Show Notes

• 00:00 – Intro: This Week on the YMYW Podcast
• 00:47 – Rebalancing Asset Allocation of US Stocks, International Stocks, and Bonds (DJ in St Louis)
• 07:21 – Can I Do a Roth Conversion and Have No Capital Gains Tax? (Tim the Enchanter, FL)
• 15:44 – Watch Financial Planning at Every Age on YMYW TV, Download the Retirement Readiness Guide for free
• 16:41 – Municipal Bonds in a Brokerage Account: Good Idea? (Coach Dobber, MN)
• 22:48 – Told My Wife We Need $6M to Retire in 20 Years. She Says I’m Silly. (Duke, upstate NY)
• 27:09 – Calculate your Free Financial Blueprint, Schedule your Free Financial Assessment
• 28:54 – What Is an Emergency Fund and How Much Should I Have in It? (Daniel, Stevensville, MI)
• 36:00 – YMYW Podcast Outro

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Transcription

(NOTE: Transcriptions are an approximation and may not be entirely correct)

Intro: This Week on the YMYW Podcast

Andi: What should you do when the asset allocation of your retirement portfolio drifts? Joe and Big Al spitball on rebalancing for DJ in St. Louis, today on Your Money, Your Wealth® podcast number 530. Plus, Coach Dobber in Minnesota is curious about municipal bonds in a brokerage account, and Daniel in Stevensville, Michigan needs details on emergency funds. Also, can Tim the Enchanter do a Roth conversion and avoid the nasty big pointy teeth of capital gains tax? And, Duke in upstate New York told his wife they need 6 million dollars in retirement, and she said he was silly. What say Joe and Al? We’ll find out. Click or tap Ask Joe and Big Al in the episode description to get your own Retirement Spitball Analysis. I’m Executive Producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

Rebalancing Asset Allocation of US Stocks, International Stocks, and Bonds (DJ in St Louis)

Joe: Alright, let’s go to DJ from St. Louis. you recently answered a question of mine regarding, they have a 60 40 globally balanced fund in the de cumulation phase or separate funds.

You both preferred three funds. I don’t think we preferred three funds. I think we are just trying to keep it simple for you, DJ.

Al: Yeah. There’s more than three you might want, but three Three is kind of what we, if you wanna be as simple as possible.

Joe: Yeah. Because you wanted one fund. Yeah. He was like, should I go into one fund? No, don’t go into one fund. And if you want to keep it super simple, go into three funds. Yeah. At least have these three. But then now he’s coming back to us Big Al. Okay. And he is like, all right, you. Preferred three funds, a, global US stock market fund, an international fund, and a bond fund. I had a second question that we overlooked, so he is gonna ask it again. If you choose these three funds, what’s your take on rebalancing? In other words, I. Do you like the idea of separate funds? I think because I could sell what is winning and that might rebalance the portfolio. That makes sense. But I would assume that you’d like to rebalance when a plan asset allocation IE 60 40 drifts to 65, 35 or 70 30.

Al: Right. In other words, I think that you are stating that you like the flexibility of selling US stocks, international stocks, or bonds at the time of the need for rebalancing or the need for cash. But let’s say that’s March, 2009, happens again, you would rebalance right? Look what’s up with people saying, right?

Joe: Is this your brother? It could be to keep up the risk level that the 60 40 asset allocation. Do you rebalance when the portfolio asset allocation is off, and if so, by what percent? 5%. If you don’t recommend rebalancing based on a percentage of the movement of the asset allocation from its target, would you be so kind to explain why? You guys are the best. I love your show. Okay. Yeah. You wanna rebalance, and it’s based on bans of the percentage of the asset allocation that you’re in.

Al: Right, and you can pick any number. I mean, we, personally as a firm, well first of all, we, our client portfolios are usually 12 to 16 different asset classes, so you have a better opportunity for rebalancing and tax, less harvesting. But I think when we answered your question first that you want to kind of keep it simple so we answered it. Just at least have these three. But if whether they have three or 15 or 20 or whatever, how many. Funds you have. The way we look at it is once it’s 20% outta whack, we rebalance, which means if your allocation on, let’s just say large company stocks is 10, 10%, that’s what you want. Once it gets to 12% or at 20% deviation, we’re selling to get back to 10, or if it gets to eight, it’s too low. You’re buying to get back to 10. Right now, you could pick 10%. You could pick. 15%, whatever number you want. but a lot of people think that’s too much work. So they just look at it once a quarter or even once a year, which is better than nothing.

