Podcast Episode - Ask Suze (and KT) Anything


Insurance, Investing, IRA, Retirement, Trusts


March 18, 2021

Listen to Podcast Episode:

On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Rosio, Melba, Nicholas, Pam, Anne, Betty, Sharon and more selected and read by KT.


Podcast Transcript:

Here she is back, as she would say by popular demand, alright listen everybody. Everyone missed me last Thursday for sure. It was Suze school, but they missed me. And they wrote in Hey, what happened to KT? Did you give her a day off? No. So, here's what I'm thinking, everybody. I may just go and change this to Suze and KT both on Thursdays and Sundays and only do Suze schools when it makes sense, or I when I want you to know something so that I don't have to sit here and think about what am I going to do on Sunday all by myself? Since you all love her, so much? KT wait before we begin, the emails are also saying to KT, did KT catch a fish. Oh, my God, I caught a 48-pound wahoo. First of all, we want to make this really clear. We do not sport fish. I only catch fish. We eat and consume and share with friends and family and the workers. We send fish around to everybody. Everyone loved it fresh wahoo. We’re at the end of the season, Cola and I went in the last one. Yeah, we went out. That's right, because Sunday I told everyone I was going to catch 48-pounder. You know what can you post that? I did? I did. I posted the picture, the Women & Money, community app that you can absolutely download at Apple Apps or Google Play. And you can see little KT and Big Colo. And you can notice that KT is actually standing on a step that's like five inches high. Who was the one who was still bigger than little one over here? It was so good. It was so good. Hope we can catch a few, but who helps you catch the fish even though I can't go out on the boat. Suze sits in the in the loggia porch we have at the house, and she tracks us on a tracker and actually sends us text during the entire fishing experience. You're going too fast. Slow down. Only go 13 MPH, not 15. I want you to head south when you hit the tide change. I want you to be here. So, she instructs us what to do. And I have to tell you we look at each other and we scream on the boat because she said, at 10:20 the tide will change. You will get hit, you will catch a fish. And we did exactly to the minute. I don't know. She must be. I even know what kind of fish they catch. They also went out yesterday to go fishing and I saw that they had slowed down. So, I knew they had caught two fish. But I knew they weren't wahoos I knew they were barracudas. So, I sent a text going you caught a barracuda, huh? Like how do you know that she can't even see us? I mean, we were out of sight at that point, but come on, let's get on with our podcast. Right. Just talking about fishing. I know she misses it, but I do. I did get on the boat and we had a barbecue. Did you post those pictures? No. Colo built me a pastoral so I don't have to walk down. Stand what? That is. It's a little ramp so that I can come on. And from the dock to the boat and Colo kinda holds me coming down and going up just to make sure that everything's good And I got to sit on the boat. And even though the boat was right on the dock tied up, we had a barbecue on the boat. That was fun. All of us from the boat. They love them. All right, KT, what's your first question? Hi, Suze. How are you? Really enjoying the podcast. Thank you so much. I've been helping my mother in-law consolidate for employer retirement accounts into a Vanguard IRA. The last step is deciding how to invest this money. We're talking about $100,000 that she will need in about 2 to 3 years when she retires. So, what allocations should I consider? I don't know the answer to this question. It really would like you to help guide her in this decision. KT, I should have made that one a quizzie. What would you tell her? Just out of curiosity, what's the key here? What's the key there? How long till she needs the money? Oh, 2 to 3 years So what would you tell her? Having sat here now and listen, probably just keep it safe and sound. Ding ding, ding ding. Yes, my girl. So, here's the thing, Rosio. Is that there's so many things that she could really invest in. She could invest in preferred stock. She could invest in even oil stocks like Chevron right now. That would give her a nice dividend yield. She could invest in many different things. But the problem is, you said this money is going to be needed in 2 to 3 years. So given that that's true, just keep it in a high yielding money market account. If it's at Vanguard, whatever the highest yielding account, not a bond fund. No, no, no, no bond funds here. But wherever you could get the highest interest rate within Vanguard, that's exactly what I would be doing if I were you. Now I just have to make one caveat for that. Is she going to need all 100,000? Is she going to need maybe 50,000? But if she's going to need all 100,000, the rule of thumb is you cannot put that kind of money in the stock market if you are going to need that money within 2, 3, 4 or even sometimes five years. So, if she's not going to need some portion of that money, then there are other things seriously that she could do with it. But I'm going to assume that she's going to need all of it. So, all of it has to stay in a high yielding money market account. Okay, KT. Okay, next question. This is another good Alliant question. This is from Melba. She said I'm going to take advantage of your great offer at Alliant. Should I open an account Alliant in the name of my living revocable trust or just in my name? And then she asks, do they have a payable upon death feature so my beneficiaries can inherit my account directly and avoid probate? You know, most