← The Clark Howard Podcast
The Clark Howard Podcast
02.03.2026 Ask An Advisor With Wes Moss
00:34:27
Dollar vs. Gold: Why You Don’t Need To Panic & #1 Retirement Fear (and Ways To Let It Go)
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- [00:00]
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- [01:05]
Clark Howard
Welcome to Ask an Advisor. I'm Krista Dibiaz here with Mr. Wes Moss.
- [01:10]
Wes Moss
Krista, you're in a great mood today and I'm excited to go.
- [01:12]
Clark Howard
Always in a great mood. Not true, but I definitely am today and I'm excited to hear what you're going to talk about. You're going to talk about a couple of things. One is going be to Gold is surging. Dollar's kind of plunging.
- [01:25]
Wes Moss
It seems it's nice to take a word like plunging and say kind of, kind of plunging, sorta.
- [01:32]
Clark Howard
And also you're gonna later on after we go to some questions, you're gonna talk about our biggest retirement fear, right?
- [01:39]
Wes Moss
And how to wipe that out of your mind, at least temporarily. And then rinse and repeat and rinse and repeat. So you're not worried about it.
- [01:47]
Clark Howard
And we are getting so many questions for you, Wes. If you have a question for Wesley or for Clark, you can go to clark.com ask and just indicate if you would like Clark or Wes to answer your question.
- [01:59]
Wes Moss
We'll start with this. I've had a bunch of questions about it over the past week and it makes sense that people are worried about it because the headlines are things like surging, plunging, surging, plunging, gold, silver, absolutely surging. And the value of the US Dollar I saw in several headlines is plunging. So the natural question is, sounds like an important thing that the very currency that we live our lives in is falling. Isn't that a terrible thing? And first I Think it's important to put it in context. The US dollar is not plunging. The US dollar is down a little over 1%.
- [02:37]
Clark Howard
Since when?
- [02:38]
Wes Moss
Over the last week or so, which is a big move for a currency as stable as the US dollar. So 1% is a big deal when it comes to price action. But if I go back and look at a chart that I pulled up today and I'm looking at it, another headline falls to the level not seen since 2022. So you think, wow, that's gotta be a giant move. And it's not a tiny move. But if you think about it and you look back over the course of history, the dollar trades in a range and it's essentially been in this similar range. Where we were, we were a little above it. Now we're back to where we were in 2002 and it's really been in around that same range for that period of time. It could fall back to the range that it stayed in from 2013 through 2023, which would be a little lower from here. And it naturally raises questions and I think the very simple one sentence answer of why I'm not worried about it. There's a couple of reasons, but one, we live here in the United States and we spend US dollars and our lives are in US Dollars, our retirement accounts are in US Dollars, our house, everything is priced in US dollars. So what we're earning and what we're spending, it's all in the same currency. So if it changes by 1 or 2 or even 5%, up or down, it really has very little impact on our lives. The worries come from the knock on next question of if the dollar is going down, isn't that inherently a bad thing? And it's not necessarily a bad thing. And again, if you think about we had a great economy from 2013 until Covid, and we had a much weaker dollar than where we are today. If you just look back over the course of economic history, we don't want a currency that plunges by 50%, but the dollar is in no way, shape or form moving that much. So I'm still comfortable with the dollar coming down a little bit because we live our lives in US Dollars and we're invested in US Dollars. There are some positives with it. If the US dollar is less expensive relative to the rest of the world, then it means our goods are cheaper here relative to the rest of the world. So it's actually good for US businesses selling outside of the US So there are some positives around it. And the question Then if you look at Swiss franc this week, that went up relative to the dollar, looking at gold and silver, which are commodities and also thought of as to some extent a safe haven against the dollar, those are up dramatically. I think those are probably almost overdone. And there's a little bit of this fear driving new money clamoring after something that is supposedly a haven against the dollar. And that's part of the reason why I think we've seen prices go up so much for those other commodities. But the fundamental question comes back to is this really bad and is it bad for the US economy? The answer is that we're in a very strong economy. I think through my economic check list, I think of it, my acronym that I came up with 20 years ago is Chime just to remember the big categories. But see for consumer spending, housing inflation, interest rates, manufacturing, employment and earnings, and you can go down that entire list and pretty much get an at least a B minus to an A on every single category we have, the consumer has still spent 5% more than they did last year. Housing prices have essentially flatlined, which is not a bad thing. Housing prices are up dramatically over the past five years since the pandemic. So a moderation in prices, there is frustration, frankly, a good thing we've not seen a big drop in housing prices. Inflation is a little warmer than the Fed wants. They just left rates where they are again because they don't feel the need to lower rates to juice the economy because the economy's in pretty good shape and inflation is in that sub 3% range. So that's good. Rates are in a moderate place. The Fed has said that recently. Manufacturing is contracting just ever so slightly, but not falling off a cliff. And then earnings and employment are still really strong. I know there's the fear. We've. The theme here has been the worry of AI taking jobs. And you see headlines just to just this week we saw, we see Home Depot laying off folks. We see Amazon laying off folks. We saw Dow Chemical lay off folks. But the jobs being created right now are still offsetting the jobs being lost still. And that's why we see a very stable unemployment rate. So you have a strong economy despite the dollar weakening a little bit. So I'm not panicking about it. And I don't think people need to change wholesale, change their investment strategy for the over exaggeration that the dollar has just calmed down a little bit relative to other currencies.
