Do I Need Permanent Life Insurance

it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome welcome
it’s Jill on money we are broadcasting live from the Capital One Bank Studios
here in New York City and it is finally spring and we are done with April good
riddens he’s awfully rainy goodbye marks with whacking it away you know what this
is now let’s celebrate may not form a day not for Mother’s Day but it is marks
last month of freedom before his baby will be born the first Jill on money
baby he’s crying but he’s excited he had a he
had they just went to their first class about basically how to change a diaper
cuz I guess neither well mark don’t you know how to drug change a diaper from
the nieces and nephews no okay well and she’s an only child so she’s got no kids
that she had to you know this is gonna be very interesting
can’t wait till aunt Jill and aunt Jackie swooped in we can change diapers
like nobody’s business and I’m good at it
I was bad the first couple of times but then it’s it’s very good for people who
are a neat and organized very good if you’ve got a financial question or you
want to wish mark good luck how about everybody send in their favorite
parenting tips for the first month of life for mark send an email ask Jill at
Jill on do that because that to me is going to be very valuable and
look how hard he’s been working on our behalf so the the bit of advice that you
give mark for month number one of Parenthood I cannot do that because I
have no children I will just judge him for whatever he does alright it
you’d like to get on the program you should also send us an email
do that at ask Jill at Jill on and that is what Sally did she’s calling
from New York Sally welcome to the program Sally D of kids I have a stepson
and he’s he’s older do you know how to change a diaper
you have no do you have any diaper changing advice you have anything for
mark what do you got it’s been so long that I don’t remember he blocked it out
I know right that’s what I say to him millions of people do this
but he wants to do it best he’s very he’s very goal-oriented all right Sally
what can we do for you well I wanted to ask you about some money that I have I
sold my mom’s house after she passed away and I paid her the debts that were
left on her house and her taxes and stuff and I ended up with about thirty
five thousand and I haven’t done anything with it and I know I should be
doing something with it okay sitting it’s in a savings account it’s making
very very little per monsen’s all right give me a little breakdown are you
single or married married and are you contributing to retirement you both
working where are you and like how old are you give me all those things we are
in our late forties we both are working we both contribute to a 401k are you
maxing out your 401ks I’m not sure but it’s probably pretty
close okay all right we’re trying if you’re in I mean you’re in your late
forties you can put nineteen thousand dollars in so if you thought what that
would be one thing to do to just say hey I can bump up my retirement contribution
and then take some of that money and savings and use that if you’re not doing
that but let’s keep going so in addition to this savings you also have another
sort of emergency reserve fund is this a surplus for you the yes yeah it is so we
don’t need that so that’s good and what about any debts anything out there car
loan mortgage what’s happening recently paid
our mortgage we had a home equity that we also recently paid like within the
last year we paid them both Wow and our cars are leased so ok and
nothing coming up in terms of needing some work on your home or anything like
that nothing big no okay and we’re both handy
so we kind of do our own majors well not major but we do our own a lot
of stuff great you’re doing yourselfers perfect now would you feel like you want
this money to be a bit safer or do you feel like oh I could just use this and
not touch it for let’s say 20 years I mean give me give me a sense of what
you’re thinking about you want to keep it safe just in case maybe a little of
each okay fair enough where do you hold your retirement accounts or do you have
any investment accounts beside your retirement accounts no we don’t we’re
just the 401k where’s your 401k what company like fidelity there you know
like with the investment part of it like where is the investments where the
investments held I don’t think I can answer there okay no problem
well here’s the thing to do you get $35,000 you might say to yourself I
don’t want to make this completely at risk so one thing to do is to go and
look for a longer-term CD maybe a two or three-year CD you can find great CD
rates at deposit accounts calm alright and then you can say alright well maybe
I’d put ten fifteen thousand dollars into CDs and you don’t have to be so
long-term but you know you’ll get instead of getting pennies on the dollar
you’ll you’ll get a little bit more you know you probably get three percent or
so the other part of it the at-risk part you would open up a general investment
account and you can do that in lots of different places so you can the reason I
ask you could do it say at fidelity or you could do it at van
you could do it at Eero price so you could do it at Charles Schwab there’s
all sorts of places you can do this the point that is that if you had let’s say
twenty thousand dollars to invest you might go to one of these companies and
you’d put half of that twenty thousand dollars into a stock index fund and half
of it into a bond index fund and make it really simple like that just boom split
it up so then you know essentially you could have you know say fifteen thousand
dollars in a CD ten thousand dollars in a stock index fund ten thousand dollars
in a bond index fund and it’s really simple the question about where to do it
the only reason I asked you where your 401ks are is that it might be easier to
cut if you’re familiar with one company’s platform it might be easier if
you’re not then you can kind of mess around and see what’s out there but
again it’s very easy to go directly to one of these big mutual fund companies
and really try to just stick to a very simple approach some stock index some
bond index and don’t mess around with it don’t mess around with it when the
market starts moving around and the only reason that you might change this
allocation is if you really needed the money or you thought you needed the
money sooner than you had anticipated so that’s it miss Sally I think that you
guys are in good shape keep saving go find out a little bit more about your
401ks see if you are maxing them out again at nineteen thousand dollars each
and then head on over to the best I would say best – to any fund or
investment company where you can buy cheap index funds that’s it very easy
thank you for calling and if you’ve got a question send us an email ask Jill at
Jill on and if you’d like why don’t you go onto
the website during the break and you can buy our book the dumb thing smart people
do with their money thirteen ways to write your financial wrongs we’ll be
right back welcome back to jail on money where Jill
Schlesinger takes the mystery out of your finances your back it’s Jill on
