Ask KT & Suze Anything: Why Am I Anxious About Retiring?

Summary

Detailed Summary of "Ask KT & Suze Anything: Why Am I Anxious About Retiring?"

Suze Orman's Women & Money Podcast
Episode Release Date: February 13, 2025

In this insightful episode of Suze Orman's renowned "Women & Money" podcast, hosts KT and Suze Orman engage with their audience by addressing pressing financial concerns related to retirement anxiety and other personal finance topics. Through a series of listener-submitted questions, the duo provides expert advice aimed at empowering individuals to make informed financial decisions. Below is a comprehensive summary of the key discussions, insights, and conclusions drawn during the episode.

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1. Combining Finances as a Newly Married Couple

Listener: Benjamin
Timestamp: [04:16 - 08:01]

Question:
Benjamin, a 35-year-old professional who recently eloped, seeks guidance on how to effectively combine finances with his spouse. Despite both having stable incomes in finance and medicine, he is uncertain about opening joint credit cards or checking accounts. Additionally, he inquires about the necessity of term life insurance given that they do not plan to have children.

Suze Orman's Advice:

• Percentage-Based Contributions: Suze emphasizes that financial contributions in a relationship should be based on income percentages rather than equal amounts. This approach ensures fairness and sustainability in managing joint expenses. "[07:03] Suze Orman: It's never about equal amounts of money. It's about equal percentages."

• Separate Accounts and Credit Cards: She recommends maintaining individual checking accounts and credit cards to preserve financial independence and mitigate potential risks related to joint accounts, such as one partner accruing debt irresponsibly.

• Term Life Insurance: Even without children, Suze advocates for securing term life insurance. This provides financial security for both partners in the event of unforeseen circumstances. She suggests, "At 35 years of age, you could get a million dollar term life insurance for very little, for 50, 100, whatever a month."

Conclusion:
Suze advises couples to adopt a balanced approach by keeping financial accounts separate while contributing to joint expenses proportionally. Additionally, obtaining term life insurance is a prudent step for financial protection, irrespective of future family plans.

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2. Financial Planning for Individuals with Disabilities

Listener: Joanne
Timestamp: [09:56 - 14:01]

Question:
Joanne, a 57-year-old teacher diagnosed with multiple sclerosis at 25, faces financial uncertainties as her disability income is set to decrease once her son turns 21. With limited savings in her 403B and recently purchasing her first home, she seeks advice on managing her finances effectively.

Suze Orman's Advice:

• Expense Management: Suze highlights the importance of controlling and minimizing expenses. "[11:00] Suze Orman: It's not about how much money you make, it's what are the expenses that you have that you may need more money to pay."

• Mortgage Strategy: She suggests considering a shorter mortgage term (15 years instead of 30) to reduce long-term debt and ensure mortgage-free living by the time Joanne might face further financial constraints.

• Maximizing Retirement Contributions: Suze advises contributing to her husband's 403B up to the company match and allocating any additional funds toward paying down the mortgage. This strategy aims to ensure that the home is owned outright, thereby reducing future financial liabilities.

Conclusion:
For individuals with disabilities, Suze emphasizes the critical role of expense reduction and strategic debt management. By focusing on owning their home and maximizing retirement contributions, individuals can achieve greater financial stability.

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3. Navigating Retirement: Lump Sum vs. Monthly Pension

Listener: Ellen
Timestamp: [14:01 - 21:48]

Question:
Ellen is planning to retire in July and feels anxious about the decision between taking her pension as a lump sum of approximately $450,000 or opting for a monthly payment of around $3,000. She contemplates leveraging the lump sum for potentially higher returns but is uncertain about the best course of action.

Suze Orman's Analysis:

• Guaranteed vs. Potential Returns: Suze compares the guaranteed monthly pension to the uncertain returns from investing a lump sum. She points out that "[15:00] Suze Orman: The $3,000 a month return is guaranteed for your life." In contrast, investing the lump sum carries market risks and does not guarantee consistent returns.

• Tax Implications and IRAs: She explains that rolling over the lump sum into an IRA could provide tax advantages and different investment opportunities but also introduces complexities like required minimum distributions (RMDs), which could deplete the principal over time.

