
Should You Help Your Adult Kids Buy a House? & 5 Things You SHOULD Spend More On
Loading summary
Don McDonald
Foreign.
Mallory Boggs
Welcome to the Clark Howard Podcast. We are here with Ask an Advisor featuring Wes Moss.
Wes Moss
Where's Chris da Dibiaz? She's on vacation. She deserves it and we miss her. But she'll be back soon, man.
Mallory Boggs
I'm ready for her to get back, but you know she's going to come back better than ever.
Wes Moss
She will be better than ever, which will be awesome. And but it's great to have you, Mallory. Great to have you here.
Mallory Boggs
Appreciate being here.
Wes Moss
I know we've got a lot of questions today we're going to dive into and then two topics. But the first one we want to start out with is this very simple question. Should you help your kids buy a home?
Mallory Boggs
I know a lot of kids who would tell you the answer is probably yes, please. Absolutely.
Wes Moss
I know what kids will say. But the question is, should you help? And then we're going to talk about five things in retirement that you might, you maybe should be spending more on.
Mallory Boggs
Are we allowed to talk about this on this podcast? I'm pretty sure it's only spend less, isn't it?
Wes Moss
Only spend less. But there are a few things that really lead to retirement happiness or help support it that I'm not saying money's buying happiness whatsoever, but the financial, and it's really about financial and lifestyle habits that I've, I continue to study and have for 15 plus years and, and I want to share some of those.
Mallory Boggs
Ooh, I'm intrigued.
Wes Moss
Some of those ideas, some of it has to do with travel. So I think this group is going to be excited about that.
Mallory Boggs
Are you telling me that I should spend more money on fun things and not just like the really basic necessities?
Wes Moss
Well, we're going to see. You're going to have to wait till later in the podcast. But again, I've been researching this for so many years. The Retire Sooner Method. I almost said my old book, the Retire Sooner Method is now for the first time available.
Mallory Boggs
Ooh, where do they find it?
Wes Moss
It's a same place everybody finds every book, which is basically just on Amazon. But if you do get the Retire Student Method, it's still in pre order state. There are three or at least three different bonuses that you would receive because you're buying it pre order.
Mallory Boggs
Oh, well, can you, can we do what they are? What, what are these special bonuses?
Wes Moss
You came up with them. So I, I'm not sure. One I know is a retired student method workbook. Number two is a video that I have done that has the charts, some of the charts in color and it explains the methodology of the five steps in the Retire Sooner method.
Mallory Boggs
It's a gps. The Retire Sooner Method.
Wes Moss
GPS video, Global Positioning System. So again, this is a book about happy retirement and getting there sooner. It's the five secrets of America's Happiest and Unhappiest retirees. So if you get it pre ordered, there's that, plus there's one other thing. Oh, a signed, signed book plate.
Mallory Boggs
Signed book plate. Yeah.
Wes Moss
But if you do pre order on Amazon for the Retire Sooner method, you can go to retiresoonermethod.com to claim those.
Mallory Boggs
Love that. And when does the book come out and what is it about?
Wes Moss
Not until this fall, but it is available now.
Mallory Boggs
Okay. Okay.
Wes Moss
It's exciting.
Mallory Boggs
I'm excited, very excited.
Wes Moss
But let's talk about this topic. Should you help your kids buy a home? Here's why. We're struggling with this in America. And I've had a lot of questions about this with families that I work with over the last couple of years. It's come up more and more. It's because first of all, we all know that the price of housing has essentially doubled over the last, call it half a decade or so.
Mallory Boggs
I think anybody who's been shopping feels that dramatic, right?
Wes Moss
CPI, the Consumer Price Index, is up over 30% over the past five years or so. But the price of housing is up even more than that. And depending on where you are, it can be even worse than that. So we've had this giant surge in home prices and we know that it's unaffordable relative to how it used to be when we were all younger because of the numbers we measure first time home buyers and their median age. And it's essentially, if you go back, let's call it 10, 15, 20 years, it hovered in that early 30s range. It was not uncommon for somebody in their late 20s to be able to buy a home. And then it kind of crept up and it floated around that age 30, median, first time home buyer age. Now it's over 40 for the first time home buyer, first time home buyer, median first time homebuyer. It takes forever to be able to buy a home because home prices are so much number one and number two, interest rates are now much higher than they were during that zero interest rate environment that we had for so long. So of course we know that it's a double whammy, one, two punch, if you will, higher prices and then higher mortgage rates which make the payments more difficult to be able to make and afford. So that's the Problem?
Mallory Boggs
Why is that a problem?
