1 00:00:08,090 --> 00:00:11,969 KT: Hello, Suze, and good morning everyone and welcome to the 2 00:00:11,970 --> 00:00:15,289 KT: Women in Money podcast and everyone's smart enough to listen. 3 00:00:15,609 --> 00:00:17,530 KT: This is KT in the house. 4 00:00:18,049 --> 00:00:20,389 KT: And today is a very special day. 5 00:00:21,840 --> 00:00:25,090 Suze: KT. Wait, everybody gotta listen to me. So we're about 6 00:00:25,090 --> 00:00:28,110 Suze: to start the podcast, and I said, You wanna start? 7 00:00:28,180 --> 00:00:30,219 Suze: You wanna do it? And she goes, Yeah, I can 8 00:00:30,219 --> 00:00:30,729 Suze: do it. 9 00:00:30,860 --> 00:00:31,899 KT: What's wrong with that? 10 00:00:31,979 --> 00:00:33,009 Suze: What day is today? 11 00:00:33,299 --> 00:00:34,409 KT: I didn't get there yet. 12 00:00:34,939 --> 00:00:35,520 Suze: That's how you start. 13 00:00:36,979 --> 00:00:41,220 KT: No, I'm doing it KT way. Today's Thursday, January 22nd, and 14 00:00:41,220 --> 00:00:44,139 KT: why did I wait to give you that date? Because 15 00:00:44,139 --> 00:00:47,180 KT: it's Don Race's birthday. 16 00:00:47,659 --> 00:00:52,989 KT: And Don is our brother-in-law, the daddy of Sophia and 17 00:00:52,990 --> 00:00:57,229 KT: Travis that you've heard about for years, and he's on 18 00:00:57,229 --> 00:01:01,750 KT: his way to Oregon to carve wood. Unbelievable. 19 00:01:02,770 --> 00:01:07,610 Suze: You, you, you're cracking me up here already, Travis. 20 00:01:07,785 --> 00:01:12,105 Suze: You know that you forgot to start with January 22, 2026. 21 00:01:12,434 --> 00:01:12,705 KT: Here we go. 22 00:01:12,864 --> 00:01:13,105 Suze: No, no, 23 00:01:13,625 --> 00:01:19,785 KT: Today is January 22nd, 2026, the birthday of Don. 24 00:01:20,184 --> 00:01:23,345 Suze: No, stop, stop, stop. Anyway, Don, we wish you a very, 25 00:01:23,584 --> 00:01:27,425 Suze: very happy birthday. We love you so much. How old 26 00:01:27,425 --> 00:01:27,925 Suze: is he? 27 00:01:28,569 --> 00:01:29,260 Suze: We don't know. 28 00:01:29,370 --> 00:01:30,330 KT: I don't know. It doesn't matter. 29 00:01:30,330 --> 00:01:32,599 Suze: That's how much we love him, everybody. We don't even 30 00:01:32,599 --> 00:01:33,169 Suze: know how old he is. 31 00:01:33,169 --> 00:01:35,330 KT: He never looks old. He's a handsome man. 32 00:01:35,489 --> 00:01:38,489 Suze: Handsome man. Now this is the Ask KT and Suze 33 00:01:38,489 --> 00:01:43,169 Suze: Anything edition. You want to ask a question, just write 34 00:01:43,169 --> 00:01:48,230 Suze: in to ask Suze S U Z E podcast at gmail.com. 35 00:01:48,650 --> 00:01:52,169 Suze: If KT chooses it, oh, we will answer it on 36 00:01:52,169 --> 00:01:54,410 Suze: the podcast. I just have to say something, KT. 37 00:01:55,339 --> 00:01:59,029 Suze: So as you know, everybody, I read many of the emails. 38 00:01:59,819 --> 00:02:03,279 Suze: Sometimes I answer you directly, as you all know. So 39 00:02:03,379 --> 00:02:06,900 Suze: I'm reading this one email, and it says, so I 40 00:02:06,900 --> 00:02:09,300 Suze: asked you a question a few weeks ago. I didn't 41 00:02:09,300 --> 00:02:12,850 Suze: get an answer, right? How do I know what the 42 00:02:12,850 --> 00:02:15,619 Suze: answer to my question is and how do I know 43 00:02:15,619 --> 00:02:17,739 Suze: when it's gonna be on the podcast? Will you let 44 00:02:17,740 --> 00:02:18,529 Suze: me know? 45 00:02:19,179 --> 00:02:22,589 Suze: And I was like, I just wrote back one simple line. 46 00:02:22,839 --> 00:02:27,570 Suze: You have to listen to the podcast. Just that simple. 47 00:02:27,639 --> 00:02:28,940 Suze: All right, KT, go on. 48 00:02:29,279 --> 00:02:34,830 KT: Also, she gets thousands, thousands. Also, you're lucky if she 49 00:02:34,830 --> 00:02:38,559 KT: answers you. It's not something that she ever has to do. 50 00:02:38,720 --> 00:02:39,940 KT: She loves doing that. 51 00:02:40,038 --> 00:02:42,139 Suze: However, I do want to say something to a few 52 00:02:42,139 --> 00:02:46,440 Suze: of you. You wrote, I answered. You wrote again, and 53 00:02:46,440 --> 00:02:47,460 Suze: I answered. 54 00:02:47,839 --> 00:02:51,119 Suze: You wrote again and then I got tied up and 55 00:02:51,119 --> 00:02:56,020 Suze: I get distracted sometimes and whatever if I've been communicating 56 00:02:56,020 --> 00:02:58,440 Suze: with you and all of a sudden you don't hear 57 00:02:58,440 --> 00:03:03,038 Suze: from me, don't just give up write again just reply 58 00:03:03,038 --> 00:03:03,160 Suze: to 59 00:03:03,270 --> 00:03:06,070 Suze: the emails that have been coming back and forth, so 60 00:03:06,070 --> 00:03:08,149 Suze: it will be brought to my attention again. I go, 61 00:03:08,190 --> 00:03:11,470 Suze: oh yeah, yeah, yeah, yeah, so don't give up. All right, 62 00:03:11,589 --> 00:03:12,070 Suze: go on. 63 00:03:12,149 --> 00:03:15,949 KT: I'm starting with a question from Ben and I really 64 00:03:15,949 --> 00:03:18,669 KT: like this and I like you, Ben, for this question. 65 00:03:19,080 --> 00:03:24,119 KT: Hi KT and Suze, I consider myself very fortunate. I'm 66 00:03:24,119 --> 00:03:28,639 KT: debt free. I own my own home. I am consistently 67 00:03:28,639 --> 00:03:34,038 KT: dollar cost averaging into my stock portfolio. I contribute to 68 00:03:34,038 --> 00:03:38,220 KT: my retirement and I have accessible funds. 69 00:03:38,710 --> 00:03:41,229 KT: I feel like I could share some of this with 70 00:03:41,229 --> 00:03:45,289 KT: someone or a cause less fortunate than me, but I'm 71 00:03:45,289 --> 00:03:49,350 KT: unsure how to determine the right amount. Suze, is there 72 00:03:49,350 --> 00:03:53,339 KT: a framework or guideline for deciding what is considered an 73 00:03:53,339 --> 00:03:57,270 KT: appropriate or responsible gift or donation? 74 00:03:57,990 --> 00:03:58,649 KT: Great question. 75 00:03:59,110 --> 00:04:00,210 Suze: How would you answer that? 76 00:04:00,630 --> 00:04:01,350 KT: Do what we do, Ben. 77 00:04:02,110 --> 00:04:02,710 Suze: What do we do? 78 00:04:02,830 --> 00:04:06,029 KT: We, we have charities that we really believe in and 79 00:04:06,029 --> 00:04:07,750 KT: that we like. One of them is St. Jude's 80 00:04:08,229 --> 00:04:09,550 Suze: No, but that wasn't his question. 81 00:04:09,710 --> 00:04:10,669 KT: No. Well, hold on... 82 00:04:10,669 --> 00:04:11,419 Suze: How do you decide on a responsible amount? 83 00:04:12,860 --> 00:04:15,470 KT: 10% is probably a good rule of thumb, like, like 84 00:04:15,470 --> 00:04:17,250 KT: all the tithings that are out there. 