- [07:35]
Don McDonald
Okay.
- [07:36]
Clark Howard
All right, we'll go to questions. Ken in North Carolina sent in this one, Ken, if I follow the 4%, 4.7% or similar rule for retirement withdrawal, but my average growth per year is 5%. That's the average per history. Conservative investing in retirement, it seems I will never use the principal money, thus never getting to enjoy all the money I saved over my lifetime of work. What am I missing with the 4% rule? Of course I'll never run out of money because I never get to spend it.
- [08:07]
Wes Moss
Yeah, what's the point? Right? And there are. I'll just go down the list. There's a really wide group of opinions on this and they're very loud voices and very highly opinionated around this topic. How much can you spend without running out? But going back to your problem, what's the. If you don't spend anything, you won't run out, so what's the point of saving? And Susie Orman has famously said over and over again that 3% is her limit. So she essentially looks at it as the 3% rule. We know that Dave Ramsey said he thinks it's safe to take out 8%. There was a giant kerfuffle in the financial planning world that says that said, that's way too high. There's an economist, Princeton economist, and retirement researcher named Wade Fowl, And Wade says 3% might even be too high. He did an article a couple of years ago in the Wall Street Journal that caught my attention. It was called Rethinking Retirement and said that he thought that three might be too high and that you need to be in the 2%, 2, 2.8% ranges. Withdrawal. So, Ken, nobody knows the answer because we don't know how long you're going to live and we don't know how well stock markets are going to do. We don't know how markets will do the three to five years right after you retired, which is super important because of the sequence. The sequence of when we get our returns matters too. So there's all these variables, so nobody knows the exact answer. I think that you and I both know, Ken, though, that anytime there are, there's a range that gets set in any sort of argument. The answer is usually right somewhere in the middle. And I don't grab a lot of headlines by using the 4% rule because it kind of makes sense. Right? 3.2.8 gets headlines. 8%, that gets headlines. The answer, just to be realistic, is around four. I like to say four plus because it implies that it's just a. It's targeted, not etched in stone. None of this is etched in stone and 4% is meant to make sure your money lasts. I like to think of it as max out what you're pulling out without running out, and that is the range. But you're right if most of the scenarios you run over the course of economic history. If you follow 4%, adjust for inflation, you do end up with a lot of money in the end. But here's the good news around that. As you're on this distribution path and you're spending money in retirement and you find yourself way ahead of schedule. That's why planning is so important, because then you can easily spend some of that extra principal that is now grown beyond what you had maybe initially forecasted. So it is a dynamic guideline that says you have a couple great years, can by all means spend some of the extra earnings that you're getting. Otherwise, all this saving and discipline we do for 40 years, what's the point? You can't spend it.
- [11:06]
Clark Howard
So true. Okay. Carlisle in California says, I retired this past March at the age of 50. Thanks for all the years of advice. Clark and team. I have three years of dry powder and cash and bonds and would like to know at what point in a downturn we would an early retiree switch from selling equities to spending the dry powder, assuming discretionary spending is at a minimum. Is it when a portfolio dips before the fire number 25 times annual expense or some other metric like a percentage drop from some baseline? I'd like to have a system in place that I don't do this too soon or too late, should it be necessary.
