First Friday: The Retirement Rules That Changed While You Weren't Looking

0:00Crypto is down. Job openings are down. Tax refunds are up. Spending by the hyperscalers big tech is up. There's a new nominee for Fed chair. There is a Roth mandate for a certain segment of the population. Prediction markets are opening grocery stores. And a prominent member of the personal finance slash behavioral economic landscape is in the Epstein files. We've got a lot to cover. Welcome to the first Friday episode of the Afford Anything podcast. This show covers five pillars, financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double-I fire. I'm your host, Paula Pant.

0:42I hold a Master's in Economic Reporting from Columbia. And typically, we normally alternate between episodes in which we answer listener-submitted questions and episodes in which we interview a guest. There's one exception, and that's the first Friday of every month when we pause to take a big macroeconomic look at what's been happening in the markets, in the economy over the past month. So welcome to the February 2026 First Friday episode. A prominent name in the personal finance slash behavioral economics community, a name that many of you will recognize, was referenced in the Epstein files 636 times.

1:24Dr. Dan Ariely is a prominent professor of business at Duke University. He is the principal of the Center for Advanced Hindsight, which is a Duke-based lab dedicated to the study of behavioral finance. He is the author of three New York Times bestsellers, including Predictably Irrational, which is a book that many of you I know have read, and it was his biggest bestseller. He also wrote The Upside of Irrationality and The Honest Truth About Dishonesty. He wrote an advice column in the Wall Street Journal called Ask Ariely, and he was a guest on this podcast twice in episode 257, which aired on May 18th, 2020, and again in episode 273, which aired on August 31st, 2020.

2:12Those of you who are frequent listeners know my buddy Joe Salcihai from Stacking Benjamins. He has also been on the Stacking Benjamins podcast twice, and he is quoted extensively in Joe's book. Dr. Ariely, his subject matter is how we misthink money, our behavioral biases around the way in which we spend money. According to the Duke Chronicle, quote, Quote, the released documents put Ariely's friendship with Epstein in a nine-year window between 2010 and 2019, when Epstein had a criminal record, although the released files showed minimal correspondences after 2016. End quote. I've looked through the files.

2:57There are a series of emails between Ariely and Epstein, the bulk of which were between 2010 to 2016. That appears to be when they had the bulk of their communication. Based on the emails, it appears that they met up several times during that six-year window. Most notably, there was an exchange in 2012 in which Ariely asked Epstein for the name and email of a redhead that he met through Epstein. Ariely told Epstein that he would, quote, would love to be able to meet her again at some point, end quote. That was an email dated September 2012. The emails also reflect that their first meeting took place in 2010 over coffee between Ariely Epstein and somebody referred to as Poppy.

3:41They met again at his house in 2012. and then they also met in both February and March of 2013 with the latter again taking place at his house. And then they met again in 2014 at Epstein's house and also in 2015. And then in 2016, an email from Ariely showed that he looked forward to meeting with Epstein, though we don't have confirmation if that took place or not. Dr. Ariely wrote a response that was published in the Duke Chronicle on February 2nd, in which he said, quote, Epstein told me about the accusations against him and said they were false. At the time, I believed him. As a researcher who studies human behavior, I was curious about him.

4:25And a few years later, I met him again in New York. These meetings were always in the presence of others and focused on topics related to decision-making. Nothing in those interactions raised concerns for me or suggested that anything inappropriate was taking place. End quote. Later in that same piece, Dr. Ariely goes on to say, quote,

5:01End quote. He also clarifies that he mentioned the redhead, quote, as a physical detail solely to help identify who I meant because I did not know her name. To the best of my memory, that introduction did not occur, nor did I ever meet her again. End quote. That is what we know. Those are the documented facts as reported initially in the Duke Chronicle. Moving to economic news. The Bureau of Labor Statistics has rescheduled the release of the January employment report to February 11th. This data typically comes out on the first Friday of the month, but they have rescheduled it to the second Wednesday of the month as a result of the partial government shutdown.

