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The Personal Finance Podcast
Retirement Account Loans, Strategies for Newlyweds, Accounts for Kids and More!- Rapid Fire Money Q&A
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In this episode of the Personal Finance Podcast, we're going to talk about retirement account loans, strategies for newlyweds, accounts for kids and more on this rapid fire Money Q&A.
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This episode of the Personal Finance Podcast. Retirement Account Loans, strategies for newlyweds and accounts for kids and more on this Rapid Fire Money Q and A What's up everybody and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of MasterMoney Co and today on the Personal Finance Podcast we are going to be doing a Rapid Fire Money Q and A. If you guys have any questions, make sure you join the Master Money newsletter by going to MasterMoney Co newsletter and you can ask your question there on any of those newsletters that come out every single week. And don't forget to follow us on Spotify Apple Podcasts, YouTube, or your favorite podcast player. And if you're getting value out of the show, consider leaving a five star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Can I thank you guys enough for leaving those five star ratings and reviews? Now today we're going to be diving into a bunch of different questions that you sent over for a Rapid Fire Money Q and A. Now when we do these Rapid Fire Money Q&As, we try to give you a pretty quick answer on most of these questions that come across. And this is a way for us to be able to answer a ton of your different questions all jammed into one episode. So really excited to dive into this. Without further ado, let's get into it. All right, the first one is Should I take a loan from my 403B to pay off credit card debt? Now the logic behind this is sound. Thinking through this process and trying to find a way to get that high interest debt paid down is really, really important. But taking a loan from your retirement has a ton of different cons and there's other options I'm going to give you here. One of the cons is the repayment risk. So if you leave your job either voluntarily or you get fired involuntarily, the loan becomes due immediately or within a short period of time, typically like 60 to 90 days. And if you can't repay the loan, it'll be treated as an early withdrawal and you'll face taxes on the amount plus a 10% withdrawal penalty. So it's really important to make sure that if you even are considering this option that you understand some of that risk and the repayment risk is one of the biggest ones. The second one is obviously opportunity costs. That money can't grow over time. But we want you to prioritize paying off debt before some of those opportunity costs. But the third big thing is you could face something like double taxation, meaning the low repayments are made with after tax dollars, but you eventually withdraw the funds in retirement, you'll pay taxes on that money again resulting in double taxation on that loan amount. And then you also want to think through the long term financial impact of and how this is going to impact you. Instead though, I would use an alternative and there's a bunch of different alternatives out there. You can do something like a debt consolidation loan, which would allow you to possibly have a personal loan or debt consolidation loan that can help you combine your credit card debt at a much lower interest rate. But really what I like is those balance Transfer cards. If you have enough income coming in and extra money left over to be able to pay 0% introductory APR for 18 months or something like that, try to find one with the longest time horizon that you can utilize. That way you can roll the funds over to a 0% APR card and have 18 months to pay that off. And I want you to prioritize highly paying that off, where you're going to get that done in full, in whatever time that balance transfer card has. So if you're going to do that balance transfer, make sure you're going to pay that whole thing off in full. And then lastly, I would cut expenses, try to increase my income to do everything I can to pay off that credit card. This is a pants on fire emergency. If you have credit card debt and it is really, really important that you make sure that you pay off that credit card debt. Now if you think you're going to be at that company for a long time, there are no cuts, you're in something like a recession proof industry, then maybe it is something you consider, but for me specifically, it can be something that it does carry high risk. Now the pros to taking a loan out or the lower interest rates, you don't have a credit check. But outside of that, you know, making sure that you understand some of those risks that are in play are really, really important. Before you go do a 403B loan, what are some of the best strategies for newly married couples setting up joint accounts? So this is a great, great question and I think is really important for a lot of people to think through. So number one is obviously to always have open and honest communication about some of this stuff. Transparency is key and discussing financial habits and goals is going to be one of the most important things as you start to set these up because you have to have clear expectations of how this is going to work going forward. Now my wife and I, we basically have fully joint accounts, meaning everything is combined no matter what we believe. It was our firm belief at the beginning of our marriage that we wanted to make sure that we combined our money. Now if something else works for you, more power to you. But that is my firm belief is kind of combining accounts. It is really, really important. And so there's a couple of ways to do that. You could do fully joint accounts, some people do like a hybrid approach and then some people do separate accounts. I am all for the fully joined accounts and I combine everything and merge my finances that way. Now when it comes to this kind of stuff and you have these fully Joint accounts. You can use tools to kind of make sure that you both are on the same