- [11:44]
Wes Moss
Yeah, the fire number. Carlisle in California. The fire number, the multiple of 25. I think that can get triggered really, really often. And it becomes burdensome to know when you're switching from using your equities versus your fixed income. So I don't know if I like that from a practical standpoint. I mean, conceptually it makes sense. Think of it. Financial planning needs to be made simple because otherwise it spins out of control and you can't follow it. So think of it a little, a little more streamlined way to think about when to use dry powder versus the total portfolio or stock. And dry powder is there for when the equity side is down a lot, not just a little. And markets are always very often, unless they're at an all time high, that means they're down. So most of the time markets are off the all time high. But if markets are off 3 to 5%, that's normal. If they're off 5 to 10%, that's still normal. So still utilize your capital as a corpus and pull proportionally. You don't have to just use dry powder. Once the stock market is in correction mode over 10%, that's when you could start leaning a little bit more towards the dry powder. I still don't think you need to use it exclusively. It's really that rule is designed for bear markets. And the reason I like the three years of dry powder is that's the average time it takes to recover from a full blown bear market. So 20% is a bear market level. That's when you're really using the dry powder so you're not having to sell your stocks when they are down. That's my metric. Under 10, continue business as usual. Over 10, lean on the dry powder and at 20 really be using the dry powder. That's to me how I'd simplify it.
- [13:31]
Clark Howard
Okay, sounds good. And this is from Jay in Connecticut. I'm 51 years old and plan to retire from teaching in three and a half years. that time I'll continue a successful real estate career and collect a $63,000 a year pension. I have a 403B account with Vanguard that I do not plan to touch for the next 15 years. Lately I've read a lot about an AI bubble. As a result, I did a little digging into the five different funds that make up my plan and notice that the Growth Fund, V I G A X, the Balance Index fund, which is vbiax and the Global Equity Fund are heavily weighted in the same big AI companies. Two funds, the Money Market Fund and the Value Fund are not exposed. The would you suggest redistributing money within the plan from those funds to a value fund like vas, VX or perhaps something else that only has a minimal, very minimal amount invested in tech, let alone AI to reduce my exposure to this bubble.
- [14:32]
Wes Moss
I think you can add here Jay. Jay, by the way, you're early retiree. So I love that he's. He's retired sooner pension helps him do that.
- [14:42]
Clark Howard
And a second career.
- [14:43]
Wes Moss
A second career is awesome because you keep working, you stay involved and you stay productive and active and the money's nice. And you're doing that at 54, so you're 513 years. That's awesome. So I love to hear that retire sooner plan. Vanguard as an asset manager is very famous for their first product was the S&P 500. So think of it, they're grounded and rooted in the S&P 500 and their funds are market cap weighted for the most part they do have some actively managed funds and those would not necessarily be but their index funds are very much market cap weighted which is not really that abnormal. And if you were to look for an equal weighted and we've talked about here on Clark Howard show about finding some ETFs that would be equal weighted of the S&P 500 not market cap weighted, to my knowledge they don't have that. So rather than having to go outside and look for other products outside of Vanguard to the addition of these other areas. Exactly like you said with the val, with value oriented funds that can start to pull your portfolio back from being too tech heavy, too S&P 500, too AI centric. So if you were to add a value oriented fund which is going to have a lot less tech in it, that'll help. You would also want to add in order to diversify away from mega cap tech, some of the mid and small cap funds as an example and international again, they're going to still be market cap weighted but the category itself takes you away from some of those big tech names. So that's one way to do it. You get some balance by adding in some of these other areas. And you're right, value as an example in general is going to be less, much less tech heavy than your market cap weighted growth indices.
- [16:39]
Clark Howard
All right, so Jay in Connecticut doesn't have to worry too much about retirement, it sounds like. But a lot of us have a huge fear around retirement. And you're going to tell us how to alleviate that fear straight ahead, right?
- [16:51]
Wes Moss
Yes, ma'. Am.
