#295 – Retirement Planning in Volatile Markets: Inflation, Oil Prices, AI, and Portfolio Strategy

Christa DiBiase [00:00:20]:
So much happening in the world.

Wes Moss [00:00:22]:
War.

Christa DiBiase [00:00:23]:
Lots of, lots of stuff to get to. But how is that going to affect us? And so I think a lot of people are very worried right now. So really, I’m looking forward to getting your take on that. And then later on, after, of course, you’re going to take questions from all of our listeners, we are going to talk about AI and not in the way that it’s normally talked about because all the talk is about AI and job loss, of course, innovation, but job loss on most financial shows. But you have a different angle for us.

Wes Moss [00:00:50]:
And it’s been wreaking havoc on different sectors in the stock market. Software is an example. Down 20, 30, 40% because the worry that AI is just gonna take and replace what these software companies are doing. So there’s been a lot of disruption with artificial intelligence and how it’s changing the job market. And there are new studies, brand new that I’ve just found because I think it’s been, it’s so new that it’s kind of the first time studies are coming out about how much we’re using AI and what it’s actually now doing to the labor force. And it is, it’s almost the opposite of what you might think. It’s almost crushing us from a workload, which is totally the opposite of what it was supposed to be doing.

Christa DiBiase [00:01:36]:
For sure. All right. But before that, we’re going to talk about what’s happening in the world.

Wes Moss [00:01:40]:
Let’s talk about the geopolitical events of the day. And this has now been, we’re in kind of week 2 approximately. We have seen the IEA just came out recently and said that We’re in the middle of the largest oil disruption, supply disruption that they’ve ever seen. And that’s a global issue. And remember that even though we have plenty of oil in the United States, we have— we produce more oil here than we even consume. So we’re actually a net exporter. The price of oil is determined globally. So if there’s a supply disruption halfway around the world, which is exactly what’s happening, it reverberates right back here to the United States.

Wes Moss [00:02:23]:
And it’s really difficult, even with the release of the Strategic Petroleum Reserves, which we’ve heard about also, there’s only so much that can do to help curtail prices of oil. If we go back to, let’s say, the end of last year, Krista, oil prices, and this is by the barrel, were in the mid-50s, and that translated to prices at the pump in the $2 range, $2.80, $2.90. So we had some real relief at when we’re filling up our cars. I know that Clark doesn’t do that because he drives a Tesla. But for those who still use petrol or gasoline, it was relatively inexpensive last year. And now the minute you see oil prices go up, the minute you see gas prices go up, and for every $10 per barrel, it’s about $0.25 per gallon at the pump. And we have seen oil now go in the $100 range. So in any given day, depending on when you’re listening to this, the swings in oil have been so dramatic, again, somewhat unprecedented to see prices move this much, where we can see $120 per barrel oil in the morning and then $85 a barrel oil in the afternoon.

Wes Moss [00:03:39]:
So depending on the hour you’re listening, we could be at $130 in oil, we could be at $85. It really just depends on the news headline of the minute and the hour. What I do know is that the situation that we’re in with the war, the US at war in Iran engulfing the entire Middle East, which impacts the critical oil choke point in the world, which is the Strait of Hormuz, where 20 to 25% of the entire world’s oil is moved through. When that is shut, that means that a quarter of the world’s oil is not moving. That’s a very, very big deal. What also doesn’t get talked a lot about are all these other, let’s call them chemicals and fertilizers and other distillates that come through that strait. So it’s not just oil, it’s a supply chain that involves even more than that. So it’s very disruptive.

Wes Moss [00:04:33]:
And that means that even if there’s, let’s say, movement and healing and traffic starting back up again, it’s going to take a while for the oil market to kind of find its footing. So we’re going to be in these reverberations of higher oil prices for potentially quite some time, even if there is a solution. So the question is, what does that do to the stock market? The minute you see oil go up, you typically see the stock market go down. It may be good for oil companies on that given day. You’ll see red all on the screen with almost every sector, but you might see oil companies up a little bit when prices are up. But for the vast majority, because oil is such a big input in our lives, 95% of products that are manufactured have some level of oil in them or derivative in them. So it’s inflationary as well. We’ve been looking at inflation.