• Partial Annuity Strategy: As a balanced approach, Suze suggests taking a portion of the lump sum to purchase an annuity for guaranteed income while investing the remaining funds for potential growth. This strategy offers both security and growth opportunities.

Conclusion:
Suze underscores the importance of evaluating personal comfort with investment risks. For those prioritizing security and guaranteed income, retaining the pension may be preferable. Conversely, those willing to manage investments for higher potential returns might consider taking the lump sum, possibly in conjunction with an annuity to balance security and growth.

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4. Managing Inherited Finances and SIPIC Coverage

Listener: Renee
Timestamp: [21:52 - 24:25]

Question:
Renee is assisting her mother with managing finances following her father's passing. Concerned about exceeding the Securities Investor Protection Corporation (SIPC) limit of $500,000 for IRA and brokerage accounts, Renee seeks advice on how to protect her mother's assets.

Suze Orman's Clarification:

• Understanding SIPIC Coverage: Suze clarifies that SIPIC covers up to $500,000 per customer, including a $250,000 limit for cash. "[24:05] Suze Orman: SIPIC covers $500,000 per customer."

• Excess SIPIC Insurance: She recommends utilizing excess SIPIC insurance provided by brokerage firms like Schwab, which offers additional protection up to an aggregate of $600 million through carriers like Lloyds of London. This ensures comprehensive coverage beyond standard SIPIC limits.

• Avoiding Unnecessary Account Separation: Suze advises against unnecessarily splitting funds across multiple financial institutions solely to stay within SIPIC limits, especially when excess coverage is available.

Conclusion:
For inherited finances, Suze emphasizes leveraging excess SIPIC insurance to ensure comprehensive protection without complicating account management. This approach safeguards assets effectively while maintaining financial simplicity.

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5. Understanding Capital Gains and Stock Sales

Listener: Judy
Timestamp: [25:30 - 27:13]

Question:
Judy seeks clarification on how to determine if capital gains apply when selling stocks through her Fidelity account. She aims to implement value cost averaging and wishes to avoid ordinary income taxes by not selling shares held for less than a year.

Suze Orman's Explanation:

• FIFO Method: Suze explains that Fidelity defaults to the FIFO (First In, First Out) method. "[26:21] Suze Orman: FIFO means first in and first out." This means the oldest shares purchased are sold first.

• Tax Implications: By understanding the FIFO approach, Judy can strategize her stock sales to minimize capital gains taxes, ensuring that she primarily sells shares held for over a year and thus qualifies for lower long-term capital gains rates.

Conclusion:
Understanding the FIFO method used by brokerage firms like Fidelity allows investors to manage their stock sales strategically, optimizing for tax efficiency by focusing on long-term holdings.

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6. Addressing High 401(k) Record-Keeping Fees

Listener: Ray
Timestamp: [27:30 - 30:06]

Question:
Ray is frustrated with his husband's 401(k) plan, which charges a high record-keeping fee of $152 monthly ($1,800 annually) on a $360,000 account. He believes such fees are excessive and seeks ways to avoid them.

Suze Orman's Advice:

• Assessing Fee Reasonableness: Suze concurs that the fee is considerably high. "[28:15] Suze Orman: That's like a 0.51% fee. That's a lot."

• Alternative Savings Strategies: She suggests contributing to the 401(k) only up to the employer's match and then directing additional savings into a Roth IRA, which typically offers lower or no fees.

• Partial Distribution: Suze advises Ray's husband to inquire if his employer allows partial distributions from the 401(k). By rolling over a portion of the funds into an IRA, the account balance subject to fees would decrease, thereby reducing the overall fee burden. "[29:52] Suze Orman: [...] you would bring down the balance of the account that is in there."

Conclusion:
High 401(k) fees can significantly erode retirement savings. Suze recommends leveraging employer matches, exploring lower-fee investment vehicles like Roth IRAs, and considering partial distributions to mitigate excessive fee charges.

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7. The Influence of the 10-Year Treasury on the Economy

Listener: Lori
Timestamp: [30:06 - 32:25]

Question:
Lori, an avid podcast listener and growing investor, inquires about the significance of the 10-year Treasury and its impact on the financial markets and the broader economy.

