Podcast Episode Details
Back to Podcast Episodes
Looking Back
This episode of Talking Real Money digs into recency bias—our human tendency to expect the future to look like the recent past—and how it’s quietly reshaping retirement portfolios. Don and Tom examine rising stock allocations in 401(k)s and target-date funds, even among older investors, and why this performance-chasing is dangerous. They highlight the risks of target-date fund managers pandering to investors, the importance of rebalancing, and the need to stick to long-term allocation plans based on risk tolerance, not market trends. Listener questions cover immediate annuities, 529-to-Roth transfer rules, and whether paying an advisor’s 1% fee is worth it compared with DIY investing.
0:04 Recency bias explained and why it drives poor investment decisions
1:05 Stock allocations hitting record levels in 401(k)s across all age groups
2:48 Risk of higher stock exposure for investors in their 60s
3:33 Target-date funds increasing equity exposure and chasing performance
5:00 Example of an investor going from 60/40 to 90% stocks
7:00 Post-2008 shifts: investors moved into bonds when they should’ve been buying stocks
7:26 Importance of rebalancing twice a year to avoid creeping U.S./large-cap overweight
9:00 Why boring diversification still works long-term
11:26 How to check your target-date fund allocation on Morningstar
12:41 Active vs. index target-date funds: Vanguard vs. T. Rowe/Nuveen
14:03 Listener Q: Fixed immediate annuity trade-offs (“wizards of odds”)
17:49 Why insurers win: payout math vs. life expectancy
18:59 Why Don & Tom dislike most annuities but tolerate immediate annuities in some cases
20:52 DIY alternative: 5% bond/CD ladder vs. annuity payout
21:25 What if you get 6%? Extending sustainable income to 23 years
21:37 Listener Q: Rules for rolling 529 funds into a Roth IRA
23:00 Key 529 limits: 15-year account age, 5-year holding period, $35k lifetime cap
23:14 Listener Q: DIY investing vs. hiring an advisor at 1% AUM
24:22 Why a good advisor’s value is about more than returns—taxes, withdrawals, estate planning
25:42 Vanguard’s Advisor Alpha and why behavior coaching adds value
Learn more about your ad choices. Visit megaphone.fm/adchoices
Published on 1 week, 5 days ago