Listen
Cart Stuart hosts a special live broadcast of Money Talk at KUT Fest in front of a live audience. This episode covers discussions over retirement planning, the state of current economics, AI, and their role in investing and planning.
The full transcript of this episode of Money Talk with Carl Stuart is available on the KUT & KUTX Studio website. The transcript is also available as subtitles or captions on some podcast apps.
KUT Announcer: Laurie Gallardo [00:00:01] This is a special broadcast of Money Talk with Carl Stewart. He is not live this week, so he’s not able to take your call. Text any time though, and your question could be answered on a future episode. Carl Stewart is an investment advisor representative of Stewart Investment Advisors. Now, here’s Carl.
Carl Stuart [00:00:23] Welcome to Money Talk. I’m Carl Stewart and you’re listening to KUT News 90.5 and the KUT app. This is normally where I would tell you about Money Talk and the fact that this is a 31 year old broadcast about the world of financial investment planning where you determine the agenda. Then I would give the number, but not today because we’re doing a special broadcast with my good friend Jimmy Moss. We are live at the KUTFest.
Speaker 3 [00:00:54] Thank you very much.
Jimmy Maas [00:00:59] I am excited that everybody here is going to listen to these great questions that I came up with. Oh, sure. I mean, so many good questions. And you will also be astounded at how long it takes Carl to answer one of them. That’s right. And so this, and maybe later in the show, we will have an opportunity for you to ask your questions. So as with the show Carl does not know what I’m going to talk to him about. Absolutely. He has no idea. Just like with your calls, he is going to take the calls as they come, sometimes they’re about toe fungus, sometimes they are about mortgages, you know, whatever. So, this week, unless you are a Spirit Airline stock owner, you had a pretty good week in stock. Stock market did well corporate profits and earnings led the way. The latest GDP report. Economic underpinnings, more positive than past ones, up 2% for the first quarter this year, versus half a percent for last quarter 2025. So AI investment, still driving these stock prices forward, forward, and forward. So the stock market is not the economy, but it does shape how we feel about the economy our consumer confidence, our behavior, our choices being made. Is there a correlation, so there is correlation there, but things are good generally with the stock market and some of the economic news, but at the same time, gas is a dollar more, eggs are still stubbornly expensive, milk is a $1 more, and my car payment is insane and just obscene really for a Toyota Corolla. So what is, how do we square this? You know, how do we square all of that going on, and how does that change our decisions, what we make with our money? Sure.
Carl Stuart [00:03:03] Things that I’ve learned over the last 47 years and that is that what matters in the news is relevant but there’s not a one-to-one connection between the headlines and what’s happening in the financial markets. So a good example of where those two align would be when we close the economy in the middle of March of 2020. With COVID, and people, they were locking people in their homes in China, and the stock market went in the ditch. That was a one-to-one relationship. Here we are today. You mentioned consumer confidence. Since we’ve been following consumer confidence, I think was around 1947. This is the lowest reading, the lowest rating. We’ve just had five consecutive weeks of positive returns. For the standard and poor 500, it’s the best string since 2020 that that happened. So there ought to be a scratching of the metaphorical head, what the heck is going on? And I think there are two or three things going on. First of all, because of artificial intelligence and also because The job market is extremely stable. We are not growing jobs and we’re not losing jobs. And inflation is above target, but it’s not 9 percent like it was when the tariffs occurred. And what’s going on so far in the economy is we have this thing that economists are now calling a K-shaped picture in your mind. Uh… The letter k The upward letter, the upward escalator, the New York Times had this as a cartoon. People in good jobs with disposable income are spending. And that’s the upward-escalator. Delta Airlines announced, prior to the close of the Strait of Hormuz, that they were selling more business class tickets than they were economy tickets. A luxury experiences are doing really well while Walmart and Dollar Tree report more customers. So there’s this bifurcation going on and companies that can take advantage of the K are benefiting and showing strong earnings. There’s something else happening that I want to tell you about that I just have learned about in the last week or ten days. So, I’ll give you a specific example. Ten years ago, the prediction was with artificial intelligence that the job as being a radiologist would disappear because AI could read your MRI or your CT scan. It turns out that the average compensation most recently of a radiologists is $500,000 per year And there’s been a growth in the number of radiologists. And the reason is, and there’s an economic, some economist got his name attached to this. When the price of a service declines, more people take advantage of it. So what’s happened is, the radiologist, she’s reading more results. More people are accessing her expertise because AI helps her get the diagnosis quicker, but the experience, the task, if you will, is still there. There is a, believe it or not, with all of this consumer negativity, the new job creation as measured by whoever measures that has ticked up since artificial intelligence has permeated our economy. So will there be dislocations? Will there be job loss? Of course there will. But at the ground… There’s also a lot of positive things that we don’t see in the daily newsfeed. And I think that that’s kind of, if you will, positive energy is showing up in stock prices of companies which benefit from that. So you have to understand. The indexes we think about, the big ones would be the NASDAQ and the S&P 500. If the S& P 500 doesn’t have the same amount of company stock of 500 companies, every moment of every day it takes the price of Nvidia or the price of Caterpillar times the number of shares. Resulting mathematical number is the proportion that it is in the S&P 500. So NVIDIA is way up here and Caterpillar is way down here. And so markets going up as it reflects the optimism about the outlook for the beneficiaries of artificial intelligence.