Suze Orman's Explanation:

• Economic Indicators: Suze outlines that the 10-year Treasury yield influences various aspects of the economy, including mortgage rates, corporate borrowing costs, and overall economic growth. "[30:44] Suze Orman: [...] the 10 year Treasury [...] is a strong predictor that a recession is coming."

• Inverted Yield Curve: She discusses the inverted yield curve, where the two-year Treasury rate surpasses the ten-year rate, as a reliable predictor of impending recessions.

• Market Impact: Changes in Treasury rates affect bond attractiveness, borrowing costs, and can signal shifts in economic health, influencing investor behavior and stock market performance.

Conclusion:
The 10-year Treasury yield serves as a critical barometer for economic health and future market conditions. Monitoring its trends helps investors anticipate and respond to potential economic shifts effectively.

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8. Closing Remarks and Personal Exchanges

Timestamp: [32:33 - 33:52]

In a light-hearted exchange, KT and Suze Orman discuss Valentine's Day, emphasizing the importance of prioritizing people over money and material possessions. They share personal anecdotes, reinforcing the podcast's overarching theme that financial well-being is intrinsically linked to personal relationships and emotional security.

Key Takeaway:
"[33:52] Suze Orman: People first, then money, then things."

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Final Thoughts

This episode of "Women & Money" adeptly navigates a range of financial topics, from retirement planning and investment strategies to managing inherited finances and understanding economic indicators. Suze Orman's expert guidance provides listeners with practical solutions tailored to their unique financial situations, reinforcing the podcast's mission to transform lives through informed financial decision-making.

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Note: The episode concluded with promotional content and disclaimers, which have been excluded from this summary to focus on the core financial discussions.

Transcript

[Susie 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.

[Unknown]

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 we will, will ris.

[KT]

Hello, everybody. Welcome to the Women and Money podcast. And everyone's smart enough to listen on February 13th featuring KT and Susie. What year?

[Susie Orman]

What year?

[KT]

KT? What do you mean, what year? Everyone knows it's 2025.

[Susie Orman]

There we go. We now know what year.

[KT]

All right, so we have an exciting. I mean, what a week so far. So super bowl was unbelievable.

[Susie Orman]

Kind of, right? I can't believe that the Kansas City Chiefs lost. So let's not talk about it.

[KT]

So, Susie, it's still a special day today.

[Susie Orman]

What makes this day so special?

[Unknown]

Why?

[KT]

Come on. Whose birthday is it, Susie?

[Susie Orman]

So, actually, this is a birthday of a kind of strange birthday because it's Julie and Laurie. Julie and Laurie's birthday is today. Right. Don't you love that?

[KT]

I do. And she will, too.

[Susie Orman]

Right. So anyway, we want to wish you the happiest of birthdays. We are so happy that you are in our lives and that we're kind of becoming one, so to speak. But anyway, have a great day. Happy birthday.

[KT]

Eat ice cream, but leave some room for the chocolates, because tomorrow is. What's Susie?

[Susie Orman]

What is that I'm kissing?

[KT]

Tomorrow is Valentine's Day. And for any of you that don't have a valentine, I'm looking at one right here that has so much love to share. She's gonna spread it all over the world.

[Susie Orman]

Katey.

[KT]

Tomorrow.

[Susie Orman]

Wait. Let's ask everybody.

[KT]

Will you be our Valentine?

[Susie Orman]

Wouldn't that be great if we had tens of thousands of people being our valentines and we're theirs?

[KT]

When you were a kid in school, did you make, like, little valentine envelopes? And they would pin them on the wall and everybody would bring valentines and put them in, and, like, mine was always overflowing.

[Susie Orman]

I bet everybody wanted you to be their valentine.

[KT]

Did you do that when you were a kid?

[Susie Orman]

No.

[KT]

They didn't do that in your school?

[Susie Orman]

The only thing that I remember about Valentine's Day that I loved more than anything was the little Valentine hearts that had those little sayings on them.

[KT]

A little candy. Candy hearts.

[Susie Orman]

I loved those so much, I can't even tell you. All right, kt, though, what questions? And by the way, everybody, as KT told you, this is Ask. Did you say it was Ask KT and Susie anything?