5:47They have also delayed the release of the Consumer Price Index to the second Friday of the month. February 13. We do, however, have a report for private sector employment from the payroll processing company ADP, which shows that private employers in the U.S. added only 22 ,000 jobs in the month of January. That is significantly less than December's downwardly revised number of 37 ,000 new jobs. Among these private sector jobs, jobs in the service industry were the bulk of it, 21 ,000 out of 22 ,000, while jobs producing goods only saw an increase of 1 ,000 jobs. The bulk of the jobs were in the education and health services sector.

6:33Small businesses had absolutely flat hiring. Medium-sized businesses added 41 ,000, and large businesses cut 18 ,000, which is how we get to our net number. Regionally, the bulk of the job growth took place in the Northeast and the Midwest, while the South and the West saw job losses. Overall, the ADP report shows a major slowdown in job creation and hiring. that has been consistent over the past three years. And it reinforces the notion that we are in a low fire, low hire situation. The unemployment rate is still historically low. It has ticked up slightly, but it is still historically low. So not that many people are getting fired, but not that many people are getting hired.

7:24It's a very stagnant job market. The six-month moving average of hiring is 48 ,000. which is substantially lower than it has been during big growth cycles in the past. Now, again, this is all based on private sector data only. ADP is a private payroll processing company, and they derive their data looking at the aggregate payroll data from their clients, which is quite a large sample size. Their client base covers roughly one-fifth of private sector workers in the U.S. If you've heard Karsten Jeska, the economist, former Fed economist, he's been a frequent guest on this podcast. He once mentioned that he doesn't only look at jobs data.

8:12He also looks at unemployment claims because jobs data is a sample size based estimate. There can be measurement error. The numbers are frequently revised, but unemployment claims are claims. There's no methodology. There's no interpretation. A claim is a claim is a claim. What we have seen recently is a rise in unemployment claims. In the past week, it moved up to 231 ,000, and that is an increase of 22 ,000 from the prior week. It's also significantly above the four-week moving average of 212 ,000. So unemployment claims are up. Meanwhile, there's a different source of data. It's called the Job Openings and Labor Turnover Survey, JOLTS data.

8:59It doesn't measure employment. It measures job openings. So it's related but different. And the JOLTS data shows that there are fewer open jobs. This is as of December. We don't have the January numbers yet. But as of December, there are fewer open jobs than there were a year ago at the same time. So there were six and a half million open jobs in December. and that is down by nearly a million jobs as compared to the previous year. There's also yet another source of data, and it's released by a firm called Challenger Gray and Christmas. They released data related to layoffs, and the Challenger Gray report shows that 1.2 workers in the U.S.

9:39were laid off in 2025, and that is the seventh worst year since 1989. According to Challenger Gray data, the layoffs in January last month were up 118 % year over year as compared to the previous January. In fact, the numbers for January 2026 were so bad that this past January was the worst month since January 2009 when the Great Recession was shaking up the market. stocks are down as of the time of this recording, particularly for SaaS companies. However, major capital expenditure by the biggest tech companies, the hyperscalers, is already showing signs of growing faster than analysts predicted it would grow in 2026.

10:28So back in December of 2025, Goldman Sachs put out a report with a consensus estimate that AI hyperscalers might invest more than$500 billion in 2026. Now with one month of data in, that number already appears to be too low. Amazon, Microsoft, and Alphabet combined, just those three companies alone are expected to spend$485 billion in CapEx in 2026. Meta is expected to spend between$115 to$135 billion and Oracle another$50 billion. Many of these estimates are rooted in real numbers. For example, Microsoft's estimate of$100 billion in CapEx spending in 2026 is based on its annualized run rate of$35 billion in just Q1 alone.

11:18So the AI hyperscalers, they not only did spend a lot in 2025, it is expected to accelerate significantly in 2026. So to put this into perspective, Alphabet spending in this coming year is expected to be double what it spent last year. This will be very good for GDP, although, of course, what's good for GDP is not necessarily good for job growth. Wall Street right now is picking some winners and losers, so there's some volatility in the market. And Wall Street has decided that SaaS companies are probably going to be the loser in this. Because if AI allows companies, particularly major enterprise companies, to build their own custom solutions, then they don't need to be paying these big fees to SaaS companies.

