00:01
Peter Dunn
These are the best is how we start this week's show. Hello, everyone. I'm Peter Dunn. Welcome to the Pete the Planner show. Joining me this week, two friends, two colleagues, two people sharing the screen on the live stream right now. Those people are kristen Ahlenius, the Queen of Content, director of Education at Your Money Line, and Damian Dunn, Vice President of Advice. Hello, Damian.
00:24
Damian Dunn
Hello, folks.
00:26
Peter Dunn
You were muted during the intro. Taking a swig of your Diet Coke to start your day, weren't you?
00:33
Damian Dunn
Yes.
00:34
Peter Dunn
Kristen, Dame is on edge today. So you predicted this could be a good show.
00:40
Kristen Ahlenius
I did. Maybe a little bit of an attitude, some snarky comments.
00:45
Peter Dunn
Can you promise me you won't poke the bear too much? Because I don't want to have to edit his words out of the radio version of what we're doing here today.
00:55
Kristen Ahlenius
I make no promises. I will try my best.
00:58
Damian Dunn
Though that thought actually crossed my mind earlier. Do we have a dump button? How much work am I going to put on Pete's plate if I slip and say some things I shouldn't say today?
01:13
Peter Dunn
Please don't. See, this is Kristen. This is why I don't want you to poke him, because I don't want to edit this. Anyway, Kristen's, been an eventful week for you. You're in the midst of buying a home.
01:23
Kristen Ahlenius
I am.
01:24
Peter Dunn
That's a stressful.
01:26
Kristen Ahlenius
It's stressful.
01:28
Peter Dunn
Segment number two, we're going to talk about why right now is probably the worst time to buy a home.
01:32
Kristen Ahlenius
Love it.
01:33
Peter Dunn
Yes. Segment one, we are going to talk about actually, no, that's segment one. Actually, we're starting off about your giant mistakes you're making. And then segment two, we're going to talk about this surprise that's about to come around the corner for a bunch of college students and rising seniors from the high school ranks, if you will, because student loan interest rates are about to go up a lot and it's going to impact people rather badly. So we're going to talk about that. Oh, it's a very uplifting show. And then people 55 to 60 are going back to work in droves and we'll discuss that as well. Good morning to Chris and Daniel. Thanks for watching on Facebook Live. Dame, are you ready to go? I mean, you've got a busy day. I've got plenty of time. The Queen of Content's got plenty of time. But dame I know you are inundated.
02:33
Peter Dunn
We will we'll be courteous to you and get started.
02:35
Damian Dunn
There's nothing I would rather do than just sit on the radio all day today. Actually, I much prefer that. So if somebody wants to take over what I'm supposed to do for the rest of the day, I'll happily hand that off.
02:45
Peter Dunn
All right, see, everybody, he's on edge. Let's get started with the show. Kristen, do you know the closest radio affiliate for you from where you live?
02:59
Kristen Ahlenius
There's an affiliate in Knox, I believe, that might be the closest.
03:03
Peter Dunn
Dame. What do you think?
03:05
Damian Dunn
Kendallville?
03:06
Kristen Ahlenius
Kendallville's Closer?
03:08
Damian Dunn
I think so.
03:09
Kristen Ahlenius
Or for you.
03:10
Damian Dunn
You know what? I'm not entirely confident. I know how far Knox is from you, so you may be right. But I don't know if we have an affiliate there.
03:20
Peter Dunn
We do. Hello, Danza. Good to be with you. Let's start 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? Askpete@petetheplanner.com that's. Askpete@petetheplanner.com and we will answer your question. It should be a personal finance question in nature. And what we promise to do is to not try to sell you things in order to answer the question. We just answer the question? By we, I mean a lot of people this week. Joining me a return trip. Kristen Ahlenius, the director of education at Your Money Line, and Damian Dunn, vice president of advice. The Three Musketeers return. Hello, Kristen.
04:00
Kristen Ahlenius
Hello. How are you?
04:01
Peter Dunn
I'm Good. Hello, Edgy. Dame. Good to be with you this week.
04:05
Damian Dunn
We'll see about that.
04:06
Peter Dunn
Dame's on edge. Everybody be prepared. Dame. I was reading an article this week that said the housing market's about to get crazy. Crazy Rocky. We're starting to see home sales fall. We're starting to see interest rates go up significantly. And we're about to see gas prices increase even further. Some reports that will reach $6 a gallon by August. All of these things point to not only a recession, but also a really rough time to buy a home. Which leads me to this. Kristen. Congrats on the new home. You're in the midst of purchasing this week.
04:45
Kristen Ahlenius
Thank you, Pete. I really appreciate that you and I.
04:48
Peter Dunn
Were talking before the show. That yeah. It is actually a rough time to start to plan to buy a home. I do think people can squeak a purchase in here in the next month or so and probably be okay. Honestly. But I think the next six months is going to get pretty rough. Tell us about your experience. I mean, you live in the financial world. I trust your judgment more than just about anyone when it comes to personal finance. It made sense for you. You needed a place to live. It's what you did. Tell us the perspective on the home buying front like what is being talked about right now out there?
05:24
Kristen Ahlenius
So I was kind of between a rock and a hard place. I had to find someplace to live. Like, don't get me wrong. Now is not the time that I wanted to be buying a house in a perfect world. But I think the thing that's most difficult right now is how different it feels to be on the outside of the housing market versus how it actually feels to be in it. Because I read articles about like, there's going to be this pullback and inventory is going to be going up. And as a buyer, that does not feel like reality at all.
