Podcast Episode - What Should I Do With my 401(k) When I Retire?

On this Ask Suze & KT Anything episode, KT asks Suze your questions about paying off your mortgage, survivor Social Security benefits, why you need the full suite of Must-Have-Documents and so much more.

Listen to Podcast Episode:

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Podcast Transcript:

KT: Good morning everybody. It is August 28th, 2025, and we would like to welcome you to the Women and Money Ask KT and Suze Anything podcast.

Suze: Oh, you did so good.

KT: That was good, right? Before this one we did 5 takes, and she said, no, no, no, KT, we have to give them one. They're not gonna want to listen to all your, your, your redos. OK. My first question is from...

Suze: For some reason, everybody, she can't get it that she should say the date.

KT: I never get the date first. I welcome you to the Women and Money podcast.

Suze: But KT, the date is really important. Know why? Because it changes, the information changes... And what I told you to do four years ago is not what I'm telling you to do now. So everybody pay attention to the date that you're listening to something and the date that you're listening to it, and then you'll know, how you should listen to it.

KT: Hi, Suze, I'm 57, continuing my 39 plus year career. Wow, congratulations, Chrystal.

Suze: What did she do?

KT: I don't know.

Suze: On something she must like something's been doing it for 40 years like me. I've been doing this 40 years and I love what I do.

KT: So Chrystal says I have a 401k and two Roth IRAs. I have four and a half years left to pay on my mortgage. My domestic partner and I want to pay off the mortgage now just in case something happens to one of our jobs.

Suze: Did you notice how she just said "my mortgage?" And what does that tell you? That says that if they don't have income coming in, they don't have enough money to pay the mortgage.

KT: She says, I have about 85,000 liquid of which 50,000 would go towards paying my half. OK, I would only have 35,000 liquid left, but I would keep building my emergency fund after paying off the mortgage. My interest rate is 3.3%. I've been paying $750 extra on the principal every month, yes, yes, yes, for three years since my partner moved in. OK, partner's only been there for a little bit. My guess is that you will tell me to keep doing that. We are just eager to get out from under a mortgage and we have no other bills. So I thought I would just ask.

Suze: So that's the first time she said "we." Chrystal, as I look into my crystal ball—anyway—it bothers me, right? And that the house obviously is in your name. The mortgage is in your name. Everything is in your name. Your partner has moved in with you, and the reason that you're able to pay extra money towards your mortgage is they are paying you in essence rent. For this, you have to be very careful because if all of a sudden your partner puts a lump sum of money like $50,000 into this, that very well could make this house in their opinion, theirs, and there's just something about it that I don't like.

Your partner has only been living with you for three years. Now I don't know how long you've been with your partner, but I like when you own your own home when it's all yours, that you're taking rent from your partner and that your partner really doesn't have a say in this. Now, obviously you were doing OK before your partner moved in and you were able to pay this mortgage.

Rather than you taking money from your $85,000 that you have liquid, if you're afraid if something happens to you and you lose your job or whatever, why don't you just keep that money safe and sound in an account that if something happened you would be able to continue from it to still pay your mortgage? Because with only four and a half years left, you've already paid all the interest up front. You're paying principal, so it makes no sense for you to give up money that's probably making 4.55% in a high yield savings account to pay off a 3.3% interest mortgage that really you've already paid that all up front. Doesn't make any sense whatsoever, so I don't want you to do it.

However, maybe to protect yourself, your partner should get a term insurance policy on him or her, and if they're around the same age as you, you know, even a $100,000 term policy if something happened to them besides losing a job—it's only like $400 a year for 100,000. So maybe it's $300 a year at this age, if they're in good health, a non-smoker and everything like that—for their half, so they could do that.

But no, I would not be doing this and do not make this both of your homes. This is your home. You're going to keep it in just your name. Their money that they pay goes for rent because they're living there and you keep it like that, girlfriend, trust me on this one.

