Podcast Episode - Ask KT & Suze Anything: Am I Too Old to Buy a House?

On this edition of Ask KT and Suze Anything, Suze answers questions about RMD calculations, dollar cost averaging, inheritance and capital gains.  Plus, home buying, insurance, T-Bills and more.

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Podcast Transcript:

Suze: September 12, 2024. Welcome everybody to the Women and Money podcast. As well as everybody smart enough to listen.

KT: We had the best anniversary last Sunday, didn't we, Suze?

Suze: Are you kidding me?

KT: No, it was fabulous. Listen, let me tell you all. We did nothing. We had a nada day, nada, nada, nada nada. We're practicing our Spanish because we're on our way to Spain over the weekend.

KT: But I have to tell you all. We had the best anniversary ever. Thank you for your notes. Your cards, your messages,

Suze: Tell them what I gave you.

KT: Oh, my goodness. She gave me three tickets.

Suze: Well, we, I told everybody that I was gonna be giving you tickets but tell,

KT: Ok, so she presented me in the morning, uh, on our anniversary with a card of a beautiful rainbow over our beach that she actually drew and created.

KT: And in the card were three tickets and I could cash these tickets in any order I wanted

Suze: One that said ocean, one said golf and one said walk. So go on.

KT: We did two out of the three.

Suze: Yes. But what did I tell you as we were doing them?

KT: That I get to, I get to not cash and use them again.

Suze: She has a free pass for our anniversary so she can use that. But wait, let me tell everybody what you did for me.

KT: You have to show them right?

Suze: I will, right? But we have on our property, a tree stump from a big tree that was cut

KT: That I never wanted her to cut. It was a beautiful, huge palm tree, incredible coconut wood, beautiful. And I begged her for 10 years not to cut it down. Sure enough, I was outnumbered by everybody. It was...

Suze: Because in a hurricane it would smash everything.

KT: So, it was cut down, it was cut down with great reluctance and there was a, a stump on the bottom and, and coconut wood is rather hard and the stump was maybe about five inches out of the ground with the intent that we pull it out or cut it with a chainsaw, but it was nice and smooth and I kept looking at it, looking at it. 

KT: So I, I drew a heart on it and within the carved, wait, I drew the heart and then I got a chisel and hammer and in between Suze, not looking for me. I worked on this stump and I carved it into a heart with a message inside just for Suze and she knows what it means and she's going to post that photo on the wall. So you have to look for it today. She's gonna post it today and I think you'll all enjoy it.

Suze: But let me tell you the funny part of everything this morning. So before we start recording, right, I say to KT, let's tell everybody about our anniversary and what we did and blah, blah, blah, blah.

Suze: And what does she do? She says, no, I don't want to do that.

Suze: Let's just get on to whatever I'm like, really like, OK, and then look what she does

KT: Look for that photo and tell me all how you like the card I made for Suze.

Suze: However, I do want to talk about one thing that was discussed briefly on last Sunday's podcast. The insurance because,

KT: oh, wait, wait, wait, let's remind everybody

Suze: go on Miss Talkative.

KT: So Suze, um was talking about different things in relationships and when she first met me, she canceled my whole life insurance policy which I had been paying in for 10 years, $15,000 every year on my birthday.

Suze: She had put in 150,000.

KT: But when I was very proud of that,

Suze: but when we canceled because Colo was listening to this and he came in and he goes, well, how much did she get when you canceled? I said we didn't say she said no I want to know when she canceled, she only got 50,000 dollars.

KT: So, that phone call cost 100,000. But here's what Suze said to me at the time, you give me that 50,000. KT I'm going to invest it and I'm gonna show you what you can do with it and guess what, everybody...

Suze: She made up that money plus some. All right. So here we are at Ask KT and Suze anything addition. If you want to send in a question, you send it in to ask Suze podcast. That's Suze at gmail.com. Keep it short because if it is short, KT will most likely pick it. If she picks it, we will answer it on the podcast.

KT: I have such a great, great selection of short emails that I think this might be a rapid fire because I'd love to get through them. But the first one I'm starting with Suze's from Mike and this isn't a question. It's a thank you. But let me share it with a lot. I like, I like the thank yous. So Mike said, Suze, I'm studying for my Series 65 exam. Tell everyone what that is.

