07.08.25 Ask An Advisor With Wes Moss

Summary

The Clark Howard Podcast - Episode 07.08.25: Ask An Advisor With Wes Moss

Release Date: July 8, 2025

In this episode of The Clark Howard Podcast, host Krista Dibiaz teams up with fiduciary advisor Wes Moss to tackle a range of pressing financial questions from listeners. The conversation delves into complex retirement planning strategies, the intricacies of Roth IRAs, optimizing Social Security benefits for public servants, and real-life success stories of achieving a fulfilling retirement. Below is a comprehensive summary of the key discussions, insights, and conclusions from the episode.

---

Roth IRA Rollover Nuances

The episode kicks off with Wes Moss addressing a common yet often overlooked mistake related to Roth IRAs.

Scenario Analysis: Rolling Over a Roth 401(k) to a Roth IRA

• Hypothetical Case: Bob from Texas is 68, has contributed $300,000 to a Roth 401(k) over the years, which has grown to $600,000. He intends to roll it over into a regular Roth IRA as he approaches retirement.

• Key Considerations:

  • Qualified vs. Non-Qualified Rollovers:
    • Qualified Rollover: If Bob meets the five-year rule and is over 59½, the entire $600,000 can be rolled over without immediate tax implications. (Wes Moss, [01:34])
    • Non-Qualified Rollover: Opening a new Roth IRA at age 68 may trigger the five-year rule on the IRA, potentially taxing the growth portion if the new Roth hasn't met the five-year requirement. (Wes Moss, [06:30])

• Solution to Avoid Pitfalls:

  • Proactive Approach: Open a Roth IRA early, even with minimal contributions, to satisfy the five-year rule well before retirement. This strategy ensures that future rollovers into the Roth IRA won't be hampered by the rule. (Wes Moss, [06:00])

Notable Quote:

"Opening a Roth IRA early on, even with just $100, ensures that you don't get stuck in the Roth trap later on." – Wes Moss ([06:00])

---

Rebalancing IRA Accounts Post Stock Surge

Listener Kirk from California inquires about managing an IRA account that has experienced significant stock price appreciation.

Guidelines for Rebalancing:

• Diversification Threshold: Wes recommends maintaining no more than 10% of any single stock within a retirement account to mitigate risk. (Wes Moss, [07:59])

• Rebalancing Strategies:

  • Periodic Review: Monitor account allocations and rebalance when a stock's weight exceeds the 10% threshold.
  • Avoiding Daily Adjustments: Implement a systematic approach rather than reacting to daily market fluctuations.

Notable Quote:

"If you're getting way too heavy into one company, even a stalwart, beyond 10%, I start to get nervous." – Wes Moss ([08:16])

---

Maximizing Social Security Benefits for Police Officers and Their Spouses

Neva from North Carolina raises concerns about Social Security benefits for police officers and the impact of pensions on spousal benefits.

Key Topics Discussed:

• Government Pension Offset (GPO) & Windfall Elimination Provision (WEP):

  • Historically, these provisions reduced Social Security spousal benefits for individuals with pensions from non-Social Security-covered employment.

• Legislative Changes:

  • Social Security Fairness Act (2025): Wes highlights that this new legislation retroactively addressed the issues posed by GPO and WEP, eliminating their negative impact on spousal benefits. (Wes Moss, [10:56])

• Implications for Police Officers:

  • With pensions now more favorably aligned with Social Security benefits, public servants can better optimize their retirement income without the previous offsets. (Wes Moss, [11:00])

Notable Quote:

"The Social Security Fairness Act has stopped the nonsense that was previously putting a dent in your spousal benefits." – Wes Moss ([10:56])

---

Evaluating Retirement Income Projections

Mike from California seeks advice on the reliability of retirement income projection tools and his retirement strategy.

Discussion Points:

• Reliability of Projection Tools:

  • Wes affirms trust in reputable tools like Fidelity's, especially when users input conservative assumptions to account for market volatility. (Wes Moss, [15:21])

• Mike's Retirement Plan:

  • Current Assets: $1.2 million in IRAs.
  • Strategy: Utilize IRA funds until age 65, then shift to pensions, and delay Social Security until age 70.
  • Projection Outcome: Conservative estimates show IRA depletion to $700,000 by age 70.

• Assessment:

  • Wes concurs that Mike's plan appears sound, emphasizing the benefits of having multiple income streams and delaying Social Security to maximize benefits. (Wes Moss, [15:21])

Notable Quote:

"As long as you're using conservative assumptions, you're less likely to find your situation much worse than what you've modeled out." – Wes Moss ([15:21])

---

Success Story: Joe and Cindy's Path to a Happy Retirement

Wes Moss shares an inspiring letter from Joe and Cindy of Indio, California, illustrating their journey to achieving a fulfilling early retirement.

