1 00:00:08,039 --> 00:00:12,039 Robert: February 22, 2026. Welcome to the Women in Money podcast 2 00:00:12,039 --> 00:00:15,119 Robert: as well as everyone smart enough to listen. Robert, the 3 00:00:15,119 --> 00:00:18,439 Robert: producer here. So I was talking with Suze yesterday and 4 00:00:18,440 --> 00:00:21,439 Robert: she mentioned that she is still getting emails and messages 5 00:00:21,440 --> 00:00:24,479 Robert: from people who don't understand why they should open up 6 00:00:24,479 --> 00:00:27,239 Robert: a Roth, and that she's been telling so many people 7 00:00:27,239 --> 00:00:29,559 Robert: to make sure that they listen to a podcast that 8 00:00:29,559 --> 00:00:32,319 Robert: she did called Don't Be Partners with Uncle Sam. 9 00:00:32,689 --> 00:00:35,650 Robert: And as we were talking, we realized, you know, it 10 00:00:35,650 --> 00:00:38,939 Robert: just makes sense to bring that particular episode back to 11 00:00:38,939 --> 00:00:42,610 Robert: the top of your feeds once again today, so that's 12 00:00:42,610 --> 00:00:45,529 Robert: what we're gonna do. This is Don't Be Partners with 13 00:00:45,529 --> 00:00:47,939 Robert: Uncle Sam. Take it away, Suze. 14 00:00:48,950 --> 00:00:53,509 Suze: I have told you over and over again, the only 15 00:00:53,509 --> 00:00:56,430 Suze: way to be investing in the stock market, 16 00:00:57,409 --> 00:01:03,369 Suze: is through dollar cost averaging, where every month or every 17 00:01:03,369 --> 00:01:07,129 Suze: three months or every six months, if there is something 18 00:01:07,129 --> 00:01:11,080 Suze: that you own, and it goes down, you buy a 19 00:01:11,080 --> 00:01:14,000 Suze: little more. If it continues to go down, you buy 20 00:01:14,000 --> 00:01:17,789 Suze: a little more. So here's a little thing that every 21 00:01:17,790 --> 00:01:19,300 Suze: one of you needs to do. 22 00:01:20,160 --> 00:01:23,000 Suze: I want you to look at every single stock that 23 00:01:23,000 --> 00:01:27,349 Suze: you have, every single ETF that you have right here 24 00:01:27,349 --> 00:01:30,899 Suze: and right now, cause the truth of the matter is, 25 00:01:31,160 --> 00:01:33,860 Suze: you don't know what the stock market's gonna do next week, 26 00:01:34,239 --> 00:01:36,518 Suze: or five weeks from now, or three years from now, 27 00:01:36,639 --> 00:01:39,680 Suze: but right here and right now, you know exactly what 28 00:01:39,680 --> 00:01:43,559 Suze: you have. So, let's say you have a stock, and 29 00:01:43,559 --> 00:01:45,819 Suze: it's worth $20,000 today. 30 00:01:47,260 --> 00:01:50,190 Suze: I want you to ask yourself the question, if you 31 00:01:50,190 --> 00:01:55,470 Suze: did not own that stock today, and you had $20,000 32 00:01:55,470 --> 00:02:00,550 Suze: in cash, would you buy that stock today? 33 00:02:01,410 --> 00:02:05,620 Suze: If the answer to that is yes, then you keep 34 00:02:05,620 --> 00:02:06,889 Suze: what you have. 35 00:02:07,849 --> 00:02:11,779 Suze: If the answer to that is no, I would not. 36 00:02:12,559 --> 00:02:15,179 Suze: Then you better think about selling it seriously. 37 00:02:16,288 --> 00:02:18,979 Suze: And if the answer is I don't know what I 38 00:02:18,979 --> 00:02:23,539 Suze: would do then just sell half obviously you have to 39 00:02:23,538 --> 00:02:27,380 Suze: remember that if you have a stock that is outside 40 00:02:27,380 --> 00:02:31,259 Suze: of a retirement account that you have not held, write 41 00:02:31,258 --> 00:02:35,639 Suze: this down that you have not held for over one year. 42 00:02:36,529 --> 00:02:39,039 Suze: If you sell it, and you have a gain in it, 43 00:02:39,220 --> 00:02:43,720 Suze: you are going to pay ordinary income taxes on that gain. 44 00:02:44,220 --> 00:02:47,380 Suze: Maybe you're gonna lose 20% to taxes, so maybe you 45 00:02:47,380 --> 00:02:48,759 Suze: just keep the stock. 46 00:02:49,669 --> 00:02:52,179 Suze: Cause if it goes down 20%, it would be the 47 00:02:52,179 --> 00:02:54,619 Suze: same as if you sold it and had to pay 48 00:02:54,619 --> 00:02:59,160 Suze: ordinary income tax on it. You have to think about that. 49 00:02:59,538 --> 00:03:03,419 Suze: Maybe you have a stock that you have a loss in. 50 00:03:04,279 --> 00:03:06,669 Suze: Again outside of a retirement account. 51 00:03:08,130 --> 00:03:10,880 Suze: And you wouldn't buy it again. All right, sell it 52 00:03:11,300 --> 00:03:16,880 Suze: and take the loss off your taxes. Just that simple. 