Friday Flight - Paper Wealth, Target Date Trends, & Bye Bye Buffett #981

Summary

How to Money
Episode: Friday Flight - Paper Wealth, Target Date Trends, & Bye Bye Buffett #981
Release Date: May 9, 2025
Host/Author: iHeartPodcasts
Duration Covered: [01:22] onwards

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1. Navigating Retailer Policies: Walmart vs. Best Buy

In this segment, Joel and Matt delve into the contrasting customer service policies of major retailers, highlighting a recent personal experience Joel had with Walmart.

• Joel shares his frustration:

  "[02:37] Joel: I bought some shoes online from Walmart, and when I needed to exchange them in-store, I discovered that the in-store prices were higher, and Walmart wouldn't honor the online price for an exchange."

• Matt contrasts this with Best Buy's consumer-friendly policies:

  "[04:44] Joel: Best Buy offers free electronics recycling, making it easier to dispose of old gadgets without additional costs."

This discussion underscores the importance of understanding retailer policies to make informed purchasing decisions and avoid unexpected expenses.

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2. The Shrinking Housing Market: Smaller Homes, Bigger Savings

Joel and Matt explore the trend of decreasing home and apartment sizes in the United States, attributing it to rising construction costs and changing consumer preferences.

• Joel explains:

  "[07:00] Joel: Builders are opting for smaller homes to maintain profitability, appealing to buyers with reduced maintenance and utility costs."

• Matt adds insight on consumer behavior:

  "[08:51] Matt: With fewer people working from home, there's a shift towards smaller living spaces that better suit current lifestyles."

The hosts emphasize that smaller homes can lead to significant savings, allowing individuals to allocate more funds toward savings and investments, thereby enhancing financial stability.

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3. Understanding the Wealth Effect: The Double-Edged Sword of Home Equity

The conversation shifts to the concept of home equity and its impact on personal finances.

• Matt outlines the current state:

  "[09:02] Matt: Homeowners collectively hold over $35 trillion in home equity, which has surged due to property appreciation."

• Joel cautions about the psychological aspect:

  "[11:37] Joel: Don't treat your home as a piggy bank. Relying on home equity for spending can lead to financial pitfalls."

They discuss the "wealth effect," where increased home values make individuals feel richer, potentially leading to increased spending. However, since home equity is not easily liquidated, it poses risks if tapped into indiscriminately.

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4. Target Date Funds: Simplifying Retirement Investing

Target date funds have surpassed $4 trillion in assets, reflecting their growing popularity among investors seeking simplicity.

• Joel highlights the benefits:

  "[12:00] Joel: Target date funds automatically adjust asset allocation as you age, offering a hands-off investment strategy."

• Matt notes the decreasing fees:

  "[13:35] Matt: Fees for these funds have dropped from an average of 0.55% in 2015 to 0.29% today, making them more attractive."

The hosts recommend low-cost options from providers like Vanguard and Fidelity, emphasizing that while target date funds may not be optimal for all, they remain a solid choice for those prioritizing simplicity and low fees.

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5. Gold Investments: A Safe Haven or Overhyped Trend?

Gold has recently outperformed the S&P 500 over the past 20 years, sparking renewed interest among investors.

• Matt discusses the performance:

  "[13:49] Matt: Surprisingly, gold has yielded better returns than the S&P 500 over the last two decades, though longer-term trends favor equities."

• Joel advises caution:

  "[15:37] Joel: Instead of purchasing physical gold, consider low-cost ETFs like GLDM for more efficient and secure exposure."

They agree that while gold can be a valuable diversification tool, it should constitute no more than 5% of an investment portfolio to balance potential benefits with risks.

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6. Warren Buffett's Retirement: Lessons for the Everyday Investor

The episode covers the significant news of Warren Buffett stepping down as CEO of Berkshire Hathaway, exploring the implications for investors.

• Joel reflects:

  "[16:36] Joel: Buffett's departure marks the end of an era. His legacy teaches us the importance of patience, long-term thinking, and simplicity in investing."

• Matt emphasizes not to emulate Buffett but to follow his advice:

  "[17:03] Joel: Instead of trying to mirror Buffett's exact strategies, focus on broad-market index funds, which he advocates for everyday investors."

They caution against idolizing Buffett's unique diligence and extensive financial analysis, suggesting that most individuals benefit more from passive investment strategies.

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7. The Critical Importance of Beneficiary Designations

Updating beneficiary information on financial accounts is essential to ensure assets are distributed according to one's wishes.

• Matt stresses:

  "[19:28] Matt: Changes in your personal life necessitate immediate updates to your account beneficiaries to prevent unintended inheritances."

• Joel underscores the simplicity and necessity:

  "[20:21] Joel: It takes less than a minute to update your beneficiary, but the consequences of neglecting this can be profound for your loved ones."

The hosts highlight real-world examples, such as Heath Ledger's case, to illustrate the importance of regular reviews and updates to beneficiary information.

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8. Cryptocurrency Caution: The Trump Coin Scam

Joel and Matt warn listeners about the risks associated with certain cryptocurrencies, using Trump Coin as a case study.

• Joel presents the facts:

  "[21:34] Joel: Only 58 out of 750,000 investors in Trump Coin made a profit, totaling nearly a billion dollars, while the vast majority incurred losses."

