Retirement Years


it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome to the show another
weekend another program we’re so excited and we’re so thankful that you are
spending some time with us we are Jill on money and we is me Jill Schlesinger
and he mark tell our CEO the best executive producer in the world we are
broadcasting live from the Capital One Bank studios in New York and thank you
for all the great messaging and contact with us remember if you have some
financial issue that’s popping up for you just shoot us a note you can email
us ask Jill at Jill on money.com ask Jill at Jill on money.com
isn’t that easy you can also go to our website Jilla and money.com
click on the contact us button and you’ll get on the air so we like to
start the show with a caller and it is Brad who is on the line from Florida
I believe you’re calling from the west coast of Florida is that right Brad yes
that’s right so as I sit here in New York with it’s cold and some flurries
you are enjoying what tell me what’s going on right there it’s currently what
about I suppose 70 degrees nice gosh that’s nice all right what can I do for
you sir well I you know I I feel like we’re in pretty good shape here except
I’m retired now or both my wife and I are were 65 and we have in the past we
had a taxable account that we were you know trying to we were concerned about
taxes if you will now that we’re retired I’m trying to Jenn
as much income as I can from that taxable account okay what is the source
of what what’s the source of your income right now are you guys are you receiving
any pensions no no okay and social we currently have an income stream okay and
it consists of my wife is on Social Security I am NOT I haven’t taken it yet
and my wife gets also has a Teachers Retirement ok and then we have we have
like 8 CDs generating interest income ok and then we from our taxable accounts we
had dividends and capital gains hmm then we’re fortunate we have a little
bit of farm income and then we also have a little bit of oil royalty no I’ll tell
you what I’m signing up for this plan how much money are you bringing in
through that and I presume when you say CDs dividends and capital gains that you
are pulling that money out and spending it in other words do you need I need to
know how much money you really need ok so to make it easier or last year with
those revenue streams it you know we we brought in 115,000 and that floated your
lifestyle was that good yeah yeah ok good I love that your wife is in the
background because I she’s like yeah let me tell you she’s like don’t what do you
mean no income I’ve got Social Security I got teachers retiring so thank you for
your wife and I’m giving her a big thumbs up okay so what we’re really
looking at here what I’d like to know is your wife’s I want to know what the the
fixed amounts that we’re getting so the Social Security
the Teachers Retirement and the farm income how and a farm and they the other
that what did you say oil yeah okay so tell me what the Social Security
teachers retirement farm income and oil I want to know what those four
components add up to okay I love you happy here on that perfect okay thank
you for the voice of reasons there madam okay I know you’re yeah okay they’re all
small they’re not big money okay we live we live we’ve always lived below
our means yes a week we live just fine we do everything we want to do but we
don’t you know need to spend a million dollars years yeah I mean like even if
we thought about this we let’s just let me round up let’s say you need a hundred
twenty grand a year right ten grand a month half of it is coming in with
Social Security Teachers Retirement the farm income in the oil and that’s kind
of a good place for us to start now let me back up from there how much money do
you have invested overall so what’s in the taxable account what’s in the
retirement account in the taxable account is I’m going to round up just a
hair is four hundred thousand okay and in the retirement accounts well you know
it’s kind of a let me just yeah in the retirement accounts that there’s like
two million one hundred and seventy five thousand okay yes that’s both our IRAs
that we have small you each have a small Roth IRA okay and when you said the
eight CDs what is that included in any of those numbers no so you’ve got the
four hundred in the tax well how much money in CDs one million for twenty
there is nothing you can do to screw this up it’s amazing now
even I could screw this up you’ve been such a good saving family really you’re
amazing the two of you I’m you know what I don’t know what Brad I’m gonna say
that your wife is amazing because it sounds like she really is the brains of
the operation so I just yeah I figured as much
uh it would literally be almost impossible for you to screw this up
seriously you have like three million bucks and you’re so asking me well you
know what’s an efficient way to generate 60 grand a year from that so you cannot
go wrong here you cannot go wrong okay that’s I mean unless you do something
totally insane like oh you know we’re gonna do we’re gonna invest all of this
you know three million dollars and you know bet it on you know black 36 you
know that’s how you doing something dumb but you’re not gonna do that so here’s
the question that I have for you who’s managing all this money you guys yeah
okay so I think that are you building the CDs as a ladder that every oh you
know what Marc’s telling me I got to go to a break so hang on one second we’re
gonna go pay some bills I’m coming right back to you I want to find out really
what’s the nut of the question here because right now I love what you’ve
done you basically have CDs that is
essentially about almost let’s say you know about half the money and it’s safe
and it’s consistent and you’re gonna get all the money you need and frankly as
soon as Brad starts to claim Social Security it’s gonna even be better so
we’re gonna hang on for one second we’re gonna go pay some bills and when we come
back we’re gonna find out really what’s the question here and what what we need
to do everyone is listening the most important piece of this is you hear how
I’m asking these questions which is what do you need right what do you got and
then we talk about how to invest because your job as an investor is to do solve
that equation nothing else you don’t have to pick the best investment you
want to get where you need to go with the least amount of risk possible you
are listening to Jill on money and when we return we’re gonna count all of Brad
and his wife’s money and figure out what to go where to go next
its Jill on money send us an email ask Jill at Jill on money.com we’ll be right
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all over the place go to jail on money.com to find it all now back to the
show with Jill Schlesinger you’re back with Jill on money and before we went to
the break we were talking to Brad and his very wise wife about their
retirement income and we started the conversation by just sort of
understanding what are the facts they’re 65 years old and they’re retired and
they get about half of their needed income for retirement from these really
great and consistent forms of income Social Security for his wife her
retirement some farm income some oil income I mean I know the farm income and
the oil income can change but that’s pretty consistent they got about three
million bucks save tremendous fantastic and so Brad here is my question to you
