← The Stacking Benjamins Show
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- [00:00]
Joe Saul-Sehy
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- [01:20]
Doug
What a filthy job.
- [01:22]
Jeremy Kyle
Could be worse.
- [01:23]
Doug
How could be raining Live from Joe's mom's basement, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor Doug. And how's your retirement plan coming along? Looking for a succinct step by step approach. We'll outline five steps to a better plan on today's show featuring CFP Jeremy Kyle. And in our headline segment as mom says the future is now, money management is a changing as T. Rowe Price and Goldman Sachs join forces to market Goldman Sachs. I heard that too.
- [02:17]
Joe Saul-Sehy
Goldman has some socks.
- [02:19]
Doug
Why did I? I said the word. I keep on moving on with the rest of the sentence and in my head I'm hearing myself say, why'd you say soc? That's not socks. OG is going to say, why'd you say socks?
- [02:29]
Joe Saul-Sehy
Well, keep bringing it man. Let's go.
- [02:31]
Doug
Okay, I'm going to back up and say and Goldman Sachs join forces to market more investments to you. But are these in your best interest? We'll share. And speaking of share, I'll also share a talk talk minute and then I'll share some incredible money themed trivia. I'm killing it today, aren't I? And now two guys who still owe me for the last round of ice cream plus interest. It's Joe and.
- [02:57]
Jeremy Kyle
Oh, ja.
- [03:00]
Joe Saul-Sehy
Hey there, stackers. Welcome back to the party. It is the Stacky Benjamin show. We're super happy that you're here. Sit back and relax and get your retirement game face on. Because OG we've got a new friend that I made at fincon upstairs talking to my.
- [03:16]
OG
Finally made a friend, Doug. I finally made a friend over these years. He finally got one friend at fincon.
- [03:23]
Joe Saul-Sehy
It's weird when you go up to people at fincon and you say, will you come down to my mom's basement and talk to me? Like, it's just. I don't know. I don't know what is that?
- [03:32]
OG
Sounds great.
- [03:33]
Joe Saul-Sehy
Why that doesn't garner more of a response, but. Jeremy Kyle is a certified financial planner in Milwaukee. He's also the host of the Retire Today podcast. He's got this great simple framework to make you think about the five steps to retirement. If you're new to retirement planning. You know what? I think that his first step is going to surprise the hell out of you. It's gonna be super fun. Can't wait for that. But let's introduce you to the team who's here with me. You already heard Doug's voice and the other voice you heard was my partner. OG is here. How are you, brother?
- [04:08]
OG
When you say the team, I think of the Bo Schembeckler.
- [04:11]
Joe Saul-Sehy
The team.
- [04:11]
Doug
The team. The team.
- [04:13]
Joe Saul-Sehy
We want a stacking. Benjamin's man doing the stacking. Benjamin's open.
- [04:16]
OG
Yeah, you probably don't know that whole bit, Joe, because you're a green and white fan, but I know Doug does. I absolutely do the boat.
- [04:24]
Doug
Absolutely.
- [04:26]
Joe Saul-Sehy
I have a tick tock minute related to that that was sent to me. Well, yes, related to football might be a little respite from financial talk right in the middle of the show, but super great and sent to us by our friend Steve. Hey, we're gonna have Jeremy coming up in a second. Jeremy, as I mentioned, is the host of the Retire Today podcast. He's also the face behind the Mr. Retirement YouTube channel. He's been a financial planner, CFP, CFA, CIMA, CLTC. He's got them all. OG he's got all the seas, all the stuff. He practices in Milwaukee, Wisconsin, where a good friend, Emily, Guy Birkin lives.
- [05:06]
OG
Home of the Brewers.
- [05:07]
Joe Saul-Sehy
Yeah, home of the Brewers. Bam. Brewers had a great baseball season this year too. We're about to hear from Jeremy in a second with five steps toward your retirement plan. But before we do that, we have some sponsors help us Keep on keeping on. You don't have to pay a dime for any of this. Goodness. So we're going to hear from them. And then Jeremy Kyle joins me at the card table to talk retirement planning. This episode is sponsored by Navy Federal Credit Union. Buying a car could be like a long road trip. There's negotiating prices, lots of fees and a difficult process. But with the auto loan from Navy Federal, you're on the highway to higher savings. We want our members to save more on their next auto purchase. That's why we offer great rates, military discounts and pre approvals that are good for 90 days. Plus we offer most decisions in seconds. You could even get 200 when you refinance your auto loans from another lender with us. So if you want to save more on your next auto purchase, learn more and apply for an auto loan@navy federal.org Autoloans Navy Federal Credit Union. Our members are the mission. Navy Federal is insured by NCUA Credit and collateral subject to approval. Terms and conditions apply for military discounts. Refinance loan must be at least $5,000 to be eligible for the $200 terms. Conditions apply. Visit Navy federal.org autoloans for details. Huge savings on Dell AI PCs are here and it's a big deal. Why? Because Dell AI PCs with Intel Core Ultra processors are newly designed to help you do more faster. It's pretty amazing what they can do in a day's work. They can generate code, edit images, multitask without lag, draft emails, summarize documents, create live translations. They can even extend your battery life so you never have to worry about forgetting your charger. It's like having a personal assistant built right into your PC to cover the menial tasks so you can focus on what matters. That's the power of Dell AI with Intel inside with deals on Dell AI PCs like the Dell 16 plus starting at 749.99, it's the perfect time to refresh your tech and take back your time. Upgrade your AI PC today by visiting Dell.com deals that's Dell.com deals. Super happy. This gentleman's coming down the stairs. It's about time we got him here. I've been enjoying his podcast. Jeremy Kyle joins us. How are you, man?
- [07:42]
Jeremy Kyle
Doing all right, Joe, how you doing?
- [07:43]
Joe Saul-Sehy
I'm doing great and it was so good to see you recently in Portland, Oregon. I'm like, I know that guy. And like, I went up to you. I'm like, I. I've been loving your show lately, man.
- [07:53]
Jeremy Kyle
Yeah, I appreciate it. And you're telling me that one of your favorite episodes, you're listening to it in the shower. So I'm glad it's not a two way media.
- [08:02]
Joe Saul-Sehy
My ability to make nice to meet you awkward Jeremy is phenomenal. Like I'm very good at it.
- [08:08]
Jeremy Kyle
I'll never forget it. And now the rest of us won't forget either.
- [08:12]
Joe Saul-Sehy
I'm sure all of our stackers. Glad they heard that part. You know, I want to start off with this current project of yours. Not the podcast, but this idea of Retire Today, which is the name of your new book and certainly Stackers. We're not going to sell you on Jeremy's book, but I do want to use it as a backbone for our discussion. If somebody's listening to this and they're 35 years old. I've known you work for a long time, Jeremy. Retire today. Why today? Even if it's going to be 20, 25 years in the future. Why is the word today in the title?
- [08:45]
Jeremy Kyle
Yeah, well, I say retire today because it's all about taking control of your retirement today. And if you start early 6am you might be able to clock out at 5pm and be done with it if you follow the steps. But most people, I'm guessing it's all about let's just take control of our retirement today. And I share a story in the book of someone who came in just completely flustered. They just took a job paying them $20,000 a year more because they felt like they had to, they had to take this job that they hated so they can make their retirement work down the road. I walked her through the steps that you take to control your retirement and she ended up quitting the job, kept on working for three more years because she loved what she was doing with her normal job. But it's all about taking control of your retirement today.
- [09:29]
Joe Saul-Sehy
It's funny. Have you seen the statistics that the average person spends more time planning their vacation than they do planning retirement?
- [09:37]
Jeremy Kyle
I've seen that. I've got that quoted in the book somewhere. So you and I are reading the same resources. That's exactly it. And I'll butcher the exact numbers, but it's something like let me take a look at my 401k for less than an hour a year, but let me plan out my car purchases and my vacation for hours upon hours per year. A little more impactful to figure out what you're going to do for the last 30 years of your life. Perhaps worth putting some time into it.
