Ask HTM - Running the Financial Gamut From Squirreling Away an Emergency Fund to Real Estate Investing #1132

Summary

How to Money – Episode #1132 Ask HTM: Running the Financial Gamut From Squirreling Away an Emergency Fund to Real Estate Investing
April 27, 2026

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Episode Overview

In this listener mailbag episode, hosts Joel and Matt tackle a wide variety of personal finance questions from their audience. The topics range from building an emergency fund, optimizing investments for teachers with pensions, real estate investing strategies like recasting vs. refinancing, maximizing Social Security benefits, to decoding workplace insurance options. With their signature banter and practical, approachable advice, the hosts focus on helping everyday people make smart, confident money moves—no jargon necessary.

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DIY Home Repair — The Ripple Effect of Taking Initiative

[02:50 - 07:00]

• Matt shares a personal win inspired by Joel: fixing his top-loading washer by replacing the suspension rods, instead of calling a repair service.
• Discussion around the value of learning to DIY home repairs—saving time, money, and fostering a sense of accomplishment.
• They note that influences from your circle (like a friend's recent DIY fix) can motivate you to tackle similar challenges.
• Quote:
  “This is too. Where the people you hang out with and what you talk about, it rubs off. It has an impact on you 100%... ‘Well, my friend just did that. Maybe I'll give it a go.’” – Joel [07:00]

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Listener Question 1: Balancing Emergency Fund & Investment Goals (Emily from Minnesota)

[08:01 - 20:52]

Emily’s Scenario:

• 28 years old, married with two kids, and struggling to decide how to split money between a high-yield savings emergency fund, a Roth IRA, and a brokerage account.
• Wants to build a 3-6 month emergency fund but feels pulled to also invest for retirement.

Key Points:

• Emergency fund comes first—especially with kids, as “the stakes are higher” for unexpected expenses.
• Matt and Joel discuss the reality of slow wealth-building: consistent, focused saving over years builds compounding results, but doesn’t feel “instantaneous.”
• Reduce investing temporarily to quickly build emergency savings.
• Scrutinize recurring expenses (internet, streaming, subscriptions) to free up more savings.
• Consider side hustles if you want to accelerate both savings and investments.
• Reiterate that you can access Roth IRA contributions if needed—it's allowed, but not ideal for emergency savings.
• Quotes:
  “...the emergency fund is even more sacrosanct...the range of potential emergencies that you could encounter goes up significantly.” – Joel [11:17]
  “Prioritizing that E fund...it puts you on steadier footing so that you can avoid digging yourself into a debt hole if an unexpected negative life event comes along.” – Joel [12:02]
  “Cut that timeline down even, even shorter.” – Matt [15:10]

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Listener Question 2: Pensions and Investment Risk (Colby, Both Spouses are Teachers)

[23:22 - 34:14]

Colby’s Scenario:

• He and his wife are both teachers with sizable pensions and also contributing to Roth IRAs, which will make up about 25% of their retirement savings.
• Should they invest their Roths more aggressively since the pensions act as a safety net?

Key Points:

• Pensions provide a conservative and reliable income floor in retirement; Roth IRAs can be invested more aggressively as “growth” dollars.
• Opt for equities (stock funds, such as VOO/S&P500 or VT/global total market funds) in Roth IRAs; avoid bonds in Roths when you have pension coverage.
• Asset allocation: Go heavier on stocks in Roths due to pensions; no need for excessive risk (like single stocks or meme assets), but growth assets make sense.
• Asset location: If you must own bonds, do it outside your Roth (though not necessary here).
• Quotes:
  “...the pensions might cover more than you think...maybe the Roth is more of a monthly ‘wants’ and extra spending category...” – Joel [28:24]
  “I would be willing to go with a purely equities-based portfolio...the other two aspects of it, like the US stocks and international stocks...you're looking for more growth there versus the bond fund, but you have the ability to take that risk.” – Matt [33:10]

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Listener Question 3: Real Estate Investing — Recasting vs. Refinancing a Mortgage (JC)

[34:29 - 44:31]

JC’s Scenario:

• Bought a house at a 5%+ interest rate, planning to rent it out in a few years.
• Wants to lower the monthly payment via recasting or refinancing to boost rental cash flow.

Key Points:

• Recasting lowers your payment by paying a lump sum, but doesn't decrease your interest rate; refinancing (not ideal right now) can lower your rate, but comes with higher fees.
• Don’t lose the forest for the trees: Think about optimizing your overall financial picture, not just cash flow from this one property.
• It might be smarter to save extra cash for a large down payment on your next property (for better terms/rates), rather than obsessively recasting the current mortgage.
• Take a longer-term perspective on property investments and cash flow optimization.
• Quotes:
  “It almost sounds like he's trying to continue to make this deal better. This particular house is like, okay, how can I get the monthly payment down as low as possible...as opposed to what else he could do with that money...” – Matt [37:25]
  “Trying to, like Matt said, focus on this individual tree versus the forest of your finances.” – Joel [39:02]

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Listener Question 4: When Should You Claim Social Security? (Lydia)

[45:51 - 53:58]

Lydia’s Scenario:

• Doing the math, she notes it would take her 13 years of higher Social Security payments (by waiting to claim at 70) to “break even” versus claiming at 62. Is it always best to wait?

Key Points:

• Standard advice is to wait for a bigger, guaranteed check, if you have the health and financial capacity to do so—delaying grows your payment by ~8% per year.
• But: Personal context matters—health, earnings, available resources, and goals all influence the best decision.
• For some, claiming early and investing personally may (but not always) yield better results, especially if willing to accept more risk.
• Use tools like Open Social Security to make informed, personalized decisions.
• Quotes:
  “...delaying Social Security is a way to maximize that benefit that accrues to you...without taking on additional risk.” – Joel [49:07]
  “But think about what you weren't able to have been able to accomplish and what you're able to have done...lessons that never get learned because you're not around to talk about them.” – Matt [51:50]

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Listener Question 5: Workplace Insurance – Should I Take Extra Accidental Death & Dismemberment Coverage?

[53:58 - 57:32]

Scenario:

• New employee offered free and ultra-cheap AD&D insurance at work. Is it worth paying for more than the free coverage?

Key Points:

• Take free or company-paid coverage, but don’t pay for additional—with no dependents or debts, it’s unnecessary.
• AD&D insurance only pays out in very specific (rare) situations; NOT a major financial priority for young, single, healthy people.
• Principle: Don’t let low cost alone nudge you into buying coverage you don’t need.
• Quotes:
  “Take the free coverage, decline the additional.” – Joel [57:32]
  “It feels like the free samples at Costco...they have whet your appetite a little bit and you think, well, I've already tried this. It's pretty dang good.” – Matt [57:10]

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Memorable Moments & Quotes

• DIY home repairs save money and build DIY confidence—“We're totally turning into a DIY podcast, by the way.” – Joel [06:12]
• Emergency fund as a “sacrosanct” tool for families: “...the range of potential emergencies...goes up significantly” – Joel [11:17]
• The challenge of slow wealth-building in an instant-gratification world: “Well, building wealth actually doesn't happen in that way and we just have to get used to the slow nature of it...” – Joel [18:29]
• On optimizing Social Security: “Sometimes the happy medium approach is best. You really have to take your own lifestyle and health into consideration...” – Joel [52:50]

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Timestamps for Key Segments

• [02:50] – DIY washer repair & the value of self-reliant home maintenance
• [08:01] – Emily on emergency fund vs. investing for retirement
• [23:22] – Colby’s pension + Roth IRA investment strategy
• [34:29] – JC on recasting vs. refinancing his mortgage for a coming rental property
• [45:51] – Lydia’s Social Security break-even dilemma
• [53:58] – AD&D workplace insurance: how much (if any) should a young, single person buy?

