1 00:00:40,939 --> 00:00:45,680 Suze: April 21st 2024. Welcome everybody to the Women and Money 2 00:00:45,689 --> 00:00:50,349 Suze: podcast as well as everybody. Smart enough to listen, Suze 3 00:00:50,418 --> 00:00:54,889 Suze: O here. So get out your Suze notebooks. And let's begin. 4 00:00:56,560 --> 00:01:00,119 Suze: I'll give you a two count beat there. All right, 5 00:01:00,310 --> 00:01:03,819 Suze: you should have them out by now. So, what a week, 6 00:01:03,830 --> 00:01:06,720 Suze: what a week in the stock market? It's a week 7 00:01:06,730 --> 00:01:10,518 Suze: where we love the Magnificent Seven and now we're hating 8 00:01:10,529 --> 00:01:14,679 Suze: the Magnificent Seven because they are going down big and 9 00:01:14,690 --> 00:01:16,660 Suze: they are taking the markets with them 10 00:01:17,470 --> 00:01:20,889 Suze: and many of us don't know what to do. We're 11 00:01:20,900 --> 00:01:24,369 Suze: afraid we're looking at the balances in our 403Bs or 12 00:01:24,379 --> 00:01:34,059 Suze: 401ks or TSBs or IRAs going down and we are getting absolutely nervous. Now, 13 00:01:34,069 --> 00:01:37,120 Suze: I'm not gonna lie to you. Never have. Never will. 14 00:01:37,550 --> 00:01:41,410 Suze: We could be entering a very volatile time in the 15 00:01:41,419 --> 00:01:45,289 Suze: stock market. Absolutely. We might see a little bounce here, 16 00:01:46,120 --> 00:01:51,699 Suze: but really there's a saying, "sell in May and go away." 17 00:01:51,709 --> 00:01:54,660 Suze: I don't know, that comes from Wall Street, but they 18 00:01:54,669 --> 00:01:57,860 Suze: always feel like the month of May, you should be 19 00:01:57,870 --> 00:02:02,639 Suze: out of stocks. But when they're out of stocks, that 20 00:02:02,650 --> 00:02:06,980 Suze: means they're traders, they're on the floor, they buy, they sell, 21 00:02:06,989 --> 00:02:09,630 Suze: they do all of that. And so they sell, they 22 00:02:09,639 --> 00:02:12,100 Suze: do other things with the money and then they come 23 00:02:12,110 --> 00:02:15,850 Suze: back eventually. That's not who you are. 24 00:02:16,220 --> 00:02:20,448 Suze: That is not who I am. You don't sell in 25 00:02:20,460 --> 00:02:25,020 Suze: May and go away. What you do is you look 26 00:02:25,029 --> 00:02:27,880 Suze: right here and right now at what you have 27 00:02:28,850 --> 00:02:32,160 Suze: and you have to ask yourself the question. Do I 28 00:02:32,169 --> 00:02:35,509 Suze: like what I own? Do I feel secure with it? 29 00:02:35,788 --> 00:02:38,710 Suze: Am I happy that it's gone down some? Because now 30 00:02:38,720 --> 00:02:39,710 Suze: I can buy it. 31 00:02:40,660 --> 00:02:43,880 Suze: I'm so glad that NVIDIA has come down from its 32 00:02:43,889 --> 00:02:47,698 Suze: high of $974 a share all the way down to 33 00:02:47,710 --> 00:02:51,359 Suze: $762 a share. And so now you're thinking, oh, maybe 34 00:02:51,369 --> 00:02:56,369 Suze: I'll buy some more. So there's always opportunity in the 35 00:02:56,380 --> 00:02:57,600 Suze: stock market. 36 00:02:58,720 --> 00:03:03,300 Suze: It just depends on when you want to realize that opportunity. 37 00:03:04,538 --> 00:03:09,079 Suze: I have told you over and over again. The only 38 00:03:09,089 --> 00:03:12,070 Suze: way to be investing in the stock market 39 00:03:12,899 --> 00:03:18,990 Suze: is through dollar cost averaging where every month or every 40 00:03:19,000 --> 00:03:22,699 Suze: three months or every six months, if there is something 41 00:03:22,710 --> 00:03:26,538 Suze: that you own and it goes down, you buy a 42 00:03:26,550 --> 00:03:29,619 Suze: little more. If it continues to go down, you buy 43 00:03:29,630 --> 00:03:33,388 Suze: a little more. So here's a little thing that every 44 00:03:33,399 --> 00:03:34,880 Suze: one of you needs to do. 45 00:03:35,699 --> 00:03:38,539 Suze: I want you to look at every single stock that 46 00:03:38,550 --> 00:03:42,898 Suze: you have, every single ETF, that you have right here. 47 00:03:42,910 --> 00:03:46,600 Suze: And right now, because the truth of the matter is 48 00:03:46,610 --> 00:03:48,979 Suze: you don't know what the stock market's gonna do next 49 00:03:48,990 --> 00:03:52,270 Suze: week or five weeks from now, or three years from now. 50 00:03:52,279 --> 00:03:55,279 Suze: But right here and right now, you know exactly what 51 00:03:55,289 --> 00:03:59,199 Suze: you have. So let's say you have a stock and 52 00:03:59,210 --> 00:04:01,399 Suze: it's worth $20,000 today. 53 00:04:02,809 --> 00:04:05,710 Suze: I want you to ask yourself the question if you 54 00:04:05,720 --> 00:04:11,139 Suze: did not own that stock today and you had $20,000 55 00:04:11,149 --> 00:04:16,109 Suze: in cash. Would you buy that stock today? 