Strategies and Tactics to Maximize Your 401k (and common mistakes to avoid) SB1740

Summary

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The Stacking Benjamins Show — Episode SB1740

Strategies and Tactics to Maximize Your 401k (and Common Mistakes to Avoid)
September 26, 2025

Host: Joe Saul-Sehy
Co-hosts/Panelists: OG (absent), Paula Pant (Afford Anything), Jesse Kramer (Personal Finance for Long-Term Investors), Lacey Langford (The MilMoney Show)
Tone: Light, conversational, occasionally irreverent and full of nerdy finance humor

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Episode Overview

This episode is a fun yet practical deep dive into optimizing workplace retirement accounts, with a spotlight on the 401k and common mistakes people make. Joe, Paula, Jesse, and Lacey share both big-picture strategies and granular tactics for maximizing retirement savings, covering employer matches, investment choices, fee pitfalls, and special features like Roth options and self-directed brokerage windows. As always, the blend is equal parts friendly banter and functional money advice—with plenty of laughs and some trivia (but don’t worry, we skip the ads and intros).

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Table of Contents

• Key Discussion Points and Insights
  • Mistake #1: Missing or Ignoring the Employer Match
  • Mistake #2: Investing Without a Strategy
  • Mistake #3: Underestimating Impact of Fees and Expenses
  • Mistake #4: Overlooking Plan Features and Upgrades
• Notable Quotes and Memorable Moments
• Timestamps for Important Segments
• Panelist Plugs & Closing Thoughts

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Key Discussion Points and Insights

1. Mistake #1: Missing or Ignoring the Employer Match (11:00)

Main Takeaways:

• Not knowing or not getting the employer match is a foundational blunder—literally turning down free money.
• In military plans (TSP/Blended Retirement System), members are auto-enrolled, but some still opt out, often for short-term wants (e.g., “buying a new truck”)—a big long-term mistake.
• The consensus: Almost no situation justifies skipping the match—even with high-interest debt.

Panel Insights:

• Joe: “It is so frustrating when I hear people go, ‘I don’t want to give any money to my company.’”
• Jesse: “A fundamental understanding of whether the 401k plan even exists in the first place... The fact that it is a benefit that you as the employee just purely get to benefit from.”
• Lacey: “With the new blended retirement system…they automatically sign you up for the TSP…But a lot of people go in and turn that off…That’s a huge mistake.”
• Paula: “Even if you have credit card debt, the match percentage you’re getting is actually higher than the interest rate you’re paying… it still makes sense to get the maximum match.” (14:24)
• Doug (humorous): “I bet you can find a way—adjust a streaming service, adjust a cell phone plan—so you can find that 5%...” (16:25)

2. Mistake #2: Investing Without a Strategy (21:00)

Highlights:

• Many people get auto-enrolled but never select investments—often leaving large sums in cash by accident.
• Action > paralysis: It’s better to start with something—like a target date fund or a broad index fund—than overcomplicate and do nothing.
• Key initial concepts: Risk tolerance, diversification, and understanding your plan’s menu.

Insights/Quotes:

• Lacey: “You have to more make a move than not make a move… Not looking at it isn’t an option because then it’s just an excuse.”
• Jesse: “If I don’t learn what I’m doing here, I’m going to make some five-figure mistake.” (25:26)
• Paula: “Expertise is the ability to both deep dive and simplify. You have to learn a lot to understand how little you actually had to learn...” (27:13)

Target Date Funds Debate:

• Lacey: “A lot of people just pick [Target Date Funds]... But you should still understand it.”
• Jesse: “If you can construct a diversified portfolio inside a 401k… I would rather someone do that than lean on a target date fund.”
• Paula: “For so many beginners, complexity is the enemy of action.”

3. Mistake #3: Underestimating Impact of Fees and Expenses (46:30)

• Small employer plans often have higher underlying fees. Big companies may get institutional rates.
• High fees can offset even the value of a match if you stay long enough.
• Moving old 401ks: When you leave an employer, you can often roll funds to an IRA or new plan to improve investment choice and cut costs.

Quotes:

• Jesse: “The bigger the company, the more negotiating power your company has…Our fees were .08%. But some plans are 1% plus. That adds up.”
• Paula: “At a minimum, get the match… When you leave that job, you can remove your money from this high-fee account and transfer it to a lower-fee custodian.” (48:31)
• Lacey: “People like, ‘Oh, rolling this over seems like such a pain in the ass.’ I go, 'It’s a bigger pain in the ass if you don’t roll it over.'” (50:40)

4. Mistake #4: Overlooking Plan Features and Upgrades (51:10)

Features Covered:

• Brokerage Windows: Allow greater investment choice, sometimes with lower fees, but often require manual transfers and monitoring.
• Roth vs. Traditional: Roth favored for younger or lower-income savers; traditional for those at peak earnings.
• Automation: Some plans auto-escalate contributions, not always present in military/Govt plans. Use automation or calendar reminders if not.
• Other features: In-plan Roth conversions, mega backdoor Roths, and the importance of avoiding after-tax subaccounts unless pursuing a specific strategy.

Quotes:

• Paula: “[Roth]…everything you put in there, all the growth, all the dividends, capital appreciation, everything is tax-free for life...(54:20)”
• Jesse: “The biggest factor...is understanding the difference between the current tax rates you’re paying, like your current bracket, versus what you might pay when you withdraw that money later. (55:19)”
• Joe: “If you’re not going to do the, the mega backdoor Roth IRA...Do not load up on after-tax money in your 401k because you’re going to create a tracking freaking nightmare.” (60:38)

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Notable Quotes and Moments

• On Money Nerd Signs:
  “If you rebalance your portfolio when you balance your checkbook on a Saturday night... you might be a money nerd!” (Paula, 04:15)
• On Risk Tolerance and Getting Started:
  “Understanding where you sit in that, how comfortable you are with a punch in the stomach with money, is really important.” (Lacey, 23:36)
• On Start Simple:
  “For somebody who’s paralyzed and not investing at all, then fine—target date fund.” (Joe, 33:12)
• On Automating Good Habits:
  “Just try it...and you know what’s cool is we can go back to HR and turn it back down later. The number of people that ever came back to me to turn it back down? Not one ever.” (Joe, 20:24)
• On Being Overwhelmed by Old Accounts:
  “Sometimes for peace of mind, it’s better to get them all together and get organized, so that way, the next move isn’t so overwhelming.” (Lacey, 50:57)
• On Roth vs. Traditional (Military):
  “In a very special group of people...can get away with contributing tax-free, and then it growing and withdrawing tax-free.” (Lacey, 54:50)

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Timestamps

• 11:00 — Not knowing/using the employer match
• 16:25 — Can you really “not afford” to contribute? Panel’s debate
• 20:24 — Just try increasing your contribution—you won’t miss it!
• 21:09 — Investing without a strategy—cash drag horror stories
• 23:30 — Building confidence in investment selection, target date funds
• 27:13 — When to ask “Why does it depend?”—the decision tree
• 33:12 — How to beat “analysis paralysis” with target date or index funds
• 46:30 — Hidden fees, small company plan problems, to roll or not to roll?
• 51:10 — Extra features: brokerage windows, Roth vs Traditional, automation
• 54:20 — Roth vs Traditional—panel viewpoint breakdown
• 60:38 — After-tax “gotchas” in 401ks

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Notable and Memorable Lighter Moments

• The recurring “you might be a money nerd if…” jokes, including “If your favorite four-letter word is ROTH...” (04:24)
• Long-running in-show trivia contest for “Olympic pools worth of beer,” revealing Oktoberfest revelers consumed 2.8 poolfuls in 2024. (43:20)
• Banter about financial “empathy vs. cynicism,” streaming service sacrifices, and whether anyone in history ever missed the extra 5% paycheck deduction (18:03, 20:24).
• “Just try it—nobody ever comes back to lower their contribution.”

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After Show & Panelist Plugs

• Jesse Kramer: Highlighting upcoming deep dives on his podcast, especially topics like financial planning with a special needs child. (62:00)
• Paula Pant: Recent “Afford Anything” interviews with David Gardner (Motley Fool), Dr. Daniel Crosby, Andy Hill, and Karsten Jeske. (62:43)
• Lacey Langford: Birthday episode about trademark issues in side hustles/businesses, and episodes on social media’s distortion of financial realities and portable careers for military spouses. (64:09)

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Takeaways and Actionable Tips

1. Always get the match (even if you’re in debt)—it’s usually the highest guaranteed return available.
2. Invest with a plan. Read materials, understand choices, and “something” is better than nothing—start simple and refine.
3. Monitor fees. Small employer plan? Factor in high costs and move funds once you change jobs.
4. Watch for useful features. Consider Roth if you qualify, take advantage of automation, but be careful with complex options like after-tax contributions and self-directed windows.
5. Roll over old accounts. Don’t let “convenience” cost you real retirement money in the long run.
6. The “set it and forget it” mindset is dangerous. Always review and update as circumstances (and plan options) evolve.
7. Ask “why does it depend?” When a financial pro says so, dig for the specific decision points.
8. “Complexity is the enemy of action.” Take the path that gets you started—and level up your strategy as you learn.