- [16:53]
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- [17:25]
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- [17:34]
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- [17:49]
Don McDonald
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- [18:41]
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- [18:49]
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- [18:57]
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- [18:58]
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- [19:12]
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- [19:43]
Wes Moss
Welcome back to Ask An Advisor. I'm Wes Moss. This is Krista Dibias.
- [19:49]
Clark Howard
Hello.
- [19:50]
Wes Moss
We're going to talk about the biggest fear in retirement and that's running out of money. And it ranks. I've done tons of research around this and you would think it is. It's not necessarily the number one concern, but it is in the top one or two or three overall concerns for Americans. And that is the fear of running out of money. I get asked in a speaking event and we do a Q and A and people ask what's around the corner? What's your next big fear? What are we should be worried about? And they're hinting towards what's the next geopolitical event? What's the next stock market correction? What's the next recession? And they're thinking about what's the big boogeyman around the corner, the real boogeyman is this persistent fear. It's not going to. I'm not going to have enough to live on. And at one day my money's going to trickle down and I'm not going to have enough. That fear drives nearly everything we do when it comes to retirement and it's very hard for it to go away. My research shows that it's 50% of all Americans. It's a primary fear, running out of money. And yes, the fear goes down when your liquid asset levels go up, but it's still very pervasive. 45% of those with a half a million to a million dollars still primary fear, running out of money. 39% of a million to 3 million. That group, there's still four out of 10 people are so very worried about it. And even one in four folks with $3 million or more, it's still a primary fear that they will one day run out of money because of all the uncertainty that is loaded in that question. What's the next shoe to drop? There are lots of ways to allay this fear and this is worth reviewing as time goes on. And this isn't a one time elixir because we're all human and we've evolved to run from fear and protect ourselves. So it's totally normal and totally human to worry about something bad happening. But I'm going to give you five things that will hopefully just eliminate that fear for you. And then in a year from now, you forget them. You've got to revisit it. So you have to constantly help yourself not worry about running out of money and losing sleep over running out of money. And it's pretty easy to do, but it's kind of like exercise and you have to keep up with it. So one, all of this, by the way, is in the construct of if you do these five things, what are you really doing? You have a plan, you have a roadmap, and the plan in itself helps you not worry about running out of money. So the context of these five things in itself together, they're just a plan. So you say, well, I'm not worried about that. And I look at it as pretty simple. It's not so much about figuring about what you need to spend. I think of it as start out with what you can spend. And that's pretty simple. I know I'm going to have this much Social Security. By the way, I just got my Social Security letter. Oh wow. I have a big birthday coming up. I have not opened it. It's still in my bag. I don't know if I even will open it. You can go online and see it. So you know what that's going to be. If you do have a pension, you know what that's going to be. So maybe that adds up to $60,000 a year. You, your spouse, maybe one or two pensions. And then you simply look at your retirement assets and you say, well, what's 4% a year of that? Maybe that's another $30,000. And now you have 90 after taxes, so maybe that's 75 or 80, depending on your tax bracket. And you say, okay, that's what we can spend. And that to me is just a really practical way to go about it, knowing that you're going to be in line budget wise. Next, the 4% rule. We want to utilize that rule but not get locked into that role. We had a question earlier today around that very question. Do if I just do the board, I'll never spend my money is 8. Too much is 2.8%. Doesn't sound like I'm even utilizing my money. So use that as a guideline and know that historically, 99% of the time, if you were to follow that, you do not run out. That seems like that would, that gives me a lot of peace of mind, helps me sleep well at night. Number three, Understand too that our spending very much changes over time. There is this thought that we need 100 grand a year and then it's 103 and then it's 107 and then it's 110 because of inflation. I've been in the retirement planning world for over 25 years and people spend less as time goes on. They really do. You may have a surge in your 60 to 70, maybe to 75, but people, they start traveling a little less. Their grandkids are grown up now, so there's maybe not as many big family trips where you're taking everybody and spending your money to do so. Hopefully you can continue to do that. There should be no age on big family trips. They should be at age 3, age 10, at age 30 for your grandkids. But there is a natural decline in spending, Even though almost 99% of retirement models project you always spending more until eternity. And that's actually not real life. Number four, a recurring theme here is around having that safety bucket, your dry powder, which is either in the money market cash bucket or the safety side of the income bucket. That dry powder really, I think, helps us mentally not worry about utilizing our money when inevitably it's not if, but when the stock market is down. And then one that I haven't talked about, but I think it is worth mentioning, we have a bigger backstop. If you're a homeowner. The average home equity in America right Now at age 62/ is a quarter of a million dollars. That's the median number. The average number is higher than that. It's 300 to $350,000, meaning that we have 12, about 11 to 12 trillion dollars in tappable home equity in America. We don't really count your home equity in your retirement spending plan because you still need a place to live. But if you end up having 3, 4, 5, $600,000 in home equity, that's. That's real money that if you really needed to, you could access it through home equity. Now we don't. It's. That is kind of a last resort, and it's not like you want to rely on it. But I think it's an important part of the asset overall balance sheet to not ignore. Put all those together and there's more than just these five. But I think that if you were to consistently remind yourself that as long as I do these five things, I don't know, I have to worry about running out of money. I think that helps us sleep well at night and eliminate, at least for a while, that worry of ever having to run out.
