12.23.25 Ask An Advisor With Wes Moss

Summary

---

The Clark Howard Podcast – "Ask An Advisor With Wes Moss"

Episode Date: December 23, 2025
Host: Clark Howard (with Wes Moss, Investment Advisor)
Guest Host: Krista Dibiaz

---

Episode Overview

This episode of The Clark Howard Podcast focuses on real-world financial questions submitted by listeners, with a central theme of navigating healthcare enrollment (especially for early retirees and those under 65), current implications of Federal Reserve rate cuts, and actionable retirement planning. Wes Moss, investment advisor, offers practical, detailed advice, and shares personal stories to illustrate complex topics. As always, the tone is empathetic, conversational, and clear, empowering listeners to make informed decisions.

---

Key Topics & Insights

1. Navigating Healthcare Enrollment for Early Retirees & the Recently Bereaved

Timestamps: [02:26]–[12:03]

• ACA Enrollment Periods:
  • Current enrollment extends into mid-January for coverage starting the following February.
  • Open enrollment is still available, dispelling the myth that options are limited once the main window expires.
  • Quote:
    "If you're enrolling now through the ACA, it would be for coverage the beginning of Feb. So there's still time." – Wes Moss [01:05]
• Case Study: Early Retiree/Widow ("Rebecca"):
  • Rebecca, a widow in her 40s with two young children, faced COBRA premiums exceeding $2,500/month.
  • Through the ACA exchange, her actual cost reduced to less than $200/month, possibly even free depending on income.
  • The key:
    • ACA subsidies, expanded during COVID, are still significant through 2025 (expected to sunset in 2026).
    • Subsidy calculators like KFF.org (Kaiser Family Foundation) provide personalized estimates.
  • Accurate income reporting is crucial to avoid future payment adjustments with the ACA.
  • Two major resources for navigating ACA and plan selection:
    • kff.org
    • nabip.org – Connects you with licensed benefits consultants for plan comparison and doctor/medication compatibility.
  • Quote:
    "The punchline is she thought she was going to be paying $2,000 or $2,500 a month. The reality is she's going to be paying probably less than $200 a month. It may even be free..." – Wes Moss [03:34]
  • Decision factors include premium, out-of-pocket maximums, coverage of preferred physicians/medications, especially for specialized drugs.
  • Memorable moment: Rebecca’s relief at not needing immediate full-time work due to ACA options [05:54-06:06].
  • Expert tip: If you under- or over-estimate income, the IRS will settle the balance after you file taxes.

---

2. Retirement Timing and Overcoming Healthcare Cost Anxiety

Timestamps: [12:04]–[15:54]

• Listener "Jeannie": 10-year age gap with spouse, fearful of retiring at 60 due to potential high healthcare costs.
• Advice:
  • A robust written (or visual) financial plan dispels uncertainty; if numbers and assumptions are conservative, early retirement is likely safe.
  • Healthcare "fear" can be mitigated:
    • Early retirees often qualify for significant ACA subsidies by keeping taxable income lower.
    • Psychological transition to retirement is a hurdle; incremental or part-time retirement may help adjust.
  • Quote:
    "If you can do it mathematically and if it works out on paper, then I say go for it." – Wes Moss [14:42]

---

3. Principal Protected Notes: Cautionary Takeaways

Timestamps: [15:54]–[18:19]

• Listener Question ("Joy"): Should I use principal protected notes in my IRA?
• Wes's Analysis:
  • Principal protected notes are “financial burritos”—complicated bank-backed structures.
  • Risks:
    • No guarantee if the sponsoring bank fails.
    • Usually no dividend payments (important in long-term returns).
    • Illiquidity: Funds are locked up for 5–7 years, making early withdrawals prohibitively expensive.
  • Psychological “lockup” could backfire compared to simply holding a diversified portfolio.
  • Quote:
    "It's almost like one of these notes is psychologically allowing you to lock yourself up—to put yourself in jail—so you don’t touch your investments, when in reality, if you just don’t touch your investments for seven years, it’s hard to lose money." – Wes Moss [17:35]

---

4. De-Risking and Generational Wealth for "Overfunded" Retirees

Timestamps: [18:19]–[24:10]

• Listener "Rich" in Arkansas:
  • Early retiree; annual spending around $100k, $3.2M net worth (2.7M invested, 66% stocks, 34% bonds), plans for generational giving.
  • Investment balance is prudent; resist the temptation to become too aggressive or conservative based on recent stock market outperformance.
  • 4% withdrawal rule applies solidly here; portfolio’s performance allows for legacy buildup with little risk if the current mix is maintained.
  • Memorable moment: Joyful acknowledgement of Rich’s lifestyle—"Rich plays a hundred rounds of golf a year… they're living the life." – Wes & Krista [20:00-20:14]
  • Quote:
    "You've landed squarely well, just under what I would call the safety zone. That's a great level to be at." – Wes Moss [21:46]

---

5. Federal Reserve Rate Cuts and the Real Estate Market

Timestamps: [26:52]–[35:12]

• Explaining the Fed:
  • The Fed controls short-term rates (the “fuel line” analogy), but not the 10-year bond yields that drive mortgage rates.
  • Even after recent cuts, mortgage rates remain ~6–6.25%—not expected to fall dramatically unless broader economic signals change.
  • Quote:
    "The Fed only controls that really short-term interest rate, the federal funds rate… Mortgage rates are predicated on the 10-year treasury rate." – Wes Moss [27:55]
  • Rate cuts don’t always trickle into lower mortgage rates; long-term rates reflect complex future expectations, not just Fed actions.
  • Market “Goldilocks” moment (not too hot, not too cold), with jobless claims low, household net worth at records ($160T), and resilient consumer spending.
  • Discussion of "K-shaped" recovery: Wealth disparity remains, but aggregate data drives Fed decisions.
  • Advice: Don’t sit idle waiting for drastically lower mortgage rates—high 5s at best are likely in the medium term.

