Ask KT & Suze Anything: Highlights from Can I Afford a Swanky New Apartment?

Summary

Episode Summary: Suze Orman's Women & Money (And Everyone Smart Enough To Listen) – "Ask KT & Suze Anything: Highlights from Can I Afford a Swanky New Apartment?"

In this engaging episode of Suze Orman's Women & Money, host KT and financial expert Suze Orman delve into a series of listener questions, providing insightful advice on personal finance matters. The episode, titled "Can I Afford a Swanky New Apartment?", covers topics ranging from estate planning and retirement accounts to investment strategies and Medicare adjustments. Here's a detailed breakdown of the key discussions and expert opinions shared during the episode.

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1. Navigating Transfer on Death (TOD) Accounts and Life Insurance

Listener: Scott
Timestamp: [01:56] - [04:19]

Scott sought advice on handling his family's lake home, valued at over $750,000, which his mother had placed in a Transfer on Death (TOD) account designated to pass to him and his two sisters after her passing. When one sister expressed disinterest in the property and requested her share of the proceeds, Scott considered using a term life insurance policy to buy her out.

Suze Orman's Insight: Suze cautioned against using a term life insurance policy in this scenario. She explained that term life insurance is designed for temporary coverage during the insured's younger years and is not cost-effective for long-term needs, especially for someone in their 70s or older.

"Term life insurance is meant to only be there during your younger years before you've had time to accumulate assets. And it allows you to do so at a very cost-effective rate. It's not meant to be your whole life."
— Suze Orman [02:17]

Instead, Suze suggested exploring alternative solutions that better fit Scott's long-term financial planning needs.

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2. Estate Planning: Trusts vs. Beneficiary Designations

Listener: Unnamed
Timestamp: [04:19] - [06:42]

A listener shared that they had recently started filling out essential estate planning documents and wondered whether to designate their trust as the beneficiary for all bank and retirement accounts, considering they have no debts or post-death expenses.

Suze Orman's Guidance: Suze emphasized the importance of not naming a trust as the primary beneficiary for retirement and Health Savings Accounts (HSAs), especially if married. She highlighted the necessity of maintaining flexibility in beneficiary designations to account for potential incapacitation.

"You never, ever, ever want the trust to be the beneficiary of any retirement account or any HSA account... If you are married, again, I am underlining this. You do not want your trust account to be the primary beneficiary."
— Suze Orman [05:25]

She advised listeners to utilize living trusts with incapacity clauses to ensure accessibility and proper management of assets in case of unforeseen circumstances.

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3. Tax-Free Rollover: Traditional IRA to HSA

Listener: Theresa
Timestamp: [06:42] - [07:36]

Theresa inquired about the possibility of performing a tax-free, one-time rollover from a traditional IRA to her Health Savings Account (HSA).

Suze Orman's Confirmation: Suze affirmed that Theresa could indeed execute a one-time, tax-free rollover from a traditional IRA to an HSA, allowing for up to the maximum contribution limit.

"You can take that money and use it to fund up to the max if you want of the HSA that you have. And it is absolutely tax free."
— Suze Orman [06:59]

She recommended consulting with her HR department to understand the specific procedures within her company.

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4. Transitioning from a 401(k) to a 403(b) Plan

Listener: Jenny
Timestamp: [07:36] - [09:28]

Jenny faced a situation where her employer was being acquired, prompting a transition from her current 401(k) with Fidelity to a 403(b) plan with Empower (formerly Prudential). She sought advice on whether to roll over her 401(k) or start a new retirement account.

Suze Orman's Advice: Suze explained that while 403(b) plans function similarly to 401(k)s, rolling over to an IRA might offer more diverse investment options and greater flexibility, especially if considering a Roth IRA conversion in the future.

"If you did an IRA rollover with the 401 that you have at Fidelity and start a new retirement account there, you also have the ability if you want to start converting to a Roth IRA and your investment options will be far grander than any 403 with Empower that they'll offer you."
— Suze Orman [07:59]

However, Suze also noted that if Jenny anticipates significant income and plans to utilize strategies like backdoor Roth IRAs, leaving the funds with the 403(b) might be more advantageous.

