September 4, 2025 • 29 mins
On this Ask Suze & KT Anything episode, KT asks Suze your questions about 529 Plans, dividend paying stocks, when to take your RMDs and so much more.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Suze (00:08):
September 4th, 2025. Welcome everybody to the Women and Money podcast, and...
KT (00:13):
Everyone smart enough to listen.
Suze (00:15):
You did it KT. For some reason, whenever we do
an open, KT forgets to say, and everybody's smart enough
to listen, and today is what KT?
KT (00:26):
September 4th.
Suze (00:27):
No, today is what?
KT (00:29):
Ask KT and Suze Anything
Suze (00:31):
Ding ding ding ding. You got that right. All right.
KT (00:34):
Do
you believe it's September?
Suze (00:36):
I do believe it's September and this is obviously a
special day in our lives.
KT (00:41):
This is a special day. This was a day of having a
great honor and privilege 13 years ago. Tell them why.
Suze (00:49):
Yeah, because my mama passed today.
13 years ago when she was...
KT (00:54):
Took her journey, baby...
Suze (00:56):
She was 97 years of age and KT and myself
and KT's twin sister Lynn and her husband Tom, we
were there we...
KT (01:05):
we
bid her farewell in the most beautiful way.
And it was such an honor for any of you listening,
if you have the opportunity to be with a loved
one when they're taking their final journey, do it. Don't
be afraid. Don't be sad, just do it. It's such
an honor. It is.
It's such a blessing.
Suze (01:25):
My brother was afraid. My, my brother was afraid, and
he lives with that sorrow to this day, anyway.
All right, so you have a question.
KT (01:37):
I do. Let's start with Cindy. I like Cindy because
she's Cindy the dog walker.
She said, Hi, Suze and KT. Quick question. I'm a
longtime listener and reader of your books many years ago. Yeah,
for me, I purchased VTI on your recommendation. I still
(01:57):
own it, and I'm curious why you never mention that
ETF more. So tell her why you don't mention it,
or do you?
Suze (02:04):
Have you noticed that I stopped mentioning it?
KT (02:07):
No,
Suze (02:08):
Of course not. All right, so anyway, here's the truth, Cindy.
I still love VTI, the Vanguard Total Stock market Index ETF,
just that simple, but the reason I switched, and I
really switched to VOO, which is also Vanguard, which has
(02:29):
a little smaller expense ratio than the spiders, is that
VTI versus VOO.
They have the same exact top 10 holdings which happen
to be Nvidia, Microsoft, Apple, Amazon, Meta, Broadcom, Alphabet, you
(02:50):
know I love Google there, Tesla and Berkshire, right, however.
Those top 10 holdings only make up 33% of VTI, 38%
of VOO. Therefore, because I knew that those top 10
holdings would be more aggressive and profitable in VOO than VTI,
(03:15):
that is why I switched, however,
VTI is still fabulous. No problem. OK, go on, KT.
KT (03:24):
OK, this next question is an interesting one because I,
I like to know the answer as well.
Suze (03:32):
She makes me laugh, everybody.
KT (03:33):
Hi, Suze and KT.
Suze (03:35):
Wait, wait, I just have to tell you every once
in a while she's reading these and she looks at
me and she says, I don't know
the answer to this one and I go, KT, of
course you don't. That's why it's ask KT and Suze.
KT (03:49):
Anything
Suze (03:50):
You ask KT. Susie answers. All right, go on.
KT (03:53):
Ok, so this question is a good one. It said, Hi,
Suze and KT. My spouse and I are ready to
withdraw $4500 a month from our combined
$1.5 million in 401ks and IRAs. She is 77. I
am 65. Most of our retirement savings is under my
(04:16):
name because she is a retired educator with a pension.
Does it matter in the long run whose account we
withdraw from?
Suze (04:26):
Hmm.
Why are you looking at me like that?
KT (04:29):
Well, does it? Yeah, it does.
Suze (04:31):
All right, everybody, listen, Peggy, it's not necessarily which account
does it matter that you withdraw from as much as
what are you invested in within those accounts now, obviously.
At 77 she's taking her RMDs, so you have to
(04:54):
take into consideration required minimum distributions. How much does she
have to take out every single year from her account,
and then you can decide after that amount which account
has the best investments for you to withdraw from. So
for instance, if you're invested in good quality stocks like
(05:16):
maybe some of the ones I just mentioned.
And you're going for growth and you like them and
you feel secure with them, why sell them now just
to withdraw the money? So again after the RMDs, it
really doesn't matter that much.
What matters is what the accounts are invested in and
(05:37):
therefore that's where the money should come from. All right.
KT (05:42):
OK, next question is from Deanna. Hi Suze, I'm from Utah.
My husband and I have a 529 plan for our
two grandchildren. What happens when we die? Where does this
money go? Can I pass the 529
plan on to my daughter who is the mother of
the two grandchildren.
Suze (06:02):
Yeah, you can, right, but what you do is you
name your daughter or the mother of the grandchildren or
whatever as a successor owner that way she will take
over management if you die. Just that simple. All right, KT.
KT (06:18):
OK, next question from Audrey. She said, hi Suze and KT.
My husband and I are a blended family. We took
care of our wills a few years ago, but as
time goes on and I listen more and more to
your podcast, there are some things I would like to
change in our documents.
Suze (06:37):
Just like me!