85 00:04:18,000 --> 00:04:19,500 Suze: That's how you would answer this question? 86 00:04:21,279 --> 00:04:21,451 KT: Maybe, yea. 87 00:04:21,451 --> 00:04:21,479 Suze: (Suze makes the wrong answer noise) 88 00:04:21,479 --> 00:04:22,160 KT: OK, well... 89 00:04:22,799 --> 00:04:25,160 Suze: Give me this. Give me this. Just give me this 90 00:04:25,160 --> 00:04:28,359 Suze: before we even start. I just got to, before we 91 00:04:28,359 --> 00:04:31,399 Suze: even got into this podcast, I got to do my 92 00:04:31,399 --> 00:04:32,219 Suze: favorite thing. (Suze makes the wrong answer noise again) 93 00:04:34,140 --> 00:04:35,219 Suze: You hate that, don't you? 94 00:04:35,309 --> 00:04:37,390 KT: I do. We need a different noise. 95 00:04:37,750 --> 00:04:38,470 Suze: What should it be? 96 00:04:38,549 --> 00:04:41,909 KT: I don't know, but we don't need a negative noise 97 00:04:41,910 --> 00:04:45,549 KT: at this hour in the morning. Answer Ben's question. 98 00:04:45,950 --> 00:04:47,190 Suze: So Ben, listen to me. 99 00:04:47,959 --> 00:04:51,779 Suze: I'll never forget one of the Oprah shows I was doing, 100 00:04:52,238 --> 00:04:55,459 Suze: and there was a woman, and this is really for everybody, 101 00:04:55,720 --> 00:04:58,799 Suze: there was a woman who was in debt. Her car 102 00:04:58,799 --> 00:05:03,940 Suze: was just repossessed. She had credit card debt, but yet 103 00:05:04,480 --> 00:05:08,670 Suze: she was still giving 10% of her money away. I'll 104 00:05:08,670 --> 00:05:12,399 Suze: never forget this, and I looked at her and I said. 105 00:05:13,149 --> 00:05:16,570 Suze: Why would you want to make yourself a burden on God? 106 00:05:17,309 --> 00:05:21,750 Suze: Why would you want to do that? Because isn't it 107 00:05:21,750 --> 00:05:25,589 Suze: true that you're constantly praying to God and saying, God, 108 00:05:25,640 --> 00:05:28,269 Suze: I just wish I had some more money. And she said, Yes, 109 00:05:28,630 --> 00:05:31,350 Suze: I pray for that all the time. And I said, 110 00:05:31,510 --> 00:05:34,630 Suze: You know what, maybe God is saying to you: 111 00:05:35,190 --> 00:05:38,910 Suze: Listen, I'm OK right now. Maybe you could just give 112 00:05:38,910 --> 00:05:42,809 Suze: me 1% or $10 or whatever, but you have got 113 00:05:42,809 --> 00:05:47,339 Suze: to be responsible for yourself and take care of yourself first. 114 00:05:47,670 --> 00:05:50,739 Suze: And then I went on and I said on that 115 00:05:50,829 --> 00:05:54,910 Suze: Oprah show, sometimes it's harder for some people to give 116 00:05:54,910 --> 00:05:58,549 Suze: $1 because they don't have any than it is for 117 00:05:58,549 --> 00:06:01,630 Suze: some people to give $5,000 because they have so much 118 00:06:01,630 --> 00:06:02,909 Suze: or whatever it may be. 119 00:06:03,649 --> 00:06:07,529 Suze: So, Ben, you have to decide on an amount that 120 00:06:07,529 --> 00:06:13,709 Suze: feels responsible to what you have and really what you feel. 121 00:06:14,049 --> 00:06:16,769 Suze: I would tell you in terms of where you should 122 00:06:16,769 --> 00:06:18,529 Suze: give it, your heart will tell you. 123 00:06:19,320 --> 00:06:22,880 Suze: What happens with me is all of a sudden, sometimes 124 00:06:22,880 --> 00:06:25,679 Suze: even I'll be in the car or I'll see somebody 125 00:06:25,678 --> 00:06:28,660 Suze: and I'll just be compelled to give them some money. 126 00:06:29,279 --> 00:06:33,079 Suze: Other times it will be an organization, sometimes it will 127 00:06:33,079 --> 00:06:34,320 Suze: be a person 128 00:06:35,010 --> 00:06:38,890 Suze: who just needs help. I don't get a tax write 129 00:06:38,890 --> 00:06:42,690 Suze: off for it. It doesn't matter. I just want to 130 00:06:42,690 --> 00:06:47,390 Suze: help them because helping them makes my heart feel better. 131 00:06:47,570 --> 00:06:52,000 Suze: It's not about helping them gets me a tax write off. 132 00:06:52,450 --> 00:06:56,768 Suze: My advice to you would be there's no percentage amount 133 00:06:56,769 --> 00:06:57,980 Suze: that should be dictated. 134 00:06:58,630 --> 00:07:02,070 Suze: You know when you should give and when you don't 135 00:07:02,070 --> 00:07:05,669 Suze: want to give. You know who to give to if 136 00:07:05,670 --> 00:07:09,790 Suze: you simply follow your heart. It will lead you to 137 00:07:09,790 --> 00:07:13,880 Suze: the right place to donate money to. Just that simple. 138 00:07:13,989 --> 00:07:15,089 Suze: Next question, KT. 139 00:07:15,750 --> 00:07:16,980 KT: OK. Next question is from... 140 00:07:17,510 --> 00:07:18,059 Suze: I have a question for you. 141 00:07:18,190 --> 00:07:18,609 KT: Yeah. 142 00:07:18,950 --> 00:07:21,750 Suze: How come when I give an answer, if you disagree 143 00:07:21,750 --> 00:07:22,859 Suze: with it, you don't go: (and Suze makes the wrong answer noise again). 144 00:07:26,399 --> 00:07:28,279 KT: I am not gonna go there. 145 00:07:28,850 --> 00:07:29,559 Suze: Why is that? 146 00:07:29,609 --> 00:07:33,410 KT: This is called the Women and Money podcast. You're Suze Orman, 147 00:07:33,529 --> 00:07:37,290 KT: the money guru of the world, and I'm KT, and 148 00:07:37,290 --> 00:07:41,440 KT: I'm gonna disagree with your financial advice? No, no, no, 149 00:07:41,529 --> 00:07:46,679 KT: I might disagree with your emotional advice, or, but no, 150 00:07:46,730 --> 00:07:50,609 KT: I'm never gonna disagree with your financial advice. It's made 151 00:07:50,609 --> 00:07:52,000 KT: me millions of dollars. 152 00:07:53,119 --> 00:07:56,250 Suze: All right, here you go, KT, if you did disagree, 153 00:07:56,299 --> 00:07:56,489 Suze: you would... 154 00:07:56,600 --> 00:07:58,410 KT: I wouldn't do that noise. 155 00:07:58,970 --> 00:08:00,929 Suze: No, but if you did disagree. 156 00:08:01,380 --> 00:08:03,820 Suze: You would have, you feel like you're powerful enough that 157 00:08:03,820 --> 00:08:05,130 Suze: you would do so, right? 158 00:08:05,809 --> 00:08:08,829 Suze: Yea. Oh, I would, well, we disagree all the time 159 00:08:08,829 --> 00:08:12,040 Suze: off air, so why wouldn't I disagree on air? 160 00:08:12,109 --> 00:08:13,359 Suze: I have absolutely no idea. 161 00:08:13,989 --> 00:08:17,829 KT: Everybody, I, if I disagree with her, she knows. But 162 00:08:17,829 --> 00:08:19,390 KT: I'm not gonna disagree about money... 163 00:08:19,390 --> 00:08:22,549 Suze: Guess what, everybody, there is a saying in our household. 