KT: Trust her, Chrystal. OK, yeah, because we've read these emails before. Trust her, Chrystal,

Suze: But after the fact of what's gone wrong. I don't want anything to go wrong.

KT: This next question is from Juan. Hi ladies, thank you for your podcast. I started listening during the COVID shutdown, and I found it very, very, very helpful. My husband and I both turned 60 this year. We've been married for over 10 years. We aspire to hold off collecting Social Security till we're 70. Barring major health or market events, our financial plan will let us do this. My Social Security check is projected to be 30% higher than my husband's. If I die before him, and I have not started collecting Social Security, will he be able to collect my higher Social Security?

Suze: Yes.

KT: Well, there you go.

Suze: Yeah, very simple, different than a spousal Social Security claim, where their spouse or ex-spouse has had to start claiming Social Security for you to get a percentage of it, a survivor benefit is very different. You do not need to be collecting it. In fact, let's just say at 67, your full retirement age really, your primary insurance amount is $2,500. Let's say you die at 69. He can collect that increase even though you didn't claim yet at 2,900. So yes, he can claim your Social Security.

KT: OK, so next question's from Tim. Hi Suze and KT. My wife is about to leave her current employer. She has approximately 148,000 in a Roth 401k that will need to be moved to a rollover IRA. She does not currently have a Roth IRA, but if she were to open one at Fidelity prior to leaving her employer, could the Roth 401k be rolled into the Roth IRA?

Suze: Yes, absolutely.

KT: Are... wait, are her employer's contributions to her Roth also after tax or tax deferred? Is there a way to tell?

Suze: Yeah, I'm sure if she looks she will see that the match from her 401k contributions from her employer is in a pre-tax account, so that could go into an IRA and her other money could go into a Roth IRA. However, the five year clock will start the day that she converts there. If she opens a Roth IRA today, even with a dollar if she qualifies for one, then the 5 year clock has started, and the five year clock has run. And then she puts her 401k Roth money into a Roth IRA, she would have met the five year rule. That is why I tell all of you open up a Roth IRA in your individual name. I don't care if you only fund it with a dollar, especially if you have money in a Roth 401k. Start the clock now.

KT: So when they do the rollover, there's no starting a clock again.

Suze: That's so if she's now, depending on her age, if she wants to take out money, the earnings, and everything, it's all tax free. She doesn't have to wait five years.

KT: OK, next is from Sharon. Hi Suze and KT. Thank you for sharing your wisdom. Every time I listen, I always learn something new from you and KT. So, I have a question about the use of limited orders when buying or selling a stock, especially in this volatile market. I don't have the time to watch the market each day. I realize I wouldn't catch the highs or lows of the market this way, but that's hard to do anyway. What are your thoughts on limited buys and sells? She's an 83-year-old still with a lot to learn, so appreciate you both sharing your wisdom. OK, this isn't both sharing wisdom. This is Suze sharing her wisdom, uh, Sharon, this isn't a KT.

Suze: You know what a limit order is KT?

KT: No.

Suze: Do you know what a market order is?

KT: No.

Suze: There you go. That's why this is a Suze wisdom, not KT's. When you are buying or selling a share of stock, when you put in your order, if it's online or if you deal with a financial advisor, they'll ask you this question. Do you want it to be a market order? A market order simply is you put it in to buy or sell, and whatever the stock is trading in the market at that time, you get that price period, so it will automatically be filled. A limit order is you want to buy or sell it at a specific price, so you're limiting what you can buy or sell it at.

The next question you're going to be asked is it a good till cancel order or a day only order? So you could put in a limit order to buy or sell a share of stock or all of your stock however you want to do it, and you can make it just for that day. You just want to see what happens that day, or in this case, Sharon doesn't want to watch it. She doesn't care, right? She's got better things to do, so therefore she could make it good till cancel. So until she physically cancels it, that limit order is good and if the price of the stock hits her limit order, whatever amount she put in, it will automatically sell.

