Damian Dunn: [00:00:00] See nothing. There it is up in the. Oh, great. We're live. Greatest start to a show ever.
Peter Dunn: Did you listen back and hear Kristen say Shots of Fire? No, I didn't. Dame, hi. Hi,
Damian Dunn: that's a great, great start to our show.
Peter Dunn: Dame, in the course of the week that I just had at one moment I had some time to myself to sit with my thoughts, and I thought of what I believe to be The creepiest first date you could take someone on and I wanted to see if it, it resonates with you proceed.
What if you went on a first date with someone? I mean, nothing like two men who've been married for not each other, but for a couple of decades each. Yeah. What if you took someone on a first date to an escape room and it was just the two of you and the date starts with you getting locked in the room with, with basically a stranger.
And then there's, of course, the people who work [00:01:00] at the escape room are watching you on a closed circuit camera. Is that the creepiest first date ever? Yeah,
Damian Dunn: that, that would have to be up there. The only way it could be creepier is if that, if the escape room journey starts in a bedroom. Oh,
Peter Dunn: that is that you've, you've that you've gone too far.
Yes. Yeah. Sorry. Hey, Dame. Hello, Andy. Hello, big Rick swing. You know, Dame, this is a special episode of the Pete, the planner show, because we are for the very first time. Bringing a dear colleague of ours onto the show is someone we've talked about on the show and we, we promised her to everyone last week.
Her name is Stacey Livingston Hoyt. Let me bring her on stage. Hello, Stacey.
Stacy Livingstone Hoyte: Hi, good
Peter Dunn: morning all. Welcome to the show. Is this the first time you've been on a podcast? Not
Stacy Livingstone Hoyte: my first time on podcast. First time live streaming. Okay. So there is that element. So
Peter Dunn: first time live streaming. How about radio?
Cause which is a, which is a medium that many believe is [00:02:00] unimportant. Has the first time on the radio. First time on the radio. Dame, you know what's disturbing about hearing that this is the first time on Stacey, Stacey's on the radio is Stacey has the perfect broadcasting voice. Yeah.
Damian Dunn: Yeah. I'm not sure how she didn't get identified for some work at some
Peter Dunn: point.
Stacey, do you realize the quality of your voice.
Stacy Livingstone Hoyte: I've heard that and thank you for that. My husband and my kids don't, I don't get that from them. Sure. But thank you for
Peter Dunn: that. Yeah. Yeah. Well, I think that's pretty stay. I thought that was just a man's problem where my, my spouse and children do not recognize the skills that I have, but apparently it transfers to all households in America.
Dame Kristen gallivanting
Damian Dunn: somewhere. I don't even know what she's doing. Well, she's Probably watching the show with her sister right now.
Peter Dunn: Oh, yeah, I guess we'll see. Hi Rochelle. Welcome to the show All right, Dame this week. We've got a couple listener [00:03:00] questions. We're gonna talk about withdrawal rates and why they matter and regular Plamen news Damon you're you're you're you're not here next week or nor are any of us because Thanksgiving week Don't
Damian Dunn: put this juju on me Peter done.
Nobody's here.
Peter Dunn: Yeah, I'm gonna be at Topgolf during the show next week Yeah, my family coming in. So everyone, this is our Thanksgiving episode. This is it. So it will post on Tuesday of next week and it's our Thanksgiving. So favorite Thanksgiving side dish Stacy.
Stacy Livingstone Hoyte: Mine is a whole meal. So mine is very much related to my.
Culture and Heritage. It's a spicy beef stew that you eat with freshly baked bread. And it's really something that you make once a year. It's called Pepper Pot.
Peter Dunn: Pepper Pot. I'm in. I'll be there. That sounds delicious.
Stacy Livingstone Hoyte: It is. It's a
Peter Dunn: delicacy. It is. How long does it take to [00:04:00] make?
Stacy Livingstone Hoyte: Overnight. So, yeah, overnight.
So six hours. If you're just going to be in the kitchen and stir in the pot because there are different processes to get this just right, you've got to get the spices right and the orange peel and, you know, give the meat a nice flavor. Oh, I'm
Peter Dunn: looking at it right now. Guyanese pepper pot or Guyanese?
How would I pronounce that? Guyanese pepper pot.
Stacy Livingstone Hoyte: Yes,
Peter Dunn: yes, yes. Oh. Yeah. This was a mistake because now I'm hungry. That looks ridiculous.
Stacy Livingstone Hoyte: It's amazing. And you have to make freshly baked bread.
Peter Dunn: Yeah, I see people dipping bread into the stew.
Stacy Livingstone Hoyte: Yeah, it's all about the stew because what gives it the flavor is you know, the yucca plant?
Yeah. Yeah, so you squeeze the juices out of the yucca plant, you boil it, it becomes this paste and you add a ton of spices and... Yeah,
Peter Dunn: game. You do realize whatever Thanksgiving dish that you [00:05:00] now mentioned is just going to seem silly. Yeah,
Damian Dunn: there's, there's no good answer for me at this point because it's, it's all very middle American blah at this point, whether it's, you know, corn and mashed potatoes, you know, or baked beans or green beans, it doesn't matter at this point.
How
Peter Dunn: spicy is the pepper pot Stacy?
Stacy Livingstone Hoyte: Very spicy. But of course for my kids, we have to, you know, turn it down a bit special kind of peppers that you use.
Peter Dunn: What do they call it? Do you know?
Stacy Livingstone Hoyte: Weary peppers with a, with a W. Okay. I do love mashed potatoes though. I love mashed potatoes. You can't go wrong with a potato.
Peter Dunn: I have the build and the complexion of mashed potatoes, personally. Yeah, anyway by the way, Brian Pingus joins us on the live stream. Happy birthday this week. A friend of the show saw that. Let's do it. Let's do a show. First segment, Dame. We talked about this.
Damian Dunn: Huh.
Peter Dunn: And you said, should I write this [00:06:00] down?
And I said, no, no, no, no. I got it. And? My confidence is waning. Let me see if I can remember with the fiance one. It was all right. Let's do that. Okay. We're going to start the show now and let's do it in three, two, one. This week on the Pete, the planner show, we answer your money questions. Here's how the show works.
