0:01

I'm Natalie Moore. I fell in

0:03

love with soap operas when I

0:05

was just five years old, and

0:07

I still watch them. Their television's

0:09

longest scripted series and have zero

0:11

reruns. Now let me tell you,

0:13

soap operas aren't just some silly

0:15

art form. They are significant. In

0:17

this season of Making Stories Without

0:19

In from W.B.E.C. Chicago, join me

0:21

as I share how the genre

0:23

began, their social impact, and why

0:25

these stories endure. Listen wherever you

0:27

get your podcast. This

0:30

is the beginning of

0:32

Liberation Day. in America.

0:35

Well, right out of the gate, we're

0:37

down more than 300 points on the Dow.

0:39

Closing Bell on Wall Street just

0:41

rang. The market's closed down. President

0:43

Trump saying, quote, I have authorized

0:45

a 90-day pause the Dow right

0:47

now, shooting up over 2,000 points.

0:49

Look at that. Ancient tech stocks

0:51

bounced back somewhat today after

0:53

the Trump administration announced it

0:55

would temporarily exempt electronics from

0:58

steep tariffs. The back and

1:00

forths from President Trump in

1:02

recent days have led to

1:04

huge ups and downs in

1:06

the stock market. So what

1:09

should we be doing with

1:11

retirement accounts and spending and

1:13

saving during this uncertain time?

1:15

I'm Sasha Ann Simons and this

1:17

is reset. Christine

1:26

Benz visited us once again with

1:28

some advice. She's the director of

1:31

personal finance and retirement planning at

1:33

Morningstar. That's a financial services firm

1:35

based here in Chicago. She's also

1:37

the author of the book, How

1:39

to Retire, 20 lessons for a

1:41

happy, successful, and wealthy retirement. Plus,

1:44

we took your calls with questions

1:46

for Christine, so you'll also hear

1:48

from listeners about their questions throughout

1:50

the episode. We begin by asking

1:52

for any top-line advice that anyone

1:54

could use. Here's Christine. Well, it's uncertainty

1:57

with a capital you that we're

1:59

living through. currently in terms of

2:01

how this will play out in

2:03

terms of economic effects and certainly

2:05

in market effects. I would say

2:08

four people who have investment accounts,

2:10

no fast moves. You don't want

2:12

to be making radical changes because

2:14

the information is changing so quickly,

2:16

right, that you could be responding

2:18

to last week's headlines and, you

2:21

know, so you don't want to

2:23

make radical changes. I do think

2:25

it's a... good time for people

2:27

to build a little bit more

2:29

liquid reserves into their plans. There's

2:32

just so much uncertainty in terms

2:34

of how this might affect jobs.

2:36

So you might want to think

2:38

about having a little bit of

2:41

a larger emergency fund if you're

2:43

someone who is right around retirement

2:45

or just retired, you'd want to

2:47

have even more liquid reserves set

2:49

aside because the name of the game

2:52

is you don't want to touch your

2:54

stock assets when they're down.