Wes Moss [00:05:23]:
Inflation is an issue that the Fed has continued to try to deal with. So an oil shock impacts the economy and it impacts the stock market and impacts your 401(k). And the question is, what happens when we go through these shocks? The Federal Reserve keeps a list of geopolitical events. They are typically war-related. Almost all of these are war-oriented or standoff-oriented. And we go back to history to say, how does the market do? What happens to stocks when we get a war-like or geopolitical shock? And we can go back to the— because the Dow Jones was around in the early 1900s, we can go back and look at the Dow Jones and how stocks did all the way back to the first geopolitical event, which is the Russia-Japan War, which was well before World War I, and then World War I, and then World War I escalation. And then Germany invades the Eastern Bloc and then World War II and Pearl Harbor, etc. And we go all through— there’s about 25, let’s call it 2 dozen geopolitical events that we can measure.

Wes Moss [00:06:34]:
Falklands War, Iraq invades Kuwait, and then the Gulf War, and then the Bosnian War, etc. So the day that this happens, it’s usually not good for stocks, as you can imagine. And we just saw that the beginning of the disruption here. We saw the market down a couple percentage points and we’ve had some 1,000-point swing days in the Dow as well. But the real key here is to, as we all know, investors are typically successful investors are participants as opposed to those who are perfectly timing the world. And participation is the key and longevity is the key. And we want to go out and look, well, okay, even though we have this shock, typically the day of or the week of even, what happens to markets 3 months later and 6 months and 12 months and even 36 months later? And the news there is pretty good. Even in situations like the Gulf War, as an example, there’s really kind of two different, this is late 1990 and early 1991 where first it was Iraq invades Kuwait and then it was really the Gulf War.

Wes Moss [00:07:42]:
We saw oil prices double then. Oil then was $20 a barrel, doubled to over $40 a barrel. Stock market down 18%. So really big correction in stocks. But what happens on average over time, markets recover pretty significantly and they get back to more like their normal long-term averages. 3 months after these shocks, on average, markets are up a little over 2%. And 6 months later, markets are up about 5%. And a year later after these shocks, on average, markets are up 11.3%, which sounds a lot like the normal long-term averages during those periods of time anyway, even without the shocks.

Wes Moss [00:08:28]:
So the shocks are scary and they do impact the world. In many cases, it’s because oil prices are going to go up, makes everything more expensive. We’re worried about inflation. We don’t know when things are going to end and when the reverberations will stop. But ultimately, history has shown us over and over and over again, really once every 3 to 5 years, we have one of these shocks. The market has found its footing and recovered. And I think it’s always important during periods of time of this extra volatility that we remember that. So that’s the takeaway here today is we, even though we’re in the middle of a shock that may reverberate for a while, we need to be patient and know that markets eventually find their footing.

Christa DiBiase [00:09:09]:
I’m guessing too that the volatility is even worse now because we have, first of all, it’s so much easier to buy and sell your own stocks than it used to be. And then you’ve got social media and people feeding into the frenzy when something happens in the world. So I’m guessing it’s just easier access for people to try to time the market and try to make these moves when slow and steady is usually best, wouldn’t you say?

Wes Moss [00:09:32]:
It depends on how you look at it. To some extent, we get bad news quicker and there’s more reaction. And then we get good news quicker too. True. And that’s why the whipsawness is perhaps even greater today than it was. The levels we end up hitting both on the low side and the high side tend to be even quicker recoveries. At least that’s felt that way over the last 5 to 10 years.

Christa DiBiase [00:09:57]:
The whipsawness.

Wes Moss [00:09:58]:
The whipsaw.

Christa DiBiase [00:09:59]:
I like that. All right. You ready for some questions?

Wes Moss [00:10:00]:
Yes, let’s do it!

Christa DiBiase [00:10:01]:
This one came in from Doug in California. “You’ve recommended to keep some powder dry for opportunities when the stock market is crashing. This is not for everyone, but if an investor has followed all of your other recommendations, this may be a good financial step. Is there a mathematical formula for investing in a falling stock market? As an example, if the stock market falls 20% from its high and then I invest, say, 25% of the funds allocated for this investment, 30% down, save 40% of the investment. What do you think?