You email us, ask Pete at Pete, the planner. com. That's ask Pete at Pete, the planner. com. And we will answer your questions. And that's actually what we're doing today by we, I mean Damien Dunn is here too. Hello, Dame. Good day, Pete. Happy Thanksgiving week to you, sir. Same to you. I'm thankful for you. I'm thankful for me as well.
And joining us this week, first time appearance on the show, a your money line favorite, Stacy Livingston Hoyt. Hello, Stacy. Good morning. Hi.
Stacy Livingstone Hoyte: Thanks for
Peter Dunn: having me. Our pleasure. You are a financial guide at Your Money Line, which is where Dame and I both also work, and you solve people's financial problems all day long [00:07:00] via email and phone and text and live chat and fax.
And pony express and skywriting, something like that.
Stacy Livingstone Hoyte: Yeah, I love it. I love it. I love getting deep with people and, and just hearing what's top of mind and
Peter Dunn: heart for them. Well, let's do it live on the air. Dear Mr. Planner, Mr. Advice and Miscellaneous, who is on vacation this week, my fiance and I are trying to make a plan to pay off his student loans.
Dame, can I get a timeout? First of the day. Damien. Anytime I get a my fiance and I email, I start rubbing my hands together because I know it's going to get spicy. And in fact, I have not read any further in this email in show prep than then right here. So I don't know where this is going to go, but I'm predicting it's going to get spicy.
Damian Dunn: Listeners take note. If you want to get in front of Pete, just say it's you and your fiance.
Peter Dunn: Also, do you think that the person's like, it just goes fiance, like, you know, like goes over the top with it, which you're
Damian Dunn: feeling, boy, they really could. [00:08:00] I think that's a
Peter Dunn: possibility, but we have different opinions on how best to go about it.
This is the best. Let me first give you some details. Both of us are in our mid twenties. He makes 130, 000. I make 90, 000. He has a student loan balance of 105, 000 with quite a few grad plus loans. I am 100 percent student loan debt free as of earlier this year. Some of his loans are at 7%, others at half or less than that.
We think we'll have about 4, 000 a month. To do what we want beyond our expenses. Once we are married, he really loves the idea of leveraging debt. So the thought of paying off the 7 percent loans, but then making minimum payments on the 3 percent loans is appealing to him since investing can make more money.
That makes me nervous personally, especially since we would like to start a family [00:09:00] in three years. We aren't sure what that would look like. When I stay home with the kids, when I continue to work with that in mind, I'd like to get them paid off before we reach that stage of life, I told him I wanted professional advice, but he wasn't as enthusiastic.
We talked about it and settled on asking you all as a compromise. I love your show. Nelly. Oh boy, the pressure is Stacy. Do you feel pressure right now?
Stacy Livingstone Hoyte: You know, we hear this a
Peter Dunn: lot. Yeah. How do you, how do you break down this situation that they've let's say they've got three years of 4, 000 a month payments.
I'm, I'm saying, let's see, that's 48, 000 a year for three years. They've got what? A hundred in a day. And what's the matter?
Damian Dunn: Just, just over two years.
Peter Dunn: Well, no, I'm saying for you have three years to go, right? So they're going to have three years of 48, 000. We're going to have like 130, [00:10:00] 000, you know, or whatever it is.
Damian Dunn: 144, 000.
Peter Dunn: Thank you. Stacey, how do you break this down?
Stacy Livingstone Hoyte: Yeah, I mean, I, I feel as if this sounds like a math problem, but it's not really a math problem. They're both making, I mean, incredible income. I'm excited that they're at this stage of their relationship and they're putting this out there. I. And from my point of view, I'm concerned that I don't want them to put themselves in a position where they're making the other person wrong.
You know, I'm hearing some low grade anxiety there, some nervousness. And I mean, overall, they can work out the numbers. They're making really good income. But I, I think it's a situation of coming to the middle.
Peter Dunn: Yeah, that's what I'm hearing. I feel that I Dame. I hear Stacy saying it's not about the numbers, but a 7 percent interest rate on a student loan is a bit spicy.
Damian Dunn: Yeah, I think there are exactly two wrong answers. [00:11:00] In this case, that's if one of them gets their way entirely. Oh,
Peter Dunn: gosh. Have you been doing marriage counseling on the side?
Damian Dunn: No, no. This just
Peter Dunn: comes naturally. Yeah, that's interesting. I see that. So you think both of them have to take a beating here in order for this to
Damian Dunn: work?
I don't know if that's the exact phrase I would have used to, to, to describe compromise, but I guess you could,
Peter Dunn: sorry, that was deep seated.
Damian Dunn: Wasn't it?
Peter Dunn: So help me understand Stacey, have you been able to distill based on my excellent reading the two sides of this? So she wants to aggressively pay down the debt.
And he wants to aggressively invest. Is that what I'm...
Stacy Livingstone Hoyte: Yeah. And we don't have any other context as far as what they have saved, what they have invested, but just given the basic numbers they sent in. So this is, this debt, this 105, 000 is 21 percent of their income going to the past. And we don't know the design that they have.
They think they're going to [00:12:00] have about 4, 000 left over. And I'm assuming since they're listeners, maybe that includes adequate savings and that's just left over. No, that's probably a fair assumption. But yeah, she does want to get it done in before they start a family. So that, that anxiety is already there before they, you know, launch life officially.
Peter Dunn: So if, if it's your call, let's say it is completely your call. What's the best financial move. For
Stacy Livingstone Hoyte: them to find middle ground, for them to find middle ground. You can work the numbers, you can give them a marketplace of ideas to work with. But I think, like Dame said, they, they really do have to come to the middle dame.
Damian Dunn: What's the best financial move? I think I think you can hopefully find some middle ground with getting rid of that. The whatever's at 7%. And we, we don't know how much of this loan balance is a 7%, but getting rid of the 7% is I think number one. Priority. And then I think we have some [00:13:00] room for compromise on the other.