2:56

potentially more jobs being cut? Well

2:58

we haven't seen that. Yet, in

3:01

fact, the jobs picture is still

3:03

pretty good. That's what makes the

3:05

current environment so strange. We're watching

3:07

this kind of slow moving car

3:09

crash, but we haven't really seen

3:11

that affect the jobs picture so

3:13

far. But realistically, there could be

3:16

implications for people's jobs. And so

3:18

I do think that holding that

3:20

additional cash cushion makes a lot

3:22

of sense right now. So I

3:24

want you to directly address this

3:26

whiplash. Overall, how have Trump's

3:28

tariff moves? Right, they're in, they're

3:31

out, right? How has that affected the

3:33

stock market? Well, it's been just a

3:35

seesaw up and down day after

3:37

day. I'm never quite sure what

3:39

I'll see when I crack open

3:41

my morningstar.com website because it has

3:43

been a lot of fits and

3:45

starts in terms of the policy

3:48

itself. So investors are responding in

3:50

real time. In fact, last week

3:52

I remember when we had a

3:54

sense that there might be some

3:56

pullback on the tariffs. You could

3:58

tell that the market was just

4:00

kind of cheering that. Stocks were

4:02

up briefly, but the net effect

4:04

has been downward pressure on stocks,

4:07

certainly. Remind us of just sort

4:09

of the different accounts and the

4:11

different investments that are tied to

4:13

the market. Well, almost everything is

4:15

responding in some way or another

4:18

one. kind of unsettling aspect of

4:20

this recent market volatility is that

4:22

US Treasury bonds are historically thought

4:24

of as a safe haven and

4:26

oasis in times of deep uncertainty

4:29

like what we're living through and

4:31

they have not responded as one

4:33

would have thought in that there

4:35

has been a little bit of

4:37

a retreat from them. We've seen

4:40

yields go up and that means

4:42

that the prices have been going

4:44

down on those bonds. So that's

4:46

a little bit different this time.

4:48

which is one reason why I

4:51

would say that investors should hold

4:53

a little bit more in true

4:55

cash assets rather than being in

4:57

the bond market with all of

4:59

their safe money. We've got Tony

5:02

from Will Met on the line

5:04

with a comment. Hey Tony, welcome

5:06

to the show. Hey, thank you.

5:08

Good afternoon to all of you.

5:10

So I've been saving up for

5:13

the past 30 years in a

5:15

very, very nice fidelity fund and

5:17

ever since... This guy took over,

5:19

I don't want to call him

5:21

a clown, but you know, it's

5:24

like a circus basically, to him

5:26

and Musk. My retirement account has

5:28

gone down over 30 percent. It

5:30

took me 30 years, and in

5:32

months, the sky is torn down,

5:35

everything that people are saved for.

5:37

And unfortunately, this is a dirty

5:39

politics, doesn't matter which I hate

5:41

Republicans, Democrats, Republicans, Democrats. As far

5:43

as I'm concerned, they're all the

5:46

same. And this guy has got

5:48

to be voted out of there

5:50

next time election comes because he

5:52

is warning. All right, thanks Tony.

5:54

Appreciate your call. So. Tony mentions

5:57

there that a 30% drop in

5:59

his retirement. Is that common right

6:01

now? No, that seems like a

6:03

lot, actually, relative to what you

6:05

would have had if you just

6:08

had kind of a broadly diversified

6:10

total US stock market index. So

6:12

that does seem like an outsized

6:14

loss. strikes me that whatever fund

6:16

that is was taking significant risk.

6:19

And a watchboard for investors at

6:21

a time like this is that

6:23

diversification is your friend. You should

6:25

have your assets in multiple types

6:27

of investments, some that are more

6:30

aggressively positioned, some that are a

6:32

little closer to cash type assets

6:34

where they will lose very little.

6:36

And you know we're wringing our

6:38

hands about the bond market during

6:41

this period, but Bonds are still

6:43

up for the year to date.

6:45

So even though they haven't defended

6:47

as we might hope they would

6:49

have, they still are a decent

6:52

place to have your money. So

6:54

the idea is diversification, not putting

6:56

all your eggs in one basket.

6:58

I'm glad you mentioned that because

7:00

I am hearing, you know, some

7:03

people are selling their bonds. What

7:05

do you think about that response?

7:07

It's probably premature because we have

7:09

so much. There's such a lack

7:12

of clarity about the current environment.

7:14

The key is to stay humble,

7:16

recognize what you cannot predict, and

7:18

how do we express humility? Well,

7:20

we spread our assets around. We

7:23

say, I'll have a little bit

7:25

of the safer assets that won't

7:27

grow as much. I'll have more

7:29

aggressively positioned assets like stocks with

7:31

good long-term growth potential, but more

7:34

short-term volatility. We're kind of spreading

7:36

our bets around, and that is

7:38

such a good way to approach

7:40

your investment accounts. I want you

7:42

to split up this advice into

7:45

buckets for me. So talk. first

7:47

to the retirees listening to us

7:49

right now, sort of give me

7:51

the sort of the immediate things

7:53

that you want them to do

7:56

or you advise for them to

7:58

do. Then there are the folks

8:00

planning to retire soon, you know,

8:02

talk to those folks as well.

8:04

And then the ones who are

8:07

probably just maybe a decade or

8:09

so away from retirement. So first,

8:11

folks who are retired right now.