KT (06:38):
Just like us. You're not alone, Audrey.
She said, I did purchase the must have documents, but
I don't know how to translate and transfer what I
currently have in my will into those documents. So let's
explain to her how that works.
Suze (06:55):
So what
you have to do, Audrey, is that given that you
created a will, possibly a trust, whatever it may be
outside of the must-have documents to begin with.
You cannot physically transfer them into the must-have documents where
they automatically transfer over. You have to, with the must
(07:17):
have documents, create new documents, and you probably should do
that anyway just to make sure that what you wanted
back then is what you want now because obviously you
say you want to make some changes, so you would
just start over because one thing interesting with the must-have
documents is that you have to do all four must-have
(07:42):
documents at one time so when you go on you'll
see you answer all these questions and really not that many,
and it will populate all four at once
the living revocable trust, the advanced directive and durable power
of attorney for health care, as well as the financial
power of attorney. It will do all of those at
(08:03):
once for you.
So you might as well just do that and there
you go, and those will be your new documents. Make
sure you get them notarized and that you fund the trust,
which means you transfer the name of your real estate
or whatever into the name of the trust. All right, KT.
KT (08:22):
So Suze, tell everyone where to go to get the
must-have docs.
Suze (08:26):
Yeah, everybody listen to me. If you don't have the
documents that I just talked about.
I'm telling you you are without a shadow of a
doubt making the absolute biggest mistake in your life, and
believe it or not, the less money you have, the
more you need those documents and I'm now strictly the
(08:49):
educator of those documents. So what you would do is
you would go to must have docs.com.
And currently they are $99 and what's great about that
is it's $2,500 worth of state of the art documents
that you can share with any family member. It's not
(09:11):
a big deal because the object of them isn't that
every single one of you needs to buy one.
It's that only one of you needs to step forward
and make sure that not only have you protected yourself
but you've protected all of your family members and maybe
all of your friends if you want to as well.
All right.
KT (09:30):
OK, my next question is from Estee. Hi Suze and KT.
I watched your TV show, Suze back in the day.
Suze (09:39):
You know what? Wait, wait, wait, wait, you can watch
it again because they are premiering little by little on YouTube.
So go to youtube.com/ Suze Orman. That is my personal
and official YouTube channel and people are loving so much
watching those shows all over again. All right, go on.
KT (10:02):
She said, I watched the TV show back in the day,
have been faithfully listening to you and KT. I take notes.
I read the Ultimate Retirement Guide twice.
Then she said, I may have missed this, but how
do you feel about reinvesting dividends three quarters of the
year and taking the cash in the fourth quarter for
(10:25):
annual living expenses and taxes instead of buying an annuity?
So that's what Estee's question is.
Suze (10:33):
Um, let me see this email...
KT (10:35):
And Estee, just so we all know, is, is about
68 years old. So that's why I'm wondering an annuity.
Suze (10:43):
Here's the thing number one, I don't want you to
do an annuity. That's number one, but number two, right,
if you reinvest the dividends, that means you are reinvesting
into the shares of the stock that you already own.
And then you take the cash in the fourth quarter,
(11:07):
you can do that as long as that dividend in
the fourth quarter is enough for your annual living expenses.
Does that make sense? So if you're going to do
it that way and you know that you are invested
in a stock that's dividend has been increasing over the
(11:27):
past 10 years, I don't have a problem with that
because remember dividends are not guaranteed. If the company gets
in trouble, they could absolutely cut their dividend.
And you don't want to be in that situation, but
if you can live off of the fourth quarter dividend, fine,
(11:48):
you can take that in cash, but it becomes very
complicated because then you have to change from reinvesting to
da da da. So just think about it, but I
would not be doing an annuity no matter what. All right.
KT (11:59):
Good morning, Suze and KT.
Suze (12:01):
It is, is it not, KT?
KT (12:03):
Yes it is. My current relationship is not working out.
Suze (12:07):
What else is new? You know how many emails we
get that start with that exact saying?
KT (12:13):
My current relationship is not working. You're not alone. You're not alone.
There's a whole lot we get like this, Susan, but
at least Suze, you and I are working out just right. So,
so Susan says we bought a house together. I own 25%
of the house. The house is worth about $520,000.
Suze (12:35):
Ok, so she owns about $130,000 worth of that house.
KT (12:39):
My plan is to move out and buy another house.
I will have the equity from the house, which he
will either pay to me or the house will be sold,
and I'll get it that way. Susan has $25,000 in
an emergency fund with no debt, about $345,000 in a
401k Roth, and traditional IRA accounts.
(13:03):
She earns about $110,000 a year and does not plan
on retiring. I really do not want a mortgage at
this stage in my life. I'm 61, but will have
to take money out of my retirement in order to
buy my home mortgage free.
So, she said she can also buy it and take
(13:24):
a mortgage out means she no longer contributes to her
retirement and she wouldn't be debt free. Can you help me?
This is the real clincher, everybody. Susan said, I feel
very anxious and not secure at all.
Suze (13:39):
Ding ding ding pop quizzy.
KT (13:41):
Yeah, I'll tell you what I would do.
Suze (13:42):
Pop quizzy...
everybody before KT answers because KT people have been writing
and saying, please bring back the quizzy.
KT (13:49):
Oh, no way.
Suze (13:56):
Well, pop, here's the wait before you answer, everybody, how
would you, seriously, answer this question? She's 61 years of age.