page and you are on track for your financial goals. Monarch Money is by far one of the best tools if you're married because you have clarity and control and you guys can put together a ton of different things. It actually has built in collaboration. It gives you both a monthly email report of what your finances are and you can have shared goals inside of Monarch Money. Monarch Money is by far one of the best tools for couples and they're also a sponsor of this show. But I just love it, so I use it and I love it so much for that. So if you go to mark money.compfp you actually get to try it for 30 days. I would highly recommend trying that for 30 days because it is one of those things that is great for couples when you're discussing goals and budgeting and you have those shared dashboards, which I think is really, really cool. And the next thing I would do is set up a joint checking account. Now where you do this checking account is up to you. If you want to go the closest bank to your proximity. That's typically kind of what I do. So for me, you know, the closest bank to me is Chase. So just checking, I kind of have that set up at Chase. And all my checking account is, is a pass through to go to other places. And then what I would do is then set up the automation so I would have a joint high yield savings account set up for your emergency fund and other savings goals. And then you have your retirement accounts. Now your retirement accounts and your investment accounts can be separate. So you can have your retirement accounts where you each have a Roth IRA or you each have your 401ks or whatever else you have available to you. Those can be separate. No worries there. A brokerage account, you can have a combined one because there's no income limits. There's no limits to how much you can put into a brokerage account. So we just combine ours when we put those together and that makes it very, very simple to figure out how much you're going to do there. And then you figure out how much you are going to share the expenses. Now this is the part where a lot of people are like, when they have separate accounts, they're like, oh, I'm going to do 40% of the mortgage and you're going to do 60% or I'm going to do 30% of eating out and you're going to do 70%. This is where it gets super confusing. If you have a fully joint account, it just comes out of the checking account. Whatever you are doing at that point in time just all comes out of the checking account. It makes it super, super easy where you're not doing a bunch of math equations on who's paying enough. Couples that venmo each other. I think that's the craziest thing in the world. And so I think this is really, really important to think through this process of how you're going to do this. Guys, I'm telling you, it is so much easier just to combine your finances. But if you want to do it the complicated way, more power to you. I'm not saying that's the wrong way to do it because a lot of people get really mad at me when I say this. But I'm just telling you how much easier it is. I literally have zero stress about who's pay, paying for whatever because it's always just combined income in one account. And then what I would do is set up all these automations. So make sure you automate your money, automate your savings, automate your investing and automate anywhere else you need to automate your bills, all that kind of stuff. So it's just all paid off at once. That's a really, really important thing to do. And then when you create that budget or that spending plan, do it together. Start off together with your goals, go through your goals, make sure you both are on the same page. And then you usually have one point person who's kind of managing the budget and the finances and that point person can over from there. And then every month you just meet and kind of talk through your personal finances. It takes, you know, five, 10 minutes to meet and kind of look at some of this stuff. You can do it. When Monarch Money sends that email every month, there's a lot of cool things that you can do there. Now one big thing is when you do get married and you have these joint accounts and you have this joint budget as well, what I like to do is create blow funds. Now blow funds are basically money that I allocate towards each of us to just blow on whatever we want. There's no questions asked, there's no hey, why did you spend money on this? It's just money that if we want to spend money on whatever the heck we want in life, we can go spend money on it. If your boy wants to buy himself a brand new sweet driver so he could stripe it down the fairway, when really all I do is just hit into the water, but he Dreams about striping it down the fairway, then I can go ahead and do that. Or if you want to go out and buy, you know, I don't know, whatever you want to buy, the blow fund is there. And that really helped us early on, especially when we didn't have a lot of money. We would use that blow fund where you can just, hey, no questions asked. There's nothing here. Each of us gets our own, and my wife and I would have our own also. You want to talk about debt? If you have debt, maybe it's student loan debt, maybe you have other debts. Make sure you talk about that and how that's going to get paid off in a repayment plan. Again, if it's combined finances, you don't really have to worry about that. The money just comes out of the accounts when it needs to. And then designating those financial roles, who's going to be in charge of the budgeting and paying the bills and doing all this stuff, who's going to be in charge of making sure the investment accounts are funded and they're going in the right places, all that kind of stuff. Assign financial roles. It might be one person, it might be one person does parts of this. And so just make sure you understand that part and then just establish some of those long term financial plans of what you want to do. So things like major life events, maybe you want to buy a house, maybe you want to start a family, maybe what are you going to do in career shifts? Just make sure you're kind of talking through all that stuff. I know this is more than just setting up