Key Elements of Their Success:

1. Financial Freedom:

   • Aggressive Investing: Maximized 401(k) contributions over four decades, resulting in a net worth of nearly $6 million without any inheritance. (Wes Moss, [22:39])
   • Diverse Income Streams: Income sources include pensions, IRA dividends, investment income, deferred compensation, and future Social Security.

2. Lifestyle Design:

   • Active Pursuits: Engaged in over 15 activities, including biking, hiking, golf, volunteering, and participating in community groups like book clubs and wine clubs.
   • Social Connections: Incorporated into a 55+ active adult community, providing ample opportunities for social interactions and friendships. (Wes Moss, [25:53])

3. Intentional Planning:

   • Strategic Relocation: Moved to Indio, California, to enjoy a desirable climate, proximity to family, and a vibrant community.
   • Debt-Free Living: Purchased an RV storage condo before tapping into retirement funds, ensuring financial security.

Financial Breakdown:

• Assets:
  • $4.2 million in IRAs
  • $350,000 in taxable accounts
  • $1.3 million in real estate
• Income vs. Expenses: With approximately $300,000 in annual income supporting a $240,000 lifestyle, Joe and Cindy maintain a comfortable financial buffer. (Wes Moss, [22:39])

Notable Quote:

"They wanted to say that if you really think about all the main components to make up a happy retirement – financial, lifestyle, core pursuits, and social – it leads to an awesome place in life." – Wes Moss ([24:12])

---

Changing Dynamics of Peak Spending Ages

Elizabeth from Colorado challenges the notion that individuals reach their peak spending in their late 40s or early 50s, arguing that with modern family dynamics, peak spending may now occur in the late 50s or early 60s.

Wes Moss's Response:

• Acknowledges the validity of Elizabeth's observation, noting demographic shifts such as delayed child-rearing impacting spending patterns.
• Refers to statistics from 2013-2014 indicating peak spending ages between 48 and 54, but agrees that this range is gradually extending higher due to changing societal trends. (Wes Moss, [29:09])

Notable Quote:

"As time goes on, it's just going to continue to climb higher." – Wes Moss ([29:09])

---

Understanding Buffered Index-Linked Notes

Mike from North Carolina raises concerns about the transparency and fees associated with buffered index-linked notes recommended by his fiduciary advisor.

Explanation and Assessment:

• Nature of Buffered Notes:

  • Structured financial products created by investment banks, combining calls and puts to limit downside risk while allowing for some market upside. (Wes Moss, [31:20])

• Fee Structure:

  • While these products may not have explicit ongoing fees, underwriting discounts and embedded costs in the derivatives used mean they aren't entirely fee-free. The investment bank sets the pricing, retaining a portion of the returns. (Wes Moss, [31:20])

• Investment Suitability:

  • Can be suitable for investors seeking limited downside protection, but it's essential to understand the embedded costs and potential limitations on returns. Comparatively, traditional ETFs or index funds might offer greater transparency regarding fees. (Wes Moss, [31:20])

Notable Quote:

"A buffered note is basically a financial derivative burrito. You’ve got a call and a put wrapped into one thing." – Wes Moss ([31:20])

---

Valuing Pensions in Retirement Plans

Jimmy from Florida seeks guidance on assessing the value of his pension within his broader retirement strategy.

Valuation Methodology:

• Pension Formula:

  • Typically based on years of service and a multiplier (e.g., 2% of salary per year of service).

• Jimmy’s Scenario:

  • Salary: $75,000/year
  • Years of Service: 11 years
  • Annual Pension: 2% × $75,000 × 11 = $16,500

• Present Value Calculation:

  • Assuming a 5% discount rate over 25 years, the pension's present value is approximately $412,500, yielding around $250,000 in today's dollars. (Wes Moss, [35:29])

• Strategic Importance:

  • Understanding the present value helps integrate the pension's role within overall retirement income, ensuring sustainable withdrawals and financial planning. (Wes Moss, [35:36])

Notable Quote:

"Pensions are sort of, they add up to a really significant number when you do the math." – Wes Moss ([35:36])

---

Conclusion

Throughout the episode, Wes Moss provides insightful, practical advice on navigating the complexities of retirement planning. From understanding the subtleties of Roth IRA rollovers to optimizing Social Security benefits for public sector employees, the discussions aim to empower listeners to make informed financial decisions. The success story of Joe and Cindy serves as a testament to the effectiveness of diligent planning and diversified income streams in achieving a happy, secure retirement.

Final Notable Quote:

"The dedication and steady effort lead to being in the spot you're in, some happy retirees, and a place a lot of folks would be pretty psyched to be in as well." – Wes Moss ([29:27])

---

For more personalized advice or to submit your questions, visit www.clark.com/askclark.

