Podcast Episode - Ask Suze & KT Anything: Are Millennials Doomed?

IRA, Retirement, Roth

April 07, 2022

Listen to Podcast Episode:

On this podcast of Ask Suze & KT Anything, Suze answers questions from listeners about selling stocks to fund home repairs, rising home costs, 403’s, annuities, and much more!

Podcast Transcript:

April 7, 2022. Good morning Suze, Good morning KT and good morning to all of you or whenever you happen to be listening to this. Welcome to Ask Suze & KT Anything and this is where you write in to AskSuze S U Z E Podcast@Gmail.com and ask a question and Miss Travis chooses it. Sometimes I choose it as well and give it to her just so you know, but if Miss Travis chooses it, we will answer it. Like we're going to do right now. How many you got today? I have a lot of questions. Wait, how do I sound? You sound good? Why? Hello testing testing everybody. My lips were right up to the mic just like they were on the Grammys a couple nights ago we were watching the Grammys and I said Suze, do you think that's their own microphone was doing that? Oh my God they were singing. I think one was Randy Carlyle. Her lips were right on the mic and I said do you think that she amazing or love her voice? I love the very original song I fell in love with called Story or My Story. Way back when your story. Yeah, Randy, we just we both have little crushes on you. But that's beside the point. Okay go on. Okay. First question is from Carrie. Hi Suze and KT. I've been listening to your podcast for the last two years and I love it. I'm 50 years old and married. My husband is 51. We have no credit card debt, but I currently owe $3,000 at 0% for a mini split heat system in our home I also owe 28,000 at 2.79% fixed on my car which I'm working on paying off early. So, here's her questions. Should I sell some of my $355,000 worth of stocks that are held in a non-retirement fund to pay off the car and the heat loan. I would have to pay tax on the proceeds of the sale to do this. Or should I just keep paying extra monthly to pay it off early? How would you answer that? KT? Well there's another one. Can I count the money ready for this? I know the answer to this then. Carrie said Suze, can I count the money in my nonretirement account towards my 12-month emergency fund? Alright. Alright. So that's enough just let's answer it. Okay. Okay. So, should she sell off the stocks? No, I would just pay it off monthly. I wouldn't sell off any stocks. Why would she want to do that? All right. And no, you cannot count money in my nonretirement account towards my 12-month emergency fund. It should. What a great day. What a great day April 7th is because Miss Travis, you got that. Absolutely correct. However, not only did you get it correct, but you said it was such authority and you owned that advice because so many times everybody when I asked KT a question, she's kind of guessing at the answer sometimes. So, her guess then becomes correct. So, what's really important? What you just saw happen there is that you have to own the power to control your destiny. You have to own the knowledge that you know why you're laughing because you're making me sound really good. And Suze sometimes I still guess no, but I thought you were laughing because I was starting to go into some kind of mode. That Suze mode there. But it was great because she knew the answer. So, when we're going through these questions and even before I or maybe KT answers them, take a second and maybe pause the podcast and see how you would answer it. And are you powerful in that answer or are you guessing? And then turn the podcast back on and hear our answer and see where you right or wrong. But Carrie now is the time not for you to be selling something and paying taxes on it and getting rid of debt. Now that's just crazy. Now is the time you just continue to pay off the debt. Start saving more money on where you might be spending it every single month, cut down your expenses and put that towards your debt. But I think you have what it takes to handle this on your own and KT was absolutely correct. You cannot count on money that you have invested as an emergency fund. And the reason is what if the market was all of a sudden going to go down seriously? Maybe we were all the way back now in 2008, and it went down 50%. That's not the time you take money out. So no, it cannot count towards your 12-month emergency fund. And what's funny, I just have to say this to Carrie. What's funny about that? It's obvious you don't have an emergency fund because you have debt and when you have debt that you can pay off, you don't have an emergency fund usually. So therefore no, don't try to scurry your way around this thing. All right, come on KT, Wait, you know what else? I just realized because I was just looking down because I wrote April 7th, you know it's a birthday now are great nephew. Elliot turns eight years old today, Elliott, you're getting old big boy. I don't know what we're going to do about that, but Elliot, we wish you the happiest of birthdays and we can't wait to get to play with you again. Alright, okay, next question is from Lynn Ngoyin, Hi Suze and KT, I love your podcast and