Some folks lock to get away. Good morning everyone. I hope that you're doing well on this great spring morning. Zach, thanks for that great music. It is great to be here with you to answer any questions today if regarding your financial planning or investment manager concerns, and I encourage you to call in with those 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.
And as I always say, there's no dumb or silly question except for the one you don't ask. So give me a call and we can chat about whatever is on your mind regarding your financial situation. A lot to talk about today. Great week in the markets. Uh, you know, you
had a situation as we talked about where corporations were reporting. Eighty percent of the S and P five hundred companies have reported earnings and have exceeded their expected targets both for what their earnings are and also what they're going to be forecasted to be. So really a great situation from a corporate cash flow perspective. And then we had some economic data that came out today this week. There
was also positive so the producer price index was actually higher than expected. But what really moved the market in a more positive direction was that core inflation was down lower than expected. And this is what we've talked about, right which is, if we're in a situation where inflation continues to move to the two percent target, that could allow the Federal Reserve to either certainly whole rates constant
or potentially cut rates. Now, with the data that came out this week on core expectations are right now that you could see two to three rate cuts, I'm still a little bit more in the camp that this economy is very strong, inflation may be a little stickier, And as I've said before, even if we don't have any rate cuts, as long as they keep rates
to the same, that's fine. You know, right now, where the Federal reserves Federal funds rate is, which is the rate they control this very short term rate, it's at about five point two five percent, which is high from where we were, let's say, in the last two or three years, even in the last ten years, but from a historical perspective, it's really kind of average. You know, I actually kind of like it at this level because at this level, different asset classes provide different levels of
return. So you know, in this in this environment, if you're a bond holder, you want to go out and buy bonds, you want to be more of a conservative investor, you can actually do okay with that allocation. If you want to hold some camp in CDs or a money market, you can do okay with that. With rates where they are, but when they're so low, it starts to distort things, and what happens is people that that distortion starts to impact people's decisions. So I'm okay with rates at
five point two five percent for the Federal Reserve. I think that you know, there's certainly a higher chance of rates going down this year now that if we can keep that inflation data going the right way. But again, as I said, it's not necessarily to have that happen. And the bigger concern I have, Franklin, this is what I said from the beginning year, was that when people were talking about six rate cuts in this year, you know, to me, if I heard six rate cuts, that meant that
perhaps inflation was good, but more likely the economy was weak. The economic data was weak, and that's why you're going to get six rate cuts. So We've talked about this as well, trying to really forecast even you know, the Fed does a pretty good job of indicating where they're going to go. Trying to forecast what's going to happen with rates, that is, that's
a situation where pretty much nobody gets it right. There's a chart that shows what that forecast has been both by the market and the Fed over the last twenty five years, and what is amazing with this particular chart is how often both the Fed Reserve itself and the market get it wrong. So, but you know, when the markets are hitting all time highs's it's great news, right. So the S and P five hundred was up to three hundred twenty
four hit all time high and Thursday. On Friday it came back a little bit from that all time high. The dal Jones hit over forty thousand, folks over forty thousand. It's actual high came on Thursday as well. But I was looking at the actual performance on Friday, and it's interesting because it was just below forty thousand all the way until lily the last minute of Friday's
trading day and it popped over forty thousand. So we did finish the week at over forty thousand, and the Nasdaq really again at all time high levels as well. So you know, as we've said, you know, you want to make sure that you're participating in this market, and you know, this economic data, this economic environment, the corporate data continues to be good.
You know, it's there's some element of a mixed bag, and you know, to me, that is a good situation, right where if you have that's kind of like the Goldilocks environment we talk about, where you know, you look at some data in some months and it doesn't look so great, and then you know, the next month or two, it turns itself around. Because if it's the opposite, if everything just looks so good, there's a good chance that you're going to get yourself more into a bubble situation.
