- Welcome back to Portfolio Rescue. We get tons of questions every week on Twitter, email, YouTube. People stop dunking on the street sometimes. And we like to try to answer them so askthecompoundshow@gmail.com is our email. Sponsor for today's show is Future Proof Festival 2023. This was the Future Proof Festival this past year in 2022 is easily one of the most fun things I've ever done career-wise in finance.

It's on the beach. We're gonna be doing live podcasts there. Duncan and I are gonna do a live Portfolio Rescue there. It was helpful from Josh and Michael, Animal Spirits live, Compound and Friends live, tons of well-known speakers. We're gonna do some musical acts. It's gonna be so much fun.

Visit futureproof.advisorscircle.com for more. Duncan, one of my favorite things about the one last year, the food, was food trucks. And you could just go eat it whenever you wanted. You didn't have to wait in like a buffet line or someone to bring you food at like most conferences. - Right.

And it was all-inclusive. You didn't have to have like tickets or, you know, pay separately, that kind of thing. That was nice. I like that. - It's fun. We had a ton of people who aren't even in the finance world come last year who were just kind of part of our audience and fans of the shows.

- Right. We met up with some of the Animal Spirits Discord people. Well, maybe we can do that again. That was fun. John and I went and met them. That was fun. - That's right. Yeah. So anyway, check it out, Future Proof. I think if you go early, you can get a little bit of a discount.

Let's get rid of the questions. - Up first today, we have a nice short one. Easy read from Edward. Is it crazy to be 100% in stocks from age 32 to sometime in my 50s for my retirement accounts? - I don't think it's crazy at all. But the thing is, there's no hard and fast rules for this that work for every person in every situation.

But it certainly makes sense for younger investors to have more risk in their retirement accounts than older investors. My favorite finance writer of all time, William Bernstein. The guy's smart. He can communicate really good stuff. So he has a book called Deep Risk that goes over the concept of risk when it comes to investing better than any explanation I've ever read.

Quick summary. He says risk comes in two flavors. Shallow risk, which is a loss of real capital, but it's recovered in a relatively short period of time, say within a few years. Deep risk is a permanent loss of capital. That could be through something like inflation. That could be selling out at the wrong point.

That could be government confiscation, some of these things. And his whole thing is, stocks against deep risk, like a real loss of capital, but exacerbate shallow risk, which means you're gonna have a lot of volatility. So Bernstein's whole point is that if you're managing for short-term spending needs, you have to follow shallow risk, while long-term spending needs, you have to be guided by deep risk.

So the moral of the story is, if you're a young saver, your biggest asset is human capital, right? It's your future earnings power and your savings. You want to have lower prices. So the biggest risk of the stock market is prices go down, right? As a young investor, you should be getting on your hands and knees and praying for lower prices, so you can put that savings to work at higher dividend yields and lower valuations and all that stuff.

If you're an older investor, you still want to have a little bit of money in stocks, as we talked about before, but you have short-term spending needs, and you might not be able to wait out a bear market as long. So I totally agree with this rule of thumb, but let's throw up the second question, because it's kind of a similar one, and then before I get in, we can answer these both at the same time.

So do another one. Okay, up next, we have the following. "I don't get why people work a 30-plus year career while investing in stocks, only to glide path into a heavier bond allocation around retirement. Why not just stay 100% in stocks and benefit from price appreciation and dividends for life?" So I got both of these questions from the same blog post.

So John, do a chart on here. This is, I did a little thing of the calendar year returns from 1928 to 1922 for the S&P 500, broken out by different return. So you can see, 0 to 10%, 10 to 20. This is 95 years of historical data. One of the craziest things about the performance of the U.S.

stock market historically is that you've been more likely to have a return in a given year of 20% or more than a loss in your given year. Let me repeat that. Over the last 95 years, you've been more likely to have a gain of 20% or more than a loss, which is pretty crazy.

So there have been 34 years with gains in excess of 20% over the last 95 years. That's more than a third of the time. 26 down years in that time, which is around 25% of the time. So not too bad. Now, people look at this stat, and I think that's why we got the questions and say, "Why would I not just have all of my money in stocks then?" Stocks are your best bet at earning a return over the rate of inflation.