Wes Moss [00:10:32]:
Doug, it is really, I think this question is about rebalancing. Because if you think about this, Doug, anytime there is a big shock in your portfolio, let’s say the stock side goes down, or maybe it’s the international piece or the U.S. piece is down disproportionately to the rest or how you originally set things up or how your kind of target goal of where you feel comfortable. Well, if there is a big movement in equities and you look at your portfolio and your allocation is way off, then rebalancing in itself, it’s not necessarily saying because the market’s down a certain amount, it’s saying that my, now my allocation is off, then it is totally normal. In fact, rebalancing is a way to automatically have yourself do this. Then when your piece of the pie, which was supposed to be 70% in stocks, let’s say as an example, and now it’s 63%, is it prudent to add and go back to 70? The answer is yes. In fact, that’s exactly what rebalancing is. I don’t believe that in a garden variety down 5% or even 10%, and these are moves that happen quickly and all the time, I think you still stick to your allocation, but be open to rebalancing.

Wes Moss [00:11:50]:
That’s the whole— that is really the kind of what’s behind rebalancing over time. When markets do get down 20%, though, it is time for you to really pay attention to adding back to the very area that is down that much. And we’re talking about something down that much, we’re almost always talking about stocks. So that’s when I would say you can get even more interested in being more proactive. Around adding to the area that’s down, buying low in this case. But I wouldn’t be rebalancing. And I don’t have a rule of thumb is just because the market’s down 3% or 6% or 8% that you automatically— it’s time to go back into stocks. I think you keep your long-term allocation that you’re comfortable with.

Wes Moss [00:12:32]:
If it gets way off, you rebalance back to it.

Christa DiBiase [00:12:35]:
All right. Bert in Georgia sent this one in. Wes, do you think much of the continued growth of the S&P 500 is due to automatic 401(k) payroll investing from employees and employers. What could disrupt this momentum?

Wes Moss [00:12:49]:
I was— I’d say it’s the fault of one of my, my author good buddies named David Bach. Oh, yeah. He’s actually coming out with a new version, the 2026 version of a book called The Automatic Millionaire. And that Automatic Millionaire was so good at making sure people said, look, Just put this thing on auto, auto save. And the easiest place to do that is in a 401(k).

Christa DiBiase [00:13:18]:
So you’re going to hold him solely responsible. That’s good. I think he’d appreciate that a lot.

Wes Moss [00:13:22]:
It’s a good thing. I think he contributed to that.

Christa DiBiase [00:13:25]:
I do too. I think Clark did too.

Wes Moss [00:13:26]:
And I think Clark did too. I think we all did in the financial community because it just made, it’s one of the few, you just cannot dispute that automatic savings is a wonderful thing relative to trying to Remind yourself to always be saving.

Christa DiBiase [00:13:39]:
Yeah. Do it first and you never see the money. That’s been important. That’s worked for me for sure.

Wes Moss [00:13:44]:
So Bert, there are 70 million people in America that are participating in 401(k) plans. 70 million people put money in, most of that automatic. The way I’ve looked at the math on this, because I’ve thought about this same question too, and Here are the rough numbers. About $500 billion of 401(k) contributions are going in every year. Okay. And then you think about, and by the way, there’s about $10 trillion in 401(k) assets. So that’s what, 5% every year? Now that’s just 401(k) assets. There’s another $20, $30 trillion of liquid assets in the United States, which is hard to even get an accurate picture on.

Wes Moss [00:14:34]:
But we’re contributing as Americans about half, $500 billion in 401(k) and another $1.5 trillion in other investing. In, let’s say, outside of retirement accounts. So we’re putting in about $2 trillion. That’s how much we’re saving. Thank you, Clark. Thank you, David Bach. And we’re—

Christa DiBiase [00:14:57]:
thank you, Wes.

Wes Moss [00:14:58]:
We’re pulling out about $1 trillion. So the way I see that is that we still have this tailwind of more money going in than is coming out. And it’s a supply-demand market. So more people buying and less people selling would tend to help to push the market higher over time, over time. And that is such a massive weight. It’s such a big pool of people, 70 million, plus all these other people, another 20, 30, 40 million people that are saving in other capacities. I think that it’s really hard to disrupt. And, but it also doesn’t mean that we’re not going to have oil shocks like we’re in the middle of today, other economic shocks, higher interest rates, demographics are slowly changing and people are slowly, in mass getting a little older.

Wes Moss [00:15:55]:
So there’s an argument that more money is going to be pulled out because less people are saving. That argument’s been being made for 10 or 15 years now, and I haven’t seen that really happen all that much either. So there’s two ways to look at this. The net inflow to the US stock market— and by the way, not everybody’s putting every dollar into stocks either. That’s the other thought here. But the net inflow in itself doesn’t is not responsible for the market going up. It is perhaps a small piece of the equation and the tailwind that has seen a rising market over time. And it’s such a massive footprint that I don’t see a disruption in that particular piece of the equation anytime soon.

