#102 – Retirement Planning in Real Life: Rule of 55, Grandkids, and Going Global

Christa DiBiase [00:00:36]:
So good to be here with you, Wes.

Wes Moss [00:00:37]:
Chris is the. Now, let’s not forget Chris is the coo. That’s chief operating officer of Clark Howard. Not him personally, but Clark Howard, Inc. And Christa is no stranger to consumer and financial advice throughout the years working with Clark, and I’m excited to have her with us today to answer some of your questions and give you a little taste of my Retire Sooner podcast, which you can find and subscribe to on any podcast platform. We are smack dab in the holiday season, and this is just a such a fun time of year. What is your favorite holiday? Thanksgiving, Christmas, New Year.

Christa DiBiase [00:01:16]:
My favorite holiday is the current holiday, the week between Christmas and New Year’s, which is called Pajamaca, where the people who are fortunate enough not to work this week are in their pajamas the entire week. And it’s just the greatest thing on the planet.

Wes Moss [00:01:31]:
I thought you might wear your pajamas to the studio. I thought you might. My kids have basically been in pajamas. Yeah, I’ve got one of my kids. We actually had. There was a lacrosse tournament a couple weeks ago that’s called the Reindeer Games, where all these teams dress in Christmas costumes. There’s like the Grinches versus the Snowball Snipers versus all these funny.

Christa DiBiase [00:01:55]:
That’s cute.

Wes Moss [00:01:56]:
But they wear. I remember one of my. One of my guys who’s grown out of them is running around in these bluey pajamas, which are these blue sweatpants, like pajamas with bluey. The character on them, but he’s way outgrown them, so it’s like they’re too short. I mean, the whole thing looks funny.

Christa DiBiase [00:02:13]:
That’s fun. I love that.

Wes Moss [00:02:15]:
What are your fit. What is your favorite pajama? You. You don’t wear, like, character pajamas, do you know?

Christa DiBiase [00:02:20]:
I just love super soft pajamas, and I actually got some really, really nice ones at Target this year. They are. Their pajama game is on point right now.

Wes Moss [00:02:29]:
On.

Christa DiBiase [00:02:30]:
No, Not a fan. Usually they don’t have. They’re not soft enough for me.

Wes Moss [00:02:34]:
Makes sense. All right, well, did you bring us. You have. I know. We have lots more questions.

Christa DiBiase [00:02:38]:
Oh, my gosh.

Wes Moss [00:02:39]:
Let’s dive right in.

Christa DiBiase [00:02:40]:
So many questions. Rich in Arkansas, says Wes. I retired at 48 and my wife followed three years later. Currently we spend 48. We spend $58,000 a year on basic living expenses, no mortgage, and an additional 10k for golf and 35k for travel. Our net worth is 3.2 million, comprised of a home valued at 450k and 2.7 million invested in a 66% stock 34% bond portfolio. We have enough liquid assets to get us well past age 59 and a half, and we can begin to tap our 401ks and Roth IRAs. We anticipate claiming Social Security at age 70, which would net us an additional 86k per year.

Christa DiBiase [00:03:20]:
As you can guess, we find ourselves overfunded for retirement. In fact, since we’ve retired, our portfolios outpaced the money we spend each year, which means our first five years of retirement were free and our next four years are already paid for. Well, this is a great problem to have. I’m sure a lot of people like that problem. My gosh. I’d like your advice on pursuing a two pronged investment approach. One, potential ways to de risk the pot of money we have for retirement, and two, investing more aggressively with the remainder of our funds to create the generational wealth we anticipate leaving for our heirs and favorite charities. And P.S.

Christa DiBiase [00:03:54]:
we are very happy retirees in excellent health and love to vacation regularly. Golf. We play more than 150 rounds per year, plus bike, run, kayak, backpack, volunteer regularly, cook great food, go to the theater and comedy clubs, read, play chess, and teach ourselves piano and guitar. Money isn’t everything, but it does provide the freedom for us to maximize our enjoyment of these activities and to be there when our family and friends need us. Just like you describe in your Happiest Retirees book.

