare you. And we just have to remember the long term of the market. If you go back to the dot to the year 2000, right after dot com, the the S&P 500 was at 1400. 1400. Here we are today around 5500. That’s an incredible more than double, more than tripling of the market over that period of time with lots of ups and downs. So we should remember that. And we have to stay patient and participate.

Wes Moss [00:08:15]:
And that’s how we build wealth. And it’s. We’ve got to be able to cover our ears to not listen to that song of safety that’s sung by the sirens because they’re there to make sure you don’t grow your wealth over time.

Christa DiBiase [00:08:28]:
All right, well, we have some questions and of course you’re going to have some related ones with everything going on. This came in from Catherine in North Carolina. Hi, Wes. I’m really enjoying Ask WES Moss. I’m 55 and my husband is 56. I would like to retire this year, but with the recent market downturn, my husband is reluctant to stop working. We’re 100% in equities and stock. We should have shifted to a less aggressive portfolio sooner.

Christa DiBiase [00:08:56]:
We had about $2 million in retirement assets earlier this year. We were advised to start shifting about 20% to cash money market. Right now we only have 41k in cash. My husband can’t bring himself to sell stocks at a loss to convert to cash. Therefore, he thinks he needs to keep working and wait for the market to recover next. I have a pension that I’m eligible to draw on this year with different options. $1,600 per month for life or $3,000 until age 62. Then it decreases to $800 or $3,000 until age 65.

Christa DiBiase [00:09:32]:
Then it decreases to 250. My pension is not adjusted for inflation. An advisor said we’re okay to retire and we could withdraw more than 4% using guardrails. Our living expenses are around 60 to 70,000 a year. We would like to spend more time traveling, home improvements, et cetera. I plan on working part time, which will bring in about 25 to 30k a year. I would love to hear your opinion.

Wes Moss [00:09:58]:
Whoa. Katherine in North Carolina There’s a lot there and a couple of things. So right out of the gate, it makes me think, as I’m kind of taking some notes here as you’re reading this through Christa Katherine’s 55. So you guys are young, they’re really young. And it sounds like you’ve getting to that 2 million number when you’re doing some planning. That number works for you guys. And remember if that works for you, just like we were saying earlier, financial plans are not predicated on a perfect straight line as these assets going up. So a financial plan knows that you’re going to have these big gifts.

Wes Moss [00:10:32]:
The only catch to that, and this is, I think what you were trying to accomplish by having some balance, is that you don’t want to go into retirement 100% in equities for this exact reason. Because then you get, you almost get beholden. You become kind of a prisoner of how well the market does. I mean, you’re trying to plan your life in the next 30 years, 40 years, the market could care less about your plans. So the market says, oh, wow, we’re down 20% or 50 years. Your assets are down from what, 2 million down to 1.8. They could go to 1.7, 1.6, depending on how big of a correction we have. And then now all of a sudden you’re totally beholden to that and the market just says, oh, sorry, you were supposed to retire.

Wes Moss [00:11:18]:
And now those numbers just don’t work anymore. That’s why you really do need that balance going in. And that’s why having 30 or 40% or even 50% now, you’re, I think you’re pretty young to have 50% in safety assets. But even having a couple years worth of dry powder and thinking about your spending need of 70,000, you’re going to be making 25. So you really only have a need of 50,000. Three years of dry powder is $150,000. So on 2 million, that’s only a 7 or 8% weighting towards that. So it’s almost as you started to get some balance, this market didn’t cooperate.

Wes Moss [00:11:59]:
I would lean towards the following. Your husband, I think his instinct is similar to what my instinct would be, which is, hey, we planned on having about 2 million. And it’s not just the number, but also a diversified 2 million where a big or at least some significant portion of it is in safety. So if I were Catherine, I would probably say, hey, let’s just postpone this. Let’s keep working, keep saving and allow the market to recover. You don’t want to go right into retirement in the middle of kind of economic turmoil. If you haven’t already had balance, balance would have solved for this, but you got caught a little quickly here or just a little bit too late. So I like the idea of just working a little while.

