#20 – CPI Report, Best Summer Travel Destinations, And One Small Shift Could Make A $2 Million Difference

Wes Moss [00:00:53]:
Jeff Lloyd, welcome. Thanks for being here, man.

Jeff Lloyd [00:00:55]:
Thanks for having me back. Always good to be here on a Sunday morning.

Wes Moss [00:00:58]:
There were so many great things that moved great. There were so many interesting things that happened this week. We’ll see. We’ll be the judge whether it’s great or not, but it moved markets. We saw CPI come out, then we saw markets hit an all time high, which is something we want to address here that kind of makes investors a little bit nervous. Well, what happens when the market hits an all time high? What are the numbers show? And I think they’re going to be different than most people think. The perception is. Of course, we’ve got always be buying low and selling high.

Wes Moss [00:01:28]:
I don’t want to invest when the markets are high. Really interesting data that you found this week that we’re going to cover here today.

Jeff Lloyd [00:01:34]:
Yeah. And maybe that’ll kind of help answer the question. I’m sure we get it. We get it a lot. Well, markets at all time high. Should we sell markets at all time high? Is now a good time to buy? Maybe that data is going to help answer some of the questions for the listeners out there.

Wes Moss [00:01:48]:
And then, of course, we had kind of a, speaking of CPI, speaking of inflation, speaking of, it was a really bad traffic week this past week. This coming week, as school lets out, traffic’s going to slow down. We’re going to get a reprieve. But I’ve got a continuation of this car fixing saga that has been super expensive. The number, kind of mind blowing numbers that at least this is all under warranty. But I think that also plays into some of these CPI numbers that have been a little stickier, a little hotter than expected. But the good news is CPI in general only up 3.4%. The latest report on this past Wednesday market really liked that number.

Wes Moss [00:02:30]:
And let’s see what else here. We’re talking value meals here on this Sunday morning. It doesn’t seem like there’s any value meal when you go to any restaurant. McDonald’s is trying to bring back some version of their dollar menu, which I do remember now that we’ve been reading and writing about it. Jeff Lloyd 4% of retirees only 4% are living the retirement dream, which makes me sad. That means to me, only 4% of retirees are hrobs, happiest retirees on the block and wallethubs top summer destination to travel in the United States that has all the fun and is relatively affordable. And we may even get to something I did for the podcast this week for the retired senior podcast. Here’s a topic for the retire Sooner podcast, how to retire a little sooner.

Wes Moss [00:03:22]:
One year sooner? Five years sooner. It’s a little math heavy, but it’s really important to go through those numbers. What does it take to shave off a year of work when it comes to savings? We’ll see. I think it’s not even published yet, but it’ll be eventually. It’ll be published. I think we publish mostly on Thursdays. In a week or two, either this upcoming Thursday or next this upcoming week, kids are out of school and we get some traffic relief. This past week was so brutal with traffic.

Wes Moss [00:03:50]:
We had thunderstorms, were a city of trees, power lines go down. I think everything was out in Buckhead. And it’s like a ripple effect. And it takes a 20 minutes commute to 45. It takes a 45 to an hour. And it’s. And the reason I think it’s important, the thought around it is one of the top five tactical, actual things that pushes people over the edge to say, I’m done. I’m done working.

Wes Moss [00:04:16]:
Either I’m working from home or I’m not. I can’t do the commute anymore.

Jeff Lloyd [00:04:20]:
That commute’s too long.

Wes Moss [00:04:21]:
Makes people want to retire.

Jeff Lloyd [00:04:23]:
Time to retire, right?

Wes Moss [00:04:24]:
Or stop working. Retirement, maybe not the right word, but get out of that job, stop the commute so bad for you. I found some new research from the USC University of Southern California has some research around the detrimental impact of long commutes. It’s what you would expect, but it’s really, it’s terrible for our health.

Jeff Lloyd [00:04:45]:
Well, the good news is a little relief is on the way. Like you said, this past week traffic was awful. But this week, with school, schools ending, there’s going to be a little traffic relief. I always feel like that last week before school starts, a lot of traffic. Kids get out, people start going on vacation, traffic starts thinning out in the Atlanta area a little bit makes it.

Wes Moss [00:05:06]:
So much more enjoyable. Speaking of traffic and car trouble and CPI inflation all put together, I think last week I told a little bit of a story about my wife’s big american suv in the shop. So this is a car that only has 30, 35,000 miles on it. It’s four years old. So because we live in town, Lynn does lots of driving, but it’s relatively close by so we don’t put a huge amount of miles on it except for an occasional trip to Michigan, which is quite a drive. But here we are with this pretty new car, relatively new car, and just take it into the, it stops running, take it to the shop two weeks later, finally get a call back. Takes forever to get any sort of word on what to do.

Jeff Lloyd [00:05:51]:
Wait two weeks just to get a callback. Not like two weeks to get fixed.

Wes Moss [00:05:55]:
No, no. Two weeks to even diagnose the problem, get a callback. It’s again, part of the reason I think we’re seeing this in inflation numbers when it comes to motor vehicle repairs. And I’ll let you figure, find that on our CPI data list, but it’s got to be a high number and here’s maybe why. I get a call and they say, guess what? You need a new engine. Your engine is broken. It’s not that old. It just, some bolt came off.

Wes Moss [00:06:24]:
And then there’s the crankshaft and there’s shreds of metal everywhere. The things cooked, it’s done.

Jeff Lloyd [00:06:31]:
You don’t want shredded metal in your engine.

Wes Moss [00:06:33]:
But the good news is it’s under warranty, so they’re so excited about this, like your engine’s fallen out. But we’ll give you a free one. In fact, we have one in the back. Okay.

Jeff Lloyd [00:06:43]:
Oh, good. We got one in storage. Right, for you.

Wes Moss [00:06:45]:
So fast forward, I guess another maybe. It really didn’t take all that long. So it’s only been maybe two weeks now and I finally get the bill. So that’s really where this story continues. As I got the bill. What do you think this thing. Wait, do you, I already told tell you this, it’s not fair to ask.