Wes Moss [00:04:22]:
I want to hang out with Rich.

Christa DiBiase [00:04:23]:
I know. My gosh, I want to be Rich.

Wes Moss [00:04:25]:
Rich plays 100 rounds of golf a year.

Christa DiBiase [00:04:28]:
Well, I don’t know if I want that, but. Yeah, that’s.

Wes Moss [00:04:30]:
That’s only one. It’s a. It’s golf. One one out of every three days. That’s not too much. That’s like pushing the limit, though. That is pushing it.

Christa DiBiase [00:04:37]:
But they’re. They’re living the life. They’re living the life. It’s great.

Wes Moss [00:04:40]:
I think 50 rounds of golf a year is. Is a really good number once a week on average, but Rich, I like. I like what you’re doing, I mean.

Christa DiBiase [00:04:48]:
What he’s doing is the dream. I mean, this is like, it’s like it’s, it’s almost like it’s a fake question. You know what I mean? Because I know it’s not a fake question. But you know, it does sound crazy.

Wes Moss [00:04:58]:
I’d say. I, I don’t know if there’s any. I should probably know this. These, I study early retirement. We’re going to figure out the statistics. But it’s pretty rare to be have someone, quote, fully stopped working in their 40s. That’s pretty rare. I’d say that’s one in a thousand.

Wes Moss [00:05:14]:
That’s a one in a thousand number. Once you get to your 50s, it gets a little bit more common. But here’s what I was jotting down as you just rapidly read through these questions and give me no time to really figure them out. But on this one, I think here’s what I got. 58 plus 10 plus 35 is 103 grand. That’s the spending I love that 10k of that is golf money and 3.2 million in net worth, but 2.7 million rich in liquid assets. And you essentially have a 2/3 stock, 1/3 bond overall allocation. Not to mention when you’re 70, you’re going to get 86 grand a year, which takes care of most of your spending right there.

Wes Moss [00:05:57]:
So if I do the math on that 103,000 today, before you’re able to get Social Security, 103,000 divided by 2.7 million is 3.8%. So, so you, you’ve landed squarely well, just under what I would call the safety zone. So I’m saying that you’re, that’s a great level to be at. You’re not fully maxing out what you could pull out for your portfolio, but you’re also not, not using your portfolio. So it’s a really nice balance I see you having here, Rich. And you will continue to grow this wealth, especially if you’re taking sub 4%. So it should continue to grow on over time. Now, the caveat, I will say is that you feel as though this has happened to anybody who’s done a financial plan in the last five years.

Wes Moss [00:06:50]:
They find themselves in this situation, Rich is that you’re ahead of schedule because we plan for 4 and a half to 5 and a half percent rates of return. Your portfolio’s done a lot better than that because the stock market has done better than that. This S&P 500 is averaged, call it 15% a year for the last several years, which is really, not only is it way above what you projected, but it’s also above its normal annual rate of return. Plans over time account for that, that we’re going to have a couple, we could have really good years above expectations, but then they’re meant to also be trying to offset the rougher years where we’re making less than we projected. So I wouldn’t feel as though you’re that far ahead. You need that cushion for some of the down years. As far as becoming more aggressive or not or less aggressive, I like the balance that you’re in now. I think that two thirds of your assets are at risk in equities, that those are inflation fighters.

Wes Moss [00:07:56]:
And that’s a really good level to be at. Remember, the 4% plus rule is predicated on having between 50% in stocks and about 70. And you’re right there in the middle of that pie chart. So I, I don’t know if I would get any more aggressive to have more generational wealth. I also don’t know if I’d be a whole lot more conservative either. So I think your, your balance is already good. You’re following these rules of thumb. And even though you’re ahead, I think that’s just part of planning over time, we’re going to have years where we’re beyond expectations and years that disappoint and it averages out over time.

