401k, IRA, Life Insurance, Roth IRA, Social Security
December 24, 2020
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On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners selected and read by KT.
December 24th, 2020 Christmas Eve. What do you think about that? I love this day. This is the day my family celebrated because we're Italian and tonight I can't wait for dinner. It's the Seven Fishes dinner. What do you make? Three fishes is around the island. I only have three fish is gonna make stone crab some wahoo sashimi and some grouper. Strawberry grouper. All right, There we go all caught by Miss Travis herself. But let me begin by saying, Welcome to the women and money podcast as well Is the men smart enough to listen? We wish all of you a very, very, very merry Christmas starting tonight and today is asked Suze an KT anything that you want. So to ask a question, just go to Asksuzepodcast@gmail.com either there or on the community app The women and money community app that you can download at Apple app’s or Google play simply by searching for Suze. As you see woman, you ask your questions there, and if Miss Travis happens to choose it, we will answer it on the podcast on this podcast KT, I want to start a little bit differently today because tonight and over the next seven days and into next year, I want us to feel hopeful. I want us to feel like things are possible in life. I want us to have faith that everything really does happen for the best somehow. And I know that's hard for a lot of you who have lost lives in your family or whatever it may be. But you just gotta have faith that everything happens for the best or how do you go through life? How do you do that if you don't have faith, and that's when you get angry and you get bitter and that's not how you want to go through life. And sometimes I imagine that many of you may wonder what happens to some of the advice that Suze gives and people follow it. Does it work? Does it not work? And I'm not just talking about financial advice because that always works. But when I give emotional advice or psychological advice or spiritual advice, does that really take hold in someone? And actually, it was October 15th, KT we did and ask Suze at that time without KT, I think anything. And there was a woman, and it's right at the beginning, I think of the podcast, I think it was the first question. There was a woman by the name of Marcello that wrote in and essentially what she was saying is, Please help me. I need advice and the advice that I need is this. I've been working and I'm just summarizing this everybody, if you want to actually listen to it and you probably should go back to the October 15th podcast and you'll hear the entire thing there. But essentially, what Marcella was asking was that she had worked for a company really hard. She was dedicated, and she was working there for six years and never, ever, ever got ahead. So she wanted to have, she says, some inspirational words please, like What do I say to my boss when it comes to time for my in person interview and on and on and on, and I gave her advice of what to actually do in that interview. And just about 10 days ago, we got this email from Marcella and KT. I would like you actually to read it to everybody. I'm happy to read this one. Okay, everybody here is what Marcello wrote to Suze. It worked. Suze, you answered me on your podcast. I listened and went in there with confidence and got a huge year end bonus plus a raise. The best part is that I got their attention now. They see what I can do for our company. And I'm no longer afraid to ask for what I deserve. No more quiet little Marcella. Do you love that? Do you love that? I was real happy to read this. Actually, I thought Wow. I couldn't remember what the whole question was. So I think October 15th was would be great for everyone to take a listen. The other thing, that's important for all of you to understand. I know that thousands and thousands of you write in questions and you're really not getting me answering them personally anymore. And that's because it's still very difficult for me because my left arm is still seriously giving me problems. So I really can't answer them like I used to. And that is why it's important, however, that you listen to the podcast because you never ever know when I will be answering a question that you sent in, KT chooses it, and I'm answering it on the podcast. So if Marcella hadn't been listening to the podcast, she might have missed that advice, which means she would have missed her raise. All right, Miss Travis, let's do as Suze and KT anything. Okay, I've I've selected a real eclectic group of questions here, but cute today. Thanks. You see, it's my favorite day is my Christmas day. She wait. I just have to go on. This woman loves Christmas more than anything in life. Really, She has a Christmas tree that she decorates every year. She puts lights out, and I've never seen such joy come over anybody, as it does Miss Travis, when it comes to this holiday, and it has nothing to do with the gifts. We don't give gifts. We we like to just celebrate things, but