One of the things that I think is interesting is that the consumer sentiment continues to be fairly poor. And University of Michigan has a survey that comes out with consumer sentiment, and you know, relative to you know, the last number of years, it continues to be pretty low. But what's interesting, as we talked about the consumer is eighty percent their spending is eighty percent of the economy, so a huge part of the economy. But even though
sentiment is low, spending remains very strong. And you know, I think there's a couple of things driving that. One is I think when people ask what is their outlook on the economy and the engaging consumer sentiment, I think
there's a lot of things that come into play there. I think, what are they feeling about the country as a whole, you know, as far as it could be politics, it could be other things going on in the country, it could be what's going on internationally, And I think that influences what they're outlook is on life and what it is on the economy, even though those aren't economic points, but they do influence people's perspective on things.
The other thing is when you look at the majority of the spending is done by when the actual numbers are done by more middle class and upper earners, and I think, really it's people who are in the lower end of the earning spectrum that are really kind of struggling in this environment. You know, I think many of them have gotten raises, but prices have gone up so much that those raises I do not necessarily cover their additional cost and that inflation
element really impacts them. So because the mill income earners and high income earners are doing well, that allows consumers spending to do well, allows the economy to do well. But there's still a bulk of people that are struggling from an overall perspective because of and that's what changes that consumer sentiment piece. But you know, you look at a lot of the other data, it still is very strong. Real estate continues to be very strong. I mean we
see that in the Kappa region. When we have clients that are either looking to buy a place or sell place, you know, we always give them guidance and say, hey, listen, make sure you really get your purchase lined up, because chances are you're going to be able to sell your place very quickly if it's properly staged and properly priced. You may struggle instead on trying to buy a place, So you want to make sure that you have
that acquisition all lined up. And the problem that most people have is that this is what the issue is overall with the market, is that it struggle to find the place they can sell their place. They struggle to find the place and then appreciate that if you have a place. Right now, you have a thirty year mortgage, and you refinanced it back in twenty and twenty one or twenty two. Your mortgage rate, if it's a thirty years probably
below three percent or in the mid threes. And now if you're gonna go ahead and buy a place, you're gonna have to get a new mortgage, and chances are that rate is going to be much higher. Uh, it's gonna be in the six and a half seven and a half percent range. And so even if you're keeping the same price point, but you're gonna need
a mortgage, uh, it's going to be more expensive. So and we see this too with both you know, town homes and condos and uh single family homes, that that challenge exists, you know, across the spectrum in both the Kaper region but even nationally it exists. Well, folks are gonna go on to a couple of different topics, but if you have any questions, feel free to give me a call. You're reach me at eight hundred eight two five five nine four nine eight hundred eight two five five nine four
nine. And I always say there's no dumb or silly question except for the one you don't ask, and you may be doing your fellow listener listener a favor by asking that question that they have as well. Let's talk a little bit more from a financial planning perspective. One of the things I want to bring up is a discussion, just real briefly on social security. And when we're doing planning with our clients, we're always including social security in that analysis.
And I get this question whether or not social Security is going to be around, and I'm better off excluding it from my retirement planning. And I can't tell you exactly what it's going to look like ten years from now. I do know that we're going to have some challenges with funding social Security ten years from now when we're in the mid twenty thirties. But what I would say is what is most likely to happen is that you're going to have younger
people whose benefits are going to change. Right, So I always talk about this when I'm in a meeting with one of my younger colleagues, that their benefits are going to be much different either the amount they're getting and more likely when they're going to start to be able to receive it and when they're full retirement. Aged, that's probably going to change. Also, how much people
are paying into it is probably going to increase. So the current working population, Yes, everything about social security could potentially change, but what I can say pretty much with one hundred percent confidence is social security will be around. It's an incredibly important part of everyone's retirement plan, just about everyone. There's a few exceptions where people have enough assets where it's not, but in the
majority of cases it's a very important part. And you know, there's the other thing to remember, which is Congress really struggles of getting anything done. The likelihood of them changing a benefit for a group of people that is very active voters, whether it's Republican or Democrats. People are you know, fifty and older are probably one of the most active groups as far as voting. So the likelihood of them changing anything is very It's probably not going to happen.