Wes Moss [00:08:33]:
And you should still be able to grow that net worth over the course of the next 30 years of retirement and, and be able to leave your legacy. That’s significant.

Christa DiBiase [00:08:44]:
Okay. This one came in from Massimo in New Jersey.

Wes Moss [00:08:49]:
Massimo.

Christa DiBiase [00:08:49]:
He says.

Wes Moss [00:08:50]:
Massimo, maybe, maybe.

Christa DiBiase [00:08:51]:
I have a question regarding our new grandson. Congratulations. I would like to set up some sort of fund every year, like $1,000 or more each year, but not a 529 plan because this is already taken care of by his other grandparents. What do you recommend? For example, opening an investment account that can be used once he’s 18 years old or a joint account or anything else you would recommend. My thought is eventually, when he gets to a certain age, he would probably need to buy a car or maybe use the money for college. And that would help him and the family.

Wes Moss [00:09:24]:
But Massimo already has. So he’s, this is a, he’s a great. Massimo is a great granddad here. My favorite is the custodial Roth, because the custodial Roth will grow tax free. It becomes their money and it continues to grow tax free. And it’s a flexible type of account where even when you’re younger, you could potentially use some of the contributions.

Christa DiBiase [00:09:48]:
But when the baby have to work.

Wes Moss [00:09:50]:
The problem is the baby has to work. So that’s really for someone who would be in their teen years and they’re doing some sort. They have some wage income and, and then you could help them with custodial Roth. But since you’re a new grandfather. Massimo Mass. Massimo, that’s not going to work right now.

Christa DiBiase [00:10:07]:
Well, maybe if the baby is like really good looking, see if he could be a model.

Wes Moss [00:10:11]:
That’s possible. That is possible.

Christa DiBiase [00:10:13]:
Clark’s kids did some of that, some baby modeling and they had Roths. Guess what?

Wes Moss [00:10:17]:
I believe that. I’m sure they did. So it’s possible, but not likely. Number two, you could just have a joint account with your grandson that is, I would say, not preferred because the minute he realizes that he would potentially have access to it, not just waiting till he’s 18 or 21. So that’s a possibility, but not, not the best option in my opinion. So this goes back to the good old fashioned utma, the uniform transfer to minor act account that you can have at pretty much any brokerage account, so, or firm Fidelity, Schwab, I believe Vanguard, you can now have, you’re the custodian and your grandson is the beneficiary of that account in a lot of states. I believe you can set the date it becomes available to them. It can be 18 or it could be 21.

Wes Moss [00:11:07]:
So I believe you as a custodian can make that choice. I like that option the best because then it’s still you’re in control of the money. But also look at this as an overall partnership and being almost educational with your grandson again today. If he’s one or two, he’s not going to understand what’s happening. But when he’s 5, 6, 9, 10, it’s a really nice thing to have between whether it’s a parent talking to children about money or a grandparent talking to their grandkids about money. It’s a nice education and dialogue to have of, hey, there’s money here. This is how we’re investing it. This is why you want to let this accumulate.

Wes Moss [00:11:45]:
And you can, it can be a really powerful resource for you down the line. And the earlier you have those conversations, I think the better the financial education is. And that’s how I think that’s even. That’s just as important as the money itself.

Christa DiBiase [00:11:59]:
Okay. Matt in Colorado wrote into you and he said if advisors are able to give great advice to various stocks and Bonds and they can speak to how the market’s moving. Then why are they even working? They should all be millionaires or billionaires. I know Wes does not say anything is a sure thing, but if advisors follow majority of what they advise, shouldn’t they be making money hand over fist? I talked to my advisor at Fidelity and they slug it out every day nine to five. I’m thinking they would rather not work, but if they could follow their own advice, then they should be able to stay home and just manage their accounts. Don’t get me wrong, this is not a criticism of Wes, just a question. And by the way, I’m writing this while I’m standing in the queue in Rome, Italy waiting for my flight to Valencia, Spain. So sorry if the grammar or spelling is not perfect.

