In today’s episode of The Stacking Benjamin Show, Joe and OG discuss a case study of the Dallas Police and Fire Pension System’s struggles, diving into poor investment choices and the impact on employees. Joe relays the perils of complicated investments, advocating for simpler and more manageable strategies. The team also shares a humorous TikTok moment about evaluating wealth through trash cans, discusses an unusual employer’s 401k vs. Roth IRA match proposal, and debates their most disappointing concert experiences.
FULL SHOW NOTES: stackingbenjamins.com/all-about-pension-funds-1576
Deeper dives with curated links, topics, and discussions are in our newsletter, The 201, available at https://www.stackingbenjamins.com/201
Enjoy!
Our Headlines
- Consultant says Dallas Police and Fire Pension should invest more in private markets (Dallas Morning News)
Our TikTok Minute
Doug’s Trivia
- What kind of ketchup does Jimmy Buffett like on his cheeseburgers in the song Cheeseburgers in Paradise?
Better call Saul…Sehy & OG
- Stacker Nick has a question about an employer’s match going to employees’ Roth IRAs.
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Written by: Kevin Bailey
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Stacking Benjamins
[00:00:00] bit: He’s the type of guy you get halfway home from the theme park before you’re like, oh, where’s Doug? Oh no, we have to go back. My wallet’s in his fanny pack. So, oh, do not feel bad for Doug. He’s terrible. Every time he tells a story somewhere, a child loses a balloon. [00:00:22] Doug: Live from Joe’s mom’s basement. It’s the Stacking Benjamin Show. [00:00:36] I’m Joe’s mom’s neighbor, Doug. And how are your investments fairing? On today’s show, we’ll dive into one pension fund that’s struggling and. Share case study lessons with you for your investing future. Then we’ll share a TikTok minute from one man who’s figured out how to really tell if someone’s rolling in the Benjamins. [00:00:55] Plus we’ll answer a question from one Stack crew who thought, you know what? I better call Doug. That guy knows everything. I am just kidding. He called Saul. See Hi and OG and don’t worry your pretty little head. Of course. I’ll leave time for my trivia question. And now two guys who are the cousin, Eddie and Clark Griswold to this podcast. [00:01:16] It’s Joe. Oh and oh ju right outta breath G. [00:01:25] Joe: It’s [00:01:26] Doug: hard to do sometimes. [00:01:27] Joe: You almost made it. Almost, almost made it. I love it when, uh, stackers tell us their kids in the backseat going, oh, ju g That’s always fun as we go around the country. Hey everybody, welcome back to the Stacking Benjamin Show. Pull up a chair, sit back, relax. ’cause we’re about to have about an hour of. [00:01:47] Financial fun and the fun always begins. This guy puts the F you in fun. Mr. OG is here. How are you man? [00:01:55] Doug: I like that. That’s pretty funny. So incredibly accurate [00:02:00] Joe: truth in advertising. We talked about disclosures with the national realtors. Uh, settlement. We should have a disclosure. OG puts the FU in fund. I try [00:02:09] OG: not [00:02:09] Joe: to. [00:02:10] OG: Don’t swear too much on the show. [00:02:11] Joe: We got a great one though. Today, og we are gonna talk about a topic that you brought to the table, which is, uh, an idea of this, uh, pension fund. Maybe, uh, uh, good money gone bad. Hmm. So that’s gonna be great. I am so excited that everybody’s here with us. You know what we. [00:02:29] Are going to get into it in just a second, but first I’ve got just a couple things. Number one is our benefits guide is out there. If you are an open enrollment time. Our benefits guide is something you should read before you just. Pick the same stuff that you picked last year. The average person changed jobs every 4.2 years. [00:02:50] Companies always change the rules. Cool thing about our benefits guide. You buy it once and it’s available as long as we make it. We’re updating it and it’s available to you. Stacking Benjamins dot com slash benefits gets you there. We also have some sponsors that make this show free for you. We always have a couple during Doug’s trivia and a couple now, so let’s hear from them and we’ll get this party started. [00:03:15] Big headline Waiting in the wings. So let’s go. [00:03:18] bit: Hello Darlings. And now it’s time for your favorite part of the show. Our Stacking Benjamin’s headlines. [00:03:25] Doug: It’s just sitting out there lurking watching us. The [00:03:28] Joe: headline. It’s just waiting. This comes to us from the Dallas Morning News headline in our backyard two months ago, news of the Dallas Police and Fire Pension System. [00:03:41] Netting a 2% return over 10 years. One of the poorest. [00:03:47] Doug: Wow, that’s hard to do. [00:03:50] Joe: One of the poorest performances in the state, rankled, most anyone who cared about how public safety officers would fare post-retirement, this piece written by a diani, uh, cheddar, and of course from the Dallas Morning News a couple weeks ago, the news of the 2% return was a clear sign. [00:04:08] The fund hadn’t. Proved raising questions of whether the pension system was making the type of financial choices reminiscent of the actions that put it in dire straits in the first place. Oh gee. This is a [00:04:19] OG: it. It is. [00:04:20] Joe: Yeah. This is kind of a deep story, but first of all, let’s talk about 2% over 10 years. If they just put it in the s and p 500 man, they would’ve had, [00:04:29] OG: yeah. [00:04:30] Chucky. Well, first let’s start with how pension systems work and why it matters. So when you establish a pension plan, it’s called a defined benefit plan, right? So there’s a formula that goes into how much money you get when you retire. So if you have a pension. Um, y you are familiar with this concept where it’s like, you know, your three highest years, times, years of service, times 1%, you know, whatever. [00:04:56] Like there’s some formula that goes into that, right? And so the pension company has to hire an actuarial firm to say, all right, let’s take a look at all of the people that we’re, we’re, you know, would be qualified for this, and how much money do we need to put away? To be able to provide this benefit for these people down the line. [00:05:15] Now you think about it when you’ve got a whole cadre of employees and some are right before retirement and some are just starting their careers. Those numbers are gonna be wildly disparate for each person individually. But in aggregate, you know, they go, okay, you need to make a $10,000 contribution this