53 00:03:17,460 --> 00:03:19,259 Suze: Maybe you have a stock then that you have a 54 00:03:19,258 --> 00:03:23,619 Suze: gain in that you wouldn't buy again. All right, sell 55 00:03:23,619 --> 00:03:27,179 Suze: that possibly and offset your loss with your gain, but 56 00:03:27,179 --> 00:03:30,339 Suze: you have to look at what you have and not 57 00:03:30,339 --> 00:03:34,020 Suze: just sit there and not know what to do. If 58 00:03:34,020 --> 00:03:36,880 Suze: it were up to me telling you all what to do. 59 00:03:37,580 --> 00:03:41,089 Suze: I would say if you own good quality stocks, ETFs, 60 00:03:41,130 --> 00:03:44,660 Suze: mutual funds, if you have 10,20, or 30 years or 61 00:03:44,660 --> 00:03:46,240 Suze: longer till you need the money. 62 00:03:47,240 --> 00:03:51,600 Suze: Can you just sit tight and as the markets may 63 00:03:51,600 --> 00:03:52,559 Suze: go down. 64 00:03:53,610 --> 00:03:55,130 Suze: You might want to buy more. 65 00:03:56,050 --> 00:03:59,059 Suze: You could sell it here if you wanted to, but 66 00:03:59,059 --> 00:04:02,169 Suze: I'm here to tell you, chances are you're not going 67 00:04:02,169 --> 00:04:06,250 Suze: to get back in and it goes up above where 68 00:04:06,250 --> 00:04:09,089 Suze: you sold it. You are not going to be a 69 00:04:09,089 --> 00:04:12,289 Suze: happy camper. Now I can tell you that because I 70 00:04:12,289 --> 00:04:13,428 Suze: did that myself. 71 00:04:14,399 --> 00:04:17,839 Suze: Years ago, I bought a stock, and I watched it 72 00:04:17,839 --> 00:04:21,040 Suze: go up and up and up and up, and it 73 00:04:21,040 --> 00:04:25,140 Suze: had gone all the way up to like $1,100 a share. 74 00:04:25,959 --> 00:04:28,980 Suze: And now I have a whole lot of gain in it, 75 00:04:29,000 --> 00:04:31,799 Suze: even though I'd have to pay taxes on it and 76 00:04:31,799 --> 00:04:34,720 Suze: now I'm getting nervous. I just got nervous. I don't 77 00:04:34,720 --> 00:04:37,440 Suze: know why. And so I decided, oh, I'm gonna sell 78 00:04:37,440 --> 00:04:40,459 Suze: it even though I like the stock. I sold it 79 00:04:40,678 --> 00:04:43,399 Suze: and I had to pay capital gains tax on it, OK. 80 00:04:44,109 --> 00:04:47,540 Suze: And then the stock started to go down and down 81 00:04:47,540 --> 00:04:50,440 Suze: and down, and I was so happy that it was 82 00:04:50,440 --> 00:04:53,760 Suze: going down because it proved that I was right, that 83 00:04:53,760 --> 00:04:54,920 Suze: I should have sold it. 84 00:04:55,660 --> 00:04:57,980 Suze: And all of a sudden it's going down a few 85 00:04:57,980 --> 00:05:02,290 Suze: hundred points, OK, and then it turns around, and it 86 00:05:02,290 --> 00:05:05,000 Suze: goes right back up to $1,500 a share. 87 00:05:05,980 --> 00:05:09,308 Suze: And I'm like, no, no, are you kidding me? 88 00:05:10,428 --> 00:05:15,549 Suze: Don't think you're gonna be out guessing what these stocks, ETFs, 89 00:05:15,630 --> 00:05:20,539 Suze: these markets are gonna do. You cannot outguess it. So, 90 00:05:21,149 --> 00:05:25,828 Suze: prepare yourselves, put on your financial safety jackets, cause just 91 00:05:25,829 --> 00:05:29,959 Suze: in case it gets a little bumpy, you'll be OK. 92 00:05:30,269 --> 00:05:34,709 Suze: You'll be OK, especially if your dollar cost averaging. 93 00:05:35,600 --> 00:05:39,000 Suze: So, I just wanna say that to you, and just 94 00:05:39,000 --> 00:05:44,109 Suze: know when these markets go down, especially in retirement accounts, 95 00:05:44,480 --> 00:05:47,558 Suze: where you are investing month in and month out, or 96 00:05:47,559 --> 00:05:49,659 Suze: every paycheck, however you do it, 97 00:05:51,040 --> 00:05:54,760 Suze: And the money's going into ETFs. You should be so happy. 98 00:05:54,839 --> 00:05:57,558 Suze: I meant what I said, that if these markets go 99 00:05:57,559 --> 00:06:01,079 Suze: down and your dollar cost averaging automatically from a paycheck 100 00:06:01,079 --> 00:06:02,179 Suze: in a retirement account, 101 00:06:03,369 --> 00:06:06,489 Suze: The more it goes down, the more shares you buy, 102 00:06:06,609 --> 00:06:10,730 Suze: and eventually when it turns around, the more money you make. 103 00:06:11,250 --> 00:06:14,850 Suze: One thing that is very important when you are looking 104 00:06:14,850 --> 00:06:20,209 Suze: at your statements, and this just happened with KT believe 105 00:06:20,209 --> 00:06:22,928 Suze: it or not, about three weeks ago. 106 00:06:23,790 --> 00:06:27,428 Suze: She comes into my little office and she says, Look 107 00:06:27,428 --> 00:06:29,549 Suze: at this. I said, What do you want me to 108 00:06:29,549 --> 00:06:34,640 Suze: look at? She said, Look at these statements, Suze. KT 109 00:06:35,178 --> 00:06:37,988 Suze: goes over them like a hawk. I'm telling you, every 110 00:06:37,988 --> 00:06:42,750 Suze: single month, every single line she's looking at, we lost here, 111 00:06:42,829 --> 00:06:46,109 Suze: we gained here, whatever it is, and that's fine. I 112 00:06:46,109 --> 00:06:48,170 Suze: like that she does that and she takes an interest 113 00:06:48,170 --> 00:06:50,988 Suze: in it. She goes, Can you believe how much money 114 00:06:50,988 --> 00:06:53,320 Suze: we have made since January? 