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Podcast Beer Segment

• [57:50 - end] – “Comeback Sauce” Southeastern IPA by Creature Comforts x Edmund’s Oast, courtesy of listener Nick.
  • Descriptions: “Pillowy mouthfeel,” “bridging between New England and West Coast IPA,” with notes of “brininess” and a “salty thirst quench” suited for sweaty Southern summers.
  • Quotes:
    “This is one I’m gonna go find locally and put in my fridge.” – Matt [59:50]

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Resources Mentioned

• How to Money Money Gear System (first “money gear”: $3,045 emergency fund)
• Episode 1112: Teacher Retirement with Sean Morgan
• Open Social Security: [link in show notes]
• Vanguard funds: VOO, VT
• Tools for expense cutting: internet bill negotiation, subscription audit.

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Tone & Style

The episode is friendly, reassuring, and conversational, with the hosts bouncing off each other’s stories and advice, always grounded in practical, real-life scenarios.

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Summary By:
[Your AI Podcast Summarizer, Knowledge as of June 2024]

Transcript

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[Matt]

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[Joel]

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[Matt]

let's say you've always wanted to take a spontaneous trip to the Caribbean. Well, here's the thing. If you get smart with your money, you can do things like that. With Empower, you can start making the most out of your money so you can go out and live a little. Isn't that why we work so hard to have some fun with our money, like treating yourself to something special or

[Joel]

spontaneously doing something extra for a loved one man? So use Empower and get good at money so you can be a little bad. Join their 19 million customers [e-mail] not an Empower client, paid or sponsored. Welcome to how to money. I'm Joel.

[Matt]

I'm Matt.

[Joel]

Today we're answering your listener questions.

[Matt]

You know it buddy. We are hearing directly listeners today. We're ranging from listeners who are pretty early on in their financial journey all the way to folks who are talking about pensions and Social Security. We're running the gamut today when it comes to the types of personal finance money topics that we're going to cover. So I'm looking forward to it.

[Joel]

You know what I love about these episodes is because the variety. Well, the variety and just like there's a never ending individuality to the questions that people have. Like you can hear principles extracted and that's something that we talk about, let's say on an interview episode or headlines which try to draw principles from the headlines on Friday episodes. But there's no End to the number of people listening who have a question that pertains specifically to their lifestyle. And they're like, I think I need something a little more targeted. So we love hearing your questions.

[Matt]

Please do.

[Joel]

If you've got one, record it, send it our way. We love to take your questions.

[Matt]

Absolutely. Hey, I wanted to share a quick little DIY win. And so this was based off of something that you shared. Was it last week or. It was a couple weeks ago, I think that you shared your dryer when. Right. So your dryer door was popping open. You had to replace the latch.

[Joel]

I still felt a little shameful about sharing such a partner.

[Matt]

Let's redeem it because I was so inspired by you, because I was like this close to calling a washer repair guy to come out to take a look at our washer. And so I'm gonna share my win. And specifically because I think this is going to be very applicable to a lot of folks who have a top loading washer because they're all basically constructed the same. The top loading washers, like whether you're looking at ge, Whirlpool, Samsung, which is what we've got, it's like the frame of the washer and then it's got the drum or the bucket or whatever that hangs down in there and it's suspended by these suspension rods, like these dampening suspension rods, whatever. And the problem. Let me describe the problem because this is the hook that might get a bunch of listeners here. If you've experienced your washer loading up just fine, it washes like an infomercial now. It washes the clothes just fine. It drains just fine. But when it kicks into the spin cycle, if it starts like. And then before you know it, the thing chimes at you because it's out of balance.

[Joel]

It's like it's actually moving across the floor.

[Matt]

It's awful. And if you've noticed that getting worse sometimes, yes, it's just a singular really thick towel that's sopping wet and it's really off balance. But sometimes, if you've noticed that that has increased in frequency and then you find yourself fighting with your. Like, I'm in there, like, what's going on? And I'll pop the top and I'm manually reorganizing the clothes so that it's like perfectly balanced. And then I hit resume and I'm watching it and I'm wasting so much time doing this. If this sounds like something that you are doing, it is those rods. It's the suspension rods. And what you can do is buy them off of Amazon. It doesn't even have to be like, I didn't even get the Samsung version. Of course, I referenced YouTube and found multiple videos that pointed me in this direction. But I got like, some cheap, like, whirlpool or GE struts or suspension rods,

[Joel]

but they still $34.

[Matt]

And I will say that the videos are like, it only takes 30 minutes. Like, some of the comments were like, it only took me about 30 minutes. This is great. This is exactly what I needed. And it took me closer to an hour because you kind of. You have to take the washer apart. And I'm pretty handy. I thought I was like, oh, yeah, I want to beat that guy.

[Joel]

10 to 25 exactly.

[Matt]

It did it. I'm super careful, though. I wanted to make sure I was doing it right. But even still, it. It took me closer to an hour, but it got those new suspension rods in there. Dude, fire that bad boy up. Oh, my goodness.

[Joel]

Burning like a kitten.

[Matt]

It felt so good to see. Well, then the laundry had been backing up, too, because we weren't running the loads. Because if it can't spin cycle, it's soaking wet.

[Joel]

Yeah.

[Matt]

And then you're tempted to throw the soaking wet pile of laundry in the wash in the dryer. And the dryer is not made to handle that. Like, it's only made to dry clothes that.

[Joel]

Are you going to break that thing, too?

[Matt]

I know. It's just like this perpetual. It's like this endless cycle of destruction and appliance repair or replacement if you don't address the thing. So if you find yourself in a similar situation, just search top loading, washer suspension, rod replacement or something like that. And there's plenty of videos out there.

[Joel]

Well done, man.

[Matt]

On YouTube. Proud of you. Thanks, man. It was incredibly gratifying.

[Joel]

Totally turning into a DIY podcast, by the way.

[Matt]

Well, yeah, I don't know. There's so much of, like, you wanting to maintain your home and take care of your stuff. And you talked about how expensive it is to get a repair person out. And like I said, or you would

[Joel]

have spent 250 for that fix.

[Matt]

More than that.

[Joel]

Bare minimum.

[Matt]

Even if you can get somebody lined up, it's going to take them like 7, 10 days to get out there. Like, it would have been a lot more than that.

[Joel]

So.

[Matt]

Yeah. Anyway, just wanted to share that you inspired me because I was like, this close to making the call because, you know, we as managers of properties, we have folks who repair appliances and we've got different folks numbers. But even still, I thought, man, this is my own. It's right here. I don't have to drive anywhere. You fixing your dryer door? I was like, okay, I gotta step up. I can do this. And sure enough, I was able to.

[Joel]

This is too. Where the people you hang out with and what you talk about, it rubs off.

[Matt]

It has an impact on you 100%.

[Joel]

And you're like, well, my friend just did that.

[Matt]

Maybe I'll give it a go.

[Joel]

I'm not gonna be a lazy sack

[Matt]

of crap over here. I thought about mailing it in. I decided to step up.

[Joel]

Nicely done. Nicely done. All right, let's mention the beer we're having on. Let's do it. This one's called Comeback Sauce. It's a Southeastern ipa. Matt. The first one of those we've had. This is by the good folks at Creature Comforts, and listener Nick dropped it by the studio on his way through town recently. So, Nick, thank you for the beer donation.

[Matt]

Thanks, Nick.

[Joel]

We're super excited to check this one out. We'll give our thoughts at the end of the episode. And if you have a money question, go to howtomoney.com ask or literally just record it on the voice memo app of your phone. Say your name at the beginning so we know who you are. If you want to say where you live, Matt will stalk you. That'll be fun always. Yeah, he loves to know more about your town. Please do record that question. Send it on over so we can take it next week on the show. Matt, let's get to our question, numero uno. This one is from listener Emily, who is on the right path, but she's trying to figure out what to do next with free cash flow.