She only has $25,000 in an emergency fund. No other debt.
She has about $345,000 again in her retirement accounts. Think
(14:18):
about that. She really doesn't want a
mortgage so she would at the age again of 61
have to take money out of her retirement accounts in
order to buy the home mortgage free. She feels anxious.
She could take a mortgage, but she doesn't want to. KT.
How would you answer that?
KT (14:37):
Four letter word baby
just leaving a relationship.
It's emotional. They broke up. Don't go and make your
life stuck again. Just be free and rent for a
couple years. You can afford to rent with that kind
of a salary and still be free and rent simple.
(15:01):
One of the things that I often ask when we
read these and when I read, I the, the puzzle
needs to be put together with all the pieces and
you often send us a question but you don't tell
us where you live for instance. That would have a
great deal of bearing on, you know, whether you buy
(15:22):
and rent, so on and so forth.
Suze (15:25):
Ding ding ding ding
KT (15:26):
Rent, right?
Suze (15:27):
Yes, but for many different reasons. OK, all right, so
first of all, what is my main law of money
when it comes to you after you have suffered the
loss of a loved one? You are to do absolutely
nothing other than keep your money safe and sound for
(15:47):
at least one to two years.
Cause you're saying to me that your relationship is not
working out. Don't tell me that that doesn't have an
emotional impact on you, whether you like him or her,
you dislike them or whatever, it has an emotional impact.
(16:10):
Now you don't want to take money out of a
retirement account. That is just the stupidest thing you could
ever do simply to what? Buy another house. No way,
not on our watch.
You really shouldn't decide anything until you know how much
money you are going to have. What is he going
(16:32):
to actually be giving you if he buys you out,
and if you sell it, remember there will be real
estate commissions, all kinds of things. This is no longer
a seller's market.
Prices are going down and down. Therefore, just wait to
see how much you really get when that is complete,
(16:53):
one step at a time.
Next, how do you know what to do? If you're
about to do something and it makes you feel insecure
right now you feel very anxious and not secure at all. Therefore,
you are to do nothing. So before you do anything,
check that little stomach of yours, and if it is nervous,
(17:17):
that is yourself telling yourself, don't do it. Remember, once
you do something, it's already done.
If you haven't done it yet, you have a lot
of time to do it. All right, there you go.
KT (17:30):
I was right.
Suze (17:31):
I gave you a ding ding ding ding ding ding
ding ding ding ding ding.
KT (17:35):
OK, next question is from Melissa, she said. Suze, I'm
a single mom with a 16 year old son.
I'm also a landlord with just a few properties.
Suze (17:47):
Oh, just a few properties?
KT (17:48):
The question is, how do I protect my real estate
from the type of economy that we are currently in?
How do I bulletproof myself from losing money? When you
find that answer, share it with all of us.
And then she said taxes are up, insurance is up
at the same time, so are the interest rates. I'm
waiting for interest rates to go down so I can
(18:10):
invest in another property outside of New York. These properties,
which are passive income, are my main source of income.
Suze (18:21):
Listen, here's the thing...
KT (18:23):
Make it a quizzy again.
Suze (18:26):
All right, ding ding ding, go for it.
KT (18:27):
Don't buy any more property right now at all.
Suze (18:33):
That's your advice.
KT (18:34):
Yeah.
Suze (18:35):
All right, that's her advice whether it's right or wrong.
I can't tell you. However, let me just say something.
I talk about investing obviously all the time and I
talk about diversification. What concerns me is, your main source
of passive income happens to be properties, and you're already
(19:00):
asking how do you bulletproof yourself from losing money. When
it comes to real estate it's very, very difficult to
bulletproof yourself from losing
money. Why? You cannot protect yourself against insurance going up.
You cannot protect yourself against property taxes going up. You
(19:21):
cannot protect yourself against the house needing repairs. You cannot
protect yourself against renting to somebody who all of a
sudden loses their job and they stop paying you and
they won't leave.
And now you may have mortgage payments with no income.
You cannot adequately truthfully protect yourself against climate change and
(19:43):
what Mother Nature may bring upon you.
So there are all of these you can't do anything about.
But what you can do is maybe think about, oh,
do I have anything invested in dividend paying stocks? Do
I have at least an eight month emergency fund maybe
(20:04):
generating some income to me? Do I have any Treasury bill,
bonds or notes that are pretty much guaranteed? What else
do you have? But you're waiting for interest rates to
go down so you could invest in another property.
So the truth of the matter is I don't know.
(20:26):
I'd like to hear that you were investing in something
other than property, even if you did an REIT within
a retirement account, but I don't know enough about you,
but I can tell you this when it comes to
real estate.
It is very, very difficult to protect yourself, especially with
(20:48):
the insurance market today. You best think about it.
KT (20:52):
No bulletproof, right?
Suze (20:53):
Mhm.
KT (20:55):
OK, Suze, next question is from Mark. I really like this question.
He said, Suze, I'm 70 years old and I have
1.5 million in a rolled over 401k.
I've been converting it into a Roth for the past
three years, and I'm wondering when is it a good
time to stop converting and just pay the grim reaper.
(21:18):
So Mark's question is how will the RMDs and converting
mix in the next few years?
Suze (21:24):
Yeah, so what, what I...
KT (21:26):
I would love to hear that too.