money if you’ve got a financial question we’d love to hear from you give us a
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corner let’s take a call it is Linda who’s on the line in New Jersey hello
Linda welcome to the program what can I do for
you hi Jill great I just I have some questions about how to invest my money
so I have a significant amount in my employer 401k over probably over about
five hundred thousand or more I do have I raise and other investments with two
other companies Vanguard and their prize I also own a townhouse that I ran out so
I have no mortgage on that and my husband I keep our savings separate so
is your probably a better investor than he is yeah yes
my my income was also much higher from from way back so I’ve been working now
for probably over 25 years we own our own home we still have a mortgage on our
home with a low pretty low interest rate and I also my last parent is now
deceased so I will be getting some money from from my mom’s investment accounts
as a beneficiary so my question is can I ask you one quick question you’re still
working right yes okay so and how old are you 51 how much longer do you think
you’re going to keep working I you know maybe 60 62 I don’t have to work might
be able to go part-time or do something else so I’m not thinking I want to go
into the be in the corporate world every day so I may I may do that mhm and how
much is the so a couple things right now you said that you got more than about a
half a million dollars in 401ks and you got two other IRS what’s the value of
those other two IR rays total assets total in both is probably 350,000 okay
and money any money outside of those retirement accounts 401k IRAs anything
that’s not retirement that’s already been invested no I just have some
surplus money and savings and checking account okay great and inheritance will
be about how much would you guess well some of us tied up in property so that
would come at a later date but probably Security’s gonna say 150 200 thousand oh
wow okay so good chunk of money coming in there
and you say things are separate from your husband just wondering so will
either of you be entitled to a pension no bummer oh well I thought you were
gonna tell me you had like this great pension funds all right yeah they did
away with that it got rolled into a 401k no it’s just too bad but I thought I’d
ask anyway how much do you figure that you guys and I’m going to just I know
you keep your money separately but just in terms of planning if you look at that
you the two of you together how much do you think you spend on a monthly basis
our mortgage is our mortgage is high because our taxes in New Jersey are very
high we pay about 12,000 a year in property tax mm-hmm but what about like
just like your total like you guys make a certain chunk of money you save a
bunch of money what do you figure you’re spending um probably like 4,000 a month
for 4,500 let’s call it 5 just for the heck of it and you will each be entitled
to Social Security down the line right okay husband’s assets just like again
ballpark because if you’re gonna stay together as a married couple chances are
even though you’re managing your money separately I’m just trying to get a
sense of how much money you guys have together to float that $5,000 a month
lifestyle right his assets again some are tied up in property but I’m gonna
say like 300 thousand okay great fantastic and I presume you’re maxing
out your 401k at work yes there’s a six percent match okay great and you’re over
the age of 50 and the only benefit to being over the age of 50 s that you can
do a $6,000 catch-up contribution otherwise it’s all downhill and I’m with
you sister so don’t worry I’m done telling you they’ll enjoy that extra six
thousand you can put in okay so now you got a bunch of money and you know I’m
just looking right now and forgetting about your husband’s money looking ahead
it looks to me like you have about a million dollars when the inheritance
comes and what’s the question here I mean you’re managing your money what is
it that you need from me to help you out with so I
spoken to a couple fund investors financial type advisors non they’re not
the non-fiduciary kind but they couple them have mentioned
IUL indexed universal life because my tax burden will be so high when I go to
withdraw money from these different 401k IRAs and this is a way to kind of offset
that tax burden and you know I’ve heard some things about stay away from IL but
I don’t know someone with my my situation my you know this excess cash
that I want to invest is that a good option and it’s so how much should I put
into it well okay so I’m not a huge fan of a
Nevil i fin surance product and the answer to the question is it’s
complicated and before we get before we let you go Mark’s gonna give you the
name of somebody in New Jersey who is a fee-only financial planner who is a
fiduciary who will help you give you like sort of the the yes or no my
inclination is no and here’s why I mean we’re talking about the extra money you
have the inheritance money and that would be what you might put into the
index universal life but you know what I’m not so sure about that
because that’s not taxable income to you right now so if you were to invest that
inheritance and you were just paying basically capital gains or current
income tax on those investments it’s not the worst thing in the world
but once you put it in the index Universal Life a you lose the liquidity
right you lose the ability to have your hands on that money – there are fees
involved and three the only way to get the money out without taxation is to
borrow the money out and then you actually have to pay an interest rate
yes you pay it to yourself but there’s a it’s complicated my guess is this is a
little overkill I don’t think you need this and my guess is that when you talk
to somebody who is a fee-only advisor someone who cannot collect a commission
and you talk to somebody who is a fiduciary who has to put your best
interest first my guess is that that type of adviser is
going to say thumbs down on index Universal Life but do me a favor Linda
hang on the phone Mark’s gonna pick it up and he’s gonna give you a name maybe
a couple names of some folks that you might want to consider chatting with
about this thank you for calling and if you like Linda are being sold or someone
is proposing a product that seems a little I don’t know a little different
than what you’re used to something that you may want to consider is to put the
brakes on put a little like timeout on this and then try to figure out whether
or not that is in your best interest and you may only know that by going to
somebody who is qualified to help you with that decision so again that is the
the real warning sign which is don’t sign call us send us an email let us
know if we can help you unravel this question so you are listening to Jill on
money and if you have a question just like Linda’s send us an email ask Jill
at Jill on we’ll be right back back to Jill on money where Jill
Schlesinger helps you take the mystery out of your finances your back it’s Jill
on money it is the month of May whoo-hoo may may may Maggie May if you’ve got a
financial question we’d like to hear from you our email address is ask Jill
