Mailbag with Ramit Sethi: “Should my inheritance fund my husband's retirement?”

Summary

HerMoney with Jean Chatzky: Mailbag with Ramit Sethi – “Should my inheritance fund my husband's retirement?”

Release Date: March 21, 2025

In this compelling Mailbag episode of HerMoney with Jean Chatzky, host Jean Chatzky invites renowned personal finance expert Ramit Sethi to address pressing financial dilemmas faced by her listeners. The episode delves into nuanced topics surrounding couples' finances, inheritance, career choices, and parenting, offering actionable insights and empathetic guidance. Below is a detailed summary capturing the key discussions, insights, and conclusions from the episode.

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1. Navigating Inheritance and Early Retirement

Listener's Dilemma: A listener presents a complex situation wherein her 57-year-old husband insists on early retirement due to burnout. The couple has amassed significant savings: $1.3 million in her husband's 401(k) and $900,000 in inherited funds, which she has kept separate. The husband's desire to retire is fueled by an advisor's suggestion that the inherited money would suffice, leading to tensions and fears about financial security post-retirement.

Key Insights:

• Emotional versus Rational Decision-Making: Ramit emphasizes the importance of distinguishing between emotions and facts. He states, “[...] feelings about, he's telling me this and we have children and all these life circumstances, it's very heated. And the emotions, they may be real, but they also are very likely leading them astray.” ([00:31])

• Importance of Open Communication and Therapy: Ramit advises that such consequential decisions require honest conversations, preferably facilitated by a therapist. He suggests, “I would encourage them to get a therapist because this is a very tough series of conversations to have...” ([03:25])

• Understanding Individual vs. Joint Assets: Jean underscores the significance of treating inherited funds as separate property until both parties agree to commingle them. She advises, “An inheritance is an individual asset... you just want to be very careful about how you treat those funds.” ([05:40])

• Reevaluating Personal and Financial Goals: Both Jean and Ramit highlight the possibility of redefining career paths and financial strategies, reassuring that it’s never too late to make changes that align with personal fulfillment and financial stability.

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2. Unequal Incomes and Career Advancement in Relationships

Listener's Dilemma: Kimberly shares her struggle with an ongoing argument in her marriage regarding her pursuit of further education and a dream career. With incomes in the relationship never being equal and Kimberly being in her mid-40s with children ranging from 10 to 18 (including one with special needs), the financial and emotional stakes are high.

Key Insights:

• Mastering Financial Literacy: Ramit points out that many couples may lack a thorough understanding of their finances, stating, “...you need to know your numbers and master your psychology.” ([11:22])

• Structured Communication: He advocates for setting aside initial emotions to discuss feelings and visions before diving into numbers. For example, “We're going to start off by talking about what we love and what we're excited about. Then we're going to talk about what we fear.” ([12:00])

• Scenario Planning: Ramit suggests creating multiple financial scenarios to visualize the impact of various decisions, such as pursuing education or altering careers. “I would love to see three different scenarios with actual numbers.” ([13:00])

• Validating Emotions and Collaborative Decision-Making: Emphasizing the importance of validation, Ramit encourages partners to acknowledge each other’s feelings without immediate judgment or solution-finding, fostering a supportive environment for decision-making.

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3. Teaching Financial Responsibility to Children

Listener's Dilemma: Poonam asks for advice on balancing financial provision for her children while cultivating their intrinsic motivation to excel. She grapples with providing for their education and future without fostering dependency or complacency.

Key Insights:

• Building a Positive Relationship with Money: Ramit critiques the notion of shielding children from money, advocating instead for integrating financial discussions into everyday life. “Money can be fantastic. Money allows us to have a roof over our head and have these adventures and be safe.” ([15:49])

• Early Financial Education: He recommends age-appropriate financial tasks, such as involving young children in budgeting for grocery bills or planning family trips, to instill practical money management skills from an early age.

• Avoiding Negative Language: Ramit advises against phrases like “We can’t afford that,” suggesting instead to discuss choices and trade-offs, thereby teaching children the value of making informed financial decisions.