Suze (21:29):
Why?
KT (21:29):
Just curious because that's a great question. No one ever
asked that question.
Suze (21:34):
All right, Mark, here's what you first need to know,
and everybody who is on RMDs or who will eventually
be on RMDs, and you want to convert from a traditional,
which is a
pre-tax retirement account to a Roth, which is after tax.
KT (21:51):
Tell them what an RMD is.
Suze (21:52):
Required Minimum Distribution.
KT (21:54):
And it starts at what age?
Suze (21:55):
73 currently and then very shortly it will be 75
just so you know. However, here's what you have to
understand you cannot convert,
in the year that you have to take RMDs until
you have taken your RMDs, and after you have taken
(22:16):
your RMDs, then you can convert. So that's how that
will work for you.
How do you know if you should just stop converting
and just paying the grim reaper? KT's laughing cause she
knows how hard that was for me to say anyway,
but here's how you know you would only convert if
(22:40):
in fact you don't need the money that you are converting.
You want to leave it in there for growth. You
don't need to touch it for years, if ever you
want to leave it to your beneficiaries and you want
to leave it to them absolutely tax free. Then you
would continue to convert. If in fact you know that
(23:02):
you're going to be needing that money to live on,
then you would maybe just take out what you want
from your traditional IRA.
And what would you do? Live on it and not
convert it to a Roth, just that simple, cause remember
there are still some rules in everything with a wroth
(23:24):
and a Roth conversion, even at your age, believe it
or not. So therefore that's how you would know. So Mark,
it's just that simple. All right, KT.
KT (23:35):
OK.
Suze, next question is from Kelly, and Kelly asks, does
it make more sense to purchase an income annuity with
qualified or non-qualified money to shore up guaranteed income needs
to supplement my pension and Social Security?
Suze (23:54):
So that's simple. If you
are going to buy an income annuity all right however,
do it with non-qualified money meaning money outside of a
retirement account, because remember in a retirement account, a pre-taxed
retirement account, all right, which is qualified money.
(24:15):
You are eventually going to have to pay RMDs, and
then it becomes very confusing as to with an income annuity,
what was the value of the balance of that income
annuity at the end of the year prior to the
year you're taking RMDs very confusing. So,
do it with non-qualified money. Last question, KT.
KT (24:36):
This is from Amy and Amy is
55.
Suze (24:44):
Yeah. What were we doing? Remember what we were doing at 55?
KT (24:44):
That was a great year.
They were so much fun.
She said, I have an old 401k balance of $69,000
that I just rolled over into a Schwab traditional IRA.
My plan was to convert little by little into my
Roth IRA, but when I was looking back at my
(25:05):
Suze notebook, I noticed something about the pro rata rule.
My notes were incomplete.
So now I'm wondering if I can still convert to
my Roth IRA. I do have another traditional IRA, and
I know that's what the pro rata rule refers to.
Please help me. So...
Suze (25:24):
Pop, pop quizzy, pop quizzy, can she or can she
not KT?
KT (25:30):
Oh...
Suze (25:31):
Will she be subjected to the pro rata rule because
she has, uh, uh, because she's, she's shaking her head
up or down...
KT (25:40):
I'm asking Suze, help me!
Can she or can she not, right, wait, so go ahead,
keep going.
Suze (25:45):
So can she convert to a Roth given the fact
that she has a traditional IRA? Is she going to
be subjected to the pro rata rule?
KT (25:57):
I think you are. (Suze makes the 'wrong answer' noise).
Oh, you're not. All right, wait, but can I just
say something? Suze, on February 18, 2024, you did an
entire podcast about the pro rata rule
Suze (26:11):
And Roth IRAs.
KT (26:13):
So, so Amy, go back and listen to it.
And that's for everyone listening February 18th, 2024.
Suze (26:22):
All right, so but here's the scoop, Amy, you are confusing
conversion with a backdoor Roth. The pro rata rule only
relates to a back door Roth period. Which means you
have too much income to get new money
(26:44):
into a Roth IRA. So what do you do? You
put money into a traditional IRA. You make it nondeductible,
and then you convert it to a Roth, but you
can only do that if you don't have any pre-tax
retirement account outside of your employers. You are simply converting,
(27:07):
from a pre-tax to a wrath, which means you are
going to pay taxes on that money, and the 5
year clock will start the day you convert, every time
you convert. So no, it does not apply to you
at all. But KT, I'm so proud of you. You
went back and looked up that podcast.
KT (27:27):
I did, I did should have
listened to it and I would have gotten it.
Suze (27:32):
Anyway, all right, there you go. So until Sunday when
I'm gonna do a different kind of Suze School.
KT (27:41):
Tell them what you're doing.
Suze (27:42):
So I was looking through some of the emails and
Doctor E, so if you're listening, know this podcast is
going to be about you, asked
a question and I realized rather than letting KT ask
it on Ask KT and Suze Anything, I'm going to
turn this one into a Suze school and really teach
(28:02):
you along with Doctor E what you need to know about...
You're going to have to tune in and find out.
So we are in September.
And because we are now in September, I promised one
of the listeners who wrote in that said, Suze, please
go back to closing the podcast with your traditional way
(28:26):
of doing it and I said for you, for the
rest of
the year, we will do that. So there's really only
one thing we want you to remember when it comes
to your money, and it is this:
KT (28:38):
People first, then money, then
things.
