Suze: March 20th, 2025. Welcome everybody to the Women and Money
Suze: podcast as well as everybody smart enough to listen.
KT: You sound a lot better, Suze.
Suze: Not a lot.
KT: Not well, my first question is kind of funny because
KT: it references your nasally voice. You sound a lot better,
Suze: but you have
Suze: to say this is the KT and Suze edition, right.
KT: Oh, hey everybody, this is the KT...
Suze: Do you think you'll ever get this?
KT: No, this is the ask Suze anything and KT will
KT: ask the question.
Suze: And to do so, just go to this, this is,
Suze: should we start over everybody, but
KT: anyway, just keep going.
Suze: All you need to know is this is the podcast
Suze: where if you've written in a question to ask Suze
Suze: SUZE podcast at gmail.com, and if KT chooses it, then
Suze: we answer it on this podcast.
Suze: But guess what else, KT?
KT: Oh, let's tell them about our new fun YouTube channel.
Suze: Yeah, so we,
KT: Suze's been having so much fun, everybody.
KT: So Suze and Amy, her executive producer of Donkey's Years
KT: at the CNBC Suze Orman Show, have gotten together and
KT: they collaborated and created the most fun Can I Afford
KT: it game on YouTube on Suze's
KT: channel.
Suze: So the way that it works is that because a
Suze: lot of you say you miss it, so you'll go there,
Suze: go to YouTube, Y O U T U B E.com.
Suze: Slash Suze Orman, S U Z E O R M
Suze: A N, and you'll see it there's only like 4
Suze: or 5 up there, but you'll see what we did.
Suze: You will get to decide if I approved or I
Suze: denied you push a little button and then we'll see
Suze: if you're right or wrong. So check it out, everybody. It's,
Suze: I think it's a lot of fun.
KT: A lot of fun. I play.
Suze: I think I look so cute. I can't tell you.
KT: Yeah, tell us how you, if you like it, and we'll,
KT: we'll keep doing it. It's great.
Suze: All right,
KT: All right. Are we ready? So my first question is
KT: from William, and he said, Suze, I loved hearing you
KT: get sassy with KT with that nasally voice of yours.
KT: Hope you're feeling better.
KT: And he's asking a question about the pro rata rule.
KT: He said, You've talked about it a few times. I've
KT: gone back and listened to old episodes. I try to
KT: track down an answer, and I'm still so confused. And
KT: he said, I think Suze, I made a big mistake.
KT: I wanted to consolidate some old 401ks in 2024 and
KT: decided I would be better off managing the money myself
KT: in a Fidelity account.
KT: So he combined a Roth IRA and a rollover IRA separately.
KT: It was a mixture of Roth and non Roth contributions.
KT: End of the day, he said, now of course I
KT: want to do a backdoor Roth. I don't think it's
KT: possible because of the pro rata rule.
Suze: Wait, I'm very confused.
KT: He is too. Take a, take a look. I want her to
KT: read it, everybody, because this, he is
KT: confused.
Suze: So it was a mixture of Roth and non-Roth contributions. Oh,
Suze: so the non Roth went into your Roth IRA and
Suze: then the non-Roth went into a rollover IRA separately and
Suze: now you want to do a back a back door.
Suze: And the question is, should you, should he or
KT: Can I don't think he can.
Suze: But should he, KT, this is your quizzy right off the bat.
KT: No, he's gonna have to pay taxes.
Suze: Do you know how much in taxes?
KT: No, I think for the one, no, I don't.
Suze: Do you even know how to figure it out?
KT: No.
Suze: All right, so let's tell William what he needs to know.
Suze: So what all of you need to know in terms
Suze: of what am I talking about, there is this crazy
Suze: tax rule that says if you have any pre-tax retirement accounts.
Suze: An IRA, an IRA rollover, a SEP IRA, a simple IRA,
Suze: anything with the initials IRA, which means individual retirement account,
Suze: so that's in your name. If you have anything with
Suze: those three letters, if you then decide to do a
Suze: backdoor Roth IRA.