thank you for guiding us with your financial wisdom. How interesting that you used her last name when normally you designed both. She signed it her last name and that's interesting. I just find it interesting because normally I like to say that name. Ngoyin. No problem, it's an Asian name, I love that name, Suze, I love your podcast and thank you for guiding us with your financial wisdom. My husband and I are one of the many interested buyers for a house since house prices are so high, it does not make sense for us to buy now, even though we would really like to own a home now we have a new baby and would love more space. When do you think the housing market will become more affordable? Do you think the millennial generation is doomed to rent forever? Given the current housing crisis? So, thank you for all of your advice and guidance. Suze give Lynn a little update, can she buy a home? So, Lynn, I don't know when you can buy a home and I don't even think it matters when you can buy a home. What you need to understand is one day you will be able to, the millennial generation is not doomed, doomed is not a part of our vocabulary, you know, I can remember all the way back when I bought my first home, I'll never forget this and I don't get upset everybody, but I was a waitress at the buttercup bakery, I took a course called the Larry Nickerson seminars and I learned how to buy houses with no money down and I watched huge houses go from $17,000 a home, to 50,000, to 100,000, to 400,000, all the way up and now those same homes are worth millions of dollars. But during that period of time I watched houses go way up like I'll never forget, maybe it was 1993 houses that were like $12 million all of a sudden went down to like 3,001 million. Everything always goes up and down and so there will come a time again when something will happen, and you'll be able to buy a home but don't worry about it if you can't afford it right now. Alright, save more money for more of a down payment. So, your mortgage payments won't be as much, but just be patient and you'll see one day, oh you will own a home and when that day comes, can you just send me an email? So, I know that you did it now, KT, I just want to say one other thing. I know I'm supposed to be quick with my answers today. All right, KT said let's be really quick today, Suze and people will stay more interested with the housing market. I just want to say this. I do think that we are slowing down right now, believe it or not for many, many reasons and possibly it's because mortgage rates now are at 5% close to that when you could have gotten one a while ago or 2.5 or 3% inventories are starting to, you know, stack back up again. So, it seems like it's starting to slow down a little here. So, let's just see what happens. But just be patient. Your time will come. All right. All right, Suze, the next one is just an update I want to share with everyone. If you haven't listened to, last, Thursday’s Ask Suze Anything. She gave a huge slap down to a gentleman by the name of Ahu, who lives in California. He's a professor and assistant professor. Anyway, we got this back from his buddy, Ryan who wrote into Suze saying Suze, he needs a slap down. He's making so many mistakes. So, this is what we this is the update on Suze Smackdown Steer. Suze, thank you so much for responding to my email on your podcast. This Thursday I shared with Ahu. I think your message is loud and clear and he took your feedback. Well two and then he goes on to thank Suze for everything that she's done. So, Ryan, I'm glad that everything worked out and that Ahu is still your friend after that Smackdown. So, what do we say to Ahu? Yahoo Ahu! Okay, next question is from Atlanta. Hi Suze and KT. I love your podcast. I'm learning so much. I'm 36 years old. I'm a single parent and I have zero retirement savings. I work at a hospital and I have a pretty sucky 403 plan at work that charges 2% fees on an average for all available mutual funds. There is no employer match. That's terrible. That's really sucky. You should be contributing to it at all. Wait a minute. She said compared to Vanguard my 403 looks like a highway robbery. Should I still invest into this? 403? Looks like I do not have a choice. I would like to continue more than the 6,000 per year. So, Atlanta of course you have a choice first of all, do not put one penny into that 403B. It is a rip off or as you would say it is sucky so why would you want to put your money in something that is sucky. You would not and especially because they do not match your contribution, they're useless to you. What you can do on your own, assuming that you qualify for it income wise is you can open up a Roth IRA which is my preference over a traditional IRA and it's April 7th, you have one week essentially for you to open one up for 2021 and then you could absolutely fund it with $6,000 because you're under 50, you could do it at 7,000 if you're 50 or older and then you could do another 6,000 for 2022. So, you could easily get $12,000 right now into either an IRA that's traditional or a Roth IRA so that's what you should do after that. If you still want to save money for your retirement, just