Money Dos and Don’ts at Each Stage of Life

Welcome to "The Informed Investor", where we break down the latest financial headlines, bringing in research and insights to help you separate the news from the noise. Welcome to "The Informed Investor." Today we are coming from our Charlotte, North Carolina office where we are hosting an educational bit for financial advisors. Now, we're very fortunate that we have two of those advisors attending the show here today. And what we're gonna do is we're gonna dive into sort of the major stages when it comes to our financial journeys. So, we're gonna break it up into different age groups. We're gonna look at 18 to 30 years old in the sense of what do I absolutely have to get right and what do I wanna make sure I avoid in terms of mistakes? We're gonna take that same approach to ages 30 to 50. And then, we're gonna look at 50 to 65 and 65 plus. So, we're gonna break the show up into two parts. Part 1, we're gonna get up to 50 years old. So with that, let's get started here. And gentlemen, I really appreciate you joining "The Informed Investor." Great to have you here. Great to be here. All right, so a couple introductions here. Mike, I'll start with you. Mike Mers coming from Boise, Idaho. Your firm is Aspen Capital Management. Tim Slattery coming from Tampa Florida Heritage Investment Group. So, great to have you here. And I just have to say, Mike. Boise, Idaho, that's where I grew up. So, two just ardent Boise State fans. Tim, you're just a loyal University of Florida fan. And this is probably the first time in your life you've been outnumbered by two Boise State fans. That's true. And it's been a rough few weeks to be a Gator fan, but we're hanging in there. Yeah, but still college football's here. Absolutely. Which is always great. Tim, let's start with you. A little bit of background about your career and a little bit about Heritage. So, I've been with Heritage since 19, I'm sorry, since 2002. I'm the Chief Investment Officer there. Firm's been in existence for 31 years actually with one exception. All the six partners are friends from high school. So, we go way back. It's very much a family business. It's a, we say it's, we've extended the family to include some people from outside, but it's a very comfortable working environment with a lot of people that have known and trusted each other for a long time. And I think we convey that kind of feeling to our clients as well, which is a big part of, I think a big contributor to the success we've had. And it's a super pleasant place to work. And very close knit. Absolutely. Wonderful people. Absolutely. Mike, let's hear a little bit about Aspen and your background. So, I started the firm 23 years ago in Boise. My background came outta school, went into the technology industry. From there, went into venture capital, but really always had a passion for serving families and individuals as opposed to institutional money. And started the firm 23 years ago. We built a firm of wonderful people that love serving clients. We work with families in about 32 states. About half of those are in Idaho. About half of those are outside of the state. And we love to work with people on sort of deep financial planning, as well as manage their portfolios. And we are blessed to work with great firms like both of yours. So, thanks for coming on the show here today. I think we've worked together, Tim, probably over 20 years. Dimensional have worked with your firm. And Mike, we're right about 20 years as well. Right out 20 years. Yeah. All right. Yeah. So, it's been a great couple decades. A lot of fun. Let's get into it here. And what I like to do on the show here, we'd like to read a couple headlines. So, I'm gonna start with some headlines, but let's start with that first age group. Sort of that 18 to 30 as we think about kinda young adults, they're getting into their working careers, thinking about how do I save my money, budget, all that goes in that age group. So, let me start with a couple headlines here and then I'll get your thoughts. Tim, I'll start with you. Okay. Coming up these headlines here. The first one, "Why Starting Retirement Investments in Your 20s Could Change Your Life." Second one, "Gen Z's No. 1 Investing Choice is Crypto: There's a Lot of Risk in That." Reaction first. Okay. To the headlines. And then we'll get into the do's and don'ts in that life stage. Yeah, so with the headline, the first headline you read, I think is, it's good advice, right? I would lead with that for someone of that age group talking about getting started with investing early for your, say your first job out of college or you know, when you're in your young 20s. Sometimes when I talk to young people like that, they think it's, "Well, you know, money's tight. I don't have a lot of extra cash flow." But to whatever extent you can, you really should be thinking about making contributions to, if you are, if you have a 401 plan offering at your employer, there's two sources of free money there. You've got either a tax deduction if you're in a regular 401 plan, free money from the government, or you've got tax free growth if you're in a Roth 401 plan. That's free money on the table, take it. And then in most cases, you've got matching from your employer. Yeah. Which is another source of free money. You really should be grabbing that. And even if you can just put in up to the maximum of the match that your employer's gonna give you, we really strongly encourage anyone to do that to the greatest extent possible. The power of compounding from that, when you look at the numbers, if you start when you're 22 or you're 23 and you're looking at retirement at 65 or older, the, if you look at the real returns of compounding over, let's say, a 40-year or 45-year working life, the numbers are staggering. And I've never seen anyone, if you ask the question, "What does $10,000 save today at an 8% return? What's that worth in 40 years in or a 5% real return?" I've never seen anyone overestimate that number, right? Yeah. For sure. The number is always staggering. Yeah. And the power of those years is really indescribable. So yes, the earlier you start, the better. Now, with the second headline with crypto. That's the shiny new object, right? And look, it's hard to argue against that because it's done well, and as humans we like to chase the shiny object. And I'm not gonna tell anyone absolutely don't do it, but understand the risks involved. I think very few people actually understand it. I think when people jump into something like crypto, they're thinking of returns and not risk. And I would just say be educated on it. And if you are gonna own anything in crypto, make sure it's a small, manageable portion of your portfolio and don't invest anything you can't afford to lose. I'll go back to your comment. It's done well, I'll say it's done well recently. Yes. It's done well a lot of times and it's done really poorly a lot of times. Yeah. Specifically around Bitcoin. Right. So, just know those massive swings you get in any kind of a cryptocurrency. Right. Now, what would you add or what are your reactions to some of the comments there? Well, my first reaction is, I just couldn't agree more with the comments on compounding. You know, in that 18 to to 30-year-old age group, if you don't really understand the power of compounding and the power of starting early, do yourself one favor out of this. You know, push pause on this and go do some work and really understand compounding because if you can start and be disciplined in that 18 to 25-year-old age group, it'll change your life. I mean, it will really change your life going forward. The only other thing I'd add to that is just the power of the Roth IRA for these young people, right? Their ability to get money in that's gonna grow tax-free for decades. Not tax-deferred, but tax-free. The combination of starting early, being disciplined, and leveraging whether it be a Roth IRA or a Roth 401 if they've got an employer plan that offers the Roth option, which almost all of them do now, it's an absolute life-changing decision if you can get people to start right out of high school or college. Yeah, I'm gonna come back to some of the Roth and the 401 stuff, but I wanna go back to compounding. For me, I think there's a theme out there that it's been called, compounding has been called the "Eighth Wonder of the World", right? It's like magic. And so, you mentioned some numbers. I actually have some numbers here. And this is stuff I used to go over with my kids and I still got the original notes on here from when I used to meet with our kids and all their friends. And then their parents started coming to some of these conversations. But here's just a couple numbers I ran on just the power of compounding just to get it out there. And I remember my dad had something he showed me when I was in high school following this framework, and it just stuck with me the years. And I think it's pretty a common way to look at this. But Tim, you've used a couple different numbers here. I'm using here, let's just say, you saved a thousand dollars a year starting your career and I'm using a 10% annualized return. Just a historical return of the market over that time period. So, if you saved a thousand dollars for your first 10 years and then didn't save again after that, at the end of 40 years, that would've turned into $305,000. So, it would've