Podcast Episode - Ask KT & Suze Anything: Is It Time To Be Conservative With My Investments?

On this episode of Ask KT & Suze Anything, Suze answers your questions about getting out of debt, collecting a late spouse’s Social Security, funding your trusts and more.

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Podcast Transcript:

Suze: December 14th, 2023. Welcome everybody to the Women and Money podcast

KT: and everyone's smart enough to listen.

Suze: You hit that right on KT in the house and this is the KT and Suze anything segment of the Women and Money podcast. So, KT, are you ready?

KT: We're just gonna go right to it. We're gonna get right to it. And I hope you're all enjoying the last month of the year. Here we go. This is from Leslie and I'm starting with this because Suze, I think you just need to tell her to stand in her truth ready. Hi, Suze and KT. I started listening to the podcast this year and, oh, how, I wish I'd found you so much sooner.

KT: So Leslie's 26 she lives with her boyfriend who's 29 last year, the boyfriend asked her to move across the country with him after he received an incredible job offer.

KT: So she felt great. I have no credit card debt. My vehicle was paid off with an inheritance I just received. This is, wait a minute. So she said let's do it anyway, her lease was ending. She was completely free and clear. They moved in January of this past year 23.

Suze: Now, how much credit card debt does she have?

KT: $10,000. Suze is psychic Leslie. So wait a minute. But here's the thing that I'm a little bit confused about. So she had everything paid off but she had no savings, no emergency fund. Anyway, long story short, they had an arrangement that he pays all the bills and I guess he's paying the rent and she contributes to groceries and pays for when they eat out.

KT: But she said that she couldn't get a job for at least a month when they moved. But how did she rack up 10 grand in debt credit card? So the question is, what should I do, Susie? I work at a bank. If I could admit my issue to my coworkers, she said she could apply for a personal loan to consolidate, she could get all kinds of balance transfers, many different options. But here's the clincher. She said it's so hard for me to talk about my debt with people in my life. Any advice is appreciated. She hasn't come clean with anyone here. So she's holding on to debt.

Suze: I hear you KT I hear.

KT: What should she do?

Suze: Obviously, Leslie, you got to KT there as far as second.

Suze: So here's the problem. The problem isn't that you have $10,000 of credit card debt. That's not the problem. The problem is you cannot admit it to other people. Why Leslie?

Suze: Do you feel ashamed of it? Do you feel like people will judge you? Are you putting on the pretense, which is why you have $10,000 of credit card debt that you're making more money than everybody thinks you're making or you have more money than others think you may have. In order to get out of debt, you have to face it to erase it. How many times have I said that you have to stand in your truth and I have had people go out and scream it to the world. I have credit card debt. How much credit card debt do you have? I would have them tell strangers everybody, they loved everybody. They didn't love until they felt like they weren't bad people because they had credit card debt. They were just bad with their money for a small period of time. Now, here's what bothers me. You were great with your money before you moved.

Suze: You didn't have debt, you had everything that you wanted. But all of a sudden now you go from 1 to 2, meaning you and your boyfriend and now you have $10,000 of debt. Why Leslie, what have you changed in your life that you are now? Spending more than you have ever spent before. You better think about that. Remember, you can never fix a financial problem with money. You could pay off this debt. But if you can't figure out why you got into debt to begin with and you can't feel free to tell everybody your coworkers, everybody.

Suze: You're only gonna get further into debt and further into a state of lack of self esteem. All right. Go on.

KT: Ok. Next question is from Kathy. Hi, Suze. Hope you're well. I have a unique situation and could use your guidance. My husband died in 1996. I never remarried. I've been working my own job since 1982.

KT: So here's where it goes. I've been told I could start collecting some of my late husband's social security benefit when I turned 60 which will be next year. I was wondering, is this correct? Would it take away from any benefit my disabled son receives, would doing so have any negative impact on collecting my own benefit at age 67 or 70 since I worked more years than my late husband.

KT: So, there you go.