Suze: When you study to be a stockbroker or a financial advisor, there are certain exams you have to pass so you can do stocks and all of that at Series 65 I believe is for mutual funds. So you have to do all those.

KT: They're not easy. They're very complicated. So he said, I'm reading the book and listening to the on demand classes and getting so confused. Then Suze, I remembered you covered many of these topics in Suze school.

KT: So he went back and listened. He said things are now clear. Thank you. Thank you. Thank you. Thank you. And then Mike said, you know, Suze, you could charge for your school. It's far better than the online training I actually paid for. So Mike, we hope you pass and congrats on your studies.

Suze: You know, I just want to tell everybody, KT about Series Seven exam. When you first study for it, you study for months. It is so hard. I cannot even tell you.

Suze: And the very first time I took it, I failed, I failed. And there were only about seven people out of the entire class, there were a lot of people that failed and I was one of them and that's when I decided, I'll never forget saying to myself. All right. All right. You want to see how much I really want to do this if this is a test because I always think everything's a test from above, right? That if you really want to see how much I want to do this and you're testing me. Let's see what I can do. And I studied because you only had one week to study and try to take it again.

Suze: And the second time I obviously passed. But sometimes in life when you fail. Maybe it's a test to see. Do you really want to do this or not? And if you do go for it with everything you have, all right.

KT: But an Orman never gives up. I remember that. Ok. My first question is from Karen. I have three Children that will inherit my 401k. How is the RMD completed?

KT: Do each contribute a certain amount each year thereafter? How is this calculated?

Suze: You know Karen, while that seems like a very simple question. It really depends on, will the kids be eligible, designated beneficiaries or will they be non-eligible, designated beneficiaries? And it will also have to do with, have you died on or after the RBD date? So all of that has to be taken into consideration. 

Suze: What I can tell you is this since it's in and 401k, you should instruct them that the second this happens if it's still in the 401k to do individual inherited IRAs in a brokerage account, that's where you start and then depending on what your situation is, it's really not that hard. Just make sure that if the money is still in a 401k when you die, that they do inherited IRAs S t a brokerage firm, have them go back and listen to last Thursdays and the Sunday before that Suze school on inherited IRAs. And by the way, I just want to say one other thing to everybody. You really want to save your beneficiaries a whole lot of trouble. Just do a Roth retirement account. Roth Roth Roth. And if everything is in a Roth when you die, they're fine. All right. Go on.

KT: All right. Next question this is from Shannon. Hi, Suze. Love, love, love your podcast. I started purchasing NVIDIA in small increments over the last four months. It continues to go down any thoughts as to whether I should continue dollar cost averaging. So, wait, I should make this my quizz, make it my quizz. What's your quiz? I'll answer her.

KT: Definitely continue dollar cost averaging.

Suze: Oh, look at the smile on her face. How low do you think it could go?

KT: I don't know how low. But wait, all I know is that NVIDIA surely will have a rise.

Suze: You do? Yeah, you are right. So we'll see. So I would absolutely and continue to dollar cost average into it without a shadow of a doubt could easily possibly go down into the nineties. Let's hope it does. But eventually a stock like NVIDIA, are you kidding me? Just keep enough of your power dry. Do you know what that means? Katie your powder dry? Just make sure you keep enough cash so you can continue to dollar cost average if it continues to go down because if it goes down...

KT: Where did you get that same from powder dry,

Suze: It's just what's in the industry is keep your powder dry.

KT: What powder like gunpowder face powder?

Suze: Will you just ask me the next question...

KT: Zoe. This is long, but I want to read this because I, I, we know people in the same situation. So I'm reading the whole email from Zoe. Hi, Suze, my life partner and I have been together for 20 years. Remember that? Everyone? 20 years. We're not married, nor do we plan on getting married. We're buying our first home, a co op apartment in New York City. We're putting 20% down and taking out a 30 year fixed mortgage while I will be contributing to the down payment. My partner is putting down most of it and will be paying the mortgage. He has a great job and he can easily handle the payments we are buying below our and his means. I recently switched careers and decided to pursue my dream career as an artist. Ok, we all know what that means. Everybody.

KT: It means if you're an artist, you're never gonna have like a guaranteed income. So it's gonna be very unstable maybe in the beginning. And obviously her partner supports this now until my, but listen to this, I like how Zoe is very positive until my career takes off. I will not be able to contribute to the mortgage. Our title will be a joint tenancy with the right of survivorship.