So I would say that, yes, social security is going to be here. But you know, if you're younger, you're probably going to be paying more into the system, and you're probably going to perhaps get less down the road, and the timing of when you get it is probably going to change, and it's not going to be in your favor. But for those people who are planning for retirement, I think I think you're kind of foolish not to. I think you're going to be too conservative with your plan if
you don't include some sort of element of Social Security and your plan. And this is the other thing I'll tell you too, which is if you haven't gone onto the Socicurity website and checked what your benefit is, I would encourage you to do that because with inflation higher over the last few years, the cost of living adjustments, the COLA adjustments to Social Security have been pretty substantial. And what that means is that the benefit amount that you're going to get
has increased quite dramatically. So I'll give you some guidance, which is people who are retiring now, as they delay their Social Security all the way until let's say age sixty seven or age seventy, and that's the latest you want to delay. There's no reason to delay past age seventy because you will not get any additional benefit. To wait until seventy one, you'll just miss out
on some of your benefit. But if you delay into age seventy, every year you delay starting at age sixty two, we can first start taking it
you get an eight percent increase in what you're going to receive. But what we're seeing is people who are you know, more or less high income earners, who have contributed along the lines of the maximum amount, and if they're delayed to age seventy, they're going to get over fifty thousand dollars in some cases fifty five thousand dollars to low fifty thousand dollars range for the Social Security
So it's again a sizeable amount. To give you an idea on that, you would need approximately two million dollars in assets to be able to get that type of distribution and to sustain it over an extended period of time, and
also to be able to bump it up for inflation. Now that's the real benefit with soial Security is like most other pensions that don't have a cost of living adjustment, social Security does have a colap and you know, when you're a retiree, you know it really is important to be able to just your spending for inflation. If you don't, it can be very problematic. So
that element becomes very important. In the amount that you're getting these days is pretty uh, pretty sizable, and so if you haven't been onto the Socurity website. I would really encourage you to do that. Well, folks, we have a call here. We're gonna go to the phone lines. We have Steve from new Hartford. Steve, how are you doing today? I'm well, how are you? I'd be good? What can I help you
with? Okay? As interest rates go down? What is a good way to participate in the bond market so I can benefit from interstrates decreasing violent prices going up? That's a great question. So if a couple of different ways. One is, even if you just hold a intermediate bond fund that has corporate bonds and treasury bonds, you're going to lock into those rates now, and as rates go down, you'll still continue to get that income of those
higher rates. So somewhere, let's say if it's an intermediate bond fund, anywhere from four and a half to five and a half percent, that you're going to get. But what's also going to happen is the value of those bonds is going to increase. So it's twofold. You're actually going to see your investment in your bond fund go up, and then you're going to see
the income that you have more or less stabilize. The other approach is right now if you want to and this is what we're doing we did for some of our clients, is you can build a bond ladder where we use US treasuries where we bought a one year or two year, a five year, seven and ten year treasury bonds, so you can buy investment grade corporate bonds and now you lock into those rates now so that as rates go down,
you've got those locked in. So you know you've got a ten year rate that's four and a half percent, when let's say you know a year from now or two years from now, that ten year could be two percent. So either approach get you locking into those rates. Owning the bond funds is a way to participate where you're probably going to see some appreciation, but you
will see appreciation in your individual bonds as well. You just need to make the determination do you want to sell them as rates are higher or do you want to keep them with that higher rate that you've locked in for Okay, now, intermedia bond funds, that would be what a duration rate of how long? Say yeah, yeah, yeah, about seven years yep. And an ATF for or mutual fund that don't make a difference, right, it