Jimmy Maas [00:08:45] I’m surprised you actually mentioned Caterpillar, not John Deere. You just came from Iowa. I know. I was in Iowa.
Carl Stuart [00:08:48] I know, I was in Iowa City this morning, it was 36 degrees.
Jimmy Maas [00:08:52] To be back so so here’s the thing so stocks are doing better our portfolios whatever they might be whether we are I am a state employee I invest in TRS they are investing for me that’s right my their portfolio inevitably is having had a good week that’s your 401k your 403 be even just if you were just a retail stock picker on well no on a certain no I’m sure a stock pick or Maybe not as good, but. Spirit Airlines that is trouble so but I read the newspaper last week and I would have sold everything so those things are doing well and I’m planning to have X amount within 10 15 20 years whenever I’m done working how but I’m also also is everything else is going up with it so how do I game plan for the rise in inflation how do i try to outpace I know it’s yeah I mean it’s Difficult question. It’s probably one that we all have to deal with.
Carl Stuart [00:09:53] I think it’s critical.
Jimmy Maas [00:09:55] Because whatever you had, if I retired in 2020, I lost 20% of that just because of the cost of living increase since then.
Carl Stuart [00:10:03] Well, you did. You could have retired in 2000 and the stock market dropped 40%. And so I think this is the fundamental and most important to most listeners. Do I have enough money to live the life that I want to live until I die? So I have to approach this with a deep sense of humility, because there’s to really answer that question. I should know the answer to these questions. How long am I going to live? What’s going to happen to the cost of living? And what’s going be the return on my savings and investments? We don’t know the answers. We don’t know the the answers, we can’t possibly know the answer. So we have to think that through from a position of humility. The first thing is the two asset classes, and people here. Have heard me say this, if you say, Carl, what can I invest in that based on history has the highest percentage that I will outpace inflation? Is it money market funds, treasury bills, certificates of deposit? The answer is a resounding no, because after inflation and after taxes, it’s a negative return. The two are… Income producing real estate, now you stop and think about this, you own a rental property in a growing economy, big if. When I graduated from high school, the town had 16,000 people, it now has 9,000. There’s no investment you could have made in real estate in Keokuk, Iowa, that you would have made money, impossible, because demand collapsed. So you take central Texas, fortunately where we are, you can raise the rents over time. You buy this rental property and the rents are $5,000 a month, it’s a duplex, and five years from now the rent’s are $8,000. I will pay you more for that property to get that rate of return, okay, that’s called a cap rate. The problem is when things go badly in real estate and the people here today are by large half my age and so I will just tell this story. Real estate went to heck in a handbasket in the Southwest for about seven years. We virtually lost all of our savings and loans in almost all of Texas banks of size. Cycles are really long because real estate is an illiquid asset. Let’s say you do have that rental property and the market goes south and you want to sell it, there may be no buyer for it. You should earn a higher return. Or at least a buyer that’s willing to pay what you. Right, so that’s called, in finance, that’s call the liquidity premium. I should make more from something that’s illiquid than I should from something liquid, which means stocks and bonds and mutual funds and exchange-traded funds. If you think about the stock market, think about a period from 1995 to 1999, we’d never had this. The stock market went up over 20% per year for five years. It was the invention of the internet. It was a takeoff of that. And yet, the iPhone didn’t show up until 2007. So you think about how you could live today without your mobile device. I don’t know. I didn’t know how to get here, and Jimmy sent me a map. He couldn’t have done that in 1995. So, had to send it.