Wes Moss [00:12:46]:
Now it’s funny that if you think about. Remember if we ever we’ve talked about the Mappiness project.

Christa DiBiase [00:12:51]:
Yes.

Wes Moss [00:12:51]:
Where it’s the 40 daily activities that we spend the most time in ranked on the things that we like the best and we we hate the most, if you will, at the bottom of the list being so by the way, work is number 39 on the list. Number 40 in the list. There’s the worst thing is being sick and bad, but just above 30, I think it’s 38 or 37 is standing in line, standing in a queue. People do not like doing that. You feel like you’re really wasting your time. So maybe that Matt’s feeling a little agitated and he said wait a minute, why, why advisors even? Why are you working if you’re so smart with markets or you’re so good at this? So here’s the reality is that the wealthier people are in the world, in America particularly, the more you need help managing all the complexity because it does get complex. I think that’s the first thought thought here. Advisors build wealth the same slow steady way everyone else does.

Wes Moss [00:13:51]:
What is the statistic though? It’s only about 5% of folks have a million dollars in retirement account in America and only 18% have a net worth of a million. To be in the top 10%, you’ve got to have almost $2 million. So I think a lot of advisors though choose to continue guiding families because that complexity is solving that is really meaningful. It’s a meaningful career and meaningful work. And, and the reality is there are millions and millions of people. So 20% of a giant population, that’s millions of people that do that kind of net worth and they really do need help. So advisors though, what do advisors really Do. They’re not in the business of sudden wealth.

Wes Moss [00:14:33]:
Advisors are not there to create an overnight windfall. They’re not market whispers and they’re not even professional mutual fund managers that that’s all they do is pick stocks. Even that group has a difficult time beating overall market. So the reality is that advisors are not there to deliver for you or themselves. Magical rates of return and piles of money overnight if they say they are.

Christa DiBiase [00:15:00]:
You need to shop your advisor, you.

Wes Moss [00:15:02]:
Need to be running. Advisors are there though to help avoid big mistakes. And I think that’s a huge part of this. Build sustainable long term plans. That’s super important. Manage your taxes, stay invested through volatility, which is the psychology of money, which is really difficult. Help protect families with bigger picture planning. Avoid emotional decisions, which is also psychological.

Wes Moss [00:15:28]:
Look at the estate planning. If you’re in your 20s or 30s, you may not need that. You may not really been thinking about that. When you get closer to retirement, you really do start thinking about that and then make that transition from work accumulation to distribution. Those are all the things that an advisor which is really a guide to give you a higher probability of reaching that top 10% of America in savings. So advisors do this the same way. They do it the long methodical way by consistent savings diversification. I also think of it this way, Christa.

Wes Moss [00:16:04]:
The reality is that we can outsource almost anything these days or we could also choose to DIY almost anything. Most people could very easily do your own taxes. So you can, you don’t need a CPA. But people do hire CPAs because of the complexity with the day of artificial intelligence. A lot of folks could, they could be their own lawyer, they could be your own electrician, you could be your own mechanic, you could be your own. We still hire chefs, we still go to restaurants, we still hire personal trainers. So a lot of services that you could do on your own and a lot of investors do do it yourself, DIY investing. But there’s a huge percentage of the population that it gets complex enough that they want help, number one.

Wes Moss [00:16:50]:
Number two, another very large percentage of the population does not want to be in the weeds with their money decisions and think about it all the time. And if I think about the families that I work with over all for many years, they don’t enjoy investing, they don’t enjoy the planning. They know they need to do it a little bit like going to the dentist. It’s not as though they love it, but they know they need to do it and they’d much rather have help with someone doing it for them and outsourcing a big chunk of it. So DIY investing is for a big chunk of the population, but there’s a huge percentage that really just they want help and it’s a meaningful career for a lot of advisors. Even if you could retire, and I think Clark could have probably retired 20 years ago, he’s still working.