open up a regular investment account, all of you are so stuck on having to have a retirement account. You need to have money in a retirement account so your money grows tax free or tax deferred if you buy an exchange traded fund in a regular investment account really everybody in most cases you're not going to pay any taxes on it until you go to sell it. And then when you do you just pay capital gains tax. So, no you have many other ways to save for your future other than a sucky 403B. The next question that was good. Next question is from Sarah. I'm so shocked everybody that KT let me say the word sucky and that she said it because she doesn't like when I talk like that on any level I don't like slang but she referred to her and it is it's a terrible plan. Hi Suze. I learned so much from you and that reminded me of what you're going to get so mad at me because I'm side tracking right now. But I just had this flash of when I was on QVC and I was with Kathy Lavigne and my mother was watching and Kathy had just found a new boyfriend and so Kathy came in and sat down and it was obvious that Kathy had had a fabulous weekend with her boyfriend and this was not late at night. I used to do the 1:00 AM show with her. So, in the middle of our sale, just like I'm doing with you now I said, so, Kathy did you get stripped this weekend? And she just looked at me and obviously she had, you should all know what that means. You'll use your imagination eight times. I use that word during that hour. My mother the next day called me and said, how could you have used the word stop on television. Suze Orman, what is the matter with you? And I just went, okay. Anyway, sorry, KT, sorry, are we ready? Ok everybody, let's get back, let's get back to the podcast. Suze, I happen to agree with your mother at this point, I learned so much from you and KT regarding my finances. Thank you so much. What is this person's name? Sarah question you've indicated on past podcasts you are not a fan of retirement funds that have a target date meaning 2025, Can you explain a little further? Why? Yes, I can. My dear Sara. So here we are in a situation right now. And I taught you this on just a few podcasts ago that when interest rates go up, the value of bonds go down and in a target date mutual fund, they target your retirement and the closer you get to retirement, the more they move you out of equities and they move you into bonds. And if you were having a large portion of your money right now in bonds and if the target date fund happened to have long term bonds rather than short term bonds as part of that, then the fact of the matter is you might lose a good percentage of your money rather than if you had just stuck in a money market fund in there or if you had had control over your own money. So, I like you to be the masters of your own financial destiny. And I like when you invest your money and when it's time for you to have growth or maybe your situation is different and you really can afford to have all of your money regardless of your age in equities, because you have enough in savings, you have enough income, whatever it may be. I want you to tailor make your investments for you in your particular situation. I don't want some company to just say, oh you're retiring in three years, so therefore we're changing you from 70% in equities down to 50% or 30% and 70% in bonds and things like that. It's just too automated for me based on your age versus based on your actual situation and based on what's happening in the economy at the time that you're getting close to retirement. So, for some people it works, there are many target date mutual funds that work with you and they're starting to change it now that they're not going to as many bonds and I can go on and on. But overall, I'd rather see you do it yourself. Okay, next is not a question, but a statement from Dedra, I want to read this so that everyone knows there's a light at the end of the tunnel, it says many more of us are right, right, right? Because we do listen to that. That's based on my podcast on Sunday, where I was aggravated and I kept saying wrong, wrong, wrong. And so, here's what Dedra writes. We just don't write in with frustrating questions. We listen and then we do. I've listened to every podcast I've read every book I've seen every episode of Suze's CNBC show. I've watched every episode when you were on Oprah Weekly and whenever I bought O magazine, your column was the first thing I turned to. Hence, I am right, right, right. As a result, this is the part I really love to listen up everybody. As a result, I retired as a multi-millionaire at the age of 58. I'm living my dream on the beach in Florida and driving my boat offshore and I give you and God all the credit and I pass on my knowledge to others by teaching financial literacy. I suspect I'm not alone, Suze. There are millions of us, you've made secure from following your advice. All of it. We just don't write in with a stupid question. That's why you never hear from us. So, I'm writing this to say thank you. Thank you, Suze. I also want to just make one correction. Dedra, There's no stupid question, Dedra. The everybody needs to