#14 – Caitlin Clark, Taxing Gen Zers Pay, Nest Eggs, Baby Boomers, Ray Dalio, and Max’ing Out Retirement Without Running Out

Wes Moss [00:00:50]:
I’d say it’s a. Been a relatively nice spring week. I could use it a little warmer, but I think my favorite morning, I don’t know which one it was. Maybe it was a Wednesday morning when I came out and our cars were clean. They were free of pollen. But then again, the pollen is not over. So it’ll be a wonderful spring week when that is finally through. Takes a while, you know, if.

Wes Moss [00:01:14]:
Jeff Floyd, welcome to money matters.

Jeff Lloyd [00:01:15]:
Thanks for having me back. Good to be back in the studio.

Wes Moss [00:01:18]:
I’ve always thought, what if I were to choose to be a doctor? You in Atlanta? What kind of practice would I run?

Jeff Lloyd [00:01:26]:
Let’s see, what kind of doctor? Moss. Indices doctor. Moss.

Wes Moss [00:01:30]:
Not a veterinarian. Right out of the gate. Not gonna be a veterinarian. I chose not to do that when I was about eight. On a farm call.

Jeff Lloyd [00:01:39]:
I don’t know. I mean, you’re big into sports. Lacrosse, basketball. You’re not an orthopedic, are you? An Ent.

Wes Moss [00:01:46]:
Allergy.

Jeff Lloyd [00:01:46]:
Allergy doctor.

Wes Moss [00:01:47]:
Allergy doctor. You wanna make a living as a doctor, you come south, you become an allergy doctor. Allergy. Asthma. I’ve been doing allergy shots for a decade, and it has been. It really works. Knock on wood. It continues to work.

Wes Moss [00:02:03]:
My poor kid, my youngest, who’s not been old enough to do it yet, he’s a mess. He’s been a mess for weeks. Sniffle, red nose. I feel so bad. The eyes have been red. That’s. That’s Atlantic.

Jeff Lloyd [00:02:19]:
It’s funny you just mentioned eyes. My son has bad allergies. Just with his eyes. He was playing with a friend the other day, I think it was this past Tuesday, and I got a call from one of the parents at the house he was at.

Wes Moss [00:02:32]:
Has Hunter dunked on his friend, asking.

Jeff Lloyd [00:02:34]:
If Hunter had been punched by someone? It’s like, no, I think it’s just his allergies and then he rubs it a lot so it’s like all red and swollen.

Wes Moss [00:02:42]:
I feel so bad for my little guy cause he’s just such a little dude still. And when he’s eyes are watering, it feels like he’s just raw. Anyway, good morning. Welcome to money matters. I’m your host Wes moss, and I’ve got 30 topics, I don’t know which ones we’re going to get to. Here’s maybe most interesting. Tax therapy. You’re going to be shocked the amount of people that need a therapist because it’s tax season and the number of people that cry when they’re doing their taxes.

Wes Moss [00:03:12]:
So we’re talking 4% rule. And Caitlin Clark, I think she’s the best thing that has happened to sports since maybe Tiger woods. The mag seven is now the mag four. Minimum wage just for fast food workers in the state of California going absolutely through the roof. What that’s going to do. Guess what, baby boomers, they’re not moving. We have new statistics around what baby boomers are going to do with their homes. And then a Wall Street Journal article that shows us the new magic number for retirement.

Wes Moss [00:03:47]:
You tell me where we start.

Jeff Lloyd [00:03:48]:
Jeff Lloyd it, I want to start with Caitlin Clark and it being final four weekend, in my opinion, this is one of the best times of the year sporting wise. You have major League baseball starting. The Braves started at this point and that’s fine.

Wes Moss [00:04:05]:
Yeah. Okay. Major League Baseball, masters coming up this week.

Jeff Lloyd [00:04:09]:
Masters in a week. Final four wrapping up. So, yeah, let’s, let’s start with the story in college basketball.

Wes Moss [00:04:15]:
And this is my, my twelve year old, I watched this game. The other kids were not overly interested, but like as the most watched of all games, now I’ve lost interest with basketball. As soon as the Tar Heels lost.

Jeff Lloyd [00:04:29]:
Sorry about that.

Wes Moss [00:04:30]:
And that was a kind of a shockingly depressing loss. And I just, as soon as that game was over, I lost mostly lost interest. However, I come home, I think it was Tuesday night at maybe I came home around 730 and the game was already on. And Jake is sitting there rooting for, he was actually rooting for LSU, but we were both rooting for the Hawkeyes, which I still don’t know what a Hawkeye really is. And Caitlin Clark, just so fun to watch.

Jeff Lloyd [00:05:01]:
I did look up what Hawkeye was in.

Wes Moss [00:05:04]:
You always do. You always kind of get down to the nitty gritty.

Jeff Lloyd [00:05:06]:
It is a resident from Iowa. It’s like a nickname for a resident of Iowa.

Wes Moss [00:05:10]:
Oh, I thought it was a bur, I thought it was they hawk?

Jeff Lloyd [00:05:13]:
That’s the mascot.

Wes Moss [00:05:14]:
Hawk with an eye.

Jeff Lloyd [00:05:15]:
But I guess if you’re from Iowa, you’re an iowan, and you’re a hawkeye.

Wes Moss [00:05:19]:
So I just think that what Caitlin Clark has done, and we know that the attendance, anything around her has gone through the roof, the ratings have gone through the roof, and the reality of her just kind of transforming interest in a sport, well, taking it to another level, and it’s a lot like what we saw, maybe the only analogy I can tell or I can go back to is what Tiger woods did for golf. 20, I don’t know, 2030 years? Has it been 30 years? 20 plus years ago? I think Caitlin Clark has done for women’s basketball. Now, I don’t know if that translates into the WNBA or if it is women’s college basketball, but it’s just. There’s something about seeing someone who’s just the. Not just the best in the game in a given year, but the best we’ve seen over the course of 30, 40, 50 years or ever of all time. It’s just. It’s just wonderful entertainment.