Suze: So, here's what I would tell you. Number one, when you turn 60 you absolutely can collect what's called a survivor's benefit because your husband predeceased you very different everybody than a spousal benefit where you are divorced from your ex. This is a survivor benefit. But at the age of 60 you will get if you claim it 28.5% of a reduction because you are not your full retirement age, which would be 67. All right. So if you decide to claim it before 67 and you do claim it at 60 whatever you would get, you are going to have it reduced by 28.5%. Not a big deal.

Suze: So now you collected and you collect it every single year up until you're 67 which is your full retirement age or 70 if you want. And then you convert over two years if that happens to be the plan, however, you're working. So you have to remember that if you are making more than $21,240 a year right now for every $2 earned, they are going to reduce that benefit by $1. So you need to know that, but not a big deal because then when you do turn full retirement age at 67 you get all that money back. So it's like they reduce it, but you do not lose it.

Suze: So that might be fine for you and not a big problem because that will increase your benefit for you when you actually get older.

KT: So, can I ask a question? So she decides not to take his when she turns 70 let's say she takes hers if hers is greater than his, is his gone.

Suze: Yeah.

Suze: So she should absolutely be taking her Survivor benefit now

KT: because she worked more than him.

Suze: Hers will be greater as long as hers is greater than his. This is what she should do if however everybody, his was greater than hers, she might want to take her actual social security benefit at 62 and then at 67 turn over to his. But given that she's making more money and her benefit will be bigger than his. She should take his now in terms of a survivor, but I hope that helps you.

KT: OK now, Lisa, she said CD versus money market 101. I say 101 because I started listening about a year and a half ago. I feel like I'm trying to catch up on a lifetime of knowledge in the financial world that I missed out on from Suze Orman for 55 years. You're not alone out there, Lisa. So she said to KT, here's your quizzy and this isn't my quizzy. It's Suze's quizzy.

KT: I recently inherited 55,000 from my brother's estate. I have turned other money that I have inherited over to our financial planner that is being held in a money market account. My question is this, is it better to place this most recent check in the money market earning a bit over 4% or get a CD perhaps with Alliant at 5.3% for the 18 months.

KT: I assume the CD rate is locked in for the entire length of the CD or is there something different I should be doing? And then she says I don't need the money in the next 18 months, but she wants to know it'll be safe

Suze: If you want to know that it's gonna be safe if I would absolutely go to my alliant.com and sign up for the 18 month CD right now where the interest rate is 5.3% or 5.35%. If it's $75,000 or more, you also have the ability, remember the minimum deposit into a CD is $1000. So you could, if you wanted to put $10,000 let's say in the 18 month, 1 $10,000 in the 19 month, 1, 10 $1000 in the 20 month, 1 $10,000 in the 21 you, you could do it like that all the way up to almost two full years just so, you know, so you might want to do that. So you do have $10,000 then coming to every month if you want to, but it's all going to be at the same interest rate that does not change. Just saying, what else are you saying, KT?

KT: This is a good question from Adriana

KT: Suze. A year ago, I changed the investment on my 403 B from Vanguard, which was only in stocks to bonds since the stock market was down. Is it time now to change back to a conservative or moderate investment, which would be about 75% stocks and 25% bonds or even in all stock. I'm 45 and have the account for 12 years. And she also has a Roth IRA. What should she do?

KT: That's a good question.

Suze: Adriana, I think you really need a true professional seriously to look at what you're doing because a year ago would not have been the time to get out of stocks and go into bonds. Ok. It would have been, oh, the stock market is starting to go down things really. If they've gone down, it's not so good. That would have been the time dollar cost average back into the stock market or just leave it there, especially if you were invested in the right area of the stock market, which would have been technology at that point in time or other things. So I'm just concerned that your timing where you're going from this to that and that into this is not what you should be doing at the age of 45 at 45 you should be truthfully invested across the board in different kinds of stocks, dividend, stocks, technology, stocks, whatever it may be. And if you don't do individual stocks and exchange traded funds and things like that, but for safe money, you could have a portion of it that's safe that you put into some type of bonds. But what kind of bonds. So when you just say 25% in bonds, I can't answer your question because you're not telling me long term, short term treasuries, municipals, Corporates. What are you doing? So, I really think given that you're 45 you also have a Roth IRA. Hopefully you can find some trusted financial advisor that can sit down with you and really see if they make sense to you in terms of what they would be doing with this money. Yes, KT. Ok.