Do we make sure if we decide that we're going to let this play out, it has to be on a 10 year payoff plan plan at the last. So we're not trying to stretch this out and try and maximize that has to be done at least 10 years max. I think a potential. Interesting option is to bank a bunch of that 4, 000 a month that they're saving into either a high yield savings account or a non qualified account as they're paying off the lower interest student loans.
And as that time comes to start a family, if they decide that they are going to become a one income household, They can potentially start drawing out of that savings account or that non qualified account helps supplement some of those student loans if they need to so they can kind of keep a foot in both ponds that way.
That way there's some safety and security there knowing that those student loans aren't going to drag them down, but you're also getting ahead of the [00:14:00] game with saving in the meantime, if they can't make the entire budget go on the remaining salary of the one income household. Going forward.
Peter Dunn: Yeah, I think the key is to make sure if they do investing here that it's non qualified investing.
Yes, that's the key to me because the second you lock it up in retirement funds, then you have restrictions. You have a lot less optionality. I think the name of the game of people in your 20s with this much discretionary income, big family plans. It's all about flexibility and optionality. And so I support paying off the 7 percent aggressively and then doing something in the line of what Dame says, although, you know, obviously 5 percent yield is great.
It sounds to me like the fiance is going to want more aggressive investing in that, and that's where the discomfort comes from the emailer is my guess.
Damian Dunn: Yeah, well, like I said, there's going to be some compromise here.
Peter Dunn: Yeah. All right. Hey, we did it. All right. [00:15:00] Show's over. No let's do this. Let's answer another question.
We'll do so after the break. So we, we have, we've officially weighed in on Nelly. Next we're talking about Martin in Miami. Martin from Miami. It reminds me of the dish at Denny's, eggs over my hammy. Have you ever had that?
Damian Dunn: I've never had it, but I've admired the name for years.
Peter Dunn: I will do so as well. Next on the Pete the Planner show, I'm Pete the Planner.
You did it, Stacy. Just like that. One segment down. All right. Goes fast, doesn't it? Well done. That could have got, that could have got a lot worse. I think a fiance questions usually go worse, you know?
Damian Dunn: Yeah. Well, I mean, they're still in their loving, adoring phase, I think at this point. And so they, they still care about each other's feelings.
Stacy Livingstone Hoyte: Yeah. No ultimatums yet.
Peter Dunn: Dave, when you engaged to Mrs. Advice, like, how much did you rely on the, the F word? Would you like, this is [00:16:00] my fiance or do you say, this is Cassie or do you be like, this is my girlfriend? Like, how did you go with this?
Damian Dunn: Oh boy. That's a long time ago. It is a long time ago. I, I think I, I used it pretty, pretty casually, but most of the people, we hung around the same people all the time.
It's not like we were meeting new people frequently at that point. Right. So.
Peter Dunn: Stacey, I can't see you just, just firing fiance out there all the time during your engagement.
Stacy Livingstone Hoyte: Yeah. I just call him by his first
Peter Dunn: name. Yeah. Fair enough. All right. Let's do this next one. Team. How much do you think I need to get into the ticker symbols on this
Damian Dunn: thing?
None. Zero. I thought you might skip it
Peter Dunn: entirely. Okay, good. I don't, I don't want to read tickers on the air. You know what I'm saying?
Damian Dunn: Sam? I mean, I do think it's interesting that every single investment. Is from the 403B
Peter Dunn: company. Well, yeah, is [00:17:00] there any choices outside of that?
Damian Dunn: We don't know, but I, I mean, if, if the expense ratio isn't inclusive of the investments either, I mean, now we're talking serious expense and that we're getting ahead of ourselves.
We're using valuable material.
Peter Dunn: Can I ask a question? Just since I haven't read this, do you think I need to take off all business names out of this thing? Because there's the, there's
Damian Dunn: the one at the top. Yep. Don't mention the investments. Yeah, and Vanguard reference. I think it's fine. It is now. I mean, this is just a podcast Pete on the radio show.
Peter Dunn: This is there. I dude. I've been thinking about this conversation for two weeks. It's so misplaced. Like I'm, there are things I do and you guys know this that make no sense, but it just looks like me paying my mortgage in person, which I did [00:18:00] on Wednesday and everyone mocks me all the time. And I'm okay with that.
This is one of those things. So many more people listen to the podcast than the radio show. Yet I'm still like, this is a radio show. Dummy. Do you listen to the radio, Stacey? Yeah. See, I'm trying to impress people like Stacy. She doesn't listen to our show on the radio. Do you listen to our show on the radio?
No.
Stacy Livingstone Hoyte: It's
Peter Dunn: alright. It's alright.
Damian Dunn: We aren't nobody's picked us up in her her network or her her radius, so no
Peter Dunn: affiliates there. Where I am, yeah. All right, let's do the thing in three, two, one back on the Pete, the planner show, answering your money questions, joining us this week, special guest cohost, Stacey Livingston Hoyt from your money line.
And of course, as always, Damon Dunn holiday. Hello, Pete. Hello, Daisy. Hello dear Pete, I am new to the personal finance sphere. Can I get a time out there? Granted you don't [00:19:00] read the word sphere in emails a lot.
Damian Dunn: No. That was a little bit of surprise, but you handled it wisely until you took a time out to talk about it.
It's a
Peter Dunn: fun word to say sphere. Have at it. That's not bad. And discovered my educator 4 0 3 B with. A company has weighted expense charge of 1. 6215. That's
Damian Dunn: very, very
Peter Dunn: particular. I contribute 1, 240 per month and have an account balance of 200, 000. With a 70 30 stock bond mix of the below funds. And then Stacy, the person went off the list, some funds, which I'm not going to go through, although I will say one's a large cap fund.
One's a small cap fund, a growth fund, a stock index fund and then a high yield bond fund. I'm 53 earn around 170, 000. We'll work for at least six more years and receive a net pension [00:20:00] amount of 94, 500 annually. Good for them. My wife, yeah, my wife will continue to work for five to 10 years and provide a net income of 36, 000 annually.
Wow. Once she retires, she will receive a pension of 12, 000 annually. Wow. We, I want to move in. We spend about a hundred thousand dollars per year, which will go down once the two kids finish college and leave the nest. Fingers crossed. We have two Vanguard Roth RAs with a balance of $37,000, which we max out and recently opened a Vanguard brokerage account with a balance of $6,000 and contribute a thousand dollars per month.