Jeff Lloyd [00:06:14]:
Well, I saw something this past week that the get in tickets for the final four for the both men’s and women’s. The women’s get in price was higher than the get in price for the men’s basketball tournament.

Wes Moss [00:06:26]:
Wow. You can thank Caitlin Clark effect. We’re going to see a lot more of her now switching to the exact opposite of the spectrum. That was lighthearted. That’s fun. Caitlin Clark, taxes coming up next Friday or next Friday? Next. Not tomorrow, not Monday, but the next Monday. April 15.

Wes Moss [00:06:47]:
It’s tax day. And 25% of Gen Z ers say they’ll need a therapist to deal with filing stress due to taxes. You found this?

Jeff Lloyd [00:07:02]:
I found this article. It came out on Monday, which was April Fool’s Day. I saw the headline, I’ll repeat it again. 25% of Gen Z’ers say they’ll need a therapist to deal with tax filing stress. I thought it was a joke. I thought it was like an onion article. And then you read it, and it just kind of keeps getting a little more ridiculous.

Wes Moss [00:07:23]:
There really are a lot of statistics around this. So Gen Z. So that Gen Z is born between 1997 and 2012. So as of that makes them the Gen Z range. Age range eleven to 26. So obviously, not all these people are filing taxes. First of all, that’s the one thing. Sure, this wasn’t from the onion.

Wes Moss [00:07:44]:
You’re not filing taxes at eleven, but certainly, if you’re working in your teens and you’re earning money, then maybe, let’s call it maybe at 17. I know our listeners are probably thinking, gosh, when I was a kid, I was working at 13. That doesn’t quite happen anymore. But when I was eleven, I was working. But I don’t know if I was filing taxes way back then.

Jeff Lloyd [00:08:06]:
I think I was a team. When I first started paying taxes, I was a t ball referee at the municipal baseball park. And I think I got some like 1099 miscellaneous or some, some tax form. I was like, what do I need to do? I’ll tell you what I didn’t do. I didn’t cry when I got it, realizing that I had to pay some taxes like some of these Gen Z’ers are doing right now, according to this article.

Wes Moss [00:08:33]:
All right, here, here it is. And this is, I guess the research was, the research was done by cash app taxes. We’ve already said that one in four gen Zers needs a therapist. The third survey also says 54% of Gen. Zers said filing their taxes has either brought them to tears in the past or they expect to be brought to tears over half. I know, we all feel so sympathetic, right?

Jeff Lloyd [00:09:01]:
I know. It’s like it just keeps saying, yeah, you do.

Wes Moss [00:09:03]:
Yes. Even you have to pay taxes just like the rest of us.

Jeff Lloyd [00:09:07]:
Does the little baby have to pay its taxes? I’m sorry.

Wes Moss [00:09:10]:
You know, and even more of this generation just give and I’ll give them a little bit of a break. They’re young. It takes a while to adjust to the, to the real world. 62% do not understand or know where to get their 1099s or their w two s. And that, I guess, is, is also added stress.

Jeff Lloyd [00:09:31]:
Well, you know, I get that pain around this tax time. It can be stressful. It can honestly be confusing. Even if you’re a Gen Z er from eleven to 26 or, you know, you’re in your fifties, sixties, seventies, even paying taxes, it can be confusing.

Wes Moss [00:09:48]:
I will give them a pass on this next one. Essentially, half, almost half of Gen Z are said they’re not aware or they’re unsure of what the tax deadline is. In our, when growing up, it was almost always April 15, April 15, and it’s April 15 this year. But we had a lot of. Because of COVID there are many of the last call it, I don’t know, five years or so. There was some exception and there was extensions. And so the April 15 day got a little morphed. So I’m going to give them their confusion.

Wes Moss [00:10:22]:
The benefit of the doubt on that last one.

Jeff Lloyd [00:10:25]:
There is a lot of confusion associated with taxes.

Wes Moss [00:10:28]:
Well, not this year. April 15, eight days or so from today. How about this? The stock market’s magnificent seven, which we talked a lot about last year. Remember, these are the seven companies out of 500. So 493 didn’t do a lot once. Just seven of the 500 did. Carried the day for markets in 2023, that has changed a bunch. One of the reasons is that that magical seven is down to a, quote, fab four at this point.

Wes Moss [00:10:58]:
It just means that the stocks last year that dominated the day, it was Apple, Microsoft, Nvidia, Amazon, Google, Meta, Tesla. Remember when we talk about the mag seven and the fab four, we’re not recommending buying or selling any of these. We’re looking at this just educationally and what it means for the overall market. Not all of those stocks have done well. In fact, this year, Tesla’s down almost a third of its value. That’s a huge drop. We’ve seen Apple have one of its worst runs in a long time down, call it double digits. And then what else has been just kind of mediocre? Well, those two have been pretty bad.

Wes Moss [00:11:34]:
And then there’s been a couple other that have been, let’s call it mediocre. So now we’re down to the fab four. So that’s one reason that we’ve seen. That’s one big change we’ve seen so far in the stock market this year, 2024 at least so far. The other thing that I think is most is fascinating, but to the good. And we talked a lot about this last year, thinking at some point this market’s got broadened out. And it can’t just be tech. That’s the only thing working.

Wes Moss [00:12:03]:
And it can’t just be AI tech. As the markets got so narrow into one theme last year, however, we just finished the first quarter, so first three months of the year, and we see almost every single sector participated. So you’ve got communication services. Energy was the number two sector for the first quarter, up almost 14%. Yes, tech did well, up about 13, but banks did. Financials did well. Industrials up over double digits. Materials up almost, call it 9%.

Wes Moss [00:12:37]:
Healthcare up 8.8%. Even utilities, which I always have some, I’ve always have been partial to utilities for a long, long time. Even utilities had for them a pretty good run, up about four and a half percent in the first quarter. So. So, yes, we’ve been looking for and waiting and anticipating that this market would broaden out and we’d see participation not just from one sector, but from multiple areas of the marketplace. At least we’ve seen that. And we, and we’ve continued to see that, at least in the short period of time we’ve been in April, the new magic number for retirement, according to the Wall Street Journal, just published this week, $1.46 million. And what that number tells us, and this came from a northwestern mutual study, I believe Wall Street Journal wrote all about it last year, was that we were, the magic number was at 1.27 million.

