Good morning, folks. My name is Martin Shields.
I'm the chief Wealth Advisor at Bruchet Financial Group, and I'm going to be your host today for Let's Talk Money. As always, it's great to be here to answer any questions you may have regarding your financial planning or investment manager concerns. And as always, you can reach me at one a hundred Talk WI. That is eight hundred eight two five five nine four nine. Again that's eight hundred
eight two five five nine four nine. And for those of you that may be a little bit too shy to be on the radio, which I don't think anybody should be, but if you are, you can email me at ask Bouchet at Bouchet dot com. Again, that's ask Bouche at Bruche dot com. It's b O U c h E dot com. So any questions regret to whether it's fun planning related or investment related, UH, give me
a call or shoot me an email. As I always say, there's no dumb or silly question except for the one that you don't ask, and you may be doing your fellow listener or favor by asking that question that they have as well, So go ahead and give me a call or send me an email. Uh. You know, when we have meetings with our clients, we usually want to have both. If it's a merry couple, we want to have both of them there. We want to have that discussion, uh,
to you know, really capture all their concerns. And you know, in that environment, I usually see can very depending on the situation, but that one of the spouse maybe has less of an interest uh in some of the things we're discussing. But I do think it's very important that you know with anybody, you know, everybody has their finances, that you have some element of knowledge about that.
Uh.
Again, it doesn't have to go always as deep as another person, but have to have some knowledge about what is going on in your own personal situation. And our goal as a firm is to always try to communicate in terms and in ideas that most people can understand. Really to try to bring down the ideas and make.
Them a little bit simpler.
You know, I'm a big believer that if you can't take a complex idea and bring it down to its simplest terms, then more likely to not you don't understand it really well. And you know, there are.
Some things that are more that are more challenging to do.
In that respect, but as a whole you can do that if you really understand the topic. You can take that complex topic and boil it down to some of the most basic ideas. And that's what we try to do with a firm. And I do think it's important that, again, at least a high level, that you understand what's going on with your portfolio, what's going on, you know, as you save for retirement, and how does retirement look like as you move into it. So again, if you have
any questions, give me a call. You can reach me at eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine, or you could email me at ask Bouchet at Bouchet dot com. So there's a number of things I wanted to discuss today. Certainly talk about the markets. We had a little bit of volatility in the markets, with a
greater than one percent drop in on Thursday. We haven't really had that type of volatility, either up or down in the market sing quite some time, but that's certainly very commonplace. It's really a sign of a healthy market to have some element of volatility. But we haven't had that.
So we'll talk about the markets and some funny.
Playing ideas that I want you to be aware of. We have a few changes in some of the contribution limits, but we're gonna go to the phone lines. We have Jim from Hadley. Jimmy there, I'm here. What can I help you with?
Well, what I would like to know is, I'm considering doing some consolidation. I've been investing for about forty five years and as you go through that, you wind up with different brokerage, broker dealers and so forth. And I've gotten it down to two of the major ones and I'm considering just moving it into one. I am concerned about the SIPC insurance. Would I in effect lose half of that or is there another way of covering any kind of risk there?
Yeah?
Great, great question. So you're right, you do with each of these custodians, you have a certain level at that PC insurance. But here's what I would tell you, which is, at the end of the day, you know, you think about these big custodians and I'll just put Vanguard, Fidelity, and Schwab those are the really the big three. Their main goal as they operate their business is to do
no wrong. And you know, contrast that, Let's say with Merrill Lynch that during the financial crisis was you know, financial custodian, but they were also trading their own money and samething with bear Stearns Safe Thing with Lehman Brothers, and in doing so they took out on a kind of outside risks that you know, when everything came crashing down, Uh, it became a problem to operate their business, and they either went in the bankruptcy or they were taken over.
Uh.
Meryl was taken over by Bank of America. You know. With the three I just mentioned, Vanguard, Fidelity, and Schwab, they don't do any trading of their own assets. They're really a financial custodian. I that is that one hundred years from now they'll still be here at some capacity, or they'll combine maybe with another. But I don't see any of these being a risk that you have to worry about the SIPP insurance because here's the thing to appreciate too. Let's just say I'm wrong here and something
happens to one of them. What I can almost also guarantee you is that no different than eight is that if one of them starts to stumble, one of the other ones will only be more than happy, just like Bank of America was to come in and step in and take them over at pennies on the dollar, right, So you know, I think there's a tremendous amount of value it's consolidating. To have accounts at across multiple custodians, especially as you get older, gets very challenging. I think
you really want to be doing that. You really wanted to be consolidating, and everything in life has some element or risk. But from a risk perspective, like you said, you have SIPC insurance, but for many people that are over that amount. I know at Schwab they also have insurance through Chubb that would ensure it gets particular situations.