If you just wait for the long term, the dividends grow, all these things. I think the optimal portfolio for anyone with a time horizon that's multiple decades should be mostly equities, but sometimes your emotions hijack you and don't allow you to get to those long-term decade periods. So, John, do a chart onto the next one.

That's just the drawdown. Even when we have gains, we've shown this before, the blue lines are the gains, the red dots are the entry-year peak-to-drop losses. Since 1928, the average loss is like 16% a year, a little more than 16% a year. Since 1950, it's a little more than 14% per year.

So even with long-term returns that are great, it can still be a volatile time in the short term, right? So I think some investors still need that emotional hedge, even when you're younger. I think that's kind of knowing yourself personally. I'm 41. For me personally, retirement accounts are all 100% stocks or equity-like investments.

I have a time horizon that's measured in decades as opposed to years or months, so I'm fine taking that. But I still have liquid cash reserves or short-term bonds to see me through shorter-term goals and emergencies, and I imagine as I get closer to retirement that that would need to be picked up so that there'll be a higher balance in those liquid savings.

So the thing is, you don't want to have to sell out of your stocks while they're down. So John, do the next one. This is S&P 500 bear markets since World War II, and I did peak-to-trough, means the top of the market when it peaks all the way to the bottom of the bear market, and how many months?

That's an average of roughly 12 months, right? So call it a year on average, historically, for the last few bear markets. Then I did a break-even column showing, okay, how long did it take you to go from peak-to-trough back to break-even at all-time highs again? So that's, on average, 21 months, taking from the bottom.

Add those up and you go peak-to-peak, and we're talking 33 months, so it's almost three years on average in the bear markets in modern history, where you go peak-to-trough back to peak. Shortest one was COVID crash at seven months. Longest one was the 1973-74 bear market, which took almost six years.

So my whole point is, you can have these bear markets that last a long time. The 2000-2002 bear market was also pretty long. You know, you don't want to be selling off your stocks when they're down for that long. Now, maybe you say, well, my portfolio's big enough, I can live off the dividends.

That's fine. Dividends aren't written in stone either. In 2008 crisis, the dividends on the S&P 500 fell more than 31%. So they didn't fall nearly as much as prices, which were 56%, but they did fall. So it's true that most of your compounding gains come later in life, when you have a big portfolio.

I think that's, if you did this straight-line spreadsheet and say, I'm gonna earn 7% per year every year, or 8%, whatever it is, the majority of the gains come when you have more money. Which, compounding, that makes sense, right? An 8% gain on a million dollars is way bigger than an 8% gain on $100,000.

But I think you have to kind of balance out your ability to sit through a bear market and maybe have bad timing, versus, I still want to grow my wealth. So I do think it's important to still grow your wealth when you're retired, but I think you have to have some balance in there of having some short-term liquidity.

And the other thing is, I think people probably mentally bucket out different things where they're looking at short-term cash, or their real estate holdings, or their portfolio. And so, most people don't have all of their net worth 100% invested in stocks anyway. But I think if you're looking at a retirement portfolio, yeah, for young people, 100% is not crazy at all.

When you get to retirement, I'm sure some people probably have the ability and intestinal fortitude to do that, but you're just setting yourself up for the potential for a really bad outcome if you're unlucky. I have a question. Is there a term in the markets for the opposite of alpha?

Because looking at those benchmarks in history, it's pretty amazing, looking at my trading account over the last year or so. What do you call that, when it's the opposite of outperformance? That's called reality, I think. The market is really hard to beat, unfortunately. And even the people who do this for a living, they do this all the time.

They have the computers and they have the quants, and they hire these people from MIT to be rocket scientists who are going to figure out how to beat the market. Beating the market is hard. Yeah, we can't all be Jim Simons, right? Yes. Also, on the dividend thing, am I crazy or did Disney used to have a dividend?

I saw recently in my account that there's no dividend there. I just hadn't paid attention in a long time. I do believe that Disney canceled their dividend during COVID to kind of make up for the lost park revenues. And you get your Star Wars shows now because Disney canceled the dividend.