[Ad Voice]

Hi, Matt and Joel. This is Emily from Minnesota. I have a couple questions for you regarding where I should be putting. Putting the most money into which investments and savings accounts. I am 28 years old. We are a family of four. We have two kids. We have a high yield savings account with about $2,000 in it. I wish that I had more money in that. So that would be my initial first thing that I would like to get up to between 10 and $15,000. We have a savings account with Fidelity that gets $25 invested a month in it. We have a Roth IRA that has $75 a month being put into it. And then we also have a brokerage account that has about $2,000 sitting in it. Like I said, I think the first thing that I should do is get my high yield Savings account up to more like a three to six month emergency fund in there. However, I also know that I want to be saving in our Roth IRA, and I feel like $75 a month is not significant. And we are 28 years old, like I said, and I'd like to be putting more into that, but because we don't have as much in our high yield savings account, it feels silly to be putting more and more money into something that we can't take out if we needed it. I'm curious your thoughts. Thanks.

[Matt]

All right, Joel, I feel like this is a classic question. Too many goals, too little money. And Emily's trying to find a way to right size some of her goals. You know, it's like, it's okay to hang on to those go goals. Well, let's just figure out where they go in the list of priorities.

[Joel]

This is where I'm like, the flip side of that equation. If you're talking about paying down debt, this is why the snowball approach is often so, like, people are so into it is because you get to see progress made more quickly because you're kind of singularly focused on one particular debt, getting rid of that, then moving on to the next one. And it is, it can be really hard if you're like, I'm trying to boost savings, I'm trying to invest, I'm trying to pay. Like, I'm trying to do all these things at once. And because of that, it feels like you're like spinning your wheels. You're not making progress very quickly.

[Matt]

Yeah. And I'm sure Emily has possibly recently discovered the, the magic of compounding. Right. Like she, she's learned that, oh man, compounding is the eighth wonder of the world. We need to be doing that. But then at the same time, she's like, she just said, right? She's like, it's silly for me to be doing that when we don't have enough savings on hand, when we don't have enough cash on the bank. So that being said, I would totally love to see you reduce your investing goals here just for a bit until you can beef that emergency fund up. And our inflation adjusted baseline goal, which is money gear number one, is 3045. That's $3045.

[Joel]

Used to be 2,467, but as we know, we had to update it for modern 2026America.

[Matt]

So a lot of inflation over the past six years in particular. And Emily isn't quite there. Uh, but I'm guessing that she could be very soon and I think having that much cash on hand is going to allow her to endure just the ups and downs of life. Anything that life might end up throwing her away, especially with kids on hand. She says she's got two.

[Joel]

Oh, yeah.

[Matt]

She made it clear. She's like family of four. I'm not counting the pets. These are two actual children that get

[Joel]

into all the things the goldfish. Sorry, you're not number five. Well, and you're right, Matt. I mean, the stakes are higher when you have kids on hand.

[Matt]

Yeah.

[Joel]

The, the emergency fund is even more sacrosanct, I think, because the range of potential emergencies that you could encounter goes up significantly.

[Matt]

Right.

[Joel]

Like, I can think of many circumstances where something happened and it was because we have offspring that cost me money that I wasn't anticipating, wasn't expecting. Whether that's some sort of accident, you know, a face plant sort of thing that happens, falling out of a tree, whatever it might be. A random emergency room visit. Could be. Hopefully not though. Emily, in your future, broken bones aren't off the table when you have kids. Although, Matt, none of my kids have actually broken a bone.

[Matt]

Dude, knock on.

[Joel]

So thankful.

[Matt]

I don't know how that hasn't.

[Joel]

Especially your kids. I know they're feral, you know. No, I'm just kidding.

[Matt]

But like, we like doing the free range parenting.

[Joel]

But this, the things that have happened. Yeah. Like they can cost money. And so that could force you to make an uncomfortable decision if you don't have enough savings on hand, like taking on credit card debt because you don't have enough cash to pay for the bill in full, or like tap into HELOC or something like that, which is something you want to avoid. But it's just an all too common reality in modern America because people haven't prioritized that, that they start dipping into or taking on debt products to ease the strain. And so prioritizing that E fund, it's there for you in case the strain comes along. And it doesn't sound like you've got nefarious kinds of debt, at least from your voice memo that you sent in, which is great. But. But the bigger emergency fund is the most important money goal for a reason. It puts you on steadier footing so that you can avoid digging yourself into a debt hole if an unexpected negative life event comes along. Again, I think if you're like single renting, you can, you can afford to yolo a little bit more. Still not wise. But when, when you have kids, it's like, man, the savings emergency savings fund is a complete and total necessity.

[Matt]

Yeah. Stakes are higher, man. Yeah. And I would also recommend, Emily, for you to look at your spending with little bit more scrutiny because I'm hearing you share some of your numbers, right. And you've got 75amonth going towards a Roth, it sounds like, but she, she mentioned 25 going into a savings account. I assume that is her high yield savings account. I'm actually assuming because she mentioned the only proper noun, the brokerage she mentioned was fidelity. So I wonder if she's got her money in the, that money management account that they have that has that automatic sweep in there. But either way, let's just say. Okay, let's hit pause on the Roth. You got that $75 now joining the 25, you're saving up $100 a month. That's not a ton of money. That's not a ton of money. Going towards an emergency fund that you're hoping to cap out around 10 or $15,000. That's $1200 a year.

[Joel]

It'll take a long time.

[Matt]

It's gonna take you eight years to hit that $10,000 threshold. That's a really long time to be kind of cruising there in money gear number four. And I do understand that for some people that's just how long it's going to take.

[Joel]

But because like I remember the first time I heard, hey, you need a six month emergency fund.

[Matt]

That's a lot of money.

[Joel]

I almost like laughed. I was like, cool, yeah, how, how long is that going to take me?

[Matt]

It's a lot of money.

[Joel]

When I was making my first job in radio, it would have taken years. Yeah, for sure. To hit that point.

[Matt]

That being said, she's 28, so she's got some years on, on you when you took that first job in radio. And I do think, but just, I don't know, with two kids it can be you're just trying to say, keep your head above water. And I'm guessing that if they're at the point to where they can, okay, let's take a, take a breather, sit down, look at the finances, look at their spending, figure out where their spending is going, even hardly without changing much in life. I've got a feeling that they might be able to just get a little bit smarter with their spending and honestly like easily double that without even feeling an impact on their, on their lifestyle. Right. Like to be able to immediately take that from like 100 to 200 without really hardly having changed anything. Boom. All of a sudden you've gone from Eight years. Now it's four years. That's starting to feel a bit more reasonable. And I think with kind of finding other ways to get after it as well, I think you could easily kind of cut that timeline down even, even shorter.

[Joel]

And like one thing you can do, just look at your recurring monthly bills. Hey, what can I cut? And then what can I negotiate? How much am I paying for Internet? You've gotten used to paying $80 a month for Internet. Well, go back to the, go back to the drawing board on that. Can I either get my current provider to reduce my monthly bill, cut it in half, or do I have to move somewhere else in order to save money on that? And you have to, it's kind of like a no stone unturned like way of approaching this problem so that you can have more margin, more of a gap, so that you can funnel more of that money towards savings so you can accomplish that goal more quickly.