- [26:37]
Clark Howard
Awesome. I love it. All right, so we'll go to questions.
- [26:40]
Wes Moss
Q and A. Q and A.
- [26:42]
Clark Howard
Okay, this question's from Kevin in Utah. Wes, I'm 30 years old and considering leaving federal employment employment to work elsewhere. Right now, I'm weighing the pros and cons to determine if it's worth leaving. One of the things I'm trying to calculate is the value of the FERS pension. At one point, Wes explained how to calculate whether to take a lump sum or a yearly pension payout. And I'm using that same logic to determine my pension's value. But one thing that I don't believe was mentioned was how to adjust this calculation for a pension that gets a yearly cost of living. Adjustments plus ola. Yep. Help. My brain hurts, Kevin.
- [27:20]
Wes Moss
My brain. I think my brain hurts too. So we got it. We're really doing a reverse pension present value. And the other thing that really makes this hard is the 30 years. So that's. Maybe we save that for the very end. But you're asking a question almost in reverse. We're very often we're left with this choice. Plus, plus cost of living. So when we're looking at determining do we take a monthly amount or a pension lump sum amount. It's the 6% test. So if you're getting offered $300,000 as a lump sum and you're getting $1,500 a month, you multiply that by 12, that's 18,000 a year, and then you divide that by 6. So 18,000 divided by 6% is 300K. So it's worth about 300K in this case the monthly amounts. But if it's just only worth 300, then why not just take the 300 having the bird in hand. Plus, most pensions don't have a cola. So for you, that is an extra benefit to the monthly. So you've got to get a weighted a little bit more towards the value of that monthly because it goes up. So that's using 6%. If I have money in account, I know I can use the 4% rule, but I also have the money. So mathematically, and there's no perfect answer here, but it's somewhere in between those two denominators you need to use. So it's six is probably a little high, four is a little low to get to the real present value. So the number in my opinion here is let's use five. So for every thousand bucks a month you would get in a pension, this is how I do it times 12. So that's $12,000 divided by 5%. So $12,000 divided by 5%, Kevin, is 240K. Well, round it, because I like things to be memorable when it comes to financial planning. Quarter of a million dollars, every thousand bucks that you would be getting in the future as a pension with a COLA is worth about a quarter of a million dollars. So if your Future pension was four grand a month, it's very similar to having $1 million in an account. And to some extent, if you really think about it, if the pension amount would inflate at a similar rate of inflation, the purchasing power of it relative to a lump sum anyway, you can look at this in apples and apples because they would both be impacted by inflation the same amount, or even in 10 years and 20 years and 30 years. So, Kevin, I would say that's how I'd look at it. That's what you'd be walking away from, is that if your fers pension one day is three or four grand, then every thousand bucks worth about a quarter of a million dollars in an account.
- [30:24]
Clark Howard
All right, John in Washington says, hello, Wes. For the bond portion of my investment portfolio, I'm considering allocating a portion to high yield junk bonds and it looks like several of Clark's Favorite Low Cost ETFs use this approach and the higher returns appear to compensate for the added risk of lower quality bonds. Do you think the risk reward trade off makes high yield bond ETFs a worthwhile choice? I appreciate the information you Clark and Krista provide.