credit unions, and I'm not exactly sure why you guys and this includes Alliant they don't like, or they don't currently allow you to open up an account where the owner of the account is the trust. However, the trust can be the beneficiary, number one, or they do have a pay on death account where you could name your kids. Now here's something that's important that all of you should know whether it's a credit union where you're insured by NCUA or a bank where you have FDIC Insurance that if something is just in your individual name and there's one person who is the beneficiary of it, then the truth of the matter is you are covered up to $250,000 of insurance. However, if you have three beneficiaries named as a POD, pay on death, which means you die, they get the money directly. It avoids probate. Each one of them gets $250,000 of insurance. So, if you have three kids, that will cover that one account up to $750,000. So, for those of you who have a lot of cash and you're always going around going, I can only put up to 250,000 here, 250,000 there. I need another bank. If you are leaving it to multiple beneficiaries and guess what you are insured $250,000 for every beneficiary and that's even true for your trust, if your trust has a lot of beneficiaries. Okay, that's Wait, Wait. Tell everyone they better hurry up and open this account. Oh, she didn't do it yet? No. So, listen to don't miss the deadline. So again, I know it is the 18th. That means we have 13 days left until the offer. The ultimate opportunity savings account is scheduled to go away. Unless we can convince. The good news is we're trying. We're trying. We're now talking. We have an appointment scheduled with them to talk about, can we just extend it to the end of the year? But even listen to me, even if we get to convince them to extend it to the end of the year, do not wait to the end of the year to open it. Why would you do that? Open it as soon as you can, so you can take advantage of the 0.55% current interest rate as well as you get that $100. Remember, $100 a month, 12 consecutive months. You get $100 in 12 months, so you get that $100 sooner than later. It's also a great place KT, to put the stimulus, seriously. Yeah, for sure. Let's just keep your fingers crossed to everyone. We want to keep this going till the end of 2021. Hey, maybe even beyond. All right, so this next question is from Nicholas, whose you're going to, she's going to get steamy. Everyone ready for this. Suze, I watched you on TV growing up, and I've always tried to follow your advice. I've recently discovered the podcast and really enjoy the Ask Suze and KT Anything segment. So ready, everyone. I recently read an article. I want me to guess, wait on Business Insider on Indexed Universal Life Insurance. What are your thoughts on this type of life insurance? Hold on, Suze. Nicholas is obviously young since he grew up watching you on TV. So, you've been on TV for what, 20 years? 25 years. Nicolas is young. We don't know how old Nicholas is. But Nicholas, be nice. Be nice. I am not nice. Be nice. Is that Nicholas, if you grew up watching me, you know that I do not mix investments. Insurance is insurance. Investments are investments and the two of them should absolutely never cross. What's so interesting, Nicholas is I happen to have read that article, you know, in Business Insider. And I was just sitting there and I remember myself reading it going. You have to be kidding me. Really? And remember in that article where they say it could be dangerous. You need to know more than that. And all these things. Oh, give me a break. Here's the bottom line without even wasting anybody's time to explain why I don't like it and why you should not do it. Just know you are so denied. It's not even funny. Stay away from all types of life insurance except for term insurance. And that is the bottom line, boyfriend. Next, KT. Okay, this is from Pam. Hi, Suze and KT. I'm a faithful and grateful follower. Don't you love when they say KT. They'll mess me up here. I did already mess you up over. Calm yourself. Okay. I'm a faithful and grateful follower of Suze for decades and have benefited from her wisdom. The current book recommends bonds for a significant percentage of retirement savings during the pandemic, Suze's comments around, bonds changed. So, this is what Pam's telling us. I'm self-managing my savings and recently switched my bond allocation to short term inflation protected bond funds while pondering best next steps. What do you recommend? Yeah, actually, in the book, The Ultimate Retirement Guide, I recommending short term bond funds, never intermediate, never long-term bond funds. And I did a Suze school on this a while ago. I don't have a problem with short term inflation protection bond funds, right now. But look at the interest rate that you happen to be getting on that bond from. Is it a lot different than a 10-year Treasury note? Is it a lot different than what you are getting at Alliant Credit Union at 0.55%? Is it a lot different, especially if you don't need this money, then investing in preferred stock or a stock like Chevron or even the XLE oil ETF or other really good dividend pain investments just check all of that out, and then you should know exactly what you should do. Okay. Next one is from an it says Suze. How do you know? You recently mentioned the need to secure your retirement savings rather than continuing to invest, so you don't lose principal in a doubt term. As I'm almost 90 years old, I have a retirement savings account I'm not drawing from. I don't want to risk losing anything. Should I just sit and hold it? This question makes me smile. You know why? Why? I hope I can get to 90 and have the question like that. I hope you get ready to 90 too. You know what yesterday