• Matt labels it a scam:

  "[21:30] Matt: This scenario exemplifies the rampant pump-and-dump schemes prevalent in the crypto space."

They advise sticking to reputable cryptocurrencies like Bitcoin and utilizing low-cost ETFs for precious metal investments to mitigate risks.

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9. Social Security's Uncertain Future: Strategic Planning Essential

The hosts discuss impending challenges facing Social Security, including the depletion of the trust fund and the implications for future beneficiaries.

• Joel explains the urgency:

  "[33:00] Joel: The Social Security trust fund is projected to be exhausted within the next decade, potentially resulting in benefit cuts."

• Matt advises on claiming strategies:

  "[34:15] Matt: Waiting to claim Social Security benefits can increase your monthly payout by up to 75%, translating to significantly higher lifetime income."

They emphasize the importance of proactive financial planning, suggesting that younger generations should prioritize personal savings and investments over reliance on Social Security, while current retirees consider the timing of their claims carefully to maximize benefits.

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Conclusion

Throughout this episode, Joel and Matt provide comprehensive insights into various personal finance topics, from navigating retailer policies and understanding home equity to making informed investment choices and planning for Social Security's uncertain future. Their blend of personal anecdotes, expert advice, and practical tips offers listeners valuable guidance to enhance their financial well-being.

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Notable Quotes:

• Joel at [02:37]: "I had to go in anyway to buy the right size. And when I got there, the price at the store for those shoes was higher than it was online."

• Matt at [08:51]: "I'm just looking for a place to crash at night for the most part."

• Matt at [17:03]: "I think it's important for us to consistently mention that target date funds can still be a great option."

• Joel at [19:37]: "It'll take you all of 45 seconds to log into the back end of your account and do that."

• Matt at [30:02]: "You're advocating for some sticky legislation? Yes, I totally agree, man."

These quotes encapsulate key moments of the discussion, reflecting the hosts' perspectives and advice on handling various financial matters.

Transcript

[Joel]

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[Joel]

Welcome to how to Money. I'm Joel.

[Matt]

I am Matt.

[Joel]

And today we're talking paper, wealth, target, date, trends and bye bye Buffett.

[Matt]

You know what, buddy? This is our Friday flight where we're going tackle the most pressing personal finance headlines out there. Specifically how they pertain to your wallet. Joel, you got a note here about Walmart. What, what's, what's the latest with Walmart? I want to give you a big fan.

[Joel]

I want to give a quick I'm not, not a fan of Walmart.

[Matt]

I like Walmart. Yeah, so we've been doing more shopping there lately. It's just not our. You know, there's only one place in my heart and it's shaped like Aldi.

[Joel]

You should actually get an Aldi tattoo over your heart, I think.

[Matt]

Oh, that'd be great.

[Joel]

Maybe one of these days. So, okay, two different retailer policies that I wanted to highlight here. One that's consumer friendly and one that's not so Walmart. And I didn't realize this until I went in the other day. I bought some shoes from my little dude online and turns out they were too big So I had to go in the store.

[Matt]

You're not gonna hang on to them, wait for them to grow into them.

[Joel]

You're right, I probably could. But I had to go in anyway to buy the right size. And they, the when I got there, the price at the store for those shoes was higher than it was online. And they wouldn't let me do an exchange and they wouldn't. So I could return and then I could buy, but then I was going to be spending more than what I would have paid online.

[Matt]

So they, that's a bummer.

[Joel]

I was just unfamiliar with the fact that Walmart does not match online prices in stores, which to me does not seem, oh, that seems super hard. And I guess I would get it too because there's more third party sellers on Walmart now if it wasn't actually sold by Walmart, it's like, alright, I get that, don't price match that.

[Matt]

But if this is an actual Walmart item.

[Joel]

Yeah, if it's sold and shipped by Walmart, why wouldn't they match it?

[Matt]

You know who would match that?

[Joel]

Who's that?

[Matt]

Aldi. I don't know how many pairs of shoes that you're buying at Aldi, but you know, like Kate and I, we joke about this. Anytime there's something kind of random that we need, we just look at each other and I'm like, oh, we've just voiced it into existence. Because then you walk down that seasonal aisle or like I swear it pops up, it's there. Like we were recently talking about getting a composter tapped into your home. I think it just means that I'm just way more typical average American consumer than maybe I would like to admit that could be. That's, that's all I got.

[Joel]

So I highlighted, I highlighted a negative store policy. Let me highlight a positive one from Best Buy. So my dad texted me and he's like, hey, I know you're like, where you live, they're better about picking up old electronic items and stuff like that. Can I drop them off at your house and can you ask your trash provider to pick it up? And I was like, yeah, but you know, you could take this stuff to Best Buy instead. And when you go to Best Buy, look at their like electronics recycling page. They will take almost anything for free. So if you've got like my dad had like old modems and DVD players and stuff lying around remotes, they'll take old TVs under a certain size. So if you're like, ah, I've kind of accumulated a Lot of junk electronics that's past their prime and they're not. You can't sell them. And you're gonna actually have to actually pay money to dispose of them, take them to Best Buy.

[Matt]

I know you're supposed to recycle, but I think there's a whole lot of folks, dude, who are out there just tossing that stuff. You know, I think that's probably like. Do you ever feel that way about recycling?