[Matt]

Yeah, and it's a win win too with the subscriptions because it's not just doing it for that one time, it's every single month after that. Literally last night I sat down, did the same. Oh, another plug for Samsung. Like we've got the Samsung TV and it's called Samsung Checkout. And it's where they build this super clumsy, bulky way of purchasing things via the tv, which means it's impossible to find after the fact. They make it really easy to say, subscribe to HBO Max, which we did a couple a few months ago for some movie or show or something like that. And guess what? We went through that series or we watched that movie and we've been paying for it for the past couple of months without having questioned it. And I finally said, I was like, you know what? I'm so sick of seeing the stupid Samsung checkout charge. And it took me a little bit to figure out how to find where the account was and to manage that. But I canceled that and I canceled Netflix and guess what? Those are two charges that I'm no longer going to be paying.

[Joel]

And those are by default. They seem, I think the people like scoff at that stuff. Like, oh, it's insignificant. It's 10 bucks here, 20 bucks there. I think that's about what you'd pay if you had both services.

[Matt]

Yeah.

[Joel]

For the rest of your Life. And that's 30 bucks a month, that's $360 a year. And then if you save 30 bucks on your Internet because you negotiate that down, you're talking about 750 bucks a year, right? There, that's going then towards your emergency fund. Those are the kind of realities we live in that you have to pay attention to that most people don't. If you want to hit that goal. And I'm not saying it's easy because the era of being in your 20s, your late 20s with multiple kids is hard. Everything is expensive. And you often bear the difficulty of expensive childcare or less income flowing in because one partner is staying at home with the kids. And so it feels really difficult to be able to save up a bigger chunk in your high yield savings account, you know, much less maxing out a Roth. You're like, yeah, when's that going to happen? I mean, those, those early years are difficult because you're trying to follow the prescription that other people have laid out and they're telling you that it works. And you're saying there's just so little money, like how is this going to work? But the truth is it's like a snowball that starts rolling. And so over time and over years of making those right decisions, even though it seems like small amounts of money that you're saving or putting towards savings and then eventually being able to put into a Roth like that, it will accrue, it will make a difference. It's just we live in an era where we can get anything essentially instantly. Right. Like, forget two day shipping, man. That's old school. Like now it's like, do you want it tomorrow morning between the hours of

[Matt]

4 and 8am or just this afternoon even? Right. That's, honestly, it's really nice. I'm not going to say I pay for prime. Absolutely.

[Joel]

And in some ways, like they, sometimes they don't even charge you extra for it. Right. But it's one of those things that we all have to reconsider in an era where we can get almost anything instantly, watch whatever we want at our fingertips. Well, building wealth actually doesn't happen in that way and we just have to get used to the slow nature of it and be okay with that. I think it's just, it's a tough emotional reality that we face.

[Matt]

Absolutely.

[Joel]

Yeah.

[Matt]

And we, for the most part, we're just talking about ways to cut back. But I think you could also use this desire to want to see some of this compounding in your life as an impetus to perhaps even start a side hustle, little side gig and different ways to make some extra money. Use that as fuel to say that this is how we're like, yes, we gotta be smart, we gotta build up the margin, get the emergency fund in place. But then beyond that, if we wanna invest more money, this is how we're gonna find the margin in our budget to be able to pull that off.

[Joel]

It's like that plasma approach that some of our listeners take.

[Matt]

Sure, right. That's what it takes.

[Joel]

They make thousands of dollars a year. You could put that in a Roth or put that towards a vacation fund, like whatever you want to do, Tommy boy. Right. But if that's the impetus, like this is really important to me. Maybe the plasma donation or the thrifting and reselling stuff, maybe that jumps up the list of priorities for you. Totally.

[Matt]

And Emily, by the way, you mentioned, this is a small note here. You mentioned not being able to take money out of the Roth. That's actually something you can do because of the post tax nature of the Roth ira. You can withdraw your contributions at any point for whatever reason you want. Which, and I kind of hesitate telling you this because she might be like, woohoo, awesome. I'll do this instead of fully funding my emergency fund, instead of sticking that money in the High Yield Savings Account. I would caution against that though, because money that you stick in your Roth, let's say at the beginning of this year, well, guess what? It's worth less right now. The money that you put into your High Yield Savings Account, it's going to be worth a good bit more. So if there's a chance that you might need that money in the near future, it's best to leave it in cash on the sidelines. Put it in a High Yield Savings Account. Don't invest those dollars.

[Joel]

You found that out the hard way back in the day.

[Matt]

I did. We're not gonna get in that this time. We'll say that for another listener question. But yes, Emily, she's thinking smarter than I am at this point in time for sure. Which is making sure you got the cash savings on hand and not just having your eyes get big by the allure of compounding like younger Matt did

[Joel]

and making that one goal, the savings for now, the intense focus, it's going to help you achieve that goal a lot faster than you otherwise be able to. So best of luck, Emily. Matt, we've got more to get to, including ways to lower your mortgage payment. We'll talk about that and more right after this.

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[Matt]

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[Joel]

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[Matt]

all right, Joe, we are back from the break. Let's keep moving. Let's hear from this is actually from Colby. Forgot to mention his name on the voice memoir. Colby. Him and his wife, they are teachers and they're looking at a two pronged approach towards retirement.

[Colby]

Hey guys, just wanted to say I've been a long time listener to the show and this is my first time calling in. But I've got a question that I've been seeking some advice on. I am 40 years old. I have a about a 15 to 20 year old time horizon till I retire. Me and my wife are both school teachers so we both have a pretty sizable pension waiting for us. So my question is on how to invest our Roth IRAs in the very end after about 15, 20 years, our Roth amounts are just going to be a fraction, probably about 25% of the what the pensions are worth. And that's not including any inheritance we might get later. But we're just wondering, should we be investing in three fund portfolio, something simple as we get older with our to date fund, or should we be a little bit more aggressive with our Roth since we do have those pensions to fall back on? Just wanted to get Yalls take on that. Thank you.

[Joel]

Bye. Oh, Matt, a family with two teacher pensions. That sounds like a nice setup for retirement right there.

[Matt]

Yeah, very nice. What's the pension look like? I don't know. Definitely don't have it.

[Joel]

Yeah, a little jealous. It feels very few people do anymore. Right. Like, teachers are one of those rare birds who still have access to a pension. Makes me think of my wife's father, my father in law, he and his wife both teachers and, and so he's like teaching in private school because he's already got the pension coming in from his public school days. So you got like three incomes coming in now.

[Matt]

Like, it's not even fair.

[Joel]

I know, I'm like, you guys, you guys found the cheat code.

[Matt]

No, no, no, it is fair. You know why? Because you're a teacher. That's like one of the hardest. I mean, I got to think you earn it. You absolutely earn it. It's not like you're not kicking back and yeah, they're not giving you that paycheck for nothing. So I think our teachers should be paid more.

[Joel]

But I will say the pensions do make it easier to plan and to save for retirement. Like when you have that known quantity at the pot of gold at the end of the rainbow, even if it's not like, you know, massive because you're a teacher. But, like, that is at least helpful. And it just makes me think that Colby should check out episode 1112 for teacher specific retirement advice.

[Matt]

Oh, nice.

[Joel]

With good old Sean Morgan, who he's all about just helping teachers retire. Well, and he wants to give them like all the ins and outs. So that was, that was a great episode for any teacher in your life. You should share that with them. Absolutely.

[Matt]

What's so cool about Sean too? He doesn't just talk the talk, he's walking the walk. Speaking of, like in the trenches with the students and your fellow teachers, man, he's a full time teacher and also creating this content on the side to be able to help, to help, you know, to help teachers. Something else I left to the picture we got of Him. I think it's like his picture from

[Joel]

like his school picture for like the faculty. Yes. Picture.

[Matt]

It's got like the yearbook look to it. I'm just like, it makes me love him even more.

[Joel]

I know, it's adorable.