KT: This is a, this one makes me sad. This is from Jillian.

KT: Hey, Suze and KT. I love listening to the podcast and I've learned so much. I recently lost my aunt whom I was like a daughter to. I was helping her with her finances and created her will and trust with the must have documents. I sent it to her in Florida where she was in assisted living. And Jillian lives in New Jersey. She said she told her where to sign and even had a notary go to her assisted living place to notarize.

KT: She actually mailed back the originals the same day she passed ironically, Suze. But upon looking at them, they realized there were no witnesses with her and the notary. So she was upset with the notary, but now she's told the will is incomplete, the trust is incomplete. She didn't have much. She had a checking account with about $30,000 which she was counting on Jillian to reimburse herself for the funeral expenses.

KT: And then she said she still has a Roth IRA and a traditional IRA of about 54,000 that she's the beneficiary on. But she's asking what can she do to recoup the $30,000. They didn't have witnesses.

Suze: That wasn't the problem, Katie, believe it or not. The one thing, everybody that you have got to understand about a living revocable trust is that once you have had your documents notarized and witnessed, you then have to take the time to change the title of that asset from aunt's name in this particular case to the trust for the ant.

Suze: And within the trust, it would have made Jillian the beneficiary. So it would have gone directly to her. So Jillian, it wasn't just the fact that she didn't have witnesses. There wasn't enough time to fund that's called funding the trust where you change the title of the asset from the individual name to the title of the trust. Number one, the other mistake that was made here, it is far, far easier when you have something like a checking account or a Roth IRA or a traditional IRA to just name a beneficiary. If she had just simply put your name as the beneficiary as a pay on death account, a pod account on that checking account, it would have gone to you right away.

Suze: So that would have taken care of that problem as well, where you're really looking for a trust isn't necessarily who it pays out to on death because you can sometimes take care of that with a pay on death or a transfer on death account.

Suze: It's all of a sudden, aunt becomes incapacitated. She isn't dead, but she can't write checks anymore. She can't do those things. A pay on death account isn't going to help. That's when a trust comes in handy, that would have named Jillian as the successor trustee. And then Jillian would have been able to pay all of auntie's bills for her.

Suze: So, what do you do? Now? The good news is she did leave you as beneficiary on the Roth Ira where there was $45,000 in it. What that means is you can take out all $45,000 without any taxes or penalties whatsoever.

Suze: So now you have access at least to that $45,000 without having to worry about it. That's number one, number two, there's a traditional IRA that has $9000 in it.

Suze: So I'm not sure if in fact, you're in a high income tax bracket if you're not, if it were me, rather than going through the thing of the rules of inherited IRAs and having to take out so much, it's a pain at this point in time. Take out half this year, take out the other half next year.

Suze: Your taxes aren't going to go up that much then all of the money is out of retirement accounts. Now, as far as the $30,000 goes, you say that she didn't have any other Children that she wanted you as the sole executor, as I'm reading this email, KT just handed me.

Suze: So eventually that will come to you in terms of succession rules that $30,000 might go into something called intestate succession because there was no will or trust dictating where it should go and the state of Florida will dictate who gets that money.

Suze: So given that she doesn't have any kids, I'm sure she doesn't have a spouse and anything like that. Most likely it will come to you anyway. But in the meantime, you do have the money there to pay back for the funeral expenses. All right.

KT: Ok. Next question is from Jean.

KT: I've learned so much from your podcast series. Thank you. My question is, can I put high commission variable annuities? One that has matured, the other has another two years to go. You love how she referred to that high commissioned variable. So she wants to put in part an IRA, an existing Roth and a savings account. I'm retired. My husband's retiring next year. We're still a few years away from RMD. What is the best way to handle this?

