Good morning everyone, and it really is a good morning. I look outside my window, I see the snows melting away after our little spring springstorm last week. We've got some warm days ahead of us in the forecast, and I was just listening to the weather before I started the show this morning, and it's saying sunny skies for Monday. So anyone who's hoping to catch a glimpse of the eclipse, looks like we may get a good chance at that.
Don't forget to get your safety glasses for that. Well, we're officially in April and spring is on its way, so it's good good to be with you. My name is Harmony Wagner. I'm a wealth advisor here at Bouchet. I'm a certified financial planner as well as a certified private wealth advisor, and I've been here with Steve and the team for almost eight years now working with clients in the community. And I have to say it's good to be back with you on the radio this morning. It's actually been a while
since I've had the pleasure of hosting the show. I recently had a baby. My husband and I welcomed our third child, our third daughter. Actually towards the end of last year, so I had some nice time off focusing on my family, settling in with our newest member, and she's a very very joyful and sweet little one. So we're very sleep deprived and very very happy and blessed. So but this is my first time back hosting the show
since last fall. It's really good to be back, giving my colleague Steve Bouchet, of course, a very well deserved break, and having the opportunity to share you know, this hour work with all of you listeners. You know, Steve's actually been hosting the show on WGY for twenty nine years, different days of the week or times of day, but you know, here
here talking to all of you every weekend for a long time. And Bouchet has been in business for over thirty four years, with Steve acting as a fiduciary for over thirty years, for serving our clients in the community here in the Capitol region and also on the country. So wherever you're listening from today, welcome, Thank you so much for tuning in, and I hope you'll
get something valuable or at least interesting out of our conversation today. Phone lines are open, and you know, as much as I have some things that I'd like to talk about today. I would so much rather hear what's on your mind, and I think our listeners might feel the same way. You know, if you have a question, chances are if someone else might be in a similar situation or have the same question. So please give me a
call. Anything you want to talk about, not the market's economy, financial planning, behavioral finance, some of my my real passions for the next hour. You've got an advice about your disposals, so give me a call. One eight hundred talk WGY. That's one eight hundred, eight two five, five, nine, four nine. I'd love to hear from you. Let's kick off with a recap of the markets for the past week. You know, this was the first week of the second quarter, very strong first quarter.
This last week was a little bit black life. All markets were down for the week, although Friday was actually a good day after another strong jobs report, which we'll talk about in a minute. But the S and P five hundred was down a little over one percent for the week, the Dow down a little over two and a quarter, and nasdack down about one point three for the week. But you know that's just kind of a it pales
against the backdrop of just how strong this year has been. And you know, if you look at the stats, when we have a first quarter like we have this year, the rest of the year often shapes up with your continued strength. I think the average for the year is about ten percent when you have a first quarter that's as strong as the one that we just had. Now, of course, you know, you can't ever use history to
predict the future. Anybody who's ever read their investment statements sees that little disclaimer. You know, historical performance is not indicative of future results. And of course that's true. And because all this stuff is so complex, there are so many factors at play, the markets in the economy, and you know, I had a client one time say, you know, well, you know, Sids, I think of the markets or the economy as a person,
and you know they're going to choose to go up or down. And you know, as we were kind of exploring that idea, we were talking about how well, the markets aren't one person, but you know, there are this conglomerate of millions and millions of people, and there are emotions that play into it, and there's so many factors that influence why markets go up and down, and so it is so hard to predict even if I could tell you exactly, you know, what the Fed would do for this rest
of this year, which of course I can't. But even if I could, I had that crystal ball, you know, it's still difficult to say exactly how the markets would respond. Of course, as everyone knows, we're in an election year that affects the markets as well. Though it does tend to be more short term noise and some more increase volatility as opposed to, you know, a deeper effect on the long term trends that are at play
in the in the markets. You know, a lot of the political news and information that comes out, it certainly creates some can create some up and downs more than the average year, but it doesn't usually influence the long term trend, which hopefully is encouraging to everyone. It certainly is to me. But you know, all that just to say how our markets are so unpredictable.
So bonds are down a little bit for the year still with the Bloomberg Barkley's aggregate bond indecks down about one point three percent for the year compared to you know, equities which are up, you know, US Lodge caps up a little over ten percent. Equities in general are doing quite well, although we'll talk a little more about some of the nuances there and in a little bit. But you know, with bonds being down, this isn't totally unexpected
given kind of the interest rate situation that's ran and the expectations. The market's not pricing in as many rate cuts as it was maybe several months ago for twenty twenty four. But bond heels are still attractive. So even though we're seeing, you know, as investors are starting to think maybe they don't cut as often or uh as many times this year as we had originally thought, impacts, you know, the price movement on the bonds, but the yields
are still attractive. And for those holding individual bonds like many of our clients, you know, the price movement isn't as important to you, right If you don't have to sell that that individual bond before maturity, then you know, you don't have as much to worry about if you do get into a situation where you have to sell it, and maybe you were planning to hold it to maturity, but all of a sudden you need to access that cash.