164 00:08:22,630 --> 00:08:23,019 Suze: What is it, KT? 165 00:08:23,260 --> 00:08:24,149 KT: KT is always right. 166 00:08:24,549 --> 00:08:27,589 Suze: Yeah, it just, oh, it irks me. Anyway, go on. 167 00:08:27,750 --> 00:08:30,209 KT: All right, this is from Elle. 168 00:08:30,769 --> 00:08:34,049 KT: Hi Suze and KT, I plan on retiring in two 169 00:08:34,049 --> 00:08:38,369 KT: years at 67 from the federal government. I have a 170 00:08:38,369 --> 00:08:41,809 KT: car that will be paid off within two years and 171 00:08:42,049 --> 00:08:45,669 KT: a mortgage balance of $120,000. 172 00:08:46,150 --> 00:08:54,150 KT: I have a modest TSP under 500,000 and is allocated 50% 173 00:08:54,150 --> 00:08:58,200 KT: G and 50% C. I don't know what that means, Suze, 174 00:08:58,349 --> 00:09:00,789 KT: so you'll have to tell us. Should I maintain 175 00:09:01,030 --> 00:09:07,450 KT: or change that allocation, I may withdraw $20,000 when I retire. 176 00:09:07,809 --> 00:09:08,929 KT: Thank you for all. 177 00:09:09,520 --> 00:09:13,130 Suze: Elle, first of all, you did not say if your 178 00:09:13,130 --> 00:09:17,570 Suze: TSP was a Roth TSP, which makes me believe it's 179 00:09:17,570 --> 00:09:22,010 Suze: a traditional TSP, which means it's pre-tax. 180 00:09:22,489 --> 00:09:25,839 Suze: So for the next two years, do you hear me, 181 00:09:26,169 --> 00:09:29,939 Suze: for the next two years till you are 67, every 182 00:09:29,940 --> 00:09:34,570 Suze: single penny that you put in to the TSP needs 183 00:09:34,570 --> 00:09:38,689 Suze: to be what? It needs to be a Roth TSP. 184 00:09:38,929 --> 00:09:44,809 Suze: That's number one. Number two, you say that you may 185 00:09:44,809 --> 00:09:48,869 Suze: withdraw 20,000 at retirement. Why? 186 00:09:49,539 --> 00:09:52,289 Suze: If you withdraw that the way you currently have it now, 187 00:09:52,299 --> 00:09:55,619 Suze: and even if you open up a Roth TSP it's 188 00:09:55,619 --> 00:09:57,460 Suze: got to be open for at least five years to 189 00:09:57,460 --> 00:10:02,218 Suze: take it out tax-free unless you have a Roth IRA, 190 00:10:02,289 --> 00:10:04,218 Suze: which I don't think you do because you didn't say 191 00:10:04,219 --> 00:10:07,580 Suze: you did, then you could have converted it to a 192 00:10:07,580 --> 00:10:11,900 Suze: Roth IRA at 67, and if you had had that 193 00:10:11,900 --> 00:10:14,500 Suze: open for five years, then you could have taken out 194 00:10:14,500 --> 00:10:18,468 Suze: the $20,000 possibly tax-free, but that's besides the point. 195 00:10:18,929 --> 00:10:22,820 Suze: But you want to withdraw $20,000 at retirement. 196 00:10:23,719 --> 00:10:28,270 Suze: And the question is: Why? Why would you do that? 197 00:10:28,489 --> 00:10:32,489 Suze: It's going to affect so many things. So, I want 198 00:10:32,489 --> 00:10:39,039 Suze: you to number one, immediately get into a Roth TSP. Also, 199 00:10:39,250 --> 00:10:42,729 Suze: if you're not in a very high income tax bracket 200 00:10:42,729 --> 00:10:44,010 Suze: or you can afford it. 201 00:10:44,590 --> 00:10:48,270 Suze: You might want to because you're now allowed to, as 202 00:10:48,270 --> 00:10:53,580 Suze: of January 28 actually, you're allowed to do in plan conversions, 203 00:10:53,789 --> 00:10:56,669 Suze: so you could take some of the money that's in 204 00:10:56,669 --> 00:11:01,460 Suze: your traditional TSP and now transfer it to a Roth 205 00:11:01,460 --> 00:11:06,049 Suze: TSP that wasn't allowed before January 28 of this year 206 00:11:06,229 --> 00:11:07,569 Suze: for the TSPs. 207 00:11:08,179 --> 00:11:11,979 Suze: In terms of your allocation, KT said, so what's a 208 00:11:11,979 --> 00:11:15,500 Suze: G and what's a C? KT, within the TSP, the 209 00:11:15,500 --> 00:11:20,609 Suze: Thrift Savings Plan, there are many different mutual funds or sections. 210 00:11:20,940 --> 00:11:23,409 Suze: The G is like the government one. It's like a 211 00:11:23,409 --> 00:11:26,339 Suze: money market fund. They pay you an interest rate. It 212 00:11:26,340 --> 00:11:30,200 Suze: doesn't fluctuate. It is good. It is solid. It's there. 213 00:11:30,659 --> 00:11:34,140 Suze: The C is like the Standard and Poor's 500 index, 214 00:11:34,219 --> 00:11:36,299 Suze: like a common stock fund. 215 00:11:36,729 --> 00:11:41,089 Suze: So right now, she is divided 50/50. 216 00:11:41,979 --> 00:11:47,229 Suze: The rule of thumb is when you retire you wanna 217 00:11:47,229 --> 00:11:52,349 Suze: make sure that you have at least three years of 218 00:11:52,349 --> 00:11:57,309 Suze: living expenses in your retirement account within a money market 219 00:11:57,309 --> 00:12:02,270 Suze: account or the G fund in your situation. That's because 220 00:12:02,270 --> 00:12:06,868 Suze: if the market starts to go down, you do not 221 00:12:06,869 --> 00:12:09,909 Suze: want to have to take money from a C fund 222 00:12:09,909 --> 00:12:11,289 Suze: or a stock fund 223 00:12:11,710 --> 00:12:15,349 Suze: when the market is down. So. Elle, you're gonna have 224 00:12:15,349 --> 00:12:19,229 Suze: to decide that you may want more if you really 225 00:12:19,229 --> 00:12:22,830 Suze: need money in the G fund than the C fund, 226 00:12:22,890 --> 00:12:23,429 Suze: just so you know. 227 00:12:23,429 --> 00:12:25,150 KT: Right now it's a 50/50... 228 00:12:25,150 --> 00:12:26,369 Suze: 50/50 split. 229 00:12:26,690 --> 00:12:29,189 KT: What would you recommend, 75/25? 230 00:12:29,789 --> 00:12:33,549 Suze: No, I wouldn't. I would either. Well, really what she 231 00:12:33,549 --> 00:12:36,109 Suze: needs to do is figure out what would three years 232 00:12:36,109 --> 00:12:41,390 Suze: of her living expenses really be. That's beyond what her 233 00:12:41,390 --> 00:12:44,750 Suze: pension is gonna be or her Social Security. What is 234 00:12:44,750 --> 00:12:47,419 Suze: that gap between her guaranteed income 235 00:12:47,859 --> 00:12:50,869 Suze: and what she needs for three to five years actually 236 00:12:50,869 --> 00:12:54,989 Suze: of living expenses and whatever that gap is that should 237 00:12:54,989 --> 00:12:58,250 Suze: be in the G fund or if she does an 238 00:12:58,250 --> 00:13:02,989 Suze: IRA rollover, a Roth IRA rollover, then that would stay 239 00:13:02,989 --> 00:13:05,150 Suze: in a money market fund for her wherever it is. 240 00:13:05,229 --> 00:13:05,630 Suze: All right, next, KT. 241 00:13:06,270 --> 00:13:09,830 KT: This is from Cathy. What are some instances when a 242 00:13:09,830 --> 00:13:13,640 KT: spouse would lose a deceased spouse's pension? 