Loading summary
Transcript15 lines
- [00:00]
A
Hey gang. I've recently been thinking about how to make my home feel more functional, not just aesthetically pleasing. I love a good design moment. But you know what? Your space has to work for you. That's why I turned to Wayfair. My big purchases there were very bright desk lights so that I could actually do my work early in the morning before the sun comes up. And then I got this kind of cool pouf that my dogs like sitting on while I do my work. And my next task is some new storage solutions for my closet, some shelving, probably even for my garage. And what makes Wayfair easy is being able to filter everything by size, finish, price and style. Find furniture, decor and essentials that fit your unique style and budget. Head to Wayfair.com right now to shop all things home. That's W A Y-F-A-I-R.com Wayfair Every style, every home. You know, every year there's a moment when winter finally loosens its grip. Especially after the kind of winter we've had this year. It's the first warm afternoon, the extra daylight. And for many of us, it makes you want to reset a little. Clearing out closets, firing up the shredder, getting rid of the statements you don't need, and maybe even thinking about the bigger picture. That's where policygenius comes in. Because thinking about insurance and long term planning can feel overwhelming. Especially when you're trying to take care of people you love. Policygenius makes the process so much easier. They're an online online insurance marketplace where you can compare life insurance quotes from some of America's top insurers side by side for free. And their license team actually works for you, helping you figure out coverage amounts, prices and terms. No guesswork. They handle the paperwork, answer your questions and help you find a policy that fits your life. This is real peace of mind. Protect the life you've built. With Policygenius you can see if you can find 20 year life insurance policy starting at just $276 a year for a million dollars in coverage. Head to policygenius. To compare life insurance quotes from top companies and see how much you could save. That's policygenius.com. Welcome to the Jill on Money show. It's Wednesday, March 11th and we are here answering your financial questions. If you've got one, just go to our website. That's jillonmoney.com jillonmoney.com There you will see a contact us button. It's in the upper right hand corner. And when you click that button, a form will pop up. Write us a note, make it detailed. If you are shy and you don't think you'll be joining us on the air otherwise, just check the box. Mark will arrange to bring you on the air live. Hey, I want to thank everybody for participating in our wonderful webinar with Ed Slott recently. It was great. If you'd like to buy that webinar, just that one webinar, you can do so it's 15 bucks. That's all it will cost you. Or perhaps you would like to plunk down $45 to join Jill on Money Live, our subscription service, because we've got our next webinar scheduled already. It is Social Security expert Heather Schreiber. She will be joining us on Wednesday, June 17th. And that is going to be an amazing, amazing webinar. So again, any Social Security people out there, you're in your 50s. You want to know what to do. You're in your 40s. You want to know whether you can count on Social Security. Join us by subscribing to Jill on Money Live. 45 bucks for 12 months. The Heather webinar. Three more after that. Let's do some emails right now. Okay. Steve writes that they are he and must be and his spouse 77 and 76 years old. They've got take home of $7,300 per month. That is due to state pensions and Social Security. Now how great is this? They're taking home 7,300amonth living expenses, six grand a month. So they're putting $1,000 a month into savings in their 70s. Oh my gosh. Okay. Assets are 300 grand in laddered CDs, $100,000 in an accessible high interest savings account. They have no other financial assets or investments. They've got 15 grand of cash on hand, no debt. A couple kids who are grown, they don't need the help. They live independently in a continuing care retirement community, which is essentially a lifetime rental agreement with options to reduce costs if necessary. Okay. Health insurance is good. Everything in place? Okay. Three questions. Investments. We choose to avoid risk given our age. We're just too old to recover losses. Plus the sufficiency and reliability of our pensions and Social Security. Are there no risk? Low risk investment options beyond CDs and high interest savings that we should consider? That's an easy one. No, if you don't want risk, take no risk. Tax minimization. We haven't done anything to manage taxes. Anything we should be doing to minimize federal Income tax, I don't know. You can't make your pension go away. You can't make your Social Security go away. You're investing in interest generating products. There's not much for you to do. And then the third long term care, Medicaid positioning. How can we protect our assets if nursing home care becomes necessary? We removed a safe harbor trust from our will for a variety of reasons. Complexity barely assets. To proceed. Suggestions? I don't think you got a lot to worry about. There's really nothing to do. You'll spend your assets down. You actually have income. There's not much more for you to do around this. I think that you kind of are where you are. So I wouldn't sweat that. All right. Okay. John wants to know, do I need a financial advisor? I heard a bit of your show on WCCO radio. That is in Minneapolis, my friends and we love CCO. You suggested that if your retirement account was under $400,000 with this caller you were speaking to that that person didn't need an advisor. Is that your recommendation? It's pretty much my situation. I don't know. Like listen, if you have just one account and it's a retirement account and you have 400 grand, I'm not sure you do need an advisor, but maybe you have a complex situation. If that's you, then perhaps. But I'd love to hear more. That's the question. Terry wants to know. Hi, Jill and Mark. My husband and I are wondering what our strategy should be for college savings. We've got two kids, ages 2 and 4. We meet our own retirement savings goals and we've been lucky enough to save a lot for our kids in a 529 account. 158,000 for the 4 year old and 135 for the 2 year old. Wow, Mark. Okay. They want to pay for public university for them. Public schools in our state are still quite expensive. The current range is around 40 to 55 grand annually. We're comfortable with keeping their 529 invested in equities until they're ready to enter high school. We'll transition to a more balanced investment plan at that time. I'd love to be able to say we're done saving for them, but with college costs rising each year, I'm not sure wwmd. What would Mark do? Well, let me bring Mark onto the program and ask Mark, what would you do? It sounds like retirement is done. They didn't tell us how old they are, but they've got a two year old and a four year old and they have almost, you know, just a chunk of money already. Almost 300 grand. What do you think, Mark? Keep putting money in the 529 or ease up?