That lack of dividend, that's how they funded. Maybe Bob Iger coming back will put that in there. Okay. Again, if you're somebody in their 30s and you can handle stocks moving around all the time and not touch it and not mess with it, then being 100% in stocks is certainly fine.

I think there probably are retirees who can handle that kind of portfolio, but I would think that the number of them who can handle the emotional volatility from it is very small. And according to our poll in the chat right now, 72% of the chat say that they're nearly 100% in equities in their portfolios.

That makes sense. We've got some long-term investors here. Good for them. All right, let's do another one. All right. Up next, we have a question from Zach, and this is a nice not to brag. I kind of like this one. Zach writes, "I'm a 38-year-old in California with $1.3 million in a 60/40 portfolio with a 4% withdrawal from an inheritance, $250,000 personal portfolio of stocks, $150,000 cash and some other small investments, and a paid-off house valued at $500,000.

I have about 50% savings rate between my 4% withdrawal and income. I'm frugal, but here's the kicker. I've been working low-paying jobs my whole life while in this position. I make about $20 an hour with no college degree. Sometimes I feel like I should just quit my job because this income isn't doing much in the grand scheme of things.

I'm just saving money to save more money and not leveling up. How should I structure my portfolio in this situation? Should I quit my job and enjoy an average life with the assets I have?" I really like this question. This is why there are no hard and fast rules, because in the last question, I said most young people, human capital is their biggest asset, and for old people, it's financial assets.

Zach is a relatively young person who has a ton of financial assets, and they dwarf his human capital. This is why there are exceptions to the rule. This is interesting. I want to run some quick numbers here. Zach said he's taking 4% on his $1.3 million inheritance. That's around $52,000 a year.

I don't know why the 4% from that portfolio. Maybe it's some sort of trust thing where he has to take that money, and that's how it's squashed out. That's why I was going to ask if that was a required thing. I'm guessing that that would make sense. Otherwise, if he's saving 50% of it, what's the point of taking it out in the first place?

He's saving a lot of it. Let's just assume your spending needs grows by the Fed's 2% inflation rate from that $52K, and I'm going to do a 4% rule every year. Your portfolio does 6% a year, because it's diversified. In 20 years, you'd still have roughly $1.8 million. He's doing pretty good.

Don't take this to the bank, because we haven't factored in taxes and a sequence of return risks. This is just a quick one. Yeah, especially if he's saving 50%, he's probably really only spending a 2% rule. Zach is in a pretty good position. I don't know what happened to put him into this position, but houses paid off, no mortgage.

He did say inheritance. Yeah. It could have been something with the parents, which is not a great situation. Six figures in liquid savings, seven-figure portfolio. Financially, as a 38-year-old, you already kind of won the game. The question is, now what? First of all, enjoy yourself a little bit, maybe.

You've won the game. Some people would say stop playing, but you still have a potentially long time horizon. You could have 50, 60 years to save and compound this money. What do you do? Go back to school, start a business, take a risk, try a new job, travel for a few months, volunteer, maybe give some money to charity.

The point is, do some stuff that makes you happy. You have plenty of capital and flexibility, but I think the first thing you need to do is you need a financial plan. You probably need to talk to a financial advisor to help you through this, because one of the things that a financial advisor can do is help you to define your goals.

I think Zach is in a great position financially, but probably hasn't gone through and figured out, what do I actually want to do with this money? It seems like he doesn't know. You need someone to help you define what those goals are, put it down on paper, create a financial plan, and figure out what exactly you want to do.

That will allow you to spend the money wisely, enjoy yourself, and also keep up your standard of living along the way. That's the goal, tooting your own horn here as a wealth manager, but I think Zach needs some sort of financial plan. That's the thing. You can't figure out what you're going to do with that money or your goals if you don't have something that you're shooting for.

He could also start a FIRE podcast, talking about early retirement and stuff. Well, the Internet comes after people who go FIRE because of an inheritance, though. Yeah, no, I'm kidding. He'd have to leave that part out. But again, great financial position. I don't know how that happened, but now you have to figure out, what am I going to do with this great position that I'm in?