at Jill on ask Jill at Jill on okay let’s see let’s do these right now
this is from Alan in Virginia who reads the column that appears in the local
Newport News Daily Press and he says I read in here the national debt could
increase by approximately another trillion dollars due in part I
understand to the tax cut recently enacted however I’ve never read or heard
where the trillion of dollars added to the national debt during the early years
of the Obama administration were expended I remember reading about
bailouts to save the financial system I don’t recall ever having a definitive
idea where all the funds were going it’s not a political question a financial one
that’s why I’m asking you the money went to a couple of different things there
was a teeny tiny piece that went to homeowners there was a bigger piece that
went to some infrastructure spending which sort of kind of worked it wasn’t a
hundred percent great and and it wasn’t it ended up being less than a trillion
the problem with the spending in this iteration is that a lot of economists
are concerned that we’ve spent all this money and we spent it actually during a
time when the economy was already doing really well which is not when you want
to start piling on debt david writes that he’s seventy years old
seventy-eight years old oh my god he’s got brain cancer why are you sending me
the sad ones mark his wife is 68 and he said I’ve just started to look into
setting up a conservatorship so that she will be cared for after my passing she’s
got memory issues our net worth is three million dollars about half as our home
half as in a Vanguard account we have an advisor who’s managing our investments
he said he could do the job but when they sent the paperwork there was a line
that said they could set themselves up as beneficiaries I was put off by that
so I think you need to talk to a lawyer David I mean I’m sure that that Vanguard
has lawyers what I would do first and I think that giving your situation for
both of you I would go to an estate attorney and I would get advice from
them absolutely because otherwise it definitely I think
that I just really think it’s it’s important to get that feedback all right
Nelson says they make $24,000 a year in Social Security income they just got a
forty six thousand dollar inheritance how should we handle it I don’t know
what else is going on in your life man maybe if you’ve got some debt pay it
down otherwise keep it really safe if that’s all the money you have in the
world you may want to buy some CDs you may want to keep some money in savings
go to deposit accounts calm you can check out where there’s the best savings
CD checking money market rates Blake writes aunt Jill I want to know if it’s
better to focus on paying off the house or contributing to a 401k also have
questions about staying with my current employer or moving on my employer
currently offers an esop an employee stock option plan I think I know it’s
best he’s maxing out his 401k he’s got some
fixed annuities in the ESOP I know what I wouldn’t pay off the house I don’t
know how old you are but you’re calling me aunt Jill it leads
me to believe that you are potentially an old 4:04 listener
send me more information Blake I got to know more about you but my inclination
is no do not be paying off that house all right here’s a question from someone
who’s retired Bernie he doesn’t have earned income but his wife does so he
wants to make a spousal Roth contribution based on her income I
believe you can do that Bernie and I think that you should be fine doing that
as long as she’s still working someone’s gotta have earned income here’s a great
headline that caught my eye Dougie writes wanna retire right now I’ve been
with the same company for almost 35 years I’m 54 I want to just stay home
all day my pension is getting close to a half a million dollars I’ve got other
assets worth 200 grand I really don’t enjoy my work and being on my feet all
day long is starting to wear on me I used to get IRS estimates of benefits
mail to me oh you’re not talking about IRS Social Security benefits go to and your Social Security benefits but you’re
too young you’re 54 so what about is there something else you can do can we
transition you into something where you’re not on your feet all day 54 is
awfully young Dougie you’re gonna live a long time we got to get you out of what
you’re doing and try to find you something I don’t think you’re gonna be
able to stay home all day I’ll tell you that much tom is considering a job offer
wants to know how to weigh his options the offer would result in more money up
front but my current job provides better long-term benefits pension healthcare
I’d love to get some thoughts about how it should be weighing my money now
versus benefits in the future you know what I think you should do Tom I don’t
know how much money you make and what your situation is this is a great reason
to hire someone who is a fee-only planner who will actually maybe by the
hour work on this with you and it could be a very helpful way for you to get
some insight and how to quantify those offers otherwise we’ll get you on the
air I’d love to I could probably do it with you but I’d love to work it through
based on other stuff going on in your life Jordan listens to the podcast hey
do you guys have the podcast the podcast is available on Apple stitcher radio com
Google Play it’s called Jill and money Jordan says that my husband and I
recently welcomed our son and we’re interested in opening an investment
account for him we would along with his grandparents and great-grandparents have
some money to set aside we’re looking something that we can add to
periodically and we’ll grow more than a traditional savings account I’m aware of
529 plans but my knowledge is limited and I’m not sure if that’s the route I
want this money to be available to use in case he chooses a career path other
than college Oh Jordan you know you can open up a general
investment account but I think you really should at least consider a 529
plan because it’s just such a great deal is your kid really not gonna go to
college it seems like that’s unlikely but maybe
I’m missing something you can always open up just a plain old investment
account do it at a no a no fee or brokerage firm or you can do it at a
that has lots of index funds like a vanguard or tiro price fidelity you know
those are all possibilities but nothing has better enhancements from the tax
point of view than a 529 plan so follow up with us let’s get some more
information and find out what we can do to help you out it’s Jill on money hey
during the break hop onto the website Jill on and go buy my book
gosh darn it the dumb thing smart people do with
their money thirteen ways to write your financial wrongs we’ll be right back do
I invest here should I put my money there Jill Schlesinger can help you back
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on book market well yeah if you’d like to
get on the air with us send an email ask Jill at Jill on and if you
don’t want to come in the air we’ll try to answer your questions as best we can
that is what Marie did her question is about cost basis so Marie writes I’m 80