Suze: Well the truth of the matter is... I can't answer this question for you. Jean because I don't know if these variable annuities were funded as a qualified retirement account or a non qualified retirement account. A qualified annuity is one that is funded with money. You have never paid taxes on. So usually you purchase that within an IRA a non-qualified annuity is one that you purchased with money that you have already paid taxes on. So I don't know which one you have. If it happens to be a qualified annuity, you can, if you want roll it into the traditional Ira, you do not wanna put it into your Roth because that will make whatever amount you put in there totally taxable to you at that time. In terms of a savings account. If these have matured, you absolutely can take the money out. But here is why I hate annuities like this. Everybody is that gene. Let's just assume these are non-qualified annuities.

Suze: You have already paid taxes on the money that you invested and all these years now that they've been in there and it's a long time since you say they've matured, which means they're out of their surrender period. They're now worth a whole lot more than what you put in. When you go to take it out, whatever amount that you're going to take out the growth of everything there is going to be taxed to you as ordinary income. Ok?

Suze: That's really sad. You're not gonna get capital gains tax treatment, anything. It's going to be taxed to you. The growth of this as ordinary income. So you have to consult a tax person before you do anything here and find out what is it that you have? You say we're still a few years away from RMDs.

Suze: So that kind of says to me that maybe these are qualified annuities if that's true. Put them in if you want to, into your traditional ira, but not into your Roth and not into your savings account. All right. Go on.

KT: This is from Sherry. She said, Suze, I listened to your Gold Digger podcast today. I'd love if you were to offer individual advice to me,

KT: I have a large sum of money in cash earning very little interest. I'm so afraid to invest because I've saved it bit by bit over the years. I'm even nervous about putting it in CDs because I don't know how much to put in or how to ladder. Thank you so much for your show. I've been listening for decades and you helped me pay off my house many years ago, but I still have a lot to learn. Suze. Tell her what to do with that.

KT: Tell her CDs are ok.

Suze: Well, here's the thing Sherry is that I have a saying that there are three internal obstacles to wealth, fear, shame and anger. Your fear is keeping you from making the most out of the money that you have. The fact that you have a large sum of money. And I don't even know what large means to you, but that's earning very little interest. And you say that you're so afraid to invest because I've saved it bit by bit over the years. If you worked so hard, bit by bit to save it over the years, why would you be giving up, not bits of money but huge sums of money.

Suze: What you have to understand is that certificates of deposits for investments under $250,000 in banks or credit unions or treasuries or even money market accounts at financial institutions, they really are safe and sound and rather than just having your money in a bank making maybe half a percent or 0.8% you could have it in a certificate of deposit. For instance, let's say you did put $200,000 in there. That would be at least $10,000 a year of interest. And if you had done this two years ago, you'd have 20 some odd thousand dollars more just by doing a move. That absolutely is safe and sound.

Suze: If you do not need this money and you know, you don't need this money or you designate a specific amount of money of what you have and you know, you're not going to need it for at least, let's say two years, then go to my alliant.com, that's myalliant.com and open up a CD there for 18 months. Just that simple. And for 18 months, you're gonna be making either 5.3 or 5.35% depending on how much money you put in there. That money is absolutely insured up to $250,000. So just know that at least start there.

KT: Ok, Suze, my last question, this is from Donna.

KT: Good morning, Suze and KT. I wanted to give a big thank you for a great Sunday school this past weekend. So she loved it. I have a quick question regarding Vanguard's ETF S.

KT: My accounts are in Vanguard and they just started offering fractional shares this year but only in the ETFs or mutual funds. Not anything else.

Suze: Not individual stocks?

KT: No, you mentioned QQQ, SPT. I would love to have that but it's expensive without a fractional share purchase.

Suze: It's almost $400 a share.

KT: Is VOO and VTT just as good or should I move to Fidelity? So listen up everyone.