what prompted you to actually give us a holler or Brad’s wife whose name is will
go undisclosed right now we don’t want to have everybody know who you are what
what prompted the question here well I’ve been a avid listener I started out
as a follower with Bob Brinker and you you kind of I enjoy your podcast and so
I just I don’t know I spend you know on listen to the radio and been studying
this I’ve read a lot and I could say weird where we kind of managed things
ourselves and now that I’m retired that before when I was working my wife you’re
correct did manage everything she’s the one that
should take credit for this I mean she set set this up wonderfully now that I
have time I kind of check it in you know I’m pursuing this a little further let
me just say that now that she’s done a great job
we’re gonna see if you can screw it up so what so what is it that you’re
seeking in terms of I mean like right now it just does not seem like there’s
any issue right you’ve got oh you’ve got a good chunk of money that’s safe what
else yeah well the only I guess the the crux of the call to you Jill is is is my
our taxable account right now we have two hundred thousand in the total stock
market index and we have two hundred thousand in Wellington okay and is I
look back from last year simply said the Wellington all produced the the index by
a lot I know I’m talking about income now right well great because the index
is not set up to to create the income because the index is only stocks and
well Vanguard Wellington is I don’t know it’s like 65 35 ish about right so it’s
like no so essentially it’s almost always gonna create the income but what
I’m not so sure about in general is that you know whether you even need to have
so much risk but that’s a totally different question I don’t think you’re
gonna need so I’m gonna jump to this because I don’t want to spend all your
whole morning when you should be out in the Sun enjoying yourselves on I like
the Wellington fund I’m gonna tell you that right now it is a solid fund and in
my estimation as you sort of describe this just in terms of the taxable
account I’m not even so sure you need to do much with it except that I like the
idea that the taxable stock market index is is there it grows the Wellington is
there and it grows but I don’t know if I’d want to take I presume there’s a big
tax hit in moving money from the index to Wellington so what I would try to do
is is not to reinvest anything that comes
in from the stock market index to put that cash and you can use it and make it
an invested in Wellington or spend the cash but I don’t think you need to worry
that much about generating so much income I don’t think I would just take
this big huge tax hit to move things over in the retirement account what are
you using similar products Vanguard stuff
yes we’re all Vanguard yeah we’re 6040 we’re 60 in total stock market hmm and
40 total bond market yeah I mean that’s it’s very easy I don’t even think I mean
if you really wanted to you could and you wanted to pull the risk back a
little bit I might change if you want to you know kind of tinker with the
allocation I would do it in the retirement account so you don’t pay any
taxes I’m just worried that like that’s the total stock market index I get that
it’s not going to produce like Wellington of course the capital of
appreciation is pretty big I do think that if you want to pull your risk
levels back to do it in the retirement account sure does make some sense I just
don’t feel like you need to necessarily pay Uncle Sam to get the allocation a
little bit more in line and I don’t I would not worry because you have so much
money in those CDs and frankly you’re I presume you’re not going to claim until
you’re 70 is that right wait well okay we we go around around with that yeah
okay and here’s the real notice if you could answer this question you’d be the
hero of the day because we’ve looked it up and tried to figure out what the
truth is here here’s here’s the thing I started taking mine and of course mine
is smaller than grabs it’ll be pretty substantial right so but he was looking
at 66 and a half that’s full retirement for him and and then also studying what
if he did go up to 70 and here is here is so this is a million dollar question
in my mind okay say alright I’m on Social Security and I
just got on Medicare this month which is a delight a big raise for me not paying
my self nice but they something happens to Brad
mm-hmm before he starts claiming now I’m taking
mine but what I was what if something did happen to him and he was taking I
would drop mine and take him right sure right okay but if he has never drawn and
something happens to him is that bunny in thin air it was the federal
government or do I get to know you get a claim you get you get the widow’s
benefit I think as even if he hasn’t claimed at the age he would have been
able to so I don’t think that’s the issue I think what’s interesting is I
think you’re gonna say the million-dollar question was something
slightly different and here’s your slightly different question if you tell
me when you’re gonna die I’ll tell you when to claim just kidding now I also
will say this you have so much money you’ve so much money you are in such
great shape that if it would make you feel better not to pull the corpus of
this estate out in other words not spending a lot of the money if you want
I don’t think claiming at 66 and a half is I mean like mathematically you’re
better off claiming at 70 presume you live long right you know that like if I
think it’s like eighty two and a half is your breakeven but let’s say that you
just want the income so you claim at 66 and a half big deal you claim it’s a
slightly lower amount maybe you could have gotten 8% more
it’s almost academic it’s like a fun exercise you have so much savings you’ve
done such a fabulous job I’m gonna turn this around and say would it make you
feel better to have that income stream sooner because in in in looking at your
retirement you’ve done such a good job you have won the opportunity to make a
more emotional decision and I want if you say I just want to like get it done
I want to have my stream of income I don’t want to pull I don’t know if you
have lots of kids or whatever you want you’re very philanthropic whatever it is
you don’t want to just pull money you just want to get that stream of income
started then turn it on at 66 and a half that is the prize for being such awesome
savers that is essentially a you have opportunity and you can make a the
mathematically inferior decision which we may or may not be so right because we
don’t know anyone’s gonna die but let’s say
statistically and I would not really worry about that I would not take a tax
it to reallocate in a taxable account I would not make myself crazy about taking
too much risk if anything instead of being 60/40 I would probably be more
like 5050 or flip it be 60% unsafe stuff 40% in stocks and in the reality is in
terms of claiming I probably just you know human nature is give me the money
now I know it’s don’t write in everybody listening this is a very specific case
in the case of Brad and his very wise wife her the Oracle I’m gonna call her
that they have a choice and I get it so I think that you’re amazing gold star
fantastic five gold stars great rating on Rotten Tomatoes – all right but
you’re listening to Jill on money you want a question like Brad’s to be on
your plate but you know maybe you don’t have three million bucks maybe you got
three dollars whatever it is we want to hear from you ask Jill at Jill on