I like all holidays But you think love Christmas Thanksgiving is my favorite because that's when you cook and it's really when the families together and and Christmas is just fun to put all the decorations out. I love lights and candles and so on and so forth. But wait, Let me get to Derek. I have a man. I have a smart man with a really smart question. He said, Hi, Suze. I have followed you since your TV show and the blue leather. I still have that blue leather jacket just so you know. He said, I'm a single blackmail 54 years of age. In 2004, I met a woman and lost her over a prenup. She exploded on me, asking about prenups. What's the best way to broach the idea of a pre nup? I currently have about $1.5 million in retirement money. One of my concerns is establishing generational wealth in my family, which is one major reason for a pre nup. So, Suze, what should he do? never get married. But I I think that All right, tell Derek what do you think about this prenup business? The reason that you have how much does he have 1.5 million reasons that most likely you still have $1.5 million in retirement is that you didn't marry this woman and what one has to really understand, Derek, is this. There's no easy way to approach the topic of a pre nup. But the time to plan for the what ifs of life is when you are in a state of love, not when you are in a state of hate. And if even approaching the subject makes the person blow up and leave, you should thank your lucky stars that that's what did it because a true partner would want to protect you. A true partner would say, of course, that money in the retirement account should always be yours. They should want more for you and to protect you than you even want to protect yourself. So the way that you approach a prenup is just do it. And if the person doesn't like it, let them leave. Totally agree. All right, Next one. Suze, I'm 57 years old and my husband is 60 were in good health. We had a 30 term life insurance policy that expired two years ago. I'm conflicted about getting insurance again. We have two Children 28 and 24. They still live at home, and we would like to leave them something as well as have enough money for final expenses. Should we get term life insurance? If so, for how long? Yeah, I wouldn't get term life insurance here because here's the thing, my friend, At this point in your life, because your kids are already 24 and 28 years of age, you do not need term insurance. And what concerns me is that you say you wanna leave something for them. You're probably not going to die. You're in your fifties right now, actually. Really? Speaking, you have a good 30 or 40 years left to live unless something goes wrong. But you already say that you're healthy. So what I would be doing if I were you, I would be saving, saving, saving. If you don't have any money and your spouse needs money in case you were to die, and you're the wage earner. Okay. You could do another 10 year level term if you want. It won't be that expensive, but term insurance is not meant to be a permanent needs. So be careful here, everybody. Okay, Suze, next question. I like this one. This has you like, but this one really needs a Suze answer. I'm curious as to how you're gonna answer it. So that's one, of course. Well, I'm gonna No, it's not a divorce, so Hi, Suze. I'm 32 married and have a four year old. We have no debt aside from our $160,000 mortgage. My husband and I are both employed, and we have a years worth of an emergency fund saved. We have been offered by my parents to move in with them so we can rent out our home to save money and pay the remainder of the mortgage off. I think it's a great idea and we'd be able to be mortgage free in two years by living with them. Now this is where I need your advice, Suze. It says my husband is not fully on board. What are your thoughts? I know you emphasize spiritually happiness, so I'd love your input. Okay. That would have been a great quiz, don't you think KT, right? What do you think, Suze? How would you answer that KT? I personally keep your husband happy and two years of living with your parents and having I mean, the four year old would probably love being around grandma and Grandpa. But quite frankly, I would so keep the mortgage. Pay it down as you can. All right. So here's the thing. Everybody, right. Is that how many years have you heard me say people first, then money, then things. If both of you were on board, then it would be a whole different answer. Or think about this. How would you feel if you were moving in with his parents with his parents? Not with your own parents. But if you had to spend two or three years with his parents at their home, how would you feel so that maybe, maybe you could understand how he feels. Because as much as we may love our in laws, it's very seldom that we love our in laws more than we love our own parents. So there's always that one step removed. So the answer here is very simple. Don't move in with your parents. And I got news for you after you've moved in with them. They're not gonna like it that much either, because they're used to having their own privacy and