Suze: You are going to have to pay taxes based on
Suze: a pro rata rule, and let's just say, William, you
Suze: wanted to contribute $7000 this year to your Roth and
Suze: let's just say you have, we'll throw out a figure
Suze: $14,676 whatever it is, in all of your IRAs that
Suze: you have.
Suze: What you need to do then is you need to
Suze: add those two together $14,676 or whatever is really in
Suze: your account, William, plus $7000 what you want to contribute,
Suze: and that comes to $21,676.
Suze: Then what you need to do is you need to
Suze: divide the $7000.
Suze: That you want to put into the back door Roth
Suze: by the $21,676 and that comes out to 32.3% or
Suze: if you then were to times $7000 by that amount,
Suze: $4,739 would be taxable. So is it worth it for
Suze: you to do that?
Suze: I don't know. Is it possible for you to take
Suze: your rollover that you did and put it back into
Suze: your 401k somehow or wherever you're working? If not, I
Suze: have to tell you you're just better off doing an
Suze: IRA with all pre-tax money.
Suze: And then converting it and pay taxes on the whole thing.
KT: Tell everyone I'm sitting here. What am I doing, Suze? My
KT: head is spinning,
Suze: But you have to know the formula, everybody, in terms
Suze: of how much will you pay in.
Suze: Taxes if in fact you have to do a backdoor
Suze: roth and you have to do a backdoor roth if
Suze: you're making more money on a modified adjusted gross income
Suze: that's allowable for you to contribute to a Roth just
Suze: that simple.
KT: She says, just that simple for you. It's just that simple,
KT: but not for the rest of us.
Suze: Well here's your
Suze: quizzy again.
KT: Oh my goodness.
Suze: What are those amounts, KT?
KT: I don't have a clue. Come on, I don't have
KT: a clue.
KT: Well, I don't have a clue.
Suze: No clue.
KT: No, I would say the amounts would be the maximum
KT: that I'm allowed to put in.
Suze: For those of you who are single, if you make
Suze: under $150,000 a year of modified adjusted gross income, you
Suze: can contribute a full $7000 to a Roth. And if
Suze: you're over that, if you're over 50 years of age,
Suze: you can contribute 80. Once your income starts to go.
Suze: Up the amount you can contribute goes down, and once
Suze: you make over $165,000 you no longer can contribute to
Suze: a Roth. Married filling jointly, it's 236 up to 246.
Suze: So obviously if you make more than that, what you
Suze: do to get into a Roth is you open up
Suze: a non-deductible IRA and you simply convert to a
Suze: but you can only do that if you do not
Suze: have any other pre-tax IRAs. All right, KT.
KT: Just that simple. OK. Next is from Amanda. Hi, Suze,
KT: I'm 53 with $250,000 at this point. Since it's losing
KT: money daily in a Roth and IRA would now be
KT: the time to move the money to cash.
KT: Then she says, I really can't afford to take much
KT: more of a hit. Do I ride it out? She said,
KT: I know one thing, Suze, you always say, don't let
KT: fear make rash decisions.
KT: So she's asking you, should she ride it out. Edward Jones,
KT: by the way, is her portfolio manager, and they keep
KT: telling her they're in good Fortune 500 companies, but she's,
KT: if you read the whole thing, she's scared, she's full
KT: of fear, and I think she should put it in
KT: cash and forget about it for a while.
Suze: If you really can't afford, my dear Amanda to take
Suze: much more of a hit, that says to me this
Suze: is money that may be never originally belonged in the
Suze: stock market. Remember, money in the stock market is only
Suze: money that you will not need for at least 5
Suze: years or longer, because that's how long it usually takes
Suze: to go from the top of a market to the
Suze: bottom back up to the top.
Suze: If this is making you lose sleep at night, and
Suze: I don't know how much money you have lost cause
Suze: you don't say that anywhere in here you just say
Suze: it seems to be losing money daily. The question is really,
Suze: if you gave them $250,000 sometime a year ago or whatever,
Suze: has it gone up above the $250,000 and now let's
Suze: say it went to $350 and now it's like at 325, 300, 275.