Wes Moss
There are very few things in america besides our 401k that help us get started on building wealth. That's the problem. So I look at the generation today. We're going to go back 15 years and let's say you could buy a home when you were 28. Well, you still own a home today, and you're now in your late mid to late 40s. You've been able to accumulate great home equity during that period of time, and that's a great advantage for the generation that was able to do that. What I worry about is over the next decade, for people that continue to have to put off these home purchases, they're not able to build equity in a home and they continue to pay rent. And renting is not always a bad option, but it certainly doesn't allow you to build any wealth. And the longer that gets delayed, and we see it in the numbers, it's essentially a decade delay, the harder it is to be able to be in a financial position to retire sooner, which is I'm against not being able to be in the position to retire sooner. So how do we solve for that? Well, of course, adult children are saying, hey, mom and dad, can you help me with this purchase? And mom and dads are saying, hey, do you want me to help you with this purchase? But it's a big one, and there's a lot of thought that should be put into it. That's what we're going through. So, number one, I feel as though, and I've done a lot of research over the years around financially supporting our children and what that does, how that impacts retirement happiness. Adult parents support their kids. It's a sliding scale because they're 100% on our payroll. Then they go to college, and they're still mostly on our payroll. And then there's that long transition time. Some it's not in. Some it's quick. But for a lot of families in the United States, because it's expensive to live in America, in the big city, it takes a long time for folks to be able to get fully financially independent. So our parents almost have to do this declining scale of financial support.
Mallory Boggs
So you're saying that for Larry, I'm going to be putting the bill for him for years now?
Wes Moss
Well, no, because I think you've started the Year Zero savings plan.
Mallory Boggs
I did. I did. I'm not. You. You talked about that.
Wes Moss
And I was like, year Zero savings plan for baby Larry. By the time he's 18 or 20, he's going to be in great shape. But most Americans are not in that position. And so families that were able to buy in their 20s, let's call it a generation or two generations ago, they're in the position to maybe help. However, just getting your retirement on your own, that is tough for a lot of families too. The financial support data, though, and how that relates to retirement happiness is very clear as well. It's not uncommon and it's not a terrible thing to help your kids out, your adult kids, but on a limited basis, and I see once those numbers get to the point where families are spending over $900 per month on average, I do see it impact happiness levels for the mom and dad, the adults, or the close to be retirees, or the retirees. If you're spending closer to 600 or less per month, then I don't see an impact happiness. It's kind of maybe a little bit more maintenance. And then I look at this as the danger zone for families that we've measured that are in that $2,500 per month range, which is tons of money. You add that up over the course of a year, I see a big impact on happiness at the parent level because they're now sandwiched. They're struggling. They're struggling to help their kids to afford life. And they're probably sandwiched because they're adult parents, their parents, the sandwich generation, they need maybe potentially help as well. So I think it's good to keep that in context. It's okay to support our adult kids, but too much support gets them overly dependent. And that I think can be a problem because it leads to these financial fights, financial disagreements between mom and dad, between dad and daughter, dad and son, mom and daughter, mom and son. So it just creates these financial strains. So I'm kind of advocating for two separate things here when it comes to housing. If you're thinking about helping your kids, adult kids buy a home, it's not so much that you're spending money on the kids because it's very different than, hey, I need to get a better car. Mom and dad, I need to join a country club. Mom and dad, I need this extra fancy school. Mom and dad for our kids. I need to go on this vacation and I've spent all my money elsewhere. So I need help. Mom and dad, that's spending support that can lead to real financial strain between parents and adult children. So I would advocate against that at all costs because we want our kids to be financially independent. And as you can imagine, that gives us a Sense of wow, our kids are in good shape. And as a parent, there's nothing more that you want in the world than my kids are in good shape. If we're spending and helping them live a lifestyle that they can't really afford on their own, they, that's a problem. But when it comes to housing, I look at a little bit differently or very differently. Is that when we're purchasing a home, we're not really spending money? Sure, we're spending money.
Mallory Boggs
That's an odd, odd way to frame that. Hang on.
Wes Moss
We're investing money. We're investing money into an asset.
Mallory Boggs
Okay.
Wes Moss
And we are investing money into an asset that should at least, at least somewhat appreciate over time. Yes. In the comments you're going to say there's insurance that doesn't come back. There are utilities that doesn't come back. There are property taxes that doesn't come back. Well, a lot of those same things. Property taxes as an exclusion are the same if we were renting. So if a parent shifts the mindset to I am helping invest in this home. And depending on how you want to structure the ownership, you are allowing your adult children to be able to start to build some wealth and build some equity. The first thing, if you're going to help kids with a home, there should be a mind shift that you're helping them with an investment that's not just spending. Even though there's a part of each of those, in my opinion, it's much more about helping them invest. Now there's a couple other keys that I would look at here, is that this is the three point test. One, can the adult children carry the home and the payments and everything that comes along with that, you really don't
Mallory Boggs
want to pay that $2,500 a month, I guess for the mortgage.
Wes Moss
Correct. Because in my opinion that's helping support a lifestyle on an ongoing, ongoing, ongoing basis. Two, mom and dad need to have their own oxygen mask on first. Your retirement needs to be taken care of first and this shouldn't impact that in any detrimental way. And then the third is a softer piece of that is less numbers based and more proximity based. Happiness levels rise when we live in close proximity to at least half of our adult children.
Mallory Boggs
I love that one.
Wes Moss
Now, as a parent, I don't know if this would get into bribery. Hey, I'll help you buy a house if you stay within the state. But I can tell you with great certainty if you live in Pennsylvania and all three of your kids move to California and all three of them Want help to buy a home? I give you permission as a parent to say, I don't think so. It's just too far away and I'll never see you kids closer to home. I would probably be a little bit more interested in helping. That is a very real issue in retirement. It's very rare to see a good situation where a family is in 10, 15 states away from all their kids. It just doesn't work, at least for mom and dad, kind of not a great situation. So I'm a big believer in proximity. You don't want to live with your kids, you don't want to live necessarily on the same street with your kids, but you do want to live within some sort of distance where you're able to see your kids and your grandchildren. I'm a very big believer in that. Whether it seems like favoritism, but it's okay. And by the way, let's say you have four children and you could always choose your favorites to live near as
Mallory Boggs
someone with four kids.