money.com we’ll be right back 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger ah the Ides of March
mid-march you got your taxes done yet have you have you have you hey Mark make
sure that we put our income tax boot camp well then put the to tax posts in
this note in this in the show notes the two different ones that we’ve done that
way we can give people lots of help because they are all freaking out don’t
get freaked out about your tax situation either like you you’ll make the
adjustment it’ll be okay everyone’s going a little
bit nuts right now i I really don’t think it’s it’s it’s
not going to be all these reports that like such big differences and the just
it’s a great opportunity to reacquaint yourself with the United States tax code
because I know that you haven’t done that it is Jill on money this is where
we answer your financial questions it’s just a couple of weeks to go before mark
and I can try to finally get through all of our we basically want to use we
wanted to use the first quarter to catch up on our emails now mark the goal is to
get through hopefully all of February by the end of March and then we’ll just
have March to catch up on and then we’re gonna have to just keep running around
like a squirrel no is that what not a squirrel the hamster on the on the
hamsters are always kind of grossed me out but if you had one sorry about that
okay here is a question if you want to reach us ask Jill at Jill on money.com
Paul writes I am 67 I’m retired I live comfortably on my pension and Social
Security way to go I’ve got a million 1/2 bucks in my IRA I don’t anticipate
touching it until my required minimum distribution is comes around at 70 and a
half I’ve got 200 grand in cash for an idiot me needs that might come up my
taxable income is around $65,000 I have another say
thousand dollars that I could claim that would keep me within the 12 percent tax
bracket is it a good idea to withdraw from my IRA the amount up to the top of
the bracket so I can get funds out at the lower rate I don’t need the cash and
could either spend it or reinvest it in mice yeah like that idea I like that
idea you like it mark you want it do it yeah I think that’s a good idea um if
you just have one I wonder if it’s worth it for you to convert it into a Roth IRA
I would try to look at that as an option I don’t know if you have lots of
different IRAs but a partial just a little bit at a time putting that into a
Roth IRA that’s another idea for you give that a shot might be you know
because Roth IRA don’t have to take a required minimum distribution David
writes last year my dad died and left me and my two siblings about $40,000 each
and a transfer on death account and $150,000 in another account we decided
to stay with the same advisor our dad used at blank notice how I said blank
cuz I don’t want to trash him yet for various reasons I want to take this
money I want to put it somewhere else I don’t know the best way to go about
leaving the advisor I like the concept of paying a percentage of the account
value I’m sorry I don’t like the concept of paying a percentage of the account
value for very little advice fee-only advisor seemed to be a more fair
situation to me besides the previously mentioned accounts I’ve got about a
million bucks in my 401k at work a couple of rental properties to consider
I’m 51 so hopefully retirement not too far away how can I find an advisor I can
feel comfortable with Dave have I got an answer for you you’re gonna go to
naphtha National Association or personal financial advisors NAPFA naphtha dot org
and you’re gonna pop your zip code in there and you’re gonna see if you come
up with people who will charge you by the hour
conversely something else you might want to think about you know Vanguard has got
a robo advisor an online buy advisor and also has financials some financial
advice you may not need it you may be that you’re in a good you’re in a good
situation but if you just want to pay sort of an hourly ad
if you want to pay for hourly advice you’ve got to find someone who actually
does that for a living so that’s my suggestion and if you want to follow up
with us and tell us where you are writing from we might know someone in
the in the actual you know area that can help you out okay okay next up this is
from Al thank you for your article about the wage gap it appeared in the Tampa
Bay Times any reasonable person reading your article should understand the half
dozen or more reasons you explain all justifiable for men generally making
more money than women it is refreshing to know there is at least one journalist
out there who understands the situation thanks again it’s so hard it’s such a
hard issue and it feels very unfair if you’re the one who is who’s really been
clocked by it here’s a question about a backdoor Roth my salary is $135,000 I’ve
Mack tout max out my 401k can I contribute to an IRA or a Roth IRA let
me just look that up let me just see what the where is the Roth IRA
contribution okay first of all unfortunately I don’t know whether
you’re married or single if you are single you make too much money to do an
actual Roth so if you’re married you might be able to do it maybe it would
really depend on like some of your deductions but here’s how a backdoor
what Roth works you put money into a non-deductible traditional IRA and then
immediately convert it to a Roth IRA so you’re not taking a tax deduction but
you can convert it there are some very thorny rules about this you’ve got to be
careful so I want to say that if you have any other IRA accounts that you
must take that into consideration okay oh my god this is just I just have to do
this one Patricia just got divorced after 33 years come on she was a
stay-at-home mom she got six hundred grand in cash 42 grand a year in alimony
any suggestions as to what to do with the cash I have no idea where to start
should I buy or rent I live in southern South Florida you know what you need you
need advice from me you need a financial advisor that’s what you need and you
need someone who can help plan that for you incorporate your alimony which I’m
sure is only going to be limited to a certain period of time and I wouldn’t go
and buy anything or do anything right this second I think that I would really
be careful in what your next steps are please go seek the advice of a financial
planner you can go to the CFP website let’s make a plan org you can go to the
NAPLAN National Association of personal financial advisors naptha org those will
be hopefully fiduciaries who will help you out and I would start with naptha I
think that might be your best bet Oh Marc Marc Marc Marc Marc 33 years hopes
you wanted out and she was just waiting for the kids or something and it wasn’t
just like the you know somebody just saying waking up one morning said well I
would have find myself okay the long road my friends find yourself the best
way you can sometimes it’s easier with a spouse you know it’s Jill on money if
you’ve got a financial question send us an email ask Jill at Jill on money.com
we’ll be right back welcome back to jail on money where Jill
Schlesinger takes the mystery out of your finances you’re back with Jill on
money if you’ve got a financial question we would love to hear from you our email
address is asked Jill Jill on money.com and our website is coincidentally called
Jill on money isn’t amazing quelle coincidence anyway if you go onto the
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podcast hey a radio listener wrote in and told me they heard a spot that we