But as a broadly speaking, one of these financial fans custodians going down to the point that your assets are in jeopardy, it's the lowest risk as you can possibly imagine. So I wouldn't be too worried about that. I think you're much better off from the value of consolidating financial cusodians than you are the risk of something happened in one of them.
Well, I'm glad I talked to you today. You've alleviated werfly concerns.
Good, good, well, I'm glad to hear that. And again, I think you're gonna be much better off with just using one of them. And again, as far as risk are concern in life, that's one of the smaller risks you've got to worry about.
Great, Thanks very much, Martin.
All right, take care Jim abye. But yeah, that's a great question that Jim had. And this is what I would always say, even for people like to have full and K plans, I mean, you are much worse off having accounts, you know, across all these different consdians. I mean we see it people collect forwing K accounts and you know, you know, do you know how you're invested with those accounts?
Do you know how your performance is?
Do you even know where those accounts are? So and all, by the way, see if always say this with folling K accounts four three B accounts, you're paying fees on those accounts that you get zero benefit from. Right, You're gonna pay what's called GPA third party administration fees. You're gonna pay custodial fees. You're gonna pay record keeping fees, You're gonna pay financial advisor fees, all these fees that pretty much every one of those plans have, even the
biggest one to some capacity. Now the bigger ones is going to be much less, but some capacity those fees exist, and that you're I'm a fan of not paying anything from something I don't get any value from, right everything, as a consumer you have to get value from otherwise
you're wasting your dollars. And so in those circumstances, in particular as it relates to four to three B or following K accounts, you are absolutely better off moving it into an IRA if you have a plan, and that's that's I mean, you have to have a plan in place.
And there are a few exceptions.
We talked about the rule of fifty five, which allows you to take distribution from a four and K plan after h fifty five. That might be one of them. But in New York State, there's really no additional protections that you get with the four and K that you don't get with an IRA as far as bankruptcy or liability, so you don't have to worry about that. But again, trying to consolidate is going to make your life a lot easier. Let's go on and continue to discussion on
to company's topics that I wanted to highlight. But again, if you have any questions, you can give me a call at eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine. And for those shy listeners, you can email me at ask Bouchet at Bouche dot com and that's b O U C H E Y if you have any questions. And bouchet is also is also our website, so hopefully you've got out through a website you're familiar with that
as well. Let's move on to some financial planning topics. So one of the things I want to highlight is starting in twenty twenty five, the amount that you can contribute into a four one K plan is going to go up from twenty three thousand dollars annually up to twenty three thousand, five hundred, so an increase of five hundred dollars, So you should be aware of that and
adjust your contributions accordingly. Now, the ketchup amount, which is the amount additional amount you can contribute if you're fifty and older, stays at seventy five hundred dollars. That does not change.
But now what's.
Interesting is the SECUREC two point zero, which was passed a few years ago, now has an increased amount that you can contribute if you're sixty, sixty one, sixty two, or sixty three. So if you're one of those four years, your ketchup amount goes up to eleven thousand, two hundred and fifty dollars in twenty twenty five.
So not that things weren't confusing.
Enough to begin with, now you've got to remember this. There's a four year period from age sixty to sixty three that your amount increases tore and fifty dollars starting next year, So to be aware of that. A couple of things from a financial planning perspective that I want to kind of bring to light that I think it's important.
You know, when you are looking at your.
Retirement how much you could take from your portfolio. You know, the rule of thumb is somewhere between four to five percent, and that could be very depending on who you talk with, but you know, it's not really absolutely limited to those numbers. In particular, let's say you retire in your early sixties, and you want to have a higher distribution rate, but you and you also want to delay taking your solid security until age seventy. You want to let that grow.
You can absolutely take a higher distribution rate for that let's say, five, six, seven, eight year period while you're delaying your SOB security, but you want to do the.
Things you want to do with your life.
And you know that is just extremely important that you know, especially if you have a firm like ours managing that distribution rate. We have a number of clients that are in that situation.
