00:16
Peter Dunn
Good day. Good day. Good day. Dame, I just wanted everyone to see you to start the show this week. Did it surprise you?
00:21
Damian Dunn
Yeah, just a little. I think everyone could tell by the look on my face.
00:25
Peter Dunn
Yeah, that was an unfortunate look. Hello, everybody. It's Peter Dunn. Pete the planner, host of the Pete the planner show, here with Damien Dunn. Hello, Dame.
00:33
Damian Dunn
Hello, Pete.
00:35
Peter Dunn
All right, so lots of happenings before we start recording the radio show this week. Things I really need to get off my chest, things you need to understand. Number one, there is currently a chipmunk on my porch right now. That's not a euphemism either. There is a physical chipmunk on my physical porch as we speak.
00:51
Damian Dunn
Is he exploring the transportation device?
00:55
Peter Dunn
He is looking at his transportation device, deciding whether he wants to partake in a delicious walnut covered in Skippy natural peanut butter and then find himself moved a few miles away. Now, here's what occurred to me as I was setting the trap this morning. What if a ground squirrel of any sort had a nut allergy? Can you think of something more unfortunate than that?
01:21
Damian Dunn
No, that'd be horrible.
01:23
Peter Dunn
It'd be terrible.
01:26
Damian Dunn
Then PETA gets involved in this whole operation, and you have protesters outside your house, and it's not good.
01:34
Peter Dunn
Dame on the show this week, we actually are actually answering email questions. Askpeed@peteeplanner.com that's. Askpeed@petetheplanner.com. We are doing that. And then we are going to talk a little bit about the tax, IRS, tax deadline changes and so much more. So let's go ahead and start the show if you're all right with it.
01:52
Damian Dunn
Let's do it.
01:53
Peter Dunn
I got to get ready. I forgot this is like a whole thing now how we do this. All right, hold on, everybody. Dame, since we've stopped using Zencaster, I have to say that the audio quality is a little it's not as good, I don't think. I feel like on the podcast, it sounds a little different. However, the technical issues that we have completely gone away. So I am all for that.
02:18
Damian Dunn
Whatever makes the fans happy.
02:23
Peter Dunn
I don't think they're happy at all. They don't come here for happiness. They come here to feel better about themselves, that they're in a better place than us.
02:31
Damian Dunn
I missed that.
02:31
Peter Dunn
All right, we're starting the show 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. Askpeed@petetheplanner.com that's Askpeed@petetheplanner.com. Joining me, as always, is the father of two state swim champions, Damien Dunn. Your kids tore it up last week in the water, swam it up the Aqua Duns, as we like to call your family. Congratulations, Dame.
02:58
Damian Dunn
Thank you. I had nothing to do with it, but it was a very successful weekend for my children.
03:03
Peter Dunn
Dame, we did receive some emails this week, and I want to go ahead and read them. The first one is from Diana she says. Question for podcast blog. You mentioned during the 401K Averages podcast that goal of 401K contribution should be an excess of twelve to 14% of your income. What if your annual 401K contribution is maxed at $58,000 per year with the profit sharing, employee contributions and employer match plus $12,000 annually to IRA and spousal IRA respectively, but you are still only reaching eleven to 12% of your gross income? Is this a bad thing? Do you need to look for other investment options at this point? Thank you, Diana Dame. This is what we classify as a good problem to have.
03:52
Damian Dunn
Yeah. If you're able to do all those things, which is fantastic. Congratulations, Diana, and still be looking for other places to stash cash. Good on you. So this is a problem that you could potentially run into if you are a high income earner, that you're going to have to look for places outside of qualified plans potentially to save for retirement. And it can be an eye opening experience for a lot of people because, Pete, I think you've shared on the show a few times that sometimes high income earners fall into this trap that they think, well, I'm doing everything that I should be doing. I'm maxing stuff out. And when it comes time, they find out that they weren't saving enough in the first place to make that all happen. So this is a great question to ask and very in tune with what's going on, don't you think?
04:43
Peter Dunn
My big concern here is this sneaky problem that I've seen in this exact scenario before. So I'm going to make up an age for this person. Okay? I don't know how old this person is. What if I looked them up to get online and sort of cyber stalked them to see how old they are? Should I do that or should I just make a guess?
05:02
Damian Dunn
Okay, creeper, let's just go with a guess.
05:04
Peter Dunn
I'm just going to pick an age because it sort of matters. It doesn't actually matter. 40, 50, it doesn't matter. Let's say their current income is only covered in this email, meaning it's not like their entire career they were earning this high of an income. So it's quite possible that they are really close to that 12% of gross income now. However, it's also possible, based on what's happened in the last 1015 years of their life, that they've only gotten to this point where they're so aggressively saving dollars, which is a very long winded way of saying they could actually still be in some pretty big trouble here if they're just now, at 11% or 12% in their 40s.
05:48
Damian Dunn
Sure, if you're playing catch up at this point, yeah, you need to pay attention. Even though you're throwing what seems like and really is a large amount of money towards savings, the numbers matter, and you've got to figure out how much time you've got left to make this.
06:05
Peter Dunn
Happen in my Indianapolis Business Journal column this week. Dame, I got one of my favorite types of questions that you and I, I think, actually talked about on the show here recently. I'm going to read the question because it falls in line with my hypothesis on this question from Diana. The IBJ column says my wife and I both are both 57 years old and had planned to retire when we reach the full retirement age of 67. Based on some back of the napkin math, I think we'll need about $2 million to retire successfully, in addition to Social Security and real estate income. Here's the problem. We only have $1 million right now. Between the both of us, we're investing a total of $2,000 a month right now. If it took us 35 working years to accumulate 1 million, how in the world are we supposed to come up with another million in just ten years?