• Fostering Independence: Jean echoes Ramit’s sentiments, highlighting that choices made in everyday decisions are foundational financial lessons. She advocates for allowances tied to responsibilities, enabling children to allocate resources wisely and prepare for financial independence.

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4. Integrating Practical Financial Advice

Throughout the episode, both Jean and Ramit emphasize the importance of actionable steps:

• Engaging Financial Therapists: Jean suggests utilizing resources like the Association of Financial Therapists to find professionals who can help navigate the intersection of finances and relationships.

• Scenario-Based Planning: Creating financial scenarios allows couples to project future outcomes based on different decisions, helping to ground emotional discussions in concrete data.

• Continuous Learning and Adaptation: Both experts encourage ongoing financial education and adaptability, acknowledging that personal and financial circumstances can evolve, necessitating flexible planning.

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5. Conclusion and Resources

As the episode wraps up, Jean and Ramit highlight the availability of further resources:

• Ramit’s Book and Podcast: Listeners are encouraged to explore Ramit’s book, Money for Couples, and his podcast, both of which provide additional strategies for managing finances within relationships.

• HerMoney Programs: Jean promotes HerMoney’s programs, Finance Fix and Investing Fix, designed to empower women with the knowledge and confidence to take control of their financial futures.

• Encouraging Engagement: The hosts invite listeners to rate the podcast and engage with them through various platforms to deepen their financial literacy and spark meaningful conversations.

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Notable Quotes:

• Ramit Sethi on Financial Psychology:

  “In order to live a rich life, you need to know your numbers and master your psychology.” ([00:31])

• Ramit Sethi on Communication:

  “Signs of a healthy financial conversation include validation and setting a vision together with the help of a third party.” ([03:25])

• Ramit Sethi on Financial Education for Kids:

  “You talk about choices you make. It’s about why we as a family choose to do these things.” ([15:00])

• Jean Chatzky on Financial Decisions:

  “Numbers not only don't lie, numbers don't have feelings, they just sit there on the page. They tell you a story.” ([14:16])

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This episode of HerMoney with Jean Chatzky serves as a vital resource for women navigating the intricate landscapes of personal finance within their relationships and families. By integrating expert advice with listener-centric discussions, Jean and Ramit provide a roadmap for achieving financial harmony and empowerment.

Transcript

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[Ramit Sethi]

So much of what they have talked about are these very hot feelings, feelings about he's telling me this and we have children and all these life circumstances, it's very heated. And the emotions, they may be real, but they also are very likely leading them astray. That's why I say in order to live a rich life, you need to know your numbers and and master your psychology.

[Jean Chatzky]

Hey everyone, I'm Jean Chatzky. Thanks so much for joining us today on Hermoney for a special mailbag chat with Ramit Sethi. I hope that you all caught our earlier episode with Ramit. He's got a new book out. It's called Money for Couples. Thanks for coming back.

[Ramit Sethi]

Thanks for having me.

[Jean Chatzky]

We heard from so many of our listeners who've got questions about how to talk to their partners, when they should return to work, staying home with kids, what to do in the event of an emergency, even when to and when not to mix finances with a partner. So if it's okay with you, Ramit, I'm just gonna dive on in.

[Ramit Sethi]

Let's do it.

[Jean Chatzky]

Okay, this first one, there's a lot of information. So here we go. My husband is 57 and insists on retiring soon. He is burnt out and miserable. He believes we have the money for him to stop working. In fact, he was told this by our advisor after my parents passed and I received some inheritance money. The advisor assumed we'd use my inherited money for him to be able to stop working. I have been a stay at home mom since we started moving around for my husband's MBA and his job after. It was never a decision that I'd stay home. It just kind of happened. So here's where we are. We have 1.3 million, mostly in my husband's 401k. I have 900,000 in inherited funds that I am keeping separate. And here she tells us that her marriage has not been happy or healthy for the last eight years. My husband claims 2 million is plenty to retire and he can retire early. But if he retires the money to pay our bills and college tuition would be on me. He told me the other night that he wants to ASAP when he can stop working. And he wants me to feel how miserable he is because the only reason he's still working is because he thinks no amount of money is going to be enough for me. I feel very guilty given that he has worked hard for our family for years. But I also feel like this inherited money is all I have. Whoa.