those joint accounts, but this is just kind of some of the quick answers that I have for setting that up. So again, if you want to set up the accounts, I would set up a joint brokerage account, I would set up a joint checking account, a joint high yield savings account. If you want an extra savings account for a little buffer at your brick and mortar bank, then you can go ahead and do that. And then outside of that, you can have separate retirement accounts if you want to, because typically you can max out separate retirement accounts. So that's a lot of times a better strategy because you can get 14 grand into retirement accounts, for example, if you're maxing out a Roth IRA instead of just seven. And so I would have separate retirement accounts there for those types of things so that you can get higher max out limits. And so that's how I would think about that process. But if you have any other questions than that, please let me know what is the difference between a Simple ira and a 401k through a job. So a simple IRA is great for folks who have small businesses because it's usually Companies that have 100 or less people are going to sign up for a Simple IRA and offer those to their employees. I actually just went through this with my mother and father in law, own a construction company and they were trying to figure out like a retirement plan for them that they could also offer to their employees. And this Simple IRA came up as probably the best option for their specific scenario. Now you can get a little less than a 401k into a simple IRA per year and at the time recording this, it's $16,000 that you can get into a simple IRA. So if you are on the other side and you have the option between a 401k and a simple IRA, I'd go 401k only because they have those higher contribution limits and they're more flexible. If you get like an employer match or things like that, then I would go 401k. And it also usually has more benefits in a 401k if you're on the other side of the coin. But if you're a company trying to figure out plan benefits, a Simple IRA can be a great option for you because it is something that works similar to a 401k or an IRA but does have those lower income limits and it's usually for smaller companies. So that's the difference between the two. If you are trying to decide the 401k has the higher contribution limits, it's more flexible and usually has more robust retirement benefits. But if you're a smaller company, a Simple IRA is great. And if you're trying to decide between the two, if you're an employee, I would go 401k personally. What is the best way to buy a house before selling your current one? If you need equity. Alright, so this is a great question and a lot of people struggle with this. Now I'm going to try to keep this answer brief, but it is one that might take a longer answer. Let's talk through this for a second. So a lot of people, when you are selling your house, you put your house in the market, you're trying to figure out, hey, if this house doesn't sell, I also need to buy a house and how do I kind of juggle this situation? It is actually a very difficult situation to juggle. I've done it before and it is one of the things that I think is kind of frustrating for a Lot of people. There's a couple of things that you can do and I don't ever love you taking on more debt, but there are a few ways to do it with debt and there's a few ways that you can do it in the contract. Now I'm going to show you my number one way is to make sure that when offers come in, you are going to make them contingent on something. So let's say, for example, you could do this two ways. Either when offers come in on your home, you're going to make them contingent on you are going to sell this house. Once you are able to find a new house, a lot of times that's hard to kind of sell a buyer on because they're trying to buy your house. So you can reverse this also and you can start to go out and look for homes and you can put offers in and you could say, hey, this offer is contingent on me selling my house. And they may want to look at the house, they may want more information, but that is one option that you could do. That is my number one option if you are looking to buy a house is to try to put in contingent offers on you selling your house so you don't have to worry about all this other stuff that I'm about to talk about here. But if that's not an option, and sometimes that's not an option, there are some things you can do. There's something like a heloc, for example. You can pull equity from your current house to bridge that gap between you putting a down payment on the new house and selling your house. So you can have that HELOC available to kind of help bridge that gap if you have equity in your house. And the pros for this are it's flexible, you have interest only payments and you can have interest only payments during the draw period and you can use as needed. A second option is a bridge loan. So if you've never heard of a bridge loan, a bridge loan is a short term loan that helps bridge the gap between buying a new home and selling your current home. So this is a product that was invented because of this exact scenario and allows you to use the equity in your current home as a down payment on the new one. And then once your current home sells, you can just pay off the loan. The risks here are you have higher interest rates, you'll need to qualify for both the new mortgage and the bridge loan. And it makes it more challenging, but it offers quick access to cash. And the other risk is if your home for Some reason, or the market takes a shift and your home doesn't sell for what you thought it would sell for, then you also have that risk there. And so, which is why I like the contingent offer thing the most. Here's another creative option though, is you can do what is called a rent back agreement. So another option is you sell your current home, but negotiate a rent back agreement allowing you to stay in your current home for a period of time. So usually this is like 60 to 90 days while you buy your new home. And this frees up your equity from the sale and gives you time to purchase a new home without taking a