They want to make sure they can spend money in.
Their sixties while they're healthy, and they want to also delay taking their SOB security, So they might be taking a distribution rate of five to sixty seven percent over those years, and it really works out very well because that allows them to spend a little bit higher than they might otherwise in their sixties and yet be able to take that higher amount of social security when there are seventy And you know I've mentioned this before for
individuals that are the highest income earners, if in twenty twenty five they start taking sub security at eight seventy, they will be getting sixty one thousand dollars sixty one thousand dollars the beginning from Social Security. That is really an amazing number as far as how high it is relative just you know, I remember when I started fifteen years ago, I think the highest mount was in the
forty forty thousand range. So you know, you really do benefit by if you're married, one of you waiting to age seventy, and especially if you're in good health. They break even ages between age seventy, age seventy eight and age eighty that if you live past that age, you are better off by delaying. So the thing to remember is if you're married and just one of you does that, now you've got that higher benefit amount for your household.
And let's say that individual who has the higher benefit amount passes away, that benefit mount stays with the household, so it stays with the remaining spouse. They will still get that high they'll switch into that higher Social Security
benefit amount. So it really is one of those things that you know, we always say this to clients, the decision you make with your Sociecurity benefit will almost never make or break your financial plan, and we really encourage to take one the opportunity of the route that really
feels best for you. But at the same time, if you can delay into age seventy and both of you are in decent health in your sixties, there is a very high likelihood that you're going to be there's a very high likelihood that you're going to be receiving that benefit all the way to mid nineties. So you might want to kind of think about that and you know,
really try to delay if possible. Okay, we got a question that came in from a listener that says, I understand tech stock insiders, owners and managers are selling stock and not buying the stock. What do you make of that? Well, you know, I think we have to appreciate this is from Mike.
I think we have to appreciate.
Is that executives of these companies usually do it in a fairly systematic way right there. There's limitations as to when they can sell, and I know, like with Steve Cook from Apple, you know, he's constantly selling Apple shares, but he's doing it based on the schedule that he has agreed to already. So you know, I don't think you really I mean, you can look at that and youbc extensive insider selling, you know, you can look at it as one factor of concern, but let's face that.
I mean, with these stocks at all time highs, if you've got a lot of your wealth tied up in that, it's not a bad idea to be selling. So I think what's more important in these circumstances. And again I'm not saying there are certain situations where you see insiders just going crazy selling that you might not want to
use that as a red flag. But as of probably speaking, when you see any executive sell in a consistent fashion for most companies, in particular with these tech stocks, I don't think it's a huge red flag.
We also have a caller.
We're gonna go to Leonard from Sky Harry Leonard, are you there?
How you doing good?
How are you.
All right?
I this weekend, I'm semi retiring. I'm sixty two years old. I have probably three quarters of my investments in a four oh one K and i'd like to do some transfers into IRA. And if I'm not mistaken, you can't do an IRA transfer unless you're working, and I'll be working.
I'll be working part time, and I was thinking about taking my part time income and just dumping as much as I can, which is seventy five percent into a roth IRA and then taking which will cut me a little short at my expenses about one thy fifteen hundred dollars a month and taking income out of my four oh one k. Is that possible?
Yes, Well, let's see a couple of things here. One, congratulations on your partial retirement, the big milestone. So congratulations. Two, as I was mentioning earlier on the show, you can if you're now are you leaving this company? Are you staying with them?
I'm staying with them, but I'm cutting from here's sixty hours a week down to two days a week, which is probably with them twenty four hours a week.
Okay and okay. So one of the things you might want to check is a number of plans allow you to do what's called the in service distribution, which allows you to move money from your four oh and k plan while you're still working there and contributing into an IRA. So I would check with your HR manager or whoever is the plan sponsor or the trustee to see if
that's possible for you. It can't quite often a day sixty five, but they can't depending on the plan, and it can be at different ages, so you could be eligible to do that, in which case, go ahead.
We have a a ROTH contribution option in our retirement system. Okay, so I could just contribute. I could. I might be able to transfer straight from my four oh one K to a ROSS without even changing companies.
