Podcast Episode - How Can Non-Married Couples Build a Shared Financial Life?

On this Ask Suze & KT Anything episode, KT asks Suze your questions about the best way for couples to split bills, honoring the final wishes of a parent, paying off debt and so much more.

Listen to Podcast Episode:

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Podcast Transcript:

Suze: What's the date, KT?

KT: Good morning, Suze. It's November 6th.

Suze: Are you positive?

KT: Yes.

Suze: You know what that means, don't you?

KT: Yes.

Suze: What does it mean?

KT: We're close to Thanksgiving.

Suze: We're always close to, we're always close to a holiday. Why is that, KT?

KT: I love, I love parties. I love to celebrate. I love gatherings. Suze does not.

Suze: That's the truth. That's the God honest truth. Does that surprise all of you?

KT: Yes.

Suze: Do you think it surprises them?

KT: Yes, it does. You're such a social person. You're so happy. You know, you're full of life, and yet you love to be alone with me. That's it.

Suze: That's it. For every birthday that I have, everybody, and then we'll start this podcast. KT says. What should we do? Like, for instance...

KT: For milestones, we, we did, I did sneak in one great party...

Suze: When I was 60, but now in June, which is not that far away, I'm gonna be 75, and KT wants to...

KT: I'm planning. I wanna make a big party, but no...

Suze: What does Suze say?

KT: She said, I just wanna be with you.

So now we're gonna have a big party, just the two of us. I won't tell them what we're doing because it's a surprise for you.

Suze: It's for me that I asked her for anyway, that's besides the point.

KT: All right, let's get on with this. Welcome to the Women and Money podcast, and everyone smart enough to listen.

Suze: KT, do you think we think we need to change the name.

KT: To the women, to the pod to the money podcast.

Suze: No, to the people's podcast, to the some podcast that isn't just exclusive.

KT: The People's Money Podcast...

Suze: The People's Money... that's boring.

KT: The Money Podcast for People.

Suze: That's very funny, KT. That's gonna be the Money Podcast for People. I kind of like that no matter who you are anyway, for right now, however, this is the Ask KT and Suze edition, anything. And if you have a question, all you have to do is write into ask Suze podcast at gmail.com.

And if KT chooses it, oh, I'll, I'll, I'll maybe answer it as well.

KT: No, this is my first question is great. Ready?

Hello, Suze.

Suze: You just interrupted me.

KT: I did because, because I, I wanna get on with it. I've got, I wanna get on with it.

Suze: Why? Because you got things to do?

KT: I do, Thanksgiving's coming up.

KT: OK, hello, Suze and KT. This is from Denise. Everyone, please remind me of the podcast that went over how to split money for bills. My husband makes less money than I do. We currently split it in half, but it may not be fair. I heard a podcast that gave a mathematical equation as to how to solve this. Let's tell her to do it the way we do it.

Suze pays for everything.

That's not true.

Suze: No, we split the money that comes in, and then it is true that I pay for 95% of everything,

KT: Yeah, but you didn't tell her how we split it. It's not 50/50, baby.

Suze: No, but 75/25 doesn't equate to me paying for 95 to 99%. However, everybody, I love paying for everything. I don't mind...

KT: If she doesn't like something. She's, KT, you're paying for that. I say, OK.

Suze: And then we do that. But seriously, you know, we have to figure out, obviously, this is just going to be a podcast of me and KT talking to each other and Robert.

Which is Robert, we have to figure out a way that people can just go on, put in what they're looking for, and up comes the podcast they're looking for, because I don't know that which one that podcast is in.

KT: So she's also given that advice a number of times, and we're about to do it again right now.

Suze: So here you go, Denise, just for you.

Let's say you make $7,000 a month. Let's say your spouse makes $3,000 a month, you'd add those two totals together, that's $10,000 and you divide that into whatever your monthly expenses happen to be that you share. Let's just make this ridiculous and say it's $3,000 a month is what you share.