I have so many questions, but I don't wanna burn a time out. My question is, what should I do about the outrageous fee heavy 4 0 3 B, stop contributing and move the 12. 50 per month to the brokerage account, or is there another recommendation? When I retire, I look forward to rolling the 403B into an IRA and working part time earning [00:21:00] 24, 000 annually.
Thank you for your help. Martin from Miami. So many questions. I have so many questions and I'm sure you do too. Stacey, what sticks out to you is like a piece of information that you've just received here or that you wish you had to answer this question.
Stacy Livingstone Hoyte: I want to know if there's a match. Yeah. Yeah. And if there are other options outside of this particular vendor
Peter Dunn: yeah.
D Dame, that's a 1. 6%, pardon me. 1. 6, 2, 1, 5%. There we go. Is redonkulous.
Damian Dunn: Yeah, that's, I mean, yes, that is heavy. It is not as uncommon as we would love for it to be in 403B land because it is often the case that the investment options that, that folks in that, that area are given are fee laden because they typically are offered inside of annuities.
That is changing [00:22:00] somewhat, but they are often very, very expensive. Here's my question.
Peter Dunn: Yeah. Okay. This person, I know this is in Miami, which things are different in Miami, but this person. 170, 000 a year as an educator, I have to think either A, it's higher ed or B, it's a, it's like a superintendent of a school system or something like that.
What, right? Or what am I missing? That
Damian Dunn: would be my guess. Higher ed or superintendent or I mean, it could be a you know, a higher up position in a city county. Position somewhere. Yeah, I'm sitting
Stacy Livingstone Hoyte: on a pretty nice pension. Look at that.
Peter Dunn: Right. I mean, they're going to have 100, 000 of pension and 106, 500 in pension income.
So this is to say, this is a problem that, that what's the guy saying? Martin needs to solve. However, it's not a, it's not a life or death situation. He Martin and his partner have put themselves in a really good spot. How can we lessen the fees? Because in a, [00:23:00] in an equivalent 401k, maybe instead of paying 1.
6. 215, you may be paying like 30 basis points, like 0. 32 or, or, or less, which is a huge difference. So Dame, does he stop contributing to that
Damian Dunn: fund? Like so many answers in life, Pete, it depends. We have to know if there's a match, even if it's expensive, I still think you contribute up to the match to make sure you get the free money.
The best kind of money is free money. And if, if there's someone on the table, get it after that. Man, I would look for potentially something else. So you've got you've got the Roth going on, which you're actively funding. You're got a huge pension go ahead and get the free money. But if you want to start putting into a, the non qualified account I wouldn't have zero issues with that.
The other question that I've got that you didn't ask me about is, is there a social security? Expected [00:24:00] here as well. I don't know with that level of Pension, I don't know if they will get social security out of that. It may be a covered pension so who knows on that point, but if there is that's even more income that makes the savings less Important doesn't mean it's not important at all because we need have some cash sitting around in case of emergency.
You should accomplish other goals or enjoy life a little bit. But yeah, get the free money and then start contributing to the non qualified
Peter Dunn: account. Stacy, how much do you worry that this will affect the tax ramifications, the taxable income of someone if they, if they, because that's, you know, a tax deduction?
Stacy Livingstone Hoyte: Yeah, I mean, I get that. But still, I mean, there could be, you could make that up in other ways, potentially, especially if there's a match. So that's the one bit of detail. And I'm wondering if they, if because they left it off, if if maybe that suggests that there is none and I also, I mean, [00:25:00] they, they, they're new to the sphere of invest in.
And I wonder if they thought past or thought about those tax consequences as well. And if they're seeking professional advice there,
Peter Dunn: yeah, right. Because what they have done is diversify their tax base by contributing to a Roth IRA. And then this four or three BDs does seem traditional in sense. So at least they'll have diversified tax base when they draw retirement income, which is a either they got lucky.
And it was an accident, or that's a rather savvy, savvy move there, Dame, all things being equal. And what we know, I think they should consider probably putting money in a different direction beyond the match, because I mean, they already have Vanguard accounts, and I'm guessing Vanguard accounts, the basis points are probably below 20 basis points, which is what, 800 percent different than what they're paying right now.
Yeah, a
Damian Dunn: lot. They are contributing right now between 8 and 9 percent of their [00:26:00] income towards the 403B. And so if, if there is a match, and that's a big assumption right now, they're greatly outpacing probably what it takes to to hit the full match. And if they back it off, it's probably not gonna be that much of a tax hit at that point.
They're probably taking an extra I don't know. 6, 000 of income. Let's just call it. And so we're not talking about a huge difference in taxes. So I think the benefits far outweigh the, the, the consequences in this case.
Peter Dunn: Yeah, I think the biggest deal here isn't the tax consequences. It's the 200, 000 balance that's subject to that rather large fee.
Damian Dunn: Sure. And maybe there's In service withdrawals that can be had. That it's I don't know if that's going to be the case in the 403b or not. I can't remember if those are even eligible in 403b's and that would certainly be plant specific, but he could certainly ask to see if there are such things as in service withdrawals to maybe get some of that money out and into an IRA while he's still working [00:27:00] there.
Peter Dunn: That's a good one. Six more years, Stacey of subjecting 200, 000 to about one and a half percent fee. I mean, that, that is that's a lot of money. I mean, you're talking about 15, 000 of wasted fees at least over the next six years. I mean, it's just burning 15, 000. Yeah.
Stacy Livingstone Hoyte: And I mean, this, the four or three B industry is, is known for this.
It's. problematic.
Peter Dunn: It is an issue. All right, so let's do this. Let's take a break. I need to calm down. I need to calm down. Go back. What is an acceptable withdrawal rate and why does it matter? That's what we're talking about next. Okay, so we will do that. This is the Pete the Planner show. That's what you're listening to.
And when we come back, it'll still be the Pete the Planner show and I will still be Pete the Planner. All right.