115 00:06:54,070 --> 00:06:56,750 Suze: And I looked at her and I said, KT we 116 00:06:56,750 --> 00:06:59,609 Suze: haven't made a penny. She says, what are you talking about? 117 00:06:59,790 --> 00:07:03,750 Suze: Look at this, Suze. I said, KT, we only make 118 00:07:03,750 --> 00:07:08,630 Suze: that money when we have sold, and we're not selling. 119 00:07:09,450 --> 00:07:12,929 Suze: We like what we own. If it goes down, we'll 120 00:07:12,929 --> 00:07:17,089 Suze: buy more of it, but we are not selling, so 121 00:07:17,089 --> 00:07:20,440 Suze: don't look at it like we have that much money, 122 00:07:20,690 --> 00:07:25,470 Suze: because until we sell, we don't have that much money. 123 00:07:26,250 --> 00:07:29,579 Suze: And I think a lot what has been happening in 124 00:07:29,579 --> 00:07:32,500 Suze: the United States of America, believe it or not, in 125 00:07:32,500 --> 00:07:36,899 Suze: terms of inflation, is that so many of you have 126 00:07:36,899 --> 00:07:42,070 Suze: been looking at your 401k statements or 403B or TSP 127 00:07:42,070 --> 00:07:46,100 Suze: statements or whatever they are, and they've gone up so 128 00:07:46,100 --> 00:07:50,380 Suze: much over the past six months that you actually feel 129 00:07:50,380 --> 00:07:54,820 Suze: wealthy and because you feel wealthier maybe wealthier than you 130 00:07:54,820 --> 00:07:55,779 Suze: ever felt. 131 00:07:56,559 --> 00:08:00,559 Suze: Then you feel OK about going out and spending money. 132 00:08:01,390 --> 00:08:04,329 Suze: That's why, on some level, I have to tell you, 133 00:08:04,470 --> 00:08:09,630 Suze: I don't think inflation is necessarily coming down, cause the 134 00:08:09,630 --> 00:08:14,709 Suze: economy is still too strong, and it's strong because of 135 00:08:14,709 --> 00:08:17,350 Suze: how much money is being spent. 136 00:08:18,420 --> 00:08:26,179 Suze: Please remember, everybody, that what you see, especially if it 137 00:08:26,179 --> 00:08:31,410 Suze: is a pre-tax retirement account, what you see is not 138 00:08:31,420 --> 00:08:33,260 Suze: what you get. 139 00:08:34,150 --> 00:08:37,250 Suze: You do not own all of that money. 140 00:08:38,000 --> 00:08:43,478 Suze: You are in partnership with Uncle Sam on every single 141 00:08:43,479 --> 00:08:50,299 Suze: penny that is in a pre-taxed retirement account, because later 142 00:08:50,299 --> 00:08:53,719 Suze: on in life when you have to take it out, 143 00:08:53,940 --> 00:08:57,598 Suze: remember you don't have a choice you have got to 144 00:08:57,599 --> 00:09:03,700 Suze: eventually take required minimum distributions. Your partner in crime here 145 00:09:04,000 --> 00:09:06,039 Suze: is Uncle Sam. 146 00:09:06,989 --> 00:09:11,619 Suze: And he will take whatever percentage that is in there 147 00:09:12,200 --> 00:09:16,159 Suze: that he wants to at that time. And when you 148 00:09:16,159 --> 00:09:21,039 Suze: have debts and deficits that are facing the United States 149 00:09:21,039 --> 00:09:25,159 Suze: of America like they are right now, do you honest 150 00:09:25,159 --> 00:09:30,280 Suze: to God believe that 30 years from now, 20 years 151 00:09:30,280 --> 00:09:35,079 Suze: from now, tax brackets won't be higher than they are 152 00:09:35,080 --> 00:09:36,400 Suze: right now. 153 00:09:37,109 --> 00:09:41,228 Suze: But all of you argue with me. You argue with 154 00:09:41,229 --> 00:09:42,030 Suze: me and say, Suze. 155 00:09:42,880 --> 00:09:44,960 Suze: I'm in a high tax bracket. 