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5. Investing a Settlement: Dollar-Cost Averaging Strategy

Listener: Melissa
Timestamp: [09:28] - [10:47]

Melissa sought advice on how to invest a $10,000 car accident settlement and a forthcoming $30,000 in September. She considered investing in dividend ETFs using a dollar-cost averaging (DCA) approach.

Suze Orman's Recommendation: Suze advised Melissa to first increase her emergency fund from six months to the recommended eight to twelve months before allocating surplus funds to investments.

"When I have been telling you now for years that everybody should have an 8 to 12 month emergency fund, looks to me like girlfriend, you're going to take this money and put it in a high yield savings account... then we'll talk about dollar cost averaging into things at that time."
— Suze Orman [10:12]

This approach ensures financial stability and readiness for unexpected expenses before committing to investment strategies.

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6. Understanding IRMAA and Medicare Premium Adjustments

Listener: Pat
Timestamp: [10:47] - [15:35]

Pat had questions about the Income-Related Monthly Adjustment Amount (IRMAA) imposed by Medicare following the sale of a rental property. She sought clarity on how the sale would affect her and her husband's Medicare premiums.

Suze Orman's Explanation: Suze provided a comprehensive breakdown of IRMAA, emphasizing that it's based on modified adjusted gross income from two years prior. She informed Pat that selling a property could influence her Medicare premiums for the following year and suggested using the SSA-44 form to request adjustments based on significant income changes.

"If you have what's called a life changing event and I think it's form SSA 44... you can request that Social Security adjust your IRMAA based on your current income."
— Suze Orman [14:15]

Suze encouraged Pat to contact Social Security to explore qualifying for reduced IRMAA payments due to the sale.

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7. Updating Estate Planning Documents After a Decade

Listener: Danette
Timestamp: [15:04] - [17:35]

Danette, who purchased estate planning documents online in 2009, wondered if she needed to update her revocable trust and other documents, especially regarding the inclusion of an incapacity clause.

Suze Orman's Guidance: Suze reassured Danette that the "must-have documents" package allows for free updates, eliminating the need to repurchase documents as laws and personal circumstances change. She encouraged Danette to review and update her documents through the service to ensure they remain current and effective.

"Once you have purchased them, no matter what updates are made, you qualify for the updates without any extra cost at all."
— Suze Orman [16:10]

Additionally, Suze highlighted the benefit of sharing these documents with family and friends for comprehensive estate planning.

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8. Assessing the Feasibility of Upgrading to a Swanky Apartment

Listener: Ms. (Name Unspecified)
Timestamp: [17:35] - [22:41]

A 40-year-old single woman who owns her home outright and has minimal investments in the market contemplated upgrading to a more luxurious apartment in the city center. She planned to use her cash reserves or take a minimal loan for the upgrade, citing an unstable job and potential early retirement.

Suze Orman's and KT's Verdict: Suze and KT unanimously advised against upgrading to a swankier apartment under her current financial circumstances. They emphasized the importance of maintaining substantial savings and investments, especially given her job instability.

"At 40 years of age, this is still your compounding years. These are not the years for you to be spending money and you need to be saving it and investing it and being wise with money."
— Suze Orman [21:12]

They suggested preserving her financial stability by avoiding increased expenses and instead focusing on accumulating assets for future security.

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Conclusion: Prioritizing People, Then Money, Then Things

As the episode wrapped up, Suze and KT reinforced the foundational financial principle of prioritizing personal relationships and well-being over monetary gains and material possessions.

KT: "People first, then money, then things."
— KT [23:58]

Suze echoed this sentiment, encouraging listeners to align their financial decisions with their core values to achieve lasting security and happiness.

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Final Thoughts: This episode provided invaluable advice on a spectrum of financial topics, empowering listeners to make informed decisions about estate planning, retirement savings, investment strategies, and lifestyle choices. Suze Orman's expertise, combined with KT's facilitation, ensures that listeners gain practical insights tailored to their unique financial situations.

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Note: This summary excludes promotional segments and disclaimers present in the original podcast transcript, focusing solely on the substantive content and expert discussions.

Transcript

[Suze Orman]

Hi, everybody. Suzio here. Now, what is the goal of money? The goal of money is for you to be secure. And there is no better way for you to be secure than having an emergency savings account. It is essential for your financial foundation. So all of you should be participating in the ultimate opportunity savings account at Alliant Credit Union. Go to myalliant.com to find out more. And be secure. We are strong, we are wise we will not apologize we are here we will thrive Together we will rise we're the little bit of faith and everything it takes we are strong we are wise Together we will rise.