[Matt]

We'll link to that in the show notes for this episode. But Colby, I think it's helpful too to provide sort of like an overall, like framework when it comes to how you should be viewing your, your retirement dollars, like how much you might be spending specifically in retirement. And keep in mind that your goal isn't likely to replace 100% of your current income, even though that is what many people wrongly assume that they have to amass. So fidelity, they found that depending on your income, you'll likely only need to replace 55 to 80% when you retire. Obviously it depends on a ton of different factors, like your lifestyle. It's actually it increases if you're planning to travel like crazy. But they're pointing to the fact that I like to see they call it like the, it's like a smile shaped spending curve because early on you're spending more as you are doing a little bit of travel. But then there's years and even decades where you're not spending a ton of money. You've kind of settled into a routine of what retirement's gonna look like. And then it does pick up towards the end as well.

[Joel]

Typically because of end of life care of healthcare costs. Exactly. And one of those reasons too is often. But maybe either the mortgage as a percentage of your income has gone down if you own a home, or you've paid off, you've likely paid it off.

[Matt]

Yeah. And the other big housing cost, which is the top line item expense on your budget every single month.

[Joel]

The other big thing, if you've been saving 15, 20, 25% of your income, guess what, you don't have to do that anymore. And so like your, your savings and investings for your future days are behind you, which just opens up another gap. Meaning, yeah, you don't need to replace as much income as you might. You might think.

[Matt]

Exactly. So I guess I say that to encourage Colby as he's trying to think through that, like, oh man, the pensions, it's great that they're there, but they're not that great. Like, do. Should we take. Basically he's asking, should we take outsized risks within our Roths in order to kind of make up for the lack of what we're going to be bringing in with our pensions alone? And I think the short answer Is yes, but also no.

[Joel]

Well, and that the pensions might cover more than you think and they actually might be sufficient to cover all of your monthly needs. And so maybe the Roth is more of a monthly wants and extra spending category and way of thinking about investing for you. I'm not sure though. Like, it depends. But. But how? So, yeah, that, that really does bring up the question he asked. How risky should you get investing inside of your Roth? Well, I think first you can afford to take more risk because you have pensions to back you up, since those pensions will likely cover many of the day to day needs that you're going to have in retirement. At least I think they will. Based on your question. I would say invest to grow this money. You've already got the conservative part of your portfolio covered. That's what a pension is, just like this guaranteed income stream. And so you don't have to worry about the conservative portion of your portfolio. That's taken care of. On top of that, conventional advice is to be more aggressive with the investments you choose to own inside of a Roth anyway. The goal is to invest in assets you expect to increase in value more significantly inside of a Roth vehicle, in particular because it allows you to avoid tax on what are likely to be your biggest gain. So that's kind of, I think that's multiple reasons to say, yeah, it's okay and probably good for you to take extra risk inside of your Roth. Not insane risk, but extra risk.

[Matt]

Exactly. That's. So that's the yes and the no. Right? Because we're not saying yes, take insane risk and go all in on whatever meme stock, shiba inu all the way. I'm actually glad. I feel like we're past the meme stonks sort of era of investing. Even crypto isn't nearly as hot. But that being said, you could still dabble with single stock investing. You could invest in riskier assets, indexes even that are a bit more aggressive. And that's not what we're saying. It depends on who you're talking to, I guess, because if you talk to a typical retiree, somebody who's used to a 6040 portfolio, you even talk to them about Voo, about the S&P 500, and they're like, like, whoa, hold your horses there, turbo. But you know somebody else and they're just like, well, dude, my baseline is qqq, which is the tech index, actually. Okay, so if specifically if you had owned QQQ in your Roth over the past decade instead of voo, you would have A lot more money because of meaningfully higher returns.

[Joel]

Something like 19% average yearly returns versus 15% in the S and P. So

[Matt]

you might hear that and think, okay, well then that's what I should do moving forward for the next decade, Right? Well, no, we're also not saying that like you don't want to own an overly conservative fund. Like he mentioned, a bond fund in your Roth. But you also don't want to yolo your way to retirement thinking that you've got everything taken care of with your pensions as well. You just have to kind of find the right balance for you. What I'm saying, if it was me, I would certainly find myself in a much more free position to invest a bit more aggressively, perhaps even a bit more aggressively than what traditional advice would recommend.

[Joel]

One of the things that's worth bringing up here is not just asset allocation. Right. The funds that you own, that is a really important topic of conversation. But also asset location. And so even if, let's say you wanted exposure to a particular bond fund, I would say that's okay. If you wanted to own some bonds in a vehicle, that's fine. Do it. Invest in bonds, if those are your druthers. Just don't own that bond fund inside of your Roth ira. It's okay to allocate some of your resources in that direction. Just make sure that the location that is parked in the right location, the Roth IRA is not the right location to put your bond investments. Again, like we said, because of your significant pensions, you probably don't even need any sort of bond investments in your life.

[Matt]

Yeah, I would go as far as to say it's not okay for you to want bond.

[Joel]

Yeah, like I would avoid them.

[Matt]

I would personally avoid it too. I mean, so I don't know, like there's a fine line between somebody really feels strongly about going taking a more conservative approach versus us saying that like, well, he's got the conservative approach figured out on the pension front. So like he specifically mentioned like the, like a three fund portfolio which has bonds in it. Even that. I'm just like, I don't know, I don't think I would really mess with that. I think I would be willing to go with a purely equities based portfolio. The other two aspects of it, like the US stocks and international stocks, I don't view those. Obviously you're looking for more growth there versus the bond fund, but you have the ability to take that risk. He's saying that the Roths are probably going to be maybe 25% of his overall portfolio. I see that as easily a way that you can get 100% in equities and as opposed to messing with the bonds at all. Personally, I wouldn't mess with the bonds at all.

[Joel]

Agreed. But if you felt the need to, don't do it inside of your Roth ira. And so really what it's coming down to it is like what funds do you want to own? Definitely more stock heavy funds, maybe all stocks inside of your Roth ira. VOO is obviously great. That's a Vanguard fund, the S&P 500 fund that we recommend the ETF all the time, super low cost VT that if you want some more international diversification inside of your stock investments, that's like a once and done. I buy that one fund and I've got. What did we say Matt recently? 8,900 stocks or something that VT owns. It's like 60 plus percent United States, but then 30 plus percent the rest of the world. That's a great one stop shop fund for people who are like, yeah, I still want. It's almost like a pretty great replica of the whole economy and the United States being the bulk of the world's economy, you're investing heavily in that. But you're not forgetting the rest of the world too. I think either one of those funds would be a great choice inside of your Roth ira.

[Matt]

That's right, buddy. Let's keep moving. Let's hear from a listener who has a real estate question for us and specifically he's looking to utilize one of our favorite approaches towards getting into investment real estate. Let's hear from jc.

[Joel]

Hello Matt and Joel. I've since moved back from overseas and bought a house for the purpose of renting it out in only a couple years from now and came with over a 5% interest rate. My goal is to lower our monthly

[Matt]

payment as much as possible when it

[Joel]

comes to rent, but also thinking about the long term spend on the home. And I wanted to get your take on recasting a loan versus refinancing. I've heard your rule of thumb for refinancing, but wondered if there's any exceptions when it comes to deciding between that or recasting. Thanks for all your help and all you do, J.C. man, I love, I love that you moved back. You bought a home with the intent of renting it out. That is such a great way to buy to, to live in the home. But like with the ultimate intent of renting it out to make money. That's an approach we wish more people would take. It's just a powerful thing to buy a home with that specific goal in mind. It, it means you're likely going to offer something a little smaller that's going to make more sense as an investment. You're thinking about it as an investment from day one. It's brilliant. Typically leads people, Matt, to buy smaller, less expensive homes because those make better rentals. Yes. Yeah. The 3,500 square foot home doesn't typically pay off in nearly the same way as a rental property. And so if you can save up money for your next down payment while living in this eventual rental, while also saving up money to pay down the mortgage to do a recast, that would be impressive. I think that's, that's a tall task. But if you can do all three at the same time, then juggle all those balls, more power to you. Heck yeah.