Wes Moss [00:13:36]:
So it’s up a couple hundred thousand from that and over a million dollars more than the average survey participants nest egg. So it goes back to this thought that we are way behind for most people in the United States when it comes to saving for retirement. These statistics also, I don’t, I don’t know if I’m exactly finding it, but I think it was something like only 2% of, let me find this. Jeff Lloyd, what was it, 2% of Fidelity 401K plans? I’m going to get back to this.

Jeff Lloyd [00:14:14]:
While you look for that, one of the other interesting things that I found in that northwest west mutual study this year, they said it took 1.46 million to retire comfortably. If you go back five years, there’s actually been a 50% increase in that number. So you take the 2019 number, increase it by 50%. And that’s what people think they need now to retire comfortably. That’s pretty remarkable. And just increase in that number. Increase in 50% in just five years.

Wes Moss [00:14:44]:
Inflation, hashtag inflation. And I’ll start with the punchline, and we’re going to come back to this story. There is no single formula that you need to have saved in your 401K or at the end of the rainbow. It’s a process and a couple of really important steps. It’s not 100 steps. It’s a few that we’ve talked about. It, really. The five money secrets of the happiest retirees.

Wes Moss [00:15:06]:
We’ve written about an awful lot, just wrote an article in Forbes.com about it, but we’ll get to that in some of these, I would say, relatively shocking statistics around retirement in America. Here we go. According to the Federal Reserve, average American has saved 333,000. That was in 2022 for retirement. That’s one of the numbers that really catches my eye. But I don’t want to skip over what we left in the last segment, which was this. Ray Dalio, what in a normal world would be a shocking headline. And in the world we live in today, there’s so much.

Wes Moss [00:15:42]:
And the headlines are so nuts and shocking that I think we’re no longer shocked. You can read something from the onion or the Babylon bee and think it’s a real headline. They’re almost indistinguishable about how crazy headlines have gotten. But this came, this was a CNBC story this week. Really? In an interview. It was one of the chief strategists, or chief investment strategists, Ashish Shah from Goldman Sachs. And they were interviewing him around, hey, what do you think about the market? What do you guys over there at Goldman think about the market? He got talking about momentum stocks and the worry that if you’re too, and this goes back to what we talked about last week, dog chasing tail investing. If you’re overly invested in just a few narrow names, and let’s say the theme has been AI and it’s technology.

Wes Moss [00:16:34]:
And I brought this up last week. Jeff Lloyd, one of my teenagers, said, why wouldn’t you just invest in, I think he said, Nvidia. Why not just put all your investments there? Remember, we’re not recommending, I’m not talking about the stock in particular, saying to buy or sell, but just the sentiment. And it’s total human nature is to see what is already done well and think, well, why don’t you just do that? And what happens is you end up narrowing and narrowing and narrowing what’s working in the market, because there’s always one or two super outperformers. There’s always one theme that has been working or has, quote, worked, and sometimes it’s past tense, and then you can even dig down further and find a company or two that’s the leader, and just human nature looks backwards and says, well, why don’t we just do that? Then what happens is by the time we do that, as human investors, that trend is probably over or it’s played itself out and we’re not looking at some of the other opportunities. And then we start jumping ship and we go to the next hot button, and you end up with this dog chasing, tail type investing. We’re always trying to chase what’s already done well, and it really leads to poor performance over time. Yeah.

Jeff Lloyd [00:17:55]:
And I just want to add, not to just stay on the max seven week after week, but if you think about it like, your son goes back, hey, why don’t we just all invest in Nvidia, right? And one thing. Well, what if you had chosen another one of the mag seven to just go all in? What if you had chosen TESLA and, and this in the, through the first.

Wes Moss [00:18:16]:
Three months of the year, down 30 some percent.

Jeff Lloyd [00:18:18]:
TesLa’s down, you know, 30% almost a third.

Wes Moss [00:18:21]:
So it can go the other directions really, really quickly. First of all, the commentary around a narrow market I think is very relevant, something we’ve been talking about for over a year. And if you’re concerned about anything in the market, it would be that. But it’s not just the market itselF. It’s the behavior of how certain trends draw a lot of investors in. So it’s not necessarily there’s a problem in the market. It is what the market can do to your psyche and lead to poor investment behavior. So it’s an interesting phenomenon.

Wes Moss [00:19:00]:
So the question is, what do you do about that? You’ve got momentum. Stocks have done really well, the best they’ve done in 15 to 17 some years. The answer is to a, not get caught up in that dog chasing tail phenomenon, and b, and this is a super simple answer. But again, the market pushes away these simple, easy things we know we should do, and that’s just being highly diversified and not narrowing your focus to the one or two things that have done really, really well. So investors need diversification with other themes. It’s not just the world is not just about a few companies that do AI or sell chips that do AI. There are other themes that are going to play out that are profitable, that are growth oriented, and that can be in areas that are very different than, quote AI. It could be industrials, could be companies that make big tractors or bulldozers that are repaving the United States.

Wes Moss [00:20:02]:
Remember, I think it was not long ago, Jeff Floyd, we just had a bridge fall and Wall Street Journal had an article that there’s 48 of these bridges that could potentially be next. It could happen anywhere. There’s a lot of rebuilding that needs to be done in the United States, which would take energy. So we have energy and then utilities. I still think one of the most interesting articles I’ve read all year was a Barron’s article that talked about how the demand for electricity over the next 1020 and 30 years, which has been very stable, something like one to one and a half percent growth per year, that growth could double over the next decade or so. What does that mean for the good old fashioned boring companies that nobody likes to talk about, utility companies. So think about industrials and energy and utilities, steel and construction that goes into all this. Perhaps these very uninteresting, these are not products or services that talk to you like chat GPT does, but perhaps there’s real value there over the course of the next three years, five years, ten years.