156 00:09:45,789 --> 00:09:50,228 Suze: I'm 50 years of age. I want my tax bracket 157 00:09:50,229 --> 00:09:54,189 Suze: now going into a Roth retirement account. There's no time. 158 00:09:54,250 --> 00:09:57,510 Suze: It makes no sense. I know what I'm doing, and 159 00:09:57,510 --> 00:10:01,989 Suze: my financial adviser tells me, You're wrong, Suze Orman. Do 160 00:10:01,989 --> 00:10:07,468 Suze: you have any idea how crazy, how absolute crazy that 161 00:10:07,469 --> 00:10:12,669 Suze: makes me? So therefore, I'm going to do a comparison 162 00:10:12,669 --> 00:10:13,469 Suze: right now. 163 00:10:14,020 --> 00:10:19,640 Suze: Between a Roth retirement account and a pre-tax retirement account 164 00:10:20,140 --> 00:10:24,260 Suze: for somebody who's just starting right now in their 50s 165 00:10:24,419 --> 00:10:29,739 Suze: and settle this stupid argument once and for all. However, 166 00:10:30,090 --> 00:10:33,580 Suze: before I do that, there is something that I need 167 00:10:33,580 --> 00:10:36,340 Suze: to do. There is a woman by the name of 168 00:10:36,340 --> 00:10:40,369 Suze: Paula whose husband died a few months ago. 169 00:10:41,750 --> 00:10:47,478 Suze: And Paula wrote and said, I need help, Suze. I 170 00:10:47,479 --> 00:10:49,559 Suze: don't know what to do with this and these things. 171 00:10:49,619 --> 00:10:52,900 Suze: I have three or four kids. Can you please help me? 172 00:10:53,179 --> 00:10:58,559 Suze: And I called Paula to help her, but the problem 173 00:10:58,559 --> 00:11:04,539 Suze: is Paula isn't necessarily sure that it's me. She is 174 00:11:04,539 --> 00:11:07,270 Suze: in shock. Number one, she can't believe that Suze Orman 175 00:11:07,270 --> 00:11:08,020 Suze: called her. 176 00:11:08,799 --> 00:11:13,929 Suze: And number two, Suze Orman said to her, Paula, you 177 00:11:13,929 --> 00:11:18,729 Suze: can't trust my voice because of artificial intelligence. I don't 178 00:11:18,729 --> 00:11:21,209 Suze: even know if I were to FaceTime you, you would 179 00:11:21,210 --> 00:11:23,849 Suze: be able to trust it because of everything that's going 180 00:11:23,849 --> 00:11:28,520 Suze: on with artificial intelligence. So I know what I'll do, Paula, 181 00:11:28,890 --> 00:11:31,030 Suze: on my podcast. 182 00:11:31,849 --> 00:11:35,609 Suze: Today I will talk about this so that you know 183 00:11:35,609 --> 00:11:38,929 Suze: without a shadow of a doubt it was me who 184 00:11:38,929 --> 00:11:44,250 Suze: was telling you what to do. So I just wanted 185 00:11:44,250 --> 00:11:48,710 Suze: to get that in and not forget it. All right, 186 00:11:48,770 --> 00:11:52,549 Suze: I want all of you right here and right now 187 00:11:52,929 --> 00:11:57,690 Suze: I want you to write down everything that I am 188 00:11:57,690 --> 00:11:58,929 Suze: about to tell you. 189 00:11:59,549 --> 00:12:02,968 Suze: Because if these numbers work at 50. 190 00:12:04,090 --> 00:12:08,650 Suze: Think about if you started a Roth retirement account at 191 00:12:08,650 --> 00:12:14,849 Suze: 25 or 30 or 35, so worst case scenario, and 192 00:12:14,849 --> 00:12:18,729 Suze: this is a real example, and this just happened to 193 00:12:18,729 --> 00:12:22,419 Suze: me on Friday on a telephone call that I was 194 00:12:22,419 --> 00:12:26,409 Suze: having with somebody who wants me to do something for 195 00:12:26,409 --> 00:12:27,969 Suze: their company, all right. 196 00:12:28,270 --> 00:12:31,609 Suze: And then of course we always talk about their own money. 197 00:12:31,630 --> 00:12:34,659 Suze: Somehow I don't know why that is. It always, at 198 00:12:34,659 --> 00:12:37,690 Suze: the end of the conversation, they tell me what they're doing, 199 00:12:37,869 --> 00:12:40,559 Suze: and then I'm like, you're kidding. You're not doing that, 200 00:12:40,630 --> 00:12:42,849 Suze: are you? And then I try to set them straight. 201 00:12:43,309 --> 00:12:50,030 Suze: So in this particular situation, this person's financial advisor has 202 00:12:50,030 --> 00:12:53,150 Suze: convinced them that the best thing that they can be 203 00:12:53,150 --> 00:12:56,969 Suze: doing is putting money, maxing out. 204 00:12:57,400 --> 00:13:05,130 Suze: Their 401k at work pre-tax. And when I said, what? 205 00:13:05,830 --> 00:13:09,710 Suze: And they said, Suze, I'm 50 years of age. I'm 206 00:13:09,710 --> 00:13:14,390 Suze: getting older now. I make approximately $300,000 a year. It's 207 00:13:14,390 --> 00:13:18,349 Suze: a huge tax write-off for me, and I've gone over 208 00:13:18,349 --> 00:13:21,309 Suze: the numbers, and this is what my adviser is telling 209 00:13:21,309 --> 00:13:24,590 Suze: me to do. Well, after 30 minutes of arguing with him, 210 00:13:24,669 --> 00:13:27,020 Suze: he still didn't believe me, I can tell you that. 211 00:13:27,429 --> 00:13:31,150 Suze: So let me just do the numbers for him, but 212 00:13:31,150 --> 00:13:33,710 Suze: for all of you as well. 213 00:13:34,669 --> 00:13:38,320 Suze: I want you to write everything down. This