did which was about podcasts I think that was because the radio stations just
wanted people to understand like what a podcast is because every radio station
is now actually in the podcast business but I think I just described it as hey
it’s like a radio show you can listen to whenever you want that’s all it is don’t
be deterred by the word podcast it should not be scary it’s very easy to
understand so it’s kind of cool you can go to any of your apps that you use but
you know there I know that a lot of people like to use the Apple if you use
an iOS phone you can literally just use the Apple app the App Store there’s also
a podcast actual app it’s a little purple thing head looks like his little
sound waves coming out of a human being but there are other ones you know you
can listen on insta cast or podcasts or SoundCloud or stitcher or what’s the one
that I use I use the one that’s called casts
I think it’s called pocket casts or cast I don’t know what they go by now but I
like it you have to pay for it anyway what happens is you then go to type in
what the your favorite podcast is for you it’ll be Jill on money and then you
subscribe to it and then you can hear us whenever
what you can listen to it when you’re taking a walk with the dogs I do a lot
of podcast listening with my dogs and they are very well informed as a result
okay let’s take some questions here this is from Phyllis 59 years old
self-employed as a chiropractor and she Nets about a hundred grand a year after
expenses that’s awesome question is should I use my cat some of the cash on
hand to pay off my credit line at the bank and my car lease yeah why not
I mean I’m presuming that the credit line is probably a cheap interest rate
but why not I wouldn’t mind just having that cleaned up the car lease you can
you can pay if you’re especially if you’re gonna end up keeping these
keeping the car it’s not a terrible thing to do but it’ll clean up your
balance sheet a little bit and maybe we’ll save some money on interest but
what you really need to make sure is that the cash on hand that money that
you have remaining which is you know it’ll be like thirty five thousand ish
that you know you you keep enough in there so that if there’s a bad month or
two in the practice that you don’t have to actually dip in to any other savings
and what else you doing with that money are you putting money away into
retirement you have a separ something I’d like to know if you if you need some
help with a retirement account that that would be a great thing to follow up with
so let us know and good luck to you Robert writes he’s 46 and he filed for a
Social Security disability I know it’s not a lot of money
I have fifty five thousand dollars in a 401 K from my former employer I worked
in for 15 years with all the surgeries I’ve had over the last several years it
was the best decision to apply for permanent disability question what am I
able to do with the money so I don’t get crushed on taxes I am married and my
wife is working full time our kids are older and work on their own I may need
some of the money until disability is improved I think that you can take money
out without a penalty if it’s for medical expenses let us look at the IRS
rules IRS rules 401 K Earl a withdrawal let’s do that that’s how I
do these things it’s very easy there are exceptions this
is the most important thing there are exceptions to that 10% penalty that
would normally apply to you okay and the exemptions are are very important to pay
attention to they are usually called hardship withdrawals and they may
they’re usually due to what’s called an immediate and heavy financial need and
limited to the amount necessary to satisfy that need
so I think that you probably want to talk to this because there you’re
automatically to have and have that immediate and heavy financial need if
the medical care expenses if it’s for medical care expenses for the employee
the employee spouse dependents are beneficiary so that to me looks like you
can probably get that money out and not have it subject to that 10% penalty so
what I would do is this I would talk to your employer and the person who holds
the plan and discuss that hardship distribution and you know the the theory
here is that you want to avoid the 10% but you’re gonna have to pay the tax due
so talk to them see what you got see if you can make that work and that should
help you out I’m so sorry it’s such a bummer Diane wants to know that whether
she should pay the 70 thousand dollar mortgage on her house she’s got 750
grand she had seven hundred fifty thousand dollars that she invested with
Merrill Lynch and when she retired three and a half years ago she wants to know
should she withdraw money to pay off the house now she lives on Social Security
and withdraws two thousand dollars of retirement savings to live on no I
wouldn’t pay that off you need your liquidity girl and by the way when she
wrote this the market was in the tank now it’s come back I’m I’m kind of
guessing she’s absolutely fine now so how about that no market time you keep
that liquidity nuzzle up to it it’ll keep you warm on a cold retirement
evening you’re listening to Jill on money when we return more of your
questions we’ll be right back you’re back with Jill on money if you’ve got a
financial question we’d love to hear from you our email addresses ask Jill at
Jill on money.com or you can always contact us from the website Jill on
money.com and let’s see we’ve got Mike who’s writing that he’s wondering about
changing the beneficiary on term life insurance policy policies and Mike
writes it occurred to me that perhaps we should name our two sons as our primary
beneficiaries for our policies instead of naming each other the reason we have
plenty of assets to comfortably sustain one of us if the others should die my
thinking is that rather than have the policy paid to our state which then
could become taxable when passed to the boys when the surviving spouse dies if
paid to our sons that could avoid the potential tax oh well how much money do
you have man because the estate tax only kicks in if you have a boatload of money
like more than eleven million bucks otherwise the money I mean it can’t you
can do that there’s no issue doing it it’s just that there’s no tax on
insurance proceeds there’s no income tax and if your estate is not huge I don’t
know where you live but you know maybe you have a maybe of an estate tax in
your state of residence but I don’t think it’s going to matter for tax
purposes but it may be better for the other to actually try to figure out you
know we’re weird to put the money down the line I don’t know I kind of think
you probably should keep it as is one last one before we finish up this hour I
have money that is with the Bank of America save and in a savings account
$125,000 I want to use it next year to purchase a vacation home
I heard dire warnings about the government confiscating our funds are
you watching too much crazy Cable TV lady relax relax
will you please you have FDIC insurance you’re covered it’s fine and you don’t
have to worry about no one’s coming to get your money God people are super
gullible sometimes just don’t worry okay this is Jill on money and we are
broadcasting live from the Capital One Bank Studios here in New York if you’ve
got a financial question send us an email go to the website Jill on
money.com and you can click the contact us button while you’re there we’ll be
