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- [00:00]
Jill Schlesinger
Hey gang, I'm not one for New Year's resolutions, but I do love the end or the beginning of a year as a great moment to reflect on your financial planning. You know, if your life has changed, maybe you've gotten married or had a kid or gotten divorced, maybe it's time to look at your life insurance. Do you have the right amount of insurance for you and your needs? These are questions that should be integral to the financial planning process. And you don't have to do it alone. With Policygenius, you can find life insurance policies that started just $292 per year for $1 million of coverage. Some options are 100% online and let you avoid unnecessary medical exams. I know that for many of you, the idea of going through this process alone is kind of daunting. But you don't have to because with policygenius, they've got a licensed support team. They'll answer questions, they'll handle the paperwork, and they'll advocate for you secure your families tomorrow so you have peace of mind today. Head to policygenius.com to your free life insurance quotes and see how much you could save. That's policygenius.com and now a word from our sponsors at Betterment. Do you want your money to be motivated? Do you want your money to rise and grind? Do you think your money should get up and work? Don't worry, Betterment is here to help. Betterment is the automated investing and savings app that makes your money hustle. Their automated technology is built to help maximize returns, meaning when you invest with Betterment, your money can auto adjust as you get closer to your goal rebalance. If your portfolio gets too far out of line and your dividends are automatically reinvested, that can increase the potential for compound returns. In other words, your money is working like a dog while you can be sleeping like one and snoring like one too. You'll never picture your money the same way again. Betterment, the automated investing and savings app that makes your money hustle. Visit betterment.com to get started. Investing involves risk. Performance is not guaranteed.
- [02:17]
Mark Telercio
Welcome to the Jill on Money show. It's Friday, January 3rd and we are here early days of 2025 answering your financial question. We are trying to help you take control, to have some agency over the big decisions in your life and you can have that. You may not get what you want.
- [02:35]
Jill Schlesinger
But at least give us a holler. Get in touch with us so you.
- [02:38]
Mark Telercio
Know what your options are. That to me is a way to really feel a lot better about the process.
- [02:45]
Jill Schlesinger
All you need to do is go.
- [02:46]
Mark Telercio
To our website jillonmoney.com, click the contact us button. Let us know if you'd like to come on the air live just by checking that box. While you're on the website, just bookmark it. All of our content gets refreshed all the time, so please do check it out. All right, let's do some emails. This is a follow up from Anonymous from Dallas who reached out about a potential large inheritance that's more than a decade away. So Anonymous says, I asked for advice on whether my wife and I should shift from a pre tax 401k contribution to full Roth. 401k? You and Mark recommended going full Roth and we made the switch. Mark also suggested discussing gifting strategies with my parents who are 72 and 70. And after speaking with them, here's what they agree to. This is amazing, Mark. You really have made a difference in this guy's life. So the parents are going to gift $8,000 each to anonymous and anonymous brother every six months with no restrictions on the use. Now wait a second, 8,000 is 16,000. I mean, they could gift more, but okay, let's just figure that out. That's that. They would also agree to cover half of my son's daycare costs totaling 750 bucks a month. Additionally, they're doubling our contributions to our one year old's 529 plan and we'll extend this to any future children. However they would like to use a grandparent owned 529 plan instead of adding it to our account which has about $13,000 in it. That decision is due to recent changes that exclude grandparent owned 529 contributions from impacting a student's financial aid eligibility. It all seems advantageous though. Part of me would love to consolidate everything into our 529 for simplicity. What are your thoughts? I did not expect any of this when my wife and I had our son, so I am tremendously humbled and grateful. Mark, what's the. It's not such a big deal to have two separate 4, 529 accounts, right?
- [04:55]
Anonymous Financial Expert
No, it's not the worst thing in the world. I mean, you know, I would rather have one, but it's not. If they're fine with it, that's all that matters.