Joe: Yes. So you’re managing the risk by rebalancing. So you’re creating discipline in the overall re you know, approach of your investment strategy. Here’s what human nature does. You know, we’re living in a volatile stock market today. When the market drops 5%, you know, what do most people do? They’re not necessarily buying, they’re selling, they’re getting out of a certain asset class, or they’re looking at their portfolio and they’re seeing, alright, well which ones are doing well in this environment and which ones are doing poorly in this environment? And they think that the ones that are currently doing poor are gonna continue to do poor. So they’re selling those assets. And then they’re buying the ones that are doing well. So they’re buying the winners and they’re selling the losers. Rebalancing does the exact opposite. So you’re selling your winners and buying your losers, and if you just hear that out loud or try to say that out loud, it’s like, well, what are you talking about That doesn’t make any sense. Why would you wanna sell your winners and buy losers? Well, when you buy the entire asset class, you’re not necessarily buying individual stocks. That could be a falling knife. You’re buying hundreds of stocks within the overall asset. And so if it’s large companies, like a example, or it could be smaller companies, could be international, it could be value, it could be growth, whatever that you’re looking at, you’re buying all of those stocks in that category.

So in general, all of those stocks kind of work together. You know, of course you’re gonna have stocks that outperform and you’re gonna have stocks that underperform. That’s why you wanna buy a big basket of those stocks. And you wanna have the same characteristics of those stocks. So if you wanna do three asset classes. So let’s say international does really well. US does poorly. I’m selling international. I’m buying US, right? Or if both of those asset classes go down and bonds go up, I’m selling some of my bonds because I wanna buy low. I. Right then you’re gonna get the recovery. So I’m buying the same really good companies at a lower price. And so that’s what people need to be thinking about, especially in turbulent times like we’re experiencing, you know, over the last several months, is that this is a phenomenal time to be thinking about what is your strategy in regards to managing the risk. Because the last thing you wanna have happen is that you have a 60 40 asset allocation and then that thing goes way outta whack. You’re just gonna be taking on way too much risk or not enough risk.

Al: Yeah. I think that’s right. Right, right. And I think I heard, it explained to me many years ago, and I kinda like this explanation, it is just a disciplined approach. So if you do that, stocks go up. Right. And so you’re actually forced to sell. Right. There you go. Good. So stocks go up. And you have a disciplined approach to sell. What are you doing? You’re selling high. That’s what you’re supposed to do. Stocks go down. You’re not selling more. You’re buying. You’re buying low. It forces you to sell high and buy low. And I’m not talking in it of the market, outta the market. I’m just talking about shaving off some of the gains. Or buying some, when you’re a little bit lower, you’re just making small course corrections and it forces you to sell high by low, which is a good strategy.

Joe: Yeah. It just takes some emotion out.

Al: It does. Yeah.

Can I Do a Roth Conversion and Have No Capital Gains Tax? (Tim the Enchanter, FL)

Joe: Yeah. All right. Let’s go to Tim, the Enchanter from Florida.

Al: Tim, the Enchanter, huh? Okay. That’s quite the name.

Joe: Yeah, it’s Hi gentlemen and Andi. Love listening to the show in my 2014 Defender. 2024. Yeah. There’s what the hell’s a defender? It’s this, I don’t know, Range Rover. Is it a Range Rover? Oh, look at Aaron, the producer. Andi, look it up.

Andi: Yeah, it’s a Land Rover, apparently, a Defender. And Tim the Enchanter is from Monty Python.

Joe: Ah. Oh, okay. Okay. Okay. I thought maybe the defender was part of the, enchanter could be favorite vehicle I’ve ever owned. This particular question stems from, your money or Wealth YouTube clip. I was watching in the hot tub. Ooh, with a margarita this past weekend. Why in hell would you be in a hot tub listening to this?

Al: Do you, well, you have a hot tub. Do you have a tv? Right?

Joe: You know how many times I’ve been in my hot tub?

Al: Probably not too much.

Joe: Zero.

Al: Why is that? It’s for, the kids, right?

Joe: I don’t, no, it’s just like I’m not a hot tub guy. Not even close to a hot tub guy.

Al: It’s like, I guess I’ve never seen you in a hot tub.

Joe: Absolutely not. And I think you never will.

Joe: You’ve never seen me in a hot tub either.