[Joel]

You kind of can't with a 55 inch TV, but you probably can with that old motor.

[Matt]

But could he not sell that 55 inch even for like.

[Joel]

Well, it was maybe. I mean, that's a good point too.

[Matt]

Was it a tube? Like a.

[Joel]

No, no, it was a flat screen. But like the screen just went out.

[Matt]

Oh, you can't sell that.

[Joel]

Yeah, I was gonna say. I mean, maybe there's some tinkerer, hobbyist who would be interest.

[Matt]

You know what I was gonna say was that sometimes I feel like it is not a futile endeavor, but like, it like recycling, like, I do regular recycling. Like this morning even I was preparing some strawberries for my lunch. Like, what did I do with a plastic strawberry container? Toss it in the recycling bin. Like, we're even composting, actually. Like, we are. Like we're cutting little tops off. And so we are reducing our waste. And so we are doing our small little part. But. But like, sometimes when I think about it, I feel like we are only moving the needle. Like 0.0000. Like, I don't know, you could put tons of zeros 1%. Like just even in our country. Like, and when I start thinking about the world, like at large, like you think about China, if you think about countries that are burning massive amounts of coal, of fossil fuels, and how does that they handle waste? I'm just like, man, maybe like for our little neighborhood over here, we're doing a good thing. But I don't know, sometimes I get discouraged when I think about just the world at large, man, and all that's going on.

[Joel]

Oh, man, we went broad.

[Matt]

You should still do the right thing. Like, I. Like we are still recycling, but sometimes I have a hard time, I guess, getting super excited about that. But that being said, I'm glad you brought that policy up.

[Joel]

Talk about the deforestation of the Amazon rainforest. Now, Matt, it's.

[Matt]

And it's certainly great that there are companies out there who are processing these electronics, making sure that there's not. What is it? Lead, mercury, getting into the water supply and different things like that. Glad that they're taking care of that because I don't want to be living somewhere where those forever chemicals and whatever is that. Isn't that what they're called? Forever chemicals?

[Joel]

Yeah, Forever.

[Matt]

Forever plastics. Yeah, that's the new thing now.

[Joel]

Plastics, microplastics.

[Matt]

We're all eating the microplastics inside of us.

[Joel]

It's true. So tried to highlight something good and bad. I feel like we went down more of the bad path.

[Matt]

My bad maybe.

[Joel]

Okay, let's highlight something else that's good though here because we talked what last week about the slate truck. That's 20 grand, which is awesome. That's a good thing. Love that. That's good news. Well, now, not just our cars shrinking and getting less expensive, but we're seeing signs that new homes in the United States, they're continuing to shrink in size. So I think part of that is because of negative news. The higher cost of building and the fact that prices are remaining elevated. Builders are like, well, I can produce the square footage of the house that I'm building and I can do just fine and make a profit. And I'm going to appeal to more buyers. So. And we are seeing some price cuts too in the housing market. We're actually going to dedicate a whole how to Money newsletter to housing soon, so please sign up for that. But yeah, some of the new apartment sizes are actually shrinking in size too. So when new apartments are being built, especially Gen Zers, they're like, yeah, give me all the amenities but give me a tiny box in which to stick my bed and I'll be fine. So I think this is a good thing. I think bigger isn't always better. And in fact, when you think about it, bigger means more maintenance costs. It means higher utility bills. The 5,000 square foot house versus the 2,500 square foot house. Yeah, it's going to cost you a lot more money to maintain. Yep. We talked about secondary costs last week. Well, you got, you got to factor in the secondary costs of home ownership too. And like, I think just bigger is better. That mentality, maybe it's falling by the wayside a little bit. Finally. I just think being content to live in smaller quarters is. It just. It means less money going towards housing and more money that you have to save and invest to grow your net worth to have more options. When it comes to work and free time, the more we toss into our homes, the less flexibility we have.

[Matt]

Totally agree. Yeah. I also wonder if the pendulum is swinging back as well as fewer folks are working from home now. I'M having to go in, so I'm just looking for a place to crash at night for the most part.

[Joel]

I think that's probably true. Yeah. For a minute there was that push towards especially I remember my little sister living in a studio apartment.

[Matt]

That's when they upgraded, right?

[Joel]

Yeah. And they were like, we can't both work from.

[Matt]

Exactly. It makes sense. So while we're speaking of homes, the average American homeowner is also rich in home equity. Collectively speaking, we've got more than $35 trillion in our homes thanks to the appreciation that they've experienced over time. And so if you, let's say bought a house in the last 10 to 15 years, you have inevitably increased your net worth because of that home.

[Joel]

Just because of the trend, right?

[Matt]

Yeah, it is up something like 80% since 2020. So even the more recent years it has been significant. But it is really only wealth on paper. And it can add to this thing called the wealth effect. And let me explain that. Basically you feel richer, it can lead to increased spending. Because of that, you spend a little bit more freely. But the tough thing is home equity, it isn't all that liquid. And because we are typically beneficiaries of home appreciation. Right. Like we are not necessarily working for it. I think it could mean for some folks out there that it's easier to borrow and spend.

[Joel]

Kind of like an easy come, easy go sort.

