Podcast Episode - Ask KT & Suze Anything: If You Don’t Like It, Don’t Do It

On this Ask KT and Suze Anything, Suze answers questions about annuities, planning for retirement, buying property and so much more.

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Podcast Transcript:

Suze: December 12, 2024. Welcome everybody to the Women and Money podcast as well as everybody smart enough to listen. This is the

KT: Ask KT and Suze, Anything...

Suze: That's right. But KT, here's what I'm gonna ask you. How did you enjoy the time with your sisters? You know, I posted many pictures.

KT: I'm afraid to look. The sisters weekend and we still have one around, we still have one. We have the little one here. She's not leaving till late tonight actually. Um So it was...

Suze: How did that happen by the way?

KT: She just didn't want to go back to Colorado it after talking to her husband, it's so cold there and she's like swimming and in the sun and beautiful. She said, can I stay a little longer? Of course, you can.

Suze: Didn't you think you should maybe say Suze is it ok if I stay?

KT: You love them.

Suze: Actually, it was my idea to begin with. So, you know. All right, but you had a good time,

KT: Really great time. We all did and some exquisite dinners together, didn't we?

Suze: Yeah, maybe I'll post some of those pictures as well. Alright.

KT: Alright. My first question. Is from Sheila and this is a really easy answer for you, Suze.

Suze: Denied.

KT: I'm working, I'm well... ready. I'm working with a financial advisor who is positive about annuities as part of a retirement strategy. I am not, if I am not mistaken, you are not either. What is your position on this, Suze?

Suze: It's surprising that I said denied right off the back, Sheila. Listen to me the first and most important thing isn't what I think isn't even what the financial advisor thinks. But you said in this email that you are not positive about annuities as a part of a retirement strategy, you said it. So if you don't think it, then you must not do it.

Suze: It's really just that simple. So I can't answer this question for you truthfully because it depends on what type of an annuity. I don't know enough about your own financial situation. Are you retiring now? Do you need guaranteed income, whatever? However, it does not even matter.

Suze: You don't like it. So don't you dare do it.

KT: Ok. Next question, Suze is from Megan in keeping with the same topic. Your favorite.

Suze: You thought I was gonna get a lot worse on that one, didn't you?

KT: I thought that you were gonna do a big deny. But ready here comes

Suze: And you were baiting me. You were, you were me up for the rest of this podcast.

KT: Here comes another one.

Suze: So I have a second chance to get really upset.

KT: Here comes another one Suze. My husband and I are very young, 60 year olds. We've been married for three years. We each have two grown children from prior marriages. We're looking at planning for our joint retirement. We have no joint savings. My husband has about $200 left in his 401k.

Suze: Do you think she meant $200 or 200,000? And just didn't put it in?

KT: I think she meant 200,000.

Suze: Doesn't matter...

KT: But she has 2.5 million in mortgage free rental property.

Suze: Are they married?

KT: Yes, they're married for only three years.

KT: I say only because of what, listen to what's coming up. We don't have any other debt. We also live in my pre marriage home, which is also paid and valued at almost a million dollars. We believe we could live off about $120,000 a year.

KT: We're looking for a financial advisor. One of the people we interviewed and liked advised me to sell $2 million net worth of my real estate portfolio and put it all in a money market account specifically with American Fund and spread it out over five funds with 400,000 in each. He showed us a hypothetical that showed if we had invested in the same funds that years ago, they would be worth 13 million. Now, blah, blah, blah, blah, blah. I I say that blah, blah, blah because every financial advisor is gonna show you a hypothetical based on should have, could have, would have in my opinion. Now, she said I want to plan for our retirement and leave a legacy for my children and grandchildren.

Suze: Notice she said "my."

KT: She said she didn't say "ours" she said mine, I appreciate your perspective. So this perspective needs a little bit of between the line thinking

Suze: and you think I know how to do that. Do you?

KT: I can help you... OK, go for it.

Suze: First of all, my dear Megan, you have obviously done incredibly well on your own over these years. I don't know how you accumulated this. If this was your first husband, your second husband or whatever, but you on your own have done so well. Look at this. You have a home that's paid and valued at 900,000 that you had before you got married.

Suze: You have 2.5 million in mortgage free rental properties. How did you do that? Hopefully you did a prenup agreement before you got married, keeping all of these properties separate. So that if anything were to happen between you and your newly wedded husband, three years is newly wedded. I don't care what anybody says. You tell me 30 years, I'll think about it but not three.

Suze: All right. So hopefully you did a prenup. Absolutely protecting all of that. What is interesting is that this advisor wants you to sell $2 million of your real estate? Why, why in this environment would he want you or she want you to sell $2 million of paid for real estate that is generating a lot of income for you and probably continuing to grow. That's number one. You say you wanna plan so that everything is great and you can leave a legacy for your children and your grandchildren. One of the great ways to do that is that if your individual real estate you bought a long time ago, you just keep and on your death, it passes to them via a living revocable trust. They're gonna get a step up in cost basis on all of it and not have to pay any tax.