Joe: It’s like on purpose. Yeah. I went on a golf trip one time and they’re like, oh yeah, I can’t wait to get in the hot tub. I’m like, what? I’m not getting no hot tub.

Al: Okay. Well, I, on the other hand, like hot tubs. I have one, but I’ve never done it with you. And I guess that’s why you’re not, we’re not, no, we’re not hot tubbers.

Joe: We’re not.

Andi: Joe, what’s your, offense to hot tubs? Why don’t you like them?

Joe: I don’t know. I just think it’s just sitting in there. It’s what are you just sitting there with water and bubbles?

Andi: You’re supposed to relax. It’s supposed to be hot. It’s supposed to be nice and relaxing.

Al: It relaxes your muscles. No. Now that you’re getting older, more ache, aches and pains. No. No, not gonna do it

Joe: or go in the pool.

Al: Okay.

Joe: The pool’s good?

Al: Yeah. Okay. You move, you swim, but then it, you get kind of chilled and you wanna do the little hot tub before you get out?

Joe: No. No, no shower.

Al: Shower works for you?

Joe: Yes.

Al: Okay. Shower works just fine. Okay.

Joe: I don’t know. It just kind of grosses me out for some reason. It’s like, it’s a lot of stuff going on in the hot tub.

Al: Well, it’s a small amount of water with a lot of people. Yeah. So I think that’s what you’re referring to.

Joe: You get, there’s like seven people all crammed in there. Their arms around each other. You got just hair everywhere. It’s like, no way. not your thing. Nope. Okay. No, thank you. All right. I’ll be on the patio having it a beer.

Al: Okay. You know, you guys you’ll be watching

Joe: Yeah. When you get done with your hot tub and come join me. Just come join me.

Al: Okay. So, all right. All is there more or is that it?

Joe: That’s it. no. So, but life is good for, Tim the Enchanter. He’s got his margarita chilling in the hot tub.

Al: Yeah.

Joe: Do you think it’s like, like an above ground or is it like embedded in the pool? What’s, what, type of hot tub do you think our boy, Tim’s got, he’s in Florida.

Al: Florida. I’m gonna say above ground.

Joe: That’s what you got, right? You got the above ground. You don’t have a connected to a pool?

Al: No, I don’t. I don’t wanna pool.

Joe: Yeah, you just have the big hot tub. I want the hot tub. Yeah, you gotta get in the stairs. You stand up.

Al: I just climb in and climb out. I don’t need stairs.

Joe: Okay.

Al: I got a little, shelf behind where I can put my beer. Okay. I got no TV there. I’m, looking at nature.

Joe: Oh, got it.

Al: Our beautiful backyard.

Joe: Got it. Got it. Yeah. yeah, and the neighbors are like, oh, there’s creepy Al again in the hot tub. There he is again.

Al: We got four kids and two dogs next door. They’re just looking over, oh, what’s going on?

Joe: Life is good indeed. In the clip Big Al discusses capital gain taxes for low income earners. In my case, a no income earner. Here’s my question. 2025 me capital gains rated 0% under 96,700. If I add in the standard deduction of $30,000 in my HSA contributions of $8,500, I come up with a total of $135,000,

Al: And that’ll be of gross income.

Joe: Okay, but he’s talking 96 7. That’s the tax plus another 30, so that’s a hundred plus pre-tax. 85. So he’s saying 1 35.

Al: He’s saying I make 135, but with-

Joe: No. He’s, I don’t think he’s saying that.

Al: Well, he’s, you’re right, actually, he’s saying if he has 135,000 of income, it’s 0%. It’s 0% ’cause it gets them to 96,000 taxable. You got it.

Joe: Yep. Okay. Okay. If I have $20,000 in interest income and another $15,000 in capital gain income, does this mean I can do a hundred thousand dollars Roth conversion and not subject any of my capital gains to be taxed?

Al: The answer is yes. Yeah, it is, yes. And especially in Florida, because Florida has no state taxes, so typically this is only a federal rule write the 0% capital gains. But Florida Joe with no state taxes. Yeah, zero tax. All good.

