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- [00:00]
Jill Schlesinger
Need contract help for those workload peaks and backlog projects.
- [00:04]
Mark T. McGowan
You're not alone.
- [00:05]
Jill Schlesinger
Robert half found that 67% of companies surveyed said they will increase their use of contract talent. That's why their recruiters leverage their experience and use award winning AI to quickly find the skilled candidates you want. Learn about their specialized talent in finance, accounting, technology, marketing, legal and administrative support at Robert Half. They know talent. Visit roberthalf.com talent today. Avoiding your unfinished home projects because you're not sure where to start. Thumbtack knows homes so you don't have to don't know the difference between matte paint, finish and satin or what that clunking sound from your dryer is. With Thumbtack, you don't have to be a home pro, you just have to hire one. You can hire top rated pros, see price estimates and read reviews all on the app. Download today. Welcome to the Jill on Money Show. It's Wednesday, August 13th and we are here trying to help you navigate your financial journey. If you don't know which way to turn, if you're freaked out, or if you feel like there's so much information you really don't know what to do with it, this is a perfect place for you because Mark and I love working through whatever it is that's on your mind financially and helping you get where you'd like to go. All you need to do to start the process is hop onto our website, jillonmoney.com I'm sure you've bookmarked it by now. And there in the upper right hand corner is a Contact us button. You click that button, write us a note and let us know what's going on. If you'd like to join us live on the program, check the box. Mark does everything else. And hey, while you're there, don't forget you can sign up for the free weekly newsletter which is now a beautiful substack subscription. And you'll also automatically be sent the blog post. I love this, Mark. I think you're quite brilliant to move it all over to substack. So well done Mark. Again rescuing me from my, you know, just my inertia. So thank you Mark. Always wonderful. Okay, today we're going to do some emails and let's get it going. Here is Michael, who is a recidivist question asker. He says it's my second time writing. Our feedback that we gave him in April of last year was helpful and so he says, I listen every single day. Thank you for that, Michael. Okay, I'm 54 years old. And my father passed away when he was 95 and a half. And my mother actually passed away in February of 2023. It's a lot over the last two years. With my father's passing away this past February, he did have everything set up in a trust. My sisters and I both received generous distributions last month of approximately $428,000. So the trust distributed this to Michael and his sisters. He's got no debt besides a mortgage at a 2% rate. Okay, so he said, I deposited my share, this $428,000, into two high yield savings accounts, earning 4% for the time being. My question is, what should I do with these funds from an investment perspective to help grow them while also reducing the chance of loss? Isn't that everybody's hope? I just want upside, no downside question. Should I dollar cost average into a few funds? Should I wait a bit until the market begins to dip? Mm. Tell me when that's gonna be. Man, I would feel horrible losing a portion of this inheritance. I really want to be careful, but I want to maximize my earnings. Okay, so here's the financial picture right now, including that inheritance. $700,000 in cash, $24,000 in brokerage. In traditional retirement assets, $1.9 million. Roth assets, $383,000, HSA $11,000. There's about almost 100 grand in company stock. He's got this condo, and he said it's got annual income, $250,000. I feel pretty good stable for my cash position. I've got a lot of cash to hold me over, even if I were to lose my job. I'm just not accustomed to receiving such a large amount of money. Okay, so here's the thing. From the way you describe this, I can tell you and prove to you that putting all of your money to work immediately as one lump sum is probably a better mathematical decision. However, I'm not going to tell you to do that. I think that you should find a game plan that you can stick to to get that money invested. Doing dollar cost averaging a little bit in a bunch of funds, maybe three or four different funds in that brokerage account on a monthly basis. But it has to be an amount that you can really feel like you can stick to it. And I don't know what that amount is. It sounds to me like you're much more concerned with downside than upside. So maybe you would do $25,000 a month, or maybe you do $50,000 a month until you've got that $428,000 that is invested. If you want to keep that extra money beyond the 400 in cash, just know that you're probably going to be earning less than that 4% over the next bunch of years. If you want to get some of that money invested also, fine. Just leave yourself, you know, a good two year Runway in case you did lose your job. But I do think that