Suze: Got that girlfriend. If you sell your real estate right now, you're going to have income tax on it. Will you have recaptured tax on it? Have you looked at the tax ramifications of selling these properties? That's number one, number two and Katie, I know you want me to make these short, but when it's this much money involved, I really need to go into detail about something, this suggestion of this person wanting you to put all of this money to begin with in a money market fund and then do what spread it over five different American funds. American funds are mutual funds that have if they're a share funds, which I bet they are, they all have a load on them. 

Suze: I just want to say that I'm suspicious here because there can't be that much difference in all of the American funds. Now, American funds are great funds. I do not like that. They have a load on them. I just want to tell you about their load for anything under $25,000. There's a five and three quarters percent load. Then it goes up in tranches from 25 to 50. 50 to 100. 100 to 250. 250 to 499. If you put $400,000 in these funds, it's gonna be a 2.5% load. So that means with this advisor's suggestion that you are going to pay a commission of 2.5% on each one of these five funds. If you simply had put $500,000 in, there would only be a 2% commission, which still, in my opinion is way too high. 

Suze: Just so, you know, for a million dollars or more, there is no commission. What so ever when you have this amount of money, this amount of money, $2 million shouldn't be going into all mutual funds at $2 million. If you had a great financial advisor, they would be putting you in individual stocks, they would be able to do option strategywith you, all kinds of things. They might diversify with you with some bonds, treasuries, all kinds of things. So, no, I do not think you should be doing that with that advisor. Number one.

Suze: Number two, if you have liked your real estate and it's producing for you in terms of great rental income, I personally would be keeping it. I would be telling you since you are probably going to be moving into your homethat you owned outright, that you better work out something with your husband as to how do you really share those expenses and things like that? But I am just wishing and praying and hoping that all of your individual assets that you entered this relationship with are in just your name and you never ever, ever put them in joint name with your husband ever. What KT?

KT: I want you to tell everyone listening about this hypothetical 30 year model. Can you please set everyone straight that any model that you go back half of your lifetime is gonna be significantly different? Can, can you tell people to just be aware of...

Suze: Just, you know, it doesn't matter what happened over the past, what matters is what is happening right now.

Suze: And real estate today is very, very different than real estate was years ago. Your property taxes on that real estate is lower than if you just bought that real estate today. There's a reason that you invested in real estate, that means you are comfortable with it. You like it, it's providing for you right now. There is no way of really knowing what's gonna happen with the stock market. What's gonna go on. It doesn't matter about 30 years ago, what matters is right here. And right now if it's a good investment or not, and with this kind of money, there is no reason in a million years. 

Suze: If you did do that, that you would put it in my opinion, in exchange traded funds or mutual funds, you would find a financial advisor who managed the money themselves and didn't get an expense ratio because why it's in a mutual fund. It just, no, I don't like this person. Don't do it.

KT: Don't do it, don't do it.

KT: Next. Anne Marie says, hi ladies. I'm 69 and just found out I'm named beneficiary on 100 and $50,000 Roth from my ex. Well, wait, we've been divorced 30 years and it's all he has. It should go to our 40 year old daughter. How do I get it to her with the least tax impact for either of us?

KT: Thank you for all you do. How does she do that?

Suze: Given the fact that your ex was smart enough to have it all in a Roth. It doesn't really matter upon his death. All $150,000 will come to you. You can take it out tax free. Give it to your daughter if you want or talk to your ex. Obviously, if he's leaving it to you and just say to him, can you please just change it from me to the 40 year old daughter. Just that simple. Either way there's no tax impact whatsoever as a beneficiary of a Roth retirement account. All right.

KT: So I, I have one more financial planner question here. They kind of came in in a big bunch, ready?

Suze: Is this one going to aggravate me?

KT: Yes. Yeah, this is from Valerie. Hi, Suze and KT.

Suze: Are you all noticing a trend here?

KT: Wait, wait, wait, a financial planner had me close my CD. Ready Suze? Put the money in my checking account for ease of transfer to a Roth IRA that he opened for me. It's been a month. The money is still sitting in my checking account earning nothing.

KT: Now she said I don't know how to fund my IRA. So I'm coming to you, Suze for advice. Should I hire another financial planner or do this on my own? The thought of making a mistake with this 50,000 dollars, Suze, sitting in a checking account paralyzes me. Then here's what I just want to read to all of you. What she's got. I have the Ultimate Opportunity Savings Account. I have 400,000 in a Roth 401k. I have 10,000 series I bonds and $100,000 CD which will mature next month and 12 months of expenses saved.

Suze: Does she give us her income level? Like is she even qualified to do a contributory Roth IRA?