05:57
Peter Dunn
I feel you. I also don't have a lot of faith in the general public to make the best decisions about when is a good time to do this or that. It's almost like when there's like a trend in your area and then finally maybe a much older relative finds out about that trend and then you can collectively say something. Dame like, well, that trend's over. Do you think on some level what we're seeing are the last few lemmings going off the cliff into the housing market? No offense, Kristen.
06:33
Damian Dunn
I'm not sure if that's the situation or not. As I think about the overall environment for home buying, supply is rather limited for the houses that are out there. Interest rates. Pete, we've discussed this on the show before. The interest rates that you and I paid on our first houses were high. Well, yours was higher than mine because I think I was a couple years behind you when you bought yours. But the rates right now are reasonable, so I don't think it's interest rates that are really going to mess people up. If I had to guess, I think it's probably because we've all got our monthly cash flow going other places. And then to have to try and adjust our budgets based on the higher mortgage payments, maybe higher interest rates and taxes that come along with that's where people are going to get hung out on a lot of this.
07:28
Damian Dunn
Not that the interest rates or anything of that nature are really all that bad. Maybe the home price is a little inflated, but it's just the fact that we have to re allocate money dollars that we've got going other places. And that's going to be really tough. Especially as there continues to be a bigger draw in demand on our money for our gas prices, groceries, all that other stuff that we supposedly need to live. It's going to make it tough.
07:54
Peter Dunn
Kristen, one thing you don't have to deal with, you're not upgrading homes, right? In the sense that you're not moving from a 3% mortgage to a 5% mortgage. Therefore you're purchasing less home in a rising market. Dame and Chris and both that's something I think is going to kill the housing market, is that for me, I have a two and a half percent mortgage. If for some reason I felt like I needed to move, am I going to double my mortgage rate and then get so much less house, less bang for the buck? That's why the housing market got so hot, because interest rates kept falling and people kept getting more bang for the buck and it made sense. So, Kristen, through that lens, as a home buyer in the marketplace, how much did you take that into consideration, the 5% interest rates compared to three points less not too long ago?
08:48
Kristen Ahlenius
Well, I think that last year that was something that I was preaching to one of my friends, people can afford a lot more house right now. So I think that I've seen in my area at the price points that I was looking at the sizes of houses that I was looking at, I think that's why that market is still so competitive is that there's still a supply issue, rather there's not enough supply for the demand. And I think the market is just as tight at some of those lower, more reasonable price points. I think that's something to point out.
09:19
Peter Dunn
Consumers with low credit scores are falling behind on payments for car loans, personal loans and credit card, a sign that the healthiest, consumer, leading or lending environment on record in the US. Is coming to an end. The share of subprime credit cards and personal loans that are at least 60 days late is rising faster than normal, according to Equifax and report in the Wall Street Journal. Kristen, this is not a problem for you because of course you have amazing credit, but Dame, this is the leading indicator of a recession. Always.
09:53
Damian Dunn
Yeah, credit usage and credit maintenance is starting to drop. We've got all these other costs coming up alongside of it. And it's not just ancillary stuff that we're talking about, it's the everyday stuff that people are buying weekly for their lives. So as these needs compete for the dollars that we have, the few dollars that we have, people are going to start picking and choosing what gets paid and what doesn't. And it's likely going to be in a way to damage their credit because they're going to start missing payments here and missing payments there and it's an indicator of what's going to come. It's sad, but that's the situation we find ourselves in.
10:38
Peter Dunn
Kristen, what's your big box store of choice? Are you a target? Walmart or Meyer? Or do you view there is a third choice or fourth choice in there for you? What's your choice?
10:49
Kristen Ahlenius
I mean, Walmart just because I feel like the price point is the best, not because I enjoy going to Walmart.
10:56
Peter Dunn
Sure. Dame, what's your box store of choice?
10:58
Damian Dunn
None of them. I try and avoid all of them like the plague.
11:02
Peter Dunn
We are a Target family, and on Wednesday, Target reported quarterly earnings that fell far short of Wall Street's expectations and their stock went down 25% after it says they have high costs, inventory woes, and other types of concerns. Here's why I want to maybe end this segment as we talk about what is to come in the next six to twelve months in our economy. I think if there is a big purchase, like a big television or an appliance that you don't necessarily need, but you want to upgrade, or a car for that matter, I might consider pumping the brakes. Because I think even though that really hurts the growth aspects of our economy at this point, you've got to look out for yourself and you've got to make good personal economy decisions like we did in 2020 without the stimulus that we received in 2021.
12:01
Peter Dunn
That's the way you're going to survive this recession. Dane, would you add anything to that?
12:06
Damian Dunn
No, I think that's very wise advice. Make sure that what you are buying really is something that you need. Start to analyze each of those spends a little bit closer as we move into the rest of the year.
12:17
Peter Dunn
All right. Coming up after the break, kristen has done a nice thing for us. Math. We will do math on the radio. Why the cost of college is about to go up. Well, it's quite obvious. Interest rates are going up and student loan interest rates are going up, too. So when student loan forgiveness is all the hotness, will it become more so as people realize it's more expensive to go to college than they even thought in the beginning? All that is next right here on the Pete the planner show. I'm Pete the planner. We'll be right back. I like the we'll be right back. It's very antiquated and it's more of a television thing, but I did it anyway. Kristen, you don't feel too beat up there, right?
12:59
Damian Dunn
Oh, no, it's know, I guess I have to say big box stores. Of the three that you mentioned, I'd have to say Sam's club because it's tied into walmart. But that's where I almost always buy my gas when I'm in fort Wayne. So I guess technically slash walmart.