Transcript

[Apple Card Ad]

This message is brought to you by Apple Card. Get 3% daily cash back when you buy an iPhone 16 with your Apple card at Apple. Subject to credit approval Apple Card issued by Goldman Sachs Bank USA Salt Lake City Branch terms and [e-mail] this podcast is brought to you by Progressive Insurance. Do you ever think about switching insurance companies to see if you could save some cash? Progressive makes it easy to see if you could save when you bundle your home and auto policies. Try [e-mail] Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states.

[Krista Dibiaz]

Welcome to Ask an Advisor. I'm Krista Dibiaz here with my friend Wes Moss, Fiduciary. You are a genius. You are. I'm starting to sound like Clark.

[Wes Moss]

Okay, that's what Clark would say.

[Krista Dibiaz]

But it's true. It's true. You're very smart and you're going to answer a bunch of questions today which you can find our form to ask questions to Wes or to the Clark [e-mail] Ask today you're going to talk about a couple of interesting things. One is there is a big blunder you can make with a Roth IRA that I wasn't aware of and I'm sure many people are not aware of.

[Wes Moss]

Right. In a world of heavy roth usage in 401ks, it's probably not overly uncommon if somebody doesn't even have a regular Roth ira. So what does the rollover look like with way out into the future if you're just opening up a brand new Roth when it comes to retirement? And we'll go into the kind of the nuances of that really tricky and special situation.

[Krista Dibiaz]

Yeah. And then also you're going to talk about a letter you received from a couple who have just nailed it with retirement happiness, who think of it as.

[Wes Moss]

Almost like a retirement love letter but from happy retirees.

[Krista Dibiaz]

That's awesome. And they read your books and they listened to you and I'm excited to hear what their recommendations are. They're saying are the three main things that make you happy.

[Wes Moss]

Yeah, they have a very cool story and they essentially started with nothing, no inheritance.

[Krista Dibiaz]

Right.

[Wes Moss]

But they're now living in early retirement. Very what I would consider happy retiree lifestyle. And they just wanted to share that and I think it's really fun to share here on the show. So why don't we start with this rule that came up very recently in my investment advisory team came to me and said this is a situation we've never seen before. And what, what do you think the Rules are here. And I had to go to the dark corners of the Internet to really get this because really this is about Roth. This is about a Roth and really a Roth 401k in the potential to roll it into a regular good old fashioned Roth, which was this scenario that this particular family was asking about. So I'm just going to make up a name and a state. Bob from Texas, okay, is 68 and over many years put $300,000 into a Roth 401K and it's grown to about 600. So think 300 contributions, 600 total value. And he wants to roll it into a regular Roth account now that he's retiring. Sounds pretty normal and standard. But because Roth and Roth 401ks have gained a lot of popularity in the last call of 10 or 15 years, I think we're going to start seeing more and more people that the only thing they ever did was open up a Roth 401K. You see folks that only have a 401 and they never opened an IRA. Well, why wouldn't the same thing be starting to happen more and more with hey, I've got this great Roth 401k and I could put a bunch of money in it, but I couldn't contribute a lot to a regular good old fashioned Roth, so I never opened one. That's the situation with Bob. So what happens? Can he roll the money over into a regular good old fashioned Roth and start taking money right away or does he have to worry about the five year rule? That's what's so interesting about this. Now I'm going to not bury the lead and say here's the way to always avoid this blunder. Not always, but this is a way, I think, to just not ever have to worry about this. Getting stuck in this little Roth trap is just open a Roth for 100 bucks and let it sit, even if you're not really going to use it because once it gets to its five year number, then you're good to go. But if you've never had a Roth and you're and you're Bob from Texas and you're 68 and you open up a new Roth, well, it's a brand new Roth and you still have to worry about the five year rule, meaning that you've got to worry about taxes on the growth or maybe. And that's what we're going to get into here. So here the way the rules work. So how much of a Roth can he use if he rolls his money over? Well, there's Two situations. One if it's a qualified roller, one if it's a non qualified rollover. And then there's the other solution which is the Roth could be older than the 401k. More vintage is probably the better word. So if Bob in this situation is 68, so he's well past 59 and a half and he's had the 401 for a decade, so he meets the five year rule in his 401 and he meets the 59 and a half rule. So him rolling money into a Roth IRA is qualified. Now if it's a brand new Roth, that starts to limit him a little bit. But the good news is for Bob in this situation is the whole 600 is count as a contribution. It was qualified in the 401 and he can take not just the what were contributions but also the growth of that 600. Now the nuance here is that if the 600 grows to 700 that $100,000 in gain that still hasn't had the five years of vintage. So there are potentially some taxes on that gain until the Roth gets to be five years old. So not the worst situation because he can still use the vast majority of that money if he rolls it over. But if let's say he only had the 401 new situation, it's non qualified. He only had it. He had the Roth for only a couple of years, didn't meet the Roth 401k less than 5 years and he has a brand new Roth IRA and he rolls the money in. Then according to my research, and again I think this is the way this works, it's pretty complicated and nuanced rule is that that rollover because it was non qualified for 401 Roth to regular Roth, it keeps its quote same character, meaning that the 300 is just a contribution. In a Roth you can take your contributions out, no taxes. But the growth there would be an issue there. So that would be taxed. The 300 of growth would be taxed because he's in a brand new Roth and it doesn't have five years. Again, he still could access his contributions. But those are the two different scenarios. Again, what's the solution here? It still goes back to hey, open up Roth and make sure you have it for at least five years. Then you don't even have to worry about this problem. This is really only a problem for Roth 401 folks that have never had an actual Roth IRA and now they're just opening. Now one other scenario. Let's Say that Bob had opened up a Roth account six years ago. His Roth 401 is only four years old. Here's the cool thing. Even though that's a non qualified rollover from the Roth 401k, I don't know a good term for this, but if he rolls it in the older Roth kind of fixes the problem for it. It kind of has the vintage that it's already. His Roth IRA is over five years old. It kind of solves the issue. And now the rollover meets the he's not going to have to worry about because he is over 59 and a half and the Roth IRA has been open for over five years. He should be good to go when it comes to withdrawals. I told you that was technical, tricky. Don't hold that one against me. But it's real life and I think it's going to come up more and more. And I'm pretty sure that's the way this special rule works.