Jeff Lloyd [00:21:08]:
Jeff Lloyd yeah, and certainly what we’ve been talking about the last couple of minutes is focused on equities and sectors within the different sectors within the stock market that provide you diversification. But it’s also not just the area of the stock market. It’s also areas outside, like us treasuries in the bond market, alternative investments, energy pipeline companies, real estate investment trusts that are also participating in this rally and that also are a part of a.

Wes Moss [00:21:44]:
Diverse portfolio have at least started to participate. And certainly this year. Speaking of treasuries, and again, becky quicks, going back and forth, this interview I’m talking about from this past week that caught my attention, the easy answer for safety is US Treasuries. Well, wait, what are US treasury safe? The reality, and this is where she brings up the Ray Dalio quote, which is Ray Dalio from Bridgewater Associates that everybody listens to, says that he estimates that the risk of some form of civil war over the next ten years is about 50%. Now, he’s been saying this for a little while. It’s not just this week, but I think he reiterated it. And that’s obviously, that’s a long term disaster doomsday scenario. So what do we do about it? And by the way, when you’re a long term investor, you’re a long term thinker, and it’s easy and it’s normal to worry about the what ifs about the future.

Wes Moss [00:22:40]:
Well, what if things go really, really wrong on the other side of that? Speaking of treasuries, we know we can’t just sit in cash. We know that that is a losing game over time. So as investors, we’ve got to make sure we’re diversified enough that we’re investing in areas of long term value in the US, regardless of where you sit on these big issues and where we see future growth. And it could be outside of the headline, companies that are caught up in the tailwind of the glitz of the day could be utilities, could be electricity, could be commodities, energy. So a civil war prediction is pretty scary. But what Daly is talking about really is the breakdown of the rule of law. And the reality is that if we don’t have the rule of law, we can’t have an environment where businesses and entrepreneurs can function and take risks. If the rich and the powerful can simply take something from you and not pay you because the rich and are better lawyers, then we simply just don’t have a system of capitalism or entrepreneurship or innovation, we end up with an orwellian 1984 society.

Wes Moss [00:23:52]:
And that sounds a lot like North Korea or Syria or Zimbabwe or Belarus or some company or country like that that can’t even regularly provide food to their population. So if that were to ever break down in the United States, this is the fundamental underpinning of why I’m so confident in the United States is because we do have the rule of law, and I don’t think it’s going anywhere. And if it did, then I’d probably look around the world and see, well, what other countries have this? Well, Denmark has it. Norway and Finland and Sweden and Germany, the Netherlands and New Zealand and Singapore and Switzerland. There’s a lot of places with an extraordinarily robust system. That is the rule of law and has it. So it’s, and I’m not saying, Jeff Floyd, we’re not moving anytime soon. But the bottom line is this, there are always things to worry about.

Wes Moss [00:24:41]:
This we’ve seen a little bit of a rockier week for stocks, and anytime stocks are a little bit rocky, it’s easy to quickly bring up scary predictions. I think that’s what we saw this past week in this interview. But as Warren Buffett will remind us, as long as we have the legal and ethical framework to invest in, then we have a healthy business environment. And by extension, we’ve got a thriving economy, at least over time. And that means I’ll be investing right here indefinitely in the United States unless that foundation goes away, and I don’t think it will. Sorry, Ray Dalio made for a good headline, but I just don’t buy it. California minimum wage fast food workers in California getting an hourly pay raise. Jeff Lloyd went into effect this past Monday.

Wes Moss [00:25:31]:
The law essentially taking minimum wage fast food workers in California to $20 an hour. That’s $4 higher than the overall state minimum wage. You make a good point around this, Jeff Lloyd, is that, what does this really mean? Well, you can make the case that there are going to be less people hired now. Food prices are going to have to go up even more. Fast food is not even going to be that affordable with such a huge increase. Think about this. If we were at $16 an hour, and I don’t even know what it was before, but that’s, it’s 20, it’s a 25% increase in wages. This may lead to companies having to invest more money.

Wes Moss [00:26:12]:
In tech.

Jeff Lloyd [00:26:15]:
Yeah, in tech. And certainly with the increase in wages, fast food, that’s a good thing for the, for the workers, not going to take away from that, those higher prices that the franchise owners and the restaurant owners could ultimately be passed on to the consumer in the form of higher prices for chicken McNuggets, higher prices for cheeseburgers. The consumer could end up feeling, bearing the brunt of these wage increases and just stop going.

Wes Moss [00:26:44]:
And then if it stops going, you have this negative, virtuous. It’s the opposite of a virtuous cycle. It’s like a downward spiral, and then you end up having less employment. And there’s a lot of. There’s really two sides to this argument. There are multiple studies that say raising minimum wage is good for the. For workers, and it doesn’t lead to less employment. And then there’s a whole nother study I read this week in the Wall Street Journal that says for every 10% increase in wages or minimum wage, negative 2% when it comes to employment, this is almost 30% raise.

Wes Moss [00:27:18]:
And so we’ll see. Time will only tell, but I think the biggest point is it may really kickstart even more automation.

Jeff Lloyd [00:27:27]:
Yeah. More technology integration that you could start seeing in some of these fast food restaurants. Y’all have probably seen, like, the self service like kiosk, where you can just go up and see a little flat panel computer screen and type in your order. What’s interesting is, I think it was the shake Shack CEO said when customers use those kiosks, they spend 10% more than if they were just ordering from a person.

Wes Moss [00:27:55]:
The kiosks are in store. And is what you’re talking about the in store kiosk?

Jeff Lloyd [00:28:00]:
The in store kiosk, yeah.

Wes Moss [00:28:01]:
Because I still haven’t gone to a fast food place where it was automated from the drive thru yet. And I know there are companies that are working on that. There’s certainly that technology out there. I just did not seen that. I have not seen that yet. So. And some of the kiosks, Jeff Floyd, will actually ask or give you recommendations. So the more you go there, the more they learn of what you probably want.