I'm with t Rowe price to your advice. Yeah, I mean to answer your other question though, is you know, frankly, I would just make like your life simple, which is you know you're going to continue working. It sounds you know you're going to still make some contributions into your retirement plan. It's certainly to the extent. I don't know if you get a match or not, but that's kind of a no brainer to contribute into your retired plan if you're getting a match. But uh, if you're doing that,
I would worry. I would just do it to the level where you have enough cash flow to live on. So I want, I want play this game where you're contribute to the ROTH, but you're also taking dollars out of an IRA that you're going to be paying additional taxes on it.
Just just make your.
Life simple and contribute to the WROTH to the extent you have the cash flow. Certainly, if you have a WROTH option and you do get a match for your company, I would absolutely contribute to the point where you get your match. But beyond that, I would try to just simplify your life and you know, use your income to live off as much as you can. You know, the other thing to appreciate too, which is you know you've saved for retirement and you're gonna be working part time.
You know, at the end of the day, if you if you need all your cash flow from your part time work to do that and you can't save any more from retirement, you know, it's still not a bad idea. Need you to do that, I mean giving up on the match if you have a match, that's kind of tough. But I would try to play this game of trying to move the money around.
Okay, the whole idea of working part time is just so I can hold off on Social Security. I'm not going to wait till seventy because most of my family life expectancy is in the late seventies.
So I've talked to people, and.
I think for me, it's wisest to retire at sixty five or sixty six with social security.
Sure, And that's what I've said on the call earlier, which is, you know, I can give you a reason why in some situations way the age seventy works. But just like you're describing, if you have any health concerns whatsoever, and also you want to, you know, get out there and retire and enjoy your life and have that cash flow, then absolutely take so security at age sixty five or sixty and go for it and enjoy your life because you don't know what tomorrow holds.
Yeah, it'll be sixty five, I guess right. Most of my family I have diabetes. Most all my family's got diabetes. My sister's seventy five, she's on dialysis.
Oh boy, I'm sorry to hear that.
The big question is how long are you going to live? Well, judging by my family, tree probably live to be around eighty.
Okay, take care of myself, okay, yep, yep. Well I hope that you do. I hope that you enjoy your retirement. Congratulations on it, and I think you're doing all the right things. Leonard, Thank you, all right, take care. Yeah, a great, great question from Leonard and white folks, I'm telling you, let's talk to a new perspective. Client guys very successful, you know, early fifties, and he wants to retire and enjoy his life, and he's in the position
to potentially do that. And I would highly encourage you to really, you know, either manage your spending as you get closer retirement. If you've done a great job saving, you can go and do the things you want to do. Or when you get to be that retirement age, don't
be afraid to spend those dollars. If you're portfolio as well managed, meaning that you know you have a good firm like ours, a wealth management firm doing it, or you know you are doing it around it, and you really have a plan in place, don't be afraid to
spend those dollars. That's one of the psychology psychological barriers I see where so often which retirees is they're so ingrained into saving and to not spending that they really struggle when they move into retirement because now not only do they not have a paycheck, but now they're spending down those dollars that they've worked so hard to save. And the one thing I always tell them, which is
you know you may have trouble spending that money. But I don't care who the beneficiary is, whether it's your kids, your grandkids, a friend, a brother or sister, whoever it is, they'll spend that money pretty pretty freely, pretty freely. You'd be amazed at how much they'll spend that money freely. And so I always really encourage clients to spend that money,
enjoy their life while they have their health. Our tagline is health, Wealth for life, and it's that for a reason, because health comes first.
You can have all the money in.
The world, if you don't have your health, then it's not gonna be worth much. And all you have to do is have a health scare. And you know what I'm talking about. And certainly as you get older, you start to realize. You know, you see these people that they have these big plans and they're going to retire, and the day they retire they pass away right or the day they retire they become disabled and not able
to do the things they want. So, you know, that's why I really encourage you, if you're in your mid forties, really start to have that plan with an advisor, get it in place, and then you know, as soon as you're in a position to retire, and you know you're getting the thumbs up from your advisor that you're in a good spot. Don't be afraid to take advantage of it. And even like Leonard was talking about, which is going ahead and using your social security to provide the cash flow,
especially if you have any concerns over your health yourself. Folks, were gonna go commercial break, but come back and join us. You're listening to Let's Talk Money, brought to you by Brush Financial Group. Well, we help our clients prioritize their health.
Well, we manage their.
Wealth for life. Folks, come back and join us as we can to take your questions.
Welcome back, folks.