[Krista Dibiaz]

All right, well, we'll go to some questions that we're sending for you. Wes Kirk in California sent this one. I've experienced a recent run up in a particular stock price in my IRA account and I'd like to know when and how I should rebalance my account. Are there some basic rules of rebalancing that we should be aware of?

[Wes Moss]

Sure. Again, I see this happen. You buy there are a couple stocks over the last decade that have just been absolutely phenomenal, up 1,000, 2, 3, 4, 5,000% depending on how long you've held them. And it can really become a big part of your retirement accounts. It's a good thing and it's a really good problem to have because it's really not a problem. Because inside an IRA there's no worry about rebalancing. You can sell that stock, reinvest it somewhere else and because it's in the crock pot and the lids on, you don't have to worry about that current taxation. It's only when you pull money out of the ira. And the rule of thumb is, and this is, I've had the same rule of thumb for 20 plus years, is 10%. And even that's a lot to have in one stock. But that to me is the demarcation line. If you're getting way too heavy into one company, even if it might be the most stalwart company in the world, still beyond 10%, I start to get nervous there. So you could do a couple of things. Just cut it back to 10%. You could look at it every time it goes to 12 or 13%, you take a small rebalancing and always keep it around 10%. It's not something you do every day. But the I would say as you're reviewing your accounts throughout the year, my rule of thumb that I like to stick to is no more than 10% in any given stock. And it's easy to make that happen inside an retirement account.

[Krista Dibiaz]

All right. And this came in from Neva in North Carolina. I have a question about Social Security benefits for police officers and their spouses. My husband is considering a career as a police officer and it looks like in our state he won't pay into Social Security but rather into a local government pension fund. Of course we need to research how those two benefits would compare when he retires.

[Wes Moss]

But.

[Krista Dibiaz]

But my real concern is my potential spousal benefit under Social Security. For the foreseeable future, I'll be focusing mainly on raising our children. So I'm working just a few hours a week freelance and bringing in 10 to $20,000 per year. My understanding is that my spousal benefit would likely be higher than the benefit I think maybe she means than the benefit from her husband based on my own earnings if I continue to work part time for many of my working years. Any advice on researching the pros and cons of Social Security versus law enforce pensions specifically with a much lower earning stay at home spouse? Obviously being a police officer is not a get rich quick scheme, but we need to be smart even if we're not in it for the money.

[Wes Moss]

Thank goodness that you're not in it for the money. And thank goodness we have police.

[Krista Dibiaz]

I know.

[Wes Moss]

God bless you.

[Krista Dibiaz]

There are lives on the line every day.

[Wes Moss]