Suze (28:41):
Now you stay safe and secure. See you Sunday. Bye-bye.
September 4th, 2025. Welcome everybody to the Women and Money podcast, and...
KT (00:13):
Everyone smart enough to listen.
Suze (00:15):
You did it KT. For some reason, whenever we do
an open, KT forgets to say, and everybody's smart enough
to listen, and today is what KT?
KT (00:26):
September 4th.
Suze (00:27):
No, today is what?
KT (00:29):
Ask KT and Suze Anything
Suze (00:31):
Ding ding ding ding. You got that right. All right.
KT (00:34):
Do
you believe it's September?
Suze (00:36):
I do believe it's September and this is obviously a
special day in our lives.
KT (00:41):
This is a special day. This was a day of having a
great honor and privilege 13 years ago. Tell them why.
Suze (00:49):
Yeah, because my mama passed today.
13 years ago when she was...
KT (00:54):
Took her journey, baby...
Suze (00:56):
She was 97 years of age and KT and myself
and KT's twin sister Lynn and her husband Tom, we
were there we...
KT (01:05):
we
bid her farewell in the most beautiful way.
And it was such an honor for any of you listening,
if you have the opportunity to be with a loved
one when they're taking their final journey, do it. Don't
be afraid. Don't be sad, just do it. It's such
an honor. It is.
It's such a blessing.
Suze (01:25):
My brother was afraid. My, my brother was afraid, and
he lives with that sorrow to this day, anyway.
All right, so you have a question.
KT (01:37):
I do. Let's start with Cindy. I like Cindy because
she's Cindy the dog walker.
She said, Hi, Suze and KT. Quick question. I'm a
longtime listener and reader of your books many years ago. Yeah,
for me, I purchased VTI on your recommendation. I still
(01:57):
own it, and I'm curious why you never mention that
ETF more. So tell her why you don't mention it,
or do you?
Suze (02:04):
Have you noticed that I stopped mentioning it?
KT (02:07):
No,
Suze (02:08):
Of course not. All right, so anyway, here's the truth, Cindy.
I still love VTI, the Vanguard Total Stock market Index ETF,
just that simple, but the reason I switched, and I
really switched to VOO, which is also Vanguard, which has
(02:29):
a little smaller expense ratio than the spiders, is that
VTI versus VOO.
They have the same exact top 10 holdings which happen
to be Nvidia, Microsoft, Apple, Amazon, Meta, Broadcom, Alphabet, you
(02:50):
know I love Google there, Tesla and Berkshire, right, however.
Those top 10 holdings only make up 33% of VTI, 38%
of VOO. Therefore, because I knew that those top 10
holdings would be more aggressive and profitable in VOO than VTI,
(03:15):
that is why I switched, however,
VTI is still fabulous. No problem. OK, go on, KT.
KT (03:24):
OK, this next question is an interesting one because I,
I like to know the answer as well.
Suze (03:32):
She makes me laugh, everybody.
KT (03:33):
Hi, Suze and KT.
Suze (03:35):
Wait, wait, I just have to tell you every once
in a while she's reading these and she looks at
me and she says, I don't know
the answer to this one and I go, KT, of
course you don't. That's why it's ask KT and Suze.
KT (03:49):
Anything
Suze (03:50):
You ask KT. Susie answers. All right, go on.
KT (03:53):
Ok, so this question is a good one. It said, Hi,
Suze and KT. My spouse and I are ready to
withdraw $4500 a month from our combined
$1.5 million in 401ks and IRAs. She is 77. I
am 65. Most of our retirement savings is under my
(04:16):
name because she is a retired educator with a pension.
Does it matter in the long run whose account we
withdraw from?
Suze (04:26):
Hmm.
Why are you looking at me like that?
KT (04:29):
Well, does it? Yeah, it does.
Suze (04:31):
All right, everybody, listen, Peggy, it's not necessarily which account
does it matter that you withdraw from as much as
what are you invested in within those accounts now, obviously.
At 77 she's taking her RMDs, so you have to
(04:54):
take into consideration required minimum distributions. How much does she
have to take out every single year from her account,
and then you can decide after that amount which account
has the best investments for you to withdraw from. So
for instance, if you're invested in good quality stocks like
(05:16):
maybe some of the ones I just mentioned.
And you're going for growth and you like them and
you feel secure with them, why sell them now just
to withdraw the money? So again after the RMDs, it
really doesn't matter that much.
What matters is what the accounts are invested in and
(05:37):
therefore that's where the money should come from. All right.
KT (05:42):
OK, next question is from Deanna. Hi Suze, I'm from Utah.
My husband and I have a 529 plan for our
two grandchildren. What happens when we die? Where does this
money go? Can I pass the 529
plan on to my daughter who is the mother of
the two grandchildren.
Suze (06:02):
Yeah, you can, right, but what you do is you
name your daughter or the mother of the grandchildren or
whatever as a successor owner that way she will take
over management if you die. Just that simple. All right, KT.
KT (06:18):
OK, next question from Audrey. She said, hi Suze and KT.
My husband and I are a blended family. We took
care of our wills a few years ago, but as
time goes on and I listen more and more to
your podcast, there are some things I would like to
change in our documents.
Suze (06:37):
Just like me!
KT (06:38):
Just like us. You're not alone, Audrey.