year. [00:05:30] Probably more like a hundred million. But you know that you get the idea. And they based all of these calculations on assumed growth rates. So just like in your financial plan, you say, all right, how much do I have to save every year? And you go, oh, well, if I make 8% a year, I’m gonna save 500 a month in my Roth and dah, dah, dah, and 30 years I’ll be rich. [00:05:48] Well, guess what happens if you post a two? Well, what do you have to do? You have to go back to the plan and say, all right, I had a two instead of an eight. What does that mean? Well, you need to save $506 this month, or you know, this year to kind of catch back up. Now, multiply that by the hundreds and thousands of employees that are covered by this pension, and oh Lord, compound it by years and years and years and in this, in this case, decades of vast underperformance compared to the markets. [00:06:17] The problem that that ends up happening is the money needed to contribute to the pension plan is so great to get caught back up. It exceeds the total capital of the organization that’s associated with the pension. There is not enough money in the city of Dallas, so they took all the money. If they took every dollar, every tax dollar and said, we’re gonna fund the pension, there’s not enough, and it all stems from either a promising benefits that are too great. [00:06:45] That could be an option, right? Or B, using projections that are too rosy or C, using projections that are too rosy, not achieving them, and then not doing anything about it for a long, long period of time and just being like, well, we’re just a little behind this year. Because once that snowballs, just like your financial plan snowballs, you don’t save anything and your 55 and you’re like, alright, what do I have to do? [00:07:06] It’s like, uh, save all your money for the next 15 years. Maybe you’ll be close. I’m like, that’s the only solution. And they’re compounding this problem. And this isn’t just the city of Dallas, by the way, because of making ridiculously stupid investment choices. Yeah, and it’s not just the city of Dallas, although they’re the article that we’re talking about. [00:07:25] It’s many pensions, many organizations across the entire country. It’s insane. [00:07:31] Joe: The reason OG that I was excited about this when you brought this to my attention and send it to me, and I started to dive into what you were talking about here. In a lot of ways, this pension system resembles the average person’s investment strategy. [00:07:46] They have a large piece of this investment that’s an index funds, it’s in indexes, it’s in broad based stuff. It’s in good things. And in fact, people that have looked at this pension fund have said that. The pension funds portfolio and index funds and bonds. According to Jean Pierre Aubrey with the Center for Retirement Research said these asset classes had a reasonable performance. [00:08:10] That part of the portfolio did really well. The part that was boring, the part that was consistent, the part that followed the broad market didn’t cost a lot. That piece, OG was fine. [00:08:22] OG: The cheap section, the the one that didn’t cost a lot to implement. Call up your broker at Merrill and say, Hey, put, put 87 million in small caps today. [00:08:32] Joe: That part went, that part went so fine. So the boring drool, don’t have to look at it. Investments that went fine. The part that went bad, and this is what made my head go, what G Pierre says, yeah, it did great, except for their private equity portfolio and now at private equity. Why the hell they getting involved in private equity? [00:08:55] Well, here’s what happened back between 2005 and 2008. Executive director Kelly Ock says the pension system is saddled with these investments from 2005 to 2008. They’ve completely overhauled the board. Everything is different now, much more professionally run, but back then. The people on the pension fund were not experienced pension fund managers who would choose the boring things. [00:09:21] Now, they were police officers and firefighters who kind of thought that sexy sounded better. So I can’t believe we have people doing this on a part-time basis who are running this monster pension fund. Listen to the type of [00:09:36] OG: hundreds and hundreds of millions of dollars. Yeah, [00:09:38] Joe: the stuff that they bought. [00:09:41] They bought acres of empty land in rural Idaho and Colorado. Obviously, they bought a wine resort in California. Who doesn’t like wine? They bought luxury homes in Hawaii. [00:09:51] OG: Well, I mean, you need a place of vacation, don’t you? [00:09:55] Joe: They bought all this stuff that they’re now saddled with, and guess what? These people are not experts in appraising the property and getting a good deal on these properties. [00:10:05] I mean, real estate can be a thing, as you and I have said before. But you’ve got these part-timers buying this crazy ass real estate and now they’re settled with it and guess what? It’s done. Hasn’t appreciated. [00:10:17] OG: Well and worse in some cases. Some of the investments are just completely defunct now and gone belly up. [00:10:23] I. I mean, this is true at so many different levels, and I know Joe, in your career, you ran into even, you know, smaller examples of this. The church foundation, you know, that’s got a few million in it and it’s run by butchers, bakers, and candlestick makers, and that’s totally fine. They’re, they’re helping out. [00:10:40] But there’s a time to call in a professional when you’re dealing with your taxes or you know, when you’re dealing with hundreds and hundreds of millions of dollars of a pension fund. I also think that there’s a big lesson here for the average investor, which is to say, if it sucks for the Dallas Pension Fund, who has virtually an unlimited time horizon, unlimited taxing authority, ostensibly, right? [00:11:06] I mean, I guess they could tax themselves out of residence, but pretty much unlimited and almost unlimited money. Right? It’s like, like, I mean, there’s so much that you, it’s like. You’re like, but I’ve got a million. Don’t you think it’s time for me to, no, it’s not. No, it’s not. I’ve got 680,000 in my 401k. [00:11:25] It’s kind of boring. Maybe I should. No, you shouldn’t. Trust me. You shouldn’t. And use this example, and the examples of Harvard and the examples of Yale and the examples of. The University of Michigan and the examples of CalPERS and the Advant like pick a organized group that quote manages money professionally. [00:11:44] Now some of ’em, to your point, they have kind of overhauled a little