8:13

So you want to have that

8:15

diversified portfolio. I like the idea

8:18

of having roughly six to ten

8:20

years worth of anticipated portfolio withdrawals

8:22

set aside in a combination of

8:24

cash and high quality bonds and

8:26

then the rest of your portfolio

8:29

you could have in stocks. And

8:31

of course you want to make

8:33

smart choices about Social Security claiming

8:35

because that's another big part of

8:37

your retirement income. So for many

8:40

people if you have haven't yet

8:42

filed for Social Security, it does

8:44

make sense to delay if you

8:46

think that you have average or

8:48

longer than average life expectancy. or

8:51

if you have a younger spouse.

8:53

The name of the game in

8:55

that situation is try to enlarge

8:57

household benefits. So be thoughtful about

8:59

that and also be thoughtful about

9:02

inflation protection. So if you're not

9:04

earning a paycheck anymore, your employer

9:06

is not going to push through

9:08

cost of living increases. Terrorists, if

9:10

nothing else, are inflationary for consumers.

9:13

So they're very likely to be

9:15

inflationary. So if you have an

9:17

investment. portfolio, you want to make

9:19

sure that you have assets in

9:21

that portfolio that will defend against

9:24

inflation. So stocks certainly do that

9:26

over long periods of time, as

9:28

do inflation-protected bonds or what are

9:30

called eye bonds. Both of those

9:32

do a nice job of helping

9:35

you preserve your purchasing power on

9:37

the interest that you're able to

9:39

earn. Yeah, I imagine some of

9:41

that advice goes well for the

9:43

people who are just a year

9:46

or so away from retirement. Yes,

9:48

definitely start building that bulwark of

9:50

safer assets. In fact, for your

9:52

new contributions, you might consider putting

9:54

all of them into safer assets.

9:57

Stop contributing to stocks. And of

9:59

course, that's a broad brush. Some

10:01

people should certainly continue to contribute

10:03

to stocks. And you want to

10:05

maintain. that stock portfolio, but here

10:08

that Social Security claiming decision is

10:10

super important. It's also a great

10:12

time if you are approaching retirement

10:14

to think about, well, what's my

10:16

spending going to look like in

10:19

retirement? And do I have any

10:21

levers that I can pull to

10:23

help reduce my in retirement spending?

10:25

And of course, many people in

10:27

the early years of retirement have

10:30

a lot of fun stuff that

10:32

they want to do, maybe pent

10:34

up demand for travel and things

10:36

like that. But you want to

10:38

be looking hard at your budget,

10:41

be thinking about, well, could I

10:43

maybe downsize into a cheaper home

10:45

if I'm not, if I'm no

10:47

longer housing a lot of people

10:50

as I was when I was

10:52

raising my kids? So you can

10:54

make some decisions about lifestyle and

10:56

budget. And before we jump back

10:58

to the phones, Christine. folks who

11:01

are about a decade or two

11:03

away from retirement, what should they

11:05

learn from what's happening right now?