06:51
Peter Dunn
Dame, this is one of my favorite things in the whole entire world because it's just a description of compounding interest. But the only reason that emailer might be in an actual better position than Diana is because this emailer already has the million dollars saved because he had theoretically done so throughout the 35 years of his career.
07:12
Damian Dunn
Yeah, math is beautiful in this case. It's going to work out very well for the IBJ writer. At that point, it'd be amazing if we knew how much Diana had set aside already and trying to ask just a few really important key pieces of information to help give a really impactful answer for her. But we are left to speculate, which, honestly, we do pretty well, if we're being fair.
07:37
Peter Dunn
I'm cyber stalking.
07:40
Damian Dunn
Okay, go for it. You're needy.
07:43
Peter Dunn
Diane, if you're listening to the podcast right now, this is as creepy as you think it is. So, Dame, she is in a high income job. We knew that from her email. But just seeing her profession, that is absolutely validated. I will also note this. It's very possible she wasn't making the sort of money she's making now into her mid 30s or more, if you know where I'm going there. Okay, so that is to say, Diana, it's possible we're going to have to find a workaround for you. Number one, you do need to find vehicles that are outside of qualified investments, things like just a brokerage account or I know some people in her profession, her line of work that even go as far to get municipal bond stacks or just different ways to have tax sensitive investments that allow them to still aggressively save.
08:41
Peter Dunn
I think the real question here's, Dame, is the one you said about 90 seconds ago, how much does she currently have saved? That's everything.
08:49
Damian Dunn
Yeah, I think that's important. She could also potentially look at some life insurance products as well to help build some cash value and also provide maybe a much needed benefit as well. So there are a few options that she's got. I'm a big fan of non qualified accounts, honestly, to help bridge whatever gaps there may be or to give you some freedom to do some other things at different points in your life. So non qualified account, for sure, I would look into and then maybe look to supplement with some other things around that area.
09:21
Peter Dunn
I've just gone to this real bad place where now I've seen a picture of her, so now I'm, like, making, like, how old is she? She looks much younger than we've just described. And now it's awkward because I'm judging a person's looks and their age, and this has really gone downhill.
09:36
Damian Dunn
I warned you.
09:37
Peter Dunn
You did warn me, but if Diana listens to the show, she knows what she's dealing with here.
09:42
Damian Dunn
It's fair.
09:44
Peter Dunn
Yeah. Okay. So inconclusive. Our answer is inconclusive. We think depending on how much she already has saved, she could actually be short on her savings goals, and she should pursue things well outside qualified plans to satisfy that. That's interesting.
10:07
Damian Dunn
Do we say, email us back with some important statistics.
10:11
Peter Dunn
If you're not currently filing some sort of protection order against me, please email us back with some more details. Let us know your age, let us know your age, let us know sort of your asset levels, and then I'll be able to give you a better answer. Your account numbers.
10:29
Damian Dunn
Yeah, exactly. Address first, kin, all that good stuff.
10:34
Peter Dunn
But, I mean, if you want a good answer, I mean, I did the research there.
10:38
Damian Dunn
Research is a very professional term for what you did.
10:43
Peter Dunn
Don't you ever do that? You interact with someone, you're like, wow, you can Google their name and get more context.
10:49
Damian Dunn
One of the worst, most egregious habits that I used to have that I haven't done in a long time, that drove Mrs. Dunn my Mrs. Dunn nuts, was to look at people's houses online.
11:03
Peter Dunn
Oh, really? Yeah. I've maybe done that once. I know that's a thing. So those people following along on Facebook Live right now and YouTube Live was me searching for additional contact by Googling, this person who just emailed me, but without I didn't disclose too much, I feel like I got the context I needed without outing this person. Any particular. Was that creepy or was it really smart? That's what I need you to put in the comments right now. If you're a podcast listener, you can ask Pete@petetheplaner.com subject line very creepy, pal. Or if you're listening on the radio. Thank you for listening on the radio. You can also email us. All right, dame. Coming up after the break, I'm going to answer another email question from another person, and maybe I'll bing them all. That's next on the Pete the Planner show. I'm Pete the planner.
11:58
Peter Dunn
What do you think? Was it creepy or not?
12:01
Damian Dunn
I was just playing it up for radio. I Google people all the time.
12:05
Peter Dunn
Brittany says both. It's possible it was both creepy and smart.
12:12
Damian Dunn
Yeah, sure, sometimes the line is blurred and you've got to do what you have to do to make things work.
12:18
Peter Dunn
So yes, both my fear with people in this profession, honestly, is that they were in school for so long and accumulated hundreds of thousands of dollars of student loan debt that it is possible that they're behind the eight ball because it's ages 22 to 35 that actually matter the most.
12:42
Damian Dunn
Yeah, there's only one way to make up for lost time and that's to throw excessive amounts of cash at it. But it's very possible that maybe she's handling her potential debts very well, very aggressively, as well as putting a decent amount of money towards retirement. Let's not completely forsake that. She may be doing okay there, but we don't know anything about the personal side of it and what she's got, maybe anything.
13:20
Peter Dunn
At least I didn't say. Well, she lives in an affordable area of the country. Hold on, I feel like your poll is a trap question. The answers could say a lot about us. Joking aside, Max on an HSA could be another vehicle. Yeah, I thought of that too and I don't know why I didn't say it. Good call, todd Dame my favorite commercial on TV right now and I laugh every time I see it and my Mrs. Planner just rolls her eyes at me is which she does all the time whether the commercial is playing or not. Now they think about it's the identity or reputation defender where like a guy is trying to sell something to a person and she's like, well I was about ready to buy from you, but then I googled your name and I found some things that weren't so complimentary and the guy goes that again.