know. Even KT gets the quzzies wrong. So, there's no stupid question, but we're so proud of you. Look, I have goose bumps everywhere. KT, thank you Dedra. Maybe one day we'll pass in the Intercoastal on our boats. You never know. This is from Nancy. I just started listening to your podcast a few months ago and I look forward to it. Weekly. My husband and I are 59 years old. We are planning on semi retiring this year. We have over two million in investments in mostly mutual funds. We max out our Roth every year and have traditional IRAs as well. We have a good amount of money just sitting in the bank and we have no debt. So, Suze, I was wondering what are your thoughts on guaranteed lifetime income annuities? I feel like it's a safe place to keep money and will continue to grow and will have a guaranteed income for life. This is from Nancy. So, Nancy. The truth of the matter is, and this may surprise all of you. But you will read about this if you read the Ultimate Retirement Guide For 50+, which was my latest book. I just looked by the way on Amazon today, KT and there's almost 5,000 reviews. Almost five-star reviews book. That's a lot of reviews. Everybody anyway. Is that you would see that in certain circumstances I actually recommend an income annuity. Now in income annuity is where you put a specific sum of money and based on your age as well as the interest rates today, they guarantee you a monthly income for as long as you live. So even if you live to be 150, they have to pay you that income. The reason that I recommended it within the book is that many of you need to know that you can meet your monthly expenses and so many of you might be, you have $4,000 a month expenses but your social security is only 2,000 a month, maybe your pension is $1,000 a month. And to simply cover your expenses, you needed another $1,000 of guaranteed income in that situation. That's when I wanted you to get a guaranteed annuity in this situation, Nancy, you have $2 million, 59 be saying to you, you with interest rates as low as they are right now that you should lock in these low interest rates with any amount of money for the rest of your life, just so you can have income. Now I would wait to see what interest rates do. I would wait to see if, when you finally go on Social Security, when you no longer have to pay for health insurance, because now you're on Medicare, what your actual expenses are that you have to meet every single month If you have enough from social security and everything else and the dividends on your stocks and whatever they may be to meet those expenses plus have money. I won't touch an income annuity with a 10-foot pole. What was that hum about? We all heard you go home. Why are you coming? Because I didn't think you were going to answer that way. What do you think I was going to say? I don't know. I thought that maybe you might like that. She was kind of locking it in. But I, it makes a lot of sense that the interest rates may be way too low. You know, it's funny, KT, when I was first started the Suze Orman Show, I used to do this, should I call it a stick? Maybe it was a stick. But it was like a thing, a routine. Really Right. Let's see what happened, sucky started me off on this whole thing. Now a slang, sorry, KT Anyway, where I would talk about annuities and why I hated them. So, and I would use this example. It was a true example of, I'll never forget reading Life Magazine. Remember life. Anyway, there was a picture of this man in a little rowboat and it said I retired and got $135 a month from my lifetime annuity and now I'm enjoying life. And I always would say if that man were still alive today, he would not be enjoying life anymore. $135 won't get him anywhere. So, stay away from annuities unless you use it the way that I talk about in the book and that's why I also don't like lifetime annuities. They make no sense. Especially when you can do other things with many high dividend paying stocks and other things that are out there. All right, everybody quizzie time. So, this is where I asked KT at question and she answers, but this isn't just for KT. This is for all of you as well. Are you learning? Are you understanding? Because you should all want to get to the point when you listen to Ask Suze & KT Anything that you can answer every single question that I am asked. I just was going to say except for Roth. Yeah, you can go everyone. Don't worry if you can't get the Roth right. That's the one part of the quizzes or questions that you have to give yourself a little time anyway. That's my goal for all of you. And my true goal for you. Miss Travis is you get every Roth question, right? One day, one day. Alright so KT before you answer let everybody think about it so they can come up with the answer on their own. This one is from Victor, right? And I picked it more for the name, believe it or not than the question, what's the topic? It says? Series I Bonds. Oh, I like that one-time contribution or multiple, right? But I picked it because I want us all to feel like we're victorious. Like we're Victor's does not like we're victims. Not like we're losers, but we can do this. We can be victorious anyway. Hi KT and