Wes Moss
So think about this. The carry. The carry means that you have the determination, probably. Let's start first, your own oxygen mask, meaning that the amount you're going to be able to spend on the down payment, invest in the down payment, should be totally fine within your own financial plan. That I think should go without saying your oxygen mask on first before you're helping your adult children. And if you can afford to help with that down payment and then help invest in that down payment, then that will help you manage for the kids what they're able to afford monthly. So number two, you determine the down payment, which will also determine what the payment is monthly on the home. And our adult children should be able to carry that on their own. So it shouldn't be, I'm going to help invest in the home with a down payment, which could be a large number, but I'm also going to help you carry this every single month. That's when we get into problems. So I would say that you're better off financially as a family with less conflict if once you helped with the down payment, the adult children are able to support that housing, lifestyle, whatever the payment ends up being on their own without having to come back every few months to say, I need money, I need money. Again, that leads to conflict. So put all that together. I think this is a story. Should we help our kids buy a home? And the answer is it's going to be different for every family when we make the mindset shift towards we're going to help invest in the home. If I can afford it for my retirement, mom and dad can afford retirement, then I'm fine to help you invest. If it still works and it doesn't make it so that mom and dad have to work for extra years just because of the kids. It's a tough housing market. It really is. What's tough is that it, it delays wealth accumulation. And I don't think it's a bad thing to look at our family to some extent as a holistic family finance. I would vote for most people. If you can help your kids afford a house otherwise, then I think it's a wonderful thing to do.
Mallory Boggs
Oh, I love that. I think that makes a lot of sense. Well, on the note of wealth accumulation, should we get into some questions?
Wes Moss
Let's get into some Q and A.
Mallory Boggs
Let's get into Q and A. All right. The first one we have is Bill from Arizona. He wrote in and he asked Wes, I am planning on retiring next month, but my wife would like to work a couple more years as she is not 65 yet and eligible for Medicaid. We have 2 million in IRA 401k and would like to start moving it to a Roth account or use it for spending. As I have been earning well over 10% lately. It's been 16% as it is growing. I think I can withdraw 200,000 each year until RMD age 75 and stay under the 24% tax bracket. Do you agree with the strategy?
Wes Moss
There's a chart that we should put up. We'll do this as soon as we're done this show. We'll make sure you see this chart. But there is a chart that we've recently been using that has proven to be super helpful for folks when it comes to should you or should you not do a Roth conversion? It's essentially decision tree chart and it starts at the top. I would see if I have a copy of it here. It starts at the very top with this one question, which is is your current marginal tax bracket less than 24%? And he mentioned Bill mentions the 24%. If the answer is no, the decision tree takes you down a path where it's likely not ideal or less ideal to think about Roth conversions. But if you say yes to that, if you answer yes to is your current marginal tax bracket less than 24, then the decision tree takes you down another path where you may end up a strong candidate to do a Roth conversion. That's what Bill is really asking here. His wife is working, he's stopping. But his wife is working.
Mallory Boggs
Correct.
Wes Moss
All right. I would say two things here. One, I think that you're answering yes, bill to that decision tree, which is you're already under 24. I like to think of these conversions as only filling up certain tax bracket buckets. And usually I don't want to see people fill more or pay more than that 24%. So that's the right way to think about this, Bill, is that you're converting X amount per year and you're still staying under at or under the 24% tax bracket. The only caveat that I would say is that if she's only going to work another year or so, you all still have that income. So you've got a little bit of a double whammy income with your wife's wages. Even though you're not working, you're going to retire soon. Then anything you convert is income. So if you convert another 100, a hundred thousand or more or 200,000, whatever that number is, that's just like wage income when it comes to filling up your federal tax brackets. So I would be inclined to A, don't go beyond the 24 bracket. B, maybe wait a year until she. Because I assume you'd be filing jointly and with your wife's not working and you're not working, you probably will have a couple of years where your income is really, really low. Besides the Roth conversion amounts you do, you may want to wait just a little bit depending on what she makes. If she makes $20,000 a year, maybe it's not an issue. If she's making 100 or 200,000 a year, I would probably be waiting until she's stopping work for that window of Roth conversion. Perfect.
Mallory Boggs
All right, well, we're going to keep going. We've got Rich from New York. He wrote in and he asks Wes. My 83 year old mother recently bought a condo near me in New York and plans to remodel it before selling her Connecticut home and moving her pension and Social Security near.
Wes Moss
I love that mom. Near son.
Mallory Boggs
There you go. There you go. Her pension and Social Security cover most of her living expenses, but most of her assets are in traditional IRAs and she's already taking RMDs. We used her 2025 and 2026 RMDs plus a little extra to buy the condo. Now we need to fund the remodel until she sells her home, likely within the next two years. We're considering a HELOC at around 6% interest, then paying some of it down with her 20, 27 RMDs. But we're trying to weigh that against taking additional IRA withdrawals now, which would likely be taxed at 22 or possibly 24% plus state taxes in New York. How would you think about this trade off? Is a HELOC a smart bridge strategy or does it make more sense to pull more from the IRA now? And if her tax bracket possibly won't change much, what's the real value of delaying those taxes? I enjoy your show every week and appreciate all the advice you and Clark provide.