- [10:00]
Joe Saul-Sehy
Well, and it is. And you love this. You can tell your enthusiasm for financial planning. I love financial planning, which is why we do the podcast. Even for somebody that's not a money geek like you or me, Jeremy and I haven't been a financial plan in a long time, but it was really fun to sit down with somebody and to have them start dreaming about what could my life be when I take control? Like, what are the cool things that I could do that I'm not doing right now? Like, it truly is a lot more fun than planning the next car purchase, I think.
- [10:29]
Jeremy Kyle
Yeah, and that's exactly it. It's controlling the things you can control. I think a lot of people try to control the things they can't control, like the stock market or the next election. But you can control your dreams. You can control whether you planned or not. You can control how much you're going to spend and how much you save. I mean, you focus on the things you can control. I think you have a lot better outcomes and a lot more fun doing it.
- [10:49]
Joe Saul-Sehy
Well, you see a lot of people when they dig into retirement planning, you, by the way, have a five simple step process. We're going to go over this, stackers, Jeremy and I, so that you get an idea of the five steps. But most people think when I first opened this book, I'm like, okay, he's going to start with investing, right? Because you got to invest for retirement. You don't start there at all. Your first step is spend. Why do you start with spend? I mean, don't get me wrong, I'm a spender at heart, dude. Why do you start with spending money and not investing money?
- [11:21]
Jeremy Kyle
Well, you got to figure out what you're solving for. I'm kind of a math geek. I'm an Excel spreadsheet geek. And a lot of times you hit the solve for button. What are you solving for? Are you solving for a million bucks? No, you're solving for how much money do you need coming into your checking account? And there's really two parts of it. One is the how much, and the other part is the how long. So as you read through the book, you say, these are the five steps Jeremy put together. The next chapter says, well, actually, you ought to start with step zero, which is figuring out how long you might be living in retirement. That's a number. That's probably the most important number to your retirement math equation is how long will you be spending retirement? So getting that number correct is a big key part of it. But I start with number one of spending, because that's what you're solving for. You're trying to make sure you have the money that you either want to spend in retirement or maybe that you can only afford to spend in retirement. You should know that ahead of time.
- [12:14]
Joe Saul-Sehy
Can we start off with this how long idea? Because you said you need to get that number right. Obviously. I mean, if I had a hotline where I could find out what that number is. But how do I kind of get in the ballpark, Jeremy. Of scoping out the right time frame ish toward how long I'm going to live?
- [12:31]
Jeremy Kyle
Yeah. So I call it the retirement longevity number instead of your life expectancy because there's two parts of it. It's the beginning of your retirement, it's the end of your retirement. And it's easier to figure out the beginning of your retirement. On average, somebody retires three years earlier than they expected. So if you've got your spreadsheet going right now, go ahead and make your retirement date three years earlier. On average. That's when people retire. But the end of retirement part of it is you don't want to think about it. The other part is you think about it incorrectly. A lot of people feel like, okay, my life expectancy is a certain age and that is like a certainty. They think of life expectancy like death certainty. That's not the case. That is just the midpoint of all the probabilities that you might be out there for how long you might live. So number one, get that correct. Most people get that wrong. So go to a place like longevityillustrator.org to get the correct number. But then have the correct understanding of this is just the midpoint. This is not the exact certainty time of it. And as you're doing your planning, think about what happens if I don't make it to that number. Well, how does that affect me? How does that affect my family? And then think about what happens if I do make it past that number. Because half the time you'll make it past half the time, you'll die beforehand. And you want to think of the whole spectrum of how do my decisions affect me and my family if I'm before or after that number, that life expectancy number.
- [13:52]
Joe Saul-Sehy
I love these what ifs, pondering these what ifs just because I feel like the longer we ponder it, the stickier our plan gets, the more we're going to stick to it because we have thought of all the worst case scenarios. But I love this idea of just being a little thoughtful around what's the timeframe by the way three years earlier. Why is that? Is it we're not healthy enough? Disabilities?
- [14:11]
Jeremy Kyle
It's a lot of reasons. Center for Retirement Research in Boston College, they do these numbers all the time. Employee Benefit Research Institute, they do these studies all the time. And just on average, you retire three years earlier than you expect. If you ask a 55 year old, when do you think you'll retire? They'll tell you 65. But when you ask a 65 year old, when did you retire? They'll tell you 62. And I think a lot of it has to do a bit with your health, a bit with your parents health. You're 62, your parents might be 90, and you're thinking, I'm going to take the time to help them out. Also, Social Security kicks in at 62 if you want to, and that's a big temptation. Another thing I find lately is you lose your job at 62 and you think, you know, I'd rather be retired instead of unemployed. Or you get a new boss who's younger than your kids and you say, that's it, I can retire. I don't want to deal with this anymore. So you go ahead. Lots of reasons. But quite often, on average, you retire three years earlier than you expect. So you got to be ready for it three years earlier than you expect. And if you do the math, you might figure out, wait a second, why do I need this extra three years? I've made myself ready to retire three years early. Let's go ahead and do it.
- [15:16]
Joe Saul-Sehy
I love that thing about the bad boss and just the ability through savings to say, you know what, I'm done. I'm sorry, I'm not going to play this game. You know, you were talking about starting off with spending. So we're solving for how much are you going to spend every year, which drives everything. I like this approach so much better than the 4% rule. Now what? The 5.2% rule, Jamie. Because I feel like, Jeremy, that everybody starts off with how much can I spend? But if I start off with what I truly want to spend, we go back to thoughtfulness in your financial plan again, which I think again makes your plan a ton stickier. If I'm not just mindlessly spending money. I don't know, do you feel the same about the 4% rule that we shouldn't be spending so much time on this number?
- [15:58]
Jeremy Kyle
I like the 4% rule. And then it gives you a target like you're 35. Like as I mentioned earlier, okay, how much do I think I need to Retire. Of course, the 4% rule ignores all kinds of things like Social Security and taxes. And also I've just read the recent book, like you said, it's a 4.7% rule.
- [16:14]
Joe Saul-Sehy
Right? Right.
- [16:15]
Jeremy Kyle
And right in the book, Bill Bang and the, the author, the founder, discoverer of the 4.7% rule now says, this is an ongoing thing. And that's the whole point of what I set the planning together of. This is an ongoing thing where you should figure out ahead of time what is it you might be spending in retirement. But then every year, take a look, what did I spend in retirement? What am I planning to spend the next year? You got a course, correct? Along the way, I mentioned I'm a math guy. I'm kind of a cash flow corporate finance geek in a way. And a lot of people think of it like, oh, I just need 100 grand a year, whatever the number is. No, you need different specific things. Like you need your lifestyle spending amount. What is it you're. You're spending on restaurants and having fun. And every year you need to figure out what your vacation budget's going to be. You need to take a look what your tax might cost. You got to take a look at your health insurance and your health insurance costs. They'll change over time. Right before 65. After 65, your health insurance costs are wildly different. So you got to really have some different budget line items in there. And then you can see, okay, how did I do on this budget for what I'm spending in general and what I'm spending on health insurance, travel, house renovations, on taxes, things like that.
- [17:23]
Joe Saul-Sehy
The people that were really good at saving and planning, do you find that they spend less money or more money than they thought they were going to when they were doing their planning in.
- [17:33]
Jeremy Kyle
General, you spend a whole lot more the first year you're sitting around the first year, you're either taking all the vacations you've been planning to take, but you haven't had the time to do it, or you're sitting around your house and you're looking around thinking, okay, I gotta update that. I've got the time to go do this project, that project. So you often spend more. I'd say everyone, virtually everyone, spends more the first year. So that's a bit of a shock. Like, wait a second, I'm spending more than I expected. But what's interesting too is that the people who are worried about, will I have enough? The answer is usually yes. If you've taken the time and you're actually saving the big problem oftentimes is you hit retirement and you realize you have more money than you needed. And it's like, wait a second, what do I do with all this kind of money? And that's what the research rules shows, especially if you're following this 4% rule. 4% rule is based off the absolute worst time in history out of the last hundred years. Okay, well, 99 times you did better than that. And so a lot of times, if you're trying to do like a Monte Carlo approach and you're saying, I want to get this 99% certainty that I'll have enough, well, what that really means is 99% of the time you didn't spend enough, you could have spent more. And I think that's more of a failure than maybe you didn't have enough throughout your retirement.