Christa DiBiase [00:16:38]:
I hope not, because I love that people are automatically saving like that. That is what you always talk about.

Wes Moss [00:16:44]:
And it’s on autosave. I mean, It takes a lot of effort. Think about how much effort it takes to stop doing that.

Christa DiBiase [00:16:50]:
Oh yeah.

Wes Moss [00:16:50]:
How many people right now can just go log into your 401(k) account? I know that I’d have to probably go remember my password and go log in. And then, because I actually just did this the other day, I remember then having to go and figure out the contribution and then trying to figure out which area that I can go and change the contribution or see the contribution. It takes a little bit of time. Anytime there’s some friction in what we do, it tends to not get done. And the good news is there’s a lot of inertia of people saving.

Christa DiBiase [00:17:25]:
That’s great. Nick in Michigan says, I have a 401(k), Roth IRA, a brokerage account, and a high-yield savings account. For my personal investments in my brokerage account, why would I choose to diversify with a bond ETF? I currently hold BND as a percentage and not just put it into my high-yield savings account. “The return rate on BND doesn’t seem swell, and my HYS—” Is that the second swell of the day? That was the first one. Oh. I mentioned it earlier. I was reading through the questions and I was like, someone used swell. I like it.

Christa DiBiase [00:17:55]:
I use swell. “My high-yield savings account has a guaranteed return rate of around 3.5%. I understand the tax implications of now versus later, but is that the only reason? To avoid present-day taxes, the security of a high-yield savings account for the safe portion of my investment seems smarter.” “Put simply, if I want an 80/20 brokerage, can my high-yield savings account count toward that 20 that would normally be in a bond ETF?” Nick in Michigan.

Wes Moss [00:18:23]:
Did he say where? Where is— did he just Michigan?

Christa DiBiase [00:18:25]:
Just Michigan.

Wes Moss [00:18:27]:
I’m a giant fan of Michigan. It’s one of my favorite places. I remember Clark freaking out when I said it’s a magical place. He goes, “Magical? What? So cold.” It’s very much about locking in an interest rate, Nick. It’s, it, first of all, on the surface, what you’re saying totally makes sense. And it’s not the worst thing in the world if you’re not doing bonds. I get, I get it. But imagine this, bonds are paying you 4% and your high yield savings account’s paying you 4%.

Wes Moss [00:19:00]:
And you say, okay, why not just do the HSA? Well, let’s say that next year, the Fed has lowered rates and now HSA is paying 2%. Now you’re getting 2%. Your bonds are still getting 4%. It’s about locking in an interest rate is reason number one why I still like diversifying with bonds/fixed income, because you’re locking in longer periods of time with rates. And number one. Number two, the diversification that comes. Remember, if rates go down, not only are you getting a locked-in rate, but you’re also usually getting some appreciation. The seesaw effect of rates going down, prices going up.

Wes Moss [00:19:37]:
So there’s some— the zig versus the zag of equity markets with fixed income to me is another variable why I like using bonds and not just high-yield savings accounts.

Christa DiBiase [00:19:51]:
Well, coming up next, we’re going to talk about AI, but a different angle than you’ve probably heard before. Is it making us work harder? We’ll see.

Wes Moss [00:20:01]:
Our team’s 2025 study of retirees found that happy retirees are 2 times more likely versus unhappy retirees to simply have a written retirement plan. Just think, you may be able to double your likelihood of happiness by simply taking an hour to sit down and put pen to paper. If you’d like a financial advisor to help you tackle the trickier questions that need answers, Reach out to our team at yourwealth.com. That’s yourwealth.com. There’s plenty to worry about in the world, isn’t there? Yes, I would say so. Oil prices going bananas has been the worry of the day, but the worry of the year has not gone away at all. In fact, it’s not going away really in our lifetime. And that is about artificial intelligence and what that does to the workforce, what it does to the economy, what ultimately how this impacts you as an investor and your 401(k) is how I think about it.

Wes Moss [00:21:04]:
But also because I’m still in the workforce, I’ve got young kids, I want them to be able to have a job when they grow up. I have a company, I’ve got, I’m in the middle of work life, like a lot of you listening, and I, think about, especially over the last couple of years, what is this going to do to this technological revolution? What is it going to do to our jobs and then our kids’ jobs? So I think that you have to have your head in the sand if you’re not thinking about this.