loan. So this would be option two for me is a rent back agreement. And that's going to allow you to rent back your home for like 90 days. You pay the buyer rent whatever the predetermined amount is, you can take a price off a loan for that predetermined rent or whatever else you want to do, and then you can go and find your next house. The con is you have a time limit to find your new home and there may be costs associated with it and sometimes it might just be easier to go, but it is easier because you don't have to move and do all these other things. Another option is you can rent a apartment short term or a home short term. That's what a lot of people I know who get in this situation do. And that's something that you could do if you have parents or family close by. You can also say, hey, can my family stay in your house for just, you know, a month or two while we are trying to find our new house? As long as it's short term and they have room, then maybe that's another option for you. But really the best strategy depends on, you know, your financial situation, the market conditions and your timeline. Those are the big three things that matter the most here. And so when you are trying to think through this scenario, I would really consider A, can you figure out ways where you have contingent offers? B, can you do a rent back agreement on your current home if you're trying to sell it? And then C, considering some of these other options, maybe a bridge loan or a heloc. If those options are not available, those are some of the ways that I would look at it and see if I could bridge the gap that way. You could also do cash out refinance. There's a couple other things you could do, but I think those are the most logical options is to a, try to figure out a way where you don't have to borrow more money and then B if you have to use some of the equity in your home. But just make sure you're not taking a huge, huge risk in case the market takes some sort of shift. My friend was just a victim of credit card fraud. How can you protect yourself from credit card fraud and be proactive? So there's a bunch of different ways to do this and we've had full episodes on this as well. But I'll kind of run down some of the quick ways that you can do this to protect your finances online. One is obviously monitor your accounts regularly, make sure you have alerts set up, all that kind of stuff. Reviewer statements, most people know that. And using strong passwords is the second one. Now, when it comes to passwords, one thing I want people to note is don't make passwords like a word or something that can kind of easily be figured out with numbers and letters. Instead, make it a whole jumbled up thing. Like companies like 1Password help you do this if you have all your passwords saved up, but make it a very difficult thing to kind of figure out. Next is kind of really be cautious with places that you're shopping on online. There are places that I've seen like in the TikTok shop or on different places like that that actually have fraudulent ads show up where it looks like you could buy something that looks interesting and then all of a sudden you click on it and there's these fraudulent ads that really take you nowhere. So make sure you're watching out for those. Those might be phishing scams that are trying to steal your credit card number. You can also use something called a virtual credit card number. So some banks and credit card companies offer virtual credit card numbers for online pur and these are temporary numbers tied to your account. I actually think that's kind of cool. And there's an extra layer of security there. So if you're unsure about a website, see if you can get a virtual credit card number. Obviously, beware of phishing scams. Don't click on suspicious links. Using a credit card over a debit card is typically good. Even though debit cards have better financial protection now, credit cards are still safer. Watch out for skimming devices. That's a huge one, gas pumps, things like that. So if it doesn't feel right at the gas pump, try to tap as much as you possibly can. That's going to be really, really important. Always try to freeze your credit. Make sure your credit is frozen. You can go to the major credit bureaus and freeze your credit there. A big one is removing your personal information. So if someone does get a piece of your personal information, making sure you get it removed from data brokers online is really, really important. Is one of my biggest things that I do every single year is make sure you remove your personal information online. A service that does this for you and they do this really, really well is del. So what they do is they go to these data brokers and they get your personal information removed from those data brokers. And this saves you hours and hours and hours of your time. Whereas like freezing your credit just takes a couple of minutes. Removing your personal information takes hours and hours of your time. And so I would definitely use a service to do this. And my favorite is Deleteme. If you go to joindelete me.compfp20, you can actually get 20% off delete me. So it's an awesome, awesome service. I highly recommend them. I've been using them for years and they get this stuff removed really quickly. In a couple of days they had like a thousand different websites remove my personal information. And that way if somebody gets a piece of your credit card or they get a piece of your personal information, then they can't find the entire picture. And so it's important to kind of make sure that you get that stuff removed. So that's another one. You can also use mobile wallet for transactions that's a little more secure. You're not swiping stuff all the time. If you're doing physical credit card transactions and if you have a lost or stolen card, make sure you're reporting it and getting rid of it immediately. A lot of people kind of wait around and making sure that you actually get rid of those cards immediately is really, really important. So those are some of my quick tips in a rapid fire fashion. So let me know if you have any questions on that. 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Biggest struggles when it comes to starting.