You know, when you discover and quantify, like when you discover a high fee and then you quantify it over time and you say, I'm burning at [00:28:00] least 15, 000. I, this person is trapped burning 15, 000 that stinks
Damian Dunn: for nothing. I mean, there's nothing else. If you were with an advisor that was charging one and a half percent, that's still a lot of money, but hopefully.
They're giving you a guidance and helping you be strategic and helping you monitor your funds. So you're getting something of value out of that point. Right now you just get the privilege of investing in that product. And that's, that's no
Peter Dunn: bueno. So yeah, look, it's a 70 30 stock bond mix over the next six years.
I mean, without making just really silly predictions here. They're going to average 8 to 10 and then net out 6. 4 to 8. 4. Yeesh.
That's brutal. All right. [00:29:00] You know, I will say I was, you get in the world of like variable annuities or something like that. I mean, you're not talking about 1. 6%. You don't want 2.
Damian Dunn: 65 percent because we got the cost of the contract, the M and E and all that. And then you've got the investment charge inside of it now.
Variables have changed their pricing structure a lot and there are some very inexpensive variable news, but they are bare bones annuities. There are no bells and whistles on it. So you have to know exactly what you're buying. When, when an advisor says, or what the old adage, you know, you got to know what you're investing in when you get into annuities, that is probably the most true place of anywhere annuities and insurance, because it can get very convoluted and confusing quickly.
Peter Dunn: I don't feel that insurance and annuities are bad. I just don't. I do feel, and I know, Dame, that's not what you're saying. I do feel you're exactly right. You do have to know, if you have high fees, are those high fees purchasing something that is of value to you? That's where people get in [00:30:00] trouble, is they've got these high fees, like in this situation, and it's, there's no additional value.
So it is burning 15, 000. All right, let's do this. What are we doing? We're doing who's who's who's setting this up. I Can't. Okay. All right. So I will tee it up to you. We'll go from there and we will Vamanos in 321 back on the pizza planner show. Now, I don't know about you, but at some point in time, you're going to stop accumulated money.
And you're going to start burning money. You're gonna start distributing that money to yourself. So you can live, so you can pay your bills. You can, you can buy your cheese. Right, right, Dave. Yeah, sure. Okay. So this concept of how much you're supposed to take out of your investments, it, it, it involves something called a withdrawal rate.
Today we're going to explore, well, like what is a good withdrawal rate? And, and why does that actually matter? And to help us understand this, I [00:31:00] go to my brother. Damien Dunn. Yeah.
Damian Dunn: The last couple of weeks, if you were not in tune with financial Twitter, FinTwit or FinEx or whatever it's called, there's been a bit of a kerfuffle, we'll call it, a bunch of super nerds arguing with a financial personality over what safe withdrawal rates actually are.
There's a longstanding belief that if you, once you retire, if you can keep your withdrawal rate around 4 percent a year. You've got a really good shot at making that money last the entire retirement because Pete, I don't know if you agree with me or not on this, but there's nothing worse than talking to somebody who thought they were okay.
And then they find out. Five, 10 years into retirement that the money is not going to be there and there has to be some changes
Peter Dunn: made some of the least favorite professional conversations I've ever had have revolved around that, that very thing. Now, Stacey, are you, [00:32:00] I am not familiar with what Dame's talking about.
Like this, the fin twit kerfuffle, like Dame, is this what you tried to send me and I refuse to watch it. Huh. Okay. I didn't watch it. So I actually don't know what you're talking about. Stacy, are you, do you know what's happening here?
Stacy Livingstone Hoyte: I didn't watch it either. I read the reply from the from the super nerds about that I didn't actually watch the show and listen to that personality.
Peter Dunn: So I'm, I'm, I'm all ears Dame, cause I have no idea what's happening here. What did that person say was a good withdrawal rate? Do you want to guess? Oh, good one. Okay. So he's, so this person is getting blown up for giving bad
Damian Dunn: advice. 4 percent is the rule of thumb. We know how we feel about rules of thumb.
It can change and has changed with a few other things, but let's just call it 4 percent for argument's sake of a segment.
Peter Dunn: Let's do that. And I want to go one step further personally. And then I look at my own finances. I use three percent. Okay. Okay. I just, that is me. And I'm willing to say that on air. So this [00:33:00] person went higher than 4 percent clearly five would be five would be I've heard it before.
That was like a thing in the nineties, six would be a problem. And so if people are freaking out, the person said 6 percent
Damian Dunn: Stacey, do you want to wager a guess or you already know because you've read something on this? Yeah higher higher pete higher pete the the individual claimed that you could safely withdraw eight percent a year Eight percent and be okay with a
Stacy Livingstone Hoyte: 100 stock allocation in retirement
Peter Dunn: based on What
Damian Dunn: date because because you should expect a 12 return Leave four percent in for inflation and take eight percent out.
You're still making money inside of the account And you're safe to take the money out and spend it as you see fit because it just happens, man.
Stacy Livingstone Hoyte: And 8 percent makes people feel good.
Peter Dunn: Dave, do you [00:34:00] remember do you remember mock retirement? There was the Monte Carlo charts within mock retirement. And I, I, I almost want to fight it.
I believe an 8 percent withdrawal rate leads to an 8 percent chance of having money. Leftover after
Damian Dunn: 30 years. So this is the really interesting part of the conversation There are some variables very important variables in this. How long are you gonna need the money? If financial planning gets really pretty easy if I know exactly how long you're gonna need the money and unfortunately in this case I'm asking when you're gonna die Is what it comes down to so if if you're not going to live very long you could potentially take 8 percent Safely and not worry about it But if you anticipate living to the average which may not be as long as you think it is according to recent numbers You can't take 8 percent it gets crazy.
If you have a hundred percent [00:35:00] allocated out of your portfolio allocated to stocks And you take 8 percent the chances that you make it for 30 years are between 15 and 20%.
Peter Dunn: See, so you give financial guidance for a living. Can you imagine giving this guidance to not only a single person, but to millions of people?
It's heartbreaking. No, it's hard. Here's what's tough about math. Yeah, I, I think, and I, it's not about this person, but that that's, that's all the day. I say so many dumb things on this show and have for 15 years, but I never say anything like professionally dumb. Like that is dumb. Yeah, I
Damian Dunn: mean, we haven't even talked about sequence of return risk, which would absolutely Decimate somebody.