Christa DiBiase [00:21:35]:
And my son, I mentioned earlier, my 20-year-old son’s in here. He was a software engineering major and he switched to business because of all this.

Wes Moss [00:21:43]:
So here’s my take on what’s happening. And this is a brand new study that just came out and it was, it was published. It was talked about in the Wall Street Journal, but it was also, it’s been in a lot of other, it’s, we went and actually looked at the actual study from, it’s ActiveTrack Productivity Lab is the company that did this new study. First of all, here, here’s the, the short way I would like to set this up. AI isn’t killing jobs. It’s burning us out with more work, a lot more work. That’s what’s really happening. You’ve seen CEOs say 50% of all white-collar jobs will be gone in 5 years.

Wes Moss [00:22:25]:
And we’re a couple years into AI now. And I was looking around at a meeting just this past week and I was saying to our team, wait a minute, I think we need to hire some people. We have to hire more people. Because there’s so much more to do. If you think about, this is the one way I look at the world that we live in. And think about your job right now and think about, you get to the end of the day, you come home. Do you feel like there was still more to do? Oh yeah. Oh yeah is the answer.

Wes Moss [00:22:59]:
And I think that we are going to, in any given day, or let’s say tomorrow, I’m going to look back and I’m going to say, Oh, there was more work to be done. And that one phrase is, I think, the answer to what is going to happen with the technological revolution. And this study to me is very, very strong evidence that that’s going to be the case. I think at the end of the year, we’re going to look back and say, wow, I didn’t realize there was so much to be done. And there was so much more we could do.

Christa DiBiase [00:23:35]:
Is this mainly with white-collar jobs, would you say?

Wes Moss [00:23:37]:
It’s with every job in every company in every industry. So here’s what happened. ActiveTrack looked at— it was a giant sample set. They analyzed 443 million hours digital activity from 164,000 workers, over 1,100 employers. And there’s another study from, from Berkeley, the Haas study. It’s in the Harvard Business Review that shows when AI shows up, the workday doesn’t shrink. It swells, it grows, it expands. So here are some of these more work stats.

Wes Moss [00:24:15]:
So they looked at companies 180 days prior to them implementing AI tools for their employees and then 180 days after. They implemented AI tools. After the AI adoption, what happened? Time spent in email jumped 104%. Messaging time back and forth with your team up 145%. The use of business management tools up 94%. Krista, weekend work. This is weekend hours. Okay.

Wes Moss [00:24:48]:
On Saturdays, up 46%. Up Sundays 58%. Well, we don’t like that. Wait, wait, wait, wait, wait, wait. I thought we were supposed to be doing less, right? Isn’t AI going to just do our job for us and we can go home at noon? The answer is it’s the opposite of that. I’m confused by that. It’s because there’s always more work that you never thought you could do to be done. The way I think—

Christa DiBiase [00:25:14]:
instead of spending your time taking notes in a meeting, AI is taking them for you and you can then work on something else.

Wes Moss [00:25:20]:
Then you immediately go work. On those notes as opposed to assimilate those notes. Got it. Everything in the world, almost any problem that you can think of today that was not the case last year or the year before is now figureoutable. So there’s, there’s anything you can think about that, oh, maybe I should do this. How many times do you think, oh gosh, I could have done that, should have done that, would like to have done that. I don’t know if I know really how to do it. Now everything is figureoutable and it creates more work because there’s nothing we can’t do.

Wes Moss [00:25:53]:
And companies are not ever going to say, well, we got the same amount of work done in 6 months as we did last year. Everyone just go take the next 6 months off. No, no, no, no. We’re going to keep going because we’re going to double the amount that we did from the year prior. And that’s the reality of the world now that we’re living in. I think these several studies really show that collaboration up 34%, multitasking up 12%. So now the bad news, everyone, is that it is leading to burnout. It’s leading to a very scientific term called brain fry, which I don’t really know what that means, but it’s probably some— the cousin to burnout because people are maxing out what they’re doing.