Joe: I assume would just pay regular income tax on 120,000 that did not come from the capital gains. Now, which would most be 10% or 12% above the 23,000, okay. Blah, blah, blah. Yeah. Does this sound right to you? So. Yeah, so again, to explain it, what he’s doing is looking at the tax tables to say what is the top of the 12% tax bracket for Mary? Finally, jointly, and it’s roughly a hundred thousand dollars. I’m not gonna get to the penny here as, Tim the Enchanter chilling in his hot tub watching me, that clip, just watching Big Al clips. Just wish wishing Big Al was in his hot tub-

Al: It’s getting a little weird with Tim the Enchanter. I don’t know.

Joe: Oh God. Yeah.

Andi: In Monty Python, in the Holy Grail, Tim the Enchanter was a pyromaniac. He was a wizard.

Joe: Okay. Alright. Okay. Playing in the hot tubs to keep the fire down. So a hundred thousand dollars of taxable income, you can have up to a hundred thousand dollars of capital gains and be 0% tax. We call that tax gain harvesting. So if you wanted to diversify out, you can sell some stocks, buy the stock back the same day, right? There’s no wash sale rule, so you sell and buy it back, and then that just increases your overall basis. Or if he did a Roth conversion, he just wants to make sure that total income plus the standard deduction stays under that a hundred thousand dollars of taxable income and you’re all good. If he went like a little bit high on the Roth conversion or maybe there was a little bit more interest in dividends. Just a small portion of that then would be subject to the capital gains. ’cause capital gains sits on top of the ordinary income, so it’s not like your capital gains. Sits on bottom. It’s like, all right, well I got $80,000 of capital gains. I don’t want to pay tax on that and put another $50,000 of ordinary income. It’s the opposite. So it goes ordinary income first, and your capital gains will sit on that ordinary income. So just a portion of whatever cap gains that you have would be taxed.

Al: Well, and I think that’s a good point, right? Which is if you go over, and this is true always of new tax brackets. If you go over by a dollar, that extra dollar is taxed at the higher rate. Everything else is taxed at the lower rate. So a lot of people still have that misconception. They go over a dollar, they’re in a new tax bracket, they’re gonna pay thousands more. That’s not true. It’s just that extra dollar.

Joe: What, does that apply to though?

Al: There’s a couple things. You know, people, well, there, there are some cliffs like IRMAA.

Joe: IRMAA, it’s a cliff, isn’t it?

Al: Yeah, that’s right. I guess, there’s Social Security, a cliff, you’re over a certain amount. You gotta pay a higher percent. There’s the real estate, where you could deduct up to $25,000 of losses. That would be another cliff if you go over a certain amount. Although that’s a, graduated cliff. So the QBI is a cliff. I mean, there are cliffs, so I guess I’m oversimplifying, but in this case, it’s not a cliff.

Joe: Got it. All right.

Watch Financial Planning at Every Age on YMYW TV, Download the Retirement Readiness Guide for free

Andi: Whether you’re a Millennial, a Gen-Xer like Joe and me, or a Baby Boomer like Big Al, the stakes are high when you’re trying to create financial security for your future. Watch Financial Planning at Every Age on Your Money, Your Wealth TV, as Joe and Big Al guide you through the financial strategies and goals that each generation should implement that can mean the difference between a retirement of scarcity or a retirement of abundance. Click or tap the link in the episode description to watch Financial Planning at Every Age. Then click through to our YouTube channel to subscribe and join the conversation in the comments. Also, download the Retirement Readiness Guide for free to learn the secrets to controlling your taxes in retirement, creating income to last a lifetime, making the most of your retirement investing strategy, and much more. These 7 plays will boost your retirement readiness despite the uncertainties of market volatility, inflation, rising healthcare costs, and the future of Social Security and Medicare. Now go to the episode description and get watching and downloading.

Municipal Bonds in a Brokerage Account: Good Idea? (Coach Dobber, MN)

Joe: Coach Dobber. He is back from, the good state of Minnesota, my home state. I’ll be there in a couple weeks. I think.

Al: A couple weeks. Okay.

Joe: Yes, sir. Well, a couple months.

Al: Is it weeks or months?

Joe: Well, I don’t know when this will air, so it’s evergreen.

Al: Got it. Okay. It could be anytime. You might be there right now, probably.

Joe: Let’s see, him, anything with alcohol.

Al: That sounds like you already.

Joe: All right. In the 2018 Ford Explorer, her wine. 2019 Acra, RDX two Middle school girls, a cat in a cava pool. To refresh your memory, you helped us, me think about a home purchase in 2023. Interest rates were low and one end on one end, much higher on the other. Oh yeah. I remember Coach Dobber.

Al: Yeah, me too now.