If you lose you know, 10 percent back to back years and are taking 8 percent out on top of it, and that's now we're talking 8 percent too, because [00:36:00] is 8 percent of the original balance. And that's what stays consistent between there's 8 percent of a fluctuating balance because Pete, people don't live off of variable incomes very well in retirement.
They want a specific dollar to make sure that hits their account month in, month out, and if that means it's 4 percent of your portfolio one year and it's 3 percent the next year and maybe 5 percent the year after that, as long as that same dollar amount hits that account, that's what's going to give them.
The confidence that they can live their lives on a day in day out basis. Now, if they know that they're going to have to change their spending by tens, potentially tens of thousands of dollars from year to year, you want to talk about an uncomfortable retirement. There you go. That's a great picture.
Peter Dunn: Is there any chance I get?
I didn't watch the clip and I feel I don't want to watch the club. I'm talking, I'm talking pretty aggressively about something I didn't watch or read. It's okay. Is there, is there a chance that. The person's guidance was misinterpreted. Not at all. What was the application [00:37:00] Stacy? Did, I mean, do you, you read all the follow up?
Did was it, it was like a caller on the show and he just hit him with the numbers.
Stacy Livingstone Hoyte: I don't remember if it was a caller, but it was essentially you're in retirement, have your portfolio in 100 percent stocks and feel better by taking 8 percent because four is four doesn't make people feel good
Damian Dunn: for the reasonable.
Let me give you the context. It was a caller who made it onto this individual show said they had talked to somebody else in the organization who had espoused essentially the 4 percent rule and the host of the show was. Very upset. So that's trash. If that clip is up on the air, we need to get that down because that's garbage.
You can take eight percent.
Peter Dunn: I know this doesn't make for good radio. Like me reacting in real time to this. Maybe it does. I don't know. I'm trying to think psychologically. What is the point of do you think this person believes? Those numbers.
Damian Dunn: Yes. Yeah. That, that, or, well, I'm not going to go any further than [00:38:00] that.
Yeah. I think they do.
Peter Dunn: So Stacey, what rate or what withdrawal rate do you like? I mean, like when you think for, yeah, I used to be at four, but look, I'm at three to three and a half. When I think about my own situation, I think of three to three and a half. Do I think I will earn more? Yeah. But that net is why I want three or three and a half.
You
Damian Dunn: know, yeah, I think it's a I think it's a flexible target. Honestly, if you can make everything work with three, four, maybe even five percent. I think if you've got some some barriers around you, you can make it work. You can have enough wiggle room. To make that money last the period of time that you're going to need it.
And we're not talking about retiring with, or sorry, passing away, moving on to post retirement with, with millions of millions of dollars. That's not the goal here. The goal is to just make sure that you are taken care of going forward. Now, if you've got all other goals outside of that, you know, leaving money to organizations or kids or family, [00:39:00] completely different conversation.
But I think if you were in the three to 5 percent range. You've got a shot at making it work, but if you are hearing somebody else's spouse other numbers be very very cautious
Peter Dunn: I'm just I'm I'm struck here. I'm struggling to understand the Motivation for this like I that's what I know. I guess with Dame you're saying well the person really believes that that's the motivation they're saying what they believe but And again, I'm also not the sort of person that would like, want to get into an argument about that.
That just seems so dangerous. I don't know. Speaking of big waste of money coming up after the break we're everyone's favorite segment, biggest waste of money of the week. Here's the thing about this. Kristen's gone. She's the world's worst guesser. Will Stacy replace her as the world's worst guesser? I don't know.
I'm going to throw her for the loop. That's next on the pizza planet show. I'm Pete the planner. I know people want to like pit personal finance experts against each other and [00:40:00] like, enjoy the thing. I just, Hey, I don't want to engage. And I, I even feel bad not saying the person's name because it feels like we're being subversive.
I just. It's
Damian Dunn: I think we usually take a very reasonable approach to situations like this on the show. And I normally, if it was just some run of the mill you know, statement or, or belief, I would have probably just ignored it. But a percent is dangerous and he, his audience is largely. People who don't don't know otherwise from that.
And so if they hear somebody say that you can take 8 percent of your income out in retirement, that's setting them up for major, major problems. There's also another wrinkle of that, that we can discuss off air about some other stuff that creates bigger problems for his industry as well, but not, not for podcast or radio.
I
Peter Dunn: appreciate that. [00:41:00] Stacey ever, you know, I mean, giving guidance to one person is hard work because you have to understand as many things as you can about a person's life and then have the confidence and the skills to, to then prescribe something. And I'm not even talking about investing. I'm just talking about decision making.
How would you, as someone who doesn't give advice to the masses, you do not give advice to the masses. How do you get your head around, as an individual practitioner, people who have a big platform giving? Guidance. Is that make you nervous to even think about it
Stacy Livingstone Hoyte: does because we're, we follow the headlines.
We follow sensationalism and this person is supposed to be an expert and, you know, you might assume that that person somehow is looking out for you or has your best interest and that can really be problematic. You
Peter Dunn: know me very well. I used to care more about this competition. And by the way, [00:42:00] we compete with this person's workplace product literally every day.
Yep. And we usually win. I don't know. That's a tough one. And I also, I'm like, I'm, I'm not a hot take machine anymore other than paying your mortgage in person. You know, that's about it. That's a, that's about the level of how great everyone needs to pay their mortgage physically in person. That's you heard it right here.
Damian Dunn: Part of me part of me wonders. And this is not meant to be ageist in any way, shape or form.
Peter Dunn: Oh, but trade carefully.
Damian Dunn: But he's, he's getting closer to retirement. Sure. And I, I wonder if he's experiencing some of the, I'm just going to say whatever at this, this point. And I'm going to take stands in a fit.
I mean, if I back out, then I back out because I've got more money than I'll ever know what to do with at this
Peter Dunn: point. I guess my point is, what is the benefit of that? Is it just the freedom to be like, I don't care? Because there's, there can't be an economic benefit to him [00:43:00] to say that. I wouldn't
Damian Dunn: guess. I mean, he's getting a ton of free, free press, but it's pretty much amongst people who already take everything he says with a grain of salt anyway.