[KT]

Yeah.

[Susie Orman]

I'm not sure you did.

[KT]

I did Women and Money podcast, but.

[Susie Orman]

That'S different than if it. Anyway, it doesn't matter.

[KT]

This is Thursday. They all know it's Ask KT anything and I'll ask Susie and she'll answer it.

[Susie Orman]

Oh, God, here we go. All right, for those of you who want to write in a question to asksusie s u zepodcastmail.com and if. If KT chooses it, we will ask and answer it on the air. Okay, Go on, kt.

[KT]

My first question is from Benjamin. I like that name. Benjamin.

[Susie Orman]

Benjamin. Yes.

[KT]

Yeah, that's how you say it in Spanish. Benjamin, Benjamin. So Benjamin said, susie, my mom gave me the Young, Fabulous and broke book as a teenager. I am now 35. It was my first financial book ever. And that book changed my life. Life. I am so grateful to you, Susie. And then he said, luckily, I found your podcast during the 2020 Covid crisis, and I've been looking forward to your new episodes every week. In addition to having the must have documents, an alliance savings account, and the Women in Money app. So, Benjamin, you're getting a big applause. She wants you to be her Valentine.

[Susie Orman]

I'm applauding.

[KT]

So, so this is a little backstory and then a question. Benjamin said of six years, and I eloped this past September 2024. We both have good jobs. I work in finance at the Mayo Clinic, and he is an ER doctor with a stable income. How should we go about combining our finances? I understand the percentage ratio based off income, but should we open a credit card together or a checking account? So that's the first question. The second is, should Taylor and I sign up for term life insurance if we don't plan to have children? Susie, we appreciate you so much.

[Susie Orman]

He didn't say Susie and kt.

[KT]

Yeah, he said Susie and kt, But I just said Susie because you're the one that taught him everything. I love that you both eloped. I think that's.

[Susie Orman]

We kind of did, right, kt?

[KT]

No, we didn't elope. We just took advantage of a great opportunity. When we got married, we had a day off and we were in South Africa and we learned at A luncheon that South Africa had no laws, rules, or objection to any kind of union.

[Susie Orman]

Yeah. There was no differentiation.

[KT]

Never.

[Susie Orman]

It was in the year 2010, everybody.

[KT]

Yeah. Before it was legal in America. So we said, let's go do it. And we did. It was great. We had a fun win.

[Susie Orman]

Here's the thing, kt, what would you say to Benjamin should he have joint credit cards and a joint checking account?

[KT]

He and Taylor notice that we have separate accounts.

[Susie Orman]

We even have separate credit cards.

[KT]

Yeah. We have separate everything. But I think what they are looking to do is to figure out the best way as a couple, as a family, a married family, to pay for things and use, you know, what they can.

[Susie Orman]

But he says he understands the percentage amount. So, Benjamin, here's what I would say to you. Pay things according to the percentage amount, which is something you understand. So remember, everybody, it's never about equal amounts of money. It's about equal percentages. And if you don't know what I mean by that, look it up on the community app and go to the podcast that I talk about that in. However, personally, I would not join credit cards. I would each have your own individual credit cards as well as checking accounts. When we say that everything is separate, everything is separate between us, except real estate, which is in joint tenancy. That's it.

[KT]

And cars.

[Susie Orman]

And cars. Right. And so.

[KT]

But the boat is Sue's.

[Susie Orman]

But the boat is mine. But I don't have to worry about, is she balancing her checkbook? Is she overdrawn? Is she not everything? We're both independent, responsible for our own accounts. That way, in case it doesn't work out. I'm not saying that. But just in case, then it's so much easier because how many times have I heard a case where you had a joint checking account and one of the spouses wiped it clean, one of the spouses charged up the credit cards galore and then just took off and the remaining spouse was responsible for it. And on and on and on. So therefore, that's what I would tell you in terms of term life insurance. Especially since Taylor is a Taylor. Katie. Yeah, especially since Taylor is an emergency room doctor. He knows very well that life is very fragile. So term life insurance isn't necessarily just for the kids. It's. You have to put yourselves in the situation that if you were to die, Benjamin, today, or if Taylor were to die today, would you be okay financially? If both of you would be okay financially, then really there's no need to get term insurance. However, I have to say, at 35 years of age, you could get a million dollar term life insurance, maybe 5 million for very little, for 50, 100, whatever a month. And given that you're making a nice sum of money, I would do it just to do it, because you just never know. Congratulations, my dear Benjamin. All right, kt. Next.

