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Speaker 1: June 25, 2020. Welcome to the Women and Money podcast as well as the men smart enough to listen. You know, I was just listening, by the way, to the opening theme song of this podcast by Effie. You should look her up on Spotify, she did this theme song as well as last season's song, and I was thinking how incredibly appropriate the words are. And this was written last year for this podcast before we knew what was going to happen this year. And I was thinking, oh my God, we must have been psychic or something because those words are so extraordinary. So, if you haven't really listened to what they are and just kind of liking the tune, but you're not really listening to the words, just take a close listen. So, last Thursday, I started to talk about social security because somebody had written in a question, and by the way, this is Ask Suze Anything today. Every Thursday I drop an Ask Suze Anything. And if you want to ask a question, just download the app, the Women and Money app by going to Apple Apps or Google Play, search for Suze Orman, S-U-Z-E. Have you ever wondered why I spell it that way? One day, I'll tell you, but anyway, and download the app and that's where you cannot only ask a question but also search all the questions that have been asked, the answers that I've answered, and listen to the podcast, search the podcast for all kinds of things there. So you might want to do that. So, somebody wrote in last week, and I answered it about social security and when to take it, and I said that I just would do a little bit of a follow up on today's Ask Suze Anything. So, I'm doing that right now. You know, if you aren't in a relationship, meaning, you're not married, you're just by yourself, you're in relatively good health, expected to live a normal life expectancy, then it's very easy to figure out well, of course, you should wait until you're 70 to take social security. But it's not always that easy, because if you're married, it depends on age. It depends on, will your spouse be taking a spousal benefit? And are you making a whole lot more money than the spouse or is your spouse making a whole lot more money than you? Or do you have younger kids? Do you have a situation where you're not healthy and you're not expected to live your normal life expectancy? All of those things matter, so, therefore, we've made it relatively easy for you, and on the app now, if you go and look at it and scroll down in one of those little blue boxes, you will see "social security." Click on there and we have on there a calculator that was created by Mike Piper, who's a CPA. In fact, he has a great book called Social Security Made Simple, you can find it on Amazon if you want. But if you just simply use this calculator that's right there and put in your information as well as the information of your spouse or whatever your situation is, it will suggest to you when you in your particular situation should absolutely take social security. If you want advanced options, meaning you want to just change it up a little, on the very top of this little app in that box there, when you click on it, you'll see advanced options. Just click there, and then you can make this even more advanced for yourself. However, to use this little calculator, you have to know what your primary insurance amount is, and your primary insurance amount is what you are expected to get at your full retirement age. You know, years ago it was very simple. Full retirement age was 65. Once you reach 65 that was your full retirement age, your FRA, you got your PIA, which is your primary insurance amount. Today, it's not quite that simple. Today, if you were born 1960 or after, your full retirement age is 67. If you were born prior to 1960, depending on your year you were born, your full retirement age might be 66, 66 and two months, 66 and six months, whatever it may be. So, it's just so simple to find out what your primary insurance amount is if you simply go to "my Social Security." Just google it, and then it will take you to the Social Security website, where if you open up a My Social Security account, it will estimate for you based on the information they have on you, your primary insurance amount. And that amount there is exactly what you will use in the calculator that is on the app to help you and your spouse, or just you, figure out when is it best for you to take social security? So, can you just do that? Now, obviously, the calculator that's on the Women and Money app that helps you figure this out is really just an estimate to get you going. It's free so that you can see what you need to know. If you really, really want to get detailed with this, there are then two really main sources that most people go to, and my favorite one happens to be Maximize My Social Security. And you go to that website by going to www.MaximizeMySocialSecurity.com, and this was put together by a professor. Fabulous, brilliant, and it will cost you $40 to get a detailed description of how you in your particular situation should maximize your social security. There is another one out there called Social Security Advisors. And to go to that one, you just go to www.SocialSecurityAdvisors.com, and there you actually have the ability to talk to somebody if you want. That one will run you between $25-125 based on what you want to do. But you might just want to start with my app to give you an idea. But this is a very, very important decision that all of you need to make sooner than later as you get older. It can cost you tens of thousands of dollars if you don't make the right decision, so, I think it's absolutely worth the investment because you have circumstances in your life that just aren't taken into consideration with the one that I have on my app. Then pay a little money and get the right answer for yourselves. Also, when you open up a My Social Security, an account there, if