Robert: March 27, 2025. Welcome to the Women and Money podcast
Robert: as well as everyone smart enough to listen. Hi everybody. Robert,
Robert: the producer here. So it turns out there was a
Robert: major electrical failure on the island where Suze and KT live,
Robert: and of course you know that one needs electricity in
Robert: order to record a podcast.
Robert: And you should know by now that we don't like
Robert: to leave you without a show. So what we're going
Robert: to do today is revisit part of an Ask KT
Robert: and Suze Anything episode from a while back, and we're
Robert: going to jump right into it with KT asking the
Robert: first question.
KT: This question's from Ed. He writes, I'll keep it short.
KT: I'm 51. I have 10,000 in a bank account.
KT: Would Suze suggest investing it in a low cost brokerage
KT: account or using it to pay the taxes on converting
KT: some of my somewhat hefty balance, $600,000 in a traditional
KT: 403B to a Roth 403B. Now Suze, remember Ed is 51.
Suze: If it were me, Ed, I would absolutely take that
Suze: $10,000 since you want to take it and invest it
Suze: anyway in a brokerage account. I think that your money
Suze: would be far better converting money to a Roth 403B
Suze: where you will be also investing it.
Suze: But you're going to be investing it tax free, so yes,
Suze: I would be doing that if I were you, but
Suze: I would be checking it with my CPA. Yes, KT.
KT: So next question, another man, Mike.
KT: I love we get all these mixed up questions because
KT: it's the Women of Money podcast, but I love when
KT: men come on.
Suze: I thought she was going to say I love answering
Suze: questions from all these mixed up men.
KT: No, they're not. No, they're not mixed up. They're, they're listening.
KT: So Mike says, I'm 61 years old and my wife
KT: is 59. We are fortunate to have about $6 million
KT: in retirement savings currently. Good for them.
KT: Good for them, right, Suze?
Suze: Can I just butt in for one second?
KT: Yeah.
Suze: So here's what's interesting.
Suze: A while ago I was being interviewed by someone and
Suze: they wanted to know how the questions that are coming
Suze: into this podcast differed from the questions that came in
Suze: for the Suze Orman show in 2001 all the way
Suze: up that I did, I think, to 2015.
Suze: Almost all the questions were I'm in debt. I don't
Suze: know what to do. I don't have any retirement. I
Suze: need to claim bankruptcy and on and on and on.
Suze: Very few, seriously, very few were about. I have a
Suze: million dollars here, $6 million there and on and on. Today,
Suze: the majority of the questions because most of those people
Suze: now that are writing in
Suze: listened to me from all of my books, watched me
Suze: on TV all those years.
Suze: And now they're all multimillionaires, the majority of them. They
Suze: all own one or two homes outright. They are all
Suze: doing so great. I cannot even stand it. I'm so
Suze: happy for them.
KT: Well, that's a tribute to your work.
Suze: So, but that's a tribute everybody to you can go
Suze: from less to more. You can have money in your life.
Suze: There is nobody out there that is excluded from being
Suze: able to do that. The only person that excludes you
Suze: from doing that is yourself, KT, go on.
KT: So Mike is saying that he and his wife are very,
KT: very fortunate, and they plan on working until they're
KT: 62, so he's 61, she's 59, perhaps late and, and
KT: continue to work. My question is regarding RMDs. Have you
KT: done an episode or do you plan on doing an
KT: episode on what type of planning you should do 3
KT: years prior to retirement? I find it all a bit confusing.
KT: I'm not sure how to prepare.
KT: If not, can you direct me to some resources on RMDs? I,
KT: I love you, Suze. I love your podcast and the
KT: community that's from Mike. We love you too, Mike,
Suze: And the community that Mike is talking about is the
Suze: women and money community. And if you simply go on
Suze: Apple Apps or Google Play, you get to download the
Suze: app for free.
Suze: And it's on that app that I say a lot
Suze: of things that I do not say or do on
Suze: the podcast, you know, KT, I think I answered him,
Suze: but let me just tell you, Mike, the most important
Suze: thing I think you should do, most important thing.
Suze: You asked 3 years before RMD start, what should you do?
Suze: Why in the world would you wait for 3 years
Suze: before you take RMDs because you have to remember.