11:07

Whatever you can do to tune

11:09

out the market volatility. It's so

11:12

hard. It's very hard. But keep

11:14

investing. See if you can bump

11:16

up your savings rate during this

11:18

period. It's an ideal time to

11:20

fund long-term accounts. But inevitably you'll

11:23

have some shorter-term goals that you'd

11:25

like to achieve. Maybe you want

11:27

to relocate to a bigger house

11:29

or whatever the case. might be

11:31

you'd want to have that fund

11:34

set aside and safer assets. Let's

11:36

jump to the phones. We've got

11:38

a couple folks waiting. We'll start

11:40

with Anna from Norwood Park. Hey,

11:42

welcome to the show. So I

11:45

have a question. I have two

11:47

401ks that kind of took a

11:49

hit last week and I'm 61

11:51

and wondering if it would be

11:53

smart to pull them out, combine

11:56

them. and put them into a

11:58

traditional IRA. So it's a great

12:00

question Anna. I am a big

12:02

believer in doing your due diligence

12:04

on those 401ks because the key

12:07

thing you want to be checking

12:09

on is how much. you're paying

12:11

in terms of administrative fees and

12:13

what the investment choices are costing

12:15

you. So do your homework on

12:18

that. But oftentimes a rollover to

12:20

a traditional IRA can make sense

12:22

as a means of lowering your

12:24

overall costs. So do your... do

12:26

a little bit of homework on

12:29

how much you're paying in terms

12:31

of administrative fees and unfortunately those

12:33

aren't as easy to find as

12:35

they should be so you may

12:37

have to hunt around a little

12:40

bit maybe even ask your HR

12:42

people and then also look at

12:44

what you're paying in terms of

12:46

investment costs but if it turns

12:48

out that you are paying a

12:51

lot and by a lot I

12:53

would say like 0.5% in terms

12:55

of annual administrative costs and certainly

12:57

if you're paying over 0.5% for

12:59

those individual funds, that's a sign

13:02

that maybe you have a costly

13:04

plan and you might be better

13:06

off in an IRA. There are

13:08

some consumer protections that are in

13:10

place for people in 401ks that

13:13

aren't necessarily there for IRAs. So

13:15

if you think that there's a

13:17

risk that you might get sued

13:19

or something like that, it's a

13:21

little safer to be in a

13:24

401K, so that's something to think

13:26

through as well. But I like

13:28

the consolidation opportunity, the idea of

13:30

having fewer. accounts that you bring

13:32

into retirement. I think overall that's

13:35

a sensible strategy. Thank you and

13:37

a great question. Let's jump now

13:39

to Bill in Skokie who's got

13:41

a question about mandatory withdrawals. Hey

13:43

Bill, welcome to the show. Hi,

13:46

thank you. Go ahead with your

13:48

question. Well I'm 73, still working,

13:50

had contemplated and still contemplating retirement,

13:52

but I'm of an age now

13:54

that I have to take mandatory

13:57

minimum withdrawals from my accounts. And

13:59

obviously those are based on the

14:01

value at December 2024, which no

14:03

longer exists. So kind of getting

14:05

hit with withdrawing when the market

14:08

is down as well as the

14:10

debacle we're going through obviously of

14:12

uncertainty. I just want to, I

14:14

mean my, my, my, through work,

14:16

it's not a 401k. It's technically

14:19

an IRA, but it's essentially deferred,

14:21

you know. acts like a 401k

14:23

and mostly that is in index

14:25

and some stuff. Let me see

14:28

if I can get you an

14:30

answer Bill Christine your thoughts. So

14:32

Bill for my first question was

14:34

going to be whether you're contributing

14:36

to a 401k because for people

14:39

who are there's an opportunity to

14:41

actually roll those IRA assets into

14:43

the 401k, and if you're still

14:45

working at 73, that's kind of

14:47

a workaround to avoid those required

14:50

minimum distributions. But that doesn't sound

14:52

like that's an option here. So

14:54

in this case, if you do

14:56

need to pull those required minimum

14:58

distributions, which kick in at age

15:01

73 from those traditional tax deferred

15:03

accounts, I would use a surgical

15:05

approach in terms of where I

15:07

go for my cash flows. So

15:09

rather than touching. my stock assets

15:12

when they tumbled a little bit

15:14

here, I would pull from my

15:16

safer assets and that would leave

15:18

my stock assets in place to

15:20

recover when the market actually does.

15:23

So I can't give you specific

15:25

advice, but in general I'm a

15:27

big believer in people taking that

15:29

surgical approach to their RMDs where

15:31

they are doing no harm in

15:34

terms of the investment portfolio and

15:36

pulling from those assets that haven't

15:38

fallen as much. March 2020 comes

15:40

to mind. Congress has actually put

15:42

the brakes on required minimum distributions,

15:45

so they called a pause on

15:47

required minimum distributions. for 2020, people

15:49

had to take them again in

15:51

2021. I don't think we'll see

15:53

anything like that this year. If

15:56

the market continues to go down,

15:58

potentially we will see a pause

16:00

on RMDs in 2026. But for

16:02

2025, I think it's safe to

16:04

say people should still take them.

16:07

Some economists say a recession is

16:09

now more likely. Christine, your thoughts.

16:11

It seems very likely if some

16:13

version of the tariffs goes into

16:15

effect, now we're seeing these carve-outs

16:18

where various industries are able to...

