Podcast Episode - Ask KT & Suze Anything

ETFs, Investing, IRA, Marriage, Mutual Funds, Retirement, Social Security, Stocks

January 27, 2022

Listen to Podcast Episode:

On this podcast of Ask KT & Suze Anything, Suze answers questions from listeners Sarah, Susan, Jenny, Marcia, Cindy, Albert and Diane, selected and read by KT.  Plus, a Quizzie from Melissa.

Podcast Transcript:

January 27, 2022. It's almost over. What's almost? January. Of course, it is because it's the 27th. Guess what's coming up? What Chinese New Year? Oh, you love. I love, I love Chinese Suze. We're going to have um longevity noodles, all my favorite food I'm going to get so I'm going to make you Chinese dumplings. I'm going to make a great dinner. Yeah, baby. Yeah, baby. Okay. Wait, before we start KT, everybody wants a fishing report. Oh, okay. I said, I hope I caught three Wahoos, but I only, we only got one, however, after we realized that the bite wasn't on, meaning the Wahoo weren't biting. We changed tactic and we did deep drop and deep dropping is one of my favorite fishing because it's like Christmas, you drop a line almost 1,000 ft into the water, you can't see anything. The fish don't see anything and you watch the tip of your pole and it goes boom, boom boom boom boom, little tiny, like maybe half inch moves and you have to hit it and bring it up fast and it's electric pole because no one could reel up by hand, 1,000 ft, it would take forever. So, you hit it, it comes up and bam you never know what you're going to get and I caught some fabulous Yellow Eye and a Grouper! to catch a grouper It is so really hard, and they bite, they're lazy fish. So, you kind of have to almost land right where they are. delicious. Nourishing report. Everybody now stops writing me and asking me how KT and Colo did. Although Colo did catch a wahoo on a jig, which is unheard, which is unheard of. So great. Alright, this is ask KT and Suze anything and this is where if you have a question and so many of you do these days, all you have to do is write to AskSuzePodcast@gmail.com and if Miss Travis chooses it, then we will answer it on the podcast. However, I do go through all of your questions and as many of you know, I answer you directly when it’s kind of tickles my fancy to do so why are you squinting your face? Because this first question from Sarah; Dear Suze, I love your podcast and found them about a year ago from a friend of mine. Now, Suze, this is a long, long, long question. So, I'm going to shorten it and get right to it. So, Sarah's question is this, I believe on your January 20th podcast, a woman who 54 years is old wrote in stating that she projected she will have about $2 million by her retirement age is 70. She wanted to know if she used the 4% rule each year, would that money likely be replenished over the following year? I was disappointed for the first time in your answer, wow, oh boy. Yeah. Then Sarah continues on. I would guess that many of your listeners me included would be lucky to have 25 or 50% of that two million by age 70. So, your implication that two million may not be enough was extremely disheartening. I would have to work until age 95 to come close to that amount. And I consider myself in pretty good financial shape for my age. 59 no debt, no mortgage, no dependence and a Roth IRA maxed out every year as well as contributing as much as I can to my company's 401K. So, Suze, please clarify your answer. I do not want to work until I'm 95. Oh Sarah. So, you're disappointed in my answer, but you did not understand my answer on any level. It's never how much money you have. It's how much money do you need to cover the expenses that you have. And on so many podcasts previously to this, I always would say to everybody, you know what I learned years ago when I was actually seeing clients was that you had people that came in that had millions of dollars in their 401K. They had a pension of thousands of dollars and yet they couldn't afford to retire while others would come in and they'd have maybe two or $400,000 in their 401K. Maybe a $2,000 a month pension. And they would be more than fine. So, my answer really to this person was there's no way that I can project, will that $2 million last her, number one, truthfully on market returns and if in fact her expenses are low. Now, I just have to say this Miss Sarah is that, have you seen what's happened to the market in the past few weeks, two days? It is possible that this woman could now be in her retirement years. She has retired. And now all of a sudden that year her portfolio goes down by 50% by 75%. And so, my answer was not incorrect even though you didn't like it. But sweetheart, you took it the wrong way. It's never, never about how much money you have that allows you to retire. It's really about what your expenses are. So, if you're in a situation where you own your home outright, you have no credit card debt. You have everything covered like long term care insurance and everything else. It doesn't really matter. Maybe you could even make it just in your Social Security depending on