[Matt]

Yeah. And I'll say that I want to frame JC's question here because I feel like he's in the weeds a little bit. Like he spent a lot of time looking at, I'm assuming he spent a lot of time studying the market, looking at properties, shopping around for different mortgages. And his world is like very zoomed in right now as far as like the specific market and the particulars to make this deal happen. And in some ways that's great because it means that he's got this thing dialed in to the best of his ability. But I, I literally mean in the weeds. Like, like, I'm thinking of like losing sight of the forest for the trees, right? Like, because he's looking at like this individual tree and I'm afraid that he's sort of losing sight of the sort of the, I guess of the bigger picture. Like, I want him to kind of lift his eyes and look beyond this particular deal because, like, I want to, I want him to look at factors that are outside of the question that he just asked, which is that, like, it almost sounds like he's trying to continue to make this deal better. This particular house is like, okay, how can I get the monthly payment down as low as possible so that we're cash flowing more money versus, you know, what we're able to rent it out for, as opposed to what else he could do with that money. Right? Like there's, what's the, There's a real estate saying where they said, like, you make your money when you buy. And it feels like he's like, ugh, well, I couldn't get the absolute best deal at least when it comes to the financing. So what can I do to continue to like, I want to keep beating this drum until like this particular deal right here looks perfect.

[Joel]

To force the square peg into a round hole and make this deal look good, even though it initially wasn't the best.

[Matt]

Yeah, exactly. Yeah. And so I think that that is just worth bringing up here because a lot of what I think we're going to talk about has to do with not the particulars of recasting or the particulars of refinancing, but more of like JC's overall financial picture and what he should be doing with his money as opposed to the specifics of recast.

[Joel]

So I think one of the things you're getting at here is whether or not you want to recast a 5% mortgage, which is to pay more money down to lower the monthly payment. Recasting is something that not many people know. People hear about refinancing that's much more expensive. A recast is typically fairly inexpensive and it's a way to put a lump sum down to reduce the ongoing monthly costs of ownership.

[Matt]

Yeah, but yeah, you keep to your rate though.

[Joel]

Yes.

[Matt]

So like the costs associated with your recast are minimal, but you do have to show up with a chunk of money in order to re. Amortize your schedule essentially to adjust your schedule versus of course, the refi, where you are paying a larger upfront cost and fees. You don't necessarily have to come to the table with any money at all, but you then get presumably a lower rate.

[Joel]

Not right now.

[Matt]

Assume your rates had, had dropped. So that's the refinancing between the refi and recast.

[Joel]

Makes sense for almost nobody right now. But. And I get that it would be better from a cash flow perspective on this specific property if you were to do a recast. It would, it would again make that, make it look better. Right. From a monthly ongoing perspective, depending on your payment though, the rent you're asking, it might not cover the current mortgage, but still you might be better off leaving the mortgage as is losing a little bit of money every month on that investment.

[Matt]

Yeah.

[Joel]

And you know, hey, guess what? It's going to appreciate in value over time. Rents are going to go up over, over time, hopefully. Right. In order to save up a larger down payment of let's say 20% to meaningfully reduce your payment on the next property you purchase. I think that's probably where my focus would be more so. Exactly. You might be just putting too much pressure on yourself to recast when that might not be the best financial move. Trying to Like Matt said, like focused on this individual tree versus the forest of your finances.

[Matt]

Yeah, yeah. What I like he's, he's looking at how can I get this specific property to cash flow the most when I can start renting it out in two years is what I'm assuming he's thinking. And I don't really care about that specific property. Like I want him to be thinking like how much can I quasi passively cash flow via all my different money making endeavors.

[Joel]

Yeah.

[Matt]

And how can that money best serve me?

[Joel]

Or even if this rental property is breaking even every month and it's not making money? Well, because I saved up more money meaningfully able to reduce my monthly housing costs and that's, that should factor in to the decision in a big way

[Matt]

too for the next house. Yeah, yeah. Which like what gives you the better outcome overall? It's just taking a longer out, like a longer view on things. It makes me. This is, this is a similar theme that we've, we've talked about in other questions, but the most applicable will be when we talk about folks who are trying to reduce their, their tax liability for a given year.

[Joel]

Yeah.

[Matt]

If you are only focused on that singular year, you might make decisions that end up hamstringing you over the next five years or even 10 years as opposed to taking a longer view and saying how can I minimize my tax liability? It's just when these decisions stretch over the course of years, I think it can be difficult to keep sight of the bigger picture versus something that's really small and contained. It's like, it's really easy. I'm thinking, okay, so imagine this isn't something that anybody would do. But like you're like, oh man, gas is so expensive right now. I don't want to have to fill up my van. I'm not going to go to the gas station. Well, guess what, it's only going to take you about a week or two to learn the lesson. And when you run out of gas and you're straight on the side of the road and now you have to either walk to a gas station or you have to catch an Uber. You gotta lift to the gas station.

[Joel]

Oh, call aaa.

[Matt]

Dang it. Now I've gotta like buy one of those stupid plastic jugs that are overpriced at the gas station. Gotta do that because they got you because they know if you're there looking for that, you need that jug in order to pump the gas.

[Joel]

It's a $30 jug now.

[Matt]

And now I have to go back to my car. And so think about all these additional expenses. Nobody's gonna do that.

[Joel]

Right.

[Matt]

Because we're not. We're not idiots. We know that if we don't fill up the van, if we don't fill up the car, even though it's painful in the moment, that that is going to lead to the best results over the quote, unquote, long term. And it's not even that long. It's like a week or two. But again, it's because that feedback loop, like, we are receiving that feedback, like, almost immediately. Right. Like, it is very easy for us to look at a couple weeks and be like, okay, this is X plus Y equals Z or whatever, as opposed to looking at something over the course of years. It can be difficult to, like, essentially remind ourselves of why it is that we're doing certain things and sort of what the goals are that we've set before us.

[Joel]

And it's not like JC is talking about using his savings to recast versus spending it on a car or something like that.

[Matt]

Right.

[Joel]

In both cases, he'd be. What he would do with the money is either avoiding or paying down debt. So it's all, you know, expense and debt related. It's a good thing. Yes.

[Matt]

Yeah.

[Joel]

So they're both good choices. Which one's the better choice?

[Matt]

Exactly.

[Joel]

If using that money for the primary home down payment allows you to, let's say, avoid pmi, you're lowering your monthly payment and total interest paid. That could be your best bet instead of recasting this loan. So I guess, yeah. Again, just questioning the premise a little bit here. We're talking about where this money can work the best for you.

[Matt]

Yeah. And honestly, going back to, like, recasting specifically, that's like, my biggest issue with that is the money that he has to come to the table in order to significantly reduce his monthly payment. And, like, I'm almost more. I might even be more of a fan of considering a refinance because, like, I'm assuming he just got the house and so he's got a couple years of living in it. And I feel like that's a great period of time to be able to see where rates go because I think there's a. I mean, I don't know, maybe there's a chance that rates drop back down into a more attractive territory where, oh, shoot, it's actually a full point lower. Okay. I think in that case, I would be more willing to pay the upfront costs associated with a refinance and permanently lower that mortgage while I'M still living in the home to significantly offset future costs in the monthly payment moving forward for the next 30 years, while also

[Joel]

holding onto the bulk of that cash

[Matt]

for other purposes because you don't have to come to the table in order to get that payment, to get that payment lower. So I know, like recasting, I think at this point in time, more folks are, I mean, I know why. Because folks aren't interested in refinancing because rates, you know, they dip down for a second, sure, but then the war and who knows where rates are going to go in the future. So I think that's why recasts are on more people's minds. But you've also got to look at all the other potential opportunities, the opportunity costs associated with what you could do with that money otherwise.