Christa DiBiase [00:17:35]:
And so he did retire when he was like 31.

Wes Moss [00:17:38]:
And he’s still working and he wants to teach.

Christa DiBiase [00:17:40]:
That’s his whole thing. And he likes to work.

Wes Moss [00:17:42]:
Yeah, and I’m really the same. I mean, I could have, I could have stopped doing this maybe a long time ago, but I’ve got little kids I don’t want. You know, there’s only so much golf, pickleball, fun, travel I can do. And I think a lot of people still love working more. Money matters with me. Chris SaDiBiasee, straight ahead. Imagine having the freedom to step away from work at 55. More time for travel, hobbies and family a whole decade earlier than most people think possible.

Wes Moss [00:18:14]:
Thanks to the rule of 55, many Americans can access retirement savings without penalties starting at age 55. But if you don’t know the rules, you could miss out on years of freedom. Let our team at Capital Investment Advisors show you how. You can find us@yourwealth.com that’s y o u r wealth.com so, Christa, we’re going to jump into your satchel of questions.

Christa DiBiase [00:18:40]:
Satchel. This came in from Almost Free Freddy in Illinois.

Wes Moss [00:18:45]:
Almost Free Freddie.

Christa DiBiase [00:18:47]:
Hi, Wes. I’m planning to retire early next year in July of 26 at age 43. I’d love your thoughts on whether my plan has any blind spots. Here’s my current picture. 457 deferred comp 330k invested in the Vanguard Total stock market. I have a Vanguard Roth IRA with 140k. Do you? I don’t know. I’m not going to read the investments unless you want.

Wes Moss [00:19:10]:
Yeah, just the values.

Christa DiBiase [00:19:12]:
A savings account on track to reach 350k by July of 26. A primary residence paid off valued at 450k and a rental condo that’s paid off valued at 200k rents for 1720amonth. I’m a disabled veteran receiving about 2000amonth in VA benefits. I plan to sell my primary residence when I retire, but keep the rental condo. My wife and I are planning to move back to Eastern Europe where we already built our dream home on land we purchased a few years ago. Pool, palm trees, the Works. That sounds awesome.

Wes Moss [00:19:45]:
The property, palm trees in Eastern Europe.

Christa DiBiase [00:19:49]:
The property is worth about 600k. The cost of living is much lower and our family is there. Our quality of life would be much better there. With no mortgage or car payments. We’ll ship two cars in the US we can comfortably live off the condo rent and VA income. I currently work for a major city police department and will have 21 years of service at retirement. I’ll become eligible to collect my pension at age 50, which was estimated to be around 5,600amonth. That means I’ll have about seven years between retirement.

Wes Moss [00:20:17]:
600Amonth, Christa. That’s the key. Okay.

Christa DiBiase [00:20:20]:
That means I’d have about seven years between retirement and the start of my pension. The numbers seem to work and I feel both excited and a bit nervous. Am I missing anything here? It almost feels too good to be true.

Wes Moss [00:20:31]:
Almost Free Freddie. I want to pull up a map first of all and try to figure out. I’d love Freddie, don’t tell us where it is, but I’d love to hear from our audience where they think that is. Think Eastern European Europe with palm trees and the coast. What could that be?

Christa DiBiase [00:20:51]:
Croatia?

Wes Moss [00:20:52]:
Yeah. Could it be Croatia? Sounds cool. Could it be Albania? Does that count as Eastern bloc? That’s kind of on the water across midaly hunger Hungary.

Christa DiBiase [00:21:02]:
I don’t know. Let’s focus.

Wes Moss [00:21:04]:
Yeah.

Christa DiBiase [00:21:05]:
On Freddie.