- [18:42]
Joe Saul-Sehy
The second spot that you talk about, once we know what the target is, how much we're going to spend in retirement. Step two, you call make. What does make mean?
- [18:53]
Jeremy Kyle
Yeah, just because you stop working doesn't mean you stop making money. And Most everyone, nearly 100% of Americans, will have Social Security. I'm in Milwaukee, Wisconsin. There's a lot of old line type of firms that still have pensions, and so you might still even have a pension. And you get these decisions, right? You get to show up one time quite often to Social Security or online and make that decision about Social Security, and you never get to change it again throughout your life. So it's not just a throwaway decision. It's there to figure out, how do I get the most out of Social Security? And especially with couples, a lot of people get that wrong. There's a lot of research. Dr. Larry Kotlikoff talks about how people in general, couples in general, lose out on $180,000 over the lifetime. Yeah, it's a huge dot amount. Right. So these decisions, it's like you got 100 grand in your one account over there, your Social Security. Like, you check a box, you could lose 100 grand or 200 grand because you checked the wrong box at the wrong time. So being thoughtful and thinking through what's the best choice with my Social Security is a huge part of it. And that's what you want to do ahead of time. You want to figure this out ahead of time. And you don't go with what your brother told you or the person who retired from your company about a month before you tells you. Those are all myths. I think you ought to base things off of math. I say do math based Retirement planning, don't do myth based retirement planning. Figure this out for yourself.
- [20:12]
Joe Saul-Sehy
It's funny, I've seen contradictory advice on when to take Social Security. So let's go through a couple of these. Number one is most the CFPs, Jeremy, that you and I know say take it later because the fact that the math, the compounding on that number, if you wait is a much bigger number. So if you can. But then there's this incredibly popular woman on Tik Tok. Immediately my eyes try not to roll. But she says, and I think she makes a good point, she's like, you don't know how long you're gonna live and when you delay, delay, delay, delay. She's like, I say take less and take it at age 62 because then you've got the bird in the hand. You know what you have, and sure it's a smaller number, but now it's yours and you can pocket it. How do we begin to parse whether we should wait and go with that math based approach because it's more or the woman on TikTok approach, A bird in the hand beats nothing later on.
- [21:02]
Jeremy Kyle
Yeah, well, it's math will win in my mind. I say you ought to learn the math, do the math and follow the math. But most people don't even bother learning the math. How can you make this decision? You got actuaries involved, you got finance geeks involved. There's a lot of stuff that goes into it. I think you ought to break it down, make it a little bit more simpler. But before you make a decision, actually do some math. And the first step is to figure out what is your life expectancy. Most everyone gets that wrong. So go out and get it the correct number. Go to longevity illustrator.org back to that same spot. You just go right there. Figure out how long you might live. A lot of people will take their Social Security early because they say, you know, what are the odds I'll actually make it to this break even point. A lot of people actually have done the math and they've figured out what they think is their break even point. A lot of times they hear 80, they say, you know, what are the odds? They throw their hands up in the air like, what are the odds? Great, I'll show you the odds. Go to that website and you'll see the odds that you can make a datey or if you're a couple and it's the higher benefit that's sitting around paying into your checking account, whether you're here or your spouse is here and so it's not the odds of how long you live, it's the odds of how long one of you might live. And when you run the numbers quite often those odds are like 70%, 80%, 90%. So don't just throw your hands up in the air like what are the odds? I'll never be able to figure it out. You can figure that out in about two minutes and then you'll know the odds. And those odds might be 80%, 90% for a couple. It's like going into casino where you win 90% of the time. You would never walk out. But oftentimes people are going into Social Security, they're walking in saying I'm worried about if I don't make this thing work and it's only going to happen 10% of the time and then they file for Social Security too early and you might want to file for Social Security. But actually do the math first. Figure out if it's the right thing for you.
- [22:43]
Joe Saul-Sehy
I'm stackers going to link to when Ted Dittersmith was on the show and Ted Jeremy was a guy who's really passion about how we should teach math and the subjects we should teach in one is probabilities. Like there's a bunch of stuff we learn in math that we don't need but understanding probability better. To your point earlier about what's the math that we can figure it out fairly quickly with just a couple websites. That's the math around Social Security. You mentioned that in some legacy cities you're a Milwaukee guy. I'm originally a Detroit guy. Lots of pensions still in Detroit. For somebody that has a pension available and hasn't yet looked into the different pension options they have available, how do I start to parse out what the best pension option might be for me?
- [23:26]
Jeremy Kyle
Yeah, the first step is to actually just get the info. Most people when they come to me, they say I figured out my pension. I looked at the info of what if I take it today or what if I wait one year and then take it a year from now. That's not all the info. I've got several clients that some big names firms in Wisconsin where you could retire today at 55 and you could wait to take your pension to age 70. I'm not saying you should wait to take your pension to age 70, but if there's 15 years of options, I'd want you to look at all 15 years of options before you make a decision and you might go through and say yep, it's the right choice. I'm taking the pension right here at 55. But quite often you'll see. Wait a second. There's some weird things that happen with this pension. If I wait this extra year, I make 10% more. I've seen it where you wait one extra year, you make 16% more. Right. That's double what Social Security is going to increase you over one year. And until you know the math, you don't know what the best thing is for you to do. So it's not with the pinch. And a lot of people, I say they make two mistakes. The first is what I just mentioned, where they just think the only options is, I quit today and I take it today, or I work one more year and I take it immediately. The option is you, you stop today or whenever you want to stop. But what if you wait a year, wait a year, wait another year, keep on going with your pension?
- [24:40]
Joe Saul-Sehy
Could be a whole separate income stream than when you retire.
- [24:43]
Jeremy Kyle
Yep, that's exactly it. And until you figure out all your options, you don't know which one's going to be the best for you. The other thing that happens with the pensions, it's like, oh, I had this old pension from way back when. So they just, it's kind of like throwaway money. They just click a box, whichever it is, oh, let me take the monthly amount or let me take the lump sum, big payment up front out of it. Because they, they think it's kind of like throwaway money. I wasn't expecting that. Well, I've seen them worth 50 grand, 100 grand, 200 grand of this pension. And if you can check a box and make it worth more or worth less, I'm guessing you'd rather take a few minutes, do the math and check the right box to give you fifty grand, a hundred grand more, instead of doing the opposite.
- [25:22]
Joe Saul-Sehy
And it's funny stackers, because in the past when I would do this, way back when, Jeremy, and it sounds like based on your answer, it's still the same. You and I would love to tell people, hey, this option's right all the time. But the math from company to company was grossly different. It sounds like it's still the case.
- [25:38]
Jeremy Kyle
Yeah, it's different from company to company. It's different from year to year. A lot of the pension math is based on current year interest rates. It's like they calculate it in a negotiation a couple years ago, but then they're applying a formula based on this year's interest rate. So you've got to take a look to see Is it worthwhile to take it now or take it later? Is it worthwhile to take the monthly amount or take the lump sum amount? You don't know until you do the math. I think you ought to do the math part of it. And there's also one thing to keep in mind. When a financial advisor is telling you to take the lump sum pension, they usually get paid on that. There's perhaps an annuity or they're managing more of your money. When the financial advisor says, yeah, I've done the math and take this pension as a monthly amount, then they're not making any money off of that. And so just keep in mind there's often an incentive. If the financial advisor is telling you to take the lump sum and invest it, that could be the right case. But know that there's a financial incentive for them to suggest you take the money out as a lump sum and invest it with them.