[Joel]

And truly, when you have, when you have a great credit score, when you've got a solid down payment lined up, you're going to get like the best rates and terms on that next mortgage. Not to mention just like shopping around when you're ready to buy the next property too. But that's what's going to give you, I think, probably the best overall personal finance picture for you. Even if, let's say, the rental property doesn't look quite as appealing because you, you took that money and you put it into the next property instead.

[Matt]

Heck yeah. All right, Joel, we got more to get to. We're going to talk about work benefits, we'll talk about Social Security, all that and more right after this.

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[Matt]

Struggling to see up close? Make it visible with viz. VIZ is a once daily prescription eye drop to treat blurry near vision for up to 10 hours. The most common side effects that may be experienced while using VIZ include eye irritation, temporary dim or dark vision, headaches and eye redness. Talk to an eye doctor to learn if VIZ is right for you. Learn [e-mail] let's say you've always wanted to take a spontaneous trip to the Caribbean. Well, here's the thing. If you get smart with your money, you can do things like that. With Empower, you can start making the most out of your money so you can go out and live a little. Isn't that why we work so hard to have some fun with our money? Like treating yourself to something special or

[Joel]

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[Matt]

Matt.

[Joel]

So use Empower and get good at money so you can be a little bad. Join their 19 million customers [e-mail] not an Empower client, paid or sponsored all right Matt, we're back. Time to get to the Facebook question of the week. This one comes from Lydia. She says I know the how to money advice is always to start taking Social Security. She knows as late as possible to get the full benefit. It's tattooed on Matt somewhere, but after doing some quick calculations, always wait. I feel like I'm missing something. Based on the average monthly benefit number shown here, if I wait to claim until age 70, I will have missed out on $134,400 that would have been paid to me if I had started claiming at age 62. The monthly benefit for claiming at age 70 is $863 greater than the benefit for claiming at age 62. Dividing. She's doing some math here, Matt. 134,400 by 863. This means it would take 13 years for the added monthly benefit to equate to the foregone amount of money by not claiming at age 62. Am I missing something here? Why is the advice always to wait to claim Social Security?

[Matt]

A lot of numbers in that Facebook question of the week but basically she's saying like it's going to take forever to recoup that. Why would I not claim away? And I will say, and I commented earlier on that she says like that she knows that the how to money way. Maybe I don't know, maybe we've said this before. I can't remember the last time I said that. Like you must always wait because I'm specifically thinking of at least usually talking generic terms in generic terms. And anecdotally there have been plenty of opportunities. I have a family member and it's been a minute since since I've shared this, but he claimed Social Security like the day it was offered as soon as he possibly could because he believed in his ability to out earn what the government would increase his Social Security payment by by him investing in the overall market. And he's done that now like for six or seven years or so, eight years maybe at this point. And he has outperformed what he otherwise would have gotten were he to have waited.

[Joel]

But he also had the ability to take on more risk than the average person.

[Matt]

Exactly.

[Joel]

Because for most people, Social Security is this constant paycheck that they can count on that at least covers the essentials. Right. Of their living style. And hopefully you have other money that you've saved up as well. But the bigger you can make that monthly check, the better, right? On average. And you're right. Like Matt, I've shared on the show how my parents changed their Social Security claiming strategy based on health realities that

[Matt]

have come out depending on what's going on in life. There are a ton of different factors.

[Joel]

The goal was for one of them to wait till 70, but it turns out that, yeah, both of them claimed before then because it became the most prudent move for them. So I get why you think this, Lydia. It is probably how we often address it without going into the weeds, but it's not the whole story. You're right about that. So I hope you had a chance to listen to our recent episode with Mike Piper. Mike is the Social Security man. We really did get into the weeds on that one. And so waiting to claim Social Security until later, it is how you guarantee yourself a higher check for life. And here's the thing, though. If you reach the age of 62 and you're in good health, chances are, if you look at the actuarial tables, that you'll live into your mid-80s even longer as a woman, Lydia.

[Matt]

Right.

[Joel]

So that's true. There's a 50% chance that you make it to age 90 if you've made it into your 60s. And so because of that, delaying Social Security is a way to maximize that benefit that accrues to you, like we said every month, 8% essential gain each year. When you delay taking Social Security without taking on additional risk. And for most people, if you can afford to wait, that guaranteed higher monthly amount makes a massive difference in terms of living style and comfortability for decades.

[Matt]

Yeah, exactly. You would be able to maximize that benefit because essentially it's guaranteed were you to wait. That's the difference here.

[Joel]

And that guarantee is meaningful, like it matters.

[Matt]

Yes.

[Joel]

Right.

[Matt]

Well, it depends on what you've got going on. Right. If you have not, if you are taking essentially riskier bets with one hand, then here's an instance to where you're like, you know what? I may not be able to actually maximize the dollar amount, but I'm maximizing my ability to have cash 8, 10, 12 years from now. But, yeah, if you wait until 70, your check is going to be 77% higher than it would be if you had claimed at the age of 62. But sort of like what you're saying to Joel, it comes down to your personal situation, what you got going on. And sure, if you can wait till, you know, as a 62 year old you might be looking up to 70 and thinking like, I mean a part of me thinks like, okay, will I still be around? Because that just assumes that you're going to be around at age 70 and with conversations I've had with my father in law.

[Joel]

But I've heard that when you die you care less about the fact that you didn't claim Social Security at optimum time, do you? Or yeah, I think you do.

[Matt]

Well, there's something to be said about that. Like I think about like I've talked with my father in law about travel and he is taking not, I don't wanna say like riskier bets but he's like, oh, I wanna go do this thing because for him he's looking and saying I'm not guaranteed tomorrow. And like when you are younger it's, I'll say that for us as quote unquote middle aged young people, it's easy to say, well there's always tomorrow.

[Joel]

Right.

[Matt]

Like the lesson that has been self affirming our entire lives, especially when it comes to investing, is that by waiting you will have more later delayed gratification. And it's always like literally you can just every few years look up and be like, oh wow, my portfolio has gotten even bigger. It's gotten even bigger all by waiting. And what lessons we don't learn is the lesson of like what if you wait too late? And at that point there isn't a lesson to be learned because like you said, you don't care anymore. But think about what you weren't able to have been able to accomplish and what you're able to have done with you, with your partner, with your family. Like these are lessons that never get learned because you're not around to talk about them.

[Joel]

And what you're getting at is there's a way to optimize your financial abilities while not living the optimal lifestyle.

[Matt]

Sure, yeah.

[Joel]

And that's what you're doing. In some cases there's a trade off by delaying Social Security. And yes, it means a guaranteed higher income for life, but it also means forsaking money that would have been useful during, you know, that's assuming that you have the. And yeah, yeah.

[Matt]

And it seems that you have that later in life sort of years. What's the game show where you have to Guess the price and you can't go over.

[Joel]

Price is right.

[Matt]

Is it?

[Joel]

Yeah.

[Matt]

Okay. That's like the only example I can think of where if you go over, you lose. Yeah. Like that truly is the lesson that we're talking about here. Because anything before that, it's just like, oh, no, it's better. It's better to be under. To undershoot it and to. And to wait a little bit longer. So I'm not trying to be a super downer over here, but I'm just thinking through, like, oh, what does it look like to incorporate some of these lessons not only in how we are building our wealth, but then in Lydia's case, how it comes down to sort of drawing down and executing that wealth as well.