She said, I did purchase the must have documents, but
I don't know how to translate and transfer what I
currently have in my will into those documents. So let's
explain to her how that works.
Suze (06:55):
So what
you have to do, Audrey, is that given that you
created a will, possibly a trust, whatever it may be
outside of the must-have documents to begin with.
You cannot physically transfer them into the must-have documents where
they automatically transfer over. You have to, with the must
(07:17):
have documents, create new documents, and you probably should do
that anyway just to make sure that what you wanted
back then is what you want now because obviously you
say you want to make some changes, so you would
just start over because one thing interesting with the must-have
documents is that you have to do all four must-have
(07:42):
documents at one time so when you go on you'll
see you answer all these questions and really not that many,
and it will populate all four at once
the living revocable trust, the advanced directive and durable power
of attorney for health care, as well as the financial
power of attorney. It will do all of those at
(08:03):
once for you.
So you might as well just do that and there
you go, and those will be your new documents. Make
sure you get them notarized and that you fund the trust,
which means you transfer the name of your real estate
or whatever into the name of the trust. All right, KT.
KT (08:22):
So Suze, tell everyone where to go to get the
must-have docs.
Suze (08:26):
Yeah, everybody listen to me. If you don't have the
documents that I just talked about.
I'm telling you you are without a shadow of a
doubt making the absolute biggest mistake in your life, and
believe it or not, the less money you have, the
more you need those documents and I'm now strictly the
(08:49):
educator of those documents. So what you would do is
you would go to must have docs.com.
And currently they are $99 and what's great about that
is it's $2,500 worth of state of the art documents
that you can share with any family member. It's not
(09:11):
a big deal because the object of them isn't that
every single one of you needs to buy one.
It's that only one of you needs to step forward
and make sure that not only have you protected yourself
but you've protected all of your family members and maybe
all of your friends if you want to as well.
All right.
KT (09:30):
OK, my next question is from Estee. Hi Suze and KT.
I watched your TV show, Suze back in the day.
Suze (09:39):
You know what? Wait, wait, wait, wait, you can watch
it again because they are premiering little by little on YouTube.
So go to youtube.com/ Suze Orman. That is my personal
and official YouTube channel and people are loving so much
watching those shows all over again. All right, go on.
KT (10:02):
She said, I watched the TV show back in the day,
have been faithfully listening to you and KT. I take notes.
I read the Ultimate Retirement Guide twice.
Then she said, I may have missed this, but how
do you feel about reinvesting dividends three quarters of the
year and taking the cash in the fourth quarter for
(10:25):
annual living expenses and taxes instead of buying an annuity?
So that's what Estee's question is.
Suze (10:33):
Um, let me see this email...
KT (10:35):
And Estee, just so we all know, is, is about
68 years old. So that's why I'm wondering an annuity.
Suze (10:43):
Here's the thing number one, I don't want you to
do an annuity. That's number one, but number two, right,
if you reinvest the dividends, that means you are reinvesting
into the shares of the stock that you already own.
And then you take the cash in the fourth quarter,
(11:07):
you can do that as long as that dividend in
the fourth quarter is enough for your annual living expenses.
Does that make sense? So if you're going to do
it that way and you know that you are invested
in a stock that's dividend has been increasing over the
(11:27):
past 10 years, I don't have a problem with that
because remember dividends are not guaranteed. If the company gets
in trouble, they could absolutely cut their dividend.
And you don't want to be in that situation, but
if you can live off of the fourth quarter dividend, fine,
(11:48):
you can take that in cash, but it becomes very
complicated because then you have to change from reinvesting to
da da da. So just think about it, but I
would not be doing an annuity no matter what. All right.
KT (11:59):
Good morning, Suze and KT.
Suze (12:01):
It is, is it not, KT?
KT (12:03):
Yes it is. My current relationship is not working out.
Suze (12:07):
What else is new? You know how many emails we
get that start with that exact saying?
KT (12:13):
My current relationship is not working. You're not alone. You're not alone.
There's a whole lot we get like this, Susan, but
at least Suze, you and I are working out just right. So,
so Susan says we bought a house together. I own 25%
of the house. The house is worth about $520,000.
Suze (12:35):
Ok, so she owns about $130,000 worth of that house.
KT (12:39):
My plan is to move out and buy another house.
I will have the equity from the house, which he
will either pay to me or the house will be sold,
and I'll get it that way. Susan has $25,000 in
an emergency fund with no debt, about $345,000 in a
401k Roth, and traditional IRA accounts.
(13:03):
She earns about $110,000 a year and does not plan
on retiring. I really do not want a mortgage at
this stage in my life. I'm 61, but will have
to take money out of my retirement in order to
buy my home mortgage free.
So, she said she can also buy it and take
(13:24):
a mortgage out means she no longer contributes to her
retirement and she wouldn't be debt free. Can you help me?
This is the real clincher, everybody. Susan said, I feel
very anxious and not secure at all.
Suze (13:39):
Ding ding ding pop quizzy.
KT (13:41):
Yeah, I'll tell you what I would do.
Suze (13:42):
Pop quizzy...
everybody before KT answers because KT people have been writing
and saying, please bring back the quizzy.
KT (13:49):
Oh, no way.
Suze (13:56):
Well, pop, here's the wait before you answer, everybody, how
would you, seriously, answer this question? She's 61 years of age.
She only has $25,000 in an emergency fund. No other debt.