Jeff Lloyd [00:07:00]:
You or, I don’t know.

Wes Moss [00:07:03]:
Okay. How much was all, how much was it all in? Just the engine that was covered by the warranty so I didn’t have to pay for this part of it at all. 15 18,000. $18,000 to repair the pretty new engine. In fact, we can’t. What’s interesting is that because it’s, I guess it’s so new, there’s a certain way we have to drive it. You can’t go over 2000 rpms, which seems really low to me, for the first 500 miles and then the next 500, then you’ve got to get your oil changed within 1000 miles. So the first thousand miles.

Jeff Lloyd [00:07:42]:
So no more, no more drag racing in midtown. Okay. You’re not peeling out of the parking lot. Okay.

Wes Moss [00:07:48]:
You cannot rev the engine at all. It’s got to break it in. Which leads me to, which to me is somewhat, it’s a mind blowing number for something that brand new whole thing took. Call it a month. And maybe I’m thinking you get a bill this big and you think maybe it does make sense that these inflation numbers, which we love to go through the categories is. So, it’s a big part of why we’ve seen sticky and warmer than we’ve liked. Now this week there was, we were cooler than we liked this past week. CPI inflation number coming in only at 3.4%.

Wes Moss [00:08:25]:
But if you look at some of these categories, there’s still some real hotspots, if you will. What’s, what is year over year vehicle?

Jeff Lloyd [00:08:32]:
Well, especially related to vehicle maintenance and repair, it’s, it’s more than double the overall inflation rate. The actual year over year increase for motor vehicle maintenance and repair is 7.6%.

Wes Moss [00:08:44]:
I think my wife’s car is in that number. I think it is directly contributing to that. Still a problem spot when it comes to inflation.

Jeff Lloyd [00:08:55]:
And you talk about higher costs for motor vehicle repair, what does that also lead to? Probably higher insurance, higher insurance costs. So on a year over year basis, motor vehicle insurance is up over 22%.

Wes Moss [00:09:08]:
Wow. That is, it is a big number, 22% in the past year. The other thing that stayed sticky on that list that I took note of is that we still had almost 6% increase in shelter. So that OEr number, the owner equivalent, is still 5.7, which is, it’s been kind of stuck at that 5.7 number. And the fed keeps saying that’s got to come down. I think it should be coming down. You look at all the data around real time apartment. I think apartment list.com comma zillow keeps track of real time rent.

Wes Moss [00:09:42]:
So it’s a monthly number and those numbers are down year over year. So here we have the government’s number of inflation is going up still and private industry is saying that rents are actually coming down even though it’s not a complete apples to apples because oer is not rent, it is what a homeowner says they could rent their house for. So it is a little bit different. Yeah.

Jeff Lloyd [00:10:05]:
Sometimes you see a little disconnect with some of the government data and then maybe what you’re seeing in actuality, let’s just take another example.

Wes Moss [00:10:12]:
Hold on. Did you say disconnect and government data in the same question?

Jeff Lloyd [00:10:16]:
I did. I did.

Wes Moss [00:10:17]:
They’re never wrong. There’s no disconnect. But let’s talk about government data.

Jeff Lloyd [00:10:21]:
Let’s talk about some other insurance that’s pretty vital to everyday life. Health insurance. According to the CPI data, it’s down year over year, about 12%, 11.6% to be exact. I don’t think I’ve seen many health insurance bills in the Lloyd mailbox. That is a lower bill from this time last year.

Wes Moss [00:10:42]:
I haven’t talked to one retiree this whole year that has said, oh, I think my health care bills are down a little bit. That doesn’t seem, that doesn’t seem right. Anyway. So that’s where we are. We ended up with a cool, if you will remember, we go back about a month ago. It was a month ago. It was the last CPI report. And this is what’s so interesting about how just on a knife’s edge, the market watchers are investors are, we were one tick, literally 0.1% higher than we thought last month and markets got hit pretty hard in one day.

Wes Moss [00:11:17]:
Dow was down, I think at one point was down 600 some points the day that inflation came in hotter than expected. Here we are this past week. Wednesday’s number was a touch lighter. It was 3.4. And then there was jubilation in the market and hence we hit all time highs. So the market is so, so intent on getting inflation to be at a comfortable level. So why we’ve been calling them mommy and daddy Fed, who’ve turned up the punishment on the economy with higher rates will go away and go on vacation and start lowering rates. It still doesn’t seem like lower rates are coming anytime soon, but you can certainly, and even Powell was speaking this week, I think he was in Amsterdam this past week saying that rates are just going to be higher for longer and there really is no indication that they’re going to go any higher.

Wes Moss [00:12:07]:
So they are high and they may stay high, but more interest rate hikes where we see interest rates and mortgage rates and credit card rates and auto loan rates go even higher, that doesn’t seem to be in the cards, at least for now.

Jeff Lloyd [00:12:20]:
Yeah, probably this week, if we had seen a hotter than expected inflation print, maybe the rate hikes come back on the table. But since we saw it come down, maybe those are off the table now. And market expectations are about one to two rate cuts through the rest of the year.

Wes Moss [00:12:39]:
So the government data that came in, consumer price index, 3.4%. How about real life CPI? I know you tracked the common man CPI. That includes the things that we need, like staying warm and eating. So food, energy, shelter, clothing, utilities, insurance. That’s if you look at what we need as a country. Where did that come in for this past week or approximately that came in.

Jeff Lloyd [00:13:10]:
There’S a measure, and now this is indexed up to 100 going back three years. It’s up over 21%, while the CPI is up only 15%. So percentage base is common man CPI a lot higher than the government data coming out.

Wes Moss [00:13:28]:
Got it. Well, all right. So that’s the reality of the world we live in. 3.4 to four, somewhere in that range, depending on what we’re looking at. Common man versus government data, CPI. At least it’s not getting worse. Jeff Lloyd found another great story this week. Wallethub ranks 100 metros in the United States and tries to tell us what the best destination is for summer trips.