13:18
Peter Dunn
Hello, Brian Pinkins. Welcome to the party. Good to see you. What price point of gasoline actually affects your decision to go somewhere? Okay, I'm going to start with Kristen. Kristen, good morning. Rick swink. Bringing that big Rick energy as always. Kristen, what price point of gasoline affects your habits?
13:42
Kristen Ahlenius
For the most part, it doesn't.
13:44
Peter Dunn
All right.
13:46
Kristen Ahlenius
Because I'm not really going anywhere that far, right? Like town's just a few miles. Now to say that, like, hey, let's take a road trip. I'm not taking a road trip when gas is $4 a gallon.
13:59
Peter Dunn
You're not going to thelma and Louise. It with dame across northern Indiana.
14:03
Kristen Ahlenius
Not in my vehicle. I get like 5 miles to the gallon. Are you kidding me?
14:08
Peter Dunn
Kristen, you were also too young to acknowledge and accept the glory that is a thelma Louise reference.
14:14
Kristen Ahlenius
It was a little lost on mean. I kind of get it. But I'm Brad Pitt. Not all the way there.
14:20
Damian Dunn
Young Brad Pitt is in it, but.
14:22
Peter Dunn
Brad Pitt is also old enough to be Kristen's grandfather.
14:27
Kristen Ahlenius
Nah.
14:29
Peter Dunn
Dame, how about you?
14:32
Damian Dunn
Subconsciously, I think it's already affecting me, to be perfectly honest, because there'll be times when I think, oh, I should go do that and then I'll come up with reasons not to do that as like, hey, I didn't have to drive anywhere and waste some money on gas. So I think I'm already started down that path.
14:48
Peter Dunn
I'm with you. I'm the same. We're driving to Charleston at the end of July and right when gas is going to be $6 a gallon, allegedly. Reportedly, and I was doing the math this week, it's like $380 for the entire trip of gas, which, had gas prices been normal, it would have been roughly half. That still better than trying to buy a plane ticket right now. Dame, let me tell you about the $1,200 plane ticket I purchased to Salt Lake City yesterday. That was fun.
15:19
Damian Dunn
Did you sit in first class?
15:20
Peter Dunn
No, I have no class. It is a lot.
15:25
Damian Dunn
Charter plane?
15:27
Peter Dunn
No, just flying the friendly skies.
15:33
Damian Dunn
I'm trying to figure out how you.
15:34
Peter Dunn
Got no, the prices are nuts. All right, let's do the college segment. We're coming back in three, two, one. Back on the Pete, the planner show director of education here at Your Money Line. There's a nice woman by the name of Kristen Ahlenius, and she did a little research for us this week that suggests with rising interest rates so will the rise in student loans affect people? Kristen, the Fed rate for student loans, what was it or what is it now? And what is it about to go to help us understand this and help us understand the impact?
16:10
Kristen Ahlenius
Sure. So there are different rates depending on if you're a dependent student, if you're undergrad, but the most common rate is the 3.73% for undergraduate dependent students who are taking unsubsidized or subsidized loans.
16:26
Peter Dunn
Okay, so now the interesting thing about dependent, we could go on for two segments about the difference between an independent and an independent student, but it is incredibly hard to get independent student status for some good reasons, but it's very hard to do that. So that's when we talk about dependent student, that's most of everyone. 3.73, you said. How long has it been that rate? Do you know?
16:51
Kristen Ahlenius
I looked back historically, and rates have been under 5% with the exception of the 2019 academic year for about a decade. So pretty low for a while.
17:03
Peter Dunn
So 2019, it popped up.
17:05
Kristen Ahlenius
Yeah. 2019 was I keep a spreadsheet because I'm like that. 2019 was 5.5%.
17:16
Peter Dunn
Dame, there's a reason we love her. She likes spreadsheets, too. All right, so 5.5. So where are they heading now? Where are we going? All right, 4.99. And that is set for the 2022. 2023 school year?
17:35
Kristen Ahlenius
Yeah. Anything after July 1.
17:38
Peter Dunn
Okay. So you ran some numbers for us of what the impact on a person's life might be. Is it significant or is that always in the eye of the beholder?
17:50
Kristen Ahlenius
Both. So it's hard because the undergraduate limit is actually much lower than people think that it is. So if you're a dependent student, you can take 27,000 across a four year degree. That's what it would be if you have a four year degree because there's annual limit and there's an aggregate limit. So it gets a little complicated, but by the time you repay on ten year standard repayment, that interest rate increase would cost somewhere around $3,300.
18:22
Peter Dunn
Okay, so not awful, but at the.
18:26
Kristen Ahlenius
Same time, it's still $3,300 on 27 grand. That's pretty sizable, I think.
18:33
Peter Dunn
So the question that occurs to me, Dame, I don't know if you're here there too, but obviously if people cap out on the Fed loans, they can take in that regard. The interest rates on the other types of student loans they would take out must be rising, too, and they could be rising more aggressively as well. Is that where your brain is going?
18:51
Damian Dunn
Yeah, absolutely. Fed loans are going to cover a chunk for most people, but they're still going to be a little outstanding. And whether or not they're going to be Parent Plus loans or private loans, those interest rates are going to be rising accordingly as well. And that's something that may not impact just the student at that point. It's going to have impact on where those dollars go, that parents could be potentially allocating to other needs, paying off of mortgage and making sure they're prepared for retirement by putting more money into their 401 KS or IRAs or whatever it needs to be. So these are going to be some big, serious considerations that, frankly, I'm concerned that a lot of people will still just look at and say, well, it's for college for my kid, and I've got to send them because that's what I'm supposed to do.