For those of you who are just joining us, my name is Martin Shields. I'm the chief Wealth Advisor at Bouchet Finance Group and I'm your host today, so let's talk money as always. Is great to be here with you to answer any questions you may have, and I encourage you to call in with those questions. You can reach me at eight hundred Talk WI. That is eight hundred eight two five five nine four nine. Once again, that's eight hundred eight two five five nine four nine.
And again if you're shy, too shy to be on the radio. You want to email me, you can email me and ask Bouchet at cha dot com. That's ask Bouche at bouche dot com and bouch A b O U c h E y dot com. We're gonna go right to the phone lines. We have Jason from Boston Lake.
Jason, you there, Yeah, I'm here.
What can I help you with?
I was listening to the show. I've got a little bit maybe a unique retirement plan. I'm in my mid forties and been focusing on planning for retirement for some years now, and I've been investing in real estate, so I've started to build up a small portfolio and you know, focusing on cash flow, trying to replace you know, you know,
maybe seventy five percent of my income with that. Any advice as I approached, maybe in the next half a decade goal of trying to retire fifty, I've got a four to one k. But any advice or you know, almost like semi retiring at that time and not necessarily full retirement with a passive income. Just want to get your thoughts on that.
Sure.
So we have a lot of clients that are very much involved in real estate and diffic capacity. And you know, one guidance I always gives anybody that is thinking about that is making sure that like you're doing, you're involved with it now, so you feel very comfortable with real estate and what that means to be a landlord and managing those properties before you do it and before you go retirement. I've seen it the other way where somebody thinks they want to kind of do that as their
retirement gig. Until they've done it, they don't understand all that it entails. And I think you could probably attest it's it's a lot of work at least, that's what in general, you know, the statement that most people would say. So you know, I would just tell you that a couple of things. One, if you're retiring early, you're got to consider healthcare. You know how you're going to get that, and that's you know, are probably gonna run you one
thousand dollars or more a month. By the time, let's say ten years from now, it could be you know, fifteen hundred or two thousand dollars more a month, so you've got to consider that. I would also just you know, suggest to you that more long term you know kind of you've got to have a plan a little bit of what are you going to be doing with your properties, meaning that you know, how long can you manage them for? You know, do you want to be managing them when
you retire? You know, maybe the answer is yes, but you still have to have some idea as to you know, maybe again you just you're manage them for as long as you can. And then at some point you you you have a property manager take over the bulk of the work for you. And you know you may do that already, which is you delegate a lot of the
work to outside experts and people that help you out. Yeah, and then you know, I think you know, just in that regard, I assuming you currently you know either your very knowledgeble in taxes and you do yourself or your work with a good CPA. Obviously with real estate there's a lot of tax advantages and making sure that that flows through, uh from a planning perspective. Otherwise, I mean it can be beneficial because now you have your subecurity, You'll have your four and K that is, you know,
now invested in publicly traded assets. Uh, and then you have your real estate, which is a diversifying asset. So I think you've got everything lined up. There's nothing major that I would have concerns over U. You know, just making sure again to your uh cash flow, you know kind of it's sufficient to cover your expenses. You know, you might be in a good spot to do that.
Yeah, as I've jumped into this, so about four or five. I think I started about six years ago. And you know, now that property values have increased and so have rental rates, it's nice to have locked in that cost basis from those years ago. So it's somewhat anti inflationary, which is what I enjoy. So I'm planning to build this a
little bit more. But I yeah, those are all great, great things for me to be thinking about that you mentioned, and just trying to make sure that I've got something locked in that I don't have to try to figure out later down the road. Get it trying to get it locked in so that's solid for the future. I appreciate the advice.
Yeah, no problem, Yeah, great, great question from Jason. And you know, we have a lot of clients there are involved in some capacity in real estate. But I think the big thing is, you know, appreciating them out of work that entails to do that.
Right.