---

6. Social Security: Timing and Strategy

Timestamps: [35:12]–[38:32]

• Listener "Doug" in Ohio: Should you take Social Security at 62 and invest, or wait until 70 for higher payments?
• Summary:
  • Waiting until 70 yields ~8% guaranteed increases per year.
  • Taking early comes with substantial reductions and lost compounding.
  • No “perfect answer”—the risk of dying early means lost benefits, but on average, waiting is optimal unless financial strain dictates otherwise.
  • Quote:
    "If you knew your expiration date, you would know exactly when to take Social Security." – Wes Moss [36:01]
  • Summary rule: Take Social Security when you need it, delay if possible for the higher, guaranteed growth.

---

7. Asset Allocation Across Accounts

Timestamps: [38:32]–[40:13]

• Listener "Steve" in South Carolina: How to keep a 60:40 stocks-to-bonds allocation with multiple accounts (IRA, brokerage)?
• Key point: Always allocate across your full portfolio (“household view”); unequal balances in different account types may require a more aggressive allocation in tax-deferred accounts if other assets are kept liquid.
• Quote:
  "If you have 10 different accounts… you want to look at the allocation of all of those accounts combined to meet what you're comfortable with." – Wes Moss [39:53]

---

8. International and Early Retirement: "Almost Free Freddie"

Timestamps: [40:13]–[45:34]

• Profile: Retiring at 43, moving to Eastern Europe (dream home, pool, palm trees, low living costs), incomes from VA, pending pension, rental property.
• Analysis:
  • Able to cover living expenses comfortably with very low (<2%) portfolio withdrawal rate before pension starts at 50.
  • Paid-off properties and diversified income streams add stability.
  • Quote:
    "If these numbers are the actual numbers, then your lower cost of living, $5,600 is a low cost of living… you are very close to being free, my friend Freddie." – Wes Moss [44:53]
  • Memorable moment: Guessing the mysterious palm-tree-laden Eastern European country, and affirmation of public service: "Thank you for your service, Freddie, both in the military and then as a police officer, putting your life on the line… That's no small feat." – Krista Dibiaz [42:57]

---

Notable Quotes

• On ACA Coverage:
  "It's more common than most people might think… Anyone looking for health care under the age of 65." – Wes Moss [02:26]
• On Visual Financial Planning:
  "There's real power in seeing that mathematically, visually." – Wes Moss [13:15]
• On Principal Protected Notes:
  "It's a fairly complicated financial vehicle where a bank… backs it. And Lehman Brothers did a lot of these back in 2005, 6, 7…" – Wes Moss [16:21]
• On Living Retirement Fully:
  "They're living the life. It's great." – Krista Dibiaz [20:14]
• On Fed/Rate Cuts and Consumer Health:
  "The United States consumer… is a lot wealthier today than they were a year ago, three years ago, five years ago." – Wes Moss [30:58]

---

Resource Links & Tools Mentioned

• Healthcare Cost Calculators: kff.org
• Healthcare Advisors: nabip.org
• The Clark Howard Podcast & Team Clark: clark.com/askclark

---

Final Takeaways

• ACA subsidies remain robust for most through 2025; early retirees or those with sudden life events like widowhood should always check ACA options before overpaying for COBRA.
• Use accurate income projections to maximize healthcare subsidies and avoid tax surprises.
• Early retirement is feasible with conservative planning, controlled spending, and an understanding of healthcare coverage opportunities.
• Financial products like principal protected notes may not be effective for most; understand the tradeoffs in return, risk, and liquidity.
• Waiting for ideal mortgage rates may only delay opportunities—act based on your life, not headlines.
• Social Security timing is highly individual; generally, waiting increases financial security in old age.
• Asset allocation should always be determined “by the household,” not individual accounts.
• With diversified income streams and low withdrawal rates, even ambitious early retirement plans (including international moves) can be achieved.

---

If you found value in this episode, share it with a friend and check out additional resources at clark.com.

Transcript

[Commercial Narrator]

When the holidays start to feel a bit repetitive, reach for a Sprite Winter Spiced Cranberry and put your twist on tradition. A bold cranberry and winter spice Flavor Fusion Sprite Winter Spice Cranberry is a refreshing way to shake things up this sipping season and only for a limited time. Sprite obey your thirst.

[Ad Voice]

You're about to make a trade.

[Krista Dibiaz]

Which u do you listen to? Is it get optioning those options or let's do a little research? Learn [e-mail] TradeSmart. Welcome to Ask an Advisor. I'm Krista Dibiaz here with Mr. Wes Moss, who is an investment advisor.

[Wes Moss]

Yes, that's true. That is true.

[Krista Dibiaz]

And we're going to talk about some really interesting topics today. It's healthcare enrollment system for so many, including the ACA and Season. Yeah.

[Wes Moss]

And system.

[Krista Dibiaz]

Yeah. Oh, Season, yeah.

[Wes Moss]

Healthcare enrollment system. The first enrollment period ended mid December, but now we're in another enrollment period until mid January. So that if you're enrolling now through the aca, it would be for coverage the beginning of Feb. So there's still time.

[Krista Dibiaz]

Okay. And you have a very interesting, compelling story to share with everyone about trying to find healthcare, even if you're well under the age of 65. A lot of people ask us about retirement health care and actually have a question for you about that today.

[Wes Moss]

And there's been a lot of changes in policy and I think it's a confusing period of time of what those supplements might be. The cost of health care is skyrocketed in the last decade. It's a really besides a mortgage. And for some families, even more so than a mortgage is the cost of health care. It's dramatic.

[Krista Dibiaz]

And then we did see a Fed rate cut again a couple weeks ago. And you're going to talk about that and what we're seeing and what the implications of that are. And should we be so concerned every time we hear about the Fed cutting or raising rates?

[Wes Moss]

Right. Or be worried about or waiting for lower mortgage rates? I know a lot of people are waiting for lower rates in order to make a home purchase or move. And I just don't know if that's coming anytime soon. Even though the Fed just cut. Again, talk about that and we.