56 00:04:16,950 --> 00:04:21,169 Suze: If the answer to that is yes, then you keep 57 00:04:21,178 --> 00:04:22,519 Suze: what you have. 58 00:04:23,359 --> 00:04:27,440 Suze: If the answer to that is no, I would not, 59 00:04:28,100 --> 00:04:30,799 Suze: then you better think about selling it seriously. 60 00:04:31,799 --> 00:04:34,429 Suze: And if the answer is, I don't know what I 61 00:04:34,440 --> 00:04:38,880 Suze: would do, then just sell half. Obviously, you have to 62 00:04:38,890 --> 00:04:43,040 Suze: remember that if you have a stock that is outside 63 00:04:43,049 --> 00:04:46,820 Suze: of a retirement account that you have not held, write 64 00:04:46,829 --> 00:04:51,220 Suze: this down that you have not held for over one year. 65 00:04:52,040 --> 00:04:54,619 Suze: If you sell it and you have a gain in it, 66 00:04:54,709 --> 00:04:59,299 Suze: you are going to pay ordinary income taxes on that gain. 67 00:04:59,690 --> 00:05:02,928 Suze: Maybe you're gonna lose 20% to taxes. So maybe you 68 00:05:02,940 --> 00:05:04,419 Suze: just keep the stock 69 00:05:05,079 --> 00:05:07,738 Suze: because if it goes down 20% it would be the 70 00:05:07,750 --> 00:05:10,190 Suze: same as if you sold it and had to pay 71 00:05:10,200 --> 00:05:14,579 Suze: ordinary income tax on it. You have to think about that. 72 00:05:14,950 --> 00:05:18,529 Suze: Maybe you have a stock that you have a loss 73 00:05:18,540 --> 00:05:19,019 Suze: in 74 00:05:19,790 --> 00:05:22,488 Suze: again, outside of a retirement account 75 00:05:23,640 --> 00:05:26,380 Suze: and you wouldn't buy it again. All right. Sell it 76 00:05:26,829 --> 00:05:32,299 Suze: and take the loss off your taxes. Just that simple. 77 00:05:32,910 --> 00:05:34,799 Suze: Maybe you have a stock then that you have a 78 00:05:34,809 --> 00:05:39,209 Suze: gain in that you wouldn't buy again. All right. Sell 79 00:05:39,220 --> 00:05:42,700 Suze: that possibly and offset your loss with your gain. But 80 00:05:42,709 --> 00:05:45,899 Suze: you have to look at what you have and not 81 00:05:45,910 --> 00:05:49,709 Suze: just sit there and not know what to do if 82 00:05:49,720 --> 00:05:52,459 Suze: it were up to me telling you all what to do. 83 00:05:53,079 --> 00:05:56,570 Suze: I would say if you own good quality stocks, ETFs 84 00:05:56,609 --> 00:06:00,140 Suze: mutual funds. If you have 10, 20 or 30 years or 85 00:06:00,149 --> 00:06:01,820 Suze: longer till you need the money, 86 00:06:02,738 --> 00:06:07,078 Suze: can you just sit tight and as the markets may 87 00:06:07,089 --> 00:06:08,118 Suze: go down, 88 00:06:09,119 --> 00:06:10,720 Suze: you might want to buy more. 89 00:06:11,510 --> 00:06:14,690 Suze: You could sell it here if you wanted to. But 90 00:06:14,700 --> 00:06:17,940 Suze: I'm here to tell you, chances are you're not gonna 91 00:06:17,950 --> 00:06:22,079 Suze: get back in and it goes up above where you 92 00:06:22,089 --> 00:06:26,190 Suze: sold it. You are not gonna be a happy camper. Now, 93 00:06:26,200 --> 00:06:29,079 Suze: I can tell you that because I did that myself 94 00:06:29,829 --> 00:06:33,369 Suze: years ago, I bought a stock and I watched it 95 00:06:33,380 --> 00:06:36,579 Suze: go up and up and up and up and it 96 00:06:36,589 --> 00:06:40,769 Suze: had gone all the way up to like, $1100 a share. 97 00:06:41,488 --> 00:06:44,459 Suze: And now I have a whole lot of gain in it, 98 00:06:44,470 --> 00:06:47,409 Suze: even though I'd have to pay taxes on it. And 99 00:06:47,420 --> 00:06:50,380 Suze: now I'm getting nervous. I just got nervous. I don't 100 00:06:50,390 --> 00:06:53,109 Suze: know why. And so I decided, oh, I'm gonna sell 101 00:06:53,119 --> 00:06:56,000 Suze: it even though I like the stock. I sold it 102 00:06:56,200 --> 00:06:58,988 Suze: and I had to pay capital gains tax on it. Ok. 103 00:06:59,660 --> 00:07:03,160 Suze: And then the stock started to go down and down 104 00:07:03,170 --> 00:07:06,000 Suze: and down. And I was so happy that it was 105 00:07:06,010 --> 00:07:09,359 Suze: going down because it proved that I was right that 106 00:07:09,369 --> 00:07:10,480 Suze: I should have sold it 107 00:07:11,200 --> 00:07:13,660 Suze: and all of a sudden it's going down a few 108 00:07:13,670 --> 00:07:17,859 Suze: 100 points. Ok? And then it turns around and it 109 00:07:17,869 --> 00:07:20,619 Suze: goes right back up to $1500 a share. 110 00:07:21,480 --> 00:07:24,929 Suze: And I'm like, no, no. Are you kidding me? 111 00:07:25,859 --> 00:07:31,049 Suze: Don't think you're gonna be out guessing what these stocks, ETFs, 112 00:07:31,100 --> 00:07:36,160 Suze: these markets are gonna do. You cannot out guess it. So 113 00:07:36,290 --> 00:07:41,489 Suze: prepare yourselves put on your financial safety jackets because just 114 00:07:41,500 --> 00:07:45,519 Suze: in case it gets a little bumpy, you'll be ok, 115 00:07:45,730 --> 00:07:50,320 Suze: you'll be ok, especially if your dollar cost averaging. 