Every day. And the compensation long term, I'm not able to say I know exactly what a police pension is going to be. But if you're there for a long period of time and you've had relatively significant earnings in your later years in the serving, then that pension should be as good or maybe a little better depending on than Social Security again adjusting for age and when you start taking it. So let's assume that your pension will be as good or better, let's say because you're not paying into Social Security. And I can't see why any system would be set up where it'd be worse than Social Security. Okay, but there is a legacy problem that people probably still think is a problem and that is Neva you're worry about. Well, what if your benefit is, let's say you're getting A spousal benefit, or there's some sort of, let's say he passed away and then you're. And you're getting the spousal amount from your husband. Well, let's just go way out in the future. The pension, the pension side. Well, there used to be these two really unfair rules. One was called the government pension offset and one was called the windfall elimination provision, the wap and the GPO is what you would have been worried about because the government pension offset said, if you're receiving a pension, again, let's say you do work part time, 20 years, 20k a year, part time, part time, your Social Security is still not nothing. And this is a rough estimate, but 20 years at 20k, it still probably ends up being a grand a month, roughly. So it's not nothing. But if, let's say your spousal benefit from your husband's pension, he had passed and now you're collecting the gpo, takes that number and says takes two thirds of it and that wipes out what your Social Security payment is. So a lot of Americans that are getting spousal benefits from Social Security were wiped out because of pensions. And in 2025, the government passed a brand new bill, the Social Security Fairness act, that went retroactively all the way back to January of 2024 that stopped that nonsense. So it's still a legacy worry because that's been the case for 20, 30 years and people are worried about it. The good news is that I think your husband will have a good solid pension from the police force and it might come from the state. Will come from the state, and the worry that you're going to get hit by the government pension offset at any point in the future, that worry is gone. And don't discount your own Social Security. And if he works in the private sector, let's call it 20 years, and he does 20 years on the force and 20 years in the private sector, the windfall elimination provision and gpo, they're gone and they're not going to impact your private sector earnings towards Social Security. So both of those provisions are gone. Now. It makes working in public service for something like the police force incrementally a little bit better than it used to be in relation to dealing with what happens with your Social Security. So that's the best way I can describe this interesting situation. Thank you, Neva.

[Krista Dibiaz]

Thanks, Neva. Okay. Mike in California says, my wife and I are planning to retire in two years when we're both 62. Our goal is to delay Pulling from Social Security as long as possible. We both have pensions and we have a combined IRA dollar amount of about 1.2 million. Our plan is to use the IRA money to get us to age 65, then start pulling from the pensions, then use pensions and IRA money to age 70, but start pulling from Social Security. I've been using Fidelity's retirement income projection tool with the setting of assuming significantly below average market conditions to see how valid my plan is. The tool says we're good. The worst case scenario shows our IRA amount dropping to about 700k at age 70. My questions are what do you think of retirement income projection tools and does our plan sound reasonable to you?

[Wes Moss]

All right, so Mike, Yes, I do rely on those tools because you're putting in a lot of variables here. And if you're modeling this out, that would be eight years that the longer I think these plans go and the more conservative you put the variables which you stated that you were going to do, you put the lowest amount of rate of return, then the more likely you're going to be as good as the plan says you'll be. Or even better. Now yes, there are special situations. What I don't see these retirement planning software is not great at saying, well, what if you get a huge drop the year of retirement and we have a bear market and some plans will do this and they'll model out sequence of return risk, but as long as you're balanced, that also helps with that. So if Your investments are 100% stock during that period of time, then you are subject to that these big market swings. But let's assume you have more of a balance which helps with that. But if you're using a conservative assumption, whether you're using a well known plan like Fidelity or any other robust retirement planning tool, if you're putting in conservative assumptions, then I don't see that you're taking a big risk of your situation being a whole lot worse than what you modeled out. And if you're, if, if the 700 is okay because now you have a pension and you have Social Security, you waited till 70, which I know those numbers get pretty high over $4,000 a month. If you wait till 70 for a lot of folks sounds like you've got a, you'll have a really nice multiple stream of really stable income with social and pension and then the 700, you could still use a 4%, even 4% plus rule on that and you sounds like you'd be in great shape. So I like those plans. I put a lot of faith in they're not perfect, but they really do a good job.

[Krista Dibiaz]

All right, straight ahead, we're going to talk about the three keys to retirement success.

[Apple Card Ad]

This message is brought to you by Apple Card. Each Apple product, like the iPhone 16, is thoughtfully designed by skilled designers. The Titanium Apple Card is no different. It's laser etched, has no numbers, and it earns you daily cash on everything you buy, including 3% back on everything at Apple. Apply for Apple Card on your iPhone in minutes, subject to credit approval. Apple Card is issued by Goldman Sachs Bank USA, Salt Lake City branch terms and [e-mail].

[Progressive Insurance Ad]

This podcast is brought to you by Progressive Insurance. Do you ever think about switching insurance companies to see if you could save some cash? Progressive makes it easy. Just drop in some details about yourself and see if you're eligible to save money when you bundle your home and auto policies. The process only takes minutes and it could mean hundreds more in your pocket. Visit progressive.com after this episode to see if you could save Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states.

[LinkedIn Ad]

Does it ever feel like you're a marketing professional just speaking into the void? Well, with LinkedIn ads, you can know you're reaching the right decision makers. You can even target buyers by job title, industry, company seniority skills. Wait, did I say job title yet? Get started today and see how you can avoid the void and reach the right buyers with LinkedIn ads. We'll even give you a $100 credit on your next campaign. Get started at LinkedIn.com results, terms and conditions apply.

[Starbucks Ad]

This episode is brought to you by Starbucks. Smooth, bright, deliciously crafted. Introducing Starbucks and Sarah Blend their smoothest, bright, brightest coffee yet. It's a new kind of light roast, one that's packed with so much flavor it shines no matter how you brew it. So go ahead and try it. Hot, iced, black, or with a splash of creamer. Visit at home.starbucks.com Suncera Blend Coffee to bring Starbucks sunserablend home.