Wes Moss [00:12:41]:
It gives time for the market to recover, save a little bit more. Then I think you’re in good shape. If I think about the bigger picture spending numbers, and I did some math here. On the low, you’ve got this low pension amount that goes forever, something like sixteen fifty dollars for the rest of your life. And then you have these tricky options of $3,000 or $3,500 until 62 and then the number goes down or till 65 and the number goes way down. Really depends on how long you live. If think about it, if you’re only planning for the next 10 years, just take the highest number that lasts for seven to 10 years. But if you’re going to live till 90 and you’re trying to have some longer term protection, that lower number times call it 30 or 35 years to get to 90, that of the options that you cited has the largest amount of cash that’s given to you, even if you adjusted for inflation.

Wes Moss [00:13:36]:
So it’s got the highest net present value as well. I think that’s the choice you have to make if you think you’re going to be living into your mid-80s or 90s. I wouldn’t discount that option one, which was the lower amount, but it lasts forever. The last piece of the equation here, from what I can tell, even if I inflate your spending to 80 and you’re going to have Social Security and call it 10 years or so of call it 50 between you and your husband, that covers most of the spending and the gap is only $30,000. Let’s call it $40,000. Well, even if your portfolio only gets back to $2 million, $40,000 on 2 million per year, it’s a super low withdrawal rate. It’s like a 2% withdrawal rate. And then that’s probably why you guys are thinking about retiring so early already.

Wes Moss [00:14:27]:
Is that your withdrawal need? If you really start doing the math, it’s pretty low on a percentage basis. And that’s an awesome place to be when you head into retirement. So I think you’re really close anyway, if it were me, you hadn’t quite finished your retirement and investment planning because you really want a diversified portfolio. By the time you start having to pull a little bit from It So maybe work a little longer. I think your withdrawal rates in a super safe place. And I can’t answer all the questions perfectly here, but I think that gives you at least. I think I’m giving you my opinion on most of these. Don’t discount that lower option that lasts for life.

Christa DiBiase [00:15:04]:
I would just add in a little something. If you do keep working, your husband keeps working. Don’t put off the home improvements and travel. I mean, while you have the higher income, maybe now is the time to do some of those things because people put off travel and things like that until they’re older. And sometimes it becomes harder when we get older too.

Wes Moss [00:15:22]:
So the last thing you want to do. I’ve actually done research on this, Christa, where the home improvements are and renovate. Here’s one retirement. I would say this is a. This is like a more than a pothole. This is like one of those jungle traps that you’re running along and you fall through. And there’s a bunch of bamboo spikes here. It’s called a renovation.

Christa DiBiase [00:15:47]:
Oh, yeah.

Wes Moss [00:15:48]:
In retirement, that is the worst possible thing you can do after you’ve stopped working. If you’re going to do housework and it’s going to be kitchen and bath, which you think you have a budget, well, it never works out exactly that way. It can bleed higher and more expensive. So happy retirees, one of the things that they know to do is take care of the bigger costs while you’re still working.

Christa DiBiase [00:16:13]:
All right, we’ll go to another question from Roger in Connecticut. Hi, Wes. I often hear advisors, in my opinion, overly pushing Roth and Roth conversions. Don’t get me wrong, I’m all for Roths. We’ve personally done Roth conversions. But I cringe when I hear advisors talking about converting over time everything to Roth. I think it’s better to have a balance of Roth and tax deferred accounts. If you converted everything, you would be at least throwing away the standard deduction and low first brackets.

Christa DiBiase [00:16:40]:
Also, to qualify for ACA insurance, you need some income or you would need to go on Medicaid. With a balance of Roth and tax deferred money, you can choose your tax bracket and have a lot of flexibility. Beyond my own finances, should we be lucky enough to have excess money, I can QCD some qualified money into charity of my choice, avoiding tax completely. In my opinion, Roth and Roth conversions are awesome, but you should never convert at all. Am I wrong? And if so, how am I wrong?

Wes Moss [00:17:07]:
Roger, you’re becoming like a Jedi Knight when it comes to managing your Tax bracket. And I love hearing that. I think part of it is just to get heard sometimes in financial media. Roger, you got to take a really strong position. You know, there’s people that I’ve interviewed on my show that write books about Roth conversions, and they write an entire book about why it’s the only option you should ever consider. And the real world is it’s really rarely ever like that. Sure. Having money in a Roth, of course, we know, is great because it’s tax free.