turned into $306,000. If you say, "You know what? I haven't gotten my savings habit yet." I don't save my first 10 years, but I started saving a thousand dollars from every year from age 11 to 40, that would've turned into only $181,000. And so, it just shows how incredibly important it's like, that that magic getting the money in right outta the gate. Yeah. Like, you guys were just talking about there. Now, let's do another one here. And this is where I think it really struck home, at least with my kids and their friends. If you saved a thousand dollars every year, but you increased it by 10% every year. So, first year was a thousand bucks, next year was 1,100 and then 1,200, it just grows over time. It would be worth 1.8 million at the end of that 40 years. So, I mean, that's the impact here we're talking about compounding. Yeah. You just gotta start early and you're getting money in there, letting the market do its thing. All right, now, let's go back to the ways you do that and go back to the 401. So you, Tim, you're talking about how important it is to just get money in there. Start at least get the match too on what you're doing there. How do you guys think about the priority of saving 'em? By that I mean, let's just say somebody's got a budget, they've dedicated a certain amount to saving. Where do you start first? Do you start with a 401? Then, do you do a Roth IRA? Or do you try to build the Roth into the 401? I think that's where you're going, Mike. So, maybe just expand on that a little bit. Well. Which one do you start with? I'll just echo what Tim said at the beginning. You've gotta start with the free money, right? That matches that free money. So, if you've got an employer retirement plan that's gonna give you any type of a match, that's where you absolutely have to start because you're getting that matching, that free money. So, you've gotta absolutely start there. And certainly our advice would be to the extent that you can afford it. And even even if you've gotta tighten the belt a little bit to afford it, you wanna start by completing that match, right? Contributing whatever you've gotta contribute to get that full match. Because for a lot of employers now today, you might be doubling your money right out of the chute with your contribution plus the employer match. So, now your $1,000 contribution gets doubled or maybe at least a 50% with a, you know, with an employer match and you're off and running. So, that's certainly where I would start. Right? Just get that match. With the tax benefits, it's free money on top of free money. It's sitting there on the table. You do whatever you can to grab it. Yeah. And so, you're talking about a Roth. The value of the Roth is you're funding that with after tax dollars. Well, but it works with a pre-tax 401 as well. It's gonna depend on what tax bracket you're in. And if so, you know, there's not a lot of 24-year-olds that are in the highest tax bracket. But you know, if you are in a higher tax bracket, you wanna consider taking that tax deduction from a regular 401 contribution right from the start. And the answer to that is with most financial questions, you know, it depends. Depends on your individual situation. But whether it's a Roth 401 or a regular 401, you wanna put as much as you absolutely prioritize that above all else. You know, one of the questions we got from our kids as they graduated and got their jobs is, and we talked to 'em about, okay, you gotta have some emergency- Yeah. Yeah. Savings as well. And they're like, "Well, how much and how long?" So, Tim, how do you think about that part? That is maybe the most difficult question that I get, not just from people in that age group, but across all age groups. How much cash should I have on hand? And you know, the simple flippant answer is up to the point where you can sleep at night, and then no more than that, right? But it's hard to say from person to person what that comfort level is. I would say for someone that's a recent graduate, college graduate that doesn't have a lot of safety assets aside? Three to six months minimum is what we typically say you should have. Because if you do lose your job, if circumstances change, if you get a better job and you have to move, but there's cost to that, you wanna have that emergency fund ready and I would say three to six months as a minimum. And make that your top first priority. Right? You gotta build that out. Yeah. Like, right outta the gate. That's right. Great. Okay. That's right. Yeah. Anything you'd add to that? No. That part of it? No. Uh-huh. All right. So, those are some of the must dos, right? Save early, get it into your 401, make sure you're getting the maximum amount of match on that 'cause you talk about free money, like, people say, "Well, it's free, but there's always a cost to something." But this truly is free. It's free. It's free. It's truly free. It is free. And then, the growth of that tax. Yeah, I wasn't sure you where you were going with that, but no, there isn't a cost to it. It's free. Yeah. Yeah. Yeah. Yeah. All right, let's talk about some of the don't dos. Like, just don't do these things when you're a young adult. What comes to mind? What have you seen where you just like, no go. Credit card debt. Yeah. So, do not run up your credit cards. Read the fine print, the interest rates are egregious. And it's, you know, it's, you're young, you got your first credit card and you have a job. And your stereo. You just, right. And so, that can get you, so the power of compounding on your 401 is magic. And the power of compounding on your credit card debt is also magic. It's magic at a higher rate and it's working against you and it's magical for a credit card company. You absolutely do not wanna put yourself in that situation. And higher rate. I mean, it's often 17, 18% or more. Absolutely. Right. That's what you're talking about. And that used to be illegal. But it's not anymore. And yeah. That can really get you in a lot of trouble really fast. Then, you end up with credit issues and that will follow you around for a while. All right. Yeah, Mark, that's the logical one for sure, is just any consumer debt, avoiding that at all costs. Another one that actually some of the young members of my team told me that are not far out of college said, "Man, you gotta avoid the college classmate." They got a job working for an insurance company, right? And they're out there and they're calling all their friends that they went to school with trying to sell 'em insurance-related products that they really don't need, that tend to be really expensive littered with lots of fees and expenses and whatnot. So, I would say be wary of your friend that went to work for a financial services company or an insurance company that needs to hit a quota and sell some products. Yeah, and there's certainly a role for insurance and we'll come to where that- Absolutely. Comes into play in the right stages. Yeah. Absolutely. My definitely don't do is do not go buy a fancy car. Yes. Right. Coming right outta university. And you see these kids, they go, "I finally got some money. I've got an income. I go get a fancy car." And then, like they need a new tire. Yeah. And they're like, "Well, I can't afford. The tire's way too expensive." Ditto. Yeah. You gotta think about that. Do you know how much brakes cost? Actually, you know what, Mark? I would actually extend that to just any depreciating asset. Right? Could be a car, could be, it could be a boat, it could be anything that depreciates in value in that time window that we're talking about. Outside of covering your living expenses, right? Building your safety bucket. And then getting, going on long-term savings. You know, most people aren't gonna have much left over, but the worst thing you can do is buy a depreciating asset like a fancy car. Yeah. Yep. Well, I like the order there. Pay your basic needs and then your prioritized saving. Pay your future self. Pay your future self. I've heard you said that before. Yep, yep. Yep. All right. The other thing here we talk a lot about is like, the daily trip to Starbucks. You know, I'm just gonna go drop five bucks on a coffee or something like that. So, I've got some numbers here as well. All right, so here's the assumption I made is, let's just say that you start going to Starbucks once a week. And I used four bucks in my example. It's probably a little low. But let's just say, once a week you go buy a Starbucks. And that comes outta your savings, right? So, you're saving less. Yeah. So four, one time a week, four bucks. And I mentioned earlier, if you save a thousand dollars a year for 40 years and you increase it 10%, that's 1.8 million. If you go buy that Starbucks drink for four bucks. I shouldn't just call it Starbucks. It could be anything. Yeah. Yeah. Right? You know, whatever. There's a lot of 'em. Yogurt, coffee. I haven't found any coffee shop that discriminates on price. Yeah. Yeah, so... All right, so let's just say we do that once a week and it's four bucks. That 1.8 million goes down to 1.4 million. I mean, it's just math. That's over a 40 year compound. Yeah. You go back to the compounding, right? Yeah. Wow. And that's once a week. It's massive. That's once a week. I was gonna say, who do you know that buys coffee one time a week? It's 4, 5 times a week. Yeah. Yeah. And that much worse, right? That it's... Yeah, so yeah, that was one of the