116 00:07:51,019 --> 00:07:54,250 Suze: So I just want to say that to you and 117 00:07:54,260 --> 00:07:58,859 Suze: just know when these markets go down, especially in retirement 118 00:07:58,869 --> 00:08:03,019 Suze: accounts where you are investing month in and month out 119 00:08:03,029 --> 00:08:05,239 Suze: or every paycheck however you do it 120 00:08:06,619 --> 00:08:10,450 Suze: and the money's going into etfs, you should be so happy. 121 00:08:10,459 --> 00:08:13,299 Suze: I meant what I said on Erin Burnett the other 122 00:08:13,309 --> 00:08:16,540 Suze: night on CNN that if these markets go down and 123 00:08:16,549 --> 00:08:19,769 Suze: your dollar cost averaging automatically from a paycheck in a 124 00:08:19,779 --> 00:08:20,959 Suze: retirement account, 125 00:08:21,859 --> 00:08:25,130 Suze: the more it goes down, the more shares you buy. 126 00:08:25,140 --> 00:08:28,640 Suze: And eventually when it turns around, the more money you 127 00:08:28,649 --> 00:08:32,679 Suze: make one thing that is very important when you are 128 00:08:32,690 --> 00:08:38,358 Suze: looking at your statements and this just happened with KT 129 00:08:38,369 --> 00:08:41,429 Suze: believe it or not. About three weeks ago. 130 00:08:42,200 --> 00:08:45,579 Suze: She comes in to my little office and she says, 131 00:08:45,590 --> 00:08:47,929 Suze: look at this. I said, what do you want me 132 00:08:47,940 --> 00:08:51,739 Suze: to look at? She said, look at the statements, Suze. 133 00:08:52,320 --> 00:08:56,059 Suze: KT goes over them like a hawk. I'm telling you 134 00:08:56,070 --> 00:09:00,700 Suze: every single month, every single line she's looking at we 135 00:09:00,710 --> 00:09:03,979 Suze: lost here, we gained here whatever it is and that's fine. 136 00:09:04,330 --> 00:09:06,309 Suze: I like that. She does that and she takes an 137 00:09:06,320 --> 00:09:09,109 Suze: interest in it. She goes, can you believe how much 138 00:09:09,119 --> 00:09:11,849 Suze: money we have made since January? 139 00:09:12,599 --> 00:09:15,218 Suze: And I looked at her and I said, KT, we 140 00:09:15,229 --> 00:09:18,219 Suze: haven't made a penny. She says, what are you talking about? 141 00:09:18,229 --> 00:09:22,299 Suze: Look at this, Suze, I said, KT, we only make 142 00:09:22,309 --> 00:09:27,179 Suze: that money when we have sold and we're not selling, 143 00:09:28,020 --> 00:09:31,419 Suze: we like what we own. If it goes down, we'll 144 00:09:31,429 --> 00:09:35,530 Suze: buy more of it, but we are not selling. So 145 00:09:35,539 --> 00:09:39,000 Suze: don't look at it like we have that much money 146 00:09:39,169 --> 00:09:44,000 Suze: because until we sell, we don't have that much money. 147 00:09:44,710 --> 00:09:48,130 Suze: And I think a lot what has been happening in 148 00:09:48,140 --> 00:09:50,960 Suze: the United States of America, believe it or not in 149 00:09:50,969 --> 00:09:55,449 Suze: terms of inflation, is that so many of you have 150 00:09:55,460 --> 00:10:00,409 Suze: been looking at your 401k statements or 403b or TSP 151 00:10:00,419 --> 00:10:04,369 Suze: statements or whatever they are and they've gone up so 152 00:10:04,380 --> 00:10:08,770 Suze: much over the past six months that you actually feel 153 00:10:08,780 --> 00:10:13,250 Suze: wealthy and because you feel wealthy or maybe wealthier than 154 00:10:13,260 --> 00:10:14,319 Suze: you ever felt, 155 00:10:14,969 --> 00:10:19,098 Suze: then you feel OK about going out and spending money. 156 00:10:19,869 --> 00:10:22,929 Suze: That's why on some level, I have to tell you, 157 00:10:22,940 --> 00:10:27,909 Suze: I don't think inflation is necessarily coming down because the 158 00:10:27,919 --> 00:10:33,169 Suze: economy is still too strong and it's strong because of 159 00:10:33,179 --> 00:10:35,909 Suze: how much money is being spent. 160 00:10:36,669 --> 00:10:44,679 Suze: Please remember everybody that what you see, especially if it 161 00:10:44,690 --> 00:10:49,809 Suze: is a pretext retirement account. What you see is not 162 00:10:49,820 --> 00:10:51,809 Suze: what you get. 163 00:10:52,609 --> 00:10:55,780 Suze: You do not own all of that money. 