Transcript
Betterment (0:00)
When investing your money starts to feel like a second job, Betterment steps in with a little work life balance. It's the automated investing and savings app that handles the work so you don't have to. While they build and manage your portfolio, you build and manage your weekend plans. While they make it easy to invest for what matters, you just get to enjoy what matters. Their automated tools simplify the complex and put your money to work, optimizing day after day and again and again. So go ahead, take your time to rest and recharge. Because while your money doesn't need a work life balance, you do make your money hustle with Betterment. Get started@betterment.com that's B E T T E R M E N T.com investing involves risk performance not guaranteed.
Leukemia and Lymphoma Society Representative (0:51)
Do you know a high schooler who's a natural leader who wants to create change by bringing people together? Could be one of the next Student Visionaries of the Year candidates across the country form powerful fundraising teams uniting with the Leukemia and Lymphoma Society to honor a local child with blood cancer. Through this seven week philanthropic leadership program, students build valuable skills like project management, entrepreneurship and financial literacy. Something I wish I'd learned at that age. Plus, it helps them stand out on college applications. But most importantly, it's a chance for students to connect meaningfully with their communities and make a real impact on blood cancer patients and their families. Learn more about Student Visionaries of the year@lls.org students that's lls.org students.
Jill Schlesinger (1:43)
Welcome to the Jill on Money show. It's Thursday, May 1st and we are here trying to help you make better, less bad financial decisions. Now, if you've got something going on, if you're feeling that the gyrations in markets makes you crazy, if you think that you are working with somebody, a financial professional who maybe doesn't feel like is cutting the mustard right now, get in touch with us. Go to jillonmoney.com, click the contact us button, write us a note and if you'd like to join us on the air live, just check the box. And Mark does everything else. Cause he is the best. The best by far executive producer in the whole wide world. By the way, another executive producer that I work with said to me like why do you keep saying that about Mark? What about me? I'm like, you know your tv, whose history is longer ours or that person's exactly right. Anyway, I'm, I'm loyal to Mark and I'm a loyal person, really loyal.
Mark (2:37)
Although I'm Glad to know that they listen.
Jill Schlesinger (2:39)
I know it is true. Certainly lately when everything's good, they don't listen quite as much. Anyway, while you're on the website, you can sign up for the free weekly newsletter, you can buy my book, the Great Money Reset, and you can subscribe to Jill on Money Live. That is where you have access to quarterly live webinars, our back catalog of all the webinars we've ever done. Bonus audio and video content. All of that is for 45 bucks for the next 12 months, Jill on Money Live. Don't forget, it's right there on the website. Okay, so Mark always tells me when markets go down, we get many, many more emails than when they go up. Hence our email box, our inbox somewhat flooded. So let's get through some emails and we will start with Michell, who writes. Hi, Jill, I would appreciate your advice for a tax strategy for my traditional thrift savings plan 401k. I am divorced, I'm 68 years old and I recently retired in February from a 40 year government position. Wow. Okay. So I have about $3,700 net from my federal pension every month. My plan is to claim my Social Security at age 70, which would be in a year from this fall and that would be $4,000 a month. So, okay, remember, net 3,700. Then she gets four grand a month at Social Security in a year and a half. Okay. Now Michelle also says she's got $900,000 in the 401k. It's all in the G fund, which is government securities. That's very rare. I don't usually find that a lot of people are in just the safest investment. It's usually the other way around. It's usually people who like, oh, because I have a pension, I can take a little more risk. So Michelle, very stable investor. Okay. She goes on to say, after listening to your programs, I think I need to take out as much thrift savings plan money before starting my Social Security in a year and a half. But I have to watch those tax brackets. I was thinking that I would put the money in tiered CDs as I do not like risk. So there she is. She hates risk. Okay. I have a large enough bank savings account to live on. I don't need the 401k anytime soon. There are no outstanding loans. My house and car paid off. Any advice is appreciated. All right, so, okay, I'm just looking at my little tax grid, the famous ED slot tax grid. So she's now only going for A year and a half is going to be getting four grand a month. So her top rate is probably. Probably 12%. I mean, you could take 100 grand out, right, and you'd be in the 24% bracket. I don't think I'd go above the 24% bracket. And I know that it's gonna be kind of a drag, but, you know, look, the money's gonna have to come out one way or another. So maybe you take out enough money from that account in the next year and a half. Well, just this year. I mean, I don't. I mean, she retired February. I don't know if she got a severance and what the amount is, but you'll have to look at just a tax grid. So you can look at it. But next year again, you'll get some Social Security, but later in the year. So maybe you get two years of taking out 100 or 150 grand, and then once the Social Security begins, you can take less money out, but maybe also stay in the 24% bracket until you get to 75, and then you've got your required minimum distributions. The thing that's interesting here is that the money's going to have to come out. And the real question is what tax bracket will it be when it comes out? And that's why I think maybe 24% is it. You don't need the money. And if you don't like risk and having money in your tiered CDs, fine with me. If you are at all inclined to be charitable, then this might be an idea, which is when you're 70 and a half, you could take money from. You'd have to roll the money into an IRA rollover account, but you could take some of that money and defer it and shoot it over to a charity in a qualified charitable distribution. But again, that money would have to be. It cannot come from a 401k or a thrift savings plan. It would have to be rolled into an IRA account in order to use a qualified charitable distribution. That's a good one, though. That's an interesting question.