Therefore, you divide $10,000 into $3,000 and that will be 30%. Therefore, you then at $7,000 pay 30% of that $7,000 which is $2,100 a month. Your husband, 30% of that $3,000 is $900 a month.

And there is your $3,000. Equal percentages, not equal amounts of money. Next question KT.

KT: OK, this is from Debbie. Good morning. I am 66 and retired.

Suze: Good for you.

KT: I've been using ML...

Suze: ML is Merrill Lynch.

KT: ...for my advisor for over 25 years. Now that I'm retired and have been really trying to get on my game, I realized how much those fees are costing me. I pay 1.23%, ready, everyone, which is about $15,000 a year. She has a lot of money they're looking after.

There are perks because they are linked to Bank of America.

Suze: That's not a perk.

KT: Well, hold on, hold on, hold on. I really can't see the value anymore. Previously...

Suze: Good for you, Debbie.

KT: Previously I worked a lot. I didn't have time to manage my own money. Vanguard's fees are about a third of that and nothing if I self-direct. Should I take the leap? Please advise.

Not only should you take the leap, you don't need Vanguard either.

Suze: You know, Debbie, obviously I think you should manage the money yourself, but it's not my money, it is your money, and it's going to manage 1.2 million because if you're paying 15,000 a year at 1.25%, that means you have approximately 1.2 million at Merrill Lynch.

Is that gonna make you nervous? Do you know what you would invest in? Can you just simply take everything that it's already invested in, if you like what it's invested in, and transfer that to like Schwab or Fidelity or even Vanguard, and then just manage it from there?

How much did you have to do with that? Could you use that extra $15,000 a year? Could you? You probably could. Is this outside of a retirement account, inside a retirement account? What do you have going on there? Do they help you with tax planning and how much you should convert? And I can go on and on and on.

So, the other thing is this: maybe you don't do it all at once. Maybe you take a third of it and you transfer it and you see how that feels or then maybe some more, whatever it may be, or you talk to this person if this person has been doing really, really well for you and you feel secure with this person or whatever it may be, maybe you talk to them and you say, you know what...

I'm going to leave you unless you only charge me 0.5% to manage this money because the truth is we don't change it much. Do you have bonds? You shouldn't be paying any percentage if you're investing in bonds. You're going to have to make this decision. You might want to take 300,000 and see what you do with that 300,000 or take it in kind so you don't have a taxable event, again unless this is a retirement account.

So you're going to have to make this decision yourself. But again, you're never powerful in life until you're powerful over your own money, how you think about it, how you feel about it, and how you invest it. Just that simple.

KT: Suze, next question is from Scott. Scott, I want to go to Scotland.

Suze: Why?

KT: I want to go fishing in Scotland and golfing.

Suze: Oh, we're gonna go golfing. Does that mean we have to take our golf clubs all the way?

KT: No, no, no, you can just rent them. We're not that good.

Hi Suze.

Suze: Although tell everybody how good I am.

KT: Suze's really a great golfer. Colo and I can't believe how she can drive that ball straight down the fairway, and he and I end up in the lake. We end up in the trees. We have to search in the woods, but Suze, bam, and she doesn't even do a practice swing. That's, that's the, that's the part that we don't get. We practice like 10 swings.

And wiggle. We do everything that the pros do, but Suze just gets up there with a pair of flip flops on and bam, hits that ball. All right, ready? Hi, Suze, I'm retiring in about a year and thanks to you, I've done very well with my retirement savings.

I'm about to rebalance my retirement account and I'm wondering if I really need to do a 60/40 balance or if I could do something more like 80/20. If 20% of my retirement savings were in cash and bonds, I could live on that amount of money very comfortably for five years, six if I'm careful. Which is making me wonder why I would have 40% of my account in slow growth investments.

Suze: Scott boy,

KT: Scotty, Scotty,

Suze: Scotty, do you want to go to Scotland with us?