- [26:34]
Joe Saul-Sehy
I think a great piece to start with this math and whether your advisor is just trying to manage more of your money, Jeremy, it is like, hey, bring over the lump sum. That'd be great. Is, what rate of return do I need to get on that money to equal this monthly payout? And if it seems fairly easy to beat, then certainly take the lump sum. If it would be a stretch to beat it, well, then why would I risk money in the financial markets? At least that's the way I see it that I would need to know at the very least that calculation, hey.
- [27:07]
Jeremy Kyle
Figure out what's that return calculation. But it's also a bit of preference. You might be someone that wants to take a chance at beating what the pension might be promising to you. Maybe you just say, I like that solid monthly amount coming in. It's really a preference of what you prefer. It is funny though. I talk to some people sometimes and they say, I want that lump sum of money. And I say, what are you going to do with it? I'm like, I'm going to go put it into the market and do like a 6040 portfolio and see how it goes. Well, if you look into the pension, they're investing in like a 6040 portfolio without any management fees. So they're kind of doing it already for you on your behalf. So it is interesting. What are you going to do with the money? And it comes down to preference. But also you got to do the math first. You don't know whether you're making a good decision or not until you've thought things through and you see those numbers in front of you.
- [27:54]
Joe Saul-Sehy
I think though, part of evaluating that advice though, is to begin with that number. What's the rate of return that I would need? I like it because then I'm getting a little bit of an idea about whether this advice makes sense or not. Step three. So we went through. We start off with how much money we spend. Second, we look at our stream of incomes. Coming in third is the word keep. What does keep me?
- [28:14]
Jeremy Kyle
Yeah, you want to keep more of your hard earned money and you will be paying taxes in retirement. You're paying taxes right now, most likely. And what most people don't realize is you hit retirement, you have far more control over your tax situation than you did beforehand. You're working, you get your W2, you give it to your tax person, you plug it in yourself and there's maybe some little things you can do on the margins, right? HSAs or IRA contributions. There's like a little bit you can do. You hit retirement and everything just opens up. You've got all these different accounts and you're not being forced to take out an account from one or another. You could take money from your traditional account or your Roth account or your brokerage account or your savings account. Those are four different accounts and four different tax situations. And you get to choose which accounts you take out the money from. When you get to choose, do I take money out in December or January, and that's two different tax years. There's all these levers you get to pull where if you are thoughtful on when do you take the money out and when do you pay the taxes on it. I found quite often you can lower your lifetime tax bill. And hey, if you're paying less in taxes over your retirement, that's just more money that you get to keep.
- [29:18]
Joe Saul-Sehy
I feel like this is a spot, Jeremy, where for our younger stackers, you can set yourself up really well with a little bit of tax diversification ahead of time. Like what kind of an account as a CFP do you want to see people have? What type of tax diversification do you want to see people have if they're doing this the right way to give themselves the most flexibility in retirement to maximize those tax brackets?
- [29:41]
Jeremy Kyle
Yeah, I like what you're calling it tax diversification. It's not just about different stocks and bonds. It's how will you save or pay taxes now and how do you save or pay taxes later on because you don't know what the next political tax law is going to show up as. And I see so many people that hit retirement, they're 62 years old, they've got 99% of their money in a traditional 401k. And they loved paying less taxes back in the day. But they're saying, I got a huge problem. I wish I'd done the Roth IRA earlier. So as you're saving, quite often it's the Roth IRA, the Roth 401K. If you can put money into it, it's helpful to have this ability to take money out later on. You're 60 plus years old, you're in retirement, you want to take out 30 grand for a new car, new windows, new driveway, and all you take out is 30 grand from the Roth IRA. You don't have to take out like 50 grand extra or whatever the number is to pay the taxes on it. So having Roth IRA accounts gives you the most flexibility later on. Of course you have to pay the taxes right now. And so that's why you maybe have that tax diversification. Maybe you do a traditional 401 and then you do the Roth IRA outside of that, just to have some diversification, some different options.
- [30:48]
Joe Saul-Sehy
All right, let's talk for a second to our 25 year old stackers listening is your bias then toward Roth, if possible?
- [30:56]
Jeremy Kyle
That's the bias. Theoretically, as a 25 year old, you're making less money in your income than as a 55 year old. So theoretically, your tax rates are lower now than they are later on. That might not always be the case. Right. You might be on the coast and you strike it rich with an Internet startup. So it's not always the case. The nice thing about rules of thumb is that it kind of gets you pointed in the right direction, but you gotta want to think about how it applies to you specifically. But that's the theory is you're younger, you haven't grown as much into your career, so your income's got room to grow, your taxes are likely going to grow in the future, and you'd rather have the tax free money later on. You don't mind paying what's likely a lower tax rate. Now, by putting the money into the the Roth ira, how much do you.
- [31:36]
Joe Saul-Sehy
Worry about tax on Medicare or tax on our Social Security or irmaa?
- [31:44]
Jeremy Kyle
Yeah, you've got to include that in your planning. So many people don't even bother to do the tax planning, but they do the tax planning as if like, let me just look at the bracket. All right, I'm in the 22% bracket, I'm in the 24% tax bracket. I'm in the 12% tax bracket. But there's so many other things that come into play. If you're below 65 and you're not working, you need health insurance, and usually that's coming from the Affordable Care Act. That's a tax cost if you have more income, but it's not going to show up in your tax bracket. And when you're past 65 and you're on Medicare or you're past 62 or whatever age that you file for Social Security, your decisions on which one of those accounts do I take the money out from will affect how much your Social Security gets taxed. It'll affect whether you pay extra parts of your Medicare costs with that IRMAA surcharge, they call it. So you've got to plan it out. And oftentimes you look at and say it's not too big of a deal. The Affordable Care act, though, that is often a big deal because a lot of times, and we'll see how the tax laws come about right now. But currently, at the end of 25, you start into 2026, there is now this Affordable Care act cliff, which they used to have, where you hop over by $1 and your subsidy went from 15 grand to zero. Right? That's the big deal. The, the IRMAA and the social securities. You want to know about that. You want to plan for it, but it's kind of a marginal cost. That's a huge cost right away if you didn't think about the Affordable Care Act. So you want to plan these things out. It's not just your tax bracket. There's all these things that come into play, like the Affordable Care act subsidies and IRMAA and Social Security.
- [33:17]
Joe Saul-Sehy
That's a big cliff.
- [33:18]
Jeremy Kyle
Yeah, it's a big cliff. That's why they call it the cliff. You make a little bit more and you lose a little bit of subsidy. It's natural. Then, boom, there goes 15 grand just by making $1 extra.
- [33:28]
Joe Saul-Sehy
It's funny because we started off with spending and then streams of income and then tech strategy. We haven't talked yet about investments. And I led off by saying, of course we're going to start with investments. Investing is number four. Earlier in this project, I want to read everybody just a piece that I like from the book you write. I remember it like it was yesterday. Monday, March 9, 2009. I was getting calls all day from worried clients. The stock market had been dropping for the past year and a half. That day, the market wasn't down that much, only 1% at its worth. Only 1% that day. Living the dream. I remember those days, by the way. This was the end of my career in financial planning. Planning. But it was just another down day. In a seemingly endless series of down days, the s and P500 had dropped 12% over the past two weeks. The US stock market was now down a total of 57% since the October 10, 2007 high point. So you get this call, you've been calling a bunch of people, you've been talking people day after day off cliffs. By the way, I started shaking because I remember these days reminding people they had a financial plan. But a guy named Gary called you. Can we talk about Gary for a minute, Jeremy?