KT: No, but here this will give us a hint of when she's retiring in her age. I live very much below my means and save everything I can for a 2027 retirement. So she's asking you for some guidance, but it sounds like she has done everything. But most importantly...

Suze: This person...

KT: She's, if you look at her list, why I read the shopping list of what she's got. Everything in this list is what Suze Orman has advised over the past two years. Everything.

Suze: So if you have, Valerie, I don't know if you have or not, but listen to me over all of that time. Are you kidding me? First of all, you can't transfer $50,000 from a CD into a Roth IRA unless the CD was in a Roth IRA. But obviously it's not why he had, you put it all in a checking account. Why didn't he have you at least do it in a money market account so that you could make 4% or 5% on it? Are you crazy? Number one, that is his first stupid mistake that he himself made then to have it sit there when he says he's gonna open up a Roth for you, which he did but not transfer at $8000 right away into that Roth another 8000 at the beginning of next year and have invested it for you. What's that about? So, no, I won't be doing anything that this advisor told me. Number one.

Suze: Number two, you can do this on your own. Do you hear me?

Suze: I would be taking this money and I would be opening an account at either Schwab or Fidelity. I would be putting it into their government money market funds, either one. And then I would be opening on my own. A Roth IRA because the most you can contribute while you're working is $8000 this year, $8000 next year.

Suze: So now you have $16,000 that you can invest within your Roth IRA. But the other $34,000 is at least sitting in a money market account making more interest and I would absolutely do it on my own. You do not need a financial advisor to be investing $16,000 for you. Do you hear me, Valerie?

Suze: Ugh...

KT: Wait, Valerie, you have about two weeks to do what Suze just said.

Suze: So do it now, girlfriend, which is why, by the way, every one of you when you write in, you don't know if I'm gonna answer your question or not. You don't know if we go way back in time and pick a question from back then and answer it. So it's really important that if you want your question answered that you at least listen to see if we're answering it. Go on KT.

KT: Ok, next question is from Susan. Hi. Fun girls. Yeah. Hi, fun...

Suze: Do know that we spend how many minutes a day laughing would you say laughing?

KT: Too many hours

Suze: Colo comes in first thing in the morning. Seriously, I'm still in bed. Right. KT has already brought in coffee for all three of us and now we're having serious meetings, meetings. And do you know what this morning's meeting was? It was about? Tell Suze, what about Caitlin Clark?

KT: Oh,

Suze: These are our conversations in the morning.

KT: Colo reports. First of all, he's an incredible sport aficionado.

Suze: He's a savant.

KT: Oh, he is, his mind has a memory beyond the beyond. His big report this morning, everyone was that we had to know that Caitlin Clark has been named athlete of the year by Time.

Suze: And then he wanted to make sure we knew that they're all flying now on a private plane.

KT: That because of her. And then he said for KT, did you know Suze, for 23 years the women's be basketball teams have been trying to get private flights to send the team around when they do their, I guess, you know, their tournament. And he said, um, and he said they were flying on, you know, all these little planes and commercial And he goes on and on and the whole conversation is about sports and all we can do is laugh. All right. Go on.

KT: But this question is good. Hi, fun girls and Colo. Quick question. I have a Roth and a newly opened brokerage account. I've been buying stocks and index funds in the Roth, but only BND in the brokerage account.

Suze: That's the bond fund.

KT: Right. I'd like to add some of your dividend stock picks but unsure which account they should go in.

Suze: It's difficult for me, Susan to answer this question. Only because I don't know the goal of your money really. That and your income tax situation, I would be buying probably stocks, index funds that maybe I would keep for a long term of growth. And if you're buying the bond fund, I would probably do it in my brokerage account. All right, go on.

KT: Ok. Another one. This is from Carol. She said, hello, KT and Suze. Many thanks for sharing your joie de vivre and financial guidance over these many years.

Suze: Do a French accent for me.

KT: Joie de vivre.

Suze: That's right. Tres bien, mi amour,

KT: she said

Suze: I just did Spanish for you. All right. I combined the two. Mon amore.

KT: I have a quick question about my living revocable trust. I do not want my successor trustee to have all the powers granted in the document. I want my successor trustee to simply liquidate my holdings and make distributions. And then she's asking, can I omit the long list of authorizations and replace it with instructions of what I wish to do if I move to another state? Do I need to restate for that reason?

Suze: Yeah, if you move to another state, you don't have to restate anything truthfully. However, if you wanna be that specific, you need to go then and see a trust lawyer when you're using a trust program and it's a boilerplate such as the must have. Documents happens to be. 