Wes Moss [00:13:54]:
Travel. 82% of Americans plan to travel this summer, which that’s a very high number. 42% are gonna take more than one trip. Where’s the best place to go? Well, at least from a, we’ve got, if we’re looking at 100 cities and you’re looking to do this at a relatively, let’s call it cost effective way. We know how pricey gasoline is right now. We know how much pricey tickets and anything you want to do in the United States, we’ve been hit by inflation. So where do you get the kind of the best bang for your buck? And this is a very extensive, formulaic way that they did this. Jeff, take us through that for just a sec.

Wes Moss [00:14:31]:
Yeah.

Jeff Lloyd [00:14:32]:
So they looked at travel cost and hassles, rank hassles, how much it cost. Attractions, how many attractions are in the area, weather, activities and safety.

Wes Moss [00:14:46]:
Give me a hassle. What’s that? Wrassle?

Jeff Lloyd [00:14:49]:
Traffic.

Wes Moss [00:14:50]:
Traffic, yeah.

Jeff Lloyd [00:14:51]:
Ease of getting into big airports or smaller airports. Can you fly direct? Is it indirect?

Wes Moss [00:14:58]:
Oh, here we go. Oh. Share of delayed flights, how often flights are delayed, number of connections to get somewhere, cost of the shortest flight. Got it.

Jeff Lloyd [00:15:08]:
Okay, so it’s this all encompassing formula. And it, like you said, measures the top 100 metro areas. Oh, I love this.

Wes Moss [00:15:18]:
Okay, so it does. Number of attractions as an example, diversity of attractions. And then under activities, it’s restaurants per capita. Amusement parks per capita. Retail shopping centers, music venues. I love this. Coffee and tea shops per capita. Ten.

Wes Moss [00:15:35]:
I love this one. Tennis courts per capita.

Jeff Lloyd [00:15:39]:
How about this one? Time of last call. So when’s the last time you can order an alcoholic beverage in a bar?

Wes Moss [00:15:45]:
And that’s right below beer gardens per capita. This is a really very interesting formula, by the way, what is the last call? 01:00.

Jeff Lloyd [00:15:55]:
You know what? It’s been so long since I was at a bar for last call. I don’t even know. Okay.

Wes Moss [00:16:00]:
I don’t even know what it is. I’m going to say it’s, one could be more than that. Who knows? And then, of course, safety. That one makes sense. Violent crime, property, property crime, crime rate, etcetera. So let’s start with this. Just the five, I guess number 100. So let’s go down, but just on the highest cost and most hassle list.

Wes Moss [00:16:18]:
So this is not the overall list. This is interesting to me. McAllen, Texas. Number one, it must just be hard to get to or, sorry. Number 100. So the very bottom of the list, Baton Rouge, Cape Coral, Cleveland, Ohio. Expensive and hassle. And then number 96 on the highest cost and most hassle list is Las Vegas.

Wes Moss [00:16:40]:
I wonder if that’s. These are the. As in a good thing or a bad thing.

Jeff Lloyd [00:16:44]:
I think it’s a bad thing.

Wes Moss [00:16:45]:
Yeah, it’s a bad thing. Cost a lot and then the lowest costs and fewest hassles. Number one is Santa Rosa, California. How about overall? Jeff Floyd?

Jeff Lloyd [00:16:55]:
All right. Overall, starting with fifth most popular or.

Wes Moss [00:16:59]:
Best, this is best places to visit in the summer.

Jeff Lloyd [00:17:02]:
Tampa, Honolulu, Orlando, Washington, DC. Drum roll. Number one, best place to visit this summer. Atlanta, Georgia.

Wes Moss [00:17:14]:
Well, really from wallet hub, they call it Atlanta Dash, Sandy Springs Dash, Alpha Ratta dash, ga Metro. So it’s, the whole metro is you get the most bang for your buck. The great thing about the summer is traffic is better. That does increase quality of life because you can get places and you’re not stuck in your car. Only thing I would say is that it’s oppressively hot here in July and August, but it’s hard to find any place in the United States that’s not so. That almost cancels each other out. Whether you go to Pennsylvania, New York, and you’re in the northeast, it’s still hot. Unless you go to one of my favorite places, northern Michigan.

Wes Moss [00:17:54]:
More money matters. Straight ahead. We keep hearing that inflation is coming down, but the past three years, the common man inflation gauge is still up over 20%. That’s necessities like food, gas, utilities and shelter. How can you possibly keep up? Well, one option is income investing. That’s using a combination of growing stock, dividends, bonds for more cash flow, and other areas that can be a hedge against inflation. Look, inflation is tough. Let us help you overcome it.

Wes Moss [00:18:22]:
Schedule a time directly with our team@yourwealth.com. dot that’s y o u rwealth.com dot. I was thinking about last weekend, the talk about the solar flare, and, yes, the cool part about that, of course, the northern lights, and we saw some amazing pictures, but also all of that worry around interrupting wireless, interrupting the power grids, that could happen from a solar flare. I didn’t hear anything that, that actually happened. I knew there were a bunch of warnings around that, but I don’t, I didn’t see any big reports around that.

Jeff Lloyd [00:18:57]:
Yeah, I saw a bunch of the headlines of, you know, be ready for communications and Internet, cell phones and power grid to go out, barely.

Wes Moss [00:19:04]:
But anyway.

Jeff Lloyd [00:19:05]:
But I didn’t hear about anything going down anywhere in the world. Did you?

Wes Moss [00:19:09]:
Nothing major. I’m sure something happened.

Jeff Lloyd [00:19:12]:
Can I tell you one thing about the northern lights that I was actually really disappointed in?

Wes Moss [00:19:16]:
Huh?

Jeff Lloyd [00:19:16]:
Do you remember how much, I’m sorry. I didn’t see them, but I didn’t even know that there was a chance that you would be able to see the northern lights in all different.

