On this episode of On The Money, the retirement planners at Ruedi Wealth Management answer listener questions and discuss how to fund long-term care expenses.
(2:15) Economy, Interest Rates
(9:14) Stock pickers who say “I do pretty well for myself”
(10:47) Why not just buy the S&P 500?
“The S&P 500 is really only one asset class. I think people hear 500 companies and think they own a diversified investment, but they are all large US companies. And there have been times – like the late 90’s/early 2000s, there was a big decline in the S&P 500 but the other asset classes didn’t decline nearly as much. Any time you concentrate your portfolio in one asset class, your worst case scenarios are worse than if you were diversified across a bunch of different asset classes.”
- David Ruedi, CFP®, RICP®
(20:30) Caller Question: Do I consider REITs a part of my stock allocation or bond allocation?
“I always count it towards the stock allocation. If you look at the expected return and the level of risk or volatility – it is very similar to stocks.”
- David Ruedi, CFP®, RICP®
(21:57) Caller question: I have most of my retirement savings in a traditional IRA. Why would I want to pay taxes now to do a Roth conversion?
“If your taxable income is lower now than it would be later if you had not done a conversion, that would be a good time to do a conversion.”
- David Ruedi, CFP®, RICP®
(27:41) Upcoming retirement legislation
(32:38) Long-Term Care Insurance
“Running out of money before running out of life in retirement was always the number one worry – turns out now health care is. People wonder if they are going to lose their financial independence and dignity due to a health care problem or long-term care.”
- Paul A. Ruedi
“If you are considering the long-term care insurance option, you may want to have a strong advocate to go to bat for you with the insurance company.”
- Ryan Repko, CFP®
“If I could wave a magic wand, I think everybody would be mandated to see some sort of financial planner or retirement planner. A lot of these issues can be dealt with in advance with proper planning.”
- Paul A. Ruedi