Jimmy Maas [00:13:56] Four days ago.
Carl Stuart [00:13:58] The guy would come up on the back of a Pony Express, I mean, really. So we become so accustomed to the results of human ingenuity that we fail to appreciate how really powerful it is. And that’s where the stock market pays off over time. Now, does it go down like real estate? Absolutely. But the difference is, because people can affect their trades, it goes down, but it comes back a lot faster.
Jimmy Maas [00:14:31] And has it outpaced inflation when we’ve seen it? We’re going through a particularly large inflationary period. I don’t know when that, no one knows when that will end, but we kind of went a long time, like 15 years we’re basically thinking we’re relatively close.
Carl Stuart [00:14:48] Because in the 1970s, we had something that the economists called stag-inflation, where we had both a combination of inflation and a weak economy. And we’d had the OPEC embargo. And if you were in Houston, it was boomtown. But if you’re in other parts of the country, it’s was very, very bad. And for almost 10 years, stocks did badly, and bonds did badly. Gold did well. Houston real estate did well, Real estate in my hometown did not. So that’s, I won’t call it an anomaly because anything can happen again, but it doesn’t appear that’s where we are. Now, we have had four good, I beg your pardon, we’ve had three good years in the U.S. Stock market. The number of times that has happened over the last 50 years is twice. So I think we have to be prudent about our expectations, but I’m shocked. That the Strait of Hormuz is closed, that West Texas Intermediate’s over $100 a barrel, that gasoline around the country’s over four dollars and the stock market’s hitting new highs. And so how do I deal with that in my 401K is I go back to basic principles. What is it I’m trying to accomplish? What’s the right mix of stuff for me? Is there anything that’s changed not in the economy? In my personal life. That would cause me to want to adjust that.
Jimmy Maas [00:16:19] You, you talk to people all the time about what to do with your funds. Um, what do you find is like the, cause some of this is about how much you’re willing to risk, right? Like, um, what are you, how risk averse are you with the money that you have set aside for the future into the, you know, so like it sounds just in the, I mean, my long intro and your discussion about the straight of our moose sounds like oil might be a pretty good place is, you know, stuff some money, but you know how. But there’s always a downside to those things too. So how do you counsel people on like how to, I don’t know, balance that like with their long-term needs with what seems like this is the hot thing now. Yeah. I need to get in on this. Yeah. So there’s.
Carl Stuart [00:17:05] But there’s some really fundamental things that people should consider. The first is the distinction between life expectancy and longevity. So I get calls on Money Talk, and I have for years. Someone will say, I’m 62 years old. I’m going to retire in three years. I think I need to pull back on my investments and be more conservative. And I say to them, you need to stop and think about that because People who are savers and investors, I’m talking demographically, I am talking about listeners to KUT and to NPR, are by and large have higher levels of education and they have higher levels of income and they access to quality medical care, which means they are going to live a lot longer. If you are 62 turning into 65 and you decide you ought to put 70% of your money in the bond market. We have friends who, last summer, who died at 102. The risk you run is running out of money. Yeah, 27 years living on bond funds. I really have a problem with target date funds, unless people understand what they do, because they will move you into a conservative allocation at your retirement date, which I think can be a mistake. And so you have to think about it from that point of view. Now, to your point about risk. And regular listeners know what I’m gonna say. I think there’s kind of three buckets. There’s the money that you need to make your car payment and buy the groceries and buy gasoline. There’s money that anticipate you will use in the near term because your Toyota Corolla is gonna wear out and you need to buy another vehicle. So there’s that money that’s somewhere between one and three years. And then there’s the one for your future. For your independence, for your ability to get up in the morning and say, whatever I do this day, I do because I want to and not because I have to. That bucket is what we’ve been talking about. There are answers for the other two buckets. But don’t confuse the money for the car with the money your financial future. And don’t confused the money financial future with the the money the car. That’s how you think about this. So you can say, I can sleep nights with this. Portfolio dropping 20% because I am not going to access that to buy my next car.
Jimmy Maas [00:19:42] Yeah, it’s not an income.
Carl Stuart [00:19:44] Until later. It’s your future. It’s your future financial benefit. And therefore, it’s your
Jimmy Maas [00:19:48] And therefore, it should be able to ride out fluctuations. It’s hard to do. 50% rises.