was right, KT. Yeah. Tell everybody the ST Patty's Day. But it was also the day my mom died. And how many years ago? Now 11, 2010. She died so 11, 11 years ago. But I have to tell you all. We were really very happy. She chose a holiday. And Suze and I had just taken her out for dinner, I think only two nights before she passed, she ordered two beers. She had a cold beer. We thought that was so I don't drink beer. My mom wanted to have a cold beer. We thought I said have two and she did. Maybe that's what killed. But we think it's, um it was great that she passed on that day. It was very sweet. Very peaceful. Yeah, we were there. Yeah. All right so, Anne that's the name of your mom and my mom. I know. That's why I picked that. And you did. I did. I love Can you believe it was Mama T and mama O, is what we called our mamas. So, Anne here's what I would tell you. First of all, you're lucky because the money happens to be in a retirement account, which means that even if you sell, there aren't any tax consequences for selling. And hopefully you have some tremendous gains. The only tax consequences are when you actually withdraw the money. Now, here's the thing, girlfriend. You are 90 years of age. That means you have been taking required minimum distributions in your case, since you turned 70.5 and normally required minimum distributions are actually almost all done by the time you are 90 because again, Suze School here, the reason the government wants you and requires you to take minimum distributions from a retirement account that you have never paid taxes on is because they want the money before you die. The tax money. So, I'm a little bit confused that you still have money in your retirement account because you say that you're not drawing from this retirement account. So, are you not taking required minimum distributions? Because when you don't, there is a 50% tax penalty on any amount of money that you should have taken that you did not take. That's 50%. So, I might just have to write you an email directly, which I will do, just to make sure, I don't know. I think anybody who's 90 years of age deserves an email for me, directly KT to make sure that they're okay and they're not making any mistakes. But truthfully, if you do have money left in your retirement account, I don't think the market's going to crash, and I just want to say one other thing here. I know. Okay, Go on, KT. Okay. Hi. Susan and KT, I have a friend who's struggling with money. He hasn't been paying his bills, not because he doesn't have money, but because he would rather spend his money on clothes and going out to eat. I've taken the time to sit with him and make a budget, but he doesn't use it now and then the question goes on to explain that this young man has gone through a couple years of some really tough emotional ups and downs. But now she's saying, I recently feel like he's taking advantage of me. How can I help him without giving him money? What's my favorite saying, KT, when is helping hurting and when is hurting healthy? That wasn't the one, I was thinking of it. I'm so proud that you at least knew that one. What are you thinking? You can never fix a financial problem with money. So, what you need to do here is that first of all, if you feel like you're being taken advantage of, it's because you are being taken advantage of. You know, I always had this thing as I was growing up. Even now it doesn't matter what somebody says to me. They can look at me right in the face and tell me, No, I didn't do that or whatever it may be, but if I feel like they did, I trust myself more than I trust others. So be kind to this person. Offer advice to this person if you want. But absolutely no more money to this person, on absolutely any level. Because at the beginning, you say he has money, so he just spends it on things that you don't think he should spend it on. So good. Let him spend until he doesn't have any. He doesn't need your money. You need your money. All right. Good, because here's one that's from Betty, one of KT's favorite topics. Can you guess? Oh, wait, not a Roth IRA. A back door. I tell them, go through the front door and you'll be safe. Hi, Suze. After getting pro-rated taxes on my back door IRA conversion this year, she said, 2020. I've decided on transferring my fidelity rollover IRA into a work sponsored 403b to avoid future pro-rated taxes. Do you know why that is KT? She said I'm a little hesitant because I would have to liquidate my ETFs and read. I don't even want here anymore. Alright, Right. Avoid the pro rata taxes by having a traditional IRA, roll it back into your 403 b. It doesn't matter what you were invested in, you would have gotten the same returns in your 403b. Because I'm sure you were afraid that you weren't doing as well. And then you could have a backdoor Roth IRA if those of you who don't understand anything I just said, because KT does not want me to explain things in such detail unless we go to Suze School because she likes when these keep moving. And I'm sure you do as well search. Because now my search function is working again on my Women and Money community app. Search for backdoor Roth IRA. Search for pro rata on the podcast and you'll understand what I'm talking about. Okay. All right, Good. Next. This is from Sharon. Hi, Suze. I'm a 55-year-old Just starting to get serious about saving money. Can I just say something? And then she said, is it too late for me and I just want to say it's never too late to save money and fall in love. Now is that sweet? Sweet? That's because we fell in love at 55 at 50. Yes. I want to do something with this stimulus. A drop in the bucket to some means more to me. She said I'm young enough to enjoy life, but too old to be foolish. How can I do this? I know the