years old many years ago I invested in Vanguard
index funds and I’ve got about five million dollars in that account it’s
about the majority of my net net worth Vanguard does not have a record of my
cost basis this was years ago before they were required to keep those records
I have been told that I will probably have to pay about a million dollars in
capital gains or I could just leave it to my son and when I die he can take
advantage of the stepped up cost basis I really would like to enjoy
some of this money now how should I start to withdraw it do you have any
thoughts well I mean look you’re entitled to enjoy it if you could simply
give us like a guesstimate like if you said many years ago how many years ago
maybe you could say that if you just like do the best you can come up with
some recollection I bought the these Vanguard funds in make it up 1981 I
don’t know and then claim that as cost basis and sell some of it and pay the
capital gains tax and move on look the IRS cannot actually hold you to
that there is no record so you’re just gonna have to do the best you can and if
you any you really just have to try to sort of guess what year it was figure
out and you can just go back and look at whatever the fund was that you’d like
the sp500 in 1985 what was the end-of-the-year value just to figure out
the middle point of the year and claim it as your cost basis and try to figure
you can actually probably talk to Vanguard and say if I bought this in
this year and you could figure out reinvested dividends really you just
have to do a best estimate the best the best you can do right and then if you
want to spend the money spend the money pay the capital gain sex but do if you
can leave a bunch of money to your kid and yes it’s better if he could take
advantage of the stepped-up basis so maybe sell some and enjoy it
you shouldn’t certainly impoverish your self if you got five billion dollars in
an account that’s insane but absolutely you should be very
focused on trying to use your money make a best faith estimate and go from there
Carl wants to know about the future of investing in the marijuana industry mark
what would you like to and by the way he he says let’s roll I love this guy I
mean it’s gonna be interesting there’s tons of opportunity I just don’t know I
don’t know which is gonna be the surviving company you know they’re gonna
be companies that fall-off on the weights I don’t
know so whatever you put into that little sliver of your portfolio do me a
favor and presume that that is money that will go to zero we will just
disappear sandy saw the story we did about student loans on CBS this morning
and she wrote in what can people do when they are so far in debt in student loans
they can’t buy a house a car or even get married because that would tie the loan
to my husband Noah won’t it wants higher your loan to your husband as long as you
don’t home Engel all of your assets but check this out here are the numbers she
took out $36,000 in the 90s she owes 180 mm now is there any way that are these
federal loans have you checked out the different loan repayment options that’s
first of all what I would do and then I might even start thinking about should
you refinance it that’s a rough one and then here’s the same thing here’s
another one who says same day obviously after the segment aired and 250 grand
and old student loans make and someone who makes less than $30,000 you totally
have to figure out whether or not you qualify for any sort of restructuring of
this in some cases in some states if you do go bankrupt depending on the type of
loan you actually may be able to blow it off but that’s insanity if you don’t
mind me saying oh brother Wesley and his wife basically said that they had
decided to invest in a timeshare major mistake on all fronts licking our wounds
any thoughts how to expedite this process there are some some timeshares
that will buy them back from you and there are some services you’re gonna get
hosed on it let me just be clear about that whatever you put in you’re gonna
just it’s not gonna work you can try to donate weeks to charities
sometimes they do that mark writes he was left some money after his father
died and he says should I put it in my 401k a CD or an IRA thanks for the
advice god no more about you mark you know if if we I gotta know more
about your situation give me a follow up shoot me a follow up
Ellen is 73 no mortgage monthly income sustains her and she said what does she
want to know she wants to know whether to have to get a reverse mortgage
there’s no reason for you to get a reverse mortgage she’s gonna have IRA in
savings I don’t think she’s gonna need a reverse mortgage
she says her monthly income sustains her well but when she starts working not so
sure I gotta hear more from Ellen also hey guys I need more information you got
to come on the show with us we have so many follow-up questions I’m sorry these
are not it takes a lot of time to get to these questions we need more info you’re
listening to Jill on money where we crave information ask Jill at Jill on
money comm we’ll be right back you’re back with Jill on money and if
you’ve got a financial question we’d love to hear from you our email address
is ask Jill at Jill on money comm we’re just working hard toiling away here live
from the Capital One Bank studios and got a really interesting question here
from Fred who loves our show and Fred is 66 years old as is his wife and he says
I’m still working part-time I plan to continue at least until I’m 70 years old
maybe beyond I love this guy already my retirement portfolio is currently at
around two million dollars with my total net worth about 3 million do you think
that we need long-term care insurance I’m getting varying opinions I’m really
confused about what to do I can’t find an underwriter for a regular long-term
care policy so now they’re trying to get me to sign up with a life insurance
policy with an LTC writer now some experts say these are junk like whole
life policies we do have some health issues nothing really major what do you
think thanks Fred so I think let’s start with the easiest start point which is
you’ve got a retirement portfolio that’s 2 million dollars which really puts you
at the I don’t need any long-term care meaning that you could self insure
doesn’t mean that you are off the hook 100% but I think that you’re probably
okay we usually think of a cut-off at around a one and a half to two million
dollars or total net worth as people who can self-insure and be ok
I’m not saying would be pleasant you’d plow through a bunch of money but you
would also have to pay a lot of fees and have a lot to contend with if you were
to buy one of these other policies now I’m not saying they’re junk either
because I think some of these hybrid policies which are essentially permanent
insurance like whole or universal life with some sort of long-term care reg
some of them okay but I just don’t think you’re gonna
need it so I think the easiest thing to do is to say no thank you
keep working build up your net worth and relax and don’t worry about it how about
that okay Fred thanks so much for writing if you’ve got a question we want
to hear from you you can go to jail on that’s our website click on