Wes Moss [00:26:39]:
They’re working more, they’re working more hours. So I think that the real risk as we move forward in this technological new corporate and small business world is that The real risk isn’t no work. The real risk is being able to balance almost too much work. And here, here, I’ll leave you with one last number. Think about the technology teams. There’s, there’s a couple, there’s a couple hundred, let’s call it 1,000 or 2,000 really, really big companies. The vast majority of businesses in America, 38 million of them, are small businesses. 28 million of those businesses are solopreneurs.

Wes Moss [00:27:19]:
Another 6.5 million are 1+, 1, 2, 3 people. If you think about big, let’s say, technology teams being able to shrink from 1,000 people down to 500, that’s, you know, that’s several, could be several hundred thousand jobs that are, that go away. But going back to the conversation I was having with our team the other day, like, oh, I think we actually need to hire a couple of people. So does every single other business in America and every single sector if they don’t want to be left behind. So I think that we may lose 500,000 jobs due to tech efficiency and we— and then we’re going to have 5 million open jobs for all the small businesses in America. So that is my take. I’ve been thinking this way now for a while. The— this ActiveTrack and the Harvard Business Review study Give me more evidence that that’s really what’s happening.

Christa DiBiase [00:28:14]:
All right. You ready for some questions? Spencer in Illinois wants to retire early. He says, hi Wes, I know you’re a big proponent of having dry powder as you approach retirement. I’m curious to hear your commentary on dry powder and risk in an aggressive early retirement strategy. I’m currently 33 with just shy of $1.1 million in total invested assets. Go Spencer. I know. A mix of tax-deferred, post-tax, and brokerage.

Christa DiBiase [00:28:41]:
My dry powder is essentially zero. My target retirement spending is around $75,000 a year. I’m looking for around $2 million in total assets. I project I will hit that number by 40 with my savings rate of $81,000 a year and a 100% stock portfolio. How do you balance diversifying the portfolio and dry powder when growth is needed? And I will add, I’m completely flexible on my retire early date and earning additional dollars part-time. I realize my investing age is young, but my total asset number is approaching.

Wes Moss [00:29:13]:
Spencer, I think you’re going to like the Retire Sooner Method. Mm-hmm. Your new book? That’s coming out not in a couple of months because you are— listen, it’s not that I don’t like the FIRE movement. I think it’s a great aspirational— it’s a good idea. But Retire Sooner method is kind of what you’re, you’re looking to do right now, which is a realistic version of FIRE. It’s a realistic version of FIRE. And you need to have pretty significant assets to be able to do it. And the key of what you just said there in your email, Spencer, is that you’re super flexible around your date.

Wes Moss [00:29:49]:
Yes. That’s a very smart statement by you, Spencer. You said I’m a big proponent of dry powder. I’m a bigger proponent of Retire Sooner. So I know that there’s some mechanics behind dry powder and we get a lot of questions about it, but I’m a proponent of retire sooner. And we’re going to be talking a lot about the retire sooner method throughout this year. But you’re in that jet stream of retire sooner. You do not need dry powder if you’re 10 years from retirement.

Wes Moss [00:30:21]:
If you’re 20 years out, Spencer, you don’t need any of the dry powder. Where dry powder comes in is when you’re getting within 3 years or sooner of when you’re going to totally stop working, have to rely on your actual investments. Because remember, the 4% plus rule of thumb is predicated on a balanced portfolio. If you go back over the course of history, 100% stock portfolio that you are withdrawing from has a lower probability of lasting than a balanced portfolio taking out higher amounts. So there’s some quantitative piece to this that balance helps you sustain your portfolio and your withdrawal rate. How do you max out what you’re pulling out from the assets without running out? And even though stocks have been the best asset class over time from a rate of returns perspective, there’s some really big drawdowns and drops that can really mess up your plan if you are relying on the portfolio. So you don’t really need dry powder today in your 30s. It’s if you choose your retirement date and it’s in your mid-40s, you’re going to want some sort of dry powder then.

Wes Moss [00:31:30]:
But Spencer, I don’t think you need it today. Okay. This is from John in Illinois.

Christa DiBiase [00:31:36]:
Wes, I’ve been fortunate. I have a Fidelity account that has amassed $4.6 million. Of that, $4.2 million is in a defined benefit plan. And of that, which $425,000 is in a 401(k), and $25,000 of that’s a Roth 401(k). I also have another $30,000 in an HSA. I’m very fortunate that I will be one of the few that still have a pension as well that will provide us $9,500 a month.

Wes Moss [00:32:04]:
John is doing great in Illinois. People are jealous.