right back it’s the weekend and that can only mean
one thing you’re listening to Jill on money the show that takes the mystery
out of your finances here’s your host Jill Schlesinger you’re back it’s our
number two our number two is being broadcast live from the policy genius
studios policy genius is the easy way to compare insurance compare and buy I
should say compare and buy insurance and they got all sorts of stuff on there
you’ve heard the the CEO of that organization was on the show
so Jennifer Fitzgerald we love her and the site’s cool so check it out policy
genius cool all right you know we like to catch up on our
emails and Mark has given me a first quarter deadline to get through jus
January was that what our goal was to get through the backlog I don’t know but
we got a lot of questions here we go let’s do it okay this is from Gary who’s
looking to buy long term health care insurance but he’s only found these
hybrid policies and the hybrid is essentially like a life insurance policy
or some sort of an annuity with a long-term care Rider and a lot of those
were created because long-term care itself is so expensive so the thing that
I think is important to do is to first say hey do you really need long-term
care insurance and remember not everybody does need it it’s it’s not a
given but I think that what’s important is if you do need it and you know who
really does need let me just give you that quickie usually it’s a married
couple right and that couple has somewhere between I don’t know
half a million to two million dollar net worth with the house included and so I
think that what’s important there is that that’s not so many people so a lot
of people are buying these kinds of insurance policies and you don’t need
them but the biggest problem here is that we see that people pay up for them
and then they don’t need them and then they cost too much and all of this stuff
is rolling into a big pain in the next study of wasteful dollars and think
buying products you don’t understand basically a whole chapter in my book the
dumb thing smart people do with their money okay so here’s what you need to
know there are certain providers who are actually in the business of providing
long term care insurance so if you go I I mean one of this there’s this American
Association for long-term care insurance which you know with a caveat I should
say that it’s a lot of this is from the insurance industry itself so just know
that one of the things that you would need to know is how you can compare all
these and really understand this I guess that from my perspective that’s
best done with a fee-only advisor or even just a plain fiduciary advisor who
can help compare all of these so you know there are a number of the companies
that are have been in the business out of the business I think that what you
may want to do is just try to just look at what whether you need it how you get
help buying it and how you can compare it I wouldn’t go to one specific company
I would probably be looking at someone who could purchase long-term care in
your behalf who could compare companies some of the companies out there when you
look at their ratings they’re there in place those ratings are in place based
on policies that have already been sold but not all these companies are in the
long-term care business anymore so what you have to really be careful about is
that you may be looking at ratings for a company that
actually exited the business so check it out
be careful use an advisor and compare before you buy anything and by the way
maybe just maybe buying a hybrid product for you Gary and your family could work
but it’s essential that you get some advice along the way
all right here’s from Donna 66 she’s still working her company reorganize
over the last year and a half and her salary decreased by about $15,000 a year
I made a decision that I could deal with that as opposed to starting to start
over who could blame me really when her salary was reduced she upped withholding
exemptions to compensate ouch I’m getting killed on my taxes for 2018 I
was just I adjusted my withholding back down again so I can’t stand this making
less money and paying more in taxes using TurboTax and my situation isn’t
complicated enough to go to a professional service mortgage interest
and little else to itemize this just seems so wrong any suggestions well you
might have done it to yourself you might so I mean I guess the difference is what
would be interesting to me in your situation Donna would be to tell me
exactly how much money you paid in 2017 and exactly how much money you paid in
2018 and let’s compare where you stand yes your $15,000 differential would make
a difference obviously but I’m wondering if like your overall tax situation isn’t
quite as bad as you may have indicated and if that’s the case then maybe it’s
just that you made the wrong adjustment it’s okay you’ve figured it out that’s
good as long as you have the money to pay the tax that’s much better
okay Kevin writes he is 30 years old he’s putting 8% pre-tax and 2% into a
Roth that might his company matches 75% of the 8% and then an additional 4% Wow
he makes 37 grand after five years of employment he’s got an actively managed
401 K by an outside company I’m in the category of
maximum growth for my age so I assumed higher risk a debt of around $20,000 I
don’t own real estate my question is am I on track for my age for a decent
retirement at around age 62 at the latest I don’t know I need more
information but let me just say this I would not put away so much money into
your Roth overall until you pay this $20,000 debt down I mean I think you
should try to capture the match I get it so that’s fine put your 8% in but I
wouldn’t do the extra 2% and I would kill myself to try to pay this whole
thing down all right question why do robots have a detrimental effect on
employment growth more so in emerging markets than developing markets the the
reason is that they are replacing people a lot of the u.s. people have already
been replaced with those offshored jobs and now that those jobs could be
replaced you know one more time over makes it much worse for the developing
but so that for the emerging economies then the developed ones so robots are
going to absolutely make a big dent in jobs and in all areas but I got this
great report total number of robots shifted shipped to North America US
Canada Mexico this is just under 36,000 that’s it it’s up a lot up by 7% big
increase in the non automotive companies using robots but the robot revolution
again probably replacing more of those lower wage jobs in emerging economies
faster than they do in developed ones all right thanks for your question and
if you have a financial question hop on to Jill on money.com
and there you can order the new book the dumb thing smart people do with their
money 13 ways to write your financial wrong so I’ll be right back 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger it’s Jill on money you have
a financial question you gotta get in touch with us easy thing to do you can
go onto the website Jill on money comm on that website what will you find
you’ll find a contact us button also you will find lots of great content check
out the resource tab where there’s a lot of cool stuff calculators and
connections to websites that we talk about all right let’s do okay let me get
to this this is an interesting question this is from Ryan I love the show thank
you so much for sharing great advice and content every week I have a question