you scroll down, you'll see a little video of me. My Social Security had me do some videos for them explaining certain things so you can go there and watch me as well. So, that's what I want to tell you about social security because I can't just generalize. You need to know specifically, but I can certainly generalize if you are healthy, you are single, you should wait until you are 70. All right, let's go to the questions that you sent in. The first one is from Carol, and she says, Suze, I have a question regarding term life insurance. My husband and I both have a term policy, and the expiration date is soon approaching and the company submitted a renewal policy and the payments would be more than double than what we were paying. I am 59 and my husband is 62. We have enough in our investments to live comfortably and have money left for our son in the future. Do you think it's a good idea to purchase another term policy? It will cost us more now that we are older. Let me know what you think. Enjoy your posts and podcasts, Carol. So Carol, here's what I think. Insurance was never meant to be a permanent need. It was never meant to be there for your entire life, it was meant to be there when you were younger before you could write in this question and say we have enough in our investments to live comfortably and have money left for our son in the future. So, if you know without a shadow of a doubt that you have enough money that if your husband were to die tomorrow, if you were to die tomorrow, whatever it may be, that if you have enough money no matter what would happen for you to live comfortably forever and have some money left over for your son, then no, don't get another policy. Why waste that kind of money? Insurance is only meant to be there when you don't have enough money to support those who are financially dependent on you in case something were to happen. But you obviously do. But I just want to talk about this in generalities right now, not about Carol's question, but something that all of you need to think about since I was just talking about social security. So many times when you figure out your retirement, you figure out oh my God, I have enough money, everything's going great. But are you sure, are you positive? Because remember, if you are calculating that you will have absolutely enough money to live in retirement based on your and your spouse's social security, you could be making a big mistake, because, upon the death of one of you, you're going to lose one social security check. And what does that do for your retirement? So, when figuring out your retirement and can you afford to retire, figure it out as if there is only one social security check, not two. Pretend like one of you has died and how does that affect your ability to be able to pay your bills? Same thing with a pension. Sometimes you're getting a pension and you figure out, oh, I have enough money for all of us to live because of this pension. And then your spouse dies and what happens to the pension? Does it get reduced in half? Does it stay the same? Does it stop altogether? You have to take those things into consideration. And just one other thing. What does concern me about Carol's question is, she says, that she has enough in our investments to live comfortably. Well, what happens if the stock market crashes? What if the market went down 38% as it did a few months ago, but it didn't stop there? It went to 58%, 60%, or it went all the way down and it stayed there? Or maybe the companies that Carol is invested in with dividends cut their dividends. So then does Carol have enough money to be OK? That's why it's so important, everybody, if you are 50, 60, 70, or 80 for you to really dive into my new book, The Ultimate Retirement Guide for 50+: Winning Strategies to Make Your Money Last a Lifetime because I talk about this in great detail in this book and why you need what I call "guaranteed income," and what is guaranteed income and how do you get it? So, if you want to read the book, you can go to www.SuzeOrman.com/WomenAndMoney, and you can right there purchase it for $10. That's a New York Times bestselling book, hardback, 320 pages for $10 and that includes shipping. Or, for those of you who would rather just listen to the book, you could go to www.SuzeOrmanAudio.com and you can stream the book for 30 days for absolutely free the audio version of it, which is 12 hours and 30 minutes. But one way or the other, honest to God, you need the information that is in that book. Fabulous reviews on Amazon, fabulous book. But it will answer your questions so that you do not make mistakes. All right, let's go to the next question. The next one is from Diana and she says, hi, Suze. I was planning to do some Roth conversions this year. With the current financial crisis, would you adjust this plan or continue on since I am 56, and 15 years at least from retirement? Also, would you increase my cash holdings to two to three years of expenses with the current status of the markets? I do not want to sell my taxable assets but may need to in order to have that much cash available for living expenses. Well, Diana, you confused me a little bit here because you say you're at least 15 years from retirement, but are you saying that you're not exactly sure because you may lose your job or whatever? So here, especially again, we go back to The Ultimate Retirement Guide for 50+. I want all of you, once you are in retirement, to have, a three-year cash cushion, and I explained that in great detail in that book. At 56, if you really don't think that you are going to be retiring for 15 years, then no, I don't think you need more than an eight-month emergency fund. Hey, if you want to have a one-year emergency fund, OK. But I think you would be far better having that money going to work for you in the market because I think the market is going to be fine. So, Diana, it doesn't matter what I think. You have to remember, the goal of money is to make you feel secure. And if you would feel more secure having two or three years of expenses set aside, then that is exactly what you should do. Your other question, which was that you were planning to do Roth conversions this year, should you adjust this plan? No, I think you should continue to do Roth conversions, especially since your 15 years away from retirement. So, on the days when the markets are really low, kind of like what happened yesterday, what you should be doing is converting on that day. But do it little by little, because remember, you're going to owe taxes on any amount of money that you do convert, and you don't want to put you in a higher income tax bracket.  