their own thing. So it might even cause trouble between them. So simple. Just don't do it. And this time, stay at home and put people before money. Good answer. That's the right answer. I would have done the same thing. Would you ever want to move in with your mama while she was alive? Let's say you didn't have it. Yeah, not really. No. There's nothing more freeing than to just be I mean, look at us here on this little island we have a rule with visitors, right? No more than two nights, three days, two nights. And that's with her immediate family is well, right? Yeah, I just wanted the same thing. So, Suze, here's the next question. Is my social Security monthly benefit taxable? Right. So obviously this person is taking social security, and the answer to that is it depends when you are taking Social Security, right? If you are single and you make between 25,000 and 34,000, a year of income, 50% of your Social Security will be taxable. If you make more than 34,000 year and when I say make more it’s income from your IRAs from your pensions from everything. Which is why I like Roth IRAs everybody, because it doesn't count in this formula. But if you make over $34,000 a year is a single. 85% of your Social Security is taxable if you are married. Finally, jointly between 32,000 and 44,000 of income, 50% of your Social Security is taxable over 44,000 year. 85% of your Social Security is taxable. And I just have to say one other thing because it was last week, KT that I think you asked me a question about married filling, separately, if they could. Whatever. And if you happen to be married and you're finally separately, Oh, your Social Security is in most cases taxable again. Just so you know, another downside of buried finally separately. All right. Okay, So another Social Security questions. Suze, you know, when I went through all these questions, I'm saying to myself, This is obvious that it's year and people need money. People are needing money This covid year has been really brutal. So here's another one. Dear Suze, could I get Social Security earlier than 70? I'm 68 I need it now, having lost many clients to Covid-19, and then I want to pay it all back before age 70. It said I'll inherit my father's estate sometime next year and then, at age 70 received the maximum amount of Social Security. Oh, that's smart, lady. So here's the question that should be also another quiz . So you know everybody we can play quiz with every single one of these questions. Can this person do what she wants to do? Can she take Social Security at 68 pay it back at 70 and then take Social Security? Can she KT? I don't think so. I think that I don't know. All right, that's a cute, she's so cute, but she doesn't know everybody. She squishes up her little nose. I wanna guess, but I don't think so. Alright, she can but listen very closely to the rules. You can take Social Security. This is at any age, by the way, if you want, and you have one year 12 months if you want to pay it back to Social Security and kind of disclaim it at that point, which means if she takes it at 68 KT, she has got to pay it back one year no later than one year after she has started taking Social Security. So by the time she's 69 she can't wait two years. It's got to be within 12 months. So, yeah, she could absolutely do that, you know that? It used to be that you could do it, no matter how long you took it for like if you took it at 62 you paid it back eight years later or whatever, it may be right. You paid it back with no interest. And I write about this in one of my earlier books. How it's something that you could do to take a interest free loan from the government because they don't charge you interest on the money so you could take it, put it in your account. But they changed the laws, so now you only have 12 months to do that. But there's another one. I want to invest and do 100 ladder one year to year, up to five years, I've decided on my bank. But which one? The Roth IRA CD or regular CD's Oh, KT, Here we go, Another quiz everybody, everybody I want you to think about I don't know what a CD ladder. I knew it. I was gonna tell me first and then I can. You know The question was, What is a CD ladder? A CD stands first of all for certificate of deposit. And when interest rates were a lot higher and normal people would do what's called a CD ladder. Let's say they had $50,000 to invest. They would invest $10,000 in a one year CD, $10,000 in a two year CD, $10,000 in a three year, 10,000 and a four year, and 10,000 and a five year. And every year they would have $10,000 come due that they would just roll over to another five year CD because it's their rolling up. And normally people would do that to get a higher average overall interest rate, but still have liquidity to their money because they have $10,000 coming do every year. The problem with that right now is interest rates are so very low. So I have to tell you, I wouldn't be doing any of these. I wouldn’t be doing a CD ladder in a Roth IRA or a CD ladder outside of a Roth IRA. Interest rates are so low that the difference between a one year CD and a five year CD