answer. Give it to her. Alliant, baby. It is. You know, I know it sounds like we're pushing a lion Alliant, but we are because it's going to end. And you need to know want this to we don't want to, but no, no, but we do not make one penny from this. So, you KT saying I don't need to say that I do, KT, because there are people out there to think Oh, they're pushing it because they make money. We do not. So, Sharon, just go to myalliant.com and put the money there. But make sure that you save at least $1200 outside of it so that you can put the $100 a month in and get your $100 But in the meantime, you'll be getting 0.55% or whatever their paying, which, you know, may go up as time goes on. Um, and enjoy it. All right, Go on, Suze. One last question. A short one. My favorite. Everyone, if I transfer my traditional IRA money, denied. No, I just have to answer before you asked. All right, Go on. Want me to ask the question for everyone else, if I transfer my traditional IRA money to my minor child's savings account or college savings 529. Do I still have to pay tax of IRA distribution? Yes, you do. So, deny. Do not do it. Okay. I knew that. That was all right, everybody. Now, as time goes on, I want to give you all quizzies that you really have to think about. Not just simple yes or no. I'm trying to educate all of you. And that includes KT. Nice. This one's from Cindy. My daughter lives in Boston. And between her and her husband's salary, they earn approximately 130,000 annually. Write it down, everybody. They earn 130,000 annually. Even with this salary, they feel they have to continue delaying buying a home because of the exorbitant housing costs. She is pregnant, and I am trying to decide on the best way to help them get a house. So, this is a situation where daughter is not asking for help. She isn't even looking for help, but Mama Bear wants to help her daughter and her grandchild. I think 1st child grandchild right, and this is Cindy situation. She has a total wealth between retirement and an IRA, A Roth IRA, investments in a trust of $5 million. Her home is paid off, and she lives in Minnesota. So here is the question, everybody should Cindy by the house herself and let them live for free so that they can say for the future should it be placed in her trust? Probably looking at $750,000 for a home, or pay the down payment for them and gift $30,000 each year to help them meet expenses. She says or is there another solution or advice that I can provide? Meaning me? She said, one more note, they have paid off their student loans so they have no outstanding debts, so they're very responsible with money. So, what should they do? Should Cindy simply by the house in her name in trust for $750,000 and let them live there for free? Or should she give them the down payment and $30,000 a year, which he can do tax free? Well, it sounds like Cindy can afford if she wanted to, to just buy them a home outright. But I definitely wouldn't do that. I think it's more remember she's going to keep it in her name. It doesn't matter. I think she should give the kids the down payment on the home, which would be 20% or more right and gift them $30,000 a year. I don't know for how long, though. You know, to tell Cindy dies because obviously, upon Cindy's death, this money will go to her daughter. She has over five million just in Trust. She has a lot more money than that. Um, I would I would help them in a way that doesn't make the kids feel guilty, makes them continue being responsible with their money, and also grateful that Mom just helped them with a little nudge. Ding ding, ding ding. You would say the same thing. I would say the same thing. In fact, I even wrote Cindy back and told her that. But the reasoning is also just a little bit different, in that when you buy a home of Cindy were to buy a home for her, these kids outright and keep it in her name, they would always feel like they are living in their mother's home. Not that it would be their home then, if they wanted to sell it or move on or change it’s like, where does that money go to? Who gets the appreciation of it? Is it Cindy, or is it them? So, no, let them own something in their own name. Let them get the tax write offs for it and just help them out with the down payment. And if they need the $30,000 a year, because they might not give it to them, just that simple. I like that. I like that answer whose answer was better mine or yours. I think that we'll both of our answers, were correct, but yours is a little bit different the reasoning. And mine is also that if her and her husband, like a couple of years from now, they get into a big argument. She doesn't get to say my mother bought us this house. Whatever. Let's hope that never happens. All right, everybody. Sunday we are going to Suze School so I can explain a little bit more about what I think will happen with the stock market with Bitcoins and with other things that I do with the stimulus check and how to qualify for it. Especially if you maybe have filed your income taxes already. And you're over the adjusted gross limit. I may go through that again. Just so you all understand because a few of you are writing emails that you're obviously not getting it. So, until Sunday. Are you going to work Sunday, KT? Well, I might come on for the Bitcoin part. Why? Because I still don't get it. You're never going to get it. I might come on for that part. You are not allowed. Okay, I'll listen. Right, there you go. KT. Want to take us out? Well, there's only one thing you have to remember. You already forgot it, when it comes to your money. And it is what, KT? People first then money then things. So, you stay sweet, in love, and safe. All right? Till Sunday. See you then.


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