Nancy Cartwright (0:00)

Hey Fidelity, what's it cost to invest.

Jill (0:02)

With the Fidelity app? Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm. That's music to my ears. I can only talk.

Fidelity App/Advertisement Voice (0:17)

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Jill (0:28)

NYSE SIPC need contract help for those workload peaks and backlog projects. You're not alone. 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 welcome to the Jill on Money show. It's Wednesday, September 24th. For our Jewish listeners. Happy New Year, Rosh Hashanah. Here it is. I'm pre taping it. I'm not working. Okay, so don't get up on worried about me. I'm good. I hope that you enjoyed whatever challah was at your meal last night. I know that I, I will have done just that. If you are not a Jewish listener and you are just listening for the heck of it and you don't know what I'm talking about, that is a Jewish New Year. It happens once a year. The nice thing, Mark, about having two New Years, it's like I get two chances at New Year's resolutions. So there's an advantage right there. Two times that I can blow through resolutions in a given year.

Mark (1:51)

I have two as well.

Jill (1:53)

Oh, right, you've got your Chinese New Year and you're sort of Jewish by association. So I'll say three. I mean, they got the time off from school so you get three chances. Fantastic for you. Hey gang, if you've got a financial issue that is bubbling up, maybe it's your New Year's resolution. Give us a Holler. Go to jillonmoney.com, click the contact Us button. Write us a note. If you'd like to join us on the air live, all you need to do is just check the box. Mark does everything else. Don't forget to check out all the content that lives on the website, including our subscription service called Jill on Money Live. That's, that's where you have access to quarterly live webinars, the back catalog of those webinars, bonus audio and video content, all for $45 for the next 12 months. We are excited about Jill on Money Live. And by the way, Mark and I took seriously your idea about putting together a live event and it is in the exploration stage as we speak. Okay, today we are going to go through some emails because Mark says, boy, we got a lot of them. Let's start with Dan, whose subject is cyber attack on global scale against financial institutions. Hmm. That's serious. Dan says, I've never heard this covered in detail. Since we live in a digital world with all of our financial savings being in the cloud, how do financial institutions protect our life savings from a cyber attack on a large scale? I know we're covered by the government up to a certain dollar amount, but what else? Okay, so this is a huge issue for every financial institution. They've got so many people trying to really control the security around all of this. Now that is also to say that they are required by government to do that. They are very interested in doing it themselves. I don't know how to put this kindly, but like, of all the things to worry about, I wouldn't worry about that because there is absolutely nothing you and I can do about it. It is much more important that we have you controlling what you can control. Like locking down your credit by freezing your credit report and not being careless about sharing passwords or telling your kids or your aging parents not to click on links. Those are the things we can actually live with. You know, these large security breaches, I'm sure they happen all the time, but we don't hear about them and, and the big companies are addressing it. I just don't. I don't want you to worry too much about the things that are so beyond our control, but I get it. It's a concern. And believe me when I tell you, every financial institution has a huge security division. So that's the good news. Rich writes, Roth versus traditional. When is the tax bomb the better approach? Okay, he says, I'm an enthusiastic listener of the show. I'm interested in better understanding your frequent advice on limiting pre tax contributions to avoid the tax bomb. My wife and I are a few years from retirement and most of our retirement savings are in a brokerage account. It's after tax. But also a lesser but still significant sum is in traditional 401k accounts which we maxed out our entire careers. I understand the benefit of tax free withdrawals from Roth contributions I also can't help but see the benefit of contributing on a pre tax basis to have more of our money working for us in the market rather than going into paying additional income tax at our very high end of career marginal tax rate of 37%. Is there a rule of thumb or consistent way to assess when it's time to start contributing to a Roth versus a traditional in our retirement accounts? Well, Mark, I mean this is a question we get all the time we, which is, hey, we're high earners or we're even mid to high earners, but we live in a high tax state. So in this case, Rich and his wife earning over 750 grand or so puts them in this highest tax bracket. But what I would just suggest to you, Rich, is to just think about this. Is your tax bracket going to go down? What we hear over and over from a lot of financial advisors is those folks that are in that high, high tax bracket of 37, 35, even 32% don't often see their tax rates go down. They have so much income from their brokerage accounts they are forced to take a bunch of income out of their retirement accounts. So it all starts to add up. So I guess that if I knew that somebody was in this higher high tax bracket and then was actually really going to go down into a bracket, yeah, maybe. But there's not a rule of thumb. It really depends on like what's already socked away, what's saved. You know, if you say to me, well, you know, I have, let's just make up a number. Let's say I have $5 million that's in pre tax money, what I want you to know is that's going to push out 200 grand a year in income. Okay. That's going to be like your first required minimum distribution. And if on top of that you've got more money coming out of taxable income coming from other sources like your brokerage