Suze: The question is, are you now below what you initially invested?
Suze: Or are you just losing money that was a profit?
Suze: If you're just losing profit right now, I would tell
Suze: you to absolutely stay there as long as you know
Suze: they're in good quality stocks. However, if it's your principle
Suze: that you are now losing, I would probably come out.
Suze: Because either way you're going to lose sleep at night
Suze: and you could take this money and you could put
Suze: them in to treasuries or CDs and have it earn
Suze: a nice 4 4.5% interest for you right around there
Suze: and you could sleep at night. So it just depends.
Suze: But I know I say don't let fear make rash
Suze: decisions for you, but this seems to me that this
Suze: isn't a rash decision. This is where you have been
Suze: watching this go down over and over and over, right?
Suze: So you have to do really...
KT: What makes you sleep at night.
Suze: What makes you sleep at night, and I hope that
Suze: made sense to you, Amanda.
KT: OK, my next question is from Leslie.
KT: Love listening to the podcast and learning from you. A
KT: few weeks ago you reminded us that you can take
KT: out what you have contributed to a Roth IRA tax
KT: free and without penalty. I'm a 37...
Suze: I hear it coming now.
KT: Wait.
Suze: I hear it coming. She wants to take it out.
Suze: Go on.
KT: No, no, no, she's really smart. I am a 37
KT: year old mom of two little ones, and I'm going
KT: to need a new car soon.
KT: Now this is important. She needs the car sometime within
KT: the next 5 years. She's trying to stretch it. I'd
KT: like to purchase my vehicles in full to avoid paying
KT: more in interest. I plan on starting to squirrel away
KT: the money in a separate file with my HYS high
KT: yield savings account, but if I can't save the entire amount
KT: before I need a new car, would you recommend using
KT: money from our savings? We have $20,000 plus $10 in
KT: an emergency to do this, or from the Roth, which
KT: she has $124k.
KT: I, I can answer this.
Suze: All right, quizzy, quizzy,
KT: You don't... don't touch the Roth.
Suze: And do what?
KT: Oh, I don't know what to say. Out of these
KT: two choices, KT says, don't go near the Roth.
Suze: Don't go near the Roth, whatever you do, don't go
Suze: near the Roth. It's fine with me if you have
Suze: 20,000 there in your savings plus 10 in emergency. I'm
Suze: fine with you taking that money to pay off your car. Why?
Suze: Because if you need money...
Suze: needed it because you've lost your job or in an accident,
Suze: you have your Roth there that you could easily take
Suze: out that $10,000 or whatever it is you could take
Suze: it out then.
Suze: But don't take it out from there or ever hopefully,
Suze: because that's money that's compounding free for you, tax free.
Suze: So I would be taking it from the 20,000 or
Suze: the 10,000 or whatever it is that you needed from.
KT: Stretch that car. Our car is how old Suze?
Suze: Going on 13
Suze: years.
KT: So Suze, my next question. Hi KT and Suze, I
KT: love you both so much. I've been a faithful listener
KT: and fan before Suze was even on TV. Whoa, Susan's old.
KT: Actually she is old.
KT: I said thank you, thank you, thank you, Suze, for
KT: everything you've taught me and thank you for your joviality
KT: and sweet support KT. So the question is this...
Suze: You are just so sweet, aren't you? She's the sweetest.
KT: When does it make sense to drop a long-term care policy?
KT: I can answer this one too. I am 4 years
KT: into paying for it, but I'm now worth 1.4 million,
KT: and I'm wondering if it's time for me to start
KT: investing
KT: the premium dollars myself and plan to self fund. Ready.
KT: She's 60 years old. Excellent health, no partner or living children.
KT: She owns her own home outright. No debt, stable employment,
KT: and stable side hustle. This is from Susan.
Suze: Susan, I know it's hard to keep paying that, thinking
Suze: you're never going to need it, you know, whatever, but
Suze: in your particular situation, if you can easily afford it.