KT: We have separate bank accounts. My concern is if something happens to him, I will not be able to pay the mortgage on my own. I also want to make sure we have the right to the property if something happens since we're not married. So if we do JTWROS

Suze: Joint tenancy with right of suvivorship...

KT: do we still need to get a living revocable trust?

Suze: So here's the thing, Zoe, I

KT: just want to say one more thing for those of you listening. He's in his mid fifties, she's in her late forties.

KT: They're not kids.

Suze: Here's what I don't understand. Zoe, you have been with this person now for 20 years. Why do you not want to get married? Especially given that you're about to become an artist in terms of your living.

Suze: You probably already have already been an artist, but now your income is going to possibly drop at least for a while. He makes a lot more money than you. So later on in life, maybe if you were married, you would be able to claim either half of his social security or if he died for you because he is older than you, you would be able to take over his social security. There's also so many more benefits I can't even tell you. However, whatever that reason may be. So be it. Here's the thing with joint tenancy with right of survivorship. 

Suze: Yes. If he does, you automatically get the house and put in your name. Problem is you can't afford it. So therefore if you're doing a 30 year mortgage, as you say, you are, maybe what you should do is get a 20 year term insurance policy on him. So if he were to die, then you get enough money to pay off the mortgage and be able to keep it just that simple. Why? 20 years instead of 30? Because most likely 20 years from now, it still may be affordable for you. You have to make sure it's a fixed a level term policy. But by then maybe you could put extra money towards the mortgage so that maybe in 20 years it would be paid off anyway.

Suze: That's number one. Do you need a trust? No, not if he dies, you're fine. The question is Zoe, what if he doesn't die? What if all of a sudden now he's in an accident. He is incapacitated. He doesn't recognize you. He can't work anymore. There is no more income coming in from him and now you have to sell the property. 

Suze: And the question is, can you join tenancy with right of survivorship means you both have to sign for it. Therefore, if he's incapacitated and he can't sign, you can't sell it. If you had a revocable trust with an incapacity clause in it, you could sign for him. He could sign for you. No problem. So that's one of the reasons you want to go to. Must have docs.com and check it out. All right, KT.

KT: Suze. Next question from Bridget, is it better to leave a 401k to Children or cash?

KT: The kids would say cash, then she said, I know the new inheritance rules on 401k s are complicated. Should my husband and I live off our cash in retirement or spend down our 401k? And then she said, with great joy, all of their daughters opened Roth's at 21 our youngest now, 20 opened hers at 18.

Suze: So what happened to Bridget? Well, Bridget, why don't you have a Roth 401k? Why don't you convert? Why don't you do things like that? So that when they do inherit, it's not that big of a deal. Absolutely not. You are to listen to me and listen to me closely.

Suze: You say in here because KT just gave this to me your email that they opened Roths at 21 and your youngest is now 20. So now they're getting older and they'll be fine financially speaking. Why don't you care about you and your husband and what you're gonna do when you get older and what is best for you?

Suze: You and your husband Bridget in terms of what should you do to make the most out of your money? So I'm not even going to answer this question other than Roth 401k. Start doing that, let it grow, let it grow, let it grow. And it depends on your tax bracket, what you live off of at the time.

Suze: Stop worrying about the kids, mama bear and start worrying about yourself. Typical mother, right?

KT: Three girls. All right. This is from Sheila. Hi KT and Suze. Love your advice. And I'm wondering about capital gains from ETF dividends in a rollover, IRA.

KT: Should I set them to automatically reinvest the dividends into the corresponding security or have them deposited to the core account to pay the taxes later? It's hard to answer this one.?

Suze: This one couldn't be easier to answer if I tried. What are you talking about?

KT: Well, I'm just giving you the best questions I like.

Suze: So Sheila make it so you reinvest the dividends and you get the most growth out of your money. Obviously, you're gonna have to pay taxes on it later. The other thing you can start to do is start converting to a Roth. There you go. All right,

KT: We better do another Roth podcast.

Suze: Are you crazy?

KT: Just to remind people how great it is.

Suze: You hate those.

KT: But I think it's just a good reminder. A refresher, a Roth refresher. That's a good thing.

Suze: I wish you could see my face.

KT: A refresher. We should do that. All right. Everybody from Susan, I enjoyed the Sunday podcast about managing money successfully in marriage. Like you and KT.