You can do anything you want. There are no formulas that I want you to really follow. You know, maybe I give generic advice and things when a lot of people are listening or reading, but truthfully, I want you all to invest what you feel you should do according to you, period.

If you wanted 100% of your money in the market, honest to God. And you knew that you had enough in cash to carry you for three to five years of expenses above your income, Social Security, all of those things. I don't care if you do that.

But you have to know that you're willing to risk, what you're not willing to risk, what you want to keep safe, and what you don't want to keep safe. So, it's really totally up to you. You can do anything you want, cause it's your money. And I know conventional wisdom would say, no, no, you have to be conservative, you have to be... Scotty, do what makes sense for you in your particular situation. All right.

KT: OK, my next question is from Jill and Jill said, hi Suze and KT. Ready? I love the opening. My sweetheart and I.

Both 53 and together for five years.

Suze: What did you like about that opening?

KT: My sweetheart and I.

Suze: I never call you sweetheart.

KT: No, but Jill is calling her, her...

Suze: Does that mean you want me to call you sweetheart?

KT: You call me sweetheart sometimes, but not really.

All right, so. My sweetheart and I, both 53 and together for five years, have been devoted listeners for two years now. Your podcast has sparked honest financial conversations between us and continues to help us prepare for retirement. Thank you.

Now, here's our dilemma. We live and earn modestly with similar incomes and comparable retirement savings. I own a $333,000 home outright. He owns a slightly less valued one with a $110,000 mortgage. We eventually want to share a home and grow old together, but neither of us want to marry again.

Suze: Probably smart.

KT: That isn't smart. Why don't they want to marry again?

Suze: I don't know if we both—ready?

KT: So many advantages. All right, go on.

Suze: OK, if we both sell and buy a home together as tenants in common, the surviving partner could end up owning a house with the other's adult children, a potentially awkward and complicated setup. If he sells his home, moves in with me, and splits expenses, he'd be contributing to a house he doesn't own.

On the other hand, he gets to invest the proceeds from selling his home, while mine would remain tied up in equity, and that feels unbalanced too.

KT: Suze, how can an unmarried couple build a shared life financially and emotionally without risking fairness, equity, or future security?

Suze: How long have they been together?

KT: Five years now. Wait, just five, and they're both 53. So I'm gonna make an assumption that they both had possibly miserable divorces or separations or whatever, and now...

KT: They just want to be free together and happy, but fair.

Suze: Jill, this is a little bit of a hard one because really it all boils down to trust. And even though he's your sweetheart, the truth of the matter is you've only been together five years, and I'm so sorry to say in my book, five years is such a short period of time.

If you told me that you had been together 25 years, I would have said something different, but I think the best thing to do in this situation is let him sell his house. Let him invest all of that money. He moves into your home and he splits whatever expenses you want to be split with him, and that's how you do it, and the house remains in your name, hopefully in trust.

And the thing is, is that if it's just in your name, you could give him a life estate in your trust that says if you were to die he is allowed to live there for as long as he wants to live there.

Obviously he would have to pay expenses and pay to live there if he wanted to. And upon his death or when he moves out. Again, it all goes to your kids. That's probably how I would do it if I were you.

But I think your concerns are valid, and I think they're really, really intelligent. So therefore let him sell his house. You keep yours, put it in trust. Give him a life estate or a life estate for x amount of years. Make sure you state that in your trust, and then everything upon the time of him moving out or he dies goes to your children. Just that easy.

All right, KT, next question.

KT: Ok, next question is from Laura. Suze, I'm hoping you can help me. My father has left in his will that I am to inherit his home and everything not mentioned.

Suze: Everything that he didn't designate in his will, KT.

KT: And his four stepdaughters. Whoa, this sounds like a Cinderella question. His four stepdaughters are to inherit $25,000 each. I want to honor his wishes. His wife passed six years ago, and he never removed her name from the deed.

I encouraged him to set up a trust six weeks ago when I learned about trust from your podcast. Thank you. The sad thing is that he's now on hospice and unable to sign documents and isn't coherent 20% of the time.