14:13
Peter Dunn
I love this. I love the whole reputation defender. Like if you google someone and there's crazy stuff about them out there and you're just googling to say give more context around a radio show, you could find out all sorts of creepy stuff. So then they had a free reputation check on this commercial. So I went to the site and entered my information because I was curious. It's like, what are people saying about me out there online? I had 100% reputation score, which is shocking if I'm being honest.
14:47
Damian Dunn
First of all, how were these responses curated?
14:51
Peter Dunn
Well, here's how I think they did it and it's dumb. They basically went to the first two or three pages of Google. Like if someone googles your name, they're not going past the third page, right? Well, sorry y'all, I have millions of results that are actually me online, right? And so a lot of times people don't if you're not in the media or whatever, you're not in the public, you don't you just have a couple and if a couple of them are bad, you're in big trouble. I have millions of legitimate ones. So I got 100% score. But, Dame, have I ever told you the story of there is a guy I knew that in college. I don't want to out this person because he's finally behind this thing. Okay. I got to think how I can do this. There was a guy who said something publicly in college that became a national news story.
15:46
Peter Dunn
He's a friend of mine. It was inappropriate for him to say it was awful. He got a lot of negative feedback. There were a lot of consequences to his juvenile statement. I will tell you off the air. And for years, if you Googled his name when he was trying to get a job really, he didn't get jobs because people would pull it up. And then he used a service like this, essentially to put that search result way down the line, and he's sort of gotten things squared away.
16:22
Damian Dunn
Nice.
16:24
Peter Dunn
You were dying to know what right.
16:29
Damian Dunn
I'm trying to think about timing. Did they go to a major campus indiana?
16:35
Peter Dunn
I can't.
16:35
Damian Dunn
Okay. All right.
16:37
Peter Dunn
I can't. Poor guys just got it behind him. He deserved all the scrutiny he got. That's the thing, right? It was just dumb.
16:43
Damian Dunn
It's probably not the case I'm thinking of then.
16:46
Peter Dunn
I don't know. All right. Hey, let's start another segment. Let me pull up that other email. I feel organized this week. I'm not. Trust me. Okay, you ready?
16:57
Damian Dunn
Yes.
16:57
Peter Dunn
Did you just make a clicking noise, or was that the chipmunk trap that just went off?
17:00
Damian Dunn
I made a clicking noise. I turned off my heat, so I didn't. Sorry. That would have been amazing to bring in a furry friend to the show live on the air now I want to go check.
17:08
Peter Dunn
All right, I'm getting up. I'm running after the show, so I have running python. So if I stand up, everyone, avert your eyes for a second. Hold on. I'm going to go see the chipmunk trap, and I got to scoot out of screen. Hold on.
17:19
Damian Dunn
I am really sorry about this, everyone. So if you're just joining us, last year, Pete had a wonderful time.
17:29
Peter Dunn
The chipmunk is sitting next to the trap, but he's not in the trap.
17:34
Damian Dunn
Just checking it out for space right now.
17:38
Peter Dunn
He's a thicky. Ricky too. He's a thick boy.
17:41
Damian Dunn
Winter was good for him.
17:42
Peter Dunn
Yeah. Maybe he's not onto the nut this early. Maybe it's not nut season.
17:48
Damian Dunn
Maybe he needs a nice red wine out there to get him in there to pair well with the nut.
17:53
Peter Dunn
In three, two, one. Back on the Pizza Planner show, answering your money questions and giving you tips on catching ground squirrels on your property. Dame, we got this question from a person named Jen. Jen. Good morning, Pete. My husband and I have no credit card debt and have not had any credit card debt since the year 2004. Ad. I added the ad. Each of our credit scores is over 800. We own our vehicle, he's retired, I'm 56 and still working. Doesn't this sound like Love Connection?
18:28
Damian Dunn
A little bit?
18:29
Peter Dunn
We'll be back in two and two. We have over $20,000 in a tier savings account. I don't know what that means. And my husband has 400,000 in his retirement investments with Fidelity and receives a small Social Security check every month for $1,395.55, and that is his sole income. I have a pension plan where I work, plus a 457 plan with $130,000 currently in that account, and put a portion of my income every paycheck to that plan. I recently refinanced our mortgage for two and a half percent rate. Oh, so excited. And we owe $127,000 on our home. I roughly have an average of $700 a month left after I pay all our bills. We own one vehicle and have for the last three years and have paid cash for it. We have one TV, we budget our groceries, we eat out once a month. Our only membership is Netflix and presumably Chill.
19:26
Peter Dunn
Finally, my question is, since I will be working for at least another ten years and my husband is eleven years older nice. Should he pull out the $127,000 out of his retirement fund and pay off the mortgage, and then I take the $1,260 a month that I pay towards the mortgage and put it in an investment, or take the extra $700 I have left after I pay our bills and put it towards the principal of our mortgage instead of the tier savings account. Jen Dame, I love this question, and boy, am I really glad that Jen emailed us because I think this is a situation that can be very easy to make a giant mistake.
20:04
Damian Dunn
Yeah. Did Jen say I'm rescanning quickly anything about an emergency fund or anything? Twenty k. And that's your savings account. Okay.
20:11
Peter Dunn
All right. Dan, you get first crack here.