This is the hand that I've been dealt. Let's do some good here. Yeah, I feel like I would maybe buy a business, a local business or something, a restaurant or something that I enjoyed. Because some people in the chat are talking about that. At that young of an age, if you just quit working, unless you have a bunch of hobbies that keep you busy, you might end up actually worse off and not happy if you just don't really feel like you have anything to keep you on track.

Alternatively, if you don't have that type of personality, then like I said, maybe volunteer and do some charity work or something that can allow you to give back or keep you busy. If you wanted to buy a business, maybe a banana stand. Are you an Impressive Development fan, Duncan?

I am. There's always money in the banana stand. All right. Let's do another one. Zach, give us a call if you want to talk to someone. I'm not tooting my own horn here, but maybe it'd be helpful to walk through some of the financial plan. I think that'd be helpful.

Right. Yeah. It sounds like he can only benefit from that. Okay. Up next, we have a question from Lee. "If I plan to retire early in my mid-40s, should I stay with a traditional 401(k) and do a Roth conversion after I retire at a lower bracket or change to Roth and get the Roth matching?

I'm in the 22% tax bracket." I don't understand this question. Lots of early retirement talk. Let's bring in the tax man himself, Bill Sweet. Hey, Bill. Oh, you're muted. Yeah, John. Gentlemen, it's good to be back to you in the new year. I was beginning to think you forgot about me, put me in a box.

Good to be back. Let's do this. All right. Early retirement. This is another, sounds like we do have a fire advocate here. Early 40s, that's pretty young. Good for them for saving enough or having a lifestyle that- I'm in my early 40s. Should I retire? Me too. Personally, I could never do it, but I respect the move.

Good for them for getting to that point. I could never do it. What are the tax implications? Because if you're retiring that early, the tax deferral stuff, the tax deferred retirement accounts kind of take on a different role here because you're not going to be able to utilize them as much as you would if you kept working.

So what's the plan here? That's so interesting because I dialed right into the last part of that question, which was, should I switch to Roth to get the Roth matching? And I think what you gentlemen are not aware of, maybe because you skipped out on tax time with Bill and Bill at 1130 AM this morning, was the Secure Act 2.0, which Sleepy Joe signed into law for us on December 30th, includes now the ability for your employer to match Roth contributions with matching Roth retirement funds.

And that's very cool. That's new. And you guys know what's on the back tattoo. Very first show, the back tattoo came out. Go back to Portfolio Rescue 1 if you want to take a look. But Roth IRA conversion is what the back tattoo on my back says. You know, Bill told us this last week.

I didn't know that was a thing. So I've been in a Roth 401(k) for the last couple of years. I did not realize that my contribution from Rich Holds Wealth Management was going into a traditional 401(k). That is correct. We've been screwing you over unintentionally all this time. But to be fair, we were following the law.

The law changed, right? But the only thing better than the Roth IRA conversion, guys, is matching Roth contributions, right? If I can get my employer match, my 4%, 6% safe harbor, whatever it is, if I can get that in a Roth account, not only is that free money, it's tax-free free money, right?

It's double free. So that's what we need. And that's what I dialed in on. I like double free. Yeah. So, but Ben, you sort of dialed in on, right, that I'm going to retire in my 40s. And so what type of account, what kind of assets do I want to have if I'm taking distribution to my 40s?

Well, we don't know how old this person is. They didn't tell us, but let's say they're in their 20s, and they say, "I'm going to retire when I'm 40." And maybe your plans change at that point. But at that point, you probably have to have a lot more taxable dollars rather than, right, to get you through that until you've touched the Roth burden.

Yeah, yeah. Big ups, big ups. And I would definitely discuss that with a certified financial planner, Rich Holds Wealth Management or elsewhere. But conceptually and very broadly, I think if the question is, do I do traditional versus Roth? 100% the answer is Roth. And the reason is because of favorable distribution rules that occur for Roth assets vice traditional.

For a traditional IRA, if you take a distribution prior to 59.5, which is the year where your distribution should come qualified, you need to eat a 10% penalty plus the income tax, right? And so if you're in a 22% tax bracket, you're paying five to state, all of a sudden your effective tax rate is like 40%, right, because you're paying that extra 10% early distribution penalties.