Next question is from Lena. She says, what can you tell those like me, whose child's 529 plan has lost almost all of its returns. I'm investing in the Vanguard Aggressive Age-Based 529 and we had $57k in February. We are now down to $45k. My fear is to start losing my principal balance. So, Lena, I'm sure that by now, given when you wrote in this question, that you've seen your 529 plan, your portfolio, come almost back up to your $57k that you had in there in February. OK? So you just have to hold on for the long run here, especially if your kid is what, 10 years away from school, at least five years away or more from when they start school? So, I wouldn't be doing anything here. I would keep investing, however, I go back to the thing of, but your fear, you say "my fear," and if you have fear, you're not secure. So what's the goal of this? So I hope by now, from when you saw that the market went down and the market went up and it goes down a little bit again, I really believe in the long run, you will be absolutely fine. This one is from Tanya. She says, you recommend that we acquire eight months of expenses in our savings accounts, but what if you have credit card debt or maybe student loans? Do you suggest to focus on paying those off first before building the savings? Or, should we pay the minimums and focus on building the savings? Obviously, when it comes to student loans, hopefully, you're on a standard repayment method, Tanya, which means you pay it off in 10 years. But no matter what plan you're on, whatever your payment is that's owed on a student loan, you have got to make that payment. Now, obviously, if it's a direct loan or federal loan, you have until September 30th of this year to make payments. You're on a total forbearance right now, no interest, nothing, so, you're not making those payments at all. If you don't have a savings account, if you don't have an eight-month emergency fund, and you can afford to pay those student loans rather than paying the student loans since they're giving you a free pass and it's not costing you anything, take the amount of money that you were paying on the student loans or should be paying on the student loans and put it in a savings account for yourself. And when it comes to credit card debt, maybe you can call your credit cards and ask them for 90 days of where you don't have to make those payments and take that amount of money that you should be paying towards credit cards and put that into your eight-month emergency fund. But that then will give you a good start on one. After the student loan deferral program is over, after September 30, you have to pay your student loans, you just have to. All right? You don't want to go in default. You don't want to ruin your FICO or credit score in terms of your credit cards. However, I would be trying to get the lowest possible interest rate on my credit cards, and I would only be paying the minimum payment due right now until all of this passes so that extra money could go into your emergency account. Again, I would look at credit unions as a great place for you to open up your emergency account, they tend to give you higher interest rates than banks. Or, you can go online and look up online banks and see what they're paying you. But either way, an eight-month emergency fund is so important, I cannot even tell you. Next one is from Lisa, she says, my daughter is approaching her third year in college. So far, my ex-husband and I have been paying for tuition out of pocket. I have close to $38k saved, $10k of that is in a 529 plan which I'm no longer contributing to. Given the current economic situation we are in with the pandemic and the future uncertainties ahead, should I hold on to my cash and have my daughter take out student loans? My ex and I have at least $60-70k saved up between the two of us. My daughter is in a five-year program. I'm getting afraid... (Here we go, there's that word again, afraid.) ...to relinquish cash with a recession looming. Whether a recession is looming or not, the keyword, Lisa, in your question to me is that you are getting afraid to relinquish cash. What is the goal of money? It's for you to be secure and when you are afraid, you are not secure. If I were you, I would hold onto the cash. I would have my daughter take out as much as she possibly can in Stafford loans, direct loans. The interest rates on those right now for the money taken out after July 1 are like 2.75%. Hold on to the cash, have your daughter take out loans. If everything passes and everything is OK, then you can always take the money if you want and pay off her loans at the end when she graduates. But that will alleviate your fear and it will have her take advantage of a really low interest rate. Also, it could probably teach her some responsibility. You've already paid for two years of her college education, let her pay for the last three of her college education. When she gets out, so she understands what it takes, make her a paying participant in this. I personally think it's good for kids to have loans, it's good for them to understand what it means to make a payment every month, so they also think twice about the money that is being spent on their college education. So my