Wes Moss [00:19:27]:
In the southeast.

Jeff Lloyd [00:19:28]:
In the southeast. Do you remember how much we heard about the solar eclipse? I mean, there was like months and weeks built up heading to that, and it was pretty cool to see. I would have rather seen the northern lights than the solar eclipse, but I didn’t hear much as much about the northern lights.

Wes Moss [00:19:45]:
It’s because we, we knew it was a destination appointment. We knew when the solar eclipse was going to happen. This was a little more last minute. Oh, hey, there’s a solar flare, or you’re gonna see some northern lights. So you were disappointed in just being.

Jeff Lloyd [00:19:57]:
And I didn’t see him, did you?

Wes Moss [00:19:58]:
You were disappointed in mother Nature.

Jeff Lloyd [00:20:00]:
A little bit. I was, yeah.

Wes Moss [00:20:02]:
I’ll give her a call now.

Jeff Lloyd [00:20:04]:
Did you get the.

Wes Moss [00:20:04]:
Jeff was disappointed.

Jeff Lloyd [00:20:05]:
Did you see him?

Wes Moss [00:20:07]:
You know what? I didn’t, but I did see some, just a really clear sky over the weekend. Anyway, yeah, I didn’t see the lights. I’ll put in a call to mother nature and let her know. How about investing in all time highs, Jeff? Floyd, this is money matters. We’re not here to talk about astrology. We’re not here to talk about space Odyssey, we’re here to talk about what happened in the market, which we saw a huge reaction to the upside as soon as we got a, which is interesting to say, ever so slightly less bad than expected inflation number.

Jeff Lloyd [00:20:42]:
Yeah, we saw a better than expected inflation print on Wednesday. And subsequently we, we saw all time highs in all three major indexes, Nasdaq all time high, s and p 500 all time high, Dow Jones all time high.

Wes Moss [00:20:56]:
And when you hear that you’re an investor, you’re putting money into your four hundred one k and you’re being religious about it. You’ve got a brokerage account, and you, whether you’re a growth investor or a dividend value investor, anything that is market based, you hear and see all time high. And you think, wait a minute, that does, something doesn’t feel great about. I get this visual of we just hit our head on the ceiling and that’s it. And that’s great. We’ve reached the ceiling. But what happens next? Now, the reality is these ceilings continue to get extended and broken. Extended and broken.

Wes Moss [00:21:31]:
But it doesn’t necessarily feel like this is the right time to be investing because it’s literally, markets are literally at a high. Again, we grow up hearing buy low, sell high, buy low, sell high. So we face this psychological barrier to investing when things have already done great. Oh, I’ve missed the boat. That’s the way I think of this is, did you miss the boat? It makes us wonder if it’s a good time to invest or just to keep investing. And I think it’s natural to feel a little hesitant about putting new money to work into the market when prices are already at what is a peak now doesn’t mean well, and that’s what this data is all about. That’s why I think, Jeff, this is so interesting is that we have new data as to what happens when markets get to one of these all time high periods. So subsequent to hitting an all time high, what happens now? This first part, I think is interesting.

Wes Moss [00:22:28]:
Hitting an all time high is not nearly as rare as you might think. Just conceptually, you think, oh, we hit an all time high. It seems like the solar eclipse had happened once. The reality is that since 1950, the S and P 500 has hit 1250 plus all time highs. And that’s again, and we’re really right around one right now that averages to 16 new all time highs per year on average. So it happens a lot that for some reason doesn’t seem to register for investors. So in the fifties, we had 137 new all time highs in the sixties, we had 218 all time highs. In the nineties, which obviously a very, very good decade for stocks, we had over 300 new all time highs.

Wes Moss [00:23:24]:
So markets plowing new ground. Plowing new ground. And so far in, in this decade, in the 2020s, we’ve had over 100 all time highs. So it’s not all that rare. And I think that’s the first important point when you’re thinking about, okay, all time high, what should I do next? So that’s one, the next thought is what happens to investments historically over time, once we get to one of these all time highs? So investing post an all time high isn’t nearly as bad as you might think. So what does it mean? What does it mean for investors? So, first of all, all time highs, like where we are today, are usually because, and if you go back and forth, usually because things are going pretty well, economy’s doing well, corporate profits are doing well, earnings are doing well, and that’s the reason we got to an all time high. So it’s usually not, and there have been periods of time, we got to all time highs where it’s just valuation and things get pricey and expensive. But in general, on average, over time, going back to the 1950s, if we’re getting to an all time high, it’s usually because things are going pretty darn well.

Wes Moss [00:24:34]:
Now, let’s take a look at how you would have fared if you had only invested. And we’re looking at the S and P 500 here. And this was an RBC. This is from Bloomberg and RBC Global Asset Management did this study. So we’re looking at the S and P 500 from 1950 all the way through 2023. And I think this is actually updated as of March of this year, March of 2024. And you only invested once the market hit an all time high. So you could look at that, Jeff, we do participation perfection.

Wes Moss [00:25:09]:
This would be essentially the, quote, worst timing. This is as bad as you could get, technically.

Jeff Lloyd [00:25:16]:
Yeah, worst timing when you invest at the absolute peak.

Wes Moss [00:25:21]:
Now, the data shows that returns would be pretty darn close to the overall average rated return of the index over a one, a two, a three year period of time. So if you look at this, I think the three year one maybe tells the story, on average, over that whole period of time, 1950 through March 2024, average three year returns for the market. Eleven and a half percent average returns. If you only. These are average three year returns if you only put money to work at an all time high, 10.9%. So they’re almost the same. So having worst timing on average, almost eleven, having how markets have done over time, during, again, looking 1950 all the way through this spring, eleven and a half. So it’s not that different.

Wes Moss [00:26:13]:
Even though you might think because we were at an all time high, my returns would be muted moving forward, and they’re barely muted at all, at least looking at history.