bit of this and gone, you know, maybe we just stick it in like some ETFs and call it a day. Like, wouldn’t that be a little easier? You know? And they’re doing that. But it’s still happening. It’s still happening at these large institutions and in these large organizations where people think it’s, you know, you gotta get cute with it. [00:12:04] If it’s not good enough for people that have unlimited money, unlimited time horizon, and unlimited ability to raise money, it ain’t good for you who have, relatively speaking, limited money, limited availability to raise it and limited investment opportunities. Just stick to these stuff. [00:12:21] Doug: I’d be interested to see when. [00:12:24] This particular pension fund started making these crazy decisions to buy land in Idaho or a house in Hawaii. And wonder if, because it seems like people are trying to throw Ha Hail Mary’s, whether it’s in their own individual account or, uh, you know, they make one bad decision and think, I gotta make up for it. [00:12:41] And I hear there’s a huge potential return on this crazy ass thing, so I’m gonna throw. You know, fourth and long and see if I get lucky and then that doesn’t work and you gotta go fourth and even longer. I’m interested to know when did that all start? [00:12:55] Joe: That’s what’s interesting about this Doug, and I’m glad you brought that up. [00:12:58] I said the years earlier. But in the middle of a bunch of stuff. But these years are very important to this whole discussion because it was 2005 to 2008. They’re buying real estate and what do we know? 2005, 2006 into about Midway 2007. What do we have? I mean, this God’s not making [00:13:19] OG: any more land, right? [00:13:20] That’s right. This [00:13:21] Joe: is when the big short came out because it was just, it was insane. I mean, remember, they’re talking to a pole dancer. At a strip club and she’s like, oh yeah, I own like 12 properties on no doc mortgages. Like, I didn’t put any money down. I just, I’m a real estate investor while I’m dancing. [00:13:38] And don’t get me wrong, I mean nothing with having a side gig, having this different stuff. But when you’re somebody I. Who has a full-time job and you’re doing no money down mortgages and no proof of, of your ability to make the payments. That’s how crazy this [00:13:54] OG: got. I’m, I’m a, I’m even a little more cynical than this Joe, in the sense that I also bet that if you pull on that thread and start unraveling a little of these things, if you wanted to, and maybe people have tried and run into some roadblocks, but a lot of times he is also run into. [00:14:09] My second cousin’s, the owner of the winery. Oh man. And I bet, I bet that there’s something in there that’s a little, maybe not as overt as my brother-in-Law owned it and sold it to the city, but maybe a little under a little, you know, more like Senator Mendez of like gold in the pockets type of conspiracy. [00:14:34] Not exactly. Tied right to it. That’s just me being cynical. I certainly can’t prove any of that well, but it wouldn’t surprise me. Let me, let me put it that way. It wouldn’t surprise me. Yeah. If that’s the case, and a lot of times that is the case because how do you run into this stuff? How do you find out that the ice cream shop is for sale? [00:14:51] How do you find out that the land in Idaho is available and that maybe Walmart’s gonna build a distribute? It’s a guy that knows the guy that knows the guy, right? You’re playing golf and somebody says, oh dude, oh, you’re in charge of that pet. You know what? My brother-in-Law was telling me about this opportunity that, you know, and maybe it’s innocuous, right? [00:15:08] It’s not, they’re not trying to steal your money, but it’s never, I don’t know a lot of people that are like literally on YouTube or on Google going, uh, potential Walmart distribution facilities in northern Idaho for sale. Oh, here’s a hundred acre property. It must be this one. I’ll make it, you know what I mean? [00:15:25] Like there are people who do that, but that’s not, to your point, from before, Joe. Probably not what they were doing in 2005, seven, and eight. Well, the second that I [00:15:33] Joe: read Wine Resort in California. I mean, here’s, here’s the thing. Smells [00:15:39] OG: like fraud, doesn’t it? It’s like, well, [00:15:41] Joe: it’s like I just getting, how do you [00:15:43] OG: get to what, uh, let’s see. [00:15:45] Uh, let’s review the investment portfolio. So we’ve got, uh, this is, uh, the SPY index fund, uh, up 8% for the year. Okay. Pretty boring. Uh, here’s our small cap value. That’s up, uh, 11%. Uh, any, uh, any motions for the new a hundred million dollars? Uh, Jack, go ahead. Yeah, I was thinking, uh, winery. Uh, hell yeah. Who doesn’t like wine? [00:16:04] All in favor? A, a, a like I was like, well, just the due diligence [00:16:10] Joe: trips, right? Yeah. Due diligence on that. Yeah. I [00:16:13] OG: need to, oh, we gotta go check out our places in Hawaii real fast. Yeah. [00:16:18] Joe: You know, I’m prepping for, uh, the interview that, uh, people are gonna hear next Monday with Meg Gorman. Meg is a tax attorney and works with high net worth individuals. [00:16:27] On their money management, and she studied past presidents. And one of my favorite pieces of her current project OG, is one of the things she found compelling about the presidents when they did really well was that they partnered with professionals that knew what they were doing and when they made mistakes, it was their own hair brainin scheme. [00:16:47] So we’re gonna talk about Ulysses S Grant. We’re gonna talk about Calvin Coolidge. We’re gonna talk about all kinds of different people. Really interesting stuff, but she doesn’t make the point that they partner with professionals because they’re smarter. What she makes, a big point of saying is they partner with professionals because the professional’s not emotionally attached, and an investment professional has seen luxury homes in Hawaii a bajillion times. [00:17:17] They’ve seen the wine resort in Napa a thousand times. They’ve seen these investments come and go and come and go, and they’re not gonna see the first one and go. Now if I’m a firefighter full time or I’m a police officer, first time I’m going home to the misses, I’m like, Hey, guess what? I think we’re taking a due diligence trip to Napa and are you kidding me? [00:17:37] You got me and my spouse out there. You’re serving us wine. I don’t think this is the best investment ever. Where the pro has been there. Mm-Hmm. And they’re like, okay, yeah, yeah. You know, you can wind me and dye me all you