really doesn't. There's now there's some good you know, it used to be I had to be a mutual fund because there was no good bond ETFs. But now there's a number of good bond etf so it really doesn't matter. You know that The advantage is that bond etf you can trade during the day, but it doesn't really matter for a bond fund, so you can go either route would be fine. You don't have any suggestions in any good ETF funds or pertual funds and bonds, do you, Yeah, Well, there's
one b O n D which is a pimpcup fund. That's that's always kind of a mainstay. You know. You can also just buy the egg AGG and that just has the exposure to the broad market. The advantage to that one, Steve, is that it does have some more longer dated bonds. So the longer bond you have, if you have a twenty year or a thirty year and rates go down, that those bonds are going to do extremely
well. Right, So if you want to go farther out on the maturity curve, would you would benefit from rates if they do drop more dramatically. And tends to have a little bit more maturity in the holdings, So that's an option as well. And the upside with agg is it's a very low cost way to get exposure to the bond market. Okay, hey, I appreciate your advice and have a very nice list of your weekends. Okay,
you too, Steve. Yeah, so great question from Steve. And this is what we always give guidance to folks, which is, you know, people these days, they see a CD rate at five percent, or they see a money market rate at that same level, and they just want to put all their money in there. And you know, hey, it's great to take advantage of that. I mean, you really should not have much money at all just sitting and cash these days when you can earn so much
from either CDs or money market. But you do have to appreciate two things. One is that if rates do in fact go down, which is at some point probably going to happen, that you're going to benefit more by owning either individual bonds or a bond fund. You're going to lock into those rates longer. So you so you know what's gonna happen if you have a money market fund and a year from now, rates of drop by three percent, you're not gonna get five plus percent on that money market fund. You're probably
gonna get four plus percent. And it keeps going down, it's gonna be three plus percent. Whereas if you have a bond fund, you've locked into those higher rates for longer. And oh, by the way, the value of your bond fund now has appreciated as well, so you get that two fold benefit. And as I mentioned to Steve, the longer out you go, if you go twenty years, if you go thirty years, and there are ETFs to have longer dated bonds, that appreciation is even going to be
more dramatic. You know, it could be more. You know, you could see, boy, if you sell rates drop by a percent or two, you know, you could see those bond funds increase by five, ten, fifteen percent. Now, what happened before as rates rose so much, those long dated bonds really got hit hard. And that's what happened to the number of these community bank is. You know, they had all these long dated bonds they thought were very conservative, which they are very conservative. They
were treasury bonds. They're going to get their money back, But it doesn't mean that the value of those bonds can't change, and they did. They dropped about thirty percent. So these safe assets of these banks had you know, they thought they were going to be steady eddies, Well they weren't. They were dropping by thirty percent and that impact their overall balance sheet. So you know, this is where it's easy to me that somebody who's running a
bank is not more knowledgeable that they wouldn't know this. But you know, unfortunately people still make even professionals make silly mistakes sometimes. But if you wanted to try to take advantage of rates dropping, you know, having those longer data bonds could be effective. The thing to remember, though, is, as I just mentioned, it's not a one hundred percent absolute given that rates are going to drop. I mean, yes, most likely they will.
That's you know, that's what the market's betting, that's what the FED is betting. But as I said many times, the FED and the market get it wrong. Is the possibility that inflation remains stickier. It could even you know, move higher if this economy remains strong. And if that's happening, I guess what interest rates are going to go up, and those long dated
bonds are going to actually lose money. So you have to appreciate anything in investments or in business UH has some element of risk and you've got to know which way that risk can go and be aware of it. Well, let's move on to another topic. But as always, if you have any questions, you can give me a call. You could reach me at eight hundred talk WI. That's eight hundred eighty two five five nine four nine. That's
eight hundred eight two five five nine four nine. So one of the other things I want to talk about, and you know, we'll talk about this and we'll go into commercial break and we'll come back and continue it. But is this concept of a sixty forty portfolio. So that is a portfolio that has sixty percent in stocks forty percent in bonds, and that's kind of a quinn essential retirement portfolio. You know, we have a portfolio for our clients.