OK, but here is the good news. I am his financial power of attorney. Can I set up the trust on his behalf? He had an appointment with his lawyer to do so, but went into the hospital and was unable. Then unexpectedly went on hospice.

Oh boy, he thinks one particular stepdaughter will be giving me great issue, and I believe he is right. How can I protect the wishes in his will?

Laura sounds like she's very reasonable, Suze, and she wants to do the right thing and honor her dad's wishes.

Suze: So, first, let me just say this, Laura, is that no, you cannot do it. You cannot set up a trust on his behalf just because you're the financial power of attorney. That isn't granted in that type of a document, number one.

Number two, the only downside of all this is if he has done a will, you are the executor of his will, it's just going to have to go through probate. That isn't that big of a deal in terms of where everything goes and one of the stepdaughters contesting. Because I doubt that they will because it's his will and his will is valid.

It's going to cost you money that it wouldn't have cost you if you had done a trust. It might take six months to one year or two years, depending on the state you're doing it, because it's not in a trust, but you can do it that way. My real question for you is, you say that he's only unable to sign things like 20% of the time.

What about the 80% of the time? Is he coherent? Could the lawyer go to the hospital and have him do the trust there during his coherent times? Is that possible? Because it's not like his stepdaughters know that he's always incapacitated, 'cause he's not. He's only incoherent 20% of the time.

So if I were you, I would call the lawyer and say, can you go visit him and see what you think? Is he coherent? Does it make sense? You can videotape him, by the way, doing it as well so that everybody can see that he was coherent when he was doing it.

And just because he's on hospice doesn't mean that he's going to die in two weeks, gonna die in three weeks. They're administering morphine. Hospice is a lot different than what people think. So, it's just something for you to consider. Worst case scenario, just follow his will.

Be strong about it and just love him up during the day, during the night, every second you spend with him, because these really are the most precious moments of both of your lives, whether you know it or not. All right.

KT: All right. Next question is from Jenna. Jenna said thank you for your continued wisdom and passion for helping women and all of those smart enough to listen.

I just love listening to you and KT on my commute to work. I enjoy when people share that with us because some people listen to us when they walk their dog in the morning, when they exercise, when they meditate. I don't know if you can meditate and listen to us, but she said, here are the details before I ask my question.

I put the mandatory 3% to my retirement. My employer puts in 4%. I then put in a voluntary 2%, and my employer puts in another 4%.

I owe $40,000 in credit card debt, all currently at zero interest rate. My car is paid off. I owe $360,000 on my mortgage. I make $155,000 a year, and my FICO score is 746. I'm a single mama.

She said, Suze, you said don't think about saving for your future till you have taken care of your mistakes of the past. Hm, that's a good one. This makes me think I should not add the voluntary contribution and take the money to pay off the debt faster. Please advise.

Suze: Here's the thing, girlfriend. You've also heard me say the biggest mistake you can make is passing up free money. Haven't you heard me say that? I don't care how much debt you have. I don't care whatever. You have to contribute up to the point of the match because it is free money. So it's not a mistake. Obviously your debt that you created for yourself, the $40,000.

I'm not so upset about that because you said one thing here, you said you're a single mama. So I don't know what you had to do, to get by as a single mama. So I'm not going to yell at you or even feel bad about the fact that you have $40,000 of debt. You have a great FICO score, you're making a great living. You're now on the right path.

And especially at times like this where the markets are going up, it's still a great time to invest. I don't want that money out of your retirement account. Now, hopefully, regardless of your income that you're making, you are in a Roth retirement account at work, all right? Just tell me that you're doing that, cause otherwise, that would be a mistake. All right, now, listen.

Just keep doing what you're doing. Keep paying it off as you can, and sooner than later you will be out of debt. Just that simple. All right, go on, KT.

KT: OK, this is my last question, from Matthew. He said, Hi, Suze and KT. Thanks for the many great episodes on Roth accounts. I know KT will empathize with my struggle to grasp the finer points of Roth funds.