your situation. So, you should not be disheartened. You should be hopeful. You should be joyous that you're doing the best you can possibly do. And KT, I just have to say one more thing, in all the years, of all the thousands of people that I saw when they retired if they had been responsible and kept their expenses down and just had a moderate sum of money and own their homes outright, not one of them ever were not able to retire. So, don't you go worrying your pretty little head about it? Got it girlfriend. Oh, you thought I was going to give her a slap down, didn't you? I wasn't sure how you were going to handle it. But I'm happy you gave her hope. I hope I gave her hope. And listen everybody, it's fine. If you disagree with me, you can let me know that you disagree with me. I'm not sure it ever will change my answer, but you can disagree with me. KT knows that one for sure. Oh yeah, I sure do. So. The next question is from Susan. It's actually not a question. I think you need to set this straight because she's very confused about Alliant. It says Suze, I was going to join Alliant under your offer, but it requires me to allow them to share my information with Foster Care to Success, which I do not want to do. Are you aware that they are requiring this? Susan, do you think I would ever do anything with anybody that I wasn't not only totally aware of it, but I was supportive of it? Everybody Please remember Alliant Credit Union is making the most generous offer for you to make more money on your money than any other credit union or bank out there. And what's interesting about it is to be part of a credit union though you have to be a member and if you don't meet certain qualifications. Alliant Credit Union had to figure out a way how any of you, no matter where you live or who you work for can be part of this extraordinary credit union. So, at no cost to you whatsoever if you just contributed $5 period and it's not even you are contributing it. Alliant Credit Union pays that $5 and you then support Foster Care to Success. You get to partake in the high interest rate. Not only that. Alliant Credit Union is giving you, but if you put in at least $100 a month for 12 months they're going to give you $100 and at the end of the year, hopefully there will be another sweepstakes where last year they gave away $20,000. Now I just also have to say this over last year alone. So much money was raised by this for Foster Care to Success. Who wouldn't want to help foster kids? Who? So really Susan, I hope you change your mind? And if you don't okay, but you're missing out on one of the best opportunities out there ever. So, for those of you who do want to participate, go to MyAlliant.com. Alright, KT, Suze. Next question is from Jenny. Hi Suze and KT, I am a self-employed psychotherapist. I'm 44 years old. I currently have a Roth IRA and a Sep., I put the allowed 6,000, I guess that's annually in my Roth as a priority and whatever else I'm able to save for retirement, I put into the Sep. IRA, I'm wondering if there is a way as a self-employed small business owner to save more in some other type of Roth account. As a therapist, I deeply appreciate your compassionate and sound financial advice. And then she goes on to say when she works with couples, she hears your voice. Suze that says people first, then money then things and she said and that helps me help others to be both financially and relational, relationally wise, there we go. So, my dear Jenny, if you work for yourself and you don't have any employees, you can always do a solo meaning just yourself Roth 401K. What does that look? I never knew, I never heard that, this is the first time I ever heard of a solo. You know how I feel about Roth? Right? Yeah, well this is a solo one. How many Roth’s are there, KT? Let me answer this question. So, you can do a solo Roth 401K. You also, if you want, I can always convert the money that you have in your Sep. IRA to a Roth converted account. Now obviously you're going to have to pay taxes on that when you convert, and you can convert any amount of it that you want to. So, you don't get that big of a tax hit. But that way you could get your money into a Roth. Now remember when you put money into your Sep. IRA, you got a tax write off for that. So, having to pay taxes then on it to convert is no big deal, but you can do one of those two things. Okay, next question is from Marcia, I have a sister in law who 70 years is old and never married, no children, no other siblings. She lives in a fully paid house that her parents left her. I have a feeling that the deed may still be in her parents’ name. Her closest relatives are my adult son and daughter. She had indicated some time ago she was planning to leave her home to them. I just learned she has no will. So long story short Suze, this Marcia wants to know, what can she do to help her have the conversation that allows her to get trust so that the house doesn't go in probate and she said her daughter told her mom that every time she tries to have the conversation with her auntie, she just does