[Matt]

I think. So I want to put this on folks radar because I want them to be careful of this. You want to be careful of this temptation. I think more than ever it's important to. I think the rule of thumb here is to know thyself. Because I do think that there are some folks like I don't think about the homes that we own, like investment properties at all. When I calculate my net worth, when I calculate some far off payout amount once the homes are paid for, that kind of thing. But I think there might be some folks where, you know, if they still got the Zillow app on their phone and they're like, oh, oh, it's increasing.

[Joel]

Again, salivating over every price increase.

[Matt]

Yeah, it kind of makes me think of like credit lines. Like if you are the kind of person who can handle a $30,000 available credit on your credit card and you hardly spend on that card at all, you don't go anywhere near that $30,000, maybe put like 300 bucks on it here and there, then I think you are probably the kind of person who isn't necessarily tempted by that increased home equity. But if you are the kind of person who's just like, oh, they just upgrade. I got seven more thousand dollars available to me. I just went from 21,000 to 28, like time. Keeping track of that time to go out and spend. If you're. Yeah, exactly. If that's. If you're that kind of person. I would also say be careful when it comes to home equity as well.

[Joel]

I think there's two things here. I think, one, don't treat your home like a piggy bank, because if, if you do, there are financial repercussions down the line. And then also kind of going on that wealth effect thing just because it exists, don't let that give you the permission, right, to spend money in a more ridiculous way just because you're like.

[Matt]

Well, I'm loaded, man.

[Joel]

I got like 350 grand in home equity, so I don't need to be as worried. I can be a little more profligate with my spending. I don't think that's the case. All right, let's talk about target date funds. Matt, they just crossed an important threshold. There are now more than $4 trillion in assets that are held inside, specifically of target date funds. And Morningstar wrote an article about this, and they basically detailed the rise of target date funds in the last couple of decades. They're also holding up better right now. Right. Given the recent market volatility, because of their more balanced approach, they're not gonna see as dramatic of a decline, typically, as somebody who is invested more like you and I, who's 100% invested in stocks. On top of this, though, fees on these funds continue to decline. Morningstar said that in 2015, they were 0.55% on average. Now they're 0.29% on average. So I like that target date funds are experiencing the same decline in fees in expense ratios that many other funds have seen as competition has increased. And the big low cost investment houses like Vanguard, Fidelity and Schwab have really pushed the envelope on that. And so Vanguard and Fidelity in particular have some of the best low cost target date fund options. Their expense ratio is a heck of a lot less than even the average. We're talking about, like 0.08%, which is pretty darn good. And so for investors who like simplicity, who like low costs, I do think it's important for us to consistently mention that target date funds can still be a great option, particularly inside of your retirement accounts, because if you invest in a target date fund, it's going to automatically shift the allocation as you age, it's easy peasy. It's a set it and forget it sort of thing. And I think target date funds, while they're not my 100% favorite fully optimized way to invest for really young people, I think they're still like, don't let perfect be the enemy of good. They can still be a good option.

[Matt]

They're still solid. Yeah. Let's talk about another investing trend. Gold is the talk of the town these days. In particular because of the less predictable economic conditions that we've been experiencing. Actually, gold, it has seen better returns than the S&P 500 over the past 20 years.

[Joel]

Shocking to think about.

[Matt]

It is, yeah. It's a bit more of like cherry picking data, I think.

[Joel]

But still, 20 years is a long time.

[Matt]

Yeah. I mean, but if you zoom out to 30 years, the S and P blows it away.

[Joel]

Yeah.

[Matt]

You zoom it out to 30, 40, 50. You zoom out to 100 years.

[Joel]

Dude, like, not even close. It's not even close to the last six months.

[Matt]

Last six months, last 20 years. Surprisingly, it has done better. But the question then comes up, should we all jump on this gold investing bandwagon on this trend? Most experts out there would tell you that gold isn't a necessary part of your investment portfolio. But if you want to hold a little bit of gold, I think that can make a whole lot of sense. We always talk about holding 5% or less of your overall portfolio in different things that we think are okay, like precious metals, bitcoin.

[Joel]

Yeah.

[Matt]

I think like you just.

[Joel]

Gold could be one of those.

[Matt]

You just love this one company and you're like, you know what, I'm gonna go buy me some Warner Brothers like I did after we talked about Harry Potter being released. Oh, did you? Yeah, I mean, just like one share.

[Joel]

Part of your like play portfolio.

[Matt]

It's just for kicks, just to have timestamped. Oh, this is when that happened. And I don't know, it's just a little something that's fun to do.

[Joel]

Yeah.

[Matt]

But it's worth mentioning because you're going to see more headlines about gold. You're going to see more advertisements specifically from gold buying companies. Especially with the run up in values.

[Joel]

That we've seen, they're loaded and they're going to be like, y' all need to get in on this.

[Matt]

And they've got so much money come.

[Joel]

Through our proprietary system to buy gold because every investor needs some gold in their lives and they're going to do the hard pitch.

[Matt]

We would actually prefer if you Want to hold some gold? We would prefer that you stick with some low cost ETFs that invest in gold specifically like GLDM. That is a great option with a very small fee.

[Joel]

Is Costco still selling the gold bars?

[Matt]

Depends on the season.