Wes Moss [00:21:06]:
Well, this is the other thing I love about Freddie is that I don’t know why. This is almost like a Dear Abby column where we’re getting a name that is relative to the question. Almost Free Freddy. I could see us doing more of that as a listener. So if you’re maybe like Randy. No, Roth. Randy. Or Social Security.

Wes Moss [00:21:27]:
Seth. I don’t know. But anyway, I think these are great. So feel free to do that. It’s a nice way. It’s probably better than changing a name when you’re writing something because you want to keep anonymous about it. So I love the.

Christa DiBiase [00:21:39]:
I just want to say also thank you for your service, Freddie. Both in the military and then as a police officer putting your life on the line every single day. That’s no small feat.

Wes Moss [00:21:48]:
God bless you, Freddie. And yes, thank you for your service. And you do. It is not too good to be true because I do see service members because you have either pensions or in your case, VA disability. And then you’re going to start collecting more money at a pretty young age. You see a lot of early retirees that are service members and that is one of the benefits of Taking that as a career path. But I’m looking at the assets here. And the key that you said, Christa, is the $5,600 is the spending that they would like to have in some unknown magical Eastern European country that we can’t figure out what it is.

Wes Moss [00:22:29]:
But the assets, if you sell the primary residence in America, which is about 450, and you take the 330, the 140 and the 350, you will have about a million too. Now some of that it sounds like. Well, and they already have a property over there that’s already paid for.

Christa DiBiase [00:22:46]:
Yeah.

Wes Moss [00:22:46]:
So that is going to. That’s essentially your liquid money is going to be in this 1.2 range at least. So then you’ve got your. Before you get it sounds like your full pension. You have 2,000 in VA and you have $1,700 in rental income. So that’s 3,700. And you need $5,600. $3,700 minus $5,600.

Wes Moss [00:23:11]:
Your gap is, let’s call it less than $2,000, but it’s 2,000 bucks a month or $24,000 a year. 24,000 a year divided by 1.2 million is 2% a year. So you only need Freddie about 2% withdrawal rate on your assets, which the income alone on whether even on a balanced portfolio with equities and fixed income is going to probably produce more than 2%. So just your dividends, dividends, your interest, your distribution. So just a cash flow from a portfolio without taking anything would cover that monthly gap. So to me it sounds like it’s not too good to be true. If these numbers are the actual numbers, then your lower cost of living, $5,600 is a low cost of living. A paid for house and then a bunch of pensions that kick in with a $1.2 million supplement.

Wes Moss [00:24:08]:
Again, I don’t know the cost of living, where you’re going and how realistic that is, but if that’s true, then you are very close to being free, my friend Freddie.

Christa DiBiase [00:24:18]:
Love it. Patrick in New York. I’m in my 29th year of teaching in New York City. New York City offers a very low cost retirement pre tax retirement account for some civil servants. We have several options for our investments that have done really well over the last 20 to 30 years. I currently have half my money in a diverse stock market account and half in a guaranteed 7% fixed rate retirement account. Yes, it’s guaranteed by our state constitution as I am less than that number.

Wes Moss [00:24:46]:
Again, 7% 7%.

Christa DiBiase [00:24:49]:
And he said some people get 8.25%. As I am less than two years away from retirement, should I start transferring more money in the 7% fixed fund? I expect to start withdrawing from this account in about five years. Additionally, would the 4% rule be too low of withdrawal rate for those of us lucky enough to have a pension and Access to guaranteed 7% fixed rate? Appreciate all of your great advice, Hatrick.

Wes Moss [00:25:15]:
Yes.

Christa DiBiase [00:25:16]:
Wow. 7% fixed.

Wes Moss [00:25:18]:
Yes. The 4% rule is too low for you. I don’t think I’ve ever said that before.

Christa DiBiase [00:25:24]:
Wow.

Wes Moss [00:25:25]:
Never gotten a question from somebody that has that. I think it’s the tax deferred annuity program, but it’s, it is guaranteed by the state of New York and I’ve had a few people over the years that have brought this up and I remember having to look this up because that’s a, it’s an incredibly large percentage that is locked in for you.