[Krista Dibiaz]

Of course we'll get to your questions. You can submit [e-mail] ask why don't.

[Wes Moss]

We start with this. And this applies to this is a story I'll share today that it's more common than most people might think and it does apply. Plus, anybody looking for health care under the age of 65. So if you haven't qualified for Medicare yet at 65 and you're an early retiree, then think of this as anybody that has to get coverage before they're getting to Medicare age at 65. So it's any early retiree. But it's also for people that have lost a job and don't want to pay COBRA because it might be super expensive, which it typically is. So anybody that's lost a job, anyone that's lost a spouse, and all of a sudden now your healthcare is kind of up in flux because it was with your spouse's company and now that's no longer, yes, you have the option to pay cobra, but that gets really expensive. And that brings me to a story of someone that I worked with and trying to help through this over the past month or so. Young widow in her 40s, we'll call her Rebecca. And the conversation around financial planning. It started with, hey, how do we figure out your current issue today? We'll talk about retirement in a minute, but let's figure out, how are you paying the bills right now? What are your biggest costs? And for her and her two children, still young, one in elementary, one in middle, the biggest cost was, hey, the COBRA I'm being offered is like $2,500 a month.

[Krista Dibiaz]

And that's her husband, that was her.

[Wes Moss]

Late husband and that was by far the biggest line item in their budget. Even though she wasn't working, she was under the impression that she had to go get a job, a full time job, in order to get health care, knowing it was going to be so expensive to pay out of pocket to continue COBRA coverage. And a lot of people find themselves in this situation. Again, this is a really difficult case because this is someone who's now a single mother widow. But this is anybody who has lost a job. This is anybody who is retiring early and trying to figure out how to get healthcare coverage. So her story, the punchline of it is that she thought she was going to be paying $2,000 or $2,500 a month. The reality is she's going to be paying probably less than $200 a month. It may be even free, depending on how much other income she decides to have or how much she decides to work. And that is the crux of this. And then you get into the world of finding healthcare through the aca, the Affordable Care act. And you go to healthcare, we all have heard you go to healthcare.gov and you look up your state, you either get coverage through the overarching plan, or if your state, like our state, the state of Georgia, has their own plan, Georgia Access, but you still go to healthcare.gov and it takes you to the site. And it's very, very similar. So the policy question, this goes back to the government shutdown a couple months ago. The policy fight was about these subsidies. So what happened is that we had a certain level of subsidies depending on your income, based on the fpl, the federal poverty limit, between if you were anywhere from 100%, so right on the federal poverty line, as far as your household income all the way up to 400%, if you're in that range, you were going to get some kind of supplement. If you were at poverty line or even lower, you're going to get, you may even be Medicaid at that point, but you're going to have very reduced, if not zero, health care costs because the subsidies would be really high. So Instead of paying a th000amonth, you might pay $50 a month or zero. And then those got expanded. Those got expanded during COVID So it made it so that the subsidies were even greater. And this was surprising to see this in real life where you would see people that have retirees who were still not Medicare yet. They're 63 or so, they went to the exchange. They, they had really good incomes. They were, but by no means strapped or on the line of not being able to pay their monthly bills yet. They still got pretty big supplements. And that's what one of the big disagreements now Washington is because those subsidies now essentially sunset at the end of this year. So starting 2026, we kind of go back to what they used to be before they were expanded. They're still significant, though, and I think that's the message I have here today. And they're going to go back to this range of 100 to 400% of the FPL, the federal poverty line. In some states, it's 133% to 400, but it's going back to the way they used to be. So that's where we stand. Back to Rebecca's story. We looked at her expected income and she's going to get some spousal Social Security benefits, and that'll count towards her household income, which will then count towards how much her healthcare is going to cost. But there's two resources that if you're in the situation, that you can use. One is kff.org, it's the Kaiser family foundation, and they have a link that will show you the new 20, 26 levels of how much your healthcare will get supplemented because you'll put in your income, you'll put in your dependents, how many people in the family, what are the age of the kids and your zip code. And this goes by zip code in America. So it's looking at your inc relative to your zip code in your county. And that will show you what kind of supplement you may or may not get. And after putting in this data for Rebecca, I got to the point where it was showing something closer to $190 a month. Way better, obviously 95% cheaper than $2,500 a month, depending on how much, let's say part time income. So what does that mean? One, dramatic cost reduction, huge relief for her and her family. Two, another relief that she might not have to go. She doesn't necessarily have to go back to work full time just to get healthcare or at least right away. And she can choose now to work part time and then supplement that income. Now that gets a little tricky too. How much do you want to work? How much income do you want so that those subsidies either stay in place or they start to go away? You go to kff.org, you put in your income. And this is important when you do this to not to try to be as accurate as possible. Because if you underestimate your income, let's say you say I'm going to make 40,000 will be my total income for the year and you end up with a really big supplement throughout the year, but you end up making 60,000, they will come back and increase. You'll have to pay the difference of what it would have been if your income was in fact higher than you had that you had stated Works the other way too. If you say I'm going to make $50,000 a year and you get some level of supplement, you end up making 25, you can end up getting a credit for your health care coverage at the end, but you do want to be accurate about it. And I love that calculator to give you an idea of what it's going to cost. And again, I'm not in the healthcare industry, so I'm not an expert at this, but I, I've helped a lot of families navigate this, so I think this should be really helpful. And then I talked to a healthcare consultant that does this full time to see if the numbers at KFF were accurate. And it turns out they really were. They're within a few dollars when he ran this through his system. But I Think the other thing to look at would be there's another organization called nabip, which is the national association of its end of benefits and insurance professionals nab, where you can find someone in your area to then not only go through the plans that are offered in your area, but figure out what company and what level of plan makes sense. And it goes beyond just the cost. So if you're in a, in a metro area, you're going to get five to. You may get eight different carriers. If you're in a really rural community, it may be two or three carriers. But even then, Krista, you have to make a lot of decisions on the level. It's, is it gold, silver, bronze, Is it, what is the monthly premium? What's the maximum out of pocket? And then more importantly or most importantly, does the plan that you choose keep the doctors you like and or keep the medications you like? If they're maintenance medications and these are common, any plan should be fine. They shouldn't be expensive. But if you have one of those, I would call them TV prescriptions. Any prescription that you see commercials on regularly, those are the really expensive ones. Those are the injections, those are the biologics. Those are the thousand, two thousand dollars a month medications. Some plans will cover them, some plans won't. So when you go through, either you call someone through the ACA or you get an independent advisor through nabip, they will help you navigate not just the supplement you may get relative to your income, but navigate the plan options and the company you choose to get healthcare from. And it's doable. I said, well, how long would it take if I wanted to start today to get an insurance card? Two to three weeks.