person that 214 00:13:38,320 --> 00:13:42,039 Suze: I spoke to was 50 years of age, and he 215 00:13:42,039 --> 00:13:48,559 Suze: makes approximately $300,000 a year. Now listen, if it works 216 00:13:48,559 --> 00:13:53,270 Suze: with $300,000 which is a good sum of money, puts 217 00:13:53,270 --> 00:13:57,590 Suze: this person in a high tax bracket, of course an 218 00:13:57,590 --> 00:14:00,619 Suze: adviser would say, you want a tax write-off. 219 00:14:01,590 --> 00:14:04,400 Suze: If it works in a high tax bracket, it even 220 00:14:04,400 --> 00:14:08,159 Suze: works better in a lower tax bracket. OK, so, 221 00:14:09,239 --> 00:14:10,950 Suze: He makes 300,000 a year. 222 00:14:11,729 --> 00:14:16,380 Suze: And he is putting $30,000 a year, which is the 223 00:14:16,380 --> 00:14:20,539 Suze: maximum that you can put into a 401k this year, 224 00:14:20,780 --> 00:14:24,900 Suze: and he's doing it every year for the next 20 years. 225 00:14:25,020 --> 00:14:28,419 Suze: Let's just make that assumption because I don't know what 226 00:14:28,419 --> 00:14:31,940 Suze: the maximum will be in future years. So just let's 227 00:14:31,940 --> 00:14:35,599 Suze: assume that that's all he puts in for the next 228 00:14:36,140 --> 00:14:37,710 Suze: 20 years. 229 00:14:38,479 --> 00:14:41,359 Suze: We're not going to consider a match. Let's just pretend 230 00:14:41,359 --> 00:14:46,380 Suze: that his company does not match. And let's also assume 231 00:14:46,380 --> 00:14:53,559 Suze: that over those 20 years, he's averaged approximately 7% on 232 00:14:53,559 --> 00:14:58,599 Suze: his money. Let's just do that for simplistic sake, OK. 233 00:14:59,630 --> 00:15:05,150 Suze: If that were true, at 70 years of age, he 234 00:15:05,150 --> 00:15:12,609 Suze: would have approximately $1.3 million and now he's no longer working, 235 00:15:12,979 --> 00:15:17,309 Suze: and he simply does what he takes the $1.3 million. 236 00:15:18,210 --> 00:15:24,140 Suze: And he rolls it over to an IRA rollover. 237 00:15:25,299 --> 00:15:29,900 Suze: Cause he now wants to invest it very securely, cause 238 00:15:29,900 --> 00:15:33,780 Suze: he doesn't want anything else to happen to it. 239 00:15:34,700 --> 00:15:38,979 Suze: So now he rolls it over, and he invests 4% 240 00:15:38,979 --> 00:15:42,219 Suze: of it in treasuries, OK. 241 00:15:43,359 --> 00:15:50,809 Suze: And at the age of 75, he now has $1.6 million. 242 00:15:51,090 --> 00:15:53,809 Suze: Now just put a pin in that for one second. 243 00:15:54,789 --> 00:16:00,109 Suze: Remember, if you were born 1960 or later. 244 00:16:00,809 --> 00:16:08,450 Suze: The new required minimum distribution age is 75, so because 245 00:16:08,450 --> 00:16:12,450 Suze: he is currently only 50, he will not need to 246 00:16:12,450 --> 00:16:18,330 Suze: take out required minimum distributions till he is 75. And 247 00:16:18,330 --> 00:16:24,039 Suze: let's just assume he did very well for himself. He 248 00:16:24,039 --> 00:16:25,830 Suze: made all of this money. 249 00:16:26,260 --> 00:16:30,950 Suze: And he's invested it wisely. He owns his house outright. 250 00:16:31,270 --> 00:16:36,830 Suze: Very little expenses. Everything is great for him, and he 251 00:16:36,830 --> 00:16:41,030 Suze: so wishes that he didn't have to take out required 252 00:16:41,030 --> 00:16:42,969 Suze: minimum distributions. 253 00:16:43,719 --> 00:16:47,669 Suze: Because he doesn't need to, but yet he does not 254 00:16:47,669 --> 00:16:52,510 Suze: have a choice. He has got to take out required 255 00:16:52,510 --> 00:16:57,349 Suze: minimum distributions, and he has lived his life in such 256 00:16:57,349 --> 00:17:03,190 Suze: a way, let's just assume this, that he has other income. 257 00:17:03,919 --> 00:17:10,900 Suze: But he only has $50,000 a year of taxable income 258 00:17:11,319 --> 00:17:16,719 Suze: besides his required minimum distributions that he will be taking out. 259 00:17:17,540 --> 00:17:22,180 Suze: If he starts to take out required minimum distributions, which 260 00:17:22,180 --> 00:17:25,609 Suze: he has to at the age of 75. 261 00:17:26,249 --> 00:17:30,159 Suze: The very first year he will take out approximately $58,000 262 00:17:30,328 --> 00:17:35,009 Suze: and then $60,000 and then $62,000 and every year as 263 00:17:35,009 --> 00:17:40,619 Suze: he gets older, it goes up approximately $2,000 to $3,000 264 00:17:40,619 --> 00:17:41,348 Suze: a year. 265 00:17:42,119 --> 00:17:47,369 Suze: And the IRS truthfully, according to life expectancy tables, expect 266 00:17:47,369 --> 00:17:50,410 Suze: him to live till about, let's just say 89 years 267 00:17:50,410 --> 00:17:54,969 Suze: of age, and by that time he's required to take 268 00:17:54,969 --> 00:18:03,589 Suze: out $100,000 as a required minimum distribution. Now the true 269 00:18:04,410 --> 00:18:08,689 Suze: question becomes how much did he totally have to take 270 00:18:08,689 --> 00:18:11,290 Suze: out of this account. 