Wes Moss
Rich from New York. I appreciate the question. I think the simple answer here is you're weighing if she's already done her RMDs and she's living on that, plus the pension, you're still paying 22% or more for every dollar you pull out. So for every dollar you pull out of that IRA, it's really only worth 78 cents. It costs 22%. The HELOC is. I love how Mallory shaking her head
Mallory Boggs
and nobody likes paying taxes.
Wes Moss
We all have to deal with this. The 6% HELOC, you're spending 6% versus spending 22%. I don't know if it's a perfect way to look at it, but directionally, that's the way I look at it. So, yes, particularly because you only need this bridge for, you said one to two years. So it's only going to cost you 6% on the amount you're pulling out for a year or two, which mathematically should be way less than taking out a big chunk, paying 22% plus all these other state taxes, maybe even putting her into another higher tax bracket. That's why home equity lines and mortgages, that's fundamentally why a lot of them exist. There's always this question, I've got a million dollars in my 401k and I'm going to buy a house. It's $500,000. I don't want a mortgage. So should I take out $500,000, buy the house? The answer is almost always no, because now you've got half a million in income, your tax bracket goes up, a third of it goes away. So it's very much about managing in this situation. Her income. And a huge way to do that is the spigot that is on her ira. And this allows you to keep that spigot as closed as possible, still pay for the renovation, sell the home. In two years, HELOC gets paid off. I think mathematically it's probably from what I'm hearing, I would absolutely lean towards the HELOC idea.
Mallory Boggs
All right, we're going to go to the next question. Bruce in Florida, he wrote in and asks Wes, I'm 60 and working full time and my wife is 61, turning 62 in October because we were military and moved around a lot. She worked enough to qualify for Social Security, but her benefit would only be around $500 a month if she claims it's 62. I plan to work until 64 but delay my own Social Security until 67. Given our situation, I don't see much downside to my wife claiming it's 62. My understanding is that she could collect her benefit until either I pass away, at which point she could switch to my survivor benefit or, or until she passes away and her benefit stops. We also have a strong pension base. I'm retired military and have a survivor benefit plan, received non taxable VA disability and we have retirement savings in a 457B tsp Roth IRAs and a Fidelity investment account. Our mortgage is paid off.
Wes Moss
All right, Bruce, are we thinking about this correctly?
Mallory Boggs
Is there any meaningful reason for my wife to delay Social Security past 62, or does claiming early make sense in our case?
Wes Moss
This is always the golden question, Bruce. And the math is really similar. Almost at any age you decide to start your payments because every time we wait, we collect forever seven, almost 8% more for life. But it takes about 12 years to make the money back we didn't take. So the math works the same. If you wait one month and and your amount goes up that next month, it'll take 11 to 12 years to get back the 500 bucks that she waited that one month for. That's pretty compelling, but it's with a higher payment. So it's about longevity. None of us know exactly how long we're going to live. You're very correct in thinking that you waiting to 67. If you pass before her, then she gets that survivor benefit that is higher. If yours is 3,000amonth and hers is 500, you pass away. She will then step up to your higher amount. So that's very much a almost an insurance policy for income for her. And I agree with that. But the same question comes back to 500 bucks a month versus $530 a month versus $570 a month as you wait year after year after year. And the math is the same whether you're waiting on 500 or 1000 or 1500 or 2000, it's 10 still goes up by the same percentage. The way I look at this is that you know you're going to keep waiting and you're still working full time and I would suspect that you probably filing taxes together. So I may be a little leery of her turning on Social while you're still working, meaning that you're already in a fairly high bracket. Now it sounds like some of your income is VA disability, but you're also it sounds like you're working too. So your tax situation is pretty complicated. So one, you absolutely need to I would dig into this with a CPA as well, but as far as waiting, I would probably think about waiting to take social a little bit longer. I mean, again, I know Clark is an advocate for waiting till later. If we can get to 70, great. But we know it takes till 81, 82 to break even on what we forwent. But at the same time, if you're going to take the funds, maybe you're paying a little bit higher taxes today on that because again, you all that different income and you're still working than you would in the future when your income is lower. So that's one reason to wait. If you don't wait. Bruce, I would advocate that it sounds like you don't really need it from a spending standpoint. So it should be invested maybe this money, this 500amonth. If you do decide to take it and you don't really need it, be investing that money as you would any other retirement money so that it has the chance to grow by 5 or 10 or 15%, depending on how markets do. So that would be my couch. I would tend to want to wait till he stops working. Bruce, if you guys do decide to take it, you don't really need it. I would be investing it.
Mallory Boggs
Love that. That's great. All right. Well, that is the questions for this segment. When we come back, we're going to talk about five things you should spend
Wes Moss
money on or should spend more on in retirement.
Mallory Boggs
Even better.