things I had thought of, is that daily habit of Starbucks. And don't play the lottery. I mean, that's just... that's tax on people that are bad at math, right? Don't play the lottery tickets. Right. I remember, I was just going through this with my daughter and her friends and I mentioned the four bucks and they started laughing. Like, what's so funny? "Like, Mr. Gochnour, we could buy yogurt but it's $9." Yeah. I'm like, "Oh geez." Okay. I go, "Who's paying for that?" But they were like, "You are." All right, so that's the 18 to 30 age group. All right, any last thoughts on that one as we ramp it up here a little bit? I think we covered it. Yeah. Okay. Let's get into, and we're using these, so broad bucket of ages, you know? Like, 30 to 50. There's nothing magic about those ages, it's more of a life stage, but yeah. Hey, let's go back. Let's go back to 18 to 30. The one thing we didn't talk about is, okay, so how are you gonna invest your money in that time? That's a good point, yeah. In that season of life, right? Yeah. So, the only thing I would add to that early stage of life is you want to be pretty aggressive, right? With your investments. Now, you wanna be really broadly diversified. You wanna be really low cost. So, do this in an intelligent way, but we wanna make sure that we're really, you know, trying to maximize our long-term returns. So, when we get that money into our 401 or our Roth IRA, we wanna make sure we're really intelligent about getting access to the global equity markets in a really broadly diversified low-cost way. Because the only way that compounding works in our favor over the long term is if we're getting really good very long term multi-decade returns. Well, when you say you wanna get aggressive. What do you mean by the aggressive part? Well, what I mean by aggressive is you know, for me, for my kids in that, you know, 18 to 30-year-old window for retirement funds that they can't touch for multiple decades? I don't really want 'em owning bonds, right? I want 'em owning higher risk, higher expected return assets, like global equities. So, you know, for me with my kids, it's, hey, let's go buy a really broadly diversified low-cost global equity fund. We're not worried about volatility. This is money that's in retirement accounts that we can't touch for decades. So, let's not worry about volatility. Let's just try to maximize our long-term returns. So, 100% equity? 100% stocks is what you're- 100% stocks. Yep. Completely agree. And for some people it's really easy. They've, in a retirement plan especially, they've got a target dated fund, right? That's gonna kinda get 'em that diversification and whatnot for 'em. And I would say just pick that furthest target date, that furthest date out into the future. That's gonna kinda maximize the risk/return of that portfolio and have you in something that's a hundred percent global equities. Yeah, I like your comment. Globally diversified, very cost effective. And I would just say disciplined on that too. Don't worry about the headlines. Yeah. Don't worry about, like you said, the volatility. Yeah. Prices going up and down. Just block it outta your mind and just let markets work, get your compounding. And don't gamify your investments. I'm seeing friends of my daughter, high school kids on their phones trading options and futures. And you know, perhaps that's a topic for another episode. We can get into that. But that's exciting but probably not a great idea from an investment standpoint. So, we try to stay away- Boy, you guys are advanced From that. In Florida. We don't do those things in Idaho. Yeah, yeah, yeah. You'd be surprised. "Look Mr. Slattery, I'm trading options." Like, wow. Yeah, wow, that's- Yeah. Get that off your phone. Yeah. Delete that out. Yes. All right. Going into the next phase of life here. The next stage is sort of this eight. So, the next stage of 30 to 50. You know, you start thinking about things like having a family, maybe getting married, having a family, home, stuff like that. So, what are the things we have to get right in that bucket? So, I would say learn about home buying when you're in that stage of life. I think that that's when you are, you're probably getting to the point where you're gonna settle down, you're gonna have a family. I think you need to learn about what it means to own a home. It's not just throwing the money in and wind it up and let it go. You've gotta learn about taxes, you've gotta learn about insurance, you gotta learn about mortgages and all the responsibilities that come along with that. So, I mean, that's at top of mind, I think, for a lot of folks in that stage. And also let's learn about saving for college. Again, in that stage of life, a lot of, some use, a lot of folks might have kids prior to that. I think our generation waited a little bit longer. I think of post 30 is when most of my cohort became parents. And again, the power of compounding and starting early. And I tell my clients, whether it's, they're new parents or whether they're new grandparents, look into prepaid college, or more frequently a 529 Plan. And then, we start to talk about the power of compounding again. It's probably not a 40-year window, but let's talk about an 18-year window and open up a 529 account as soon as you've got a Social Security Number, and start putting away as much as you can. And again, pretty aggressive. We don't wanna be 100% equity the during that entire ride. We wanna scale back the risk as the kids get older. But the sooner the better. And look at the tax advantages on the back end of those 529s for paying for college. Tax advantage being? It grows tax deferred. Absolutely. Right, and then you can pull the money out if it's for qualified expenses. If it's qualified college, for qualified education expenses, it comes out tax free. And the definition. So, as an owner of a 529, it's usually the person that funds the account is the account owner and the student to be is the beneficiary. You can change those beneficiaries as the owner of the account. And the definition of who counts as a family member beneficiary is extremely liberal and very wide. And you can change the beneficiary of an account over to a sibling or other family members pretty widely defined. And it can go down several generations. If you don't need it for your own kids, it could be for the grandkids or even longer. And then, the compounding story starts to get even better. It's an incredible program. You can- To grow in tax deferred and the flexibility that comes with that and changing names. It starts things like that to look like a perpetual family education trust. Yeah. That's tax free. All right, let me go back to that. The home. Yeah. Comment for a minute. You know, because I think people, like you said, okay, you gotta get a mortgage, you gotta get insurance, things like that. But what about when the dryer breaks or you need a refrigerator or you gotta get the hose? One of our colleagues, Jake DeKinder, who you guys know in fact is oftentimes on the show here. He just, he got a text from his wife this morning. There's a leak coming outta the ceiling. Oh no. He's like, well- Oh no, the dreaded leak. Yes. Turn it off, you know? And I'll deal with it when I get home. That was not on the calendar today. Yeah, like, where's the main water line? That's all part of home ownership. And I think there's a view out there where people think, "Well, my home that's, I'm gonna make a bunch of money 'cause over time the value of my home increases." How do you guys think about that? Home ownership versus perhaps renting? Any thoughts on? Yeah, I think it's a great question, and especially at the beginning of this age bracket we're talking about, right? Somebody in their early 30s, I do think it's an important thing for people to recognize. You mentioned a number of the costs, and then you added maintenance to it, right? So, home ownership. Let's not forget the cost of selling a home, right? Usually in different parts of the country, it's gonna be about a 6% real estate transaction fee if you're gonna sell it. So, if you're getting into a place as a first time home buyer with like 5% down and you need to sell that home a year or two later and the transaction costs 6%, you've just wiped out your entire down payment, right? In needing to sell the place. So, I would just be really conscious of making sure that you're really ready to buy a home. So, you're, from a career standpoint, you're in a place where you feel comfortable, that you're not gonna need to sell this home and move in a real short term period and eat up a whole bunch of your down payment with transaction costs. And then, also you're financially in a place where you can't just afford the down payment, but you also have some backstop money so that when you do get the leak or the appliances go out, or all of the fun maintenance things that we have with homes over time, you can actually afford it. Home ownership's great. Hopefully everybody listened to this at some point will be able to afford to do it. But it's no panacea early in your life. Is there guidelines out there? Say, hey, if my, let's, I'll make up a number. My mortgage is a thousand dollars monthly. Is there a number that says here's kind of what your overall maintenance cost will be for a home? Like, is it 10% of your mortgage, annual mortgage payment or 5%, any? I don't know of a benchmark for that 'cause it