not want to go there. So, what can she do? Here's what you need to do is you need to get your sister in law to listen to this podcast right here and right now and a podcast, she can listen to it anytime she wants. So, sister in law of Marcia listen to me. Don't be stupid and that is the word that I want to use because if you die without a will, you really have a will whether you know it or not because your property is going to go into what's called Intestate Succession because every state already dictates when you die without a will, who is going to get your property and not only who's going to get it, but it's going to have to go through probate. So, what is wrong with you? Why would you not want to make sure that if you have this home, I don't care who you leave it to. You don't have to leave it to your sister in law's kids. That's not the point here. Whoever you want to leave it to, not only should you have a will that says where all your things are to go that are within your home, But you should also put that house in a living revocable trust and you do so because you want to avoid probate. Otherwise let's say the house is worth 2, $300,000. Whoever is going to get this house is going to have to come up with $10, $30,000 just to get it. Why do you want to punish those that maybe you love? Hey, you want to leave it to a charity fine. But this is a conversation that you need to have. And at the age of 70 now I'm going to be 71 so I can talk to you like this girlfriend. Things can happen. I very easily don't cry. KT could have lost my life 18 months ago. Right, KT, it was a good possibility that that was going to be the outcome. So, don't tell me that you just don't want to talk about it. You are too old and hopefully too wise to have a sister in law who is so smart that she writes into the Women & Money Podcast for me to tell you this. So, after you hear this, I want you to sit down with your sister in law and have a conversation that has to be had whether you want to or not. Next question Miss Travis. Suze, If Oprah's listening to that, you go, there's a Suze slapped down. Oprah's birthday. Oh my God. Oprah's birthday is in two days. We'll have to email her and go, let's send her a fun video. We always do but we'll do a really fun one. I'm gonna send her a fishing video. Happy early birthday, Oprah. All right. Next question is from Cindy. So, here's my question. She said Suze. I sold a rental. Thinking about using the money to pay off our house with the $300,000. Proceed. But the interest is only 3%. I'm about 12 years to retiring, my husband about nine years. We have no other debt. Our home is worth 590,000, we owe about 218,000. We have 12 months emergency fund. What are your thoughts on paying off the house or investing this money? Well, let's see. How do you feel about the stock market right now, Cindy? How do you feel if your money was in the stock market? Let's just say you took this money and you invested it in the stock market and now you're down 10, 20, 30. Some stocks are down 40, 50, 80% versus you having your home paid off. What is the goal of money answer Miss Travis to be secure to be secure? So, my answer is dependent on you. What would make you feel more secure? Would you feel more secure if you own your home outright that way? You know, no matter what happens over these next 12 or 9 years until you retire, you own your home outright. Would that make you feel more secure or would you feel more secure putting your money in the stock market and now it goes up and it goes down, it goes all around, which would make you feel more secure. If it were me. If it were Miss Travis, let's say it at the same time, what would we do, pay the hospital morgue out? Right, That's right. Pay it off. That's what we would do. We would pay it off and then you would still have $80,000 because of the 300 you only owe 18 if you want to take some of that and dollar cost average or do whatever into the stock market or if you want to take that and take advantage of some really good quality stocks that are down here right now. Big time. Go ahead and do that. But the other thing you could do is if you pay off your mortgage take your mortgage payment every single month and dollar cost average into these markets. Next question KT, this is from Albert. Hi Suze and KT on Thursday’s podcast, you answered a question about when taxes are due? That was a quizzie and I think I got it wrong. Right Suze? I don’t remember. Yeah, it was on IRA to Roth rollover answer was April 15th of the following year. Yeah, I got that one wrong. You got that one wrong. I got that one wrong. Don’t you hate when you get them wrong? I do! Why KT. Because I really should know the answers by now. See you make everybody who listens feels so good that the spouse of Suze Orman doesn't know the answer to certain things and then people can identify with you. It's so sweet when you don't know but don't you think I should know after over 20 years? But there's listening to the answer. Well you've never even heard me talk about this topic because this was a little confusing