- [34:36]
Jeremy Kyle
Yeah, Gary's interesting. He's like several people I've talked to over time. But he's the one that, that just really sticks out to me because a year earlier he said, I want to retire in a few years. Let's set up my investments. I'm a big fan of this idea called a bucket strategy. Let's have short term money, let's have some long term money. And of course the market down then. So, you know, spring of 2008, the market's down like 10%, 15%, it was down a little bit. And I said, we like to do income buckets. Let's set up some money for the short term, let's set up some money for the long term. And he said, that's a great idea, but I'll wait till the market comes back up. Well, a year later, the market didn't come back up. It's down like 40% now, down 50% from the absolute top point. And so he was calling every day saying, I can't let my money drop further. I can't let my money drop further. And I was saying, well, when do you need the money? Well, it's like a year from now, you know, it's down the road. Well, if you don't need the money today, why are you getting out of the market today? And then finally he just couldn't take it anymore. The market was down. He said, I gotta get out, sell everything to cash. And I did, you know, that's his instructions. Sold everything to cash. I tried for weeks to convince him not to. Tried that day to convince him not to. He sold everything to cash. I hung up the phone. I turned to my business partner at the time, I said, this is probably the bottom. Gary threw in the towel. And unfortunately I was correct. And years later, Gary still had his money in cash. He didn't invest the money back into the market. He didn't even take the money out because he didn't need it. And it's all about when it comes to investing, knowing when do you need the money and setting things up. If you need money in the short term, use short term investments. If you need money long term, use long term investments. And he was conflating the two like so many people do. They think, I need some money soon. So it's in the long term stock market type money, or I need money way down the road, but I can't afford to lose it. So let me put it into the bank. It's all about your time horizons. When do you need the money? That's the first thing to think of with investing.
- [36:30]
Joe Saul-Sehy
How many times have you heard, yeah, Jeremy, but this time's different.
- [36:34]
Jeremy Kyle
Yeah. And too often, unfortunately, I've got a similar story with somebody in Covid where the market's dropping, you know, 5%, 10%, 30% eventually. It's funny and bad that it was exactly the same thing where a different person, he called on that Monday of COVID in late march and said, I just can't take it anymore. I've got to pull out, move it to cash. And I did, because that's what he instructed me to do after weeks and trying so long that day to convince him otherwise. And I called another business partner at the time, I said, guess what? This guy pulled out of the market. It's probably the bottom. And the next three days, the stock market went up 20%.
- [37:12]
Doug
Fast.
- [37:13]
Joe Saul-Sehy
Yeah, very fast.
- [37:13]
Jeremy Kyle
Three days it went up 20%. And two, three years later, this individual around Covid time still hadn't taken the money out because he kind of conflated the short term market moves with, what am I going to do? It's like, oh, the market dropped 10% yesterday last week. It's going to do that every day for the rest of the time. No, that's, that's not how it works.
- [37:32]
Joe Saul-Sehy
This goes back again, though, to number one, which is start off with spending. How much are you going to spend? Because now I know how much I need in that short term bucket.
- [37:42]
Jeremy Kyle
Yeah. Oh, you need 30 grand out next year. Well, why are we taking the whole half million dollars and throwing into cash? Well, maybe you move 30 grand in cash and say, okay, I'm good for the next year. Let's leave the money invested and see how it grows. But if you don't know what you're solving for, if you're solving for, I need this number to say a certain thing on my statement Then, yeah, every single up and down, which happens milliseconds all day long, is going to affect you. But if you know what you're solving for, then you know, okay, I need this X amount set aside for the short term. And when the stock market drops, it's no fun. But then you look and say, oh, I wanted three years of money set aside in cash, and there you go, I've got it. It's no fun with the market up and down, but I can afford to let it come back up again.
- [38:25]
Joe Saul-Sehy
I did. Like, as an advisor, you tried to find a middle ground, which also was absurd, because if you start off with when you need the money and work backward, you still wouldn't do this. But you even tried to tell Gary, hey, Gary, you're not gonna need this money right away. He wouldn't listen. But then you said, why don't you just take then half of it? It's way more than you're gonna need over the short run. But why don't you just move half of it to cash instead of all of it? And Gary still wouldn't do it. Jeremy, this story hit home with me because I had this with a family member, which I was always told during my career, don't work with family members. And it was always true, by the way. Guys do not work with family members. And I had this family member that was like, what do you keep saying? The horses left the barn. No, the horses left the barn. We got to move it all. We got to move it all. I'm like, you're about to put the horse out of the bar. Go out of the barn. If you move at all. And he moved at all, and he locked in all these losses. And I still. I've been a financial planner in forever, and I still get angry, Jerry. I still get angry about that. Oh, it's so frustrating. So begin with the end of mind. Begin with the amount of money that you're going to spend.
- [39:24]
Jeremy Kyle
That's exactly it.
- [39:25]
Joe Saul-Sehy
What's the fifth step?
- [39:26]
Jeremy Kyle
Fifth step is what is it you leave behind? And sometimes you leave behind some money. Oftentimes you leave behind a mess because you haven't planned for things ahead of time. And it's not just the idea of the estate planning and how much money you're gonna leave behind. It's also what are the risks that could derail your retirement? Right? You do your Excel spreadsheet. Everything looks great when every single box shows the exact amount of inflation and stock market returns. But what if inflation in the stock market doesn't do what you thought. What if your health changes in a way you didn't, thought, you didn't think was gonna happen? And so as you do your planning, yes, set things up, it's gonna work out pretty well. Let's start thinking of things that might not go so well. Yeah, one thing that might derail the train there for your retirement is you live longer than you expected. Or what if you don't live as long as you expect? How did your decisions with Social Security and how much money you're going to spend, how did that change if you didn't make it to the exact number? A lot of people think like I'm hitting this exact number and that's it. And they plan out. I got the 20 years on my spreadsheet. Well, what if it's five? What if it's 35? Think of those different things that could change your retirement. And of course, especially if you live longer, your health might change. And you've got to think through what's your plan in case my health changes in retirement. Part of that's the health insurance you choose. Part of that's maybe having some sort of long term care planning. Doesn't mean you have long term care insurance, just means you have a long term care plan. Think about where are you going to get that care and who's going to provide that care for you and how are you going to pay for that care. You want to plan these things out ahead of time. That's all the kind of the, the risks that can hit your retirement and of course, hopefully things still go well and then you leave some money behind and you've got some documents you want to put together, you want to take care of the people you leave behind.
- [41:09]
Joe Saul-Sehy
That catastrophic illness planning and that contingency planning. When you get to that point in your plan, just when those things inevitably hit and you know that you already thought about it five years ago, 10 years ago, 15 years ago, you already have a plan in place. Like watching that plan spring into action with people. When I was an advis was always so fun's not the right word. Comforting. I think comforting was the word because you're like, you know, we don't have to worry about it now because we already planned. Here's what our strategy is and it's still valid today. It's funny because when it came to long term care, what drove me crazy when I was a financial planner was people would go, well, yeah, I decided against the insurance. And you said this earlier, Jeremy, I was like, great, what's our plan. I don't care about the insurance. What's our plan? They're like, yeah, I don't know, but I'm not gonna buy the insurance. Great. I don't care. What's our plan like? Getting around Whether you're going to buy the insurance or not is fine. It's what are we going to actually do? Which is far more important. And I think the insurance industry doesn't want you to think about that. They want you to think about yes or no on the insurance, where you're talking a much, much bigger rubric.
- [42:10]
Jeremy Kyle
Yeah. You say what the plan is and you might go through and say, I want the insurance. Well, work with an insurance broker you trust to go find the best insurance for you. Or you might work through and say I don't want the insurance. In which case there's a strategy that Christine Binns put in her book how to Retire, where she calls it a long term care fund where Perhaps you have $1.2 million saved for retirement and you decide, I don't want to get the insurance, but I want to earmark 200,000 towards long term care expenses in the future and then I'll just base my planning on the million dollars that I have here. So you get this kind of extra account on the side where if you need it, you've got it. And if you don't need it, well, they're just extra money that might help out your surviving spouse, might help out your kids later on down the road. You've actually put a plan in place. It's not, I just said against the insurance. So I'm just going to stick my head in the sand. I don't have a plan in place. If you say no, the insurance. Fine. What's your plan then?