12:04To make one more point on the notion that what's good for GDP is not necessarily good for job growth, because that's something new that we're seeing right now that we don't necessarily often see in the past. Historically, GDP growth and job growth have tended to, for the most part, run in lockstep. And what we're seeing in 2026 is the decoupling of those two things. I should say what we expect to see in 2026 is a continuation of a trend that we've already seen in 2025 and 2024, which is a decoupling of those two things, a decoupling of corporate growth from job growth. And if I may take a moment to editorialize, one thing that I've been thinking about a lot lately is, and this is something we've discussed on many First Friday episodes in the past, is this wide chasm between consumer confidence and economic performance.

12:55So the early 2026 consumer confidence reports are out. The conference board released its consumer confidence index numbers for early 2026. And they found that consumer confidence has fallen to, in January 2026, consumer confidence fell to its lowest level since 2014. Let me repeat that. Consumer confidence is at its lowest level in 12 years, according to data from the conference board, which is one of two major trackers of consumer confidence. The other one being the University of Michigan's Consumer Sentiment Index, which has often found similar. They've both had similar findings. You know, in spite of some recent stock market volatility, we've got stocks, real estate values, gold, and as of last fall, even crypto at all time highs.

13:52Crypto obviously has tanked and home prices have softened slightly since 2022. But we have this situation where people who owned assets pre-pandemic, buy-in holders who acquired assets pre-pandemic have done very, very well. But people who own assets are only about 50 % of the population. And the other half of the population that doesn't hold any assets is seeing job stagnation, rising prices, and the cost of fundamental life things like a home feeling increasingly out of reach. And so I think that the disconnect between consumer confidence and economic performance is largely a reflection of who owns assets versus who doesn't, and specifically who purchased assets pre-pandemic, stocks, real estate, even gold, who purchased those assets pre-pandemic versus who didn't.

14:52owning assets is not just about quote unquote being rich. It is to a certain extent about not being broke, not feeling as though prices are climbing and climbing and climbing and they're getting further away from you and your wages aren't keeping up and there aren't a whole lot of other jobs that you can move into. That is a very tough situation to be in. But if you have a 401k that's going gangbusters or an IRA that's going gangbusters or a handful of rental properties that have all grown in equity immensely, then you are likely to feel more confident about the future as compared to somebody who holds no assets.

15:30It just keeps coming back to the most important thing that you can do in order to not just build wealth, but in order to not be broke is buy assets, buy stocks, buy real estate, buy bonds, buy treasuries, by ETFs, by index funds, maybe by a tiny portion of commodities, but by assets. That is the single most important thing that you can do to protect yourself in a rapidly changing and increasingly uncertain world. Okay, we're going to take a moment to hear from the sponsors who make the show possible. When we return, there's so much more that we still need to cover. We're going to talk about the nominee for the new Fed chair, Kevin Warsh.

16:17We'll discuss Davos. We'll talk about 530A accounts. We'll talk about the 401k withdrawal allowance for a house down payment. The credit card interest rate cap. We'll talk about home buying in 2025, which is at its lowest point in 30 years. We'll talk about a mandate to invest in Roth accounts. And we'll discuss tax refunds. We've got a lot. That's all ahead.

16:48Welcome back. There's a new nominee for Fed chair. This choice took a lot of people by surprise. Kevin Warsh is the nominee. He has a reputation for being a hawk, meaning he is hyper vigilant about inflation. That makes him a choice that took many people by surprise, given that it is well known that the White House wants the Fed to lower the interest rate, which, of course, could have some inflationary risks. Given that the White House wants the interest rate to be lowered, why appoint somebody who has a reputation for being hyper-vigilant about inflation, why appoint that guy to be Fed chair?

17:28Well, a couple of things to note about him. So Warsh is quite vocal about the size of the Fed's balance sheet. He thinks the Fed needs to clean up its balance sheet. He doesn't like the Fed's habit of buying bonds in the open market. in order to lower interest rates. And so his nomination signals that perhaps an unstated or lesser known goal of the administration is to clean up the Fed's balance sheet. Now, there is a risk that by virtue of doing so, by virtue of selling those bonds, that could pressure rates to go higher. So that would be countermeasured through rate cuts. Warsh has advocated for rate cuts.