depends how much of your, how much did you put down, right? I mean, did you put 10% down on your home or did you put 50, right? So, but- Yeah, maybe I should have said the value of your home. The value of the home. Yeah, that's probably a better way. Yeah. Yeah. I should've said that. So, you know, I've heard 3% of the value of the home is what you should kind of bank on for maintenance on a yearly basis. I've never really dug down to see if that's accurate. I can tell you anecdotally those come, it's not 3% every year. Yeah, that's right. It's yeah. It's zero for a couple years and then, you know, then it's 10. Yeah. But it's, I don't think owning versus renting is clearly superior in every case. Renting might be a better choice and to your point in a lot of situations. It's hard to, being in Florida, it's hard to convince people in Florida at this point that real estate isn't always a home run investment, right? And we've had a really, really nice run. I'm sure in other parts of the country. It's a much- Yeah. Boise. That concept is a much easier yourself. Absolutely. Yeah, we're right there with you. Yeah. Yeah. Anything you wanna add? I would just say. A couple of other things that I might think about. Tim's touched on two of the three, like tax-free vehicles that we have. He's touched on Roth IRA, he's touched on the 529 Plan. The third one, which isn't used nearly as frequently that can be really helpful in this timeframe of life, is to start thinking about that HSA account. That health savings account, which is another in the third of the three tax-free vehicles for people that wanna start accumulating some tax-free growth in an account to pay for future medical expenses later in life. Someone that's doing a great job of saving for retirement, doing a great job of maybe funding kids' 529 plans. If they've got a little leftover, an HSA account can be a great way to continue to get tax-free compounded growth over time. So, something like that you can fund it. And so, if I do have a medical cost, I just pay for it with my normal? Yeah, that's right. Earnings? Don't use the HSA 'cause that grows tax free over time. And that's pretty flexible too, right? Just save your receipts. Yep, that's right. Way down the road. It's actually, functions very similar to a 529 Plan. You save your receipts. It's kind of an on your honor system. And you're right, you use it as an account that would continue to grow and invest over time, and you'd be paying for some of those medical expenses outta your pocket. The only other one I was gonna bring up, Mark, in this phase, 30 to 50 is when we start having families, having kids. And that's certainly when we need to start thinking about life insurance. And I think this is a point where for us, certainly, Term Life we think is the way to go. It's very low cost. You can buy it, you know, quite easily, get plenty of coverage for a really affordable amount. So, someone that's in that position in life, I think Term Life is a great way for them to start making sure that they've got their family protected. Any guidance on dollar amounts you wanna think through on something like that? That's another, it depends- It depends? Question. Yeah. But you know, it's... To your point, start young \because it's much less expensive as you know. I think in our age cohort, if you all have checked out the Term Life market for yourselves recently, it's a much higher dollar amount. Yeah. Than you were paying when you were in your 30s. So, you know, I think it's, that's a somewhat, you know, the how much should the benefit amount be on the insurance? I think that's more intuitive. What makes you feel comfortable. But you know, $10,000 isn't gonna do it. Right. Yeah. Yeah. I mean, if you're a high earner, a million dollars is probably a starting point. Yeah, well, maybe some. You go ahead. What you think about that? I was gonna say, you know, certainly at the back end of this age group, someone that's around 50, a great thing at that point is to have a financial plan. And if you've got a well done financial plan, it's gonna tell you exactly how much you should have. If you're at the beginning of that, you're young in life, you've just had your first kid and whatnot, I think you're right. It's kind of intuitive of thinking about, okay, what situation would you wanna leave your spouse in? Okay, well, maybe I want to make sure that the mortgage is paid off if something happened to me. Maybe I wanna make sure that there's money for education for the kids, right? You're leaving your spouse in a position where if something dramatic happened to you, right? The spouse is in a good situation. So, those are some things that I think people often think through as, okay, what if any mortgage do I have? How many kids do I have? What type of maybe education funding would I like to make sure is taken care of? And I think that's a great place to start. I've also heard too about having extra money available because it's such a difficult time for the surviving spouse that it just gives you a little extra flexibility if you need to take some time away from work or something to be able to afford that one. Yeah, yeah. One other thing I wanna get your thoughts on. And I'm not sure what, if you have any advice or guidance on this. But go back to perhaps what's the most important decision you make in your life? And we've been talking a lot about families and kids and homes. But if you go a little bit before that, it's who you marry. And I'll speak for myself. I don't know if I have guidance to say, "Hey, here's how to make sure it's a solid marriage or not. But it is probably the most important decision you'll ever make 'cause there's so many things that come from that." I would say if you look at the data, right? I believe that the number one cause for divorce is usually financial. Okay. That's a good answer. Right? It is. Yeah. It is usually financially linked. That's right. So, if we work backwards from there, right? We know that finances and financial matters create a tremendous amount of friction in a lot of relationships, right? So, I think just knowing upfront and being on the same page with your partner as to what your financial goals are gonna be and how you're gonna fund and work to meet those goals. I think it's probably pretty rare that two people come together in a marriage that think about money exactly the same. That's probably a fairly rare occurrence. but I think just spending the time and energy upfront, communicating well, making sure that you have priorities, making sure that you have goals that you're both bought into. Doesn't mean you can't approach things differently. But as long as you're both on the same page with respect to some of the goals that you're trying to achieve, I think it increases the likelihood of success long term much better and reduces a lot of friction in a marriage 'cause we know that money issues is the leading cause of divorce. What are the, some of the things, don't do this in that 30 to 50 age group? I'll take that one. I think in, we talked earlier about buying depreciating assets as a younger recent college graduate. but that carries through all stages of life. And I think in towards the later part of this stage of life, we're starting to think about some new toys, expensive cars, yes, that we spoke about before. But also boats, airplanes, second homes. You know, there's a place for all those things. But we typically recommend that you rent boats, you rent airplanes, you rent second homes. And yes, buy your primary residence if that's right for you if you're gonna be in a particular place on a more permanent basis. But from a financial standpoint, buying large, expensive depreciating assets is usually not a good play. And Mike, it goes back to, you said earlier about if you have a financial plan, that helps guide your decision-making and that probably clarifies some of these things you, the wants versus the impact it has on my future. Yeah. My future state. And that's when you know if you can really afford it or not. Right. All right guys, that wraps up part one. A couple things that jump out to me from that is just absolutely make sure you're taking advantage of tax-deferred investments, 401s, the Roths, HSAs, 529s, things like that. Be incredibly disciplined with your investing. Make sure it's globally diversified and just let it grow over time. I mean, those are the big ones there, right? Let your money work for you and be very careful how you're thinking about your spending. So, we'll come back here in a moment on part two where we look at life after 50 years old. So, thanks everybody for joining "The Informed Investor" and be sure to hit subscribe and get to part two of your investments after 50. Thanks.