164 00:10:56,460 --> 00:11:01,960 Suze: You are in partnership with Uncle Sam on every single 165 00:11:01,969 --> 00:11:08,840 Suze: penny that is in a pre-tax retirement account because later 166 00:11:08,849 --> 00:11:13,000 Suze: on in life, when you have to take it out, remember, 167 00:11:13,010 --> 00:11:16,619 Suze: you don't have a choice. You have got to eventually 168 00:11:16,630 --> 00:11:23,039 Suze: take required minimum distributions. Your partner in crime here is 169 00:11:23,049 --> 00:11:24,559 Suze: Uncle Sam 170 00:11:25,440 --> 00:11:30,098 Suze: and he will take whatever percentage that is in there 171 00:11:30,640 --> 00:11:34,669 Suze: that he wants to at that time. And when you 172 00:11:34,679 --> 00:11:39,580 Suze: have debts and deficits that are facing the United States 173 00:11:39,590 --> 00:11:43,669 Suze: of America like they are right now. Do you honest 174 00:11:43,679 --> 00:11:48,820 Suze: to God believe that 30 years from now 20 years 175 00:11:48,830 --> 00:11:53,150 Suze: from now, tax brackets won't be higher than they are 176 00:11:53,159 --> 00:11:54,940 Suze: right now. 177 00:11:55,559 --> 00:11:59,760 Suze: But all of you argue with me. You argue with 178 00:11:59,770 --> 00:12:00,619 Suze: me and say, Suze, 179 00:12:01,289 --> 00:12:03,530 Suze: I'm in a high tax bracket. 180 00:12:04,190 --> 00:12:09,299 Suze: I'm 50 years of age. I want my tax bracket now. 181 00:12:09,309 --> 00:12:12,929 Suze: Going into a Roth retirement account. There's no time. It 182 00:12:12,940 --> 00:12:16,250 Suze: makes no sense. I know what I'm doing and my 183 00:12:16,260 --> 00:12:20,630 Suze: financial advisor tells me you're wrong, Suze Orman. Do you 184 00:12:20,640 --> 00:12:26,869 Suze: have any idea how crazy, how absolute crazy that makes me? 185 00:12:27,460 --> 00:12:32,000 Suze: So therefore, I'm going to do a comparison right now 186 00:12:32,510 --> 00:12:38,390 Suze: between a Roth retirement account and a pre-tax retirement account 187 00:12:38,559 --> 00:12:42,830 Suze: for somebody who's just starting right now in their fifties 188 00:12:42,919 --> 00:12:48,319 Suze: and settle this stupid argument once and for all. However, 189 00:12:48,330 --> 00:12:52,099 Suze: before I do that, there is something that I need 190 00:12:52,109 --> 00:12:54,770 Suze: to do. There is a woman by the name of 191 00:12:54,780 --> 00:12:59,489 Suze: Paula whose husband died a few months ago 192 00:13:00,250 --> 00:13:05,909 Suze: and Paula wrote and said I need help, Suze. I 193 00:13:05,919 --> 00:13:08,179 Suze: don't know what to do with this and these things. 194 00:13:08,190 --> 00:13:11,559 Suze: I have three or four kids. Can you please help me? 195 00:13:11,650 --> 00:13:17,098 Suze: And I called Paula to help her. But the problem 196 00:13:17,109 --> 00:13:23,140 Suze: is Paula isn't necessarily sure that it's me. She is 197 00:13:23,150 --> 00:13:25,738 Suze: in shock. Number one, she can't believe that Suze Orman 198 00:13:25,750 --> 00:13:26,589 Suze: called her. 199 00:13:27,340 --> 00:13:32,400 Suze: And number two, Suze Orman said to her, Paula, you 200 00:13:32,409 --> 00:13:37,320 Suze: can't trust my voice because of artificial intelligence. I don't 201 00:13:37,330 --> 00:13:39,760 Suze: even know if I were to facetime you, you would 202 00:13:39,770 --> 00:13:42,400 Suze: be able to trust it because of everything that's going 203 00:13:42,409 --> 00:13:47,080 Suze: on with artificial intelligence. So I know what I'll do Paula, 204 00:13:47,260 --> 00:13:49,559 Suze: on my podcast 205 00:13:50,059 --> 00:13:53,890 Suze: today, I will talk about this so that, you know, 206 00:13:53,900 --> 00:13:57,500 Suze: without a shadow of a doubt, it was me who 207 00:13:57,510 --> 00:14:02,820 Suze: is telling you what to do. So I just wanted 208 00:14:02,830 --> 00:14:07,280 Suze: to get that in and not forget it. All right, 209 00:14:07,289 --> 00:14:10,919 Suze: I want all of you right here and right now 210 00:14:11,390 --> 00:14:16,070 Suze: I want you to write down everything that I am 211 00:14:16,080 --> 00:14:17,479 Suze: about to tell you. 212 00:14:17,880 --> 00:14:21,489 Suze: Because if these numbers work at 50 213 00:14:22,599 --> 00:14:27,000 Suze: think about if you started a Roth retirement account at 214 00:14:27,010 --> 00:14:33,419 Suze: 25 or 30 or 35. So worst case scenario. And 215 00:14:33,429 --> 00:14:37,229 Suze: this is a real example. And this just happened to 216 00:14:37,239 --> 00:14:40,929 Suze: me on Friday on a telephone call that I was 217 00:14:40,940 --> 00:14:44,929 Suze: having with somebody who wants me to do something for 218 00:14:44,940 --> 00:14:46,489 Suze: their company. All right. 