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For More: Check the show notes and all linked resources at stackingbenjamins.com.
Remember: This show is for entertainment and education—consult a pro before making financial decisions!

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Transcript

[A]

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[B]

This is the battle for the next big idea.

[C]

This is not Play Play.

[A]

We're spending millions of dollars. I'm so excited to embark on this.

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Adventure with all of you.

[D]

Made the best idea win on Brand with Jimmy Fallon.

[B]

Series premiere Tuesday on NBC.

[A]

I guess you should have called. I did call earlier when using the phone.

[C]

Earlier? When was that?

[A]

Er, later. When? Then I left a message. A message? What number did you call? 2 4, Niner, 5, 6, 7, 8. I can't hear you. You're trailing off. And did I catch a niner in there? Were you calling from a walkie talkie? No, it was cordless. Mm. You know what? Don't.

[E]

Not here.

[C]

Not now.

[D]

Live from the basement of the YouTube headquarters, it's the Stacking Benjamin show. I'm Joe's mom's neighbor Doug, and earlier this month was national 401k day. Mom had us be busy putting out all the Halloween decorations so we totally missed it. But every day is a great day to work on your retirement plan. So today we've invited a few of our friends to help you tweak the knobs on your retirement accounts. Plus, our year long competition for the trivia challenge trophy is heating up. Can Jessie take first place? Can Paula continue her surge? We'll find out midway through this show with my incredible trivia question. And now, a guy who knows knows the best 401k strategy is part math, part patience and part pretending you understand the HR memo about self directed brokerage options. It's Joe Saul, CI.

[A]

Well, the good news, Doug, as you may know, is that that self directed brokerage option, if you actually have it, isn't a bad deal. Hey everybody. Welcome to the Stacky Benjamin show Friday edition. Sit back and relax because we're going to have a good time today. Doug, nothing you like better Than saying the phrase tweaking your knobs. I know that's like one of your.

[D]

It evokes so many great memories, Joe. I just can't.

[A]

I gotta work. I gotta work not to make that my segue. You know how I do. And now somebody who loves tweaking their knobs like that just. I gotta not do it. Just not not do it. So let's just send this over to our good friend who also last week was my co MC kicking off fincon.

[E]

Yes.

[A]

The Paula pant from afford anything's here. We great time. Did we.

[E]

We survived. We did it. We had a great. Can. Can we tell them what our whole shtick was?

[C]

Now that.

[E]

Now that it's happened, can we.

[A]

Now that it's already over.

[E]

Now that it's already over, can we make the big reveal?

[A]

Let's do it.

[E]

This was your brilliance. So you had.

[A]

Say that again. Who's. What was that?

[E]

Doug's friend. Doug's friend's brilliance.

[D]

There we go.

[A]

I love that guy.

[E]

So Jeff foxworthy has the whole you might be a redneck if. And so, Joe, you came up with the shtick of you might be a money nerd if.

[A]

And we got some good ones. What was your favorite one?

[D]

Tala, stop. This is going to get off the hook quickly. I can't handle this level of humor. I'm on medication.

[A]

You will love these, Doug. You will love these.

[E]

If you rebalance your portfolio when you balance your checkbook on a Saturday night.

[A]

You might be a money nerd.

[D]

Oh, my God.

[A]

Oh, my God. Doug, if your favorite four letter word is roth, you might be a money nerd. He's got to stop.

[D]

Who comes up with this stuff?

[A]

What's the other one?

[E]

If you stay up late to check the markets in Asia, you might be a money nerd.

[D]

Yeah, that's not.

[A]

Come on, Doug. Yes, there's always one. That's not funny.

[D]

Can't give you.

[A]

I like this one. If you go to a dinner party and you say, but that's not a real diversification strategy, you might not be a money nerd. Which is followed by and if you get invited back, your friends are money nerds. It's fantastic.

[E]

If you ask someone for their number and they give you their credit score.

[D]

Nerd.

[A]

Well, let's invite another nerd who is in upstate New York right now where he is finally just in time for fall experiencing summer. Oh, it's Mr. Jesse Kramer. Is that mini meek?

[B]

It is. It is. I didn't think I was going to be in the Frame. And also, I just want to say, when Doug was doing the intro, I took some notes.

[A]

Tweak the knobs.

[B]

I was taking notes of what Doug was saying, what I could bring. I mean, dog, it stuck out like a sore knob.

[A]

It was right there.

[D]

Right, right there.

[A]

How are you, Mr. Kramer? Here in the first week of fall and also first week of summer for you guys up there in Rochester, New York.

[B]

Yeah, things are going well. It was awesome seeing you guys out in Portland. The jokes hit harder with the audience than they just hit with Doug. So I think we're all feeling good.

[A]

You know, And, Jesse, we had a great meetup. And what we can't tell people if Paula was there or not.

[E]

So big surprise. Big surprise.

[A]

You had to be there to know if Paula was there. But somebody who's at Fincon every year and is one of our BFFs, and we're super happy she's back on the show. The woman behind the Milmo show, the military show. Lacy Lankford's here. How are you, Lacy?

[C]

I'm doing well. How about you?

[A]

Just trying to stay away from Doug tweaking his knobs.

[C]

Me too. Ditto.

[A]

So for people, for the three people out there that don't know about the Milmo show, tell everybody what awesomeness you do on a weekly basis.

[C]

Yes, I help the military community make, save, and invest money wisely. So that's my show. It's all about the military community helping them with money and entrepreneurship because that falls into the make component of money. And making money is sometimes a struggle in our community. With military spouses, there's a lot of underemployment. Those are the things that I cover on my show, but it's near and dear to my heart.

[A]

Underemployment because families move so often.

[C]

Yes. And you could, you know, have a PhD but be working, you know, at a grocery store. So you're definitely underemployed, but that's what's available in your area. So you're not always aligning your expertise and your experience with a perfect job. It's often like, if you want to work, these are your options.

[A]

Is it a struggle getting our youngest military members to learn to save?

[C]

Yes, but I think that applies to all youth. That's one thing I try to remember and tell people is that the majority of the military is under the age of 24, and so that's who we're dealing with. A lot of teenagers and don't have as much responsibility, especially in the military. They're Making a steady paycheck. Their medical's covered. There's, you know, a roof over their head, food on the table. So sometimes it is hard to get them to see. No, no, no. In the future, you're really going to need this money. So I'm always harping on the. You're saving money for two people, for yourself and for your 80 year old self. And you got to put some of it away now for the quality of life for your 80 year old self.

[A]

Well, as everybody here knows, our longest sponsors. Our longest sponsor for a reason, Navy Federal, because we love helping our military members. We're super happy that you do, Lacy. And man, if you're anybody in the military community, Lacy's ship show is not only something that will help you get ahead. Lacy happens to be just slightly funny. Like, just slightly.

[C]

It's a scooch.

[A]

Yeah. AKA I can't. In fact, this is how funny Lacy is. We did a comedy club tour a few years ago, and the sponsor of the tour decided Lacy had to go to Kansas City because Lacy was so damn funny. So, Lacy, no pressure, but you got to bring it today to make up for all of us, you know, so.

[C]

Speaking of funny, I'm a little rusty. I totally forgot that this is live.

[A]

Well, welcome. Yes. We've got a few stackers hanging out with us so far. We started early. Dan is here, B is here, and, well, they're the ones that have chatted so far. So come say hi to us Monday afternoons. We're normally here recording the Friday shows. So come on out. If you get the 201 newsletter, you'll know when we go live. But enough of that. We're talking 401ks because earlier in the month, it was 401k day and we totally missed it. We totally missed it. So better late than never, I think. Doug, you hit it on the nail on the head. Every day should be 401k day. So whether you have a 401k, 403b, a different type of retirement plan. Let's dive in today, Paula.

[E]

We didn't miss it. We're just 11 and a half months early for the next one. We are, right?

[A]

We are. This is why Paula sat in the front row all the way through elementary school, middle school, high school.

[E]

Glass full, glass half full. We're 11 and a half months early for next year's 401k day.

[A]

So Paula's here keeping us on the straight and narrow. Lacey's here, Jesse's here. Doug and I, in just a second, we're going to talk 401ks, but we have a couple sponsors to make sure we can keep on keeping on. And you don't pay a dime for any of this. So we're going to hear from them and then we're going to help you do better with your 401k. Race the rudders, race the sails. Race the sails. Captain, an unidentified ship is approaching. Over. Roger, wait. Is that an enterprise sales solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title and more. Start converting your B2B audience today. Spend $250 on your first campaign and get a free $250 credit for the next one. Get started [e-mail] campaign terms and conditions apply.