Carl Stuart [00:19:54] It’s hard to do, and we know this empirically, a couple of Nobel Prize winners, Richard Kahneman and, I beg your pardon, Dan Kahnemen and Richard Thaler, proved in the lab that a human being experiences a 10% loss as 10%, and he experiences a ten percent, I’m sorry, Stover, he experiences 10% gain as 10% and he experience a 10 percent loss doesn’t mind a 20 percent. I think that’s evolution. I think the old saying, a cat doesn’t jump on a hot stove twice. And so we have to know what Warren Buffett said, which is, I get fearful when others are greedy, and I get greedy when others feel fearful. That’s easy to say intellectually, when the stock market’s doing well. It’s an altogether different thing to say when the stock market is going in the ditch.
Jimmy Maas [00:20:49] Should I see a financial advisor? Should I a fiduciary? Should I just go see a therapist?
Carl Stuart [00:20:57] Ha ha ha!
Jimmy Maas [00:20:58] Or should you just?
Carl Stuart [00:20:58] Have a martini. Exactly. I like the third one. Here’s what I’ve observed in my 47-year career. When I started this, there were gatekeepers. You could not do this yourself. Jack Bogle either hadn’t started or had just started Vanguard funds. The Johnsons in Boston were just getting started with Fidelity. Charles Schwab was probably a young man, and if you wanted to buy a stock or a bond you needed to go to what then were called stockbrokers. And commissions, believe it or not, were regulated. So were airline tickets. So were clothing. You went to buy a pair of Levi’s. The price came from the factory on the ticket. That’s what we did until Jerry Ford rescinded those and deregulated a lot of that. So today, the opposite has happened. The real fundamental question is, Do I have the time? And the interest and the personality to do this myself. And if the answer is yes, you can do this for virtually no cost because you can buy really low cost, what we call exchange traded funds, or you can say I want somebody to help me. The best example of my personal life was early on in my marriage, I did my own income taxes. And then one day I got up. Letter and I looked at the address it came from and if a person’s blood could run cold it said Internal Revenue Service and I had made a mistake on my taxes and I said I don’t want to do this anymore. I’m going to hire an accountant. If I go talk to five accountants, let’s just pretend they’re all local, not big eight or big three or whatever, the odds are their fees are gonna be more or less the same because that’s how the market works. So I need to find someone that I have a good fit with. It’s the same way, I’m gonna do this on my own and live with the consequences or I’m going to put Saturday between me and my money and then the model is I can choose someone. Who is compensated by the transaction, just like a real estate agent. That’s not the evil thing, it’s well known. Or I can hire someone who makes no commissions, but I pay them based on the value of the assets they’re managing. There is a fair amount of therapy, though, in your profession. Oh, absolutely. It never shows up except when things have gone in the ditch. I mean, when things are good, we all confuse brains with luck. But when things go bad, the benefit of an advisory is it keeps you on your plan. It keeps you from making mistakes. That’s the deal. It’s easiest to sit here this afternoon and say this. But if. This rate of our moves is closed in six months from now, and oil’s $185 a barrel, and inflation’s 7%, and the stock market’s in the tank. The benefit of this conversation is to stay the course that fits your plan.
Jimmy Maas [00:24:26] Money Talk airs every Saturday at five o’clock on KUT News 90.5 FM on the KUT app and at KUT.org. This podcast is produced by KUT and KUTX Studios as part of KUT Public Media, home of Austin’s NPR station and the Austin Music Experience. We are a nonprofit media organization. If you feel like this is something worth supporting, set an amount that’s right for you and make a donation at supportthispodcast.org
KUT Announcer: Laurie Gallardo [00:24:57] Welcome back to a special edition of Money Talk with Carl Stewart. Just a reminder, he is not live this week, so he is NOT taking calls for this show. Now, back to Carl, joined by KUT’s Jimmy Maas.
Jimmy Maas [00:25:15] Is everyone got some sort of retirement set aside, either like employee plan or whatever? How much is enough?
Speaker 3 [00:25:26] Ha ha.
Jimmy Maas [00:25:26] Like, when do we, when can we stop?
Carl Stuart [00:25:32] So, this goes back to the three things. Tell me how long you’re gonna live, what the return on your investment is, and what happens to inflation, and I’ll answer your question right now, Jimmy. You need $17,437.12.