Jeff Lloyd [00:28:25]:
Yeah. And it’s like, go up to the kiosk. It’s like, hey, last time you’re here, you know, Wes, if you’re at McDonald’s with your. Your four boys, it’s like, hey, you want your four big Macs and four large fries and four large Cokes and 40 chicken McNuggets. 40 chicken McNuggets. You want that again?

Wes Moss [00:28:40]:
No wonder.

Jeff Lloyd [00:28:41]:
So, yeah, it’s gonna be. It’s gonna be customized and tailored personally to you.

Wes Moss [00:28:44]:
No wonder people spend 10% more. When it comes to the automated key chaos. We’ll see more money matters straight ahead. We keep hearing that inflation is coming down. By the past three years, the common man inflation gauge is still up over 20%. That’s necessities like food, gas, utilities, and shelter. How can you possibly keep up? Well, one option is income investing. That’s using a combination of growing stock, dividends, bonds for more cash flow, and other areas that can be a hedge against inflation.

Wes Moss [00:29:15]:
Look, inflation is tough. Let us help you overcome it. Schedule a time directly with our team@yourwealth.com. Dot that’s y o u rwealth.com dot. If you’re a baby boomer, you very likely are trying to stay in your home for the long run. And I see this with families all the time, and I’ve talked to people. Well, let me reserve judgment here for just a minute. Here are the statistics around that.

Wes Moss [00:29:41]:
Redfin did a study around this. They’re, the big real estate company found that nearly 80% of baby boomers plan to keep their current homes as they grow older. Essentially, they want to age in place. They want to stay put. Now, what does that mean for the housing market? It continues this thought around a shortage of homes for sale. If you’ve got baby boomers this massive part of the demographic of the United States who have a locked in, either paid off their mortgages or they’ve locked in low mortgage rates, it’s really hard for that group to move, and they just don’t, people just don’t want to move. They just don’t. Do not want to move out of their home.

Wes Moss [00:30:21]:
They don’t want to have to go through the process. I’ve had so many conversations around this with families and talking about, well, what about a 55 plus community? Okay. 16% of folks say they would like to do a 55 plus community. 3% of people already doing that, according to the red Fin survey. Move in with your adult children and your family, 8% plan to do that. Move into an assisted living or nursing facility, 9%. And then moving in with a group of friends. And this one isn’t.

Wes Moss [00:30:51]:
I see this, too. A cousin, a best friend, a brother. I see this a lot, too. Or mom or dad moving in with their kids. Well, no, I’m sorry. This is about friends, 4% of folks. So what? So four out of 100 are planning on moving in with their, their friends or some sort of confidant for life. And I think that’s cool, too.

Jeff Lloyd [00:31:13]:
I think out of, out of the, the five choices that I’m looking at in this survey. You know, staying in your current home, moving into a community, moving in with your family, moving into assisted living. I think moving in with friends sounds the best.

Wes Moss [00:31:30]:
You know what? And I think that number is low. My experience is not four out of 100 I see this. I would say, well, if you were looking at people that are single. Right. If you exclude married couples, I totally get that you want to age in place or move to a 55 plus community, but at least for singles, and that’s not in this study. Maybe we need to do a study around this. If you are single, I think that this number here, either moving with family or moving with friends, is a heck of a lot higher.

Jeff Lloyd [00:32:02]:
I think it would be a lot higher.

Wes Moss [00:32:03]:
I put that at 20 plus percent. I put it at 30%. And I think it’s an amazingly good idea, and I’ve seen it work out a lot. Imagine, here you are. Let’s call it 70, 75, and you’re single, and you have a best friend for life. Or you have two best friends for life. That sounds. That sounds funny.

Wes Moss [00:32:21]:
You know what it sounds like? It sounds like what the Japanese do in. I don’t know if this is Okinawa or in the country of Japan, but I think they call that a moa or a moai.

Jeff Lloyd [00:32:32]:
That’s part of being in a blue zone. Right?

Wes Moss [00:32:34]:
Part of being in a blue zone. Five friends for life. They pledge their friendship for life. It’s not a marriage, it’s not a contract. But they just say, hey, look, we’re gonna be. We’re gonna be friends until we die. And that’s arguably one of the reasons that that population has the. One of the very highest number of centenarians in the world.

Wes Moss [00:32:54]:
It’s a. It’s a Dan Buettner blue zone idea. Nine ways to live the longest.

Jeff Lloyd [00:33:00]:
Yeah. Another interesting fact that I saw in this article is that it said over half of baby boomers owe nothing, have. Have zero mortgage on the current home. So maybe that could also be a reason that you see the number so high that they’re willing to just stay put and not move anywhere else.

Wes Moss [00:33:19]:
You think of this baby boomers aging in place because it makes financial sense. And again, I hear that all the time from. From families that we work with, is that why would I move? Why, it’s. If I move, and, yes, I can sell my house for a lot more than I paid for it, because we’ve had, hussentially, we’ve seen home prices double over the last. What call it decade or so. A lot of that has come in the last five years. But the cost of moving, the cost to commission to sell a house, the cost to move and then re getting set up, it’s just, it’s very expensive to do. So.

Wes Moss [00:33:54]:
The one other question in this survey, moving to a 55 plus community, I would say I’ve almost never met a family that has done that, that hasn’t enjoyed it. That is a high probability as far as I’ve seen over the years. And let’s call it, I don’t know, several dozen families I’ve seen do this. I find it hard to have a, I don’t recall a conversation where somebody doesn’t really like it.

Jeff Lloyd [00:34:23]:
Yeah. Another thought I have is think if you’ve been in your house even 20 years, 30, 40 years, the thought of packing everything up and getting everything ready and packed up and boxed up and ready to ship and move to another location just doesn’t sound very appealing. And also, a lot of these options would also be downsizing. Most likely be downsizing. So you’d be happy. You’d have to be getting rid of a lot of space, a lot of things, or pass it on to your children or friends and find some other way to get rid of it or pass it along.