Jeff Lloyd [00:26:22]:
Yeah, there’s a little difference in those returns. But I think the ultimate point is going back to the perfection versus participation. As long as you’re invested in the market, regardless if you’re buying at the peak or the trough, being invested in general is the most important part of successful investing over time.

Wes Moss [00:26:43]:
How about corrections Jeff Floyd? You would think again on the surface, and you’re an investment guy and you’ve been in the investment business for a long time, but on the surface, do you get the feeling, or do you think investors get the feeling of now that we’re at a high? Well, things have to correct.

Jeff Lloyd [00:27:01]:
Absolutely. I think that it’s natural investor sentiment and it’s what they see and headlines. I know we talk about that a lot on the show, but it’s like, well, we’re at an all time high. How much higher could we go? It’s like they always think the next 10% move in the market is going to be lower instead of higher.

Wes Moss [00:27:21]:
And it may even be a little bit more pronounced if you think about individual companies. So it’s maybe less rare for a company in particular to have a big run and it’s making all time highs and then it corrects. But here we’re talking about real diversification. We’re looking at the overall s and P 500. And here are these numbers. So how frequent are market corrections? Remember, 10% or more following hitting an all time high, how often does this happen? Well, if you look out different time periods. So on a one year basis, only 9% of the time post hitting an all time high, have we seen the market correct 10% or more a year later. So less than one out of ten periods, markets are down 10% after an all time high.

Wes Moss [00:28:06]:
That to me was, again, it’s interesting data number, look, go three years out. It’s only happened, it’s only 2% of the time. So if you look at three year periods post an all time high, 98 times out of 100, we’re not 10% lower. Interesting. And then you go five years out, zero. So zero times over the course of history. And again, this data is going back to 1950 till March of 2024. Hit any all time high over the course of history, and then you look out five years, is the market 10% lower? At that point, the answer is, it’s zero cases.

Wes Moss [00:28:42]:
So it just shows. And I think it may go back to the whole reason we’re at an all time high is that you’ve got to have some things. You’ve got to have a lot of fundamental things usually going right just to be able to get there. So here’s bottom line. When we’re looking at an environment where we are today, and by the way, we know this, it’s not as though it’s any easier for investors if we’re in a ten or 15% correction to put money to work, because you’re thinking, wait a minute, we’re going even lower. There’s really no easy time when it comes to investing to think, oh, this is a good time. Whether it’s all time high or markets are correcting, it doesn’t ever feel like a great time. Right.

Jeff Lloyd [00:29:22]:
And remember, we’ve talked about it a lot on the show, too. The average drawdown in any given year is 16.5%, 16 plus.

Wes Moss [00:29:30]:
Right. In an average year.

Jeff Lloyd [00:29:32]:
In an average year.

Wes Moss [00:29:34]:
So, of course, the future is uncertain. It’s always uncertain, particularly in the short run. It’s super uncertain. But history shows that stocks and markets in general, of course, they rise over the long run. And reaching new highs is really common. It’s more common than you probably think, and it doesn’t, at least historically, indicate that returns would be all that, much less moving forward. Again, the numbers between investing in all time highs versus the average over that same period of time, very, very similar. And it also doesn’t necessarily spell impending doom, doesn’t necessarily spell at all an upcoming correction.

Wes Moss [00:30:17]:
In fact, all time highs might actually suggest more growth is on the horizon. Thank you for that data. Jeff Lloyd. No, fine.

Jeff Lloyd [00:30:28]:
Thank you. I think it’s just a good reminder, especially as this past week, we’re at all time highs, just a reminder of it’s happened over 1200 times going back to the 1950s.

Wes Moss [00:30:41]:
Participation is the key, not perfection, when it comes to investing. Jeff Lloyd, you’re always thinking fast food. I don’t, you, I know you don’t love fast food, but you’d like to track how just expensive it is, because as parents, both of us, whether we like it or not, fast food is. It’s one of the, it’s what we got to do sometimes.

Jeff Lloyd [00:31:00]:
Well, if we’re playing and there’s not.

Wes Moss [00:31:01]:
A chick fil a around every corner, and for some reason, chick fil a has tricked us all into thinking their fast food is actually healthy. I still think it is.

Jeff Lloyd [00:31:10]:
What happens if you need fast food on a Sunday? You can’t stop at Chick fil a.

Wes Moss [00:31:14]:
That’s true. That’s true.

Jeff Lloyd [00:31:16]:
So you got Wendy’s or you got McDonald’s.

Wes Moss [00:31:18]:
All right. So I recall there was a period of time where that value, the dollar menu was such a good idea. I remember even almost memorizing it or knowing you could get, I think it was a junior burger or junior MC, a little Big Mac. I can’t remember what it was.

Jeff Lloyd [00:31:37]:
Yeah, you could get, like, just a burger or fries or, you know, a little ice cream or drink. You can mix and match for a dollar each.

Wes Moss [00:31:45]:
And now it feels like, for a dollar, you can get like a fry for a dollar. That’s what it feels like now. How much? You were just at Wendy’s, weren’t you? Or McDonald’s? How much?

Jeff Lloyd [00:31:57]:
Yeah, I was at a Wendy’s drive thru this past week and just getting, like, a normal cheeseburger combo and a frosty, and it was $15.

Wes Moss [00:32:05]:
Oh, so you were at Wendy for just one meal. You were Wendy’s.

Jeff Lloyd [00:32:07]:
At Wendy’s.

Wes Moss [00:32:09]:
I haven’t had Wendy’s. The frosty’s still pretty awesome. I remember it being great.

Jeff Lloyd [00:32:15]:
It’s really good. But after seeing this of what McDonald’s is rolling out, might have to switch from wendy’s to McDonald’s new value meal.

Wes Moss [00:32:25]:
So they don’t, they’re not going back to the dollar menu. That doesn’t seem like it buys all that much, but I kind of like this mix of what they’re doing here, which is they’re going to do. They just announced that this past week they’re going to start offering a $5 value meal. So this is an entire meal for $5, which seems like it’s been a long time since she could have done that. Again, not quite the dollar menu, but it’s close. So as an example, it’ll include, it’s four menu items for $5. It’s, it’s a. Either it’s a McChicken or a McDouble, which is interesting.