but so let me finish the question from Albert. Don't you have to be concerned about owing the IRS a large sum of money. Would quarterly payments be due to avoid any penalties? You know? That's funny. KT. As you know, I look through every one of these emails. Do you know how many people wrote this exact same question? Now? Remember everybody. I don't choose the questions that KT is going to ask, but I read them all. So many of you asked me this exact same question. So, let's just get something straight when you're paying taxes and you're making estimated payments for instance. All right. You owe to stay out of penalty. You owe either 90% of what this year's tax liability is going to be or 100% of last year's tax liability. So as long as you're paying in four equal payments, what last year's tax liability was then you don't have to worry about how much you're gonna owe this year. So no, I'm not worried about penalties at all, just so you know. All right. Here's the next question, Suze. Hi, my name is Diane. I'm 66 and my husband is 67. We have a variable life insurance policy. We started; I know your favorite in 1993. Wait a minute. Our premium is $300 quarterly for 150,000 in insurance. I figured we will have paid 34,800 by the end of 2022, the total cash value is 24,000. I think it's about 24,000. So, what should I do, Suze cash out and get term or just keep paying and my kids will still get what it's worth when we die? There you go. What should she do? I know, look, if you could all see Suze's face, woof! Well, I'll tell you why. Diane, my face looks this way. She's mad. I'm not mad. I'm sad. She's sad and a little mad. Because here we are, you're 66 your 67, 29 years ago, if you do this throughout this entire year 2022, somebody convinced you to spend $1,200 a year. A year for $150,000 of life insurance telling you fabulous thing to do Now. The reason I'm sad is 28 years ago, 29 years ago I was telling all of you do not buy whole life insurance, do not buy universal life insurance, do not buy variable life insurance. So, if you had listened to me back then I want to hear the difference. Diane, rather than having 24,000 and again, according to your email, we're not sure if it's the cash value is 12,000 or 24,000 because of how you wrote this. So, we're a little confused there, but just let's assume it's 24,000. Alright if you continue to do this through 2022, Putting in $300 every quarter. If you had simply put $300 every quarter for 29 years and only earned 5% on your money, you would have $78,657 today. Also, if you had made more than that because over the last 28, 29 years you easily would have averaged at least 10-14% on your money. But just let's say it was 10%, You would have almost $207,000 today. I know. Okay. And yet now you just paid in 34,800 but that's not what you lost because you lost what the future value of that money should have been for either 12 to $24,000. And now you're asking me what you should do? Cash it out and that’s it my girl. But before you cash it out here's what's very important, you are 66 and you are 67, your husband, you still have at least 20-25 years or longer if you're healthy to live. So if you took this money out, you know I'm sure there is something over that period of time that you could make that money grow big time now for you to have $150,000 to leave to your kids. That means for another 20 some odd years until you die, you're gonna still have to put in $1,200 a year. So there goes another possible $78,000 minimally down the drain. So, here's what I would do. If I were you, if you are healthy and you know you are healthy then I would absolutely cash out these policies. And what I would be doing that with that money is if you qualify for it, put it into a Roth IRA every year divided equally and put you know 7,000 yours, 7,000 in your husband's, whatever it may be. You can invest the rest if you have this money and you owe money on your mortgage, on your home, pay down your mortgage. The goal is not to worry about your kids. The goal is to worry about you and do you and your husband have enough money. But if you know go to see the doctor, get a full exam, if you know both you and your husband are absolutely healthy, you can absolutely cash this out now. For whatever reason you want to have insurance. All right, you can get a term insurance policy but at your age it starts to get very expensive because the reason term insurance is so cheap is because usually you get it when you're younger you get it for 20 or 30 years. You're not expected to die within those 20 or 30 years. So, the premiums are once you start to get to 70, 80, and so forth. Term insurance, there's a good possibility you could die with it. So, they charge your premiums accordingly. So, go to SelectQuote.com, check it out and see what maybe a five-year policy might cost. But I personally think it's a waste of money to do that unless something happens an accident or whatever. I think you're far better off taking advantage of this money and especially as markets go down here possibly investing it. All right KT, I just