about bond exchange-traded funds and whether they are an investment worth
having I have taxable money in the following
locations a Savings Bank 2% interest an online investment platform two accounts
with two accounts one fully stocks the other one 4060 stock fund and then
another account brokerage account individual stocks my question is whether
I need any bond exchange traded fund exposure given cash interest rates
currently I’ve been looking over the prospectus for bond ETFs that the online
advisor uses I see historic rates of return that float at two to six percent
a year given that these these returns and the
really good return on cash I’m currently considering having my money either in
stocks or cash I’m struggling to understand the value of having money in
a bond etf given that the returns are not substantially different than cash
can you educate me on why you might want to keep money more money allocated to
bonds because yes you’re right the low ends of the range is 2% but when
interest rates start to rise they go up I mean you could do it I think that
having a bond fund gives you just a slightly it will act
slightly differently over time then a cash account well so then you might want
to say to yourself well is that really necessary in a bond fund it’s just me I
would okay here is I love when someone writes about a close friend let me start
by saying that this is from rest Russel your book just arrived I can’t wait to
read it Thank You Russell if you want to buy the
book just go to Jill on money.com click on the book link and you can buy the
book ok here’s Russell says a close friend is about to receive 80 thousand
dollars tax-free at age 60 a good place where is a good place to park the money
she no longer has earnings I’m thinking it can’t be put in a Roth IRA correct if
you don’t earn money can’t use it Roth would prefer to just let it grow her
household has just over five hundred thousand dollars in an IRA and the
Thrift Savings Plan growing steadily so ok so here’s the thing is there any
outstanding debt that’s one question now that debt could be lots of different
things I’m not saying a mortgage debt but is
there any debt that’s outstanding we want to take care of that number two
she’s 60 so if she’s 60 years old I really want an adequate emergency
reserve fund so you know if your household has a half a million dollars
in an IRA and other retirement accounts my my guess is that you spend a good
chunk of money so make sure that that the we have that emergency reserve fund
parked with safe accounts you know a savings of checking a CD anything like
FDIC safe account right okay next then you might consider hey you know should
we invest this money you could one way to do it is to take whatever the extra
money is and you could put it into and invest a taxable investment account and
you could make it a really kind of a boring account maybe it’s 50 percent
stock index fund 50 percent bond index fund if you’re the type of people who
really know that you’re not gonna touch the money and you don’t need the money
that may argue for taking slightly more risk but if you don’t like risk at all
and you really want to dial it back you can put less money at risk in the stock
market the other thing I also would remind people is that one thing to keep
in mind is that you know you may want to use that money to pre-fund doing
something like do you need to buy a car do you need to get something big out of
the way that you’d rather do now rather than wait until later so you can give me
a holler back if there are more details to discuss about this I think that
having that emergency reserve fund especially as you are approaching your
very important retirement this is key you’ve got to have enough money that’s a
that’s that’s outside of retirement okay so listen the only thing is that if your
friend is married even though she doesn’t have earned income maybe she
could do a spousal IRA but that’s not gonna get rid of a ton of money right
that’s $80,000 but that’s one way to defray some of that money into a great
tax environment okay sandy writes why does Vanguard have my Roth IRA invested
in bonds the position is not increased in value since 2014
being in non-taxable product seems wrong to me well there’s no way that Vanguard
first I don’t know who first of all who invested the money Vanguard is managing
the money for you.if so those are taxable bonds that are in the Roth if
you own municipal bonds that are in a Roth that is a problem so I would double
check and send me more info so that I can help you with that because I’m not
sure I know so send me the whole sum of the portfolio and that way we can see
what you have and what why things are moving or not moving in your case in in
a way that you would have hoped this is from Thomas who’s single 63 he’s got 6
million bucks in assets okay mostly retirement assets retired he’s
receiving a buyout from a business he sold over five years ago – he’s
receiving about 400 grand a year I feel since I probably won’t be in this high
tax bracket again then I should put pull out my Roth now maybe place into
tax-free bonds to take advantage of extraordinary stretch of high tax
brackets oh wait a minute I don’t get this
a small Roth has a hundred and twenty five thousand so you I don’t think you
can recharacterize a whole Roth can’t you just do one year’s contributions I
think so I don’t think you could do this the way you want to do it I’ll tell you
what I would do keep your money that’s fine keep
everything as is however when your retirement buyout go that I’m sorry your
business sale buyout drops out two years from now then you should start to think
about converting the old retirement assets into Roth assets that’s what I
think I don’t think you should be thinking about what that I see which way
you want to go I want to go the opposite direction I want to see in two years
when you’re when your actual tax bracket drops down whether you should start
converting assets let me know if I’m missing something there here’s James
considering making extra payments to pay down principle on our mortgage how can I
ensure that they applied to provide you pay down your mortgage James I want more
information send me more information is that really the best use of your money
what’s the rate I get what you want to do pay down principal not interest many
you got to check with your mortgage company of course had to physically do
that but I want to know why you want to do that that would be interesting to
learn jerome is suddenly in the single filer back tax bracket his wife died in
2016 his income last year adjusted gross just
under seventy thousand dollars his yearly
fired minimum distribution is about $1,400 my question is what can I do with
my IRA I assume it’s too late to put that in a Roth yeah when you have to
take your RMD you’d have to take the money can’t do anything else with it
okay and then the other piece of this is that if you want to avoid taking that
income altogether and you don’t want to count it as income the best thing you
can do is a qualified charitable distribution where you send it from the
account straight over to a charity you don’t get a charitable contribution
deduction if you’re an Itemizer but you don’t count it as income I hope
that helps okay you’re listening to Jill on money if you’ve got a financial
question send us an email ask Jill at Jill on money.com and during the break
why don’t you just go over to the website Jill on money comm poke around
we got lots of fun things to read listen watch sign up for a free weekly