Wes Moss [00:33:03]:
A four piece chicken mcNugget, fries, and a drink, all for $5. I guess it’s one of those. Either you get a chick McChicken, a McDougal, or a four piece chicken nugget, a fry and a drink, all for $5. That seems like three things to me. I know four menu items that you can choose from.

Jeff Lloyd [00:33:22]:
You get the nuggets but you also get a McChicken or McDouble with the fries and drink. So it’s four.

Wes Moss [00:33:28]:
Say that one more time. That’s interesting. Oh, you can either get a, you.

Jeff Lloyd [00:33:32]:
Choose the chicken sandwich or the cheeseburger and turkey sandwich, and then you get the nuggets, fries, and drinks.

Wes Moss [00:33:39]:
Wow, that does sound like a pretty good deal for $5. That’s a lot.

Jeff Lloyd [00:33:44]:
My guess is you’re gonna see more fast food restaurants reroll out value meals in response to this.

Wes Moss [00:33:51]:
They’ve got to. Do you know that as many as 4% of retirees say they’re living a nightmare, and only 4% of current retirees say they are, quote, living the dream survey finds. This is a new study that from Schroeder’s, which, I don’t know, there’s a bunch of different research companies that contribute to this, but evidently only 4% of retirees say that they are living the retirement dream. Now, there is a pretty decent middle here. So you’ve got the living the dream, and then you’ve got the nightmare. There are a bunch of people in the middle. 44% said they’re comfortable, 34% said they’re not great, but not bad. 15% say they’re struggling.

Wes Moss [00:34:35]:
So 15 and 34 and then four, that’s what, 53 over half are kind of not. Retirement’s not all that good in America.

Jeff Lloyd [00:34:49]:
So 34 say they’re not great, but not bad. Does that mean 34% is good? Just kind of right in the middle? That’s how I would interpret that.

Wes Moss [00:34:57]:
I know, I look at this, say, look for 44% are comfortable and 4% are living the dream. So that’s 48% of folks are in the good to great category, which invariably shows that we’ve got a bunch of people that are not living the american dream. And I don’t know, I don’t love that. And you can imagine. Here are the top reasons. Number one on the list, 85% of that group says higher than expected healthcare costs. This, of course, if you get into retirement, you’re ready. Think about the ramifications here.

Wes Moss [00:35:32]:
You get into retirement, let’s say you’re into your seventies, things are going well. You’re doing all the things that you wanted to do, your love in life, and then, wham, husband or wife has to do some sort of surgery and a, you’ve got healthcare costs now. It’s not, oh, if you’re in your, if you have Medicare and you’ve got a good Medicare or Medigap program. I just talked to a longtime family I’ve worked with, they’re in California now, but they just had a big surgery that the bill, I think, was something like $250,000. They paid less than $1,000. So if you’ve got good, you’ve got Medicare, plus a supplemental Medicare program that covers the other 20% that Medicare doesn’t cover. Then out of pocket health care costs don’t necessarily have to be all that high, but it’s not that way for everyone. And 85% are worried.

Wes Moss [00:36:24]:
And this is one of the reasons why. It’s weighing down on retirement happiness higher than expected health care costs. And number 276 percent are worried about just a market downturn, like a major market downturn that could reduce their assets, hence reducing their income 69%. This is number three on the list, not knowing how to best draw down their income. And then next on the list, 68%. I would have thought this would be number one on the list, outliving assets. That’s a fear that we know.

Jeff Lloyd [00:37:00]:
Yeah, this was according to that Schroeder story. But just in talking with people throughout the years, we have said that we think the number one fear in retirement that people have is the fear that they are going to run out of money.

Wes Moss [00:37:14]:
In fact, I skipped number one. So those were two through five. Number 189 percent of respondents, inflation lessening the value of their assets. Really, they’re almost all about inflation, aren’t they? Inflation was number one, higher than expected health care. That’s inflation. Market downturn, not necessarily about inflation, not know how to draw down income. That could be because we’re trying to draw income in order to protect our purchasing power. So that’s about inflation.

Wes Moss [00:37:44]:
Outliving assets. That’s about inflation. So inflation is really the, if you just sum it up, it’s, people are worried about inflation, and we’ve had much more inflation over the last couple of years than we have had in a couple of decades, and it started to worry people. So that, to me, is very telling about the state of the economy and retirement in America, and I don’t love it.

Jeff Lloyd [00:38:10]:
Well, I can kind of understand this with inflation being the number one fear in retirement, with think about maybe some people that had retire two, three years ago, and you’ve seen inflation up 20 plus percent over that time period that could potentially eat into your purchasing power. But we’ve talked a lot here on the show on how to combat that inflation through investing and possibly dividend paying stocks and living off that dividend growth and generating that type of income from your portfolio.

Wes Moss [00:38:46]:
The statistic of the year that I remember that I keep coming back to it was new data, updated by the Federal Reserve that showed that almost 70% of 65 through 69 year olds, so that’s baby boomer prime retirement age, have less than $100,000 saved. And that is what this article goes into, some of the statistics, employee benefit research that EBRI shows that a third of workers have less than 50,014% of workers have less than less than 1000 total. So we know we’re behind in large part when it comes to savings, and that leads to the worry of inflation. If I don’t have enough savings, inflation’s making everything more expensive. Now I’m even more behind and worried about running out of money. That’s why we’re not talking about the 4% plus rule here. But that’s why we spend a lot of time around withdrawal strategies. We even went to the 6% rule.

Wes Moss [00:39:43]:
What if you, if you need more than four? Is it possible? Certainly not as easy. It’s a much taller order. But what would you do if you needed more than the 4% rule? We did that. So if you missed that part of money matters, you can find it on the Money Matters podcast as well. Apple Spotify, wherever you find your podcast. So the reality here is that we’ve got a lot of work left to do. There’s a lot of wood to chop. However, it’s never too late to be.