Suze: That they changed the RMD laws. I think it was
Suze: the Secure Act 2.0, and I think KT it was
Suze: December of 2022. They changed the rules. Why are you laughing?
KT: Because I can't remember what they did in December 2022.
KT: How do you remember all these dates? Oh my God,
KT: she's a genius.
Suze: No, don't say that. I don't like when you say
Suze: that anyway, anyway.
Suze: So they changed the rules, and these rules really apply
Suze: to you, Mike, even more than me. Obviously they changed
Suze: the rule from RMD starting at the age of 72
Suze: to 73, but the big change is that starting in 2033.
Suze: If you were born 1960 or later, RMDs don't start
Suze: until you are 75. Now think about that. Here you
Suze: are only 61, so that's 14 years from now. I
Suze: don't care about 3 years before your RMDs, and now
Suze: we have a really big problem.
Suze: Why don't you now if you can start to convert
Suze: money from a traditional IRA or a traditional 401k or
Suze: wherever it is to a Roth IRA, a Roth 401k?
Suze: Why don't you make sure that you're doing back door
Suze: Roths or whatever.
Suze: Because if you were to do that, then you wouldn't
Suze: be building on the money that you have in these
Suze: retirement accounts right now. You would actually be building your
Suze: Roth retirement accounts, so when the time comes, guess what?
Suze: Your RMDs won't be that big anyway, just so you know.
Suze: So that's really what I would be doing.
Suze: There's all kinds of things that I could tell you
Suze: to do that I'm sure I wrote you about, but
Suze: that is the most important thing I want you to consider,
Suze: all right, because if you start planning now, you'll be
Suze: very happy that you did 15 or 14 years from now.
Suze: All right, KT.
KT: You don't like RMDs.
Suze: I just think I'm mad at myself that we have
Suze: to take them. I told you before...
KT: You told us a couple podcasts that you made a mistake.
Suze: I made a serious mistake, and I was yelling at
Suze: the person I do all my money with. I was like,
Suze: while we were discussing what my RMDs are going to be,
Suze: when should we take them? Should we take them in
Suze: like kind? What should we do with them and things
Suze: like that.
Suze: And I said, and why the heck didn't we convert
Suze: in 2010 when we were able to convert all of it?
Suze: Who cares if I would have paid taxes? I was
Suze: allowed to pay taxes over 2011 and 2012, not 2010.
Suze: And for all these years I would have had all
Suze: this growth because I did magnificently truthfully, KT for us
Suze: during all those years and I'm like, what was wrong
Suze: with me?
KT: What were you thinking?
Suze: I was not thinking. All right.
KT: All right, my, I, I love this question, Suze. This
KT: is a need or a want question right from Eric.
KT: Curious on your thoughts...
Suze: Another man.
KT: Yeah, I have. I picked a lot of guys. Suze,
KT: curious on your thoughts on investing in art and wine,
KT: both solo and I love this question and actively managed
KT: with a company or through an app. So Eric's
KT: asking your thoughts on investing in art and wine. I
KT: love this question.
Suze: Well, why don't you answer it.
KT: Yes, yes, yes. However, I'm gonna answer if you can
KT: afford it because it's if this is a need or
KT: a want, it's really a want. And if you can
KT: afford to invest in
KT: art and wine boyfriend, as Suze would say do it. However...
Suze: You don't know I would say that.
KT: All right, so KT would say boyfriend, do it. Now wait,
KT: KT has another bit of advice. I'd be very careful
KT: in who I invested with in terms of a company
KT: or an app.
KT: I think it's really important that maybe you start some
KT: direct investing either with a small gallery that you know,
KT: or with the wineries themselves. Every great winery here, just
KT: here in our own country in California
KT: has fabulous programs and investigate what you want to do
KT: before your investment.
Suze: Oh she's so proud of her answer, everybody. Here's what
Suze: I would tell you, Eric. There are more things than
Suze: you realize when it comes to investing in art or wine.
Suze: It's storing the wine. We have a very big wine collection.
Suze: We do.
KT: Yes, we do. Suze doesn't drink, by the way, everybody,
KT: but has a sip maybe.
Suze: When KT met me, I had already started to invest
Suze: in wine.
Suze: And I took her to a cellar that I had
Suze: in New York and she was very impressed with it.