Suze: And maybe you can easily afford a projection of a 30%
Suze: price increase and you still could easily afford it. I
Suze: would so keep it I can't even tell you, but
Suze: at 60, you know, you feel great, most likely that
Suze: you can do anything and
Suze: I'm sorry to say I personally have experienced that that's
Suze: not exactly true. I, I've had many major things actually,
Suze: everybody go wrong with me, and they always turned out right.
KT: But we fixed her.
Suze: We fixed it, every single one of them, and there
Suze: were many, trust me, but the truth of the matter is,
Suze: if I didn't have KT,
Suze: I don't know, especially the last operation I had 5
Suze: years ago, how I would have gotten through it.
Suze: And that's when the long term care would have come
Suze: in handy, trust me, so you have to think that way.
Suze: So if you can easily afford it, keep it. If
Suze: you can't and you think you're gonna drop it anyway
Suze: a year from now or 2 years from now or
Suze: 3 years from now because it's a struggle, then drop
Suze: it now because there's nothing worse with paying for it
Suze: and paying for it and paying for it.
Suze: And then all of a sudden, you decide you can't
Suze: afford it anymore and now you wasted all that money.
Suze: All
Suze: right.
KT: OK, so next question is from Scott. He said, my
KT: husband works for IBEW.
KT: I, I picked this because I, I like IBEW. It's
KT: the International Brotherhood of Electrical Workers.
Suze: Because of your uncle...
KT: And my grandpa, they were all electricians.
KT: The union provides legal service benefits, and they're in the
KT: process of preparing a will, Suze.
KT: I know you are pro revocable trust, but one of
KT: the advisers said that a law was passed last year
KT: that we can do a transfer on death deed with
KT: our home to our two children instead. Can you please
KT: tell me the pros and cons of both so I
KT: can make a better informed decision?
Suze: The
Suze: only pro of it.
Suze: If you never get sick, if you never become incapacitated
Suze: and everything, and then you die and obviously you own
Suze: it in joint tenancy with right of survivorship to your spouse,
Suze: that at that point when the spouse dies, it goes
Suze: to the kids. That's it, no probate, simple.
Suze: But life isn't simple, my friend. A transfer on death
Suze: deed doesn't help you. All of a sudden you own
Suze: this home, you and your husband, and now one of
Suze: you became incapacitated. You had a stroke. You had a
Suze: car accident, and you needed to sell the house.
Suze: But you own it in joint tenancy with right of survivorship.
Suze: The question is, if your spouse is incapacitated, can you
Suze: sell the house? And the answer to that question is no,
Suze: you cannot because it takes two signatures on that deed
Suze: to sell the house. And since your spouse now is incapacitated,
Suze: you're going to have to go down to probate court.
Suze: You're going to get a conservatorship assigned to him. That's
Suze: going to cost you money.
Suze: And from that point on, every year you have to
Suze: check back with the court to make sure that what
Suze: you're doing with his half of the money,
Suze: it is legit.
Suze: A transfer on death deed doesn't help you in any way.
Suze: Same thing as a will, a will, obviously you have
Suze: to pay probate, but it doesn't help you in case
Suze: of the what ifs of life. It doesn't help you
Suze: if you need to sign checks for your spouse or
Suze: do all kinds of things.
Suze: Therefore, I would go to musthadocs.com. It'll cost you $99
Suze: and you can get $2500 worth of state of the
Suze: art documents good in every single state. I would check
Suze: it out. Not only do you get a will and
Suze: a trust, you get a durable power of attorney for
Suze: health care and an advance directive and a financial power
Suze: of attorney.
Suze: So while it's true that they're giving him this thing,
Suze: they're preparing a will which is fabulous.
Suze: I will always tell you a will is not enough.
Suze: And therefore I will believe it to the day that
Suze: I die cause I've seen it too many times. What happens?
KT: OK, OK. Next is from KP, she said, Suze, I'm
KT: retiring later this year. Me and my 90 year old
KT: mom want to move out of state to be closer
KT: to my daughter. We plan to live together in our
KT: new home. We're trying to
KT: figure out who should pay for our new home and
KT: how to hold the title. I currently own my home
KT: outright and would like to use it as a rental
KT: when we move. My mom is very financially secure, has
KT: enough extra cash to easily purchase our new home outright.