[Krista Dibiaz]

Okay. All right. Well, my heart goes out to your client and anyone else who's in that kind of situation. This time of year especially, it must be so hard. I can't even imagine.

[Wes Moss]

They're really tough.

[Krista Dibiaz]

So.

[Wes Moss]

All right, the equation.

[Krista Dibiaz]

We're going to go to some questions. This one is sort of related. Jeannie in Arkansas says I'm 10 years younger than my spouse. We've saved and saved and saved. Our financial advisor recommended I retire at 60. He believes we have enough funds to support our current frugal and happy lifestyle. My husband agrees. I am fearful of stopping working because I won't have medical insurance coverage or will have to pay very high premiums for five years for worthless medical coverage. Their point is I should stop at 60 because my husband will be 75 years old if I keep working until I'm 60. Five, they think we will miss valuable time to enjoy retirement together. And if I wait until till 65, my husband could be in declining health and not enjoy as much retirement as much, and that we will regret those wonderful years together. Right now is the plan is for me to keep working. How do you know when to retire?

[Wes Moss]

Jeanne I think the simple answer is that if the numbers work, and this is the power of a written financial plan, written is maybe the wrong word here because it's usually a bunch of numbers, but a visual financial plan, and if you're giving them accurate numbers, your advisor and saying, here's our spending approximately to the dollar. But if you're pretty accurate about that, the other pieces of the equation are also their assumptions. We can take, let's say, 4% each year from the balance and never run out of money. 4%, rule of thumb, those tend to really be pretty accurate over time. I've seen them work for three years, five years, seven years, almost 20 years. And there's real power in seeing that mathematically, visually. And if the plan numbers work and the assumptions are conservative. So you're not saying we expect to make 12% per year every year. If we expect to make maybe a conservative assumption, 5%, then I don't know why it wouldn't work out. But you're Jeanne, I think what's happening with you, you've got this age gap, which is a reality. It sounds like you're 60, your husband's 70. It is a psychological barrier and you're worried about healthcare. We just talked about healthcare. The great thing about being in retirement without wage income, you get to really control your adjusted gross income. And that's one really big piece of the equation that people overlook. When you get into retirement, you only need to pull out what you need to spend. So if you only need an extra 30 or 40 or $50,000, and you said you guys live a frugal lifestyle, then you limit your IRA withdrawals, you pull from the after tax accounts, which shouldn't count towards your income unless you have giant capital gains. And you very well could qualify for a pretty big supplement. So that takes care of the healthcare piece. Jeanne, I think the biggest part for you is understanding, yeah, we've got a written plan, two, we can take care of healthcare. But it's the psychological component of saying, gosh, I'm only 60 and I'm going to be retired. Your advisor is right. I think your husband is right, and I think your intuition here is right. By the time your husband's 75, that's a lot of lost years. That's a half a decade of lost years of freedom and happy retirement. And I'm a big advocate. If you can do it mathematically and if it works out on paper, then I say go for it. The only other caveat I would say is if you're still really worried about it, you may want to transition to retirement and work maybe not till you're 65, but work during age 61 or 60, maybe 61, and really try to do it part time and as flexible as possible so you can ease into retirement and then before you completely stop working. But I say go for it.

[Krista Dibiaz]

Jeannie Joy in Pennsylvania says, I'm new to your show. I wish I discovered it sooner. A financial advisor at my credit union recently recomm adding principal protected notes to my traditional IRA strategy. I'm not familiar with these. What is your perspective on them?

[Wes Moss]

I think we had a question similar to this about six months ago. Joy in Pennsylvania. Joy, the principal protected note, it's like I call it a financial burrito. Do you remember this?

[Krista Dibiaz]

Yes.

[Wes Moss]

Think of this as a bond wrapped around a stock market vehicle or an option. So it's a complicated, it's a fairly complicated financial vehicle where a bank, remember these are backed by the bank. So there is no guarantee on any of these. It's just that. And Lehman Brothers did a lot of these I Remember back in 2005, 6, 7. It's a Lehman Brothers principal protected note. Nobody's focusing on the fact of where it came from. It's just, well, I get my. I get to participate because of the stock part of the option. I get a hundred percent of the stock market upside but no downside. Why wouldn't everybody do that? Well, the problem could be that the company behind it ends up having trouble and the whole thing's worthless. So that's the first thing. The second thing is that typically you're not getting any dividends, which can make up a fairly big portion of total return for the S&P 500 within these principal protected notes. Number three, there's a real illiquidity piece of the equation. So once you buy one of these, and maybe it's a five year note or a six or a seven year note, it's really hard to get out of it without losing a whole bunch of money. So the money does get tied up and locked up and it can work out if the market's up over that period of time, then you do usually capture a similar return and you usually are capped at least of getting your money back in most of these notes. And again, there's a lot of different variations on this, but for me, it's a really long period of time and over five to seven years, it's really hard for, let's say even a conservative, especially a conservative asset like a bond ETF or a bond portfolio, to lose money over that long period of time. It's almost like one of these notes is psychologically allowing you to lock yourself up so that you. It's almost putting yourself in jail so you don't touch your investments, when in reality, if you just don't touch your investments for seven years, it's hard to lose money.