KT: She wants to get out of Vanguard to go to Fidelity so she can purchase anything in fractional shares.

Suze: You bet you should.

KT: I have been contemplating the move for a while because of this. She can only place $100 a month in her Roth. And then she said I am DCA.

KT: What does that mean?

Suze: Dollar cost averaging. What do you think it was like OCD, something like that?

KT: Yea, "I am DCA." She's 61 and she's trying to save as much as she did.

Suze: You know, I have to tell you I ran into this problem last week with Colo's account, I wanted to buy him

Suze: QQQ, but I didn't want to buy him one full share. I did only want to put in maybe $100 for him or $200. And the firm that I have his Roth IRA with does not do fractional shares and I cannot tell you how aggravated I was at that if I were you and Fidelity does do fractional shares, which means that if one share of stock, everybody is just, let's say $400 and all you want to invest in it is $15. They let you do that. And so if I were you, I would switch my account number one and number two, I might be doing so as well for Colo. All right, KT, do you know what time it is?

KT: Quizzy time, Suze.

Suze: All right, everybody. This is quizzy time where I asked KT and all of you a question and let's just see if you can answer it. Now, last Sunday,

Suze: I did a Suze School talking about the seven magnificent stocks that really made the markets move. And on Sunday morning after I did that, I actually sat down with KT, my sister in law, her twin sister and my brother in law, her twin sister's husband...

KT: And Colo.

Suze: Yes, Colo was with us for breakfast. And as we were having breakfast, everybody intently listened to that podcast.

Suze: And again on that podcast, I named the seven stocks that seriously moved the stock market. If you didn't own these this year, you really didn't make that much money at all in the stock market. So,

Suze: KT

KT: (Laughs) What?

Suze: Your quizzy today, and everybody's quizzy is: Can you remember the seven stocks that I happened to name.

KT: Oh no. Alright, give me a hint? I can remember like probably five of them. But give me a hint.

Suze: Ok the hint is...

Suze: one of my favorite people in life was my aunt.

KT: That's true.

Suze: One of your favorite people in life was your mama. But let's spell aunt ANT not AUNT... so aunt Mama.

KT: So that's my hint?

Suze: That's your hint. Aunt Mama.

KT: OK. The A stock I can remember pretty easily.

KT: So the first one I, I love because I have lots of it is Apple, right? The N is a little tricky because I don't, I don't remember this one but it was N via N via envy. NVIDIA, NVIDIA

KT: T, easy: Tesla. Tesla.

Suze: Ok that was ANT, now mama - M A M A. What do they stand for?

KT: M is definitely Microsoft. I know we have a lot of that. Microsoft

KT: um A... oh, Suze's favorite stock to play on Amazon. Amazon. I have, I have another M...

Suze: KT, you bought it at 90 after I said I wouldn't touch it.

KT: Meta! I like Mark.

Suze: It tripled your money in that. Now the last one may confuse everybody but KT will probably get it.

KT: I remember that the other a because everyone calls it by a different name but it's Alphabet but we all refer to it as Google but it's Alphabet. Wait, so wait, wait, let me do it. Aunt Mama. Ready everybody. Apple and NVIDIA NVIDIA Tesla. East, ANT. Mama Microsoft Amazon.

KT: Um Meta and alphabet.

Suze: Yes. Better known as Google as well.

KT: I got it.

Suze: Yes! Ding, ding, ding, ding, ding, ding, ding.

KT: I could only actually without these hints, I could only get five of them but I got all the spectacular seven or the what did you call it?

Suze: Magnificent seven. Alright, everybody. So if you want to remember those stocks, remember: ANT MAMA.

KT: Let's give this test to Colo.

Suze: Ok, we can do that.

KT: Because he loves to read his little stock portfolio.

Suze: So what do we want to tell everybody?

KT: Listen, everyone today wherever we go,

KT: I will create a more peaceful, joyful and loving world.

Suze: And listen, if you all do that, if you all really try your best just to even do one of those things, I promise you. and so does KT, that you will be unstoppable.