Commercial Announcer
This episode is brought to you by AT and T Business. For business owners, connectivity is key. If you are starting your business today, that would be your first concern and your first decision. Reliable connectivity is essential to launching whether you're local or national. For a business owner, it's a decision that pays benefits every day and in every aspect of your operation. Make the right decision. Choose ATT business. AT&T business is a reliable provider for business owners. Powered by AT and T Business built to work. Get AT and t business@business.att.com Investing with Schwab is like spending a Saturday at a great farmer's market, you can fill your reusable tote with a bit of everything. Maybe you go for some free range self directed investing or perhaps you pick a few farm fresh trades while you peruse. You can even get help from a dedicated advisor. That's full service wealth management. Mix, match and change your mind whenever you want because at Schwab you can invest your way. No matter your goals or appetite for investing. Schwab has everything you need all in one place. Visit schwab.com to learn more.
Don McDonald
Hi, I'm Don McDonald from the Talking Real Money podcast. Simple, honest financial advice is hard to find because there are too many people in the financial services industry and even the media who will do or say anything to get your money. Well, for decades my co host Tom and I have been trying to help people better manage money on the radio, TV and in our podcasts. About five times a week we share simple, low cost advice on building the wealth you need to enjoy a better future without making your broker richer. And ironically, you broker Listening to Talking Real Money could not be easier because you're already listening to a podcast. Just search for Talking Real Money on your podcast service or ask your smart speaker. Give us a try. You have absolutely nothing to lose except a few minutes of time and you might just discover something to help you enjoy a more prosperous and secure future along with a simpler present. Just visit talkingrealmoney.com or search for Talking Real Money in this podcast service. It's that easy.
Commercial Announcer
Study and play come together on a Windows 11 PC and and for a limited time, college students get the best of both worlds. Get the Unreal college deal everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass ultimate with a custom color Xbox wireless controller. Learn more@windows.com studentoffer while supplies last ends June 30th terms at aka mscollegepc tomorrow morning is knocking.
Mallory Boggs
Stock your fridge now. How about a creamy mocha Frappuccino drink? Or or a sweet vanilla smooth caramel maybe? Or a white chocolate mocha? Whichever you choose, delicious coffee awaits. Find Starbucks Frappuccino drinks wherever you buy your groceries.
Wes Moss
Welcome back to Ask an Advisor here on the Clark Howard Show. I'm Wes Moss along with Mallory Boggs filled in for Krista Dee today, who's on vacation and we are diving right back into questions and one quick topic before we get to that Mallory yes
Mallory Boggs
and cause we are actually giving the Clark Howard audience permission to Spend more.
Wes Moss
Well, it's, let's say, refocus our spending on areas that you should have no guilt around.
Mallory Boggs
Okay, well, that's a little different.
Wes Moss
And this came out, this was a real life situation where someone I've worked with for a very long time, single, probably not getting remarried, say age 71. We're going to call her Round the World Robin because she. One of the big things we planned for last year was for her to go on this round the world cruise.
Mallory Boggs
Ooh, that sounds fun.
Wes Moss
And I know this audience loves travel and some of these round the world cruises are just, they're fascinating because you're literally going around the world and you're seeing dozens and dozens of countries, dozens of ports. And this started, let's say in the fall of last year and ended in the spring of this year was five and a half months.
Mallory Boggs
That's a long time on a boat
Wes Moss
for around the World Robin, which is not actually her name, but anytime I meet somebody who's doing around the world cruise, I think of a listener from back in the day from one of my radio shows that we called Round the World Robin, who called in with a question about can I afford this trip? And the answer here in this real life situation, we had to plan for it. And it was within. It's not inexpensive at all, but it was with Within Robin's annual spending. So she gets back and this one was curtailed a little bit because of all the unrest in the Middle East. She ended up doing a more Pacific oriented tour, went through the Panama Canal to Mexico, Cartagena. I'm getting these out of order. Louisiana, Hawaii, Asia, Indonesia, ended up in Alaska, back to LA, et cetera. I mean, just fascinating trip, fabulous. And 2000 people on the boat. 1200 of these folks were kind of elite. Had the elite status because they'd been on so many cruises. She was pretty much a fairly new. It's only, I think her second cruise, fairly new cruise newbie. But she was surprised at the folks that had the elite status that had been on like 50 cruises, were definitely. She's a super young 71.
Mallory Boggs
Ah, okay.
Wes Moss
So there are a lot of folks there were not super mobile. Maybe they had walkers or there was. There was part. A big chunk of the crews not super mobile, not going exercise classes, but she was. And there were tons of people in their 50s as well. And so she was with the group that was super active. She walked a couple miles every day. It's so funny to hear. I walked a couple miles on the boat every day. Exercise classes, five days a week. So she kind of found her people.
Mallory Boggs
Great community.
Wes Moss
Great community. And just these are lifelong friends, some of the folks she met. So I think it was a really wonderful thing for her to do. When she got back, something had happened to her H vac, so that was like almost 10 grand. That was a huge number. Was actually six. And then her car, which she'd had for almost 15 years, died and she had to get a new car and that was 60. Then around the same week, it was time for her to go and pay the big down payment on her next trip for next year, which was like 40,000, so.
Mallory Boggs
Oh, so she's spending in like a week, $100,000.