20:14
Damian Dunn
Should he liquidate a retirement account? No, I don't think you should remove assets, take assets to pay for something that can be cash flow to this point. This is the old killing the chicken Pete that you often refer to. You don't want to take this away from yourself in the future income that could possibly provide for you in retirement, even if it is ten years away at this point. So I would be really reluctant to take the tax hit on this because there's going to be taxes that come out of it as well, and I just don't think it's going to work out quite the way you're anticipating.
20:52
Peter Dunn
There were a few numbers that jumped out to me on this. The first is a two and a half percent mortgage. Like God. So exciting.
20:59
Damian Dunn
Yeah.
21:00
Peter Dunn
There's certain things in life that only certain people get really excited about, and one of those sorts of things is a low interest mortgage. And I'm the sort of person that gets excited about it and I think you are, too.
21:12
Damian Dunn
Totally. Yeah. I'm also the person that doesn't care if I don't miss the exact bottom of mortgage rates either. I mean, anything that two and a half percent, who cares if you could have got it for two, another month later you got two and a half percent. It's amazing. Be happy with it, give yourself a high five and move on.
21:33
Peter Dunn
There's two reasons why a low interest rate mortgage is a good idea. Number one, it gives you a low payment, okay. And then people enjoy that throughout their lives. But the other reason is if the interest rate is low enough, then it justifies your ideas that your assets that are at work, your invested assets, can stay at work. And you don't have to get out of something that's presumably earning a six to 8% of rate of return to not pay a two and a half percent interest rate. That spread. Paying two and a half percent and having money offset that, yet making six to 8% on it. That is a good business decision. What I'm saying is, no, don't take nice invested assets and pay off a really low interest rate that doesn't work.
22:24
Damian Dunn
No, and I understand the desire to be debt free, mortgage free specifically, especially as you aren't in retirement yourself yet, Jim, but you can see it over a few hills away from here. And we often encourage people to try and time their retirement with getting rid of the mortgage within a few years one way or the other. I don't know if that's going to be the case. Based on saying that she just recently refinanced two and a half percent, I can't make a judgment on whether that's going to be a 15 year or a 30 year mortgage that she just refinanced to.
23:00
Peter Dunn
I think it's got to be 15 and a two and a half percent. Unless it's an Arm, which she didn't mention, which would freak out.
23:07
Damian Dunn
Yeah. So let's just say it's 15 year. We'll go, best case scenario, 15 year. That's only going to leave her five years of mortgage payments as she enters into retirement, which probably get rid of maybe a smidge quicker if things work out. Okay. It's still going to time out. Okay. So leave that asset where it's at, cash flow the mortgage, and let things play out.
23:31
Peter Dunn
It's interesting when you can eliminate I was thinking about this, actually. We had an executive team meeting yesterday and something I was going to bring up, I didn't but it applies to this situation, too. It's like knowing the problem you're trying to solve is half the battle. Right. And there are so many distractions in work and in your finances and your personal life of what you think the problem is and what the problem really is. And I think this is a good example in personal finance here, that the problem feels like it's the mortgage payment. The problem is not the mortgage payment. The problem she's trying to really solve here is what does she do with $700 a month? Right? Does she fill up her emergency fund, which arguably dame a $20,000 emergency fund? What do you think? It's good or bad?
24:27
Damian Dunn
It's got to be close to being what most people would consider adequate.
24:32
Peter Dunn
I agree for a working person, but for a pre retiree, I like a higher emergency fund, primarily because you don't get the chance to replenish that emergency fund when you peel it off. The challenge is, and this is where I wanted to go with this, I see this situation. I used to see this situation all the time when there was a ten to eleven year age gap, all the time that one person's retirement is seen as both different and separate, and then the other person has to make decisions in relation to this person's retirement happening. It's very disconnected, and I think this is my opinion, it is very common in that generation because of how people were socialized and made decisions around money.
25:20
Damian Dunn
That's true. That's a good point. We take a slightly different take on it at this point for a lot of us. But yeah, there's almost the two separate financial lives that are being discussed here. It's unfortunate because I think it adds an unnecessary layer of complication to this, but that's how they may potentially be viewing things. And if that's the case, then I still think they're okay based on what they say. So we're not dealing with a potential for catastrophic results here. It's just trying to make the best decision, as you said, identifying the problem is what to do with that $700 a month and do what you want with it. Put it towards the mortgage if you choose. Build up that retirement. The emergency fund and the Tiered account, both are good possibilities for you.
26:18
Peter Dunn
I would want to know what her pension is, but if it was healthy, frankly, I would probably put it towards the mortgage. As Danza noted on Facebook Live here, she can easily chunk down another $84,000 over the next ten years of principal just with those extra payments. Dame before we hit the break here, and since I'm making uncomfortable comments on the radio this week, I'm going to go a step further with this one. I think they either got married late in life I don't think it's a second marriage. I think they got married later. And the reason I feel that is because every time I see that sort of, well, he's retired. I think people who've been married for a really long time don't necessarily act that way. That sounds judgmental. It's not meant to be. Coming up after the break, I will find my foot out of my mouth, maybe for an entire segment.
27:15
Peter Dunn
All that's next on the Pete the Planner show. I beat the planner. Do you know what I mean, though?
27:21
Damian Dunn
I think so and I also think we need to start referring to Danza as our research department.
27:27
Peter Dunn
Danza is the research department. When you're the 2020 listener of the year. Did you hear that snap. Do you think that was my trap?
27:35
Damian Dunn
It could have been.
27:36
Peter Dunn
I got to quit getting up and looking at the trap. I put a fresh nut on it this morning. Wow.
27:43
Damian Dunn
Only the best for your ground squirrels.