That's when you can be exposed to a little bit of price risk or interest rate risk that you know, depending on what rates have done and in the interim of the term of the bond, that affects what you could get for it. But if you hold it to maturity, you're going to get your your original investment back with the interest that it was expected to pay out.
So, you know, while a lot of people focus on you know, all the bonds are down my portfolio, you know, if if you're going to hold them to maturity, and for you know, our clients, that's usually the intention. When we're holding these individual bonds, it doesn't affect you as much, so you know, focus on those yields and the income coming off of that side of the portfolio, which is so much better than it was, you know, two three years ago when bond andest traits were
historic lows. Kind of switching back to stocks for a moment here, you know, there's been so much talk about the Magnificent Seven, the seven companies in the SMP that were really responsible for carrying a lot of the growth, especially last year coming out of the bear market, and we're kind of seeing now at the dichotomy of stock market valuations in the markets where in the Magnificent seven out of which really five, four or five are doing really well this
year, you know, Apple and testl having fallen a little bit in twenty twenty four. But you know, these particular seven stocks that we're leading the charge last year have really really high valuations compared to you know, historical averages they're trading. Of those seven, they're trading an average of forty three times earnings. But the rest of the market valuations are much closer to historical averages.
And actually when you look deeper into the different sector breakdowns, you see that some sectors, you know, for example, small caps value and also international, which is lacking US for for some time, those three particular sectors are trading actually at recession level valuations. Some of the small cap value funds I was thinking to look at yesterday or trading on only eight times earnings compared to the forty three of the Magnificent Seven. So you know, we are
seeing some a split in in how some of these stocks are valued. And so it'll be interesting to see, you know, how the market as overall and a broad scale kind of performs as we you know, keep moving through this this rate cycle and see what happens with the FED and inflation for the rest of the year. You know, one thing I did read an article this week that really resonated me with me that I wanted to share was the
following quote from Larry Swidrow. It says, you know, remember that for stocks, it doesn't matter in the markets whether the future news is good or bad, only whether it is better or worse than expected. And I thought that, you know, he put that so succinctly, and you know, it's it's such a wise way to think about it. You know, Oftentimes, when I'm talking with clients, as you know I do each each day
each week, we're talking about the markets. Of course, we're talking about the economy, what the federal do, political outcomes, geopolitical risks, right, you know, we talked about it already. The world is so complex out there, and the way that it affects markets and you know, trickles down to the average investor is really complicated as well. But oftentimes our focus is whether the event or the outcomes in these different areas are going to be
you know, inherently good or bad. In our opinion. But you know, as that that quote kind of reminds us it's really not whether those things are good or bad. It's it's relative to expectations and whether it's better or worse than originally expected, better or worse than the market already had priced in. Sometimes an event that might not be typically considered a good thing can create actually positive price movement in the market, even if it's just a little bit
better than the markets were expecting. So, you know, I felt that that quote was a great way to kind of frame not only this discussion, but you know, whatever we're thinking about the markets, and you know, the way that it affects financial considerations. It's always a good thing to keep in mind. That's certainly a concept I'm going to keep in my back pocket as I talk to clients each day. Is you know, it doesn't matter as much whether the events or the outcomes are good or bad. It's whether
they're better or worse than you expected beforehand. So that's a key key point that it's good to keep in mind. We did have a strong job report yesterday, so, as I mentioned, you know, even though stocks markets were down for the week, they put up a good day yesterday, and so the jobs report came out with three hundred and three thousand jobs added in March, and then that was compared to an expected two hundred thousand. So, you know, another strong jobs report, and it was nice to see
the markets react favorably. You know, it's still a little early on obviously, it was just one trading day since that report came out, but it does feel like a lot of times over the last couple of years, there's been so many times that a strong jobs report would be a bad thing for the markets. You know, we had that whole good news is bad news kind of phenomenon going on where you almost don't want to see good news because
you know the markets are gonna are gonna dip. That wasn't the case yesterday, So you know, we did see the markets having positive returns for the day after a strong jobs report. Whether it's a sign that investors are more focusing on the economic strength as opposed to the FED reaction or lack thereof, you know, who knows, But but it was a good jobs report showing
that the US economy is still still going strong. We're gonna take a quick break, but I'll be right back with more, let's talk money right here on w g Y. All right, everybody, thanks for staying with me through that brief break and thanks for joining me to this morning let's talk money here on this sunny April Saturday. This is Harmony Wagner joining you and here to answer your questions as well. Phone lines are open, so get me
a call one eight hundred talk WGY. The number is one eight hundred eight two five five nine four nine. I'd love to hear your questions, whatever you'd like to discuss this morning. Talking about the jobs report a little bit and the labor market. You know, one thing I found kind of interesting in my research this week was some of the areas in the labor market that are really contributing in a strong, disproportionately strong way to the growth is healthcare
and you know, hospitality or leisure jobs. So out of the two point nine million jobs gained in the US over the last year, those two sectors alone are responsible for one and a half million, So more than half of the job growth has come from healthcare and these hospitality, leisure, you know, that service sector. So it sounds pretty impressive when you actually zoom out a little bit and go back to the early pandemic days of four years ago.