[Krista Dibiaz]

Have you ever.

[Wes Moss]

Spotted McDonald's hot crispy fries right as they're being scooped into the carton and time just stands still?

[Krista Dibiaz]

We are back. And Wes, you're gonna talk about a letter you received from a couple who probably read one of your books. Which one do you think it was?

[Wes Moss]

I don't know. Probably what the happiest retirees know.

[Krista Dibiaz]

They said they read one of them, right? And they also listened to your podcast.

[Wes Moss]

Maybe Retire Sooner Podcast. Potentially, yeah. And I would call it kind of a retirement love letter. And I think what the reason they shared it. This is Joe and Cindy from Indio I n D I O California. And I think the reason they wrote in was that they wanted to say that it's possible. And they're having. To me, they're having an amazing retirement. They retired early, a little bit early, so late mid, late 50s. They live in a new location that they kind of scouted out. It's in California. I looked up where that is in the world. And kind of near the Palm Springs area, which is kind of a beautiful place to live their kids. And they're just thriving. They're thriving, but they also started with zero. What they wanted to share was that if you really think about all the main components to make up a happy retirement, the financial, the lifestyle, core pursuit and the social area, if you think that all through. And it really does lead to a pretty awesome place in life, but it's hard to get to. It takes some time. So I want to maybe read, but again, I think our audience really cares about that. Otherwise they'd be listening to, you know, true crime podcasts or comedy. So I took this a thousand plus word letter, which is really awesome, and I truncated it down into a couple hundred words and we'll share these, the three keys I think they're embodying. So. Hey Wes, after reading your books and listening to you on air, my wife Cindy and I wanted to share our H Rob story. Hrob stays our happiest retiree on the block. We both retired last May. Cindy, 57 and me 60. We were born and raised in the same town, met in middle school, married 1998, three kids, all through private universities, but off the payroll.

[Krista Dibiaz]

Nice.

[Wes Moss]

They're off the payroll. Cindy worked as a critical care nurse, mostly night shifts. And I started as a software engineer and finished my career as a VP in it. When our kids were young, Cindy would come home from her shift in the morning as a night nurse, hand off the kids and then I'd make the 90 minute commute to work. So they avoided daycare. But that's a pretty rough schedule.

[Krista Dibiaz]

Brutal.

[Wes Moss]

Avoid daycare. Over time, we invested aggressively in our 401 case. We built a retirement plan. After years of traveling and exploring, we chose Indio, California and moved there in spring of 22 before retiring. That early move let us get settled by cars first the home.

[Krista Dibiaz]

So.

[Wes Moss]

And purchase an RV storage condo. I don't know if that. Yep. So RV and storage, they have car condos.

[Krista Dibiaz]

So I think that they bought a place to store their rv. There are like these. That's a business now. Like condos for cars, Like RV storage condo.

[Wes Moss]

Right. All before they touch their retirement fund. So now they're debt free. Six income streams. Six income streams, which is cool. Between us, pensions, IRA dividends. They're counting their investment income, deferred comp, and soon Social Security. By 2029, we'll have about 300k in annual income to support a 240k lifestyle. That's a good rich ratio.

[Krista Dibiaz]

Wow.

[Wes Moss]

Money coming in easily supports money going out. We've built a net worth nearly 6 million all on our own. No inheritance these days.

[Krista Dibiaz]

Wow.

[Wes Moss]

We're busy with travel in our Newmar Dutch Star motorhome, which is like. It's a really nice motorhome. Biking, hiking, golf, volunteering. They had a ton of core pursuits that I'm not even listing here. Cindy's in book clubs and exercise groups. He's on the HOA committee and a wine club. We have 15 plus core pursuits between us.

[Krista Dibiaz]

Wow.

[Wes Moss]

It's a lot of hobbies on steroids. Our kids are close. Two within driving distance, one a short flight away. Life is good out here in the desert.

[Krista Dibiaz]

Wow.

[Wes Moss]

Thanks for helping light the path. And really all he's referring to is just. I've done a bunch of research about the lifestyle of a happy retiree and it kind of goes down into these three main areas. And I think this is what Joe and Cindy have really done. So one, they have their financial. It's called zero to financial freedom. That's what Americans want to do. We want to get to financial freedom. That is the goal. As soon as we can get there. By the way, Cindy started at $9.93 an hour.

[Krista Dibiaz]

Wow.