[E]

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[A]

All right, guys, 401k day a couple of weeks ago. But you know what? That's not going to stop us. We're going to help people, as you said, Paula, get on the straight and narrow for next year ahead of time because you can show up and you've already done all the hard work. I thought it'd be best to go over four of the common mistakes that we see people make. And the first one, Paula, since I already mentioned your name, let's start with you. Not knowing the employer match, I think might be the cardinal sin. You think there's any sin that comes before that one?

[E]

You know, not getting the employer match would probably be a bigger one than not knowing the employer match. As long as you're getting the full employer match, you can always look back through your records years later and figure out, hey, hey, what was that? Anyway?

[A]

Yeah, it is so frustrating when I hear people go, yeah, I don't want to give any money to my company. This is a thing. Jesse. I was going to call him Lacy, but I'm like, lacy, most of your audience knows exactly who they're employed by. But Jesse, you must have heard like I've heard in the past, people go, I don't want to give any money. My company like people thinking that this is like somehow your HR director is putting the money in their pocket for a few weeks before it goes in. Your 401k is a big misnomer.

[B]

Right. You know, just. Right. A fundamental understanding of whether the 401k plan even exists in the first place. Like whether there is this employer sponsor plan. The fact that is a benefit that you as the employee just purely get to benefit from. Not that we have to go into the weeds because there are things out there, I mean, like the 457 plan where.

[A]

457.

[B]

Right. My understanding is I'm pretty sure those assets actually do end up on the company balance sheet, which is kind of unique. Yeah, but that's so in the weeds. But the whole point is, you know, some individuals out there are just completely unaware of what benefits are out there for them, whether it's 401k specific or just other financial benefits in life, employer related benefits. And so educating yourself on that is a great first step.

[A]

It totally is a great first step. Lacy, besides just the company match, I mean, your military members, they get the thrift savings play. We're going to talk about fees later. But that's a hell of a retirement plan that I see people not take advantage of.

[C]

Yes. Well, the military has taken with the new blended retirement system. So it's the new, you know, retirement system for the military. Now there is. They automatically sign you up for the TSP, which is the military's version of a 401k. But I was going to say a mistake that people, I see people make is that they opt out, they get it set up automatically. Once they pass two years, they're getting automatic contributions up to 5%. After a little bit, you automatically get 1%. You don't even have to contribute. But if you're contributing 5%, you're going to get a matching total of 5%. But a lot of people go in and turn that off. Whether that's, you know, they want more money to go out every weekend, they want to get a new truck. Whatever the reason, they end up doing that. But I feel like that's a huge mistake.

[A]

Paul, is there ever a good reason to not do the 401 match? And I waited till your mouth was full to ask you this question.

[E]

Sorry, give me a moment. I'm chewing.

[A]

I didn't. I got halfway through asking.

[D]

We're clearly a priority for her right now.

[C]

We don't want her to get low blood sugar.

[E]

I would think, you know how much.

[A]

The ratings would go up if Paula just like passes out in the middle of the show.

[E]

Do it for the ratings, Joe. I do it for the ratings. I would say when it comes to specifically the match, I can't think of any reason why you wouldn't get the match. Because even if you have debt, let's say you've got credit card debt or some other high interest form of debt, that interest rate, maybe it's 25%, maybe it's 30%, but if a match is 50% or if a match is dollar for dollar, that match percentage that you're getting is actually higher than the interest rate that you're paying on your debt. So even in the case that you have credit card debt, high interest credit card debt, it still makes sense to get the maximum match.

[A]

Even at a 25% match, it still equals most credit card debt. And so assuming at some point the credit card debt goes bye bye like you're still equal it, I, I can't. Jesse or Lacey, can you guys think of a reason why somebody should forego the match?

[B]

Just some food for thought on that last line of thinking is like depending on the size of someone's credit card debt, if someone has enough credit card debt that it's going to take them years to pay down, you know, you could make the argument to say well do you want this one time 50% for 1k match or do you want to pay down this credit card debt that's going to accrue against you at 25% per year for the next X years. And that might weigh the scales a little bit differently. But as far as someone who just shouldn't take advantage of their 401k match at all, I would think it's only the person who is in such dire straits that they need every little dollar of earned income they possibly can to put food on their kids table, put clothes on their kids back and even that 5% deferral into their 401k is the difference between some of those really, really basic human needs being met. But outside of that, I mean like the, you know, to Paula's point, the first 1, 2, 3, 4, 5% that you have extra, it's gotta go to either that 401k match or maybe some corner cases to a high interest credit card. That'd be my two cents.

[D]

Can I jump in and add two to Jesse's two, Joe?

[A]

Sure.

[D]

I almost want to challenge what you said Jesse, a little bit because the vast majority, you loser. I think the vast majority of people who are, who are in a position in a role in a job that have a 401k available to them probably have that 5% to give and don't think they do. In other words, like, I didn't, I didn't like hearing you give them the out because I think there's a lot of people who, who think, yeah, man, I need every single penny and I can't afford. But I bet you you can. I bet you you can find a way to adjust a streaming service, adjust a cell phone plan or something so that you can find that 5% to put it into your 401k. So I, I didn't like hearing you give them the excuse because I'm willing to bet most people who have a job that has a 401k means they probably make enough that they can adjust a couple of those things that we think are necessities, but there's probably some wiggle room in a couple of those necessities to give them that 5%.

[B]

I think what we just saw was the difference between empathy and cynicism right there.

[A]

Right there.

[B]

No, I think you're right. I mean, Doug, I would wager that, you know, 97% of percent of people who fit my criteria, really, what they're saying is I need the new iPhone 17, and in order to do that, I'm going to turn off my 401k contributions this month. And we all agree that's probably, that's. That's not a smart financial move, right?

[A]

I don't think there's as many people saying that though, Jesse, is. We, you know, you hear talking heads all the time talk about that. I don't think there's that many people that are cutting their 401k to buy the new iPhone. But back to you, Jesse.

[D]

I think, I think it's never like a one to one ratio like that for a specific luxury. I think it's this little bit of lifestyle creep that happens. And you've got, per month, you've got $5 over here and $12 there. And it adds up to call it, you know, 250 bucks a month that you probably could redistribute, but you just, you don't make that one to one ratio of I want the new iPhone. It's all the other little stuff that's killing you.

[A]

Be hanging out with us on YouTube is on team Doug says cynicism rules. So we should just be cynical about each other. I swear to God, if you're online, I think that's the rule, isn't it?

[D]

All right.

[A]

All cynical all the time. Lacy, you coach people on their money like if somebody tells you they don't have enough money to contribute to the TSP or 401k, 403b, 457, whatever it might be, how do you help them ring some money out, find the money so that they can get at least up to the match?

[C]

Yes. I feel like I'm right between Doug and Jesse that I do think sometimes there are situations where, especially in my community there's you, you might have an 18 year old that has five kids that you know is just enlisted in the military. So they're not making, you know, $3,000 a month. So they are really stretched thin. But to Doug's point, it's like, okay, now how are you spending that money that you have? So when I look at that, it's looking at their bank statements to see the past history and highlighting that. And then a lot of times when it's really narrow like that, I'm more focused on on how you're going to bring in some extra money, whether that dire. It's like, do you want to donate plasma? Can you sell something? Can you take on a side hustle, something like that? But I would rather them do that for their future self, especially if they have some type of debt. I'm like, to get that match, you're going to need to get a side hustle in order to make sure you're paying down your debt so that way you don't have to stop saving for your future. So I think it's everything in money is, you know, it depends on the person, their situation. But it would be very extreme where I would say like, oh yeah, don't give money for your TSP or your 401k, especially for military spouses, they have 401ks or I'm a big fan of military spouses saving for their own retirement with an ira. So I'm like, find the money. You have to be congruent with what you're saying. If you want these things in the future, then your actions need to align with that.

[A]

It's so interesting. Back when I was a financial planner, I would tell people, just try it, let's just try it. And you know what's cool is we can go back to HR and we can turn it back down later. And you know, the number of people that ever came back to me to turn it back down, not one ever. So I think a lot of Times, Doug, you're 100% right. People think I don't have the money. And then when it's just taken away before the Paycheck gets there. They totally do. But the good news is you could be the person. So let's just try it and see if it works. The second sin I want to talk about is investing without a strategy. You know, I feel like, Paul, a lot of times people, they get signed up for the 401k, and how many times have you heard this? Oh, my goodness. They sign me up automatically, so I'm like, that cool. I don't have to do that. And then they find out, like, a year and a half later, my money's been sitting in cash the entire time.

[E]

I literally just went to dinner with a friend on Saturday night who told me that the money in Roth IRA or it was some retirement account. I don't remember specifically what kind of account, but she had money in a retirement account that she just realized was sitting in cash. And she for years has not known this.

[A]

But it's great when you find out. I mean, you can sit around and go, oh, man, I should have. I should have. But that doesn't help. Like, right. The fact that she knows now is pretty great, right?