Welcome to "The Informed Investor," where we break down the latest financial headlines, bringing in research and insights to help you separate the news from the noise. Welcome to "The Informed Investor." We are coming from our Charlotte, North Carolina, office here today. And we are diving into the must dos and the must not dos when it comes to your financial lives. So part one, we looked at those decisions you wanna make going up to 50 years old. And today, we're gonna do part two, which is going to be the decisions post-50 and into retirement. So joining me here today are two advisors that are in for our educational event, and pleasure to introduce you guys again here, just in case somebody didn't see part one. But Mike Mers, Aspen Capital Management, from Boise, Idaho. Tim Slattery from Heritage Investment Group in Tampa, Florida. So, guys, I really enjoyed the part one, a lot of fun here. Excited to dive into part two, 50-plus, 'cause that's certainly, unfortunately, where I'm at. Here we are. In my family. I think we're all- At least two of the three of us are. All right, so key takeaways from part one is just make sure your money's working for you. Let compounding work. Find your tax-deferred vehicles. Be thoughtful about your spending. Let's get into it here when, let's say, 50 and up. So, now, we talked about families in the earlier stage. Now the families are probably older, the kids are a little bit older, high school or maybe they're getting into college or maybe even getting out of the house. What are some of the things you wanna be thinking about that we gotta get right in sort of that 50 to 65 group? And I'll probably say, too, that you think about a career standpoint, that's probably when you're starting to really see your maximum earnings years, things like that. Peak earning years. Yeah, so Mike, why don't you just take us there and start us off? Yeah, well, I'll start with probably the, you're right. Usually this is gonna be somebody's hitting their peak earning years, right? And I would say, from a financial planning standpoint, probably the biggest mistake we see people make in this time window is lifestyle creep, right? As their income goes up, that lifestyle just keeps creeping up and up and up over time. And as you mentioned, they're also now starting to get, you know, within line of sight to retirement, right? And retirement is maybe out there. It might be 10, 15 years down the road. But the biggest challenge we see people having is that lifestyle creep, and once they get used to that lifestyle, it's really hard to back it down when they move into retirement. And a really expensive lifestyle is really difficult to maintain in retirement without a really large nest egg. So for me, the biggest thing I would say from a financial planning standpoint in this phase, be really careful about lifestyle creep. Do you have some specific examples, like, that you've observed from people? And there's probably a lot of FOMO. Like, "Well, my friend's doing this, so I wanna do some of this." Oh, a ton of FOMO. I think in episode one, Tim mentioned, you know, a lot of the fun things that we like to do in life, right? So second homes and boats and airplanes and travel and entertainment, right? And just that creep for a lot of people that aren't disciplined, right? As their income grows over time, they allow their lifestyle to consume that growth, right? And so the big things I would focus on is probably the spending on the kids, which can creep pretty substantially. And then just like fixed cost spending as people are buying second homes and, you know, multiple cars and a lot of travel and entertainment that becomes baked into a lifestyle that becomes really hard to reverse. Tim, anything you'd add to that on observations on creep? Yeah, I couldn't agree more with Mike. I think we do see that in that stage of life, The one thing I encourage my clients to do, if you're in that stage where you do have more disposable income and if your lifestyle is gonna creep higher, I think what I tell people is that it's better to do things than to have things. If you're going to spend some extra money, spend it on your children, spend it on doing enjoyable things with your children, spend it on travel. It doesn't have to be long, extended, fancy trips. Short vacations are fine. But spending money on adventures and on activities is gonna bring you more happiness than spending money on shiny objects, especially if they're depreciating assets. And I think there's quite a bit of research around that. There is. That supports that as well. Right? Absolutely. The experiences. Experiences. The experiences drive joy, not what's sitting in your garage or anything. And I think with our age group in particular, I've noticed that with the generation behind us, the millennials, I think, actually I'll have to compliment them about this, I think the millennials have a much better handle on this idea of doing things rather than having things and being wise about spending time as a limited resource and just the knowledge that, you know, the shiny new object isn't gonna make you happy, but spending time with the people you love absolutely will. And then as you get into that, I'll say the latter part of that stage, you start thinking about things like your estate plan, wills, who's the trustee of the wills, stuff like that. Incredibly, incredibly important. So give us some thoughts on the must dos with that. Well, I think that's where, as you get to the latter part of this, you know, sort of 50 to retirement window is where you really have to start to have, at that point, you really need a financial plan, right? And that financial plan is certainly going to include things like estate planning, making sure you've got all your healthcare directives and wills, trust, whatever's appropriate for that person's, you know, situation, setup. One of the things I would say as someone approaches retirement is really understanding your spending and what it costs you to live your lifestyle becomes really important. For us, as people transition into retirement, we see the most successful first two to three years of retirement from those who really understood what their spending was going into retirement because they can make that extension into retirement with a lot of confidence. But if they don't know before they retire what they're really spending, that can be a really emotional experience for 'em. So I'd say get your estate planning, get a good financial planner that can really develop a financial and a retirement plan for you and start documenting what your spending is. You don't need to know how much you spend on coffee or pizza every week, but you need to understand the big buckets. And I would say this with, when we ask our clients that, just in the initial stages of this planning conversation, "Just very casually, tell me how much do you think you spend," and everyone underestimates what they spend, everyone. When they actually do the exercise and we'll go through a six-month period or a year period and say, "Okay, let's look back. How much did you actually spend?" And I think it's shocking to a lot of people. I think we all spend more than we think that we do. And by the way, one-time things count. "Yeah, I replaced my roof, it was $46,000, but that's just a one-time thing." Well, no, that counts and the new car counts and all of these things count. So we have to take that into account. You can't just cast it aside. I bet it's a combination. In some cases, they just really don't know. In some cases, they're just probably, I don't wanna say embarrassed, but spending too much. They kinda inherently know they're spending too much. Just probably don't want to come clean on it. Yeah, you don't wanna ask that question with only one of the spouses in the room. That's a really good point. Right? You want to ask that question with both of 'em because, you know, we all know in our lives, usually, you know, one person's responsible for purchasing and buying certain things and the other's responsible for other things and oftentimes one doesn't know what the other's spending on things. So, yeah, we've run into a lot of problems before when we get an answer from one and then the other person finds out what the answer was and goes, "You've gotta be kidding me. We spend way more." Marry a saver. Yeah . Yeah. Going back to our prior conversation on, marry a saver, I think that's great advice there, going back to like wills and trusts and things like that, you know, it's incredibly important in this phase. It's really important also for the prior stage, right? When you have kids, you wanna make sure you have a will in place and, you know, who's gonna watch the kids in case something does happen to the, both those kind of things. But I'm gonna bring this back now because it's not just you want to have one for, you know, you and your family, but starting to think about your parents then. And Tim, we were talking about this a little bit too. You know, where it can get very complicated even on very, I'll say, not basic situations. So, like, my dad died, he passed away about three ago. And so I stepped in and did a lot of stuff with my mom and I was shocked. I'll say what a pain it was to deal with this stuff and how complex it gets on a very simple situation. And so where I'm going with this is looking up to your level of their trust, their wills, who's the directive on some of these things. So maybe Tim, you wanna run with that a little bit? Yeah, so between me and my wife, we're four for four on parents with dementia or Alzheimer's. So as you're in the stage of life that we are in, you do need to start thinking about what's the plan with respect to our aging parents? And yes, a lot of it is with wills and trusts. And not only that, but you have to have a living will set up, right? And what about your advanced directives and healthcare surrogates and that sort of things. When we talk about estate planning, maybe the clients aren't thinking about those healthcare-related legal situations that we need to account for. So, yes, you