27:45
Peter Dunn
So Dame is a nice man, and Dame gave me a gift last weekend in two regards. It's about 09:00 at night. I don't know, 08:00. No one knows what time it is. I'm at my home here, and wherever I am, I sense a presence. I sense a present. There's noise, just a presence. I walk by my front door. I look out the little window that's next to the door, and I see Damien's face. Damien is there. He is drawing a picture of me. No, he is there. And he mentioned he might be stopping by and bringing me a gift. Then he did. He brought me a delicious bottle of booze, which is great. Here's the problem. I'm so excited to try this boost, but I don't know when to drink it. And the challenge is it has a caffeine component to it. And Dame, I am not the sort of person I'm so nervous, and now I'm overthinking when to drink this gift because I don't want to turn up, as the kids say, I don't want to get it liddy, but I really want to try it, and I don't know when to drink it.
28:55
Peter Dunn
So any thoughts?
28:56
Damian Dunn
Now would have been the perfect time. A little bit of caffeine before your run, get things loose.
29:01
Peter Dunn
That's a good call. Next Friday on the show. Let me see what's on the let me see my actual work calendar next Friday. Okay.
29:07
Damian Dunn
Live taste test.
29:08
Peter Dunn
You know what we're drinking on the show next week.
29:11
Damian Dunn
Okay.
29:11
Peter Dunn
What are you going to drink? I don't know.
29:13
Damian Dunn
We'll figure it out. By the way, the best use of money that you highlighted last week from was it Cardinal Spirits, I believe, in Bloomington. I think they sell that indianapolis. In the Carmel area. I did not get a chance to stop at any of the fine purveyors of adult beverages, but I believe they are available. So that's another option.
29:37
Peter Dunn
That's a good point, Dame. That's a good point. All right, Dame, let's do this. I don't have a segment here, but I do have my IBJ con, which we mentioned earlier, and the math for it. I actually did some math out, which I think math on the radio and math in a newspaper is pretty exciting. You know what? Next week, everyone brittany says it the best BYOB everyone on the show next week, we're going to have a noon or wait, is that a drink at noon, or is that doing a different direction?
30:04
Damian Dunn
I don't know.
30:06
Peter Dunn
I'm going. To rescind that comment. We're going to have a beverage on the show next week. Okay?
30:12
Damian Dunn
Yeah, I think it's great idea.
30:14
Peter Dunn
All right. That's what we're doing. Oh, my God, I got to talk Mrs. Planner into this.
30:18
Damian Dunn
Just sneak the bottle into your office sometime during the week. She'll never know.
30:23
Peter Dunn
She doesn't come in here because it's a mess. Exactly. Okay, let's start a segment. I'll figure out what we're going to talk about when we get there. Three, two, one. Back on the Pete the Planner show. If you want to find out what we talk about during the break on this show, tune in live, noon Eastern on Fridays on Facebook Live or YouTube Live. Just go to Pete the Planner, go to Youtube.com Pete theplanner or Facebook.com petetheplanner and guess what happens? You can catch all the conversation. Or, of course, just listen to the podcast. Dame, I mentioned earlier, my IBJ column about the guy that needed $2 million. He has a million. He's ten years out, and he's contributing $2,000 a month, and he wants to know how in the world is he going to have another million dollars in just ten years when it took him a million dollars to accumulate 30 or took him 35 years to accumulate the million dollars?
31:16
Peter Dunn
Dame, I love this topic. It has to do with compounding and the importance of saving early, but I thought maybe you would enjoy getting deep into the interest rates and understanding exactly what rate of return he would have to earn to accomplish his goals. Does this appeal to you?
31:31
Damian Dunn
I feel like this is story time, and I'm just going to find a blanket and snuggle up.
31:34
Peter Dunn
Can I tell you how glad I am that you just didn't go, nah, do something else.
31:40
Damian Dunn
That would have been amazing.
31:42
Peter Dunn
Okay. By the way, this is data that you pulled for me.
31:48
Damian Dunn
That was a request.
31:50
Peter Dunn
Yeah, it was. Okay, so this is rude. It's not rude. It's just true. This person doesn't have a tremendous amount of investment savvy. They just don't. And that's okay. I'm not judging the person. I'm just observing. They don't because they would know the answer to the question. But here's what they have. They have moxie. No, they're disciplined. They're a disciplined investor. You don't have a million dollars at age 57 with what looks like a Yeoman's effort because some real estate, too.
32:26
Damian Dunn
It sounded like they had I mean, they've done well.
32:30
Peter Dunn
Totally. So if you want to say the scale being one, you're a complete noob in ten, you're Warren Buffett. This person's probably a five.
32:40
Damian Dunn
Yeah, nothing wrong with that. Nothing wrong with that.
32:44
Peter Dunn
Not at all. Because the proof is in the pudding. They got a million bucks.
32:48
Damian Dunn
Listen, I would much rather have somebody just keep their notes to the grindstone and do the little things right consistently rather than have somebody who's always trying to outsmart the room totally.
33:02
Peter Dunn
Right. And the thing is, I bring this up because of this person's limits going forward, they likely don't fully understand their risk tolerance. Right. People in this situation, they think the stock market, and they think, oh, that's risky, or that's not for me, or let's go. They don't view the equities market as simply a piece of their portfolio. They think it's this all or nothing thing. That's my experience.
33:34
Damian Dunn
Yeah, I think that's fair.
33:36
Peter Dunn
So when we talk about this, or when I answered the question, what I wanted to focus on is getting the person to understand that they can take a conservative approach to the market, a moderately conservative approach to the market, simply by seeking, after they talk to a licensed financial advisor, a 60 40 portfolio. It's very common, 60% bonds?
33:59
Damian Dunn
Very common, very common.