[E]

Exactly. And that's the thing is so much of financial education is learning through the school of hard knocks. Unfortunately, we don't have. Most of us don't have financial education when we're kids. And so a lot of adulthood is simply learning through trial and error, learning through making mistakes. And frankly, if you're gonna learn an expensive lesson, wouldn't you rather do it in your 20s, 30s, 40s, even 50s, rather than learn an expensive lesson in your 80s? You know, when you don't have that time to recover?

[A]

I like that from a teaching perspective too. Just making yourself older and going, okay, what if. What if I was at this age and I didn't know and I had done nothing Right. Lacy, how do we do this? Our average stacker wants to feel confident that they're making, like, the right financial move. But you've seen all the different options that people can do. Heck, you know, the TSP is pretty straightforward. Luckily, there's not a ton of options, but you look at some of these 401ks or even an IRA out there, like, you can choose anything. Like, how do you feel confident you're making the right move and not over complicate it when you're starting out?

[C]

Yeah, I think you have to more make a move than not make a move. But it can be difficult because there are so many options. You're right in the TSP aren't as many, but it's a Big struggle for military spouses. And I think you have to do a little bit of homework, do a little bit of research, read the material. I think that if that's given to you, you may not understand everything, but starting to get familiar with it, not looking at it isn't an option because then it's just an excuse like, oh, I didn't know. But you could start to understand it. And to your point earlier, you could do something and you can always go back and change that. You know, as long as you're not taking money out or stopping your contributions, you can change what you're investing your money in. So don't think it as forever. Try a plan. Try something and see if it's working. Reevaluate it, don't set it and forget it, and then change it if it needs to be.

[A]

What do you think the first concept is? People need to know with investing.

[C]

Picking something.

[A]

Yeah, with picking something.

[C]

For me, I think it's risk tolerance. Especially if you're in a relationship, you're understanding somebody you know might be fine with just going to laying $100 on red versus somebody else. It's like, no way. I don't even want to gamble. So understanding where you sit in that, how comfortable you are with a punch in the stom with money, is really important. And so then you can determine, all right, I'm going to try something that has a little bit lower risk so I can sleep at night and get used to this. Then you can amp it up a little bit.

[A]

That's interesting because Jesse Lacy goes to kind of stocks, right? Can be all over the place. And yet for me, it's funny, Lacy, when you were talking, I was thinking that the first thing might be this idea of diversification. So I know even if I am all in stocks, like, the chance of losing my money is. Is not high. Jesse, what do you think the first thing is to know about getting your strategy together?

[B]

It's a tough one. The first thing to know about getting your strategy together. Because I, I like. So, I mean, Lacy touched on the subjective nature of risk tolerance, right. About that feeling of like, do I want to put my money at risk? Am I okay taking this ostensible gamble? So, so my framework, I think this comes from the cfa, the chartered financial analyst framework. They talk about need, ability, and willingness. So willingness to take risk is that very same subjective thought process of like, can I stomach this risk? Will I be able to sleep at night with this in my portfolio? The need and the ability part are much more objective. Numbers that kind of go back to someone's financial plan and what are your long term goals and how much time do you have to get to those goals and how much risk numerically, how much volatility can you afford to suffer and how much risk can you take to still reach your goals on time? And I know that's a lot for someone to get into. You know, if this is day one of your 401k plan, that's a lot to think about. And a lot of people maybe don't feel that drive inside them to think about that. But my own story is, you know, after like three or four years of 401k contributions at my first job where maybe I'm contributing 5 or 6k a year or 10k a year, I'm getting a little bit of a company match and there's market growth. It's like, next thing you know I've got 80,000 bucks in a 401k and I realized, boy, if I don't learn what I'm doing here, I'm going to make some five figure mistake. So I think for some people it takes that amount of that realization that they have some serious skin in the game to like we've said a few times now, actually realize, oh, I need to learn this. And if I need to make changes now that I'm two or three or five years in, I still can make those changes.

[A]

That always drives me crazy when people say, well, they can't be bothered to learn about the stock market. I'm like, how are you actually going to get to retirement then? Like, what are you, what are you going to do? I mean, don't get me wrong, you could figure out about real estate, but generally those people aren't, are not knowing about the stock market because they don't know anything about real estate. They just don't want to be bothered to think about investing at all.

[B]

Yeah, well, yeah, you know, the devil's advocate argument is that to the outsider who's unaware of what's going on, or all they've ever seen is my uncle on CNBC with his sound effects, maybe they think the stock market is a casino.

[A]

Bam, bam, bam.

[B]

Yeah, exactly. Wham. So anyway, it takes a lot of education, doesn't it, to convince yourself that just like you said, Joe, a diversified portfolio over the long run, it's hard to find. It's hard to find a circumstance where that loses money over a multi decade period. But it takes some serious education to, to get to that point where you've internalized that. That understanding.

[A]

Paula, I get what Jesse's saying, but does it really take that much education? Because. And I don't know if maybe I've been in this field too long, but I think that Wall street wants you to think it's complicated. I think there's a lot of people out there who get paid a lot of money to have you think it's complicated. And yet I remember drawing stuff on a whiteboard about diversification, and people get it in about 34 seconds.

[E]

Yeah. So I agree with you. And also, there's an expression that expertise is the ability to both deep dive and simplify. And so I think that to a certain extent, you have to learn a lot in order to understand how little you actually had to learn. I got a process, you know, like. Well, because there's so many. For example, there are so many questions in which the answer is, it depends.

[A]

Oh, right.

[E]

What mix of asset classes should I have in my portfolio? Well, it depends.

[A]

Yes.

[E]

There's so many questions around that. Between a tax deferred, tax exempt, and taxable account, what. How much money should I have in each? Well, it depends. And so I think that you have to. Because of the fact that you have all of these questions that fork off into different branches, and it gets. It can get complicated, especially if you're a beginner and you're just learning all of this stuff for the first time. I think first you have to learn this big body of knowledge, and once you've learned it, you can kind of sit back and go, wait a second. If I really simplify all of this down to its root, the root is actually quite simple. So I think you. You need to be able to deep dive in order to be able to simplify.

[A]

That is always my first question. I get what you're saying now, and that's always my first question when somebody says it depends. And I know that's the right answer. But then my next question is always, why does it depend? Like, why? And if somebody ever tells you that it depends, I think that's the first thing you got to ask is why? And not being mean. I just need to know why it depends. Like, what are the factors that it depends on? Because I've. I don't know. I've been in a room with a lot of financial people that I feel like are obfuscating the truth by telling me that it depends. And I'm like, but when people give me the it depends. And here's what I mean by that. If you're doing this, then this applies. And if you're doing this, then this applies. And that decision tree, just knowing what the decision tree looks like helps me just a ton. Just helps me a ton. Lacy, I got a question for you. If people, whether it is complicated or not, people perceive this as complicated, and especially people that are reticent to invest consider it complicated, is this where the Target Day Fund comes in?

[C]

Absolutely. That's the off ramp for a lot of people, is I don't have to go here. I can get off here, and it's easy. And I can understand that somebody else is kind of taking that over, but I think that you should still understand it. A lot of people just pick that because reducing risk and it's kind of managed on its own for you. But going back to risk tolerance or other factors, those might not be a good fit for you. So I do think that you need to understand it. In the tsp, they call them life cycle funds, and it. You just don't know, especially in the military community, how long you're going to be staying in the military, if you're, you know, going to be taking a government job and maybe still contributing to TSP differently. But there's all these other factors. So I do think that you still need to understand it. But that's kind of the option for people like, oh, if you don't want to go there, then just put it in here. And I don't think that people should do that if they choose that, and that's good, but they should understand what a target date fund is before they do it.

[A]

Jesse, I can see Lacy's point about the Target Date Fund for people just starting out. Not my preferred choice, but I can see people choosing that.

[C]

Yeah.

[A]

And then I love Lacy's point. And then I learn, what about people that go, you know what? Target date fun for the long term? I'm not a fan of that, but are you a fan of that?

[B]

Yeah. Well, I think this is a really good example, Joe, of the reason why you want to continue learning about this stuff, and the reason why maybe something that you learned 10 years ago isn't as applicable today as you once thought it was. And in other words, it's not that this stuff has to be overly complicated. It's just that maybe it changes over time or it's simple to understand. It's just not necessarily easy to always implement. Like, it's simple to understand the idea that a diversified stock portfolio provides these great returns over time. It's not easy to live through a 40% drop in the Market and then stay the course. And with target date funds in particular. Literally two weeks ago I went through and read a summary of this one like 80 page academic article that's kind of out of control and how long it is. But it's about the inefficiencies of target date funds and about some of the. Whether it's just fee drag because they're charging you 40 basis points instead of 10 basis points like an index fund, or the fact that some of these target date fund, not custodians, but fund managers pack suboptimal mutual funds into the target date fund to ensure that those mutual funds are still getting new dollars plowed into them. And that leads to underperformance over the long run. So these are things I see you nodding to that you probably this might be why you're not a fan of a target day fund in the first place.