having awareness of what you could really hang on to in terms of your, your dad's money. I want you to understand that if you were to put this all into the markets at one time, you probably would have some horrible wipeout. But I also want to say that even if you do dollar cost averaging, there'll be some wipeout and it is going to freak you out. He should know the deal because prior to this inheritance he has almost $3 million. So he knows there's ups and there's downs. Yeah, but that's retirement money. And this is all of a sudden laden with the whole inheritance. Honor my father. I can't screw this up. It's okay. You're going to be okay. Dollar cost average, pick an amount you can stick to. I kind of would probably do 50 grand a month. What about you, Mark? Would you do more or less? Me, I would do more, yeah, but that's me. Whatever makes him comfortable. Whatever is comfortable. Get it invested as quickly as possible and don't futz around with it. Okay. John says, hi, Jill, I love listening to your show. My wife and I are both 65. We live in Minnesota. We don't make a lot of money, but we did have a decent living. I quit my main job. I took a less stressful job four years ago. We both still work full time, but we are planning on retiring at the end of this year. Combined we earn $80,000 and we also plan to work part time, but only making the allowable income. I think maybe that's interesting. I think it's because they're claiming their Social Security early, which I'm not sure why they're going to do, but let's just keep going. Wife would take her Social Security, I guess at 65 or 66, $1500. She gets a little bit of money in a pension, he says, so she was going to take it early. They have an advisor and the advisor said don't take his Social Security benefit until 67, his full retirement age and that would be $2,600 a month. I plan on working part time, earning about $22,000 a year and fill the gap with our 401k money, we've got $230,000 in 401ks. Our monthly expenses are around $4,000. It doesn't include any funny money. We're not travelers. We do take two weeks in the winter, but we stay stateside. I know there's a lot more to it. Our house is paid for, small equity loan will be paid off soon. Otherwise no debt. What do you think? Sounds good. I'm not sure why your wife is taking her Social Security early. I'm not sure I would do that. Is she in bad health? Maybe that's why I don't know. But if each of you has decent life expectancy, just wait till you're both 67, it's fine and you can pull the money out of your 401k and she'll have a higher benefit then. You know her benefit is more than half of yours. So I think it's worth it for her to maybe wait. So run that by your financial advisor. Otherwise looks like a decent plan to me at least. So far so good. Hey, Mike wants to know. I'm wondering if you can answer a question regarding my SEP IRA. I am getting up there in age 72 and I think it's time to get off the roller coaster. I've built the portfolio up to about a half a million dollars. Can I roll it into a safe non volatile income producing penalties or capital gains taxes? Aside from the gradual payouts, if you have any suggestions, I'd greatly appreciate it. You know what gang and Mike specifically, everybody wants that. Can we have like just something that produces nice amount of money with not a lot of risk but also growing. So you know Mike, you can keep the money in the SEP as an IRA account. You can invest it however you want. Whatever you do in terms of selling what's in there, you will not have to pay tax on it. You will only have to pay money when the money comes out. If you have a half a million dollars, is this the only money you have? Are there other monies that are available? What other forms of income will you have? All of this would really help determine the way that you can manage the money going forward. But even if you really want to get off the stock only portfolio, I really do think you're going to have to have some equities in there to provide growth for you. But again, anything you buy and sell inside of this account, no tax event because it's inside of an IRA account. Let's get a little more information. We can give you some more Guidance. This next note is from Shauna, who says we are 50 and 51 years old. We have one child who will probably inherit somewhere around 3 to 5 million dollars. Presuming they make a lot of money with their money. Okay, so Shawna says she hasn't been the best at managing her money. I mean, how old could this kid be? You're only 50, but. All right. With the new 10 year rule with inherited IRA withdraw, I'm worried that she would be overwhelmed with the amount of money she would be required to take each year. It might be more of a burden than a blessing. We have begun shifting more towards a brokerage account, which does not force her to pull the money out. By the required minimum distribution rules for inherited IRAs. Are there other strategies that you would recommend? We had thought about a trust, but I am unsure of the tax consequences. And thank you so much. I listen to you daily. I'm always learning something new. You know, maybe