KT: I am her only living child and sole beneficiary.
KT: My question, would it make more sense for her to
KT: buy our new home in trust so that I would
KT: inherit it when she passes? Should she give me the
KT: funds or some of the funds so I can purchase
KT: the house in my own name, or should I just
KT: sell my current home and buy our new home myself?
KT: I don't want a mortgage, and the only way I
KT: can pay for our new home outright is if I
KT: sell my current home.
KT: My current house will rent for about 4000 a month.
KT: Please help.
KT: Um, KP sounds like she and her mom absolutely love
KT: each other, and what I think that you need to
KT: do is help her decide what's the best way to, to do this.
Suze: Oh, this one's simple, KT, so simple. Listen, if mommy
Suze: has the money and she doesn't care, let mommy pay
Suze: for it outright, obviously in a living revocable trust with
Suze: you as the successor beneficiary. She is the primary beneficiary.
Suze: That it's held in trust for her benefit while she's alive,
Suze: your benefit after she has died. The reason you want
Suze: to do that is for a few reasons, truthfully. Let's
Suze: say you buy it and it's $500,000. Let's just say
Suze: that's what it is. And then all of a sudden
Suze: it goes to 600,000, 700,000, 800,000, and then mama dies.
Suze: Now it goes to you. You get a step up
Suze: in cost basis on that house as if you had
Suze: purchased it for $800,000. Then when you turn around and
Suze: sell it, that's your cost basis plus you get $250,000
Suze: exemption as well. So mamma should absolutely do it in
Suze: her name, a living revocable trust with you and her beneficiaries.
Suze: All right.
Suze: In terms of selling your home, listen, if you have
Suze: what it takes to be a landlord, which is a lot,
Suze: just so you know, right, then keep your house and
Suze: rent it out, but make sure you do the math
Suze: on it. What would you get for that house after
Suze: taxes and if invested at like 4%, how much would
Suze: that come out to be every single year?
Suze: And maybe you never know, you get more by selling
Suze: it and investing it that way, or the equal amount
Suze: as if you're getting it when you are renting it.
Suze: So just check it out and then you'll know which
Suze: one you should do.
KT: Yeah, plus being a landlord out of state could be
KT: a little tricky, yeah, complicated.
Suze: Unless she has good tenants. All right, OK,
KT: so next question is from Monina. I like that name Monina.
Suze: You like every name.
KT: No, this
KT: is a great name Monina.
KT: It's me again.
KT: It's Monina again. I've written to you before and you
KT: actually replied to my email about paying off my mortgage
KT: with my savings.
Suze: I do answer you personally every once in a while.
KT: She said. I followed your advice and my home condo
KT: is paid off. I am proud of that, but I'm
KT: a little anxious about my savings. I'm slowly building my
KT: emergency fund currently at 6 months
KT: working towards 12 or more, what is a person to
KT: do next once you've funded your revocable living trust, maxed
KT: your 401k Roth contribution, received the max matching from my employer,
KT: built your emergency fund, and carry no debt, but want
KT: to continue to maximize my retirement fund.
KT: Do I just wait till I'm 59 and a half years old
KT: to convert? Is there no way around the pro rata rule?
KT: I've enjoyed your Roth Quizzy Sunday so much. So there
KT: you go, Monina.
Suze: Monina, listen to me.
KT: She sounds like she's doing great.
Suze: It's so funny that so many of you write with
Suze: this particular question where you feel like, hey, if you
Suze: can't contribute to this retirement account or that retirement account,
Suze: you have no other way to invest.
Suze: And the truth of the matter is, the majority of
Suze: our money, it's not in retirement accounts, they're in investment
Suze: accounts where you're buying stock and buying bonds and buying
Suze: this and buying that and it's fabulous. So you just
Suze: simply start a regular account at any discount brokerage firm
Suze: that you like.