You know, we see this as well, which is people they are just involved with invested in the you know, stock market or whatever, and they hear that you can be earning more money with real estate, which may or may not be true, depends on the circumstances. But what
you have to appreciate. Let's say you can earn on average nine or ten percent long term being a stock investor, and you hear, and you know, maybe some elements of truth is that from investing in property and being a landlord that you might be able to earn something greater than that twelve thirteen, maybe fourteen, fifteen percent. There's a
couple of things to appreciate that. One is, when you're investing in the stock market, you know that nine or ten percent, you can just invest in the SP five one hundred and capture that and really requires no work. Whereas if you're going to get anywhere greater than that that amount that I mentioned, you are absolutely going to be putting a sizeable amount of time and effort and
resources into those properties. And I think you know the other thing that people don't always take in consideration is one is their hours in that, right, that should be something you're capturing because it's it's not passive, you're actively investing in it. Two is the headaches, right, the phone calls on a weekend, the phone calls during the week and you know if you outsource that then that's going to eat into your ability to have those higher returns.
And so I think you know that's an important part that most people don't appreciate. The other element, too, is it also requires you investing dollars into that capital asset, right, So you know, you having a part of building our house over time, you're gonna have to be putting dollars into that. And if you're accurately trying to capture the actual return on your investment, you need to be taking that in consider ration and many times people are not, So you know, just something to be aware of as
you're going forward with that. We're going to go on to an email that we received for one of our listeners.
This is from Christopher.
He says, I have a five five twenty nine plan in my name, and I think I should spend that before my son is old enough to go to college by spending it on my nieces and nephews. Uh, that way, it will not be considered for financial aid support. That thought, I pay off high student loans for my nephews and in the future they would pay off as college bills. Let's see here, Well, this is interesting. I've never heard of this strategy before, but it's certainly an interesting idea.
A couple of things to consider.
One is you cannot use five twenty nine plan assets to pay off a loan. Right you have that has to be for if you want to get the tax breaks on it. Now, you can pull that money out and pay ordinary income taxes on that distribution uh and then and then pay for the debt. But if you want to pull it out and pay and get not to pay taxes on it, you have to pay for qualified educational expenses. So that has to be either directly to the college or a can be for living expenses
as well. So if you wanted to pay for your nieces and nephews and then they turn around and they with your kids, I guess is the strategy. But here's a couple of things to consider. One is there's a lot of risk for that right because you pay for your nieces and nephews and you know you don't know
if for certain they're going to pay for your kids. Secondly, when it comes to financial aid, you know the five twenty nine plans, Depending on how much you have, they score much lower, much lower than any other asset does in that financial aid package. So you know, if you had money in a brokerage account, or in a savings account, or any of these other situations, they would score much higher and they would impact your financial aid much greater. So you know I would I would really this would
not be a strategy I would probably support. I think you know, here's what you have to appreciate, which is you've saved those dollars to put into a five to twenty nine plan to make sure that you know, you and your kids can go to the college they want and limit your financial burden. And again, part of this depends on how many dollars you have in there. But you know, I'm a big believer in kiss keep it simple, right, And so you know, you start playing this game that
you're describing, it may or may not go well. And at the end of the day, what is the advantage that you're getting by doing this? So I would probably just move forward, you know, try to save as much as you can into a five twenty nine plan, in many cases you'll still get financial aid and you'll be in a better spot to help your kids so that either you or they are not taking on debt.
So it's something.
I guess it's feasible, but you're you've got a number of roadblocks. In particular, as I mentioned, you can't use five twenty nine plan assets to pay off debt and it has to pay be paid for qualified educational expenses. But great question. Let's move on and cover a few additional topics here. But again, if you have any questions, you can reach me at eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine, or you can email me a
question at ask Bouchet at bouchet dot com. That's ask Bouchet at Bouche dot com, and that's b O U C H E Y dot com.
Let's talk a little bit.
We got a number of economic reports that came out this week. We had the labor numbers for the month of October, and they weren't great, to say the least, only twelve thousand jobs added, one of the lowest amounts in the number of years, and I think it's important to note that because of the a number of strikes, including the boat Boeing strike, and because of the hurricanes, which of course were quite dramatic throughout all the Southeast,
that's a big impact on those numbers. But it is safe to say that if you look at let's say the three months moving average, you know, you really in these numbers, really don't want everyone to look at just one month because of you know, situations like this that can impact things dramatically for that just that one month, but the three month moving average is declining for these additional jobs added, and also the revisions, which is an
important number of the prior months, was also phillo dramatic. So you are seeing a labor market that is softening. It is it is a labor market that's softening. And now you had unemployment rate stay at four point one percent, so that's certainly good, and wage growth has still continue to be pretty strong around four percent. So I think
what this means is a couple of things. One is that again with a weakening potential weakening labor market, and with inflation still above the feeds two percent target, but more in the PCEE came out at two point seven percent, so you know, not where they wanted to be, but certainly not really jumping higher.