I don't know what the other assets you have, maybe you might want to convert this or pull the money out yourself. My guess is that you're probably going to be in a. In a higher tax bracket than her. But then maybe what you do is you do pull that money out, you pay the tax. She didn't have to worry about it. You put in a brokerage account, make that brokerage account a trust account, and then you could dribble it out. That's the only. That's really the way to do it. Otherwise, I guess you could potentially. Oh, I can't believe I'm saying this. You could buy an annuity and that would kind of be a faucet, but it would still have to come out over 10 years. So I think maybe you could just pull the money out, pay the tax, and then she won't have to really worry about that and get a really good estate attorney to make sure that she's got someone who can help guide her. Okay, Mark, you ready for this? Brenda listens to us every day, all caps. I'm 70 years old, widowed. I have Social Security of $3,100 a month. I have $2 million in a traditional IRA, and I will begin my required minimum distributions when I'm 73. What do you think about opening a Roth IRA at my age? The kids are suggesting this. Your advice. I mean, the kids, of course, would love this because this is just like our previous note where, you know, you would love for someone else to pay the tax that's due. And it is much better to inherit an asset that has already been taxed a Roth asset. The question I guess is how much other money do you have to pay for the conversion and are you in a lower tax bracket than the kids are? So those are the big questions that we ask when we're thinking about whether or not someone at your this point, that's much about age. It's about whether you have the money outside of the retirement account to pay the tax that was due and also whether your tax bracket is much lower than theirs. Just so she's clear, she can't open up a Roth and just start contributing to a Roth because there's no earned income. This would be a conversion. Yeah, we would just be talking about a conversion for sure. Okay, Maureen, subject is continuing care retirement community. Ah, this is a great question. I can tell already. My husband and I are in our mid to late 70s. We put a deposit on a continuing care retirement community, which is a CCRC with good credentials near us. I'd like to know your financial opinion of this type of retirement planning and any questions we should ask the management of this community. Okay, so you put the money in and you put this deposit down and now you buy into this place and theoretically the continuing care means you go in and they're in their 70s, they're fine, but if something bad happens, you kind of step to a different level of care. And then you know when you're bonkers and they have to put you in the memory unit, you're already in the right place. The thing is that when you die, that usually when the survivor is deceased, the there's supposed to be some amount of money you get back from the way you bought in. Here's the real trick with these places. They have been very bad at managing their own finances. So she says, good credentials, good credentials aside, you need to have somebody look at the financials of this kind of facility. Maybe you have an accountant or someone who's a money manager or a cfp. But the question to ask yourselves is, how is the financial management of this community? There are a couple of these places in and around the greater New York metropolitan area that were very high priced. And a lot of them have, and I know two at least, that have gone broke. So you really have to make sure that somebody is looking at these and making helping you make that next decision. Okay, the last question is from Erin, who is a longtime listener and she says, I find myself one of the unlucky federal employees facing a reduction in force in early November. I am not available for an immediate pension and I will get a much lower one starting at 62 because I didn't meet my agency's pension requirements before the date of the rif, the reduction in force. I now find myself trying to figure out my next endeavor, and I want to make sure I'm using my money wisely. I just don't know how long I'll be unemployed. My two main questions are, is there something I can do with my severance, annual leave payout and chunk of my emergency savings that will get the money working for me, but keep it liquid. Right now it's $60,000 in emergency savings in a normal savings account earning very little interest. I'll be getting a year of severance and probably around a 13 to $15,000 payout. Okay, so for that money, High Yield Savings account is the route to go. Okay, so go online, go to depositaccounts.com, go find yourself a high yield savings account, and pop it in there because you need to be. You have to have liquidity. Okay. My second question is about retirement savings. So let's go through some of these numbers. She's 41, single, no kids, one Yorkie. I grew up with a Yorkie. She's kind of cute. Thrift savings plan has $633,000. About 150 grand is Roth. She has a separate Roth IRA, 47,000, a rollover with 