Roth IRAs, there is a penalty for early distributions, but it only applies to the earnings portion. And assuming that on retirement, you take your Roth 401(k) rolled into the IRA, which is probably a good move, you get these favorable distribution rules allow you to access your basis first. So for somebody retiring in their 40s, yeah, I think a Roth is grade number one.

Might even be favorable, Ben, over a taxable brokerage account, although tax diversification is a great principle. Right. So yeah, so you're saying if you roll over the IRA, you can still take out those contributions tax-free, penalty-free, and that's kind of what you can live on until you can get those other ones later on in your life.

Yes, your contributions. And just point of emphasis, only from an IRA. So you actually have to roll the money over to an IRA to take advantage of those rules. Roth 401(k) distributions are always pro rata. So you have to be careful with the implications. And my other big advice here would be, beyond finances, have a plan for what you're going to do with your life.

Because I think you could get bored real quick in your 40s if you don't have something that's going to keep you going. You can only go on so many trips and sit on the beach for so long before you get a little bored, I think. I know it sounds great in theory, but if you haven't thought through like, "What am I going to actually do with my life?" You see a lot of these fire message boards things where they show people who say, "I planned for 15 years.

I saved 7% of my income, and I realized I didn't live my life. I didn't have any hobbies. I didn't have many friends." So I think that is probably a bigger part of the situation than the finances of it. I would agree 100%, Ben. Right. All right, let's do another one.

Okay, up next we have a question from Eric. Also, Bill, I should make you put money in the swear jar for saying "Sleepy Joe." You're going to get so many hate political comments now in the YouTube comments. It's a great nickname. Come on. Okay. He should embrace it. Yeah, I agree.

Up next we have, "We're 34 and 33 with two children, four and two, and expecting twins this summer. Both of us have Workplace 403B plans, Roth IRAs, and rollover IRAs from previous jobs. Taxable income in the 22% bracket. We currently have child credits of $6,000 a year, which will potentially jump to $12,000 a year in 2023.

All else kept equal, our effective rate in 2022 of 13% would drop to about 6.5% in 2023 with the additional tax credit. I only hear of arguments for Roth early in career due to income level, but also think young families have a unique window to contribute and convert to Roth at a very appealing, effective rate up through their 30s and 40s.

Does it make more sense, especially for young families, to use effective tax rate as the deciding factor?" All right, before we get into the Roth stuff here, I want to talk a little bit about having twins to a family. First of all, four, two, and twins, Godspeed to you.

That's a lot. We have twins, George and Kate, are now five, going on six. We actually looked through some old photos, found this one recently. This one always makes me happy on the old... I'm so glad we got... Chunky monkeys, look at them. Yes. We actually have a handful of friends and family members who have twins.

So it's kind of like you're joining this club or fraternity. A few thoughts on having twins, because it is a totally different experience. The first three to four months basically was a blur, complete blur. Life is very chaotic, but I think in the best way possible. It's really crazy to see the bond that twins have with one another.

My twins have this unspoken language that they have that only the two of them understand. It's like they're on the same wavelength. It's very bizarre. Be prepared for this one on a regular basis, especially with car seats. I'd be carrying both car seats. You know, you get the biceps from carrying babies.

I probably heard this on a weekly basis. "Got your hands full there, huh? Huh?" Yeah. Always hilarious. How about them apples? If I felt like pulling it up, I'd say, "Literally, my hands are full." So I think you also have to put on a brave face, because all the other parents out there are going to be expecting you to be double tired and double miserable in those early months when you're not sleeping.

I think you have to pretend like you're not, right? Now, I was never miserable, but I was definitely tired. It actually didn't really happen for us that much. Things were pretty hectic, but my wife spent the first three months saying, "We've got to get these sleep trained," and we did.

High-quality laundry machine and dryer are key. With four kids, you're going to be doing lots of loads. You don't want to double up on the laundry machine even. So anyway, that's my thoughts on twins. You're a guy, right? Yeah. Don't even think about the fact that you're going to have three, maybe four children in college at the same time.