243 00:13:14,719 --> 00:13:21,340 Suze: Cathy, the main reason that you would lose your spouse's 244 00:13:21,719 --> 00:13:26,820 Suze: pension when they died is because, number one, they chose 245 00:13:26,820 --> 00:13:32,119 Suze: a pension that was a life only pension, which means 246 00:13:32,119 --> 00:13:36,809 Suze: it's good for his or her life, period. And after 247 00:13:36,809 --> 00:13:41,640 Suze: that there's no more money and normally one chooses that 248 00:13:41,640 --> 00:13:42,630 Suze: because they feel like 249 00:13:43,099 --> 00:13:45,580 Suze: I want more money now. We need more money. You 250 00:13:45,580 --> 00:13:48,738 Suze: won't need as much when I die. So the largest 251 00:13:48,739 --> 00:13:53,479 Suze: pension choice is life only. Then it starts to decrease 252 00:13:53,659 --> 00:13:56,849 Suze: when you want to leave a joint and survivor benefit. 253 00:13:58,059 --> 00:14:01,940 Suze: The biggest decrease is when you get a 100% joint 254 00:14:01,940 --> 00:14:07,079 Suze: and survivor benefit, which means spouse dies, you get 100% 255 00:14:07,080 --> 00:14:08,460 Suze: of what they were getting. 256 00:14:09,179 --> 00:14:13,189 Suze: Many people opt for a 50% joint and survivor benefit. 257 00:14:13,409 --> 00:14:15,968 Suze: I always say that is a serious mistake. If you 258 00:14:15,969 --> 00:14:18,968 Suze: have the option. I don't care how much money you 259 00:14:18,969 --> 00:14:24,010 Suze: have or how much money you need. Always do a 100% 260 00:14:24,010 --> 00:14:28,250 Suze: joint and survivor option unless you know that the spouse 261 00:14:28,250 --> 00:14:29,530 Suze: that you'll be leaving it to 262 00:14:30,090 --> 00:14:34,849 Suze: is seriously ill isn't going to survive you by any means, 263 00:14:34,929 --> 00:14:37,270 Suze: and you know that without a shadow of a doubt, 264 00:14:37,599 --> 00:14:40,359 Suze: and or they have what's called a pop up option, 265 00:14:40,450 --> 00:14:45,090 Suze: but that's a whole other popcast. Next, there are many 266 00:14:45,090 --> 00:14:48,489 Suze: pensions where you know your spouse is going to get 267 00:14:48,489 --> 00:14:53,190 Suze: a pension, but they haven't signed up for the pension yet, 268 00:14:53,690 --> 00:14:58,030 Suze: and they die before they sign up for it. 269 00:14:58,469 --> 00:15:02,150 Suze: There are corporations and places that one can work, that 270 00:15:02,150 --> 00:15:04,830 Suze: if you don't sign up for it and you die 271 00:15:04,830 --> 00:15:05,429 Suze: before that. 272 00:15:06,229 --> 00:15:07,099 Suze: Out of luck. 273 00:15:08,299 --> 00:15:08,309 KT: Really? 274 00:15:08,320 --> 00:15:09,380 Suze: Uh-huh. You gotta know these things. 275 00:15:09,909 --> 00:15:13,309 KT: Oh my, wait a minute, Suze, stop right there. If 276 00:15:13,309 --> 00:15:15,830 KT: you're working for a company and let's say you're, you've 277 00:15:15,830 --> 00:15:17,530 KT: been there 15 years. 278 00:15:18,039 --> 00:15:22,869 KT: And you never signed up or your HR people haven't really nudged you. 279 00:15:22,869 --> 00:15:25,469 Suze: Usually they ask you to sign up at 55 or 280 00:15:25,469 --> 00:15:28,130 Suze: 60 right in there somewhere just depends. 281 00:15:28,190 --> 00:15:28,789 KT: But if you haven't done that... 282 00:15:28,789 --> 00:15:30,500 Suze: If you haven't done that... 283 00:15:30,820 --> 00:15:33,789 KT: Your, your spouse... if you die all of a sudden 284 00:15:33,789 --> 00:15:35,989 KT: you have a heart attack and you die on the job, 285 00:15:36,059 --> 00:15:38,150 KT: let's say your spouse doesn't get a pension, if you didn't sign up? 286 00:15:38,799 --> 00:15:41,349 Suze: That's right. If you didn't sign up, that's why you've 287 00:15:41,349 --> 00:15:41,780 Suze: got to... 288 00:15:41,780 --> 00:15:42,530 KT: Can you dispute it? 289 00:15:42,880 --> 00:15:44,900 Suze: No, not if those are the rules. That's why you 290 00:15:44,900 --> 00:15:48,479 Suze: have to know how does it work? And if you 291 00:15:48,479 --> 00:15:51,520 Suze: can't sign up for a pension yet, that's when you 292 00:15:51,520 --> 00:15:55,400 Suze: have term life insurance to cover yourself in case that 293 00:15:55,400 --> 00:15:58,369 Suze: were to happen. Also, believe it or not. 294 00:15:59,250 --> 00:16:04,570 Suze: There are times when if it's less than a 50% 295 00:16:04,570 --> 00:16:09,010 Suze: joint and survivor option, the spouse has to sign off, 296 00:16:09,289 --> 00:16:11,929 Suze: and a lot of times the spouse doesn't listen and 297 00:16:11,929 --> 00:16:13,309 Suze: they just say, whatever. 298 00:16:14,030 --> 00:16:17,400 Suze: And you should always check what happens in case of 299 00:16:17,400 --> 00:16:21,750 Suze: a divorce, because sometimes that can change. So there's so 300 00:16:21,750 --> 00:16:26,080 Suze: many things that can happen, but the main reason is 301 00:16:26,080 --> 00:16:31,159 Suze: normally they've chosen a life only option which if they 302 00:16:31,159 --> 00:16:34,140 Suze: are married is the absolute biggest mistake 303 00:16:34,979 --> 00:16:37,700 Suze: that they can ever make in their lives unless their 304 00:16:37,700 --> 00:16:40,659 Suze: spouse is seriously ill. All right, KT, next. 305 00:16:40,940 --> 00:16:44,580 KT: So Suze, wait, I have a question. If the spouse 306 00:16:44,580 --> 00:16:48,539 KT: that's working signed off, he or she wants 100%, they 307 00:16:48,539 --> 00:16:52,090 KT: don't leave anything after death to their spouse... 308 00:16:52,140 --> 00:16:53,619 Suze: And the spouse signed off on it, yes... 309 00:16:53,700 --> 00:16:56,729 KT: Can they change their mind like a year later? 310 00:16:56,820 --> 00:16:59,159 Suze: They can't even change their mind a week later once 311 00:16:59,159 --> 00:17:00,599 Suze: they start the pension. 312 00:17:00,859 --> 00:17:02,619 KT: OK. Next question is from Peg. 313 00:17:03,200 --> 00:17:07,159 KT: I am 83. I have been a poor money manager 314 00:17:07,160 --> 00:17:10,229 KT: all my life. I've been able to make some positive change. 315 00:17:10,510 --> 00:17:13,680 Suze: Don't you think that's funny? Poor and money in the 316 00:17:13,680 --> 00:17:14,199 Suze: same breath? 317 00:17:14,520 --> 00:17:16,079 KT: I've been a poor money manager. 318 00:17:16,189 --> 00:17:18,359 Suze: But still, right? Poor money anyway. Go on. 319 00:17:19,069 --> 00:17:21,560 KT: So wait a minute, but here's what I love about the question. 