KT: I just added that part. My husband and I have been married for 14 years. I manage all of our finances. I'd like to get my husband more involved. So he understands what's going on, but he's not interested. He's never been good about saving money, but I ensure that we do. We are debt free. We have an eight month emergency fund and we're on track for retirement. We have about a million dollars to date.

KT: We are both 46 good for them with kids. Eight and 11 years old, short of chasing him around with a laptop. How do I get him more involved so he can be part of our financial decisions.

KT: You want me to tell you, Suze,

Suze: We're gonna make this. Does he ask KT anything today...

KT: Here's what I would do, Susan, call your husband in, pour a glass of wine. Say, honey, I need to tell you something really serious. He'll say what? And then give him that glass of wine.

KT: We're broke, we're just broke, then you'll get him more involved in your money.

Suze: Right? So here's what I would tell you to do.

Suze: I would get very serious with him and I would play ready... I would play incapacitated or death. I'm serious.

KT: They're 46.

Suze: And I would sit down and say, all right, we're going to play a game right now. I've either been struck by a car and I'm totally incapacitated. I can't do anything or I've been killed in a car crash. Just play it.

Suze: What would you do first sweetheart? And then give him a quiz and write down questions. Where are our accounts? What are we invested in? Where would you get the money to pay the bills? Every question that you could possibly have? Is there enough money? For you to continue to live without me bringing in any money, whatever it may be and ask him he's by himself. 

Suze: Now, where would he go? What accounts are the bills paid from? How much is everything? Where is the emergency fund? What do you do for the kids? How do we hold title to the house? Everything? Is there an insurance policy? Every possible question that you could think of and when he's not able to answer one of them and now you give him an F you can then say to him, I am no longer joking with you.

Suze: This isn't funny. If something happens to me, you have a responsibility to take care of our kids to make sure that everything is ok and you cannot be now more irresponsible if you tried. If you something happens to you, we're fine. If something happens to me, oh, you are screwed. So what I want you to do right now is make a commitment to me that we're going to figure this out together as one and don't joke with him. It's not funny.

Suze: It's not funny. Everybody, if you're in this situation with somebody, it's just plain stupid if they refuse to partake in something that is their lifeline. If something happened to you. All right. Go on KT.

KT: Next question from Joseph.

KT: Should I sell my tea bills in my Roth IRA that mature in November and buy another six month? Or should I wait until it matures and buy another six month. So this is important. The end question, the end to the question is Suze, this is money I will need in seven months.

KT: So...

Suze: If this is money that you're gonna need in seven months, um, just wait till November, forget about it. Can you not get so tricky with what you're doing? It makes no sense. Just wait till it matures. Let's see where interest rates are at the time.

Suze: Are you better off doing a six month CD at that time or something else? Or even our money market higher? No, just, just no, don't

KT: Well, wait till you hear this is... from Lewis other than being state income tax immune and being backed by the US government. What advantage does a treasury note have over a CD? Here's a great question to follow that previous one.

Suze: So it depends on the length of the treasury note. Remember a treasury note, unlike a bill that's usually only up to like a year. Anything from that point on till 10 years is known as a note.

Suze: And remember, treasuries can be sold on the secondary market. So as interest rates go down, the value of your treasury note will go up the longer the maturity, then the more it will go up. Which is why I told you a long time ago, everybody to look into buying 2030 year treasury bonds. They are up considerably right now in value plus we locked in a higher interest rate than what is current in a certificate of deposit.

Suze: You can't really do that. A certificate of deposit. In many cases. If you come out before the maturity date, there's going to be a penalty whether it's three months or six months or whatever, it may be that way if it's just a regular CD, there are some brokered CDs and things like that, but most of you just have regular CDs. So there is an advantage over a long term Treasury Note.

Suze: If interest rates do start to go down where you then possibly could sell it for a gain. But then what are you gonna do with the money? Then possibly if there's more money than what you put in and even if interest rates are down, then you can invest the gain and maybe get the same yield on your money. So yeah, Treasury Notes can have an advantage over CDs. Next KT.

KT: So I picked this because I want all of you listening to know one thing.

KT: There's never a wrong question when it comes to money ever. So this is from Carolyn, Suze, you ready? Carolyn said, is it ok to purchase a home at the age of 65 or 66?