absolutely, if your parents haven't taken care of this, it is in your best interest if you're in this 50-ish age group to help your parents get that in place because you do not want to be doing that in a crisis situation. And before you get to a crisis, you should also have a conversation with aging parents about if you do need, whether it be assisted living or if you do need to be in a memory care facility at one point, what are you comfortable with? What are you not comfortable with? Do your two parents want to be together? Can they be together if one of them is declining faster than the other? And it's extremely important to have these conversations beforehand because I've seen it personally on more than one occasion and frequently with clients where doing this in a crisis situation is as bad as it gets. It's a situation you do not wanna put yourself in. It's incredibly stressful, it can be incredibly expensive, and it's just much more easily done beforehand in a calm, rational way that everyone can express their interests and you get input from all the family members and do it right. Do you have a couple things here? I'm gonna give some examples in my mind here, but- I was gonna say, I think Tim covered the healthcare side well. You talked about dealing with the parents, to the extent that your parents will listen, right? I think one of the great things we can help 'em do is consolidate and simplify, right? So many people, our parents' generation, have two, three, four bank accounts, you know, at different banks. You know, they wanna have all, they don't wanna put all their eggs in one basket, and as a result, they've let their life get complex financially. And at some point, somebody's gotta deal with that, right? And so to the extent that we can get 'em to simplify things a lot, reduce accounts, narrow things down, it makes it a whole lot easier for the heirs when they pass. Well, I'll give you a couple examples I went through that just had no understanding of how this stuff works. And so I'd encourage anybody to go out there and you can probably go find a whole bunch of different things that guide you through what's going to come. But for example, when my dad passed away, so I called the credit card company, said, "Hey, can you take his name off?" They're like, "Yeah, absolutely. Thanks for calling." Instantly they shut the card off. I didn't know they were gonna do that, right? I go, "Well, what about my mom?" They're like, "Well, she's gonna have to apply for another credit card, her own credit card." So things like that. Like, well, okay, what about the bank account? Instantly it had to be changed to something else. My dad's retirement account, his IRA, that got frozen for a while as they had to go then launch in her name. And so everything just sort of suspended. So I mentioned those things just to say make sure you got some liquidity somewhere. Yes, yes, definitely. To get through those things. Another one that was just, you don't think about these things. My mom was doing something at the bank, so she had to show her ID. Well, it expired like two weeks before. And so, like, we needed another form of identification. We couldn't find their passports anywhere. You know, it's not that they were out traveling, but it's a form of identification. So we can't find their passports. So my sister, to get a new ID, went to DMV, and they're like, "Well, we need her marriage certificate." Like, well, I don't know where that is. We couldn't find that. So, literally, 60 years ago, they had to go to the state they got married in and get it from 60 years ago to go get a license to be able to vote and do some banking. I mean, just things like that. And those things snowball quickly, right? Just something as simple as where's their password list. And if this happened, you know, with me with my parents as they started to decline in their mental acuity, you're having to log into all their accounts online and, you know, where are the passwords? And, of course, you're going into Dad's desk and they're all written on Post-It Notes, which is probably something we wanna encourage them not to do as well. Really secure. Yeah, really secure. And they're all the same. They're all the same in capital letters with exclamation points and, no, so security was not at top of mind. So, yes, that's a conversation you need to have as well because now in the digital age, we have all these passwords all over the place that have been replaced and updated and some of them haven't and let's try and consolidate those in a single safe place to where when we do have to step in as, you know, speaking for our parents or representing our parents that we're prepared to do that. And there's some really good places to do that where it's all encrypted and everything else, these passwords, and people have access to it. People being the family member or the trustee around that. All right, one other thing I wanna mention. You guys have mentioned a second home kind of in this age group too, about just be careful, make sure it fits in your plan, a second home. You mentioned even in the last phase of you kind of wanna rent, maybe not own a second home. And I bring this up the irony of it, because both of you have a second home, yet you're telling people not to have a second home. This is true, yes, guilty. Explain that. Guilty. Well, my explanation is I bought mine before Airbnb became a thing. So that's my excuse. No, honestly, I think Tim and I would both agree our second homes have given both of our families great memories. So I wouldn't say that I tell people, "Don't buy a second home." What I would tell people is make sure that you've really thought through all of the expenses of owning a second home before you buy it. You've got the maintenance costs, the insurance costs. Homes are expensive to own and maintain over time. And as long as you can afford it, it can be a fantastic asset for your family. Unfortunately, I think both of us all too often see people that haven't really thought through the total cost of ownership of owning a piece of real estate and have made mistakes along the way. And in my situation, Mark, I've told you this, I don't think I bought a second home so much as it was sold to me by a realtor friend of mine. We were actually looking for a rental and did the bait and switch and took me to this place and he said, "Actually, this isn't for rent. It's for sale." But this was 2010. It was a bank-owned property that he said, "Make 'em a dumb offer," and I made 'em a really dumb offer and they took it. So, you know, I'm kind of an accidental second homeowner. But it has brought our family a lot of joy. We use it a lot. It's brought our friends a lot of joy too. We hand out the keys pretty liberally. So, but we can't rent it in an Airbnb situation. So it is a big cash drag. If you're gonna own a second home, to your point, you've gotta think about can you generate some income off of it? And if you can't, how much are you really going to use it? And if you can generate income off of it, do you really want to be a landlord? 'Cause that's not always the greatest thing in the world. And those phone calls tend to come at inconvenient times. And that property might not cash flow as much as you thought. So, yeah, you do have to give very careful thought to the second home and, yes, there's an upside to it, but it's not always all it's cracked up to be. Yeah, I think you're spot on about the usage. Both of you guys use your places quite a bit and wonderful family experiences there. I've got some friends with second homes that rarely gets used. I think that's kind of what you wanna be careful of. That's where Airbnb is such a great fit for that. Hey, as we transition to then I'll say the post retirement life, let's talk a little bit about integrating into retirement life as we kind of buffer up against that age 65. And Tim, I think you have some pretty strong feelings about way to prepare for retirement. Yeah, we tend to encourage our clients not to abruptly retire or at least consider easing into retirement because I think when, you know, we all have difficult days at work and we say, you know, "I can't wait till the day where I can just pull the plug and be finished with this," but that's a massive lifestyle change just from a time standpoint, but also psychologically. I think a lot of us, our identities are very wrapped up in what our profession is. When someone says, "Tell me about yourself," you'll lead with your spouse, your kids, but also you talk about your profession. And I try and have my clients go through this thought experiment, a year into retirement, you meet someone at a cocktail party and they ask you, "What do you do?" Are you gonna be comfortable with the answer? And are you gonna be comfortable with the identity that you end up with when you don't have an answer other than, "I'm retired and I play golf," which is fine, but I think it's a much easier transition if you would consider working part-time or doing some consulting or at the very least volunteering and keeping yourself busy and engaged, especially in those early years, because that transition to a cold turkey stop working type of situation is quite dramatic. And the other thing that we warn people against, for those of us, folks that are our clients, they're savers. They've built up a nice nest egg. That's why they need financial planning. But as a saver, you've