19:38
Peter Dunn
Yeah. Kristen, it's the plus program interest rates that are so high, right?
19:43
Kristen Ahlenius
Yeah. They're usually a couple percentage points higher, give or take. But what will get you actually on those loans is that the loan origination fee is like 4%.
19:54
Peter Dunn
What?
19:55
Kristen Ahlenius
Yeah, it's really not even the interest. I mean, the interest rate is not great, but it's better than the private space. It's historically still pretty low, but the origination fee on a Parent Plus loan is like 4.2%.
20:09
Peter Dunn
All right, can you explain an origination fee as it relates here and throw some numbers in there so people understand what you're talking about?
20:14
Kristen Ahlenius
I didn't run any math, but basically, whatever, if you take out $10,000, you're going to pay a 4% fee up front on that ten grand, and then you're going to start to pay interest on that loan. And plus loans aren't subsidized either, so that interest starts accruing right away, and you don't have a payment due while your child is in school, so that interest starts to accumulate. And then our favorite thing here on the show is that interest will capitalize after a period of forbearance, adding that interest back to principal. Not good.
20:48
Peter Dunn
Good Lord. Here's my assertion. My hypothesis that this rise interest rates will affect students. I think it will affect parent borrowers more because the can is kicked further down the road. A parent isn't going to be out of the Parent Plus loan situation for what, the earliest 114 years? Is that the way you want to think about it.
21:17
Kristen Ahlenius
Yeah. And once your balance is over, I want to say it's 30 grand. Maybe you can actually pick up extended repayment plans. So multigenerational student loan repayment?
21:32
Damian Dunn
Yeah. Now, to be fair, parents could absolutely pay the interest on those loans while their students are still in school or their kids are still in school. They could even make principal payments on those as well if they wanted to. So it's not like this is an unsolvable problem. It's just that most people will see, hey, I don't have to make payments on that. So I'm going to continue to use my cash in other areas because things are kind of tight right now and I don't have to pay that. So I'll just worry about that in one to four years when junior graduates and figure it out then, and that's going to be the big issue.
22:06
Peter Dunn
Kristen, can I ask you a question? I would normally ask you off air and ask that you not tell anyone that I ask you the question.
22:12
Kristen Ahlenius
You can.
22:13
Peter Dunn
During this period of time in which people have not been paying on federal student loans, have people with Parent Plus loans had to pay during this timeframe, or were they suspended or were they set to zero as well?
22:23
Kristen Ahlenius
I don't think they had to pay, but as I'm saying that out loud, I don't know why I'm questioning myself.
22:28
Peter Dunn
I never question you other than to get answer.
22:31
Kristen Ahlenius
I don't know why in my head I'm questioning myself. I'm having a little bit of impostor syndrome. So thanks for asking me that one on the air. I appreciate it.
22:39
Peter Dunn
Well, no, at this point, the show's really about fleshing out that maybe you are the smartest one in the room, and that's what we're trying to do here.
22:47
Damian Dunn
Kristen, don't worry. If you are wrong, we will get emails about yeah.
22:50
Peter Dunn
How dare you give advice about things you don't understand. That's how every email starts. Timmy dame. So, Dame, with the inflationary environment, with the hiring issues that still exist, at what point in time do schools actually raise tuition and fees back to that 6% to 7% annual inflation rate that they were doing in the early 2000s? Because for the last few years they've sort of taken a break on that. You've had tuition freezes at several campuses across the country. You got to think that comes to.
23:25
Damian Dunn
An end too, at some point. I think it has to. And that's where we're going to see some major shakeups, and we've already seen a lot of the smaller schools either struggle or outright fail and close their doors. And a lot of the major institutions and mid major institutions are doing okay so far. And because there's a reduced supply of college seats available, they're still seeing regular steady demand. And so I think they're doing okay. But as costs increase, they got to pass it on. To somebody. And unless they can figure out a way to get into those endowment dollars to offset some of those costs, which isn't as easy as a lot of people think it is, by the way, they're going to have those dollars come in from somewhere. And that means it's going to be students, parents, and the loans they can take out.
24:12
Peter Dunn
Kristen, I was thinking this week how important it is for parents who have 529 college savings plans to use the age based portfolios in times like these. Because if you were full throttle and you have a kid going to school this fall, what your balance was last fall is much different. What it's going to be this coming fall and in some cases, depending on what you have saved, you're talking about an entire year's worth of tuition wiped off the map.
24:40
Kristen Ahlenius
Yep, absolutely. You got to bring that risk tolerance down.
24:44
Peter Dunn
Oh my gosh. Dame, had that occurred to you that.
24:46
Damian Dunn
People are getting I just checked my 529 account balances.
24:49
Peter Dunn
Don't do that, don't do that. I saw your face.
24:52
Damian Dunn
I just did.
24:56
Peter Dunn
I don't want to check. No, I checked my retirement account balance a couple of weeks ago and I'm still recovering. Coming up after the break, you know what else is recovering? The job market for people 55 and older. We'll talk about that next on the Pizza Planner show. The segue was so good. I mean just so good. Dame, how bad?
25:16
Damian Dunn
Not nearly as bad as I thought it was going to be. Honestly, not nearly as bad as what my retirement stuff is.
25:22
Peter Dunn
Well, you're in age based portfolios, right?
25:24
Damian Dunn
Yeah, I think they work pretty darn well. I got to be honest. I don't know how because it seems like there's been no safe place to hide in any of this mess. But it's much higher than I thought it was going to be.