34:01
Peter Dunn
60% stocks, 40% bonds. And you don't have to use individual stocks and individual bonds. You can use funds. So that is to say, to get the person comfortable with risk and the elements of risk. And I bring this up because they don't have to do that. Well, the last ten years, a blended portfolio of 60% stocks and 40% bonds, and this is period ending December 31 of 2020, it has returned 9.78% annually. That's 9.78% every year during that time frame. Dame, that is ridiculous.
34:42
Damian Dunn
Yeah, it's an incredibly conservative portfolio. Now, last ten years have been pretty darn good, pete, I don't know if you know that. I mean, there's ostensibly been maybe one or two years in that time period that were negative. Everything else has been pretty darn good. So I don't want to say that this is an aberration, but I would lock that in for the rest of my life. If you told me I'd get a 60 40 portfolio for nine and change for the rest of my life, yeah, I'm taking it. So it's reasonable because that's what the numbers play out. But to expect a 60 40 to return nine and change, I think might be on the high side personally.
35:27
Peter Dunn
Now, listen to this. If the person didn't invest another dime, they weren't putting that $2,000 a month away, they would only need a tick above a 7% rate of return to reach his $2 million goal. But since he's putting in the $2,000 a month dame, he only needs a 5.25% rate of return. And this is really important to know and to find that information, because as we often say on the show, sometimes investors are so uninformed with what they need to do that they take unnecessary risk. A person in this situation should have the wherewithal to go to a licensed financial advisor and ask her, what's the smallest rate of return I need to achieve in order to achieve my $2 million asset goal? That's the question. And unfortunately, prior to the person emailing me, they didn't know that's what, a five out of ten in terms of investor savvy.
36:27
Peter Dunn
That's where it gets you is the uninformed question or the question that is not asked that you should ask the.
36:34
Damian Dunn
Power that you can get, the empowerment that you can get out of asking the right question even if you don't word it right. But getting the right answer for that is tremendous. And this person made a very reasonable question to make it's something that you would logically think, oh gosh, it took me forever to get to this point. How am I going to ever make that gap up between now and ten years from now? Well, you asked a great question. Now we can explain to you how this all works. In theory, past performance is no guarantee of future returns. But it's a great question because now that you know this, everything starts to become a little bit clearer and how this is going to work and the law of average is going to play out in your favor.
37:20
Peter Dunn
See, he emailed me thinking I was going to have to give him some magic bullet or he'd have to get lucky. What he doesn't realize is that this is the dotting of an I, the crossing of a T. It's over, baby. As long as he is invested suitably to his risk tolerance and I can't tell him what his risk tolerance is only he can determine what he and his partners he mentioned a partner in the email what the risk tolerance is and then find an advisor that will invest accordingly at 5.25% rate of return over a ten year period of time. There are certain investments that you can go to and comfortably achieve that not with a guarantee. In fact, sometimes there are products that guarantee that rate of return. Certain times annuities or even an indexed annuity or variable annuity. Back in the day, fixed annuities would even pay that much.
38:14
Peter Dunn
I don't think anything's really tracking at that level right now. But Dame, here's the other thing. I forget the guy's name Richard. It doesn't matter. Who knows if dame, if you went to this guy and you said, hey, you need only a 5.25% rate of return, who knows if he has the context to know whether that's achievable, right?
38:36
Damian Dunn
Totally. If you sit down with most folks who hard workers just doing what they do to try and save as much for retirement and you say, what do you think a reasonable rate of return is for your portfolio? Right now? They may guess right, but most people don't have the experience or the context to be able to tell you that. And so this little bit of education to go along with how it all fits together can be extremely enlightening for people.
39:09
Peter Dunn
How often do you ask that question when you're talking to hey, money customers or your money align clients? How often when someone's trying to get to the heart of a question like this do you say, well, what do you think is a reasonable rate of return?
39:22
Damian Dunn
That's a great question. I don't ask it enough, to be perfectly honest. And maybe I'll start looping this in because it will give you a good insight as to where that person is.
39:32
Peter Dunn
Yeah. It's almost like you go to a doctor and like, well, how many calories do you think you should have?
39:37
Damian Dunn
All of them.
39:38
Peter Dunn
3500 dummies.
39:39
Damian Dunn
Yeah, just like everybody else.
39:41
Peter Dunn
All right, Dean. Coming up after the break, biggest waste of money of the week and current events. This week's biggest waste of money of the week is a doozy. It is a doozy. It's one of those that even if I had all the money in the world, I'm not sure I would purchase it, even though it's pretty amazing.
40:01
Damian Dunn
Yeah, totally.
40:01
Peter Dunn
It's intriguing because it's involved all that's next right here on the Pete the Planner show. I'm the guy who had all the money in the world, wouldn't buy the next product. That was me really stretching out a poorly executed hitting of the post. That was terrible.
40:21
Damian Dunn
Well done.
40:22
Peter Dunn
No, it really wasn't. It was Pete poor.
40:30
Damian Dunn
Say, Pete poor.
40:32
Peter Dunn
Do you think I can set this up for the coming weeks? It's almost chipmunk season, you all, and I feel very strongly about trapping them and transferring them off property. Do you think I should set up a live camera that we keep in the corner of the screen here? Do you know what I mean?
40:50
Damian Dunn
Yeah, I do. And as tempted as I am, I think it might become a distraction that might interfere with the radio side of things.
40:59
Peter Dunn
Here's what I can do. I have a clock right here. I could put, like, a little chipmunk screen right there. I don't know how many do we.
41:12
Damian Dunn
Might have to I thought were going to go with, like, a March Madness theme, and were going to wager on how many chipmunks you catch over the next couple of weeks.