Just push that off. That's a future use problem. Don't even think about that now. The more practical stuff, how does the child tax credit stuff work here with four children? That's potentially a good thing for them, right? This could be a good deal? Yeah. My guy's math, I think, is a little bit off.

He's using the prior child tax credit. It's $2,000 a year here in 2023, which is no small shakes. But what the listener is getting at is- Oh, and they thought it was $6,000. Yeah. So bad news right off the bat, but it's going to be okay. You're going to be so busy and sleep deprived you won't notice.

But what they're getting at is these tax credits, they effectively wipe out your income tax. A tax credit, dollar for dollars, is more powerful than a deduction because instead of reducing your taxable income like a tax deduction does, a mortgage tax deduction, what you're getting is these credits that offset your income tax, which is awesome.

And you get to take $2,000 a year as the current law all the way up through age 15, when the child turns 16. So it's a pretty long- So they're getting eight grand a year with four kids. Basically, yeah, to offset their taxes. And only part of that is refundable.

And I think the listener's question is, "Hey, how do I use this? If this is going to offset a major tax, I'm going to be so sleep deprived I'm not going to notice. But should I flip the switch in the 22% bracket? Should I take some more income to use up this tax credit?" I think the answer is yes, but I would be careful because the last part of the question is really important on whether you use marginal versus effective tax rates.

So to solve for this, because I didn't have a lot of time to prepare, I made a famous chart, and I want to walk through it briefly. I know, Duncan's going to throw me out. So just to illustrate what's going on here for podcast listeners, you get $100,000 of income, calculate the tax at $13,000, you could offset that by credits, let's say $6,000, you're left with $6,500 of tax.

His question is, "Okay, cool, that means my effective tax rate is 6.5%, right?" $6,500 divided by $100,000 of income, that's where that comes from. So let's say that you add in a Roth versus a traditional, you were deducting, now you've got more income because you elected Roth, now what happens?

You've got more income, you've got more tax, let's say that you still have the equivalent amount of child tax credit, but now your tax is $7,000 because you're at the 22% rate. And so his question is, "Cool, now my effective tax rate is 9.6, less 6.5%, that's only 3% more, right?

Should I use that?" I think the answer is no, because the marginal tax rate, the extra dollar that comes in on top of everything else is the relevant number. That is going to be 22%, so ultimately you're going to be paying 22% on your taxes, not 3%, even if your effective tax rate is different.

And the reason I think that's important to outline is that the child tax credit is partially refundable, you can get that back on a refund. So I think the math is a little more complicated depending on how much the listeners actually earn, but I think the bottom line answer to your question, use your marginal tax rate when you're making these decisions, not your effective.

- Okay, I gotcha. Yeah, I see what you did there. That makes sense. - Yeah, yeah, yeah. Some jujitsu. And guys, I got, you just got to visualize this. You got to come live in my brain, come Inception style into here. You got to see it to believe it.

- Yeah, yeah, 100%. I definitely get that. - Yeah. - I understand everything there. - Duncan, when was the last time somebody asked you a tax question on the street from Portfolio Rescue? I couldn't stop thinking about that backstage. - All the time. All the time. - I mean, I did it last week.

Pop quiz! You know, I came out from... And you got it right, to your credit. So good for you. Good on you. - All right, we got one more here. - Okay, yeah. Last but not least, we have a question from Andrew. Is it possible to do a Roth 401k, traditional 401k, and backdoor Roth?

- Okay, this person. Bill, you've been beating Roths over that. I mean, honestly, 90% of the questions this week had to do with Roth IRAs that came into my inbox. So people are trying to figure out like, okay, I want to max out as many tax for strategies as possible.

What are the combos here? And what are some of the knockout factors that would deter you from using any one of these? - Yeah, 100% you can. I would advise it. I think it's great fun. It's a great thing to do on a Friday night with a glass of Chardonnay.

But what I would throw at a listener is to pay attention to the limits. The limits are very important. So for 401ks, the aggregate amount that goes salary contribution, salary deferral, is $22,500 per person per year if you're under the age of 50. That amount is split between traditional versus Roth IRAs, meaning that you cannot duplicate that amount.