320 00:17:22,119 --> 00:17:25,198 KT: This is where I, I wonder if it's ever too late, Suze. 321 00:17:25,280 --> 00:17:26,639 KT: I'm 83. 322 00:17:27,479 --> 00:17:30,219 KT: I've been a poor money manager all my life. I've 323 00:17:30,219 --> 00:17:33,839 KT: been able to make some positive changes in the past 324 00:17:33,839 --> 00:17:38,589 KT: few years. Ready? I need help getting the basics in 325 00:17:38,589 --> 00:17:42,099 KT: budgeting and learning not to spend. Can you help me? 326 00:17:43,449 --> 00:17:45,170 Suze: Girlfriend, you listen to me... 327 00:17:45,250 --> 00:17:47,199 KT: Wait. 83, is it ever too late? 328 00:17:47,930 --> 00:17:52,310 Suze: Listen to me, Peg, right? If you are now able 329 00:17:52,739 --> 00:17:58,649 Suze: to make good financial decisions, you don't really need help 330 00:17:58,650 --> 00:18:01,750 Suze: getting the basics in budgeting and learning not to spend. 331 00:18:02,319 --> 00:18:05,619 Suze: Right, but she says, Can I help? Here are three rules. 332 00:18:05,880 --> 00:18:09,639 Suze: You follow these three rules, and I promise you, you 333 00:18:09,640 --> 00:18:14,040 Suze: will know exactly how to budget. All right. I don't 334 00:18:14,040 --> 00:18:16,319 Suze: like the word budget. Budgets, KT, are like diets. 335 00:18:16,400 --> 00:18:17,280 KT: Wait, go tell her... 336 00:18:17,349 --> 00:18:18,010 Suze: But wait, do you know... 337 00:18:18,040 --> 00:18:19,359 KT: ...here's the three rules. 338 00:18:19,439 --> 00:18:22,359 Suze: Oh, all right. Anyway, I wanted to tell you why 339 00:18:22,359 --> 00:18:25,000 Suze: I don't like budgets, but that's besides the point. 340 00:18:25,109 --> 00:18:25,790 KT: No. The three rules. Go for it. 341 00:18:26,040 --> 00:18:29,280 Suze: Oh, she's keeping me on point today. All right. 342 00:18:29,579 --> 00:18:34,489 Suze: Is this: you are to live below your means but 343 00:18:34,489 --> 00:18:38,899 Suze: within your needs. What is a need? A need is 344 00:18:38,900 --> 00:18:43,209 Suze: food that you get at a grocery store. It's gasoline 345 00:18:43,209 --> 00:18:45,939 Suze: that you put in your car because either you, you 346 00:18:45,939 --> 00:18:48,659 Suze: really have to go somewhere. You don't go out joyriding, 347 00:18:48,780 --> 00:18:50,920 Suze: although at 83 she probably doesn't do that. 348 00:18:50,969 --> 00:18:51,660 KT: What is the second rule? 349 00:18:52,180 --> 00:18:55,319 Suze: The second rule is how do you do that? 350 00:18:56,040 --> 00:18:59,699 Suze: From this day forward, when you go to spend any 351 00:18:59,939 --> 00:19:04,640 Suze: money at all, Peg, ask yourself the question: Is this 352 00:19:04,640 --> 00:19:07,640 Suze: a need or is this a want? If it is 353 00:19:07,640 --> 00:19:12,579 Suze: a need, buy it. If it's a want, walk away. 354 00:19:12,910 --> 00:19:15,760 Suze: And last but not least, just get as much pleasure 355 00:19:15,760 --> 00:19:20,760 Suze: out of saving as you do spending. It's just that simple. 356 00:19:20,760 --> 00:19:24,159 KT: Now wait, this isn't just for Peg. This, these three 357 00:19:24,160 --> 00:19:28,800 KT: rules apply to everyone, no matter what age you are. 358 00:19:28,959 --> 00:19:30,599 Suze: But don't you wanna ask me why I don't like budgets? 359 00:19:31,439 --> 00:19:31,780 KT: No. 360 00:19:32,040 --> 00:19:32,569 Suze: Why not? 361 00:19:32,760 --> 00:19:35,159 KT: Because you, you think they're like a diet, they don't work. 362 00:19:35,239 --> 00:19:38,349 KT: People start it. It's a, it's a silly thing. A 363 00:19:38,349 --> 00:19:41,150 KT: budget isn't something people follow. 364 00:19:41,569 --> 00:19:41,889 Suze: All right, go on. 365 00:19:42,739 --> 00:19:45,329 KT: The three rules though they will follow. 366 00:19:45,329 --> 00:19:47,369 Suze: Ding ding ding ding ding. 367 00:19:48,569 --> 00:19:51,329 KT: All right, this is from, this is from Carla. She said, 368 00:19:51,609 --> 00:19:54,930 KT: I was blessed to be gifted your books in my 369 00:19:54,930 --> 00:19:56,150 KT: early 20s. 370 00:19:56,750 --> 00:20:00,238 KT: And took your advice to invest in index funds with 371 00:20:00,239 --> 00:20:05,479 KT: a low expense ratio in my first 401k. Now in 372 00:20:05,479 --> 00:20:10,709 KT: my forties I have 1 million plus in investments. Thank you. 373 00:20:10,880 --> 00:20:12,479 Suze: Hopefully in Roth's. Go on. 374 00:20:13,040 --> 00:20:16,079 KT: All right, everybody that we know that's under 30, listen 375 00:20:16,079 --> 00:20:20,329 KT: to that, right? She took Suze's advice. My parents have 376 00:20:20,329 --> 00:20:23,359 KT: named me executor of their will. They are in their 377 00:20:23,359 --> 00:20:25,800 KT: early eighties. They have a reverse 378 00:20:25,939 --> 00:20:30,599 KT: mortgage, a car loan on a 2025 sedan, and credit 379 00:20:30,599 --> 00:20:34,680 KT: card debt. I am told that when they pass to 380 00:20:34,680 --> 00:20:38,109 KT: turn the house and car over to the bank, there's 381 00:20:38,109 --> 00:20:41,459 KT: nothing left for my sister and I. Is it really 382 00:20:41,459 --> 00:20:45,920 KT: this simple? My parents have declared bankruptcy in the past, 383 00:20:46,160 --> 00:20:48,959 KT: maxed out credit cards, and buy a new car every 384 00:20:48,959 --> 00:20:53,359 KT: two to three years. They are disclosing little information, which 385 00:20:53,359 --> 00:20:54,859 KT: is why I read 386 00:20:55,719 --> 00:21:00,369 KT: "The Ultimate Retirement Guide for 50+" to learn more. I 387 00:21:00,369 --> 00:21:03,209 KT: don't want to purchase their home from the bank. I'm 388 00:21:03,209 --> 00:21:07,229 KT: glad they're able to supplement their income through the reverse mortgage. 389 00:21:07,449 --> 00:21:10,349 KT: I don't want to be on the hook for their debts. 390 00:21:10,689 --> 00:21:14,569 KT: Please feel free to edit my submission. I did not 391 00:21:14,569 --> 00:21:19,510 KT: edit this, Carla, because you need to hear Suze's advice. 392 00:21:19,810 --> 00:21:20,910 Suze: And so does everybody 393 00:21:21,354 --> 00:21:26,675 Suze: else who happens to have parents that are as irresponsible 394 00:21:26,675 --> 00:21:30,635 Suze: as Carla's when it comes to money and is willing 395 00:21:30,635 --> 00:21:33,395 Suze: to say here kids you deal with the fact that 396 00:21:33,395 --> 00:21:37,155 Suze: we have been financial screw ups OK just that simple 397 00:21:37,354 --> 00:21:41,114 Suze: and trust me there are many out there. Carla sweetheart 398 00:21:41,114 --> 00:21:42,515 Suze: listen to me number one. 399 00:21:43,040 --> 00:21:45,339 Suze: As long as you don't put your name on anything, 400 00:21:45,530 --> 00:21:48,510 Suze: as long as you don't say you'll take responsibility for it, 401 00:21:48,719 --> 00:21:52,000 Suze: you are not responsible for any credit cards that they 402 00:21:52,000 --> 00:21:55,750 Suze: have in their names. When they both die. 403 00:21:57,180 --> 00:22:02,520 Suze: Then those debts will absolutely go away. However, when one 404 00:22:02,520 --> 00:22:06,439 Suze: of them dies, the other is still going to be responsible, 405 00:22:06,479 --> 00:22:09,560 Suze: and that's what you have to think about, cause there 406 00:22:09,560 --> 00:22:12,599 Suze: is where we might have a problem. They're both in 407 00:22:12,599 --> 00:22:15,599 Suze: their 80s. Maybe one of them has a pension like 408 00:22:15,599 --> 00:22:19,780 Suze: your father. He dies before your mother. 409 00:22:20,510 --> 00:22:24,270 Suze: Now, we've lost one Social Security check, maybe we've lost 410 00:22:24,270 --> 00:22:26,949 Suze: a pension check, like I just talked about a few 411 00:22:26,949 --> 00:22:29,010 Suze: minutes ago, and now your mom 412 00:22:29,800 --> 00:22:34,448 Suze: or the surviving parent has less money available than they 413 00:22:34,449 --> 00:22:37,849 Suze: did with even more and more credit card debt and 414 00:22:37,849 --> 00:22:40,689 Suze: guess what now they've maxed out on their credit cards 415 00:22:40,689 --> 00:22:43,930 Suze: they can't get any more credit and now we have 416 00:22:43,930 --> 00:22:48,810 Suze: problems so you better start to find out right now 417 00:22:48,810 --> 00:22:52,369 Suze: what's really going on with them because it's not just 418 00:22:52,369 --> 00:22:54,140 Suze: what happens when they are dead. 419 00:22:54,510 --> 00:22:58,270 Suze: It's what happens when one of them dies, and you 420 00:22:58,270 --> 00:23:00,910 Suze: might want them to listen to this if you don't 421 00:23:00,910 --> 00:23:04,389 Suze: have the nerve to ask them for this on your own. 422 00:23:04,510 --> 00:23:08,948 Suze: That's number one. Number two, they have a reverse mortgage 423 00:23:08,949 --> 00:23:10,109 Suze: on their home. 424 00:23:11,140 --> 00:23:14,780 Suze: What that means is that the bank owns the house 425 00:23:14,979 --> 00:23:18,380 Suze: and the bank is paying them monthly every month to 426 00:23:18,380 --> 00:23:21,699 Suze: live in that house. Now I don't know how long 427 00:23:21,699 --> 00:23:25,609 Suze: that's been going on. It is possible that the bank 428 00:23:25,609 --> 00:23:29,719 Suze: has already paid out more than the house is worth, 429 00:23:30,380 --> 00:23:32,180 Suze: or maybe they haven't. 430 00:23:32,760 --> 00:23:37,739 Suze: But on your parents' death, what will happen is depending 431 00:23:38,000 --> 00:23:41,468 Suze: on how much has been taken out if they've taken 432 00:23:41,469 --> 00:23:45,040 Suze: out already more than the house is currently worth, the 433 00:23:45,040 --> 00:23:46,910 Suze: bank is just gonna take the house and you don't 434 00:23:46,910 --> 00:23:49,879 Suze: have to worry about it. If they haven't taken out 435 00:23:49,880 --> 00:23:53,680 Suze: as much as the house is worth, then you will 436 00:23:53,680 --> 00:23:56,738 Suze: sell the house, pay the bank back. 437 00:23:57,160 --> 00:24:00,040 Suze: And you get to keep the rest. I have a 438 00:24:00,040 --> 00:24:04,089 Suze: feeling the bank is going to get the house. As 439 00:24:04,089 --> 00:24:07,839 Suze: far as their car goes, the car, just call the 440 00:24:07,839 --> 00:24:11,780 Suze: car company up and say, hey, repossess it. It's theirs, whatever. 441 00:24:11,920 --> 00:24:14,300 Suze: Any car company that is stupid enough 442 00:24:14,680 --> 00:24:19,640 Suze: to really lend people money who have claimed bankruptcy, who 443 00:24:19,640 --> 00:24:23,160 Suze: have probably horrible FICO scores, all the stuff going on 444 00:24:23,160 --> 00:24:28,150 Suze: with your parents, fine, let them repossess the car, no 445 00:24:28,150 --> 00:24:33,099 Suze: big deal. I'm sure that's exactly what will happen. So 446 00:24:33,239 --> 00:24:37,699 Suze: the main thing, however, that I'm worried about isn't so 447 00:24:37,699 --> 00:24:40,020 Suze: much what happens when they've died. 448 00:24:40,719 --> 00:24:44,089 Suze: It's what happens as they get older and older and 449 00:24:44,089 --> 00:24:48,159 Suze: now all of a sudden do they need nursing care? 450 00:24:48,239 --> 00:24:50,599 Suze: What are they gonna need? What if they can't take 451 00:24:50,599 --> 00:24:54,478 Suze: care of themselves? Who's gonna be responsible for that? And 452 00:24:54,479 --> 00:24:58,780 Suze: is that gonna fall on you? So Carla, more than anything, 453 00:24:59,160 --> 00:25:01,958 Suze: don't worry about after they've died. That's not gonna be 454 00:25:01,959 --> 00:25:02,729 Suze: a problem. 455 00:25:03,390 --> 00:25:06,319 Suze: The problem becomes, what are you gonna do as they 456 00:25:06,319 --> 00:25:09,800 Suze: get older and older and older. They keep up these 457 00:25:09,800 --> 00:25:14,949 Suze: bad financial habits, they get more and more into financial trouble. 458 00:25:15,319 --> 00:25:17,079 Suze: Now does somebody... what happens? 459 00:25:17,560 --> 00:25:19,639 Suze: You need to sit down with them. You need to 460 00:25:19,640 --> 00:25:22,479 Suze: be an adult, and you need to say, I don't 461 00:25:22,479 --> 00:25:25,260 Suze: care that you don't want to talk to me about this. 462 00:25:25,449 --> 00:25:28,599 Suze: I need to know these things, and I want to 463 00:25:28,599 --> 00:25:32,760 Suze: know them now, or else, as you get older, if 464 00:25:32,760 --> 00:25:36,399 Suze: you need my help before you've died, I'm not going 465 00:25:36,400 --> 00:25:38,319 Suze: to be able to be there for you. 466 00:25:39,069 --> 00:25:44,069 KT: Now wait, uh, on that same note, Susie, listen to this. 467 00:25:44,430 --> 00:25:46,579 KT: There's always some light at the end of the tunnel. 