Joe: And it was Big Al’s smooth, soothing words. That helped me relax about the whole thing. Happy to say we went for it and everything turned out much better than I imagined. Joe, you were pretty emotional as well as it seemed you were going through the same thing. Very similar. Yep. Yep. I do remember that.

2023. Hope all was, hope Al was able to calm you down too.

Al: Did I calm you on that?

Joe: Oh yeah.

Andi: In the hot tub?

Al: Yeah. Jumping right back in that house. You got get fired up tonight.

Joe: Oh my God. Looking for your thoughts on a different matter. Municipal bonds and brokerage accounts. All right. We finally got to the point where other retirement accounts are growing nicely and there’s money left over to start building a brokerage account balance. We’re in the mid-forties and curious about how you look at total return when factoring the tax-free gains of in-state municipal bonds. I know they don’t return nearly as much as other investments, but how do you look at the total return? Because our brokerage account balances are so low, it’s difficult to imagine taking greater risks in. It feels like the market could be wobbly for a while. We have a high yield savings account and just looking to build a little nest egg in a BA as well in a brokerage account. Brokerage account. Okay, BA, if this is an as nine way to establish a BA.

Al: That does have another little as nine BA left.

Joe: How do you suggest people dip their toes into the waters? Thanks so much for your time. Continued success and laughter. Coach D. Coach D. Okay. Alright. No, this is not as nine at all, coach D but here’s, this is, this is a common, I wouldn’t say it’s an issue. I wouldn’t say it’s a problem. I think it’s a characteristic of investors is they treat brokerage accounts so differently than any other account that they have.

Al: Yeah.

Joe: They don’t wanna lose a penny. It’s like, it’s a money’s money. So you just gotta think about your retirement accounts, your for growth, your brokerage accounts. Are they for growth? Is your cash accounts, no, those are not for growth. Your Roth accounts, what are the goals? Then you just look at your entire portfolio and then you wanna make sure that you’re thinking about the taxation of the portfolio. So if I have a brokerage account that I’m trying to grow and I’m in my forties, I’m not going municipal bonds. I want to go very tax efficient stock. ETFs, mutual funds, individual stocks, whatever that you want to do. I want growth there because then when I sell it, I’m going to be taxed at a lower rate. I get tax free. Income is fine, but do you need the income? I would much rather have growth than income in my forties, especially when he says that he’s already saving above and beyond the retirement accounts, right? That he has extra cash, so now he wants to start a brokerage account. I would not go Munis, I would go stocks. But your total return is basically your growth plus income, plus your tax benefit. So what’s your growth component of a municipal bond? It’s not that great, right? You’re buying it for income. And then so what’s the income, what’s the yield on the overall municipal bond? And then you’ll calculate your tax equivalent yield. Depends on what tax bracket that you’re in.

Al: Yeah, that Well, that’s exactly right.

Joe: So is that 4%, is that 6%? Is that 7%? That’s great. But I would much rather have the opportunity that’s on the high end.

Al: Right.

Joe: I’d much rather have the opportunity to make 8, 9, 10, 12, 15% over a long period of time in a tax favored account.

Al: In a tax favored account. Right. Which, which brokerage account?

Joe: Is that your BA?

Al: Yeah, the BA. Couple, couple exceptions. I think one is your emergency cash safety that needs to be safe. Number two would be cash that you set aside for some short term purpose, like let’s say a down payment on a home or a vacation. Property, whatever that you wanna buy within the next year to two. Yeah, that would be really safe. But everything else in your brokerage account, consider that part of your investments and definitely you actually want growth in that account. ’cause as Joe said, you it is tax favored ’cause you got a capital gains rate.

Joe: Yeah. Pick a total US stock market. ETF, off and running. Yeah. Simple. Yep. Like it. All right. We agreed. Right, right. I wonder how that house is going. I guess that that house is working out perfectly.

Al: Yeah. I’m glad I could soothe you. Coach Dobber.

Joe: Yeah. I wish I could say the same.

Al: Well, you bought a new house about the same time.

I know. Yeah. Yeah. And how’s that going down the street?

Joe: Yeah, I know. Three, three hours.

Al: I know it’s way much better neighborhood, right?

Joe: Oh yeah. The neighbors are so much better. It’s almost the same neighbor on one side of the house.

Joe: They’re just on the left now. They’re, yeah, exactly. Yeah. But no, it was a little noisy on the other side.