[KT]

Okay, next is from Joanne. She said Susie.

[Susie Orman]

What?

[KT]

Joanne, thank you so much for your podcast. I'm a female, 57 who has had multiple sclerosis for over 30 years. I was 25 when I was diagnosed. I am a teacher on disability and I receive $3,000 a month. When my younger son turns 21, it will drop to $2,500 for the rest of my life. They still allow me to work with a limit to my earnings as a substitute teacher. I don't have much in my 403B because I didn't contribute for years when I started subbing. Bottom line, any good advice for me and my family would be greatly appreciated. My husband has a good 401k that his company matches. We just bought our first home last year. Finally, God bless you both and we're gonna say right back at you, Joanne, God bless you too.

[Susie Orman]

Here's the bottom line. Truthfully, it's not how much money you have, it's more important, what are your expenses? Because if your expenses can be very, very low, then you don't need as much income. It's not about how much money you make, it's what are the expenses that you have that you may need more money to pay. You said the key here, which is you finally bought a home last year. So the question becomes, did you do it with a 30 year mortgage or a 15 year mortgage? Because in 30 years, God willing, you'll be 87 years of age. That's a long time to have to be paying a mortgage. Fifteen years from now, you would only be 72, which is one or two years younger than we are right now. So what I would be doing if I were you, any extra money, if you can afford this, any extra money that you make, and I think as a teacher, that's getting the teacher disability. I think you're allowed, depending on where you live, to make anywhere between $15,000 and $25,000 per year. So not bad. Maybe you're making besides the $2,500 a month for the rest of your life when your son turns 21, then maybe you're making another 2,000amonth or something like that, plus whatever your husband is making and whatever is in his 403 account. So the question becomes, are you better only contributing up to the point of the match in your husband's 403B? Because the truth of the matter is you're not in a very high tax bracket, I have a feeling, and taking that extra money and putting it towards what the mortgage on your home so that by the time you really do have to stop working, you own your home outright. If you own your home outright, your disability check plus whatever your hubby will be getting in Social Security plus the money that's in the 403 will probably serve you very, very well. So your key is to reduce any possible fixed expenses that you have so they're not there by the time you retire and that will help you dramatically. That is my advice to you. All right.

[KT]

Okay. It seems like I'm on a retirement theme today. So Ellen asks. Hi, Suzy. I'm retiring in July and I'm finding myself quite anxious about it. People get scared when they retire, Susie. They get really nervous. So here's what she said. I had planned to take my pension in a lump sum, approximately $450,000, mainly because I feel it can grow much more than receiving it monthly. I believe it would be around $3,000 a month or slightly higher. Between that and my Social Security, I would hardly need to draw from my except for large expenses. But I keep going back and forth. What should I do? I really appreciate all the advice you have given me all of these years. You are a blessing. Boy, Susie, you're getting a lot of blessings today. Okay, what's your advice for Ellen?

[Susie Orman]