Now, if you can believe that we realized that both of those sectors dropped off so dramatically during that time for obvious reasons. Those are pretty high touch positions that were affected really dramatically in those early days of the pandemic when
you know, the whole world it felt, had shut down. So when you look at the long term trend line, even with the impressive growth in these two areas of labor market over the last four years since then, the job levels and these secrets are actually still below the long term trend line, And so you know, whether they'll actually fully recover to where they were before, where you'd expect them to be, or if you think, you know,
maybe the world has changed in some ways permanently coming out of the pandemic, and maybe you know, we don't get back to where we were. Some of these things are just more you know, done remotely now, or you know, some businesses that were on the business during that time they won't be coming back. So it's it's interesting to see and it'll be interesting to
see how the labor market does eventually stabilize. But as of right now, you know, we are just seeing such strength, continued strength, almost you know, to a point where you would have thought it was impossible, knowing all the great hikes, and you know how much the markets were maybe expecting a recession or at the very least to slow down, and we're just seeing such strength. So it is certainly positive to see that. So, you know, now markets kind of turned to the next week. The March CPI
report will come out next week on Wednesday. The last couple have shown that inflation is a little stickier than the Fed would like to see, so you know, we'll see next week how the trend for twenty twenty four is shaping up. But at this point, I think, you know, traders are kind of pricing and expectations for maybe one or two quarter point cuts more likely then the three that you know a month or so ago were more expected.
So, you know, as we see the economy staying strong, infliction not all the way down to their target, you know, we'll see how that affects the expectations and the Fed's actual actions as the year plays out. But you know, what you may be asking yourself after this, you know, discussion on the markets and the economy and kind of a macro level is how does this all affect us? Right? We're We're just average investors trying to
do the right things when it comes to our personal finances. You know, how does all these larger global scale themes, you know, how do I take this in and interpret what to do with it for myself? And one question that I get a lot during times like this from clients and from people who are you know, talking with us people. It's just for people I know who you know, want a little little advices. Do I invest right now? You know, markets are at all time highs, and is it
really the right time to be putting money into the stock market? Like am I doomed for the markets to dip? And there's actually a great chart, you know, if I wasn't on the radio, if I was presenting to you over over video right now, I could show it to you. But you know, it's a great chart that JP Morgan actually puts together. And because a lot of investors are worried about that, right you feel like you're buying high. This is the last thing I should do do I am I
going to put my money in and see that see it drop immediately? Well, you know, the history actually tells us that investing at all time highs, you actually have a better outlook for your own personal performance over the long term by investing at all time highs. And if you think about it, it's really because the market tends to rise, you know, somewhat stubdily and makes a lot of new all time highs and rapid succession. As of a few weeks ago, we actually had hit sixteen all time highs for the S
and P this year alone in first three months. I think it's actually now over twenty in just three months, right hitting twenty new all time highs for the S and P. So you know, if you had invested at the first all time high, your account would be doing quite well right now. And that's kind of the premise, is the market momentum and how impactful that
can be. So if you're nervous about investing with markets at all time highs, I would say that as long as you're a long term investor, you're not gonna need this money in one to two years, this is as good a time as any to put money to work. So it's interesting and may seem counter to what you might intuitively, but you know, history really shows us that because of momentum, it's good to invest even when the market is up, and if you wait too long for it to go down, you
may miss it. I'm going to go to the phone lines now and chat with Rick from half Moon. Good morning, Rick, how are you today? Good morning? You got three daughters? I heard I do I do you know? I got three grand daughters? Awesome? It's a lot of fun. Yeah, So it's about the I'm invested in the Fidelity Advisor Strategic Income of Fun, which I believe is a bond fund, and that's that's a combination of a lot of bonds in there. So they would all have