18:08He says that AI is deflationary. We actually dug into that. If you want a deep dive into how AI can be deflationary, listen to our podcast interview with Zach Cass, which just aired a couple of weeks ago in January. He talks about how AI can make the cost of living cheaper for many of us, most of us, because there are services that we formerly had to pay for that we no longer will need to pay for, or at least not as much. But because AI, according to Warsh, because AI has a deflationary effect that, in Warsh's view, gives us greater leeway to engage in rate cutting, and that very rate cutting can also give us license to shrink the size of the Fed's balance sheet by selling bonds back onto the market.

18:54And Warsh is expected to become the Fed chair on May 15, which is when the current Fed chair, Jerome Powell's term, ends. So Jerome Powell will remain a member of the Fed Board of Governors until his term as a Board of Governors member ends on January 31st, 2028. But his term as chair ends on May 15 of this year. Meanwhile, the current Wall Street consensus is that analysts are generally expecting the Fed to implement one or two more rate cuts this year, meaning another 25 to 50 basis points. That's a quarter point or half point over the span of the year. In related news, home buying in 2025 hit its lowest point in 30 years.

19:43The 2025 home sale numbers matched the 1995 home sale numbers. The National Association of Realtors reported that existing home sales remain stalled at around 4 million. Currently, as of today, Friday, February 6th, the current average 30-year fixed rate mortgage is at 6.26 % according to Bankrate. Now, what would happen if that prevailing mortgage rate dropped by just a quarter point from 6.26 % down to 6 %? Well, according to the National Association of Home Builders, that would bring 1.1 million more households onto the market, which would spur some home sales. Now, I should note that the Fed does not set mortgage interest rates.

20:30The Fed only sets the federal funds rate, which is the rate at which banks borrow money from one another, bank to bank, overnight. So it's the overnight lending rate for bank to bank lending. The reason that we often talk about the Fed's interest rate policy is because it's a proxy for the 10-year Treasury yield. But it is the 10-year Treasury yield and not the Fed's interest rates that determine 30-year fixed mortgage rates. Which means that sometimes, even if the Fed drops rates, if the 10-year Treasury yield for unrelated events moves in a way that surprises the market, the 30-year mortgage rate will follow.

21:11In any event, the National Association of Home Builders released a report indicating that they expect the 30-year mortgage rate to reach 6 % by next year, 2027. I should also add, if you are looking to buy a home either for yourself or as a rental property, a new report has listed the most affordable states, and they are West Virginia, Mississippi, Louisiana, Kentucky, and Arkansas. Those five states have the lowest median home prices, with many single-family homes staying under$212 ,000. A new House bill has been introduced that would allow people to make withdrawals from their 401k without penalties for the purposes of making a down payment or covering closing costs on a primary residence.

22:01Under this proposal, which was introduced on January 23rd, individuals could withdraw funds from their 401ks for up to five years without penalty and could make a penalty-free 401k withdrawal for the purposes of gifting that money to a relative as long as the relative uses the money for a down payment or closing costs. The name of the bill is the Home Savings Act, and it was introduced by Representative John McGuire of Virginia. However, it has no co-sponsors and does not have a companion Senate bill, so its likelihood of getting passed is uncertain. The White House is calling for a one-year cap on credit card interest rates.

22:44Under this proposal, credit card interest rates would be maxed out at a maximum of 10 % for one year. In order for this to pass, it would require widespread congressional support. The heads of major banks and credit card issuers are, of course, against this, with JPMorgan Chase CEO Jamie Dimon stating that if this were to pass, many lenders would pull credit lines from consumers. It would likely, according to Brian Kelly, the points guy, who is a former guest on the show, it would likely also have major ramifications for cashback, points, miles, other credit card rewards. According to Experian, as of June 2025, the typical American had$6 ,735 in credit card debt.

23:33According to the Federal Reserve, the average interest rate on credit card debt is around 21%. This means that paying off$10 ,000 in debt over the span of three years would require paying more than$3 ,500 in interest. According to an analysis by Vanderbilt University, capping credit card interest rates to 10 % would reduce consumer interest payments by more than$100 billion. An analysis by Vanderbilt University found that a 10 % cap would likely result in reduced lending to customers who have FICO scores below 600, who may then turn towards pawnshops or payday loans. However, it could increase the popularity of buy-now-pay-later services, such as Klarna, which are already used by more than 90 million Americans.

