1 00:00:06,889 --> 00:00:10,398 Robert: August 31, 2025. Welcome to the Women and Money podcast, 2 00:00:10,460 --> 00:00:13,529 Robert: as well as everyone smart enough to listen. Robert, the 3 00:00:13,529 --> 00:00:16,690 Robert: producer here, we hope you're enjoying the long Labor Day 4 00:00:16,690 --> 00:00:19,920 Robert: weekend and taking a break from work. In fact, today, 5 00:00:20,170 --> 00:00:22,809 Robert: Suze is taking a break from work as well, but 6 00:00:22,809 --> 00:00:24,849 Robert: that doesn't mean you don't get a podcast. 7 00:00:25,940 --> 00:00:28,059 Robert: We're gonna play for you today the main part of 8 00:00:28,059 --> 00:00:31,729 Robert: an episode that we originally dropped in April of last year. 9 00:00:32,400 --> 00:00:36,279 Robert: And when we think about the theme of this year, right? 10 00:00:36,400 --> 00:00:40,360 Robert: Make your money, make more money, this episode really ties 11 00:00:40,360 --> 00:00:41,318 Robert: into that theme. 12 00:00:42,000 --> 00:00:44,330 Robert: And based on some of the emails and questions that 13 00:00:44,330 --> 00:00:47,770 Robert: have come in from you, it is absolutely time to 14 00:00:47,770 --> 00:00:51,610 Robert: bring this particular subject back to the top of the feed. 15 00:00:52,840 --> 00:00:56,040 Robert: So enjoy, and Suze and KT will be with you 16 00:00:56,040 --> 00:00:56,880 Robert: this Thursday. 17 00:00:57,779 --> 00:01:02,369 Suze: I have told you over and over again the only 18 00:01:02,369 --> 00:01:05,319 Suze: way to be investing in the stock market. 19 00:01:06,160 --> 00:01:12,230 Suze: Is through dollar cost averaging where every month or every 20 00:01:12,230 --> 00:01:15,989 Suze: three months or every six months if there is something 21 00:01:15,989 --> 00:01:19,949 Suze: that you own and it goes down, you buy a 22 00:01:19,949 --> 00:01:22,800 Suze: little more. If it continues to go down, you buy 23 00:01:22,800 --> 00:01:26,669 Suze: a little more. So here's a little thing that every 24 00:01:26,669 --> 00:01:28,150 Suze: one of you needs to do. 25 00:01:28,949 --> 00:01:31,860 Suze: I want you to look at every single stock that 26 00:01:31,860 --> 00:01:36,220 Suze: you have, every single ETF that you have right here 27 00:01:36,220 --> 00:01:40,019 Suze: and right now, because the truth of the matter is 28 00:01:40,019 --> 00:01:41,940 Suze: you don't know what the stock market's going to do 29 00:01:41,940 --> 00:01:45,098 Suze: next week or five weeks from now or three years 30 00:01:45,099 --> 00:01:47,989 Suze: from now, but right here and right now you know 31 00:01:47,989 --> 00:01:51,180 Suze: exactly what you have. So let's say you have a 32 00:01:51,180 --> 00:01:54,660 Suze: stock and it's worth $20,000 today. 33 00:01:56,059 --> 00:01:59,050 Suze: I want you to ask yourself the question. If you 34 00:01:59,050 --> 00:02:04,330 Suze: did not own that stock today and you had $20,000 35 00:02:04,330 --> 00:02:09,460 Suze: in cash, would you buy that stock today? 36 00:02:10,229 --> 00:02:14,508 Suze: If the answer to that is yes, then you keep 37 00:02:14,508 --> 00:02:15,779 Suze: what you have. 38 00:02:16,720 --> 00:02:20,720 Suze: If the answer to that is no, I would not. 39 00:02:21,460 --> 00:02:24,008 Suze: Then you better think about selling it seriously. 40 00:02:25,050 --> 00:02:27,839 Suze: And if the answer is I don't know what I 41 00:02:27,839 --> 00:02:32,359 Suze: would do and just sell half, obviously you have to 42 00:02:32,360 --> 00:02:36,279 Suze: remember that if you have a stock that is outside 43 00:02:36,279 --> 00:02:40,149 Suze: of a retirement account that you have not held right 44 00:02:40,149 --> 00:02:44,509 Suze: this down, that you have not held for over one year. 45 00:02:45,449 --> 00:02:47,948 Suze: If you sell it and you have a gain in it, 46 00:02:48,089 --> 00:02:52,600 Suze: you are going to pay ordinary income taxes on that gain. 47 00:02:53,089 --> 00:02:56,050 Suze: Maybe you're going to lose 20% to taxes, so maybe 48 00:02:56,050 --> 00:02:57,609 Suze: you just keep the stock. 49 00:02:58,520 --> 00:03:01,079 Suze: Cause if it goes down 20%, it would be the 50 00:03:01,080 --> 00:03:03,500 Suze: same as if you sold it and had to pay 51 00:03:03,500 --> 00:03:08,008 Suze: ordinary income tax on it. You have to think about that. 52 00:03:08,399 --> 00:03:12,269 Suze: Maybe you have a stock that you have a loss in. 53 00:03:13,038 --> 00:03:15,740 Suze: Again outside of a retirement account. 54 00:03:16,899 --> 00:03:19,750 Suze: And you won't buy it again. All right, sell it 55 00:03:20,160 --> 00:03:25,770 Suze: and take the loss off your taxes, just that simple. 56 00:03:26,320 --> 00:03:28,080 Suze: Maybe you have a stock then that you have a 57 00:03:28,080 --> 00:03:32,479 Suze: gain in that you wouldn't buy again. All right, sell 58 00:03:32,479 --> 00:03:36,039 Suze: that possibly and offset your loss with your gain, but 59 00:03:36,039 --> 00:03:39,199 Suze: you have to look at what you have and not 60 00:03:39,199 --> 00:03:42,880 Suze: just sit there and not know what to do. If 61 00:03:42,880 --> 00:03:45,750 Suze: it were up to me telling you all what to do, 62 00:03:46,339 --> 00:03:49,949 Suze: I would say if you own good quality stocks, ETFs, 63 00:03:49,960 --> 00:03:53,279 Suze: mutual funds, if you have 10, 20, or 30 years 64 00:03:53,279 --> 00:03:55,089 Suze: or longer till you need the money. 65 00:03:56,100 --> 00:04:00,410 Suze: Can you just sit tight and as the markets may 66 00:04:00,410 --> 00:04:01,410 Suze: go down. 67 00:04:02,369 --> 00:04:03,979 Suze: You might want to buy more. 68 00:04:04,899 --> 00:04:07,949 Suze: You could sell it here if you wanted to, but 69 00:04:07,949 --> 00:04:11,029 Suze: I'm here to tell you, chances are you're not going 70 00:04:11,029 --> 00:04:15,110 Suze: to get back in, and it goes up above where 71 00:04:15,110 --> 00:04:17,910 Suze: you sold it. You are not going to be a 72 00:04:17,910 --> 00:04:21,109 Suze: happy camper. Now I can tell you that because I 73 00:04:21,109 --> 00:04:22,339 Suze: did that myself. 74 00:04:23,220 --> 00:04:26,700 Suze: Years ago I bought a stock and I watched it 75 00:04:26,700 --> 00:04:29,899 Suze: go up and up and up and up and it 76 00:04:29,899 --> 00:04:34,010 Suze: had gone all the way up to like $1,100 a share. 77 00:04:34,760 --> 00:04:37,420 Suze: And now I have a whole lot of gain in 78 00:04:37,420 --> 00:04:40,109 Suze: it even though I'd have to pay taxes on it. 79 00:04:40,540 --> 00:04:43,419 Suze: And now I'm getting nervous. I just got nervous. I 80 00:04:43,420 --> 00:04:45,899 Suze: don't know why. And so I decided, oh, I'm going 81 00:04:45,899 --> 00:04:48,500 Suze: to sell it even though I like the stock. I 82 00:04:48,500 --> 00:04:51,399 Suze: sold it and I had to pay capital gains tax 83 00:04:51,399 --> 00:04:52,220 Suze: on it, OK. 84 00:04:52,899 --> 00:04:56,368 Suze: And then the stock started to go down and down 85 00:04:56,369 --> 00:04:59,290 Suze: and down, and I was so happy that it was 86 00:04:59,290 --> 00:05:02,609 Suze: going down because it proved that I was right, that 87 00:05:02,609 --> 00:05:03,768 Suze: I should have sold it. 88 00:05:04,450 --> 00:05:06,868 Suze: And all of a sudden it's going down a few 89 00:05:06,869 --> 00:05:11,119 Suze: 100 points, OK, and then it turns around and it 90 00:05:11,119 --> 00:05:13,869 Suze: goes right back up to $1,500 a share. 91 00:05:14,750 --> 00:05:18,170 Suze: And I'm like, no, no, are you kidding me? 92 00:05:19,290 --> 00:05:24,409 Suze: Don't think you're going to be out guessing what these stocks, ETFs, 93 00:05:24,450 --> 00:05:28,589 Suze: these markets are going to do. You cannot outguess it. 94 00:05:28,970 --> 00:05:34,320 Suze: So prepare yourselves. Put on your financial safety jackets cause 95 00:05:34,320 --> 00:05:38,769 Suze: just in case it gets a little bumpy, you'll be OK. 96 00:05:39,089 --> 00:05:43,570 Suze: You'll be OK, especially if your dollar cost averaging. 97 00:05:44,459 --> 00:05:47,540 Suze: So, I just want to say that to you and 98 00:05:47,540 --> 00:05:52,260 Suze: just know when these markets go down, especially in retirement 99 00:05:52,260 --> 00:05:56,179 Suze: accounts where you are investing month in and month out 100 00:05:56,178 --> 00:05:58,488 Suze: or every paycheck, however you do it. 101 00:05:59,869 --> 00:06:03,570 Suze: And the money's going into ETFs. You should be so happy. 102 00:06:03,660 --> 00:06:06,380 Suze: I meant what I said that if these markets go 103 00:06:06,380 --> 00:06:09,940 Suze: down and your dollar cost averaging automatically from a paycheck 104 00:06:09,940 --> 00:06:11,219 Suze: in a retirement account. 105 00:06:12,170 --> 00:06:15,429 Suze: The more it goes down, the more shares you buy, 106 00:06:15,480 --> 00:06:19,709 Suze: and eventually when it turns around, the more money you make. 107 00:06:20,160 --> 00:06:23,760 Suze: One thing that is very important when you are looking 108 00:06:23,760 --> 00:06:29,079 Suze: at your statements, and this just happened with KT, believe 109 00:06:29,079 --> 00:06:31,750 Suze: it or not, about three weeks ago. 110 00:06:32,609 --> 00:06:36,290 Suze: She comes into my little office and she says, Look 111 00:06:36,290 --> 00:06:38,390 Suze: at this. I said, What do you want me to 112 00:06:38,390 --> 00:06:43,649 Suze: look at? She said, Look at these statements, Suze. KT 113 00:06:43,649 --> 00:06:46,849 Suze: goes over them like a hawk. I'm telling you, every 114 00:06:46,850 --> 00:06:51,609 Suze: single month, every single line she's looking at, we lost here, 115 00:06:51,690 --> 00:06:54,970 Suze: we gained here, whatever it is, and that's fine. I 116 00:06:54,970 --> 00:06:57,040 Suze: like that she does that and she takes an interest 117 00:06:57,040 --> 00:06:59,849 Suze: in it. She goes, Can you believe how much money 118 00:06:59,850 --> 00:07:02,200 Suze: we have made since January? 119 00:07:02,899 --> 00:07:05,609 Suze: And I look at her and I said, KT, we 120 00:07:05,609 --> 00:07:08,489 Suze: haven't made a penny. She says, What are you talking about? 121 00:07:08,649 --> 00:07:12,609 Suze: Look at this, Suze. I said, KT, we only make 122 00:07:12,609 --> 00:07:17,489 Suze: that money when we have sold, and we're not selling. 123 00:07:18,459 --> 00:07:21,790 Suze: We like what we own. If it goes down, we'll 124 00:07:21,790 --> 00:07:25,950 Suze: buy more of it, but we are not selling, so 125 00:07:25,950 --> 00:07:29,339 Suze: don't look at it like we have that much money, 126 00:07:29,589 --> 00:07:34,329 Suze: because until we sell, we don't have that much money. 127 00:07:35,010 --> 00:07:38,440 Suze: And I think a lot what has been happening in 128 00:07:38,440 --> 00:07:41,359 Suze: the United States of America, believe it or not, in 129 00:07:41,359 --> 00:07:45,760 Suze: terms of inflation, is that so many of you have 130 00:07:45,760 --> 00:07:50,959 Suze: been looking at your 401K statements or 403B or TSP 131 00:07:50,959 --> 00:07:54,670 Suze: statements or whatever they are, and they've gone up so 132 00:07:55,000 --> 00:07:59,920 Suze: much over the past six months that you actually feel wealthy. 133 00:08:00,600 --> 00:08:04,649 Suze: And because you feel wealthier, maybe wealthier than you ever felt. 134 00:08:05,420 --> 00:08:09,369 Suze: Then you feel OK about going out and spending money. 135 00:08:10,290 --> 00:08:13,329 Suze: That's why on some level I have to tell you 136 00:08:13,329 --> 00:08:18,489 Suze: I don't think inflation is necessarily coming down because the 137 00:08:18,489 --> 00:08:23,559 Suze: economy is still too strong, and it's strong because of 138 00:08:23,559 --> 00:08:26,209 Suze: how much money is being spent. 139 00:08:27,239 --> 00:08:35,070 Suze: Please remember everybody that what you see, especially if it 140 00:08:35,070 --> 00:08:40,299 Suze: is a pretext retirement account, what you see is not 141 00:08:40,299 --> 00:08:42,159 Suze: what you get. 142 00:08:42,909 --> 00:08:46,059 Suze: You do not own all of that money. 143 00:08:46,760 --> 00:08:52,289 Suze: You are in partnership with Uncle Sam on every single 144 00:08:52,289 --> 00:08:56,989 Suze: penny that is in a pre-taxed retirement account. 145 00:08:57,940 --> 00:09:02,049 Suze: Because later on in life when you have to take 146 00:09:02,049 --> 00:09:05,650 Suze: it out, remember you don't have a choice. You have 147 00:09:05,650 --> 00:09:11,299 Suze: got to eventually take required minimum distributions. Your partner in 148 00:09:11,299 --> 00:09:14,900 Suze: crime here is Uncle Sam. 149 00:09:15,739 --> 00:09:20,439 Suze: And he will take whatever percentage that is in there 150 00:09:21,049 --> 00:09:25,049 Suze: that he wants to at that time. And when you 151 00:09:25,049 --> 00:09:29,890 Suze: have debts and deficits that are facing the United States 152 00:09:29,890 --> 00:09:34,010 Suze: of America like they are right now, do you honest 153 00:09:34,010 --> 00:09:39,130 Suze: to God believe that 30 years from now, 20 years 154 00:09:39,130 --> 00:09:43,929 Suze: from now, tax brackets won't be higher than they are 155 00:09:43,929 --> 00:09:45,280 Suze: right now. 156 00:09:45,960 --> 00:09:50,090 Suze: But all of you argue with me. You argue with 157 00:09:50,090 --> 00:09:50,890 Suze: me and say, Suze. 158 00:09:51,750 --> 00:09:53,789 Suze: I'm in a high tax bracket. 159 00:09:54,659 --> 00:09:59,140 Suze: I'm 50 years of age. I want my tax bracket 160 00:09:59,140 --> 00:10:03,049 Suze: now going into a Roth retirement account. There's no time. 161 00:10:03,099 --> 00:10:06,380 Suze: It makes no sense. I know what I'm doing and 162 00:10:06,380 --> 00:10:10,900 Suze: my financial adviser tells me, you're wrong, Suze Orman. Do 163 00:10:10,900 --> 00:10:16,329 Suze: you have any idea how crazy, how absolute crazy that 164 00:10:16,330 --> 00:10:21,510 Suze: makes me. So therefore I'm going to do a comparison 165 00:10:21,510 --> 00:10:22,289 Suze: right now. 166 00:10:22,950 --> 00:10:28,719 Suze: Between a Roth retirement account and a pre-tax retirement account 167 00:10:28,989 --> 00:10:33,098 Suze: for somebody who's just starting right now in their 50s 168 00:10:33,309 --> 00:10:38,590 Suze: and settle this stupid argument once and for all. However, 169 00:10:38,950 --> 00:10:42,429 Suze: before I do that, there is something that I need 170 00:10:42,429 --> 00:10:45,190 Suze: to do. There is a woman by the name of 171 00:10:45,190 --> 00:10:49,819 Suze: Paula whose husband died a few months ago. 172 00:10:50,539 --> 00:10:56,380 Suze: And Paula wrote and said, I need help, Suze. I 173 00:10:56,380 --> 00:10:58,460 Suze: don't know what to do with this and these things. 174 00:10:58,469 --> 00:11:01,829 Suze: I have three or four kids. Can you please help me? 175 00:11:02,059 --> 00:11:07,419 Suze: And I called Paula to help her, but the problem 176 00:11:07,419 --> 00:11:13,380 Suze: is Paula isn't necessarily sure that it's me. She is 177 00:11:13,380 --> 00:11:16,119 Suze: in shock number one. She can't believe that Suze Orman 178 00:11:16,119 --> 00:11:16,849 Suze: called her. 179 00:11:17,640 --> 00:11:22,789 Suze: And number two, Suze Orman said to her, Paula, you 180 00:11:22,789 --> 00:11:27,630 Suze: can't trust my voice because of artificial intelligence. I don't 181 00:11:27,630 --> 00:11:30,069 Suze: even know if I were to FaceTime you, you would 182 00:11:30,070 --> 00:11:32,710 Suze: be able to trust it because of everything that's going 183 00:11:32,710 --> 00:11:37,460 Suze: on with artificial intelligence. So I know what I'll do, Paula, 184 00:11:37,750 --> 00:11:39,909 Suze: on my podcast. 185 00:11:40,359 --> 00:11:44,309 Suze: Today I will talk about this so that you know 186 00:11:44,309 --> 00:11:47,799 Suze: without a shadow of a doubt it was me who 187 00:11:47,799 --> 00:11:53,109 Suze: was telling you what to do, so I just wanted 188 00:11:53,109 --> 00:11:57,559 Suze: to get that in and not forget it. All right, 189 00:11:57,679 --> 00:12:01,539 Suze: I want all of you right here and right now. 190 00:12:01,869 --> 00:12:06,500 Suze: I want you to write down everything that I am 191 00:12:06,500 --> 00:12:07,819 Suze: about to tell you. 192 00:12:08,309 --> 00:12:11,840 Suze: Because if these numbers work at 50. 193 00:12:12,940 --> 00:12:17,510 Suze: Think about if you started a Roth retirement account at 194 00:12:17,510 --> 00:12:23,739 Suze: 25 or 30 or 35. So worst case scenario, and 195 00:12:23,739 --> 00:12:27,579 Suze: this is a real example, and this just happened to 196 00:12:27,580 --> 00:12:31,299 Suze: me on Friday on a telephone call that I was 197 00:12:31,299 --> 00:12:35,289 Suze: having with somebody who wants me to do something for 198 00:12:35,289 --> 00:12:36,780 Suze: their company, all right. 199 00:12:37,070 --> 00:12:40,098 Suze: And then of course we always talk about their own 200 00:12:40,099 --> 00:12:43,159 Suze: money somehow I don't know why that is. It always 201 00:12:43,369 --> 00:12:45,559 Suze: at the end of the conversation they tell me what 202 00:12:45,559 --> 00:12:49,130 Suze: they're doing and then I'm like, You're kidding. You're not 203 00:12:49,130 --> 00:12:50,848 Suze: doing that, are you? And then I try to set 204 00:12:50,849 --> 00:12:56,929 Suze: them straight. So in this particular situation, this person's financial 205 00:12:56,929 --> 00:13:01,640 Suze: adviser has convinced them that the best thing that they 206 00:13:01,640 --> 00:13:05,849 Suze: can be doing is putting money maxing out. 207 00:13:06,280 --> 00:13:14,010 Suze: The 401k at work pre-tax and when I said what. 208 00:13:14,700 --> 00:13:18,570 Suze: And they said, Susie, I'm 50 years of age. I'm 209 00:13:18,570 --> 00:13:23,250 Suze: getting older now. I make approximately $300,000 a year. It's 210 00:13:23,250 --> 00:13:26,929 Suze: a huge tax write off for me, and I've gone 211 00:13:26,929 --> 00:13:29,849 Suze: over the numbers, and this is what my adviser is 212 00:13:29,849 --> 00:13:33,210 Suze: telling me to do. Well, after 30 minutes of arguing 213 00:13:33,210 --> 00:13:35,090 Suze: with him, he still didn't believe me, I can tell 214 00:13:35,090 --> 00:13:39,679 Suze: you that. So let me just do the numbers for him, 215 00:13:39,809 --> 00:13:42,570 Suze: but for all of you as well. 216 00:13:43,469 --> 00:13:47,140 Suze: I want you to write everything down. This person that 217 00:13:47,140 --> 00:13:50,900 Suze: I spoke to was 50 years of age, and he 218 00:13:50,900 --> 00:13:57,380 Suze: makes approximately $300,000 a year. Now listen, if it works 219 00:13:57,380 --> 00:14:02,098 Suze: with $300,000 which is a good sum of money, puts 220 00:14:02,099 --> 00:14:06,489 Suze: this person in a high tax bracket, of course, an 221 00:14:06,489 --> 00:14:09,689 Suze: adviser would say, you want a tax write off. 222 00:14:10,479 --> 00:14:13,280 Suze: If it works in a high tax bracket, it even 223 00:14:13,280 --> 00:14:17,070 Suze: works better in a lower tax bracket. OK, so. 224 00:14:18,010 --> 00:14:19,820 Suze: He makes 300,000 a year. 225 00:14:20,489 --> 00:14:25,280 Suze: And he is putting $30,000 a year, which is the 226 00:14:25,280 --> 00:14:29,409 Suze: maximum that you can put into a 401k this year, 227 00:14:29,619 --> 00:14:33,799 Suze: and he's doing it every year for the next 20 years. 228 00:14:33,919 --> 00:14:37,280 Suze: Let's just make that assumption because I don't know what 229 00:14:37,280 --> 00:14:40,809 Suze: the maximum will be in future years. So just let's 230 00:14:40,809 --> 00:14:44,710 Suze: assume that that's all he puts in for the next 231 00:14:45,080 --> 00:14:46,590 Suze: 20 years. 232 00:14:47,190 --> 00:14:50,419 Suze: We're not gonna consider a match. Let's just pretend that 233 00:14:50,419 --> 00:14:55,619 Suze: his company does not match. And let's also assume that 234 00:14:55,619 --> 00:15:03,159 Suze: over those 20 years he's averaged approximately 7% on his money. 235 00:15:03,419 --> 00:15:07,460 Suze: Let's just do that for simplistic sake, OK. 236 00:15:08,650 --> 00:15:14,010 Suze: If that were true, at 70 years of age, he 237 00:15:14,010 --> 00:15:20,989 Suze: would have approximately $1.3 million and now he's no longer 238 00:15:20,989 --> 00:15:26,210 Suze: working and he simply does what he takes the $1.3 million. 239 00:15:26,929 --> 00:15:33,030 Suze: And he rolls it over to an IRA rollover. 240 00:15:34,109 --> 00:15:38,750 Suze: Cause he now wants to invest it very securely because 241 00:15:38,750 --> 00:15:42,659 Suze: he doesn't want anything else to happen to it. 242 00:15:43,580 --> 00:15:47,840 Suze: So now he rolls it over and he invests 4% 243 00:15:47,840 --> 00:15:51,080 Suze: of it in treasuries, OK. 244 00:15:52,130 --> 00:15:59,739 Suze: And at the age of 75, he now has $1.6 million. 245 00:15:59,989 --> 00:16:02,679 Suze: Now just put a pin in that for one second. 246 00:16:03,619 --> 00:16:08,929 Suze: Remember if you were born 1960 or later. 247 00:16:09,640 --> 00:16:17,299 Suze: The new required minimum distribution age is 75, so because 248 00:16:17,299 --> 00:16:21,309 Suze: he is currently only 50, he will not need to 249 00:16:21,309 --> 00:16:27,229 Suze: take out required minimum distributions till he is 75. And 250 00:16:27,229 --> 00:16:32,909 Suze: let's just assume he did very well for himself. He 251 00:16:32,909 --> 00:16:34,630 Suze: made all of this money. 252 00:16:35,130 --> 00:16:39,849 Suze: And he's invested it wisely. He owns his house outright, 253 00:16:40,130 --> 00:16:45,690 Suze: very little expenses. Everything is great for him, and he 254 00:16:45,690 --> 00:16:49,909 Suze: so wishes that he didn't have to take out required 255 00:16:49,909 --> 00:16:51,799 Suze: minimum distributions. 256 00:16:52,650 --> 00:16:56,530 Suze: Because he doesn't need to, but yet he does not 257 00:16:56,530 --> 00:17:01,409 Suze: have a choice. He has got to take out required 258 00:17:01,409 --> 00:17:06,239 Suze: minimum distributions, and he has lived his life in such 259 00:17:06,239 --> 00:17:12,050 Suze: a way. Let's just assume this, that he has other income. 260 00:17:12,698 --> 00:17:19,869 Suze: But he only has $50,000 a year of taxable income 261 00:17:20,167 --> 00:17:25,558 Suze: besides his required minimum distributions that he will be taking out. 262 00:17:26,520 --> 00:17:31,040 Suze: If he starts to take out required minim distributions, which 263 00:17:31,040 --> 00:17:34,520 Suze: he has to at the age of 75. 264 00:17:35,079 --> 00:17:39,150 Suze: The very first year, he will take out approximately $58,000 265 00:17:39,150 --> 00:17:43,829 Suze: and then $60,000 and then $62,000 and every year as 266 00:17:43,829 --> 00:17:49,510 Suze: he gets older, it goes up approximately $2,000 to $3,000 267 00:17:49,510 --> 00:17:50,180 Suze: a year. 268 00:17:50,839 --> 00:17:56,219 Suze: And the IRS truthfully, according to life expectancy tables expect 269 00:17:56,219 --> 00:17:59,260 Suze: him to live till about let's just say 89 years 270 00:17:59,260 --> 00:18:03,889 Suze: of age, and by that time he's required to take 271 00:18:03,890 --> 00:18:12,369 Suze: out $100,000 as a required minimum distribution. Now the true 272 00:18:13,040 --> 00:18:17,579 Suze: question becomes how much did he totally have to take 273 00:18:17,579 --> 00:18:20,209 Suze: out of this account 274 00:18:21,130 --> 00:18:34,479 Suze: in required minimum distributions, and the answer to that is $1,202,897. 275 00:18:35,900 --> 00:18:42,920 Suze: It was required over those 14 years to take out 276 00:18:42,920 --> 00:18:50,810 Suze: $1.2 million that he will owe ordinary income taxes on. 277 00:18:51,500 --> 00:18:58,679 Suze: At whatever tax bracket Uncle Sam puts into place again, however, 278 00:18:59,010 --> 00:19:03,800 Suze: we are going to assume that tax brackets stay exactly 279 00:19:03,800 --> 00:19:09,079 Suze: as they are right now, which is the lowest income 280 00:19:09,079 --> 00:19:13,010 Suze: tax brackets any of us have been in in years. 281 00:19:13,920 --> 00:19:17,729 Suze: And we're just going to assume they stay this low, 282 00:19:17,900 --> 00:19:20,699 Suze: although I would make a bet with any of you 283 00:19:20,699 --> 00:19:23,739 Suze: that is not going to happen, but I'm just going 284 00:19:23,739 --> 00:19:29,060 Suze: to give this example, assuming that we stay at the 285 00:19:29,060 --> 00:19:34,189 Suze: tax brackets we are right now. And if that is true, 286 00:19:34,819 --> 00:19:43,448 Suze: he's going to end up paying at least $313,000 in taxes. 287 00:19:44,079 --> 00:19:48,948 Suze: Over the next 14 years as he's taking the money out. 288 00:19:50,069 --> 00:19:55,810 Suze: Now again, what did he save in taxes when he 289 00:19:55,810 --> 00:19:57,329 Suze: put the money in? 290 00:19:58,209 --> 00:20:04,900 Suze: He saved approximately $144,000. 291 00:20:06,640 --> 00:20:07,890 Suze: Now that's a lot of money. 292 00:20:09,020 --> 00:20:15,399 Suze: But do you understand that really what's happening here is 293 00:20:15,400 --> 00:20:18,449 Suze: Uncle Sam is just giving you a loan? 294 00:20:19,160 --> 00:20:24,409 Suze: A loan in this case of $144,000. 295 00:20:25,250 --> 00:20:29,569 Suze: And over the years, Uncle Sam's going to get back 296 00:20:29,569 --> 00:20:35,040 Suze: at least $313,000. 297 00:20:36,229 --> 00:20:37,280 Suze: Think about that. 298 00:20:38,699 --> 00:20:42,629 Suze: When you put money in a pre-tax retirement account. 299 00:20:43,390 --> 00:20:46,280 Suze: You put in an amount of money. Please listen to 300 00:20:46,280 --> 00:20:47,389 Suze: me closely now. 301 00:20:48,329 --> 00:20:53,319 Suze: You're putting in money and it is growing and growing 302 00:20:53,319 --> 00:20:57,219 Suze: and growing and growing in this example. 303 00:20:58,119 --> 00:21:07,520 Suze: This person only put in $600,000 over those 20 years. 304 00:21:08,849 --> 00:21:11,569 Suze: But because of compounding. 305 00:21:12,469 --> 00:21:18,920 Suze: It's now worth 1.6 million at the age of 75. 306 00:21:19,890 --> 00:21:25,979 Suze: So Uncle Sam is going to get taxes on that 307 00:21:25,979 --> 00:21:31,569 Suze: extra million dollars of growth above what he put in. 308 00:21:31,619 --> 00:21:32,619 Suze: Do you see that? 309 00:21:33,400 --> 00:21:39,719 Suze: He put in 600,000. It's now worth 1.6 million. 310 00:21:40,900 --> 00:21:47,770 Suze: Forget the $600,000 he put in. It grew by $1 million. 311 00:21:49,319 --> 00:21:56,179 Suze: And Uncle Sam gets to have taxes on that $1 million. 312 00:21:56,800 --> 00:22:00,909 Suze: Plus he gets back the taxes he gave you over 313 00:22:00,910 --> 00:22:06,500 Suze: all those years on that $600,000 that you put in. 314 00:22:06,900 --> 00:22:10,550 Suze: Think about it. Think about it. 315 00:22:11,780 --> 00:22:16,849 Suze: Why do you think they want you to do this? 316 00:22:17,619 --> 00:22:22,379 Suze: Because they know exactly they are going to make a 317 00:22:22,380 --> 00:22:27,699 Suze: lot of money off of you. Do you all hear 318 00:22:27,699 --> 00:22:29,140 Suze: what I'm saying? 319 00:22:30,390 --> 00:22:35,159 Suze: Even if he had saved $200,000 in taxes. 320 00:22:35,910 --> 00:22:40,530 Suze: That's still a lot less than 313,000 that he will 321 00:22:40,530 --> 00:22:42,410 Suze: owe and in reality. 322 00:22:43,270 --> 00:22:47,979 Suze: 20 years from now he may owe a whole lot more, 323 00:22:48,150 --> 00:22:52,199 Suze: but wait, I'm continuing on with this example. 324 00:22:53,310 --> 00:23:00,829 Suze: Even though he took out approximately the $1.2 million in 325 00:23:00,829 --> 00:23:05,859 Suze: our MDs, he still has remaining in that account. 326 00:23:06,959 --> 00:23:13,919 Suze: About $433,000 because that money has been growing all those 327 00:23:13,920 --> 00:23:17,879 Suze: years that he's been taking out RMDs and now let's 328 00:23:17,880 --> 00:23:21,560 Suze: assume that he dies at the age of 89. 329 00:23:22,319 --> 00:23:24,589 Suze: And now his children. 330 00:23:25,630 --> 00:23:26,640 Suze: Get the money. 331 00:23:27,520 --> 00:23:32,369 Suze: They now have to continue to take the money out 332 00:23:32,369 --> 00:23:35,500 Suze: of this inherited IRA that they just got. 333 00:23:36,199 --> 00:23:42,060 Suze: And they have to wipe it clean totally within 10 years, 334 00:23:42,270 --> 00:23:46,189 Suze: so chances are they're going to take out $45 to 335 00:23:46,189 --> 00:23:48,459 Suze: $50,000 a year. 336 00:23:49,119 --> 00:23:52,349 Suze: If they do that, we don't know what tax bracket 337 00:23:52,349 --> 00:23:56,229 Suze: they're in, but let's just say they're in an average 338 00:23:56,229 --> 00:23:59,869 Suze: tax bracket as well. They're going to probably pay at 339 00:23:59,869 --> 00:24:06,780 Suze: least another $100,000 in income taxes to get that money 340 00:24:06,780 --> 00:24:10,510 Suze: and truthfully everybody probably a whole lot more. 341 00:24:11,380 --> 00:24:15,920 Suze: So given that, between what this guy is going to 342 00:24:15,920 --> 00:24:21,520 Suze: pay in income taxes, 313,000, at least the 100,000 his 343 00:24:21,520 --> 00:24:22,989 Suze: kids are going to have to pay. 344 00:24:24,020 --> 00:24:32,300 Suze: Now they have paid jointly $413,000 in taxes based on 345 00:24:32,300 --> 00:24:33,969 Suze: today's tax structure. 346 00:24:35,810 --> 00:24:41,089 Suze: Versus the $144,000 or even the $200,000 of a tax 347 00:24:41,089 --> 00:24:43,520 Suze: write-off that he got. 348 00:24:44,520 --> 00:24:48,430 Suze: Am I making sense to all of you, so now 349 00:24:48,430 --> 00:24:49,510 Suze: you're saying, well, Suze. 350 00:24:50,369 --> 00:24:54,000 Suze: You want him to do a wroth. You're wroth crazy, 351 00:24:54,250 --> 00:24:56,540 Suze: so do the numbers for me with a Roth. Oh, 352 00:24:56,650 --> 00:24:58,329 Suze: thank you very much for asking. 353 00:24:59,339 --> 00:25:05,430 Suze: OK, he's still 50. He makes $300,000 a year, no problem, 354 00:25:05,719 --> 00:25:11,199 Suze: but instead of putting in $30,000 a year for the 355 00:25:11,199 --> 00:25:16,800 Suze: next 20 years, we have to take away the $7,200 356 00:25:16,800 --> 00:25:19,800 Suze: in tax that we're going to have to pay on 357 00:25:19,800 --> 00:25:24,629 Suze: that $30,000 now because we did not do a pre-tax 401k. 358 00:25:25,400 --> 00:25:28,119 Suze: So for the next 20 years. 359 00:25:28,880 --> 00:25:35,239 Suze: He's only going to be investing $22,800 a year in 360 00:25:35,239 --> 00:25:41,079 Suze: the Roth 401k versus the $30,000. OK. Still an annual 361 00:25:41,079 --> 00:25:44,510 Suze: average rate of return of 7%. Just stick with me here. 362 00:25:44,560 --> 00:25:48,919 Suze: This is just an example. Don't go crazy. It's just 363 00:25:48,920 --> 00:25:52,359 Suze: trying to equal things out, all right, everybody, at the 364 00:25:52,359 --> 00:25:53,800 Suze: age of 70. 365 00:25:54,400 --> 00:25:59,430 Suze: He would have only $1 million in his Roth 401k 366 00:25:59,430 --> 00:26:04,520 Suze: versus the $1.3 million he would have had in his 367 00:26:04,520 --> 00:26:06,839 Suze: traditional 401k. All right. 368 00:26:07,599 --> 00:26:10,839 Suze: But now he takes it and does an IRA roll 369 00:26:10,839 --> 00:26:14,238 Suze: over with it, makes again 4% on it, put it 370 00:26:14,239 --> 00:26:18,239 Suze: all in treasuries, and at the age of 75, he 371 00:26:18,239 --> 00:26:29,599 Suze: now will have $1.2 million versus $1.6 million 400,000 dollars difference, OK. 372 00:26:30,260 --> 00:26:34,780 Suze: But here's the big difference. He doesn't want to take 373 00:26:34,780 --> 00:26:38,050 Suze: our MDs out. He doesn't want to touch the money. 