219 00:14:46,760 --> 00:14:49,739 Suze: And then of course, we always talk about their own 220 00:14:49,750 --> 00:14:53,000 Suze: money somehow. I don't know why that is it always 221 00:14:53,020 --> 00:14:55,239 Suze: at the end of the conversation, they tell me what 222 00:14:55,250 --> 00:14:58,820 Suze: they're doing. And then I'm like, you're kidding, you're not 223 00:14:58,830 --> 00:15:00,520 Suze: doing that, are you? And then I try to set 224 00:15:00,530 --> 00:15:06,580 Suze: them straight. So in this particular situation, this person's financial 225 00:15:06,590 --> 00:15:11,270 Suze: advisor has convinced them that the best thing that they 226 00:15:11,280 --> 00:15:15,580 Suze: can be doing is putting money maxing out 227 00:15:15,809 --> 00:15:23,630 Suze: their 401k at work pre tax. And when I said what? 228 00:15:24,390 --> 00:15:28,210 Suze: And they said, Suze, I'm 50 years of age, I'm 229 00:15:28,219 --> 00:15:32,989 Suze: getting older now. I make approximately $300,000 a year. It's 230 00:15:33,000 --> 00:15:36,609 Suze: a huge tax write off for me and I've gone 231 00:15:36,619 --> 00:15:39,450 Suze: over the numbers and this is what my advisor is 232 00:15:39,460 --> 00:15:42,859 Suze: telling me to do. Well, after 30 minutes of arguing 233 00:15:42,869 --> 00:15:44,859 Suze: with him, he still didn't believe me. I can tell 234 00:15:44,869 --> 00:15:49,450 Suze: you that. So let me just do the numbers for him. 235 00:15:49,460 --> 00:15:52,250 Suze: But for all of you as well, 236 00:15:53,169 --> 00:15:56,869 Suze: I want you to write everything down. This person that 237 00:15:56,880 --> 00:16:00,590 Suze: I spoke to was 50 years of age and he 238 00:16:00,599 --> 00:16:06,950 Suze: makes approximately $300,000 a year. Now, listen, if it works 239 00:16:06,960 --> 00:16:11,820 Suze: with $300,000 which is a good sum of money puts 240 00:16:11,830 --> 00:16:16,109 Suze: this person in a high tax bracket. Of course, an 241 00:16:16,119 --> 00:16:19,390 Suze: advisor would say you want a tax write off 242 00:16:19,950 --> 00:16:22,940 Suze: if it works in a high tax bracket, it even 243 00:16:22,950 --> 00:16:26,729 Suze: works better in a lower tax bracket. Ok. So 244 00:16:27,700 --> 00:16:29,510 Suze: he makes 300,000 a year 245 00:16:30,190 --> 00:16:34,809 Suze: and he is putting $30,000 a year, which is the 246 00:16:34,820 --> 00:16:39,099 Suze: maximum that you can put into a 401k this year 247 00:16:39,239 --> 00:16:43,549 Suze: and he's doing it every year for the next 20 years. 248 00:16:43,559 --> 00:16:47,000 Suze: Let's just make that assumption because I don't know what 249 00:16:47,010 --> 00:16:50,450 Suze: the maximum will be in future years. So just let's 250 00:16:50,460 --> 00:16:54,460 Suze: assume that that's all he puts in for the next 251 00:16:54,469 --> 00:16:56,320 Suze: 20 years. 252 00:16:56,890 --> 00:17:00,049 Suze: We're not gonna consider a match. Let's just pretend that 253 00:17:00,059 --> 00:17:05,229 Suze: his company does not match. And let's also assume that 254 00:17:05,239 --> 00:17:12,899 Suze: over those 20 years, he's averaged approximately 7% on his money. 255 00:17:12,920 --> 00:17:17,139 Suze: Let's just do that for simplistic sake. Ok. 256 00:17:18,198 --> 00:17:23,667 Suze: If that were true, at 70 years of age, he 257 00:17:23,678 --> 00:17:30,649 Suze: would have approximately $1.3 million and now he's no longer 258 00:17:30,659 --> 00:17:35,139 Suze: working and he simply does what he takes the 1.3 259 00:17:35,148 --> 00:17:35,848 Suze: million 260 00:17:36,630 --> 00:17:42,689 Suze: and he rolls it over to an IRA rollover 261 00:17:43,660 --> 00:17:48,439 Suze: because he now wants to invest it very securely because 262 00:17:48,449 --> 00:17:52,319 Suze: he doesn't want anything else to happen to it. 263 00:17:53,140 --> 00:17:57,959 Suze: So now he rolls it over and he invests 4% 264 00:17:57,969 --> 00:18:00,760 Suze: of it in treasuries. Ok? 265 00:18:01,819 --> 00:18:09,420 Suze: And at the age of 75 he now has $1.6 million. 266 00:18:09,609 --> 00:18:12,349 Suze: Now just put a pin in that for one second. 267 00:18:13,130 --> 00:18:18,589 Suze: Remember if you were born 1960 or later, 268 00:18:19,339 --> 00:18:26,939 Suze: the new required minimum distribution age is 75. So because 269 00:18:26,949 --> 00:18:30,930 Suze: he is currently only 50 he will not need to 270 00:18:30,939 --> 00:18:36,849 Suze: take out required minimum distributions till he is 75. And 271 00:18:36,859 --> 00:18:42,560 Suze: let's just assume he did very well for himself. He 272 00:18:42,569 --> 00:18:44,359 Suze: made all of this money 273 00:18:44,760 --> 00:18:49,619 Suze: and he's invested it wisely. He owns his house outright. 274 00:18:49,630 --> 00:18:55,239 Suze: Very little expenses. Everything is great for him. And he 275 00:18:55,250 --> 00:18:59,619 Suze: so wishes that he didn't have to take out required 276 00:18:59,630 --> 00:19:01,500 Suze: minimum distributions 277 00:19:02,199 --> 00:19:06,180 Suze: because he doesn't need to. But yet he does not 278 00:19:06,189 --> 00:19:11,099 Suze: have a choice. He has got to take out required 279 00:19:11,109 --> 00:19:16,000 Suze: minimum distributions and he has lived his life in such 280 00:19:16,010 --> 00:19:21,698 Suze: a way. Let's just assume this, that he has other income, 281 00:19:22,400 --> 00:19:29,589 Suze: but he only has $50,000 a year of taxable income. 