Wes Moss [00:35:02]:
I recall a conversation over the last couple of weeks of a family who lives in a 55 plus community up, let’s call it north of Atlanta, let’s call it canton somewhere. And this was a community that had it started, I think, right before the GFC, the great financial crisis, and then kind of got stalled out because a lot of home builders went out of business. Community didn’t really do much in the very beginning, so it was kind of stifled, maybe 10% done. And then as the economy kind of healed over the next couple of years, it resumed. And now it’s got. Now it’s a really large community. But just to hear the joy of having, let’s say, a place, a big clubhouse where you’re running into people all day long, and a group for everything from cooking to cards to pool to multiple different kinds of book clubs, whether it’s crime dramas or history book clubs, you hear about the stories I hear from folks that are in these communities. There’s a ton of socialization, and there’s a ton around core establishing core pursuits, which is another core pursuits we think of as hobbies on steroids here, on money matters that we’ve written about, that we know that happy retirees have 3.6 on average.

Wes Moss [00:36:25]:
Core pursuits have caught four hobbies on steroids, unhappy retirees have, let’s call it less than two. You end up in a 55 plus community. You almost can’t, it’s hard for you to not have multiple core pursuits again, pickleball, tennis, golf. And this doesn’t even need to be some fancy high end country club, but just the, the thought around having people around of similar interests. Socialization, particularly as we age and you get into your seventies and your eighties, we lose our loved ones, we lose our friends. So we have to be able to have some sort of environment where it’s easy to reconnect and stay social. And these 55 plus communities, and they’re not all perfect and they’re not all great. And you hear about places like the villages in Florida, which is so massive.

Wes Moss [00:37:16]:
Now in those cases, again, most people I talk to love those. I have had some, I’ve heard some reports that they’re almost, they’re just too big. There’s too many activities. It’s almost, it’s overwhelming for some people. But in the most part, these places solve, these communities, solve for maybe the most important word in that sentence, and that is community. Right. Community, socialization and core pursuits. Put that all together.

Wes Moss [00:37:46]:
It not only will Dan Buettner, I’ll tell you about the longevity principles around that, but the happiness and retirement principles that coincide. What do you think? Jeff Lloyd, you move into one.

Jeff Lloyd [00:38:01]:
They sound enticing. And I know this may sound stupid, but just the socialization aspect of it, I think that’s why you get so many people that love moving into those types of communities. They love being around people. Like you said, they go to dinner with people, they play tennis with other people. They play pickleball, play cards. They’re in book clubs. And it’s kind of all right there together in one place.

Wes Moss [00:38:24]:
And I think about this, and I don’t know if I ever quite had this. I know, I think I’ve always thought it was cool that you did. I know you’ve lived in, really, you still live in a neighborhood that’s a little bit like this, maybe a 35 plus community for you guys. But we can, if you think back to your best times in life and you ended up with, on a street with twelve houses that is a cul de sac or maybe it’s 20 or 30 folks and they’re all of similar age, they all have kids, that in itself can become a wonderful neighborhood. And I know that you’ve had a couple neighborhoods where it’s, where you’ve got people your age similar ages of kids and you, and you’ve, I know, always loved that. So it’s really just the same thing. It’s just a little bit more predetermined and there’s a little more thought around it. You’ve lucked out.

Jeff Lloyd [00:39:20]:
Yeah, we got lucky on the street that we moved into. It just turns out there were a lot of kids that were similar in age to our own kids. And so naturally, the kids start playing, the parents meet each other, hang on. They take a liking to each other, and it’s just, for us, it was just a real natural process that, the natural process.

Wes Moss [00:39:41]:
If you’re such a likable guy like you, you make it seem easy. But Jeff Floyd’s pretty darn likable.

Jeff Lloyd [00:39:46]:
Like I said, I got lucky.

Wes Moss [00:39:48]:
The new magic number for retirement. This was a Wall Street Journal article. According to Northwestern Mutual, the financial company that did this survey, about 4500 adults, says now it’ll take $1.46 million to retire comfortably. At least that’s what the 4500 or so adults said in the survey. That’s up from about one and a quarter million last year and over a million dollars more than the average survey participants actual savings. So people are still way behind. A, people are scared about being able to afford retirement, b, they’re way behind, and c, people don’t know how much money they really need. So there’s also this confusion around how much do I really need? Right.

Wes Moss [00:40:39]:
And Jeff Lloyd, sometimes these just big, round numbers, hard to exactly translate to what it means. So anxiety about retirement’s sky high, and I would say a lot of that has to do with inflation and just people being way behind. What’s interesting is that how the different decades, when different decades really started working and how much each generation thinks they’ll need. So millennials, so boomers think they need the least. Boomers think they need around a million dollars for retirement. Then you get to Gen X, Z, and millennials, and they’re all in the one, five to one. So millennials think they’ll need the most at about, call it $1.65 million. Now, you average those four decades or those four demos together, demographics together, that’s where the survey is getting this $1.46 million.

Wes Moss [00:41:37]:
Now, the punchline here, of course, there really is no one single number. It’s not just a number. The number around retirement is just one of the components. Right. Jeff Lloyd the reality here is that there are a couple of things we need. One, we’ve got to figure out the income sources you’re going to have. So then we can subtract that from the, if we know we’re going to get $50,000 a year in Social Security and pensions. I know that sounds like a lot, but I’m using a round number here.

Wes Moss [00:42:09]:
Then we don’t. And we need 100, then technically we don’t need our investments to generate 100, we only need to generate 50. So that’s this concept of filling the gap. Filling the gap, which we’ve written about and talked about, is really about figuring out how much you need in any given month or any given year, knowing what the income sources are going to, how much that’s going to fill. And then that’s the gap you need to solve for. You don’t need to solve for the entire spending need because the vast majority of Americans are going to get Social Security and, and then it’s not a third anymore. But it’s not an insignificant number of people that are going to get some sort of, some sort of pension as well. Yeah.

Jeff Lloyd [00:42:52]:
And certainly that 1.46 and one size fits all number. If, if you’re a couple in retirement and you’re spending $10,000 a month, that 1.46 might not go as far as a couple spending five to 6000 a month.