[Ramit Sethi]

Wow. Yeah, wow.

[Jean Chatzky]

And having been divorced, like, bells are ringing all over the place.

[Ramit Sethi]

Yeah. Listen to the words and the language being used. Words like, I feel guilty. He wants me to be as miserable as he is. Our marriage hasn't been good. There's a lot of issues here. Several things come to mind for me. First off, this is not a process to rush through. This is a time to slow down. This is a very consequential decision, not just financially, but also relationally. Second, I suspect that there hasn't been a lot of honest conversations between the two of them. For example, the fact that he believes she simply wants more money. How much? What does that mean? Is that actually true? Does she know how much she wants? Does he know? If I were to guide them, my suggestion would be, first off, I would encourage them to get a therapist because this is a very tough series of conversations to have and it would be very tempting to jump into it. And within 10 minutes they would be fighting, saying, I've been wanting, I've been working for 20 years. Well, you never told me it. That's not what we want. We want to actually, with the help hopefully of a third party, sit down and say, hey, what's our vision for the next chapter of our life? That's first, I'd like to stop working, or I'd like to get a different career and then talk about what's happened in the past. I don't know how I ended up being a stay at home mom. It sort of just happened and I, I still hold some resentment from that. Let's talk about that. And then finally, where do we want to go and do our numbers support that? I bet you this husband has no idea that she's considering keeping her inheritance separate. That needs to come out, but it needs to come out in a thoughtful way. I certainly would not mention that right up front. So there's a lot of discussion that has to happen. I would highly recommend engaging with a therapist. I hope the best for them that they can come to a vision together. There are ways where she might say, I want to keep part of this separate, part of it joint. As long as we can commit to therapy or improve the way that we interact. It might turn out that their next chapter is a different one than they'd planned, but they need to talk about it over a series of time with somebody helping them.

[Jean Chatzky]

Absolutely. And I would suggest looking for a therapist who specializes in finance. These people exist. In fact, there is a whole association of financial therapists. So you can go to their website, you can plug in your zip code, they'll help you find somebody who is close to you or you can see somebody who's not so close or on zoom. Regarding that inheritance, you do want to move really carefully. As Ramit was saying, once you have decided that you're commingling the whole thing, as I think you know it's commingled, there are assets that are considered marital. They're part of the marital relationship. And if the marital relationship were to dissolve, they would be divided. And then there are individual assets that you would come to the marriage with and keep separate. An inheritance is an individual asset. And so until you decide that you're actively going to commingle it, like by putting it into a joint account, it is your separate property. You just want to be very careful about how you treat those funds and how you use them for the benefit of your joint life. And the other thing that I would say is that you've been a stay at home mom. If you still feel like that was not the right path for you, it is not too late to change. You can find a career. You can go back for training, you can go back to school, you can go out and just get a job. You're not at the end of your road. We can change if we decide that we want to.

[Ramit Sethi]

Yeah, I love that.

[Jean Chatzky]