want, but this is the, show me the balance sheet. Show me what this is really doing. I like that point. [00:17:55] It’s not because they’re smarter, it’s because they’re not emotionally attached, but [00:18:00] Doug: aren’t the people that are hired to manage these funds also air quotes professionals? Isn’t that like, you’re not just using somebody. Who’s in the downtown city office to manage 1.6 billion, but that’s the point. [00:18:15] Joe: Again, Doug, the fund has been overhauled since 2008. [00:18:19] Between 2005 and 2008. It was police officers and firefighters that were on this board versus, okay. [00:18:28] OG: Well, and the reality is for anybody who’s served on these things before. You get these pitches, even the professionals who are, maybe it’s meant to be the guardrails of, you know, the, the, the foundation board at school. [00:18:43] The foundation board at the Opera House isn’t all financial professionals. There’s people from the Opera house there. Right. That’s, it’s their money. So they’re on the, you know, they maybe have some guardrails of financial pros, but what happens is they get all these pitches and. It’s, it’s a sales job, you know, I mean, like, it’s, well, this sounds really exciting. [00:19:03] Oh, I mean, look, I get no less than a dozen phone calls a week from people who are like, Hey, I know that you have lots of clients. I know that you’re in charge of lots of money. Let me tell you about my greatest, you know, tool old that I think would be great for your clients. They’re always selling fear and panic or opportunity, and mostly lately fear and panic. [00:19:26] You know, this product will protect your clients from, uh, down market. And wouldn’t that be great because your clients will love you. ’cause the market never goes down with this, uh, investment I’ve got, well, guess what kind of investment that is. Some beautiful real estate investment trust, no worse fixed annuity. [00:19:43] Oh, you [00:19:43] Joe: goes down, of course. God, that was right in front of me and I missed it. [00:19:48] OG: So I get these pitches right, because I, I’m a little bit of a gatekeeper for clients at some level. Little bit different than the pension fund, so I understand what happens and, and sex sells, man. It just, it’s, if it’s cool and it’s flashy and, and to your point, I get to take the misses on a trip to. [00:20:06] I mean, hell, Joe, I know you remember these when you were an advisor in the broker dealer world. How did you decide to use a new company? What did they do? I mean, maybe they still do it. I don’t know. I don’t [00:20:16] Joe: know either. But [00:20:17] OG: they would, they would go whine and dine [00:20:18] Joe: that they would, we’ve got a dinner, [00:20:19] OG: Joe, we’d love you to come to dinner. [00:20:21] Hey, we’ve got a meeting in Chicago. Can we fly out to Chicago? And we will tell you about all our cool new stuff. Hey, we’ve got a thing, a trip to New York. You can meet the CEO da da, you know? They would do anything to get in front of your clients. And you’re the gatekeeper. [00:20:35] Joe: Who was that guy? Um, who was the attorney general in New York that put the Stewart away? [00:20:42] Elliot Spitzer. Elliot Spitzer. [00:20:43] bit: Oh yeah. [00:20:43] Joe: So Elliot Spitzer was going after all these fun families, none of which were in New York, by the way. They were all outside of New York. Yeah. So he was playing nice with the New York funds, but he went after Invesco in Houston. He went after strong funds in, uh, Milwaukee. [00:20:58] So strong invited me and a bunch of people out to hear Dick Strong, the owners, his pitch. And man, when we went out there og, he was lobster tail whining and dining us [00:21:09] OG: the best wine. Oh, they had, [00:21:11] Joe: they had Jeremy Siegel come talk to us. Jeremy S Jeremy Siegel. Jeremy, yes. Come talk to us about stuff. They also had, uh, Tom CRE was the coach at Marquette. [00:21:21] They had Tom Crane come and give us a talk. And it’s funny because I sat next to another financial planner. We’re at the airport, we’re getting ready to leave. I said, so what did you think? Because this was their pitch about, Hey, strong is good, and we’re still in business. Strong is fun, we’re great. And he’s like, I gotta get the hell outta here. [00:21:37] I’m like, me too. ’cause when you are selling me this hard, it’s not my first rodeo. If you’ve gotta sell me this hard, you’re in deep shit. Like you are in deep, deep. [00:21:48] bit: Yeah. [00:21:48] Joe: When you gotta pull this. Yet, if I hadn’t been a full-timer, if I didn’t know what the. You know, what the hell was going on. I mean, Tom Cream’s talking to me. [00:21:57] This is amazing. It’s great. Little old me. Oh, it’s, it’s so wild. This, uh, at one point, private equity OG was 50%, five 0% of this fund. And, uh, the current administration’s trying to just get it back to 5%. That’s, that’s their goal. It’d be interesting to see where this goes. I’ll link to it in our show notes at Stacking Benjamins dot com and of course, we’ll follow up more with a 2 0 1 tomorrow. [00:22:25] Kevin Bailey’s going to not just curate this, but talk about setting up your investment plan in our newsletter, which is of course always free and always comes out the day after we chat about this stuff on the podcast. Coming up next, OG and I look at our TikTok minute. It’s gonna be exciting. We already know Doug, what OGs gonna say about today’s today’s TikTok minute. [00:22:49] But is it air quotes, greatness we’re gonna hear, or is it, uh, true greatness? We’ll know in a minute. Plus we’re gonna take a call from a stacker. But before that, you’ve got today’s, well, this one’s wow. This is a great trivia question. What do we got? [00:23:04] Doug: It is great. Hey there, stackers. I’m Joe’s mom’s neighbor Doug, and it’s National Cheeseburger Day. [00:23:11] I like mine with little eant tomato. Yum. I’m gonna fire up the grill so come on over. But let’s get you a trivia question first. That song Cheeseburger in Paradise made Jimmy Buffett tons of money and he likes his with lettuce and tomato and what. Specific cat’s up. Hold on, cat’s up. Who wrote this? I’ll be back right after I get a big kosher pickle and a cold draft beer. [00:23:46] Hey there, stackers. I’m Mr. Pencil, fin, mustache, and guy who’s got the fins out. Joe’s mom’s neighbor, Doug. So how do you spell Kaz up? Or is it ketchup? I think it’s ketchup. Who the hell wants some cats up? I mean, is that what you say to cats? Hey, cats up. Sorry. You know me, obviously have these big thoughts swirling in my head. [00:24:07] I dunno what to do with ’em. Yeah. Let’s get to Jimmy Buffet’s big song Cheeseburger in Paradise. He likes his with lettuce and tomato. And what kind of ketchup? Yeah, it’s definitely ketchup. Of course. It’s Heinz 57 and French fried taters. And now let’s get to the guys who are the taters on this podcast. [00:24:29] Back to Joe and OG [00:24:35] Joe: Jimmy Buffett. Hey, let’s see if somebody’s a Jimmy Buffett on TikTok right now. Let’s see if it’s a amazing creator who’s just bringing it on. TikTok fence to the right, fence to the left, og. To your point, people watching this on video or is it somebody who you know is only air quotes? Brilliant Doug, what do you got? [00:24:56] Brilliant or air quotes brilliant. Today. [00:24:57] Doug: Uh, I’m gonna say that this is gonna be brilliant. I really think that this is gonna change my life. [00:25:03] OG: Buffett, or air quotes, Buffett. [00:25:05] Doug: Buffet or air quotes buffet. Yeah, that’s what you were talking about before, right? Yeah. Yeah. Is this buffet or air quotes? Buffet, Doug. [00:25:13] Uh, this is real buffet. This is the real thing. [00:25:16] Joe: Well, and I don’t know if it is or not. This might be like a brand new way of looking at things, so might be a new interpretive artist, I guess. A talker, which is [00:25:26] Doug: usually considered geniusness when somebody brings a whole new way of looking at the world. [00:25:30] That’s real genius. [00:25:32] Joe: Or is it a bridge too far? This is a talker telling you how you can tell when somebody probably has a bunch of money. [00:25:40] bit: I. I’m gonna let y’all in on a little secret. You didn’t, if somebody’s got money, all you gotta do, what kind of trash can do you have? Hmm. Because trash cans, I’m about to have to open a mortgage, get a mortgage to get, get a trash can, because do you know how expensive those are? [00:25:55] Like hundreds of people are paying three, four, $500 for a trash can for $500. They better take itself out to the street. Uh uh, and people are gonna be like, oh, but that’s the most expensive ones. Yeah, sure. You can get a, a trash can for a hundred dollars. A white one. No top. It’s. This big. Like still hundred dollars. [00:26:12] We’re spending hundred dollars on a trashcan. I forgot to pack it in the move. And that was the biggest mistake of my life because I’m about to be in crippling debt for the rest of my life, just affording a trashcan. I may have to wait until my parents die just so they can pass down their stainless steel trashcan. [00:26:26] You wanna stainless steel trash can these days. You gotta work in tech. You gotta be making money. I don’t know. Trash can is generational wealth these days. Again, next time you’re on a date, don’t ask them what kind of car or what kind of house, just what kind of trash can do you have. So [00:26:40] Joe: date, what type of trash can you got? [00:26:44] Oh, this is a keeper. [00:26:45] Doug: Not for nothing. Uh, you a Rubbermaid man, if you know what I [00:26:50] Joe: mean. I never thought about evaluating somebody’s trash can. [00:26:56] Doug: It’s been a while since I had to buy one. You know, the city now often provides those big giant ones that automatically, I shouldn’t say automatic. ’cause you can’t afford it [00:27:05] Joe: anymore. [00:27:05] That’s why, right? [00:27:06] Doug: You gotta pay with tax dollars. You’re getting levied on your, but I do remember, and it’s been a while since the last one I bought, even then it was well over a hundred bucks and I bet you that was 10 years ago and that thing is hanging on. But the trash guys, it’s their mission to beat the outta your trash can. [00:27:22] It’s [00:27:22] Joe: their mission. Oh [00:27:24] Doug: my goodness. They’re throwing ’em as far as they can order. [00:27:26] Joe: Leave it halfway in [00:27:27] OG: the street. [00:27:27] Doug: Yeah. Banging them against the edge to try to empty it out. And then they just drop it. Like you said, og, let’s hope a Buick hits this, [00:27:34] Joe: taking out their anger on the trash can. That’s what I do on a random Monday. [00:27:38] Like if I was the trash guy and I’d had a bad weekend, the lines lose. I would’ve taken it out in a trash can. It’s a good way to get your anger. [00:27:46] OG: Dude’s making like 200 grand a year though. So jokes on us. I’m [00:27:49] Joe: not talking about Yeah, they’re making, you’re making a bunch of money and. You’re able to take out your anger on trash cans instead of on people. [00:27:57] I mean, free therapy. How great is that? Yeah. Job that keeps [00:28:00] Doug: paying all the free stuff you can pick out of the trash to save on your budget, all that food. Oh God. [00:28:10] OG: It’s that raccoon commercial. Have you seen that one where the raccoons are talking and they’re like, oh, this one tastes like butt. You should try it. [00:28:17] He’s like, why would I try it? It’s like the two raccoons are like, oh, it tastes so gross. It’s it’s terrible. Tastes like somebody’s butt. [00:28:23] Joe: Perfect. Exactly what you’re looking for. Not trying that. Uh, thanks to Tina on our team who, uh, sent that to me and said, I think this is a good one and clearly, uh, a good new way to look at whether somebody has money or not. [00:28:37] Uh, let’s help out a stacker. Somebody said, you know what? I better call Saul. See, hi and og, I’ve got a question. If you’ve got a question, head to stacky Benjamins dot com slash voicemail. And you know what? You can be as cool as Nick who’s asking us a question today. [00:28:55] caller: Hey, Joe and OG Doug. This is Nick calling from the very rainy, very dreary, cold, and soggy. [00:29:02] Don’t ever move here. Pacific Northwest. Recently a family member of mine and her coworkers were offered what I feel is a pretty strange change to the retirement plan offered by their small company. Currently, their employer matches the first $3,000 of their contributions into their 401k. Pretty normal. [00:29:20] The company owner’s proposal though is to instead match employee contributions to their Roth IRAs on the basis of this being better for the employees in the long term. As a total amateur myself, I gave advice to my family member to just stick with a 401k and seek a Roth option. Within that plan, I suspect that there are a lot of ins, a lot of outs, and a lot of what have yous that I didn’t consider, and so I wonder what your advice would have been to my family member. [00:29:51] What mechanism might her employer try to use to accomplish this match? What IRS scrutiny might this draw If. I know I’m gonna get a link, yada yada, but even so, Doug 2024 in Huge please and thank you. [00:30:07] Joe: Huge. Sending a huge piece of swag your way. Doug 2024. It’s the final part of the campaign, so you probably want to call in soon if you want to get yours to make sure that you influence those voters the last few weeks of this, uh, contentious election. [00:30:21] Get those swing states, Doug. Yeah, the swing states. Nick saved that call [00:30:25] Doug: right at the end. ’cause at the beginning I thought he Newman to me. Remember in Seinfeld? Hello. Yes. Newman Newman and that, he kind of did that to me at the beginning of the call, but then he reigned it back in. Saved it with the Doug 2020 Boomerang four what? [00:30:38] Boom. Thanks, buddy. [00:30:39] Joe: Yeah. What a what a boomerang. Uh oh. Gee, this is interesting. I man have never heard of this. Where an employer goes, Hey, I could match your 401k, but why don’t I match the IRA instead? What the hell’s going on there? [00:30:50] OG: I can’t see any scenario that this makes any sense whatsoever for I. The employee or the employer. [00:31:00] So Roth contributions are employee contributions, right? They’re, they’re after tax. Your contributions are on your own. That has nothing to do with your employer, uh, of any kind. And if someone else gives you the money to put into it, especially it’s your employer, then technically that’s gotta be additional compensation to you. [00:31:20] So it’s like if they say, well, I’m gonna give you. Five grand to put in your Roth IRA for you? Well, you have to pay me five grand to do that. You know what I mean? Like there’s no mechanism for transferring money from an employer to an employee’s Roth IRA. That doesn’t involve that, that I can think of, that doesn’t involve compensation W2 compensation to the employee first. [00:31:46] So that doesn’t make any sense to me from the employer standpoint. So yeah, this just sounds really funky. There is a new thing that’s coming. It’s not available yet because, you know, it just takes a while for companies to figure this out and for the laws to get written on it. But, um, but there is gonna be a mechanism for matching student loan payments. [00:32:07] Cool. Well, not in student loans though. So like for example, let’s say that you are just outta school. You can’t contribute to a 401k because you’re doing a hundred dollars a month in your student loans, right? You’re trying to pay off your student loans and from a cashflow standpoint, you can’t do both. [00:32:21] Very common thing for people, there’s proposed to be a mechanism for me to take a look at your student loan payments and say, oh, you’re doing, you did $1,200 in student loan payments. I’m gonna put $1,200 in your 401k to match your student loan payment. You know what I mean? Like that not match it in the sense of like going to the student loan, but that’s not available yet. [00:32:42] There’s also a provision coming for employer matching contributions and Roth 4 0 1 Ks, but I’ve yet to see the tax writeup on this because the whole idea of money going into your 401k from an employer standpoint is tax. It’s, it’s, it’s a deduction for the business. In order to contribute money to Roth, you have to have after tax money, so. [00:33:06] I don’t know how employers are gonna function with not getting a deduction, not having a business expense, but also having a cash flow issue. You know what I mean? Like you don’t get to write off Roth contributions on your taxes as a business owner. But anyways, so there’s some stuff they have to figure out there. [00:33:23] Do you think, by the way, just, [00:33:24] Joe: just hold on a second there, oog, you think this is going to pass or has it passed and it’s just not rolled out yet? [00:33:31] OG: It’s part of Secure 2.0. It’s just not available yet. Like, it’s just like the, um, the rule about if you make too much money, any excess, uh, contributions that you make beyond like your, your over 50 contributions. [00:33:43] If you make over 150 k, that over 50 contribution has to go Roth. Mm-Hmm. Not traditional. That’s part of, it’s all part of the same thing. Gotcha. Well, that’s great news. Yeah, but it’s up to the employer to, to offer it. And I don’t know of any employer that’s gonna offer it because there’s no tax write off. [00:33:58] It’s like, if I have a hundred thousand dollars of employer 401k matching in my company, I, I want to have that as a business expense. Right? Like that’s a legitimate business expense. If it goes on the Roth side, it’s not gonna be. Then if they do make it a business expense, then it’s really not gonna be a Roth contribution to the employer or employee, rather. [00:34:17] So they’re gonna have to like fiddle with, you know, different taxation of employee Roth matching. I don’t know. So more to follow from the, you know, congress. What, what, what happens here right? Is Congress goes, this would be a great idea, law passed, and then the rest of the world goes, well wait, how are you gonna do that? [00:34:35] Who, wait, who’s, who’s doing the programming? And the. Payroll system and the 401k providers and like nobody talks to anybody who actually has to do this. Congress just dreams this crap up on their own and thinks it’s a great idea. I mean, take a look at the RMDs for inherited IRAs. Congress said, here’s the new law. [00:34:53] It’s taken the IRS four years to figure out how to deal, how to implement it. And then they’re like, okay, yeah. So this is the new way that we’re gonna do it. We’re four years behind. Okay, fine. Anyways, for Nick’s family, I, I just don’t see, I don’t see any benefit to this plus, well, I guess if you’re maxing it out, I, I don’t know. [00:35:14] I would rather have the opportunity to do both, right? I mean, why not get a 401k match of some dollar amount and also be able to do my full Roth if you are somehow. Figuring out a way to like have less money going your Roth because your employer does some, then you’re, you’re kind of cutting yourself off at the knees of not getting the match on the other side. [00:35:34] So I don’t think there’s anything illegal about it. I just can’t see the, the, the format for how it gets done. [00:35:41] Joe: Yeah, and to your point earlier, I do not understand what’s in it for the employer. I just don’t, no. I don’t even know why they was, unless there’s [00:35:47] OG: something that’s missing here and, and just kinda lost in translation the telephone game. [00:35:52] It could be that this is. Roth 401k matching like we were talking about, and you’ve got the option of doing the Roth and the Roth 401k matching and the employer’s saying, I can match in the Roth 401k instead of your traditional 401k. And that’s better