So up to you if you want to do that or not. A lot of times if you put a limit order too close to the market of what's happening, the traders will just have it go down there, pick up your limit order, and then wipe it out because they know that they have orders showing the stock's going to be going up. So just be careful with limit orders. However, it doesn't hurt if you know you want to sell something to just glance on it or get an alert when a stock hits a certain price. Make sure that you get a text or an email saying, Oh, Sharon, the stock just hit this price. Maybe you need to do something. Pay attention. Pay attention.

KT: Do you remember, um, I remember my brother Johnny was working on the Chicago exchange. I'll never forget this. He went on vacation and he was responsible for a great deal of money for one of his clients, and he put it on a limit. He did that, and we had that big crash, that unforeseen huge crash. John became a hero overnight because he put it on a limit, so that guy, that client didn't lose anything. And John was like this hero. Everyone thought, like, how did you know? And he didn't. It just happened that he went on vacation that week.

Suze: Go on. All right, but a limit order can also work against you.

KT: OK, next question.

Suze: That was KT's very sweet way of being able to mention her brother Johnny, who she loves. She loves this boy so much even though he's no longer a boy, he just turned 60. God, she loves him. And guess what, everybody... So do I.

KT: I want to hear something even more amazing. He seriously loves me. The most, the most.

Hey, Suze, I'm sure you've probably answered this question before, but I've just started listening to your podcast. I want to move my 401k into something since I'm about to retire next year at 68. Where should I move it?

Suze: Well, you know, again, these questions are kind of all similar, KT, but...

KT: I would roll it over to a Roth IRA.

Suze: But she has a 401k. She didn't tell you she had a Roth 401(k). She said she has a 401(k).

KT: Yeah, where should she move it?

Suze: You don't say how much money you have in this 401(k). The only number you use here is the number 68. So for a long time, obviously you've gotten very used to how the 401k works, the investments in the 401k, and you probably feel very comfortable with it.

When you roll it to let's say an IRA rollover, and it would be a traditional IRA rollover, why? Because you don't want to owe taxes on it when you do so, and it would be a custodian to custodian rollover. You want it to go directly from your employer sponsored 401(k) into your IRA rollover at a brokerage firm.

When you do that, they have to liquidate everything that's in your 401(k), all the mutual funds and everything, and it's cash that will roll over. Now you're going to have to decide on your own how do you want to invest that money? Do you want to invest it all at once? Do you want a dollar cost average? So the question I turn back to you is how comfortable do you feel doing that?

Because I can tell you if it's a large amount when you roll it over to a brokerage firm, oh, you're going to have some financial adviser saying I think you should do this, I think you should do that, let's buy an annuity, let's do this, let's do that. So just depending on your knowledge, your comfort level, because remember the goal of money is for you to be secure.

And it may just be that you are secure with it in your 401(k) at your ex-employers where it happens to be invested. Maybe it's all invested in a Standard and Poor's 500 fund or something like that. So the question now reverts right back to you, girlfriend. Are you comfortable where it is, or do you feel secure enough for it to go to an IRA rollover and invest it?

Once it's at the IRA rollover, little by little you could convert it to a Roth IRA so that as you get older you have more and more money in your Roth IRA and then you won't have to be subjected to required minimum distribution.

KT: I have a question. Can she leave that for as long as she wishes in her 401(k)?

Suze: Yeah, yeah, as long as it's $5,000 or more, she can leave it at her ex-employer's 401(k) plan, which she may feel more comfortable with.

Again, the goal of money is for you to be secure. So the question is also, you don't have to do it all. Maybe you take half of it and roll it to an IRA rollover and see how it feels, or a small amount of money, but just because you're not exactly sure and you're saying where should I move it, it makes me a little bit protective of you because if you don't even know where to move it, I don't know you would know what to do with it once you moved it. So probably I would be telling you to leave it exactly where it is until you know.