Wes Moss [00:17:40]:
Money grows tax free, comes out tax free. But there’s a really high cost to put money into a Roth, and you are throwing away some things. You brought up a couple good points. If you have zero income, then you’re right. First of all, you don’t need income to pay for a supplemental plan or a healthcare plan. You can be on ACA Healthcare. As long as you can pay for it, you can be on it. But if you have zero income, and that’s hard to do too, because you’re going to at some point have Social Security, you have zero income, then you do run the risk of ending up looking at Medicaid.

Wes Moss [00:18:15]:
So I think that being able to control your income, having a regular IRA can help with that. Now, I don’t think you need to manufacture your income because there’s going to be enough in retirement with Social that you’re not going to have zero income. The second part is that the two things that really stand out is, look, when you’re managing your tax bracket, the standard deduction does work. Now, this is going to be different for everybody. Consult your CPA for your particular situation. I’m not a cpa, but I’m always looking at my tax brackets. And I have definitely known families that I’ve worked with. Let’s say somebody was in a student year or have very little income, they were way away from Social Security.

Wes Moss [00:18:56]:
The standard deduction helped them do a Roth conversion. So you’re right in a lot, in a big sense that that standard deduction kind of gets wasted if you have zero income. And you can utilize that if you keep your tax brackets really low to even do future Roth conversions, because you can utilize that. The other piece here is, if you’re charitably minded, the QCD, the qualified charitable deduction that you can start at 70 and a half from your regular IRA, that goes away if there’s no IRA money. So you don’t want to imagine the amount of money you’re. You’re saving by doing a charitable gift from your ira because you don’t pay taxes on that. Everything’s in a Roth. You’ve kind of guaranteed that you’re going to pay taxes on the money to get it into the Roth and then you’re giving the money away.

Wes Moss [00:19:47]:
So just for that reason alone, you may want to keep some regular IRA money if you’re charitably inclined, and you’re going to give away dollars after age 70 and a half. So, short answer, you’re not wrong at all. Roth is great, but the balance here absolutely can work for you long term.

Christa DiBiase [00:20:06]:
All right. And when we get back, you’re going to help us understand inflation, which has been frustrating so many people.

Wes Moss [00:20:13]:
So frustrating. Are you facing a fork in the road and deciding between continuing your career and retirement? I’m Wes Moss, host of Money Matters, and this massive life decision shouldn’t be taken lightly. Talk with my team. If you’d like help reviewing your retirement accounts and building a financial plan. We can help you review options and offer an opinion based on your best interests. You can find us@yourwealth.com that’s y o u r wealth.com we’re going to get into a controversial topic and it’s called inflation. And we all know about it, we all think about it. I just remember the last couple of years, I do a radio show in Atlanta called Money Matters.

Wes Moss [00:21:01]:
And at some point I think we started calling inflation matters because that’s. It was the only topic. Inflation, inflation, inflation. So I want to talk here for a minute about how to beat inflation, how to think about inflation, and how to protect yourself from inflation when it comes to retirement. So first of all, we had this long stretch where we didn’t really worry about inflation. We had about a 10, 11 year stretch after the great financial crisis where we had really low inflation because we had a rough, not a great economy, but it lasted for a really long time. You can call it globalization or whatever. The, there’s a lot of reasons for it.

Wes Moss [00:21:38]:
And we almost forgot that inflation was a problem. And it was, it was almost, it was so mild. I think even in 09, we actually had one year of deflation. Prices went down about a half a percent for just that one year. And then we had a bunch of years where it was one, one and a third, one and a quarter. I think this also manifested when it came to Social Security. You know, we had big inflation back in 2022 and 23 and people got big raises for Social Security. And it was because we had big inflation and people had forgotten that their Social Security was even tied to inflation because we.

Wes Moss [00:22:15]:
You didn’t Even notice a 1.1% bump in your Social Security check. Right. It was just. We just got lulled to sleep for almost a decade that there was almost no inflation. There was. It was actually below what the Federal Reserve even. Even wants. Which brings me to the point that inflation is absolutely necessary.