[Wes Moss]

As a nurse. Joe started 27k a year, 27 grand a year as a junior software engineer. So it's the financial side, the lifestyle design, all their core pursuits, which I love. And then the power of how they plan this thing out, which is I think the really cool part that kind of is a glue that sticks all this together. So one didn't make a lot of money in their early years and then steadily climbed their salaries and income over the years. They max out the 401ks. When you do that for 40 years, it just works. It just plain works, particularly if you're invested in, let's say, an index. And if you go back over the last 30, 40 years, that money grows dramatically. And if you're 30 today and you feel like it's impossible to get to 3 million, 5 million, they have a $6 million net worth, it's not, but it's a really long way away. It's a really long way. But I don't know why it wouldn't work. As long as America stays an amazing place for business around the world, then our markets hopefully will reflect that over time. So they end up with 4.2 million IRA, 350 in a taxable account and a million three in real estate. They have pension IRA, they have dividends, Social Security that hasn't even turned on yet and their spending is about 240. It's a big number. But with all these income streams and their retirement assets, they easily cover that. So again, it took four decades. There's no magic there, no inheritance there. 40 years, that's what it takes. Number two, lifestyle design. Right. They've got 15 core pursuits. They have connection with their family and their community.

[Krista Dibiaz]

They sound super fun by the way.

[Wes Moss]

And I think they're fun.

[Krista Dibiaz]

I want to hang out with them.

[Wes Moss]

They're pickleballers, which more and more Americans are doing that. It is the most social of all the sports. It's more social than tennis. It's more. I think it's a little bit more. It's a maybe equally social and quicker than golf. So it's an hour, hour and a half, not four or five hours for golf. I love it. For the, the social connection part, it's actually a little dangerous because you're really like moving quickly and stopping. A lot of busted Achilles. Oh, a lot of hamstring pulls, lot of broken rest. So be careful when you're playing pocketball. Hope Joe and Cindy are. They're in a 55 plus active adult community so they've got everyone around them that is in a similar age range, which makes it a lot of fun. There's plenty of people to do all these different activities. Hiking, biking, walking, running, swimming, volleyball, tennis. Pickle. Doesn't matter what they are, but you have people to do them with. That is a full joyful retirement situation to be in. And they were intentional because now they're driving distance of their two kids and they're a short flight away from their third. And I love the Newmar Dutch Star. Love the Newmar Dutch Star motorhome because that they can cruise all around the country wherever one of the go wherever they want to go adventure wise. And it's creating experiences and the adventure of that plays very well. It's actually this is a hint to some of my new research, one of the few core pursuits because I've always said it doesn't matter what your core pursuits are, as long as you have them. Have them and spend time doing them. There is one that correlates more heavily towards happy versus unhappy retirees. One, not surprisingly, is exercise and physical activity. But number two is adventure. There's a high correlation between adventure, so that means travel. RVing is an example, has a high correlation to those who are happier versus unhappy in retirement. But all of this. Step three took the power of some foresight and some planning. You don't just move from the north. I think they were in the northeast all the way across. Moving to California is a big deal. Moving 45 minutes away is a big deal, let alone 3,500 miles or 4,000 miles northeast to southwest of America. But they really thought about this. They found a place that would give them socialization in the active community. They wanted to be near their kids, and they did all this very intentionally, along with their retirement planning. So they got to the numbers, and that gave them financial freedom. And all of that was really. It was really thought out. And so you think about this really fun talk about a retirement life map to draw out with colored pencils like this. They did it, and it's working. And provided they continue to have great health, which I pray for everyone to have, that and longevity. This is, by the way, a pretty. This kind of environment promotes a lot of longevity. Then I think they have so many good years, hopefully decades of a happy retirement being H. Robs. And to me, that dedication and steady effort, all that leads to being in the spot they're in, some happy retirees, and a place I think a lot of folks would be pretty psyched to be in as well.

[Krista Dibiaz]

Yeah. H. Rob, again, means happiest retiree on the block from your book title. Yeah. Okay.

[Wes Moss]

And the reason for that is that it was. The idea for the book came from a retirement survey that I did that showed these habits of happy versus unhappy retiree. How do you fall into one camp versus the other? And I was around the time I had really young kids, and there was a popular book called the Happiest baby.

[Krista Dibiaz]

Oh, yes, I remember that book.

[Wes Moss]

On the block.

[Krista Dibiaz]

All right, we're gonna go to questions now. Elizabeth in Colorado says, Wes says that people reach their peak spending by late 40s or early 50s. I'm going to disagree with that statement. Since people are having kids later in life, we should reach our peak spending by the late 50s or early 60s.

[Wes Moss]

Look, she's not wrong, Elizabeth. You're not. You're not wrong about that. There are plenty of families I Mean, I'm one of those, my peaks. But you're right, I mean I'm, I think about when my kids are going to be finished college, I'll be like 60. So you're right about that. And you know, I think about my, I mean, my mom was in her early 20s when she had me, so it really worked out. That's very much correct for them. They were in their. My dad was I think 42, 46 when I was done college. But then my subsequent siblings, he was in that demographic and his peak spending was called probably 50. And you're right as we wait and demographics moves pretty slowly though, so it's not like this changes dramatically. And if you look at the statistics, if you go back, I think these are from 2013, 2014. So it's still 10 years ago. The range was 40, I think 48 to 54. So it is a range. But you're right, I think as time goes on, it's just going to continue to climb higher. So. Very good observation. She's probably not wrong.