So if you do 22,500 in one, you can't do it in the other. You can do 11,250 in both. Some mix, but ultimately those are aggregated. IRAs are not subject to the 401k limits. And so yes, you can do a traditional IRA contribution, backdoor convert it if you're over the income limit.

And you can do that in addition to the 401k, but the aggregate limit applies to the 401k. So that's the important distinction. - So if I get another job that's remotely, and I'm doing another remote job on the side, I can't open a new 401k and get that limit from there?

- Ah, great question, Ben. So you brought in a second job. No, so this is interesting. The salary deferral limit, which is what I talked about a second ago, that is limited. You cannot replicate that at different jobs. However, you can in different jobs do a profit sharing contribution.

So someone who might have a SEP IRA is considered a profit sharing plan. Those are not subject to either the IRA limits or the retirement penalty limits. Again, distinct to the profit sharing element. So if you work multiple jobs, more than likely, you're not going to give you a lot of matching contributions.

But if you happen to get a 4% match, yes, you can duplicate that in multiple places. - If someone made me the tax retirement czar of this country, I would just give everyone the same limit no matter what. Everyone gets $100,000 of tax deferral, whether it's an IRA, a SEP IRA, a 401k, a 403, whatever it is.

I don't know why we have to have these different limits. - I'll go even further, Ben. When you and I retire in our mid-40s, I guess we missed the boat on that. But when we retire in our mid-50s, we are going to go lobby Congress in Washington and get this away from the employer.

That'd be my thing. There is a retirement plan for federal employees called the TSP, the Thrift Savings Plan, one of the lowest cost plans in the country. - You're preaching to the choir here. My brother is part of it and I'm jealous of it all the time. - And it's open to federal employees.

Why do we do this? Through employers, because it requires the employer. Me, as Red Hull Wealth Management, the plan sponsor, I have to set this up every year for the benefit of you guys, right? And our guy, John, I have to do this every year and certify stuff and pay bills and blah, blah, blah.

Why don't we just do this through the federal government, encourage people to save? Like, screw the match. Maybe the company puts in the match, I don't know. But this should be open as a retirement program for the people. - You must be a reader of Wealth of Common Sense.

It was one of my early blog posts. And it's also one of the cheapest retirement plans. I think each fund is like two or three basis points of investment expenses. BlackRock runs it for them. It's an amazing program. You get like five index fund choices. Yes, it should be open to all Americans.

- Government employees, sponsors, yeah, the whole thing. So I'm with it. And so we are going to go to Washington. - How would companies use their retirement plans to try to lure talent? - Yep, yep. And for the inauguration day in 2036, meet me there on the steps of the White House.

We're going to go meet Chuck Schumer, Kristen Gillibrand. We're going to go right up to Sleepy Joe, still be president and get this thing signed into law. Let's do it. Who's with me? - Okay, another dollar in the square yard. - You can Zoom me into that one. I'll watch from Zoom.

- I think he's going to be like in his hundreds. - We'll do it live. We'll do a live show from DC. - Let's do it. - All right. If you have any tax questions for Bill, any of us, Duncan, keep them coming. - They take me out of my box when we get more than 10 a week, so.

- Askthecompoundshow@gmail.com. Remember new compounded friends tomorrow. If you have something in podcast form, leave us a review, leave us a comment below. I respond to all of them unless they're mean, then I don't. - Yeah. - Compoundmerch is idontshop.com. Remember, keep those questions coming. - We've got some new stuff coming.

We've got some new stuff coming in the shop. Keep your eyes peeled. - All right. - Yeah. - Are you still hiring? Are you still hiring a tax person? - Yeah. We're looking. We're looking. It's a hard time to hire somebody in tax, but yeah, if you've got skills, get on our radar.

- Let us know. Thanks everyone who showed up to the live chat as always, and we will see you next time. - See you, everyone. - Yep. Big shouts to Eric. Congrats on the babies. - Yeah. Congrats. - Yeah. Thanks. - Thanks. - Thanks. - Thanks. - Thanks. - Thanks.

- Thanks. - Thanks. - Thanks. - Thanks. - Thanks. you