25:35
Peter Dunn
So our kids are about the same age. Kristen, these age based portfolios within these college funds, what's interesting is in really good years, like we've had a lot of recently in the market, you might cap out at 13, 15% while the market's getting 28, 32% and you're like, oh man, I should really crank it up. But to Dame's point now, did you do the portfolio for the last twelve months? Did you click that calculation?
26:04
Damian Dunn
No, I just looked at the balances.
26:06
Peter Dunn
Hang on, I'm going to look now. Oh, I don't want to do why am I doing this?
26:11
Damian Dunn
Fun.
26:12
Peter Dunn
It's not. We're going to be note. I can just see the itunes reviews guys just checking their investment balances and.
26:21
Damian Dunn
They wouldn't be wrong.
26:22
Kristen Ahlenius
So out of touch.
26:23
Damian Dunn
We are out of touch, but you know mean. Okay, what is it?
26:29
Peter Dunn
What's the number?
26:31
Damian Dunn
I don't have a percentage. Maybe you do on yours, but they took it off.
26:37
Kristen Ahlenius
They were getting too many phone calls.
26:39
Peter Dunn
Hilarious. Okay, hold on, I'm logging in. There we go. Okay, everyone stand by. Everyone stand by on the podcast and on the live stream so I can check my kids college fund balances.
26:55
Damian Dunn
Oh.
26:59
Peter Dunn
We better get to soccer practice.
27:02
Damian Dunn
I just received a text message from Mrs. Advice.
27:07
Peter Dunn
Yes.
27:08
Damian Dunn
And she said, I'm feeling ill about 529. Please don't say it on the air.
27:13
Peter Dunn
All right, so by the way, my one year return as of 519 2022 on my daughter's account. HP's portfolio. She's 13 is -6% which I'll take that I will take that. So let's look at Theodore's, though. Theodore is the next age.
27:32
Damian Dunn
Yeah, I say only in one band lower. It's not going to be that much. Maybe minus seven or eight.
27:38
Peter Dunn
All right, I feel okay now. But you know what? Compare that to your retirement portfolio. I think I'm smacked 30% or so right now.
27:49
Damian Dunn
Yeah, I think I'm 25 this is.
27:53
Kristen Ahlenius
Why I don't look.
27:56
Damian Dunn
Was that year to date or is that in the last year.
28:02
Peter Dunn
What I just told no for your retirement I don't know 30 from the high point.
28:08
Damian Dunn
Yeah. Okay.
28:09
Peter Dunn
So what's weird, though and I have to admit it, I'm not scared about the market. It's never fun to watch 1000 point swings, but I do have to say I have zero concern zero inkling to do anything about it because this is not my first rodeo. I know how this works. I know that February 19 to March 23 of 2020, the market fell. 34% and 148 days later, it was at its pre fall level. I don't think it's going to happen this time that way, but I do think it's just going to take no more than a couple of years.
28:45
Damian Dunn
Yeah, a couple of months and a few trillion dollars in stimulus. I mean, that'll fix anything.
28:50
Peter Dunn
Here he goes. Edgy Dame he'd held it back. It's like he had some chamomile tea or something. And then finally he took a Red Bull and he's like taxes I'm wishing.
29:02
Damian Dunn
I had a McGill I think that'd be a really interesting experiment right now.
29:05
Peter Dunn
You don't like coffee I know which.
29:07
Damian Dunn
Makes it even crazier you had a.
29:10
Peter Dunn
Miguel here when you were here last week, kristen I did.
29:13
Kristen Ahlenius
It was delicious. Oh, it was good. And Pete and I had already had coffee at I was hopped up it was good.
29:23
Peter Dunn
All right so let's get after it I actually love this news story our coworker Lisa, one of our financial guides, put it in and I think there's a lot of positive news with it. Back on the Pete the Planner show Kristen director of education at Your Money Line I was looking at an article the other day that our coworker Lisa sent to us that referenced that more people in their. So let's do that in that segment starting in three, two, one. Back on the Pizza Planner show kristen director of education at Your Moneyline I was looking at an article the other day that our coworker Lisa sent to us that referenced that more people in their. Late fifty s and early 60s are unretiring coming off the retiring during the pandemic because they couldn't work, didn't want to work, were scared to work, didn't feel safe, all sorts of reasons.
30:15
Peter Dunn
But that has flipped, and they're coming back to the workplace. That's a good sign.
30:20
Kristen Ahlenius
Yeah, I think that having people come back to work, I mean, under 65, personally, I think it's too a little early to retire anyway, so I like seeing that those employment numbers are up.
30:36
Peter Dunn
Yeah. Dame, the numbers say nearly 64% of adults between the ages of 55 and 64 were working in April, essentially the same rate as in February of 2020. That's a more complete recovery than any other age group. Think about that. There were major job losses in all sorts of categories. The biggest category drop. Okay, I'm going to give you the age ranges, and you tell me what you think the biggest drop was from February of 2020 to April of 2020. Here are your choices. 55 to 64, 65 plus 20 to 24, 25 to 34, 35 to 44 or 45 to 54. Kristen, I'll start with you. What do you think the biggest age band was for job loss?
31:35
Kristen Ahlenius
I almost want to say the mid twenty s to early 30s because of kids and maybe having to have a parent at home. I don't know.
31:46
Peter Dunn
That's a good guess. Dame, I know you haven't read this article because you refuse to read The New York Times. What is your guess?
31:54
Damian Dunn
Actually, it was going to be either the early 20s or later half of the 20s for the same reason that Kristen gave.