Christa DiBiase [00:32:08]:
And I am presently planning to take a 75% survivorship when I retire in about 3 years. I also have $50,000 in a high-yield savings account and I’m 62. I know I have enough to retire today or when required in 3 years, but we’ve decided to pay out approximately $125,000 a year to my 3 children in order for them to purchase their houses over the next 3 years. My son is sitting here, my 20-year-old son, don’t get any ideas. We still have $350,000. I like this idea, Mom. Yeah, we still have $350,000 on our mortgage, which I plan to pay off once I’m not in the 35% tax bracket, and we have a $4,000 monthly house payment. It seems the only way to provide my $125,000 gift to my kids is through a withdrawal from retirement, and that comes with about a 30% FICA tax.

Christa DiBiase [00:32:57]:
Is there a good way to avoid this, or another vehicle to provide this? We definitely want to gift the money to our children now versus later. You can’t take money to the grave.

Wes Moss [00:33:07]:
Can’t take it to the grave, John. And The— as you can see here, I’m taking notes and I’m doing some math for you. The— it’s really— it sounds to me, John, and you’re in a fortunate position to be able to help because it is so— think about the problem that John and his family are facing is it’s really hard to buy a house.

Christa DiBiase [00:33:27]:
Yes, it’s so hard.

Wes Moss [00:33:28]:
You’d be 30 and making a great living and still— first-time homebuyers— still really hard to buy a house. Right. Rates are higher. Home prices are essentially as high as they’ve ever been still. So it’s really hard to be able to come up with a down payment of 10% or 20%. And I get it. And you’re in a position to help.

Christa DiBiase [00:33:46]:
Very generous.

Wes Moss [00:33:47]:
If you’d like to do $125,000 a year and do it for 3 years for 3 kids, my— the way I’m looking at this is it’s basically about $42,000 a year to each child for 3 years. And as you listed out your assets, I was paying attention to the location of those assets. We think about how much we talk about tax planning and where assets are. Are they in retirement accounts? Are they in Roth accounts? Are they after-tax accounts? And you’ve got all this money, $4.6 million. And from what I am hearing, everything except $50,000, Jon, is in an af— is in a retirement account. Yeah, $25,000 in a Roth, that’s not going to help much here. $50,000 in an HSA, or I’m sorry, a high-yield savings account. I don’t think you ever want to— you could potentially use the HSA money, but I’d say no, don’t do that either.

Wes Moss [00:34:46]:
So it really has to come from your retirement accounts. The defined benefit plan is just treated as a retirement plan. So when you pull money out, it’s going to be taxed as ordinary income. He said FICA there. It’s not. He probably just means federal taxes. Right. I think so.

Wes Moss [00:35:05]:
Not FICA, which would be your wage taxes, your Social Security taxes on your wages. So the good news is this. This is how I see this happening. There’s very little way to get around. I’m even thinking maybe you could give them a family loan and let them pay it back.

Christa DiBiase [00:35:22]:
You could forgive each year too and give—

Wes Moss [00:35:24]:
Yeah, but they still have to get the money. Right.

Christa DiBiase [00:35:26]:
They have to get to it first to do the loan.

Wes Moss [00:35:27]:
So he’s still got to get the money. Unless they take loans, but they don’t want to do that. I think they’re trying to avoid that. Right. So John, you still, even if you did a family loan situation, they’ve got to have the capital and it’s got to come from somewhere and it’s got to come from retirement account. So either way you get taxed. So the good news here is that you’re going to be fine in retirement no matter what. You’ve got this $9,500 a month plus another, $4.6 million to produce income for you.

Wes Moss [00:35:56]:
So you’re totally in great shape. I think the issue here is that probably one of the best things you can do is think about spreading this out, one, over time. Maybe it’s not, maybe it’s not just in the next 3 years. Maybe you do it over 5. And I think your main thing to do here, John, is watch your tax bracket buckets. And if you are, if you find yourself with $100,000 worth of room before you get to the next bucket, then it’s probably an okay time to be gifting because you’re still at the same tax rate. But the minute, and it’s a little bit like thinking about a Roth conversion, but the minute you go over into the next bracket and think about there’s the 24 bracket that jumps all the way to the 32. Then you want to avoid having income, which gets created by pulling money out of the retirement accounts.