Suze. I love listening to your podcast on my Harley commute to and from work. My question is regarding Series I Bonds. I know about the five-year period before withdrawing but I want to know about how contributing works. If I start an account a contribution with $500. Is that the only time I can contribute to it? Or does it work like a Roth IIA where I can continue to make monthly contributions. Think about it. Everybody thinks about it. All right, Miss Travis. Well I do know this. I know that the most you can contribute in the given period is $10,000 per individual. The given period is per annum. And I know another thing about Series I bonds because we have these, and I and Suze loves these is that they change the interest rate gets locked in, but it changes twice a year. So, for instance if you know the question stick to the question. So, we're not giving up, not giving a KT School on Sarah's contribute. You can contribute actually even more than 10,000. Did you know that you can do you see what she's doing again? I asked her a simple question. Yes. The answer is yes. You can contribute more than 500. So, he can do it every month like a Roth IRA no I don't think you can do it every month. I think you have to do it each, each period like every six months they change that interest rate. So, he can do 500 now. And then in May when they changed the interest rates another 500 or more. If he can if he has more money put in more. I think that's right. Wait wait Suze, let me think about this. He's starting with 500, KT. We're going to do a whole podcast. Which is this one question. So that was your answer. You know, so I can only do it one time. He can keep doing it every month. Every day up to 10,000. That's what I said. No that is not what you just said. We have it all recorded. Everybody can play it back. What she just said, you could own, that's not what you said. So here he can contribute up to $10,000 a year. But that no, KT don't let people see you squirm right now. You're manipulating. Just stop. Stop, Stop. Are you willing to stop? All right go for it. Oh anyway, so here is the correct answer everybody. Miss Travis. What? Notice I call her Miss Travis when I'm a little pissed off. Anyway, Miss Travis was correct in that you can put up to $10,000 a year into a Series I bonds but you don't have to do it all at once. You could put $100 in one month, $300 in the next month. Your cumulative total however you want to do it, whether it's daily, whether it's hourly it doesn't matter cannot be more than 10,000 now Victor. So, what I just have to say something. Did you know that you can put in up to 15 if you use your tax return money? Yes, I did. But how do you do that, KT? So, your paper paper, that's my girl. So, most of you when you buy Series I bonds, you do it through TreasuryDirect.gov and you can only do 10,000 per person electronically. If you are getting a tax refund, you then can buy up to $5,000 of paper I bonds where they actually issue you the certificate of them. But you can't do it electronically. So, Victor you can do as many as you want by the way. Talking about Series I bonds, you might want to go to my Women & Money app and on their on my wall I talk about why you might want to buy I bonds now before may when the interest rate is going to change because the interest rate could be lower than the 7.12% that it is now could be higher. It could be the same, but it could be low lower. So, you might want to check out my wall where I explain why does it usually go lower? It depends on what CPI and everything else is. It's complicated. KT. But it can. All right Miss Travis that was a good podcast. You've got that one so wrong. I knew it was 10,000 but I did get it wrong but what you defend yourself. So, because I knew it was 10,000 that he could put in up to. This will go on forever. People, after we sign off the podcast, I know that we will be talking about this. Alright Sunday Suze School. What are you going to do? Well at this point now it can change everybody. But the very first lesson is going to be if you happen to have a 401K or whatever and you own company stock. The company that you work for in that 401K why you may not want to when you retire role that stock over you may want to do something else with it. Also, I want to talk about how you can increase insurance, the FDIC Insurance on banks, the NCUA Insurance on credit unions so that if you have larger sums of money You can actually increase the $250,000. There is a way to increase it by a lot. And so I'm going to talk about that and I'm also going to talk about people checking the maturity ease on the bond funds that they have and what you can do about it so that you don't lose money on bond funds as interest rates continue to go up if you want to stay in bond funds. Those are my three topics. You have any any that are better. No, I like them. I like the Bond Fund one. Well there you go. Alright everybody that brings us to the end of Ask Suze & KT Anything so until Sunday. What do you want to tell everybody? KT better stay safe, strong, and secure. And just know we love all of you. Bye bye now. Bye.

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