Peter Dunn: All right. And we're done. Moving on. Is this person now officially in like the Elon Musk and Taylor Swift category of the show of what we just, in cryptocurrency, it's just like we try not to talk about them.
Damian Dunn: Very possibly after, after this, only if if situations dictate, like I said, I, I normally don't.
This was a unique case that I thought needed mentioning in case there's somebody who listens to that show and this show. I wanted to try and give a balanced perspective.
Peter Dunn: Do you really think someone listens to that show and this show?
Damian Dunn: I, yeah, I do. Do you really? Yeah, I do.
Stacy Livingstone Hoyte: I hear that actually when I talk to people.
Peter Dunn: Did they listen to both shows?
Stacy Livingstone Hoyte: That they, they started with, you know, that [00:44:00] person. And they, you know, they've done the courses and all that. Yeah.
Peter Dunn: Then they found their way here. Yeah.
Damian Dunn: Yeah. There's a comment over on the side that says, I was hoping you, y'all would cover this. Oh, okay.
Peter Dunn: Welcome people from that land.
We we're an empathetic. Tennessee. Tennessee,
Damian Dunn: that land. Welcome from that land.
Peter Dunn: Oh, I'd from that show. We welcome all comers. No shame. All right. Let's, um, oh man, I
Damian Dunn: have, I have been thinking about biggest waste of the money all week since I knew this was going to be Stacy's first pass at I, this is probably the most excited I've been for a biggest waste of money of the week in a long time.
Oh dear.
Peter Dunn: I feel like this one's unfair. But I'm gonna try. I mean, I feel like Kristen gets a lot of unfair ones, so, you know, let's see what we can do. Alright, we're ready to go. I need to do this.[00:45:00]
Oh, Big Rick Swink says... I Have a theory of who this is. I used to be all bought in. Well, there's, there's no theory. We all know who it is. Like if anyone doesn't know what we're talking about at this point Jason says, I think most people who listen to one financial podcast, listen to multiple. I do believe that, Dame, I think that's sort of what you're saying, right?
Like, yeah, that's true. Okay, I want to be done with this. Alright 3, 2, This week's biggest waste of money of the week right here on the Pete the Planner show is... The Urwerk UR230 Eagle Watch. Urwerk, if I'm pronouncing it correctly, introduces a new generation of its UR200 collection. The UR230 Eagle revamps the model with a sleek CTP carbon case fitted with a retractable cover.
When shot... It displays the lower dial, flip it [00:46:00] open and unveil the entire revolving satellite complication in all its glory. Where's can witness the three armed carousel each holding a rotating block with four hours numerals while a skeletonized hand points to the minutes. The sophisticated mechanism is powered by a UR7.
3 movement with a 48 hour reserve and finished with a volcarbonized rubber strap. The URwork UR230 Eagle Watch, Stacy. Is this an attractive watch to you?
Stacy Livingstone Hoyte: I couldn't even figure out what you were describing unless, I mean, other than you saying watch, it's I couldn't, yeah, with, if you had deleted that word, I couldn't tell you what you were talking about.
Very
Peter Dunn: complicated. Dame, is this an attractive watch? No,
Damian Dunn: I, no, not in, not in the traditional sense, not in what I would argue the [00:47:00] contemporary sense. It's, it's just not anything that's attractive
Peter Dunn: to me. Stacey, how much does the Your Work UR 230 Eagle Watch cost? With the flip cover? Yes, with the convertible.
Yeah, retractable
Stacy Livingstone Hoyte: cover. Yeah, retractable cover. 1200.
Peter Dunn: 1200 is certainly a guess. Dame?
Damian Dunn: No, this thing is going to be six figures. I'm going to say at least 100, 000.
Peter Dunn: 200, 000 American dollars. And with that, Stacey is officially the world's worst guesser. Congratulations, Stacey. You are terrible at guessing high end watch prices.
Stacy Livingstone Hoyte: Oh my
Peter Dunn: goodness. Dane, what's the news this week?
Damian Dunn: The gap in life expectancy between men and women is widening and COVID is primarily to blame. Thanks COVID. In 2021, women's life expectancy was 79. 3, while men's was... Peter Dunn, I go to you for the first [00:48:00] guess.
Peter Dunn: 77. 1.
Damian Dunn: Stacey? 78? Those are two guesses. Men's was 73 and a half.
Oh my gosh, that's 79. 3 for women, 73 and a half, the largest gap since 1996 COVID contributed to 40 percent of the difference as men were more likely to work in industries with high rates of exposure like transportation and women were more likely to be vaccinated. But the opioid epidemic was also a major factor.
Overdoses were much more common in men than women and accounted for 30 percent of the life expectancy gap. The reason I bring this up. Because my birthday
Peter Dunn: is in like a week.
Damian Dunn: Maybe. I mean, that might have been some great planning on my part. But we were just talking about, you know, retirement and planning and making sure that you're making good decisions going into retirement, social security decisions, all of that.
There's a huge gap. And it's not like just the old two year. expected [00:49:00] average anymore. That is nearly six years of time. And there's a lot that can happen financially in six years. So
Peter Dunn: make a decision. Stacy, do you see Dame's brilliance here? What he's just given advice to all of our listeners is if you're a single man, take an 8 percent withdrawal rate and you'll be fine.
That's what Dame just said, right? We'll be out of money. Yeah. I think that's. That actually
Damian Dunn: works and social security early as long as you're not working because you're not going to make it long enough for the break point to flip silver. So there's
Peter Dunn: now
Damian Dunn: you're starting to understand how I structure shows Pete.
Peter Dunn: What else is in the news?
Damian Dunn: Every construction worker who worksite now has something in comma with NASA astronauts who lost a tool bag worth. A tool bag of tools.
Peter Dunn: It's gotta be a lot. I mean, [00:50:00] they're probably one of a kind tools that are machined with care. 500, 000
Damian Dunn: bucks. Relative steel at 100 grand during a spacewalk on November 1st.