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Prerequisites before buying a business? All right, so this is a great question if you guys don't know. I bought a business at the end of 2023, and there are a lot of things that I learned throughout that process, and we are now growing that business very quickly. A lot of things have changed since I purchased that business. But I am very bullish on buying businesses. So I think there are some skills that you have to have before you do this. One is financial literacy. You need to understand balance sheets. You need to understand cash flow. Those two things are very, very important to understanding how a business runs. If you don't understand those two things, someone can take advantage of you when you're going through the process of buying a business. Two is you need to understand the industry and you need to understand the competition for businesses that you are buying. So say, for example, you're going to go out and you're going to buy a car wash. The first business I almost bought, what I didn't understand was the competition coming in. So I almost bought a car wash. I was five days away from doing it, and it was months away before they were about to open three of the automatic car washes near me. The competition was about to get really, really intense. The owner knew that and they were trying to sell it, but they did not disclose it to me. And so because of that, I did not understand the competition. Make sure you understand market research, competition and industry. Three is management skills. The thing is, when you take over these businesses, especially if you have employees, you have to have decent management skills. And especially on a takeover, when employees are on edge. So if you are buying a business, they're expecting a ton of different changes, which likely there will be if you're buying that business and you need to have management skills. I bought a business with a lot of employees, and so those skills are really, really important to make sure that you understand how to deal with that. So management skills are really important. Leading teams, operations, that kind of stuff. If you haven't done it yet, then maybe start with businesses that don't have employees, which I like more honestly. But leading teams and operations are really important. Marketing and sales knowledge. How are you going to market your business? How are you going to make sure people understand and know what it is, know where it is, how it works, all those different things, how your business will solve their problem? All of these are really important. And then basic legal understanding is the last one. Things like contracts, compliance, you can hire an attorney for most of that, and I highly recommend that you do. But also understanding what the attorney is telling you is really, really important going forward. And then basic management, operations, systems and processes. So understanding how systems and processes work is really important. A great book on that is Traction. If you've never read Traction, it is one of my favorite books and one that you can start to implement standard operating procedures and have a system in place so that you can start to remove yourself from that business eventually and be able to have it run automatically. So those are the some of the things that I would definitely highly recommend. There are great books out there to get those started. Real world experience is the most important for a lot of this stuff, and unfortunately some of it you can't get until you start to get in the trenches. But I would definitely start to read through and have an understanding of a lot of this stuff before diving into buying a business and obviously how to run the numbers on a business. All that kind of stuff is also very, very important. You need to understand how to do that and what you need to know before buying a business. There are things like making sure you understand how am I going to add value to this business, or how am I going to make sure it continues to run. All really, really important. Now life hack, when you buy a business, make sure you can keep the current owner on for at least a year to kind of get you situated, get your feet wet, understand what's going on, and if they'll stay on for longer and run the business for you, even better. But make sure you understand exactly what's going on and see if you can keep them on for a while. It is really, really important to leverage their expertise. If they want to leave in 30 days, that's a red flag. Make sure they want to stay on. I think that is really, really helpful, Especially if you have employees, customers, all that kind of stuff that are very, very labor intensive. You want to make sure that they stay on. If you buy like a plumbing company or if you buy like an electrical company, you want to make sure that owner stays on for at least a year. And you can pay them a salary or whatever else, but they need to stay on to help you through the process, in the transition. Make everybody know it's going to be okay. Make sure that every system is in place. So that is an easy transition. Employees know that you're not just going to screw them over, basically is another big piece of that. But also so you understand how to run the business. You don't want them leaving too quickly because it is very hard to learn a business in 30, even 60 days. You want them to stay on at least minimum six months. But really a year is really what you want. Should I open a brokerage account in my name or a custodial account for your kids? So this is a great question when I get a lot, because when I talk about this stuff, people always have specific questions on this. Here's the big difference, and this is why I actually opened a brokerage account in my name. And I make my kids the beneficiaries of each one. So each of my. My kids have their own brokerage account. I do the system where I contribute $100 a month, $250 on birthdays and Christmas, and $1,000 when they're born. And when I do that system, it's actually just in a standard brokerage account at Fidelity, and I open it and put them