[Joel]

Okay.

[Matt]

Are they still selling giant wheels of cheese of Parmesan?

[Joel]

Yeah, I guess.

[Matt]

A Parmigiano.

[Joel]

Yeah. I don't know what the gold buying season is, but yeah, I wonder. Typically when they put them out there, they sell it quickly, but even that.

[Matt]

Are they still selling $2,000 yu steaks. I mean, sometimes they put these things out there and I'm just like, who the heck somebody is is buying this?

[Joel]

Obviously somebody is, but I think that you're right. Like, buying it inside of a ETF makes more sense even than buying like physical gold at a place like Costco, which is going to give you a better deal than you're going to get almost anywhere else for buying gold. And some people, like, I don't know, want to stick it under their mattress or something like that. That's not ideal. Like, if you want some gold exposure, low cost ETFs are typically the best way to go. While we're talking about investing, Matt, let's talk about the main headline this week, the one that hits us right in the sweet spot in our hearts. Warren Buffett stepping down as the CEO of Berkshire Hathaway. Did you shed a tear when you heard the news? I.

[Matt]

Not really, because I'm like, yeah, he's like so old.

[Joel]

Good for him. At the age of 94 for finally, like saying, all right, I'm going to get out at the end of the year, seven months or whatever.

[Matt]

And maybe because I know you and I, we've had more conversations too. I mean, with Charlie Munger having died, we talked about Warren Buffett. Earlier this year. We actually had David Clark on talking about the new towel of Warren Buffett. Yeah, I don't know. It makes sense.

[Joel]

It totally makes sense.

[Matt]

He's old, He's a sharp guy.

[Joel]

I don't begrudge him this. And I actually encourage him in this endeavor to bag work and live out the rest of your years with, I don't know, hopefully a little less. But apparently he's going to remain the chairman of Berkshire. So he's not like completely altogether, but he really is the goat and man. So many of the moves he's made over the decades that you could highlight have been impressive. Berkshire's returns, you're talking about the gold versus the S& P. Well, Berkshire, his company. Those returns have far outpaced the S and P during his investing tenure. Something like basically 20% returns versus 10 plus percent returns for the S and P over those many decades. But I think it's important to highlight the fact that he is an anomaly. And most of us shouldn't aspire to be like Warren Buffett. I mean, in some ways we should. I appreciate his humility and his intelligence, his frugal nature. Yeah. But in other ways it's like, well, don't, don't try to do that because I saw the stat. Matt Jason Zweig in the Wall Street Journal estimates that Warren Buffett has read more than 100,000 financial statements of companies. And he said that's actually probably pretty conservative. I bet Warren thread quite a bit more than that. And my question to how to money listeners is, are you willing to do that? Are you?

[Matt]

Nope.

[Joel]

Are you going to spend your days, your evenings, instead of hanging out with your partner or pursuing a hobby, reading financial statements of companies? Some people are going to say, yeah, I am, because that's really fun for me. Then maybe you are in the Warren Buffett ilk who can and should invest in single stocks. But for most of us normies who don't do that, then I think it's just a good, hey, index funds make the most sense. And that's why we should also do what Warren Buffett says, not what he does. What he says to everyday investors is like, yeah, investing most of your assets into the s and P500 is going to build you wealth over time. You don't even need to do it the way I did it. I love that he did it the way he did it. I think he's passed on a lot of great lessons to individual investors over the years. Patience, long term thinking, the beauty of simplicity. He's just been such a remarkable fixture in the investing landscape for so long. I think this is a good reminder to learn from Warren Buffett and not necessarily try to mimic him.

[Matt]

I don't know if this is uncouth to bring this up, but maybe with Warren getting old, he's 94 years old. Maybe this is a good reminder to review your beneficiaries if you haven't on your different accounts.

[Joel]

I'm sure Warren has this, you know, buttoned up.

[Matt]

I'm sure he does, but I saw a recent article talking about this. We haven't mentioned this on the show in a while, but if there have been any major life changes, make sure that you make those changes within the back end of your Retirement accounts, contrary to popular belief, your beneficiary, it actually supersedes what is in your will. So, like, you don't want the money that you've been working hard to grow to be left to someone that maybe you no longer intend for that money to go to. In that article, they actually mentioned Heath Ledger and how with his unexpected death, he hadn't named his daughter as the beneficiary. Instead, he had left all the money to, like, his sisters and his parents. That's like a, you know, celebrity, obviously, so it gets slightly more attention. But that's just a great example. In the end, they. They gave her all the money, so they took care of her. But that's still the kind of situation that you ideally want to completely avoid.

[Joel]

And let's be honest, it's. It'll take you all of 45 seconds to log into the back end of your account and do that. And if you don't have the right beneficiary listed and you were to pass away like that's a man, think about the problem that you're leaving your loved ones.

[Matt]

Sure.

[Joel]

Random other aside on investing. Matt, real quick. I saw this stat and it shocked me. You know, the Trump Coin that got released, it was widely published.

[Matt]

Which one?

[Joel]

Or there are multiple.

[Matt]

I feel like they're.

[Joel]

There was Trump and Melania.

[Matt]

Oh, that's true. But I feel like there have been multiple stories about grifting taking place from within the White House.