different maturities, yes they would. Yes, So when you buy a bond fund, you know the fund manager is, you know, selecting the bonds and removing some of the times replacing them, and you're not as in control of it as you are if you buy individuals. So yeah, there's different maturities, different different terms, different durations within that fund. And if an interest rates come down with then that bond fund should go up it, yes,
it typically would. We see the bond prices having an inverse relationship with rates, so as price rates go down, prices of bonds go up because you know, if you hold the bond that's paying four percent, and someone who's going to buy a new bund bonds can only get one for two percent, yours is a lot more attractive, so they pay more. So that
that is typically how it works, even with even with the funds. Uh. You know, they still hold those bonds that are going to be at higher rates if you know, rates in the in the new bond market fall. Okay, thanks thanks for that information. Thank you Rick for calling, and have fun with those granddaughters of yours. All right, well, we have another caller, so I'm going to jump to Alan in Glenville. Good morning, Allan, how are you today? Very good, rat Joel enjoy
it. I mentally just a quick thought. They just wanted to get your feedback on this. The ten year T bill right now is around four to four. I'm just curious one of your thoughts. If the T bill, the ten year specifically hits five five and a quarter five and a half, what damage do you see that doing to the overall stock market? Just like to get your thoughts. My impression is inflation is not going away. You can't pump all this money into the economy and expect the marginal rates to come
down. So I'm in the camp five five and a half six, but I wanted to get your insight as to what you think the effect would be on the overall stock market. Thanks, yeah, thank you, Allan. And you know, I think you're kind of alluding to a trend that we're seeing a lot as well, which is, you know, this last you know, one percent of getting the inflation from three percent where it's you know, in floating around to two percent where the Fed would like to see it.
You know that that is a little bit sticky, and you're probably right a lot of the wage growth that we've seen is contributing to that. And you know that's something that we we kind of knew going into this is when inflation gets into the labor market, that makes it a lot stickier, a lot harder to bring down because people have more money they're going to be spending
it. We're seeing a lot of you know, areas of the market still very high inflation wise when you really break it down, so you know that certainly affects it. You know, obviously, a rising yield on the ten year it's it's showing that investors are confident, but you know it does have higher borrowing costs, so so growth is slower. If it falls, that
might signal more economic uncertainty. You know, I think you know some of what you see as well is that when you can get such great yields over the long term in the bond market, especially those those ten year or or higher, you know, if you can get five percent there, that's going to attract a lot of people to to buying that. And you know, just as we've seen times where stock market went up when bonds were rates were really low, and we would you know, say, oh, it's a
Tina situation. There is no alternative t I n A. And you see people getting pushed to stocks when bonds aren't attractive. You know, you could see something similar as well, people pulling out of stocks to buy into these you know, ten years if it was at you know, five percent or more. And even with where it is that now, you know, it's been attractive to a lot of people. Certainly for our clients, it's something that we always consider as well. So thanks so much for for your question
and for calling in. We are going to be coming up to the end of the the end of the first half of the show here in just a few minutes, so just time to finish up on the discussing about, you know, investing with markets at all time highs that we were chatting about before,
before the calls and the great questions. You know, there there are certainly always people who are going to be worried about putting money in when it's when it's at a high, and you know what I always you know, the example I always talk about with them is, you know, when we were at COVID highs or highs before COVID, I should say, so January February of twenty twenty. You know, the markets were at all time high for that time, and some folks would have been worried to put their money
in. And you know, if they were, then maybe rightly so, because the markets did go down thirty four percent that year. However, the recovery since then has been so dramatic that the all time high of before COVID is you know, would be very low in today's environment. So you know, when when you're looking at it, you just got to be a long term investor as always, and remembering that you know, today's all time high
is probably going to be nothing special five years from now. If you don't need the money in the next one to two years, and you're really going to be a long term investor with that money, then investing it now is as good a time as any. You can always look at a DCA approach dollar cost averaging if you want to. Sometimes that's a way to mitigate risk, but it is always good just to get invested as soon as you can.