[Krista Dibiaz]

Okay, Rich in Arkansas says Wes I retired at 48 and my wife followed three years later. Currently we spent 48. We spent $58,000 a year on basic living expenses, no mortgage, and an additional 10k for golf and 35k for travel. Our net worth is 3.2 million, comprised of a home valued at 450k and 2.7 million invested in a 66% stock 34% bond portfolio. We have enough liquid assets to get us well past age 59 and a half when we can begin to tap our 401ks and Roth IRAs. We anticipate claiming Social Security at age 70, which would net us an additional 86k per year. As you can guess, we find ourselves overfunded for retirement. In fact, since we've retired, our portfolios outpaced the money we spend each year, which means our first five years of retirement were free and our next four years are already paid for. Well, this is a great problem to have. I'm sure a lot of people like that problem. My gosh. I'd like your advice on pursuing a two pronged investment approach. One, potential ways to de risk the pot of money we have for retirement, and two, investing more aggressively with the remainder of our funds to create the generational wealth we anticipate leaving for our heirs and favorite charities. And P.S. we are very happy retirees in excellent health and love to vacation regularly. Golf. We play more than 150 rounds per year plus bike, run, kayak, backpack, volunteer regularly, cook great food, go to the theater and comedy clubs, read, play chess and teach ourselves piano and guitar. Money isn't everything, but it does provide the freedom for us to maximize our enjoyment of these activities and to be there when our family and friends need us. Just like you describe in your Happiest Retirees book.

[Wes Moss]

Rich. I want to hang out with Rich.

[Krista Dibiaz]

I know. My gosh. I Want to be rich.

[Wes Moss]

Rich plays a hundred rounds of golf a year.

[Krista Dibiaz]

Well, I don't know if I want that.

[Wes Moss]

But yeah, that's, that's golf. One out of every three days. That's not too much. That's like pushing the limit, though. That is pushing it.

[Krista Dibiaz]

But they're, they're living the life. They're living the life. It's great.

[Wes Moss]

I think 50 rounds of golf a year is, is a really good number once a week on average. But Rich, I like what you're doing.

[Krista Dibiaz]

I mean, what he's doing is the dream, I'd say.

[Wes Moss]

I don't know if there's any. I should probably know this. These, I study early retirement. We're going to figure out the statistics. But it's pretty rare to have someone, quote, fully stopped working in their 40s. That's pretty rare. I'd say that's one in a thousand. That's a one in a thousand number. Once you get to your 50s, it gets a little bit more common. But here's what I was jotting down as you just rapidly read through these questions and give me no time to really figure them out. But in this one, I think here's what I got. 58 plus 10 plus 35 is 103 grand. That's the spending. I love. That 10k of that is golf money and 3.2 million in net worth, but 2.7 million rich in liquid assets. And you essentially have a 2/3 stock, 1/3 bond overall allocation. Not to mention when you're 70, you're going to get 86 grand a year, which takes care of most of your spending right there. So if I do the math on that 103,000 today, before you're able to get Social Security 103,000 divided by 2.7 million, it's 3.8%. So you, you've landed squarely well, just under what I would call the safety zone. That's a great level to be at. You're, you're not fully maxing out what you could pull out from your portfolio, but you're also not, not using your portfolio. So it's a really nice balance I see you having here, Rich. And you will continue to grow this wealth even if you're, especially if you're taking sub 4%. So it should continue to grow over time. Now, the caveat, I will say, is that you feel as though this has happened to anybody who's done a financial plan in the last five years. They find themselves in this situation, Rich, is that you're ahead of schedule because we plan for 4.5% to 5.5% rates of return. Your portfolio, it's done a lot better than that because the stock market has done better than that. This s and P500 has averaged, call it 15% a year for the last several years, which is really not only is it way above what you projected, but it's also above its normal annual rate of return. Plans over time account for that, that we're going to have a couple we could have really good years above expectations, but then they're meant to also be trying to offset the rougher years where we're making less than we projected. So I wouldn't feel as though you're that far ahead because you need that cushion for some of the down years. As far as becoming more aggressive or not or less aggressive, I like the balance that you're in now. I think that two thirds of your assets are at risk in equities. Those are inflation fighters and that's a really good level to be at. Remember, the 4% plus rule is predicated on having between 50% in stocks and about 70, and you're right there in the middle of that pie chart. So I don't know if I would get any more aggressive to have more generational wealth. I also don't know if I'd be a whole lot more conservative either. So I think your balance is already good. You're following these rules of thumb and even though you're ahead, I think that's just part of planning. Over time we're going to have years where we're beyond expectations and years that disappoint and it averages out over time. And you should still be able to grow that net worth over the course of the next 30 years of retirement and be able to leave your legacy. That's significant.

[Krista Dibiaz]

Okay, so we're going to take a quick break and then talk about the Fed rate cut and Fed rate cuts in general.

[Progressive Insurance Ad Voice 1]

This podcast is brought to you by Progressive Insurance. Fiscally Responsible Financial geniuses, Monetary magicians. These are things people say about drivers who switch their car insurance to Progressive and save hundreds because Progressive offers discounts for paying in full, owning a home and more. Plus, you can count on their great customer service to help you when you need it. So your dollar goes a long way. Visit progressive.com to see if you could save on car insurance, Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states or situations.

[Progressive Insurance Ad Voice 2]

This podcast is brought to you by Progressive Insurance, Fiscally responsible financial geniuses, Monetary magicians These are things people say about drivers who switch their car insurance to Progressive and save hundreds because Progressive offers discounts for paying in full, owning a home and more. Plus, you can count on their great customer service to help you when you need it. So your dollar goes a long way. Visit progressive.com to see if you could save on car insurance, Progressive Casualty Insurance Company and affiliates. Potential savings will vary. Not available in all states and situations.