- [05:02]
Mark Telercio
Yeah, let's just take the money however it comes and not start quibbling over the details. I agree with you. I'd rather that as well, but seems like a pretty good deal for you and I'm very Happy and I'm glad you had the conversation. It's funny how you have conversations and it does lead to better decision making, which is amazing. This is from Michael, who said, I watched a short video of yours about not changing what you're doing with index funds, et cetera. But my concern being only four years from drawing off investments, is avoiding some sort of crash. By the way, Michael says a bubble crash. So it depends what your bubble is in. Okay, so Michael's in the vanguard world and he said I was considered leaning to energy funds and a minimum volatility exchange traded fund. They are both managed. The latter only lost 0.16% during COVID Another thought was just sitting on a six month CD to let things shake out. Any opinions? Okay, what we're really talking about is what's the proper allocation as you anticipate drawing from your investments. I think the first thing you have to do, Michael, is to figure out how much money are we drawing? What are we asking your portfolio to provide for you? And what do I mean by that? I mean that if you're looking at your retirement planning and you say, well, I will be getting Social Security, which makes up some portion. Let's just say, you know, there's 30 grand coming in from Social Security and I'll need another 70 grand from my portfolio. Okay, and let's say you have a few million bucks in the portfolio. In that case, we need to set up a system where you can provide $70,000 from your portfolio consistently. Now if you've got again, I'm going to just pretend you got $3 million in the portfolio. One thing to do is to have two years of that need. $140,000 locked down in some sort of cash equivalent like a cd, right? So you could have a one year cd, a two year cd, you can even have a three year cd. Just so if you're really worried about the next four years. But what I think is more important is do you have your allocation right? Overall, I'm not into energy funds, I'm not into a minimum volatility exchange trader fund. I'm not into managed funds. What I'm into is having some stocks, some bonds, some cash, maybe a real estate fund, maybe you want a small commodities fund. But boy, I wouldn't be picking out leaning on any specific kinds of funds, sector funds, because I don't think it's worth it. You don't need to. So what you're really saying is how do I not just get through the next four years? How do I get through the next 34 years. Right. And that means that you really need to be paying attention to what it is you're asking that portfolio to provide for you in terms of income, then coming up with the right allocation to get you there. Oh, this is a fascinating question, Mark. This is from Heather. The subject is 529s underperforming. How about that? Okay. Hi, Jill and Mark. I have been checking on my kids 529 plans and with how well the stock market is doing, these 529s are barely earning anything under 10% each year. The kids are 11 and 13. The clock is ticking. I keep adjusting the investments, but I'm not having luck. Would it really be that bad to save for college in a regular brokerage account? Maybe I'm a bad picker. We have the California and New York plan. All right, well, let me just look at the New York 529 plan. Do you want to weigh in on this, Mark, on the New York saves 529 plan? Because this is a plan that has. What are the investments inside of the New York plan?
- [08:47]
Anonymous Financial Expert
Yeah, I use the New York plan. It's 100% Vanguard. There are some target date fund options, and there's also individual fund options. Options, if that's what you want to do. So I don't know how these plans are invested. That's obviously what's going on here.
- [09:03]
Mark Telercio
Yeah, I think she's messing with the plan. That's what I really think. So are you using a target based plan if you're doing a target? I still think if I look at those target funds, there are different portfolios. So let's see that. Like 11, which means what am I seven years out? Right? Seven or eight years out. So I'm in 24. So that gets me to 33. Okay, so I'm going to look at this. In the target enrollment of 2033, this would probably be about what she's. I bet this is what she's in. This allocation is in the stock market 34%. Okay. This is what the problem is. The stock market fund, the US fund, 34%, an international fund, 23%. And then bonds in the rest. So it's a 50, 50. So if you want and you feel comfortable doing this instead of like, oh my God, I'm gonna like actually do the age based plan, which is fine. Nothing bad's gonna happen to you in that plan. But if you really wanna go crazy, Mark, what do you do? Do you do 70% stocks? And I mean, you can do the Vanguard stock index portfolio, and that'll rock it for you.
- [10:15]
Anonymous Financial Expert
You know, I mean, I think this is the problem with target day funds is people don't realize how they perform as soon as the way that they're designed is once the kid turns 12 or, you know, 1112, and from that point on, they're going to get very, very conservative in terms of a 529 plan. It's really those first 11 or 12 years that you have the room to really make a lot of growth. That's why, I mean, I have Theo. He's 100% invested in stocks.
- [10:42]
Mark Telercio
Yeah. I mean, if I just look at the. Obviously for this year, the stock index, you know, it's up. Gonna be up 18, 19, 20%. It's gonna. That's what it's gonna do. Now, if you feel comfortable doing this, then I want you to get back in touch with us. Because you either have to just decide like, I've got plenty of money in there, it's good, or you say, that's gonna be sort of my safer money, but I'll move some portion of this and make it more like a 7030 fund. But you're on the hook. That 13 year old especially, that's gonna be dangerous time.
- [11:15]
Anonymous Financial Expert
13 year old, I probably wouldn't be messing around with it. Cause it's getting close to D day.
- [11:20]
Mark Telercio
Excuse me, I sneezed on that D day comment. Give us a holler back. Heather, if you've got a question to follow up. Okay, this is from Beth. Sadly laid off, but maybe I can retire and make lemonade out of lemons. This is my kind of gal. Okay, so it says. Jill, I started listening to your podcast recently, and I love the content. Thank you. I'm hoping you can help me with a tough decision I have to make. Or at least give me some confidence in my financial situation. I've worked in corporate America for about 25 years, and I've always done well. A few weeks ago, I was notified I'd be laid off at the end of the year. Hmm, that stinks. I'm extremely disappointed. However, the company has found a role for me that would maintain my salary. Oh, that's good. I am familiar with the role and I can do it, but not sure I want to. I'm strongly considering walking away. Oh, my God. 54 years old. And I'll tell you what, right now, ma'am, I'm feeling like this better be good numbers Mark for me to walk away. Here we go. All right. Planning for expenses of $9,000 a month. That's our bogey, Mark. Here we go. Oh, this is going to be so easy to do. The brokerage account has $2.5 million. The 401k has $1.5. So again, so two and a half. Let's add three. There's three and a half now because we got to pay tax on the 401. 200,000 in a Roth pension starts in six years. $3,900 a month. No COLA, no cost of living adjustment. Social Security at age 70. Ah, I want to plan on a long life to 99 years old. I have a partner, but I want to plan without their finances. Should I take this job? Can I walk away and never have to work again? Okay, Mark, what do you think? This is a fascinating one. So $9,000 a month we have. We know that we have $3,900 a month of that taken care of at least. I mean, I know there's no cost of living, but that's a good start. And the Social Security at age 70 is another 3,400. So, all right, we know we have that, but we have six years that we have to spend, you know, that money. Six years times $9,000 a month. Then at age 60, we get the pension. So we have 60 to 70 pension only. Right? And then 70 is Social Security. Does Beth have the ability to walk away and stick her middle finger up at corporate America and say, I'm done.