Told My Wife We Need $6M to Retire in 20 Years. She Says I’m Silly. (Duke, upstate NY)

Joe: All right. Let’s go to Duke from Upstate New York. Hi, Joe. Al, Andi. Well, I put that outta order. Let’s just keep natural. I’m so glad I found YMYW. If it wasn’t for your show, I’d still be shredding canceled credit cards into pieces, loading bricks of cash into empty envelopes monthly, and living a curiously odd rich life consisting of a fridge full of seltzer waters and driving a 2005 Chevy Tahoe with 230,000 miles.

Al: I think I know who he is referring to.

Joe: Yeah. Mr. Ramsey, how is this rich? It felt like Frank Costanza on the Festivus episode. Festivus for the rest of us. I remember, wasn’t it a poll that they kind of sat around Festivus, the Festivus pole.

Andi: Yes. And I think it’s George Costanza this, this from Seinfeld, right?

Joe: Yeah, yeah, yeah. George Costanza. Yeah, Festivus. For the rest of us there has to be another way. Your Money, Your Wealth is the other way, has steered me to the path of financial freedom, so thank you. Me and my red-hot smoking wife. Oh my God.

Al: Oh, that’s cool.

Joe: Yeah, we’re at 42 and 40, and when the topic of money comes up, I tell her we need $6 million US dollars to retire in 20 years. She says, I’m silly. Well, you please spitball my silliness. Our average spend is roughly a hundred thousand dollars a year. All right. Okay, here we go. Silly. 6 million bucks. Here we go. I’ve always heard the purchase power of the dollar decreases by half every 20 years. So to maintain our current lifestyle at retirement, we’ll need to draw $200,000 annually with life expectancy rates increasing. The 4% rule seems relatively aggressive at 60 and 62, so we might need to drop that somewhere between three and a half. Maybe 3.75, which puts our retirement target between 5.3 and 5.71. Woo. Talk about a fat wallet. Big Al’s got that fat wallet. That’s why we call ’em Big Al. Although it’s not the $10 million whopper Suze Orman says you need anyways. Do you agree with the logic of my target? We have no pension. Currently have one and a half million dollars of investment split equally between Roth, traditional and taxable accounts, assuming the rule of 72, that pot should double twice before we retire in 20 years, putting this on track towards the target. What else do you recommend we do? Right, besides converting traditional to Roths? Of course. Thank you, Duke.

Al: Okay. I did some math already. Joe, you can, you can follow up with that. Alright. I would say hundred.

Joe: What? 20 years? What’d you use? Three point and five I. Oh, for inflation?

Al: Mm-hmm. I just did three and I got about 180,000. So 200,000 is about right.

Joe: Okay.

Al: That’s the need. I divided that by 4%. I think four percent’s actually. Okay. Because of, of Social Security, which he didn’t mention. But assuming that there’s Social Security, which there would be. Right? Right. So then, uh, here I, now I. I’m my brother and me at the same time.

Um, so yeah, $5 million, 200,000 divided by 4%, $5 million. That’s what I get. I think. I think you’re kind of on track with your analysis. And so what I did was you got a million and a half, I said 20 years, 6%. How much do you need to add every year? To get 5 million. It worked out to about 27,000, which I think is probably doable based upon your savings already.

So I think you’re on track and I think you’re probably pretty close to what, uh, what you’re thinking. So I, I give you the victory over your wife on that. You’re

Joe: not silly Duke, and that’s silly at all. A hundred thousand dollars, 200,000. Yeah, I like it. Anything else that you should be thinking about?

Al: Besides Roth. Well, that’s, that’s, that’s it. Roth, put money in a Roth. That’s it. That’s all we do is just Roth it.

Andi: Gotta Roth it.

Al: Okay. Okay. I like it.