16:20

to receive exemption from being tariffed,

16:22

but right now it definitely does

16:24

dim the economic outlook. I think

16:26

it's realistic for consumers to brace

16:29

themselves. The tricky part is that

16:31

we might see recession and inflation

16:33

at the same time. Yeah. And

16:35

that could cause what's called... How

16:37

does that work? I know. Recession

16:40

and inflation at the same time.

16:42

Right. And that could lead us

16:44

to something called stagflation, which means

16:46

weak or slowing economic growth paired

16:48

with inflation, but the tariffs do

16:51

have the potential to cause both

16:53

things at once, which is one

16:55

reason why consumers really need to

16:57

take care to protect against inflation

16:59

and protect their personal balances. How

17:02

should our behavior change? Well, building

17:04

out those cash reserves, inflation kind

17:06

of is what it is. So

17:08

if you're earning a paycheck, you're

17:10

employer should pass through cost of

17:13

living increases to help address address

17:15

that. And then if you have

17:17

investment assets and you're someone who's

17:19

retired, you just want to make

17:21

sure that you are inflation protecting

17:24

your portfolio by holding stocks and

17:26

by holding those inflation protected bonds.

17:28

Mike in Downers Grove is on

17:30

the line with a related question.

17:32

Hey Mike, go ahead with your

17:35

question. full depression given that the

17:37

tariffs had something to do with

17:39

spiraling back in the day? I

17:41

wouldn't go there just yet. You

17:43

know, we haven't even moved into

17:46

a recession yet, so the question

17:48

is to what extent these tariffs

17:50

will go into effect. My hope

17:52

all along has been that there

17:54

would be some guardrails around this,

17:57

where if the market fell enough

17:59

and certainly with the bond market

18:01

getting in on the action recently,

18:03

that that would pressure the administration

18:06

to maybe pull back from some

18:08

of the decisions related to tariffs.

18:10

So I think that's still an

18:12

open question around whether we'll see

18:14

that those guardrails, whether we'll see

18:17

Congress put some pressure on the

18:19

administration to maybe take back some

18:21

of this power that by all

18:23

accounts it very much has. Yeah.

18:25

And as we talked about, as

18:28

you said earlier, you know, building

18:30

up those cash reserves and just

18:32

thinking of safe investments. right now,

18:34

is it time to adjust the

18:36

mix of stocks and bonds in

18:39

a 401k or IRA? If you're

18:41

someone who hasn't taken any risk

18:43

out of your portfolio and you're

18:45

getting close to retirement, that's a

18:47

category of individuals who I think

18:50

should look at potentially pulling back

18:52

from stocks. Not entirely, of course,

18:54

but if you are, say, 90%

18:56

stocks and you're someone who's in

18:58

your early 60s, I would think

19:01

about de-risking that portfolio a little

19:03

bit. And the idea is that

19:05

it's not at all unprecedented to

19:07

have a market down- where stocks

19:09

go down and stay down for

19:12

a long period of time. The

19:14

2000s were really a terrific recent

19:16

example of that. So you're protecting

19:18

yourself against that kind of sustained

19:20

stock market down draft by building

19:23

safer assets. As always, wonderful having

19:25

you. Christine Bens is the Director

19:27

of Personal Finance and Retirement.

19:29

planning at and morning

19:31

author of the

19:34

book, book How to Retire 20

19:36

Lessons Successful, and

19:38

Wealthy and Wealthy Grateful

19:40

for you answering

19:42

all of our

19:45

questions you our listeners.

19:47

all of our Ann,

19:49

thank you so

19:51

much. our listeners. Sasha Ann, thank

19:53

you so much. episode

19:56

of the of the

19:58

was produced by produced

20:00

by edited by

20:02

Dan Tucker. by It

20:04

was mixed by

20:07

was mixed by To

20:09

get a better

20:11

understanding of our

20:13

current political and

20:15

cultural landscapes, make

20:18

sure to subscribe

20:20

to our podcast. make

20:22

sure to I'm Sasha

20:24

Ann Simons. We'll

20:26

meet again later

20:29

today. We'll meet again later

20:31

today.