KT: I would too.

Suze: All right, well, there you go.

KT: So next question is from Michelle. Michelle, my belle...

Suze: Here she goes...

KT: I used to know the French words that go after that, but...

Suze: Here's the thing that's so funny. KT thinks she can sing.

KT: I can sing. I sing all the time.

Suze: I don't have a great singing voice, but I love to sing. I can sing.

There's a saying, not my saying, but sing like nobody can hear you, dance like nobody is watching.

KT: I danced...

Suze: And KT does both those things to the extreme.

KT: Like no one's watching except Suze. And sometimes she records it, which I get very angry, and then posts it on the wall. All right, ready. I know that you are not a fan of life insurance policies, but I'm wondering if it makes sense for tax purposes and income in my case.

Suze: No, no, no.

KT: You're already answering her.

Suze: Because it never makes sense for tax purposes.

KT: I am a 50-year-old single woman with no kids. I have a paid off house and I have $2.3 million in savings between brokerage, 401(k), IRA, and Roth IRA accounts.

Suze: You know why she has so much money?

KT: Yeah, single and no kids.

Suze: That's right. That's the key.

KT: All right, so about 700,000 is in my brokerage, which is how I would fund the annuity policy. What should I be aware of and look out for before getting this type of annuity? Suze, in your opinion, is it better to just buy rental property for the same purpose?

Suze: So the purpose obviously is avoiding taxes with it. See, here's what I don't understand Michelle. And even rental property, right now she can do rental property. She could do an REIT. REITs are starting to come up nicely now, but they will pay you income that's taxable, Michelle.

You have to understand that on no level do I want you to touch an annuity, to touch any type of life insurance policy or any insurance investment on any level. It makes no sense. Do you hear me? That's it, period.

However, if you continue investing this money in dividend paying stocks and or growth stocks, value stocks, you just keep investing it. Dollar cost averaging in your brokerage firm. You're not paying taxes on the growth of that money. You don't buy a stock just to own it for a year. And then later on in life, as this money has been growing up and up and up, if you decide to sell, so it's at the capital gains tax rate.

Don't worry about taxes. You're saying you're wondering if it makes sense for tax purposes income in your case. Listen, do a municipal bond, do things like that, and not pay taxes on it. But no, the answer is very simple. You are not going to do this over my dead body, and as you can tell, my body is not dead.

KT: That was funny. OK, final question from Barbara. Dear Suze and KT, when you talk about the benefits of a revocable trust, you mention the incapacity clause. My husband and I have a revocable trust, as well as the other must have documents, but I was curious as to why a financial power of attorney would not address the incapacity issue. There you go. She wants you to make her more financially secure.

Suze: So here's the scoop, everybody, right? A revocable trust with an incapacity only governs the assets that are in a trust. There are assets like an IRA, an employer retirement plan, assets not titled in the trust that a power of attorney governs. It is just that simple, so you need both.

But I will tell you this: a power of attorney at a bank when you present it may give you problems because they don't like dealing with power of attorneys because they don't know is it null and void, what does it govern, all these things. So both of those documents are essential.

KT: That is a wrap.

Suze: It is?

KT: Yes.

Suze: Are you making these podcasts shorter and shorter?

KT: A little bit.

Suze: Yeah, ask me why.

KT: People remember more information if there's less. They do. I do. And if I can remember it, if I can quote you on what to do with a Roth because you didn't give me so many options—front door, back door, side door, under—then that's how I learn. Less is more.

Suze: You know, KT loves to back herself into a corner with me.

KT: No corner, no corner.

Suze: This is a corner that you backed yourself into.

KT: OK, we're gonna say there's only one thing we want to remember...

Suze: Because no matter how short or long or whatever, she still doesn't know anything about a Roth.

KT: There's only one thing we want you to remember, and it's this. We want your money to make more money.

Suze: All right, everybody, until next time, you stay safe and healthy.

KT: Bye bye.