Here's the thing. Katie just handed me, Ellen, your email. Now everybody, you have to get this. When you write a long email, we're not going to tell all the facts and figures that you've written. We may not even read it when it's too long. So KT just highlighted what your question happens to be. But as I'm reading your email to myself right now, you only use the word I feel. I max out every year. You do not say we anywhere. You do not mention anywhere in this email that you have a partner, meaning a spouse. You say that you're going to get a $3,000 a month pension. And I have a feeling that because you didn't say it was a 100% joint and life and survivor benefit, which means if you die, your partner gets that you're probably taking a life only pension, which gives you the highest amount. But it also means that upon your death, because you probably have nobody to leave it to because it could only be a spouse. Truthful, in most cases, that $3,000 would absolutely go away. So that's something one has to take into consideration. That 3% or $36,000 a year is an approximate 8% a year return on a $450,000 investment. All right, which would be your lump sum. What's interesting about that, even though that's totally taxable to you and even though there isn't a cost of living increase on it, it's not like it will go down either. It's not like you will have any risk to that money at all. Now remember, if you take a lump sum and you roll it over to an ira, so it's not taxable to you, even if you just assumed a conservative 5% return on your money, that's going to generate for you about $1,800 a month, $1,200 a month, approximately less than the 3,000 from your pension. And that's without depleting your principal. Now maybe you could get a 7% return which would give you about $2,600 a month. But you have to remember, Ellen, those returns are not guaranteed. The $3,000 a month return is guaranteed for your life. For your life. Now, of course, we could take into consideration inflation and what that will, but who cares about that? Because truthfully, you have other investments that could make up for that as well. So it depends. Do you feel capable of investing $450,000 to generate income for yourself? What if you had taken the $450,000 a few years ago and interest rates were down to 0.06%, 0.01%, the markets weren't doing so great. Do you see what I mean, Ellen? So there are things you can't always assume you're going to make a 4 or 5% return on your money or more unless you put it in like a 20 or 30 year treasury bond or something like that. The thing that you also have to consider, and I know I'm going long here, but that's because I think you need to know, and many people listening are in this situation, is that when you do an IRA rollover with it, you're going to have to start doing required minimum distributions sooner than later. And you do not say anywhere in here how old you currently are. Therefore, I don't know how many years you are away from RMDs. And when you start taking required minimum distributions out, the balance most likely in your IRA starts to go down and down and down. So you can't count on always having $450,000 in there. So what should you do? When I don't know what to do, I kind of do both. What do I mean by that? You could take a lump sum, go over into an IRA with it, and within the IRA you could possibly purchase an annuity with half of it, like $225,000 in income annuity. That gives you a guaranteed income for the rest of your life and invest the other. But if you're confident in managing your investments, then probably the lump sum would be a better choice. But if you value your security over growth and don't want to take any market risk, then the pension might be better. But if you're still undecided, you can do a partial annuitization strategy. Like I just said. Anyway, now you know how is that, kt?

[KT]

I like that you do both. I like that it's kind of like a win win, you know, when you're not only. Well, you're not quite sure what her capacity is.

[Susie Orman]

Honestly, if I probably had to choose one or the other, what would you do? I can tell you and I had nobody to leave money to. Didn't matter. Nieces, nobody. Dogs, pets, anything, nobody, nothing. No kitty. I would probably take the pension, especially because she has other money invested. She has a 403B, she has a Roth. She has all of those things that she's maxed out every year. So she already has a portion of money. And she said in here that the $3,000 a month plus Social Security, she wouldn't have to touch the other money. And she's quite anxious. So therefore she wouldn't be anxious just.

[KT]

Living on what she knows she has.

[Susie Orman]

So that's what I would do if I were her. But she has to decide.

[KT]

Our next question is from Renee. Hello, Susie and kt.

[Susie Orman]

Hello, Renee.

[KT]

I have a quick question. My father passed away last year. I'm helping my mother with her finances. I'm reading that the securities Investor Protection corporation. Is that SIPIC? Is that SIPIC, and that's what you call it? SIPC protects IRA and brokerage accounts up to $500,000. So for protection, it would seem that we should spread the money between at least two financial institutions. What is your opinion?

[Susie Orman]

Should that be your quizzy?

[KT]

Yeah. Well, I'm just trying to figure out here how much money she. She has to separate it because she doesn't want to exceed the SIPIC half a million dollar.

[Susie Orman]

Right?

[KT]

Yeah, I think you. I think she doesn't really have to do that. I mean, she can do that. But you don't have to do that if you make us the other one. Another beneficiary.

[Susie Orman]

No, that's for FDIC insurance.

[KT]

Okay, do it. Separate it.

[Susie Orman]

No, don't.

[KT]

Don't separate. All right. What should she do?

[Susie Orman]

So the truth of the matter is, Renee, most of our money is in one financial institution. Even though it's two separate accounts. So here's what you need to.

[KT]

My account is a lot smaller than Susie's.