[A]

Yeah, there's this crazy white paper called stacked that people can get which walks through the same stuff.

[B]

It's weird, but I'll admit like up until recently, it's not like I knew those facts for myself. I just heard over the like call it the last 12 months. I'd heard people in the community being like, listen, you should really think twice about putting money into a target date fund. And so I guess going back to my point, your question was, would I recommend putting money in a target date fund? Listen, if you can construct a diversified portfolio inside a 401k using only asset specific funds, meaning like here's my total market stock index fund for 8 basis points. And here's my total market bond index fund for 8 basis points. I would rather someone do that than lean on a target date fund. That's my answer.

[A]

Me too. Me too, Paula. Target date fund versus starting out somewhere else.

[E]

My preference is target date fund largely for the simplicity or just VTS X Again because of the simplicity. Because I think that for so many beginners, complexity is the enemy of action, you know? So get started, get in the door. Don't let perfect be the enemy of good. And you can always refine later.

[A]

I like what Dan says here online. For somebody who's paralyzed and not investing at all, it was funny. He's writing this, Paula, the same time you're saying don't let perfect be the enemy of good. If you're paralyzed, you're not gonna do anything, then fine. Target day fund. You know, but I like vtsax. I even think you could just go with like the S&P 500 if that's available.

[E]

Yeah, absolutely. Absolutely. When I say VTS X, I mean that. I don't mean specifically Vanguard, although I love Vanguard. I mean that as a. As a proxy for any total stock market index fund.

[A]

And the problem with that, Lacy, is that then people have to recognize that diversification will make sure that you don't lose all your money. Is a thing that I think a problem that new investors have when they first start out.

[C]

Yes, absolutely. Because if they don't have that basic understanding, then they're not going to.

[A]

It feels too much like gambling. Yeah. All right. It is the halfway point. We got a couple more things I want to talk about. I want to talk about fees and expenses, one of my favorite topics. And then overlooking plans, extra features like the little quirks in your 401k. Doug mentioned one of those. The ability to have this brokerage account option, or choosing Roth versus Traditional. We'll go into all those briefly, start people thinking about those. But at the halfway point of every Friday show, we have this amazing competition between our three frequent contributors. Paula, pan to Jesse Kramer and OG And, Lacy, that means you get to play for OG today. Do you want the good news or the bad news?

[C]

Let's take the bad news.

[A]

Well, the bad news is you're gonna have to guess first.

[C]

Oh, darn it.

[A]

Which I know. It always frustrates me when somebody's nice enough to join us and then we have to have them lead the way. But Lacy. This isn't Lacy's first time on the show, so she knows. And the other bad news is, is that even though while you're winning you have 11, you are not winning by as much as you have been, because Jesse Kramer is at ten and a half. So Jesse could take the lead today.

[B]

Did someone win on my behalf? Who won on my behalf? Who do I owe a cookie to, Doug?

[D]

Who?

[A]

Who won on Jesse's behalf? Because I don't remember.

[C]

That's a great question, Jesse.

[A]

That is a great question. If only we could remember what happened last week, Jesse, that would be great.

[D]

They're never being invited back, I can tell you that.

[A]

Yes. So you are half a point away, my friend. And then Paula. Actually, that was two times ago, because last time we were on, Paula won, moving her to seven and a half.

[D]

Was it Yillian Yon's root?

[A]

It was. It was. It was Jillian. Jillian John.

[B]

I was taking a little semi retirement, a partial retirement, a mini retirement, and she came in and won a point for me.

[A]

Yes. Jesse was retiring often when Jillian won. So we've got Jesse at ten and a half. OG at eleven. Paula at seven and a half. And surging. Who's going to win this week? Well, Doug, we need a trivia question. What's on tap today?

[D]

Hey there, stackers. I'm Joe's mom's neighbor, Doug. And I am so glad we delayed this basement based celebration of retirement accounts because. Because that just gives us a chance to combine it with my favorite misnamed holiday. Oktoberfest. Yes, every year in Munich, Germany, people who couldn't get into their local 401k festival instead head across the street to drown their sorrows in beer with thousands of their soon to be closest friends. I mean, get a couple of pints in you and even the guy who rejects his company match. Looks pretty cool, right? Beer goggles are real, folks. Beer goggles are real.

[A]

Real.

[D]

I've been both a victim and a beneficiary. But I digress. Here's today's question. Based on the number of liters in beer these lunatics downed in Munich in 2024 over 16 days at the official Oktoberfest celebration, how many Olympic sized pools could this beer have filled instead of bellies? And later, Porta Potties. I'll be right back as. As soon as I tell the beer wench upstairs to fill my stein with a foamy beverage.

[A]

It's the circle of beer, Doug. The circle of beer.

[C]

Wow.

[A]

Olympic sized pools. Lacy, you get to go first. Lucky you. On this deal. So, 16 days at Oktoberfest in Munich. Happening right now. Based on last year, how many Olympic size pools of beer would the amount they imbibe have filled up?

[C]

Over 16 days.

[A]

Over 16 days.

[D]

That's how long Oktoberfest is.

[C]

I just. There's so much pressure. I don't want to let OG down. Wait, did it say how many liters they did last year?

[A]

We did not.

[D]

We did not.

[C]

So I just have to guess how many Olympic sized swimming pools.

[A]

I actually know what's funny, and I'm actually proud of him for this. When Doug and I were coming up with this question, I told Doug, how many leaders when I was doing the draft of this question, and he almost nailed it.

[D]

And then Joe was like, well, if you almost nailed it, they definitely will.

[A]

We gotta make this hard.

[D]

Tell them how many.

[C]

Yeah, okay. I'm gonna go with eight.

[A]

Eight swimming pools. Jesse, is that too many swimming pools or not enough?

[B]

I think that's a good guess. I'm jotting down, like all my little math here, and my math gets me to 16 divided by three. So I'm going to say five point. Do I have to use a whole number?

[A]

No.

[B]

Do I just use a whole number? No.

[A]

And the real answer is not a whole number.

[B]

I'm going to say five.

[A]

Dude, it could be 0.0.

[C]

That is not fair.

[A]

It could be 0.0.

[B]

Well, I'm going to say 5.3.

[A]

That's not a whole number.

[B]

Can I say 5.3?

[A]

You can say 5.3, but it's 5.0.

[B]

5.3 pools.

[A]

5.3. We've got eight pools and 5.3 pools, Paula.

[E]

Well, okay, so I'll tell you what I actually think it is and then I'll tell you my official guess. So when I heard the question, the little math that I did is this festival is 16 days long. So if you filled five Olympic sized pools per day time, 16 days, then it would be 80. So, Lacy, when you said eight, I was like, oh, I was literally thinking an order of magnitude differently, an order of magnitude greater. So I'm going to take the over. So how many layers of fraction can I go? So 8.000001.

[D]

Jesus.

[A]

One spot. It could be 0.0. Could be 0.1. Could be 0.2.

[E]

Yeah, I'll go 8.0.00001.

[A]

We'll go 8.1.

[E]

8.1.

[A]

Yes. And Lacey, you should feel good about that because that would have happened either way. She was going to either take 8.1 or 7.9. So even if you'd said 8.1. All right, unless 8.1 is the answer, then that would suck. So Lacey's at 8, Jesse at 5.3. Paula takes you over. 8.1. She thinks it's actually 80. How many Olympic sized pools is it? We'll find out in just a minute.

[E]

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[A]

Lacy, you opened this up with eight. Paula thinks that's way low. Jesse thinks that it's a little less than that. What do you think? You feeling good, Lacy?

[C]

Oh, I'm sorry. I thought you said Jesse.

[A]

I'm sorry.

[B]

I wasn't sure either.

[A]

Lacey.

[B]

It's okay.

[A]

I'm not even sure.

[C]

No, I'm not feeling good. I am not feeling good. There's a lot of pressure to lose for somebody else or win for them. I'm. I'm going to be optimistic win so I might have a shot.

[A]

Let's go with win for them. Jesse, you feeling good?

[B]

I'm feeling okay. Olympic swimming pools are huge, and that is a lot of beer. But it's also a lot of people. And 16 days. Wow.

[A]

16 days. A lot of people. I'm feeling good. I like if you've never been drinking with Pola Pant. You know what a can do attitude she has.

[D]

Yeah. There's a reason why she was thinking 80.

[A]

Yeah.

[D]

So I know how much I can put down in a night multiplied by.

[E]

Well, because. Okay, so I'm thinking, let's say the average person there might drink. If they're there all day, then maybe they'll have like four or five liters. Let's just say five liters for easy math. I don't know how many liters are in an Olympic size pool. And I also don't know how many people are there. But it seems like it would work out.

[A]

Well once everybody logged in their answers. I told during the break everybody watching us online that they could also partake since they were nice enough to let you guys go first. And somebody's going to take home a copy of that white paper. Jesse name stacked this book CNN said was the best book on personal finance. You should have read that year. But I digress. They now have their answers locked. Doug, you got the answer. Who's going home with the prize?