Wes Moss
So. Right. So this is a, let's call this, I think it's called a ship expedition. Much smaller ship, 100 folk starting in Cape Town, I believe, and going up the African coast all the way up to Europe and ending in, let's call it Portugal.
Mallory Boggs
Okay.
Wes Moss
Another. Right. Amazing.
Mallory Boggs
Yeah, yeah, yeah. I'm like, sign me up.
Wes Moss
And she called in kind of a panic and said, you know, I feel like I'm, I'm spending way too much. I feel guilty that I'm doing, I'm putting a down payment on this next big trip and just was nervous about her spending.
Mallory Boggs
A hundred thousand dollars should make you nervous, right?
Wes Moss
The reality here is that when we went back to the table and looked at her spending, she has a big, a big amount of Social Security. She waited till she was 70, so she's still early retirement. Worked all the way till she was 70, saved plenty of money. She's well into the financial green zones when it comes to retirement savings. Financial green zones that I describe in, in my new book, the Retire Sooner Method, which is just available now on Amazon for pre order. So she's well into the financial green zones, which are important, but the reality is that she has a well documented written plan. And that's great, but the reality is we kind of forget what, what's in the plan.
Mallory Boggs
Yeah, of course. You, you, you want me to hold on to the.
Wes Moss
She was reviewing her financial plan when she was in Hawaii, Alaska. Toki.
Mallory Boggs
I'm just all so disappointed if she was.
Wes Moss
She kind of forgot, right? She'. Got. And all these things hit her at one time. And just as we do as humans, we extrapolate. Something happens this week and then it happens next week. Our minds say it's going to happen every week. That's scary from a spending perspective. So we just went back to. We didn't have to go back to the drawing board. We just went back to the board we drew on and she realized that she's still within the 4% rule for the year.
Mallory Boggs
That's fantastic.
Wes Moss
And she's a little, let's take all 4% plus she's a little over. But that's okay. That's planned for. And the resolution of that was that, oh, I just a. I feel so much better and I know I can afford it, but here's the last piece. But I still kind of feel guilty. What else, Robin, should you be doing while you've now gotten to retirement? Don't feel guilty. But there's this guilt that we're spending and we're spending on us. And so here are five quick things. We'll post this. There'll be an article on clark.com, but I want to at least run through these five things that I want you to have. No guilt. And I'm not saying you should spend extravagantly on any of these things, but if you were to direct your spending to focus in on some areas that I think are very much in line with the habits of happy retirees versus unhappy retirees. Here are the five areas. 1. Adventure travel. Travel and adventure and adventure Core pursuits show up very prominently in my happy retiree research on the happy retiree side and not the unhappy retiree side. And those two things totally qualify. Now those are expensive versions we just talked about for Robin, but they qualify
Mallory Boggs
as I bet a lot of the listeners here can find some good deals on some adventure travel.
Wes Moss
Maybe Clark should do a show on adventure. I'll leave that up to Clark. I'd love to hear what his thoughts on pricing on that.
Mallory Boggs
We'll have to pull him in for that.
Wes Moss
Family experiences instead of family support, Right? We just talked earlier about supporting financially our kids. I see the results being so much better when a family or grandmother or mom says, or grandfather or dad says, hey, let's go on a trip together versus hey, I'm going to just keep paying extra per month so that you can eventually afford the trip you want. Family experience is number two. Three, home base. We are going to be in our home, likely more than we ever have been. Now that we're retired, we want to get the big things done, like the new roof done before we retire, God willing, if it works out that way, new AC before we stop working. And then so during retirement we can say, well, what am I using more that I wouldn't didn't have before? Maybe it's a new sunroom. Maybe It's a new deck. Maybe it's a new grilling area. Maybe it's new landscaping because you're home all the time. Maybe it's new gardening. I think that there's a very positive impact when we focus our attention on that from a spending perspective. Number four, movement, sports, health. You almost can't, you can't overspend in this category. Now, yes, they're good gym deals and terrible gym deals, but when it comes to focusing your financial energy on health and wellness and exercise, very rarely are you going to be spending too much in those areas. And number five, anything that has to do with socialization. Now, by the way, socialization and health can work hand in hand because there's walking groups, there's exercise groups. Just like Robin's story about having a five day a week exercise class on that long cruise she went on. Always walking the ship with friends. We're not talking about paying for friends, but certainly memberships and teams and leagues are wonderfully helpful and positive lifestyle spends when it comes to a happy retirement. And socialization is such a key piece of all of that. Those are my five things that you should have little to zero guilt on when it comes to focusing some money attention on those in retirement.
Mallory Boggs
I love that. Okay, all right, let's get into some questions now. Lightning round, lightning round. Here we go. All right. Kenneth in California wrote in and he asks, hi, Wes. I'm a max saver. I've maxed out my 401k and IRA contributions and I'm now opening up a taxable investment account. I want to mix in some international equity exposure into my investing. Would it be better to invest in the Fidelity International Zero fund in my IRA and my normal Fidelity S&P 500 index? Investing into the taxable account, Is there any benefit to a certain arrangement where I put either? Thank you for all that you do and for helping Clark get more time off. I've really enjoyed your weekly segment and it's helped me to think more deeply about investing.