Calculate your Free Financial Blueprint, Schedule a Free Financial Assessment

Andi: Duke, we didn’t have a lot of your numbers, but I plugged what we did have into our Financial Blueprint tool. Ages 42 and 40 for Duke and Red Hot, and I totally made up that you make $150,000 combined and that you save $25K a year, we know you do have $1.5 million saved, and want to spend $200K a year in retirement, or $16,667 per month. I used the Blueprint’s default of $58,000 a year in Social Security based on the fake numbers I fed it, I said you want to retire at 60, and here’s what it said: the likely minimum you would need to have saved by the time you retire is about $2 million bucks. In “the retirement zone” is about $4 million, and the likely maximum you would require would be $8 million. And remember, this is based mostly on me guessing your numbers, but it’s still within the zone. So of course the tool suggests you need to build your investment portfolio, avoid taking on too much or too little risk, and allocating no more than two thirds of your savings to retirement accounts. Now it’s your turn. Click or tap the Financial Blueprint link in the episode description, enter your real numbers and details, and see how you’re doing as you plan for retirement. Next, schedule a free financial assessment with one of the experienced human professionals on Joe and Big Al’s team at Pure Financial Advisors to review your Financial Blueprint. They’ll help you develop a thorough financial plan that addresses your unique immediate needs and your long-term retirement vision. At the end of the assessment process, you can decide whether Pure Financial Advisors is a good match for your retirement planning needs, and what those next steps look like. Click or tap the links in the episode description to get your Financial Blueprint and to schedule your Financial Assessment – both free, courtesy of Your Money, Your Wealth and Pure Financial Advisors.

What Is an Emergency Fund and How Much Should I Have in It? (Daniel, Stevensville, MI)

Joe: Here we go. Last one for today. Yeah, we got Daniel from Stevensville, Michigan. Oh rah?

Andi: Oorah.

Al/Joe: Oorah.

Joe: Oorah, Oorah. Your Money, Your Wealth. Big Al. Oh, I get it.

Andi: I don’t know why you’re separate, Big Al. It’s Your Money, Your Wealth, and Big Al.

Joe: All right, love it. Okay. To give you a quick insight about me, I served in the United States Marine Corps from 2016 to 2024. Great. Well thank you for your service, sir.

Al: Right.

Joe: And then transferred into the Michigan Army. National Guard is a weekend warrior, one weekend a month, and two weeks during the summer, and I’m an assistant manager at a Courtyard by Marriott. I do love reading and running six miles a day, trying to keep up with Big Al. Sounds like Daniel’s got a little crush. I run my six miles in 45 minutes. Not bad for an old guy. I’m 28 years old. That’s impressive. Six miles in 45 minutes.

Al: That’s fast. I run a 5K, which is about three miles in about 29 minutes. And that’s as good as I can do

Joe: on your motor scooter?

Al: No, no, I do, I do, I do a few five Ks each year. No, as you, but-

Joe: I thought you were gonna say a month.

Al: Yeah.  No, just like your boy here. Not bad, but I do, I, I use the elliptical and I do run the stairs. Where’s at your house? Uh, in the stairs? Yeah.

Joe: Yeah.

Al: Do you have an elliptic go out in the house? No, that’s at the gym. Oh, got it. Where do you go? Bay Club. Bay Club.

Joe: Oh, I’ve never been there.

Al: Oh, the Carmel Valley one. You, you go to the Fairbank. I’ve never been there. Never been there either. You remember? I know. Does it? You don’t like hot tubs?

Joe: Yeah, I don’t like hot tubs.

Al: No.

Joe: I,

Al: no, no. Okay. I’m seeing a pattern. Yeah. What now? Now it, the Bay Club does have a hot tub. Hot tub at a gym. Because you went, now that would be something.

Joe: Alright, so you go to the gym. Right. You get done with your workout, you’re gonna jump in the hot tub at the gym, or do you only go to your own personal, private hot tub? I go to my own, but I mean, are you opposed to go to the gym hot tub?

Al: I have, and I don’t do very often because of the, because of the same thing you’re talking about.

Joe: So, I mean, how about the guys that are like, you know, they jump in there without any clothes off.

Al: Well, that’s not true at the Bay Club.

Joe: I, well, we’ll see. I don’t know. I Why you going, you gonna go check it out? I know. Maybe I got started when I was a kid, when I went to a gym and then all of a sudden you see guys just going into the hot tub and they start ripping off their trunks.

Al: Now you’re thinking of the, that does happen in the sauna.

Joe: Oh God.

Al: You wanna do? I love saunas, but I’m only gonna do a sauna in my own backyard. You want to hit my house? So tonight we’ll go to the gym, we’ll go to sauna. Let’s, let’s, and then jump. Perfect. Naked.

Andi: Wow, this took a weird turn.

Joe: All right. My question is about emergency fund and how much should I have in it, and how do I start an emergency fund? PS, what are some other great financial podcasts to listen to? I do tell everyone and everyone I know about Your Money, Your Wealth.

Al: Other great podcasts to listen to.