Thank you so much for the question. We're going to take two more. But before we do, a quick word from our sponsors. It's no surprise that your career is one of your biggest financial assets. The more you earn, the more you can save and invest and build the kind of financial future you want. But earning more doesn't just add happen. You have to take action. I remember early in my career I was doing all the right things. Staying late, proving myself in the magazine industry. But I didn't see it reflected in my paycheck. It wasn't until I learned how to advocate for myself, how to negotiate, how to own my worth, that I started to see real financial progress. And that's exactly what strawberry me career coaching helps you do. They match students and professionals with certified career coaches who help you. So if you're ready to make your next career move, go to Strawberry Me Hermoney and claim your $50 credit. That's Strawberry Me Hermoney because taking control of your career is one of the smartest money moves you can make. You know that moment when you're standing in the kitchen staring at your glass of tap water and wondering what's actually in this? Yeah, same. I've always been big on staying hydrated, especially when I'm training for a race. But after learning that nearly every home in America has harmful contaminants in its water, I knew I had to do better. That's why I love Aquatru. Y'all know that I love to have coffee brewed all day. I'll admit it. And I can honestly say it tastes so much better now. Plus, with filters that last up to two years, I am not constantly worried about replacements. Aqua True comes with a 30 day money back guarantee and even makes a great gift. Today my listeners receive 20% off any Aqua Tru purifier. Just go to aquatru.com that's a Q U a T-R-U.com and enter code hermoney at checkout. That's 20% off any Aqua True water purifier. When you go to aquatru.com and use promo code Hermoney. H E R M O N E Y We're back. Ramit Sethi and I are answering your couples and money questions. This one's from Kimberly. It's a similar clash of priorities. She writes, in my relationship, incomes have never been equal. There is an ongoing argument between my husband and me that I should be using our resources to become trained to take on a career. This would be a dream career for me and an amazing opportunity. It would also mean moving from the US To Europe, opportunities for more culture, and affordable education for our family. He wants me to get that career training now, but more training would mean dipping into funds or taking out more loans. We're trying hard to avoid parent student loans for college, so I don't want to spend the time and money yet. I'm in my mid-40s, but my kids are 10, 10, 14 and 18 and one of them is special needs. So we're just hitting the college years. I know extra income at this stage would allow for more travel to boost our retirement savings and to be able to retire earlier. Here's the main crux of our argument. I feel like he's asking me to add more Education onto my plate to spend the resources, time and money, even if it's something I'll never use. He feels that without me working more, he will work until he dies. The question of when I should return to full time work so we earn more has been the main point of contention with us.

[Ramit Sethi]

I bet you they don't know their income. Oh, I bet you, I bet you they don't know the first thing about their finances. So much of what they have talked about are these, these very hot feelings. Feelings about, he's telling me this and we have children and all these life circumstances, it's very heated. And the emotions, they may be real, but they also are very likely leading them astray. That's why I say in order to live a rich life, you need to know your numbers and master your psychology. For example, if I were advising this couple, a couple of things that I would suggest to them first off would be sit down and agree that we simply want to talk about how we feel. For this conversation, we're not even going to talk about numbers. Let's set that aside. We're going to start off by talking about what we love and what we're excited about. Then we're going to talk about what we fear. Hey, I fear that I'm being asked to take on this burden. I fear that it's late in life. I fear this, I fear that. And the other person is not going to try to correct them or reassure them. Simply, I hear you. They're going to validate them and then you give each other a hug and that's it. Sometimes just being hurt is so valuable. It's something I'm working on in my own relationship is learning how to validate. And not everything has to be solved right away. Then you gotta know your numbers. So for this couple, what I would love to see are three different scenarios with actual numbers. Scenario one, we keep as is, here's how things end up 20 years from now. You can actually map it out pretty clearly. You need to know your income, you need to plug in your investment returns. You need to talk about how much ballpark you're gonna spend on the kids for college. People resist doing this because they don't like to make assumptions. Hey everybody, you have to make assumptions in life. It doesn't mean if you're wrong that you're a bad person, you're gonna be wrong. But at least you went through the process of saying, hey, are we gonna spend $5,000 a year on each kid for college or $50,000 a year for each year, for college. Let's at least get in the universe and we can add a little buffer. I'd like to see some scenarios on what if one person gets an education? What if one person gets a job, switches jobs, negotiate salary. There's so many different stuff. Pick the three biggest scenarios. Now you've got your feelings, you've got some scenarios. Now you can start to go through the process and say, you know what, seeing this makes me feel more comfortable about this. But if we did scenario two, I would need you to be more involved. Making dinner every week. Okay, we can have that conversation, but now we are grounded and we are looking at actual potential facts.

[Jean Chatzky]

I think that's spot on, right? That you're looking at reality. And here's the thing that people just don't understand. Numbers not only don't lie, numbers don't have feelings, they just sit there on the page. They tell you a story. And what you choose to feel from looking at those numbers is on you. It's a reflection of your life experience. But the numbers in and of themselves, they're not evil. They're not even scary once you put them down. I think people believe they will be scary. But I've seen just as many situations where the numbers made people feel better as where the numbers made people feel that they had some catching up to do. So I'm with you and I think that's going to be a great way to start.

[Ramit Sethi]

Great.

[Jean Chatzky]

One more? Okay.

[Ramit Sethi]

Yeah.