Suze: Wait, before you go on, KT. How do you feel about it that everybody in the world writes in and they identify with your lack of ability to understand Roths?

KT: Because it's complicated and I'm a very smart girl.

Suze: Now let me correct something here, right? You keep saying it's complicated.

KT: It is.

Suze: Listen to me. Everybody thinks it's complicated. And because you're all thinking it's complicated, you're all making it more complicated than it really is. So KT, I need you to stop thinking that it's complicated. I need you to start thinking along with Matthew and everybody else that it's actually easy and you can do it.

KT: OK. Good luck.

That's all, that's all I have to say, everyone. Good luck. I'll give it a shot, Suze, but good luck.

Suze: Why can't you do that for me, sweetheart?

KT: I'll give it a shot. So I have a few...

Suze: Could you imagine if I called you sweetheart all the time?

KT: You know who calls sweetheart? Don calls our sister Barbara sweetheart. She calls him sweetheart.

And Tom calls Lynn honey honey.

Suze: And what does your brother call Lisa?

KT: Uh, Poopsy. Poopsy. Oh my God.

Suze: I call my KT, KT.

KT: And Colo calls me KT. He every morning. Hi KT. Hi Suze. All right, so Matthew, we're gonna give this a shot.

So Matthew said, I have a few questions in my road to understanding. OK. First, withdrawals. I'm only gonna ask one question, Matthew, just so you know, we're gonna take this step by step. There's like two pages here of questions about the Roth, so I'm gonna do one. That's it. That's all you get.

KT: I understand there are no penalties on withdrawing contributions, but I cannot touch the earnings. My question is on operationalizing this. When I go into my brokerage account and see the cost basis, I know I can withdraw that amount, but when I sell any particular stock, I sell earnings too. How do I report on taxes without having to pay penalties and taxes? Do not make this a quizzy, Suze.

Suze: Oh, trust me, I won't because it's so easy. This is too easy for you to have this as a quizzy. Don't you agree?

KT: Yeah.

Suze: This is way too easy. You understand this one, right?

KT: No.

Suze: Matthew, listen to me. Your cost basis doesn't determine anything. It doesn't matter when it's in a Roth IRA. Why? Because there are no taxes in a Roth when you buy or sell something. It's all tax-free. All that matters in a Roth is the amount that you originally contributed.

So, if you originally contributed, let's just say $7,000, all right, let's just say that's true, and you bought something, you sold something, and you doubled your money. As long as you don't withdraw more than $7,000 there's no taxable event. It's not like they divide it from earnings to whatever. It's when you actually withdraw everything above the amount that you originally contributed, that will be considered earnings.

But you're not going to take out more than you originally contributed before five years and when you're 59 and a half, so you're overthinking this, boyfriend. It's just that simple. Now, KT, did that make sense to you?

KT: Yeah, that was easy. That was easy.

Suze: Come on.

KT: No, that was easy. That made a lot of sense to me. What you just said was easy.

Suze: Now, is it possible, everybody, here's the million dollar question. Is it possible KT thought that was easy because we shifted her mindset from thinking something was complicated to thinking it was easy? Is that possible?

KT: Yeah, it is possible. That was easy to understand.

Suze: So you agree with me that maybe Roths can be easy?

KT: Yes.

Suze: Easy, right?

KT: Yes, yes, yes, yes, yes, yes.

Suze: So you know what else is easy?

The fact that that ends this Ask KT and Suze Anything podcast. One thing we want all of you to do, and that is to go to youtube.com/Suze Orman, and you will find videos there that you will want to see — not only of my old shows and things like that,

but sometimes I appear there talking about stocks and things that we don't do on this podcast, so go there and check it out. All right, KT take us out.

KT: So everybody just remember 3 things... People first.

Suze: She almost forgot. You almost forgot. I can tell you forgot.

KT: People first, then money, then things.

Suze: Now you stay safe, strong, healthy, and secure, and we'll see you soon.