Jimmy Maas [00:25:47] Well, according to my life insurance payments, I might be living a long time because it’s pretty high.
Carl Stuart [00:25:52] Yeah, yeah, yeah. So I think you have to err on the conservative side. There’s a great, this is a really corny financial planning joke, and there’s two fellows sitting in a coffee shop in East Texas, and one says to the other, I have the perfect retirement plan, his friend says, really? He said, yes, I am gonna die penniless, spend my last dollar and die. And his friend said, really, and he said, Yes? As long as I’m dead by Tuesday, it’ll all work out. That’s the problem. So I’m going to give you a rule of thumb. All rules of thumb are just that. They’re not in stone. A long time ago, a man ran thousands of simulations and said, when you stop working, if you have, and this is full of jargon, a balanced portfolio in your retirement plan of at least 55 to 65 percent in stocks, somewhere in that range, and the rest in more conservative investments, bonds or those other strategies. You can take four percent out of that and every year increase it by the rate of inflation. So, the sobering thing is…
Jimmy Maas [00:27:20] Every time you say this, it makes me sad.
Carl Stuart [00:27:23] I mean, every time. $40,000 is a million bucks, $80,000 is $2 million. So are there ways to ameliorate that partially? Because you have other sources of income, social security, and you don’t have to work and quit. There are ways in our economy to work less, less, less to supplement your income. You can, during your working life, work to eliminate your liabilities. If you retire and you don’t have a car note, and you have no credit card debt, and you had no mortgage, you can have real flexibility as to what your expenditures are, right? But if you have those things, you don’t have flexibility.
Jimmy Maas [00:28:14] Let’s say my lifestyle is I have a very nice car and I wear tailored clothing well into my retirement. I fly around the country to speak at festivals. Ha ha! You’re so rude.
Carl Stuart [00:28:29] Ha ha ha. It’s so disrespectful. Ha ha!
Jimmy Maas [00:28:33] Let’s say hypothetically that was my lifestyle.
Jimmy Maas [00:28:39] How, you know, like, I get the, it’s a million dollars for 40K. So that’s a nice rule of thumb. Some years are going to be better, and some years are not going to be as good. Let’s make some magic math here. How do I start? Let’s, how do I get going to get to that point where in 20 years I can The dream of that, yeah.
Carl Stuart [00:29:07] What most of us on a daily basis think about is we think about ourselves as an income statement, which is I have these bills, and I pay them, and at the end of the month, I have some money in my checking account. I make my visa payment, I make car payment, I make mortgage or rent payment. The problem with that is those expenses don’t stop the day you retire. And so. You have to also think of yourself, to use an accounting term, as a balance sheet. These are my assets, and these are my liabilities. So if you think about the math, let’s say I have $200,000 in my KUT 401K plan, and I have a $150,000 left in my mortgage. Everything else is flat. What’s my net worth? My net worth is $50,000. It’s the value of my assets versus minus the value of my liabilities. So I have a dual task of increasing my assets, if I have an employer-sponsored plan, particularly if there’s an employer matching contribution. But I have to reduce and ultimately eliminate my liabilities now. The three biggest debts that most people have, we’ve talked about, are auto debt, credit card debt, and real estate debt. The good thing about mortgage is you have to make the monthly payment. You don’t get a choice. At the end of 20 years, or 25 years, or 30 years. You still have to have a car. And so what I tell people is, buy the least expensive car that you can. Cars are much more durable than they were when I was a youngster. Make the monthly payments. That’s now in your budget. When you’re done making the monthly payments, keep making the month payments. But make it to the Jimmy Moss account. If you have to, to kind of trick yourself, open a separate account at your credit union, your bank or whatever. Make that 150, 250, $450 payment over here. Keep driving the car. Say you have a five year note. Drive the car for 12 years. And now it comes time to buy a car. You’re either going to pay cash for it, or substantially more cash than the time you did before, which means you have a smaller note, which means that you pay it off faster, and you keep doing that. You make that a lifetime habit. So you now will have no mortgage debt. You have no credit, I beg your pardon, you have