271 00:18:12,339 --> 00:18:25,640 Suze: In required minimum distributions, and the answer to that is $1,202,897. 272 00:18:27,030 --> 00:18:34,188 Suze: It was required over those 14 years to take out 273 00:18:34,189 --> 00:18:41,948 Suze: $1.2 million that he will owe ordinary income taxes on. 274 00:18:42,670 --> 00:18:49,689 Suze: At whatever tax bracket Uncle Sam puts into place again, however, 275 00:18:50,150 --> 00:18:54,889 Suze: we are going to assume that tax brackets stay exactly 276 00:18:54,890 --> 00:19:00,229 Suze: as they are right now, which is the lowest income 277 00:19:00,229 --> 00:19:04,170 Suze: tax brackets any of us have been in in years. 278 00:19:05,109 --> 00:19:08,819 Suze: And we're just going to assume they stay this low, 279 00:19:09,119 --> 00:19:11,849 Suze: although I would make a bet with any of you 280 00:19:11,849 --> 00:19:14,879 Suze: that is not going to happen. But I'm just going 281 00:19:14,880 --> 00:19:20,199 Suze: to give this example, assuming that we stay at the 282 00:19:20,199 --> 00:19:25,300 Suze: tax brackets we are right now, and if that is true, 283 00:19:25,959 --> 00:19:34,579 Suze: he's going to end up paying at least $313,000 in taxes. 284 00:19:35,180 --> 00:19:40,060 Suze: Over the next 14 years as he's taking the money out. 285 00:19:41,189 --> 00:19:46,948 Suze: Now, again, what did he save in taxes when he 286 00:19:46,949 --> 00:19:48,510 Suze: put the money in? 287 00:19:49,410 --> 00:19:56,069 Suze: He saved approximately $144,000. 288 00:19:57,760 --> 00:19:59,060 Suze: Now that's a lot of money. 289 00:20:00,130 --> 00:20:06,530 Suze: But do you understand that really what's happening here is 290 00:20:06,530 --> 00:20:09,609 Suze: Uncle Sam is just giving you a loan. 291 00:20:10,430 --> 00:20:15,540 Suze: A loan in this case of $144,000. 292 00:20:16,430 --> 00:20:20,989 Suze: And over the years, Uncle Sam's gonna get back at 293 00:20:20,989 --> 00:20:26,229 Suze: least $313,000. 294 00:20:27,329 --> 00:20:28,469 Suze: Think about that 295 00:20:29,800 --> 00:20:33,579 Suze: When you put money in a pre-tax retirement account, 296 00:20:34,619 --> 00:20:37,409 Suze: You put in an amount of money. Please listen to 297 00:20:37,410 --> 00:20:38,560 Suze: me closely now. 298 00:20:39,430 --> 00:20:44,449 Suze: You're putting in money, and it is growing and growing 299 00:20:44,630 --> 00:20:48,369 Suze: and growing and growing. In this example, 300 00:20:49,260 --> 00:20:58,669 Suze: This person only put in $600,000 over those 20 years. 301 00:21:00,060 --> 00:21:02,718 Suze: But because of compounding. 302 00:21:03,589 --> 00:21:10,030 Suze: It's now worth 1.6 million at the age of 75. 303 00:21:11,040 --> 00:21:17,159 Suze: So, Uncle Sam is going to get taxes on that 304 00:21:17,160 --> 00:21:22,659 Suze: extra million dollars of growth above what he put in. 305 00:21:22,760 --> 00:21:23,760 Suze: Do you see that? 306 00:21:24,540 --> 00:21:30,859 Suze: He put in 600,000. It's now worth 1.6 million. 307 00:21:32,030 --> 00:21:38,859 Suze: Forget the $600,000 he put in, it grew by $1 million. 308 00:21:40,449 --> 00:21:46,449 Suze: And Uncle Sam gets to have taxes on that $1 309 00:21:46,449 --> 00:21:51,729 Suze: million plus he gets back the taxes he gave you 310 00:21:51,729 --> 00:21:57,629 Suze: over all those years on that $600,000 that you put in. 311 00:21:57,959 --> 00:22:01,680 Suze: Think about it. Think about it. 312 00:22:02,890 --> 00:22:07,829 Suze: Why do you think they want you to do this? 313 00:22:08,770 --> 00:22:13,489 Suze: Because they know exactly. They are going to make a 314 00:22:13,489 --> 00:22:18,849 Suze: lot of money off of you. Do you all hear 315 00:22:18,849 --> 00:22:20,250 Suze: what I'm saying? 316 00:22:21,510 --> 00:22:26,209 Suze: Even if he had saved $200,000 in taxes. 317 00:22:27,040 --> 00:22:31,599 Suze: That's still a lot less than 313,000 that he will 318 00:22:31,599 --> 00:22:33,579 Suze: owe and in reality. 319 00:22:34,410 --> 00:22:39,109 Suze: 20 years from now he may owe a whole lot more, 320 00:22:39,290 --> 00:22:43,389 Suze: but wait, I'm continuing on with this example. 