32:01
Peter Dunn
So the answer is the younger twenty s, twenty to twenty four lost 30% of their jobs. 30% from February of 2020 to April 2020. The next group, oddly enough, and this actually makes some sense, is 65 plus. About 20% of people lost their jobs. If you were 65 plus and by the way, I know we're doing guessing games and we're making little jokes here and there. We're not making light of the fact that people lost jobs, and we're not making light of the fact that people who are more experienced struggle to find work. Please understand, we're not that cold hearted. We are just looking at the numbers here. But Dame, there is reason to be hopeful. The fact that so many people in that 55 to 64 age group not only coming back to work because of inflationary reasons. Now with the market downturn, you see sequence of return risk come into play and hopefully they're getting good advice from financial advisors that say, hey, go take some of that edge off by getting some income.
33:12
Damian Dunn
Yeah, it's really interesting. The people that would have stepped out of the workforce for whatever reason, whether they lost their job, whether they weren't comfortable being around larger groups of people, they didn't feel safe at work, whatever the reason is, they've been living off of some of those assets that they have been accumulating over that time period. So hopefully they didn't take too much of a chunk out of that and they'll be able to add to it by reentering the workforce and end up in an equal or better position in just a few years from now when everything stabilizes and then starts to recover.
33:46
Peter Dunn
Yeah. Kristen, when you think about this, I certainly can think of some anecdotal stories of people I know that left the workforce in that age group and then have come back to open arms with that institutional knowledge they bring back to the table in some instances. It's not only just back into the job market in any old job, it's back to an employer of which they left when times were bad. Any exposure there for you or are my anecdotal stories the only one?
34:16
Kristen Ahlenius
I don't know that I have a lot of anecdotal stories, but I did want to tag on to something that Dame said, which is that if someone is reentering the job market when the market's down and then potentially putting dollars into retirement, that's a really great scenario for them as well, is if they were living off of some of those assets. Not that you can time the market, of course, but then reentering and putting dollars back in at a lower cost point is advantageous long term as well.
34:45
Peter Dunn
Dame, I always like to ask this question, but it also seems cold hearted in relation to what the market has just done in the last few months. When was the actual worst time to retire in the last twelve months or so? And why is that a reasonable question? To some degree in the last twelve months?
35:06
Damian Dunn
Yeah, probably would have been last fall would have been my guess, because after that we've just seen a pretty consistent erosion in the value of portfolios since then. And if you are dragging additional dollars out to live on what you had always planned on doing, not only are you losing account value by consuming them for living expenses, but the market isn't being kind to you either, and the value of your shares is decreasing as you go. So if you need $5,000 to live off of a month, you're going to have to sell more of your investments to get that $5,000 a month than you would have maybe twelve months prior, 24 months prior. So you're getting it from both ends at that point.
35:57
Peter Dunn
Yeah. That's tough. And I'm curious, Kristen, I know within the last twelve months you've probably taken more cases than Dame has on the Your Moneyline hotline. Do you find people in the pre retirement age group, 55 to 64? Were you getting any crypto questions from those folks or were those primarily in the younger demographics?
36:20
Kristen Ahlenius
Usually in the younger demographics. Now I will say that everyone is curious about crypto, I think, but I think the level of curiosity and how likely they would be to actually act on purchasing crypto. I think that's a younger generation that's.
36:37
Peter Dunn
Dame, anything you would add to that?
36:38
Damian Dunn
No, I think I agree. She's right. A lot of people are crypto curious, but the people who really jump in are going to be in the younger demographics.
36:47
Kristen Ahlenius
Yeah.
36:49
Peter Dunn
A couple of weeks ago, maybe three or four weeks ago on the show, we talked about a retirement range as opposed to a retirement date. And in light of this conversation, part of that range can be a range to then give yourself the ability to decide to go back into the workforce of saying, hey, I'm going to retire, I'm retired, but I'm going to make it okay over the next three years or four years to change my mind. I think that could take a lot of pressure off of a person. Dave yeah.
37:23
Damian Dunn
If you look at retirement as not a permanent end or a permanent transition from one period of your life to the next and give yourself the flexibility to reenter the job market, even if it's just part time, you are going to give yourself the ability to decrease the demand on all the hard work that you did up to that point by saving money and preparing for retirement, by decreasing the demand that you have on those dollars. So even if it's just working a few hours a week to cover food and gas in your household, maybe it's more than a few hours now. But if you can cover some of the costs that you have on a day to day, month to month case, then you are in much better shape by giving yourself permission to reenter the workforce.
38:17
Peter Dunn
Yeah, I think that's a great point. It's all right to assign a particular expense category to that supplemental income, whether it's retirement or second job, for that matter, as the market and the economy, I should say, recovered in the last 18 months or so. You did see people out there humping getting a second job, trying to make up for lost time, and hopefully they did the same thing. Right. They assigned that income to a particular task as opposed to an overall higher income, which now would have them in trouble and unable to quit that second job. Kristen, are you seeing just from a trends perspective of people who call that second job idea there? Did people take on more second jobs in this time?
39:02
Kristen Ahlenius
I think so, but I don't know if to the level that I would have liked did I see specific assignment for those dollars. I think that there's still a disconnect there for a lot of people and understandably, it's tough.
39:15
Peter Dunn
Yeah, it is. So let's do this. Let's take a break. Coming up after the break, biggest waste of money of the week. I've got a doozy this week and more current events. The whole show has been current events, but we'll do even more. I'm Pete the planner. This is the Pete the Planner show.
39:30
Kristen Ahlenius
It's the biggest waste of money of the week. Going to be my condo.
39:33
Peter Dunn
I would not do that to you. I think you made a good decision, but that would be I feel like Dame wants me to do that.