[Krista Dibiaz]

All right. Mike in North Carolina says, I'm working with a fiduciary advisor and one of the recommendations is that they continue to present to my wife and I are buffered index linked notes. I've asked them the question about the fees and they indicate that there are none. This sounds too good to be true. And when I look at the prospectus, the only expenses I see are underwriting discounts. It does not appear transparent to me. Can you explain whether these are good investments or whether to avoid them?

[Wes Moss]

Mike? They're not inherently bad, first of all, of course they're not free. There is no such thing. I mean, you get a big Wall street bank usually. These are the investment banking arms of the big brokerage companies. Those are the ones that create these products through options. So a buffered note typically is going to have a call and a put some combination of that at different prices so that you get some of the market upside but then limit some of the downside. So it buffers your returns. And for some folks, that's not necessarily a bad investment profile. The reality though is that of course there's costs because you're using derivatives. A buffer note is basically a financial derivative burrito. You've got a call and a put and you wrap it all into one thing and the cost in there. And of course the investment bank gets paid because they're the ones that are creating the product and they set the pricing so that whatever they're selling it for, they're Keeping a chunk of it. And now technically, once it's sold and your advisor is buying that for you in your account, the inherent cost isn't necessarily. You're not getting a fee inside of it, but there was. There was cost to get it and set the parameters of those derivatives in inside of that financial burrito. So it's. So it's not. It's not free, but there shouldn't be ongoing costs if it's in your account. Again, that doesn't maybe count for the advisory fee that you may have. But it's a product. Think of it this way. You could have an ETF and your advisor isn't making any money off an etf. But if it's charging you a tenth of a percent per year, that money is going to the etf. It's not going to the advisor or the fiduciary. Here it's, I think, a similar situation where the fee gets. Goes to the investment bank and then your advisor's using that within your allocation. They're not necessarily bad. It really is on a relative basis to what.

[Krista Dibiaz]

Okay, I challenge you. One day I want you to do like a whole thing where you're comparing like ETFs, index funds, all that stuff, and you have to use like burrito.

[Wes Moss]

Quesadilla taco on the Clark Howard Show. Here we have come up with some fair amount of food.

[Krista Dibiaz]

Yeah.

[Wes Moss]

Crock pot, crock pot skillet.

[Krista Dibiaz]

Yeah, that was a good one.

[Wes Moss]

Now burrito.

[Krista Dibiaz]

Yep. All right, Jimmy in Florida says this question's for Wes. How should I think about the value of my pension and my overall retirement plan? My wife and I are now in our 30s and contribute 15% of our income to workplace 401ks. I have 11 years of pension service with my employer with average earnings so far of 75,000 per year.

[Wes Moss]

Pension formulas are. They're somewhat standard. They're going to give you years of service. How much time you spent 10 of your 11 years, 20, 30 years times a multiplier. It could be kind of standard, maybe is one and a half to 2%. So let's say 2% of your salary now, sometimes it's your highest three years, your last three years. It's usually something like that. But if you do some math, Jimmy, what do you think this thing is worth? And again today. So if I did the Math and did 75,000 times 2%, 1500 times 11 is $16,500. So that's $16,500 per year, which is pretty. That already is not insignificant. Assume You. You live to receive that for 25 years. 16,500 times 25 is 412. A little over $400,000. So just already that's. That's what you would be getting paid in the future. Now that's. Those are tomorrow's dollar, so you technically have to discount it. Use a discount rate of, let's say, five or so. What is that worth in today's dollars? This is obviously not perfect math. As I'm doing this in my head. I would say that that already is worth about a quarter of a million dollars. 250k if you're using around a 5% discount rate. That's how I'd look at it.

[Krista Dibiaz]

And that is. He did actually attach the plan document and is 2% times the years of service. Up to 30 years.

[Wes Moss]

Up to 30, yeah. Which is like, that's a pretty standard formula. Let's do this. This for fun. 20 years times 2%, and you end up making 100k in the number that they. They do. What would this thing be worth, Jimmy? 20 times point to 40,000 bucks a year. That's pretty awesome. Times 25 years. It's a million bucks in payments that you would receive. So that's probably worth, I don't know, close to 500k already if you were to do that. So I think it's super smart to think that through and know that, gosh, I'm getting 2% of every single of my salary for every single year I worked. It adds up to a really significant number.

[Krista Dibiaz]

Great questions, everyone. Remember, if you want to ask a question, go to clark.com ask. That's going to do it for us today. Wes.

[Wes Moss]

Oh, we're already wrapping up. I thought we had a whole nother segment, but it went that quickly.

[Krista Dibiaz]

It went that fast. Time flies when you're having fun. Clark will be back tomorrow. Hope everyone has a great rest of your day.