[LifeLock Ad Voice]

The holidays mean more travel, more shopping, more time online and more personal info in more places that could expose you more to identity theft. But LifeLock monitors millions of data points per second. If your identity is stolen, our US based restoration specialists will fix it, guaranteed or your back. Don't face drained accounts, fraudulent loans or financial losses alone. Get more holiday fun and less holiday worry with LifeLock. Save up to 40% your first year. Visit LifeLock.com podcast terms apply close your eyes.

[Ad Voice]

Exhale, Feel your body relax and let go of whatever you're carrying today. Well, I'm letting go of the worry that I wouldn't get my new contacts in time for this class. I got them delivered free from 1-800-contacts. Oh my gosh, they're so fast.

[Wes Moss]

And breathe.

[Ad Voice]

Oh sorry. I almost couldn't breathe when I saw the discount they gave me on my first order. Oh, sorry. Namaste. Visit 1-800-contacts.com today to save on your first order.

[Wes Moss]

1-800-Contacts.

[Stitch Fix Ad Voice]

Shopping is hard, right? But I found a better way. Stitch Fix Online Personal styling makes it easy. I just give my stylist my size, style and budget preferences. I order boxes when I want and how I want. No subscription required. And he sends just for me, pieces plus outfit recommendations and styling tips. I keep what works and send back the rest. It's so easy. Make style easy. Get started today@stitch fix.com Spotify that's stitchfix.com.

[Wes Moss]

Spotify welcome back to Ask an Advisor. Wes Moss, along with Krista Dibiaz, we're going to dive. Did the Federal Reserve sound exciting to you? Does this seem like a I feel like a ho hum topic?

[Krista Dibiaz]

No, I don't think it's ho hum because it's. I just feels like it's. It's something we all are supposed to care about and it's going to be a big deal. And if the markets move with it, people are anticipating it.

[Wes Moss]

It's like a groundhog. Yeah, you don't hear about it. It still pops its head up.

[Krista Dibiaz]

Right?

[Wes Moss]

On Tuesday, right? You don't hear about it. Oh wait, but there's a Fed meeting and then what did the Fed say? And was it a cut? Was it a dovish cut or is a hawkish cut? What does that mean for interest rates? What does that mean for the stock market? What does it mean for real estate and mortgages? And that's why we cover the Fed, because it does impact everyone. We know that the, the Fed is the driver of the car of the United States economy. One of our listeners wrote in and said it was more like that they control the fuel line. The guy said they control the gas tank, but they do control the fuel line where they open it up, which would be low, cheap interest rates, where money's cheap and easy to borrow. You're goosing the economy or goose in the engine. And then they, let's say they, they taper the fuel line and there's less gasoline, get into the engine, everything slows down a little bit. That would be raising rates. And that' the cycle that we've gone through in the last several years, we've seen we live for a decade with a zero interest rate policy and it really fueled the economy. And then it was one of many things that created this massive inflation. So the Fed had to tighten and tighten the gas line and step on the brake. And to do that, the raising interest rates to slow everything down, everything gets more expensive, harder to borrow. And that's why we've seen some of the lowest housing activity as far as moving. I read an Axios article the other day. We have seen on record the lowest amount of people moving in the United States than we've ever seen on record. Now I don't know how far back they're going. I don't think they were looking at the Oregon Trail days. But as far as in modern economic history it's something like only 11% of people moved, which is on the really low end. And why is because people like Christa very smartly and probably a lot of our listeners here on the Clark Howard show locked in super low interest rates. And those interest rates are there as long as you want to stay on the house and pay it off. Today rates are at six and a quarter to depending on your credit score. But 30 year mortgage rates are over well over 6. And that is a question of when are they going to go down. If the Fed lowers like they did recently, why aren't my mortgage rates not going down? Well, there's a couple of reasons. One, the Fed only controls that really short term interest rates, the federal funds rate, which is, it is the beginning. That would be a short super Ultra short term bond, but they don't have control over what the 10 year treasury yields and mortgage rates are predicated on the 10 year treasury rate. So Fed could lower rates 3, 4, 5, 6, 8 times on the short end of what they call the yield curve. And the ten year treasury could stay exactly where it is, might even go up a little bit because that is more reflective of where we're headed as an economy. And I think that in the last Fed meeting, even though they lowered rates by a quarter of a percent and now the range we're in is this 3.5% to 3.75% range. So not low rates, but also not high. Call these Goldilocks interest rates. That's kind of where we are right now. They were hawkish, meaning that they essentially said, look, don't get used to this. We've lowered rates now several times in a row and we don't really know if we need to do this anymore. That was the message from Jerome Powell. That was the message from the Fed. And there's all the. You'll hear about the dissents in the Fed. Very usually the Federal Reserve all call it 12 voters, all vote the same way. We saw multiple voters disagree with this. So there's dissension in the Fed. Some people don't think we should be lowering rates, some people think we should. And there's a lot of commentary that we should lower them even more. But the reality is it doesn't look like the Fed is ready to cut anymore. So the market kind of got what it wanted, lower interest rates. But hey, don't get used to it.

[Krista Dibiaz]

Don't expect it again.

[Wes Moss]

Right, don't expect it. So why would rates not continue to go down again? Why does the Fed want to lower rates? So to increase the economy, to goose the economy, Open up the fuel line, step on the accelerator. I don't know that we really need that. If you look at some of the economic science here, the economy is still strong. Jobless claims are still very low. When we measure how many people are saying, I just got laid off, that's a really low number right now. Historically, the unemployment rate is still, even though it's crept up a little bit, it's still very low in the, in the mid to low 4% range. That's still low on a historical basis. And we've got things like rents have become more affordable. We've actually seen rental prices on average slowly come down over the last 30 months, almost consecutively. So people will be able to have more affordable rent and Household net worth just hit another record. Something like $160 trillion of household wealth in the United States. That's home equity, it's 401k accounts, it's investment accounts, it's value of your businesses, it's cash. So the United States consumer, the average American family, is a lot wealthier today than they were a year ago, three years ago and five years ago. And all that wealth at some point can be spent. I don't see the consumer falling off a cliff here anytime soon. We've got an enormously diversified economy here in the United States. We've got healthcare, technology, banking, finance, energy, of course, artificial intelligence. You put that all together. We have a very diversified economy here in the United States relative to some other countries that are more one trick. Ponies.