Wes Moss
Kenneth, let me tell you a quick story. When I was a child, let's call it my first year or two in the investment business, I learned about time horizons and assets, the volatility and expected return of assets. So higher volatility, more expected long term return. One of my first IRA contributions, I think it was back when the limits are like $2,000 a year, was, wow,
Mallory Boggs
that was a long time ago.
Wes Moss
I thought, look, I'm in my early 20s. I'm going to pick the most aggressive investment because it's going to be in this IRA forever. Can't even touch it for 40 years. Right. Oh, I used a broad index, Emerging Market International Fund.
Mallory Boggs
Oh, that was pretty risky.
Wes Moss
Just like what Kenneth's asking about. Yes, and I did it in the IRA because I thought it would have the largest growth over time. Well, fast forward 25 plus years, emerging market fund has done about 700%.
Mallory Boggs
That's pretty dang good.
Wes Moss
Yeah, it's good.
Mallory Boggs
700% is not something to sneeze at.
Wes Moss
But The S&P 500 is down about 1,200%. Oh, so the S&P 500 is won by 500%, Mallory. Okay, so you don't know, Kenneth, what's going to do better? You don't know. We don't know. The S&P 500 is going to be better than the international Index that you pick or vice versa. If you knew Kenneth, then why would you buy the other one?
Mallory Boggs
Yeah, right, yeah.
Wes Moss
If you knew, why would you buy the other one? So we don't know. We have to admit to ourselves we don't know over time what's going to outperform. So for you to say, I'm going to put the international one in the IRA because it's maybe got a longer time horizon, the logic is broken there because you don't know which one's going to do better. We diversify because we don't know which areas will do better. So we want to own multiple areas around the world.
Mallory Boggs
That makes sense.
Wes Moss
Right now there is one technicality that may actually lean towards having your international stock investments in your taxable account because of the foreign tax credit. Even if you own an ETF that's international companies, you may end up getting a little bit of foreign tax credit back again. It's. Everyone's situation is different from a tax perspective, but the answer is, when you're diversifying US International is a great example. We don't know which one's going to do well or better over different periods of time. So I don't think you can make the call of which account they go in or another. If you like them as investments, they can go on both.
Mallory Boggs
Oh, so that's a recommendation. Just buy a little bit of both in each one.
Wes Moss
That's my call.
Mallory Boggs
I like it. All right, well, let's keep going. We got Mary in Pennsylvania. She wrote in and she asks Wes, I am 61. My husband is 62. And we are both still working through company provided financial advisor review. We were told that we can both retire today if we Want to. That's exciting.
Wes Moss
All right. Mary in pa. Okay.
Mallory Boggs
Through a series of events, our emergency fund was depleted over the last six months. To get back on track, I have reduced My company, Roth 401k to 9%, matches 6%, did not touch. Husband's 19%. Lower salary than mine. Since starting from zero, it doesn't look like we will build our dry powder back up before retirement. Say it will be 65 years for both of us. My question is, should we start withdrawing from our retirement funds now up to the top of the 24% MFJ bracket, about 40k per year, less than 2% total retirement assets. Or just keep the plan and chill knowing we can tap those funds if they are ever needed in the future. Or something else. Thank you for your advice.
Wes Moss
What kind of accounts do they.
Mallory Boggs
Does Mary have a Roth 401K? For sure.
Wes Moss
Roth 401K? Is that where the bulk of this is?
Mallory Boggs
Yes, it does look like that's the case.
Wes Moss
Okay, so that really matters here, Mary, in Pennsylvania, remember, your dry powder or your safety assets, let's call it that, are there for safety and stability for, let's call it three years worth of what you need for withdrawals. They don't have to be in a taxable account versus an ira doesn't have to necessarily be one or the other. More importantly, you've got the best of both worlds because you've got a Roth 401. So it's tax free money anyway. Don't be afraid to say, look, if you feel as though you don't have your dry powder as a cushion from an investment and a balance standpoint, you can go ahead and do a rebalancing in your 401k because it's a Roth. And one, there's no tax issues when you're doing a rebalancing within a retirement account anyway. And two, it's tax free money when it comes out. So it's just like a taxable account. So don't be worried that you've shifted your allocation away. You don't have enough in safety assets. You can always have more safety assets through a rebalancing. Now the only thing that's a little perplexing to me, Mary, is that if you just spent down your quote, dry powder and it's going to take you five years to get it back and at the same time you guys are in a position to retire today, I don't see how that all can be true at the same time. So if you've depleted a fund that is three years worth of spending and it's going to take you five more years to get it back. Yet you can still retire today. I don't know how those numbers would add up. So maybe there's something I'm missing. But I would be going back to that financial advisor rerunning those numbers, Mary, because maybe I'm missing something. But what I will say is it sounds like a lot of your assets are in the Roth 401. That's such a great kind of account to have to cover so many of your bases.
Mallory Boggs
Absolutely. All right, last question. We are writing in. Tony from Utah, he wrote in and asks I received notice from Fidelity that The S&P 500 fund is no longer considered diversified due to the size of the Mag 7 companies. I was surprised to see that this even applied to the total US Stock market fund to force proper diversification. I'm thinking about these four stock the S&P 500 at 35% mid cap index of 15% the small cap index of 10% and the international stock index of 15% and the remaining 25% in total US bond fund and money market. Is it okay to use a total US Index to diversify or am I over complicating my portfolio for no good reason?