[Susie Orman]

Yeah, I'd say so. But it's still a seriously large account.

[KT]

Yeah.

[Susie Orman]

Yeah. Are you proud of that?

[KT]

Yeah.

[Susie Orman]

Did you ever think you'd have that much money?

[KT]

Yeah, I actually did. I always thought I would be a multimillionaire.

[Susie Orman]

You did?

[KT]

Yeah, when I was very young.

[Susie Orman]

I know.

[KT]

I don't know why I always thought that I would. It wasn't something I strived to do as an artist, you know? You never. Everyone calls it a starving artist, but I never did. I never did. I always thought, wow, I could do what I love and really be very successful and good at it. So I was.

[Susie Orman]

Okay. Not me, but. All right. I never in a million years thought.

[KT]

You never thought you'd be anything more than a waitress.

[Susie Orman]

That's right.

[KT]

Right.

[Susie Orman]

That's right. So it's right.

[KT]

So you really lucked out.

[Susie Orman]

I did, didn't I? Anyway, what you need to know, Renee, is that why it's true. Sipic covers $500,000 per customer. And I believe it's a limit of $250,000 for cash. Also, that's held in your account. All the brokerage firms have what's called excess SIPIC insurance. And I'll just talk about Schwab for right now because a lot of you have accounts at Schwab. Schwab. It's. Excess insurance is purchased from the Lloyds of London. And they have an additional coverage that provides protection for securities and cash. KT up to an aggregate of $600 million. So for everybody, if you have an account at Schwab. In the unlikely event that the firm goes broke, it will cover your money. But if you have money that you invested and the money has gone down in value. It does not cover you for market losses. You just have to know that. Okay? So there you go. All right. KT next.

[KT]

So from Judith. Hi, ladies. Can you explain how I determine if capital gains applies when selling a stock? If I keep value cost averaging to a position. We all learned about that last Sunday. I have an account with Fidelity, and if I sell, it just asks a dollar amount. Not which shares to sell by date. I understand. I don't want to sell the shares I bought within a year to avoid ordinary income. Thank you so much. So what should Judy do?

[Susie Orman]

I'm so tempted to say kt. When? Like one of the questions from last Sunday. When is it best that lump sum investing performs better for you? When a stock does what?

[KT]

When it rises? When it's on the rise?

[Susie Orman]

That's my girl.

[KT]

Yeah, I learned all that, everybody.

[Susie Orman]

So, Judy, here's what you need to know. Since your account is at Fidelity. I happen to know that by default, Fidelity, when you put in an order and it asks for a dollar amount, it defaults to a FIFO method.

[KT]

What's that?

[Susie Orman]

I knew you were going to say that.

[KT]

No, what is that method?

[Susie Orman]

Fifo.

[KT]

Fifo. Sounds like somebody's dog. What is it?

[Susie Orman]

It is, right? FIFO means kt, first in and first out. Out. So the oldest shares, which were the first ones you bought, are the first ones to be sold. So Fidelity automatically does that for you, and it's just that simple.

[KT]

So she was worried about that.

[Susie Orman]

So you don't have to be worried about that. Because when you put in a dollar amount and that's all it's asking you for, at Fidelity, they're going to sell your oldest shares first. Okay, next.

[KT]

All right, this is from Ray. Dear KT and Susie, quick question. I hope it's quick. I just realized we've been charged what's called a record keeping fee for my husband's 401k. It's a non Roth. This account has roughly $360,000. Ready, Susie. This really makes me mad. And the fee was $152 for this month. $1,200 total last year is this high. They shouldn't even have to pay it. Right?

[Susie Orman]

Well, the truth of the matter. What's happening here, KT, if it was 1,200 totally last year and now it's, you know, $150 a month this year. So eight. That's eight.

[KT]

That's crazy. So wait, that's making her really mad. Everybody. So tell Ray what's high.

[Susie Orman]

It's absolutely high.

[KT]

How does Ray avoid that?