newsletter do it all it’s all there Jill odd money we’ll be right back 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger you’re back with Jill on
money if you’ve got a financial question we would love to hear from you our email
address is ask Jill at Jill on money.com very easy let’s do some emails in this
season of taxes let’s talk about this very excellent question from Tricia Roth
versus Roth IRA versus 401k the unfairness of it I like this this is
more of a general question that others may be wondering about also why are
people who work for a company allowed to put eighteen thousand five hundred
dollars a year into a 401k but people like me who work for a small company
that doesn’t offer a retirement plan we’re only allowed to put in sixty five
hundred dollars because it fifty five hundred is the limit but she’s over 50
so she can do the extra thousand dollars how is this fair I’d like to contribute
more than the seven thousand for 2019 into a retirement fund but I can’t and
meanwhile my husband is allowed to put something like 14 grand into his SEP IRA
I don’t really understand why these numbers are so different I agree it
seems patently unfair but let’s go through this a little bit for 2019 here
are the limits for 2019 you can put six thousand dollars that’s
for this year into an IRA or a Roth IRA and if you are over the age of 50 you
can put in an extra thousand so that’ll get you to your seven thousand tricia
just know that okay now the other part of this the 401k you have a limit of
$19,000 for workers if you’re over the age of 50 you’ve got a catch-up
contribution of an extra 6,000 so you can put 25 grand yeah I mean
doesn’t seem very fair but when you talk about your husband
he’s probably self-employed and so he gets to put in he gets to have an
account called a simplified employee pension or recep you might have heard of
this okay so this is a little bit more convoluted for 2019 the SEP limit is 25%
of up to $280,000 of common compensation but there’s a limit you can only put
fifty six thousand dollars so sometimes a SEP IRA is also said in the same
breath as a Keogh or a profit-sharing plan so it’s fifty six thousand dollars
no catch-up contributions there okay and when you make your SEP contribution you
can do it up to the due date of your tax return including extensions so there’s
something to keep in mind so what are we supposed to do I think we go to your
employer this is what my suggestion would be Tricia it and say hey look I
know we’re a small company but can’t you put in at least a simple IRA that’s
usually the what happens for a small companies they’ll put something in
that’s an easier plan to manage and if you had a simple IRA you get to put away
thirteen thousand dollars in 2019 you get a catch up of three thousand if
you’re over the age of fifty however your business the business that puts it
in has to do some matching but it’s not that much so maybe you could Lobby your
boss Tricia to put in at least a simple IRA make it so much better for you so
the only other thing I could suggest is that if I looked at you and your husband
then why don’t we just have him put more into his SEP IRA and that could kind of
help cover you I don’t know if he can do more maybe that’s the way we should skin
the cat think about that and if I’ve missed something let me know it is a
bummer it really is okay speaking of IRAs
this is from Sheila who is 65 and she’s $30,000 of credit card debt she’s 65
she’s paying $1,100 a month on it however she’s got 700 grand in an IRA is
it feasible to withdraw money from my IRA to lower my debt yes it’s totally
feasible but you got to pay tax on it so I think that what I would suggest to you
Sheila is yeah hey I don’t know how you got into this debt
I really don’t but let’s presume I don’t know how much other money you have but
whatever you’re pulling out of that IRA is going to be added to your income so
as you pull money out be very careful to shoot B to ensure that you don’t
necessarily pull so much out you know to go into a huge different tax bracket so
I don’t know the sources of your income I’m gonna just sort of guess that maybe
you fall into that twenty two percent range it’s about forty grand to eighty
four thousand but yes I would pull the money out and that would be kind of
where I put it there I would say that’s pay that debt down but then like come on
get on it here you’ve got to be careful you have to be looking at what is the
best the best use of your money and why are you going into debt I don’t know
what happened all right oh this is one of my favorites
this is from Gerald Weddings four daughters dear Jill I just read your
book by the way my book is called the dumb thing smart people do with their
money so you can order it to just go on the website okay same shameless plug
okay according to your book I’ve made the right decisions I don’t agree on
everything however your expertise is very impressive I probably made some
minor mistakes my wife and myself have used and still use a financial planner
I wanted to let I wanted to let you know that weddings can cause financial
pressures we planned for a lot of things but not for weddings of my two daughters
we are fortunate that everything worked out whoever at the time and it did put
us in a temporary financial situation my daughters had nice weddings and did not
kill our retirement and you guys didn’t kill each other that’s from Jerry
yeah I mean I get it the wedding thing is dopey as someone who has had a bunch
of money blown on a wedding which we and then the Union ended up in divorce
they’re just the dumbest waste of time and money but I also am very clear that
people should be planning for because they can’t possibly seem to say no to
their kids so you know that said go spend money on the wedding but actually
be very careful not to blow through your budget or your emergency reserve fund
and don’t be borrowing against the house kids want to have a big wedding and they
want you to pay for it you say here’s how much I can do it’s kind of like the
college conversation get the kid ones have a big wedding then you can
basically say great here’s how much we can afford
by the way weddings are just not on the parents of the daughters anymore
everyone’s chipping in I’m going to chip into marks wedding which may result in
ordering a pie for the four of us after the event okay you’re listening to Jill
on money if you’ve got a financial question send us an email our email
address is ask Jill at Jill on money.com hey during the break go to the website
Jill on money.com read listen watch sign up for our free
weekly newsletter we’ll be right back if you’ve missed any part of the show or
want to check out a pass she’ll go to jail on money.com for more great
personal finance content you’re back with Jill on money hey have I mentioned
that I’ve written a book here’s the thing it’s sort of like the CFP once you
get it you kind of don’t ever want to give it up and now that once I’ve
written this book I want to sell it every single chance I have because I
don’t know if I the second book in me the first one so good I’m only kidding
come on it’s called the dumb thing smart people do with their money the dumb
things smart people do with their money thirteen ways to write your financial
wrongs you can just go to our website Jill on money.com
you can click on the link that says the book and you can buy it anywhere you
want or you can walk into a brick-and-mortar bookstore in your