- [30:53]
Wes Moss
Hey John.
- [30:54]
Clark Howard
Yeah, it's very nice.
- [30:55]
Wes Moss
That is very sweet of you John. Yeah, the junk bonds, high yield bonds, the industry is so good at naming things to make them sound less bad but collecting collectively they're not necessarily bad. John, you're exactly right. You get a higher think of the junk bonds are just companies with bad balance sheets or not so great balance sheets. So they're like someone with a low credit score has to pay a higher rate on the credit card. Same thing with when a company that borrows money and they have low credit or bad credit, they're going to have to pay a higher rate. Right now historically that's been in the 7 to 9% range in interest. 10 today because there's such low default rates and the economy's pretty darn very strong. There's less of a premium because there's a little lower of a worry that companies are going out of business in mass. So right now high yield really only pays around 6%. 6 to 7% still is. Believe it or not that's junk bond levels. And you're right. As long as you're doing this in an ETF or a fund where you've got 200, 500 different positions, there's going to be some defaults. But the overall returns over history assume defaults 1, 2, 3% a year depending on the economy and the higher rates absolutely make up for those defaults and people do pretty well over time owning high yield bonds. So I think it absolutely is part of a multi asset class income strategy and it would be augmenting your highly safe A rated corporate bonds, triple A rated or government bonds. I think it absolutely can be part of the income bucket. The only catch just to make sure you know what you're getting into and I look over the past five years total return for junk bonds has been let's call it 22% to 25%. So pretty good. Bonds have been pretty flat during that period of time. But when the stock market gets really nervous and goes down, so do junk bonds. Not as much as stocks. But during the pandemic call that March April period, right as we were heading into lockdowns, junk bonds were down 25%. So they don't act like a stable bond fund. 2022 junk bonds are down 15%. So they don't have as much volatility as stocks proper. But they absolutely the correlations go up when the world gets really nervous. So just know what you're getting into. But over time, if you do it in a really diversified, low cost way, there's been a nice payoff.
- [33:36]
Clark Howard
Okay. One of your favorite names, Lynn in California. Because you're married to Lynn.
- [33:42]
Wes Moss
I have a Lynn, but she's not in California.
- [33:44]
Clark Howard
Yep. And Clark is married to Lane.
- [33:46]
Wes Moss
Lynn and Lane and Lane. You're on the Clark Howard Show.
- [33:48]
Clark Howard
Okay. Lynn says Clark's podcast has so much valuable information. I'm so grateful for all I've learned over the years. Thank you Clark, Wes and team. I have a question about titling a small brokerage account I have of one of Clark's favorite children, Fidelity. I have a living trust but haven't changed this brokerage account to the name of the trust. I do have the same beneficiaries listed for both the Living Trust and this brokerage account. Is it necessary to change the name of this account to the trust name? Thank you again for all your amazing help.
- [34:17]
Wes Moss
The short answer here is yes. Just a caveat, Lyn. I'm not an estate planning attorney, so there are some nuances here. And technically you should be speaking with an estate planning attorney to answer this question. But from a bigger picture perspective, it sounds like you have TOD accounts. So you have brokerage accounts which don't. A regular brokerage account doesn't have a beneficiary. If you have a TOD or transfer on death, you do name a beneficiary. So it sounds like that's what you already have. But yes, if you have Living Trust set up, then you do want to retitle your brokerage accounts in the name of that living trust. It takes away the confusion. You've already done the work to set up and paid for the living Trust if they have the beneficiaries that you want. So you're going to skip probate as an example. That's why we would do a living trust for our after tax assets. Then just take that final step and coordinate with your brokerage firm the brokerage account, titling the names along with the name of the Living trust. Because that's why you did it in the first place.
- [35:24]
Clark Howard
Okay, well, that's it for us.
- [35:26]
Apple Card Announcer
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- [35:27]
Clark Howard
Thank you so much for being with us today. Please subscribe, Share this Episode with a friend. We truly appreciate everybody who tunes in to us and to Clark. And he will be back tomorrow. Have a fantastic rest of your day.