[Susie Orman]

So you can't avoid it if you're going to participate in the 401k. All right, now that is like a 0.51% fee. That's a lot. It's a lot. You know, usually it's 45 to 80. But that's why you might just want to contribute up to the point of the match in the 401k and then go and open up a Roth IRA and contribute the rest there or whatever it may be. However, what your husband should do is go and ask his employer if they allow partial distributions. What does that mean? Many 401ks allow you to take up to either 50% of the value that's in there, sometimes only $50,000, and do a rollover with it if you want, into an IRA rollover. All right. If you were to do that, you would bring down the balance of the account that is in there. And therefore that fee of about half a percent. Okay. Is now being charged on less money because it's out of there. And so that's what I would do if I were you. Okay. All right.

[KT]

It's horrible. They charge that much.

[Susie Orman]

Yeah. It's funny, the very last thing that Ray says is that there's no way to roll over this money until he quits his job. Correct. Ask if the company allows a partial distribution.

[KT]

Okay. I have one more question. I really like this one. It's from Lori because I know we're over. So ready? This is a short question I hear when it comes to the financial health of our. We look at the ten year Treasury. Susie, could you please explain this? But I want you to explain it to Lori because she also said she's been an avid fan of the podcast, learning so much and becoming more of an investor every day. Congratulations. Yeah, good for you, Lori. So answer her question and then we'll give it a wrap. But I want her to have her question answered.

[Susie Orman]

Yeah. A lot is dependent on the 10 year Treasury. It influences mortgages. You've heard me say that before. Corporate bond, all kinds of things. Borrowing costs, debt, everything raises the interest rates on credit cards. So our economy is influenced by are you buying a house? Are you not? Are corporations borrowing money so that they can grow more? All those things matter. Also, one of the main indicators of are we a healthy economy or are we in a recessionary economy? That's to come is something called the inverted yield curve. And we talked about this a lot. And this is where the two year treasury rate is compared to the ten year treasury rate. And if the two year rate is higher than the ten year rate, then that is a strong predictor that a recession is coming, which is the economy. So people watch the 10 year for all of those reasons. Right. So when rates go up, remember, borrowing becomes more expensive and then that slows down growth and bonds become more attractive, which could affect the stock market as well. But that is why Everybody watches the 10 year. Because it's involved in so many of those indications. All right. So you ready for your quizzy?

[KT]

No. You gave me a quizzy already.

[Susie Orman]

What was your quizzy?

[KT]

You gave me one.

[Susie Orman]

Did you get it right?

[KT]

No, I didn't. Want to. Give me one and see if I get it right?

[Susie Orman]

No. We'll see. If you feel that way. I'll save this one. Do you want me to save it?

[KT]

Yeah, save it because.

[Susie Orman]

Are you done?

[KT]

Yeah. It's Valentine's day tomorrow. I don't want a quizzy.

[Susie Orman]

Oh, that's so sweet. Because you don't want me to go. I know. Here's your quizzy. Right. How much does Susie love you?

[KT]

More than all the money in the world.

[Susie Orman]

Ding, ding, ding, ding, ding, ding, ding. Although that's not how I would have answered the question.

[KT]

How would you answer?

[Susie Orman]

More than all the molecules and atoms in the world.

[KT]

Yeah, but this is a money show.

[Susie Orman]

How unromantic.

[KT]

Just not serious. Not a science show. All right, let's see how unromantic I am tomorrow, everybody.

[Susie Orman]

Do you have something planned?

[KT]

Yes.

[Susie Orman]

You do?

[KT]

Yes.

[Susie Orman]

Really?

[KT]

Yes. You'll have to wait and see.

[Susie Orman]

Do I?

[KT]

No.

[Susie Orman]

How do you know?

[KT]

Because you just never do.

[Susie Orman]

I write you the most exquisite.

[KT]

Oh, that's different. But that's not something planned, like something we're gonna do anyway. Tomorrow's Valentine's day. Everybody's a Valentin.

[Susie Orman]

And there's only one thing that we want you to remember, and it's this.

[KT]

People first, then money, then things.

[Susie Orman]

Now you stay safe. See you soon.

[KT]

Bye.

[Susie Orman]

Bye.

[Unknown]

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.

[Susie Orman]

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 M Y A L L I A N T dot com, and look into opening an ultimate opportunity savings account. Put in at least $100 a month every sing 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.

[Unknown]

Neither Susie 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 expense 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.