321 00:22:44,449 --> 00:22:53,189 Suze: Even though he took out approximately the $1.2 million in RMDs, 322 00:22:53,459 --> 00:22:57,010 Suze: he still has remaining in that account. 323 00:22:57,959 --> 00:23:05,020 Suze: About $433,000 because that money has been growing all those 324 00:23:05,020 --> 00:23:08,979 Suze: years that he's been taking out RMDs and now let's 325 00:23:08,979 --> 00:23:12,699 Suze: assume that he dies at the age of 89. 326 00:23:13,520 --> 00:23:17,810 Suze: And now his children get the money. 327 00:23:18,810 --> 00:23:23,560 Suze: They now have to continue to take the money out 328 00:23:23,560 --> 00:23:26,609 Suze: of this inherited IRA that they just got. 329 00:23:27,400 --> 00:23:33,119 Suze: And they have to wipe it clean, totally within 10 years. 330 00:23:33,410 --> 00:23:37,290 Suze: So chances are they're going to take out $450,000 to 331 00:23:37,290 --> 00:23:39,630 Suze: $50,000 a year. 332 00:23:40,349 --> 00:23:43,520 Suze: If they do that, we don't know what tax bracket 333 00:23:43,520 --> 00:23:47,319 Suze: they're in, but let's just say they're in an average 334 00:23:47,319 --> 00:23:50,959 Suze: tax bracket as well. They're going to probably pay at 335 00:23:50,959 --> 00:23:57,859 Suze: least another $100,000 in income taxes to get that money, 336 00:23:58,000 --> 00:24:01,640 Suze: and truthfully, everybody, probably a whole lot more. 337 00:24:02,540 --> 00:24:07,060 Suze: So, given that, between what this guy is going to 338 00:24:07,060 --> 00:24:12,659 Suze: pay in income taxes, 313,000, at least the 100,000 his 339 00:24:12,660 --> 00:24:14,130 Suze: kids are gonna have to pay. 340 00:24:15,160 --> 00:24:23,478 Suze: Now they have paid jointly $413,000 in taxes based on 341 00:24:23,479 --> 00:24:25,119 Suze: today's tax structure, 342 00:24:26,939 --> 00:24:32,189 Suze: versus the $144,000 or even the $200,000 of a tax 343 00:24:32,189 --> 00:24:34,630 Suze: write-off that he got. 344 00:24:35,729 --> 00:24:39,569 Suze: Am I making sense to all of you? So now 345 00:24:39,569 --> 00:24:40,689 Suze: you're saying, well, Suze, 346 00:24:41,520 --> 00:24:45,079 Suze: You want him to do a Roth. You're Roth crazy, 347 00:24:45,400 --> 00:24:47,680 Suze: so do the numbers for me with a Roth. Oh, 348 00:24:47,800 --> 00:24:49,438 Suze: thank you very much for asking. 349 00:24:50,489 --> 00:24:56,550 Suze: OK, he's still 50. He makes $300,000 a year, no problem, 350 00:24:56,849 --> 00:25:02,310 Suze: but instead of putting in $30,000 a year for the 351 00:25:02,310 --> 00:25:07,930 Suze: next 20 years, we have to take away the $7200 352 00:25:07,930 --> 00:25:11,089 Suze: in tax that we're gonna have to pay on that 353 00:25:11,089 --> 00:25:16,030 Suze: $30,000 now because we did not do a pre-tax 401k. 354 00:25:16,530 --> 00:25:19,229 Suze: So for the next 20 years. 355 00:25:19,979 --> 00:25:26,379 Suze: He's only going to be investing $22,800 a year in 356 00:25:26,380 --> 00:25:32,219 Suze: the Roth 401k versus the $30,000. OK, still an annual 357 00:25:32,219 --> 00:25:35,619 Suze: average rate of return of 7%. Just stick with me here. 358 00:25:35,699 --> 00:25:40,060 Suze: This is just an example. Don't go crazy. It's just 359 00:25:40,060 --> 00:25:43,500 Suze: trying to equal things out, all right, everybody, at the 360 00:25:43,500 --> 00:25:44,938 Suze: age of 70. 361 00:25:45,500 --> 00:25:50,739 Suze: He would have only $1 million in his Roth 401k 362 00:25:50,739 --> 00:25:55,479 Suze: versus the $1.3 million he would have had in his 363 00:25:55,479 --> 00:25:58,060 Suze: traditional 401k. All right. 364 00:25:58,770 --> 00:26:02,300 Suze: But now he takes it and does an IRA rollover 365 00:26:02,300 --> 00:26:05,540 Suze: with it, makes again 4% on it, put it all 366 00:26:05,540 --> 00:26:09,660 Suze: in treasuries, and at the age of 75, he now 367 00:26:09,660 --> 00:26:20,780 Suze: will have $1.2 million versus $1.6 million 400,000 dollars difference, OK. 368 00:26:21,400 --> 00:26:25,879 Suze: But here's the big difference. He doesn't want to take 369 00:26:25,880 --> 00:26:29,219 Suze: our MDs out. He doesn't want to touch the money. 