answer is very simple. No, have her take out loans and you keep the cash, girlfriend. This one's from Brad. Suze, I bought a car in December 2019 with a 2.8% 36-month rate from my credit union. I can easily afford the payments, and my wife and I fully fund our retirements and have our emergency funds in place. Our FICO scores are excellent as well. I recently received a refinance offer of 1.9%. While the loan would be for 36 months, I calculated the payment for 30 months and it would be about $40 a month less. What do you think, Suze, is it worth it? I've never refinanced a car before. Thanks, Brad. And he signs it, "one of the men smart enough to listen since he was 22 years old." Brad, yeah, I think you should refinance it because $40 a month for the next 30 payments, or 29 payments, or whatever it is, in savings, is $1200, and that is a lot of money. So, as long as you're not paying anything to refinance it, as long as you pay it off according to the schedule that you were on so that by December 2022 it is totally paid for, then you go ahead and do it, boyfriend, just that simple. All right, let's do one last one and it's from Cindy. And she says, I'm 28, in the military, and I'm stationed in a combat zone. (Cindy, stay safe!) I'm contributing the max to the traditional TSP. What funds should I be invested in within the TSP? All right, so, Cindy, first of all, let's talk. And for those of you who don't know when you're in the military, the TSP is the Thrift Savings Plan, identical to your 401k or 403b at work. So it's for federal employees, military, things like that. Cindy, you're in a combat zone, what does that mean? That means that your income that you are paid is tax-free. You do not pay taxes when you're in the military and you're stationed in a combat zone. Why in the world at the age of 28 when you're in a combat zone, are you contributing the max to the traditional TSP? You don't need a tax write off, you should be contributing the max to the Roth TSP because you don't need a tax write off. And even if you did, you know me, I don't want you to contribute to traditional IRAs, traditional 401ks, 403bs, or TSPs. I want you all in Roth retirement accounts. A Roth retirement account is simply where you contribute with money that you've already paid taxes on, and when you go to take it out, it's tax-free. So she goes on to say, what fund should I be invested in within the TSP? All right, so this is very interesting because there are so many different choices that those of you who are investing in a TSP retirement plan that you have. You have what's called the L-funds, which are like your target date funds where you just put the retirement date 2020, 2030, 2040, or 2050. That's what they are in a TSP, and they do the investments for you and everything is great that way. I don't like the L-funds at all within the TSP, so I would stay away from them. You have five other kinds of funds. You have the G-fund, which is the government fund, and that's where you would keep money that you want totally safe and sound. At the end of last year, I think it was paying 2.24%. Right? You have the F-fund, which is about corporate bonds and things like that. I would absolutely stay away from the F-fund. I would just not, on any level, contribute to it. The S-fund is about small-cap funds, and I happen to like that fund. The I-fund is an international fund, and then the C-fund is like your Standard and Poor's 500 index fund. So if I were you, I would be putting probably out of the 100% that you're investing in your Roth TSP now, I would be putting 70% in the C-fund, 25% in the S-fund, and 5% in the I-fund. But nothing in the F-funds what so ever. All right, now we've answered Cindy's question and for all of you in the military or who work for the federal government, that's what I would be doing if I were you. So, we had a little rough day yesterday in the market. Don't let that deter you. Yesterday, I went in and I bought even more stocks, and it is possible the market will go down today, things will go crazy, who knows? But in the long run, everything will be OK. Like I've told you before, I think come February of next year we'll be more on a smooth path and probably by April of 2022 or so, I think you will have seen the economy at that time recover, believe it or not. So, just stick with it as long as you have time on your side. And I hope this podcast today has made you just a little bit more smart, strong, and most definitely, what's the word of this podcast? Secure. Now you stay safe. Hi, I'm Sarah, and I'm Robert, and we're from Suze Orman's Women and Money podcast team here to tell you that Alloya's member credit unions are so proud to have brought you this episode. You know, Robert, credit unions live by people helping people philosophy. Absolutely, Sarah. And that means when you bank with a credit union, you can trust that they have your best interest at heart. The fact is, regardless of circumstance, a credit union will have your back and keep your money safe, that's the credit union promise. Go to www.MyCreditUnion.gov to find a credit union that fits your needs. That's MyCreditUnion.gov. In providing answers neither Suze Orman Media nor Suze Orman is acting as a Certified Financial Planner, advisor, a Certified Financial Analyst, an economist, CPA, accountant, or lawyer. Neither Suze Orman Media nor Suze Orman makes any recommendations as to any specific securities or investments. All content is for informational and general purposes only and does not constitute financial, accounting or legal advice. You should consult your own tax, legal and financial advisors regarding your particular situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any loss, which may arise from accessing or reliance on the information in this podcast and to the fullest extent permitted by law, we exclude all liability for loss or damages, direct or indirect, arising from use of the information.