Wes Moss [00:43:06]:
Right. And this goes back to, again, another one of the really important checkpoints. If we don’t have a mortgage like 54% of baby boomers that you just brought up in the last segment, then the spending need comes way down. The saving need obviously doesn’t need to be as high or robust because it takes a lot less to live on. That’s the thought of filling the gap analysis when it comes to retirement planning, more money matters. Straight ahead. Wall Street Journal is talking about a magic number. I don’t disagree with this because I’ve essentially had this magic number as well.

Wes Moss [00:43:40]:
Lots of research over the years when it comes to retirement and happiness. And one of the, and this is the punchline around this is it’s not just about the number because it’s really more of, I think, of this relatively concise recipe of about five things from a financial perspective that set you up for less money anxiety, less worry equals more potential happiness in retirement. This is the money side, not the lifestyle side. That’s another topic for another day. And we’ve recently updated those numbers due to the massive inflation that we’ve had here in the United States and the massive inflation we’ve had over the, over the post COVID years. But from our survey, the way we look at this, Jeff, of course, is what are those inflection points to go from the unhappy retiree to the happy retiree camp? And so we’re looking at these money happiness relationships, or ratios, if you will, and if you update our numbers for all of the inflation that we’ve seen and even give it a little cushion. So I think this is a more durable number for the next several years. The minimum, and this is a median number when it comes to that nest egg, is $700,000.

Wes Moss [00:45:00]:
Now, that’s way less than what the Wall Street Journal is reporting. However, our quote, average, or mean number is very close. So our number where folks go from the happy to the unhappy camp is the. Is the $700,000. That’s that median. And then the average happy retirees, about one and a quarter. So our numbers line up. And I think there’s no coincidence around that because it’s not just about having that nest egg.

Wes Moss [00:45:25]:
The nest egg, of course, is there for emergencies and big expenses. But the nest egg is also your income engine, which leads us to, I’ll skip to call it number three on the list, and that has to do with streams of income. So I skipped over number two for now. But streams of income, we have that Nasdaq not to necessarily spend it down. We have it to generate income that then pays our bills. And, yes, we can spend some of the growth, but we want it to last forever. So we go to the next one on the list, or the kind of, kind of the fifth and most important piece of the happy retiree money equation. We’ve done one, three, now five.

Wes Moss [00:46:07]:
Never done it in this order, is to spend wisely, using the 4% rule of thumb, which gets kicked around an awful lot. And we thought about even doing this because it’s basketball tournament time, where we’ve got people saying 2%, you can only do 3%, you can do 5%, you can do 8%. And we were going to do a big playoff. We thought it was going to get a little complicated. In the end, we really still believe very strongly in our 4% rule of thumb number. And if we can know that we’re only spending around that four to 4.5% range, we can increase what we’re pulling out over 30 year. We’re talking 30 years plus here for inflation. So it accounts for the rise over time in our purchasing, the need for our purchasing power to stay intact.

Wes Moss [00:46:55]:
In order to do that, because prices inflate, we need a little bit more money every single year. So that solves for that. So if we a have this nest egg b. We’ve got multiple streams of income. Social Security one, Social Security two, maybe a pension. And we’re following the 4% rule. Then those are three of the five pieces that make the happy retiree formula work when it comes to the money side of the equation. Well, equation number two and four that we skipped over, also very important.

Wes Moss [00:47:23]:
Number two has to do with our spending. And this goes back to our baby boomer number that you brought up. What’s the percentage of boomers that have a fully paid mortgage?

Jeff Lloyd [00:47:31]:
It was overhead. According to Redfin, it was 54%. Have no mortgage boomers.

Wes Moss [00:47:37]:
And then the other group likely has locked in a pretty darn low interest rate because boomers have. We know people have been staying put. Not a lot of housing activity, not a lot of people buying and selling. That’s part of the reason housing prices have stayed so high, even though rates, interest rates are so much higher, which should have arguably brought real estate prices down. In a normal environment, where people are buying and selling and moving at a normal pace, we would have probably seen mortgage home prices fall. We just haven’t seen that. It’s because the supply side is so low, because people are locked in and want to stay for a number of reasons. One, financially, it makes sense to people want to stay in their house.

Wes Moss [00:48:16]:
Baby boomers want to stay in their home. So number two is get the mortgage paid or have a payoff within sight, close to when you’re going to retire. That brings the need for how much income you have, obviously way down. And you can have more of the money you’re spending on discretionary items, things for fun, travel, your core pursuits, going to see family, spending money on family. These are the things that our hobbies, these are the things we want to be able to spend money on, as opposed to that we have to spend money on. And that’s debt mortgage. And yes, it makes total mathematical sense to take out a 30 year mortgage at a low interest rate. And quite frankly, that’s the system that America has built.

Wes Moss [00:49:01]:
But we also don’t want to be beholden to that. And when we can get rid of it, there’s this wonderful sense of autonomy once we no longer have the biggest bill going to a bank every single month. Which leads us to, if I’m not forgetting one of the four, I did write these, so you would think I would remember, which would be be a tomorrow investor. What does that mean to Jeff Lloyd?

Jeff Lloyd [00:49:30]:
It means don’t get caught up in all the scary headlines, some of which we have talked about on the show today. Ray Dalio.

Wes Moss [00:49:37]:
Ray Dalio. Or is it Dalio or Dalio? Dalio.

Jeff Lloyd [00:49:40]:
I think Dalio.

Wes Moss [00:49:41]:
Dalio is out there talking about how half of states are going to want to only use their state law and not federal law, and that’s going to be a civil war. We hear these scary predictions all the time. However, tomorrow, investors, and it’s really not.

Jeff Lloyd [00:49:58]:
Getting caught up in although or the, or the daily or weekly or monthly market swings. It is in general, market participation is more important than perfection. And continuing to continually invest and contribute money to your 401K or your IRA over time, that nest egg historically should continue to grow.