- [43:02]
Joe Saul-Sehy
Jeremy's new book is called Retire today. Create your retirement master plan in five simple steps. I'm so glad you could go through a couple of the strategies in each of these five sections. Obviously the book is what, 225 pages long. So we're, there's no way that we're going to do them all on our show. But where can people get it? Jeremy?
- [43:21]
Jeremy Kyle
Yeah, you can find anywhere you, you buy books. But you could also go to my website, jeremykile.com J E R E M Y K e I l.com and there's a link there for you to get the book.
- [43:31]
Joe Saul-Sehy
I would be ostracized by our stackers if you didn't tell people what's coming up on the podcast too. On the Retired Today podcast.
- [43:39]
Jeremy Kyle
Yeah. So Retire Today is a podcast I've had for six years. Used to be called Retirement Revealed. Changed the name to Retire Today to match the book. If you go to the podcast right now, you'll see hear me going through each of the steps and details. But coming up pretty soon is something I call a true retirement story. I think it's good to know what retirement looks like from somebody that's not a financial advisor. It's not even a podcaster. Somebody that's a true retiree that's telling you what retirement is. Life. So they got true crime stories out there. I'm bringing it to retirement. True retirement stories. So you see what life is like on the other side.
- [44:15]
Joe Saul-Sehy
That's awesome. We love those stories. Like case study time. Yeah. Great stuff. We'll link to all of that, the book, and the podcast in our show notes. Jeremy, thank you for mentoring our Stackers today. I super appreciate you taking the time, man.
- [44:28]
Jeremy Kyle
Glad to be here, Joe.
- [44:33]
Doug
Hey there, Stackers. I'm Joe's mom's neighbor, Doug, and. And man, how awkward. Accidentally gave a free show to the lady next door until I realized the blinds were open in my trailer next to Joe's mom's house. I do believe she got an eyeful because I just got a cryptic note saying she wanted to pay me some money. I know what you're thinking, and no, I'm not creating a spicy little page anytime soon. Stackers. Although you can listen to my voice and just imagine how. Okay, all right, I'll just do the trivia. But they love my voice. These guys have no idea how hard it is being this beautiful, weird connection. Coming. Just wait for it. It's coming. Yet another beautiful person. There's more than just me. Made history today when her photos appeared au natural in the very first issue of Playboy, way back on Today's date in 1953. They were photos she'd taken back a few years earlier when she was a struggling artist. Kind of like I am right now. Hey, maybe I should do this trivia segment. A little stripped down, huh? Nope, That'll bring him to the show. Can't see below the desk. You don't know. Maybe I already am. So who was the one time struggling actress who appeared in issue number one of Playboy? Boy, I'll be back right after I find out just how much this neighbor lady will give me if I show off my ankles. I got great ankles, man.
- [46:01]
OG
More like cankles.
- [46:06]
Jeremy Kyle
Bombas makes the most comfortable socks, underwear, and T shirts.
- [46:10]
OG
Bombas are so Absurdly comfortable. You may throw out all your other clothes.
- [46:13]
Jeremy Kyle
Sorry, do we legally have to say that?
- [46:16]
Joe Saul-Sehy
No, this is just how I talk. And I really love my Bombas. They do feel that good. And they do good too.
- [46:21]
Jeremy Kyle
One item purchased equals one item donated. To feel good and do good, go.
- [46:25]
Joe Saul-Sehy
To bombas.com and use code audio for.
- [46:27]
Jeremy Kyle
20% off your first purchase. That's B O M b-s.com and use code audio at checkout.
- [46:36]
Joe Saul-Sehy
Tonight on NBC, Jimmy Fallon and Bozma St. John host the highly anticipated new competition show. I hire 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands.
- [46:50]
Jeremy Kyle
This is a huge opportunity.
- [46:52]
Joe Saul-Sehy
This is the battle for the next big idea.
- [46:54]
OG
This is not Play Play. We're spending millions of dollars.
- [46:57]
Joe Saul-Sehy
I'm so excited to embark on this adventure with all of you.
- [47:00]
Doug
May the best idea win on brand with Jimmy Fallon. Series premiere tonight on NBC.
- [47:09]
Jeremy Kyle
When did making plans get this complicated?
- [47:13]
Joe Saul-Sehy
It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans.
- [47:20]
Jeremy Kyle
Send event invites and pinned messages so no one forgets. Mom 60th and never miss a meme or milestone. All protected with end to end encryption.
- [47:29]
Doug
It's time for WhatsApp Message Privately with everyone.
- [47:33]
Jeremy Kyle
Learn more@WhatsApp.com hey there, stackers.
- [47:41]
Doug
I'm Mr. Texarkana. Ankles 20. And guy who's more than a little confused, Joe's mom's neighbor, Doug. Okay, get this. The neighbor lady who saw me with the blinds open is gonna give me money, but only if I, quote, keep my shirt on and never take it off again. Wow, I must have really rocked her world, huh? Well, to earn that five bucks, I just have to wear this shirt for six months straight. Five bucks. People are paying for anything these days.
- [48:10]
OG
Days.
- [48:10]
Doug
But Playboy paid one future star a lot of money to appear in issue numero uno of their new magazine back in 1953. Which star was it whose photo from just a few years earlier, 1949, were used in issue one. The answer, none other than Marilyn Monroe. And now here come two guys who love to get naked and intimate with their money Talk. Joe and OG yes, we do.
- [48:38]
Joe Saul-Sehy
Let's get down to what's real. And, Doug, glad you're gonna earn five bucks. I think for all of us, we're happy to see that shirt stay on.
- [48:46]
Doug
I look great. And you know, there are times when. When clothing is sexier than not clothing. I think that's really what that neighbor.
- [48:52]
OG
Was saying you all the time.
- [48:53]
Jeremy Kyle
Right.
- [48:53]
Joe Saul-Sehy
Every time we see you, we're like, clothing is better than done.
- [48:57]
Doug
It looks good on me, man.
- [48:58]
Joe Saul-Sehy
Yeah, it is great. Thanks to Jeremy for coming down to the basement and I think OG just to shine the spotlight a little longer. Hard to invest money when you don't know what you're investing for. Almost goes back to John's call from Monday when he was talking about different financial advisors to manage his money. And they all had different ideas. The ideas really come together better if you start with, how much money do I think I'm going to spend?
- [49:24]
OG
Yeah, we look at that as, you know, there's really four different buckets every. Every year that you can put money in. You can, you can pay your income taxes, you can save it, you can spend it on debt, and then you can spend it on everything else. If you just break your spending down into those four buckets, it becomes pretty clear to see what the everything else bucket is. And if you still got some debt, you know, coming into retirement, you can add that. But taxes are a function of where the money comes from. So that's the calculation on the back end. A lot of times people look at their gross income and go, well, in retirement, you know, I make 150,000. So I guess in retirement, need 150,000. It's like, well, you only spend 65. The rest is savings, taxes, and debt payments. So having a clear understanding of what your budget is going in makes everything else flow from there.
- [50:07]
Joe Saul-Sehy
Yeah, the more, you know when I'm going to spend a dollar, the easier it is to invest for that dollar. Because much like in a lot of sporting events, the game is not to do the fantastic play. The goal is to just not mess it up. Keep the. If you're playing golf. Yeah, if you keep. If you're playing golf to stay out of the sand trap, stay away from the trees. If you're. Yeah. If you're a football player or if.
- [50:32]
OG
Doug's playing ball, stay out of the fairway. Whatever makes you happy.
- [50:36]
Doug
I'm better from the rough.
- [50:38]
Joe Saul-Sehy
Speaking of sports, especially putting. Speaking of sports, stacker Steve sent us something. Said, hey, guys, football season's here, and I know that it doesn't have a lot to do with money, but this has a ton to do with your love in quotes of the state of Ohio, which apparently is shared by comedian Greg Warren. A funny story, by the way, Steve, is that I took Cheryl to see Leanne Morgan in Shreveport a few weeks ago, and I was pleasantly Surprised when Greg Warren, the guy we're about to hear, was the opening comedian. And I love this guy. So, Steve, I was glad that you sent this, but Greg Warren talking about the state of Ohio.