[Joel]

Well, this is something we've talked about on the show before. Bitcoin and crypto are kind of completely different things in a whole lot of ways. And there's a lot more room for. To get swindled, I guess, in the crypto space than there is if you just invest some in bitcoin with regularity. Turns out only 58 people have made money owning Trump Coin. They've made almost a billion dollars in total, and over 750,000 people invested in Trump Coin. And almost all those people lost money. So 58 out of 750,000 people made money. The rest of them lost.

[Matt]

It sounds like a scam.

[Joel]

Yep. A lot of pump and dump stuff happening in the crypto space. Still, beware.

[Matt]

I stand behind my term or my use of the word grift because, like, that is what, like, talk about wealth transfer, man. This is something that we hate seeing. This is regardless of whether or not you support the different policies that he's going for. But I hate to see this.

[Joel]

Yeah. And it's just another reminder to, hey, yeah, invest some in Bitcoin if you're so inclined, but don't mess with the rest of the crypto space. All right, Matt, we've got more to get to, including we're talking about Social Security problems and how you can react. We'll talk about that and more right after this. This message is brought to you by Navy Federal Credit Union May is Military Appreciation Month, and we're celebrating the military community that goes above and beyond every day with Navy Federal Credit Union. Navy Federal was created for the military community and is dedicated to ensuring that its members feel celebrated and honored every single day.

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[Matt]

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[Joel]

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[Matt]

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[Matt]

All right, buddy, we've got more Friday flight to get to and of course now it is time for the ludicrous headline of the week. And we're gonna take this segment and talk about credit. There's an article from CNBC that I am unhappy with because the title of.

[Joel]

The article was I don't like seeing you unhappy.

[Matt]

How to raise your credit score 160 points in 30 days. Well, okay, so specifically it wasn't the headline, it was what was contained within the story.

[Joel]

Because yeah, the headline, it sounds promising, right?

[Matt]

Yeah, yeah. We talk about improving your credit score all the time. This is something that we. It's a regular feature here on the show. You don't want to ignore your credit score and especially raising your credit score this much in just a month, I am all for. But sadly this article had some really bad advice that was mixed in with the good stuff. So first of all, the good stuff, they say to pay attention to your credit score. Yeah, totally true.

[Joel]

Well, in your credit reports in particular too. Right. To say, hey, if there's an error on there, you want to fight it.

[Matt]

Exactly. There are mistakes on a huge percentage of those reports. Consumer Reports says that half of folks who actually go looking, they're going to find an error. So that's something that you can be on the lookout for.

[Joel]

Basically, the credit bureau's not so great at the record keeping, which is their primary job.

[Matt]

They're not great at it. But in addition. So that's like a small example of something that was good. In addition to that, the article said to consider hiring a credit repair company. And also interspersed and mixed throughout this entire article. I think it was sort of like a pay to play sort of journalism. But you saw. I didn't even check with you, but I assumed you also saw the. I'm not gonna call them out specifically, but it was a lending, I'm sorry, a credit repair company. And they had like some charts to where it looked like it was a part of the story. But then there's also ads from the same company.

[Joel]

There's like the small grayed out thing that says ad in the bottom right here.

[Matt]

It's super sketchy. Don't like it because this is something that you can complet completely diy. You don't need another expensive monthly subscription, which is the model that most of these companies operate under like 150 bucks.

[Joel]

A month or something like that. Right.

[Matt]

And like, you can tell oftentimes when something's a scam, when there's something called, gosh, like a startup fee or like an onboarding.

[Joel]

Those are the worst.

[Matt]

Yeah, like a setup charge. I'm like, what needs to be set up? Like, you taking me as a customer. I don't like it. And we've actually got an article up on the website with some tips to rebuild your credit score. And it is a much better article than the one that CNBC was running.

[Joel]

If you've got like a question because you feel like your credit score is not where it needs to be, send us a question. We'd be happy to take it on the podcast, but just do not, do not sign up for one of these credit repair companies because they'll take more than they give and most of the things that they're offering to do. Yeah, you can do yourself. More bad news on the credit front, Matt. Medical debt. If I can be staying on credit reports after all. Because these policy changes were essentially made by executive order. And it seems like that's the only way policy changes get made these days, which just puts more power in the hands of the president, no matter whether they have an R or a D by their name. But many of the changes that were enacted by the previous administration are now subject to change, and the same will be true of whoever is in the Oval Office next. And as the Consumer Financial Protection Bureau has been downsized and its futures in jeopardy, a judge has been asked to vacate the rule that would have excluded medical debt from appearing on credit reports moving forward. And so this isn't final, but it does seem that the medical debt exclusion is unlikely to stick around. And although I think the credit bureaus have still basically on their own, of their own volition, said, well, you know, medical debt under 500 bucks we're not going to put on there anyway. But with this and what's happening with student loan collections, it's even more crucial to pay attention to your credit report and credit score these days. We're likely to see average scores, I would say, dropping in the coming years and in the future. I think it would make sense for both parties to get the legislative branch involved in writing and passing bills for the changes they want to see endure. Because otherwise it's just going to kind of be this back and forth, this whiplash of like, no, we're gonna do this. But if it's issued by executive order, the chances of that thing sticking around over the long term are just minimal.