Suze: And of course that investment went into her stomach, but
Suze: that is besides the point.
KT: No, went into a fabulous fine glass. That's right, with
KT: a great dinner.
Suze: Yes, but it cost me a lot of money.
Suze: To store those wines just so you know it costs
Suze: us money today to store all the wines...
KT: And insure them.
Suze: And insure them. All right, now let's move on to art.
Suze: We invested in some art.
Suze: And we thought we were gonna do great with it,
Suze: and one of the pieces that we had evaluated the
Suze: other day actually has gone down in value rather than up.
Suze: And so when it also comes to art, you have
Suze: to insure your art so there is a cost to
Suze: protecting these investments and therefore you better take that into
Suze: consideration so Eric, you better know what you're doing because
Suze: chances are
Suze: it might not be as great as an investment as
Suze: you think after all the costs, especially if you don't
Suze: have a reputable person to guide you.
KT: Start with the wine.
Suze: Also, I have to say one other thing. Most people
Suze: who invest in serious pieces of art.
Suze: They invest because they love the art.
Suze: They love it. They love looking at it. They want
Suze: it around them. They don't necessarily care about selling it ever.
Suze: They just kind of want it, but KT, I know
Suze: we can go on here. Why don't you tell them
Suze: about the art that you missed investing in? Come on,
Suze: a quick story. Come on, KT.
KT: I was very, very good friends with Andy Warhol, everybody.
Suze: And tell him what you passed up.
KT: And I remember, and I was young, I was a
KT: young art director in New York at the time, and
KT: I remember, and Andy loved me. He would, he would
KT: take take me to Studio 54 and all those great
KT: night spots in New York. So anyway, I remember one
KT: day we were in his factory in New York City, and,
KT: and he was doing all these silk screens of Chairman
KT: Mao and different portraits, his famous portraits.
KT: And he asked me if I wanted one, and I said,
KT: how much is it? He said, for you $350 350 dollars, everybody.
Suze: And what did you say?
KT: I said, Well, let me think about it. Maybe, maybe
KT: I'll get one next month or so. I didn't think
KT: at all about it.
Suze: And you thought that you could never really afford it
Suze: at that time.
KT: No, no, no, no, I, I could afford it.
Suze: But you didn't do it.
KT: I didn't do it. Why? Because I thought I could
KT: just do this anytime we're friends.
Suze: Now just tell everybody what that sells for today.
KT: I don't really know the exact price of his prints today, millions, millions, many,
KT: many millions. He had the Marilyn Monroe. He had quite
KT: a few famous great, great portraits. Grace Kelly, Grace Kelly
KT: was a beautiful one. Yeah, all right,
Suze: So anyway, you, you probably.
Suze: Shouldn't listen to KT. All right, go on.
KT: OK, so next question. Stick with the wine.
Suze: There was another thing she passed up that would have
Suze: made her so wealthy. It's not even funny, but we
Suze: can talk about that another time.
KT: Coffee, right? The coffee story? OK.
KT: All right, next question. Let's get into my questions. I
KT: have a mountain of questions. Hi, Suze. Let me start
KT: by acknowledging you as a trailblazer and beacon of light
KT: for all of us women who want to take charge
KT: of our lives and finances. Thank you. And I am,
KT: this is from Darchase.
KT: She said, I am a recently widowed retired veteran's spouse.
KT: Equity in the home that we purchased in 2005 has doubled.
KT: The present mortgage rate is 3.5% with a balance of 116,000.
KT: The home was built in 1986. It's presently worth about 270,000.
KT: Suze, I would like to do some renovations, and I've
KT: been thinking about using the equity to acquire upfront cash.
KT: A 30-year refinance loan, especially with rates in excess of 7%,
KT: is out of the question.
KT: What would you suggest as an alternative to acquire cash
KT: without losing my current rate of 3.5%?
Suze: Here's the scoop, girlfriend. You didn't list in this email,
Suze: and first of all, both Katy and I are very,
Suze: very sorry for your loss.
Suze: And the truth of the matter is that if you
Suze: want to do some renovations, you didn't tell us any
Suze: other alternatives that you have for cash, meaning a retirement account,
Suze: an investment account, anything else. I'm going to assume this
Suze: is the only way that you can do it. So
Suze: if I were you, I would simply do, even though
Suze: I don't suggest it right now because interest rates are
Suze: so high.