Wes Moss [00:22:33]:
It’s almost like an ingredient. It’s like salt. Right? If you’re the right, a little bit of salt in a biscuit makes for a great biscuit. A little bit of salt in a stew makes for an amazing stew. Without it, like, remember we used to have wars over salt. It’s a big deal. But the minute you dump salt into a stew or into a biscuit, it ruins everything. So it’s an ingredient we want to manage.

Wes Moss [00:22:53]:
And that’s exactly what the Federal Reserve does. They don’t have a target of zero inflation. They have a target of 2% inflation. Because if you have steadily rising prices, but in a manageable way, their mandate is actually the way they say it is, price stability. But it’s price stability at 2% every year. And it kind of has this gentle nudge for all of us to go out and spend because we know that things are going up in price. We’re not rushing to the store to get avocados because we think they’re going to go up by 2% over the course of the year. But we have this general sense of things get a little bit more expensive.

Wes Moss [00:23:33]:
So it’s very healthy for the economy to have this pinch of inflation. Now, as another example, and I’m not going to say this is a good thing, but we see if you go back to the beginning of 2025, the tariff worries of, hey, wait a minute, I think prices are going to jump a lot for XYZ car. We saw sales for cars go through the roof because people were trying to get ahead of the inflation. Just as an example, it motivates us to go spend today. So it’s a really good thing to have. We just don’t want a salt block in our stew. It kind of ruins everything. So.

Wes Moss [00:24:07]:
So we need it. It’s also back in the vernacular in America. We investors who didn’t talk about it for a really long time and forgot about it. The reality here is that even at a 2, 2 and a quarter, 2.5% inflation rate, it wilts the purchasing power by 20, 30, 40%, depending on how long your retirement is. And I think of it through. Go. Go back to a car example. If you only had dollars for specific items.

Wes Moss [00:24:36]:
Imagine if you only had a wallet for food. So you had food dollars and you had gasoline dollars and you had car dollars and you had, and if you let’s, you go back to 2000 and I don’t know the exact date here, but I think let’s go back to. I don’t have my glasses here, Christa. I cannot see 2020. And I think about where inflation was for cars. And again we had had, really, we had almost, we had a decade of car prices not going up, actually went down a little bit. If I had $30,000 in my car wallet and I was eyeing, let’s say a entry level Lexus, that’s a happy retiree car. So I use that.

Wes Moss [00:25:16]:
If I waited for two years. Imagine we’re talking about dollars in your wallet. They’re not invested in anything. They’re actual, it’s in your car wallet now two years later because of all the supply chain disruptions in the pandemic. Now that same car went from 30 to 40 mm, but your wallet still only has 30 grand in it. So your car dollars, they didn’t change, but they became way less affected. They, they essentially wilted by 25%. And that happened.

Wes Moss [00:25:50]:
Now that was a rapid example. We had big inflation in just a two year period, but it happens to almost every category and it happens pervasively over time. So I want us to remember that it’s a part of the equation. It’s not as though we didn’t have inflation. Now we hadn’ inflation. We’re going to go back to no inflation. That’s not the case. It’s, it’s always there.

Wes Moss [00:26:13]:
It’s part of the Fed’s mandate. So what do we do? The very simple answer is you have to invest your assets in areas that inflate along with inflation. Your main quarterback for this, probably the best historical example of something has given us a rate of return above the rate of inflation. So remember, if stocks are up 10%, inflation up 3, your real rate of return is only 7. So the main quarterback in being able to fight and get a rate of return above inflation has been historically broadly diversified equities. I think of it in terms of categories to see how that works. Why do stocks protect us from inflation? Think about these sectors like healthcare, think about sectors of utilities. As their cost goes up, they pass it on to you and we just have to keep paying more as consumers.

Wes Moss [00:27:07]:
That goes back into earnings. Companies now have more money because they’ve passed on the price to us. Well, we can now be the beneficial owner of that company that continues to have more earnings because they’re inflating their prices along with inflation. Potato chip company. If you’re making potato chips and potatoes become 10% more expensive and now your end chip costs 10% more, what do you do? That little yellow bag of potato chips is just 10% higher. And if you don’t own the potato chip company, then you’ve now been hit from inflation with no sort of recourse. So we’ve got to own the potato chip company, if that makes sense. And we’ve got to own a broadly diversified basket of companies that are able to inflate their prices along with inflation.