[Matt]

You're advocating for some sticky legislation? Yes, I totally agree, man. So another article that was also ludicrous. So little two for one today, but this one was from USA Today. Americans saved money in fintechs. When money went missing, FDIC was nowhere to be found. This was. Okay, so this is like the opposite of the CNBC article. This is some good reporting that was taking place. And this article highlighted the way that fintech banks grew into these juggernauts for savers. They were promising higher rates, they're promising better perks. And the rise of these cool online banks, that's really a story of actual fintech growth. But as we have mentioned before, many of these fintech banks are on shaky ground. And what happens, inevitably when customers of some of these neo banks lost their savings, the fdic, they had nothing to do about it.

[Joel]

They're like, what? Huh? Are you, Are you reaching out to us? Because like that in our jurisdiction?

[Matt]

Yeah. And so the reason for this is.

[Joel]

Basically it's like that Spider man meme where everyone's pointing at somebody and the FDIC is pointing that out.

[Matt]

That is exactly the case.

[Joel]

Not our fault.

[Matt]

So the company, these new startups, they aren't actual banks. Instead, what happens, they work with FDIC insured banks through an intermediary. But still when these banks experienced, again, when these tech companies experienced issues, the FDIC didn't do anything in order to help these customers.

[Joel]

Yeah, call it, I'm glad you call them tech companies because they're not. They look and feel.

[Matt]

That's the problem though, because on the.

[Joel]

Website market themselves like a bank, they.

[Matt]

Say that they are not banks. And so some of that.

[Joel]

But if you just at first glance as a consumer, you, it would be understandable that you would think they were.

[Matt]

Exactly. But this is why this has been a drum that we've continued to beat. We want folks to stay away from those. We want you to actually go with a real online bank, an actual company that's been around for a minute that has their very own FDIC insurance.

[Joel]

Yeah, we mentioned them consistently. We say Ally cit, Discover Capital One, those are all online banks but they're fully fledged banks. They're not super cutesy and stuff like that with the fintech names and the extra, oh, get your paycheck two days early. They don't really have that kind of fancy stuff going on. But it's fine. We don't think you need that stuff. They still pay competitive rates. They keep their fees low. We love those online banks. They're better than the traditional brick and mortar giant banks. You kind of get the best of both worlds with them and you're not at risk of losing your money like you are with some of these fintech banks. I'm still curious to see how this shakes out and whether some of those consumers who had money with the fintech banks are going to get the fintech faux banks I guess is what we should call them, are going to get their money back. That remains to be seen. Matt, let's talk about Social Security for a second. The spotlight is on Social Security right now. Problems seem to be getting worse at the Social Security administration. We've got staff changing requirements to claim benefits, have some folks on edge. And then on top of that, which we've detailed this before on the show, we dedicated a whole episode to it a couple years back. The Social Security trust fund is set to run out sooner than expected in that year. It feels like that year keeps of when the trust fund is going to run out, keeps getting pushed up and up. So in less than a decade, that's when the trust fund is set to expire, which has retirees worried about receiving the benefit they're entitled to. They might not get what's coming to them, like what they've paid into for their whole lives. So what happens if or when we reach that point? Well, benefits get automatically cut by essentially like a quarter. So retirees and soon to be retirees, they're getting fearful about the solvency of Social Security. It's leading to early claims. And so instead of waiting till 67 or even later, they're starting to get that monthly check at 65 or even earlier. And this is a personal decision. There's a lot at play in when you claim Social Security. And the reality is that there's trade offs, right, to claiming early and to waiting, especially if you're not in great health, like waiting till 70 if you're not doing so hot. Well, I get why you might claim early, but a good chunk of folks would be, when you run the numbers, better off waiting longer, even with this kind of increased uncertainty around Social Security. And I also just think people in their 60s should be less worried about the future of Social Security. It's people in their 20s and 30s and 40s who should be like, have.

[Matt]

A bigger impact on them planning a.

[Joel]

Little more, investing more for their own future retirement, and banking less on the reality of Social Security being a major, major part of their retirement income plans.

[Matt]

Yeah. Let's talk about the specific numbers, because the benefit is roughly 75% higher if you wait. If you claim at age 70 as opposed to age 62, those early claims are going to reduce benefits for decades to come. And if you're healthy, right. If you're a healthy retiree, the overall amount received could be reduced by up to six figures over your lifetime.

[Joel]

Essentially $120,000 less in your pocket because you claim too early. Right?

[Matt]

Yeah. And obviously none of us out there know how long we're going to live. But if you are in good health at retirement age, if you can afford to wait, it's still likely the best option. If you want a little bit of additional reassurance, you can consult this fairly inexpensive software that's out there. There's this one called Maximize My Social Security. If this is something you're trying to really crunch the numbers on. And again, like, like you mentioned, Joel, for younger listeners, it is going to impact you more than if you're like 60 years old. But even still, I think it's going to be around for, for all of us, if you're listening to this just.

[Joel]

In a diminished fashion.

[Matt]

Yeah, in some form or fashion, it's going to be there. But I do think our benefits are unlikely to be as high as what it's saying. [e-mail] yeah.