Christa DiBiase [00:25:47]:
That’s if you have the eight and a half percent too. That is wild.

Wes Moss [00:25:50]:
Right. I think if you’re even higher level, I don’t know if it’s the superintendents or whoever get this, but yeah, it’s 8. It’s over 8%.

Christa DiBiase [00:25:57]:
Yeah.

Wes Moss [00:25:57]:
Which is incredible number to be guaranteed. And so Patrick, right now you’re half stock and half of the fixed cap. What a balanced portfolio. What an amazingly, what a great balanced portfolio. And, and you’re going to retire in the Next, I think two years and you’re going to need it in five. I would say this. No, the 4% rule does not apply to you. Think of it this way.

Wes Moss [00:26:20]:
If you have a locked in, and this is just like mathematically, if you have a 7% locked in rate of return, you could take more than the seven. You could take 8%. And hypothetically and mathematically your balance would only go down by about 1% per year. So you could actually take 8% and be fine and not run out of money because you’re gaining seven every year. You’re just reducing it little by little. So you’re way beyond the 4% rule. And I think that can be a real blessing.

Christa DiBiase [00:26:48]:
And that’s with half the money, right?

Wes Moss [00:26:49]:
That’s with half the money. But I think the question is that as you get closer, do you put more of the money in?

Christa DiBiase [00:26:54]:
Right. That’s what he wants to know.

Wes Moss [00:26:55]:
And I would say that it stands to reason that you could be at 75%. And I think part of this depends on your risk tolerance. Yes. Equities. Can the stock side of the market can be more like 12 or 13. It’s been more like 15% over the last several years. So it’s a real inflation fighter. But so is seven and you can really sleep well at night with that.

Wes Moss [00:27:17]:
Me personally, if I had something like this, I probably would stay at least 50% and do the other 50% in equities because I really believe in stocks over time that are inflation fighters. You could make a case though to go a higher percentage in the 7% number. Now the one catch, I would just say you make the argument put 100% in but you gotta be careful about anything that says guaranteed. I don’t think there’s anything guaranteed in this world financially unless it’s backed by the full faith and credit of the United States government Treasury. And this is backed by. It might be in the Constitution, but it’s also backed by the state of New York.

Christa DiBiase [00:28:04]:
States go bankrupt.

Wes Moss [00:28:06]:
States go bankrupt. States run giant deficits. That’s why municipal bonds issued by states, not all of them do. Well, some of them go. There are counties, there’s a lot of examples over the course of the last 50, 75 years where a state wasn’t able to pay. So you are relying on the credit worthiness of the state. So I would just be careful that one. If this goes wrong, what they would probably do is just reduce that number and then you could take the money out and do something else with it.

Wes Moss [00:28:39]:
So I think as long as they’re continuing to give you that 7% you’re probably fine. I’d say there’s a high level of confidence with that. But just know that there’s no such thing as a guarantee from really anything except for the U.S. treasury. And you’re talking about a state. So just be careful with that piece of. But yes, if you Continue with this 7% you can go way above the 4% rule of thumb. The rule of thumb.

Christa DiBiase [00:29:06]:
Right. Andrew in Iowa says. I have a question for Wes. What is the benefit of investing in small mid cap stocks? I understand diversification is good because you never know what company will take off and become the next Apple or Microsoft. But wouldn’t the most successful companies end up leaving the small and mid cap category and and become large cap stocks anyway? If I had put money into a small cap fund when Apple was there, I wouldn’t have missed out on all their gains as they left that category and became a mid and eventually large.