the contact us button and you will get what you need
there’s a lot of good stuff there too all right when we return more of your
questions we will be right back it’s the weekend and that can only mean
one thing you’re listening to Jill on money the
show that takes the mystery out of your finances here’s your host Jill
Schlesinger alrighty it’s our number two of Jill on money we are broadcasting
live from the policy genius studios policy genius is the easy way to compare
and buy insurance I read some staggering statistic hold on I gotta find this
about insurance these always make me nuts simply because it’s just so it’s
kind of scary so this is life happens which is a research organization for the
life insurance industry and they are out with their annual survey of attitudes
and understandings of insurance you ready
only 57% of American adults are protecting their loved ones with life
insurance with more than two-thirds who recognize the need than those who
actually own it meaning that I know I need it but I don’t have it brother over
a half of the population thinks the cost of a term life insurance policy is over
three times the actual cost head over to policy genius gang if you want to see
the cost of life insurance and term is usually I mean really probably nine and
a half times out of ten you probably only need term life insurance and if you
want to get a good quote on term life insurance go on over to policy genius
who is uh very nicely sponsoring our studio mark heading into hi baby alert
time it’s okay he’s having an anxiety attack a little bit everyday well let
you know when the newest Jill on money family members with us I feel like the
Jill on money family is basically Mark and the mother of his
child me and my girlfriend are two dogs and now your baby so not bad seven not
quite enough for a basketball game but play a little three-on-three with one on
the bench I got a feeling with the size of Mark and his girl we’re not gonna see
a big basketball player just saying all right
tennis he wants tennis we’ll see if you’ve got a financial question hey
maybe it’s about insurance give us a holler the email address is ask Jill at
Jill on ask Jill at Jill on and that’s
what Debra rod did here is the question Jill we owned a property in California
that was in the huge camp fire camp fire fire that destroyed over 12,000
structures and it was declared a national disaster area that was just the
worst oh okay here’s this here’s the background the home was originally
bought as a rental and then we were going to be living it in in retirement
we had good insurance we paid it off we received a check in the amount of one
hundred ninety three thousand dollars after the property was paid for we’re
still gonna have to pay for the removal of debris and that could be another
twenty-five to thirty thousand dollars at this time we have no idea when we’re
going to receive a bill my question is we’re not going to rebuild and we’re
being told that the amount of the check we received is capital gains tax is it I
think that if I think that okay I don’t believe that you that this is a pure
capital gains I think maybe this is my guess I don’t know this so you’re going
to have to talk to a tax preparer in the state of California but here is what I
believe I believe that it is subject to capital gain
above your basis meaning what you paid for it
so I think what you may want to try to figure out is go back in time get make
sure you have all the numbers right and you look at that you look at what you
paid you look at your improvements that you’ve made right and now we’re gonna
see what the long-term capital gains will be if so you’re married filing
jointly so if you make between seventy eight thousand seven hundred fifty one
dollars and four hundred eighty eight thousand eight fifty so let’s just do
this seventy eight to four eighty eight if
you make between that sounds like you that would be you guys maybe you pay a
fifteen percent capital gain okay now if you make less than that if you make less
than about that seventy eight thousand seven hundred fifty dollars your capital
gains rate is zero so you’ve got to figure out how much the property is
worth and then you have to go to an attorney to an accountant who can help
you figure out what is subject to capital gains and I think that that’s
gonna be the most important thing that you could do right now it’ll give you a
tiny bit of peace of mind hopefully okay all right
edie rights huh I got out of the market just before the big drop in 2008 and I
was afraid to get back in because I’m retired and cannot afford a drop like
the last crash what should I do to generate some revenue without market
exposure what about Vanguard index funds huh Edie
first of all Edie congratulations on getting out of the market and
congratulations for missing the three hundred percent return that we’ve seen
since then so now you’re saying to me you want to actually do some market
timing and get back into the market after it’s now going up up up up up this
seems crazy to me so let’s just do a couple of things Edie
are you supporting yourself right now okay
in retirement without any problem do you have enough income if you do then
don’t worry then forget it you don’t have to take any risk if you don’t and
you’ve got some money in the you know that needs to grow then you need to
figure out the right allocation for you but what you can’t do is create an
allocation then the next time the market drops get out again you’ve got to create
an allocation that you can live with and I don’t know what that is for you so I
would love it if you could get back in touch with us we’d love to get you on
the air and talk about this I think that that would be really helpful okay okay
this is from a Karina and says I’d love to hear all of your financial advice on
CBS this morning hey thanks if you guys want to see any of those old segments
just go to the website Jill on click on watch and you’ll see the
segment’s okay here’s a little bit about Karina I’m 46 single no kids no college
loans credit card $3,000 I rented an apartment for fourteen hundred fifty
dollars a month cars paid off just got a $5,000 raise at work whoo and I know is
there a number missing here mark annual income she says 7,200 I think 72,000
don’t you okay savings fifteen thousand credits towards 760 about eight years
ago the company I worked for closed and they sent me a notice saying my pension
check for the 401 K was twenty twenty eight thousand dollars rolled over to a
place called Park Avenue securities and the six years I haven’t done anything
with the money should I roll the money to a Roth IRA what should I do with it
by the way I’m buying a co-op in the near future hey you know what you should
do first of all roll the money into an IRA rollover and just do it at a
low-cost place of Vanguard or taro price or Schwab or TD Ameritrade wherever you
want do that and give yourself a little bit of time some index funds that should
be it or roll it into your new companies plan okay it’s Jill on money if you’ve
got a financial question we’d love to hear from you ask Jill at Jill on hop onto the website Jill on money
come and go buy my book the dumb things smart people do with their money 13 ways