have to say one more thing before your quizzie. Right? And it's this many of you are writing in and you are so freaked out. You're freaked out because you own bond funds in your retirement accounts, or you own bond funds outside of your retirement accounts or you own bond ETF listen to me closely. Again, if you have no place else to invest or you've already invested in target date mutual funds or bond funds before you freak out. I want you to check the maturity of the bonds that are in your ETF or target date funds because if you do and they are under five years of maturity then just stay where you are. And it's just that simple. So, I again don't have a problem if you already have money in short term bond funds or if you are in a target date bond fund or ETF and when I say bond funds, I also mean ETF and the maturity of your bonds is under five years. Just stay right where you are to go from that into the stock market right now into the Vanguard Total Stock Market Index would be one of the biggest mistakes you have made because nobody knows where these markets are going to go and it's too soon. So, don't do it. And the last thing I would want you to do is to take a large sum of money and put it into the stock market right here across the board. Not now. Okay, you can nibble on stocks that have come down that have good multiples that have good earnings and things like that. But be very careful here. Everybody just be careful if on the other hand, you look at your bond portfolios in your ETF or mutual funds and you see that you're in a long-term bond portfolio which means maturity of 10 years or longer that I would think about getting out. It's just that simple. Just because you're in a bond fund doesn't mean you should sell. Be very, very careful. All right, KT, it is time for your quizzie. So, this one is from Melissa. Now I wrote Melissa and I told her I was going to be answering this on today's podcast. So, don't screw it up. KT. Okay, all right now Melissa says, I am 53 and my ex-husband is 65, we were married for 11 years, he is remarried, and I am single. Yay1 She says, she says, yay, well let's give her Oh yeah, yeah, baby. Alright. He is eligible to collect my Social Security? So, that's your first question. Is he eligible to collect her Social Security now since he has remarried? And is there any impact to my balance when it's time for me to collect? She says, don't worry, I won't be collecting until I'm 70. She also wants to know am I eligible to collect on any of his or would that go to his current wife? So, there are many questions here. So, the very first question everybody is her ex-husband entitled to collect on her Social Security, He has remarried, remember that. And how long were they married? 11 years. I believe the answer is yes, you're positive. Well, I remember you talking a lot to one of my family members about 10 years. About a 10 year mark. Yes, I know. I was like, don't stay in there for 10 years. But here's the thing. All right. But he can't collect it till she would you can't collect it until she's at retirement. Alright, totally wrong. The reason is, Yes, you have to be married at least 10 years. And then you get divorced for the possibility of collecting on each other's social security unless you get remarried. Her ex-husband got remarried. He is no longer entitled to collect half of Melissa’s Social Security. Next question. Next question. Is there any? If the answer to that was yes. Let's just say it was, is there any because let's just say he didn't get remarried. Is there any impact to my balance when it's time for me to collect? So, if a spouse, if an ex-spouse collects half of your Social Security, does it impact your Social Security at all? Ding! Ding! Ding! Ding! Ding! Ding! Ding! Everybody stops worrying. If your ex is going to collect on your Social Security or not, because it doesn't affect what you get on any level. Now, last question. So, you're going 50/50 here, KT. I am. I am I eligible to collect on any of his or would that go to his current wife after 11 years, I believe? No, I don't think she can. Final answer. Yeah. Because he couldn't. Well, wait. She didn't get remarried so she can. Yeah, baby. Because she didn't marry. She's single. Yeah. So, she could if she wanted to. And that will be up to you, my dear Melissa, just don't get remarried. If that is your plan. All right, KT, we did it. We did it. And we're doing this podcast. Just so all of you know from Florida. We're back in Florida will be back on the island tomorrow. I had to get a haircut. Do you like it? I had to go to the dentist. Yes, but I had to get a haircut. My hair was just too bushy. Well she also had to do a few other things to get ready for February. We have a lot of TV and lots of fun things Suze's doing in February. So, all right, we'll leave you right now again. Happy birthday early to you, our dear Oprah. And really, there's only one thing that we want for all of you and that is for you to remain safe, strong and secure. See you on Sunday. Bye bye.

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