468 00:25:47,030 --> 00:25:50,949 KT: Her parents, Carla's parents were 83 and a mess, but 469 00:25:50,949 --> 00:25:54,510 KT: listen to this. This is from Sue, who's 80 years old. 470 00:25:54,869 --> 00:25:57,709 KT: She said, Hi, Suze, I'm 80 years old and I 471 00:25:57,709 --> 00:26:01,349 KT: live in New York State. My daughter lives in Pennsylvania, 472 00:26:02,140 --> 00:26:08,280 KT: which I recently read has an inheritance tax of 4.5% 473 00:26:08,420 --> 00:26:13,379 KT: for children of the deceased. I have about 3 million 474 00:26:13,380 --> 00:26:17,660 KT: in a 403B which names my son a New York 475 00:26:17,660 --> 00:26:21,719 KT: state resident and my daughter as the beneficiaries. 476 00:26:22,209 --> 00:26:25,930 KT: If I am reading this correctly, is my daughter gonna 477 00:26:25,930 --> 00:26:30,770 KT: have to give 4.5% of my hard earned money to 478 00:26:30,770 --> 00:26:35,290 KT: the state of Pennsylvania? If so, how would that work 479 00:26:35,290 --> 00:26:39,569 KT: if she withdraws the money over 10 years, since PA 480 00:26:39,569 --> 00:26:44,150 KT: also says that inheritance tax payments are due on the 481 00:26:44,150 --> 00:26:47,280 KT: death and are delinquent after nine months. 482 00:26:48,430 --> 00:26:51,750 KT: Sue lives in upstate. Well, she lives in New York State. 483 00:26:51,869 --> 00:26:56,229 Suze: No problem, Sue. Listen to me. First of all, normally 484 00:26:56,229 --> 00:27:01,349 Suze: this 4.5%, which is true, applies to things like real estate, 485 00:27:01,430 --> 00:27:06,530 Suze: things like that. It never usually applies to a retirement account, 486 00:27:07,020 --> 00:27:11,650 Suze: especially because you happen to be in New York. All right, now, 487 00:27:11,670 --> 00:27:14,859 Suze: if you were a Pennsylvania resident, everything was there, da 488 00:27:14,859 --> 00:27:15,510 Suze: da da da. 489 00:27:15,880 --> 00:27:22,899 Suze: But even then, normally IRAs are not included in this 4.5% 490 00:27:22,900 --> 00:27:24,530 Suze: estate tax. All right, next. 491 00:27:24,719 --> 00:27:27,839 KT: But the reason I wanted you to read that is 492 00:27:27,839 --> 00:27:32,180 KT: here is an 80 year old that's extremely responsible. 493 00:27:32,540 --> 00:27:34,339 Suze: And how does that help Carla? 494 00:27:34,420 --> 00:27:38,619 KT: Well, the Carla, I'm just saying to everyone listening that 495 00:27:38,619 --> 00:27:41,698 KT: because you're in your 80s, it doesn't mean that you, 496 00:27:41,819 --> 00:27:45,780 KT: you know, are bad with money like Carla's parents. This 497 00:27:45,780 --> 00:27:47,260 KT: woman Sue is great. 498 00:27:50,160 --> 00:27:50,699 KT: You don't like that? 499 00:27:51,680 --> 00:27:55,040 Suze: Well, the reason I'm looking at you like that is KT. 500 00:27:55,800 --> 00:27:58,989 Suze: Most of the 80 year olds that are writing in, 501 00:27:59,239 --> 00:28:01,400 Suze: where they're the ones writing in. 502 00:28:01,859 --> 00:28:05,569 Suze: They have money. They've been listening to me for 40 years. 503 00:28:05,829 --> 00:28:09,660 Suze: They are, of course, are responsible. And so the real 504 00:28:09,660 --> 00:28:13,260 Suze: lesson there is if you start early, you'll end up 505 00:28:13,260 --> 00:28:16,050 Suze: with millions like most of our 80 and 70 year 506 00:28:16,050 --> 00:28:22,500 Suze: olds and 90 year olds have multi-millions. However, Carla is 507 00:28:22,500 --> 00:28:26,060 Suze: gonna end up with millions when she's in her 80s. 508 00:28:26,589 --> 00:28:29,829 Suze: But parents who don't listen to the Women and Money podcast, 509 00:28:29,910 --> 00:28:33,750 Suze: they never have. They never listened to me on CNBC 510 00:28:33,750 --> 00:28:34,829 Suze: or any of that. 511 00:28:35,699 --> 00:28:39,020 Suze: What are you gonna do? What this really shows you, everybody, 512 00:28:39,260 --> 00:28:40,880 Suze: is if you start early. 513 00:28:41,719 --> 00:28:43,599 Suze: You'll be just fine. All right, go on. 514 00:28:43,880 --> 00:28:46,800 KT: OK, so this last question is from Richard. I was 515 00:28:46,800 --> 00:28:52,319 KT: saving this for you, Suze. Ready, everyone? Richard, I'm right 516 00:28:52,319 --> 00:28:56,599 KT: there with you. I love this question. Suze, what is 517 00:28:56,599 --> 00:28:59,859 KT: a backdoor Roth and how do I do it? 518 00:29:01,119 --> 00:29:02,880 Suze: Do you want to answer that? Do you want that to be your pop quizzy? 519 00:29:03,510 --> 00:29:05,229 KT: I'll give it a shot. Let me give it a shot. 520 00:29:05,510 --> 00:29:06,640 Suze: Did you plant that? 521 00:29:07,000 --> 00:29:09,040 KT: No, I didn't plant it, but I'll give it a shot. 522 00:29:09,839 --> 00:29:13,599 KT: I don't, I don't maybe have the exact numbers right, but... 523 00:29:14,599 --> 00:29:19,849 KT: The Roth has requirements and if one doesn't meet those requirements, 524 00:29:20,119 --> 00:29:25,359 KT: a backdoor Roth was created for those that have a 525 00:29:25,359 --> 00:29:27,060 KT: traditional IRA. 526 00:29:28,030 --> 00:29:32,280 KT: And they have they're they're not able to open a Roth. 527 00:29:32,640 --> 00:29:37,479 KT: What they can do is convert the traditional IRA. 528 00:29:37,880 --> 00:29:39,920 Suze: No, that's not what a back door is. 529 00:29:40,319 --> 00:29:42,000 KT: That's why the back door is... 530 00:29:42,000 --> 00:29:44,069 Suze: Oh, that was such a good try. 531 00:29:44,069 --> 00:29:47,359 KT: Why... then why that's one of the reasons why it 532 00:29:47,359 --> 00:29:50,800 KT: exists so that you could actually 533 00:29:51,670 --> 00:29:55,030 KT: put money through the back door into a Roth. 534 00:29:55,109 --> 00:29:57,199 Suze: All right, but let me explain it very clearly. 535 00:29:57,290 --> 00:29:59,010 KT: All right, explain it better, please. 536 00:29:59,430 --> 00:30:00,189 Suze: That wouldn't be hard. 537 00:30:01,260 --> 00:30:02,719 KT: It's not nice. (KT makes the wrong answer noise) 538 00:30:05,979 --> 00:30:10,060 Suze: All right. Once you make too much money... 539 00:30:10,160 --> 00:30:11,079 KT: That's what I said. 540 00:30:11,420 --> 00:30:12,849 Suze: You listen to me closely... 541 00:30:13,180 --> 00:30:15,180 KT: But that's what I said. Everyone, OK, go ahead. 542 00:30:15,810 --> 00:30:17,270 Suze: They know what you said. 543 00:30:17,569 --> 00:30:18,689 KT: All right, go ahead. Finish. 544 00:30:19,109 --> 00:30:22,520 Suze: All right, she so hates being wrong. She hates... 545 00:30:22,619 --> 00:30:25,290 KT: No, no, no, you're gonna describe what I'm, what I 546 00:30:25,290 --> 00:30:26,670 KT: think I was correct... 