282 00:19:29,640 --> 00:19:34,699 Suze: Besides his required minimum distributions that he will be taking 283 00:19:34,709 --> 00:19:35,219 Suze: out 284 00:19:36,109 --> 00:19:40,729 Suze: if he starts to take out required minimum distributions, which 285 00:19:40,739 --> 00:19:44,129 Suze: he has to at the age of 75 286 00:19:44,780 --> 00:19:48,679 Suze: the very first year he will take out approximately 58,000 287 00:19:48,770 --> 00:19:53,520 Suze: and then 60,000 and then 62,000 and every year as 288 00:19:53,530 --> 00:19:59,199 Suze: he gets older it goes up approximately 2 to $3000 289 00:19:59,209 --> 00:19:59,869 Suze: a year. 290 00:20:00,540 --> 00:20:05,910 Suze: And the IRS truthfully according to life expectancy tables, expect 291 00:20:05,920 --> 00:20:08,969 Suze: him to live till about, let's just say, 89 years 292 00:20:08,979 --> 00:20:13,510 Suze: of age. And by that time, he's required to take 293 00:20:13,520 --> 00:20:21,989 Suze: out $100,000 as a required minimum distribution. Now, the true 294 00:20:22,520 --> 00:20:27,229 Suze: question becomes, how much did he totally have to take 295 00:20:27,239 --> 00:20:29,829 Suze: out of this account 296 00:20:30,890 --> 00:20:44,208 Suze: in required minimum distributions? And the answer to that is $1,202,897. 297 00:20:45,599 --> 00:20:52,739 Suze: It was required over those 14 years to take out 298 00:20:52,750 --> 00:21:00,458 Suze: $1.2 million that he will owe ordinary income taxes on 299 00:21:01,270 --> 00:21:08,380 Suze: at whatever tax bracket, Uncle Sam puts into place again. However, 300 00:21:08,540 --> 00:21:13,439 Suze: we are going to assume that tax brackets stay exactly 301 00:21:13,449 --> 00:21:18,688 Suze: as they are right now, which is the lowest income 302 00:21:18,699 --> 00:21:22,688 Suze: tax brackets, any of us have been in, in years 303 00:21:23,599 --> 00:21:27,189 Suze: and we're just going to assume they stay this low. 304 00:21:27,540 --> 00:21:30,400 Suze: Although I would make a bet with any of you 305 00:21:30,410 --> 00:21:33,389 Suze: that is not going to happen. But I'm just going 306 00:21:33,400 --> 00:21:38,629 Suze: to give this example assuming that we stay at the 307 00:21:38,640 --> 00:21:43,670 Suze: tax brackets. We are right now. And if that is true, 308 00:21:44,329 --> 00:21:52,149 Suze: he's going to end up paying at least $313,000 in 309 00:21:52,160 --> 00:21:53,109 Suze: taxes 310 00:21:53,630 --> 00:21:58,599 Suze: over the next 14 years as he's taking the money out. 311 00:21:59,640 --> 00:22:05,379 Suze: Now again, what did he save in taxes when he 312 00:22:05,390 --> 00:22:07,020 Suze: put the money in? 313 00:22:07,900 --> 00:22:14,599 Suze: He saved approximately $144,000. 314 00:22:16,250 --> 00:22:17,630 Suze: Now, that's a lot of money. 315 00:22:18,619 --> 00:22:25,030 Suze: But do you understand that? Really? What's happening here is 316 00:22:25,040 --> 00:22:28,159 Suze: Uncle Sam is just giving you a loan, 317 00:22:28,829 --> 00:22:34,030 Suze: a loan in this case of $144,000. 318 00:22:34,920 --> 00:22:39,469 Suze: And over the years, Uncle Sam's gonna get back at 319 00:22:39,479 --> 00:22:44,739 Suze: least $313,000. 320 00:22:45,829 --> 00:22:46,969 Suze: Think about that. 321 00:22:48,239 --> 00:22:52,310 Suze: When you put money in a pre tax retirement account, 322 00:22:53,069 --> 00:22:55,930 Suze: you put in an amount of money, please listen to 323 00:22:55,939 --> 00:22:57,069 Suze: me closely. Now 324 00:22:57,920 --> 00:23:02,939 Suze: you're putting in money and it is growing and growing 325 00:23:03,119 --> 00:23:06,930 Suze: and growing and growing in this example. 326 00:23:07,670 --> 00:23:17,199 Suze: This person only put in $600,000 over those 20 years. 327 00:23:18,550 --> 00:23:21,209 Suze: But because of compounding, 328 00:23:22,160 --> 00:23:28,540 Suze: it's now worth 1.6 million at the age of 75. 329 00:23:29,489 --> 00:23:35,550 Suze: So Uncle Sam is going to get taxes on that 330 00:23:35,560 --> 00:23:41,219 Suze: extra million dollars of growth above what he put in. 331 00:23:41,229 --> 00:23:42,310 Suze: Do you see that? 332 00:23:42,989 --> 00:23:49,359 Suze: He put in 600,000? It's now worth 1.6 million. 333 00:23:50,410 --> 00:23:56,229 Suze: Forget the 600,000 he put in it grew by $1 334 00:23:56,319 --> 00:23:57,430 Suze: million 335 00:23:59,020 --> 00:24:05,839 Suze: and Uncle Sam gets to have taxes on that $1 million. 336 00:24:06,430 --> 00:24:10,560 Suze: Plus he gets back the taxes he gave you over 337 00:24:10,569 --> 00:24:16,150 Suze: all those years on that $600,000 that you put in. 338 00:24:16,339 --> 00:24:20,199 Suze: Think about it. Think about it. 339 00:24:21,209 --> 00:24:26,180 Suze: Why do you think they want you to do this 340 00:24:26,839 --> 00:24:31,790 Suze: because they know exactly. They are going to make a 341 00:24:31,800 --> 00:24:37,369 Suze: lot of money off of you. Do you all hear 342 00:24:37,380 --> 00:24:38,790 Suze: what I'm saying? 