account, maybe that adds up to 3 or 400,000 total. Sure. That 32% is lower than your current 37% tax bracket. And there's only one little asterisk which is this presumes that tax rates stay at these levels. And I don't know whether they will. I know I've been saying they'd go up over time and maybe they won't in our lifetimes and maybe they will. So some of it is just about like your comfort level and taking that risk. On Priscilla writes, I'm 66 and I plan to work full time until I'm age 70. My moderate IRA and savings are managed by a large brokerage firm. Firm. Should I consider moving these accounts to a low cost firm like Vanguard? Or at this point should I just leave it where it is? I'm trying to maximize retirement savings in these final years of my work life and wonder about the fees going out to the manager. I've been with her for a long time. She's been very supportive when I needed her. I have the impression that my account is relatively small compared to other clients. And I feel therefore I only get attention when I ask for it. Understandable, but maybe not worth the fee. Maybe too late to make the change worthwhile. I appreciate your time and advice, Priscilla. Okay, so, Priscilla, I think it depends on what the alternative is to you. Because if somebody's been there for you, and I know that you don't want to pay the fee, but you don't really want to do this yourself, then that gives you one, one set of choices. If you do want to do it yourself, then sure, you can go to Vanguard. But as this person at the big brokerage firm doing other things for you, you know, you have to kind of weigh the pros and cons of this. I would be remiss if I didn't say like, maybe this is a time to just shop the relationship around. I don't want to tell you to just go and get out and do this because maybe, maybe you. Maybe this is a situation where it's important that you actually have somebody and having somebody will mean paying some fee. So I'd be interested to learn what the fee is, what that person's providing for you, and then maybe we can give you some alternatives. Subject. Not sure what my next steps are. Okay. Valerie's 59. She retired from a state job with a pension and she also works part time. She nets about 8,200 bucks a month. She needs $3,000 for bills and living expenses. How about that, Mark, huh? She maxes out her Roth, she wants to invest in a condo. She lives in Connecticut. So high cost of living and high tax rates. I'm wondering what I can do to better prepare for later life concerns. I've had cancer twice. I'm not sure I can get long term care insurance. He probably can't. And if he could, it would be very expensive. What should I do to make sure that I'll be okay? I'm single, no kids. Okay. She has a net worth of about $1.2 million. Okay. About 350 grand is in a house and she's got other stuff, lots of other assets. So what I will say Valerie, is that if you are alone, I'm just thinking about this previous question. Like, like this is like this sort of similar to Priscilla and you have all this money and assets in all different accounts. The question is, do you want to do this yourself? If you want to continue managing this yourself? What I would try to do is consolidate as many assets as I can. Okay. And if you could do that, like making sure that all of the money is in one place, make sure that all like accounts are combined. So if there's an old 457 plan out there, roll it into a rollover account. If there's old Roth, new Roth, put it all in one place, then you try to create a game plan where you will be allocating this and getting that money to work for you. But there's really no big issue since you net all this money and you have only the need for $3,000. So even if you stopped working part time, it seems like your pension would probably cover your needs. So that's really the most important thing. I would not you. The one thing you mentioned that I say I would not do is I certainly would not go and invest in a condo. I really would not do that. I would stay liquid and I would keep the allocation simple and I would try to make sure that things are tidy and neat and accounts are easy to manage. So that's my two cents. This next question is from Anonymous and the subject is not going to inspire hate mail. Okay, so Anonymous says that she's a shy long term investor. And so she says, ready for this Mark? I can hear Mark saying that my situation is not a slam dunk. Not even close. And Jill, my brain tells me you would say I need to work longer or find a new endeavor that offers health insurance. But I am starting to feel the stress of my job and and worry I am going to change my future health if I continue to work. So I would like a way to retire fully right now. There's mixed longevity in the family. One side passes in their 70s, other in their 90s. Okay, so 60 year old dual citizen of the US and the EU, a 20 year old in college, one to two years left, no state income tax. Okay, so the remaining money in a 529 should cover the additional costs. Here's what Anonymous has Mark. $430,000 in an IRA, $140,000 in a Roth, $20,000 in an HSA, about a half a million dollars in a brokerage account, $50,000 in cash. All right, so remember, Anonymous is 60 and says that full retirement age, Social Security is about three grand a month. Zillow says houses worth 600 grand. It's paid off, willing to sell it if it makes sense to do so. Monthly spend is nine grand, so that's a real number. But two grand of that is due to work costs. So it looks like if we think about the spend is seven grand. And now look at those numbers. Yeah, you're. This is not great. Okay, so what happens is the essentials that Anonymous has is 3,500amonth. She says she uses a retirement calculator, which suggests that she could stay in her home and spend $6,000 a month. But in my mind, the numbers don't work. Mark, what do you think about Anonymous here? You know, we've got about a million bucks. There will be three grand a month at age 67. She's 60 right now. She may be able to shave off this. Like What? Sounds like seven grand a month down to 3,500amonth. What do you think about this?