- [07:37]
B
I would probably ease up. I mean by the time each of these kids is 18, they're going to have well over $300,000 each. And if they're talking about a public, you know, I don't know if it's in state, out of state, who knows, It's a long ways to go. But if you're saving this much for college, I'm guessing you guys are saving a lot for yourselves. So this is, any shortfall, you're probably going to be able to cover it.
- [07:57]
A
Yeah, I, I mean, you didn't ask me what I would do, but I would ease up a little bit and see where, where they stand, you know, like you can, you can kind of ease up or maybe you can say like, all right, we have cash flow right now. Let's do it for a couple more years. But like by the time that five year old, that four year old is first grade, I don't know, you probably can let this roll a little bit. That's just my 2 cents or super duper. Fund it for three more years and then look at the numbers and build out the tuition planning and see where you stand.
- [08:30]
B
One other thing that I would do, I wouldn't wait until high school to start peeling back some of the risk. Once Those kids turn 12 years old, that's when I would start peeling off some of the risk.
- [08:39]
A
Yeah, okay, fair enough. Good, good idea, man. Okay, Ann says, I would love to get your opinion on whether Roth contributions or conversions make sense for me now or in the future. Okay. I am a 54 year old woman, single parent to a child. I live in California. High taxes, okay, Cash flowing. The kids college right now. Net worth 3 million bucks. A small condo makes up about a third of that retirement and other investments are the remainder. 60 grand in a Roth, one and a half in a traditional 401K, 340 grand in company stock. Yowza. Okay. About five years ago, in anticipation of my child going to college, I went from working part time to full time and became an owner in my company. As a result, my income has ramped up significantly year over year for the past five years and should continue to rise. Rise. I've used this income to help my parents and to pay off all of my debt except my mortgage. All right, in terms of spend, basic fixed expenses, around eight grand a month. But when I add in the extras, it's 11 grand a month AGI. Listen to this, Mark. My adjusted gross income has gone from 350 to 770 over the past four years, doubling more than doubling. And she thinks it's going to rise to more than a million in the next few years. It's a highly stressful job, long hours. Well, what do you think? It's not going to be stressful making a million dollars a year. Come on. And she hopes to scale back when her kid graduates in 2028. And I'd like to go back to earning say around 350 grand. Hope to retire no later than 2033. Okay. Now each year about $100,000 goes to my company sponsored retirement and related accounts, 401ks company match HSA cash balance plan. And this year I'm going to put 100 grand or so into a brokerage account. And each year I use a backdoor Roth. Okay, so you're ready for your two questions. Here we go. I don't see any case to be made for contributing to a Roth 401 right now due to my income levels and state and federal tax rate. Also I can do an in Plan 401 Roth conversion, but I don't have the free cash and it doesn't seem to make sense from a tax perspective. I also believe I will be in a lower tax bracket when I retire. That's interesting. All right, so do you agree, is there a case to make the 401 Roth or do an in plan conversion? Well, I certainly wouldn't do an in plan conversion right now. So let's just see, what does she have? She has $340,000 that is in company shares. She's going to start putting 100 grand a year into a brokerage account. So right this minute she is in the 37% bracket. She will go down to 35% mark. So you want to make your case for her to do a Roth 401k right now or not?