- [51:19]
Doug
I love the people of Ohio, but, like the Buckeye fans, I don't.
- [51:28]
Jeremy Kyle
They're just. They're. They're.
- [51:29]
Joe Saul-Sehy
You know, they're obnoxious.
- [51:30]
Doug
I mean, anytime you're in a room and you say anything about sports, half.
- [51:36]
Joe Saul-Sehy
The people go, oh, see, see?
- [51:40]
Doug
I o. See, see? It takes two of these idiots to spell. Hey, how do you spell the place where you live? Well, usually I work with a partner.
- [51:55]
Jeremy Kyle
Hold on a second.
- [51:57]
Doug
Jimmy, come here. They want us to spell the state.
- [52:01]
Joe Saul-Sehy
Takes two people for all four letters.
- [52:03]
OG
We were driving down the road, stopped at a stoplight, and, you know, sometimes you hear a porn blow or like, beep, beep. You just kind of like go, oh, light's still red, you know, wasn't for me. And then I hear beep, beep, beep. Okay, still not for me.
- [52:18]
Jeremy Kyle
Honk, honk, honk, honk, honk, honk, honk, honk.
- [52:20]
OG
And finally I realized, this guy next to me, I look at him, I go, what? Forgetting I'm driving my wife's car that's got a Michigan plate, like a Texas plate, but it's a lock m. And the guy next to me just does the big oh. And I gave him the IO in single middle finger, double bird in America. He got the I.O. version. He got the Michigan version of the I.O. right back to him. So we had a good chuckle.
- [52:45]
Joe Saul-Sehy
That's how Michigan, Ohio State fans say, I love you. That's your love, I always say.
- [52:49]
OG
Can't wait to see in November. Hope it's a good game.
- [52:53]
Doug
Good luck to you. Hope everybody.
- [52:55]
OG
Luck to you. You're number one in my book, Steve.
- [52:58]
Joe Saul-Sehy
Thanks for sending that along. Very, very funny comedian Greg Warren there. Let's move on to our headline. Hello, darlings.
- [53:07]
OG
And now it's time for your favorite part of the show, our Stacking Benjamin's Headlines.
- [53:12]
Joe Saul-Sehy
Our headline today comes to us from the website here, Seeking Alpha Boy. You know, in the headline, all year this year, guys, we've been reporting on the SEC approving private investments in your 401k. And it took almost. No, it took almost no time at all for this, quote, goodness that we've been reporting on. And by air quote, you got to hear the dripping sarcasm here. Stackers, these wealth management firms to jump on this. Seeking Alpha reports. Goldman Sachs T row price plan to offer new alternative investments for wealthy clients by 2025 and, and for retirement accounts starting in 2026. So they're gonna roll it out to wealthy people in 2025 and the rest of us, they roll it out early next year. This is according to Reuters. The news comes as Goldman Sachs said earlier this month it plans to acquire up to a billion dollars in t roll price common stock equaling a stake of 3.5% in TROW. As part of a collaboration agreement, the alliance was set to focus on offering public and private market investment products for retirement and wealth. Investors don't know why I think we need private equity inside our 401k. There is nothing stackers don't. There is no goal that this is going to help you reach that you can't already reach without private money. Private money is going to put more money into Goldman Sachs, I think.
- [54:44]
Doug
I mean, Goldman Sachs, I mean there's.
- [54:46]
OG
A time and a place for illiquid investments and for what this goes after, which is smaller micro companies, you know, an aggregate type of deal. But that's just not for the normal investor, you know, a regular investor. Because think of it this way. If you base everything based on the concept of Treasuries or your bank account, right? The concept of risk free rate, or if you just want to add the S and P to the calculation and say, you know, I know with a high degree of certainty that I can get 10% a year if I invest in the 500 biggest companies in the United States now it's not going to be 10% linearly every year. You know, there's some volatility there and I'm willing to accept that volatility, that some years it's plus 30, some years it's minus 30, but it's gonna average to 10, I'm okay with that. And you base everything off of that. And now you're gonna say, I'm gonna take some money and I want it to be crazy illiquid or I want it to be focused on this really esoteric type of thing. What kind of return are you going to need to accept the fact that the volatility of that is so much more. And the way that I would think about this is you've got the 500 biggest companies in the world. You get 10% a year with a known range of returns, right? Plus 30, minus 30, let's say with the occasional outlier twice in your lifetime of a minus 40, minus 50.
- [56:11]
Jeremy Kyle
Okay?
- [56:11]
OG
So that's your baseline number, that's your baseline acceptance of ups and downs in the market. And this is your retirement money. And so your brother in law shows up and says, I have this great idea. I make amazing ice cream. You know it, you've had it. We make the little batches in the kitchen. It's fantastic, everyone loves it. I think I should start an ice cream business. And I want you to be the first investor. I'm gonna invest some. You invest some and I can guarantee you 10% return. What are you gonna say about that? You're gonna say no way, dude. Like if I'm investing in your company, I already know what I have to do to get 10%, right? To get 10, I need to invest in the 500 biggest companies in the world. The most productively managed, the most expertly driven companies that have ever existed. And I get 10 and no offense to you, and you're fine ice cream making.
- [57:01]
Joe Saul-Sehy
Who's gonna run, who's gonna run a better company? Your brother in law with a good idea, who's never run a company before, just makes good ice cream. Or Coca Cola, like right, which one is a machine?
- [57:13]
OG
Not even Coca Cola, but the aggregate of all the Coca Cola's that ever existed and ever will exist. You know, all the most well capitalized companies. Okay, so what kind of return do you have to have to accept the risk of that Small, small, small company investment. Would you do it for 11? Probably not. Would you do it for 12? Probably not. Would you do IT for 15, 20, 25? Like you have to have so much higher return potential because your variability doesn't go minus 30 to plus 30 anymore. It goes zero on one end. The ice cream shop fails and there's no money.
- [57:51]
Joe Saul-Sehy
I think I gotta double my money. Oh yeah.
- [57:53]
OG
Or we turn into the next Ben and Jerry's. Right, so Those are the two extremes. We're Ben and Jerry's in 50 years or I'm out. So what kind of annual return do you need? Somewhere in the middle. And the same thing is true with a lot of this private equity stuff. And I'm not saying that it's not productive, I'm saying that it's illiquid. It's hard to get your fingers on how it's being managed. And for some people this rate of return and volatility is acceptable, but probably not for the vast majority of stackers.
- [58:20]
Joe Saul-Sehy
Yeah, I have, I've come down, as longtime stackers know, on liking some of these private equity investments. But I think it's fun with your sandbox money. And I think these are compelling stories. But inside your 401k. You've got to disregard the sales pitch. Well, at the very least, look behind the sales pitch. So I'll give you two that. In the past, I've said that I've liked. I've liked masterworks in the past. This is where you buy artwork. You're actually buying into an actual painting. And then the value of that painting hopefully goes up while you hold it and then you sell it. One thing about masterworks, that when you look past the sales pitch and what they do. So the first thing is the sales pitch. I love that sales pitch. That's great. You know, I don't like about masterworks OG which is why it's a sandbox thing for me and not more than that. Look at how much it costs the people at masterworks to do their job, the huge amount of money they have to make for them before they make any money for you. And the fact that you're investing in one painting now, they're good at it, but you're investing in one painting and you're not going to have any liquidity until that painting comes to life. Like, is it really. Is the juice going to be worth the squeeze? No, I just think it's fun. I think it's fun, which is why it's sandbox money. Acre Trader. We did an episode with a creator of Acre Trader about how he created that company. These people invest in farmland. Again, your money is going into the dirt in the ground. You're not going to get your money back until that sale is complete. Which. How many years in the future is it going to be until that happens? And imagine in your 401k, the amount of money that it takes to invest in these investments. There's often a very sizable minimum investment to get into these things. You put 25 or 35, $40,000 of your money into the ground. And it turns out that there's some environmental issue, let's say, who knows? But when you get specific like that, it can be awful. So I think people are going to be enamored by the sales pitch. And listen, Goldman Sachs and T Roll Price, they're fantastic at sales pitch. They're fantastic at getting you to fall in. Oh, it's a painting. Oh, it's farm. The Farmers. I mean, imagine how great this will be. This will be fantastic. You got to look at the fees. You have to look at the liquidity event. When will this painting be sold? Will it ever be sold? If they find out something about this painting, what's going to happen? They find out something about this land. I don't. There's so many variables. I just hate this inside your phone.