We call it growth and income. Many of our retirees are in that growth and income. But there's a question over the last number of years, is sixty forty portfolio dead? And what they mean by that is the challenges that we're seeing, in particular in the bond space with interest rates rising so much and the value of bonds going down like we had twenty twenty two where they were down eighteen percent, Is that sixty forty portfolio obsolete? And it's
interesting because like anything in life, it's more nuanced than that. You know, what I would say is it's not obsolete. But from our perspective, we use alternatives in our portfolio and we will continue to use them, and that's really where that alternative sleeve helps diversify against that interest rate risk. We'll use anywhere from five to twenty to twenty five percent in alternatives. Back in
twenty twenty two, we were completely out of bonds. So I think in many ways, is you know, having just a static sixty forty portfolio, it's kind of dead. I mean, I think there are better approaches using different alternative asset classes that can add more value. And that's again what we've done with our clients. We still even though we've moved a little bit back into bonds, we still use alternatives. Well, folks, we're gonna go
to commercial break, but come back and join us. You're listening to Let's Talk Money, brought to you by Bouchet Financial Group. While we help our clients prioritize their health while we manage their wealth for life. Come back, folks, as we take your questions. Welcome back everybody. I hope that you're doing well. I appreciate you coming back, and as always, if you have any questions, please give me a call. You could reach me
at eight hundred eight two five five nine four nine. That's eight hundred eight two five nine. So, as any of you know, I'm a big fan of the winter. I'm all about winter activities and everything. But boy, when this warm weather comes, this is my real kind of happy zone here, folks. I love the warm weather. I see we're going to be in the mid to high eighties this week, and you know, just getting out there and doing everything, it looks like we're really from the trees
and everything. We've really moved into summer and this is just the best time of year. You're you're not really into summer yet, but you're you're getting there, which is fantastic. I want to highlight a few things going along in the community. One I want to give a shout out to Kimmy Ventnor. She's the CEO of the Ron McDonald House of Albany and she was recently just this Friday awarded one of the Albany Business Reviews forty under forty awards.
And you know, she is a I'm the chair of the Ron Mcdonalduse War and she is just a dynamic young woman and we're so fortunate to have her leading the organization. And you know, I've been eight years on that board. I've got one more year where I'll be on what's called past president. Uh. It's been a great experience in my life and I always say I thank Steve for allowing us to spend that time to be involved with these charities. That's what a lot of us do. We get back involved with the
community. And the raw McDonald House is just an amazing community. If you're not I'm sorry, amazing charity. If you're not familiar with it, I would encourage you to look it up. And you know, basically what it does is it allows families to have any major health issues and they're down at Albany Med for treatment, that they can stay at the Ron McDonald House while they're at Albany Med. And we have families coming in from miles away.
So it really is you know, amazing to have that and Kimmy has just done a fan fantastic job as the CEO, so we just want to highlight that. And then also, you know, our firm was involved with supporting the Sarahtoga Senior Center that was on Wednesday and the Alzheimer's Gala on this Saturday, and again just these are a great organizations within the community and you know, just we are very proud and happy to be able to support them.
And again, this is something that as a firm since I've been here, you know, Steve's been doing this for since he started the firm. So, uh, you know, it's one of the reasons why one of the reasons I love working at this firm is just our involvement with the community. And now we have twenty colleagues and they all embrace that idea. Uh so it's it's really an awesome thing. I'm going to go into a few more ideas to share from a financial planning perspective, but you know, I do
want to share share some news as well. And if you we're looking online in the papers or anything, you may have seen this. Steve Bouchet's wife, Sue Bouche, passed away on Thursday evening and it was very unexpected, and I was in their home in Troy, and I do want to put
that I just say that to everyone. You know, I've been with Steve for twelve years now, and my family and I moved up here twelve years ago and our kids were just little kids then, and you know, so Sue was one of the first people I met when we moved to this area, and she was just an amazing individual. So it's been really hard news for all of us to handle, and certainly for Steve and my colleagues Ryan and Lauren, their son and daughter. But I did wanted to share that
to everybody because it is that news is out there. So again my thoughts are to Steve and to Ryan and Lauren, and I also just want to say, you know how much we love Sue and what an amazing woman she
was. So you know, when you have so many unexpected like that guy, you know, she's sixty eight years old, you know, really brings home the importance of living a great life, you know, living in the moment, not being caught up in things that don't matter so much, right, because that's sometimes we do that, and you know, we always talk to our clients about this. Our tagline is health, Wealth for life. And you know, the health comes first. That's that's the most important thing.