Suze: But I would seriously simply not refinance my home. I
Suze: would try to do a home equity line of credit
Suze: in the hope that they see that you have enough
Suze: income and everything to qualify for that. When interest rates
Suze: go back down again, if you want, you could then
Suze: possibly refinance all of it back to maybe 3.5% or
Suze: who knows what, but
Suze: here's something that I just want to say for all
Suze: of you if you ever do refinance in any situation,
Suze: if you have, let's say, a 30 year mortgage, you
Suze: have been paying on it now for 7 years.
Suze: You have 23 years left now. Interest rates have come
Suze: down and you've decided, all right, I want to refinance,
Suze: and if you refinance for another 30 years now you
Suze: have totally obliterated the reason that you should really be refinancing.
Suze: So if interest rates come down.
Suze: And you do refinance and let's say you owe 23
Suze: years still on your mortgage, then you would refinance for
Suze: 20 years, never refinance for longer than the period of
Suze: time you currently have left on your mortgage. Alright KT
Suze: got any more for me or is that it?
KT: That was it.
Suze: Are you sure?
KT: Yes.
Suze: All right, cause guess what I have for you.
Suze: A quizzy and everybody, this is a great quizzy. I
Suze: love this quizzy, but it's not just for KT, as
Suze: I say every week, it's for you as well. How
Suze: would you answer this question, because there will be many
Suze: of you out there who happen to be in this
Suze: exact situation. Are you ready, KT?
KT: I'm ready.
Suze: This is from Ashley, and I picked it because I
Suze: bet there's a lot of our younger listeners that are
Suze: in this exact situation.
Suze: Hi Suze and KT, you two are the best all
Suze: in capitals. You helped me fund my first Roth, buy
Suze: our first place in New York City and start investing
Suze: on my own. I fired my financial adviser, whom I
Suze: never heard from. Dollar cost averaging, yeah, baby. So here
Suze: I am at another big life step.
Suze: Having a baby, it's so easy to calculate the cost
Suze: of affording a home, but it's so hard, all in capitals,
Suze: to find info on whether you're financially secure enough to
Suze: take care of another tiny human.
KT: So sweet, Ashley.
Suze: And she says, I'm this is all not only some
Suze: of it in capitals, but bolded.
Suze: I'm very worried about the financial stress of this step,
Suze: even if it's an amazing one.
Suze: Just the cost of daycare in our area, write it down,
Suze: KT is $3500 a month.
Suze: And my husband and I are willing to postpone kids
Suze: till it makes sense financially. Adoption is always an option.
KT: Good good for her. Good for you, Ashley.
Suze: I have to tell you that. But here is Ashley's
Suze: situation now, everybody, that you have to write down. The
Suze: monthly income is about $10,000 after taxes plus bonuses.
Suze: And so therefore it's about in my estimation, and I'm
Suze: the one doing this about $15,000 a month after taxes.
Suze: They have $86,000 in an emergency fund.
Suze: Their retirement investments are about $138,000.
Suze: Their monthly expenses are $6000 including mortgage insurance, food, and transport.
Suze: Now what I'm not exactly clear about with all this,
Suze: everybody is, does that include the savings into retirement accounts
Suze: and things like that? I'm not sure, but we will
Suze: just take her word for it that it's $6000.
Suze: So the question is, KT, with all of that.
Suze: Do you think
Suze: that she has enough money at this point in time
Suze: to have a baby. Everybody think about it. Please add
Suze: in at least the cost of day care.
Suze: And she does not say how old she is just
Suze: so you know.
KT: OK.
KT: I, I have my answer.
Suze: That was quick. I can't wait to hear this.
KT: All right, so her expenses right now, including daycare with
KT: the baby.
KT: It is about $9500 a month. Let's say those bonuses
KT: don't really come to fruition as much as we want
KT: them to. So you're, you're estimating $15,000 a month of income.
Suze: Yeah, and I'm the reason I'm doing that, KT, is
Suze: she also says their annual income before taxes
Suze: is $237,000. So in the state of New York you
Suze: have cities...
KT: Right, right, right, right. So, so let me just get
KT: to my point.