[Krista Dibiaz]

Can I ask you a question?

[Wes Moss]

Please.

[Krista Dibiaz]

So I think a lot of people might say, well yes, the wealthy are getting wealthier, but people who don't have investments, people who are working more blue collar jobs, things are so much more expensive. I can't eat out like I used to. I can't. You know what I mean? I think some people are feeling the squeeze where maybe they wouldn't have before.

[Wes Moss]

But the Fed's looking at the economy as a whole.

[Krista Dibiaz]

I know, I'm just saying, like, I think we should acknowledge that for sure.

[Wes Moss]

At least it's very true. And that's what we've heard so much about. The K, the K shaped economy in 2025 where you have, one group of us is headed higher and wealthier and making more money and having more assets and the other.

[Krista Dibiaz]

Right.

[Wes Moss]

Is actually getting squeezed and their wages are going up slower than inflation. So they're, they feel less, they feel poorer because of that.

[Krista Dibiaz]

Right.

[Wes Moss]

And the Fed does acknowledge all of it. But if you look at the dollars getting spent, it's still, let's call it the, the totality shifts towards that upper part of the K, it's still making up for it. So in totality the economy is doing well even though a lot of people aren't. And the Fed is looking at not overheating the entire economy. Yeah, I think that's, that's their, that's, it's a hard job. They have to thread that needle and acknowledge that the K shaped economy is very real. So what does this mean for mortgage rates? It means to me, yes, rates have come down from seven down to the lower sixes. But as long as we have the totality of the US economy doing fairly well and not headed lower or in retraction, which there's really not a could always have a recession. But the recession odds, another thing we were go back a couple years, we were at a 60% chance of recession. Today those odds are less than 5%. So as long as the economy stays in relatively good shape, the Fed doesn't feel like they need to lower rates anymore. So I just think that it's going to be hard to see mortgage rates go much lower than the 6% level. Maybe we dip into the high fives. So I just don't want folks waiting and waiting by the phone waiting it for the 5% mortgages to ring before they go out and make a purchase because it could be waiting for years and years.

[Krista Dibiaz]

Housing prices have gone down in much of the country, so maybe it is a better time to buy Even though that 6% mortgage might go further. And historically that's not a high mortgage rate. Anyway, we've talked about that too. So Goldilocks, okay. Doug in Ohio wrote into you and said I heard. I hear Clark and Wes recommend waiting to take Social Security until 70 quite often because it increases your payments 8% per year for each year you delay taking it. However, if you die before you start receiving it, all those years of delayed payments are lost. Does it make sense to take Social Security at 62 or at 67 even if you don't need it and invest it? It seems that that would be a better option if you have the self discipline to invest instead of spend it.

[Wes Moss]

Doug, there's no perfect answer here because we don't know when we're going to die. So if you knew your expiration date, you would know exactly when to take Social Security. So the reason that Clark says wait till 70 and I advocate waiting till 70 if you can, is that you're getting a guaranteed increase of almost 8% a year while you wait in order for you to take this money at 62. So we know now you're chopping a third of it off of what it would be at your full age. Then you're paying taxes on it likely and then you're investing it. So you're already starting in the hole. What's the probability of you netting above 8% after taxes and then having to invest the money? It's a low probability when you are essentially given an almost 8% rate of return. It's hard to not take that option. So I would take off the table. I'm not a big advocate of taking it, investing it, might as well just wait and let it compound higher. But the real answer here, and it's a complicated decision and it is different for everyone. There's a unique set of fingerprints that will lead you to the right answer. But you're right. If you don't take Social and you wait, you, let's say a month before your 70th birthday, you've waited and then you die, you collected zero. And that's just the reality. If you live to your 95, then you're better off having waited till 70. There are scores of YouTubers that advocate taking social at 62 and they make a pretty good case. You just two folks. The two brother example. One brother starts at 62 with 1700 bucks a month. The other brother waits till 67, five full years, he gets a higher payment. It's almost 2,400 bucks a month. But they have now collected the exact same amount of money at what age 80? So if you look at that, you say, well, what's the point of waiting? What's the point? The point here is that I would say that if you're doing some real financial planning, you take Social Security when it's most optimized. Meaning that when it makes the most sense for you to take it. Which means you take it when you start to need it. And that to me is optimizing Social. If you can wait till 70 and you think you have a lot of longevity and you're going to live to your 90s, absolutely wait. But if not taking Social Security is damaging beyond 4 or 5, let's call it 5 or 6 or 7% withdrawals from your assets, then it may make sense to start taking Social Security earlier. But again that is situational and there's no perfect answer for anyone.

[Krista Dibiaz]

Okay, Steve in South Carolina says I have a question on asset allocation. I'm recently retired with $1.6 million in a pre tax IRAs and 400k in a post tax brokerage account. Of that 400k I keep 250 in dry powder and the rest in fidelity zero funds. Between our pensions and Social Security our essential expenses are met. My portfolio funds non essential expenses. If I want to maintain a 60:40 allocation between stocks and bonds, do I consider the post tax accounts as well? If I do, it pushes the pre tax IRA more heavily into stocks due to the amount I keep dry.

[Wes Moss]

You're right Steve. That's how you do want to look at this? Look at the entire amount. If you want to have your overall allocation 60% in stocks, you're right because of the 250 you have in your dry powder. Out of 400. That brokerage account is 62% in the conservative side. So it's essentially a 40% equity, 60% bond cash an account, but it's a smaller account. That means your $1.6 million IRA should then balance that out. And I don't know the exact math here, but that's. It's more likely that that'll be closer to 65 or 70% in equities and 30% fixed income. Put the two together and then you've got the allocation that you're looking for. So yes, combine all different accounts or anybody else in the same thought process. If you have 10 different accounts and three IRAs and a Roth for you and a brokerage account and your and your spouse does as well, you want to look at the allocation of all of those accounts combined to meet what you're comfortable with.