spent your entire life with money going in the right direction as we say. You've been putting away money into those 401ks and into your other savings vehicles and investment vehicles. When you retire, that flow turns around and comes the other direction and that is, for most people, very, very difficult to get used to. You've prided yourself on being a saver all these years. You never really worried about running out of money until you retire and that flow of money starts to go the other direction. It looks great on paper and it looks great in the software that we run and the plan is rock solid, you're not gonna run out of money, but it's easy to tell someone that, but the emotional side of our psyche jumps in pretty quickly when that money starts to go the other way and you really need to be prepared for that and be 100% sure that you've got the right plan in place. Yeah. What would you add to that as people prepare going into retirement? Yeah, I would just wholeheartedly agree that that change from the accumulation to the decumulation phase of your life, it's an incredibly emotional change for people that most of them are not ready for it. They're just not prepared for it. I think this is a part for us as well where tax planning really starts to become paramount. Most people at this phase of their life probably have some tax-free money in Roths, some tax-deferred money in 401ks and IRAs, as well as some taxable assets in a brokerage account. And really thinking through how they're going to use those different buckets of money in the most tax-efficient way to create cash flow for them to live off of becomes really important because you can make a lot of mistakes. You've saved, you've accumulated, hopefully you've invested well, now how you deinvest and create cash flow from those different pockets at different points in your retirement years before Social Security, before required minimum distributions, and you really think that through and plan it out, you can minimize a lot of tax friction if that's done really intelligently. It can get very complex. You need some serious strategies depending on the situation. You know, we don't have time to really get into all the different ways you can do that. I just encourage anybody out there, get with somebody like yourself, an advisor, a financial planner, because it's super important to have the right approaches as you get into that stage. So let's get into the next stage. You've saved, you saved, you've retired, you're comfortable, you're comfortable with the negative, the outflows . Now what's on our mind? 'Cause now we get into perhaps maybe gifting, a little more philanthropy, things like that. Tim, what do the post-65s need to be doing, right? Yeah, we should be thinking about legacy at that point and philanthropy, whether it be through volunteering your time, whether it be through contributing money, and that can be during your lifetime or it can be in a bequest to a charity after you're gone. And we're also starting to think about at that point gifting to the kids and the grandkids. And those conversations that we're having with our retired clients in that stage of life is, they all say the same thing, which is, "Well, I don't wanna ruin my kids' incentives to save on their own," right? And so there's this balance of, "I wanna help them out, but I don't want to destroy their incentive and I want my kids to save for their kids' college. I want them to have to be disciplined the way I was," right? And so there's this balance here between ruining your kids' and your grandkids' incentives, but also helping them out in the stage of life that they need it. And sometimes my clients aren't thinking about that aspect of it. Well, you know, if you have a client that's in their '70s and, "Well, my kids can have what's left when I'm gone," well, okay, but if you pass away in your 80s when they're in their upper 50s, they don't need the money as much then. Give them the money when they need it, when they're buying a home or they're trying to save for their kids' college and they're trying to pay off a mortgage or pay off student loan debt. These are the years when they really need the money. So you kind of have to balance those two considerations out. When is the money needed the most versus what's that gonna do to incentives? When do you start telling the kids how much money you have? Oh, boy. It depends. We don't. They do, right? We don't tell the kids, the parents tell the kids. And I say that to make the point of- And that's my question. That's a family by family decision. When do the parents, when do the parents tell 'em how much we have and how much they're going to get? And that's a very family by family decision, for sure. And what is the kid's reaction? Sorry to interrupt. How are the kids gonna react to that? Some kids will see that and, "Okay, well, I'm done working." And so we don't want that to happen. Other families, you know, the children are taking pride in doing things on their own. So, yes, it's absolutely a family by family decision to be made. But at some point along the way, you know, the kimono has to come off, right? I mean, as the parents get into that stage that we were talking about before where the kids are having to make decisions for them and if their, you know, health and mental acuity of the parents is declining, you need to bring the kids into, you can't just give them a partial view at that point. That's the point I think at which you really need to show 'em everything. So if you extend what Tim said earlier, the phases that the parent goes through, right? They've got kids that are in their 20s, maybe their 30s, and our experience I think is very similar to yours, where the parents are really concerned about those kids developing good habits and discipline around saving and investing. And I think our experience has been once they feel comfortable that those kids have good habits, so now we're talking about maybe roughly age 40, you know, late 30s to 40. At that point they see that the kids are executing, you know what I mean? They're disciplined, they're saving, they're investing, they're making good decisions. That's when we see Mom and Dad start to get much more comfortable sharing the details of the family situation. Before that, they tend to be a little gun shy, right? Because the kids just haven't proven yet that they can make really good decisions with that information. Hey, one of the things, too, I think in that age group, and again this is more from experiences, as you think through older, let's just say they're together, older couples, when do you bring the family together and talk about some of these things? Like, here's the wealth, here's how it might be distributed, the medical directives. It's almost like a role playing of this is the situation you're gonna have to make a call on. Do we pull the plug or not? Like, you don't know how you react until you're in the moment or... I just think those things are so critically important that people aren't prepared for or is there- Yeah. It feels like you gotta have that stuff in place. Or, sorry, not in place, but openly discuss. You do. There's no playbook for that. And this is why we see it go wrong I think so often, that there isn't a great playbook for that other than to say, "You do need to have this conversation." And, tragically, sometimes the conversation isn't had until it's too late, right? And too late meaning one of the parents is ill or is declining in mental acuity and then you're rushing to do this under duress. So, yeah, the best I think we can do is encourage people to, repeatedly encourage people to have this conversation before it becomes a crisis situation. Yeah. You know, Mark, we keep talking about emotions in different ways, right? So emotions around multi-generational planning, emotions around, you know, just retiring and moving from accumulation to decumulation. Another emotional state that we see all the time when somebody retires is they turn on CNBC every day. I mean, people that have never watched, I mean, they've been working their entire life and now every day they wake up and CNBC gets turned on. Another really emotional change for them, right? A lot of 'em have a lot of free time and so they start watching the business news, right? So another big emotional shift for them in retirement is just having the time to now start to take some interest in their investments where they've been maybe outsourcing that to us for even decades. And now all of a sudden, they're, you know, listening to, you know, business news all the time and wanting to take actions in their portfolio. So I would say, you know, tuning out the noise. You guys did a great movie on this that I think is available on YouTube, right? But that title of "Tune Out the Noise," boy, that's a big one for us. When somebody retires, getting them to be willing to tune out the noise and just focus on living a great retirement and living life, it's one of the biggest challenges we face. Yeah, and I think that dovetails well to what we were talking about before with you don't want to completely disengage when you're retired, and if you've got all this free time on your hands, you're gonna be watching financial news and political news on both sides of the spectrum and that will put you under emotional duress in a lot of ways. So stay involved and volunteer, get involved with your favorite