to write your financial wrongs we’ll be right back back to jail on money where
Jill Schlesinger helps you take the mystery out of your finances you’re back
with Jill on money if you’ve got a financial question an investment
question may be after the tax hangover you’ve got some tax questions want to
figure out how we can help you out just send us an email ask Jill at Jill on that’s ask Jill at Jill on
oh by the way a lot of people been asking about the podcast because we’ve
got this new sponsor and got blood of publicity around it maybe you’re
listening to us on terrestrial radio and that’s fantastic maybe you’re listening
it through your radio stations website that’s fantastic too if you’d like
slightly different stuff a lot different but slightly different check out the
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can then go and give us a good review on Apple because somehow or other that
helps how are our reviews doing pretty well we’re good marks giving me a double
thumbs up okay Leslie writes my mother had a revocable trust and she put her
house in that trust then upon her death last year it became irrevocable let me
just cut translate that for everybody so revocable trust is changeable so while
you’re living you can create a trust you can put stuff in it you can put
securities and mutual funds and house you can put these your asset inside the
trust then upon your death it becomes irrevocable which means not changeable
and by the way when it becomes irrevocable it usually has its own tax
ID number okay so Leslie’s the trustee of the
trust and she’s in the middle of selling the home
the house and the assets worth under $400,000 not really sure why we put all
that in a trust but there it is six beneficiaries to the trust all
siblings question does each of the beneficiaries get taxed on the money as
earned income on next year’s taxes or is it considered an inheritance and
therefore exempt okay so here’s what happens the trust has to file its own
return so you need somebody who understands how to file estate tax
returns and trusts returns which is really anyone qualified to file taxes
any tax preparer or a CPA then what you need to do is ask the attorney who
drafted the trust what is the tax liability or you can also ask the CPA
but you should just ask both of them and make it easy for yourself here’s the
bigger issue that I see for everyone else like IRA learning from this our
learning is essentially that we are often putting assets in trusts and we
are often creating trusts for no particular reason so let’s be careful
before we start visiting Joe Schmoe attorney to do that you really have to
feel like this is the right decision for you okay
Marsha is 78 years old and she says she hasn’t made enough money in the last few
three or four years to pay taxes she did some substitute teaching but now a
family farm has been sold she has a check does she get any break in capital
gains hey we just went through the capital gains right so I don’t know it
depends how much you you actually have in income if you are single and your
income is less than thirty eight thousand six hundred dollars zero
percent capital gains if it’s thirty eight thousand 601 all the way up to
four hundred twenty-five thousand eight hundred bucks fifteen percent so that’s
that’s the deal see if you fall in those wherever you fall you’ll have to either
pay a little bit of 15% or none Rosanna writes
she’s got 29 grand sitting in a rollover IRA with fidelity
she put half of it into a fidelity go account which is basically a robo or an
online investing platform put the remainder in a CD and the question is
will I have to pay taxes on the amounts invested no if it’s an IRA rollover no
you do not and you what as long as it stays within an IRA wrapper you don’t
have to pay tax on it you only have to pay tax on the money when it comes out
of the IRA okay so while it’s in an IRA go crazy okay don’t worry about it
here’s another IRA question okay this is from Fred I was reading that the IRS
does allow a spousal IRA contribution even when only one in the couple is
working my question is what is the maximum deductible amount is it
cumulative or can it be doubled I don’t get that question about doubled but
here’s the deal you can put six thousand dollars into an IRA a traditional IRA or
a Roth IRA and if you’re over the age of 50 you can put in an extra one thousand
dollars for a total of seven thousand dollars 7400 that is only for a calendar year so
it’s each of you get that okay Charles listens to us on beyond WH is in
Louisville Kentucky and so he is 51 years old and has been contributing to a
401k for the past six years I have about $40,000 in there now we have recently
been given the option by my employer to change all
or some of our contributions to a Roth smart move for me or should I keep
contributing to the traditional one that I’ve been using for the past six years a
plan to work for another 15 to 16 years I don’t know how much you make Charles
so that is really what we would want to know if you are in a low tax bracket we
might think that the Roth could be good for you
what would a low tax rate be for you I mean look do you make less II and I
don’t know if you’re married or not but if you’re single and you make say less
than thirty nine thousand bucks yeah maybe you do a Roth it really depends on
what your tax bracket is um and maybe you split the difference maybe you can
say I’ll start doing Roth now and I’ll keep the other stuff where it is
I like having some money that’s already been taxed that is good but let us know
how much you make it will help us guy you a little bit better lena wants to
say that she enjoys the advice here and she says it’s genuine see now it sounds
so much better if somebody said that on the air and then we could play it in an
endless loop when we get the nasty grams from the disgruntled okay Lena’s husband
and she have a mortgage as well as a second the second was news to redo the
home and we took it out thirteen years ago
the interest on the second mortgage is something like nine percent my husband
has spoken to a bunch of financial institutions nobody seems to be able to
help us is there a way we could lower interest on the second we just don’t get
it um hey Lena I think you’re gonna have to maybe it’ll
refinance the second maybe you got to refinance the whole thing I need the
numbers to help really guide you on this but maybe the way to do this is to
essentially allow yourselves the opportunity to refinance all the debt
that’s out there okay and then you might get a lower rate you might be able to
pay it off more efficient but we need the numbers unfortunately so
that’s a problem and last right before we go to the break Joyce is writing that
she’s got investments in mutual funds they pay well they’ve got dividends
long-term capital gains my husband and I are retired our other income is from
government pensions and Social Security well I’m able to receive a tax refund
we’re hit with an increased deduction from their Social Security income it’s
based on AGI any ideas on how we should adjust our investments yeah get out of
those dividend producing accounts just get out of them move it into more of the