She has about $345,000 again in her retirement accounts. Think
(14:18):
about that. She really doesn't want a
mortgage so she would at the age again of 61
have to take money out of her retirement accounts in
order to buy the home mortgage free. She feels anxious.
She could take a mortgage, but she doesn't want to. KT.
How would you answer that?
KT (14:37):
Four letter word baby
just leaving a relationship.
It's emotional. They broke up. Don't go and make your
life stuck again. Just be free and rent for a
couple years. You can afford to rent with that kind
of a salary and still be free and rent simple.
(15:01):
One of the things that I often ask when we
read these and when I read, I the, the puzzle
needs to be put together with all the pieces and
you often send us a question but you don't tell
us where you live for instance. That would have a
great deal of bearing on, you know, whether you buy
(15:22):
and rent, so on and so forth.
Suze (15:25):
Ding ding ding ding
KT (15:26):
Rent, right?
Suze (15:27):
Yes, but for many different reasons. OK, all right, so
first of all, what is my main law of money
when it comes to you after you have suffered the
loss of a loved one? You are to do absolutely
nothing other than keep your money safe and sound for
(15:47):
at least one to two years.
Cause you're saying to me that your relationship is not
working out. Don't tell me that that doesn't have an
emotional impact on you, whether you like him or her,
you dislike them or whatever, it has an emotional impact.
(16:10):
Now you don't want to take money out of a
retirement account. That is just the stupidest thing you could
ever do simply to what? Buy another house. No way,
not on our watch.
You really shouldn't decide anything until you know how much
money you are going to have. What is he going
(16:32):
to actually be giving you if he buys you out,
and if you sell it, remember there will be real
estate commissions, all kinds of things. This is no longer
a seller's market.
Prices are going down and down. Therefore, just wait to
see how much you really get when that is complete,
(16:53):
one step at a time.
Next, how do you know what to do? If you're
about to do something and it makes you feel insecure
right now you feel very anxious and not secure at all. Therefore,
you are to do nothing. So before you do anything,
check that little stomach of yours, and if it is nervous,
(17:17):
that is yourself telling yourself, don't do it. Remember, once
you do something, it's already done.
If you haven't done it yet, you have a lot
of time to do it. All right, there you go.
KT (17:30):
I was right.
Suze (17:31):
I gave you a ding ding ding ding ding ding
ding ding ding ding ding.
KT (17:35):
OK, next question is from Melissa, she said. Suze, I'm
a single mom with a 16 year old son.
I'm also a landlord with just a few properties.
Suze (17:47):
Oh, just a few properties?
KT (17:48):
The question is, how do I protect my real estate
from the type of economy that we are currently in?
How do I bulletproof myself from losing money? When you
find that answer, share it with all of us.
And then she said taxes are up, insurance is up
at the same time, so are the interest rates. I'm
waiting for interest rates to go down so I can
(18:10):
invest in another property outside of New York. These properties,
which are passive income, are my main source of income.
Suze (18:21):
Listen, here's the thing...
KT (18:23):
Make it a quizzy again.
Suze (18:26):
All right, ding ding ding, go for it.
KT (18:27):
Don't buy any more property right now at all.
Suze (18:33):
That's your advice.
KT (18:34):
Yeah.
Suze (18:35):
All right, that's her advice whether it's right or wrong.
I can't tell you. However, let me just say something.
I talk about investing obviously all the time and I
talk about diversification. What concerns me is, your main source
of passive income happens to be properties, and you're already
(19:00):
asking how do you bulletproof yourself from losing money. When
it comes to real estate it's very, very difficult to
bulletproof yourself from losing
money. Why? You cannot protect yourself against insurance going up.
You cannot protect yourself against property taxes going up. You
(19:21):
cannot protect yourself against the house needing repairs. You cannot
protect yourself against renting to somebody who all of a
sudden loses their job and they stop paying you and
they won't leave.
And now you may have mortgage payments with no income.
You cannot adequately truthfully protect yourself against climate change and
(19:43):
what Mother Nature may bring upon you.
So there are all of these you can't do anything about.
But what you can do is maybe think about, oh,
do I have anything invested in dividend paying stocks? Do
I have at least an eight month emergency fund maybe
(20:04):
generating some income to me? Do I have any Treasury bill,
bonds or notes that are pretty much guaranteed? What else
do you have? But you're waiting for interest rates to
go down so you could invest in another property.
So the truth of the matter is I don't know.
(20:26):
I'd like to hear that you were investing in something
other than property, even if you did an REIT within
a retirement account, but I don't know enough about you,
but I can tell you this when it comes to
real estate.
It is very, very difficult to protect yourself, especially with
(20:48):
the insurance market today. You best think about it.
KT (20:52):
No bulletproof, right?
Suze (20:53):
Mhm.
KT (20:55):
OK, Suze, next question is from Mark. I really like this question.
He said, Suze, I'm 70 years old and I have
1.5 million in a rolled over 401k.
I've been converting it into a Roth for the past
three years, and I'm wondering when is it a good
time to stop converting and just pay the grim reaper.
(21:18):
So Mark's question is how will the RMDs and converting
mix in the next few years?
Suze (21:24):
Yeah, so what, what I...
KT (21:26):
I would love to hear that too.
Suze (21:29):
Why?
KT (21:29):
Just curious because that's a great question. No one ever
asked that question.