[Robert]

April 24, 2025 welcome to the Women and Money podcast as well as everyone smart enough to listen. Hi, everybody. Robert, the producer here. I know, I know, I can hear you saying, but you and Susie said she'd do a new podcast today. Well, given that these markets are crazy, Susie, as is her prerogative, has decided to wait until this Sunday to do a brand new Susie School that will be more beneficial to what's happening right now than try and do it inside of an Ask KT and Susie Anything episode. And for those of you who've been listening for a while to this podcast, you know that we still like to give you something wonderful to hear on podcast day. And of course, today is no exception. So we'll hear bits of an Ask KT and Susie Anything show from last fall. And let's jump in with KT setting up the first question.

[KT]

Okay, my first question, Susie, is from Scott. Scott, he said, Susie and kt. When my dad passed away, my mom put their home into a TOD to my two sisters and I.

[Suze Orman]

So that's a TOD kt.

[KT]

I'll tell everyone it's transfer on death account.

[Suze Orman]

Ding, ding, ding, ding, ding, ding, ding. A ding, a ding, a ding.

[KT]

Now listen to this, everyone. So Scott's oldest sister said to him privately, I don't want anything to do with this house. Pay me my third. The home in question is a lake home with an assessed value exceeding $750,000. And this is a little bit interesting. He said, susie, I feel immoral asking, but can I open a term life policy for my mom so I can cover the cost to buy out my sisters? I don't think that's immoral. So anyway, that's his question.

[Suze Orman]

Scott, here's what I would tell you. Now, it's not an immoral question, but I'm not sure it solves your problem. And let me tell you why. A term life insurance policy is only good for A specific term. So let's say I don't know how old you are right now, but let's say your mother is older. Let's say she's in her 70s and maybe she's going to live to her 90s, possibly even 100. There's no way that a term policy at this point in time, if that's how old she is, is going to be cost effective. You may find that you pay more in premiums over a long period of time than you do if you were just to save that money, possibly to have the money to buy out your sister at the time. So I don't think a term policy is the way to go. Remember, term life insurance is meant to only be there during your younger years before you've had time to accumulate assets. And it allows you to do so at a very cost effective rate. It's not meant to be your whole life. So if I were you, that isn't how I would solve this problem. I mean, I could go on and on about ways that you could solve it, but that wasn't your question to me. So no, I don't think your term life insurance policy would will do it. I just don't.

[KT]

All right, so Susie, the next question is from a listener that said, I just got my must have documents and started filling them out. It's a little surreal. Thinking about passing. I read that I may want to make my trust the beneficiary for all of my bank and retirement accounts. Is this accurate or would it be better to make some or all of them podcast, provided I have no debt or expenses after death?

[Suze Orman]

So here's my question. Kt does he say or she say how old they are? Do they say if they're married, anything?

[KT]

No, but they're just filling them out for the first time.

[Suze Orman]

All right, so here's what I want everybody to know about the must have documents. And what are the must have documents? They are a living, revocable trust, an advanced directive and durable power of attorney for health care, a will a and a financial power of attorney. Those are four documents that you must have. And if you want those, by the way, go to musthavedocs.com and take a look because that's where you can get them. What you have to understand is if you are married, you never, ever, ever want the trust to be the beneficiary of any retirement account or any HSA account. Let's be clear on that. So when this person says that it should my beneficiary for all my bank and retirement accounts. Not if you are married. Again, I am underlining this. You do not want your trust account to be the primary beneficiary, if you are married, of any retirement accounts and or an HSA insurance account. So here's what you all need to know as well. Sure, you can make your accounts and everything pay on death. But as I've said many times, what if you don't die? What if you become incapacitated? Then the pay on death account isn't going to help you. Who's going to be able to access that money if you need it? A living trust with an incapacity clause in it, which the must have documents have is the way to go, bar none. Just telling you you want to avoid problems, get the must have documents. All right, kt.

[KT]

Okay, this is my favorite kind of question, everyone. From Theresa. You ladies rock. I heard I can do a one time rollover from a traditional IRA to my HSA account tax free. If so, how?