neighborhood and buy it just from that person or that place so go ahead and do
that all right it’s time to rock through some of your emails mark says he watched
a segment with me on the CBS Evening News and wanted to know is the
retirement issue America’s next big bubble to burst leaving the US and a
very big recession no I don’t think so actually I think that it’s a crappy
situation and that would be you know kind of my the sort of my cautionary
tale but I don’t think it’s a bubble kind of thing it’s just it’s a situation
that we’re gonna have to pay attention to and I think that it’s one of the
reasons why I think that many people are going to start to realize that they
can’t retire when they want they’re going to say oh I should have not paid
for that kids college education because I really need more retirement money but
I don’t think it’s the kind of thing where it’s a bubble that burst it’s
probably going to change the demographics of the workplace that I
think Ron wants to know that he whether he should be rebalancing I like
rebalancing he’s he’s using he’s working with a
fargo advisor i don’t know how you’re paying that person but it may be worth
it for you to check out some other ideas for managing money maybe an online
advisor there’s one really good one at vanguard betterment wealthfront all
these things okay William wants to know he’s got a 401 K from a second job they
change ownership they fired most of the original crew my primary job is with the
county with no 401 K what can I do with the 401 K from the second job oh you
know what you can do you can roll that into an IRA rollover account it’s very
easy to do you can do it almost anywhere and in fact you know you can do it at a
place like I just mentioned Vanguard but there’s any of these big investment
companies that have low-cost index funds sure why not
so I would look at Vanguard I’d look at T rowe Price I’d look at Charles Schwab
I would look at TD Ameritrade they have a good platform did I miss any I think
that’s it all of those are good choices so give that a shot okay fred is asking
about IRAs newspaper articles indicate that if one has made an IRA contribution
of a tax-deductible and a non tax-deductible type one cannot separate
them when starting mandatory withdrawals the IRS requires you to define the
percentage in each category use the total however when I started
contributing to Bank IRA CDs the amounts were deductible for the first five years
and I selected one year term CDs the next year I added to the maturing first
CD and so on for five years thereafter my IRA contributions were not deductible
I opened a new CD account for one year added my yearly allowable IRA amount to
that one each they’re each their year thereafter I added the allowable amount
I kept all the accounts separate must I provide a total of all IRA accounts each
year as mandatory withdrawals approach for me in two years or can I state that
X amount comes from deductible and Y from non deduct
what do you think about that one Fred hey mark what do you think about that
one I think it’s gonna be tough here’s what I would do I would go to the
bank and I’d ask them because it’s really about what the way they report
versus what you are going to say so I think you may want to talk to the bank
before you start that process also think you may want to be very clear with
someone maybe you might go talk to someone who could potentially help you
with this meaning somebody who is either a tax preparer or a CPA who may know
this better than I don’t want to mess around I was getting very very nervous
around these tax issues you should be talking to someone who’s an expert in
that I can ask Eadie slot that question but I have a feeling that it’s it’s
going to be hard and I’m worried also a little bit that it could be an audit
flag but but you know it doesn’t matter that much but maybe we got to think
about that Mary bought into a timeshare which is almost
always a bad investment mark did ever tell you the story about my
mother-in-law my brother-in-law bought a timeshare in Florida was really excited
about it and he comes home because oh we bought this thing in blankety-blank I
don’t know Cocoa Beach Florida and she looks at him and she literally just in a
monotone timeshares are for suckers that’s what she said he was sort of
bewildered by that and I laughed my butt off anyway how do we get out without
spending more money we are the property taxes you got to talk to them and try to
sell it back and you basically go to them and you see if you can negotiate it
is not easy so I would I would caution you on that okay then what else that’s
it I think we’re gonna go to a break and then we’re gonna come back and we’ll do
we’ll finish up the hour and we will and finish up the show because the end of
this hour is the end of the show which I’ve now forgotten about already okay
let’s come by so fast all right you’re listening to Jill on money and just
shoot us an email ask Jill at Jill on money.com we’ll be right back you’re back with Jill on money we are
broadcasting live from the policy genius studios go check out policy genius
policy genius calm it is the easy way to compare and buy insurance so easy by the
way okay let’s get to some questions here this is from let’s see
and just that word the letter N I am comment outs on the outside but
genetically inclined to be a worrywart I read ponder but always recognize my
lack of real knowledge on money the market had to survive on pensions IRA so
for me and all like me with my investments mostly in bonds how does the
quote dreaded inverted yield curve impact my investments or my future um
okay so the answer to that is it depends that you know an inverted yield curve
just means that essentially the interest rate that is being paid for shorter term
bonds is higher than that of intermediate or longer-term bonds now
when I wrote that column a while back the yield curve was looking like it was
inverting but it no longer does look like that and one of the reasons that
people talk about the inverted yield curve is because it is often a sign a
potential sign of a recession do I think that that’s happening I don’t think so I
really I don’t think that that’s happening I don’t think you have to
really worry about that question oh I love these questions hey when’s the Auto
Show we got to get our buddy back to do an auto we got to do that the auto
episode jeffrey says his three-year lease of his Toyota Highlander is going to
spire purchase price 24 grand I don’t want to take on a new lease or car loan
over the summer I was forced to make unexpected but essential home repairs
had to use most of my savings to pay for it I’m thinking of using withdrawal of
contribution from my Roth IRA to avoid a car loan or a new lease so I can
replenish my reserve fund begin saving for my next vehicle yes you can and you
can with you can withdraw your contributions without penalty but I wish
that you wouldn’t I feel like you’re never gonna get that money back in there
so what I would say is can’t you get a cheap car loan a really cheap one it
would be so much better if you could do that and then go from there all right
that’s it that’s the program if you’ve got a financial question throughout the
week always feel free to email us ask Jill at Jalan money com check out all of
our great content on the website Jill on money calm and please go out and buy the
book so you can stop hearing me talk about it alright have a great week we’ll
talk to you next weekend

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