Wes Moss [00:27:53]:
And we’ve got to be the owner of those companies to benefit from that. And that’s how we protect. So stocks are your main quarterback. I would put real estate into that same category. That’s been very effective to hedge against inflation. And I think about there’s a recent billionaire list. I don’t know. Have you seen this? No.

Wes Moss [00:28:08]:
Bruce Springsteen is on the list.

Christa DiBiase [00:28:10]:
Okay, The Boss.

Wes Moss [00:28:11]:
The Boss is on the list. He’s a billionaire.

Christa DiBiase [00:28:14]:
Wow.

Wes Moss [00:28:15]:
Arnold Schwarzenegger is on the list. How did he get to be a billionaire? You think his royalties from those hit movies like Terminators, Terminators franchise. Do you think that really got him there?

Christa DiBiase [00:28:28]:
No.

Wes Moss [00:28:29]:
Supposedly back when he was Mr. Universe got a little bit of Mr. Universe money. What did he do with it? He bought California real estate way back in the 70s. So the path to being a billionaire is not saving, it’s about investing. And I don’t know the exact properties he bought, but I think he bought a lot of it and it’s worth a ton of money today. And that inflated along with inflation for that 40 year period. So real estate does that.

Wes Moss [00:28:55]:
And then I would say more of your defensive line. This is not high powered offense, but owning bonds at least can keep you pace with inflation and maybe a little bit of a real rate of return. So if inflation is 3 and bonds are paying you 4 and a half, you’re not only keeping up with inflation, but you have a little bit of a real rate of return above that. So collectively you’ve got your quarterback that stocks and real estate. You’ve got your defensive line called that fixed income or bonds. And collectively that grouping should keep us ahead of inflation because we own assets that inflate along with inflation and it’s not going away.

Christa DiBiase [00:29:34]:
Okay, let’s go to questions. Cal in Georgia wrote in with this one. I’m 28, married with two kids and my wife and I max out our Roth IRAs and contribute 15% of our income to 401ks. My parents recently retired early, but my siblings and I are concerned that they didn’t account enough for inflation and may run out of money in their 70s or 80s. We want to set up a long term family savings or brokerage account that we can all contribute to over the next 15 to 20 years. This would create a safety net in case they need financial help later, which could also be when my kids are starting college. What’s the best way to structure something like this? Should we use a joint investment account, trust or something else? Any advice on the managing contributions, investments and tax implications would be greatly appreciated. I just have to say, wow.

Christa DiBiase [00:30:25]:
Most people would not think of doing this for their parents and re have the, the foresight to, you know, realize this could be a huge problem.

Wes Moss [00:30:33]:
It’s pretty cool. It’s, it’s interesting though, you know, Cal’s 28. You’re in Cal, you’re now making some good money or you’re maxing out some of your retirement plans and you’re thinking about your folks, who sounds like they retired early but without a lot of money. So I don’t, I don’t understand that one. But I’m all for retiring sooner. But if we don’t have the money to do it, then really is going to be the burden would be on the kids to help. And which is cool that he’s able to do that. And he’s got siblings through it.

Wes Moss [00:31:02]:
So you’ve got multiple people that are able to contribute to this. So naturally he’s thinking, okay, well let’s open up an account, let’s all put money in and it’ll grow over time. It’s a safety net. And I’m just going to assume, I don’t think Cal said how many siblings he had, but I’m going to assume I’m from a family of four. I’ll assume he has two siblings. So you have three people to try to help with the safety net. Cal has two kids. And the way I think about this is that in 10 years Cal’s kids are going to be in, they’re going to be in middle school or high school, middle school.

Wes Moss [00:31:38]:
And then Cal’s sister’s gonna have kids that are middle school and high school, and then his brother’s gonna have kids in middle school and high school. And one of them is gonna say, I want my kids to go to private school. So I don’t have enough money right now to Contribute to the joint account for mom and dad. And then one of the siblings is gonna say, well, I’m not sending my kids to private school. My kids go to public school, so I have more money. So that’s your choice. So you still have to contribute. And wait a minute.