no car debt. The pernicious one is the credit card debt. Because the rates are more than 20% interest. The things you buy disappear. There are consumptive items. And that’s where we have a real problem. And I get calls or texts on Money Talk. I like the calls better because I can have a conversation. And I happen to have a man call and he said, I was the saver, I had money in the bank, I got married, we started a family, and I’ve got $20,000 in credit card debt. I’m thinking about some of my investments, should I sell them to pay off the debt? And I said, I don’t mean to be disrespectful, but if we had this conversation 18 months from now, would you have credit card debt?” And he said, yes, because I said, that means that you’re living beyond your means. I said so how do you change that behavior? You just can’t get up in the morning and say, I’m not going to do that anymore. That’s not how it works. So, most of us, if we have regular income… We end up the month with money in the bank. We don’t really know how we spend our income. And we live in a consumption society. Make yourself get a paper receipt from every Starbucks latte, from the gas station, from grocery store. And sit down every couple weeks and put those into categories, because you’re beginning to comprehend how you’re spending money. And if you have credit card debt and you’re only making the monthly payment, the minimum, you will never get out of credit card that and so you’re looking for ways to say, wait a minute, I didn’t realize we went out to dinner three times last week. Let’s go out to diner once this week or let’s starting out dinner once every other week. Let’s fundamentally shift. Psychologists say if we have a sincere desire to change our behavior, the first thing we have to do is measure it. If we want to quit smoking, most of us can’t get up in the morning and say, I quit, that’s it. We need to say, how many cigarettes a day do I smoke? So I’m a pack and a half a day guy, I smoke 30 cigarettes a day, which by the way, I did camel straight snow filter. Yeah, those were the days. Luckily I quit about 60 years ago, but anyway, 50 maybe. No filter? Oh, gosh, come on. Of course no filters. You think I’m a weenie? I’m gonna put a filter on a cigarette? Give me a break. So my dad told me when he was in combat in World War II in Europe, that they would get these rations, they were called K rations. They were all dried food. And with them was four or five lucky strikes, or camel cigarettes. That was just part. Part of life. Every movie star, when I was a kid, smoked. It was cool. So anyway, I digress. But it’s measuring current behavior combined with a sincere desire to change that if we want to lose weight by ourselves at digital scales and step on that sucker every morning, I do that. It’s not pleasant, but I do it. And so when I sit down to eat, I mental picture, tomorrow morning I’m going to step on the digital scales. That’s fundamental to independence financially.
Jimmy Maas [00:35:13] Sincerely though, if you’re not a regular user, if you did not use your credit card at Starbucks and you used it for an emergency car fix or a medical bill or something like that, it would make sense to pay off the debt first.
Carl Stuart [00:35:27] That’s the highest charged debt, the highest interest debt. It’s basically a 30% investment. That ought to be the, I completely agree. You have no choice with the mortgage. So, and then, and here’s the hard part. We don’t have unlimited income. You’re also thinking about growing your assets. Over here, you’re reducing your liabilities. And over here, you’re contributing to your retirement plan, right? You’re saving for your kids’ college. I mean, this is complicated stuff.
KUT Announcer: Mike Lee [00:35:54] If you’re a regular KUT listener, you know by now that member support makes everything we do possible, and you know all about becoming a sustaining member, but you might not know about another way to support the reliable news on KUT. If you have a donor-advised fund, you can support the station by recommending a grant to KUT! It’s a great way to show your support and to help ensure that KUT is your reliable news source, and it is way easier than it sounds. Find out more at KUT dot org slash legacy.
KUT Announcer: Laurie Gallardo [00:37:54] Welcome back to a special edition of Money Talk with Carl Stewart. Just a reminder, he is not live this week, so he is NOT taking calls for this show. Now back to Carl, joined by KUT’s Jimmy Maas.
Jimmy Maas [00:38:09] Does anyone have a question for Carl? Yes, sir. All right. Here it is.
KUT Announcer: Mike Lee [00:38:20] I want to hear arguments about when to take social security.