[Krista Dibiaz]

Okay. This came in from Almost Free Freddie in Illinois.

[Wes Moss]

Almost Free Freddie.

[Krista Dibiaz]

Hi Wes. I'm planning to retire early next year in July of 26 at age 43. I'd love your thoughts on whether my plan has any blind spots. Here's my current picture. 457 deferred comp. 330k invested in the Vanguard Total Stock market. I have a Vanguard Roth IRA with 140k. Do you? I don't know. I'm not going to read the investments unless you want.

[Wes Moss]

Yeah, just the values.

[Krista Dibiaz]

A savings account on track to reach 350k by July of 26. A primary residence paid off valued at 450k and a rental condo that's paid off valued at 200k rents for 1720amonth. I'm a disabled veteran receiving about 2000amonth in VA benefits. I plan to sell my primary residence when I retire, but keep the rental condo. My wife and I are planning to move back to Eastern Europe where we already built our dream home on land we purchased a few years ago. Pool, palm trees, the works. That sounds awesome. The property.

[Wes Moss]

Palm trees in Eastern Europe. What is this?

[Krista Dibiaz]

The property is worth about 600k. The cost of living is much lower and our family is there. Our quality of life would be much better. Better there with no mortgage or car payments. We'll ship two cars from the us. We can comfortably live off the condo rent and VA income. I currently work for a major city police department and will have 21 years of service at retirement. I'll become eligible to collect my pension at age 50, which was estimated to be around 5,600amonth.

[Wes Moss]

That means I'll have about seven years between retirement,600amonth, Krista. That's the key. Okay.

[Krista Dibiaz]

That means I'd have about seven years between retirement and the start of my pension. The numbers seem to work and I feel both excited and a bit nervous. Am I missing anything here? It almost feels too good to be true.

[Wes Moss]

Almost Free Freddie. I want to pull up a map first of all and try to figure out. I'd love. Freddie, don't tell us where it is, but I'd love to hear from our audience where they think that is Eastern European Europe with palm trees and the coast.

[Liberty Mutual Ad Voice]

What could that be?

[Krista Dibiaz]

Croatia.

[Wes Moss]

Yeah. Well, this is the other thing I love about Freddie, is that I don't know why. This is almost like a Dear Abbey column where we're getting a name that is relative to the question. Almost Free Freddie. I could see us doing more of that as a listener. So if you're maybe like Randy.

[Krista Dibiaz]

Yeah.

[Wes Moss]

No. Roth Randy. Or Social Security Seth. I don't know. But anyway, I think these are great. So feel free to do that because it's a nice way. It's probably better than changing a name when you're writing something because you want to keep anonymous about it. So I love the.

[Krista Dibiaz]

I just want to say also, thank you for your service, Freddie, both in the military and then as a police officer, putting your life on the line every single day. That's no small feat.

[Wes Moss]

God bless you, Freddie. And yes, thank you for your service. And you do. It is not too good to be true because I do see service members because you have either pensions or, in your case, VA disability, and then you're going to start collecting more money at a pretty young age. You see a lot of early retirees that are service members. That is one of the benefits of taking that as also a career path. But I'm looking at the assets here, and the key that you said, Krista, is the $5,600 is the spending that they would like to have in some unknown, magical Eastern European country that we can't figure out what it is. But the assets, if you sell the primary residence in America, which is about 450, and you take the 330, the 140 and the 350, you will have about a million, too. Now, some of that it sounds like. Well, and they already have a property over there that's already paid for.

[Krista Dibiaz]

Yeah.

[Wes Moss]

So that is going to. That's essentially your liquid money is going to be in this 1.2 range at least. So then you've got your. Before you get it sounds like your full pension you have 2,000 in VA and you have $1,700 in rental income. So that's 3,700. And you need 5,600. 3,700 minus 5,600. Your gap is, let's call it less than 2,000, but it's 2,000 bucks a month or 24,000 a year. 24,000 a year divided by 1.2 million is 2% a year. So you only need Freddie about 2% withdrawal rate on your assets, which the income alone, even on a balanced portfolio with equities and fixed income is going to probably produce more than 2%. So just your dividends, dividends or interest or distribution. So just a cash flow from a portfolio without taking anything would cover that monthly gap. So to me it sounds like it's not too good to be true. If these numbers are the actual numbers, then your lower cost of living, $5,600 is a low cost of living. A paid for house and then a bunch of pensions that kick in with a $1.2 million supplement. Again, I don't know the cost of living, where you're going and how realistic that is, but if that's true, then you are very close to being free. My friend Freddy.

[Krista Dibiaz]

Love it. Awesome. Well, happy holidays to everyone. We will be back next week with another show but I hope that you enjoy your Christmas if you celebrate. And thank you so much for being with us, listening, watching and we hope that you'll subscribe and share this episode with a friend if you found something useful. Thank you, Wes.

[Wes Moss]

Thank you, Krista.

[Krista Dibiaz]

Merry Christmas to you.

[Wes Moss]

Merry Christmas.

[Krista Dibiaz]

Have a great day.

[Wes Moss]

Limu Emu and Doug.

[Liberty Mutual Ad Voice]

Here we have the Limu Emu in its natural habitat helping people customize their car insurance and save hundreds with Liberty Mutual. Fascinating. It's accompanied by his natural ally, Doug.

[Wes Moss]

Uh, Limu is that guy with the binoculars watching us.

[Liberty Mutual Ad Voice]

Cut the camera.

[Progressive Insurance Ad Voice 1]

They see us.

[Wes Moss]

Only pay for what you [e-mail] Liberty Liberty Liberty Liberty Savings Ferry underwritten by Liberty Mutual Insurance Company and affiliates. Excludes Massachusetts.