Wes Moss
Yeah, Tony, this has been a brewing issue for. It just keeps getting worse over the last five years. Plus where you're getting weight concentration at the top so much. So it's very telling that Fidelity sends out that letter.
Mallory Boggs
Yeah.
Wes Moss
Hey, Your S&P 500 is not that diversified anymore. Wait, aren't there 500 stocks? Well, 35 to 40% of the, of the movement of that fund is in only 7, 8, 9, 10 stocks. So it's, it's technically it's really not that diversified. So it's telling that you got that letter and you're absolutely correct in thinking the only way to add diversification is to own some other areas. And if the Mag 7 is weighted towards Ultra Mega Cap, to get some diversification away from that, you would need to be adding mid size small cap and international ETFs. So no, you're not overthinking. I think you're being smart about it. Another way to think about it, There are funds ETFs that are equal weighted so that every component in an index as an example, The S&P 500 has the same weighting. So every single piece is weighted not by the size of the company but just equally among all 100, 200, 500 depending on the index you're looking at. Take a look at equally weighted funds or ETFs as well to help fix that issue.
Mallory Boggs
Wonderful. All right. Well, that's Tony, all the questions for today. Thank you so much.
Wes Moss
Keep them coming. Keep them coming.
Mallory Boggs
So good. Where can people send them?
Wes Moss
Yep. Folks are now sending in questions@wesmoss.com there's an ask Wes on the Clark Howard show button right there on the homepage of wesmoss.com that's w-e s m o s s dot com. We love to keep hearing from you. Thank you so much.
Mallory Boggs
You're so great. Thank you.
Episode: Ask An Advisor With Wes Moss
Date: June 2, 2026
Host: Clark Howard (featuring Wes Moss & Mallory Boggs)
In this "Ask an Advisor" installment, financial expert Wes Moss joins Team Clark's Mallory Boggs to cover urgent money questions from listeners and discuss pressing retirement and home-buying issues. The main theme this week is balancing the desire to save with the importance of using money intentionally—especially in helping adult children purchase homes and spending thoughtfully in retirement. The show features listener Q&A on Roth conversions, IRA withdrawals, Social Security timing, investment allocations, and portfolio diversification, all delivered with the podcast's trademark approachable, practical advice.
[02:58–15:07]
“We all know that the price of housing has essentially doubled over the last… half a decade or so.” — Wes Moss [03:15]
Wealth Building and Renting:
Impact on Parents' Retirement Happiness:
"Too much support gets them overly dependent. And that…I think can be a problem because it leads to these financial fights, financial disagreements..." — Wes Moss [07:21]
“There should be a mind shift that you’re helping them with an investment that’s not just spending…” — Wes Moss [10:00]
“You don’t want to live necessarily on the same street...but you do want to live within some sort of distance where you’re able to see your kids and your grandchildren.” — Wes Moss [12:16]
Bottom Line Advice:
If parents can help with a down payment without putting their own retirement at risk, and kids can afford the ongoing costs, helping buy a home can be a good family investment. Avoid ongoing living support, and be mindful of geography for family happiness.
[15:12–26:05]
"I like to think of these conversions as only filling up certain tax bracket buckets. And usually I don’t want to see people fill more than that 24%." — Wes Moss [17:12]
"The HELOC is...only going to cost you 6% ...a year or two, which mathematically should be way less than...paying 22% plus all these other state taxes..." — Wes Moss [20:24]
"It takes about 12 years to make the money back we didn’t take...it’s about longevity..." — Wes Moss [23:00]
[29:24–38:07]
Adventure Travel:
Major happiness driver—expensive, but highly valued by happy retirees.
Family Experiences:
Funding shared adventures (not monthly support) increases positive memories and family bonds.
Home Base:
Enhancing your living environment for quality of life—remodeling, upgrades, or investments in the home you’ll spend more time in.
Movement, Sports, Health:
No such thing as overspending (within reason) on health, gym, wellness, or activities fostering an active lifestyle.
Socialization:
Spending on memberships, clubs, group exercise, or social endeavors; critical for happiness, health, and longevity.
"If you were to direct your spending to focus in on some areas that I think are very much in line with the habits of happy retirees...here are the five areas." — Wes Moss [34:37]
[38:07–46:45]
“We don’t know...which areas will do better. So we want to own multiple areas around the world.” — Wes Moss [40:15]
“35 to 40%...of the movement of that fund is in only 7, 8, 9, 10 stocks. So, technically, it’s really not that diversified.” — Wes Moss [45:29]
On supporting adult kids' homebuying:
“It’s not so much that you’re spending money on the kids...when we’re purchasing a home, we’re not really spending money? We’re investing money.” — Wes Moss [09:51]
On guilt in retirement:
“Don’t feel guilty. But there’s this guilt that we’re spending and we’re spending on us.” — Wes Moss [34:00]
On investment predictability:
“If you knew [which investment would outperform], then why would you buy the other one?” — Wes Moss [40:15]
Throughout the episode, the hosts maintain a conversational, warm, and supportive tone—urging financial prudence but granting “permission” in retirement to spend on what leads to lasting happiness. The advice is research-backed, flexible, and always with an eye toward the unique situation of each listener.
To ask a question or learn more, visit: