Robert: August 31, 2025. Welcome to the Women and Money podcast,
Robert: as well as everyone smart enough to listen. Robert, the
Robert: producer here, we hope you're enjoying the long Labor Day
Robert: weekend and taking a break from work. In fact, today,
Robert: Suze is taking a break from work as well, but
Robert: that doesn't mean you don't get a podcast.
Robert: We're gonna play for you today the main part of
Robert: an episode that we originally dropped in April of last year.
Robert: And when we think about the theme of this year, right?
Robert: Make your money, make more money, this episode really ties
Robert: into that theme.
Robert: And based on some of the emails and questions that
Robert: have come in from you, it is absolutely time to
Robert: bring this particular subject back to the top of the feed.
Robert: So enjoy, and Suze and KT will be with you
Robert: this Thursday.
Suze: I have told you over and over again the only
Suze: way to be investing in the stock market.
Suze: Is through dollar cost averaging where every month or every
Suze: three months or every six months if there is something
Suze: that you own and it goes down, you buy a
Suze: little more. If it continues to go down, you buy
Suze: a little more. So here's a little thing that every
Suze: one of you needs to do.
Suze: I want you to look at every single stock that
Suze: you have, every single ETF that you have right here
Suze: and right now, because the truth of the matter is
Suze: you don't know what the stock market's going to do
Suze: next week or five weeks from now or three years
Suze: from now, but right here and right now you know
Suze: exactly what you have. So let's say you have a
Suze: stock and it's worth $20,000 today.
Suze: I want you to ask yourself the question. If you
Suze: did not own that stock today and you had $20,000
Suze: in cash, would you buy that stock today?
Suze: If the answer to that is yes, then you keep
Suze: what you have.
Suze: If the answer to that is no, I would not.
Suze: Then you better think about selling it seriously.
Suze: And if the answer is I don't know what I
Suze: would do and just sell half, obviously you have to
Suze: remember that if you have a stock that is outside
Suze: of a retirement account that you have not held right
Suze: this down, that you have not held for over one year.
Suze: If you sell it and you have a gain in it,
Suze: you are going to pay ordinary income taxes on that gain.
Suze: Maybe you're going to lose 20% to taxes, so maybe
Suze: you just keep the stock.
Suze: Cause if it goes down 20%, it would be the
Suze: same as if you sold it and had to pay
Suze: ordinary income tax on it. You have to think about that.
Suze: Maybe you have a stock that you have a loss in.
Suze: Again outside of a retirement account.
Suze: And you won't buy it again. All right, sell it
Suze: and take the loss off your taxes, just that simple.
Suze: Maybe you have a stock then that you have a
Suze: gain in that you wouldn't buy again. All right, sell
Suze: that possibly and offset your loss with your gain, but
Suze: you have to look at what you have and not
Suze: just sit there and not know what to do. If
Suze: it were up to me telling you all what to do,
Suze: I would say if you own good quality stocks, ETFs,
Suze: mutual funds, if you have 10, 20, or 30 years
Suze: or longer till you need the money.
Suze: Can you just sit tight and as the markets may
Suze: go down.
Suze: You might want to buy more.
Suze: You could sell it here if you wanted to, but
Suze: I'm here to tell you, chances are you're not going
Suze: to get back in, and it goes up above where
Suze: you sold it. You are not going to be a
Suze: happy camper. Now I can tell you that because I
Suze: did that myself.
Suze: Years ago I bought a stock and I watched it
Suze: go up and up and up and up and it
Suze: had gone all the way up to like $1,100 a share.
Suze: And now I have a whole lot of gain in
Suze: it even though I'd have to pay taxes on it.
Suze: And now I'm getting nervous. I just got nervous. I
Suze: don't know why. And so I decided, oh, I'm going
Suze: to sell it even though I like the stock. I
Suze: sold it and I had to pay capital gains tax
Suze: on it, OK.
Suze: And then the stock started to go down and down
Suze: and down, and I was so happy that it was
Suze: going down because it proved that I was right, that
Suze: I should have sold it.
Suze: And all of a sudden it's going down a few
Suze: 100 points, OK, and then it turns around and it
Suze: goes right back up to $1,500 a share.
Suze: And I'm like, no, no, are you kidding me?
Suze: Don't think you're going to be out guessing what these stocks, ETFs,
Suze: these markets are going to do. You cannot outguess it.
Suze: So prepare yourselves. Put on your financial safety jackets cause
Suze: just in case it gets a little bumpy, you'll be OK.
Suze: You'll be OK, especially if your dollar cost averaging.
Suze: So, I just want to say that to you and
Suze: just know when these markets go down, especially in retirement
Suze: accounts where you are investing month in and month out
Suze: or every paycheck, however you do it.
Suze: And the money's going into ETFs. You should be so happy.
Suze: I meant what I said that if these markets go
Suze: down and your dollar cost averaging automatically from a paycheck
Suze: in a retirement account.
Suze: The more it goes down, the more shares you buy,
Suze: and eventually when it turns around, the more money you make.
Suze: One thing that is very important when you are looking
Suze: at your statements, and this just happened with KT, believe
Suze: it or not, about three weeks ago.
Suze: She comes into my little office and she says, Look
Suze: at this. I said, What do you want me to
Suze: look at? She said, Look at these statements, Suze. KT
Suze: goes over them like a hawk. I'm telling you, every
Suze: single month, every single line she's looking at, we lost here,
Suze: we gained here, whatever it is, and that's fine. I
Suze: like that she does that and she takes an interest
Suze: in it. She goes, Can you believe how much money
Suze: we have made since January?
Suze: And I look at her and I said, KT, we
Suze: haven't made a penny. She says, What are you talking about?
Suze: Look at this, Suze. I said, KT, we only make
Suze: that money when we have sold, and we're not selling.
Suze: We like what we own. If it goes down, we'll
Suze: buy more of it, but we are not selling, so
Suze: don't look at it like we have that much money,
Suze: because until we sell, we don't have that much money.
Suze: And I think a lot what has been happening in
Suze: the United States of America, believe it or not, in
Suze: terms of inflation, is that so many of you have
Suze: been looking at your 401K statements or 403B or TSP
Suze: statements or whatever they are, and they've gone up so
Suze: much over the past six months that you actually feel wealthy.
Suze: And because you feel wealthier, maybe wealthier than you ever felt.
Suze: Then you feel OK about going out and spending money.
Suze: That's why on some level I have to tell you
Suze: I don't think inflation is necessarily coming down because the
Suze: economy is still too strong, and it's strong because of
Suze: how much money is being spent.
Suze: Please remember everybody that what you see, especially if it
Suze: is a pretext retirement account, what you see is not
Suze: what you get.
Suze: You do not own all of that money.
Suze: You are in partnership with Uncle Sam on every single
Suze: penny that is in a pre-taxed retirement account.
Suze: Because later on in life when you have to take
Suze: it out, remember you don't have a choice. You have
Suze: got to eventually take required minimum distributions. Your partner in
Suze: crime here is Uncle Sam.
Suze: And he will take whatever percentage that is in there
Suze: that he wants to at that time. And when you
Suze: have debts and deficits that are facing the United States
Suze: of America like they are right now, do you honest
Suze: to God believe that 30 years from now, 20 years
Suze: from now, tax brackets won't be higher than they are
Suze: right now.
Suze: But all of you argue with me. You argue with
Suze: me and say, Suze.
Suze: I'm in a high tax bracket.
Suze: I'm 50 years of age. I want my tax bracket
Suze: now going into a Roth retirement account. There's no time.
Suze: It makes no sense. I know what I'm doing and
Suze: my financial adviser tells me, you're wrong, Suze Orman. Do
Suze: you have any idea how crazy, how absolute crazy that
Suze: makes me. So therefore I'm going to do a comparison
Suze: right now.
Suze: Between a Roth retirement account and a pre-tax retirement account
Suze: for somebody who's just starting right now in their 50s
Suze: and settle this stupid argument once and for all. However,
Suze: before I do that, there is something that I need
Suze: to do. There is a woman by the name of
Suze: Paula whose husband died a few months ago.
Suze: And Paula wrote and said, I need help, Suze. I
Suze: don't know what to do with this and these things.
Suze: I have three or four kids. Can you please help me?
Suze: And I called Paula to help her, but the problem
Suze: is Paula isn't necessarily sure that it's me. She is
Suze: in shock number one. She can't believe that Suze Orman
Suze: called her.
Suze: And number two, Suze Orman said to her, Paula, you
Suze: can't trust my voice because of artificial intelligence. I don't
Suze: even know if I were to FaceTime you, you would
Suze: be able to trust it because of everything that's going
Suze: on with artificial intelligence. So I know what I'll do, Paula,
Suze: on my podcast.
Suze: Today I will talk about this so that you know
Suze: without a shadow of a doubt it was me who
Suze: was telling you what to do, so I just wanted
Suze: to get that in and not forget it. All right,
Suze: I want all of you right here and right now.
Suze: I want you to write down everything that I am
Suze: about to tell you.
Suze: Because if these numbers work at 50.
Suze: Think about if you started a Roth retirement account at
Suze: 25 or 30 or 35. So worst case scenario, and
Suze: this is a real example, and this just happened to
Suze: me on Friday on a telephone call that I was
Suze: having with somebody who wants me to do something for
Suze: their company, all right.
Suze: And then of course we always talk about their own
Suze: money somehow I don't know why that is. It always
Suze: at the end of the conversation they tell me what
Suze: they're doing and then I'm like, You're kidding. You're not
Suze: doing that, are you? And then I try to set
Suze: them straight. So in this particular situation, this person's financial
Suze: adviser has convinced them that the best thing that they
Suze: can be doing is putting money maxing out.
Suze: The 401k at work pre-tax and when I said what.
Suze: And they said, Susie, I'm 50 years of age. I'm
Suze: getting older now. I make approximately $300,000 a year. It's
Suze: a huge tax write off for me, and I've gone
Suze: over the numbers, and this is what my adviser is
Suze: telling me to do. Well, after 30 minutes of arguing
Suze: with him, he still didn't believe me, I can tell
Suze: you that. So let me just do the numbers for him,
Suze: but for all of you as well.
Suze: I want you to write everything down. This person that
Suze: I spoke to was 50 years of age, and he
Suze: makes approximately $300,000 a year. Now listen, if it works
Suze: with $300,000 which is a good sum of money, puts
Suze: this person in a high tax bracket, of course, an
Suze: adviser would say, you want a tax write off.
Suze: If it works in a high tax bracket, it even
Suze: works better in a lower tax bracket. OK, so.
Suze: He makes 300,000 a year.
Suze: And he is putting $30,000 a year, which is the
Suze: maximum that you can put into a 401k this year,
Suze: and he's doing it every year for the next 20 years.
Suze: Let's just make that assumption because I don't know what
Suze: the maximum will be in future years. So just let's
Suze: assume that that's all he puts in for the next
Suze: 20 years.
Suze: We're not gonna consider a match. Let's just pretend that
Suze: his company does not match. And let's also assume that
Suze: over those 20 years he's averaged approximately 7% on his money.
Suze: Let's just do that for simplistic sake, OK.
Suze: If that were true, at 70 years of age, he
Suze: would have approximately $1.3 million and now he's no longer
Suze: working and he simply does what he takes the $1.3 million.
Suze: And he rolls it over to an IRA rollover.
Suze: Cause he now wants to invest it very securely because
Suze: he doesn't want anything else to happen to it.
Suze: So now he rolls it over and he invests 4%
Suze: of it in treasuries, OK.
Suze: And at the age of 75, he now has $1.6 million.
Suze: Now just put a pin in that for one second.
Suze: Remember if you were born 1960 or later.
Suze: The new required minimum distribution age is 75, so because
Suze: he is currently only 50, he will not need to
Suze: take out required minimum distributions till he is 75. And
Suze: let's just assume he did very well for himself. He
Suze: made all of this money.
Suze: And he's invested it wisely. He owns his house outright,
Suze: very little expenses. Everything is great for him, and he
Suze: so wishes that he didn't have to take out required
Suze: minimum distributions.
Suze: Because he doesn't need to, but yet he does not
Suze: have a choice. He has got to take out required
Suze: minimum distributions, and he has lived his life in such
Suze: a way. Let's just assume this, that he has other income.
Suze: But he only has $50,000 a year of taxable income
Suze: besides his required minimum distributions that he will be taking out.
Suze: If he starts to take out required minim distributions, which
Suze: he has to at the age of 75.
Suze: The very first year, he will take out approximately $58,000
Suze: and then $60,000 and then $62,000 and every year as
Suze: he gets older, it goes up approximately $2,000 to $3,000
Suze: a year.
Suze: And the IRS truthfully, according to life expectancy tables expect
Suze: him to live till about let's just say 89 years
Suze: of age, and by that time he's required to take
Suze: out $100,000 as a required minimum distribution. Now the true
Suze: question becomes how much did he totally have to take
Suze: out of this account
Suze: in required minimum distributions, and the answer to that is $1,202,897.
Suze: It was required over those 14 years to take out
Suze: $1.2 million that he will owe ordinary income taxes on.
Suze: At whatever tax bracket Uncle Sam puts into place again, however,
Suze: we are going to assume that tax brackets stay exactly
Suze: as they are right now, which is the lowest income
Suze: tax brackets any of us have been in in years.
Suze: And we're just going to assume they stay this low,
Suze: although I would make a bet with any of you
Suze: that is not going to happen, but I'm just going
Suze: to give this example, assuming that we stay at the
Suze: tax brackets we are right now. And if that is true,
Suze: he's going to end up paying at least $313,000 in taxes.
Suze: Over the next 14 years as he's taking the money out.
Suze: Now again, what did he save in taxes when he
Suze: put the money in?
Suze: He saved approximately $144,000.
Suze: Now that's a lot of money.
Suze: But do you understand that really what's happening here is
Suze: Uncle Sam is just giving you a loan?
Suze: A loan in this case of $144,000.
Suze: And over the years, Uncle Sam's going to get back
Suze: at least $313,000.
Suze: Think about that.
Suze: When you put money in a pre-tax retirement account.
Suze: You put in an amount of money. Please listen to
Suze: me closely now.
Suze: You're putting in money and it is growing and growing
Suze: and growing and growing in this example.
Suze: This person only put in $600,000 over those 20 years.
Suze: But because of compounding.
Suze: It's now worth 1.6 million at the age of 75.
Suze: So Uncle Sam is going to get taxes on that
Suze: extra million dollars of growth above what he put in.
Suze: Do you see that?
Suze: He put in 600,000. It's now worth 1.6 million.
Suze: Forget the $600,000 he put in. It grew by $1 million.
Suze: And Uncle Sam gets to have taxes on that $1 million.
Suze: Plus he gets back the taxes he gave you over
Suze: all those years on that $600,000 that you put in.
Suze: Think about it. Think about it.
Suze: Why do you think they want you to do this?
Suze: Because they know exactly they are going to make a
Suze: lot of money off of you. Do you all hear
Suze: what I'm saying?
Suze: Even if he had saved $200,000 in taxes.
Suze: That's still a lot less than 313,000 that he will
Suze: owe and in reality.
Suze: 20 years from now he may owe a whole lot more,
Suze: but wait, I'm continuing on with this example.
Suze: Even though he took out approximately the $1.2 million in
Suze: our MDs, he still has remaining in that account.
Suze: About $433,000 because that money has been growing all those
Suze: years that he's been taking out RMDs and now let's
Suze: assume that he dies at the age of 89.
Suze: And now his children.
Suze: Get the money.
Suze: They now have to continue to take the money out
Suze: of this inherited IRA that they just got.
Suze: And they have to wipe it clean totally within 10 years,
Suze: so chances are they're going to take out $45 to
Suze: $50,000 a year.
Suze: If they do that, we don't know what tax bracket
Suze: they're in, but let's just say they're in an average
Suze: tax bracket as well. They're going to probably pay at
Suze: least another $100,000 in income taxes to get that money
Suze: and truthfully everybody probably a whole lot more.
Suze: So given that, between what this guy is going to
Suze: pay in income taxes, 313,000, at least the 100,000 his
Suze: kids are going to have to pay.
Suze: Now they have paid jointly $413,000 in taxes based on
Suze: today's tax structure.
Suze: Versus the $144,000 or even the $200,000 of a tax
Suze: write-off that he got.
Suze: Am I making sense to all of you, so now
Suze: you're saying, well, Suze.
Suze: You want him to do a wroth. You're wroth crazy,
Suze: so do the numbers for me with a Roth. Oh,
Suze: thank you very much for asking.
Suze: OK, he's still 50. He makes $300,000 a year, no problem,
Suze: but instead of putting in $30,000 a year for the
Suze: next 20 years, we have to take away the $7,200
Suze: in tax that we're going to have to pay on
Suze: that $30,000 now because we did not do a pre-tax 401k.
Suze: So for the next 20 years.
Suze: He's only going to be investing $22,800 a year in
Suze: the Roth 401k versus the $30,000. OK. Still an annual
Suze: average rate of return of 7%. Just stick with me here.
Suze: This is just an example. Don't go crazy. It's just
Suze: trying to equal things out, all right, everybody, at the
Suze: age of 70.
Suze: He would have only $1 million in his Roth 401k
Suze: versus the $1.3 million he would have had in his
Suze: traditional 401k. All right.
Suze: But now he takes it and does an IRA roll
Suze: over with it, makes again 4% on it, put it
Suze: all in treasuries, and at the age of 75, he
Suze: now will have $1.2 million versus $1.6 million 400,000 dollars difference, OK.
Suze: But here's the big difference. He doesn't want to take
Suze: our MDs out. He doesn't want to touch the money.
Suze: He actually wants to leave it to his kids. He
Suze: doesn't need it.
Suze: All right, now, the 1.2 million at just a 4%
Suze: interest rate, it's in treasuries, it's in a CD.
Suze: So at the age of 89 is going to be
Suze: worth $2.1 million and now he dies. Now, guess what?
Suze: Now it passes down to his kids and because it's
Suze: in a Roth IRA.
Suze: They don't have to touch it for 10 years. They
Suze: don't have to take out any required minimum distributions. They
Suze: have 10 years for it to grow tax free, so
Suze: they just leave it there cause they were listening to
Suze: the Women and Money podcast and they heard Suze Orman say,
Suze: if you're ever in this situation and you don't need it,
Suze: just leave it there till the 10th year if it's
Suze: in a Roth.
Suze: And then take 100% of it out in the 10th year.
Suze: All right.
Suze: So 10 years from now when they inherit $2.1 million
Suze: their inherited IRA because it's a Roth, will be worth
Suze: $3.1 million everybody that will pass to the kids absolutely
Suze: tax free.
Suze: I just want you to think about that.
Suze: Big, big difference. Now, a lot of you will say,
Suze: but yeah, Suze, he took out the 50 some odd
Suze: thousdand a year or whatever, and maybe he invested it.
Suze: I don't care. I don't care.
Suze: I just want you to stop finding excuses for why
Suze: you think a traditional or a pre-taxed retirement account is
Suze: the way for you to go. I want you to
Suze: stop the excuses of you are 60 years of age,
Suze: you're 50, you make too much money. It's too late.
Suze: It is never too late to be smart with your money.
Suze: Do you hear me?
Suze: So you can continue to do what you're doing.
Suze: But I'm here to tell you, if you really want
Suze: to be smart with your money, you will listen to
Suze: this podcast over and over again, you'll do the numbers.
Suze: Maybe you won't agree with me with the numbers, fine,
Suze: do the numbers yourself.
Suze: But I am telling you, in the long run, don't
Suze: become partners with Uncle Sam. Be in business with yourself.
Suze: Buy Uncle Sam out every single year so you don't
Suze: have to deal with him any more.
Suze: You know, just think about it that way. And then,
Suze: no matter what, it's 100% yours when you look at
Suze: your statements, it's 100% yours for those of you who
Suze: have traditional 401ks or whatever it is, when you look
Suze: at your statement, you better take a good 20 or 30%
Suze: away if not more, because that's Uncle Sam's cut.
Suze: Was it worth it for a tax write off? Really?
Suze: Not in the long run. All right, everybody, there's only
Suze: one thing that I want you to remember when it
Suze: comes to your money, and it is this people first,
Suze: that's you, everybody, not Uncle Sam. That's you. People first,
Suze: then money, then things. Can you tell that this topic
Suze: has absolutely aggravated me? All right.
Suze: So just stay safe, and if you listen to me
Suze: you will become financially unstoppable.