Wes Moss [00:36:55]:
You want to be careful that you don’t go from 24% all the way to 32% and even higher. So, this is a tax bracket income management situation for you. Sounds like you can totally do it, but I would just be careful about going too high. In those buckets. And the only solution there would be to spread it out maybe a little longer than you’re thinking.

Christa DiBiase [00:37:18]:
And maybe work with a CPA to make sure everything’s right.

Wes Moss [00:37:22]:
Or a financial advisor. I think this is both. I would say you should be working with a CPA or your CPA on this in coordination with a financial advisor on these withdrawals, because the withdrawal adds to your adjusted gross income.

Christa DiBiase [00:37:39]:
Okay. Bill in New York sent this one in. You recently mentioned that a ridiculously low percentage of the population maxes maxes out their 401(k). For me personally, my current company has this true-up plan for the company match in case you max out your 401(k) early in the year. Unfortunately, this process takes about 6 months to get to the original match invested. So I ended 2025 with contributions of just over $23,000. I have friends who would have to forfeit their company match altogether if maxing out early, so they’re doing something similar. I’m curious if the data would change if we were looking at up the percentage of people who contributed $22,000+.

Christa DiBiase [00:38:18]:
Third, I’m a 40-year-old who has become very interested in becoming a CFP. I’ve been in sales since college, various industries, none of them the financial space. But over the last few years, I became a little obsessed with personal finance. I’m curious if you have any advice for an old career changer like myself to get started on the right track. I’m not interested in selling life insurance or annuities, and I’d be able to take a pay cut. but less than $90K per year would be difficult due to the cost of living in my area. If you can’t already tell, I love the show. Keep up the great work.

Wes Moss [00:38:49]:
Bill is a cool dude, and I hope you’re, you’re going to be listening to the answer here. This is a really— nobody’s brought this up in the last year and a half I’ve been doing this. And it’s a very helpful question because You’re running into a situation and it’s, it’s something like 14%. It’s a little less than 15% of Americans max out their 401(k), okay, Bill. And the way most companies match is that they match you every single month. So the match only comes when you put money in and then you get the match. But if you are a big earner and you have a really high percentage savings rate, You may have maxed out your 401(k) plan in 6 months. Okay.

Wes Moss [00:39:39]:
Then you’ve only gotten matched those 6 months. The other 6 months you don’t get it. Now, in your company, Bill, you get what’s called a true-up because some companies will say, well, if you max out early and you don’t get your true match, then we’ll true you up. But it takes another 6 months usually to do that. So you’ve missed out on market growth for like a whole year. Right. So the answer to that is it’s good if you’re, if you’re true up, at least you’re getting the free money match. But in some cases, it may be better to just do this systematically and spread out your 401(k) max contribution depending on your age so that it approximately fills you up by the last month of the year.

Wes Moss [00:40:22]:
How many more people would be maxing out math— because they get hit in these true-up situations. I don’t know. Probably not a lot more. If 14% of Americans max out their 401(k) and they count people that get to $23,579 because they’re, they just missed out on the max, maybe another percent or two. It’s really, it’s a lot of money for people to save. And most people are not able to do that. That’s why only 14 or 15% of people do. So I don’t think the number changes much.

Wes Moss [00:40:52]:
Bill, last question is a simple one. You’re, let’s say you’re 40 and you want to be a CFP. There are very few careers and jobs that are as well suited and welcoming as a mid-career change to being a CFP. It’s a really good industry that you could start at 50 if you wanted. So at 40, I, I’m not going to say you’re a spring chicken, but it’s totally attainable because you could have a 20, 25-year career as a CFP, which is super long. And I wouldn’t— you’re not too late to be thinking about making a career shift at all. And if you get a CFP, you’re going to be able to earn that $90,000 minimum, I think, pretty easily, even as like a brand new person at a firm. Wonderful.

Wes Moss [00:41:41]:
Krista, I love having you here. I love these questions. So thank you as always for being in studio. You can find me, easy to do so, at yourwealth.com. Have a wonderful rest of your day.

Mallory Boggs (Disclaimer) [00:41:56]:
Hey, y’all, this is Mallory with the Retire Sooner team. Please be sure to rate and subscribe to this podcast and share it with a friend. If you have any questions, you can find us at wesmoss.com. That’s W-E-S-M-O-S-S dot com. You can also follow us on Instagram and YouTube. You’ll find us under the handle Retire Sooner Podcast. And now for our show’s disclosure.