Wes Moss [00:29:36]:
Andrew, you’re absolutely right. And we’ve gone through an environment in the last several years where large cap Companies have really dominated. They’ve dominated the news cycle, they’ve dominated the return. So you start to think, well, wait a minute, why don’t I just own large companies? Because the mechanism you described is really how it works. Companies, if they’re really successful, they graduate, they’ll go from a small cap fund to a mid cap fund to a large cap fund. And you’re right, if you only own small caps, you would have owned Apple for a little while, but eventually it graduated and became a mid cap and then eventually graduated to a large cap. So you’re right, you would miss out on the continued growth as some of these companies have gotten bigger and continued to have a really phenomenal pace of growth. So the answer here is you do want to own all three.

Wes Moss [00:30:30]:
And it makes sense to me to have certainly have large cap, but mid and small as well. And technically, most of the time I think of Russell as one of the index providers and they have ETFs, but they are once a year they take a snapshot of the size of the companies, the market capitalization, and if it’s grown from a mid to a small cap company, then it gets, it’ll go into their, their large cap etf. So you’re right, they graduate. And that’s why you want to own. You don’t want to have just one of those three categories. I think it makes sense to either have both small and large or all three small, mid and large.

Christa DiBiase [00:31:07]:
All right, and here’s one more. Gary in Florida in his book, you can retire younger than you. Younger than you.

Wes Moss [00:31:14]:
I love that. That’s a good title, Gary.

Christa DiBiase [00:31:17]:
Wes says that the happiest retirees own a home at $350,000. Given inflation, what home value would west say is equivalent for retirees today? It’s Sooner than you think is the real title.

Wes Moss [00:31:30]:
I like Younger. You can retire younger than you think.

Christa DiBiase [00:31:33]:
Same thing, right?

Wes Moss [00:31:34]:
Love that. I love that. That’s an old book, Gary. That’s old. And we’ve had a lot of inflation since then. The re.

Christa DiBiase [00:31:41]:
And, and that’s a new one coming out next year.

Wes Moss [00:31:44]:
I did, I finished writing the Retire sooner method. So that’ll be coming out in 2026. But the data in the book, you can retire sooner than you think was all the way back in 2013, published in 2014. Those are old numbers. And you’re right, we’ve had a lot of inflation from 2014 till today. If you were to look at the Case Shiller home price index, it’s up about 100% it’s a little more than 100%. So if you were just to adjust for for inflation, well, actually housing inflation, you’d have to double that. So a $350,000 house in 2014 would probably be worth 700k today.

Wes Moss [00:32:26]:
The real key here, Gary, is to have your mortgage pay off within sight or mortgage paid off. That’s one of the habits of happy retirees. You get rid of that big number you’re paying to your bank or your mortgage company. That’s really the key. It’s not as important on the value. It’s about getting rid of the mortgage to be a happy retiree. All right, Chris Dibias, thank you so much for coming on, being here and doing some of this Q and A with me. Love doing these here on Money Matters.

Christa DiBiase [00:32:55]:
Oh, thank you for having me and everyone. If you’re driving around right now, when you get home, get in your pajamas and celebrate Pajamaca.

Wes Moss [00:33:02]:
It is Pajamaca and I invite you to hear Christa and me every week as we talk about ways to retire sooner, retire happier, and answers to your retirement questions on the Retire Sooner podcast. Follow the Retire Sooner podcast wherever you listen to podcasts and look for new episodes every Thursday. Of course, during the week, it’s easy to reach out to us and the Money Matters team. You can just go to yourwealth.com that’s y o u r your wealth.com and have a wonderful rest of your day.

Disclaimer [00:33:38]:
This is provided as a resource for informational purposes and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. The mention of any company is provided to you for informational purposes and as an example only, and is not to be considered investment advice or recommendation or an endorsement of any particular company. Past performance is not indicative of future results. Investing involves risk, including possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. The information provided is strictly an opinion and for informational purposes only, and it is not known whether the strategies will be successful. There are many aspects and criteria that must be examined and considered before investing.

Disclaimer [00:34:26]:
This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal tax or investment advisor before making any investment, tax, estate or financial planning considerations or decisions. Investment decisions should not be made solely based on information contained herein.