343 00:24:39,920 --> 00:24:44,859 Suze: Even if he had saved $200,000 in taxes, 344 00:24:45,660 --> 00:24:50,630 Suze: that's still a lot less than 313,000 that he will owe. 345 00:24:50,640 --> 00:24:52,109 Suze: And in reality, 346 00:24:52,819 --> 00:24:57,760 Suze: 20 years from now, he may owe a whole lot more. 347 00:24:57,770 --> 00:25:01,920 Suze: But wait, I'm continuing on with this example, 348 00:25:02,859 --> 00:25:10,760 Suze: even though he took out approximately the $1.2 million in RMDs, 349 00:25:11,890 --> 00:25:15,520 Suze: he still has remaining in that account 350 00:25:16,469 --> 00:25:23,530 Suze: about $433,000 because that money has been growing all those 351 00:25:23,540 --> 00:25:27,500 Suze: years that he's been taking out RMDs. And now let's 352 00:25:27,510 --> 00:25:31,250 Suze: assume that he dies at the age of 89 353 00:25:32,020 --> 00:25:34,270 Suze: and now his children 354 00:25:35,239 --> 00:25:36,349 Suze: get the money. 355 00:25:37,199 --> 00:25:42,069 Suze: They now have to continue to take the money out 356 00:25:42,079 --> 00:25:45,170 Suze: of this inherited IRA that they just got 357 00:25:45,890 --> 00:25:52,089 Suze: and they have to wipe it clean totally within 10 years. So, 358 00:25:52,099 --> 00:25:57,550 Suze: chances are they're gonna take out 45 to $50,000 a 359 00:25:57,560 --> 00:25:58,188 Suze: year 360 00:25:58,810 --> 00:26:01,989 Suze: if they do that, we don't know what tax bracket 361 00:26:02,000 --> 00:26:05,790 Suze: they're in. But let's just say they're in an average 362 00:26:05,800 --> 00:26:09,890 Suze: tax bracket as well. They're gonna probably pay at least 363 00:26:09,900 --> 00:26:16,670 Suze: another $100,000 in income taxes to get that money and 364 00:26:16,680 --> 00:26:20,189 Suze: truthfully everybody, probably a whole lot more. 365 00:26:20,989 --> 00:26:25,540 Suze: So, given that between what this guy is going to 366 00:26:25,550 --> 00:26:31,479 Suze: pay in income taxes, 313,000, at least 100,000, his kids 367 00:26:31,489 --> 00:26:32,650 Suze: are gonna have to pay. 368 00:26:33,410 --> 00:26:41,660 Suze: Now, they have paid jointly $413,000 in taxes based on 369 00:26:41,670 --> 00:26:43,670 Suze: today's tax structure 370 00:26:45,290 --> 00:26:50,770 Suze: versus the $144,000 or even the $200,000 of a tax 371 00:26:50,780 --> 00:26:53,170 Suze: write off that he got. 372 00:26:54,219 --> 00:26:58,109 Suze: Am I making sense to all of you? So now 373 00:26:58,119 --> 00:26:59,319 Suze: you're saying, well, Suze, 374 00:27:00,010 --> 00:27:03,689 Suze: you want him to do a Roth, you're Roth crazy. 375 00:27:03,810 --> 00:27:05,869 Suze: So do the numbers for me with a Roth. Oh, 376 00:27:05,880 --> 00:27:07,989 Suze: thank you very much for asking. 377 00:27:08,939 --> 00:27:15,119 Suze: Ok, he's still 50 he makes 300,000 a year. No problem. 378 00:27:15,310 --> 00:27:20,760 Suze: But instead of putting in $30,000 a year for the 379 00:27:20,770 --> 00:27:26,550 Suze: next 20 years, we have to take away the $7200 380 00:27:26,560 --> 00:27:29,650 Suze: in tax that we're gonna have to pay on that 381 00:27:29,660 --> 00:27:34,479 Suze: $30,000 now because we did not do a pre-tax 401k. 382 00:27:35,000 --> 00:27:37,800 Suze: So for the next 20 years, 383 00:27:38,430 --> 00:27:44,909 Suze: he's only going to be investing $22,800 a year in 384 00:27:44,920 --> 00:27:50,770 Suze: the Roth 401k versus the 30,000. Ok. Still an annual 385 00:27:50,780 --> 00:27:54,260 Suze: average rate of return of 7% just stick with me here. 386 00:27:54,270 --> 00:27:58,579 Suze: This is just an example. Don't go crazy. It's just 387 00:27:58,589 --> 00:28:02,050 Suze: trying to equal things out. All right, everybody at the 388 00:28:02,060 --> 00:28:03,479 Suze: age of 70 389 00:28:03,790 --> 00:28:09,290 Suze: he would have only $1 million in his Roth 401k 390 00:28:09,300 --> 00:28:14,089 Suze: versus the 1.3 million he would have had in his 391 00:28:14,099 --> 00:28:16,609 Suze: traditional 401k. All right. 392 00:28:17,270 --> 00:28:20,530 Suze: But now he takes it and does an IRA roll 393 00:28:20,540 --> 00:28:23,929 Suze: over with it, makes again, 4% on it. Put it 394 00:28:23,939 --> 00:28:27,889 Suze: all in treasuries and at the age of 75 he 395 00:28:27,900 --> 00:28:39,329 Suze: now will have $1.2 million versus 1.6 million. $400,000 difference. Ok. 396 00:28:39,930 --> 00:28:44,489 Suze: But here's the big difference. He doesn't want to take 397 00:28:44,500 --> 00:28:47,849 Suze: our mds out. He doesn't want to touch the money. 