[Suze Orman]

You are absolutely right, my dear Teresa. One time and one time only. If you want to use the money in an ira, a traditional ira, so you've never paid taxes on on it, or even a pre tax IRA rollover that you may have, you can take that money and use it to fund up to the max if you want of the HSA that you have. And it is absolutely tax free. So if you want to know how to do it in your particular company, I would ask your HR person how to do it. All right.

[KT]

Okay. So on the theme of 401ks, this is from Jenny. My employer is being bought by another company. I have a 401k with fidelity. They're switching to a 403 with empower. I think that was formally prudential. Should I roll over or start a new retirement account? I don't know much about 403s. Thank you.

[Suze Orman]

A 403 works essentially the same way as a 401. Really? That's what you need to know. However, if it were me and I had a 401k with fidelity and now they're switching it to a 403 with empower. What I want you to think about, however, is if you did an IRA rollover with the 401 that you have at Fidelity and start a new retirement account there, you also have the ability if you want to start converting to a Roth IRA and your investment options will be far grander than any 403 with Empower that they'll offer you. But if you make a lot of money and you want to do a backdoor Roth IRA one day. If you have a traditional IRA that you rolled over, you're not going to be able to do a backdoor Roth. So therefore you might just want to leave it with the 403. With Empower just depends how much money you make a year, how much money you think you're going to make in the future and if you like the investment options and the fees that Empower is going to charge you other than and actually the amount of money that you have in there, because if there isn't a lot of money in there, then oh you bet I would do an IRA rollover and then convert it to a Roth ira. All right.

[KT]

All right, Next is from Melissa. Hi Susie. I understand you're a big fan of dollar cost averaging.

[Suze Orman]

I am.

[KT]

I will be receiving about $10,000 for car accident settlement within the next few weeks and $30,000 next September. I'd like to invest all of this money in dividend ETFs because I have no debt. I'm contributing 12% to my 401 and I have a six month emergency fund. Do I put everything in a high yield savings account and then invest maybe $1,000 at a time every week into a dividend ETF? Or what's the best way to go about dollar cost averaging with large sums.

[Suze Orman]

Of money given that you only have a six month emergency fund? When I have been telling you now for years that everybody should have an 8 to 12 month emergency fund, looks to me like girlfriend, you're going to be taking this money and putting it in a high yield savings account or money market account and you're going to add the $30,000 to it again when it comes in a year from now you're going to see is that an 8 or 12 month emergency fund and if it is and there's anything extra, then we'll talk about dollar cost averaging into things at that time.

[KT]

All right, kt okay, next question is from Pat and Pat is asking Susie and kt. I have a question about irmaa. So I have to tell you all, I didn't know what IRMAA was so I looked it up. It's an income related monthly adjusted amount from Medicare. Susie will tell you what that means. But this is a question about irmaa.

[Suze Orman]

You pay irmaa?

[KT]

My husband, My husband.

[Suze Orman]

Do you know that you pay irmaa?

[KT]

I do.

[Suze Orman]

Every single year. So do I. All right, go on, go on.

[KT]

Irma must be rich man. All right. My husband and I are selling our rental property as we no longer want to be landlords nor do we want to invest in other options. That said, we are prepared to pay the taxes. No, we will have to pay IRMAA for a year and just want to be totally done. So then the question is, do I have to wait for the two year look back with Medicare to charge the IRMAA fees? I don't know what that means.

[Suze Orman]

All right, let's see if I can explain this to you. As you know, everybody, when you turn 65, which is so fabulous, you qualify for Medicare. And I can't tell you how incredible Medicare is when it comes to health needs. Do you know that that entire operation that I went through and everything, I did not pay one penny for it.

[KT]

What do you think that would have cost? Well over a million bucks.

[Suze Orman]

Well over a million bucks. Well over a million for what they had to do, for how long they had to do it. I mean that was, I'm sure it was over a million dollars anyway, so what is irmaa?

[KT]

Wait, so she paid zero?

[Suze Orman]

Zero. You know that?

[KT]

Yeah, I know. I'm telling everyone. Listening. That's what Medicare is incredibly, so, incredibly important.

[Suze Orman]

Everybody.

[KT]

Hope it never goes away.