as the beneficiaries. The reason for this is with your own brokerage, you get flexibility if you want to gift that account later on in life. Whereas if you use a custodial account, something like a UTMA or a ugma, it gives your kids control at the age of majority. I want to make sure I can make that final decision because these accounts are going to have a lot of money in them, especially if you're contributing even small amounts of money over time. I want to make sure I can make that final decision. So I do them in brokerage accounts in my name, make them the beneficiaries of those brokerage accounts so that I have more flexibility. That's the entire reason why I do it that way. Now, some people may argue with me, they want different benefits of a UTMA or ugma. They're just less flexible than a taxable brokerage account is for me. And because I'm not as worried about things like tax implications when it comes to my kids accounts because I'm giving them money and so I can put them in things like trusts later on or make different shifts that are going to be very easy to transfer those over. But it's much more complicated to use a UTMA or UGMA if you want to change your mind or anything like that, then you got bigger issues you have to worry about. So I like the standard brokerage account. It's easy, it takes a couple of seconds to open. You make them the beneficiaries, bada bing, bada boom, you're done. Should I save more for a down payment if I'm renting? So if you're planning to buy more, saving more obviously improves your mortgage terms and larger down payments help you avoid pmi. So private mortgage insurance, you can avoid that additional cost. But if buying isn't a priority, focusing on investing or building other savings might be the bigger priority for you than having that down payment savings saved up. So it kind of depends on the situation, what you're thinking about doing. And then it also comes down to a math problem because what you really want to do is, hey, if I can get an FHA loan with 3.5% down and I'm okay with that and I'm okay with the PMI that comes along with it and the additional closing costs and I can afford the mortgage payment, which affording that means 30% or less of your income goes towards housing related costs, then it may make sense to save less for a down payment. It just kind of depends on your financial situation where you are currently. What I would do is use our total cost of ownership calculator. It's free. If you go to MasterMoney Co resources that's going to help you do that calculation so you understand the differences between buying and renting in your area and some of the other implications that come along with that. Where should a college graduate invest Besides a Roth IRA or 401k? So some other options that you have Besides a Roth IRA or 401 or one an HSA, a Health Savings account. If you have a high deductible health plan and this is a way for you to get triple tax benefits, meaning money goes in tax free, it can grow tax free and you can pull the money out tax free as long as you have a qualified medical expense, which is a very long list of things that you can have a qualified medical expense for. If you don't have that qualified medical expense Then it turns into like a traditional ira. So that's one great one. Another one is a taxable brokerage account. Love taxable brokerage accounts. They have a lot of flexibility. You pay a lot less in taxes than your income tax. You only pay tax on the gains. A lot of great benefits to a taxable brokerage account. So that's another great option. Real estate investments are fantastic. If you are interested in investing in real estate, it's not for everybody, but if you are investing in real estate, I like single family, multifamily houses, those types of things. Employee stock purchase plans. If your company offers it, that's another great one if you believe in the company. But for me, I'm picking the other ones first, unless there's some sort of benefit to them, like you get a immediate discount, something like that, that. So those are some other great options and ones that I would definitely consider. All right, the last one is what is the difference between a pension and other retirement accounts? So a pension is something that your employer guarantees pay out based on salary and years of service, meaning it is something that companies will guarantee that they're going to pay you out X amount of dollars for X amount of years after you retire, if you've been with the company for, let's say, 30 years or, you know, whatever. So something like that is really, really interesting. But most places don't offer it anymore, whereas a 401k or an IRA, you contribute and payouts depend on investment performance. So a 401k is your responsibility, a pension is your employer's responsibility. Typically now pensions provide guaranteed income and 401ks and IRAs offer investment control. So there's two different options there, the 401k and IRA. If you want to calculate how much you can withdraw every single year, just use the 4% rule. So you can draw down 4% every single year and adjust for inflation every year thereafter and be able to preserve that wealth. So if you have a million bucks in your 401k, that means you can draw down $40,000 per year and still preserve that account over time. So it's really important to understand those differences. But just thinking of it, the simple way is the pension is your company's responsibility to pay out, and then the 401k is your responsibility to manage and contribute to and grow. That is where the difference lies. Now, 401ks came after companies didn't want to pay pensions anymore, so the 401k came into place. And really, sometimes pensions can bankrupt companies. So I think that's why a lot of them shifted over to 401ks, but it's really important to know the differences for sure. Listen, if you guys have any questions you want your question answered on the personal finance podcast like these ones, join us on the Master Money newsletter. You just go to MasterMoney Co newsletter and you may get your question answered on the show just like these ones. 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