39:40
Kristen Ahlenius
It'd be so good.
39:41
Damian Dunn
No, I don't.
39:43
Peter Dunn
Angry, Dame. Angry. Payments on most Parent Plus loans are automatically suspended without interest through August 31, 2022.
39:53
Kristen Ahlenius
What I thought, but I don't know why. As the words came out of my mouth, my brain fell out of my head as well. Makes for good radio.
40:03
Peter Dunn
Like Dame said, if you were wrong, we would hear about it.
40:07
Kristen Ahlenius
Ask Pete at Pete's planner.com.
40:12
Peter Dunn
All right, so I'm ready for Dame. Did I steal all of your current events, or do you have any leftover?
40:19
Damian Dunn
No, I got some.
40:20
Peter Dunn
You have any guessing games for us this week?
40:22
Damian Dunn
Yeah, I can turn a couple into guessing games.
40:25
Peter Dunn
I love a good guessing game. All right, let's start the show in three, two, one. This week's biggest waste of money of the week, right here on the Pizza Planner show is the Volback equator shirt. Climate change is creating wild temperature fluctuations across the planet in order to design a shirt for the future. Volback? Is that how you pronounce it, Dame? V-O-L-L-E-B-A-K?
40:58
Damian Dunn
Sure.
41:01
Peter Dunn
Design a shirt for the future. Volback started at the equator, home to some of the hottest and most humid places on the planet. To build its equator shirt, it began with one of the lightest and softest fabrics in existence, a rare silk like cotton from the Nile Delta. Then it added stretch strength, UV protection, and buttons carved from Corozo nuts anchored to military tape. It comes engineered with the most advanced ventilation system the company has made using 18 concealed air vents built with laser cutting and super soft Italian mesh that you know who does a mesh real well, Dame?
41:47
Damian Dunn
The Italians.
41:47
Peter Dunn
The Italians that work together like built in aircon. I think they mean air conditioning. The result is a phenomenally lightweight, technical shirt that will work anywhere on Earth. It's available in black because when you're trying to stay cool black, you definitely want to wear black. And Temple of Doom edition. All right, Dame, how much is this shirt with Italian mesh and can withstand hot, humid conditions? How much do you think, Dame? Okay, 249. Big Rick swing comes in at 189. Kristen, what do you got? The answer is $345.
42:38
Damian Dunn
Price.
42:39
Peter Dunn
Right?
42:39
Damian Dunn
Rules. Sorry, Kristen.
42:40
Kristen Ahlenius
You lost.
42:41
Peter Dunn
Sorry, rookie. So here's the solution here of how you don't buy this shirt. Don't go to the equator. It's pretty simple. It's just like, by the way, your plane flight to the equator has got to cost like $17,000 right now. Don't go to the equator and buy this shirt with the Italian mesh.
43:04
Damian Dunn
Are you telling me in Middle, Indiana, you haven't ever wished for a shirt that would feel like built in air conditioning?
43:11
Peter Dunn
Okay, I do think that's a fair question because I do wear a lot of technical shirts that have SPF so I don't have to slather on mayonnaise all over my arms every time I go outside.
43:26
Damian Dunn
I think this is right up your alley. Maybe not the black one I think is ridiculous, but the Temple of Doom, I think might have a place in your closet.
43:35
Kristen Ahlenius
It does say it works anywhere. It's not just for the you know what?
43:40
Peter Dunn
If I change my mind here? The problem is it doesn't have a real collar that flips over. It's got one of those no collar things and it looks like I'm on sprockets or something.
43:54
Damian Dunn
Cool.
43:54
Peter Dunn
Peter yeah, dane what's in the news this week?
43:58
Damian Dunn
Earlier this week, Fidelity Investments announced its 21st annual retiree health care cost estimate revealing that a 65 year old couple retiring this year 2022 year of Lord and our Savior can expect to spend.
44:13
Peter Dunn
An average of $300,000.
44:17
Kristen Ahlenius
Kristen, I saw the headline.
44:20
Damian Dunn
Okay. $315,000 in health care and medical expenses.
44:26
Peter Dunn
She said 321.
44:29
Damian Dunn
I saw the headline. Yeah. The 2022 estimate for single retirees is $150,000 for men and $165,000 for women. I will refrain from making the joke that is obvious to most people. Fidelity's estimate assumes both members of the couple are enrolled in traditional Medicare between which Medicare Part A and B covers expenses such as hospital stays, doctor visits and services, physical therapy, lab tests and more, and then some Medicare Part D stuff. Pete $315,000 in retirement. That's just another reason to go back into the workforce, if you ask me.
45:06
Peter Dunn
And to contribute to a health savings account. And I remember when this study first came out, I'm that years old. I believe the first time it came out, it was $226,000. I just remember every year as we're sort of researching things, you just go look at that number every year. I think it started at 226. That's quite the increase. But I would note all things consider that's a marginalized $315,000. But that's not that much of an increase over 226 some ten years ago.
45:38
Damian Dunn
Yeah, it seems like it should be higher than that, right? But you're right. It feels weird to say that it doesn't seem like that much money, but it's really a lot of money.
45:50
Peter Dunn
What else is in the news?
45:52
Damian Dunn
Investors have rebuked two dozen major US. Companies over executive pay. At JPMorgan Chase and intel, investors owning roughly two thirds of shares didn't support pay plans at recent annual meetings. Coca Cola barely won a majority with 50.5% of the vote. Historically, less than 90% support on these non binding votes is unusual. And corporate governance always analysts consider less than 70% a sign of significant investor dissatisfaction. So far. Twenty three S and P. Five hundred companies have reported less than 70% support according to analysis of about 250 companies. Seven blue chips missed 70% for a second year in a row including GE. The JPMorgan plan was $215,000,000. It was a bunch. It was a lot and the investors.