Wes Moss [00:32:03]:
We get this joint tax return and it’s now three people have to sign it and somebody just got a bunch of interest. And wait a minute, I didn’t realize it was so tax expensive because we all are on this joint account and so. And so stopped contributing. So those gains are my gains and not. And I’ve done more. Let’s see where I’m going here, Cal.

Christa DiBiase [00:32:22]:
Ah, yikes.

Wes Moss [00:32:23]:
Absolute nightmare. Absolute nightmare. If you collectively with your siblings start a joint account, which sounds awesome and noble, but it’s also a recipe for absolute sibling disaster. So how do you do it right? And it’s as though I’ve been speaking from experience from this. I’ve seen this happen a lot.

Christa DiBiase [00:32:48]:
I bet you have.

Wes Moss [00:32:49]:
Because it’s. What is a guarantee is that everyone’s life will change financially and everyone’s financial priorities change and everyone’s different kids. But the priority to take care of the parents still remains. Question is, who is most responsible? How do you keep it fair? How do you keep it equitable? A couple ways to do it. One, in my opinion, you never would want to do a joint account. It gets complicated and then imbalanced and people owe taxes and people stop contributing. So the way to do this would be to open up a family trust where you write the rules to begin with. So you set up some sort of guideline that is, hey, we’re just going to start this year.

Wes Moss [00:33:30]:
We all agree that we’re going to each put in $10,000 or whatever it is, $50,000 each, and then we’re just going to let that grow. And here are the rules of the trust. The money goes to our parents, and an estate planning attorney can do that for you. And it’s less about. Well, it’s about laying out the guidelines today so that you don’t have these sibling rivalries down the line and these family issues that. That will inevitably come up because we’re talking about money and priorities and everyone’s always are going to eventually be different, even if they’re almost exactly the same today. So that is one way to do this is to kind of prescript the rules. And that way it.

Wes Moss [00:34:11]:
I think it really help long term not have any sort of family divide the second way. And more practically, the way I could see doing this. And this isn’t necessarily perfectly fair either because let’s say you’re making a ton of money and you’re paying 40% in taxes and your sibling is making good money, but paying 20% in taxes. It takes you more earnings to end up with $1,000 at the end of the day to give to mom and dad. But we’re also trying to help mom and dad here. So I think that it may be a more practical way to think about this, and I’ve seen this work, is that everybody at some point when they need the money, which also should give you a long time here, 10, 20 years before they start running out, it allows you to save money and increase your earnings over time. Then you start supplementing the parents once a month. Everyone says, hey, we’ll all chip in a thousand dollars a month.

Wes Moss [00:35:11]:
And that helps fill the gap between what mom and dad are getting and what they really need. And that’s kind of an easier, more palatable way, I think may not be perfectly fair because everyone’s tax rates are a little different. But this is a charitable endeavor here. It’s a charitable act. So I would look at it as if you’re going to do it now. You’re going to want to look at some sort of trust formation and you’re going to have to talk to estate planning attorney to do that. Otherwise, think of it more practically down the road. Everybody contributes a little bit over the course of time.

Christa DiBiase [00:35:44]:
I would also.

Wes Moss [00:35:45]:
So what would you say on that?

Christa DiBiase [00:35:47]:
I mean, I would Just one other thing. I would have them, I would pay for them. If you can find a fiduciary who’s willing to do an hourly sit down with the parents, they may need a reality dose of what they’re going to need to save and spend in order to maintain their money over time. And look at their Social Security and the whole picture. And then maybe they can get on the kind of budget that would enable them to sustain themselves. Like, I don’t know if they’ve done something like that, but I would definitely recommend that as well.

Wes Moss [00:36:13]:
I think that’s a really good point. It’s that there’s got to be some transparency when you’ve got a bunch of siblings and you in. Mom and dad retired early. Why did they retire early? Are they. Do they have. Maybe they have plenty of money coming in. Maybe they have ten grand a month coming in. But mom and dad are, you know, twirling the world and they need 20 grand a month.