If you have your health, those other things are less important. And I think so often we get caught up in nonsense stuff that really doesn't matter on the big picture. And you know, our goal, as I say when we're coming in, is that we help our clients prioritize their health while we manage their wealth for life. And you know that to me is such an important role that we play with our clients, which is focused on the things that matter your your family, your friends, your health, both your
physical health and your mental health. Uh, you know that that is is so important. And the stuff that that doesn't matter, what's what's going on the market's day to day or you know, all the stuff that you see in the headlines that you know these days tends to be more negative. That stuff doesn't that doesn't matter. So, you know, just a reminder of that and ensues passing really brings that to the forefront from me, uh, you know, myself and the importance of that. So I did want to
put that out there. And again, she was just an amazing person and I was very fortunate to know her so, but at the same time we got to I'm here to answer any questions you may have regarding your financial planning or investment management concerns. And you know, I guess the number to reach me is eight hundred eight two five five nine four nine. That's eight hundred
eight two five five nine four nine. And one of the things I do want to talk about, you know, as I talk about you know, Sue and passing, and you know, just the importance of things is, you know, so much of what we deal with with our our clients is the psychological, is the emotional elements of their finances. And you know we
see this all the time. And I will tell you that our advisors myself included, are always reading up as to you know, how does how does this come an impact even us as as advisors, but how does it impact our clients? And you know, there's different things that we see that we try to give them some guidance on, and you know, one of them
is really what we see is it can be elements of financial anxiety. Uh. And again I see this, you know when people are coming to us where they haven't started working with us, they really have this level of anxiety over what's going on with their finances, and that's why I think it's so important to be, you know, working with a fiduciary advisor. You know that is going to be working in your best interest and making sure that you have that plan in place. It really just amazes me. You know,
we talk about how the firm are very successful. We manage around one point four billion now and to give you an idea, when I joined Steve, we're managing around one hundred and fifty million. So you know, I've talked about this amazing firm that Steve's built, and you know how we've been able to grow it over the years. But we grow it because of our care and our concern for our clients and the planning we do for our clients. I mean, usually people come to us for investment management, but it's the
planning that is in place. Welcome back, folks. I got a little bit of technical difficulties, but I'm back. I was talking about the importance of having a financial plan in place, and I would just really encourage you if you do not, if you're listening to this program, you do not have a well fought out plan that you've gotten an expert guidance from then I would make this a priority because you know, it is about the dollars and
cents. I mean, without a doubt, it's about the dollars and cents, but it is absolutely also about the mental and perspective and the emotional perspective and removing that financial anxiety that exists. As I mentioned, you know, our growth has been phenomenal over the years, and it really is because so many of our clients refer their colleagues and their friends and their families to us.
And when I see some of these folks coming in, very successful individuals, just incredibly successful individuals, and they just do not have anything in place to either prepare for themselves and or their loved ones, their spouses, to think about how do they make sure that if their kids are getting these assets that it's well thought out, if they have charitable interest, how they go
about doing that. And it really amazes me that they are this successful, that they've been able to accumulate significant wealth, but yet they don't have a well thought out plan in place. So would really encourage that because, as I said, it does reduce the social anxiety and the financial anxiety. And you know, the other element is you see, it goes both ways.
Right, you have people who just have that anxiety and the uncertainty. And the one thing I always try to communicate is listen, uncertainty is part and parcel with where and how we live our lives. Right, You're never going to have of certainty, but we have a plan in place. You know
what those risks are, you know what those those potential issues are. And then you know, we do a lot of scenario analysis with our clients where we look at different scenarios everything from different spending levels, different levels when they retire, different levels of care they meet maybe for long term care, and then we look at them and we try to mitigate those risks when we say to ourselves, what do we do to make sure that that risk doesn't happen?
And so you know, at that piece, to me, that ability to give our clients that guidance is invaluable. Uh. And that's again when we talk about the mental perspective of working with a firm like ours, that's so important. The other side of this, though, is an element of
over confidence. You know, people are over confident in their ability either the manage and their portfolio or to do this on their own and then you know they have this you know thought that the confidence equates to confidence and it doesn't.
And then I see this as well, which is, you know, people come in over confident in their situation, and you know, that's a more difficult situation because I've got to be the bearer of bad news and tell them that, hey, you know, you think you're in a great spot, but you really have some challenges that exist, and we need to kind of look at those challenging situations and it makes some adjustments perhaps, And that's
not easy, right when people think that everything's going to be smooth sailing and it's and it's not. It's you know, really kind of a tough situation they're going to have. But as we always say, you know when a doctor, if you go to see your doctor and the news isn't good, you don't want your doctor's sugarcoat it, right. You want your doctor to be honest and give you direct guidance as to what you should be doing.