[D]

Hey there, stackers. I'm the local baron of beer and guy who just realized you called Joe's mom beer wench at your own peril. Joe's mom's neighbor, Doug. Ah, Munich Germany, the place where millions of people last year downed 7 million liters of beer. 7 million. But that wasn't our question. Ours was, how many Olympic sized swimming pools would this have filled? If you said, well, I'm not going to tell you. What I will say is it was 5.31 pools less than what Paula said, 5.3 less than what Lacey said. Just two and a half less than what Jesse said, because the correct answer is 2.8 Olympic swimming pools, making Jesse not only a winner, but our new leader in the clubhouse.

[B]

Someone pour me a beer.

[E]

Amazing.

[D]

And Lacey, not only were you wrong, but you also gave up OG's lead. And for that, we all thank you.

[A]

We thank you, all of us.

[C]

Thank you. Happy to help. Happy to help.

[D]

You're the real winner today.

[E]

Wow.

[A]

Doing your part. Well, you're not. Can you believe that? When I found out it was 2.8.

[E]

Swimming pools, I thought it was 80.

[D]

I guessed 3. When we were doing this as a draft, I guessed three.

[A]

Paula's like, I could do 80. I could do three by myself.

[C]

Well, my point is, like, if you come to Oktoberfest, like, you're ready to drink beer, so it's, you know, you're not. You're all in. So I just thought people would be drinking more than their normal amount.

[A]

Jack hanging out with us on YouTube says, well, I guess I gotta get over there and help him drink more beer.

[C]

I'm with Jack.

[B]

I'm curious. How many people do you guys think.

[E]

Attend and how many liters are in an Olympic sized pool?

[C]

So many questions.

[A]

Doug, you can look that up for me, but we do have that number. How many people attend?

[B]

Yeah, My guess was 8 million and 2 liters per person. 16 million liters. And I don't know, for some reason I converted to kilograms before doing the division for the pools. I know.

[E]

And then I converted it to Celsius.

[B]

Yeah, I did that. The distance of the sun.

[A]

Divide by four. And there you go. Nice job, Jesse.

[D]

There were 7.2 million visitors, so everybody, on average drank a liter of beer.

[C]

Bunch of lightweights.

[A]

Wow. Yeah.

[B]

Oddly coincidental.

[A]

One liter each. And they come in these one liter things.

[B]

Mugs.

[E]

Steins.

[A]

Well, it's not steins anymore. It's now M A. And it's that thing that looks like a B but is pronounced like whatever that thing is. We actually, Doug and I got in the weeds on this. Probably more than we should have, but let's get in the weeds.

[E]

Were you drinking beer at the time?

[A]

No, but we should have been. That would have been great. Doug, we need to celebrate the moment.

[D]

Then the question would have been less or more incomprehensible than it already was.

[A]

Then Doug would have even been calling me beer wench. And you beer wench. And everybody beer wench.

[D]

Yeah.

[A]

Let's talk about fees in hidden costs in IRAs and 401ks. Jesse, how, how big a point is this for investors to know about the 401k?

[B]

Yeah, it's a decent point. My understanding is that like a really good proxy for the fees that you'll pay is just the, the size of your company and like the total number of employees, the total number of participants. Like all investing fees, like investing fees eat away at long term returns, long term performance. It kind of compounds.

[A]

What do you mean by that? Do you mean the bigger the company is, the higher the fees are?

[B]

Yeah, sorry, the other way around. Yeah, I probably didn't explain that clearly. Usually the bigger the company, the more negotiating power your company has with one of the big 401k custodians. And therefore you can negotiate lower fees.

[A]

Gotcha. Small company people.

[B]

Correct. My former employer had something like 60,000 employees nationally. And our fund fees in the 401k, like my index fund, the target date fund fees, those fees were like pretty typical that you would see if you just logged into Fidelity right now in your ira. Like those usually don't change much. But then all the underlying, like the record keeping fee and the, the annual just because fee, in some plans those are like half a percent or 3/4 or 1%. Whereas with my old company that was huge. I still remember it was 8 basis points. It was.08%.

[A]

Wow. Wow.

[B]

And those do add up. Those do add up. And for what it's worth, those do make a difference. Sometimes when it's like some people will ask, well, I work at a tiny company, the 401k fee, the total fee is like 1.1%. Should I invest in this to get the match or do the fees kind of eat away at the benefit of the match? And the answer is like, if you look at it for a long enough period of time, like that fee can eat away at any benefit you'll get from a match. So it's interesting, it's a very kind of nuancey and in the weeds topic, but once someone gets serious about this enough, it's worth understanding that.

[A]

Well, so let's go into that, Paula. Let's say that somebody works at a small company and to Jesse's point, they have a high fee, 401k. Is it better to invest outside of the 401k or to say, you know what, it's just high fees or nothing.

[E]

I would add a minimum, get the match. Because, you know, the average person stays at their job for, I don't know exactly what the current averages is in terms of number of years, but let's say four years, five years, six years.

[A]

The statistic I think three years ago was 4.2. So you're in the ballpark, I'm sure still.

[C]

Okay, cool.

[E]

See, on certain things, I can guess in the ballpark.

[B]

Give her a point.

[D]

Just, I'm like, Paula, just say a number. You sound so credible, we wouldn't believe any number you would have said. Just spit it out.

[A]

The Average person has 80 different swimming pool jobs.

[E]

The average person at a pool maintenance company.

[A]

Drinks more than a liter of beer.

[E]

Okay, so the average person stays at their job for 4.2 years, which means that when you leave that job, you can remove your money from this high fee account and, and transfer it to a lower fee custodian.

[A]

It's interesting, Lacy, because sometimes, and you won't see this inside the tsp, I think the TSP is known for very low fees, isn't it?

[C]

Yes, like 0.036.

[A]

Yeah. Just nothing. But when you're working with the spouses and establishing maybe working on a 401k at a job that they have, the thing that always messed me up was when somebody at a really small company like Jesse's talking about works in one of these companies where it's an annuity, even though the fee looks manageable, there's actually even more hidden fees on top of that. Like, that's a pain in the ass trying to figure out where your fees are actually being paid from.

[C]

Yes. And for many military spouses, they're not even getting jobs where they have an employer plan or they qualify for the employer match. So often they are contributing to an IRA. Or many of military spouses have multiple 401ks laying around. And so to Paula's point, a lot of times that's my advice is you should be looking, you know, if your newer one has lower fees, like rolling that over, getting them all together, sometimes it's one or two of them might be good to stay where they're at because of the fees, but it starts to eat at it. And it's overwhelming for a lot of military spouses having multiple ones to look at and make that decision every year or every two years. But it's Something that has to be done. It's just the way the cookie crumbles.

[A]

I love that you said that because I saw that a lot too. People like, oh, rolling this over seems like such a pain in the ass. I go, it's a bigger pain in the ass if you don't roll it over. Like it's a small time pain in the ass one time here for the next month or two for us to get this done, but then for the rest of your life, it's much better having it in one place.

[E]

Yes.

[C]

It overwhelms you. A lot of times you're getting all of the information from those different plans and it can be confusing and overwhelming. So sometimes for peace of mind, it's better to get them all together and, and get organized so that way, you know the next move isn't so overwhelming. With your employer benefits, this brings up.

[A]

Some of these plans, extra features that they have. Let's move into my last point of the day about these cool features, or maybe not so cool. One is, you know, Doug mentioned this, Jesse, this brokerage account option, right, where you might be able to, to move money over there, you know, if your fund has high fees, does it make sense then to use this brokerage account, this side account, so you can go get a fund that has much lower fees?

[B]

I suppose so. I'm not like intimately familiar with those little side brokerage accounts. I do know from the ones that I'm aware of that they're kind of limited in size, for lack of a better term. Like the 401k plan usually puts a limit on how much of your 401 assets you can divert over into the side brokerage account, the sandbox. Because I think the idea was like, oh, well, we still want most of your money to be in these approved funds within the plan. 15, 20, 25 funds that have been approved. But if you want a little sandbox, 5%, 10% will allow you to do that. So if you have really high fund fees or just high plan fees, I'm not sure if that side brokerage account is a way out of it or not. My guess would be it's not.

[A]

The biggest problem I saw and continue to see is that even if you move that little bit over, Jesse, you have to schedule it on your calendar because you can't contribute directly to it. I've never seen a plan where you can contribute directly. So you've got to continue to shovel money over there, which makes it even more complicated. You know, back to Lacy's point about it Seems so complex to do all these things. You're just adding some complexity. But heck, if you get the ability to do that. Let's talk about a different aspect here, Paula. You know, somebody's signed up for the 401k Roth versus traditional. Where do, where do we go?