The likelihood is that you're going to see the Federal.
Reserve cutting interest rates by probably a quarter percent on the seventh. They meet this week and they're going to be making a determination whether the cut or not, and by how much of it do cut. I think half a percentage point is off the table. I would say that I think they're going to probably after cutting a half point in September, that probably cut a quarter point this week, and then we'll have to see about December.
It could be another quarter point. But when the labor numbers came out on yesterday's Yesterday morning, the markets really did quite well yesterday. I think you're kind of still having this Goldie locks environment, right, which is, you know, you had GDP growth at two point eight percent, which is all the considered really continue to be good economic growth in the broader economy, and then you've got some
weakness that allows the Federal Reserve to cut rates. And you know, if you had to ask me what does a soft landing look like, I would describe it just like this, which is you got to have inflacing continue to move to that two percent target. But at the same time, you want to still see the economy broadly speaking, to be strong. Uh. And you know, again we look at the amount of job openings. There's still a lot of jobs that are available. Well, we're going to go
to the phone lines. We have Marie from Albany. Marie are you there?
Yes?
Oh, yeah, good morning, Good morning.
What can I help you with?
Yes? I was wondering if you could talk about the if you're able to just the impact that the billions of dollars this country has put into immigration, the legal immigration, how does that impact savers? Are you able to covelous that, you know, to keep saving and saving, Like, are we savers and investors going to end up having to pay more taxes on our money? Do you think because the government is spending billion dollars on the migrants crossing the border.
Should we look Yeah?
I made that is, should we look.
For like tax free like tax free investments just to you know, save and potentially higher capolic gains rates in the future.
Yeah. So, I mean what I'll talk to your question more of from a larger perspective, right, which is, uh, you know, the problem that is probably more impactful is the fact that the broader uh, federal government deficits is so large. Now you know, if they're spending money on these immigrants come across border, it's you know, dollars, but relatively speaking, it's billions not trillions, and our annual deficit is in the trillions range. Uh. You know as of
right now. What that does is that may the economy stronger, meaning that all those dollars are moving out into the economy, and that is you know, one of the issues potentially from an inflation perspective, that drives up higher inflation. I think bigger issues are that long term, if you keep that up, where your annual deficits are so large and that your national debt to teams grow, that at some
point you can have a problem. Right so, you know, there's a term with bankruptcy that happens very slowly and then all at once. And you know, our dollar is the dollar is the currency of exchange, and what that means is that when any countries are doing whether it's oil or really any form of trade, they're usually doing it in dollars. So that puts us in a very unique position because you know, we can keep printing dollars
and we're okay. But if that were to change, and you know, it's very unlikely because if it's going to change, you've got to go to another currency. And the question is which one, right you're going to have? The Euro I don't know the end the one. You know, you look at each other countries or you know in the
Euros a number of countries their currencies. They all have their issues as well, and so you know, for the time being, even though the US does things that are not great from a long term perspective, they're still better off than what some of our fellow countries do. So you know, that's the problem. More so with the government spending. It's not one particular area that you have to be worried about, uh, it's more broadly speaking, and how does
that cumutive effect at some point become a problem. But to your question, I mean, listen, all I would tell you is you've got to always just do what's in your best interest, and what's in your best interest is to save dollars and be invested in the stock market long term. And yes, you do need to be a bit of an optimist to do that, right, because there are are different reasons to be testimistic about whatever's going
on in our country. But you know, to quote quote Warren Buffett, don't bet against the US economy, right, that's a bet you're probably gonna lose. So just do with in your best interest when they continue to save and be a long term investor and you're gonna be successful. But thanks for your.
Calling, yable answer, great answer, Thank you, thank you for much.
Okay, yeah, pack care. We're going to go on to an email we have from Robert. He said, hello, my name is Robert. My question is I'm retired from New York State and receive a pension ten ninety nine are which I only pay federal tax. None can I contribute to our wroth IRA. Great question. We get this quite a bit from people who have pensions, and the answer, unfortunately.
Robert, is no.
Uh, you need to have what's called W two income, which is simply earned income to contribute to our wrath so that pension income is not considered W two and you cannot contribute to a roth ira.
So but if you we don't go work part.