That's exactly what we do with our clients as well, is if you're doing something that we think is going to be a problem, whether it's from with your portfolio or whether it's a planning perspective, whatever that may be. We're going to have a real honest conversation with you and you may not like it. And as we always say, at the end of the day, if we lose a client because we are honest with them and we're giving them this
direct guidance, well so be it. That is just what we're willing to do because we never wanted to be in a situation where a client runs into an issue and we knew they were doing something that could be problematic to their long term financial health and we don't do anything about it. To us, that is a real problem, so we want to make sure that doesn't happen. Well, folks are going to go on and talk about a couple of different topics, but if you have any questions, you could reach me at
eight hundred talk WI. That's eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine. One of the things I want to talk about are five twenty nine plans. We got to always get a lot of questions about these, Uh, the rules have changed over the last number of years. To me, they're a great way for most families to save for retirement, I'm sorry for education for their kids or grandkids. And there's a couple of points that I want to highlight here.
One of which is, you know before there was always this thought, well one of my kids doesn't go to college, and you know, you get that those dollars in there, and it's they're difficult to get out if you don't use it for college expenses. But now the rules have changed and you can actually, if they've been in there for at least fifteen years, you can do a Wroth conversion of those dollars up to thirty five thousand dollars in
total, and you could do it at sixty five hundred a year. So you know that that's a great way that, hey, you're going to save for your kids college education, and then you know, if they go, you got them covered. If they don't go, then you could do that Wroth conversion. The other thing is really for a number of clients we see this, they can use them as a state planning a tool. So let
me tell you how you do this. So you you fund the five twenty nine plans, you use them for your kids, but you can even overfund them. And you know, we've got three kids. The likelihood that one of them may get married and have kids, we're going to say, is probably pretty decent, and the likelihood that those kids will go to college,
it's probably also pretty decent. That you can keep some of those dollars in there if you want for their kids, even though they're not even married, they don't even have kids yet, that you can keep them in there, because what can happen is those dollars will continue to grow tax deferred, and
that when even if my wife and I were to pass away. The real interesting part with five twenty nine plans is that there is no requirement at this point they have to push those dollars out so they can continue to grow in
their tax deferred. I'll contrast that with an IRA that when you have an IRA, those dollars grow tax deferred, but after my wife and I pass away and our kids who receive it, they have to take those dollars out within ten years and pay ordinary income on those dollars, Whereas, again with a five twenty nine plan, as that goes to our next generation, you just change the owner and the beneficiary, and those dollars continue to grow tax
deferred, so it can be a really powerful estate planning tool. And then in New York State we do get the benefit of it's ten thousand dollars per couple five thousand dollars per individual. Of those contributions that you put in, you get a New York State tax deduction on those. So again I really feel that for many families that is a great way to save for college. You know, you may not cover all your expenses with your five twenty nine
plan. The thing to remember too, is that those dollars in a five to twenty nine plan, when you get you submit for financial aid through your college, they actually get scored lower, meaning they have less of an impact on your financial aid than if you had dollars in a taxible account, or certainly if your kids have dollars in the taxible account, those those dollars are actually the worst. You really do not want to be putting dollars in your
kids name for as far as financial aid is concerned. When they get evaluated for financial aid, those dollars in the kids' name get scored the highest or the worst that's going to impact your financial aid. While then then it goes to dollars in a brokerage count in you or your spouse's name. Then it goes to a five to twenty nine plan. So those five twenty nine plans
can score really well in that regard. Here's the other thing to remember, though, is those dollars have to be either used for qualified educational expenses. That can be room and board. If it's if it's let's say, going straight to the college, you can pay for that room and board directly. If it's going to be for rent, you can pay for up to the amount that is considered for that state for room, so rental rates for that. But you cannot cover food directly with those five twenty nine dollars. So
that's an important distinction as well. Right, So if you're right, if that money's going directly to the institution, then it can cover full room and board. If it's going into your checking account to pay for your student's rent, it can only pay for rent. It cannot pay for food. But
the other thing too is I get this question. Can families take out no interest rate loans, utilize those over four years, and then after the student graduates from college, can they go ahead and pay down those loans with five twenty nine dollars? And the answer is no, you cannot. You cannot
use five twenty nine dollars to pay off a student loan. You have to either be paying for that expense directly or you can do the Roth conversions and a state plan that I discuss, but that's an important thing to know that you don't try to do that. Well, just we've got a few more minutes the last couple of things I want to share with you, but 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.