Carl Stuart [00:38:25] Oh gosh. At what age? Gosh. If there’s one category of questions that I hate, it’s social security. So I will tell you, first of all, and this is common sense, if you come from a family of people who have chronic heart disease and you think your longevity is diminished, That’s a factor, of course. If you’ve been diagnosed with Parkinson’s or some other life-shortening disease, of course that’s it. But if you are healthy for your age cohort and you can afford it, the benefit grows from full retirement age, which probably for you is around 67, 67 and a half. From there until 70, when you have to take it out, it’s mandatory. The benefit grows at 8% a year. And there’s no investment that you and I can make. That guarantees 8% per year. And if you’re married and your spouse has less income than you do and he or she has a lower income, it’s nice to have you have the highest income. So that’s what I recommend, all other things being equal, postpone it as long as you can. Now, we have young people in the audience. This young man here, can he count on social security? The answer is no. Social security, people will say to me, well, I paid into it for my lifetime and I’m gonna get my money back. No, you’re not. There’s not a Jimmy Moss account at the social security. It is pure transfer. I know you’re shocked. It’s pure transfer, you put money in and I take it out. Thank you very much. It’s a pure transfer system. It worked beautifully when there were 30 people in the workforce for two people on retirement. If you had told my grandfather, George Clayton Bowles, who had a 100-acre farm in northeastern Missouri, that the government was gonna send him a monthly check when he was 65, he’d look at you, you were nuts. That’s not the job of the government. So the demographics are such that fewer and fewer people are paying in and more and more people are taking out. So when you plan for your future, I would tell you that if you’re in your 40s and younger, and maybe 50s and younger. You need to figure that the benefit will be diminished. Now the answer to fix it is straightforward. It’s really straightforward. Right now, if you make, it’s around 160 or $70,000, you pay 6.2% into Social Security. If you work, if your self-employed, you pay 12.4, and if you’re employed, your employer pays 6.20%. But it stops at 170, and there’s an inflation adjustment every year. Well, if you’re that radiologist who makes $500,000, that $330,000 is not subject to Social Security. Think about what would happen if we raised the maximum income subject to social security. We could change because people are living longer. We could the date at which you get full retirement. And the most controversial thing is that you means adjustment. I’ve made a good living. I don’t need social security. There are people listening to this broadcast who live day to day who can’t possibly save enough money to retire. They need it to live on. So, the answers, those three answers are right there. The problem is, if you’re a member of the House of Representatives and you stand up and say, I think we ought to raise the Social Security tax on people over 170, we ought to push the retirement age to 72, and we oughta means test it so people with good savings get nothing, I don’t think you’re gonna be re-elected. We live in a representative democracy, in a republic. And so here’s my prediction, things have to get worse. That’s the way things work in this country. Things have to get really, really bad before we change. It’s like the smoker who goes to the doctor and he says, oh, there’s a spot on your lung. I think I’ll quit. And that’s, I remember when Bergstrom Air Force. Should have done filters. Really? That would have saved that. That was it. There would have been no spot on the lung. I can only say smarty pants because it’s public radio. So for those of you who’ve lived here a long time, you remember Bergstrom air force base. So, the political reality was… That Congress people, Senators and House of Representatives, they wanted a military installation in their district. It was great for the economy, stable employment. So we had military bases all over the country. And people knew that we had more than we needed. But no one was going to stand up and say, close mine. So what did Congress do? They got a bunch of people together and said, you go off and solve this and come back and we’ll vote yes or no. And so no congressperson. Had to say, I voted to close mine. It was a consensus deal, and we closed Brickstrom. That has to happen with Social Security. It has to get sufficiently painful that they’ll let these group of people go off and come back with the bitter pill, and we’re all gonna take it. But unless and until that day happens, we’re just gonna keep singing by the graveyard, just like we did with government debt. People say to me, Carl, For the first time, our outstanding government debt equals the outstanding, equals the gross domestic product. And the answer is yes. And what are we doing about it? We’re adding to it. We’re reading 2.4 trillion dollars, and we will continue to do this until we can.
Jimmy Maas [00:44:22] Carl, we’ve come to the end of our time. Really? We have, yeah. Is that correct? Yeah. Sees. Time fl-
Carl Stuart [00:44:27] wise when I’m heaven-fied.
Jimmy Maas [00:44:29] Sheriff says we got to go. So we send us off to say goodbye on the air
Carl Stuart [00:44:35] Oh, okay.
Jimmy Maas [00:44:36] All the folks are
Carl Stuart [00:44:37] All right, well thank you for being here and thank you for listening.
Speaker 3 [00:44:40] Ha ha ha ha!
Carl Stuart [00:44:44] Next and next Saturday at 5 be sure to tune in to money talk
KUT Announcer: Laurie Gallardo [00:44:55] You’ve been listening to a special edition of Money Talk with Carl Stewart. Carl Stewart is an investment advisor representative of Stewart Investment Advisors. And this is KUT and KUT HD1 Austin.
This transcript was transcribed by AI, and lightly edited by a human. Accuracy may vary. This text may be revised in the future.