Suze: I feel comfortable with that $15,000.
KT: OK, so let me just get to the point here.
KT: I would wait a little bit before I had the baby,
KT: and I'll tell you why. I think if you have
KT: a little bit of a, I would put another bucket
KT: in your list here called Baby Fund. I would build
KT: a little more of a cushion.
KT: Just for the what ifs of having a baby, and
KT: I would eliminate the most important thing you put in
KT: this email, which is the word stress. You cannot get
KT: pregnant and enjoy 9 months before your little tiny human
KT: arrives and have any stress. So just wait maybe 2
KT: years if you can. We don't again, we don't know
KT: how old you are.
KT: But if you could wait 2 years, you could probably
KT: acquire a great deal of money in just a baby fund.
Suze: So that's your answer.
KT: That's my answer.
Suze: There is no right or wrong answer here.
KT: No, because we love babies and we think it's great.
Suze: So let me tell you how I think about this
Suze: and what I would tell you to do, Ashley, right?
Suze: And again, I'm not going to approve or deny because
Suze: you're the one once again.
Suze: That has to make this decision, but I just want
Suze: to give you a little bit more information about how
Suze: to make this decision.
Suze: Your income and bonuses again after tax 15,000 we all
Suze: know that 86,000 and emergency savings expenses and things like that.
Suze: All right, we all know your money. What is not
Suze: in this equation is the cost of a child today.
Suze: Forget daycare. Forget that there are costs to having a
Suze: child and it comes out to be approximately
Suze: $25,000 a year till about the age of 17 or
Suze: 18 and that does not include, by the way saving
Suze: for college so what we have to do is we
Suze: have to add
Suze: $2000 to your actual cost, not just $3500 a month,
Suze: but another $2000 a month. So that's $5500 added to
Suze: what you say of $6000. So let's just say your
Suze: monthly expenses now are $12,000 a month.
Suze: So here's what I would like you to do to
Suze: see if you're figuring things correctly.
Suze: If it is true.
Suze: That your expenses are $12,000 a month and now you
Suze: have approximately $15,000 a month of income.
Suze: The difference there is $3000 a month, correct, Ashley, for
Suze: you to just get by with this child. Therefore, for
Suze: the next 6 months, I want you to play having
Suze: a child.
Suze: In fact, what you should do is put away anywhere
Suze: from 3 to $6000 a month into a high yield
Suze: money market account and see how it feels that you
Suze: have this child and you have an additional, let's just
Suze: say $6000 of expenses from what you have right now.
Suze: Because I'm just going to assume that the difference between
Suze: what your expenses are now and your income you're putting
Suze: away in savings. So let's just say you do increase
Suze: by $6000 a month.
Suze: You put $6000 a month away for one year and
Suze: see how it feels. Now you have to ask yourself
Suze: the question. Was that easy for you to do? You
Suze: should set a date at the first of every month
Suze: that you put that money away. Can you put it
Suze: away on the 1st of every month, or is it
Suze: too hard for you to do that? Can you not
Suze: afford it?
Suze: Was there a month that you could not do it?
Suze: Was your lifestyle changed dramatically because you had to do that?
Suze: And if it was changed, how did it change? Now,
Suze: obviously your life's going to change when you have a baby,
Suze: and you're going to be just like everybody else. You're
Suze: gonna experience love, at least this is what everybody else says,
Suze: more than you've ever experienced love in your life, so
Suze: it's going to be fabulous.
Suze: However, can you easily afford it before the baby comes?
Suze: Now here's the good news. If you're able to do that,
Suze: let's say put $6000 a month away for a year.
Suze: Now you have an additional $72,000 my love, to add
Suze: to your emergency fund which will then bring you to
Suze: a total of $158,000 and that's one year
Suze: of living expenses if something goes wrong so that you
Suze: can maintain everything even if you can't work or whatever
Suze: it may be. That is how I would decide if
Suze: I were you, if you could easily afford a child
Suze: without stress.
Suze: KT, how was my answer?
KT: Ding ding ding ding ding.
Suze: Thank you, girlfriend. All right, everybody, there's only one thing
Suze: that we want you to remember, and it's this:
KT: People first.
Suze: Then money.
KT: Then things.
Suze: Now you stay safe. See you soon. Bye bye.