Time as a barista or pouring beers at your local group hub, those would be W two dollars and you can contribute up to eight thousand dollars annually into that. So but that's a great question from Robert, And that's one of those things. You know, we just talking to a new client coming out board. You know, they have kids in their teenagers, and then another new set of clients coming out in the kids are a litle bit younger. You know. One of the great things to do with
robert situation. He's moving out of earning income, but we have young kids, they're moving into earning income and they'll have W two income and to start contributing to a wroth for them. And what we do for our kids, my wife and I is that we have them contribute to a wroth and we have them put in half their dollars they've earned into the row. The other half we put in to match, and they save some dollars for future spending down the road, and then they spend
some dollars. So it gets them into this mindset of what is it, you know, being a good shaver, you know, always thinking about having to save those dollars and preferently in a tax preferential account like a roth. It also gets them saving dollars in a taxable account or a bank account for money as they might need in college or in their early twenties, and then they get to spend some dollars. So kind of all those three buckets, but certainly contribute to a ROTH earlier is beneficial because
those dollars now grow tax free indefinitely. So just something to be aware of as you're thinking about that. And you know, one of the things is amazing. I don't know if you're on LinkedIn, but I encourage you to follow me on LinkedIn. You can just put in Martin Shields at Bouchet as chief Wealth Advisor, and I put out a lot of different thoughts on the marketing economy and different things with the community.
But one of the things.
That I talked about in the last week or so was the fact that there's going to be eighty four trillion dollars that let me say this again, eighty four trillion dollars that's going to be transferring over the next twenty years in wealth transfers. So that's going to be going to multiple, multiple generations. And what I highlight in my LinkedIn blog was two things. One to me, that
shows that people aren't spending enough. Whether it is you know, they get sufficient assets as they get closer to retirement, they should be saving less for retirement if they're in a good spot and spending those assets on themselves then or when they're in retirement, they're not spending enough. And listen, I'm constantly telling clients to spend more money. So that's one observation I have. The other one is that we need to make sure that that next generation is really
well prepared for receiving these assets. Right, you think about that eighty four trillion dollars is coming down the pike, and if they're not ready, they're going to waste those dollars. And it's all that hard work that these generations have done to build that wealth is going to go by the wayside, and what you're going to see is this
real gap between the haves and the have nots. Because the people that are well prepared are doing all the right things, their kids or grandkids are hopefully also going to be that way, and that wealth is going to continue. Now, it doesn't mean they're not going to be able to use those dollars to capacity, but they're not going to spend them down to zero. But then that other folks that don't make sure that their kids or grandkids are well prepared, and I've seen it before, it's not a
pretty picture. They'll spend those assets real quickly, very quickly, down to zero. And that's one of the things we always really communicate with our clients, which is, not only do we work with them, but our goal is to work with their kids, and then we'rek with the grandkids. And sometimes it's just pure education, but sometimes it's working with them as clients to make sure that they're well prepared.
Because what you don't want to do is work so hard all your life, save all those dollars and then for whatever reason not spend them, which is, you know, against what I'm going to give you a counsel on is to spend those dollars but then have them go to that next generation and then have them be spent foolishly.
It's just not the way that you want to do it. Uh. And you know I always say too, which is, you know, think about this this way, which is if when you're retired, if you can even when you have kids, if you
can spend those dollars down to zero. Uh. And whether it's you know yourself, whether it's charities that you're giving those dollars to while you're still living, or whether you should kids and grandkids in ways that you're giving those dollars to them where you can see the benefit, whether it's a down payment out of a house or paying
for college education or whatever it is. In most cases, you're better off spend those dollars while you're living and you can see how those dollars are being used then than not now. The only other thing you can do as well, which is you can put those dollars into trust if you don't feel as though your kids or
grandkids are going to spend them wisely. I'd rather take the approach of educating that next generation so that they know how to spend those dollars and frankly, that they're saving their own dollars properly, rather than putting something into trust. To me, the only situation that should be occurring for like a special need situation. Well, folks, we spend an
hour together. I hope you'll learned a little bit. As always, it's been great to be here with you to give you some thoughts and guidance and make sure you're doing the right thing in your own personal financial situation. You're listening to Let's Talk Money, brought to you by Bouchet Financial Group. While we help our clients prioritize their health well, we manage their wealth for life. Take care of yourself and take care of each other.