is negligible. In fact, there are times when a one year CD will pay you more than a five year CD. So if I were you, given that interest rates are so low, why lock up your money at all. If you just want an interest rate, you want to keep your money safe and sound, just find a company that offers you the highest possible interest rate in a savings account, whether it's in a Roth IRA or, uh, regular savings account. I obviously love Roth IRAs more than anything. So if you are able to do this in a Roth IRA, do it in a Roth. There you go, KT. Okay, now you know what a ladder is. Okay, next question. Hi, Suze. It's Heidi here and I need your help. I have $470,000 sitting in the bank from the loss of a beloved family member. I don't know how to use this money wisely. My husband and I are 45 years of age. We make good money about 300,000 per year, and we've saved a very large emergency fund. We have both been contributing to our 401 K. We have over $600,000. The only debt we have is a mortgage on our home. We owe 350,000. Please help us. We've never had this much money and we don't want to mess it up. That was a sweet question is really responsible Heidi, I like this question. You know, she's 45 years of age, so she's really only 20 years away from where she may want to retire. And I have a feeling that if she has a mortgage on her home, she probably recently most likely refinanced it because interest rates are so low. So she probably has a least 20 or more years left on her mortgage. So therefore, Heidi, you say that you really want to be responsible with this money, and you also say that it's been sitting in the bank for four years. What that tells me is that this money is paralyzing you because you don't wanna lose this precious gift because you know obviously how hard whoever left it to you had to work for it. If I were you ready for this one, I would take $350,000 from the $470,000 that's just been sitting in the bank at half a percent interest. That's taxable, and I would pay off the mortgage on my home in full. Your interest rate is probably around 2.5 or 3%. Even after the tax deductions, you're probably still paying more for this mortgage than you are making on this money. That way you don't have to worry. You can think, Oh my God, I own my home outright due to the fact that I lost a family member and then what's ever left of that, since you obviously don't need the money. If you have a child finance their college education with it, that's what I would do. So do you have one more for me, KT. Okay, Suze, have one more question regarding a traditional IRA. Will I be taxed on the required minimum distribution at age 72? Should I ask you what required minimum distributions or do you don't want me to ask you that question? Want me to guess way, Tony, this is from Tony. Um, the answer is absolutely. That's my girl. She's right. For those of you who don't know, however, RMD’s required minimum distributions state the following For those of you who turned 72 years of age by April 1st after the year that you turn 72 the IRA requires that you withdraw a specific amount of money from your retirement accounts, especially an IRA a traditional IRA. And whatever you withdraw because it's a traditional IRA is absolutely taxable to you. That's again. Another reason why I want you to do a Roth IRA because there are no required minimum distributions from a Roth IRA. And again, just remember earlier what did I say? That income from a retirement account counts towards taxable income towards your Social Security. Also, your Medicare premium amount. So you're better off with a Roth IRA always. Hi, KT. Do you think that's enough for today? Maybe you need to close it with one more since it's Christmas Eve. All right, so let's do a quiz here. Right. This is our quiz, are you ready for this? Right. This is the quiz, not only for KT, but really, it's a quiz for every single one of you. Here it goes. If you had a wish. So you were able to make a wish and you knew without a shadow of a doubt that that wish was going to come true. Would you wish for A) more money, B) more health or C) more time to spend with your loved ones. Think about it, KT. Want me to answer that? I want you think about it. I want everybody to think about it that seriously, if you had a wish and you could wish for more money, more health or more time with your loved ones, what would you say? What would your wish be all right, KT, answer for me. Suze you know what? I have to answer this for me, and maybe for everyone listening, the answer, is all of the above grade. Answer, my dear KT. So from KT and myself and Robert and everybody that has anything to do with the women and money podcast, we all wish you the most merry of Christmases tonight. We wish that the gifts that you find under your Christmas tree, our gifts that allow all your wishes to come true not only for this year but for every year as long as you are alive. We thank you so much again for being part of the Women and Money podcast and from both KT and myself we wish you a Merry, Merry Christmas and Feliz Navidad.
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