[Suze Orman]

So you turn 65 and Medicare has a part A and a part B. And when it comes to part B, you pay a monthly premium for it based on your income. And your income, depending on what it is, you could pay like up to $500 a month. I think we pay 526amonth KT out of our Social Security check for Medicare Part B. But IRMAA is really, it's a monthly adjusted amount for Medicare. But IRMAA is based on your modified adjusted gross income from two years prior. So they're always looking back two years. And so therefore, if you had an income sale from a piece of property in 2024, the income from that sale in this case would generally affect her 2026 Medicare premiums.

[KT]

I get it now. I understand.

[Suze Orman]

I got it now. Here's the thing, however, with Social Security, if you have what's called a life changing event and I think it's form. Oh God, are you going to quote me on this? Social Security SSA 44. Okay, I think that's it, right?

[KT]

You probably right because you memorize numbers.

[Suze Orman]

Anyway, you can request that Social Security adj. Your IRMAA based on your current income, usually if there's a significant reduction to a qualifying event. So, and I have to tell you, the sale of a property qualifies for that. So Patricia, if I were you. If you want the IRMAA increase to start in 2025 and be done after that one year, just you need to contact them and see if in fact it qualifies or what happens with 2024. What? 2022, whatever it is, you need to contact them and see if it will help you. All right.

[KT]

Okay. This is my final question from Denise.

[Suze Orman]

I want to know something here.

[KT]

What?

[Suze Orman]

I wouldn't necessarily want to get it done. Oh, you just handed me her email. Did you see on the bottom it says she wants to do it now because she thinks tax brackets are going to go up over the next few years. That's why she wants to do it now. I got it. All right, see what you can do. Life changing event form SSA44.44 you said? I hope. All right.

[KT]

Okay. So from Danette. Hello Susie and kt. Happy travels. Susie. I purchased the must have documents online in 2009.

[Suze Orman]

Sm smart.

[KT]

Yeah, she is smart. I opened my revocable trust, changed my house title. You mentioned the incapacity clause. Is it available with my docs automatically or do I need to fill it in all over again and have them co signed and notarized again? Then she says do I have to buy the newest docs? This is from Danette.

[Suze Orman]

So Danette, here's the great thing about the must have docs. It's a one and done. That's it. Meaning what? Once you have purchased them, no matter what updates are made, you qualify for the updates without any extra cost at all. I would never talk to you about something that I want you to buy that you have to continue to buy and buy as it changes. So unlike many of the other companies, when something changes, you have to buy it again. That's not true with the must have docs. Your 2009 ones that you did buy has the incapacity clause in it. However, given that that was so long ago, I think it's a really great idea. If you redid them so that you see where is everything? How did you do it? Is there any changes that you want to make? And therefore on your documents when you go back and you go to the program, there's a little help tab or whatever, just contact the company and you'll automatically be updated to the program as it is today. And it's just been totally updated by the way. So if I were you, I would do that one. Know another thing I love about the must have docs kt? Besides that.

[KT]

What's that?

[Suze Orman]

You can share it with as many People in your family as you want or friends. Or friends or whatever. So it's like it just takes one of you to do it. QuizzyTime KT.

[KT]

Okay, what do you got for me?

[Suze Orman]

This is from Ms. All right. And she says the following. And I know it's a she by the way. Anyway, I'm 40, which means that I've gone by people first, then money, then things for half of my life. Thank you. I currently own my home outright, but only have about 35% of total net worth invested in the markets. The rest are in cash. I have relatively low expenses for myself. Now are all of you listening to these facts? Because this quizzy isn't just for KT to be able to answer. I give quizzes for all of you to be able to answer, to know if these things ever happened in your situation, what you should do. All right. Now again, this person is single, no kids. She says, however, my job is quite unstable, hence I must be prepared to be retired at any time. I am a citizen of a low cost of living country, hence plan on retiring there should the need arise. She's 40. She plans to retire there if the need arises. All right. I am able to live at my parents home indefinitely. From my estimates, if I were to liquidate my assets and put the money in the bank with 3% interest, I should have two times the monthly expenses that my parents currently use. Has anybody ever heard of inflation? But anyway, all right, my question sounds.

[KT]

Like a great place to go.