24:22And buy-now-pay-later services often split purchases into four payments, and those payments are interest-free. These services primarily make their money from merchant fees, so they charge the retailers between 2 % to 8 % of the transaction cost. They do also generate revenue from customer fees, primarily fees for missed payments. You can contribute more to your 401k and IRA this year. We should have covered this in January, but we didn't, so we'll get to it in the February episode. The 401k employee contribution limit has increased to$24 ,500 this year. And if you are 50 or older, you can contribute an extra$8 ,000 as a catch-up contribution.

25:04So if you're 50 or older, by December 31st, whatever your age is on December 31st is considered your age for the entire year for the purposes of catch-up contributions. If you're 50 or older, you can contribute a total of$32 ,500 to your 401k as an employee contribution. And then your employer can also put in a bunch of money. So the total contribution limit, including the employer side, is$72 ,000. There's also something that some plans allow that are called super catch-ups, and those are for people between the ages of 60 to 63. If your plan allows for a super catch-up, that's an additional$11 ,250.

25:46The IRA contribution limits are up as well. So in 2026, you can put$7 ,500 into your IRA. That is an increase over the$7 ,000 limit, which we had in 2025. If you are age 50 and over by the end of the year, you can also contribute an additional$1 ,100 as a catch-up contribution. That's a 10 % increase over 2025's catch-up limit, which was$1 ,000. The HSA contribution limits only ticked up slightly. Self-only coverage for 2026 is up$100 extra as compared to last year. So this year it's$4 ,400. Last year it was$4 ,300. If you have a family HSA, the contribution limit this year is up$200 as compared to last year.

26:34So this year it's$87.50. Last year it was$85.50. The catch-up, which for an HSA is people 55 and older, remains the same at an extra$1 ,000. But there is a Roth mandate. That's right, a mandate for one of these accounts. but it only applies to one of these and to certain people. Who does it apply to and when? We're going to find out right after this word from our sponsors.

27:11Welcome back. If you made more than$150 ,000 last year, and if you're making catch-up contributions into your 401k this year, you are required, required to make those as Roth contributions. This is totally new. There has never been a Roth mandate before. It used to be optional. But starting January 1st of this year, if you're 50 and older, it's totally up to you whether you want to make pre-tax contributions or Roth contributions or a combination of the two to your retirement account up to the$24 ,500 limit. it, but any catch-up contributions that you make must be made to a Roth account. Now, this is for employer-sponsored retirement plans, like this is for your 401k.

28:03It is not for your personal IRA. So this does not apply to non-employer-sponsored accounts. Now, originally, this rule was supposed to go into effect back in 2024, but at the time, a lot of workers didn't have access to a Roth 401k. So the IRS actually granted a two-year transition period, which gave many employers time to prepare for the Roth catch-up contribution rule to go into effect. And so over the span of the last two years, many employees suddenly got access to a Roth 401k for the first time. So check with your employer because even if three, four, five years ago, you didn't have access to a Roth 401k, which was common.

28:50Many employers did not formerly offer Roth 401k. Your retirement plan might now include that because of the Roth catch-up requirement. By the way, for anybody who's new to the show and is wondering what we're talking about, very quickly, Roth contributions are after-tax contributions. meaning you pay taxes on the money in the year in which you earn it, but then all of the growth, the dividends, the income, the capital gains, all of that grows tax exempt. By contrast, traditional contributions are tax deferred on the income in the year that you make it, but then you pay taxes at the end when you withdraw that money.

29:32So when we say that catch up contributions for people who made over$150 ,000 are now in your 401k mandated to be Roth. What we're saying is that you are required to pay taxes on that income this year, but that money can then grow tax exempt forever or for as long as you're alive. And then it gets complicated after that when we talk about inheritance, but that's a different topic for a different day. In any event, if you make a high income and you're over 50, it It looks like you will be building out a stronger piece of the, you know, we talk about the tax triangle where you want a combination of tax deferred, tax exempt and taxable assets in your portfolio.