sort of an index fund environment and stop settling stuff with big long-term
capital gains index funds really do work well for this so you might want to check
that out okay but be careful that you don’t incur more taxes and changing
things around so there okay when we come back more of your questions it’s Jill on
money check it out Jill on money comm we’ll be
right back follow Jill on Twitter and Instagram for
more personal finance content just use the handle at Jill on money now back to
the show you’re back with Jill on money we’ve got this new studio and does it
sound different to you not to me but anyway hopefully it will improve our
quality we are always seeking to improve our quality but we don’t we don’t go
crazy about it though we don’t we didn’t like jump up and down and say oh we want
a new studio they came to us the fine folks here at the CBS radio news
division our CBS News radio division anyway if you’ve got a financial
question we’d love to hear from you our email address ask Jill at Jill on ask Jill at Jill on and that is with what let’s change this
name because I think they want a different name so let’s call her Wanda I
don’t know why but I just said Wanda that’s good Wanda writes
I am surprised by the amount of retired military that email you and ask how
they’re doing Wanda says my husband retired from the Navy after 32 years and
that was back in 2012 he he currently has two jobs not one two one is a
full-time job lots of travel his other job isn’t even really a part-time job it
pays more than my own full-time job I call it his fun job now Wanda herself is
a government employee and she said basically we always kind of banked my
salary and because we never knew where we were gonna go next anyway Wanda says
I’m the saver in the family and I love watching our savings and investments
grow but I’m also the one that believes we could retire
at anytime my husband isn’t convinced I’ve had two friends whose spouse has
recently died in their 50s I think if we’re in a in really good shape we
should retire earlier that is true although you know it is part of my book
the dumb thing smart people do with their money dumb thing number eight you
spend too much money early in your retirement that can definitely be
something that’s a trap so let’s see what Wanda and her husband have they’ve
got a net worth of 2.2 million bucks they have a emergency reserve fund of 80
grand they’ve got 401ks IRAs of about let’s
call it 800 thousand okay and they have brokerage accounts of about 1.3 so
there’s your 2.2 million all right they’ve got 10 acres of land all right
now let’s talk about his the the what what the husband has he makes 130 grand
on his full-time job in his part-time job is 70 and she makes 60 then he also
has a military retirement of 73 grand so they spend about $13,000 a month
currently and they got a mortgage on their home they don’t plan on staying
that in the house they’re gonna probably downsize and probably have a smaller
mortgage maybe none at all all right now here’s the thing she uses
a robo-advisor personal capital and she used to have she used to pay them about
a thousand bucks a month then she’s like I could do it myself
so she she’s using a different advice a robo and just doing different stuff
themselves and she says when they she runs the numbers and different folks run
the numbers they’re basically like 99 percent set for retirement at age 60 and
what she really wants to do I guess is to understand how to
possibly convince her husband that they are set for retirement the answer is
yeah you are probably set for retirement and probably at age sixty but I think if
you show your husband the numbers and he still doesn’t believe the numbers then
that is simply an irrational response and so what do we need to do to get him
over that that threshold and maybe it’s you saying to him look I really want to
stop working when I’m 60 and if you don’t want to stop working could we at
least agree that you would give up the job that has tons of travel because even
if he just had that part-time job plus his military pension then that gives you
about a hundred and forty grand a year you can spend some of the money in your
brokerage account to supplement it and you can wait to draw your social
security and then you’ll be all set just saying I think you’re set but something
else is going on here I’m sidebar Wanda wants to know if I are if I am familiar
with tastytrade which I totally am not bark you know him and Mark looked it up
there’s a lot going on and so here’s the other part of Wanda’s question I heard
one guest on your podcast say he quit trading options due to a large loss I
recently due to my son’s influence became interested in trading options but
keep it small so okay tasty trades philosophy is trade small
trade often my philosophy is do not trade often at all because there every
trade every transaction has some sort of cost and you know if you want to just
play around with options my first job on Wall Street it was an options trader
it’s fun it’s a mathematical equation it’s great but honest to god don’t you
have better things to do I mean I I don’t know I I don’t see this as the
smartest thing to do and it probably is begging for a little bit of trouble down
the line but you know what if you want to do it
fine totally fine but I would try to be careful please
really all right um our one minute to go all right I’m going to wait to do this
one I got a custom college loan questions that came in after we did a
bunch of stuff about college last question here let me just give this from
Ruth Ann who’s 64 years old and she says that I have invested in my 4 oh my 401k
and a pension and invite an advisor told me to put 50% of my assets in an indexed
annuity the rest managed by the financial advisor fees are one and a
half percent is one and a half percent reasonable you don’t have any dollar
amount there so I don’t know and on you probably don’t have an advisor if
someone told you to put half of your money in an index annuity send me more
details with them you’re listening to Jill on money and coming up we’re gonna
get back to more of your great questions during the break go to jail on money
comm and sign up for our free weekly newsletter we’ll be right back back to Jalan money where Jill
Schlesinger helps you take the mystery out of your finances you’re back with
Jill on money if you’ve got a financial question give us a holler
holla ask Jill at Jill on give us a lot of details let us know what
you’re thinking I’ve been doing a lot of speaking
engagements to support the book and so I’m going to answer some of the
questions that I’ve been getting as follow-ups I was out in the Bay Area and
boy there I feel so bad for these people because the housing market there is
insane even though it’s said to be cooling down a little bit
God it is hard to buy there’s just not a ton of inventory and so here is somebody
who followed up let’s just call this person a B got it marked a B so a B is
worried that in the future buying a home feels really out of reach and so she
said you know not sure that this has to be the sign of financial wealth and she
said I’m glad that you reiterated that it is not the case that it’s okay to
rent and not just buy alright so when the question is about one investing in