charities, get involved with your grandkids. But staying home and watching 24-hour news is not a good pastime in retirement. I heard it well said, stay informed, you know, read or listen to what it is, and once you're informed, shut it off, right? And then you're done. Hey, two things I wanna get into here and get your thoughts on quickly, just kinda going back to some things I think that are pretty important probably for the audience and go back to risk mitigation. We haven't talked about umbrella insurance yet. We talked a little bit about life insurance and that, but even umbrella insurance, as you think about particularly, okay, your kids are driving now or maybe you happen to have a pool at your house, you know, there's accidents that can and do happen. You gotta be protected there. How do you talk to your clients about umbrella? Yeah, I mean, it's absolutely a discussion on the insurance side of just making sure that they've got adequate coverage. You're right, different families have different situations, swimming pools. You know, I'm in Idaho, a lot families are hunters and outdoorsmen and whatnot, right? So you've got, different families have different risk and that should certainly be covered through umbrella insurance and making sure that they've got an adequate amount of that. Just depending on the asset base of the family, that's gonna really kind of drive how much they've gotta have. Well, even examples, this happened, one of our neighbors in a previous place we lived where they had a dog and the dog bit the kid next door, got sued, and the insurance company, fortunately they had umbrella insurance, but settled for like a couple hundred grand. It was a, didn't even draw blood. So it was a pretty minor bite. Wow. So these things, you just need protection that you don't even know what you need it for. Well, and it's not, I would add to that it's not just about insurance, but how are your assets titled from a lawsuit standpoint, from a liability standpoint? This is, from personal experience, something we weren't really thinking about that our attorney, our estate attorney, encouraged us to do. When you've got teenage drivers, whose name is the car in, right? Even when you have adult drivers, you're not owning your cars as joint owners. And when that teenager becomes an adult, you want that car in his or her name as soon as possible, right? And so these are little details that we don't often think about with respect to how am I titling my assets that can have huge implications from a liability standpoint. Yeah. The other thing I wanted to ask you guys, this goes back to maybe it's the post-retirement, thinking about some of the gifting and things like that, donor advice funds can be pretty effective. Let's just, you know, summarize what a donor advice fund is and how you guys talk to your clients about that. So donor-advised fund is a, it's a easier, more simple way to, I like to think of it as a simpler way to have a lasting family foundation type of a vehicle from which you can make contributions. So with a donor-advised fund, I can make contributions to the fund today, I get the tax deduction at the time that I make the contributions to the fund, but I don't have to distribute it out to charities until some date in the future. So it's a place where you can put your charitable contributions in there and give them out in large amounts, small amounts, at a future date. And you can keep it there in perpetuity. For us, we've used ours in our family as a way to kind of get my kids on board with what our charitable mission is and we make regular contributions to it. But at Christmas time every year, we get the family together and we talk about, "Okay, this is what we're gonna be giving away this year," and we ask the kids for input as to give me two or three charities that you think are a good idea as a recipient of some of what we're gonna give away and why is that? And so by allowing you to manage, you're separating the tax deduction from the actual gift to the charities through the donor-advised fund. It gives you a lot of flexibility in that respect, allows you to optimize it from a tax standpoint, and it gives you something to kind of rally around, rally the family around, as far as deciding what it is you stand for from a charitable standpoint. Yeah. Anything you'd expand on with that? I'd bring it back to my point earlier on tax planning. This post-retirement timeframe for people that have had the, been fortunate enough to accumulate assets in different buckets, a donor-advised fund becomes a really important tool in really optimizing people's retirement tax situation. It can be a wonderful tool when combined with like an IRA to Roth IRA conversion, right? You can offset that income with a contribution to a donor-advised fund and it's a tool in the toolbox of really creating a pretty tax-efficient lifestyle after retirement. But tax planning in retirement can get really tricky and it can be really important and a donor-advised fund can be a great tool in helping somebody both help them achieve all of their philanthropic desires while making some really smart tax-efficient decisions. Thanks for going through those couple topics with me. I just wanted to make sure we touched on those. So let's just wrap it up here and bring it all together. We kind of went through, I'll call it the financial journey and the different stages through that. As you think through, say, at the high level, any overall summarized comments you want to make here on that? And Tim, I'll start with you and then I might throw a few in and then Mike, we'll go to you. Okay. I think of all the things we've talked about in both of these episodes, the one thing that is crystal clear is start when you're young. The power of compounding, as we've said, is magic. And if you can, excuse me, if you can start when you're young, even with small amounts of contributions to a 401k or a Roth 401k, the implications for you and for your family off into the future are tremendous. And the other thing too is as far as the other stage of life, when you're at the end stages of life and starting to think about what to do with these assets that you've accumulated, spending money on others is gonna bring you more happiness than spending it on yourself. And when you get to those later stages of life, and we did touch on this, it's better to do things than to have things. But I see this from my clients all the time. They've never been so happy about their money as when they gave it away, whether it's to their kids when they can make a meaningful impact on the lifestyle of their children or to a nonprofit that's important to them, that's the most impact that their money has. So when you get to that other end, you should really be thinking not what my money can do for me, but what it can do for other people. And there's been a lot of studies on that. The data's really clear that's what's gonna bring you the most happiness with your money. You know, Tim sort of took the, you know, kind of the planning/emotional side of this. I'll take more of the investment portfolio management side of this, right? Which is, he definitely talked about starting early, compounding, right? I would say when we think about what people can do to put the odds in their favor from an investment standpoint, so you're saving that money now, right? Get it really broadly diversified in a really low-cost way, right? And if you can do that from a really young age, you talked about not gamifying it, right? But if you can just have a really disciplined approach, you can tune out the noise and you can take appropriate amounts of risk in a really low-cost, broadly diversified way and you can let that compound for decades upon decades, you're gonna be in really good shape someday. Yep. My, I think, key takeaways as we wrap up here, a couple things. I think one is go back to the family dynamics and make sure everyone's very well aware of what those things are as you have the aging parents around that in terms of their wishes, directives, emotionally, all that. I think the other one is we've gone through different stages here, and for me, every one's important. I don't feel like there's one more important than another because the one down the road is a function of what happened early on. So each one of these different stages are super important. I think for many families, you can't afford to screw it up. And a lot of things we've got into here can get very technical and strategic. So I just encourage everybody out there just to get with a financial advisor, a financial planner, to make sure you got the right plan in place for you and you're optimizing the decisions as best you can. So with that, gentlemen, thank you. This was a lot of fun. It was fun. I really appreciate you guys taking some time away from the conference room. Thanks for having us. And joining us here. Appreciate it. Thank you for having us. Listen, your clients are lucky to have you. You guys do phenomenal work and I'm sure you're very rewarded emotionally by the impact you have on families. Absolutely. We are. So, congratulations to the work you've done there. Thank you. With that, thank you all for joining us here. Today was part of the session around making the best decisions with your money over time. Be sure to go check out part one if you haven't done that yet. Thanks again for joining and have a wonderful rest of the day.