Wes Moss [00:50:24]:
Well. And this is the other thing about how much can I take out? How do I max out what I take out without running out? That’s why this withdrawal debate is so prevalent and continuous. It’ll stay this way. It’s really, when we started talking about this twelve years ago, ten years ago, I thought that the debate had just heated up. The reality is that I had just gotten into the debate and it had continued for years. William Bang, and came out with a 4% rule back in the early nineties. And I think it’s been debated ever since, and it will continue to get debated every time interest rates go down, you’re going to have somebody that says it should be the 2% rule. And when you get a great market run, like the 1990s, where we had essentially straight up markets, there was a better, at least intermediate or short term case to be made that it could be six or 7%.

Wes Moss [00:51:27]:
But what the rule tries to do is it tries to take into account all of those cycles. So the long, bad periods of time and the long good periods of time, because retirement invariably will probably see both because we hope our retirement is 20, 30, 40, maybe 50 years if we’re in the retire super early, sooner camp. So it is meant to span the test of time. So we don’t want it to be too high just because we have a couple of good years. And it is meant to combat inflation. So the number that you’re pulling out again, I want to pull out. I want to max out what I can pull out from my investments without running out. It’s also designed to be able to increase your spending along with inflation.

Wes Moss [00:52:15]:
One of the critical components of that is to be a tomorrow investor and make sure that you have some percentage. And we’ve done our own studies on this, really shows that if you want to be able to use that rule and have it last 30 plus years, 30, 40, 50 years, with a very high probability. It’s got to have at least 50% in stocks. It’s got to have 50%. These studies are predicated on, and one of the things that these studies ultimately did, the withdrawal rate studies, it also looked at, well, what kind of portfolio can I have? And it doesn’t work if we’re 100% in bonds. The 4% rule just doesn’t work. It also doesn’t work as well, or it still can work, but it doesn’t have as a. It doesn’t have as high a probability of long term success if it’s 100% in stocks.

Wes Moss [00:53:05]:
Because if you have 100% in stocks and you enter, let’s say, retirement, right, as in the year 2000, when the technology bubble burst and the markets went to pieces for a really long period of time, that doesn’t work either. So it’s the balance of both equities or stocks and fixed income together that it’s meant to buffer you and have better long term or higher probabilities that we can use that 4% range number for really the long duration of a retirement. And arguably, and in a lot of cases, end up with as much money or more than you even started with when you started to withdraw. As we wrap up, Jeff Lloyd, thank you for being here today. What’s your favorite story of the week?

Jeff Lloyd [00:53:54]:
I think my favorite story of the week, and I think, you know, it was the article that I read on Monday, April 1. You thought it was April Fool’s Day. I thought it was a joke, but that a quarter of Gen Z’ers were gonna need therapy due to filing taxes. And then you read beyond the headline, and it keeps getting better, and that half of Gen Zers are going to be brought to tears or expect to be brought to tears from filing their taxes.

Wes Moss [00:54:25]:
That is what is the most relevant, arguably relevant, but not relevant, because it’s in the past, and we don’t need to look to the past. We’re always looking forward. We’re tomorrow investors here on money matters is that the market is really broadened out. So the first quarter showed us that it wasn’t just tech that drove the market, it was even utilities were up in the first quarter around four and a half percent. Consumer staples, up 7.5%. Healthcare stocks up almost 9%. Materials, materials, companies that make chemicals and raw, let’s call it goods up, almost call it 9%. So we saw a lot of banks financials up double digits.

Wes Moss [00:55:11]:
So we are seeing a broadening out of the market. It’s not just tech that has done well, so far in 2024. And even though that is rear view mirror looking, it is certainly what seems to be somewhat of a durable shift for markets broadening out that we’ve been waiting for. We’ve had a long period of time where that wasn’t so much the case. And then maybe the most heartwarming story of the day, I’d have to go with baby boomers plan to keep their homes. That’s because people want to stay. They want to stay put. 71% of boomers that are aging in place in their current home, 7% are already doing so.

Wes Moss [00:55:50]:
So now you’re looking at almost 80%. But the uncovered, the stone that we uncovered is what is that?

Jeff Lloyd [00:56:00]:
It would be a lot of fun to move in with your friends in.

Wes Moss [00:56:04]:
Retirement, which is number, which arguably is similar to number two on the list. The second most popular option. 16%. Looking to move into a 55 plus community, that’s a little bit like moving in with friends, because you’re going to have friends right there in the community. But if we were to look at this as maybe not for married couples, maybe that’s the equivalent of moving in with friends if you’re, if you’re a married couple. And for singles, there’s a lot of singles in the 55 plus communities as well. So I think it’s a really, that’s a good option. But the move in with a group of friends, I’ve seen that with, particularly with, well, only with single folks that have moved in with someone that’s a lifelong friend.

Wes Moss [00:56:43]:
And I think that’s amazing, too. I think that makes a ton of sense. It’s what, it’s what the Japanese do to some extent with their japanese moa z moas. I don’t know if that’s just Japan or all of Japan or Okinawa only, but it’s a group of women in Japan that say, hey, we’re gonna be friends for life forever, as long as we live healthy longevity. And I have a feeling they’re pretty happy retirees. So with that, we’ve got to wrap it up here. Jeff Lloyd, thanks for being here, man.

Jeff Lloyd [00:57:16]:
Thanks for having me back in the studio. Really enjoyed it.

Wes Moss [00:57:19]:
You can find Jeff Floyd, me, the whole team. Money matters@yourwealth.com. That’s yoeur, Yourwealth.com. Have a wonderful rest of your day.

Mallory Boggs [00:57:34]:
This is provided as a resource for informational purposes and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. The mention of any company is provided to you for informational purposes and as an example only, and is not to be considered investment advice or recommendation or an endorsement of any particular company. Past performance is not indicative of future results. Investing involves risk, including possible loss of principal. There is no guarantee offered that investment return, yield or performance will be achieved. The information provided is strictly an opinion and for informational purposes only and it is not known whether this strategies will be successful. There are many aspects, is and criteria that must be examined and considered before investing.

Mallory Boggs [00:58:22]:
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