for you because of the tax free nature. Maybe that’s what’s being offered and they mis misheard a little bit of it. [00:36:12] This does [00:36:12] Joe: sound like Nick getting the data from the relative. Relative brought it home from the boss. Uh, there could, there, there must be some game of telephone here. Could have [00:36:22] OG: been a meeting. Not anything on paper. Yeah. I mean, it could have been a hypothetical like, Hey, I’m thinking about doing this, who might be interested type of thing. [00:36:31] Yeah. I mean, it’s worth looking into a little bit more, but especially if it’s the Roth 401k side of things. But you can’t figure out a way logically that, that this would make sense for an employer. This [00:36:39] Joe: brings up a bigger point, og, which is that. When Tina and I on our team took this course through MIT score, the professor made a great point. [00:36:47] He was talking about social media, but he also said, this is just true in your life, which is think of whatever your question is, whatever the thing is that either something that you like or some question you have, or something about reality, the way that you think. Think that you’re not a snowflake because statistically you are not. [00:37:09] There’s, there’s probably a lot of people that have the same question you do, and I know that, especially when it comes to finance, people are afraid to ask questions. They’re like, I’m gonna look stupid. If you have a question, you are not a snowflake. There’s probably 50 people. If you’re sitting in a room of, uh, you know, a couple hundred people, there’s probably 50 people that are wondering the same thing to themself. [00:37:31] So. This is a spot, I think we use this from HR professionals all the time. People don’t ask enough questions. How does this work? Mm-Hmm. Why would I do this? What else is available? This is a great time. I think we’re just asking the boss a few clarifying questions. It’s gonna come in really handy. [00:37:49] OG: It’s true for any money thing, like you said. [00:37:50] Absolutely. [00:37:51] Joe: Yeah. Too often we sit through a meeting and, uh, you know, you and I have been with people. Heck, I’ve been the person before. I walk outta the meeting and Cheryl will go, so what’d you make of that? I’m like, I didn’t understand what all they were talking about. Well, why didn’t you ask a question? [00:38:02] Well, I didn’t wanna look stupid and this brilliant. She’s like, too late a long time ago. I’m like, well, joke’s on you. You married me, so hey. Uh, but a lot of people probably think the same thing, so ask that question. I. Speaking of asking a question, if you’ve got a question for the stove, Stacking Benjamins dot com slash voicemail, but if you’re not here because you want to clarify your relatives use of retirement plans, you’re worried about your own retirement, you’re worried about your own financial future, and you’re like, I don’t have a comprehensive financial plan, OG and his team are taking clients. [00:38:37] So here’s what you do. You head to stack your Benjamins dot com slash og. That’s the link to their calendar. And it’s the first step to seeing how OG and his team will interface with you to make better financial decisions as we come down the stretch to 2024. Can’t believe I’m saying that phrase, but time to get it moving. [00:38:55] Time to get the ball rolling. Stuckey Benjamins dot com slash og. We gotta continue the discussion that we were having. That Doug you brought up from the trivia earlier. Let’s talk about concerts ’cause we’ve been to our, a fair share of concerts. How many times have you seen Jimmy Buffett live, og? [00:39:15] OG: Um, a lot. [00:39:16] Yeah. Dozen probably. I mean, I won’t see Elijah anymore. Jimmy [00:39:20] Joe: Buffett be saying if you were live right now. Let me out. What’s that? Let me out. This [00:39:25] Doug: conference so bad. Too soon. Is it too soon? So bad. [00:39:29] OG: August 30th was Jimmy Buffett Day a couple weeks ago, as a matter of fact. [00:39:33] Joe: Yeah. [00:39:33] OG: Great entertainer, storyteller. [00:39:35] Joe: I was gonna say, I never went to see him live, but I heard that every concert was different. Every concert was a ton of fun. He always wanted to be there and always seemed to be just, I mean, well worth the money to go see Buffett [00:39:46] OG: playing barefoot is pretty [00:39:47] Doug: funny. [00:39:48] Joe: Did you see him too Doug? Oh, many times. [00:39:50] Doug: Yeah. Tons. Yeah. Six, eight times. I mean, enough that, I mean, he was a regular, uh, at the big amphitheater. Yeah. Pine naia. Yeah. What’s [00:40:00] Joe: your most disappointing concert you ever spent money on? Uh, wow. [00:40:04] Doug: Great question. [00:40:05] Joe: Yeah. Where you were like, I shouldn’t have spent money on that. [00:40:08] Doug: Well, I have two and it’s not because of the money. [00:40:11] I don’t think about it in terms of, oh man, I spent too much on that. But, so I’m a huge fan of a guy named Paul Weller. Big, huge in style counsel. Yeah, I mean, started with the Jam, then the style council. Then he went solo in the, in the early nineties and I’m just, I love darn near everything the guy has done and. [00:40:31] Have been to actually, he’s the guy I’ve seen the most live, and he doesn’t come to the US that often, but there was one show in particular on, I’m like, dude, you just mailed it in and it just, it was in Royal Oak, Detroit area and it just so happened that I had also had tickets to see him in Chicago like two days later and went and saw him with a different friend in Chicago. [00:40:53] It was one of the best concerts I’ve ever seen, and that’s. When I realized the variability of, hmm, just artists from show to show city to city, you never know what you’re gonna get. And I was just, it’s kinda the magic of it, isn’t it? It is, but you know, you just, you don’t wanna go see the, the artist you like the most. [00:41:14] What the off night? You don’t wanna see the off night. Yeah, you don’t wanna see the off night. And I got an off night plus concrete blonde open for him that night and that that sucked so bad. And my other really bad one just happened last year. I went to Chicago to see big head Todd and the monsters, and I had seen him, I. [00:41:28] I think exactly a week before the world shut down for Covid, I saw him in Detroit, one of the best shows I’ve ever seen. And then a year or two actually now what, three or four years later, but saw him in Chicago and it was nothing Incredibly disappointing. Yeah. So bad. Why just no energy? Well, you know what, actually think, yeah, I guess I shouldn’t