41:21
Peter Dunn
Let me get one under my pelt.
41:23
Damian Dunn
Nicely done.
41:25
Peter Dunn
Okay. I should show a picture of this thing, right?
41:30
Damian Dunn
Yeah, you can.
41:32
Peter Dunn
Okay, hold on, everybody. Dame, try to be entertaining.
41:40
Damian Dunn
I love being put on the spot like that. It's where I thrive.
41:45
Peter Dunn
Be funny.
41:46
Damian Dunn
Yeah. I had somebody it was part of an interview process. They did a psychological interview, I guess, and the shrink leaned across the table and got right in my face and said, tell me a joke. And I just laughed at him.
42:05
Peter Dunn
My gosh, I would love that opportunity.
42:10
Damian Dunn
You would have done, like, a full 15 minutes set.
42:13
Peter Dunn
Yeah. Thank you. It's like, pulled the mic out of my briefcase.
42:20
Damian Dunn
Flashlight.
42:22
Peter Dunn
Awesome. Remember the two drink minimum. Okay, you're ready to go? Let's start a radio segment because I got to go run after this. I have tights on three, two, one. This week's biggest waste of money of the week right here on the Pete the planer show is the dry ager, dry, aging fridge. That's right. Dame made in Germany and now available in the US. And Canada, the Dry ager, dry aging cabinet. It's a beautifully crafted statement piece that comes in two sizes and seamlessly integrates into and enhances any type of interior design. Dry Ager performs as elegantly as it looks, transforming any type of quality meat into the most exquisite and tender bite of dry aged goodness previously reserved for our high end steakhouses. That sound effect was unnecessary. It sort of fell flat. I regret it. With a rich and complex flavor profile, buttery texture and nutty aroma.
43:24
Peter Dunn
Maybe the chipmunks would like it. Your dry aged meal is sure to impress. This revolutionary plug and play machine is a result of years of research and development. And there's a lot of other things going on here. But here's the thing, dame. I like dry aged meat. Do you have a preference? Do you like the dry aged meat?
43:39
Damian Dunn
It's not bad. I'm usually happy with anything that gets put in front of my face.
43:44
Peter Dunn
Sure. And so here's the thing about dry aging that I happen to know. It's not a pretty process like, it I mean, as a man, if I see a dry aged piece of beef that is currently in the process of doing dry aged, I will give it a knowing nod and glance and appreciation. I don't think my wife wants to see partially rotting meat showcased in our kitchen, if you know what I mean.
44:09
Damian Dunn
You know what they need? They need that special glass that it's frosted when you hit a button. And you can push a button to just check on it and check on the meat and then click it and it goes back to being frosted and you don't have to stare at the rotting muscle tissue.
44:27
Peter Dunn
I don't eat enough meat. Red meat, I should say, to justify that purchase. It's interesting. I like draged meat. I would just never personally purchase this because it just doesn't make any sense. Oh, the cost. Everyone's wondering. There are two versions. One's $2,700 and the other one's 3700. So it's not even that much. It's just like how much dry aging. And one of them will hold like whole sides of beef. The 3701 will hold like a whole side. Like a chopped in half cow.
44:58
Damian Dunn
I mean, that's like having a twelve x twelve walk in cooler in your barn or something.
45:04
Peter Dunn
Are you about to swivel the camera to the twelve x twelve walk in cooler to your barn?
45:08
Damian Dunn
No, of course not.
45:09
Peter Dunn
Do you have a twelve x twelve walking cooler in your barn?
45:12
Damian Dunn
Maybe.
45:14
Peter Dunn
Oh my gosh. What's?
45:16
Damian Dunn
In the news this week, the net worth of US. Households finished 2020 at the highest level on record as soaring prices for stocks, real estate and other assets erased losses inflicted by the coronavirus, pandemic and related economic downturn. Household net worth ended the fourth quarter at $130.2 trillion. The Federal Reserve said that was up 5.6% from the third quarter and 10% from the end of 2019.
45:45
Peter Dunn
Yeah, I talked to some friends. Yeah, I have friends. I talked to friends about how their net worth changed in 2020. Where was it on January 1 versus December 31 of the year? And on average, Dame, the people I talked to, this is very anecdotal very limited set. I think the average is roughly 30% change for the year.
46:10
Damian Dunn
Wow, that's impressive.
46:12
Peter Dunn
It was not a cross section of America that I asked. It was just a group of my.
46:17
Damian Dunn
Friends, small sample size and a very specific geographic region.
46:21
Peter Dunn
Yeah. So that number you just gave is not surprising. I think it was an incredible year for some people's, net worth, which I made a prediction. I would love to find it on the show, but that would take effort. I made prediction back in March of 2020. Yeah. I had to have been in which I said I thought the pandemic's impact on people's personal finances I can't believe I said this.
46:46
Damian Dunn
Oh, my God.
46:47
Peter Dunn
I can't believe I've admitted to it now. Would shrink the wealth gap.
46:52
Damian Dunn
Yeah. And I think I said you're nuts.
46:54
Peter Dunn
Yeah. No, I am nuts. I've said a lot of dumb things on the show, and so we don't want to get into a listicle, but that's amongst the dumbest.
47:03
Damian Dunn
What's up there?
47:05
Peter Dunn
I don't know. It was weird. I don't know if it was like some sort of hopefulness to that or like, maybe this will shake it up. It was just all very dumb and uninformed. But if with so much financial pain in 2020, yet net worths went up, that is not the shrinking of a wealth gap, my friends. That is the broadening of the gap.
47:26
Damian Dunn
Yeah. We're going to take a trip north to our neighbors for the next story.
47:31
Peter Dunn
Okay.