Wes Moss [00:36:36]:
Now, are all the siblings going to be willing to kick in for that. So it’s, it always goes back to kind of these priorities if it’s really, look, hey, mom and dad just don’t have enough money and then they’ve got to be able to just live and then it’s a different conversation. So to your point, Chris, that the transparency with the family is so important and I think you’re right. If you sat down with a CFP or a fiduciary, they can really get you some clarity around their financial situation, which I’ll give you clarity around how you really can help.

Christa DiBiase [00:37:08]:
Okay. Ryan in Wisconsin wrote in with this one. Are there any advantages to dollar cost averaging? More frequent. I currently buy index funds once per month. The market can change drastically over a month. So I’m wondering if weekly or even daily buys would be a better way to smooth the ride while still being an average meet the market investor.

Wes Moss [00:37:29]:
Okay, Ryan, there’s no way to know this because you don’t know how the market is going to ever react into the future, right? So if you were to say I want a really dollar cost average and you were starting in 2007, then slower $ cost averaging would have been better because the market went down for two straight years. If you were deciding to dollar cost average in early 2020 when the pandemic bottom came, then dollar cost averaging would have cost you money. So forget more frequently you want to do this on one lump sum. We should really do, we should really talk about this as a, as a, as a larger segment. But there is no perfect answer because we don’t know how markets are going to react. So there are plenty of studies around this around 70% of the time. So it’s 7 out of 10. But there’s 3 out of 10 where this doesn’t work.

Wes Moss [00:38:22]:
Putting money to work faster is better because markets do have the propensity that they’re up over time, right? So the quicker you get money invested, the higher the probability, no guarantee here that your money has a better rate of return. So to answer your question, I would say invest it when you have it, particularly when you’re younger and sooner is, is better. So I would say that that would be my short answer to that really more complicated than it sounds question.

Christa DiBiase [00:38:50]:
And we’ll definitely do that in the future. Mark that down. Lisa in Texas says Wes recently mentioned phasing into retirement. Aren’t Social Security benefits driven by the beneficiaries annual earnings? Will reducing earnings or cutting those in half for the final years of a working history advers impact annual benefits.

Wes Moss [00:39:09]:
Not necessarily. Lisa, remember Social Security takes your top 35 years and then they average them. And you’ve got to remember well it, it, it really this depends but for a lot of folks when you worked really early on, you’ve got some really low years in there and the even if you’re scaling back to halftime and you’re phasing into retirement, I call it the retirement gray zone, your 2025 earnings that are, that are kind of working half are still probably replacing some of the really low years. So I think that right if we work from age 20 to age 65, I mean that’s 45 years. So we get a lot of years you can cancel out that don’t even matter. We’re only taking the top 35 and that’s what’s what your Social Security payments are predicated upon and of course your age. So usually it does not hurt. It sounds like wait a minute, I’m making less all at the end and now it’s going to reduce my Social Security.

Wes Moss [00:40:05]:
Usually the formula doesn’t, it really doesn’t have that big of a negative impact because again we got, you can look at the best 35 years and even part time work maybe replacing some of the smaller years way back when you were young working, super young working. Okay Christa, thank you. And if our listeners, if you’d like to submit a question, we’d love to hear from you. You can find us and submit a question through your wealth. That’s Y o u r wealth.com contact.

Speaker C [00:40:36]:
Hey y’all, this is Mallory with the Retire Sooner team. Please be sure to rate and subscribe to this podcast and share it with a friend. If you have any questions you can find us@wesmoss.com that’s W-E-S-M-O-S-S.com youm can also follow us on Instagram and YouTube. You’ll find us under the handle Retire Sooner podcast. And now for our show’s disclosure. This is provided as a resource for informational purposes and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. The mention of any company is provided to you for informational purposes and as an example only and is not to be considered investment advice or recommendation or an endorsement of any particular company.

Speaker C [00:41:23]:
Past performance is not indicative of future results. Investing involves risk, including possible loss of principal. There is no guarantee offered that investment return yield or performance will be achieved. The information provided is strictly an opinion and for informational purposes only, and it is not known whether the strategies will be successful. There are many aspects and criteria that must be examined and considered before investing. This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal tax or investment advisor before making any investment, tax, estate or financial planning considerations or decisions. Investment decisions should not be made solely based on information contained herein.