blame it on him. [00:41:48] It was the venue we were at, uh, the Riviera in Chicago, and the sound quality was awful. Like just everything was just muddy and together, and you could barely discern the lyrics. [00:42:00] Joe: Yeah, I saw the killers at the Fox Theater and they had the sound guy had it turned so high that it was just blaring. Yeah, it, it wasn’t it, like if they would’ve turned it down just a little bit. [00:42:11] This is not old guy thing. I thought if they would just turned it down, I could’ve heard some fidelity instead of just when it [00:42:16] Doug: happened to me. You know, last year at the Riviera, I thought, oh God, I’m gonna be the old guy. I am not gonna say anything. But I was with my sons who were in their twenties and they were like, oh yeah, that was way too loud. [00:42:25] That was ridiculous. We couldn’t hear anything. [00:42:27] Joe: Well, and I wasn’t even worried about the decibels as much as the fact that it was blaring outta the. Speaker and it was ruining my ability to hear, you know, the guitarist do their thing. Exactly the drum do their thing. I couldn’t, couldn’t hear any of it. My worst one was, uh, REM showed up once at Pine Knob North of Detroit and they did not wanna be there. [00:42:44] Michael Stipe, when he does not wanna be there, was, you know, and it’s REM and you’re like, oh, this is gonna be great. It’s so, and I had so much anticipation and he walked out and, uh, about 90 minutes of complete boredom. And even on the, it was so funny because. I laughed out loud when they came out to do an encore. [00:43:02] ’cause I was like, you didn’t wanna do the main set? Why the hell are you coming back up? See a obligatory thing. Then they mail in the encore and leave again. Oog you, uh, worst concert. [00:43:11] OG: I can’t actually think of one. That was the worst. Um, that’s good. Yeah. I, I, I mean, I don’t go to a lot. Wow. So it’s not. I don’t tend to, he’s also [00:43:19] Doug: not sober enough through most of his concerts to probably realize how good they are. [00:43:24] OG: Well, I mean, there’s, there’s a little of that. I mean, talking about Jimmy Buffett, the last one that we saw was here in Dallas and Frisco, and I brought my kids. And I don’t know how we got these tickets or what conspired to make this happen, but we were in the fourth row from the front on the aisle. [00:43:41] caller: Wow. [00:43:41] OG: So, you know, my kids were little at the time and, um, the boys were, I think Caroline stayed home. I don’t obviously, but having the aisle open was awesome because like the kids could see and there was plenty of room to like kinda, you know, do your thing. Yeah. I know that like for Dave Matthews, Dallas is generally considered like the mailed in show. [00:44:01] ’cause usually Houston’s really big and then they go somewhere else after Dallas generally. So it’s like kind of Dallas is the sandwich one and Dosis is pretty cool, but not gigantic. I. Maybe not quite as big as Pine Knob to kinda give you guys an idea if you’ve never been there. But this, this last show, it was like top hit after top hit after top hit after top hit. [00:44:21] Like it was like they hit all the, that like every single song that you’re like, oh, it’d be great if they played this from the back catalog. Oh, like they’re rigging your mind and this one and this one. Yeah. You’re just going, holy crap. So, uh, but there’s no record of it. They post a lot of their stuff on Sirius now, so you can re-listen to the concerts, but, uh, but they didn’t do that. [00:44:38] I had a good [00:44:38] Joe: time seeing Springsteen, but it was exactly the opposite. It was, let’s play all the most obscure BSides that nobody’s heard from a, and it was great watching him on stage, but he played so few of his hits. [00:44:50] Doug: Was that the one I that [00:44:51] Joe: you took me to? Yeah, it was at the Palace. Right at the palace, which is, yeah. [00:44:55] I think gone now, but that Oh, it is gone. Yeah. I thought it was really fun watching him. I thought they put on a good show, but I didn’t know crap. Like I feel like I know a fair amount of Springsteen, but I was like, Nope. [00:45:06] Doug: Two things stick in my memory from that show. One was how much energy he had, and at that point he was old. [00:45:13] He’s still bringing it. Almost to that same level, and he’s ancient. Now, the other thing that sticks in my memory is how hilarious it was to watch all of these older people dress up like they were in high school and they were squeezing into clothes they had no business squeezing into it was fantastic. [00:45:30] I went to [00:45:30] Joe: see Rush with friends and I, I told my friends at a time, I said, I’m not really a Rush fan. You know, take somebody else. And they, so they call me back like an hour later. They’re like, we can’t find anybody else. I’m like, I love going to, because I told ’em, I said, if nobody else can go, I’m in. [00:45:41] ’cause I love going to concerts and heck, it’s Rush, let’s go. But Doug, there were dudes my dad’s age playing, uh, air drums, just, it was so damn funny watching this dude my dad’s age just drumming along, [00:46:00] just like Springsteen brought it. I had this whole new appreciation for that band. ’cause they were there. Probably the, yeah, we could probably make this the long, longest after show ever talking about concerts, but I think it’s time that we wrapped it up for today. Doug, as an encore to this presentation, what should we have learned on today’s show? [00:46:17] Doug: Alright, Joe, here’s what we should have learned today. First, take some advice from og. Keeping it simple with your investments is not just better for returns. It’s easier to track and manage too. Second. Here’s a to-do from our TikTok minute, go check out your neighbor’s garbage cans if you’re wondering how much cash they have. [00:46:36] But the big lesson, wait, did I just tell you to look at your neighbor’s cans? Well look at my cans. All right. Look, I My eyes are up here. Up, up. Yeah, up here. There you go. This show is the property of SB podcasts LLC, copyright 2024, and is created by Joe Saul-Sehy. Joe gets help from a few of our neighborhood friends. [00:47:02] You’ll find out about our awesome team at Stacking Benjamins dot com, along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. Oh yeah. And before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know. [00:47:21] This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s Mom’s neighbor, Duggan. We’ll see you next time back here at the Stacking Benjamin Show.
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