Joe: Yeah. Financial podcasts.

Al: Yeah. What do you like?

Joe: I like, The Compound and Friends. Josh Brown.

Al: Okay.

Joe: I also listen to, financial podcasts…. I listen to Meb Faber, we’ve had him on the show. Remember him?

Al: Yep.

Joe: I listen to Animal Spirits.

Al: Okay, good.

Joe: What else do I listen to? That’s about it. Most of the podcasts I listen to are golf.

Al: Something other than what we do every day. Yeah. Yes. I would tend to agree. I’m actually, I’m not much help there. I used to like Ric Edelman’s, but he doesn’t do those anymore.

Joe: He’s done. He’s retired.

Al: Yeah. Yeah.

Joe: Well, he’s done the second phase of life. He’s lived to 190.

Al: That’s what he says. Yeah. He’s going to space. I guess he still does a podcast on crypto.

Joe: No, I don’t think so.

Al: Really? I think, yeah. I think that’s done too. Yeah. I listened to the last episode. Yeah.

Joe: Okay. All right. Anyway, the question is emergency fund. So I would say set aside three to six months, how do you start it? Very easy. You go to your bank, set up account, have it separate from your checking account so you’re not, you’re not you, you’re not, um, thinking you’ll touch it. It’s completely separate.

Only use it for emergencies, but yeah, start, start small, build up to three to six months and then call that good. If you have any extra money to invest, then just invest in the market or invest in your, whatever strategy is gonna make sense to have you reach your goals.

Joe: Cool. You’re starting Need a new podcast

Al: on on on the hot tub?

Joe: Hot tub retirement.

Al: Oh, that’s perfect. Get into, we’re gonna get, get into gyms. Working out on the elliptical. We’re gonna get it asanas. We’re gonna do

Andi: Talking about finance while you do it.

Al: Actually I did. Have you ever done an ice bath?

Joe: Cold plunge.

Al: Yeah.

Joe: Or an ice bath.

Al: Ice bath in a tub full of ice and water.

Joe: I’ve done a cold plunge. Yes.

Al: Well, probably the same idea in Minnesota. No, here. That doesn’t count. It’s gotta be like 35 degrees.

Joe: Well, okay, well then no, I’ve, I’ve done a polar.

Al: Swim. Yeah, but that’s like 50 degrees.

Joe: No, that’s like you when you’re ice fishing and then you have a pole, you cut a big hole in the lake.

Al: Yeah. And you jump in.

Joe: You jump in.

Al: Okay. Well, you, you just said it was here.

Joe: Well, no, I’ve done both. I’ve done a cold plunge where you have a tub and it’s full of ice and water, and then you sit in there for like 10 minutes. Okay. So that, that qualifies.

Al: Okay. Alright. How was your experience?

Andi: Are you saying you only did that one time, a cold plunge here?

Joe: No, I do cold plunges often. Not often. I’ve done it more than once and probably less than 10. Yeah.

Andi: Do you feel like it’s made a difference for you?

Joe: Oh. I am just clean living.

Al: That’s why he doesn’t need a hot tub. The, the cold plunge solve problems. Cold. Yeah. Just killing it. No,

Andi: which is better. The cold plunge or the ice fishing experience?

Joe: Well, I was so young when I did that. I was in high school. So I don’t really remember. I would imagine some Grain Belts and some MD Morgan David 2020 was involved. Um, got it. So, but uh, but no, the coat plunge is good. Yeah. In the mornings.

Al: Yeah. Yeah. It gets you going doesn’t it?

Joe: Gets you fired up.

Uh, alright, that’s it for us. Thank you, Andi. Thank you Aaron, Big Al. Thank you sir. And thank you guys. See you next time. Show’s called Your Money, Your Wealth.

YMYW Podcast Outro

Andi: This is Your Money, Your Wealth, and your podcast! If you enjoy YMYW, do us a favor and tell your friends. It helps us reach more listeners like you. And don’t forget to leave your honest reviews, comments, and ratings for Your Money, Your Wealth in Apple Podcasts, on YouTube, and in all the other apps that let you do that like Amazon, Audible, Castbox, Goodpods, Pandora, PlayerFM, Podcast Addict, Podchaser, and Podknife. We’re on all of ‘em!

Your Money, Your Wealth is presented by Pure Financial Advisors, a registered investment advisor. This show does not intend to provide personalized investment advice through this podcast and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.

_______

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