Suze (21:34):
All right, Mark, here's what you first need to know,
and everybody who is on RMDs or who will eventually
be on RMDs, and you want to convert from a traditional,
which is a
pre-tax retirement account to a Roth, which is after tax.
KT (21:51):
Tell them what an RMD is.
Suze (21:52):
Required Minimum Distribution.
KT (21:54):
And it starts at what age?
Suze (21:55):
73 currently and then very shortly it will be 75
just so you know. However, here's what you have to
understand you cannot convert,
in the year that you have to take RMDs until
you have taken your RMDs, and after you have taken
(22:16):
your RMDs, then you can convert. So that's how that
will work for you.
How do you know if you should just stop converting
and just paying the grim reaper? KT's laughing cause she
knows how hard that was for me to say anyway,
but here's how you know you would only convert if
(22:40):
in fact you don't need the money that you are converting.
You want to leave it in there for growth. You
don't need to touch it for years, if ever you
want to leave it to your beneficiaries and you want
to leave it to them absolutely tax free. Then you
would continue to convert. If in fact you know that
(23:02):
you're going to be needing that money to live on,
then you would maybe just take out what you want
from your traditional IRA.
And what would you do? Live on it and not
convert it to a Roth, just that simple, cause remember
there are still some rules in everything with a wroth
(23:24):
and a Roth conversion, even at your age, believe it
or not. So therefore that's how you would know. So Mark,
it's just that simple. All right, KT.
KT (23:35):
OK.
Suze, next question is from Kelly, and Kelly asks, does
it make more sense to purchase an income annuity with
qualified or non-qualified money to shore up guaranteed income needs
to supplement my pension and Social Security?
Suze (23:54):
So that's simple. If you
are going to buy an income annuity all right however,
do it with non-qualified money meaning money outside of a
retirement account, because remember in a retirement account, a pre-taxed
retirement account, all right, which is qualified money.
(24:15):
You are eventually going to have to pay RMDs, and
then it becomes very confusing as to with an income annuity,
what was the value of the balance of that income
annuity at the end of the year prior to the
year you're taking RMDs very confusing. So,
do it with non-qualified money. Last question, KT.
KT (24:36):
This is from Amy and Amy is
55.
Suze (24:44):
Yeah. What were we doing? Remember what we were doing at 55?
KT (24:44):
That was a great year.
They were so much fun.
She said, I have an old 401k balance of $69,000
that I just rolled over into a Schwab traditional IRA.
My plan was to convert little by little into my
Roth IRA, but when I was looking back at my
(25:05):
Suze notebook, I noticed something about the pro rata rule.
My notes were incomplete.
So now I'm wondering if I can still convert to
my Roth IRA. I do have another traditional IRA, and
I know that's what the pro rata rule refers to.
Please help me. So...
Suze (25:24):
Pop, pop quizzy, pop quizzy, can she or can she
not KT?
KT (25:30):
Oh...
Suze (25:31):
Will she be subjected to the pro rata rule because
she has, uh, uh, because she's, she's shaking her head
up or down...
KT (25:40):
I'm asking Suze, help me!
Can she or can she not, right, wait, so go ahead,
keep going.
Suze (25:45):
So can she convert to a Roth given the fact
that she has a traditional IRA? Is she going to
be subjected to the pro rata rule?
KT (25:57):
I think you are. (Suze makes the 'wrong answer' noise).
Oh, you're not. All right, wait, but can I just
say something? Suze, on February 18, 2024, you did an
entire podcast about the pro rata rule
Suze (26:11):
And Roth IRAs.
KT (26:13):
So, so Amy, go back and listen to it.
And that's for everyone listening February 18th, 2024.
Suze (26:22):
All right, so but here's the scoop, Amy, you are confusing
conversion with a backdoor Roth. The pro rata rule only
relates to a back door Roth period. Which means you
have too much income to get new money
(26:44):
into a Roth IRA. So what do you do? You
put money into a traditional IRA. You make it nondeductible,
and then you convert it to a Roth, but you
can only do that if you don't have any pre-tax
retirement account outside of your employers. You are simply converting,
(27:07):
from a pre-tax to a wrath, which means you are
going to pay taxes on that money, and the 5
year clock will start the day you convert, every time
you convert. So no, it does not apply to you
at all. But KT, I'm so proud of you. You
went back and looked up that podcast.
KT (27:27):
I did, I did should have
listened to it and I would have gotten it.
Suze (27:32):
Anyway, all right, there you go. So until Sunday when
I'm gonna do a different kind of Suze School.
KT (27:41):
Tell them what you're doing.
Suze (27:42):
So I was looking through some of the emails and
Doctor E, so if you're listening, know this podcast is
going to be about you, asked
a question and I realized rather than letting KT ask
it on Ask KT and Suze Anything, I'm going to
turn this one into a Suze school and really teach
(28:02):
you along with Doctor E what you need to know about...
You're going to have to tune in and find out.
So we are in September.
And because we are now in September, I promised one
of the listeners who wrote in that said, Suze, please
go back to closing the podcast with your traditional way
(28:26):
of doing it and I said for you, for the
rest of
the year, we will do that. So there's really only
one thing we want you to remember when it comes
to your money, and it is this:
KT (28:38):
People first, then money, then
things.
Suze (28:41):
Now you stay safe and secure. See you Sunday. Bye-bye.
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