That's kind of the key. So come up to the news break here, but we'll be back after the break with some more discussion on the market's economy. I have actually some interesting financial planning topics that we're going to talk about after the break, like your magic number for retirement and has it changed, So stay tuned. We'll be right back with more. Let's talk money. Brought to you by Bluche Financial Group, where we help our clients prioritize
their health or we manage their wealth for life. Stay with us, We'll be right back. Hello everyone, thanks for staying with me through the news. This is Harmony Wagner joining you this morning. I'm one of the wealth of advisors here at Bouchet, a certified financial planner and a certified private wealth advisor, and I'm here at your disposal on this you know, beautiful Saturday morning. So if you have any questions, anything on your mind, please
give me a call. That phone number is one eight hundred talk WGY. That's one eight hundred eight two five five nine four nine, and I would love to hear what's on your mind. We've been talking so far about the markets, the economy and you know how it affects all of us. And I do have some planning, financial planning kind of topics. I'd like to chat about maybe a little bit of taxes, as that's probably on everyone's mind
as we get closer to the end of tax season. Unless you're on extension, that deadline is coming up in just a little over a week, week and a half, I suppose, So you know, I know my colleagues who are our CPAs, who are working in that side of the business are probably very excited for April fifteenth. And for anyone out there who who's been procrastinating, you know, now's the time to get your taxes done. So
we will talk about that a little bit too. But you know, I just kind of wanted to address another question that we get a lot, especially for folks who are approaching retirement, and this is exactly the question that you should be asking. So you know, if it's something that's been on your mind, you're thinking the right way. But the question that we get asked a lot is, you know, let's say we experience a major downturn in the markets. You know, how long do I really have to recover those
losses? Now, of course there's sequence of return risk, which is the risk that you retire and then immediately in the first one to two years we experience a really significant correction, drawn out bear market or even a recession, and how that would affect you. And it does affect people disproportionately to have that happen earlier in retirement as opposed to in the middle or later. You know, most people say you're retiring in your sixties or even seventies. You
know, life expectancies are growing. They're much higher than they were, you know, years ago. So you know, for all of our clients when we're doing financial planning, we're planning for their money to last them till at least age ninety five, so you know, that's thirty twenty five years, maybe more. Sometimes as well. So you know, it's not a matter of if there's a bear market or a recession in your retirement time frame. If you if you live that long, it's you know when and how many
probably more than one if you look historically that you'd experience. So you can't avoid it, of course, but there is more of a risk if it happens earlier, and there's ways to protect yourself against that, and that's something they work with clients on, especially those who you know, feel paralyzed by that fear, feel like I can't actually retire because I'm so nervous that as soon as I do, the markets are are going to tank and it's going
to impact me long term. So you know, that is something to consider. But you know, even some folks who maybe a retired yet or may be in the middle of their retirement, they have this question. If we experience a big downturn, you know, even even something like a two thousand and eight type situation in terms of the returns for a couple of years, you know, equity returns being severely negative, do I have the time to recover those losses? And you know, when we look at the actual average
length of a recession. It's much shorter than most people think. In the last seventy five years almost so since nineteen fifty, the longest recession has been nineteen months. That was two thousand and eight. That was of course very severe, you know, very very dramatic. Before that, it was sixteen
months, and that was I think in the seventies. So in the last seventy years there has really actually been we've seen a dramatic improvement in the length of recessions, being much shorter than in the first you know, fifty years of the twentieth century, from nineteen hundred to nineteen fifty. In that time period there was thirteen recessions, lasting in total of two hundred and thirty eight
months. The economy was in a recession forty percent of the time. Since nineteen fifty, there's only been eleven recessions and twenty five years, lasting a total of one hundred and thirteen months, so in a recession for twelve percent of the time. Essentially, what we've really seen is you know, efficiency, improving market's ability to recover coming back much quicker. You know, we've
seen an improvement in fiscal and monetary policy. So we've seen you know, the economists and the Federal Reserve, and you know, all these policy decision makers learning from the past, and not that they're perfect in any way, but you know, we have seen an improvement in the way that our economy is able to handle these recessions and get through them and get back to a
state of economic growth. So, you know, if you're worried about a downturn, and maybe you know, we have some people who think it is it going to take me ten fifteen years to get back whatever I lose in the stock market if if the market goes down, and you know, historically, especially in recent history, the last fifty to seventy five years, that has just not been the case. The longest one has been nineteen months,
and the average is much lower than that. So you know, as long as you do the right things, meaning you don't sell out, you don't panic, you don't go out to cash when the market drops down, and you know, at the bottom sell out and put your money in under the mattress, as long as you're not doing that kind of you know, emotional irrational type of behavior when the market goes down, and you're prepared for it, that you've prepared by having the right cash reserve set aside, and you
know, doing the right things, you have a really good chance of recovering it, probably sooner than you think. And it's certainly not a reason to stay out of the market long term. The markets have been and are very likely to continue to be the best place to invest your money to get, you know, the highest long term growth that you can and for people who
are living longer and oftentimes retiring earlier, that growth is really important. So you know, it's kind of some good news when you look at history. You know, the recent history has been really really positive in the way that our economy is able to handle recessions and move on. And you know, if you know what to do and you're able to you know, white not through those times and not panic and not make a mistake that might affect you for the rest of your life, then you know, you can you can
really weather those downturns. Certainly not a reason to not invest. So I just kind of want to share that athlet. It was really interesting kind of stats on the recessions there, all right, So I think, you know,
let's shift gears here to some planning topics. April is actually financial Literacy Month, and that is something we are so passionate here at Bouchet now and be the first one to tell you that sometimes these different months or or holidays that can get made up at times can be a little overwhelming, but this
is certainly one that is important to us professionally. Is you know, the the connection to our community to educating people, to helping people be financial financially literate, from you know, retirees to all the way down to you know, really really young people. And of course I have really young kids, three three girls, all three and unders, so I think a lot about you know, when's the right time to start educating them on these topics and
how to guide their financial literacy as they grow. So it's something that we're all committed to, and it's why you know, the radio show has been such an important part of our company culture over you know, almost thirty years now, is you know, sharing what we know and being as transparent as we can to help you know, anyone who will listen, So thank you for tuning in and kind of being a part of that. And I want
to share a little bit about you know, some financial literacy topics. So you know, one that I've been talking about with clients recently and kind of you know, exploring is this concept that's called reverse budgeting. Now, don't turn off the radio just because I said, you know, budgeting. I know a lot of people really really don't like that word. And you know,
I can be guilty of that as well. You know, it just seems like no matter how many apps there are, how many spreadsheets, there's just not always a great way to budget and to really make that a part of your life. I think studies show that maybe sixty to seventy percent of people cringe at the word budgeting. They want to hear, they don't, they don't want to do it, certainly, So don't turn off the radio.