[E]

I mean, my bias is towards the Roth unless there is a compelling reason to do so otherwise for a couple of reasons. Now, just to establish what a Roth is. For anybody who might not be familiar, when you put money inside of a Roth account, you don't get a tax advantage that year, meaning you don't get to deduct that income from your taxes in that current year. But everything that you put in there, all the growth, all the dividends, the capital appreciation, everything is tax free for life. So a Roth is a tax exempt account. And in particular, the younger you are, the bigger of a benefit that is because your money has more time to grow. To compound, you think the rule of 72, which states that your money is going to double every, you know, if it's an, if it's at an 8% return, your money's going to double every nine years. Well, if you're 30, all right, that, that money doubles when you're 39 and then when you're 48 and then it like it just keeps doubling. And all of that is totally tax free. So I think the Roth is, you know, unfortunately limited in our opportunities. Like there's a Roth IRA for people who are self employed or some people might be able to do a Roth 401K or a solo if you're self employed, a solo Roth 401k. But generally speaking, your opportunities to make Roth contributions are fairly curtailed. So if you do have the chance to do it, go for it.

[A]

Yeah, but that is definitely my bias too. Lacy, is your bias for people generally the Roth as well?

[C]

Yes, absolutely. Especially and not to keep talking about the military community, but that's who you know. Yes, but in a very special group of people that when you deploy to a hazardous area, hostile fire, you do not pay federal income taxes. So we're a small group of people that can get away with contributing tax free and then it growing and withdrawal tax free.

[A]

So it's like hsa, but for any reason.

[C]

Yes, yes. So I mean, and you think at some points people are deploying for a year at a time. I mean, we're not quite that same ops tempo now, but that's a huge savings for people for their future. So often in the military community, that's the Way to go, Jesse.

[A]

When it comes to Roth versus. Are you okay?

[B]

Yeah. Yeah. Yep. I was hoping you would call on me. That was my face. That was my call on me.

[A]

Joe, did you have something specific you wanted to say before I called you?

[B]

Well, no, it's just that that explanation that Lacy just gave, I loved it. Because the whole idea is the whole Roth versus Traditional. To me, the biggest factor. There are a few different factors, but to me, the biggest factor is understanding the difference between the current tax rates you're paying, like your current tax bracket, versus what you might pay when you withdraw that money later. Because the compounding idea is like, yeah, your money's going to compound in a really nice way inside of a Roth or a traditional account and it's going to be tax free compounding either way. The question is, would you rather pay income tax now on the front end or income tax later on the back end? Lacey's example is awesome. Because if you can get away with contributing into a roth account at 0% right now, it's a win no matter what, a hundred percent. You know for a fact that there's no way a traditional account could be better. I had a stacker reach out to me today. She's 57, and part of her question had to do with Roth versus traditional. Now, I don't know enough about her to answer the question, but for the average 57 year old, I might wager they're at the highest income earning years of their career. And for that reason, I would wonder, is that person going to have more income now as a working 57 year old or 8 years from now when they retire at 65? And the answer might be they have more income now at age 57 than at 65, and therefore they're paying higher taxes now at 57 than at 65, and therefore they should contribute to a traditional account, not a Roth account. They should save the tax dollars today. That's my two cents. But I'm happy to be in the minority if that puts me in the minority.

[A]

Well, I actually think it's not because, Paula, you and I have kicked this around a lot. Like, a lot when we answer questions on afford anything. And I know that for you and I both, I think I can speak for you. It's our bias. But in Jesse's case that he's talking about, like, but I don't know about you, my standpoint is talk me out of it. Let's start with Roth and talk me out of it. And maybe for the 57 year old you Just talk me out of it.

[E]

Possibly. But the other completely unknowable piece is eight years from now, when that 57 year, we're gonna assume that the 57 year old wants to retire at 65. If that 57 year old retires at the age of 65 eight years from now, the unknowable piece is what will taxes be like at that time. You know, we're going to go through a couple of presidential administrations, we're going to go through a couple of cycles of congressional elections. We have no idea what this, this nation's governance is going to look like eight years in the future and therefore what our tax rates are going to look like at that time. So there's a little bit of probabilistic thinking that also goes into this. You know, how much would you pay for the certainty of locking in today's rates?

[A]

Yeah, I mean, that's a good question. She brings up Jesse, do you take the certainty it's now and it can't get worse because, I mean, unless they change the law.

[B]

Yeah, to some extent. I would say if I'm uncertain about what the tax rates are going to be, then I can either say I have absolutely zero idea and I don't even know, I don't know the answer to any question about the future because I have no idea, or I say probably my best assumption is to assume they'll be similar in some way, shape or form to current tax rates. That's the way that CFP curriculum is generally taught is you shouldn't predict what the future tax rates are going to be. You should assume they look similar to current tax rates. So then it becomes a question of, well, can I more accurately predict this individual's income? And that's where for me sitting here at age 35, do I know what my income is going to look like at age 60? That's pretty hard 25 years in the future. But for a 57 year old who might retire in the next decade, can I reasonably predict what their income situation is going to look like in retirement? Sure. Security, right. Dividends and interest, withdrawals from the ira, et cetera, et cetera, et cetera. And that's where you get to say, boy, if you're in your highest earning years, you're paying 35% marginal federal tax brackets right now. And based on everything you've told me, you would fit into the 22% tax bracket in retirement, do I feel pretty confident about that 13% arbitrage I just described? I do. At least in the way I tend to work with people.

[A]

Let's talk about one more thing, Lacy, which is, and I don't know this, does the military and our government employees have the ability to get into these automatic escalation plans where maybe you're putting in 5% this year and 6% next year, 7% the year after that?

[C]

No, not automatic, but they are, they are changing some things. They're looking at actually because you can't contribute to your TSP after you leave military service and they're looking at, if you retire from the military to change that. So I know they are trying to change some things, but it's very easy for people to do that on their own if they choose to do that. But no, it's not set up automatic. But there is something we were talking about earlier, like these offshoot accounts, the TSP allows now set up a separate account for mutual funds, which wasn't an option before, but there's a special window for it. I will say it, there's a lot more expenses to it. So it's definitely not as cheap. And you have to have, you know, over $40,000. You have to at least contribute 10,000. So there are some things that are different but not de escalating.

[A]

It's like a self directed brokerage account where you can just buy a full slate of different funds.

[C]

Yes. With some rules.

[A]

Well, and it's funny, Lacy, because even as you say that with a ton of funds, I like that idea. Especially if you work for a smaller company. But if you've got the tsp, why the hell are you messing around with that?

[C]

Yes.

[A]

That drives me crazy. Oh, there's so many other things. BackDoor Roth IRAs, using these after tax contributions and then in plan conversions, being able to do those I think is an important feature of the 401k that's kind of 201. If you're somebody who can't do as much Roth as you want, you want to do more Roth later. I will caution people, the one thing I don't like at all about 401ks is the ability to do just after tax contributions. After tax contributions are a mess. Pick either pre tax or Roth. But if you're not going to do the, the mega backdoor Roth IRA where you're doing after tax and then flipping it over to a Roth. Do not load up on after tax money in your 401k because you're going to create a tracking freaking nightmare for yourself later. And it drives me crazy that companies allow those. And I, I used to When I was a planner, I'd see one person a year, like, oh, I put all my money in after tax. I'm like, it's gonna stink so bad for you. It is so, so, so tough. Guys, great job today. Thank you so much for sharing with the Stacker community so much about the 401k. And we, I hope we, we helped a lot of people. Speaking of helping people, you guys help people on all the channels where you work. We'll have our guest of honor, Lacy, go last. Jesse, what's going on at personal finance for long term investors, man?

[B]

Ooh. We just released our ninth AMA episode. Or maybe we're about to release it. And then some somewhere in there, depending on what day it comes out. And then soon I'm actually changing the format. I'm going to start going to three episodes a month, which I'm pretty excited about. And one of them is going to be a really Deep Dive episode. And based on a couple really heartwarming questions I got from listeners, I'm going to do my first Deep Dive episode on financial planning with a special needs child. A pretty interesting niche topic.

[A]

Yeah, that's a niche topic. And people that need a lot of help because every time we touch on those topics, we get lots of people going. You know what? I wish you'd do that more. Much, much, much needed by that community. Paula, what's going on at the Afford Anything show?

[E]

Well, a few weeks ago, we had a guest who I know you also had, David Gardner, the CEO of the Motley fool, but we did a deep dive interview, 90 minutes.

[A]

So if you liked my half hour.

[E]

Yeah, exactly. You can hear three times that.

[A]

We actually made David feel comfortable because I put on my Motley fool jester cap. So then he put his on.

[E]

Really?

[A]

And we did the entire thing with our gesture caps on. It was pretty fun.

[E]

Oh, fantastic. I did the opposite. I drank out of a vtsax mug the whole time just to make a point about index funds.

[A]

You drank eight swimming pools worth of liquids?

[E]

Yeah, I drank the Kool Aid is what I did.

[A]

That's fantastic.