370 00:26:29,400 --> 00:26:33,069 Suze: He actually wants to leave it to his kids. He 371 00:26:33,069 --> 00:26:34,119 Suze: doesn't need it. 372 00:26:35,310 --> 00:26:41,589 Suze: All right. Now, the 1.2 million at just a 4% 373 00:26:41,589 --> 00:26:44,849 Suze: interest rate, it's in treasuries, it's in a CD. 374 00:26:45,680 --> 00:26:48,439 Suze: So at the age of 89 is going to be 375 00:26:48,439 --> 00:26:56,938 Suze: worth $2.1 million and now he dies. Now guess what? 376 00:26:57,479 --> 00:27:01,119 Suze: Now it passes down to his kids and cause it's 377 00:27:01,119 --> 00:27:03,160 Suze: in a Roth IRA. 378 00:27:04,180 --> 00:27:06,819 Suze: They don't have to touch it for 10 years. They 379 00:27:06,819 --> 00:27:10,540 Suze: don't have to take out any required minimum distributions. They 380 00:27:10,540 --> 00:27:16,260 Suze: have 10 years for it to grow tax-free, so they 381 00:27:16,260 --> 00:27:19,139 Suze: just leave it there because they were listening to the 382 00:27:19,140 --> 00:27:22,579 Suze: Women and Money podcast, and they heard Suze Orman say, 383 00:27:22,739 --> 00:27:25,459 Suze: if you're ever in this situation and you don't need it, 384 00:27:25,699 --> 00:27:28,699 Suze: just leave it there till the 10th year if it's 385 00:27:28,699 --> 00:27:29,959 Suze: in a Roth. 386 00:27:30,359 --> 00:27:33,280 Suze: And then take 100% of it out in the 10th year. 387 00:27:33,479 --> 00:27:33,959 Suze: All right. 388 00:27:34,839 --> 00:27:43,489 Suze: So 10 years from now when they inherit $2.1 million 389 00:27:44,079 --> 00:27:49,079 Suze: their inherited IRA because it's a Roth will be worth 390 00:27:49,079 --> 00:27:58,290 Suze: $3.1 million everybody that will pass to the kids absolutely 391 00:27:58,359 --> 00:27:59,560 Suze: tax free. 392 00:28:00,739 --> 00:28:03,938 Suze: I just want you to think about that. 393 00:28:05,380 --> 00:28:10,030 Suze: Big, big difference. Now, a lot of you will say, 394 00:28:10,140 --> 00:28:13,420 Suze: but yeah, Suze, he took out the 50 some odd 395 00:28:13,420 --> 00:28:16,319 Suze: thousdan a year or whatever, and maybe he invested it. 396 00:28:16,500 --> 00:28:18,619 Suze: I don't care. I don't care. 397 00:28:19,400 --> 00:28:24,479 Suze: I just want you to stop finding excuses for why 398 00:28:24,479 --> 00:28:30,130 Suze: you think a traditional or a pre-tax retirement account is 399 00:28:30,130 --> 00:28:32,520 Suze: the way for you to go. I want you to 400 00:28:32,520 --> 00:28:35,879 Suze: stop the excuses of you are 60 years of age, 401 00:28:35,959 --> 00:28:38,979 Suze: you're 50, you make too much money, it's too late. 402 00:28:39,119 --> 00:28:42,839 Suze: It is never too late to be smart with your money. 403 00:28:42,959 --> 00:28:44,479 Suze: Do you hear me? 404 00:28:45,489 --> 00:28:48,609 Suze: So, you can continue to do what you're doing. 405 00:28:49,410 --> 00:28:52,890 Suze: But I'm here to tell you, if you really want 406 00:28:53,209 --> 00:28:55,810 Suze: to be smart with your money, you will listen to 407 00:28:55,810 --> 00:28:59,400 Suze: this podcast over and over again, you'll do the numbers. 408 00:28:59,660 --> 00:29:02,650 Suze: Maybe you won't agree with me with the numbers, fine, 409 00:29:02,810 --> 00:29:03,949 Suze: do the numbers yourself. 410 00:29:05,180 --> 00:29:09,630 Suze: But I am telling you, in the long run, don't 411 00:29:09,630 --> 00:29:14,969 Suze: become partners with Uncle Sam. Be in business with yourself. 412 00:29:15,339 --> 00:29:18,910 Suze: Buy Uncle Sam out every single year so you don't 413 00:29:18,910 --> 00:29:20,650 Suze: have to deal with him anymore. 414 00:29:21,599 --> 00:29:25,260 Suze: You know, just think about it that way, and then 415 00:29:25,449 --> 00:29:30,119 Suze: no matter what, it's 100% yours when you look at 416 00:29:30,119 --> 00:29:35,400 Suze: your statements, it's 100% yours for those of you who 417 00:29:35,400 --> 00:29:38,680 Suze: have traditional 401ks or whatever it is, when you look 418 00:29:38,680 --> 00:29:42,400 Suze: at your statement, you better take a good 20 or 30% away, 419 00:29:42,439 --> 00:29:46,160 Suze: if not more, because that's Uncle Sam's cut. 420 00:29:47,199 --> 00:29:51,920 Suze: Was it worth it for a tax write-off? Really, not 421 00:29:52,119 --> 00:29:55,209 Suze: in the long run. All right, everybody, there's only one 422 00:29:55,209 --> 00:29:56,939 Suze: thing that I want you to remember when it comes 423 00:29:56,939 --> 00:30:00,880 Suze: to your money, and it is this people first. That's you, everybody, 424 00:30:01,000 --> 00:30:06,160 Suze: not Uncle Sam. That's you. People first, then money, then things. 425 00:30:06,239 --> 00:30:10,060 Suze: Can you tell that this topic has absolutely aggravated me? 426 00:30:10,479 --> 00:30:11,079 Suze: All right. 427 00:30:11,839 --> 00:30:16,219 Suze: So, just stay safe, and if you listen to me, 428 00:30:16,479 --> 00:30:21,459 Suze: you will become financially unstoppable.