547 00:30:26,670 --> 00:30:28,280 Suze: KT, can you let me do this? 548 00:30:28,650 --> 00:30:31,630 KT: All right, go ahead. Tell everybody what is a backdoor Roth. 549 00:30:32,670 --> 00:30:39,630 Suze: Obviously, there are maximum modified adjusted gross income limits that 550 00:30:39,630 --> 00:30:43,469 Suze: you have to be under to do what's called a 551 00:30:43,469 --> 00:30:49,709 Suze: contributory Roth, and a contributory Roth is where you are 552 00:30:49,709 --> 00:30:54,109 Suze: able to put in up to $7,500 if you are 553 00:30:54,109 --> 00:30:59,020 Suze: under 50 this year, $8,600 if you are 50 or older, 554 00:30:59,229 --> 00:31:00,619 Suze: and you can do that every year. 555 00:31:01,900 --> 00:31:07,979 Suze: However, you can also do what's called a conversion. Which means 556 00:31:07,979 --> 00:31:11,020 Suze: if you have a traditional IRA right now, 557 00:31:11,829 --> 00:31:15,829 Suze: an IRA that obviously you've never paid taxes on, you 558 00:31:15,829 --> 00:31:19,890 Suze: can convert that money regardless of your income, 559 00:31:20,930 --> 00:31:25,229 Suze: into a Roth IRA. You just have to do what? 560 00:31:25,489 --> 00:31:29,229 Suze: You have to pay taxes on the amount that you converted. 561 00:31:29,810 --> 00:31:34,250 Suze: But then a backdoor Roth is very, very different. 562 00:31:35,270 --> 00:31:40,030 Suze: A backdoor Roth is where you do not have a 563 00:31:40,030 --> 00:31:44,869 Suze: traditional IRA already, or a traditional SEP IRA or a 564 00:31:44,869 --> 00:31:49,989 Suze: simple IRA because if you do, you cannot do a 565 00:31:49,989 --> 00:31:53,949 Suze: backdoor Roth, because if you do a backdoor Roth, you 566 00:31:53,949 --> 00:31:56,709 Suze: are going to be subjected to what's known as the 567 00:31:56,709 --> 00:31:59,670 Suze: pro rata rule, which means you're gonna have to pay 568 00:31:59,670 --> 00:32:02,050 Suze: taxes on that money essentially twice. 569 00:32:02,510 --> 00:32:05,630 Suze: So you just don't do it. If you do not 570 00:32:05,630 --> 00:32:11,650 Suze: have a traditional retirement account outside of work of any kind, 571 00:32:12,290 --> 00:32:17,300 Suze: what you do is you open up a IRA but 572 00:32:17,300 --> 00:32:22,989 Suze: you make it non-deductible and you fund it with either 573 00:32:22,989 --> 00:32:27,170 Suze: the 7,500 this year or the 8,600 if you are 574 00:32:27,300 --> 00:32:28,770 Suze: 50 or older. 575 00:32:29,300 --> 00:32:34,569 Suze: And you then immediately convert it to a Roth IRA. 576 00:32:35,130 --> 00:32:39,530 Suze: So now you have gotten money into the Roth IRA 577 00:32:39,530 --> 00:32:43,890 Suze: through the back door, as if it's like a contributory Roth. 578 00:32:44,339 --> 00:32:49,699 Suze: But you cannot contribute more than 7,500 or 8,600 right 579 00:32:49,699 --> 00:32:54,979 Suze: now to a traditional IRA that you make non-deductible. So 580 00:32:54,979 --> 00:32:58,680 Suze: do you understand the difference, KT? It's not just converting 581 00:32:58,939 --> 00:33:00,619 Suze: money you have in a traditional. 582 00:33:00,699 --> 00:33:04,765 KT: I missed out on that part. You're right. The deductible and non-deductible. 583 00:33:05,744 --> 00:33:06,574 Suze: You got that? 584 00:33:06,824 --> 00:33:07,395 KT: I think so. 585 00:33:07,885 --> 00:33:07,905 Suze: All right. 586 00:33:07,944 --> 00:33:09,064 KT: I have to think about it. 587 00:33:09,145 --> 00:33:14,185 Suze: All right, but that's going through the back door. The 588 00:33:14,185 --> 00:33:17,905 Suze: key is, however, you have to make sure that you 589 00:33:17,905 --> 00:33:19,224 Suze: do convert it. 590 00:33:20,140 --> 00:33:22,989 Suze: And the reason is you want it in the Roth 591 00:33:22,989 --> 00:33:27,988 Suze: IRA because if it stays in the non-deductible IRA and 592 00:33:27,989 --> 00:33:31,469 Suze: it starts to grow, if it makes money and then 593 00:33:31,469 --> 00:33:34,630 Suze: you convert it, the amount of money that it's grown 594 00:33:34,630 --> 00:33:37,750 Suze: will be taxed to you, so there you go, but 595 00:33:37,750 --> 00:33:39,229 Suze: you have to be careful with it. 596 00:33:40,239 --> 00:33:41,760 KT: That's the part I missed. 597 00:33:41,959 --> 00:33:45,119 Suze: Yeah, you thought you were so smart, didn't you? 598 00:33:45,119 --> 00:33:47,880 KT: I didn't think I was smart. I told everyone I'm studying 599 00:33:47,880 --> 00:33:50,800 KT: the Roth, so I really know it, and I thought 600 00:33:50,800 --> 00:33:51,780 KT: that I kind of got the backdoor. 601 00:33:52,660 --> 00:33:55,859 Suze: We talked about this. I just wanna say this to you. 602 00:33:56,160 --> 00:33:57,640 Suze: I'm proud that you tried. 603 00:33:59,869 --> 00:34:04,619 Suze: No, I'm not kidding, KT. If you just try, eventually 604 00:34:04,619 --> 00:34:07,510 Suze: you will get it versus I don't know the answer. 605 00:34:07,630 --> 00:34:09,669 Suze: I don't know. It's a back door, side door, inside. 606 00:34:10,030 --> 00:34:13,029 KT: No, no, no, I wanna know the answer to everything 607 00:34:13,030 --> 00:34:13,790 KT: about a Roth. 608 00:34:14,070 --> 00:34:15,549 Suze: Tell me why you wanna know. 609 00:34:15,550 --> 00:34:19,540 KT: Because I should after all these years. I should, and 610 00:34:19,540 --> 00:34:21,830 KT: it's important that I know the difference. 611 00:34:21,979 --> 00:34:25,370 Suze: All right, there we go, everybody. And in the same way, 612 00:34:25,379 --> 00:34:27,189 Suze: KT says she should. 613 00:34:27,668 --> 00:34:32,529 Suze: So should you. So until Sunday, there's only one thing 614 00:34:32,529 --> 00:34:35,229 Suze: that we want you to remember. Number one, we want 615 00:34:35,229 --> 00:34:41,509 Suze: you to go to my YouTube channel, right? Youtube.com/ Suze Orman. 616 00:34:41,829 --> 00:34:45,908 Suze: Please subscribe because again, I am so trying to convince 617 00:34:45,908 --> 00:34:49,648 Suze: KT to do videos of these podcasts, but 618 00:34:50,059 --> 00:34:54,018 Suze: she's not quite into that yet. One day, maybe so 619 00:34:54,018 --> 00:34:56,819 Suze: until Sunday. There's only one thing that we want you 620 00:34:56,819 --> 00:34:58,559 Suze: to remember. What is that, KT? 621 00:34:58,698 --> 00:35:03,739 KT: People first, then money, then things, and maybe, maybe on 622 00:35:03,739 --> 00:35:08,264 KT: Susie's birthday we will come live on video. 623 00:35:08,465 --> 00:35:13,764 Suze: I doubt it highly, but especially given last Sunday's podcast, 624 00:35:14,225 --> 00:35:17,574 Suze: you now know why I say to all of you, 625 00:35:17,945 --> 00:35:21,685 Suze: now you stay safe. Bye-bye.