46:45
Peter Dunn
Said no thank know. Kristen, have you ever rebuked an executive's pay?
46:52
Kristen Ahlenius
No.
46:53
Peter Dunn
You're going to get the opportunity right now. All right guys, I'm thinking about a massive pay increase for you me and I want you all to vote on that. So Dane, what say you?
47:06
Damian Dunn
It's non binding right?
47:07
Peter Dunn
It's non binding then.
47:09
Damian Dunn
No.
47:09
Peter Dunn
Kristen?
47:11
Kristen Ahlenius
Yes.
47:12
Peter Dunn
50% fails again. It's too bad. I think in this economy it's rather tone deaf to take a massive pay increase to shareholders. They should be struck down on principle.
47:29
Damian Dunn
I agree.
47:31
Peter Dunn
Kristen if there was an industry right now seriously? Yes I am asking a serious question. Think of an industry right now in which a CEO or a company all told would be justified in asking for a pay increase. Can you think of a company and or.
47:50
Kristen Ahlenius
Mean the service industry has had a really hard time but I don't think that means that CEOs deserve more than anybody. Don't know.
48:01
Peter Dunn
Yeah I was thinking the same thing. It's like well Delta has been through a lot right. But try giving with their pilot shortages and all sorts they don't even pay people to board the plane. There's no way.
48:17
Damian Dunn
Dame no, I don't think so. I think there's got to be some read the room moment in a lot of these businesses and just pay attention.
48:27
Peter Dunn
Yeah, I agree. Other than personal finance CEOs I agree. Dane, what else is in the news?
48:32
Damian Dunn
K through twelve school districts in the US haven't spent 93% of the $122,000,000,000 in COVID relief they were awarded last year. The Wall Street Journal reports. And the country's second largest school district in La hasn't spent a single dime of its $2.57 billion booster. Do you want me to continue or do you want to interject some thoughts?
48:53
Peter Dunn
Well I had a conversation about this morning actually in a meeting. It is use it or lose it. You all it is use it or lose it and what some school districts made the mistake of doing is that they use some of those funds to make purchases that are going to prove unsustainable once those funds are gone and then they're going to have to eliminate that program or purchase. In some instances people were trying to either give pay bumps or they were trying to do buy down benefits. So maybe they pay more for the health insurance of a teacher than they previously did but then when these funds are gone and the clock strikes midnight then the person's health insurance is going to drastically increase because of the poor decisions made around this. So dame I'm a not surprised those funds haven't been used because I think so many school districts struggle to make good decisions around them.
49:50
Damian Dunn
Yeah I think infrastructure would have been the key place to try and get some of these dollars spent. But construction has been an absolute nightmare the last couple of years, and trying to find people to get those things taken care of probably was a lot harder than anticipated.
50:05
Peter Dunn
That's all we have time for this week on the show. Thanks to Kristen, thanks to Dame sending you good vibes, because good vibes are all that's in the budget. I'm Pete the Planner, and this is the Pete the Planner show.
50:17
Kristen Ahlenius
So the same problems for the school districts as individuals was really the summary point there, right? Like additional dollars, unsustainable levels of dollars, removal of those dollars. Right?
50:34
Peter Dunn
Yeah. I hadn't thought of it that way, but.
50:39
Damian Dunn
The individual could have saved those dollars. There was no impetus on the individual to go out and spend them because they were there to keep. The school districts don't have a choice. Either they're going to use them or they're going to lose them. They can apply for waivers, which I think there are a couple of different offices that are accepting those requests to extend, like on a two year time period, those dollars that are there to be spent. But even then, they've got to be smart about where they spend them because, like we said, they can't just create these programs and then drop them two years later or make all these full time hires and then say, we don't have the budget to maintain your job after the funds dry up. So it's a really tricky situation. I think the obvious answer is infrastructure, but I don't know if there are other strings that are attached to the dollars that may prevent that, too.
51:36
Peter Dunn
Kristen, if I were to get you a housewarming gift, I'm going to give you some choices. I'm prepared, like a hardware store gift card, a house plant, or a bottle of booze.
51:54
Damian Dunn
Can I throw a wrinkle in there that may change your options? Pete sure. The community she lives in is a golf cart. Friendly know.
52:02
Peter Dunn
I know she has a golf cart now, though.
52:04
Kristen Ahlenius
Yeah, I do.
52:05
Damian Dunn
I know. But maybe a portable speaker or something that she can just jam out to tunes as she's driving through town.
52:11
Peter Dunn
All right, so what's your answer, Kristen?
52:13
Kristen Ahlenius
Well, the couple that shares the law with me, they're over 65, and they were already, like, looking out the window the other day when I was there. I think that they're really nervous about somebody young moving in. So maybe not the booze. Maybe a hardware store gift card.
52:29
Damian Dunn
I wasn't saying a keg to wheel up to your door. He was just like a little bottle.
52:33
Peter Dunn
Yeah.
52:34
Damian Dunn
Distributing truck is going to back up in your driveway and just get the motorized platform down.
52:40
Peter Dunn
I don't know how loud you drink, but I'm drinking. I'm silent, crying. Listen to REM like everybody else. I don't know what you're doing. Are you blasting coldplay, def Leppard? Okay, well, you do it different up there. Congrats on your new house. We're excited for you, Dame. You make any big mistakes this week, too? No, I'm just kidding. All right, everybody, that's all we have. Stay getting money.