Wes Moss [00:40:11]:
It’s never too late to start saving for retirement. More money matters. Straight ahead. You were not here for the Don Carr interview, were you?

Jeff Lloyd [00:40:23]:
I think I was out of town when you did that.

Wes Moss [00:40:25]:
This was for the retire Sooner podcast. Dawn Carr is the director of the, it’s the Claude Pepper Institute, or center professor of sociology at Florida state, and she’s a longevity researcher. How do we make our lives better as we age? How do we maintain our health span and our quality of life as we get older? She was a researcher at the Stanford center on Longevity, and the reason? I think she’s brilliant. She did her postdoctorate work at Carolina UNC, the Carolina center program of Health and Aging Research, University of North Carolina. So she must be.

Jeff Lloyd [00:41:07]:
You would like that, west, as fellow Tar Hill.

Wes Moss [00:41:10]:
But, you know, I interview these professors and these doctors around this topic, and I have many times. But I liked that. I had some actionable ideas from her. Yes, we know we need to continue to exercise. Yes, we know we need to have socialization. But there was some, she really had some nice prescriptions around. How do we do that? Money, let’s say on the scale one to ten in retirement, let’s give it a nine. Most people would give it a ten.

Wes Moss [00:41:38]:
I’ll give it a nine. On scale one to ten, but it gets press and talked about at a ten. Importance is a nine, but it gets talked about at a ten. Socialization is a nine, and it gets talked about at a two. For some reason, it’s hard to articulate how important socialization is and how we need to do it. There’s one really interesting idea that she has studied, and it’s the impact of what she calls formal volunteering. Not just volunteering, but formal volunteering, which means you’ve, you’re volunteering in a place that has a mission and it has an outcome, and it is serving others. So you’re doing something for someone else.

Wes Moss [00:42:14]:
So it doesn’t matter where it is, a hospital or church or a school. But if you are having what she calls formal volunteering a shared mission and purpose, it creates empathy. And they actually studied their subjects, looked at their biomarkers on the day they were volunteering. There are documented physiological changes that happen, lower stress, lower inflammation when you are helping people. And formal volunteering may be the most efficient way to do it. So working is good. It’s good for our brains, good for our minds, good for our socialization. But only 2 hours of volunteering a week is the equivalent to your brain, to the good of 20 hours worth of work.

Wes Moss [00:43:00]:
So it might be the most concentrated, valuable thing that we can do when it comes to retirement. Happiness. Longevity is formal volunteering in some way, shape or form. You get to choose on your impact, your quality of life. And I thought that was quite a takeaway from Doctor Dawn Carr, professor, sociology researcher. And if you follow the retire sooner podcast, you’ll get a notification of when that interview gets published. How to retire one year sooner or five years sooner on this episode of money matters. And I got this idea because obviously we host a podcast called the Retire Sooner podcast, and we’re always talking about the money and happiness secrets of happy retirees.

Wes Moss [00:43:48]:
And we’re interviewing health experts, longevity experts, et cetera, to make, we want retirement to be better and more happier, more fulfilling, healthier. But it’s been a while since we’ve talked about how do you actually retire sooner, like a year sooner, or three years or five years sooner? And I realized, and this is, we published an article at forbes. I write for forbes.com dot jeff. You help a bunch on these articles, too. And again, I’ve written about all my favorite topics. Happy retiree habits, income investing, dividend investing, retirement planning, you name it. And some of the articles have done okay, or at least I thought they did okay. And I think at least some people read them.

Wes Moss [00:44:31]:
But one we recently published, it was so simple, it was so basic that I thought it wasn’t. I thought nobody would read it. I thought it was gonna bomb. But it was titled one small shift could make a $2 million difference. Now, maybe that is. I think that title is pretty good, but the article is simply about what we’ve covered it here. Jack Saver, Jill, investor. One gets 1% a year.

Wes Moss [00:44:56]:
One gets 10% a year. One’s an investor, it’s $1,000 a month for 30 years. And we know what it adds up to. The saver gets about 400 grand. The investor, close to 2.3 million. So it’s almost a $2 million difference. And that one shift is, one is an investor, hypothetically. The other is just a saver.

Wes Moss [00:45:16]:
And that was it. And that article, within the first week, had more views and reads than all of my other forbes.com articles combined. So it made me think, well, wait a minute. Maybe we all need to continue to be reminded about just the simple, make it simple fundamentals. Financial planning can get super complicated. Investing can get infinitely complicated. But really, the most powerful ideas are often the ones that we distill down and just make simple. So we said, wait a minute.

Wes Moss [00:45:49]:
Let’s just do a little bit of math. What’s it take to get to a certain goal and then shave off a year? How do we get to the goal a year sooner or five years sooner? So, some of this is just math, but I think it’s good to remind ourselves around this very math. Now we’re going to use as a rate of return. We’ve got to make some assumptions. I didn’t want to use 5%. I thought it was too low. 10% maybe, even though that’s the market rate of return over time. Or a little more than that.

Wes Moss [00:46:15]:
The market’s a little more than that. Over S and P 500, we settled on 8%. It’s not unaggressive. It’s not super aggressive. We’re going to use 8% rate of return. Then we have to have a checkpoint. So you’ve got to have a financial checkpoint, too, since we know, on average, eight drops have $1.2 million saved. Liquid retirement assets.

Wes Moss [00:46:35]:
Let’s start there. Now, let’s assume right out of the gate that you already have $250,000 saved. Because where money matters, or you’re interested in investing? You already have $250,000, and you need then to. We’re looking to get to the one and a quarter million. It means you need a million more. And let’s say your baseline is 25 years to get there, meaning you’re 40 today. You want to get there by the time you’re 65. Or, again, if you’re 30, take your age plus 25.