[E]

So, yeah, David Gardner's been on the show recently. Dr. Daniel Crosby, who is a psychologist, he specializes in behavioral finance. He joins us on the show. Andy Hill, a good friend of both of ours, joins us on the Afford Anything podcast. Karsten Yeska, Big Earn has joined us on the Afford Anything podcast. So those have all aired in the.

[C]

Past couple of weeks.

[A]

Awesome. And you can find that at the Afford Anything podcast. Lacy, thank you so much for joining us.

[C]

No. Thank you for having me. This was fun. I appreciate it.

[A]

And for cutting your. Your shopping trip short.

[C]

Anything for you. Anything.

[A]

Actually. Actually, we saved you money, Lacy.

[C]

That's true. You did. You did.

[A]

So what's coming up at the Milmo show? What are you helping our military and military spouses with this week?

[C]

Yes, Well, I just wrapped a special show, my birthday show, which I do every year with, like, something fun. This year I had my cousin on, who just so also happens to be a trademark and patent attorney. So we kind of did a deep dive in, like, the trademark issues that I had with my brand and kind of broke down mistakes people make in the beginning and things they should be aware of when trademarking their businesses. And then recently just did a show on, or getting ready to do a show on how social media's messed up. What people consider as being financially successful. It used to be like, hey, no debt, have a house, a car, paid off. The basics were really great for people. And now it's like, if you're not taking your kids on a European vacation for two months, you're not financially successful.

[A]

And taking selfies every minute.

[C]

Yes, but. But social media, you didn't used to know what all your neighbors spent their money on or the people you went to church or the people you were in high school with. But now all of a sudden, you're keeping up with, you know, their dinners and things like that. So that's the show. And then also have one coming out about for military spouses starting a bookkeeping business for a side hustle, something that is PCs proof or that can move with them. So some really great shows coming.

[A]

When you said trademark attorney, I'm like, why do people need trademark attorney help? But then I went, oh, side hustle for military spouses. Not side hustle, but people starting a business. And then you can be location independent. You can move along with your spouse and. And keep the business running.

[C]

But also, a lot of active duty service members start a side hustle, are starting a business. This is something they know they want to do after they leave the military, especially if they're separating, not retiring. So starting a business and doing it right, and then this also, each industry has their niche. And so using the same things, like every financial planner using an oak tree in their logo, like, that's the problem. Like in the military, like everybody using, you know, Chevrons or American flags, things.

[A]

Like that, every mechanic says they're ASE certified to the point that. I know what that means. You know what I mean?

[C]

Or podcasters having the podcast mic in their logo or you know, mechanics having a wrench in their logo.

[D]

All these things cutting a little too close.

[C]

I have one too.

[A]

And that is it the Milmo show. And we'll link to that and afford anything. And look at that mug that Jesse Kramer at Personal Finance for long term investors has.

[B]

That's.

[A]

That's a very nice stacking mug.

[B]

It's nice.

[A]

All available where finer podcasts are available and you'll find them at our show notes page@stacking benjamins.com that's going to do it for today, Stackers. Thank you so much for hanging out with us. And Doug, you got it from here, man. We should. We have learned on today's show.

[D]

Well, Joe, first, like Lacy said, if you're in the military, be sure to opt out of that TSP as soon as you can. You don't want the government to use your money for evil and buy any more MRI res than it already does.

[A]

I think that's. That's not at all.

[D]

That's pretty much what you said, right?

[C]

No, it's not.

[D]

I think I nailed it.

[C]

But they're trying to get the M M's. That's what they're doing out of them are.

[D]

Second, don't forget what Paula said about high fee 401k plans. Don't let that prevent you from participating because on average you're gonna get canned. I mean, you'll be at your next job in about 4.2 years, which will give you a chance to transfer your balance to a lower cost plan. But the big lesson, whether it's beer or your 401k, you don't want to chug it all at once. Pace yourself. Keep filling the glass and you'll have plenty left for the closing ceremonies.

[A]

Wait a minute. Did you just have a big idea that made sense? Like how long has it been since we've had a big idea that actually off there?

[D]

It didn't feel right. I threw open my mouth a little bit.

[A]

What the hell's going on? Yeah.

[D]

Thanks to Lacey Langford for joining us today. Check out her incredible podcast called the Milmo show where they use interpretive dance and slam poetry to help you learn about investing while you're in the military.

[B]

And not at all.

[D]

We'll also include I can't look at her. We'll also include links in our show [e-mail] and thanks to Paula Pan for hanging out with us today. You'll find her fabulous podcast Afford Anything where she speaks only Only in polysyllabic words for an hour straight. You'll find that show wherever you listen to super intelligent podcasts. And finally, thanks to the Jesse Kramer for joining us today. He's like, oh, what's he gonna say about it?

[B]

Bring it on.

[D]

You'll find Jesse's hit podcast Pfly Personal finance for long term investors right between the Kit Kats and the Snickers bars, at Walmart checkout counters everywhere. We'll also include links in our show [e-mail] 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 [e-mail] 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, 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.

[A]

Welcome to the after show. We got some great interactions at the end of the show. Everybody wondering about fees and old 401ks and things like that. Ingrid asks, is there a database where you can find old 401k plans? Do you guys know any place to go?

[C]

Like found money, right? Like they lost it? Yeah, every state has their own.

[D]

I thought she meant like cool retro ones from the 90s.

[A]

I think what I would do, Ingrid, is I would start off with just your old 401ks and if you have not rolled them over to a separate ira, then just in case the company still has some money there for you even if you didn't contribute, I might just call that company, call their HR department and see if there's any money there for you. I would actually go back through the companies that you work for. I don't know of a database either. Jesse.

[B]

I was going to say, I think retirement plans have to file a Form 5500 with the Department of Labor. So like, what I'm thinking of right now is like, yeah, if the company still exists, go call your old HR department. What about for like a defunct company that no longer exists?

[A]

Yeah, then I think it's going to go to the state.

[B]

Yeah, I mean, the short answer is there definitely are ways to reclaim that money and have your Social Security number handy because that's going to be the way they identify your ownership of the account.

[A]

Aaron has a self directed brokerage account as part of his 401k. So he can put Jesse more money than just that little bit. He can put bunches of money generally, if you've got that type of company, Aaron, I bet you work for a big company if you got that type of a benefit, because I see that much more often there. But he can move money over and he says his main 401k funds charge a 0.35% expense ratio. The self directed brokerage account costs $12 a quarter. But that seems fairly cheap. It depends if you've got $12 in there, Aaron, it's not cheap. It all depends on, on the amount. Right. But that gives them access to the Vanguard Total Stock market index, which has a expense ratio 0.03. So I think it's a matter of scale whether that's good or not. But then again, the problem you have, Aaron, is that you have to, I don't think you can contribute directly to the self directed brokerage account. You have to like quarterly move money over to do that. And then the question is, is like what's, what's the method to do that? Jesse also says, or not, Jesse, Eddie hanging out with us? Yes, Jesse says. Jesse's cousin Eddie says the government's always going to get on and share with traditional ira. And that is the truth. Who is that, Doug? Ed Slott, when he was on our show, always says, you know, you're your uncle in Washington, you're going to share all that money with. And then he always leans into his mic and goes, and he's not even your real uncle. So. Which I find cool uncle from Ed. But Eddie says something interesting I did want to talk about. Taxes always go in one direction up. Which if you look at tax rates currently, Eddie, they're actually pretty damn low compared to if you go back to like the 1970s. We are at very low interest rates, which is why again, when we talk to tax experts, they always tell me you should expect. Eddie, what you're talking about, you should expect them to go higher. Do you guys agree? Disagree.

[B]

Yeah, I'm fine with what you just what you just explained. Joe, if I could speak without stuttering, I'm fine with what you explained. I would actually argue with Eddie's first point. The government is always going to get its share with a traditional Iraq. Well, unless you're one of Lacy's special corner cases where a Roth IRA, you could contribute to that at a 0% tax rate. The government's going to get its share, always with Roth contributions, because it's getting its share upfront. And then yes, I know for most retirees out there, eventually RMDs will kick in and any traditional IRA distribution will be a taxable event. But you can certainly do a lot of smart tax planning later on in your life to make sure those taxable events are at the 0, 10 and 12% tax bracket. So all I'm saying is like, again, I don't think there's any sort of magic beans with Roth accounts, especially when it comes to tax avoidance. It's just my two cents.

[A]

Sounds like we just have to have a Roth versus traditional cage match.

[B]

Maybe I just spent a lot of time talking about this stuff. I spent a lot of time, whether it's in my day job, on the podcasting, in the blog, like working in the spreadsheets, crunching the numbers on Roth versus Traditional. And this idea that, you know, a traditional IRA is by default worse because a tax bill is coming later with it. It's like, show me the math and I'll believe you. But I've seen a lot of the math that it depends on the person and their own tax rates.

[A]

I just think it's worse because you like it better.

[B]

That's fair. I get it. I get it. I will be the heel for this podcast. I will take that mantle from og.

[A]

Thanks for your questions, guys.