index funds once you pay off your debt and hit and fund your emergency reserve
funds and max out 401k a B says I’ve got all those points covered
I currently invest with Vanguard my question is with the money I’m saving
monthly should all of it go into a mutual fund should I put some of it into
savings even though I can cover twelve months of living expenses I don’t think
so I think you can put you know you don’t have to invest it as aggressively
as you would invest a 401 K but I think that you could certainly just say split
it with a bond index a stock index maybe an International stock index and and
don’t necessarily have to put you know over do it with your emergency reserve
fund second question for the 401 K a B is maxing it out she contributes 7%
to a Roth 401k 5% traditional she’s sort of on the border of a tax bracket um so
is it doing a mix going to be more trouble than it’s worth
yeah I don’t think so it’s fine and here’s another question should I put my
money murrow 1k if the economy were to go into
a recession and say stocks tanked but I could still max out my 401k should I yes
of course you that’s when you absolutely should be that’s when you should be
putting the most money to work you know if you had that opportunity so here’s
the other question I know there is not really a way to fully catch up when it
comes to missed years or opportunities but after paying a forty five thousand
dollars in student loans I feel behind most of the people my age
a B is a ripe old twenty eight years old okay I’ve years worth of savings it’ll
be my first time I can max up my 401k I don’t have any anything else what’s
your advice suggestion for next steps on building financial wealth and freedom I
think that really you’re doing exactly what you should be doing at age twenty
eight you’re maxing out your retirement account which is fantastic and you’re
gonna be putting some money in a non retirement account which is fantastic
and that’s what you need to do you don’t need to be buying individual stocks you
don’t have to be trying to figure out the best time to buy or sell stick to
the game plan okay stick to the game plan and I think
you will be happy for doing so alright good thank you for hanging out with me
in the Bay Area it was a lot of fun all right um okay more questions I see
mr. mark he’s handing his butt got his fingers in my face here okay question
here is about about college tuition my daughter will be starting college in
September and I’m a widow and I live on just my own salary I have a son starting
college in three and a half years nervous wreck on how I can afford to
co-sign loans for both any information you can provide okay how about this
do not cosign on loans do not what you need to be doing is having a
conversation with your kids so that you can basically say to them I can’t help
you I got my own issues that I have to manage okay brother
here’s one last question before we close out this segment this is from Mark who
wants to tell a story he says I’m currently in the middle of your book
dumb things smart people do with their money I was on the chapter about
identity theft specifically the story you told about wiring money and how a
financial adviser would never send wiring information through an email that
very day that I was reading the chapter literally I received an email from my
financial adviser person saying Charles Schwab was having some problems was
having some processing issues and I would be best served timewise to wire
money to them instead of waiting for the checks to clear I didn’t send the money
however I might have had I not read your book when I contacted my financial
person he let me know their system had been hacked how about that the hacker
was posing as my own financial adviser and the hacker and ultimately my
financial person stated that it was not likely this would have succeeded but we
were all very grateful that I did what I did I just wanted to say thanks I am
enjoying your book tremendously thanks for writing it Marc that is so
awesome I know these stories are crazy because
you simply cannot like you can’t trust anyone and the best possible position to
take is the position that don’t do anything that’s the do no harm approach
okay and if you were to take that approach you probably save yourself
quite a bit of anxiety over the long term
be skeptical don’t just click on things don’t just wire money do these kinds of
things really be careful okay you’re listening to Jill on money and if
you’ve got a question we want to hear from you hey maybe your kid needs some
help with college stuff maybe you’re sending
your your freshman high school are out on college tours you may want to check
out money check that out that’s gonna be helpful for you ok we’ll
be right back you’re back with Jill on money before we close out the show I
just want to get to some college financial aid questions and some
comments so this is really interesting because I did a few segments on CBS this
morning in March and then again in April and this is a note from Barnard who says
that has the idea of presenting or combining college fees and loan interest
as the real cost of the degrees as the idea of like looking at all together
help in deciding what major that the kid pursues or postgraduate program to enter
he says a little guidance to the applicant for figuring the total
interest cost may be useful too yeah I mean this is one of the hugest problems
that when you look at these financial awards and kids sign up for loans or
even families those first decisions are made without understanding what the
long-term cost of the loan is and that’s a problem okay here’s a note from Fred
who also saw the segment about student loans and he’s in a huge maseo’s over
$200,000 in student loans but he’s really gone through a horrible phase
divorce foreclosure process of bankruptcy I contacted my senator and
never got to speak with him aides said they’d look into it
so I also was interested in this because you know we often hear that you cannot
discharge a student loan via chapter 7 or a chapter 11 bankruptcy but there is
some there are some circumstances under which you can discharge student loans if
you can prove undue hardship so I think you
might really need to think about whether or not you fall into this it’s not
impossible that’s what I guess is really important but it may take some work
there really the the test has three prongs you have to prove that you cannot
maintain a minimal standard of living for yourself and your dependents based
on your current income and expenses to the second problem your financial
situation is not likely to change during the loans term and three you’ve made
good-faith efforts to repay the loan all right that’s it that’s the show we have
been broadcasting live from the policy genius Studios policy genius the easy
way to compare and buy insurance if you’ve got a financial question send us
a note ask Jill at Jalan money comm hop on to our website Jill on you
can listen to past shows and you can buy the book the dumb things smart people do
with their money thirteen ways to write your financial wrongs thanks for
listening we’ll see you next week

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