47:32
Damian Dunn
A Toronto restaurant not resident. There are residents in Toronto, too, but a Toronto restaurant is making things easier for those looking to expense lunch by naming various menu items after office supplies. Good Fortune Burger has begun offering hashtag receipts. R-E-C-E-A-T-S. They're renamed menu items disguised as a number of common office tools. Their Fortune Burger, for example, has become the basic steel stapler, and palm fries are now known as a CPU wireless mouse. These receipt offerings are currently only available for a limited time, although each menu item will continue to be offered under its more traditional name.
48:16
Peter Dunn
That is amazing. And it's also, I believe, fraud.
48:21
Damian Dunn
Yeah, let's not skate over that.
48:23
Peter Dunn
But is it most fraud amazing if you really like that's ingenious.
48:27
Damian Dunn
Yeah. They're just looking out for their patrons at this point.
48:31
Peter Dunn
That's funny. That's really fun. But as the owner of an organization don't do that. Yeah. Dame. Hey, can you send me all your receipts? That reminds me, it's March Madness, of course, right now. And so people have those. They go to a site where you click one button and it pulls up a spreadsheet. So if your boss is looking over your shoulder but with a work from home, I think productivity has screeched to a halt today.
48:57
Damian Dunn
Yeah. I can't imagine that anybody is doing much of anything this afternoon other than us doing a radio show.
49:03
Peter Dunn
Yeah, and it's not much.
49:05
Damian Dunn
What else? Dan as millions of people began working, exercising and doing just about everything from home during the pandemic, sales of sweatpants and dumbbells surged enough to worry the fashion industry about a shortage of leisure wear. Britain's statisticians expect those consumer trends to stick around. Handweights and men's loungewear pants, along with hand sanitizer, have been added to the list of items that the Office for National Statistics uses to track prices and calculate Britain's inflation rate. Women's sweatshirts were also added to expand the women's casual wear section. That's right. They added sweatpants, dumbbells, hand sanitizer to track inflation in bread.
49:48
Peter Dunn
That's fascinating. I'm wearing a piece of athleisure right now. Think about it. In a professional setting, what I'm wearing right now is it's a running shirt. It's a lululemon running shirt. I would never wear this in a professional setting. However, it's 2021. Anything goes. And I'm wearing running tights right now. If I were to stand up, I would have to fire myself.
50:14
Damian Dunn
Are they just essentially leggings?
50:17
Peter Dunn
Men don't wear leggings, dame.
50:18
Damian Dunn
You do.
50:20
Peter Dunn
These are performance compression wicking. So, anyway, at the conclusion of our show, if anyone's on the west side of Carmel, Indiana, don't go outside for the next hour or so unless you want to lose your appetite. Dame. I was picking out clothes the other day to work, and by work, I mean downstairs in this office, and I took a beat longer than normal choosing which T shirt to wear that day, and I thought it was sort of funny. I sort of laughed at myself and I thought, wow. I mean, a year ago, I don't know if I changed clothes in a three day period, because we're all just walking around like mopes now. It's just like, wow. Which T shirt, I think, sends the message I want to. Which message? T is really the one to go with.
51:05
Damian Dunn
I've often wondered recently what office fashion is going to look like when people come back.
51:11
Peter Dunn
Totally with you. Todd just says on YouTube live, if you stand up, your Google reputation score is likely to go down. That's very true. It's funny. Are running tights as cute as bike shorts? I have both. What do you think, Dane? What's more aesthetically pleasing me and running tights or bike shorts?
51:30
Damian Dunn
It depends on the chammy.
51:32
Peter Dunn
It does depend on the chammy. Yeah. Dean, what is workplace wear going to look? I'll have to admit, again, this is getting a little much on this episode. A lot of my work clothes aren't going to fit.
51:45
Damian Dunn
After seeing you last Friday, I thought, man, he's going to have a whole new wardrobe before he comes back.
51:51
Peter Dunn
And I don't want to spend any money right now, so I'm going to have to actually get some things all altered. But it's like, at what point am I going to go to a meeting that involves a suit? Anyway, that's it for the show. Send you good vibes. Because good vibes are all that's in the budget. Every week on this show, we basically change your life. Email us, ask Pete@peteeplaner.com, and Dame will answer your question. I'm Pete the planner. Bye bye now. Why did I say it like that?
52:15
Damian Dunn
You're a professional, that's why.
52:20
Peter Dunn
All right. What are you drinking on the show next week? I don't know.
52:25
Damian Dunn
Probably something mixed.
52:28
Peter Dunn
I'm going to just do that. Jameson coffee drink. Jameson cold brew on ice that you got me. Nice, everyone.
52:37
Damian Dunn
I hope it's nice.
52:39
Peter Dunn
I think it looks delicious. I'm excited, and I think a noontime bev is the way to go. Dame, have a good weekend.
52:47
Damian Dunn
Same to you.
52:48
Peter Dunn
Everyone who is on the show right now, just hanging out live with us, have a good weekend. If you're a podcast listener, your weekend already happened. And if you wasted it's on you. Best of luck with your life. And I may never see you again. I'm sorry. I don't know.
53:06
Damian Dunn
It got a little dark.
53:07
Peter Dunn
I don't know. We're still in the midst of a pandemic. Nothing's dark at this point. It's like nothing's unprecedented at this point, which is actually tempting fate. I don't want to say that.
53:18
Damian Dunn
Yeah, let's not.
53:19
Peter Dunn
Dan's says she's going to have a nip of port. Ruby or tawny? I don't know, though. You don't know? Tawny catain. Great gal. Okay, I'm going to go. Goodbye, everybody.