- [13:57]
Anonymous Financial Expert
If that's what she wants to do, she can do it. She has the brokerage account and that's what's going to float her for the next six years, if that's what she wants to do.
- [14:04]
Mark Telercio
I think if you want to do again, I would make sure if that's the case, just remember what you have to do. That brokerage account's got two and a half million dollars. We got to set this up right now so that you can have $100,000 a year come out of that. I'm saying 100 because I think there'll probably be some tax implications. Right? So 100 out of that 2.5 million for six years, easy, right? No big deal. So let's just say we're now at $1,900,000, maybe even say 1.8 for the heck of it. Then from age, you start collecting your pension. And then at age 60, you know what I would do? I would use now my 401k. I would take the money from the old 401k, which I imagine you're going to put into an IRA rollover. Use that to make up whatever is the difference between your need and your pension. Okay? So there's going to be a little bit more every year that you're going to need to pull out of that 401 because we know that your pension is not inflation adjusted. There's no cola. Then hopefully you're draining some of the money out of this account out of the 401k while you're in a lower tax bracket. Then at age 70, you're going to add in your Social Security and do it again and keep pulling from that 401k so that we can get that amount down in order to minimize your future required minimum distributions. Mark, I feel like we have told somebody to really tell the boss to take the job and shove it. What do you think?
- [15:35]
Anonymous Financial Expert
You did not crush that dream.
- [15:36]
Mark Telercio
No. It's a dream maker today. Okay. This is from Linda who said, my husband met with our Fidelity Advisor last week. He suggested that we put a portion of our retirement into a fixed target annuity. I've listened to your show. I know you're not a fan of annuities, but the advisor thinks this is great. I'm not a believer. Please help this 30 year married couple figure it out. We're a few years away from retirement. We've got a million dollars in our portfolio. Okay. So the thing is, the one thing I can tell you about the Fidelity Advisor is that the Fidelity Advisor is not getting paid on that piece of business. They do have a arrangement where they have these annuities that are lower cost and there's not a big fat commission involved. So that, that's one thing that makes me feel better. The problem, I think is that what they're trying to do is give you income, which is great. I'm wondering if there's a way to do it from the portfolio itself. Now, Mark, do you have a view on this? Because again, Fidelity, it's a little different because this is not a big commission product. That's not the issue here. I was wondering if the husband may have said, I'm worried about income or they're trying to figure out how to annuitize something. I still think that I'd like more information, but do you think at first blush that we should think about this?
- [17:09]
Anonymous Financial Expert
I'm not ready to say that because I need more info. I need to know how much they have and what they're spending. Are there any pensions involved? So I can't say that.
- [17:18]
Mark Telercio
I think we would love more information. And please, even if you just said, okay, we have a million dollars, but like is there any pension amount? What is the Social Security claiming strategy and what is the rationale for this product? You know, the other thing that I have a hard time with with an annuity is that it is also tying up money and I feel very concerned about losing the liquidity. Uh, and that's really what I think we should be considering. If you have a financial question, you have a life question, give us a Holler. Go to jillonmoney.com and click the Contact Us button if you don't want to come on the air. If you're a little bit nervous, give us a lot of your background and don't forget to let us know the all important how much money you spend either on a monthly or an annual basis. It really does help in the planning process. You can subscribe subscribe to us on the Odysee app or wherever you find your favorite podcast. Our music is composed by Joel Goodman. Mark Telercio is our executive producer and king of all things web and we.
- [18:21]
Jill Schlesinger
Are distributed by the fine folks at Odyssey.
- [18:24]
Mark Telercio
Please put your hands metaphorically on someone's.
- [18:26]
Jill Schlesinger
Back or maybe even give them a.
- [18:28]
Mark Telercio
Hug, but make sure you get permission.
- [18:29]
Jill Schlesinger
Not everybody's a hugger these days.
- [18:30]
Mark Telercio
I'll tell you, I've learned that firsthand. Change your work, change your wealth, change your life. Thanks for listening and we'll talk to you tomorrow.
- [18:43]
Jill Schlesinger
Hi, this is Jill Schlesinger.
- [18:45]
Mark Telercio
Being a business owner means you're always.
- [18:47]
Jill Schlesinger
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- [19:37]
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