398 00:28:47,859 --> 00:28:51,550 Suze: He actually wants to leave it to his kids. He 399 00:28:51,560 --> 00:28:52,670 Suze: doesn't need it. 400 00:28:53,709 --> 00:28:59,900 Suze: All right. Now, the 1.2 million at just a 4% 401 00:28:59,910 --> 00:29:03,369 Suze: interest rate, it's in treasuries, it's in a CD. 402 00:29:04,170 --> 00:29:06,910 Suze: So at the age of 89 is going to be 403 00:29:06,920 --> 00:29:15,270 Suze: worth $2.1 million and now he dies. Now, guess what? 404 00:29:15,839 --> 00:29:19,839 Suze: Now it passes down to his kids and because it's 405 00:29:19,849 --> 00:29:21,729 Suze: in a Roth IRA, 406 00:29:22,680 --> 00:29:25,380 Suze: they don't have to touch it for 10 years. They 407 00:29:25,390 --> 00:29:29,060 Suze: don't have to take out any required minimum distributions. They 408 00:29:29,069 --> 00:29:34,579 Suze: have 10 years for it to grow tax free. So 409 00:29:34,589 --> 00:29:37,589 Suze: they just leave it there because they were listening to 410 00:29:37,599 --> 00:29:41,140 Suze: the Women and Money podcast and they heard Suze Orman say, 411 00:29:41,150 --> 00:29:44,069 Suze: if you're ever in this situation and you don't need it. 412 00:29:44,109 --> 00:29:47,260 Suze: Just leave it there till the 10th year if it's 413 00:29:47,270 --> 00:29:48,130 Suze: in a Roth 414 00:29:48,849 --> 00:29:51,969 Suze: and then take 100% of it out in the 10th year. 415 00:29:51,979 --> 00:29:52,510 Suze: All right. 416 00:29:53,250 --> 00:30:01,949 Suze: So 10 years from now when they inherit $2.1 million 417 00:30:02,410 --> 00:30:07,780 Suze: their inherited IRA, because it's a Roth will be worth 418 00:30:07,790 --> 00:30:16,709 Suze: $3.1 million. Everybody that will pass to the kids. Absolutely. 419 00:30:16,719 --> 00:30:18,109 Suze: Tax free. 420 00:30:19,229 --> 00:30:22,489 Suze: I just want you to think about that 421 00:30:23,790 --> 00:30:28,670 Suze: big, big difference. Now, a lot of you will say, 422 00:30:28,680 --> 00:30:31,930 Suze: but yeah, Suze, he took out the 50 some odd 423 00:30:31,939 --> 00:30:34,869 Suze: thousand a year or whatever and maybe he invested it. 424 00:30:34,979 --> 00:30:37,170 Suze: I don't care. I don't care. 425 00:30:37,890 --> 00:30:42,969 Suze: I just want you to stop finding excuses for why 426 00:30:42,979 --> 00:30:48,670 Suze: you think a traditional or a pre-tax retirement account is 427 00:30:48,680 --> 00:30:50,910 Suze: the way for you to go. I want you to 428 00:30:50,920 --> 00:30:54,489 Suze: stop the excuses of you are 60 years of age, 429 00:30:54,500 --> 00:30:57,510 Suze: you're 50. You make too much money. It's too late. 430 00:30:57,530 --> 00:31:01,420 Suze: It is never too late to be smart with your money. 431 00:31:01,430 --> 00:31:03,030 Suze: Do you hear me? 432 00:31:03,890 --> 00:31:07,180 Suze: So you can continue to do what you're doing? 433 00:31:07,900 --> 00:31:11,479 Suze: But I'm here to tell you if you really want 434 00:31:11,650 --> 00:31:14,349 Suze: to be smart with your money, you will listen to 435 00:31:14,359 --> 00:31:18,050 Suze: this podcast over and over again. You'll do the numbers. 436 00:31:18,060 --> 00:31:21,300 Suze: Maybe you won't agree with me with the numbers. Fine. 437 00:31:21,310 --> 00:31:22,790 Suze: Do the numbers yourself. 438 00:31:23,630 --> 00:31:27,810 Suze: But I am telling you in the long run, don't 439 00:31:27,819 --> 00:31:33,650 Suze: become partners with Uncle Sam. Be in business with yourself. 440 00:31:33,660 --> 00:31:37,449 Suze: Buy Uncle Sam out every single year so you don't 441 00:31:37,459 --> 00:31:39,209 Suze: have to deal with him anymore. 442 00:31:40,089 --> 00:31:43,869 Suze: You know, just think about it that way and then 443 00:31:43,880 --> 00:31:48,619 Suze: no matter what, it's 100% yours, when you look at 444 00:31:48,630 --> 00:31:53,660 Suze: your statements, it's 100% yours. For those of you who 445 00:31:53,670 --> 00:31:57,329 Suze: have traditional 401ks or whatever it is. When you look 446 00:31:57,339 --> 00:32:00,579 Suze: at your statement, you better take a good 20 or 30% 447 00:32:00,589 --> 00:32:04,699 Suze: away if not more because that's Uncle Sam's cut. 448 00:32:05,650 --> 00:32:09,229 Suze: Was it worth it for a tax write off? Really? 449 00:32:09,739 --> 00:32:13,479 Suze: Not in the long run? All right, everybody. There's only 450 00:32:13,489 --> 00:32:15,219 Suze: one thing that I want you to remember when it 451 00:32:15,229 --> 00:32:18,359 Suze: comes to your money and it is this people first. 452 00:32:18,369 --> 00:32:22,910 Suze: That's you, everybody, not Uncle Sam, that's you people first, 453 00:32:22,920 --> 00:32:26,229 Suze: then money. Then things. Can you tell that this topic 454 00:32:26,239 --> 00:32:29,589 Suze: has absolutely aggravated me. All right. 455 00:32:30,290 --> 00:32:34,550 Suze: So just stay safe and if you listen to me, 456 00:32:34,920 --> 00:32:39,930 Suze: you will become financially unstoppable.