This is a different thing. This is reverse budgeting. And you know, it's kind of for not for folks who are in a situation where their income is closely lining up to their expenses where they might have to be a little bit more cautious. This is for folks who their income is outpacing their expenses, so they're finding that their bank accounts are accumulating, that their cash
position is growing over time, and in how to handle that. So, you know, a lot of times people when it comes to their financial lives or even life in general, they tend to fixate on risk on one side of the equation, whatever risk they perceive to be most severe, most detrimental to them. I think that's you know, part of the way we're wired for survival is, you know, we focus on one risk, the one we think is the most severe, and we try as hard as we can
to avoid, reduce, mitigate that. So of course people are worried, you know, when it comes to budgeting, I need to make sure that I'm not spending more than I'm making to the point where I'm going to run out of cash and you know, be be penningless, and of course that's
something that you want to be cautious of. But a lot of people are finding that they're actually in the other position where they're fortunate enough to have, you know, wages that are outpacing their monthly cash, phone needs, their monthly expenses, and so their cash is building up. And that's a risk as well, not as severe to your daily life, but it is a risk that you know, you have cash that's piling up that's not doing anything
for you. At some points, it could pile up to an extent that it's exceeding the FDIC insurance at a bank where something happens to that bank, well, anything above you know, the FDIC limit is at risk potentially that that limit is two hundred and fifty thousand for a single account with one account holder. If it's a joint account, it's up to five hundred thousand, So you can think of it as two hundred and fifty thousand per per person
on the account. But you know, there are so many people that we speak to who have well above that limit, and so they actually are putting themselves at a risk of losing it. But you know, so reverse budget and kind of addresses this, and it says, let's establish what you need in cash, you know, that kind of emergency reserve fund. It usually ranges from three to six months, sometimes six to nine. All depends on your personal situation, whether you're a single or multiple income household, how you
perceive the security of your job. You know, different things can play into what that right number is for you of how much you need in cash. But for most people it falls between I would say three to nine months, three to six months that they need to keep in pure cash in the bank at their fingertips where you know, they could write a check today and it's there accessible to them. But beyond that, and beyond any other expenses that
you have that you know about coming up in the near term. You know, if you're going to be putting on a new roof for the next year, it's probably not money you want to invest. But anything above that, anything that's kind of for general investment, not ear mark, for anything, not part of your emergency reserve fund, you really should be disciplined and stomatic about investing that. Even if it's in something conservative like a money market fund
or individual bonds CDs. You know you can keep it conservative. You don't have to, you know, swing for the fences and buy bitcoin with that cash, but you know, putting it in someone where it's going to be
working for you. You know, we all could could lament about the interest rates that a local bank savings account is going to pay, but you know, there are so many other options out there for whether it's a high yield savings account, online bank account, or some of those other conservative ones I just listed, And it's really important to be putting that extra cash to work, you know, so it can grow, because that is part of your
portfolio. Everything that you have, all of your assets under one bucket are a part of your portfolio, and uh they you know, you know, you need to approach it that way and make sure that you're investing it and growing it in a way that it's going to benefit you long term. So that's kind of the concept of reverse budgeting. You say, all right, I'm going to keep ten thousand dollars in my checking account. That's kind of