374 00:26:38,280 --> 00:26:41,899 Suze: He actually wants to leave it to his kids. He 375 00:26:41,900 --> 00:26:43,020 Suze: doesn't need it. 376 00:26:44,170 --> 00:26:50,489 Suze: All right, now, the 1.2 million at just a 4% 377 00:26:50,489 --> 00:26:53,689 Suze: interest rate, it's in treasuries, it's in a CD. 378 00:26:54,579 --> 00:26:57,300 Suze: So at the age of 89 is going to be 379 00:26:57,300 --> 00:27:05,729 Suze: worth $2.1 million and now he dies. Now, guess what? 380 00:27:06,339 --> 00:27:09,979 Suze: Now it passes down to his kids and because it's 381 00:27:09,979 --> 00:27:12,069 Suze: in a Roth IRA. 382 00:27:12,969 --> 00:27:15,688 Suze: They don't have to touch it for 10 years. They 383 00:27:15,689 --> 00:27:19,400 Suze: don't have to take out any required minimum distributions. They 384 00:27:19,400 --> 00:27:24,890 Suze: have 10 years for it to grow tax free, so 385 00:27:24,890 --> 00:27:27,879 Suze: they just leave it there cause they were listening to 386 00:27:27,880 --> 00:27:31,479 Suze: the Women and Money podcast and they heard Suze Orman say, 387 00:27:31,609 --> 00:27:34,319 Suze: if you're ever in this situation and you don't need it, 388 00:27:34,609 --> 00:27:37,609 Suze: just leave it there till the 10th year if it's 389 00:27:37,609 --> 00:27:38,770 Suze: in a Roth. 390 00:27:39,160 --> 00:27:42,209 Suze: And then take 100% of it out in the 10th year. 391 00:27:42,380 --> 00:27:42,780 Suze: All right. 392 00:27:43,699 --> 00:27:52,319 Suze: So 10 years from now when they inherit $2.1 million 393 00:27:52,900 --> 00:27:58,010 Suze: their inherited IRA because it's a Roth, will be worth 394 00:27:58,010 --> 00:28:07,180 Suze: $3.1 million everybody that will pass to the kids absolutely 395 00:28:07,180 --> 00:28:08,430 Suze: tax free. 396 00:28:09,540 --> 00:28:12,839 Suze: I just want you to think about that. 397 00:28:14,290 --> 00:28:18,889 Suze: Big, big difference. Now, a lot of you will say, 398 00:28:19,010 --> 00:28:22,280 Suze: but yeah, Suze, he took out the 50 some odd 399 00:28:22,280 --> 00:28:25,199 Suze: thousdand a year or whatever, and maybe he invested it. 400 00:28:25,369 --> 00:28:27,489 Suze: I don't care. I don't care. 401 00:28:28,189 --> 00:28:33,339 Suze: I just want you to stop finding excuses for why 402 00:28:33,339 --> 00:28:38,979 Suze: you think a traditional or a pre-taxed retirement account is 403 00:28:38,979 --> 00:28:41,380 Suze: the way for you to go. I want you to 404 00:28:41,380 --> 00:28:44,719 Suze: stop the excuses of you are 60 years of age, 405 00:28:44,819 --> 00:28:47,849 Suze: you're 50, you make too much money. It's too late. 406 00:28:48,020 --> 00:28:51,739 Suze: It is never too late to be smart with your money. 407 00:28:51,819 --> 00:28:53,349 Suze: Do you hear me? 408 00:28:54,310 --> 00:28:57,500 Suze: So you can continue to do what you're doing. 409 00:28:58,250 --> 00:29:01,859 Suze: But I'm here to tell you, if you really want 410 00:29:02,069 --> 00:29:04,670 Suze: to be smart with your money, you will listen to 411 00:29:04,670 --> 00:29:08,349 Suze: this podcast over and over again, you'll do the numbers. 412 00:29:08,550 --> 00:29:11,589 Suze: Maybe you won't agree with me with the numbers, fine, 413 00:29:11,640 --> 00:29:13,060 Suze: do the numbers yourself. 414 00:29:14,030 --> 00:29:18,449 Suze: But I am telling you, in the long run, don't 415 00:29:18,449 --> 00:29:24,000 Suze: become partners with Uncle Sam. Be in business with yourself. 416 00:29:24,189 --> 00:29:27,770 Suze: Buy Uncle Sam out every single year so you don't 417 00:29:27,770 --> 00:29:29,479 Suze: have to deal with him any more. 418 00:29:30,400 --> 00:29:34,130 Suze: You know, just think about it that way. And then, 419 00:29:34,339 --> 00:29:38,979 Suze: no matter what, it's 100% yours when you look at 420 00:29:38,979 --> 00:29:44,260 Suze: your statements, it's 100% yours for those of you who 421 00:29:44,260 --> 00:29:47,550 Suze: have traditional 401ks or whatever it is, when you look 422 00:29:47,550 --> 00:29:51,099 Suze: at your statement, you better take a good 20 or 30% 423 00:29:51,099 --> 00:29:54,979 Suze: away if not more, because that's Uncle Sam's cut. 424 00:29:56,099 --> 00:29:59,819 Suze: Was it worth it for a tax write off? Really? 425 00:30:00,339 --> 00:30:03,810 Suze: Not in the long run. All right, everybody, there's only 426 00:30:03,810 --> 00:30:05,579 Suze: one thing that I want you to remember when it 427 00:30:05,579 --> 00:30:08,619 Suze: comes to your money, and it is this people first, 428 00:30:08,699 --> 00:30:13,170 Suze: that's you, everybody, not Uncle Sam. That's you. People first, 429 00:30:13,380 --> 00:30:16,540 Suze: then money, then things. Can you tell that this topic 430 00:30:16,540 --> 00:30:19,939 Suze: has absolutely aggravated me? All right. 431 00:30:20,689 --> 00:30:24,880 Suze: So just stay safe, and if you listen to me 432 00:30:25,339 --> 00:30:30,410 Suze: you will become financially unstoppable.