- [11:49]
B
Well, I mean I can just tell you that I would. I do same tax bracket in terms of doing conversions. I mean if she knows her income is going to go down in a few years, you know, obviously I would probably wait until then.
- [12:01]
A
Yeah, because I think that. Okay, let's say you the reason why you would do more Roth right now is that even with what you're doing, you have this money that's already in traditional, that one and a half million bucks. And so what I think the case that Mark would make is you that's already going to grow. And it's like 20 years of growth. Remember, you're not taking money out of that 401k till you're 75. And yes, you could convert later, but the dollars are going to keep growing. I don't think it's like a moral imperative for you to do a Roth right now, especially if, you know, we're really just talking about a few years. Because you remember, mark, it's now 20, 26. So it's just two years before she goes down into a tax bracket that is more like 35% as the top bracket. She, she thinks, she thinks, she thinks. But I mean, I could, I can live with that. So the question then is, would it be advisable to start contributing to a Roth in 29? Yeah, that's when I think, but I don't know if you have to. I would just contribute to a Roth and I wouldn't necessarily do the conversions until you kind of see where you land. I, we. I feel like there's a lot of unknowns with this plan, you know, 7, 350 to 770. You didn't expect. 770. You're going to go to a million and, I don't know, maybe land somewhere lower than that. Who knows? I think that what you're going to have is by the time you're 60ish, we're going to be able to have 15 years where maybe you're not working or that's when I think we could start to do some in plan conversions. I wouldn't necessarily do it while I'm in my 50s, because who knows what this kid's going to do. Maybe the kid's going to go to grad school, I don't know. But this is quite a great problem to have, don't you think?
- [13:47]
B
I'll say.
- [13:48]
A
Oh, my God. All right, quick last question. This is from Jasmine, who said, last year I began working a remote job which pays through PayPal. Someone mentioned that I need to pay quarterly taxes to the irs. Even though I always get money back. I can't find clear information online. It's confusing. Help me understand if this is something I need to do. I made about two grand a month with this job. Okay, well, listen, you'll find out. Right now you're about to file your taxes. Whether or not you're going to have to make quarterly payments or not. You probably don't have to if you're withholding somewhere else, I don't know. You'll make a decision based on this tax filing year isn't that. I mean, there's no reason to necessarily do anything this second. She'll find that out. Isn't that right?
- [14:29]
B
She's going to know real soon. But if nothing's being withheld, then yeah, you're probably going to want to, you know, kind of go by what tax bracket you're in and put aside that percentage eth each month just to make those quarterly payments going forward.
- [14:42]
A
Exactly. And don't sweat it. This is not like some horrible thing like making a quarterly payment is pretty easy to do. So don't sweat this. All online. Mark taught me many years ago. All right, gang, that's it. That's the program. Thanks so much for listening. Don't forget, when you go to jill on money.com to submit your question using that contact us button, we would love for you to sign up for our free weekly newsletter which comes comes out every single Friday. And we also want you to check out all the other content that lives on the website. Just do that. Okay? You can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. Just remember, we always want you to, either metaphorically or even physically, with permission to put your hands on someone's back. Someone needs a boost. This will make you feel good. This will make the person feel really good. Change your work. Change your work. Wealth, change your life. Thank you for listening and we'll talk to you tomorrow. Hey gang. I just made a first time ever purchase on behalf of the pod. I was so psyched because Mark and I don't do a lot of promotional materials, but I was able to create a branded sweatshirt. Yep, a Jill on Money branded sweatshirt with vistaprint. Now I'm not usually good at these things, but Vistaprint made it simple to bring this idea like, oh, wouldn't it be cool if Mark and I could create some sweatshirts that we'll try out and maybe the listeners would want to get them as well. They've got these great design tools. They have fast shipping, human support. If you need a little guidance along the way. Because the sweatshirts were so easy to execute. Now I'm thinking about doing some other stuff. Maybe there's some baseball caps or, I don't know, other fun stuff that you guys would want, you'll let us know. There's a reason that over a million people trust Vistaprint for their small business print needs. Vistaprint Print your possible Right now, New customers get 20% off with code NEW20@vistaprint.com it is not hard to destroy a college Last season, the podcast Campus Files brought you stories of fraternity drug rings, stolen body parts, campus cold, and more.
- [16:50]
B
And now Campus Files is back for another season. There's a guy screaming into his phone.
- [16:55]
A
He's like, I just saw Charlie Kirk
- [16:57]
B
get assassinated right in front of me. Every week is a new episode and a new story.
- [17:01]
A
It was so chaotic, it's almost like a university under siege. Listen to and follow Campus Files, available now wherever you get your podcasts.