Suze: And when you buy something and let's say you buy
Suze: an ETF and you're going to keep it for a
Suze: long time while the money's in there, you're not paying
Suze: taxes on it, so it will grow and it will
Suze: grow and grow just like a retirement account, but in
Suze: an investment account, when you do sell it, if it's
Suze: after one year of holding it, you only pay capital gains.
Suze: In a pre-tax IRA you're gonna pay ordinary income tax.
Suze: I can actually make a case that an investment account
Suze: in the long run might even be better than a
Suze: pre-tax IRA, just so you know. All right.
KT: OK. Last question, Suze, from Christian. Dear Suze and KT,
KT: thank you for everything you do. I'm trying to build out.
Suze: KT, when you read these and they say thank you
Suze: and they love us, how does it make you feel?
KT: Great.
KT: Especially when they really, really love my contribution.
Suze: Of course,
Suze: of course. Well, what was wrong with me? Of course. All right.
KT: Thank you for everything you do. I'm trying to build
KT: out a piece of my portfolio that is focused solely
KT: on dividends with the hope of covering my main living
KT: expenses at some point. This is why I picked this one.
KT: My friend sent me an article about Aristocrat and King stocks.
KT: I don't have a clue what those are, Suze. That's
KT: why I picked this question. I am unsure of where
KT: to start. Would you focus on dividend Aristocrat or King stocks?
KT: There are also dividend Aristocrat ETFs. So there you go.
KT: She's 42. She has one year of emergency savings, no debt,
KT: and 350,000 in retirement accounts.
KT: So tell me what Aristocrat and King stocks are.
Suze: An Aristocrat...
KT: Sounds very regal.
Suze: ...is a stock that has raised its dividend for 25
Suze: years in a row. A King is a stock that
Suze: has raised its dividend for 50 years in a row.
Suze: If I were going to be investing at this point
Suze: in time between one or the other, I would be
Suze: investing in the Aristocrats because I just think you'll get
Suze: a little bit higher dividend and possibly some more growth
Suze: than you would from the Kings, but either way it's fine.
Suze: There are dividend Aristocrat ETFs, one of them that I
Suze: have recommended on this podcast for years now.
Suze: Symbol is NOBL. It's about $102 a share, and it's
Suze: the Standard and Poor's Pro Shares 500 dividend Aristocrats ETF.
Suze: So all the stocks in there are Aristocrats. So that's
Suze: one of them. There are many of them. Just do
Suze: a search and they'll all come up, but that's the
Suze: one that I've been investing in,
Suze: if you want conservative, I like other dividend stocks that
Suze: are not Aristocrats that are paying a higher dividend, but
Suze: that's not your question. Although Pfizer would be the answer
Suze: to that. Anyway, all right, everybody, that brings us to
Suze: the end of today's. You don't get a quizzy because
Suze: you had 3 or 4.
KT: I did, yeah, I got them right,
Suze: Ready. This is a quizzy ready, KT.
Suze: If people want to go and see and play the
Suze: can I afford a game that we have on my
Suze: YouTube channel? What is the URL?
Suze: Look at her little face.
KT: The URL is go to youtube.com/suzeorman
KT: ding ding ding ding ding
Suze: ding ding ding
KT: Because I love playing those games. They're fun.
Suze: It's a fun thing.
KT: Yeah, tell us if you like them. They're fun.
Suze: So that's again YouTube, Y O U T U.com/ Suze
Suze: S U Z E Orman.
Suze: Go on, do it. They're free and then there's only
Suze: a few of them, right? And then post on the
Suze: board on the Women and Money app if you liked
Suze: it or not, because you never know when I'll actually
Suze: do one where you can call in and that little
Suze: emoji that you're going to see will tell you if
Suze: you're approved or denied.
Suze: In real time, so let me know. All right, everybody,
Suze: until Sunday. There's only one thing we want you to
Suze: remember when it comes to your money. What is it,
Suze: my little sweet?
KT: People first, then money, then things.
Suze: Yes, indeed. So all of you stay safe. Bye bye now.