[Joel]

And sometimes the happy medium approach is best. And you really have to take your own lifestyle and health into consideration when you're coming up with these. When you're trying to make this decision. It's also important to look at the details as well because if you're still working when you claim at 62, you're subject to an earnings test that can mean that your benefit would be cut for a while anyway. The earnings test goes away at 67. So 67 might be like the right time to claim because if you are still working, then, you know, you don't have to deal with that. If you're married, it's often advantageous for one spouse to claim much earlier and for the other to claim later. Just like maybe that provides the optimal and the optimization move at the same time. Best of both worlds. But again, I mean, there's man so much that goes into a person's decisions of when to claim. And so I would suggest Mike's calculator open Social Security. We'll link to it in the show notes, but it's completely free to use. Mike worked for years on that thing and it has been a help to many, many thousands of people trying to figure it out because it's. It can be a little complicated and it can at least present you with the information you need to be able to make an informed choice for yourself.

[Matt]

That's right. That'll be in the show notes. Let's get to another Facebook question. Joel, this is from an anonymous poster. Hello. I took a new job and am enrolling in benefits. My employer offers a 34 cent credit for AD&D insurance per pay period. That's accidental death and dismemberment insurance. I've never had this type of insurance before and am unsure which kind to get. Obviously I will at the very least enroll in a plan that's covered. But none of the plans are exactly 34 cents. These are my options. I was planning to get the 18 cent plan, but I'm wondering if it is actually worth paying the extra couple cents per pay period for the other plan. I know we're talking less than the cost of a Big Mac per year. Love that. But this type of insurance seems so conditional for context. I'm 29, single, with no dependents and little to no major debt or assets. What do you think, Joel should go above and beyond and get the fancy plan. I just stick with the 18 cent plan.

[Joel]

I just want to say I remember those early years of choosing the benefits at work and just being like a deer in the headlights. And so I get this like you're, you're not alone. Anonymous. That's a weird position. What do I do to be in? And you're trying to figure out, yeah, what, what does that even mean? And is that beneficial? It seems like it's so cheap. I should just, I should get it right. Like I should have that coverage just in case. Well, and a lot of companies offer like small amounts of various insurance products for little money to employees. Oftentimes like a free one extra salary of life insurance. And it's like, yeah, take it if it's free. Why not 100% paying for extra coverage though, via your employer?

[Matt]

Maybe not, maybe not.

[Joel]

Less 100% less 100%. Especially for young folks with no significant health issues, which is where this posterior falls in, Matt. So yeah, get the free stuff, but don't get more from your employer unless you have health issues that make it impossible to get a good rate on the open market is typically the best way to go. It's cheaper, it's more portable to get your own policy. Oh, and because you're single with no dependents, there's likely no reason for additional life insurance in particular at this point. When it comes to this AD&D policy in particular though, Matt, do you want to, you want to address that?

[Matt]

Well, so unlike life or disability insurance, it's certainly a less necessary type of insurance. So it's a much lower priority because it only pays out in very specific circumstances like, so it's called AD&D. Accidental death and dismemberment. So like losing a limb or losing an eye, which of course could happen, but I don't know. That's not something I'm really interested in insuring against. Like, so if it was me, I would take up to the free amount that's offered and then avoid the additional coverage. I think, man. The. Even though it's such a small amount of money, it's partly the principle, but it's also the fact that you don't need it. You don't need to insure beyond that. If it was me, I wouldn't. It feels like the free samples at Costco and they're just. You're like, oh, well, they got this thing. Like that's what. To me, that's what it is.

[Joel]

Don't hate on the free samples at Costco.

[Matt]

Oh, I take the Costco. I take the samples. Okay. You know what I don't do?

[Joel]

What?

[Matt]

Buy the product that they're selling.

[Joel]

Yes. No. Yeah. Unless it's like truly is great. But usually I know that I ahead of time. Sure.

[Matt]

But like that's how I see it. They have whet your appetite a little bit and you think, well, I've already tried this. It's pretty dang good.

[Joel]

Yeah.

[Matt]

I think that's how a lot of these products are. Like they've whet your appetite. You're like, well, I've already got it. All I have to do is just kind of like ramp it up. I don't have to resubmit any new information. Go through the hassle and the rigmarole to be able to make that happen. I think that's kind of the similar approach when it comes to some of these workplace employer sponsored benefits that they're offering, including this AD&D insurance benefit.

[Joel]

So take the free coverage, decline the additional.

[Matt]

Yep. Eat your Big Mac 100%. All right. The beer that you and I enjoyed today, Joel, comeback sauce. Let's get to it. Let's share our thoughts. This is a collab with Creature Comforts and Edmonds OST Southeastern ipa.

[Joel]

What'd you think? Well, two great Southeastern breweries. Sadly. I've had some Edmonds Ost beers but still never been to Edmonds O. Somehow in Charleston, South Carolina.

[Matt]

Kate and I, I think we're going to fix that.

[Joel]

Are you?

[Matt]

Yeah. We started. We started finally putting together what our summer is going to look like.

[Joel]

Bring back all the goodies.

[Matt]

I think it's going to involve Charles.

[Joel]

That's awesome. It's a great town. And it's like. But it's not close enough for us to visit easily. It was like four and a half hours. Something like that. Okay. Is it anymore? But I remember we've been. I've been once or twice and I loved it. It's a beautiful place. But this beer Pillowy mouthfeel is what I'm going to say. And they call it a Southeastern ipa, which actually does feel like this attempt to bridge the gap between New England and West Coast. And so it's got some of the mouthfeel of New England, but it's actually got some of the bitter notes of a modern west coast ipa. I'm going to say, okay, I like

[Matt]

the modern West Coast.

[Joel]

No, modern, not old school.

[Matt]

Not like the old school, super pithy, bitter to the bone west coast ipa.

[Joel]

But still enough of that bitter hot presence, which is I enjoy.

[Matt]

Okay. So I was trying to suss out what makes this different than a New England. And I get what you were saying as far as, like, the. Some of the bitter notes. To me, I think it's salt. There's something about this beer that tastes briny to me. Like, it almost. And you always make fun of me when I talk about staying hydrated with beer, but it's almost like there is something going on where it's like this beer has electrolytes going on. And I thought that also makes sense from a New England versus. Or I'm sorry, like a Northeastern versus a southeastern approach. Because it's like, man, we're down here sweating.

[Joel]

We're dehydrated. We need more electrolytes.

[Matt]

We need the electrolytes, we need the salt. And with Edmund's ost being on the coast, I don't know, I was creating this. This entire narrative and just completely brainwashing myself as to what they did to the spear to make it truly southeastern. But I really do think it kind of has like. Like a brininess to it. It's got this thirst quench. I don't know what it is. There's. There's something about it that. That is very drinkable. Yeah, I really like it.

[Joel]

I agree. So big thanks to listener Nick for dropping this one off.

[Matt]

This is one I'm gonna go find locally and put in my fridge.

[Joel]

For real.

[Matt]

It's really good.

[Joel]

And actually the name Comeback Sauce, one of our favorite chicken sausage joints had a special sauce called Comeback Sauce there.

[Matt]

So I don't know if back in

[Joel]

East Atlanta they knew that, named it after this or not, but it brings back some nostalgia for me, too.

[Matt]

I doubt that. I'm sure there's other places that also have Comeback Sauce. Probably. But Delia's pouring out for deal. They closed, like, years ago.

[Joel]

Right. Well, they have another. I think they have a second location that's still open. Oh, really? I think so.

[Matt]

On the way to Westminster. Okay. Yeah, yeah, yeah.

[Joel]

But I think the East Atlanta locations shuttered. It's gone.

[Matt]

Yeah. All right, let's go ahead and wrap it. You can find our show notes up on the [e-mail] including, we mentioned, multiple resources, so you can find that yet again. Howtomoney.com that's gonna be it for this episode, buddy. Until next time, Best friends out. Best friends out.

[Joel]

Are you listening to that new bumper Sunset? It's really good, man. I'm really digging it.

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