[Suze Orman]

My question is I have been thinking of upgrading my apartment to a swankier one in the city center, downtown vibes, better air. I plan to use all or most of the cash I have on hand for the upgrade or take a minimal loan. Now I am assuming here that she has a home that she owns outright. She may be thinking about selling her home, moving to a bigger, swankier apartment in the city. But she'd have to use all the cash from her home and to make an upgrade or make or have a minimal loan. Do I approve? Think about it. Oh, you're looking at me like there's nothing.

[KT]

There's a no brainer here, Susie.

[Suze Orman]

What is that?

[KT]

No. Why would you do that? I would never do that. If I had an unstable job and I'm 40 years old, I'd want to accumulate as much, much cash as possible. So then I'd feel free.

[Suze Orman]

So you've denied her?

[KT]

Yes, totally. Say it kt, you are denied. That's the way you say it.

[Suze Orman]

So what's funny about this quizzy is I wrote her back.

[KT]

Oh, what'd you say?

[Suze Orman]

I sent her a little picture of myself with a stamp that said denied.

[KT]

Look there.

[Suze Orman]

Ding, ding, ding, ding, ding, ding. So you're right. But here's YMS that you're thinking, in my opinion, is not logical. You currently own your home outright, you don't have any bills, whatever. And what you're saying is that you want to move to a swankier place, which means more expenses, more taxes, more everything. And you don't have a stable job, so you have to be prepared to retire at any time. No. At the age of 40, if you lose your job, you get another job. You stay where you want. Obviously you're liking wherever you live and you just want a little more life around you. So go to that place, the swankier place, and be entertained and then go home to a place that you own outright. So at 40 years of age, this is still your compounding years. These are not the years for you to be spending money and you need to be saving it and investing it and being wise with money. And then when you're old like us, you can live on a private island. You could do whatever you want at that point in time.

[KT]

Why doesn't she just rent something in the city and see if she likes it?

[Suze Orman]

No, that's ridiculous. She doesn't need to be paying more money.

[KT]

I don't know why she wants to do that.

[Suze Orman]

That's not our problem. Here's the other thing. You say that if you liquidate your assets and you put the money in the bank with a 3% interest, how do you know what interest rates are going to be? How do you know what your assets are going to be? If you had done this plan years ago and you were thinking, oh, it's 2007, you've now lost your job, you're going to sell your home, you're going to sell your assets. You wouldn't get anywhere close to what anything is currently worth today. And you say that you would have two times the monthly expenses that your parents currently use. Do you really want to live the lifestyle that maybe your parents are living? So your thinking is wrong on this. You are to think that you are going to make the most out of your life here, where you're obviously enjoying yourself, or you would be back home already. You're going to save it, you're going to invest it. If you want a swankier lifestyle, go there for the weekend and come back, do whatever. But no, you are denied. All right, kt, that's it.

[KT]

That's a wrap.

[Suze Orman]

That's a wrap. So until Sunday. There's only one thing that we really want you to remember when it comes to your money. And what is that? Kt.

[KT]

That's people first, then money, then things.

[Suze Orman]

And if you do that, stay safe, don't want to live in a swankier place, and stay healthy. You will be unstoppable. We are strong we are wise we will not apologize we are here we will thrive Together we will rise we're the little bit of faith and everything it takes we are strong we are wise Together we will rise Foreign hi everybody, Suzy O Here now. If you are looking for a way to start saving to get the most out of your money, I want you to go to myalliant.com that's my A L L I A-N-T.com and look into opening an Ultimate Opportunity Savings Account. Put in at least $100 a month every single month for 12 consecutive months. Earn 3.10% interest on your money right now and get $100 at the end. Are you kidding me? It's the best deal out there. Start saving right now.

[Robert]

Neither Suze Orman Media nor Susie Orman is acting as a Certified Financial Planner Advisor, a Certified Financial Analyst, an economist, cpa, accountant, or lawyer. Neither Suze Orman Media nor Suze Orman make any recommendations as to any specific securities or investments. All content contained in this podcast is for informational and general purposes only and does not constitute financial accounting or legal advice. You should consult your own tax, legal and financial advisors regarding your particular situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any losses which may arise from accessing or reliance on information in this podcast and to the fullest exposure extent permitted by law. We exclude all liability for loss damages, direct or indirect, arising from the use of this information. The must have documents discussed in this podcast are legal documents created by a lawyer and distributed by Hay House.