- [60:47]
OG
I want to give you one more here for the average person's 401k balance, which I think I remember reading is right at 100k. Does that sound right to you? Yeah, guys, maybe.
- [60:57]
Joe Saul-Sehy
I think it's slightly above. Yeah.
- [60:59]
OG
How much are you seriously going to invest here? 10%? 20? 30? Like we're talking about a very insignificant total sum. 10 grand. 20 grand. 30 grand for the average person. I get this is at zero. I'm not saying $30,000 is not a lot of money. I'm saying that you're going to take 30 grand and hope to do what with it? Make 4,500, make 5,000 at the risk of that 30,000 becoming zero instead of having 3,000 compounded. Like we're not investing the sums that are like life altering. This isn't Bitcoin 2011, you know, it's.
- [61:41]
Joe Saul-Sehy
Like, oh, dude, if I'd have put.
- [61:42]
OG
30 grand in Bitcoin 2011, I'd be a billionaire. Yeah, okay, I get that you wouldn't have held it the whole time, but fine. This isn't life altering returns with the sums of money that we're talking about in your 401k either. You know what I mean? So why do you want to expose 10%, 20%, 30% of your of your 401k to a potential negative 100% loss. Right. Or some profoundly awful result to make six grand, to make eight grand, to make 10 grand. It's just not a big enough number in aggregate to me to move it, to make me want to do this stuff.
- [62:20]
Joe Saul-Sehy
This is the sad thing OG is I feel like our stackers, you know, as we communicate with them, we see them around the country, they're in our basement community on Facebook. When I see them. I actually don't think our stackers are going to get caught up in this a lot. But the reason I wanted to do this headline is you're going to see your brother in law or your sister in law who doesn't know how to do any of this due diligence, who's going to be at the backyard barbecue and it's going to tell somebody in our stacker family, oh, you should see what I just did with my 401k. Oh boy. I think it's going to be the people that fall for sales pitches. When you go into a casino, half the people in the casino are people that can't afford to be there. The other Half are people that. That, you know, take their play money. Well, shouldn't be there, but they're taking their play money and they're having a good time. But there is a significant portion of the gambling public that needs the win, that needs to hit blackjack, and those people should not be in these private investments. Yuck. I'll link to this story on our show.
- [63:26]
OG
Don't do this.
- [63:28]
Joe Saul-Sehy
Don't do this. And. And encourage those people that are doing this or are thinking about doing this in the future.
- [63:36]
OG
Don't do this.
- [63:36]
Joe Saul-Sehy
Send them our way. Yeah, send them to this segment.
- [63:39]
Doug
We'll slap them around a little bit.
- [63:41]
Joe Saul-Sehy
Just have them listen and so they can do some due diligence. Stacking Benchmark.com is where you find the show notes. Also, Kevin Bailey dives into topics like this in our newsletter, the 201, which comes out every week. Stacking benjamins.com 201. You know, this isn't the last time OG we're doing this headline. This headline is just beginning. This is talk about emerging markets. This is an emerging topic that we've now talked about. I think this is maybe the third time we've talked about it. I think 20, 26, we're gonna all of a sudden have cautionary tales about people that lost a ton of money doing this kind of investing if. If you call it investing. All right, let's move on to the back porch. Doug, speaking of community, what's going on in our community, buddy?
- [64:29]
Doug
Well, Joe, there's a lot going on in the community, but I think we need to pause a little bit and talk about something. And a friend of the show that I know you were close with and meant a lot to you and meant a lot to our community that we should. We should probably pay some respects to.
- [64:43]
OG
So.
- [64:43]
Doug
So let's talk a little bit about the passing of Jonathan Clements.
- [64:47]
Joe Saul-Sehy
Jonathan Clements was the longtime personal finance columnist at the Wall Street Journal, had a wonderful blog that he ran called the Humble Dollar. And Jonathan had this great way with words that he could take these complex subjects and just go, this is good. This is bad. And could he. I think sometimes the simplest writing is the most difficult. And Jonathan was able to write very plainly and very simply. And what. What I loved was when Jonathan realized that he had stage four cancer, he wrote about it openly and he talked about the value of estate planning, getting your affairs in order, and how important. That was one of my favorite times with Jonathan was one of his appearances on the show, and he talked about the value. You guys know how much I love vacation. Book the vacation way, way, way ahead of time. Don't book it the day before you go. Because a big part of the deliciousness of a vacation is all the dreaming about it beforehand, about how fun it's going to be, about how the experience is going to be. And it's funny. We're taking my mom on a. On a Christmas markets river cruise in December, and mom's never been out of the United States, and I. I just know she's gonna love it. And we booked this thing back in the early spring after I talked to Jonathan for the last time. And all we do, mom and I and Cheryl, we spend a lot of time talking about how fun we're. How much fun we're gonna have. So for me, that's a very personal legacy of Jonathan Clements. He always talked about how this is more than money. And his last appearance on the show we titled what Makes a Life Worth Living, which is really what it's all about. Jonathan could talk about what it's all about. So sad to hear the passing of Jonathan Clements. Next time we do our Greatest Hits episode, we'll play that episode for you so you can go back and listen to it, because it's a timeless evergreen episode. All right. I don't know how we follow that. So we won't.
- [66:58]
Doug
Yeah, we won't. But, Joe, if you need a. I forgot all about the Christmas markets cruise. Do you need me to submit my Christmas wish list to you guys to bring it? Man, have some focus when you're on your trip.
- [67:11]
Joe Saul-Sehy
I. I would absolutely love to pick you something up in the Christmas markets. Maybe. Maybe I'll drink a glass of mulled wine on your behalf. I'm sure that's what you would want.
- [67:20]
Doug
That's gonna happen anyways.
- [67:22]
Jeremy Kyle
That's.
- [67:22]
Doug
That doesn't make me feel special.
- [67:26]
Joe Saul-Sehy
I'm not doing the chestnuts over the open fire again. I did that last time. And those chestnuts smell great. And the dude in the stove top hat, you know, the. The big tall hat. Cooking them looks really cool. They taste like crap. They taste. Yeah. Don't need those. All right, Doug, what's our takeaways for today? Give us the big three.
- [67:48]
Doug
First, take some advice from Jeremy Kyle. By starting with how much you plan to spend. It's much easier to create a retirement plan than it is to start with your investment strategy. Everything is solvable once you know how much you wish to spend. Second, looking into private assets and your 401k plan. Remember that while your returns may vary you're going to guarantee lots of money into the pockets of Wall street bankers. That's not who should have that money. But the big lesson, don't tell OG that you're earning money from the neighbor for keeping your clothes on. He just said if I never take off my shoes again while recording, he'll double that woman's $5. Five more dollars just to keep my shoes on. Incredible. It's like rain and money down here. Wait, what? Thanks to CFP Jeremy Kyle for joining us today. You'll find his new book, Retire Today. Create your retirement master plan in five simple steps. Wherever books are sold or on on Jeremy's website, jeremykile.com that's Kyle spelled K E I L. We'll also include links in our show notes@stackingbenjamins.com this show is the property of SB Podcasts, LLC, Copyright 2025, and is created by Joe Saul Sehive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome team@stackingbenjamins.com along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. Oh, yeah. And before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug, and we'll see you next time back here at the Stacking Benjamin Show.