[Jean Chatzky]

Okay. So this one is from Poonam. Not exactly about money conversations as a couple, but I thought it was a good one. How do you navigate providing for your kids yet keeping them grounded with an inner desire to excel? We believe as parents, once we're set, it's our responsibility to help our kids get ahead. And this includes giving them a good education, maybe a down payment. But how do you build that inner fire when by default their lives will already be better than a lot of people's?

[Ramit Sethi]

I think Poonam probably same culture as me. My parents immigrated from India. And I think for a lot of people, whether you grew up here, whether you have parents from here or another country, we understand the experience of growing up differently today than our parents raised us. And in my case, my parents, we didn't have a lot of money. Like we didn't eat out. Eating out? What are you talking about? Once every six weeks if we have a coupon. And nowadays, you know, I eat out much more than that. Let me say a couple of things as related to the couples I've spoken to about money and kids. Many parents, they believe that money is something to protect kids from. So they say things like, I want to let them be a kid. I say, what? What's that about? And what they really mean deep down is, money's bad and I want to keep it away from my kids as long as possible. No, money's good. Money can be fantastic. Money allows us to have a roof over our head and have these adventures and be safe. What you'll eventually discover when you want to have a really good relationship with money and families is it all starts with the adults. If you have a good relationship, then you can teach your kids. But you can't teach kids something that you don't believe yourself. They're too smart. They can tell you're lying. The second thing is there are very specific ways to get kids involved. When they're young, young, pull them up, sit on your lap, say, can you help me push this button. We're going to pay the bill when we push this button. That helps us keep this roof over our head and keep the fridge full of the food that we love to eat. Push the button. Yay. We're getting them excited. We're connecting joy with money. We're also showing them that mom is involved with money, dad is involved with money. Both parents are involved with money as they get older. We have $100. We have to get these things from the grocery store. Can you help me do it? And they're learning how to make a list and account for things like tax. By the time they graduate high school, ideally, they should have planned whether it be a family trip, purchasing a family car, like a big purchase. That way they account for taxes, tips, unexpected transportation costs. That is how kids go out into the world. Prepared, they understand trade offs. They know that you can't always have everything, but they know that you can spend on the things you love. Now, wouldn't you rather do that than not talk about money at all and say things like, we can't afford that? I would ban that phrase from households immediately. You talk about choices you make. You talk about why we as a family choose to do these things. And by the time they go off as adults, they are well prepared.

[Jean Chatzky]

Yeah, I totally agree. I think that it's all about choices. And we are teaching our kids about choices from a very young age. When we ask them, do you want to wear the red shirt or the blue shirt, you don't think it's a money conversation? It's 100% a money conversation that they have to make a decision, and that is the hardest thing in life. And an allowance can be a really, really good teaching tool. You just have to give it with a list of things that you're not going to pay for anymore, where they have to take their resources and allocate them over a whole bunch of things they want and choose the things that they want most or decide that they're going to save some for next time so they can buy a bigger thing that they want. Even more than that, the goal is as your kids roll out of the house, as Ramit said, they can actually handle enough money so that they don't blow through an entire semester's worth in the first month. And they can get through that first semester of college without calling you. Panicked on the phone that they don't have any money left. So it's a process and I think this is a really good way to start. Remy, you're the best.

[Ramit Sethi]

Thank you. You know, I love our conversations. I always have a great time.

[Jean Chatzky]

I have a really good time as well. Congrats once again on the book, guys. It's called Money for Couples. Ramit has a great podcast also called Money for Couples. You can find that everywhere. You find your podcasts and you can find the book in pretty much every bookstore. Thanks again for being with us.

[Ramit Sethi]

Thanks so much.

[Jean Chatzky]

If you love this episode, please give us a five star review. On Apple Podcasts, we always value your feedback. And if you want to keep the financial conversations going, join me for a deeper dive. HerMoney has two incredible programs. Finance Fix, which is designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets bi weekly on Zoom. With both programs, we are leveling the playing fields for women's financial confidence and power. I would love to see you there. Her Money is produced by Hayley Pascalides. Our music is provided by Video Helper and our show comes to you through Megaphone. Thanks for joining us and we'll talk soon.