So we have a lot of discussions with our clients regarding long term care and we you know, we work with a number of insurance providers on if they want long term care insurance. Brian Johnson is an individual that we work with quite a bit, is very knowledgeable and really kind of a star in that space. And you know, it can be a way that you can
there's different products now that exists to protect you on that. But another route that people take is what's called medicaid planning, where you're basically moving dollars outside your estate to put it so that you could qualify for Medicaid planning, and I just want to bring up that quite often, the challenge that we see is that especially with people with pensions, and they have pensions, those pensions, you can't exclude those dollars for medicaid planning. Social security you can cannot
exclude those dollars for medicaid planning. With iraise traditional irays, there's going to be an assumption that those IRA dollars will be at income stream coming from those dollars as well. You won't have to spend those iras down, but you will there will be an assumption that there will be income coming from the IRA for that. And so you need to appreciate all this when you're making these
decisions as far as medicaid planning. The other thing I think that's important to appreciate, which is one you've saved all these dollars for making sure that you're well taken care of, and you know that may be to pay for assistic care. Because what happens is most people when they go into assistic care, the average stay is in the low twenty months, right, but actually most people stays is around nine, ten or twelve months. That's what most people's
experiences because in gener they're going into assistic care. You know, usually when they're in their late seventies or eighties or nineties, and they're not in there that long. And as I was talking to a client the other day, you know, when you go in, you're going out really only one way,
right, and it usually doesn't last that long. So you know, the thing you have to appreciate with medicaid planning is there can be some challenges with getting into certain facilities, right because these facilities are not always inclined to
want to take Medicaid patients. So you have to appreciate that that you might be limiting where you can go. There could also be challenges with trying to afford in home care as well, so you know, at the end of the day, you know, definitely you want to go through and look at this. Maybe insurance can't be the right approach, Medicaid can be the right approach, but at the end of the day, maybe some hybrid between all
those. And you know, if you have to use your own dollars for you or your wife to get that care, again, that's what you've saved those dollars for, is to make sure that if you need care, you're getting the proper care. You know, I think all of us would say that we ourselves and or for our spouses want to make sure they get the best care they can possibly get, and so if it cost a few extra
dollars, that's okay, right, that is okay. You know, my dad's passed away four years now, but I always tell my mom that, you know, any money she has, go ahead and spend it. It's you know, we're fine. Please do not save those dollars for for me or for my siblings. I want her to make sure she's spending the dollars properly on herself, and that that is it's a bit of a mindset change.
People struggle with that concept, but it is important to make sure that you you know, have a plan in place, but that you're not afraid to spend that money on yourself because you know that's what it's there for. Well, folks, we're almost done here. But one last thing I want to share is just to all the graduates out there. There's a lot of
graduations. My son is going to be graduated from Saratoga High School, my niece has graduated from UVA, and I just want to share that make sure as you're moving on to this next stage in your life, that you start by doing the right things from a financial perspective. It is so important if you can start when your early twenties doing things from a financial perspective, it
just puts you in a great position. And you know, whether it's making sure you're not taking on a lot of debt and certainly no credit card debt, make sure that you're trying to pay down your student loans, that you're saving both having an emergency reserve fund that you're saving, that you're saving for all these things. It's just so important. So just a reminder on that that you have that in place, and you do it when you're early in
your twenties and just put you in a great spot. And that's where it becomes important if you can take that time to do it when your twenties and not wait until your forties and fifties. Well, folks, it was great to be here with you, and I hope you'll learned a little bit more. You'll listen to Let's Talk Money, brought to you by Bouchet Financial Group.
While we help our clients prioritize our health while we manage their wealth for life, remember, folks, take care of yourself and take care of each other.