my emergency reserve. Whenever I see that it's crept up to twelve, thirteen, fifteen, whatever it is, I'm going to move over that excess. Maybe you look at it once a month, maybe once a quarter, you know, at least annually, you know, whatever that frequency that makes sense for you. But to make sure that if you're seeing your your cash position pile up, number one, you're fortunate and that's a great position to be in, but you also have some some action that's that would benefit you when
you're in that spot. So that's the concept of reverse budgeting. You know, it's something that we talk about with a lot of our clients, especially when we see, you know, okay, your cash position is higher than last time we met let's talk about that. Let's make sure that we're putting that money to work for you and gave that growth that you need. So hopefully that helps somebody out there today if that's something that you find you're in
that situation, that reverse budgeting concept. All right, Well, you know I mentioned the tax deadline coming up? Is this that time of year when a lot of people have their tax returns ready to go. For some of you, you're getting a refund or you've received a refund, and that's really nice, although you do want to be too large. You don't want to be you know, letting the government borrow your money interest free all year every
year. But getting a little refund is nice. But some folks are on the other boat where they're finding that they owe on their taxes and they might be thinking, is there anything I can do right now in the next ten days to help my tax situation for last year? Right? And maybe you weren't able to plan last year to mitigate some of that taxes, or you know, maybe you just didn't know about it. And sometimes there's definitely you
can do. But you know, if you're looking for a way to reduce your taxes a little bit, something that you can consider is you still have the ability to make IRA contributions to a traditional IRA for most people. There are some eligibility requirements, but you can do that and you can shelter up to sixty five hundred if you're under fifty and seventy five hundred if you're fifty year older, and if you're married, both you and your spouse can do
that. Typically, the requirements that you have to have earned income of at least that amount, So you know, if you want to contribute sixty five hundred, you have to have earned income that could be you know, wages, commissions, self employment income, not pension income, not portfolio income. That's separate. Has to be earned and you have to have it in the amount that you'd like to amount or more of what you'd like to contribute.
So if you have three thousand and earned income for twenty twenty three, you can contribute three thousand. If you have sixty five hundred, you can contribute sixy to five hundred. If you have fifty thousand of earned income, you're still cap at that sixty five hundred or seventy five hundred if you're fifty year older. Even if your spouse doesn't work but you do, or vice versa, you don't work and your spouse doesn't have earned income, their income covers
you. It's kind of looked at a household basis, so that is something that you can consider. Again, if you are saying, I just need to take the edge off of my twenty twenty three tax bill a little bit. If you haven't contributed to an IRA or roth IRA yet, contributing to that traditional IRA will give you that tax production for the current year. You can also contribute to an HSA if you are covered by a high deductible health plan. So an HSA or a health savings account is an account where money
in there is set aside for qualified medical expenses. That list is much larger than you might think. It's not just you know, hospital bills. It's sometimes things you might buy at a pharmacy. You know, I even purchased blue light glasses with an HSA one time. That was a covered expense. So look at the list. It's more than you might think. But anyway, you know, the HSA is a tax advantaged account in three ways.
If you put money in and you know, of course you have to qualify, you have to be covered by a high deductible plan, but you can put money into there and you can get the tax deduction for that contribution. The limits are for twenty twenty three are three eight hundred and fifty for individual coverage. If you have a family plan, you're limited seven seven hundred and
fifty. Those limits have gone up a little bit for two twenty four to forty one to fifty for single and eighty three hundred for family, So you can contribute there and get a tax deduction for that contribution. When the money grows tax deferred potentially tax free, so as the money's growing in there, you can have it invested. Oftentimes, once you get to a certain balance, you can invest that and you can have it growing tax free for you.