The white satchel, which can now be seen orbiting the Earth with a telescope or a good pair of binoculars. Pete, I'm gonna need to time out
Peter Dunn: here. Granted. Do you
Damian Dunn: have a pair of binoculars in your house?
Peter Dunn: I have a pair of my grandfather's World War II field glasses that he had on the beach of Iwo Jima at my house.
Do you
Damian Dunn: think you could potentially see a tool bag floating in space with those binoculars? No, you
Peter Dunn: actually can barely see across the street. I don't think they were very helpful back in World
Damian Dunn: War II. I would love to see the pair of binoculars that can see a tool bag floating in space. I'll be genuinely interested in seeing that.
The bag alluded astronauts, Jasmine, something and Laura Laurel O'Hara during a maintenance [00:51:00] spacewalk on the international space station. So don't worry. The tool bag has now been classified as a space trash, I believe, or space junk. At this point, so it will disintegrate and you won't have a wrench fall out of the sky and hit you in the head at terminal velocity.
Peter Dunn: How do you forget a tool bag in space? I guess it's just like like you started the you just forget a tool bag at a work site How do you leave a coffee on top of your car and then drive off with it? Like I can't believe
Damian Dunn: it wasn't attached like tethered to something Yeah, interesting.
Peter Dunn: Anyway Dan, what else in the news?
Damian Dunn: Pete, have you ever wondered how big Amazon carts are?
Peter Dunn: Big Amazon carts
Damian Dunn: are. Like how much can you actually put in an Amazon cart?
Peter Dunn: How many items or how many
Damian Dunn: dollars? You can decide that. Let me just cut to the chase. They're big enough to hold a car, Pete, big enough to hold a car. Hyundai will become the first automaker to sell new cars on the shopping site.
In [00:52:00] 2024, the two companies announced earlier this week, prospective buyers can search the website for available vehicles in their area by model color and features, and then choose payment and financing options. They can then either pick up the vehicle or have the dealership deliver it to their door.
That's right. You can buy your next car on Amazon.
Peter Dunn: I have a question. Why? I don't know if this is good or bad. I, why wouldn't someone just buy a car at Hyundai. com?
Damian Dunn: Well, they don't do that.
Peter Dunn: Oh, so this, like the, the, the real science or the technology here is that they've made it possible to buy a car at Amazon, like that's the
Damian Dunn: story.
Yeah, the story is that you can buy a major manufacturer and amazon are partnering to sell cars on amazon's
Peter Dunn: Yeah, stacy. Do you think this will be wildly popular or no? I don't think so
Stacy Livingstone Hoyte: Buying cars online through amazon now that's different. So people buy cars online all the [00:53:00] time, but through amazon, that's different I'm worried
Peter Dunn: Yeah, that makes me a little bit nervous.
I, especially with credit being how it is right now and interest rates being how this feels like a buyer's remorse is sitting around in your jammies buying cars seems like a bad thing.
Damian Dunn: I feel like it's an extension of Tesla. For sure, Tesla does it all on their own website, but this is just Hyundai leveraging Amazon at this point, and I think there are other deals with other manufacturers soon.
I mean, you could actually have an Amazon auto mall coming to your web, your computer screen in the next year or so.
Peter Dunn: That's an Amazon shareholder. Let's hope that works out day. Many other stories.
Damian Dunn: Your Thanksgiving dinner will probably be cheaper this year. The typical 10 person turkey fest will cost 61 and 17 cents, a four and a half percent decline from last year's record high of 64 and a nickel, but 25 percent higher than 2019 total.
So there you go, Pete. You can, you can splurge a little bit and get a, an extra dessert possibly for your family. [00:54:00] I got to
Peter Dunn: go ingredient shopping tomorrow morning. This year I'm going with like an 18 pound bird. And then I'm going to get a separate turkey breast and make that for some additional protein for the people.
I think once you go above 20 pounds and try to cook a turkey above 20 pounds, just the experience is not great. So I'm going smaller and then I don't know what they're going to do with the legs and the thighs of the bird's breast that I take. But now this sounds very, very barbaric and I regret bringing it
Damian Dunn: up.
Are you doing anything special with the turkey this year?
Peter Dunn: I always spatchcock it, you know that. You gotta spatchcock it. Cuts the cooking time down to about 90 minutes. I'm a big, I bring big spatchcock energy to the kitchen. When do you start prepping? I will tomorrow, right? So Saturday and Brian and all of that dry Brian, I'm a dry Brian man myself.
And it's with that, I bid everyone to do Stacy, thanks for being here. Dame. Thanks as always [00:55:00] everyone else sending you good vibes. Cause good vibes are all that's in the budget. I'm Pete the Planner. This is Pete the Planner Show. All right. Well, Stacey, great job. Well done. Thanks. Thanks. I gotta go.
It's just fun spending time with you all. I've got to edit this show, send it to the station, and then go have some meetings. Meetings. I have a two o'clock meeting at a coffee at a Starbucks in the busiest intersection in the city. And I'm mad about that.
Damian Dunn: Is it with a reverse mortgage
Peter Dunn: specialist by chance?
Ha ha. Ha ha. That caught me. That was funny. And I think my head's going to spin all day about the withdrawal rate thing. I did not know that.
Damian Dunn: Well, now you can go back and watch that video. I just
Peter Dunn: don't, I just don't get the motivation. Like that's where I'm, yeah, I disagree with the advice, but you and I, Damian, you and I disagree about stuff.
Who cares? But I feel like I always know your motivations in a good spot. I don't [00:56:00] understand the motivation. That's where I'm struck here.
Damian Dunn: Financial freedom for the people, Pete, as I'm sure that's what the motivation is.
Stacy Livingstone Hoyte: And a retraction probably isn't coming.
Peter Dunn: When you can never admit that you're wrong, retractions usually don't come. It's with that that I will now spend the rest of my day looking up pepper pot recipes. Thank you. Have a good Thanksgiving with your family. Stacey great job today. It was nice having you. Thank you. My pleasure. Good to be here.
Damian, Andrew Dunn, have a good week or so. I'll I'll miss you my dear friend and have fun with your family and everyone else. Stay getting money.