[Joel]

If you log in, it'll give you kind of a projection for what your Social Security income is likely to take that with a grain of salt. I would reduce that meaningfully into my retirement projections. Like something will be there in all likelihood. But the fact that our politicians have let it get to this point where Social Security is kind of, kind of living on the precipice, that it boggles the mind and there's just, it's going to take some political will to change the future of Social Security so that it's going to be around, stick around for the rest of us.

[Matt]

It's a real issue that's going to like, there are some things that are worth talking about or that politicians actually addressing and there are some things that really aren't. And it's just for show. This is like one of the real things that needs to be addressed.

[Joel]

It's like a ticking from a time bomb.

[Matt]

Exactly. From a policy standpoint. But I want to go back as well to the, like you mentioned the personal factors and some of the different trade offs. You got to keep in mind too, some of the different life goals that you have. Because I like, I. For folks out there who are tapping it, who are tapping it early. Right. Like so, so far, like, we kind of, we address the numbers sort of side of the equation. But like think through what it is that you want to be able to accomplish in your life while you still have the ability to.

[Joel]

Right.

[Matt]

And so for retirees, if you're like, you know, yeah, we can wait until age 70 and you know, we're going to be wealthier. Yes, you definitely will. But that's, that's like a no brainer. Right. Like anytime you crunch the numbers, waiting, waiting is always going to lead to you having more, a higher net worth. And so I think the more important questions to ask are what am I likely going to want to be able to do within my retirement years? Or like, what life goals am I trying to accomplish? What kind of impact am I looking to have? And I'll be like, maybe this is like a little bit of Matt confession time. I'm not having like retirement like questions, but Kate and I, we've been talking about this more and we're not talking about.

[Joel]

Are you going to claim now?

[Matt]

Yeah, we're not talking about, they'll be.

[Joel]

Like, I'm sorry sir, you're far too young.

[Matt]

You need to. Yeah. Come back in 20 or 30 years. Wait, how old am I?

[Joel]

Yeah, yeah.

[Matt]

But the ability to Wrestle with some of these thornier issues. I think it's really important because. And we're not, again, so we're not talking about tapping retirement, but other dollars that we've invested. And it's kind of hard to wrap your mind around, like, okay, this is something that we've been putting money into for a very long time. And so this is within a brokerage. But what do we want now, what to do with that money? What is that going to allow us to accomplish that we may not have the ability to do a decade from now, two decades from now, knowing that, yes, by waiting, it's going to lead to a larger sum of money. But what are the other factors that you need to take into account?

[Joel]

And the game plan can change. Right. So I've talked about this on the show. When my mom was diagnosed with cancer, like, the thought was, well, we will tap some of our retirement funds, maybe a little bit more than we otherwise would, just to be able to hold off on taking Social Security. And the plan flipped once my mom's diagnosis happened. And it was like, no, no, no, we're gonna take Social Security. I want as many months of Social Security as I can get because I don't know how long I'm gonna be around. And then we'll leave the retirement funds a little more intact.

[Matt]

Yeah.

[Joel]

And so this isn't necessarily a cut and dry, always easy to figure out scenario.

[Matt]

I think this is, like, one of the hardest things to figure out. Like, this truly is, like, one of the toughest nuts to crack. And Kate and I have had a lot of different conversations over the years about personal finances and business and, like, okay, strategy, different things like that. But, man, this is. It's so difficult. And I get, you know, we're not thinking through, like, life expectancy. Like, those are less the questions. I guess that works thinking about right now, but even still, like, am I guaranteed the ability to wake up a week from now and continue along doing the same things that I'm doing today? No. And I'm not saying in the next week I'm going to yolo. Like, you know, drain. Drain my accounts. So you got to find some sort of balance, though, between YOLO or only looking to the long term, because I feel like that can be just as seductive. Right.

[Joel]

Like, let me build up the account balance as big as I humanly can. Let me guarantee the fattest Social Security check. And then guess what?

[Matt]

I've run the compounding interest calculator. I've run through the different glide paths and scenarios and, like, that's a really easy button to hit. And if that is all you're doing.

[Joel]

The easy button is also to just take Social Security as quickly as you can. Be like, let me get that money. And then you wake up five years down the road and you're like, this check isn't as big as I wish it was or need it to be.

[Matt]

Both ends of the spectrum can be really easy.

[Joel]

And a little bit of delayed gratification would have done me better. Yeah.

[Matt]

No. Yeah. I think the ability for folks to address these sort of thorny topics more head on could lead to productive conversations, not only with, like, your partner or your spouse, but even, like, maybe you don't. You don't have a partner like you yourself to, like, like think, like, spend some time thinking about this and like journaling to perhaps uncover some of the different. Yeah. What's going on under the. Under the hood.

[Joel]

Yeah.

[Matt]

What else are you. Are you looking to accomplish?

[Joel]

Even that Social Security software, those calculators, they're not.

[Matt]

They don't account for that. No.

[Joel]

They don't have the journaling feature included. So you do have to take some personal stuff into consideration. The numbers matter, but the numbers aren't the only thing that matters.

[Matt]

Totally.

[Joel]

All right, Matt, that's going to do it. For this episode, we'll have links to some of the resources that we mentioned, including that maximize my Social Security link up on our [e-mail] you know it.

[Matt]

But until next time, best friends out. Best friends out.

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[Matt]

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[Joel]

You're listening to an iHeart podcast.