And as long as the money comes out for those qualified medical expenses, then it comes out tax free as well. So it is one of the
best best tax advantage accounts. You can use tax deduction upfront, tax free growth, tax free distributions as long as it's going to those medical expenses, and you can still contribute up to the tax deadline to that for twenty twenty three, So if you want to shelter a little bit more money you can put in thirty eight fifty if it's individual, seventy seven to fifty if you have a family plan, and that will reduce your taxable income for the year
as well. So a couple more things you can do in these last few days before tax deadline if you're finding yourself, you know, in that position where you'd like to do that. We're gonna take one more quick break here and then we'll be back to finish out the show, so stay with us. We'll be right back all right. Thanks everyone for joining me this morning. We still have about ten minutes left with the show and some more interesting things to discuss, So if you do have a question, feel free to
call in one eight hundred talk WGY. That's one eight hundred eight two five, five nine four nine. Well, one thing that I did want to chat about with with the listeners today is this idea of a magic number of retirement. And you know what is that magic number that you are saving towards to say, you know, if I have this much of my portfolio, then I feel like I can retire. And you know that's that's how some people approach it. Now, you know, from my perspective working in the
industry with you know, one hundreds of different clients over the years. There is more complexity to it than that. Certainly, it's not as simple as Okay, if I have you know, one million dollars, I can retire and I'll let the rest of my days comfortably. There are so many unknowns. We don't know what market returns will be. We don't know how long any individual retirement is going to be. We don't know how long that money
has to sustain for. We plan for a long time to be on the safe side, but you really don't know, and all those things factor into it. You can't predict different expenses that might come up. But you know, it is kind of a way to think about it, and I think just kind of given a motivational tool that a lot of people use as they're you know, working in their careers and maybe looking forward to that retirement day,
saying well, you know, I'm saving towards this goal. And when we look at, you know, what people's retirement expectations are, we've seen that in the last five years, their you know, quote unquote magic number has increased really dramatically. So in twenty twenty, the average amount that people were saying, this is what I need to feel comfortable to retire was nine hundred and fifty thousand in twenty twenty four. It's just shy have one point
five million. So that has grown about fifty percent in five years. That amount that people feel they need to retire comfortably. Now, that is not always necessarily what you need, right. I have set down on clients where they say I want to retire with three million. That's my number. If I don't have that, I probably will keep working. I'm not tied to
the number. And as we go through their planning and dive into their spending and their details of their situation, what their social security will be, what their pension will be if they have one, you know, all that kind of information, we realize that either maybe three million is way more than they need and they could retire earlier, or sometimes it's not enough and they need
to you know, revamp that number. You know, there's a lot to factor in with inflation and spending patterns in retirement, and you know, there's so much that goes into it. So sometimes that number is either much more than they expected in their you know, continuing to work and sometimes a stress inducing job not the best environment, something that affects their quality of life just to get to this you know, arbitrary number and they don't need to or
sometimes, you know, unfortunately it is the opposite where they realize, if I want to live you know, this certain lifestyle, I actually have to save more. So, you know, I wanted to share this number one because we're at a time in American history where we're at a record breaking number of people that are reaching retirement age. It's this trend called peak sixty five where every single day from now through twenty twenty seven, eleven thousand people will
have their sixty fifth birthday. Eleven thousand people every day will turn sixty five through the next three years. So that's that's a huge number of people that are in that retirement window. Right. Of course, some people retire earlier, some folks retired leader, but you know, that's kind of that retirement age that a lot of people think of. You know, sixty five,
you're at least probably planning for retirement if you're not already there. And so we have a lot of people that are approaching that that time of their life where they're saying, you know what, what is my magic number, and not just the number that I think in my mind. But you know, I need to check this a little bit and really look at a detailed plan and make sure that the number I'm have in my mind as a goal is enough for me and not too much for me. And that's really an important
thing. So, you know, if you're one of those eleven thousand people who's turning sixty five today, happy birthday, and if you're kind of in that range of your life, you know, give us a call. Let let us help you out, Let us help you. There are so many questions that people in that you know, decade of life are facing, right what to do with their four oh one K, how to manage taxes,
social security decisions, pension decisions. Do I spend more money now? How do I know if I do that, I won't you know, set myself up for failure later in life when I you know, more, more advanced in years and unable to go back to work if I needed to. How do I mitigate all these risks? And sometimes you just don't know what you don't know? Right? Sometimes folks are saying, I've really had this goal
of early retirement. I want to retire at sixty and they haven't considered the fact that they're going to have to pay for healthcare for five years before reaching Medicare eligibility. You know, they might not be they might not be thinking, oh, I actually had this goal of I want to make sure my children aren't taking care of my grandchildren, and they're not factoring that into their
spending needs. So sometimes you don't know what you don't know, and it's good to sit down with an advisor that can, you know, in looking out for your best interest, look at your situation objectively and say have you considered this and kind of model that for you? You know, cash flow I think one of the biggest not necessarily risks, but the biggest difficulties in retirement planning. And we see this for retirees across the board is most people
spend the most in the first ten to fifteen years of their retirement. Them retiring slows down or not retiring excuse me, their cash flow needs slow down in the middle decade, and they slow down again in the final years of their life, typically with a for most people, slight uptick in the last one to two years. You know, for medicals, towards the end of their life. But for most people, they spend more at the beginning, and so that is a little bit difficult to plan for it because you don't
know how long you live. You want to make sure that you're protected and all all squared away. So let us help you with that. If you're finding yourself in that range reaching you know that magic sixty five age, you know, let us let us help you with the number for retirement. Well, as we come to the end of the show today, thank you again
for tuning in. I hope you got something valuable or at least interesting out of our conversation, and I hope you'll tune in tomorrow at eight am to spend an hour with Nicole Gebel, one of my brilliant colleagues, will be talking with you then. But until then, thank you so much for listening to Let's Talk Money, brought to you by Bouche Financial Group, where we help our clients prioritize their health or we manage their wealth for life. Stay
safe and healthy. Make sure you're wear your clip safety glasses on Monday. Have a great weekend.