Wes Moss [00:47:04]:
That’s the math we’re doing here. So if you’re 30, you’d be looking to hit this goal at age 55. That’s your target age. What kind of savings would that take to get to the million and a quarter? And then we’ll do it and we’ll say, how do we accelerate that a little bit? So, example one, Conor. Conor Miller, a frequent guest on the show. Let’s say he’s 40. He wants to get to a million and a quarter. He has 250 now, already started.

Wes Moss [00:47:28]:
How much does he need to save to get to a million and a quarter in 25 years? Here’s the answer. Remember, 8% rate of return. Spoiler alert, Jeff Lloyd. He doesn’t need to save anything more. Here’s breakdown of the calculations. The 250% to 8% rate of return over 25 years gets him to 1.7 million. So he’s already beyond that. And that’s because he had that nucleus started of 250.

Wes Moss [00:48:00]:
Now, let’s go back to the real math. Let’s assume we are starting from scratch. We’re starting from zero. So, Conor’s 40. He wants to get to one and a quarter by age 65. Starts with 00:25 years. 8% rate of return. What’s he need to save? About 17 grand a year, which translates to about 1400 bucks a month.

Wes Moss [00:48:23]:
1425. But if he’s consistently saving every month, getting an 8% rate of return over time, on average, he gets to one and a quarter million by age 65. So time really is on our side. $17,000, hopefully is doable. Not to everybody, but doable. And, in fact, well under the 401k max amount in any given year now, mathematically, what if we wanted to do this one year sooner? What does Conor have to do to accelerate that and shave off not 25 years, but 24? Same goal. One and a quarter million. Same rate of return.

Wes Moss [00:49:02]:
8%. How much does he need to save per year? Well, it’s about 19 grand a year, or 1560 a month. How much more is that? It’s $135 more per month. That’s it. So $135 a month essentially buys you a full extra year of economic freedom when the math came back on this. It reminded me of the great Latte debate. Jeff Lloyd. What is it? I don’t know.

Wes Moss [00:49:32]:
What’s the last time you’ve been to Starbucks? Do you ever go?

Jeff Lloyd [00:49:35]:
I don’t really ever go anymore. After I heard the latte story, it’s like I need to make coffee at.

Wes Moss [00:49:41]:
Scare you off of lattes.

Jeff Lloyd [00:49:42]:
It just put, put it into perspective about how much money you spend and what you could have if you didn’t spend it on lattes each day.

Wes Moss [00:49:51]:
I asked producer Mallory about this, and it’s always been my thought that you’re not going to d latte your way to retirement. However, this is interesting. So an extra 135 a month. Now, I asked producer Mallory because she still goes to Starbucks. She said it’s very easy to spend six or $7 for XYZ drink. And the other thing you forget, you always got to leave a tip. It’s got to be at least a buck. So now we’re at $8.

Wes Moss [00:50:18]:
So we’re 135 extra we’re trying to squeeze out every month to put into retirement. Divided by an dollar eight latte. It’s only 16. It’s really not a latte a day. Maybe this is because of inflation. It is a latte every other day. You’re given up for that extra $135. So $135.

Wes Moss [00:50:39]:
Jeff Lloyd on top of that 17 or so thousand per year, $135 extra a month buys Connor, in this example, an entire year sooner of economic freedom. Five years sooner gets a little, it gets a little tougher, say, same math here. The goal for Conor trying to get to one and a quarter million, 8% rate of return he’d need to save about $27,000 per year translates to about $2,300 a month. And now he hits that in only 20 years. So if you’re out there listening and you’re 40, and even if you’ve started with, you have nothing saved at this point, you get to a million and a quarter with an 8% rate of return. Again, obviously, that’s not guaranteed. It’s a hypothetical number. It’s achievable in 20 years by saving about $2,300 a month.

Wes Moss [00:51:34]:
Again, these are not small numbers. And we know that most of America doesn’t have a whole lot of retirement savings because it’s hard, it’s expensive to live in America. It’s hard to have the discipline or just, quite frankly, the means to be able to save that kind of money. But that’s the math. That’s the math behind this. So 25 years versus doing it in 20. It’s an extra $850 a month. So 850 a month, that’s a lot of lattes.

Wes Moss [00:51:59]:
That’s a big number. That buys Conor, in all of our examples here, five extra years of economic freedom. I don’t know. So put that in perspective. $850 a month extra on top. Maybe it’s already tough to save it. Maybe you could do that a little bit extra. But what’s the reward getting to your destination, if that’s your goal, and it’s our hypothetical goal here.

Wes Moss [00:52:26]:
And is it worth an extra five years? It may be, yeah.

Jeff Lloyd [00:52:31]:
The example you gave the one year sooner, that seems like you can make a few adjustments to make it a little simpler to retire one year sooner. Five years takes a little bit more sacrifice, but a little bit more. But once you break it down, it seems somewhat attainable.

Wes Moss [00:52:48]:
Attainable. And that’s why it’s good just to understand these numbers. So the lesson is that the uphill climb can only be lessened by increasing the amount of time you have to retire sooner. So I’d say there’s not much magic here, but I think maybe there is some magic when you understand what those numbers need to be. If you make the process a little more clear, a little simpler. It’s called the magic. Jeff Lloyd of time. And if you give yourself enough of it, you can do almost anything.

Wes Moss [00:53:19]:
Thanks for being here in the studio. Where can we find you and the entire money matters team?

Jeff Lloyd [00:53:25]:
You can find us the money matters team and the retire center team@yourwealth.com. y o U. Rwealth.com and that’s a new and improved website.

Wes Moss [00:53:35]:
It just was updated.

Jeff Lloyd [00:53:36]:
We just got a refresh over the last couple of weeks.

Wes Moss [00:53:38]:
Much easier to use, easier to find resources, right@yourwealth.com? have a wonderful rest of your day.

Mallory Boggs [00:53:50]:
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 advisor 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. This information is not intended to and should not form a primary basis for any investment decision that you may make.

Mallory Boggs [00:54:43]:
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.