Suze: Of course, if you can afford it, girlfriend. So I want you to do something which is called Play House.

Suze: So today's podcast is about playing all kinds of things to know what it's like when you really do the real thing. All right, or the real thing happens, you know, you want to purchase a home. So you're going to hopefully put at least 20% down. Besides the amount of money you're gonna put down. You need to have an 8 to 12 month emergency fund. 

Suze: So you put 20% down. Let's check that box off. Now, let's decide at your age. Truthfully, you should be doing a 15 year fixed rate mortgage because you don't still want to have a mortgage at the age of 95. You want to have it paid off, you know, by the time essentially that you're 80. So therefore, look at what the mortgage payments would be with a 15 year fixed rate mortgage. Just that simple, write that amount down.

Suze: Then you also have to do what find out what would it cost you in insurance per month on that house. Write that amount down, what would it cost you in property taxes per month? Write that amount down, what would it need in maintenance? Probably another two or $300 a month in case something were to go wrong, write that amount down, add up all of those amounts and let's say they come to $4000 a month. Let's just say that's true. And let's say you're currently renting right now and your rent is $2000 a month. Subtract your rent from the 4000, that would leave you $2000 that you're gonna have to come up with. 

Suze: So, at the beginning of every month for the next six months, take that $2000 and put it in a money market account or some account paying you interest and see what that feels like. Are you late? Can you do it at the first of every month? And if you can, and it's easy then I got news for you and you know that your job is stable, you know, that your income will remain for a long time, then yeah, you can afford to buy a home.

Suze: And guess what, at the end of those six months, you'll have a whole lot of money in this case, an additional 12,000 plus interest to put towards the down payment. If you find that you can't, it's too difficult. You still have money that you saved. All right, KT. Next.

KT: Ok. Next is from Penny. Penny said my spouse and I are 75 years old. We need to know more information on different types of insurance policies, which is the best type of life insurance coverage. Is it whole life or term? What are the pros and cons?

Suze: So, you know, Penny that your email is "PennyWise." Right. That's how, that's what you're calling yourself for this email. Now, I don't know if that's your real name or, you know, if that's just a name you made up, however at the age of 75. Actually speaking, you are closer to death when the insurance companies look at your age and probably health so whole life insurance is going to be so expensive. I can't tell you. I don't know why you actually need insurance. Hopefully, at this point in your life, nobody is financially dependent on either of you if you're dependent on your spouse or vice versa.

Suze: Now, maybe we're gonna have a little bit of problems, but term insurance at this point would be the only way to go. All right.

KT: Suze. Next question is from Jennifer. Hi, Suze. What do you think of paper trading so I can practice. What's your opinion on this, Suze?

Suze: I don't think it's a bad idea at all. Where, what is she talking about? Everybody? You pretend on paper that you bought stock or ETFs you also should all pretend that you start with a certain amount of money, let's just say $25,000. And what are the five or 10 or 12 stocks or ETF that you're going to invest in? How much of that? 25,000 did you invest the first month at what price? And then when do you dollar cost average again? And just on paper track it? All right.

KT: This is my last one from Hari.

KT: Hello, KT and Suze. Thank you for the very informative podcast every week. You suggested adding kids as authorized users to help their credit score. We both have excellent credit scores above 800. Do both parents need to add the kids in each of their credit card or one of the parents accounts is good enough.

Suze: Probably one is good enough. But KT and I would always tell you two is better than one. And why do we say that?

KT: I'm a twin

Suze: So we had little caps made two better than one. So truthfully, Hari, you could both do it if you want. But the truth of the matter is do it on all your credit cards, not just one. All right. So here we are. Are we all packed, our plane is at three to go back to the mainland,

KT: Almost packed.

Suze: Almost packed?

KT: I have all day,

Suze: All day to pack because, well, truthfully, you shouldn't be taking anything back because we're doing...

KT: I am taking a few things, bathing suit, goggles, things I need in Spain. I'm jumping in the Med everyone.

Suze: All right. She's jumping in the Med.

KT: No sharks, you know.

Suze: All right. So then until Sunday we'll see what happens since we'll be on our way to Spain, what we're gonna do for Sunday.

Suze: But until then there's only really one thing that we want you to remember when it comes to your money. And that is what KT?

KT: People first, money and things.

Suze: You stay safe and healthy and you will be what? Unstoppable.