Suze: No, you cannot change any part of those documents because it has to be clear that you are protected and sometimes you can change something that actually hurts you rather than is there to help you. So my advice would be go and see a trust lawyer have a trust drawn up exactly what you want the successor trustee to be able to do or not do. However, a successor trustee is somebody that once you are dead or you're incapacitated really does have to carry out all of your wishes according to the trust, if you don't trust that person to do exactly that you don't have the right successor trustee. OK.

KT: Next question, Suze is from Anne. She said, hello, my husband and I are purchasing a condo for our daughter in San Diego. We wanted to put the condo in her name as well as ours. All of our properties have been in our trust. What do you suggest for this property? Put it in the trust with her first line over the two other siblings, joint tenants, community property or community property with right of survivorship.

Suze: Ding, ding, ding, ding pop quizzy.

KT: Oh oh oh, so put it in the trust with her - I would do

Suze: Wait. Everybody. How would you answer this question? Mommy and daddy want to leave the property...

KT: Well, they want to buy this for their.

Suze: They want to buy a condo just for their daughter in San Diego right now. They want to put the condo in her name as well as theirs. Ok. All of our properties have been in trust. What do you suggest for this property?

Suze: Would you everybody, KT, would you put it in trust with her first line over the two other siblings, joint tenants or community property with right of survivorship. First question with their daughter, can they put it in community property?

KT: I don't know.

Suze: She has the cutest little face.

KT: I don't know.

Suze: The answer to that is no because community property is only between spouses.

KT: See, I didn't know that.

Suze: Well now you do. So you can't do community property with her name on it. I personally would not put her name on it right now. I just wouldn't, I would own it in your name and your husband's name and then I would own it in community property with right of survivorship so that it went to either one of you, but you got a step up in basis on the entire thing. If just one of you dies, then what I would do is at that point, you could do a transfer on death account that upon the last person's death, meaning whoever survived of the two of you, it goes directly to your daughter. 

Suze: Now, you could do that in trust for her. But if you don't want any complications and you want to avoid probate and everything. You could do it as a transfer on death just with that property.

KT: And with that daughter.

Suze: So, officially we've done your quizzy.

KT: All right.

Suze: So you usually end after your quizzy.

KT: Oh, wait, let me just do one more. Do you want to end?

Suze: Never. Never, never,

Suze: never. Never.

KT: All right. Hi, Suze and KT. We're closing our home next week. Should I pay it off in full or get a mortgage partially and invest that remaining cash? Listen to these numbers, Susie, we're already putting more than 50% down on a $700,000 home. I have additional 300,000 from the sale of our current home that we're not sure to invest or pay full in cash for the new home. We are currently set to get a 15 year mortgage for the 300,000 rate locked at %.25. Seems a little bit high.

Suze: That's actually low in comparison.

KT: But I mean, anyway, my hu listen to this, my husband and I are 52 and 48, done with the kids education expenses, fully paid off college, no student loans, no car loans or any other debt we take home combined roughly 200,000. Personally. So,

Suze: let's so quizzy again. What would you do?

KT: Could I answer this? They're 52 and 48. They're still pretty young.

Suze: What would you tell them?

KT: I wouldn't pay it off in full.

Suze: Great. What would you do?

KT: I would put down the 50% is huge. And if you're saying that 5.25 is pretty good, then they have at least these 300,000 cash as an emergency money and...

Suze: They could pay it off anytime ...they

KT: want any time they want in case they need that money. You never know about the what ifs? That's what I would do.

Suze: Ding Ding Ding!

KT: You're good, KT. You're good KT. I never get it right.

Suze: But I just have to tell you a little funny story, which is we're trying to do a translation of the podcast into Spanish. OK. And, and so I heard the first version last night and the one that got translated with artificial intelligence, even though they weren't able to capture our sweet little voices, although you have a much sweeter voice than I do. But anyway, is, was an Ask KT and Suze Anything. KT, you don't even know this. So I listened to it last night and I was listening to the quizzy part and you hear it go ding, ding, ding, ding, ding, ding, like these, like these, like these noises that we make and I'm trying to imitate it. It was so funny. I can't tell you.

KT: We should let colo listen to it

Suze: because I don't know if it's, if it's accurate.

KT: It's funny because we, we were hoping we could translate... if Susie and I spoke fluent Spanish, we would be able to do this and we so want to,

Suze: It's such a shame we don't...

KT: We really, really want to take care of our Hispanic community is so important. Right?

Suze: But anyway, I just thought that was kind of funny. Ding, ding, ding, ding, ding, ding. You should hear, I have to play it for you. It's actually hysterical. All right. That brings us to the end of another Ask KT and Suze Anything. If you want, send in your question to ask Suze podcast at gmail.com and if KT picks it, we will answer it on the podcast. But until Sunday for Suze School, there's really only one thing that we want you to remember when it comes to your money. And what is it, KT?

KT: People first, then money, then things.

Suze: And if you do that, stay healthy, stay strong and stand in your truth, we promise you you will be unstoppable.