3,000, a rollover retirement account. She's got the emergency savings of 60, brokerage 17. Her current salary is 150,000. But she thinks that she's not really sure about, like, what the next one is going to be. The cost of living, she says, is about $75,000 a year. She's been in D.C. but she said, I'm going to probably move once I'm laid off, going back to Ohio, where it's a much lower cost of living. Okay, this is very cute. At the end, she says any advice would be greatly appreciated. I credit your podcast with helping me over the last few years to get my financial house in order. I'm less freaked out at having to start over, in part because I followed your advice on emergency savings and financial priorities. How about that, Mark? That's kind of nice. So she's only 41, and if she's moving to a lower cost state, this is a good chunk of money that she has saved in retirement. I mean, she's basically got 700 grand in retirement, and then she's got her emergency reserve. I think you are in very good shape. And what you're going to need to see is Once you move out of a high cost of living area like D.C. back to Ohio, you're going to have to really try to get a sense of how much you can earn there and what will your real cost of living be. But honestly, if you're just going to be putting away 15% of your income into retirement, I'm sure it's going to be fine. You don't spend a lot of money. Is there something that I'm. That. That could come up and bite you in the tush? I guess. But it seems like you're in very solid position right now to find a job making less money. Look, do I think it's a bummer that you kind of thought you were going to be on the road to a great pension? Yeah. That stinks. But you've done a really good job of building that thrift savings plan, and I think that will serve you well. Mark, do you want me to sing about Ohio right now? Because I have a good one. Okay. Why, oh why, oh, why o why did I leave Ohio? Yeah, it's a little Broadway show tune. You can leave that in or maybe take it out. That'll be in. Okay, I think that's it. So here's the deal, gang. Such a weird time in the economy and, you know, we got that crazy, you know, jobs report with the revisions. But I feel like the information that we have learned from talking to all of you is that a lot of weird things can come out of the blue. You may be retiring before you thought you were going to. That may be because you want to. It may be because your bosses want you to. One of the best ways to think about a strategy to kind of bulletproof your balance sheet, bulletproof yourself, is to get in touch with us and let us know how we can help you out. We can really build some different scenarios. So much of this is dependent on what is going on for you. If you need our assistance, get in touch with us. Go to jillonmoney.com, click the contact us button, write us a note, and if you would be willing to come on the air, just check the box. Mark will do everything else. You can subscribe to us on the Odyssey app, where you can also subscribe to our weekend show called Money Watch that Odyssey app, very helpful. You can also subscribe wherever you find your favorite podcast. Please put your hands metaphorically on someone's back. Someone needs a little pat on the back. Maybe someone you need know has lost their job and be nice for you to do something nice for that person. Change your work. Change your wealth. Change your life. Thank you for listening. We'll talk to you tomorrow.
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Mark T. McGowan
Starting your own business can be intimidating. Suddenly you're wearing all the hats. Designer marketer, customer support, shipping expert. It's a lot. That's where Shopify comes in. Shopify is the global commerce platform powering millions of businesses around the world and 10% of all e commerce in the US Shopify has your back. With hundreds of ready to use templates, you can launch a beautiful professional online store that looks and feels like you need content. Shopify's AI tools can help you write product descriptions, headlines, even enhance your product photos. Want to grow your reach easily? Create email and social media campaigns to meet your audience wherever they're scrolling. And with Shopify's world class support, you'll have expert help for everything. Turn your big business idea into With Shopify on your side, sign up for your $1 per month trial and start selling today at shopify.com Odyssey podcast. Go to shopify.com Odyssey podcast shopify.com Odyssey podcast every week on the Moth Podcast we hear from incredible people who have found their own voice. There's this little bit of wisdom people say all the time, you know, that.
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Jill Schlesinger
You should live in the moment. Let me tell you something, there is.
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Mark T. McGowan
Nothing worse than being forced to live in the moment. The Moth Podcast features real people telling their stories live on stage to connect and learn from them. Follow and listen to the Moth on the free Odyssey app or wherever you get your podcasts.